www.atriuminvest.com.au 1MONTHLY REPORT DECEMBER 2018 | ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

ATRIUM EVOLUTION SERIES DIVERSIFIED FUND

MONTHLY REPORTDECEMBER 2018

FUND PERFORMANCE

Source: Atrium, Iress. Performance as at 31 December 2018. Since Inception date is 24 June 2011. Atrium Evolution Series - Diversified Fund (AEF) performance is after fees and costs and assumes re-investment of all distributions. Market indices represent performance of; The RBA Cash rate, S&P ASX 200 Accumulation Index, S&P ASX Small Ordinaries Accumulation Index, S&P ASX 300 Listed property Accumulation Index, MSCI World ex-Australia net AUD and Local Currency, Bloomberg AusBond Composite Bond Index all-maturities and the US Spot Gold price. Peer Benchmark refers to the Morningstar Multisector Indices. Past performance is not a reliable indicator of future performance.

Performance VolatilitySharpe

Ratio

1 Month 3 Months 6 Months 1 Year 2 Years p.a.

3 Years p.a.

5 Years p.a.

Since Inception

Since Inception

Since Inception

AEF 5 Units Growth Income

-0.1% -2.5% -1.5%-2.5%1.0%

0.4%-3.9%4.3%

2.5%-1.1%3.6%

1.2%-2.8%4.0%

3.7%-1.6%5.3%

5.1%0.4%4.7%

2.9% 0.9

AEF 7 Units Growth Income

-0.6% -4.7% -3.1%-4.0%1.0%

0.1%-6.3%6.4%

3.3%-2.4%5.7%

1.9%-4.4%6.3%

5.1%-2.2%7.3%

6.9%0.9%6.0%

4.6% 1.0

AEF 9 Units Growth Income

-0.9% -6.0% -4.1%-5.0%1.0%

-0.4%-7.3%6.9%

3.8%-2.4%

6.%

2.3%-4.0%6.3%

5.7%-1.7%7.4%

7.7%1.6%6.1%

5.8% 0.9

Australian Cash 0.1% 0.4% 0.8% 1.5% 1.5% 1.6% 1.9% 2.4% 0.3% -Australian Equities -0.1% -8.2% -6.8% -2.8% 4.2% 6.7% 5.6% 7.5% 11.6% 0.4

Australian Small Cap Equities -4.2% -13.7% -12.7% -8.7% 4.7% 7.5% 5.6% 2.7% 14.4% 0.0

Australian Listed Property Trusts 1.7% -1.7% 0.2% 3.3% 4.8% 7.6% 12.5% 12.7% 11.9% 0.9

International Equities ($A) -4.9% -11.7% -5.2% 0.8% 6.9% 7.3% 9.7% 13.1% 10.6% 1.0

International Equities (Local) -8.1% -13.3% -8.6% -7.5% 4.8% 6.1% 6.1% 8.5% 11.0% 0.5

Australian Fixed Interest 1.5% 2.2% 2.8% 4.5% 4.1% 3.7% 4.7% 5.3% 2.7% 1.0

Gold 5.1% 7.7% 2.4% -1.6% 5.7% 6.5% 1.3% -2.1% 16.6% -0.3

Morningstar Multisector Moderate

-0.3% -2.2% 1.4% -0.2% 2.5% 2.9% 3.6% 4.7% 2.8% 0.8

Morningstar Multisector Balanced

-0.9% -4.4% -3.0% -1.4% 2.9% 3.8% 4.5% 5.8% 4.4% 0.8

Morningstar Multisector Growth

-1.6% -6.4% -4.6% -2.4% 3.4% 4.4% 4.9% 6.6% 6.1% 0.7

www.atriuminvest.com.au 2MONTHLY REPORT DECEMBER 2018 | ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

ATRIUM EVOLUTION SERIES – DIVERSIFIED FUNDMONTHLY REPORT DECEMBER

MARKET COMMENTARYMarkets were very volatile in the December quarter, rounding out a year of uncertainty. Equity markets fell around the world as investors became increasingly concerned about the outlook for global growth, partly as a result of growing political uncertainty in the U.S. This coincided with a view that the U.S Federal Reserve may be less willing to provide support to markets, as it hiked rates four times over 2018. Credit markets remained weak, while the Australian dollar fell 2.4% over the quarter.

The U.S equity market (S&P 500) fell a significant 13.5% over the quarter, leaving it slightly lower (-4.4%) over the year. The information technology sector was the major drag on the overall market. While Apple and Amazon were each able to reach U.S $1 trillion in market capitalisation in2018, both companies have since fallensharply from those highs, as did other majortechnology players including Facebook andMicrosoft. Outside of the U.S Technologysector, financials fell 13.1% reflecting themarkets view on their earnings outlook.

European and Emerging Market (EM) equities also ended the year lower. European equities declined for the quarter (MSCI European Index, -11.3%) with the banks underperforming as the Euro zone continues to face a very low / negative yield environment. Emerging markets outperformed other markets over the quarter, the MSCI Emerging Market Index down 7.4% in local currency terms, with Brazil and Russia up strongly over the year (up 15.0%, and 18.5% respectively).

Australian equities (S&P/ ASX 200) fell 8.2% during the quarter and finished the year down 2.8%. Industrials fell 4.2%, broadly reflecting the concerns around

global growth and equity market weakness. The Resources sector fell 8.2%, reflecting broad-based weakness in commodity prices. Financials were also down with the banks weighing heavily, although notable within this was the sharp outperformance of CBA from late October when the sale of asset manager Colonial First State was announced.

Bond markets provided some respite during the quarter, as U.S, European and Japanese bond yields fell (prices rose). U.S treasury yields fell sharply over thequarter despite the U.S Federal Reserveraising rates by 25 basis point in December,indicating market expectations of no furtherrate hikes in 2019. However, Novembercomments from U.S Federal ReserveChairman Jerome Powell that the cashrate was ‘just below’ neutral caused a re-assessment of market pricing.

In Australia, the consensus view is that the Reserve Bank (RBA) will not move rates for another 12 months, due to concerns around the housing market, availability of credit, and a lack of inflation. Data released around the end of the year showed Australian house prices fell 4.8% over 2018, highlighting one of the pressures

facing the RBA. Many analysts have removed any probability of a rate hike over the next 12-18 months, rather pricing in some probability of further cuts despite rates being at record lows.

In currency markets, 2018 was a year of U.S dollar strength as the dollar rose 4.4%on a trade weighted basis. Conversely,the Australian dollar fell sharply against theU.S dollar, down 9.7% for the year and2.4% over the December quarter. Muchof this could be put down to the dramaticnarrowing of the bond yield spread betweenAustralia and the U.S, but also to the overallrise in market volatility. The Australian dollarclosed at $0.70 US cents at the end ofDecember.

www.atriuminvest.com.au 3MONTHLY REPORT DECEMBER 2018 | ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

ATRIUM EVOLUTION SERIES – DIVERSIFIED FUNDMONTHLY REPORT DECEMBER 2018

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AEF 5 AEF 7 AEF 9

Event Driven

Discretionary Global Macro

Systematic Global Macro

Equity Long-Short

Private Markets

Sovereign Debt

Investment Grade Credit

Non-Investment Grade Credit

Cash and Liquidity

Combined Equity

Emerging Market Equities

International Equities

Australian Equities

ASSET ALLOCATION

Source: Atrium, Iress. Allocations as at December 31 2018.

PORTFOLIO COMMENTARY

December rounded off a challenging year, with the portfolios navigating difficult market conditions relatively well, albeit lower for the quarter. While we are never content with negative returns, even over the short term, the portfolio held up well considering 2018 was a particularly difficult year for global asset prices.

Global and domestic equities were the main detractors to performance over the quarter, while rates and credit and private markets continued to contribute positively to performance. We continued to maintain higher levels of cash in the portfolio, ready to deploy where opportunities presented. We took the opportunity to add Treasury Wine Estates and Ramsay Healthcare to our Australian equities exposures and topped up our allocation to Japara Healthcare. We also halved our position in MYOB, and fully sold out of Navitas, which were both key contributors to performance and rallied after respective takeover bids.

We took advantage of the December volatility to add to our global equity exposure, as the circa 20% pullback in the U.S equity market provided ample opportunities to deploy capital at very attractive prices. On the currency front, our long exposure to the U.S dollar also helped boost our portfolio performance, as U.S dollar strength relative to the AUD benefitted our returns.

Among our International equity managers, the Magellan Global Equities Mandate was the clear standout, outperforming the MSCI All Countries Index by 3.7%. The fund benefitted from holdings in Starbucks, McDonald’s and Yum! Brands, with detractors for the quarter including Apple, Facebook and Heinz. The Antipodes Global Fund experienced a more difficult quarter, with major detractors including banking and technology stocks.

Despite the increasing intensity of market volatility towards quarter end, the allocation to alternatives emerged with a pleasing 0.03% return for December and -3.6% for the quarter, against a backdrop of larger equity market declines. September proved a difficult start for alternative strategies, the rapid increase in U.S 10-year yields leading to a subsequent repositioning in equity markets. This adjustment coupled with large falls in energy prices proved difficult for alternative managers to navigate over the short term.

October and November were months when our alternative managers adjusted their strategies, with managers de-risking their portfolios in response to sharp reversal of market conditions. This adjustment was completed in December, and as evidenced from performance results, several strategies returned to profitability in the final month of the year.

The standout performer over the quarter (and year) was systematic macro manager P/E Global FX Alpha Fund. The fund delivered a 5.4% return over the quarter and 17.9% over the 12 months, during a period of volatility when other strategies struggled. The fund focuses on long-term investment returns trading in exchange traded currencies, and the strong performance was driven by an environment of short-term rate differentials and economic uncertainty. It is worth re-iterating the importance of including strategies such as these as part of the alternatives allocation. These strategies

exhibit a low to zero correlation with equity markets over the medium to long-term, providing diversification benefits where other asset classes may struggle.

Progressing into 2019, the portfolios remain well positioned as we continue to be active in our asset selection. After increasing our exposure to global equities during the recent bout of volatility, equity allocations are currently around the middle of the target range. We also maintain a sizeable exposure to the U.S Dollar, as we expect markets to continue to experience higher levels of volatility than in recent years. We are well positioned to take advantage of any opportunities while also maintaining a strong focus on capital preservation should markets continue their downward trajectory.

www.atriuminvest.com.au 4MONTHLY REPORT DECEMBER 2018 | ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

Asset Class Contributions

ATRIUM EVOLUTION SERIES – DIVERSIFIED FUNDMONTHLY REPORT DECEMBER 2018

Source: Atrium, Iress. Performance as at 31 December 2018. Contribution and Attribution Return figures are calculated before fee estimates and Attribution Return displayed in the Asset Class Contributions table will not equal the reported performance numbers for the Atrium Evolution Series – Diversified Fund which are stated after fees. Past performance is not a reliable indicator of future performance.

The Manager seeks to actively manage the risks associated with foreign currency and equity market exposures by utilising certain derivative instruments. These adjustments will be captured within the total exposures in the table.

ASSET CLASS CONTRIBUTIONS FOR ATRIUM EVOLUTION SERIES DIVERSIFIED FUND AEF 5 PORTFOLIO

ASSET CLASS CONTRIBUTIONS FOR ATRIUM EVOLUTION SERIES DIVERSIFIED FUND AEF 7 PORTFOLIO

ASSET CLASS CONTRIBUTIONS FOR ATRIUM EVOLUTION SERIES DIVERSIFIED FUND AEF 9 PORTFOLIO

0.01% 0.03%

-0.65%

0.07%

0.00%

0.46%

-0.07%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.02%

-1.73%

0.07% 0.00%

0.97%

-0.67%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.01%

-2.26%

0.07% 0.01%

1.21%

-0.96%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.03%

-0.65%

0.07%

0.00%

0.46%

-0.07%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.02%

-1.73%

0.07% 0.00%

0.97%

-0.67%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.01%

-2.26%

0.07% 0.01%

1.21%

-0.96%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.03%

-0.65%

0.07%

0.00%

0.46%

-0.07%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.02%

-1.73%

0.07% 0.00%

0.97%

-0.67%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

0.01% 0.01%

-2.26%

0.07% 0.01%

1.21%

-0.96%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

Cash Rates &Credit

ListedEquities

PrivateMarkets

LiquidAlternatives

Currency AttributionReturn

Mon

thly

con

tribu

tion

to re

turn

s %

www.atriuminvest.com.au 5MONTHLY REPORT DECEMBER 2018 | ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

IMPORTANT INFORMATION The information in this document (Information) has been prepared by Atrium Investment Management Pty Limited (ABN 17 137 088 745, AFSL 338 634). The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235 150) is the Responsible Entity of the Atrium Evolution Series – Diversified Fund (ARSN 151 191 776) (Fund). The Information is of a general nature only and does not take into account the objectives, financial situation or needs of any person. Before acting on the Information, investors should consider its appropriateness having regard to their own objectives, financial situation and needs and obtain professional advice. No liability is accepted for any loss or damage as a result of any reliance on the Information. Investors should consider the Fund’s Product Disclosure Statement (PDS) (available from www.atriuminvest.com.au) before making any investment decision. Past performance is not a reliable indicator of future performance. Future performance and return of capital is not guaranteed. ATR109 01/19

Level 6, Challis House, 4 Martin Place, Sydney NSW 2000

02 9248 8090

www.atriuminvest.com.au

ATRIUM EVOLUTION SERIES – DIVERSIFIED FUND

MONTHLY REPORT DECEMBER 2018

INVESTMENT OBJECTIVEThe investment objective of each of the AEF 5, AEF 7 and AEF 9 Portfolios is to seek to maximise returns while managing the level of risk that the Portfolio is exposed to within a pre-determined limit.

Fund Manager Atrium Investment Management Pty Ltd

Responsible Entity One Managed Investment Funds Limited

Launch Date 24 June 2011

Fund Size1

AEF 5 - $84.7mAEF 7 - $333.3mAEF 9 - $260.5m

Buy Sell SpreadAEF 5 - 0.10% / 0.10%AEF 7 - 0.10% / 0.10%AEF 9 - 0.15% / 0.15%

Management Costs1

AEF 5 – 2.01% AEF 7 – 2.06%AEF 9 – 2.04%

Management Costs consist of the following:

Management Fee - 1.28%

Indirect Costs -

AEF 5 – 0.73% AEF 7 – 0.78%AEF 9 – 0.76%Recoverable Expenses - 0%

ARSN 151 191 776

APIR CodeAEF 5 – COL0029AUAEF 7 – COL0030AUAEF 9 – COL0031AU

Unit Pricing3

WeeklyAEF 5 – $1.0378 AEF 7 – $1.0814AEF 9 – $1.1380

1 The Net Asset Value of each of the classes of units in the Fund is calculated by taking the value of the investments and taking away the value of the liabilities that are referrable to the relevant class of units.

2 The management costs consist of a management fee, indirect costs and recoverable expenses and are shown inclusive of GST (10%) less available Reduced Input Tax Credits (RITC). These estimates may vary from time to time and may be rounded to two decimal places. Actual fees and costs may vary from those stated. Management costs do not include transactional and operational costs. Please refer to the Fund’s Product Disclosure Statement (PDS) for more information on fees and costs.

3 Month end redemption prices per unit are quoted.