Quarterly Investor ReportJanuary 2014

Davin Hood - Portfolio Manager

Cor Capital Pty LtdAFSL: 419924 ABN: 37 155 801 817 www.corcapital.com.au

Dear Investor,

In this report I have broken from the usual format to highlight one of the smartest and most candid

thinkers in the world as having beliefs that align with our own and those that underlie the Cor

Capital Fund. Nassim Nicholas Taleb is an author, philosopher and former options trader and you

may be aware of his famous book The Black Swan. I can also recommend his first title, Fooled by

Randomness from which I have listed a number of thought-provoking quotes below. Enclosed is

your copy of his most recent work, Antifragile, which identifies the things in life, business and

markets that are beyond robust and actually benefit from ‘stress, disorder, volatility and turmoil’.

It is a must read for all sophisticated investors. [Note: If you are currently limited for time I suggest

you first read Chapters 9 -11 in addition to the Prologue]

There is no doubt about the robustness of the Cor Capital Fund and the way it is managed but in my

opinion it meets Taleb’s criteria for being ‘antifragile’; I will be interested to hear if our investors

agree. Having managed the Fund for 17 months now I have even more confidence in our strategy

than when we commenced operations; particularly given its relative uniqueness as one based on

logic rather than predictions. From a performance perspective, we will have some very good years

and some average years but our difference is that we should have no really bad years. The benefits

this stability brings to compound returns and ease of investment decision making will no doubt

continue to be undervalued until the next shock or crisis unfolds.

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Chart 1

Note: Chart 1 displays the change in value of $1 invested in each of the Cor Strategy (as described in the Information Memorandum - August 2012), bank bills, Australian equities and the Dow Jones Credit Suisse Hedge Fund Index between December 2003 and December 2013. It also shows the performance of the Cor Capital Fund since inception in August 2012. Results for the Cor Strategy are theoretical and do not represent actual results. The analysis should not be taken as prediction of likely future returns. Source: Cor Capital Pty Ltd, IRESS, Credit Suisse.

Cor Capital Fund Actual

Aus Equities

Cash

DJCS Hedge Fund Index

Cor Strategy

?

Our first full calendar year to 31 December 2013 can probably be described as average given our long

term return expectation is inflation plus 4 percent per annum. The annualised total return since

inception to 31 December 2013 was 4.6 percent (per annum) and the total return for calendar 2013

was 1.7 percent. There were no portfolio changes during the last quarter as asset values stayed

within the required ranges. Full performance and attribution is set out on page 5.

Reflecting on Taleb’s insights, it is important to consider the risks that were present 12 months

ago rather than viewing the realised surge in equities markets and the worst year in thirty for gold

bullion as the single possibilities. ‘Postdictors’ will disagree. This same hindsight bias is there every

year and 2014 will be no exception.

With interest rates (globally) still artificially low (but perhaps turning) and investors exposed to

assets normally beyond their comfort level, we are well and truly living in a risky and speculative

world. However the Cor Capital Fund strategy of broad diversification and disciplined rebalancing

should serve Fund investors well regardless of market and economic outcomes.

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Cash: 25.5%

Equities: 25.8%

Fixed Interest: 25.2%

Gold: 23.6%

Asset Allocation - 31 December, 2013

Cash

EquitiesFixed Int.

Gold

03

“There is one world in which I believe the habit of mistaking skill for luck is most prevalent – and most conspicuous – and that is the world of markets.”

“…that which came with the help of luck could be taken away by luck (and often rapidly and unexpectedly at that)…. [whereas] things that come with little help from luck are more resistant to randomness.”

“…one cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e., if history played out a different way).”

“…there is an ingratitude factor in warning people about something abstract (by definition anything that did not happen is abstract). Say you engage in a business of protecting investors from rare events by constructing packages that shield them from their sting. Say that nothing happens during the period. Some investors will complain about your spending their money; some will even try to make you feel sorry: “You wasted my money on insurance last year; the factory did not burn, it was a stupid expense. You should only insure for events that happen. ”

“At any point in time, the richest traders are often the worst traders…those that are best fit to the latest cycle. This does not happen often with dentists or pianists- because these professions are more immune to randomness.”

“If you engaged in a Russian roulette-type strategy with a low probability of large loss, one that bankrupts you every several years, you are likely to show up as the winner in almost all samples – except in the year when you are dead.”

“I speculate in all of my activities on theories that represent some vision of the world, but with the following stipulation: No rare event should harm me. In fact, I would like all conceivable rare events to help me.”

“Consider that all one needs is two bad years in the investment industry to terminate a risk-taking career and that, even with great odds in one’s favour, such an outcome is very possible. What do people do to survive? They maximise their odds of staying in the game by taking black-swan risks – those that fare well most of the time, but incur a risk of blowing up.”

Nassim Nicholas Taleb

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“My lesson from Soros is to start every meeting at my boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone, but happened to be endowed with the rare privilege of knowing it.”

“There seems to be no such thing as a foolish decision if it results in profits. “Money talks”.”

“….fragility….is often ignored by businessmen who ,trained in static thinking, tend to believe that generating profits is their principal mission, with survival and risk control something to perhaps consider – they miss the strong logical precedence of survival over success. To make profits and buy a BMW, it would be a good idea to, first, survive.

“As to growth in GDP, it can be obtained very easily by loading future generations with debt – and the future economy may collapse upon the need to repay such debt…..economic growth with fragilities is not to be called growth…”

“…more upside than downside can come simply from the reduction of extreme downside (emotional harm) rather than improving things in the middle. A barbell can be any duel strategy composed of extremes, without the corruption of the middle – somehow they all result in favourable asymmetries.”

“We are demonstrably arrogant about what we think we know. Why on earth do we predict so much? Worse, even, and more interesting: Why don’t we talk about our record of predicting? Why don’t we see how we (almost) always miss the big events? I call this the scandal of prediction.”

"Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage. It’s the leverage of efficiency. Adding debt to that system produces wild and dangerous gyrations and provides no room for error. Complex systems survive thanks to slack and redundancy, not debt and optimisation. Capitalism cannot avoid fads and bubbles. Equity bubbles have proved to be mild; debt bubbles are vicious.”

Nassim Nicholas Taleb

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Total ReturnSince inception: 6.42%Since Inception ann.: 4.55%3 months: -0.57%12 months: 1.70%24 months ann.: na36 months ann.: na

Risk Indicators% positive quarters: 67 Av. positive quarter: 2.84%Av. negative quarter: -2.39%Worst quarter: -4.22%Best quarter: 5.36%% positive years: 100Worst 12 months: 1.70% Best 12 months: 6.50%

Performance attribution - 3 months (%)

Equities: 0.88

Cash: 0.17

Fixed interest: 0.01

Gold -1.63

Total return: -0.57

Significant portfolio adjustments - 3 months

None

Additional information

Fund size AU$18M

NAV per unit $1.0383

Distribution yield: 3.2%

All returns quoted above include income and are net of fees.Inception: 8 August 2012Past performance is not an indication of future returns.Reference to ‘quarter(s)’ and ‘year(s)’ above is to calender periods.

Performance attribution - 12 months (%)

Equities: 5.15

Cash: 0.87

Fixed interest:: 0.32

Gold: -4.64

Total return: 1.70

Significant portfolio adjustments - 12 months

Increase Gold Sep 2013

Reduce Gold Aug 2013

Increase Gold Apr 2013

Reduce Equities Feb 2013

Cor Capital Fund - $1 invested at inception Consumer Price Inflation + 4% p.a.

Performance – Quarter ending 31 December 2013

JUL2012

OCT2012

JAN2013

APR2013

JUL2013

OCT2013

JAN2014

1.12

1.10

1.08

1.06

1.04

1.02

1.00

0.98

Please call me or send an email should you have any questions.

Davin Hood

Managing Director and Portfolio Manager

T: 03 9823 6296 M: 0431 700 939 E: davin.hood@corcapital.com.au

Important Information: This report (‘Report’) has been produced by Cor Capital Pty Ltd (‘Cor Capital’) ABN 37 155 801 817, AFSL 419924 and has been prepared for informational purposes only and does not constitute an o�er to sell or a solicitation of an o�er to purchase any security of �nancial product or service. Any such o�er or solicitation shall be made only pursuant to an Information Memorandum or other o�er document (collectively ‘O�er Document’) relating to a Cor Capital �nancial product or service. A copy of the relevant O�er Document relating to a Cor Capital product or service may be obtained by calling Cor Capital on 03 9823 6296 or by visiting www.corcapital.com.au. This Report does not constitute a part of any O�er Document issued by Cor Capital. Past performance is not necessarily indicative of future results and no person guarantees the performance of any Cor Capital �nancial product or service or the amount or timing of any return from it. This material has been provided for general information purposes and must not be construed as investment advice. Neither this Report nor any O�er Document issued by Cor Capital takes into account your investment objectives, �nancial situation and particular needs. In addition to carefully reading the relevant O�er Document issued by Cor Capital you should, before deciding whether to invest in a Cor Capital �nancial product or service, consider the appropriateness of investing or continuing to invest, having regards to your own objectives, �nancial situation or needs. Cor Capital strongly recommends that you obtain independent �nancial, legal and taxation advice before deciding whether to invest in a Cor Capital �nancial product or service. The information contained in this Report may not be reproduced, used or disclosed, in whole or in part, without prior written consent of Cor Capital.

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