Listed Investment Companies - Macquarie€¦ · Choosing a Listed Investment Company (LIC) Net Tangible Asset Backing (NTA) LICs report net tangible asset backing (NTA) for the company

Listed Investment Companies

January 2016

Opportunity to invest in a diversified equity exposure Page 2

What are Listed Investment Companies (LICs)? Page 2

Choosing a Listed Investment Company Page 3

Advantages of investing in LICs Page 4

Risks and Considerations of investing in LICs Page 4

ASX LICs Monthly Update Page 5

Net Tangible Asset (NTA) comparison Page 6

Annualised LIC share price performance Page 7

Dividend focus Page 8

Recent and upcoming distributions Page 9

Premium/Discount to NTA (%) history Page 10

Glossary Page 12

Appendix Page 14

Total returns Page 14

Dividends Page 15

Liquidity analysis Page 16

Snapshots Page 17

Disclaimer Page 39

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$ 30.1 billion in

December 2015. Recent market weakness has seen this total retrace to A$28.9 billion in mid January.

The second chart below shows the monthly proportionate value traded for LICs with a trend towards

international equities. The recent shift to alternatives can be partly attributed to the buy-back and winding

up of Global Resource Masters Fund Limited (GRF) and the December 2015 listing of Absolute Equity

Performance Fund Limited (AEG) which saw elevated interest following a positive debut.

Listed Investment Companies market capitalisation Trends

Source: MWM Research, Iress, Morningstar, January 2016

Monthly value traded

Source: IRESS, January 2016

20

25

30

Feb

-14

Mar-

14

Ap

r-1

4

May-

14

Ju

n-1

4

Ju

l-1

4

Au

g-1

4

Sep

-14

Oct-

14

No

v-1

4

Dec-1

4

Jan

-15

Feb

-15

Mar-

15

Ap

r-1

5

May-

15

Ju

n-1

5

Ju

l-1

5

Au

g-1

5

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

A$ billionTotal Market cap for LICs

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15

Australian Equities

Alternatives / Specialist

International Equities

54%

4%1%

26%

20%

95%

Page 2 of 39

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)


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.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

2000

4000

6000

AFI

AR

G

MLT

WA

M

DJW

BK

I

CIN

AU

I

DU

I

CD

M

MIR

WH

F

PIC

WA

X

FG

X

AM

H

QV

E

CTN

WIC

WD

E

MFF

UR

F

PM

C

AG

F

PG

F

FG

G

TG

G

PA

I

HH

V

ALI

AU

F

EM

F

EA

I

EG

I

PA

F

ALF

BA

F

US

F

TO

P

AY

Z

GV

F

BTI

AY

D

GR

F

%A$ Mil

Market cap (LHS) Management expense ratio (RHS)

Australian equities International Equities Absolute / Specialist

Page 3 of 39

Advantages of investing in LICs

Low costs

The MER for most ASX-listed LICs ranges from 0.10% to 1.50% per annum. The MERs for the three

largest Australian equity LICs (AFI, ARG, MLT) are amongst the most competitively priced with all three

below 0.20% 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 100% franked dividends since 1995. 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 4 of 39

http://www.asx.com.au/products/managed-funds/market-update.htm

ASX LICs Monthly Update

The chart below shows the movements in pre-tax NTA during December.

Pre-tax NTA growth, December 2015

Source: MWM Research, IRESS, January 2016

The AMP Capital China Growth Fund (AGF) NTA retraced 18.1% through December, trading ex dividend

on 29 December with a dividend of $0.3387 payable on 31 March 2016, subject to repatriation of funds

from China. On a total return basis the fund was positive for the month, returning 3.1%. The dividend

was much larger than the previous year’s ($0.0292) and was primarily composed of realised capital gains

with the portfolio manager selling into strength during mid 2015. The US listed Morgan Stanley China A

Share Fund (CAF.NYS) distributed a similarly large dividend from capital gains. AGF also provided

investors with an update of estimated expenses to the year ending 31 December 2015. AMP estimates

the cost of extraordinary expenses incurred during the year at 0.08% of fund assets. AGF suffered

through early January as Chinese equity volatility increased dramatically with AGF continuing to trade on

the ASX despite trading in China being suspended twice in the first week of the year.

Carlton Investments (CIN) was the best performer of the larger LICs for the second consecutive month,

adding 6.4% on a pre-tax NTA basis. This reflected CIN’s concentrated position in Event Hospitality and

Entertainment Ltd (EVT, previously Amalgamated Holdings Limited) of 49.5% which increased 9.3%

during December.

Absolute Equity Performance Fund (AEG) enjoyed a successful listing in mid December with a 12%

premium to NTA sustained in recent weeks. AEG employs a market neutral investment strategy via

long/short pair trades on ASX listed securities and derivatives. The portfolio was fully invested after two

weeks and had a net market exposure of +3.3% as at 31 December 2015. Short positions in Primary

Healthcare (PRY) and Sonic Healthcare (SHL) worked well through the month while a pair trade of long

Beach Energy (BPT) and AGL Energy (AGL) weighed on performance.

The Global Resource Masters Fund (GRF) announced on 18 December it would look to wind up the fund

with at least 90% of the net assets to be returned to shareholders via a proposed capital return. The

move followed shareholders approving on 17 November an on-market buyback of up to 50% of the

issued capital of GRF. The company was able to purchase 13.2 million shares, equivalent to 28.6% of

the issued capital, in the following month to 16 December. The majority of these shares were purchased

at approximately $1.35 between 8 and 18 December. The company stated “the significant shareholder

demand for participation in the on-market buyback suggests that the 50% buyback limit will be

insufficient to accommodate all existing shareholders wishing to exit their investment in GRF.”

GRF will hold a general meeting on the proposed return of capital on 19 February 2016. Assuming this

vote is successful, a further meeting will be held to vote on winding up the fund, with a 75% majority

required. GRF will continue to operate the on-market buyback (up to the approved 50% capacity), given

the demand from investors to exit their positions, with shares to be purchased either at or below NAV.

The underlying portfolio positions have now been mostly liquidated with the fund to hold 100% cash. It is

intended the initial capital return will account for at least 90% of GRF’s net assets, with a second smaller

distribution to follow once the winding up process has been completed.

-20%

-15%

-10%

-5%

0%

5%

10%

AG

F

TG

G

EM

F

WIC

EA

I

MFF

ALI

PM

C

PG

F

FG

G

PA

I

CD

M

PA

F

AU

F

EG

I

GV

F

PIC

DU

I

AM

H

DJW

HH

V

QV

E

AU

I

BK

I

AR

G

AFI

WA

M

FG

X

MIR

WA

X

MLT

CT

N

WH

F

CIN

Page 5 of 39

Net Tangible Asset (NTA) Comparison

The two charts below rank the LICs by premium/discount to pre-tax NTA as at 31 December 2015.

Premium / discount to pre-tax NTA – Australian Equities


Premium / discount to pre-tax NTA – International Equities


Monthly percentage movements in premium / discounts


-17.5%-12.3%

-9.4% -8.2% -7.4% -5.5% -5.0% -3.8% -3.8% -2.9%

1.8%4.7% 4.8% 5.7% 6.2% 8.4% 9.9%

14.4%

34.0%

-30%

-20%

-10%

0%

10%

20%

30%

40%

CTN CIN WHF WIC PIC AUI DUI QVE AMH FGX MLT BKI WAX AFI MIR WAM ARG CDM DJW

-15.3%-12.6% -12.2% -11.8% -11.2% -10.6%

-6.4%-4.5% -3.0%

-1.1% -0.1%

3.3%6.8%

10.1%

20.3%

-20%

-10%

0%

10%

20%

30%

AGF PGF HHV TGG GVF PAF ALI EGI AUF EAI MFF EMF PAI FGG PMC

-6%

-4%

-2%

0%

2%

4%

6%

8%

WD

E

BA

F

HH

V

AU

F

PG

F

EA

I

WA

X

US

G

PIC

UR

F

BK

I

CT

N

WH

F

DJW

CIN

AU

I

CD

M

QV

E

PA

I

MLT

EM

F

FG

X

TG

G

DU

I

AFI

WA

M

MFF

MIR

FG

G

AM

H

ALI

AR

G

WIC

PM

C

ALF

AG

F

TO

P

Page 6 of 39

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

3-Year annualised return classified by Investment style

5-Year annualised return classified by Investment style


-30

-20

-10

0

10

20

30

40

AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX CTN WIC MFF AGF PMC TGG HHV AUF ALF GRF IPE WAA

(%) Capital Return Dividend Return Total Return

Absolute /

Specialist

Australian Equities International Equities

-10

0

10

20

30

40



Absolute /

Specialist


-10

0

10

20

30



Absolute /

Specialist


Page 7 of 39

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 100% franked dividends for over 20 years.

12 Months Net dividend yield and Gross dividend Yield (%)

Source: IRESS Bloomberg, January 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


0

5

10

15

20

25

30

35

40

45

AFI ARG MLT BKI DJW WAM CIN AUI DUI CDM MIR WHF AMH WAX QVE FGX CTN WIC MFF AGF PMC TGG HHV AUF URF ALF WAA

% Dividend 12m Yld- Net Dividend 12m Yld -Gross

International EquitiesAustralian Equities Absolute /

Specialist

0

1

2

3

4

5

6

0

20

40

60

80

100

120

140

MIR DJW CIN MLT AUI CDM FGX AFI BKI WAX

(%)($m) Franking Credits (LHS) Franking credits as % of assets (RHS)

Page 8 of 39

Recent and upcoming distributions


Code Name Ex-Date Pay Date Dividend Frank ing Type DRP

IPE IPE 11-Nov-15 2-Dec-15 $0.0100 70% I na

CBC CBG Capital 18-Nov-15 27-Nov-15 $0.0150 100% F $0.9770

WHF Whitefield 20-Nov-15 11-Dec-15 $0.0850 100% I $4.0600

AYD Australian Masters Yield Fund No 1 23-Nov-15 4-Dec-15 $0.6400 100% I na

AYH Australian Masters Yield Fund No 2 23-Nov-15 4-Dec-15 $0.7300 100% I na

AKY Australian Masters Corporate Bond Fund No 5 23-Nov-15 4-Dec-15 $0.8800 100% I na

AYZ Australian Masters Yield Fund No 5 30-Nov-15 10-Dec-15 $0.5300 100% I na

AYJ Australian Masters Yield Fund No 3 30-Nov-15 10-Dec-15 $0.4600 100% I na

AYK Australian Masters Yield Fund No 4 30-Nov-15 10-Dec-15 $0.4300 100% I na

AQF Australian Governance Masters Index Fund 3-Dec-15 18-Dec-15 $0.0200 100% S $1.6800

IBC Ironbark Capital 7-Dec-15 23-Dec-15 $0.0075 100% I na

URF US Masters Residential Property Fund 29-Dec-15 29-Jan-16 $0.0500 0% F na

AGF AMP Capital China Growth Fund 29-Dec-15 31-Mar-16 $0.3387 0% F na

EMF Emerging Markets Masters Fund 29-Dec-15 29-Jan-16 $0.0300 0% I na

ABW Aurora Absolute Return Fund 29-Dec-15 19-Jan-16 $0.0098 0% I $0.9489

AYF Australian Enhanced Income Fund 29-Dec-15 15-Jan-16 $0.1000 26% I na

AUP Aurora Property Buy-Write Income Trust 29-Dec-15 19-Jan-16 $0.1082 0% I $5.4651

AIB Aurora Global Income Trust 29-Dec-15 19-Jan-16 $0.0171 0% I $0.8509

CAM Clime Capital 4-Jan-16 22-Jan-16 $0.0120 100% I na

ALR Aberdeen Leaders 7-Jan-16 4-Feb-16 $0.0100 100% I na

MIR Mirrabooka Investments 20-Jan-16 9-Feb-16 $0.0350 100% I na

DJW Djerriwarrh Investments 28-Jan-16 16-Feb-16 $0.1000 100% I na

WIC Westoz Investment Company 1-Feb-16 19-Feb-16 $0.0300 100% I na

OZG Ozgrowth Limited 1-Feb-16 19-Feb-16 $0.0025 100% I na

Page 9 of 39

Premium/Discount to NTA (%) history (as at 31 December 2015)

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2011 2012 2013 2014 2015

Australian Foundation Investment Company (AFI)

Premium/disc to NTA (LHS) Share price (RHS) NTA price (RHS)

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

-15%

-10%

-5%

0%

5%

10%

15%

2011 2012 2013 2014 2015

Argo Investments (ARG)


$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

-20%

-15%

-10%

-5%

0%

5%

10%

2011 2012 2013 2014 2015

Milton Corporation (MLT)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

$2.0

-20%

-15%

-10%

-5%

0%

5%

10%

2011 2012 2013 2014 2015

BKI Investment Company (BKI)


$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

0%

5%

10%

15%

20%

25%

30%

35%

40%

2011 2012 2013 2014 2015

Djerriwarrh Investments (DJW)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2011 2012 2013 2014 2015

WAM Capital (WAM)


$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

-30%

-25%

-20%

-15%

-10%

-5%

0%

2011 2012 2013 2014 2015

Carlton Investments (CIN)


$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

-20%

-15%

-10%

-5%

0%

5%

10%

2011 2012 2013 2014 2015

Australian United Investment Company (AUI)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

2011 2012 2013 2014 2015

Diversified United Investment (DUI)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

-40%

-30%

-20%

-10%

0%

10%

20%

2011 2012 2013 2014 2015

Cadence Capital (CDM)


Page 10 of 39

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2011 2012 2013 2014 2015

Mirrabooka Investments (MIR)


$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2011 2012 2013 2014 2015

Whitefield (WHF)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

-25%

-20%

-15%

-10%

-5%

0%

5%

2011 2012 2013 2014 2015

AMCIL (AMH)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2011 2012 2013 2014 2015

WAM Research (WAX)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2011 2012 2013 2014 2015

Magellan Flagship Fund (MFF)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

2011 2012 2013 2014 2015

AMP Capital China Growth Fund (AGF)


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2011 2012 2013 2014 2015

Platinum Capital (PMC)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

-25%

-20%

-15%

-10%

-5%

0%

5%

2011 2012 2013 2014 2015

Templeton Global Growth Fund (TGG)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2011 2012 2013 2014 2015

Hunter Hall Global Value (HHV)


$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

$2.0

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2011 2012 2013 2014 2015

Australian Leaders Fund (ALF)


Page 11 of 39

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 (DRP)

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 DRP’s of their investee companies or other

purchases of securities. A DRP 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: http://www.ato.gov.au/Business/Bus/CGT-listed-investment-companies-concession/

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 12 of 39

http://www.ato.gov.au/Business/Bus/CGT-listed-investment-companies-concession/

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 13 of 39

Appendix

Total returns at 31 December 2015

LICs Name Share price total return (%) Return standard deviation (%)

1M 3M 1 Yr 3 Yr 5 Yr 1 Yr 3 Yr 5 Yr

Australian Equities

AFI Australian Foundation Investment 3.7 4.4 -1.7 5.7 3.7 9.8 8.9 11.4

ARG Argo Investments 5.1 5.4 3.1 9.2 4.8 9.6 9.5 10.7

MLT Milton Corporation 5.0 7.3 2.2 9.1 7.4 12.0 12.8 13.3

BKI BKI Investment 0.9 5.6 6.3 7.2 6.4 13.3 12.7 13.3

DJW Djerriwarrh Investments 0.9 4.6 -6.7 1.8 0.4 11.1 10.3 14.2

WAM WAM Capital 3.9 6.0 5.5 8.3 8.1 8.2 9.1 9.6

CIN Carlton Investments 6.0 16.9 20.0 19.8 13.5 14.7 15.2 -

AUI Australian United Investment 1.4 1.0 -5.9 4.6 2.2 12.1 13.4 13.9

DUI Diversified United Investment 2.1 4.0 0.3 7.2 3.8 12.8 14.2 15.2

CDM Cadence Capital -1.0 3.0 8.1 3.1 12.9 9.3 11.7 13.2

MIR Mirrabooka Investments 4.9 4.5 1.2 8.0 8.8 12.1 15.3 16.2

WHF Whitefield Limited 3.8 4.6 2.6 12.0 8.4 11.7 11.3 11.6

PIC Perpetual Equity Investment -1.5 2.6 -0.5 - - 8.8 - -

AMH AMCIL Limited 4.1 9.8 1.1 7.1 8.0 10.7 16.2 14.4

WAX WAM Research 2.0 2.8 11.2 12.3 12.5 8.1 11.0 12.0

QVE QV Equities 1.5 1.0 -0.5 - - 7.4 - -

FGX Future Generation Invst Company 3.6 7.4 11.0 - - 9.8 - -


MFF Magellan Flagship Fund -0.5 12.3 15.5 31.1 24.5 17.8 18.2 16.7

AGF AMP Capital China Growth Fund -13.3 -9.4 2.8 18.6 6.6 39.6 33.6 29.2

PMC Platinum Capital 1.3 2.2 4.4 21.5 5.7 13.7 14.9 16.1

PGF PM Capital Glb Opport. Fund -3.8 2.0 -5.2 - - 14.4 - -

TGG Templeton Global Growth Fund -2.8 -5.4 -12.3 17.3 9.4 15.9 17.2 16.3

FGG Future Generation Global Invest. 0.9 7.3 - - - - - -

PAI Platinum Asia Investments -1.0 4.0 - - - - - -

HHV Hunter Hall Global Value -1.7 8.8 -9.5 13.1 7.5 21.9 16.2 15.8

ALI Argo Global Listed Infrastructure 1.2 -11.2 - - - - - -

Alternative/Specialist

URF US Masters Residential Property -5.5 -8.5 -6.8 6.1 - - - -

ALF Australian Leaders Fund 4.9 -3.1 -2.1 2.9 5.3 16.7 15.2 14.2

Source: IRESS, Bloomberg, January 2016

Page 14 of 39

Dividend yield, net and grossed up at 31 December 2015

LICs classified by Style 1 Yr DPS

Growth (%)

3 Yr DPS

Growth (%)

5 Yr DPS

Growth (%)

12m Gross div.

Yld (%)

12m Net div.

Yld (%)

Australian Equities

AFI Australian Foundation Investment 4.5 3.1 1.8 5.6 3.9

ARG Argo Investments 5.4 4.3 3.4 5.4 3.8

MLT Milton Corporation 4.4 6.4 5.2 6.1 4.2

BKI BKI Investment 3.6 4.1 2.9 6.2 4.3

DJW Djerriwarrh Investments 0.0 0.0 0.0 8.7 6.1

WAM WAM Capital 7.7 8.4 11.8 9.5 6.6

CIN Carlton Investments 8.0 8.7 10.0 4.8 3.4

AUI Australian United Investment 6.3 6.7 5.9 6.6 4.6

DUI Diversified United Investment 2.5 3.4 2.0 6.0 4.2

CDM Cadence Capital 10.0 -4.2 22.4 10.6 7.4

MIR Mirrabooka Investments -20.2 16.8 9.8 8.8 6.6

WHF Whitefield Limited 0.0 0.0 0.0 5.8 4.0

PIC Perpetual Equity Investment - - - 0.7 0.5

AMH AMCIL Limited -38.5 17.0 14.9 6.4 4.5

WAX WAM Research 6.7 7.2 3.9 8.9 6.2

QVE QV Equities - - - 2.1 1.5

FGX Future Generation Invst Company - - - 2.5 1.7


MFF Magellan Flagship Fund 25.6 31.2 - 1.2 1.0

AGF AMP Capital China Growth Fund 772.3 143.5 67.2 30.5 30.5

PMC Platinum Capital 37.5 - 2.1 8.3 5.8

PGF PM Capital Glb Opport. Fund - - - - -

TGG Templeton Global Growth Fund -10.7 28.4 1.2 3.7 3.4

FGG Future Generation Global Invest. - - - - -

PAI Platinum Asia Investments - - - - -

HHV Hunter Hall Global Value 79.6 - 7.6 10.6 10.3

ALI Argo Global Listed Infrastructure - - - - -


URF US Masters Residential Property 0.0 0.7 - 5.0 5.0

ALF Australian Leaders Fund -16.7 -3.1 -3.6 10.1 7.0

Source: IRESS Bloomberg, January 2016

Page 15 of 39

LICs liquidity analysis at 31 December 2015

Code Company 3M avg

traded vol

3M avg daily

value traded

6M avg

traded vol

6M avg daily

value traded

Bid ask

spread

(A$)

Bid ask

spread/Price

ratio

Australia Equities

AFI Australian Foundation Investment 281,539 1,638,553 324,970 1,929,648 0.02 0.34%

ARG Argo Investments 135,094 1,039,697 152,306 1,194,243 0.03 0.38%

MLT Milton Corporation 142,939 620,352 136,247 601,299 0.06 1.35%

BKI BKI Investment 141,151 234,949 175,775 292,736 0.01 0.60%

DJW Djerriwarrh Investments 76,962 324,296 91,266 397,919 0.05 1.17%

WAM WAM Capital 420,677 851,614 409,255 818,933 0.01 0.47%

CIN Carlton Investments 2,797 88,617 2,421 75,518 0.35 1.09%

AUI Australian United Investment 15,446 113,560 14,237 108,725 0.01 0.14%

DUI Diversified United Investment 51,972 174,142 48,541 165,284 0.08 2.40%

CDM Cadence Capital 295,274 441,508 384,994 562,643 0.025 1.68%

MIR Mirrabooka Investments 46,720 116,482 47,279 120,522 0.06 2.33%

WHF Whitefield Limited 32,930 138,894 30,707 130,100 0.07 1.66%

PIC Perpetual Equity Investment 179,951 176,181 204,020 198,720 0.005 0.52%

AMH AMCIL Limited 39,825 34,529 45,124 39,222 0.01 1.12%

WAX WAM Research 187,206 234,677 157,371 194,634 0.005 0.39%

QVE QV Equities 167,146 171,483 169,891 175,011 0.005 0.50%

FGX Future Generation Invst Comp. 264,454 295,905 201,136 223,698 0.015 1.29%

International

MFF Magellan Flagship Fund 301,472 604,690 340,019 658,272 0.01 0.48%

AGF AMP Capital China Growth Fund 727,365 938,342 1,057,515 1,342,249 0.005 0.54%

PMC Platinum Capital 169,934 320,854 172,859 326,099 0.005 0.26%

PGF PM Capital Glb Opport. Fund 483,742 495,840 566,734 589,434 0.005 0.51%

TGG Templeton Global Growth Fund 138,852 176,200 161,299 211,483 0.005 0.42%

FGG Future Generation Global Invst. 204,356 231,773 - - 0.04 3.48%

PAI Platinum Asia Investments 276,546 285,415 - - 0.01 1.00%

HHV Hunter Hall Global Value 220,150 257,579 233,263 270,616 0.005 0.43%

ALI Argo Global Listed Infrastructure 118,564 216,195 115,617 219,416 0.07 4.17%


URF US Masters Residential Property 47,886 103,971 57,239 122,792 0.04 1.99%

ALF Australian Leaders Fund 268,548 367,680 263,465 359,911 0.02 1.41%

Source: IRESS, Bloomberg, January 2016

Page 16 of 39

Australian Foundation Investment Company LimitedDetails

Stock code AFI

Last Price - 31 Dec 15 $5.95

Pre-Tax NTA - 31 Dec 15 $5.63

Premium/discount to NTA 5.68%

Premium/discount avg (5yr) 0.62%

Securities on issue 1,097,326,895

Market cap (m) $6,079

Listed option code n/a

Listed options on issue n/a

Management Fee 0.16%

Performance Fee No

Internal / external mgmt Internal

Dividends (past 12mth) $0.23

Dividend Yield (past 12mth) 3.9%

Franking level (past 12mth) 100.0%

Gross dividend yield (past 12mth) 5.5%

DRP Yes

DRP discount 2.5%

Dividend frequency Semi-annual

Value traded 1 mth ($m) 28.9


Average spread (%) 0.23

Source: MWM Research, IRESS (19/01/16)

Share Price Performance & Volatility (18 January 2016)

1 Mth 3 Mth 1 Year 3 Year* 5 Year*

AFI price history

Recent Dividends

Ex DateDividend

(cps)

Franking

(%)Pay Date Div Type DRP($)

7/08/2015 14.00 100 28/08/2015 F 6.03

5/02/2015 9.00 100 20/02/2015 I 5.97

8/08/2014 14.00 100 29/08/2014 F 5.93

4/02/2014 8.00 100 21/02/2014 I 5.86

Source: MWM Research, IRESS Source: MWM Research, IRESS

* Total Return and Standard Deviation are annualised

** Standard Deviation is a measure of volatility on the share price movements, a higher

standard deviation suggests greater variance away from its mean.

Benchmark = S&P ASX 200 Accumulation Index

Performance fee = None

Stand

Dev.**- - 11.81% 12.34% 13.78%

Australian Foundation Investment Company Limited (AFI) invests in

Australian companies with high quality assets, brand and/or business

footprints. AFI is the largest LIC on the ASX and has been listed since

1928. The management expense ratio is amongst the lowest available

and there is no performance fee. AFI has 1.9 million 6.25% $100

convertible notes on issue (ASX code AFIG) which convert to ordinary

shares at $5.0864 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 (DRP) 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 10% 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 with the monthly report disclosing which portfolio holdings have

active option positions.

Total

Return3.66% 4.39% 2.15% 9.52% 7.30%

$5.40

$5.60

$5.80

$6.00

$6.20

$6.40

Jan-15 Apr-15 Jul-15 Oct-15

LIC Snapshot Macquarie Wealth Management Research

Page 17 of 39

AMP Capital China Growth FundDetails

Stock code AGF



Premium/discount to NTA -15.27%

Premium/discount avg (5yr) -21.51%

Securities on issue 386,294,100

Market cap (m) $328




Performance Fee Yes

Internal / external mgmt External





DRP Yes

DRP discount 0.0%

Dividend frequency Annual







AGF price history

Recent Dividends

Ex DateDividend

(cps)

Franking


29/12/2015 33.87 0 31/03/2016 F

29/12/2014 2.92 0 26/03/2015 F 1.1286

23/12/2013 1.92 0 26/03/2014 F 0.7653

21/12/2012 2.35 0 26/03/2013 I 0.6479





Benchmark = S&P/CITIC 300 Total return index (Converted into A$)

Performance fee = 20% of outperformance above the benchmark

Stand

Dev.**- - 40.76% 29.45% 26.89%

AGF’s main objective is to achieve long-term capital growth for investors

by investing in China. The benchmark is the S&P/CITIC 300 Total Return

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 20% 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 20%

discount to its NTA and has moved to more frequent reporting of its

NTA to help address this.

Total

Return13.18% 18.26% 34.14% 31.06% 13.87%

$0.85

$1.06

$1.27

$1.48

$1.69

$1.90



Page 18 of 39

Argo Investments LimitedDetails

Stock code ARG










Performance Fee No






DRP Yes

DRP discount 2.0%








ARG price history

Recent Dividends

Ex DateDividend

(cps)

Franking


17/08/2015 15.50 100 2/09/2015 F 7.85

12/02/2015 14.00 100 4/03/2015 I 7.95

18/08/2014 14.50 100 3/09/2014 F

11/02/2014 13.50 100 5/03/2014 I 7.16







Stand

Dev.**- - 12.97% 12.29% 14.06%

Argo Investments Limited (ARG) invests in Australian listed securities

and short-term interest bearing securities. The Company has no debt

and has a market capitalisation of $5.2bn, which places it within

Australia's top 100 listed companies. Argo is internally managed, had an

expense ratio of 0.15% in the year to June 2015 and does not charge a

performance fee. Net tangible assets is reported on a monthly basis.

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 and trusts.

Argo's investment function is led by Jason Beddow, Managing Director,

having joined the firm in 2001 as an analyst and promoted to Chief

Investment Officer in 2008. The team seeks to identify well-managed

businesses with the potential to generate growing and sustainable

profits to fund increasing dividend payments. A majority of its revenue is

generated by the dividends and distributions received from the

companies in the portfolio. The investment team seeks to purchase

companies, or add to existing holdings, below their calculated long-term

value. Portfolio holdings are generally only sold due to takeovers or

when the outlook for the industry or company has deteriorated

significantly.

Total

Return5.12% 5.40% 6.89% 12.86% 8.17%

$7.10

$7.40

$7.70

$8.00

$8.30

$8.60



Page 19 of 39

Australian United Investment Company LimitedDetails

Stock code AUI






Market cap (m) $760




Performance Fee No






DRP Yes

DRP discount 0.0%








AUI price history

Recent Dividends

Ex DateDividend

(cps)

Franking


2/09/2015 18.50 100 25/09/2015 F 7.8021

24/02/2015 15.50 100 17/03/2015 I 8.5764

3/09/2014 17.50 100 25/09/2014 F 8.883

21/02/2014 14.50 100 17/03/2014 I 7.9708







Stand

Dev.**- - 14.44% 15.48% 17.63%

Australian United Investment Company Limited (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.

Total

Return1.37% 1.01% -1.69% 8.82% 5.98%

$6.80

$7.20

$7.60

$8.00

$8.40

$8.80



Page 20 of 39

BKI Investment Company LimitedDetails

Stock code BKI






Market cap (m) $899




Performance Fee No






DRP Yes

DRP discount 0.0%








BKI price history

Recent Dividends

Ex DateDividend

(cps)

Franking


5/08/2015 3.65 100 27/08/2015 F 1.7

12/02/2015 3.55 100 26/02/2015 I 1.75

12/08/2014 3.50 100 28/08/2014 F 1.66

11/02/2014 3.45 100 27/02/2014 I 1.61







Stand

Dev.**- - 15.86% 15.29% 15.92%

BKI Investment Company Limited (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 90% to 95% dividend pay out ratio of

Net Operating Profit.

Total

Return0.90% 5.64% 10.85% 11.48% 10.28%

$1.50

$1.56

$1.62

$1.68

$1.74

$1.80



Page 21 of 39

Carlton Investments LimitedDetails

Stock code CIN






Market cap (m) $847




Performance Fee No






DRP No

DRP discount n/a








CIN price history

Recent Dividends

Ex DateDividend

(cps)

Franking


31/08/2015 65.00 100 21/09/2015 F

2/03/2015 43.00 100 19/03/2015 I

29/08/2014 63.00 100 17/09/2014 F

27/02/2014 37.00 100 20/03/2014 I







Stand

Dev.**- - 19.33% 17.69% 17.81%

Carlton Investments Limited (CIN) is an investment company investing

and holding in shares and units in entities listed on the Australian

Securities Exchange with a long term investment horizon. CIN invests in

Australian listed entities that provide both high levels of income through

predominantly franked dividends and long term capital growth, and

holds its equity investments for the long term and not for trading

purposes.

Investments are generally only disposed of through takeover, mergers or

other exceptional circumstances that may arise from time to time.

Carlton Investments Group entities do not act as share traders nor do

they invest in speculative stocks.

Total

Return5.97% 16.93% 23.86% 23.28% 16.45%

$28

$29

$30

$31

$32

$33

$34

$35



Page 22 of 39

Djerriwarrh Investments LimitedDetails

Stock code DJW






Market cap (m) $940




Performance Fee No






DRP No

DRP discount n/a








DJW price history

Recent Dividends

Ex DateDividend

(cps)

Franking


28/01/2016 10.00 100 16/02/2016 I

4/08/2015 16.00 100 21/08/2015 F

29/01/2015 10.00 100 17/02/2015 I

5/08/2014 16.00 100 22/08/2014 F







Stand

Dev.**- - 18.19% 17.46% 19.72%

Djerriwarrh Investments Limited (DJW) invests in Australian equitieswith

a focus on stocks predominantly in the ASX 50. DJW was listed on the

ASX during 1995.

DJW aims to provide shareholders with attractive investment returns

through access to a steady stream of fully franked dividends and capital

growth. The investment philosophy is built on taking a medium to longer

term view of value, which means the company tends to buy and hold

individual stocks for the long term based on business strategy of the

companies, their underlying value and growth prospects. The company

also uses exchange traded options to enhance income returns to

investors. DJW sells options on stocks in the portfolio which generates

additional income via option premiums. The level of covered-call options

typically range between 20% to 50% of the total portfolio.

Total

Return0.94% 4.62% -1.08% 7.58% 5.82%

$4.00

$4.20

$4.40

$4.60

$4.80

$5.00



Page 23 of 39

Diversified United Investment LimitedDetails

Stock code DUI






Market cap (m) $664




Performance Fee No






DRP Yes

DRP discount 0.0%








DUI price history

Recent Dividends

Ex DateDividend

(cps)

Franking


2/09/2015 7.50 100 25/09/2015 F 3.2981

24/02/2015 6.50 100 17/03/2015 I 3.6647

3/09/2014 7.50 100 25/09/2014 F 3.8326

21/02/2014 6.50 100 17/03/2014 I 3.5276







Stand

Dev.**- - 17.69% 17.79% 20.23%

Diversified United Investment Limited (DUI) is an investment company

that invests in a diversified portfolio with the objective of obtaining its

current income and longer term capital gain within an acceptable level

of risk.

The philosophy is to take a medium to long term view and to invest in

Australian equities and short term deposits. Investments may also be

made from time to time in listed property trusts, fixed interest securities,

convertible notes or international equities.

Total

Return2.10% 3.96% 4.41% 11.27% 7.55%

$3.10

$3.20

$3.30

$3.40

$3.50

$3.60

$3.70

$3.80



Page 24 of 39

Future Generation Global Investment Company LimitedDetails

Stock code FGG






Market cap (m) $314

Listed option code FGGO

Listed options on issue 274,135,666


Performance Fee No






DRP No

DRP discount n/a

Dividend frequency None







FGG price history

Recent Dividends

Ex DateDividend

(cps)

Franking






Benchmark = No benchmark


Stand

Dev.**- - - - -

Future Generation Global Investment Company Limited (FGG) is an

internationally focused listed investment company with the dual

objectives of providing investors with diversified exposure to global

equities while also helping to improve the lives of young Australians who

are affected by mental health issues.

The company is expecting to have 10 to 20 fund managers, by having a

number of different fund managers the company will have access to a

range of investment styles and strategies. The company believes that

the diversification of styles and strategies used by the different

underlying funds in its portfolio is important in managing and mitigating

risk in the company's portfolio. The company expects its portfolio will

largely comprise investments in funds with exposure to global equities.

The company may invest directly in securities (or similar investments)

and may also retain cash where it is of the view it is prudent to do so.

Total

Return0.86% 7.34% - - -

$1.00

$1.04

$1.08

$1.12

$1.16

$1.20



Page 25 of 39

Hunter Hall Global Value LimitedDetails

Stock code HHV






Market cap (m) $267




Performance Fee Yes






DRP Yes

DRP discount 0.0%








HHV price history

Recent Dividends

Ex DateDividend

(cps)

Franking


3/09/2015 4.00 0 18/09/2015 S 1.08

3/09/2015 4.00 0 18/09/2015 F 1.08

15/04/2015 4.00 18 29/04/2015 I 1.21

18/09/2014 3.00 23 1/10/2014 F 1.12





Benchmark = MSCI World Accumulation Net Return Index in A$

Performance fee = 15% of investment portfolio compared to its benchmark in A$

Stand

Dev.**- - 24.20% 18.51% 20.00%

HHV invests in domestic and international stocks using a valued based

investment approach. Stocks trading under intrinsic value are selected

with a bias towards small-mid cap stocks. HHV holds a high portion of

the portfolio in Australia while being underweight in other regions (US,

Europe and Asia) when compared to the benchmark and peers that

invest globally. HHV’s investments are bound by the ethical investment

policy where investments harmful to humans or the environment are

removed.

The portfolio carries high stock-specific risk due to the high

concentration in individual companies such as Sirtex Medical Limited

(SRX) and St Barbara (SBM). HHV pays a management fee of 1.5% per

annum (payable on a monthly basis) to the investment manager. The

performance fee equates to 15% of any outperformance above the

benchmark (MSCI World Net Returns Index in A$).

Total

Return-1.67% 8.76% -3.38% 18.74% 10.72%

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50



Page 26 of 39

Magellan Flagship Fund LimitedDetails

Stock code MFF






Market cap (m) $849

Listed option code MFFO



Performance Fee Yes






DRP Yes

DRP discount 0.0%








MFF price history

Recent Dividends

Ex DateDividend

(cps)

Franking


13/10/2015 1.00 100 12/11/2015 F 1.8709

29/04/2015 1.00 0 15/05/2015 I 1.7414

13/10/2014 1.00 0 14/11/2014 F 1.4659

29/04/2014 1.00 0 16/05/2014 I 1.4804





Benchmark = No benchmark

Performance fee = 10% outperformance, capped at $2m per annum.

Stand

Dev.**- - 20.30% 23.12% 21.64%

MFF is an LIC with two main objectives: to maximise risk adjusted after-

tax returns for shareholders by investing in outstanding companies at

below their assessed intrinsic value and to minimise the risk of

permanent loss for their shareholders. MFF seeks to identify companies

with competitive and scale advantages and strong cash flows. By

selecting companies with these characteristics, the portfolio is skewed

towards multinationals and large US companies, with exposure to

Europe and Asia obtained indirectly via multinationals listed in the US.

The portfolio is concentrated with the top 5 holdings representing over

50% of the assets held. No individual position, at cost, exceeds 10% of

the company’s investment assets, except where pre-approved by the

board up to a limit of 20%.

MFF has a borrowing limit of 20% of investment assets. The use of

derivatives and short-selling is very limited. MFF may use currency

hedging, but does not anticipate hedging non-$A cash flows or

investments in the current exchange rate and economic environment.

MFF holds its cash predominately in US dollars. The performance fee is

A$ 2 million if total shareholder’s return exceeds 10% p.a., capped at

$6m to 31 December 2016.

Total

Return-0.47% 12.83% 16.65% 32.27% 25.34%

$1.70

$1.80

$1.90

$2.00

$2.10

$2.20



Page 27 of 39

Mirrabooka Investments LimitedDetails

Stock code MIR






Market cap (m) $366




Performance Fee No






DRP Yes

DRP discount 5.0%








MIR price history

Recent Dividends

Ex DateDividend

(cps)

Franking


20/01/2016 3.50 100 9/02/2016 I

22/07/2015 7.00 100 7/08/2015 S 2.5

22/07/2015 6.50 100 7/08/2015 F 2.5

22/01/2015 3.50 100 10/02/2015 I 2.23





Benchmark = S&P ASX Mid Cap 50 and Small Ord Accu. Indices


Stand

Dev.**- - 22.85% 25.13% 24.86%

Mirrabooka Investments Limited (MIR) is an investment company

specializing in small and medium sized companies located with Australia

and New Zealand. The company's general definition of small and

medium sized companies is those companies which fall outside the top

50 listed companies, by market capitalization, on the Australian Stock

Exchange (ASX) or are in the S&P/ASX Mid Cap 50s or Small Ordinaries

Index.

The portfolio has a medium to long-term investment horizon. Securities

purchased that grow to be reclassified as large will not necessarily be

sold if the company is satisfied with investment prospects. The

company typically holds between 50 - 80 stocks depending on their fit

with its investment aims and the desired concentration of risk within the

portfolio. Portfolio performance is benchmarked against the Small

Ordinaries Accumulation Index and the Mid Cap 50 Accumulation Index.

Total

Return4.88% 4.45% 5.10% 12.06% 12.74%

$2.40

$2.50

$2.60

$2.70

$2.80

$2.90



Page 28 of 39

Milton Corporation LimitedDetails

Stock code MLT










Performance Fee No






DRP Yes

DRP discount 0.0%








MLT price history

Recent Dividends

Ex DateDividend

(cps)

Franking


13/08/2015 0.40 100 3/09/2015 S 4.39

13/08/2015 9.90 100 3/09/2015 F 4.39

12/02/2015 8.50 100 3/03/2015 I 4.56

14/08/2014 0.40 100 3/09/2014 S 4.55





Benchmark = S&P/ASX All Ord Accu. Index


Stand

Dev.**- - 15.24% 14.38% 14.96%

Milton was established as a private investment vehicle for four

shareholders in 1938. It became a public company in 1950 and listed

on the Sydney Stock Exchange in 1958. Milton is listed on the Australian

Securities Exchange under the code MLT.

Milton’s objective is to hold a diversified portfolio of assets that

generates a growing income stream for distribution to shareholders in

the form of increasing fully franked dividends and provides capital

growth in the value of the shareholders’ investments.

Milton is predominantly a long term investor in companies and trusts

that are well managed, with a profitable history and an expectation of

increasing dividends and distributions. Turnover of investments is low

and capital gains arising from disposals are reinvested. Milton holds

liquid assets such as cash and term deposits and it may invest in hybrid

securities as well as real property development through joint ventures.

Total

Return5.05% 7.26% 6.34% 13.09% 10.70%

$4.10

$4.30

$4.50

$4.70

$4.90



Page 29 of 39

Platinum Asia Investments LimitedDetails

Stock code PAI






Market cap (m) $283

Listed option code PAIO



Performance Fee Yes






DRP No

DRP discount n/a








PAI price history

Recent Dividends

Ex DateDividend

(cps)

Franking






Benchmark = MSCI All Country Asia ex Japan Net Index (A$)

Performance fee = 0.15

Stand

Dev.**- - - - -

Platinum Asia Investments Limited (PAI) provides investors with an

opportunity to invest in an ASX listed investment company which aims

to give investors exposure to an actively managed, diversified portfolio

of attractive companies in the Asian Region ex Japan.

The company will invest primarily in listed securities of companies in the

Asian Region ex Japan. Shareholders may expect the portfolio to

contain listed companies based in China, Hong Kong, Taiwan, South

Korea, Malaysia, Singapore, India, Thailand, Indonesia, Philippines, Sri

Lanka, Pakistan and Vietnam. The company may also invest up to 15%

of its NAV (at the time of investment) in unlisted securities of companies

in the Asian Region ex Japan. Such investments may include, for

example, shares in a pre-IPO company. However, unlisted securities do

not form part of the company's core investment strategy.

Total

Return-0.96% 4.04% - - -

$0.95

$0.98

$1.01

$1.04

$1.07

$1.10



Page 30 of 39

PM Capital Global Opportunities Fund LimitedDetails

Stock code PGF






Market cap (m) $314




Performance Fee Yes






DRP No

DRP discount n/a








PGF price history

Recent Dividends

Ex DateDividend

(cps)

Franking






Benchmark = MSCI World Index (AUD)


Stand

Dev.**- - 16.14% - -

PGF’s investment objective is to provide long term capital growth over a

seven-year-plus investment horizon by investing in global markets.

According to the investment guidelines, the portfolio should hold

approximately 40 global listed stocks with no individual position

exceeding 10% of the portfolio weighting. There are no geographical

restrictions, while industry sectors are limited to the greater of 35% of

the portfolio or three times sector weight within MSCI World Index ($A).

While a majority of the portfolio will be invested in globally listed stocks,

the company may also invest in unlisted securities, interest bearing debt

securities, managed investment schemes, derivatives, deposit products

and cash.

The portfolio is able to short-sell securities and use leverage to enhance

returns. The maximum short proportion and leverage allowed by the

company is 30% of the portfolio’s market value. PGF pays a

management fee of 1.0% per annum (payable on a quarterly basis) to

the investment manager. The performance fee equates to 15% of any

outperformance over the benchmark (MSCI World Index (AUD)).

Total

Return-3.81% 2.02% -5.16% - -

$0.90

$0.95

$1.00

$1.05

$1.10

$1.15



Page 31 of 39

Perpetual Equity Investment Company LimitedDetails

Stock code PIC






Market cap (m) $239

Listed option code PICO



Performance Fee No






DRP Yes

DRP discount 2.5%

Dividend frequency Irreg







PIC price history

Recent Dividends

Ex DateDividend

(cps)

Franking


25/08/2015 0.50 100 10/09/2015 F 0.93







Stand

Dev.**- - - - -

Perpetual Equity Investment Company Limited (PIC) is a listed

investment company (LIC) with an objective to provide investors with a

growing income stream and long-term capital growth in excess of its

benchmark over minimum 5 year investment periods. The company has

a flexible mandate to invest in both global and domestic securities

which will result in the portfolio materially departing from PIC's

benchmark, the S&P/ASX 300 Accumulation Index. The ASX 300

benchmark was selected to represent the opportunity cost of only

investing in Australian equities with the manager seeking to add value

above Australian equity market return.

The company's investment strategy is to create a concentrated and

actively managed portfolio of Australian securities with a mid-cap focus

outside the 20 largest ASX companies by market capitalisation. The

allocation to global listed securities will be opportunistic in nature and

the global listed securities portion is not expected to have any

consistent capitalisation bias, but will be larger and more liquid than

comparable Australian entities. Companies are selected on four key

quality criteria: sound management; conservative debt; quality of the

business; and recurring earnings (where applicable). The portfolio is

expected to be concentrated in 20-40 securities, but the manager will

diversify the portfolio across industry sectors and offshore investments.

Up to 25% of the portfolio’s net asset value may be held in cash,

deposit products and senior debt with less than one year to maturity

with this cash portfion of the portfolio only likely to be reached as equity

markets become very expensive.

Total

Return-1.52% 2.63% 0.00% - -

$0.90

$0.93

$0.96

$0.99

$1.02

$1.05



Page 32 of 39

Platinum Capital LimitedDetails

Stock code PMC






Market cap (m) $425




Performance Fee Yes






DRP Yes

DRP discount 2.5%








PMC price history

Recent Dividends

Ex DateDividend

(cps)

Franking


18/08/2015 6.00 100 11/09/2015 F 1.82

18/02/2015 5.00 100 13/03/2015 I 1.73

21/08/2014 5.00 100 8/09/2014 F 1.74

18/02/2014 3.00 100 10/03/2014 I 1.75





Benchmark = MSCI All country World Net Index in A$

Performance fee = 10% of O/P above the benchmark, plus 5% hurdle

Stand

Dev.**- - 21.90% 21.53% 21.77%

PMC aims to provide capital growth by investing in undervalued large

and mid-cap international stocks. The portfolio can hold up to 150

stocks and also enter into short positions over indices or stocks that the

manager perceives as overvalued. PMC seeks absolute returns from a

bottom-up stock selected portfolio and consequently the holdings may

show little resemblance to the benchmark (MSCI AC World Net Index).

The large number of holdings across different regions provides

diversification, reducing the adverse impact of an incorrect investment

call. Portfolio sector weightings are not constrained, hence the sector

weightings can fluctuate to reflect the manager’s views.

PMC actively manages currency to generate additional return.

Derivatives (equity swaps, futures and options) are used for risk

management purposes and the limits are reviewed by the board. The

company does not generally enter or trade derivatives for speculative

purposes. A 10% outperformance fee applies on the amount the

portfolio outperforms the benchmark by 5% hurdle.

Total

Return1.33% 2.15% 10.44% 26.76% 9.00%

$1.60

$1.68

$1.76

$1.84

$1.92

$2.00



Page 33 of 39

QV Equities LimitedDetails

Stock code QVE






Market cap (m) $204

Listed option code QVEO



Performance Fee No






DRP No

DRP discount n/a

Dividend frequency Irreg







QVE price history

Recent Dividends

Ex DateDividend

(cps)

Franking


13/10/2015 1.50 100 6/11/2015 F

16/03/2015 0.50 100 2/04/2015 I







Stand

Dev.**- - 17.01% - -

QV Equities Limited (QVE) provides investment in ASX listed entities

outside the S&P/ASX 20 Index with the aim of providing long-term

capital growth and income over a five year plus investment period. The

company's manager is Investors Mutual Limited. The company's

investment strategy is to create a diversified portfolio of ASX listed

securities outside the S&P/ASX 20 Index. The company aims to

predominantly invest in the S&P/ASX 300 Index and the portfolio may

also invest up to 5% in unlisted securities, derivatives and cash

securities.

The Manager has a long-term focus with a belief that short-term

volatility can create opportunities to build positions in high quality

companies which will reflect their value in the long-term. A qualitative,

bottom-up, value approach is employed. The Manager looks to invest in

entities with four clear quality characteristics: a competitive advantage

over their peers; recurring, predictable earnings; a capable management

team; and the ability to grow over time. Additionally, from a valuation

perspective, the Manager believes that it is important that such entities

be trading at a price below what it believes represents the long-term

underlying value of the entity. The portfolio is primarily managed by

Anton Tagliaferro (Chief Investment Manager) and Simon Conn (Senior

Portfolio Manager) from Investors Mutual.

Total

Return1.47% 2.44% 1.44% - -

$0.95

$0.99

$1.03

$1.07

$1.11

$1.15



Page 34 of 39

Templeton Global Growth Fund LimitedDetails

Stock code TGG






Market cap (m) $287




Performance Fee No






DRP Yes

DRP discount 2.5%

Dividend frequency Annual







TGG price history

Recent Dividends

Ex DateDividend

(cps)

Franking


9/09/2015 4.10 17 25/09/2015 F 1.2591

10/09/2014 3.50 100 26/09/2014 F 1.3159

9/09/2013 2.50 100 27/09/2013 F 1.1557

7/09/2012 1.50 100 28/09/2012 F 0.7234





Benchmark = MSCI All Country World Index


Stand

Dev.**- - 18.92% 18.77% 20.33%

TGG’s investment objective is to achieve long term capital growth from

a globally diversified portfolio of investment securities. The portfolio

holds approximately 40 stocks and diversifies risk by allocating roughly

equal weighting to each holding. TGG selects value stocks via a bottom-

up stock selection process identifying stocks trading at a discount to

assessed value. TGG adopts a ‘buy and hold’ investment philosophy,

whereby securities are typically held for five years or more, with the

expectation that the market will recognise valuation gaps over time.

With no geographic limits on the allocation, the portfolio can move away

from the benchmark country/sector weightings.

The portfolio is unhedged and is impacted by movements in the foreign

exchange markets. Appreciation of the $A would reduce the value of

the portfolio expressed in $A. TGG’s annual management fee is 1.00%

of the value of the fund’s assets. There is no performance fee.

Total

Return-2.77% -5.38% -9.36% 20.36% 11.62%

$1.10

$1.18

$1.26

$1.34

$1.42

$1.50



Page 35 of 39

WAM Capital LimitedDetails

Stock code WAM






Market cap (m) $983




Performance Fee Yes






DRP Yes

DRP discount 2.5%








WAM price history

Recent Dividends

Ex DateDividend

(cps)

Franking


19/10/2015 7.00 100 30/10/2015 F 1.9186

20/04/2015 7.00 100 30/04/2015 I 1.9154

7/10/2014 6.50 100 17/10/2014 F 1.8903

18/03/2014 6.50 100 31/03/2014 I 1.9432





Benchmark = S&P ASX All Ord Accu. Index


Stand

Dev.**- - 13.94% 13.86% 16.01%

WAM Capital Limited (WAM) is a listed investment company managed

by Wilson Asset Management (International) Pty Limited. WAM provides

investors exposure to an actively managed diversified portfolio of

undervalued growth companies which are generally found in the small

to medium industrial sector; and also provides exposure to relative value

arbitrages and market mispricing opportunities. The investment

objectives are to deliver investors a rising stream of fully franked

dividends, to provide capital growth and preserve capital.

WAM has two investment principal factors determining the investment

decisions of the company, being (i) Research Driven, the company buys

shares in companies after extensive research, focused on free cashflow

then rating the company with respect to management, earnings growth

potential, valuation and industry position. The company sells once the

company reaches the valuation. (ii) Market Driven, the company scours

the market for trading opportunities including IPO's, placement, block

trades, rights issues, corporate transactions (such as takeovers,

mergers, schemes of arrangement, corporate spin-offs, restructurings),

arbitrage opportunities.

Total

Return3.92% 9.50% 12.44% 14.55% 13.60%

$1.90

$1.96

$2.02

$2.08

$2.14

$2.20



Page 36 of 39

WAM Research LimitedDetails

Stock code WAX






Market cap (m) $222




Performance Fee Yes






DRP Yes

DRP discount 2.5%








WAX price history

Recent Dividends

Ex DateDividend

(cps)

Franking


12/10/2015 4.00 100 23/10/2015 F 1.1932

18/05/2015 4.00 100 28/05/2015 I 1.1362

13/10/2014 3.75 100 24/10/2014 F 1.097

11/04/2014 3.75 100 30/04/2014 I 1.122





Benchmark = S&P ASX All Ord. Accumulation Index


Stand

Dev.**- - 15.14% 17.04% 18.29%

WAM Research Limited (WAX) is a Listed Investment Company

managed by Wilson Asset Management Group. WAM Research Limited

(WAX) is a listed investment company that invests in undervalued

growth companies, primarily small to medium sized industrial

companies listed on the ASX.

The investment objectives are to provide a growing stream of fully

franked dividends and to achieve a high real rate of return, comprising

both income and capital growth, within risk parameters acceptable to

the Directors. WAX investment strategy is research driven investing,

focusing on the free cashflow then rating the company with respect to

management, earnings growth potential, valuation and industry position.

Total

Return1.98% 5.98% 18.10% 18.52% 18.06%

$1.10

$1.16

$1.22

$1.28

$1.34

$1.40



Page 37 of 39

Whitefield LimitedDetails

Stock code WHF






Market cap (m) $323




Performance Fee No






DRP Yes

DRP discount 2.5%








WHF price history

Recent Dividends

Ex DateDividend

(cps)

Franking


20/11/2015 8.50 100 11/12/2015 I 4.06

22/05/2015 8.50 100 12/06/2015 F 4.45

20/11/2014 8.50 100 12/12/2014 I 4.05

26/05/2014 8.50 100 13/06/2014 F 4.03





Benchmark = S&P ASX 200 All Industrials Index


Stand

Dev.**- - 17.93% 15.41% 16.80%

Whitefield Limited (WHF) is an investment company focusing on

investment in a portfolio of diversified industrial (non-resource)

companies listed on the Australian Stock Exchange.

Whitefield aims to generate an investment return which is in excess of

the return of the All Industrials Accumulation Index over the long term

from investment in a portfolio of industrial shares listed on the Australian

Stock Exchange. Whitefield seeks to hold investments which are

realistically capable of generating a robust and sufficient rate of return

through the satisfactory delivery of future earnings over a few years. The

company holds a diversified investment portfolio containing

approximately 60 holdings, with exposure across the major economic

segments of the Australian industrial (non-resource) market.

Total

Return3.83% 6.63% 6.62% 16.21% 12.35%

$3.90

$4.10

$4.30

$4.50

$4.70

$4.90



Page 38 of 39

Disclaimer

Listed Investment Companies was finalised 19 January 2016.

Analyst Certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers

and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations

or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall

revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 318062) (“MGL”) and its related entities (the “Macquarie Group”) and has

taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

General Disclosure: This research has been issued and distributed in Australia by Macquarie Equities Limited ABN 41 002 574 923 ("MEL").

MEL holds Australian Financial Services Licence No. 237504 and is a Participant of the Australian Securities Exchange Group. MEL is not an

authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959 and MEL's obligations do not represent deposits or other

liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in

respect of the obligations of MEL. This research has been prepared for the use of the clients of Macquarie Group Limited and its related

entities (the "Macquarie Group") and must not be copied, either in whole or in part, or distributed to any other person. If you are not the

intended recipient, you must not use or disclose the information in this research in any way. Nothing in this research shall be construed as a

solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is general advice

and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider

the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before

making any financial investment decision. There are risks involved in securities trading. The price of securities can and does fluctuate and an

individual security may even become valueless. International investors are reminded of the additional risks inherent in international

investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the

investment. This research is based on information obtained from sources believed to be reliable but we do not make any representation or

warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions

expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect,

consequential or other loss arising from any use of this research and/or further communication in relation to this research. The Macquarie

Group or its associates (including MEL), officers or employees may have interests in the financial products referred to in this report by acting in

various roles including as investment banker, underwriter or dealer, holder of principal positions, broker, lender, director or adviser. Further,

they may act as market maker or buy or sell those securities as principal or agent and, as such, may affect transactions which are not

consistent with the recommendations (if any) in this research. The Macquarie Group or its associates (including MEL) may receive fees,

brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The analyst(s) principally

responsible for the preparation of this research receives compensation based on overall revenues, including investment banking revenues of

Macquarie Group Limited and its related entities. Disclosures with respect to issuers, if any, mentioned in this research are available at

www.macquarie.com.au/research/disclosures, or can be obtained from your Macquarie representative. © Macquarie Group.

Page 39 of 39

Documents

Listed Investment Companies - Macquarie€¦ · Choosing a Listed Investment Company (LIC) Net Tangible Asset Backing (NTA) LICs report net tangible asset backing (NTA) for the company