hedges aussie $$, page-18

Hope,

The effect of the hedging and the appreciation of the AUD and its corresponding effect on portfolio valuations has been overplayed big time.

Maybe let's talk about the following points:

1. A fluctuating dollar (up or down) will affect portfolio values (up or down) across a multitude of assets in a multitude of industries. This is why hedging exists in the first place.

2. CER is looking to close out its hedging with CNP as counterparty. It is extremely likely that as these have and are being closed out, new hedges are being put into place all the time, so while the USD Vlaue of the portfolio drops significantly as the AUD increases against it which affects NTA negatively, the value of the hedges correspondingly increases significantly with affects NTA positively. CER will know they need to hedge out this exposure. They just won't be doing it with CNP.

Cheers and good luck.