Farnam Managed Accounts ARSN

Transcription

1 Farnam Managed Accounts ARSN Supplementary Product Disclosure Statement 1 July 2014 Important notice This Supplementary Product Disclosure Statement (SPDS) dated 1 July 2014 supplements the Farnam Managed Accounts Product Disclosure Statement (PDS) dated 27 June You should read this SPDS together with the PDS. However, the information in this SPDS supersedes the PDS, to the extent of any inconsistency. Generally, the content of this SPDS is new information unless stated otherwise. The purpose of this SPDS is to update the PDS for changes including regulatory requirements, Anti-Money Laundering Legislation and the Foreign Account Tax Compliance Act. This SPDS is issued by Australian Unity Funds Management Limited ABN , AFS Licence No as the Responsible Entity for Farnam Managed Accounts ARSN Access to Farnam Managed Accounts and the giving of investment instructions Farnam Managed Accounts is only available to investors through financial advisers who are authorised by the Responsible Entity to access Farnam Managed Accounts. This means that you may not make an Application to become a member of Farnam Managed Accounts unless you submit your Application through an authorised financial adviser. Investment instructions can also only be made on your behalf by your financial adviser, via the Farnam Portal. The Responsible Entity has directed the Administrator to act in accordance with the Responsible Entity s policy (as summarised below) regarding investors who do not continue to receive financial advice from a financial adviser authorised to access Farnam Managed Accounts. Implications for investors who do not continue to receive financial advice Should your financial adviser inform the Administrator that you have chosen to not receive their ongoing financial advice, then you will not be able to transact your investments through Farnam Managed Accounts, until you have nominated an alternate authorised financial adviser. Until you nominate an alternate financial adviser, you will be able to view your Account balance through the Farnam Portal. You may write to the Administrator with a request to close your Account which may result in the disbursement of the assets of your Account to you, and the closing of your Account. The Administrator will contact you to request that you nominate an alternate financial adviser, authorised to access Farnam Managed Accounts. If you do not nominate an alternate authorised financial adviser within 90 days, then this may result in the closure of your Account by the Responsible Entity. If your Account is closed after the 90 day period, the Administrator will contact you to provide options in returning the assets held through your Account. Options may include the in-specie transfer of assets to your name (where permitted), or if this option is not available, then your Account assets will be sold (i.e. converted to cash), and the proceeds transferred to your nominated bank account. This sale of assets will occur regardless of prevailing market conditions, and may therefore result in a loss to you. Refer page 7 of the PDS for further details on risks. Exemptions If, under the Corporations Act, you meet one of the tests to be considered a Wholesale Investor, the Responsible Entity may determine that you can access Farnam Managed Accounts via the Farnam Portal without the assistance of an authorised financial adviser. Voting policy The Responsible Entity s voting policy in relation to Farnam Managed Accounts is that it will not exercise voting rights relating to investments held through Farnam Managed Accounts.

2 Farnam Managed Accounts ARSN Supplementary Product Disclosure Statement 1 July 2014 You may obtain a copy of the Responsible Entity s voting policy free of charge by contacting the Responsible Entity on Withdrawal rights Withdrawal rights for Investment Options may change, and withdrawals may not be available if for example an Investment Option s product disclosure statement or disclosure document becomes defective or the product s issuer decides to cancel or suspend withdrawals. If the withdrawal rights relating to an Investment Option change, the Investment Option s issuer may not be required to return an investment or provide other options to withdraw. Notification of any supplementary or replacement disclosure documents issued for Investment Options will be provided to your authorised financial adviser through the Farnam Portal. Should the Administrator or Responsible Entity receive notification that an Investment Option s withdrawal rights have changed, or a limited withdrawal option is made available, your authorised financial adviser will be able to access this information through the Farnam Portal within five Business Days of the notification. Your authorised financial adviser s instruction to act on withdrawal options will be followed; however you may be allocated withdrawal proceeds on a pro rata basis. For example, if the change in an Investment Option s withdrawal arrangements places a limit on the amount that can be withdrawn, then the amount paid out may be less than the amount requested by you. If this occurs, your payment will be reduced proportionately. Minimum holding requirements for Investment Options Some Investment Options may be subject to minimum holding requirements imposed by the investment s issuer. Generally minimum holding requirements of Investment Options are not imposed when investing through Farnam Managed Accounts. However, there may be instances where an Investment Option s minimum holding requirement is imposed. Some investments made through Farnam Managed Accounts are consolidated (in terms of how they are held), and in many cases more than one investor through Farnam Managed Accounts may have holdings in the same Investment Option. If the Administrator receives a withdrawal instruction for an Investment Option and is informed by the Investment Option s issuer that the minimum holding requirement will be imposed, under the Farnam Managed Accounts Constitution, the Administrator may not act on the original withdrawal request. In some circumstances, the issuer of an Investment Option may impose the minimum holding requirement and close an account entirely. This may result in a loss to all Investors of that Investment Option. Selection of investments The Responsible Entity has appointed FedInvest Pty Ltd ACN ( FedInvest ) to provide investment consulting services to the Responsible Entity in relation to Farnam Managed Accounts. FedInvest has established an investment committee ( FedInvest Investment Committee ), which comprises four members, with at least one member being a representative of the Responsible Entity. Available investments are reviewed by the FedInvest Investment Committee. In reviewing investments, the FedInvest Investment Committee considers criteria including, but not limited to: Liquidity of the investment; Asset allocation and diversification; Research recommendations; Standard risk measures; Compatibility with the administration platform; The diversification of the Investment Menu; and Registration status for Managed Investment Schemes. Investments reviewed by the FedInvest Investment Committee may include investments issued by the Responsible Entity or its related parties. The selection of investments is conducted on an arm s length basis and

3 Farnam Managed Accounts ARSN Supplementary Product Disclosure Statement 1 July 2014 is not constrained by related party relationships. Further information on related party policy and arrangements is available on page 30 of the PDS. If the FedInvest Investment Committee is satisfied an investment meets its review criteria, it recommends to the Responsible Entity that the Investment Option be included on the Investment Menu. The Responsible Entity will then assess the Investment Option. The Investment Menu is monitored by the FedInvest Investment Committee on an ongoing basis and undergoes an annual review to determine if available Investments Options should continue to be made available and open to investment. If the annual review determines that an Investment Option no longer meets its review criteria, the FedInvest Investment Committee may recommend to the Responsible Entity the removal of the Investment Option from the Investment Menu. If an Investment Option is removed from the Investment Menu, the Administrator will not accept any new applications into the removed Investment Option. Investors who hold an Investment Option that is removed from the Investment Menu may maintain the Investment Option until such time the investor decides to liquidate their holding. If a material change to the Farnam Managed Accounts investment policy occurs, the Responsible Entity will notify your authorised financial adviser via the Farnam Portal. Complaints handling This section replaces complaints handling policy on page 29 in the PDS. If you would like to make a complaint about Farnam Managed Accounts you can call the Administrator on us at fed.support@linearam.com.au or write to us at the following address: Farnam Managed Accounts Administrator PO Box 482 Collins Street West VIC 8007 The Responsible Entity will promptly acknowledge your complaint, generally within 10 business days, investigate it and decide in a timely manner what action needs to be taken. The Responsible Entity will notify you of its decision within 45 days after receipt of the complaint, together with any remedies that are available, or other avenues of appeal against the decision. Complaints regarding investments available through the Investment Menu If you would like to make a complaint about an Investment Option, you should approach the Investment Option s issuer. The Investment Option issuer s contact details can be found in the relevant disclosure document available through the Investment Menu. Financial advice related complaints If you would like to make a complaint about financial product advice you have received in relation to investing through Farnam Managed Accounts, you should approach your authorised financial adviser, and/or the dealership your authorised financial adviser represents. If you are then not satisfied with the handling of your complaint, you may contact: Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Phone: Fax: (03) Website: info@fos.org.au This service operates as an independent body for the industry, to determine unresolved complaints. There is no cost to you for using this service.

4 Farnam Managed Accounts ARSN Supplementary Product Disclosure Statement 1 July 2014 Foreign Account Tax Compliance Act The Responsible Entity intends to meet any requirements imposed on Farnam Managed Accounts under Australian legislation designed to give effect to the Foreign Account Tax Compliance Act ( FATCA ) agreement between Australia and the United States. This may include registering Farnam Managed Accounts with the United States authorities, collecting certain information from you, reporting payments made in respect of your investment and retaining information to meet record keeping requirements. Anti-Money Laundering The current content of page 32 of the PDS is taken to be replaced with the following: Australia s Anti-Money Laundering and Counter Terrorism Financing ( AML/CTF ) laws requires the Responsible Entity to adopt and maintain an AML/CTF program. To meet this legal requirement, we need to collect certain identification information and documentation (Know Your Client (KYC) Documents) from new investors. Your financial adviser will assist you in providing the necessary identification documents prior to submitting the application through the Farnam Portal. Processing of applications or withdrawals may be delayed or refused if Investors do not provide the applicable KYC Documents when requested. Under the AML/CTF laws, the Responsible Entity is required to submit regulatory reports to AUSTRAC. This may include the disclosure of your personal information. The Responsible Entity may not be able to tell you when this occurs. As a result, if instructed by AUSTRAC, the Responsible Entity may be required to deny you (on a temporary or permanent basis) access to your Account. This could result in loss of the capital invested, or you may experience significant delays when you wish to transact on your Account. For information on how to apply, and for account types, please refer to the AML+CTF Identification Requirements on the website. Privacy From 12 March 2014, important changes to the way in which we handle your personal information commenced. As a result, we have updated our Privacy Policy which is available from the website.

5 Date: 27 June 2013 Product Disclosure Statement Farnam Managed Accounts Issuer and Responsible Entity Australian Unity Funds Management Limited ABN AFS Licence Promoter Federation Alliance Limited ABN AFS Licence Product Disclosure Statement is for Farnam Managed Accounts. This is an important document and should be read before you complete the Application Form.

6 IMPORTANT INFORMATION This Product Disclosure Statement ( PDS ) is issued by Australian Unity Funds Management Limited ABN , AFS Licence ( AUFM, Responsible Entity ), the Responsible Entity of Federation Managed Accounts ARSN Farnam Managed Accounts is a separate class of interests in Federation Managed Accounts. In this PDS a reference to Farnam Managed Accounts, or to an interest in Farnam Managed Accounts, is a reference to the class of Federation Managed Accounts established for the purpose of offering Farnam Managed Accounts. The Promoter of Farnam Managed Accounts is Federation Alliance Limited ABN AFS Licence ( Promoter ). The Administrator of Farnam Managed Accounts is Linear Asset Management Limited ( Administrator ) ABN AFS Licence Before you invest, we recommend you read this PDS in its entirety and check the website at for any updated information. The website contains the Investment Menu, including details of all available Investment Options for investment through Farnam Managed Accounts. Applications for investment in Farnam Managed Accounts may only be made via the Application Form which must be signed and sent to the Administrator together with the other required documents. Applications will not be accepted unless Application Money (including cash via electronic funds transfer or direct debit, cheque or by transfer of existing holdings of securities (In Specie, or a combination of those) is accompanied by an original signed Application Form. The information contained in this PDS is general in nature and has been prepared without taking into account your investment objectives, financial situation or particular investment needs. Before making a decision to invest in Farnam Managed Accounts, it is important that you read the entire PDS and consult a financial adviser regarding the appropriateness of this investment for your personal circumstances. Investment in Farnam Managed Accounts is not guaranteed. This means that you may not recover your initial investment and you are not guaranteed a return on your investment. You should consider the information contained in this PDS and the appropriateness of an investment in Farnam Managed Accounts having regard to your objectives, financial situation and investment needs before proceeding to invest. This will include considering the risk factors that could affect the financial performance of Farnam Managed Accounts, some of which are described in the Risks section on page 7 of this PDS. The Investment Menu also highlights specific risks for each Investment Option. No person has been authorised by the Responsible Entity to make any representation or to give any information about Farnam Managed Accounts that is not contained in this PDS. Any representation or information of this kind that has been provided must not be relied on as being authorised by the Responsible Entity in connection with this offer. This PDS will be issued as an electronic Product Disclosure Statement ( Electronic PDS ) and it may also be issued in paper form. The Electronic PDS is available via Investors should only rely on the information in this PDS. If this PDS has been received electronically, then a paper copy of this PDS will be provided free of charge on request by telephoning the Promoter on or ing managedaccounts@farnam.com.au, or by telephoning the Administrator on or ing managedaccounts@farnam.com.au, or you may be able to obtain a paper copy of this PDS by contacting your financial adviser. If this PDS has been received electronically, you should ensure that the complete Application Form and Electronic PDS have been obtained. If you are unsure about the completeness of this PDS, whether received in printed or electronic form, you should contact the Promoter or the Administrator. Information contained in this PDS may change from time to time. Information that is not materially adverse information for investors may be updated and provided via the Farnam Portal and at The Administrator will provide you with a paper copy of any updated information free of charge on request. If there is a change to the information contained in the PDS that is materially adverse for investors, the Responsible Entity will issue a supplementary or replacement PDS in accordance with the Corporations Act. The distribution of this PDS in jurisdictions outside Australia may be restricted by law and persons who come into possession of it should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This PDS does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register or qualify Farnam Managed Accounts or otherwise permit the public offer of Farnam Managed Accounts outside Australia. Any forward looking statements that relate to future matters which are contained in this PDS or the Investment Menu are subject to uncertainty and risks. The actual performance of your investment via Farnam Managed Accounts may be materially different from those expressed by or implied in the statements. An investment in Farnam Managed Accounts does not represent an investment in or liability of the Responsible Entity or of any other Australian Unity Group company and is subject to investment risk, including delays in repayment and loss of capital invested or income re-invested. Neither the Responsible Entity, the Promoter or the Administrator, nor any of their related bodies corporate, guarantee the performance or success of Farnam Managed Accounts or investments made by you via Farnam Managed Accounts, or payment of distributions or repayment of any of your investment. None of the Investment Managers or Fund Managers mentioned in this PDS (including in any Investment Menu) have authority to make statements on behalf of or bind the Responsible Entity. Certain terms in this PDS have defined meanings. Refer to the Defined Terms on page 33 of this PDS. Australian Unity Funds Management is a wholly owned subsidiary of Australian Unity Limited ABN and is a member of the Australian Unity Group of companies. Investment returns are not guaranteed. None of the products referred to in this document (or in any Investment Menu) are guaranteed or otherwise supported by Australian Unity Funds Management or by Australian Unity Limited. You should consider this when assessing the PDS and whether to invest in Farnam Managed Accounts. Your interest: When you invest in Farnam Managed Accounts you are an indirect investor because the Custodian will hold the investments you choose, on your behalf. Your rights as an indirect investor are different from your rights if you invested directly. For example, the Custodian will receive information and communications in relation to your underlying investments. You have the right to request copies of these communications if you wish. See Reporting on page 16 for further details. The Responsible Entity may in the future issue different classes of interests in Farnam Managed Accounts. Costs of investing through Farnam Managed Accounts: The total fees and charges you will pay will include the costs of investing in Farnam Managed Accounts as well as the costs of any investments you choose. It is important that you understand the fees of any investments you choose, and that those fees are in addition to the fees charged by the Responsible Entity for Farnam Managed Accounts, together with transaction and account costs incurred on your behalf. Transactional fees and costs are set out in this PDS. The cost of underlying investments are set out in the underlying investment Disclosure Documents. Please refer to the Investment Menu (available on the website or via the Farnam Portal) and fees and other costs on page 18 for further details.

7 Contents Key features 2 About Farnam Managed Accounts 3 Benefits of Farnam Managed Accounts 5 Risks 7 Establishing an Account 11 Transacting 12 Reporting 16 Taxation 17 Fees and other costs 18 Additional Information 28 Authorisations 31 Anti-Money Laundering Compliance 32 Defined Terms 33 Corporate Directory 35

8 Key features Feature Overview Page Farnam Managed Accounts Investment Menu Minimum Investment Investment Methods Additional Investments Regular Contributions Income Withdrawals Regular Withdrawals Investment Instructions Risks Fees and Other Costs Cooling Off Minimum Cash Holding Consolidated Reporting A comprehensive investment administration platform that allows you to tailor an individual portfolio from an extensive Investment Menu and delivers you a package of services, including investment holdings and consolidated portfolio reporting. There is a comprehensive range of investment solutions to choose from, including Model Portfolios, ASX Securities, Managed Funds, Fixed Interest Securities, Dynamic Trading Strategies, Cash and Term Deposits. Refer to farnam.com.au for the current Investment Menu or contact the Administrator to request a hard copy. The Responsible Entity may update the Investment Menu from time to time. The minimum investment into Farnam Managed Accounts is $50,000 unless otherwise permitted by the Responsible Entity. Some Model Portfolios and Managed Funds have minimum investment amounts. You can make investments by direct deposit or electronic funds transfer, or by cheque, or by In Specie Transfer of Australian securities or other investments or a combination of those methods. Additional investments of any amount may be made at any time. 13 You can make regular contributions either by direct debit from your nominated bank account on a monthly basis (Regular Contribution Plan, minimum of $100 per month), or by arranging a direct credit through your own financial institution (Your Own Savings Plan). Income is paid to your Cash Account, which forms part of your Account. Unless you request otherwise, income generated from investments in your Account will generally either remain in your Cash Account or be allocated in accordance with your Investment Instructions. It will not be reinvested directly back into the investment which generated the income. You can request to withdraw cash of any amount or instruct the Administrator to make an In Specie Transfer of assets out of your Account. The Administrator will endeavour to comply with your request promptly, however, it is possible there may be delays or circumstances may arise in which your request cannot be satisfied at all. You may elect to receive a regular payment from your Account. 15 You can change the mix of investments in your Account at any time by providing an Investment Instruction to the Administrator. Your Investment Instruction will generally be implemented on the next Business Day after it is received, but there may be times when there are delays for reasons outside the Administrator s control. There are risks associated with investing in Farnam Managed Accounts and in the underlying investments you select. There are fees and costs payable by you to the Responsible Entity. There are also fees and other costs associated with the underlying investments or strategies that you choose. An investment in Farnam Managed Accounts is not subject to cooling off rights, pursuant to an Australian Securities and Investments Commission (ASIC) Class Order. A minimum of 2% of your Account balance will be held as cash. Some Model Portfolios may also require a minimum cash holding which is in addition to this 2% minimum (refer to the Investment Menu for details). All reporting for Farnam Managed Accounts is available online and by making an Application you agree to receive all reports, correspondence and communications electronically. 2 2 and the Investment Menu 11 and the Investment Menu and the Investment Menu 18 and the Investment Menu You should consult your financial adviser before deciding on the composition of your Account and an appropriate amount to invest in and/or withdraw from Farnam Managed Accounts. 2 Farnam Managed Accounts

9 About Farnam Managed Accounts Farnam Managed Accounts is a comprehensive investment administration platform that delivers superior administration, tailored investment solutions and flexible reporting, all providing a powerful investor experience. The investment universe The Investment Options you can choose are set out in the Investment Menu. The investment universe is broad, with options which may include: ASX Securities Managed Funds Cash and Term Deposits International Equities Initial Public Offerings Exchange Traded Funds Exchange Traded Options Fixed Interest Securities Derivatives Your investment universe can be constructed using: Self-directed Investments, which provide the flexibility to select any investments the Responsible Entity lists on the Investment Menu to follow your own strategy; and/or Model Portfolio of Managed Funds, which provide a combination of Managed Funds, professionally researched and designed to optimally blend asset classes, Investment Managers and investment styles to achieve diversification; and/or Model Portfolios, which are professionally managed by Investment Managers according to their stated mandate. Investment Menu The Investment Menu includes your options for investment. The Investment Menu forms part of this PDS and the Responsible Entity may update it from time to time. You should read the Investment Menu for further details about the Investment Options before making investments via your Account. You can obtain a copy of the Investment Menu free of charge as follows: Go to farnam.com.au Call the Administrator on the Administrator at managedaccounts@farnam. com.au Contact your financial adviser, or For existing Investors, through the Farnam Portal. Self-directed Investments Farnam Managed Accounts allows you to select Selfdirected Investments from the Investment Menu. The Selfdirected Investments provide you with the flexibility to build and operate your own portfolio. The Administrator will only act on Investment Instructions received from you or your Representative in respect of your Self-directed Investments. The Administrator will report to you on your Self-directed Investments in a consolidated manner along with the other investments in your Account. The available Self-directed Investments are set out in the Investment Menu. Model Portfolios Model Portfolios provide access to professional Investment Managers who will manage the relevant portion of your assets in line with a specified Mandate. By investing in one or more Model Portfolios, that portion of your Account is subject to ongoing monitoring and re-balancing to maintain portfolio weightings. The Model Portfolio Mandate set out in the Investment Menu describes the applicable investment strategy, risk profile, objectives and investment universe. It is possible to customise selected Model Portfolios, or apply Dynamic Trading Strategies (see page 6). Each of these approaches changes the way the Model Portfolio operates and you should read the relevant section of this PDS and the Investment Menu for further details. How does your account work? I. You choose your investments from the Investment Menu in line with your risk and return objectives. Your financial adviser may assist you with this. II. As part of the Application process you provide the Administrator with an Investment Instruction to purchase investments. III. The Administrator administers each Investor s Account in accordance with that Investor s Investment Instructions, providing regular online reports to you and your Representative or financial adviser via the Farnam Portal. IV. All assets acquired on behalf of Investors are held by the Custodian. Investors retain beneficial ownership of those assets. V. You, or your financial adviser, can review your investments and the performance of the investments in your Account in line with your changing circumstances. You are able to change the investment allocation of your investments at any time by providing the Administrator with an Investment Instruction. VI. You are provided with a segregated Cash Account from which any fees and charges are deducted, transactions are settled, and to which any dividends/ distributions and bank interest are credited. Each Account must maintain a minimum cash holding of 2% of the total Account balance at all times (plus any additional cash holdings if required by certain Investment Options, e.g., Model Portfolios). The Administrator will report to you on your Cash Account in a consolidated manner along with the other investments in your Account. VII. You and your financial adviser can review the tax reports such as Capital Gains Tax (CGT), an income summary, fees, and a tax summary at any time to assist you with your tax planning. Farnam Managed Accounts 3

10 About the Responsible Entity Australian Unity Funds Management (AUFM) is the Responsible Entity of Federation Managed Accounts, in relation to which Farnam Managed Accounts is a seperate class of interests. It is subject to the provisions of the Constitution and the Corporations Act AUFM is responsible for the administration and management of Farnam Managed Accounts, and has engaged Linear Asset Management Limited (Linear) to provide administration services. About Farnam Investment Management Farnam Investment Management (Farnam) is a boutique investment manager specialising in the active management of equity and fixed income portfolios. Farnam is owned by its founder Peter Durbin along with other key personnel. The investment decisions of Farnam are dictated by an investment committee of four highly qualified and experienced individuals with backgrounds in funds management, stockbroking, investment banking, accounting and securities research. Together the investment committee of Farnam have over 50 years experience in financial markets and a mutual passion for discovering value for investors. As a value investor, Farnam aims to capitalise on inefficient markets by uncovering quality businesses that are trading at discounts to their intrinsic or fair value. Farnam has an underlying belief that these quality businesses will eventually be recognised by markets and with time be rerated to this intrinsic value. About the Administrator Linear as an established provider of Platform and Administration solutions to the financial services industry, is committed to the delivery of operational and technological excellence. Linear s dedicated team includes industry professionals with extensive experience in financial planning, superannuation, investment markets and technology. 4 Farnam Managed Accounts

11 Benefits of Farnam Managed Accounts Farnam Managed Accounts provide convenient and transparent investment administration with the ability to construct a portfolio in line with your investment objectives. The benefits include the following: Ease of administration The Administrator s experience in operating a platform ensures an easy-to-use system delivering secure online consolidated reporting, tax and performance information including a set of annual, audited tax reports for each Investor. Professional investment management If you select one or more Model Portfolios or Managed Funds then those assets are professionally managed in line with the Mandate for the Model Portfolio or the stated investment strategy for the Managed Fund. Investment choice and diversification Farnam Managed Accounts offers you the choice and the ability to construct a diversified portfolio, enabling you to invest across the major asset classes such as Australian and international shares, listed and unlisted property, alternative assets, fixed interest and cash. Online access You can access your Account information at any time via the Farnam Portal. Your secure Farnam Portal login allows you to view your Account details, monitor your investment performance and access a wide range of consolidated reports. Flexible investing Farnam Managed Accounts utilises sophisticated trading system technologies which allow orders to be placed efficiently across multiple exchanges during normal market hours. Your Investment Instructions can be provided through the Farnam Portal at any time to change your Account s composition. Transparency Farnam Managed Accounts allows you to see each individual investment in your Account, as well as all fees, charges and taxes relating to your Account on an itemised basis, providing you with a clear understanding of the total costs of investing through Farnam Managed Accounts. Consolidated reporting Farnam Managed Accounts provides consolidated portfolio reporting including valuations, asset and sector allocation and performance analysis though the Farnam Portal. The Farnam Portal displays information on your Account as at the close of the previous Business Day. Indirect ownership of assets Through Farnam Managed Accounts, your investments are held by the Custodian. However, you retain the beneficial ownership of the investments at all times. The holding of the investments by the Custodian removes many of the administrative burdens associated with direct ownership. In particular, you will not receive any direct communication detailing transactions from registries or companies. Instead, the Administrator will receive and process these on your behalf and then report to you via regular statements. In the event of a corporate action, such as a capital raising, the Administrator may communicate the details to you as necessary, (see page 16 for details on Reporting). Additionally, your privacy is protected as your name does not appear on public registers. Tax reporting Farnam Managed Accounts is audited annually, therefore your accountant and/or tax adviser can rely on the end of financial year tax summary for the preparation of your tax returns. Normally, CGT should not be payable on In Specie Transfers into or out of Farnam Managed Accounts unless the owner of the security ceases to be the beneficial owner. If you wish, you can adopt the tax parcel accounting method to suit your personal circumstances. Refer to page 17 for further information about taxation. Tax parcel management When disposing or switching your assets, you may become liable for CGT. Farnam Managed Accounts allows Investors to communicate which holding, or tax parcel, they require to be bought or sold to realise a specified gain or loss. Such transactions are undertaken by the Administrator of Farnam Managed Accounts and are done independently of any Investment Manager. Investors can also elect to change the treatment of tax parcels to alter the CGT outcome, this includes applying FIFO, Min Gain and Max Gain 1. Please consult your financial adviser for further information. All taxation management instructions must be communicated to the Administrator by you or your Representative. 1. Refer to the Defined Terms on page 33 for an explanation of these terms Farnam Managed Accounts 5

12 Model Portfolio tax awareness Investors in a Model Portfolio(s) should also note that the tax position of individual Investors is not taken into account by the Investment Manager when making investment decisions within their Mandate (eg. realising gains within a certain timeframe). Your financial adviser may be able to assist you in managing your tax position by customising your Model Portfolio(s). Please consult your financial adviser for more information. Customisation of certain Model Portfolio(s) Some Model Portfolios permit you to customise your holdings by, for example, allowing you to exclude certain securities, or to lock a Model Portfolio(s) from being transacted. Locking holdings It is possible to specifically lock a Model Portfolio so that no alterations can be made to that Model Portfolio. The lock instruction is communicated to the Administrator and will remain in force until you instruct otherwise. However, locking is not permitted on Model Portfolio(s) that have a Dynamic Trading Strategy applied to them. If you apply a Dynamic Trading Strategy to a locked Model Portfolio then the lock will be removed. Locking a Model Portfolio(s) could affect the performance of your investment in the Model Portfolio. Locking forms part of customising a Model Portfolio, and you should check the Investment Menu as to whether your selected Model Portfolio(s) allow this. Dynamic Trading Strategies Certain Model Portfolios permit you to overlay a Dynamic Trading Strategy that is managed by the Responsible Entity. See the Investment Menu for more details. 6 Farnam Managed Accounts

13 Risks What is risk? Risk can generally refer to the variability and volatility of an investment return and the likelihood of incurring a loss on your investment. All investments come with a degree of risk. You will need to determine how much risk you are able or willing, to tolerate. The main risks of investing include a decrease in the value of your investment, a fluctuation or a decrease in the amount of income generated from the investment, or a lower than expected rate of return. It is commonly accepted that there is a relationship between the level of return generated by an investment, and its level of risk. The spectrum below shows the four main types of investments according to their relationship between risk and return for you to consider. Cash Fixed interest Property Equities Lower risk, but normally a lower return over a longer term Higher risk, and normally a higher return over a longer term If the security of your money is your highest concern when selecting investments, you should choose an investment with lower risk, bearing in mind that your return may be lower in the long-term. Conversely, if your focus is towards achieving higher returns, you will need to be comfortable with the fluctuations in the value of your investment before selecting an investment with higher risk. Before you make any investment via Farnam Managed Accounts, you should identify exactly what you want your investment to achieve and what level of risk you are willing to take on the investment failing to perform in line with your expectations, or performing negatively over a period of time (the risk ). Please consult your financial adviser for more information. The risks of investing and performance of your portfolio are highly dependent on the investments that you select. Each Investment Option available via Farnam Managed Accounts has its own specific risks. You should refer to the Disclosure Document relevant to the Investment Option for more information on risk specific to the Investment Option before selecting your investments. The Responsible Entity has the discretion to change the Investment Options listed in the Investment Menu from time to time and to determine to no longer hold certain assets via Farnam Managed Accounts. How you can manage your risk In managing your risk, the Responsible Entity recommends that you: seek your own professional advice to help you understand how your current financial situation, and your investment objectives, affect the selection of investments that you can make; consider your investment timeframe, your investment objectives and your risk tolerance; and diversify your investments to help reduce risk and the volatility of investment returns. The following sections outline the key risks of Farnam Managed Accounts: Timing risk Timing risk refers to the risk of price falls in markets shortly after the purchase of an investment or conversely the risk of price rises in markets shortly after investments are sold. Timing risk is relevant where an Investment Manager or Fund Manager is buying and selling assets or advising the Administrator to do so on your behalf; e.g. where there is a delay in communicating and executing decisions. Timing risk is also applicable in the context of you or your Representative providing Investment Instructions. For example, if you provide Investment Instructions to purchase assets on your behalf, then the Administrator will execute that order as soon as practicable, however, there will always be some delay while the Administrator processes your order. Additionally, if you have requested the Administrator to carry out more than one Investment Instruction, then the Administrator may need to carry the instructions out consecutively rather than simultaneously (i.e. you may need to wait until the Administrator can sell securities or withdraw from Managed Funds before the Administrator can settle a purchase for you). Execution risk When investing through Farnam Managed Accounts, your Account may consist of interests in securities, Managed Funds, cash, other financial products and possibly derivatives. The risks associated with investing in these assets are the same whether you invest yourself or through Farnam Managed Accounts. Due to the volatile nature of financial markets there is a risk that your Representative, a Fund Manager or Investment Manager, in exercising their available discretions, may undertake transactions which result in a loss (realised or unrealised) to you. There is also the risk that a Model Portfolio s investment strategy, risk profile or target objectives may change and (particularly if a Regular Contributions Plan applies) you may not have details about the new Mandate or the current Disclosure Document/Investment Menu at the time your investment is executed. The respective Investment Manager or Fund Manager of the Model Portfolios or Managed Funds may change and there is a risk their Mandates or strategies could be altered or closed. Farnam Managed Accounts 7

14 Concentration risk You have the flexibility to design your Account as you see fit, however, you should be aware of the risk of concentrating on similar or correlated asset classes. Additionally, the Model Portfolios and Managed Funds may be exposed to investments that are highly correlated. Concentration risk means that, should a particular asset class be adversely impacted, other highly correlated asset classes run a greater risk that they will also be affected. Your financial adviser can assist you to manage this risk through diversification. Investment Manager/Fund Manager risk Before investing in Model Portfolios or Managed Funds through Farnam Managed Accounts you need to consider the risks associated with Investment Managers or Fund Managers managing your investments. If the manager is not performing properly or well, then there is a risk you will miss out on opportunities that may be beneficial to you. For example, a manager may lose key people or manage risk poorly, may lose its license to operate or become unable to perform its duties. See the Investment Menu for specific risks of each Model Portfolio and also see each Managed Fund s Disclosure Document. Dynamic Trading Strategies risk There are risks associated with the Dynamic Trading Strategies the Responsible Entity may offer. For example, in relation to Capital Preservation, there may be higher transaction fees and possible tax consequences if the dynamic rebalancing of your investment results in a higher turnover of assets. There is also the risk the assumptions made by the Administrator in applying its formula do not reflect the market conditions at the time you apply the Capital Preservation trading strategy. These risks are in addition to the risks associated with the Model Portfolios to which the trading strategy applies, including the asset and management risks. See the Investment Menu for specific details of the risks for each Dynamic Trading Strategy and Model Portfolio option, which may be available from time to time. If you appoint someone to operate your account If you appoint someone to operate your Account under a Power of Attorney or the terms of a managed discretionary account, you are bound by the terms of that relationship. Their decisions to acquire and dispose of investments through Farnam Managed Accounts and/or change the amount of money you have invested in Farnam Managed Accounts may impact your investments. The Responsible Entity and the Administrator are not responsible for checking whether Investment Instructions given on your behalf are appropriate for you, your Account or current market conditions, that they are consistent with general principles of prudent investing, or that the person giving the instructions is authorised by the terms of your separate arrangement with your attorney, planner or other adviser. Scheme risk There is an inherent level of risk involved in investing in Farnam Managed Accounts because it is a managed investment scheme. This includes the risk of changes to fees, notice periods and withdrawal processes. If the Responsible Entity increases fees then the Responsible Entity will provide you with 30 days notice. Other risks include AUFM being removed as the Responsible Entity or Farnam Managed Accounts closing. There are also risks associated with the Custodian, where assets may be mixed with property together with schemes of the Responsibility Entity. The Custodian may not meet its service level obligations. Structural risk The fact that your investments are held indirectly through Farnam Managed Accounts (i.e. in the name of the Custodian) means that, compared with direct investments you hold in your own name, your ability to deal with your investment may be affected in the unlikely event of a breach of duty or insolvency on the part of the Responsible Entity or the Custodian. The structure of Farnam Managed Accounts also means that you rely on the Administrator to ensure the accuracy and efficiency of the administration and computer systems. There is a risk that a failure in any of these systems will cause a delay in processing and reporting on your Account. Investors should also note that there is a risk persons with access to your Account details may provide fraudulent or other unauthorised instructions. You should keep your Farnam Portal username and password secure. No cooling off There is no cooling off period in respect of an investment in Farnam Managed Accounts. If you wish to withdraw from Farnam Managed Accounts, then the Responsible Entity, through the Administrator, must take reasonable steps to realise your investment and return your money or securities. However, fees and other costs may apply and also the value of the investments may have changed, meaning that you may receive an amount less than your Application Money. 8 Farnam Managed Accounts

15 Administrator risk Linear Asset Management is the Administrator of Farnam Managed Accounts, which means Linear Asset Management administers most aspects of Farnam Managed Accounts on a daily basis, including providing and maintaining the software and systems and giving effect to your Investment Instructions. Linear Asset Management performs this role under a services agreement with the Responsible Entity. If these services fail, a new Administrator may be appointed. Corporate actions The Investment Options available in the Investment Menu may be subject to corporate actions. For example, corporate actions can include rights issues, member votes, meetings and takeover offers. As your investments are made indirectly via Farnam Managed Accounts, you may not be eligible to participate in all corporate actions. The Administrator will receive notice of these events on your behalf and may automatically process corporate actions where your authorisation is not required. The Administrator may act on corporate actions where it is considered beneficial to the interests of all Investors of Farnam Managed Accounts. The following sections outline some of the key risks of investing in general. Where applicable, you should refer to the Disclosure Document relevant to the Investment Option for more information on risks specific to the Investment Option. General risk Risk is inherent in every investment decision, therefore it is important to understand the relationship between risk and return prior to making such a decision. In general the higher the risk associated with an investment the higher the expected return is on the investment. Investment returns may be volatile over time, and the possibility therefore exists for an Investor to lose money or be unable to recover their initial investment amount. Market risk There is always a risk that any investment may fall as well as rise in value through the movement of investment markets as a whole. Market forces will impact the price of investments, and at their worst, market values of some assets may become zero if adverse market conditions are encountered. Political risk There is a risk that investments could be adversely impacted by political factors. These could include changes to domestic and international political parties, legislative changes (such as the treatment of taxation) or change in Government policy. Liquidity risk Liquidity risk is the risk incurred in possessing a financial product where it is difficult or impossible to realise or redeem the investment because of lack of demand or because there is no available means to realise or redeem the investment at the time. This risk can be higher for particular types of investments, such as small capitalisation shares, direct property, many alternative assets and some debt and/or credit instruments. Additionally, for some investments such as Managed Funds, redemptions may be suspended, delayed or altered at the level of the Managed Fund. This may impact the ability of an Investor of Farnam Managed Accounts to exit/ liquidate their underlying investment. Under the terms of the Constitution, the Responsible Entity (and therefore the Administrator) has the discretion to refuse to act on requests to redeem an investment in Federation Managed Accounts in certain situations. Sector risk Sector risks include but are not limited to demand for the type of product or service a company produces or provides, commodity prices, the economic cycle of industry, shifts in consumer demands, lifestyle changes or advances in technology. It is important for Investors to know that the future performance of any investment made via Farnam Managed Accounts is not guaranteed, including any return in the form of income. Your Account s underlying investments will rise and fall in value. There are various risks within particular asset classes including those listed in the Investment Menu, some of which are specific to the type of asset and some of which are general risks of any investment. Farnam Managed Accounts 9

16 Equity risk Equity risk is the risk inherent in investing in listed equities (e.g. shares), where prices may be volatile due to stock market dynamics. Such dynamics may include companyspecific issues (change in management, failure of a business venture, etc), economic conditions, regulatory changes or political influences. Shares issued by companies may fall in price (value) or at their worst, may lose all of their value. International shares may be affected by foreign exchange (currency) movements, different taxation treatments to those applied to Australian shares and political and regulatory risks/ changes associated with overseas markets and countries. In a declining market, shares of smaller capitalisation companies may experience short-term price variation and may become less liquid (liquidity risk increases). Smaller companies are also likely to be more financially dependent upon a small number of key management personnel. This increases the risk of a company becoming insolvent if there are adverse developments, including failure of a product, loss of a large customer or changes in management. There may be other risks associated with the use of hybrids, convertible preference shares and other nonvanilla equities such as counterparty and settlement risk. Fixed income risk Fixed income investments are subject to default risk. This is where the credit issuer fails to meet interest payments or repay the principal of your capital or both. By investing in a fixed income investment there is a risk that if you terminate your investment before the maturity date, you could be subject to costs or reduced interest. Also, where you invest in a fixed income investment via a third party (such as a Model Portfolio or Managed Fund) then you are subject to all the risks and conditions of that Disclosure Document. Derivative risk A derivative is a financial instrument which has characteristics derived from an underlying asset or index. You can choose to invest in certain derivatives via Farnam Managed Accounts, including put and call options. Additionally, derivatives may be used by Investment Managers or Fund Managers to protect against changes in market value of existing investments, to simulate an investment position without purchasing or selling the underlying asset, to partially or substantially manage against various risks such as credit and interest rate risks or to gear an investment or a portfolio. The use of derivatives attracts a higher level of risk than other investment classes. The risks include the failure of the value of derivatives to move in line with the underlying asset, a derivative position may be costly to reverse, the parties/counterparties associated with the derivative contract may not fulfil their obligations, and derivatives may be impacted by market liquidity. As derivatives are a leveraged investment, your potential losses and gains are multiplied in relation to movements in the price of the underlying assets. The Investment Menu indicates which Investment Option uses derivatives. Options risk Options are a form a derivative and there are inherent risks associated with their use. When you purchase an option the entire amount you invest in that option can be lost. When you sell (or write) a call option covered against a security then you will be trading away any of the upside in the security above the strike price of the option. The risk is that the security may rise further than the strike price of the option and you will not benefit from the increase in value. You should consult your financial adviser about the suitability of options for your particular circumstances. Currency risk Changes in the value of the Australian dollar against foreign currencies may affect the value of investment returns of offshore investments because losses or gains must be converted back to Australian dollars. In order to manage this currency risk, some Investment Managers and Fund Managers may have a policy of hedging some, or all, international currency exposures to manage the impact of fluctuating exchange rates. The Investment Menu indicates which Investment Manager or Fund Manager hedge some, or all, international currency exposures. 10 Farnam Managed Accounts

17 Establishing an Account Minimum investment The minimum investment in Farnam Managed Accounts is $50,000 unless otherwise permitted by the Responsible Entity. There may also be minimum initial investment amounts for the Investment Options set out in the Investment Menu. Application Money Application Money can be provided via electronic funds transfer or direct debit, cheque or by transfer of existing holdings of securities (In Specie Transfer), or a combination of cash/cheque and In Specie Transfer. If you are investing via a direct cash transfer, then please refer to the bank account details on the Application Form when organising the transfer. If you would prefer the collection of a direct debit from your nominated bank account, please sign the Direct Debit Request Form. If you are attaching a cheque, please make it payable to Farnam Managed Accounts A/C <Client Name>. If you are investing via an In Specie Transfer of securities, please refer to the information below for more details. Application Money held before the Administrator establishes your Account will be held in accordance with the Corporations Act and will not earn interest. In Specie Transfers In Your existing holdings of listed securities can be transferred into your investment in Farnam Managed Accounts (at the time of Application or at a later time) as long as: the securities are beneficially owned by you (which may include those held in custody by other services); transfer forms are provided, which are appropriately signed; and the cost history of each transferred parcel is received. If you instruct that the securities being transferred In Specie into your Account be applied to one or more Model Portfolio(s), then the Administrator will attempt to do this. However, if any security does not form part of your selected Model Portfolio(s) then it may be sold when the Model Portfolio is rebalanced. Transaction fees may apply to In Specie Transfers, as well as a transfer fee if your requested transfer relates to a Managed Fund not listed on the Investment Menu. Refer to the fees and other costs section starting on page 18 for more details. Applications An Application will only be processed when the Administrator has received the original documentation together with payment of the Application Money in cleared funds, and/or an In Specie Transfer of securities, and the relevant identification documentation. The Responsible Entity reserves the right to refuse an Application in whole or part at its discretion. If this occurs then your Application Money will be refunded within five Business Days. The Responsible Entity believes it is important for you to obtain independent professional advice about your financial circumstances and needs and whether Farnam Managed Accounts is a suitable investment for you. Therefore your Application will generally not be accepted unless it comes through your financial adviser. Authorisations You may complete a Representative Form if you would like to authorise the Administrator to take Investment Instructions directly from your Representative in relation to your Account. Investors may nominate their financial adviser as their Representative. However, you are not under any obligation to make your financial adviser your Representative or to appoint a Representative. Your Account Your Account will be established and you will become an Investor in Farnam Managed Accounts once the Administrator accepts your completed Application Form and payment. Once your Account is established, the amount you have invested will be applied according to your Investment Instructions to your selected investments. The Administrator will generally implement your Investment Instructions on the next Business Day after your Account is established. How to apply To apply for an Account in Farnam Managed Accounts you need to; I. Complete the Application Form online. II. Complete and provide the other forms and documentation as required (including the Representative Form if you want to appoint a Representative, the Direct Debit Request Form, any details of In Specie Transfers to be completed, and all relevant identification documents). III. Ensure all Applicant(s) and the Representative (if applicable) sign the forms where indicated. IV. Send the original forms and all relevant identification documents with the Application Money to the Administrator. Further information about the details the Responsible Entity and the Administrator require and instructions about how to complete the Application Form are set out on the Application Form itself. Farnam Managed Accounts 11

18 Transacting Once you are an Investor in Farnam Managed Accounts then you can begin transacting on your Account. You will be given a secure username and login to use the Farnam Portal. You or your Representative can then provide the Administrator with your Investment Instructions. It is important to know that transacting on your Account will attract fees and other costs. See the fees and other costs on page 18 for further details. Choosing your investments A comprehensive range of investment solutions is available via Farnam Managed Accounts. The complete Investment Menu from which you can choose is available at farnam.com.au or via the Farnam Portal, once you become an Investor. You should seek advice from your financial adviser to determine which Investment Option(s) to invest in. The Responsible Entity may update or change the Investment Menu from time to time. You should refer to the website at farnam.com.au for a current copy of the Investment Menu before making an Application or a further investment. You can contact the Administrator on to request a hard copy free of charge. Investment Instructions Investment Instructions can be provided to the Administrator by you and/or your Representative at any time via the Farnam Portal. The Administrator generally processes Investment Instructions on the next Business Day after they are received, however, there may be times when this is not practicable. Also, you should note that under the Constitution, Investment Instructions are not required to be processed by any particular time. If you provide standing Investment Instructions to the Administrator, the standing Investment Instructions will be followed until you vary the Investment Instructions. For example, you may wish to apply all further contributions towards a particular investment or request that the Administrator pays you regular withdrawals. You can provide most Investment Instructions online through your Farnam Portal. If you require a paper form then forms can be downloaded from your Farnam Portal or you can phone the Administrator on and request forms be sent to you. In some circumstances, the Administrator has the discretion to accept Investment Instructions provided in writing either by post or via or fax, however, generally Farnam Managed Accounts is a fully online product. There are terms and conditions relating to online instructions to which you agree when you make your Application; these are set out on page 31 of this PDS. Your Account You can view your Account and its value and composition via the Farnam Portal. The cash balance, the current aggregated value of your Account and the value of the underlying investment positions will be updated on a daily basis as at the close of the previous Business Day. All positions may at times be subject to delay. All assets in your Account are held in the name of the Custodian (or Custodians) appointed by the Responsible Entity. Each Investor s assets and liabilities are accounted for separately. Records of individual security holdings for each Investor are retained within Farnam Managed Accounts. Your Cash Account To make sure there is always enough cash to pay fees and settle any charges in connection with trades made on behalf of your Account, you must maintain a minimum amount of cash in your Account (currently 2% of your Account balance). This is in addition to any cash that a particular Investment Option (such as a Model Portfolio) may require you to hold as part of its asset allocation. The Administrator at times may hold more than 2% of your Account in cash to cover anticipated withdrawals. The Administrator may sell some of the investments in your Account in the event that the minimum cash holding in your Account falls below the necessary minimum. Your investments will continue to be sold until your cash holding is brought up to the required minimum level. This will be done in line with your Investment Instruction or any subsequent Investment Instruction received from you (if you have provided one). The Administrator will credit any bank interest or dividends/ distribution income earned on your behalf to your Cash Account or the relevant Model Portfolio as and when it is received. All cash is held by a regulated Australian bank and earns interest. Your Cash Account will be reported on to you in a consolidated manner along with the other investments in your Account. Model Portfolio weightings If you choose to invest in Model Portfolios, your individual weightings or mix of Model Portfolios are applied on a floating basis. This means that the weightings (i.e., the value in dollar and percentage terms) will fluctuate from time to time as the performance of one Model Portfolio differs from the performance of another. The Administrator will only reweight your Model Portfolio on instruction from you or your Representative. You should consult your financial adviser for further details of how this works. 12 Farnam Managed Accounts

19 Customising your Model Portfolio Farnam Managed Accounts offers you the ability to customise the Model Portfolios in your Account by directing the exclusion or locking of certain stocks within a Model Portfolio. Not all Model Portfolios offer the ability to customise. You should review the Investment Menu to determine if the Model Portfolio you invest in offers customisation. Possible customisations include: Lock Model Portfolio: suspends any transactions from occurring, other than the processing of corporate actions by the Administrator. Exclude Securities: Where you do not wish to invest in a particular security, you can elect to exclude that security from a Model Portfolio. You can customise your Account at any time. You should be aware that customisations may involve fees and costs. For further information on these costs please refer to the fees and other costs on page 18 for more details. Dynamic Trading Strategies for Model Portfolios Dynamic Trading Strategies (DTS) are an additional way that you can tailor certain Model Portfolios. DTS involves the Administrator automatically managing your Model Portfolio in accordance with a predefined strategy which is defined in detail in the Investment Menu. The various DTS offered, including the fees and risks, are set out in the Investment Menu which may be updated by the Responsible Entity from time to time. You can apply a DTS when you invest or at any later time. You cannot apply a DTS (including Capital Preservation) to any particular tax parcels. If you apply a DTS to your Model Portfolio, then you should be aware that the asset allocation will be changed pursuant to the relevant DTS. Your investment will therefore look and perform differently from the Model Portfolio. One DTS you can apply, when it is offered in the Investment Menu, is Capital Preservation, in which the Administrator applies a formula to the relevant assets in your Account on a daily basis and then adjusts the allocation between equities and cash according to exposure levels and the preservation level you select. The cut off time for receipt of instructions about Capital Preservation is 12pm (Melbourne time) each Business Day, as the Administrator runs the calculation at approximately 2pm (Melbourne time) and then rebalances the Model Portfolio. Any new Investment Instructions or variations to instructions about Capital Preservation received after 12pm (Melbourne time) will be held over until the following Business Day. Any variations to Investment Instructions which are received prior to 12pm (Melbourne time) may also be held over to the following Business Day. Cash holdings in Model Portfolios Some Model Portfolios have a minimum cash holding (in addition to the minimum required for each Account, which is currently 2% of your Account balance). If there is excess cash above the minimum required for a Model Portfolio investment, for example, from additional contributions, interest, dividends and distributions or the proceeds from the sale of investments, then the excess cash may be used to acquire further investments for your Model Portfolio, e.g. a parcel of securities. This may be subject to any contrary standing Investment Instruction(s) that you provide. Making additional investments You can make additional investments at any time by: electronically transferring cash arranging a direct debit cheque made out to Farnam Managed Accounts A/C <Client Name> transferring eligible securities into your Account (see In Specie Transfers In on page 11), or establishing a Regular Contribution Plan or a regular payment plan. Any additional investments will be invested in accordance with your standing Investment Instructions as provided by you or your Representative (if applicable) as soon as possible (generally on the next Business day) unless you advise the Administrator otherwise (for example, your additional investment will be applied to a Model Portfolio if that is your existing standing Investment Instruction). Before making an additional investment you should refer to the relevant Investment Option s website for any updates to this PDS (including a supplementary or replacement PDS) or check the Farnam Portal. Regular contributors should retain a copy of this PDS together with any updated information in their records. If you invest in Managed Funds or other Investment Options, which have their own Disclosure Document, then you should also check whether they have issued updated disclosure. Your Own Savings Plan You may instruct your financial institution to pay an agreed amount into your Account on a regular basis ( Your Own Savings Plan ). You can choose the amount, frequency, and timing of these payments. The Administrator will provide you with the bank account details to direct your plan payments once your Account is opened. For more information about Capital Preservation including worked examples and details of the risks, please see the Investment Menu. Farnam Managed Accounts 13

20 Regular Contribution Plan You may choose to set up a Regular Contribution Plan to authorise the Administrator to debit an agreed amount from your bank account each month for investment into your Account. This must be at least $100 per month and will normally be debited on the 15th of each month or the next Business Day after that. If you wish to participate in a Regular Contribution Plan, you will need to complete a Direct Debit Request Form as well as provide instructions in the Application Form or via an Investment Instruction (if at a later time). You cannot arrange a direct debit from a third party account. The Administrator will not accept instructions from your Representative to set up a Regular Contribution Plan. You will need to provide an Investment Instruction in relation to how to apply any regular contributions. If you wish to change your financial instruction, then you must complete and lodge a new Direct Debit Request Form. The Administrator will not charge you a fee if you stop, change or reduce your Regular Contribution Plan at any time, and will require two Business Days notice to effect such a change. Receiving income, dividends or distributions All income from dividends and distributions will be received as cash and paid into the Cash Account (i.e. dividends/ distributions may not be reinvested back into the investment which generated the dividend/distribution). If a Model Portfolio generated the income then the income will be taken as cash and that cash will be paid into the relevant Model Portfolio that holds the security from which the dividend was received. Income from interest earned on the Cash Account (including interest on the cash from dividends) may be paid to the relevant Model Portfolio if that is the standing Investment Instruction. Withdrawing all or part of your Investment You can generally request a withdrawal from your Account at any time using the online form available from the Farnam Portal or by writing to the Administrator via fax or post and providing your client code, account name, the value to be withdrawn and the external account details to deposit the funds. Third party payment instructions will not be accepted. Withdrawals can be effected in the following ways (see below for further details on each option): a cash withdrawal as a direct deposit to your nominated bank account or financial institution; an In Specie Transfer; or a combination of an In Specie Transfer and cash/direct deposit. The Administrator will act on any withdrawal instruction that appears to have come from you and will endeavour to comply with your request promptly, subject to its ability to do so. Please be aware that the Constitution allows a period of 30 days for the Responsible Entity to act on a withdrawal request, and in some circumstances a longer period may apply. Once you or your Representative provides a withdrawal instruction, you must seek the Administrator s approval before revoking the Investment Instruction. Upon receiving an Investment Instruction to withdraw your total Account balance, Farnam Managed Accounts will deem your Investment Instruction to have been terminated and unless you have advised otherwise, and the Administrator agrees, your Account will be closed. Withdrawing cash To receive a cash payment from your Account, you are required to nominate a bank account into which all cash withdrawals are to be paid. Third party payment instructions will not be accepted. The Administrator will continue paying cash withdrawals into this account unless you request otherwise. The Administrator will not accept a variation instruction regarding your nominated bank account from your Representative. If it is necessary to sell, or redeem investments in order to satisfy your request to withdraw cash, then: Unless you instruct the Administrator otherwise, your investments will be sold or redeemed proportionately across your Account. The amount you will receive will be the price at which the investments are actually sold or redeemed, net of all fees, charges and expenses, including brokerage and other transaction costs. The sale/redemption of your investments in your Account will generally commence on the next Business Day following the receipt of your withdrawal request. The proceeds will generally be available within 24 hours of settlement of the sale of the investments. It is anticipated that settlement will in normal circumstances occur within four Business Days. Longer periods may apply, for example, in the case of the ex-distribution period of a Managed Fund, or Managed Funds offering limited liquidity. There may be delays in selling or redeeming assets due to factors beyond the Responsible Entity s and the Administrator s control, such as market conditions and the level of liquidity of the investments. See Risks on page 7 for details about Timing and Execution risks. The cash from selling your securities will accumulate until the full amount is available to be transferred into your nominated bank account. Please note that administration and other ongoing fees will apply to this cash balance whilst it remains in your Account. 14 Farnam Managed Accounts

21 In Specie Transfers Out If you no longer wish to hold your investments through Farnam Managed Accounts, then you may be able to transfer them out by requesting an In Specie Transfer, and hold them directly in your own name or through another structure or service. You must complete the relevant transfer form, indicating the name and number of securities to be transferred and the account number they are to be transferred into. Please note that a change in ownership (such as, for example, a transfer to a self-managed superannuation fund) will require the completion of an Australian Standard Transfer Form and may be a CGT event, so could have taxation consequences. A transfer fee may also apply (see fees and other costs on page 18 for details). You should obtain financial and taxation advice before deciding to transfer investments out of Farnam Managed Accounts. When the Administrator will not process withdrawals The Administrator may suspend withdrawals during periods in which there is closure or disruption of a relevant stock exchange or if other unusual circumstances outside of the Administrator s control persist. Notification of events such as this will be placed on the website at farnam.com.au as well as on the Farnam Portal. Other circumstances when the Administrator will not process your withdrawal request include the situation where a Managed Fund is frozen. This means the Fund Manager cannot or will not process withdrawals. Additionally, Investors should note the Constitution does not require the Administrator to act on your withdrawal request if it would mean your Account falls below the prescribed minimum balance. Alternatively, your request could be treated as applying to all assets or a class of asset you hold. A minimum balance requirement is not currently imposed. You will be provided with 30 days notice if a minimum balance requirement is imposed in the future. Regular Withdrawing You may request regular payments from your Account to be paid to a nominated bank account. This may be, a fixed amount every month, or a monthly payment of any dividend or distribution income that has been received into your Account over the preceding month. Regular withdrawal payments will normally be automatically credited to your nominated bank account as cleared funds on or around the 15th day of each month (or the nearest earlier Business Day). If you choose a regular payment from your Account then the Administrator will pay monthly payments from the cash balance of your Account. If there is insufficient cash in your Account, the Administrator will endeavour to still make your regular monthly payment. However, some of the investments in your Account will be sold to cover the withdrawals and to restore a cash component. This will result in an overall reduction in the value of your investment and there may be taxation consequences to you as a result of selling your investments in this way. For those Investors who elect to receive a monthly payment of any dividend or distribution income generated by their Account, then the total value of dividends and distributions received in the preceding month will be paid. It is important to note that the value of this income stream will vary from month to month in line with dividend and distribution payments and there may be some months in which no dividends or distributions are received into the Account. Therefore there will be no monthly payment to you. Also, you should note receipt of dividends or distribution income by an Investor would ordinarily be subject to tax in the Investor s hands. To request, vary or cancel a regular payment you should provide an Investment Instruction through the Farnam Portal. You can do this at any time, however, the request needs to be received by the Administrator s office at least four Business Days before the due date of the next income payment. Investment Instructions from your Representative to change the details about how withdrawal proceeds are paid to you will not be accepted. Farnam Managed Accounts 15

22 Reporting You can access consolidated portfolio reporting for your Account via the Farnam Portal once your Account has been opened. Applications will only be accepted from Investors who agree to receive their reports electronically. See the Online Terms and Conditions on page 31 for further details Account information Your Account will reflect the current position of your Account balance (including your cash balance) as at the close of the previous Business Day. The following information about your Account is available through your secure Farnam Portal login: your Account details including a list of the investments in your Account; the performance of your Account over varying periods; the value of your Account, updated daily; a list of your Cash Account transactions; any investment purchases and sales made on your behalf; details of distributions and dividends paid; any brokerage charged to your Account; any transaction fees charged; and any other fees, costs and other charges deducted from your Account, which include the costs of investing in Farnam Managed Accounts and the costs of the Investment Options you select. Audit report Each year, the Responsible Entity will obtain an independent auditor s report on the accounting systems and controls applied to Farnam Managed Accounts. A copy of this report will be made available via the Farnam Portal within three months of the financial year-end. Communications in relation to your underlying investment As the investments in your Account are held in the Custodian s name, the Administrator, via the Custodian, receives notices about corporate actions and other communications that relate to your investments. The Responsible Entity will, in conjunction with the relevant Investment Manager (if applicable), determine the best course of action for Investors in Farnam Managed Accounts as a whole regarding particular corporate actions such as takeovers, mergers and buybacks. What is best for Investors as a whole may not necessarily be best for an individual Investor. If you would like a copy of the communications received, then please contact the Administrator on The Constitution permits a fee for this service, however, the fee is currently waived for the life of this PDS (see fees and other costs on page 18). Investors should note that when the Administrator buys and sells/redeems assets for you, you will not be able to see the exact composition of your Account until these transactions have been finalised. There may be times when the delay is for a longer period at the Responsible Entity s, the Administrator s or the Investment Managers discretion. Tax reports Tax reports such as CGT information, an income summary, GST reporting, fees, and a tax summary are available from the Farnam Portal, at any time to assist you with your tax planning or in the preparation of your tax return. 16 Farnam Managed Accounts

23 Taxation The following taxation information in this PDS is intended as a guide only and should not be relied upon by Investors as specific taxation advice. The information is based on the Responsible Entity s understanding of the current Australian tax law and how it relates to Australian resident Investors who hold their investment for the purpose of realising a long term return, that is, hold their investment on capital account for tax purposes, and is current at the date of this PDS. Investors should be aware that laws and interpretations may change from time to time. Investors are advised to seek their own independent professional tax advice in relation to an investment in Farnam Managed Accounts, as taxation treatments may differ according to individual circumstances. Taxation of Farnam Managed Accounts Investors are the beneficial owners of all of the assets in their Account. Therefore, Farnam Managed Accounts itself does not pay tax. Any income or gain attributable to assets (e.g. securities) in your Account is deemed as having accrued directly to you. Tax on income Any income derived from your Account (e.g. dividends, interest, gains on the disposal of investments) is taxable. However, you may be able to offset part or all of any resulting tax liability if you receive tax credits (e.g. franking credits or foreign tax credits). Investors should seek their own independent professional tax advice, because there may be relevant exemptions. Through Farnam Portal online tax reporting, you can see the approximate tax credits generated by your Account. Tax on capital gains Disposal of investments in your Account may arise from your decision to make a withdrawal or switch between Model Portfolios or simply investment decisions made by an Investment Manager. These disposals may lead to a taxable gain or loss under the CGT provisions of the Income Tax Assessment Act. Tax reporting Each Account will receive a separate unique tax report containing the amount assessable for income tax, deductible expenses, and a summary of realised capital gains (showing both those eligible for a discount and those ineligible for a discount), and realised losses for the financial year. This information is relevant for the preparation of an Investor s tax return for that financial year. Farnam Managed Accounts independent auditor audits the accounting system and the controls applied to produce that summary. The audit report is provided with the taxation summary report each year. The taxation summary report is prepared on the assumption that Investors have a tax status as an Investor subject to the CGT rules (including exempt Investors) rather than as traders. Taxation of options Option activity gives rise to either a realised capital gain or loss when the position is closed. Since options generally have a life of less than 12 months, gains are not usually subject to any CGT discount. Foreign investments Generally speaking, foreign income (e.g. foreign dividends) is taxable in Australia with entitlement to foreign tax credit or withholding tax paid (if any) in the country from which the income is derived as an offset against Australian tax liability. Investors are advised to seek independent professional tax advice in this regard. Providing your Tax File Number (TFN) You are not obliged to quote your TFN, Australian Business Number (ABN), or exemption in the Application Form. However, if you provide neither, the Responsible Entity is obliged by Australian Tax Office requirements to deduct tax from any income received on your behalf at the highest marginal rate plus the Medicare levy. Goods and Services Tax (GST) GST will be charged on, or incorporated into, various fees and expenses paid in relation to Farnam Managed Accounts, including the fees charged for managing the Model Portfolios and administering Farnam Managed Accounts. All fees quoted in this PDS are inclusive of GST. Farnam Managed Accounts 17

24 Fees and other costs 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 ( has a managed investment fee calculator to help you check out different fee options Fees and costs This section shows fees and other costs that you may be charged. Under the Constitution, these fees are payable to the Responsible Entity. You should be aware there may be other costs or expenses you pay for the particular Investment Option you select. These fees and costs may be deducted from your money, from the returns on your investment or from Farnam Managed Accounts assets as a whole. Taxes are set out on page 17. You should read all of the information about fees and costs because it is important that you understand their impact on your investment. Fees and costs for particular Investment Options are set out in the relevant Investment Option s Disclosure Document. All fees are quoted inclusive of GST. Type of fee or cost Amount How and when paid Fees when your money moves in or out of Farnam Managed Accounts Establishment Fee The fee to open your investment. Contribution Fee The fee on each amount contributed to your investment. Withdrawal Fee 1 The fee on each amount you take out of your investment. Termination Fee 2 The fee to close your investment. Nil Nil Nil Nil Not Applicable Not Applicable Not Applicable Not Applicable 1. See heading Transaction fees in the Additional explanation of fees and costs section as a transaction fee may apply. 2. No termination fee is payable, however any fees and costs accrued but not yet paid would be deducted from your Account prior to the investments in your Account being transferred out. Also, transaction fees or expenses may be payable on the sale of any assets. 18 Farnam Managed Accounts

25 Type of fee or cost Amount How and when paid Management Costs: The fees and costs for managing your investment. Administration Fee 3 The fee for operating the Farnam Managed Accounts. Model Portfolio & Self Directed Investments 0.44% pa from $0 to $250, % pa from $250,001 to $500, % pa from $500,001 to $1,000, % pa for amounts above $1,000,001 Note: subject to a minimum monthly fee of $36.50 See page 21 for further detail. Deducted from your Account monthly in arrears, calculated on a daily basis, based on the daily balance of your Account. Model Portfolio of Managed Funds If you select a Model Portfolio of Managed Funds, then you pay a Model Portfolio fee of 0.25% p.a. of the investment amount which is deducted from your Account monthly in arrears, calculated based on the average daily market value of the assets in the Model Portfolio(s) during the month. Dynamic Trading Strategy Option If you select a Dynamic Trading Strategy in conjunction with a Model Portfolio investment, then you pay an investment management fee of 0.55% p.a. of the investment amount which is subject to the Dynamic Trading Strategy. This fee is calculated daily and deducted from your Account monthly in arrears. It is charged by the Responsible Entity in addition to the Model Portfolio investment fee that the Investment Manager charges. Not payable on other Self-directed Investments. Account keeping fee The fee for operating your Account. Custodian Fee The fee charged by the Custodian that holds securities in safekeeping for an Investor. $1.76 per Account per week. Deducted from your Account at the end of each week, in arrears % p.a. of the net asset value of your Account. Deducted from your Account monthly in arrears and the whole amount paid to the Custodian, calculated based on the average daily market value of the assets in your Account during the month. Investment Fee 4 The amount you pay for investing in a professionally managed Investment Option. Each Investment Option which is professionally managed has its own investment fee structure which may range from nil to 2.50% p.a. of net asset value. Please refer to the Investment Menu for details. Investment Option The responsible entity of the Managed Fund calculates and deducts its fee as described in the relevant Disclosure Document. 3. The Administration fee is tiered. Family grouping may apply. See the Additional explanation of fees and costs section for further details. 4. Refer to Investment Fees in the Additional explanation of fees and costs section for more details. Farnam Managed Accounts 19

26 Type of fee or cost Amount How and when paid Performance Fee The fee payable for the investment performance of a Model Portfolio or Managed Fund. Transaction Fees 5 The amount you pay to the Responsible Entity for processing transactions. Each Model Portfolio and Managed Fund has its own fee structure and performance fees may be up to 30% of the outperformance over a selected benchmark or a high water mark. No performance fees are payable on Model Portfolios of Managed Funds. Please refer to the Investment Menu for details. Model Portfolios Listed ASX & International securities transactions % of the value of the transaction Derivatives % of the value of the transaction Self directed Investments Listed ASX & International securities transactions - the greater of $33 or 0.33% of the value of the transaction Derivatives - the greater of $35 or 0.5% of the value of the transaction Managed Funds - $11 per transaction Model Portfolio The performance fee, if applicable, is deducted from your Account monthly in arrears and paid to the Investment Manager. Managed Fund The performance fee, if applicable, is calculated and deducted by the responsible entity of the Managed Fund as described in the relevant Disclosure Document. Not payable on other Self-directed Investments. Deducted from your Account at the time of the transaction when you make a purchase via your Account, or if you are selling then the fee is deducted from the proceeds of sale. Transaction Fees are not payable if an In Specie Transfer Fee applies. Transaction fees payable include the costs of brokerage unless otherwise specified. In specie Transfer Fees The amount you pay for transferring certain managed funds in to your Account. $33 per transfer If you request an In Specie Transfer into your Account of a managed fund investment not listed on the Investment Menu, then this amount is deducted from your Account at the time of the transaction. Service Fees 6 Investment Switching Fee 7 The fee for changing Investment Options. Nil Not applicable. 5. See heading Transaction fees in the Additional explanation of fees and costs section for further details. 6. Adviser service fees include an amount agreed on an ongoing basis. Refer to Adviser Service Fees in the Additional explanation of fees and costs for further details. 7. Transaction Fees may apply if you buy and sell investments. See heading Transaction fees for further details. 20 Farnam Managed Accounts

27 Additional explanation of fees and costs The total fees and charges you will pay will include all of the costs of investing through Farnam Managed Accounts plus any amounts relating to your chosen Investment Option. It is important that you understand there may be fees relating to the investments you choose, and that those fees are in addition to the fees charged by the Responsible Entity for Farnam Managed Accounts. There may also be transaction and account costs incurred on your behalf which are recovered from your Account. Please refer to the Investment Menu for details about the fees and costs associated with each Investment Option. All fees and costs outlined in this section are inclusive of GST unless otherwise specified. Management costs Administration fee The administration fee is charged to cover the costs of administering Farnam Managed Accounts. The fee accrues on a daily basis and is payable monthly in arrears on the aggregate value of the assets (including cash) standing to the credit of your Account. The fee is deducted from your Account following the end of the calendar month. The Administrator may apply family grouping when calculating the administration fee. This means that the fee is levied on the balance of all Accounts across a family group. The fee is then charged to those Accounts on a proportionate basis, and may result in an overall reduction of the administration fee charged to each Account. You can arrange for accounts to be grouped by contacting the Administrator, however please note the Administrator reserves the right to apply family grouping at its discretion. The administration fee is subject to a minimum monthly fee of $36.50 per calendar month ($ p.a.) and is calculated on a reducing tiered scale, based on a percentage of your daily Account balance, illustrated below: Account keeping fee The fee is charged to cover the costs of administering your Account. The fee is $1.76 per Account per week, to be deducted at the end of each week. Custody fee The custody fee is 0.013% p.a. of the net asset value of your Account, calculated based on the average daily market value of the assets in your Account during the month (i.e. $6.50 p.a. for an Account balance of $50,000). This fee is charged to cover the costs of the Custodian. The fee is deducted from your Account monthly in arrears and the whole amount paid to the Custodian. In Specie Transfer fees Transfer fees for Managed Funds If you request a In Specie Transfer of an existing investment in a Managed Fund into or out of your Account then the Administrator will charge a fee of $33 per Managed Fund and this will be deducted from your Account at the time of the In Specie Transfer. The Investment Option manager may apply other fees, for example, a contribution fee (see page 27). There is no transfer fee for an In Specie Transfer out of your Account. Also, if you pay a transfer fee then you are not subject to transaction fees, as described below. Transaction fees Transaction fees are for processing transactions. The fees generally cover the expenses associated with the transaction, such as brokerage, unless specified otherwise. The fee is added on to the amount applied to settle a purchase, (and fee amount is deducted from your Cash Account), or deducted from the proceeds of sale. The fees and expenses differ depending on whether your investment is via a Model Portfolio or is a Self-directed Investment. Account Balance Fee (% p.a.) Max Tier Fee ($ p.a.) Max Cumulative Fee ($ p.a.) $0 to $250, $1,100 $1,100 $250,001 to $500,000 $500,001 to $1,000, $825 $1, $600 $2,525 Thereafter 0.11 Note: The tiered scale is subject to a minimum monthly fee of $36.50 ($438 p.a.). This minimum monthly fee applies to all Account balances up to $99,545. For account balances over $99,545 the administration fee is calculated on the tiered scales set out in the table above applied to the Account balance. Farnam Managed Accounts 21

28 Model Portfolios If you invest in Model Portfolios, then the Administrator will follow the instructions of the Investment Manager to buy and sell securities on your behalf. The Responsible Entity s fees and the estimated expenses to be deducted from your Account per transaction are as follows: Model Portfolio Investment Transaction fee Other expenses (estimate) Worked example of $50,000 in Model Portfolio ASX Securities 0.33% of the value of the transaction amount Nil $ Managed Funds $11 per transaction Nil $11.00 International Equities Derivatives Any other 0.33% of the value of the transaction amount 0.44% of the value of the transaction amount 0.275% of the value of the transaction amount Nil $ Nil $ Nil $ Self-directed Investments The fees and an estimate of expenses per transaction are as follows: Self-directed Investment Transaction fee Other expenses (estimate) Worked example of $50,000 in Self-directed Investment ASX Securities 0.33% of the value of the transaction amount Nil $ Managed Funds $11 per transaction Nil $11.00 International Equities Derivatives Any other 0.33% of the value of the transaction amount 0.5% of the value of the transaction amount 0.275% of the value of the transaction amount Nil $ Nil $ Nil $ Investment fees Where you have selected a Model Portfolio or Managed Fund, the Investment Manager or Fund Manager will apply their own fee structure to the Model Portfolio or Managed Fund they manage. These are costs associated with the underlying investments and are deducted from your Account. Please refer to the Investment Menu or relevant Disclosure Document for specific details about the fees and costs associated with each type of investment. Briefly, the investment fees are as follows: I. Model Portfolios the fee is generally deducted monthly in arrears and is calculated daily based on the aggregate value of the funds invested in the Model Portfolio. The fee is not linked to the performance of the Model Portfolio. If your Model Portfolio includes Managed Funds the investment fee charged by the Fund Manager of the Managed Fund will be in addition to the Model Portfolio fee of 0.25% per annum. Please refer to the Investment Menu for details of each Model Portfolio s investment fee. II. Managed Funds the investment fee will be calculated and deducted as described in the relevant Disclosure Document. The deduction of the fee will generally be reflected in the unit price for the Managed Fund. An example of how a Managed Fund investment fee operates is found on page Farnam Managed Accounts

29 III. Dynamic Trading Strategies If you request a Dynamic Trading Strategy, such as Capital Preservation, to be applied to your Model Portfolio then the Administrator will charge a fee of 0.55% p.a. (inclusive of GST) of the total amount to which Capital Preservation applies. This fee is calculated daily and charged monthly in arrears. For example, if the amount to which Capital Preservation applied was $50,000 (i.e. the value of the assets and cash in the Model Portfolio) then the fee charged would be $275 p.a. If you request Dynamic Trading Strategies then you will also pay the investment management fee and performance fee charged by the Investment Manager in respect of the Model Portfolio. There will also be transaction fees that result from the constant rebalancing of your investment. Performance fee for Model Portfolio Model Portfolio performance fees are calculated after the deduction of any applicable investment fees and before any administration fees or adviser service fees and are payable only where the outperformance is still positive net of any such fees. Performance fees are subject to a Model Portfolio outperforming a benchmark or a high water mark. This prevents the Investment Manager(s) levying fees more than once if a Model Portfolio rises then falls then rises again, ensuring the Investment Manager is only rewarded for fresh outperformance. Any underperformance of the Model Portfolio from the high water mark is carried forward and the underperformance must be recouped before a performance fee can be charged for a subsequent outperformance. Performance fees Some investments accessible through Farnam Managed Accounts may attract a performance fee. This is not a fee payable to the Responsible Entity, instead the fee is deducted from your Account and paid to the Investment Manager or Fund Manager as applicable. For example: I. Model Portfolios Details about which Model Portfolios attract a performance fee are set out in the Investment Menu. Also, see below for further details and a worked example. II. Managed Funds If a performance fee is charged, then it will be calculated and deducted as described in the relevant Disclosure Document. The deduction of the fee will generally be reflected in the unit price for the Managed Fund. Please refer below and to the Disclosure Document of the relevant Managed Fund Investment Option for more detail. The performance fee is client-specific rather than Model Portfolio specific. This means that as Investor s circumstances vary in terms of entering and exiting Model Portfolios, it is possible that two or more Investors may be charged different performance fees despite being invested in the same Model Portfolios. Please refer to the Investment Menu for information on whether your chosen Model Portfolio will apply a performance fee. Managed Fund performance fees The Investment Manager of an underlying Investment Option may charge or incur performances fees. These fees are arrangements where the Investment Manager (and any other Investment Manager they may appoint) of the underlying Investment Option, may earn additional fees if the investment performance of the underlying Investment Option they manage or operate exceeds specified criteria or benchmarks. The amount of any performance fee will vary and it is not possible to state future performance fees as these depend on the performance that the Investment Manager of the underlying Investment Option achieves. Farnam Managed Accounts 23

30 Worked example of performance fee for Model Portfolio The following table shows how a performance fee would be calculated for an Investor with an initial contribution of $49,000 and initial Model Portfolio weights of 50% into Model Portfolio A and 50% into Model Portfolio B. For illustration purposes only, the example assumes floating weights and that no investment fee is charged for either Model Portfolio. The performance fee is payable on a monthly basis, but for simplicity, only three days are shown in the example with no prior performance applicable to either Model Portfolio. No performance fees are payable on Model Portfolios of Managed Funds. Performance Fee Calculation Example Model A Model B Value of allocation to each Model Portfolio $24,500 $24,500 Model Portfolio performance for Day % 1.00% Benchmark performance for Day % 0.80% Value attributed to Model Portfolio - close of Day 1 $24, $24, Model Portfolio performance - (value added) Day 1 $ $ Benchmark performance - value Day 1 $ $ Out-performance (value added) Day 1 Base for performance fee at close of Day 1 ($36.75) ($36.75) $49.00 $49.00 Model Portfolio performance for Day % 0.75% Benchmark performance for Day % 0.90% Value attributed to Model Portfolio - close of Day 2 $24, $24, Model Portfolio performance - value added Day 2 $ $ Benchmark performance (value added) Day 2 Out-performance (value added) Day 2 $86.31 $ $ ($36.67) Base for performance fee at close of Day 2 $ $12.33 Model Portfolio performance for Day 3 (2.00%) 1.00% Benchmark performance for Day 3 (1.14%) 0.20% Value attributed to Model Portfolio - Close of Day 3 $24, $25, Model Portfolio performance - (value added) Day 3 ($497.37) $ Benchmark performance - value Day 3 ($282.10) $49.84 Out-performance (value added) Day 3 Base for performance fee at end of Month ($215.27) ($92.10) $ $ Overall value added for the Period ($92.10) $ performance fee payable (11% inc GST) $0.00 $23.30 Loss carried forward ($92.10) $ Farnam Managed Accounts

31 Payments to your financial adviser Adviser Service Fees You may agree with your financial adviser to pay an Adviser Service Fee. You and your financial adviser will determine the amount or percentage of the Adviser Service Fee that will apply and note this on the Application Form or in the Investment Instruction, as applicable. The Adviser Service Fee may be: a fixed-dollar amount deducted from your Account monthly in arrears; or an annual percentage (as agreed with your financial adviser) of the value of your Account, which includes the value of any cash and other investments held, such as securities (calculated on the closing value on a daily basis). If instructed by you, the Adviser Service Fee will be deducted from your Account and paid on your behalf. Where the Adviser Service Fee is a monthly or annual fee, then the Adviser Service Fee will be calculated daily, based on the closing value of your Account over the month and will be deducted monthly in arrears from the available cash allocations of each Account. The Adviser Service Fee will continue to be paid until you advise otherwise in writing. The amount deducted will be inclusive of GST. You should seek taxation advice about the taxation implications and the deductibility of these payments. Adviser Transaction Fees You may agree with your financial adviser to pay an Adviser Transaction Fee in respect to transactions in ASX Securities, International Securities, Derivative Securities and unlisted products. You and your adviser will determine the percentage and/or minimum dollar amount that will apply and note this on the Application Form. If instructed by you, the Adviser Transaction Fee will be deducted from your Account and paid on your behalf. The amount deducted will be inclusive of GST. You should seek taxation advice about the taxation implications and the deductibility of these payments. Incidental Fees CGT reconstruction fee You may transfer eligible Australian securities or other investments into your Account. If you are unable to provide Capital Gains Tax details for securities or other investments, the Administrator may need to reconstruct those details in order to enable you to use the tax reporting features, and to adopt the tax parcel accounting method for later dealings. In that case, a fee may apply for reconstructing the capital gains tax records of your investments, which will be advised to you at the time of your transfer. Expense recoveries The Administrator currently recovers certain expenses from individual Investor Accounts on a user-pays basis. For example, depending on the Investment Option(s) you select, amounts may be deducted from your Account for the following: Investment management and (in some circumstances) performance fees. Transaction costs for some types of investments (such as brokerage and execution costs on international equities). Bank charges and government taxes such as stamp duty, if applicable. Under the Constitution, the Responsible Entity also has a general right to be reimbursed for all losses, damages and costs incurred in the course of its administration of Farnam Managed Accounts, which it can allocate proportionately across all Accounts based on the value of assets in each Account. The Responsible Entity does not currently exercise its right to be reimbursed in this way, however, it reserves the right to do so at a future time. Maximum fees or waived fees The Constitution entitles the Responsible Entity to charge the following fees (exclusive of GST): Account keeping fee up to $2.50 per Account per week Administration fee up to 4% p.a. of the aggregate value of the assets in an Investor s Account calculated on a daily basis. Lower administration fees are charged as stated in the table on page 19 of this PDS. Investment fee up to 4% p.a. of the aggregate value of the assets attributable to a Model Portfolio. The Responsible Entity waives part or all of this fee, or you may just pay a cost recovery for the underlying manager s fee, depending on the Investment Option you select. Withdrawal fee up to 2% of the value of the assets the subject of a withdrawal request. This fee has been waived however note transaction fees are payable when you withdraw all or part of your investment. Derivative issuer fee a fee of up to 1% of the notional value of an over-the-counter derivative contract while the contract is in place. Currently, the Responsible Entity waives this fee for the life of this PDS. Performance fee the Responsible Entity has the ability to charge a performance fee of up to 50% of the amount of the outperformance of a Model Portfolio in excess of its most recent high water mark. Dynamic Trading Strategy Investment fee the Responsible Entity has the ability to charge an investment fee of up to 4% p.a. of the aggregate value of the assets attributable to a Dynamic Trading Strategy, calculated on a daily basis. A lower fee is currently charged as stated in the table on page 19 of this PDS. Farnam Managed Accounts 25

32 Cash holdings fee up to 1% p.a. of the value of all cash holdings in Farnam Managed Accounts. This fee has been waived for the life of this PDS. Finance arrangement fee when the Responsible Entity arranges a margin loan or any other finance facility, then it may charge up to 1% of the maximum limit of the facility or loan. This fee has been waived for the life of this PDS. In Specie Transfer fee up to $100 for each In Specie Transfer to or from an Investor (or its nominee) as a processing fee. The Responsible Entity will only charge a fee of $33 and only on transfer in of certain managed funds which are not listed on the current Investment Menu for the life of this PDS. Transaction fee a fee for processing any transaction of financial products to a maximum amount equal to the greater of $35 or 0.50% of the value of the assets the subject of the transaction. The Responsible Entity currently charges less than this amount. See the Transaction fees on page 20 for details. Dishonour fee up to $25 for each payment which is dishonoured or rejected. This fee has been waived for the life of this PDS. Communications fee a fee of up to $25 per copy of each communication the Responsible Entity (or its nominee) sends to an Investor. This fee has been waived for the life of this PDS. Switching fee a fee of up to $50 per request to change the allocation of any money or assets. This fee has been waived for the life of this PDS but please be aware transaction fees apply. Custody fee if the Responsible Entity should act as Custodian and hold any of the assets of Farnam Managed Accounts, then it may charge a fee of up to 0.50% p.a. of the value of the assets it holds. Variation of fees Under the Constitution, the Responsible Entity may waive, reduce or refund any part of the fees specified in this PDS. The Constitution sets out the limits for the fees that the Responsible Entity may charge and the method of recovery, the recurrence of the recovery and the timing of the recovery of the fees. If a change in fees results in an increase in fees or costs, then the Responsible Entity will give notice to Investors 30 days before the change takes effect. Taxes The Administrator may charge taxes to your Account. See the Taxation in this PDS, on page 17 for more details. Service provider arrangements Up until 30 June 2013, incentives may continue to be offered to your financial adviser or other intermediaries, as determined by, and paid for, by the Responsible Entity. From 1 July 2013, substantive parts of the legislation known as the Future of Financial Advice ( FoFA legislation ) commence operation. The FoFA legislation contains provisions which regulate, and in some cases prohibit, payments to financial advisers and intermediaries by product issuers. After commencement of the FoFA legislation, any new arrangement to make payments or provide incentives to financial advisers and intermediaries will be entered into in compliance with the FoFA legislation. Differential fees In accordance with the Corporations Act and ASIC policy, the Responsible Entity may individually negotiate or rebate fees with Investors classed as wholesale or professional Investors. 26 Farnam Managed Accounts

33 Example of annual fees and costs for Model Portfolio This table gives an example of how the fees and costs for Farnam Managed Accounts can affect your investment over a 12-month period. You should use this table to compare this with other managed investment products and administration platforms. Example Model Portfolio Management Costs 2 Balance of $100,000 1 with a contribution of $5,000 during the year. For every $100,000 you have in Farnam Managed Accounts you will be charged fees of up to $1, each year. Equals Cost of investment in Farnam Managed Accounts If you had an investment of $100,000 at the beginning of the year and you put in an additional $5,000 during that year 3, you would be charged fees of $0 to $1, The cost of Model Portfolios, making investments and Investment Manager s fees are additional to these costs. You must also add the fees you negotiate with the Responsible Entity or your financial adviser. 1. This example assumes $100,000 in a Model Portfolio and $1,000 in cash. 2. The Management Costs are made up of: (a.) Account keeping fee of $1.76 per week = $91.52; plus (b.) Custody fee of $100,000 x 0.013% p.a. = $13.00 (c.) Investment management fee (paid to Farnam Investment Management as Investment Manager of the Model Portfolio [$100,000 x 0.88% p.a. = $880.00]); plus (d.) Administration Fee (fee paid to the Responsible Entity) $100,000 x 0.44% p.a. = $ each year. 3. This example does not take into account any returns. It also does not take into account any transaction fees and assumes you put in an additional $5,000 at the end of the year. 4. Additional Fees may apply. For example, you may choose to pay an Adviser Service Fee (as a % agreed with your financial adviser) of your Account balance. Example of annual fees and costs for a Managed Fund 1 This table gives an example of how the fees and costs for investing in a Managed Fund (available on the Investment Menu) can affect your investment over a 12 month period. The example Managed Fund below is the Australian Unity Investments Platypus Australian Equities Trust Wholesale Units (Trust). You should use this example to compare this with other managed investment products. TRUST Balance of $50,000 with a contribution of $5,000 during the year Contribution fee 2 Nil For every $5,000 you put in you will be charged $0 Plus Plus Management Costs % p.a. plus performance fees 4 For every $50,000 you have in the Trust Investment Option you will be charged fees of $475 each year, plus performance fees. Equals Cost of investment in Farnam Managed Accounts If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year 4, you would be charged fees of $0 to $475. What it costs you will depend on the Managed Fund(s) you choose and the fees you negotiate with the Responsible Entity or your financial adviser. 1. This example does not take into account Farnam Managed Accounts administrative fees or any returns. The example assumes you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 at the end of that year, and that a performance fee was not payable during that year. A buy/sell spread may apply to the purchase of units in the Trust Investment Option. 2. At the date of this PDS, there is no underlying contribution fee for the Trust Investment Option. 3. At the date of this PDS, the underlying management cost for the Trust Investment Option is 0.95% p.a. 4. Please refer to the underlying disclosure for the Trust Investment Option for details of how the performance fee operates. Note: The above examples are reasonable estimates only, and are provided by way of illustration to show the total price paid in acquiring the investments through Farnam Managed Accounts. The actual amount you will pay may vary compared to these examples, and will depend on various factors, such as the actual investment balance, and the fees and costs charged by the relevant Investment Option. Your financial adviser can provide more information about fees and costs and an estimate of what you will pay in relation to your Account. Farnam Managed Accounts 27

34 Additional Information Structure of Farnam Managed Accounts An investment through Farnam Managed Accounts is an investment in a registered managed investment scheme. The name of that managed investment scheme is Federation Managed Accounts. You have rights and protections similar to investors in other managed investment schemes. However, Farnam Managed Accounts is different from a unit trust in that, instead of units, Investors acquire an interest in Farnam Managed Accounts when they invest, i.e. Investors become a member of the managed investment scheme but each Investor has a separate Account to which their investments are allocated. Your Account is administered only in accordance with your Investment Instructions. Any investments are made in the name of the Custodian however each Investor is the beneficial owner of the assets which appear in their Account. Each Investor is fully responsible for any liabilities that arise in respect of their selected investment. In this way, it is an indirect investment, similar to a custodial arrangement or service available through a wrap account or other investor directed portfolio service. An indirect investor s rights are different from the rights they would have if they had invested directly. The rights relating to the underlying investments are held and exercised by the Custodian on your behalf, for example, the right to vote, receive income and to receive information and communications in relation to your underlying investments (see Reporting on page 16). ASIC relief To operate Farnam Managed Accounts, the Responsible Entity relies on ASIC Class Order 02/296 Investor directed portfolio-like service provided through a registered managed investment scheme. This class order gives relief from some of the fund raising and disclosure requirements of the Corporations Act provided the Responsible Entity complies with certain conditions, including providing you with regular reports about your investment in Farnam Managed Accounts. No cooling off period There are no cooling off rights in relation to an investment in Farnam Managed Accounts as the Responsible Entity relies on the relief provided in ASIC Class Order 02/296. If you wish to withdraw from Farnam Managed Accounts then the Administrator must take reasonable steps to realise your investment and return your money. However, fees and other costs may apply and also the value of the investments may have changed meaning that you may receive an amount less than your Application Money. The procedures to withdraw all or part of your investment are set out on page 14 of this PDS. Constitution The Constitution and the Corporations Act (as varied by ASIC Class Order 02/296) govern the rights of an Investor. The Constitution is the primary document governing the relationship between the Responsible Entity and Investors and contains extensive provisions about the legal obligations, rights and powers of both the Investors and the Responsible Entity. It provides that the assets of each Account are vested in, and held by, the Responsible Entity or any appointed Custodian, on behalf of each Investor for whom an Account has been established. It includes broad powers for the Responsible Entity to carry out its duties and deal with the assets, including the right to fees and reimbursement of expenses, details about how it must comply with Investment Instructions and in what circumstances it is not obliged to act. The Constitution also details the Responsible Entity s entitlement to be indemnified out of the assets held through Farnam Managed Accounts for all liabilities, costs, damages or expenses incurred in connection with its office, or in prosecuting or defending any action in respect of a provision of the Constitution. The liability of the Responsible Entity is limited to the extent of the assets of Farnam Managed Accounts (including the assets of an Investor s Account), except to the extent there has been any fraud, negligence or breach of trust by the Responsible Entity. The absolute beneficial entitlement of Investors to the assets in their Accounts is set out in the Constitution. The liability of Investors is limited under the Constitution to the value of their investment. However, the question of limited liability for investors in managed investment schemes has not been tested in a court of law. All Investors are bound by the Constitution, and any amendments. A special resolution of Investors at a properly convened meeting is required to amend the Constitution, unless the change does not adversely affect the rights of Investors. Upon request, you (or your financial adviser) can obtain a copy of the Constitution. Compliance Plan and Compliance Committee The Compliance Plan outlines the principles and procedures which the Responsible Entity will invoke to ensure that it complies in all respects with the provisions of the Corporations Act, ASIC policy, and the Constitution. The Compliance Plan deals with an extensive range of issues in relation to the operation of Farnam Managed Accounts. A Compliance Committee, consisting of members who are internal and external to the Responsible Entity has been established. The Compliance Committee is responsible for monitoring compliance with the Compliance Plan and reports on its findings to the Responsible Entity s Board. 28 Farnam Managed Accounts

35 Custodian agreement An appropriately authorised and experienced Custodian has been appointed to hold all assets in Farnam Managed Accounts and the custodian agreement requires the Custodian to deal with the assets only as instructed by the Responsible Entity. The Custodian may only act in accordance with the terms of the custodian agreement and has no liability (including for negligence or breach of trust) or responsibility to members of Farnam Managed Accounts for any act or omission in accordance with proper instructions or otherwise, in accordance with the terms of the custodian agreement. Under the custodian agreement the Custodian may appoint a sub-custodian to hold all or some of the assets with the Responsible Entity s consent. The custodian agreement may be terminated by either party issuing a termination notice in accordance with the custodian agreement. The Custodian has not authorised or prepared this PDS and is not its issuer and takes no responsibility for the accuracy of any representation made in any part of this PDS. Complaints handling policy The Responsible Entity takes complaints seriously and aims to resolve them as quickly as possible. If you would like to make a complaint you can call the Administrator on us at managedaccounts@farnam.com. au or write to us at the following address: Farnam Managed Accounts Administrator PO Box 482 Collins Street West VIC 8007 The Responsible Entity will promptly acknowledge your complaint generally within 10 business days, investigate it and decide in a timely manner what action needs to be taken. The Responsible Entity will notify you of its decision within 45 days after receipt of the complaint, together with any remedies that are available, or other avenues of appeal against the decision. If you are then not satisfied with the Responsibility Entity s handling of your complaint, you may contact: Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Phone: Fax: (03) Website: fos.org.au info@fos.org.au This service operates as an independent body for the industry, to determine unresolved complaints. There is no cost to you for using this service. Privacy The Responsible Entity and the Administrator collect your personal information for the following purposes: to administer and provide products and services and to manage the relationship with you; to process transactions, to answer queries and for security purposes; to develop products and services; and to allow the Australian Unity Group to market products and services to you (subject to your right to opt-out of receiving various direct marketing materials at any time). In managing your Account, your personal information may need to be disclosed to: your financial adviser, either directly or through other service providers which the Responsible Entity may have arrangements with; reputable service providers who may carry out functions associated with our products and services on our behalf (e.g. mailing houses who conduct mailings for us); our financial institution to initiate the drawing from or payment to your nominated account (where you have selected the direct debit or credit facility); and a third party, as required by law. You are entitled to access information held about you. You should notify the Administrator immediately if any of the information held about you changes, so as to ensure that your information is always complete, accurate and up to date. If you do not provide the information requested on the Application Form, your Application request may be unable to be processed. If a financial adviser s details appear on the Application Form, you authorise the Responsible Entity and the Administrator to give information relating to your Account and investments to your financial adviser and acknowledge that your financial adviser is your agent for the purpose of receiving this information. The Privacy Policy can be found at: farnam.com.au If you have any complaints or questions about the privacy of your personal information, please contact the Responsible Entity s Privacy Officer by writing to: Farnam Managed Accounts Administrator PO Box 482 Collins Street West VIC 8007 If your complaint is not addressed to your satisfaction, you may write to the Privacy Commissioner at: Office of the Federal Privacy Commissioner GPO Box 5218 Sydney NSW 2001 Farnam Managed Accounts 29

36 Consents of named parties Each of the parties named in this PDS has given its consent to be named in this PDS in the form and context in which it is named. Each of the parties other than the Responsible Entity has not caused the issue of this PDS and does not make, nor purport to make, any statement in this PDS. Each of the parties has not, before the issue of this PDS, withdrawn its consent to be named. Each of the parties expressly disclaims and takes no responsibility for any part of this PDS other than the reference to its name. Related Parties All transactions the Responsible Entity enters into in relation to Farnam Managed Accounts, including those with related parties, are on arm s length commercial terms. Entities within the Australian Unity Group may provide registry, accounting, asset management and tax services in relation to Farnam Managed Accounts for fees charged at a commercial rate. Policies and procedures are in place to manage the risk of any actual or perceived conflict of interest as a result of a related party transaction. Related party transactions with Australian Unity Group entities are reviewed and approved by senior management with clearly identified governed policies and guidelines. Details of material related party transactions can be found on our website: farnam.com.au. Related party arrangements Fees to Federation Alliance Limited for their services will be paid by the Responsible Entity out of the fees it receives. Labour standards or environmental, social or ethical factors Unless otherwise stated in the relevant Disclosure Document, the Investment Managers and Fund Managers whose products are offered through Farnam Managed Accounts do not take into account labour standards or environmental, social or ethical considerations in relation to investment decision-making relating to their Mandates or investment strategies. Continuous disclosing entity Farnam Managed Accounts is a disclosing entity under the Corporations Act and is therefore the subject of regular reporting and disclosure obligations, including obligations to disclose when an important event occurs. Any reports and disclosures of important information will be lodged with ASIC and can be obtained from ASIC. Copies will also be provided to Investors via the Farnam Portal or . Margin lending It may be possible to invest in Farnam Managed Accounts using a margin lending facility, if approved by the Responsible Entity. If you wish to make an application for a margin lending facility, then you should complete the relevant forms which should be available by contacting your financial adviser. If your Application to invest in Farnam Managed Accounts using a margin lending facility is approved by the margin lender you selected, then (subject to the Responsible Entity s consent), you or your Representative (if applicable) will be able to apply funds drawn down from your margin loan to your Account. If you choose to fund your Account using a margin lending facility, all or part of the investments in your Account are used as security for the facility. The Responsible Entity does not enter into a lending agreement with the margin lender as a means of providing this security. The margin lender s interest is limited to your Account balance only, and it is not entitled to any recourse against assets in other Investors Accounts. A margin lending facility will be subject to additional risks not set out in this PDS. You should discuss this in detail with your financial adviser before considering taking a margin loan. 30 Farnam Managed Accounts

37 Authorisations Investment authority to Responsible Entity By becoming an Investor in Farnam Managed Accounts you are deemed to be authorising the Administrator to make investments on your behalf in accordance with the Investment Instruction(s) that you or your Representative provide. Under this authority, your contributions will be invested by buying or selling/redeeming investments according to your instructions, or if you invest in Model Portfolios then investments will be pursuant to changes made to your selected Model Portfolio(s) by the Investment Managers. An instruction to change the composition of your Account from you or from your Representative on your behalf will be accepted and will be acted on, subject to the discretions in the Constitution and described in this PDS. By investing in Farnam Managed Accounts, you are providing a standing authorisation to pay funds into and withdraw funds from your Account in accordance with Investment Instruction(s) from you or your Representative and also to make payments for settlement of trades and related fees. This authorisation continues until you withdraw from Farnam Managed Accounts. Please refer to the Application Form for further details about the authority provided to the Administrator. Online Terms and Conditions When your Account is activated you will be provided with access to the Farnam Portal via a password and user ID. The Responsible Entity will not generally be liable for any loss incurred by you if your password is used by someone without your authority, except to the extent that such liability is attributable to the Responsible Entity s negligence. However, you need to be aware that, when accessing your Account by entering your password, you discharge, release and agree to indemnify the Responsible Entity from and against all proceedings, actions, liabilities and claims arising out of the use of your password. Investors should take care to store their password separately from their Account records. Your Farnam Portal will show the date and details of each transaction made for your Account, including the amount paid for the securities and any associated fees, costs and charges that have been deducted from your Account. Model Portfolio values, including cash balances, are current as at the end of the previous Business Day, allowing you and your financial adviser to more accurately manage your tax positions. Please note that all positions may at times be subject to delay. Online and fax instructions Investors should note that there is a risk persons with access to your Account details may provide fraudulent or other unauthorised instructions. Therefore, you agree to indemnify and release the Responsible Entity from all potential actions and liabilities arising from us acting on what appeared to be genuine instructions from you or from your Representative on your behalf. Appointment of a Representative When you invest in Farnam Managed Accounts you may appoint a Representative (generally your financial adviser) who can provide instructions to the Administrator on your behalf. To appoint a Representative and authorise the provision of information to your Representative about your Account, you must complete and sign the relevant section of the Application Form. The appointment of a Representative is subject to the following terms and conditions. Your Representative will be permitted to: Make Applications on your behalf, with the exception of setting up a Regular Contribution Plan or changing the nominated bank account for withdrawals. Transmit your requests relating to your Account and all investments of your Account including (without limitation), making additional investments or withdrawals from your Account, changing your Account details, or selecting and switching investments, including Model Portfolios and Self-directed Investments. Obtain information regarding the assets that make up your Account and make enquiries about your investment strategy. Transmit your requests to the Administrator on your behalf in relation to the transactions listed above and any incidental transactions. If directions or an enquiry is received from a person who the Administrator reasonably believes is your Representative, then the directions or an enquiry will be acted on as if they were your personal acts. Until a written cancellation of the appointment is received, the Administrator will continue to act on any instructions from your Representative. The Responsible Entity reserves the right to cancel or vary the terms of the appointment of a Representative upon providing you with 14 days notice. Where your Representative is a company or partnership, all actions taken by any director, partner, or authorised officer of the Representative is deemed to be an act of the Representative. The Responsible Entity is not responsible for and does not provide personal financial advice in relation to your investments. The Responsible Entity, its successors and assigns disclaim any liability for direct or consequential loss, damage or injury arising from your appointment of a Representative. You agree that the Responsible Entity and the Administrator are not responsible for acts, matters and things done or purported to be done by your Representative, even if not authorised by you, provided the Responsible Entity and the Administrator have no reasonable reason to believe that they are not your Representative. Neither you nor any person making a claim on your behalf will have any right or claim against the Responsible Entity or the Administrator, or their related bodies corporate, successors, and assigns, regarding any matter, act, or thing done or purported to be done by your Representative. Any payment made, requested or received by your Representative will constitute a release of the Responsible Entity s and the Administrator s obligations and neither you nor any person making a claim on your behalf will have any cause of action against the Responsible Entity or the Administrator. Farnam Managed Accounts 31

38 Anti-Money Laundering Compliance The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML legislation) requires us to identify and verify your identity prior to accepting an Application from you. The information we require is set out below (although we may request additional information from time to time, if we consider it is appropriate to do so). If you invest through a financial adviser, then the adviser may request and collect the verification materials we require. For other account types not listed below, please refer to the Customer Identification Requirements on our website. Individuals An individual (other than an individual who notifies the Responsible Entity that he or she is an Investor in his or her capacity as a sole trader) must provide the following: I. Full name; II. Date of birth; III. Residential address (e.g. not a PO Box); IV. Nationality (e.g. country(ies) of citizenship, residence); and V. Source of funds including the origin of funds (e.g. employment, investments, other(s) please specify). An Investor who is investing in his or her capacity as a sole trader must provide the following (in addition to (I) to (V) above): VI. Full business name (if any) under which you carry on your business; VII. Full address of your principal place of business (if any) or residential address (e.g. not a PO Box); and VIII. Any ABN issued to you. Companies A company must provide the following: I. Full name of the company as registered by ASIC; II. Full address of the company s registered office and principal place of business (if any); III. ACN issued to the company; IV. Whether the company is registered by ASIC as a proprietary or public company (tick box on Application Form); and V. For proprietary companies, the name of each director of the company. Trusts A person who notifies the Responsible Entity that they are an Investor in the person s capacity as the trustee of a trust, must provide the following: I. Full name of the trust; II. Full business name (if any) of the trustee in respect of the trust; III. Type of trust; IV. Country in which the trust was established; V. If any of the trustees is an individual the information required to be collected from an individual (see Individuals above); VI. If any of the trustees is a company the information required to be collected from a company (see Companies above); VII. Full name and address of any trustee in respect of the trust; and VIII. Full name of any beneficiary or if the terms of the trust identify the beneficiaries by reference to membership of a class details of the class. Verification of information Investors must provide current (e.g. documents that have not expired) and certified copies of the documents listed below. A certified copy means a document that has been certified as a true copy of an original document by a lawyer with a current practising certificate, a Justice of the Peace, a member of the Institute of Chartered Accountants in Australia, CPA Australia or the National Institute of Accountants with two or more years of experience or any other person authorised under the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1). Individuals In order to verify the information provided for an individual, please attach: I. A certified copy of your current driver license that contains a photograph or current passport; or II. A certified copy of your birth certificate together with a certified copy of a notice that was issued by a utilities provider (e.g. telephone, gas or electricity). Companies In order to verify the information provided for a company, please attach: I. A search of the relevant ASIC database (e.g. an ASIC company extract) or a search of a license or other records of a relevant regulator; and II. If a proprietary company, then for each beneficial owner (e.g. any individual who owns more than 25% of the issued capital in the company), please attach the documents required for Individuals above. Trusts In order to verify the information provided for a Trust, please attach: I. A current certified copy or certified extract of the trust deed; and II. For all individual trustees and beneficiaries, please attach the documents required for Individuals and Companies above. 32 Farnam Managed Accounts

39 Defined Terms ABN Account Australian Business Number. Each Investor s Account including all assets, liabilities (if applicable) and cash in the Cash Account. Administrator Linear Asset Management Limited ABN AFS Licence AFS Licence Applicant Application Application Form Application Money ASIC ASX ASX Securities Australian Equities Business Day Capital Preservation Cash Account CGT Self-directed Investments Compliance Plan Constitution Corporations Act Custodian Disclosure Document Dynamic Trading Strategy Australian financial services licence. A person who submits an Application Form in accordance with this PDS to become a member of Farnam Managed Accounts. An Application for an investment in Farnam Managed Accounts. The Application Form to be used for investment in Farnam Managed Accounts. This can be completed online or a paper copy can be requested by contacting the Administrator on The money or non-cash assets received from or transferred by an Applicant in accordance with this PDS and the Constitution. Australian Securities and Investments Commission. Australian Securities Exchange. Listed securities that are traded on the ASX. Australian listed and unlisted shares or managed investment schemes. A day on which banks are open for business in Melbourne other than a Saturday, Sunday or public holiday, or such other day as the Responsible Entity determines. A Dynamic Trading Strategy managed by the Administrator designed to preserve a specified level of capital invested in a Model Portfolio through daily monitoring of the exposure between equities and cash with the aim to rebalance the investment amount before the value falls below the protection level an Investor selects. See the Investment Menu for further details, if this feature is offered from time to time. Means the cash account, segregated from investment assets, which forms part of your Account. Capital Gains Tax. The investments you or your Representative select (outside of the Model Portfolios) which you choose to hold through Farnam Managed Accounts. See the Investment Menu for available Investment Options. The compliance plan that provides a framework for monitoring the operation of Federation Managed Accounts, as amended from time to time. The constitution of Federation Managed Accounts as amended from time to time. Corporations Act 2001 (Cth) and the associated regulations, as amended from time to time. The independent custodian which hold investments for Investors. Includes a product disclosure statement and any other offer document used for investment purposes as prescribed by the Corporations Act. Dynamic Trading Strategies are predefined strategies managed by the Administrator that can be applied to selected Model Portfolios. The Investment Menu contains further details. Farnam Farnam Investment Management Pty Ltd ABN AFSL Farnam Managed Accounts 33

40 Farnam Portal FIFO Fund Managers GST In Specie Transfer Investment Instruction Investment Managers Investment Menu Investment Option Investor Managed Funds Mandate Max Gain Min Gain Model Portfolio PDS Promoter Regular Contribution Plan Representative You will be provided with a User ID and Password for a secure internet website where you can view your Account details, receive reports and view updated information about Farnam Managed Accounts. The Farnam Portal is accessed via farnam.com.au. First in First out (FIFO) method refers to tax parcels which are acquired first and also disposed of first. The responsible entities of the Managed Funds. Australian Goods and Services Tax pursuant to the A New Tax System (Goods and Services) Tax Act A transfer of securities where there is no change in the beneficial ownership of the securities. The instructions from you or on your behalf from your Representative regarding your Account. All Investment Instructions are provided online via the Farnam Portal or in such form as accepted by the Administrator from time to time. Investment Managers who either construct, or provide advice to the Responsible Entity on the construction of (and in certain cases the implementation of), transactions for Model Portfolios, as listed in the Investment Menu. The investment menu located at farnam.com.au or from the Farnam Portal which contains the full list of Investment Options for investment. The Investment Menu forms part of this PDS and may be updated from time to time at the Responsible Entity s discretion. You can receive a hard copy free of charge upon request. An investment available on the Investment Menu. An Investor in Farnam Managed Accounts, referred to as you or your. Registered managed investment schemes in which you may invest via Farnam Managed Accounts. Details of Managed Funds available through Farnam Managed Accounts can be found in the Investment Menu, with a copy of their PDS. You should read the Disclosure Document for each Managed Fund before investing via your Account in a Managed Fund. The investment instructions of the Investment Manager on how it manages each Model Portfolio according to that Model Portfolio s risk and return profile and with the aim of achieving a stated investment objective. Maximise capital gains or, if no capital gains are available, minimise your capital losses. Maximise capital losses or, if no capital losses are available, minimise your capital gains. A portfolio of assets invested by an Investment Manager according to the Mandate of the model portfolio. Details of available Model Portfolios, their Mandate, and other details including specific risks and fees can be found in the Investment Menu. This product disclosure statement, including any supplementary product disclosure statement or other updates from time to time. The promoter of Farnam Managed Accounts, Federation Alliance Limited ABN AFS Licence A regular investment in Farnam Managed Accounts whereby the Administrator direct debits a set amount each month from an Investor s nominated bank account. A person who an Investor nominates as their Representative and who is authorised to transact on behalf of the Investor. Responsible Entity Australian Unity Funds Management Limited ABN , AFS Licence Your Own Savings Plan An arrangement put in place by an Investor to make regular additional investments to their Account. 34 Farnam Managed Accounts

41 Corporate Directory Contact Farnam Managed Accounts Address Level 9, 525 Flinders Street Melbourne Vic 3000 Postal PO Box 482 Collins Street West VIC 8007 Phone Fax Website farnam.com.au Responsible Entity Australian Unity Funds Management Limited ABN AFSL Address 114 Albert Road South Melbourne VIC Phone (Advisor Support) Fax Promotor of Farnam Managed Accounts (Sales and general enquiries) Federation Alliance Limited ABN AFSL Address Level Queen Street Brisbane QLD 4000 Postal GPO Box 2466 Brisbane QLD 4001 Phone Fax Website farnam.com.au Administrator (for application and advisor support queries) Linear Asset Management Limited ABN AFSL Address Level Flinders Street Melbourne VIC 3000 Postal PO Box 482 Collins Street West VIC 8007 Phone Fax Website linearassetmanagement.com.au admin@linearam.com.au Farnam Managed Accounts 35

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44 Contact Farnam Managed Accounts Postal PO Box 482 Collins Street West VIC 8007 Phone Fax Website farnam.com.au