Benefits of investing in the Clime Smaller Companies Fund

Investment Strategy

• The Fund is a smaller companies fund which seeks to deliver strong risk-adjusted total returns by investing in a portfolio of high quality smaller Australian companies that are attractively priced.

Investment objective

• The Fund seeks to deliver strong risk adjusted total returns. Its objective is to outperform a blended benchmark comprising 50% of the Small Ordinaries Accumulation Index and 50% of the Emerging Companies Accumulation Index.

Investments

• The Fund invests in select high quality investments which we believe are trading at a discount to intrinsic value. A key objective of the Fund is to generate sustainable long term capital growth.

Investor suitability

This Fund may suit investors with a high risk tolerance and investment time horizon of at least 5 years.

About the Fund

The Clime Smaller Companies Fund is a concentrated portfolio of high-quality businesses that are outside the ASX200 at the time of initial investment.

The Fund invests in niche leaders that have good economics, strong balance sheets, and significant growth prospects. It is designed to take advantage of the structurally inefficient market segment of small capitalisation stocks.

Its objective is to outperform a blended benchmark comprising 50% of the Small Ordinaries Accumulation Index and 50% of the Emerging Companies Accumulation Index.

Investing Methodology

The Clime Smaller Companies Fund has a quality focus with a strong valuation discipline.

Fund holdings are characterised by:

• A competitive advantage, leadership within a specific niche and a sound track record

• Financial strength, high levels of profitability and margin

• Low financial leverage

• Capital efficient growth and cash generation

• Highly capable management team aligned with creating shareholder value

• Companies that can deliver genuine sustainable long-term growth

• Investments that can be purchased at appropriate prices

Our approach to portfolio management ensures investments are appropriately weighted according to their level of risk and reward. Position sizing reflects not only our assessment of valuation and quality, but also the degree of strategy execution.

How we invest your money

The Fund invests in a portfolio of Australian equities (listed and unlisted) and cash. In a limited number of instances, the Fund may invest up to 10% of its value in pre-IPO opportunities where the expected timeframe to ASX listing is 6 months or less.

The Fund invests directly: investments typically comprise ordinary shares. The Fund may hold cash, and at times, the levels of cash or cash equivalents may be high (up to 100%) where attractive investment opportunities are not apparent and/or elevated market uncertainty presents an increased risk of near-term capital loss.

The Fund may periodically hold market portfolio protection instruments to hedge liquidity and market risk.

Portfolio constraints

The following additional constraints apply to the Fund:

• The Fund will invest in securities that are outside of the S&P/ ASX200 Index at the time of initial investment,

• no single holding in any security may constitute more than 15% of the Fund (at the time of trade),

• the Fund may hold a maximum of 40 securities and

• the Fund may not hold more than 10% of the total shares outstanding of any single security at any time.

These portfolio guidelines will be applied by the Investment Manager flexibly as the Fund grows. Deviations from these will be corrected as soon as the Investment Manager considers practicable.