BLUEROCK MANAGED ACCOUNT SERVICE INVESTMENT MANDATE - FEBRUARY 2018

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1 - FEBRUARY 2018 Managed Discretionary Account (MDA) Provider and Administrator Mason Stevens Limited ACN AFSL

2 IMPORTANT INFORMATION This document has been issued by Mason Stevens Limited ABN , AFSL (Mason Stevens). Mason Stevens is the Managed Discretionary Account (MDA) Provider of the MDA Service. Mason Stevens has appointed BlueRock Private Wealth Pty Ltd (BlueRock) as Program Adviser on the Investment Option(s) and Model Portfolio(s) outlined in this Investment Mandate. BlueRock are a Corporate Authorised Representative of BR Advice Pty Limited ABN , AFSL Mason Stevens has appointed a licensed sub-custodian to hold all client monies and financial products in accordance with regulatory requirements. A copy of the agreement under which the appointment of the subcustodian was made is available for inspection at the registered office of Mason Stevens. If you are considering using a managed account you must read the Mason Stevens account application, the Investment Option and Model Portfolio information outlined in this document and the Mason Stevens financial services guide. If you are a retail investor, you must obtain personal advice from a licensed financial adviser on whether a managed account and a particular Investment Option or Model Portfolio is appropriate for you given your personal goals, needs and financial circumstances. This document is produced without consideration of the investment goals, needs or financial circumstances of any person who may read it. Where there are references in this document to data provided by third parties, neither Mason Stevens or BlueRock has control over that data and neither party accepts any responsibility for verifying or updating that data. Mason Stevens, BlueRock and their respective directors, officers, employees and associates may from time to time hold interests in investments of, or earn fees and other benefits from, corporations or investment vehicles which may be held in your managed account under any Investment Option or Model Portfolio. Mason Stevens has issued this document. BlueRock consents to the statements in this document attributable to it or referring to them, and have not withdrawn their consent. BlueRock have confirmed the statements attributable to them or referring to it are not misleading or deceptive at the time of issue. All amounts in this document are quoted in Australian dollars and all fees are inclusive of the estimated net effect of GST (ie inclusive of GST, less any input tax credits and/or reduced input tax credits). Investment involves risk, potentially resulting in (but not limited to) delays in payment of withdrawal proceeds and the loss of income and capital invested. Past performance is not necessarily indicative of future performance. Mason Stevens and BlueRock and their respective directors, officers, employees, subcontractors and associates do not assure or guarantee the capital value of your investments will be maintained or the investment performance of any investments acquired through the managed account under any Investment Option or Model Portfolio. BLUEROCK 2

3 1. THE BLUEROCK 1.1 INTRODUCTION What is a Managed Discretionary Account (MDA)? A Managed Discretionary Account (known as a Managed Account) allows you to invest in a professionally managed Investment Option(s) or Model Portfolio(s) that consist of a portfolio of assets that follow a defined investment strategy. You will delegate the day-to-day investment decisions of the Investment Option(s) or Model Portfolio(s) to an MDA Provider, whom may be advised or appoint a Program Adviser (eg Investment Manager), by agreeing to an investment mandate. The Investment Option(s) or Model Portfolio(s) may invest in the following types of assets: Australian and international equities Fixed income securities Exchange traded funds Managed funds Listed property Listed Investment Companies Cash Access to invest If you are a retail client you can only access the financial products and services outlined in this Investment Mandate through a licensed financial adviser and you must be provided with personal advice. Personal advice will determine whether the Investment Option(s) or Model Portfolio(s) offered and the Managed Account is suitable for you. Your financial adviser will issue you with a Statement of Advice (SOA). Benefits of Managed Accounts The main benefit of Managed Accounts is that it allows you to consolidate other investments you may hold and benefit from consolidated management, execution and reporting. Investors are able to view their holdings in their Managed Account, any transactions and investment performance on a daily basis. In addition, investors in Managed Accounts retain the beneficial ownership of the underlying assets of the Investment Option(s) or Model Portfolio(s). This ultimately means that you will be entitled to any income generated from assets held but will also be liable for any tax consequences. BLUEROCK 3

4 There are differences between investing in a Managed Account and an investor holding the asset directly. The table below outlines the primary differences between the two. Beneficial Owner Corporate Actions Administration MDA You retain beneficial ownership of all investments. You are entitled to all dividends, franking credits and distributions. The underlying investments are registered in the name of the Custodian appointed by the MDA Provider. As the investments are registered in the Custodian s name any notices for corporate actions are sent to the Custodian. Upon set up of your MDA Service you will be required to provide standing instructions for future corporate actions which the Custodian will implement going forward. The Custodian structure removes the hassle of paperwork. All contract notes, holding statements, dividend statements can be handled by the Custodian and reported directly to your online account. At the end of financial year the investor is provided with an audited tax report. Direct Investment You retain beneficial ownership of all investments. You are entitled to all dividends, franking credits and distributions. The investments are usually registered in your name via CHESS or other market settlement system. You receive all shareholder notifications on corporate actions directly. You are responsible for communicating with the share registry directly to provide instructions on each actionable corporate action. All investor communication is sent directly to you. You will need to administrate all your individual investments. BlueRock Managed Account Service The BlueRock Managed Account Service (Service) allows you to establish a Managed Account that will enable you to select and invest in specific Investment Option(s) and/or Model Portfolio(s). You as the investor will delegate the day-to-day investment decisions of the Investment Option(s) or Model Portfolio(s) to the MDA Provider, who is advised by BlueRock as the Program Adviser. The investor retains beneficial ownership of all assets within the Investment Option(s) or Model Portfolio(s) you choose to invest in. Self Directed Accounts (SDA) In addition to holding selected Investment Option(s) or Model Portfolio(s), you (or your licensed financial adviser) will also have the flexibility to choose your own portfolio of assets and hold those investments in what is known as an SDA. An SDA allows you, to instruct the MDA Provider to deal in securities or other investments on your behalf on an execution only basis. These securities will be held outside of any Investment Option(s) or Model Portfolio(s) that you choose. SDAs provide investors with the ability to hold securities across multiple asset classes and multiple international securities exchanges, approved by MDA Provider. Mason Stevens will automatically open an SDA for you on establishment of the service. BLUEROCK 4

5 GLOBAL EQUITIES FOREIGN EXCHANGE GLOBAL DERIVATIVES & COMMODITIES SELF DIRECTED ACCOUNT TERM DEPOSIT HUB MARGIN LENDING FIXED INCOME MANAGED ACCOUNTS & MANAGED FUNDS Investment choice With advice from your financial adviser you may choose to invest in the following Investment Options in your Managed Account: BlueRock Moderate Investment Option BlueRock Balanced Investment Option BlueRock Growth Investment Option BlueRock High Growth Investment Option BlueRock determines the initial asset allocation for and also manages the ongoing asset allocation of these Investment Options. The investment parameters for the Investment Options are detailed in the Investment Guide later in this document. The Investment Options are constructed and managed by BlueRock through allocations to the specific Model Portfolios listed below: BlueRock Australian Shares Model Portfolio BlueRock Australian ETF Model Portfolio BlueRock Income-Focused Model Portfolio BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio BlueRock International ETF Model Portfolio BlueRock Global Opportunities Model Portfolio You may also invest directly in the Model Portfolios above from advice from your financial adviser. Further information is detailed further in this document. The below specialist investment portfolio is utilised in conjunction with the above Model Portfolios to achieve the desired asset allocation and investment strategy for each of the overarching Investment Options. The below model portfolio is not available for direct investment: BlueRock Specialist Investments Model Portfolio Suitability of this Managed Account Please note that the BlueRock Managed Account Service may not be suitable to your relevant circumstances if you have provided limited or inaccurate personal information to your financial adviser. Furthermore, the service may cease to be suitable should your relevant circumstances change. You should speak with your financial adviser should your circumstances change at any stage. BLUEROCK 5

6 1.2 PARTIES TO THE INVESTMENT MANDATE The Investment Mandate is between Mason Stevens and the investor (you) for your investment in your selected Investment Option(s) and Model Portfolio(s). Program Adviser Mason Stevens has appointed BlueRock as the Program Adviser of the Investment Option(s) and Model Portfolio(s). BlueRock s responsibilities include: to advise the MDA Provider on the initial asset allocations and changes to the ongoing asset allocations for the Investment Options; to advise the MDA Provider on and manage the Model Portfolio(s) in accordance with the defined investment parameters outlined in this document; to advise the MDA Provider on the composition of the investment universe for the Model Portfolio(s) and advise of any changes in accordance with the defined investment parameters on pages outlined in this document; to advise the MDA Provider on corporate actions arising from any direct investments held across any of the Model Portfolios(s). Portfolio Manager The Program Adviser may appoint a Portfolio Manager(s) to manage specific Model Portfolios(s) under this Investment Mandate. Further information is detailed in the Investment Guide section later in this document. MDA Provider Mason Stevens is the MDA Provider and administrator of the Service. arranging the settlement of investments in your Model Portfolio(s); recording and crediting income on investments held in your Model Portfolio(s); supervising compliance of the Program Adviser with the Model Portfolio(s). About Mason Stevens Mason Stevens Limited is part of the Mason Stevens group of companies (Mason Stevens Group). The Mason Stevens Group is a privately owned financial services firm based in Sydney, founded in The Mason Stevens Group specialises in offering separately managed accounts supported by a comprehensive investment and administration platform, as well as bespoke investment solutions to both retail and wholesale investors. Custodian Mason Stevens is licensed by the Australian Securities and Investments Commission (ASIC) to provide custodial and depositary services to clients. Mason Stevens has appointed a licensed sub-custodian to hold client monies and all financial products. Our primary sub-custodian is National Australia Bank Level Bourke Street Melbourne VIC 3000 NB: National Australia Bank has engaged Citibank N.A. as it global sub-custodian. From time to time Mason Stevens may change the appointed sub-custodian. Mason Stevens responsibilities include: establishing your Managed Account; maintaining records of investments in your Investment Option(s) and/or Model Portfolio(s) and providing you with up-to-date online reporting; implementing transactions in accordance with your instructions or delegated authority; changes to the Investment Option(s) or Model Portfolio(s) as instructed by the Program Adviser; implementing corporate actions in response to Program Adviser advice; BLUEROCK 6

7 2. ABOUT BLUEROCK 2.1 ABOUT BLUEROCK BlueRock was established in 2008 as an Accounting Firm focused on delivering strategic advice for business owners regarding their business and private affairs. Having since grown to over 180 staff across 7 divisions, BlueRock is now a genuine multi-disciplinary advisory firm helping a broad range of clients in a holistic manner. BlueRock Private Wealth (BRPW) is the wealth management division of BlueRock and was founded by Adam Morse CFP in February Leigh Fernando CFP joined the business in 2015 and is a co-director of BlueRock Private Wealth. BlueRock Private Wealth works in close conjunction with the wider BlueRock firm to ensure a holistic range of advisory services is delivered in a collaborative and succinct manner. BlueRock holds an Australian Financial Services License via BR Advice P/L. BlueRock Private Wealth act as a Corporate Authorised Representative of BR Advice. Adam Morse CFP and Peter Lalor CA (Managing Director of BlueRock) are the Directors of BR Advice. INVESTMENT COMMITTEE BlueRock is responsible for advising the MDA Provider on the management and performance of the Investment Options and Model Portfolios available for investment through this Investment Mandate. The BlueRock Investment Committee oversees the investment strategy and performance of the Portfolio Manager and will from time to time direct the Portfolio Manager to make adjustments to the underlying investment strategy, to ensure asset allocation and specific investment ideas are reflected in portfolio positioning. The role of the BlueRock Investment Committee is to: Review action taken following last committee meeting Review performance of investment options vs respective benchmarks Review asset allocation of investment options vs benchmark weightings and agreed Strategic Asset Allocation (SAA) vs Dynamic Asset Allocation (DAA) Discuss asset allocation and portfolio composition in light of current and anticipated macroeconomic trends (SAA vs DAA) Suggest updates to and review performance of all appointed investment specialists including any external investment advisory firms engaged to assist with direct investment allocations Propose changes to asset allocation and portfolio composition in light of market movements, anticipated returns, or macroeconomic conditions Present new investment ideas which have passed minimum investment filtering required to be considered for portfolio inclusion Evaluate the quality of research obtained and resources utilised to ensure a high standard The establishment and management of the Investment Options and Model Portfolios are supervised by an experienced Investment Committee comprising the following members: Adam Morse (Chairman) Director, BlueRock Private Wealth Adam founded the wealth management division of BlueRock in 2014 and has been an active contributor in the Financial Planning industry since Adam is a Certified Financial Planner and a board member of the BlueRock Group, and is primarily focused on the continued evolution of best practice strategic financial advice, encompassing asset management. As Investment Committee Chair, Adam has been responsible for the vision and implementation of the BlueRock Investment Mandates and continues to play a key role in ongoing oversight, more specifically contributing to asset allocation and particular investment ideas and thematics, which are ultimately ratified by the Investment Committee. BLUEROCK 7

8 Stirling Larkin Chairman of the Larkin Group, Stirling is an independent BlueRock investment committee member whom brings a wealth of macro-economic experience to the table in his role. He has maintained a Private Wealth Management focus for over 17 years through Trading (Market Making), Family Office Asset and Private Ancillary Fund Management, Wholesale Wealth Advisory and Expert Network positions in Australia, China and abroad. He has complemented this with senior university lecturing tenures internationally for over a decade and writes a weekly column in the the Australian Financial Review (AFR). Stirling is also a Graduate of the Australian Institute of Company Directors (AICD). Tom Bignill Tom co-founded Mason Stevens in February Having been involved with managed accounts since their infancy in Australia, Tom has a strong vision for the growth and development of the managed accounts industry. Tom and his team are committed to enhancing the investment and client service models of financial advisory practices in Australia. Prior to Mason Stevens, Tom was Head of Equity Market Services & Direct Clients at Next Financial, and was part of the original team at Next Financial that built over A$2billion book of clients prior to its acquisition by Wilson HTM in BLUEROCK 8

9 3. BLUEROCK INVESTMENT PHILOSOPHY & PROCESS 3.1 INVESTMENT PHILOSOPHY The investment philosophy of BlueRock begins from the perspective that our clients are seeking a relationship which focuses on their short and long term goals via the provision of a strategic wealth management plan, coupled with a transparent, flexible and nimble investment solution. BlueRock embraces a holistic view of a client s business and personal circumstances and seek to meet their goals and objectives through best of breed technology and financial products, delivered via a client centric relationship and service. In the absence of a wellconsidered strategic wealth management plan, we believe there is less capacity to define an appropriate level of portfolio risk. We believe that asset allocation, and genuine portfolio diversification are the key drivers of portfolio risk, and that high transparency and liquidity are important for navigating volatile market conditions. We focus on direct investments, Listed Investment Companies (LICs) and Exchange Traded Funds (ETFs) for core portfolio holdings, coupled with specialist Managed Funds to increase portfolio diversification into asset classes less easily accessed via direct investments. Transparency and liquidity is supported by a primary focus on large market capitalisation companies for direct investment holdings. BlueRock believes it is critical to provide, where appropriate, a transparent portfolio solution for our clients, as it provides confidence and reassurance. BlueRock achieves this transparency by investing in large companies, both domestic and international, that are either household names or have products and solutions to which our clients can understand and relate. BlueRock believes that both passive and active management have a place in portfolios to deliver a flexible, proactive, value-added approach. This is carried out at both an investment level, but through dynamic asset allocation within and across a portfolio. To this end, cash is used as a strategic tool to protect performance within a portfolio and may provide a buffer for opportunities where market conditions demand. If circumstances warrant, BlueRock utilises techniques such as currency hedging and the use of alternative investment strategies with lower correlation to traditional investment markets, in order to mitigate risk in uncertain times. BlueRock has the freedom to draw on research, opinions and data from a broad array of domestic and global providers. This flexibility and rigor behind the investment approach seeks to enhance the risk adjusted return profile of portfolios. Overarching this approach to portfolio construction is a focus on cost efficiency, the effective use of technology to efficiently manage client portfolios, and ongoing communication and education for our clients to ensure they remain informed and comfortable that their investments are working for them, as they should be. 3.2 INVESTMENT PROCESS The BlueRock investment process incorporates the following key steps in constructing and managing its investment portfolios: Asset Allocation BlueRock have a strong, strategic relationship with Morningstar, a global research investment house. Morningstar have invested considerable time and resources into effective Risk Profiling techniques and asset allocation methodology, and BlueRock leverages this expertise at the heart of our process, which is then coupled with any specific asset allocation views, driven by the BlueRock investment committee. We will generally not move away from the split between growth and defensive allocations within the various levels of risk, unless it is to hold a higher element of defense for short term protection. We will at times move plus or minus for each of the underlying asset classes such as bonds, shares and property, and the subsets of each, which is reflective of a Dynamic Asset Allocation approach. Macroeconomic trends and analysis The BlueRock investment committee identify regions, sectors, and themes that appear attractive and appear to offer compelling value or momentum. These may be driven by economic, demographic, political or strategic factors (among others), and are derived from a broad selection research, data, and critical analysis on diverse and nuanced insight. BLUEROCK 9

10 Stock identification An intensive process that draws on available research and market opinions to identify the companies that are best placed to exploit these opportunities. This also incorporates the use of technical analysis to identify trends and help fine-tune entry and exit of positions. Specialist investments Where direct investments are not an appropriate medium to invest into more specialised asset classes or particular themes, BlueRock will utilise our networks, research tools and experience to identify best of breed investment managers to obtain specific investment exposures. BlueRock follows a structured approach to interviewing and approving specialist investment managers. Risk management An overarching focus of protecting client investments remains at the heart the BlueRock investment process. This involves actively managing exposures across sectors, themes and geographic regions, and the use of cash as a strategic tool. BlueRock are happy to maintain higher cash weightings (within the bounds of the portfolio guidelines) in the absence of any compelling opportunities. Whilst BlueRock actively track and measure index correlations and benchmarks, they are not bound by them. Oversight & review BlueRock has a structured weekly and quarterly review program in place to maintain the above investment process, in addition to ad hoc research and oversight of particular investment positions and new opportunities. This is coupled with client reporting and ongoing structured face to face review programs individually tailored for our clients. BLUEROCK 10

11 4. INVESTMENT GUIDE 4.1 THE INVESTMENT OPTIONS The Investment Options are managed according to risk profiles set by the BlueRock Investment Committee and you can nominate the Investment Option for investment that you have agreed with your financial adviser. Each Investment Option is exposed to a variable allocation to specific Model Portfolios. BlueRock, as Program Adviser, will advise the MDA Provider of the initial asset allocation weightings for each Investment Option as well as any ongoing changes to these asset allocations. The MDA Provider will execute the changes on your behalf. With advice from your financial adviser you may choose to invest in the following Investment Options: BlueRock Moderate Investment Option BlueRock Balanced Investment Option BlueRock Growth Investment Option BlueRock High Growth Investment Option BLUEROCK MODERATE INVESTMENT OPTION Investment strategy The BlueRock Moderate Investment Option (the Investment Option) is a portfolio containing core investments which have a bias towards capital preservation. A portion of the Investment Option may be invested in property securities and Australian and international equities to provide capacity for some growth potential. The Program Adviser will aim to achieve a performance objective of CPI + 2.2% per annum over a period of 3 years or more, net of fees and costs. Investor Risk Profile The Moderate risk profile is designed for investors with a minimum three-year timeframe or those who seek a diversified portfolio of interest bearing and growth asset classes, with an emphasis on interest bearing assets. This portfolio also suits investors seeking a lower level of investment value volatility, and therefore willing to accept lower potential investment performance, hence the 70 percent exposure to defensive assets (cash and fixed interest). Investment Parameters DAA Model Portfolio Range* BlueRock Australian Shares Model Portfolio or 0-20% BlueRock Australian Shares ETF Model Portfolio BlueRock Income-Focused Model Portfolio or 30-60% BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio or 0-25% BlueRock International ETF Model Portfolio BlueRock Specialist Investments 0-25% Cash 15-55% *A Dynamic Asset Allocation(DAA) range, allows for movement in the portfolio positioning to allow for changing market conditions and valuation fundamentals in different asset classes. BlueRock will not hold a higher than target exposure to Growth assets for each Risk Profile and have allowed for a higher maximum range band for defensive assets and lower minimum range band for growth assets to allow portfolio positioning to move to a far more defensive position. It should be noted, that at times, asset allocation within each Model Portfolio can include higher levels of cash, therefore skewing the overall portfolio positioning for a more defensively orientated position. BLUEROCK 11

12 BLUEROCK BALANCED INVESTMENT OPTION Investment strategy The BlueRock Balanced Investment Option (the Investment Option) is a portfolio of investments split between growth asset classes such as Australian and international equities and investments with defensive income-producing attributes, such as cash and fixed income. The Program Adviser will aim to achieve a performance objective of CPI % per annum over a period of 5 years or more, net of fees and costs. Investor Risk Profile The Balanced risk profile is designed for investors with a minimum five-year timeframe. This portfolio also suits investors who desire a modest level of capital stability but are willing to accept moderate investment value volatility in return for commensurate potential investment performance, hence the 50 percent exposure to growth assets (shares, listed property and infrastructure) and 50 percent exposure to defensive assets (cash and fixed interest). Investment Parameters DAA Model Portfolio Range* BlueRock Australian Shares Model Portfolio or 5-25% BlueRock Australian Shares ETF Model Portfolio BlueRock Income-Focused Model Portfolio or 25-55% BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio or 5-35% BlueRock International ETF Model Portfolio BlueRock Specialist Investments 0-25% Cash 5-35% *A Dynamic Asset Allocation(DAA) range, allows for movement in the portfolio positioning to allow for changing market conditions and valuation fundamentals in different asset classes. BlueRock will not hold a higher than target exposure to Growth assets for each Risk Profile and have allowed for a higher maximum range band for defensive assets and lower minimum range band for growth assets to allow portfolio positioning to move to a far more defensive position. It should be noted, that at times, asset allocation within each Model Portfolio can include higher levels of cash, therefore skewing the overall portfolio positioning for a more defensively orientated position. BLUEROCK GROWTH INVESTMENT OPTION Investment strategy The BlueRock Growth Investment Option (the Investment Option) is a portfolio containing core investments which have a bias towards long-term growth. Typically more than half the portfolio will be investment in growth asset classes such as Australian and international equities. The Program Adviser will aim to achieve a performance objective of 3.70% per annum over a period of 7 years or more, net of fees and costs. Investor Risk Profile The Growth risk profile is designed for investors with a minimum seven-year timeframe or those who are willing to accept higher levels of investment value volatility in return for higher potential investment performance. Some exposure to interest bearing assets is still desired, but the primary concern is a higher return, hence the 70 percent exposure to growth assets (shares, listed property and infrastructure). Investment Parameters DAA Model Portfolio Range* BlueRock Australian Shares Model Portfolio or 15-35% BlueRock Australian Shares ETF Model Portfolio BlueRock Income-Focused Model Portfolio or 0-40% BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio or 20-45% BlueRock International ETF Model Portfolio BlueRock Specialist Investments 0-25% Cash 0-25% *A Dynamic Asset Allocation(DAA) range, allows for movement in the portfolio positioning to allow for changing market conditions and valuation fundamentals in different asset classes. BLUEROCK 12

13 BlueRock will not hold a higher than target exposure to Growth assets for each Risk Profile and have allowed for a higher maximum range band for defensive assets and lower minimum range band for growth assets to allow portfolio positioning to move to a far more defensive position. It should be noted, that at times, asset allocation within each Model Portfolio can include higher levels of cash, therefore skewing the overall portfolio positioning for a more defensively orientated position. BLUEROCK HIGH GROWTH INVESTMENT OPTION Investment strategy The BlueRock High Growth Investment Option (the Investment Option) is a portfolio consisting predominantly of investments in growth asset classes such as Australian and international equities. It is unsuitable for clients requiring income and stability from their investments. The Program Adviser will aim to achieve a performance objective of CPI % per annum over a period of 10 years or more, net of fees and costs. Investor Risk Profile The High Growth Investment Option is designed for investors who are solely focused on achieving a high long-term investment return. This strategy suits the more aggressive investor who has little concern for capital volatility and may be utilising gearing as part of their investment strategy. A minimum ten-year timeframe should be committed to. Up to 100% of the portfolio can be allocated to growth assets. Investment Parameters DAA Model Portfolio Range* BlueRock Australian Shares Model Portfolio or 20-45% BlueRock Australian Shares ETF Model Portfolio BlueRock Income-Focused Model Portfolio or 0-15% BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio or 40-65% BlueRock International ETF Model Portfolio BlueRock Specialist Investments 0-25% Cash 0-15% *A Dynamic Asset Allocation(DAA) range, allows for movement in the portfolio positioning to allow for changing market conditions and valuation fundamentals in different asset classes. BlueRock will not hold a higher than target exposure to Growth assets for each Risk Profile and have allowed for a higher maximum range band for defensive assets and lower minimum range band for growth assets to allow portfolio positioning to move to a far more defensive position. It should be noted, that at times, asset allocation within each Model Portfolio can include higher levels of cash, therefore skewing the overall portfolio positioning for a more defensively orientated position. BLUEROCK 13

14 4.2 THE MODEL PORTFOLIOS The following pages contain descriptions for each of the Model Portfolios that are available through this Investment Mandate. The Investment Options detailed in Section 4.1 will have asset allocations to the Model Portfolios below. Your financial adviser may also tailor a Portfolio for you using these Model Portfolios. Each Model Portfolio is managed in accordance with an agreement between the Program Adviser and the MDA Provider. With advice from your financial adviser you may choose to invest in the following Model Portfolios: BlueRock Australian Shares Model Portfolio BlueRock Australian ETF Model Portfolio BlueRock Income-Focused Model Portfolio BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio BlueRock International ETF Model Portfolio BlueRock Global Opportunities Model Portfolio BlueRock Specialist Investments Model Portfolio 4.3 REBALANCING The Program Adviser may adjust the market value weights of the underlying investments in the Model Portfolio(s) to ensure that weightings are consistent with the Model Portfolio s investment strategy. Rebalancing will occur at the discretion of the Program Adviser. 4.4 PORTFOLIO MANAGERS The Program Adviser has appointed the following Portfolio Managers, to manage specific Model Portfolios within this Investment Mandate. Akambo The Program Adviser has appointed Akambo Pty Limited (Akambo), ABN (AFSL ), as the Portfolio Manager to the below Model Portfolios. BlueRock Australian Shares Model Portfolio BlueRock Australian ETF Model Portfolio BlueRock Income-Focused Model Portfolio BlueRock Income-Focused ETF Model Portfolio BlueRock International Model Portfolio BlueRock International ETF Model Portfolio BlueRock Global Opportunities Model Portfolio Akambo is responsible for the management and investment decisions of the Model Portfolio(s). Akambo is not acting in the capacity of Program Adviser to the Model Portfolio(s). About the Portfolio Manager Akambo is a financial advisory firm established in Akambo has a strong background in investment advice and asset management gained through many years of experience in the financial services industry. Akambo offers individually tailored advice for selfmanaged super funds, individuals, not-for-profits, families and corporate clients extending across a range of financial services and products. For further information on Akambo, please refer to BlueRock BlueRock (also the Program Adviser) is the portfolio manager of the BlueRock Specialist Investment Model Portfolio only. Please refer to section 2 for further information on BlueRock. BLUEROCK 14

15 BLUEROCK AUSTRALIAN SHARES MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Australian Shares Model Portfolio (the Model Portfolio) is to provide clients with medium and long term investment returns via a concentrated exposure to investments predominantly listed within the S&P/ASX 200. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Benchmark Investment objective Minimum number of investments 6 Maximum number of investments 25 Minimum cash weighting 2% Description BlueRock Akambo Maximum cash weighting 30% Maximum single security weighting 30% Rebalancing Minimum initial investment $50,000 Suggested investment timeframe 5 years + Securities listed on the S&P/ASX 200 Accumulation Index (Up to 25% may be held in securities listed outside of the S&P ASX 200 Accumulation) including, managed funds, exchange traded funds (ETFs), and listed warrants. Up to 30% of the Model Portfolio value may be held in hybrid and/or fixed income securities in place of cash where relatively large cash balances would otherwise be held. The strategy of the Model Portfolio is to predominantly invest in companies that seek to outperform the S&P/ ASX 200 Accumulation Index. The Model Portfolio is not guided by or bound by the index weightings of the broader benchmark indices, but does take into consideration an appropriate balance of weightings between various investment sectors. The investment strategy of the Model Portfolio will be active to the extent that investments will be reviewed regularly and the composition will be scrutinized to ensure that it is well placed to achieve its goal of outperforming the relevant benchmark. The annual portfolio turnover will be dependent on market conditions and the performance of individual stocks within the Model Portfolio. The investment methodology will be guided by a selection of available broker research, relevant technical analysis, and other stock-specific and macroeconomic news and data. S&P/ASX 200 Accumulation Index To outperform the S&P/ASX 200 Accumulation Index Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 15

16 BLUEROCK AUSTRALIAN SHARES ETF MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Australian Shares ETF Model Portfolio (the Model Portfolio) is to provide clients with medium and long term investment returns in Australian equities via Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs). Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Benchmark Investment objective Minimum number of investments 1 Maximum number of investments 5 Minimum cash weighting 2% Description BlueRock Akambo Maximum cash weighting 30% Maximum single security weighting 98% Rebalancing Minimum initial investment $5,000 Suggested investment timeframe 5 years + Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs) with exposure to Australian equities. The strategy of the Model Portfolio is to invest in ETFs (and potentially LICs) which provide broad exposure to Australian equities. Whilst the general strategy is to obtain broad Australian equity exposure, the Manager may sometimes seek to overlay this with a diversified approach to asset allocation. S&P/ASX 200 Accumulation Index To track the S&P/ASX 200 Accumulation Index Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 16

17 BLUEROCK INCOME-FOCUSED MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Income-Focused Model Portfolio (the Model Portfolio) is to obtain a rate of return above the relevant benchmark by investing primarily in domestic and international fixed income securities. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Description BlueRock Akambo Benchmark RBA Cash Rate + 2.5% Australian and international fixed income securities, asset backed securities, corporate bonds, hybrid securities, ETFs and managed funds. The strategy of the Model Portfolio is to extract enhanced income or distribution returns by investing in high quality and mostly liquid fixed income investments. Investment objective To outperform the RBA Cash Rate +2.5% Minimum number of investments 1 Maximum number of investments 15 Minimum cash weighting 2% Maximum cash weighting 100% Maximum single security weighting 98% Rebalancing Minimum initial investment $50,000 Suggested investment timeframe 5 years + Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 17

18 BLUEROCK INCOME-FOCUSED ETF MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Income-Focused ETF Model (the Model Portfolio) is to obtain a rate of return above the relevant benchmark by investing primarily in domestic and international fixed income securities and/or domestic and international fixed income ETFs. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Description BlueRock Akambo Benchmark RBA Cash Rate + 2.5% Investment objective To track the RBA Cash Rate +2.5% Minimum number of investments 1 Maximum number of investments 5 Minimum cash weighting 2% Maximum cash weighting 100% Maximum single security weighting 98% Rebalancing Minimum initial investment $5,000 Suggested investment timeframe 5 years + Australian and international fixed income securities, asset backed securities, corporate bonds, hybrid securities, ETFs and managed funds. The strategy of the Model Portfolio is to extract enhanced income or distribution returns by investing in high quality and mostly liquid fixed income investments. Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 18

19 BLUEROCK INTERNATIONAL MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock International Model Portfolio (the Model Portfolio) is to provide clients with exposure to international markets. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Benchmark Investment objective Minimum number of investments 2 Maximum number of investments 20 Minimum cash weighting 2% Description BlueRock Akambo Maximum cash weighting 30% Maximum single security weighting 80% Rebalancing Minimum initial investment $75,000 Suggested investment timeframe 5 years + ASX and internationally listed ETFs, ASX listed instalment warrants, managed funds and international listed securities. The strategy of the Model Portfolio is to invest in a mix of international shares, indices (via ETFs listed on the ASX or other major stock exchanges) or managed funds that will provide a concentrated exposure, as well as obtain direct exposure to a number of listed international shares that either have a compelling longer term growth story, or provide shorter term strategic opportunities. The Model Portfolio may seek foreign exchange positions for hedging or investment purposes. MSCI All-Country World Index (ACWI) Net Total Return ($AUD) To outperform the MSCI (ACWI) Net Total Return ($AUD) over rolling 5 year periods Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 19

20 BLUEROCK INTERNATIONAL ETF MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock International ETF Model Portfolio (the Model Portfolio) is to provide clients with exposure to international markets through the use of Exchange Traded Funds (ETFs). Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Benchmark Investment objective Minimum number of investments 1 Maximum number of investments 5 Minimum cash weighting 2% Description BlueRock Akambo Maximum cash weighting 30% Maximum single security weighting 98% Rebalancing Minimum initial investment $5,000 Suggested investment timeframe 5 years + ASX and internationally listed ETFs, ASX listed instalment warrants, managed funds and international listed securities. The strategy of the Model Portfolio is to invest in ETFs (and potentially LICs) which provide broad exposure to international equities. Whilst the general strategy is to obtain broad international equity exposure, the Manager may sometimes seek to overlay this with a thematic approach to asset allocation. MSCI All-Country World Index (ACWI) ($AUD) To track the MSCI (ACWI) ($AUD) over rolling 5 year periods Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 20

21 BLUEROCK GLOBAL OPPORTUNITIES MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Global Opportunities Model Portfolio (the Model Portfolio) is to take advantage of value and wholesale opportunities in Australian and international equities, fixed income and other asset classes. These opportunities may be through placements, new listings, or other means. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Description BlueRock Akambo Securities within the S&P/ASX 200 Index and their listed warrants, international equities, managed funds and ETFs. Investment strategy Benchmark Investment objective Minimum number of investments 1 Maximum number of investments 25 Minimum cash weighting 2% Maximum cash weighting 30% Maximum single security weighting 98% Rebalancing Minimum initial investment $200,000 Suggested investment timeframe 5 years + Up to 25% of the portfolio value may be invested outside of the S&P/ASX 200. Up to 98% of the Model Portfolio value may be held in hybrid and/or fixed income securities should circumstances warrant. The investment strategy of the Model Portfolio is to predominantly invest in value and event driven opportunities in local and international markets, in both equities and fixed income. The investment methodology will be guided by a research-driven stock selection process, as well as a technical overlay. MSCI All-Country World Index (ACWI) ($AUD) To outperform the MSCI (ACWI) ($AUD) over rolling 5 year periods Program Adviser Discretion *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 21

22 BLUEROCK SPECIALIST INVESTMENTS MODEL PORTFOLIO Model Portfolio Objective The investment objective of the BlueRock Specialist Investments (the Model Portfolio) is to invest into specific asset classes and investment options which are not correlated to the investment strategies of the other available Model Portfolios, but which are desired for asset allocation. The Portfolio will also give investors exposure to domestic and international markets and allows the Program Adviser to achieve a sufficient level of portfolio diversification. Model Portfolio Parameters Feature Program advisor Portfolio manager Investment universe* Investment strategy Benchmark Investment objective Minimum number of investments 1 Maximum number of investments 10 Minimum cash weighting 2% Description BlueRock BlueRock Maximum cash weighting 100% Maximum single security weighting 98% Rebalancing Minimum initial investment Managed Funds, Listed Investment Companies (LICs) and Exchange Traded Funds (ETFs). The investment strategy of the Model Portfolio is to select either best of breed professionally managed investment options in specific asset classes, or utilise an ETF index tracker to give exposure to a specific asset class or market index, to compliment wider portfolio construction. CPI + 2%p.a. Suggested investment timeframe 5 years + To outperform CPI + 2%p.a. Program Adviser Discretion $20,000 (not available for individual investment) *Please note these parameters are not absolutely fixed at all times. The Program Adviser targets these parameters but variations may develop from time to time due to corporate actions, market share prices, index changes and delays in rebalancing due to the Program Adviser minimising turnover of your investments. The timing of additional investments in your Managed Account may also lead to short term different balances of cash and securities as your portfolio is being implemented. Mason Stevens will give you reasonable notice of any change to these parameters. It is at the sole discretion of the MDA Provider to accept investments below the minimum investment amount. BLUEROCK 22