Benefits of investing in the Regal Long Short Australian Equity Fund

Investing in the Fund gives investors access to:

• An opportunity to partake in an investment that would ordinarily be difficult for individual investors to employ;

• Enhanced potential for excess returns through the use of short-selling techniques; and

• A strategy with an investment team with a proven track record.

Regal are experienced investment management professionals:

• With extensive experience in managing equities for investors since 2004;

• Are specialists in using alternative techniques such as short-selling;

• Have a strong team of investment analysts with diverse capital markets backgrounds; and

• Possess a robust risk management framework.

Regal are complemented by well-resourced service providers, including:

• The Hongkong and Shanghai Banking Corporation, Sydney Branch (Custodian & Administrator);

• UBS, Credit Suisse and Bank of America Merrill Lynch (Prime Brokers of the Underlying Fund); and

• Perpetual Trust Services Limited (Responsible Entity).

Investor suitability

The Fund is suitable for investors with an investment horizon of five years or more.

About the Fund

The Regal Long Short Equity Fund aims to outperform the S&P/ASX 300 accumulation index net of fees over a rolling five-year basis. The fund aims to have a tracking error of 4 - 8%.

The Manager selects stocks for the Fund using a disciplined Four Step Stock Selection Process. To value shares, companies are thoroughly researched from a fundamental perspective to derive their intrinsic value. The Manager incorporates key insights from many different styles of investing (e.g. fundamental, quantitative, technical) and invests where there is conviction from more than one source. The relaxation of the short constraint allows the manager to generate alpha from both undervalued and overvalued companies.

Investment strategy

The Fund aims to outperform the S&P/ASX 300 Accumulation Index net of fees over a rolling five year period by investing in an unregistered unit trust named the Regal Australian Long Short Equity Fund (Underlying Fund'), managed by Regal Funds Management Pty Limited. The Underlying Fund invests in Australian listed (or soon to be listed) equities, exchange traded derivatives and cash assets. These are held by the Australian domiciled custodians, and denominated in Australian Dollars.

To identify investment ideas, Regal primarily employs fundamental, bottom-up analysis of companies listed (or soon to be listed) on the Australian Securities Exchange.

Regal employs long/short investing' techniques to increase the breadth of investment opportunities for enhanced potential to outperform.

How we invest your money

Regal's investment approach aims to produce investment returns by systematically exploiting market inefficiencies through a bottom-up' approach to valuing companies. The investment management team normally spends considerable time meeting with the management of companies and talking to their suppliers, customers and competitors (though meeting management is not a prerequisite for investing).

Stocks are considered for either a long or short position in the portfolio by following a four-step stock selection process:

1. Bottom-up' valuation involves considering factors such as earnings, strength of the balance sheet, cash flows and the quality of management. This step may involve management visits and other company- specific qualitative measures.
2. Identify top-down', or macro factors and trends affecting a company including global growth, currency impact and commodity prices. This allows the team to assess whether to hedge these risks or to seek to benefit from them.
3. Catalysts can change the market's perception of value. These can include management changes, earnings upgrades or corporate activity. By investing with catalysts in mind the team can minimise the time they are invested in a stock and as a result, reduce risk.
4. Finally, the analysis seeks to minimise mistakes by first understanding alternative viewpoints in the market and hence Regal's insight' in a given trade.

Investment guidelines

The Underlying Fund may invest within the asset class and net exposure ranges as set out below. As well as providing reasonable constraints, these investment guidelines also serve to manage a number of risks including leverage, short selling as well as investment specific and market risks.

Asset class exposure: as % of NAV

• Cash: -10%-10%

• Australian listed equites: 90%-110%

• Exchange traded derivatives: 10%-20%

Market exposure: as % of NAV

• Net exposure: 90%-110%

• Gross exposure range: 90%-200%

• Anticipated gross exposure: 140%-180%

• Single stock active weight: +/- 5%

Holdings: No of positions

• Number of long positions (min/max): 40-100

• Number of short positions (min/max): 0-40

Tracking error target: 4%-8% p.a.