INVESTSMART GROUP LIMITED — Net Asset Value 2005

Dec 13, 2005

Fat Prophets Australia Fund Limited ACN 111 772 359 Level 33, 2 Park St Sydney, NSW 2000 1 300 88 11 77 fatfund@fatprophets.com.au

NOVEMBER 2005 NTA RELEASE

14 December, 2005

Undiluted Net Tangible Asset Backing as of:
	Nov 30	Oct 31	Sept 30	Aug 31	July 31	June 30	May -31
Before Tax 2 \$	1.113	1.081	1.133	1.077	1.067	1.032	0.981
After Tax \$	1.074	1.052	1.092	1.048	1.042	1.014	0.980
Cash Holdings %	6.6	5.7		12	20	25	41

Portfolio Sector Allocation including Cash as of 30 Nov 05
GICS Sector Positions + Cash S&P/ASX 300 Index	Index ℅	Fund ℅	Active Position $pp^3$
Energy	4.5	9.2	4.7
Materials	21.6	26.7	5.1
Industrials	8.7	24.2	15.5
Consumer Discretionary	5.0	0.0	-5.0
Consumer Staples	6.6	2.6	$-4.0$
Health Care	3.3	6.3	3.0
Financials	44.6	21.1	$-23.5$
Information Technology	0.7	2.2	1.5
Telecommunications Services	3.3	1.1	$-2.2$
Utilities	1.5	0.0	-1.5
Cash		6.6

^<sup>1 The net tangible asset backing stated below is not diluted for the potential issuance of shares arising from the 32,185,001 options expiring on 20 April 2008 which are exercisable at \$1.00 per share and which are stapled to the shares of Fat Prophets Australia Fund until 20 April 2006

² Defined as before providing for the estimated tax on unrealised income and gains.
³ Percentage points

Top 15 Holdinas

As the portfolio is largely established, we release the top 15 holdings and will continue this practice on a monthly basis.

Top 15 Holding by Portfolio Weight as of 30 Nov 2005
Company	Code	Portfolio Weight %
BHP BILLITON LIMITED	BHP	94
OIL SEARCH LIMITED	OSH	7.2
ANZ BANKING GROUP LIMITED	ANZ	6.3
REPCOL LIMITED	RPC	6.2
ESPREON LIMITED	EON	5.6
COMMONWEALTH BANK OF AUSTRALIA	CBA	5.5
PERSEVERANCE CORPORATION LTD	PSV	4.0
WESTPAC BANKING CORPORATION	WBC	3.8
TRIBECA CORPORATION LTD	TBC	3.6
AMMTEC LIMITED	AEC	3.1
KONEKT LIMITED	KKT	3.0
GROPEP LIMITED	GRO	3.0
IMAGE RESOURCES	IMA	2.8
MACQUARIE INFRASTRUCTURE GROUP	MIG	2.7
TOWER LIMITED	TWR	2.6

Dear Fat Fund Shareholders.

The Fat Fund's pre-tax NTA increased by 2.96% on a before-tax basis in November 2005. Since inception the pre-tax NTA has appreciated by 14% or 25% on a hypothetical annualised basis. In dollar terms, the pre-tax NTA rose from \$1.081 to \$1.113 for a rise of 3.2 cents.

Against its benchmark, the S&P/ASX 300 Accumulation Index, the pre-tax NTA underperformed by 1.5% in November 2005.

The portion of cash held within the portfolio continued to rise in November 2005 to 6.6% compared to 5.7% at the end of October 2005. This increase in cash largely reflects our sell down in Telstra, as discussed in our AGM presentation. (This is available on our website)

Performance

The recent trend of underperformance against the ASX 300 benchmark may be of concern to you. At the end of November, around 37% of the portfolio by value was invested outside our stated benchmark, the ASX 300. Two months ago we received board approval to increase this threshold to 40% from 30%. At the current time, we see greater value opportunities in many smaller companies than in their larger counterparts. This strategy inevitably comes with greater volatility, which can affect shorter term performance.

Importantly, we are still very comfortable with the companies that have recently underperformed, with valuations remaining very attractive. It is our belief that these companies are poised to outperform the broader market over the medium term. One such example is Tribeca Learning which we discuss below.

Company Commentary

Tribeca Learning Ltd

We discussed Tribeca in detail in our June NTA commentary. Briefly, Tribeca specialises in providing educational services to individual and corporate clients. These include banks, insurance companies and security dealer groups. A large number of these educational services are provided online. Tribeca has spent a considerable amount of time and money building its web based platform. The scalability of the business is a particularly attractive attribute, arising from the fact that once the initial development outlay is complete and critical mass obtained, additional revenue largely flows to the pre-tax profit line. Our positive view on the business model was leant further support by an attractive valuation - a PER of below 10x in 2006 on our estimates.

In May 2005, the Company announced it intended to divest its compliance business, resulting in a share price decline of over 20%. The compliance business was considered non-core and did not represent a significant part of Tribeca's revenue base. After closely analysing the potential impact of this sale, including discussions with management, we surmised that the sell off in the stock was overdone, and subsequently doubled our position in the company.

On the 8^th of December, Tribeca received a takeover offer from a US based company Kaplan Inc. resulting in an immediate 36% rise in the share price. The \$55m takeover offer is on an agreed basis, unanimously endorsed by the board of Tribeca, and equates to 40.5 cents per share.

With Tribeca representing around 3.1% of the Fat Fund prior to the offer, this investment has contributed 1.1% to the overall performance of Fat Fund in December 2005.

Stocks Disclosed to Date - Summary

To date we have written about the following stock positions. The weight of these positions within the Fat Fund portfolio at close of business Nov 30, 2005 was:

Company	ASX Code	Portfolio Weight	≅See Monthly —
		$\left( \frac{\alpha}{\beta} \right)$ and $\left( \frac{\alpha}{\beta} \right)$	$\sim$ Report for $\sim$
			Commentary
AMMTEC	AEC	3.1	June 05
AUST WORLDWIDE	AWE	0.60	May 05
EXPLORATION
COFFEY INTERNATIONAL	COF	1.90	June 05
ESPREON	EON	5.60	July 05
GROPEP	GRO	2.90	June 05
KONEKT	KKT	3.00	Aug 05
OIL SEARCH	OSH	7.10	April 05
PERSERVERANCE	PSV	4.00	Sept 05
REDFLEX	RDF	1.70	Oct 05
REPCOL	RPC	6.20	April 05
TRIBECA	твс	3.60	June 05

Unstapling Date

As always, we remind you that the share and option that make up each stapled security can not be traded separately, until after the unstapling date of 20 April 2006.

Again, on behalf of the Board we thank you for your support and look forward to updating you again next month.

Kindest Regards

Your Board of Directors and the Fat Prophets Funds Management* Team

*Fat Prophets Funds Management (Australia) Pty Ltd is the Manager of the Fat Prophets Australia Fund Limited investment portfolio.

This report has been prepared solely for the benefit of the Fat Fund and its shareholders. It summarises information on the financial products held by the Fat Fund and the views of the Fat Fund as at the date of preparation of the report. These views and financial products may and will change after the issue of this report. No assurance can be given by the Fat Fund or Fat Prophets Funds Management Australia Pty Limited (the Manager) as to the accuracy and completeness of the information used to compile this report. Past performance is not necessarily indicative of future performance.

By making this report available, the Fat Fund and the Manager are not providing any general advice or personal advice within the meaning of section 766B of the Corporations Act regarding the Fat Fund, any potential investment in the Fat Fund or any investments or potential investments of the Fat Fund. This report is made without consideration of any specific person's investment objectives, financial situation or needs. The Fat Fund, the Manager and directors and employees of the Fat Fund and the Manager do not accept any liability for the results of any action taken or not taken on the basis of the information contained in this report, any negligent mis-statements, errors or omissions.