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Review of IOOF MultiMix Trusts

IOOF Investment Management Limited. 29 October 2012. Review of IOOF MultiMix Trusts. Not signed off: DO NOT DISTRIBUTE. September quarter 2012. Disclaimer.

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Review of IOOF MultiMix Trusts

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  1. IOOF Investment Management Limited 29 October 2012 Review of IOOF MultiMix Trusts Not signed off: DO NOT DISTRIBUTE September quarter 2012

  2. Disclaimer Issued by IOOF Investment Management Limited (IIML), ABN 53 006 695 021, AFSL 230524. Client Services 1800 002 217. Website www.ioof.com.au . IIML is a company within the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account, your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser. You should obtain and consider a copy of the Product Disclosure Statement available from us or your financial adviser, before you acquire a financial product. IIML, its employees and directors may receive remuneration up to 0.3% of the amount invested. Further details are available in the PDS. Ratings are only one factor to be taken into account when deciding whether to invest. For more information on the meaning of these ratings and the rating scales used, please refer to the Lonsec websites at www.lonsec.com.au To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Neither IIML nor any company in the IOOF group guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance. The Lonsec Limited (“Lonsec”) ABN 56 061 751 102 rating (assigned as follows: IOF0092AU-November 2011; IOF0098AU- November 2011; IOF0094AU- November 2011; IOF0095AU-November 2011; UFM0051AU-November 2011; IOF0093AU- November 2011; IOF0097AU- November 2011; IOF0090AU-November 2011) presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the fund manager for rating the product(s) using comprehensive and objective criteria. Review of IOOF MultiMix Trusts September 2012

  3. Agenda • Financial markets review – September 2012 • Market outlook • MultiMix single-sector trusts review – September 2012 • MultiMix diversified trusts review – September 2012 • Strategic tilting • Appendices Review of IOOF MultiMix Trusts September 2012

  4. Financial markets review September 2012

  5. Investment returns for major asset classes Past performance is not indicative of future performance. Source: IRESS Review of IOOF MultiMix Trusts September 2012

  6. Short term returns have improved Past performance is not indicative of future performance. Source: SuperRatingsIOOF 'Corporate 100' performance and quartile ranking Review of IOOF MultiMix Trusts September 2012

  7. Financial markets review S&P/ASX 300 Accumulation Index closed the period 8.75% higher, continued to be volatile Driven in part by further bond purchases announced by European and US central banks Actions of policy makers in Europe, US, and China are key Investors remained cautious, preferring defensive stocks MSCI All Countries World ex-Australia Index ($A) appreciated 5.19% in unhedged AUD terms Emerging markets performed even better with a return of 6.20% Review of IOOF MultiMix Trusts September 2012

  8. Financial markets review Australian bonds returned 1.98% International bonds returned 2.86% Government bond markets benefited in part from the promise of further quantitative easing in the US and the UK, as well as the introduction of the ECB’s new bond-buying initiative Softer economic data globally also helped although gains were limited by a marked improvement in risk sentiment The recent sustained run of strong fixed interest performance suggests further gains may be more difficult to come by Australian property gained 6.68% over the September quarter, underperforming the broader market AREITs outperformed Global REITs which were up 3.48% Review of IOOF MultiMix Trusts September 2012

  9. Market outlook European crisis: positive action taken but structural issues still persist. Ongoing focus on Spain, Portugal and Italy United States: housing improving which is important but corporate earnings turning over and what about ‘fiscal cliff’? China: slowdown occurring but still high base growth. Will stimulus measures work? Australia: possible further rates cuts anticipated as strong dollar impacts domestic economy Equity Markets: remain cheap relative to bonds and fair value relative to own metrics Global fixed income: remains an expensive safe haven but what is the catalyst for an increase in yields? Currency markets remain volatile and are hostage to macroeconomic events Review of IOOF MultiMix Trusts September 2012

  10. IOOF MultiMix single-sector trusts review September 2012

  11. IOOF MultiMix Australian Shares Trust Sep 2012 IIML 3.91% Alliance Bernstein 14.92% Vinva16.69% Boutique Manager Portfolio 3.56% Integrity 13.52% Solaris17.84% Legg Mason 7.36% Perennial15.09% Merlon7.11% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  12. IOOF MultiMix International Shares Trust Sep 2012 Esemplia5.34% TT International 12.22% Credit Suisse Asset Management 6.27% Neuberger Berman 14.50% Wellington9.85% LSV Asset Management 18.09% Perennial 4.76% SSGA 28.97% Allocations may not sum to 100% due to rounding *International shares benchmark changed from MSCI World ex Australia $A Index (unhedged) from October 2011. Figures shown here are a composite of both indexes. Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  13. IOOF MultiMix Diversified Fixed Interest Trust Sep 2012 Western Asset Management 4.91% Perennial (Aust fixed interest) 15.83% Perennial (Cash) 9.44% IIML (Cash) 5.56% Loomis Sayles 12.16% IIML (Income) 12.61% Brandywine 12.95% PIMCO (Austfixed interest) 11.76% PIMCO (Intl fixed interest) 14.80% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  14. IOOF MultiMix Cash Enhanced Trust Sep 2012 Perennial35.41% IIML 64.59% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  15. MultiMix Wholesale Trusts review September 2012

  16. MultiMix WholesaleAustralian Property Trust Sep 2012 Cash 1.89% Colonial First State 22.96% Challenger75.16% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  17. MultiMix Wholesale International Property Trust Sep 2012 Cash 0.94% Cohen & Steers 20.53% Perennial54.45% BT Global 24.08% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  18. MultiMix Wholesale Alternative – Defensive Trust Sep 2012 Cash 49.49% Infrastructure 25.57% Subordinated debt 13.26% Credit opportunities11.68% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  19. MultiMix Wholesale Alternative – Growth Trust Sep 2012 Private equity 17.78% Cash 13.49% Special situations 5.41% Discretionary hedge funds 11.67% Systematic hedge funds51.65% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  20. IOOF Trusts review September 2012

  21. IOOF Wholesale Income Trust Sep 2012 Cash 0.93% Perennial Income Fund 99.07% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *Performance figure is a composite of UBSA Bank Bill Index and the UBS Credit FRN Index. Review of IOOF MultiMix Trusts September 2012

  22. IOOF Cash Management Trust • FUM: $1.4b • Weighted average duration: 55 days • Term deposits: 48% • Maximum exposure: CBA 28% • A1+ exposure: 66% • A1 exposure: 21% • A2 exposure: 13% Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML Review of IOOF MultiMix Trusts September 2012

  23. IOOF MultiMix diversified trusts reviewSeptember 2012

  24. IOOF MultiMix Balanced Growth Trust Sep 2012 Alternatives9.80% Cash 5.74% Australianshares 29.70% Fixed interest 17.16% International shares 29.71% Property 7.90% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  25. IOOF MultiMix Balanced Growth Trust Attribution for September quarter: The bulk of the underperformance was a result of the underperformance within the Australian shares portfolio Low levels of hedging contributed negatively to performance The Alternatives – growth portfolio contributed negatively to performance as it underperformed its equities benchmark Positive performance from the international equities portfolio contributed to performance Positive performance from the diversified fixed interest portfolio contributed to performance Positive performance from the international listed property portfolio contributed to performance Review of IOOF MultiMix Trusts September 2012

  26. Asset allocation update Review of IOOF MultiMix Trusts September 2012

  27. IOOF MultiMix Moderate Trust Sep 2012 Australianshares 18.30% Alternatives8.78% Fixed interest 27.07% International shares 14.85% Property 8.29% Cash 22.71% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  28. IOOF MultiMix Moderate Trust Attribution for September quarter: The bulk of the underperformance was a result of an overweight allocation to cash Poor performance from the underlying Australian equities managers detracted from performance An underweight to equities, particularly Australian equities also contributed to the underperformance Positive performance within the fixed interest and cash asset classes contributed the bulk of value Positive performance from the international equities asset class also contributed to performance Review of IOOF MultiMix Trusts September 2012

  29. Asset allocation update Review of IOOF MultiMix Trusts September 2012

  30. IOOF MultiMix Capital Stable Trust Sep 2012 Australian shares 10.53% Property 5.08% Cash 42.22% Diversified fixed interest 42.17% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  31. IOOF MultiMix Conservative Trust Sep 2012 Australian shares 10.38% Alternatives 7.31% International shares 7.24% Property 9.27% Cash 29.95% Diversified fixed interest 35.84% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  32. IOOF MultiMixGrowth Trust Sep 2012 Cash 2.87% Alternatives 8.08% Diversified fixed Interest 4.99% Property 6.96% Australian shares 47.39% International shares 29.71% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  33. IOOF MultiMixGrowth Trust Attribution for September quarter: Positive performance from the international equities portfolio contributed to performance The bulk of the underperformance was a result of underperformance within the Australian shares portfolio Low levels of hedging contributed negatively to performance The Alternatives - growth portfolio contributed negatively to performance as it underperformed its equities benchmark Review of IOOF MultiMix Trusts September 2012

  34. IOOF Multi Series Balanced Trust Sep 2012 Cash 5.35% Australianshares 34.55% Diversified fixed interest 25.23% International shares 30.02% Australian property 4.84% Allocations may not sum to 100% due to rounding Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF Multi Series Balanced Trust Product Disclosure Statement available from our website www.ioof.com.au Review of IOOF MultiMix Trusts September 2012

  35. IOOF Multi Series Balanced Trust Attribution for September quarter: Strong performance from Legg Mason/Brandywine in international fixed interest contributed to performance Strong performance from Credit Suisse Holt in international shares contributed to performance Strong performance from Colonial First State in Australian fixed interest contributed to performance Credit Suisse Holt’s Australian shares portfolio detracted from performance SocieteGenerale’semerging markets portfolio detracted from performance Review of IOOF MultiMix Trusts September 2012

  36. Strategic tilting update

  37. Currency/overseas assets Asset allocation committee decided to put more money offshore (AEQ to OEQ) for the Balanced Growth and Hi Growth Trusts (November 2010). All funds maintain a zero hedge target benchmark The AUD is trading at historically high levels We see the following four main catalysts for Australian dollar weakness: Increased risk aversion from the ongoing debt crisis in Europe RBA easing Fiscal tightening Decline in commodity prices prompted by the economic slowdown in China Valuation on overseas shares was attractive – especially in the US The natural hedge – if markets fall, A$ fall – GFC example Tilt has outperformed by 2.7% as at 30 September 2012 Lonsec Investment Review – August 2012

  38. AUD/USD Source: Datastream Lonsec Investment Review – August 2012

  39. Global fixed interest/cash tilt • August 2010, 20% allocated to cash funded from global bonds within the IOOF MultiMix Diversified Fixed Interest Trust • Rationale • US Gov’t bonds yields unsustainably low at around 1.5% • Cash and term deposits currently have a high running yield with no duration risk • Status/Outcome • Since implemented, global bonds outperformed cash • Tilt has underperformed by approximately 7.0% as at 30 September 2012 Lonsec Investment Review – August 2012 39

  40. US 10 year government bond yield Source: Bloomberg Lonsec Investment Review – August 2012

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