Investment Philosophy
The investment philosophy of the Company's investment manager, Ausbil Dexia Limited ("Manager"), is based on a process which has been pioneered and successfully implemented by their senior investment professionals since inception in 1997.

The Manager's philosophy is that active management of the portfolio facilitates greater consistency and risk controlled outperformance.

By adopting a "Style Neutral" approach, rather than the traditional "value" or "growth" bias our Manager has been able to achieve greater consistency in value added performance across the full term of the sharemarket cycle.

The philosophy is that share price movements are driven by earnings trends and impact on both "growth" and "value" stocks alike. The aim is to exploit the opportunities within the entire market, rather than just restricting our selection to "growth" or "value" shares.

Quality and well proven research processes designed to identify both sector and company earnings changes at an early stage assist in pre-empting share price rises and hence create outperformance relative to the benchmark.


Investment Strategy
The Manager's investment strategy is to focus on the more rewarding opportunities within undervalued emerging stocks which are growing, or have the potential to grow at a faster rate than the leader stocks. Once a company achieves a leadership position within a market, either domestically or globally, the ability for earnings to continue to grow organically as strong as they did during the period of achieving their leadership status, is more difficult. A company with a dominant market share will have a harder task in growing its business and profitability, whereas a successful smaller company with innovative management, product and service has greater potential to achieve superior growth off a smaller base.The strategy is to identify these emerging leader opportunities and create superior wealth for our shareholders than would be achieved by investing a broader leader dominated portfolio. The emerging leader market is also fertile ground for performance enhancing takeover activity as leader companies seek to grow their market by acquiring challenging competitors.


Investment Process
Our Manager's investment process is unique in that it focuses on the key drivers to sector and share earnings over the coming twelve month period. It seeks to add value through the combination of: Detailed macroeconomic and sectoral analysis to determine portfolio strategy; with Hands-on company specific research to identify mis-priced companies with attractive valuation and earnings prospects. Portfolio construction then focuses on blending these conclusions into a concentrated but risk controlled portfolio designed to outperform.


Dividend Policy
The Company will pay dividends from the profit, dividend and interest income it receives from its investments to the extent permitted by law and prudent business practice. Dividends will be franked to the extent that available imputation credits and the applicable franking benchmark percentage (if any) permits. Dividends passed on to shareholders may include part or all of the profits from realisation of investments.


Capital Structure Policy
The Board will regularly review the capital structure of the Company and, where the Board considers it appropriate, undertake appropriate capital reconstructions including market buy-back of shares.


Permitted Investments
The Management Agreement with Ausbil Dexia Limited provides a wide range of investment options and enables the Manager to undertake investments on behalf of the Company without Board approval within specific guidelines. However, if a proposed investment is not in accordance with written guidelines, Board approval is required.

The Company proposes to invest in the following investments:

a. Listed securities, being any security quoted on the ASX and other markets including, without limitation, shares, units or notes which are redeemable, preference or deferred, fully or part paid, with or without any right, title or interest thereto or therein (including any right to subscribe for or convert to such security whether listed on the ASX or not), and any Security of whatsoever nature which the Manager expects will be quoted on the ASX or similar markets within a twelve month period from the date of investment.

b. Listed securities on any global stock market where the security is also listed on the ASX.

c. Warrants and options to purchase any investment and warrant and options to sell any investment which is a permitted investment.

d. Purchase of bills of exchange, promissory notes or other negotiable instruments accepted, drawn or endorsed by a bank, or by any corporation of at least an investment grade credit rating granted by a recognised credit rating agency in Australia.

e. Units or other interests in cash management trusts.

f. Debentures, unsecured notes and bonds of a corporation of at least an investment grade credit rating granted by a recognised credit rating agency in Australia.

g. Any other financial product with which the Manager may use in the management of the portfolio in accordance with its Australian Financial Services License.


Report to Security Holders
To assist shareholders in the Company assess the value of Shares and to comply with the Listing Rules, within 14 days of the end of each month the Company will release to shareholders through the ASX a statement of the net tangible asset backing of its Shares as at the end of the preceding month. The calculation of the net tangible asset backing of the Shares will be made in accordance with the Listing Rules.

The Company will provide holders of Securities on request, free of charge, a copy of statements to shareholders through ASX of the net tangible asset backing of the Securities from time to time.