SelectorFundsManagementLtd Newsletter#31

In this quarterly edition we review performance and attribution. We discuss our stock selection process. We focus on obstructive sleep apnea specialist ResMed Inc. And finally we revisit government intervention. Photo.Whalemigrationcoincideswithreportingseason inSydney.

SelectorFundsManagementLimited ACN102756347AFSL225316 Level3,66HunterStreet SydneyNSW2000Australia Tel61280903610 www.selectorfund.com.au

September2012

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

DearInv vestor, ve witnessed d something rather ironic. Despite ongoing finan ncial During the past quarter we hav ck in Europe, sluggish grow wth in the US S and slowdo own concerns s in China, wo orld markets are deadloc hittingnew n fourmon nthhighs.TheUSDowJon nesIndustrialindex,theLo ondonFTSE,the t GermanDAX D and eve en our local All Ordinarie es Index have e marched up pwards despite the backd drop of inves stor uncerta ainty. Its har rd to draw too t many co onclusions ot ther than to make the observation o t that focusing gonwhatdrivesmarketsisinitselfratherfutile. d furthe er in our repo ort, investors s generally ap pproach inves sting from tw wo angles. Eit ther As we discuss they for rm a view on n the world and then make decisions based b on thos se views or alternatively they conside er each invest tment on a case c by case basis. The fi irst approach h is often referred to as top t downin nvestingandthe t second,not n surprising gly,iscalledbottom b upinv vesting.Forour o part,Selec ctor is a bot ttomup fund ds manageme ent business. Our skill set lies in appro oaching any given g investm ment ideaonanindividualbasissothat taviewcanbe b formedon nthemeritso ofthatbusiness. It is an approach tha at makes intu uitive sense to o us and impo ortantly remo oves the mar rkets noise fr rom the process. Where this approach h is particularly helpful is during times of market ex xtremes, periods notdiss similartotheissuescurren ntlyfacinginv vestorstoday y.Withsomu uchanxietyou utinthemarket, its little e wonder tha at investors st till view cash as an asset class c currently y representin ng the best va alue formon ney.Theonlyproblemwiththisapproa achisthatitisreactionary yandaswenotedinourJu une quarterly newsletter r, globally, go overnment bond yields ar re pushing near zero. It certainly c doesnt strikeusasbeingalo ogical,wellth houghtoutin nvestmentapproach. In this quarterly q new wsletter, we explain why bottomup investing wor rks for us and d follow that t up withacompany c revi iewonobstru uctive sleep apnea a group ResMed R Inc. Having follow wedthefortu unes of this business b sinc ce its Australian listing in 1999, the gro oup has carve ed out an im mpressive mar rket position n, providing tangible t proo of of the fina ancial returns s that can be e generated when w wonde erful busines sses marry up p with sensib ble managem ment teams. As A we will ex xplain furthe er in the review, there is s a lot of work required to t make this all happen but b fortunate ely for the inv vestor, all thats reallyre equiredispat tience,aqualitysorelylack kingintoday smarket. Finally, overthe past tquarterthe Fundoutper rformedthe general g market, delivering gagross posit tive return of o 11.62% as compared to o the 8.20% rise in the All Ordinaries Accumulation Index. We are pleased dwiththeseresultsduringaparticularly ydifficultinve estmentclimate. Toallou urinvestorswe w trustthatyoufindthereportinform mative. Regards s TonySc cenna CoreyVincent V
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

TableofContents estors Page1:Lettertoinve eSeptemberQuarter2012 2 Page4:Performance etablesinceinception i Page4:Performance p10 Page4:PortfolioTop urviewofthe einvestingwo orld Page5:Selectorou eviewResMedInc. Page8:CompanyRe 7:TabcorpHo oldingstakin ngontheVict torianGovern nment Page17 Page18 8:CompanyvisitdiarySept temberQuarter2012 Quote nLecture199 91WhyGov vernmentisth heproblem(M MiltonFriedm man) Wriston Thepo ointisthatthe eactionsthat tserveselfinterestarever rydifferentin ntheprivatesphere s thanthey t areinth hepublicsphe ere.Thebotto omlineisdiff ferent.Ifagro oupofpeople estartanent terpriseinthe e privatesphere,itma aybeasucces ssoritmaybeafailure.Most M newente erprisesarefa ailures.Ifthe o succes ss,itwouldprobablyalrea adybeinexist tence.Iftheenterprise e isa enterprisewereanobvious failure,thatmeansit tlosesmoney y.Thepeoplewhoownithave h averycl learbottomli ine.Tokeepit going,they t wouldha avetodiginto otheirownpockets.Theyarereluctant ttodothat,sotheyhavea strongincentive i eithertomaketh heenterpriseworkortosh hutitdown. Suppose e the same gr roup of people have the sa ame idea, sta artthe same enterprise in the governm ment sector,and a theinitia alresultsarethe t same.Iti isafailure;itdoesnotwork.Theyhave eaverydiffer rent bottom line. Nobody y likes to adm mit that he ha as made a mi istake, and th hey do not ha ave to. They can argue th hat the initial failure wasonly because e the enterpris ise was not on n a large eno ough scale. More M importa ant,theyhave eamuchdiff ferentanddee eperpocketto t drawon.With W thebestintentionsinthe world, they t can try to t persuade the t people wh ho hold the purse strings t to finance the e enterprise on o a larger scale, s to dig deeper d into th he pockets of f the taxpaye ers in order to o keep it goin ng. That expla ains what is a very gener ral rule: if a private p enterp prise is a failu ure, it is close ed downun nless it can ge et a governm ment subsidy y to keep it going; if a g government enterprise is s a failure, it t is expanded. I challeng geyoutofind dexceptions.
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Perform manceSeptem mber2012 For the quarter end ding Septemb ber 2012, the e Fund delive ered a gross positive return of 11.62% % as red to the 8.20% rise in the t All Ordin naries Accum mulation Index x. Performan nce statistics are compar detailed donpage20. Perform mancetablesince s inceptio on %Retu urns Fund% AllOrdsInd dex Al llOrdsAcc Gr rossReturn % Index% 3months +11.62 +6.55 +8.20 1Year +24.10 +8.26 +13.36 3years +3.99 2.40 +1.84 Sinceinceptioncom mpoundpa +7.34 +1.93 +6.37 Top10 0September2012* Top10June J 2012* ARBCo orporation Campbe ellBrothers Blackm mores FlightCe entre Carsale es IOOFHo oldings Flexigr roup IRESS FlightCentre C NewsCo orporationInc c IOOFHoldings H Pharmax xis IRESS ResMedInc ResMe edInc. SEEK SEEK SIRTeXMedical M SIRTeX XMedical WorleyP Parsons Top10 0=51.61% Top10=61.96% *Listedinalphabetic calorder ndex unaware e stock select tion investme ent strategy with w typically 25 Selector runs a high conviction in 40 stocks chosen for r the Fund. As A shown abo ove, the Fund ds top 10 po ositions usual lly represent the great majority m of its s equity expo osure. Current t and past po ortfolio comp position has historically h been very unlike that of your y average runofthem mill index hugger fund manager. m Our stock select tion p hasnotincludedeith herretailban nksorthelarg geresourcecompanies,RIOandBHP.Our O tothispoint goal rem mains to focu us on truly differentiated broad cap sto ock selection rather than the closet index hugging gportfoliosof fferedbymos stlargefundmanagers.
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Perform manceattribu utionforthequarter Top5stockcontrib butors % Top5st tockdetracto ors % SIRTeX XMedical +3.19 Whiteha avenCoal 0.96 FlightCentre C +1.33 NRWHo oldings 0.77 ResMe ed +1.31 Fleetwo oodCorporation 0.22 Flexigr roup +1.27 Monade elphous 0.14 Carsale es +1.09 Navitas 0.12 nd benefited from a strong reporting s season among g its business s investments s. While mark kets The Fun value co ompanies daily, according g to investor r sentiment, the t true test t of a businesss worth is far moreta angibleandmeasureable. m Forthatreas son,reporting gseasonisaw wakeupcallfor f investorsand manage ement alike. While W we acc cept that the whole proce ess of what m management teams t choose e to reportissubjecttoabuse, a alittlebitofduedil ligencequickl lyexposesthewinnersandthelosers. w lookforandwhatmatte ersmosttouswhenanaly ysinganybusi iness,areacleansetofpr rofit Whatwe number rs, that are no ot subjectto oneoff item ms that distort tthe true ear rnings of the business, a solid cash flo ow statement t that leaves more questio ons answered d than unansw wered, an im mproving balance sheet ca arrying little net debt and a focus on shareholder re eturns by way of rising earnings per sh hare anddivi idendflows. Wemig ghtbeaskingforagreatde ealbutthatis swhatweare eseekingand dovertimeth hegreatmajo ority of our investments i have done ju ust that as re eflected in th he latest set of profit rele eases. By way y of example e, of the Fun nds 23 busine ess investments, 16 repor rted higher earnings, repr resenting 76% % of theFun ndstotalvalu ueofdollars invested.In te ermsofdividends, 78%of fcompanies chose c topay out dividend ds that were e either highe er or equal to the previous years pay yment. These e are impress sive statistic cs that speak k volumes to their indiv vidual busine ess achievem ments despite e the economic backdro op of tougher conditions both locally and abroad. It should therefore come e as no surprise thatthe eFundhaspe erformedpart ticularlywellduringthepa astquarter. A partic cular highligh ht during the period includ ded SIRTeX Medical M that c continued to post impress sive growth in dose unit sales for the e treatment of liver cancer. Apart from enjoying increasing public awareness, the business has delivered top an nd bottom lin ne growth ov ver a number r of years wh hilst maintaining a conservative balan nce sheet, car rrying net cas sh of $49 mil llion and paying fully franked dividend ds of ten cen nts for the 20 012 year, up from seven cents. Invest tors who wish to revisit this busines ss can access our compan ny review of SIRTeX, unde ertaken in ou ur September r 2009 quarte erly newslet tterreviewviaourwebsite e. h been the achieveme ents of both Flight Centre, which deliv vered record net Equally impressive have n and lifted full f year divid dends from 8 84 cents to $1.12 $ as well as profits up 16.3% to $200 million medical ldevicecomp panyResMed dIncwhichisourfeaturebusiness b story yinthisquart terly.SFM
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Selector rourviewof o theinvesti ingworld a your tr rade for long g enough in any field of endeavour, your hope would w be tha at it If you apply delivers s some worth hwhile outcomes. For som me it may come in the fo orm of a com mpetitive edge e in busines ss,perhapsbr randrecognit tionorsimply yagreaterap ppreciationof fhistory.Forourpart,hav ving spent our o entire wo orking lives applying a our trade within n the investm ment world, a knowledge e of historycountsforso omething.Ourgreatestass setishowwe eapplywhatwe w know,wit thwhatwehave witness sedandthere elevanceextr racted.Somecallthisexpe erience,wesimplycallitapplying a thegrey g matteroflessonslea arnt. nlyaguide.Pastcyclesare eneverthesa amealthough htheyaremo ostsimilardur ring Intruth,historyison o market tur rmoil or inve estor exubera ance. This is where the g grey matter counts most, at times of pointsof o extremes. A 2012, , Bill Gross th he cofounder r and cochief investment officer of the e worlds larg gest During August bond fu und PIMCO O declared that the wo orld was wit tnessing the death of the e equities cu ult. Foundedin1971inNewport N BeachCalifornia, ,PIMCOsgro owingpresenc ceontheglobalbondmar rket stage has seen it be ecome the wo orlds largest and most influential bon nd fund mana ager, with ass sets undermanagement m exceedingUS S$1.8trillion.In2007,BillGrosswasna amedbyMorn ningstarasFixed Income Manager of f the year for r the third time and follo owed this up p in 2010, wh hen Mornings star s ofFund dManageroftheDecadeaward a forthe eperiod2000 02009. awardedGrossthestatus

PIMCOs:Bill B Gross

In his most m recent investment outlook review w, Bill Gross started his piece with the e following T The cult of equity e is dyin ng. Like a once bright gree en aspen turning to subtle shades of ye ellow then red d in the Colorado fall, in nvestors imp pressions of stocks s for the e long run or any run ha ave mellowed d as well. Gross backs up his views, v looking g back over one hundred years y of histo ory, highlighti ing why the past p will not t be repeated d in the future. Rather th han debate th he merits of Grosss analysis, history has taughtus u nottojum mptoconclusi ionswhenma arketsaretra adingatextre emes.Tryingto t concludet that equities s are in a dea ath spiral is a bridge too fa ar and not be ecause the lo ogic and evide ence behind this
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

view is lacking but because b huma ans are conditioned to ext trapolate the e most recent t events into the future,beitgoodorbad. In fact, history or more m precisely y humans, ha ave a habit of o repeating themselves. In August 19 979, Busines ssWeekmagazineranthecover c storyti itled,DeathofEquities.Thelonglistofreasonsgiven as to why investors should brace e themselves included this s gem, For b better or for worse, w then, the U.S. economy probably has to regard the death of equities as a near n permanent condition reversib ble some day, but not soo on. Such was s its timing, th hat within a s short period after publishing, equities sbeganoneof o itsstronges strunsinhist tory. In our experience e th he media usually gets it wrong, w and the e pieces that t get the mos st attention te end to be highly emotive e, where the e facts usually y get in the way w of a goo od story. It is s also why many investor rs actinsuch h arearguard d fashion,lookingto exit when w things are a depressed dbutplunging in whenpricesaresoar ring. Looking gupratherth handown At Selec ctor our investment appro oach is to loo ok up rather than down. T The industry has termed this bottomup investing g. The key premise is that t we look to identify y businesses that have the characteristics that we deem at ttractive, so a as to warran nt both our initial attention and perh haps ultimate ely making an a investmen nt as shareholders. We are a in essenc ce stock pick kers, where the directio on of markets s and macroe economic con nditions are of o secondary importance. Its not that we ignore these t issues but consider r the individu ual merits of a business and managem ment team to o be quite fr rankly, more important. Ultimately U the e decision to invest or no ot is made on n a case by case c basis,ir rrespectiveof fwhethermarketsareroaringorfalling g. Selectorsinvestmen ntapproachis sthusallabo outtheindivid dualbusiness s.Atthemom ment,alleyesare na and the flo ow on impact ts to our reso ources boom m. Unfortunately the media is so obses ssed on Chin with the potential fa allout, that many m compan nies just dont get a look in. And yet with over 2,0 000 listed Australian A com mpanies, its easy e to see w why many rem main off the investors rad dar. Add to th hat, the des sire of the many industry fund manag gers, who cho oose solely to o track and mirror m the st tock index and you can understand u why w BHP Billit ton, Rio Tinto and the four major ban nks get so much attentio on. And qu uite frankly this t is a situ uation that we w relish. Gr reat business ses reside in n all pockets s of commercial life. Som me are consi idered for inclusion in the broader st tock market index, the gr reat aluetoattrac ctinvestorint terestwhilstothers o mayhave manyarenot.Somearetoosmallinmarketva eir way but ar re on the cus sp of recovery y. We dont play p favourite es. Our attitude is to cast the lost the net far and wide with w the aim of finding so ome great bu usinesses. In this regard our attention n is restricte ed to Australian listed bus sinesses even n though a gre eat many now w have signif ficant operations extendingoffshore,earning e consi iderableprofits. ection proces ss that allows s us to determ mine which businesses are e worthy of in nclusion extends The sele well be eyond an adh herence to a specific inve estment style e. And yet m most analysts s feel they must m
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

choose between tw wo investment approaches s customarily y thought to be in oppos sition, value and a . If you are a value manag ger, the impre ession formed is of an inv vestor who is both disciplined growth. andbuy yingcheaplywhereas w grow wthmanagers sareviewedaslackingfin nancialprudence,payingover o theodd dsforabusine esssfutureearnings e prosp pects. Nothing g could be further from th he truth. In o our opinion, the t two appr roaches are joined at the hip and sho ould be viewed as insepa arable. Growt th is always a component t in the calcu ulation of value. Identify ying investme ents with valu uations offering us a good d margin of s safety is just as important t as thoseth hatcangrowshareholdervaluewellint tothefuture. . AtSelec ctorourvalu uebasedgrow wthapproac chisjustthat t,onethataim mstomarryboth b sidesofthe investm ment spectrum m. This is no ot a play on n words, but t reflective o of our investment style t that encapsu ulates how we w view a bus siness. Underpinning this approach ar re the four business qualities weseek kinanyinvestmentopportunityconsidered; 1. 2. 3. 4. mentteam Stronglyalignedmanagem thleadershipqualities Businesswit Balanceshee et,conservativelyposition ned Shareholderreturnstreat tedwithpara amountimportance

For those who are new n to Selec ctor and have e not read ou ur previous quarterly q new wsletters, it may m esometolearnthatofallthequalitiesconsidered,management m tisgiventhehighest h priori ity. surprise The rea ason why is straight forw ward. The mo ost important t manageme ent act is the e allocation of o a compan nyscapital.It tisthemostimportantbe ecausecapitalovertimede eterminesshareholdervalue. Deciding what to do o with the co ompanys earnings rein nvest in the b business or return r money y to shareho olders is an exercise bot th in logic and rationality. If a comp pany fails this hurdle it will invariab bly fail the sh hareholder. While W most fi inancial schools emphasis s the importa ance of finan ncial number rsasthekeytool t forfinan ncialsuccess,thegreymatterthatwecarry,reinforc cesourviewt that highqualitymanagerssitabovemost m financialmetrics. w maynotagreewithourthinkingsh houldcloselyconsidersom meofthefollo owingexamp ples. Thosewho Why ha as building group g Adelai ide Brighton Cement delivered excellent results over the ye ears whereas fellow com mpetitor Boral struggles? W Why has plum mbing group Reece traver rsed the difficult housing g industry environment while w Fletcher r Building has tripped up? Why has obstructive o sleep apnea specialist s Res sMed Inc. (se ee article review) manoeu uvred itself in nto such a po owerful industry position n while Fishe er & Paykel Healthcare has h lost ground? Equally, why has engineering gro oup Monade elphous Grou up maintaine ed financial d discipline while larger com mpetitor Leighton has sho own suchlax xstandards? Good management m does not come about t by acciden nt. There are those tha at embrace the respons sibility whilst accepting the accountabi ility that com mes with the t title and ther re are those t that do not. In our exper rience if inves stors get this key aspect right, r the chance that a more m durable and a semergesovertimeincreasedramatically. transparentbusiness
SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

There arecountlessbusinessexamplesthatSe electorhasdiscussedover rtheyearswhichperfectly yfit ome discusse ed in previou us quarterlies include W WorleyParsons s (March 200 09), this description. So ptember 2009 9), IRESS (Ma arch 2010), Blackmores (Ju une 2010) an nd most recently SIRTeX Medical (Sep ne 2012). The e majority of f these busine esses do not get media co overage and too Technology One (Jun r unkn nown and undiscovered. This is how we like it because ultimately u go ood many remain perform mancegetsdis scoveredand drewarded.S SFM ResMed dInc.(RMD) Table1:ResMedInc c.timeline19 9892012
Year 1980 1987 1989 1993 1994 1995 1998 1999 1999 1999 1999 1999 2000 2001 Event E Professor P Colin Sullivan S & collea agues at Univer rsity of Sydney provide first suc ccessful non inv vasive treatment of obstructive o sleep papnea(OSA),commonly c referr redtoasContinuousPositiveAirwayPressure(C CPAP). Baxter B Centreac cquiresCPAPtec chnologyrightsfrom f University. Dr D Peter Farrell via Rescare Gr roup acquires te echnology rights s relating to CP PAP treatment and a a CPAP dev vice business b fromBa axter. Wake upAmericareporttoCo ongressin1993,estimatedthatapproximately4 40millionindivid dualsintheUnit ted States S sufferfrom mchronicdisord dersofsleep.No omuraJafcoinve estsinResCare. ResCare R incorporatedasaDelaw wareCorporation. NetrevenuesUS$13.8million n,pretaxearningsUS$1.8millio on. JuneCompanynamechangedto t ResMed Inc. listsonNasdaq,offering2millio onshares,raising gUS$24million. Announces A 2:1st tocksplit. Company C transfe ersprincipallistingtoNewYorkStockExchange e(RMD),establis shessecondarylistingonASX. th RMD R completes10 anniversary y,opensnew120,000squarefootmanufacturin ngandR&DfacilityinSydney. Net N revenuesclim mbtoUS$88.6million, m earnings sbeforetaxUS$24.5million. November N beg ginstradingonth heNewYorkSto ockExchange(NY YSE),secondarylistingonASX,known k asCDIsand a tradingataratio oof10CDIsforeachNYSEshare e. RMD R releasestheAutoSetT;apre p emptivedevi icethatautomat ticallyadjustsairpressuretosuitpatientsneed ds. Revenues R exceed dUS$100million nforfirsttime,a announces2:1stocksplit,fulltim mestaff625 RMD R acquiresMAPMedizinTechnologieGmbHforUS$70millio on,leadingGerm mandesigner,manufacturerand d distributor d ofme edicaldevicesfo ortreatmentofsleep s breathingdisorders d (SBD).Germanmarketsecondlargest tfor OSA O products. JuneRMDissue esfiveyearUS$180millionconv vertiblesubordinatednotestof fundacquisition. RMD R operatesdi irectlyin14countriesandaddit tional50countri iesthroughane etworkofdistributors. Revenue R topsUS S$200million,AutoSetSpiritlaunchedworldwid de,companybuy ysback4million ncompanyshare es. th Records R 37 con nsecutivequarterofgrowth,rev venuepassesUS$ $300million,ne etprofitsexceed dUS$50millionfor f first f time. Mirage M SwiftNas salPillowsreleas sed,becomingc companysmostsuccessfulprod ductlaunch.New wcompanyflow generator g platformS8unveiled. USA U healthappro ovalreceivedforVPAPAdaptSV Vdevicetotreat tcentralsleepapnea.RevenuespassUS$600 million, m staffnum mbersexceed2,500andoperati ionsextendsove er67countries. Global G sleepther rapymarketestimatedatUS$2b billion,currently y10%penetrated. April A RMDannouncestotalwo orldwidevolunta aryrecallof300,000S8flowgen neratorsatacostofUS$60millio on. Aug A InternalexecutiveKieranGallahue G appoint tednewCEO, su ucceedingfound derPeterFarrell. . Net N profitsexcee edUS$100millio onforfirsttime. Company C entersoralappliancemarket m withacquisitionofFrenc chdentalsleepcompany c Labora atoriesNarval. Launched L produc ctsforhomesle eeptestingmark ket,releasednew wS9AutoSetflowgenerators. Revenues R passUS$1.0 U billion,re esearchanddeve elopmentspend dexceedsUS$75 5million. February F CEOKieran K GallahueresignsasCEO,PeterFarrellres sumesroleasinterimCEO. Revenues R hitUS$ $1.3billion,netprofitspass$US S250million,com mpanystarts paymentofquarte erlydividends.

2001 2002 2002 2004 2005 2006 2007 2007 2007 2008 2009 2010 2010 2011 2012

SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

History Inthehealthcare h are ena,Australia ahasgivenbirthtoaprett tyimpressivelistofcurren ntgloballeaders. They in nclude blood plasma grou up CSL, bionic hearing im mplant make er Cochlear, protective p glove manufa acturer Ansell l and the focu us of this rev view, sleep ap pnea specialis st ResMed In nc. In many w ways Cochlea ar and ResMe ed Inc. have travelled sim milar time pat ths. The tech hnologies that underpin both b busines sses had their r origins inspired by local inventors Pro ofessor Graeme Clark and d Professor Colin Sullivan n respectively y. Since the 1980s both h have forged a leading position in their respect tive healthcarefield. P Su ullivan and colleagues c fro om Sydney University p provided the first successful While Professor treatme ent for obstru uctive sleep apnea a (OSA) in 1980, it to ook Dr Peter rs Farrells ac cquisition of the technologyin1989to t firmlyestab blishthebusi inesscase. sOSA? Whatis People with OSA ex xperience recurrent epis sodes where respiratory airflow cease es during sle eep. These episodes e are due to a te emporary collapse of the e upper airw way. This hap ppens when the muscles s, which norm mally hold the e upper airway open duri ing sleep 1, relax and cause the airway y to narrow 2. If the thro oat is particularly narrow o orthemuscle es relax too m much, the airw way can beco ome telyblocked3.Thisiscalle edanobstruc ctiveapnea.* complet Diagram m1:OSA

*Sou urce:ResMedInc.annualreport ts

After a period of tim me, which ma ay be anything from ten se econds to tw wo minutes, th he brain realises the leve el of oxygen n in the bloo od is low and d alerts the body to wakeup. Typically, the per rson subcons sciously arou uses from sleep, causing t the throat muscles m to contract and open o the airw way. Althoug ghthesuffere erisoftenunawareofit,t thiscyclecanoccursevera alhundredtim mesduringsix xto eight ho ours of sleep. The main sy ymptoms of O OSA are heav vy snoring, ap pneas, and ex xcessive daytime sleepine essdueto dis srupted sleep p.Othermore eseriousconsequences in ncludedepres ssion, high blo ood pressure, serious he eart condition ns, sexual pro oblems, memory lapses, in ntellectual de eterioration, and gheadaches. morning

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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

HowDo oesCPAPWork? Like ma any great tec chnologies, th he actual scie ence behind the Continuo ous Positive Airway Press sure (CPAP) treatment is s rather simple. Patients are connected to a unit that delive ers air press sure through h a small nasa al mask. Some describe th he treatment method simi ilar to how a vacuum clea aner works,only o inrevers se.Theairpre essurethatis sappliedviathe t nasalpassages,actslik keanairsplint to keep p the upper airway a open to prevent o obstructive ap pneas. While the treatme ent path is no ot a cure, th he growing patient p and medical m accep ptance of this s nightly routine has delivered a thriv ving busines sswithannuit tytyperevenues. WakeupAmerica"reporttoCongressin199 93 Prior to o CPAP, patie ents diagnose ed with OSA w were primarily treated wi ith a tracheo otomy, a surg gical procedu uretocuta hole h in thepa atients windp pipeto create eachannelfo or airflow.Ho oweveraturn ning point fo or the OSA in ndustry took k effect with the release of the Wak ke up Americ ca report to US Congres ss in 1993, in n which the National Com mmission on Sleep Disord ders Research h estimated t that approximately40mi illionindividu ualssufferchr ronicdisordersofsleepap pnea. Birthof fResMedInc. . 4, the commercialisation of o sleep apnea a began in ea arnest with Fa arrell register ring the ResC Care In 1994 busines ss in the US. A name change to ResMed Inc. in 1995 5 coincided with w its listing g on Nasdaq and the issu uing of two million shares, raising U US$24 million n in new cap pital. In 1999 9, the company transfer rreditsprima arylistingtothe t NewYork kStockExchange(NYSE), along a withasecondary s list ting ontheAustralian A Sto ockExchange(ASX).

10

ResM MedInc.listsonNYSE30Septem mber1999

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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Table 1 provides a timeline of highlights covering the groups seve enteen years s of commer rcial progres ss.Whatis mo ostapparentasyouscroll throughthe years,isthe marketsrap piduptakeof the groups products an nd services. Table T 2 outlines the fina ancial perform mance, which captures as a a g point, the ye ear 2000 to the current pe eriod. Denote ed in US dolla ars, revenues s have risen over o starting tenfold from US$115 5 million to the t current U US$1.3 billion while operat ting earnings s have kept pace p nt of US$33 million to US$303 million. At the sa ame time, th he company has from a starting poin dheavilyinmaintaining m productleader rshipviaitscommitmentto t researchanddevelopm ment invested andhighlightedfurth herintherep port. Table2:ResMedInc c.FinancialSn napshot
US$M
Revenue e Operatin ngExpenses Research h&Development EBIT NPAT EBITMar rgins(%) Sharehol ldersEquity NetDebt t/(netcash) MarketCapitalisation C Enterpris seValue Buyout(%)** ROCE(%)*** GOCF/EBITDA E (%) UnderlyingEPS() PER Dividend dpershare() Dividend dYield% SharePrice30June($US) Issuedsh hares(m)*

2000
115.6 (37.0) (8.5) 33.1 22.2 28.6 93.9 (18.2) 1,399 1,381 2.4 43.5 61.0 18.4 63.0 n/a n/a 11.60 120.6

2005
425.5 (298.1) (30.0) 97.4 64.8 22.9

20 006
607.0 (437.7) (37 7.2) 132.1 88 8.2 22 2.8

2007
716.3 (515.0) (50.1) 151.2 126.0 22.1

2008
835.4 (624.0) (60.5) 150.9 113.4 19.0

2009 9
920.7 7 (666.1 1) (63.1) 191.5 5 146.4 4 21.6

2010
1,092.4 (770.6) (75.2) 246.6 190.1 23.3

2011 2
1,243.1 (8 873.4) (9 92.0) 277.7 2 227.0 2 23.2 1,730.7 (6 635.1) 4,720 4 4,085 4 6.8 25.3 95.0 9 148.9 1 20.7 n/a n/a 30.95 3 152.5 1

2012
1,368.5 (955.9) (109.7) 302.9 254.9 23.2

11

474.1 32.1 2,473 2,505

738.1 (98 8.4) 3,6 623 3,5 525

931.2 (141.8) 3,229 3,087

1,081.8 (183.4) 2,716 2,533

1,115. .2 (254.0 0) 3,064 4 2,810 0

1,287.5 (367.1) 4,586 4,219

1,607.6 (558.6) 4,558 3,999

3.9 19.2 57.0

3.7 20 0.6 55 5.0

4.9 19.1 44.0

6.0 16.8 81.0

6.8 22.2 98.0

5.8 26.8 86.0

7.6 28.9 110.0

43.2 38.2 n/a n/a 16.50 149.9

57 7.1 41 1.1 n/ /a n/ /a 23.48 154.3

80.5 25.6 n/a n/a 20.63 156.5

74.6 23.9 n/a n/a 17.87 152.0

97.2 20.9 n/a n/a 20.36 6 150.5 5

126.1 24.1 n/a n/a 30.41 150.8

174.5 17.9 n/a n/a 31.20 146.1

*Adjusted dforstocksplits **Buyout trepresentsEBIT/EVasapercentage ***ROCE=EBIT/(Shareho oldersEquity+deb btcash.Sharepr riceasat30June2012 2

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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Growingmarketopp portunity While many m patient ts who suffer with OSA a are unaware they have t the condition n, over the past p decade a growing pool p of evide ence is giving g rise to the significant lo ong term con nsequences t that unhealthy sleep has h on peoples daily live es. The long list of seriou us health con nditions includes obesity, , both as a cause and a symptom m of OSA, coronary c dis sease, stroke e, diabetes and hyperte ension.Suchistheextentofthediseasethatitisestimatedthat oneinfiveadultshaveso ome form of f OSA. In the US, this gives s rise to approximately 40 0 million adult ts, yet the lac ck of awaren ness among both the me edical commu unity and the e general pub blic has resulted in less than t 20% of this b treatedordiagnosed dthusfar. groupbeing SleepCl linics Historic cally, patients s diagnosed as a suffering from OSA were referred b by a general practitioner p t to a sleepsp pecialistforfu urtherevalua ation.Invariab blythiswould dinvolveavis sittoasleepclinicwherethe patientwouldbeobservedovern night.Itisimp portanttoapp preciatehow wthisprocessisnowchang ging an for the industry player rs. Until very y recently, the only viable e option open n to and what it will mea patients s suspected of having a sleep disorder was the overnight o sta ay, however the stigma and a inconve enience of att tending resul lted in a large number av voiding the pr rocedure alto ogether, thereby remaini ingundiagnos sed. S healthcare and technolo ogy advancem ments in new w CPAP devices has led to o an The rising cost of US uptake in home slee ep testing. Under this sce enario, rather r than being sent to a clin nic for overni ight observa ation, the general practit tioner sends the patient home with a self titratin ng CPAP dev vice. Whilst the t use of sleep clinics will w continue, the cost and d convenience factors tha at support ho ome sleepte estingsuggest tsagrowingnumber n ofOS SAdiagnosedpatients. ResMed dsInc.role ResMed ds Inc. prim mary role is that of a d developer, manufacturer m and distribu utor of med dical equipment for diagnosing, treat ting and managing sleepdisordered breathing. A growing public s OSA has se een ResMed Inc. lead the e industry both in terms s of awareness of the illness that is tion and market share. Im mportantly th he company has reinvest ted heavily in n designing flow f innovat generat tors that are smaller, quie eter and mas sks that are more m comfor rtable for the e nightly wearer. Thegroupdoesnotsell s totheenduserbuttohomehealth hcaredealersandsleepclinics. ResMed dsInc.produ uctsuite Patients s diagnosed with w OSA rem main on thera apy for life. While W the nig ghtly regime of o fitting a fa acial mask co onnected to an airflow generator g has s obvious dra awbacks for users, the lo ong term hea alth consequ uences of do oing otherwis se are now well w documen nted. Diagram m 2 illustrate es ResMeds Inc. latest airflow a gener rator the S9 9 AutoSet an nd some of the groups extensive mask m range. The T requirement for use ers to replace masks regu ularly, provid des ResMed Inc. with a highly h attract tive, annuity ytyperevenue emodelinmuchthesame ewayastheclassic c razora andbladesbu usinessmode el.
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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Operati ions/Geogra aphicalcover rage From it ts startup po osition in 199 94, the ResM Med Inc. busi iness has exp perienced en normous orga anic growth both financ cially and geographically. Today, ResMed Inc. products are sold s in over 70 countrie es through a network of distributors d and a direct sa ales force. As s at June, employee numb bers totaled 3,700, with 500 employ yed in resea arch and dev velopment, 1,700 1 in sale es and 1,500 0 in acturing.Thebiggestmark ketcontributo ortogroupre evenueremai instheUSma arketasoutlin ned manufa inTable e3. m2 Diagram ange Maskra

QuattroFX XNasalMaskQuattroFull lFaceMask

SwiftFXNasal N PillowMas sk

13

AirflowGeneratorra ange

TheS9Au utoSet

ApneaLinkPlus P homesleeptestdevice

While management m is reluctant to t discuss ma arket share, industry analy ysts estimate e levels in exc cess of 40% in both the e domestic and a offshore regions. Importantly, th he companys s share is more m pronouncedinmask ks.Thissegme entofthebus sinessisthehighest h contributortoprofits,wheregr ross margins ssitabove80 0%andwhere ethereplacem mentcycleco ontributesannuitytyperev venue. Manufa acturing is undertaken in both b Sydney and Singapor re. Managem ments prepare edness to set t up operatio ons in Singapore is in many m ways a reflection of o the limited d benefits pr rovided to lo ocal manufa acturers. The groups abilit ty to maintain n gross margins at circa 60% illustrates s how successful manage ementhasbeeningrowing gthetopline ewithoutcom mprisingitsco ontributionto oprofits.
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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Table3:ResMedInc c.financialsn napshot20052012

Year
Grouprevenue r (US$m) ) US German ny France Australia Restofworld w Totalre evenue Product tsalessplit Airflowgenerators Masks Totalpr roductsales GroupNet N Revenue Costofsales s Grossprofit Grosspr rofitmargin% Expense es Selling,general,admin Researc ch&development other Totalex xpenses Netinco ome R&D/Revenue R %

2005
210.5 72.8 47.5 14.2 80.5 425.5 208.5 217.0 425.5 150.6 274.9 64.6 135.7 30.0 11.8 131.5 57.3 7.1

2006
320.9 96.4 59.4 18.7 111.5 606.9 315.6 291.3 606.9 230.1 376.9 62.2 200.1 37.2 8.2 245.5 88.2 6.1

2 2007
376.7 107.9 75.9 19.8 134.6 714.9 370.4 344.5 714.9 272.1 384.5 53.8 237.3 50.1 6.9 294.3 66.3 7.0

2008 8
409.6 132.2 100.7 22.8 170.0 835.3 418.5 416.8 835.3 338.5 493.7 59.1 278.1 60.5 12.6 363.2 110.3 7.2

2009
493.4 132.2 106.3 21.0 167.7 920.6 532.1 3885 920.6 366.9 553.8 60.1 289.9 63.1 10.5 363.5 146.4 6.8

2010
590.4 155.9 118.5 26.1 201.4 1,092.2 633.5 458.7 1092.4 436.9 655.5 60.1 328.9 75.2 8.0 415.1 190.1 6.9

201 11
662.2 6 1 171.4 1 137.3 34.9 2 237.2 1,2 243.0 6 699.1 5 543.9 1,2 243.2 5 501.8 7 741.3 59.6 3 371.2 92.0 11.1 4 474.4 2 226.9 7.4

2012
749.0 0 181.4 4 139.3 3 35.6 6 263.1 1 1,368.4 4 736.5 5 631.9 9 1,368.4 4 547.8 8 820.7 7 60.0 0

14
401.6 6 109.7 7 14.9 9 526.3 3 254.9 9 8.0 0

Researc ch&developm ment cess, has be een the commitment to research and developme ent. As Table 3 Critical to that succ highligh hts, the comp pany invests upwards u of 8. .0% of revenu ue on produc ct developme ent. During 20 012, this am mounted to $110 million, a not insigni ificant sum when w compar red to group profits of $255 million. However, the point is not necessar rily to question the merit of the inv vestment but t to wledge that to o date, it has provided the e group with a compelling product offe ering in a mar rket acknow experiencing continu ued solid grow wth. It is a sig gnificant item m in the comp panys cost of o doing busin ness line and d appropriate ely the expen nditure is tota ally written off as an expe ense during th he course of the year. Compet titors Whileth hemarketsfo orthegroupsproductsar rehighlycom mpetitive,thenumberofdirectplayers has declined d over the pa ast decade. Consolidation C within the healthcare h ind dustry has resulted in a hand full of direct d compe etitors namely Philips BV V, DeVilbiss and a Fisher & Paykel Healthcare. The gap
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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

between the two lea ading players s, ResMed Inc c. and Philips s BV and the rest of the fi ield is signific cant n estimated combined market m share of greater than eighty per cent. In nterestingly, the with an Amsterd dam based Philips P BV arr rived onto th he scene in la ate Decembe er 2007, whe en it bought out medical l equipment maker Respi ironics Inc. fo or 3.6 billion Euros (US$5 5.2 billion) in its largest ever e acquisit tion. At the ti ime, Respiron nics was ResM Meds Inc. mo ost direct and d fiercest com mpetitor and the offerrepresentedaPER P multipleof36times. CapitalManagemen nt In our earlier article you may recall that we outlined four busine ess qualities we seek when eringnewinve estmentsnam mely; conside 1. 2. 3. 4. Stronglyalignedmanagem mentteam thleadershipqualities Businesswit Balanceshee et,conservativelyposition ned Shareholderreturnstreat tedwithpara amountimportance

Thelast t,surrounding gshareholderreturnsisul ltimatelyhow wwemeasure ethelongter rmworthinessof any investment. Wh hile a busines ss can get ov vervalued by the market in the short run, r over tim me a sharepricewilllarge elyreflectthe ecompanys underlying u fin nancialperformance.Anin nvestorstudy ying thesharepriceactio onofResMedInc.ashighlightedinGrap ph1couldco oncludethatthings t havebeen tough of o recent years. Since pe eaking in mi id 2010 at close c to $4.0 00 per share the compan nys valuatio onhasbeenheading h south hforsometim me,slidingbe elow$2.50inrecentmonths. Graph1: 1 ResMedInc c.tenyearsh harepriceper rformance

15

So ource:BusinessSpectator S SelectorFunds F Managem mentLimited ACN102 2756347AFSL22 25316 Level3,66 6 HunterStree etSydneyNSW2000, 2 Australia Telephon ne6128090361 10Webwww.se electorfund.com m.au

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Howeve er as we have e highlighted d above, noth hing could be e further from m the truth. In fact ResMe eds mostre ecentpriceac ctionhasmor retodowithloftyinvestorexpectation nsandthemu ultipleapplied dto thebusinessthanthebusinessits self. To be fair f it hasnt always been that way. A period assoc ciated with s significant capital investm ment coupled d with difficul lt industry co onditions led many to ques stion the mer rit of investors ever receiv ving an adeq quate return n on their investment. Th he growing pains p of business, was reflected in high h working gcapitalrequ uirementsdur ringthemid2 2000sthatco onstrainedthegroupsfreecashflow. ResMed dInc.2012 Fast for rward to 2012 and manag gement has t the group we ell positioned d and reaping g the rewards s of past inv vestment. The e ResMed Inc c. business is s hitting its st traps and management sh hould be roun ndly applaud ded.OnalmosteverybusinessmetricResMed R Inc.isingoodshapeandtheoutlookisequ ually positive e. The group has just rep ported recor rd revenues of US$1.4 bi illion, net pr rofits of US$254 million, invested ove er US$100 mi illion in fully expensed res search and de evelopment, declared its first f d to shareholders at the rate r of US17 cents per qu uarter (equal to full year dividend d yield d of dividend 2%) and d ended the year with ov ver US$500 m million net ca ash in the bank. At the micro m level, gr ross margins s are being maintained m at 60%, free ca ash flow is on n the up and c capital expen nditure is trailing thegrou upsannualdepreciation d charge. c Notsurprisinglythegroupsshare epricehasre espondedand distradingclosetoalltim mehighs.Look king ereareperhapsthreeaspe ectsofthebu usinessthatgiveusconfide encethatsho ouldResMed Inc. out,the maintain its current financial disc cipline, years down the tra ack investors will view tod days share price asawonderfulentry ypoint. Firstly, the t health iss sues surrounding OSA and d awareness among clinicians continue es to grow while thegrow winguseofhome h sleepte estingwillund doubtedlylea adtofurtherpatientawareness.Secondly, as a bus siness, ResMed Inc. has re eached a critical inflection n point where e its manufac cturing scale and a level of f investment has allowed it to respond d to competitive pressures s and yet maintain improv ving returns on capital invested. Th he groups rising cash ba alance and c commenceme ent of divide end paymen nts should be e viewed as a sign of stre ength rather than a busin ness hitting maturity. m Fina ally, manage ement has alw ways invested d with an eye e to the futur re. The group ps product range, particularly the curr rent self titrating AutoSet airflow gene erator and its bevy of mask ks have enab bled the busin ness tomain ntainacompe etitiveedge. Apart from its initia al capital rais sing, totaling just US$24 million, ResM Meds inc. ha as achieved this h withoutcalling c onshareholdersfor radditionalca apital.Nothin ngis successandthebusinessthatithas, certain in life or inve esting but Re esMed Inc. ap ppears well prepared p to m meet both the e challenges and opportu unitiesthatin nevitablylieahead.SFM
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16

 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Tabcorp pHoldings(TA TAH)takingontheVictorianGovernm ment The old adage you can c run but you y cant hide e, might be wagering w grou up Tabcorps message to the an Governme ent. When Tabcorp flo oated back in 1994 un nder the pr revious Kenn nett Victoria Government, it agreed to pay $597 million n for its wag gering and g gaming licenc ce for a per riod ears. The gro oup raised at t its listing, $675 $ million, , with the bu ulk of the funds extending out 18 ye ked for the government. g The T governm ment sponsore ed prospectu us issued to the public, no oted earmark that the e licences did d not need to be amortis sed over the life of the 18 1 year period, thus allow wing Tabcorp ptoreporthig gherprofitsand a thusbep promotedasahighdividen ndpayingbus siness. er for this to occur, the ac ccountants signing off on the prospect tus needed to o be satisfied d on Howeve how this licence pa ayment shoul ld be treated d in the com mpany accoun nts. It was decided d that the licencewouldbesoldtoTabcorponthebasisthatthecom mpanywouldbeentitledto oarefundatthe end of the licence period that being Augu ust 2012. Tha at refund wa as to be paid d irrespective e of whethe eritsuccessfu ullyretendere edforthelice enceorchose enotto. Time ha as a way of blurring b the truth howeve er a passage from the or riginal Tabcor rp prospectus in 1994he elpstoexplain nthecasetha atonexpiryo oftheinitialli icencetheco ompanywasentitled; e whethe erornotitisthesuccessfu ultendererto oreceiveanamount a equal ltothelesser rofthesumpaid p forthe new n licencesandabenchm mark,which wouldbenot tgreaterthan n115percen ntorlessthan n85 percent tofthesumpaid p forthein nitiallicences. o this refund formula Tabcorp now w calculates that it is entitled to $6 686.8 million n in Based on compen nsation from the governm ment. What g gave rise to this claim was w the forme er governments move in n April 2008 to announce e that it would not be renewing the gaming licences when they expired but would instead allow w the states s pubs and clubs c to own n and operate their gam ming es. As such it formed the e view that n neither Tattersalls (also a gaming lice ence holder) nor machine Tabcorp pwereentitle edtocompen nsation. hy do you th hink the John n Brumby go overnment to ook this view w? Simple, by b working on a And wh technica alitythatnonew licences swereissued.Inonestro okeofthepen n,thegovern nmentwhichhad recognised a liability y to make pa ayment for th hese licences s in its budge et papers bet tween 1994 and 2008to ookleaveofit tsresponsibilities. vernment will now have to defend it tself in court t, having auc ctioned the gaming g mach hine The gov entitlem ments in 201 10 for $981 million m to the states clubs and pub owners. Tab bcorp has in our opinionaverystrong ghandandin nthefullnessoftimethegovernment g may m ruethemanner m inwh hich it avoided its respon nsibility to act t in good faith h to both sha areholders an nd the people e of Victoria who w will be left with the clean up bill should the c courts rule in n Tabcorps fa avour. Our original comm ment onthistopicappeare edinourJune2008quart terlynewslett tertitledG GovernmentsPerfectingthe tealingavaila ableonourwebsite w under rtheheading gnewsletters. .SFM artofst
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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

Compan nyvisitdiarySeptemberQuarter Q 2012 2 July MYX May ynePharmaGroup G manage ementmeetin ng ILU Iluka aResources MLB Melb bourneITma anagementm meeting PXS Phar rmaxisquarte erlyconferencecall SRX SIRT TeXMedicalconference IRE IRES SSmanageme entmeeting NVT Navi itasFY12conferencecall August RMD ResM MedFY12con nferencecall RFL Rubi ikFinancialmanagement m meeting m ANN Anse ellacquisition nconferencecall COH Coch hlearFY12conferencebrie efing NWS New wsCorpFY12conference c b briefing FXL Flexigroupconfer rencebriefing g CWN Crow wnFY12conferencebriefin ng JHX Jame esHardiequa arterlyconfer rencecall ANN Anse ellFY12confe erencebriefin ng CRZ Cars sales.comFY1 12conference ebriefing DMP Dom minosPizzaEnterprisesFY12conferenc cebriefing EGP Echo oEntertainme entFY12conf ferencebriefing ABC Adel laideBrighton nCementHY12conferenc cebriefing REA REAGroupFY12conference c briefing diaH12confe erencebriefin ng APN APNNews&Med QBE QBEInsuranceGr roupHY12co onferencebrie efing SAI SAIGlobal G FY12conference c br riefing MCP McP Pherson'sFY12conference ebriefing FWD FleetwoodCorpo orationFY12conference c br riefing bourneITHY12conferenc cebriefing MLB Melb MND Mon nadelphousGroup G FY12co onferencebrie efing SUL Supe erRetailGrou upFY12confe erencebriefin ng SEK SEEK KFY12confer rencebriefing g JIN JumboInteractive eFY12confer rencebriefing g FFY12confer rencebriefing g IFL IOOF WTF Wot tif.comHoldin ngsFY12conf ferencebriefi ing IRE IRES SSHY12confe erencebriefin ng CSL CSLFY12confere encebriefing riefing BBG BillabongInternationalFY12conferencebr dnoFY12conf ferencebriefing CDD Card ALL Arist tocratLeisure eHY12confer rencebriefing g FLT Fligh htCentreFY12conference ebriefing PPT Perp petualFY12co onferencebriefing
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06/07/12 2 09/07/12 2 19/07/12 2 18/07/12 2 18/07/12 2 26/07/12 2 31/07/12 2

03/08/12 2 06/08/12 2 07/08/12 2 07/08/12 2 08/08/12 2 09/08/12 2 10/08/12 2 13/08/12 2 14/08/12 2 14/08/12 2 14/08/12 2 15/08/12 2 17/08/12 2 16/08/12 2 17/08/12 2 17/08/12 2 17/08/12 2 20/08/12 2 20/08/12 2 21/08/12 2 21/08/12 2 22/08/12 2 22/08/12 2 22/08/12 2 23/08/12 2 23/08/12 2 24/08/12 2 22/08/12 2 27/08/12 2 27/08/12 2 28/08/12 2 29/08/12 2 30/08/12 2

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 er2012Selector rAustralianEquitiesFundQuart terlyNewsletter r#31 Septembe

WOR Wor rleyParsonsFY Y12conferen ncebriefing 29/08/12 2 BKL BlackmoresFY12conferenceb briefing 31/08/12 2 September APE APEagers E HY12conference c br riefing 04/09/12 2 NHF NIBHoldingsFY12conference ebriefing 05/09/12 2 a#3FY12conf ferencebriefing 05/09/12 2 DTL Data SGM Sims sMetalGroup pconferencebriefing 05/09/12 2 CTD Corp porateTravelManagemen ntFY12conferencebriefing g 10/09/12 2 IPD Impe edimedconfe erencebriefin ng 11/09/12 2 SRX SIRT TeXMedicalFY12conferen ncebriefing 12/09/12 2 mitedDisclaim mer SelectorFundsManagementLim The info ormation con ntained in this document is general in nformation only. This do ocument has not been prepared p taki ing into acco ount any pa articular Inve estors or cla ass of Invest tors investm ment objectiv ves,financialsituationorneeds. n The Dir rectors and our o associates s take no res sponsibility fo or error or o omission; how wever all care is takenin npreparingth hisdocument t. The Directors and our associates s do hold units in the fund d and may hold investme ents in individ dual niesmentione edinthisdoc cument.SFM compan
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19