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Unconstrained investment in Asian equities

Martin Currie Asia Unconstrained Trust 5 October 2016 Outlook

Martin Currie Asia Unconstrained Trust

Unconstrained investment in Asian equities

Investment trusts

5 October 2016

Price

328.3p

Market cap

£119m

AUM

£142m

NAV*

388.8p

Discount to NAV

15.6%

NAV**

395.6p

Discount to NAV

17.0%

*Excluding income. **Including income.
As at 4 October 2016.

Yield

2.4%

Ordinary shares in issue

36.1m

Code

MCP

Primary exchange

LSE

AIC sector

Asia Pacific ex-Japan

Share price/discount performance

Three-year cumulative perf. graph

52-week high/low

330.0p

238.0p

395.6p

280.3p

**Including income.

Gearing

Gross*

4.1%

Net*

2.2%

*As at 31 August 2016.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Martin Currie Asia Unconstrained Trust is a research client of Edison Investment Research Limited

Martin Currie Asia Unconstrained Trust (MCP) was launched in 1985 and in July 2014 adopted Martin Currie’s Asia Long-Term Unconstrained (ALTU) strategy, aiming to generate returns in line with Asia-Pacific ex-Japan GDP growth, which generally has not been fully reflected in the region’s equity market returns. Since ALTU’s inception in 2008, it has demonstrated lower volatility than the market, capturing most of the upside in rising markets, while outperforming in falling markets. MCP has a wider discount than the peer group, which provides scope for it to narrow; its current dividend yield of 2.4% is attractive versus non income-mandated peers.

12 months ending

Total share price return (%)

Total NAV return (%)

Blended
benchmark* (%)

MSCI AC Asia
ex-Japan (%)

3Y GDP growth Asia ex-Japan (%)

30/09/12

8.2

11.9

11.0

15.7

14.6

30/09/13

16.4

9.1

13.1

5.3

14.5

30/09/14

1.5

0.6

5.2

8.4

11.0

30/09/15

(9.3)

(9.6)

8.0

(6.0)

8.0

30/09/16

32.4

36.1

6.1

36.6

6.1

Source: Thomson Datastream, IMF, Edison Investment Research. Note: 12-month rolling discrete total return performance, all in £ terms. *Blended benchmark is MSCI AC Asia Pacific Index (Japan fixed at 40%) until 30 June 2008, MSCI AC Asia Pacific Index from 1 July 2008 to 30 June 2011, MSCI AC Asia Pacific Index (Japan fixed at 25%) from 1 July 2011 to 10 July 2014, and three-year rolling nominal Asian GDP growth from 11 July 2014.

Investment strategy: Asia Long-Term Unconstrained

MCP adopted the ALTU strategy in July 2014, aiming to generate total returns in line with rolling three-year Asia-Pacific ex-Japan nominal GDP growth. The investment process is rigorous, involving screens, detailed fundamental analysis, a corporate governance assessment and a forensic accounting review. Stocks are only selected if the team’s assessment of the company’s intrinsic value is at a significant discount to the current share price. The resulting high-conviction portfolio typically has 20-30 positions and is held for the long term; hence portfolio turnover is relatively low.

Market outlook: Potential further upside

The Asia ex-Japan stock market has appreciated meaningfully in 2016, and its valuation discount versus the world market has narrowed from the lows experienced in 2015. However, its forward P/E multiple is still at a significant discount to developed world markets such as the US and UK. Therefore, there is potential for further re-rating given the outlook for higher economic growth in the Asia ex-Japan region; factors include positive demographics and growth in trade.

Valuation: Wider discount, above-average yield

Having widened following the result of the UK’s EU referendum, MCP’s current share price discount to cum-income NAV of 17.0% is wider than the 15.1% average of the last 12 months and is wider than the averages of the last three, five and 10 years. There is scope for the discount to narrow if positive investment performance is maintained or investor demand for Asian equities increases. MCP has a progressive dividend policy and its current yield of 2.4% ranks favourably versus its peers.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Martin Currie Asia Unconstrained Trust aims to achieve returns commensurate with Asia ex-Japan nominal GDP growth, unconstrained by an equity benchmark, over a long-term time horizon from a concentrated portfolio of 20-30 stocks. Before its change of investment objective in July 2014, it invested in a pan-Asian portfolio with a benchmark of MSCI AC Asia Pacific (Japan fixed at 25%).

24 May 2016: Annual report for 12 months to 31 March 2016. NAV TR -7.9%, share price TR -10.3%.

12 November 2015: Half-yearly report for six months to 30 September 2015. NAV TR -19.2%, share price TR -19.7%.

11 November 2015: Martin Shenfield appointed to the board as a non-executive director.

Forthcoming

Capital structure

Fund details

AGM

July 2017

Ongoing charges

FY16 1.2% (see page 7)

Group

Martin Currie Investment Management

Interim results

November 2016

Net gearing

2.2%

Managers

Andrew Graham

Year end

31 March

Annual mgmt fee

Tiered, 0.60-0.75% of net assets

Address

Saltire Court, 20 Castle Terrace,

Edinburgh EH1 2ES

Dividend paid

December and August

Performance fee

None

Launch date

1985

Trust life

Indefinite

Phone

0131 229 5252

Continuation vote

Three-year, next in 2018

Loan facilities

£10m (see page 7)

Website

www.martincurrie.com/uk/asia-unconstrained-trust

Dividend policy and history

Share buyback policy and history

MCP has a progressive dividend policy and has paid interim and final dividends since FY14.The compound annual growth in dividends since 2010 is 13.1%.

MCP is authorised to repurchase up to 14.99% and allot up to 5% of its ordinary shares. A tender offer for 10% of the issued shares was made in July 2014. Financial years shown.

Shareholder base (as at 20 September 2016)

Portfolio exposure by sector (as at 31 August 2016)

Top 10 holdings (as at 31 August 2016)

Portfolio weight %

Company

Country

Sector

31 August 2016

31 August 2015*

AIA

Hong Kong

Financials

7.7

7.6

Taiwan Semiconductor

Taiwan

Information technology

7.1

5.4

China Mobile

China

Telecommunications

6.2

6.2

Samsung Electronics

South Korea

Information technology

5.8

N/A

Tencent Holdings

China

Information technology

5.7

N/A

Tata Consultancy Services

India

Information technology

5.3

5.4

Infosys

India

Information technology

5.1

5.8

HSBC

Hong Kong

Financials

4.8

5.2

Hero MotoCorp

India

Consumer discretionary

4.5

N/A

Singapore Telecommunications

Singapore

Telecommunications

4.5

4.0

Top 10

56.7

52.5

Source: Martin Currie Asia Unconstrained Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in August 2015 top 10.

Market outlook: Potential for further re-rating

Exhibit 2 (left-hand side) shows GDP growth rates from the International Monetary Fund’s October 2016 World Economic Outlook. While forecast growth for emerging and developing Asia is lower than the 2006-15 rate; it is still appreciably higher than the forecast growth for advanced economies and the world as a whole. Factors for this include faster population growth, with a rapid expansion in the middle classes, low household debt and unemployment, and growth in trade. Although Asia ex-Japan equities have re-rated somewhat versus global equities – since January 2016 the forward P/E multiple discount to world markets has narrowed from 21% to c 14% – there is the potential for further re-rating on the back of higher relative earnings growth. Given macro uncertainties in developed markets – such as the outcome of the US election and the outlook for US interest rates, deflation in Japan, continued slow growth in Europe and the impact of Brexit on the UK economy – investors may be attracted to a fund with a well-defined investment approach investing in Asia ex-Japan equities.

Exhibit 2: Emerging Asia vs advanced and world markets – GDP growth and valuation metrics

GDP growth rates – emerging Asia vs advanced economies and world

DS Asia ex-Japan vs DS World valuation comparison

Source: IMF WEO October 2016, Thomson Datastream, Edison Investment Research

Fund profile: Rigorous fundamental analysis

MCP was launched in 1985 and, having changed its benchmark in 2008 and 2011 (see table note on page 1), adopted Martin Currie’s Asia Long-Term Unconstrained (ALTU) strategy on 11 July 2014. ALTU was launched in 2008, aiming to deliver returns that match Asia ex-Japan GDP growth (measured on a rolling three-year basis). Between 31 October 2008 and 30 June 2016, the strategy has returned 14.3% pa (net of fees and expenses). It is a high-conviction, long-only strategy that results in a concentrated portfolio of 20-30 stocks, which are held for the long term. Stocks are selected based on positive fundamentals and attractive valuations. In addition, potential investee companies’ corporate governance track records are assessed and their financial statements undergo a rigorous forensic accounting process. The portfolio is constructed without reference to an index and is diversified by sector and geography. A maximum 10% of the portfolio may be held in a single stock and a maximum 10% may be held in any one company; currency exposure is not hedged. MCP is managed by Andrew Graham and Martin Currie’s Asia investment team.

The fund managers: Andrew Graham and team

The manager’s view: On balance, conditions are improving

Manager Andrew Graham comments that over the last several months, since end-May 2016, business conditions globally, as well as in Asia, have improved; not universally, but the positives outweigh the negatives. This has been evidenced in forward-looking indicators such as purchasing managers’ new orders and export diffusion indices, while not very robust, are positive rather than negative. Inventories of finished goods and inventory-to-shipment ratios remain relatively elevated in most areas, but there is some destocking, which is evidence of a better environment; if new orders remain positive, it will lead to a more meaningful improvement in inventory data. The manager suggests that the economic environment is “a bit better”, but not more vibrant than this. This improving data is primarily to do with the manufacturing sector, which is a small part of many economies, but a good indicator of broader economic growth.

Considering messages from recent company meetings and Q216 earnings reports, the manager comments that, in general, operations that are performing well are getting stronger and those that have been problematic are showing signs of improvement, such as Siam Commercial Bank. Investors were concerned about the Thai economy and rising non-performing loans, which had increased during 2015. The manager thought that this was not a systemic problem and that by mid-2016 there should be signs of improvement. This view has been borne out by recent comments from the bank’s management; the stock has reacted positively and is now one of the best performing stocks in the MCP portfolio year-to-date.

Graham notes that earnings forecasts in the region have increased; the estimate revision ratio has been rising for most of 2016, from a very low base, having been negative in the last few years. The strongest revisions have primarily been in more cyclical parts of the market such as materials. Regionally, the strongest revisions have generally been in North Asia – China, Taiwan and Korea – and weakest in the ASEAN region. The manager suggests that because revisions tend to run ahead of hard data, the revision ratio may be close to a peak, but the earnings picture is certainly more positive.

Commenting on valuation, Graham notes that the Asia ex-Japan stock market has experienced quite a strong upward move and valuations have risen from a relatively low base. The MSCI AC Asia ex-Japan Index is trading at 13.5x 12-month forward earnings, which is one standard deviation above the five-year average, but roughly in line with the 10-year average. Given it is a size rather than a price-weighted index, the multiple does not fully reflect the outperformance and higher valuations of smaller-cap companies; on an equally weighted basis, the market multiple is more like 16.5x. The stock market is no longer very cheap versus history and earnings need to come through to support current valuations. However, it is also important to consider the valuation of Asian markets versus the rest of the world, as this paints quite a different picture. Asia ex-Japan stocks have de-rated meaningfully over the last five years relative to European and US stocks. This trend ceased in Q116, although the 12-month forward P/E multiple for Asian ex-Japan stocks is still 10-15% cheaper than Europe and 20-25% cheaper than the US. Looking back over the last 20 years, this is very low relative to history.

Asset allocation

Investment process: Asia Long-Term Unconstrained (ALTU)

The ALTU strategy involves an initial screen of c 1,100 Asian equities, looking for companies with stable returns above the cost of capital, which are generating positive cash flow. The resulting investable universe of c 200 companies undergoes an in-depth evaluation of their competitive positions and sustainable growth. Potential investee companies’ corporate governance records are reviewed and their financial statements are investigated, which leads to the generation of a 40-60 page comprehensive ‘accounting diagnostics report’. Long-term growth and cash returns are modelled and the assessed intrinsic value of a company is compared to the current share price. There are also regular reviews of existing portfolio holdings; the manager looks at a broad range of upside and downside outcomes and the assessment of these drives portfolio activity.

Current portfolio positioning

At end-August 2016, the top 10 holdings accounted for 56.7% of the portfolio – an increase in concentration versus 52.5% at end-August 2015. Seven names were common to both periods.

Changes in geographic or sector exposure over the last 12 months have occurred as a result of individual stock decisions. The manager has been taking profits in Indian companies Hero MotoCorp and Maruti Suzuki. Both companies have done well on the back of improving orders as a result of the launch of new models and a gradual increase in demand in India. Two positions have been sold completely. M1 is a Singaporean telecoms company. The manager took profits some time ago and had been progressively trimming. He is concerned about an increasingly competitive business environment; a fourth player may enter the market, which could be disruptive. However, if this company is ultimately unsuccessful, M1 could be repurchased at some time in the future. Tsingtao Brewery was sold on valuation grounds and as a result of a tougher competitive environment, given aggressive expansion into China by Anheuser-Busch InBev, which has negatively affected Tsingtao’s earnings.

In May 2016, Chinese technology company Tencent was added to the portfolio; the stock has been held in the past. Martin Currie has run forensic reports on the company for the last few years, but needed clarification regarding the structure of the business and the relationships between the listed and operating companies. The additional clarity was received after a long process of engagement with Tencent’s management. The Martin Currie team have been working for some time on analysing Tencent’s long-term prospects in gaming (PC/mobile games) and broader internet service (its ecosystem). It needed to ascertain what the current share price was implying about the value of these businesses and if a potential investment looked interesting from a risk/reward perspective. Analysis concluded that Tencent’s position in online games was strong and growing, the communication platform was strengthening, and cross-selling was increasing. The manager felt that a lot of investment had already been made to build out the ecosystem, which should lead to a stabilisation in margins going forward now there is better diversification of the revenue stream. Tencent is gradually rolling out advertising, but not so fast that it destroys the user experience; the manager suggests that it is “not grabbing for gold”, but acting in a measured way that will enhance the sustainability of growth. At the time of purchase, Tencent’s valuation was lower than history and Martin Currie’s own intrinsic valuation; it was viewed as having an attractive risk/reward profile. The manager purchased a large 5% position based on high conviction when the stock price was in the low HK$150s (it is now higher than HK$210).

Exhibit 3: Geographical exposure at 31 August 2016

Exhibit 4: Portfolio characteristics

MCP portfolio

MSCI AC Asia ex-Japan Index

Price/earnings* (x)

15.5

12.7

Price/book (x)

2.3

1.7

Yield (%)

2.8

2.6

EV/EBIT (x)

12.0

12.8

EV/EBITDA (x)

8.2

7.5

Net debt/(cash) to equity (x)

(14.6)

22.8

Return on equity* (x)

14.6

12.8

Source: Martin Currie Asia Unconstrained Trust, Edison Investment Research

Source: Martin Currie and UBS PAS, 31 August 2016. Note: *Indicates consensus.

Exhibit 3: Geographical exposure at 31 August 2016

Source: Martin Currie Asia Unconstrained Trust, Edison Investment Research

Exhibit 4: Portfolio characteristics

MCP portfolio

MSCI AC Asia ex-Japan Index

Price/earnings* (x)

15.5

12.7

Price/book (x)

2.3

1.7

Yield (%)

2.8

2.6

EV/EBIT (x)

12.0

12.8

EV/EBITDA (x)

8.2

7.5

Net debt/(cash) to equity (x)

(14.6)

22.8

Return on equity* (x)

14.6

12.8

Source: Martin Currie and UBS PAS, 31 August 2016. Note: *Indicates consensus.

Looking at the portfolio characteristics in Exhibit 4, compared to our last note published in February 2016, the valuation metrics of the portfolio are broadly similar versus the MSCI AC Asia ex-Japan Index. There is a wider disparity between the price/earnings ratios; contributing to this is the purchase of Tencent, which has a relatively higher earnings multiple. Also, MCP’s portfolio now has a higher rather than a lower dividend yield than the index. Indicative of the quality nature of holdings in the portfolio, companies in aggregate hold net cash rather than net debt on their balance sheets.

Performance: Outperformance since change in strategy

MCP adopted the ALTU strategy in July 2014. As shown in Exhibit 5, this strategy has generated lower annual volatility versus the market. Between October 2008 and August 2016, annual volatility in the ALTU strategy has been 4.8pp lower than the MSCI AC Asia ex-Japan Index. Its average return in months when the market rallied was 1.3pp lower (73% of the upside), but in months when the market fell was 1.4pp higher (56% of the downside). Exhibit 6 shows MCP’s absolute share price and NAV total returns versus the benchmark’s. Over one year, returns have been particularly strong; MCP’s share price total return of 32.4% and NAV total return of 36.1% are considerably ahead of the GDP-based benchmark return of 6.1%. In recent months the relative outperformance has been magnified by sterling weakness following the UK’s decision to leave the European Union.

Exhibit 5: ALTU NAV volatility and upside/downside participation to 31 August 2016

Exhibit 6: Price, NAV and blended benchmark total return performance (%)

Source: Martin Currie Asia Unconstrained Trust. Note: ALTU strategy inception date is 31 October 2008.

Source: Thomson Datastream, Martin Currie Asia Unconstrained Trust. Note: Three- and five-year and since change of strategy (SC) performance is annualised.

Exhibit 5: ALTU NAV volatility and upside/downside participation to 31 August 2016

Source: Martin Currie Asia Unconstrained Trust. Note: ALTU strategy inception date is 31 October 2008.

Exhibit 6: Price, NAV and blended benchmark total return performance (%)

Source: Thomson Datastream, Martin Currie Asia Unconstrained Trust. Note: Three- and five-year and since change of strategy (SC) performance is annualised.

Looking at relative returns in Exhibit 7, MCP has outperformed its blended benchmark since the change to the ALTU strategy in July 2014 and has also outperformed over shorter time periods. Given the change in strategy, its relative performance over three and five years is of less relevance.

Exhibit 7: Share price and NAV total return performance, relative to index (%)

 

One month

Three months

Six months

One year

SC

Three years

Five years

Price relative to blended benchmark

0.8

13.6

15.3

24.8

7.2

1.0

1.4

NAV relative to blended benchmark

0.9

10.8

16.2

28.3

10.0

2.6

(0.2)

Price relative to MSCI AC Asia ex-Japan

(1.2)

1.5

(3.4)

(3.1)

(4.8)

(12.5)

(9.5)

NAV relative to MSCI AC Asia ex-Japan

(1.1)

(1.0)

(2.6)

(0.4)

(2.2)

(11.2)

(11.0)

Price relative to MSCI World

(0.2)

6.6

0.8

1.3

(9.5)

(18.9)

(28.2)

NAV relative to MSCI World

(0.0)

4.0

1.6

4.2

(7.1)

(17.7)

(29.4)

Source: Thomson Datastream, Edison Investment Research. Note: Data to end-August 2016. Geometric calculation. SC = since change of investment objective on 11 July 2014.

Discount: Back in range since post-Brexit dip

As shown in Exhibit 8, MCP’s share price discount to cum-income NAV widened following the result of the UK’s EU referendum, reaching a trough at 20.9% on 7 July 2016. The discount has narrowed to 17.0%, which is modestly wider than the 15.1% average of the last 12 months. It is also wider than the averages of the last three, five and 10 years of 13.5%, 14.5% and 15.1%, respectively. There is scope for the discount to narrow if MCP maintains its positive performance track record since adopting the ALTU strategy, or if there is higher investor demand for Asia ex-Japan equities.

Exhibit 8: Share price discount to NAV (including income) over three years (%)

Source: Thomson Datastream, Edison Investment Research

Capital structure and fees

MCP is a conventional investment trust with one class of share in issue; there are currently 36.1m ordinary shares outstanding, with a further 3.4m held in treasury. It has a £10m loan facility with the Royal Bank of Scotland, which expires on 31 August 2018; at 31 March 2016 (end of FY16), £5.1m was drawn down. The balance can be drawn down and invested at the discretion of the manager; gearing was increased to allow the purchase of the holding in Tencent, but has since been repaid following asset sales. At end-August 2016, gross gearing was 4.1%, or 2.2% net of cash.

A new fee structure was introduced in 2014. Martin Currie is paid a management fee, calculated quarterly at 0.75% pa of net assets up to £150m and 0.60% pa of net assets above £150m; there is no performance fee. For FY16, ongoing charges were 1.2%, which was in line with the prior year. Following the change to the ALTU strategy, the continuation vote is now every three rather than every five years; the next vote is due in 2018.

Dividend policy and record

Following the change to the ALTU strategy in July 2014, focusing on growth rather than income, shareholders were advised not to expect the level of dividend growth generated in prior years. The annual dividend was held steady in FY15 at 7.50p but increased by 3.3% to 7.75p in FY16 (since 2010 the compound annual growth in dividends is 13.1%). Based on the current share price the dividend yield is 2.4%; while not high in absolute terms, MCP’s yield compares favourably with both the low level of interest rates available and peer group yields.

Peer group comparison

Exhibit 9 shows trusts in the AIC Asia Pacific ex-Japan sector with track records longer than 10 years; MCP has a far more concentrated portfolio than all of the peers. Its NAV total returns have lagged the peer-group average over the periods shown, albeit only modestly over one year. In terms of risk-adjusted returns as measured by the Sharpe ratio, MCP’s are below average over one and three years. Most trusts in the sector are trading at a discount to NAV; MCP’s is currently the widest. This may be because it is the smallest trust in the group, or that investors are waiting until MCP has a longer performance track record following the July 2014 change to the ALTU strategy. Its gearing and ongoing charges are broadly in line with the peer-group average; no performance fee is payable. When the three trusts with an income mandate are excluded, MCP’s dividend yield of 2.4% is higher than the remainder of the peers; it is double the level of the remaining peer-group average.

Exhibit 9: Asia Pacific ex-Japan peer group (as at 4 October 2016)

% unless stated

Market cap £m

NAV TR 1 Year

NAV TR 3 Year

NAV TR 5 Year

NAV TR 10 Year

Sharpe 1y (NAV)

Sharpe 3y (NAV)

Discount (ex-par)

Ongoing charge

Perf. fee

Net gearing

Dividend yield (%)

Martin Currie Asia Unconstrained

118.6

39.2

26.5

63.3

99.2

1.1

0.0

(17.0)

1.2

No

102

2.4

Aberdeen Asian Income

378.5

39.0

19.4

76.9

230.8

1.2

(0.2)

(5.1)

1.3

No

109

4.2

Aberdeen Asian Smaller

341.4

42.2

25.5

105.1

345.1

2.1

(0.1)

(13.5)

1.5

No

107

1.1

Aberdeen New Dawn

224.7

36.7

22.8

62.0

172.1

0.9

(0.1)

(14.4)

1.1

No

110

2.1

Edinburgh Dragon

583.0

39.7

27.5

69.4

190.4

1.2

0.1

(13.6)

1.2

No

107

1.0

Fidelity Asian Values

226.9

53.7

61.8

120.4

254.5

2.4

0.8

(9.9)

1.4

No

101

0.6

Henderson Far East Income

399.8

39.0

30.5

90.2

175.0

1.2

0.1

1.3

1.1

No

104

5.7

Invesco Asia

197.4

46.1

57.0

105.1

248.0

1.4

0.6

(11.5)

1.0

No

100

1.6

JPMorgan Asian

267.1

43.9

46.4

90.2

144.6

1.3

0.4

(14.4)

0.8

No

105

0.9

Pacific Assets

282.2

35.1

58.3

126.2

210.8

1.2

0.9

(3.7)

1.3

No

100

0.9

Pacific Horizon

123.7

38.2

41.7

81.5

144.7

1.1

0.4

(13.9)

1.0

No

103

0.2

Schroder Asia Pacific

587.3

44.1

52.8

113.8

230.3

1.4

0.6

(12.6)

1.1

No

100

1.2

Schroder Asian TR Inv. Co.

186.0

41.0

52.9

98.8

174.9

1.7

0.7

(6.8)

1.0

Yes

108

1.5

Schroder Oriental Income

563.5

42.1

45.1

118.1

262.8

1.4

0.5

1.8

0.9

Yes

101

3.4

Scottish Oriental Smaller Cos

284.1

37.1

41.1

118.1

386.6

1.3

0.4

(15.8)

1.0

Yes

92

1.3

Average

317.6

41.1

40.6

95.9

218.0

1.4

0.3

(9.9)

1.1

103

1.9

Trust rank in sector

15

9

12

14

15

13

12

15

5

9

4

Source: Morningstar, Edison Investment Research. Note: TR=total return. Sharpe ratio is a measure of risk-adjusted return. The ratios shown are calculated by Morningstar for the past 12- and 36-month periods by dividing a fund’s annualised excess returns over the risk-free rate by its annualised standard deviation. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

There are five members on the board of MCP; all are non-executive and independent of the manager. Chairman Harry Wells was appointed in 2003 and took on his current role in July 2014. Gregory Shenkman is the senior independent director; he was appointed in 2007. The other three board members and their years of appointment are Peter Edwards (2007), Anja Balfour (2012) and Martin Shenfield (2015). The board members have backgrounds in investment, finance and law.

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DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Martin Currie Asia Unconstrained Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Martin Currie Asia Unconstrained Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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