Aurora Fortitude Absolute Return Fund Aims to provide a high rate of return, comprising both income and capital growth over both

rising and falling equity markets

PRODUCT DISCLOSURE STATEMENT No. 1

DATED 7 October 2010

Aurora Fortitude Absolute Return Fund, ARSN 145 894 800, APIR Code: AFM0005AU

Issuer: Aurora Funds Management Limited, ABN 69 092 626 885 AFSL No. 222110

(i)

Important Notice and Disclaimer

This PDS, which is dated 7 October 2010 has not been, and is not required to be, lodged with the Australian Securities and Investments

Commission („ASIC‟). No responsibility as to the contents of this PDS is taken by ASIC. Investment in the Aurora Fortitude Absolute Return

Fund („Trust‟ or „Fund‟) is offered by Aurora Funds Management Limited ABN 69 092 626 885 (referred to in this PDS as „AFM, „the

Responsible Entity‟, „Issuer‟, „we‟, „our‟, or „us‟). No Aurora Group company other than us makes any statement or representation in this

document. The information contained in this PDS is general only and does not take into account your individual investment objectives,

financial profile, or requirements. You should assess the information within the PDS, and consider talking to a financial adviser, before

making an investment in the Fund. All individual or joint investors in the Funds must be at least 18 years of age.

The information in this PDS is up to date at the time of preparation. However, some information and terms can change from time to time. If a

change is considered materially adverse we will issue a supplementary or replacement PDS. For updated or other information about the Fund

(such as performance), please consult your financial planner, call us on 1300 553 431 or visit our website www.aurorafunds.com.au. We will

send you a copy of the updated information free of charge upon request.

The Fund may make investments directly or indirectly by investing in other funds (including funds related to or managed by a member of the

Aurora Group) that have investment objectives and authorised investments that are consistent with the relevant Fund. This structure helps to

minimise transaction costs and can enhance diversification.

The Fund‟s constitution permits a wide range of investments and gives us as Responsible Entity broad investment powers. We may vary the

investment objectives, strategies, benchmarks, asset allocation ranges and processes of the Fund set out in this PDS. We will give Unit holders

written notice of any material variation we believe they would not have reasonably expected.

Where this PDS is provided in electronic form, you must print all pages including the Application Form. Units in the Fund will not be issued

unless you use the Application Form attached to either the paper or electronic copy of this PDS, or the approved electronic application facility.

The Prime Broker, as at the time of preparation of this PDS, is UBS AG, Australia Branch (ARBN 088129613, AFSL 231087) (referred to

throughout this PDS as the „Prime Broker‟). The Custodian, as at the time of preparation of this PDS, is UBS Nominees Pty Limited (ABN 32

001 450 522, AFSL 231088) (referred to throughout this PDS as the „Custodian‟). The Custodian and Prime Broker may be replaced from time

to time by the Responsible Entity. The Prime Broker and Custodian nor any of its employees, associates and subsidiaries has not prepared this

PDS and is not responsible for its contents, nor do they give any guarantee of the return on your investment, or repayment of capital or

particular rates of return on income and capital.

The Responsible Entity and its employees, agents or officers do not guarantee the success, repayment of capital or any rate of return on income

or capital or the investment performance of the Fund. Your investment does not represent deposits or other liabilities of the Aurora Group or

the Prime Broker and Custodian, or any related company. Your investment can be subject to investment risk, including possible delays in

repayment and loss of income and principal invested and Aurora and AFM do not in any way stand behind the capital value and/or rates of

return of the Fund.

This PDS is not an offer or invitation in relation to the Units in any place in which, or to any person to whom, it would not be lawful to make

that offer or invitation. The distribution of this PDS outside Australia may be restricted by the laws of places where it is distributed and

therefore persons into whose possession this document comes should seek advice on and observe those restrictions. Failure to comply with

relevant restrictions may violate those laws.

We authorise the use of this PDS for investors who wish to access the Fund through an Investor Directed Portfolio Service („IDPS‟, or „IDPS-

like‟ schemes commonly known as a master trust or wrap account) or a nominee or custody service. We are not responsible for the operation

of an IDPS or IDPS-like service.

Unless otherwise stated, all amounts specified in this PDS include GST and are net of any input tax credits or RITC, where available. No

image contained in the PDS represents an asset of the Fund. Unless identified to the contrary, all references to monetary amounts are to

Australian dollars. Capitalised terms have the meaning given to them in the Glossary.

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Contents

Key features 3

The investment strategy and process 4

What are the risks? 6

Fees and other costs 9

Taxation for Australian residents 13

What else do I need to know? 15

Withdrawing your investment 20

Making an investment 21

Glossary / Dictionary 22

Application Form & AML 24

The Fund may be suited to:

investors seeking consistent long term absolute returns and half-yearly income payments

superannuation funds, charities and individual investors (retail and wholesale)

The Aurora Group

With in excess of $500 million in funds under management and administration (as at the date of this PDS),

Aurora Funds Limited (Aurora Group) provides asset management and responsible entity/ trustee services for

over 3,500 Australian and New Zealand investors. Aurora Funds Limited (Aurora) was listed on the ASX in

July 2010 with the ASX Code: AFV.

The wholly owned subsidiary Aurora Funds Management Limited (AFM) is the Issuer and Responsible Entity

of the Fund. Prior to the listing of Aurora Funds Limited, the Fund was issued by Fortitude Capital Pty Ltd

(Fortitude), for which it won the “Australian Hedge Fund of the Year” in both 2008 and 2009.

The listing of the Aurora Group has seen the expansion of the Group‟s investment and research capabilities -

which now comprises an experienced team of 6 investment professionals.

The Aurora Group is the issuer /distributor of the:

Aurora Sandringham Dividend Income Trust (ARSN 108 249 154) ASX Code: AOD

Aurora Sandringham Australian Equity Income Trust ASX Code: ABW

Aurora Global Infrastructure Income Trust (ARSN 127 692 406) ASX Code: AIB

Aurora Property Buy-Write Income Trust (ARSN 125 153 648) ASX Code: AUP

van Eyk Blueprint Alternatives Plus (ARSN 121 722 521) ASX Code: VBP

CORALS Commodities Fund (ARSN 131 196 882)

Aurora Sandringham Global Income Trust (ARSN 131 291 499)

Aurora Fortitude Absolute Return Fund (ARSN 145 894 800)

You may contact AFM at:

Telephone: 02 9080 2377 or 1300 553 431

Facsimile: 02 9080 2378

Email: enquiries@aurorafunds.com.au

Website: www.aurorafunds.com.au

Post: PO Box R1695

Royal Exchange NSW 1225

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Key features Further Details Type of Fund and

timeframe

Type of Investment The Fund is an unlisted registered unit trust.

Suggested timeframe At least 5 years.

Investment fundamentals

Benchmark RBA Cash Rate. See www.rba.gov.au for more information on the Benchmark.

Investment Objective The Fund aims to achieve a high rate of return, comprising both income and capital

growth (and preserve the capital of the Fund) over both rising and falling equity markets.

Please note that while we aim to achieve this objective, the returns are not guaranteed.

Page 4

Investment Process The Fund seeks to meet the Investment Objective through using many different

investment strategies that allow the Fund to have very little correlation to the Australian

stock market. These strategies may include: long/short strategies, convergence trading,

merger and acquisition trading, arbitrage opportunities, derivative strategies.

The Fund may utilise leverage from time to time.

Please see pages 22 to 23 for a description of key terms

Page 4

Investment universe In addition to holding cash, the Fund may hold common stock, preferred stock, preference

shares, warrants or rights to subscribe to or purchase such securities or other equity

instruments in relation to entities that are listed (or about to be listed) on the ASX, NZX

and other foreign markets, or derivative instruments including futures and options listed

on the ASX, NZX and Sydney Futures Exchange. The Fund may trade in foreign listed

securities for the purpose of M&A and arbitrage.

Net Asset allocation ranges Cash 0 – 100%

Net equities exposure -25% –25% (including derivatives and convertibles)

Minimum transaction and

balance requirements1

Minimum Investment $100,000 and in multiples of $50,000 thereafter.

Minimum Redemption $50,000 or balance of holdings.

Fees and other costs2

Contribution fee Nil.

Management fee 1.5375% (including GST) per annum of the Net Asset Value. Pages 9-12

Performance fee 20.5% per annum (including GST) of the gross performance (net of fees) over the

Benchmark. Pages 9-12

Transaction costs – buy/sell

spread

0.20% per transaction Page 10

Risks of investing in the

Fund

All investments are subject to risk. The significant risks are described herein. Page 6

Making and withdrawing

your investment

Investing and withdrawing Generally, you can invest or withdraw at any time subject to certain limits in the

constitution.

Applications Valid application requests with payment must be received prior to 12noon on a Business

Day in Sydney to be processed that day.

Page 21

Anti-Money Laundering

(AML)

In order to process your Application, we will require information from you to confirm

your identity and source of funds.

Page 21

Cooling Off A 14-day cooling off period applies. Note that this does not apply to indirect investors via

an IDPS or IDPS-like service.

Page 21

Withdrawals Valid withdrawal requests must be received prior to 12noon on a Business Day in Sydney

to be processed that day and will usually be paid within five business days

Page 21

Distribution Payments

Frequency Half-yearly. However, there may be periods when no distributions are made. Page 15

Payment methods Reinvested into additional Units, or paid to your nominated bank account.

Valuation & Liquidity

Issue Price Net Asset Value per Unit plus buy-spread. Page 17

Liquidity Applications and redemptions will generally be made daily. However, the Fund may limit

applications and redemptions, and redeem your investment in certain circumstances.

Investor reporting and

information

General information and

updates

For further information, including any updates issued by us, the Fund‟s monthly

newsletter, and other statutory reports can be found at www.aurorafunds.com.au.

Transaction confirmations We generally send transaction confirmations for investments and withdrawals.

Annual tax reporting We send consolidated annual tax statements.

Complaints A complaints handling and disputes resolution process has been established. Page 15

1 We may, at our discretion, accept lower minimum transaction and balance amounts.

2 For certain wholesale clients (as defined in the Corporations Act) we may, at our discretion, negotiate, rebate or waive all or part of our fees.

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The investment strategy and process

Aims to provide a high rate of return, comprising both income and capital growth over both

rising and falling equity markets. Please note that while we aim to achieve this objective, the

returns are not guaranteed.

The Fund aims to achieve absolute returns (i.e. positive returns in both rising and falling equity markets) by

using a number of different investment strategies that allow the Fund to have very little correlation to the stock

market index. The focus on „absolute returns‟ differs from traditional funds in that the Fund aims to produce

returns regardless of equity market conditions.

We have a wide discretion over the Assets and formulation of investment strategies that may be adopted by the

Fund. These investment strategies may change from time to time (without notice) to reflect market conditions.

The adoption of a range of strategies means that the Fund‟s returns are not necessarily dependent on the stock

market‟s direction.

In addition to holding cash, the Fund may hold common stock, preferred stock, preference shares, convertibles,

warrants or rights to subscribe to or purchase such securities or other equity instruments in relation to entities

that are listed (or about to be listed) on the ASX, NZX and other foreign markets, or derivative instruments

including futures and options listed on the ASX, NZX and Sydney Futures Exchange. The Fund may hold

investments in securities and derivatives in offshore markets.

The underlying strategies that may be adopted by the Fund include (but are not limited to):

Long and Short

The Fund may purchase equities with a view to short term and medium term capital gains. The Fund will

focus on equities listed (or about to be listed) on the ASX. The investment mandate may at times include

international listed securities involved in a merger and acquisition transaction with an Australian listed

company.

In addition the Fund may “short sell” securities that are considered to be overpriced in the anticipation of

purchasing them later at lower prices for a profit. The use of short selling enables the Fund to balance the

directional exposure of the portfolio in order to adopt a more market neutral bias.

See page 6 for further information on, and the risks of, short-selling.

Convergence Trading

Many companies listed on the ASX also have their securities listed on international exchanges. The Fund

may seek to exploit any price arbitrage which exists from the multiple listing of these securities.

This strategy will also include any short term opportunities whereby an arbitrage exists between chess

depositary interests, rights issues, new shares, company options, and deferred delivery securities. This also

includes convertible arbitrage trades.

Merger & Acquisition (M&A) trading opportunities

The Fund will seek to take advantage of merger and takeover opportunities that arise within the Australian

equity market. The portfolio will deal in announced deals only, inclusive of cash and scrip deals, and agreed

mergers. The portfolio will trade both discounted and premium bids.

Convertible & Yield Arbitrage

The Fund will seek to take advantage of the yield profile of convertible and yielding securities and hedge

where appropriate the equity component associated with those securities.

Derivative Strategies

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The Fund‟s use of derivatives will be confined to purchasing exchange traded futures and options and or

writing derivatives, which will not be written in excess of securities held. The Fund may use derivatives in

order to:

(a) hedge short term risks;

(b) hedge overall portfolio exposure;

(c) enhance the return profile of an individual security; and

(d) as a stock substitute.

The Fund may utilise leverage from time to time through a prime broking arrangement (see page 16). For

example, the Fund can purchase exposure of up to 350% of NAV to a long position, and have a corresponding

short position of 350% of NAV, subject to a maximum position of 20% of NAV in any long or short position.

The Fund‟s overall „equity market exposure‟ is generally expected to vary between +/- 25% of net assets.

Leverage magnifies returns (both positive and negative) in the value of an investment relative to a comparable

unleveraged investment.

Further information in relation to the Fund‟s investment strategy, including a monthly newsletter, can be

obtained from www.aurorafunds.com.au.

The Investment Process

In selecting investments for the Fund we follow a rigorous process which includes detailed qualitative and

fundamental research. The investment analysis and selection process involves four key steps which are

summarised as follows:

The Fund focuses on the universe of Australian exchange listed equities (including Australian shares listed

overseas) and equity derivatives, including options and convertible securities.

We research various criteria and reasons to invest in particular situations. These criteria may pertain to

fundamental and quantitative analysis, company event situations such as takeovers and mergers, demergers and

restructuring, liquidity events, recapitalisations, multiple share classes, option availability and pricing.

The catalyst for the Fund to enter a trade is identifying mispriced risk. This is assessed in the context of a broad

portfolio of listed equities, options, and other instruments. We continually evaluate market indicators or risk,

and seek opportunities within, and across, the underlying strategies – whilst having regard to the expected time

horizon of each investment.

Once an investment decision is made, the implementation of the trade is conducted in parallel with an active

focus on risk management. Risk management techniques are employed at the position level, the strategy level

and the overall portfolio level.

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What are the risks?

Prior to investing you should have regard as to whether this is a suitable investment for you, and whether it

meets your individual investment objectives and financial circumstances. For example, you should consider

your financial targets, investment timeframe, how the risks of this Fund compare to your other investments, and

what degree of risk you will accept in order to achieve your targets. All investments are subject to varying risks

– both internal and external. Accordingly, like all investments, the Fund is expected to make losses from time

to time.

The table below lists the significant risks associated with investing in the Fund. Nevertheless, other risks will

exist, which may ultimately become material, and may result in material financial loss. You should talk to an

adviser about the risks involved in investing in the Fund, and how they might impact on your individual

financial circumstances.

Risk

Market risk The Fund is exposed to equity market risk. This risk is impacted by broad factors such as

interest rates, availability of credit, political environment, Unit holder/investor sentiment and

significant external events (e.g. natural disasters).

Prime Broker,

Custodian,

Counterparty risk

The Fund is exposed to the credit risk of its Prime Broker and Custodian, and other

counterparties (which may include the Issuer). Should the counterparty go into

administration/liquidation the Fund may lose some or all of its assets to the extent assets are

held by the Prime Broker/Custodian, though not pledged to the Prime Broker. The Fund‟s

counterparties may borrow the Fund‟s assets at any time, however any borrowed asset must

be returned in order to allow the Fund to meet its normal settlement obligations. This lending

may expose the Fund to additional risks. The Fund pledges its assets as collateral to lenders

or counterparties. Should the Fund default on its interest, or repayment or other obligations,

the lender/counterparty may take possession of the Fund‟s assets. There is a risk that the

Fund‟s administration counterparty may fail, or fail to accurately price the Fund‟s Units. This

may result in some short-term liquidity or other constraints on the Fund or Issuer. These risks

are managed by ensuring that the Fund manages its borrowing/derivative positions within

pre-determined limits, and by only dealing with credible lenders/counterparties based on

enforceable legal contracts, and by limiting the lenders‟/counterparties‟ recourse to only

Fund assets.

Short-selling risk Short selling involves additional risks such as liquidity risk, leverage risk and regulatory risk.

In addition, losses incurred through short-selling can be unlimited. Whilst short selling can

be used to reduce risk, it is also possible for a fund‟s long positions and short positions to

both lose money at the same time. Additionally, there can be no guarantee that the securities

necessary to cover a short position will be available for purchase. These risks are managed

by ensuring that short-selling is restricted below pre-determined limits, and by limiting short-

selling to shares that can be borrowed, and recourse to only Fund assets.

Securities lending risk The Fund may lend securities as part of its investment strategy. Under a securities lending

transaction, securities are lent to a third party (borrower) by the securities‟ owner (lender) for

a period of time in return for a fee or other benefit. Securities lending exposes both the lender

to additional risks. Whilst these may cause a loss to the Fund, processes are in place to

manage these risks where possible, including requirements for borrowers to provide

sufficient collateral as security and enforceable legal contracts between the parties.

Securities borrowing

risk

The Fund may borrow securities as part of its investment strategy. The risks of securities

borrowing includes the risk that the lender recalls the securities loan thereby requiring the

Fund to unwind a trading position, even if this unwinding results in a loss.

Concentration risk As the Fund may hold concentrated positions, the value of the Fund may be more volatile

than the value of a more diversified fund. Concentrated exposures may also result in

significant losses.

Derivatives risk The value of derivative investments is linked to the value of an underlying asset (or an

interest rate, share index or some other reference point) and can be highly volatile. While

derivatives offer the opportunity for higher gains for a smaller initial cash outlay, they can

also result in significant losses, sometimes significantly in excess of the amount invested to

obtain the derivative. Risks associated with using these tools might include the values of the

derivative failing to move in line with the underlying asset, potential illiquidity of, or

inability to get set in, the derivative, the Fund not being able to meet payment obligations as

they arise, and counterparty risk (this is where the counterparty to the derivative contract

cannot meet its obligations under the contract). Using derivatives may not provide the

- 7 -

desired returns or protection from loss, and may increase losses. We aim to keep derivative

risk to a minimum by constantly monitoring the Fund‟s use of derivatives, and by only

entering into derivative contracts with reputable counterparties.

External risk External factors are outside our control, and can affect both the value of the investment and

also the income that the investment might produce. These factors include such things as

interest rates, government policies, taxation and other laws, global stock market and

economic conditions/volatility in general. External risk factors cannot be eliminated.

Interest Rate risk The risk that the capital value or income of the Fund, or an investment of the Fund, may be

adversely affected when interest rates fluctuate.

Issuer risk The skill and performance of the Issuer can have a significant impact (both directly and

indirectly) on the investment returns of the Fund. Changes in the personnel and resources of

the Issuer may also have a material impact on investment returns of the Fund.

Fund risks Fund risk refers to specific risks associated with the Fund, such as termination and changes

to fees and expenses. The performance of the Fund or the security of your capital is not

guaranteed. Your investment may not keep pace with inflation, which reduces the purchasing

power of your money. There is no guarantee that the Investment Strategy will be managed

successfully, or will meet its objectives. Failure to do so could negatively impact

performance. From time to time the Issuer may be subject to conflicts of interest, and the

Fund may invest in other investments that are related to AFM. The Investment Strategy is

specific and may not provide the targeted objectives. Unit holders should also be aware that

the Investment Strategy is expected to lose money from time to time. The Investment

Strategy, process and guidelines are executed on a best endeavours basis only.

Each of the investments in which the Fund may invest is subject to its own specific risks

(including some currency risks). This includes the risk that the underlying investment may

themselves utilise gearing. This would have the effect of magnifying total gearing (and hence

default risks) related to the assets supporting that total gearing – see „Gearing risk‟. As the

nature of these investments is subject to change without notice, the actual risks associated to

each specific investment cannot be fully predicted or described.

Returns from investing in securities, derivatives, and currency hedges can be volatile –

particularly over the short to medium term. The active trading nature of the Fund means that

the volatility of the Fund may be higher as the returns are not always evenly distributed over

long periods. Investing in the Fund may give different results than investing individually

because of income or capital gains accrued in the Fund and the consequences of investment

and withdrawal by other Unit holders.

An investment in the Fund is governed by the terms of the constitution and the PDS, each as

amended from time to time. If the Fund size falls below an economic level, and if it is

considered by the Responsible Entity (at the Responsible Entity‟s sole discretion) to be in the

best interest of Unit holders, or if any material service or investment contract terminates and

cannot be replaced to our satisfaction, we have the right to close the Fund, and return your

remaining investment to you.

We aim to manage these risks by monitoring the Fund and acting in Unit holders‟ interests.

Gearing risk Gearing has the effect of magnifying the gains and also the losses, and also the volatility, of

an investment. Accordingly, a geared investment is a higher risk investment relative to an un-

geared investment with an otherwise comparable investment strategy. Unit holders have a

higher risk of capital loss as the level of borrowing increases. As the level of cash and

securities borrowings increase so too does the interest cost of those borrowing, as does the

sensitivity to any variation in interest rates themselves. The cost of borrowing may increase

materially, or become unavailable, which may lower the targeted and actual returns. These

risks are managed by ensuring that borrowing is restricted below pre-determined limits, and

by limiting recourse to only Fund assets.

- 8 -

Liquidity and

withdrawal risk

If a Unit holder or a group of Unit holders seeks to make large withdrawals, then selling

assets to meet those withdrawals may result in a detrimental impact on the price we receive

for those assets. Alternatively, unusual events may occur that cause market liquidity to

decrease and/or adversely change. Any such event may prevent the Fund from fully

implementing the Investment Strategy, or from entering/liquidating security and/or derivative

positions, or may adversely affect the ability of the Fund to price its investments. In these

situations, the Responsible Entity may choose to restrict, delay, or suspend Unit pricing,

applications, or redemptions. The Fund‟s Assets may be illiquid, particularly during adverse

market conditions, and this may adversely affect the NAV. In addition, we may seek to

manage the assets (and if necessarily temporarily amend the Investment Strategy without

prior notice) of the Fund in order to minimise disruption, costs, and capital risk to the Fund -

and thereby seek to protect the Fund in the interests of all Unit holders.

Offshore market risk By investing in offshore markets, the Fund may be exposed to a broad range of international

risks, including political, legal and regulatory, taxation, currency, and trading and settlements

risks. Investing in assets from less developed regions or markets display higher levels of

volatility of investment return than assets in mature markets. These risks are managed by

limiting geographic exposure to 20% of NAV to any one country outside of Australia.

Regulatory risk The risk that the value or tax treatment of an investment in a Fund or its underlying assets, or

the effectiveness of the Fund‟s trading or Investment Strategy may be adversely affected by

changes in government (including taxation) policies, regulations and laws, or changes in

generally accepted accounting policies or valuations methods. Such changes may make some

Unit holders consider that a managed investment scheme to be a less attractive investment

option than other investments, prompting greater than usual levels of withdrawals, which

could have adverse effects on the Fund.

- 9 -

Fees and other costs

Consumer advisory warning

The warning below is required by law. The fees and other costs associated with investing in the Fund are

described in this section.

Did you know?

Small differences in both investment performance and fees and costs can have a substantial impact on your

long-term returns. For example, total annual fees and costs of 2% of your fund balance rather than 1% could

reduce your final return by up to 20% over a 30-year period (for example, reduce it from $100,000 to $80,000).

You should consider whether features such as superior investment performance or the provision of better

member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and

management costs where applicable. Ask the fund or your financial adviser.

To find out more

If you would like to find out more, or see the impact of the fees based on your own circumstances, the

Australian Securities and Investments Commission (ASIC) website (www.fido.asic.gov.au) has a managed

investment fee calculator to help you check out different fee options.

The Table below shows fees and other costs that you may be charged. These fees and costs may be deducted

from your contribution or from the returns on your investment or from the Fund Assets as a whole. Taxes are

set out in „Taxation considerations‟ on pages 13 and 14. You should read all of the information about fees and

charges, as it is important to understand their impact on your investment.

Type of fee or cost Amount How and when paid Fees when your money moves in or out of the Fund

1:

Establishment fee: The fee to open your

investment.

Nil. Not applicable.

Contribution fee: The fee on each amount

contributed to your investment.

Nil. Not applicable.

Withdrawal fee: The fee on each amount you

take out of your investment.

Nil. Not applicable.

Termination fee: The fee to close your

investment.

Nil. Not applicable.

Management Costs:

Management costs: The fees and costs for

managing your investment1.

Performance fee1: The fee based on the Fund‟s

performance.

1.5375% per annum of the

Fund‟s Net Asset Value.

20.50% of the amount that

outperformance exceeds the

Benchmark.

Calculated daily and paid by the Fund at

the end of each month. For a worked

dollar example, refer to page 11.

It is calculated and accrued daily and paid

by the Fund six-monthly2. For a worked

dollar example, refer to page 11.

Normal Operating Expenses

Nil.

Not Applicable

Borrowing costs

The Fund will pay interest/fees

on borrowings (if any) and/or

undrawn amounts. We are

unable to estimate these costs.

These costs are generally accrued daily

and paid quarterly. This accrual reduces

the Fund‟s assets and is reflected in the

Unit price.

Service fees: Investment switching fee: The fee for

changing investment options.

Not applicable. Not applicable.

1. For more detail please refer to the "Additional explanation of fees and costs". For certain wholesale clients (as defined in the

Corporations Act) we may, at our discretion, negotiate, rebate or waive all or part of our fees.

2. Or payable on the termination and replacement of the Responsible Entity.

Additional explanation of fees and costs

Management costs

Management costs comprise the additional fees or costs that an investor incurs by investing in the Fund rather

than investing directly in the underlying assets. They may include such things as the management fee, normal

operating expenses, and abnormal expenses and performance fees.

- 10 -

Management fee

This is the fee we charge for overseeing the Fund‟s operations, providing access to the Fund, and managing

the investment strategy.

Normal operating expenses

We may recover from the Fund all expenses incurred in relation to the proper performance of our duties.

For example, this would include Fund promotion (including product disclosure statements, advertising and

promotional material and printing), custody, registry, accounts and audit, taxation advice, external

consultants and compliance and insurance, regulatory costs, stationery, communications and postage.

The constitution does not place any limit on the amount of the normal operating expenses that can be paid

from the Fund. We do not currently charge for normal operating expenses. Should we change the amount

of expense recovery, we will give 30 days‟ notice.

Abnormal expenses

We may recover abnormal expenses (such as costs of Unit holder meetings, legal advice/proceedings)

from the Fund. These costs are rarely incurred and are generally insignificant over time.

Units in lieu

We may elect to receive Units in lieu of all or part of any management or performance fee plus any

applicable GST for the Funds.

Transaction costs - buy-sell spread

When you invest or withdraw all or part of your investment, we use what is called a „buy-sell‟ spread

(currently set at 0.20%) to recover our estimate of the transaction costs incurred. The buy-sell spread on an

investment/redemption of $50,000 is $100. The buy-sell spread is retained by the Fund (not us) and aims

to cover the transaction costs of applications to or withdrawals from the Fund (this includes, among other

things, brokerage, bank and other transaction charges, and government taxes/duties). The buy-sell spread

may be changed at any time without notice.

Borrowing Charges

Borrowing money allows the Fund to increase the amount available for investment. The Fund may borrow

money, and invest both your money, and the borrowed amount, in the Investment Strategy. The Fund will

pay interest on borrowings (if any) at a rate which is subject to change without notice. Using borrowings

increases the gains or losses from an investment compared to the returns on a corresponding investment

with no borrowings.

The level of borrowings used will change without notice as the investment opportunities, value of assets,

borrowing availability and cost, and other market conditions change. We are not able to estimate the

Fund‟s annual borrowing costs.

Performance fee

The Responsible Entity is entitled to receive twice annually a performance fee of 20% (excluding GST) of

the amount by which the increase of Net Asset Value of the Fund exceeds the Benchmark Performance

during the relevant Performance Period, subject to it being above the High Water Mark. The Performance

Fee is calculated and accrued daily as follows:

Performance Fee = (FP - BP) x 20%

Where:

FP = CV – OV

BP or Benchmark Performance = B x OV

CV = the Net Asset Value of the Fund at the close of the day (after other fees and expenses have been

accrued but before accrued performance fees)

OV = the Net Asset Value of the Fund at the opening of the day (pre performance fee accrued Net

Asset Value of the Fund but post paid performance fees)

B = the percentage return of the Benchmark at the commencement of the day.

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The Performance Period means:

a) the period from the first day of the next month following each 6 month period ending either at the end

of the Financial Year or 31 December each year (i.e. every 6 months); and

b) if the Fund terminates on a day other than the last day of a 6 calendar month Performance Period, then

the last Performance Period will expire on the termination date.

Any accrued Performance Fee will be payable as at 1 January and 1 July in each calendar year directly

from the Fund (in the same way the ongoing base management fee is paid).

The High Water Mark means the Net Asset Value of the Fund at the end of the preceding Performance

Period (adjusted for subsequent Applications, redemptions and distributions).

If the accrued Performance Fee at the end of each Performance Period is a negative number, then no

Performance Fee is payable for that Performance Period. The accrued negative Performance Fee will be

carried forward into the next Performance Period. Any negative performance (adjusted for any

Applications and redemptions) must be recouped in full before we are entitled to be paid a further

Performance Fee. We are not required to reimburse the Fund or Unit holders for the amount of any

negative performance fee accrual over a performance fee period, including on termination of the Fund.

Should we choose to change the basis of calculating the performance fee we will advise all Unit holders in

writing giving them one month notice of this change.

For example, on an investment of $50,000, monthly outperformance of 0.42% (being 5%

per annum) after fees over the Benchmark, and no previous under performance, the annual

performance fee will be 20.5% x ($50,000 x 5%) = $512.50.

Example of annual fees and costs for the Fund

The following tables give an example of how fees and costs in the Fund can affect your investment over a one-

year period. You should use these tables to compare this product with other managed investment products.

Please note that these are examples only. In practice, the actual investment balance of a Unit holder will vary

daily and the actual fees and expenses we charge are based on the value of the Fund, which fluctuates daily.

Example 1

Where no performance fee is payable

Balance of $50,000 with a contribution of $5,000 at the

beginning of the year

Contribution fee 0% For every additional $5,000 you put in, you will be charged $0.

Plus Management costs 1.5375% And, for every $50,000 you have in the Fund you will be charged

$768.75 each year.

Equals Cost of the Fund If you invest $5,000 at the beginning of the year and your average

balance is $50,000 over the course of the year, you would be

charged up to $768.75.

What it costs you will depend on the fees you negotiate with the

Fund or financial adviser.

Example 2

Where a performance fee is payable

Balance of $50,000 with a contribution of $5,000 at the

beginning of the year

Contribution fee 0% For every additional $5,000 you put in, you will be charged $0.

Plus Management costs 1.5375% And, for every $50,000 you have in the Fund you will be charged

$768.75 each year.

Plus Performance fee 20.5% of the

outperformance. And if the Fund meets the criteria to be paid a performance fee,

you will be charged $512.50

Equals Cost of the Fund If you invest $5,000 at the beginning of the year and your average

balance is $50,000 over the course of the year, you would be

charged up to $1,281.25.

What it costs you will depend on the fees you negotiate with the

Fund or financial adviser.

These examples are calculated on the basis that your balance remains constant at $50,000 throughout the year

(i.e. the Fund‟s Unit price remains unchanged in Example 1, and increases by 5% over the Benchmark at the

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end of the year in Example 2). The example does not include the effect of any transaction costs (including the

buy-sell spread). The example assumes that no additional service fees are incurred by you and that fees are not

individually negotiated with us.

Where we invest in other Aurora funds

Funds may gain investment exposure through other funds operated by the Aurora Group. Where we invest in

funds operated by us, full management fees are not received by us from both funds. Instead, adjustments are

made so that our management fee will be no greater than the management fees set out herein.

Differential fees & discretion

For wholesale clients, in line with ASIC policy, we may negotiate the fees on an individual basis at our

discretion. The law may restrict us from negotiating our fees with other investors. The terms of these negotiable

arrangements are at our discretion. Please contact us to find out if and how you can negotiate your fees with us.

We may also pay part or all of the management fee to your financial adviser in the form of trail commission or

to other service providers in relation to the Fund. For example, on a $10,000 investment, if we paid the entire

management fee, we would pay $153.75 to your financial planner in the form of trail commission. This is not

an additional amount borne by you as it is paid for entirely out of the management fee.

We have prepared a policy in relation to the guidelines and relevant factors taken into account when we use

discretion in determining such things as unit prices, calculating transaction costs, etc. A copy of this policy is

available on request free of charge. We keep a record of any exercise of discretions which are outside the scope

of, or are inconsistent with, the policy.

Can the fees change?

Yes, all fees can change. The constitution provides for a maximum contribution fee of 5% of the Application

Monies, a maximum withdrawal fee of 3% of the withdrawal amount, a maximum management fee of the

greater of 5% on the Fund‟s total assets, a time cost fee of $200 per hour for work outside the normal day to

day responsible entity obligations, and a maximum performance fee of 30% of out performance. These

maximums are advised for information only, and are not necessarily the current fees charged. To change fees

above levels allowed by the constitution, we would need the approval of Unit holders. We will give you 30

days‟ notice of any proposed increase in the fees. These fees vary, depending on what you ask us to do.

If you ask us to do something outside our normal administrative function for you, we might charge you a fee.

These fees vary, depending on what you ask us to do. Currently, our fees are $25 if you want a bank cheque or

a third party cheque drawn, $25 for a telegraphic transfer, or $15 for a copy of the constitution.

Government taxes and duties

Government taxes and duties may be applied as appropriate. In addition to the fees and costs described in this

section, standard government fees, duties and bank charges may also apply such as stamp duties. Some of these

charges may include additional GST and will apply to your investments and withdrawals as appropriate.

Indirect (or alternative form) remuneration

We may provide financial assistance out of our own resources (for seminars, client mailings, cooperative

advertising, firm commitments etc.) to licensed financial intermediaries. This is not an additional cost to you.

Please refer to the financial services guide or statement of advice your financial adviser gives you for more

information on fees payable to them.

What benefits are payable to AFM?

Except for fees disclosed in this PDS, AFM and its directors and employees have not received and are not

entitled to any benefit in relation to the offer of Units in the Fund. Subject to law, directors may receive a salary

as employees of the Aurora Group, consulting fees, director‟s fees, and from time to time may hold interests

(directly or indirectly) in the shares of Aurora or Units in the Fund. The Aurora Group‟s internal sales staff may

also receive a commission (payable from the Aurora Group‟s own resources and not borne by Unit holders in

any way) calculated by reference to Applications received. AFM is indemnified out of the Assets of the Fund

for all fees, costs and expenses borne in the proper performance of its duties.

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Taxation for Australian residents

Taxation issues are complex and taxation laws, their interpretation and associated administrative practices

may change over the term of an investment in the Fund. This summary incorporates tax provisions relevant as

at the date of this PDS and outlines the main Australian income tax implications for Australian tax residents

who subscribe for Units pursuant to this PDS and hold these Units on capital account. The information in this

summary is of a general nature only and does not purport to constitute legal or tax advice.

This PDS cannot address all of the taxation issues that may be relevant to a particular Unit holder. As the

taxation implications for each potential Unit holder may be different, each prospective Unit holder must obtain

their own independent professional taxation advice on the full range of taxation implications applicable to their

own individual facts and circumstances re investing in, or to holding, or disposing of, the Units.

Characterisation of the Fund

The Fund will be characterised as a trust for the purposes of the Income Tax Assessment Act 1936 (Tax Act),

and will be a "fixed trust" which is "widely held" for the purposes of the Tax Act. The Fund is not generally

expected to pay any income tax on its net taxable income during the investment term, as the Fund‟s net taxable

income (and related tax liabilities) will be passed through to Unit holders.

The Net Income of the Fund

The net income of the Fund for a financial year will be the sum of all amounts that would be assessable income,

less all amounts that would be allowable deductions. This will generally include all dividends and other

income, franking credits, realised capital gains/losses, and costs, fees and expenses associated with the conduct

of the Fund‟s business.

Where the net income of the Fund for any particular financial year is a loss, trust loss provisions can apply to

deny the availability of tax losses and, the Fund will not be able to pass through the benefit of any franking

credits it receives during that financial year to Unit holders. These franking credits will be permanently lost.

Taxation of Unit holders - Distributions

Unit holders who are presently entitled to the distributable income of the Fund will be assessable on the net

income of the Fund, in proportion to their entitlements to that distributable income.

In the event that the distributable income of the Fund exceeds the net income of the Fund, the amount of the

excess (commonly referred to as "tax deferred income") will not be included in your assessable income. Rather,

the cost base of your Units will be reduced by the amount of any such excess, potentially increasing the amount

of capital gain derived on ultimate disposal of the Units. In the event that the total of tax deferred income

received is in excess of the cost base of your Units, the excess will be taxable as a capital gain.

Generally, Unit holders will be required to include any franking credits received from the Fund in their

assessable income and may be entitled to a tax offset equal to the amount of franking credits so included.

Sale, Redemptions and transfers

The sale, redemption and transfer of Units are taxable events. The cost base of a Unit will include the amount

paid to acquire the Units together with any incidental costs. The cost base of a Unit may be reduced by the

amount of any tax-deferred distributions received from the Fund. Any gain you derive or loss you incur on the

sale, redemption, or transfer should generally be taxable as a capital gain/loss.

If the Units have been held for more than 12 months, this gain may qualify for concessional tax treatment for

individuals, trusts or complying superannuation funds. Very broadly, under these rules, should the Unit holder

satisfy the required 12-month holding period, any gain on disposal by an individual or trust Unit holder may

qualify for a 50% discount. If the Unit holder is a complying superannuation fund, the discount is 33%.

On redemption of a Unit, part of the Redemption Amount may include an interim or final distribution of

distributable income of the Fund. In this case the disposal proceeds for the Unit would not include the amount

of any such distribution and would equal the Redemption Amount less the amount of any such distribution.

- 14 -

Such a distribution on redemption may include an amount of dividend income and, in these circumstances, the

Unit holder may also be entitled to any franking credits attaching to that dividend income.

Part IVA

Australia has a comprehensive anti-avoidance regime under its tax laws that can apply to any tax benefit

obtained under a scheme where any party to the scheme has entered into it for the dominant purpose of

enabling a taxpayer to obtain a tax benefit in connection with the scheme. The application of anti-avoidance

regime will depend upon the circumstances of each Unit holder. The potential application of these rules to your

investment should be discussed with your own tax adviser.

Stamp Duty

Stamp Duty may be payable on the transfer of Units.

Goods and Services Tax (GST)

No GST should be payable in respect of the subscription, acquisition, disposal or redemption of Units, nor in

respect of any distributions paid in respect of the Units. GST may apply to fees charged to you. You should

obtain your own advice as to whether an input tax credit is available for any such GST, as it may depend on

your personal circumstances.

Where GST applies to fees that are charged to the Fund and recoverable from the Fund‟s assets, those fees plus

any applicable GST may be recovered from the assets of the Fund. However, the Fund may be entitled to claim

input tax credits or reduced input tax credits for that GST, depending on the precise nature of the fee.

Quoting your Tax File Number (TFN)

It is not compulsory to quote your TFN, Australian Business Number, or exemption details. However, should

you choose not to, we are required to deduct tax from your distributions at the maximum personal rate (plus the

Medicare levy).

- 15 -

What else do I need to know?

What rules govern the Fund?

The Fund is governed by a constitution which has been lodged with, and registered by the ASIC as a managed

investment scheme under Chapter 5C of the Corporations Act. You can inspect a copy of the constitution at our

office or we will provide you with a copy, for the disclosed fee, if you call us.

The constitution and the Corporations Act govern the rights and obligations of Unit holders and us. The

constitution sets out the conditions under which the Fund will operate, terminate, and the rights, obligations and

liability of the Responsible Entity. Unit holder approval is required where changes to the constitution may

adversely affect Unit holders.

A compliance plan is in place. This plan sets out how we will ensure compliance with both the Corporations

Act and the constitution when operating the Fund. An independent compliance committee monitors our

compliance with the compliance plan.

Indemnity

AFM, as the Responsible Entity of the Fund is indemnified out of the assets of the Fund for any liability

incurred by it in properly performing or exercising any of its powers or duties in relation to the Fund. To the

extent permitted by the Corporations Act, this indemnity includes any liability incurred as a result of any act or

omission of a delegate or agent appointed by the Responsible Entity. The Fund may retain and pay out of any

money in its hands all sums necessary to affect such an indemnity.

How are complaints handled?

You may lodge any complaints by writing to AFM at the address shown on the back cover of this PDS. We will

always acknowledge any complaint in writing and respond within 45 days. If you remain unhappy, you can

contact the Financial Ombudsman Service (FOS) - which is independent from us on:

Financial Ombudsman Service

GPO Box 3, Melbourne VIC 3001

Telephone: 1300 780 808

Email: info@fos.org.au

To be considered by the FOS, the claim involved must be under any financial limits set by FOS (unless we both

agree in writing) of $150,000. If you are investing through an IDPS or IDPS-like service then enquiries and

complaints should be directed to the operator of that service, and not to us. The Australian Securities and

Investment Commission (ASIC) also has a free call Infoline on 1300 300 630 which you may use to make a

complaint and obtain information about your rights.

Distribution Policy

The Fund expects to distribute all its net income each year to Unit holders via half-yearly distribution

payments. The nature and frequency of all distribution payments may change at our sole discretion. We will

advise you in writing of any expected material changes. You should note that the Fund does not guarantee that

distributions will be made every six months or that any distribution will be made at all.

The Unit price generally falls by the amount of any distribution (per Unit) immediately after the Unit goes ex-

distribution. If you invest just prior to a distribution then that distribution may effectively represent a return of

your investment. Depending on your circumstances, this may have certain tax implications and we recommend

that you speak with your financial adviser or tax adviser to determine your own situation.

Distribution Re-investment Plan

The Fund has a Distribution Re-investment Plan (DRP) available for all distributions. The DRP will enable

Unit holders to reinvest all or part of the distributions payable on their Units in additional Units.

Unit holders may elect to participate in the DRP in respect of all or part of their Units in the Fund that will

comprise that member‟s DRP Units. The Issuer may in its absolute discretion accept or refuse any application

to participate. The net cost of investing at that time will be the Application Price per Unit prior to that issue as

at the end of each distribution period. The number of Units issued may be rounded down to four decimal

- 16 -

places. Participation in the DRP can be terminated by notice in writing to the Fund prior to the register closing

for each distribution period. Any notice received after books have closed will only become effective for the

next distribution period. If Unit holders fail to elect to participate then the distribution will be payable in cash.

Asset allocation ranges

If market movements, applications into or withdrawals from a Fund, or changes in the nature of an investment,

cause the Fund to exceed the indicative asset allocation or a limit in this PDS, this will be addressed by us as

soon as reasonably practicable.

Prime broking and custody arrangements

AFM has appointed UBS AG, Australia Branch to be Prime Broker and UBS Nominees Pty Limited as

Custodian for the Fund. Both are members of the UBS Group of companies. The appointments were made

pursuant to the prime brokerage customer documents (the „Customer Documents‟) entered into between the

Responsible Entity for the Fund and the Prime Broker (for itself and as agent for certain other members of the

UBS Group of companies (the „UBS Companies‟)) and the Custodian. These services include the provision to

the Fund of gearing financing, clearing, and settlement. The Fund may also utilise the Prime Broker, other

members of the UBS Group of companies and other brokers and dealers for the purposes of executing

transactions for the Fund.

The fees of the Prime Broker and the Custodian are payable by the Fund. The Prime Broker has no decision

making discretion relating to the investment of the assets of the Fund and makes no representation in respect of

the Fund or the investment of the Fund‟s assets.

Certain assets of the Fund will, subject to the following paragraph, be held by the Custodian in segregated

accounts together with assets deposited by it on behalf of other customers of the Custodian or the Prime Broker.

Such assets will not be mixed with the property of the Custodian or the Prime Broker and should not be

available to third party creditors of the Custodian or the Prime Broker in the event of insolvency of the

Custodian or the Prime Broker (as the case may be). However, the assets of the Fund held by a Custodian will

be subject to a charge to secure the Fund‟s obligations to the Prime Broker.

The obligations of the Fund to the Prime Broker in respect of any transactions may be secured by transferring

to the Prime Broker by way of security title to certain investments, cash or other assets of the Fund (together

referred to as „Collateral‟). The Prime Broker is entitled to sell, lend or otherwise use any Collateral for their

own purposes, subject to an obligation to return equivalent securities or cash value. Such Collateral is not

segregated from the Prime Broker‟s own property and may be available to third party creditors of the Prime

Broker in the event of the insolvency of the Prime Broker.

Under the Customer Documents, the Prime Broker is not responsible for and is not liable for any loss on

settlement of a transaction, any acts or omission of the executing broker, its employees or agents, non-

compliance with any regulatory requirements to report transactions, refusing to settle a transaction or failing to

notify the Fund of its failure to settle a transaction (except where the Prime Broker performs such functions in

its own capacity).

UBS Nominees Pty Limited will provide custody services for the assets of the Fund including documents of

title or certificates evidencing title to investments, held on the books of the Prime Broker as part of its

brokerage function in accordance with the terms of the Customer Documents. The Custodian may appoint sub-

custodians, including a member of the UBS Group, for such investments.

We may remove UBS AG, Australia Branch as the Prime Broker and UBS Nominees Pty Limited as the

Custodian and appoint another prime broker and custodian in their respective place at any time without notice

to investors. See pages 6 to 8 for further risks associated to using gearing, and also to prime broker and

custodian arrangements generally.

Conflicts of Interest

The Issuer, and its various service providers may from time to time act as issuer, investment manager,

custodian, registrar, broker, administrator, investment adviser, distributor or dealer in relation to, or be

otherwise involved in other ways, or have other funds established by parties other than the Fund, as the case

- 17 -

may be, which have similar objectives to those of the Fund. It is, therefore, possible that any of them may, in

the course of business, have potential conflicts of interest with the Fund. We will, at all times, have regard in

such event to its obligations to the Fund and will endeavour to ensure that such conflicts are resolved fairly.

In addition, subject to applicable law, any of the foregoing may deal, as principal or agent, with the Fund,

provided that such dealings are carried out as if effected on normal commercial terms negotiated on an arm‟s

length basis.

The Issuer or any of their affiliates or any person connected with the Issuer may invest in, directly or indirectly,

or manage or advise other funds which invest in assets which may also be purchased or sold by the Fund.

Neither the Issuer nor any of their affiliates nor any person connected with them is under any obligation to offer

investment opportunities of which any of them becomes aware to the Fund or to account to the Fund in respect

of (or share with, or inform, the Fund of) any such transaction or any benefit received by any of them from any

such transaction.

Continuous Disclosure and Unit holder communications

As at the date of this PDS, the Fund is not a disclosing entity for the purposes of the Corporations Act and as

such, is not subject to regular reporting and disclosure obligations. Nevertheless, the Fund will:

(a) prepare and lodge with ASIC yearly financial statements accompanied by a Director's statement and

report and an audit or review report;

(b) immediately notify Unit holders of any information concerning the Fund of which it is, or becomes

aware and which a reasonable person would expect to have a material effect on the price or value of

Units, subject to certain limited exceptions related mainly to confidential information.

You will also receive notification (as required by law) of:

your account details and any investment or redemption;

any changes in the terms of your investment; and

performance updates.

We may provide updates, and issue information relevant to the Fund, on our website from time to time. We

may use e-mail to contact you unless you advise to the contrary. You may request that we forward hard copies

of the statutory reports to you free of charge. Copies of all documents lodged by the Fund with the ASIC may

be obtained from or inspected at an office of ASIC.

May I transfer my Units?

The constitution of the Fund provides that you may not transfer your Units without our prior approval. If you

want to transfer your Units speak to us. We have the forms, and stamp duty will generally need to be paid.

Whilst we have the ability to refuse to register transfers of Units, we generally do not refuse.

Non-listing of Units

The Units of the Fund are not currently listed on any securities exchange. We retain the right to make an

application to list the Units of the Fund on any securities exchange at any stage in the future (without notice)

but as at the date of this PDS we have no intention to do so.

Applications and Unit Pricing

The Unit Price is based on the Net Asset Value of the Fund (plus or minus any buy-sell spread) divided by the

number of Units on issue and is generally calculated on every Business Day. Subject to the cooling-off process,

an Application can only be withdrawn with our approval.

The Unit Price will be routinely available at www.aurorafunds.com.au or by contacting us during normal

business hours. The Application Price is the Net Asset Value per Unit plus the buy spread. The Fund‟s Assets

and Liabilities will be valued according to generally accepted Australian accounting principles.

Units will be allocated as soon as practicable after the determination of the applicable Application Price. The

number of Units received on an Application will be equal to net Application Monies (after deduction for the

amounts owning to us or others) divided by the Application Price. The number of Units issued will be rounded

down to four decimal places. Any balance of funds will be retained to the benefit of the Fund.

- 18 -

We will deposit all Application Monies into an interest bearing trust account until the allocation of the Units.

Interest earned will be credited to the benefit of the Fund. If your cheque is not honoured, no Units will be

issued to you, and we may charge you for any costs incurred by us. If your Application Form is not completed

correctly, or if the accompanying payment is for the wrong amount, it may still be treated as valid, at our

absolute discretion. Units are issued on the terms set out in the PDS and constitution. You should ensure that

you read and understand these terms. You should note that the lodgement of an Application and payment

constitutes an offer by you to acquire the Units in accordance with the terms contained in this PDS and

constitution.

Minimum/maximum size

The Fund may be wound up at any time if it is considered to be in the best interest of Unit holders. In

particular, if the net assets of the Fund falls below an economic level, we may consider winding up the Fund.

Should we decide to close the Fund the assets will be sold and the proceeds, after all costs have been deducted,

distributed proportionally to the number of Units held. Once the Fund reaches $500 million it may be

temporarily or permanently closed for additional subscription.

Labour standards or environmental, social or ethical considerations

We do not take into account labour standards or environmental, social or ethical considerations in determining

the selection, retention or realisation of assets.

How can I provide instructions?

Subject to the requirements outlined, or as stipulated by us, you, or persons authorised by you, can provide

instructions (quoting your Unit holder number) in writing, by facsimile, or by any other method allowed by us

from time to time. By investing in the Fund, you authorise us to accept instructions provided by these methods.

You acknowledge that there are risks associated with using various methods of providing instructions such as,

but not limited to, fraud, loss, misappropriation, failure in technology, or any other cause. You or persons

authorised by you, agree to indemnify us against any claims, damage, loss, cost or expense that we or you

suffer or incurs because of our acting or not acting on instructions purporting to be from you or any person

authorised by you. We are not required to make enquiries as to the genuineness or validity of any instruction. A

person is taken to be you, or a person authorised by you, if that person quotes your Unit holder number and the

name in which the investment is held. A person is also taken to be a person authorised by you to give

instructions if you have held out that person to us as a person authorised by you to give instructions and have

not yet notified us in writing that such a person has ceased to be authorised.

Is my personal information collected and protected?

When you complete the Application Form for units in the Fund, AFM will be collecting personal information

from you. AFM may collect additional personal information from you in the future. AFM needs to collect

personal information from investors for the primary purpose of providing investors with an investment in the

Fund (including assessing your application and identifying you).

There are also a number of related purposes for which your personal information will be collected and these are

to process your application, administer and manage your investment in the Fund, and comply with Australian

taxation laws, the Corporations Act, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006

(Cth) („AML/CTF Act‟) and other laws and regulations. If you do not provide AFM with your contact details

and other information we may not be able to process your application, administer or manage your investment or

tell you about investment opportunities in which you may be interested.

AFM may also collect personal information (including sensitive information) about you from third parties, to

meet its obligations under the AML/CTF Act. Your information may be used in connection with the purposes

for which it is collected. AFM may also use your information to forward to you from, time to time, details of

other investment opportunities offered by AFM in which you may be interested. Please tick the box on the

Application Form if you do not wish to be updated with such investment opportunities. If you do not mark the

box on the application, we will assume that you want to hear about the investment opportunities we have

described.

AFM may disclose your personal information to the following types of organisations:

- 19 -

any third party service provider engaged to provide custody, reporting, administration, technology,

auditing, registry, mailing or printing services in relation to the Fund;

the Australian Tax Office and other Government or regulatory bodies, when and to the extent required by

law;

any professional advisers (including legal and accounting firms, auditors, consultants and other advisers);

and

those where you have consented to such disclosure, or as required or authorised by law.

Please note that for Indirect Investors, AFM will not collect or hold any personal information in connection

with your investment in the Fund. You should contact the relevant IDPS Operator for more information about

their collection, storage and use of your personal information. You can gain access to the personal information

AFM holds about you, subject to some exceptions allowed by law. AFM will give you reasons if it denies

access. If you have any queries in relation to AFM‟s Privacy Statement please or wish to access the personal

information that it holds about you please contact us.

What consents have been provided?

UBS AG, Australia Branch as Prime Broker and UBS Nominees Pty Limited as Custodian have given and, at

the date of this PDS, had not withdrawn their consent:

to be named in this PDS in the form and context in which they are named; and

to the inclusion of the statements made about them and which are specifically attributed to them, in the

form and context in which they appear.

Neither the Prime Broker, the Custodian nor any UBS company will be liable for any loss to the Fund resulting

from any act or omission in relation to the services provided under the terms of the Customer Documents unless

such loss results directly from the negligence, wilful default breach of contract or fraud of the indemnified

person.

The Prime Broker and the Custodian are providers of services to the Fund and are not responsible for the

preparation of this or the activities of the Fund and therefore accepts no responsibility for any information

contained in this document. Neither the Prime Broker nor the Custodian will participate in the investment

decision-making process for the Fund.

- 20 -

Withdrawing your investment

You may generally withdraw your investment on a daily basis, being a business day in Sydney. Redemptions

must be for a minimum of $50,000 (or the balance of your Unit holding).

Generally, if your valid withdrawal is received before 12noon Sydney time on a New South Wales business day

(the transaction cut-off time), it will usually be processed using the unit price determined as at the close of

business on that day. If your withdrawal request is received after the transaction cut-off time, or on a non-

business day, it will usually be processed using the applicable unit price calculated as at the close of business

on the next business day.

Any withdrawal requests received during the period of suspension, or for which a Unit price has not been

calculated or confirmed prior to the commencement of a period of suspension, will be deemed to have been

received immediately after the end of the suspension period. Units will only be priced on a forward basis.

We may redeem some or all of your Units without you asking, including where you breach your obligations to

us (for example, you provide misleading information in your Application Form), or we need to pay any amount

you owe us, or we owe someone for you (for example, the tax office).

The net amount you will receive upon redemption (before the above deductions, if any) is the Net Asset Value

per Unit (less the buy-sell spread).

If your redemption would cause your holding balance to fall below $50,000, we are entitled (but not obliged) to

treat it as a request for redemption of all your Units. A redemption request, once lodged, may only be

withdrawn with our approval. You will generally receive the proceeds of any redemption within 5 business

days of calculation of the redemption amount. Payments will only be made in the name of the Unit holder.

The constitution allows for the payment of redemptions to be made within 90 days of receipt of the request

(whilst the Fund is liquid) and for redemptions to be suspended for up to 180 days (or such longer period as

considered reasonable in AFM's opinion) in special circumstances, such as if there is a circumstance outside

our control which impacts on our ability to properly or fairly calculate asset values (for example, if there is

material market uncertainty, limited market liquidity, the Fund has received withdrawal requests for more than

10% of the net assets, and/or market closures). If we delay redemptions for these reasons, the NAV will be

calculated after the circumstance stops.

- 21 -

Making an investment

The minimum initial investment amount is A$100,000, and in multiples of A$50,000 thereafter. Any additional

investment should be for a minimum of A$50,000, and in multiples of A$10,000 thereafter1.

Please keep a copy of the current PDS and any information that updates it for future reference. A copy of the

PDS and any supplementary PDS is available free of charge by visiting our website www.aurorafunds.com.au.

You may make your payment by either cheque or direct credit. Cheques must be drawn from an Australian

domiciled bank, and be in Australian dollars. Third party cheques will not be accepted.

Your completed Application should be forwarded to:

BY MAIL BY HAND

Aurora Funds Management Limited

PO Box R1695

Royal Exchange NSW 1225

Aurora Funds Management Limited

Level 2, 350 George Street

Sydney NSW 2000

Please see the Application Form for additional instructions.

Application timing

Generally, if your valid application is received before 12noon Sydney time on a New South Wales business day

(the transaction cut-off time), it will usually be processed using the unit price determined as at the close of

business on that day. If your payment and valid application request are received after the transaction cut-off

time, or on a non-business day, it will usually be processed using the applicable unit price calculated as at the

close of business on the next business day.

Restrictions on investments

We can vary the minimum investment amounts for the Fund at any time and can also change the application

cut-off time. Under the constitution, we can accept or refuse applications for any reason. In particular, where

we consider it to be in the best interests of Unit holders (such as an inability to value a Fund), we may suspend

application requests. Any application requests received during the period of suspension, or for which a Unit

price has not been calculated or confirmed prior to the commencement of a period of suspension, will be

deemed to have been received immediately after the end of the suspension period.

Cooling-off?

By law, certain investors (those not defined as wholesale clients in the Corporations Act), have a cooling-off

right whereby they can change their mind about their investment in the Fund and ask for their money to be

repaid. However, it is not a right to get all of your money back, and cooling-off right does not apply to

reinvested distributions or if a Fund is illiquid. We are allowed to (and generally do) make adjustments for

market movements up or down, as well as any tax and reasonable transaction and administration costs.

If you change your mind, do not delay. You have 14 days starting on the earlier of:

when we send you confirmation that you are invested; or

the end of the 5th business day after the day on which we issue the Units to you.

Anti-Money Laundering

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) requires the

Responsible Entity to adopt and maintain an anti-money laundering and counter-terrorism financing

(AML/CTF) compliance program. An integral part of the AML/CTF compliance program is the legal

requirement for the Responsible Entity to know its customers. To meet this legal requirement certain

identification information, including in some cases documentation, will need to be collected from investors

making applications. Applications made without providing this information can not be processed until all the

necessary information has been provided and verified. The AML/CTF compliance program will also include

ongoing customer due diligence, which may require the Responsible Entity to collect further information.

1 We may, at our discretion, accept lower minimum transaction and balance amounts.

- 22 -

Glossary

Terms used in this PDS have the following meanings:

AML/CTF Act Anti-Money Laundering and Counter-Terrorism Financing Act 2006;

Applicant a person who submits an Application;

Application an application for Units under this PDS;

Application Form the application form attached to this PDS;

Application Monies the total monies lodged with an Application;

Application (Issue) Price such price determined under the constitution and PDS;

Assets all the property, rights and income of the Fund, but not Application Money or property in

respect of which Units have not yet been issued, proceeds of redemption which have not

yet been paid or any amount in any distribution account;

ASX ASX Limited (ABN 98 008 624 691) and associated markets (described at

www.asx.com.au) as the context requires;

Aurora Group Aurora Funds Limited (ACN 143 194 165) and its subsidiaries;

Benchmark the RBA Cash Rate or other indicator as determined under the Trust Deed from time to

time;

Buy spread the difference between Net Asset Value per Unit and the Application Price in the fund.

Corporations Act the Corporations Act 2001 (Cth) as amended and associated regulations;

Fund / Trust the Aurora Fortitude Absolute Return Fund (ARSN 145 894 800);

Issue the issue of Units in accordance with this PDS;

Liabilities all present liabilities of the Fund including any provision which the Issuer decides should

be taken into account in determining the liabilities of the Fund (for example, unpaid

performance fees), but does not include:

(a) any amount representing investors' capital;

(b) undistributed profits;

(c) interest attributable to investors accruing on investors' capital;

(d) capital reserves; or

(e) any other amount representing the value of rights attaching to Units, whether or

not redeemable;

regardless of whether characterised as equity or debt in the accounts of the Fund;

Net Asset Value (NAV) Assets less Liabilities;

NZX the NZX Limited, and associated markets as the context requires;

Offer the offer of Units under this PDS;

PDS this Product Disclosure Statement, as modified or varied by any supplementary PDS made

by the Fund and lodged with the ASIC from time to time and any electronic copy of this

PDS, and any supplementary PDS;

RITC Reduced Input Tax Credit as defined in A New Tax System (Goods and Services

Tax) Act 1999, as amended and associated regulations;

Sell spread the difference between Net Asset Value per unit and the withdrawal price of Units in the

Fund.

Unit holder the holder of Units in the Aurora Fortitude Absolute Return Fund;

Units units in the Aurora Fortitude Absolute Return Fund.

Dictionary

Arbitrage the practice of taking advantage of a price difference between two or more markets;

striking a combination of matching deals that capitalise upon the imbalance, the profit

being the difference between the market prices.

Convergence trading a convergence trade is buying one asset forward – i.e., for delivery in future (going long

the asset) and selling a similar asset forward (going short the asset) for a higher price, in

the expectation that by the time the assets must be delivered, the prices will have become

closer to equal (will have "converged"), and thus one profits by the amount of

convergence.

- 23 -

Convertible arbitrage involves the simultaneous purchase of convertible securities and the short sale of the same

issuer's ordinary securities.

Convertible securities an instrument that can be exchanged for shares of the issuer of that security.

Derivatives an instrument that derives its value from that of an underlying instrument (such as shares,

share price indices, fixed interest securities, commodities, currencies etc).

Futures an agreement to buy or sell an asset or cash equivalent at a date in the future at a price

agreed today.

Long where one has bought or who holds a position that will benefit from rising prices.

Long-short the process of allocating a percentage of the Fund‟s Assets to those investments believed

will go up in value while allocating another percentage to those that are believed will go

down in value.

Market neutral where a strategy seeks to entirely avoid some form of market risk, typically by hedging.

An investment or portfolio is truly market neutral if it exhibits zero correlation with the

unwanted source of risk.

Options a contract between two parties giving the taker (buyer) the right, but not the obligation, to

buy or sell a pre-existing underlying asset at a particular price on or before a particular

date.

Preference shares are shares that rank before ordinary shares in the event of liquidation.

Rights a privilege granted to shareholders to buy new shares in the same company at a

predetermined price.

Short or short selling shorting or short selling is selling a security you do not own. By short selling a security,

one attempts to profit from a decrease in the value of the security. The difference between

the higher sale price and lower purchase price is a profit (provided all the costs associated

with the transaction are also recouped). However, if the subsequent purchase price is

higher than the initial short selling price then one will incur a loss equal to the amount by

which the purchase price exceeds the short selling price (plus any associated transaction

costs). Short selling can be used as a strategy to try to improve returns and to manage risk.

Warrants are financial instruments that are broadly split into products with investment purposes and

those for trading purposes.

- 24 -

Application Form – AFARF (PDS No 1)

This Application Form is part of a Product Disclosure Statement (‘PDS’) dated 7 October 2010 relating to Units in the Aurora Fortitude Absolute Return Fund ARSN 145 894 800. The PDS contains information about investing in the Fund. You should read this document and any supplementary product disclosure statement before applying for Units in the Fund. (If you make an error while completing your Application Form, do not use correction fluid. Cross out your mistakes and initial your changes). The Corporations Act requires that a person who provides access to the Application Form must provide access, by the same means and at the same time to the PDS. You should consider seeking professional financial, taxation and legal advice as you deem appropriate, in respect of the Fund before deciding whether to invest. If you have received the PDS electronically, AFM will provide a paper copy free of charge on request. Additional information required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

In accordance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act) we are required to collect additional information about you. We may also ask you to provide certified copies of certain identification documents along with the Application Form. Under the AML/CTF Act, we are prohibited from processing your Application until we have received all of the information and supporting documentation requested in this form. In most cases, the information that you provide in this form will satisfy the AML/CTF Act. However, in some instances we may contact you to request further information. It may also be necessary for us to collect information (including sensitive information) about you from third parties in order to meet our obligations under the AML/CTF Act. A list of persons eligible to certify documents can be found in Appendix 1 on the last page of this form.

Part A - Are you an Existing or New Investor?

Existing Investor For all existing investors, complete your existing account details below; if required complete the section relating to your investor type as indicated by Part B. Then complete the Application Form from Section 6 onwards. Existing account number

Existing account name

New Investor Complete your investor details and the additional information requested in the section relating to your investor type as indicated by Part B. Then complete the remainder of the Application Form from Section 6 onwards and mail the completed form along with your certif ied identification documentation (where applicable) to the AFM contact details provided in the PDS. Faxed copies will not be accepted.

If investing via a Financial Adviser Please ensure both you and your financial adviser also complete Section 11 Financial Adviser Details and Customer Identification Declaration. You do not need to provide copies of your certified identification documentation with your Application Form if this information has been provided to your financial adviser, your financial adviser has elected to retain this information, and agreed to make it available upon request, under Section 11 of the Application Form.

- 25 -

Part B - Type of Applicant and Required Documentation

Individual/Joint (including verifying officers) Sole Trader Individual Trustees / Individuals within a Partnership

› Go to and complete: Section 1A

› Go to and complete: Section 1A and 1B

› Go to and complete: Section 1C

› Identification required (for each individual):

A certified copy of any ONE of the following documents:

Australian driver’s licence; OR

Australian passport; OR

Any ID card issued under state or territory law that contains your photo, date of birth and signature.

Company

› Go to and complete: Section 2

› Identification required: No certified documents are required

Trust / Superannuation Fund

› Go to and complete: Section 3

› Identification required:

For Trust/Superannuation Trust: For Category B (Foreign

Super Trust) and Category E (other Trust) you must provide ONE of the following documents:

Certified copy or certified extract of the trust deed; OR Notice (such as an assessment notice) issued to the trust

by the Australian Taxation Office within preceding 12 months; OR A letter from a solicitor or qualified accountant verifying the

name of the trust.

For individual trustees, you must provide a certified copy of any ONE of the following documents:

Australian driver’s licence; OR

Australian passport; OR

Any ID card issued under state or territory law that contains your photo, date of birth and signature.

Category B and E trusts must also provide a list of the full names

and addresses (not PO Boxes) of all individual and company trustees.

Partnership

› Go to and complete: Section 4

› Identification required:

You must provide a certified copy or certified extract of any ONE of the following documents:

The partnership agreement; OR Extract of minutes of a partnership meeting. Both of these documents must show the full name of the

partnership.

In addition, ONE partner must also provide a certified copy of

any ONE of the following documents:

Australian driver’s licence; OR

Australian passport; OR

Any ID card issued under state or territory law that contains your photo, date of birth and signature.

Authorised/Representative Agent

› Go to and complete: Section 5

› Identification required: Not applicable

Other

› If you are a Charity, Association, Cooperative, Government Body or IDPS please contact the Administrator for the forms that you will need to complete.

- 26 -

Section 1: Individual/Joint/Sole Trader

A. Individual/Joint Investor Details (joint applicants will be held as joint tenants) Complete your name, address and contact details below. You must include a street residential address not a PO Box.

Investor 1 Title

Mr Mrs Ms Dr Other - (please specify): Date of birth TFN or reason for exemption

1 9 Full name

Country of residence for tax purposes (if not Australia)

Residential address (not a PO Box)

Suburb / Town State Postcode

Investor 2 Title

Mr Mrs Ms Dr Other - (please specify): Date of birth TFN or reason for exemption

1 9 Full name

Country of residence for tax purposes (if not Australia)

Residential address (not a PO Box)

Suburb / Town State Postcode

B. Sole Trader Details (A person carrying on a business in Australia) (please also complete Section 1A) Business name (if any)

Australian Business Number (ABN) (if applicable) Tax File Number (TFN)

Principal place of business (not a PO Box)

Suburb / Town State Postcode

- 27 -

C. Individual Trustees/Individuals within a Partnership (please complete in addition to relevant sections. If more than 2

individuals, please provide full names and residential addresses on a separate page and attach to this form).

Individual 1 Title

Mr Mrs Ms Dr Other - (please specify): Date of birth

1 9 Full name

Country of residence for tax purposes (if not Australia)

Residential address (not a PO Box)

Suburb / Town State Postcode

Individual 2 Title

Mr Mrs Ms Dr Other - (please specify): Date of birth

1 9 Full name

Country of residence for tax purposes (if not Australia)

Residential address (not a PO Box)

Suburb / Town State Postcode

Section 2: Company

Company name

Australian company Public Private

Foreign company Public Private

Australian company (Public and Private) Australian Company Number (ACN) Australian Business Number (ABN)

- 28 -

Registered address (not a PO Box)

Suburb / Town State Postcode

Principal place of business in Australia

Same as registered address above

Other - please provide address below:

Address (not a PO Box)

Suburb / Town State Postcode

Foreign company (Public and Private) Australian Registered Business Number (ARBN) (if not registered, leave blank)

Identification number issued by foreign registration body (if not registered, write ‘not registered’)

Name of foreign registration body (if applicable)

Registered address in Australia (not a PO Box) (if not registered in Australia, provide overseas address)

Suburb / Town State Postcode

Principal place of business in Australia (or full name and address of company’s agent in Australia)

Same as registered address above

Other - please provide address below:

Full name of agent in Australia (if applicable)

Address

Suburb / Town State Postcode

1. Director details for private companies (both Australian and Foreign) If more than 5 directors, please provide full names on a separate page and attach to this form Director 1 – Full name

Director 2 – Full name

Director 3 – Full name

- 29 -

Director 4 – Full name

Director 5 – Full name

2. Major Shareholders for Private Companies excluding regulated companies (both Australian and Foreign) For a private company (Australian and Foreign) which is not a ‘regulated company’

1 please provide details for each shareholder who owns,

through one or more shareholdings, more than 25% of the company’s issued capital. 1 ‘Regulated Company’ – any company that is licensed and subject to the oversight by a statutory regulator i.e. ASIC, APRA, ATO If more than 3 major shareholders, please provide full names and residential addresses on a separate page and attach to this form. Major Shareholder 1 Full name

Residential address (not a PO Box)

Suburb / Town State Postcode

Country

Major Shareholder 2 Full name

Residential address (not a PO Box)

Suburb / Town State Postcode

Country

Major Shareholder 3 Full name

Residential address (not a PO Box)

Suburb / Town State Postcode

Country

Section 3: Trust / superannuation fund

Name of Trust / Superannuation Fund

Country of establishment

- 30 -

Tax File Number (TFN)

Type of Trust

Category A Government superannuation fund (Australian or Foreign) established under legislation

Category B Foreign superannuation fund (other than Category A)

Category C Managed investment scheme registered with ASIC

Australian Registered Scheme Number (ARSN) APIR Code

Category D Regulated Trust*

Name of regulator (e.g. ASIC, APRA, ATO)

Registration / Licence details

Australian Business Number (ABN)

Category E Other (e.g. family trust, unregistered scheme, foreign trust)

Please specify below

* A Regulated Trust refers to: i) a self managed superannuation fund within the meaning of Section 19 of the Superannuation Industry (Supervision) Act 1993 (SIS) – the regulator is the Australian Tax Office, ii) a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme within the meaning of the SIS Act – the regulator is the Australian Prudential Regulation Authority (APRA). If you selected either Category B or Category E, you will need to provide details of beneficiaries.

Beneficiary details

Do the terms of the Trust identify the beneficiaries by reference to a membership of a class?

Yes Provide details of membership class (e.g. family members of a named person)

No List full names of all company and individual beneficiaries.

If more than 4 beneficiaries, please provide full names on a separate page and attach to this form.

Beneficiary 1 - Full name

Beneficiary 2 - Full name

Beneficiary 3 - Full name

Beneficiary 4 - Full name

Trustee details Trustee is a:

Company Complete Section 2 Company of this form

Individual Complete Section 1C of this form

- 31 -

Section 4: Partnership

Full name of Partnership

Registered business name of partnership (if any)

Country of establishment

Type of partnership Is the partnership regulated by a professional association?

Yes Complete regulated partnership details below plus Section 1C for ONE of the partners:

Regulated partnership

Full name of Professional Association partnership regulated by

Membership/Registration details

No Complete Section 1C for ALL of the partners

Section 5: Authorised Representative/Agents

Full name of Authorised Representative

Title of role held with investor

Signature of Authorised Representative/Agent

Please also sign Section 10 Declaration and Signatures.

Evidence of authority to act on investors behalf (e.g. Power of Attorney)

If the investor is a non-individual please also complete the following: (i.e. a company, trust etc) If a non-individual investor (i.e. a company, trust etc) appoints an authorised representative in relation to this investment then the investor must also appoint a verifying officer to liaise with that authorised representative. Please provide the following information about the verifying officer: Title

Mr Mrs Ms Dr Other - (please specify): Date of birth

1 9 Full name

Residential address (not a PO Box)

Suburb / Town State Postcode

- 32 -

Country

Section 6: Investor Contact Details (all new investors to complete) Investor contact name and contact details

Title

Mr Mrs Ms Dr Other - (please specify): Full name

Phone number (work) Phone number (mobile or home)

( ) ( ) Fax number

( ) Email address

Postal address (if different to street address)

Suburb / Town State Postcode

Country

Section 7: Investment Amount and Investment Distribution Options

Amount to be invested $ , , . 00 Payment method Important – Preferred method of payment (please ✓ your selection)

Cheque Cheques are to be made payable to “Aurora Fortitude Absolute Return Fund”

Electronic Funds Transfer

Please contact Aurora Funds Management Limited for banking instructions.

Reference Code: Distributions (please select one only - if no selection is made or an incomplete instruction is received, the Distribution will be reinvested)

Reinvest all

Pay all to the nominated bank account

Account Name

Name of Financial Institution Branch

BSB No. Account No.

-

- 33 -

Section 8: Annual Financial Report

From 30 September each year you can obtain a copy of the Trust’s annual financial reports from our website at: www.aurorafunds.com.au. However, if you would like to receive a copy by post please tick the box.

I would like to recieve a copy of the Annual Report.

Section 9: Privacy

When you complete this Application Form AFM will be collecting personal information from you for the primary purpose of processing and administering your investment in the Trust. In order to comply with Australian Taxation laws, the Corporations Act, the Anti-Money Laundering and Counter-Terrorism Act and other laws and regulations AFM must collect certain information about you. AFM may also be required to obtain personal information (including sensitive information) about you from third parties in order to comply with these laws. AFM may disclose your personal information to other parties involved in providing services to, administering or managing the Fund (such as to your financial adviser and to service providers such as external administrators and posting services). AFM may also use your information to forward to you, from time to time, details of other investment opportunities offered by AFM in which you may be interested. Please tick the box if you do not wish to be updated with such investment opportunities. If you do not mark the box we will assume that you want to hear about the investment opportunities we have described.

I do not wish to be updated.

Section 10: Declaration and Signatures

You should read the PDS for the Aurora Fortitude Absolute Return Fund dated 7 October 2010 (‘PDS’), offering Units in the Fund before investing. A person giving access to this Application Form must, at the same time and by the same means, give access to the PDS and any document which updates the information contained in the PDS. While the PDS is current, AFM will provide on request and without charge a paper copy of the PDS, any document which updates it and the Application Form to anyone receiving an electronic copy of the PDS. The law prohibits any person passing on to another person this Application Form unless it is attached to, or accompanied by, a complete and untampered electronic version of the PDS or a print out of it. I/We have read the PDS to which this Application Form applies and agree to be bound by the terms and conditions of the PDS and the Constitution. I/We have received this Application Form with the PDS and declare that all details are correct. I/We acknowledge that Aurora Funds Management Limited is not responsible for the delays in receipt of monies caused by the postal service or the Applicant’s bank. I/We received and accepted this offer in Australia. I/we acknowledge that Aurora Funds Management Limited does not guarantee the repayment of capital or the performance of the Fund or any particular rate of return from the Fund. By signing this Application Form, I/We acknowledge that I/We have read and understood the PDS and where appropriate have obtained my/our own independent financial investment advice (having regard to the inherently complex nature of these products). If this is a joint Application each of us agrees our investment is held as joint tenants. I/We acknowledge and agree that where the Responsible Entity, in its sole discretion, determines that:

I/We are ineligible to hold Units in the Fund or have provided misleading information in my/our Application Form; or

I/We owe any amounts to AFM or any other person, I/We appoint the Responsible Entity as my/our agent to submit a withdrawal request on my/our behalf in respect of all or part of my/our Units, as the case requires, in the Fund. Authorised signatories for future instructions You may specify the way that you wish to sign future instructions in relation to your investment in the Fund. These instructions do not apply for your initial Application. They will apply to all your existing and future Unit holdings in the Fund until such time as you advise AFM in writing to the contrary. A. Company Please tick one of the following options

One director and company secretary Two directors Please also tick one of the following two options

Signed under common seal Signed without common seal B. Trust/Superannuation Fund/Partnership/Charity/Association/Co-operative/Government Body

- 34 -

Please tick one of the following options

One director and company secretary Two directors

Two executive officers Two authorised signatories Please also tick one of the following two options

Signed under common seal Signed without common seal Name Applicant

Signature of Applicant Date

/ / 2 0

Capacity (please tick if applicable)

Director Secretary Executive Officer Authorised Signatory Name Applicant

Signature of Applicant Date

/ / 2 0

Capacity (please tick if applicable)

Director Secretary Executive Officer Authorised Signatory Company Seal (if applicable)

- 35 -

Section 11: Financial Adviser Details and Customer Identification Declaration

Customer Identification Declaration (Financial Adviser to complete) I confirm that I have completed an appropriate customer identification procedure (CID) on this investor which meets the requirements of the Anti- Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Please select the relevant option below:

I have attached the verification documents that were used to perform the CID for this investor; OR

I have not attached the verification documents but will retain them in accordance with the AML/CTF Act and agree to provide AFM or its agents with access to these documents upon request. I also agree that if I become unable to retain the verification documents used for this application in accordance with the requirements of the AML/CTF Act I will forward them to AFM.

I agree to provide AFM or its agents with any other information that they may require to support this Application. Financial Adviser name (if a new adviser, please attach a copy of your employee/representative authority)

Business name

Adviser number (if applicable)

Street address

Suburb / Town State Postcode

Postal address

Suburb / Town State Postcode

Office phone Mobile

( ) ( ) Fax number

( ) Email address

Dealer details Dealer name

Dealer number (if applicable)

Contact person

AFSL number ABN

Postal address

Suburb / Town State Postcode

- 36 -

Office phone Fax number

( ) ( ) Email address

Dealer stamp

Signature of Financial Adviser Date

/ / 2 0

Financial Adviser Access to Investor information (Investor to complete) I/We agree that information relating to my/our investment be supplied to my/our financial adviser.

Please tick (✓) the box if you do not wish to your financial adviser to have access to information about your investment.

Please also elect if you wish copies of all transaction confirmations to be provided to your financial adviser. If no election is made copies will not be sent.

Please send copies of all transaction confirmations to my/our adviser

Please DO NOT send copies of all transaction confirmations to my/our adviser

- 37 -

Section 12: Record of Verification Procedure

A: Individual/Sole Trader/Individual Trustee/Individual Partner/Individual Unincorporated Association Important: Verify the individual’s full name; and either their date of birth or residential address ID Document Details Document 1

Verified from: Original Certified copy

Issue date Document issuer

/ /

Accredited English translation:: Original Certified copy

Expiry date Document issuer

/ / Document 2

Verified from: Original Certified copy

Issue date Document issuer

/ /

Accredited English translation:: Original Certified copy

Expiry date Document issuer

/ / B: Joint applicant Document 1

Verified from: Original Certified copy

Issue date Document issuer

/ /

Accredited English translation:: Original Certified copy

Expiry date Document issuer

/ / Document 2

Verified from: Original Certified copy

Issue date Document issuer

/ /

Accredited English translation:: Original Certified copy

Expiry date Document issuer

/ / C: Company/Company Trustee Domestic Company Verification Procedure

Standard verification procedure Verify:

the full name of the company as registered by ASIC

whether the company is registered as a proprietary or a public company

the ACN issued to the company.

Alternative verification procedure (For a company which is an Australian listed company, a majority owned subsidiary of an Australian) listed company or is a regulated company (ie licensed by an Australian Commonwealth, state or territory statutory regulator).

Verify that the company is:

an Australian listed company (if applicable)

a majority owned subsidiary of an Australian listed company (if applicable)

a regulated company (if applicable).

- 38 -

Foreign Company Verification Procedure

Standard verification procedure (For Foreign Companies registered with ASIC) Verify:

the full name of the company as registered by ASIC

the ARBN issued to the company

whether it is registered by a foreign registration body and, if so, whether it is registered as a private company or a public company.

Standard verification procedure (For Foreign Companies NOT registered with ASIC) Verify:

the full name of the company as registered by ASIC

whether it is registered by a foreign registration body and, if so - whether it is registered as a private company or a public company - the identification number issued to the company.

Document 1

Verified from: Original Certified copy Performed search

Document issuer website

Accredited English translation:: N/A Sighted

Issue/search date Public document type

/ / Document 2

Verified from: Original Certified copy Performed search

Document issuer website

Accredited English translation:: N/A Sighted

Issue/search date Public document type

/ / D: Trusts Verify the following:

registered managed investment scheme, regulated trust or government superannuation fund - full name of the trust - verify that the trust is a registered managed investment scheme, regulated trust or government superannuation fund, as

applicable

other trusts - full name of trust - verify the identity of the trustee.

Document 1

Verified from: Original Certified copy Performed search

Document issuer website

Accredited English translation:: N/A Sighted

Issue/search date Public document type

/ / Additional Information Regarding the Trustees Information about the identity of only one of the trustees where the selected is:

An individual, or.

A Domestic Company, or

A Foreign Company.

Must also be verified in accordance with the type of Trustee applicant.

- 39 -

E: Partnerships Verify the following:

All Partnerships - full name of the Partnership

Partnerships that are members of a professional association - membership of the professional association

Document 1

Verified from: Original Certified copy Performed search

Document issuer website

Accredited English translation:: N/A Sighted

Issue/search date Public document type

/ / In addition verify individual partner details as provided. F: Association

Incorporated Unincorporated (MUST also verify individual member details) Verify the following:

‘Incorporated Association’ - full name of the Association - ID number issued on incorporation (if any)

‘Unincorporated Association’ - full name of the Association

Document 1

Verified from: Original Certified copy Performed search

Document issuer website

Accredited English translation:: N/A Sighted

Issue/search date Public document type

/ / Document 2

Verified from: Original Certified copy Performed search

Document issuer website

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Appendix 1 – Persons authorised to certify documents How to certify your documents

A certified copy is a document that has been certified as a true copy of an original document. To certify a document, take the original document and a photocopy to one of the people listed in the categories below and ask them to certify that the photocopy is a true and correct copy of the original document. That person will need to print their name, date and the capacity in which they are signing (eg postal agent, Justice of the Peace). Sample working is provided below: I, [full name], as [category of persons as listed below], certify that this [name of document] is a true and correct copy of the original [signature and date]. Please indicate who certified the identification documents. AML/CTF - Persons Authorised to Certify Identification Documents

Legal

a person who is enrolled on the roll of Supreme Court • of a State or Territory, or the High Court of Australia, as a legal practitioner (however described)

a judge of a court a magistrate a Chief Executive Officer of a Commonwealth court a Registrar or Deputy Registrar of a court Trade marks attorney (currently licensed or registered to practice) Patent attorney (currently licensed or registered to practice) Clerk of a court Master of a court Bailiff Sheriff or Sheriff’s officer Commissioner for Affidavits Commissioner for Declarations Public Notary JP

a Justice of the Peace (please include registration number (or equivalent)) Police

a police officer (please include registration number (or equivalent)) Accountant a member of the Institute of Chartered Accountants in Australia a member of the Certified Practising Accountants Australia a member of the National Institute of Accountants Fellow of the National Tax Accountant’s Association Occupations (must hold a current licence or be registered to practise)

Medical Practitioner Dentist Pharmacist Veterinary surgeon Physiotherapist Optometrist Chiropractor Psychologist Nurse Post Office

an agent of the Australian Postal Corporation who is in charge of an office supplying postal services to the public a permanent employee of the Australian Postal Corporation with 2 or more years of continuous service who is

employed in an office supplying postal services to the public

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Diplomatic service

an Australian Consular Officer within the meaning of the Consular Fees Act 1985 an Australian Diplomatic Officer within the meaning of the Consular Fees Act 1985 Employee of the Commonwealth who is in a country or place outside Australia and authorised under paragraph 3(c) of

the Consular Fees Act 1995 and exercising his or her function in that place. Employee of the Australian Trade Commission who is in a country or place outside Australia and authorised under

paragraph 3(c) of the Consular Fees Act 1995 and exercising his or her function in that place Finance corporations (bank, building society, credit union)

an officer with, or authorised representative of, a holder of an Australian financial services licence, having 2 or more continuous years of service with one or more licensees.

Professional associations

Member of Chartered Secretaries of Australia Member of Engineers Australia other than the grade of student Member of the Association of Taxation and Management Accountants Member of the Australasian Institute of Mining and Metallurgy Government/Aust Defence Force

Member of the Parliament of the Commonwealth Member of the Parliament of a State Member of a local government authority of a State or Territory Member of the Australian Defence Force who is an officer Member of the Australian Defence Force who is a non-commissioned officer within the meaning of the Defence Force Discipline Act 1982 with 2 or more years of continuous service Member of the Australian Defence Force who is a warrant officer within the meaning of the Defence Force Discipline

Act 1982 Senior Executive Service employee of the Commonwealth or a Commonwealth authority Senior Executive Service employee of a State or Territory or a State or Territory authority Permanent employee of the Commonwealth or a Commonwealth authority with 2 or more of continuous service who is

not specified in another item in Part 2 of the Schedule 2 of the Statutory Declarations Regulations 1993 Permanent employee of a State or Territory or a State or Territory authority with 2 or more of continuous service who is

not specified in another item in Part 2 of the Schedule 2 of the Statutory Declarations Regulations 1993 Permanent employee of a local government authority with 2 or more of continuous service who is not specified in

another item in Part 2 of the Schedule 2 of the Statutory Declarations Regulations 1993 Other

Marriage celebrant registered under Subdivision C of Div 1 of Part IV of the Marriage Act 1961 Minister of religion registered under Subdivision A of Div 1 of Part IV of the Marriage Act 1961 Teacher employed on a full-time basis at a school or tertiary education institution Person before whom a statutory declaration may be made under the law of the State or Territory in which the

declaration is made Holder of a statutory office not specified in another item in Part 2 of Schedule 2 of the Statutory Declarations Regulations 1993

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Aurora Funds Management Limited

Level 2, 350 George Street

Sydney NSW 2000

PO Box R1695, Royal Exchange NSW 1225

Investor Enquiries: 1300 553 431

Email: enquiries@aurorafunds.com.au

Website: www.aurorafunds.com.au

APPLICATION INSTRUCTIONS

(i) Complete the Application Form

(ii) Attach certified AML documents (as required)

(iii) Make your cheque payable to “Aurora

Fortitude Absolute Return Fund”

(iv) Send your completed Application to:

Aurora Funds Management Ltd

PO Box R1695

Royal Exchange NSW 1225

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Application Form – Existing Investor (Additional Application) AFARF (PDS No 1)

This Application Form is part of a Product Disclosure Statement (‘PDS’) dated 7 October 2010 relating to Units in the Aurora Fortitude Absolute Return Fund ARSN 145 894 800 issued by Aurora Funds Management Limited (ABN 69 092 626 885, AFSL 222110). The PDS contains information about investing in the Fund. You should read this document and any supplementary product disclosure statement before applying for Units in the Fund. (If you make an error while completing your Application Form, do not use correction fluid. Cross out your mistakes and initial your changes).

The Corporations Act requires that a person who provides access to the Application Form must provide access, by the same means and at the same time to the PDS. You should consider seeking professional financial, taxation and legal advice as you deem appropriate, in respect of the Fund before deciding whether to invest. If you have received the PDS electronically, AFM will provide a paper copy free of charge on request.

Existing Account/ Holder number

Existing Holder name

Investment Amount

Amount to be invested $ , , . 00 Payment method Important – Preferred method of payment (please ✓ your selection)

Cheque Cheques are to be made payable to “Aurora Fortitude Absolute Return Fund”

Electronic Funds Transfer (Bank: Westpac BSB: 032-000 Acc No: 626552)

Reference Code:

Contact Details Title and Full name

Phone number (work) Phone number (mobile or home)

( ) ( ) Email address

Declaration and Signatures

You should read the PDS for the Aurora Fortitude Absolute Return Fund dated 7 October 2010 (‘PDS’), offering Units in the Fund before investing. A person giving access to this Application Form must, at the same time and by the same means, give access to the PDS and any document which updates the information contained in the PDS. While the PDS is current, AFM will provide on request and without charge a paper copy of the PDS, any document which updates it and the Application Form to anyone receiving an electronic copy of the PDS. The law prohibits any person passing on to another person this Application Form unless it is attached to, or accompanied by, a complete and untampered electronic version of the PDS or a print out of it. I/We have read the PDS to which this Application Form applies and agree to be bound by the terms and conditions of the PDS and the Constitution. I/We have received this Application Form with the PDS and declare that all details are correct, and that this Application does not alter any previously lodged and valid instructions and declarations previously given to Aurora including in relation, but not limited, to such things as Distribution options, privacy, annual report, financial advisers, Authorised Representatives/Agents, investor contact and address details, etc. I/We acknowledge that Aurora Funds Management Limited is not responsible for the delays in receipt of monies caused by the postal service or the Applicant’s bank. I/We received and accepted this offer in Australia. I/we acknowledge that Aurora Funds Management Limited does not guarantee the repayment of capital or the performance of the Fund or any particular rate of return from the Fund.

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Application Form – Existing Investor (Additional Application) AFARF (PDS No 1) By signing this Application Form, I/We acknowledge that I/We have read and understood the PDS and where appropriate have obtained my/our own independent financial investment advice (having regard to the inherently complex nature of these products). If this is a joint Application each of us agrees our investment is held as joint tenants. I/We acknowledge and agree that where the Responsible Entity, in its sole discretion, determines that:

I/We are ineligible to hold Units in the Fund or have provided misleading information in my/our Application Form; or

I/We owe any amounts to AFM or any other person, I/We appoint the Responsible Entity as my/our agent to submit a withdrawal request on my/our behalf in respect of all or part of my/our Units, as the case requires, in the Fund. Name Applicant / Unit holder 1

Signature of Applicant Date

/ / 2 0

Capacity (please tick if applicable)

Director Secretary Executive Officer Authorised Signatory Name Applicant / Unit holder 2

Signature of Applicant Date

/ / 2 0

Capacity (please tick if applicable)

Director Secretary Executive Officer Authorised Signatory Name Applicant / Unit holder 3

Signature of Applicant Date

/ / 2 0

Capacity (please tick if applicable)

Director Secretary Executive Officer Authorised Signatory

Please forward the completed Application Form to:

Aurora Funds Management Limited PO Box R1695 Royal Exchange NSW 1225