SPEAKER: Nathan Lim, International Portfolio Manager, Australian Ethical Investment LOCATION: SydneyDATE: August 2015

ASX INVESTMENT VIDEOS

DISCLAIMER: The views, opinions or recommendations of the presenters are solely their own and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”). Information and material presented at the seminar is for educational purposes only and does not constitute financial product advice. Investors should obtain independent advice from an Australian financial services licensee before making investment decisions. No responsibility is accepted by ASX for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of this information or material. © Copyright 2015 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2013.

Ethical investing –Good for you & the world?

Starting thoughts

Investments in core responsible investment have grown by 24% year-on-year to

$31.6 billion in Assets Under Management.

Core responsible investment Australian equities funds have outperformed the ASX 300 index & the average large cap Australian equities fund

over 1, 3, 5 and 10 years.

Source: RIAA Benchmark Report 2015

Megatrends

CSIRO KPMG PWC Australian Ethical

Need for efficiency Resource Stress Resource Scarcity Efficiency(Lowering energy demand), Recycling and Waste management

Environmental Crisis Climate Change Climate Change Renewable energy

Demographics Demographics Demographics and Social change

Health and Wellbeing, Education

Connectivity and networks

Enabling technology Technological breakthroughs

Telecommunication, IT, Medical Technology

Changing consumer demand

Rise of individual power and decision making

Increased engagement leading to an increase in positive investment

Urbanisation Rapid Urbanisation Sustainable property, Sustainable transport

Best of sector does not avoid any sector or stock, and favours best performance in each sector only.

Negative Screen avoids investment in certain sectors, such as coal, weapons manufacture or human rights abuses

Corporate Engagement/Shareholder Activism engaging at board level, or using proxy voting

A Positive Approach actively seeks to identify & support beneficial endeavours, such as healthcare & technology

What is ethical investment?

ETHICAL CHARTER – Unchanged since 1986

Australian Ethical shall seek out investments which provide for, and support:

o The development of works’ participation in the ownership and control of their work

o The production of high quality and property presented products and services

o The development of locally based ventures

o The development of appropriate technological systems

o The amelioration of wasteful or polluting practices

o The development of sustainable land use and food production

o The preservation of the endangered eco-systems

o Activities which contribute to human happiness, dignity and education

o The dignity and well being of non-human animals

o The efficient use of human waste

o The alleviation of poverty in all its forms

o The development and preservation of appropriate human buildings and landscape

ETHICAL CHARTER – Unchanged since 1986

Australian Ethical shall avoid any investment which is considered to unnecessarily:

o Pollute land, air or water

o Destroy or waste non-recurring resources

o Extract, create, produce, manufacture or market materials, products, goods or services which have a harmful effect on humans, non-human animals or the environment

o Market, promote or advertise, products or services in a misleading or deceitful manner

o Create markets by the promotion or advertising of unwanted products or services

o Acquire land or commodities primarily for the purpose of speculative gain

o Create, encourage or perpetuate militarism or engage in the manufacture of armaments

o Entice people into financial over-commitment

o Exploit people through the payment of low wages or the provision of poor working conditions

o Discriminate by way of race, religion or sex in employment, marketing or advertising practices

o Contribute to the inhibition of human rights generally

DOMESTIC SHARES – A bottom-up approach

• Fundamental analysis to determine fair value

• Focus on what we know best (Small Caps, IT, Biotech, Renewables)

• Comprehensive study of industry, company and revenue drivers, sustainability of business model

and SWOT analysis

• Meet management

• Continuous monitoring of companies, competitors, industry & ongoing dialogue with management

DOMESTIC SHARES – Our Charter does introduce size & sector biasThe Charter generates a bias towards small-mid caps, e.g. only 26 stocks in the S&P/ASX 100 currently meet our ethical criteria in the Australian Shares Fund

•Telecommunications, Software, IT services – Efficiency

•Healthcare & Biotechs – Contribution to human happiness and dignity

•Banks – Analysis of loan book screens out NAB, ANZ, and CBA

•Consumer Discretionary – Lack of positives

•Mining and Mining Services – Environmental concerns

Overweight due to Charter

Underweight due to Charter

Australian Shares Fund – Sector Allocation

2015 Money Management –Responsible Investments Award

Mercer Ratings: Ranked 2nd/99 FYTD, 1st/99 over 1 year, 2nd/67 over 7 years and 2nd/54 over 10 years.

INTERNATIONAL SHARES – Top-down approach

Macro Economics Energy Landscape

Stock Selection

Portfolio Construction

Monitor

INTERNATIONAL SHARES

• A holistic view of both supply & demand: wind & solar power are ethical investments, yet any

technology that enables the transition to sustainability can also qualify.

• Efficient use of energy is just as, if not more important, as it serves to eliminate wasted energy.

• Energy Efficiency, Waste Management, & Recycling

• Cleantech & Renewables

• Development of appropriate buildings

Smart Energy Thematic

Investment Areas

International Shares Fund – Sector Allocation

2014 Best International Equities Fund – awarded by the Australian Fund Manager Foundation

Diversified Shares Fund – Sector Allocation

Mercer Ratings: Larger Companies Trust Class B ranked 3rd/23 over 1 year and FYTD, and 2nd/22 over 2 and 3 years.

The Future of Investment…

• Independent research shows over 20% of the market are already involved in

ethical investment in some form and we see this interest growing.

• In the last 2 years Australian Ethical has doubled in size, with funds under

management now close to $1.2 billion.

• Ethical fund returns exceed those of mainstream funds.

Australian Ethical mFundsAustralian Ethical has a wide range of funds on the ASX mFunds Settlement Service:

o Australian Shares Fund

o Diversified Shares Fund

o International Shares Fund

o Fixed Interest Fund

o Cash Fund

o Advocacy Fund

o Emerging Companies Fund

o Minimum investment is $25,000

o Management fee of 0.95% per annum

Disclaimer

This information is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on this information, you

should consider obtaining financial advice that is tailored to suit your personal circumstances, and should refer to the Financial Services Guide, Product Disclosure

Statements and Additional Information Booklets available on our website.

Units in the Australian Ethical Managed Funds are issued by Australian Ethical Investment Ltd (ABN 47 003 188 930; Australian Financial Services Licence No. 229949). Interests in the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743; Fund Registration No.

R1004731) are offered by Australian Ethical Investment Ltd by arrangement with its subsidiary and trustee of the Super Fund, Australian Ethical Superannuation Pty Ltd (ABN 43

079 259 733, Registrable Superannuation Entity Licence No. L0001441).

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