INVESTSMART GROUP LIMITED — Net Asset Value 2006

Oct 31, 2006

MATERIAL CHANGE IN NET ASSET BACKING

In October 2006, the Australian stock market rose sharply, with the S&P/ASX 300 Accumulation index gaining 4.71% over the month. In addition, Fat Prophets Australia Fund Limited ("Fat Fund") derived benefits from stock selection within its portfolio, as well as accretion from the share buy back activity conducted over the period. As a consequence, the pre-tax net asset backing per share of Fat Fund is estimated to have risen by $7.0 - 7.5%$ over the month of October.

These estimates are unaudited and are taken from daily valuations of Fat Fund, allied to estimates of expenses and impost of tax on realised gains, and are given as an indicative guide, in the interests of continuous disclosure. The final unaudited figures, as supplied by our outsource partner, and calculated in accordance with Listing Rule 19.12, will be released to ASX by 15^th November 2006.

For further information:

Andrew Brown 0418 215 255

Steve O'Hanna 0410 418 900

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.