Zenith Monthly Market Report (31 October 2012)

Zenith Monthly Market Report (31 October 2012) Market Indicators Previous Month Price Change in Price 12 Month Change in Price Market Indicator End of Month Price 12 Months Ago Price Interest Rates Overnight Cash Rate (%) 3.25 3.50-0.25 4.75-1.50 3 Month BBSW (%) 3.50 3.87-0.37 4.82-1.32 10 Year Bond Rate (%) 3.13 2.99 0.14 4.51-1.38 Australian Shares All Ordinaries Index 4535.36 4406.34 2.93% 4360.50 4.01% S&P/ASX 200 4517.00 4387.02 2.96% 4298.10 5.09% Property ASX 300 A-REITS Index 959.00 911.50 5.21% 778.90 23.12% Regional Shares Dow Jones Industrials (US) 13096.46 13437.13-2.54% 11955.01 9.55% S&P 500 (US) 1412.16 1440.67-1.98% 1253.30 12.68% FTSE 100 (UK) 5782.70 5742.07 0.71% 5544.22 4.30% STOXX 50 (EUR) 270.30 268.48 0.68% 243.48 11.02% TOPIX (Japan) 742.33 737.42 0.67% 764.06-2.84% Hang Seng (Hong Kong) 21641.82 20840.38 3.85% 19864.87 8.95% Commodities US$ Gold Price 1720.65 1772.10-2.90% 1714.85 0.34% US$ Oil Price W Texas Crude 86.24 92.19-6.45% 93.19-7.46% US$ CRB Spot Commodity Index 476.16 497.31-4.25% 510.23-6.68% Exchange Rates AUD / USD 1.04 1.04 0.03% 1.06-2.07% AUD / EUR 0.80 0.81-0.83% 0.76 5.32% AUD / GBP 0.64 0.64 0.23% 0.66-2.09% AUD / JPY 82.89 80.90 2.46% 82.62 0.32% TWI 76.50 76.90-0.52% 76.90-0.52% Volatility VIX Index % 18.60 15.73 2.87% 29.96-11.36% Key Points: The Reserve Bank of Australia (RBA) reduced the overnight cash rate by 25 basis points to 3.25% during the October board meeting. The 3 month Bank Bill Swap Rate fell again during October, in anticipation of a potential November rate cut, falling by thirty seven basis points (bps). The Australian 10 Year Bond yield rose, ending the month priced at a yield of 3.13%; however the yield on these bonds has fallen by 1.38% over the past 12 months. Australian Shares recorded a fifth consecutive month of positive growth, with the All Ordinaries Index rising 2.93%, while the S&P/ASX200 Index gained 2.96%. Australian Listed Property increased by 5.21% during October, as measured by the ASX 300 A-REITS Index. This index has now risen by 23.12% over the past 12 months. Most global equities markets, with the exception of the United States (S&P 500 Index -1.98%), performed well in during October with Hong Kong s Hang Seng Index, leading all the major regional market indices rising by 3.85%. Despite the negative performance during October the S&P 500 Index has still increased by 12.68% over the past 12 months. Gold (-2.90%) and Oil (-6.45%) both fell during October, with the Oil Price having now fallen by 7.46% over the past 12 months. The broader commodities index as measured by the US$ CRB Spot Commodity Index fell by 4.25% and has also lost ground (6.68%) over the previous 12 months. The Australian Dollar (AUD) enjoyed relatively flat returns, increasing against the US dollar (0.03%) and British Pound (0.23%), whilst falling against the Euro (-0.83%). These returns indicate that investors were waiting on the Reserve Bank of Australia s November announcement regarding interest rates before actively taking positions in the foreign exchange markets. [1]

Cash, Fixed Interest & Credit Zenith Benchmarks Index 1 Mth 1 Qtr 1 Yr 3 Yr 5 Yr Australian Cash UBSA Bank Bill 0.30 0.91 4.23 4.57 5.06 1.21 3.41 Australian Bonds UBSA Australia Composite All Maturities 0.02 1.63 10.22 8.68 8.29 2.00 7.50 International Bonds Barclays Global Aggregate ($USD Hedged) 0.28 0.92 6.10 5.06 5.43 2.29 5.08 Fin Cal Summary of Statistics: Australian Cash returned 0.30% in October, as measured by the UBSA Bank Bill Index, bring its returns over the past year to 4.23%. Australian Bonds gained 0.02%, as measured by the UBSA Australia Composite All Maturities Index, to post a return of 10.22% over the past 12 months. International Bonds gained 0.28% to end the past 12 months 6.10% higher, as measured by the Barclays Global Aggregate ($US Hedged). Commentary: During their October board meeting the RBA lowered the official Australian cash rate by 25 basis points to 3.25%. Contracting economic growth in Europe and the United States, and the sluggish domestic retail sales figures were crucial factors leading to their decision. Strong market expectations of a further 25 basis point reduction during the RBA s November meeting, were dashed with the RBA leaving the cash rate on hold at 3.25%. During the month the Australian unemployment rate increased from 5.3% to 5.4%, with higher unemployment in Queensland (6.4%), leading some analysts to forecast the end of the resources boom in Australia. Domestic inflation continues to remain low (approximately 2%), with the headline CPI measure being below 2%. These factors helped fuel the increased speculation of an RBA rate cut during the November board meeting. In the international bond markets, Italian borrowing costs fell to their lowest levels since May 2011 with their 5 year yield (3.80%) and 10 year yield (4.92%) both representing reductions (0.29% and 0.32% respectively) on the yields from the previous month. Both Germany and France also experienced strong demand for their long term debt. This reduction in the yields of risky European sovereign debt suggests that the Outright Monetary Transactions (OMT) initiated by Mario Draghi and the European Central Bank have increased investor confidence as to the security of European Sovereign Debt. The United States successfully sold off $66 US billion of coupon notes during the middle of October. Strong demand was experienced for both the 10 and 30 year bonds issued by the US Treasury, with the implied yields being 1.667% and 2.904% respectively. Demand for US Treasury Bonds has remained constant during 2012, with the oversubscription of this issue being at a rate of 2.49 to 1, a value which is in-line with data from previous months. This stability in the demand for long-term US sovereign debt indicates an increasing level of confidence amongst investors as to the security of United States Treasury Bonds. Ben Bernanke and US Federal Reserve also announced their intentions to continue with the bond repurchasing plan, amidst criticisms that the Federal Reserve was effectively printing money in order to keep the Government s borrowing costs low. Bernanke also stated that he expects that the headline interest rate in the United States will continue to remain near zero until at least 2015. [2]

Cash, Fixed Interest & Credit GLOBAL CORPORATE DEBT- CHANGE IN SPREADS -1.50% -1.00% -0.50% 0.00% 0.50% -0.27% -0.15% 0.03% This chart shows the change in Global corporate debt spreads over the past one month, one quarter and one year. A fall in spreads indicates a rise in corporate debt security prices and vice versa. -0.19% -0.08% 1 Qtr -1.02% -0.74% -0.61% -0.23% 1 Year -1.26% -1.00% -0.73% 1 Year 1 Qtr AAA -0.23% -0.08% 0.03% Inv Grade -0.73% -1.02% -0.27% High Yield -1.26% -0.74% -0.15% Emg Mkts -1.00% -0.61% -0.19% This chart shows the change in Government Bond yields over the past one month, one quarter and one year. A negative change in yields indicates a rise in bond prices. Country weightings for the Barclays Global Aggregate Index, as at 31 May 2010 were as follows: Australia 1%; UK 6%; US 26%; Japan 33%. GOVERNMENT BONDS - CHANGE IN YIELDS 0.60% 0.40% 0.20% 0.00% -0.20% -0.40% -0.60% -0.80% -1.00% -1.20% -1.40% -1.60% 1 Qtr 1 Year AUS 3 YR 0.13% 0.00% -1.31% AUS 10 YR 0.14% 0.02% -1.38% US 3 YR 0.07% 0.10% 0.00% US 10 YR 0.06% 0.22% -0.42% UK 3 YR 0.08% 0.19% -0.39% UK 10 YR 0.13% 0.38% -0.59% JAPAN 3 YR 0.01% 0.00% -0.10% JAPAN 10 YR 0.00% -0.02% -0.27% [3]

Australian Shares 1 3 Yr 5 Yr Fin Cal 1 Qtr 1 Yr Zenith Benchmarks Accumulation Index Mth Market Capitalisation S&P/ASX 300 Index 2.92 7.41 9.85 3.39-3.61 11.92 15.43 S&P/ASX 50 Leaders Index 2.97 7.38 12.40 4.21-2.44 12.78 17.39 S&P/ASX Midcap 50 Index 3.86 6.59 0.61-0.10-7.58 7.52 7.88 S&P/ASX Small Ordinaries Index 1.31 8.85-2.49-0.08-8.23 8.65 5.81 S&P/ASX Emerging Companies Index -1.70 5.68-7.66 4.04-1.52 GICS Sectors S&P/ASX 300 Materials 2.29 10.00-10.43-0.34-5.51 9.26-0.46 Summary of Statistics: S&P/ASX 300 Industrials 3.61 6.79 6.37 1.00-9.40 6.88 6.89 S&P/ASX 300 Consumer Discretionary 2.80 4.59 8.52-0.68-8.70 7.04 17.08 S&P/ASX 300 Consumer Staples 2.49 8.80 21.86 11.31 6.09 16.28 25.81 S&P/ASX 300 Energy 1.08 4.82-7.58-4.80-1.41 7.51 1.80 S&P/ASX 300 Healthcare 1.55 11.60 40.61 10.90 4.71 16.46 35.78 S&P/ASX 300 Information Technologies 0.27 12.78 21.62-2.50 0.27 18.36 22.87 S&P/ASX 300 Telecommunications 5.66 9.08 48.72 21.28 8.49 18.10 38.97 S&P/ASX 300 Financials ex Property 3.14 7.79 22.07 7.28 0.66 15.54 26.40 S&P/ASX 300 Utilities 1.09 0.17 21.99 12.78 0.47 5.93 16.00 S&P/ASX 300 Property 5.32 6.44 30.79 10.06-11.24 12.35 30.71 The Australian share market increased again in September with the S&P / ASX 300 rising 2.92%, taking the total increase for the Australian share market (S&P / ASX 300) to 15.43% for the calendar year. On a market capitalisation basis, mid cap companies were the strongest performers (+3.86%), with the S&P/ASX Mid Cap 50 Index outperforming the headline S&P/ASX 300 Index by 0.94% over the month. The Mid Cap 50 Index has now risen by 6.59% over the quarter. The S&P/ASX Emerging Markets Index fell by 1.70%, resulting in a 12 month loss of 7.66%. The S&P/ASX 50 Leaders Index increased by 2.97%, and has been the strongest performing market capitalisation index this calendar year, having increased by 17.39%. On a sector basis, Materials grew by 2.29%, taking its growth for the quarter to 10.00%, a strong performance given the recent price volatility in mineral resources. The S&P/ASX 300 Telecommunications Index also continued in its recent growth recording positive growth of 5.66%, taking its 12 month performance to 48.72%. The Energy sector underperformed the broader Australian share market increasing by 1.08% during the month, and has increased by just 1.80% over the calendar year. Commentary: Australian equity markets increased by 2.92% during October as measured by the S&P/ASX 300 Accumulation Index. This continued a strong period of growth for Australian equities having registered 5 consecutive months of positive growth since May. The RBA s announcement in early October of a 25 basis point reduction in the official cash rate was positively viewed by investors, and led to a strong expectation for further reductions in the cash rate during the RBA s November meeting. The Telecommunication sector was the strongest performing sector outperforming the S&P/ASX 300 Index by 2.73%, with internet service provider iinet Ltd posting a gain of 13.04% over the month. iinet Ltd s growth can largely be attributed to the strong growth in their dividend payments over the previous financial year. Dividends paid by iinet Ltd have grown by 28% over this period. M2 Telecommunications Group also recorded strong gains for the month rising 10.70%. The S&P/ASX 300 Industrials Index also grew during October, rising by 3.24%. Ceramic Fuel Cells rose by 43.64% over the period, after the developer of small generators announced corporate restructuring and cost cutting measures designed to allow for an organisational change, with the company to re focus its attention towards Europe. The changes, including the outsourcing of cell production, are expected to save the company approximately $5 million dollars over the current financial year. By contrast Hills Holdings Ltd fell by 33.62% during October after the company revealed that its first quarter earnings had fallen by 45%. Hills also announced the implementation of structural changes to the company, including the retrenchment of staff that will cost Hills Holdings up to $110 million. The poorest performing sector, the S&P/ASX 300 Information Technology Sector Index (+0.27%), underperformed the S&P/ASX 300 Index by 2.66%. Information Technology company SMS Management and Technology Ltd fell by 20.95% during October, after downgrading its first quarter sales projections. Despite concerns of weakening demand for resources from emerging Asian economies the S&P/ASX 300 Materials Index rose by 2.54% with steel maker Arrium Ltd rising 44.04% on the back of a takeover bid from a consortium of buyers including POSCO and Noble Group. The takeover offer was subsequently withdrawn on November 1 st, resulting in a single day share price reduction of 12%. Discovery Metals Ltd also had strong gains during October rising by 34.11%. [4]

Australian Shares 50% GICs SECTOR PERFORMANCE RELATIVE TO ASX 300 ACCUMULATION INDEX 40% 30% 20% 10% 0% -10% -20% -30% 1 Qtr 1 Year MATERIALS -0.63% 2.58% -20.28% INDUSTRIALS 0.69% -0.62% -3.49% CONS DISC -0.12% -2.82% -1.33% CONS STAP -0.43% 1.39% 12.01% ENERGY -1.83% -2.59% -17.43% HEALTHCARE -1.36% 4.19% 30.76% IT -2.65% 5.37% 11.77% TELCO 2.74% 1.67% 38.87% FIN EX-AREIT 0.23% 0.38% 12.21% UTILITIES -1.83% -7.24% 12.13% PROPERTY 2.40% -0.97% 20.94% LARGE, MID AND SMALL CAP PERFORMANCE RELATIVE TO ASX 300 ACCUMULATION INDEX -20% -10% 0% 10% This chart shows GICs Sector performance relative to the ASX 300 Index, over the past 1 quarter, 1 month, 1 quarter and 1 year time periods. GICs Sector weightings for the ASX 300 Index, as at 31 May 2010 were as follows: Materials 25%; Industrials 7%; Consumer Discretionary 4%; Consumer Staples 9%; IT 1%; Telecommunication Services 4%; Financials ex-areit 33%; Property 6%; Energy 7%; Utilities 1%; Healthcare 4%. TOP 50 MIDCAP 50-0.03% -0.82% 0.06% 0.94% 2.54% -9.24% -1.61% SMALL CAPS 1.44% -12.35% -4.62% This chart shows market capitalisation segmental performance relative to the ASX 300 Index. MICRO CAPS -17.52% -1.73% 1 Qtr 1 Year [5]

International Shares Zenith Benchmarks Accumulation Index 1 Mth 1 Qtr 1 Yr 3 Yr 5 Yr International Shares - MSCI World Ex-Au ($A) -0.52 6.16 12.06 3.05-5.09 4.50 10.79 Unhedged MSCI World ($A) -0.39 6.20 11.98 3.04-5.03 4.77 10.98 MSCI Small Cap World Ex Aus ($A) -0.30 7.85 11.75 6.49-2.54 4.90 11.57 MSCI AC World ($A) -0.15 5.27 13.07 2.51-5.20 3.97 10.48 International Shares - MSCI World ex-au (Local Currency) -0.59 3.59 11.12 7.72-3.15 4.85 11.73 Local Currency MSCI World (Local Currency) -0.68 4.64 9.45 7.88-2.87 5.99 12.25 MSCI World S. Cap ex-au (Loc. Crncy) -0.58 6.28 9.22 11.48-0.32 6.12 12.85 MSCI AC World (Local Currency) -0.44 3.73 10.51 7.33-3.05 5.18 11.75 Regional Shares - MSCI North America -1.59 3.27 13.29 11.93-0.32 4.55 13.00 Local Currency MSCI Asia 0.00 3.29 3.19 0.73-8.33 2.35 8.89 MSCI AC Asia ex-japan -0.60 4.34 6.64 5.65-2.37 6.54 12.92 MSCI China 5.67 9.04 7.71 0.33-8.34 10.55 14.72 MSCI Europe 1.14 4.70 10.90 4.80-4.26 7.67 11.21 MSCI Emerging Markets -0.26 3.81 6.49 5.87-1.78 5.63 10.77 MSCI India -1.88 7.87 5.24 5.61-1.06 6.99 22.17 MSCI Japan 0.81 2.02-0.86-4.39-13.37-2.53 4.25 Global Gold Shares in A$ FTSE Gold Mines -2.74 20.69-12.84-0.75-1.83 14.03-4.84 Global Resources in A$ HSBC Global Mining 1.75 14.26-9.66-1.60-7.68 9.04-0.89 Summary of Statistics: International Shares lost ground during October, with the MSCI World Ex-Australia ($A) Index and the MSCI World ($A) Index falling by 0.52% and 0.39% respectively. The MSCI World (Local Currency) Index lost 0.68% for the month; however the Index has still gained 12.25% over the calendar year. Fin The MSCI All Countries World Index ($A) (-0.15%), which includes both developed and emerging market economies, fell in October after recent strong performance while the Local Currency Index (-0.44%) also fell. The growth in Global Small Caps halted during October with the MSCI Small Cap World Ex Australia ($A) Index falling by 0.30%, with the Local Currency equivalent also falling by 0.58%. On a Regional Basis, MSCI China (+5.67%) outperformed all the major regional indices, and has now risen by 9.04% over the quarter. MSCI India was the poorest performer during October, falling by 1.88%, after recent strong gains, whilst MSCI North America also underperformed the global index falling by 1.59%. Global Gold Shares lost ground over the month, falling by 2.74%, however the Index has increased by 20.69% over the quarter, as measured in Australian Dollar terms by the FTSE Gold Mines Index. Global resources securities again posted positive returns increasing by 1.75% for the month, and have now risen by 14.26% over the quarter as measured by the HSBC Global Mining Index. Commentary: The North American markets slowed during October, falling by 1.59%. Some of these losses could be attributed to the disaster caused by Hurricane Sandy as the MSCI North America Index lost 1.72% between the 22 nd and 24 th of October, perhaps in anticipation of the looming natural disaster. The MSCI Europe Index grew by 1.14% in October, building on gains made in recent months. The positivity surrounding Mario Draghi s bond repurchasing plans had provided confidence to European investors, with greater levels of funds being directed towards equities markets, as indicated by the gains made by MSCI Europe which increased by 1.14% over the month and 4.70% over the previous three months. Chinese securities continued their strong growth, with the MSCI China Index increasing by 5.67%. This index has now grown by 9.04% over the past quarter as a result of the strong gains in both September and October. The announcement in October of the growth in Chinese exports, assisted in alleviating investor s concerns regarding the potential for a Chinese recession, as reflected by the increase in the MSCI China Index. The growth in Chinese retail sales of 14.2%, which outperformed analyst expectations, was an important factor in the growth experienced by the Chinese Index. The MSCI Emerging Markets Index (-0.26%) lost ground during October, however the Index still outperformed the MSCI World Index ($A) for the period. The Emerging Markets Index has now risen by 10.77% over the calendar year. Despite falling by 1.88% during the period, the MSCI India Index has experienced the highest calendar year growth of any regional index, rising by 22.17%. On a sector basis, the Utilities and Industrial industries were the strongest performers, however they gained just 0.58% and 0.47% as measured by the MSCI ACWI Utilities Index and the MSCI ACWI Industrial Index respectively. The MSCI ACWI IT Index fell by 5.19%. The Australian dollar remained steady against the major currencies, losing 0.83% against the Euro, but gained 0.03% and 0.23% against the USD and British Pound respectively. This holding pattern suggests foreign exchange investors were awaiting the RBA s cash rate decision in early November before acting definitively in their exchange rate trading decisions. Cal [6]

International Shares Zenith Benchmarks Index 1 Mth 1 Qtr 1 Yr 3 Yr 5 Yr Currency Spot Rates AUD / USD 0.03-1.26-2.07 4.89 2.31 1.40 1.68 Fin AUD / EUR -0.83-6.31 5.32 9.41 4.56-0.99 1.59 Cal AUD / GBP 0.23-4.11-2.09 5.57 7.63-1.29-2.07 AUD / JPY 2.46 0.91 0.32 0.75-4.92 1.46 5.69 Investors should note that investments in any international assets are subject to the risk of currency fluctuations. If a foreign investment is unhedged, the gain / loss from the relevant currency pair should be deducted from the return of the asset to calculate the approximate return of the investment. REGIONAL PERFORMANCE RELATIVE TO MSCI WORLD INDEX IN HEDGED $A TERMS -15% -10% -5% 0% 5% MSCI All Countries World Index (Local Currency) vs. MSCI ACWI Sector Performance -15% -10% -5% 0% 5% 10% NORTH AMERICA -0.91% -1.37% Cons. Disc. 0.54% 0.97% 0.91% EUROPE 3.84% 1.82% 0.06% 1.45% Cons. Staples Energy -10.52% -3.59% -1.00% -1.31% 0.03% 3.81% ASIA EX-JAPAN -0.30% -2.81% 0.07% Financials Health Care 0.00% -0.85% 2.78% 4.41% 0.84% 8.53% JAPAN -2.62% 1.49% Industrials -1.10% -3.50% 0.91% -10.31% IT -4.75% -3.79% -3.83% EMERGING MARKETS 0.41% -0.83% -2.96% 1 Qtr 1 Year Materials -13.74% Teleco. -6.78% -7.73% -3.32% 0.58% 1.90% Utilities -10.04% -3.38% 1.02% This chart shows Regional performance relative to the MSCI World Index in $A terms, over 1 month, 1 quarter and 1 year time periods. Regional weightings for the MSCI World Index, as at 31 May 2010 were as follows: North America 58%; Europe 29%; Asia ex-japan 2%; 1 Mth 1 Qtr 1 Yr 1 1 3 Yr 5 Yr Fin Cal 1 Yr Zenith Benchmarks Accumulation Index Mth Qtr Industry Sectors - MSCI ACWI Consumer Discretionary Index 0.11 4.69 11.42 11.84-1.75 4.84 14.78 Local Currency MSCI ACWI Consumer Staples Index -0.41 0.13 14.32 10.64 3.42 3.31 9.96 MSCI ACWI Energy Index -1.44 2.42-0.01 2.98-4.09 5.63-0.11 MSCI ACWI Financials Index 2.34 8.13 11.35-1.09-12.62 9.11 17.51 MSCI ACWI Health Care Index -0.44 2.88 19.04 10.08 1.52 5.62 14.05 MSCI ACWI Industrials Index 0.47 2.62 7.01 6.63-6.83 3.33 7.70 MSCI ACWI IT Index -5.19-0.07 6.68 7.53-2.50 0.22 10.31 MSCI ACWI Materials Index 0.14 5.63-3.23 2.00-6.71 4.86 2.68 MSCI ACWI Teleco. Services Index -3.76-3.05 2.78 3.68-5.97 0.09 2.87 MSCI ACWI Utilities Index 0.58 0.35 0.47-1.02-8.29-0.81 0.11 [7]

Property & Infrastructure 1 3 Yr 5 Yr Fin Cal 1 Qtr 1 Yr Zenith Benchmarks Index Mth Australian Listed Property S&P/ASX 300 Property 5.32 6.44 30.79 10.06-11.24 12.35 30.71 FTSE E/N Australia 4.10-1.67 29.62 13.56-14.21 9.73 26.84 Global Listed Property - Hedged in A$ FTSE E/N Dev 1.42 3.17 18.24 11.61-6.39 6.68 22.73 Global Listed Property - Regional Local Return FTSE E/N North America -1.79-7.29 23.71 27.36 3.87-2.37 14.44 FTSE E/N Euro Zone 7.73 7.09 18.79 6.66-2.63 12.96 26.82 FTSE E/N UK 2.94 1.79 24.79 11.67-10.43 10.29 30.03 FTSE E/N Developed Asia 1.22 3.09 32.57 13.62-2.88 12.46 36.15 FTSE E/N Japan 0.80 1.91 25.39 12.03-5.15 7.27 32.29 Australian Listed Infrastructure S&P/ASX 300 Utilities 1.09 0.17 21.99 12.78 0.47 5.93 16.00 Global Listed Infrastructure - Hedged in A$ UBS Global Infra. & Utilities 2.28 5.46 17.49 12.65 0.57 6.58 14.69 Global EM Listed Infrastructure - Hedged in A$ UBS EM Infra. & Utilities -0.70 0.37 3.98-1.76-5.44-1.17 4.31 Summary of Statistics: Australian Listed Property gained 5.32% during October, as measured by the S&P/ASX 300 Property Index, bringing its gains for the calendar year to 30.71%. Global Listed Property gained 1.42%, as measured by the FTSE E/N Developed Index in $A terms. The Asian Property Markets both registered positive growth with the FTSE E/N Developed Asia Index (+1.22%) and the FTSE E/N Japanese Index (+0.80%) both recording consecutive months of positive growth. Australian Listed Infrastructure grew by 1.09%, as measured by the S&P/ASX 300 Utilities Index, however still underperformed the global benchmark by 1.19%. The UBS Global Infrastructure & Utilities Index closed the month 2.28% higher, whilst the UBS Emerging Markets Infrastructure & Utilities Index recorded its first negative return since July, falling by 0.70% This chart shows Regional performance relative to the FTSE EPRA/NAREIT Index over 1 month, 1 quarter and 1 year time periods. Regional weightings for the FTSE Index, as at 31 May 2010 were as follows: North America 46%; Europe ex-uk 10%; UK 5%; Asia ex- Japan 20%; Japan 10%; Australia 9%. FTSE EPRA NAREIT REGIONAL LISTED PROPERTY RETURNS -1.79% 2.94% 1.22% 0.80% 4.10% 7.73% Commentary: The S&P/ASX 300 Property Accumulation Index rose 5.32% in October, outperforming the broader Australian share market. At a stock specific level the Goodman Group increased by 11.87%. The Goodman Group has now risen by 32.30% over the calendar year, in large part due to the reporting in August of an operating profit of $463 million, a 21% improvement on its 2011 results. The Goodman Group also forecast an operating profit of $524 million, equating to an earnings per share of 32.3 cents. The Mirvac Group (5.25%) continued on its strong growth from September, after achieving strong portfolio occupancy in its first quarter. No companies in the Index posted negative returns; however the Aspen Property Group had a 0% return, as volume trading on the security slowed dramatically after recent poor performance and the continued fallout as a result of the Group breaching its debt covenants. -7.29% 1 Qtr 1 Year NORTH AMERICA -1.67% 1 Year 23.71% 1.79% 3.09% 1.91% 7.09% 1 Qtr -7.29% 18.79% 23.71% 24.79% 25.39% 32.57% 29.62% -1.79% EURO ZONE 18.79% 7.09% 7.73% UK 24.79% 1.79% 2.94% ASIA 32.57% 3.09% 1.22% JAPAN 25.39% 1.91% 0.80% AUSTRALIA 29.62% -1.67% 4.10% [8]

Author: Huw Flanagan Zenith Investment Partners (03) 9642 3320 Data source: Bloomberg DISCLAIMER: This report is prepared exclusively for clients of Zenith Investment Partners (Zenith). The report contains recommendations and advice of a general nature and does not have regard to the particular circumstances or needs of any specific person who may read it. Each client should assess either personally or with the assistance of a licensed financial adviser whether the Zenith recommendation or advice is appropriate to their situation before making an investment decision. The information contained in the report is believed to be reliable, but its completeness and accuracy is not guaranteed. Opinions expressed may change without notice. Zenith accepts no liability, whether direct or indirect arising from the use of information contained in this report. No part of this report is to be construed as a solicitation to buy or sell any investment. The performance of the investment in this report is not a representation as to future performance or likely return. The material contained in this report is subject to copyright and may not be reproduced without the consent of the copyright owner. Zenith usually receives a fee for assessing the fund manager and product(s) described in this document against accepted criteria considered comprehensive and objective. [9]