STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
The strategy aims to generate longterm capital appreciation through a valuation-based investment approach in Japanese equities.
The strategy consists of only the highest conviction investment ideas from predominantly smaller companies and is managed in a concentrated manner, unconstrained by a benchmark.
Benchmark
Russell Nomura Mid-Small Index – used for reference purposes only
Portfolio Manager
Max Godwin
Global equity market volatility has continued to rise into 2016 and this has coincided with investor time horizons becoming very short term and thematic in nature. Negative market sentiment, stemming from uncertainty around the global market environment, has driven share prices far from what valuations suggest some companies are worth, for both expensive and cheap stocks. In terms of style performance, low beta strategies and high price momentum has continued to dominate positive performance, calendar year to date. This is evident in the market’s ongoing narrow preference for extremely expensive defensive stocks, such as consumer staples, pharmaceuticals, rail companies, and utilities.
Conversely, value strategies have continued to underperform calendar year to date. Amid this market environment valuation dispersion remains wide and there are now significantly mispriced investment opportunities based on valuation. For example, Banks and insurance companies have been indiscriminately sold off by the market, irrespective of attractive valuations and supportive trend fundamentals. We avoid following the thematic preferences of the market. Instead, our approach is to let the significant share price anomalies lead us to the best potential opportunities based on valuation, and then remain patient but price sensitive.
Our contrarian approach is to deeply understand the trend fundamentals for every stock held in the Strategy and exploit significant price opportunities.
The Japanese equity market is also being supported by prospects for higher payouts and earnings growth. With the onset of negative interest rates for bond holders, there is now a strong economic imperative for companies to improve capital efficiency encouraging shareholder oriented behaviour. Topix firms have announced the approval of share buybacks through February 29, 2016, with a total value of ¥2.1 trillion, up 248% year on year. Announced buy backs in 2016 year to date are surging ahead of historical year to date levels. Improved corporate behaviour through positive use of excess cash and capital rationalisation is supportive for sustainability of returns and therefore the longer term rerating for Japan equities.
The Strategy returned 5.8% in March, outperforming the reference benchmark, the Russell Nomura Mid-Small Index, by 0.7%.
The Strategy represents our highest conviction investment ideas in Mid-
Small universe and is managed without regard to the reference benchmark.
All data as of 31 March 2016 unless otherwise stated.
Source: Eastspring Investments, JP Morgan Equity Research, Bloomberg.
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STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
Toshiba Tec, Sankyo Tateyama, and
Komeri Co Ltd were key contributors to the Strategy performance in
March.
Toshiba Tec has a dominant domestic market share in its point of sale
(POS) system business as well as a smaller overseas multi function printer (MFP) business. It it has a strong balance sheet and continues to generate good free cash flow, in these businesses, but it has struggled to integrate its acquisition of
IBM’s large global POS business due to a range of complexities that it had not accounted for. This has significantly increased one-off costs associated with the integration at a point in time where sales in Europe and Emerging Markets are cyclically weak.
However our conservative trend assumptions suggest that valuations are now very attractive and more than compensate the Strategy for the shorter term risks to company profitability.
Sankyo Tateyama is one of three large manufacturers of extruded aluminum products, particularly for the construction and building industry, in Japan. The oligopolistic industry structure enables scales advantages in both manufacturing and distribution of its products. Whilst
Sankyo Tateyama is attractively valued, it also out of favour with the market. Market sentiment is negative on the back of the weak yen environment which has increased import costs for aluminum in the shorter term and also suppressed short term margins. However we observe that due to the overcapacity in global aluminum production, trend prices for aluminum are falling which we expect to be supportive for the likely level of trend earnings Sankyo Tateyama could generate through the market cycle.
Komeri Co Ltd, is a chain of DIY hardware stores. There remains sufficient valuation support for a moderate position in the Strategy. The company continues to focus on labour efficiency and product mix to reinforce its scale and cost advantages, and underpin margins.
All data as of 31 March 2016 unless otherwise stated.
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STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
Tobu Railway, Shindengen, and
Rohm Co Ltd were key detractors from the Strategy performance in
March.
Tobu Railway has been neglected by the market after underperfoming in recent years. However our analysis suggests that management are taking steps to improve trend margins which is not being recognised by the market.
Shindengen is manufacturer of electronic components and assembler of electronic modules primarily for the auto industry. Its share price has fallen amid market concerns for shorter term cyclical weakness and a strengthening Yen. This has presented an opportunity to build a position in the Strategy as Shindengen is attractively valued compared to the likely level of sustainable earnings it could generate longer term.
The investment team’s analysis suggests that Rohm has a far better earnings profile and expected cash flow than the market is currently pricing. The Strategy has responded to share price weakness by adding to the position.
Our investment approach tends to be contrarian in nature.
Accordingly, outperforming names are a funding source to invest further capital into high-conviction names that have lagged the market.
The portfolio manager reduced the position size in Cocokara Fine, one of the five largest nationwide drugstore chains in Japan; Pal Co Ltd, an operator of a chain of clothing stores; Leopalace21, an apartment builder and leaser; Rengo Co Ltd, one of two dominant manufacturers of cardboard boxes in Japan; Denki Kogyo Co Ltd, a leading player in communications antennae for base stations; Kurita Water Industries, a water treatment equipment company; Kaneka Corp, a specialist chemicals manufacturer; Nikon Corp, a digital imaging company.
Among others, the Fund took advantage of price episodes to add to IBJ
Leasing, leasing company for general machinery; Fujibo Holdings, a manufacturer of industrial fiber products; Toshiba Tec, a manufacturer of office equipment and electrical machinery; Yamaha Motor Co Ltd, a manufacturer of motorcycles and leisure craft; Sankyo Tateyama, a manufacturer of extruded aluminum products; Shindengen Electric
Manufacturing, a semiconductor company; Daikoku Denki Co Ltd, a developer of computer systems for the pachinko industry; Oki Denki, a developer of hardware and software systems for IT, network infrastructure and communications technology; Awa Bank and Tokyo TY
Financial Group, two regional banks; Credit Saison, a financing company; and Rohm Co Ltd, an electronic component manufacturer.
All data as of 31 March 2016 unless otherwise stated.
Page 3

STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
The Strategy will continue to focus on the numerous valuation outliers with significant sustainable earnings potential.
The market’s shorter term focus on thematic macroeconomic news flow can drive significant share price anomalies for the Strategy to exploit.
The approach is to look through, and exploit, shorter term market volatility by applying a disciplined long term valuation approach.
Importantly for our investment approach, relative valuation dispersion in the market remains wide with the number of out of favour, relative valuation outliers increasing. This market dynamic presents opportunities for our valuation discipline to exploit.
There remains a long tail of out-of-favour valuation outliers, which provides ample opportunity for the Strategy.
We note that there are many companies in strong financial health. Corporate improvement was driven by meaningful restructuring at the company level. The strength of earnings improvement remains underappreciated by the broader market.
All data as of 31 March 2016 unless otherwise stated.
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STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
Rolling Period Data
Composite Return - Net (%)
Composite Return - Gross (%)
Benchmark Return (%)
Relative to Gross (%)
Composite Annualised Volatility (%)
Highest Return in Composite (%)
Lowest Return in Composite (%)
Tracking Error (%)
Information Ratio
Calendar Year Data
Composite Return - Net (%)
Composite Return - Gross (%)
Benchmark Return (%)
Relative to Gross (%)
Composite 3-Year Annualised Volatility (%)
Benchmark 3-Year Annualised Volatility (%)
Number of Portfolios
Composite Assets (USD mn)
As a % of Firm's Assets
1 m 1 Y 2 Y 3 Y 4 Y
Annualised figures
5 Y 6 Y 7 Y 8 Y 9 Y S. I.
5.7
5.8
5.1
0.7
n/a n/a n/a n/a n/a
YTD
2016
-8.5
-7.7
-7.2
-0.5
19.0
-7.6
-8.4
7.4
-0.1
2015
-9.1
11.2
-8.9
12.1
-10.6
15.1
1.7
-3.0
16.0
16.3
15.6
15.2
2
316
0.3
2
326
0.3
11.1
12.0
11.3
0.7
15.9
11.6
11.6
6.3
0.1
2014
18.8
19.8
14.8
5.0
17.3
16.6
3
429
0.5
16.1
17.0
14.2
2.9
16.0
16.9
16.9
5.8
0.4
2013
65.7
67.1
53.3
13.8
19.1
17.7
2
194
0.3
20.4
21.4
16.1
5.2
17.6
21.3
21.3
5.7
0.8
2012
32.2
33.3
-13.1
14.8
16.3
-12.8
1.9
17.1
20.9
17.5
2
108
0.1
18.7
19.7
13.1
6.5
17.4
19.7
19.7
5.7
1.0
2011
-13.8
-0.3
23.4
17.1
2
69
0.1
14.3
15.2
9.4
5.8
18.8
16.0
16.0
6.5
0.9
2010
13.8
12.9
28.2
22.6
2
108
0.2
19.3
20.3
12.0
8.3
19.8
21.1
21.1
7.3
1.0
2009
32.0
24.8
20.4
2
41
0.1
12.0
12.9
5.4
7.5
21.8
7.6
1.0
2008
-40.9
5.1
6.0
1.1
4.8
21.5
7.6
0.7
2007
-24.1
33.1
-40.4
-23.5
10.0
-37.7
-11.6
23.2
-2.7
-11.8
2
29
0.1
1
33
0.1
3.9
4.8
1.5
3.3
21.0
7.8
0.5
2006
1
100
0.2
Eastspring Investments claims compliance with Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards.
To receive a complete list and description the composites and/or a presentation that adheres to the GIPS standards, contact the relevant sales representatives or email institutional@eastspring.com.
1 The Firm is defined as all portfolios, except those that are predominantly
Private Equity portfolios, of Eastspring Investments (Singapore) Limited and Eastspring Investments (Hong-Kong) Limited (collectively referred to as "Eastspring Investments"), which are business units within the
Prudential Plc Group.
2 This composite includes separately managed portfolios that primarily invest in shares of Japan smaller companies and are managed without reference to a benchmark.
3 This composite was created in May 2009 and composite performance starts from 1 July 2006. A complete list of the Firm's composites is available upon request.
4 The composite was re-defined in May 2009 and now includes portfolios that are managed with similar investment and risk objectives rather than against benchmark. The funds in this composite are managed without being constrained by their benchmark while performance may vary widely from the reference benchmark over shorter periods, the Fund Manager expects to outperform the reference benchmark over the longer term.
5 For each of the years from 1995 to 2009, Eastspring Investments has been verified by an independent verifier. Copies of the verification reports are available upon request.
6 Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards.
Verification does not ensure the accuracy of any specific composite presentation.
7 The minimum fund size requirement for a fund to be included in a composite is USD3 million.
8 All returns are presented in JPY. Fund sizes are presented in USD.
9 Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
10 Performance results are presented gross of investment management fees and net of trading expenses. The results are also gross of other fees and foreign withholding tax on dividend, interest income and capital gains.
Additional information on other fees treatment are available upon request.
11 Portfolios within the composite has no or minimal derivatives exposure.
12 If a fund has a cash flow or in-specie transfer (either in or out) that is greater than 10% of the opening balance of the fund, then the impact on portfolio performance has to be assessed to determine whether it should be held out-of-structure. If the impact on performance is equal to or greater than 20 basis points, then the fund can be excluded from composite performance until it is back in structure. Additional information regarding the treatment of significant cash flows is available upon request.
13 The highest % of management fee charged are as per below:
Equity Strategies : 2.00% per annum
Fixed Income Strategies : 1.25% per annum
14 Additional information regarding policies for calculating and reporting returns is available on request.
15 The Firm total assets under management as of 31 December 2015 was
USD104.5 billion. Out of this, 15%-20% are invested into Eastspring
Investments managed funds and results in the double-count of total Firm assets.
16 Net composite returns shown do not represent actual net returns of underlying portfolios but are calculated net of the highest band fee (0.83% p.a.) in the tiered management fee schedule applicable to an institutional investor investing in such a strategy. However, the firm reserves the right to change this fee structure and hence net composite returns might change without prior or subsequent notifications to current or potential investors.
All data as of 31 March 2016 unless otherwise stated.
Page 5

STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
Stocks
Toshiba Tec
Sankyo Tateyama
Komeri
Shimamura
Nissin Kogyo
Representative
Portfolio ending position
3.4
4.4
3.1
2.1
2.7
Benchmark ending position
0.0
0.0
0.0
0.2
0.0
Absolute
Contribution to
Representative
Portfolio
0.6
0.4
0.3
0.2
0.2
Stocks
Tobu Railway
Shindengen Electric Manufacturing
Rohm n/a n/a
Representative
Portfolio ending position
0.8
0.3
3.0
n/a n/a
Benchmark ending position
0.3
0.0
0.2
n/a n/a
Absolute
Contribution to
Representative
Portfolio
0.0
0.0
0.0
n/a n/a
Stocks
Sankyo Tateyama
IBJ Leasing
Toshiba Tec
Sumitomo Riko
Komeri
Advantest
JSR
Sumitomo Heavy Industries
Rohm
Sumitomo Real Estate Sales
Representative Portfolio position
4.4
3.7
3.4
3.2
3.1
3.0
3.0
3.0
3.0
2.8
All data as of 31 March 2016 unless otherwise stated.
Source: Eastspring Investments.
Page 6

STRATEGY COMMENTARY
COMPOSITE
JAPAN SMALLER COMPANIES EQUITY
March 2016
Summary
Number of holdings
Price to earnings (number of times)
Price to book (number of times)
Dividend yield (%)
Sector
Domestic
Autos
Technology
Financials
Telecommunications
Global Basics
Defensive
Representative Portfolio
42.1
13.4
21.6
11.3
0.0
10.0
0.0
Representative Portfolio
47
12.0
0.8
2.1
Benchmark
33.4
5.5
17.7
9.6
0.2
12.7
20.8
Benchmark
1,342
14.3
1.2
1.9
Relative
8.6
7.8
3.9
1.7
-0.2
-2.7
-20.8
All data as of 31 March 2016 unless otherwise stated.
Source: Eastspring Investments.
Page 7

Disclaimer
Strictly Private and Confidential.
For Institutional, Wholesale or Professional Investors Only. Not for distribution to the retail public.
This document is produced by Eastspring Investments (Singapore) Limited and issued in :
Singapore, Australia and United States by Eastspring Investments (Singapore) Limited (UEN: 199407631H).
Hong Kong by Eastspring Investments (Hong Kong) Limited and has not been reviewed by the Securities and
Futures Commission.
United Kingdom by Eastspring Investments (Luxembourg) S.A. - UK Branch, 125 Old Broad Street, London EC2N
1AR.
Dubai by Eastspring Investments Limited - Precinct Building 5, Level 6, Unit 5, Dubai International Financial
Center, Dubai, United Arab Emirates. Eastspring Investments Limited is duly licensed and regulated by the Dubai
Financial Services Authority (DFSA). This information is directed at Professional Clients as defined by the Conduct of Business rulebook of the DFSA and no other person should act on it.
Canada (Province of Ontario only) by Eastspring Investments (Singapore) Limited.
Eastspring Investments
(Singapore) Ltd. is not a registered adviser in Ontario.
Its principal office is located in Singapore, with all or substantially all of its assets situated outside of Ontario and of Canada. As a result of the above, there may be difficulty in enforcing legal rights against Eastspring Investments (Singapore) Ltd.
For purposes of service of process in Ontario, our local agent is Osler, Hoskin & Harcourt LLP, 100 King Street West, First Canadian Place,
Suite 6100, Toronto, ON M5X 1B8. This material is not, and under no circumstances is to be construed as, an advertisement or public offering of the securities in Canada.
The afore-mentioned entities are hereinafter collectively referred to as Eastspring Investments.
This document is solely to be used for informational purposes only and is not intended for anyone other than the recipient. This information is not an offer or solicitation to deal in shares of any securities or financial instruments and it is not intended for distribution or use by anyone or entity located in any jurisdiction where such distribution would be unlawful or prohibited. This document may not be copied, published, circulated, reproduced or distributed without the prior written consent of Eastspring Investments.
Information herein is believed to be reliable at time of publication but Eastspring Investments does not warrant its completeness or accuracy and is not responsible for error of facts or opinion nor shall be liable for damages arising out of any person’s reliance upon this information. Any opinion or estimate contained in this document may subject to change without notice.
Past performance and the predictions, projections, or forecasts on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of Eastspring
Investments or any of the funds managed by Eastspring Investments. An investment is subject to investment risks, including the possible loss of the principal amount invested. Where an investment is denominated in another currency, exchange rates may have an adverse effect on the value price or income of that investment.
Furthermore, exposure to a single country market, specific portfolio composition or management techniques may potentially increase volatility. The information contained herein does not have any regard to the specific investment objective(s), financial situation or the particular needs of any person.
Where included, benchmark and index data included in this document are provided for illustrative purposes only.
The portfolio and/or services mentioned do not formally track any such benchmarks or indices and no representation is made as to relative future performance or tracking deviation.
You should note that investing in financial instruments carries with it the possibility of losses and that a focus on above-market returns exposes the portfolio to above-average risk.
Page 8

Performance aspirations are not guaranteed and are subject to market conditions. Higher yielding investments can produce income at the expense of capital growth or the capital value of the investment. High volatility investments may be subject to sudden and large falls in value, and there could be a large loss on realization which could be equal to the amount invested.
The performance of the composites shown herein reflects the deduction of standardized management fees and brokerage commissions. You should note that expenses incurred may be different in character and amount from those that will be incurred by the portfolio in the future. Note also that the performance reflects the reinvestment of interest and other earnings. The performance illustrations have not been audited.
Eastspring Investments (excluding JV companies) are ultimately wholly-owned / indirect subsidiaries / associates of
Prudential plc of the United Kingdom. Eastspring Investments and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
Eastspring Investments (Singapore) Limited (UEN. 199407631H)
10 Marina Boulevard
#32-01 Marina Bay Financial Centre Tower 2
Singapore 018983
Tel: 6349 9711 | Fax: 6509 5382
Page 9