Benefits of investing in MEC

The Company will hold an ethically screened portfolio predominantly comprised of global Securities and Derivatives.

The Company's Portfolio will not include direct investments in Securities that are issued by entities in the following industries:

• Armaments;

• Tobacco and alcohol;

• Gambling;

• Coal and Uranium mining;

• Oil and gas extraction;

• Intensive animal farming and aquaculture; or

• Logging of rainforest or old growth timber.

The Manager intends to apply a "positive screen by investing a minimum of 5% of the Company's Net Assets in Securities issued by companies which produce products or services that it considers are likely to improve the planet.

About the Fund

The Morphic Ethical Equities Fund seeks to provide investors a way to grow their wealth and feel confident they do so without investing in businesses that harm the environment, people, and society.

The Company's Investment Strategy is to construct a portfolio of ethically screened global Securities and Derivatives, designed to provide superior risk adjusted returns to Shareholders. This return will comprise a combination of capital growth and income, thus allowing franked dividends to be paid to Shareholders when prudent, and provided the Company has sufficient profit reserves and franking credits available.

The Fund excludes direct investments in entities involved in environmental destruction, including coal and uranium mining, oil and gas, intensive animal farming and aquaculture, tobacco and alcohol, armaments, gambling and rainforest and old growth logging.

2.5% of management fees are donated to Bush Heritage.

Stock selection is subject to compliance with the ethical screens described in the Morphic Ethical Charter. For more insight on how we see the future of ethical investing, please read our Ethical Whitepaper.

Investment objectives

The Company will aim to:

• deliver investors an ethically screened portfolio;
• deliver investors superior risk adjusted returns; and
• provide capital growth and consistent income.

The Index is a broad index covering world share markets.

Over the long term the Company expects to benefit from avoiding investments in Excluded Securities. However, investors need to be aware that in some business cycles such as portfolio might have done less well than broad global equities markets for several years in a row, and may do so in the future.

How we invest your money

The Company will primarily invest in global listed Securities and Derivatives. The Company may also invest in unlisted Securities, fixed interest instruments, commodities, credit instruments and currencies, all of which may be invested through assets, Exchange Traded Funds or other Derivatives, including futures, options, forwards and swaps.

The Equity Exposure limit for each country will be based on the size of each relevant market. Similar rules will apply to managing Portfolio concentrations in individual sectors.

The Portfolio will mainly consist of long and short investments, carefully selected with a view to their own investment attributes, their resonance with the Manager's broader global economic and market analysis.

Investment guidelines

• Number of Long and Short Positions: 20-60 positions typically, making up 30% to 70% of Net Assets. Maximum of 100 positions

• Geographic Equity Exposure limits: US: 75%; Other G7: 25%; All others:15%; Emerging Markets total: 40%

• Industry/Sector Equity Exposure limits: Four times each General Industry Classification Segment (GICS) of the MSCI Index

• Single Security Long Position (inception limit): 5% of Net Assets

• Single Security Long Position (market value limit): 15% of Net Assets (after any change from acquisition)

• Single Security Short Position (inception limit): 5% of Net Assets

• Single Security Short Position (market value limit): 6% of Net Assets(after any change from acquisition)

• Net Equity Exposure: 0% to 200% (typically 100%)

• Portfolio value at risk limit: 5% of the Portfolio (typically 2%)

• Limits on unlisted Securities: Typically 0% but up to 10% of Portfolio's value at risk limit. Refer to Section 3.13 of the PDS for a definition of value at risk limit

• Limits on gold bullion and other physical commodities: 10% of Portfolio's value at risk limit