First State Stewart Asia Investment Forum 2016 27 April 2016, - - PowerPoint PPT Presentation

First State Stewart Asia Investment Forum 2016

27 April 2016, Rosewood Hotel, London

For professional clients only

First State Stewart Asia Investment Forum 2016

Chris Turpin, Managing Director First State Investments

First State Stewart Asia Investment Forum 2016

Michael Stapleton, Managing Partner First State Stewart Asia

4

First State Stewart Asia

Portfolio Implementation

Hong Kong Charlene Zheng Eva Chung Vancy Leung Singapore Celestine Wong 4/7 7/19 0/9 1/6

Portfolio Management

Hong Kong Andrew McKee George Pickard Gokce Bulut Helen Chen Martin Lau Quanqiang Xian Richard Jones Sophia Li Winston Ke 5/5 1/1 5/5 3/3 13/20 9/19 6/28 6/6 1/8

Numbers against each name indicate years with firm/years of industry experience as at 31 March 2016.

Team Structure

Managing Partners: Martin Lau & Michael Stapleton

Hong Kong

Business Management

Alan Cheung Jo Nhan Karen Choi Michael Stapleton 8/20 1/16 1/5 17/19 Edinburgh Fraser Wood 9/22

Team Assistants

Hong Kong Mary Tung Venice Kan Vera Ha Singapore Christina Choo 4/18 3/17 2/20 10/36 Edinburgh Christina Robertson 1/4

Portfolio Management

13/26 1/7 1/1 4/13 Alistair Thompson Naren Gorthy Sreevardhan Agarwal Vinay Agarwal Singapore

Portfolio Management

Edinburgh Scott McNab Wee Li Hee 14/16 13/13

5

First State Stewart Asia

$6.4b $5.8b $5.0b $2.8b $477m $406m $31m

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 India Hong Kong China A-Shares Asia Pacific ex Japan Leaders & All Cap Asia Pacific ex Japan Select Japan Greater China

Source: First State Investments, USD AUM as at 31 March 2016.

50% 50% Institutional Wholesale/Retail Mandate OEIC Offshore OEIC Offshore Offshore Offshore Offshore OEIC Offshore US$

US$20.9 billion Assets Under Management

Our Investment Style

Martin Lau, Managing Partner

First State Stewart Asia

7

Our investment approach Absolute return mindset Bottom-up Long-term Quality companies Sustainable and predictable growth Strong valuation disciplines

8 45% 84% 61% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Up Markets Down Markets All Markets

Months of outperformance (%)

First State Asian Equity Plus Fund

Source: Lipper. Months of outperformance vs MSCI AC Asia Pacific ex Japan Index calculated since fund launch on 14 July 2003. Provided in USD on a gross of fees basis.

Investment style perspective

as at 31 March 2016

Months of outperformance (%)

Headwinds and Tailwinds

Richard Jones, Director

First State Stewart Asia

10

Headwinds & Tailwinds?

“A tailwind is a wind that blows in the direction of travel of an object, while a headwind blows against the direction of travel. A tailwind increases the object's speed and reduces the time required to reach its destination, while a headwind has the opposite effect”. Wikipedia, the free encyclopedia

• We like tailwinds and try to avoid headwinds
• Market professionals and we have “predicted nine of the previous five recessions”
• Difference between climate & weather?

11

We are bottom-up investors

“We have two classes of forecasters: Those who don't know …and those who don't know they don't know”

• Rule no.1: We don’t do macro
• JK Galbraith summed things up very well…
• Rule no.2: See rule number one

12

Another definition of macro?

• A macro lens for big close ups?
• We meet 1,000+ company management-teams in a

typical year

• Portfolios are the outcome
• We look for specific bottom-up things. Quality is the one

word summary

• But, end up with some broad views/observations as well
• Can I call it bottom-up macro?

Source: Gettyimages.

13

Different, but the same?

• The four most-dangerous words you ever hear

in investing…” this time it’s different”

• Okay, not Asian Crisis Two, but?
• World trade growth and Asian exports continue

to contract

• Debt levels continue to rise everywhere,

but especially in Asia and particularly China

• Politics gets messier all the time, as an

aspirational middle-class emerges Histor tory doe

• esn’t repeat,

t, b but t it t

• f
• fte

ten rhymes es

• Ma

Mark k Twain in

14

World trade growth

Source: CPB Netherlands Bureau for Economic Policy Analysis, First State Investments, April 2016.

(%YoY)

• 25%
• 20%
• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 25% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Volumes, seasonally adjusted Values

15

More debt and even more debt in GEM…

Source: McKinsey Global Institute: Debt and (Not Much) Deleveraging, February 2015.

Change in debt outstanding by country type

22% 78%

2000-07 (US$ 37 trillion)

47% 53%

2007-14 (US$49 trillion)

Developing Advanced

16

Some headwinds?

• RMB weakness, collateral damage across
• ther economies; exporters, technology,

Taiwan (Brambles, TSMC, Delta, Asustek, Giant, Mediatek)

• Light on China, light on domestic Australia
• Balance sheets don’t matter until they’re the only

thing that matters

• Avoid assets/liabilities mix, stock-market exposure

(wealth-management products)

• Light on banks and residential property companies,

particularly where regulation is less rigorous

Source: Gettyimages.

17

More headwinds

• Avoid doing business with Governments (toll-

roads/concessions in general)

• Liquidity likely to be more important than it

has been. Watch investor concentration

• Light on Asean, careful of lobster pots
• Rebalancing economies usually takes

decades and often brings social strife

• Indian growth is lower than people believe,

domestic consumption may be vulnerable

Source: Gettyimages.

18

Any tailwinds??

• Guns & baked beans? (Gold & Newcrest)
• Globally competitive Indian IT services and

pharmaceuticals (Dr Reddy’s, TCS, Infosys)

• Rising wealth and changing lifestyles, healthcare in

general (CSL, Resmed, Raffles Medical)

• Legal framework and regulation matter; Singapore &

Hong Kong (SingTel & HKCG)

• In times of adversity, corporate governance and

integrity matters more than ever

• Can we add to high quality cyclicals? Do such things

exist? (LG Chemical, BHP?)

Source: Gettyimages.

19

In macro we trust

• Asia’s demographics & population growth
• Still a lot of per capita upside in the longer-term
• Emerging & growing middle class

underpin rising consumption

• Cost structures and competitive position still

attractive

• India still the easiest story to believe in, if you want

to dream

• Corporate balance sheets strong,

governance/regulation is improving

• Politics maybe relatively stable compared to the

West? You

• u s

shou

• uld i

invest f t from th the bottom

• ttom-up a

and worry rry f fro rom t the top top-dow

• wn
• Ano

nony nymous

20

MSCI Asia Pacific ex-Japan relative to MSCI AC World Index

Source: Bloomberg, First State Investments, April 2016.

(1/1/2007 = 100)

80 90 100 110 120 130 140 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MSCI AC Asia Pacific ex Japan relative to MSCI AC World Index

21

Asia Pacific, Emerging Markets and Global Price/Book

Source: Bloomberg, April 2016.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 MSCI Asia Pacific ex-Japan MSCI Emerging Markets MSCI World

Price to Book (x)

PBR MSCI Asia Pacific ex-Japan MSCI Emerging Markets MSCI World Current 1.4x 1.4x 2.1x 10-year average 1.8x 1.8x 2.0x 20-year average 1.8x 1.5x 2.4x

22

Country breakdown – Asian Growth Fund

as at 31 March 2016

Source: First State Investments. Numbers may not add up due to rounding.

Fund (%) Index* (%) Fund (%) Index* (%) Greater China 39.8 55.3 Indian sub-continent 27.0 9.5 China 4.6 28.1 India 27.0 9.5 Hong Kong 16.8 12.8 Taiwan 18.4 14.5 Australasia 5.3 0.0 Australia 5.3 0.0 South Korea 5.6 18.3 Cash 3.9 0.0 South East Asia 18.4 16.9 Indonesia 0.0 3.2 Malaysia 0.0 4.1 Philippines 1.0 1.7 Singapore 16.5 5.3 Thailand 1.0 2.6 Total 100.0 100.0

23

What really matters? A personal note…

Ever erything ng sh shoul uld be be made ade as as si simple as p as possi ssible, but but not

• t simp

imple ler

• Al

Albert Ein instein in

• We’re wrong as often as anybody else, but we

know it and don’t make big bets on this basis

• Not wanting to lose, versus winning,

entail radically different approaches to investment/life

• Don’t waste time making elaborate forecasts,

look at the track-record. Find compounders

• Most truly great ideas can be expressed on the

back of a post-card in five minutes

24

…staying alive and not losing

• Nobody reads annual reports, so read them
• Governance is all that really matters for

minority shareholders like us

• Quality definition? How you behave when

the share price halves

• It’s always the quality of the people that

make magical and sustainable returns happen

• And of course, just as the trick in life is not

to die, so the trick in investment is not to lose! Ther ere ar are o e old d pilots s and and there re are e bold ld p pilo ilots, but t there re are re n no old bold ld p pilo ilots

• An

n old d av aviat ation ada n adage

Company examples – India

Sreevardhan Agarwal, Investment Analyst

First State Stewart Asia

26

Our first meeting…

“What Harsh has achieved so far is impressive. But there are reasons to be nervous. The business is still too dependent on a single product, Parachute, and a single commodity, Copra. If Unilever were to apply the same enthusiasm to Marico’s markets which they applied so successfully to Colgate, then Marico would be in serious trouble.” AVOID – September, 1999

Source: Bloomberg.

27

From Family Conglomerate to Professionally Managed Consumer Business

Charandas

Coconut Oil

Ajay Sanjay Hansraj

Seed Manufacturing

Kishore

Chemicals Manufacturing

Harsh

90% of Capital Employed 80% of Profits

Harsh Head HR VP - Marketing VP - Operations CFO

100% of Profits and Capital Employed

What had they achieved so far?

“Management proudly declares that capex is kept to a minimum, except human capital where it overspends.” May, 2003

Spice Trading

Jayasinh

Bombay Oil Industries Marico

Fast Moving Consumer Goods (FMCG)

Source: Company Website.

28

Business Diversified… And Franchise Improved

1990’s Revenue Split

Parachute 70% Edible Oil & Others 30% Parachute 31% Saffola 14% Value Added Hair 25% Other Personal Care and Food 9% International 21% 100% India

“It is usual of them to identify a niche category and do a small prototype in a zonal market and invest only after getting validation. This allows consistent innovation but they won’t bet the house on any 1 product alone.”

Company Report, 2008

Market Share Rank Parachute 50% 1 Sweekar 9% 6 Saffola 5% 8 Market Share Rank Parachute (India) 56% 1 Saffola (India) 55% 1 Value-Added Hair Products (India) 33% 1 Saffola Oats (India) 14% 2 Parachute (Bangladesh) 84% 1 Male Grooming (Vietnam and Egypt) 39% - 52% 1

2015 Revenue Split

Source: company data and analyst reports.

29

Moving up the value chain

5% 7% 9% 11% 13% 15% 2004 2006 2008 2010 2012 2014

A&P % of Sales Doubled Over 10 Years

65 85 105 125 145 165 185 5% 7% 9% 11% 13% 15% 2000 2003 2006 2009 2012 2015

Margins Doubled Despite 50% Increase in Copra Price

Copra Price (INR) Operating Margin

~17x ~10x

Source: Company Website, Bloomberg.

30

Engagement over a decade

Demerger of Product and Service Business Succession Planning

Harsh Mariwala, Non-Executive Chairman Rajvi Mariwala Canine Behaviorist Rishabh Mariwala Founder, Soap Opera Saugata Gupta CEO

“There will be no family succession – the company will be run by a professional after Harsh retires.” – May, 2003 “Management will give Kaya another 2 years to perform.” – August, 2011

Source: Media outlets. Source: Company Website.

31

What we worry about now…

15 20 25 30 35 40 45 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Forward PER Price/Op. Cash Flow

“Marico has done very well over the last decade by transforming itself from being a commodity company to being a branded one. For the next decade, Marico will have to be a lot different.”

• September, 2015

Forward P/E Ratio

Marico (April 2016) 38x Marico (10-yr average) 27x Peer average 31x Dabur 33x Godrej Consumer Products 34x Nestle India 36x Colgate Palmolive India 32x Hindustan Unilever 40x Jyothy Laboratories 31x Tata Global Beverages 17x Marico Bangladesh 23x

Source: Bloomberg.

Peak Valuations

Company examples – China

Helen Chen, Investment Analyst

First State Stewart Asia

33

CSPC Pharmaceutical (1093 HK)

An eight-year SOE reform story

Before 2007 Held by SOE 2007 Private equity controls the parent

2009-2012 Group restructuring

2015 PE exited, management in control 2012 PE in control

Hony Capital

Listco

75% 88% if including CB

Management

Listco

32%

SPG Listco 51% SPG Listco 51% 100% Hony Capital

Source: Company data.

34

SOE reform is to free the tiger in the cage, and to give it wings. Liu Chuanzhi, Chairman of Legend Holdings

• Chairman Cai Dongchen has been Chairman of SPG and

the listco since 1990s.

• His determination for SOE reform was inspired by Lenovo’s

reform and development.

• He owns 29% of CSPC now.

CSPC Pharmaceutical (1093 HK)

Chairman becomes the controlling shareholder

Source: Company data. Source: Company website.

35

CSPC Pharmaceutical (1093 HK)

Moving up the value chain

57% 6% 36%

1% 2007 Segment profit

Penicillin Cephalosporin series Vitamin C Finished drugs 10 20 30 40 50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R&D spending grew rapidly (US$ mil)

50x

2015 Segment profit

5% 8%

• 2%

23% 66% 89% Caffine & others Antibiotics Vitamin C Common generics Innovative drugs

Source: Company data. FactSet.

36

CSPC Pharmaceutical (1093 HK)

Traveling in corporate development

The first letter was to communicate with the company our suggestions after reading their 2014 report; the second letter was to raise the issue of the holding company structure after private equity exited. We continue to engage with companies

• n the following aspects:
• Shareholding structure
• Board structure
• Management incentive scheme
• Succession
• R&D

37 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

• 2,000

4,000 6,000 8,000 10,000 India China UK France

Healthcare spending lags

Healthcare expenditure per cap (US$) Healthcare spending as % of GDP (RHS)

CSPC Pharmaceutical (1093 HK)

Healthcare: embracing China’s structural trend

T

• Healthcare is a big sector,

US$ 328 billion in size.

• Total spending more than doubled in

the past 5 years.

• The sector is highly fragmented. The

biggest drug company accounts for less than 3% of total drug sales.

• We are looking for companies with

good portfolio and R&D, and most importantly sensible management.

We are looking for future leaders

Source: World Bank, 2014. Morgan Stanley.

98 100 103 105 108 111 114 121 126 171 0% 5% 10% 15%

60 110 160 210 2005 2006 2007 2008 2009 2010 2011 2013 2014 2020

Aging population is coming

Population aged 65 and over (million) % of population aged 65 and over (RHS)

38

• T
• Fuyao is the biggest auto glass maker in
• China. It has 73% market share in the auto

OEM market.

• It also has 10% market share overseas.
• No. 1 auto glass maker in the world

T

• Chairman Cho Tak Wong holds 17% of the
• company. He donated 12% to his charity

foundation.

• His ambition is to make auto glass for the

world.

A farmer-turned-entrepreneur

Fuyao Glass (600660 CH/3606 HK)

A made-in-China story

• 500

1,000 1,500 2,000 2,500 2000 2002 2004 2006 2008 2010 2012 2014

Remarkable growth in last 15 years (Revenue, US$ million)

Source: Company data, Factset. Source: Company website.

39

Fuyao Glass (600660 CH/3606 HK)

The most profitable glass maker going global

The only pure auto glass company in the world. Yield is 2-3ppt higher than peers.

Focus

Equipment  molds  float glass auto glass

Vertical integration

Engage with customers from design-in to production

Value-added products

Source: Company data. First State Investments.

The most profitable auto glass maker in the world Export from China: 1/3 of revenue is export Production overseas: plants in US and Russia

40

Fuyao Glass (600660 CH/3606 HK)

Looking for quality in China A-share

Strong franchise Biggest auto glass company in China Steady growth 11% revenue CAGR, 9% profit CAGR in last 5 years Reliable management Chairman Cho Tak Wong is a respectable leader; our interests are well aligned Good governance Introduced independent directors in 1995; paid out more than what they raised Reasonable valuation 12x P/E, 2x P/B, 5% dividend yield

Source: Bloomberg. First State Investments.

Panel Discussion with:

Martin Lau, Managing Partner Alistair Thompson, Director Richard Jones, Director Vinay Agarwal, Director Sophia Li, Portfolio Manager

Appendix - Japan

43

Divergence between macro economy and corporate profit

Source: Ministry of Finance and the Cabinet Office. As at December 2015.

2 4 6 8 10 12 14 16 18 20

460 470 480 490 500 510 520 530 Mar '94 Mar '95 Mar '96 Mar '97 Mar '98 Mar '99 Mar '00 Mar '01 Mar '02 Mar '03 Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 Mar '15 Latest Nominal GDP s.a. Corporate RP s.a. (right)

(JPY trn) (JPY trn)

• 4.5%

+132.1%

44

Margin lags behind the rest of the world

Source: Factset and Jefferies. All Sector (exclude Banks, Diversified Financials & Insurance). Factset universe (covers 80-90% of the overall market) is for Asia-ex Japan, Europe and Japan. S&P 500 is used for the US. As at 7 April 2016.

2 4 6 8 10 12 14 16 18 ROE (%, DuPont analysis) Asset Turnover (x) Net Profit Margin (%) Financial Leverage (x) Japan Asia ex Japan Europe US

45

Sector breakdown of Japan All-cap Equity Fund

as at 31 March 2016

Source: First State Investments..

33 19 15 12 7 6 2 8 21 8 19 10 18 9 5 1 6 3 5 10 15 20 25 30 35 Consumer Discret. Consumer Staples Industrials Info. Tech. Financials Health Care Materials Energy Telecom Services Utilities Liquidity Japan Equity Fund MSCI Japan Index %

46

What do we own in the Japan Equity portfolio?

PORTFOLIO

Top Asian consumer brands Cutting-edge global manufacturers in automation, industrial and medical equipment Leading domestic industry consolidators that grow through multiple cycles Businesses that create new demand and are backed by the structural growth drivers Management with a motivated and open mindset to embrace changes Profitable niche companies that adopt a unique business model and focused strategy

47

Ryohin Keikaku

Muji – No Brand Quality Goods that endures the test of time.

0% 10% 20% 30% 40% 50%

2011 2012 2013 2014 2015 2016E2017E2018E

Overseas sales contribution

Overseas Uniqlo Overseas Muji 0% 5% 10% 15% 20% 25% 50 100 150 200 250 300 350

2011 2012 2013 2014 2015 2016E2017E2018E

Number of stores in Greater China OP Margin of Greater China Business

Asia is the major growth driver

Source: Company data and First State Stewart Asia.

Muji’s Shanghai flagship store Long queue outside Muji Café at lunchtime

48

Leading drug store operators

Benefit from both ageing population and industry consolidation

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CVS Department Stores SuperMarkets/GMS Drugstores

Source: Euromonitor and company data. As at 31 March 2016.

Japan retail format migration Concentration ratio of different retail segment

Retail segment Top 5 companies market share Market size (JPY trn) CVS 91% 10.2 Home appliance 66% 6.7 Supermarket/GMS 65% 16.4 Drug store 35% 6.2 Furniture 27% 3.4 Shoes 26% 1.9 Apparel 26% 7.3

49

Robotics and moving up the value chain

The future of the world’s factory

Source: Nomura Securities and IFR. As at December 2014.

1988 28% 2014 89% 2014 30% 0% 20% 40% 60% 80% 100% 76 80 84 88 92 96 00 04 08 12 Japan China (CY) 478 314 292 164 79 85 66 54 36 100 200 300 400 500 600 South Korea Japan Germany USA Americas Europe World average Asia China

CNC ratio = machine tools equipped with NC systems / total machine tools (volume basis) The number of industrial robots per 10,000 persons employed in the manufacturing industries

50

Important information

This document is directed at persons of a professional, sophisticated or wholesale nature and not the retail market. This document has been prepared for general information purposes only and is intended to provide a summary of the subject matter

• covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of

issue and may change over time. This is not an offer document, and does not constitute an offer, invitation, investment recommendation or inducement to distribute or purchase securities, shares, units or other interests or to enter into an investment

• agreement. No person should rely on the content and/or act on the basis of any matter contained in this document.

This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information. We do not accept any liability for any loss arising whether directly or indirectly from any use of this document. References to “we” or “us” are references to Colonial First State Global Asset Management (CFSGAM) which is the consolidated asset management division of the Commonwealth Bank of Australia ABN 48 123 123 124. CFSGAM includes a number of entities in different jurisdictions, operating in Australia as CFSGAM and as First State Investments (FSI) elsewhere. Past performance is not a reliable indicator of future performance. Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to the names of any company is merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies. In the United Kingdom, this document is issued by First State Investments (UK) Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 143359). Registered office: Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB, number 2294743. Outside the UK within the EEA, this document is issued by First State Investments International Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 122512). Registered office 23 St. Andrew Square, Edinburgh, Midlothian EH2 1BB number SC079063.

51

Asian Equity Plus Fund performance

as at 31 March 2016 (Class I Distribution shares, % USD gross of fees)

Source: Lipper. Since launch performance calculated from 14 July 2003. Index returns are gross of tax.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Asian Equity Plus Fund

• 1.2

15.5 5.9 26.7

• 8.7

24.1 59.8

• 37.0

37.4 33.0 22.7 31.5 MSCI AC Asia Pacific ex Japan Index

• 9.1

3.1 3.6 22.6

• 15.4

18.4 73.7

• 51.6

37.2 33.2 21.0 23.0

14/07/2003 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 14/07/2003 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs Asian Equity Plus Fund 565.0 196.4 44.3 17.6

• 6.9

5.7 1.5 16.1 11.5 7.6 5.6 MSCI AC Asia Pacific ex Japan Index 243.5 72.5 0.6

• 3.0
• 11.3

7.2 1.9 10.2 5.6 0.1

• 1.0

Annualised Returns (%) Asian Equity Plus Fund MSCI AC Asia Pacific ex Japan Index

52

Asian Equity Plus Fund performance

as at 31 March 2016 (Class I Distribution shares, % USD net of fees)

Source: Lipper. Since launch performance calculated from 14 July 2003. Index returns are gross of tax.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Asian Equity Plus Fund

• 2.8

13.7 4.3 24.6

• 10.2

22.1 57.2

• 38.0

35.1 30.7 20.5 28.9 MSCI AC Asia Pacific ex Japan Index

• 9.1

3.1 3.6 22.6

• 15.4

18.4 73.7

• 51.6

37.2 33.2 21.0 23.0

14/07/2003 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 14/07/2003 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs Asian Equity Plus Fund 436.0 151.6 33.2 12.2

• 8.3

4.9 1.1 14.1 9.7 5.9 3.9 MSCI AC Asia Pacific ex Japan Index 243.5 72.5 0.6

• 3.0
• 11.3

7.2 1.9 10.2 5.6 0.1

• 1.0

Annualised Returns (%) Asian Equity Plus Fund MSCI AC Asia Pacific ex Japan Index

53

Indian Subcontinent Fund performance (VCC)

as at 31 March 2016 (Class I shares, % USD gross of fees)

Source: Lipper. Since launch performance calculated from 23 August 1999. Index returns are gross of tax.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Indian Subcontinent Fund 6.8 48.1 9.1 32.2

• 20.9

33.0 101.2

• 56.2

64.4 38.3 47.9 34.9 78.4 2.7

• 22.4

MSCI India Index

• 6.1

23.9

• 3.8

26.0

• 37.2

20.9 102.8

• 64.6

73.1 51.0 37.6 19.1 78.4 8.4

• 19.5

23/08/1999 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 23/08/1999 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs Indian Subcontinent Fund 1030.2 276.1 79.4 68.5

• 5.3
• 2.4
• 3.3

15.7 14.2 12.4 19.0 MSCI India Index 357.1 61.4

• 9.0

11.9

• 13.2
• 3.4
• 2.5

9.6 4.9

• 1.9

3.8 Annualised Returns (%) Indian Subcontinent Fund MSCI India Index

54

Indian Subcontinent Fund performance (VCC)

as at 31 March 2016 (Class I shares, % USD net of fees)

Source: Lipper. Since launch performance calculated from 23 August 1999. Index returns are gross of tax. **Average return of funds in Indian peer group as defined by First State Investments using Lipper performance data. Since inception peer group performance from 31 August 1999.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Indian Subcontinent Fund 5.1 45.6 7.3 29.9

• 22.3

30.7 97.7

• 57.0

61.4 35.8 45.0 32.0 73.7

• 1.4
• 27.1

MSCI India Index

• 6.1

23.9

• 3.8

26.0

• 37.2

20.9 102.8

• 64.6

73.1 51.0 37.6 19.1 78.4 8.4

• 19.5

Peer Group average**

• 1.7

40.7

• 5.8

24.9

• 35.0

22.0 91.4

• 61.6

66.3 41.2 40.7 24.2 93.7 2.8 25.8

23/08/1999 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 23/08/1999 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs Indian Subcontinent Fund 645.7 216.2 64.9 60.3

• 6.9
• 3.2
• 3.7

12.9 12.2 10.5 17.0 MSCI India Index 357.1 61.4

• 9.0

11.9

• 13.2
• 3.4
• 2.5

9.6 4.9

• 1.9

3.8 Peer Group average** 480.4 90.7 9.4 31.0

• 11.3
• 4.3
• 4.0

10.7 6.4 1.6 9.3 Peer Group average** Annualised Returns (%) Indian Subcontinent Fund MSCI India Index

55

Japan Equity Fund performance

as at 31 March 2016 (Class III shares, % USD)

Source: First State Investments. *Launch date: 2 February 2015. Index returns are gross of tax.

Gross of fees Net of fees

Cumulative Returns (%) Since launch 1 yr 6 mths 3 mths Japan Equity Fund 26.6 13.7 19.1 4.4 MSCI Japan Index 0.8

• 6.8

2.4

• 6.4

Cumulative Returns (%) Since launch 1 yr 6 mths 3 mths Japan Equity Fund 24.7 12.1 18.2 4.1 MSCI Japan Index 0.8

• 6.8

2.4

• 6.4

56

China Growth performance

as at 31 March 2016 (Class I shares, % USD gross of fees)

Source: Lipper. Since launch performance calculated from 17 August 1999. Index returns are gross of tax.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 China Growth Fund

• 2.0
• 0.7

24.0 21.8

• 12.9

15.5 100.0

• 53.0

78.3 85.4 18.8 21.4 114.5

• 2.6

7.2 MSCI China Index

• 7.6

8.3 4.0 23.1

• 18.2

4.8 62.6

• 50.8

66.2 82.9 19.8 1.9 87.6

• 14.4
• 10.7

17/08/1999 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 17/08/1999 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs China Growth Fund 1379.1 226.6 18.9 6.7

• 15.3

1.5

• 7.3

17.6 12.6 3.5 2.2 MSCI China Index 283.2 109.1

• 3.2

3.7

• 18.7
• 1.0
• 4.8

8.4 7.7

• 0.6

1.2 Annualised Returns (%) China Growth Fund MSCI China Index

57

China Growth performance

as at 31 March 2016 (Class I shares, % USD net of fees)

Source: Lipper. Since launch performance calculated from 17 August 1999. Index returns are gross of tax.

Calendar Year Returns (%) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 China Growth Fund

• 4.0
• 2.8

21.4 19.3

• 14.7

13.1 95.9

• 53.8

75.3 82.3 16.6 19.0 110.1

• 4.6

4.7 MSCI China Index

• 7.6

8.3 4.0 23.1

• 18.2

4.8 62.6

• 50.8

66.2 82.9 19.8 1.9 87.6

• 14.4
• 10.7

17/08/1999 31/03/2006 31/03/2011 31/03/2013 31/03/2015 30/09/2015 31/12/2015 17/08/1999 31/03/2006 31/03/2011 31/03/2013 120 60 36 12 6 3 120 60 36

Cumulative Returns (%) Since launch 10 yrs 5 yrs 3 yrs 1 yr 6 mths 3 mths Since launch 10 yrs 5 yrs 3 yrs China Growth Fund 989.7 167.7 7.0 0.2

• 17.0

0.5

• 7.8

15.5 10.3 1.4 0.1 MSCI China Index 283.2 109.1

• 3.2

3.7

• 18.7
• 1.0
• 4.8

8.4 7.7

• 0.6

1.2 Annualised Returns (%) China Growth Fund MSCI China Index