Listed Investment Companies (LICs) · BAILLIEU HOLST RESEARCH 04 February 2015 Baillieu Holst Ltd...

BAILLIEU HOLST RESEARCH

04 February 2015

Baillieu Holst Ltd ABN 74 006 519 393 www.baillieuholst.com.au Please read the disclaimer at the end of this report.

CONTENTS Company Page #LIC Sector Picks 3 Updated Sector Snapshot 4 Annualised Performance Table 9

Acorn Capital (ACQ) 10

Australian Foundation Inv. Co. (AFI) 11

AMP Capital China Growth Fund (AGF) 12

Australian Leaders Fund (ALF) 13

Aberdeen Leaders Fund (ALR) 14

AMCIL (AMH) 15

Argo Investments (ARG) 16

Australian United Inv. Co. (AUI) 17

BKI Investment Company (BKI) 18

Clime Capital Limited (CAM) 19

Cadence Capital (CDM) 20

Carlton Investments (CIN) 21

Century Australia Investments (CYA) 22

Contango Microcap (CTN) 23

Diversified United Investments (DUI) 24

Djerriwarrh Investments (DJW) 25

Future Generation Inv (FGX) 26

Global Value Fund (GVF) 27

Hunter Hall Global Value (HHV) 28

Ironbark Capital (IBC) 29

ING Private Equity Access (IPE) 30

Lion Selection (LSX) 31

Magellan Flagship Fund (MFF) 32

Milton Corporation (MLT) 33

Mirrabooka Investments (MIR) 34

OZ Growth (OZG) 35

PM Capital Asian Opportunities (PAF) 36

PM Capital Global Opportunities (PGF) 37

Perpetual Equity Investment (PIC) 38

Platinum Capital (PMC) 39

QV Equities (QVE) 40

Templeton Global Growth (TGG) 41

WAM Capital (WAM) 42

WAM Research (WAX) 43

Whitefield (WHF) 44

Westoz (WIC) 45

Watermark Market Neutral Fund (WMK) 46

Appendix

Large Cap Domestic – Historical P/D 47

Small Cap Domestic – Historical P/D 48

International LIC’s – Historical P/D 50

Specialist LIC’s – Historical P/D 52

Premium/Discount to Pre-tax NTA 53

Premium/Discount to Post-tax NTA 53

Total Shareholder Return – 12 months 54

TSR compound annual growth – 3 yrs 54

TSR compound annual growth – 5 yrs 55

NTA growth – 1 yr 55

NTA compound annual growth – 3 yrs 56

NTA compound annual growth – 5 yrs 56 NTA compound annual growth – 10 yrs 57 LIC’s average historical Price to NTA 57

Listed Investment Companies (LICs) SECTOR REPORT

December 2014 Performance Review and Update

The All Ordinaries Accumulation Index (XAOAI) returned 5.0% in the Calendar Year 2014 whilst the MSCI World Index*, a benchmark for LICs with an international focus, returned 14.4% as global equity markets outperformed local equities and the Australian Dollar depreciated 8.3%.

Large domestic LICs performed in line with the market in the Calendar Year 2014, whilst smaller domestic LICs underperformed the market by 3.5% and showed a disperse range of returns. Globally focused LICs as a sector outperformed the benchmark by 3.4%; the return profile was improved materially by two participants (AGF and HHV). Metrics below are as of 31 December 2014, see FIG.2 for latest update.

Large capitalisation domestic

Milton Corporation (MLT) and Argo Investments (ARG) were the strongest performers over the past 12 months with total shareholder returns (TSRs) of 10.2% and 10.1% respectively and active returns of 5.2% and 5.1%.

Diversified United (DUI) was at the largest discount to net tangible assets (NTA pre-tax**) at 7.6%. Djerriwarrh (DJW) continues to trade at a significant 29.5% premium to NTA (pre-tax**).

DJW also has the highest dividend yield at 5.6% fully franked.

Small capitalisation domestic

Carlton Investment Limited (CIN) was the strongest performer over the past 12 months with a TSR of 17.1% and an active return of 12.1%. Whitefield Ltd. (WHF) and WAM Research (WAX) followed with TSRs of 10.1% and 10.0%, and active returns of 5.1% and 4.9% respectively.

Carlton Investment Limited (CIN) had the largest discount to NTA (pre-tax**) at 11.7%. Mirrabooka Investments (MIR) and WAM Capital (WAM) traded at notable premiums to their peers at 14.9% and 12.1% respectively. Westoz Investment Ltd. (WIC) and Australian Leaders Fund (ALF) had the highest dividend yields (fully franked) at 8.5% and 8.4% respectively. Ozgrowth (OZG) and Contango Mircoap (CTN) were also attractive, trading on dividend yields of 8.3% and 8.2% fully franked.

Global

Hunter Hall Global Value (HHV) was the strongest performer over the past 12 months with a TSR of 41.9% and an active return of 27.4%. AMP Capital China Growth Fund (AGF) and Magellan Flagship Fund (MFF) also performed strongly with TSRs of 34.5% and 19.1%, and active returns of 20.1% and 4.7% respectively.

AMP Capital China Growth Fund (AGF) was again at the largest discount to NTA (pre-tax**) at 26.5%. Platinum Capital Ltd (PMC) was notable at a 10.4% premium.

HHV had the highest dividend yield over the past 12 months at 5.0% (partially-franked)

*A$ adjusted, **Pre-tax NTA refers to net tangible assets after tax paid but before tax on unrealised gains. *Performance figures from Bloomberg and calculated with re-invested dividends. *Active return refers to TSR relative to that of the comparative index. Disclaimer: LIC performance measurements reflect performance after all operating expenses and taxation. Using index benchmarks often understates performance as the indices used are before all operating expenses and tax. Total Shareholder Returns are often negatively impacted by capital events such as options, DRPs, Share Purchase Plans and placements. Dividend yields contained within are historical and are not an indication of future dividend payments.


04 February 2015


LIC Sector Update

The 2014 calendar year was a significant one for the Listed Investment Companies (LIC) sector with around 15 new offerings and a record circa $1.5 billion of new capital raised during the period. The capital has been raised through IPO’s, rights issues, SPPs, convertible note listings and bonus option issues. Of particular note were IPOs from large domestic fund managers Perpetual (FUM of $31.8bn) with Perpetual Investment Company (PIC) and Investors Mutual (FUM of $5.5bn) with QV Equities (QVE). Growth in SMSFs and increased education surrounding the benefits of the LIC structure underpin growth in this sector. In 2015 we expect to see moderation in appetite for new domestic LIC offerings however expect the market to be supportive of growth within the international segment.

Large capitalisation: During the December quarter we saw the LICs in this segment continue to trade at premiums above medium and longer-term trading averages. Whilst premiums have moderated slightly we have observed more volatile intermonth trading through our tracking portfolios. For example, Argo (ARG) traded up to a 10% premium above its pre-tax NTA during the period, well above medium and longer-term trading averages. In light of many “traditional” LICs in this segment trading at premiums we have preferred LICs such as Diversified United (DUI), which operate under a similar mandate and have a similar underlying portfolio, albeit with less liquidity. The rights issue for DUI created a valuation opportunity to buy the rights (DUIN) at a material discount (>10%). DUI stock, once consolidated with the traded rights, will have a market capitalisation above $700m.

Small capitalisation: During the December quarter we saw the LICs in this segment continue to trade at premiums above medium and longer-term trading averages. Namely, LICs that exhibited good absolute performance and attractive fully franked yields began to trade at excessive premiums in our view (e.g. MIR and WAM). We have added new listings (FGX, GVF, QVE, PIC) to this segment post meetings with management. We are of the view that these provide investors with a value proposition incremental to our existing coverage.

International: The international segment continues to exhibit superior absolute performance relative to the domestic sector with 1 and 3 year performance of 17.8% and 30.7% per annum respectively. Strong underlying performance and the continued devaluing of the AUD relative to key global currencies (i.e. USD, GBP etc.) has supported strong capital growth over such periods but has also been the impetus for us to encourage clients to seek out a heightened level of geographic diversification within their equity portfolios.

Specialty: The December quarter was challenging in this segment with Acorn Capital (ACQ) and Lion Selection (LSX) both with exposure to the microcap segment of the resources market.

FIG.1: DECEMBER 2014 PREMIUMS/(DISCOUNTS) TO NTA VERSUS HISTORICAL AVERAGES

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

AF

I

AR

G

AU

I

BK

I

DJW ML

T

ALF

ALR

AM

H

CA

M

CD

M

CIN

CT

N

CY

A

DU

I

FG

X

IBC

MIR

OZ

G

QV

E

WA

M

WA

X

WIC

WH

F

WM

K

AG

F

GV

F

HH

V

MF

F

PA

F

PG

F

PM

C

TG

G

AC

Q

IPE

LSX

December 3yr Av 10yr Av

Large Capitalisation Domestic Small Capitalisation Domestic (<$700mn) International Specialist

Source: Baillieu, Bloomberg, company reports.


04 February 2015


FIG.1 provides a comparison snap shot of the variance in discounts and premiums to NTAs in December 2014 versus the averages over three and ten years. When choosing our preferred LIC exposures we compare the current discount and premium with the long term averages to assess whether the current market valuations provide an attractive entry point. However our primary focus is the quality of the LIC. When judging the quality of a LIC we suggest investors look for a number of key attributes. 1) Strong underlying portfolio performance; 2) An ability to generate sustainable and attractive fully franked dividends; 3) Reputable investment managers that are highly engaged with their shareholders; 4) Attractive cost and management fee structures.

LIC Sector Picks

Top picks: Our top picks refer to preferred exposures within each sector based on numerous quantitative and qualitative factors. However, they should not be treated as official stock recommendations but merely as a guide to where we would apportion funds at this particular point in time. Our monthly eFlash will provide our updated views. FIG.2 on the following page provides a current update of the overall sector with our estimated current NTAs derived from our model portfolios for the LICs.

Large capitalisation: Picks from the traditional LICs in this segment are Australian Foundation Investments (AFI) and BKI Investment Company (BKI). We currently estimate AFI to be trading at a 2% premium to pre-tax NTA with a 3.5% dividend yield fully franked (FF) whilst BKI is trading at a 1% discount and a 4.1% dividend yield (FF). It is important to note that whist these are our preferred exposures we do not view them as standout value propositions. We see more value in some growing LICs in this segment, namely DUI. DUI and the traded rights stock (DUIN) are currently offering the best value in the segment with DUI and DUIN trading at 9% and 10% discounts to pre-tax NTA respectively. DUI is trading on 3.9% dividend yield fully franked. It is important to note the rights stock is not entitled to the interim dividend payment; however we have taken that into consideration within our NTA estimates.

Small capitalisation: Future Generation Fund (FGX) and Whitefield (WHF) are our current picks in this segment. In our view, FGX offers a unique value proposition to investors looking for exposure to domestic small cap equities. It is managed by 14 of Australia’s leading fund managers with no performance fees and an annual donation of 1% of NTA to charity. Its share price is currently trading around par value with NTA and thus we view this as an attractive entry point relative to other domestic small cap LICs, which are at premiums. We would expect it to pay a dividend yield above the market yield when it commences dividend payments. We are also positively predisposed to the newly issued mid-cap LICs QVE and PIC. Whilst their track records in the LIC format are unproven as yet both fund managers have a track record of outperformance over the medium and long-term in their unlisted funds. In our view, WAM and MIR still trading at excessive premiums of ~15% and ~10% respectively, despite MIRs premium narrowing 5% to 10% since end of December.

International: Top picks in this segment are 1.) Templeton Global Growth (TGG) and 2.) Magellan Flagship Fund (MFF). Whilst we advocate a broadly equal mix between both these LICs, MFF once fully taking into account all “in-the-money” 2017 options (MFFO) is trading at ~8% premium to pre-tax NTA. Thus we currently prefer TGG. Excluding the options, MFF is trading at a ~3.5% discount and 1.1% yield. TGG is a highly diversified global manager with a value focus. It is overweight European equities and its largest positions would be ~2.5% of the overall portfolio. It is currently trading at a ~4% discount to NTA and aims to pay out ~3% of the portfolio NTA annually as a dividend. MFF takes more concentrated positions, with its largest being Visa at ~13.4% (Dec ’14). It is currently heavily weighted to US listed stocks (~90%).

Specialty: Our top pick in the sector is the Acorn Capital Investment Fund (ACQ). Whilst the weakness in resources has hampered portfolio performance, we believe that over the medium-term ACQ’s strategy of cherry-picking the most attractive opportunities from the listed microcap and unlisted markets will generate strong risk-


04 February 2015


adjusted returns for shareholders. It is worth noting that its unlisted investments are generally held at cost and thus realising exits from such investments should provide a step-change in performance. Post IPO, the stock has drifted to a discount of ~16% and we view this as an attractive entry point for those with a medium to long-term outlook.

Updated Sector Snapshot

FIG. 2: OVERVIEW OF LISTED INVESTMENT COMPANIES COVERAGE BY SECTOR (as of 3 February 2015)

Large Cap CodeShare Price

Market Cap. ($m)

Dividend ($)

YieldGrossed Up Yield

December NTA

December Disc/Prem

Est.NTA

Estimated Disc/Prem

3 Yr AveP/D

5 Yr AveP/D

MER

Australian Foundat. AFI 6.20 6733.6 0.22 3.5% 5.1% 5.80 4.3% 6.08 2.0% 1.3% 0.7% 0.17%

Argo Investments ARG 8.07 5362.1 0.28 3.5% 5.0% 7.36 5.4% 7.75 4.1% -1.7% -2.0% 0.15%

Australian United In AUI 8.26 902.4 0.32 3.9% 5.5% 8.48 -5.7% 8.84 -6.6% -7.5% -7.0% 0.11%

BKI Investment Ltd BKI 1.70 940.5 0.07 4.1% 5.9% 1.63 -2.8% 1.71 -1.0% -5.2% -7.9% 0.16%

Djerriwarrh DJW 4.58 1001.1 0.26 5.7% 8.1% 3.56 29.5% 3.64 25.7% 19.9% 17.3% 0.39%

Diversified United DUI 3.49 598.6 0.14 3.9% 5.6% 3.68 -7.6% 3.83 -9.0% -9.1% -8.6% 0.15%

Milton Corporation MLT 4.77 3050.6 0.18 3.8% 5.4% 4.29 4.4% 4.49 6.3% -3.0% -4.3% 0.13%

Small Cap CodeShare Price

Market Cap. ($m)

Dividend ($)


December NTA

December Disc/Prem

Est.NTA

Estimated Disc/Prem

3 Yr AveP/D

5 Yr AveP/D

MER

Australian Leaders ALF 1.44 366.8 0.12 8.3% 11.9% 1.29 10.5% n/a n/a 3.8% -3.7% 1.00%

Aberdeen Leaders ALR 1.13 69.6 0.06 4.9% 7.0% 1.18 -7.2% 1.23 -8.0% 3.4% 0.6% 1.05%

AMCIL Limited AMH 0.88 212.8 0.07 7.4% 10.6% 0.87 1.7% 0.92 -3.9% -3.9% -7.1% 0.65%

Clime Capital CAM 0.94 76.4 0.05 4.9% 7.0% 0.98 -2.0% n/a n/a -9.6% -14.9% 1.00%

Cadence Capital CDM 1.43 285.9 0.10 7.0% 10.0% 1.35 5.3% 1.39 2.9% 1.0% -7.8% 1.00%

Carlton Investments CIN 29.67 785.5 1.00 3.4% 4.8% 32.00 -11.7% 34.53 -14.1% -15.9% -17.1% 0.09%

Contango Microcap CTN 1.07 170.0 0.09 8.0% 9.5% 1.10 -4.7% 1.11 -3.9% -13.7% -19.4% 0.00%

Century Australia CYA 0.92 72.9 0.05 5.5% 7.8% 0.93 -4.2% 0.98 -6.7% -8.1% -9.8% 0.40%

Future Gen Ltd FGX 1.11 203.1 n/a n/a n/a 1.08 -3.0% n/a n/a n/a n/a 0.00%

Global Value Fnd Ltd GVF 1.08 59.1 n/a n/a n/a 1.07 -2.0% n/a n/a n/a n/a 1.50%

Ironbark Capital Ltd IBC 0.55 93.3 0.03 5.5% 7.8% 0.58 -6.2% n/a n/a -7.1% -11.2% 0.65%

Mirrabooka Invest. MIR 2.48 349.8 0.20 8.1% 11.5% 2.22 14.9% 2.26 9.9% 7.4% 3.8% 0.64%

Ozgrowth Limited OZG 0.18 65.0 0.01 4.2% 6.0% 0.17 4.0% 0.17 4.2% -22.0% -25.7% 1.00%

Perpetual Equity Ltd PIC 0.98 244.4 n/a n/a n/a 0.97 1.0% n/a n/a n/a n/a 1.00%

Qv Equities Limited QVE 1.06 195.7 n/a n/a n/a 1.01 2.8% n/a n/a n/a n/a 0.95%

Whitefield Ltd WHF 4.36 333.4 0.17 3.9% 5.6% 4.56 -7.2% 4.80 -9.1% -7.8% -8.7% 0.35%

WAM Capital Limited WAM 2.08 718.4 0.13 6.3% 8.9% 1.79 12.1% 1.81 14.9% 2.0% -4.6% 1.00%

WAM Research Ltd WAX 1.21 172.2 0.08 6.2% 8.9% 1.09 6.0% 1.11 9.4% -1.7% -8.2% 1.00%

Westoz Inv Ltd WIC 1.07 137.7 0.05 4.2% 6.0% 1.02 3.8% 1.02 4.3% n/a n/a 1.00%

Watermark Fund Ltd WMK 0.86 75.3 0.05 5.8% 8.3% 0.95 -9.5% n/a n/a n/a n/a 1.00%

International CodeShare Price

Market Cap. ($m)

Dividend ($)


December NTA

December Disc/Prem

Est.NTA

Estimated Disc/Prem

3 Yr AveP/D

5 Yr AveP/D

MER

Amp Capital China AGF 1.15 430.8 0.03 2.6% 2.6% 1.47 -26.5% 1.41 -18.7% -21.4% -21.5% 1.65%

Hunter Hall Global HHV 1.30 245.6 0.07 5.0% 5.1% 1.36 -3.9% 1.39 -6.7% -15.3% -17.8% 1.50%

Magellan Flagship MFF 1.88 669.6 0.02 1.1% 1.1% 1.94 -3.0% 1.94 -3.4% -2.7% -6.9% 1.25%

Pm Capital Asian Ops PAF 1.00 55.1 n/a n/a n/a 1.04 -8.1% 1.09 -8.0% n/a n/a 1.00%

Pm Capital Fund PGF 1.08 187.8 n/a n/a n/a 1.14 -6.3% 1.16 -7.5% n/a n/a 1.00%

Platinum Capital Ltd PMC 1.82 422.6 0.08 4.4% 6.3% 1.65 10.3% 1.71 6.2% -0.2% 2.3% 1.50%

Templeton Global TGG 1.45 288.5 0.04 2.4% 3.4% 1.42 1% 1.52 -4.4% -10.5% -13.2% 1.00%

Specialist CodeShare Price

Market Cap. ($m)

Dividend ($)


December NTA

December Disc/Prem

Est.NTA

Estimated Disc/Prem

3 Yr AveP/D

5 Yr AveP/D

MER

Acorn Cap Inv Fund ACQ 0.74 37.6 n/a n/a n/a 0.87 -16.1% 0.88 -16.0% n/a n/a 0.95%

IPE Ltd IPE 0.32 43.0 0.03 9.5% 13.6% 0.34 -8.0% n/a n/a -16.2% -25.1% 0.85%

Lion Selection Grp LSX 0.30 32.1 n/a n/a n/a 0.36 -38.9% n/a n/a -24.4% -29.1% 1.50%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports


04 February 2015


LIC Basics

What is a LIC?

A LIC has characteristics of both managed funds and stock exchange-listed companies.

Essentially a LIC is a company that invests in other companies, with the purpose of giving its shareholders exposure to a variety of shares via its investment portfolio.

LICs may also invest in cash or fixed income instruments, although in many cases this will form only a relatively small proportion of their investment portfolio.

Income from LICs takes the form of semi-annual dividend payments that are linked to the profitability of the portfolio. Capital gains can arise where the investor sells the shares in the LIC for more than they originally bought them for.

Benefits of investing in LICs

Diversification

Investment in just one LIC can potentially give an investor exposure to more than 100 different companies in a range of industries.

This therefore reduces the risk to capital losses as losses connected to one company may be offset by gains by others in the portfolio.

A LIC is a cost-effective method of achieving such a degree of diversification.

LICs are managed by investment professionals

Each LIC is managed by full-time investment professionals whose goal it is to optimise returns on the investment portfolio for shareholders within strictly enforced risk parameters.

In this respect, LICs are passive investments. Once the shares in the LIC have been purchased, the investor leaves investment decisions to the managers of the LIC.

Some LICs have operated for more than 50 years while others, although only recently listed, are operated and managed by investment firms that have built strong reputations over many years.

Transparent investment philosophy

All LICs are transparent as to how they invest their funds. Investors can choose the relevant LIC based on their own investment goals and risk preferences.

Some LICs focus on specific geographic areas (such as Australia or overseas), may invest in a range of industries or focus on just one (such as resources), or are geared towards providing investors with annual income streams or longer-term capital gains (or a combination of both).

In this document, we briefly describe each of the 37 selected LICs as well as list the main investments of each and their recent performance.

Ease of investment

Investing in a LIC is done in exactly the same manner as any other company on the ASX, by placing an order with your stockbroker to buy shares in it.

Exiting the investment is just as straightforward: the investor sells the shares on-market during trading hours through their stockbroker.

The majority of LICs are highly ‘liquid’, meaning that there are a relatively large number of willing buyers and sellers on the ASX ready to allow the investor to enter or exit the investment at any time they want and without having to buy in at a premium or sell at a discount to “market price”.


04 February 2015


Costs involved in investing in a LIC

Entry costs

Investing in the ASX via a LIC is highly cost-effective relative to other methods of investing in a ‘portfolio’ of investments.

The initial cost comes in the form of brokerage paid to acquire the shares. Investing in a LIC allows the investor to effectively buy shares in more than 50 companies (depending on the LIC), but only pay brokerage to invest in one (the LIC). A LIC is therefore an efficient method of diversification.

The entry costs to LIC investments are generally lower than retail managed funds, which utilise a “front-end load” charge that can be up to 4% of the market value of the units in the fund at the date of purchase.

Ongoing costs

There are two types of fees that the manager of the LIC charges during the investment period: management fees and performance fees.

The LIC uses management fees to cover costs incurred in running the portfolio. These fees are taken out of the profits of the LIC, which are a function of the performance of the investment portfolio of the company (including dividends paid and capital gains/losses on shares that are sold). They are paid regardless of the profitability of the investment portfolio.

These fees range from 0.12-1.5% of assets per year. This is much lower than average fees charged for retail managed funds, which are approximately 1.5-3.0%. The effect of this cost-saving on a longer-term investment, where returns compound over a number of years, can be quite substantial. One reason for this lower cost is that LICs do not incur back-office or distribution costs, reducing their cost of operation. The fees (calculated as a “management expense ratio” or MER) of our selected LICs are shown in the graph below.

FIG.3: MANAGEMENT FEES OF SELECTED LICs FOR FY14

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

ACQ

AFI

AGF

ALF

ALR

AMH

ARG

AUI

BKI

CAM

CDM

CIN

CTN CYA

DJW DUI

FGX

GVF

HHV

IBC

IPE

LSX

MFF

MIR

MLT

OZG PAF

PGF

PIC

PMC

QVE

TGG

WHF

WAM

WAX

WIC

WMK

Average 0.77%

Unlike management fees, performance fees are paid only if the LIC’s investment portfolio outperforms a predetermined benchmark and is linked to the size of this outperformance. Not all LICs charge performance fees.

These fees provide an incentive for the manager of the fund to optimise returns for shareholders of the LIC. They are generally paid not just if the fund is profitable, but when it is more profitable than the market as a whole. Unlike management fees, they will generally not deteriorate low returns or worsen investment losses.

Performance fees for our selected LICs are shown in the table below. The benchmark index is the S&P/ASX All Ordinaries Accumulation Index unless otherwise stated below.

Investing in the ASX via a LIC is highly cost-effective relative to other methods of investing in a “portfolio” of investments


04 February 2015


Exit costs

Exit costs from LICs are generally limited to the brokerage paid on selling the shares. This is unlike retail managed funds, which can generally be exited at no charge.

Exiting a LIC investment can have tax consequences.

What income do investors receive from a LIC?

Annual investor income from a “buy-and-hold” investment strategy in a LIC takes the form of dividends, just like other share investments.

However, because LICs utilise a company structure, payment of dividends is at the discretion of the management of the LIC. In other words, just because the investment portfolio of the LIC has made a profit in a given year, it does not mean that all, or even any, of that profit will be paid to shareholders in that year. This is unlike managers of retail managed funds, which are required to pay out the income to unitholders in the particular tax year that it is earned. Generally, LICs will pay out a high proportion of earnings as dividends.

Company Performance Fee

ACQ 20% of outperformance of S&P/ASX Small Ords Acc Index AFI None

AGF 20% above S&P/CITIC300 TRI

ALF 20% above All Ordinaries Accumulation Index

ALR None

AMH None

ARG None

AUI None

BKI None

CAM 20% above All Ordinaries Accumulation Index

CDM 20% of returns above index or of portfolio return

CIN None

CTN None

CYA 10% of returns above index +1%

DJW None

DUI None

FGX None

GVF 15% of outperformance in excess of a hurdle return being 4% above the 1 year swap rate

HHV 15% above MSCI World Index

IBC 15% of returns above index +1%

IPE 10% of outperformance of portfolio over benchmark

LSX 15% of outperformance above benchmark

MFF 10% if returns exceed MSCI World Index and 10-year bond rate

MIR None

MLT None

OZG 20% where performance exceeds 7% over 12 month period

PAF 15% of performance in excess of MSCI Asia (ex Japan) Index (AUD)

PGF 15% of performance in excess of MSCI World Index (AUD)

PIC None

PMC 10% of returns above MSCI World Index +5%

QVE None

TGG None

WHF None

WAM & WAX

20% of returns above All Ordinaries Accumulation Index if index increased, or where the 20% of the index decreased over the period, 20% of positive portfolio perf (0% if negative)

WIC 20% where performance exceeds 10% over 12 month period

WMK 20% of returns above the RBA cash rate


04 February 2015


Most of our selected LICs focus on blue chip stocks and pay out a high proportion of earnings as a dividend. Accordingly, they have healthy dividend yields (as shown in the following graph).

FIG. 4: DIVIDEND YIELD FOR SELECTED LICS

0.00

2.00

4.00

6.00

8.00

10.00

12.00

ACQ

AFI

AGF

ALF

ALR

AMH

ARG

AUI

BKI

CAM

CDM

CIN

CTN CYA

DJW DUI

FGX

GVF

HHV

IBC

IPE

LSX

MIR

MLT

OZG PAF

PGF

PMC

QVE

TGG

WHF

WAM

WAX

WIC

WMK

MFF

Taxation issues

The returns of the LIC are generally taxed at the company tax rate of 30%. Accordingly, when dividends are paid to shareholders of the LIC, they attach franking credits. These are a tax benefit for shareholders, as they receive a “credit” for the company tax already paid on the LIC income when the shareholder’s ordinary income is assessed.

Capital gains are managed by the manager of the LIC. Where the dividend paid to a shareholder of a LIC contains income derived from a capital gain of the LIC, it will be treated as a capital gain, not ordinary income, in the hands of the shareholder. Under current tax rules, only 50% of this amount is taxable for many investors.

This tax treatment contrasts with that of unlisted retail managed funds, where investors incur an annual tax liability on interest and capital gains that the fund earns each year.

LICs versus managed funds

LICs are listed on the stock exchange so entry and exit costs are limited to brokerage. This means that diversification is achieved at little cost. LICs also offer a tax-effective structure, whereby dividends are fully franked and assessed as a capital gain in the hands of the shareholder. Therefore, only 50% of this amount is taxable for many investors. Contrast this with managed funds where investors incur an annual tax liability on the interest and capital gains that the funds earn each year.

The fee structures of LICs are also favourable in comparison with managed funds. Our selected LICs have management expense ratios ranging from 0.12% to 1.5%, whereas managed funds often charge at least 1.5%. The difference in fees can have a substantial effect on long-term investments. For example, from an initial investment of $50,000 invested at identical returns for a decade, the LIC investment could be worth up to $6,000 more than the managed fund.

LICs versus exchange traded funds (ETFs)

LICs and EFTs both have low management fees and efficient tax structures compared with managed funds. However, ETFs have an open-ended structure, where units on offer can increase or decrease based on supply and demand, and trade at or close to their net asset value. ETFs are generally passive investment products and hence do not aim to outperform the market in the same way many of the LICs do.

ETFs are required to distribute any surplus income to security holders, whereas LICs have the ability to conserve surplus income and take advantage of market opportunities as they see fit. This added flexibility is beneficial to the shareholder.

Our selected LICs have management expense ratios ranging from 0.12-1.5%, whereas managed funds often charge at least 1.5%

Average 4.4%


04 February 2015


Despite speculation that LICs will face increased competition from ETFs, we feel that for the majority of our clients LICs provide a superior investment vehicle with the added possibility of returns above that of the underlying asset.

FIG. 5: ANNUALISED PERFORMANCE TABLE (UP UNTIL 31 DEC 2014)

Large Cap

Domestic1 Year TSR

1 Year Active

Return3 Year TSR

3 Year Active

Return5 Year TSR

5 Year Active

Return

AFI 0.9% ‐4.2% 19.3% 5.0% 7.6% 1.1%

ARG 10.1% 5.1% 20.2% 5.9% 7.0% 0.6%

AUI 4.5% ‐0.5% 18.3% 4.0% 5.8% ‐0.7%

BKI 5.0% 0.0% 16.6% 2.3% 9.7% 3.2%

DJW 1.9% ‐3.1% 16.3% 2.0% 6.6% 0.1%

DUI 2.6% ‐2.5% 20.2% 5.9% 6.4% ‐0.1%

MLT 10.2% 5.2% 20.8% 6.5% 9.2% 2.8%

Small Cap

Domestic1 Year TSR

1 Year Active

Return3 Year TSR

3 Year Active

Return5 Year TSR

5 Year Active

Return

ALF ‐8.8% ‐13.8% 22.7% 8.4% 13.8% 7.3%

ALR ‐14.8% ‐19.8% 9.4% ‐5.0% 2.2% ‐4.2%

AMH 2.7% ‐2.3% 18.4% 4.1% 11.1% 4.6%

CAM ‐7.1% ‐12.1% 10.8% ‐3.5% 8.2% 1.8%

CDM 4.3% ‐0.8% 14.4% 0.1% 20.7% 14.3%

CIN 17.1% 12.1% 27.4% 13.1% 14.1% 7.7%

CTN 7.0% 2.0% 14.0% ‐0.3% 8.6% 2.2%

CYA 8.7% 3.7% 17.4% 3.0% 6.9% 0.5%

*FGX ‐0.9% ‐0.2% n/a n/a n/a n/a

*GVF 4.5% ‐8.9% n/a n/a n/a n/a

IBC 3.4% ‐1.7% 12.4% ‐1.9% 9.3% 2.9%

MIR ‐3.6% ‐8.6% 24.5% 10.2% 10.2% 3.8%

OZG 1.9% ‐3.1% 15.5% 1.2% 8.9% 2.4%

*QVE 4.0% 6.6% n/a n/a n/a n/a

WHF 10.1% 5.1% 25.0% 10.7% 10.3% 3.9%

WAM 9.4% 4.4% 18.4% 4.1% 16.6% 10.1%

WAX 10.0% 4.9% 29.1% 14.8% 17.6% 11.2%

WIC ‐7.3% ‐12.4% 14.0% ‐0.3% 7.4% 0.9%

WMK ‐8.8% ‐11.0% n/a n/a n/a n/a

*PIC 0.5% ‐3.5% n/a n/a n/a n/a

International 1 Year TSR1 Year Active

Return3 Year TSR

3 Year Active

Return5 Year TSR

5 Year Active

Return

AGF 34.5% 20.1% 22.1% ‐2.2% 3.4% ‐8.9%

HHV 41.9% 27.4% 29.2% 4.9% 13.3% 1.0%

MFF 19.1% 4.7% 40.9% 16.5% 25.1% 12.8%

*PAF ‐0.5% ‐15.6% n/a n/a n/a n/a

PGF 10.9% ‐3.5% n/a n/a n/a n/a

PMC 13.9% ‐0.6% 28.7% 4.3% 5.8% ‐6.5%

TGG 5.0% ‐9.5% 32.7% 8.3% 14.3% 2.0%

Specialist 1 Year TSR1 Year Active

Return3 Year TSR

3 Year Active

Return5 Year TSR

5 Year Active

Return

*ACQ ‐27.0% ‐23.5% n/a n/a n/a n/a

IPE ‐8.8% ‐14.1% 14.7% 0.0% 21.3% 14.8%

LSX ‐58.5% ‐30.0% ‐20.0% 10.5% ‐18.7% 2.7% *TSR since Inception date. Source: Bloomberg, Baillieu Holst, TSR is calculated under the assumption that dividends are re-invested. Active return refers to TSR relative to that of the comparative index


04 February 2015


Acorn Capital (ACQ) www.acorncapital.com.au

Acorn Capital was founded in 1998 and is the largest specialist microcap investor in the Australian market.

ACQ invests in ASX listed companies outside the top 250 by market capitalisation and unlisted opportunities if they are evaluated to be more attractive than listed opportunities.

ACQ listed on the ASX in May 2014. The year to date (YTD) total shareholder return for the Calendar Year 2014 was -27.0% with pre-tax net asset backing decreasing 11.1%. The YTD active return was -23.5%.

FIG. 6: ACQ SNAPSHOT FIG. 7: ACQ PORTFOLIO TOP 10

Metric Company Fund (%)

Price (31 Dec 2014) $0.73 Servcorp 4.48%

Share price range (12 months) $0.72 ‐ $0.96 Amaysim 3.26%

Shares on issue 50.82 mn Capitol Health 2.68%

Market capitalisation $37.35 mn Indophil Resources 2.48%

Pre-tax asset backing* $0.87 Generation Healthcare REIT 2.41%

Post-tax asset backing* $0.90 IMF Bentham 2.39%

Premium/(Discount) to pre-tax NTA -16.1% iProperty group 2.35%

Premium/(Discount) to post-tax NTA 22.9% eServGlobal 2.16%

Dividend yield 0.0% Amcom Telecommunications 2.11%

Dividend per share 0c Shine Corporate 2.10%

Franking N/A

Management expense ratio (FY14) 0.95%

FIG. 8: ACQ PERFORMANCE FIG. 9: ACQ FUND PERFORMANCE

Total Shareholder Return YTD 3 Year 5 Year NTA Performance YTD 3 Year 5 Year

ACQ -27.0% n/a n/a ACQ -11.1% n/a n/a

Sector Average Return -31.4% n/a n/a Sector Average n/a n/a n/a

Active Return -23.5% n/a n/a Share Price/NTA (average) -9.9% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures from May 2014. Active return refers to TSR relative to that of the comparative index. FIG. 10: ACQ VS SMALL ORDINARIES INDEX

-30

-25

-20

-15

-10

-5

0

5

10

Apr-14 Jun-14 Aug-14 Oct-14 Dec-14

Small Ords Index ACQ

Source: Bloomberg

Baillieu Holst Ltd acted as Underwriter for The Acorn Capital Investment Fund and earned fees in relation to that activity in the past 12 months. In line with the company’s internal compliance guidelines, our investment recommendation is restricted.

Please also refer to the general disclosure at

the end of this report.


04 February 2015


Australian Foundation Investment Company (AFI) www.afi.com.au

AFI was formed in 1928 and is Australia’s oldest and largest listed investment company.

AFI is a long-term, low-risk investor in major companies on both the ASX and New Zealand Stock Exchange.

The total shareholder return for the Calendar Year 2014 was 0.9% with pre-tax net asset backing increasing 4.2%. The active return was -4.2%.

FIG. 11: AFI SNAPSHOT FIG. 12: AFI PORTFOLIO TOP 10


Price (31 Dec 2014) $6.05 Commonwealth Bank. 9.2%

Share price range (12 months) $5.80 - $6.32 Westpac Banking Corp 6.3%

Shares on issue 1086.1 mn BHP Billiton Limited* 4.8%

Market capitalisation $6,560 mn National Aust. Bank* 4.8%

Pre-tax asset backing* $5.80 Telstra Corporation.* 4.7%

Post-tax asset backing* $4.94 Wesfarmers Limited 4.1%

Premium/(Discount) to pre-tax NTA 4.3% ANZ Banking Grp Ltd 3.2%

Premium/(Discount) to post-tax NTA 22.5% RIO Tinto Limited 2.8%

Dividend yield 3.6% Woolworths Limited 2.7%

Dividend per share 22c Amcor Limited 2.4%

Franking 100% *Indicates that options are outstanding


FIG. 13: AFI PERFORMANCE FIG. 14: AFI FUND PERFORMANCE

Total Shareholder Return 1 Year 3 Year 5 Year NTA Performance 1 Year 3 Year 5 Year

AFI 0.9% 19.3% 7.6% AFI 4.2% 14.6% 6.4%

Sector Average Return 5.0% 18.8% 7.5% Sector Average 4.0% 13.6% 5.7%

Active Return -4.2% 5.0% 1.1% Share Price/NTA (average) 4.2% 1.3% 0.7% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index.

FIG. 15: AFI VS ALL ORDINARIES INDEX

-8

-6

-4

-2

0

2

4

6

8

Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14

All Ords Index AFI

Source: IRESS


04 February 2015


AMP Capital China Growth Fund (AGF) www.ampcapital.com.au

AGF invests in shares in companies listed on China’s Shanghai or Shenzhen stock exchanges, also known as China A shares, with an aim to achieve long-term capital growth for investors.

China A shares are not readily accessible to foreign investors and access is granted through a Qualified Foreign Institutional Investors (QFII) license, which AMP holds.

The total shareholder return for the Calendar Year 2014 was 34.5% with pre-tax net asset backing increasing 48.5%. The active return was 20.1%.

FIG. 16: AGF SNAPSHOT FIG. 17: AGF PORTFOLIO TOP 10


Price (31 Dec 2014) $1.08 PING AN INSURANCE GROUP CO-A 6.36%

Share price range (12 months) $0.63 ‐ $1.10 CITIC SECURITIES CO-A 4.90%

Shares on issue 374.6 mn CHINA MINSHENG BANKING-A 4.09%

Market capitalisation $430.8 mn HAITONG SECURITIES CO LTD-A 3.96%

Pre-tax asset backing* $1.47 CHINA STATE CONSTRUCTION -A 3.52%

Post-tax asset backing* $0.99 CHINA MERCHANTS BANK-A 3.33%

Premium/(Discount) to pre-tax NTA -26.53% CHINA VANKE CO LTD -A 3.16%

Premium/(Discount) to post-tax NTA 9.09% SHANGHAI PUDONG DEVEL BANK-A 2.35%

Dividend yield 2.76% HUANENG POWER INTL INC-A 2.07%

Dividend per share 2.986c CHINA PACIFIC INSURANCE GR-A 1.87%

Franking 0.00%


FIG. 18: AGF PERFORMANCE FIG. 19: AGF FUND PERFORMANCE


AGF 34.5% 22.1% 3.4% AGF 48.5% 23.4% 2.7%

Sector Average Return 17.8% 30.7% 12.4% Sector Average Return 7.5% 13.0% 4.4%

Active Return 20.1% -2.2% -8.9% Share Price/NTA (average) -19.0% -21.4% -21.5%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 20: AGF VS MSCI WORLD INDEX

-30

-20

-10

0

10

20

30

40


MSCI ($AUD) AGF

Source: Bloomberg


04 February 2015


Australian Leaders Fund (ALF) www.wfunds.com.au

Australian Leaders Fund invests in leading Australian companies, focusing on the top 200, with strong business fundamentals on attractive terms. In addition, ALF short sell companies that they feel are fundamentally challenged.

Their investment objective is to deliver superior returns over the medium term within acceptable risk parameters while preserving the company’s capital.

The total shareholder return for the Calendar Year 2014 was -8.8% with pre-tax net asset backing decreasing 7.8%. The active return was -13.8%.

FIG. 21: ALF SNAPSHOT FIG. 22: ALF PORTFOLIO TOP 10


Price (31 Dec 2014) $1.43 Australia & New Zealand Banking Group 4.96%

Share price range (12 months) $1.30 - $1.80 Commonwealth Bank of Austr 4.18%

Shares on issue 254.76 mn Rio Tinto Ltd 3.72%

Market capitalisation $356.66 mn Wesfarmers Ltd 2.36%

Pre-tax asset backing* $1.29 Primary Health Care Limited 2.07%

Post-tax asset backing* $1.31 Origin Energy Limited 2.03%

Premium/(Discount) to pre-tax NTA 10.47% Crown Resorts Limited 1.96%

Premium/(Discount) to post-tax NTA 8.78% Tatts Group 1.86%

Dividend yield 8.42% Worleyparsons Limited 1.85%

Dividend per share 12c Incitec Pivot Limited 1.83%

Franking 100% As at 30 Jun 2014


FIG. 23: ALF PERFORMANCE FIG. 24: ALF FUND PERFORMANCE


ALF -8.8% 22.7% 13.8% ALF -7.8% 10.3% 4.4%


Active Return -13.8% 8.4% 7.3% Share Price/NTA (average) 14.4% 3.8% -3.7% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 25: ALF VS ALL ORDINARIES INDEX

-20

-15

-10

-5

0

5

10


All Ords Index ALF

Source: IRESS


04 February 2015


Aberdeen Leaders Fund (ALR) www.aberdeenasset.com.au

ALR invests in companies within the S&P/ ASX 200 index with an aim of providing investors with regular income and long term capital growth.

The total shareholder return for the Calendar Year 2014 was -14.8% with pre-tax net asset backing increasing 7.1%. The active return was -19.8%.

FIG. 26: ALR SNAPSHOT FIG. 27: ALR PORTFOLIO TOP 10


Price (31 Dec 2014) $1.10 BHP Billiton Limited 9.21%

Share price range (12 months) $1.04 ‐ $1.37 Commonwealth Bank. 6.70%

Shares on issue 61.58 mn ANZ Banking Grp Ltd 6.28%

Market capitalisation $67.42 mn Singapore Telecomm. 5.51%

Pre-tax asset backing* $1.18 CSL Limited 5.28%

Post-tax asset backing* $1.12 RIO Tinto Limited 4.83%

Premium/(Discount) to pre-tax NTA -7.20% ASX Limited 4.79%

Premium/(Discount) to post-tax NTA -2.23% Wesfarmers Limited 4.66%

Dividend yield 5.71% AusNet Services 4.57%

Dividend per share 6.25c AMP Limited 4.46%

Franking 100%


FIG. 28: ALR PERFORMANCE FIG. 29: ALR FUND PERFORMANCE


ALR -14.8% 9.4% 2.2% ALR 7.1% 12.7% 1.3%


Active Return -19.8% -5.0% -4.2% Share Price/NTA (average) 3.9% 3.4% 0.6% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG.30: ALR VS ALL ORDINARIES INDEX

-25

-20

-15

-10

-5

0

5

10


All Ords Index ALR

Source: IRESS


04 February 2015


AMCIL (AMH) www.amcil.com.au

Amcil was formed in 1996 with an initial focus on the media and telecommunications sectors.

The limited scope of attractive investments within these sectors resulted in a change of strategy, and Amcil now has a diversified portfolio of 30 to 40 of Australia’s largest companies.

The total shareholder return for the Calendar Year 2014 was 2.7% with pre-tax net asset backing increasing 2.7%. The active return was -2.3%

FIG.31: AMH SNAPSHOT FIG. 32: AMH PORTFOLIO TOP 10



Share price range (12 months) $0.83 ‐ $1.01 Oil Search Ltd* 7.54%

Shares on issue 241.9 mn BHP Billiton Limited 6.25%

Market capitalisation $205.6 mn Westpac Banking Corp 5.19%

Pre-tax asset backing* $0.87 Telstra Corporation.* 5.19%

Post-tax asset backing* $0.82 Brambles Limited 4.83%

Premium/(Discount) to pre-tax NTA 1.72% National Aust. Bank 4.04%

Premium/(Discount) to post-tax NTA 7.93% Transurban Group* 3.90%

Dividend yield 7.34% CSL Limited* 3.71%

Dividend per share 6.5c Qube Holdings Ltd 3.21%



FIG. 33: AMH PERFORMANCE FIG. 34: AMHFUND PERFORMANCE


AMH 2.7% 18.4% 11.1% AMH 2.7% 12.0% 8.7%


Active Return -2.3% 4.1% 4.6% Share Price/NTA (average) -1.5% -3.9% -7.1% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 35: AMH VS ALL ORDINARIES INDEX

-10

-5

0

5

10

15

20


All Ords Index AMH

Source: IRESS


04 February 2015


Argo Investments (ARG) www.argoinvestments.com.au

Argo was formed in 1946 and is based in Adelaide, South Australia.

It is the second-largest LIC by market capitalisation.

Argo’s portfolio contains investments in about 130 companies, with many of Australia’s major enterprises represented.


FIG. 36: ARG SNAPSHOT FIG.37: ARG PORTFOLIO TOP 10


Price (31 Dec 2014) $7.76 Westpac Banking Corp 7.00%

Share price range (12 months) $7.18 ‐ $8.14 ANZ Banking Grp Ltd 6.20%

Shares on issue 664.4 mn Telstra Corporation. 5.20%

Market capitalisation $5,269 mn Commonwealth Bank. 5.10%

Pre-tax asset backing* $7.36 BHP Billiton Limited 4.90%


Premium/(Discount) to pre-tax NTA 5.43% National Aust. Bank 3.80%

Premium/(Discount) to post-tax NTA 19.57% Milton Corporation 3.10%

Dividend yield 3.61% RIO Tinto Limited 3.00%

Dividend per share 28c Macquarie Group Ltd 2.80%

Franking 100%


FIG. 38: ARG PERFORMANCE FIG. 39: ARG FUND PERFORMANCE


ARG 10.1% 20.2% 7.0% ARG 4.5% 14.8% 5.7%


Active Return 5.1% 5.9% 0.6% Share Price/NTA (average) 2.4% -1.7% -2.0% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 40: ARG VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10

12


All Ords Index ARG

Source: IRESS


04 February 2015


Australian United Investment Company (AUI) www.aui.com.au

AUI was founded in 1953 by the late Sir Ian Potter and The Ian Potter Foundation.

AUI utilises a “traditional” investment philosophy, focusing on reduction of risk by investing in a range of large and mid-cap companies on the ASX.

Investments are chosen on their individual merits, with no pre-determined policy that any particular proportions of the capital will be invested in particular investment sectors.


FIG. 41: AUI SNAPSHOT FIG. 42: AUI PORTFOLIO TOP 10


Price (31 Dec 2014) $8.00 ANZ Banking Grp Ltd 8.40%


Shares on issue 109.3 mn Westpac Banking Corp 7.50%

Market capitalisation $894 mn National Aust. Bank 6.70%



Premium/(Discount) to pre-tax NTA -5.66% RIO Tinto Limited 5.30%

Premium/(Discount) to post-tax NTA 9.44% Diversified United 4.70%

Dividend yield 4.00% Woodside Petroleum 4.50%

Dividend per share 32c Woolworths Limited 3.50%

Franking 100%


FIG. 43: AUI PERFORMANCE FIG. 44: AUI FUND PERFORMANCE


AUI 4.5% 18.3% 5.8% AUI 3.2% 15.0% 5.3%


Active Return -0.5% 4.0% -0.7% Share Price/NTA (average) -4.1% -7.5% -7.0% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 45: AUI VS ALL ORDINARIES INDEX

-10

-5

0

5

10

15

20


All Ords Index AUI

Source: IRESS


04 February 2015


BKI Investment Company (BKI) www.bkilimited.com.au

BKI was listed on the ASX in December 2003 with an objective to provide investors with sound dividend yields and long-term capital growth.

BKI invests in a diversified portfolio of Australian shares, trusts and interest-bearing securities.


FIG. 46: BKI SNAPSHOT FIG. 47: BKI PORTFOLIO TOP 10



Share price range (12 months) $1.54 - $1.73 National Aust. Bank 8.70%


Market capitalisation $9.32 mn Telstra Corporation. 5.70%


Post-tax asset backing* $1.52 ANZ Banking Grp Ltd 4.70%

Premium/(Discount) to pre-tax NTA -2.76% Wesfarmers Limited 4.50%

Premium/(Discount) to post-tax NTA 4.28% New Hope Corporation 4.00%

Dividend yield 4.38% Tpg Telecom Limited 3.30%

Dividend per share 6.95c Woolworths Limited 3.00%

Franking 100%

Management expense ratio 0.16%

FIG. 48: BKI PERFORMANCE FIG. 49: BKI FUND PERFORMANCE


BKI 5.0% 16.6% 9.7% BKI 3.6% 11.7% 6.4%


Active Return 0.0% 2.3% 3.2% Share Price/NTA (average) -1.1% -5.2% -7.9% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 50: BKI VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10


All Ords Index BKI

Source: IRESS

Baillieu Holst Ltd acts in a corporate advisory role for BKI. In

line with the company’s internal compliance guidelines, our

investment recommendation is restricted. Baillieu Holst Ltd has

acted in a corporate advisory role for BKI earned fees in relation to

that activity in the past 12 months.

Please also refer to the general

disclosure at the end of this report.


04 February 2015


Clime Capital Limited (CAM) www.climecapital.com.au

Clime Capital, listed on the ASX in 2004, offers investors the opportunity to participate in a long-term approach to portfolio investing using value investing principles.

Clime invests in a diversified portfolio of Australian businesses, trusts and interest bearing securities.

The total shareholder return for Calendar Year 2014 was -7.1% with pre-tax net asset backing decreasing 6.9%. The active return was -12.1%.

FIG. 51: CAM SNAPSHOT FIG. 52: CAM PORTFOLIO TOP 10


Price (31 Dec 2014) $0.96 ANZ Banking Group 6.11%

Share price range (12 months) $0.90 ‐ $1.07 Woolworths Ltd 5.33%

Shares on issue 81.3 mn Adelaide Brighton Ltd 4.27%

Market capitalisation $75.6 mn BHP Billiton Limited 4.26%

Pre-tax asset backing* $0.98 SMS Management & Technology Ltd 3.96%

Post-tax asset backing* $0.97 National Australia Bank Notes 3.80%

Premium/(Discount) to pre-tax NTA -2.04% Macquarie Perpetual Notes 3.78%

Premium/(Discount) to post-tax NTA -1.03% Multiplex Convertible Notes 3.77%

Dividend yield 4.64% Brickworks Ltd 3.66%

Dividend per share 4.45c McMillan Shakespeare Ltd 2.82%

Franking 100%


FIG. 53: CAM PERFORMANCE FIG. 54: CAM FUND PERFORMANCE


CAM -7.1% 10.8% 8.2% CAM -6.9% 4.0% 1.9%


Active Return -12.1% -3.5% 1.8% Share Price/NTA (average) -5.5% -9.6% -14.9% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 55: CAM VS ALL ORDINARIES

-20

-15

-10

-5

0

5

10


All Ords Index CAM

Source: IRESS


04 February 2015


Cadence Capital (CDM) www.cadencecapital.com.au

Cadence Capital is an actively managed investment company with a portfolio of Australian securities.

Although it focuses on a fundamental bottom-up approach to portfolio management, it also uses technical analysis over the short term to supplement returns.

The manager targets 20 to 40 core investments and up to 40 trading opportunities in the portfolio.

The total shareholder return for the Calendar Year 2014 was 4.3% with pre-tax net asset backing decreasing 0.9%. The active return was -0.8%.

FIG. 56: CDM SNAPSHOT FIG. 57: CDM PORTFOLIO TOP 10


Price (31 Dec 2014) $1.42 Macquarie Group Ltd 7.60%

Share price range (12 months) $1.34 ‐ $1.54 Melbourne IT Limited 4.80%

Shares on issue 199.9 mn Genworth Mortgage 4.60%

Market capitalisation $281.9 mn Retail Food Group 4.50%

Pre-tax asset backing* $1.35 National Aust. Bank 3.80%

Post-tax asset backing* $1.36 Mastercard Inc. 3.80%

Premium/(Discount) to pre-tax NTA 5.34% Bank of Queensland. 3.70%

Premium/(Discount) to post-tax NTA 4.41% ANZ Banking Grp Ltd 3.60%

Dividend yield 7.04% Luxottica Group SPA 3.50%

Dividend per share 10c Henderson Group 3.50%

Franking 100%


FIG. 58: CDM PERFORMANCE FIG. 59: CDM FUND PERFORMANCE


CDM 4.3% 14.4% 20.7% CDM -0.9% 8.1% 10.5%


Active Return -0.8% 0.1% 14.3% Share Price/NTA (average) 4.0% 1.0% -7.8%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 60: CDM VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8


All Ords Index CDM

Source: IRESS


04 February 2015


Carlton Investments (CIN) www.carltoninvestments.com.au

Carlton Investments’ strategy is to invest in established listed blue chip stocks that provide high levels of sustainable income through fully franked dividends.

Investments are held for the long term and not for trading purposes.

Carlton is primarily exposed to banking, tourism and leisure sectors.


FIG. 61: CIN SNAPSHOT FIG. 62: CIN PORTFOLIO TOP 10


Price (31 Dec 2014) $28.25 Amalgamated Holdings 39.00%

Share price range (12 months) $24.75 ‐ $29.52 National Aust. Bank 8.10%


Market capitalisation $774.4 mn Commonwealth Bank. 5.50%

Pre-tax asset backing* $32.00 ANZ Banking Grp Ltd 3.70%

Post-tax asset backing* $26.83 Telstra Corporation. 3.10%


Premium/(Discount) to post-tax NTA 5.29% AGL Energy Limited. 2.50%

Dividend yield 3.54% BHP Billiton Limited 2.40%

Dividend per share 100c Perpetual Limited 2.20%

Franking 100%


FIG. 63: CIN PERFORMANCE FIG. 64: CIN FUND PERFORMANCE


CIN 17.1% 27.4% 14.1% CIN 15.0% 20.6% 11.3%


Active Return 12.1% 13.1% 7.7% Share Price/NTA (average) -10.4% -15.9% -17.1%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 65: CIN VS ALL ORDINARIES INDEX

-10

-5

0

5

10

15

20


All Ords Index CIN

Source: IRESS


04 February 2015


Century Australia Investments (CYA) www.centuryaustralia.com.au

Century Australia Investments was listed in April 2004 and is managed by Perennial Value Management, a leading boutique fund manager.

Its investment strategy is to provide long-term capital growth and income by investing in quality, undervalued Australian companies.


FIG. 66: CYA SNAPSHOT FIG. 67: CYA PORTFOLIO TOP 10



Share price range (12 months) $0.83 ‐ $0.95 BHP Billiton Limited 8.10%

Shares on issue 79.7 mn National Aust. Bank 7.80%

Market capitalisation $70.9 mn Telstra Corporation. 6.90%

Pre-tax asset backing* $0.93 Commonwealth Bank. 6.50%

Post-tax asset backing* $0.94 ANZ Banking Grp Ltd 6.40%

Premium/(Discount) to pre-tax NTA -4.20% Woodside Petroleum 3.30%

Premium/(Discount) to post-tax NTA -5.42% RIO Tinto Limited 3.00%

Dividend yield 5.62% Macquarie Group Ltd 2.90%

Dividend per share 5c AMP Limited 2.70%

Franking 100%


FIG. 68: CYA PERFORMANCE FIG. 69: CYA FUND PERFORMANCE


CYA 8.7% 17.4% 6.9% CYA 5.8% 14.0% 2.6%


Active Return 3.7% 3.0% 0.5% Share Price/NTA (average) -3.9% -8.1% -9.8% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 70: CYA VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10


All Ords Index CYA

Source: IRESS


04 February 2015


Contango Microcap (CTN) www.contango.com.au

Contango Microcap was listed on the ASX in March 2004 and is managed by Contango Asset Management.

Contango invests in companies with a market capitalisation of generally between $10 million and $350 million and aims to hold 60-120 securities.

Its investment philosophy revolves around the premise that microcap companies are under-researched and hence offer considerable upside potential.

The total shareholder return for the Calendar Year 2014 was 7.0% with pre-tax net asset backing decreasing 3.0%. The active return was 2.0%.

FIG. 71: CTN SNAPSHOT FIG. 72: CTN PORTFOLIO TOP 10


Price (31 Dec 2014) $1.05 Slater & Gordon 4.00%

Share price range (12 months) $0.99 - $1.20 Villa World Ltd. 3.10%

Shares on issue 158.9 mn Affinity Edu Grp Ltd 3.10%

Market capitalisation $168.4 mn GBST Holdings.. 2.90%

Pre-tax asset backing* $1.10 Austal Limited 2.90%

Post-tax asset backing* $1.08 Automotive Holdings 2.80%

Premium/(Discount) to pre-tax NTA -4.74% ERM Power Limited 2.70%

Premium/(Discount) to post-tax NTA -2.88% Iproperty Group Ltd 2.60%

Dividend yield 8.23% SG Fleet Group Ltd 2.60%

Dividend per share 8.6c Amcom Telecomm. 2.50%

Franking 38%


FIG. 73: CTN PERFORMANCE FIG. 74: CTN FUND PERFORMANCE


CTN 7.0% 14.0% 8.6% CTN -3.0% 3.1% -0.1%


Active Return 2.0% -0.3% 2.2% Share Price/NTA (average) -11.4% -13.7% -19.4% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 75: CTN VS SMALL ORDINARIES INDEX

-15

-10

-5

0

5

10

15


Small Ords Index CTN

Source: Bloomberg


04 February 2015


Diversified United Investments (DUI) www.dui.com.au

Diversified United Investments was founded in 1991 by Australia United Investments, Barclay Investments (a Myer family investment company), the late Sir Ian Potter and The Ian Potter Foundation.

It invests predominantly in Australian equities, but also in property trusts, fixed income securities and cash instruments.


FIG. 76: DUI SNAPSHOT FIG. 77: DUI PORTFOLIO TOP 10



Share price range (12 months) $3.27 ‐ $3.85 ANZ Banking Grp Ltd 7.20%


Market capitalisation $583.2 mn CSL Limited 6.20%


Post-tax asset backing* $3.24 BetaShares US Dollar ETF 5.50%

Premium/(Discount) to pre-tax NTA -7.61% National Aust. Bank 4.80%

Premium/(Discount) to post-tax NTA 4.94% Woodside Petroleum 4.50%

Dividend yield 4.02% RIO Tinto Limited 4.10%

Dividend per share 13.6532c Transurban Group 3.80%

Franking 100%


FIG. 78: DUI PERFORMANCE FIG. 79: DUI FUND PERFORMANCE


DUI 2.6% 20.2% 6.4% DUI 2.0% 15.6% 5.2%


Active Return -2.5% 5.9% -0.1% Share Price/NTA (average) -7.8% -9.1% -8.6% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 80: DUI VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10

12

14


All Ords Index DUI

Source: IRESS


04 February 2015


Djerriwarrh Investments (DJW) www.djerri.com.au

Djerriwarrh Investments has been in operation since 1989 and was listed on the ASX in 1995.

Its investment portfolio focuses on stocks with low price-earnings ratios in the ASX top 50.

It also has a trading portfolio that is used for short-term trading purposes. Trading is principally in options.


FIG. 81: DJW SNAPSHOT FIG. 82: DJW PORTFOLIO TOP 10


Price (31 Dec 2014) $4.61 BHP Billiton Limited* 8.96%

Share price range (12 months) $4.36 ‐ $4.95 Commonwealth Bank.* 8.69%

Shares on issue 218.6 mn Westpac Banking Corp* 8.06%

Market capitalisation $1,025 mn National Aust. Bank* 6.48%

Pre-tax asset backing* $3.56 ANZ Banking Grp Ltd* 6.43%

Post-tax asset backing* $3.52 Telstra Corporation.* 4.60%

Premium/(Discount) to pre-tax NTA 29.49% Oil Search Ltd* 3.80%

Premium/(Discount) to post-tax NTA 30.97% Wesfarmers Limited* 3.55%

Dividend yield 5.64% RIO Tinto Limited* 3.06%

Dividend per share 26c Woodside Petroleum* 2.91%



FIG. 83: DJW PERFORMANCE FIG. 84: DJW FUND PERFORMANCE


DJW 1.9% 16.3% 6.6% DJW 1.6% 11.3% 3.7%


Active Return -3.1% 2.0% 0.1% Share Price/NTA (average) 24.7% 19.9% 17.3% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 85: DJW VS ALL ORDINARIES INDEX

-10

-8

-6

-4

-2

0

2

4

6

8


All Ords Index DJW

Source: IRESS


04 February 2015


Future Generation Investment Fund (FGX) www.futuregeninvest.com.au

Future Generation Investment Fund is a small/mid-cap LIC that will be managed by a number of prominent investment managers who have waived their usual management and performance fees so that funds can be donated to nominated charities.

Investment objectives: 1) Provide a stream of fully franked dividends; 2) achieve capital growth and; 3) preserve shareholder capital.

The total shareholder return since inception (Sept 2014) was -0.9 % with pre-tax net asset backing increasing 11.0%. The active return was -0.2%.

FIG. 86: FGX SNAPSHOT FIG. 87: FGX PORTFOLIO TOP 10


Price (31 Dec 2014) $1.05 Paradice Large/Mid Cap Funds 10.40%

Share price range $1.02 ‐ $1.06 Bennelong Australian Equities 10.10%

Shares on issue 183.8 mn Regal Australian Long Short Equity Fund 9.50%

Market capitalisation $203.1 mn Bennelong Alpha 200 Fund 7.80%

Pre-tax asset backing* $1.08 Wilson Asset Management Equity Fund 7.70%

Post-tax asset backing* $1.08 Watermark Absolute Return Fund 7.20%

Premium/(Discount) to pre-tax NTA -2.97% Eley Griffiths Group Small Companies Fund 7.10%

Premium/(Discount) to post-tax NTA -3.35% CI Australia Equities Fund 5.30%

Dividend yield 0.00% Optimal Australia Absolute Trust 4.90%

Dividend per share 0c Sandon Capital Activist Fund 4.30%

Franking N/A


FIG. 88: FGX PERFORMANCE FIG. 89: FGX FUND PERFORMANCE


FGX -0.9% n/a n/a FGX 11.0% n/a n/a


Active Return -0.2% n/a n/a Share Price/NTA (average) 1.3% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures as of Sept 2014. Active return refers to TSR relative to that of the comparative index. FIG. 90: FGX v ALL ORDINARIES INDEX

-7

-6

-5

-4

-3

-2

-1

0

1

2

Sep-14 Oct-14 Nov-14 Dec-14

All Ords Index FGX

Source: Bloomberg


04 February 2015


Global Value Fund (GVF) www.globalvaluefund.com.au

Global Value Fund invests in a global portfolio of securities purchased at a discount to their underlying asset value, giving investors an alternate source of market outperformance compared to more common stock selection strategies.

GVF first listed on the ASX on 21 July 2014.

The total shareholder return since inception was 4.5% with pre-tax net asset backing increasing 8.7%. The active return was -8.9%.

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures as of 21 July 2014. Active return refers to TSR relative to that of the

comparative index.

FIG. 95: GVF v MSCI WORLD INDEX (A$)

-4

-2

0

2

4

6

8

10

12

14

16

18

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

MSCI ($AUD) GVF

Source: Bloomberg

FIG. 91: GVF SNAPSHOT FIG. 92:GVF PORTFOLIO TOP 5


Price (31 Dec 2014) $1.05 Boussard & Gavaudan Holdings 6.70%

Share price range (12 months) $0.97 ‐ $1.06 Pacific Alliance China Land 6.40%

Shares on issue 55.0 mn Vinaland Limited ZDP 5.80%

Market capitalisation $56.9 mn Harbourvest Global Private Equity 4.60%

Pre-tax asset backing* $1.07 Tri-Continential Corporation 4.50%

Post-tax asset backing* $1.04

Premium/(Discount) to pre-tax NTA -1.99%

Premium/(Discount) to post-tax NTA 0.31%

Dividend yield 0.00%

Dividend per share 0c

Franking 100%


FIG. 93: GVF PERFORMANCE FIG. 94: GVF FUND PERFORMANCE


GVF 4.5% n/a n/a GVF 8.7% n/a n/a


Active Return -8.9% n/a n/a Share Price/NTA (average) 0.7% n/a n/a


04 February 2015


Hunter Hall Global Value (HHV) www.hunterhall.com.au

Hunter Hall Global Value is managed by the Hunter Hall Group, which has managed a number of funds and investment trusts since 1993.

HHV’s objective is to deliver long term total shareholder returns through a portfolio of undervalued international and Australian equities and consistently pay dividends.


FIG. 96: HHV SNAPSHOT FIG. 97: HHV PORTFOLIO TOP 10


Price (31 Dec 2014) $1.31 Sirtex Medical 19.40%

Share price range (12 months) $0.99 ‐ $1.33 M2 Telecommunications 4.50%

Shares on issue 188.9 mn Danieli 4.30%

Market capitalisation $237.1 mn Bank of New York Mellon 2.60%

Pre-tax asset backing* $1.36 Take Two Interactive 2.50%

Post-tax asset backing* $1.36 Prudential Financial 2.50%

Premium/(Discount) to pre-tax NTA -3.92% Marvell 2.40%

Premium/(Discount) to post-tax NTA -3.92% JDS 2.40%

Dividend yield** 4.96% Leopalace21 2.30%

Dividend per share** 6.5c ICBC 2.20%

Franking 11.0%


FIG. 98: HHV PERFORMANCE FIG. 99: HHV FUND PERFORMANCE


HHV 41.9% 29.2% 13.3% HHV 21.6% 18.6% 7.6%


Active Return 27.4% 4.9% 1.0% Share Price/NTA (average) -11.9% -15.3% -17.8% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 100: HHV VS MSCI WORLD INDEX (A$)

-10

-5

0

5

10

15

20

25

30

35

40


MSCI ($AUD) HHV

Source: Bloomberg


04 February 2015


Ironbark Capital (IBC) www.ironbarkcapital.com

IBC is an investment company holding a portfolio of Australian shares and fixed income securities. IBC is managed by Kaplan Funds Management.

IBC holds a diversified portfolio of stocks over the medium to long-term. The portfolio is well diversified with investments in 32 different entities.


FIG. 101: IBC SNAPSHOT FIG. 102: IBC PORTFOLIO TOP 10


Price (31 Dec 2014) $0.54 Telstra Corp 10.90%

Share price range (12 months) $0.52 - $0.58 Commonwealth Bank (Perls II 10.40%

Shares on issue 171.2 mn BHP Billiton 9.70%

Market capitalisation $92.5 mn ANZ Conv. Pref 7.30%

Pre-tax asset backing* $0.58 Westpac Banking Corp 6.90%

Post-tax asset backing* $0.57 Commonwealth Bank 6.80%

Premium/(Discount) to pre-tax NTA -6.25% Suncorp Conv. Pref 4.90%

Premium/(Discount) to post-tax NTA -5.59% Origin Energy Sub Note 4.70%

Dividend yield 5.53% ANZ Banking Grouo 4.60%

Dividend per share 2.9861c IAG (Convertible Pref. Securities) 3.90%

Franking 100.0% As at 30 Sept 2014


FIG. 103: IBC PERFORMANCE FIG. 104: IBC FUND PERFORMANCE


IBC 3.4% 12.4% 9.3% IBC 15.6% 8.5% 9.0%


Active Return -1.7% -1.9% 2.9% Share Price/NTA (average) -5.2% -7.1% -11.2%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 105: IBC VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8


All Ords Index IBC

Source: IRESS


04 February 2015


ING Private Equity Access (IPE) www.ingpeal.com.au

ING Private Equity Access Limited (ING PEAL) is a listed investment company that listed on the Australian Stock Exchange (ASX) on 25 November 2004.

IPE invests in a combination of private equity investments and other investments, comprised principally of Australian listed equities and fixed interest securities.


FIG. 106: IPE SNAPSHOT FIG. 107: IPE PORTFOLIO TOP 10


Price (31 Dec 2014) $0.31 Wolseley Private Equity 14.62%

Share price range (12 months) $0.30 ‐ $0.43 Quadrant Private Equity 14.30%

Shares on issue 136.6 mn Archer Capital 13.24%

Market capitalisation $41.7 mn NBC Capital 13.00%

Pre-tax asset backing* $0.34 Pacific Equity Partners 12.92%

Post-tax asset backing* $0.38 Catalyst Investment Managers 6.50%

Premium/(Discount) to pre-tax NTA -8.01% Talu Ventures 6.50%

Premium/(Discount) to post-tax NTA -17.33% Industry Funds Management 6.50%

Dividend yield 9.68% Direct Capital Management 5.69%

Dividend per share 3c Ironbridge Capital 4.06%

Franking 100.0%


FIG. 108: IPE PERFORMANCE FIG. 109: IPE FUND PERFORMANCE


IPE -8.8% 14.7% 21.3% IPE -11.4% -1.4% -0.4%

Sector Average Return -31.4% n/a n/a Sector Average Return n/a n/a n/a

Active Return -14.1% 0.0% 14.8% Share Price/NTA (average) -8.1% -16.2% -25.1%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 110: IPE VS ALL ORDINARIES INDEX

-20

-15

-10

-5

0

5

10

15

20


All Ords Index IPE

Source: Bloomberg


04 February 2015


Lion Selection Group (LSX) www.lsg.com.au

LSX Lion Selection (LSX) is a specialist mining LIC with a focus on early stage mining projects. LSX was established and listed on the ASX in 1997.

LSX gives investors exposure to the high risk, high growth stage of mining investment. It focuses on early stage gold and base metals activities. It provides early stage funding to assist companies along the development curve and exit following considerations of value after project development.


FIG. 111: LSX SNAPSHOT FIG. 112: LSX PORTFOLIO TOP 10


Price (31 Dec 2014) $0.22 One Asia Resources 49.50%

Share price range (12 months) $0.18 - $0.54 Cash 13.90%

Shares on issue 106.9 mn Roxgold 7.69%

Market capitalisation $26.7 mn Doray Minerals 6.19%

Pre-tax asset backing* $0.36 Cash dedicated to Africa 3.50%

Post-tax asset backing* $0.56 Other Asia 2.89%

Premium/(Discount) to pre-tax NTA -38.89% Other Africa 3.00%

Premium/(Discount) to post-tax NTA -60.71% Rum Jungle Resources 2.60%

Dividend yield 0.00% Auricup Resources 2.50%

Dividend per share 0c Toro Gold 1.80%

Franking 0.0% As At 30 Sept 2014


FIG. 113: LSX PERFORMANCE FIG. 114: LSX FUND PERFORMANCE


LSX -58.5% -20.0% -18.7% LSX -40.0% -25.7% -16.0%

Sector Average Return -31.4% n/a n/a Sector Average Return n/a n/a n/a

Active Return -30.0% 10.5% 2.7% Share Price/NTA (average) -31.7% -24.4% -29.1% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 115: LSX VS SMALL RESOURCES INDEX

-70

-60

-50

-40

-30

-20

-10

0

10

20


Small Resources Index LSX

Source: IRESS


04 February 2015


Magellan Flagship Fund (MFF) www.magellangroup.com.au/mff/

The Magellan Flagship Fund was listed on the ASX in December 2006 and is managed by Magellan Asset Management.

The fund is focused on North American companies with more than 95% of its portfolio consisting of global multinationals that are leaders in emerging markets as well as developed markets.


FIG. 116: MFF SNAPSHOT FIG. 117: MFF PORTFOLIO TOP 10


Price (31 Dec 2014) $1.88 Visa 13.40%

Share price range (12 months) $1.38 ‐ $1.96 Wells Fargo 11.80%

Shares on issue 356.3 mn Lowe's 11.70%

Market capitalisation $657.4 mn Home Depot Inc 10.70%

Pre-tax asset backing* $1.94 Mastercard 10.10%

Post-tax asset backing* $1.69 Bank of America 9.30%

Premium/(Discount) to pre-tax NTA -2.99% HCA Holdings Inc 8.10%

Premium/(Discount) to post-tax NTA 11.31% US Bancorp 5.70%

Dividend yield 1.06% Lloyds Banking Group PLC 5.40%

Dividend per share 2c Bank of New York Mellon Corp 3.60%

Franking 0.0%


FIG. 118: MFF PERFORMANCE FIG. 119: MFF FUND PERFORMANCE


MFF 19.1% 40.9% 25.1% MFF 28.9% 34.3% 21.4%


Active Return 4.7% 16.5% 12.8% Share Price/NTA (average) 9.9% -0.2% 2.3% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 120: MFF VS MSCI WORLD INDEX (A$)

-15

-10

-5

0

5

10

15

20


MSCI ($AUD) MFF

Source: Bloomberg


04 February 2015


Milton Corporation (MLT) www.milton.com.au

Milton Corporation was formed in 1938 and listed in 1958. Its objective is to invest in a diversified portfolio that provides an increasing income stream over time.

Milton is not a speculative investor and does not sell assets to increase profits for shareholders. It maintains a relatively heavy focus on banking with 36% of total assets in the sector.

The total shareholder return for Calendar Year 2014 was 10.2% with pre-tax net asset backing increasing 7.1%. The active return was 5.2%.

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR

above that of the comparative index.

FIG. 125: MLT VS ALL ORDINARIES INDEX

-10

-5

0

5

10

15


All Ords Index MLT

Source: IRESS

FIG. 121: MLT SNAPSHOT FIG. 122: MLT PORTFOLIO TOP 10




Shares on issue 639.5 mn National Aust. Bank 5.40%

Market capitalisation $2,890.7 mn Soul Pattinson (W.H) 4.60%

Pre-tax asset backing* $4.29 Wesfarmers Limited 4.30%

Post-tax asset backing* $3.83 BHP Billiton Limited 3.70%

Premium/(Discount) to pre-tax NTA 4.43% ANZ Banking Grp Ltd 3.60%

Premium/(Discount) to post-tax NTA 16.97% Bank of Queensland. 3.20%


Dividend per share 18c Telstra Corporation. 3.10%

Franking 100.0%


FIG. 123: MLT PERFORMANCE FIG. 124: MLT FUND PERFORMANCE


MLT 10.2% 20.8% 9.2% MLT 7.1% 14.2% 6.8%


Active Return 5.2% 6.5% 2.8% Share Price/NTA (average) 2.1% -3.0% -4.3%


04 February 2015


Mirrabooka Investments (MIR) www.mirra.com.au

Mirrabooka Investments’ objective is to provide medium to long-term gains by investing in small/mid-sized companies in Australia and New Zealand. It was established in 1999 and listed in 2001.

Mirrabooka provides investors with an opportunity to focus on investing outside blue chip companies.

The total shareholder return for the Calendar Year 2014 was -3.6% with pre-tax net asset backing increasing 3.4%. The active return was -8.6%.

FIG. 126: MIR SNAPSHOT FIG. 127: MIR PORTFOLIO TOP 10


Price (31 Dec 2014) $2.55 Ansell Limited* 3.71%

Share price range (12 months) $2.38 ‐ $2.90 Qube Holdings Ltd 3.67%

Shares on issue 141.0 mn Tassal Group Limited 3.46%

Market capitalisation $348.4 mn Alumina Limited 3.25%

Pre-tax asset backing* $2.22 IRESS Limited 3.06%

Post-tax asset backing* $2.02 Perpetual Limited* 2.51%

Premium/(Discount) to pre-tax NTA 14.86% Als Ltd 2.47%

Premium/(Discount) to post-tax NTA 26.24% Seek Limited* 2.43%

Dividend yield 7.84% ResMed Inc. 2.36%

Dividend per share 20c Vocus Comms Ltd 2.28%

Franking 100.0% *Indicates that options are outstanding


FIG. 128: MIR PERFORMANCE FIG. 129: MIR FUND PERFORMANCE


MIR -3.6% 24.5% 10.2% MIR 3.4% 14.0% 8.8%

Sector Average Return 1.6% 17.4% 11.0% Sector Ave 1.3% 11.0% 5.6%

Active Return -8.6% 10.2% 3.8% Share Price/NTA (average) 13.5% 7.4% 3.8% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 130: MIR VS ALL ORDINARIES INDEX

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8


All Ords Index MIR

Source: IRESS


04 February 2015


OZ Growth (OZG) www.ozgrowth.com.au

OZG is a listed investment company that focuses on investing in Australian equity market. The portfolio of assets is managed by Westoz Funds Management Pty Ltd, a wholly owned subsidiary of Euroz Limited.

The Company invests in small to mid-sized companies, generally listed on the Australian Securities Exchange and with some connection to Western Australia.

The total shareholder return for the Calendar Year 2014 was 1.9% with pre-tax net asset backing decreasing 21.0%. The active return was -3.1%.

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 135: OZG VS ALL ORDINARIES INDEX

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25


All Ords Index OZG

Source: IRESS

FIG. 131: OZG SNAPSHOT FIG. 132: OZG PORTFOLIO TOP 10


Price (31 Dec 2014) $0.18 Cedar Woods Prop. 22.0%

Share price range (12 months) $0.15 ‐ $0.23 Automotive Holdings 9.0%

Shares on issue 361.0 mn Tap Oil Limited 6.0%

Market capitalisation $61.4 mn Finbar Group Limited 5.0%

Pre-tax asset backing* $0.17 Mount Gibson Iron 4.0%

Post-tax asset backing* $0.18 Medusa Mining Ltd 3.0%

Premium/(Discount) to pre-tax NTA 4.05% Sundance Energy 3.0%

Premium/(Discount) to post-tax NTA -0.55% Fleetwood Corp 3.0%

Dividend yield 8.33% Teranga Gold Corp 2.0%

Dividend per share 1.5c Sth Crs Elect Engnr 2.0%

Franking 100.0%


FIG. 133 OZG PERFORMANCE FIG. 134: OZG FUND PERFORMANCE


OZG 1.9% 15.5% 8.9% OZG -21.0% -2.2% 1.1%


Active Return -3.1% 1.2% 2.4% Share Price/NTA (average) -12.9% -22.0% -25.7%


04 February 2015


PM Capital Asian Opportunities Fund (PAF) www.pmcapital.com.au

PM Capital Asian Opportunities Fund began trading on the ASX on 22 May 2014.

PAF provide long-term capital growth by investing in a portfolio of predominantly undervalued listed Asian equities and other investment securities in the Asian Region (ex-Japan).

The total shareholder return since inception was -0.5% with pre-tax net asset backing increasing 8.1%. The active return was -15.6%.

FIG. 136: PAF SNAPSHOT FIG. 137: PAF PORTFOLIO TOP 10


Price (31 Dec 2014) $0.96 51Job Inc 9.20%

Share price range (12 months) $0.89 ‐ $1.00 Donaco International Ltd 7.10%

Shares on issue 55.1 mn Mindray Medical 6.40%

Market capitalisation $53.7 mn Beijing Capital International 5.40%

Pre-tax asset backing* $1.04 Tingyi 5.00%

Post-tax asset backing* $1.03 Genting Malaysia 4.80%

Premium/(Discount) to pre-tax NTA -8.10% MGM China Holdings Ltd 4.40%

Premium/(Discount) to post-tax NTA -7.03% Turquoise Hill Resources 4.30%

Dividend yield 0.00% SJM Holdings 4.00%

Dividend per share 0c Baidu Inc Adr 3.90%

Franking 100%


FIG. 138: PAF PERFORMANCE FIG. 139: PAF FUND PERFORMANCE


PAF -0.5% n/a n/a PAF 8.1% n/a n/a


Active Return -15.6% n/a n/a Share Price/NTA (average) -5.3% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures from 22 May 2014. Active return refers to TSR relative to that of the comparative index.

FIG. 140: PAF VS MSCI WORLD INDEX (A$)

-15

-10

-5

0

5

10

15

20

May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

MSCI ($AUD) PAF

Source: Bloomberg


04 February 2015


PM Capital Global Opportunities Fund (PGF) www.pmcapital.com.au

Platinum Capital began trading on the ASX on 12 December 2013.

PGF provides long-term capital growth by investing in a portfolio of undervalued global (including Australian) equities and other investment securities.

The total shareholder return for the Calendar Year 2014 was 10.9% with pre-tax net asset backing increasing 21.0% The active return was -3.5%.

FIG. 141: PGF SNAPSHOT FIG. 142: PGF PORTFOLIO TOP 10


Price (31 Dec 2014) $1.07 Lloyds Banking Group PLC 6.30%

Share price range (12 months) $0.76 ‐ $1.11 ING Group NV 5.70%

Shares on issue 174.6 mn Pfizer Inc 5.00%

Market capitalisation $181.6 mn Barclays PLC 4.70%

Pre-tax asset backing* $1.14 Google 4.70%

Post-tax asset backing* $1.10 Bank of America 4.50%

Premium/(Discount) to pre-tax NTA -6.35% JP Morgan Chase and Co 4.50%

Premium/(Discount) to post-tax NTA -2.86% PM Capital Asian Opportunities Fund 4.30%

Dividend yield 0.00% Citycentre Holdings (Debt) 4.30%

Dividend per share 0c Realogy Holdings 4.10%

Franking 100%


FIG. 143: PGF PERFORMANCE FIG. 144: PGF FUND PERFORMANCE


PGF 10.9% n/a n/a PGF 21.0% n/a n/a


Active Return -3.5% n/a n/a Share Price/NTA (average) -5.6% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures from 12 December 2014. Active return refers to TSR relative to that of the comparative index.

FIG. 145: PGF VS MSCI WORLD INDEX (A$)

-10

-5

0

5

10

15

20


MSCI ($AUD) PGF

Source: Bloomberg


04 February 2015


Perpetual Equity Investment Company (PIC) www.perpetualequity.com.au

Perpetual Equity Investment Company listed on the 18 December 2014 and will operate under Perpetual management. Perpetual currently has over $31 billion of funds under management.

PIC follows a bottom-up investment approach, focusing on mid-caps with a concentrated exposure of 20 – 40 securities. Capital will be deployed within six months of listing.

The total shareholder return since inception was 0.5% with no change in the pre-tax net asset backing. The active return was -3.5%.

FIG. 146: PIC SNAPSHOT FIG. 147: PIC PORTFOLIO TOP 10

Metric Company %

Price (31 Dec 2014) $0.98 n/a

Share price range $0.97 ‐ $0.99 n/a

Shares on issue 250.6 mn n/a

Market capitalisation $244.37 mn n/a

Pre-tax asset backing* $0.97 n/a

Post-tax asset backing* $0.98 n/a

Premium/(Discount) to pre-tax NTA 0.7% n/a

Premium/(Discount) to post-tax NTA -0.1% n/a

Dividend yield** na n/a

Dividend per share** na n/a

Franking 100% n/a


FIG. 148: PIC PERFORMANCE FIG: 149: PIC FUND PERFORMANCE


PIC 0.5% n/a n/a PIC 0.0% n/a n/a


Active Return -3.5% n/a n/a Share Price/NTA (average) 0.7% n/a n/a

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures from 18 December 2014. Active return refers to TSR relative to that of the comparative index. FIG. 150: PIC VS ALL ORDINARIES INDEX

-2

-1

0

1

2

3

4

5

6

Dec-14

All Ords Index PIC

Source: IRESS


04 February 2015


Platinum Capital (PMC) www.platinum.com.au

Platinum Capital was listed on the ASX in 1994 and is managed by Platinum Asset Management.

Its strategy is to invest in international equities, predominantly from Europe and Asia.

Platinum is an active manager and also derives revenue from trading activities.


FIG. 151: PMC SNAPSHOT FIG. 152: PMC PORTFOLIO TOP 10


Price (31 Dec 2014) $1.82 Ericsson 2.40%

Share price range (12 months) $1.54 ‐ $2.03 Alcoa 2.40%

Shares on issue 232.2 mn Samsung Electronics 2.30%

Market capitalisation $426.1 mn Toyota Industries 2.30%

Pre-tax asset backing* $1.65 Casino Guichard Perrachon 2.30%

Post-tax asset backing* $1.56 Foster Wheeler 2.10%

Premium/(Discount) to pre-tax NTA 10.40% Baker Hughes 2.00%

Premium/(Discount) to post-tax NTA 16.94% Astra Zeneca 2.00%

Dividend yield 4.40% Intesa Sanpaolo 1.90%

Dividend per share 8c Nippon Telegraph & Telephone 1.80%



FIG. 153: PMC PERFORMANCE FIG. 154: PMC FUND PERFORMANCE


PMC 13.9% 28.7% 5.8% PMC 2.6% 20.3% 7.2%

Sector Average Return 17.8% 30.7% 12.4% Sector Ave 7.5% 13.0% 4.4%

Active Return -0.6% 4.3% -6.5% Share Price/NTA (average) 9.9% -0.2% 2.3% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG 155: PMC VS MSCI WORLD INDEX (A$)

-10

-5

0

5

10

15

20


MSCI ($AUD) PMC

Source: Bloomberg


04 February 2015


QV Equities (QVE) www.qvequities.com

QV Equities Limited is a listed investment company, managed by Investors Mutual Limited (IML). It first listed on the ASX in August 2014.

Their investment objective is to achieve long term value through capital growth and income, by investing in a diversified portfolio of ASX listed entities outside the S&P/ASX 20 Index.

As of QVE’s most recent portfolio update, the company was holding 52% cash.

Since Inception the total shareholder return was 4.0% with pre-tax net asset backing increasing 3.4%. The active return was 6.6%

FIG. 156: QVE SNAPSHOT FIG. 157: QVE PORTFOLIO TOP 10


Price (31 Dec 2014) $1.04 Sonic Healthcare n/a

Share price range (12 months) $0.95 ‐ $1.08 AGL Energy n/a

Shares on issue 184.6 mn Orica n/a

Market capitalisation $196.6 mn Ansell n/a

Pre-tax asset backing* $1.01 ASX Limited n/a

Post-tax asset backing* $1.00 Bank of Queensland n/a

Premium/(Discount) to pre-tax NTA 2.79% Chorus Limited n/a

Premium/(Discount) to post-tax NTA 3.60% Oil Search n/a

Dividend yield 0.00% Shopping Centres Australasia n/a

Dividend per share 0c Salmart n/a

Franking N/A


FIG. 158: QVE PERFORMANCE FIG. 159: QVE FUND PERFORMANCE


QVE 4.0% n/a n/a QVE 3.4% n/a n/a


Active Return 6.6% n/a n/a Share Price/NTA (average) 0.1% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. YTD figures from August 2014. Active return refers to TSR relative to that of the comparative index.

FIG. 160: QVE VS ALL ORDINARIES INDEX

-10

-8

-6

-4

-2

0

2

4

6

Aug-14 Oct-14 Dec-14

All Ords Index QVE

Source: Bloomberg


04 February 2015


Templeton Global Growth Fund (TGG) www.tggf.com.au

The Templeton Global Growth Fund was listed on the ASX in 1987 by Franklin Templeton Investment group, an American investment group with more than 50 years’ experience.

Templeton’s investment approach is to seek out fundamentally undervalued securities with a focus on long-term growth.

Its portfolio gives Australian investors access to a diversified portfolio of international securities.


FIG. 161: TGG SNAPSHOT FIG. 162: TGG PORTFOLIO TOP 10


Price (31 Dec 2014) $1.43 Microsoft 2.30%

Share price range (12 months) $1.23 ‐ $1.46 Amgen Inc 2.10%

Shares on issue 199.0 mn Sanofi 2.00%

Market capitalisation $281.6 mn Samsung Electronics 1.80%

Pre-tax asset backing* $1.42 Citigroup 1.80%

Post-tax asset backing* $1.38 Roche Holding AG 1.80%

Premium/(Discount) to pre-tax NTA 0.92% Glaxosmithkline plc 1.70%

Premium/(Discount) to post-tax NTA 4.00% Comcast Corp 1.70%

Dividend yield 2.45% China Telecom Corp 1.70%

Dividend per share 3.5c Gilead Sciences Inc 1.60%

Franking 100% As at 30 Sept 2014


FIG. 163: TGG PERFORMANCE FIG. 164: TGG FUND PERFORMANCE


TGG 5.0% 32.7% 14.3% TGG 2.3% 21.6% 8.6%


Active Return -9.5% 8.3% 2.0% Share Price/NTA (average) -2.7% -10.5% -13.2% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index. FIG. 165: TGG VS MSCI WORLD INDEX (A$)

-15

-10

-5

0

5

10

15

20


MSCI ($AUD) TGG

Source: Bloomberg


04 February 2015


WAM Capital (WAM) www.wamfunds.com.au

WAM Capital concentrates primarily on small to medium industrial companies with an objective to deliver a rising stream of fully franked dividends, to provide capital growth and preserve capital, through market driven, research driven and investment driven investing.

WAM also provides exposure to relative value arbitrage and market mispricing opportunities. WAM is managed by Wilson Asset Management.


FIG. 166: WAM SNAPSHOT FIG. 167: WAM PORTFOLIO TOP 10


Price (31 Dec 2014) $2.01 Hunter Hall Global 2.40%

Share price range (12 months) $1.91 ‐ $2.11 Century Australia 2.30%

Shares on issue 345.4 mn Slater & Gordon 2.00%

Market capitalisation $704.6 mn Austal Limited 1.60%

Pre-tax asset backing* $1.79 CSG Limited 1.60%

Post-tax asset backing* $1.75 Mantra Group Ltd 1.40%

Premium/(Discount) to pre-tax NTA 12.15% Altium Limited 1.40%

Premium/(Discount) to post-tax NTA 14.73% Corp Travel Limited 1.30%

Dividend yield 6.47% IPH Limited 1.30%

Dividend per share 13c Retail Food Group 1.30%

Franking 100%


FIG. 168: WAM PERFORMANCE FIG. 169: WAM FUND PERFORMANCE


WAM 9.4% 18.4% 16.6% WAM 5.8% 11.0% 7.3%


Active Return 4.4% 4.1% 10.1% Share Price/NTA (average) 9.9% 2.0% -4.6%

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR relative to that of the comparative index.

FIG. 170: WAM VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8


All Ords Index WAM

Source: IRESS


04 February 2015


WAM Research (WAX) www.wamfunds.com.au

WAM Research (WAX) aims to invest in undervalued small and medium industrial growth companies listed on the ASX. WAX is also managed by Wilson Asset Management.

The investment objective is to provide a growing stream of fully franked dividends and to achieve a high real rate of return, comprising both income and capital growth within risk parameters acceptable to the Directors. This is achieved through market driven, research driven and investment driven investing.

The total shareholder return for the Calendar year 2014 was 10.0% with pre-tax net asset backing increasing 13.4%. The active return was 4.9%.

Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR above that of the comparative index. FIG. 175: WAX VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10


All Ords Index WAX

Source: IRESS

FIG. 171: WAX SNAPSHOT FIG. 172: WAX PORTFOLIO TOP 10


Price (31 Dec 2014) $1.16 Slater & Gordon 3.90%

Share price range (12 months) $1.10 ‐ $1.22 Austal Limited 3.20%

Shares on issue 142.3 mn CSG Limited 3.10%

Market capitalisation $166.5 mn Mantra Group Ltd 2.80%

Pre-tax asset backing* $1.09 Altium Limited 2.70%

Post-tax asset backing* $1.09 IPH Limited 2.60%

Premium/(Discount) to pre-tax NTA 5.97% Retail Food Group 2.50%

Premium/(Discount) to post-tax NTA 6.16% Sirtex Medical 2.40%

Dividend yield 6.47% Corp Travel Limited 2.40%

Dividend per share 7.5c Amalgamated Holdings 2.30%

Franking 100%


FIG. 173: WAX PERFORMANCE FIG. 174: WAX FUND PERFORMANCE


WAX 10.0% 29.1% 17.6% WAX 13.4% 21.9% 11.6%


Active Return 4.9% 14.8% 11.2% Share Price/NTA (average) 5.3% -1.7% -8.2%


04 February 2015


Whitefield (WHF) www.whitefield.com.au

Formed in 1923, Whitefield is one of Australia’s oldest listed investment companies.

It provides investors with a diversified exposure to the industrial segment (i.e. no resource companies) of the market with the aim of generating long-term returns.


FIG. 176: WHF SNAPSHOT FIG. 177: WHF PORTFOLIO TOP 10



Share price range (12 months) $3.82 ‐ $4.35 Westpac Banking Corp 8.48%

Shares on issue 76.5 mn ANZ Banking Grp Ltd 7.28%

Market capitalisation $328.8 mn National Aust. Bank 6.54%

Pre-tax asset backing* $4.56 Telstra Corporation. 6.01%

Post-tax asset backing* $4.26 Macquarie Group Ltd 4.45%


Premium/(Discount) to post-tax NTA -0.70% CSL Limited 3.39%


Dividend per share 17c Brambles Limited 2.66%

Franking 100%


FIG. 178: WHF PERFORMANCE FIG. 179: WHF FUND PERFORMANCE


WHF 10.1% 25.0% 10.3% WHF 11.0% 21.7% 8.6%


Active Return 5.1% 10.7% 3.9% Share Price/NTA (average) -5.8% -7.8% -8.7% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR above that of the comparative index. FIG. 180: WHF VS ALL ORDINARIES INDEX

-6

-4

-2

0

2

4

6

8

10


All Ords Index WHF

Source: IRESS


04 February 2015


Westoz Investment Company (WIC) www.westozfunds.com.au

Westoz Funds, established in 2005, focuses on investments in Western Australian based companies outside the ASX100.

The company has stated a policy to pay out a minimum of 50% of realised after tax profits to shareholders by way of dividends.


FIG. 181: WIC SNAPSHOT FIG. 182: WIC PORTFOLIO TOP 10


Price (31 Dec 2014) $1.06 Automotive Holdings 13.00%

Share price range (12 months) $0.88 ‐ $1.35 Finbar Group Limited 10.00%

Shares on issue 129.3 mn Cedar Woods Prop. 8.00%

Market capitalisation $137.7 mn Mount Gibson Iron 4.00%

Pre-tax asset backing* $1.02 Medusa Mining Ltd 3.00%

Post-tax asset backing* $1.08 Sundance Energy 3.00%

Premium/(Discount) to pre-tax NTA 3.82% Fleetwood Corp 2.00%

Premium/(Discount) to post-tax NTA -1.85% Sandfire Resources 2.00%

Dividend yield 8.49% Mmaoffshor 2.00%

Dividend per share 9c Northern Star 2.00%

Franking 100%


FIG. 183: WIC PERFORMANCE FIG. 184: WIC FUND PERFORMANCE


WIC -7.3% 14.0% 7.4% WIC -17.3% 0.3% -2.0%


Active Return -12.4% -0.3% 0.9% Share Price/NTA (average) -6.5% -17.6% -22.9% Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR above that of the comparative index. FIG.185: WIC VS ALL ORDINARIES

-30

-25

-20

-15

-10

-5

0

5

10


All Ords Index WIC

Source: IRESS


04 February 2015


Watermark Market Neutral Fund (WMK) www.wfunds.com.au

Watermark Market Neutral Fund (WMK) listed in July 2013 and is managed by Watermark Funds Management, an absolute return manager who also manages Australian Leaders Fund (ALF).

The market neutral structure means the long portfolio and short portfolio are of equal value, thus minimising exposure to general market movements. The performance on the fund will be the interest on the cash at bank plus the difference in performance of the two portfolios.

The total shareholder return for the Calendar Year 2014 was -8.8% with pre-tax net asset backing decreasing 2.9%. The active return was -11.3% (against the RBA cash rate).

FIG. 186: WMK SNAPSHOT FIG. 187: WMK PORTFOLIO TOP 10


Price (31 Dec 2014) $0.89 ANZ Banking Group Ltd 3.54%

Share price range (12 months) $0.86 ‐ $1.08 Commonwealth Bank of Austr 3.08%

Shares on issue 87.6 mn Rio Tinto Limited 2.67%

Market capitalisation $75.3 mn Origin Energy Limited 2.39%

Pre-tax asset backing* $0.95 Worleyparsons Limited 2.17%

Post-tax asset backing* $0.96 Intueri Education Group Ltd 1.98%

Premium/(Discount) to pre-tax NTA -6.32% Primary Health Care Limited 1.87%

Premium/(Discount) to post-tax NTA -7.29% Incitec Pivot Limited 1.86%

Dividend yield** 5.62% Gentrack Group Limited 1.83%

Dividend per share** 5c Tatts Group Limited 1.82%



FIG. 188: WMK PERFORMANCE FIG. 189: WMK FUND PERFORMANCE


WMK -8.8% n/a n/a WMK -2.9% n/a n/a


Active Return -11.3% n/a n/a Share Price/NTA (average) -2.2% n/a n/a Source: IRESS, Bloomberg, Baillieu Holst, Company reports. Figures as at 31 Dec 2014, unless otherwise noted. Active return refers to TSR above that of the comparative index. FIG. 190: WMK VS ALL ORDINARIES

-20

-15

-10

-5

0

5

10


All Ords Index WMK

Source: IRESS


04 February 2015


‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0

1

2

3

4

5

6

7

8

9

Premium/Discount NTA Share Price

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00


‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0

1

2

3

4

5

6


‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

2

4

6

8

10

12


Appendix LARGE CAPITALISATION DOMESTIC - HISTORICAL PREMIUMS/DISCOUNTS FIG. 191: AFI FIG. 192: ARG

FIG. 193: BKI FIG. 194: DJW

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2


‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

1

2

3

4

5

6


FIG. 195: MLT FIG. 196: AUI

Source: Bloomberg, Baillieu Holst


04 February 2015


‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

0

0.2

0.4

0.6

0.8

1

1.2


‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2


‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

0

0.5

1

1.5

2

2.5


‐40.0%

‐35.0%

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4


‐60.0%

‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6


‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6


SMALL CAPITALISATION DOMESTIC - HISTORICAL PREMIUMS/DISCOUNTS FIG. 197: AMH FIG. 198: ALF

FIG. 199: ALR FIG. 200: CAM

FIG. 201: CDM FIG. 202: CYA



04 February 2015


‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

0

5

10

15

20

25

30

35


‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8


‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5


‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

0

0.05

0.1

0.15

0.2

0.25

0.3

Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13 Jan‐14


‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

0

0.5

1

1.5

2

2.5


FIG. 203: CIN FIG. 204: CTN

FIG. 205: DUI FIG. 206: IBC

FIG. 207: MIR FIG. 208: OZG

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

0.5

1

1.5

2

2.5

3




04 February 2015


‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

0

1

2

3

4

5

6


‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

0

0.5

1

1.5

2

2.5


‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

0

0.2

0.4

0.6

0.8

1

1.2

Sep‐13 Sep‐14


‐45.0%

‐40.0%

‐35.0%

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Sep‐09 Sep‐10 Sep‐11 Sep‐12 Sep‐13 Sep‐14


FIG. 209: WAM FIG. 210: WHF

FIG. 211: WAX FIG. 212: WMK

‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6


FIG. 213: WIC



04 February 2015


INTERNATIONAL LICs - HISTORICAL PREMIUM/DISCOUNT FIG. 214: AGF FIG. 215: HHV

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

0

0.5

1

1.5

2

2.5


‐40.0%

‐35.0%

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6



FIG. 216: MFF FIG. 217: PMC

‐35.0%

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.5

1

1.5

2

2.5


‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0

0.5

1

1.5

2

2.5

3


FIG. 218: PAF FIG. 219: PGF

‐12.0%

‐10.0%

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0.98

1

1.02

1.04

1.06

May‐14


‐12.0%

‐10.0%

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

0

0.2

0.4

0.6

0.8

1

1.2

Jun‐14




04 February 2015


FIG. 220: TGG

‐30.0%

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8



SPECIALIST LICs - HISTORICAL PREMIUM/DISCOUNT FIG. 222: IPE FIG. 223: ACQ

‐90.0%

‐80.0%

‐70.0%

‐60.0%

‐50.0%

‐40.0%

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4


‐18.0%

‐16.0%

‐14.0%

‐12.0%

‐10.0%

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

0

0.2

0.4

0.6

0.8

1

1.2

May‐14




04 February 2015


FIG. 224: PREMIUM/(DISCOUNT) TO PRE-TAX NTA

DJW

MIR

WAMALF PMC

WAX ARG CDM MLT AFI OZG WICGVF AMH TGG

CAM QVE FGX BKI MFF HHV CYA CTN AUI IBC WMK PGF ALR WHF PAF DUI IPE

CIN

ACQ

AGF

LSX

‐45%

‐35%

‐25%

‐15%

‐5%

5%

15%

25%

35%

Source: Bloomberg, IRESS

FIG. 225: PREMIUM/(DISCOUNT) TO POST-TAX NTA

DJW

MIRAFI

ARGMLT PMC

WAMMFF

AUI AGF ALF AMHWAX CIN DUI CDM BKI TGG QVE

GVF

OZG WHF CAM WIC ALR PGF CTN FGX HHV CYA IBC PAF WMK

IPE ACQ

LSX

‐80%

‐60%

‐40%

‐20%

0%

20%

40%



04 February 2015


FIG. 226: TOTAL SHAREHOLDER RETURN – % RETURN OVER 12 MONTHS

HHV

AGF

MFF CINPMC

MLT WHF ARG WAXWAM CYA CTN BKI TGG AUI CDM IBC AMH DUI OZG DJW AFI

MIRCAM WIC WMK IPE ALF

ALR

LSX

‐80%

‐60%

‐40%

‐20%

0%

20%

40%

60%


FIG. 227:TSR COMPOUND ANNUAL GROWTH – % OVER 3 YEARS

TGG

HHV WAX PMC CINWHF MIR

ALF AGFMLT ARG DUI AFI WAMAMH AUI CYA BKI DJW OZG IPE CDM CTN WIC

IBCCAM

ALR

LSX

‐30%

‐20%

‐10%

0%

10%

20%

30%

40%


Average 3.55%

Average 19.1%


04 February 2015


FIG. 228: TSR COMPOUND ANNUAL GROWTH – % OVER 5 YEARS

MFF

IPE CDM

WAXWAM

TGG CIN ALF HHVAMH WHF MIR BKI IBC MLT OZG CTN CAM AFI WIC ARG CYA DJW DUI PMC AUI

AGFALR

LSX

‐25%

‐20%

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

25%

30%


FIG. 229: NTA GROWTH – % OVER 1 YEAR

AGF

MFF

HHV

IBC CIN WAXWHF

MLT ALR WAM CYA ARG AFI BKI MIR AUI AMH PMC TGG DUI DJW

CDMCTN

CAM ALFIPE

WICOZG

LSX

XAOAI

‐50%

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

40%

50%

60%


Average 3.5%

Average 9.7%


04 February 2015


FIG. 230: NTA COMPOUND ANNUAL GROWTH – % OVER 3 YEARS

MFF

AGFWAX WHF TGG CIN PMC

HHV

DUI AUI ARG AFI MLT MIR OZG CYAALR AMH BKI DJW WAM ALF

IBC CDM

CAM CTNWIC

IPE

LSX

XAOAI

‐30.0%

‐20.0%

‐10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Average 12.6%


FIG. 231: NTA COMPOUND ANNUAL GROWTH– % OVER 5 YEARS

MFF

WAX CINCDM

IBC MIR AMH WHF TGGHHV WAM PMC MLT AFI BKI ARG AUI DUI

ALF DJWAGF CYA CAM ALR OZG

CTN IPEWIC

LSX

XAOAI

‐20%

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

25%

Average 5.4%



04 February 2015


FIG. 232: NTA COMPOUND ANNUAL GROWTH – % OVER 10 YEARS

CINAMH MIR

WAX AFI DUI AUI ALF BKI MLT CAM ARG WAMCTN DJW HHV WHF PMC

ALRTGG

IBC

LSX

XAOAI

‐20%

‐15%

‐10%

‐5%

0%

5%

10%

15%

Average 5.0%


FIG. 233: LIC’S AVERAGE HISTORICAL PRICE TO NTA

‐16%

‐14%

‐12%

‐10%

‐8%

‐6%

‐4%

‐2%

0%


All chart data to 31 December 2014

Historical Average


Baillieu Holst Ltd ABN 74 006 519 393 www.baillieuholst.com.au

This document has been prepared and issued by:

Baillieu Holst Ltd ABN 74 006 519 393

Australian Financial Service Licence No. 245421 Participant of ASX Group Participant of NSX Ltd

Analysts’ stock ratings are defined as follows:

Buy: The stock’s total return is expected to increase by at least 10-15% from the current share price over the next 12 months.

Hold: The stock’s total return is expected to trade within a range of ±10-15% from the current share price over the next 12 months.

Sell: The stock’s total return is expected to decrease by at least 10-15% from the current share price over the next 12 months.

Disclosure of potential interest and disclaimer:

Baillieu Holst Ltd (Baillieu Holst) and/or its associates may receive commissions, calculated at normal client rates, from transactions involving securities of the companies mentioned herein and may hold interests in securities of the companies mentioned herein from time to time. Your adviser will earn a commission of up to 50% of any brokerage resulting from any transactions you may undertake as a result of this advice.

When we provide advice to you, it is based on the information you have provided to us about your personal circumstances, financial objectives and needs. If you wish to rely on our advice, it is important that you inform us of any changes to your personal investment needs, objectives and financial circumstances.

If you do not provide us with the relevant information (including updated information) regarding your investment needs, objectives and financial circumstances, our advice may be based on inaccurate information, and you will need to consider whether the advice is suitable to you given your personal investment needs, objectives and financial circumstances. Please do not hesitate to contact our offices if you need to update your information held with us. Please be assured that we keep your information strictly confidential.

No representation, warranty or undertaking is given or made in relation to the accuracy of information contained in this advice, such advice being based solely on public information which has not been verified by Baillieu Holst Ltd.

Save for any statutory liability that cannot be excluded, Baillieu Holst Ltd and its employees and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments.

Baillieu Holst Ltd assumes no obligation to update this advice or correct any inaccuracy which may become apparent after it is given.

Disclaimer: LIC performance measurements reflect performance after all operating expenses and taxation. Using index benchmarks often understates performance as the indices used are impacted by capital events such as options, DRPs, Share Purchase Plans and placements. Dividend yields contained within are historical and are not an indication of future dividend payments before all operating expenses and tax. Total Shareholder Returns are often negatively. Baillieu Holst Ltd acts in a corporate advisory role for BKI. In line with the company’s internal compliance guidelines, our investment recommendation is restricted. Baillieu Holst Ltd has acted in a corporate advisory role for BKI earned fees in relation to that activity in the past 12 months. The preparation of this report was funded by ASX in accordance with the ASX Equity Research Scheme. This report was prepared by Baillieu Holst and not by ASX. ASX does not provide financial product advice. The views expressed in this report do not necessarily reflect the views of ASX. No responsibility or liability is accepted by ASX in relation to this report.

Baillieu Holst Ltd ABN 74 006 519 393

AFSL No. 245421 Participant of ASX Group Participant of NSX Ltd Participant of Chi-X Australia www.baillieuholst.com.au Melbourne (Head Office) Address Level 26, 360 Collins Street Melbourne, VIC 3000 Australia Postal PO Box 48, Collins Street West Melbourne, VIC 8007 Australia Phone +61 3 9602 9222 Facsimile +61 3 9602 2350 Email [email protected] Bendigo Office Address Cnr Bridge & Baxter Streets Bendigo, VIC 3550 Australia Postal PO Box 40 North Bendigo, VIC 3550 Australia Phone +61 3 5443 7966 Facsimile +61 3 5442 4728 Email [email protected] Geelong Office Address: 16 Aberdeen Street Geelong West Vic 3218 Postal PO Box 364 Geelong Vic 3220 Australia Phone +61 3 5229 4637 Facsimile +61 3 4229 4142 Email [email protected] Newcastle Office Address Level 1, 120 Darby Street Cooks Hill, NSW 2300 Australia Postal PO Box 111 The Junction, NSW 2291 Australia Phone +61 2 4925 2330 Facsimile +61 2 4929 1954 Email [email protected] Perth Office Address Level 10, 191 St Georges Terrace Perth WA 6000 Australia Postal PO Box 7662, Cloisters Square Perth, WA 6850 Australia Phone +61 8 6141 9450 Facsimile +61 8 6141 9499 Email [email protected] Sydney Office Address Level 18, 1 Alfred Street Sydney, NSW 2000 Australia Postal PO Box R1797 Royal Exchange, NSW 1225 Australia Phone +61 2 9250 8900 Facsimile +61 2 9247 4092 Email [email protected]

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