Alleron Investment Management Limited Monthly Report August 2015

Portfolio performance and attribution analysis Market commentary Portfolio commentary Global markets fell amidst concerns Positives: Since Inception (Annualised) Month of slowing Chinese economic growth FXJ - The company reported revenue as well as uncertainty over the timing growth driven mainly by Domain as Portfolio +9.302% -6.718% of an interest rate hike in the US. The well as a positive FY16 outlook. Benchmark +7.052% -7.933% oil price fell 18% to US$38 before SYD - The company reported solid recovering to $48. Falling Chinese Top 3 and bottom 3 performing stocks passenger traffic growth in addition to manufacturing data weighed on the Top 3: Fairfax Media Holdings Ltd (FXJ), Airport Hold- the acquiring of domestic Terminal 3 share market as its continued correc- ings Ltd (SYD), The Reject Shop Ltd (TRS). from for $535m. tion triggered more government inter- Bottom 3: AMP Ltd (AMP), Downer EDI Ltd (DOW), Seek Lim- vention including a devaluation of the TRS - The company’s FY15 result ited (SEK). Yuan by 4% and reduced official showed turnaround momentum result- interest rates. The Australian dollar Portfolio changes ing from a new product mix and op- fell from US76 cents to 71 cents. erational initiatives. Stocks joined or increased: The Australian market fell as banks Negatives: The Reject Shop Ltd (+0.50%): A discount retailer of consumer and energy stocks underperformed. AMP - The share price underper- goods. The company is showing progress in its new customer en- Most outlook statements did not meet formed due to the falling share mar- gagement approach and leveraging the existing infrastructure. market expectations including indus- ket. trial companies with global exposures Travel Group Ltd (+0.25%, New): A leisure and which should be positively impacted DOW - The share price fell due to corporate travel agent. The company’s international operations are by a falling A$. ANZ and CBA re- disappointing profit guidance given gaining positive momentum. ported low single digit earnings by management for FY16. growth and raised $8bn in total to SEK - The market was impatient with Ltd (+0.25%): A premium wine producer comply with new capital rules. Treas- management’s decision to reinvest in and seller. The company’s US inventory problems have been recti- ury Wine’s brand management and the company’s position as market fied and marketing plans are delivering earnings growth. cost cuts generated 22% earnings leader. growth in FY15. .com ac- Stocks Removed or Reduced: quired a Mexican automobile website Portfolio focus to continue its global expansion. BHP Alleron’s investment process focusses Seek Ltd (-0.50%): An online employment and education com- on companies with a competitive pany. Management has been unclear about the timeframe and ef- and RIO reported strong balance advantage and a developing organic fect on earnings from the planned reinvestment into the company’s sheets and increased dividends de- growth profile. An investment will be brands. spite significant falls in profits due to lower commodity prices. made once an identified investment Ltd (-0.50%, Exit): A diversified metals and mining com- increased its dividend and expects trigger occurs. pany. The company is focussing on cost cutting to offset lower production costs to fall in the first full commodity prices. year of PNG LNG production.

Current portfolio Top ten holdings Sector analysis Portfolio analysis:

Stock 31/08/15 Industry Classification Weight Top 100 94.00% of fund National Bank 5.94% Consumer Discretionary 7.05% Ex 100 3.00% of fund Banking Corporation 5.70% Consumer Staples 5.55% Ltd 5.32% Energy 10.92% Tracking error: 4.4% Financials 32.89% Holdings Ltd 5.06% Breach report: No Breaches to report BHP Biliton Ltd 5.04% Healthcare 12.10% Industrials 15.14% Portfolio Return Dispersion AMP Ltd 4.95% Information Technology 0.96% Resmed Inc 4.85% Range of Performance: -6.663% to –6.719% Materials 11.73% Cochlear Ltd 4.84% Telecommunications 0.00% Notable Differences: No notable differences. Seek Ltd 4.42% Cash 3.66% Caltex Australia Ltd 4.30% Total 100.00%

Disclaimer: This communication is issued by Alleron Investment Management Limited ABN 71 109 874 160 AFSL 278856 Suite 1001, Level 10, 46 Market Street, Sydney NSW 2000. This information does not constitute a recommendation, offer or solicitation to buy or sell any securities. It reflects Alleron's Model Portfolio at the end of the month stated and Alleron's views at the date of preparation. Both the Model Portfolio and Alleron's views are subject to change without notice. Past performance figures are no guarantee of future returns and exclude Alleron's fees. Date of preparation: 7 September 2015