Investment Guidelines

Investment Universe:
There are approximately two thousand listed securities on the Australian Stock Exchange. As a Listed Investment Company focussing on Australia's leading companies, it is the manager's intention to have at least 70% of the company's balance sheet invested in the largest 200 of these listed companies or else retained in cash. Up to 30% of the balance sheet may be invested in smaller emerging growth companies.

Diversification:
A clear objective of the fund is to diversify risk with a broad representation of individual securities taken from a range of sectors. In evaluating risk in a leveraged portfolio, investors should consider all individual exposures as a percentage shareholder's funds potentially at risk. On this basis it is considered prudent that the portfolio should consist of a least 50 positions when fully invested. No individual security should account for more than 20% of the company's assets.

The key source of risk in a long/short portfolio is sector bias. It is essential that both long and short portfolios are populated with securities taken from all sectors of the market.

The investment universe is segmented into five major sectors: Defensives (including cash); Financials; Industrial cyclicals; Resources; and Smaller companies. Each of these sector groups comprise securities operating in industries with similar dynamics.

In total there are 25 industry groups making up these five sectors, these industry groups should also be broadly represented in a well constructed portfolio. It is the manager's intension to construct long/short portfolios with a broad representation of all sectors.

The audit committee, comprising a majority of independent directors will monitor construction of the portfolio to ensure compliance with these investment guidelines.