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Alphinity Sustainable Share Fund “Investing in quality undervalued companies entering an earnings upgrade cycle”

September 2018

Accurium Webinar

• Alphinity is an Australia-based equities fund manager, leveraging its strong investment process and teams across domestic and global portfolios

• Majority owned (70%) and managed by its founders. Strong alignment of team and client interests

• Alphinity Investment Management was established by the team in 2010

• Principals have worked together on average 14 years, successfully applying the same investment process and tools since 2004

• Global equities team established in 2015 with the same investment process and strong team culture

• Business structure allows the team to focus on investing, with all administration and distribution requirements outsourced to Fidante/Challenger

• A$8.6 billion domestic and A$1.1 billion global FUM as at August 2018

Alphinity Overview

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Alphinity Investment Team

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Global Equities Multi-discipline Australian Equities

Johan Carlberg Lead Portfolio Manager

(ASF, CASF, SRI)

• Building materials,

Materials ex-Resources, Services

Experience: 31 years

Andrew Martin Portfolio Manager

(ASF, CASF)

• Banks, Insurers,

Diversified Financials, IT


Stuart Welch Senior Research Analyst

• Healthcare,

Transport, Infrastructure


Richard Hitchens Senior Data Science & Quantitative Analyst


Adam Solano Senior Trader


Fidante Administration and Distribution (~160 staff)

Fund Finance Business Services Compliance

Stephane Andre Portfolio Manager

(ASF, SRI)

• Resources, Energy,

Utilities


Bruce Smith Portfolio Manager

(ASF, SRI)

• Consumer, REITs,

Telecom


Jonas Palmqvist Portfolio Manager


Jeff Thomson Portfolio Manager


Lachlan MacGregor Portfolio Manager


Andrew Grimes

Client Portfolio Manager


Risk and Performance Investment Operations

Highly experienced

Nikki Thomas Portfolio Manager


Alphinity – building long term performance

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Robust process is adding value in all funds across all periods

3mths 1 year 3 years 5 years 7 years

Since

inception

Since

inception7 year

information

p.a. p.a. p.a. p.a. cumulative ratio

Benchmark (ASX300) 6.0% 15.4% 11.5% 8.9% 10.3% 9.3% 103.1%

Australian Share Fund (ASF) 6.4% 19.4% 13.3% 10.4% 12.6% 11.2% 134.3% 1.3

Concentrated Fund (CASF) 7.1% 22.6% 16.6% 13.2% 14.6% 13.0% 166.5% 1.8

Sustainable Share Fund (SSF) 7.5% 24.6% 14.6% 11.5% 13.3% 11.9% 145.4% 1.2

Alpha ASF 0.4% 4.0% 1.7% 1.5% 2.3% 2.0% 31.1%

Alpha CASF 1.2% 7.2% 5.0% 4.3% 4.3% 3.8% 63.4%

Alpha SSF 1.5% 9.2% 3.1% 2.6% 3.0% 2.6% 42.3%Inception for the funds is 1 September 2010. Performance is shown before fees. Source: Alphinity

Period ended 31 August 2018

Period ended 31 August 2018 3mths 1 year 2 years 3 years 5 years 7 years

Since

inception

Since

inception

p.a. p.a. p.a. p.a. p.a. cumulative

Australian Domestic Funds

Benchmark (ASX300) 6.0% 15.4% 12.5% 11.5% 8.9% 10.3% 9.3% 103.7%

Australian Share Fund (ASF) 6.2% 18.4% 14.8% 12.4% 9.5% 11.8% 10.4% 120.7%

Concentrated Fund (CASF) 6.9% 20.9% 16.7% 15.0% 11.8% 13.4% 11.9% 145.8%

Sustainable Share Fund (SSF) 7.3% 23.4% 16.3% 13.4% 10.3% 12.1% 10.6% 123.9%

Alpha ASF 0.2% 3.0% 2.3% 0.9% 0.6% 1.5% 1.1% 17.0%

Alpha CASF 0.9% 5.5% 4.2% 3.5% 2.9% 3.1% 2.6% 42.1%

Alpha SSF 1.3% 8.0% 3.8% 1.9% 1.4% 1.8% 1.3% 20.2%

Inception for the funds is 1 September 2010. Performance is shown after fees.

Performance before fees

Performance after fees

Source: Alphinity. Past performance is not a reliable indicator of future performance. Inception date for the Funds is 1 September 2010, once Alphinity assumed formal investment management responsibilities.

Alphinity history Building long term performance

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+103.7%

+145.8%

+120.7%

+123.9%

Source: Alphinity. Returns are net of fees and assume the reinvestment of distributions. No allowance is made for tax. Past performance is not a reliable indicator of future performance. Figures for the Inception Date for the Fund are taken from 1

September 2010, once Alphinity assumed formal investment management responsibilities.

How to invest

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The Alphinity Sustainable Share Fund is a pooled equity vehicle with Fidante Partners acting as the Responsible Entity. It has been in operation since June 2000. Alphinity assumed management in September 2010.

It is available on the following platforms:

Asgard eWrap BT Panorama BT Wrap HUB24 IOOF - Pursuit Select Macquarie Wrap Super Manager Macquarie Wrap Investment Manager MLC Wrap – IDPS MLC Wrap – Super MLC Navigator Netwealth Private Oasis Synergy Capital Management

And coming soon to Netwealth Public

Also available on mFunds (ticker ALH03)

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Alphinity

Investment Philosophy

Finding underestimated earnings growth

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These stocks can be found at any point in the market cycle.

Company’s Earnings Life Cycle

Stock example: Macquarie

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Momentum and Consistency

• Strong earnings per share (EPS) upgrade cycle continues, benefitting from increasing activity levels and fund raisings, demand for infrastructure/long dated income assets and the leverage created by attacking cost base.

• Performance fees accruing to unlisted funds will assist earnings in next 2-3 years.

• Balance sheet pregnant with asset gains from investments since GFC – yet to be recycled freeing up capital and boosting earnings. Excess capital has already seen buyback announced.

• Business transformation to more stable Asset Manager from volatile Investment Bank continues with Macquarie Funds Group now up to $490bn of funds under management globally (top 50 asset manager) – low capital usage, higher return on equity (ROE) and more stability should support higher valuation. Valuation still well short of global asset manager peers.

• US tax change benefits, exposure to US and global rising economic activity, and leverage to any increased US infrastructure spend, combined with a growing Green Assets business add to the story going forward. Foreign currency exposure material.

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MQG EPS Revisions

2018 2019

Source: Bloomberg Alphinity

-0.30%

-0.20%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

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1.20%

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-1.5%

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-0.5%

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2.0%

2.5%

3.0%

Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

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MQG Active Weight Cumulative Attribution for MQG

Stock example: Telstra

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Structural and cyclical pressure

• Started in 2010 (inception) with the ASF portfolio underweight Telstra after then-new CEO Thodey reset earnings in 2010. Stock was very cheap (Price–to-Earnings[P/E] 10x and 10% div yield) but had no earnings momentum

• A glimmer of hope showed at the FY11 result, resulting in upgrades as Telstra’s investment in its mobile infrastructure started to show in increased market share. We went overweight at that point. Upgrades continued

• We maintained varying levels of overweight between 2011 and 2015, during which time earnings were delivering consistently ahead of market expectations. The stock enjoyed a strong re-rating to the point that by the FY15 result it had become quite expensive (P/E 17x and yield <5%)

• Earnings were increasingly at risk from heightened competition in the mobile phone market. Earnings expectations had become overdone. Sold down after the August 2015 result; we have been significantly underweight since then

• Subsequent developments have perpetuated the downgrade trend and the company has also announced a significant cut to future dividends

ESG – a vital aspect of our fundamental research

• Environmental, Social and Governance issues are a natural and important part of the fundamental research process and stock discussions given their direct impact on the performance of companies. This applies across all funds

• We signed the UN’s Principles for Responsible Investment soon after inception and have taken leadership roles in several PRI engagements where relevant to Australian companies

• We have found CAER’s EIRIS database useful in raising our awareness of some issues, notwithstanding the obvious shortcomings involved in using third party research. We have addressed that by having our own independent experts on the Compliance Committee to provide greater insight. The same shortcomings make ESG metrics of limited value, but are measured in any case

• SSF Charter (slide 31) sets out the objectives and restrictions of the Sustainable Share Fund

• We interact with senior managers of investee companies to ensure that our views are known and considered. We vote every resolution brought before investee companies, raising any issues with management before voting. We use proxy advisors ISS and Ownership Matters but ultimately make our own decisions

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Sustainable Share Fund

Applying Alphinity’s Investment Philosophy

to a tighter Sustainable Investable Universe

Investing sustainably doesn’t need to mean lower returns

• ESG integration in fundamental research is now mainstream

• Sustainable Investing is becoming increasingly expected too:

• 9 in 10 Australians expect their superannuation and investments to be invested responsibly and ethically

• 4 in 5 (78%) Australians would consider moving super or other investments to another provider if their current fund engaged in activities not consistent with their values

• 63% of Australians expect their advisers to incorporate their values or consider the societal or environmental implications of particular investments

• Millennials are the most likely to consider changing their investments to another provider if their current fund engages in activities not consistent with their values

• However, interest in sustainable investing declines dramatically if investment returns are compromised

Sustainable investing is now increasingly expected

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Source: RIAA report, Alphinity Investment Management

Not all “sustainable” companies are good

investments

Not all companies with poor ESG characteristics

are bad investments

1. Focus on negative screens and not positive impact.

2. Lack of engagement with the company to drive change. Mainly focused on Governance (‘G’ in ‘ESG’).

3. Data quality from research firms has been variable, simplistic and very much based on company reports rather than company engagement.

4. The investment case has sometimes been neglected in the search for a “positive theme”, leading to poor returns.

Traditional approaches to Sustainable Investing

needed improving

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Solution Problems of traditional approach

• Need for positive ESG screens and support of UN Sustainable Development Goals.

• Active company engagement focused on all facets of ESG and SDGs. Transparent communication encouraged.

• Expertise required to review and improve data, and to engage with companies.

• Each stock needs to have an investment case developed by a skilled team.

“Sustainable-ness” is not the determinant of returns: good stock selection is

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Sustainable Share Fund: A disciplined Process

All liquid Australian Stocks (>300 companies)

A balanced portfolio of 35-55 companies with good ESG characteristics

and/or address one or more Sustainable Development Goal

Investable Universe (~180 companies)

Apply the Investment Process

The Alphinity process combines fundamental and quantitative research to identify

companies with the best prospect of delivering positive earnings surprise, which generally leads

to outperformance.

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Negative Screen: exclude unacceptable activities as

detailed in the Charter

Positive Screens: good ESG characteristics, few controversies and, where possible, support one or more of

the UN’s Sustainable Development Goals

Step 1: Defining the Sustainable Investment Universe

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“Sweet Spot”

Part of Investable Universe

Investigate and determine whether to include in Investable Universe

companies whose business

activities are acceptable

companies whose

activities contribute

to the SDGs

companies achieving

a high ESG ranking

~80 stocks

>80 stocks

>20 stocks

1

2 3

Process Step 1 (cont.)

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Principle

Details

High proportion of revenues generated by activities compatible with the fund’s Charter. Focus on Production and Operation; Service and Distribution assessed on a case by case basis

Highest-ranking ESG & lowest controversy companies in ASX300 as defined by CAER, subject to Committee insights. Exclude worst 15% global stocks, and worst 40% sector relative stocks (D and E categories).

Activities considered incompatible with the fund’s charter (with 10% cumulative revenue threshold) include:

• High Impact Fuels: Thermal Coal, Coal Seam Gas, Oil Sands, Arctic Drilling and Uranium.

• Mining of gold where it is the predominant extraction (as opposed to being a by product)

• Animal welfare: factory farming, animals in entertainment, live exports, animal testing for cosmetics and in some cases for Healthcare

• Addictions: Tobacco, Alcohol, Gambling

• Armaments

• Old growth forest logging & non-RSPO Palm Oil

• Predatory lending & hostile debt collection

• Pornography

• Consider Preparedness, Disclosure, Quantitative & Qualitative performance on Environmental, Social and Governance factors such as

– E: Climate Change, Environmental Sustainability

– S: Human Rights, Consumer Protection, Diversity

– G: Compensation, Management Structure, Culture

• Controversy factors based on news monitoring, potential impact and company response/management

High ESG ranking scores Activities compatible with the Charter 1 2

Process Step 1 (cont.)

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Company Sustainability Alignment makes an assessment of the degree to which company operations and products support the UN Sustainable Development Goals agenda as it evolves, including

• proportion of revenues from sustainable products (at least 20% of company revenues supporting one or several goals)

• qualitative assessment of involvement in SDG themes (e.g. energy & climate change, health) Many companies provide inadequate disclosure on how they perform according to the goals so Alphinity is using the services of CAER and Sustainalytics to gain further insights. SDG research is quickly evolving, getting better with each iteration

Activities that support the UN Sustainable Development Goals 3

Process Step 2 – Finding compelling investments

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Fundamental Research (V, M & Q) Quantitative Research (M & Q)

• Understand specific share price drivers

• Develop strong view on these stock drivers and company valuation

• Understand real market expectations (not just sell side)

• Continuously compare our view and earnings expectations vs. ‘market’

• Utilise all information sources including quantitative signals

• Momentum factors – earnings revisions are auto-correlated and closely related to stock price performance. Market tends to lag and/or underestimate earnings revision cycles.

• EPS revisions • EPS Revisions Index (ups vs downs) • Price Momentum

• Quality Factors – provides an insight into

‘sustainability of earnings’ and potential earnings turning points.

• FCF Margin • ROE and change in ROE • Balance Sheet Accrual

Find companies with underestimated earnings growth using...

Ranking of stocks in Composite Research Model (CRM)

Process Step 3 – Constructing a balanced Portfolio

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• Strong fundamentals

• High team conviction

• Quant is average but improving

• Borderline top 3rd of CRM

= Initiate small ~0.5-1.0% position

100%

100%

• Strong fundamentals

• High team conviction

• Quant indicators are strong

• Sits in top 3rd of CRM

= Hold a 2-3% active position

• Falling valuation support


• Borderline of top 3rd of CRM

= Exit / trim position

Small active weight Large active weight

• Low valuation support

• Quant is poor

• Well outside top 3rd of CRM

= Generally no position held (unless for risk control purposes)

Risk/Return is optimised by adjusting stock weights according to position on CRM matrix

• Falling valuation support


• Borderline of top 3rd of CRM

= Exit / trim position

A Committee including eminent external experts

ensures the Fund stays true to label

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Sustainable Share Fund Committee

Elaine Prior

• Citi Head of ESG Research 2009-17

• Extensive industry, stockbroking and funds management background

Mark Lyster

• MD of Action Sustainability Asia Pac

• Former EY Director of Sustainability; also Net Balance, Ecos Corp

• Chair RIAA Human Rights working group

Stephane Andre

• Principal & Portfolio Manager, Alphinity


Bruce Smith

• Principal & Portfolio Manager, Alphinity


The Challenge:

• External databases are by necessity big-picture and often penalise new or small companies for non-disclosure, producing a lot of “grey areas”

• The ASSF Compliance Committee includes authoritative external parties to help adjudicate on the grey areas. The two external experts act in an Advisory capacity

Compliance Committee’s Role: Refine Charter & Filters as they evolve

• Define, Review & Confirm Investable Universe

• Help identify areas of Company Engagement, and where appropriate be involved in company engagement

• Review Service Providers and asses how to obtain best insights

• Review Portfolio construction from an ESG perspective against benchmarks, adjusting if required

Additional Invitees:

• External service provider when relevant

• Johan Carlberg, CEO

Experience: 41 years Experience: 30 years

Company Engagement is an active role of the

Committee and investment team

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• Keep engaging with high-ranking CRM companies which are excluded due to ESG concerns on what they are doing to address those concerns

• Engage with medium and high ranking CRM companies to better assess how they presently (or intend to) support the UN Charter SDGs

• Strengthen Environmental and Social Engagement with investee companies on certain themes, e.g. Climate Change, Human Rights

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Portfolio


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Top active overweights

Rank Company Name Active

Position

CRM Score

(/100)*

1 Bingo Industries Limited 2.5% 65

2 Computershare Limited 2.2% 87

3 IDP Education 2.2% 78

4 Macquarie Group Ltd 2.1% 92

5 New Energy Solar 1.8% 71

6 Woodside Petroleum Limited 1.8% 93

7 Goodman Group 1.6% 77

8 Suncorp Group Ltd 1.5% 84

9 Lendlease Ltd 1.5% 75

10 Mirvac Group 1.4% 83

Source: Alphinity, as at 31 August 2018


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Portfolio position

Source: Alphinity, as at 17 September 2018

Size indicates positive active position

Indicates active underweight position if stock held

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Costa Group Providing Healthy Food

Sustainability

• Grows healthy fresh fruits and vegetables (berries, mushrooms, citrus, avocados, etc.) aiming for reliable, year-round supply through geographic diversification and protected cropping

• Employer of choice for seasonal workers, provides genuine pastoral care; promotes education and careers in horticulture

• Strong environmental focus (water conservation, efficient energy use, renewable energy and minimal use of fertilisers)

• Provides surplus produce to charities

Investment Case

• Costa was IPO’d in 2015 with strong market positions, a meaningful growth path in Australia and immature ventures in China and Morocco

• Market has struggled to properly assess the upside potential of the company, resulting in an apparent high multiple but also regular earnings upgrades, producing significant share price outperformance

• Assessing remaining upside is challenging (as it is with all stocks) however expansion of scale and scope positions Costa well for the immediate future.

Addressing Poverty

• As a participant in the Pacific Islander Seasonal Worker Scheme, Costa Group is one of the few Australian companies that has been able to help address poverty in developing nations.

• Some workers are now up to their fifth seasons, providing Costa with trained harvesters and the workers with good wages that enable them to improve their own families’ living situations and contribute income to their own nation.

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IDP Education Investing for growth

• Global leader in international education, operating for more than 50 years and with offices in more than 30 countries. A beneficiary of the need for tertiary education in developing countries, and is providing scope for residents of those countries to learn essential skills to foster further development

• Co-owns IELTS*, the world’s best-recognised English language proficiency test for study, work and migration purposes.

• Market cap ~$1.5bln

Sustainability

• Enabling quality education is a critical goal in achieving Sustainable Development.

• IDP’s presence in developing economies will, over time, build on the base of tertiary-qualified doctors, nurses, engineers etc. to help build those countries’ social and economic infrastructure

• Investing in digital innovation which enhances reach and capability

Investment Case

• Earnings upgrades coming from IELTs revenue growth in Australia following a flat period

• Currently investing for future growth, so earnings impacted by higher D&A charge

• Maintaining and even growing margins

*International English Language Testing System


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ESG and Carbon vs Benchmark

Data source: CAER, Alphinity

Overall ESG score is better than ASX300

Estimated Carbon intensity materially below that of the ASX300

ESG Risk Factor Metrics

SSF ASX300

Environment 3.63 3.40

Social 3.56 3.40

Governance 3.98 3.97

Overall 3.80 3.59

Carbon Exposure Metrics

Scope 1 & 2 SSF ASX300

Weighted Average Carbon Intensity* 195 582

Carbon Footprint (tonnes/$m invested) 75 121

* Intensity: Market cap or portfolio value weighted CO2 tonnes per $USm revenue

Top 10 Carbon Contributors 31-July-2018

SSF ASX300

Rank Stock CO2 t/$m revenue Weight Contribution Stock CO2 t/$m revenue Weight Contribution

1 WPL 902.9 4.4% 39.9 AWC 27740.5 0.4% 110.0

2 BHP 425.8 7.8% 33.6 LNG 307157.3 0.0% 64.5

3 RIO 809.4 3.0% 24.7 S32 4562.2 1.0% 47.7

4 BSL 1283.5 1.9% 23.9 AGL 4614.4 0.8% 39.1

5 QAN 1023.1 2.1% 21.7 SKI 14048.6 0.2% 31.9

6 CWY 639.4 1.4% 8.9 BHP 425.8 6.4% 27.3

7 OZL 425.2 1.4% 6.1 CLQ 113281.7 0.0% 25.1

8 APA 247.9 2.0% 4.9 MSB 51376.9 0.0% 20.5

9 SPI Futures 582.3 0.6% 3.5 WPL 902.9 2.0% 18.0

10 SDF 345.3 0.9% 3.1 ORG 1774.3 1.0% 18.0

Top 10 170.2 402.2

Total 195.0 582.3

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Appendix

Alphinity SSF Investment Philosophy

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Sustainable

Value

Momentum

Quality

Investing in sustainable,

quality, undervalued companies

undergoing an earnings upgrade cycle

Seeking Sustainable companies

that contribute to UN SDGs and rank well on ESG metrics.

Investing at an attractive

valuation point.

Investing at the right point in the earnings life cycle (serial correlation).

Investing in strong, sustainable, high quality businesses.

Alphinity SSF Charter

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The Alphinity Sustainable Share Fund seeks out Sustainable, Socially Responsible enterprises that also offer attractive prospective returns.

Society faces significant challenges to achieve progress in a sustainable way. Alphinity aims to play a role in helping to address this challenge through this specialised fund. We are committed to supporting those companies our research shows are doing good and avoiding those which aren’t.

• We seek companies that, along with offering attractive financial returns, have strong ESG practices and the capacity to make a positive impact on society in areas of economic, environmental and social development by contributing towards the advancement of the UN Sustainable Development Goals agenda as it evolves.

• We avoid companies that

• are involved in activities we consider are not compatible with the Fund’s charter, as they may be harmful to society and/or inconsistent with the achievement of the UN Sustainable Development Goals; and/or

• display poor practices in their management of Environmental, Social and Governance issues.

Making a positive impact

Extractive industries

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To invest or not to invest?

We debated long and hard about whether to include mining companies in our investable universe. While there is some simplistic appeal in just saying “no”, we concluded that some should be included

A nuanced approach is required. Some extracted materials are essential to achieve the Sustainable Development Goals. We cannot build badly-needed infrastructure that will enhance peoples’ lives without materials like steel and concrete. We cannot produce technology without rare earths, plastics and glass. We cannot move to electric vehicles without access to materials like copper, graphite and lithium to make motors and batteries. But we need to make sure that the companies producing these commodities are behaving in a positive way so ESG is especially important. Where a viable and more sustainable alternative becomes available, we will adjust our commodity restrictions accordingly

Having said that, some extractive activity is unnecessary or unhelpful. What social value is added by mining Gold? While there is no realistic substitute for Metallurgical Coal, there is for Thermal Coal. Thermal coal mining is ultimately a sunset industry and any exposure to this sector risks being stuck with stranded assets. We exclude companies with material involvement (i.e.>10% of revenues) in commodities including Gold, Thermal Coal, Uranium, Oil Sands and Coal Seam Gas, as well as those engaging in Chemical Fracking and drilling in the Arctic. We have retained the ability to invest in non-fracked Gas as a lower-emission transition energy source

Company Engagement

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Include RIO in investable universe?

CAER: “To Investigate” Compatibility of activities with Fund charter: “Pass”. Thermal Coal and Uranium < 5% of 2017 Rev, decreasing to 2% in

2018 as RIO has sold its NSW thermal coal assets. Controversy score: CAER highlights 21 controversies , 6 of which are considered high severity ESG – ranks best in class. Top scores in Governance, Human Rights, Stakeholder Issues. A leader in the sector. SDG score: “Seek”

Company engagement to clarify issues of contention • Discussion covering all high-risk controversies: e.g. alleged tax avoidance in Australia; corruption in Guinea; Bougainville

suing RIO over destruction caused by Panguna mine in the 1980s; failure to rein in sulphur dioxide emissions at Kitimat aluminium smelter

• Number of controversies is expected to be high along with number, diversity and longevity of operations • We believe all issues are being proactively and seriously dealt with:

• Guinea Corruption – immediately alerted authorities, took strong financial actions, lifted training) • Riversdale write down – engaged with Chairman. Proper process in place. • Kitimat smelter has since been rebuilt, reducing emissions by 50%

Confirmed strong ESG rating and SDG support ESG

Extensive engagement with Board on remuneration (quantum/safety penalty) – all issues addressed Strong commitment and actions taken to improve safety Employee treatment: support for workers affected by family and domestic violence; global parental leave

SDG Sustainable Development Report with clear commitment to 2 degrees limit in strategic and operational approach:

have reduced carbon emissions by 36% between 2008-16 and are committed for more Production of raw materials supporting a lower carbon future (Aluminium, Copper for EV) using low emission

sources (eg Hydro in Canada for its smelters)

Alphinity SSF

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Best and worst performers

Top 10 Stocks Contributors (bps) Bottom 10 Stocks Detractors (bps)

Netwealth Group∞ +209 IOOF Holdings -41

IDP Education∞ +135 Aristocrat Leisure** -33

Bingo Industries∞ +112 Santos Ltd** -30

Wagners Holding∞ +95 A2Milk* -27

Aconex∞ +89 Infigen Energy∞ -24

Macquarie Group +76 National Australia Bank -21

CSL +70 Resmed* -17

Beach Energy +49 Medibank Private -16

Reece∞ +46 Sims Metal Management -15

Woodside Petroleum +44 Downer EDI -15

12 months to August 2018

¤ Excluded from SRSF universe but eligible for inclusion in SSF Universe * Underweight/not held ** Underweight as excluded from Investable Universe ∞

These positions exclusive to this Fund

CRM quant factor back-testing

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(ASF)

Two eminent ESG experts

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Elaine Prior

Elaine recently retired from Citi Research in Sydney where she was a Managing Director covering ESG and Sustainability research for Citi’s fund manager and superannuation fund clients. An award-winning ESG pioneer, she researched sustainability issues on ASX listed companies to help clients assess valuation impacts or risks, or to engage with companies to encourage risk mitigation or broader positive change. With Elaine at the helm, Citi was awarded “Best Broking Firm” title by ESG Research Australia every year for eight years between 2009 and 2016.

Elaine held roles in investment research and funds management for 20 years prior to joining Citi in 2007, primarily focused on the resources sector, and was the top-rated BHP analyst in the Australian market for several years.

Elaine has degrees in Chemistry, Petroleum Engineering and Antarctic Studies and, before working in the markets, was an oil industry engineer in the UK North Sea and Australia. She also worked on environmental projects for Antarctic and Arctic tourism.

Mark Lyster

Mark is the co-founder and Managing Director of Action Sustainability Asia Pacific Ltd, a boutique sustainability advisory firm with offices in Sydney and London. Mark has been at the cutting edge of sustainability and business in Australia for the last two decades and specialises in areas such as Sustainability Strategy, Responsible Lending and Investing, Human Rights and Modern Slavery.

Mark is an expert on the finance sector and has advised a number of leading organizations such as CBA, ANZ, IAG, Telstra Super, Woolworths, NSW Office of Environment and Sustainability Victoria. Mark is the inaugural Chair of the Responsible Investment Association of Australasia Human Rights Working Group.

Mark previously held Director level positions at leading consulting firms including EY, Net Balance, Ecos Corp.

.....the continuous pursuit of performance 37

Investment team

Johan Carlberg

Principal, Lead Portfolio Manager

Johan is a principal of Alphinity Investment Management. Johan is the lead portfolio manager as well as having responsibility for Chemicals, Paper & Packaging, Building Materials and small industrial sectors. Johan was previously a Senior Vice President and Director, Australian Equities for AllianceBernstein’s Australian Equities fund, responsible for managing Alliance’s Australian equities portfolios, from 2003-2010. Prior to joining Alliance, Johan worked with Robur Asset Management in Sweden as Equities portfolio manager, managing domestic as well as international equity portfolios. Previously Johan worked with BZW Australia as an equities research analyst responsible for the Paper/Packaging, Food/Household and Alcohol/Tobacco sectors, leaving the firm as Associate Director. He started his career with Ohman Fondkommission in Sweden as an equities research analyst covering the Pulp & Paper sector. He received a Bachelor of Economics and Business Administration from the Stockholm School of Economics. Experience: 30 years. Stephane Andre Principal, Portfolio Manager Stephane is a principal of Alphinity Investment Management. Stephane’s focus is on the Energy, Materials and Industrials sectors, as well as portfolio management oversight. Stephane was previously a Vice President and Research Analyst for AllianceBernstein‘s Australian Equities fund covering the same sectors from 2005-2010. Stephane’s prior background was primarily in management consulting, having worked with McKinsey & Company from 1997 to 2002 in South Africa and Australia, leaving the firm as an Associate Principal. Prior to this, Stephane held Relationship Management roles within JP Morgan (Belgium) and Standard Corporate & Merchant Bank (South Africa). Stephane was also employed by SABMiller as Commercial Director Asia Pacific, ultimately responsible for launching and building a premium non-alcoholic beverage portfolio across the region. Stephane holds a Commercial Engineering degree (with high honors) from Universite Catholique de Louvain in Belgium. Stephane is fluent in French as well as German. Experience: 24 years.

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Commences August 2010

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.....the continuous pursuit of performance

Investment team

Bruce Smith

Principal, Portfolio Manager

Bruce is a principal of Alphinity Investment Management. His focus is on the Consumer, Telecommunications and Property sectors, as well as portfolio management oversight.

Bruce was previously a Vice President and Research Analyst for AllianceBernstein‘s Australian Equities fund covering the Consumer and Telecommunications and Property sectors, from 2004-2010. Prior to that Bruce held Equity Analyst and Portfolio Management positions at both Zurich Scudder Investments and Suncorp Investment Management, focusing predominantly on the Media and Telecommunications sectors. Bruce was also Investment Manager for NZI Insurance Australia. He started his career in the markets at J B Were as a Money Market Dealer. He received a Bachelor of Business from UTS, and holds a Graduate Diploma from the Securities Institute of Australia. Experience: 32 years.

Andrew Martin Principal, Portfolio Manager Andrew is a principal of Alphinity Investment Management. His focus is on the Financials, Transport and Infrastructure sectors, as well as portfolio management oversight. Andrew was previously a Vice President and Research Analyst for AllianceBernstein’s Australian Equities fund covering the Financial, Transport, Healthcare and Tourism & Leisure sectors from 2003-2010, as well as oversight for the management of the Australian Concentrated fund from 2008. Prior to joining Alliance, he spent several years with JB Were Stockbroking as Senior Analyst covering the gaming and insurance sectors respectively. Previously, Andrew worked for Merrill Lynch and as an Actuarial Analyst with AMP Life. He holds a Bachelor of Economics from Macquarie University, a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia. He has also been a Fellow of the Institute of Actuaries of Australia since 1998. Experience: 21 years.

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Stuart Welch

Senior Research Analyst

Stuart is a Senior Research Analyst for Alphinity, and joined the company in July 2017. Stuart’s focus is the Healthcare, Transport and Infrastructure sectors, as well as contributing to portfolio management discussions. These sectors will be transitioned from the rest of the team over the remainder of 2017. Stuart was previously an Investment Analyst in Fidelity International’s Sydney office, from 2010 to 2017. During that period he covered healthcare, banks, insurers, diversified financials, oil and gas, transport, utilities and infrastructure, dealing with local and international Portfolio Managers with varying mandates. Prior to joining Fidelity, Stuart spent several years working in Private Equity in the USA, with Macquarie Bank in Sydney in structured products, and KPMG in its assurance and advisory group. Stuart holds a Bachelor of Business degree from UTS, a Masters of Philosophy in Management Studies from Cambridge in the UK and is a CFA Charter holder.

Experience: 17 years.

Investment team

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Richard Hitchens

Senior Quantitative Analyst

Richard is a Senior Quantitative Analyst for Alphinity, and joined the company in August 2017. Richard’s is responsible for Alphinity’s domestic and global quantitative research, as well as contributing to portfolio management discussions. Richard was Director of Quantitative Research at Credit Suisse in Sydney from 2012 to 2017 where he used uniquely-collected data sets to perform quantitative analyses, primarily focused on the capture of alpha and the management of portfolio risks, to produce proprietary research for clients. Prior to joining Credit Suisse he was Director of Specialist Sales at RBS and a Partner at JB Were and Goldman Sachs. Richard holds a Bachelor of Commerce with Honours degree from University of Melbourne, majoring in Actuarial Studies, Economics and Econometrics, and is a Fellow of the Institute of Actuaries. He is also in the final stages of completing a Master of Information and Data Science from the University of California, Berkeley.


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Investment team

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Adam Solano

Equities trader

Adam manages the dealing function for the Alphinity portfolios. In this role he manages the execution of portfolio decisions made by the investment team, monitors daily cash flows and pre-trade compliance limits.

Adam previously worked at Macquarie Asset Management (Listed Global Infrastructure) as a Senior Trader. Adam has extensive experience in domestic as well as international equities trading using a range of execution platforms. During his nearly 11 years at Macquarie Adam also gained significant experience in compliance reporting, investment risk operations and portfolio administration. Adam holds a Bachelor of Business (International Management) from Newcastle University. Experience: 13 years.

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Disclaimer

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Information contained in this publication is current as at the date of this publication and is provided by Alphinity Investment Management Pty Ltd (ABN 12 140 899 709, AFSL 356895) (Alphinity) as investment manager of the Alphinity Australian Share Fund (ARSN 092 999 301), Alphinity Australian Equity Fund (ARSN 107 016 517), Alphinity Concentrated Australian Share Fund (ARSN 089 715 659), Alphinity Sustainable Share Fund (ARSN 093 245 124) and Alphinity Global Equity Fund (ARSN 609 473 127) (Funds). Fidante Partners Limited ABN 94 002 835 592, AFSL 234668 (Fidante Partners) is the responsible entity and issuer of interests in the Funds. The information is intended solely for holders of an Australian Financial Services Licence or other wholesale clients as defined in the Corporations Act 2001 (Cth). It is intended to be general information only and not financial product advice and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should, therefore, consider its appropriateness having regard to these matters and the information in the product disclosure statement (PDS) and any additional information brochure (AIB) for a Fund before deciding whether to acquire or continue to hold an interest in a Fund. The PDS and any AIB can be obtained from your financial adviser, our Investor Services team on 13 51 53, or on www.fidante.com.au. Past performance is not a reliable indicator of future performance.

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