KARARA MARKET NEUTRAL PLUS FUND

INFORMATION MEMORANDUM

DATED 16 APRIL 2019

FOR AN OFFERING OF SERIES 1 UNITS TO WHOLESALE INVESTORS

TRUSTEE: PERPETUAL TRUST SERVICES LIMITED ABN 48 000 142 049 AFSL NO. 236648

INVESTMENT MANAGER: KARARA CAPITAL PTY LIMITED ABN 34 134 075 157 AFSL NO. 333318

CONTENTS

1. KEY FEATURES AT A GLANCE ............................................................................................................................ 3

2. ABOUT PERPETUAL AND KARARA CAPITAL ...................................................................................................... 5

3. ASIC BENCHMARK AND DISCLOSURE PRINCIPLES ............................................................................................ 7

4. HOW THE FUND INVESTS ............................................................................................................................... 10

5. PORTFOLIO GUIDELINES ................................................................................................................................ 12

6. FEES ............................................................................................................................................................... 12

7. RISK FACTORS ................................................................................................................................................ 14

8. TAXATION...................................................................................................................................................... 16

9. INVESTMENTS, WITHDRAWALS AND DISTRIBUTIONS.................................................................................... 16

10. ADDITIONAL INFORMATION .......................................................................................................................... 20

11. COMPLETING THE APPLICATION FORM ......................................................................................................... 23

12. APPLICATION FORM ...................................................................................................................................... 27

CORPORATE DIRECTORY ................................................................................................................................................. 40

CONTACT DETAILS FOR

KARARA CAPITAL’S CLIENT

SERVICE TEAM:

Telephone: (03) 8612 7100

Fax: (03) 8612 7111

Email: admin@karara.com.au

Website: www.karara.com.au

Post: Level 33

101 Collins Street

Melbourne Vic 3000

This Information Memorandum (“IM”) is dated 16 April

2019 and is issued by Perpetual Trust Services Limited

ABN 48 000 142 049, AFSL No. 236648. References to

“Perpetual” or the “trustee” throughout this IM, unless

the context requires otherwise, are references to

Perpetual Trust Services Limited as trustee of the Karara

Market Neutral Plus Fund (“the Fund”). A reference to

“Fund” is to the Karara Market Neutral Plus Fund.

References to “Karara Capital” are references to Karara

Capital Pty Limited ABN 34 134 075 157 AFSL No. 333318,

who is the investment manager of the Fund. A reference

to “the Administrator” is a reference to Link Fund

Solutions Pty Limited ABN 44 114 914 215, and a

reference to “the Custodian” and/or “the Prime Broker” is

a reference to Deutsche Bank AG (London Branch).

The information in this IM is subject to change from time

to time and may be updated by Perpetual and made

available to you. When necessary, Perpetual will issue a

updated IM.

You may only apply for units in the Fund if you have

received this IM in Australia and are a ‘wholesale client’

as that term is defined in section 761G of the

Corporations Act.

This IM offers one class of units in the Fund, being

Series 1. All references to units in this IM are references

to Series 1 units in the Fund. Other classes of units in the

Fund with different fee structures may be offered under

other offer documents.

Perpetual reserves the right to refuse to accept an

application in whole or in part.

This document is not required to be lodged with

Australian Securities and Investments Commission

(“ASIC”) and does not contain information that may be

expected to be found in a prospectus, product disclosure

statement or other regulated offer document. The Fund is

not required to be and is not registered as a managed

investment scheme under the Corporations Act 2001.

The Fund is governed by the Constitution and the

Application Form.

Important notice: An investment in the Fund is not a

deposit with or other liability of any of Perpetual,

Karara Capital and their related bodies corporate and

is subject to investment risk including possible delays

in repayment and loss of income or principal invested.

None of Perpetual, Karara Capital and their related

bodies corporate guarantees any particular rate of

return on the units, the performance of the Fund or

the repayment of capital from the Fund.

Perpetual and Karara Capital make no

recommendations in relation to this IM or the offer of

units pursuant to this IM. Only information and

representations contained in this IM may be relied

upon as having been authorised by Perpetual. No

person is authorised to give any information or make

any representation not contained within this IM.

This IM contains general information only and does not

take into account your individual objectives, financial

situation and particular needs. You should consider

whether the information in the IM is appropriate for

you in light of your objectives, financial situation and

needs. It is important that you read the entire IM

before making any decision to invest. You should also

consider the risk factors that could affect the Fund’s

financial performance. All these factors should be

considered in light of your particular investment

needs, objectives and financial circumstances

(including financial and taxation issues). You should

seek professional advice from a broker, financial

adviser or other professional adviser before deciding

whether to invest. Some of the risk factors that you

should consider are set out in Section 7: Risk Factors.

This IM does not constitute, and may not be used for

the purpose of, an offer or solicitation in any

jurisdiction other than Australia.

A reference to “business day” throughout this IM and

any of its attached documents means a day other than

a Saturday or Sunday on which banks are open for

general banking business in Sydney. References to ‘$’

in this Information Memorandum are to Australian

dollars unless the context otherwise requires.

Page | 3

1. KEY FEATURES OF THE FUND AT A GLANCE Key features Karara Market Neutral Plus Fund

Fund name Karara Market Neutral Plus Fund, an unregistered managed investment scheme.

Investment objective The investment objective of the Fund is to outperform the RBA Cash Rate (after fees) over rolling 5-year

periods.

Investment strategy The Fund will seek to provide investors with a return profile that is consistent and uncorrelated to other

asset classes.

The fund is an absolute return fund that aims to generate positive returns in all market environments by

reducing the majority of market risk, focussing on capital preservation and exploiting individual stock mis-

pricings. The Fund will utilise fundamental research to achieve this.

Investment time horizon Karara Capital suggests an investment horizon of at least 5-years.

Benchmark RBA Cash Rate.

Investments The Fund will typically invest in securities listed (or to be listed) on the Australian Securities Exchange (ASX),

Australian exchange traded derivatives and Australian denominated cash. The Fund may also invest in

Global REITs listed on developed market exchanges (typically Global REITs held by the Fund will be listed on

share markets located in the USA, Japan, Singapore, Hong Kong, UK and New Zealand).

Investment exposures The following guidelines will apply to managing the Fund:

• Target number of positions: Between 30 and 100 (combined Long and Short)

• Maximum GROSS Exposure: 400% (200% Long and -200% Short) of the Net Asset Value of the

Fund (NAV)

• Maximum NET Equity Exposure: +80% of NAV

• Minimum NET equity Exposure: -50% of NAV

• Maximum individual security exposures1:

o ASX 100 securities: +/- 30% of NAV

o ASX101-200 securities: +/- 20% of NAV

o Ex-200 securities: +/- 10% of NAV

o Global REITs: +/- 10% of NAV

Asset type Range (long and short) %

of NAV

Asset Allocation • ASX listed REITS, property related securities, Utilities related

securities and Infrastructure related securities

• Other ASX-listed securities comprising sectors not listed above.

• Global REITs listed on developed market exchanges

• Derivatives

• Cash

0% to 200%

0% to 100%

0% to 40%

0% to 40%

0% to 150%

Distributions Semi-annually as at 31 December and 30 June. Generally payable within 30 days and paid to your

nominated bank account or reinvested in additional units.

Eligible investors Wholesale investors as defined within section 761G of the Corporations Act

Minimum initial investment2 $250,0003

Minimum additional

investment2

$25,000

Minimum balance2 $250,000

Minimum withdrawal2 $25,000

Fees • Contribution fee: Nil

• Withdrawal fee: Nil

• Management fee: 1.50% pa of the Fund’s net assets payable from the Fund calculated and payable

monthly in arrears.

• Performance fee: 20% of excess performance above benchmark (after fees are adjusted to add back any

performance fees accrued but not yet paid) provided specified performance hurdles are met as set out in

section 6.2 of this IM. Accrued monthly and paid annually as at 30 June.

• Buy/Sell Spread +/- 0.25%4

Fund expenses Capped at 0.20% pa of the Net Asset Value.

Applications Monthly, with notice to be received by 2.00pm AEST on the last business day of the month

Withdrawals Monthly, with notice to be received 10 days prior to the last business day of the month, with withdrawal

proceeds generally paid within 10 business days of the end of month to your nominated bank account.

Page | 4

Key features Karara Market Neutral Plus Fund

Unit pricing Monthly, and available from Karara Capital’s website www.karara.com.au

Reporting The following reports will be sent to you:

• application and withdrawal confirmations

• monthly investor statements

• monthly investment fund report

• annual tax statements

• annual investment fund report

• distribution statements

• annual audited financial statements of the Fund are available upon request

Key service providers to the Fund

Trustee Perpetual Trust Services Limited

Investment Manager Karara Capital Pty Limited – responsible for:

• managing the Fund’s investments

Prime Broker & Custodian Deutsche Bank AG (London Branch) – responsible for:

• Custody of the Fund’s assets;

• Clearing and settlement functions;

• Provision of credit facilities, stock borrowing, foreign exchange and margin financing; and

• Brokerage and dealing when executing transactions for the Fund.

Administrator Link Fund Solutions Pty Limited – responsible for:

• Investment accounting, fund accounting, unit pricing calculations; and

• Unit registry

All fees quoted are inclusive of the impact of GST and net of any reduced input tax credits available to the Fund.

1 Maximum security exposure except where the maximum individual security exposure exceeds the stated limit due to market movements. In such

circumstances, the Investment Manager will dispose of any securities within a reasonable period.

2 Or other such amounts as Perpetual may determine from time to time without prior notice to unitholders. Perpetual may also in its absolute

discretion waive the minimum amounts.

3 The minimum investment is subject to the investor qualifying as a ‘wholesale client’ as defined within s.761G of the Corporations Act. A minimum

initial investment of $500,000 applies to investors who do not otherwise satisfy the eligible investor requirements.

4 In some circumstances, Perpetual may accept application monies, or pay withdrawal proceeds in-specie with consent. The buy/sell spread may not

apply in these circumstances.

Page | 5

2. ABOUT PERPETUAL AND KARARA CAPITAL

2.1 PERPETUAL TRUST SERVICES LIMITED

Perpetual Trust Services Limited, the Trustee of the Fund,

is part of the Perpetual Limited group of companies which

has been in operation for 130 years.

Perpetual Limited is a member of the Financial Services

Council (FSC). The standards of the FSC (FSC Standards)

apply to relevant activities conducted by Perpetual Limited

as well as certain other entities related to the FSC member,

including Perpetual. Perpetual complies with FSC

Standards including FSC Standard No. 1: Code of Ethics &

Code of Conduct. However, it has appointed service

providers to provide certain services in relation to the

Fund, some of which may not be members of the FSC.

Where a service provider is a member of the FSC,

Perpetual has taken reasonable steps to ensure that the

service provider will comply with all FSC Standards in

providing the services in relation to the Fund. Where a

service provider is not a member of the FSC, prior to the

appointment of the service provider, Perpetual has

undertaken all appropriate and reasonable due diligence,

establishes and maintains compliance monitoring, and

complies with all applicable laws in relation to the

appointment. Accordingly, you may not receive the full

benefit or protection of the FSC Standards in relation to

any services which are delegated to or provided by a

service provider.

As the Trustee, Perpetual is responsible for the operation

of the Fund and must act in accordance with the

constitution of the Fund.

Perpetual is permitted to deal with the assets of the Fund

as if it were the absolute and beneficial owner of them.

Perpetual is permitted to appoint delegates and agents to

assist it in exercising its powers and carrying out its

functions on such terms as it thinks fit. Perpetual has

appointed Karara Capital as the investment manager of the

Fund. Perpetual is able to terminate Karara Capital’s

appointment under the Investment Management

Agreement at any time in circumstances, including but not

limited to:

• A receiver is appointed with respect to the assets

and undertakings of Karara Capital;

• Karara Capital goes into liquidation, ceases to

carry on business in relation to its activities as

Investment Manager or materially breaches or

fails to observe or perform any duty or obligation

under the agreement and fails to rectify the

breach within a reasonable period;

• It is required to do so by law; or

• The Fund terminates.

Link Fund Solutions Pty Limited as the administrator of the

Fund and Deutsche Bank AG (London Branch), N.A. as the

prime broker and custodian of the assets of the Fund.

2.2 KARARA CAPITAL

Karara Capital is a specialist investment management

company focusing on the active management of Australian

equities. Karara Capital manages the Karara Investment

Funds as well as Australian equities mandates with

institutional investors.

Karara Capital is wholly owned by its employees, which

aligns their interests with those of their investors. As a

privately owned business Karara Capital is free to make

independent investment decisions.

At the core of Karara Capital’s team are its three Executive

Directors and majority shareholders: David Slack, Rohan

Walsh and Luke Sinclair, who between them have built a

successful track record managing Australian equities

spanning over 30 years. Supporting them is a team of

experienced investment professionals.

David Slack – Managing Director, Chief Investment Officer

(CIO)

B.Ec. (Hons), Fellow of FINSIA

As CIO, David is responsible for evaluating and overseeing

Karara Capital’s overall investment philosophy and

process. In addition, he has day-to-day responsibility for

co-managing client portfolios.

Prior to joining Karara Capital, David was a co-founder and

Joint Managing Director of Portfolio Partners Limited, a

major Australian fund manager which managed $5.3 billion

at the time it was sold to Norwich Union in 1998. Prior to

that, David was a founding executive director of County

NatWest Investment Management Limited (now Invesco

Australia), where he held the position of Head of

Australian Equities for nine years.

He is a former non-executive director of Victorian Funds

Management Corporation and, before joining Karara

Capital, was its deputy Chairman and Chair of the Board

Investment Committee.

David has over 40 years’ investment management

experience.

Rohan Walsh – Director

B.Sc. (Hons), Grad. Dip. App Fin & Inv.

Rohan joined Karara Capital in 2007. Together with Luke

Sinclair he is responsible for co-managing the Karara

ASX300 strategy.

Prior to joining Karara Capital, Rohan headed the

Australian equities team at Invesco, a position he held for

12 years. Rohan was responsible in this position for

developing the team and overseeing the investment

process. Preceding this, he was a senior Investment

Manager within County NatWest’s Australian equities

team with David for five years.

.

Page | 6

2. ABOUT PERPETUAL AND KARARA CAPITAL cont.

Rohan began his career working in the petroleum

exploration industry. Later he joined Barclays Bank and

then moved to the investment management division of the

State Bank of Victoria.

Rohan has over 30 years’ investment experience

Luke Sinclair – Director

B.Sc. (Hons), MA, CFA

Luke is responsible for co-managing the Karara ASX300

strategy.

Prior to joining Karara Capital, Luke worked with Rohan for

eight years in the Australian Equities team at Invesco. He

was responsible for financial analysis and security selection

in various industry sectors over this time. From 2001 he

was a senior Investment Manager of the Australian

Equities portfolio at Invesco.

Before joining Invesco, Luke was an Investment Manager

at Jardine Fleming Asset Management and responsible for

stock analysis and managing Australian equity portfolios.

Luke has over 20 years’ investment experience.

2.3 KARARA CAPITAL’S VISION

Karara Capital’s vision is to deliver superior investment

returns to investors.

Key to delivering this vision is Karara Capital’s commitment

to:

An established investment approach

Karara Capital employs a rigorous investment approach

that is patient, research intensive and forward looking.

Karara Capital's objective is to identify companies that it

believes possess positive attributes that can be purchased

at attractive prices and that will deliver superior returns

over time.

Small investment team

Karara Capital considers that small investment teams

perform better than larger ones as people management

has the potential to detract from effective portfolio

management.

Talented and empowered professionals

Karara Capital’s investment team comprises people who

have strong technical skills and a thorough understanding

of economics, portfolio theory and behavioural finance.

Creativity, independent thinking and temperament are

valued characteristics. The key talent of the Karara

Capital’s investment team lies in their ability to identify

where market expectations are wrong.

Business culture

Karara Capital fosters a performance orientated, creative

and collegiate business culture. Employee equity

participation in the business gives Karara Capital the ability

to attract, develop and retain top investment talent and

create a positive work environment and culture.

2.4 INVESTMENT MANAGEMENT

Key Decision Maker of the Fund

Andrew Smith – Investment Manager

B.Com, B.Sc., Grad. Dip. App Fin & Inv.

Andrew is the key individual responsible for managing the

Fund and devotes a substantial proportion of his time

executing the Fund’s investment strategy.

Prior to joining Karara, Andrew was a senior portfolio

manager and equity partner at Freehold Investment

Management, a real estate and infrastructure specialist

manager. Andrew was responsible for a market leading

absolute return fund and for dedicated REIT and

infrastructure portfolios. Prior to Freehold, Andrew held

senior positions at several respected funds management

firms including Goldman Sachs, APN Property Group and

Portfolio Partners. During Andrew’s tenure at Goldman

Sachs Asset management he was a member of the global

investment team. Whilst at APN, Andrew created and

launched the APN Asian REIT fund. He was co-manager for

this fund and researched investment ideas across the

region.

Andrew has over 20 years’ investment experience.

Investment Team

Andrew is a member of and can draw on the expertise of

Karara Capital’s team of proven investment professionals.

The key success factor in the investment team lies in their

ability to work together to identify where market

perceptions and expectations are wrong.

Page | 7

3. ASIC BENCHMARK AND DISCLOSURE PRINCIPLES

The Australian Securities and Investments Commission (‘ASIC’) has released benchmarks and disclosure principles to assist investors to

make a more informed decision. This section of the IM addresses the improved disclosure requirements in accordance with ASIC

Regulatory Guide 240. The requirements of ASIC Regulatory Guide 240 apply to responsible entities of hedge funds registered with

ASIC. However, ASIC encourages other issuers to disclose against the benchmarks and apply the disclosure principles. Accordingly,

while the Fund is not required to make these disclosures, it has generally sought to disclose in accordance with ASIC’s guidance.

3.1 DISCLOSURE BENCHMARKS

ASIC BENCHMARK SUMMARY REFERENCE

Valuation of assets: The Fund meets this benchmark by holding ASX-listed (or to

be listed) securities, Global REITs listed on developed market

exchanges, Australian denominated cash and Australian

exchange traded derivatives only. OTC derivatives are NOT

permitted.

Valuations of the Fund and its underlying investments are

undertaken by the Fund’s Administrator Link Fund Solutions

Pty Limited.

For additional information in relation to

the valuation of assets please refer to

page 19 of the IM, 9.5 Unit Pricing.

Periodic reporting: The Fund meets this benchmark by providing investors with

the following information:

Monthly reporting:

• NAV of the Fund and Redemption Price of Units;

• Details of any changes to key service providers

including any changes in related party status;

• Net performance returns;

• Any material changes to the Fund’s risk profile and

strategy; and

• Any material changes to the primary investment

personnel responsible for managing the Fund.

The above information will be included within the monthly

investment fund report that will also be available on Karara

Capital’s website at www.karara.com.au

Annual reporting:

• Asset allocation of the Fund by asset type;

• Liquidity profile as at year-end;

• Maturity profile of the Fund’s liabilities as at year-

end;

• The Fund’s leverage ratio as at year-end;

• Details on derivative counterparties engaged;

• Annual investment returns of the Fund since

inception; and

• Details of any changes to key service providers

including any changes in related party status.

The above information will be included within the annual

investment fund report that will also be available on Karara

Capital’s website at www.karara.com.au

For additional information in relation to

Reporting please refer to page 23 of the

IM, 10.3 Reporting.

Page | 8

3. ASIC BENCHMARK AND DISCLOSURE PRINCIPLES cont.

3.2 DISCLOSURE PRINCIPLES

ASIC

DISCLOSURE

PRINCIPLE

SUMMARY REFERENCE

Investment

strategy:

The investment objective of the Fund is to outperform the RBA Cash Rate (after fees)

over rolling 5-year periods.

The Fund aims to generate absolute returns in line with long term equity returns

while targeting a lower risk profile, as measured by fund volatility. Generating returns

that are uncorrelated (i.e. Performance doesn’t necessarily rise/fall when equity

markets do) and preserving capital are priorities for the Fund.

The Fund uses long and short positions to target absolute returns. Shorting serves two

main purposes; to profit from falling stock prices and to reduce total portfolio risk.

To build the portfolio Karara Capital undertake a process of:

• Security analysis;

• Security valuation;

• Portfolio construction; and

• Position sizing.

The Fund will typically invest in securities listed (or to be listed) on the Australian

Securities Exchange (ASX), Australian exchange traded derivatives and Australian

denominated cash. OTC derivatives are NOT permitted.

The Fund may also invest in Global REITs listed on developed market exchanges

(typically Global REITs held by the Fund will be listed on share markets located in the

USA, Japan, Singapore, Hong Kong, UK and New Zealand).

The key dependency underpinning the investment strategy is the research, analysis,

skill and experience of the investment manager.

There are a number of risks associated with investing in the Fund. Key risks include

the use of Leverage, Short Shelling and Derivatives. The investment manager’s

approach to managing risk is set out in section 7.

The investment manager may adjust the guidelines applying to the investment

strategy from time to time without notice to the unitholders (any material change will

be notified to investors as soon as possible and/or be notified on Karara's website).

For additional information

in relation to the

investment objective and

strategy of the Fund please

refer to section 4 – How

the Fund Invests.

For additional information

in relation to the Fund

investments please refer

to section 5 – Portfolio

Guidelines.

For additional information

in relation to the Key Risks

associated with investing

in the Fund please refer to

section 7 – Risk Factors.

Investment

manager:

The Investment Manager of the Fund is Karara Capital Pty Limited.

Andrew Smith, has overall responsibility for the Fund’s investment decisions and is

supported by a team of investment professionals.

For additional information

please refer to section 2 –

About Perpetual and

Karara Capital.

Fund structure: The Fund is an Australian unregistered managed investment scheme. The Fund

invests directly in its investments. A diagram of the Fund’s structure is set out in

section 1.2.

In addition to Karara Capital, the other key service providers are set out in the Table

of Key Features of the Fund at Section 1 and section 10.5 and 10.6. Perpetual as

Trustee regularly monitors the service providers to ensure compliance with their

contractual service obligations. There are no related party relationships and all

arrangements are on arm’s length terms.

There are various risks associated with this structure including counterparty risk.

For additional information

please refer to sections

10.5 – Prime Broker and

Custodian and section 10.6

Administrator

For additional information

please refer to section

7.13 – Counterparty and

service provider risk.

Page | 9

3. ASIC BENCHMARK AND DISCLOSURE PRINCIPLES cont. ASIC

DISCLOSURE

PRINCIPLE

SUMMARY REFERENCE

Valuation,

Location and

Custody of

Assets:

In determining the Net Asset Value of the Fund, the assets of the fund will normally

be valued as follows:

Exchange traded assets: exchange traded securities that are regularly traded are

valued at their last traded price. Other investments traded through a clearing firm

will be valued by reference to the most recent official settlement price quoted by

that clearing house or exchange.

Currencies: any non-Australian dollar value will be converted into Australian

Dollars at the rate determined by the Administrator in accordance with their

valuation policy.

The Fund will typically invest in ASX-listed (or to be listed) securities, Australian

exchange traded derivatives and Australian denominated cash.

The Fund may also invest in Global REITs listed on developed market exchanges

(typically listed on share markets located in the USA, Japan, Singapore, Hong Kong, UK

and New Zealand).

The Prime Broker and Custodian hold the Fund’s assets. Cash may also be held on

deposit with one or more Australian banks.

For additional information

in relation to the Fund

investments please refer to

section 5 – Portfolio

Guidelines.

For additional information

please refer to section 10.5

– Prime Broker and

Custodian and section 10.6

Administrator.

Liquidity: The Investment Manager expects to realise at least 80% of the Fund’s assets, at the

value ascribed to those assets in calculating the Fund’s Net Asset Value, within 10

days.

Leverage: The Fund may from time to time use leverage to magnify the Fund’s exposure to

investments. Leverage may be obtained by the Fund borrowing securities from the

Prime Broker to invest and by investing in derivatives. A worked example of the

impact of Leverage is provided in section 7.11.

The Fund’s maximum Gross exposure is 400% (200% Long and -200% Short) of the Net

Asset Value of the Fund.

The Prime Broker has a security interest over the Fund as collateral and the Fund is

subject to counterparty risk with respect to the Prime Broker. The assets of the Fund

may also be transferred to the Prime Broker as collateral.

For additional information

please refer to section 4.8 –

Leverage and section 7.11 –

Risks associated with

Leverage

For further information

please refer to section 10.5

- Prime Broker and

Custodian.

Derivatives: The Fund may use derivatives as part of its investment strategy to obtain exposure,

leverage the portfolio and achieve a short position. The Fund may use Australian

exchange traded derivatives only (typically futures contracts). OTC derivatives are

NOT permitted.

The Investment Manager will transact with regulated and reputable brokers as

Derivative counterparties following due diligence. Australian exchange traded

derivative transactions are cleared through the ASX, which reduces the counterparty

risk.

There are a number of risks associated with investing in derivatives. Key risks include

the use of Leverage, Short Selling and also Counterparty Risk.

For additional information

in relation to the Key Risks

associated with investing in

Derivatives please refer to

section 7 – Risk Factors.

Short Selling: The Fund utilises short selling with the aim of generating alpha from falling stock

prices and to reduce overall share market risk and total portfolio risk. Short selling

involves selling borrowed securities with the intention of buying the securities back,

at a later date, at a lower price.

To manage the risk associated with short selling the Fund may utilise ‘Stop-Loss

Limits’ on short positions held by the Fund.

For additional information

in relation to Short Selling

please refer to section 4.7 -

Short Selling and Section

7.10 - Risks associated with

Short Selling.

Withdrawals /

Redemptions

Unitholders can redeem/withdraw from the Fund monthly with notice to be received

by the registry 10 days prior to the last business day of the month.

Withdrawals may be suspended and/or in limited circumstances as set out in section

9.7. Unitholders will be notified in writing of any material changes to their withdrawal

rights.

For further information

please refer to section 9.7 –

restrictions Applying to

Withdrawals and

Applications

Page | 10

4. HOW THE FUND INVESTS4.1 INVESTMENT OBJECTIVE

The Fund aims to generate absolute returns in line with

long term equity returns while targeting a lower risk

profile, as measured by fund volatility. Generating returns

that are uncorrelated (ie. Performance doesn’t necessarily

rise/fall when equity markets do) and preserving capital

are priorities for the Fund.

4.2 INVESTMENT STRATEGY

The Fund uses long and short positions to target absolute

returns. Shorting serves two main purposes; to profit from

falling stock prices and to reduce total portfolio risk.

To build the portfolio Karara Capital undertakes a process

of:

• Security analysis;

• Security valuation;

• Portfolio construction; and

• Position sizing.

4.3 SECURITY ANALYSIS

The Fund will seek to achieve its objective by utilising

fundamental analysis. Fundamental analysis utilises

original, independent and security specific research. The

essence of this research is driven by ‘change’. This can

come in any manner of forms such as; management,

strategy, acquisition/divestment, outlook for a company’s

products/services, return on invested capital, the balance

sheet, momentum, sentiment, regulation or

macroeconomic. Our investment decisions are based on

the identification and interpretation of change. Karara

Capital need to assess how significant the change is, has it

been reflected in the stock price, and is a re-rating likely?

4.4 SECURITY VALUATION

When evaluating a security and considering the ‘changes’,

Karara Capital derives a valuation that is the summation of

our knowledge and insight. Peer review is undertaken to

ensure the merits of each particular investment case. Our

final valuation is compared to the current stock price. If a

sufficient upside or downside is present, Karara Capital will

take either an active long or short position.

4.5 PORTFOLIO CONSTRUCTION

A significant portion of our value-add comes from being

able to make active stock decisions in a timely fashion.

The Fund has four general areas of alpha generation.

Relative valuation, fundamental long, fundamental short

and event driven. Understandably some of these

classifications have a natural overlap.

Relative valuation – this is often referred to as ‘pairs’

trading. Essentially Karara Capital are trying to match up

pairs of securities that have similar characteristics from

within similar ASX sectors. Karara Capital are looking for a

relative pricing dislocation to exploit. This could be based

upon the dividend yield or price to earnings ratio. This

form of investing requires regular rebalancing to capture

the available alpha.

Fundamental long – the Fund may take a standalone long

position in a security where it has undergone our security

analysis and valuation process. The company’s prospects

within an industry may not be being appropriately

recognised by its market price or market rating.

Fundamental positions are generally held for the medium

to long term (6-12 months).

Fundamental short – this is effectively the opposite of a

fundamental long. Karara Capital will take this position

when Karara Capital believes a company’s share price is

trading above our derived valuation.

Event driven – frequently Karara Capital observes special

situations whereby mispricing occurs. These can be caused

by merger and acquisition activity, initial public offerings,

equity placements, recapitalisations, Australian de-listings,

buybacks, acquisitions & divestments and index

rebalancing. These events differ in nature and have varying

expected timeframes to play out.

4.6 POSITION SIZING

Individual stock positions are selected with reference to

the deviation to our valuation, stock volatility, stock

liquidity and price & earnings momentum. Generally the

largest stock positions will be in lower risk large

capitalisation stocks. Higher risk small capitalisation stocks

will be held at relatively smaller sizes.

4.7 SHORT SELLING

The Fund utilises short selling with the aim of generating

alpha from falling stock prices and to reduce overall share

market risk and total portfolio risk.

Short selling involves selling borrowed securities with the

intention of buying the securities back, at a later date, at a

lower price. To manage the risk associated with short

selling the Fund may utilise ‘Stop-Loss Limits’ on short

positions held by the Fund.

The Fund’s maximum GROSS short exposure will be -400%

of the Fund’s Net Asset Value. The maximum NET short

exposure is -50% of the Fund’s Net Asset Value.

4.8 LEVERAGE

Leverage is a tool which may be utilised by the Fund to

magnify exposures beyond the assets available to the Fund

by increasing the level of investible assets. The Fund may

borrow securities to invest and may invest in Derivatives

that have the same effect as borrowing. This could

enhance returns, although it may also increase losses.

Borrowing or leverage may produce more volatile returns

compared to investing without making use of borrowing or

leverage.

The Fund’s maximum GROSS exposure is 400% (200% Long

and -200% Short) of the Net Asset Value of the Fund.

Leverage is a means by which GROSS exposure can be

increased above 100%.

The Fund may use the assets of the Fund as security for

any monies and securities borrowed or collateral for

Derivatives or Short Selling.

Page | 11

5. PORTFOLIO GUIDELINES.

THE KARARA MARKET NEUTRAL PLUS FUND

The Fund will typically invest in securities listed (or to be

listed) on the Australian Securities Exchange (ASX),

Australian exchange traded derivatives and Australian

denominated cash. The Fund may also invest in Global

REITs, Infrastructure related securities and Utilities related

securities listed on developed market exchanges*.

Although the Fund is authorised to invest in Australian

exchange traded derivatives, OTC derivatives are NOT

permitted.

INVESTMENT OBJECTIVE

The investment objective of the Fund is to outperform the

RBA Cash Rate (after fees) over rolling 5-year periods.

An investment in this Fund is not intended to be of a short-

term nature. Karara Capital suggests an investment

horizon of at least five years. Although Karara Capital have

suggested a minimum investment horizon for an

investment in this Fund, you should regularly review your

investment decision with your professional adviser as your

investment requirements or market conditions may

change.

FUND PERFORMANCE

To obtain up-to-date performance information, please visit

the Karara Capital website www.karara.com.au or contact

a client service representative on (03) 8612 7100.

* Developed market exchanges as defined by MSCI. Typically

Global REITs held by the Fund will be listed on share markets

located in the USA, Japan, Singapore, Hong Kong, UK and New

Zealand

INVESTMENT RESTRICTIONS

Investment Exposures

Target number of

positions:

30 - 100 (combined Long and Short)

Maximum NET Equity

Exposure:

+80% of the Net Asset Value of the Fund

(NAV)

Minimum NET Equity

Exposure:

-50% of NAV

Maximum GROSS

Exposure

400% (200% Long and -200% Short) of NAV

Maximum individual

security exposure*

ASX100 securities +/- 30% of NAV

ASX101-200 securities +/-20% of NAV

Ex-200 securities +/- 10% of NAV

Global REITs +/- 10% of NAV

* Maximum security exposure except where the maximum individual

security exposure exceeds the stated limit due to market movements. In

such circumstances, the Investment Manager will dispose of any securities

within a reasonable period.

Asset Allocation

Range (Long and Short)

% of NAV

ASX listed REITs, property related

securities, Infrastructure related securities

and Utilities related securities.

0% to 200%

Other ASX-listed securities comprising

sectors not listed above

0% to 100%

Global REITs, Infrastructure related

securities and Utilities related securities

listed on developed market exchanges

(excluding Australia)

0% to 40%

Derivatives 0% to 40%

Cash 0% to 150%

Note: These guidelines may be adjusted from time to time without notice

to the unitholders (any material change will be notified to investors as

soon as possible and/or be notified on Karara's website).

Page | 12

6. FEES

6.1 MANAGEMENT FEE

Karara Capital will be paid a management fee of 1.50% p.a.

(inclusive of GST and net of any reduced input tax credits

available to the Fund) of the value of the Fund’s net assets

referable to the Series 1 class of units. The Fund’s

constitution allows Perpetual to charge a management fee

of up to 4% p.a (inclusive of GST) of the Net Asset Value of

the Fund.

The management fee is calculated monthly and is paid

from the Fund monthly in arrears.

6.2 PERFORMANCE FEE

The Fund’s constitution allows Perpetual to charge a

maximum performance fee of 25% of excess performance

of the Series 1 unit class where the performance for the

class exceeds the benchmark for the class over a financial

year. The benchmark is the RBA Cash rate.

At the date of this IM, the performance fee is 20%

(inclusive of GST and net of any reduced input tax credits

available to the Fund) of excess performance by which the

Series 1 unit class outperforms the RBA Cash Rate over a

financial year, provided:

• the Series 1 unit class outperforms the RBA Cash

rate by 2% per annum (Performance Hurdle).

The performance fee (if any) is paid to Karara Capital.

Any entitlement to a performance fee will be paid annually

in arrears within 60 days of the end of the financial year. If

the return on the Series 1 unit class in any year is less than

the benchmark return, this under-performance will be

carried forward and applied against the return on the

Series 1 unit class in the following and any subsequent

years. A performance fee will not accrue until any under-

performance has been recovered. This represents a high

water mark.

The performance fee is calculated monthly. Individual

calculations for each month (as detailed below) are

aggregated on a financial year to date basis and, where

positive (taking into account any under-performance which

has been carried forward), are reflected in the unit price.

The formula for determining the performance fee for a

month is:

A x 20% x (TP - BP)

where:

A: the Net Asset Value (NAV) of the Series 1 unit

class at the end of the immediately preceding month

(adjusted to add back any performance fees which have

accrued but have not been paid) and adjusting for any

change in the NAV as a result of applications,

withdrawals and distributions during the month.

TP: the percentage change in the NAV of the Series 1 unit

class from the end of the immediately preceding

month to the end of the current month after

adjusting to neutralise any reduction in the NAV as a

consequence of:

• entitlements to distributable income where the

end of the current month coincides with the end

of a distribution period; and

• any performance fees which have accrued but

have not been paid.

BP: the Benchmark expressed as a percentage time-

weighted adjusted for any increases or decreases in

the RBA Cash rate over the current month.

Worked examples of the Performance Fee

The below examples are for the purpose of illustrating how

performance Fees may be calculated only. Each example

assumes the investment return of the Fund and the

Benchmark is steady during the period. The examples also

assume no applications or withdrawals are made during

the period.

Example 1 – Fund performance exceeds the Performance

Hurdle

The adjusted Fund NAV at the beginning of the period is

$500,000 and at the end of the period is $530,000.

Therefore the investment return for the period is 6% as 6%

x $500,000 = $30,000. The Benchmark return for the

period is 2% and the Performance Hurdle for the period is

4% (Benchmark return +2%).

The Performance Fee will be calculated as:

$500,000 x 20% x (6% - 2%) = $4,000.00

Example 2 – Fund performance does NOT exceed the

Performance Hurdle

The adjusted Fund NAV at the beginning of the period is

$500,000 and at the end of the period is $515,000.

Therefore the investment return for the period is 3% as 3%

x $500,000 = $15,000. The Benchmark return for the

period is 2% and the Performance Hurdle for the period is

4% (Benchmark return +2%).

NO performance fee is payable as the Fund performance

does not exceed the Performance Hurdle.

The performance fee is calculated on the performance of

the Series 1 units and not on the performance of your

investment in the Fund. As a result, the actual

performance fee payable on your investment in the Fund

may be affected by the timing of your applications and

withdrawals.

6.3 NORMAL EXPENSES

Perpetual has the power under the Fund’s constitution to

be reimbursed for all expenses properly incurred in

operating the Fund. This includes reimbursement from the

Fund for the custody, administration, accounting and audit

expenses incurred in respect of the Fund on an on-going

basis. The level of expenses that can be reimbursed from

the Fund is capped at 0.20% per annum. Where the

expenses exceed 0.20% per annum, the residual expenses

will be paid by Karara Capital.

Page | 13

6. FEES cont.

6.4 ABNORMAL EXPENSES

Subject to the Corporations Act, Perpetual is entitled to be

paid or reimbursed from the Fund’s assets for any

abnormal expenses incurred in relation to the proper

performance of its duties in respect of the Fund. Any

abnormal expenses (such as investor meetings, changes to

the constitution and defending or pursuing legal

proceedings) will be paid out of the Fund. These costs are

expected to be incurred fairly infrequently.

6.5 TRANSACTION COSTS

The Fund may incur transaction costs (such as brokerage,

settlement costs, clearing costs and stamp duty) when

buying and selling the Fund’s assets. Transaction costs may

be incurred in the day-to-day management of the Fund’s

investment portfolio, or when investors enter or exit the

Fund.

When transaction costs are incurred by changing the

Fund’s investment portfolio, the transaction costs are paid

out of the Fund’s assets and are reflected via a reduction in

the Fund’s unit prices.

When transaction costs are incurred because investors

choose to buy or sell units, transaction costs are estimated

and incurred by those investors via a buy/sell spread, with

a view to ensuring that other investors do not bear these

costs.

The buy/sell spread is not a fee paid to Perpetual or Karara

Capital, but is retained in the Fund to cover estimated

transaction costs. Reinvested distributions do not incur a

buy spread.

Currently, the Fund charges a buy/sell spread of 0.25% for

investments into or out of the Fund. This is incorporated

into the application price and withdrawal price of units in

the Fund. The buy/sell spread may change in the future.

In some circumstances, Perpetual may be able to accept

application monies, or pay withdrawal proceeds in-specie.

The buy/sell spread may not apply in these circumstances.

6.6 BORROWING COSTS

Any costs associated with the Fund borrowing securities

(including interest, establishment fees, government

charges and securities lending fees) are deducted from the

Fund’s assets and reflected in the unit price.

The Fund will pay the securities lender an ongoing fee on

borrowed securities. The ongoing fee varies on a security

by security basis but is usually within the range of 0.5%-

5.0% per annum of the market value of the security.

6.7 GOVERNMENT CHARGES

Government charges such as state taxes will be applied to

your investment as appropriate.

All fees quoted are inclusive of the impact of GST and are

net of any reduced input tax credits available to the Fund.

Reduced input tax credits will be claimed by Perpetual.

Information on GST is set out in section 8.5.

6.8 DIFFERENTIAL FEES

Subject to the Corporations Act, Perpetual and Karara

Capital may charge lower fees, rebate or waive fees for

certain investors or a class of investors (provided all are

wholesale). The terms on which different fees may be paid

and rebates or waivers provided are entirely at Perpetual

and Karara Capital’s discretion.

6.9 CHANGES TO FEES AND EXPENSES

Fees may increase or decrease for many reasons, including

changes in the competitive, industry and regulatory

environment or simply from changes in costs. Perpetual

may increase the fees at any time up to the maximum

specified in the constitution, by giving you 30 days written

notice.

6.10 BENEFITS RECEIVED

As a result of the brokerage paid by the Fund, Karara

Capital may use Commission Sharing Agreements (“CSA’s”)

with brokers to pay for the supply of investment research-

related products and services to Karara Capital. Karara

Capital will only use products or services in this way where

they believe they can reasonably be expected to assist in

the provision of investment services to the Fund and/or

assist in the performance of investment decision making.

Page | 14

7. RISK FACTORS

There are a number of risks associated with an investment

in the Fund, either specific to the Fund or general

investment risks, which may materially and adversely

affect the future financial performance and financial

condition of the Fund.

This section describes a number of risks associated with an

investment in the Fund. This list of risks is not exhaustive.

Many of these risks are outside the control of Perpetual

and Karara Capital and there can be no guarantee that the

Fund will achieve its stated objectives. In particular, there

can be no guarantee of the Fund’s capital, rate of return on

capital or generation of income or of the investment

performance of the Fund.

Before making any investment decision relating to the

Fund, you need to carefully consider whether the

investment is suitable for your personal financial position,

risk tolerance and investment timeframe.

7.1 MARKET RISK

Market risk refers to the risk that certain events may occur

and have a negative impact on the share prices of listed

securities within a particular market. These events may

include changes in economic, social, technological,

political, legal or accounting conditions, as well as market

sentiment. Shares of companies with a small or medium

market capitalisation may be subject to these risks to a

greater extent than shares of other companies with larger

market capitalisations.

7.2 SECURITY-SPECIFIC RISK

As the Fund will hold securities in companies listed on the

ASX and other developed market exchanges, they will be

subject to the risk of changes in share prices. Various

factors can affect share prices such as changes in

government and central bank policies, economic cycles

and the level of business confidence. Also, changes to a

company’s market, its market position, technology, cost

structure, and management may impact on the value of

the Fund’s investments in those securities. The share

prices of individual companies are also dependent upon

the financial circumstances of the company, namely

revenue, earnings and cash flow.

7.3 DERIVATIVES RISK

A derivative is a financial instrument that derives its value

from the price of another asset (including securities) or

market index. Where derivatives are held, losses may arise

where there is an adverse movement in the value of the

asset that underlies the derivative or where the Fund or a

counterparty to a derivative contract is unable to meet its

obligations under that contract.

7.4 LIQUIDITY RISK

Liquidity risk is the risk that an investment held by the

Fund may not be easily converted into cash with little or no

loss of capital and minimum delay, for example, because of

either inadequate market depth or disruptions in the

market place. Shares of companies with a small or medium

market capitalisation may be subject to these risks to a

greater extent than shares of other companies with larger

market capitalisations.

7.5 INTEREST RATE RISK

Interest rate movements may adversely affect the general

business, financial and economic climate worldwide, and

hence the value of the assets of the Fund. In addition, to

the extent that investors use debt to fund their investment

in the Fund, interest rate movements may adversely affect

them.

7.6 OPERATIONAL RISK

Operational risk is the risk associated with a breakdown in

the investment and administrative procedures or controls

that Perpetual and Karara Capital employ to manage the

Fund and its investments, possibly as a result of staff

changes, human error or technological breakdown.

7.7 STRUCTURAL RISK

The Fund is subject to the risks arising from its unit trust

structure. Investing in a unit trust is not the same as

investing directly in securities, as the income and capital

returns of a unit trust may be affected by applications and

withdrawals made by investors of different unit classes. In

addition, the Fund can change its constitution and its fees,

the trustee or the investment manager of the Fund can

change and the Fund can be terminated.

7.8 REGULATORY AND TAX RISK

The Fund may be adversely impacted by any changes to

the regulatory and tax environments in Australia. The

potential tax risks include the ability of the Fund to

maintain the current tax treatment of trusts in Australia.

As Perpetual and Karara Capital each hold an Australian

Financial Services Licence and operate within the regulated

financial services industry, they are subject to compliance

risks. Perpetual and Karara Capital have ongoing

obligations which include compliance with licensing,

conduct and disclosure regulations.

7.9 MANAGEMENT AND KEY MAN RISK

Management risk is the risk that an investment

management strategy used by the Fund may fail to

produce the intended result. In managing the Fund assets

Karara Capital will apply the investment approach

described in this IM. However there is no guarantee that

this investment approach will produce the intended

return.

In addition, any staff changes may impact on Karara's

ability to successfully implement its investment approach

in managing the Fund.

Page | 15

7. RISK FACTORS cont.

7.10 SHORT SELLING

The Fund may undertake short selling. Short selling

involves selling securities that may or may not be owned

by the Fund and borrowing the same securities for delivery

to the purchaser, with the obligation to return the

borrowed securities at a later date. For example, the Fund

may borrow a share from the Prime Broker and sell that

share for $100. If the price of that share decreases to $75,

then the Fund will make a profit of $25 when it buys that

share and returns it to the Prime Broker. However, if the

price of that share increased to $115, then the Fund will

make a loss of $15. Establishing a short position involves a

higher level of risk than establishing a long only position in

a security as there is no limit on maximum loss, given that

the price of the underlying security could theoretically rise

without limit. In practice, the position would normally be

closed out by purchasing the shorted security at a

predetermined price to cap the level of potential loss

(stop-loss limit).

There is no guarantee the Fund will be able to purchase

the security at a price that would generate a positive

return or buy sufficient amounts of the security to satisfy

the Fund’s obligations to return the security to the entity

that lent them. This could cause loss to the Fund. To

manage the risk associated with short selling the Fund may

utilise ‘Stop Loss Limits’ on short positions held by the

Fund.

7.11 LEVERAGE

Leverage is a tool which may be utilised by the Fund to

magnify exposures beyond the assets available to the Fund

by increasing the level of investible assets. The Fund may

borrow securities to invest and may invest in Derivatives

that have the same effect as borrowing. This could

enhance returns, although it may also increase losses.

Borrowing or leverage may produce more volatile returns

compared to investing without making use of borrowing or

leverage. Borrowing of securities is typically sourced from

the Prime Broker.

Worked example

A worked example of the impact of Leverage on

investment returns and losses is set out below.

This example assumes the maximum anticipated level of

leverage i.e. 200% GROSS exposure. The example further

assumes that the Fund is fully invested. This will mean for

each $100,000 invested, the GROSS exposure will be

$200,000

• A 1% increase in the return on assets of the Fund

results in a 2% increase in return to investors

($2,000 gain for the GROSS exposure of

$200,000); and

• A 1% decrease in the return on assets of the

Fund results in a 2% decrease in return to

investors ($2,000 loss for the GROSS exposure of

$200,000)

In the above example, if no leverage were used, the GROSS

exposure on $100,000 invested would be $100,000:

• A 1% increase in the return on assets of the Fund

results in a 1% increase in return to investors

($1,000 gain for the GROSS exposure of

$100,000); and

• A 1% decrease in the return on assets of the

Fund results in a 1% decrease in return to

investors ($1,000 loss for the GROSS exposure of

$100,000)

Please note the above example has been provided for

reference purposes only. Any assumptions underlying

these examples are hypothetical only.

7.12 FOREIGN EXCHANGE RISK

The Fund may invest in securities listed on a foreign

developed sharemarket and therefore the Fund may have

foreign currency exposure. Foreign exchange fluctuations

may have a positive or adverse impact on the investment

returns of the Fund. The Fund’s foreign currency exposure

may be over or under hedged or not hedged at all. It may

not always be possible to hedge all foreign currency

exposures and there is no guarantee that hedging will be

successful. Generally, a long position will be matched with

a short position of similar size to minimise foreign

exchange movements.

7.13 COUNTERPARTY & SERVICE PROVIDER RISK

Default by any of the Fund’s counterparties or Service

Providers (e.g. Prime Broker and Custodian) may cause

losses to the Fund. The Fund’s investments may be

borrowed, lent or otherwise used by the Fund’s Prime

Broker and Custodian. Any cash the Prime Broker and

Custodian receives on the Fund’s behalf will not typically

be subject to the client protections conferred by relevant

laws. The Fund will rank as an unsecured creditor to the

Prime Broker and Custodian in the case of its insolvency.

Accordingly, the Fund may not be able to recover

equivalent assets in full should the Prime Broker and

Custodian in such circumstances. Counterparties and

Service Providers may also hold security over the Fund’s

assets so that they rank ahead of unitholders in recovering

the assets of the Fund. We will seek to appoint

counterparties and service providers that have a low risk of

defaulting, although these risks cannot be entirely

eliminated. The Investment Manager will transact with

regulated and reputable brokers as derivative

counterparties following due diligence. The Fund is

authorised to invest in Australian exchange traded

derivatives only, which are cleared through the ASX,

reducing the derivative counterparty risk.

Refer section 10.5 for further details relating to the Prime

Broker and Custodian.

7.14 MANAGING RISKS

While all risks cannot completely be eliminated, Perpetual

and Karara Capital aim to manage the impact of these risks

through the use of consistent and carefully considered

investment guidelines and compliance procedures.

However, investors should note that not all risks can be

foreseen and managed. Your decision to invest in the Fund

should be taken with these risks in mind and you should be

comfortable that the risks outlined previously are in line

with your personal risk profile.

Page | 16

8. TAXATION

An investment in the Fund has potential tax implications

depending on your personal circumstances.

This taxation summary provides an overview of the

Australian taxation implications, as at the date of this IM,

for Australian resident investors investing in a Fund (see

Section 8.5 for a discussion on the taxation of non-resident

investors).

The comments below are general in nature and are current

as at the date of this IM. The consequences of investing in

the Fund will vary from investor to investor. You should be

aware that the applicable taxation laws might change over

the life of your investment in the Fund.

Perpetual strongly recommends that all investors in the

Fund obtain professional taxation advice about the

implications of investing in the Fund, regardless of whether

their units in the Fund are held on capital or revenue

account, or as trading stock.

8.1 TAXATION OF THE FUND

The Trustee of the Fund is a resident of Australia for tax

purposes. The Trustee intends to distribute all of the

income of the Fund to investors at the end of each

financial year (see Section 9.4). Where this is the case, the

Fund should not be liable for income tax.

The Fund will generally not be liable to pay income tax on

the basis that:

• where the Fund is not an Attribution Managed

Investment Trust ("AMIT"), investors are

'presently entitled' to all of the Fund’s

distributable income; or

• where the Fund is an AMIT, all taxable income is

intended to be attributed to investors for each

income year.

To the extent that investors are not presently entitled to,

or (where the Fund is an AMIT) attributed with, any of the

Fund's income, then the Fund will be subject to tax on that

income at the highest marginal rate (plus Medicare levy

and any other applicable government charges).

The AMIT provisions in the tax legislation apply to

qualifying managed investment trusts that make an

irrevocable election to become an AMIT. The practical

consequences for Australian resident investors should be

similar whether the Fund is an AMIT or not.

Information will be posted on Karara Capital’s website

(www.karara.com.au) if the Trustee elects for the Fund to

enter into the AMIT regime.

Furthermore, it is intended that the Fund will not

undertake any activities that would result in it being

regarded as a public trading trust (which would result in

the Fund effectively being taxed as a company).

If the Fund incurs a tax loss, for taxation purposes, that tax

loss cannot be passed on to investors. However, unutilised

tax losses may be carried forward by the Fund, subject to

the satisfaction of the loss recoupment rules. Carried

forward revenue losses can be used to offset assessable

income derived by the Fund in a subsequent year.

However, carried forward capital losses can only be offset

against capital gains realised by the Fund.

8.2 TAXATION OF AUSTRALIAN RESIDENT INVESTORS

Income earned by the Fund, whether distributed, retained

or reinvested, can form part of the assessable income for

unitholders in the year of entitlement or attribution

(where the fund is an AMIT). This means that you may be

required to pay tax on income that has not yet been

distributed to you, or where you have elected to re-invest

distributions back into the Fund.

You should be taxed on your share of the Fund’s taxable

income, which may include both a capital and income

component (e.g. trust distributions, dividends, franking

credits and capital gains).

Investors will receive a tax statement annually. The

statement will include information to be included in your

tax return.

If the Fund elects into the AMIT regime, Perpetual will be

able to accumulate part or all of the Fund’s income in the

Fund, in which case the income of the Fund that is

attributed to you will be more than the distribution that

you receive. If this occurs, the Fund’s unit price would only

fall by the amount of the actual distribution and not by the

additional amount attributed to investors. Investors would

need to increase the cost base of their units for tax

purposes by the amount that has been attributed to them

but not paid as a distribution. This information will be

provided on your annual tax statement.

You should be aware that the taxation position of the Fund

may change at any time. Additionally, as investors are able

to move out of the Fund at different times, it is possible

that taxation liabilities in respect of gains that have

benefited past investors may have to be met by

subsequent investors.

8.3 FRANKING CREDITS

The Fund may derive dividend income which may be

franked for tax purposes. In this instance, your share of the

Fund’s taxable income may include franking credits.

Subject to various conditions, you may be able to use these

credits as a tax offset to reduce your tax payable.

Perpetual recommends that you seek independent

professional taxation advice with respect to your

entitlement to franking credit tax offsets, including the

implications of the 45 day rule.

Page | 17

8. TAXATION cont. 8.4 WITHDRAWALS AND TRANSFERS

Where units are held as capital assets, any transfer or

withdrawal of units will be treated as a disposal for capital

gains tax ("CGT") purposes. A capital gain will arise where

the capital proceeds (excluding income distributed at the

time of disposal) exceeds the original (or adjusted) cost

base of the units.

Individuals, trusts and complying superannuation entities

may be eligible for CGT concessions in relation to capital

gains made with respect to units which are held for at least

12 months. The CGT concessions will not be available

where you hold units in the Fund on revenue account.

A capital loss will arise where the capital proceeds are less

than the original reduced (or adjusted reduced) cost base

of the units. Capital losses may only be offset against

current or future capital gains of the investor, where the

loss recoupment rules are satisfied.

8.5 TAXATION OF NON-RESIDENT INVESTORS

If you are a non-resident investor (for tax purposes) in the

Fund, Perpetual strongly recommends that you obtain

advice based on your particular circumstances. Non-

resident investors should seek their own independent

taxation advice regarding their local, as well as Australian,

taxation obligations.

As a non-resident, distributions from the Fund may be

subject to:

• Australian income tax; and/or

• withholding tax (depending on your country of

residence and the nature and amount of the

distribution),

both of which will be withheld by Perpetual.

8.6 GOODS AND SERVICES TAX (GST)

The acquisition of units, receipt of distributions and

subsequent disposal or redemption of units in the Fund

should not be subject to GST, regardless of whether the

investor is registered for GST.

GST will generally be incurred on various acquisitions made

by the Fund. The Fund may be able to claim input tax

credits and/or reduced input tax credits ("RITCs") of at

least 55% of the GST incurred.

The receipt of distributions should not give rise to any GST

consequences, as such amounts are considered to be

outside the scope of GST. Unless otherwise stated, all fees

quoted in this IM are quoted on a GST inclusive basis and

net of any applicable RITCs referable to the Fund.

It is recommended that investors seek independent advice

with respect to the GST consequences arising from their

investment.

8.7 FOREIGN TAXATION

Where the Fund’s investments have a connection with a

foreign jurisdiction, there may be Australian and foreign

taxation consequences.

Australian residents are required to include in their

assessable income their share of any foreign taxes paid by

the Fund. Australian residents will normally be entitled to a

tax offset for foreign taxes paid by the Fund. If foreign tax

offsets are included in your distribution, you must

determine your entitlement based on your individual

circumstances.

8.8 PROVISION OF TAX FILE NUMBER (TFN),

EXEMPTIONS AND AUSTRALIAN BUSINESS NUMBER

(ABN)

You can choose whether or not to provide your TFN on

your Application Form. If you do not provide your TFN or

TFN exemption details, Perpetual is required to withhold

tax up to the highest marginal rate plus Medicare Levy and

any other government charges from any income

distributions made to you. Investors that hold units as part

of an enterprise may quote their ABN instead of their TFN.

The Australian Taxation Office (ATO) can provide more

information about TFNs and ABNs.

8.9 US TAX WITHOLDING AND REPORTING UNDER

THE FOREIGN ACCOUNT TAX COMPLIANCE ACT

(“FATCA”)

The United States of America has rules (known as FATCA)

which are intended to prevent US persons from avoiding

tax. Broadly, the rules may require the Fund to report

certain information to the ATO, which may then pass the

information on to the US Internal Revenue Service (IRS). If

you do not provide this information, we will not be able to

process your application.

In order to comply with these obligations, Perpetual will:

• collect certain information about you and

undertake certain due diligence procedures to

verify your FATCA status; and

• provide information to the ATO in relation to

your financial information required by the ATO

(if any) in respect of any investment in the Fund.

8.10 COMMON REPORTING STANDARD (“CRS”)

The CRS is a global standard for the collection, reporting

and exchange of financial account information on foreign

tax residents. The requirements are similar to those which

exist under FATCA, however, the CRS applies to a greater

number of countries.

Australia has signed the OECD Multilateral Competent

Authority Agreement on Automatic Exchange of Account

Information. This agreement enables CRS information to

be exchanged between the tax authorities of the

jurisdictions that have adopted CRS legislation.

The Trustee is required to collect certain information

about foreign tax residents and provide it to the ATO.

Further, the ATO may pass this information on to tax

authorities in other jurisdictions.

Page | 18

9. INVESTMENTS, WITHDRAWALS AND DISTRIBUTIONS

9.1 HOW TO MAKE AN INVESTMENT

The minimum initial investment amount (and minimum

balance to be maintained) is $250,000 for eligible investors

investing in the Fund (Perpetual may waive or vary this

from time to time). A minimum initial investment (and

minimum balance to be maintained) of $500,000 applies to

investors who do not otherwise satisfy the eligible investor

requirements.

To invest in Series 1 units, you must complete the

Application Form contained within or accompanying this

IM. You can only apply for investment in the Fund if you

have received this IM within Australia.

Forward the completed Application Form, together with

your cheque or bank confirmation of funds transfer, to the

Fund’s Administrator:

BY POST

Attention: Karara Unit Registry

Link Fund Solutions Pty Limited

GPO Box 5482

Sydney NSW 2001

BY FAX (refer Section 10.4)

Link Fund Solutions Pty Limited

Fax: 02 9221 1194

BY EMAIL

LFS_Registry@linkgroup.com

Your investment monies can be remitted from any

financial institution in Australia to the Custodian’s

nominated bank account. Please include a bank

confirmation of funds transfer together with your

Application Form. Account details are as follows:

Perpetual Trust Services Limited as Trustee of Karara

Market Neutral Plus Fund

BSB: 012-003

Account Number: 8380-95277

<Application name>

The number of units issued to you is determined by

dividing your investment amount by the applicable unit

application price (see Section 9.5 on how the unit

application price for Series 1 units is calculated).

If your correctly completed Application Form and cheque

or bank confirmation of funds transfer are received and

accepted by the Administrator:

• by 2.00pm AEST on the last business day of the

relevant month, your investment will be processed

using the unit application price for the last business

day of that month. If your application is received

after this time, it will be returned to you.

Generally, units will be issued on the business day

immediately following acceptance of your application (see

Section 9.7 for further information).

If this is your first investment in a Fund, you will be sent an

Investor ID number. You should retain this for all future

transactions in respect of the Fund.

9.2 ADDITIONAL INVESTMENTS

Additional investments can be made at any time in writing

(including by facsimile – refer Section 10.4). The minimum

amount for additional investments is $25,000 (or such

other amount as Perpetual may determine from time to

time).

9.3 HOW TO MAKE A WITHDRAWAL

You are permitted to make withdrawal requests but

Perpetual is only required to satisfy such requests while

the Fund is ‘liquid” (as defined in the Corporations Act) and

the request is for at least the minimum withdrawal

amount (unless the request relates to the balance of your

holdings in the Fund). The minimum withdrawal amount is

$25,000 (or such other amount as Perpetual may

determine from time to time). If your withdrawal request

results in your remaining investment falling below the

minimum balance (currently $250,000), Perpetual reserves

the right to treat your withdrawal request as a full

withdrawal of your investment. If a holding is less than the

minimum balance (currently $250,000), Perpetual may

(after giving 30 days’ notice), redeem the holding without

the need for a withdrawal request.

To withdraw from the Fund, fax or post your withdrawal

request to the Administrator (see Section 9.1 for postal

address details).

BY FAX (refer Section 10.4)

Link Fund Solutions Pty Limited

Fax: 02 9221 1194

If you request the withdrawal of a number of units, the

withdrawal value of your investment is determined by

multiplying the number of units by the unit withdrawal

price (see Section 9.5 on how the unit withdrawal price is

calculated).

If your withdrawal request is received and accepted by the

Administrator:

• 10 days prior to the last business day of the relevant

month, your withdrawal will be processed using the unit

withdrawal price for the last business day of that month.

If your request is received after this time, it will be taken to

be received on the next business day and processed on the

last business day of the following month using the unit

withdrawal price for that month.

The proceeds from your withdrawal will usually be

available within ten business days of calculation of the

relevant unit withdrawal price. However, in accordance

with the Fund’s constitution, Perpetual may take up to 21

days to pay you. Further, in certain circumstances,

Perpetual may suspend withdrawals (see Section 9.7 for

further information).

Page | 19

9. INVESTMENTS, WITHDRAWALS AND DISTRIBUTIONS cont.

Your withdrawal proceeds will be deposited into your

nominated Australian financial institution account.

Cheque payments will not be made.

Please note, withdrawals will not be paid in cash, nor will

they be paid into a third party account.

9.4 DISTRIBUTIONS

The Fund may earn income from its investments, including

trust distributions and dividends. The Fund may also

generate capital gains or losses from the sale of

investments.

Generally, distributable income is calculated semi-annually

(as at 31 December and 30 June), and paid to investors

within one month of the last day of the distribution period.

Perpetual reserves the right to make additional

distributions during the year.

Your entitlement to the distributable income of the Fund

in respect of Series 1 units is calculated on a pro rata basis

by reference to the number of units you hold at the end of

the distribution period compared to the number of Series 1

units on issue at the end of the distribution period.

Following the determination of the income to be paid to

investors the Fund’s unit price will fall to reflect the

reduced value of the Fund following the payment of the

distribution to investors (in other words, it is priced to

exclude the distribution entitlement).

You may have distributions paid directly to your

nominated Australian financial institution or you can

reinvest your income in additional units in the relevant

Fund. If Perpetual does not receive written instructions on

how you want your distribution paid, Perpetual will

reinvest the amount into the relevant Fund. Proceeds of

electronic transfers that have been unsuccessful on three

occasions will be reinvested in units on behalf of the

investor at the applicable application price.

9.5 UNIT PRICING

Generally, the unit price of the Karara Market Neutral Plus

Fund is determined on the last business day of each

month.

The unit price of Series 1 units is calculated by:

• establishing the Fund’s NAV and the NAV

attributable to the Series 1 unit class

• dividing the NAV attributable to the Series 1 unit

class by the number of Series 1 units on issue to

investors at the time the unit price is calculated

to determine the NAV per unit

• for unit application prices increasing the NAV per

unit by the buy spread percentage (to allow for

transaction costs)

• for unit withdrawal prices, decreasing the NAV

per unit by the sell spread percentage (to allow

for transaction costs).

In determining the Fund’s NAV, the assets owned by the

Fund are normally valued at the end of day close of market

valuations.

The Fund’s NAV includes the value of the unrealised gains

and any income and realised gains not yet distributed. At

the end of a distribution period the Fund’s NAV may

decline as it is adjusted to reflect the amount of any

distribution. Consequently, if you invest just before a

distribution, you may receive back some of your capital as

taxable income.

All investor transactions are processed using a forward

pricing methodology. Therefore, if your instruction is

received by the Administrator:

• 10 days prior to the last business day of the

relevant month, the unit price applied to your

transaction will be the price calculated based

upon close of market valuation for the last

business day of that month.

9.6 CLASSES OF UNITS

Units may be offered in the Fund in one or more classes,

and Perpetual has the discretion to issue more classes of

units. Classes do not constitute separate trust funds. Units

of the same class confer equal interests and rights and

investors holding units of different classes must be treated

fairly.

Only the Series 1 class of units is offered in respect of the

Fund under this IM. Other classes of units with different

fee structures may be offered under other offer

documents.

9.7 RESTRICTIONS APPLYING TO WITHDRAWALS AND

APPLICATIONS

In certain emergency situations that impact the effective

and efficient operation of a market for an asset in the Fund

or in circumstances where Perpetual otherwise consider it

to be in investors’ interests, Perpetual may suspend

processing all applications or withdrawals for the Fund.

Applications or withdrawals received during the

suspension will be processed using the application or

withdrawal price applicable when the suspension is lifted.

Large Withdrawal Requests

Perpetual can in certain circumstances delay or stagger the

payment of large withdrawal requests. For example, if a

Unitholder requests the withdrawal of units representing

more than 5% of the number of units on issue in the Fund

and/or the aggregate of withdrawal requests represents

more than 10% of the number of units on issue in the

Fund, Perpetual has the right to stagger the withdrawals

into five separate withdrawal requests over five successive

months

If the Fund is not liquid

If the Fund becomes non-liquid (as defined by the

Corporations Act) withdrawals can only be made subject to

Page | 20

10. ADDITIONAL INFORMATION

an offer made according to the Corporations Act.

Perpetual has no obligation to offer an opportunity to

withdraw from the Fund whilst the Fund is non-liquid.

10.1 ELIGIBLE INVESTORS

You must be a wholesale investor as defined in section

761G of the Corporations Act to invest directly in the Fund. A minimum initial investment of $500,000 applies to

investors who do not otherwise satisfy the eligible investor

requirements.

10.2 CONSTITUTION

Perpetual’s responsibilities and obligations are governed

by the Fund’s constitution, the Corporations Act and

general trust law. The constitution of the Fund contains

various provisions that relate to the rights, terms,

conditions and obligations imposed on you and Perpetual.

Some of the constitution’s key provisions include those

relating to:

• your powers and rights;

• the Fund’s commencement, duration and

termination;

• unit pricing;

• investor meetings;

• Perpetual’s powers (such as its investment powers),

its right to charge fees and recover expenses and its

right to be indemnified;

• how Perpetual handles complaints; and

• your liability (although your liability as an investor in

the Fund is limited by the Fund’s constitution to the

value of your Series 1 units (subject to any tax

liability), the effectiveness of this limitation has not

been conclusively determined by the courts and

therefore no absolute assurance can be given that

your liability as an investor in the Fund is limited in

every situation).

Under the Fund’s constitution, the Fund may borrow

money and grant security.

Perpetual may, in accordance with the Corporations Act,

terminate the Fund or close it to new investors at any

time. Perpetual may amend the Fund’s constitution in

accordance with its terms and the Corporations Act.

A copy of the Fund’s constitution is available free of charge

by contacting Karara Capital.

10.3 REPORTING

Investors in the Fund will receive the following reports and

statements:

• Application and Withdrawal Confirmations

specifying details relating to your transactions

• Monthly Statement specifying holdings and the value

of your investment

• Monthly Investment Fund Report specifying Fund

NAV, redemption price of units, details of any

changes to key service providers including any

changes in related party status, net performance

returns, any material changes to the Fund’s risk

profile and strategy and any material changes to the

primary investment personnel responsible for

managing the Fund.

• Annual Investment Fund Report specifying asset

allocation of the Fund by asset type, liquidity profile

as at year-end, maturity profile of the Fund’s

liabilities as at year-end, the Fund’s leverage ratio as

at year-end, details of derivatives counterparties

engaged, annual investment returns of the Fund since

inception and details of any changes to key service

providers including any changes in related party

status.

• Distribution Statement after each distribution is paid.

At the end of each financial year, you will receive a

Consolidated Distribution Statement that will help to

simplify your record keeping by providing the total

amount of the income paid to you over the past 12

months.

• Tax Statement on an annual basis.

The Fund’s audited financial statements are available by

the end of September each year. Perpetual is not required

to send you a copy unless you request a copy. For a free

copy, please contact Karara Capital.

You may choose to receive a copy when completing the

Application Form.

Updated information in relation to the Fund will be

available from the Karara Capital website at

www.karara.com.au or by contacting Karara Capital on

(03) 8612 7100 or emailing admin@karara.com.au.

Page | 21

10. ADDITIONAL INFORMATION cont.

10.4 FAXED INSTRUCTIONS

You can give withdrawal instructions and additional

investment instructions by facsimile to the Administrator.

You should retain a copy of every facsimile instruction that

you send along with the record of transmission.

By using the facsimile facility to send instructions to Link

Fund Solutions, Karara Capital or Perpetual (collectively,

“the Entities”), you acknowledge that there is a risk that

fraudulent requests may be made by a third party.

Accordingly, you should be aware of the following

conditions on the use of the fax facility:

• Your faxed instructions will only be processed if

received in full. The Entities are not responsible for

any loss or delay that results from a facsimile not

being received.

• A facsimile receipt confirmation from the sender’s

machine is not evidence of receipt of the facsimile by

the Entities.

• Subject to the Corporations Act, the Entities are not

responsible for any fraudulent or unauthorised

facsimile transactions and will not be liable for any

losses, expenses or other damages incurred.

• You agree to release and indemnify, on a joint and

several basis, the Entities and their respective

officers, employees and agents against any liabilities

whatsoever as a result of any facsimile

communication that purports to be on your behalf.

10.5 PRIME BROKER AND CUSTODIAN

Deutsche Bank AG (London Branch), has been appointed as

the Fund’s Prime Broker. The services provided by the

prime broker may include the provision to the Fund of

margin financing, clearing, settlement, stock borrowing

and foreign exchange facilities. The Fund may also

authorise Deutsche Bank AG (London Branch), other

members of the Deutsche Bank group of companies and

other brokers and dealers for the purposes of executing

transactions for the Fund.

Deutsche Bank AG (London Branch), has also been

appointed as the Fund’s Custodian.

The Custodian’s role is limited to holding the assets of the

Fund as Perpetual’s agent. The Custodian does not hold

the assets for you and has no direct relationship with you.

The Custodian has no supervisory role in relation to the

operations of the Fund and has no liability or responsibility

to you.

10.6 ADMINISTRATOR

Link Fund Solutions Pty Limited has been appointed as the

Administrator of the Fund. As a result of this, certain Fund

administration functions have been outsourced to the

Administrator, including unit registry, unit pricing and

some accounting functions.

10.7 RIGHT TO CHANGE TERMS AND CONDITIONS

Perpetual reserve the right to change the terms and

conditions (subject to the constitution and Corporations

Act) set out in this IM, as applicable to the Fund, by giving

investors not less than 30 days’ written notice.

10.8 MONITORING OF KEY SERVICE PROVIDERS

Perpetual has entered into service level agreements with

the service providers and will, with the assistance of Karara

Capital, regularly monitor the performance of the service

providers against the service standards set out in the

relevant agreements.

10.9 RELATED PARTY TRANSACTIONS

Perpetual and Karara Capital may use the services of

related parties in the management of the Fund and pay

fees for their services at arm's length commercial rates.

The types of related party services that may be used in the

management of the Fund include broking, underwriting,

futures trading and clearing.

From time to time, directors and employees of Perpetual

and Karara Capital may hold units in the Fund.

All related party transactions are conducted on arms'

length normal commercial terms and conditions.

10.10 CONFLICTS OF INTEREST

Karara Capital acts as the investment manager to other

client portfolios and the compensation Karara Capital

receives for managing each portfolio may vary to the

compensation it receives for managing the Fund. Such

other clients may have investment objectives or may

implement investment strategies similar to those of the

Fund.

Karara Capital may also take action with respect to the

other clients that differs to the Fund. To the extent that a

particular investment is suitable for both the Fund and

other clients, such investments will be allocated between

the Fund and the other clients pro rata based on assets

under management or in some other manner that is fair

and equitable under the circumstances to ALL clients. In

addition, purchase and sale transactions may be effected

between the Fund and other client portfolios for cash

consideration at the current market price of the particular

securities.

As a result of the foregoing, Karara Capital may have

conflicts of interest in allocating its time and activities

between the Fund and its other client portfolios, in

allocating investments among the Fund and the other

client portfolios, and in effecting transactions between the

Fund and other client portfolios.

Karara Capital has implemented internal policies and

procedures to ensure any conflicts of interest arising in

relation to managing the Fund are readily identified and

appropriately managed.

Page | 22

10. ADDITIONAL INFORMATION cont.

10.11 LABOUR STANDARDS AND ETHICAL, SOCIAL

AND ENVIRONMENTAL CONSIDERATIONS

When making investment decisions, including selecting,

retaining or realising an investment, Karara Capital takes

into account labour standards and ethical, social and

environmental considerations to the extent that they

impact the sustainability and performance of a business

and thus the performance of the investment. Karara

Capital does not have a predetermined view or policy of

selecting, retaining or realising investments based

specifically on such considerations or standards.

10.12 COOLING-OFF PERIOD

No cooling-off period applies to an investment in the Series

1 units of the Fund.

10.13 INQUIRIES AND COMPLAINTS

Perpetual has established procedures for dealing with

complaints. If an investor has a complaint, they can contact

Perpetual during business hours. Contact details can be

found in the Corporate Directory section of this IM.

Perpetual will use reasonable endeavours to deal with and

resolve the complaint within a maximum period of 45

days.

10.14 CONSENT

Karara Capital has consented to the statements made

about it being included in this IM, in the form and context

that they appear. Karara Capital has not withdrawn its

consent before the issue date of this IM.

Deutsche Bank AG (London Branch) has consented to the

statements made about it being included in this IM, in the

form and context that they appear. Deutsche Bank AG

(London Branch) has not withdrawn its consent before the

issue date of this IM.

There are no statements in this IM made by, or based on a

statement made by, the Administrator, Link Fund

Solutions.

10.15 PRIVACY

Perpetual collects personal information from you in the

application and any other relevant forms to be able to

process your application, administer your investment and

comply with any relevant laws. If you do not provide

Perpetual with your relevant personal information,

Perpetual will not be able to do so.

Privacy laws apply to its handling of personal information

and Perpetual will collect, use and disclose your personal

information in accordance with Perpetual’s privacy policy,

which includes details about the following matters:

• the kinds of personal information Perpetual collects

and holds

• how Perpetual collects and holds personal

information

• the purposes for which Perpetual collects, holds, uses

and discloses personal information

• how you may access personal information that

Perpetual holds about you and seek correction of

such information (note that exceptions apply in some

circumstances)

• how you may complain about a breach of the

Australian Privacy Principles (APP), or a registered

APP code (if any) that binds Perpetual, and how

Perpetual will deal with such a complaint

• whether Perpetual is likely to disclose personal

information to overseas recipients and, if so, the

countries in which such recipients are likely to be

located if it is practicable for Perpetual to specify

those countries.

Perpetual’s privacy policy is publicly available at our

website at www.perpetual.com.au or you can obtain a copy

free of charge by contacting Perpetual. A copy of the

Karara Capital’s privacy policy is publically available at

www.karara.com.au. A copy of the Fund Administrator’s

privacy policy is publically available at

www.linkfundsolutions.com.au

Page | 23

11. COMPLETING THE APPLICATION FORM

To invest in the Fund, please complete all relevant sections

of the Application Form and forward your completed

Application Form, together with your cheque or bank

confirmation of funds transfer to:

BY POST

Attention: Karara Unit Registry

Link Fund Solutions Pty Limited

GPO Box 5482

Sydney NSW 2001

BY FAX (refer Section 8.4)

Link Fund Solutions Pty Limited

Fax 02 9221 1194

If you need assistance, please contact Karara Capital’s

Client Service team on (03) 8612 7100.

11.1 VERIFYING THE IDENTITY OF NEW INVESTORS

Under Australian anti-money laundering and

counterterrorism financing legislation (“AML Legislation”),

Perpetual is required to verify the identity of prospective

investors. Generally the information and/or certified

documentation required to verify a prospective applicant’s

identity is detailed within the relevant section of the

Application Form, however in some instances additional

information and/or identification may be required.

The AML Legislation requires that Perpetual keep any

documentation that you supply to it relating to your

identity for a period of seven years after the end of your

relationship with Perpetual.

To satisfy our obligations under the AML Legislation,

Perpetual has implemented a number of measures and

controls including carefully identifying and monitoring

investors. As a result:

• Transactions may be delayed, blocked, frozen or

refused where Perpetual has reasonable grounds to

believe that the transaction breaches the law or

sanctions of Australia or any other country;

• Where transactions are delayed, blocked, frozen or

refused Perpetual is not liable for any loss you suffer

(including consequential loss) as a result of

Perpetual’s compliance with the AML Legislation; and

• Perpetual may from time to time require additional

information from you to assist in this process.

Providing complete and accurate information will enable

Perpetual to process your application efficiently and to

meet its obligations under the AML Legislation. Failure to

provide the requested information and/or certified

documentation may prevent or delay the processing of

your application.

Perpetual also has certain reporting obligations under the AML

Legislation and is prevented from informing you that any such

reporting has taken place. Where required by law, Perpetual may

disclose your information to regulatory or law enforcement

agencies, including AUSTRAC, which is responsible for regulating

the AML Legislation.

11.2 INDIVIDUALS (INCLUDING THOSE ACTING AS TRUSTEE

OR CUSTODIAN, OFFICE HOLDERS INCLUDING INDIVIDUAL

TRUSTEE AND ANY BENEFICIAL OWNERS IDENTIFIED)

The easiest form of verification to use is an Australian passport or

State or Territory driving licence showing your photograph or a

passport that contains your photograph and signature. The name

provided on the Application Form should agree exactly to that on

the relevant form of identification. Otherwise you can prove your

identity by providing two pieces of non-photographic evidence,

one from each of the columns below.

ONE of the following

documents, AND

ONE of the following

documents

• Birth certificate • Commonwealth, State

or Territory financial

benefits notice (less

than 12 months old)

• Commonwealth

citizenship certificate

• Tax notice (less than

12 months old)

• Pension card issued

by Centrelink

• Local utilities provider

notice (less than 3

months old)

• Foreign citizenship

certificate or birth

certificate

Page | 24

11. COMPLETING THE APPLICATION FORM cont.

11.3 TRUSTS

Different types of trusts are listed below. The list should be

used to determine:

• the type of trust, and

• whether or not your trust is regulated

for the purposes of completing section 3A of the

Application Form.

Type of trust Whether

regulated or not

Discretionary trust

(including family trust)

Not regulated

Unit trust Not regulated

Probate trust Not regulated

Self-managed superannuation

fund - within the meaning of

section 19 of the Superannuation

Industry (Supervision) Act 1993

(Cth)

Regulated by the

Australian Taxation

Office (ATO)

Managed investment scheme

registered by ASIC

Regulated by ASIC

Other superannuation fund:

Regulated superannuation fund,

an approved deposit fund, a

pooled superannuation trust, or a

public sector superannuation

scheme, within the meaning of

the Superannuation Industry

(Supervision) Act 1993 (Cth),

including small APRA regulated

funds

Government superannuation

fund established by legislation

Regulated by APRA

or other relevant

legislation

Other, please specify where

indicated in section 3A of the

Application Form

Verifying the name of the trust

Perpetual needs to verify the name of the trust to comply

with anti-money laundering and counter-terrorism

financing regulations. You can provide a:

• properly certified copy of the trust deed, or

• properly certified extract of the trust deed, or

• notice (such as notice of assessment) issued by the

ATO within the last 12 months, or

• a letter from a solicitor or qualified accountant

verifying the name of the trust.

Unregulated trusts

For trusts not regulated by the ATO, ASIC or the Australian

Prudential Regulatory Authority (APRA) in addition to the

information you have provided in the Application Form

Perpetual require the following information:

• General details for all trusts:

- the full name;

- the full business name (if any);

- the type of trust; and

- country where the trust was established;

• Beneficiary details:

- the full name of each beneficiary; and

- Beneficiaries membership classes (for example,

investors, family members of name person, etc).

• Beneficial owner details:

- the full name, address and role of the individuals

that directly or indirectly control* the Trust

• Trustee details:

- Identification information for all of the trustees

(individual or company information).

• Settlor details:

- the full name of the settlor.

* includes control by acting as trustee; or by means of

trusts, agreements, arrangements, understandings and

practices; or exercising control through the capacity to

direct the trustees; or the ability to appoint or remove the

trustees.

The information should be supplied on a separate sheet of

paper and provided to us with your Application Form.

Unregulated trusts: verifying details

For unregulated trusts, Perpetual needs to verify the

details outlined above. You can provide a properly

certified copy of the trust deed which includes the details

of the trust, trustees, beneficiaries, settlors and appointers

(where applicable).

11.4 CORPORATE TRUSTEES OR COMPANIES For corporate trustees and other companies that are

proprietary (or private) companies, in addition to the

information provided on the Application Form Perpetual

requires the following information:

• the full name of each director; and

Page | 25

11. COMPLETING THE APPLICATION FORM cont.

• the full name, address and role of each individual who holds

one or more direct or indirect shareholdings 25% or more of

the company’s issued capital, and if no individuals meet this

requirement, the full name, address and role of each

individual who directly or indirectly control* the company.

• the full company name (as registered by ASIC);

• company type, proprietary (private) or public (listed);

• the address of registered office**;

• the address of principal place of business**;

• if public (listed) the name of the relevant market/exchange;

and

• if a subsidiary of a listed company the name of the holding

company, and market/exchange of holding company.

* includes exercising control through the capacity to determine

decisions about financial or operating policies; or by means of

trusts, agreements, arrangements, understanding & practices;

voting rights of 25% or more; or power of veto. If no such person

can be identified then the most senior managing official/s of the

company (such as the managing director or directors who are

authorised to sign on the company’s behalf).

** street address is required (street, suburb, state, postcode,

country) – PO Box is not acceptable.

The information should be supplied on a separate sheet of paper

and provided to us with your Application Form. Perpetual needs

to verify such information and you can provide a certificate of

registration or incorporation issued by ASIC or the relevant foreign

registration body (must show full name of company, name of

registration body, company identification number and type of

company – private or public); or the most recent company

statement issued by ASIC.

11.5 PARTNERSHIPS

For all partnerships, provide the full name, address and role of

each individual who holds 25% or more of the partnership or are

entitled (either directly or indirectly) to exercise 25% or more of

the voting rights, including power of veto, and if no individuals

meet this requirement, the full name, address and role of each

individual who directly or indirectly control* the partnership.

* includes exercising control through the capacity to determine

decisions about financial or operating policies; or by means of

trusts, agreements, arrangements, understanding and practices. If

no such person can be identified then the most senior managing

official/s of the partnership (such as the managing partner or

senior managing official).

For partnerships not regulated by a professional association, in

addition to the information provided on the Application Form we

require the following information:

• General details for all partnerships:

- full name;

- full business name (as registered with any state of

territory business name authority);

- country in which the partnership was established;

- any membership body regulated the partnership.

• Partner Information:

- the full name of each partner;

- the full residential address (you cannot provide a PO

Box) of each partner; and

- individual identification for one of the partners (date of

birth).

The information should be supplied on a separate sheet of paper

and provided to us with your Application Form.

For all partnerships, Perpetual needs to verify the partnership

name and you can provide a copy of the partnership agreement.

For partnerships regulated by a professional association,

Perpetual needs to verify such membership and you can provide

an original current membership certificate.

11.6 PROVIDING CERTIFIED COPIES OF DOCUMENTS

If you have been asked to provide a certified copy of a document

in the Application Form, please ensure:

• the certified copy includes the statement “I certify this to be

a true copy of the original document”; and

• is signed by an eligible certifier (please refer to Section 11.7

below).

The certifier must state their qualification or occupation to

confirm their eligibility to certify the document.

Please note, the copy actually signed by the certifier must be

submitted with your Application Form.

11.7 WHO CAN CERTIFY DOCUMENTS?

Eligible certifiers include:

• Judge, Magistrate,

Lawyer

• Certified practicing or chartered

accountant with 2+ years membership

• Justice of the

Peace

• Police officer

• Notary public • Australian Post employee with 2+

years of continuous services

• Officer of a

financial institution

with 2+ years

continuous service

(with one or more

institution)

• Authorised representative of an

Australian Financial Services Licensee

with 2+ years continuous service (with

one or more Licensee) (this may

include your financial adviser).

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CORPORATE DIRECTORY

TRUSTEE

Perpetual Trust Services Limited

ABN 48 000 142 049

AFSL No. 236648

Level 18, 123 Pitt Street

Sydney NSW 2000

Phone: (02) 9229 9000

Fax: (02) 8256 1419

Website: www.perpetual.com.au

INVESTMENT MANAGER

Karara Capital Pty Limited

ABN 34 134 075 157

AFSL No. 333318

Level 33, 101 Collins Street

Melbourne Vic 3000

Phone: (03) 8612 7100

Fax: (03) 8612 7111

Website: www.karara.com.au

Email: admin@karara.com.au

ADMINISTRATOR

Link Fund Solutions Pty Limited

ABN 44 114 914 215

GPO Box 5482

Sydney NSW 2001

Phone: (02) 9547 4311

Fax: (02) 9221 1194

Website: www.linkfundsolutions.com Email: LFS_registry@linkgroup.com