Realindex Australian Small Companies Fund

Fact sheet - 31 Aug 2015

Fund strategy Fund facts The Realindex Australian Small Companies Fund uses the RAFI® Benchmark ASX Small Ords Accum methodology in the construction of its portfolios which selects and weights Funds under management $530.9 million companies according to their economic footprint defined by fundamental Inception Date 17 November 2008 measures of company size (sales, cash flow, book value and dividends). The portfolio is further enhanced by applying additional factors such as quality of earnings and debt coverage.

Commentary The Realindex Australian Small Companies Fund returned -3.39% (gross of fees) during August 2015, outperforming the S&P/ASX Small Ordinaries benchmark which returned 4.87%.

Small Cap Value (-3.1%) outperformed its Growth counterpart (-4.2%) during the month. This outcome is typically favourable for the portfolio, given the Value tilt inherent in the Fundamental Indexation methodology.

Within the portfolio, favourable stock selection was the key driver behind outperformance, while the contribution from asset allocation was largely flat.

At a sector level, strong stock selection within Energy (-18.1%) was the largest contributor to relative performance during the month. A lack of exposure to underperformers Beach Energy ( 31.3%) and Liquefied Natural Gas (-12.8%) both made meaningful contributions to relative performance, with Beach Energy the top relative contributor across the portfolio at a company level. A large overweight holding in Z Energy (-1.3%) also contributed.

It was a similar story in the Industrials sector (-4.2%), with favourable stock selection benefitting relative performance. Underweight exposure to Veda Group (-14.7%) and Mineral Resources ( 19.4%), together with overweight holdings in Skilled Group (+7.8%) and Programmed Maintenance Services (+8.4%), combined to drive outperformance in the sector.

Overweight positions in gold stocks OceanaGold (+7.1%), (+6.9%) and Resolute Mining (+10.4%) contributed to performance after gold rose 3.55%

In the Consumer Discretionary sector (-3.6%), the portfolio’s overweight holding in apparel company Pacific Brands (41.7%) was the standout contributor. The company’s share price rallied sharply post the release of FY15 results, and has now risen more than 85% in the past two months.

Underweight exposure to a relatively strong Health Care sector (-2.3%) detracted from relative performance. Underweight exposure to biotechnology company Medical (+12.5%) was the main drag on relative performance, after the company’s share price rallied after posting record sales and net profit.

The portfolio continues to offer a valuation discount to the market-cap benchmark, as measured by price-to-book (1.9x vs. 2.3x) and price to sales (1.9x vs. 2.7x), as well as a dividend yield higher than the benchmark (3.9% vs. 3.3%).

% figures in parenthesis show total return in Australian dollars from 31 July 2015 to 31 August 2015, unless otherwise noted.

Since Gross performance 1 month 3 month 6 month 1 year 2 year 3 year 5 year inception Realindex Australian Small Companies Fund -3.39% -8.16% -3.55% -5.14% 3.34% 10.22% 7.27% 11.54% ASX Small Ords Accum -4.87% -10.89% -9.08% -9.62% -1.43% 0.38% -0.72% 5.10% Outperformance 1.48% 2.73% 5.53% 4.48% 4.77% 9.85% 7.99% 6.44%

Top 10 holding comparison ASX Small ASX Small as at 31 Aug 2015 Fund Ords Accum Active Weight Sector Holding comparison Fund Ords Accum Active Weight Australian Pharmaceutical Industries Ltd 2.81% 0.46% 2.35% Energy 4.42% 4.78% -0.36% Z Energy Limited 2.42% 0.00% 2.42% Materials 13.52% 13.26% 0.26% A.P. Eagers Limited 2.33% 0.00% 2.33% Industrial 16.79% 15.79% 0.99% Sigma Pharmaceuticals Limited 2.05% 0.86% 1.19% Consumer Discretionary 28.19% 22.72% 5.47% Premier Investments Limited 1.74% 1.06% 0.68% Consumer Staples 3.56% 3.44% 0.12% Amalgamated Holdings Ltd 1.59% 0.00% 1.59% Healthcare 6.99% 9.32% -2.32% 1.55% 1.13% 0.42% A-REIT 7.93% 11.13% -3.20% Chorus 1.54% 0.25% 1.28% Financial-x-A-REIT 9.30% 9.95% -0.65% SKY Network Television Limited 1.48% 0.62% 0.86% Information Technology 4.21% 5.49% -1.28% SKYCITY Entertainment Group Limited 1.45% 0.58% 0.87% Telecoms 3.27% 3.47% -0.20% Utilities 1.82% 0.63% 1.18%

Top 5 relative contributors Value added Top 5 relative detractors Value lost Beach Energy 0.25% Sirtex Medical Limited -0.25% Pacific Brands Limited 0.20% SKY Network Television Limited -0.14% Limited 0.16% Nuplex Industries Ltd -0.13% Australian Pharmaceutical Industries Ltd 0.16% Estia Health -0.10% M2 Group Ltd 0.12% Spotless Group Holdings -0.10%

Contact To find out more, please contact us on 1300 809 204 or email [email protected]. Disclaimer Realindex Investments Pty Limited ABN 24 133 312 017 AFSL 335381. The Realindex Australian Small Companies Fundoption (Fund) described in this document is offered by Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232 468. This document is intended to provide general information only. You should assess whether the information is appropriate to you before making an investment decision. The performance figures used in this document are sourced from the Fund’s relevant benchmark index and from actual performance figures achieved before fees and expenses. Past performance is no indication of likely future performance. The fees payable by investors in the Fund may be negotiated and can differ between investors. For this reason the performance figures used in this document are shown before fees and costs. Investors should have regard to the Information Memorandum (available by contacting the Realindex team on 1300 809 204) or their negotiated fee agreement for further information on the fees and costs. Neither the of nor any of its subsidiaries guarantees or stands behind the performance of the Fund or the repayment of capital. An investment in the Fund is not a deposit or liability of the Bank and is subject to investment risk including loss of income and capital. RAFI and Fundamental Index are trademarks of Research Affiliates LLC, and are used with permission. Patent pending: WO 2005/076812, WO 2007/078399. Research Affiliates, LLC, is a U.S. Securities and Exchange Commission registered investment advisor. Research Affiliates, LLC and its related entities do not warrant the accuracy of the information provided herein, either expressed or implied, for any particular purpose.

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