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Australian Shares Core PortfolioQuarterly Update September 2015

Investment Growth of $10,000

Time Period: 29/07/2004 to 30/09/2015

2005 2007 2009 2011 2013 201510,000.0

12,500.0

15,000.0

17,500.0

20,000.0

22,500.0

25,000.0

27,500.0

Aust Shares - Core S&P/ASX 200 TR

Core Portfolio - Top 10 Holdings

Weighting %

Australia and New Zealand Banking Group Ltd

Westpac Banking Corp

BHP Billiton Ltd

Veda Group Ltd

National Australia Bank Ltd

ResMed Inc CDR

QBE Insurance Group Ltd

Westfield Corp

Woolworths Ltd

Wesfarmers Ltd

8.4

7.1

6.9

6.8

5.9

5.8

5.5

5.0

4.6

4.5

Morningstar Style Box

27.1 15.5 23.5

5.5 17.1 11.3

0.0 0.0 0.0

LargeM

idSm

all

Value Blend Growth

Equity Style %

Equity Style Value 32.7

Equity Style Core 32.5

Equity Style Growth 34.8

Joel BloomerSenior Portfolio Manager+612 9276 [email protected]

Portfolio Overview

Before discussing the portfolio, I'd like to highlight a few changes regarding Morningstar's research and direct equity portfolio services. We have moved management of the Australian Shares Core Portfolio out of our equity research group and into our investment management group. After spending 10 years in Morningstar equity research leadership and analyst roles, I'll manage this portfolio going forward in the newly created role of Head of Discretionary Equity Strategies, Asia-Pacific. My former duties as Head of Equity Research, Asia-Pacific, have been assumed by two exceptionally experienced investment professionals: Carolyn Holmes is our new Head of Australia Equity Research based in Sydney; and Lorraine Tan is our new Head of Asia Equity Research based in Singapore. Our former Core Equity Portfolio managers, Peter Warnes and Mathew Hodge, remain valued members of Morningstar's equity research team with whom I will surely collaborate in the future, along with the rest of our research team. Our aim in making these changes is to enhance our value proposition in providing research and investment management to clients via high-quality products and increased engagement. For more information on these changes or the various research and investment services Morningstar provides, please contact our sales team.

Performance of the Australian Shares Core Portfolio in the September quarter was disappointing, declining 7.6% relative to the benchmark's 6.6% retracement. This was primarily driven by weakness in a few holdings, particularly Santos which has subsequently been downgraded to no-moat, very high uncertainty, with a reduced fair value estimate by the coverage analyst. With my taking the reins, I don't expect material changes to the portfolio strategy: outperform the benchmark after fees, with low turnover, using attractively priced companies with durable quality through a complete cycle, while leveraging Morningstar equity research as a key input. However, we will endeavour to use our new management capacity and investment management group capabilities to do a better job of this, taking the lead from sharp outperformance demonstrated in our other discretionary equity strategies, including the Income and Small Cap Portfolios.

We see the Australian equity market as being at a cross-road. Our bottom-up research indicated undervaluation from 2010 to 2012 followed by overvaluation from 2013 until early 2015, which has proven predictive. After a sharp sell-off (and slight bounce) so far in the second half of the year, we now find the major Australian equity indices about fairly valued. Commonly quoted valuation metrics, such as price-to-earnings, suggest a similar conclusion with the price multiple now acknowledging that earnings growth has been, and might remain, subdued.

Our research and investment philosophy trusts that, in the long run, free markets and their constituents always revert to fair value as the gravity of earnings eventually overrides the whims of short-term sentiment. We simultaneously trust that animal spirits are never far from the surface and thus those same free markets spend little time trading at fair value, tending to overshoot in either direction with little warning. The next move seems particularly uncertain at present as large financials (the index workhorses of the past five years) face a significantly more daunting outlook. The big banks are staring down increased regulation among other concerns that are poised to cap returns on capital.

Picking which short-term direction sentiment ultimately chooses is not our game. Our discretionary equity strategies focus on companies with sustainable competitive advantages (narrow or wide economic moats) trading at discounts to their long-term intrinsic values. With overweights to health care, industrials, consumer discretionary, and technology, the Core Equity Portfolio has a growth lean at present. The portfolio's price-to-fair-value ratio of 0.76 indicates that it is trading at a 24% discount to our analysts' fair value estimates.

THIS REPORT HAS BEEN PRODUCED USING PRESENTATION STUDIO, A MODULE OF MORNINGSTAR DIRECTAny Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. © 2015 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement (Australian products) or Investment Statement (New Zealand products) before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO").

Australian Shares Core Portfolio Quarterly Update September 2015

Core Portfolio - Complete List of Holdings

Portfolio Date: 30/09/2015

CodeStyle Box

EconomicMoat

FairValue

Uncertainty

PortfolioWeight

%Australia and New Zealand Banking Group LtdWestpac Banking CorpBHP Billiton LtdVeda Group LtdNational Australia Bank LtdResMed Inc CDRQBE Insurance Group LtdWestfield CorpWoolworths LtdWesfarmers LtdPlatinum Asset Management LtdCASHTelstra Corp LtdCSL LtdComputershare LtdGoodman GroupBrambles LtdTrade Me Group LtdCrown Resorts LtdAlumina LtdIluka Resources LtdAnsell LtdSantos Ltd

ANZ Ç Wide Medium 8.4WBC Ç Wide Medium 7.1BHP È Narrow Medium 6.9VED Ì Wide Medium 6.8NAB Ç Wide Medium 5.9RMD Ë Narrow Medium 5.8QBE É Narrow High 5.5

WFD É Narrow Medium 5.0WOW Ç Narrow Medium 4.6WES È Narrow Medium 4.5PTM Ì Narrow Medium 4.1

3.6TLS È Narrow Medium 3.5CSL É Narrow Medium 3.4CPU Ë Narrow Medium 3.1

GMG É Narrow Medium 3.1BXB É Wide Medium 3.0TME Ê Wide Medium 2.8

CWN É Narrow High 2.8AWC Ë None High 2.7

ILU Ë Narrow High 2.7ANN Ê Narrow Medium 2.5STO Ë None Very High 2.1

Holdings-Based Style Trail

Time Period: 31/10/2012 to 30/09/2015

Mic

roSm

all

Mid

Larg

eGi

ant

Deep-Val Core-Val Core Core-Grth High-Grth

Aust Shares - Core 31/10/2012 30/09/2015 S&P/ASX 200 TR 31/10/2012 30/09/2015

Holdings-Based Style Map

Mic

roSm

all

Mid

Larg

eGi

ant

Deep-Val Core-Val Core Core-Grth High-Grth

Aust Shares - Core 30/09/2015 S&P/ASX 200 TR 30/09/2015

Note dividends for Trade Me are imputed for New Zealand residents. Australian residents receive unfranked dividends with a supplementary payment.Morningstar Investment Committee members own the following securities held by the portfolio: AWC, BHP, NAB, QBE, STO, TLS, WES

The above chart shows the portfolio and index style mix. The shaded area is the region in which 75% of the portfolio's holdings fall.

The above chart shows the portfolio and index style mix over time, the smallest dot representing the earliest date.



Transactions in the Quarter

In the September quarter, there were no transactions for the Portfolio. With an attractive price-to-fair-value ratio and 3.5% cash, the portfolio is essentially fully invested. As mentioned in the overview, we think the portfolio has solid return prospects, indicated by the weighted-average price-to-fair-value of 0.76. This means that using our analysts' fair value estimates, the portfolio is trading at a 24% discount. After substantially downgrading the assessed quality and outlook, Santos is on the chopping block. However, given the significant discount to fair value, we remain patient for now.

Asset Allocation


%

Stock 96.4

Cash 3.6

Total 100.0

Equity Country Exposure


%

Australia 96.4

Cash 3.6

Total 100.0

Equity Sectors (GICS)


%

Energy 2.2

Materials 12.7

Industrials 10.2

Consumer Discretionary 5.8

Consumer Staples 9.5

Healthcare 12.1

Financials 40.7

Information Technology 3.2

Telecom Services 3.6

Total 100.0

Portfolio Fundamentals

Display Benchmark 1: S&P/ASX 200 TR

Inv Bmk1 Cat Avg

Average Market Cap (mil)

P/E Ratio (TTM)

Debt to Capital % (TTM)

ROA % (TTM)

ROE % (TTM)

13,623.1

16.7

33.5

8.0

16.5

20,088.9

15.4

38.8

4.7

15.0

23,567.3

15.8

39.2

4.7

14.8



Quarter Performance

The Australian Shares Core Portfolio declined 7.5% in the September quarter compared with a pullback of 6.6% for the benchmark, underperforming by 0.9%. Santos was the largest drag, while Alumina and Ansell also detracted. Veda Group was a big bright spot followed by positive contributions from Westfield Corporation and Trade Me Group. Our underweight to banks contributed positively, as did our underweight to energy, despite the Santos exposure.

Contributors:Veda Group (overweight) received a buyout offer from Equifax, one of the three dominant credit agencies in the U.S. The offer is just above our analyst's standalone fair value estimate for this wide moat-rated firm. Veda's place in the portfolio will be hard to fill given it is an exceptional business, but the price seems fair. When a wide-moat business is the incumbent, sometimes buying is the best way to gain market entry, as is the case with Veda in Australia.

Westfield Corporation (overweight) reported earnings that showed continued growth in operating assets and income from developments. Increased risk aversion likely drove a bounce in shares during the quarter, as did a lower Australian dollar given earnings derived outside of Australia.

Trade Me Group (overweight) had a volatile quarter, but was ultimately a positive contributor to performance after reporting strong growth in several segments, including classifieds, property, and motor, partly offset by weakness in general merchandise. New Zealand may not offer exceptional growth in the long term for T rade Me, but we still like this wide-moat business.

Detractors:Santos (overweight) has been caught in a crippling combination of headwinds with debt and capital expenditure peaking just as the oil price fell by half, and just before production began at the massive AUD 22 billion Gladstone LNG project. Hindsight being as humbling as it is, our exposure to Santos at this critical juncture was a mistake. After a significant fall in the share price, we wait for some market reprieve before exiting our reduced position.

Alumina Ltd (overweight) has been in steady decline for much of the year as uncertainty on economicgrowth in China and supply concerns weigh on aluminium and alumina prices. At a current fully franked yield of 6%-plus, the shares seem more likely to hold their ground while we wait for the fundamental story to play out: a higher long-term alumina price when it is delinked from aluminium prices. Steady migration towards using aluminium rather than heavier weight steel should ensure continued demand.

Ansell (overweight) retreated in the September quarter, following a weak earnings outlook, driven by soft demand in the industrials segment and a stronger U.S. dollar relative to other revenue currencies, effectively causing costs to inflate faster than revenue. Ansell initiated a stock buyback which seems like good value given the severely compressed earnings multiple, but the company needs to restart organic growth.

Risk-Reward

Time Period: 1/08/2004 to 30/09/2015

Retu

rn

Std Dev

0.0 3.0 6.0 9.0 12.0 15.0 18.0

0.0

2.0

4.0

6.0

8.0

10.0 Aust Shares - Core

S&P/ASX 200 TR

Aust Shares - Core - Market Performance

Time Period: 1/08/2004 to 30/09/2015

Inv Bmk1

Up Period Percent

Down Period Percent

Best Month

Worst Month

Best Quarter

Worst Quarter

Up Capture Ratio

Down Capture Ratio

63.43

39.55

9.14

36.57

60.45

-12.71

7.98

23.25

-12.61

-16.08

21.50

-18.25

100.00

100.00

95.72

98.47

Risk

Time Period: 1/08/2004 to 30/09/2015

Inv Bmk1

Return % pa

Std Dev

Downside Deviation

Alpha

Beta

R2

Sharpe Ratio (arith)

Tracking Error

7.89

13.83

0.00

14.06

0.00

1.00

100.00

0.23

0.00

3.81

-0.53

0.95

86.95

0.17

5.13

7.07

Performance Relative to Peer Group (one month lag)

Peer Group (5-95%): All Managed Investments - Australia - Equity Australia Large Blend

Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile

Retu

rn

-8.0-6.0-4.0-2.00.0

YTD 1 year 3 years 5 years Since inception

2.04.06.08.010.012.014.0




Sector and Industry Weightings Analysis

With no transactions in the September quarter, our sector and industry weights are largely unchanged, although market movements shrank our materials exposure by a couple of percentage points.

Health care is still our largest sector overweight position, driven by ResMed, CSL, and Ansell. The health-care weighting is meant to leverage the themes of increasing wealth, standards of living, and longevity, as well as the steadily ageing population.

The consumer staples sector is our second-largest overweight position, underpinned by Woolworths and Wesfarmers. Both are high-quality businesses and should grow their defensive earnings at attractive rates in most economic conditions, though leadership and strategy ambiguity at Woolworths are a current concern.

While competitive threats have grown with the likes of Aldi and Costco, we believe Woolworths in particular can reduce prices and successfully defend its market share thanks to its scale and cost advantage. We are not expecting a turnaround in the short term, but given valuation, the defensiveness of the sector and the quality of the franchise, we think it's an attractive investment on a three- to five-year view. A large proportion of earnings should be paid to shareholders as dividends.

Our largest sector underweight position is to financials, reflecting an underweight in banks, although our exposure to the "big four" is still large in absolute terms. A couple of quarters ago, we increased the diversification of our financials holding, away from banks, with the addition of Platinum Asset Management and an increased weighting to Veda Group. These complement holdings in Westfield Corporation, Goodman Group and QBE Insurance Group. The lack of exposure to passive real estate and utilities has hurt recent performance, but we believe the risks from asset price inflation build. Our property exposures of Westfield Corporation and Goodman Group are more growth-orientated and global facing. Both bring internationalexposure and benefit from a falling Australian dollar.

Materials is our second largest absolute sector weighting (ahead of health care and behind financials), via investments in BHP Billiton, Alumina Ltd, and Iluka Resources. Iluka should benefit from the industrial recovery in the U.S. and Europe, and the likely consumption of higher-quality, more zircon-intensive tiles.

We believe BHP Billiton continues to be the highest-quality materials company despite recent underperformance. Alumina Ltd's share price has also struggled of late, but we still expect an eventual rise of earnings with a long-term increase in the alumina price.

GICS Industry Group Weights Relative to Benchmark

Commercial Services and Supplies

Health Care Equipment and Services

Food and Staples Retailing

Software and Services

Retailing

Consumer Services

Insurance

Diversified Financials

Consumer Durables and Apparel

Household and Personal Products

Automobiles and Components

Pharmaceuticals and Biotechnology

Real Estate

Capital Goods

Media

Food, Beverage and Tobacco

Materials

Energy

Telecommunication Services

Utilities

Transportation

Banks

-12.0-10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0

7.2

5.4

3.3

2.4

2.0

0.2

0.1

0.0

-0.1

-0.1

-0.1

-0.1

-0.2

-0.4

-0.7

-1.0

-1.5

-1.8

-2.3

-2.3

-4.9

-7.8

GICS Sector Weights Relative to Benchmark6.3

4.5

9.36.9

0.04.4

41.648.0

13.06.5

10.27.3

12.913.9

3.30.7

3.45.4

0.02.3

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Materials

Technology

Telecom Services

Utilities




Selection Effects

Time Period: 1/07/2015 to 30/09/2015

Underperform Outperform

Overweight

Underw

eightRe

lativ

e W

eigh

t

Relative Return

12.00

6.00

0.00

-6.00

-12.00

-75.00 -60.00 -45.00 -30.00 -15.00 0.00 15.00 30.00 45.00 60.00 75.00

15 1413 12

11

1098 7

654321

1514131211

10

98

76

5

4

32

1

Best Selections Investment Type Weight +/- Return +/- Effect

1 Veda Group Ltd Stock 5.30 26.41 1.40

2 Westfield Corp Stock 3.25 17.36 0.53

3 Trade Me Group Ltd Stock 2.44 19.68 0.47

4 Commonwealth Bank of Au... Stock -9.80 -4.44 0.44

5 Origin Energy Ltd Stock -0.84 -41.25 0.39

6 ResMed Inc CDR Stock 5.27 6.14 0.31

7 Platinum Asset Manageme... Stock 4.05 4.22 0.17

8 Orica Ltd Stock -0.50 -23.19 0.13

9 Wesfarmers Ltd Stock 1.17 11.49 0.13

10 South32 Ltd Stock -0.65 -17.61 0.12

11 Woodside Petroleum Ltd Stock -1.74 -5.76 0.10

12 Liquefied Natural Gas Ltd Stock -0.12 -60.40 0.08

13 WorleyParsons Ltd Stock -0.14 -35.43 0.06

14 Sonic Healthcare Ltd Stock -0.60 -8.46 0.05

15 Lend Lease Group Stock -0.57 -8.66 0.05

Worst Selections Investment Type Weight +/- Return +/- Effect

1 Santos Ltd Stock 2.94 -40.91 -1.37

2 Alumina Ltd Stock 3.06 -15.19 -0.47

3 Ansell Ltd Stock 2.78 -14.83 -0.42

4 Iluka Resources Ltd Stock 2.88 -13.01 -0.38

5 Crown Resorts Ltd Stock 2.93 -10.86 -0.32

6 Australia and New Zealand ... Stock 2.94 -9.77 -0.29

7 Sydney Airport Stock -0.87 25.81 -0.20

8 Scentre Group Stock -1.47 12.97 -0.18

9 Transurban Group Stock -1.33 13.02 -0.17

10 Asciano Ltd Stock -0.54 32.45 -0.15

11 BHP Billiton Ltd Stock 1.64 -7.54 -0.13

12 Medibank Private Ltd Stock -0.43 30.58 -0.12

13 Qantas Airways Ltd Stock -0.54 23.86 -0.12

14 Treasury Wine Estates Ltd Stock -0.26 39.35 -0.09

15 AGL Energy Ltd Stock -0.79 11.89 -0.09

Returns Relative to Benchmark

As of Date: 30/09/2015

Retu

rn

3 month YTD 1 year 3 years 5 years Since inception (29/07/2004)-10.0-8.0-6.0-4.0-2.00.02.04.06.08.010.012.0

-7.6 -7.5 -7.8

6.0 5.67.1

-6.6

-3.7

-0.7

9.4

6.57.8


Performance measures are expressed after fees, but before costs and taxes are deducted. Dividends are reinvested in the portfolio. The performance displayed is for the Australian Core Portfolio and represents modelled performance only. This performance will differ from actual performance depending on factors such as transaction timing and any divergence from constituent weightings.* Where inception date is not the beginning of a month, returns are calculated using a start date which is the first day of the month following inception.



Cumulative Attribution Effects

Time Period: 1/11/2014 to 31/10/2015

GICS Industry GroupCumulative Attribution Effects

Cumulative Allocation EffectCumulative Selection EffectCumulative Active Return

Attribution EffectsAllocation EffectSelection EffectActive Return

Attribution Effect %12.00

9.00

6.00

3.00

0.00

-3.00

-6.00

2.00

1.00

0.00

-1.00

11-30-2014 12-31-2014 1-31-2015 2-28-2015 3-31-2015 4-30-2015 5-31-2015 6-30-2015 7-31-2015 8-31-2015 9-30-2015 10-31-2015

Allocation Effects

Time Period: 1/07/2015 to 30/09/2015

Underperform Outperform Overweight

Underw

eightRe

lativ

e W

eigh

t

Relative Return

9.00

4.50

0.00

-4.50

-9.00

-20.00 -16.00 -12.00 -8.00 -4.00 0.00 4.00 8.00 12.00 16.00 20.00

5

4

3

2

1

5

4

3

2

1

Best Weighting Weight +/- Return +/- Effect1 Banks -7.67 -4.80 0.382 Energy -1.39 -17.41 0.273 Food and Staples Retailing 3.42 7.27 0.244 Consumer Services 0.74 8.32 0.065 Retailing 1.64 3.76 0.06

Worst Weighting Weight +/- Return +/- Effect1 Transportation -4.29 17.71 -0.712 Utilities -2.13 9.07 -0.193 Food, Beverage and Tobacco -0.89 19.07 -0.164 Commercial Services and Supplies 5.85 -1.49 -0.085 Telecommunication Services -2.32 2.17 -0.05



Equity Sectors (GICS)

Time Period: 1/10/2012 to 30/09/2015

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

03/2013 09/2013 03/2014 09/2014 03/2015 09/2015

Energy % Materials % Industrials %Consumer Discretionary % Consumer Staples % Healthcare %Financials % Information Technology % Telecom Services %Utilities %

Equity Style Valuation

Time Period: 1/10/2012 to 30/09/2015

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

03/2013 09/2013 03/2014 09/2014 03/2015 09/2015

Value % Core % Growth %

Equity Market Capitalization

Time Period: 1/10/2012 to 30/09/2015

0.0

12.5

25.0

37.5

50.0

62.5

75.0

87.5

100.0

03/2013 09/2013 03/2014 09/2014 03/2015 09/2015

Giant % Large % Mid %Small % Micro %



Portfolio Mandate and Typical PositioningInvestment Methodology and Process

Core Portfolio StrategyThe Australian Shares Core Portfolio is an actively managed concentrated portfolio consisting of our best ideas in the S&P/ASX 200 Index. The portfolio is constructed with a focus on long-term fundamental value and bias toward businesses with sustainable competitive advantages (economic moats) and predictable cashflows.

Total return from the Core Portfolio will tend to be driven by both capital appreciation and dividend yield with the mix dependent on the opportunities available. Core holdings may overlap with our Income, Growth, and Sustainable Portfolios with the style bias driven by the relative value offered by market prices. Investors in the Core Portfolio simplify their investment decision process by outsourcing the style tilt to Morningstar. Relative value is largely determined by comparing prevailing stock prices to our research team’s price/fair value estimates. The Core Portfolio has a strong bias toward companies with an economic moat and more predictable cash flows (lower uncertainty). This approach helps ensure preservation of capital, low turnover, and reduced volatility while pursuing excess returns.

Investment Strategy Committee ProcessThe Australian equity portfolios are managed by their portfolio managers and our eight-person investment strategy committee which comprises selected members of the equities research team. Committee meetings reinforce rigor and consistency of research methodology through collaborative debate on proposed andexisting holdings. A constant feedback loop between Morningstar’s research team and investment committee members leverages team strengths in vetting stock calls and portfolio holdings. This constant cycle strengthens team culture, expertise and ratings, minimising key-person risk and common behavioural pitfalls.

The committee is experienced and well-resourced, ensuring stability and succession planning. Representation from each sector team ensures cross-market expertise. Committee members have average industry experience of 17 years and average tenure with Morningstar of 10 years. We are not averse to an occasional portfolio manager change, as the driving forces behind our portfolio construction process are our bottom-up research and investment committee overlay.

In-depth research by our large, global, and experienced analyst team is the bedrock of our portfolio management process and facilitates our high conviction investments. We have more than 100 equity andcredit analysts globally, covering around 1,700 stocks and 700 debt issuers, making us one of the largest independent research teams in the world. Our 20 Australian and New Zealand-based analysts cover about 230 Australian and New Zealand stocks which includes extensive research reports, timely event analysis, actionable special reports, and deep discounted cash flow modelling on every company. This is complimented by our local credit research to help us assess the complete capital structure and preserve capital while pursing upside opportunities.

Investment Committee Feedback Loop


This document is issued by Ibbotson Associates Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Ibbotson’). Ibbotson is a member of the Morningstar group of

companies (‘Morningstar’). © 2015 Morningstar, Inc. All rights reserved. In compiling this document, Ibbotson has relied on information and data supplied by Morningstar and other

third party information providers. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Ibbotson, Morningstar nor their third party

information providers accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included.

Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. Past performance is not a reliable

indicator of future performance. Neither Ibbotson nor Morningstar guarantees the performance of any investment or the return of capital. The information provided is general advice only

has been prepared without reference to an individual person’s objectives, financial situation or particular needs. You should consider the advice in light of these matters and if

applicable the relevant disclosure document before making any decision to invest. To obtain advice tailored to your situation, individuals should contact a professional financial adviser.

For a copy of the relevant disclosure document, please contact our Distribution Team on 02 9276 4550. Some material is copyright and published under licence from ASX Operations

Pty Ltd ACN 004 523 782.

Portfolio Overview An actively managed portfolio of Australian equities, with a focus on companies with economic moats that are trading at

relatively attractive valuations.

Sector Specialist Managed Accounts

Asset Allocation Return Objective Time Horizon Risk Profile

Growth

Assets %

Defensive

Assets %

Australian Shares

Core

S&P/ASX 200 Accumulation Index 7 years High 100 0

Australian Shares

High Yield

S&P/ASX 200 Accumulation Index 7 years High 100 0

Australian Shares

Small Cap

S&P/ASX Small Ordinaries Accumulation Index 7 years Very high 100 0

Property

S&P/ASX 200 REITs Accumulation Index 5 years High 100 0

Global Shares MSCI ACWI Accumulation Index

(Net Dividends Reinvested)

7 years High 100 0

Cash

Bloomberg Australian Bond Bill Index 2 years Very low 0 100

This document is issued by Ibbotson Associates Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Ibbotson’). Ibbotson is a member of the Morningstar group of

companies (‘Morningstar’). © 2015 Morningstar, Inc. All rights reserved. In compiling this document, Ibbotson has relied on information and data supplied by Morningstar and other

third party information providers. Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Ibbotson, Morningstar nor their third party

information providers accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included.

Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. Past performance is not a reliable

indicator of future performance. Neither Ibbotson nor Morningstar guarantees the performance of any investment or the return of capital. The information provided is general advice only

has been prepared without reference to an individual person’s objectives, financial situation or particular needs. You should consider the advice in light of these matters and if

applicable the relevant disclosure document before making any decision to invest. To obtain advice tailored to your situation, individuals should contact a professional financial adviser.

For a copy of the relevant disclosure document, please contact our Distribution Team on 02 9276 4550. Some material is copyright and published under licence from ASX Operations

Pty Ltd ACN 004 523 782.

Diversified Managed Accounts

Asset Allocation Return Objective Time Horizon Risk Profile

Growth

Assets %

Defensive

Assets %

Defensive

CPI+ 0.75% Rolling 1 year Low 15 85

Conservative

CPI+ 1.0% Rolling 3 years Low to Medium 30 70

Balanced

CPI+ 2.5% Rolling 5 years Medium 50 50

Growth

CPI+ 3.5% Rolling 7 years Medium to High 70 30

High Growth

CPI+ 4.5% Rolling 9 years High 85 15

High Growth Plus

CPI+ 5.0% Rolling 10 years High 95 5

Diversified Income

CPI+ 2.0% Rolling 4 years Medium 40 60

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