Monthly

Performance Update

Emerging Leaders Investment Limited

December 2013 'Global growth expectations appear to be too conservative.'

Market Review

Portfolio performance for the month of December 2013 was 2.74% versus the benchmark return of 2.70%.
The Australian mid/small cap equity market, as measured by the Emerging Leaders composite benchmark1, closed the month 2.7% higher. The US Fed announced that it would begin tapering its Asset Repurchase program in January 2014 on improving US unemployment figures whilst simultaneously announcing its inten- tions to maintain its low benchmark interest rate. Domestically, the Australian Treasury revealed the extent of the deterioration in the federal budget whilst Holden announced that it would stop manufacturing cars in Australia in 2017 - a
sign of the pressures facing local trade-exposed manufacturers.

Portfolio Characteristics

Returns as at 31st December 2013

Fund Review

At a sectoral level, the Portfolio benefited from the overweight position in the
Telecommunication and Financials (ex REITs) sectors. The nil holdings in Informa-

Top 10 Stocks

Portfolio% Index* Tilt%

tion Technology, REITs and Consumer Staples also added value. Major detractors to the Portfolio included the overweight tilt in the Consumer Discretionary sector and the underweight positions in Healthcare and Energy.
At a stock level, the overweight positions in TPG Telecom, Veda Group, Sandfire Resources, Henderson Group and Seven Group Holdings were the largest posi- tive contributors to performance. The nil exposure to Recall Holdings also add- ed value. Detractors to the Portfolio included the overweight positions in REA Group and Bionomics. The nil holdings in Ramsay Health Care also detracted from relative performance.

Outlook

Global growth expectations appear to be too conservative. The world's largest economy, the US, continues to deliver strong data, to the extent that a tapering of quantitative easing measures is imminent. This tapering will be undertaken only on the basis that the economic recovery is not jeopardised and will be done in the supportive environment of continued accommodative monetary policy. The commitment by the FOMC is to maintain its benchmark interest rate at low levels "well past the time that the unemployment rate declines to below 6.5%, espe- cially if projected inflation continues to run below (2%)" and for this reason, 2014 should see further positive surprise at the pick-up in the US. In terms of other key contributing factors, China, the world's second largest economy, continues to deliver 7-7.5% annual growth, consistent with the objectives outlined by the new leadership team and within the framework of the current 5-year plan. The Chinese export sector is the area that will possibly deliver the growth surprise in the coming 12 months with an improvement in demand. The UK and Europe are likely to provide positive impetus to the global growth equation for the first time since 2011 and whilst this is somewhat discounted in current expectations, recent trends suggest that assumptions are conservative. The domestic story has been dampened as a result of 3 years of minority government and the uncertainty that has surrounded major policy initiatives. It may take time for the domestic recovery to take hold, but a recent weakening in the Australian Dollar and some positive sentiment reads suggest that 2014 could deliver positive GDP surprise.

Bank of Queensland 7.12 2.11 5.01

TPG Telecom 4.89 0.44 4.44

Resmed 4.64 2.11 2.53

Seek 4.29 2.46 1.83

Seven West Media 3.93 0.42 3.50

Bluescope Steel 3.90 1.72 2.18

James Hardie Industries 3.45 3.12 0.33

JB Hi-Fi 3.34 0.61 2.74

Aristocrat 3.25 1.27 1.98

REA Group 3.23 0.53 2.70

Portfolio Sector Tilts

Portfolio% Index* Tilt% Energy 5.12 5.55 -0.43

Materials 16.24 18.25 -2.00

Industrials 16.12 14.55 1.57

Consumer Discretionary 29.24 19.19 10.05

Consumer Staples 0.00 4.98 -4.98

Healthcare 7.15 11.34 -4.19

Financials (x LPT) 17.03 11.33 5.70

LPTs 0.00 6.73 -6.73

IT 0.00 2.56 -2.56

Telecommunication 4.89 1.65 3.24

Utilities 0.00 3.88 -3.88

Cash 4.21 0.00 4.21

Total 100.00 100.00 0.00

*70% S&P/ASX Midcap 50 Acc Index and 30% S&P/ASX Small Ord Acc Index

^ Gross of Fees

Ausbil Dexia Limited, Level 23, 207 Kent Street, Sydney NSW 2000 T: 02 9259 0200 F: 02 9259 0222 W:www.ausbil.com.au

Net returns are after fees, before taxes and assume reinvestment of all distributions. You should note that past performance is not necessarily a guide to future performance. Ausbil Dexia Limited (ACN 076 316 473, AFSL 229722) does not give any warranty as to the accuracy, reliability or completeness of the information contained on this page. Offers for investment in Ausbil Dexia funds are made via the relevant current Product Disclosure Statement, which can be obtained by contacting our office.

distributed by