Listed Investment Companies

Transcription

1 Listed Investment Companies April 2016 ASX LICs Monthly Update Page 2 Net Tangible Asset (NTA) comparison Page 3 Annualised LIC share price performance Page 4 Dividend focus Page 5 Recent and upcoming distributions Page 6 Opportunity to invest in a diversified equity exposure Page 7 What are Listed Investment Companies (LICs)? Page 7 Choosing a Listed Investment Company Page 8 Advantages of investing in LICs Page 9 Risks and Considerations of investing in LICs Page 9 Premium/Discount to NTA (%) history Page 10 Glossary Page 13 Appendix Page 15 returns Page 15 Snapshots Page 16 Disclaimer Page 45

2 ASX LICs Monthly Update The majority of LIC net tangible assets (NTAs) increased with Australian equity LICs delivering the best returns as the S&P/ASX 200 added 3.4%. International LICs also performed well although performance was more mixed as global equities and the Australian dollar traded sideways during the month. The chart below shows the movements in pre-tax NTA during April. Monthly growth rate of Pre-tax NTA, May % 4% 2% -2% -4% Australian Equities International Equities Alternative / Specialist -6% CDM* WAM* ALF WAX* AEG FGX* PAF AGF GVF* URF BTI EAI EGI PAI PMC CIN PGF AUF BAF PIC FGG WHF QVE ALI MLT BKI WIC AMH MIR EMF ARG HHV* TGG MFF* CTN DJW AFI AUI DUI, May * indicates the LIC went ex-dividend during the month. Djerriwarrh Investments Limited (DJW) retraced 2.7% during the month, despite recording NTA growth of +3.7%, due to a large drop in its share price premium to its NTA backing. While DJW s premium to its pre-tax NTA remains the largest of Australian equity LICs at +29% (as at 30 April), its share price has lost ground in recent months as its premium to NTA has collapsed after peaking at +45% as at 31 January Premiums for Australian equity LICs saw weakness through the month while a range of international and alternative LICs saw significant increases in their premiums. See overleaf and page 10 for more detail on premiums and discounts. Templeton Global Growth Fund (TGG) completed a performance review of its external manager, Franklin Templeton Investments Australia, resulting in a new investment management agreement. The new agreement will be for a period of three years, beginning 1 July 2016, with the terms broadly unchanged including a 1. management fee of net tangible assets with no performance fee. Arrangements have also been made with Franklin Templeton to increase marketing support for TGG. Management also disclosed the US-listed Franklin Resources (BEN.NYS), which has a market capitalisation over US$20 billion, intends to become a substantial shareholder in TGG as a sign of its significant commitment. TGG rallied 3.5% following the announcement on 10th May. The PM Capital Asian Opportunities Fund (PAF) announced its intention to begin paying fully franked dividends, to be declared at the company s full-year result in August. PAF is yet to pay a dividend with the recent payment of $2.3 million in tax creating sufficient franking credits to begin paying franked dividends. This month we have added seven new snapshots including: Absolute Equity Performance Fund (AEG), Australian Leaders Fund (ALF), Argo Global Listed Infrastructure (ALI), AMCIL (AMH), Asian Masters Fund (AUF), Blue Sky Alternatives Access Fund (BAF) and Future Generation Investment Company (FGX). Page 2 of 45

3 Net Tangible Asset (NTA) Comparison The chart below shows the monthly movement in premiums and discounts. Monthly percentage movements in premium / discounts 8% 6% 4% 2% -2% -4% -6% -8% -1 DJW CDM MFF AFI CTN BKI ARG AUI AGF EMF URF FGG DUI HHV WHF CIN ALI AUF MIR WAM GVF PIC MLT WIC AMH TGG FGX EGI PMC BAF PAI ALF QVE PGF WAX EAI BTI AEG PAF, May 2016 Australian Equities International Equities Alternative / Specialist The two charts below rank the LICs by premium/discount to pre-tax NTA as at month-end. Premium / discount to pre-tax NTA Australian Equities 45% 3 15% -15% % -11.9% -10.8% -8.8% -8.2% -7.3% -7.2% -7.1% -6.9% -4.1% -2.1% -1.1% -0.6% -0.2% -18.9% % 3.9% 29.4% 16.8% 17.2% 12.2% 13.5% CTN CIN ALR CAM PIC AUI DUI CYA WDE WHF QVE CIE AMH FGX AFI MLT ARG BKI MIR WAX CDM WAM DJW, May 2016 Premium / discount to pre-tax NTA International Equities % 1 0.8% 1.7% 4.2% 8.1% % -11.7% -10.6% -10.3% -4.7% -8.1% -7.2% -17.2% -15.5% AGF HHV EGI TGG PAF PGF EAI ALI MFF AUF EMF PAI FGG PMC, May 2016 Page 3 of 45

4 Annualised LIC Share Price Performance The tables below illustrate the share price performance of LICs which have been listed for at least 5 years. As can be seen, international equity strategies have delivered the best total returns in recent years, primarily from an uplift in capital values. Australian equity total returns have been less compelling but a better source of dividend payments, particularly when accounting for franking credits. Further information on returns and standard deviations is included in the appendix. A summary snapshot page is also provided for the largest, most liquid LICs, including the manager s investment thesis and a brief history of the fund. 1-Year return classified by Investment style (%) Capital Dividend 40 Australian Equities International Equities 20 Absolute / Specialist AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX CTN WIC MFF AGF PMC TGG HHV AUF ALF IPE WAA 3-Year annualised return classified by Investment style (%) Capital Dividend Australian Equities International Equities Absolute / Specialist AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX CTN WIC MFF AGF PMC TGG HHV AUF ALF IPE WAA 5-Year annualised return classified by Investment style (%) Capital Dividend 30 Australian Equities International Equities 20 Absolute / Specialist AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX CTN WIC MFF AGF PMC TGG HHV AUF ALF IPE WAA Source: IRESS, May 2016 Page 4 of 45

5 Dividend focus Managers of LICs place a great emphasis on dividend payments given the primarily retail investor base. The majority of Australian equity LICs listed below have a long track record of paying fully franked dividends with the largest LICs (AFI, ARG, MLT) having paid 10 franked dividends for over 20 years. 12 Months Net dividend yield and Gross dividend Yield (%) % Dividend 12m Yld- Net Dividend 12m Yld -Gross 15 Australian Equities International Equities Absolute / Specialist AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX QVE FGX CTN WIC MFF AGF PMC TGG HHV AUF IPE ALF WAA Source: IRESS, Bloomberg, May 2016 Franking accounts The chart below illustrates the Australian equity LICs with the largest franking credit balances, normalised by the LIC s asset base. A larger franking credit balance provides a degree of certainty future dividends will be fully franked with the potential for franking credits to be returned via capital management strategies. Australian LICs - Franking credit balances ($m) Franking Credits (LHS) Franking credits as % of assets (RHS) MIR DJW CIN MLT AUI CDM FGX AFI BKI WAX, May 2016 (%) Page 5 of 45

6 Recent and upcoming distributions Code Name Ex-Date Pay Date Dividends ( ) Franking (%) Type MIR Mirrabooka Investments 1-Apr Apr I $ 0.77 ARG Argo Investments 6-Apr Apr I $ 1.00 USH Us Masters Holdings 7-Apr Apr I $ 1.16 AGF Amp Capital China Growth Fund 7-Apr Apr I $ 0.77 CAM Clime Capital 7-Apr-16 6-May I $ 1.01 OZG Ozgrowth 8-Apr-16 5-May I $ 1.02 IPE IPE 13-Apr Apr I $ 1.26 WHF Whitefield 13-Apr Apr I $ 1.08 ABW Aurora Absolute Fund 13-Apr Apr S na AYF Australian Enhanced Income Fund 13-Apr Apr I na DUI Diversified United Investment 13-Apr Apr I $ 1.03 CYA Century Australia Investments 18-Apr Apr I na AQF Australian Governance Masters Index Fund 19-Apr May I $ 1.00 IBC Ironbark Capital 27-Apr May I $ 2.11 AUP Aurora Property Buy-Write Income Trust 27-Apr May I na ALR Aberdeen Leaders 27-Apr May I $ 1.23 AYD Australian Masters Yield Fund No 1 29-Apr May I $ 1.90 HHV Hunter Hall Global Value 4-May May I na GVF Global Value Fund 18-May May I na FGX Future Generation Investment 18-May May-16 $ I na WAA WAM Active 18-May May-16 $ I na CDM Cadence Capital 18-May May-16 $ I na CBC CBG Capital 18-May May-16 $ I na AYZ Australian Masters Yield Fund No 5 18-May May-16 $ I na Source: IRESS, May 2016 Page 6 of 45

7 Opportunity to invest in a diversified equity exposure What are Listed Investment Companies (LICs)? LICs are companies, listed on the ASX, which manage a portfolio of assets on behalf of their investors. By owning shares in LICs, investors are able to gain exposure to diversified portfolios that are managed by investment professionals. LICs are closed-end funds where shareholders join or leave the investment by buying or selling the LIC shares on the ASX. The resulting stable funds under management (FUM) allow the manager to make decisions on a long term basis. A number of LICs strive to pay stable fully franked dividends (although dividends are set at the discretion of the manager with respect to profitability and solvency of the company) which may satisfy investors desire for tax effective income. The investment manager may be internal or external to the LIC. The investment styles of LICs can be classified into three broad categories: Australian shares invest principally in ASX-listed shares International shares invest principally in shares listed on international stock exchanges Absolute / specialist LICs include long/short equities, absolute return strategies, fund of fund vehicles, private equity, unlisted assets and multi-asset strategies. Investment approaches vary and can range from conservative to aggressive. When deciding whether or not to invest in a LIC, investors should consider whether the structure, investment style and underlying portfolio suit their personal investment objectives. The ASX-listed LICs sector has expanded from A$ 24.1 billion in January 2014 to A$28.8 billion in April The second chart below shows the monthly proportionate value traded for LICs with a trend towards international equities. Listed Investment Companies market capitalisation Trends A$ billion 30 Market cap for LICs Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16, Morningstar, May 2016 Monthly value traded % 1% Alternatives / Specialist International Equities 9% 21% % 7 3 Australian Equities 2 1 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 Source: IRESS, May 2016 Page 7 of 45

8 Choosing a Listed Investment Company (LIC) Net Tangible Asset Backing (NTA) LICs report net tangible asset backing (NTA) for the company on a monthly basis. The NTA is the market valuation of the underlying investments and is reported on a pre-tax basis and post-tax basis (where the capital gains tax obligation of liquidating all holdings is taken into account). As LICs are closed-end funds they may trade at, above or below the most recent NTA valuation due to liquidity risk and investor sentiment. Increasingly, LICs are reporting NTA on a more frequent basis (weekly or even daily) to provide more up to date information to investors. Management and performance fees LICs incur a fee for management of the portfolio, which is paid out of FUM. The management fee is also referred to as the management expense ratio (MER). It normally ranges between 0.1% and 1.5% of FUM, with larger LICs incurring MER at the low end of the range as they are able to spread their fixed costs over a greater FUM. A performance fee may also be incurred, calculated with reference to the performance of the portfolio against a benchmark and paid to the investment manager in accordance with the investment management contract. Larger LICs benefit from scale (lower fees) A$ Mil Market cap (LHS) Management expense ratio (RHS) Australian equities International Equities Absolute / Specialist % AFI ARG MLT WAM BKI DJW AUI CIN DUI MIR CDM WHF FGX AMH PIC QVE WAX CTN WDE WIC MFF URF PMC AGF PGF TGG FGG HHV PAI ALI EMF AUF EAI EGI PAF MA1 ALF BAF GVF BTI TOP USF AYZ AYD GRF 0.0 Source: IRESS, May 2016 Company/management risk The LIC investor takes on the risk and performance of the underlying investments, as well as the risk of the LIC as an operating entity. The NTA only takes into account the value of the investments at a fixed date. Assessments of the competency of management and desirability of the investment strategy of the LIC may lead investors to apply a premium or discount to the existing portfolio. Liquidity risk LICs are not typically highly liquid, though the underlying investments may be. This mismatch in liquidity may lead to investors preferring to purchase a LIC at a discount to NTA. Unlike ETFs, contracted market makers are not appointed to provide minimum spreads. See the appendix for average trading spreads. Dividend timing Dividends may be paid by the underlying investments through the year, while the LIC may pay semi-annual or quarterly dividends. The NTA price may include the value of dividends that have been received by the LIC and not yet paid out. Expected change in value of underlying investments The NTA is a valuation at a fixed point in time. If the market moves subsequent to this date, the LIC share price may pre-empt the change to NTA. At times investment themes may lead to LICs trading at a price that deviates from underlying value. For example when investors are pursuing yield, LICs which pay fully franked dividends may trade at a higher premium to NTA than when negative investment environments prevail. Page 8 of 45

9 Advantages of investing in LICs Low costs The MER for most ASX-listed LICs ranges from 0.1 to 1.5 per annum. The MERs for the three largest Australian equity LICs (AFI, ARG, MLT) are amongst the most competitively priced with all three below 0.2 reflecting their larger scale. Many LICs do not charge performance fees. While LICs do not charge exit fees (like managed funds), bid/offer spreads and brokerage do need to be accounted for. Diversification LICs may hold a large number of companies (50 to 100 stocks) in their portfolio, providing an efficient means of diversification with the purchase of a single security. Differentiation The characteristics and strategies of LICs may suit different investor needs. Transparency LICs release portfolio updates to the ASX in order to meet their continuous disclosure obligations. The majority of LICs publish their top holdings each month while all disclose their full portfolios in their financial statements. The ASX publishes a monthly NTA report accessible via this link. Larger LICs communicate regularly with their investors, holding investor seminars as well as annual general meetings. Investor access LICs can be traded during market trading times and there are no minimum investment amounts or holding periods beyond those applied by the ASX to all listed securities. Income Investors can seek LICs that strive to pay stable, franked dividends. The three largest Australian equity LICs have continually paid 10 franked dividends since Certain Australian resident taxpayers can claim a tax benefit where a component of the dividend is sourced from realised eligible LIC capital gains. Shareholders should consult their tax advisor. Risks and Considerations of investing in LICs Investment style Investors need to review the characteristics of the underlying portfolio prior to investment to verify the philosophy of the LIC. Security may trade at prices higher or lower than NTA LIC share prices may trade higher or lower than NTA. If an LIC is trading at a discount to NTA there is no quick mechanism to close the gap (though sometimes other interested parties will try to have the manager replaced or the venture wound up). No control over the timing of realisation of capital gains Shareholders have no control over the timing of realisation of capital gains, which are at the discretion of the LIC. Also the tax treatment may not be the same across different taxable entities. Shareholders should consult their tax advisor if they are unsure or have any questions. Performance fees Some LICs (notably smaller specialist LICs) charge performance fees in addition to the MER. Derivatives and gearing LICs can leverage the portfolio by using options and/or derivatives. Shareholders should check whether the LIC uses leverage and what limits are in place. Page 9 of 45

10 Premium/Discount to NTA (%) history (as at 30 April 2016) Australian LICs Premium/Discount to NTA (%) 1 Australian Foundation Investment Company (AFI) $7.0 15% Argo Investments (ARG) $9.0 8% 6% 4% 2% -2% $6.0 $5.0 $4.0 $ % $8.0 $7.0 $6.0 $5.0 $4.0-4% -6% -8% -1 $2.0-5% -1-15% $3.0 $2.0 1 Milton Corporation (MLT) $6.0 15% BKI Investment Company (BKI) $2.0 5% $5.0 1 $1.8 $1.6-5% -1 $4.0 $3.0 $2.0 5% -5% -1 $1.4 $1.2 $0.8 $0.6-15% -2-15% -2 $0.4 $0.2 5 Djerriwarrh Investments (DJW) $6.0 2 WAM Capital (WAM) $2.5 45% 4 35% 3 $5.0 $4.0 15% 1 5% $2.0 $1.5 25% $ % 1 5% $2.0-5% -1-15% -2 $0.5 Carlton Investments (CIN) $ Australian United Investment Company (AUI) $10.0-5% -1-15% -2 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 5% -5% -1 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0-25% -3 $10.0 $5.0-15% -2 $2.0 5% Diversified United Investment (DUI) $4.5 3 Cadence Capital (CDM) $1.8-5% $4.0 $3.5 $ $1.6 $1.4 $1.2-1 $2.5-15% $2.0-1 $ % -3 $1.5 $ $0.6 $0.4 $0.2 Page 10 of 45

11 25% Mirrabooka Investments (MIR) $3.0 Whitefield (WHF) $ % 1 5% $2.5 $2.0-2% -4% -6% $5.0 $4.0 $1.5-8% $3.0-5% -1-15% -2-25% $0.5-1 $2.0-12% -14% -16% Perpetual Equity Investment Company (PIC) $1.2 5% AMCIL (AMH) $1.2-1% -2% -3% $1.1-5% $0.8-4% -5% -1 $0.6-6% -7% -8% $0.9-15% -2 $0.4 $0.2-9% -1 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 $0.8-25% 2 WAM Research (WAX) $1.6 4% QV Equities (QVE) $1.2 15% $1.4 2% 1 $1.2 $1.1 5% $0.8-2% -5% -1 $0.6-4% $0.4 $0.9-15% -6% -2 $0.2-25% -8% $0.8 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 1 Future Generation Investment (FGX) $1.5 5% Westoz Investment Company (WIC) $1.8 8% $1.3 $1.6 6% -5% $1.4 $1.1 4% -1 $1.2 2% $0.9-15% $0.7-2 $0.8-2% -25% $0.5 $0.6-4% -3 $0.3-6% -35% $0.4-8% $0.1-4 $ $0.1-45% Sep-14 Mar-15 Sep-15 Mar-16 6% Wealth Defender Equities (WDE) $1.2 1 Watermark Market Neutral Fund (WMK) $1.2 4% 2% 5% -2% $0.8 $0.8-4% $0.6-5% $0.6-6% -8% $0.4-1 $ % -14% Jul-15 Oct-15 Jan-16 Apr-16 $0.2-15% -2 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 $0.2 Page 11 of 45

12 International LICs Premium/Discount to NTA (%) 1 Magellan Flagship Fund (MFF) $2.5 AMP Capital China Growth Fund (AGF) $2.5 5% $2.0-5% -1 $2.0-5% $1.5-15% $ % -15% -2 $ % $0.5-25% -4 25% Platinum Capital (PMC) $2.5 1 PM Capital Global Opportunities Fund (PGF) $ % 1 5% -5% -1-15% $2.0 $1.5 $0.5 5% -5% -1-15% $1.2 $0.8 $0.6 $0.4 $ Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 5% Templeton Global Growth Fund (TGG) $1.8 Hunter Hall Global Value (HHV) $1.6 $1.6 $1.4-5% $1.4 $1.2-5% $ % $0.8 $0.8 $0.6-15% $0.6-2 $0.4 $ % $0.2 $ % Alternative and Specialist LICs Premium/Discount to NTA (%) 4 IPE (IPE) $0.6 25% Australian Leaders Fund (ALF) $2.0 2 $ % $1.8 $1.6 $ % $1.4 $1.2-2 $0.3-4 $0.2-5% -1 $0.8 $ $0.1-15% -2-25% $0.4 $0.2 35% WAM Active (WAA) 3 25% 2 15% 1 5% -5% -1-15% -2 $1.6 $1.4 $1.2 $0.8 $0.6 $0.4 $0.2 2 Thorney Opportunities Ltd (TOP) $0.7 15% $0.6 1 $0.5 5% $0.4 $0.3-5% $ % $0.1-2 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Page 12 of 45

13 Glossary Benchmark LICs often provide an indicator or benchmark against which their portfolio performance can be compared. Capital management LICs may increase or decrease the amount of capital held by offering share buybacks, dividend reinvestment plans and/or share purchase plans. These mechanisms allow shareholders to increase or decrease their holdings without brokerage fees being charged. Dividend/distribution reinvestment plan () A company may offer shareholders the opportunity to reinvest their dividend in the LIC s shares. This allows the LIC to retain cash which may be consumed by participating in the s of their investee companies or other purchases of securities. A allows shareholders to increase their shareholding without brokerage fees. A discount may be offered on the price of the new shares. Dividend Type Dividends are denoted interim (I), final (F) or special (S). Dividend yield Dividend yield is defined as dividend over the last 12 months divided by current share price. Payment of a dividend is determined at the discretion of the manager. Not all LICs pay or intend to pay a dividend. Funds under management (FUM) FUM is the quantum of funds available to the LIC for investment. Liquidity risk Whereas many of the underlying investments of LICs may be highly liquid (able to be traded in sizeable volumes without moving the share price significantly), LICs do not trade as robustly. It is wise to check the liquidity of the LIC when deciding how much to invest. LICs may hold investments that are illiquid, facing liquidity risks in their operations. Listed investment company (LIC) LICs are closed-end vehicles, allowing the company to concentrate on investment selection rather than potential redemptions. Liquidity is provided to shareholders via trading on the ASX. The manager may issue new shares where investment opportunities arise or buy-back and cancel shares in order to reduce the size of the funds under management. Some LICs manage the investment portfolio to minimise tax and produce regular income through fully franked dividends. Listed investment company capital gains A LIC capital gain is a capital gain made directly by a listed investment company. If the dividend paid by a LIC includes the capital gain, shareholders who are Australian residents can claim an income tax deduction. The LIC advises its shareholders how much of the dividend is attributable to a LIC capital gain. Refer: Listed investment trusts (LITs) LITs have an open-ended structure meaning that investors can buy or sell their units on the ASX or directly buy from or sell to the Trust. LITs must pay all surplus income in the form of distributions, which carry the franking levels of the underlying investments distributions. Management expense ratio (MER) The MER is the cost to manage the investments of the LIC (and therefore the cost to the shareholder). The LIC may use internal or external management. Page 13 of 45

14 Net tangible assets (NTA) Pre-tax NTA is calculated by valuing the aggregate portfolio at market prices and dividing by the number of shares on issue. The NTA figure is also quoted on a post-tax basis, where any tax that would be payable on the realisation of the portfolio is taken into account. Performance fee Some LICs receive a performance fee, where the investment management stipulates and the performance exceeds the benchmark. The performance fee may be structured so that after a period of poor performance the LIC s performance has to exceed prior highs before being payable. Share purchase plan (SPP) ASIC has granted relief to allow companies to offer a share purchase plan where investors may apply for new shares at a predetermined price without being charged brokerage. The amount is restricted to $15,000 per investor per annum. A discount may be offered on the price of the new shares. Share buyback Companies may offer a share buyback program, purchasing shares on market (or potentially off-market) to reduce the FUM. Page 14 of 45

15 Appendix returns at 30 April 2016 LICs Name Share price total return (%) standard deviation (%) 1M 3M 1 Yr 3 Yr 5 Yr 1 Yr 3 Yr 5 Yr Australia Equities AFI Australian Foundation Investment ARG Argo Investments MLT Milton Corporation BKI BKI Investment DJW Djerriwarrh Investments WAM WAM Capital CIN Carlton Investments AUI Australian United Investment DUI Diversified United Investment CDM Cadence Capital MIR Mirrabooka Investments WHF Whitefield Limited PIC Perpetual Equity Investment AMH AMCIL Limited WAX WAM Research QVE QV Equities FGX Future Generation Invt Company International MFF Magellan Flagship Fund AGF AMP Capital China Growth Fund PMC Platinum Capital PGF PM Capital Glb Opport. Fund TGG Templeton Global Growth Fund FGG Future Generation Global Invest PAI Platinum Asia Investments HHV Hunter Hall Global Value ALI Argo Global Listed Infrastructure Alternative/Specialist URF US Masters Residential Property ALF Australian Leaders Fund Source: IRESS, Bloomberg, May 2016 Page 15 of 45

16 Absolute Equity Performance Fund Limited Absolute Equity Performance Fund (AEG) is a listed investment company (LIC) that aims to generate positive investment returns, irrespective of the direction of equity markets. The company will primarily hold a portfolio of pair trades in large capitalisation Australian equities in a market neutral style that seeks to minimise market risk. AEG targets annualised volatility of 12% to 15%. A management fee of 1.5 (plus GST), payable monthly in arrears, is charged by the investment manager. A performance fee may also be charged, equivalent to 2 of the increase in AEG's net asset value, before taxes, above a high watermark. AEG is externally managed by Bennelong Long Short Equity Management (BLSEM), a boutique hedge fund manager founded by Richard Fish in 2002 as a joint venture with Bennelong Funds Management. The investment manager will predominately deploy a pair trading strategy, which involves short selling a security and using the proceeds to purchase a security in a similar industry with an equal dollar value. Fundamental research is used to select securities and generate returns. The market neutral process can potentially reduce market and sector risk leaving the portfolio more purely exposed to company specific risk. The portfolio composition will be approximately i) immature pairs (3) which are early stage opportunities with a large potential return ii) maturing pairs (4) which will have a catalyst driving an ongoing price adjustment and iii) mature pairs (3) which will have largely been rerated by the market and will look to be exited by the investment manager. Approximately 50 to 80 securities will be held at any one time via 25 to 40 pairs with each pair representing 2% to 4% of the fund's gross value. The portfolio can be leveraged up to 5 times NAV. Dividend (cps) 5.41% % Benchmark = Performance fee = 2 of performance above the high watermark Franking (%) AEG Last Price - 30 Apr 16 $1.17 Pre-Tax NTA - 30 Apr 16 0 Premium/discount to NTA 16.88% Premium/discount avg (5yr) 17.87% Securities on issue 90,909,091 Market cap (m) $107 AEGO Listed options on issue 0 Management expense ratio 1.5 Internal / external management External Dividends (past 12mth) Dividend Yield (past 12mth) Franking level (past 12mth) Gross dividend yield (past 12mth) discount Value traded 1 mth ($m) 2.6 Value traded 12 mth ($m) 26.1 Average spread (%) 0.88 (17/05/16) AEG price history $1.40 $1.32 $1.24 $ Page 16 of 45

17 Australian Foundation Investment Company Limited Australian Foundation Investment Company Limited (AFI) invests in ASXlisted companies with high quality assets, brands and/or business footprints. AFI is the largest listed investment company (LIC) on the ASX and has been listed since The company is internally managed with no performance fee and one of the lowest management expense ratios available. AFI has 1.9 million 6.25% $100 convertible notes on issue (ASX code AFIG) which convert to ordinary shares at $ at the holders' request. AFI has offered a share purchase plan (SPP) to investors in recent years with a 5% discount in 2015, while the dividend reinvestment plan () is also active with a 2.5% discount in place. The investment team, led by Mark Freeman as Chief Investment Officer, seeks well-managed companies with strong fundamentals which are able to pay steady dividends. The investment horizon is the medium to long term, with the aim of providing attractive total returns and fully franked dividends which grow at a faster rate than inflation. AFI typically holds 70 to 100 stocks with an expected annual portfolio turnover of 5%. AFI also operates a trading portfolio, limited to 1 of the total portfolio, in order to take advantage of shorter-term opportunities in the market. AFI operates a 'buy and write' option strategy to generate extra income, particularly during periods of heightened volatility, with the monthly report disclosing which portfolio holdings have active option positions. AFI Last Price - 30 Apr 16 $5.54 Pre-Tax NTA - 30 Apr 16 $5.55 Premium/discount to NTA -0.18% Premium/discount avg (5yr) 0.94% Securities on issue 1,130,305,250 Market cap (m) $6,330 Listed options on issue Management expense ratio 0.16% No Internal / external management Internal Dividends (past 12mth) $0.24 Dividend Yield (past 12mth) 4.3% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 6.2% discount 2.5% Semi-annual Value traded 1 mth ($m) 38.3 Value traded 12 mth ($m) Average spread (%) 0.22 Benchmark = S&P/ASX 200 Accumulation Index Performance fee = None 3/02/ /02/2016 I /08/ /08/2015 F /02/ /02/2015 I /08/ /08/2014 F % -2.42% -7.07% 3.74% 7.01% % 12.69% 14.16% (17/05/16) AFI price history $6.80 $6.46 $6.12 $5.78 $5.44 $5.10 Page 17 of 45

18 AMP Capital China Growth Fund The AMP Capital China Growth Fund (AGF) seeks to achieve long-term capital growth for investors by investing in China. The benchmark is the S&P/CITIC 300 Index. AGF provides access to China A shares as a holder of a qualified foreign institutional investor licence. China A shares are Renminbi denominated shares issued by companies registered in mainland China and listed on the Shanghai and Shenzhen exchanges. The AGF portfolio holds its largest weights to the financial services and industrials sectors, in line with the benchmark, while being underweight energy. The largest overweight position relative to the benchmark is health care. AGF s management fee is 1.65% pa of the value of the fund s assets, plus a performance fee of 2 of outperformance above the benchmark. The fund is unhedged and is subject to movements in the foreign exchange markets. The fund has historically traded at a 2 discount to its NTA and has moved to more frequent reporting of its NTA to help address this. AGF Last Price - 30 Apr 16 $0.82 Pre-Tax NTA - 30 Apr 16 $0.99 Premium/discount to NTA % Premium/discount avg (5yr) % Securities on issue 471,789,252 Market cap (m) $380 Listed options on issue Management expense ratio 1.65% Internal / external management External Dividends (past 12mth) $0.34 Dividend Yield (past 12mth) 40.9% Franking level (past 12mth) 0. Gross dividend yield (past 12mth) 40.9% discount 0. Annual Value traded 1 mth ($m) 9.5 Value traded 12 mth ($m) Average spread (%) 0.74 Benchmark = S&P/CITIC 300 return index (Converted into A$) Performance fee = 2 of outperformance above the benchmark 29/12/ /03/2016 F /12/ /03/2015 F /12/ /03/2014 F /12/ /03/2013 I % 4.46% % % % 33.88% 30.09% (17/05/16) AGF price history $2.00 $1.74 $1.48 $1.22 $0.96 $0.70 Page 18 of 45

19 Australian Leaders Fund Ltd The Australian Leaders Fund (ALF) is a long/short Australian equities LIC which first listed in ALF is externally managed by Watermark Funds Management, headed by portfolio manager Justin Braitling. A management fee of 1% (plus GST) is applied, as a percentage of net assets, for investment services provided. An annual performance fee of 2 may be charged i) when the S&P/All Ordinaries Accumulation Index has increased, 2 of excess returns will be charged and ii) when the S&P/All Ordinaries Accumulation Index has declined, 2 of the amount of the increase in the portfolio will be charged. The performance fee is calculated for the year to 30 June, no performance fee will be charged when the portfolio value has declined. ALF seeks to deliver above market returns with lower risk while delivering fully franked dividends to investors. The primary focus is a long / short strategy via Australian equities, although up to 5 of the portfolio can be held in international equities as of February A directional long/short investment strategy is employed with the goal of delivering returns in excess of the All Ordinaries Accumulation Index and managing exposure to equity market risk. A 'long' portfolio is constructed with a focus on high quality companies well placed to benefit from economic and industry trends. The 'short' portfolio bets against companies with poor management and weak fundamentals. This is not necessarily a market neutral strategy - the portfolio may be either fully invested, market neutral or net short at any time. The relative size of the long and short portfolios will be determined by the opportunity set available. Leverage may be used to amplify returns. ALF Last Price - 30 Apr 16 $1.42 Pre-Tax NTA - 30 Apr 16 $1.30 Premium/discount to NTA 9.23% Premium/discount avg (5yr) -1.99% Securities on issue 269,869,781 Market cap (m) $367 Listed options on issue Management expense ratio 1.0 Internal / external management External Dividends (past 12mth) $0.10 Dividend Yield (past 12mth) 7. Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 10.1% discount 3. Semi-annual Value traded 1 mth ($m) 6.0 Value traded 12 mth ($m) Average spread (%) 0.63 Benchmark = S&P/ASX All Ordinaries Accumulation Index Performance fee = 2 of outperformance above the benchmark 29/03/ /04/2016 I /10/ /10/2015 F /03/ /04/2015 I /10/ /10/2014 F % 0.68% 19.69% 5.76% 10.73% % 18.34% 18.2 (17/05/16) ALF price history $1.60 $1.48 $1.36 $1.24 $ Page 19 of 45

20 Argo Global Listed Infrastructure Argo Global Listed Infrastructure (ALI) primarily invests in a portfolio of global listed infrastructure securities. The company is externally managed by Argo Service Company (ASCO), a subsidiary of Argo Investments. ASCO appointed Cohen & Steers Capital Management, a global investment manager specialising in real assets, as portfolio manager of ALI. A management fee of 1.2% per annum is charged by ASCO with Cohen & Steers entitled to 5 of this fee. There is no performance fee in place. ALI intends to pay a semi-annual dividend and currently has a discount of 5% in place. ALI was first listed on the ASX during July The investment objective is to deliver total returns from a combination of income and capital appreciation via prudent investment management. Cohen & Steers, as portfolio manager, will aim to deliver above benchmark returns. The company has selected a blended benchmark of 9 of FTSE Global Core Infrastructure 50/50 Index (A$) and 1 of the BofA Merrill Lynch Fixed Rate Preferred Securities Index (A$). Hence, the portfolio will consist of an actively managed, diversified set of global listed infrastructure securities (8-10 of portfolio) and fixed-income securities (-2 of portfolio), diversified by country and sub-sector. While the portfolio will be unhedged, the manager does have flexibility to defensively hedge against currencies where the outlook is weak, but does not attempt to generate alpha from currency management. Approximately 50 to 100 securities will be held by the portfolio with a 5% maximum allocation to cash. Permitted derivative instruments such as options and futures contracts may be used by the portfolio manager, including opportunistic sale of call options on up to 2 of the portfolio and put options on up to 1 of the portfolio % 5.83% Benchmark = 9 FTSE Global Infra, 1 BofA Fixed Rate Pref Securities Performance fee = None 25/02/ /03/2016 I 1.68 ALI Last Price - 30 Apr 16 $1.81 Pre-Tax NTA - 30 Apr 16 $1.95 Premium/discount to NTA -7.18% Premium/discount avg (5yr) -7.12% Securities on issue 143,090,638 Market cap (m) $265 ALIO Listed options on issue 143,044,214 Management expense ratio 1.2 No Internal / external management External Dividends (past 12mth) 1 Dividend Yield (past 12mth) 0.3% Franking level (past 12mth) 0. Gross dividend yield (past 12mth) 0.3% discount 5. Semi-annual Value traded 1 mth ($m) 2.7 Value traded 12 mth ($m) 43.5 Average spread (%) 1.15 (17/05/16) ALI price history $2.10 $1.98 $1.86 $1.74 $1.62 $1.50 Page 20 of 45

21 AMCIL Limited AMCIL (AMH) invests in a concentrated portfolio of both large and small capitalisation Australian equities. AMH has an agreement in place with Australian Investment Company Services Limited (AICS) for the provision of portfolio management and research duties. The fee paid to AICS reflects the costs of providing these services. Ross Barker, the Managing Director of AICS and AMH, is also Managing Director of AFIC, Djerriwarrh Investments and Mirrabooka Investments. AMH was first listed in February 2000 and has paid a fully franked annual dividend every year since listing. There is currently a discount of 2.5% in place. The objective is to provide shareholders with attractive total returns including capital growth over the medium to long term and to pay an enhanced level of dividends. AMCIL maintains three portfolios: the investment portfolio, the trading portfolio and the options written portfolio. The investment portfolio will typically contain 30 to 40 stocks covering large and small companies in the Australian equity market. The number of holdings in the portfolio will depend on market conditions and investment opportunities. The selection of stocks in the portfolio is based on attractive valuations as well as the outlook for growth and the competitive structure of the industry. A medium to long term view of value is taken. The options written and trading portfolio are held for short term trading opportunities only. AMH Last Price - 30 Apr 16 $0.91 Pre-Tax NTA - 30 Apr 16 $0.92 Premium/discount to NTA -1.09% Premium/discount avg (5yr) -9.31% Securities on issue 254,699,886 Market cap (m) $236 Listed options on issue Management expense ratio 0.65% No Internal / external management Internal Dividends (past 12mth) 4 Dividend Yield (past 12mth) 4.4% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 6.3% discount 2.5% Annual Value traded 1 mth ($m) 0.9 Value traded 12 mth ($m) 10.9 Average spread (%) 0.74 Benchmark = S&P/ASX 200 Accumulation Index Performance fee = None 11/08/ /08/2015 F /08/ /08/2014 S /08/ /08/2014 F /08/ /08/2013 S % 6.43% % 11.18% % 21.35% 22.15% (17/05/16) AMH price history 0 $0.96 $0.92 $0.88 $0.84 $0.80 Page 21 of 45

22 Argo Investments Limited Argo Investments Limited (ARG) invests in Australian listed securities and short-term interest bearing securities. The company was established in 1946 and is one of the largest listed investment companies (LICs) on the ASX. Argo is internally managed, does not charge a performance fee, and had a low management expense ratio of 0.15% in the year to June Argo has paid a semi-annual fully franked dividend since 1995 with a dividend reinvestment plan () currently available at a 2% discount. Argo has operated an annual share purchase plan (SPP) in recent years at a 2% discount. Argo reports its net tangible assets on a monthly basis including its top 20 holdings. Argo's investment function is led by Jason Beddow, Managing Director, having joined the firm in 2001 as an analyst. The investment team seeks to identify well-managed businesses with the potential to generate growing and sustainable profits to fund increasing dividend payments. A majority of revenue is generated by the dividends and distributions received from the companies in the portfolio. The underlying portfolio is constructed to provide steady returns over the long run, by diversifying over a wide range of securities in the Australian market, typically approximately 100 companies. The investment team seeks to purchase companies, or add to existing holdings, below their calculated long-term value. The long history of Argo and its buy and hold approach has resulted in significant tax liabilities, although portfolio holdings are generally only sold due to takeovers or when the outlook for the industry or company has deteriorated significantly. ARG Last Price - 30 Apr 16 $7.26 Pre-Tax NTA - 30 Apr 16 $7.08 Premium/discount to NTA 2.54% Premium/discount avg (5yr) -0.47% Securities on issue 679,654,373 Market cap (m) $4,887 Listed options on issue Management expense ratio 0.15% No Internal / external management Internal Dividends (past 12mth) $0.31 Dividend Yield (past 12mth) 4.2% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 6. discount 2. Semi-annual Value traded 1 mth ($m) 32.3 Value traded 12 mth ($m) Average spread (%) 0.20 Benchmark = S&P/ASX 200 Accumulation Index Performance fee = None 11/02/ /03/2016 I /08/ /09/2015 F /02/ /03/2015 I /08/ /09/2014 F 0.69% -1.98% -3.63% 7.04% 7.64% % 12.94% 14.2 (17/05/16) ARG price history $8.90 $8.48 $8.06 $7.64 $7.22 $6.80 Page 22 of 45

23 Asian Masters Fund The Asian Masters Fund (AUF) was established in November 2007 offering investors a means to invest in Asian equity fund managers via a fund of funds structure. AUF is an externally managed LIC with a management agreement in place with Walsh & Company Asset Management Pty Limited. A 1% annual management fee is charged, payable monthly in arrears. AUF benchmarks its performance to the MSCI Asia ex Japan Index. While AUF does not charge a performance fee, the underlying managers may charge a performance fee. AUF has paid semi-annual dividends since 2010, a is currently available with a discount of 2.5%. The two key investment objectives of the Asian Masters Fund are to achieve a high real rate of return on invested capital and a long-term exposure to Asia while maintaining strong diversification. AUF provides its underlying exposures by region, sector and largest stocks on a look through basis which enhances transparency. Investments in offshore fund managers are not hedged back for currency risk. The portfolio of funds is also diversified by fund manager, which is necessary given redemption risks. That said, the company s investment mandate has become more flexible since listing, allowing for increased investments in a single fund manager, increased regional allocation limit and broadened the ability to invest in long/short and geared funds. AUF Last Price - 30 Apr 16 $1.22 Pre-Tax NTA - 30 Apr 16 $1.21 Premium/discount to NTA 0.83% Premium/discount avg (5yr) 3.25% Securities on issue 122,095,774 Market cap (m) $151 Listed options on issue Management expense ratio 1.0 No Internal / external management External Dividends (past 12mth) 2 Dividend Yield (past 12mth) 1.8% Franking level (past 12mth) 50. Gross dividend yield (past 12mth) 2.2% discount 2.5% Semi-annual Value traded 1 mth ($m) 0.6 Value traded 12 mth ($m) 10.9 Average spread (%) #N/A N/A Benchmark = MSCI Asia ex Japan Index Performance fee = None 25/02/ /03/2016 I /08/ /09/2015 F /02/ /03/2015 F /08/ /10/2014 F % % % 23.54% (17/05/16) AUF price history $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 Page 23 of 45

24 Australian United Investment Company Limited Australian United Investment Company (AUI) is an Australian investment company holding a portfolio of securities predominantly comprising shares of ASX listed companies. AUI s funds are invested in shares of companies listed primarily in the ASX300. AUI is an investment company which seeks, through portfolio management, to reduce risk and improve income from dividends and interest over the longer term. Investments are purchased or subscribed for on the basis of the directors' assessment of their individual prospects for income and growth. AUI mainly invests in ASX listed securities using the S&P/ASX 300 Accumulation Index as its performance benchmark. AUI Last Price - 30 Apr 16 $7.05 Pre-Tax NTA - 30 Apr 16 $7.68 Premium/discount to NTA -8.2 Premium/discount avg (5yr) -6.79% Securities on issue 123,374,507 Market cap (m) $882 Listed options on issue Management expense ratio 0.1 No Internal / external management Internal Dividends (past 12mth) $0.34 Dividend Yield (past 12mth) 4.8% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 6.8% discount 0. Semi-annual Value traded 1 mth ($m) 5.4 Value traded 12 mth ($m) 34.5 Average spread (%) 0.45 Benchmark = S&P/ASX 300 Accumulation Index Performance fee = 2 of outperformance above the benchmark 23/02/ /03/2016 I /09/ /09/2015 F /02/ /03/2015 I /09/ /09/2014 F % -1.03% -9.82% 4.06% 5.13% % 15.29% 17.64% (17/05/16) AUI price history $8.80 $8.30 $7.80 $7.30 $6.80 $6.30 Page 24 of 45

25 Blue Sky Alternatives Access Fund Limited The Blue Sky Alternatives Access Fund (BAF) was listed in June 2014 as a listed vehicle offering investors access to unlisted alternatives. The asset classes include real estate, private equity, real assets and hedge funds. BAF is externally managed with a management agreement in place with Blue Sky Alternative Investments (Blue Sky). An annual management fee of 1.2 (plus GST) is payable monthly while a performance fee is payable annually in arrears. The performance fee is equivalent to 17.5% (plus GST) of the portfolio s outperformance above the company s absolute return hurdle rate of 8.. The company paid its first dividend in October 2015 with no available. The investment objective is to achieve pre-tax returns, net of fees, in the long-term that are above 8. per annum by investing in a portfolio of alternative investments. The investment portfolio consists of a portfolio of funds and investments managed by Blue Sky entities. The manager seeks to achieve a balance in returns between capital growth and income while asset classes able to provide short term liquidity are also allocated to. The company s mandate restricts investments in a single asset class to 4 of the portfolio and investments in a single Blue Sky entity to no more than 5 of the invested equity in a particular fund. The strategy of investing in unlisted funds carries redemption risk which may result in BAF not being able to exit the underlying investments when required. BAF Last Price - 30 Apr 16 4 Pre-Tax NTA - 30 Apr 16 9 Premium/discount to NTA -4.79% Premium/discount avg (5yr) -0.94% Securities on issue 127,924,870 Market cap (m) $136 Listed options on issue Management expense ratio 1.2 Internal / external management Internal Dividends (past 12mth) 3 Dividend Yield (past 12mth) 2.9% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 4.1% discount 0. Annual Value traded 1 mth ($m) 3.4 Value traded 12 mth ($m) 40.9 Average spread (%) % % - - Benchmark = No benchmark Performance fee = 17.5% of excess returns above 8. hurdle return 20/10/ /11/2015 F 1.05 (17/05/16) BAF price history $ $0.98 $0.95 Page 25 of 45

26 BKI Investment Company Limited BKI Investment Company (BKI) is an Australian investment company which invests in a diversified portfolio of Australian shares, trusts and interest bearing securities. The company is a long-term investor in companies, trusts and interest bearing securities with a focus on Australian entities. Some 30 years since the inception of the core portfolio, BKI s investment strategy is focused on research driven, active equities management, investing for the long term, in profitable companies, with a history of paying attractive dividend yields. The stock selection is bottom up and research driven, focusing on the merits of individual companies rather than market and economic trends. BKI targets a 9 to 95% dividend payout ratio of Net Operating Profit. BKI Last Price - 30 Apr 16 $1.60 Pre-Tax NTA - 30 Apr 16 $1.54 Premium/discount to NTA 3.9 Premium/discount avg (5yr) -4.48% Securities on issue 598,420,149 Market cap (m) $944 Listed options on issue Management expense ratio 0.18% No Internal / external management Internal Dividends (past 12mth) 7 Dividend Yield (past 12mth) 4.5% Franking level (past 12mth) 100. Gross dividend yield (past 12mth) 6.5% discount 0. Semi-annual Value traded 1 mth ($m) 7.1 Value traded 12 mth ($m) 78.5 Average spread (%) 0.42 Benchmark = S&P/ASX 300 Accumulation Index Performance fee = None 4/02/ /02/2016 I /08/ /08/2015 F /02/ /02/2015 I /08/ /08/2014 F % -2.62% -3.32% 6.84% 9.49% % 15.46% 16.17% (17/05/16) BKI price history $1.90 $1.82 $1.74 $1.66 $1.58 $1.50 Page 26 of 45