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1 November 2017 Review prepared by Morningstar Investment Management Europe 1 Oliver s Yard, City Road, London EC1Y 1HQ Model Portfolio 6 for Cofunds Website Information Document

2 Contents 2 Contents... 2 Introduction to Morningstar Investment Management Europe and the Model Portfolios... 3 Introduction... 3 About Morningstar Investment Management Europe Limited... 3 Model Portfolio 6 - Overview... 4 Key Facts... 4 Model Portfolio 6 Overview... 5 Cash... 5 UK Commercial Property... 5 Fixed Income... 5 Equities... 5 Model Portfolio 6 Overview... 6 Model Portfolios Fund Descriptions... 7 Cash... 7 UK Commercial Property... 7 Model Portfolios Fund Descriptions... 8 Fixed Interest... 8 Equities... 8 Model Portfolios Fund Descriptions... 9 Model Portfolios Fund Descriptions Model Portfolios Fund Descriptions... 11

3 Introduction to Morningstar Investment Management Europe and the Model Portfolios 3 Introduction The Model Portfolios are featured on the Cofunds website and provide advisers with an actively monitored and advised range of four Model Portfolios. Distribution Technology Ltd is the asset allocation provider and Morningstar Investment Management Europe Limited advises upon the fund selection for the Model Portfolios, drawing predominantly from the Researched Fund Panel which is also featured on the Cofunds website. While the Model Portfolios are continuously monitored, a formal quarterly review takes place following which updated Portfolios are posted to the Cofunds website. The rationale for any recommendations of fund and portfolio construction changes is included in this quarterly report, along with explanation of the performance of the Models. About Morningstar Investment Management Europe Limited Morningstar Investment Management Europe Limited provides comprehensive investment advisory and portfolio management services for financial institutions and financial advisers. Morningstar Investment Management Europe Limited applies the independent qualitative investment research from Morningstar, Inc. analysts to provide asset allocation, investment selection and portfolio construction services to life, pension and fund-of-funds providers. Our investment research approach has been in place since 1994 and is forward-looking in nature, which leads to a strong emphasis on the qualitative aspects of research. Morningstar Investment Management Europe s aim is to recommend a relatively small number of funds that are of the highest quality and deliver risk and return outcomes that support various investment objectives.

4 Model Portfolio 6 - Overview 4 Key Facts Asset Allocation (November 2017) The Model Portfolios were established in December Asset allocation is provided by Distribution Technology Ltd. Morningstar Investment Management Europe populates the asset allocation with funds it considers appropriate and attractive as a result of its in-depth, qualitatively-driven research process. The objective is to deliver a risk and return profile in each of the asset classes that is commensurate with the underlying markets, whilst seeking outperformance over the long-term. Asia Pacific ex Japan 8% Japan 7% Emerging Markets 8% Cash 4% UK Commercial Property 5% UK Corporate Bond 16% North America 12% Global High Yield 4% Europe ex UK 5% UK 31% Model Portfolio - November 2017 Asset Classes % Asset Allocation Cash 4.0 UK Commercial Property 5.0 Fixed Interest 20.0 Fund Suggested Fund Weight % Morningstar Analyst Rating JPM Sterling Liquidity 4.0 n/a M&G Feeder of Property Portfolio* 3.0 n/a Threadneedle UK Property Authorised Trust** 2.0 n/a UK Corporate Bond 16.0 Fidelity Strategic Bond 8.0 Silver Invesco Perpetual Corporate Bond 8.0 Gold Global High Yield 4.0 Kames High Yield Bond 4.0 Neutral Equities 71.0 UK 31.0 CF Woodford Equity Income 8.0 Silver Jupiter UK Special Situations 8.0 Silver Man GLG Undervalued Assets 6.0 Silver Threadneedle UK Equity Income 9.0 Silver Europe ex UK 5.0 Schroder European 5.0 Silver North America 12.0 HSBC American Index 8.0 Gold Schroder US Mid Cap 4.0 Silver Japan 7.0 Schroder Tokyo 7.0 Gold Asia Pacific ex Japan 8.0 Fidelity Asia 8.0 Bronze Emerging Markets 8.0 Fidelity Emerging Markets 4.0 Bronze M&G Global Emerging Markets 4.0 Bronze *Feeder fund of M&G Property Portfolio (PAIF) **Feeder fund of Threadneedle Property Authorised Trust (PAIF)

5 Model Portfolio 6 Overview 5 The section below provides further information about the funds that have been selected for the Model Portfolios. Cash The cash portion of the Portfolio is allocated to the JPM Sterling Liquidity fund. This fund is managed with the aim of achieving a competitive level of total return that is consistent with the preservation of capital and a high degree of liquidity. Its benchmark is seven day Sterling LIBID. UK Commercial Property For the property portion of the Model Portfolio, we have selected M&G Feeder of Property Portfolio and Threadneedle UK Property. Both funds provide exposure primarily to the UK commercial property market. M&G Feeder of Property Portfolio* is managed by PruPIM, the group s wellregarded property division. The team is extremely well-resourced and we believe it is a robust offering in this asset class. Threadneedle UK Property Authorised Trust** is also managed by experienced property practitioners. The fund was launched relatively recently, in February 2007, and is differentiated in that the managers are more yield focused than others, with the result that they look to identify higher yielding assets that fall just outside the prime real estate category. When investing in any property funds, advisors and investors need to be aware of the liquidity mismatch from open-ended daily dealing fund structures created by investing in direct UK commercial real estate. Typically, direct property funds seek to mitigate this liquidity issue by holding a buffer of liquidity instruments mainly comprising cash but can also include real estate securities, derivatives, and fixed income. At times of stress, these buffers can shrink to unsustainable levels particularly when outflows gather pace forcing investment houses to apply measures such as fair value adjustments and trading suspensions. *In January 2013, the M&G Property Portfolio was reconstructed into the M&G Property Portfolio, a property authorised investment fund (PAIF), and the M&G Feeder of Property Portfolio (Feeder), a linked feeder fund. PAIFs are a type of tax-efficient retail property fund which are beneficial for taxexempt investors. The Feeder fund is directly linked to the same portfolio of underlying direct property assets as the PAIF. Due to differences in cash in and out flows between the two funds, there are likely to be some differences in pricing. From a tax point of view, tax-exempt investors in the Feeder fund do not participate in the tax benefits of the PAIF structure but they are effectively in the same tax position as they were pre-conversion. At the present time, some platforms including Cofunds are unable to support PAIF. **In May 2016, the Threadneedle UK Property Trust was reconstructed into the Threadneedle PAIF, a property authorised investment fund (PAIF), and the Threadneedle UK Property Authorised Trust (Feeder), a linked feeder fund. PAIFs are a type of tax-efficient retail property fund which are beneficial for tax-exempt investors. The Feeder fund is directly linked to the same portfolio of underlying direct property assets as the PAIF. Due to differences in cash in and out flows between the two funds, there are likely to be some differences in pricing. From a tax point of view, taxexempt investors in the Feeder fund do not participate in the tax benefits of the PAIF structure but they are effectively in the same tax position as they were pre-conversion. At the present time, some platforms are unable to support PAIF. The Portfolio has an allocation to Global High Yield and we have recommended the Kames High Yield Bond fund. In August 2017, it was announced that co-manager Phil Milburn had left Kames. David Ennett remains as co-manager of the fund and has been joined by Stephen Baines. Considering the changes, we will be reviewing the fund in the coming weeks. Equities UK Equities In the UK portion of the Portfolio, we have recommended four funds, Threadneedle UK Equity Income, CF Woodford Equity Income, Jupiter UK Special Situations and Man GLG Undervalued Assets. Threadneedle UK Equity Income and CF Woodford Equity Income are in the UK Equity Income sector while the other two funds are located in the UK All Companies sector. Within an asset class allocation, we aim to recommend a blend of different mandates and management styles. The CF Woodford Equity Income fund is managed by and experienced and successful manager in a manner that is agnostic to the benchmark. The manager s track record shows that his funds have tended to protect investors capital better than the market during selloffs and yet have added value over a market cycle. We have selected Threadneedle UK Equity Income as we have high regard for the managers and believe that they have the ability to perform well over the long term. In practice, the fund is run for total return, but with greater emphasis on producing a strong and rising yield. This results in a pragmatic management style and is supported by the quality of the manager s top-down market insights and the team s detailed stock research. These funds are complemented by an allocation to Jupiter UK Special Situations. Fund manager, Ben Whitmore, has a genuinely contrarian investment philosophy, which is married with a long-term mindset. His process has been tried and tested over market cycles and we have high conviction that the fund can outperform. Man GLG Undervalued Assets is managed with a valuation conscious approach that focus on stocks the manager believes are undervalued relative to their asset base and the return on capital they generate. The fund has a bias to stocks lower down the cap scale. By making these changes, the blend is focused on our highest conviction ideas. European Equities In the European equity portion of the Portfolio, we have selected Schroder European. The fund is managed by Martin Skanberg, who has over twenty years of investment experience, having begun his career at SEB in Skanberg adopts a flexible investment style and process, which is both thoughtful and risk-aware. He typically looks for companies with sustainable profitable growth above market expectations or improving long-term returns. The fund has no particular style bias although the manager will at times tilt the portfolio to reflect the areas where he sees the most opportunities. Fixed Income For the UK Corporate Bond exposure, we have recommended two funds, namely Fidelity Strategic Bond and Invesco Perpetual Corporate Bond. The Invesco Perpetual fund is located in the IA Corporate Bond sector while the Fidelity fund is located in the IA Strategic Bond sector. Both funds have experienced managers and teams at the helm. The Invesco Perpetual Corporate Bond fund is managed with greater flexibility by very experienced fixed income practitioners. They tend to reflect greater conviction views in this fund, which has proven relatively rewarding over time. Fidelity Strategic Bond has been managed by Ian Spreadbury since its launch in April He believes strongly in the merits of diversification and seeks out a wide variety of alpha sources through which to generate consistent and attractive relative performance over the long-term.

6 Model Portfolio 6 Overview 6 North American Equities In the North American portion of the Portfolio, we have recommended a combination of HSBC American Index, US Mid Cap. HSBC American index is an index tracker fund that seeks to track the performance of the S&P 500 index. We believe using a tracker fund is our best option for core US equity exposure. The Schroder US Mid Cap fund is invested primarily in mid and smaller companies in the US market and as such can be seen as a higher risk offering. However, our view is that the manager s experience and innate risk-awareness makes this fund appropriate for use in a blend and an attractive long-term holding for US equities. Japanese Equities Schroder Tokyo has been selected for the Portfolio s Japanese equity exposure. The Schroder team has a long heritage of investing in the Japanese stock market and is very well resourced. The manager has been involved in Japanese equities since the early 1980s, and he has a pragmatic approach which has produced consistent returns over the long term. Asia Pacific ex Japan Equities In the Asia Pacific ex Japan portion of the Portfolio, we have recommended the Fidelity Asia fund (formerly Fidelity South East Asia). Fidelity Asia is managed with a flexible and active approach and the manager is prepared to back his views with conviction. This can result in greater volatility but this has been rewarded with strong relative returns over the longer-term. Emerging Market Equities We have recommended the Fidelity Emerging Markets and M&G Global Emerging Markets. The Fidelity Emerging Markets fund invests principally in areas experiencing rapid economic growth including countries in Latin America, South East Asia, Eastern Europe and the Middle East. It aims to generate long-term capital growth by investing in Emerging Market (EM) companies and in practice it aims to outperform its MSCI EM benchmark by 1-1.5% (net) per annum with a typical tracking error range of 4-7%. The manager of M&G Global Emerging Markets opts for companies with high levels of corporate governance and a focus on shareholder value creation. The fund often incorporates a value bias, in part due to the manager s desire to seek out-of-favour companies. It will invest in firms across the market cap range and relative to the benchmark, the MSCI Emerging Markets index, the fund has thus far been overweight to mid-caps.

7 Model Portfolios Fund Descriptions 7 The section below provides further information about the funds that have been selected for the Model Portfolios. Cash JPM Sterling Liquidity The fund aims to provide capital preservation and a high degree of liquidity while delivering a return consistent with the prevailing money market rates. The fund has been managed since 2010 by Olivia Maguire, a member of the International Fixed Income Group in London and part of the global liquidity portfolio management team of 25. Specialising primarily in Sterling- and Euro-denominated money market and short-term fixed income strategies, she also runs a Gilt liquidity fund. Macguire is well supported by JP Morgan's 20-strong team of experienced credit analysts, which boasts an average industry tenure greater than 17 years and nearly all have been with JPM for over five years. This team covers all strategies and maturities within the fixed income credit spectrum. Focusing on high quality GBP money market instruments, the fund invests in a diverse range of debt obligations issued by governments, international organisations and corporations or financial institutions. These securities will have ratings of A/A2 or higher issued by independent rating agencies. The fund invests in a range of cash equivalent securities such as Time Deposits, Certificates of Deposits, Floating Rate Notes, Government bills and Commercial Paper. The weighted average maturity will be below 60 days and the initial or remaining maturity of each debt security will not exceed 397 days at the time of purchase. There is a maximum exposure of 5% to any single issuer. Investors should be aware that in a low yield environment, the fees associated with managing cash funds will likely lead to flat or modestly negative returns. UK Commercial Property M&G Feeder of Property Portfolio* Aims to maximise long-term total returns through an actively managed UK commercial property portfolio and is diversified by both property and industry. Note: The fund provides feeder access into the main fund which has a PAIF structure. Fiona Rowley is an experienced investor and has worked in the property team at Prudential Property Investment Managers (PruPIM) since She was joined by co-manager Justin Upton, who has more than 10 years of experience in property, in January The managers also have access to a well-resourced property team at M&G. The investment process combines market forecasts, research views on valuations, rental growth, and levels of risk premium with detailed market knowledge. This enables the formation of coherent views on the prospective performance of property markets and assets based on current valuations. The manager has demonstrated strong ability, investing prudently in commercial property over multiple market cycles. Investors need to be aware of the liquidity mismatch from open-ended daily dealing fund structures created by investing in direct UK commercial real estate. Typically direct property funds seek to mitigate this liquidity issue by holding a buffer of liquidity instruments mainly comprising cash but can also include real estate securities, derivatives, and fixed income. At times of stress, these buffers can shrink to unsustainable levels particularly when outflows gather pace forcing investment houses to apply measures (such as fair value adjustments and trading suspensions) which are hard for investors to digest. *In January 2013, the M&G Property Portfolio was reconstructed into the M&G Property Portfolio, a property authorised investment fund (PAIF), and the M&G Feeder of Property Portfolio, a linked feeder fund. PAIFs are a type of tax-efficient retail property fund which are beneficial for tax-exempt investors. The Feeder fund is directly linked to the same portfolio of underlying direct property assets as the PAIF. Due to different cash flows affecting the two funds, there are likely to be some differences in pricing. From a tax point of view, tax-exempt investors in the Feeder fund do not participate in the tax benefits of the PAIF structure but they are effectively in the same tax position as they were pre-conversion. At the present time, some platforms are unable to support PAIFs. Threadneedle UK Property Authorised Trust** Aims to provide a total return comprising income and capital growth, by investing in a diversified portfolio of predominantly UK commercial property. Note: The fund provides feeder access into the main fund which has a PAIF structure. Don Jordison has run the mandate since launch in February He leverages off the wider resources of Columbia Threadneedle s experienced property team, including property management and investment professionals. The fund focuses on higher yielding assets, often outside the prime real estate category, where the manager believes the greatest performance potential exists. Risk is mitigated by diversification, and by investing predominantly in existing buildings, keeping property development risk to a minimum. Cash management is an important part of the process, and will use this tactically to exploit market weakness. The fund is considered to be a high-quality proposition in this specialist area given the backing of an experienced team who have a wealth of knowledge and expertise in this niche area of the market. Investors need to be aware of the liquidity mismatch from open-ended daily dealing fund structures created by investing in direct UK commercial real estate. Typically direct property funds seek to mitigate this liquidity issue by holding a buffer of liquidity instruments mainly comprising cash but can also include real estate securities, derivatives, and fixed income. At times of stress, these buffers can shrink to unsustainable levels particularly when outflows gather pace forcing investment houses to apply measures (such as fair value adjustments and trading suspensions) which are hard for investors to digest. **In May 2016, the Threadneedle UK Property Trust was reconstructed into the Threadneedle PAIF, a property authorised investment fund (PAIF), and the Threadneedle UK Property Authorised Trust (Feeder), a linked feeder fund. PAIFs are a type of tax-efficient retail property fund which are beneficial for tax-exempt investors. The Feeder fund is directly linked to the same portfolio of underlying direct property assets as the PAIF. Due to differences in cash in and out flows between the two funds, there are likely to be some differences in pricing. From a tax point of view, taxexempt investors in the Feeder fund do not participate in the tax benefits of the PAIF structure but they are effectively in the same tax position as they were preconversion. At the present time, some platforms are unable to support PAIF.

8 Model Portfolios Fund Descriptions 8 Fixed Interest UK Corporate Bond Fidelity Strategic Bond The fund seeks to deliver an attractive income with the possibility of capital growth from fixed interest securities. The managers are also mindful of the need to protect investors capital and to this end aim to produce higher returns with lower volatility than the peer group. The fund has the flexibility to move its asset allocation significantly, including through the use of derivatives. The managers have however identified neutral weights of 60% investment grade credit, 20% UK government bonds and 20% high yield. They also impose a ceiling of a maximum of 50% invested in high yield bonds. Ian Spreadbury is a very experienced investor and has managed the fund since launch in April In April 2017, Tim Foster and Claudio Ferrarese were named as co-managers on the fund, alongside Spreadbury. Both Foster and Ferrarese are portfolio managers within the fixed-income team and have been with the firm for over 10 years. We view the changes as a recognition of growing contribution from these members towards managing the fund over the years. The team also leverage Fidelity's in-house quantitative and qualitative fixed income analyst resource in the management of this fund. The managers believe strongly in the merits of diversification and seek out a wide variety of sources for excess return through which to generate consistent long term relative performance. They employ a variety of models to identify relative value and their considered approach is supported by the rigour of their macroeconomic analysis, which aims to consider all potential scenarios and their likely impact on the fund. The rigorous portfolio construction process is consistent with the desire to provide an attractive yield while controlling volatility through diversification, and conducive to repeatedly generating attractive returns over the long term. Invesco Perpetual Corporate Bond A sterling corporate bond fund that invests largely in investment grade bonds, with the flexibility to invest up to 20% in non-investment grade corporate bonds, such as government or high yield bonds. The managers may also invest in non-sterling issues with currency exposure generally hedged back to sterling. The fund has been managed by co-head of fixed interest, Paul Causer, since its launch in 1995 and Michael Matthews who was named as co-manager in March 2013 and is an integral member of the fixed-income team since its foundation. In December 2016, Invesco Perpetual made some changes to its fund management team and reshuffled management responsibilities, resulting in long standing co-manager, Paul Read, no longer named manager on this fund. Read remains as co-head of fixed interest in Invesco Perpetual and is named manager for a number of other mandates. We view this change as a natural progression within the team, as they look to recognize and retain talent. The investment approach is based upon macroeconomic analysis, credit analysis and value assessment. The managers are very valuation driven, and will only take risk when they believe they are being rewarded for doing so and are prepared to act aggressively when they believe valuations are extreme. This results in a high conviction portfolio and therefore performance may diverge significantly from peers and the benchmark over the short-term. Global High Yield Kames High Yield Bond The fund invests predominantly in a portfolio of sterling and US dollar denominated high yield bonds. Up to 20% of the fund may also be invested in BBB rated investment grade bonds, which allows the managers the flexibility to retain bonds which have experienced a ratings upgrade. In September it was announced that co-manager Phil Milburn was leaving Kames. Co- manager David Ennett, who joined from Standard Life Investments in September 2016, remains at the firm and will continue in his current role as head of high yield. Jack Holmes, who joined from Standard Life with Ennett in 2016 to work in the high yield team, has been named as the co-manager of the fund. We hold David Ennett in high regard and his previous fund, Standard Life Higher Income, held a Morningstar Analyst Rating of Bronze. While the departure of Phil Milburn is a significant loss to the team, Ennett brings over a decade of investment experience and strong track record managing a similar mandate at Standard Life. The managers' aim is to construct a portfolio of the team's best ideas and the emphasis is on security selection, focusing on the credit metrics and risks of each individual issuer. An assessment of the overall economic environment also plays a part in the overall fund positioning. The fund tends to be relatively concentrated and there are no formal stock, sector or geographic constraints. Equities UK CF Woodford Equity Income Aims to achieve a reasonable level of income with capital growth from investments primarily in the shares of UK companies. Up to 20% can be invested in international companies. In practice, the fund aims to achieve a minimum income yield target of 110% of the dividend yield on the FTSE All- Share Index, but only if this is not at the expense of an investor's capital. Neil Woodford, who founded Woodford IM in 2014, has been managing UK equity income funds since 1988 and is one of the longest serving managers within the industry. He has consistently demonstrated an ability to combine an overall appraisal of economic prospects with well-informed stock-picking. This is evidenced by a track record of strong returns over market cycles, using a long-term approach and his consideration of investments from an absolute perspective. The manager invests in companies that he thinks are undervalued but can sustain dividend growth over the medium term. The portfolio is constructed with little regard to the benchmark and at the sector level the fund s weightings may deviate significantly from those of the FTSE All-Share Index. The manager can also include less liquid equity investments such as unquoted companies which may account for a significant proportion of the portfolio. Investors should therefore be aware that short-term relative performance can be volatile as a result of the manager s approach; however he has demonstrated an excellent long-term track record in the management of income portfolios.

9 Model Portfolios Fund Descriptions 9 Jupiter UK Special Situations The fund s objective is for capital growth by investing predominantly in UK equities. The manager aims for the fund to outperform the FTSE All Share Index over the long term. The fund has been managed by Ben Whitmore since November 2006, when he joined Jupiter from Schroder Investment Management. Whitmore joined Schroders in 1994 as an insurance analyst before becoming a UK equity fund manager in He successfully ran Schroder Recovery from 2001 to Whitmore was joined by analyst, Dermot Murphy in 2013, who was made assistant manager in April Like other Jupiter funds, Whitmore and Murphy are free to run their portfolio with high conviction, with little engagement with other Jupiter fund managers or company management. The investment approach reflects the fund manager s contrarian and valueorientated investment philosophy. He aims to identify longer-term valuation anomalies by looking for stocks that have an attractive P/E ratio when calculated using 10-year average earnings, but are nevertheless well run companies with sound balance sheets. Qualifying stocks are then subject to fundamental analysis before being added to the portfolio, which is unconstrained relative to the FTSE All-Share benchmark. Realising value can often take a long time, so the average holding period for a stock is often high, with fund turnover consequently low. Man GLG Undervalued Assets The objective of the fund is to achieve long-term capital growth through investing predominantly in UK equities. In performance terms, the fund aims to outperform the FTSE All-Share index across a market cycle. Henry Dixon has managed the fund since inception in November 2013 when he joined Man GLG. He utilises the same philosophy and investment process which he deployed successfully in the management of the FP Matterley Undervalued Assets fund since Dixon was one of the original founders of Matterley and prior to that worked at New Star Asset Management. He is supported by co-manager Jack Barrat. The fund offers investors a valuation conscious approach which is actively managed and is biased to stocks lower down the market-cap scale. The manager seeks to identify companies which are considered to be undervalued relative to their asset base and to the returns on capital the companies are generating. The investment process has been applied consistently over time. Threadneedle UK Equity Income Aims to achieve an above average level of income combined with capital growth. The fund will invest primarily in UK equities, but it may however, invest in other securities. The fund's benchmark is the FTSE All-Share index which the managers aim to outperform over the long-term. Richard Colwell assumed sole responsibility for the fund following the announcement in May 2016 that Leigh Harrison would be retiring at the end of June Colwell joined Threadneedle in Sept 2010 and was appointed as co-manager alongside Harrison in October 2015, Colwell had however been lead manager on the fund prior to Harrison's departure. He is supported by the UK Equity team, which adopts a collegial approach with coverage of sectors divided between fund managers and analysts. On the UK equity income mandates he works closely with Jonathan Barber. The fund is managed using a combination of top-down and bottom-up disciplines and the manager's total return philosophy translates into a dual objective of seeking to outperform the benchmark as well as delivering a healthy income. This results in the manager adopting a pragmatic investment approach. His medium-term macro outlook ensures that the fund is positioned in line with his market expectations and not overly responsive to short-term market moves. The fund will typically contain between 45 and 60 stocks and will be diversified as the manager seeks to manage risk at both the stock and portfolio level. Europe ex UK Schroder European The fund predominantly invests in a portfolio of large- and mid-cap European companies excluding the UK and in performance terms seeks to outperform the FTSE World Europe ex UK index. The fund is managed by Martin Skanberg, who has over twenty years investment experience, having begun his career at SEB in He joined Schroders in Skanberg has been running this fund since 2006 and works closely with the core European team which is led by Rory Bateman, who joined in 2008 and reorganised and reinvigorated the team. Skanberg adopts a flexible investment style and process, which is both thoughtful and risk-aware. He typically looks for companies with sustainable profitable growth above market expectations or improving long-term returns. The fund has no particular style bias although the manager will at times tilt the portfolio to reflect the areas where he sees the most opportunities. He seeks to identify a company where the market underestimates its growth, margins or returns and highlights the key drivers that will change the markets perception. North America HSBC American This passive fund seeks to track the performance of the S&P 500 index. It aims to fully replicate the S&P 500 Index by holding all 500 index constituents, alongside a cash buffer that is typically invested in S&P 500 futures contracts to manage dividend payments and daily investor inflows and outflows. The fund is managed by Ed Gurung. Gurung has been at HSBC Global Asset Management since September 2007 and has been a portfolio manager in the Passive Equity Team since He currently manages a broad allocation of different fund structures including segregated, commingled pension, ETFs, and retail funds, with a primary focus and expertise in the Americas, Europe ex UK, and global strategies. The fund has the attributes we consider appropriate for an index tracking strategy and has done a good job tracking its benchmark in recent years. The fund discontinued securities lending in Dec 2014 in response to client demand for a more conservative approach. The fund's ongoing charge is highly competitive compared with other index funds.

10 Model Portfolios Fund Descriptions 10 Schroder US Mid Cap Offers investors exposure to a US equity portfolio that is invested in midand small-cap stocks using a bottom-up, stock-picking process. In performance terms the fund aims to outperform the Russell Mid Cap Index. Jenny B Jones is based in New York and has managed the fund since April She also manages the Schroder US Smaller Companies fund, a fund she has managed since While Jones has overall responsibility for this fund, she is supported by an experienced team of six sector specialists and they work as a close unit. The manager believes that by focusing predominantly on stock selection and blending both qualitative and quantitative research inputs, she and her team are able to identify stocks that will generate higher than average returns on invested capital and outperform the benchmark over the long-term. In particular, the team looks for three types of companies: superior growth companies which are unattractively priced; steady growers; and, turnaround situations. The manager is also mindful of the need to protect investors' capital and is willing to hold above average levels of cash if she perceives the opportunity set to be limited. Consequently the fund may lag the benchmark in periods where markets rally strongly and has tended to outperform in periods of weakness. Japan Schroder Tokyo The fund offers investors core exposure to a diversified portfolio of Japanese equities, with the aim of outperforming the Topix Index over the long term. The fund has been managed since 2004 by Andrew Rose, an experienced investor who has been managing Japanese equity portfolios since the 1980's, making him one of the most experienced managers in the UK retail space. He is supported by a well-resourced team of analysts and portfolio managers based in Tokyo, a team which Rose used to head up before moving back to London. The manager adopts a flexible approach and has a preference for investing in companies where the market has taken a short-term negative view but he believes the potential for earnings surprise in the next 2-3 years is present. Whilst the approach is primarily bottom-up, the manager has a good grasp of market sentiment and his disciplined approach to valuations and fundamentals have served him well in that regard. The manager is mindful of his exposures relative to the index and aims not to take too much risk relative to the benchmark, thereby making this fund a good option as the mainstay of an investor's Japanese allocation. The fund generally has a consistent performance profile compared to the index. Teera Chanpongsang has only been running this fund since the beginning of 2014 but he is an experienced investor who has been with Fidelity since His background includes managing Asian country funds as well as the Emerging Asia fund and he remains supported by one of the largest analyst teams in the region. The manager seeks to identify companies where the market has not fully appreciated the earnings growth potential. He is a long-term investor and likes to invest in well-managed industry leaders that are well positioned to benefit from changes in industry dynamics and that trade on attractive valuations. He also aims to identify companies that trade below their intrinsic value and that can benefit from improving fundamentals, growth potential that is not fully understood by the market, turnaround opportunities or a cyclical turning point being reached in certain industries. He is a benchmark aware rather than benchmark driven investor. Emerging Markets Fidelity Emerging Markets Aims to provide investors with long-term capital growth by investing in emerging market equities, with the aim of outperforming the MSCI Emerging Markets index over the long term. The fund is managed by Leon Eidelman. He works very closely with Austin Forey who is an experienced emerging market (EM) investor, having run this fund from 1997 until 2016, and also benefits from the support derived from JPM's global research resources. The manager also benefits from the research support of a 100-strong team of dedicated EM and Asia Pacific portfolio managers and analysts. The fund has historically been managed with a greater awareness of the benchmark and in performance terms seeks to outperform consistently through time. More recently the manager has been willing to take larger regional bets and tracking error to the benchmark has increased as a result. This is expected to remain in the future. Stocks are selected predominantly from the bottom-up using both quantitative and qualitative criteria. Strong emphasis is placed on the quality of a company, which is assessed using a number of financial metrics but includes an assessment of the calibre of management teams. Asia Pacific ex Japan Fidelity Asia (formerly Fidelity South East Asia) Offers investors exposure to a diversified portfolio of Asian companies with a bias towards large-and mid-cap stocks. In performance terms, the fund aims to outperform the MSCI AC Asia ex Japan index over the long term. In March 2015, the benchmark for this fund changed from the MSCI AC Far East ex Japan to the MSCI AC Asia ex Japan index which incorporates an allocation to India.

11 Model Portfolios Fund Descriptions 11 M&G Global Emerging Markets The fund aims to maximise long-term total return by investing in the shares of companies from across the emerging markets and aims to deliver consistent top quartile returns in the IA Global Emerging Markets sector. The fund is managed by Matthew Vaight, who is backed by a team of four analysts, and has the support of M&G s global research analysts and portfolio managers. Vaight has been managing the fund since its launch in February 2009 and he has also been managing the M&G Asian fund since February The team supporting Vaight has been rebuilt following the departures of former co-managers Michael Godfrey and Colm D'Ollier in the last few years, and we are comfortable that it remains adequately resourced. The fund is focused on fundamental analysis of individual companies and country and sector positioning are a by-product of this analysis, rather than any top-down views. Investments are made in companies with high levels of corporate governance and a focus on shareholder value creation. Investments are made on a long-term view and subsequently the fund s turnover is typically lower than that of peers. The fund often incorporates a value bias and the managers seek to invest in out-of-favour companies. Important Information THIS DOCUMENT IS FOR PROFESSIONAL CLIENT USE ONLY AND SHOULD NOT BE RELIED UPON BY PRIVATE CUSTOMERS. Morningstar Investment Management Europe Limited is authorised and regulated by the Financial Conduct Authority to provide comprehensive investment advisory, and portfolio management services for financial institutions, plans sponsors, and financial advisors Morningstar Inc. All rights reserved. The information, data, analyses and opinions ( Information ) contained herein: (1) includes the proprietary information of Morningstar; (2) may not be copied or redistributed except as specifically authorised; (3) is not warranted to be complete, accurate or timely; and (4) may be drawn from fund data published on various dates. Morningstar Investment Management Europe shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. It is important to note that investments in securities involve risk and will not always be profitable. Morningstar Investment Management Europe does not guarantee that the results of its investment recommendations or the objectives of the portfolio will be achieved. Morningstar Investment Management Europe does not guarantee that negative returns can or will be avoided in any of its portfolios. The Portfolios described are intended as a guide to fund mixes that could be considered when populating the asset allocation for a particular risk profile. Past performance is no guarantee of future results. The Morningstar Analyst Rating should not be used as the sole basis in evaluating a mutual fund. Morningstar Analyst Ratings are based on Morningstar s current expectations about future events; therefore, in no way does Morningstar represent ratings as a guarantee nor should they be viewed by an investor as such. Morningstar Analyst Ratings involve unknown risks and uncertainties which may cause Morningstar s expectations not to occur or to differ significantly from what we expected. Morningstar Analyst Ratings are subject to change at any time and without warning. Please see for the latest Ratings.