The Mercantile Investment Trust plc Annual General Meeting

The Mercantile Investment Trust plc Annual General Meeting Discovering tomorrow s market leaders 24 th May 2017 Guy Anderson, Portfolio Manager, The Mercantile Investment Trust

Agenda Overview of fund strategy Performance review Outlook and positioning Appendix 1

Overview of fund strategy The Mercantile Investment Trust plc A Diversified Portfolio of UK Mid and Small Cap Companies Investment Objective Long term capital growth from a portfolio of UK mid and small cap companies Benchmarked against the FTSE All-Share ex. FTSE 100 and Investment Trusts Ongoing charges 1 0.48% (management fee reducing by 5bps by February 2018) Key Features Gearing range 2 of -10% to +20% Dividend of 46p equivalent to a 2.6% net yield 3 (+7% vs FY16) Active discount management Investment Approach Four person dedicated investment team Fundamental analysis Consistent investment philosophy 1 Fiscal year to 31 st January 2017 2 Gearing facilities consist of 175m 6.125% debenture repayable 2030 and 3.85m 4.25% perpetual debenture 3 Quarterly dividend payments over twelve months to Jan 2017, yield based on share price 31 st Jan 2017 Source: J.P. Morgan Asset Management. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. Yield is not guaranteed and may change over time. 2

Overview of fund strategy Experienced and stable investment team Guy Anderson, Portfolio Manager Lead manager Industry Experience: 15 years Martin Hudson, Portfolio Manager Co-manager Industry Experience: 41 years Anthony Lynch, Portfolio Manager Co-manager Industry Experience: 8 years Timothy Lewis, Investment Analyst Industry Experience: 5 years Rigorously identifying investments with specific characteristics Attractively valued Good fundamentals Positive outlook As of 30th April 2017. There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management will continue to be employed by J.P. Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional s future performance or success. 3

Overview of fund strategy DS Smith European packaging consolidator benefitting from e-commerce growth Investment case Total return vs. benchmark Strong market position with exposure to attractive FMCG packaging market 1.25 Relative performance ROS +460bps Market consolidator ROACE in a +530bps over 6 years fragmented market over 6 years 1 Attractively valued even ex. acquisition opportunities 0.75 31/01/2014 31/01/2015 31/01/2016 31/01/2017 Market consolidator with strong synergies record Source: DS Smith, Bloomberg. As at 31 st January 2017. Benchmark = FTSE All-Share ex.100 ex. IT. FMCG = fast moving consumer goods. Opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not necessarily a reliable indicator for current and future performance. 4

Performance review Five year performance The Mercantile Investment Trust plc 31 st January 2012 to 31 st January 2017 Cumulative returns 240 200 Share price NAV FTSE All Share ex. 100 ex. IT FTSE 100 +116% +102% +100% +51% 160 120 80 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Source: Thomson Reuters Datastream; Morningstar. Rebased to 100 as at 31 st January 2012. Past performance is not a guide to the future. Performance data has been using net asset value per share, cum income, with debt at par value in GBP. Please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment. 2016 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 5

Performance review Financial year performance The Mercantile Investment Trust plc Absolute returns 40% Share price NAV Benchmark 36.6% 30% 29.0% 27.7% 27.5% 26.6% 27.2% 20% 18.6% 12.5% 12.9% 10% 4.3% 6.1% 4.7% 4.4% 4.6% 0% -0.7% -10% FY17 FY16 FY15 FY14 FY13 Source: J.P. Morgan Asset Management. GBP. FY = Financial year (to 31 st January). Benchmark = FTSE All-Share ex.100 ex. Investment Trusts Past performance is not a guide to the future. Source: J.P. Morgan/Morningstar. Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment. 6

Performance review One year performance Total returns 140 Share price NAV FTSE All Share ex. 100 ex. IT FTSE 100 120 100 +4.3% +6.1% +12.5% +21.4% Contributions to total returns 12 months to 31 st January 2017 Benchmark total return 12.5 Stock/ sector selection -4.7 Gearing/ cash -1.4 Cost of debentures -0.6 Fees & expenses -0.5 Share repurchases 0.8 Return on net assets 6.1 % 80 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Increase in discount -1.8 Return to shareholders 4.3 Source: (LHS) J.P. Morgan Asset Management. Thomson Reuters Datastream.. Rebased to 100 at 31 st January 2016 (RHS) Xamin, Morningstar, AIC, DataStream, J.P. Morgan Asset Management. 12 months to 31 st January 2017 Total return, debt at par value, net of fees, income reinvested. Benchmark is FTSE All-Share Index excluding FTSE-100 and Investment Trusts Past performance is not an indication of future performance 7

Performance review Largest contributors to performance The Mercantile Investment Trust plc 31 st January 2016 to 31 st January 2017 Sector level attribution Stock level attribution Travel & Leisure (u) 1.36% Micro Focus (o) 0.58% Software & Computer Services (o) 0.73% MP Evans (o) 0.47% Real Estate Investment & Services (u) 0.54% Cobham (u) 0.39% Beverages (o) 0.46% NMC Health (o) 0.36% Health Care Equipment & Services (u) 0.44% 3i (o) 0.35% Financial Services (o) -0.65% Dixons Carphone (o) -0.51% Industrial Engineering (u) -1.09% Berkeley Group (o) -0.52% Support Services (u) -1.19% Greencore (o) -0.57% H'hold Goods & Home Construction (o) -1.21% Weir (u) -0.60% Mining (u) -1.86% Polymetal (u) -0.71% -3.0% -1.5% 0.0% 1.5% 3.0% Relative Contribution % -1.0% -0.5% 0.0% 0.5% 1.0% Relative Contribution % Source: B-one, J.P. Morgan Asset Management; (o) denotes overweight, (u) denotes underweight; period average Past performance is not an indication of future performance. Attributions may not match official returns due to differences in systems rounding The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. 8

Outlook and positioning UK mid and small caps have outperformed large cap over the long term Cumulative return with dividends reinvested 1400 1200 FTSE 250 FTSE 100 1000 800 600 400 200 0 Jan-93 Jan-97 Jan-01 Jan-05 Jan-09 Jan-13 Jan-17 Distribution of annual relative returns Number 2015 2006 2005 20 2004 2000 1996 1994 1988 15 1985 2016 1984 2014 1983 2011 1981 2008 1979 2013 10 2002 1976 2012 2001 1974 2010 1998 1973 2003 1995 1970 1993 1991 1969 1987 2009 5 2007 1982 1967 1986 1999 1997 1968 1964 1972 1978 1992 1966 1961 1962 1971 1990 1965 1958 1960 1963 1975 1989 1980 1956 1955 1957 1959 1977-40 -30-20 -10 0 10 20 30 40 50 60 NSCI return minus All-Share return % Source (LHS): J.P. Morgan Asset Management, Bloomberg. All series are rebased to 100 as at 31st January 1993 to 31st January 2017. All indices in GBP and include reinvested dividends. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance. Source (RHS) Source: Numis Smaller Companies Index 2017 Annual Review Numis/ Elroy Dimson, Scott Evans and Paul Marsh London Business School. Total return index, Log scale. NSCI = Numis Smaller Companies Index. The NSCI covers the bottom ten percent of the UK equity market. Data to 31st December 2016, study published 16th January 2017. Past performance is not an indication of future performance. 9

Outlook and positioning Structural reasons for long term outperformance Early stage of lifecycle Disruptive growth challenges incumbents 800 600 400 200 0 250 200 150 100 50 0 H2'14 H1'15 H2'15 H1'16 H2'16 Sales, m (RHS) Total return (LHS) H1'14 H2'14 H1'15 H2'15 H1'16 H2'16 Sales, m (RHS) Total return (LHS) 80 60 40 20 0 250 200 150 100 50 0 Source: DataStream, Bloomberg, as at 30th April 2017 The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The companies above are shown for illustrative purposes only. The use of their logos is in no way an endorsement of those companies by J.P. Morgan Asset Management nor is it intended to indicate an endorsement of J.P. Morgan Asset Management by those companies. Past performance is not an indication of current and future performance. 10

Outlook and positioning Auto Trader Market leader in auto classifieds, 100% digital Investment case ARPR growth ARPR growth ahead of expectations combined with operational gearing to drive margin expansion 1,600 1,500 1,400 +10.5% +11.0% Pricing power 4x larger consumer audience compared to next competitor Cross/up sell services to increase customer stickiness 1,300 1,200 1,100 1,000 +6.1% High return on invested capital and strong cash conversion 900 800 FY14 H115 FY15 H116 FY16 H117 FY17e A leading internet platform in a winner-takes-all market Source: Auto Trader, consensus estimates. As at 31st January 2017. ARPR = Average Revenue per Retailer The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not necessarily a reliable indicator for current and future performance. 11

Outlook and positioning Potential for increased M&A activity Long term attractions of UK small/ mid Attractive M&A targets Open markets Manageable size Percentage of index acquired 12% 10% 8% Catalysts for an increase in M&A now 6% Weak GBP Low interest rates 4% 2% 0% FTSE 100 FTSE 250 Small Cap FTSE 100 avg. FTSE 250 avg. Small Cap avg. Source: (RHS) Liberum, Bloomberg, as at 30 th April 2017 12

Outlook and positioning UK economy current market indicators UK Composite PMI two years 60 58 56 54 52 50 48 46 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 UK Consumer Confidence ten years Consensus 2017 UK GDP forecast 2.5% 2.0% 1.5% 1.0% 10 0-10 -20-30 -40-50 0.5% 0.0% Source (LHS): Markit/CIPS UK Composite PMI, GfK UK Consumer Confidence, Bloomberg; (RHS) Bloomberg consensus. As at 30 th April 2017. PMI = Purchasing Managers Index 13

Outlook and positioning Portfolio positioning 31 st January 2017 Sector weighting 31 st Jan 2017 Top 10 holdings 31 st Jan 2017 Weight (%) Geographic revenue mix 31 st Jan 2017 Industrials Consumer Services Financials Consumer Goods Technology Basic Materials Oil & Gas Health Care Utilities Telecommunications 8% 7% 4% 2% 2% 4% 2% 4% 2% 4% 1% 1% 0% 1% 30% 31% 27% 20% 24% 25% Mercantile Benchmark DS Smith 2.6 Phoenix 2.4 Auto Trader 2.3 Inchcape 2.2 SEGRO 2.2 Domino s Pizza 2.1 Just Eat 2.0 Rentokil 2.0 Bellway 1.9 Halma 1.9 Top 10 21.5 Top 20 37.7 Top 50 72.0 Number of holdings 112 Europe ex. UK, 15% North America, 14% Emerging Markets, 15% APAC, 3% UK, 53% Source: (Left) J.P. Morgan Asset Management, Factset; portfolio weightings calculated as % of invested capital; (Middle) J.P. Morgan Asset Management, calculated as % of invested capital; (Right) Factset, Company reports; Revenue mix by geography, APAC = Asia-Pacific. Portfolio weightings calculated as % of invested capital. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. 14

Outlook and positioning Summary Economic indicators expansionary Signs of increasing inflation Political uncertainty Healthy and growing dividend income Source: Bloomberg, J.P. Morgan Asset Management The opinions and views expressed here are those held by the author as at 30th April 2017, which are subject to change and are not to be taken as or construed as investment advice. 15

Appendix 16

Gearing 5 years' historic gearing levels vs. benchmark Gearing Level 20% 15% Month end gearing levels - LHS FTSE All Share ex 100 ex IT (total return index) - RHS Index 7500 6500 10% 5500 5% 4500 0% 3500-5% 2500-10% 1500 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Source: DataStream, J.P. Morgan Asset Management As at 30th April 2017 (weightings exclude cash/cash equivalents) 17

Investment objective and specific risks The Mercantile Investment Trust plc Investment objective Long term capital growth from a portfolio of UK medium and smaller companies Specific risks Investments in smaller companies may involve a higher degree of risk as price movements can be more volatile than in larger companies This trust operates a gearing range of between 20% geared and 10% cash, as such market movements in either direction may be exaggerated/lessened External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds could decline at the same time The share price may trade at a discount to the Net Asset Value of the The Company The single market in which the Trust primarily invests, in this case the The UK, may be subject to particular political and economic risks and, as a result, the trust may be more volatile than more broadly diversified trusts Companies listed on AIM tend to be smaller and early stage companies and may carry greater risks than an investment in a company with a full listing on the London Stock Exchange Source: J.P. Morgan Asset Management as of 30th April 2017 18

The Mercantile Investment Trust plc This is a promotional document and as such the views contained herein are not to be taken as advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management's own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the products or underlying overseas investments. Both past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment products, there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates worldwide. You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through the following website www.jpmorgan.com/pages/privacy. Investment is subject to documentation (Investor Disclosure Document, Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset Management Marketing Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorized and regulated in the UK by the Financial Conduct Authority. Registered in England No: 288553. Registered address: 25 Bank St, Canary Wharf, London E14 5JP. 6fd53260-3c76-11e7-beed-005056960c63 19