Annual Report 2026 # The City of London Investment Trust plc ![img-0.jpeg](img-0.jpeg) ![img-1.jpeg](img-1.jpeg) ![img-2.jpeg](img-2.jpeg) ![img-3.jpeg](img-3.jpeg) MANAGED BY **Janus Henderson** INVESTORS --- ![img-4.jpeg](img-4.jpeg) ## Strategic Report | Performance | 2-5 | | --- | --- | | The City of London Story | 6-7 | | Chairman's Statement | 8-11 | | Portfolio Snapshot | 12-13 | | Fund Managers' Report | 14-19 | | Portfolio Information | 20-21 | | Business Review | 22-37 | ## Governance | Directors and Fund Managers | 39-40 | | --- | --- | | Directors' Report | 41-43 | | Corporate Governance Report | 44-50 | | Audit and Risk Committee Report | 51-54 | | --- | --- | | Nominations Committee Report | 55-56 | | Directors' Remuneration Report | 57-60 | | Statement of Directors' Responsibilities | 61 | | Independent Auditor's Report | 62-68 | ## Financial Statements | Income Statement | 70 | | --- | --- | | Statement of Changes in Equity | 71 | | Statement of Financial Position | 72 | | Notes to the Financial Statements | 73-88 | ## Additional Information | Securities Financing Transactions | 90-92 | | --- | --- | | Alternative Performance Measures | 93-94 | | Glossary | 95 | | General Shareholder Information | 96 | | Financial Calendar | 97 | ## Notice of AGM | Notice of Annual General Meeting | 98-106 | | --- | --- | | Corporate Information | 107 | For the methodology behind AIC Dividend Hero and AIC ISA Millionaire, see the AIC website at www.theaic.co.uk --- # Strategic Report ## Objective The Company's objective is to provide long-term growth in income and capital, principally by investment in equities listed on the London Stock Exchange. The Board fully recognises the importance of dividend income to shareholders. 1 --- The City of London Investment Trust plc Annual Report 2026 ![img-5.jpeg](img-5.jpeg) # Performance at 30 June ## Total Return Performance for year to 30 June | | 2026 % | 2025 % | | --- | --- | --- | | NAV^{1,6} | 21.9 | 16.8 | | Share price^{2,6} | 21.0 | 21.8 | | FTSE All-Share Index (Benchmark) | 21.9 | 11.2 | | AIC UK Equity Income sector^{3} | 13.7 | 12.6 | | IA UK Equity Income OEIC sector | 15.1 | 10.5 | ## Total Return Performance for 10 years to 30 June 2026 (rebased to 100) ![img-6.jpeg](img-6.jpeg) ## Dividend Yields ![img-7.jpeg](img-7.jpeg) 2 --- The City of London Investment Trust plc Annual Report 2026 ![img-8.jpeg](img-8.jpeg) # Performance at 30 June ## City of London 10 Years of Dividend Growth (rebased to 100) ![img-9.jpeg](img-9.jpeg) ## City of London 20 Years of Dividend Growth (rebased to 100) ![img-10.jpeg](img-10.jpeg) ## City of London 60 Years of Dividend Growth (rebased to 100) ![img-11.jpeg](img-11.jpeg) Note: The Consumer Prices Index ("CPI") was first introduced in the UK as an official measure in 1996 and is therefore not available for 60 years 3 --- The City of London Investment Trust plc Annual Report 2026 ![img-12.jpeg](img-12.jpeg) # Performance at 30 June NAV per share⁶ | 2026 | 2025 | | --- | --- | | **553.4p** | **472.5p** | NAV per share (debt at fair value)⁶ | 2026 | 2025 | | --- | --- | | **558.9p** | **478.1p** | Share price | 2026 | 2025 | | --- | --- | | **566.0p** | **487.5p** | Revenue earnings per share | 2026 | 2025 | | --- | --- | | **22.5p** | **21.6p** | Ongoing charge for the year⁵,⁶ | 2026 | 2025 | | --- | --- | | **0.36%** | **0.36%** | Premium⁶ | 2026 | 2025 | | --- | --- | | **2.3%** | **3.2%** | Premium (debt at fair value)⁶ | 2026 | 2025 | | --- | --- | | **1.3%** | **2.0%** | Gearing at year end⁶ | 2026 | 2025 | | --- | --- | | **4.7%** | **5.3%** | Dividends per share | 2026 | 2025 | | --- | --- | | **22.15p** | **21.30p** | Revenue reserve per share⁶ | 2026 | 2025 | | --- | --- | | **10.2p** | **9.9p** | ## Sector Exposure As a percentage of the investment portfolio excluding cash: ![img-13.jpeg](img-13.jpeg) Source: Janus Henderson 1 Net asset value ("NAV") per ordinary share total return with debt at fair value (including dividends reinvested) 2 Share price total return using mid-market closing price 3 Association of Investment Companies ("AIC") UK Equity Income sector size-weighted average NAV total return (shareholders' funds) 4 AIC UK Equity Income sector NAV total return calculated on a simple average basis 5 Calculated using the methodology prescribed by the AIC 6 Alternative Performance Measure Sources: Morningstar Direct, Janus Henderson, LSEG Datastream A glossary of terms and an explanation of Alternative Performance Measures are on pages 93 to 95 4 --- The City of London Investment Trust plc Annual Report 2026 ![img-14.jpeg](img-14.jpeg) # Performance at 30 June NAV Total Return Performance to 30 June 2026 | | 1 year % | 3 years % | 5 years % | 10 years % | | --- | --- | --- | --- | --- | | NAV per ordinary share^{1} | 21.9 | 64.5 | 84.8 | 136.9 | | FTSE All-Share Index | 21.9 | 53.1 | 67.9 | 129.8 | | AIC UK Equity Income sector average^{2} | 13.7 | 42.1 | 52.6 | 120.4 | | IA UK Equity Income OEIC sector average | 15.1 | 45.8 | 50.8 | 101.5 | Share Price Performance Total Return to 30 June 2026 | Value of £1,000 with net income reinvested | 1 year £ | 3 years £ | 5 years £ | 10 years £ | | --- | --- | --- | --- | --- | | Share price per ordinary share^{3} | 1,209.8 | 1,640.4 | 1,839.2 | 2,384.2 | | FTSE All-Share Index | 1,218.9 | 1,530.9 | 1,678.8 | 2,297.6 | | AIC UK Equity Income sector average | 1,145.2 | 1,441.9 | 1,531.8 | 2,291.2 | | IA UK Equity Income OEIC sector average | 1,151.0 | 1,457.6 | 1,507.8 | 2,015.2 | Ten-Year NAV and Dividend Record | Year ended | Net asset value per ordinary share (p)^{4} | Net asset value per ordinary share (rebased)^{5} | Net dividends per ordinary share (p) | Net dividends per ordinary share (rebased)^{5} | | --- | --- | --- | --- | --- | | 30 June 2016 | 378.6 | 100.0 | 15.90 | 100.0 | | 30 June 2017 | 416.1 | 109.9 | 16.70 | 105.0 | | 30 June 2018 | 424.3 | 112.1 | 17.70 | 111.3 | | 30 June 2019 | 416.3 | 110.0 | 18.60 | 117.0 | | 30 June 2020 | 338.7 | 89.5 | 19.00 | 119.5 | | 30 June 2021 | 384.1 | 101.5 | 19.10 | 120.1 | | 30 June 2022 | 393.5 | 103.9 | 19.60 | 123.3 | | 30 June 2023 | 391.2 | 103.3 | 20.10 | 126.4 | | 30 June 2024 | 429.6 | 113.5 | 20.60 | 129.6 | | 30 June 2025 | 478.1 | 126.3 | 21.30 | 134.0 | | 30 June 2026 | 558.9 | 147.6 | 22.15 | 139.3 | Historical dividend ![img-15.jpeg](img-15.jpeg) Historical NAV$^{4}$ ![img-16.jpeg](img-16.jpeg) 1 NAV per share total return with debt at fair value (including dividends reinvested) 2 AIC UK Equity Income sector size-weighted average NAV total return (shareholders' funds) 3 Share price total return using mid-market closing price 4 NAV per ordinary share is calculated after deducting all prior charges, including the preference and preferred ordinary stocks, at fair value 5 Rebased to 100 at 30 June 2016 Sources: Morningstar Direct, Janus Henderson, LSEG Datastream A glossary of terms and Alternative Performance Measures are on pages 93 to 95 5 --- The City of London Investment Trust plc Annual Report 2026 # The City of London Story ## A Brief History The Company (or “City of London”) was formed as The City of London Brewery Company in 1860 to acquire Calverts, a family brewing business at Upper Thames Street in the City of London, registering as a limited company in 1891. The brewery had extensive interests in the licensed premises trade. ![img-17.jpeg](img-17.jpeg) Photo credit: Keith Osbourne In 1932, the name was changed to The City of London Brewery and Investment Trust Limited, parts of the business having been sold and the proceeds invested in securities according to investment trust principles. In 1968, the remaining part of the brewery business was sold and the Company concentrated exclusively on investments in securities. In 1970, the Company appointed Touche, Remnant & Co. as Investment Manager and in 1982 the name was changed to TR City of London Trust PLC. In 1992, Touche, Remnant & Co. was acquired by Henderson Administration Group plc. The name of the Company was changed to The City of London Investment Trust plc in October 1997. The Company has grown significantly with a strong performance record. Invested mainly in UK equities with a bias towards large, multinational companies and a conservative approach to portfolio composition, it prioritises sustainable income and long-term capital growth. ![img-18.jpeg](img-18.jpeg) Photo credit: The Brewery History Society (custodians) The Company has increased its dividend every year since 1966 and this 60 year record is the longest of any investment trust. In May 2017, Henderson Group plc merged with Janus Capital Group Inc. to become Janus Henderson Group plc. On 30 June 2026, Janus Henderson Group completed a take-private transaction with Trian Fund Management L.P., General Catalyst Group Management LLC and Qatar Investment Authority. ### City of London: 60 Years of Dividend Growth ![img-19.jpeg](img-19.jpeg) Source: Janus Henderson 6 --- The City of London Investment Trust plc Annual Report 2026 # The City of London Story (continued) ## History of income growth The summer of 1966 was significant for English football fans as it was the first (and most recent) time that England's men's team won the World Cup. It was also the start of City of London's dividend growth track record which has continued uninterrupted for 60 years. ### Over that time, an initial investment of: **£1,000** in **CITY OF LONDON** has yielded investors **£55,900** in gross income, assuming that they had not reinvested their income. This compares to just **£3,900** earned from a **SAVINGS ACCOUNT**, based on the Bank of England base rate, or **£37,300** paid out by the **UK EQUITY MARKET**, as measured by the FTSE All-Share Index over the same period. ### Cumulative income received from £1,000 initial investment ![img-20.jpeg](img-20.jpeg) Source: Janus Henderson and LSEG Datastream ![img-21.jpeg](img-21.jpeg) Source: Janus Henderson and LSEG Datastream ## Compounding income and total return While City of London has provided investors with a growing source of income, it has also delivered strong long-term capital growth on a total return basis. If investors had reinvested their dividends back into shares in the Company over the period since 1966, an initial investment of £1,000 would be worth £1.3m today. For comparison, an investment of £1,000 in the UK market over 60 years, as measured by the Datastream UK Market Index (as data for the FTSE All-Share Index total return only goes back to 1986), would be worth £0.7m on a comparable total return basis. This comparison demonstrates a significant outperformance by City of London over the long term. ### City of London total return from a £1,000 initial investment ![img-22.jpeg](img-22.jpeg) Source: Janus Henderson and LSEG Datastream ## Reserves One of the main advantages of investment trusts is their ability to retain surplus income and create revenue reserves. These reserves can be added to in profitable years and paid out in the leaner years, thereby smoothing the level of dividend payments to shareholders where appropriate. The investment process for City of London aims to avoid companies that cannot sustain dividend payments and the diversification of the portfolio limits the impact of any dividend cut. Furthermore, the use of revenue reserves along with the ability to distribute capital reserves arising from gains realised from investments gives compelling reassurance of the sustainability of the dividend in challenging market conditions. City of London's dividend growth track record and strong reserves position should give investors comfort over the long term. 7 --- ![img-23.jpeg](img-23.jpeg) Sir Laurie Magnus CBE Chairman # Chairman's Statement "The dividend was increased, for the 60th consecutive year, by 4.0% and was fully covered by earnings per share. This continues City of London's unique leadership in delivering the longest record of consecutive annual dividend increases in the investment trust sector." --- The City of London Investment Trust plc Annual Report 2026 # Chairman's Statement City of London produced a net asset value ("NAV") total return of 21.9% over the year to 30 June 2026, which was the same as the FTSE All-Share Index total return. The Company also exceeded the FTSE All-Share Index total return over 3, 5 and 10 years. The dividend was increased, for the 60th consecutive year, by 4.0% and was fully covered by earnings per share. This continues City of London's unique leadership in delivering the longest record of consecutive annual dividend increases in the investment trust sector. The Board is determined to maintain this leadership position over the years ahead. ## The Markets Despite volatile global politics, stock markets produced good returns during the twelve months. Excitement about the potential for artificial intelligence ("AI") shifted from the large technology companies that will provide AI to those benefiting from the huge capital expenditure in building out the infrastructure, such as semi-conductor manufacturers. Companies whose business models appeared to be threatened by AI were notable underperformers, even if the threat had not yet impacted their results. Equity markets were also helped by a loosening of monetary policy in the second half of 2025. The US Federal Reserve reduced interest rates to 3.75% after announcing three 25 basis points ("bps") cuts and the Bank of England also reduced its rate to 3.75% after two 25 bps cuts. Following the outbreak of armed conflict between the US and Iran at the end of February 2026, which led to the closure of the Strait of Hormuz and an upward spike in the oil price, interest rates stayed on hold in the US and UK. The European Central Bank lifted its key deposit rate, in June, by 25 bps to 2.25% as pricing pressures increased. Equity markets initially fell on the escalation of the conflict in the Middle East but recovered in anticipation of a ceasefire and with the Memorandum of Understanding signed by the US and Iran in June. UK GDP growth was tepid during the second half of 2025, partly because of damaging speculation, for the second consecutive year, about tax changes in the Budget. 10-year Gilt yields rose during the 12 months from 4.5% to a peak of 5.2% in May, before falling to 4.8% at the end of June, with continuing doubts in the markets about the sustainability of the UK government's fiscal policy. Economic growth improved marginally during the first half of 2026, but the arrival of Andy Burnham as Prime Minister has revived uncertainty concerning the government's attitude towards business and its fiscal credibility. There was a significant number of takeover bids for UK listed companies by overseas companies and private equity firms, as has been the case for several years. City of London's portfolio benefited with the proposed acquisitions of Beazley by Zurich Insurance, Schroders by Nuveen of the US, Tate & Lyle by Ingredion of the US and Segro by Prologis of the US. ## Performance ### Earnings and Dividends City of London's earnings per share increased by 4.4%. The growth in dividends from the banks sector was the most important positive contributor for the third year in a row. Special dividends accounted for as revenue amounted to £0.3 million, down from £0.6 million for the previous year and reflecting the corporate trend for effecting shareholder distributions through share buybacks rather than dividend payments. Expenses remained under tight control, with City of London's ongoing charge ratio of 0.36% remaining very competitive compared to most other actively managed funds. The management fee with Janus Henderson is 0.3% for net assets up to £3.0 billion, dropping to 0.275% on any excess above £3.0 billion. Net assets amounted to £2.85 billion as at 30 June 2026. City of London's annual dividend grew by 4.0%, ahead of UK CPI inflation of 2.6%. Over ten years, City of London's dividend has grown by 39.3%, slightly behind UK CPI inflation of 41.7%. The last decade has been a difficult period for real dividend growth, adversely affected both by the widespread cuts during the Covid pandemic and a period when, mainly because of rising energy costs, the annual rate of inflation exceeded 10%. Over 20 years, City of London's dividend has risen by 136.6%, compared to UK CPI inflation of 78.0%. City of London's record of 60 consecutive annual dividend increases is the longest of any investment trust. It has been achieved by investing predominantly in the UK stock market and by harnessing the benefits of the investment trust structure, including the facility to use revenue reserves and to raise low-cost long-term debt. It has also been achieved through the exemplary custodianship of the fund management team, led by Job Curtis, who has consistently steered the portfolio through numerous unpredictable market challenges over a tenure of 35 years with skill, humility and dedicated commitment. The revenue reserve increased by £3.6 million to £52.3 million, with the revenue reserve per share rising by 3.0% to 10.2p. The Board is firmly of the view that dividend payments should, other than in very exceptional circumstances, be covered by revenue alone and not be supplemented by distribution from realised capital profits. Whilst the Company's capital reserves arising from gains on investments sold (which rose by £61.0 million to £459.4 million) could help to fund dividend payments, the Board considers that a healthy revenue reserve provides an important backstop for dividend payments made from revenue alone, especially during periods of dividend cuts across the stock market, as occurred during the Covid pandemic. ### NAV Total Return City of London's NAV total return of 21.9% for the 12 months was the same as for the FTSE All-Share Index. Gearing, which 9 --- The City of London Investment Trust plc Annual Report 2026 # Chairman's Statement (continued) contributed positively by 0.8%, was financed mainly by secured debt. The £30 million 2.67% secured notes (maturing in 2046) and the £50 million 2.94% secured notes (maturing in 2049) will continue to provide low-cost debt financing over the next 20 years for investment in equities. Stock selection detracted relative to the FTSE All-Share Index by 0.5%. The biggest stock detractor relative to the FTSE All-Share Index was Rolls Royce, the aero engine manufacturer, which pays a low level of dividend and was not held. The next largest detractors were being underweight in HSBC, the bank, and AstraZeneca, the pharmaceutical company. The biggest contributor to relative performance was not holding London Stock Exchange followed by IG, the online trading company, and not holding Experian, the credit rating company. As mentioned in the introduction, City of London's NAV total return was ahead of the FTSE All-Share Index over 3, 5 and 10 years. City of London was also ahead of the AIC UK Equity Income and IA UK Equity Income OEIC sector averages over 1, 3, 5 and 10 years. ## Share Issues and Buybacks The Board takes very seriously its stated policy to issue and buy back shares within a narrow band relative to NAV. The ability to do this is underpinned by the liquidity of the Company's portfolio, all of which is listed and readily marketable, in contrast to the position of some other investment trusts. Over the last 15 years, the Company's prevailing share price premium and discount to NAV has stayed within narrow bands rarely exceeding 3%. City of London's shareholders have therefore benefited from a relatively low volatility of share price relative to NAV. In addition, share issues at a premium and buybacks at a discount have enhanced NAV. During the 12 months to 30 June 2026, the Company sold 9.1 million shares from treasury (which had been bought back in earlier periods) and issued 12.4 million new shares - all at a premium to NAV for total proceeds of £114.8 million. ## Environmental, Social and Governance The Fund Manager and Deputy Fund Manager, supported by specialists at Janus Henderson, give careful consideration to environmental, social and governance ("ESG") related risks and opportunities when selecting stocks for the portfolio. The Board recognises that these risks are highly relevant to the long-term performance of City of London and of interest to shareholders and commentators. An analysis by MSCI, a company widely used in the review of ESG factors, shows that City of London's portfolio, as at 30 June 2026, had a lower weighted score to ESG risks than the FTSE All-Share Index. ESG-related issues receive careful consideration at each Board meeting, including how shareholdings have been voted at investee meetings. Further details on how the Fund Managers take ESG considerations into account in their investment decision-making process are provided on pages 34 to 37. ## Annual General Meeting The 2026 Annual General Meeting ("AGM") will be held in the offices of Janus Henderson, 201 Bishopsgate, London EC2M 3AE on Thursday, 29 October 2026 at 1.00pm. The meeting will include a presentation by our Fund Manager, Job Curtis, and Deputy Fund Manager, David Smith. Any shareholder who is unable to travel is encouraged to join virtually by Zoom webinar by registering at www.janushenderson.com/cty-agm. The Board has decided to adopt the practice of conducting the voting for each resolution on a poll, as an alternative to shareholders voting on a show of hands at the meeting. This will mean that all votes submitted by proxy will be taken into account, as well as the votes of those shareholders physically present. All shareholders, and particularly those who cannot attend in person, are therefore requested to submit their votes by proxy by the deadline set out in the Notice of Meeting to ensure their vote counts. ## Outlook The huge amount being spent on rolling out the infrastructure for AI suggests it will be a groundbreaking new technology. While there will be significant medium-term productivity benefits for the world economy, there will also be disruption for some industries and related labour markets. The returns on the vast sums being invested could also be disappointing, with adverse consequences for the highly valued stocks that have capitalised on the speculation associated with the AI "revolution". In addition, this capital expenditure is having a short-term upward impact on inflation, with price rises in commodities and components, such as copper and semiconductors, even if the adoption of AI will ultimately be deflationary. Movements in oil and natural gas prices continue to have an important influence on global inflation. The wars in Ukraine and Iran have constrained the availability of these energy resources and reduced refining capacity with adverse consequences for critical products, such as jet fuel and diesel. The outcome of these conflicts, which is still uncertain, will have a significant effect on the global economy. Overall, while inflation remains above target in the US and UK and rising in Europe, further interest rate cuts by central banks are unlikely. 10 --- The City of London Investment Trust plc Annual Report 2026 # Chairman's Statement (continued) The UK equity market offers a diverse range of sectors and is not dominated by technology companies, as is the case with the US stock market. The Board is confident that companies in industries with large weightings in the UK stock market, such as financials, resources and consumer staples, will grow in the years ahead. The share prices of UK companies remain at a considerable valuation discount to comparable companies overseas and therefore likely to continue to attract takeover bids. The Board believes City of London's portfolio is well placed to build on its record-breaking 60 years of consecutive dividend growth and to provide shareholders with a competitive total return. Sir Laurie Magnus CBE Chairman 15 September 2026 11 --- The City of London Investment Trust plc Annual Report 2026 # Portfolio Snapshot ## Forty Largest Investments as at 30 June 2026 The 40 largest investments, representing 84.35% of the portfolio, are listed below. | Position | Company | Sector | Market value £'000 | Portfolio % | | --- | --- | --- | --- | --- | | 1 | HSBC | Banks | 191,727 | 6.42 | | 2 | Shell | Oil and Gas | 126,076 | 4.22 | | 3 | British American Tobacco | Tobacco | 123,940 | 4.15 | | 4 | NatWest | Banks | 118,357 | 3.96 | | 5 | Lloyds Banking | Banks | 104,434 | 3.50 | | 6 | BAE Systems | Aerospace and Defence | 101,365 | 3.40 | | 7 | Unilever | Personal Care, Drug and Grocery Stores | 94,564 | 3.17 | | 8 | AstraZeneca | Pharmaceuticals and Biotechnology | 93,060 | 3.12 | | 9 | Tesco | Personal Care, Drug and Grocery Stores | 89,656 | 3.00 | | 10 | M&G | Investment Banking and Brokerage Services | 87,386 | 2.93 | | **Top 10** | | | **1,130,565** | **37.87** | | 11 | Rio Tinto | Industrial Metals and Mining | 84,752 | 2.84 | | 12 | Imperial Brands | Tobacco | 80,184 | 2.69 | | 13 | Barclays | Banks | 78,270 | 2.62 | | 14 | BP | Oil and Gas | 73,327 | 2.46 | | 15 | GSK | Pharmaceuticals and Biotechnology | 73,278 | 2.45 | | 16 | IG | Investment Banking and Brokerage Services | 72,720 | 2.44 | | 17 | Aviva | Life Insurance | 72,367 | 2.42 | | 18 | Standard Life (formerly Phoenix) | Life Insurance | 71,968 | 2.41 | | 19 | RELX | Software and Computer Services | 64,052 | 2.14 | | 20 | National Grid | Gas, Water and Multi-utilities | 60,029 | 2.01 | | **Top 20** | | | **1,861,512** | **62.35** | | 21 | Legal & General | Life Insurance | 57,915 | 1.94 | | 22 | British Land | Real Estate Investment Trusts | 57,739 | 1.93 | | 23 | Land Securities | Real Estate Investment Trusts | 57,569 | 1.93 | | 24 | Schroders | Investment Banking and Brokerage Services | 43,438 | 1.45 | | 25 | Severn Trent | Gas, Water and Multi-utilities | 35,472 | 1.19 | | 26 | Diageo | Beverages | 35,017 | 1.17 | | 27 | Reckitt Benckiser | Personal Care, Drug and Grocery Stores | 34,370 | 1.15 | | 28 | Glencore | Industrial Metals and Mining | 33,397 | 1.12 | | 29 | TotalEnergies | Oil and Gas | 30,464 | 1.02 | | 30 | Munich Re | Non-life Insurance | 27,329 | 0.92 | | **Top 30** | | | **2,274,222** | **76.17** | | 31 | St. James's Place | Investment Banking and Brokerage Services | 27,259 | 0.91 | | 32 | Segro | Real Estate Investment Trusts | 26,694 | 0.89 | | 33 | Swire Pacific | General Industrials | 26,672 | 0.89 | | 34 | SSE | Electricity | 26,176 | 0.88 | | 35 | Novartis | Pharmaceuticals and Biotechnology | 26,011 | 0.87 | | 36 | BT | Telecommunications Service Providers | 25,942 | 0.87 | | 37 | TP ICAP | Investment Banking and Brokerage Services | 21,996 | 0.74 | | 38 | IMI | Electronic and Electrical Equipment | 21,474 | 0.72 | | 39 | ITV | Media | 21,359 | 0.72 | | 40 | Smiths | General Industrials | 20,480 | 0.69 | | **Top 40** | | | **2,518,285** | **84.35** | All classes of equity in any one company are treated as one investment. 12 --- The City of London Investment Trust plc Annual Report 2026 # Portfolio Snapshot (continued) ## Classification of Investments and Portfolio Weighting as at 30 June 2026 | | | Portfolio % | FTSE All-Share Index % | Relative to the FTSE All-Share Index percentage points | | --- | --- | --- | --- | --- | | **Energy** | Oil and Gas | 7.7 | 8.6 | (0.9) | | | | **7.7** | **8.6** | **(0.9)** | | **Basic Materials** | Chemicals | 0.6 | 0.3 | 0.3 | | | Industrial Metals and Mining | 3.9 | 6.5 | (2.6) | | | Precious Metals and Mining | – | 0.6 | (0.6) | | | | **4.5** | **7.4** | **(2.9)** | | **Industrials** | Aerospace and Defence | 3.4 | 6.7 | (3.3) | | | Construction and Materials | 0.4 | 0.5 | (0.1) | | | Electronic and Electrical Equipment | 1.3 | 1.2 | 0.1 | | | General Industrials | 1.6 | 0.7 | 0.9 | | | Industrial Engineering | 0.4 | 0.5 | (0.1) | | | Industrial Support Services | 0.5 | 2.5 | (2.0) | | | Industrial Transportation | – | 0.1 | (0.1) | | | | **7.6** | **12.2** | **(4.6)** | | **Consumer Staples** | Beverages | 1.6 | 2.1 | (0.5) | | | Food Producers | 1.4 | 0.5 | 0.9 | | | Personal Care, Drug and Grocery Stores | 7.3 | 6.1 | 1.2 | | | Tobacco | 6.9 | 4.1 | 2.8 | | | | **17.2** | **12.8** | **4.4** | | **Health Care** | Medical Equipment and Services | 0.6 | 0.5 | 0.1 | | | Pharmaceuticals and Biotechnology | 7.7 | 11.5 | (3.8) | | | | **8.3** | **12.0** | **(3.7)** | | **Consumer Discretionary** | Consumer Services | – | 1.4 | (1.4) | | | Household Goods and Home Construction | 1.1 | 0.6 | 0.5 | | | Leisure Goods | – | 0.3 | (0.3) | | | Media | 0.7 | 0.9 | (0.2) | | | Personal Goods | – | 0.2 | (0.2) | | | Retailers | 1.2 | 1.4 | (0.2) | | | Travel and Leisure | 0.2 | 1.9 | (1.7) | | | | **3.2** | **6.7** | **(3.5)** | | **Telecommunications** | Telecommunications Service Providers | 2.4 | 1.2 | 1.2 | | | | **2.4** | **1.2** | **1.2** | | **Utilities** | Electricity | 0.9 | 1.2 | (0.3) | | | Gas, Water and Multi-utilities | 3.8 | 3.3 | 0.5 | | | | **4.7** | **4.5** | **0.2** | | **Financials** | Banks | 16.8 | 17.0 | (0.2) | | | Closed End Investments | – | 5.6 | (5.6) | | | Finance and Credit Services | – | 1.5 | (1.5) | | | Investment Banking and Brokerage Services | 9.7 | 2.9 | 6.8 | | | Life Insurance | 7.2 | 2.4 | 4.8 | | | Non-life Insurance | 2.3 | 0.9 | 1.4 | | | | **36.0** | **30.3** | **5.7** | | **Real Estate** | Real Estate Investment Trusts | 5.4 | 1.8 | 3.6 | | | Real Estate Investment and Services | 0.4 | 0.2 | 0.2 | | | | **5.8** | **2.0** | **3.8** | | **Technology** | Software and Computer Services | 2.6 | 2.3 | 0.3 | | | | **2.6** | **2.3** | **0.3** | | **Total** | | **100.0** | **100.0** | **–** | 13 --- # Fund Managers' Report ![img-24.jpeg](img-24.jpeg) Job Curtis Fund Manager ![img-25.jpeg](img-25.jpeg) David Smith Deputy Fund Manager "The portfolio is designed to continue growing City of London's dividend and provide a competitive total return, including capital appreciation. We believe the companies in the portfolio offer good value relative to our view of the prospects for earnings and dividend growth." 14 --- The City of London Investment Trust plc Annual Report 2026 # Fund Managers’ Report ## Investment Background The UK equity market, as measured by the FTSE All-Share Index, produced a total return of 21.9% over the year under review. UK GDP growth slowed in the second half of 2025, adversely affected by speculation over the Budget, but recovered in the first half of 2026, leading to growth of 1.1% over the 12 months. After poor results in the May local elections, Sir Keir Starmer resigned as Prime Minister and was replaced by Andy Burnham in July 2026. Globally, the dominant investment theme was excitement over the new technology of artificial intelligence (“AI”). The vast sums being spent on building out the infrastructure for AI led to very substantial opportunities for suppliers, such as manufacturers of semi-conductor chips, copper miners and builders of data centres. But concern grew towards the end of the period about whether the returns would justify the scale of investment. The outbreak of hostilities between the US and Iran, which led to the Strait of Hormuz being closed, caused a rise in the oil price and fall in global equity prices. These moves reversed in the second quarter of 2026 as the conflict appeared to de-escalate. ### FTSE All-Share Index total return (rebased to 100) ![img-26.jpeg](img-26.jpeg) Source: LSEG Datastream, as at 30 June 2026. Rebased to 100 as at 30 June 2025 During the 12 months, the Bank of England made two 25 basis points cuts in the base rate, in August and December 2025, taking it from 4.25% to 3.75%. CPI inflation started the period under review at 3.6% and was on a declining trend until the conflict between the US and Iran led to a rise in the oil price and inflation. The 10-year gilt yield, which was 4.5% on 30 June 2025, rose to a peak of 5.2% on 19 May 2026 and ended the 12 months at 4.8% on 30 June 2026. The dividend yield of the FTSE All-Share Index was 3.1% at 30 June 2026, below the 10-year gilt yield and the base rate, but with equities offering the prospect of dividend growth. ### FTSE All-Share Index dividend yield, UK 10-year gilt yield and UK base rate ![img-27.jpeg](img-27.jpeg) Source: LSEG Datastream, as at 30 June 2026 In 2017 and 2021, when interest rates were exceptionally low, the Company was able to fix cheap rates of borrowing for long periods through the following secured notes: £30 million 2.67% 2046 and £50 million 2.94% 2049. In addition, there is also one secured note with two-and-a-half years until maturity: £35 million 4.53% 2029. These borrowings remained invested in equities throughout the year. The HSBC facility, which is priced off the base rate, was used opportunistically: £17 million was drawn down at the start of the 12-month period, falling to £4 million at 30 September 2025, rising to £73 million at 31 May 2026 and falling to £32 million at 30 June 2026. ### UK £ vs US$ and Euro ![img-28.jpeg](img-28.jpeg) Source: LSEG Datastream, as at 30 June 2026 In the foreign exchange market, the US dollar strengthened against sterling, which reflected the better growth of the US economy, partly due to capital expenditure on AI infrastructure. The exchange rate between the US dollar and sterling fell from 1.37 to 1.33. Against the euro, sterling was more stable, with the exchange rate moving from 1.17 to 1.16. 15 --- The City of London Investment Trust plc Annual Report 2026 # Fund Managers' Report (continued) ## Brent Crude Oil US$/bbl ![img-29.jpeg](img-29.jpeg) Source: Bloomberg, as at 30 June 2026 The oil price softened during the first eight months of the period under review, reflecting an excess supply of oil in world markets. There was a dramatic change with the outbreak of the conflict between the US and Iran leading to the closure of the Strait of Hormuz, a significant artery in the export of oil and liquified natural gas ("LNG") from the Middle East. In some respects, it was surprising that the oil price did not rise higher than $118/bbl. Consumers globally reduced demand for oil and China was able to draw on its large oil reserves. The oil price fell in June 2026, as the Memorandum of Understanding between the US and Iran was agreed, and ended the 12 months at $73/bbl. ## Performance Review ### Estimated performance attribution (relative to FTSE All-Share Index total return) | | 2026 % | 2025 % | | --- | --- | --- | | Stock selection | -0.51 | +5.54 | | Gearing | +0.76 | +0.39 | | Expenses | -0.36 | -0.36 | | Share issues/buybacks | +0.11 | +0.02 | | Total | 0.00 | +5.59 | Source: Janus Henderson The Company produced a net asset value total return of 21.9%, which was the same as the FTSE All-Share Index. Gearing contributed to performance by 0.76 percentage points ("pp") and stock selection detracted by 0.51pp. The biggest stock detractor to relative performance was not owning Rolls Royce, the aero engine manufacturer. Benefiting from the upswing in the civil aerospace cycle, Rolls Royce's shares performed strongly but the company continued to pay a low level of dividend. The second and third biggest detractors were HSBC, the bank, and AstraZeneca, the pharmaceutical company. Both were large holdings in the portfolio but underweight relative to the benchmark index. The fourth biggest detractor was RELX, the provider of information and analytics to businesses, lawyers and scientists. RELX's shares underperformed on general fears of the medium-term impact of AI on its business, despite it delivering short-term profits growth in line with expectations. The fifth biggest detractor was Anglo American, the mining company, which was sold from the portfolio but subsequently announced a combination with Teck of Canada, which was well received. The biggest and third biggest contributors to relative performance were respectively London Stock Exchange and Experian, the credit rating company, which were not held in the portfolio. Both companies derated on fears about the impact of AI on their businesses. The second biggest contributor was IG, the online trading company, which benefited from supportive market conditions and an improved product offering leading to strong customer growth. The fourth biggest contributor was 3i, the investor in private companies, where the holding was reduced and the portfolio was underweight. The fifth largest contributor was Schroders, the fund management company, which agreed to be taken over by Nuveen of the US. ### FTSE 100, 250 and SmallCap Indices total return (rebased to 100) ![img-30.jpeg](img-30.jpeg) Source: LSEG Datastream, as at 30 June 2026. Rebased to 100 as at 30 June 2025 Large companies, as represented by the FTSE 100 Index, produced a total return of 23.6%, outperforming the 10.2% return for medium-sized companies, as represented by the FTSE 250 Index, and the 14.3% return for smaller companies, as represented by the FTSE Smallcap Index. The FTSE 100 was helped by its large weighting in mining, banks and health care which were strongly performing sectors. ### FTSE 350 Higher and Lower Yield (rebased to 100) ![img-31.jpeg](img-31.jpeg) Source: LSEG Datastream, as at 30 June 2026. Rebased to 100 as at 30 June 2025 16 --- The City of London Investment Trust plc Annual Report 2026 # Fund Managers’ Report (continued) Higher yielding shares outperformed, with the FTSE 350 Higher Yield Index (the higher dividend-yielding half of the largest 350 companies listed in the UK) producing a return of 28.2% compared to a total return of 15.6% by the FTSE 350 Lower Yield Index (the lower yielding half of the largest 350 companies listed in the UK). The perceived AI loser companies, such as RELX, London Stock Exchange and Experian mentioned above, tended to be lower yielding. ## Portfolio Changes ### Distribution of the portfolio as at 30 June 2026 ![img-32.jpeg](img-32.jpeg) Source: Janus Henderson, as at 30 June 2026 The proportion of the portfolio in large UK-listed companies (constituents of the FTSE 100 Index) rose during the 12 months from 81% to 85%. This reflects the strong performance and continuing good prospects, in our view, for capital and income growth from sectors and companies typically found in the FTSE 100 Index, such as banks and life insurers. The proportion in overseas-listed companies reduced slightly from 8% to 7%, given our preference for UK companies which stood at a valuation discount to overseas equivalents. There is scope for up to 20% of the portfolio to be in overseas-listed equities and it did reach 17% as at 30 June 2022. In the future, a greater allocation will be given to overseas-listed equities when we perceive the relative valuation to have improved. There were four new holdings bought during the 12 months. Big Yellow is the UK’s largest self-storage operator with a footprint of some six million square feet. Its estate is primarily freehold and concentrated in London, the South-East and large urban conurbations. Although demand can be affected by the volume of housing transactions, evidence suggests there is considerable scope for secular growth of self-storage in the UK to reach the penetration found in some other countries, such as the US. ICG is an alternative asset management firm, in areas such as structured capital, private debt, private equity secondaries, credit and real assets. The private markets in which ICG operates have been growing faster than public markets with less pressure on management fees. ITV’s revenues are split between media and entertainment, where it is the leader in UK TV advertising, and the studios, where it is one of the world’s largest makers of television programmes. ITV has reached agreement to sell its media and entertainment division to Sky (owned by Comcast of the US), subject to regulatory approval. The remaining studios division should be able to achieve a higher valuation given its growth rate. Rightmove is the UK’s leading property portal, with some 90% of estate agents paying a monthly subscription to advertise an unlimited number of properties on its website. Rightmove’s shares have derated because of fears about AI disrupting its business model. Rightmove is investing in AI to enhance its platform and has proprietorial data and analytics to build on. There were seven complete sales made during the 12 months. Two companies were sold ahead of the completion of takeovers: Beazley, the specialist insurer, which is being bought by Zurich Insurance; and Dowlais, the motor components company, which was taken over by American Axle. Anglo American, the mining company, was sold after it cut its dividend severely and concern about the difficulty of selling its coal assets in Australia and its controlling interest in De Beers, the diamond company. XP Power, a power supply manufacturer, passed its dividend, and Hays, the employment agency, and Mondi, paper and packaging company, both cut their dividends. These three companies, which were small holdings in the portfolio, were sold given uncertainty about their recovery prospects. In the oil and gas sector, the holding in Harbour Energy was sold, given the cut in its dividend and its high leverage. In contrast, a significant addition was made to BP, which stopped its share buyback but continued to increase its dividend. The elevated oil price has enabled BP to reduce its debt levels more quickly than previously anticipated. In addition, the company made several discoveries of new oil and gas fields over the last year, including Bumerangue, a large prospect off the coast of Brazil. In consumer staples, additions were made to two long-standing holdings, Diageo and Unilever. Diageo is one of the world’s largest alcoholic drinks companies, with brands such as Johnnie Walker (Scotch whisky), Guinness (beer), Smirnoff (vodka) and Don Julio (tequila). Diageo has performed poorly in recent years, with falling profits leading to a cut in its dividend. Although weight-loss drugs may have had an impact, there is also an element of cyclicality in demand for premium alcoholic beverages, which should recover. The new Chief Executive, Sir Dave Lewis, who had an excellent record turning around Tesco, should be able to improve Diageo’s trading performance and operational efficiency over the medium term. Unilever is in the process of significantly simplifying its business. It spun out its ice cream business, Magnum, which was sold from the portfolio. It also announced the merger of its food division with McCormick of the US. This will take 17 --- The City of London Investment Trust plc Annual Report 2026 # The Company's Viability The AIC Corporate Governance Code includes a requirement for the Board to assess the future prospects for the Company, and to report on the assessment within the Annual Report. The Directors have completed their assessment and report as set out below. The Board considers that certain characteristics of the Company's business model and strategy are relevant to this assessment: - The Board seeks to deliver long-term performance by the Company. - The Company's investment objective, strategy and policy, which are subject to regular Board monitoring, mean that the Company is invested mainly in readily realisable, UK-listed securities and that the level of borrowings is restricted. - The Company is a closed end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions. - The Company has an ongoing charge of 0.36%, which is lower than other comparable investment trusts. Also relevant are a number of aspects of the Company's operational agreements: - The Company retains title to all assets held by the Custodian under the terms of a formal agreement with the Depositary. - Longer-term fixed rate borrowing is in place, being 4.53% secured notes 2029 (which are due to be repaid during the five-year assessment period), 2.94% secured notes 2049 and 2.67% secured notes 2046 which are subject to financial covenants with which the Company complied in full during the year. The value of long-term borrowing is relatively small in comparison to the value of net assets, being 4.0%. - Revenue and expenditure forecasts are reviewed by the Directors at each Board meeting. This includes stress testing of the forecast under different scenarios. - Cash is held with approved banks. Three model scenarios are considered which evaluate the impact on revenue reserves over a five year period. These range from a worst-case scenario which includes low consensus dividend estimates and significant dividend cuts of up to 50% from specific sectors and investee companies, to a best-case scenario with high consensus dividend estimates, no dividend cuts in any specific sector and limited dividend cuts in specific investee companies. Increasing dividend payments to shareholders could continue under all three scenarios whether through revenue, or supported by distributable capital reserves. None of the results from the three scenarios would therefore threaten the viability of the Company. Covenant limits are tested to ascertain the level that net assets would need to fall by to breach any covenant conditions. Net assets would need to fall by amounts in excess of £2.5 billion to breach covenants, with all other factors remaining constant. The Board considers this to be highly unlikely and therefore does not threaten the viability of the Company. In addition, the Directors carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's business model, including future performance, liquidity and solvency, and considered emerging risks that could have a future impact on the Company. The principal risks identified as relevant to the viability assessment were those relating to investment portfolio performance, including climate change, and its effect on the NAV, share price and dividends, and threats to security over the Company's assets. The Board took into account: the liquidity of the Company's portfolio; the existence of the longer-term fixed rate borrowings; the effects of any significant future falls in investment values and income receipts on the ability to repay and renegotiate borrowings, grow dividend payments and retain investors; and the potential need for share buybacks to maintain a narrow share price discount. The Directors assess viability over five-year rolling periods, taking account of foreseeable severe but plausible scenarios. The Directors believe that a rolling five-year period best balances the Company's long-term objective, its financial flexibility and scope with the difficulty in forecasting economic conditions affecting the Company and its shareholders. The Directors have considered the current geopolitical and macroeconomic uncertainties and the potential for sudden catastrophic events such as pandemics, conflict and climate events, in particular the impact on income and the Company's ability to meet its investment objective. The Directors do not believe that they will have a terminal impact on the viability of the Company and its ability to continue in operation, notwithstanding the short-term uncertainty these events could cause in the markets and specific short-term issues, such as energy and/or supply chain disruption, inflation and labour shortages. Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period. 33 --- The City of London Investment Trust plc Annual Report 2026 # ESG ## How we integrate Environmental, Social and Governance considerations in our investment decisions The Board believes that integrating ESG into investment decision-making and ownership practices is an important factor for delivering the investment outcomes our shareholders seek. ESG considerations are therefore a fully embedded component of the investment process employed by the Fund Managers, and the wider Janus Henderson investment teams. The Company integrates ESG but does not pursue a sustainable investment objective or otherwise take ESG factors into account in a binding manner. ESG integration is the practice of incorporating material environmental/social and governance information or insights in a non-binding manner alongside traditional measures into the investment decision process to improve long-term financial outcomes of portfolios. ESG related research is one of many factors considered within the investment process. ### Defining ESG **Environmental** factors include climate change, use of natural resources, pollution, waste management, water usage and deforestation. **Social** factors include corporate culture, diversity, health and safety, community relations and supply chain management. **Governance** factors include business ethics, board composition, remuneration and shareholder rights. ### Investment Considerations Resilience of business models is crucial to the Company's investment strategy. The Company's investment philosophy is valuation driven, with a dividend yield considered the most important measure of value. As such, a considerable amount of time is spent by the Fund Managers identifying fundamental factors, including ESG factors which may impact profits, cash flow and dividends and ensuring that investee companies have robust policies and processes in place to manage these. Whilst no company is specifically excluded based on ESG considerations, the Fund Managers would seek to avoid companies where ESG risks are not sufficiently considered or managed. As the Fund Managers strive to understand all drivers of company performance, they also strive to understand the risks. An evaluation of ESG factors is integral to this. Governance is a key part of fundamental factor analysis with good corporate governance supportive of long-term decision-making and investment returns. The significance of environmental and social factors can vary depending on the sector and the region in which a company operates. Nonetheless, each ESG factor, in addition to the quantitative and qualitative assessments, is an important consideration when evaluating the opportunity in an equity investment. Fundamental factors considered vary, but may include: | **Financial Analysis** | Dividend sustainability, free cash flow, operating margin, balance sheet strength, leverage, profitability, earnings growth. | | --- | --- | | **Qualitative Evaluation** | Competitive position, industry trends, business volatility, business model, barriers to entry, exposure to disruption. | | **Environmental** | Pollution, carbon emissions, water usage, waste management, resource use, sustainable sourcing. | | **Social** | Health and safety, employee relations, diversity and inclusion, employee development, data privacy, supply chain management. | | **Governance** | Shareholder alignment, board independence, shareholder rights, business ethics, voting structure, remuneration, board experience, accounting standards. | | **Valuation** | Dividend yield, free cash flow, price to earnings ratio ('P/E'), earnings per share ('EPS'), enterprise value/earnings before interest, tax, depreciation and amortisation ('EV/EBITDA') and dividend cover. | The Manager engages MSCI (see footnote 1 on page 37), a leading firm researching and rating ESG factors globally, to support investment research. MSCI can also be used to monitor the holdings within the Company and analyse its overall ESG risk exposure. ### Weighted average ESG score ![img-33.jpeg](img-33.jpeg) Source: MSCI, City of London and Index weights as at 30 June 2026 MSCI provides an ESG quality score which measures the ability of the underlying holdings to manage key medium to long-term risks and opportunities that arise from ESG factors. It is based on MSCI ESG ratings and is measured on a scale of 0 to 10 (0 being worst and 10 being best). For this metric the Company scores 8.2 and the benchmark 7.9. The risk ratings are aggregated for the Company's portfolio and the benchmark, the FTSE All-Share Index. The Company's ESG risk is 3.8% lower than the benchmark, as assessed by MSCI. 34 --- The City of London Investment Trust plc Annual Report 2026 # ESG (continued) ## Distribution of MSCI ESG Fund Ratings Universe ![img-34.jpeg](img-34.jpeg) Source: MSCI, City of London and Index weights as at 30 June 2026 MSCI's ESG ratings are ranked using a seven-point AAA-CCC scale. Both the Company and the benchmark score AA ratings using this analysis. The Company has no exposure to companies with the lowest CCC scores, with more exposure to AAA rated stocks than the benchmark. ## Carbon emissions ![img-35.jpeg](img-35.jpeg) Source: MSCI, City of London and Index weights as at 30 June 2026 The above chart shows the direct and indirect carbon emissions of the holdings in both the Company and the benchmark. These emissions are based on the assets under management of the Company compared to an equivalent portfolio of assets under management invested in the benchmark. Scope 1 and 2 emissions are the direct emissions from a company's operations and scope 3 emissions are indirect emissions. The Company's direct and indirect carbon emissions are 21.9% lower than the benchmark. ## Engagement and Stewardship Stewardship is a fundamental part of the Manager's long-term, active approach to investment management. Strong ownership practices, including engagement with management and boards, can help protect and enhance long-term shareholder value. Janus Henderson is a signatory to the UK Stewardship Code and is a founding member of the UN Principles of Responsible Investment ("UN PRI"). Additionally, Janus Henderson is a supporter of a number of broader ESG initiatives such as the Access to Medicine Index which aims to improve availability of health care in developed and emerging markets and Climate Action 100+, an investor-led initiative to engage with heavily emitting companies to reduce their greenhouse gas emissions. As a part of the research process, portfolio managers and analysts meet frequently with company management, senior executives and boards, with Janus Henderson conducting thousands of meetings per year. These meetings typically occur prior to initiating a position and throughout the holding period. The portfolio managers develop long-term relationships with the management of firms in which they invest. Should concerns arise over a firm's practices or performance, they would seek to leverage these constructive relationships by engaging with company management or express their views through voting on management or shareholder proposals. Escalation of engagement activities depends upon a company's individual circumstances. ## Voting The Board believes that voting at general meetings is an important aspect of corporate stewardship, and a means of signalling shareholder views on board policy, practices and performance. The Board has delegated responsibility for voting the rights attached to the shares held in the Company's portfolio to the Manager, who actively votes at shareholder meetings and engages with companies as part of the voting process. Voting decisions are guided by the best interests of the investee companies' shareholders and made in consultation with the Fund Managers, who have an in-depth understanding of the respective company's operations. Voting decisions are taken in keeping with the provisions of the Manager's Responsible Investment Policy, which sets out the Manager's approach to corporate governance, corporate responsibility and compliance with the Stewardship Code, and is publicly available on the Manager's website at www.janushenderson.com. To retain oversight of the process, the Directors regularly receive reports on how the Manager has voted the shares held in the Company's portfolio. They also review the Manager's Responsible Investment Policy and Proxy Voting Policy and Procedures at least annually. In the period under review, the shares in the Company's portfolio were voted in respect of 85 meetings. The level of governance in leading global companies is generally of a high 35 --- The City of London Investment Trust plc Annual Report 2026 ## ESG (continued) standard in terms of best practice, which meant support in favour of the resolutions proposed by management was warranted. However, in respect of 4 resolutions (<1% of the resolutions proposed), support was not warranted and, following discussion between the Fund Managers and Janus Henderson's governance team, the shares were voted against the investee board recommendation. On occasion, the Fund Managers take voting decisions after consultation with the Chairman on behalf of the Board. As an active manager, Janus Henderson's preference is to engage with management and boards to resolve issues of concern rather than to vote against shareholder meeting proposals. This approach is more likely to be effective in influencing company behaviour. The Fund Managers therefore actively seek to engage with companies throughout the year and in the lead up to the annual shareholder meeting to discuss any potentially controversial agenda items. However, where they believe that proposals are not in shareholder interests or where engagement proves unsuccessful, they will vote against. ### Voting record ![img-36.jpeg](img-36.jpeg) In terms of resolutions not supported, the principal area was environment/social resolutions: ![img-37.jpeg](img-37.jpeg) Source: Janus Henderson using Institutional Shareholder Services ("ISS") categories Note: Some meetings had more than one vote against management * Environmental/social voting relates to where an improvement in reporting and disclosures are needed by companies on environmental and/or social matters ** Janus Henderson routinely votes against proposals labelled 'other business'. Many companies put forward proposals labelled 'other business'. This is a request to allow the board and shareholders to raise other issues and discuss them at the meeting. It is often a routine request, however as it could potentially lead to subsequent approval of items without prior disclosure to minority shareholders, Janus Henderson routinely votes against these items ### Engagement Example The Fund Manager engaged with investee companies in the tobacco sector to discuss the risks and opportunities evolving from "next generation" nicotine products, such as vapes/e-cigarettes, heated tobacco products and modern oral (nicotine pouches). Job Curtis (Fund Manager) and Charlotte Nisbet (Janus Henderson Responsible Investment & Governance Analyst) met with executives of Imperial Brands (on 13 August 2025) and British American Tobacco (on 23 September 2025). Both companies explained the complex market of "next generation" product development and regional regulation differences. New product development and growth is determined by what is permitted by regulators and consumer preferences. A key risk is the semi-Illicit market for products, including Chinese produced vapes and oral nicotine, sometimes targeted at the youth market. Both companies would welcome more regulation to restrict this activity. From this engagement, we gained comfort that Imperial Brands and British American Tobacco were responding to the growing demand for "next generation" nicotine products in a responsible way. ### The Environment As an investment company, the Company's own direct environmental impact is minimal. The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. For the same reasons, the Company considers itself to be a low energy user under the Streamlined Energy & Carbon Reporting ("SECR") regulations and therefore is not required to disclose energy and carbon information. The Manager recognises the importance of managing its operational activities in a sustainable way and minimising any adverse impact on the environment. In 2021, Janus Henderson reached its target to reduce its carbon footprint for its own operations by 15% per full-time employee ("FTE") based on 2018 consumption levels. In 2022, Janus Henderson set new five-year reduction targets for its operations relative to a 2019 baseline: - reduction target of 29.4% in Scope 1 (fuel) and Scope 2 (electricity) emissions; - reduction target of 17.5% in Scope 3 (business travel, freight, paper, water, waste) emissions; and - reduction target of 17.5% on water and waste consumption by FTEs. 36 --- The City of London Investment Trust plc Annual Report 2026 ## ESG (continued) Janus Henderson has been certified as a CarbonNeutral® company since 2007 and retained that certification throughout 2025, offsetting its residual emissions by financing renewable energy, afforestation and landfill methane capture projects. Janus Henderson discloses its carbon emissions annually through regulatory and voluntary reporting frameworks, including the CDP, as well as in its 2025 Responsibility Report. Janus Henderson produces product-level Task Force on Climate-Related Financial Disclosures (“TCFD”) reports for funds in scope as well as an entity-level TCFD report. These reports include an overview of the climate-related governance, strategy, risk management, and metrics and targets of Janus Henderson and its portfolios. Product-level metrics include absolute carbon emissions, carbon footprint, weighted average carbon intensity, implied temperature rise and climate scenario analysis (Climate Value at Risk). Janus Henderson’s TCFD Report specific to City of London is available on the Company’s website at www.cityinvestmenttrust.com. 1 Certain information contained herein (the “Information”) is sourced from/copyright of MSCI Inc, MSCI ESG Research LLC, or their affiliates (“MSCI”), or information providers (together the “MSCI Parties”) and may have been used to calculate scores, signals, or other indicators. 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No MSCI Party shall have any liability for any errors or omissions in connection with any Information herein, or any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages 37 --- # Governance ![img-38.jpeg](img-38.jpeg) 33 --- The City of London Investment Trust plc Annual Report 2026 # Directors and Fund Managers ## Directors ![img-39.jpeg](img-39.jpeg) ### Sir Laurie Magnus CBE **Position:** Chairman of the Board and Nominations Committee # **Date of Appointment:** 1 March 2020 (Chairman on 27 October 2020) **Skills and Experience:** Sir Laurie has over 45 years of experience in corporate finance markets and over 20 years as a member of investment supervisory bodies, including as a director of various investment trusts. He was Chairman of Pantheon International plc until October 2022. He has held senior positions at financial institutions including Samuel Montagu, Phoenix Securities, Donaldson Lufkin & Jenrette and Lexicon Partners (latterly as Chairman prior to its merger with Evercore). He is currently a non-executive senior adviser to Evercore's European business. # **Current External Appointments:** Sir Laurie is the Independent Adviser to the Prime Minister on Ministerial Standards. In the not-for-profit sector, he is a trustee of the Migration Museum. ![img-40.jpeg](img-40.jpeg) ### Sally Lake **Position:** Chair of the Audit and Risk Committee # **Date of Appointment:** 1 August 2024 (Chair of the Audit and Risk Committee from 31 October 2024) **Skills and Experience:** Sally is a fellow of the Institute of Actuaries, and has spent the majority of her career within non-life commercial insurance. During her time at Beazley plc, from 2006 to 2024, she held a variety of roles, including within both business units and the actuarial and finance functions. In her final five years with Beazley, Sally served as group CFO during a period of significant change both within the business, within the finance and accounting function as well as the wider macro environment. As part of her role, she also was responsible for investments, investor relations, actuarial, corporate governance, compliance, finance change and modernisation as well as all aspects of finance. She was a member of the plc board until May 2024, as well as a number of subsidiaries. Sally is a very proud and active DEI advocate. She was the executive sponsor for HM Treasury's Women in Finance Charter, as well as a supporter of a number of changes at Beazley to improve inclusion and representation for women, families and people of colour. # **Current External Appointments:** None. ![img-41.jpeg](img-41.jpeg) ### Ominder Dhillon **Position:** Director # **Date of Appointment:** 1 September 2021 **Skills and Experience:** Ominder brings to the Board strong investment knowledge across public and private markets, sustainable investing, sales and marketing expertise and a good understanding of governance and risk management. He was, until January 2020, Global Head of Institutional Distribution at M&G plc. Prior to that, from 2011 to 2015, he was Head of Distribution at Impax Asset Management. He was also formerly Head of UK and Ireland at Fidelity International, Director of Institutional Sales at Scottish Widows Investment Partnership and a trustee of UK charity Facing History and Ourselves. # **Current External Appointments:** Non-executive Director of Fidelity Special Values PLC and a Director of Ocris Partners SL. All Directors are non-executive and independent of Janus Henderson. All Directors are members of the Nominations Committee. The Audit and Risk Committee comprises Sally Lake, Ominder Dhillon, Ted Holmes and Clare Wardle. The Insider Committee comprises the Chairman and Senior Independent Director or, in their absence any two Directors. 39 --- The City of London Investment Trust plc Annual Report 2026 # Directors and Fund Managers (continued) ![img-42.jpeg](img-42.jpeg) ## Robert Holmes (Ted) **Position:** Director **Date of Appointment:** 1 January 2018 **Skills and Experience:** Ted has a strong background in investment management. Ted joined the Board following a twenty-year career at UBS Asset Management. During that time, he worked as a managing director in both the Chicago office (previously Brinson Partners) and London office (previously Phillips and Drew) in a variety of positions, from analyst to European Head of Equities. Prior to UBS, he worked for Ernst & Young in Washington, D.C. He has an MBA from the University of Chicago Booth School of Business, is a Chartered Financial Analyst and is a Certified Public Accountant. **Current External Appointments:** Non-executive Director and Chair of the Audit Committee of River UK Micro Cap Limited and Director of Octopus AIM VCT 2 plc and Blue Ocean Investment Partners Limited. ![img-43.jpeg](img-43.jpeg) ## Clare Wardle **Position:** Senior Independent Director **Date of Appointment:** 1 November 2019 **Skills and Experience:** Clare brings to the Board considerable international experience in risk, governance, competition and compliance. Clare was General Counsel and Company Secretary of Coca-Cola Europacific Partners plc until March 2026. She played a leading role in the growth of Coca-Cola Europacific from a $15 billion market cap company operating in Europe to a $33 billion market cap company operating in 30 countries. Previously she was Group General Counsel and Company Secretary of Kingfisher, Europe's largest home improvement group. Before that, Clare was Commercial Director, General Counsel and Company Secretary of Tube Lines, held a number of senior roles in Royal Mail Group and worked at what is now Hogan Lovells. She is currently chair of a fundraising committee for Royal British Legion Industries. She was also formerly a non-executive Director of ViaCode Limited, Chair of Basketball England, Senior Independent Director of Modern Pentathlon GB and a trustee of the Friendly Almshouses. **Current External Appointments:** None. ![img-44.jpeg](img-44.jpeg) ## Fund Manager Job Curtis has been City of London's Fund Manager since 1 July 1991. After graduating from Oxford University in 1983 with a BA Hons in Philosophy, Politics and Economics, he joined Grieveson Grant stockbrokers as a trainee. In 1985, he joined Cornhill Insurance as an assistant fund manager and then moved to Touche Remnant in 1987 where he became a fund manager. Touche Remnant was taken over by Henderson Group plc in 1992 and Job is currently a member of Janus Henderson's Global Equity Income team. ![img-45.jpeg](img-45.jpeg) ## Deputy Fund Manager David Smith is a Fund Manager on the Janus Henderson Global Equity Income team, a position he has held since 2008. David manages Henderson High Income Trust plc, a number of UK equity institutional funds and co-manages the Janus Henderson Cautious Managed Fund. He joined Janus Henderson in 2002, initially working in operations and progressing to the UK Equities team, and is now part of the Global Equity Income team. David graduated with a BSc degree (Hons) in Chemistry from Bristol University. He holds the Investment Management Certificate and the Chartered Financial Analyst designation. 40 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Report The Directors present their report and the audited financial statements for the year ended 30 June 2026. The Investment Portfolio on pages 20 and 21, Corporate Governance Report, Audit and Risk Committee Report and Nominations Committee Report on pages 44 to 56, Statement of Directors' Responsibilities on page 61, explanations to the AGM resolutions on pages 101 to 104 and Securities Financing Transactions, Alternative Performance Measures and other information on pages 90 to 97 form part of the Directors' Report. ## Results and Dividends The results for the year are set out in the financial statements. First and second interim dividends of 5.40p each, a third interim dividend of 5.65p and a fourth interim dividend of 5.70p, totalling 22.15p per share, have been declared and paid in respect of the year to 30 June 2026, an increase of 4.0% over the previous year. See note 10 on page 79 for more information. No final dividend is being proposed. A review of the year and the outlook for the forthcoming year can be found in the Strategic Report. ## Directors The Directors of the Company are listed on pages 39 and 40. All served throughout the period. In accordance with the recommendations of the AIC Corporate Governance Code, all Directors will offer themselves for re-election at the forthcoming AGM. The beneficial interests of the Directors and their connected persons in the securities of the Company as at 30 June 2026 are set out in the Directors' Remuneration Report on page 59. Details of Directors' insurance and indemnification are set out on page 48. ## Share Capital There are no restrictions on the transfer of the Company's share capital and there are no shares or stock which carry specific rights with regards to control of the Company. The Company is not aware of any agreements or arrangements between holders of securities which would result in restrictions on the transfer of securities or voting rights. The Company's equity and non-equity share capital comprises: ### Ordinary shares of 25p nominal value each The voting rights of the ordinary shares on a poll are one vote for every 15 shares held. At the beginning of the year, there were 502,664,868 ordinary shares in issue, of which 9,147,762 shares were held in treasury. Accordingly, there were 493,517,106 shares in issue with voting rights. During the year, the Company sold from treasury/issued a total of 21,555,000 shares with a nominal value of £5,388,750 and representing 4.3% of the shares in issue at the beginning of the year. This figure includes 9,147,762 shares sold from treasury and the issue of 12,407,238 new shares. The shares were sold/issued to Cavendish Capital Markets Limited at a price range of 497p to 580p per share for total proceeds (net of commissions) of £114,836,000. No shares were bought back during the year. At 30 June 2026, the number of ordinary shares in issue was 515,072,106, with no shares held in treasury. Since 30 June 2026 and up to 11 September 2026, being the last practicable date prior to publication of the Annual Report, 770,000 new shares have been issued. No shares have been bought back since the year end. ### Cumulative first preference stock The voting rights of the first preference stock on a poll are one vote per £10 of stock held. At 1 July 2025 and at 30 June 2026 there was £301,982 of first preference stock in issue. ### Non-cumulative second preference stock Second preference stockholders have no rights to attend and vote at general meetings (except on the winding-up of the Company or if dividends are in arrears). At 1 July 2025 and at 30 June 2026 there was £507,202 of second preference stock in issue. ### Non-cumulative preferred ordinary stock The voting rights of the preferred ordinary stock on a poll are one vote per £20 of stock held. At 1 July 2025 and at 30 June 2026 there was £589,672 of preferred ordinary stock in issue. Further details on the first and second preference stock and the preferred ordinary stock are contained in note 15 on pages 81 and 82. ### Total voting rights At 30 June 2026, the total voting rights in the Company were 34,397,822, comprising 34,338,140 ordinary share voting rights (99.8%), 30,198 first preference stock voting rights (0.1%) and 29,484 preferred ordinary stock voting rights (0.1%). ### Shareholder authorities The Directors seek annual authority from the shareholders to allot new ordinary shares, to dis-apply the pre-emption rights of existing shareholders and to buy back, for cancellation or to be held in treasury, the Company's ordinary shares. In addition, the Directors seek annual authority to buy back and cancel the Company's preferred and preference stocks. The Directors will once again be seeking to renew the authorities to allot and repurchase the ordinary shares at the upcoming AGM, when the existing authorities will expire. Details are set out in the Notice of Meeting on pages 99 to 104. 41 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Report (continued) ## Holdings in the Company's Shares There are no declarations of interests in the voting rights of the Company as at 30 June 2026 in accordance with the Disclosure Guidance and Transparency Rules of the FCA. No changes have been notified in the period from 1 July 2026 to 11 September 2026. ## Fund Managers' Interests As at 30 June 2026, Job Curtis, the Fund Manager, has a beneficial interest in 320,258 shares and a non-beneficial interest in 18,700 shares and David Smith, the Deputy Fund Manager has a beneficial interest in 56,792 shares. ## Related Party Transactions The Company's transactions with related parties in the year were with the Directors and the Manager. There were no material transactions between the Company and its Directors during the year and the only amounts paid to them were in respect of expenses and remuneration for which there were no outstanding amounts payable at the year end. In relation to the provision of services by the Manager, other than fees payable by the Company in the ordinary course of business and the provision of marketing services, there were no material transactions with the Manager affecting the financial position of the Company during the year under review. More details on transactions with the Manager, including amounts outstanding at the year end, are given in note 23 on page 88. ## Financial Risk Management The principal risks and uncertainties facing the Company are set out on pages 31 and 32. The Company's financial risk management policies and procedures, including its exposure to market price, currency, interest rate, liquidity and credit risks, are set out in note 16 to the financial statements on pages 82 to 86. ## Greenhouse Gas Emissions The Company's environmental statements are set out in the Strategic Report on pages 34 to 37. ## Annual General Meeting The AGM will be held on 29 October 2026 at 1.00pm. The Board invites shareholders to attend the meeting at the registered office at 201 Bishopsgate, London EC2M 3AE. The Meeting will include a presentation by the Fund Manager, Job Curtis, and Deputy Fund Manager, David Smith. Shareholders will also be able to join the Meeting via Zoom webinar by registering at www.janushenderson.com/cty-agm. Voting at the meeting will be held on a poll. Joining the meeting electronically via the Zoom webinar will not constitute formal attendance for quorum or voting purposes and shareholders will not be able to vote live through the platform. The Board therefore requests all shareholders, and particularly those who cannot attend physically, to submit their votes by completing a Form of Proxy. Shareholders with shares held in their own names will receive a Form of Proxy enabling them to vote; shareholders holding shares through nominee accounts, such as through a share dealing service or platform, should contact their provider directly and ask them to submit the proxy votes on their behalf. Instructions for attending the AGM and details of resolutions to be put to the AGM are included in the Notice of AGM on pages 98 to 106. If shareholders would like to submit any questions in advance of the Meeting, they are welcome to send these to the Corporate Secretary at itsecretariat@janushenderson.com. The Board considers that the resolutions to be proposed at the AGM are in the best interests of the Company's shareholders as a whole. The Board therefore recommends unanimously to shareholders that they vote in favour of each of the resolutions, as the Directors intend to do in respect of their own beneficial holdings. ## Disclosure of Information to Auditor Each of the Directors who were members of the Board at the date of approval of this report confirms that, to the best of their knowledge and belief, there is no information relevant to the preparation of the Annual Report of which the Company's Auditor is unaware and they have taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company's Auditor is aware of that information. ## Re-appointment of Auditor Ernst & Young LLP ("EY") have indicated their willingness to continue in office as Auditor and resolutions proposing their re-appointment and authorising the Audit and Risk Committee to determine their remuneration for the ensuing year will be put to shareholders at the forthcoming AGM. Further information in relation to their re-appointment can be found in the Audit and Risk Committee Report on pages 51 to 54. ## UK Listing Rule 6.6.4 UK Listing Rule ("UKLR") 6.6.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross-reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard, other than in accordance with UKLR 6.6.1(6), the information for which is detailed on page 41 under Share Capital. 42 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Report (continued) ## Securities Financing Transactions The Company has appointed HSBC Bank plc as its lending agent. All stocklending is carried out in line with the Securities Lending Agreement and is overseen by the Depositary. Under that Agreement, HSBC provides indemnification to the Company against borrower default. As the Company undertakes securities lending, it is required to report on securities financing transactions (as defined in Article 3 of Regulation (EU) 2015/2365, securities financing transactions include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sell back transactions or sell-buy back transactions and margin lending transactions). In accordance with Article 13 of the Regulation, the Company's involvement in and exposures related to securities lending for the accounting period ended 30 June 2026 are detailed on pages 90 to 92. ## Approval The Directors' Report has been approved by the Board. By order of the Board Janus Henderson Secretarial Services UK Limited Corporate Secretary 15 September 2026 43 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report ## Governance Structure **Board of Directors** Responsible for providing leadership, setting the investment objective and policy of the Company, establishing an appropriately robust framework of internal control and risk management, and appointing and monitoring the performance of the Company's third-party service providers **Chairman:** Sir Laurie Magnus **Senior Independent Director:** Clare Wardle **Audit and Risk Committee** **Purpose:** Ensure the integrity of the financial reporting, evaluate the effectiveness of the systems of internal control and risk management, and oversee the relationship with the external auditors Chair: Sally Lake See pages 51 to 54 for the Audit and Risk Committee Report **Nominations Committee** **Purpose:** Ensure the Board has a balance of skills, experience and diversity, oversee performance evaluations of the Board and its committees, and maintain an effective framework for succession planning, with a formal approach to the appointment of Directors Ensure that the performance of service providers meets expectations and their terms of engagement remain appropriate Chairman: Sir Laurie Magnus See pages 55 and 56 for the Nominations Committee Report Third-party service providers appointed by the Board **Janus Henderson** **Fund Management:** Global Equity Income team with Job Curtis and David Smith as the Company's appointed Fund Manager and Deputy Fund Manager respectively **Sales, Marketing, Administration** **Corporate Secretary:** Janus Henderson Secretarial Services UK Limited **Alternative Investment Fund Manager:** Janus Henderson Fund Management UK Limited **HSBC Bank plc** (Depository and Custodian) Ensure safe custody of the Company's assets, verification of ownership and valuation **Computershare Investor Services plc** (Registrar) Maintain the register of members and assist shareholders with queries in respect of their shareholdings **Cavendish Capital Markets Limited** (Corporate Broker) Conduit between the stock market and the Company, keeping the Board updated on market conditions and shareholder views The Board has two principal Committees: the Audit and Risk Committee and the Nominations Committee. The terms of reference for these committees are available on the Company's website at www.cityinvestmenttrust.com. The Company has also established an Insider Committee, which would meet as required to assist the Board in meeting its obligations under the Market Abuse Regulation. 44 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) ## Corporate Governance The Board is accountable to shareholders for the governance of the Company's day-to-day affairs and is pleased to report to shareholders on the Company's governance arrangements and how the principles of the applicable codes have been applied during the year under review. ## Applicable Corporate Governance Codes By virtue of the Company's listing on the London Stock Exchange, the Board is required to report on how the principles of the 2024 UK Corporate Governance Code ("UK Code") have been applied. Being an investment company, a number of the provisions of the UK Code are not applicable as the Company has no executive directors or internal operations and all day-to-day activities are outsourced to external service providers. The Board has therefore considered the principles and recommendations of the Corporate Governance Code published by the Association of Investment Companies in August 2024 ("AIC Code"). The AIC Code addresses the principles set out in the UK Code as well as additional principles and recommendations on issues that are of specific relevance to investment companies. The Financial Reporting Council ("FRC") has endorsed the AIC Code and confirmed that, by following it, the boards of investment companies should fully meet their obligations in relation to the UK Code and UK Listing Rule 6.6.6. The Board considers that reporting against the principles and provisions of the AIC Code provides more relevant information to shareholders in terms of its governance arrangements. The 2024 AIC Code applies to the Company's financial year ended 30 June 2026. The enhanced reporting requirements under Provision 34 of the AIC Code relating to the Board's declaration on the effectiveness of material controls, will apply for the year ending 30 June 2027. The preparatory work undertaken during the year is described in the Strategic Report on page 31. The AIC Code and the UK Code can be found on the respective organisations' websites: www.theaic.co.uk and www.frc.org.uk. The AIC Code includes an explanation of how it adapts the principles and provisions set out in the UK Code to make them relevant for investment companies. ## Statement of Compliance The Company has complied with the principles and provisions of the 2024 AIC Code throughout the year to 30 June 2026 except as set out below. The Company has no chief executive or other executive directors. It therefore has no need to consider the remuneration of executive directors and has not reported further in respect of these provisions. In addition, the Company does not have any internal operations and therefore does not maintain an internal audit function. However, the Audit and Risk Committee considers the need for such a function at least annually (see page 49 for further information). As the Company has no employees and has a small Board of solely non-executive Directors, the Board has not established a separate remuneration committee. The remuneration of Directors is dealt with by the Board as a whole. Given the business model operated by the Company and the importance of the role of the Manager in ensuring the success of the Company, the Board believes that it remains its responsibility to keep under review the level of service provided by the Manager. It is assisted in this by the Nominations Committee, as set out in the Nominations Committee Report on pages 55 and 56. Accordingly, a separate Management Engagement Committee has not been formed. The AIC Code includes two deviations from the UK Code permitting the Chairman of the Board to be a member of the Audit and Risk Committee and for their tenure to exceed nine years. The Company has not taken advantage of these provisions and continues to comply with the provisions of the UK Code in this respect. ## Governance Overview The Board is comprised entirely of non-executive Directors and has constituted two principal committees: the Audit and Risk Committee and the Nominations Committee. The Board has also constituted an Insider Committee. The governance structure and committee membership are set out on pages 39 and 44. The Board engages third-party service providers to deliver the operations of the Company. Janus Henderson has been appointed to manage the investment portfolio and is the Company's Alternative Investment Fund Manager. Janus Henderson also provides or manages the day-to-day accounting, company secretarial, administrative, sales and marketing activities. The Company has appointed a Depositary, which in turn appoints the Custodian, responsible for the safe custody of the Company's assets, and a Registrar to maintain the Register of Members and assist shareholders with queries in respect of their holdings. The Board and its Committees maintain oversight of the third-party service providers through regular and ad hoc reporting. The Board also meets annually with representatives from the Depositary and Custodian to discuss amongst other matters performance, service levels, their value for money, information security and business resilience plans. ## Board Leadership and Purpose The Board has overall responsibility for the Company's affairs and for promoting the long-term success of the Company. The Board is collectively responsible for providing leadership, setting the investment objective and policy, appointing the Company's third-party service providers, establishing a robust internal control and risk management system and monitoring the performance delivered by service providers within the established control framework. It is also responsible for setting the Company's standards and values and for ensuring that its obligations to its shareholders and other stakeholders are understood and met. Information relating to the Company's purpose and values can be found in the Business Model on pages 23 and 24 and to the Board's engagement with stakeholders on pages 28 to 30. 45 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) ## Division of Responsibilities | Role | Primary responsibilities | | --- | --- | | Shareholders/ investors | - Approving material changes to the Company's investment policy. - Making decisions regarding changes to the Company's constitution. - Electing and re-electing Directors to the Board, or removing them from office if deemed appropriate. - Determining the overall limit for Directors' remuneration. | | Chairman | - Leading and managing Board business and ensuring the timely flow of information from service providers to the Board, facilitating open, honest and constructive debate among Directors. - Leading the Nominations Committee in developing succession planning and the identification of potential candidates for appointment to the Board (except when considering his own succession). - Leading the Board in determining its governance framework, culture and values. - Leading the Board's relationship and engagement with shareholders and other stakeholders. - Managing the relationship with the Manager. The role description for the Chairman is available on the Company's website. | | Senior Independent Director | - Acting as a sounding board for the Chairman and intermediary for the other Directors as necessary. - Leading the performance evaluation of the Chairman. - Acting as a channel of communication for shareholders in the event that contact through the Chairman is inappropriate. The role description of the Senior Independent Director is available on the Company's website. | | Independent non-executive Directors | - Providing independent judgement and constructive and effective challenge, especially to the decisions of the Manager. - Scrutinising and holding to account the performance of the: - Fund Managers in meeting the investment objective; and - Manager in the promotion of the Company and day-to-day smooth operations of the Company's business. - Providing strategic guidance and offering specialist advice. | | Committee Chairs | - The leadership and governance of their Committee. - Maintaining the relationships with specialist service providers delivering services within the remit of their Committee. - Reporting on the activities of their Committee to the Board. - Seeking approval from the Board for the responsibilities set out in their respective terms of reference. | | Company Secretary | - Advising the Board on governance, regulatory and procedural matters. - Supporting the Chairman in planning Board and Committee business. - Minuting the proceedings of Board and Committee meetings. - Helping to ensure that Board and Committee processes operate effectively. | | Manager (AIFM) | - Promoting the Company's investment proposition to professional and retail investors. - Making the necessary reporting to the FCA regarding the Company's status as an AIF. - Providing accounting, company secretarial and other administrative services to the Company ensuring compliance with the applicable statutory and regulatory provisions. - Coordinating the delivery of services provided by the Company's other third-party service providers. | | Fund Managers | - Selecting the stocks held within the portfolio. - Diversification and risk management through stock selection and size of investment. - Determining the volume and timing of acquisitions and disposals. - Determining the frequency and level of gearing within the overall limits set by the Board. | 46 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) ## Operation of the Board The Board met formally seven times in the year to 30 June 2026. With effect from the current financial year, it is anticipated that there will be six scheduled meetings each year. Additional Board or Committee meetings are convened when required. The Directors have regular contact with the Fund Managers, Corporate Secretary and other employees of the Manager between meetings. The Board has a formal schedule of matters specifically reserved for its decision, which includes setting strategy and oversight of performance, risk management and internal controls. All matters that are not delegated to the Manager under the management agreement are reserved for the Board's decision. A copy of the schedule of matters reserved is available on the Company's website. A procedure for Directors, in the furtherance of their duties, to take independent professional advice at the expense of the Company has been adopted. At each meeting the Board reviews with the Fund Managers the Company's investment performance and compliance with the approved investment policy, and also considers financial analyses and other reports of an operational nature. The Board monitors compliance with the Company's objective and is responsible for setting asset allocation, investment and gearing limits within which the Fund Managers have discretion to act. The Fund Managers take decisions as to the purchase and sale of individual investments, although the Board has responsibility for the approval of any investments in in-house funds managed or advised by the Manager. The Manager and Corporate Secretary ensure that all Directors receive, in a timely manner, all relevant management, financial, regulatory and other information to allow them to discharge their responsibilities and to enable the Board (and its Committees) to function effectively. Representatives of the Manager attend each Board meeting enabling the Directors to probe further on matters of concern. In addition, the Chairman is invited to attend meetings of all the chairs of the investment trust companies managed by Janus Henderson which provide a forum to discuss industry matters, and then reports back to the Board. The Directors have direct access to the advice and services of the Corporate Secretary, Janus Henderson Secretarial Services UK Limited, which provides company secretarial services, through its nominated chartered secretary, and advises the Board on governance, regulatory and procedural matters. The Corporate Secretary is a subsidiary of Janus Henderson. It has its own reporting lines and controls in place to ensure that there is a clear distinction between the two entities to manage potential conflicts between the Company and Janus Henderson. Any correspondence from shareholders addressed to the Chairman or the Board received at Janus Henderson's offices is forwarded to the Chairman in line with the established procedures in place. Any correspondence is submitted to the next Board meeting. See page 28 for information about how the Company communicates with shareholders. Janus Henderson and BNP Paribas, which is engaged by Janus Henderson, have arrangements in place by which their staff may, in confidence, raise concerns about possible improprieties in relation to financial reporting or other matters. The Board, the Manager and the Corporate Secretary operate in a supportive, co-operative and open environment. ## The Board ### Board composition and independence Under the Company's Articles of Association, the total number of Directors shall not be less than three nor more than seven. As at the date of this report, the Board comprises five non-executive Directors, whose biographies are included on pages 39 and 40. These biographies demonstrate the breadth of investment, financial, commercial and professional experience relevant to their positions as Directors. Sir Laurie Magnus was appointed as Chairman of the Board on 27 October 2020. Sir Laurie was independent on appointment in accordance with the criteria set out in the AIC Code and has no relationships that may create a conflict of interest between his interests and those of shareholders. Details of his other significant commitments can be found on page 39. Following review by the Nominations Committee as part of the performance evaluation, the Board is satisfied that Sir Laurie has sufficient time to devote to the Company. The independence of the Directors is determined with reference to the AIC Code. The Nominations Committee considers the independence of each Director at least annually by reviewing their other appointments and commitments, as well as their tenure of service and any connection they may have with the Manager. Following evaluation, the Nominations Committee determined that all Directors continued to be independent in character and judgement and that their individual skills, broad business experience and knowledge and understanding of the Company were of benefit to shareholders. All Directors are considered by the Board to be independent of the Manager and free of any relationship which could materially interfere with the exercise of their independent judgement. There were no contracts subsisting during or at the end of the year in which any Director is or was materially interested and which is or was significant in relation to the Company's business. No Director has a contract of service with the Company and there are no agreements between the Company and its Directors concerning compensation for loss of office. ### Appointment and retirement The Board may appoint Directors at any time and any Director so appointed will stand for election by shareholders at the next AGM following appointment. Each Director receives a letter of appointment that sets out, amongst other matters, what is expected of them in terms of time commitment. 47 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) In keeping with the provisions of the AIC Code, the Board has adopted a policy for all Directors to retire and stand for re-election annually at each AGM. Under the Articles of Association, shareholders may remove a Director before the end of their term by passing an ordinary resolution at a general meeting. The Board considers a potential candidate's other commitments on appointment and then annually through the performance evaluation process to ensure that Directors have sufficient time to commit to the Company. A schedule of Directors' other commitments is reviewed at each Board Meeting and Directors are required to seek the Chairman's approval prior to accepting further appointments. ## Tenure The Board's policy for Directors, including the Chairman, is that they serve for no more than nine years, other than in exceptional circumstances and where it considers this to be in the best interests of the Company. This ensures the regular refreshment of the Board and its Committees and forms an integral part of the Board's succession planning. In advance of each AGM, the Nominations Committee will consider and make recommendations to the Board about whether it is appropriate for eligible Directors to be recommended for re-election, taking into account the results of the annual performance evaluation and the ongoing requirements of the AIC Code. ## Professional development Newly appointed Directors are offered a bespoke induction programme which covers the legal and regulatory framework for investment companies and the operations of the Manager, including the compliance and risk management frameworks, accounting, sales and marketing, and other administration services provided by the Manager. Directors are also provided on a regular basis with key information on the Company's policies, regulatory and statutory requirements and internal controls. Changes affecting Directors' responsibilities are advised to the Board as they arise. Directors also regularly participate in relevant training and industry seminars and may do so at the expense of the Company. Directors' individual training requirements are considered as part of the annual evaluation process which is led by the Chairman of the Board. ## Conflicts of Interest The Company's Articles of Association permit the Board to authorise situations where a Director has or may have an interest that conflicts, with the interests of the Company ("situational conflicts"). The Board has a formal system in place for Directors to declare situational conflicts to be considered for authorisation by those Directors who have no interest in the matter being considered. In deciding whether to authorise a situational conflict, the non-conflicted Directors must act honestly and in good faith with a view to the best interests of the Company and they may impose limits or conditions when giving the authorisation, or subsequently, if they think this is appropriate. Any situational conflicts considered, and any authorisations given, are recorded in the relevant meeting's minutes. The Board believes that the systems it has in place for reporting and considering situational conflicts continue to operate effectively. No situational conflicts of interest were considered during the year or up to the date of this report. ## Insurance and Indemnification Directors' and officers' liability insurance cover is in place in respect of the Directors. Under the Company's Articles of Association and subject to the provisions of UK legislation, a qualifying third-party indemnity may be provided to Directors in respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted or judgment is given in their favour by the Court. No indemnity was given during the year or up to the date of this report. ## Board Attendance The table below sets out the number of scheduled formal Board and Committee meetings held during the year under review and the number of meetings attended by each Director. All Directors attended the 2025 AGM. The number in brackets denotes the number of meetings each Director was entitled to attend. | | Board | Audit and Risk Committee | Nominations Committee | | --- | --- | --- | --- | | Ominder Dhillon | 7 (7) | 3 (3) | 1 (1) | | Ted Holmes | 7 (7) | 3 (3) | 1 (1) | | Sally Lake | 7 (7) | 3 (3) | 1 (1) | | Sir Laurie Magnus | 7 (7) | 3 (3) | 1 (1) | | Clare Wardle | 7 (7) | 3 (3) | 1 (1) | Notes: Sir Laurie Magnus attended each of the Audit and Risk Committee meetings by invitation. An additional meeting of the Nominations Committee was held during the year to consider the Board evaluation process. The Insider Committee did not meet during the year ## Continued Appointment of the Manager The Board monitors investment performance at each meeting, including information about performance relative to the benchmark and competitors in the AIC's UK Equity Income sector, receives updates in respect of professional sales and marketing activities carried out by the Manager for the Company twice annually and receives a formal recommendation from the Nominations Committee in 48 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) respect of the continued appropriateness of the terms of the management agreement at least annually. The assessment of the Manager by the Nominations Committee included consideration of the quality of the team involved in all aspects of servicing the Company, including company secretarial, administration, sales and marketing, the Manager's use of gearing and management of the portfolio's risk profile, the stability of the management group, its business priorities and the adequacy of succession planning. Following completion of the review, the Board was satisfied with the performance of the Manager and the services being provided and believes that the continued appointment of the Manager on the terms agreed is in the interests of the Company's shareholders as a whole. ## Internal Control and Risk Management The Board has overall responsibility for the Company's risk management and internal control framework and for reviewing its effectiveness, as set out in the chart on the following page. The Audit and Risk Committee supports the Board in the continuous monitoring of the framework. Details of the principal risks facing the Company, including emerging risks, and how these are mitigated are set out on pages 31 and 32. The Board has established an ongoing process for identifying, evaluating and managing the principal and emerging risks faced by the Company. The process was in operation throughout the period and up to the date of this report. The framework is designed to meet the specific risks faced by the Company and takes account of the nature of the Company's reliance on its service providers and their internal controls. The framework is designed to manage rather than eliminate the risk of failure to achieve the Company's business objectives and provides reasonable, but not absolute, assurance against material misstatement or loss. The key components of the internal control framework include: - clearly defined investment criteria which specify levels of authority and exposure limits. The Board reviews reports on compliance with the criteria at each meeting; - regular reporting which allows the Board to assess the Company's financial position. The management accounts and forecasts are reviewed by the Board at each meeting including reports on investment performance and gearing; - the contractual agreements with the Manager and other third-party service providers. The Board reviews performance levels and adherence to relevant provisions of the agreements on a regular basis. The Nominations Committee conducts a formal evaluation of the overall level of service provided at least annually (see Nominations Committee Report on pages 55 and 56); - the review of controls (including financial, operational and compliance) at the Manager and other third-party service providers. The Board receives quarterly reporting from the Manager and Depositary, and reviews annual assurance reports on the effectiveness of the control environments at the Company's key service providers; and - the review of additional reporting provided by: - the Manager's Operational Risk team on the control environment in operation at the Manager and their view of the control environments in place at the third-party service providers used by the Company; and - the Manager's Internal Audit team on areas of operation which are relevant to the Company. The Board, assisted by the Audit and Risk Committee, has carried out a review of the effectiveness of the Company's system of internal controls for the year ended 30 June 2026. During the course of its review the Board did not identify and was not advised of any failings or weaknesses relating to the Company's portfolio that have been determined as material. ## Internal Audit Function Systems are in operation to safeguard the Company's assets and shareholders' investments, to maintain proper accounting records and to ensure that financial information used within the business, or published, is reliable. The Company is an investment company, has no employees and delegates all executive activities to third-party service providers, principally among them, the Manager. The Board places reliance on the Company's framework of internal control and the Audit and Risk Committee's view on reporting received from specific second and third line of defence teams at the Manager. The Manager's Operational Risk team supports the Audit and Risk Committee in considering the independently audited reports on the effectiveness of internal controls in place at the Company's third-party service providers. The Manager's Internal Audit department provides regular reporting to the Board on the operations at the Manager and presents at least annually to the Audit and Risk Committee. The Board considers the need for its own internal audit function annually and continues to conclude that it is not necessary at the present time for the Company to have its own function. 49 --- The City of London Investment Trust plc Annual Report 2026 # Corporate Governance Report (continued) ## Framework of Internal Controls ### How the system of internal control operates The Board delegates contractually to third-party service providers all of the Company's operational requirements. It maintains oversight of these providers throughout the year by receiving regular reporting on their activities. All are considered stakeholders. The Nominations Committee formally evaluates the performance and service delivery of key third-party service providers at least annually. The Audit and Risk Committee evaluates the performance of the Auditor on completion of each audit cycle and monitors the effectiveness of the control environment of the key third-party service providers each year through review of their annual assurance reports (usually ISAE 3402), supplemented by the view of the Manager's Operational Risk team. Ernst & Young LLP has been appointed as the Company's Auditor. ![img-46.jpeg](img-46.jpeg) 50 --- The City of London Investment Trust plc Annual Report 2026 # Audit and Risk Committee Report I am pleased to present the Audit and Risk Committee Report for the year ended 30 June 2026. ## Membership The members of the Audit and Risk Committee (“Committee”) are Sally Lake (Committee Chair), Ominder Dhillon, Ted Holmes and Clare Wardle. The Committee Chair is considered by the Board to have recent and relevant financial experience, and the Committee as a whole has competence relevant to the sector in which the Company operates and to the Company as an investment trust. The Chairman of the Board may attend meetings by invitation of the Chair. ## Meetings The Committee usually meets three times a year, to review the half-year results, the annual results and to review the Company’s risk management and internal controls. It met three times in the year under review. The Company’s Auditor, the Fund Managers and the Manager’s Financial Reporting Senior Manager for Investment Trusts are invited to attend meetings of the Committee on a regular basis. Other representatives of the Manager, including those responsible for operational risk, internal audit and information security, and BNP Paribas may also be invited to attend if deemed necessary by the Committee. ## Role and Responsibilities The primary responsibilities of the Committee are: to ensure the integrity of the Company’s financial reporting, including oversight of the preparation and audit of the annual financial statements; to monitor and review the effectiveness of the Company’s risk management and internal control framework and the control environments of the Manager and the Company’s other third-party service providers; and to monitor the effectiveness and objectivity of the external Auditor. The Committee oversees the relationship with the external Auditor, approving the terms of their appointment or their removal. The Committee reports to the Board after each meeting. The Committee’s responsibilities are set out in formal terms of reference which are reviewed at least annually. The FRC’s Minimum Standard for Audit Committees is incorporated within the terms of reference and this report includes details of the activities undertaken to meet the requirements of the Minimum Standard. The terms of reference were updated during the year to reflect the 2024 AIC Code and the forthcoming enhanced reporting requirements relating to material controls. ## Committee Effectiveness Review The activities of the Committee were considered as part of the Board effectiveness review (see page 55 for more details). The review concluded that the Committee continued to operate effectively. ## Activities during the Year In the year under review, the Committee considered the following matters: ### Financial reporting - The appropriateness of the Company’s accounting policies and of the quality and effectiveness of the accounting records and management information maintained on behalf of the Company. - The level of dividends to be paid by the Company, for recommendation to the Board. - The disclosures made in the annual and half year reports in relation to internal controls and risk management, viability, going concern and related parties and consideration of whether the report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy in order to make recommendations to the Board. ### Auditor - The audit plan, including the principal areas of focus. - The nature, scope and cost of the external audit and reviewing the Auditor’s findings in this respect. - The re-appointment and evaluation of the independence, effectiveness and objectivity of the Auditor. ### Internal controls and management of risk - The principal risks facing the Company, including consideration of emerging risks, the risk management systems in place and the Company’s risk map. - Reports on the effectiveness of the internal controls in place at Janus Henderson and the Company’s other principal third-party service providers and discussing them with the Manager’s Operational Risk Team. - Compliance with the terms of the loan notes in issue. - The need for the Company to have its own internal audit function. - The whistleblowing arrangements in place at the Manager and other key service providers for their staff to raise concerns, in confidence, about possible improprieties, including in relation to the Company. - The Manager’s policies and arrangements in relation to information security, meeting with the Janus Henderson Chief Information Security Officer. - Meeting with representatives of Janus Henderson’s business resilience and internal audit teams. - The Company’s anti-bribery policy, approach to tax evasion and the confirmations received from third-party service providers as to whether they have appropriate procedures in place in these respects. - The annual confirmation from the Company’s Depositary in respect of the safe-keeping of the Company’s assets. 51 --- The City of London Investment Trust plc Annual Report 2026 # Audit and Risk Committee Report (continued) The Committee also undertook preparatory work to support the enhanced reporting requirements under Provision 34 of the 2024 AIC Code. The Board will be required to make a declaration on the effectiveness of material controls in the Annual Report for the year ending 30 June 2027. ## External Audit ### Appointment and Tenure of the Auditor The Committee confirms that the Company is in compliance with the requirements of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014. This order relates to the frequency and governance of tenders for the appointment of the external auditors and the setting of the policy on the provision of non-audit services. An audit tender was last carried out in 2023. The appointment of Ernst & Young LLP ("EY") as Auditor was recommended to the Board, and their appointment was confirmed by shareholders at the 2023 AGM. The financial statements for the year ended 30 June 2026 will be the third to be audited by EY and the third year for the audit partner, Mike Gaylor. ### Auditor's Independence The Committee monitors the Auditor's independence by: - approving the policy regulating the non-audit services that may be provided by the Auditor to the Company; - assessing the appropriateness of the fees paid to the Auditor for all work undertaken by them; and - reviewing the information and assurances provided by the Auditor on their compliance with the relevant ethical standards. For the year ended 30 June 2026, EY confirmed that all of its partners and staff involved with the audit were independent of any links to the Company and had complied with its ethics and independence policies and procedures, which are fully consistent with the FRC's Ethical Standards. Having considered the above-mentioned aspects, the performance and behaviour of the Auditor during the audit process and the assurances received from EY, the Committee is satisfied that auditor independence and objectivity are safeguarded. ### Audit Fees The fees payable to the Auditor for audit services in respect of the year ended 30 June 2026 were £67,000 (2025: £65,000) (inclusive of VAT). ## Policy on Non-Audit Services The Committee has approved, and keeps under regular review, the policy on the provision of non-audit services by the auditor. The policy sets out that the Company's auditor will not be considered for non-audit work where this is prohibited by the current regulations and where it appears to affect their independence and objectivity. In addition, the provision of any non-audit services by the auditor is not permitted to exceed 70% of the average annual statutory audit fee for the three consecutive financial periods preceding the financial period to which the cap applies. Such services require approval in advance by the Committee, or Audit and Risk Committee Chair, following due consideration of the proposed services. No non-audit services were provided by EY in the year under review. ## FRC Review of the 2025 Annual Report The Company's Annual Report for the year ended 30 June 2025 was reviewed by the FRC as part of their normal monitoring activities. Confirmation was received from the FRC that they had no questions or queries to raise with the Company, although they noted that they may raise queries in the future should new information become available to them that they considered to be relevant. Their letter advised that their review had been based solely on the report and accounts and did not benefit from detailed knowledge of the Company's business or an understanding of the underlying transactions entered into. It had, however, been conducted by staff of the FRC who had an understanding of the relevant legal and accounting framework. It also noted that the FRC's role was not to verify the information provided but to consider compliance with reporting requirements. ## Audit for the Year ended 30 June 2026 In the year under review, EY challenged both the Manager's and the Board's judgements and exercised professional scepticism. The audit team required detailed evidence of all metrics, numbers and disclosures made within the Annual Report to support a robust assessment and evaluation of the financial information contained therein. As an example, the Manager provides the Committee and the Auditor with an analysis of special dividends and the rationale for whether these should be treated as income or capital. The Auditor's review included challenge to the Manager to provide additional justification or background to the dividends before confirming whether they concurred with the proposed treatment. The Committee faces fewer issues of judgement than might apply with an operating business. Areas where the Committee challenges the Manager include the determination of the fair market value of debt in order to confirm the appropriate basis for calculation, and stress testing of the revenue forecast to support the dividend payment policy and the assumptions in the viability statement. The Committee did not consider it necessary to request the Auditor to look at any specific areas in addition to those already identified in the audit plan in relation to the audit for the year ended 30 June 2026. The Committee is satisfied that the Annual Report for the year ended 30 June 2026, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. 52 --- The City of London Investment Trust plc Annual Report 2026 # Audit and Risk Committee Report (continued) In relation to the Annual Report for the year ended 30 June 2026, the following significant issues were considered by the Committee: | Significant issue | How the issue was addressed | | --- | --- | | **Valuation and ownership of the Company's investments** | The Directors have appointed the Manager, who outsources administration and accounting services to BNP Paribas, to perform the valuation of the assets of the Company in accordance with its responsibilities under the AIFMD rules. As required under the AIFMD rules, the Manager has adopted a written valuation policy, which may be modified from time to time. Actively traded investments are valued using stock exchange prices provided by third-party pricing vendors. Ownership of listed investments is verified by reconciliation to the Custodian's records and the Directors have received quarterly reports from the Depositary, which has responsibility for overseeing the Company's operations, including verification of ownership and valuation. | | **Recognition of income** | Income received, including special dividends, is accounted for in line with the Company's accounting policy (as set out on page 74). Special dividends, and their treatment as revenue or capital, have been reviewed by the Committee and the rationale agreed. The Board reviews revenue forecasts and scenario analyses at each Board meeting in support of the Company's future dividends. | | **Maintaining internal controls** | Information about the internal control and risk management framework adopted by the Company is set out in the Corporate Governance Report on pages 49 and 50. The Committee receives regular reports on internal controls and assurance reporting from Janus Henderson, BNP Paribas, HSBC Bank plc and Computershare Investor Services plc and has access to the relevant personnel of Janus Henderson who have a responsibility for risk management and internal audit. The assurance report for one of the Company's service providers had received a qualified opinion by the respective service auditor. The Committee thoroughly reviewed the instances giving rise to the qualification, whether these had impacted the Company directly and the corrective actions taken by management. Following these discussions, the Committee was satisfied that the Company's internal controls had operated as intended and that the qualification had had no direct impact on the Company. The Committee also meets annually with representatives from Janus Henderson and HSBC Bank plc to discuss and challenge their reports. | | **Maintenance of investment trust status** | The Committee considered regularly the controls in place to ensure that the regulations for ensuring investment trust status are observed at all times, receiving supporting documentation from Janus Henderson and BNP Paribas. | ## Effectiveness of the External Audit The Auditor attended two Committee meetings in the year, when the Committee was considering the audit plan and the annual results. An initial audit planning meeting between EY, BNP Paribas, the Fund Managers and the Manager's staff was held. The Committee Chair met with the Auditor prior to the commencement of the audit to discuss the audit plan and proposed audit fee, and again to review the audit results prior to these being presented to the Committee. The Auditor presented and discussed the findings of the FRC's latest Audit Quality Inspection Report on EY to the Committee and reported on the progress made by the firm in addressing the areas identified for improvement in the prior year's report. The Committee carried out a post-audit assessment of the performance of the Auditor. The Committee reviewed and assessed the robustness of the audit, the level of challenge offered by the audit team, the Auditor's understanding of the Company and the investment trust sector, the quality of the audit team and the timeliness of delivering the tasks required for the audit and reporting for the Committee. The Committee Chair invited views from the Directors, the Fund Managers and other members of the Manager's staff. The Committee also met privately with the Audit Partner to discuss how the audit operated from his perspective. 53 --- The City of London Investment Trust plc Annual Report 2026 # Audit and Risk Committee Report (continued) Overall, the Committee considers that the audit quality for the year ended 30 June 2026 has been high and that the Manager and EY have worked together effectively. Following completion of the assessment, the Committee remained satisfied with the effectiveness of the audit provided by EY. EY have indicated their willingness to continue in office and resolutions re-appointing them as Auditor to the Company and authorising the Committee to determine their remuneration will be proposed at the AGM. Sally Lake Chair of the Audit and Risk Committee 15 September 2026 54 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Remuneration Report ## Remuneration Policy The Remuneration Policy ("the Policy") sets out the principles applied in the remuneration of the Company's Directors. The Policy was last approved by shareholders at the AGM on 31 October 2023. Shareholders will be asked to re-approve the Policy at the 2026 AGM; if approved, it will continue in force until the AGM in 2029. The Board has not established a separate remuneration committee and matters relating to Directors' remuneration are dealt with by the Board as a whole. Individual Directors do not participate in discussions relating to their own remuneration. The appropriateness and relevance of the Policy is reviewed at least annually, particularly in terms of whether the policy supports the Company's long-term sustainable success. In determining the Policy, the Board takes into account all factors which it deems necessary, including relevant legal and regulatory requirements, the provisions and recommendations of the UK Code and the AIC Code and fees paid to directors of comparable investment trusts. The objective of the Policy is to attract, retain and motivate non-executive Directors of the quality required to manage the Company successfully. The Company's approach is that fees payable to the non-executive Directors should reflect the time spent on the Company's affairs, reflect the responsibilities borne by the Directors, and be sufficient to promote the long-term success of the Company. Directors are remunerated in the form of fees payable to the Director personally quarterly in arrears. Fees are pro-rated where a change takes place during a financial year. The total annual aggregate fees payable to Directors shall not exceed £350,000. The Chairman of the Board is paid a higher fee in recognition of his additional responsibilities, as is the Senior Independent Director, the Chair of the Audit and Risk Committee and the Marketing Lead. The Directors may be reimbursed for all reasonable and properly documented expenses incurred in the performance of their duties. The level of fees paid to each Director is reviewed annually, although such a review may not necessarily result in any change to the rates. The level of fees paid to the directors of other investment companies of a similar size and nature is taken into account when carrying out the review in order to avoid and manage conflicts of interest in determining remuneration levels. The Board may amend the level of remuneration paid to individual Directors within the parameters of the Policy. No Director is eligible to receive bonuses, pension benefits, share options or other benefits and no long-term incentive schemes are in place. The Policy, irrespective of any changes, is put to shareholders at intervals of not more than three years with the next approval due to be sought at the AGM in 2029. ## Letters of appointment All Directors are non-executive and are appointed under a Letter of Appointment. No Director has a service contract with the Company. There are no set notice periods and a Director may resign by notice in writing to the Board at any time. No compensation is payable for loss of office. ## Recruitment principles All Directors, including any new appointments to the Board, are paid at the same rate. The Chairman of the Board, Senior Independent Director, Chair of the Audit and Risk Committee and Marketing Lead are paid higher fees in recognition of their additional responsibilities. The Board will not pay any introductory fee or incentive to any person to encourage them to become a Director, but may pay the fees of search and selection specialists in connection with the appointment of any new non-executive Director. The Company intends to appoint only non-executive Directors for the foreseeable future. ## Views of shareholders Any views expressed by shareholders on the fees being paid to Directors would be taken into consideration by the Board when reviewing levels of remuneration. ## Annual Report on Remuneration This report has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended (the "Regulations"). The report also meets the relevant requirements of the Companies Act 2006 (the "Act") and the UK Listing Rules of the FCA and describes how the Board has applied the principles relating to Directors' remuneration. As required by the Act, an ordinary resolution to approve the Directors' Remuneration Report will be proposed at the forthcoming AGM. 57 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Remuneration Report (continued) The Company's Auditor is required to report on certain information contained within this report; where information set out below has been audited, it is indicated as such. All Directors are non-executive and the Company has no chief executive officer or employees; as such some of the reporting requirements contained in the Regulations are not applicable and have not been reported on, including the requirement for a future policy table and an illustrative representation of the level of remuneration that could be received by each individual Director. It is believed that all relevant information is disclosed within this report in an appropriate format. The Board has not been provided with advice or services by any person in respect of its consideration of the Directors' remuneration. ## Statement from the Chairman As the Company has no employees and the Board comprises entirely non-executive Directors, the Board has not established a separate Remuneration Committee. Directors' remuneration is reviewed annually and is determined by the Board as a whole within the parameters approved by shareholders. During the year, the Board reviewed the fees paid by other investment companies in the AIC UK Equity Income sector (the Company's peer group), fees paid to directors of other large investment trusts with assets of over £1 billion (excluding sector specialists) and those paid by the Janus Henderson managed investment trusts. The Board also took into consideration the prevailing rate of inflation, looking at RPI, CPI, as well as the increasing responsibilities and time commitment required of Directors. Following consideration, the Directors' fees were increased with effect from 1 January 2026 by 3.5% (rounded to the nearest £100), slightly below the CPI rise of 3.6% for the 12 months to 31 October 2025. Mr Dhillon carries out additional work for the Board as Marketing Lead, liaising with the Manager on the marketing and advertising programme and budget. It was agreed that he should be paid an annual fee equivalent to that of the Senior Independent Director to reflect his additional responsibilities. The new rates are as set out in the table below. The increases were to ensure that the Directors are properly remunerated for their services to the Company and so that the Company can remain competitive when seeking new Directors. There have been no other major decisions on Directors' remuneration or any other changes to the remuneration paid to each individual Director in the year under review. The Board is satisfied that the changes to the remuneration of the Directors are compliant with the Directors' Remuneration Policy approved by shareholders at the 2023 AGM. There will be no significant change in the way that the Remuneration Policy will be implemented in the course of the next financial year. ## Directors' annual fees The current fees for specific responsibilities are set out in the table below. Other than the Chair of the Audit and Risk Committee, no fees are payable for membership of the Board's Committees. | Role | Rate at 30 June 2026 £ | Rate at 30 June 2025 £ | | --- | --- | --- | | Chairman of the Board | 58,500 | 56,500 | | Chair of the Audit and Risk Committee | 44,000 | 42,500 | | Senior Independent Director | 40,300 | 38,900 | | Marketing Lead | 40,300 | n/a | | Other non-executive Directors | 36,600 | 35,300 | ## Performance The chart below illustrates the total shareholder return for a holding in the Company's shares over the ten-year period to 30 June 2026 as compared with the FTSE All-Share Index, which was adopted as the Company's benchmark index with effect from 1 July 2019. ### Total return performance over the ten-year period to 30 June 2026 ![img-47.jpeg](img-47.jpeg) 58 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Remuneration Report (continued) ## Directors' remuneration (audited) The remuneration paid to the Directors who served during the year ended 30 June 2026 and 30 June 2025 was as follows: | | Year ended 30 June 2026 Total salary and fees £ | Year ended 30 June 2025 Total salary and fees £ | Year ended 30 June 2026 Total expenses and taxable benefits £ | Year ended 30 June 2025 Total expenses and taxable benefits £ | Year ended 30 June 2026 Total £ | Year ended 30 June 2025 Total £ | | --- | --- | --- | --- | --- | --- | --- | | Ominder Dhillon^{1} | 37,800 | 34,900 | 218 | 250 | 38,018 | 35,150 | | Ted Holmes | 35,950 | 34,900 | – | – | 35,950 | 34,900 | | Sally Lake^{2} | 43,250 | 36,804 | – | – | 43,250 | 36,804 | | Sir Laurie Magnus^{3} | 57,500 | 55,850 | – | – | 57,500 | 55,850 | | Clare Wardle | 39,600 | 38,550 | – | – | 39,600 | 38,550 | | Samantha Wren^{4} | – | 13,833 | – | – | – | 13,833 | | **Total** | **214,100** | **214,837** | **218** | **250** | **214,318** | **215,087** | Notes: The amounts paid by the Company to the Directors were for services as non-executive Directors. The table above omits other columns set out in the relevant regulations because no payments of other types such as performance-related pay and pension-related payments were made. No variable pay was paid to any Director 1 Appointed as Marketing Lead with effect from 1 January 2026 2 Appointed as a non-executive Director on 1 August 2024 and appointed as Chair of the Audit and Risk Committee on 31 October 2024 3 Chair and highest paid Director 4 Chair of the Audit and Risk Committee until resignation on 31 October 2024 No other remuneration or compensation was paid or payable by the Company during the year to any of the current or former Directors or third parties. ## Directors' interests in shares (audited) | Beneficial interest | Ordinary shares of 25p | | | --- | --- | --- | | | 30 June 2026 | 1 July 2025 | | Ominder Dhillon | **5,943** | 5,943 | | Ted Holmes | **10,000** | 10,000 | | Sally Lake | **9,200** | 9,200 | | Sir Laurie Magnus | **110,000** | 110,000 | | Clare Wardle | **16,447** | 16,447 | The interests of the Directors and their connected persons in the ordinary shares of the Company at the beginning and end of the financial year are shown in the table. There have been no changes to any of the Directors' interests in the period from 1 July 2026 to the date of this report. No Director has any interests in the preference or preferred stock of the Company. The Company does not have a shareholding requirement for Directors. ## Relative importance of spend on pay In order to show the relative importance of spend on pay, the table below sets out the total level of remuneration compared with the distributions to shareholders by way of dividends. There were no other significant distributions, payments or other uses of the Company's net return or cash flow deemed to assist in the understanding of the relative importance of spend on pay. | | 2026 £ | 2025 £ | Change £ | Change % | | --- | --- | --- | --- | --- | | Total Directors' remuneration | 214,318 | 215,087 | (769) | (0.4) | | Ordinary dividends paid | 109,827,058 | 104,438,793 | 5,388,265 | 5.2 | 59 --- The City of London Investment Trust plc Annual Report 2026 # Directors' Remuneration Report (continued) ## Statement of voting at AGM At the Company's last AGM held on 30 October 2025, shareholders approved the Directors' Remuneration Report in respect of the year ended 30 June 2025. Shareholders last approved the Directors' Remuneration Policy at the AGM on 31 October 2023. | Resolution | For (including at Chairman's discretion) | % of total votes^{1} | Against | % of total votes^{1} | Withheld | | --- | --- | --- | --- | --- | --- | | Remuneration Policy | 6,622,825 | 99.2 | 56,004 | 0.8 | 53,908 | | Remuneration Report | 5,958,371 | 99.0 | 62,014 | 1.0 | 47,965 | $^{1}$ Excluding votes withheld ## Approval of the Annual Report on Remuneration The Annual Report on Remuneration was approved by the Board on 15 September 2026. On behalf of the Board Sir Laurie Magnus CBE Chairman 15 September 2026 60 --- The City of London Investment Trust plc Annual Report 2026 # Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and the Republic of Ireland”, and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the net return or loss of the Company for that period. 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, comprising FRS 102, 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. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. 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. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report and Corporate Governance Report that comply with that law and those regulations. The Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. ## Directors’ Responsibility Statement Each of the Directors, who are listed on pages 39 and 40, confirms that, to the best of their knowledge: - the Company’s financial statements, which have been prepared in accordance with UK Accounting Standards on a going concern basis, give a true and fair view of the assets, liabilities, financial position and return of the Company; and - the Strategic Report and financial statements 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 it faces. On behalf of the Board Sir Laurie Magnus CBE Chairman 15 September 2026 The financial statements are published on the website www.cityinvestmenttrust.com. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The maintenance and integrity of the website is the responsibility of Janus Henderson; the work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the Annual Report since it was initially presented on the website. 61 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc ## Opinion We have audited the financial statements of The City of London Investment Trust plc (the "Company") for the year ended 30 June 2026 which comprise the Income Statement, the Statement of Changes in Equity and the Statement of Financial Position and the related notes 1 to 23, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: - give a true and fair view of the Company's affairs as at 30 June 2026 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006. ## Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ## Independence We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company and we remain independent of the Company in conducting the audit. ## Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included: - Confirming our understanding of the Company's going concern assessment process by engaging with the Directors and the Corporate Secretary to determine if the key factors were considered in their assessment. - Inspecting the Directors' assessment of going concern, including the revenue forecast, for the period to 15 September 2027 which is at least 12 months from the date these financial statements are authorised for issue. In preparing the revenue forecast, the Company has concluded that it is able to continue to meet its ongoing costs as they fall due. - We reviewed the Company's assessment of the liquidity of investments held and evaluated the Company's ability to sell those investments to cover the working capital requirements should revenue decline significantly. - Reviewing the factors and assumptions, including the impact of the current economic environment and other significant events that could give rise to market volatility, as applied to the revenue forecast and the liquidity assessment of the investments. We considered the appropriateness of the methods used to calculate the revenue forecast and the liquidity assessment and determined, through testing of the methodology and calculations, that the methods, inputs and assumptions utilised were appropriate to be able to make an assessment for the Company. - Considering the mitigating factors included in the revenue forecast that are within the control of the Company. - In relation to the Company's borrowing arrangements, we recalculated the Company's compliance with debt covenants and performed stress testing to assess the likelihood of the Company breaching the financial covenants as a result of a reduction in the value of the Company's portfolio. - Reviewing the Company's going concern disclosures included in the annual report in order to assess that the disclosures were appropriate and in conformity with the reporting standards. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the period assessed by the Directors, being the period to 15 September 2027, which is at least 12 months from the date these financial statements are authorised for issue. 62 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) In relation to the Company's reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern. ## Overview of our audit approach | **Key audit matters** | - Risk of incomplete or inaccurate revenue recognition. - Risk of incorrect valuation or ownership of the investment portfolio. | | --- | --- | | **Materiality** | - Overall materiality of £28.5m which represents 1% of the net asset value. | ## An overview of the scope of our audit ### Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing the level of work to be performed. All audit work was performed directly by the audit engagement team. ### Climate change Stakeholders are increasingly interested in how climate change will impact The City of London Investment Trust. The Company has determined that the most significant future impacts from climate change could affect the Company's investments. These are explained on pages 31 and 32 in the principal risks and uncertainties. All of these disclosures form part of the "Other information", rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated. Our audit effort in considering climate change was focused on the adequacy of the Company's disclosures in the financial statements as set out in note 1(a) and conclusion that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing as required by FRS 102. We also challenged the Directors' considerations of climate change risks in their assessment of going concern, viability and associated disclosures. Based on our work, we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter. ### Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. 63 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) Risk **Incomplete or inaccurate revenue recognition** (as described on page 53 in the Audit and Risk Committee Report and as per the accounting policy set out on page 74). The total revenue for the year to 30 June 2026 is £119.88m (2025: £112.47m), consisting primarily of dividend income from listed equity investments. There is a risk of incomplete or inaccurate recognition of revenue through the failure to recognise proper income entitlements or to apply an appropriate accounting treatment. Additionally, in accordance with the AIC SORP, special dividends received by the Company can be included in either the revenue or capital columns of the Income Statement depending on the commercial circumstances behind the payments. Our response to the risk **We performed the following procedures:** We obtained an understanding of the processes and controls surrounding revenue recognition, including the classification of special dividends, by performing walkthrough procedures. For 100% of dividends received and accrued, we recalculated the income by multiplying the investment holdings at the ex-dividend date, traced from the accounting records, by the dividend per share, which was agreed to an independent data vendor. We also agreed all exchange rates to an independent data vendor and agreed a sample of dividend receipts to bank statements. For 100% of dividends accrued, we reviewed the investee company announcement to assess whether the dividend entitlements arose prior to 30 June 2026. To test completeness of recorded income, we verified that expected dividends for each investee company held during the year had been recorded as income with reference to investee company announcements obtained from an independent data vendor. For all investments held during the year, we inspected the type of dividends paid with reference to an external data vendor to identify those which were special dividends. The Company received six special dividends in the year, three classified as revenue and three classified as capital. The total value of special dividends was immaterial to our audit. Key observations communicated to the Audit and Risk Committee The results of our procedures identified no material misstatement in relation to incomplete or inaccurate revenue recognition. 64 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) | Risk | Our response to the risk | Key observations communicated to the Audit and Risk Committee | | --- | --- | --- | | **Incorrect valuation or ownership of the investment portfolio** (as described on page 53 in the Audit and Risk Committee Report and as per the accounting policy set out on page 73). The valuation of the investment portfolio at 30 June 2026 was £2,986.02m (2025: £2,455.88m) consisting primarily of listed investments. The valuation of the investments held by the Company is the key driver of the Company's net asset value and total return. Incorrect investment pricing, or a failure to maintain proper legal title of the assets held by the Company could have a significant impact on the net asset value and the return generated for shareholders. The fair value of listed investments is determined using quoted market bid prices at close of business on the reporting date. The Company participates in stock lending activity governed by a stock lending agreement with the custodian, HSBC. The agreement allows the custodian to use, for their own purposes, the collateral posted for the stocks on loan. There is a risk that valuation or ownership of the stocks on loan is incorrect. | **We performed the following procedures:** We obtained an understanding of the processes surrounding investment pricing and legal title of listed investments by performing walkthrough procedures. For 100% of investments in the portfolio, including the stocks on loan and collateral, we verified the market prices and exchange rates applied to an independent pricing vendor and recalculated the investment valuations as at the year end. For all investments in the portfolio, we obtained the market prices from an independent pricing vendor for five business days pre and post the year end date and calculated the day-on-day movements to identify any stale prices. We verified that the listed prices are valid fair values through review of trading activity. We compared the Company's investment holdings including the stocks on loan as at 30 June 2026 to an independent confirmation received directly from the Company's Custodian and Depositary. | The results of our procedures identified no material misstatement in relation to the risk of incorrect valuation or ownership of the investment portfolio. | ## Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. ### Materiality *The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.* We determined materiality for the Company to be £28.50m (2025: £23.32m), which is 1% (2025: 1%) of net assets. We believe that net asset value provides us with a materiality aligned to the key measure of the Company's performance. ### Performance materiality *The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.* On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 75% (2025: 75%) of our planning materiality, namely £21.38m (2025: £17.49m). We have set performance materiality at this percentage due to our past experience of working with the Company which therefore indicates a lower risk of misstatements, both corrected and uncorrected. 65 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) Given the importance of the distinction between revenue and capital for investment trusts, we also applied a separate testing threshold for the revenue column of the Income Statement of £5.71m (2025: £5.36m) being 5% (2025: 5%) of the revenue net return before taxation. ## Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of £1.43m (2025: £1.17m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. ## Other information The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. ## Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: - the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and - the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. ## Matters on which we are required to report by exception In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or Directors' Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or - certain disclosures of Directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit. ## Corporate Governance Report We have reviewed the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Report relating to the Company's compliance with the provisions of the UK Corporate Governance Code specified for our review by the UK Listing Rules. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Report is materially consistent with the financial statements or our knowledge obtained during the audit: 66 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) - Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 73; - Directors' explanation as to its assessment of the Company's prospects, the period this assessment covers and why the period is appropriate set out on page 33; - Director's statement on whether it has a reasonable expectation that the Company will be able to continue in operation and meets its liabilities set out on page 33; - Directors' statement on fair, balanced and understandable set out on page 61; - Board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 31; - The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 49; and - The section describing the work of the Audit and Risk Committee set out on page 51. ## Responsibilities of Directors As explained more fully in the Statement of Directors' Responsibilities set out on page 61, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. ## Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. ## Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management. - We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are UK GAAP, the Companies Act 2006, the UK Listing Rules, the UK Corporate Governance Code, the Statement of Recommended Practice for the Financial Statements of Investment Trust Companies as issued by the Association of Investment Companies, Section 1158 of the Corporation Tax Act 2010 and The Companies (Miscellaneous Reporting) Regulations 2018. - We understood how the Company is complying with those frameworks through discussions with the Audit and Risk Committee and Company Secretary, review of Board and committee minutes and review of papers provided to the Audit and Risk Committee. - We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by considering the key risks impacting the financial statements. - Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company. 67 --- The City of London Investment Trust plc Annual Report 2026 # Independent Auditor's Report to the Members of The City of London Investment Trust plc (continued) A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. ## Other matters we are required to address - Following the recommendation from the Audit and Risk Committee, we were appointed by the Company on 31 October 2023 to audit the financial statements for the year ending 30 June 2024 and subsequent financial periods. - The period of total uninterrupted engagement including previous renewals and reappointments is three years, covering the year ended 30 June 2026. - The audit opinion is consistent with the additional report to the Audit and Risk Committee. ## Use of our report This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Mike Gaylor (Senior statutory auditor) For and on behalf of Ernst & Young LLP Statutory Auditor London 15 September 2026 68 --- # Financial Statements 69 --- The City of London Investment Trust plc Annual Report 2026 # Income Statement | Notes | | Year ended 30 June 2026 | | | Year ended 30 June 2025 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue return £'000 | Capital return £'000 | Total return £'000 | Revenue return £'000 | Capital return £'000 | Total return £'000 | | 2 | Gains on investments held at fair value through profit or loss | – | 409,587 | 409,587 | – | 244,522 | 244,522 | | 3 | Income from investments held at fair value through profit or loss | 119,588 | – | 119,588 | 112,223 | – | 112,223 | | 4 | Other interest receivable and similar income | 290 | – | 290 | 242 | – | 242 | | | **Gross revenue and capital gains** | **119,878** | **409,587** | **529,465** | **112,465** | **244,522** | **356,987** | | 5 | Management fee | (2,417) | (5,639) | (8,056) | (2,006) | (4,680) | (6,686) | | 6 | Other administrative expenses | (1,453) | – | (1,453) | (1,228) | – | (1,228) | | | **Net return before finance costs and taxation** | **116,008** | **403,948** | **519,956** | **109,231** | **239,842** | **349,073** | | 7 | Finance costs | (1,852) | (3,954) | (5,806) | (1,954) | (4,191) | (6,145) | | | **Net return before taxation** | **114,156** | **399,994** | **514,150** | **107,277** | **235,651** | **342,928** | | 8 | Taxation | (733) | – | (733) | (812) | – | (812) | | | **Net return after taxation** | **113,423** | **399,994** | **513,417** | **106,465** | **235,651** | **342,116** | | 9 | **Return per ordinary share - basic and diluted** | **22.52p** | **79.43p** | **101.95p** | **21.57p** | **47.74p** | **69.31p** | The total columns of this statement represent the Company's Income Statement. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. The Company has no recognised gains or losses other than those recognised in the Income Statement. The notes on pages 73 to 88 form part of these financial statements 70 --- The City of London Investment Trust plc Annual Report 2026 # Statement of Changes in Equity | Notes | Year ended 30 June 2026 | Called up share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Other capital reserves £'000 | Revenue reserve £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | | At 1 July 2025 | 125,666 | 1,073,479 | 2,707 | 1,081,493 | 48,694 | 2,332,039 | | | Net return after taxation | – | – | – | 399,994 | 113,423 | 513,417 | | 17, 18, 19 | Sale of 9,147,762 ordinary shares from treasury | – | 8,079 | – | 38,277 | – | 46,356 | | 17, 18 | Issue of 12,407,238 new ordinary shares | 3,102 | 65,378 | – | – | – | 68,480 | | 10 | Dividends paid | – | – | – | – | (109,799) | (109,799) | | | **At 30 June 2026** | **128,768** | **1,146,936** | **2,707** | **1,519,764** | **52,318** | **2,850,493** | | Notes | Year ended 30 June 2025 | Called up share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Other capital reserves £'000 | Revenue reserve £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | | At 1 July 2024 | 125,666 | 1,072,624 | 2,707 | 849,910 | 46,621 | 2,097,528 | | | Net return after taxation | – | – | – | 235,651 | 106,465 | 342,116 | | 17, 19 | Buyback of 2,530,895 ordinary shares for treasury | – | – | – | (11,154) | – | (11,154) | | 17, 18, 19 | Sale of 1,685,000 ordinary shares from treasury | – | 855 | – | 7,086 | – | 7,941 | | 10 | Dividends paid | – | – | – | – | (104,392) | (104,392) | | | **At 30 June 2025** | **125,666** | **1,073,479** | **2,707** | **1,081,493** | **48,694** | **2,332,039** | The notes on pages 73 to 88 form part of these financial statements 71