Annual Financial Report

JPMorgan American IT PLC

27 March 2024

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN AMERICAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2023

Legal Entity Identifier: 549300QNAI4XRPEB4G65

Information disclosed in accordance with the DTR 4.1.3

JPMorgan American Investment Trust plc ('JAM' or the 'Company'), the FTSE 250 trust investing in North American companies, announces its annual results for the year ended 31st December 2023 (the "Reporting Period").

Financial highlights for the Reporting Period include:

·    JAM generated a NAV total return, with debt at fair, of +24.7% in 2023 compared with +18.9% for its benchmark, the S&P 500 Index, while its share price total return was +26.6%.

·    Since the change in investment approach on 1^st June 2019 to the end of February 2024, JAM has generated a NAV total return of +116.3% compared with +97.3% for its benchmark. This represents an annualised outperformance of 2.2 percentage points.

·    JAM's discount narrowed from 1.7% to 0.3% in the year and it has subsequently traded at premium allowing the re-issuance of shares from treasury.

·    At the end of 2023, 91.5% of JAM's assets were invested in US large cap stocks, through a high conviction portfolio of 40 stocks. This represented a carefully curated selection of the Manager's best growth and value investment ideas. The small cap portfolio represented 6.5% of assets, with the balance in liquidity funds.

·    The Ongoing Charges Ratio for 2023 was 0.38% and JAM remains one of the most competitively priced US actively managed funds available to UK investors, in either closed-ended or open-ended form.

·    Subject to shareholder approval at the AGM, a final dividend of 5.25p will be paid on 31st May 2024, making a total dividend of 7.75p per share for the 2023 Financial Year. This represents an increase of 6.9% on the previous year's total dividend.

Operational highlights for the Reporting Period include:

·    After 10 years' service, including seven as Chair, Dr. Kevin Carter will retire at the AGM on Thursday, 15th May. He will be succeeded by Robert Talbut, who has been a Non-Executive Director since 2017.

·    Ms Pui Kei Yuen was appointed as a Non-Executive Director of the Company with effect from 1st January 2023 and Mr Colin Moore was appointed as a Non-Executive Director of the Company with effect from 1st February 2024.

Outlook

·    It is encouraging to see inflation trending down and the US economy performing more strongly than expected, and seemingly likely on the glide path to a soft landing.

·    There is an unusually high degree of uncertainty about the implications of the US presidential election outcome later this year for both domestic US policy and for the nation's international relations. However, the Board believes that the Company's Manager has already demonstrated its considerable skill in navigating the many unique challenges equity markets have faced over recent years, as evidenced by their performance track record.

CHAIR'S STATEMENT

The performance of the US stock market exceeded most expectations in 2023, as the US Federal Reserve's aggressive monetary policy stance succeeded in driving inflation down, without thus far tipping the economy into the recession many feared. A handful of the market's largest stocks led the market higher, buoyed by optimism about the potential for Artificial Intelligence (AI) to generate growth and productivity increases. The Company's net asset value (NAV), with debt at fair value, increased by 24.7% on a total return basis in 2023 in sterling terms, ahead of its benchmark, the S&P 500, which increased by 18.9% on the same basis. During the year, the share price traded between a discount of 7.3% and a premium of 0.4% compared to NAV.

These very satisfying annual returns extend the Company's long-term track record of strong outright gains and benchmark outperformance. Since the Company changed its investment approach on 1st June 2019, it has outperformed the benchmark index by 18.9% in the subsequent 57 months through to the end of February 2024, providing a NAV total return to shareholders of 116.3% compared with a benchmark return of 97.3%. This is an annualised outperformance of 2.2 percentage points since the change in investment approach.

The Portfolio

At the end of the review period, 91.5% of your Company's total assets were invested in US large cap stocks, in a high conviction portfolio of some 40 stocks. This represents a carefully curated selection of the Manager's best growth and value investment ideas. The proportions of growth and value weightings can vary between 60% and 40% in either direction and stood at 54% in growth and 46% in value at the period end. The overall allocation to the small cap portfolio was approximately 6.5% at period end. The balance of the portfolio was invested in liquidity funds.

The Company's small cap allocation was invested in a portfolio of stocks that replicated the portfolio of the JPMorgan US Small Cap Growth Fund until November 2023. Thereafter, the strategy was changed from a growth focus to a more blended approach, which has resulted in a portfolio which is fairly evenly balanced between growth and value small cap stocks. The Board believes the new strategy is better aligned with the large cap strategy.

More details about performance attribution and portfolio activity during the year can be found in the Investment Manager's report in the Annual Report.

Gearing

The Company is able to deploy gearing which over time is expected to enhance performance provided the cost of the gearing is less than the performance of the Company's equity portfolio.

The Board believes it is prudent for its gearing capacity to be funded from a mix of sources, including short- and longer-term tenors and fixed and floating rate borrowings. The Company's gearing strategy is implemented through the use of an £80 million revolving credit facility (with an additional £20 million accordion) with Mizuho Bank Ltd. This is drawn in US Dollars to match the currency of the Company's asset base. Alongside this bank facility, the Company has in issue a combined US$100 million of unsecured loan notes issued via private placements, US$65 million of which is repayable in February 2031 and carries a fixed interest rate of 2.55% per annum. The remaining US$35 million of this private placement matures in October 2032 and carries a fixed interest rate of 2.32%.

The Board has set the current tactical level of gearing at 5%, with a permitted range around this level of plus or minus 5%, meaning that currently gearing can vary between 0% and 10%. This tactical level of gearing remained unchanged throughout the year. The Company ended the year with gearing equivalent to 2.8% of net assets.

At the time of writing, the gearing level of the Company was 3.1%, calculated in line with the Association of Investment Companies ('AIC') methodology. The Board continues to review the appropriate gearing level on a regular basis.

Board Review of the Manager

As in prior years, the Board visited the Manager's offices in New York and held meetings with the portfolio managers and the analyst teams. The Board also met with JPMorgan's senior management team to discuss the performance of the portfolio, the Company's strategy and to review broader aspects of the Manager's service. During the year, as an exception, the Board, accompanied by JPM's senior management team, also visited San Francisco. The purpose of the trip was to visit a few portfolio companies to understand the impact of AI on their businesses, how this is likely to evolve, and its implications for the wider economy.

As previously announced, Tim Parton retired as the portfolio manager of the growth team on 1st March 2024. I would like to thank Tim and wish him a happy and well-deserved retirement. The Company has been informed by the Manager, that Jonathan Simon, the portfolio manager responsible for large cap value stocks, has given notice that he intends to retire in early 2025. Jonathan will continue with his existing responsibilities until his retirement and the Company will make an announcement regarding his successor in due course.

The Manager provides other services to the Company, including accounting, company secretarial and marketing services. These have been formally assessed through the annual manager evaluation process. Taking all factors into account, the Board concluded that the ongoing appointment of the Manager is in the continuing interests of shareholders.

Ongoing Charges

The Board continues to monitor closely the Company's cost base. The Company's Ongoing Charges Ratio ('OCR') for the year under review was 0.38% (2022: 0.36%). The increase this year is primarily attributable to the additional investment in sales and marketing efforts by the Company. The Company remains one of the most competitively priced US actively managed funds available to UK investors, in either closed-ended or open-ended form.

Share Price and Premium/Discount

Throughout most of the year, the Company's shares traded at a discount to its NAV except for a brief period later in the year. Consistent with our statements made in previous years, and because share buy-backs at a discount to NAV enhance the NAV for remaining shareholders, the Board is prepared to buy-back shares when they stand at anything more than a small discount. This undertaking has operated for several years and applies in normal market conditions.

During the year 6,314,594 shares were purchased into Treasury, at a cost of £45 million, representing 2.5% of the Company's issued share capital (excluding shares held in Treasury) at the beginning of 2023. The average discount to NAV at which these shares were purchased was 3.8%. Most of the shares were repurchased in the first half of the year, and the most recent buyback was in July. Since the year end, the shares have traded near to NAV and the Company has been able to issue 150,000 shares from Treasury at a premium to NAV.

The Company will again ask shareholders to approve the repurchase of up to 14.99% of its capital at a discount to estimated NAV at the forthcoming Annual General Meeting. We will also be seeking shareholder permission to issue shares, where the Board is confident of sustainable market demand. The authority, if approved, will allow the Company to issue up to 10% of its issued share capital from Treasury. The Company will only issue shares at a price in excess of the estimated NAV, including income and with the value of the debt at fair value.

Dividends

Whilst capital growth is the primary aim of the Company, the Board understands that dividend receipts can be an important element of shareholder returns. As such the Board has sought to enhance shareholder returns with a progressive dividend policy.

The Company paid an interim dividend in respect of the 2023 financial year (FY23) of 2.5p on 6th October 2023 (unchanged from the interim dividend paid in FY22). Subject to shareholder approval at the AGM, a final dividend of 5.25p will be paid on 31st May 2024 to shareholders on the register on 21st April 2024, making a total dividend of 7.75p per share for FY23. The Board is happy to report that this represents an increase of 6.9% on last year's total dividend of 7.25p per share.

After the payment of the proposed final dividend, the balance in the revenue reserves will be £22.0 million, equivalent to 12.0p per share (2022: 11.5p per share) or 1.6 times (2022: 1.6 times) the current dividend. The prudent approach of building up revenue reserves in prior years provides the Board with a means of supporting current and future dividend levels, should earnings per share drop materially in any financial year.

The Board continues to monitor the net income position of the Company and, based on current estimated dividend receipts for the year ahead, the Board aims to continue its progressive dividend policy in the forthcoming year.

Environmental, Social and Governance ('ESG')

The Manager continues to enhance its ESG approach, which ensures it best captures the fundamental insights of the investment team. ESG factors are integrated fully into the Portfolio Manager's investment process, and more information can be found in the Annual Report.

The Board

It has been my pleasure and honour to serve as a member of the Board over the past ten years, including seven years as its Chair. It is my intention, as previously communicated, to retire from the Board at the Annual General Meeting (AGM) to be held in May 2024.

In keeping with the Board's history of appointing Chairs from within its existing complement of directors to ensure continuity, I am delighted to announce that Robert Talbut will succeed me as Chair at the conclusion of the forthcoming AGM.

Sir Alan Collins retired from the Board in May 2023 and as previously reported, Ms Pui Kei Yuen was appointed as a Non-Executive Director of the Company with effect from 1st January 2023. Mr Colin Moore was appointed as a Non-Executive Director of the Company with effect from 1st February 2024. Colin has over 40 years' experience in the investment industry. His previous roles include Global Chief Investment Officer at Columbia Threadneedle, Chief Investment Officer of International Value at Putnam Investments and Chief Investment Officer at Rockefeller & Co. For both of these appointments, the Company engaged an independent search consultancy, Odgers Berndtson.

The results of this year's externally facilitated Board evaluation process by Lintstock confirmed that Directors possess the experience and attributes to support a recommendation to shareholders that, with the exception of myself, they seek appointment/re-appointment at the Company's forthcoming AGM. In line with the AIC Code of Corporate Governance, additional statements to support the re-appointment of each Director are included in the Annual Report.

Shareholder engagement

The Board believes that shareholder interactions are very helpful in assisting it with the management of the Company's affairs, and, as opportunities arise, Board members welcome and seek such meetings.

During the past year, the Manager also held meetings and regular calls with shareholders, including webinars, and provided portfolio and market updates on the Company's website. I am pleased to report that the Company was rated as the "Best Active Fund" in the US at the 2023 AJ Bell Investment Awards.

During the year, the Board also undertook an Asset Reunification Programme, conducted by the Company's registrar, which aimed to trace and reunite shareholders with unclaimed shares and dividends in the Company valued at c.£900,000.

Annual General Meeting

This year's AGM will be held on Thursday, 15th May 2024 at 2.30 p.m. at Trinity House, Tower Hill London EC3N 4DH. Apart from the formal business of the meeting, shareholders will have the opportunity to hear from our portfolio managers, Jonathan Simon and Felise Agranoff, who will make a presentation by video, to be followed by a question and answer session.

Shareholders are invited to attend the meeting and raise any questions they have, either at the meeting, or in advance, by writing to the Company Secretary at the address given in the Annual Report or via email to [e-mail]. As is normal practice for the Company, all voting on the resolutions will be conducted on a poll. The Board strongly encourages all shareholders to exercise their votes by completing and returning their proxy forms in accordance with the notes to the Notice of Meeting included in the Annual Report.

For shareholders who wish to follow the AGM proceedings, but choose not to attend in person, we will be able to offer participation via video conferencing facilities. Details on how to register, together with access details, can be found on the Company's website: www.jpmamerican.co.uk. Shareholders viewing the meeting via conferencing software will not be able to vote in the poll and we therefore especially encourage those shareholders who cannot attend in person, to exercise their votes in advance of the meeting by completing and submitting their form of proxy. Shareholders are also encouraged to send any questions to the Board, via the Company Secretary, at the email address above, ahead of the AGM. We will endeavour to answer all relevant questions at the meeting, or via the website, depending on arrangements in place at the time.

If there are any changes to the arrangements for the Annual General Meeting, the Company will update shareholders through the Company's website and, if appropriate, through an announcement to the London Stock Exchange.

Stay Informed

The Company delivers email updates 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://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JAM

Outlook

It is encouraging to see inflation trending down and the US economy performing more strongly than expected, and seemingly likely on the glide path to a soft landing.

This bodes well for US equities in the year ahead, although there are, as ever, potential threats, especially on the geopolitical front. There is an unusually high degree of uncertainty about the implications of the US presidential election outcome later this year for both domestic US policy and for the nation's international relations.

However, the Board believes that the Company's Manager has already demonstrated its considerable skill in navigating the many unique challenges equity markets have faced over recent years, as evidenced by their performance track record.

The Board is confident that the investment process and deep resources of the Manager, in combination with the Company's investment structure and policy, continue to present shareholders with an attractive long term investment proposition.

Dr Kevin Carter

Chair                                                                                                                                           26th March 2024

INVESTMENT MANAGER'S REPORT

Market Review

The year just past was a strong one for most equity markets, with the S&P 500 Index boasting a double-digit return of +26.2% in US dollars, and +19.2% in sterling. Despite a period of turbulence in February and March 2023, when a large west coast regional bank fell victim to the US Federal Reserve's (Fed) aggressive tightening cycle, raising fears of much broader financial sector instability, the market resumed its recovery from its 2022's lows. Declining inflation and the promise of lower interest rates were the primary market drivers, further supported by the new secular growth opportunity created by the arrival of accessible generative artificial intelligence (Gen AI) tools. The index performance was heavily dominated by the 'Magnificent 7' - Apple, Microsoft, Amazon, Alphabet, NVIDIA, Meta Platforms and Tesla - whose combined weight now comprises 28% of the S&P 500; these contributed a striking 83% of the index's performance for the year.

The US economy proved to be more resilient in the face of aggressive monetary tightening than many expected, as the much-anticipated full-scale US recession has yet to materialise. But, as in the late 1980s, the economy did experience rolling recessions across a range of industries, most notably housing, and a very significant and widespread inventory correction, as supply chains normalised following their pandemic-induced disruptions. The Fed's work on inflation seems to be done, as the CPI has retreated from a peak of 9.1% in June 2022 to 3.4% in December 2023, with further reductions in the pipeline and numerous deflationary influences emerging.

US corporate earnings have also been stronger than expected. Earnings forecasts for 2023 increased steadily over the course of the year as recession fears and elevated costs subsided. Technology spending has begun to reaccelerate after a period of optimisation and digestion, while significant government spending programs around clean energy and reshoring of strategic manufacturing have supported very strong capital spending by businesses.

The sharp rise in interest rates by the Fed created considerable challenges that were felt most acutely in parts of the regional banking sector, precipitating the dramatic failure of three banks - Silicon Valley Bank, First Republic and Signature Bank - in the early part of the year. Monetary tightening phases such as this one have a history of triggering high profile failures, from Long Term Capital Management in 1998, to Lehman Brothers, Bear Stearns and Washington Mutual in 2008. Interest rate pressure on regional banks, and banks in general, directly impacts their willingness to lend. Not surprisingly, bank lending surveys highlight that corporate lending standards have tightened meaningfully, and that lending by small banks, particularly lending for commercial real estate, is very constrained. Private credit funds have partially stepped in to fill that vacuum, but more for commercial and industrial business loans.

As mentioned previously, the stock market rebound was fuelled significantly by the 'Magnificent 7', whose average return for the year was 76%, nearly three times the return for the S&P 500. This resurgence in the mega cap tech stocks was partly triggered by the launch of ChatGPT, which showcased recent breakthroughs in generative AI. For the first time, individuals have direct access to the underlying large language model that can answer complex questions and solve problems. Companies across almost all industries have begun to invest in AI; there appears to be considerable risk in not doing so. The competitive disruption and the potentially favourable impact on productivity that AI will herald are very hard to estimate but could be quite substantial. Timing is also hard to assess.

It is no surprise given the dominance of AI that the best performing sectors for the S&P 500 in 2023 have been tech-driven, with information technology, communication services and consumer discretionary stocks all up more than 40%. Energy, which was the best performing sector in 2022, was one of the worst performers over the past year, registering a 1.3% decline due to the drop in oil prices and fears of an economic slowdown. Defensive stocks did not fare well either, with utilities suffering a 7% decline. Despite the turmoil in the banking sector, financials finished the period up 13%.

Large cap stocks, as represented by the S&P 500 Index, outperformed the small cap Russell 2000 Index, returning +26.1% compared to the 16.9% rise in small caps. In a reversal of 2022's outcome, Value names lagged Growth by a wide margin, as the Russell 3000 Value Index returned +11.7% while the Russell 3000 Growth Index returned +41.2%.

The following tables provide an overview of the returns of different investment styles in the US market during 2023, as well as the sector performance of the S&P 500.

2023 US Equities Style performance (US$)

2023	Value	Blend	Growth
Large	11.5%	26.3%	42.7%
Mid	12.7%	17.2%	25.9%
Small	14.6%	16.9%	18.7%

2023 S&P 500 Index performance (US$)

Source: FactSet, Russell Investment Group, Standard & Poor's, Wilshire, J.P. Morgan Asset Management. Data as of 31st December 2023. All calculations are cumulative total return, including dividends reinvested for the stated period. For all time periods, total return is based on Russell style indices with the exception of the large blend category, which is based on the S&P 500 Index. Past performance is not a reliable indicator for current and future performance.

Performance and Overall Asset Allocation

The Company's net asset value rose 24.7% on a total return basis in 2023, significantly outpacing the 18.9% return of the S&P 500 Index. This result means that 2023 was the fourth year out of the past five that the Company has delivered double digit returns.

The large cap portion of the portfolio, which at over 90% of the Company's assets is its biggest allocation, added the most value over the period. Gearing was also additive given the market's rally. The Company's small cap allocation, which averaged approximately 7% over the period, detracted from relative returns.

Performance attribution

For the year ended 31st December 2023
	%	%
Contributions to total returns
Net asset value (debt at fair value) total return
in sterling termsAPM		24.7
Benchmark total return (in sterling terms)		18.9
Excess return		5.8
Combined Portfolio return in US dollar terms1	33.4
Benchmark total return in US dollar terms	26.0
Combined Portfolio relative return in US dollar terms	7.4
Large & Small Cap Portfolio contribution2:
Large Cap Portfolio in US dollar terms	8.4
Small Cap Portfolio in US dollar terms	-1.0
Combined Portfolio relative return in US dollar terms	7.4
Contributions to return
Equity portfolio (ex-cash and gearing) in US dollar terms	5.5
Cash and gearing impact in US dollar terms3	1.9
Combined Portfolio relative return in US dollar terms	7.4
Effect of foreign currency translation4	-0.4
Combined Portfolio relative return in sterling terms	7.0	7.0
Management fee and other expenses5		-0.4
Finance costs5		-0.4
Share buybacks6		0.1
Impact of fair valuation of debt7		-0.5
Total		5.8

Source: J.P. Morgan/Morningstar.

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

¹     The aggregated returns of both the Large Cap and Small Cap portfolios.

²     The split of returns by portfolio, relative to the benchmark. This has been calculated using the average weighting of the Large Cap and Small Cap portfolios over the year.

³     Cash and gearing - measures the impact on returns of the principle amount of borrowings or cash balances on the Company's relative performance.

⁴     Effect of foreign currency translation - measures the impact of currency exposure differences between the Company's portfolio and its benchmark.

⁵     Management fee, other expenses and finance costs - the payment of fees, expenses and finance costs (interest paid on borrowings) reduces the level of total assets, and therefore has a negative effect on relative performance.

⁶     Share buybacks - measures the enhancement to net asset value per share of buying back the Company's shares for cancellation at a price which is less than the Company's net asset value per share.

⁷     The impact of fair valuation includes the effect of valuing the combined US$100m private placements at fair value.

^APM Alternative Performance Measure ('APM').

Large Cap Portfolio

The decisive outperformance by the large company portion of the portfolio over the review period was mainly driven by good stock selection.

Strong stock-specific contributors included NVIDIA, the leading producer of graphics processing units (GPUs), a class of semiconductors originally developed for video gaming applications, but now predominantly deployed in large data centre applications. NVIDIA's share price rallied over 200% for the year, reflecting a sequence of huge positive earnings revisions. The highly computer-intensive workloads undertaken by the hyperscale cloud service providers (Amazon, Microsoft, Alphabet, etc.) require the much faster processing speeds offered by parallel-processing GPUs. This requirement is massively magnified when the application in question is the training of a large language model (LLM) for generative AI, and NVIDIA is almost the only provider of these applications.

Our overweight position in the semiconductor company Advanced Micro Devices proved beneficial. It is known for designing and developing computer processors and graphic technologies. The company reported strong performance throughout the year. Tailwinds from AI optimism and a positive guidance on the sales of AI chips for the next year, contributed to the rally.

Another top contributor was cyber security company Palo Alto Networks. The prevalence, scope and impact of cyber-attacks continues to rise, and digital security is now a top IT budget priority for all businesses and government agencies. Palo Alto offers the most comprehensive suite of solutions for larger private and public organisations. Another top contributor was online travel services provider Booking Holdings. This company reported record earnings throughout the year, surpassing 2019 levels as the post-COVID travel boom continued. Like many leading companies, Booking has emerged from the pandemic in a more favourable competitive position.

Portfolio holdings that detracted from returns during the year included multinational pharmaceuticals company Bristol-Myers Squibb, and financial services company Bank of America. Bristol-Myers is in transition from a reliance on more mature products to newly launched ones, and the performance of these new lines of business has lagged expectations. The stock's share price decline over the year reflects these setbacks. However, we have maintained our holding due to our ongoing confidence in the long-term outlook for this business and the stock's unassuming valuation. Bank of America's stock was impacted early in the year by the previously mentioned regional bank failures, but rallied quite strongly in the fourth quarter, to end the year essentially flat. We remain comfortable with our position in this leading financial institution.

Performance was also hindered by our exposure to SolarEdge Technologies. This company provides electrical inverters that convert DC power from solar panels to AC power for domestic and commercial use. The solar market corrected during the year due to regulatory changes in certain key US states, general economic weakness and intensifying competition in Europe. SolarEdge's failure to address these challenges meant that the company no longer qualified as a 'best idea' in the growth sleeve of the portfolio, and so was sold.

Large Cap Portfolio Stock Attribution

For the year ended 31st December 2023

	Relative weight	Stock return	Impact
Top Contributors	(%)	(%)	(%)
NVIDIA	0.4	239.0	1.4
Advanced Micro Devices	1.8	127.6	1.2
Palo Alto Networks	1.6	111.3	1.1
Booking Holdings	1.4	76.0	0.7
Martin Marietta Materials	1.9	48.6	0.6
	Relative weight	Stock return	Impact
Top Detractors	(%)	(%)	(%)
Bristol Myers Squibb	1.4	-26.2	-0.9
Bank of America	1.6	4.8	-0.7
Xcel Energy	-0.1	-11.6	-0.6
SolarEdge Technologies	0.0	-33.0	-0.6
Kinder Morgan	2.3	4.1	-0.6

Source: Wilshire. It is shown for illustrative purposes only and is not meant to be representative of actual results. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the investment manager without notice. Past performance is not a reliable indicator of current and future results.

Portfolio Activity

The market pullback in 2022 created some opportunities to acquire attractive, higher growth companies at more reasonable prices. As always, we remain very selective, only adding names with differentiated and compelling fundamentals. Over the past year we purchased eleven new names and exited the same number.

One important re-acquisition early in the year was Meta Platforms, the holding company for Facebook, Instagram, WhatsApp, Reels and the Oculus virtual reality product line. After a challenging period for growth and profitability, the company implemented measures to rein in capital expenditure and operating expenses. It has also deployed more AI tools to enhance advertising placement, support user protection and improve the on-line experience. To us, the company seems re-energised and growth has reaccelerated. Its valuation remains attractive and estimates are being revised higher as the recovery becomes more apparent. Meta has faced numerous headwinds in the last couple of years, including increasing competition from TikTok, the negative impact of Apple's IDFA (Identification for Advertisers) changes, a weaker than expected advertising environment, and concerns over its ambitions related to virtual reality and the 'metaverse'. Now many of those headwinds have eased and the company is able to play more offense.

The purchase of Meta was funded by the sale of Zoom Video Communications. Zoom provides one of the two main video communications platforms, along with Microsoft Teams, that became a must-have during the pandemic for a massively expanded customer base of home-based and hybrid workers.

Zoom's value proposition to enterprises is compelling, as video conferencing remains a very viable alternative to face-to-face meetings, and working from home remains popular amongst many workers. However, video conferencing has become another of the business applications that Microsoft is willing to bundle with its broader enterprise offering, at no additional cost. Especially in the small/medium business space, it is just very difficult for Zoom to compete with free.

We also introduced a position in Intuit to the portfolio in March, funded by exiting Ingersoll Rand. Intuit is the dominant provider of personal tax preparation software, via its TurboTax offering. It is also the default choice of small business accounting and other software packages, providing QuickBooks, QuickBooks Online and now Mailchimp, and runs a personal finance platform, Credit Karma. We believe the durability of QuickBooks's double digit revenue growth over the next few years is underestimated by the market. The company is well-positioned to benefit from the favourable tailwinds supporting small/medium sized businesses. We view Intuit as a very high-quality company with a relatively defensive business model, whose P/E valuation had corrected back to 2018 levels. Yet it is offering a potential 10% revenue growth and mid/high teens earnings growth.

We sold our position in Ingersoll Rand, a leading player in the compressor industry. Compressors are fundamental to most manufacturing and other industrial processes, and there is now a clear replacement cycle in favour of newer, more energy-efficient models. However, the disposal was motivated by some concerns, albeit so far unjustified, that the company might experience a cyclical slowdown and an inventory correction in its distribution channels.

We also purchased Regency Centers, a real estate investment trust that owns and operates retail shopping centres. We initiated our position in the stock due to its superior property portfolio and balance sheet strength. The company's tenants focus on necessity, service, convenience and value, to serve the essential needs of the communities in which it has locations. Most of its centres are in suburban areas with strong demographics and populations with above average income levels.

To accommodate Regency Centers, we exited T-Mobile, the US's number three wireless communications company, behind Verizon and AT&T. The company has increased its market share aggressively, but additional accelerated growth is likely to be harder to realise.

Within the energy sector, during the second half of the year, we bought EOG Resources, funded by the sale of ConocoPhillips. Both companies engage in the exploration, production and marketing of crude oil and natural gas. We view EOG as one of the best operators in this commodity business, with a highly differentiated culture of innovation, technology leadership, and a very sophisticated approach to capital allocation. With over ten years of inventory, we expect EOG Resources to make capital investments with high returns and low reinvestment risk. We now see a more attractive risk/reward opportunity in this name than in ConocoPhillips.

We also initiated a position in Ross Stores, an operator of discount retail apparel and home accessories stores. Ross sells an ever-changing selection of goods, substantially below department store prices, to a lower-income demographic. The post-COVID period has been particularly favourable for discount retailers, as they help other retailers clear excess inventory that flooded in once supply chains reopened. Department stores are losing market share over the long term as we believe they will continue to experience reduced sales growth and Ross has ample opportunity to continue to expand its store network, while deploying free cash flow to repurchase shares and further enhance earnings per share growth.

To fund the acquisition of Ross Stores, we sold our position in DexCom, a medical device company that provides continuous glucose monitors for use by diabetics, to help them manage their disease more precisely. The stock has been under pressure driven by the view, which we share, that new weight-loss drugs are likely to reduce the incidence of Type 2 diabetes - a welcome development, but one which will lower demand for DexCom's products.

In a related area of the healthcare sector, we established a position in Eli Lilly, funded by the sale of our holding in Intuitive Surgical. Eli Lilly is a major pharmaceutical company focused on diabetes, oncology, immunology and neuroscience. The company has recently emerged as a leader in the field of GLP-1 drugs, derived from compounds used to treat diabetes, which have shown dramatic results in the successful treatment of obesity and related diseases. These therapies must be administered indefinitely to be effective, creating very large and long-term market opportunities. The health benefits are, however, striking and the cost, while high, appears to be justified - this class of drugs may be one of the most significant healthcare innovations in decades. Intuitive Surgical is the dominant leader in robotic surgery systems. Despite reporting earnings in line with analysts' expectations, the stock has been under pressure due to the perceived impact of GLP-1s on bariatric, and potentially other, surgical procedures.

In the utility sector, we replaced Xcel Energy with NextEra Energy. NextEra Energy is the world's largest generator and supplier of clean, renewable energy: wind and solar. The company is expected to be one of the largest utility company beneficiaries of the Inflation Reduction Act, which offers substantial tax credits for clean energy investments. A long-time high-flyer, NextEra's stock suffered a substantial correction as higher interest rates and scarcer capital availability raised questions about the returns on large solar projects. This seemed to us to be a market over-reaction to a near-term and temporary setback for a sector with undisputed viability over the longer-term. Xcel Energy is also a large electricity utility, focused on central US markets, but it lacks NextEra's scale of growth opportunities and its technical expertise in renewables.

We also exited Charter Communications to fund the purchase of United Parcel Service. Like many cable companies, Charter has faced a slowly decaying base of home video customers (a phenomenon known as 'cord cutting'). Competition also seems to be increasing in the higher growth broadband-only market, with attractive new fixed and satellite-based wireless offerings in the market. We bought United Parcel Service, the leading logistics and package delivery company. We were attracted to the company on account of its strengthened management team and its focus on improving the quality and profitability of its revenue rather than concentrating purely on growing volumes.

One of the more recent portfolio adjustments has been the initiation of a position in Broadcom, funded by our exit from Oracle. Oracle provides software products and services that address many core corporate IT requirements. We purchased the stock earlier in 2023, on the view that companies with legacy Oracle solutions might find it convenient to stay with Oracle as they transitioned from site-based facilities to more efficient cloud-based services. However, the company has experienced some execution issues in the pace of that cloud migration and we question their ability to truly compete with very strong, established cloud competitors. We perceived a more attractive opportunity in Broadcom, a global manufacturer and supplier of certain key semiconductor categories, and also certain enterprise software tools. The key defining characteristics of Broadcom (formerly Avago Systems), have been best in class management, a very close partnership with customers, relentless cost control and very strategic and thoughtful capital allocation. We believe Broadcom has a sustainable franchise with very high market shares, and we are excited about the earnings accretion from the recent large acquisition of VMWare, a cloud service provider.

Value and growth exposure

The large cap portfolio is divided between value and growth stocks, with the allocation allowed to vary between 60:40 and 40:60. At the end of the review period, value stocks comprised some 46% of the large cap portfolio, and growth stocks were higher, with a 54% allocation. This is close to the current growth/value split of the S&P500 index. The graph is included in the Annual Report.

Portfolio Holdings

Large Cap Portfolio

As at 31st December 2023

This table is included in the Annual Report.

The table below shows that the large cap portfolio at the year end was trading at a 29% discount to the market on a free cash flow basis, which confirms that we are not paying a premium for good cash flow. The portfolio is expected to deliver earnings growth of around 14% for the next 12 months, which is in line with the market, however, both of these figures are based on consensus earnings, which may need to be revised. It is comforting to have the valuation cushion provided by our holdings, relative to the market.

Characteristics	Large Cap Portfolio	S&P 500
Weighted Average Market Cap	US$564.8bn	US$588.9bn
Price/Earnings, 12-month forward1	16.7x	16.7x
Price/Free Cash Flow, last 12-months	12.2x	17.1x
EPS Growth, 12-month forward	13.9%	14.2%
Return on Equity, last 12-months	25.2%	24.5%
Predicted Beta	1.02	-
Predicted Tracking Error	2.32	-
Active Share	62%	-
Number of holdings	40	500

Source: FactSet, Barra, J.P. Morgan Asset Management. Data as of 31st December 2023.

1     Including negatives.

Small Cap Portfolio

The small cap portfolio negatively impacted returns over the review period, as it underperformed the S&P 500. The overall allocation to the small cap portfolio was maintained at approximately 5.0% during the first six months of the year. As the small cap selloff intensified, the allocation was increased due to the attractive opportunities emerging in this space, and we ended the year with an allocation of 6.5%.

Small cap valuations now look very compelling relative to large caps and we have experienced a prolonged period of large cap stocks outperforming small cap stocks. It feels like the stage is starting to be set for a reversal, although timing is always hard to predict.

For more than 30 years, the Company's small cap allocation comprised small cap growth stocks. However, in the fourth quarter of 2023, we added a small cap value strategy to the small cap allocation, to bring the overall small cap allocation towards a more blended style. We believe this is a more complementary fit with the profile of the large cap portfolio.

Outlook

The US economy has so far held up better than many expected, and diminishing inflation pressures, combined with improved growth prospects have fuelled hopes of a soft landing. The unemployment rate has remained in a narrow range between 3.4% and 4.0% since December 2021, and could stay in this range in the year ahead.

However, the pace of job creation is likely to slow, so consumer spending could grow more slowly, especially as we expect banks to gradually tighten lending standards. However, while younger and lower income households are showing signs of increased financial stress, overall consumer financial conditions remain quite manageable, and with interest rates set to decline, we do not expect to see an outright decline in consumer spending.

Inflation should continue its steady downward trend. Last year, reported inflation was boosted by several factors, including its large housing component, which significantly lags actual house prices and rent levels. A restricted supply of new and used cars also contributed to inflation pressures, as did faster wage growth and a sustained resurgence in airline travel following the pandemic. However, all these trends are now abating, suggesting that inflation will continue to moderate in the year ahead.

Oil prices have fallen back within a more normal range of US$ 70-80 per barrel for West Texas Intermediate crude. Going forward, the combination of a sluggish global economy and increased output from the US and non-OPEC nations should more than offset any further reductions in OPEC and Russian output, holding oil prices in check.

This combination of factors - a soft landing, lower inflation, falling rates and relatively stable oil prices might appear to offer a 'Goldilocks' scenario for the stock market; not too hot and not too cold. The market's valuation certainly reflects a more optimistic consensus, although the headline number is boosted by some multiple expansion for the highflying Magnificent 7, with other areas of the market still offering attractive investment opportunities.

There are certainly many potential risks to a rosy outlook, including the US presidential election, the lagged impact of higher interest rates, an expanding fiscal deficit and very significant geopolitical tensions. But the market is often said to climb a wall of worry, and in the current instance such worries have resulted in the accumulation of vast amounts of cautious cash enjoying safe, but unexciting 5.0% money market returns. As money market returns begin to track the Fed fund rate lower, at least some of this cash is likely to be tempted back to the more compelling and rewarding opportunities on offer in US equity markets. Our portfolio should benefit accordingly.

Jonathan Simon

Felise Agranoff

Portfolio Managers                                                                                                                          26th March 2024

PRINCIPAL AND EMERGING RISKS

The Directors confirm that they have carried out a robust assessment of the principal and emerging risks facing the Company, including those that could threaten its business model, future performance, solvency or liquidity. The risks identified and the ways in which they are managed or mitigated are summarised below.

With the assistance of JPMF, the Risk Committee, chaired by Sir Alan Collins until May 2023 and thereafter by Mr Robert Talbut, has drawn up a risk matrix, which identifies the principal and emerging risks to the Company. These are reviewed and discussed on a regular basis by the Board.

These risks fall broadly into the following categories:

Principal risk	Description	Mitigating activities
Investment Strategy and Resources
Investment Process and Strategy	An inappropriate investment strategy, poor asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and its peer companies, resulting in the Company's shares trading on a wider discount.	The Board mitigates this risk through its investment policy and guidelines, which are monitored and reported on regularly by the Managers. The Board monitors the implementation and results of the investment process with the Portfolio Managers and reviews data which details the portfolio's risk profile. The Manager deploys the Company's gearing within a range set by the Board.
Loss of Investment Team or Investment Manager	The sudden departure of or failure to adequately replace one or both of the Senior Portfolio Managers or several members of the wider investment management team could result in a short term deterioration in investment performance.	The Manager has a depth of experienced investment resources and takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team-based approach.
Technological Change and or Disruption	Changes in technology may disrupt the business of investee companies impacting their market value.	The Manager has extensive research resources focused on technology.
ESG Requirements From investors	The Company's policy on ESG and climate change may be out of line with investors' expectations.	The Board liaises closely with the Managers on this to understand the ESG integration process and shareholder expectations.
Performance
Market	Market risk arises from uncertainty about the future prices of the Company's investments. This market risk comprises three elements - equity market risk, currency risk and interest rate risk.	The Board and Manager monitor and review these market risks and their potential impact on the portfolio. This is a risk that investors take having invested into a single country fund
Share Price Relative to Net Asset Value	The shares trading on an excessive discount or premium to Net Asset Value can negatively impact shareholders.	The Board monitors the Company's premium/discount level and is committed to buy-back shares when they stand at anything more than a small discount, and also to issue shares at a premium where the Board is confident of sustainable market demand, to enhance the NAV per share for remaining shareholders.
Regulatory, Compliance & Operational
Operational and Cybercrime	Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the custodian's or depositary's records could prevent accurate reporting and monitoring of the Company's financial position. The Company is dependent on third parties for the provision of all of its services and systems, especially those of the Manager, the Administrator and the Depositary.	The Board has received the cyber security policies for its key third party service providers and the Manager has assured the Directors that the Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme. The Board keeps the services of the Manager and third-party suppliers under continuous review and receives regular control reports.
Accounting, Legal and Regulatory Compliance	In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158').	The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. In addition, the Board seeks to ensure compliance with all relevant regulation and legislation in the UK, Europe and the US and relies on the services of its Manager, and its professional advisers to monitor compliance with all relevant requirements.
Geopolitical, Macro and Other Exogenous Issues
	There are numerous risks of this type. Below are some examples.	There is little direct control of this type of risk possible but it is important to monitor them.
Legislative and Regulatory Change	Changes in legislation, including in the US, UK and the European Union, may adversely affect the Company either directly or because of restrictions or enforced changes on the operations of the Manager.	The Board continues to monitor changes to the regulatory, legislative and taxation framework within which it operates, whether such changes were designed to affect it or not. In order to do this, the Board draws on the expertise and advice of its professional advisers, including the Manager.
Widespread Social and Economic Disruption	Recent examples of the Global Financial Crisis or the Covid-19 pandemic may have ended or abated but disruption may reoccur for several reasons.	The Board monitors the effectiveness and efficiency of service providers' disaster recovery processes through ongoing compliance and operational reporting.
Climate Change	Climate change has become one of the most critical issues confronting companies which could present a material risk to the value of investee companies.	The Manager's investment process integrates ESG factors including climate change into its approach to assess the potential impact on investee companies.
Geopolitical	There is an increasing risk to market stability and investment opportunities from geopolitical conflicts, such as between Russia and the Ukraine, China and Taiwan, China and the US, and the turmoil in the Middle East.	The Company addresses these global developments in regular questioning of the Manager and with external expertise and will continue to monitor these issues.
Artificial Intelligence (AI)	Advances in computing power means that AI has become a powerful tool that will impact a huge range of areas and with a wide range of applications that include the potential to disrupt and even to harm.	The Board works with the Manager to monitor developments concerning AI as its use evolves and considers how it might threaten the Company's activities, which may, for example, include a heightened threat to cybersecurity.
Emerging risk	Description	Mitigating activities
Threat to liberal democracies	There appears to be an increasing threat to a number of western democracies, including the US, as a result of the growing influence of populist, nationalistic politicians. In addition, there would appear to be a heightened threat to the orderly democratic process, which is particularly relevant given this year's US Presidential election.	The Board will monitor developments in this area carefully both in conjunction with the Manager and other external experts when appropriate, and consider how this risk might threaten the Company's activities.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report in the Annual Report. The management fee payable to the Manager for the year was £4,261,000 (2022: £4,329,000) of which £nil (2022: £nil) was outstanding at the year end.

Included in administration expenses in note 6 in the Annual Report are safe custody fees amounting to £15,000 (2022: £12,000) payable to JPMorgan Chase Bank N.A. of which £5,000 (2022: £2,000) was outstanding at the year end.

Handling charges on dealing transactions amounting to £12,000 (2022: £11,000) were payable to JPMorgan Chase Bank N.A during the year of which £5,000 (2022: £3,000) was outstanding at the year end.

The Company also holds cash in the JPMorgan USD Liquidity LVNAV Fund, which is managed by JPMF. At the year end this was valued at £33.9 million (2022: £33.8 million). Income amounting to £1,648,000 (2022: £611,000) was receivable during the year of which £nil (2022: £131,000) was outstanding at the year end.

At the year end, total cash of £280,000 (2022: £1,079,000) was held with JPMorgan Chase Bank N.A.. The net amount of interest of £6,000 (2022: £1,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2022: £nil) was outstanding at the year end.

Full details of Directors' remuneration can be found in the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report & Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare the Annual Report & Financial Statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that, taken as a whole, the Annual Report & Financial Statements are fair, balanced and understandable, provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;

•   make judgements and accounting estimates that are reasonable and prudent;

•   state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•   prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also 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 accounts are published on the www.jpmamerican.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Strategic Report, Statement of Corporate Governance and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed in the Annual Report on page 47, confirms that, to the best of their knowledge:

•   the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and return or loss 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.

The Board confirms that it is satisfied that the Annual Report & Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.

The Board also confirms that it is satisfied that the Strategic Report and Directors' Report include 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 the Company faces.

For and on behalf of the Board

Dr Kevin Carter

Chair

26th March 2024

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st December 2023

	2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value
through profit or loss	-	304,636	304,636	-	(144,183)	(144,183)
Net foreign currency gains/(losses)	-	5,078	5,078	-	(8,319)	(8,319)
Income from investments	16,519	1,214	17,733	18,883	1,063	19,946
Interest receivable	1,654	-	1,654	612	-	612
Gross return/(loss)	18,173	310,928	329,101	19,495	(151,439)	(131,944)
Management fee	(852)	(3,409)	(4,261)	(866)	(3,463)	(4,329)
Other administrative expenses	(1,053)	-	(1,053)	(835)	48	(787)
Net return/(loss) before finance costs and taxation	16,268	307,519	323,787	17,794	(154,854)	(137,060)
Finance costs	(627)	(2,506)	(3,133)	(651)	(2,607)	(3,258)
Net return/(loss) before taxation	15,641	305,013	320,654	17,143	(157,461)	(140,318)
Taxation charge	(1,429)	(909)	(2,338)	(2,943)	(326)	(3,269)
Net return/(loss) after taxation	14,212	304,104	318,316	14,200	(157,787)	(143,587)
Return/(loss) per share	7.73p	165.41p	173.14p	7.42p	(82.45)p	(75.03)p

The dividends payable in respect of the year ended 31st December 2023 amount to 7.75p (2022: 7.25p) per share, costing £14,152,000 (2022: £13,746,000). Details of dividends paid and proposed are given in note 2.

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

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.

The net return/(loss) after taxation represents the profit/(loss) for the year and also the total comprehensive income.

STATEMENT OF CHANGES IN EQUITY

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2021	14,082	151,850	8,151	1,292,152	29,885	1,496,120
Repurchase of shares into Treasury	-	-	-	(35,032)	-	(35,032)
Net (loss)/return	-	-	-	(157,787)	14,200	(143,587)
Dividends paid in the year (note 2)	-	-	-	-	(13,418)	(13,418)
At 31st December 2022	14,082	151,850	8,151	1,099,333	30,667	1,304,083
Repurchase of shares into Treasury	-	-	-	(45,108)	-	(45,108)
Net (loss)/return	-	-	-	304,104	14,212	318,316
Dividends paid in the year (note 2)	-	-	-	-	(13,292)	(13,292)
At 31st December 2023	14,082	151,850	8,151	1,358,329	31,587	1,563,999

STATEMENT OF FINANCIAL POSITION

At 31st December 2023

	2023	2022
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	1,608,263	1,381,109
Current assets
Debtors	789	938
Cash and cash equivalents	34,207	34,884
	34,996	35,822
Current liabilities
Creditors: amounts falling due within one year	(1,121)	(30,083)
Net current assets	33,875	5,739
Total assets less current liabilities	1,642,138	1,386,848
Creditors: amounts falling due after more than one year	(78,139)	(82,765)
Net assets	1,563,999	1,304,083
Capital and reserves
Called up share capital	14,082	14,082
Share premium	151,850	151,850
Capital redemption reserve	8,151	8,151
Capital reserves	1,358,329	1,099,333
Revenue reserve	31,587	30,667
Total shareholders' funds	1,563,999	1,304,083
Net asset value per share - debt at par	856.5p	690.3p

STATEMENT OF CASH FLOWS

For the year ended 31st December 2023

	2023	20221
	£'000	£'000
Cash flows from operating activities
Net return/(loss) before finance costs and taxation	323,787	(137,060)
Adjustment for:
Net (gains)/losses on investments held at fair value through profit or loss	(304,636)	144,183
Net foreign currency exchange (gains)/losses	(5,078)	8,319
Dividend income	(17,733)	(19,946)
Interest income	(1,654)	(612)
Realised foreign currency exchange losses on transactions	(756)	(1,022)
Realised foreign currency exchange (losses)/gains on JPMorgan
USD Liquidity Fund	(596)	3,739
Increase in accrued income and other debtors	(14)	(29)
Increase/(decrease) in accrued expenses	214	(56)
Net cash outflow from operations before dividends and interest	(6,466)	(2,484)
Dividends received	14,423	16,413
Interest received	1,656	481
Overseas withholding tax recovered	1,182	167
Net cash inflow from operating activities	10,795	14,577
Purchases of investments	(625,714)	(496,876)
Sales of investments	703,254	540,264
Net cash inflow from investing activities	77,540	43,388
Dividends paid	(13,292)	(13,418)
Repurchase of shares into Treasury	(45,108)	(35,036)
Repayment of bank loan	(26,929)	(78,558)
Draw down of bank loan	-	78,596
Loan interest paid	(1,269)	(906)
Private placement interest paid	(2,007)	(1,995)
Net cash outflow from financing activities	(88,605)	(51,317)
(Decrease)/increase in cash and cash equivalents	(270)	6,648
Cash and cash equivalents at start of year	34,884	28,355
Foreign currency exchange movements	(407)	(119)
Cash and cash equivalents at end of year	34,207	34,884
Cash and cash equivalents consist of:
Cash and short term deposits	280	1,079
Cash held in JPMorgan USD Liquidity Fund	33,927	33,805
Total	34,207	34,884

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. Interest paid has also been reclassified to financing activities as this relates to the bank loans and private placement note. Previously, this was shown under operating activities. Other than changes in presentation of the certain cash flow items, there is no change to the cash flows as presented in previous periods.

Analysis of change in net debt

	As at		Other	As at
	31st December		non-cash	31st December
	2022	Cash flows	charges	2023
	£'000	£'000	£'000	£'000
Cash and cash equivalents
Cash and short term deposits	1,079	(799)	-	280
Cash held in JPMorgan USD Liquidity LVNAV Fund	33,805	529	(407)	33,927
	34,884	(270)	(407)	34,207
Borrowings
Debt due within one year	(29,096)	26,929	2,167	-
Debt due after one year	(82,765)	-	4,626	(78,139)
	(111,861)	26,929	6,793	(78,139)
Net debt	(76,977)	26,659	6,386	(43,932)

Other non-cash charges relate to an amortisation adjustment on borrowings and foreign currency exchange gains/(losses).

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st December 2023

1.  Accounting policies

(a)     General information and basis of accounting

The Company is a closed-ended investment company incorporated in the UK. The address of its registered office is at 60 Victoria Embankment, London, EC4Y 0JP.

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, 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 Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Board has, in particular, considered the ongoing conflicts between Ukraine and Russia and in the Middle East, and 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. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. The Directors have also assessed the ability of the Company to repay the amount drawn down under its revolving credit facility, which expires in August 2025, and are satisfied as to its ability to do so on account of the ability of the Company to raise new finance via loans or share issuances, or alternatively through the realisation of investments in the Company's highly liquid quoted securities. Furthermore, the Directors are satisfied that the Company and its key third party service providers have in place appropriate business continuity plans and confirm they have been able to maintain service levels through disruption such as that caused by the pandemic.

Accordingly, the financial statements have been prepared on the going concern basis as it is the Directors' reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements.

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

2.  Dividends

(a)     Dividends paid and proposed and declared

	2023	2022
	£'000	£'000
Dividends paid
2022 Final dividend of 4.75p (2021: 4.50p)	8,727	8,646
2023 Interim dividend of 2.50p (2022: 2.50p)	4,565	4,772
Total dividends paid in the year	13,292	13,418
Dividends declared
2023 Final dividend of 5.25p (2022: 4.75p)	9,587	8,974

All dividends paid and declared in the period have been funded from the Revenue Reserve.

The dividend proposed in respect of the year ended 31st December 2022 amounted to £8,974,000. However, the amount paid amounted to £8,727,000 due to shares repurchased after the balance sheet date but prior to the share register record date.

In accordance with the accounting policy of the Company, the dividend declared in respect of the year ended 31st December 2023, will be reflected in the financial statements for the year ending 31st December 2024.

(b)    Dividend 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 £14,212,000 (2022: £14,200,000).

	2023	2022
	£'000	£'000
2023 Interim dividend of 2.50p (2022: 2.50p)	4,565	4,772
2023 Final dividend of 5.25p (2022: 4.75p)	9,587	8,974
Total	14,152	13,746

The revenue reserve after payment of the final dividend will amount to £22,000,000 (2022: £21,693,000).

3.  Return/(loss) per share

	2023	2022
	£'000	£'000
Revenue return	14,212	14,200
Capital return/(loss)	304,104	(157,787)
Total return/(loss)	318,316	(143,587)
Weighted average number of shares in issue during the year	183,852,137	191,374,674
Revenue return per share	7.73p	7.42p
Capital return/(loss) per share	165.41p	(82.45)p
Total return/(loss) per share	173.14p	(75.03)p

The total return per share represents both basic and diluted return per share as the Company has no dilutive shares.

4. Net asset value per share

The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end are set out below. These were calculated using 182,603,216 (2022: 188,917,810) Ordinary shares in issue at the year end (excluding Treasury shares).

	2023		2022
	Net asset value attributable		Net asset value attributable
	£'000	pence	£'000	pence
Net asset value - debt at par	1,563,999	856.5	1,304,083	690.3
Add: amortised cost of US$65 million 2.55%
Private Placement Feb 2031	50,727	27.8	53,723	28.4
Less: fair value of US$65 million 2.55%
Private Placement Feb 2031	(45,636)	(25.0)	(45,913)	(24.3)
Add: amortised cost of US$35 million 2.32%
Private Placement Oct 2032	27,412	15.0	29,042	15.4
Less: fair value of US$35 million 2.32%
Private Placement Oct 2032	(23,328)	(12.8)	(23,522)	(12.5)
Net asset value - debt at fair value	1,573,174	861.5	1,317,413	697.3

5. Non-statutory accounts

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2023 but is derived from those accounts. Statutory accounts for the year ended 31 December 2023 will be delivered to the Registrar of Companies in due course. The Annual Report and Financial Statements include the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the       Company's website (or any other website) is incorporated into, or forms part of, this announcement.

26th March 2024

For further information:

Priyanka Vijay Anand

JPMorgan Funds Limited             0800 20 40 20 (or [phone])

ENDS

A copy of the Annual Report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The Annual Report will be available on the Company's website at www.jpmamerican.co.uk where up-to-date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

JPMORGAN FUNDS LIMITED

 

END