**Summary**
The Mercantile Investment Trust PLCs annual financial report for the year ended January 31, 2026, highlights a NAV total return of 12.3% (with debt at fair value), slightly underperforming the benchmark FTSE All-Share Index (ex-FTSE 100, ex-investment trusts) which returned 15.8%. The share price total return was 12.5%. Over longer periods, the trust has outperformed the benchmark, with a 10-year cumulative NAV total return of 109.3% versus 85.1% for the benchmark. The trusts performance was driven by strong stock selection in industrials and financials, offset by weaker performance in investment banking and consumer discretionary sectors. The trust benefited from takeovers in Alpha Group International and Just Group but was impacted by a higher number of takeovers where it had no holdings.
The trust maintained a competitive Ongoing Charges Ratio (OCR) of 0.49% and repurchased 63,799,708 shares at an average discount to NAV of 9.9%, adding 0.9% to the NAV total return. A total dividend of 8.20p per share was declared, an increase of 3.8%, fully covered by earnings. The trusts dividend has grown for 12 consecutive years, with a 10-year annualized growth rate of 6.7%.
The report discusses the impact of geopolitical events, including the war in Iran, on market conditions and highlights the trusts focus on high-quality companies with conservative balance sheets. The portfolio managers emphasize the importance of active stock picking in volatile markets and remain confident in their ability to deliver long-term outperformance. The trusts gearing policy, share buyback strategy, and marketing efforts are also outlined, with a focus on enhancing shareholder value and maintaining a strong market presence.
| Year | 2025 | 2026 |
|---|---|---|
| Net asset value per ordinary share (pence) | 263.2p | 288.2p |
| total dividends paid in the year (pence) | 7.90p | 8.20p |
| net return after taxation (pence) | 31.30p | 29.03p |
| gearing | 14.1% | 14.4% |