> December 2016

AMP CAPITAL AUSTRALIAN SMALL COMPANIES FUND - ON-PLATFORM CLASS A

Seeks to generate capital growth over the long term by investing in a diversified portfolio of small listed companies in Australia and New Zealand.

Performance summary > Australian smaller companies made a positive return in

December, but underperformed larger-cap stocks > Biotechnology and automotive were the best performing

sectors > Australian smaller companies are expected to recover

gradually as the economy continues to improve despite an increase in bond yields

Investment approach The management of the Fund is outsourced to UBS Global Asset Management (UBS) as investment manager. UBS is a fundamentally based active, core manager. Internally generated research, focused on longer term value drivers at the industry, stock and country level, is used to estimate fundamental value for stocks, upon which investment decisions are made.

Performance – as at 31 December 2016 Inception Date: 03 May 2000 Performance benchmark: S&P/ASX Small Ordinaries Accumulation Index Management costs: 1.0227% plus possible performance fees

% 1 mth 3 mth 1 yr 3 yr 5 yr Incept Total return - after fees 0.85 -6.02 4.22 13.01 13.37 11.19 Distribution 0.27 0.25 0.32 0.79 1.27 8.43 Growth 0.57 -6.28 3.90 12.22 12.10 2.76 Benchmark 3.61 -2.45 13.18 6.24 4.86 5.61

Past performance is not a reliable indicator of future performance. Performance is annualised for periods greater than one year.

Total returns are calculated using the unit price which uses the net asset values for the relevant month end. This price may differ from the actual unit price for an investor applying for or redeeming an investment. Actual unit prices will be confirmed following any transaction by an investor. Returns quoted are before tax, after Class 'A' fees and costs, and assume all distributions are reinvested.

For more information visit ampcapital.com.au

Sector Allocation

$500,000 invested since inception

Top 10 holdings Security Details % Portfolio APN OUTDOOR GROUP LTD 4.18 SUPER RETAIL GROUP LTD 4.12 STEADFAST GROUP LTD 3.96 NEXTDC LTD 3.90 TECHNOLOGY ONE LTD 3.82 WORLEYPARSONS LTD 3.72 BAPCOR LTD 3.64 COLLINS FOODS LTD 3.15 ARB CORP LTD 3.08 GATEWAY LIFESTYLE 3.07

Top / bottom 5 active positions

0% 5% 10% 15% 20% 25% 30%

Consumer Discretionary

Information Technology

Cash

Health Care

Energy

Materials

Financials

Real Estate

Industrials

Consumer Staples

Telecommunication Services

Utilities

Fund Benchmark

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Fund Benchmark

-2% -1% 0% 1% 2% 3% 4%

OZ MINERALS LTD

MACQUARIE ATLAS ROADS GROUP

METCASH LTD

NIB HOLDINGS LTD/AUSTRALIA

SIMS METAL MANAGEMENT LTD

STEADFAST GROUP LTD

TECHNOLOGY ONE LTD

SUPER RETAIL GROUP LTD

NEXTDC LTD

APN OUTDOOR GROUP LTD

> AMP CAPITAL AUSTRALIAN SMALL COMPANIES FUND - ON-PLATFORM CLASS A

Market commentary Australian shares performed strongly in December, closing the month up by over 4% (as measured by the S&P/ASX 200 Accumulation Index). All sectors participated in the ‘Santa Claus rally’ to some extent and closed positive, with financials providing the largest contribution to returns. At a stock level within the ASX 200, standout performers included Origin Energy, which did well following OPECs decision to cut production from October levels, and QBE, which has a high percentage of its earnings in US dollars and also tends to be more profitable when bond yields are rising due to its investment strategy. Smaller companies rose by 3.61% (S&P/ASX Small Ordinaries Index) in December, underperforming the larger cap market. The small resources sector (+2.46%) underperformed the small industrials (+3.91%). The best performing sectors during December were biotechnology, automotive, media and chemicals. The key driver of performance in the automotive sector was the 19% price increase in Bapcor. The worst performing sectors in December were precious metals, wholesale distribution & manufacturing and agricultural products. Precious metals were impacted by weaker gold prices as expectations of continued quantitative easing reduced, with the largest falls being recorded by Perseus (-43%) and Dacian (-31%). The best performing stocks during December in the Small Ordinaries index were Galaxy Resources (which began shipments from the Mount Cattlin lithium mine), UGL (which was subject to a A$525 million takeover bid from CIMIC), Collins Foods (which saw its half-year results boosted by acquisitions) and Sims Metal (which saw an earnings upgrade). The worst performers for the month were Bellamy's (which saw trading in its shares suspended following weak sales in China), Paladin, CSG (after it downgraded its earnings growth forecast) and Dacian Gold (which was impacted by the falling gold price and dilution following its A$25 million share placement). Outlook Top-line growth remains elusive for Australian shares, with many companies still focussing on cost-cutting rather than margin expansion. Banking profitability is likely to continue to be stifled by capital-holding requirements and the mining sector, despite benefitting from a bounce-back in resource prices, may still struggle for a while yet. Companies that historically offer high and stable dividends have arguably been over-bought amid the hunt for yield, so investors will likely benefit (as always) by being highly selective, and focussing on a business’s underlying profitability and prospects for the future, rather than buying purely for yield in isolation.

The key macro and portfolio issue during the December quarter was the increase in both Australian and the US bond yields. This caused significant rotation out of longer duration high priced equities in favour of shorter duration lower growth stocks. The key portfolio question in 2017 will be whether this can continue or whether higher overall debt levels will see a pause in this repricing. Some resilience in key commodity prices of coal and iron ore continues to assist the recovery of parts of the resources sector. We are also seeing this impact the mining services sector. The portfolio's modest additions to the resources sector earlier in the calendar year left it better positioned to benefit from the strong performance of the sector in recent months. The Fund's modest but targeted portfolio additions in gold, iron ore and energy companies left the portfolio better exposed to a continued rally in the resources sector. Nevertheless the Fund retained a small sector underweight position to both the gold and small resources sector following this adjustment. The Fund has established positions in stocks that will benefit from the slightly higher interest rate environment, such as the Bank of Queensland, which like the "big-four" banks in the ASX 100, typically sees improved margins as interest rates rise. The Fund’s strategy remains focused on the structural growers and high returning business, many exploiting disruptive change. We have also added some new positions with greater cyclical exposure as the Australian economy shows early signs of exceeding expectations. Most of these opportunities are relatively unique to the small company's asset class and provide the Fund with an ongoing flow of new investment ideas.

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Investment objective To provide long term capital growth, after costs and before tax.

Facts Fund size $169.82 million Distribution frequency Quarterly

Minimum suggested time frame 3 to 5 years Date of last distribution Dec 2016

Minimum initial investment $500,000 Distribution cents per unit 0.72

Buy/sell spread +0.40/-0.40 Investors should consider the Product Disclosure Statement (PDS) available from AMP Capital Investors Limited (ABN 59 001 777 591) (AFSL 232497) (AMP Capital) for the AMP CAPITAL AUSTRALIAN SMALL COMPANIES FUND - ON-PLATFORM CLASS A (Fund) before making any decision regarding the Fund. AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426 455) is the responsible entity of the Fund and the issuer of units in the Fund. The PDS contains important information about investing in the Fund and it is important investors read the PDS before making a decision about whether to acquire, continue to hold or dispose of units in the Fund. Neither AMP Capital, nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. Past performance is not a reliable indicator of future performance. While every care has been taken in the preparation of this document, AMP Capital makes no representation or warranty as to the accuracy or completeness of any statement in it including without limitation, any forecasts. This fact sheet has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. Investors should, before making any investment decisions, consider the appropriateness of the information in this fact sheet, and seek professional advice, having regard to their objectives, financial situation and needs.

For more information T: 1800 658 404 F: 1800 630 066 W: www.ampcapital.com.au

Or your state account manager APIR Code AMP0446AU

AMP Capital Investors Limited

ABN 59 001 777 591, AFSL 232497