1. A LISTED ABSOLUTE RETURN FUND 1 2012 Annual General Meeting

2. 2 Australian Leaders Fund Limited ( ALF ) Australian Leaders is a listed investment company with an absolute return focus that invests in the shares of leading and emerging companies listed on the Australian Stock Exchange. ALF is different to a traditional fund in its use of hedging strategies to enhance returns and manage risk. Directors: J Braitling (Chairman) G. Wilson J. Abernethy J. Gosse NTA: At 31 October Shares outstanding: 72m Market Capitalisation @ $1.275: $91.8m NTA @ 31 st October 2012: 1.25 after tax Premium – 2% Dividend:Franking 201111cFF 201211cFF Franking Balance: $15m or $.21 per share. Fund Statistics Fund NAV AUD (Millions)$90.2 Long (72) 177.3% Short (58) -146.7% Gross Exposure323.9% Net Exposure 30.6% Cash 69.4% Top 10 Long Holdings Telstra Corp. Ltd. Rio Tinto Ltd. National Australia Bank Ltd. JB Hi-Fi Ltd. Transurban Group Origin Energy Ltd. Crown Ltd. Commonwealth Bank of Australia Orica Ltd. Jumbo Interactive Ltd.

3. Economic Outlook Base case Slow growth trends in the global economy to continue. A combination of very weak activity in advanced economies as private and public sector deleveraging continues, along with modest growth in emerging countries lead by China where growth will match underlying consumption (5-7%) Risk Case Global economy slips back into recession following one or a combination of the following:  Disorderly resolution to European Sovereign Debt crisis.  A hard landing in China as efforts to rebalance the economy fail.  Political gridlock in the US leads to sharp fiscal contraction. 3 Medium Term Outlook What to expect in 2013 Growth will slow modestly in 2013 in response to front loaded fiscal austerity both in Europe and in the US (Fiscal Cliff). Emerging market growth will stabilise and pick up modestly lead by China.

4. OECD Growth has stalled Europe: The region is slipping deeper into recession as austerity measures bite and growth in core Europe slows with trade and external demand UK: Trade and financial linkages with Europe will see the UK slip back into recession following positive Olympics lead Q3 growth. US: While we are seeing some weak growth in employment this is not translating into income growth which is flat. Ongoing household deleveraging and no income growth ensures weak private sector demand. The fiscal cliff will take between 1-4% points off growth in an economy growing at just 1.5% as we head into 2013. Japan: The economy contracted at 3.5% in Q3. Weaker trade activity will see further weakness in 2013. Corporate profitability has fallen sharply suggesting business investment will also weaken further. 4

5. Growth can only resume in Europe once debt sustainability and competitiveness are restored in the periphery. We can look forward to years of fiscal austerity, debt restructuring and financial repression. In a closed monetary union, competitiveness can only be regained through difficult microeconomic reform and internal devaluation. “Europe moves forward through crisis” Jacques Delors List compiled by Roubini Global Economics of what lies ahead:  Greece undergoes a debt restructuring and exits the EZ in H1 2013.  Portugal undergoes debt restructuring and exits the EZ by end-2014.  Ireland undergoes a debt restructuring by end-2014.  Spain requests EFSF/ESM support in Q4 2012.  Italy requests EFSF/ESM support in Q2 2013.  Spain gets a full troika program in mid-2013.  EFSF/ESM funds run out in late 2014.  Spain undergoes a debt restructuring in 2015. 5 Europe - years of painful adjustment ahead

6. Outlook for the Australian economy 6 -Base case The income shock will have a meaningful flow on effect on employment and consumption. As fiscal receipts will also fall sharply, we may also see some tightening in the public sector made worse by a change in government. Mining investment has been a key support to growth in recent years, this will become a significant drag on growth as this investment runs off. While an easing in financial conditions will provide some relief, economic activity will be softer in the medium term. -Risk Case- Recession- we have not had one for 20 years, surely we are due! Cracks are appearing in the China growth story given the dependence on fixed asset investment (FAI). An abrupt rebalancing away from FAI at a time when mining investment in Australia is winding down would result in a much sharper slow down in the mining sector. An easing in financial conditions may not be the panacea markets are hoping for given household conservatism. Medium Term Outlook What to expect in 2013 With the terms of trade rolling over, Australia is going to suffer an income shock not dissimilar to what happened during the GFC when commodity prices collapsed. Mining sector profits and tax receipts will fall sharply. Business investment will hold up as mining investment peaks- overall growth will be softer than 2012.

7. Mining boom to mining bust implications for the economy Income Shock- Mining profits and government receipts will fall sharply. Clear implications for employment and spending Mining investment has been a key contributor to growth in recent years and will fall sharply from 2014 7

8. The contraction in income could be as bad as in the 1991-92 recession, employment is less effected as the impact is more narrowly based. 8 Income shock narrowly based around mining and related industry- moderate impact on employment Income shock broadly based across industry-large impact on employment

9. Income is what drives the stock market. Without growth returns will be modest at best Market and sector profit growth (%) Pro-rated to JuneFY11AFY12AFY13EFY14E All Companies13-3 7 Banks12005 Property Trusts-2306 Resources42-13-200 Industrials2512 Market (ex res)4129 9

10. The ASX has underperformed with disappointing profit growth 10

11. The market has moved higher on liquidity support, valuations now look full Vs profit growth 11

12. Outlook for Equity Markets  The rally in equity markets that commenced back in June has been underpinned by unprecedented monetary stimulus from central banks in advanced economies. The prospect of a disorderly resolution to the European debt crisis has diminished with the central bankers’ resolve. Economic fundamentals have weakened however as the European recession deepens and the US recovery stalls.  Reflecting this weaker outlook, profit forecasts have fallen across the board. With shares having moved sharply higher in response to diminished risks, they now look more fully valued relative to underlying earnings (p/e expansion).  If the market is to hold recent gains, profit growth both here and abroad has to resume, we are less sanguine.  So in summary, profit growth in advanced economies is very soft and unlikely to improve any time soon. Equity markets have moved higher as the acute phase of the European crisis seems to have passed. Shares now look more fully valued particularly given the low growth environment we are in.  Given our medium term outlook for weaker growth and elevated risks we are maintaining our cautious portfolio settings with reduced equity market exposure. 12

13. 13 A Soft Outlook for Corporate Profits  With the mining boom rolling over, mining companies are facing leaner years ahead with weaker commodity prices.  Major trading banks are also struggling in a soft credit environment.  Industrial sectors are battling structural headwinds with a high Australian dollar and poor productivity.  We sense some of the better opportunities can be found in small emerging growth companies, many fall below the radar of the broader investment community.

14. 14 A bright spot is the digital Economy  One of the few bright spots transforming our society is the digital economy.  There is no meaningful technology sector in our share market (industry is dominated by offshore players).  However digital convergence is having a profound impact on a number of other sectors which we can invest in: digital infrastructure software and content. Explosive Growth in Internet Traffic

15. 15 How to profit from the Digital Economy  Incumbent: Telstra is the dominant player, well placed to capitalise on the continued shift to wireless and the strong growth in data.  Emerging infrastructure: Amcom builds concentric fibre rings in regional centres, with 2,200km of high speed fibre-optic networks predominantly in Perth. NextDC is rolling out Australia’s only truly national data centre network.  Digital Media: Jumbo Interactive is an online wholesaler and retailer of lottery games. Consumers are increasingly purchasing online, with penetration of mobile devices a key driver. Onthehouse is fast becoming the leading online real estate content provider in Australia.  Content/Software: Newscorp – Multiple new digital platforms are demanding greater content. SAI Global is a global provider of information, assurance and compliance services, with a SaaS-based GRC Software offering a high degree of scalability.

16. All data as of 30 September 2012 16 ALF Net Returns Vs Index

17. 17 Performance Drives Returns Source: Patersons Listed Investment Companies, Quantitative Research, 9 August 2012.

18. 18 Portfolio Returns Australian Leaders Fund Ltd 30 September 2012 ALF6 MONTHS1 YEAR3 YEARS (P.A.)5 YEARS (P.A.)SI (P.A.) Long1.2%22.4%6.7%6.5% Short-7.6%3.5%-0.9%-5.3% Gross8.2%32.0%9.1%12.3%17.4% Net7.3%28.7%5.9%8.0%14.0% Index2.1%13.4%1.8%-3.6%7.9% Alpha5.2%15.3%4.1%11.6%6.0%

19. QUESTIONS 19