AUSTRALIAN LEADERS FUND LIMITED A.B.N. 64 106 845 970 AUSTRALIAN LEADERS FUND LIMITED (ALF) – January 2012 INVESTMENT UPDATE & NTA As at 31st January 2012 NTA before tax on unrealised gains $1.2571 NTA after Tax $1.2335

MONTH IN REVIEW Improving housing and payrolls data out of the US in addition to easing concerns of a hard landing in China have helped to shift investor focus away from the European debt crisis. Domestically the Reserve Bank of left interest rates unchanged which was seen as a negative for the struggling private sector.

Despite a considerable cash-weighting, the Fund recorded a 5.1% return in January, marginally underperforming the All Ords which advanced by 5.2%. Key contributors to the fund included Ainsworth Game Technology, which continues to increase its domestic ship-share of slot machines and is receiving excellent support from customers in NSW and Victoria. Leighton Holdings, which is also a sizable position in the Fund, rallied hard in January as two loss making contracts came to a close. Mayne Pharma Group detracted from the Fund’s performance as issues in the US regarding generic entry and patent validity for the Doryx 150mg formulation weighed on the share price. The Courts decision regarding patent validity is expected in March. While there are clear risks with Doryx, we suspect this is largely priced in and we are encourage d by recent new management appointments at Mayne

BUYBACK The board is focused on maximising returns to shareholders and this will from time to time involve active capital management. The board views the on market share buyback as being in line with this aim as it will add value to the remaining shares on issue and increase the NTA per share.

A share buyback for up to 6,461,392 shares or approximately 10% of issued capital commenced on 15 th March 2011 for a 12 month duration.

As at close of market on 13th February 2012 1,649,149 shares had been bought back. For personal use only use personal For PORTFOLIO PERFORMANCE INCLUDING ATTRIBUTION FINANCIAL YEAR TO DATE RETURN 1 MONTH RETURN (%) 3 MONTH RETURN (%) 6 MONTH RETURN (%) (%)

Total Total 2 Total Total Total Total Total Total Attributio 1 Attribution Attribution Attribution Portfolio All Ords Portfolio All Ords Portfolio All Ords Portfolio All Ords n Long 6.8 5.2 2.1 2.0 0.0 2.7 -4.1 -1.6 -4.7 -7.2 -4.9 -4.3 Portfolio Short 5.8 5.2 -0.4 -2.7 0.0 2.5 -3.5 -1.6 2.1 -5.2 -4.9 0.9 Portfolio Cash -1.8 -0.4 0.1 0.5 Total 5.1 5.2 -0.1 4.9 0.0 4.9 -4.1 -1.6 -2.5 -7.8 -4.9 -2.9 1 The “Total Portfolio” column displays the return achieved in the period from the Investment Portfolio (long) and from the Borrowed Securities portfolio (short) separately. The Total Portfolio performance, representing the underlying return achieved on Shareholder’s Funds is a weighted return of the long and short portfolios as well as cash. As such this column will not sum.

2 Attribution shows the contribution to the outperformance of Shareholder’s Funds in the period coming from the Investment Portfolio (long) and the portfolio of Borrowed Securities (Short) as well as from the cash retained on the Balance Sheet. Each contribution sums to the overall outperformance of shareholders funds.

Fund Attribution: In January, the Long Portfolio increased in value by 6.8% outperforming the All Ordinaries Index, which increased by 5.2%.

The portfolio of securities that ALF has borrowed and sold (short)increased by 5.8% outperforming the All Ordinaries Index, and detracting from perfomance.

At the end of January ALF has 59% of net Shareholders Funds invested in equities with the balance retained in cash.

On balance, Shareholders Funds increased by 5.1% on a gross basis in January underperforming the market by 0.1 %.

Individual Stock Contributions A/ Investment Portfolio (Long): The overall portfolio returns were supported during the month by strong contributions from the following 3 positions Stock Total monthly return % Attribution Effect % Ainsworth Game Technology Ltd. 34.7 1.2 Leighton Holdings Ltd. 25.8 0.4 Toll Holdings Ltd. 19.1 0.3 The following 3 portfolio positions detracting from overall performance Stockonly use personal For Total monthly return % Attribution Effect % Mayne Pharma Group Ltd. -16.2 -0.5 Alacer Gold Corp. -7.9 -0.4 Trade Me Group Ltd. -3.5 -0.2 B/ Funding Portfolio (Short):

We are expecting companies that have been sold short to perform poorly. Positive attribution is achieved when borrowed securities (shorts) underperformed the benchmark.

Overall portfolio returns were supported during the month by the poor relative performance of the following securities which have been sold short. Stock Total monthly return % Attribution Effect % Aurora Oil & Gas Ltd. -13.3 0.5 Ltd. -4.5 0.3 Ltd. -2.2 0.3

The following 3 portfolio positions detracting from overall performance Stock Total monthly return % Attribution Effect % Ltd. 17.2 -0.4 Resolute Mining Ltd. 24.9 -0.3 Ltd. 16.6 -0.3 Gross Portfolio Structure

As at 31st December 2011 As at 31st January 2012 Investment Type $m % $m % Listed Securities - Long 105 138% 117 147% Listed Securities - Short -59 -78% -70 -88% NET EXPOSURE 46 60% 47 59% Fixed Interest in Cash 30 40% 33 41% Gross Assets 76 100% 80 100% The listed securities portfolio is detailed on the following page

TOP 20 LONG PORTFOLIO HOLDINGS 1 Corp. Ltd. 6,994,165.50 5.97% 11 Ltd. 2,701,992.40 2.30% 2 Banking Corp. 6,059,221.20 5.17% 12 GPT Group 2,432,757.00 2.07% 3 BHP Billiton Ltd. 5,994,476.24 5.11% 13 Ltd. 2,248,911.90 1.92% 4 Ltd. 4,734,678.00 4.04% 14 CFS Retail Property Trust 2,229,500.00 1.90% 5 Ainsworth Game Technology Ltd. 4,100,667.78 3.50% 15 Toll Holdings Ltd. 2,118,609.29 1.81% 6 Australia & Banking Group Ltd. 3,335,356.85 2.84% 16 Alacer Gold Corp. 2,095,170.00 1.79% 7 Ltd. 3,294,444.00 2.81% 17 Ltd. 2,094,543.00 1.79%

8 Ltd. 3,147,320.00 2.68% 18 DUET Group 2,058,875.00 1.76% For personal use only use personal For 9 Ltd. 2,884,525.28 2.46% 19 Woolworths Ltd. Frn 24-nov-2036 2,048,132.00 1.75% 10 Telecom Corp. of New Zealand Ltd. 2,713,750.00 2.31% 20 Westfield Retail Trust 1,960,750.00 1.67% As at 31st January 2012 the equity portfolio gave exposure to:

Consumer Discretionary Health Care Ainsworth Game Technology Ltd. 4,100,667 3.50% Atcor Medical Holdings Ltd. 1,114,222 0.95% Tatts Group Ltd. 1,727,200 1.47% Primary Health Care Ltd. 636,945 0.54% Trade Me Group Ltd. 1,635,000 1.39% ResMed Inc. (CDI-10CDI/1SHS) 548,000 0.47% Crown Ltd. 799,713 0.68% Mayne Pharma Group Ltd. 1,686,473 1.44% 8,262,580 7.04% Acrux Ltd. 1,723,608 1.47% Media CSL Ltd. 1,089,550 0.93% Consolidated Media Holdings Ltd. 1,746,149 1.49% 6,798,798 5.80% 1,746,149 1.49% Industrials Retailing Leighton Holdings Ltd. 1,891,340 1.61% Ltd. 1,357,000 1.16% Service Stream Ltd. 1,413,782 1.21% Holdings Ltd. 1,236,146 1.05% Boart Longyear Ltd. 1,355,200 1.16% Myer Holdings Ltd. 1,206,027 1.03% RCR Tomlinson Ltd. 1,106,114 0.94% JB Hi-Fi Ltd. 837,900 0.71% Sedgman Ltd. 730,668 0.62% 4,637,073 3.95% 6,497,104 5.54% Consumer Staples Commercial & Professional Services Wesfarmers Ltd. 4,734,678 4.04% SEEK Ltd. 420,800 0.36% Metcash Ltd. 2,701,992 2.30% 420,800 0.36% 7,436,670 6.34% Transportation Corporate Bonds Toll Holdings Ltd. 2,118,610 1.81% Woolworths Ltd. Frn 24-nov-2036 2,048,132 1.75% Group 1,330,309 1.13% Ltd. Frn 20-dec-2071 1,242,183 1.06% Airways Ltd. 1,123,548 0.96% 3,290,315 2.81% 4,572,467 3.90% Energy Materials Woodside Petroleum Ltd. 3,147,320 2.68% BHP Billiton Ltd. 5,994,476 5.11% Origin Energy Ltd. 1,651,200 1.41% Newcrest Mining Ltd. 3,294,444 2.81% Ltd. 1,605,364 1.37% Rio Tinto Ltd. 2,884,525 2.46% Santos Ltd. 1,315,190 1.12% Alacer Gold Corp. 2,095,170 1.79% Whitehaven Coal Ltd. 699,870 0.60% Orica Ltd. 2,094,543 1.79% Bandanna Energy Ltd. 507,020 0.43% Teranga Gold Corp Cdi 1,564,507 1.33% Cockatoo Coal Ltd. 419,848 0.36% Sandfire Resources N.L. 1,410,292 1.20% 9,345,812 7.97% Base Resources Ltd. 1,275,223 1.09% Financials Corp. Ltd. 1,086,500 0.93% Westpac Banking Corp. 6,059,221 5.17% Aston Resources Ltd. 1,054,900 0.90% Australia & New Zealand Banking Group Ltd. 3,335,357 2.84% Ltd. 901,203 0.77% National Australia Bank Ltd. 2,248,912 1.92% PanAust Ltd 702,000 0.60% 11,643,490 9.93% Alumina Ltd. 608,003 0.52% Insurance 24,965,786 21.30% AMP Ltd. 1,605,461 1.37% Telecommunication Services Insurance Australia Group Ltd. 1,430,288 1.22% Telstra Corp. Ltd. 6,994,166 5.97% QBE Insurance Group Ltd. 1,399,999 1.19% Telecom Corp. of New Zealand Ltd. 2,713,750 2.31% 4,435,748 3.78% Chorus Ltd. 1,524,000 1.30% Real Estate 11,231,916 9.58% GPT Group 2,432,757 2.08% Utilities CFS Retail Property Trust 2,229,500 1.90% DUET Group 2,058,875 1.76% Westfield Retail Trust 1,960,750 1.67% Hastings Diversified Utilities Fund 839,388 0.72% Lend Lease Group 1,264,832 1.08% 2,898,263 2.48% Australia 1,176,000 1.00% 9,063,839 7.73% TOTAL LONG PORTFOLIO 117,246,810 100.00%

TOTAL SHORT PORTFOLIO (70,091,490) For personal use only use personal For