Economic & Investment Update

1. Economic & Investment Update July 2014 James Holt Zurich Investments

2. General advice warning This information is general in nature and does not take into account personal objectives, financial situations or needs of any person. It is not a personal recommendation about any securities or stocks mentioned. This presentation has been prepared specifically for the exclusive use of financial advisers, researchers and trustees. It is not to be published without the prior written consent of Zurich Financial Services Australia Limited ABN 11 008 423 372. Please consider the important information slide at the back of this presentation. Any investment objectives do not represent a guarantee of performance, return or income. Past Performance is not a reliable indicator of future performance. Zurich Investment Management Limited ABN 56 063 278 400 AFSL 232511 5 Blue Street North Sydney NSW 2060 Phone 1800 500 655 (Zurich Investments) PNOE–009109-2014

3. Agenda • Macro Backdrop Key economic developments • Investment considerations & Outlook 3

4. Macro backdrop - Environment supportive of future growth • Corporations are financially strong and continue to drive efficiency to protect and grow profits • Global monetary policy remains highly accommodative; the cost of money is cheap • The global financial system is on sturdier footing • Commodity and labor inflation remain subdued

5. Global leading indicators still solid Source: Bloomberg

6. How long will the expansion last?- We can look a previous expansions • Current expansion 59 months (May) • Last 3 expansions were: • - 73 months (2001-2007) • - 120 months (1991-2001) • 92 months (1982-1990) • = average 95 months Source: KKR

7. USA - Still room for many sectors to grow Housing normally peaks at 2 to 2.5 million units 55 year average Source: Federal Reserve of St Louis

8. USA - Energy revolution • Energy self sufficiency ahead? • Huge competitive advantage • Energy prices • Feedstock • US industry to benefit • “Onshoring” Source: iStockphoto

9. Europe - Righting the ship • “Whatever it takes” • Core showing signs of life • Periphery accessing bond markets • BUT • Unemployment problems • Action recently taken to address deflationary pressures • Geopolitical tensions Source: Google images

10. The ECB acts - But scope for further expansion • Low core inflation provokes ECB response • Number of measures including cutting deposit rate to -0.1% • Targeted LTRO over four years • Additional QE very possible ECB balance sheet

11. Japan: Abenomics working..so far • Prime Minister Abe’s second coming • Three arrows • Aggressive monetary policy • Public works spending • Private sector reforms • Stock market up 57% in 2013, has been volatile – best since 1972 • Other nationalistic policies Nikkei 2013 marked best calendar year return since 1972 Jan 2009 to Mar 2014 Source: Bloomberg

12. China: Challenges & Choices • Third Plenum policies • Crackdown on credit • “SHIBOR” • Policy induced slowdown • Excess capacity still needs addressing • Labour costs increasing • Double edged sword Source: Bloomberg

13. Australia - Economic transition From this… To this? Source: iStockphoto

14. Iron ore $dmt Source: Bloomberg

15. Australia - East coast transition

16. Budget recap - “Contribute and build” • Increasing the retirement age to 70 by 2035 • Bring back indexation of fuel excise • Cuts to welfare; From the “cargo net” to the safety net • Reduce threshold for family benefits • Paid parental scheme stays, but at lower threshold • Introduction of a Medicare co-payment • “Temporary” deficit levy on high income workers • Scythe through government agencies • $40 billion road building plan, plus additional state and private sector funding

17. How will confidence hold up? - Consumer confidence

18. How will confidence hold up? - Business sentiment

19. Investment considerations Recent and current environment • Equity & fixed income markets are being driven by policy developments • Monetary policy is encouraging rent-seeking, discouraging wealth creation Manage risk • Cannot outright dismiss possible unfavorable outcomes of extreme monetary policy: • Focus on balance sheet strength • Avoidance of investments predicated on the revival of a cycle based on borrowing, asset leverage and consumer spending • Avoidance of Europe (that are not global companies) Position for long term wealth creation in a low growth world • Digital technology shift in business models driving efficiency as a source of wealth creation rather than scale • Knowledge over capital • Shale hydrocarbons in North America (also geopolitical risk diversifier) • On-shoring in the US

20. Outlook Source: Zurich Investments

21. Important information This information, dated June 2014, is given in good faith and has been derived from sources believed to be accurate as at this date and is subject to change. However, it should not be considered as a comprehensive statement on, or study of, any matter and should not be relied on as such. Neither Zurich Investments nor any related entities, or any of their employees or directors give any warranty of reliability or accuracy and to the fullest extent possible under law, accept no responsibility arising in any way whatsoever including by reason of negligence for errors or omissions. Investors should consider the relevant Zurich Investments PDS when making financial decisions about an investment in any fund. The relevant PDS is available from your financial adviser or Zurich. Zurich Investments Australia’s funds are not available for investment to US residents, US citizens or US nationals. They are not to be marketed, promoted and must not be offered in any way to US citizens, US nationals or US residents. The Funds are not regulated by the SEC under any U.S securities or US Insurance laws. The issuer of the relevant Fund’s PDS is Zurich Investment Management Limited ABN 56 063 278 400 AFSL 232511, GIIN FVHHKJ.00012.ME.036 of 5 Blue Street North Sydney NSW 2060 Australia (Zurich Investments).