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JPMorgan Income & GrowthInvestment Trust plc

Annual Report & Accounts for the year ended 31st January 2013

Annual Report2013

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Features

Contents

About the Company

1 Financial Results2 Chairman’s Statement

Investment Review

4 Investment Managers’ Report8 Financial Data9 Financial Record10 Ten Largest Investments11 Portfolio Analysis11 UK Direct Equity Analysis12 List of Investments14 Capital Structure of the Company

Directors’ Report

15 Board of Directors17 Directors’ Report17 Business Review22 Corporate Governance27 Directors’ Remuneration Report

Accounts

28 Statement of Directors’Responsibilities

29 Independent Auditor’s Report30 Income Statement31 Statement of Total Recognised Gains

and Losses31 Reconciliation of Movements in

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

Shareholder Information

56 Notice of Annual General Meeting59 Glossary of Terms and Definitions61 Information about the Company

Objective

The Company’s investment objectives are to meet the final capital entitlement of theIncome shareholders and to provide them with a regular quarterly income as well asto provide capital growth for Capital shareholders.

Investment Policy

In order to manage risk, the Company invests in a diversified portfolio, typicallycomprising 50 to 70 UK equities and a range of other assets. The investments areprimarily UK equities, however, the Company has the flexibility to vary theallocation between UK equities and other assets in order to seek the best absolutereturns.

Benchmark

The FTSE 350 Total Return Index.

Capital Structure

For details of the Company’s capital structure, please refer to page 14.

Life of the Company

The Company has a fixed life, and will be wound up voluntarily on or around30th November 2016.

Management Company

The Company employs JPMorgan Asset Management (UK) Limited (‘JPMAM’ or ‘theManager’) to manage its assets.

AIC

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

Website

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


JPMorgan Income & Growth Investment Trust plc. Annual Report & Accounts 2013 1

Financial ResultsTotal returns

+23.3%Unit net asset value total

return1 (2012: +2.3%)

+29.4%Unit share price total return

(2012: –1.7%)

+16.1%FTSE 350 Total Return Index2

(2012: –0.1%)

+105.6%Capital share price total

return (2012: –47.1%)

+25.5%Income share price total

return3 (2012: +6.3%)

0.0%Capital share net asset value

total return (2012: 0.0%)

+23.3%Income share net asset value

total return1 (2012: +2.3%)

The above are total returns and include dividendsreinvested.

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

1Source: J.P. Morgan.2Source: FTSE.3Source: Morningstar. Share price change plus dividends received.

–45–40–35–30–25–20–15–10–505

101520253035

201320122011201020092008

%

Performance

JPMorgan Income & Growth – unit return to shareholders

JPMorgan Income & Growth – unit return on net assets

Benchmark

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JPMorgan Income & Growth Investment Trust plc. Annual Report & Accounts 20132

Chairman’s Statement

Your Company made good progress in the most recent financial year. Shareholders’Funds returned 23.3% over the 12 months to January. This was some 7.2% ahead ofthe benchmark, the FTSE 350 index. The Company has now outperformed in each ofthe last three years: the cumulative total returns over the last three years have been10.7% more than the benchmark. We increased the ordinary dividend from 4.2p to4.4p per Income share for the year.

The Board recognises that we have some way to go yet to wipe out the cumulativeunderperformance since the inception of the Company, which coincided with themost turbulent period for markets since the 1930s. But the value of incomeshareholders’ entitlement at the year end was 99.1p per share, just marginally lessthan the 103.4p that would be the maximum payable for each income share when weliquidate the Company in 2016. If shareholders’ funds exceed this amount, the excesswill be distributed to capital shareholders. The possibility of some intrinsic value forthe capital shareholders led to a significant improvement in the market price ofcapital shares over the year. The share price more than doubled.

This progress has been made despite a difficult and volatile period for economies andmarkets. Recovery from the financial calamity of 2007 to 2009 has been slow andfaltering. The UK has experienced a double-dip recession. The US has twice comeclose to closing down federal government as a result of political stalemate over thebudget deficit. The Euro has experienced a prolonged existential crisis; and somecountries within the Eurozone are suffering deep and painful depressions. Yetmarkets have made good progress.

We have central bankers to thank for this counter-intuitive result. The ECB’s promiseto buy government bonds without limit appeared to remove the possibility ofimminent collapse of a sovereign borrower in Europe. Monetary policy elsewhere islooser than we have known it in our time. Low interest rates and quantitative easinghave powerful, but gradual effects. As the interest rate on government bonds hasfallen to historic lows, investors have systematically moved wealth to higher riskassets: first corporate bonds, then emerging market debt, then high yield bonds, andmost recently, equities. Whilst rates stay low, we might expect equity prices to remainbuoyant.

Your portfolio is heavily dependent on equity markets. Some 66% of the portfoliois invested in UK equities; and a further 12% is exposed to international equities(including emerging markets). The rest of the portfolio is diversified across highyield bonds, emerging market debt and convertible bonds.

Our policy of diversifying from UK equities has so far been successful. Reducing theburden of income generation from the UK market has given our portfolio managersgreater scope to invest in growth-oriented and smaller companies. Our UK equitieshave performed very well as a result. Last year the UK equity portfolio was up 3%more than the FTSE 350. As well as the central bankers, we have our portfoliomanagers to thank for a nimble navigation of treacherous markets last year.



We have maintained gearing at around 30%. Half of the floating rate debt has beenfixed. The blended cost is currently 2.6% p.a. The Board considered fixing a furthertranche, but we decided that the flexibility of a standard loan was valuable. At somestage, the monetary stimulus will cease to be administered: we may wish to reduceour market exposure temporarily.

The Board hopes that as many members as possible can join us at this year’s AnnualGeneral Meeting. If any shareholders have questions or comments we are alwayshappy to respond to letters.

Karl SternbergChairman 9th April 2013

Investment Managers’ Report

The weighting to UK equities ranged between 58% and 67% of total assets during theperiod. The change in equity exposure was primarily driven by the removal of ourshort position in FTSE 100 futures.

All of the elements of the portfolio performed well during the year. The bestperformance was from UK equities and the convertibles portfolio.

The table below shows both the absolute returns and the contribution to the netasset value increase from the various elements of the overall portfolio.

Sarah Emly

Neill Nuttall

John Baker


Contributions to Total Returns as at 31st January 2013

Contribution toAbsolute Return Performance

% %

Benchmark total return +16.1 +16.1

UK Equities +18.6 +3.0JPMorgan Multi-Asset Income Fund +15.4 –0.2JPMorgan Emerging Markets Multi-Asset Fund1 +7.3 +0.2JPMorgan Strategic Bond Fund +6.5 +0.1Convertibles +24.6 +1.0Gearing +3.9

Investment Manager contribution +8.0

Effect of Swap 0.0Effect of share issuance/buybacks 0.0Management fee/other expenses –0.8

Other effects –0.8

Unit net asset value total return +23.3

Source: Xamin/JPMAM/Morningstar.

All figures are on a total return basis. Performance attribution analyses how the Company achieved its recorded

performance relative to its benchmark index.

Market Review

It was another weak year for the UK economy, but a positive year for UK equities. Ourbenchmark index, the FTSE 350 Index, delivered a return of 16.1%.

In the first half of the Company’s year, equity markets and other risky financial assetswere weak. Investors’ focus was on the ongoing financial crisis in Europe. Greecesuffered political turmoil as it tried to meet tough bailout conditions set by itscreditors, and for a while it seemed that the country may elect to leave the Eurozoneor be thrown out. Meanwhile, it became increasingly clear that Spain might need abailout due to a combination of indebted regions and rising bad loans in the bankingsector. Weakness in Continental Europe affected the UK badly. Our economyexperienced a double-dip recession, confounding government expectations of bettergrowth.

1This fund was purchased during the financial year and the contribution effect has been calculated from their purchasedate.



The turning point for investor sentiment came in July, when the ECB president MarioDragi said he would ‘do whatever it takes’ to preserve the euro. This was followed inSeptember with the announcement of the ECB’s Outright Monetary Transactionsprogramme, which allows the central bank to intervene in Eurozone sovereign bondmarkets if countries formally request assistance and agree to meet certain conditions.

Investors were further encouraged by an acceleration in both Chinese and USeconomic data. The UK, although weak, avoided an outright contraction. Excludingfinancial services and oil and gas output (both of which are in structural or manageddecline), the rest of the economy grew around 1.5%.

With the global economic backdrop improving and fears of a Eurozone breakupabating, previously risk-averse investors began to switch from the safety of thegovernment bond markets into equities. Dividend yields looked very attractivecompared with government bond rates; and, unlike conventional bonds, equitiesseemed to offer some protection against the possibility of rising inflation. Theten-year Gilt yield, which had fallen to its lowest level since records began in 1703,climbed back from 1.5% towards 2.0% by year end.

UK Equity Portfolio Review

The UK equity portfolio outperformed the Company’s benchmark substantially,delivering a return of +18.6% versus +16.1% for the index. In the first half of the year,performance was driven by some of our more defensive and high yielding stocks,such as British American Tobacco. During the more encouraging second half of theyear, our more cyclical stocks generated the strongest returns, as well as ourfinancials.

Our significant overweight position in the low cost airline group Easyjet was a strongcontributor to performance. This company consistently delivered results that wereahead of market expectations. It demonstrated particularly strong revenue growth asthe company widened its customer base and introduced additional revenue streams,such as allocated seating. Other positive contributors included our holdings in stockssuch as Smith (DS), Filtrona and Elementis. Berkeley also stands out: it reportedstrong profit progress as it benefited from the improving domestic housing market.

We introduced some attractive new stocks to the portfolio that were cheaply valued,such as Taylor Wimpey the housebuilder and ITV, which announced strong resultsand a better-than-expected dividend. We also selectively added to some of our morecyclical stocks, and also to some of our financials in order to benefit from the morebuoyant equity market environment. We bought a more significant position in ourtwo favoured banking stocks, Barclays and HSBC, and added to our existing holdingin Legal & General.

We sold stocks that were no longer compelling on valuation grounds or which lackedpositive newsflow, such as the food retailer, WMMorrison; the media group, Pearson;and the chemicals group, Johnson Matthey.

Diversified Assets, Convertible Bonds and Fixed Interest Review

We retained allocations to our multi-asset income strategy and convertible bonds,although reduced our exposure to the latter during the fourth quarter.


We sold our position in the JPM Strategic Bond Fund mid-year and introduced anallocation to the JPM Emerging Markets Multi-Asset Fund. The fund aims to achievelong term capital growth through allocations to emerging market equities, corporateand sovereign bonds.

JPMorgan Multi-Asset Income FundThe fund returned 15.4% during the year which was a good result from a balancedfund which gives us both exposure to international equities as well as defensivecharacteristics from its bond holdings. The yield remains over 4.0%. We benefitedparticularly from our allocation to higher dividend emerging market stocks. Propertycompanies were also among the best performing asset classes. Although we remainpositive on high yield bonds, we reduced our allocation in the fourth quarter andadded to higher-yielding equities.

JPMorgan Strategic Bond Fund & JPM Emerging Markets Multi-Asset FundWe sold our exposure to the JPM Strategic Bond Fund in August, investing theproceeds in the JPM Emerging Markets Multi-Asset Fund as we became more positiveon riskier assets. This proved to be a good move as Government Bonds struggled tomake headway in the latter part of our financial year and emerging market assetsrose. The JPM Emerging Markets Multi-Asset Fund brings diversification benefits andsignificant yield. The fund has produced positive returns in Sterling terms sinceAugust.

Convertible BondsOur convertible bond portfolio had a very good year with strong capital growth and ahigh dividend yield. We made few changes within our convertible bond allocation aswe continued to focus on those bonds which offer attractive running yield of around4% to 5% and exposure to some participation in equity market gains. Our holdingsbenefited from credit spread tightening and positive equity market performance.Improved appetite for risk assets over the year helped to move valuations from aposition of cheapness back up towards fair value. One example is Vedanta. Followinga period of strong performance, we judged that prospects for future appreciationwere limited, so we sold the position in October.

Outlook

We continue to believe that deleveraging in the developed world remains the coremacro driver over the longer term. This will likely keep average annual global growthlevels, as well as returns on financial assets, below longer term averages over thenext 5 to 10 years. However, in the more immediate future we believe that assetmarkets are more heavily influenced by the economic cycle and the outlook for thenext 1 to 3 years is more positive.

Growth in the UK is moderate at best, while the Eurozone remains in recession.However, the US economy continues to gain traction and we see risks to the upside asthe housing market recovery gains pace and the benefits of lower energy prices feedthrough to the manufacturing sector. Meanwhile Asian growth continues to improve,boosted by policy easing in both Japan and China. In summary, we see a gradualreacceleration of global growth, albeit it with regional variations.


Investment Managers’ Reportcontinued



We believe that global excesses of both labour and productive capacity will continueto dampen core inflationary pressures. Where inflation remains stubborn we believethat central banks will be more tolerant as economic activity builds to ‘escapevelocity’, the term used by the Bank of England Governor-designate Mark Carney todescribe the process of recovery from the overhang of the Global Financial Crisis. Thisis certainly true in the UK where in its latest Quarterly Inflation Report the Bank ofEngland’s outlook for inflation remained above target for most of the forecast period.Despite this, monetary accommodation was expected to continue. We thereforeanticipate that global monetary policy will remain very easy, suppressing real interestrates which will provide further support to risk assets and notably equities.

Whilst we foresee a positive medium term economic backdrop, we also believe thatequities represent fair value in absolute terms while being attractive relative to otherfinancial asset classes, notably cash and government bonds. However, we areconscious that the current rally in equities is now some four years old. As such, ourshorter term view is more cautious and we continue to believe that the company willbenefit from the diversification away from a sole concentration to UK equities. In linewith these shorter term concerns we shall look to see if there are any attractivehedging strategies that may ameliorate any downside, although we would see acorrection as an opportunity to add to equity exposure in line with our moreoptimistic medium term view.

Neill NuttallSarah EmlyJohn BakerInvestment Managers 9th April 2013



Financial Datafor the year ended 31st January 2013

31st January 31st January %2013 2012 change

Income shares:Net assets attributable (£’000) 61,173 52,909 +15.6Net asset value per share (p) 99.10 85.70 +15.6Share price (p) 86.50 73.50 +17.7Share price discount to net asset value per share (%) 12.70 14.20

Capital shares:Net assets attributable (£’000) 0 0 0.0Net asset value per share (p) 0.00 0.00 0.0Share price (p) 9.25 4.50 +105.6Share price discount to net asset value per share (%) N/A N/A

Units:Shareholders’ funds 61,173 52,909 +15.6Net asset value per unit (p) 99.10 85.70 +15.6Share price (p) 92.50 76.00 +21.7Discount (p) 6.70 11.30 –40.7

Revenue for the year:Gross revenue (£’000) 3,419 3,834 –10.8Net revenue attributable to income shareholders (£’000) 2,727 3,276 –16.8Return per Income share (p) 4.41 5.30 –16.8Dividend per Income share (p) 4.40 4.20 +4.8Special dividend per Income share (p) — 0.50 –100.0

Gearing (%) 30.7 35.3

Ongoing Charges (%) 1.32 1.31



Financial Recordfrom 20th December 2006 (the date the Company began investing) to date

20th December 31st January 31st January 31st January 31st January 31st January 31st January2006 2008 2009 2010 2011 2012 2013

Income sharesNet assets (£’000) 64,747 66,894 39,010 47,777 54,012 52,909 61,173Net asset value per share (p) 103.4 106.8 61.5 76.3 87.4 85.7 99.1Share price (p) 104.50 92.00 57.50 68.00 73.25 73.50 86.50Premium/(discount) (%) 1.1 (13.9) (11.8) (10.9) (16.2) (14.2) (12.7)

Capital sharesNet assets (£’000) 29,117 5,498 0 0 0 0 0Net asset value per share (p) 46.5 8.6 0.0 0.0 0.0 0.0 0.0Share price (p) 50.00 20.50 9.50 8.00 8.50 4.50 9.25Premium (%) 7.5 138.4 N/A N/A N/A N/A N/A

Year ended 31st January 20081 2009 2010 2011 2012 2013

Gross revenue (£’000) N/A 6,362 5,274 3,077 3,293 3,834 3,419Revenue return attributable to Income shareholders (£’000) N/A 5,059 3,472 2,462 2,744 3,276 2,727

Total dividends declared (£’000) N/A 4,321 3,903 2,521 2,487 2,902 2,716Revenue return per Income share (p) N/A 8.08 5.53 3.89 4.40 5.30 4.41Total dividends declared per Income share (p) N/A 6.9 6.2 4.0 4.0 4.2 4.4

Special dividend declared per Income share (p) N/A — — — — 0.5 —

Gearing (%) N/A 14.8 35.0 34.8 42.8 35.3 30.7

Ongoing Charges (%) N/A 1.53 1.53 1.40 1.24 1.31 1.32

Rebased to 100 at 20th December 200620th December

Year ended 31st January 2006 20081 2009 2010 2011 2012 2013

Unit net asset value total return 100.0 76.9 45.5 58.8 70.5 72.1 88.9Unit price total return 100.0 70.7 48.9 57.4 65.6 64.5 83.5Income share net asset value total return 100.0 105.8 65.5 88.1 106.5 108.9 134.3

Income share price total return 100.0 90.7 61.8 79.1 90.6 96.3 120.9Capital share net asset value return 100.0 18.5 0.0 0.0 0.0 0.0 0.0Capital share price return 100.0 41.0 19.0 16.0 17.0 9.0 18.5Benchmark return 100.0 96.7 70.2 93.2 110.1 110.0 127.7

1Covers the period from 20th December 2006 (the date the Company began investing) to 31st January 2008.

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

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2013 2012Valuation Valuation

Company Sector £’000 %1 £’000 %

JPMorgan Multi-Asset Income Fund Diversified Assets 15,665 19.6 14,229 20.0JPMorgan Multi-Asset Income Fund aims to provide diversified incomeby investing in a global portfolio of fixed and floating rate debt, equityand equity-linked securities.

HSBC Financials 4,582 5.7 2,117 3.0HSBC provides a variety of international banking and financial services,including retail and corporate banking.

Royal Dutch Shell Oil & Gas 4,390 5.5 4,564 6.4Royal Dutch Shell is the UK’s largest oil and petrochemicals company.

JPMorgan Multi-Asset Emerging Markets Fund3 Diversified Assets 4,349 5.4 — —JPMorgan Multi-Asset Emerging Markets Fund aims to achievelong-term capital growth. The Fund invests primarily in an activelymanaged portfolio of equities and bonds of emerging-marketcompanies and sovereign issuers, using derivatives where appropriate.

BP Oil & Gas 2,926 3.7 2,453 3.4BP is the UK’s second largest oil and petrochemicals company.

Vodafone Telecommunications 2,396 3.0 2,763 3.9Vodafone is Europe’s largest mobile telecommunications companyproviding a range of services worldwide.

GlaxoSmithKline Health Care 2,295 2.9 2,238 3.1GlaxoSmithKline is a research-based pharmaceutical company thatdevelops and sells prescription and over-the-counter medicines.

British American Tobacco2 Consumer Goods 2,150 2.7 1,911 2.7British American Tobacco manufactures, markets and sells cigarettes.

Rio Tinto Basic Materials 1,907 2.4 1,738 2.4Rio Tinto is an international mining company.

Barclays2 Financials 1,868 2.3 796 1.1Barclays is a global financial services provider.

Total 42,528 53.2

1Based on total investments of £79.9m (2012: £71.3m).2Not included in the ten largest investments at 31st January 2012.3Not held in the Portfolio as at 31st January 2012.

At 31st January 2012, the value of the ten largest investments amounted to £37.7m representing 52.9% of total investments.

Ten Largest Investmentsat 31st January 2013



At 31st January 2013 At 31st January 2012Portfolio1 FTSE 350 Index2 Portfolio1 FTSE 350 Index2

Sector Breakdown % % % %

Financials 23.6 22.6 18.3 19.3

Oil & Gas 13.7 16.5 17.1 18.6

Consumer Goods 13.6 14.0 12.1 13.2

Industrials 11.0 8.7 11.4 7.8

Basic Materials 9.7 10.2 11.1 12.7

Consumer Services 8.6 9.5 5.9 9.0

Telecommunications 7.4 6.0 9.1 6.3

Health Care 7.2 7.2 9.2 7.8

Utilities 3.8 3.8 5.1 3.9

Technology 1.4 1.5 0.7 1.4

Total 100.0 100.0 100.0 100.0

1Based on total UK Direct Equities of £53.2m (2012: £46.1m).2Source: FTSE.

Portfolio Analysis

UK Direct Equity Analysis

At 31st January 2013 At 31st January 2012Asset Breakdown %1 %1

UK Direct Equities2 66.6 64.6

Diversified Assets2 25.5 20.0

Convertible Bonds 7.9 9.6

Bond Fund — 5.8

Total 100.0 100.0

1Based on total investments of £79.9m (2012: £71.3m).2Total equities exposure, including those held in Diversified assets was 78.2% at 31st January 2013.



List of Investmentsat 31st January 2013

ValueCompany £’000

FinancialsBanksHSBC 4,582Barclays 1,868

6,450Life InsurancePrudential 948Legal & General 820Standard Life 651Aviva 423

2,842Non-life InsuranceLancashire 543Catlin 521Direct Line Insurance 400

1,464Financial ServicesAberdeen Asset Management 976Provident Financial 408

1,384Real Estate Investment TrustsBritish Land 398

398

Total Financials 12,538

Oil & GasOil & Gas ProducersRoyal Dutch Shell 4,390BP 2,926

Total Oil & Gas 7,316

Consumer GoodsTobaccoBritish American Tobacco 2,150Imperial Tobacco 1,212

3,362BeveragesDiageo 1,525

1,525Household Goods & Home ConstructionBerkeley 680Taylor Wimpey 550

1,230


Food ProducersTate & Lyle 599

599Automobiles & PartsGKN 530

530

Total Consumer Goods 7,246

IndustrialsSupport ServicesWolseley 588John Menzies 566Diploma 501Interserve 444Filtrona 384

2,483General IndustrialsSmith (DS) 701RPC 390Rexam 362

1,453Aerospace & DefenceBAE Systems 861Senior 437

1,298Industrial EngineeringMelrose Industries 619

619

Total Industrials 5,853

Basic MaterialsMiningRio Tinto 1,907BHP Billiton 1,428Xstrata 1,225

4,560ChemicalsElementis 587

587

Total Basic Materials 5,147




Consumer ServicesTravel & LeisureEasyjet 1,075Compass 465Intercontinental Hotels 381

1,921MediaITV 618WPP 537Informa 434

1,589General RetailersWH Smith 596Halfords 460

1,056

Total Consumer Services 4,566

TelecommunicationsMobile TelecommunicationsVodafone 2,396

2,396Fixed Line TelecommunicationsBT 1,155KCOM 392

1,547

Total Telecommunications 3,943

Health CarePharmaceuticals & BiotechnologyGlaxoSmithKline 2,295AstraZeneca 1,536

Total Health Care 3,831

UtilitiesGas, Water & MultiutilitiesCentrica 534Pennon 300Severn Trent 223

1,057ElectricityScottish & Southern Energy 589Drax 357

946

Total Utilities 2,003


TechnologySoftware & Computer ServicesMicro Focus International 420

420Technology Hardware & EquipmentLaird 317

317

Total Technology 737

UK Direct Equities 53,180

Diversified AssetsJPMorgan Multi-Asset Income Fund 15,665JPMorgan Multi-Asset Emerging Markets Fund 4,349JPMorgan Sterling Liquidity Fund 390

Total Diversified Assets 20,404

Convertible BondsAres Capital 5.75% Convertible 2016 1,305TUI Travel 4.90% Convertible 2017 1,297Cemex S.A.B. 4.875% Convertible 2015 1,157Sainsbury(J) 4.25% Convertible 2014 1,103Salamander Energy 5% Convertible 2015 926Electra Private Equity 5% Convertible 2017 530

Total Convertible Bonds 6,318

Total Investments1 79,902

1Total investments comprises £73,584,000 in equity shares, £6,318,000 in convertiblebonds.



Capital Structure of the Company

Introduction

The Company has two classes of shares, Income and Capital.Under the Company’s Articles of Association, on a return ofassets on a winding up of the Company, the Income shares areentitled to all the assets of the Company up to a predeterminedcapital entitlement of 103.4p per Income share, plus anybalance of revenue available for dividend payments. TheCapital shareholders will be entitled to receive all the residualassets of the Company following the payment of theseentitlements to the Income shareholders.

At the year end, the assets of the Company amounted to£61,173,000 including the balance of revenue amounting to£1,582,000. This is £4,256,000 below the amount needed tomeet the final entitlement of the Income shares, as shown inthe Reconciliation of Movements in Shareholders’ Funds onpage 31 and in note 18 on page 45.

Under accounting standards, the Income share class isclassified in the accounts as a liability due to the rights attachedto that share class, detailed above. The Capital share class,which is the subordinate class of shares, is classified as equity.This means that the Balance Sheet of the Company will showzero net assets unless the assets increase to a level in excessof the final entitlement of the Income shares.

Income shares

Characteristics and EntitlementsThe Income shares offer a dividend yield and first call on capitalup to a predetermined capital entitlement on winding up.

Income shares will have a maximum capital entitlement of103.4p per share on any winding-up of the Company. They arealso entitled to any undistributed revenue available fordividend payments.

Income shares are entitled to such dividends as the Directorsmay determine to distribute in respect of each financial period.Such dividends will take the form of quarterly dividends to bedeclared in February, May, August and November, and paid inMarch, June, September and December respectively.

Revenue available for dividend paymentsAt 31st January 2013, undistributed revenue amounted to£1,582,000 (before payment of the fourth quarterly dividend)

and have been allocated in the accounts to the Income shares.Further details on the movement in the revenue available fordividend payments are given in note 16 on page 43.

Voting RightsEach holder of Income shares present in person at a generalmeeting will have one vote on a show of hands and, on a poll,each holder present in person or by proxy will have one votefor each Income share held. Income and Capital shares rankpari passu with respect to voting rights.

Capital shares

Characteristics and EntitlementsGenerally by virtue of their effective gearing and their lack ofyield, Capital shares have limited protection against adversemarket movements and are therefore classed as high risksecurities. Conversely, they are potentially attractive securitiesto investors seeking a geared exposure to the capitalperformance of investment markets.

Capital shares are entitled to be paid an amount, on anywinding up of the Company, representing all the surplus netassets after repaying the bank loans and any other obligationsand meeting the final entitlement of the Income shares. TheCapital shares have no entitlement to revenue available fordividends.

Voting RightsEach holder of Capital shares present in person at a generalmeeting will have one vote on a show of hands and, on a poll,each holder present in person or by proxy will have one votefor each Capital share held. Income and Capital shares rank paripassu with respect to voting rights.

Units

Characteristics and EntitlementsA Unit share comprises one Capital share and one Incomeshare. On application to the Company’s Registrar, these Sharesmay be separated into Income shares and Capital shares.

Unit shareholders have the same entitlements and votingrights as if they held separately the Income shares and Capitalshares comprised in their Units.



Board of Directors

Karl Sternberg (Chairman of the Board and Nomination Committee)

A Director since 2006.

Last reappointed to the Board: 2011.

Current remuneration: £29,000.

He is also a Fellow of St Catherine’s College, Oxford. He is a Director of Friends Life GroupPlc, Oxford Investment Partners Limited, and Lowland Investment Company plc. He waspreviously Chief Executive of Oxford Investment Partnership and was also previouslyChief Investment Officer of Deutsche Asset Management Limited.

Connections with Manager: None.

Shared directorships with other Directors: None.

Current shareholding in Company: 6,825 Capital shares, 23,000 Income shares and3,479 units.

Nicholas Craig Harvey (Chairman of the Audit Committee)




He is currently a Director of Lainston Investment Services Limited. He was formerlya Director of Hambros Bank plc.



Current shareholding in Company: 13,310 Capital shares and 4,760 units.

Jane Tozer OBE




Jane worked for IBM in technical and marketing roles, before becoming CEO of asoftware company. She is currently a Non-Executive Director of F&C Global SmallerCompanies plc, StatPro Group plc, Elexon Limited, Citizens Advice Service in ThreeRivers Ltd, Asthma UK and the Information Technologists’ Company Charity. She is alsoco-founder of the Information and TMT Non-Executives Association and a member ofthe Advisory Board of Warwick University Business School.



Current shareholding in Company: 44,592 Capital shares, 61,063 Income shares and21,869 units.



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

David Watts




He was formerly the joint Chief Executive and Chief Investment Officer of GartmoreInvestment Management Limited. He is a Director of Lord Wandsworth College Trustand Stern Farms Limited. He was previously a Director of Martin Currie InvestmentManagement Limited. He was formerly Chairman of the Investment Committee ofMerchant Navy Ratings Pension Fund Trustees Limited.



Current shareholding in Company: 251,507 Income shares.

Ian Scott-Gall




Ian, a Chartered Accountant and former CEO has had over 24 years public companyexperience as a CEO and a Finance Director with Vislink plc and Blick plc. He wasformerly a Non-Executive Director of Control Instruments Group Ltd, listed on theJohannesburg stock exchange and a Director of Framlington Innovative Growth TrustPlc.



Current shareholding in Company: 20,000 Capital shares and 26,200 Income shares.

Board of Directors continued



The Directors present their report and the audited financialstatements for the year ended 31st January 2013.

Business ReviewBusiness of JPMorgan Income & Growth Investment Trust plcThe Company carries on business as an investment trust andwas approved by HM Revenue & Customs as an investment trustin accordance with Section 1158 of the Corporation Tax Act 2010for the year ended 31st January 2012. In the opinion of theDirectors, the Company has subsequently conducted its affairsso that it should continue to qualify as an investment trust underthe HM Revenue & Customs’ qualifying rules.

Approval in previous years is subject to review should there beany subsequent enquiry under Corporation Tax SelfAssessment.

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

A review of the Company’s activities and prospects is given inthe Chairman’s Statement on pages 2 and 3 and in theInvestment Managers’ Report on pages 4 to 7.

ObjectiveThe Company’s investment objectives are to meet the finalcapital entitlement of the Income Shareholders and to providethem with a regular quarterly income as well as to providecapital growth for Capital Shareholders.

Investment Policies and Risk ManagementThe Company invests in UK equities and also in a range of otherassets. The Company will retain the flexibility to vary thepercentage of its assets attributable to UK equities and otherassets according to the allocation it considers would achievethe best absolute returns. The allocation to UK equities willtypically consist of some 50 to 70 holdings. In order to achieveits investment objective and to seek to manage risk, theCompany invests in a diversified portfolio.

Investment Limits andRestrictions• The Company will typically invest a minimum of 60% of its

portfolio in UK equities (as at 31st January 2013: 66.6%).

• The Company will not invest more than 15% of its portfolioin any individual investment apart from collectiveinvestment vehicles (Largest investment as at 31st January2013: 5.7%).

• The Company will use gearing when appropriate toincrease potential returns to Shareholders. The Company

has the power under its Articles to borrow up to an amountequal to 60% of its Net Asset Value at the time of thedrawdown. The Directors have set a maximum gearinglevel of 35% of Net Asset Value at the time of the drawdown(Gearing level as at 31st January 2013: 30.7%).

• The Company will not invest more than 15% of its grossassets in other UK listed investment companies (as at31st January 2013: 0.0%).

• The Company will use derivatives (including options,futures and interest rate swaps) when appropriate withinconditions and limits set by the Board for efficient portfoliomanagement to enhance potential returns to Shareholders.

PerformanceIn the year ended 31st January 2013, the Company produceda unit net asset value total return of 23.3%. This compareswith a return on the Company’s benchmark of 16.1%. At31st January 2013, the value of the Company’s investmentportfolio was £79.9 million. The Investment Managers’ Reporton pages 4 to 7 includes a review of developments during theyear as well as information on investment activity within theCompany’s portfolio.

Total Return, Revenue and Dividends Capital sharesGross capital return for the year amounted to £9.1 million(2012: £1.4 million loss) and net capital return after deductingcapitalised management fee, finance costs and tax amountedto £8.5 million (2012: £1.8 million loss). The increase in assetsrequired to meet the final entitlement of the Income shares atthe beginning of the year amounted to £12.8 million and afteradjusting for the £8.5 million net capital gain during the year,the balance at the end of the year is £4.3 million.

Income sharesThe assets available to meet the final entitlement of theIncome shares rose by £8.5 million during the year,decreasing the deficit to £4.3 million.

Distributable income for the year, attributable to the IncomeShareholders amounted to £2.7 million (2012: £3.3 million).The Directors have declared a fourth quarterly dividend of1.1p (2012: 1.10p plus a special dividend of 0.50p) per incomeshare. This dividend will cost £0.7 million (2012: £1.0 million)and the revenue available for distribution after allowing forthis dividend will amount to £0.9 million (2012: £0.9 million).

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

Directors’ Report


Directors’ Report continued


• Performance against the benchmark index

PerformanceFigures have been rebased to 100 on 31st January 2008

Source: Morningstar/FTSE.

JPMorgan Income & Growth – Unit price.

JPMorgan Income & Growth – net asset value per Unit.

Benchmark.

Performance Relative to BenchmarkFigures have been rebased to 100 on 31st January 2008

Source: Morningstar.

JPMorgan Income & Growth – Unit price.

JPMorgan Income & Growth – net asset value per Unit.

The Benchmark is represented by the grey dotted line.

• Performance against the Company’s peers The principal objective is to meet the final capitalentitlement of the Income shareholders and to providethem with a regular quarterly income as well as capitalgrowth for Capital shareholders. The Board also monitorsthe performance relative to a broad range of competitorfunds.

• Performance attributionThe purpose of the performance attribution analysis is toassess how the Company achieved its performance relativeto its benchmark index, i.e. to understand the impact on theCompany’s relative performance of the various

components such as asset allocation and stock selection.Details of the attribution analysis for the year ended31st January 2013 are given in the Investment Managers’Report on page 5.

• Share price discount to net asset value (‘NAV’) per shareThe Board has a share repurchase policy which seeks toaddress imbalances in supply of and demand for theCompany’s shares within the market and thereby seek tomanage the volatility and absolute level of the discount orpremium to NAV per share at which the Company’s sharestrade.

In the year to 31st January 2013, Units in the Company’sshares traded between a discount of 5.3% and 10.4% basedon month end values.

Unit Premium (+)/Discount (–)

Source: Datastream.

JPMorgan Income & Growth – Discount.

• Ongoing ChargesThe ongoing charges represent the Company’smanagement fee and all other operating expenses,excluding finance costs, expressed as a percentage ofthe average daily net assets attributable to incomeshareholders during the year. The method of calculatingthe ongoing charges has been changed. In previous years,the total expense ratio (‘TER’) was calculated, whichrepresented the Company’s management fee and otheroperating expenses excluding finance costs, expressed as apercentage of the average month end net assets during theyear. The ongoing charges for the year ended 31st January2013 was 1.32% (2012: TER 1.31%). The Board reviews theongoing charges of the Company regularly and on anannual basis compares its ongoing charges against othercompanies with similar investment objectives and policies.

Share CapitalThe Company has the authority to repurchase shares in themarket for cancellation and issue shares.

40

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140

201320122011201020092008

–15–12–9–6–303691215

201320122011201020092008

70

80

90

100

110

201320122011201020092008



The Company has not issued or repurchased any Incomeshares or Capital shares during the year or since the end of theyear.

A resolution to renew the Company’s issuance powers will beput to shareholders for approval at the Annual GeneralMeeting. The full text of this resolution is set out in the Noticeof Meeting on page 56.

A resolution to renew the Company’s authority to repurchaseshares at a discount to NAV will be put to shareholders at theforthcoming Annual General Meeting. The full text of thisresolution is set out in the Notice of Meeting on page 56.

Details of the share capital structure of the Company can befound on page 14.

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

• Investment and Strategy: An inappropriate investmentstrategy, for example asset allocation or the level ofgearing, may lead to under-performance against theCompany’s benchmark index and peer companies. TheBoard manages these risks by diversification of investmentsthrough its investment restrictions and guidelines whichare monitored and reported on by the Manager. JPMAMprovides the Directors with timely and accuratemanagement information, including performance data andattribution 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,and reviews data which show statistical measures of theCompany’s risk profile. The Investment Managers employthe Company’s gearing tactically, within a strategic rangeset by the Board. The Board holds a separate meetingdevoted to strategy each year.

• Market: Market risk arises from uncertainty about thefuture prices of the Company’s investments. It representsthe potential loss the Company might suffer throughholding investments in the face of negative marketmovements. The Board considers asset allocation, stockselection and levels of gearing on a regular basis and hasset investment restrictions and guidelines which aremonitored and reported on by JPMAM. The Board monitors

the implementation and results of the investment processwith the Investment Managers.

• Accounting, Legal and Regulatory: Should the Companybreach Section 1158 (‘Section 1158’) of the Corporation TaxAct 2010, it may lose investment trust status and as aconsequence gains within the Company’s portfolio wouldbe subject to Capital Gains Tax. The Section 1158qualification criteria are continually monitored by JPMAMand the results reported to the Board each month. TheCompany must also comply with the provisions of theCompanies Act 2006 and, as its shares are listed on theLondon Stock Exchange, the UKLA Listing Rules andDisclosure and Transparency Rules (‘DTRs’) issued by theFSA. A breach of the Companies Act could result in theCompany and/or the Directors being fined or the subject ofcriminal proceedings. A breach of the UKLA Listing Rules orDTRs may result in the Company’s shares being suspendedfrom listing which in turn would breach Section 1158. TheBoard relies on the services of its Company Secretary,JPMAM, and its professional advisers to ensure compliancewith the Companies Act 2006 and the UKLA Listing Rulesand DTRs.

• Corporate Governance and Shareholder Relations: Detailsof the Company’s compliance with respect to CorporateGovernance best practice, including information onrelations with shareholders, are set out in the CorporateGovernance report on pages 22 to 26.

• Operational: Disruption to, or failure of, JPMAM’saccounting, dealing or payments systems or the custodian’srecords may prevent accurate reporting and monitoring ofthe Company’s financial position. Details of how the Boardmonitors the services provided by JPMAM and itsassociates and the key elements designed to provideeffective internal control are included within the InternalControl section of the Corporate Governance report onpage 24.

• Financial: The financial risks faced by the Company includemarket risk (comprising interest rate risk and other pricerisk), liquidity risk and credit risk. Further details aredisclosed in note 25 on pages 48 to 54.

Future Developments The future development of the Company depends on thesuccess of the Company’s investment strategy. The InvestmentManagers discuss the outlook in their report on pages 4 to 7.




Management of the Company

The Manager and Company Secretary is JPMorgan AssetManagement (UK) Limited (‘JPMAM’). JPMAM is employedunder a contract terminable on six months notice. If theCompany wishes to terminate the contract on shorter notice,the balance of remuneration is payable by way ofcompensation.

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

The Board conducts a formal evaluation of the Manager on anannual basis. The evaluation includes consideration of theperformance of the Manager, its management processes,investment style, resources and risk controls. As a result of theevaluation process the Board is of the opinion that thecontinuing appointment of the Manager is in the interests ofthe shareholders.

Management Fee

The annual management fee is paid monthly at the annualisedrate of 0.8% of the Company’s net assets. The rate reduces to0.7% of the Company’s net assets over £65 million. Fundsmanaged or advised by JPMAM or any of its associatedcompanies that are held in the Company’s portfolio of assetsare excluded from the calculation and therefore attract noadditional fee.

Going Concern

The Directors believe that having considered the Company’sinvestment objective (see page 17), risk management policies(see page 48), capital management policies and procedures(see page 54), the nature of the portfolio and expenditureprojections, that the Company has adequate resources, anappropriate financial structure and suitable managementarrangements in place to continue in operational existence forthe foreseeable future. For these reasons, they consider thereis reasonable evidence to continue to adopt the going concernbasis in preparing the accounts. In arriving at this conclusion,the Directors have considered the fixed life of the Company, thefinal entitlement of the Income shareholders and the ability torenew the Company’s loan facilities.

Payment Policy

It is the Company’s policy to obtain the best terms for allbusiness and therefore there are no standard payment terms.In general the Company agrees with its suppliers the terms on

which business will take place and it is the Company’s policy toabide by these terms. As at 31st January 2013, the Companyhad no outstanding trade creditors (2012: none).

Directors

The Directors of the Company who held office at the end of theyear, together with their beneficial interests in the Company’sshare capital, were:

31st January 1st FebruaryCapital 2013 2012

Karl Sternberg 6,825 6,825Nicholas Craig Harvey 13,310 13,310Jane Tozer 44,592 44,592David Watts — —Ian Scott-Gall 20,000 20,000

31st January 1st FebruaryIncome 2013 2012

Karl Sternberg 23,000 23,000Nicholas Craig Harvey — —Jane Tozer 61,063 31,605David Watts 251,507 251,507Ian Scott-Gall 26,200 26,200

31st January 1st FebruaryUnits 2013 2012

Karl Sternberg 3,439 3,241Nicholas Craig Harvey 4,760 4,760Jane Tozer 21,869 21,170David Watts — —Ian Scott-Gall — —

Since the year end, Karl Sternberg has acquired a further40 units.

In accordance with the Company’s Articles of Association,Karl Sternberg and David Watts, being eligible, will stand forre-election at the forthcoming Annual General Meeting.

The Nomination Committee, having considered theirqualifications, performance and contribution to the Board andits committees, confirms they continue to be effective anddemonstrate commitment to the role and the Boardrecommends to shareholders that they be reappointed.



Director Indemnification and Insurance

As permitted by the Company’s Articles of Association, theDirectors have the benefit of an indemnity which is aqualifying third party indemnity, as defined by Section 234of the Companies Act 2006. The indemnities were in placeduring the year and as at the 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. There is nocover against fraudulent or dishonest actions.

Disclosure of information to Auditors

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

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

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

The above confirmation is given and should be interpretedin accordance with the provision of Section 418(2) of theCompanies Act 2006.

Section 992 Companies Act 2006

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

Capital StructureThe Company’s capital structure is summarised on page 14.

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

Environmental Matters, Social and Community Issues

Information about environmental matters and social andcommunity issues is set out on page 26. The Company has noemployees.

Notifiable Interests in the Company’s Voting Rights

As at 31st January 2013, the Company was aware of thefollowing interests in excess of 3% or more of its issued sharecapital:

Share Number of Shareholders Class shares held %

JPMorgan Asset Management1 Income 7,233,349 5.73Capital 12,926,091 10.24

Rathbones Brothers plc Income 6,551,279 5.19Capital 1,207,439 0.96Units 466,138 0.36

Investec Wealth & Investment Limited Income 11,904,851 9.43

Capital 871,286 0.69Citigroup Capital 4,690,000 7.37Nortrust Nominees Limited Capital 1,946,363 3.02

1Non-beneficial.

Since the year end, JPMorgan Asset Management has reducedits holdings in the Income and Capital shares to 6,015,474(4.76%) and 10,758,216 (8.52%) respectively. The Company isalso aware that approximately 6.58% of the Company’s totalvoting rights are held by individuals through savings productsmanaged by JPMAM and registered in the name of ChaseNominees Limited. If those voting rights are not exercised bythe beneficial holders, in accordance With the terms andconditions of the savings products, under certaincircumstances JPMAM has the right to exercise those votingrights. That right is subject to certain limits and restrictions andfalls away at the conclusion of the relevant general meeting.

Independent Auditor

Ernst & Young LLP have expressed their willingness to continuein office as Auditor to the Company and resolutions proposingtheir re-appointment, and authorising the Directors todetermine their remuneration for the ensuing year, will be putto shareholders at the Annual General Meeting.

Annual General Meeting

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

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

(i) Authority to allot relevant Securities and to disapply statutorypre-emption rights (resolutions 6 and 7)

The Directors will seek authority at the Annual General Meetingto issue new shares equivalent to 5% of the present issued




share capital. This authority will remain in effect until theAnnual General Meeting in 2014 unless renewed at an earliergeneral meeting. The full text of the resolution is set out in theNotice of Meeting on pages 56 to 58.

It is advantageous for the Company to be able to issue newshares to participants purchasing shares through theJ.P. Morgan savings products and also to other investorswhen the Directors consider that it is in the best interests ofshareholders to do so. As such issues are only made at pricesgreater than the NAV, they increase the assets underlyingeach share and spread the Company’s administrativeexpenses, other than the management fee which is chargedon the value of the Company’s assets, over a greater numberof shares. The issue proceeds are available for investment inline with the Company’s investment policies.

(ii) Authority to repurchase the Company’s shares for cancellation(resolution 8)

At the General Meeting held on 15th June 2012, shareholdersgave authority to the Board to enable repurchases of up to14.99% of the then issued share capital. A resolution will beproposed at the Annual General Meeting that the Company beauthorised to purchase in the market up to 14.99% of theCompany’s issued share capital as at the date of the passing ofthis resolution.

The Directors consider that the renewal of the authority is inthe interests of shareholders as a whole, as the repurchase ofshares at a discount to the underlying net asset value (‘NAV’)enhances the NAV of the remaining shares and helps to controlthe discount and its volatility. Resolution 8 gives the Companyauthority to buyback its own issued shares in the market aspermitted by the Companies Act 2006 (the ‘Act’).

The full text of the resolution is set out in the Notice of Meetingon page 56. Repurchases will be made at the discretion of theBoard and will only be made at prices below the prevailing NAVper share, thereby enhancing the NAV of the remaining sharesas and when market conditions are appropriate.

The Company currently does not hold any shares in the capitalof the Company in Treasury.

Recommendation (resolutions 6 to 8) The Board considers that resolutions 6 to 8 are likely topromote the success of the Company and are in the bestinterests of the Company and its shareholders as a whole. TheDirectors unanimously recommended that you vote in favourof the resolutions as they intend to do in respect of their ownbeneficial holdings which amount in aggregate to 493,403shares representing 0.39% of the voting rights in the Company.

Corporate Governance

Compliance

The Company is committed to high standards of corporategovernance. This statement, together with the Statement ofDirectors’ Responsibilities in respect of the Accounts onpage 28, indicates how the Company has applied the principlesof good governance of the Financial Reporting CouncilUK Corporate Governance Code 20101 (the ‘UK CorporateGovernance Code’) and the AIC’s Code of CorporateGovernance (the ‘AIC Code’), which complements theUK Corporate Governance Code and provides a framework ofbest practice for investment trusts.

The Board is responsible for ensuring the appropriate level ofCorporate Governance and the Company has complied with thebest practice provisions of the UK Corporate Governance Code,in so far as they are relevant to the Company’s business, andthe AIC Code, other than in respect of the provision relating to asenior independent director, throughout the year under review.

Role of the Board

A management agreement between the Company and JPMAMsets out the matters over which the Manager has authority. Thisincludes management of the Company’s assets and theprovision of accounting, company secretarial, brokerage,administration, and some marketing services. All other mattersare reserved for the approval of the Board. A formal scheduleof matters reserved to the Board for decision has beenapproved. This includes determination and monitoring of theCompany’s investment objectives and policy and its futurestrategic direction, gearing policy, management of the capitalstructure, appointment and removal of third party serviceproviders, review of key investment and financial data and theCompany’s corporate governance and risk controlarrangements.

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

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

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



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

Board Composition

The Board consists of five non-executive directors, all of whomare regarded by the Board as independent of the Company’sManager.

The Directors have a breadth of investment knowledge,business and financial skills and experience relevant to theCompany’s business and brief biographical details of eachDirector are set out on page 15.

The Board does not believe that it would be appropriate toadopt a policy whereby Directors serve for a limited periodof time. However, in order to provide a balance of skills,experience, length of service and ages, it is the Board’s policyto introduce new Directors to provide an orderly successionover time.

A review of Board composition and balance is included as partof the annual performance evaluation of the Board, details ofwhich may be found on page 23.

The Board has considered whether a senior independentdirector should be appointed. As the Board comprises entirelyof non-executive directors, the appointment of a seniorindependent director is not considered necessary. However,the Chairman of the Audit Committee leads the evaluation ofthe performance of the Chairman and is available toshareholders if they have concerns that cannot be resolvedthrough discussion with the Chairman.

Tenure

Directors are initially appointed until the following AnnualGeneral Meeting when, under the Company’s Articles ofAssociation, it is required that they be appointed byshareholders. Thereafter, a Director’s appointment will run fora term of three years. Subject to the performance evaluationcarried out each year, the Board will agree whether it isappropriate for the Director to seek an additional term. ADirector’s continuing appointment is subject to reappointmentby shareholders on retirement by rotation in accordance withthe Company’s Articles of Association, which require that onethird of the Board must retire by rotation each year.

Any Director who has served for a period of more than nineyears will stand for annual re-election thereafter. The Boarddoes not believe that length of service in itself necessarilydisqualifies a Director from seeking re-election but, whenmaking a recommendation, the Board will take into account theongoing requirements of the UK Corporate Governance Code,including the need to refresh the Board and its committees.

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

After an assessment of their respective performances during theyear, the Board recommends the re-election of Karl Sternbergand David Watts who retire by rotation at this year’s AGM.

Induction and Training

On appointment, the Manager and Company Secretary provideall Directors with induction training. Thereafter, regularbriefings are provided on changes in law and regulatoryrequirements that affect the Company and the Directors.Directors are encouraged to attend industry and otherseminars covering issues and developments relevant toinvestment trust companies. Regular reviews of the Directors’training needs are carried out by the Chairman by means of theevaluation process described below.

Meetings and Committees

The Board delegates certain responsibilities and functions tocommittees. Details of the membership of committees areshown with the Directors’ profiles on page 15.

The table below lists the number of Board and committeemeetings attended by each Director. During the period therewere five Board meetings, including a private meeting of theDirectors to evaluate the Manager and a separate meetingdevoted to strategy, two Audit Committee meetings and ameeting of the Nomination Committee.

Audit NominationBoard Committee Committee

Meetings Meetings MeetingsDirector Attended Attended Attended

Karl Sternberg 5 2 1Nicholas Craig Harvey 5 2 1Jane Tozer 5 2 1David Watts 4 2 1Ian Scott-Gall 5 2 1




Board Committees

Nomination Committee The Nomination Committee, chaired by Karl Sternberg, consistsof all of the Directors and meets at least annually to ensure thatthe Board has an appropriate balance of skills and experienceto carry out its fiduciary duties and to select and proposesuitable candidates for appointment when necessary. Theappointment process takes account of the benefits of diversityincluding gender.

The Committee conducts an annual performance evaluation ofthe Board, its committees and individual Directors to ensurethat all Directors have devoted sufficient time and contributedadequately to the work of the Board and its Committees, Theevaluation of the Board considers the balance of experience,skills, independence, corporate knowledge, its diversity,including gender, and how it works together. Questionnaires,drawn up by the Board, with the assistance of JPMAM and afirm of independent consultants, are completed by eachDirector. The responses are collated and then discussed by theCommittee. The evaluation of individual Directors is led by theChairman who also meets with each Director. The Chairman ofthe Audit Committee, Nicholas Craig Harvey leads theevaluation of the Chairman’s performance.

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

Audit Committee The Audit Committee, chaired by Nicholas Craig Harvey,comprises all of the Directors and meets at least twice eachyear. The members of the Audit Committee consider that theyhave the requisite skills and experience to fulfil theresponsibilities of the Audit Committee.

The Audit Committee reviews the actions and judgements ofthe Manager in relation to the half year and annual accountsand the Company’s compliance with the UK CorporateGovernance Code. It reviews the terms of the managementagreement and examines the effectiveness of the Company’sinternal control systems, receives information from theManager’s Compliance department and reviews the scope andresults of the external audit, its cost effectiveness, the balanceof audit and non-audit services and the independence andobjectivity of the external auditor; in the opinion of theDirectors the auditor is considered independent.Representatives of the Company’s auditor attend the AuditCommittee meeting at which the draft annual report andaccounts are considered. The Directors’ statement on theCompany’s system of risk management and internal control isset out overleaf.

Terms of ReferenceBoth the Nomination Committee and the Audit Committee havewritten terms of reference which define clearly their respectiveresponsibilities, copies of which are available for inspection onrequest at the Company’s registered office, on the Company’swebsite and on request at the Company’s registered office andat 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 performanceand reports formally to shareholders quarterly each year byway of the annual report and accounts, the half year report andtwo interim management statements. This is supplemented bythe daily publication, through the London Stock Exchange, ofthe net asset value of the Company’s shares.

All shareholders have the opportunity, and are encouraged,to attend the Company’s Annual General Meeting at whichthe Directors and representatives of the Manager areavailable in person to meet with and answer shareholders’questions. In addition, a presentation is given by theinvestment managers reviewing the Company’sperformance. During the year the Company’s broker, theinvestment managers and JPMAM hold regular discussionswith larger shareholders. The Directors are made fullyaware of their views. The Chairman and Directors makethemselves available as and when required to addressshareholder queries. The Directors may be contactedthrough the Company Secretary whose details are shownon page 61.

The Company’s Annual Report and Accounts are published intime to give shareholders at least 20 clear working days’ noticeof the Annual General Meeting. Shareholders wishing to raisequestions in advance of the meeting are encouraged to submitquestions via the Company’s website or write to the CompanySecretary at the address shown on page 61.

Details of the proxy voting on each resolution will be publishedon the Company’s website shortly after the Annual GeneralMeeting.

Risk Management and Internal Control

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



including business, financial, operational, compliance and riskmanagement.

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

Since investment management, custody of assets and alladministrative services are provided to the Company byJPMAM and its associates, the Company’s system of riskmanagement and internal control mainly comprisesmonitoring the services provided by JPMAM and its associates,including the operating controls established by them, to ensurethey meet the Company’s business objectives. There is anongoing process for identifying, evaluating and managing thesignificant risks faced by the Company. This process has beenin place for the year under review and up to the date ofapproval of the Annual Report and Accounts. Whilst theCompany does not have an internal audit function of its own,the Board considers that it is sufficient to rely on the internalaudit department of JPMAM. This arrangement is kept underreview. The key elements designed to provide effective riskmanagement and internal control are as follows:

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

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

Management Systems – The Manager’s system of riskmanagement and internal control includes organisationalagreements which clearly define the lines of responsibility,delegated authority, control procedures and systems. Theseare monitored by JPMAM’s compliance department whichregularly monitors compliance with FSA rules and reports tothe Board.

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

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

• Reviews the terms of the management agreement andreceives regular reports from JPMAM’s compliancedepartment;

• Reviews the report on the risk management and internalcontrols and the operations of its custodian, JPMorganChase Bank, which is itself independently reviewed; and

• The Directors review on a regular basis an independentreport on the risk management and internal controls andthe operations of JPMAM.

Bymeans of the procedures set out above, which accord withthe Turnbull guidance on internal controls, the Board confirmsthat it has reviewed the effectiveness of the Company’s systemof internal control for the year ended 31st January 2013, and tothe date of approval of this annual report and accounts.

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

Voting Policy

The Company delegates responsibility for voting to JPMAM.The following is a summary of JPMAM’s policy statements oncorporate governance, voting policy and social andenvironmental issues, which has been reviewed and noted bythe Board.

Corporate Governance JPMAM believes that corporate governance is integral to our investmentprocess. As part of our commitment to delivering superior investmentperformance to our clients, we expect and encourage the companies inwhich we invest to demonstrate the highest standards of corporategovernance and best business practice. We examine the share structureand voting structure of the companies in which we invest, as well as the




board balance, oversight functions and remuneration policy. Theseanalyses then form the basis of our proxy voting and engagementactivity.

Proxy Voting JPMAM manages the voting rights of the shares entrusted to it as it wouldmanage any other asset. It is the policy of JPMAM to vote in a prudent anddiligent manner, based exclusively on our reasonable judgement of whatwill best serve the financial interests of our clients. So far as is practicable,we will vote at all of the meetings called by companies in which we areinvested.

Stewardship/EngagementJPMAM recognises its wider stewardship responsibilities to its clients as amajor asset owner. To this end, we support the introduction of the FRCStewardship Code, which sets out the responsibilities of institutionalshareholders in respect of investee companies. Under the Code,managers should:

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

– disclose their policy on managing conflicts of interest;

– monitor their investee companies;

– establish clear guidelines on how they escalate engagement;

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

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

– report to clients.

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

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

JPMAM is also a signatory to the United Nations Principles of ResponsibleInvestment, which commits participants to six principles, with the aim ofincorporating ESG criteria into their processes when making stockselection decisions and promoting ESG disclosure. Our detailed approachto how we implement the principles is available on request. JPMAM is alsoa signatory to the Carbon Disclosure Project. JPMorgan Chase is asignatory to the Equator Principles on managing social andenvironmental risk in project finance.

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

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

9th April 2013



The Board presents this report, which has been prepared inaccordance with the requirements of Section 421 of theCompanies Act 2006. An ordinary resolution for the approvalof this report is to be put to shareholders at the forthcomingAnnual General Meeting.

The law requires the Company’s auditor to audit certain of thedisclosures provided. Where disclosures have been auditedthey are indicated as such. The auditor’s opinion is included intheir report on page 29.

Directors’ Remuneration1

2013 2012Directors’ Name £ £

Karl Sternberg 27,500 27,500Nicholas Craig Harvey 22,500 22,500Jane Tozer 20,000 20,000David Watts 20,000 20,000Ian Scott-Gall 20,000 20,000

Total 110,000 110,000

1Audited information.

With effect from 1st February 2013, fees have been increasedfrom £27,500 to £29,000 per annum for the Chairman, from£22,500 to £23,500 per annum for the Chairman of the AuditCommittee and from £20,000 to £21,000 per annum for theother Directors.

The total Directors’ fees of £110,000 (2012: £110,000) were allpaid to Directors and £nil (2012: £nil) paid to third parties formaking available the services of Directors.

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

As all of the Directors are non-executive, the Board has notestablished a Remuneration Committee. Instead, theNomination Committee reviews Directors’ fees on a regularbasis and makes recommendations to the Board as andwhen appropriate. Reviews are based on informationprovided by JPMAM, and relevant third parties on the level

of fees paid to the directors of the Company’s peers andwithin the investment trust industry generally. The Directors’fees are not performance related. Any increase in theaggregate fee level above £200,000 per annum wouldrequire both Board and shareholder approval.

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

The Company does not operate any type of incentive orpension scheme and therefore no Directors receive bonuspayments or pension contributions from the Company or holdoptions to acquire shares in the Company. Directors are notpaid compensation for loss of office. No other payments aremade to Directors, other than the reimbursement ofreasonable out-of-pocket expenses incurred in connection withattending to the Company’s business.

A graph showing the Company’s unit share price total returncompared with its benchmark index the FTSE 350 Total ReturnIndex, is shown below.

Unit price and benchmark total returnperformance for five years to31st January 2013

Source: Morningstar/FTSE.

Unit price total return.

Benchmark total return.

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

9th April 2013

60

80

100

120

140

201320122011201020092008

Directors’ Remuneration Report



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

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

• select suitable accounting policies and then apply themconsistently;

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

• state whether applicable UK Accounting Standards havebeen followed, subject to any material departures disclosedand explained in the financial statements.

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

The accounts are published on thewww.jpmincomeandgrowth.co.uk website, which is maintainedby the Company’s Manager, JPMorgan Asset Management (UK)Limited (‘JPMAM’). The maintenance and integrity of thewebsite maintained by JPMAM is, so far as it relates to theCompany, the responsibility of JPMAM. The work carried out bythe auditor does not involve consideration of the maintenanceand integrity of this website and, accordingly, the auditoraccepts no responsibility for any changes that have occurred tothe accounts since they were initially presented on the website.The accounts are prepared in accordance with UK legislation,which may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed inthe Directors’ Report confirm that, to the best of theirknowledge:

• the financial statements, which have been prepared inaccordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom AccountingStandards) and applicable law, give a true and fair view ofthe assets, liabilities, financial position and return or loss ofthe Company; and

• the Directors’ Report includes a fair review of thedevelopment and performance of the business and theposition of the Company, together with a description of theprincipal risks and uncertainties that it faces.

For and on behalf of the Board Karl SternbergChairman

9th April 2013

Statement of Directors’Responsibilities



Independent Auditor’s Report to the members of JPMorganIncome & Growth Investment Trust plc

We have audited the financial statements of JPMorgan Income&Growth Investment Trust plc (the ‘Company’) for the year ended31st January 2013 which comprise the Income Statement, theStatement of Total Recognised Gains and Losses, the Reconciliationof Movements in Shareholders’ Funds, the Balance Sheet, the CashFlow Statement and the related notes 1 to 26. The financialreporting framework that has been applied in their preparation isapplicable law and United Kingdom Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice).

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

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ ResponsibilitiesStatement set out on page 28, the Directors are responsiblefor the preparation of the financial statements and for beingsatisfied that they give a true and fair view. Our responsibilityis to audit and express an opinion on the financial statements inaccordance with applicable law and International Standardson Auditing (UK and Ireland). Those standards require us tocomply with the Auditing Practices Board’s (APB’s) EthicalStandards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to givereasonable assurance that the financial statements are freefrom material misstatement, whether caused by fraud orerror. This includes an assessment of: whether the accountingpolicies are appropriate to the Company’s circumstances andhave been consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made bythe Directors; and the overall presentation of the financialstatements. In addition, we read all the financial andnon-financial information in the Annual Report and Accountsto identify material inconsistencies with the audited financialstatements. If we become aware of any apparent materialmisstatements or inconsistencies, we consider theimplications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the Company’s affairsas at 31st January 2013 and of its net return for the year thenended;

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

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

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• the part of the Directors’ Remuneration Report to be auditedhas been properly prepared in accordance with theCompanies Act 2006;

• the information given in the Directors’ Report for thefinancial year for which the financial statements are preparedis consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

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

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

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

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

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

Under the Listing Rules we are required to review:

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

• the part of the Corporate Governance Statement on pages 22to 26 relating to the Company’s compliance with the nineprovisions of the UK Corporate Governance Code specifiedfor our review; and

• certain elements of the report to the shareholders by theBoard on Directors’ remuneration.

Michael-John Albert (Senior Statutory Auditor)for and on behalf ofErnst & Young LLP, Statutory AuditorLondon 9th April 2013

Independent Auditor’s Report



Income Statementfor the year ended 31st January 2013

2013 2012Revenue Capital Total Revenue Capital Total

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

Gains/(losses) on investments andderivatives held at fair value through profit or loss 2 — 9,068 9,068 — (1,346) (1,346)

Net foreign currency gains/(losses) — 6 6 — (5) (5)Income from investments 3 3,395 — 3,395 3,780 — 3,780Other interest receivable and similar

income 3 24 — 24 54 — 54

Gross return/(loss) 3,419 9,074 12,493 3,834 (1,351) 2,483Management fee 4 (121) (282) (403) (114) (265) (379)Other administrative expenses 5 (319) — (319) (315) — (315)

Net return/(loss) on ordinary activities before finance costs and taxation 2,979 8,792 11,771 3,405 (1,616) 1,789

Finance costs 6 (165) (386) (551) (394) (918) (1,312)Change in fair value of swap contract — — — 297 692 989Dividends paid on Income shares* 7 (3,018) — (3,018) (2,526) — (2,526)

Net (loss)/return on ordinary activities before taxation (204) 8,406 8,202 782 (1,842) (1,060)

Taxation 8 (87) 88 1 (32) 25 (7)

Net (loss)/return on ordinary activities after taxation (291) 8,494 8,203 750 (1,817) (1,067)

Return/(loss) per class of share 9Return/(loss) per Income share 4.41p 13.76p 18.17p 5.30p (2.94)p 2.36pReturn per Capital share — — — — — —

*Dividends paid during the year ended 31st January 2013 of 4.9p (2012: 4.1p) per income share, amounting to £3,018,000 (2012:£2,526,000) include a special dividend of 0.5p (2012; nil) per Income share amounting to £302,000 (2012: nil) in respect of theprevious financial year.

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

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columnsrepresent supplementary information prepared under guidance issued by the Association of Investment Companies.

The notes on pages 34 to 55 form an integral part of these accounts.



Reconciliation of Movements inShareholders’ Fundsfor the year ended 31st January 2013

Increase inassets required

Called up Capital to meet the finalshare Share Other redemption entitlement of Capital

capital premium reserve reserve the Income shares reserves Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1st February 2011 646 456 28,536 17 11,010 (40,665) —Repurchase of Income shares for

cancellation — — (1) 1 — — —Adjustment to shortfall reserve

following repurchase and cancellation of Income shares — — — — (16) 16 —

Transfer to shortfall reserve — — — — 1,817 — 1,817Net capital loss on ordinary activities — — — — — (1,817) (1,817)

At 31st January 2012 646 456 28,535 18 12,811 (42,466) —Transfer to shortfall reserve — — — — (8,555) — (8,555)Net capital return on ordinary activities — — — — — 8,555 8,555

At 31st January 2013 646 456 28,535 18 4,256 (33,911) —


Statement of Total Recognised Gains and Lossesfor the year ended 31st January 2013

2013Revenue Capital Total

£’000 £’000 £’000

Movement in fair value of the cash flow hedge — 61 61Net return attributable to income shareholders 2,727 8,494 11,221

Total recognised gains in the period 2,727 8,555 11,282



2013 2012Notes £’000 £’000

Fixed assets Investments held at fair value through profit or loss 10 79,512 71,308Investment in liquidity fund held at fair value through profit or loss 390 —

79,902 71,308

Current assetsDebtors 11 543 644Cash and short term deposits 814 1,301Financial asset:

Derivative financial instruments held at fair value through profit or loss 12 61 —

1,418 1,945

Creditors: amounts falling due within one year 13 (147) (204)Financial liability:

Derivative financial instruments held at fair value through profit or loss 14 — (140)

Net current assets 1,271 1,601

Total assets less current liabilities 81,173 72,909Creditors: amounts falling due after more than one year 15 (20,000) (20,000)Net assets attributable to the Income shareholders 16 (61,173) (52,909)

Net assets — —

Capital and reservesCalled up share capital 17 646 646Share premium 18 456 456Other reserve 18 28,535 28,535Capital redemption reserve 18 18 18Increase in assets required to meet the final entitlement of the

Income shares 18 4,256 12,811Capital reserves 18 (33,911) (42,466)

Total equity shareholders’ funds — —

Net asset value per share 19Income share 99.1p 85.7pCapital share — —

The accounts on pages 30 to 55 were approved and authorised for issue by the Directors on 9th April 2013 and signed on theirbehalf by:

Karl SternbergDirector


The Company’s registration number is: 5973571

Balance Sheetat 31st January 2013



2013 2012Notes £’000 £’000

Net cash inflow from operating activities 20 2,670 3,016

Returns on investments and servicing of finance Interest paid (578) (1,319)Dividends paid on Income shares (3,018) (2,526)

Net cash outflow from returns on investments and servicing of finance (3,596) (3,845)

Taxation recovered 4 2

Capital expenditure and financial investment Purchases of investments (22,409) (20,378)Net payments for options exercised (5) (6)Sales of investments 22,781 24,837Settlement of futures contracts 62 (170)Other capital charges – handling fees — (3)

Net cash inflow from capital expenditure and financial investment 429 4,280

Net cash (outflow)/inflowbefore financing (493) 3,453

Financing Repayment of bank loan — (23,000)Drawdown of Bank loan — 20,000Repurchase and cancellation of Income shares — (36)

Net cash outflow from financing — (3,036)

Net (decrease)/increase in cash for the year 21 (493) 417


Cash Flow Statementfor the year ended 31st January 2013



1. Accounting policies(a) Basis of accounting

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted AccountingPractice (‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companiesand Venture Capital Trusts’, (the ‘SORP’) issued by the AIC in January 2009.

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

The accounts have been prepared on a going concern basis.

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

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

Derivatives are classified as held for trading and are measured at fair value using a recognised valuation technique. Unrealisedmovements in the valuation of derivatives are recognised in the Income Statement except where the derivative meets thecriteria for cash flow hedge accounting. Under the requirements of cash flow hedge accounting, unrealised gains or losses onderivative products are recognised through the Statement of Total Recognised Gains and Losses as a separate componentof equity.

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

(c) Accounting for reservesGains and losses on sales of investments and realised gains or losses on derivatives, including any related foreign exchangegains and losses, realised gains and losses on foreign currency, management fee and finance costs allocated to capital and anyother capital charges, are included in the Income Statement and dealt with in capital reserves within ‘Gains and losses on salesof investments and derivatives’. Increases and decreases in the valuation of investments, options and other derivatives held atthe year end, including the related foreign exchange gains and losses, are included in the Income Statement and dealt with incapital reserves within ‘Holding gains and losses on investments and derivatives’.

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

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

Interest receivable from fixed interest securities is included in revenue on a time apportionment basis using the effectiveinterest method.

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

Premiums receivable from written options are included in revenue on a time apportionment basis over the life of theinstrument.

Deposit interest receivable on cash and short term deposits is taken to revenue on an accruals basis.

Underwriting commission is recognised in income where it relates to shares that the Company is not required to take up.Where the Company is required to take up a proportion of the shares underwritten, the same proportion of commissionreceived is deducted from the cost of the shares taken up, with the balance taken to income.

Notes to the Accountsfor the year ended 31st January 2013



(e) ExpensesAll 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 mainly stamp duty and brokerage commission. Details of transaction costsare given in note 10 on page 41.

(f) Finance costsFinance costs are accounted for on an accruals basis using the effective interest method and in accordance with the provisionsof FRS 25: ‘Financial instruments: presentation’ and FRS 26: ‘Financial instruments: measurement’.

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

Dividends paid to Income shareholders are classified as finance costs because the Income shares are classified in the accountsas liabilities in accordance with FRS 25. Dividends payable are included in the accounts in the year in which the Companyenters into an obligation to make the dividend payment. Dividends payable are allocated wholly to revenue as to allocate anyportion to capital would affect the rights and benefits attributable to the Capital shareholders.

In accordance with FRS 21: ‘Events after the balance sheet date’, the fourth quarterly and special dividends are included infinance costs in the year in which the Company enters into an obligation to pay them.

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

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

Bank loans and overdrafts are classified as loans and receivables and are measured at amortised cost. They are recorded atthe proceeds received net of direct issue costs.

In accordance with FRS 26: ‘Financial instruments: measurement’, written options are designated as ‘held at fair value throughprofit or loss’, which is the cost of closing out the contracts, and included in current liabilities.

The Company uses an interest rate swap to hedge the cash flow risk arising from interest rate fluctuations. The swap isclassified as ‘held at fair value through profit or loss’ and has been designated as an effective cash flow hedge in accordancewith the provisions of FRS 26. Gains or losses arising on the fair value of the cash flow hedge during the year are shown in theStatement of Total Recognised Gains and Losses and are accounted for in capital reserves.

In accordance with FRS 25: ‘Financial instruments: presentation’, the Income share class is classified in the accounts as aliability due to the rights and obligations attached to that share class. Accordingly, dividends payable in respect of the Incomeshares are classified as an expense and recognised in the income statement. Holders of the Income shares are entitled to theaccumulated retained revenue of the Company plus a capital value equivalent of 103.4p per share. Therefore, the carryingvalue of the Income shares is presented in the balance sheet as the aggregate value of the retained revenue of the Companyand a residual capital entitlement that is capped at 103.4p per share.

In the event that the net assets of the Company are not sufficient to meet the income and capital entitlements of the incomeshareholders, a separate reserve is created to reflect the amount by which the net assets of the Company need to increase invalue in order to meet the capital entitlement of the Income shares. The net assets of the Company are only ascribed toholders of the Capital shares once this hurdle has been reached.



1. Accounting policies continued(h) Foreign currency

In accordance with FRS 23: ‘The effects of changes in foreign exchange rates’, the Company is required to nominatea functional currency, being the currency in which the Company predominantly operates. The Board, having regard to thecurrency of the Company’s share capital and the predominant currency in which its shareholders operate, has determined thatsterling is the functional currency. Sterling is also the currency in which the accounts are presented.

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

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

(i) TaxationCurrent tax is provided at the amounts expected to be paid or received.

Deferred tax is accounted for in accordance with FRS 19: ‘Deferred Tax’.

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 ismore likely than not that taxable profits will be available against which those timing differences can be utilised.

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

Tax relief on expenses charged to capital is calculated on the ‘marginal basis’ in accordance with the recommendations of theSORP.

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

2013 2012£’000 £’000

2. Gains/(losses) on investments andderivatives held at fair value through profit or lossGains on sales of investments based on historical cost 1,294 902Amounts recognised in investment holding gains and losses in the previous year

in respect of investments sold during the year (1,891) (1,758)

Losses on sales of investments based on the carrying value at the previous balance sheet date (597) (856)

Realised gains/(losses) on close out of futures 170 (170)Net movement in investment holding gains and losses 9,464 (192)Unrealised losses on futures held at fair value through profit or loss — (107)Movement on realisation of options 33 (17)Other capital charges – handling fees (2) (4)

Capital gains/(losses) on investments and derivatives held at fair value through profit or loss 9,068 (1,346)

Notes to the Accounts continued



2013 2012£’000 £’000

3. Income Income from investmentsUK dividends 2,174 2,183UK unfranked investment income from OEICs and REITs 704 965UK bond interest 203 346Overseas dividends 129 152Overseas interest 167 121Scrip dividends 18 13

Total income from investments 3,395 3,780

Other interest receivable and similar incomePremiums receivable from written options 15 51Deposit interest 3 3Underwriting commission 6 —

Total other interest receivable and similar income 24 54

Gross revenue return 3,419 3,834

2013 2012Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

4. Management fee Management fee1 121 282 403 114 265 379

1Details of the management fee are given in the Directors’ Report on page 20.

2013 2012£’000 £’000

5. Other administrative expensesAdministration expenses 180 179Directors’ fees1 110 110Auditor’s remuneration – for audit services2 29 26

319 315

1Full disclosure is given in the Directors’ Remuneration Report on page 27.2Includes £5,000 (2012: £4,000) irrecoverable VAT.




6. Finance costs Interest on bank loans and overdrafts 165 386 551 100 232 332Net finance cost of swap — — — 294 686 980

165 386 551 394 918 1,312

7. Dividends payable on Income shares(a) Dividends paid and declared

2013 2012£’000 £’000

2012 fourth quarterly dividend of 1.1p (2011: 1.0p) 679 616Special dividend of 0.5p (2011: nil) 302 —First quarterly dividend of 1.1p (2012: 1.0p) 679 616Second quarterly dividend of 1.1p (2012: 1.0p) 679 615Third quarterly dividend of 1.1p (2012: 1.1p) 679 679

Total dividends paid in the year 3,018 2,526

Fourth quarterly dividend declared of 1.1p (2012: 1.1p) 679 679Special dividend declared of nil (2012: 0.5p) — 302

The fourth quarterly dividend has been declared in respect of the year ended 31st January 2013 and was paid in March 2013. Inaccordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending31st January 2014.

(b) Dividends declared for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’) The requirements of Section 1158 of the Corporation Tax Act 2010 are considered on the basis of dividends paid and declaredin respect of the year as follows. The revenue available for distribution by way of dividend for the year is £2,727,000(2012: £3,276,000). The brought forward income available for distribution after allowing for the prior year fourth quarterlydividend amounted to £885,000. The carried forward income available for distribution after allowing for the fourth quarterlydividend declared amount to £903,000. Details of the movement in the revenue reserve are given in note 16 on page 43.

2013 2012£’000 £’000

First quarterly dividend of 1.1p (2012: 1.0p) 679 616Second quarterly dividend of 1.1p (2012: 1.0p) 679 615Third quarterly dividend of 1.1p (2012: 1.1p) 679 679Fourth quarterly dividend of 1.1p (2012: 1.1p) 679 679Special dividend of nil (2012: 0.5p) — 302

Total dividends paid and declared of 4.4p (2012: 4.7p) 2,716 2,891




8. Taxation (a) Analysis of tax (credit)/charge for the year


Overseas withholding tax 2 — 2 7 — 7Tax relief on expenses charged to capital 88 (88) — 25 (25) —Prior year adjustment (3) — (3) — — —

Current tax (credit)/charge for the year 87 (88) (1) 32 (25) 7

(b) Factors affecting current tax (credit)/charge for the yearThe factors affecting the current tax (credit)/charge for the year are as follows:


Net (loss)/return on ordinary activities before taxation (186) 8,449 8,263 782 (1,842) (1,060)

Net (loss)/return on ordinary activities before taxation multiplied by the applicable rate of corporation tax of 24.33% (2012: 26.32%) (45) 2,056 2,011 206 (485) (279)

Effects of:Non taxable capital (gains)/losses — (2,208) (2,208) — 355 355Change in fair value of swap contract (4) (11) (15) (78) (182) (260)Non taxable UK dividend income (529) — (529) (574) — (574)Non taxable overseas dividend income (31) — (31) (40) — (40)Non taxable scrip dividends (4) — (4) (3) — (3)Income taxed in different years — — — 37 — 37Overseas withholding tax 2 — 2 7 — 7Dividends paid on income shares 734 — 734 665 — 665Unrelieved expenses and charges (121) 163 42 (97) 312 215Brought forward expenses utilised — — — (116) — (116)Tax relief on capitalised expenses 88 (88) — 25 (25) —Prior year adjustment (3) — (3) — — —

Current tax charge/(credit) for the year 87 (88) (1) 32 (25) 7

(c) Deferred taxationThe Company has an unrecognised deferred tax asset of £1,246,000 (2012: £1,311,000) based on a prospective corporation taxrate of 23% (2012: 25%). The reduction in the standard rate of corporation tax was substantively enacted on 12th July 2012 andis effective from 1st April 2013. The deferred tax asset has arisen due to the cumulative excess of deductible expenses overtaxable income. Given the composition of the Company’s portfolio, it is not likely that the Company will be able to utilise thisasset in the foreseeable future and therefore no asset has been recognised in the accounts.

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



9. Return per class of shareReturn per Income share Return per Income share is based on the weighted average number of Income shares in issue during the year of 61,747,803(2012: 61,751,913) and the following figures:


(Loss)/return attributable to Income shareholders (291) 8,494 8,203 750 (1,817) (1,067)Add back dividends on Income shares 3,018 — 3,018 2,526 — 2,526

Total return/(loss) attributable to Income shareholders 2,727 8,494 11,221 3,276 (1,817) 1,459

Return/(loss) per Income share (pence) 4.41 13.76 18.17 5.30 (2.94) 2.36

Return per Capital share Return per Capital share is based on the weighted average number of Capital shares in issue during the year of 64,527,781(2012: 64,527,781) and the following figures:


Return attributable to Capital shareholders — — — — — —

Return per Capital share (pence) — — — — — —




2013 2012£’000 £’000

10. Fixed assetsInvestments held at fair value through profit or loss 79,512 71,308Investment in liquidity fund 390 —

79,902 71,308

2013 2012Listed Delisted Total Listed Delisted Total£’000 £’000 £’000 £’000 £’000 £’000

Opening book cost 65,428 876 66,304 69,282 876 70,158Opening investment holding gains/(losses) 5,880 (876) 5,004 7,830 (876) 6,954

Opening valuation 71,308 — 71,308 77,112 — 77,112

Purchases at cost 22,387 — 22,387 20,159 — 20,159Sales – proceeds (22,660) — (22,660) (24,915) — (24,915)Losses on sales of investments based on the

carrying value at the previous balance sheet date (597) — (597) (856) — (856)Net movement in investment holding

gains and losses 9,464 — 9,464 (192) — (192)

79,902 — 79,902 71,308 — 71,308

Closing book cost 66,450 876 67,326 65,428 876 66,304Closing investment holding gains/(losses) 13,452 (876) 12,576 5,880 (876) 5,004

Total fixed asset investments held at fair value through profit or loss 79,902 — 79,902 71,308 — 71,308

During the year, prior year investment holding gains amounting to £1,891,000 were transferred to gains and losses on sales ofinvestments as disclosed in note 18 on page 45.

Transaction costs on purchases during the year amounted to £63,000 (2012: £73,000) and on sales during the year amountedto £9,000 (2012: £16,000). These costs comprise brokerage commission and stamp duty.



2013 2012£’000 £’000

11. Current assetsDebtorsSecurities sold awaiting settlement 39 160Taxation recoverable 275 171Dividends and interest receivable 223 308Other debtors 6 5

543 644

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

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

2013 2012£’000 £’000

12. Financial asset: Derivative financial instruments held at fair value through profit or lossInterest rate swap contract on loan facility with National Australia Bank 61 —

2013 2012£’000 £’000

13. Creditors: amounts falling due within one year Securities purchased awaiting settlement — 62Loan interest payable 40 67Deferred option income — 5Other creditors and accruals 107 70

147 204

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

2013 2012£’000 £’000

14. Financial liability: Derivative financial instruments held at fair value through profit or loss

Written options — 33FTSE 100 Index future — 107

— 140




2013 2012£’000 £’000

15. Creditors: amounts falling due after more than one year Bank loan 20,000 20,000

On 23rd November 2011, the Company arranged a £20 million three year sterling credit facility with National AustraliaBank, which is due to expire in December 2014. Interest is payable on this facility at a margin of 1.85% per annum overLIBOR as offered in the market for the term of the advance, plus ‘mandatory costs’, which are the lender’s cost ofcomplying with certain regulatory requirements of the Bank of England and Financial Services Authority. The facility isunsecured but is subject to covenants and restrictions which are customary for a credit facility of this nature. At the yearend, the Company had drawn down the whole £20 million on this facility. The loan was rolled over on 20th March 2013 fora further three months and is repayable, at the option of the Company, on 20th June 2013, but the lender has no right torecall the loan until the expiry of the facility in December 2014. Therefore, the loan is categorised as falling due after morethan one year. The Company also entered into a swap contract during the year, which fixes the interest payable on£10 million of the loan facility at 2.83% for the whole term of the facility.

16. Net assets attributable to the Income shareholders2013 2012

£’000 £’000 £’000 £’000

Opening balance 52,909 54,012Net revenue return on ordinary activities after taxation attributable to the

Income shareholders 2,727 3,276Dividends paid on Income shares (2,709) (2,526)Special dividend paid on Income shares (309) —Net revenue (loss)/return (291) 750Repurchase and cancellation of Income shares — (36)Increase/(decrease) in assets available for Income shareholders 8,555 (1,817)

Closing balance 61,173 52,909

2013 2012£’000 £’000

Net assets attributable to the Income shareholders comprises:Revenue reserve available for distribution 1,582 1,873Capital reserve 59,591 51,036

Closing balance 61,173 52,909


16. Net assets attributable to the Income shareholders continuedMovement in revenue reserve available for distributionThe Income shareholders are entitled to receive dividend distributions paid in the year and, on a winding up of the Company,are entitled to the undistributed balance available for dividend payments. The movement in revenue available for distributionduring the year is as follows:

2013 2012£’000 £’000

Opening balance 1,873 1,123Fourth quarterly dividend paid (679) (616)Special dividend (302) —

Opening balance after allowing for fourth quarterly dividend 892 507Revenue available for distribution 2,727 3,276First quarterly dividend paid (679) (616)Second quarterly dividend paid (679) (615)Third quarterly dividend paid (679) (679)

Closing balance 1,582 1,873Fourth quarterly dividend paid (679) (679)Special dividend paid — (302)

Closing balance after allowing for fourth quarterly dividend 903 892

2013 2012£’000 £’000

17. Called up share capital Issued and fully paid:Income shares of 1p eachOpening balance of 61,747,803 (2012: 61,797,803) shares 617 618Repurchase of nil (2012: 50,000) shares for cancellation — (1)

Closing balance of 61,747,803 (2012: 61,747,803) shares 617 617

In accordance with FRS 25 ‘Financial Instruments: presentation’, the Income Shares are classified in the accounts as a liabilitydue to the rights and obligations attached to that share class. Thus the called up share capital relating to the Income shares isincluded in the Balance Sheet within ‘Creditors: amounts falling due after more than one year – Net assets attributable to theIncome shareholders’.

2013 2012£’000 £’000

Issued and fully paidCapital shares of 1p each:Opening and closing balance of 64,527,781 (2012: 64,527,781) shares 646 646

The characteristics and entitlements, and voting rights of the Income and Capital shares are as detailed under CapitalStructure of the Company on page 14.




Increase inassets required Capital reserves

to meet the Gains and Holding gainsCalled up Capital final entitlement losses on sales and losses on

share Share Other redemption of the Income of investments investmentscapital premium reserve1 reserve shares2 and derivatives and derivatives Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

18. ReservesOpening balance 646 456 28,535 18 12,811 (47,331) 4,865 —Net foreign currency gains — — — — — 6 — 6Losses on sales of investments

based on the carrying value at the previous balance sheet date — — — — — (597) — (597)

Net movement in investment holding gains and losses — — — — — — 9,464 9,464

Movement in fair value of swap contract — — — — — — 61 61

Transfer on disposal of investments — — — — — 1,891 (1,891) —Realised gains on futures — — — — — 170 — 170Transfer on disposal of futures — — — — — (107) 107 —Realised gains on options — — — — — 33 — 33Management fee and finance

costs charged to capital — — — — — (668) — (668)Tax relief on expenses charged

to capital — — — — — 88 — 88Other capital charges –

handling fees — — — — — (2) — (2)Transfer to the shortfall reserve — — — — (8,555) — — (8,555)

Closing balance 646 456 28,535 18 4,256 (46,517) 12,606 —

1The share premium was cancelled in February 2007 and the ‘Other reserve’ created for the purpose of financing share buy backs.2The closing balance comprises £2,674,000 relating to the increase in assets required to meet the predetermined capital entitlement of the Income shareholders plus thebalance of accumulated revenue amounting to £1,582,000 to which the Income shareholders are entitled.

19. Net asset value per share

The Company’s total net assets are below the predetermined capital entitlement of the Income shareholders of £63,847,000(2012: £63,847,000) (103.4p per share). Therefore, the net asset value per Income share is based on the total net assets of theCompany divided by the 61,747,803 (2012: 61,747,803) Income shares in issue at the year end.

The net asset value per Capital share is £nil (2012: £nil) because if the Company had been wound up at the balance sheet date,all the assets would have been payable to the Income shareholders as their predetermined capital entitlement ranks higherthan the Capital shares.



2013 2012£’000 £’000

20. Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

Total return on ordinary activities before finance costs and taxation 11,771 1,789Add capital (return)/loss before finance costs and taxation (8,792) 1,616Scrip dividends received as income (18) (13)Decrease in accrued income 86 106(Increase)/decrease in other debtors (1) 18Increase in accrued expenses 14 4Effective interest adjustment (22) (92)Tax on unfranked investment income (111) (147)Management fee charged to capital (257) (265)

Net cash inflow from operating activities 2,670 3,016

At At31st January Exchange 31st January

2012 Cash flow movement 2013£’000 £’000 £’000 £’000

21. Analysis of changes in net debtCash and short term deposits 1,301 (493) 6 814Bank loan falling due after more than one year (20,000) — — (20,000)

(18,699) (493) 6 (19,186)

22. Contingent liabilities and capital commitments

There were no contingent liabilities or capital commitments at the balance sheet date.

23. Transactions with the Manager

Details of the management contract are set out in the Directors’ Report on page 20. The management fee payable toJPMorgan Asset Management (UK) Limited (‘JPMAM’) for the year was £403,000 (2012: £379,000), of which £35,000 wasoutstanding at the year end (2012: £nil).

Safe custody fees and other charges amounting to £1,000 (2012: £1,000) were payable to JPMorgan Chase, of which £nil (2012:£1,000) was outstanding at the year end.

JPMAM may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’slength. The commission payable in the year was £1,000 (2012: £31,000) of which £nil (2012: £nil) was outstanding at the yearend.

Handling charges on dealing transactions amounting to £2,000 (2012: £4,000) were payable to JPMorgan Chase during theyear of which £nil (2012: £2,000) was outstanding at the year end.

The Company held an investment in JPMorgan Strategic Bond Fund which is managed by JPMAM. The entire holding was soldduring the current year. At 31st January 2012 this investment was valued at £4.2 million and represented 5.8% of theCompany’s investment portfolio. During the year, the Company made no purchases of this investment (2012: £nil) and salesproceeds amounting to £4.1 million (2012: £1.4 million). Income amounting to £131,000 (2012: £237,000) was receivable fromthis investment during the year.




The Company holds an investment in JPMorgan Multi-Asset Income Fund which is managed by JPMAM. At 31st January 2013this investment was valued at £15.7 million (2012: £14.2 million) and represented 19.6% (2012: 20.0%) of the Company’sinvestment portfolio. During the year, the Company made no purchases of this investment (2012: £nil) and no sales (2012:£835,000). Income amounting to £826,000 (2012: £829,000) was receivable from this investment during the year.

The Company holds an investment in JPMorgan Multi-Asset Emerging Markets Fund which is managed by JPMAM.At 31st January 2013 this investment was valued at £4.3 million (2012: £nil) and represented 5.4% (2012: nil) of theCompany’s investment portfolio. During the year, the Company made purchases amounting to £4.0 million of thisinvestment (2012: £nil) and no sales (2012: £nil). No Income (2012: £nil) was receivable from this investment during theyear.

The Company holds an investment in JPMorgan Sterling Liquidity Fund which is managed by JPMAM. At 31st January2013 this investment was valued at £0.4 million (2012: £nil) and represented 0.5% (2012: nil) of the Company’s investmentportfolio. During the year, the Company made purchases amounting to £2.3 million of this investment (2012: £nil) andsales amounting to £1.9 million (2012: £nil). No Income (2012: £nil) was receivable from this investment during the year.

At the year end, a bank balance of £814,000 (2012: £1,301,000) was held with JPMorgan Chase. A net amount of interestof £3,000 (2012: £3,000) was receivable by the Company during the year from JPMorgan Chase, of which £nil (2012: £nil)was outstanding at the year end.

24. Disclosures regarding financial instruments measured at fair value

The Company’s financial instruments that are held at fair value comprise its investment portfolio and derivative financialinstruments comprising written options, an interest rate swap contract and an index future.

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

Level 1 – valued using quoted prices in active markets.

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

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

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

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

The following table sets out the fair value measurements using the FRS 29 hierarchy at 31st January:

2013Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Financial instruments held at fair value through profit or lossEquity investments and convertibles 79,512 — — 79,512Liquidity fund 390 — — 390Bond fund — — — —Derivative financial instruments:

Written options — — — —FTSE 100 Index future — — — —

Swap contract — — 61 61

Total 79,902 — 61 79,963



24. Disclosures regarding financial instruments measured at fair value continued

2012Level 1 Level 2 Level 3 Total£’000 £’000 £’000 £’000

Financial instruments held at fair value through profit or loss Equity investments and convertibles 67,154 — — 67,154Liquidity fund — — — —Bond fund 4,154 — — 4,154 Derivative financial instruments:

Written options — (33) — (33)FTSE 100 Index future — (107) — (107)

Swap contract — — — —

Total 71,308 (140) — 71,168

There have been no transfers between Levels 1 and 2 during the year (2012: nil). A reconciliation of the fair valuemeasurements in Level 3 is set out below.

2013 2012Interest Interest

rate swap rate swapcontract contract£’000 £’000

Level 3 financial instruments held at fair value through profit or loss Opening balance — (989)Change in fair value of swap contract during the year 61 989

Closing balance 61 —

There have been no transfers into or out of Level 3 during the year (2012: nil).

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

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

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

The Company’s financial instruments may comprise the following:

– investments in UK equities and other securities, which are held in accordance with the Company’s investment objective;

– short term debtors, creditors and cash arising directly from the Company’s operations;

– a sterling denominated revolving loan facility, the purpose of which is to finance the Company’s operations;

– derivative transactions comprising written options, an interest rate swap contract and a FTSE 100 Index future; and

– the amount attributable to Income shareholders, the purpose of which is to finance the Company’s operations.




(a) Market risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in marketprices. This market risk comprises two elements – interest rate risk and other price risk. Information to enable an evaluationof the nature and extent of these two elements of market price risk is given in parts (i) and (ii) to this note, together withsensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks. The Manager assessesthe exposure to market risk when making each investment decision and monitors the overall level of market risk on the wholeof the investment portfolio on an ongoing basis.

(i) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits, the interest payable on variable ratecash borrowings and the fair values of fixed interest investments.

Management of interest rate risk The Company finances part of its activities through borrowings on a loan facility at levels approved and monitored by theBoard. The possible effects on cash flows that could arise as a result of changes in interest rates are taken into accountwhen borrowing on the loan facility. The Company uses an interest rate swap to hedge the cash flow risk arising frominterest fluctuations.

Interest rate exposure At the year end, the Company held investments in fixed coupon convertible bonds, amounting to £6.3 million(2012: £6.9 million). The market value of these stocks may fluctuate when interest rates are re-set, however, they aremore exposed to changes in the market prices of the shares into which they are convertible and therefore their valuehas been included in other price risk exposure in part (ii) to this note. The Company also had nil investments in bondfunds at the year end (2012: £4.2 million). The value of these will fluctuate when rates are re-set, which will impact theCompany’s capital return, but the amounts are not significant. Other than these investments, the Company has nofinancial assets or liabilities carrying fixed rates of interest. The exposure to floating rates of interest, giving cash flowinterest rate risk when rates are re-set, is shown below.

2013 2012£’000 £’000

Exposure to floating interest ratesCash and short term deposits 814 1,301JPMorgan Sterling Liquidity Fund 390 —Creditors: amount falling due after more than one year – bank loan (10,000) (20,000)

Total exposure (8,796) (18,699)

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

The above year end amounts are not representative of the exposure to interest rates during the year due to the fluctuationin the level of cash balances held. The maximum and minimum exposures during the year were as follows:

2013 2012£’000 £’000

(Minimum debit)/maximum credit interest rate exposure to floating rates –net (loan)/cash balances (7,424) 3,328

Maximum debit interest rate exposure to floating rates – net loan balances (19,078) (19,603)



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

(i) Interest rate risk continuedInterest rate exposure continuedThe Company has a £20 million three year sterling credit facility that matures in December 2014, with NationalAustralia Bank. Interest is payable on this facility at a margin of 1.85% per annum over LIBOR as offered in the marketfor the term of the advance, plus ‘mandatory costs’, which are the lender’s cost of complying with certain regulatoryrequirements of the Bank of England and Financial Services Authority. The facility is unsecured but is subject tocovenants and restrictions which are customary for a credit facility of this nature. At the year end, the Company haddrawn down the whole £20 million on this facility at an interest rate of 2.37%, which, subsequent to year end, wasrolled over on 20th March 2013 for a further three months and is repayable, at the option of the Company, on20th June 2013. A swap contract entered into in the year fixes the interest payable on £10 million of the loan at 2.83%,for the whole term of the facility. Changes in the fair value of the swap contract are allocated 30% to revenue and 70%to capital. Changes in interest rates will affect this fair value and consequently affect profit after taxation and net assets.

Interest rate sensitivityThe following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2012: 1%)increase or decrease in interest rates. This level of change is considered to be a reasonable illustration based onobservation of current market conditions. The sensitivity analysis includes the impact on the Company’s cash and loanbalances held at the balance sheet date, with all other variables held constant.

2013 20121% increase 1%decrease 1% increase 1% decrease

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

Income statement – return after taxationRevenue return (18) 18 (47) 47Capital return (70) 70 (140) 140

Total return after taxation for the year (88) 88 (187) 187

Net assets attributable to Capital shareholders — — — —

The increase or decrease in the total return after taxation for the year will have no effect on net assets attributable toCapital shareholders as they are currently £4.3 million (2012: £12.8 million) below the final entitlement of the Incomeshareholders.

In the opinion of the Directors, the above sensitivity analysis may not be representative of the Company’s future exposureto interest rate changes due to fluctuation in the level of cash balances and drawings on the loan facility.

(ii) 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, written options and the FTSE 100 Index future.

Management of other price risk The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the riskassociated with particular industry sectors. The Manager has responsibility for monitoring the portfolio, which is selectedin accordance with the Company’s investment objectives and seeks to ensure that the portfolio of investments meets anacceptable risk/reward profile.




Other price risk exposureThe Company’s total exposure to other changes in market prices at 31st January 2013 comprises its holdings in equityinvestments, convertibles and its exposure through written options as follows:

2013 2012£’000 £’000

Equity investments and convertibles held at fair value through profit of loss 79,512 67,154Exposure through written options — 942Exposure through FTSE 100 Index future — (5,193)

Total exposure to other changes in market prices 79,512 62,903

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

Concentration of exposure to other price risk An analysis of the Company’s investments is given on pages 12 and 13. This shows that the majority of the investments’value is in the UK. Accordingly there is a concentration of exposure to that country. However, it should be noted that aninvestment may not necessarily be wholly exposed to the economic conditions in its country of domicile.

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 20% (2012: 20%) in market prices. This level of change is considered to be a reasonable illustration basedon observation of current market conditions. The sensitivity analysis is based on the Company’s equity investments,convertibles, written options and the FTSE 100 Index future, adjusting for changes in the management fee, but with allother variables held constant.

2013 201220% increase 20% decrease 20% increase 20% decreasein fair value in fair value in fair value in fair value

£’000 £’000 £’000 £’000

Income statement – return after taxationRevenue return – attributable to Income shareholders (31) 31 (30) 30Capital return – attributable to Capital or Income

shareholders 12,698 (12,698) 12,510 (12,510)

Total return after taxation 12,667 (12,667) 12,480 (12,480)

Net assets attributable to Capital shareholders 8,393 — — —

The impact of the increase or decrease in the total return after taxation for the year on net assets attributable to Capitalshareholders is limited to the amount shown above, as they are currently £4.3 million (2012: £12.8 million) below thepredetermined capital entitlement of the Income shareholders.



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

This is the risk that the Company will encounter difficulty in meeting 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 tomeet funding requirements if necessary. Short term flexibility is achieved through the use of overdraft facilities. The Board’spolicy is for the Company to remain fully invested in normal market conditions and that borrowings be used to manage shortterm liabilities and working capital and to gear the Company as appropriate. Details of the Company’s loan facility are given inpart (a)(i) to this note on page 50.

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

2013More than

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

Creditors: amounts falling due within one year Bank loan interest 83 253 — 336Securities purchased awaiting settlement — — — —Other creditors 107 — — 107Derivative instruments held at fair value through profit or loss:

Written options — — — —FTSE 100 Index future — — — —

Creditors: amounts falling due after more than one year Bank loan including interest — — 20,297 20,297Final capital entitlement of the Income shareholders — — 63,847 63,847

190 253 84,144 84,587




2012More than

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

Creditors: amounts falling due within one year Bank loan interest 144 441 — 585Securities purchased awaiting settlement 62 — — 62Other creditors 70 — — 70Derivative instruments held at fair value through profit or loss:

Written options 27 6 — 33FTSE 100 Index future 107 — — 107

Creditors: amounts falling due after more than one year Bank loan including interest — — 21,687 21,687Final capital entitlement of the Income shareholders — — 65,720 65,720

410 447 87,407 88,264

(c) Credit risk Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transactioncould result in a loss to the Company.

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

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

Exposure to JPMorgan ChaseJPMorgan Chase is the custodian of the Company’s assets. The custody agreement grants a general lien over the securitiescredited to the securities account. The Company’s assets are segregated from JPMorgan Chase’s own trading assets and aretherefore protected from creditors in the event that JPMorgan Chase were to cease trading.



25. Financial instruments’ exposure to risk and risk management policies continued(c) Credit risk continued

Credit risk exposure The following table shows amounts extracted from the Balance Sheet and the related maximum exposure to credit risk at thecurrent and comparative year end.

2013 2012Balance Maximum Balance Maximumsheet exposure sheet exposure £’000 £’000 £’000 £’000

Fixed assets – investments held at fair value through profit or loss 79,902 — 71,308 —Current assetsDebtors – securities sold awaiting settlement, dividends and

interest receivable, other debtors and tax recoverable 543 543 644 644Cash and short term deposits 814 814 1,301 1,301Derivative financial instruments held at fair value through

profit or loss 61 61 — —

81,320 1,418 73,253 1,945

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

26. Capital management policies and procedures

The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise theincome and capital return to the Income and Capital shareholders respectively through an appropriate balance of capital anddebt.

The Company has the power under its Articles to borrow up to an amount equal to 60% of its net assets attributable toshareholders at the time of the drawdown.

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

2013 2012£’000 £’000

Debt for gearing purposes:Bank loan 20,000 20,000Less: Investments in liquidity funds (390) —Less: Cash and short term deposits (814) (1,301)

Total net debt for gearing purposes 18,796 18,699

Equity for gearing purposes:Net assets attributable to the Capital shareholders — —Net assets attributable to the Income shareholders 61,173 52,909

Total equity for gearing purposes 61,173 52,909

Gearing/(net cash) 30.7% 35.3%




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

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

– the need to buy back shares for cancellation, which takes into account the share price discount or premium;

– the opportunity for issues of new shares; and

– the extent to which revenue in excess of that which is required to be distributed should be retained.



Notice is hereby given that the sixth Annual General Meeting ofJPMorgan Income & Growth Investment Trust plc will be held atthe Holborn Bars, 138-142 Holborn, London EC1N 2NQ onTuesday, 21st May 2013 at 2.30 p.m. for the following purposes:

1. To receive the Directors’ Report & Accounts and theAuditor’s Report for the year ended 31st January 2013.

2. To approve the Directors’ Remuneration Report for theyear ended 31st January 2013.

3. To re-elect Karl Sternberg a Director of the Company.

4. To re-elect David Watts a Director of the Company.

5. To reappoint Ernst & Young LLP as auditors to the Companyand to authorise the Directors to determine theirremuneration.

Special Business

To consider the following resolutions:

Authority to allot relevant securities – Ordinary Resolution6. THAT the Directors of the Company be and they are hereby

generally and unconditionally authorised, (in substitutionof any authorities previously granted to the Directors),pursuant to and accordance with Section 551 of theCompanies Act 2006 (the ‘Act’) to exercise all the powersof the Company to allot relevant securities in the Companyand to grant rights to subscribe for, or to convert anysecurity into shares in the Company (‘Rights’) up to anaggregate nominal amount of £32,263, representingapproximately 5% of the Capital issued share capital and£30,873, representing approximately 5% of the Incomeissued share capital at the date of the passing of thisresolution, provided that this authority shall expire at theconclusion of the Company’s Annual General Meeting heldin 2014, 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 or rights to begranted after such expiry and so that the Directors of theCompany may allot relevant securities and grant rights inpursuance of such offers, agreements or arrangements asif the authority conferred hereby had not expired.

Authority to disapply pre-emption rights on allotment of relevantsecurities – Special Resolution7. THAT subject to the passing of Resolution 6 set out

below, the Directors of the Company be and they arehereby empowered pursuant to Section 570 and 573 ofthe Act to allot equity securities (within the meaning ofSection 560 of the Act) pursuant to the authorityconferred by Resolution 6 or by way of a sale of Treasuryshares as if Section 561(1) of the Act did not apply to anysuch allotment, provided that this power shall be limitedto the allotment of equity securities for cash up to anaggregate nominal amount of £32,263, representingapproximately 5% of the Capital issued share capital and£30,873, representing approximately 5% of the Incomeissued share capital as at the date of the passing of thisresolution at a price of not less than the Net Asset Valueper Capital or Income share and shall expire on theexpiry of the general authority conferred by resolution 5,save that the Company may before such expiry makeoffers, agreements or arrangements which would ormight require equity securities to be allotted after suchexpiry and so that the Directors of the Company mayallot equity securities in pursuance of such offers,agreements or arrangements as if the power conferredhereby had not expired.

Authority to repurchase the Company’s shares for cancellation –Special Resolution8. THAT the Company be generally and, subject as herein after

appears, unconditionally authorised in accordance withSection 701 of the Companies Act 2006 (the ‘Act’) to makemarket purchases (within the meaning of Section 693 of theAct) of its issued Capital and Income Shares on such termsand in such manner as the Directors may from time to timedetermine.

PROVIDED ALWAYS THAT

(i) the maximum number of Capital shares herebyauthorised to be purchased shall be 9,672,714 or ifless, that number of Capital shares which is equal to14.99% of the Capital issued share capital as at thedate of the passing of this Resolution;

(ii) the maximum number of Income Shares herebyauthorised to be purchased shall be 9,255,996 or if

Notice of Annual General Meeting



less, that the number of Income Shares which is equalto 14.99% of the Income issued Share Capital as at thedate of passing of this Resolution;

(iii) the minimum price which may be paid for any Capitalor Income share is 0.01p in each case;

(iv) the maximum price which may be paid for a Capital orIncome share shall be an amount equal to the highestof: (a) 105% of the average of the middle marketquotations for a Capital or Income share taken fromand calculated by reference to the London StockExchange Daily Official List for the five business daysimmediately preceding the day on which the share iscontracted to be purchased; or (b) the price of the lastindependent trade; or (c) the highest currentindependent bid;

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

(vi) the authority hereby conferred shall expire at theCompany’s Annual General Meeting to be held in 2014unless the authority is renewed at a general meetingprior to such time; and

(vii) the Company may make a contract to purchase sharesunder the authority hereby conferred prior to theexpiry of such authority and may make a purchase ofshares pursuant to any such contract notwithstandingsuch expiry.

By order of the BoardDivya Amin, for and on behalf ofJPMorgan Asset Management (UK) Limited, Company Secretary

15th April 2013

Notes

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

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

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

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

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

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

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



7. A corporation, which is a shareholder, may appoint anindividual(s) to act as its representatives(s) and to vote inperson at the Meeting (see instructions given on the proxyform). In accordance with the provisions of the Companies Act2006, each such representative(s) may exercise (on behalf ofthe corporation) the same powers as the corporation couldexercise if it were an individual member of the company,provided that they do not do so in relation to the same shares.It is therefore no longer necessary to nominate a designatedcorporate representative. Representatives should bring to themeeting evidence of their appointment, including any authorityunder which it is signed.

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

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

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

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

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

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

13. The register of interests of the Directors and connected personsin the share capital of the Company and the Directors’ letters ofappointment are available for inspection at the Company’sregistered office during usual business hours on any weekday(Saturdays, Sundays and public holidays excepted). It will also beavailable for inspection at the Annual General Meeting. NoDirector has any contract of service with the Company.

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

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

16. As at 8th April 2013 (being the latest business day prior to thepublication of this Notice), the Company’s issued share capitalconsists of 61,747,803 Capital shares and 64,527,781 Income shares,carrying one vote each. Therefore the total voting rights in theCompany are 126,275,584.

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

Notice of Annual General Meetingcontinued



Capital Share Price Total ReturnReturn to the investor based on the change in the Capital sharemid-market price.

Income Share Price Total ReturnReturn to the investor based on the change in the Incomesharemid-market price and assuming all dividends quotedex-dividend during the year were reinvested, withouttransaction costs, into Income shares at the time the shareswere quoted ex-dividend.

Unit Share Price Total ReturnReturn to the investor based on the change in the Unitmid-market price and assuming all dividends quotedex-dividend in respect of a Unit during the year werereinvested, without transaction costs, into Units at the timethe Units were quoted ex-dividend.

Capital Net Asset Value (‘NAV’) Total ReturnReturn to the investor based on the change in the NAV perCapital share.

Income Share NAV Total ReturnReturn to the investor based on the change in the NAV perIncome share and assuming all dividends quoted ex-dividendduring the year were reinvested, without transaction costs, intoIncome shares at the NAV per Income share at the time theshares were quoted ex-dividend.

Unit NAV Total ReturnReturn to the investor based on the change in the NAV per Unitand assuming all dividends quoted ex-dividend in respect of aUnit during the year were reinvested, without transaction costs,into Units at the NAV per Unit at the time the Units were quotedex-dividend.

Benchmark Total ReturnTotal return on the benchmark, on a mid-market value tomid-market value basis, assuming that all dividends received

were reinvested, without transaction costs, in the shares of theunderlying companies at the time the shares were quotedex-dividend.

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

Gearing/(Net Cash)The excess amount above shareholders’ funds of total assetless cash and cash equivalents, expressed as percentage ofshareholders’ funds. If the amount so calculated is negative,this is shown as a ‘net cash’ position.

Ongoing ChargesThe Ongoing Charges represent the Company’s managementfee and all other operating expenses, excluding finance costs,expressed as a percentage of the average daily net assets duringthe year. The method of calculating the Ongoing Charges hasbeen changed. In previous years, the total expense ratio (‘TER’)was calculated, which represented the Company’s managementfee and other operating expenses excluding finance costs,expressed as a percentage of the average month end net assetsduring the year.

Share Price Discount/Premium toNAV Per ShareIf the share price of an investment trust is lower than the NAVper share, the shares are said to be trading at a discount. Thediscount is shown as a percentage of the NAV per share. Theopposite of a discount is a premium. It is more common for aninvestment trust’s shares to trade at a discount than at apremium.

Glossary of Terms and Definitions



Warning to shareholders – Boiler Room Scams

In recent years, many companies have become aware that their shareholdershave been targeted by unauthorised overseas-based brokers selling what turnout to be non-existent or high risk shares, or expressing a wish to buy theirshares. If you receive unsolicited investment advice or requests:

• Make sure you get the correct name of the person or organisation

• Check that they are properly authorised by the FSA before gettinginvolved by visiting www.fsa.gov.uk/pages/register/

• Report the matter to the FSA by calling 0845 606 1234

• If the calls persist, hang up.

More detailed information on this can be found on the Money Advice Servicewebsite www.moneyadviceservice.org.uk


Financial CalendarFinancial year end 31st JanuaryFinal results announced AprilHalf year end 31st JulyHalf year results announced SeptemberInterim Management statements announced May and DecemberDividends on ordinary shares paid Payable quarterly in March, June, September and DecemberAnnual General Meeting May

Information about the Company

HistoryThe Company was incorporated on 20th October 2006 and beganinvesting on 20th December 2006.

Company NumbersCompany registration number: 5973571London Stock Exchange codes:Capital B1G3N00, Income B1G3N11, Units BIG3N22.ISIN numbers: Capital GB00B1G3N007, Income GB00B1G3N114,Units GB00B1G3N221.

Bloomberg Codes:Capital JIGC LN, Income JIGI LN, Units JIGU LN.Reuters Codes:Capital GJICx.L, Income JGICix.L, Units JGIC.U.L.

Market InformationThe net asset value (‘NAV’) per share of each share class ispublished daily, via the London Stock Exchange. The Company’sshares are listed on the London Stock Exchange and share pricesare quoted daily in the Financial Times, The Times, The DailyTelegraph, The Scotsman, The Independent and on the JPMorganwebsite at www.jpmincomeandgrowth.co.uk, where the shareprice is updated every fifteen minutes during trading hours.

Websitewww.jpmincomeandgrowth.co.uk.

Share TransactionsThe Company’s shares may be dealt in directly through astockbroker or professional adviser acting on an investor’s behalf.They may also be purchased and held through the J.P. MorganInvestment Account, J.P. Morgan ISA and J.P. Morgan SIPP. Theseproducts are all available on the online wealth manager service,J.P. Morgan WealthManager+ available atwww.jpmorganwealthmanagerplus.co.uk

Manager and Company SecretaryJPMorgan Asset Management (UK) Limited

Company’s Registered OfficeFinsbury Dials20 Finsbury StreetLondon EC2Y 9AQTelephone: 020 7742 4000

For company secretarial and administrative matters, pleasecontact Divya Amin.

CustodianJPMorgan Chase Bank, N.A.25 Bank StreetCanary WharfLondon E14 5JP

RegistrarsEquiniti LimitedReference 3081Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone: 0871 384 2342*

*Calls to this number cost 8p per minute from a BT landline, otherproviders’ costs may vary. Lines open 8.30 a.m. to 5.30 p.m.,Monday to Friday. The overseas helpline number is +44 (0)121 415 7047.

Notifications of changes of address and enquiries regarding sharecertificates or dividend cheques should be made in writing to theRegistrars quoting reference 3081. Registered shareholders canobtain further details on their holdings on the internet by visitingwww.shareview.co.uk.

Independent AuditorErnst & Young LLPStatutory Auditor1 More London Place London SE1 2AF

BrokersWinterflood Securities LimitedThe Atrium BuildingCannon Bridge25 Dowgate HillLondon EC4R 2GA

Savings Product AdministratorsFor queries on the J.P. Morgan Investment Account, J.P. Morgan ISAand J.P. Morgan SIPP, see contact details on the back cover of thisreport.

A member of the AIC



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

Your telephone call may be recorded for your security

www.jpmincomeandgrowth.co.uk


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