1. Portfolio and market review November 2015

2. Australian Equities High Conviction Portfolio Annualised performance as at 31 October 2015 2 NetFrankingGross YieldCreditsYield 4.8%1.5%6.3% 1 Year Forward Rolling Yield

3. Australian Equities Socially Responsible Portfolio Annualised performance as at 31 October 2015 3 NetFrankingGross YieldCreditsYield 4.8%1.5%6.3% 1 Year Forward Rolling Yield

4. Australian Equities Income Portfolio Annualised performance as at 31 October 2015 4 NetFrankingGross YieldCreditsYield 5.0%1.7%6.7% 1 Year Forward Rolling Yield

5. Risk profile options including High Conviction portfolio Annualised performance as at 31 October 2015 5

6. 6 Market Review

7. 7 Valuations  Valuations remain reasonable relative to interest rates.  In line with long term averages.

8. 8 Market Review Valuations  Growth stocks still appear to offer better relative value to defensive yield in a low interest rate and low growth environment.

9. 9 Market Review Major Considerations  Central banks remain accommodative.  US Federal Reserve will need to raise rates at some point.

10. 10 Market review Lifting rates is bad for markets?  It is understandable markets are nervous on changes to interest rates.  But it is not a foregone conclusion.

11. 11 Market Review Major Considerations  China has been stimulating for some time, will we begin to see the results soon?  Modest signs of economics becoming a little less bad will support China related stocks. Source: BCA

12. 12 Market Review Major Considerations  Offshore hedge funds remain nervous regarding Australian housing. Acknowledge Sydney market is cooling, however we note:  Arrears nationally are improving substantially.  Banks are lifting rates on mortgages.  Offshore settlement risk limited as properties are ‘in the money’.  Interest rates remain low and unemployment has proved resilient.

13. 13 Market Review Major Considerations  We have been concerned about the domestic economy weakening.  But Turnbull has been lifting confidence.  And the economy is transitioning – tourism, education, exports, infrastructure

14. 14 Market Review Portfolio positioning  Strong business models with structural competitive positions – SEK, IRE, MYO, LNK  Exposure to offshore markets so that profits will benefit from the lower A$ – BXB, TWE  Exposure to growing segments of the economy – LLC, MQG, EHE  Companies with improving quality through self-help and restructuring – QBE, AZJ, MQA  Reduced our underweight on banks reflecting the improving value on offer in these high quality businesses.  For the High Conviction portfolio we have a small overweight in the major miners reflecting the level of negativity currently reflected in the share prices.

15. Seek - Underperformer  Thesis: Sustainable Growth. 15-18% revenue growth driven by: –#1 position in China, Asia, Australia, Brazil and Mexico. Leveraging strong market position to grow out new businesses. –Access to 375m+ job seekers and assisting 400k students pa –Strong access to data and platform to drive growth –Reinvesting heavily which is dragging on profit growth but should drive long term growth  Valuations: Trades at a high PE of 21x yet has one of the strongest revenue growth profiles in the market. 15

16. Treasury Wines  Thesis: Improving Quality. Strong brands and improved competitive position thanks to new management and the A$.  Valuations: Recently confirmed they are tracking 8% ahead of expectations and bought a significant asset at an attractive price from a distressed seller (high teens accretive). Very strong earnings momentum and the market remains behind the curve.  Opportunity: Market is underestimating currency benefit (no volume improvement factored in) and underestimating the improvements being undertaken. 16

17. Fairfax – New Purchase  Thesis: Improving quality. –Perception is as an old media stock yet 75% of the value is Domain. –Domain has 95% of the listings of REA, 70% of the viewers yet 16% of the value. –Strong momentum with revenues up +45% in the 15. –Print revenue is only 35% of the old metro business. –Balance sheet is pristine.  Valuations: Sum of parts valuation. We assume print revenues decline by 10% pa and place it on a low multiple. Assume Domain trades at a small discount to REA despite superior growth rates. Significant upside. 17

18. Disclaimer 18 IMPORTANT NOTE: This document has been prepared by DNR Capital Pty Ltd, AFS Representative– 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. The general information in this document has been prepared without reference to any recipients objectives, financial situation or needs. Before making any financial investment decisions we recommend recipients obtain legal and taxation advice appropriate to their particular needs. Investment in a DNR Capital individually managed account can only be made on completion of all the required documentation.