Proposed combination with BASC

JPMorgan US Smaller Co. IT

07 October 2026

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person responsible for arranging for the release of this announcement on behalf of the Company is Priyanka Vijay Anand of JPMorgan Funds Limited as Company Secretary.

JPMorgan US Smaller Companies Investment Trust plc ("JUSC" or the "Company")

Proposed combination with Brown Advisory US Smaller Companies PLC ("BASC")

LEI: 549300MDD7SOXDMBN667

7 October 2026

Introduction

The boards of JUSC and BASC are pleased to announce that non-binding heads of terms have been agreed for a combination of JUSC and BASC. The combination follows the completion of the strategic review undertaken by the BASC board, which the BASC board believes offers the best outcome for BASC's shareholders as well as delivering meaningful benefits for existing JUSC shareholders. The combination is to be implemented through a proposed members' voluntary winding up of BASC by way of a scheme of reconstruction under section 110 of the Insolvency Act 1986 (the "Scheme") and the associated transfer of certain of the assets and undertaking of BASC to JUSC (together the "Transaction" and the "Proposals"). Pursuant to the Scheme, shareholders in BASC ("BASC Shareholders") will be entitled to receive new shares in JUSC ("New JUSC Shares") and/or to realise some or all of their holding for cash (the "Cash Option") at a discount of 0.75% to BASC's Residual NAV (the "Cash Option Discount").

Following implementation of the Proposals, the enlarged JUSC will continue to be managed by JPMorgan Funds Limited (which has delegated the management of the Company's portfolio to JPMorgan Asset Management (UK) Limited, together "JPMorgan") in accordance with its existing investment objective and policy.

BASC has received an irrevocable undertaking from Saba Capital Management LP ("Saba") (together with its managed funds and clients) to, amongst other things, vote, or procure a vote, in favour of the Scheme in respect of the BASC shares beneficially owned by it and to elect, or procure an election, for the Cash Option in respect of Saba's entire beneficial holding of BASC shares representing approximately 16% of BASC's issued share capital.

In addition, Saba, BASC and JUSC have signed a standstill agreement (together with the irrevocable undertaking above, the "Irrevocable Undertaking and Standstill Agreement") whereby Saba has given a number of undertakings including that it will not put forward proposals to JUSC Shareholders or requisition a general meeting of JUSC, such undertakings to expire on 7 October 2027. Saba (together with its managed funds and clients) does not currently hold any interest in JUSC.

Dominic Neary, Chairman of the Company, commented: "I am delighted to announce a proposed combination with BASC and look forward to welcoming those shareholders who participate in the rollover option. I believe that US smaller companies are some of the most exciting in the world, with JUSC's investment trust structure providing a marked advantage in accessing these opportunities.

There are significant benefits of this combination for all shareholders. With increased scale ever more important in the investment trust market, shareholders in the combined JUSC will benefit from an enlarged vehicle, with improved liquidity and lower ongoing costs. This provides a compelling platform for shareholders to 'Invest in the Heart of America', accessing an asset class that offers attractive long-term opportunities through a structure that offers enhanced returns, strong governance oversight and shareholder representation."

Stephen White, Chairman of BASC, commented: "Throughout the Strategic Review, the Board's priority has been to secure the best possible outcome for all shareholders. We considered a broad range of options and potential partners, and believe the proposed combination with JUSC provides the right balance of choice and long-term opportunity.

For shareholders who wish to remain invested, it preserves exposure to US smaller companies through an investment trust structure, while offering the benefits of a larger vehicle, improved liquidity and lower ongoing costs. At the same time, shareholders who would prefer to realise their investment will have the option of a full cash exit.

Despite the unsettled geopolitical backdrop, we continue to see a favourable outlook for US smaller companies. The macroeconomic background remains supportive, valuations are attractive and there are signs that investors are revisiting the asset class as they take profits in other parts of their portfolios that have performed strongly. We believe the proposed combination creates a stronger vehicle through which shareholders can retain exposure to that opportunity over the long-term."

Benefits of the Proposals

The benefits of the Proposals are expected to include:

·      Create a stronger investment trust positioned to deliver attractive long-term returns from US smaller companies: As the only two dedicated UK-listed US smaller companies trusts, BASC and JUSC are both believers in this asset class operating in the investment trust structure. This is an opportunity to create a strengthened proposition for the benefit of both companies' long-term shareholders and for future cohorts of investors.

·      Scale: Post Transaction, the increased scale of JUSC should offer improved secondary market liquidity for shareholders in the enlarged JUSC and result in further cost efficiencies. As part of the Proposals, JUSC and JPMorgan have agreed a further reduction in the annual management fee for the combined vehicle to 0.65% on the first £200m of net assets, and 0.60% on net assets thereafter. As a result of a combination, rolling BASC Shareholders and JUSC shareholders could benefit from estimated annual cost savings of c.20 basis points and c.13 basis points, respectively[1].

·      Discount management: Post Transaction, JUSC would continue to operate a robust discount management policy through share buybacks and its regular 5-yearly continuation votes. As part of the Proposals, JUSC will supplement this policy by introducing a 5-yearly conditional tender offer from 1 January 2027 for 30% of its own shares occurring at a 2% discount to NAV, triggered under two conditions: if JUSC underperforms the Russell 2000 Index total return with net dividends reinvested, expressed in sterling terms (the "Benchmark") over the trailing five-year period; and if the average share price discount to NAV over the preceding twelve months is wider than 5%.

·      Well-resourced team with a robust investment process: JUSC is managed by an experienced portfolio management team of Don San Jose, Dan Percella, and Jon Brachle. The portfolio managers benefit from the insights of over 70 research analysts in the US and 130 globally. JUSC is managed using a rigorous investment process focused on bottom-up, fundamental research. The portfolio managers seek to identify high-quality smaller cap companies in the US market, trading at reasonable valuations, to build a portfolio that aims to deliver outperformance through a cycle, and since the portfolio managers' inception, JUSC has outperformed the Benchmark in 75% of rolling 3-year periods over their tenure.

·      JPMorgan's extensive resources and commitment: JPMorgan is highly supportive of its investment trust business and has a dedicated client team of over 40 individuals responsible for the servicing of its investment trust clients. JPMorgan would make a substantial financial contribution, equivalent to a minimum of 12 months management fee on the net assets transferred to the enlarged JUSC by BASC in order to insulate JUSC shareholders and rolling BASC Shareholders from a significant proportion of the costs of the Transaction. In addition, JPMorgan is making a separate contribution, post-transaction, to the enlarged JUSC's marketing and promotional activities, which will benefit all shareholders of the enlarged JUSC.

·      Opportunity for continued exposure to US smaller companies: BASC Shareholders who have expressed support for exposure to US smaller companies in an investment trust structure can continue to do so. Valuations of high-quality US smaller companies are attractive, following a two-year period in which unprofitable US smaller companies have outperformed profitable companies by more than 20%. The JUSC portfolio management team remains focused on identifying high-quality companies trading at attractive valuations, that are significantly differentiated from the wider market, which the Board believes provides a compelling opportunity for long-term investors.

·      Complementary shareholder base: There is a significant overlap between BASC's and JUSC's top shareholders, allowing BASC Shareholders the opportunity to consolidate their investments into a larger, more liquid investment trust.

·      Ability to stay invested in a tax efficient manner: Eligible BASC Shareholders who roll over their investment in BASC into JUSC are expected to be able to do so without triggering a charge to UK capital gains tax.

·      Full cash exit available: BASC Shareholders will have the option to realise some or all of their holding in BASC for cash, at BASC's Residual NAV less the 0.75% Cash Option Discount.

·      A solution for both exiting and continuing shareholders: The Proposals are designed to be simple, equitable, and attractive to BASC Shareholders, providing both liquidity to those that want it and a compelling rollover opportunity into JUSC for those that desire to remain invested in a US smaller companies investment trust mandate.

·      Board of enlarged trust: BASC will have director representation on the Board of the combined entity, maintaining continuity of oversight for BASC Shareholders.

Market outlook

Both JPMorgan and the JUSC Board recognise that JUSC's focus on high‑quality companies has lagged the market's enthusiasm for stocks aligned with a variety of themes, such as AI, cryptocurrency, and quantum computing, and a strong relative outperformance of high beta and high volatility stocks relative to those with higher profitability.

Nevertheless, JPMorgan and the JUSC Board remain positive on the outlook for US small-cap equities. While recent returns have been driven by a narrow group of AI-related companies, earnings momentum is showing signs of broadening across cyclical industries, with strengthening fundamentals in areas such as banks, industrial real estate, transportation, capital equipment and analogue semiconductors. Small-cap earnings are also expected to grow slightly faster than those of large-cap companies, which, together with attractive valuations for high‑quality small caps and depressed long‑term relative performance versus large caps, supports the investment case.

Against this backdrop, the JUSC Board and JPMorgan believe the asset class offers compelling long-term opportunities for patient investors to participate in any resulting style tailwinds.

Structure of the Transaction

The Transaction will be implemented by way of a scheme of reconstruction and members' voluntary liquidation of BASC pursuant to section 110 of the Insolvency Act 1986. The Transaction will be implemented on a formula asset value ("FAV")-to-FAV basis, as set out below.

Pursuant to the Scheme, BASC Shareholders will be given the option to roll over their shareholding in BASC into JUSC in exchange for the issue of new ordinary shares of 2.5 pence each in JUSC to them (the "Rollover Option") or to receive cash. The Cash Option will be for up to 100% of BASC's shares in issue (excluding treasury shares). The Cash Option will be subject to a discount of 0.75% as set out in the section titled "Allocation of Cash Option Discount" below.

The assets of BASC will be split into three pools comprising (i) the interests of continuing BASC Shareholders who wish to roll over into JUSC (the "Rollover Pool"), (ii) cash to satisfy the Cash Option (the "Cash Pool"); and (iii) cash, assets and undertakings (including any assets not suitable to be transferred to JUSC) that the proposed liquidators consider sufficient to meet the current and future, actual and contingent liabilities of, and any other amounts payable by, BASC, including any Transaction Costs (as defined below) not already paid (in each case, including any VAT in respect thereof), together with a retention for the proposed liquidators to provide for any unascertained, unknown or contingent liabilities of BASC (such amount not expected to exceed £100,000 in aggregate) (the "Liquidators' Retention") (the "Liquidation Pool").

New JUSC Shares will be issued as the default option in the event that BASC Shareholders do not make a valid election for the Cash Option under the Scheme.

Further details and definitions of capitalisation terms are set out in the section titled "Calculation of Formula Asset Value" below.

Calculation of Formula Asset Value

The FAV of BASC and JUSC will be calculated as at a specified calculation date in accordance with each of BASC's and JUSC's normal accounting policies (as appropriate) and will take into account the adjustments outlined below:

(a)        the Residual NAV shall be equal to the NAV of BASC (as determined in accordance with BASC's normal accounting policies), less the BASC Transaction Costs as defined below not already reflected in the NAV, less the value of the cash, assets and undertaking appropriated to the Liquidation Pool together with the Liquidators' Retention;

(b)        the Cash FAV shall be equal to the Residual NAV multiplied by the percentage of BASC shares that are elected or deemed elected, for the Cash Option, less the Cash Option Discount;

(c)        the Rollover Pool FAV shall be equal to the Residual NAV multiplied by the percentage of BASC Shares that are deemed to have elected for the Rollover Option (the "Rollover Proportion"), plus the benefit of the relevant part of the Cash Option Discount and the relevant part, if any, of the Management Fee Waiver (as defined below) (in each case, to the extent applicable to the Rollover Pool FAV as set out below);

(d)        the JUSC FAV shall be equal to the NAV of JUSC (as determined in accordance with JUSC's normal accounting policies) less the JUSC Transaction Costs as defined below not already reflected in JUSC's NAV, plus the benefit of the relevant part of the Management Fee Waiver and the relevant part, if any, of the Cash Option Discount (in each case, to the extent applicable to the JUSC FAV as set out below); and

(e)        each of which will be reviewed by an independent accountant. 

JPMorgan cost contribution

JPMorgan will contribute the following amounts, calculated by reference to the revised JUSC management fee at the relevant marginal management fee rate on the value of the assets rolling into JUSC (the "Incremental Management Fees"), comprising:

(a)  an amount equivalent to a minimum of 12 months Incremental Management Fees (the "Management Fee Waiver"), the exact period (which for the avoidance of doubt may include a fraction of a month) being such period that will prevent NAV dilution from the Transaction for all ongoing shareholders in the enlarged JUSC, determined in accordance with the remainder of this paragraph, to be applied first to offset the costs incurred by JUSC in connection with the Proposals (the "JUSC Transaction Costs") in determining the JUSC FAV, then, to the extent that any of the Rollover Proportion of the costs incurred by BASC in connection with the Proposals (the "BASC Transaction Costs") remain after allocation of the relevant part of the Cash Option Discount in accordance with "Allocation of Cash Option Discount" below, to offset such remaining Rollover Proportion of the BASC Transaction Costs in determining the Rollover Pool FAV, and then to meet any remaining amount of the LSE listing and admission fees payable in connection with the issue of New JUSC Shares to BASC Shareholders after the application of the Cash Option Discount referred to below. To the extent that the above operation uses up less than 12 months Incremental Management Fees, the Management Fee Waiver shall be exactly 12 months Incremental Management Fees and any part of the Management Fee Waiver in excess of that which, when taken together with the relevant part of the Cash Option Discount, is not needed to meet the JUSC Transaction Costs or the Rollover Proportion of the BASC Transaction Costs would be for the benefit of all shareholders in the enlarged JUSC; and

(b)  a contribution post-Transaction to the enlarged JUSC marketing expenses equal to an amount equivalent to three months of Incremental Management Fees for the benefit of all shareholders in the enlarged JUSC.

Allocation of Cash Option Discount

The benefit of the Cash Option Discount will be applied in the following order until it is used up:

a)   first to offset the Rollover Proportion of the BASC Transaction Costs in determining the Rollover Pool FAV;

b)   secondly, to the extent that any JUSC Transaction Costs remain after allocation of the relevant part of the Management Fee Waiver in accordance with the "Manager cost contribution" above, to offset such remaining JUSC Transaction Costs in determining the JUSC FAV;

c)   thirdly, to pay the listing and admission fees payable in connection with the issue of New JUSC Shares to BASC Shareholders;

d)   fourthly to reduce the Management Fee Waiver (not below 12 months); and

e)   finally, to be transferred to JUSC on completion of the Scheme and for the benefit of all shareholders in the enlarged JUSC.

Dividends

Each company's NAV will be adjusted as at the Calculation Date for any dividends which have been declared prior to the Scheme Effective Date but not paid to the respective company's shareholders and not accounted for in the respective NAVs as at the Calculation Date.

BASC Shareholders will have no right to any JUSC dividends having a record date prior to the Scheme Effective Date but the New JUSC Shares will rank fully pari passu with the existing ordinary shares of JUSC for all dividends declared by JUSC on or after the date of issue of the New JUSC Shares. JUSC anticipates declaring a pre-Scheme interim dividend to existing JUSC shareholders

Conditions and expected timetable

Implementation of the Proposals is subject to a number of conditions, including:

·      the passing of the necessary resolution by JUSC shareholders to approve the issue of New JUSC Shares;

·      the passing of the necessary resolutions of BASC Shareholders to approve the Scheme and to place BASC into members' voluntary liquidation; and

·      certain regulatory and tax approvals.

The Company will publish a circular to convene a general meeting of JUSC shareholders to approve the issue of New JUSC Shares pursuant to the Proposals. At the same time, BASC will publish a circular setting out full details of the Proposals and to convene the necessary general meetings to implement the Scheme. It is anticipated that such shareholder documentation will be published by mid-November 2026.

Subject to the relevant conditions being satisfied, it is expected that the Scheme would be completed in December 2026 or shortly thereafter.

The expected timetable in respect of the Scheme remains subject to change.

All references to the Company's shares in issue or issued share capital exclude treasury shares.

Enquiries:

JPMorgan US Smaller Companies Investment Trust plc                                                                                               Contact via Company Secretary

Dominic Neary (Chairman)

JPMorgan Funds Limited (Manager)                                                                            01268 444470

Simon Elliott

Neil Martin

William Talkington

JPMorgan Funds Limited (Company Secretary)                                                         01268 444470

Priyanka Vijay Anand  

Deutsche Numis (Corporate Broker & Financial Adviser)                                          020 7545 8000

Nathan Brown

Matt Goss

City Code

In accordance with customary practice for such schemes of reconstruction pursuant to section 110 of the Insolvency Act 1986 involving investment companies, the City Code on Takeovers and Mergers is not expected to apply to the combination.

Important Information

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of such jurisdictions.

The New JUSC Shares have not been, and will not be, registered under the U.S. Securities Act of 1933 (as amended) (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an exemption from registration under the Securities Act. Moreover, the New JUSC Shares have not been, nor will they be, registered under the applicable securities laws of Australia, Canada, Japan, New Zealand, the Republic of South Africa, or any member state of the EEA (other than any member state of the EEA where the shares are lawfully marketed). Further, JUSC is not, and will not be, registered under the US Investment Company Act of 1940, as amended.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to, inter alia, stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement contains statements about the Company that are or may be deemed to be forward looking statements. Without limitation, any statements preceded or followed by or that includes the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance of the negative thereof, may be forward looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding financial position, strategy, plans, proposed acquisitions and objectives of BASC or the enlarged JUSC, are forward looking statements.

These forward looking statements are not guarantees of future performance. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statement. Due to such uncertainties and risks, readers should not rely on such forward looking statements, which speak only as of the date of this announcement, except as required by applicable law. Subject to their respective legal and regulatory obligations, each of JUSC and JPMorgan expressly disclaim any obligations or undertaking to update or revise any forward looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Rules, the Disclosure Guidance and Transparency Rules, the Public Offers and Admission to Trading Regulations 2024 and MAR.

None of JUSC or JPMorgan or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to any of them, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. Each of JUSC and JPMorgan and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

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