Performance update and proposed change to dividend policy

Following feedback from shareholders, the board of Martin Currie Asia Unconstrained Investment Trust announces that it is initiating a policy of increasing the yield on the shares by introducing a distribution from capital to the dividend. This will be subject to shareholder approval at the company’s Annual General Meeting in July 2017.

4 April 2017

The Board proposes that the first payment from capital will be made as part of the final dividend paid in August 2017 for the year ended 31 March 2017 and that this payment will be set at a level of 2% of the Company's ex-income NAV referenced to the Company's year-end of 31 March 2017.

This will increase the headline dividend yield on the Company's shares, for the full year to 31 March 2017, to approximately 4.5% based on the Company's share price at the close on 31 March 2017.

It is the intention to repeat the capital distribution in future years, to be paid on an annual basis along with the final dividend and set by reference to 2% of the prior year-end ex-income NAV. Careful consideration has been given to calculating the capital distribution at a level which will not constrain the Investment Manager during the investment process.

There will be no change to the Company's Investment Policy.

The move comes at a time when the company reports strong performance – in the year to 31 March 2017, and subject to audit, the company has achieved a capital return on net assets of 30.8%*.

Commenting on the proposal, Chairman, Harry Wells said:
“The Board believes that the new dividend policy will reward existing shareholders and make the shares appealing to new buyers particularly retail investors, who will be able to receive a very attractive level of income while participating in potential capital growth reflective of the investment opportunities in Asia.

“For some time, the Board has been concerned by our shares trading at a wide discount to Net Asset Value ignoring the recent improvement in investment performance. The Board submits that buying back shares is not the solution as this just facilitates sellers rather than rewarding loyal shareholders. We acknowledge that there may be a small proportion of shareholders holding stock in their own name that may be disadvantaged by changes in dividend tax being implemented by HMRC from April 2018, but that most individual holders and new buyers prefer to hold shares in tax free wrappers, SIPPs and ISAs.

“The Board commends this new dividend policy given that income remains an important issue for investors in current market conditions and intends that the policy will be enduring, but has reserved the right to keep it under review.

“I should point out that there is no change to the investment policy. The Investment Manager will continue to have wide flexibility in executing the mandate but is now free from any income considerations in stock selection. However, the Company's portfolio will continue to be invested in high quality businesses characterised by sustainable growth models, where improving free cash flow should naturally lead to an increase in the level of portfolio income.”

Shareholders will have the opportunity to vote for the continuation of the Company for a further three years at the AGM in July 2018.

To read the London Stock Exchange RNS announcement in full please click here.

Past performance is not a guide to future returns
*Source: Martin Currie, for the twelve month period to 31 March 2017. The net asset value is exclusive of income. There is a risk to capital as a result of proposed change to dividend policy. For more information on portfolio, performance and dividends, please click here