Fund: Smarter Money Long Short Credit Fund

Strategy: Alternatives/Unconstrained Fixed-Income

Return (since Aug 2017): 5.9% pa gross / 3.9% pa net

Net return volatility (since Aug 2017): 3.4% pa

Atchison/Australia Ratings: Recommended/Very Strong

Strategy: We add value via active asset-selection using arange of valuation models with the aim of deliveringsuperior risk-adjusted returns, or alpha, to traditionalhedge funds. We primarily invest in senior andsubordinated debt securities, hybrids and derivativesissued by Australian entities domestically, although we caninvest in these securities when they are issued overseas, orby overseas entities (into Australia or offshore). The Fundcan use gearing and targets holding the majority of itsportfolio in investment-grade securities. It is managed byCoolabah Capital Investments.

Objective: An absolute return fixed-income strategyfocused on exploiting long and short mispricings in creditmarkets that targets high-yield like returns above theReserve Bank of Australia (RBA) cash rate plus 4% to 6%p.a. over rolling 3 year periods with volatility of less than5% p.a. after Management Fees, Administration Fees andPerformance Fees.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

Note: all portfolio statistics other than running yield reported on gross levered value

% Monthly Returns > RBA Cash Rate 73.5% Cash Securities + RBA Repo-Eligible Debt 48.5%

Portfolio Weight Cash Securities 0.2% Portfolio Weight Hybrids 15.3%

Portfolio Weight Floating-Rate Securities 99.1% Portfolio Weight ABS/RMBS 14.9%

Av. Portfolio Credit Rating A Credit Spread Duration 3.56 years

No. Floating-Rate Notes/Bonds/Hybrids 90 Annual Volatility (since incep.) 3.44% p.a.

Total Number of Unique ADIs 12 Gross Sharpe Ratio (since incep.) 1.4x

Av. Gross Running Yield (Net of leverage) 3.5% Permitted Gearing Up to 75%

Modified Interest Rate Duration 0.11 years Awards: FE Alpha Manager 2019: Christopher Joye; Ratings: Recommended (Atchison); Very Strong (Australia Ratings); Lonsecavailable to clients

August 2019Click Here to Apply Online

June 2020

www.coolabahcapital.com

Period Ending 30/06/2020

Gross Return

(Assist.)†

Net Return (Insto.)†

Net Return (Assist.)*†

RBA O/N Cash Rate

Gross Excess

Return‡

1 month 1.76% 1.38% 1.38% 0.01% 1.75%

3 months 8.72% 8.17% 8.14% 0.04% 8.69%

6 months 1.49% 0.81% 0.72% 0.19% 1.29%

1 year 4.44% 2.80% 2.59% 0.64% 3.80%

2 years 6.49% 4.53% 4.30% 1.06% 5.43%

Inception pa Aug. 2017

5.94% 4.14% 3.92% 1.18% 4.76%

† The Assisted (Assist.) and Institutional (Inst.) columns represent different unit classes within the fund. Refer to the PDS for more information. ‡ The Excess Return columns represent the gross and net return of the fund above the RBA cash rate. *On 1 April 2019 management, administration, custody and responsible entity fees were reduced from 1.5% to 1.0% per annum for Assist. Most recent month returns in this report are estimated

Portfolio Managers Christopher Joye, Ashley Kabel, Stephen Parker, Darren Harvey (Coolabah Capital Investments)

APIR Code (Assisted) SLT2562AU Fund Inception 31-Aug-17

ISIN AU60SLT25623 Distributions Quarterly

Morningstar Ticker 41597 Unit Pricing Daily (earnings accrue daily)

Asset-Class Alternatives/Hedge Funds Min. Investment $1,000

Target Return Net 4.0%-6.0% > RBA cash Withdrawals Daily Requests (funds normally in 3 days)

Investment Manager Smarter Money Investments Buy/Sell Spread 0.00%/0.10%

Sub-Manager Coolabah Capital Investments Mgt. Fee (Assisted) †† 0.75% p.a.

Responsible Entity Equity Trustees Admin. Fee†† 0.25% p.a.

Custodian Mainstream Perf. Fee 20.5% of returns over RBA cash rate

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)

The since inception gross (net insto.) return of 5.9% p.a. (3.9% p.a.) is the total return earned by the fund since 31 August 2017,including interest income and movements in the price of the bond portfolio after all fund fees paid by institutional investors. Eachinvestor’s return will vary depending on their fee regime, investment date, and any top-ups/withdrawals they make. Theannualised volatility estimate of 3.4% p.a. is based on the standard deviation of net daily returns since inception, which are thenannualised.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Portfolio commentary: The zero-duration and daily liquidity Long Short Credit Fund (LSCF) strategy returned 1.76% gross (1.38% net of fees) in June. LSCF substantially outperformed the RBA Overnight Cash Rate (0.01%), the AusBond Floating Rate Note (FRN) Index (0.23%), and the FE fundinfo “Alternative” peer group (0.37%). LSCF ended June with a weighted-average credit rating of A and a running yield of approximately 3.5%. Over the June quarter, LSCF has returned 8.72% gross (8.14% to 8.17% net) compared to the RBA Overnight Cash Rate (0.04%), the AusBond FRN Index (1.39%), and the FE fundinfo “Alternative” peer group (2.93%).

Since LSCF’s inception almost 3 years ago in August 2017, it has returned 5.94% pa gross (3.92% to 4.14% net of fees) compared to the RBA cash rate (1.18%), the AusBond Bank Bill Index (1.52%), the Barclays Global High Yield Index (1.59%), the FE fund info alternative peer group (1.69%), and the AusBond Floating Rate Note (FRN) Index (2.41%). While LSCF’s return volatility since inception has been 3.4% pa (measured using daily returns), as a daily liquidity product with assets that are marked-to-market using executable prices, volatility does exist. This contrasts with illiquid credit (eg, loans and high yield bonds) wherein assets that have very high risk can appear to have remarkably low volatility, which is, in fact, just a mirage explained by the inability to properly value these assets using executable prices.

Strategy commentary: June was yet another roller-coaster month in the remarkable year that has been 2020, whichhas subject all portfolios to the most extreme stress-tests wrought by the 1-in-100 year COVID-19 crisis.

Coolabah Capital’s strategies had another strong month performance-wise with cash-plus products generally upbetween 0.44% and 0.52% net in the month (0.52% to 0.66% gross), the long/short credit strategies appreciating bybetween 1.38% and 1.63% net (1.76% gross) over the same period, and our Active Composite Bond Strategy returning1.01% (before fees) compared to the AusBond Composite Bond Index’s 0.31% (this is an institutional product withconfidential fee terms that is not available to retail investors).

In fact, Coolabah had four wholesale strategies ranked in leading institutional researcher eVestment’s Top 15 fixed-income products globally in the period since March 2020, which spans over 25,000 funds in eVestment’s database(limited to strategies with less than US$2.5bn in FUM).

In the June quarter Coolabah’s cash-plus strategies were up between 1.90% and 2.33% net (2.09% and 2.58% gross),the long/short strategies returned between 8.14% and 9.23% net over the same period, and the Active Composite BondStrategy delivered a 4.13% return (gross) compared to the Composite Bond Index’s 0.53% (again, this is an insto-onlyproduct).

As we had flagged in March and April, this performance was driven by aggressive mean-reversion in high-grade andliquid financial credit spreads on securities issued by systematically important banks. We had firmly asserted in Marchand April that the unprecedented moves in spreads presented a once-in-a-generation buying opportunity, and so it hasproved with, for example, total non-annualised returns on hybrids bought in the darkest days of March north of 20%.

There continue, however, to be conspicuous stresses in credits issued by lower-rated companies in both the BBB"investment-grade" band and the sub-BBB “high-yield” or “junk” categories, where both rating downgrades anddefaults continue to climb. There have never been more fallen angels from the investment-grade to high-yield bands,and junk defaults are the highest they have been since the GFC. This has included a raft of high-profile defaults andcorporate collapses, including Virgin Airlines, Hertz, JC Penney, J Crew and Wirecard, which have created mayhem fortheir creditors.

The most striking example in Australia has been the default of Virgin Airlines on both its senior secured and seniorunsecured junk bonds, which were quite popular with domestic investors that will now reportedly recover less than 10cents in the dollar.

For years we have argued against blind diversification in fixed-income and instead preferred to construct portfolioscomprising systematically important issuers that are likely to be resilient and liquid in even the worst recessions. By wayof contrast, the more common approach when building credit portfolios is to have a very large number of securities—ranging from circa 150 to over 1,000—in the name of reducing risk via "diversification".

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)

Strategy commentary cont’d: The problem with this logic is that diversification is only valuable if the correlationsbetween securities are less than one when crises arrive. Yet in the corporate credit market, defaults are highly cyclical,as we saw in 2008 and 2009, 2015 and 2016, and again in 2020. This means defaults are correlated, which in turnmeans that if you diversify a corporate credit portfolio across a large number of issuers with BBB and/or high-yield (ie,sub BBB) ratings you will inevitably suffer from a large number of defaults and/or stress events during a recession.

Many investors would not know one-quarter to one-half of the names in a superficially well-diversified corporate bondportfolio precisely because it includes many medium-sized businesses with much higher risks of going sour. Whenrecessions materialise, as one did in March, investors discover that the liquidity of these bonds disappears becausenobody wants to buy them as a result of their soaring credit risks.

Our contention is that the real hazard is in these so-called “bar-belled” portfolios where you have, say, half the capitalin bonds with unquestionably strong credit quality and the other half in much racier exposures. In any serious economicretrenchment, some component of the high-risk half of the portfolio blows-up (or suffers stress), cruelling the overallportfolio’s performance and liquidity.

In the Australian bond market we have seen evidence of extreme credit stress and illiquidity in many sectors, includingairlines, airports, commercial property (especially office and retail), hospitality, retail, and amongst lenders to small tomedium sized enterprises. There are also historically high rates of defaults (or borrower non-payment) in riskier non-bank lending portfolios, including, amongst others, sub-prime home loans and SMEs.

During more benign times, all these sectors were sources of yield and comforting diversification. But it turns out thatduring the tough times this diversification has heightened rather than reduced credit and liquidity risk.

The alternative approach that Coolabah prefers is to focus on credits issued by systematically important institutionsthat benefit from implicit or explicit government guarantees, such as banks, and extremely durable monopolies andoligopolies, like Woolworths and Coles.

June was yet another month replete with exogenous shocks and seemingly never-ending tape bombs that Coolabah’s23 person team, including five portfolio managers and 11 analysts, was committed to analysing around the clock. Onearea of focus has been understanding the consequences of new COVID-19 outbreaks in the US and Victoria. In the USthere are certain states like California, Florida and Texas where there have been long and strong first waves (seescreenshots from our live COVID-19 tracking system below). Officials are clearly struggling with containment, and thecumulative infection curves have yet to flatten or stabilise. This contrasts with most developed countries and states likeNew York where initial outbreaks have increased more quickly, but have then been comprehensively crushed througheffective lockdown and containment measures.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)

Strategy commentary cont’d: In Australia our data scientists’ analysis of Victoria's COVID-19 infection trajectory hasunearthed a disturbing finding: it would appear that since April our southern neighbour has systematicallyunderperformed the rest of Australia's key conurbations in terms of its ability to contain this wicked virus and flattentheir curve. The first chart below is a screenshot from our internal, real-time system that tracks the cumulative numberof daily infections. This highlights that Victoria has been struggling to contain COVID-19 since the start of April in strikingcontrast to the rest of Australia, which has done a brilliant job of flattening their curves.

The second screen-shot from our systems presents the growth in cumulative infections on a state-by-state basis inlogarithmic terms, and it shows a similar story: there is something in the Victorian experience---either its policy reactionfunction or perhaps the composition of its population---that has prevented it from flattening the COVID-19 curve like allother states. Put differently, Victoria's curve has been increasing, not flat-lining, for a number of months now incontrast to the other major metro markets.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)

Strategy commentary cont’d: If we then look at the daily change in the number of new infections, one can see thatVictoria (blue line) has reported persistently higher cases than NSW (brown line), which is the comparison in the firstscreen-shot below, and all other states, which are included in the second screen-shot. While we might want to beat-upon our Victorian brethren, when we turn to consider our real-time Google mobility data, on almost every score PremierAndrews has been a lot tougher than the other states. Victoria is the purple line and has experienced, for example,lower retail/recreation activity, public transport usage, workplace attendance, participation in parks, and longer stays athome. (The residential screen tracks the duration of time that people spend in their homes.)

Credible explanations have been posited, including fundamental vulnerabilities in the security arrangements around Victoria's quarantine hotels, growing community indifference to the mixed messages from the premier regarding lockdowns and protests, and the lack of translated COVID-19 communications that meant ethnic minorities might not have fully understood the gravity of the crisis.

Another explanation relates to deficiencies in Victoria's COVID-19 testing intensity. Our systems track a rich range of real-time data on testing from around the world on a state (or provincial) level through to national statistics, which are updated automatically. When we evaluated the testing data from Victoria, there did indeed appear to be some shortcomings.

In particular, cumulative tests per capita materially lagged New South Wales, Queensland and South Australia, and the national Australian and New Zealand averages, between the onset of the crisis in March through to early May. It seemed the Victorians new something was awry by that time, because there was a noticeable acceleration in testing per capita thereafter to such an extent that by mid May Victoria was outperforming most states (and the Australian and New Zealand averages). You can see our system screenshots enclosed below.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)

Strategy commentary cont’d:

While the recent outbreak in Victoria has been disappointing, it is encouraging that the premier has now moved tolockdown the 10 affected regions, because one thing we know with conviction is that high-integrity lockdowns do work.

Don’t forget to listen to Coolabah Capital’s popular Complexity Premia podcast. You can listen on your favouritepodcast app, or you can find it on Apple Podcasts or Podbean here.

Performance Disclaimer:Disclaimer: Past performance does not assure future returns. All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is notguaranteed. This information has been prepared by Smarter Money Investments Pty Ltd, a wholly owned subsidiary of Coolabah Capital Investments Pty Ltd. It is general information only and is not intended to provideyou with financial advice. You should not rely on any information herein in making any investment decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance onthis information. The Product Disclosure Statement (PDS) for the funds should be considered before deciding whether to acquire or hold units in it. A PDS for these products can be obtained by visitingwww.coolabahcapital.com. Neither Coolabah Capital Investments Pty Ltd, Smarter Money Investments Pty Ltd, Equity Trustees Limited (EQT) nor its respective shareholders, directors and associated businesses assumeany liability to investors in connection with any investment in the funds, or guarantees the performance of any obligations to investors, the performance of the funds or any particular rate of return. The repayment ofcapital is not guaranteed. Investments in the funds are not deposits or liabilities of any of the above-mentioned parties, nor of any Authorised Deposit-taking Institution. The funds are subject to investment risks, whichcould include delays in repayment and/or loss of income and capital invested. Past performance is not an indicator of nor assures any future returns or risks. Smarter Money Investments Pty Limited (ACN 153 555 867) isan authorised representative (#000414337) of Coolabah Capital Institutional Investments Pty Ltd (AFSL 482238).

Equity Trustees Ltd (AFSL 240975) is the Responsible Entity for these funds. Equity Trustees Ltd is a subsidiary of EQT Holdings Limited (ACN 607 797 615), a publicly listed company on the Australian Securities Exchange(ASX: EQT).

Ratings Disclaimers:Financial Express Crown Rating Disclaimer: © 2018 FE. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FE, (2) may not be copied orredistributed, (3) do not constitute investment advice offered by FE, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct,complete, or accurate. FE shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. FE does not guarantee that afund will perform in line with its FE Crown Fund Rating as it is a reflection of past performance only. Likewise, the FE Crown Fund Rating should not be seen as any sort of guarantee or assessment of the creditworthinessof a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.

Australia Ratings Analytics Disclaimer: The information contained in the Australia Ratings Analytics report (assigned January 2019) and encapsulated in the investment rating is of a general nature only. The report andrating reflect the opinion of Australia Ratings Analytics Pty Limited (AFSL 494552). It does not take into account an individual’s objectives, financial situation or needs. Professional advice should be sought before makingan investment decision. A fee has ben paid by the fund manager for the production of the report and investment rating.

Atchison Disclaimer: The Atchison Rating (assigned June 2019) presented in this document is published by Atchison Consultants Pty Ltd ABN 58 097 703 047 AFSL 230 846. The report contains recommendations andadvice of a general nature and does not have regard to the particular circumstances or needs of any specific person who may read it. Investors should assess either personally or with the assistance of a licensed financialadviser whether the Atchison Consultants recommendation or advice is appropriate to their situation before making an investment decision. The information contained in the report is believed to be reliable, but itscompleteness and accuracy is not guaranteed. Opinions expressed may change without notice. Atchison Consultants does not accept any liability, whether direct or indirect arising from the use of information containedin this report. No part of this report is to be construed as a solicitation to buy or sell any investment. Atchison Consultants does not accept any responsibility to inform you of any matter that subsequently comes to itsnotice, which may affect any of the information contained in this report. The performance of the investment in this report is not a representation as to future performance or likely return.

Past performance does not assure future returns. Please read the

PDS to understand risks and disclaimers on final page

www.coolabahcapital.com

Fund: Smarter Money Long Short Credit Fund

Return/Risk : 5.9% pa gross/3.9% pa net (3.4% pa volatility)