Annual Report • Sep 19, 2023
Annual Report
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JPMorgan Mid Cap Investment Trust plc Selecting the stars of the FTSE 250 Annual Report & Financial Statements for the year ended 30th June 2023 FINANCIAL CALENDAR Financial year end 30th June Final results announced September Half year end December Half year results announced February Half yearly dividends on ordinary shares paid November, April Annual General Meeting 1st November Key Features 2 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Your Company at a Glance Structure of the Company Launched in 1972, JPMorgan Mid Cap Investment Trust plc (the ‘Company’) is an investment trust and public limited company, with a premium listing on the London Stock Exchange. Objective The Company aims to achieve capital growth from investment in medium-sized UK listed companies. The Company specialises in investment in FTSE 250 companies, using long and short term borrowings to increase returns to shareholders. Investment Policies • To focus on FTSE 250 stocks that deliver strong capital growth. • To have significant exposure to the UK economy, with selective exposure to overseas earnings. • To seek out both value stocks and growth stocks, including AIM stocks, to deliver strong performance throughout the market cycle. • To use gearing, as appropriate, to increase potential returns to shareholders. Benchmark The FTSE 250 Index (excluding investment trusts). Capital Structure As at 30th June 2023, the Company’s called-up share capital comprised 25,398,080 Ordinary shares of 25p each including 3,838,838 shares held in Treasury. Management Company and Company Secretary The Company employs JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’) as its Alternative Investment Fund Manager (‘AIFM’) and Company Secretary. JPMF delegates the management of the Company’s portfolio to JPMorgan Asset Management (UK) Limited (‘JPMAM or the ‘Investment Manager’). The Portfolio Managers are Georgina Brittain and Katen Patel, who are employees of JPMAM. Website The Company’s website, which can be found at www.jpmmidcap.co.uk , includes useful information on the Company, such as daily prices, factsheets and current and historic half year and annual reports. Email Updates To sign up to receive email updates from the Company delivering regular news and views, as well as the latest performance statistics, please visit https://tinyurl.com/UK-Mid-Cap-Sign-Up or scan the QR code on page 9. Contact the Company General enquiries about the Company should be directed to the Company Secretary at [email protected] Key Features J.P. Morgan Asset Management 3 Whilst the FTSE 250 Index is currently going through one of its longest periods of underperformance, even surpassing the 2007/08 global financial crisis, the reasons behind its impressive outperformance over its large cap counterparts over the long term remain intact.” Georgina Brittain, Portfolio Manager, JPMorgan Mid Cap Investment Trust plc “ The Mid Cap Index is full of exciting companies operating in structural growth areas, many of whom are world leaders in the niche they operate in, yet, it is still a relatively undiscovered part of the UK market. Despite what the headlines would lead us to believe, UK Macro data has in general been stronger than expected over the last 12 months and the UK consumer is proving to be resilient. Mid cap valuations remain extremely attractive and whilst it is difficult to call the bottom of the market, the FTSE 250 Index looks well placed to deliver superior returns over the longer term.” Katen Patel, Portfolio Manager, JPMorgan Mid Cap Investment Trust plc “ JPMorgan Mid Cap Investment Trust plc provides access to this dynamic area of the UK stock market. It focuses on selecting the stars of the FTSE 250, ranging from industry leaders with the potential to graduate to the FTSE 100, to the less-established companies that are at an earlier stage of their growth trajectory. Mid cap champions The Investment Manager believes that UK mid cap companies present a unique and compelling investment opportunity – a view that’s backed up by the sector’s long-term outperformance: over the last 25 years, the performance of the FTSE 250 Index (excluding Investment Trusts) compares favourably to many other major equity indices. Many mid cap companies are (or could be) leaders in their specific markets. The Company has the ability to invest in these companies before they enter the FTSE 250 or at IPO stage, which is often before their stock prices reflect their full potential. Mid cap companies offer active investors several other unique advantages. The diversity of the mid cap universe – the ten largest stocks in the FTSE 250 make up just circa. 12% of the index compared with four times that in the FTSE 100 – means more opportunities to find winners. Mid cap companies are also often merger and acquisition targets of larger companies that are seeking to augment their growth and are willing to pay a premium to market valuations. Lastly, mid caps tend to be less researched than large caps, meaning a well-resourced, diligent investment manager can spot opportunities that others might overlook. Conviction investors Our experienced, dedicated mid cap portfolio management team uses a rigorous ‘value, quality and momentum’ process to seek out investment candidates that possess the attributes for success. The Portfolio Managers have access to extensive small and mid cap research resources, allowing them to get to know companies inside out. When they do invest, it is with high conviction and with bolder positions than the index or other managers. The Company can move swiftly between UK-focused and globally-focused companies, as well as growth and value tilts, as market conditions require. The Portfolio Managers have the freedom to hold onto successful investments as they graduate to the FTSE 100. 4 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Contents Strategic Report Financial Highlights 6 Chairman’s Statement 8 Portfolio Managers’ Report 11 Ten Year Record 13 Portfolio Information 15 Environmental, Social and Governance (‘ESG’) Report 18 Business Review 21 Principal Risks 25 Long Term Viability 30 Duty to Promote the Success of the Company 31 Directors’ Report Board of Directors 36 Directors’ Report 37 Corporate Governance Statement 40 Audit & Risk Committee Report 46 Directors’ Remuneration Report 49 Statement of Directors’ Responsibilities 53 Independent Auditor’s Report 55 Financial Statements Statement of Comprehensive Income 62 Statement of Changes in Equity 62 Statement of Financial Position 63 Statement of Cash Flows 64 Notes to the Financial Statements 66 Regulatory Disclosures Alternative Investment Fund Managers Directive (‘AIFMD’) Disclosures 82 Securities Financing Transactions Regulation (‘SFTR’) Disclosure 82 Shareholder Information Notice of Annual General Meeting 84 Glossary of Terms and Alternative Performance Measures (‘APMs’) 88 Investing in JPMorgan Mid Cap Investment Trust plc 90 Share Fraud Warning 91 Information About the Company 92 Strategic Report Financial Highlights 6 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Total returns (including dividends reinvested) to 30th June 3 years 5 years 10 years 2023 2022 Cumulative Cumulative Cumulative Return to shareholders 1,APM Return on net assets 2,APM Benchmark return 3,APM Net asset return performance compared to benchmark return APM Dividend per share +6.4% –38.4% +8.2% –18.6% +7.5% –30.4% +11.3% –10.8% +3.0% –16.1% –3.6% +18.1% 31.75p 29.5p +4.5% –14.3% –6.8% –7.2% +89.0% +84.1 +66.3% +17.8% 1 Source: Morningstar. 2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share. 3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts). APM Alternative Performance Measure (‘APM’). A glossary of terms and APMs is provided on pages 88 and 89. Financial Highlights J.P. Morgan Asset Management 7 Strategic Report Summary of results 2023 2022 % change Net asset value, share price and discount at 30th June Shareholders’ funds (£’000) 221,971 222,908 –0.4 Net asset value per share 1,029.6p 988.8p +4.1 Share price 876.0p 854.0p +2.6 Share price discount to net asset value APM 14.9% 13.6% n/a Shares in issue (excluding shares held in Treasury) 21,559,242 22,543,730 n/a Revenue for the year ended 30th June Net revenue return attributable to shareholders (£’000) 8,110 7,937 +2.0 Net return/(loss) (£’000) 14,570 (101,227) n/a Revenue return per share APM 36.85p 34.07p +8.0 Return/(loss) per share 66.20p (434.58)p n/a Dividend per share 31.75p 29.5p +7.6 Gearing at 30th June APM 8.9% 5.6% Ongoing charges ratio for the year ended 30th June APM 0.93% 0.92% APM Alternative Performance Measure (‘APM’). A glossary of terms and APMs is provided on pages 88 and 89. 1 Source: Morningstar. 2 Source: Morningstar/J.P. Morgan, using cum income net asset value per share. 3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts). A glossary of terms and APMs is provided on pages 88 and 89. Performance (total returns) for periods ended 30th June 2023 –20 0 20 40 60 80 100 10 Year 5 Year 3 Year 1 Year JPMorgan Mid Cap Investment Trust plc – return to shareholders 1 JPMorgan Mid Cap Investment Trust plc – return on net assets 2 Benchmark return 3 6.4% 7.5% 3.0% 8.2% 11.3% 18.1% –18.6% –10.8% –3.6% 89.0% 84.1% 66.3% Chairman’s Statement 8 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Investment Performance For the year to 30th June 2023 the NAV total return for your Company was +7.5%, ahead of the FTSE 250 Index (excluding investment trusts) return of +3.0%. The Company’s share price discount to NAV widened marginally over the year resulting in a share price total return of +6.4%. I will comment further on the share price discount later in this statement. It is encouraging to be able to report on a year of positive performance in both absolute and relative terms after the difficult year to June 2022. The positive relative performance was driven almost entirely by good stock selection by your managers. Share buyback activity in the period also assisted performance. A review of the Company’s performance for the period and the outlook for the remainder of the year is provided in the Portfolio Managers’ report that follows. Revenue and Dividends Whilst the Company’s principal objective is capital growth the Board recognises that dividends are a welcome component of total shareholder returns. Net revenue after taxation for the 12 months to 30th June 2023 was £8.11 million (2022: £7.94 million) and earnings per share were 36.85 pence (2022: 34.07 pence).The Board is pleased to increase the total dividend this year and is proposing a final dividend of 23.75p, which when added to the interim dividend paid in April 2023 of 8.0 pence, amounts to a total dividend payable of 31.75 pence (2022: 29.5 pence) for the full year, representing a 7.6% increase on the total dividend payable in 2022. It is pleasing to be in a position to both increase the dividend and add to revenue reserves after drawing down a significant portion of revenue reserves to maintain dividend payments to shareholders following the severe reduction in dividend payment levels by UK companies in 2020 during the pandemic. The final dividend will be paid on 15th November 2023 to shareholders on the register at the close of business on 13th October 2023. Based upon the year end share price of 876.0 pence, the total dividend of 31.75 pence for the year represents a dividend yield of 3.6%. After the payment of the final dividend the Company will have revenue reserves of approximately 35.6 pence per share (2022: 28.1 pence per share). Share Price Rating to NAV per Share The discount at which the Company’s shares trade versus its NAV widened to 14.9% over the review period (2022: 13.6%). At its peak the discount reached 15.7%. This is comparable with the discount experience of its immediate peers and also of investment trusts across many asset classes. The Directors recognise the importance to shareholders that the Company’s share price should not differ excessively from the underlying NAV and the Board continuously aims to address any imbalance between supply and demand relative to an overall assessment of general market trends. At the Annual General Meeting (‘AGM’) held in November 2022, shareholders gave approval for the Company to renew the Directors’ authority to repurchase up to 14.99% of the Company’s shares for cancellation or to be held in Treasury on an ongoing basis. In the 12 months to 30th June 2023, the Board utilised the Company’s authority to buy back shares and repurchased a total of 984,488 shares, representing 4.4% of the issued share capital (excluding shares held in Treasury) on 1st July 2022. These shares were purchased at an average discount to NAV of 13.4%, producing an accretion to the NAV of approximately 6.0 pence per share for continuing shareholders. Shares repurchased are held in Treasury and such treasury shares and any new ordinary shares will only be sold or issued at a premium to NAV. Gearing and Borrowing Facilities The Board has determined that in normal circumstances the Company’s overall gearing range is 10% net cash to 20% geared. Within this range, and after due consideration at each Board meeting, the Board normally sets a narrower, short term gearing range for the ensuing period. The Company’s gearing strategy is implemented using bank borrowing facilities. Following the expiry of the Company’s £25 million revolving credit facility with National Australia Bank in February 2023, the Board resolved to replace the facility with a £25 million, two-year revolving credit facility with ING Bank. This is in addition to the existing facility of £30 million (with an option of further John Evans Chairman Chairman’s Statement J.P. Morgan Asset Management 9 Strategic Report increasing the facility by £20 million, subject to credit approval by the lender) with Bank of Nova Scotia (‘Scotia Bank’) which is due to expire in February 2024. The Board will be reviewing the options available for the replacement of the £30 million Scotia Bank facility ahead of its expiry in February 2024. When structuring the Company’s debt, the Board considers quantum, terms and tenure and endeavours to ensure that the Portfolio Managers have access to a flexible structure to assist with the objective of enhancing shareholder returns. Revised Management Fee Arrangements As announced in December 2022, with effect from 1st January 2023, the Company’s Manager reduced its investment management fee. There are three key changes to the fee agreement. Fees are now based on net assets (as opposed to total or gross assets) the tier at which the 0.65% fee rate tapers has been reduced from £250 million of net assets to £200 million of net assets and the tapered fee has been reduced from 0.60% to 0.55%. It is felt that this revised fee structure balances the need for the Company’s ongoing charges ratio to remain competitive, whilst rewarding the Manager for its efforts. Environmental, Social and Governance Considerations Whilst the Portfolio Managers select stocks based primarily on company fundamentals, they also consider the potential impact of ESG factors on a company’s ability to deliver shareholder value. Through the investment process a company’s strategy is assessed for dealing with these important factors and the consequent risks arising from them. The analysis helps determine whether relevant ESG factors are financially material and, if so, whether they are reflected in the valuation of the company. Such analysis may influence not only the Portfolio Managers’ decision to own a stock but also, if they do, the size of that position in the portfolio. Further information on the Manager’s ESG process and engagement is set out in the ESG section on pages 18 to 20. Task Force on Climate-related Financial Disclosures As a regulatory requirement JPMorgan Asset Management (‘JPMAM’) published on 30th June 2023 its first UK Task Force on Climate-related Financial Disclosures (‘TCFD’) Report for the Company in respect of the year ended 31st December 2022. The report discloses estimates of the Company’s portfolio climate-related risks and opportunities according to the Financial Conduct Authority (‘FCA’) Environmental, ESG Sourcebook and the TCFD. The report is available on the Company’s website under the ESG documents section: https://am.jpmorgan.com/content/dam/jpm-am- aem/emea/regional/en/regulatory/esg-information/jpmorgan-mid-cap-investment-trust-plc-esg- fund-report.pdf The Board is aware that best practice reporting under TCFD is still evolving with regard to metrics and input data quality, as well as the interpretation and implications of the outputs produced, and will continue to monitor developments as they occur. Stay Informed The Company delivers email updates on the Company’s progress with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via https://tinyurl.com/UK-Mid-Cap-Sign-Up or by scanning the QR code on this page. Annual General Meeting (‘AGM’) The Company’s fifty-first AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on 1st November 2023 at 2.30 p.m. We are delighted to invite shareholders to join us in person for the Company’s AGM, to hear from the Portfolio Managers. Their presentation will be followed by a question-and-answer session. Shareholders wishing to follow the AGM proceedings but who choose not to attend in person will be able to view them live and ask questions (but not vote) through conferencing software. Details on how to register, together with access details, will be available shortly on the Company’s website at www.jpmmidcap.co.uk or by contacting the Company Secretary at [email protected] Chairman’s Statement 10 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report My fellow Board members, representatives of JPMorgan and I look forward to the opportunity to meet and speak with shareholders after the formalities of the meeting have been concluded. Shareholders who are unable to attend the AGM are strongly encouraged to submit their proxy votes in advance of the meeting, so that they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically and detailed instructions are included in the Notes to the Notice of AGM on pages 85 to 87. Outlook The positive returns for the year, described above, were generated against an almost uniformly negative background for the UK, and in particular, domestically focused UK equities. In many respects the FTSE 250 has been in the eye of the storm of negativity directed at the UK stock market over the past 12 months. This has been reflected in a steady reduction in the allocations to UK equities by institutional and private investors alike. Indeed in the year to 30th June 2023 the UK All Company sector of Investment Trusts (in which your Company resides) saw the largest net selling of any investment trust sector. Hardly a resounding vote of confidence in your asset class. The reasons are not hard to find. Inflation has proved to be higher and more resilient at the higher levels than anticipated. The Bank of England’s blunt response of 14 interest rate increases has been hard-hitting, but perhaps there are now signs that this process is at an end. In a consumer orientated economy, such attempts to reduce inflation by squeezing disposable income has contributed to a negative overview for UK equities. Having been one of the best performing indices in the world for many years, the FTSE 250 Index has stumbled against such a difficult backdrop and produced poor performance versus both larger UK companies and other markets, particularly the US equity market. A dialogue developed which questioned the very future of the market for mid and small cap companies in the UK with competition for capital from private equity and competition for new listings from other markets, notably the US where higher valuations are on offer. However, there are signs of positive actions and policy changes arising from this debate and the Board welcomes proposed reforms to support UK capital markets. Right now the FTSE 250 Index is trading at a valuation level rarely seen in recent years. Logic suggests that buying an out of favour asset at a discounted valuation should be a good starting point for investment returns. This is particularly the case if the earnings progression of the assets is maintained. Currently your Portfolio Managers are optimistic and seeing opportunities to invest in good businesses at very attractive valuations. Gearing in the Company sits near 10%, towards the upper end of recent levels confirming their optimism and commitment, which is shared by your Board. John Evans Chairman 18th September 2023 Portfolio Managers’ Report J.P. Morgan Asset Management 11 Strategic Report Performance and Market Background The financial year to June 2023 was a turbulent one. The atrocious war in Ukraine raged on, and geopolitical uncertainties increased. Both the USA and the UK avoided recession, surprising many economists, although the threat of a mild recession in both regions has not completely dissipated. While inflation is believed to have peaked in developed markets the UK became an outlier, with stubbornly higher inflation than in Europe or the USA. Interest rates rose at an astonishingly rapid pace, and the Bank of England has raised rates fourteen times from the absolute low in December 2021. Markets are now pricing in peak rates of 5.5 - 6%, which is notably higher than forecasts one year ago. Public sector strike action grew in the UK in response to the stark cost of living increase over the year, although the decline in energy prices and the increase in nominal wages should provide some relief, as should the very low rate of unemployment. Against this backdrop, the FTSE 250 Index (excluding investment trusts) was up 3.0% over the year. The Company produced a total return on net asset value of 7.5% in the period, and the share price total return was 6.4%, reflecting a very slight widening of the discount of the share price relative to net assets. Performance Attribution – Contributions to Total Returns As at 30th June 2023 12 months to 30th June 2023 % % Benchmark return APM 3.0 Stock selection 5.1 Net cash –0.4 Gearing +0.1 Investment Manager contribution 4.8 Portfolio total return 7.8 Management fees/other expenses –0.9 Share repurchases 0.6 Other effects –0.3 Return on net assets APM 7.5 Return to shareholders APM 6.4 Source: JPMAM and Morningstar. All figures are on a total return basis. Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark index. APM Alternative Performance Measure (‘APM’). A glossary of terms and APMs is provided on pages 88 and 89. Portfolio Among the contributors to the outperformance over the year were two of our largest positions in the retail sector, Dunelm and JD Sports Fashion, as these category killers reminded the market of their worth with impressive results and lowly valuations. In addition, our holdings in Bank of Georgia, Ashtead (equipment rental) and 4Imprint (marketer of promotional merchandise) also performed strongly, again supported by impressive results in spite of the economic backdrop. On the negative side, the main detractors included the housebuilder Vistry, Future (media company) and not owning Dechra Pharmaceuticals, which was bid for at a significant premium, so this hurt performance on a relative basis. The portfolio continued to evolve as we adapted to the changes in the economic environment. New additions included Inchcape, the automotive distributor (following its large South American acquisition), Balfour Beatty, the infrastructure company with significant exposure to US infrastructure, Keller (exposed to both US infrastructure and to the huge urban area project (NEOM) in Saudi Arabia). Finally, Mitchells & Butler, the bar and pub company, was added to the portfolio as the consumer Georgina Brittain Portfolio Manager Katen Patel Portfolio Manager Georgina Brittain, managing director, is a portfolio manager within the J.P. Morgan Asset Management International Equity Group, based in London. An employee since 1995, Georgina joined the firm as a graduate trainee. She obtained a MA in Classics from the University of Oxford, and earned a Diploma in Law from City University, London. She is a qualified barrister. Katen Patel, executive director, is a portfolio manager within the J.P. Morgan Asset Management International Equity Group, based in London. An employee since April 2013, he previously worked at HSBC Bank Plc in a European equity sales role. He obtained a BSc. in Management from the London School of Economics and Political Science. Katen is a CFA charterholder. outlook improved and inflationary pressures began to ease. Over the year we also sold out of certain holdings including Marshalls, Spirent, Quilter and National Express, on concerns over current trading and/or balance sheet strength. Outlook The trajectory of inflation and interest rates is clearly key for the outlook. While we had expected a mild recession in the UK in the second half of 2023, the economy may avoid this - but UK growth prospects are pedestrian at best. Following the encouraging inflation figures in July we believe inflation has peaked in the UK, and we foresee a significant further decline from the current levels over the course of 2023, which will hopefully bring the UK more in line with other developed markets. Interest rates at 5.25% have risen significantly and we believe they are very close to peak levels. Consumer confidence had staged a significant recovery from its abject lows – largely, we believe, due to continuing very low unemployment rates and the wage increases that have been seen this year – although the very recent spike in mortgage rates has caused a setback in what had been an upward trend. Clearly the UK stock market is currently focused on the macro-economic outlook. Evidence of this can be seen in the sharp one day upward move of 4% in the FTSE 250 Index when July’s inflation figures proved a positive surprise. However, as always, our focus is on the companies themselves. Overall the message we are hearing from them is a positive one. The FTSE 250 is a broad and diverse index, and we continue to find exciting and undervalued investment opportunities, some of which we have described above. This leads us to valuations. While the environment remains difficult for businesses and consumers to navigate, a lot of this is already reflected in valuations. At the time of writing, the FTSE 100 is on a forecast P/E for 2024 of 10.5x, and FTSE 250 is similar on a 10.8x forecast. The Mid Cap index premium has almost completely disappeared; and 10.8x compares to a 20 year P/E average of 13.7x (source: Investec). The Bank of America chief investment strategist, Michael Hartnett, has called out UK mid cap stocks as being at their cheapest versus global stocks since 2003. Within the portfolio, we own a number of dominant players in their markets which we view as simply being valued wrongly. To give just one example, Jet2, the UK’s number one holiday company, is currently being valued by the market at 7x P/E. As we have said before, acquirors of UK businesses are recognising this and M&A is set to continue. The current gearing level of just under 10% in the portfolio reflects our view of the compelling valuations currently available. Georgina Brittain Katen Patel Portfolio Managers 18th September 2023 Portfolio Managers’ Report 12 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Ten Year Record J.P. Morgan Asset Management 13 Strategic Report 1 Source: Morningstar/J.P. Morgan. 2 Source: Morningstar/J.P. Morgan, cum income net asset value. 3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts). Ten Year Performance Figures have been rebased to 100 at 30th June 2013 50 100 150 200 250 300 350 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Share price total return 1 Net asset value total return 2 Benchmark total return 3 1 Source: Morningstar/J.P. Morgan. 2 Source: Morningstar/J.P. Morgan, cum income net asset value. 3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts). Ten Year Performance Relative to Benchmark Figures have been rebased to 100 at 30th June 2013 90 100 110 120 130 140 150 160 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Share price total return 1 Net asset value total return 2 Benchmark total return 3 Ten Year Record 14 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report At 30th June 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Shareholders’ funds (£’m) 172.1 199.1 242.4 218.3 275.9 314.1 284.6 237.4 340.4 222.9 222.0 Net asset value per share (p) APM 717.3 829.6 1,010.1 909.6 1,157.6 1,319.2 1,199.9 1,001.3 1,450.6 988.8 1,029.6 Share price (p) 611.5 734.5 886.0 835.0 1,004.0 1,250.0 1,077.5 886.0 1,420.0 854.0 876.0 Discount (%) APM 14.7 11.5 12.3 8.2 13.3 5.2 10.2 11.5 2.1 13.6 14.9 Gearing/(net cash) (%) APM 12.2 8.1 9.1 (0.5) 2.3 4.6 4.4 5.6 9.2 5.6 8.9 Year ended 30th June Revenue attributable to shareholders (£’000) 5,030 5,200 6,847 7,067 7,391 7,888 8,320 4,670 4,771 7,937 8,110 Revenue return per share (p) 20.95 21.67 28.53 29.45 30.88 33.12 35.01 19.69 20.32 34.07 36.85 Ordinary dividend per share (p) 17.0 18.0 20.0 21.0 23.0 26.5 29.5 29.5 29.5 29.5 31.75 Special dividend per share (p) 1.0 — 4.5 4.5 3.0 1.5 — — — — — Ongoing charges ratio (%) APM 0.66 0.97 0.95 0.91 0.86 0.83 0.87 0.88 0.83 0.92 0.93 Rebased to 100 at 30th June 2013 Total return to shareholders 1,APM 100.0 123.2 152.7 147.6 182.2 232.1 205.5 174.7 288.4 177.7 189.0 Total return on net assets 2,APM 100.0 118.3 147.4 136.1 177.4 206.4 192.4 165.4 245.9 171.2 184.1 Benchmark total return 3,APM 100.0 117.8 135.5 127.8 155.2 172.6 162.5 140.8 192.5 161.5 166.3 1 Source: Morningstar/J.P. Morgan. 2 Source: Morningstar/J.P. Morgan, cum income net asset value. 3 Source: Morningstar. The Company’s benchmark is the FTSE 250 Index (excluding investment trusts). APM Alternative Performance Measure (‘APM’). A glossary of terms and APMs is provided on pages 88 and 89. Portfolio Information J.P. Morgan Asset Management 15 Strategic Report Ten largest investments At 30th June 2023 2022 Valuation Valuation Company Sector £’000 % 1 £’000 % 1 OSB Financials 10,244 4.2 12,522 5.3 JD Sports Fashion 2 Consumer Discretionary 8,015 3.3 6,422 2.7 Intermediate Capital 2 Financials 7,852 3.3 1,440 0.6 Dunelm Consumer Discretionary 7,336 3.0 6,642 2.8 Bank of Georgia 2 Financials 7,229 3.0 1,828 0.8 4imprint 2 Consumer Discretionary 7,185 3.0 1,505 0.6 JET2 2 Consumer Discretionary 7,102 2.9 4,592 2.0 Premier Foods 2 Consumer Staples 7,071 2.9 6,249 2.7 Games Workshop 2 Consumer Discretionary 7,005 2.9 5,010 2.1 Ashtead 2 Industrials 5,986 2.5 4,194 1.8 Total 75,025 31.0 1 Based on total portfolio of £241.6m (2022: £235.3m). 2 Not included in the ten largest investments at 30th June 2022. At 30th June 2022, the value of the ten largest investments amounted to £85.1 million representing 36.2% of the total portfolio. Portfolio Information 16 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Portfolio analysis 30th June 2023 30th June 2022 Portfolio Benchmark Portfolio Benchmark % 1 % % 1 % Consumer Discretionary 30.6 23.7 26.6 19.0 Industrials 28.3 22.5 25.0 22.6 Financials 19.1 16.9 21.2 19.9 Consumer Staples 7.6 5.6 6.1 5.0 Technology 6.4 4.7 7.9 4.7 Energy 3.0 2.3 2.7 2.2 Health Care 2.0 5.5 2.8 4.1 Telecommunications 1.0 1.3 3.0 1.6 Real Estate 1.0 13.1 3.9 13.8 Basic Materials 1.0 2.5 0.8 4.4 Utilities — 1.9 — 2.7 Total 100.0 100.0 100.0 100.0 1 Based on total portfolio of £241.6m (2022: £235.3m). Investment activity During the year ended 30th June 2023 Gains/ Value at Benchmark (losses) on Value at 30th June 2022 Classification 1 Purchases Sales investments 30th June 2023 £’000 % £’000 £’000 £’000 £’000 £’000 % FTSE 250 Index companies 204,822 87.1 (12,787) 93,761 (84,790) 4,871 205,877 85.2 FTSE 100 Index companies 18,682 7.9 12,787 1,005 (14,556) 3,265 21,183 8.8 AIM Listed companies 10,797 4.6 — 7,399 (3,915) 295 14,576 6.0 Other investments 1,021 0.4 — — (932) (89) — — Total portfolio 235,322 100.0 — 102,165 (104,193) 8,342 241,636 100.0 1 Movement in relation to the reclassification of the indices during the year. Portfolio Information J.P. Morgan Asset Management 17 Strategic Report Consumer Discretionary JD Sports Fashion 2 8,015 Dunelm 7,336 4imprint 7,185 JET2 3 7,102 Games Workshop 7,005 Vistry 5,978 Watches of Switzerland 5,220 Marks & Spencer 4,815 EasyJet 4,778 Bellway 4,771 Howden Joinery 4,497 Trainline 2,323 Mitchells & Butlers 1,744 Next Fifteen Communications 3 1,551 Future 1,519 73,839 Industrials Ashtead 1 5,986 Inchcape 5,870 Spectris 5,749 Diploma 5,670 IMI 2 5,163 Serco 4,123 Oxford Instruments 4,095 Rotork 3,823 Grafton 3,626 Bodycote 3,333 Balfour Beatty 3,238 Morgan Advanced Materials 3,014 Morgan Sindall 2,653 Mitie 2,574 Page 2,088 Weir 2 2,019 Clarkson 1,924 Keller 1,820 Chemring 1,639 68,407 Financials OSB 10,244 Intermediate Capital 7,852 Bank of Georgia 7,229 Alpha FX 3 4,515 Man 4,259 Investec 3,989 Virgin Money UK 3,507 TBC Bank Group 2,640 Vanquis Banking 2,016 46,251 Consumer Staples Premier Foods 7,071 Greggs 4,086 Tate & Lyle 3,739 Britvic 3,338 18,234 Technology Bytes Technology 5,381 Computacenter 3,779 Softcat 3,186 Moneysupermarket.com 3,180 15,526 Energy Energean 3,635 Harbour Energy 2,286 Serica Energy 3 1,408 7,329 Health Care Indivior 4,919 4,919 Telecommunications Telecom Plus 2,450 2,450 Real Estate Urban Logistics REIT 1,271 CLS 1,082 2,353 Basic Materials Hill & Smith 2,328 2,328 Total Investments 241,636 1 All investments are FTSE 250 Index companies unless indicated otherwise. 2 FTSE 100 Index companies. 3 AIM listed companies. Valuation Company £’000 Valuation Company £’000 List of investments 1 At 30th June 2023 Environmental, Social and Governance (‘ESG’) Report 18 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Introduction ESG is an acronym which stands for Environmental, Social and Governance. It describes the broad field of sustainability in the corporate sector and is widely used when assessing the environmental impact of businesses, when considering how companies acquit themselves in respect of their broad social responsibilities and when reviewing the practices and standards followed by companies in their own management. Awareness of these issues has increased significantly in recent years within the asset management industry, including the investment managers responsible for the Company’s portfolio, among the Board members of your Company, among shareholders and potential shareholders in the Company and, indeed in society at large. The basics: what is ESG? E is for Environmental. This component considers a company’s impact on the world we live in, relating to the quality and functioning of the natural environment and natural systems. S is for Social. Social factors address the way that companies act within society; this includes the way that employee interests are managed, and the broader impact a company has on society. G is for Governance. This component relates to how companies are managed. It considers the measures that protect shareholder interests as well as the way any company meets regulatory and other external obligations. Why do we integrate ESG into our investment processes? Considerations of sustainability have long been intrinsic to our approach to managing the Company’s portfolio. When we invest the Company’s capital, we have to make judgements about future risks and rewards of any investment which have always included ESG factors, because all of them have the potential to affect the future value of a company and its shares. A business that produces huge amounts of carbon emissions or plastic waste, for example, is likely to find itself the subject of scrutiny from regulators and consumers and failure to anticipate this and to change will likely lead to a loss of value for shareholders in the long run. The same is true of businesses that neglect their social responsibilities or fail in matters of governance. Of course, a more explicit integration of ESG factors brings with it other benefits. The market in which we invest is increasingly paying attention to these factors when assessing sectors and companies, discriminating starkly between companies which are offering compelling narratives of transition to a low-carbon approach, and those which have yet to do so. So ESG has had to become a bigger and more important part of any investment judgement. Finally, as investment managers we have responsibilities and obligations, not only to the Board and shareholders of the Company, but as a social actor in a broader sense. We have a duty not just to produce good investment outcomes for our clients, but to be responsible corporate citizens. ESG Integration within the Company’s portfolio For us, ESG integration does not simply involve paying external vendors for ESG information; it rests heavily on our own proprietary research, on both a fundamental and a quantitative basis. In addition, a quantitative-led ESG score uses third-party ESG data, to the extent it is available, weighted according to our own views on materiality. While we do not explicitly exclude individual stocks on ESG criteria, ESG factors influence our level of conviction and thus impact a stock’s position size within the portfolio. We also work with a central stewardship team which sets priorities for corporate engagement both in terms of issues and in terms of significant individual investments held in portfolios. Engagement Active engagement with companies has long been an integral part of our approach to investment and to ESG. We use it not only to understand how companies consider issues related to ESG but also to try to influence their behaviour and encourage best practice. We believe that companies which maintain high standards of ESG and which respond to shareholder engagement are likely over time to provide good returns to their shareholders. Our scale and long history of active management and experience in good stewardship practices allow us to have direct access to the management teams of portfolio companies and so encourage best practice on ESG matters. Alongside this direct engagement, we endeavour to vote at all of the meetings called by companies in which your portfolio invests. Environmental, Social and Governance (‘ESG’) Report J.P. Morgan Asset Management 19 Strategic Report A few examples of our engagement activity over the last year are provided below: In November 2022, we met with Grafton Group, the Irish DIY, home and garden retailer, following the announcement of their new CEO appointment. We wanted to discuss why Mr. Born was viewed as the best candidate for the role, given his lack of direct retail experience. The Chairman outlined the selection process that they had undertaken and highlighted the factors that had led to Mr. Born being identified as the preferred candidate, including his breadth of experience across analogous sectors, including logistics and retail. Following his appointment, we also met with Mr. Born in December to discuss strategy and capital allocation. We were pleased to note a continued commitment to share buybacks. Our Investment Stewardship Team sent a letter to the Nomination Chair at Indivior, the UK-listed pharmaceuticals company. We were acting as the lead engager on behalf of the 30% Club - UK Investor Group, outlining best practice on diversity at Board and company level. As asset managers and long-term institutional investors, we, the 30% Club - UK Investor Group, are responsible for the stewardship of the investments we make on behalf of clients. We acknowledge the existence of inequities and discrimination and we recognise the existence of systemic discrimination and its impact on racial and ethnic minorities, globally. We also believe boards that embrace diversity, as manifested through appropriate gender and racial representation and a broad spectrum of skills and experience, are more likely to achieve better outcomes for our clients. We also view diversity as integral to sound decision-making and we believe that companies with an inclusive culture and diversity of skills, experiences, and perspectives at all levels of the organisation are better managed and better able to adapt to change, and thus create long-term value. We received an acknowledgement of our letter in February 2023, but from the investor relations team, not the Chairman. We asked the company to confirm how the search process is going regarding alignment with the UK Parker Review. Obtaining a commitment from Indivior that they will by aligned with the Review by 2024 is the next step in our engagement. Following on from our engagement in 2022, we engaged with Dunelm Group again this year, noting that the company has increased its transparency and disclosure on its cybersecurity risk programme and completed a review on its internal pay practices. Dunelm has also embedded a robust Diversity, Equity and Inclusion programme. This year, our Investment Stewardship team met with Dunelm Group on its operational performance and sustainability issues. Our discussion focused on the key topics of cybersecurity, living wage, gender pay gap and responsible sourcing. We had previously asked the company for full disclosure on its cybersecurity framework, and they have since further developed their IT security governance and recruited to increase this capability. It was encouraging to see the progress the company has made in identifying vulnerabilities and uplifting its framework around these risks. Regarding wages and the gender pay gap, we had previously asked for additional disclosures relating to fair pay, and this has been clearly articulated within their latest remuneration report. The company also revised its pay structure and was especially sensitive to this for its lowest paid employees whose pay may be more impacted by the escalation of living costs. We also asked the company to explain progress regarding long-term targets on responsible sourcing and incorporating a decarbonisation plan, in addition to own brand cotton to be sourced as ‘responsibly cotton’ by 2024. The company confirmed such programmes were in place and they are making progress in terms of expanding their Product Quality & Sustainability team by recruiting two environmental specialists. We will continue engaging with the company. Proxy Voting J.P. Morgan Asset Management exercises the voting rights of shares held in client portfolios, where entrusted with this responsibility. We seek to vote in a prudent and diligent manner, based exclusively on our reasonable judgement of what will best serve the financial interests of our clients. We aim to vote at all meetings called by the companies in which we are invested, unless there are any market restrictions or conflicts of interests. We believe that corporate governance is integral to our investment process. We examine the share structure and voting structure of the companies in which we invest, as well as the board balance, oversight functions and remuneration policy. For full details, please see the J.P. Morgan Asset Management Corporate Governance Policy & Voting Guidelines, copies of which are available on request, or to download from our website at https://am.jpmorgan.com/content/dam/jpm-am- aem/global/en/investment-stewardship/Engagement-and-proxy-voting-statement.pd f Environmental, Social and Governance (‘ESG’) Report 20 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report JPMorgan Mid Cap Investment Trust plc: Voting at shareholder meetings over the year to 30th June 2023 Against/ Abstain Total % Against/ For Against Abstain Total Items Abstain Audit Related 127 0 0 0 127 0% Capitalisation 259 0 0 0 259 0% Company Articles 7 0 0 0 7 0% Compensation 110 3 0 3 113 3% Director Election 525 4 0 4 529 1% Miscellaneous 1 0 0 0 1 0% Mutual Funds 1 0 0 0 1 0% Non-Routine Business 2 0 0 0 2 0% Routine Business 128 0 0 0 128 0% Social 36 0 0 0 36 0% Strategic Transactions 9 1 0 1 10 10% Takeover Related 55 0 0 0 55 0% Total 1260 8 0 8 1268 Examples of our recent activity with regard to proxy voting are provided below: JD Sports Fashion Plc is a UK listed sports fashionwear and equipment retailer. The company’s remuneration practices have come under scrutiny in recent years with last year’s remuneration report receiving nearly 30 percent dissent. The company’s refreshed remuneration committee is seeking to address long standing concerns on remuneration with bonus outcomes being reduced, to reflect corporate governance issues, as well as undertaking a more extensive review of remuneration. The committee did however grant the CFO a significant increase in base pay. Significant base pay increases act as an amplifier for variable incentives which are based on base salary, and we expect companies to exercise restraint in such increases. The company explained that the increase reflected an increase in responsibilities for the CFO. While we were inclined to support management at the company general meeting, we await the outcome of the more comprehensive review of remuneration practices by the remuneration committee. Frasers Group* is a UK listed company, retailing sports and leisure clothing, footwear, equipment, and apparel through shops and online in the United Kingdom and internationally. At the 2022 Annual General Meeting, the company sought approval for a one-off award granted to the executives which would allow for a very high quantum of pay-out without reasonable justification. Under this bespoke plan, participants would be eligible for a significant one-off award, based on the achievement of share price targets (with underpins). The use of absolute targets along with the significant quantum attainable are not considered best practice and do not adhere to our remuneration guidelines. As a result of our concerns, we voted against the remuneration report. The remuneration related resolution received significant dissent at the general meeting and we will continue to engage with the company in order to ensure our concerns are noted and to understand the company’s response to the significant dissent raised. Morgan Sindall is a UK listed construction and regeneration company. At this year’s AGM, the company proposed a remuneration policy update that included an increase in the maximum limit on bonus from 125% to 150% of base salary and an increase in LTIP opportunities from 150% to 200% of base salary. Ahead of the AGM, the company sent a letter to all shareholders outlining their rationale for the proposed increase. The company highlighted that there are no pay increases outlined for 2023 and that the company needed to maintain flexibility over a three year period. In addition, the company noted that any increase would only be in the event that Morgan Sindall’s performance warranted the increased opportunities and having taken into account the opinions of shareholders. We felt that the increased flexibility proposed is broadly appropriate for a company of Morgan’s size and peer group. As a result of the company’s commitment to maintaining the current variable incentive limits and utilising the higher limit only when circumstances allowed, we were comfortable supporting the remuneration policy resolution at the AGM. The Future In investing your Company’s assets we have always looked for companies with the ability to create value in a sustainable way. That scrutiny remains firmly embedded in our process and we know that the Directors of the Company, shareholders and potential investors, view attention to ESG factors as important in their assessment of us as Investment Managers. We expect ESG to remain a major theme in the Company’s portfolio and the course being taken by regulators suggests that its importance will only increase in years to come. The research we do and the approach we take in investing the Company’s assets will continue to reflect that and to evolve as necessary. J.P. Morgan Asset Management * Not held in the portfolio as at 30th June 2023. Business Review J.P. Morgan Asset Management 21 Strategic Report The Directors present the Strategic Report for the Company’s year ended 30th June 2023. The aim of the Strategic Report is to provide shareholders with the ability to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders. The Chairman’s Statement together with the Portfolio Managers’ Report form part of this Strategic Report. The Company’s Purpose, Values, Strategy and Culture The purpose of the Company is to provide a cost effective, sustainable investment vehicle for investors who seek long term capital growth from a portfolio of medium-sized UK quoted companies, which outperforms its benchmark index over the longer term, taking account of wider issues including environmental, social and governance matters. To achieve this, the Board of Directors is responsible for employing and overseeing an investment management company that has appropriate investment expertise, resources and controls in place to meet the Company’s investment objective. To ensure that the Company's purpose, values, strategy and culture are aligned, the Board comprises independent, non-executive Directors from a diverse background who have a breadth of relevant experience and contribute in an open boardroom culture that both supports and challenges the investment management company and its other third party suppliers. For more information, please refer to page 40. Objective of the Company The Company’s objective is to provide shareholders with capital growth from investment in medium-sized UK listed companies. It aims to outperform the benchmark, which is the FTSE 250 Index (excluding investment trusts), with dividends reinvested. Business Model JPMorgan Mid Cap Investment Trust plc is an investment trust and public limited company, incorporated in England and Wales, limited by shares, with a premium listing on the London Stock Exchange. In seeking to achieve its objective the Company employs JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’) to manage actively the Company’s assets. The Board has determined an investment policy and related guidelines and limits, as described below. The Company is subject to UK legislation and regulations including UK company law, UK Financial Reporting Standards, the FCA Listing, Prospectus, Disclosure Guidance and Transparency Rules, the UK Market Abuse Regulation, taxation law and the Company’s own Articles of Association. The Company is an investment company within the meaning of Section 833 of the Companies Act 2006 and has been approved by HMRC as an investment trust (for the purposes of Sections 1158 and 1159 of the Corporation Tax Act 2010). The Directors have no reason to believe that the Company will not continue to retain its investment trust status. The Company is not a close company for taxation purposes. A review of the Company’s activities and prospects is given in the Chairman’s Statement on pages 8 to 10, and in the Portfolio Managers’ Report on pages 11 and 12. Investment Policies and Risk Management In order to achieve its objective, the Company invests in a diversified portfolio, concentrating on FTSE 250 companies that deliver strong capital growth. The Portfolio Managers seek out both value stocks and growth stocks, including AIM stocks, to deliver strong performance throughout the market cycle. The portfolio has a significant exposure to the UK economy, with selective exposure to overseas earnings. Gearing is used, as appropriate, to increase potential returns to shareholders. Investment Limits and Restrictions The Board seeks to manage the Company’s risk by imposing various investment limits and restrictions. • The Company will not invest more than 15% of its assets in other UK listed investment companies. • No more than 15% of the portfolio at prevailing values may be invested outside the FTSE 250 Index, including AIM stocks. • The Company will not invest more than 10% of assets in companies that themselves may invest more than 15% of gross assets in UK listed investment companies. • The Company will not invest more than 10% of its assets in any one individual stock at the time of acquisition. • The Company’s Gearing policy is to operate within a range of 10% net cash to 20% geared in normal market conditions. Compliance with the Board’s investment restrictions and guidelines is monitored continuously by the Manager and is reported to the Board on a quarterly basis. Performance In the year to 30th June 2023, the Company produced a total return on net assets of 7.5% and a total return to shareholders of 6.4%. This compares with the total return on the Company’s benchmark index of 3.0%. As at 30th June 2023, the value of the Company’s investment portfolio was £241.6 million (2022: £235.3 million). The Portfolio Managers’ Report on pages 11 and 12 includes a review of developments during the year as well as information on investment activity within the Company’s portfolio. Key Performance Indicators (‘KPIs’) The Board uses a number of financial KPIs to monitor and assess the performance of the Company. The principal KPIs are: • Performance against the benchmark index This is the most important KPI by which performance is judged. Information on the Company’s performance is given in the Chairman’s Statement and the Portfolio Managers’ Report. (Also please refer to the graphs on page 13). • Performance attribution The purpose of performance attribution analysis is to assess how the Company achieved its performance relative to its benchmark index, i.e. to understand the impact on the Company’s relative performance of the various components such as stock and sector allocation and gearing. Details of the attribution analysis for the year ended 30th June 2023 are given in the Portfolio Managers’ Report on page 11. • Share price rating to net asset value (‘NAV’) per share The Board has share issuance and repurchase policies in place which seek, where possible, to address imbalances in supply of and demand for the Company’s shares within the market and thereby reduce the volatility and absolute level of the premium or discount to NAV at which the Company’s shares trade and in relation to its peers in the sector. In the year to 30th June 2023, the shares traded between a discount of 7.7% and 15.7% to the cum income net asset value using daily data. More information on the Board’s share issuance and repurchase policies is given in the Chairman’s Statement. Discount Performance (month end data) Source: Morningstar. • Ongoing charges The Ongoing Charges Ratio represents the Company’s management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year. The Ongoing Charges Ratio for the year ended 30th June 2023 was 0.93% (2022: 0.92%). The Board reviews each year an analysis which shows a comparison of the Company’s Ongoing Charges Ratio and its main expenses with those of its peers. Share Capital The Directors have authority on behalf of the Company to repurchase shares in the market either for cancellation or into Treasury and to sell Treasury shares or issue new Ordinary shares for cash. During the year 984,488 Ordinary shares were repurchased into Treasury (2022: 919,040) and nil shares were sold from Treasury (2022: nil). Since the year end a further 10,000 Ordinary shares have been repurchased into Treasury. Special Resolutions to renew the Company’s authorities to issue and repurchase shares will be put to shareholders at the forthcoming Annual General Meeting. Board Diversity When recruiting a new Director, the Board’s policy is to appoint individuals on merit. Diversity is important in bringing an appropriate range of skills and experience to the Board and an assessment is made of the qualities and skills of the existing Board before appointing new directors. When completing a review of the skills and experience of Directors, the Board feels that they are equipped with the necessary attributes required for the sound stewardship of the Company and that their knowledge sets allow for lively and engaging debates. Full details of the skills and experience of the Directors can be found on page 36. At 30th June 2023, there were two male Directors and three female Directors on the Board. Please refer to page 42 for more information on the workings of the Nomination Committee. The following disclosures are provided in respect of the FCA Listing rules targets that: i) 40% of a board should be women; ii) at least one senior role should be held by a woman; and iii) at least one board member should be from a non-white ethnic background, as defined by the Office of National Statistics (ONS) criteria. As an externally managed investment company with no chief executive officer (CEO) or chief financial officer (CFO), the roles which qualify as senior under FCA guidance are Chair and Senior Independent Director (SID). The Board also considers the Audit & Risk Committee Chair to represent a senior role within this context. At 30th June 2023, the Board met the target on gender diversity criteria and female representation in a senior role. However, the Board does not currently meet the target in relation to ethnic representation on the Board. The small size of the board with only non-executive directors can provide challenges in ensuring targeted diversity in board appointments. Although the Board does not consider it –20 –15 –10 –5 0 5 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Premium/Discount Business Review 22 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Business Review J.P. Morgan Asset Management 23 Strategic Report appropriate to set targets, it ensures that long lists include diverse candidates of appropriate experience and merit. In relation to its future succession planning objectives, ethnic diversity considerations will form a significant element of the search. In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board has provided the following information in relation to its diversity based on the position at the Company’s financial year ended 30th June 2023, the reference date: Number of Board % of Board Number of Gender Members Members Senior Roles 1 Man 2 40.0 2 Woman 3 60.0 1 Prefer not to say 0 0 0 Number of Board % of Board Number of Ethnic Background Members Members Senior Roles 1 White British or other White (including minority-white groups) 5 100.0 3 Mixed/Multiple Ethnic Groups 0 0 0 Prefer not to say 0 0 0 1 The roles of Chair of the Board of Directors, Audit & Risk Committee Chair and Senior Independent Director are classified as senior positions. The role of Audit & Risk Committee Chair is not currently defined as a senior position under the Listing Rules, however the Board believes that, for an investment trust company, it should be regarded as such as it is broadly equivalent to the Chief Financial Officer of a trading company. All Board appointments are subject to a formal, rigorous and transparent procedure. The Board, through the Nomination Committee, has reviewed the Company’s succession plan and it is intended that alongside finding candidates that have skills which are complementary to those of other members of the Board, gender and ethnicity considerations will be important factors when considering future Board appointments. Employees, Social, Community, Environmental and Human Rights Issues The Company is managed by its Manager, has no employees and all of its Directors are non-executive. The day to day activities are carried out by third parties. There are therefore no disclosures to be made in respect of employees. The Company has no direct social or community responsibilities or impact on the environment and the Company has not adopted an ESG investment strategy nor does it modify the Company’s investment objective. However, an increasingly broad spectrum of investors focus on ESG issues for their portfolios. They want to know that their managers are aware of these issues, that they take them into account in building their portfolios and that they raise issues directly with investee companies. The Board is aware of the Investment Manager’s approach to ESG considerations, which are fully embedded into the investment process. Companies that address ESG issues and adopt sustainable business practices are better placed to maximise their performance and create enduring value for shareholders. Corporate governance issues have the most direct bearing on the risk/reward profile of the Company’s portfolio thus this, together with relevant environmental concerns and social issues, where the focus is on the economic impact of the involvement, is integrated into the Investment Manager’s investment process. The Investment Manager engages in meaningful interactions with investee companies through dedicated meetings and exercises the Company’s proxy votes in a prudent and diligent manner in the interests of our shareholders. An explanation of the Investment Manager’s overall approach to ESG is on page 18 to 20. The Board further notes JPMAM’s global policy statements in respect of ESG issues: JPMAM believes that companies should act in a socially responsible manner. We believe environmental, social and governance (‘ESG’) considerations, particularly those related to governance, can play a critical role in long-term investment strategy. As an active investment manager, engagement is an important and ongoing component of our investment process, and we view frequent and direct contact with company management as critically important. When considering investment options, we supplement our proprietary thinking with research from a variety of third-party specialist providers and engage directly with companies on a wide array of ESG issues. Our governance specialists regularly attend scheduled one-on-one company meetings alongside investment analysts to help identify and discuss relevant issues. Although our priority at all times is in the best economic interests of our clients, we recognise that ESG issues have the potential to impact the share price, as well as the reputation of companies. JPMAM is also a signatory to the United Nations Principles of Responsible Investment, which commits participants to six principles, with the aim of incorporating ESG criteria into their processes when making stock selection decisions and promoting ESG disclosure. The Manager has implemented a policy which seeks to restrict investments in securities issued by companies that have been identified by an independent third party provider as being involved in the manufacture, production or supply of cluster munitions, depleted uranium ammunition and armour and/or anti-personnel mines. Shareholders can obtain further details on the policy by contacting the Manager. Greenhouse Gas Emissions The Company itself has no premises, consumes no electricity, gas or diesel fuel and consequently does not have a measurable carbon footprint. As a low energy user under HMRC guidelines it is not required to disclose energy and carbon information. The Board notes the policy statements from the Investment Manager in respect of Social, Community and Environmental and Human Rights issues and Greenhouse Gas Emissions and that it is a signatory to the CDP (formerly known as Carbon Disclosure Project), as well as JPMorgan Chase being a signatory to the Equator Principles on managing social and environmental risk in project finance. The Modern Slavery Act 2015 (‘the MSA’) The MSA requires companies to prepare a slavery and human trafficking statement for each financial year of the organisation. As the Company has no employees and does not supply goods and services, the MSA does not apply directly to it. The MSA requirements more appropriately relate to JPMF and JPMAM. J.P.Morgan’s statement on the MSA can be found on the following website: https://www.jpmorganchase.com/about/our- business/human-rights Corporate Criminal Offence The Company has zero tolerance for tax evasion. Shares in the Company are purchased through intermediaries or brokers and no funds flow directly into the Company. As the Company has no employees, the Board’s focus is to ensure that the risk of the Company’s service providers facilitating tax evasion is also low. To this end it seeks assurance from its service providers that effective policies and procedures are in place. Future Prospects The Board continues to focus on maximising total returns over the longer-term. The outlook for the Company is discussed in both the Chairman’s Statement and the Portfolio Managers’ Report. Business Review 24 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Principal Risks J.P. Morgan Asset Management 25 Strategic Report The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. With the assistance of JPMF, the Audit & Risk Committee has drawn up a risk matrix, which identifies the key risks to the Company. These are reviewed and noted by the Board. The risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below. Principal risk Description Mitigating activities Principal risk description Mitigating activities Movement from prior year Underperformance Discount Control This risk is unchanged but remains elevated due to a continuation of unfavourable economic conditions (caused by factors such as the geopolitical crisis between Russia and Ukraine high inflation and interest rates) faced by the UK equities market, making investment decisions to be more challenging for the Portfolio Managers. The Board manages these risks by diversification of investments and through its investment restrictions and guidelines, which are monitored and reported on by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Portfolio Managers, at least one of whom attends all Board meetings, and reviews data which show measures of the Company’s risk profile. The Portfolio Managers employ the Company’s gearing tactically, within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year. This risk remains stable. The discount at which the Company’s shares trade versus its NAV widened to 14.9% over the review period (2022: 13.6%). At its peak the discount reached 15.7%. This is comparable with the discount experience of its immediate peers and also of investment trusts across many asset classes. During the year the Company continued to conduct share buybacks. The Board monitors the share price against the absolute and sector relative premium/discount levels. The Board reviews sales and marketing activity and sector relative performance (considered the primary drivers of the relative discount level). The Company also has authority to buy back its existing shares to enhance the NAV per share for remaining shareholders and to reduce the absolute level of discount and discount volatility. Investment trust shares often trade at discounts to their underlying NAVs; they can also trade at a premium. Discounts and premiums can fluctuate considerably leading to volatile returns for shareholders. Poor implementation of the investment strategy, for example as to thematic exposure, sector allocation, stock selection, undue concentration of holdings, factor risk exposure or the degree of total portfolio risk, may lead to failure to beat the FTSE 250 index and peer companies. Principal risk description Mitigating activities Movement from prior year Market and Economic Risk Inappropriate Gearing Levels (both over and under gearing of the portfolio) This risk is unchanged but remains highlighted due to the quick succession of the events which have unfolded in recent times i.e. Brexit, the outbreak of the COVID-19 pandemic and geopolitical crisis in Russia- Ukraine, adding significant pressure on markets and economies. This risk is managed to some extent by diversification of investments and by regular communication with the Manager on matters of investment strategy and portfolio construction which will directly or indirectly include an assessment of these risks. The Board receives regular reports from the Manager regarding market outlook and gives the Portfolio Managers’ discretion regarding acceptable levels of gearing and/or cash. Currently the Company’s gearing policy is to operate within a range of 10% net cash to 20% geared. The Board considers thematic and factor risks, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Manager. The Board can, with shareholder approval, look to amend the investment policy and objectives of the Company to gain exposure to or mitigate the risks arising from geopolitical instability. Market risk arises from uncertainty about the future prices of the Company’s investments, which may reflect underlying uncertainties arising from economic, social, fiscal, climate and regulatory changes. In the past few years Brexit and the COVID-19 pandemic have been major sources of uncertainty and have contributed to elevated levels of market volatility. In recent times, geopolitical risks have risen markedly with the Russian invasion of Ukraine. While direct linkage to the UK from Russia tend to be small, the impact of sanctions and the rise in commodity prices has caused disruptions to supply chains which in turn has led to high inflation and interest rates. These risks represent the potential loss the Company might suffer through holding investments in the face of negative market movements. This risk remains heightened by the effects of changes made by governments and central banks to monetary policy to combat inflation. This has led to hikes in interest rates charged by lenders however, there are now signs that rates are moderating. To mitigate this risk all borrowing arrangements are monitored by the Board and those requiring Board approval, as well as leverage levels, are discussed with the Portfolio Managers at every Board meeting. Covenant levels are monitored regularly. The Company’s investments are in quoted securities that are readily realisable. The Board ensures that any renewal or replacement of such facilities is addressed early; the Manager has regular discussions with banks on lending appetite and pricing throughout the year. Further information on leverage can be found on page 82 and in the Glossary of Terms and Alternative Performance measures on pages 88 and 89. The Company borrows money for investment purposes. If the investments fall in value, any borrowings will magnify the extent of this loss. If borrowing facilities are not renewed, either because banks stop lending or the Company cannot borrow at an appropriate rate or tenor, the Company may have to sell investments to repay borrowings and/or a lack of borrowing facilities would leave the Company unable to access potential opportunities and lag behind the performance of its geared peers. Principal Risks 26 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Principal Risks J.P. Morgan Asset Management 27 Strategic Report Principal risk description Mitigating activities Movement from prior year Outsourcing Cyber Crime ESG Requirements from Investors Details of how the Board monitors the outsourced services and the key elements of the risk management and internal control framework governing these services are included within the Risk Management and Internal Controls section of the Corporate Governance Statement on pages 43 and 44. Furthermore, the Manager has a comprehensive business continuity plan to safeguard the continued operation of the business in the event of a service disruption as evidenced during the outbreak of the COVID-19 pandemic. Disruption to, or failure of, the Manager’s accounting, dealing or payments systems or the Depositary or Custodian’s records may cause inaccurate reporting and monitoring of the Company’s financial position or result in a misappropriation of assets. This risk remains stable. The Board continues to monitor the outsourced services. This risk remains stable. To date the Manager’s cyber security arrangements have proven robust and the Company has not been impacted by any cyber attacks threatening its operations. The Company benefits directly and/or indirectly from all elements of JPMorgan’s Cyber Security programme. The information technology controls around physical security of JPMorgan’s data centres, security of its networks and security of its trading applications, are tested by independent auditors and reported every six months against the AAF Standard. The threat of cyber attack is regarded as at least as important as more traditional physical threats to business continuity and security. In addition to threatening the Company’s operations, such an attack is likely to raise reputational issues which may damage the Company’s share price and reduce demand for its shares. This risk remains stable. Investors continue to seek greater ESG oversight in their investment portfolios. The Manager has integrated the consideration of ESG factors into the Company’s investment process. Further details are set out in the ESG report on pages 18 to 20. The Company’s policy on ESG and climate change may be out of line with ESG practices which investors are looking to invest in accordance with. Principal risk description Mitigating activities Movement from prior year Regulatory Change Global Pandemics This risk remains stable. Changes to the regulatory landscape are expected to be ongoing. The Board receives regular reports from its broker, depositary, registrar and Manager as well as its legal advisers and the Association of Investment Companies on changes to regulations which could impact the Company and its industry. The Company monitors events and relies on the Manager and its other key third party providers to manage this risk by preparing for any changes, adverse or otherwise. The Company’s business model could become non-viable as a result of new or revised rules or regulations arising from, for example, policy change or financial monitoring pressure. This risk has reduced. There are always exogenous risks and consequences arising from a pandemic, which are difficult to predict and plan for in advance. The Company does what it can to address these risks when they emerge, not least operationally and in trying to meet its investment objective. The Board receives reports on the business continuity plans of the Manager and other key service providers. The effectiveness of these measures has been assessed throughout the course of the COVID-19 pandemic and the Board will continue to monitor developments as they occur and seek to learn lessons which may be of use in the event of future pandemics. The Board is mindful that implications arising from future pandemics will vary and hence the ability to assess mitigation activities is limited. But the Board seeks to manage these risks through: a broadly diversified equity portfolio, appropriate asset allocation, reviewing key economic and political events and regulatory changes, active management of risk and the application of relevant policies on gearing and liquidity. COVID-19 has highlighted the speed and extent of economic damage that can arise from a pandemic. There is the risk that emergent strains may not respond to current vaccines and may be more lethal and that they may spread as global travel increases. Principal Risks 28 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Principal Risks J.P. Morgan Asset Management 29 Strategic Report Emerging Risks The AIC Code of Corporate Governance also requires the Audit & Risk Committee to put in place procedures to identify emerging risks. Emerging risks, which are not deemed to represent an immediate threat, are considered by Audit & Risk Committee as they come into view and are incorporated into the existing review of the Company’s risk register. However, since emerging risks are likely to be more dynamic in nature, they are considered on a more frequent basis, through the remit of Board when the Audit & Risk Committee does not meet. The Board considers that the following are emerging risks: Economic Contraction – A long term reduction in returns available from investments as a result of recession, stagnation, inflation or other extended exogenous factor which may render the achievement of the Company’s investment objectives and policies more challenging. Societal Breakdown – Modern society has contributed to rising inequality, resource depletion and increasingly complex and interrelated financial, political and technological systems. Looking over history, these factors have been the precursors to societal collapses resulting in periods of wide-ranging disruption and economic simplification. Even limited or localised societal breakdown may threaten both the ability of the Company to operate, the ability of investors to transact in the Company’s securities and ultimately the valuations and operations of investee companies and the ability of the Company to pursue its investment objective and purpose. Technology – the emergence of technology (i.e. artificial intelligence) or new technological standards which are incompatible with existing procedures and practices within the industry or sector may have the potential to increase the complexity of the systemic dependencies and interactions across various sectors. Structural Changes – Potential structural changes to the UK stock market resulting from merger and acquisition activity could drive a decline in the number of listed companies in the market and investment opportunities particularly in the mid-cap area. Furthermore, attractiveness of the UK market could be impacted by structural changes to the way investors access the market, including changes within the platform channels. Long Term Viability 30 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report The Company is an investment trust and has the objective of achieving long term capital growth by investing in liquid, medium sized UK companies. The Company enjoys the benefit of the closed ended structure and is therefore better able to withstand market movements since it is not subject to forced liquidation of investments due to sudden redemptions by shareholders. Although past performance is no guide to the future, the Directors believe that the Company has an attractive future for investors as a long term investment proposition. However, it is difficult to look forward too far into the future without considerable uncertainty, so the Directors have adopted a medium term horizon to assess the Company’s viability, which is five years. This is regarded as a prudent minimum duration for investing in equities. The Directors have considered the Company over the next five years and examined its prospects, principal and emerging risks and the outlook for the UK economy, its equity market and the market for investment trusts. They have examined the robustness of these base case estimates using further severe but plausible scenarios, including the market contractions caused by the 2008 financial crisis, the impact of the COVID-19 pandemic, the current high inflationary and interest rate environment and the direct and indirect effects arising from the ongoing invasion of Ukraine by its neighbour, Russia. The Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years until 30th June 2028. This reasonable expectation is subject to there being no significant adverse change to the regulatory or taxation environment for investment trusts. It is also subject to there being no sustained adverse investment performance by the current or any successive Manager, that may result in the Company not being able to maintain a supportive shareholder base. Duty to Promote the Success of the Company J.P. Morgan Asset Management 31 Strategic Report Section 172 of the Companies Act 2006 (‘Companies Act’) states that: A Director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the following six items. The Board’s philosophy is that the Company should foster a culture where all parties are treated fairly and with respect and the Board recognises the importance of keeping the interests of the Company’s stakeholders, and of acting fairly between them, front of mind in its key decision making. In managing the Company, the aim of both the Board and Manager is always to ensure the long-term sustainable success of the Company and, therefore, the likely long-term consequences of any decision are a key consideration. In managing the Company during the year under review, we acted in the way which we considered, in good faith, would be most likely to promote the Company’s long-term sustainable success, and to achieve its wider objectives for the benefit of our shareholders as a whole, having had regard to our wider stakeholders and the other matters set out in section 172 of the Companies Act. The likely consequences of any decision in the long term; The Company does not have any employees. The interests of the Company’s employees; The Board’s approach is described under ‘Stakeholders’ on the next page. The need to foster the Company’s business relationships with suppliers, customers and others; The Board takes a close interest in ESG issues and sets the overall strategy. However, ESG integration does not modify the Company’s investment objective and the Company does not have an ESG focused investment strategy. However, the Board has appointed a Manager that, through its Investment Manager, integrates ESG considerations into its investment process. Further details are set out in the ESG report on pages 18 to 20. The impact of the Company’s operations on the community and the environment; The Board’s approach is described under The Company’s Purpose, Values, Strategy and Culture on page 21. The desirability of the Company maintaining a reputation for high standards of business conduct; and The Board’s approach is described under ‘Stakeholders’ on the next page. The need to act fairly as between members of the Company. Duty to Promote the Success of the Company 32 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Stakeholders The Board has identified the following as its key stakeholders: The Board believes the best interests of the Company are aligned with those of these key stakeholders as all parties wish to see and ultimately benefit from the Company achieving its investment objectives whilst carrying on business in compliance with the highest possible regulatory, legal, ethical and commercial standards. The table below sets out details of the Company’s engagement with these stakeholders: Stakeholder Engagement Shareholders Continued shareholder engagement is critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering and maintaining good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategic thinking and objectives. Full details on how the Board ensures it is fully appraised of shareholder views and how it engages with all shareholder groups can be found on page 43. Manager and Investment Manager The principal supplier is the Manager, in particular the investment management team who are responsible for managing the Company’s assets in order to achieve its stated investment objective. The Board maintains a good working relationship with the Manager, who also provides administrative support and promotes the Company through its investment trust sales and marketing teams. The Manager’s investment management function is fundamental to the long term success of the Company through the pursuit of the investment objective. The Board monitors the Company’s investment performance at each Board Meeting in relation to its objective and also to its investment policy and strategy. The Board also maintains strong lines of communication with the Manager via its dedicated company secretary and client director which extend well beyond the formal business addressed at Board meetings ensuring the Board is rapidly informed of Manager and shareholder views and of the discount levels and the Manager is fully aware of the Board’s views and their requirements. The Company Broker Auditor Depository Registrar Investee Companies Debt providers Legal Advisors Custodian Manager/Investment Manager Investment Manager Portfolio Management Shareholders Wider Society Third Party Service Providers Duty to Promote the Success of the Company J.P. Morgan Asset Management 33 Strategic Report Investee companies The Board is committed to responsible investing and actively monitors the activities of investee companies through its delegation to the Investment Manager. In order to achieve this, the Manager has discretionary powers to exercise voting rights on all resolutions proposed by the investee companies. On behalf of the Company, the Investment Manager voted on all shareholder resolutions put to AGMs and general meetings by investee companies during the year; the Investment Manager aims to maintain this record in so far as it is practically possible (full details can be found in the ESG report on pages 18 to 20). The Board monitors investments made and divested and questions the rationale for exposures taken and voting decisions made. Other key service providers The Board ensures that it promotes the success of the Company by engaging specialist third party suppliers, with appropriate capability, performance records, resources and controls in place to deliver the services that the Company requires for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board consider the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board maintains regular contact with its key external service providers, either directly, or via its Company Secretary, and receives regular reporting from them through the Board and Committee meetings. The Management Engagement Committee meets annually to appraise and review its key service providers. Wider society and the environment Whilst strong long term investment performance is essential for an investment trust, the Board recognises that to provide an investment vehicle that is sustainable over the long term, both it and the Manager must have regard to ethical and environmental issues that impact society. Hence environmental, social and governance considerations are integrated into the Manager’s investment process and will continue to evolve. Further details of the Manager’s integrated approach to ESG can be found on pages 18 to 20. The Directors confirm that they have considered their duty under Section 172 when making decisions during the financial year under review. Key decisions and actions during the year which have required the Directors to have regard to applicable section 172 factors include: Key Decisions and Actions Dividends Payable to Shareholders Although the Company’s objective is to deliver capital growth, the level of dividends paid is a key consideration for the Board, given the ongoing demand for income which when added to the interim dividend paid in April 2023 of 8.0 pence per share. The Board has declared a final dividend of 23.75 pence per share, giving a total fully covered dividend of 31.75 pence per share for the year ended 30th June 2023. Based upon the year end share price of 876.0 pence, the 31.75 pence dividend represents a dividend yield of 3.6%. Gearing and Borrowings As mentioned in the Chairman’s statement, during the year, the Company’s revolving credit facility with National Australia Bank expired in February 2023 and the Board replaced the facility with a £25 million, two-year revolving credit facility with ING Bank. Subject to being in line with the Company’s gearing guidelines, the Board considers that the availability of funding is important to the Investment Manager to enhance investment returns for shareholders by borrowing money to buy high conviction assets as opportunities arise. Share Price Rating to Net Asset Value (‘NAV’) per Share In yet another challenging year, very few investment trusts, regardless of performance, asset class or investment approach, were immune from discount volatility as a result of unfavourable global market conditions caused by factors such as the ongoing geopolitical crisis in Russia-Ukraine. Your Company was no exception as its discount widened to 14.9%. The Board recognises that a widening of, and volatility in, the Company’s discount is seen by some investors as a disadvantage of investments trusts. With a strong investment team, a strong process and long term performance, a narrower and more stable discount has been an increasingly important area of focus for the Board. Over the long term the Board is seeking a stable discount or premium commensurate with investors’ appetite for UK equities and the Company’s various attractions, not least the quality of the investment team and the investment process, and the strong long term performance these have delivered. This commitment has resulted in a series of targeted buybacks, with buybacks continuing post the year’s reporting year end. Revised Management Fee Arrangement To enable the Company’s ongoing charges ratio to remain competitive whilst rewarding the Manager for its efforts, with effect from 1st January 2023, following due consideration of the Board’s review of the competitiveness of the investment management fees, the Company’s Manager reduced its fees. The revised fees payable to the Manager is now a tiered fee of 0.65% per annum on the first £200 million of net assets and 0.55% on net assets in excess of £200 million. Prior to 1st January 2023, the management fee was tiered at 0.65% per annum on total assets less current liabilities, excluding amounts held in a liquidity fund, up to £250 million and 0.60% per annum for assets in excess of £250 million. Miscellaneous In addition, the Directors have kept under review the Company’s operating costs; continued to hold the Manager to account on investment performance; undertaken a robust review of the principal and emerging risks faced by the Company; and continued to encourage the Manager to enhance its sales and marketing efforts. Furthermore, the Board has been in frequent contact with the Manager, receiving regular updates on the operating effectiveness of the Manager and key service providers and on areas such as portfolio performance and activity, portfolio liquidity, gearing and the discount to NAV at which the Company’s shares trade. By order of the Board Alison Vincent, for and on behalf of JPMorgan Funds Limited Company Secretary 18th September 2023 Duty to Promote the Success of the Company 34 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Strategic Report Directors’ Report John Evans (Chairman of the Board and Nomination Committee) A Director since June 2016. Last reappointed to the Board: 2022. Other directorships/relevant experience: Non-Executive Chairman of STS Global Income & Growth Trust plc. He commenced his career at Ivory & Sime and was one of the founding partners of Aberforth Partners, a specialist investment management firm that invests in UK smaller quoted companies largely on behalf of institutional investors. Connections with Manager: None. Shared directorships with other Directors: None. Shareholding in Company: 10,750. Lisa Gordon A Director since May 2022. Last reappointed to the Board: 2022. Other directorships/relevant experience: Non-Executive Chairman of Cenkos, an AIM listed securities firm and a Non-Executive Director of Alpha Group International PLC. She was founding Director and the Corporate Development Director of Local World plc (prior to its acquisition by Trinity Mirror), the Chief Operating Officer of Yattendon Group, a private conglomerate, the Director of Corporate Development of Chrysalis Group PLC, the media group and a Director of M&C Saatchi Plc. She is a Registered Representative Member of the Securities Institute. Connections with Manager: None. Shared directorships with other Directors: None. Shareholding in Company: Nil. Richard Gubbins (Chairman of the Management Engagement Committee) A Director since January 2017. Last reappointed to the Board: 2022. Other directorships/relevant experience: Holds a number of directorships including Hero Inc. Limited. He is also a senior consultant to an Indian family office and a Trustee of The Mary Rose Permanent Endowment Fund. He was a senior corporate partner at Ashurst LLP until 2016 and was Chairman of Henderson Alternative Strategies Trust PLC from 2014 to 2020. Connections with Manager: None. Shared directorships with other Directors: None. Shareholding in Company: 5,000. Margaret Payn (Chairman of the Audit & Risk Committee) A Director since March 2019. Last appointed to the Board: 2022. Other directorships/relevant experience: Non-Executive Director and Audit Committee Chair of Albion Technology and General VCT PLC and Non-Executive Director of Bendigo and Adelaide Bank Limited. Former CFO/COO of AMP Capital Limited, one of Australia’s largest investment managers, and a former Director of McPhersons Consumer Products Limited. She is a chartered accountant having qualified at KPMG. Connections with Manager: None. Shared directorships with other Directors: None. Shareholding in Company: Nil. Hannah Philp (Chairman of the Marketing & Communications Committee) A Director since March 2020. Last reappointed to the Board: 2022. Other directorships/relevant experience: A Non-Executive Director of The Bankers Investment Trust plc and Founder of ARC Club Ltd, a real estate operator managing shared amenities in residential developments. Prior to this she was director of marketing at Witan Investment Trust, a FTSE 250 investment company and an account director within the investor relations team at Edison Investment Research. Connections with Manager: None. Shared directorships with other Directors: None. Shareholding in Company: 376. Board of Directors 36 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report The Directors present their report and the audited financial statements for the year ended 30th June 2023. Directors The Directors of the Company who were in office during the year and up to the date of signing the financial statements are detailed on page 36. Details of Directors’ beneficial shareholdings may be found in the Directors’ Remuneration Report on page 51. All Directors will be standing for reappointment at the Company’s forthcoming AGM. The Board recommends to shareholders the reappointment of those Directors. Please refer to pages 40 and 41 for more information. Director Indemnification and Insurance As permitted by the Company’s Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third party indemnity, as defined by Section 234 of the Companies Act 2006. The indemnity was in place during the year and as at the date of this report. An insurance policy is maintained by the Company which indemnifies the Directors of the Company against certain liabilities arising in the conduct of their duties. Management of the Company The Manager and Company Secretary is JPMF, a company authorised and regulated by the FCA. JPMF is an affiliate of JPMAM and was appointed as the AIFM from 1st July 2014 to ensure the Company’s compliance with the Alternative Investment Fund Managers Directive. JPMF is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. which, through other subsidiaries, also provides marketing, banking, dealing and custodian services to the Company. JPMF is employed under a contract which can be terminated on six months’ notice, without penalty. If the Company wishes to terminate the contract on shorter notice, the balance of remuneration is payable as compensation. The Board has evaluated the performance of the Manager and confirms that it is satisfied that the continuing appointment of the Manager, on the terms agreed, is in the best interests of the Company and shareholders as a whole. In arriving at this view, the Board also considered the investment strategy and process of the Investment Management Team and the support that the Company receives from JPMF. The Alternative Investment Fund Managers Directive (‘AIFMD’) JPMF is the AIFM. JPMF has been approved as an AIFM by the FCA. For the purposes of the AIFMD the Company is an alternative investment fund (‘AIF’). JPMF delegates responsibility for the day to day management of the Company’s portfolio to JPMAM. The Company has appointed The Bank of New York Mellon (International) Limited (‘BNY’) as its depositary. BNY has appointed JPMorgan Chase Bank, N.A. as the Company’s custodian. BNY remains responsible for the oversight of the custody of the Company’s assets and for monitoring its cash flows. The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material changes to this information be disclosed in the annual report & financial statements of each AIF. An Investor Disclosure Document, which sets out information on the Company’s investment strategy and policies, leverage, risk, liquidity, administration, management, fees, conflicts of interest and other shareholder information is available on the Company’s website at www.jpmmidcap.co.uk . There have been no material changes (other than those reflected in these financial statements) to this information requiring disclosure. Any information requiring immediate disclosure pursuant to the AIFMD will be disclosed to the London Stock Exchange through a primary information provider. The Company’s leverage and JPMF’s remuneration disclosures are set out on page 82. Management Fee With effect from 1st January 2023, the management fee paid to the Manager is a tiered fee of 0.65% per annum on the first £200 million of net assets and 0.55% on net assets in excess of £200 million. Prior to 1st January 2023, the management fee was tiered at 0.65% per annum on total assets less current liabilities, excluding amounts held in a liquidity fund, up to £250 million and 0.60% per annum for assets in excess of £250 million. Total Return, Revenue and Dividends Gross return for the year amounted to £17.9 million (2022: gross loss £97.6 million) and net return after deducting finance costs, management fees, administrative expenses and taxation amounted to £14.6 million (2022: net loss £101.2 million). Distributable income for the year amounted to £8.1 million (2022: £7.9 million). The Directors recommend a final dividend of 23.75p (2022: 21.5p) per share, payable on 15th November 2023 to shareholders on the register at the close of business on 13th October 2023. This distribution, will amount to £5,118,000 (2022: £4,847,000). An interim dividend of 8.0p per share (2022: 8.0p per share) was paid on 25th April 2023. Following the payment of these dividends, the revenue reserve will amount to £7,668,000 (2022: £6,336,000), equivalent to 35.6p per share or 1.1 times the proposed dividend for the year. Directors’ Report J.P. Morgan Asset Management 37 Directors’ Report Disclosure of information to Auditors In the case of each of the persons who are Directors of the Company at the time when this report was approved: (a) so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act) of which the Company’s auditors are unaware; and (b) each of the Directors has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information (as defined) and to establish that the Company’s auditors are aware of that information. The above confirmation is given and should be interpreted in accordance with the provision of Section 418(2) of the Companies Act 2006. Independent Auditors PricewaterhouseCoopers LLP (‘PwC’) has expressed its willingness to continue in office as Auditors to the Company and a resolution proposing its reappointment and authorising the Directors to determine its remuneration for the ensuing year will be put to shareholders at the AGM. Capital Structure and Voting Rights Capital Structure The Company’s capital structure is summarised on the inside cover of this report. Voting Rights in the Company’s shares As at 18th September 2023 (being the latest business day prior to the publication of this report), the Company’s called-up share capital consists of 21,549,242 Ordinary shares (excluding Treasury shares) carrying one vote each. Therefore the total voting rights in the Company are 21,549,242. Notifiable Interests in the Company’s Voting Rights The Company has not been informed of any changes to the notifiable interest in the Company’s voting rights over the review period nor between 30th June 2023 and the date of this report. The rules concerning the appointment and replacement of Directors, amendment of the Articles of Association and powers to issue or repurchase the Company’s shares are contained in the Articles of Association of the Company and the Companies Act 2006. There are no restrictions on voting rights nor concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; no agreements which the Company is party to that affect its control following a takeover bid; and no agreements between the Company and its Directors concerning compensation for loss of office. Listing Rule 9.8.4R Listing Rule 9.8.4R requires the Company to include certain information in a single identifiable section of the Annual Report & Financial Statements or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this report. Annual General Meeting NOTE: THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should seek your own personal financial advice from your stockbroker, solicitor or other financial adviser authorised under the Financial Services and Markets Act 2000. Resolutions relating to the following items of special business will be proposed at the forthcoming AGM: (i) Authority to issue relevant securities and disapply pre-emption rights (resolutions 11 & 12) The Directors will seek renewal of the authority to issue up to 2,154,924 new shares or sell shares held in Treasury other than by a pro rata issue to existing shareholders up to an aggregate nominal amount of £538,731 such amount being equivalent to approximately 10% of the current issued share capital (excluding Treasury shares). The full text of the resolutions is set out in the Notice of AGM on pages 84 to 87. It is advantageous for the Company to be able to issue new shares or sell Treasury shares to investors when the Directors consider that it is in the best interest of shareholders to do so. Any such issues would only be made at prices greater than the NAV per share, thereby increasing the assets per share. (ii) Authority to repurchase the Company’s shares (resolution 13) The authority to repurchase up to 14.99% of the Company’s issued share capital (excluding shares held in Treasury), granted by shareholders at the 2022 AGM, will expire on 1st May 2024 unless renewed at the forthcoming AGM. The Directors consider that the renewal of the authority is in the interests of shareholders as a whole as the repurchase of shares at a discount to NAV enhances the NAV of the remaining shares. The Board will therefore seek shareholder approval at the AGM to renew this authority, which will last until 30th April 2025 or until the whole of the 14.99% has been acquired, whichever is the earlier. The full text of the resolution is set out in the Notice of AGM on pages 84 to 87. Repurchases will be made at the discretion of the Board, and will only be made in the market at prices below the prevailing NAV per share as and when market conditions are appropriate, thereby enhancing the NAV of the remaining shares. (iii) Authority to hold general meetings (resolution 14) A general meeting, other than an Annual General Meeting, may be called on not less than 14 clear days’ notice. Directors’ Report 38 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report Recommendation The Board considers that resolutions 11 to 14 are likely to promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own beneficial holdings which amount in aggregate to 16,126 shares representing approximately 0.01% of the voting rights of the Company. Other Information Financial risk management objectives and policies, with information on exposure to price, credit and liquidity risk, can be found in note 21 to the Financial Statements. Information on post balance sheet events can be found in note 23. Directors’ Report J.P. Morgan Asset Management 39 Directors’ Report Corporate Governance Statement Compliance The Board is committed to high standards of corporate governance. It has considered the principles and provisions of the AIC Code of Corporate Governance published in 2019 (the ‘AIC Code’), which addresses the principles and provisions set out in the UK Corporate Governance Code (the ‘UK Code’) published in 2018, as they apply to investment trust companies. It considers that reporting against the AIC Code, therefore, provides more appropriate information to the Company’s shareholders. Through ongoing advice throughout the year from the Company Secretary and the use of a detailed checklist the Board confirms that the Company has complied with the principles and provisions of the AIC Code, in so far as they apply to the Company’s business, throughout the year under review. As all of the Company’s day-to-day management and administrative functions are outsourced to third parties, it has no executive directors, employees or internal operations and therefore has not reported in respect of the following: • the role of the executive directors and senior management; • executive directors and senior management remuneration; and • the workforce. Copies of the UK Code and the AIC Code may be found on the respective organisations’ websites: www.frc.org.uk and www.theaic.co.uk Role of the Board A management agreement between the Company and JPMF sets out the matters over which the Manager has authority. This includes management of the Company’s assets and the provision of accounting, company secretarial, administration and some marketing services. All other matters are reserved for the approval of the Board. A formal schedule of matters reserved to the Board for decision has been approved. This includes determination and monitoring of the Company’s investment objectives and policy and its future strategic direction, gearing policy, dividend policy, management of the capital structure, appointment and removal of third party service providers, review of key investment and financial data and the Company’s corporate governance and risk control arrangements. The Board has procedures in place to deal with potential conflicts of interest and, following the introduction of the Bribery Act 2010, has adopted appropriate procedures designed to prevent bribery. It confirms that the procedures have operated effectively during the year under review. The Board meets at least quarterly during the year and additional meetings are arranged as necessary. Full and timely information is provided to the Board to enable it to function effectively and to allow Directors to discharge their responsibilities. There is an agreed procedure for Directors to take independent professional advice in the furtherance of their duties and at the Company’s expense. This is in addition to the access that every Director has to the advice and services of the Company Secretary, JPMF, which is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Board Composition The Board, chaired by John Evans, currently consists of five non-executive Directors. All Directors are considered to be independent of the Company’s Manager. The Board believes that it is appropriate to have a Senior Independent Director (‘SID’) and Richard Gubbins fulfils this role. The SID is available to shareholders if they have concerns that cannot be resolved through discussion with the Chairman. The Directors have a breadth of investment, business and financial skills and experience relevant to the Company’s business and brief biographical details of each Director are set out on page 36. The Board’s policy on diversity, including gender and ethnicity, is to take account of the benefits of this during the appointment process. The Board remains committed to appointing the most appropriate candidate and seeks to ensure that it does not unwittingly exclude any group. Therefore, no targets have been set against which to report. Reappointment of Directors The Directors of the Company and their brief biographical details are set out on page 36. The skills and experience that each Director brings to the Board, and hence why their contributions are important to the long term success of the Company, are summarised below. All Directors will stand for reappointment at the Company’s forthcoming AGM. Resolution 5 concerns the reappointment of John Evans. He joined the Board in June 2016 and has served for seven years as a Director. He assumed the role of Chairman from Michael Hughes in October 2020. John has in-depth knowledge and experience in UK equity investment management and of the investment trust sector in general. He brings strong leadership credentials to the position of Chairman. For details of his current directorships, please refer to page 36 of the Report. Corporate Governance Statement 40 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report Resolution 6 concerns the reappointment of Lisa Gordon. She joined the Board in May 2022 and has served a year as a Director. Lisa has more than 25 years’ of board experience, in both executive and non-executive roles at both listed and private companies. She has a strong track record in growing businesses and creating shareholder value with extensive hands-on experience in investment, M&A, strategy and business development, digital transformation, marketing, corporate restructuring and investor relations. She has a deep understanding of capital markets developed through Plc Board roles and following an early career in investment banking. For details of her current directorships, please refer to page 36 of the Report. Resolution 7 concern the reappointment of Richard Gubbins. He joined the Board in January 2017 and has served for six years as a Director. Richard has vast experience in the corporate finance sector having acted as a lead corporate partner for Ashurst LLP on M&A and corporate finance transactions for over 27 years. With this experience, and having chaired Henderson Alternative Strategies Trust PLC for over six years, he continues to contribute to Board deliberations with sound and relevant advice. For details of his current directorships, please refer to page 36 of the Report. Resolution 8 concerns the reappointment of Margaret Payn. She joined the Board in March 2019 and has served for four years as a Director. Margaret has a strong accounting and financial background, having held the office of CFO and COO at AMP Capital Limited, which was one of Australia’s largest investment managers. She is a chartered accountant, having qualified with KPMG in the UK and brings this skill set to her role as Chairman of the Company’s Audit & Risk Committee. For details of her current directorships, please refer to page 36 of the Report. Resolution 9 concerns the reappointment of Hannah Philp. She joined the Board in March 2020 and has served for three years as a Director. Hannah brings to the Board recent and relevant experience in the somewhat niche area of investment trust marketing. She is key to the Board’s plans to increase the promotion of the Company and attract more shareholders to the benefits of long term investing in UK mid cap stocks. For details of her current directorships, please refer to page 36 of the Report. The Board confirms that each of the Directors standing for reappointment at the forthcoming Annual General Meeting continue to contribute effectively and recommends that shareholders vote in favour of their reappointment. Tenure Directors are initially appointed until the following AGM when, under the Company’s Articles of Association, it is required that they be reappointed by shareholders. Thereafter, subject to the performance evaluation carried out each year, the Board will agree whether it is appropriate for each Director to seek reappointment. In accordance with corporate governance best practice, Directors continuing in office seek annual reappointment and no Director, including the Chair, will normally seek reappointment after having served for nine years on the Board. The Board keeps plans for its orderly succession and refreshment under continual review. The average tenure of Directors is less than six years, as detailed in the table below, which shows the tenure of Directors standing for reappointment at the forthcoming Annual General Meeting and projected forward to 2028. Please note that the above table is a guide only and does not anticipate for retirements of current Directors nor the appointment of new Directors. The terms and conditions of Directors’ appointments are set out in formal letters of appointment, copies of which are available for inspection on request at the Company’s registered office and at the AGM. A list of potential conflicts of interest for each Director is maintained by the Company. These are considered carefully, taking into account the circumstances surrounding them, and, if considered appropriate, are approved. Key – tenure 0-6 years 7-8 years 9+ years John Evans Richard Gubbins Margaret Payn Hannah Philp Lisa Gordon Corporate Governance Statement J.P. Morgan Asset Management 41 Directors’ Report Training and Appraisal On appointment, the Manager and Company Secretary provide all Directors with induction training. Thereafter regular briefings are provided on changes in regulatory requirements that affect the Company and Directors. Directors are encouraged to attend industry and other seminars covering issues and developments relevant to investment trusts. As part of the Board’s annual evaluation process the Chairman reviews with each Director their training and development needs. The Board conducts a formal evaluation of its own performance and that of its committees and individual Directors. The responses to questionnaires are discussed at a private meeting. The evaluation of individual Directors is led by the Chairman, and the SID leads the evaluation of the Chairman’s performance. Meetings and Committees The Board delegates certain responsibilities and functions to committees. Details of membership of committees are detailed below. The table below details the number of Board and Committee meetings attended by each Director. During the year there were five Board meetings. In addition, a private meeting of the Directors to evaluate the Manager, two Audit & Risk Committee meetings, two Marketing & Communication Committee meetings, a Nomination Committee meeting and a Management Engagement Committee meeting were held. Meetings Attended Audit & Risk Board Committee Meetings Meetings Director Attended Attended Current Directors John Evans 5 2 Lisa Gordon 5 2 Richard Gubbins 5 2 Richard Huntingford 1 2 1 Margaret Payn 5 2 Hannah Philp 5 2 Management Marketing & Nomination Engagement Communications Committee Committee Committee Meeting Meeting Director Attended Attended Attended Current Directors John Evans 2 1 1 Lisa Gordon 2 1 1 Richard Gubbins 2 1 1 Richard Huntingford 1 — — 1 Margaret Payn 2 1 1 Hannah Philp 2 1 1 1 Retired from the Board in September 2022. As well as the formal meetings detailed above, the Board meets and communicates frequently by email, video conferencing or telephone to deal with day to day matters as they arise. Board Committees Nomination Committee The Nomination Committee consists of all Directors and is chaired by John Evans. The Committee meets at least annually to ensure that the Board has an appropriate balance of skills to carry out its fiduciary duties and to select and propose suitable candidates when necessary for appointment. A variety of sources, including the engagement of external search consultants, is used to ensure that a wide range of candidates is considered. The appointment process takes into account the benefits of diversity, including gender. The Committee has a succession plan to refresh the Board in an orderly manner over time. The Committee undertakes an annual performance evaluation, as described above, to ensure that all members of the Board have devoted sufficient time and contributed adequately to the work of the Board. Management Engagement Committee The membership of the Management Engagement Committee consists of all Directors and is chaired by Richard Gubbins. The Committee meets at least once a year to review the terms of the management agreement between the Company and the Manager, to review the performance of the Manager, to review the notice period that the Board has with the Manager and to make recommendations to the Board. The Committee also reviews the Company’s agreements with other major service providers. Corporate Governance Statement 42 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report Marketing & Communications Committee The membership of the Marketing & Communications Committee consists of all Directors and is chaired by Hannah Philp. The Committee meets twice a year to review the effectiveness and results of JPMAM’s Sales and Marketing strategy in relation to the Company. Audit & Risk Committee The report of the Audit & Risk Committee is set out on pages 46 and 47. Terms of Reference The Nomination Committee, Management Engagement Committee, Marketing & Communications Committee and the Audit & Risk Committee have written terms of reference which define clearly their respective responsibilities, copies of which are available on the Company’s website and for inspection on request at the Company’s registered office and at the AGM. Relations with Shareholders The Board regularly monitors the shareholder profile of the Company. It aims to provide shareholders with a full understanding of the Company’s activities and performance and reports to shareholders by way of the Annual Report & Financial Statements and the Half Year Report. This is supplemented by the daily publication, through the London Stock Exchange, of the net asset value and share price of the Company’s shares and the monthly publication of a Company factsheet. In normal circumstances all shareholders have the opportunity, and are encouraged, to attend the Company’s AGM at which the Directors and representatives of the Manager are available in person to meet with and answer shareholders’ questions. In addition, a presentation is given by the Portfolio Managers who review the Company’s performance. During the year the Company’s brokers and the Manager hold regular discussions with shareholders. The Directors are made fully aware of their views. The Chairman and Directors make themselves available as and when required to address shareholder queries. The Directors may be contacted through the Company Secretary whose details are shown on page 92. The Company’s Annual Report & Financial Statements are published in time to give shareholders at least 20 working days’ notice of the AGM. Shareholders wishing to raise questions in advance of the meeting are encouraged to write to the Company Secretary at the address shown on page 92. Details of the proxy voting position on each resolution will be published on the Company’s website shortly after the AGM. Risk Management and Internal Control The AIC Code requires the Directors, at least annually, to review the effectiveness of the Company’s system of risk management and internal control and to report to shareholders that they have done so. This encompasses a review of all controls, which the Board has identified to include business, financial, operational, compliance and risk management. The Directors are responsible for the Company’s system of risk management and internal control which is designed to safeguard the Company’s assets, maintain proper accounting records and ensure that financial information used within the business, or published, is reliable. However, such a system can only be designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable, but not absolute, assurance against fraud, material misstatement or loss. Since investment management, custody of assets and all administrative services are provided to the Company by JPMF and its associates, the Company’s system of risk management and internal control mainly comprises monitoring the services provided by the Manager and its associates, including the operating controls established by them, to ensure that they meet the Company’s business objectives. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company (see Principal Risks on pages 25 to 29). This process has been in place for the year under review and up to the date of the approval of the Annual Report & Financial Statements and it accords with the Financial Reporting Council’s guidance. Given the foregoing, and in common with most investment trust companies, the Company does not have an internal audit function of its own. The Manager’s internal audit department conducts regular and rigorous reviews of the various functions within its asset management business. Any significant findings that are relevant to the Company and/or the Manager’s investment trust business are reported to the Board. The key elements designed to provide effective internal control are as follows: Financial Reporting – Regular and comprehensive review by the Board of key investment and financial data, including revenue projections, analysis of transactions and performance comparisons. Management Agreement – Evaluation and appointment of a manager and custodian regulated by the FCA, whose responsibilities are clearly defined in a written agreement. Management Systems – The Manager’s system of risk management and internal control includes organisational J.P. Morgan Asset Management 43 Directors’ Report Corporate Governance Statement agreements which clearly define the lines of responsibility, delegated authority, control procedures and systems. These are monitored by JPMorgan’s Compliance department which regularly monitors compliance with FCA rules and reports to the Board. Investment Strategy – Authorisation and monitoring of the Company’s investment strategy and exposure limits by the Board. The Board keeps under review the effectiveness of the Company’s system of risk management and internal control by monitoring the operation of the key operating controls of the Manager and its associates as follows: • the Board, through the Management Engagement Committee, reviews the terms of the management agreement and receives regular information on the Manager’s internal controls and operations; • the Board reviews a report, which is also independently reviewed, on the internal controls and the operations of its custodian, JPMorgan Chase Bank, N.A; • the Board reviews every six months a report from the Company’s Depositary, Bank of New York Mellon (International) Limited, which summarises the activities performed by the Depositary during the reporting period; and • the Board reviews every six months an independent report on the internal controls and the operations of JPMF’s investment trust department. By means of the procedures set out above, the Board confirms that it has reviewed the effectiveness of the Company’s system of risk management and internal control for the year ended 30th June 2023, and to the date of approval of the Annual Report & Financial Statements. During the course of its review of the system of risk management and internal control, the Board has not identified nor been advised of any failings or weaknesses which it has determined to be significant. Therefore a confirmation in respect of necessary actions has not been considered appropriate. Corporate Governance and Voting Policy The Company delegates responsibility for voting to JPMAM. The following information in italics is a summary of JPMAM’s policy statements on corporate governance, voting policy and stewardship/engagement issues, which has been reviewed and noted by the Board. Details on social and environmental issues are included in the Strategic Report on page 23. Corporate Governance JPMAM believes that corporate governance is integral to its investment process. As part of its commitment to delivering superior investment performance to clients, it expects and encourages the companies in which it invests to demonstrate the highest standards of corporate governance and best business practice. JPMAM examines the share structure and voting structure of the companies in which it invests, as well as the board balance, oversight functions and remuneration policy. These analyses then form the basis of JPMAM’s proxy voting and engagement activity. Proxy Voting JPMAM manages the voting rights of the shares entrusted to it as it would manage any other asset. It is the policy of JPMAM to vote in a prudent and diligent manner, based exclusively on a reasonable judgement of what will best serve the financial interests of clients. So far as is practicable, JPMAM will vote at all of the meetings called by companies in which it is invested. Stewardship/Engagement JPMAM believes effective investment stewardship can materially contribute to helping build stronger portfolios over the long term for our clients. At the heart of JPMAM’s approach lies a close collaboration between our portfolio managers, research analysts and investment stewardship specialists to engage with the companies in which JPMAM invests. Regular engagement with JPMAM’s investee companies through investment-led stewardship has been a vital component of JPMAM’s active management heritage. JPMAM continues to exercise active ownership through regular and ad hoc meetings, and through its voting responsibilities. JPMAM’s formal stewardship structure is designed to identify risks and understand its portfolio companies’ activities, in order to enhance value and mitigate risks associated with them. JPMAM has identified five main investment stewardship priorities it believes have universal applicability and will stand the test of time: governance; strategy alignment with the long term; human capital management; stakeholder engagement; and climate risk. Within each priority area, JPMAM identified related themes it is seeking to address over a shorter time frame. These themes will evolve as JPMAM engages with companies to understand issues and promote best practice. This combination of long-term priorities and evolving, shorter-term themes provides JPMAM with a structured and targeted framework to guide its investors and investment stewardship teams globally as JPMAM engages with investee companies around the world. Corporate Governance Statement 44 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report JPMAM is also committed to reporting more widely on our activities, including working to meet the practices laid out by the Financial Reporting Council (‘FRC’) in the UK Stewardship Code, to which JPMAM is a signatory. JPMAM’s Voting Policy and Corporate Governance Guidelines are available on request from the Company Secretary or can be downloaded from JPMAM’s website: https://am.jpmorgan.com/gb/en/asset- management/institutional/about-us/investment-stewardship / By order of the Board Alison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary 18th September 2023 Corporate Governance Statement J.P. Morgan Asset Management 45 Directors’ Report Role and Composition The Audit & Risk Committee consists of all Directors and is chaired by Margaret Payn. The Committee meets at least twice each year. The members of the Audit & Risk Committee consider that at least one member has recent and relevant financial experience and that the Committee as a whole has competence relevant to the sector in which the Company operates. As permitted under the AIC Code and given the number of Directors on the Board and the straightforward nature of the Company’s operations, the Chairman is a member of the Audit & Risk Committee. The Committee reviews the actions and judgements of the Manager in relation to the half year and annual report & financial statements and the Company’s compliance with the AIC Code. At the request of the Board, the Audit & Risk Committee provides confirmation to the Board as to how it has discharged its responsibilities so that the Board may ensure that information presented to it is fair, balanced and understandable, together with details of how it has done so. The Audit & Risk Committee also examines the effectiveness of the Company’s internal control systems, receives information from the Manager’s Compliance department and also reviews the scope and results of the external audit, its effectiveness and the independence and objectivity of the external auditors. In the Directors’ opinion the Auditors are independent. Going Concern In accordance with The Financial Reporting Council’s guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company’s ability to continue as a going concern. The Directors confirm their reasonable expectation that the Company has adequate resources to continue in operational existence for the 12 month period from the date of approval of the financial statements. This confirmation is based on a review of assumptions that took into account the outlook for the UK stock markets; the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments; and the ability of the Company to meet all of its liabilities and ongoing expenses. The Board has, in particular, considered the impact of heightened market volatility resulting from the conflict between Russia and Ukraine and the current high inflationary and interest rate environment, but does not believe the Company’s going concern status is affected. The Company’s assets, the vast majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly under all stress test scenarios reviewed by the Board and reviews of the impact of market factors, structural and financial factors and operating factors. Gearing levels and compliance with borrowing covenants are reviewed by the Manager and Board on a regular basis. Furthermore, the Directors are satisfied that the Company’s key third party suppliers, including its Manager, are not experiencing any operational difficulties to adversely affect their services to the Company. Financial Statements and Significant Accounting Matters During its review of the Company’s financial statements for the year ended 30th June 2023, the Audit & Risk Committee considered the following significant issues, including the first two significant issues which were communicated by the Auditors during their reporting: Significant issue How the issue was addressed Valuation The valuation of investments is existence and undertaken in accordance with the ownership of accounting policies, disclosed in investments note 1(b) to the Financial Statements. Controls are in place to ensure that valuations are appropriate and existence is verified through custodian reconciliations. The Company has appointed The Bank of New York Mellon (International) Limited (‘BNY’) as its depositary. BNY has appointed JPMorgan Chase Bank, N.A., as the Company’s custodian. BNY remains responsible for the oversight of the custody of the Company’s assets. Recognition of The recognition of investment income investment income is undertaken in accordance with accounting policy note 1(d) to the Financial Statements. Income reporting is conducted by the Manager and reviewed by the Board at every meeting. Compliance with Approval for the Company as an Sections 1158 and investment trust under Sections 1158 and 1159 of the 1159 for financial years commencing on Corporation Tax or after 1st October 2012 has been Act 2010 obtained and ongoing compliance with the eligibility criteria is monitored on a regular basis by the Manager, who reports on a monthly basis to the Board on the Company’s continuing compliance. The Committee has also reviewed the appropriateness of the adoption of the Going Concern basis in preparing the accounts, particularly in view of heightened market volatility resulting from the conflict between Russia and Ukraine and the current high inflationary and interest rate environment. The Committee recommended that the adoption of the Going Concern basis is appropriate (see Going Concern statement). The Committee also assessed the Long Term Viability of the Company as detailed on page 30 and recommended to the Board its expectation that the Company would remain in operation for the five year period of the assessment. Going Concern/Long Term Viability 46 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Report Audit & Risk Committee Report The Board is required to be made fully aware of any significant financial reporting issues and judgements made in connection with the preparation of the financial statements. Auditor’s Appointment and Tenure The Audit & Risk Committee also has a primary responsibility for making recommendations to the Board on the reappointment and removal of the external auditors and their fee. Representatives of the Company’s Auditors attended the Audit & Risk Committee meeting at which the draft Annual Report & Financial Statements were considered and also engage with Directors as and when required. The Company’s current Auditor, PwC, have audited the Company’s financial statements since its year ended 30th June 2011 and following a tender process conducted by the Committee in February 2020, were recommended to the Board to be reappointed as Auditor on the basis of the breadth of experience demonstrated of the investment funds sector, and the resources and strength of their audit team. The Board supported this recommendation. The Company’s current senior statutory auditor has been in the position since 2021, and the Company’s 2023 audit will be Shujaat Khan’s third year of a maximum five years in the role. The Committee has recommended the continued appointment of PwC as Auditor of the Company, to the Board, and recommends to shareholders that they vote in favour of Resolution 10 at the Company’s forthcoming AGM. Fair, Balanced and Understandable As a result of the work performed, the Committee has concluded that the Annual Report & Financial Statements for the year ended 30th June 2023, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy, and has reported on these findings to the Board. The Board’s conclusions in this respect are set out in the Statement of Directors’ Responsibilities on page 53. By order of the Board Alison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary 18th September 2023 Audit & Risk Committee Report J.P. Morgan Asset Management 47 Directors’ Report Directors’ Remuneration Report Directors’ Remuneration Report J.P. Morgan Asset Management 49 Directors’ Remuneration Report The Board has prepared this report in accordance with the requirements of Section 421 of the Companies Act 2006. An ordinary resolution to approve this report will be put to the members at the forthcoming AGM. The law requires the Company’s auditors to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor’s opinion is included in their report on pages 55 to 60. Directors’ Remuneration Policy The Directors’ Remuneration Policy is subject to a triennial binding vote and an ordinary resolution to approve this report was put to shareholders at the 2022 AGM. The Board has resolved that, for good governance purposes, the policy vote will be put to shareholders every year. Accordingly a resolution to approve the policy will be put to shareholders at the 2023 AGM. The policy is set out in full below and is currently in force. The Board’s policy for this and subsequent years is that Directors’ fees should properly reflect the time spent by the Directors on the Company’s business and should be at a level to ensure that candidates of a high calibre are recruited to the Board. The Chairman of the Board and the Chairs of the Audit & Risk Committee and Marketing & Communications Committee are paid higher fees than other Directors, reflecting the greater time commitment involved in fulfilling those roles. Reviews are based on information provided by the Manager and industry research carried out by third parties on the level of fees paid to the directors of the Company’s peers and within the investment trust industry generally. The involvement of remuneration consultants has not been deemed necessary as part of this review. The Company has no Chief Executive Officer and no employees and therefore no consultation of employees is required and there is no employee comparative data to provide, in relation to the setting of the remuneration policy for Directors. All of the Directors are non-executive. There are no performance-related elements to their fees and the Company does not operate any type of incentive, share scheme, award or pension scheme and therefore no Directors receive bonus payments or pension contributions from the Company or hold options to acquire shares in the Company. Directors are not granted exit payments and are not provided with compensation for loss of office. No other payments are made to Directors, other than the reimbursement of reasonable out-of-pocket expenses incurred in attending the Company’s business. Directors’ fees were paid at the fixed rate of £40,500 for the Chairman, £34,000 for the Chair of the Audit & Risk Committee, £31,300 for the Chair of the Marketing & Communications Committee and £27,300 for the other Directors. Following a review, Directors’ fees were increased with effect from 1st July 2023 and will be paid at the fixed rate of £43,500 for the Chairman, £36,250 for the Chair of the Audit & Risk Committee, £33,350 for the Chair of the Marketing & Communications Committee and £29,000 for the other Directors. The Company’s Articles of Association stipulate that aggregate fees must not exceed £250,000 per annum. Any increase in this maximum aggregate amount requires both Board and shareholder approval. The Company has not sought shareholder views on its remuneration policy. The Board considers any comments received from shareholders on remuneration policy on an ongoing basis and will take account of those views. The Directors do not have service contracts with the Company. The terms and conditions of Directors’ appointments are set out in formal letters of appointment which are available for review at the Company’s AGM and the Company’s registered office. Details of the Board’s policy on tenure are set out on page 41. The Company’s Remuneration policy also applies to new Directors. Directors’ Remuneration Policy Implementation The Directors’ Remuneration Report is subject to an annual advisory vote and therefore an ordinary resolution to approve this report will be put to shareholders at the forthcoming AGM. There have been no changes to the Remuneration policy compared with the year ended 30th June 2023 and no changes are proposed for the year ending 30th June 2024. At the AGM held on 1st November 2022, of votes cast, 99.6% of votes cast were in favour of (or granted discretion to the Chair who voted in favour of) the remuneration report and 0.4% voted against. Votes withheld were 29,440, the equivalent of less than 0.01% of votes cast. Details of the implementation of the Company’s remuneration policy are given below. No advice from remuneration consultants was received during the year under review. Single total figure of remuneration The total figure of remuneration for the Board for the year ended 30th June 2023 was £172,549. The total remuneration for each Director is detailed below together with the prior year comparative. Directors’ Remuneration Report 50 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Directors’ Remuneration Report Single Total Figure Table 1 2023 2022 Taxable Taxable Fees expenses 2 Total Fees expenses 2 Total Directors’ Name £ £ £ £ £ £ John Evans 40,500 3,129 43,629 39,000 1,693 40,693 Lisa Gordon 3 27,300 157 27,457 4,399 — 4,399 Richard Gubbins 27,300 1,947 29,247 26,250 — 26,250 Richard Huntingford 4 6,825 — 6,825 26,250 — 26,250 Margaret Payn 34,000 — 34,000 32,700 — 32,700 Hannah Philp 31,300 91 31,391 30,150 — 30,150 Total 167,225 5,324 172,549 158,749 1,693 160,442 1 Audited information. Other subject headings for the single figure table as prescribed by regulation are not included because there is nothing to disclose in relation thereto. 2 Taxable travel and subsistence expenses incurred in attending Board and Committee meetings. 3 Appointed on 1st May 2022. 4 Retired from the Board on 30th September 2022. Annual Percentage Change in Directors’ Remuneration The following table sets out the annual percentage change in Directors’ fees for the year to 30th June: % change % change % change for for the year for the year year ended to 30th June to 30th June 30th June Directors’ name 2023 2022 2021 John Evans 1 +3.8% +15.0% +49.0% Lisa Gordon 2 +4.0% n/a n/a Richard Gubbins +4.0% +2.9% — Richard Huntingford 3 n/a +2.9% — Margaret Payn 4 +4.0% +3.0% +6.8% Hannah Philp 5 +3.8% +18.2% — 1 Assumed role of Chairman on 29th October 2020. Had Mr Evans been Chairman throughout the financial year ended 30th June 2021, his fee increase would have been nil and +2.6% in respect of the financial years ended 30th June 2021 and 2022 respectively. 2 Appointed on 1st May 2022. Percentage change for 2023 has been calculated by prorating the 2022 fee over the year to obtain a more realistic percentage change. 3 Retired from the Board on 30th September 2022. 4 Assumed role of Audit & Risk Committee Chair on 30th October 2019. Had Ms Payn been Audit & Risk Committee Chair throughout the financial year ended 30th June 2020, her fee increase in respect of the financial year ended 30th June 2021 would have been nil. 5 Appointed on 1st March 2020 and assumed role of Marketing & Communications Committee Chair on 22nd July 2021, the date of this Committee’s inaugural meeting. A table showing the total remuneration for the Chairman over the five years ended 30th June 2023 is below: Remuneration for the Chairman over the five years ended 30th June 2023 Performance related benefits received as a Year ended percentage of 30th June Fees maximum payable 1 2023 £40,500 n/a 2022 £39,000 n/a 2021 £38,000 n/a 2020 £38,000 n/a 2019 £37,000 n/a 1 In respect of one year period and periods of more than one year. Directors’ Shareholdings 1 There are no requirements pursuant to the Company’s Articles of Association for the Directors to own shares in the Company. The Directors’ beneficial shareholdings are detailed below: 30th June 30th June Ordinary 2023 2022 John Evans (Chairman) 10,750 10,750 Lisa Gordon — — Richard Gubbins 5,000 5,000 Margaret Payn — — Hannah Philp 376 376 1 Audited information. In accordance with the Companies Act 2006, a graph showing the Company’s share price total return compared with its benchmark, the FTSE 250 Index (excluding investment trusts), is shown below. The Board believes this Index is the most representative comparator for the Company, given the Company’s investment objective. Ten Year Share Price and Index Total Return to 30th June 2023 Source: Morningstar. A table showing actual expenditure by the Company on remuneration and distributions to shareholders for the year and the prior year is below: Expenditure by the Company on Remuneration and Distributions to Shareholders Year ended 30th June 2023 2022 Remuneration paid to all Directors 172,549 160,442 Distribution to shareholders — by way of dividend 6,507,000 6,909,000 — by way of share repurchases 9,000,000 9,317,000 For and on behalf of the Board John Evans Chairman 18th September 2023 50 100 150 200 250 300 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Share price Benchmark Directors’ Remuneration Report J.P. Morgan Asset Management 51 Directors’ Remuneration Report Statement of Directors’ Responsibilities Statement of Directors’ Responsibilities J.P. Morgan Asset Management 53 Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report & Financial Statements in accordance with applicable law and regulation. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law). Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors, whose names and functions are listed in the Directors’ Report on page 36 confirm that, to the best of their knowledge: • the Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102, give a true and fair view of the assets, liabilities, financial position and return of the Company; and • the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. For and on behalf of the Board John Evans Chairman 18th September 2023 Independent Auditor’s Report Independent Auditor’s Report J.P. Morgan Asset Management 55 Independent Auditor’s Report Independent auditors’ report to the members of JPMorgan Mid Cap Investment Trust plc Report on the audit of the financial statements Opinion In our opinion, JPMorgan Mid Cap Investment Trust plc’s financial statements: • give a true and fair view of the state of the company’s affairs as at 30th June 2023 and of its return and cash flows for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law); and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report & Financial Statements (the ‘Annual Report’), which comprise: the Statement of Financial Position as at 30th June 2023; the Statement of Comprehensive Income, the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit & Risk Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. We have provided no non-audit services to the company in the period under audit. Our audit approach Overview Audit scope • The company is a standalone Investment Trust Company and engages JPMorgan Funds Limited (the ‘Manager’) to manage its assets. • We conducted our audit of the financial statements using information from JPMorgan Chase Bank N.A., (the ‘Administrator’) to whom the Manager has, with the consent of the directors, delegated the provision of certain administrative functions. • We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the company operates. • We obtained an understanding of the control environment in place at both the Manager and the Administrator, and adopted a fully substantive testing approach using reports obtained from the administrator. Key audit matters • Valuation and existence of investments. • Income from investments. Materiality • Overall materiality: £2,219,165 (2022: £2,229,079) based on 1% of Net Assets. • Performance materiality: £1,664,374 (2022: £1,671,809). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter We assessed the accounting policy for the valuation of investments for compliance with accounting standards and performed testing to check that investments are accounted for in accordance with this stated accounting policy. We tested the valuation of the quoted equity investments by agreeing the prices used in the valuation to independent third-party sources for all investments. We tested the existence of the investment portfolio by agreeing all investment holdings to an independent custodian confirmation. No material issues were identified. Valuation and existence of investments Refer to the Accounting Policies and the Notes to the financial statements. The investment portfolio at the year end principally comprised quoted equity investments valued at £241.6 million. We focused on the valuation and existence of investments because investments represent the principal element of the net asset value of the company as disclosed on the Statement of Financial Position in the Financial Statements. We found that the accounting policies implemented were in accordance with accounting standards and the AIC SORP, and that income has been accounted for in accordance with the stated accounting policy. The gains/losses on investments held at fair value through profit or loss comprise realised and unrealised gains/losses. For unrealised gains and losses, we tested the valuation of the portfolio at the year-end, together with testing the reconciliation of opening and closing investments. For realised gains/losses, we tested a sample of disposal proceeds by agreeing the proceeds to bank statements and we re-performed the calculation of a sample of realised gains/losses. We tested the accuracy of dividend receipts by agreeing the dividend rates from investments to independent third-party data. To test for occurrence, we confirmed that all dividends recorded had occurred in the market to independent third-party data and traced a sample of receipts to bank statements. To test for completeness, we tested that the appropriate dividends had been received in the year by reference to independent third-party data of dividends declared for all quoted investments held during the year. Income from investments Refer to the Accounting Policies and Notes to the Financial Statements. For the Company we consider that ‘income’ refers to both revenue and capital (including gains and losses on investments). We focused on the accuracy, occurrence and completeness of investment income as incomplete or inaccurate income could have a material impact on the Company’s net asset value. We also focused on the accounting policy for income recognition and its presentation in the Statement of Comprehensive Income as set out in the requirements of The Association of Investment Companies Statement of Recommended Practice (the ‘AIC SORP’) as incorrect application could indicate a misstatement in income recognition. Independent Auditor’s Report 56 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Independent Auditor’s Report Independent Auditor’s Report J.P. Morgan Asset Management 57 Independent Auditor’s Report Key audit matter How our audit addressed the key audit matter How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it operates. The impact of climate risk on our audit In planning our audit, we made enquiries of the directors and manager to understand the extent of the potential impact of climate change on the company’s financial statements. The directors and manager concluded that the impact on the measurement and disclosures within the financial statements is not material because the company’s investment portfolio is made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the company’s investment activities. We also considered the consistency of the climate change disclosures included in the Strategic report with the financial statements and our knowledge from our audit. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Overall company materiality £2,219,165 (2022: £2,229,079). How we determined it 1% of Net Assets. Rationale for benchmark applied We have applied this benchmark, a generally accepted auditing practice for investment trust audits, we believe this provides an appropriate and consistent year-on-year basis for our audit. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £1,664,374 (2022: £1,671,809) for the company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £110,958 (2022: £111,454) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included: • Evaluating the directors’ risk assessment and considering whether it addressed the relevant threats to the company; • Evaluating the directors’ assessment of potential operational impacts to the company of relevant risks, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; We also tested that the allocation and presentation of dividend income between the revenue and capital return columns of the Statement of Comprehensive Income was in line with the requirements set out in the AIC SORP. No material issues were identified. • Reviewing the directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the company and oversight of key third-party service providers; and • Assessing the implication of significant reductions in net assets as a result of market performance on the ongoing ability of the company to operate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic Report and Directors’ Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ Report for the year ended 30th June 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report. Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: Independent Auditor’s Report 58 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Independent Auditor’s Report Independent Auditor’s Report J.P. Morgan Asset Management 59 Independent Auditor’s Report • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit & Risk Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities Independent Auditor’s Report 60 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Independent Auditor’s Report for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital gains) or to increase the net asset value of the company. Audit procedures performed by the engagement team included: • discussions with the Manager and the Audit & Risk Committee, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; • reviewing relevant committee meeting minutes, including those of the Board and Audit & Risk Committee; • assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; • review of financial statement disclosures to underlying supporting documentation; • Identifying and testing manual journal entries, in particular year end journal entries posted by the Administrator during the preparation of the financial statements; and • designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of directors’ remuneration specified by law are not made; or • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit & Risk Committee, we were appointed by the members on 29th October 2010 to audit the financial statements for the year ended 30th June 2011 and subsequent financial periods. The period of total uninterrupted engagement is thirteen years, covering the years ended 30th June 2011 to 30th June 2023. Shujaat Khan (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 18th September 2023 Financial Statements 62 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Statement of Comprehensive Income Financial Statements For the year ended 30th June 2023 2023 2022 Revenue Capital Total Revenue Capital Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Gains/(losses) on investments held at fair value through profit or loss 3 — 8,331 8,331 — (107,110) (107,110) Net foreign currency gains/(losses) — 3 3 — (7) (7) Income from investments 4 9,402 — 9,402 9,516 — 9,516 Interest receivable and similar income 4 114 — 114 41 — 41 Gross return/(loss) 9,516 8,334 17,850 9,557 (107,117) (97,560) Management fee 5 (445) (1,039) (1,484) (673) (1,571) (2,244) Other administrative expenses 6 (616) — (616) (675) — (675) Net return/(loss) before finance costs and taxation 8,455 7,295 15,750 8,209 (108,688) (100,479) Finance costs 7 (358) (835) (1,193) (204) (476) (680) Net return/(loss) before taxation 8,097 6,460 14,557 8,005 (109,164) (101,159) Taxation credit/(charge) 8 13 — 13 (68) — (68) Net return/(loss) after taxation 8,110 6,460 14,570 7,937 (109,164) (101,227) Return/(loss) per share 9 36.85p 29.35p 66.20p 34.07p (468.65)p (434.58)p Details of dividends are given in note 10 on page 71. The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. Net return/(loss) after taxation represents the profit/(loss) for the year and also Total Comprehensive Income. The notes on pages 66 to 80 form an integral part of these financial statements. Statement of Changes in Equity Called up Capital share Share redemption Capital Revenue capital premium reserve reserves 1 reserve 1 Total £’000 £’000 £’000 £’000 £’000 £’000 At 30th June 2021 6,350 454 3,650 319,752 10,155 340,361 Repurchase of shares into Treasury — — — (9,317) — (9,317) Net (loss)/return — — — (109,164) 7,937 (101,227) Dividends paid in the year (note 10) — — — — (6,909) (6,909) At 30th June 2022 6,350 454 3,650 201,271 11,183 222,908 Repurchase of shares into Treasury — — — (9,000) — (9,000) Net return — — — 6,460 8,110 14,570 Dividends paid in the year (note 10) — — — — (6,507) (6,507) At 30th June 2023 6,350 454 3,650 198,731 12,786 221,971 1 The capital and revenue reserves are distributable. The amount of these reserves that are distributable is not necessarily the full amount of the reserves as disclosed in these financial statements. These reserves may be used to fund distributions to investors. The notes on pages 66 to 80 form an integral part of financial statements. J.P. Morgan Asset Management 63 Statement of Financial Position Financial Statements At 30th June 2023 2023 2022 Notes £’000 £’000 Fixed assets Investments held at fair value through profit or loss 11 241,636 235,322 Current assets 12 Debtors 1,694 6,921 Cash and cash equivalents 2,484 15,831 4,178 22,752 Current liabilities Creditors: amounts falling due within one year 13 (23,843) (20,166) Net current (liabilities)/assets (19,665) 2,586 Total assets less current liabilities 221,971 237,908 Creditors: amounts falling due after more than one year 14 — (15,000) Net assets 221,971 222,908 Capital and reserves Called up share capital 15 6,350 6,350 Share premium 16 454 454 Capital redemption reserve 16 3,650 3,650 Capital reserves 16 198,731 201,271 Revenue reserve 16 12,786 11,183 Total shareholders’ funds 221,971 222,908 Net asset value per share 17 1,029.6p 988.8p The financial statements on pages 62 to 65 were approved and authorised for issue by the Directors on 18th September 2023 and were signed on their behalf by: Margaret Payn Director The notes on pages 66 to 80 form an integral part of these financial statements. Company registration number: 1047690. The Company is registered in England and Wales. 64 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Statement of Cash Flows Financial Statements For the year ended 30th June 2023 2023 2022 1 £’000 £’000 Cash flows from operating activities Net return/(loss) before finance costs and taxation 15,750 (100,479) Adjustment for: Net (gains)/losses on investments held at fair value through profit or loss (8,331) 107,110 Net foreign currency (gains)/losses (3) 7 Dividend income (9,379) (9,516) Interest income (114) (41) Scrip dividends received as income (23) — Realised loss/(gain) on foreign exchange transactions 3 (7) Increase in accrued income and other debtors (52) (5) Decrease/(increase) in accrued expenses 158 (17) (1,991) (2,948) Dividends received 8,752 9,286 Interest received 114 41 Overseas tax recovered/(paid) 72 (15) Net cash inflow from operating activities 6,947 6,364 Purchases of investments (107,045) (113,532) Sales of investments 110,031 142,071 Net cash inflow from investing activities 2,986 28,539 Dividends paid (6,507) (6,909) Repurchase of shares into Treasury (8,737) (9,317) Repayment of bank loan (28,000) (15,000) Drawdown of bank loan 21,000 — Interest paid (1,036) (693) Net cash outflow from financing activities (23,280) (31,919) (Decrease)/increase in cash and cash equivalents (13,347) 2,984 Cash and cash equivalents at start of year 15,831 12,847 Cash and cash equivalents at end of year 2,484 15,831 Cash and cash equivalents consist of: Cash and short term deposits 258 272 Cash held in JPMorgan Sterling Liquidity Fund 2,226 15,559 Total 2,484 15,831 1 The presentation of the Cash Flow Statement, as permitted under FRS 102, has been changed so as to present the reconciliation of ‘net return/(loss) before finance costs and taxation’ to ‘net cash inflow from operating activities’ on the face of the Cash Flow Statement. Previously, this was shown by way of note. Other than consequential changes in presentation of the certain cash flow items, there is no change to the cash flows as presented in previous periods. The notes on pages 66 to 80 form an integral part of these financial statements. J.P. Morgan Asset Management 65 Statement of Cash Flows Financial Statements Reconciliation of net debt As at Other non-cash As at 30th June 2022 Cash flows charges 30th June 2023 £’000 £’000 £’000 £’000 Cash and cash equivalents Cash 272 (14) — 258 Cash equivalents 15,559 (13,333) — 2,226 15,831 (13,347) — 2,484 Borrowings Debt due within one year (15,000) (8,000) — (23,000) Debt due after one year (15,000) 15,000 — — (30,000) 7,000 — (23,000) Net debt (14,169) (6,347) — (20,516) 66 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements For the year ended 30th June 2023 1. Accounting policies (a) Basis of accounting The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice (‘UK GAAP’), including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the ‘SORP’) issued by the Association of Investment Companies in July 2022. All of the Company’s operations are of a continuing nature. The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 46 of the Directors’ Report form part of these financial statements. The policies applied in these financial statements are consistent with those applied in the preceding year. (b) Valuation of investments The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors. Accordingly, upon initial recognition the investments are designated by the Company as held at fair value through profit or loss. They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which are recognised as capital at the time of acquisition. Subsequently the investments are valued at fair value, which are quoted bid prices for investments traded in active markets. For investments which are not traded in active markets, unlisted and restricted investments, the Board takes into account the latest traded prices, other observable market data and asset values based on the latest management accounts. All purchases and sales are accounted for on a trade date basis. (c) Accounting for reserves Gains and losses on sales of investments including the related foreign exchange gains and losses, realised gains and losses on foreign currency, management fee and finance costs allocated to capital and any other capital charges, are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Realised gains and losses’. Increases and decreases in the valuation of investments held at the year end including the related foreign exchange gains and losses, are included in the Statement of Comprehensive Income and dealt with in capital reserves within ‘Investment holding gains and losses’. (d) Income Dividends receivable from equity shares are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in nature, in which case it is included in capital. Overseas dividends are included gross of any withholding tax. Special dividends are looked at individually to ascertain the reason behind the payment. This will determine whether they are treated as revenue or capital. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital. Underwriting commission is recognised in revenue 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 commission received is deducted from the cost of the shares taken up, with the balance taken to revenue. Deposit interest receivable is taken to revenue on an accruals basis. J.P. Morgan Asset Management 67 Notes to the Financial Statements Financial Statements Dividends from Real Estate Investment Trusts (‘REITs’) are taken to revenue on an accruals basis. UK REIT dividends can be Property Income Distribution (‘PID’) or non-PID for tax purposes. The exact split is determined by the underlying company. PID revenue is taxable. Non-PID revenue is treated similarly to UK dividends. (e) Expenses All expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue with the following exceptions: – The management fee is allocated 30% to revenue and 70% to capital, in line with the Board’s expected long term split of revenue 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 commonly referred to as transaction costs and comprise brokerage commission and stamp duty. Details of transaction costs are given in note 11 on page 72. (f) Finance costs Finance costs are accounted for on an accruals basis using the effective interest method. Finance costs are allocated 30% to revenue and 70% to capital, in line with the Board’s expected long term split of revenue and capital return from the Company’s investment portfolio. (g) Financial instruments Cash and cash equivalents may comprise cash including demand deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Liquidity funds are considered cash equivalents as they are held for cash management purposes as an alternative to cash. The Liquidity fund portfolio consists of short dated deposits and commercial paper, a maturity profile of less than three months and low volatility net asset value. Other debtors and creditors do not carry any interest, are short term in nature and are accordingly stated at nominal value, with debtors reduced by appropriate allowances for estimated irrecoverable amounts. Bank loans are classified as financial liabilities measured at amortised cost. They are initially measured as proceeds received net of direct issue costs. Loans are subsequently measured at amortised cost using the effective interest method. Interest payable on the bank loan is accounted for on an accruals basis in the Statement of Comprehensive Income. The Company has not utilised any derivative financial instruments in the current and comparative year. (h) Taxation Current tax is provided at the amounts expected to be paid or recovered. Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is more likely than not that taxable profits will be available against which those timing differences can be utilised. Tax relief is allocated to expenses charged to capital on the ‘marginal basis’. On this basis, if taxable income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to the capital column. Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on an undiscounted basis. (i) Value Added Tax (‘VAT’) Expenses are disclosed inclusive of the related irrecoverable VAT. Recoverable VAT is calculated using the partial exemption method based on the proportion of zero rated supplies to total supplies. (j) Functional currency The Company is required to identify its functional currency, being the currency of the primary economic environment in which the Company operates. The Board, having regard to the currency of the Company’s share capital and the predominant currency in which its shareholders operate, has determined that sterling is the functional currency. Sterling is also the currency in which the financial statements are presented. Transactions denominated in foreign currencies are converted at actual exchange rates at the date of the transaction. Monetary assets and liabilities and equity investments held at fair value denominated in foreign currencies at the year end are translated at the rates of exchange prevailing at the year end. 68 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 1. Accounting policies (continued) (j) Functional currency (continued) Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in revenue or capital, depending on whether the gain or loss is of a revenue or capital nature. Gains and losses on investments arising from a change in exchange rates are included in ‘Investment holding gains and losses’ for investments still held at year end, and in ‘Realised gains and losses’ for investments sold during the year. (k) Dividends payable Dividends are included in the financial statements in the year in which they are approved by shareholders. (l) Repurchase of shares for cancellation The cost of repurchasing shares including the related stamp duty and transactions costs is charged to capital reserves and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. The nominal value of share capital repurchased and cancelled is transferred out of called up share capital and into capital redemption reserve. (m) Repurchase of shares to hold in Treasury The cost of repurchasing shares into Treasury, including the related stamp duty and transaction costs is charged to capital reserves and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Where shares held in Treasury are subsequently cancelled, the nominal value of those shares is transferred out of called up share capital and into capital redemption reserve. Should shares held in Treasury be sold, the sales proceeds will be treated as a realised profit up to the amount of the purchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will be transferred to share premium. 2. Significant accounting judgements and estimates The preparation of the Company’s financial statements on occasion requires the Directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current and future periods, depending on circumstance. The Directors do not believe that any significant accounting judgements or estimates have been applied to this set of financial statements, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. 3. Gains/(losses) on investments held at fair value through profit or loss 2023 2022 £’000 £’000 Realised losses on sales of investments (7,477) (4,493) Net change in unrealised gains and losses on investments 15,819 (102,615) Other capital charges (11) (2) Total capital gains/(losses) on investments held at fair value through profit or loss 8,331 (107,110) J.P. Morgan Asset Management 69 Notes to the Financial Statements Financial Statements 4. Income 2023 2022 Revenue Total Revenue Total £’000 £’000 £’000 £’000 Income from investments UK dividends 7,501 7,501 6,928 6,928 Overseas dividends 766 766 1,013 1,013 Special dividends 1,040 1,040 1,518 1,518 Property income distributions 72 72 57 57 Scrip dividends 23 23 — — 9,402 9,402 9,516 9,516 Interest and similar income Interest from liquidity funds 114 114 36 36 Deposit interest — — 5 5 114 114 41 41 Total income 9,516 9,516 9,557 9,557 5. Management fee 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Management fee 445 1,039 1,484 673 1,571 2,244 Details of the management fee are given in the Directors’ Report on page 37. 6. Other administrative expenses 2023 2022 £’000 £’000 Administration expenses 197 284 Directors’ fees 1 167 159 Depositary fees 2 33 55 Auditor’s remuneration for audit services 3 53 46 Marketing costs 4 166 131 616 675 1 Full disclosure is given in the Directors’ Remuneration Report on pages 49 to 51. Excludes Directors’ taxable expenses which are included within administration expenses. 2 Includes £5,000 (2022: £9,000) irrecoverable VAT. 3 Includes £9,000 (2022: £8,000) irrecoverable VAT. Auditor’s remuneration for non-audit services amounted to £nil in 2023 (2022: £nil). 4 Includes £28,000 (2022: £22,000) irrecoverable VAT. 70 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 7. Finance costs 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Interest on bank loans and overdrafts 358 835 1,193 204 476 680 8. Taxation (a) Analysis of (tax credit)/charge in the year 2023 2022 £’000 £’000 Overseas withholding tax (13) 68 Total tax (credit)/charge for the year (13) 68 (b) Factors affecting total taxation (credit)/charge for the year The tax (credit)/charge for the year is lower (2022: higher) than the Company’s applicable rate of corporation tax of 20.5% (2022: 19%). The factors affecting the total tax (credit)/charge for the year are as follows: 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Net return/(loss) before taxation 8,097 6,460 14,557 8,005 (109,164) (101,159) Net return/(loss) before taxation multiplied by the Company’s applicable rate of corporation tax of 20.5% (2022: 19%) 1,660 1,324 2,984 1,521 (20,741) (19,220) Effects of: Non taxable capital (gains)/losses — (1,709) (1,709) — 20,352 20,352 Non taxable scrip dividends (5) — (5) — — — Non taxable UK dividends (1,751) — (1,751) (1,605) — (1,605) Non taxable overseas dividends (157) — (157) (192) — (192) Tax attributable to expenses and finance costs allocated to capital (385) 385 — (389) 389 — Unrelieved expenses 638 — 638 665 — 665 Overseas withholding tax (13) — (13) 68 — 68 Total tax (credit)/charge for the year (13) — (13) 68 — 68 (c) Deferred taxation The Company has an unrecognised deferred tax asset of £17,463,000 (2022: £16,672,000) based on a prospective corporation tax rate of 20.5% (2022: 19%). The March 2021 Budget announced an increase to the main rate of corporation tax to 25% from 1st April 2023. This increase in the standard rate of corporation tax was substantively enacted on 24th May 2021 and became effective from 2nd June 2021. The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the financial statements. Given the Company’s status as an investment trust company and the intention to continue meeting the conditions required to obtain approval, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments. J.P. Morgan Asset Management 71 Notes to the Financial Statements Financial Statements 9. Return/(loss) per share 2023 2022 £’000 £’000 Revenue return 8,110 7,937 Capital return/(loss) 6,460 (109,164) Total return/(loss) 14,570 (101,227) Weighted average number of shares in issue during the year 22,008,413 23,293,115 Revenue return per share 36.85p 34.07p Capital return/(loss) per share 29.35p (468.65)p Total return/(loss) per share 66.20p (434.58)p 10. Dividends (a) Dividends paid and proposed 2023 2022 £’000 £’000 Dividends paid 2022 Final dividend of 21.5p (2021: 21.5p) per share 4,767 5,044 2023 Interim dividend of 8.0p (2022: 8.0p) per share 1,740 1,865 Total dividends paid in the year 6,507 6,909 Dividend proposed 2023 Final dividend proposed of 23.75p (2022: 21.5p) per share 5,118 4,847 Total dividends proposed for year 5,118 4,847 All dividends paid and proposed in the year have been funded from the revenue reserve. The Final dividend proposed in respect of the year ended 30th June 2022 amounted to £4,847,000. However, the amount paid amounted to £4,767,000 due to shares bought back after the balance sheet date but prior to the record date. The dividend proposed in respect of the year ended 30th June 2023 is subject to shareholder approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th June 2024. (b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (‘Section 1158’) The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £8,110,000 (2022: £7,937,000). The revenue reserve after payment of the final dividend will amount to £7,668,000 (2022: £6,336,000). 2023 2022 £’000 £’000 Interim dividend of 8.0p (2022: 8.0p) per share 1,740 1,865 Final dividend of 23.75p (2022: 21.5p) per share 5,118 4,847 6,858 6,712 72 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 11. Investments held at fair value through profit or loss 2023 2022 £’000 £’000 Investments listed on a recognised stock exchange 241,636 235,322 Opening book cost 222,378 256,236 Opening investment holding gains 12,944 115,559 Opening valuation 235,322 371,795 Movement in the year: Purchases at cost 102,165 118,561 Sales proceeds (104,193) (147,926) Gains/(losses) on investments 8,342 (107,108) 241,636 235,322 Closing book cost 212,873 222,378 Closing investment holding gains 28,763 12,944 Total investments held at fair value through profit or loss 241,636 235,322 Transaction costs on purchases during the year amounted to £499,000 (2022: £590,000) and on sales during the year amounted to £58,000 (2022: £84,000). These costs comprise mainly stamp duty on purchases and brokerage commission. The Company received £104,193,000 (2022: £147,926,000) from investments sold in the year. The bookcost of these investments when they were purchased was £111,670,000 (2022: £152,419,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. 12. Current assets 2023 2022 £’000 £’000 Debtors Securities sold awaiting settlement — 5,847 Dividends and interest receivable 1,468 895 Overseas tax recoverable 151 156 Other debtors 75 23 1,694 6,921 The Directors consider that the carrying amount of debtors approximates to their fair value. Cash and cash equivalents Cash and cash equivalents comprise bank balances, short term deposits and liquidity funds. The carrying amount of these represents their fair value. The breakdown of cash and cash equivalent is provided in the reconciliation of net debt. J.P. Morgan Asset Management 73 Notes to the Financial Statements Financial Statements 13. Current liabilities 2023 2022 £’000 £’000 Creditors: amounts falling due within one year Securities purchased awaiting settlement 126 5,029 Bank loans 23,000 15,000 Repurchases of the Company’s own shares awaiting settlement 263 — Interest payable 223 66 Other creditors 231 71 23,843 20,166 The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value. As at 30th June 2023 the Company had floating rate loan facilities in place. A £30 million five year unsecured multi currency loan facility with Scotiabank (Ireland) Limited expiring on 22nd February 2024, and a £25 million unsecured loan facility with ING Bank expiring on 14th February 2025. Under the terms of the five year £30 million Scotiabank (Ireland) Plc multi currency loan facility, the Company may draw down up to £30 million, with an option to increase the facility by £20 million (subject to credit approval by the lender), at an interest rate of SONIA as quoted in the market for the loan period, plus a margin and mandatory costs. At the year end, the Company had £23 million (2022: £15 million) drawn down on this facility. Under the terms of the two year £25 million ING Bank loan facility, the Company may draw down up to £25 million at an interest rate of SONIA, plus a margin and mandatory costs. At the year end, the Company had nil drawn down on this facility. 14. Creditors: amounts falling due after more than one year 2023 2022 £’000 £’000 Bank loans — 15,000 During the year, the Company’s revolving credit facility with National Australia Bank matured in February 2023 and the Board replaced the facility with a £25 million, two-year revolving credit facility with ING Bank (see note 13). 15. Called up share capital 2023 2022 Number of Number of shares £’000 shares £’000 Ordinary shares allotted and fully paid: Opening Balance of ordinary shares of 25p each excluding shares held in Treasury 22,543,730 5,636 23,462,770 5,866 Repurchase of shares into Treasury (984,488) (246) (919,040) (230) Subtotal of shares of 25p each excluding shares held in Treasury 21,559,242 5,390 22,543,730 5,636 Shares held in Treasury 3,838,838 960 2,854,350 714 Closing balance of shares of 25p each including shares held in Treasury 25,398,080 6,350 25,398,080 6,350 Further details of transactions in the Company’s shares are given in the Business Review on page 22. 74 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 16. Capital and reserves Capital reserves Investment Called up Capital Realised holding share Share redemption gains and gains and Revenue capital premium reserve losses losses reserve 1 Total 2023 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Opening balance 6,350 454 3,650 188,327 12,944 11,183 222,908 Net foreign currency gains — — — 3 — — 3 Realised loss on sale of investments — — — (7,477) — — (7,477) Net change in unrealised gains on investments — — — — 15,819 — 15,819 Repurchase of shares into Treasury — — — (9,000) — — (9,000) Management fee and finance costs allocated to capital — — — (1,874) — — (1,874) Other capital charges — — — (11) — — (11) Dividends paid in the year — — — — — (6,507) (6,507) Retained revenue for the year — — — — — 8,110 8,110 Closing balance 6,350 454 3,650 169,968 28,763 12,786 221,971 1 The revenue reserve is distributable. The amount of the revenue reserve that is distributable is not necessarily the full amount of the reserve as disclosed in these financial statements of £12,786,000 as at 30th June 2023. This reserve may be used to fund distributions to investors. Capital reserves Investment Called up Capital Realised holding share Share redemption gains and gains and Revenue capital premium reserve losses losses reserve 1 Total 2022 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Opening balance 6,350 454 3,650 204,193 115,559 10,155 340,361 Net foreign currency losses — — — (7) — — (7) Realised losses on sale of investments — — — (4,493) — — (4,493) Net change in unrealised gains on investments — — — — (102,615) — (102,615) Repurchase of shares into Treasury — — — (9,317) — — (9,317) Management fee and finance costs allocated to capital — — — (2,047) — — (2,047) Other capital charges — — — (2) — — (2) Dividends paid in the year — — — — — (6,909) (6,909) Retained revenue for the year — — — — — 7,937 7,937 Closing balance 6,350 454 3,650 188,327 12,944 11,183 222,908 1 The revenue reserve is distributable. The amount of the revenue reserve that is distributable is not necessarily the full amount of the reserve as disclosed in these financial statements of £11,183,000 as at 30th June 2022. This reserve may be used to fund distributions to investors. 17. Net asset value per share 2023 2022 Net assets (£’000) 221,971 222,908 Number of shares in issue 21,559,242 22,543,730 Net asset value per share 1,029.6p 988.8p 18. Contingent liabilities and capital commitments At the balance sheet date there were no contingent liabilities or capital commitments (2022: none). J.P. Morgan Asset Management 75 Notes to the Financial Statements Financial Statements 19. Transactions with the Manager and related party transactions Details of the management contract are set out in the Directors’ Report on page 37. The management fee payable to the Manager for the year was £1,484,000 (2022: £2,244,000) of which £nil (2022: £nil) was outstanding at the year end. Included in administration expenses in note 6 on page 69 are safe custody fees amounting to £4,000 (2022: £8,000) payable to JPMorgan Chase, N.A. of which £2,000 (2022: £1,000) was outstanding at the year end. The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm’s length. The commission payable to JPMorgan Securities Limited for the year was £nil (2022: nil) of which £nil (2022: £nil) was outstanding at the year end. The Company also holds cash in the JPM GBP Liquidity LVNAV Fund, which is managed by JPMorgan. At the year end this was valued at £2,226,000 (2022: £15,559,000). Interest amounting to £114,000 (2022: £36,000) was receivable during the year of which £nil (2022: £nil) was outstanding at the year end. Handling charges on dealing transactions amounting to £11,000 (2022: £3,000) were payable to JPMorgan Chase, N.A. during the year of which £3,000 (2022: £1,000) was outstanding at the year end. At the year end, total cash of £258,000 (2022: £272,000) was held with JPMorgan Chase, N.A. A net amount of interest of £nil (2022: £5,000) was payable by the Company during the year from JPMorgan Chase, N.A. of which £nil (2022: £nil) was outstanding at the year end. The Directors are related parties and full details of their remuneration and shareholdings can be found on pages 49 to 51 and in note 6 on page 69. 20. Disclosures regarding financial instruments measured at fair value The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio. The investments are categorised into a hierarchy consisting of the following three levels: (1) The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date (2) Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly (3) Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. Details of the valuation techniques used by the Company are given in note 1(b) on page 66. The following table sets out the fair value measurements using the FRS 102 hierarchy at 30th June. 2023 2022 Assets Liabilities Assets Liabilities £’000 £’000 £’000 £’000 Level 1 241,636 — 235,322 — Total 241,636 — 235,322 — There were no transfers between Level 1, 2 or 3 during the year (2022: none). 76 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 21. Financial instruments’ exposure to risk and risk management policies As an investment trust, the Company invests in equities for the long term so as to secure its investment objective stated on the ‘Key Features’ page. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in a reduction in the Company’s net assets or a reduction in the profits available for dividends. These financial risks include market risk (comprising other price risk and interest rate risk), liquidity risk and credit risk. 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 direct exposure to foreign currency risk. The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not changed from those applying in the comparative year. – investments in listed equity shares of UK companies, which are held in accordance with the Company’s investment objective; – cash held within a liquidity fund and time deposits; – short term debtors, creditors and cash arising directly from its operations; and – loan facilities, the purpose of which are to finance the Company’s operations. (a) Market risk The fair value of future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises two elements – other price risk and interest rate risk. Information to enable an evaluation of the nature and extent of these two elements of market risk is given in parts (i) and (ii) of this note, together with sensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. (i) Other price risk Other price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of equity investments. Management of other price risk The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the overall risk of the portfolio. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company’s investment objectives and seeks to ensure that individual stocks meet an acceptable risk/reward profile. Other price risk exposure The Company’s total exposure to changes in market prices at 30th June comprises its holdings in equity investments as follows: 2023 2022 £’000 £’000 Investments held at fair value through profit or loss 241,636 235,322 The above data is broadly representative of the exposure to other price risk during the current and comparative year. Concentration of exposure to other price risk An analysis of the Company’s investments is given on pages 15 to 17. All of the investments are listed in the UK. Accordingly there is a concentration of exposure to the UK. However, it should also be noted that an investment may not be entirely exposed to the economic conditions in its country of domicile or of listing. J.P. Morgan Asset Management 77 Notes to the Financial Statements Financial Statements Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 20% (2022: 20%) in the market value of equity investments. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities, adjusting for changes in the management fee but with all other variables held constant. 2023 2022 20% increase 20% decrease 20% increase 20% decrease in fair value in fair value in fair value in fair value £’000 £’000 £’000 £’000 Statement of Comprehensive Income – return after taxation Revenue return (88) 94 (87) 92 Capital return 48,121 (48,107) 46,862 (46,850) Total return after taxation for the year 48,033 (48,013) 46,775 (46,758) Net assets 48,033 (48,013) 46,775 (46,758) (ii) Interest rate risk Interest rate movements may affect the level of income receivable on cash deposits, the liquidity fund and the interest payable on variable rate borrowings when interest rates are reset. Management of interest rate risk The Company does not normally hold significant cash balances. Short term borrowings are used when required. The Company may finance part of its activities through borrowings at levels approved and monitored by the Board. The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the Company borrows on the loan facility. Interest rate exposure The exposure of financial assets and liabilities to floating interest rates using the year end figures, giving cash flow interest rate risk when rates are reset, is shown below. 2023 2022 £’000 £’000 Exposure to floating interest rates: Cash and cash equivalents 2,484 15,831 Bank loans (23,000) (30,000) Total exposure (20,516) (14,169) Interest receivable on cash balances is at a margin below SONIA (2022: same). The JPM GBP Liquidity LVNAV Fund seeks to achieve a return in line with prevailing money market rates whilst aiming to preserve capital consistent with such rates and to maintain a high degree of liquidity. Details of the bank loans are given in note 13 on page 73. Interest rate sensitivity The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1% (2022: 1%) increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial instruments held at the balance sheet date with all other variables held constant. 78 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 21. Financial instruments’ exposure to risk and risk management policies (continued) (a) Market risk (continued) (ii) Interest rate risk (continued) Interest rate sensitivity (continued) 2023 2022 1% increase 1% decrease 1% increase 1% decrease in rate in rate in rate in rate £’000 £’000 £’000 £’000 Statement of Comprehensive Income – return after taxation Revenue return (44) 44 68 (68) Capital return (161) 161 (210) 210 Total return after taxation for the year (205) 205 (142) 142 Net assets (205) 205 (142) 142 In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due to fluctuations in the level of cash balances, cash held in the liquidity fund and amounts drawn down on the Company’s loan facilities. (b) Liquidity risk This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Management of the risk Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding requirements if necessary. The Board’s policy is for the Company to remain fully invested in normal market conditions and that short term borrowings be used to manage short term liabilities and working capital requirements and to gear the Company as appropriate. Liquidity risk exposure Contractual maturities of the financial liabilities, based on the earliest date and contractual undiscounted cashflows on which payment can be required are as follows: 2023 Within More than one year one year Total £’000 £’000 £’000 Creditors: Securities purchased awaiting settlement 126 — 126 Repurchase of the Company’s own shares awaiting settlement 263 — 263 Other creditors and accruals 231 — 231 Bank loans, including interest 24,304 64 24,368 24,924 64 24,988 J.P. Morgan Asset Management 79 Notes to the Financial Statements Financial Statements 2022 Within More than one year one year Total £’000 £’000 £’000 Creditors: Securities purchased awaiting settlement 5,029 — 5,029 Other creditors and accruals 71 — 71 Bank loans, including interest 15,496 15,206 30,702 20,596 15,206 35,802 The liabilities shown above represent future contractual payments and therefore may differ from the amounts shown in the Statement of Financial Position. (c) Credit risk Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company. Management of credit risk Portfolio dealing The Company invests in markets that operate Delivery Versus Payment (‘DVP’) settlement. The process of DVP mitigates the risk of losing the principal of a trade during the settlement process. The Manager continuously monitors dealing activity to ensure best execution, a process that involves measuring various indicators including the quality of trade settlement and incidence of failed trades. Counterparty lists are maintained and adjusted accordingly. Cash and cash equivalents Counterparties are subject to regular credit analysis by the Manager and deposits can only be placed with counterparties that have been approved by JPMAM’s Counterparty Risk Group. Exposure to JPMorgan Chase JPMorgan Chase Bank, N.A. is the custodian of the Company’s assets. The Company’s assets are segregated from JPMorgan Chase Bank, N.A.’s own trading assets. Therefore these assets are designed to be protected from creditors in the event that JPMorgan Chase, N.A. were to cease trading. The Depositary, Bank of New York Mellon (International) Limited, is responsible for the safekeeping of all custodial assets of the Company and for verifying and maintaining a record of all other assets of the Company. However, no absolute guarantee can be given on the protection of all the assets of the Company. The Depositary Agreement grants a lien over available assets credited to the securities account. The extent of this lien is limited to the amount of unpaid fees payable to Bank of New York Mellon (International) Limited. Credit risk exposure The amounts shown in the Statement of Financial Position under debtors and cash and cash equivalents represent the maximum exposure to credit risk at the current and comparative year ends. (d) Fair values of financial assets and financial liabilities All financial assets and liabilities are either included in the Statement of Financial Position at fair value or the carrying amount is a reasonable approximation of fair value. 80 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Notes to the Financial Statements Financial Statements 22. Capital management policies and procedures The Company’s debt and capital structure comprises the following: 2023 2022 £’000 £’000 Debt: Bank loans 23,000 30,000 Equity: Called up share capital 6,350 6,350 Reserves 215,621 216,558 221,971 222,908 Total debt and equity 244,971 252,908 The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the income and capital return to its equity shareholders through an appropriate level of gearing. The Board’s policy is to limit gearing within the range of 10% net cash to 20% geared, in normal market conditions. 2023 2022 £’000 £’000 Investments held at fair value through profit or loss 241,636 235,322 Net assets 221,971 222,908 Gearing 8.9% 5.6% The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes: – the planned level of gearing, which takes into account the Manager’s views on the market; – the need to buy back equity shares, either for cancellation or to hold in Treasury, which takes into account the share price discount or premium; and – the opportunity for issues of new shares, and sales of shares held in Treasury. 23. Subsequent events The Directors have evaluated the period since the year end and have not recognised any subsequent events. Regulatory Disclosures Regulatory Disclosures 82 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Regulatory Disclosures Alternative Investment Fund Managers Directive (‘AIFMD’) Disclosures (unaudited) Leverage For the purposes of the Alternative Investment Fund Managers Directive (‘AIFMD’), leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and is calculated on a gross and a commitment method in accordance with AIFMD. Under the gross method, exposure represents the sum of the Company’s positions without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated after certain hedging and netting positions are offset against each other. The Company’s maximum and actual leverage levels at 30th June 2023 are shown below: Gross Commitment Method Method Leverage Exposure Maximum limit 200% 200% Actual 110% 110% JPMorgan Funds Limited (the ‘Management Company’) is the authorised manager of JPMorgan Mid Cap Investment Trust plc (the ‘Company’) and is part of the J.P. Morgan Chase & Co. group of companies. In this section, the terms ‘J.P. Morgan’ or ‘Firm’ refer to that group, and each of the entities in that group globally, unless otherwise specified. This section of the Annual Report & Financial Statements has been prepared in accordance with the Alternative Investment Fund Managers’ Directive (the ‘AIFMD’), the European Commission Delegated Regulation supplementing the AIFMD, and the ‘Guidelines on sound remuneration policies’ issued by the European Securities and Markets Authority under the AIFMD. The Information in this section is in respect of the most recent complete remuneration period (‘Performance Year’) as at the reporting date. This section has also been prepared in accordance with the relevant provisions of the Financial Conduct Authority Handbook (FUND 3.3.5). Remuneration policy A summary of the Remuneration Policy currently applying to the Management Company (the ‘Remuneration Policy Statement’) can be found at https://am.jpmorgan.com/gb/en/asset- management/gim/per/legal/emea-remuneration-policy . This Remuneration Policy Statement includes details of how remuneration and benefits are calculated, including the financial and non-financial criteria used to evaluate performance, the responsibilities and composition of the Firm’s Compensation and Management Development Committee, and the measures adopted to avoid or manage conflicts of interest. A copy of this policy can be requested free of charge from the Management Company. The Remuneration Policy applies to all employees of the Management Company, including individuals whose professional activities may have a material impact on the risk profile of the Management Company or the Alternative Investment Funds it manages (‘AIFMD Identified Staff’). The AIFMD Identified Staff include members of the Board of the Management Company (the ‘Board’), senior management, the heads of relevant Control Functions, and holders of other key functions. Individuals are notified of their identification and the implications of this status on at least an annual basis. The Board of the Management Company reviews and adopts the Remuneration Policy on an annual basis, and oversees its implementation, including the classification of AIFMD Identified Staff. The Board last reviewed and adopted the Remuneration Policy that applied for the 2022 Performance Year in June 2022 with no material changes and was satisfied with its implementation. Quantitative disclosures The table below provides an overview of the aggregate total remuneration paid to staff of the Management Company in respect of the 2022 Performance Year and the number of beneficiaries. These figures include the remuneration of all staff of JP Morgan Asset Management (UK) Ltd (the relevant employing entity) and the number of beneficiaries, both apportioned to the Management Company on an Assets Under Management (‘AUM’) weighted basis. Due to the Firm’s operational structure, the information needed to provide a further breakdown of remuneration attributable to the Company is not readily available and would not be relevant or reliable. However, for context, the Management Company manages 25 Alternative Investment Funds (with 4 sub-funds) and 2 UCITS (with 44 sub-funds) as at 31st December 2022, with a combined AUM as at that date of £21.6 billion and £21.3 billion respectively. Fixed Variable Total Number of remuneration remuneration remuneration beneficiaries All staff of the Management Company (US$’000s) 21,662 14,069 35,731 146 The aggregate 2022 total remuneration paid to AIFMD Identified Staff was USD$114,556,000, of which USD$1,232,000 relates to Senior Management and USD$113,324,000 relates to other Identified Staff. 1 1 Since 2017, the AIFMD identified staff disclosures includes employees of the companies to which portfolio management has been formally delegated in line with the latest ESMA guidance. Securities Financing Transactions Regulation (‘SFTR’) Disclosure (Unaudited) The Company does not engage in Securities Financing Transactions (as defined in Article 3 of Regulation (EU) 2015/2365, securities financing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sell back transactions or sell-buy back transactions and margin lending transactions) or Total Return Swaps. Accordingly, disclosures required by Article 13 of the Regulation are not applicable for the year ended 30th June 2023. Shareholder Information Notice of Annual General Meeting 84 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Shareholder Information Notice is hereby given that the fifty first Annual General Meeting of JPMorgan Mid Cap Investment Trust plc will be held at 60 Victoria Embankment, London EC4Y 0JP on 1st November 2023 at 2.30 p.m. for the following purposes: 1. To receive the Directors’ Report, the Financial Statements and the Auditors’ Report for the year ended 30th June 2023. 2. To approve the Directors’ Remuneration Report for the year ended 30th June 2023. 3. To approve the Directors’ Remuneration Policy. 4. To approve a final dividend. 5. To reappoint John Evans as a Director of the Company. 6. To reappoint Lisa Gordon as a Director of the Company. 7. To reappoint Richard Gubbins as a Director of the Company. 8. To reappoint Margaret Payn as a Director of the Company. 9. To reappoint Hannah Philp as a Director of the Company. 10. To reappoint PricewaterhouseCoopers LLP as auditor to the Company and to authorise the Directors to determine their remuneration. Special Business To consider the following resolutions: Authority to allot new shares – Ordinary Resolution 11. THAT the Directors of the Company be and they are hereby generally and unconditionally authorised (in substitution of any authorities previously granted to the Directors) pursuant to and in accordance with Section 551 of the Companies Act 2006 (the ‘Act’) to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company (‘rights’) up to an aggregate nominal amount of £538,731 representing approximately 10% of the Company’s issued share capital (excluding shares held in Treasury) as at the date of the passing of this resolution, at a price of not less than the net asset value per share provided that this authority shall expire at the conclusion of the Annual General Meeting of the Company held in 2024 unless renewed at a general meeting prior to such time, save that the Company may before such expiry make offers or agreements which would or might require shares to be allotted or rights to be granted after such expiry and so that the Directors of the Company may allot shares and grant rights in pursuance of such offers or agreements as if the authority conferred hereby had not expired. Authority to disapply pre-emption rights on allotment of relevant securities – Special Resolution 12. THAT subject to the passing of Resolution 11 set out above, the Directors of the Company be and they are hereby empowered pursuant to Sections 570 and 573 of the Act to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred by Resolution 11 or by way of the sale of treasury shares as if Section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities for cash up to an aggregate nominal amount of £538,731, representing approximately 10% of the issued share capital (excluding shares held in Treasury) as at the date of the passing of this resolution, at a price of not less than the net asset value per share and shall expire upon the expiry of the general authority conferred by Resolution 11 above, save that the Company may before such expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and so that the Directors of the Company may allot equity securities in pursuance of such offers or agreements as if the power conferred hereby had not expired. Authority to repurchase the Company’s shares – Special Resolution 13. THAT the Company be generally and, subject as hereinafter appears, unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the ‘Act’) to make market purchases (within the meaning of Section 693 of the Act) of its issued shares of 25p each in the capital of the Company PROVIDED ALWAYS THAT (i) the maximum number of shares hereby authorised to be purchased shall be 3,230,231 or, if less, that number of shares which is equal to 14.99% of the Company’s issued share capital (excluding shares held in Treasury) as at the date of the passing of this Resolution; (ii) the maximum price which may be paid for a share shall be an amount equal to the highest of: (a) 105% of the average of the middle market quotations for a share taken from and calculated by reference to the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is purchased; or (b) the price of the last independent trade; or (c) the highest current independent bid; (iii) any purchase of shares will be made in the market for cash at prices below the prevailing net asset value per share (as determined by the Directors) at the date following not more than seven days before the date of purchase; Notice of Annual General Meeting J.P. Morgan Asset Management 85 Shareholder Information (iv) the authority hereby conferred shall expire on 30th April 2025 unless the authority is renewed at the Company’s Annual General Meeting in 2024 or at any other general meeting prior to such time; and (v) the Company may make a contract to purchase shares under the authority hereby conferred prior to the expiry of such authority and may make a purchase of shares pursuant to any such contract notwithstanding such expiry. Authority to hold general meetings – Special Resolution 14. THAT, a general meeting, other than an Annual General Meeting, may be called on not less than 14 clear days’ notice. By order of the Board Alison Vincent, for and on behalf of JPMorgan Funds Limited, Secretary 25th September 2023 Notes These notes should be read in conjunction with the notes on the reverse of the proxy form. 1. If law or Government guidance so requires at the time of the Meeting, the Chairman of the Meeting will limit, in his sole discretion, the number of individuals in attendance at the Meeting. In addition, the Company may still impose entry restrictions on certain persons wishing to attend the AGM in order to secure the orderly and proper conduct of the Meeting. 2. A member entitled to attend and vote at the Meeting may appoint another person(s) (who need not be a member of the Company) to exercise all or any of his rights to attend, speak and vote at the Meeting. A member can appoint more than one proxy in relation to the Meeting, provided that each proxy is appointed to exercise the rights attaching to different shares held by him. 3. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Your proxy could be the Chairman, another Director of the Company or another person who has agreed to attend to represent you. Details of how to appoint the Chairman or another person(s) as your proxy or proxies using the proxy form are set out in the notes to the proxy form. If a voting box on the proxy form is left blank, the proxy or proxies will exercise his/their discretion both as to how to vote and whether he/they abstain(s) from voting. Your proxy must attend the Meeting for your vote to count. Appointing a proxy or proxies does not preclude you from attending the Meeting and voting in person. However, please note that in the current circumstances, your vote may not be counted where a proxy other than the Chairman of the Meeting is appointed as additional third parties may not be permitted entry to the meeting. 4. Any instrument appointing a proxy, to be valid, must be lodged in accordance with the instructions given on the proxy form. 5. You may change your proxy instructions by returning a new proxy appointment. The deadline for receipt of proxy appointments also applies in relation to amended instructions. Any attempt to terminate or amend a proxy appointment received after the relevant deadline will be disregarded. Where two or more valid separate appointments of proxy are received in respect of the same share in respect of the same Meeting, the one which is last received (regardless of its date or the date of its signature) shall be treated as replacing and revoking the other or others as regards that share; if the Company is unable to determine which was last received, none of them shall be treated as valid in respect of that share. Notice of Annual General Meeting 86 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Shareholder Information 6. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), members must be entered on the Company’s register of members as at 6.30 p.m. two business days prior to the Meeting (the ‘specified time’). If the Meeting is adjourned to a time not more than 48 hours after the specified time applicable to the original Meeting, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the number of votes they may cast) at the adjourned Meeting. If however the Meeting is adjourned for a longer period then, to be so entitled, members must be entered on the Company’s register of members as at 6.30 p.m. two business days prior to the adjourned Meeting or, if the Company gives notice of the adjourned Meeting, at the time specified in that notice. Changes to entries on the register after this time shall be disregarded in determining the rights of persons to attend or vote at the Meeting or adjourned Meeting. 7. Entry to the Meeting will be restricted to shareholders and their proxy or proxies, with guests admitted only by prior arrangement. 8. A corporation, which is a shareholder, may appoint an individual(s) to act as its representative(s) and to vote in person at the Meeting (see instructions given on the proxy form). In accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise 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 designated corporate representative. However, please note that, in the light of the COVID-19 pandemic and associated Government guidance, including the rules on physical distancing and limitations on public gatherings, it is unlikely that your vote will be counted where a representative other than the Chairman of the Meeting is appointed as additional third parties are unlikely to be permitted entry to the meeting. Representatives should bring to the Meeting evidence of their appointment, including any authority under which it is signed. 9. Members that satisfy the thresholds in Section 527 of the Companies Act 2006 can require the Company to publish a statement on its website setting out any matter relating to: (a) the audit of the Company’s Financial Statements (including the Auditors’ report and the conduct of the audit) that are to be laid before the AGM; or (b) any circumstances connected with Auditors of the Company ceasing to hold office since the previous AGM, which the members propose to raise at the Meeting. The Company cannot require the members requesting the publication to pay its expenses. Any statement placed on the website must also be sent to the Company’s Auditors no later than the time it makes its statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required to publish on its website pursuant to this right. 10. Pursuant to Section 319A of the Companies Act 2006, the Company must cause to be answered at the AGM any question relating to the business being dealt with at the AGM which is put by a member attending the Meeting except in certain circumstances, including if it is undesirable in the interests of the Company or the good order of the Meeting or if it would involve the disclosure of confidential information. 11. Under Sections 338 and 338A of the 2006 Act, members meeting the threshold requirements in those sections have the right to require the Company: (i) to give, to members of the Company entitled to receive notice of the Meeting, notice of a resolution which those members intend to move (and which may properly be moved) at the Meeting; and/or (ii) to include in the business to be dealt with at the Meeting any matter (other than a proposed resolution) which may properly be included in the business at the Meeting. A resolution may properly be moved, or a matter properly included in the business unless: (a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the Company’s constitution or otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be accompanied by a statement setting out the grounds for the request, must be authenticated by the person(s) making it and must 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 be included in the business only) must be accompanied by a statement setting out the grounds for the request. 12. A copy of this notice has been sent for information only to persons who have been nominated by a member to enjoy information rights under Section 146 of the Companies Act 2006 (a ‘Nominated Person’). The rights to appoint a proxy can not be exercised by a Nominated Person: they can only be exercised by the member. However, a Nominated Person may have a right under an agreement between him and the member by whom he was nominated to be appointed as a proxy for the Meeting or to have someone else so appointed. If a Nominated Person does not have such a right or does not wish to exercise it, he may have a right under such an agreement to give instructions to the member as to the exercise of voting rights. Notice of Annual General Meeting J.P. Morgan Asset Management 87 Shareholder Information 13. In accordance with Section 311A of the Companies Act 2006, the contents of this notice of meeting, details of the total number of shares in respect of which members are entitled to exercise voting rights at the AGM, the total voting rights members are entitled to exercise at the AGM and, if applicable, any members’ statements, members’ resolutions or members’ matters of business received by the Company after the date of this notice will be available on the Company’s website www.jpmmidcap.co.uk . 14. The register of interests of the Directors and connected persons in the called-up share capital of the Company and the Directors’ letters of appointment are available for inspection at the Company’s registered office during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted). It will also be available for inspection at the AGM. No Director has any contract of service with the Company. 15. You may not use any electronic address provided in this Notice of Meeting to communicate with the Company for any purposes other than those expressly stated. 16. As an alternative to completing a hard copy Form of Proxy/Voting Direction Form, you can appoint a proxy or proxies electronically by visiting www.sharevote.co.uk . You will need your Voting ID, Task ID and Shareholder Reference Number (this is the series of numbers printed under your name on the Form of Proxy/Voting Direction Form). Alternatively, if you have already registered with Equiniti Limited’s online portfolio service, Shareview, you can submit your Form of Proxy at www.shareview.co.uk . Full instructions are given on both websites. 17. As at 18th September 2023 (being the latest business day prior to the publication of this Notice), the Company’s called-up share capital consists of 21,549,242 Ordinary shares (excluding treasury shares) carrying one vote each. Therefore the total voting rights in the Company are 21,549,242. Electronic appointment – CREST members CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. See further instructions on the proxy form. Glossary of Terms and Alternative Performance Measures (‘APMs’) 88 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Shareholder Information Alternative Performance Measures (APMs) are numerical measures of current, historical or future financial performance, financial position or cash flow that are not GAAP measures. APMs are intended to supplement the information in the financial statements, providing useful industry-specific information that can assist shareholders to better understand the performance of the Company. Where a measure is labelled as an APM, a definition and reconciliation to a GAAP measure is set out below: Return to Shareholders (APM) Total return to shareholders, on a last traded price to last traded price basis, assuming that all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend. Year ended Year ended 30th June 30th June Total return calculation Page 2023 2022 Opening share price (p) 7 854.0 1,420.0 (a) Closing share price (p) 7 876.0 854.0 (b) Total dividend adjustment factor 1 1.036934 1.024233 (c) Adjusted closing share price (p) (d = b x c) 908.4 874.7 (d) Total return to shareholders (e = (d / a) – 1) 6.4% –38.4% (e) 1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last traded price quoted at the ex-dividend date. Return on Net Assets (APM) Total return on net asset value (‘NAV’) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested, into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. Year ended Year ended 30th June 30th June Total return calculation Page 2023 2022 Opening cum-income NAV per share (p) 7 988.8 1,450.6 (a) Closing cum-income NAV per share (p) 7 1,029.6 988.8 (b) Total dividend adjustment factor 1 1.032647 1.021499 (c) Adjusted closing cum-income NAV per share (d = b x c) 1,063.2 1,010.1 (d) Total return on net assets (e = d / a – 1) 7.5% –30.4% (e) 1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum-income NAV at the ex-dividend date. Net asset value per share (APM) The value of the Company’s net assets (total assets less total liabilities) divided by the number of ordinary shares in issue. Please refer to note 17 on page 74 for the calculation. Benchmark return Total return on the benchmark, on a closing-market value to closing-market value basis, assuming that all dividends received were reinvested in the shares of the underlying companies at the time the shares were quoted ex-dividend. The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company’s investment universe. The Company’s investment strategy does not follow or ‘track’ this index and consequently, there may be some divergence between the Company’s performance and that of the benchmark. Share Price Discount/Premium to Net Asset Value (‘NAV’) per Ordinary Share (APM) If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The discount is shown as a percentage of the NAV per share. The opposite of a discount is a premium (see page 7). Glossary of Terms and Alternative Performance Measures (‘APMs’) J.P. Morgan Asset Management 89 Shareholder Information Gearing/(Net Cash) (APM) Gearing represents the excess amount above shareholder’s funds of total investments, expressed as a percentage of the shareholders’ funds. If the amount calculated is negative, this is shown as a ‘net cash’ position. As at As at 30th June 30th June 2023 2022 Gearing calculation Page £’000 £’000 Investments held at fair value through profit or loss 63 241,636 235,322 (a) Net assets 63 221,971 222,908 (b) Gearing/(net cash) (c = (a / b) – 1) 8.9% 5.6% (c) Ongoing charges (APM) The ongoing charges ratio represents the Company’s management fee and all other operating expenses excluding finance costs payable, expressed as a percentage of the average of the daily cum-income net assets during the year and is calculated in accordance with guidance issued by the Association of Investment Companies. Year ended Year ended 30th June 30th June 2023 2022 Ongoing charges calculation Page £’000 £’000 Management fee 1 69 1,484 2,244 Other administrative expenses 69 616 675 Total management fee and other administrative expenses 2,100 2,919 (a) Average daily cum-income net assets 225,387 316,969 (b) Ongoing charges (c = a / b) 0.93% 0.92% (c) 1 The management fee for the year is based on the following: – from 1st July 2022 to 31st December 2022, on 0.65% per annum on total assets less current liabilities, excluding amounts held in a liquidity fund (‘total assets’), up to £250 million and 0.60% on total assets over £250 million; and – from 1st January 2023 to 30th June 2023, on an annual rate of 0.65% on the first £200 million of net assets and 0.55% on net assets in excess of £200 million. Earnings/(Loss) per Ordinary Share The earnings/(loss) per Ordinary share represents the return/(loss) after taxation divided by the weighted number of Ordinary shares in issue during the year. Performance attribution Analysis of how the Company achieved its recorded performance relative to its benchmark (see page 11). Performance Attribution Definitions: Stock/Sector selection Measures the effect of investing in securities/sectors to a greater or lesser extent than their weighting in the benchmark, or of investing in securities which are not included in the benchmark. Gearing/Net Cash Measures the impact on returns of borrowings or cash balances on the Company’s relative performance. Management fee/Other expenses The payment of fees and expenses reduces the level of total assets, and therefore has a negative effect on relative performance. Share repurchases Measures the positive effect on relative performance of repurchasing the Company’s shares for cancellation, or repurchases into Treasury, at a discount to their net asset value (‘NAV’) per share. Investing in JPMorgan Mid Cap Investment Trust plc 90 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Shareholder Information You can invest in a J.P. Morgan investment trust through the following: 1. Via a third party provider Third party providers include: Please note this list is not exhaustive and the availability of individual trusts may vary depending on the provider. These websites are third party sites and J.P. Morgan Asset Management does not endorse or recommend any. Please observe each site’s privacy and cookie policies as well as their platform charges structure. 2. Through a professional adviser Professional advisers are usually able to access the products of all the companies in the market and can help you to find an investment that suits your individual circumstances. An adviser will let you know the fee for their service before you go ahead. You can find an adviser at unbiased.co.uk . You may also buy investment trusts through stockbrokers, wealth managers and banks. To familiarise yourself with the Financial Conduct Authority (FCA) adviser charging and commission rules, visit fca.org.uk . 3. Voting on Company Business and Attending the AGM The Board encourages all of its shareholders to exercise their rights by voting at general meetings and attending if able to do so. If you hold your shares on the Company’s main register, please refer to the notes to the AGM on pages 85 to 87 and your form of proxy. If your shares are held through a platform, platform providers often provide shareholders with the ability to receive company documentation, to vote their shares and to attend general meetings, at no cost. Please refer to your investment platform for more details, or visit the Association of Investment Companies’ (‘AIC’) website at www.theaic.co.uk/aic/shareholder-voting-consumer-platforms for information on which platforms support these services and how to utilise them. AJ Bell You Invest Barclays Smart investor Bestinvest Charles Stanley Direct Close brothers A.M. Self Directed Service Fidelity Personal Investing Freetrade Halifax Share Dealing Hargreaves Lansdown iDealing IG Interactive investor iWeb ShareDeal active Willis Owen X-O.co.uk Share Fraud Warning J.P. Morgan Asset Management 91 Shareholder Information Investment and pension scams are often sophisticated and di�cult to spot Be a ScamSmart investor and spot the warning signs Fraudsters will often: • contact you out of the blue • apply pressure to invest quickly • downplay the risks to your money • promise tempting returns that sound too good to be true • say that they’re only making the o�er available to you or even ask you to not tell anyone else about it How to avoid investment and pension scams If you’re suspicious, report it Y ou can report the �rm or scam to us by contacting our Consumer Helpline on 0800 111 6768 or using our reporting form using the link below. If you’ve lost money in a scam, contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk Reject unexpected o�ers Scammers usually cold call, but contact can also come by email, post, word of mouth or at a seminar. If you’ve been o�ered an investment out of the blue, chances are it’s a high risk investment or a scam. Check the FCA Warning List Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the �rm is known to be operating without our authorisation. Get impartial advice Get impartial advice before investing – don’t use an adviser from the �rm that contacted you. Be ScamSmart and visit www.fca.org.uk/scamsmart 1 2 3 Information About the Company 92 JPMorgan Mid Cap Investment Trust plc – Annual Report & Financial Statements 2023 Shareholder Information History JPMorgan Mid Cap Investment Trust plc was launched in 1972 as Crossfriars Trust Limited and raised £10 million by a public offer of shares. Its original policy was to invest up to 25% of its assets in UK unquoted shares. The Company changed its name to The Fleming Enterprise Investment Trust in 1982. It adopted its current investment policy of concentrating on FTSE 250 companies in 1993 and reaffirmed this policy in February 1997. The Company changed its name to The Fleming Mid Cap Investment Trust plc in October 1998, to JPMorgan Fleming Mid Cap Investment Trust plc in November 2001 and adopted its present name in November 2005. Directors John Evans (Chairman of the Board and Nomination Committee) Lisa Gordon Richard Gubbins (Chairman of the Management Engagement Committee and Senior Independent Director) Margaret Payn (Chair of the Audit & Risk Committee) Hannah Philp (Chair of the Marketing & Communications Committee) Company Numbers Company registration number: 1047690 London Stock Exchange number: 0235761 ISIN: GB0002357613 Bloomberg code: JMF LN LEI: 549300QED7IGEP4UFN49 Market Information The Company’s shares are listed on the London Stock Exchange. The market price is shown daily in the Financial Times and on the JPMorgan website at www.jpmmidcap.co.u k Website www.jpmmidcap.co.uk Share Transactions The Company’s shares may be dealt in directly through a stockbroker or professional adviser acting on an investor’s behalf. Manager and Company Secretary JPMorgan Funds Limited Company’s Registered Office 60 Victoria Embankment London EC4Y 0JP Telephone number: 020 7742 4000 Please contact Alison Vincent for company secretarial and administrative matters. Depositary The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA The Depositary has appointed JPMorgan Chase Bank, N.A. as the Company’s custodian. Registrars Equiniti Limited Reference 1082 Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: +44 (0)371 384 2945 Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to the helpline will cost no more than a national rate call to a 01 or 02 number. If calling from outside of the UK, please ensure the country code is used. Notifications of changes of address and enquiries regarding share certificates or dividend cheques should be made in writing to the Registrar quoting reference 1082. Registered shareholders can obtain further details on individual holdings on the internet by visiting www.shareview.co.u k Independent Auditor PricewaterhouseCoopers LLP Edinburgh Atria One Altria One 144 Morrison Street Edinburgh EH3 8EX Brokers Investec Bank plc 30 Gresham Street London EC2V 7QP Financial Conduct Authority (‘FCA’) Regulation of ‘non-mainstream pooled investments’and MiFID II ‘complex investments’ The Company currently conducts its affairs so that the shares issued by the Company can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust. The Company’s ordinary shares are not considered to be ‘complex investments’ under the FCA’s ‘Appropriateness’ rules and guidance in the Conduct of Business sourcebook. Consumer Duty Value Assessment The Manager has conducted an annual value assessment on the Company in line with Financial Conduct Authority (FCA) rules set out in the Consumer Duty regulation. The assessment focuses on the nature of the product, including benefits received and its quality, limitations that are part of the product, expected total costs to clients and target market considerations. Within this, the assessment considers quality of services, performance of the trust (against both benchmark and peers), total fees (including management fees and entry and exit fees as applicable to the Company), and also considers whether vulnerable consumers are able to receive fair value from the product. The Manager has concluded that the Company is providing value based on the above assessment. A member of the AIC GB A121 | 09/23 CONTACT 60 Victoria Embankment London EC4Y 0JP Tel +44 (0) 20 7742 4000 Website www.jpmmidcap.co.uk
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