Shareholders vote on 23 November on whether the trust should continue, as the company prepares to absorb Aberdeen UK Smaller Companies Growth Trust in a deal due to complete by the end of 2026, subject to shareholder approval.

JUGI reported a net asset value (NAV) total return of 7.2%, compared with 9.8% for the Deutsche Numis Smaller Companies plus AIM Index over the same period. Last year, its NAV returned 0.6% against 2.5%. The trust’s share price total return for the year ended 31 July 2026 was 9.1%.

The board highlighted that, under JPMorgan fund managers Georgina Brittain and Katen Patel, the trust’s three-year cumulative NAV total return was 38.4%, compared with 27.5% for the benchmark, and its three-year cumulative share price total return was 44.5%.

Over ten years, the cumulative NAV total return was 159.9% and the cumulative share price total return was 211.2%, “both significantly outperforming the benchmark return over the period of +69.0%”. The trust did, however, underperform over five years.

The company also remains in the first quartile versus small cap peers over three, five and ten years. During the year, JUGI bought back 9,725,250 shares at a cost of £31.6m, at an average discount of 10.1%, which enhanced the NAV return per share by 0.8%.

A dividend of 14.52p per share was paid for the year ended 31 July 2026. For the financial year beginning 1 August 2026, the board intends to pay dividends totalling 14.92p per share (3.73p per quarter).

The board said in a statement to shareholders: “The company’s underperformance relative to the benchmark was primarily driven by less favourable sector allocation, most notably by the portfolio’s relative underweight position in the strongly performing basic materials sector.”

It explained that UK smaller cap companies lagged larger cap stocks over the review period, as the sector was more “vulnerable to fears of rising interest rates and to domestic economic activity, which remained lacklustre”.

Under the company’s articles of association, the board must put a continuation vote to shareholders every three years, and the next will take place at the AGM on 23 November.

The board said: “Given the long-term performance returns and the company’s favourable prospects, your board believes that the continuation of the company is in the best interests of all shareholders. The board therefore strongly recommends that shareholders vote in favour of the company continuing as an investment trust for a further three-year period.”

Last month, Aberdeen UK Smaller Companies Growth Trust (AUSC) announced a “proposed reconstruction and rollover” with JUGI, after what it called a “disappointing” first half of underperformance. In the six months to 31 December, the portfolio fell 3.5%, trailing the 4.6% total return from the Deutsche Numis Smaller Companies plus AIM index.

The portfolio’s NAV rose a total of 15% and shareholder returns rose 20%. Over five years, however, the portfolio fell 3% and shareholders sat on a 6% loss including dividends, while the Numis index returned 27% and 26% over those periods.

The struggle followed the retirement in 2022 of former fund manager Harry Nimmo, who had run the trust since 2003. Fund managers Abby Glennie and Amanda Yeaman replaced him.

AUSC shareholders may take a cash exit, capped at 35% of AUSC’s issued share capital. Payouts will be calculated from AUSC’s remaining NAV after costs and wind-down provisions, scaled to the number of shareholders who choose cash, and reduced by a 2% discount.

Following the merger, the enlarged JPMorgan trust will continue to be managed by JPMorgan Funds, with reduced management fees of 0.6% per annum on net assets up to £200m and 0.55% per annum on net assets above that.

Chair Katrina Hart said: “However, inflation is already edging up due to events in the Middle East and household energy bills are set to climb to a three-year high by the end of the year, developments which will complicate the Bank of England’s task in 2027. Any rise in interest rates will adversely impact UK small cap companies.

“However, your portfolio managers seek out companies capable of navigating their own course regardless of the near-term political and economic environment.

“The continued positive performance of the majority of the portfolio’s holdings, combined with the company’s strong long-term track record, provide ample evidence of the portfolio managers’ skill at identifying such resilient, innovative and growing companies.

“The board commends their ongoing efforts to take full advantage of interesting, attractively valued investment opportunities as they emerge. These efforts are supported by the manager’s extensive research capabilities, which we believe give the company a significant competitive advantage over less well-resourced peers.

“In our view, your company is therefore well-positioned to maintain its long track record of providing shareholders with strong absolute returns and outperformance, as well as an attractive, predictable income stream.”