F U N D S

MAN A G E M E N T S E RV I C E

QUARTERLY INVESTMENT

REPORT

30 September 2016

Produced by P U B L I C T R U S T E EGPO Box 1338 Adelaide South Australia 5001 T 08 8226 9200 | F 08 8226 9350Country freecall 1800 673 119 (landline only)www.publictrustee.sa.gov.au

Quarterly Investment Report, 30 September 2016

This Quarterly Investment Report presents the results of the Public Trustee’s Funds Management Service performance and commentary for the quarter ended 30 September 2016.

Public Trustee is a statutory entity founded in 1881. At the end of the September 2016 quarter, it had approximately $930m in funds under management. Public Trustee’s Funds Management Service has a distinguished record of high quality, proven and consistent investment performance. We are proud of our long-standing reputation for trust and reliability, and the vital role we play for our customers and their financial affairs.

This financial year has started with a stronger first quarter, with returns ranging from 0.51% for cash to 5.12% for equities. Over the long term Public Trustee’s investments continue to perform well. The use of active fund managers with a quality bias has been beneficial for each of our Standard Investment Strategies.

SIS Performance versus Benchmark to 30 September 2016

Performance* Last 3 months

Last 12 months 3 years 5 years

Cash 0.51% 2.15% 2.57% 3.23%benchmark 0.23% 1.17% 1.44% 1.94%variance 0.28% 0.98% 1.13% 1.29%

Capital Stable 1.46% 4.91% 4.85% 6.27%benchmark 1.13% 4.96% 4.47% 5.76%variance 0.33% -0.05% 0.38% 0.51%

Balanced 2.30% 7.34% 6.86% 9.13%benchmark 2.05% 7.46% 6.48% 8.72%variance 0.25% -0.12% 0.38% 0.41%

Growth 3.12% 8.56% 7.80% 10.97%benchmark 2.79% 8.48% 7.09% 10.34%variance 0.33% 0.08% 0.71% 0.63%

Equities 5.12% 9.50% 8.62% 13.32%benchmark 4.22% 9.47% 7.66% 12.44%variance 0.90% 0.03% 0.96% 0.88%

*After fees

If you would like to add to your portfolio, you may do so at any time. Please contact Elaine Pringle (08) 8226 1746 for more information.

Debra ContalaPublic TrusteeOctober 2016

Quarterly Investment Report, 30 September 2016

Market OverviewGlobalGlobal share markets all rebounded in the September quarter. The UK market performed strongly, benefitting from the falling currency and dissipating concerns over Brexit. Japan’s Nikkei and the S&P 500 were also up strongly during the quarter. Share markets have been supported by low interest rates, a rebound in commodity prices and reasonable company earnings.

AustraliaThe Reserve Bank of Australia (RBA) reduced official interest rates to a record low of 1.50%, to stimulate economic activity. The Australian Dollar appreciated against all major currencies during the September quarter, finishing at $0.76US.

Share MarketsThe Australian share market had a strong quarter, closing up 5%. Overseas shares measured by the MSCI World Index also performed well finishing the quarter up 2% on an unhedged basis.

Key DevelopmentsKey developments over the quarter were:

Global share markets rebounded strongly after a weak June quarter;The Australian Dollar appreciated; andAustralian official interest rates reduced by the Reserve Bank to 1.50%.

Since 1990, funds invested through Public Trustee Common Funds have grown from $160 million to $930 million today.

Quarterly Investment Report, 30 September 2016

Cash Investment StrategyThe Reserve Bank reduced interest rates during the quarter to a record low of 1.50%. The fund’s return of 0.51% for the quarter was above the benchmark return by 0.28%. The strategies 3 and 5 year returns remain at 2.57% and 3.23%, which are 1.13% and 1.29% respectively ahead of benchmark.

Crediting Rate:The investment return for this fund is calculated daily, based on the net earnings of the fund.

The average crediting rate for the quarter was 2.06%, and the daily rate at 30 September 2016 was 2.00%.

Fund size: $355 million.

Objective:Funds assigned to the cash investment strategy are invested in the Public Trustee's Cash Common Fund. The objective of the Cash Common Fund is the preservation of capital. The strategy is intended for investors who are seeking secure returns at prevailing short term interest rates.

Capital Stable Investment StrategyThe strategy’s return for the quarter was 1.46% outperforming the benchmark return by 0.33%. The strategy’s 3 year and 5 year returns of 4.85% and 6.27% are 0.38% and 0.51% respectively ahead of benchmark.

Fund size: $80 million.

Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) 1.46% 4.91% 4.85% 6.27%Benchmark** 1.13% 4.96% 4.47% 5.76%Difference 0.33% -0.05% 0.38% 0.51%

*Annualised ** Index return on Strategic Asset Allocation

Objective:The objective of this strategy is to achieve a higher return than cash by strategically allocating 26.5% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for investors who are seeking higher returns than cash over time and are prepared to accept a slight increase in risk in terms of downward movements in the value of their capital from time to time.

Quarterly Investment Report, 30 September 2016

Balanced Investment Strategy

The strategy’s return for the quarter was 2.30% outperforming the benchmark return by 0.25%. The strategy’s 3 year and 5 year returns of 6.86% and 9.13% are 0.38% and 0.41% respectively ahead of benchmark.

Fund size: $211 million.

Performance Quarter % 1 year % 3 year %* 5 year%**

Return (after fees) 2.30% 7.34% 6.86% 9.13%

Benchmark** 2.05% 7.46% 6.48% 8.72%

Difference 0.25% -0.12% 0.38% 0.41%*Annualised ** Index return on Strategic Asset Allocation

Objective:The objective of this strategy is to gain a higher return by strategically allocating 52.5% of the funds in growth assets and the balance in fixed interest and cash. It is suitable for medium term investors who seek higher returns and are prepared to accept some volatility in the value of the funds invested.

Growth Investment Strategy

The strategy’s return for the quarter was 3.12%. This outperformed the benchmark by 0.33%. The strategy’s 3 year and 5 year returns remain at 7.80% and 10.97%, which are 0.71% and 0.63% ahead of benchmark.

Fund size: $209 million.

Performance Quarter % 1 year % 3 year %* 5 year%**

Return (after fees) 3.12% 8.56% 7.80% 10.97%

Benchmark** 2.79% 8.48% 7.09% 10.34%

Quarterly Investment Report, 3o September 2016

Difference 0.33% 0.08% 0.71% 0.63%*Annualised ** Index return on Strategic Asset Allocation

Objective:The objective of this strategy is to attain high long term returns in excess of inflation. It has a 71.5% strategic allocation to growth assets and the balance in fixed interest and cash. It is suitable for long term investors who are prepared to accept high volatility in the value of the funds invested.

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Equities Investment StrategyThe strategy’s return for the quarter was 5.12%, which outperformed the benchmark by 0.90%. The strategy’s 3 year and 5 year returns remain at 8.62% and 13.32%, which are 0.96% and 0.88% respectively ahead of benchmark.

Fund size: $75 million.

Performance Quarter % 1 year % 3 year %* 5 year%**Return (after fees) 5.12% 9.50% 8.62% 13.32%Benchmark** 4.22% 9.47% 7.66% 12.44%Difference 0.90% 0.03% 0.96% 0.88%

*Annualised ** Index return on Strategic Asset Allocation

Objective:The equities strategy offers 100% exposure to the world’s share markets. Over the long term, it offers the prospects of high returns but with the likelihood that capital values will fluctuate broadly in line with the fortunes of the share markets. Typically, this strategy may be used as a return booster in conjunction with one of the other investment strategies.

The objective of this strategy is to gain exposure to both domestic and overseas share markets. It has a 55/45 strategic allocation to the two markets respectively.

NB: All the above investment strategies are exercised through investment in one, or a combination of, the Public Trustee Common Funds.

Quarterly Investment Report, 30 September 2016

The investment returns presented in this quarterly report relate to past performances and must not be taken to imply that this predicts future returns of the funds. The information and opinions contained in this report have been compiled or are arrived at by Public Trustee from sources believe to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness.

The information in this report is of a general nature. Public Trustee strongly recommends that you contact the Office to discuss your particular circumstances. Public Trustee does not accept any liability whatsoever for any direct or consequential loss arising from any usage of information herein contained.