Apostle Loomis Sayles Senior Loan Fund LOOK BEYOND THE HORIZON Monthly Fact Sheet, 31 October 2009 Investment Style Performance (% pa) Performance Inception> DEBT – SENIOR BANK LOANS 1 mth 3 mths CYTD 1 yr Returns (20/11/07) Fund (gross) 0.44 3.26 36.30 22.82 0.20 Investment Objective Benchmark* 0.29 0.86 3.37 4.64 6.18 The Fund’s investment objective is to seek to provide a high level of current income and such preservation of capital as is Active Return 0.15 2.40 32.93 18.18 -5.98 consistent with investment in a portfolio of senior bank * USD LIBOR 3 Month in AUD. >Annualised. loans. Primary Investments Portfolio Analysis The Fund seeks to accomplish its investment objective through investment primarily in a diversified managed Portfolio Characteristics portfolio of predominantly U.S. Senior Loans. Fund Portfolio construction is driven by bottom-up security selection and top-down macroeconomic analysis. Individual Margin over Libor (%) (USD) 2.62 investment ideas are evaluated by the Fund’s portfolio Coupon Rate (%) (USD) 3.40 management team and credit research analysts based on Current Yield (%) (USD) 3.59 investment return potential and contribution to overall Weighted Average Purchase Price (c/$) 92.95 portfolio risk. Weighted Average Market Price (c/$) 93.83 Fund Investment Strategy and Allocation Limits = Average Coupon Rate/Weighted Avg Market Price 90-100% of total assets in Senior Loans. 0-10% of total assets in cash or cash equivalents. Allocation Analysis 0-10% of total assets in other authorised investments. Credit Quality (%) Characteristics Fund Average Quality BB- Unit Price 0.905593 BBB 4.06 BB 55.05 Fund Size (AUD) 412,452,272 B 33.28 CCC & Lower 2.81 Reporting Benchmark 3 Month USD LIBOR hedged into AUD Not Rated 2.62 Fund Inception Date 20 November 2007 Cash & Equivalents 2.18 Total 100 Legal Structure Australian Managed Investment Scheme Valuation Frequency Daily Sector Allocation (%) Liquidity Frequency Fortnightly Fund Industrial 87.71 Responsible Entity Apostle Asset Management Limited Financial 5.36 Utility 4.75 Investment Manager Loomis, Sayles & Company, L.P. Cash & Equiv 2.18 Total Management Fee By Negotiation Total 100 Portfolio Manager Kevin Perry, John Bell Country Allocation (%) Administrator State Street Australia Limited Fund Custodian State Street Australia Limited United States 99.63 Canada 0.37 Total 100 Contact Apostle Asset Management Limited Level 11, 23-25 O’Connell Street SYDNEY NSW 2000 Australia T +61 2 8224 2900 F +61 2 8224 2910 www.apostleam.com.au Monthly performance (gross % pa) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 2009 8.30 2.09 1.23 7.21 3.63 3.28 2.77 1.34 1.45 0.44 -- -- -- 2008 -2.27 -2.20 1.01 3.25 1.38 0.73 0.08 0.39 -3.74 -17.03 -6.57 -3.55 -26.39 2007 -- -- -- -- -- -- -- -- -- -- -- 0.36 -- Apostle Loomis Sayles Senior Loan Fund LOOK BEYOND THE HORIZON Monthly Fact Sheet, 31 October 2009 Holdings by Industry (%) Market Performance While greater risk was rewarded with greater return in loans again in Aerospace/Defence 0.87 October, we noted two developments that suggested the risk rally may be Automotive 0.74 running out of steam. First, the new issue loan market started to open up Banking 1.47 as near-par secondary prices created the right arithmetic for comparable Building Materials 1.60 value. Second and not unrelated, BB-rated loans actually went down Cash & Equivalents 2.18 slightly in price, most likely reflecting both “fast money” exiting the Chemicals 4.00 recovery trade and relative value decisions by accounts wanting to buy new Consumer Cyclical Services 6.17 issues with BB ratings and higher coupons. We face a choice each day in Consumer Products 2.70 Diversified Manufacturing 0.68 this environment: chase yield or hold quality. If we were convinced that Electric 4.75 the economic prospects are strong we might be inclined to lower quality in Energy 0.60 our search for extra basis points of return. Instead, we think the market Entertainment 3.07 will grow weary of the interaction of uninspiring revenue growth and highly Environmental 1.49 levered balance sheets. We prefer to accept modest return prospects with Food and Beverage 3.72 far less balance sheet risk given our outlook. Gaming 0.65 Health Insurance 0.19 Outlook Healthcare 10.62 Industrials – Other 8.62 It has become increasingly apparent that there is a disparity between the Insurance 0.56 way money is flowing in the real economy and the way it is flowing in the Media – Cable 4.01 investment markets. In the real economy, unemployment is rising Media – NonCable 5.29 (reducing consumer expenditures) and banks are not lending at a torrid Metals & Mining 0.28 pace to real businesses. Home prices will not likely find a floor until mid- Oil Field Services 2.97 2010 and commercial real estate seems to be in decline. Meanwhile, P&C 2.62 investment cash returns are essentially zero and has been flowing in high Packaging 2.65 volume towards anything easily buyable: stocks, bonds, and commodities. Paper 1.05 This disparity is unsustainable, in our opinion. We worry that it will take so Pharmaceuticals 1.93 much time for the real economy to show real strength that a significant Pipelines 2.32 number of overlevered credits will default. Our skepticism continues to Railroads 0.18 drive our portfolio construction. REITS 0.71 Restaurants 0.63 Retailers 5.04 Supermarkets 0.75 Technology 5.38 Telecommunications 0.79 Textile 1.39 Wireless 3.34 Wirelines 4.02 TOTAL 100 Top Five Portfolio Holdings (%) Holding Amt S&P Spread Portfolio Rating (%) HCA, Inc. Term Loan B +225 1.25 BB Community Health +225 1.19 BB Systems, Inc. Term Loan CSC Holdings, Inc. +175 1.18 BBB- Incremental B Term Loan DaVita, Inc. Tranche B- +150 0.97 BB+ 1 Term Loan Energy Transfer Equity, +175 0.97 BB- L.P. Term Loan B Apostle Asset Management Limited ABN 60 088 786 289 AFSL No. 246830 (“Apostle”) APIR Code IAM0006AU This document is issued by Apostle and relates to the Apostle Loomis Sayles Senior Loan Fund (“Fund”) of which Apostle is the responsible entity. The Investment Manager for the Fund is Loomis, Sayles & Company, L.P.. Loomis, Sayles & Company, L.P. is licensed to provide investment management services in the US and conducts any portfolio management activities in and from US. Loomis, Sayles & Company, L.P. is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (Cth) in respect of financial services. Loomis, Sayles & Company, L.P. is regulated by the SEC under US laws which differ from Australian laws. This material is for information purposes only. It is not an offer or a recommendation to purchase or sell any security and is not intended to substitute for the Fund’s Information Memorandum which will outline the risks involved and other relevant information. Please note that past investment performance is not a reliable indicator of future investment performance. This information may not have been prepared taking into account your objectives, financial situation or needs. This document may contain information provided directly by third parties. To the maximum extent permitted by law, Apostle excludes liability for material provided by third parties. This document is strictly confidential and is intended solely for the use of the person to whom it has been delivered. It may not be reproduced, distributed or published, in whole or in part, without the prior approval of Apostle.
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