separately managed account - mlc · 2020. 11. 2. · sma model portfolio investment manager 4 |...

Separately Managed AccountProduct Disclosure Statement - Part 1

ABN 45 006 302 987AFSL 236466

Issued by NavigatorAustralia Limited (NAL)

Preparation date1 July 2020

The information in thisProduct Disclosure Statement is general

and doesn’t take into accountyour personal objectives,

financial situation or needs. Before acting on this information,

you should consider its appropriatenesshaving regard to your objectives,

financial situation and needs.A financial adviser can help you decide

if this is the right product for you.

Contents

4About the SMA

6Things to consider before you invest

13How the SMA is managed

The purpose of this Product Disclosure Statement (PDS) is to give you the informationyou need when investing in the Integrated Separately Managed Account (SMA) whichis a Registered Managed Investment Scheme. ARSN 138 086 889. This PDS is comprisedof two parts:

Part 1 - (this document) - an overview of how the SMA works.

Part 2 - the applicable SMA model menu available to you - information on the modelportfolios, including fees and costs that apply.

The latest versions of these documents, which together comprise this PDS are available at mlc.com.au

In this PDS, NAL is referred toas ‘us’, ‘we’, ‘our’, ‘responsibleentity’.

This Product Disclosure Statement (PDS) is issued by Navigator Australia Limited (NAL) ABN 45 006 302 987 AFSL 236466 (NAL), the responsibleentity of the Integrated Separately Managed Account ARSN 138 086 889 (SMA). The SMA is a registered managed investment scheme, and thepurpose of this PDS is to provide you with information that may assist you in making a decision as to whether to invest in the SMA.

Investment through the SMA, and the information in this PDS, is only intended to be accessed by persons who hold an account in an investordirected portfolio service, a master trust or a superannuation fund (each referred to in this PDS as a “platform”) that is administered or operatedby a NAB Group company (referred to in this PDS as the “platform operator”). When you apply to invest in the SMA via the relevant platform,the platform operator will hold the relevant interest in the SMA on your behalf according to the terms of that platform.

The information in this PDS is subject to change. Changes to the SMA and the Model Portfolios will be made from time to time and we may addor remove Model Portfolios. The Platform operator will advise you of changes to information in this PDS that are materially adverse. We mayprovide this information to you by mail, email or by making the information available at mlc.com.au. We’ll let you know when information aboutyour Model Portfolio has been made available online. If you prefer to receive updates about your account by mail, please let us know.

The information in this document may change from time to time. Any updates that aren’t materially adverse will be available at mlc.com.au.You can obtain a paper copy of any of these changes at no additional cost by contacting us.

For more information please speak with your financial adviser. You can get a free copy of the latest PDS at mlc.com.au/forms_and_brochures orby contacting us. Please read the latest PDS before making an investment.

References to mlc.com.au in the online copy of this document link directly to the additional information available.

NAL is a subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686 (NAB) and is part ofthe National Australia Bank Group of Companies (NAB Group). An investment in the SMA or in the Model Portfolios that are made available viathe SMA from time to time is not a deposit with, or liability of, NAB or any other member of the NAB Group. Neither NAL, NAB nor any othercompany in the NAB Group stands behind or otherwise guarantees the capital value or investment performance of the SMA or any ModelPortfolio.

Separately Managed Account Product Disclosure Statement | 3

https://www.mlc.com.au/



https://www.mlc.com.au/personal/forms-and-documents/forms/superannuation


The SMA allows you to access anextensive range of professionallyconstructed Model Portfolios made up of:

securities listed on the Australiansecurities exchange, cash and listedfixed income; or

securities listed on the Australiansecurities exchange, managed funds,cash and listed fixed income

so you can choose the Model Portfolio youwant to suit your needs.

Benefits of the SMA

Individual accounts

When you invest in the SMA through aplatform, a separate interest will be issuedto the platform operator in relation to eachModel Portfolio you choose, and anyassets we hold in relation to that separateinterest will be accounted for separately.Asset holdings that relate to a ModelPortfolio that you select are referred to inthis PDS as “your account” or “your ModelPortfolio”.

You (or the trustee in the case of asuperannuation investment) retainbeneficial ownership of the assets held inyour account.

Transparency

You can view the assets that you holdwithin your chosen Model Portfoliothrough your platform reports andfacilities.

Portability

You can transfer Australian securities andunits in managed funds that are held by(or for) you into the Wrap platform beforetransfer into the SMA and still retain thebeneficial interest in those assets. Youcan also transfer your securities and unitsin managed funds between your ModelPortfolios within the SMA. Please see page13 for more details.

No inherited capital gains forlisted securities

When you transfer assets into youraccount, or assets are acquired by us andheld as part of your account, an individualcost base is established in relation to thatModel Portfolio. For listed securities thismeans there are no tax consequences foryou as a result of other investors’transactions. The same benefit howeverdoes not apply for holdings of managedfunds within the SMA.

Professional investmentmanagement

You can benefit from the servicesprovided to NAL by investmentprofessionals who monitor and manageModel Portfolios on our behalf.

NAL, as responsible entity for the SMA,has appointed a number of investmentmanagers to provide NAL with a range ofinvestment advisory services inconnection with the Model Portfolios thatyou can select when investing in the SMA.

Consolidated reporting

Because the SMA is fully integrated withthe technology systems of the platformthrough which you access the SMA, youwill be able to have a comprehensive viewof your Model Portfolio. This means youcan:

view the breakdown of securities,managed funds and cash investmentsin your Model Portfolio

keep track of your investments, and

transact between the SMA and otherinvestments on your platform easily.

The diagram below shows how the SMAworks.

Investor

Individual Model Portfolio

Platform

manages

in specie transfer

Cash Account

Managed Fund

Direct Equities

SMA Model Portfolio

Investment Manager

4 | Separately Managed Account Product Disclosure Statement

About the SMA

Who can investIf you want to start an investment in theSMA, you must do so through an InvestorDirected Portfolio Service (IDPS), a mastertrust, a superannuation fund or Wrapaccount – collectively known as a‘platform’, administered or operated byNAL or another NAB group company.

Please make sure that you have the latestcopy of the PDS or in the case of an IDPS,the IDPS Guide for the platform that youare invested in. These documents arereferred to in this PDS as your ‘platformoffer documents’. You can obtain thelatest copy of the platform offerdocuments at mlc.com.au or you canrequest a copy by calling us.

Investments into the SMA via yourplatform account can be made in thefollowing ways:

cash investment;

transfer of securities and/or units inmanaged funds; or

a combination of both.

The minimum initial investment isdifferent for each Model Portfolio. Thereis no minimum for additional investmentsyou may choose to make in your ModelPortfolio.

You can monitor your investment throughyour Adviser who will have access toreporting and performance related to yourinvestments in the SMA.


About the SMA


Each Model Portfolio may be investedin:

Australian shares and securitieslisted on the Australian SecuritiesExchange (ASX);

listed property securities on the ASX;

units in managed funds; and

cash and fixed income

Before you invest, there are some thingsyou need to consider, including how muchrisk you're prepared to accept. This isdetermined by various factors, including:

your investment goals

the savings you'll need to reach thesegoals

your age and how many years you haveto invest

where your other assets are invested

the return you may expect from yourinvestments, and

how comfortable you are withinvestment risk.

Investment riskAll investments come with some risk.Some Model Portfolios will have more riskthan others, as it depends on a ModelPortfolio’s strategy and assets.

The value of an investment with a higherlevel of risk will tend to rise and fall moreoften and by greater amounts thaninvestments with lower levels of risk, ieit’s more volatile.

While it may seem confronting,investment risk is a normal part ofinvesting. Without it you may not get thereturns you need to reach yourinvestment goals. This is known as therisk/return trade-off.

Many factors influence an investment’svalue. These include, but aren’t limited to:

market sentiment

changes in inflation

growth and contraction in Australianand overseas economies

changes in interest rates

defaults on loans

company specific issues

liquidity (the ability to buy or sellinvestments when you want to)

changes in the value of the Australiandollar

investments and withdrawals by otherinvestors

changes in Australian and overseaslaws, and

a counterparty not meeting itsobligations eg when buying securities,the seller may not deliver on thecontract by failing to provide thesecurities.

Other SMA risksThe significant risks of investing in theSMA are typical of the risks of making asimilar investment in listed securities andmanaged funds. In addition to the risksexplained throughout this section 'Thingsto consider before you invest', thefollowing may influence a ModelPortfolio’s value:

Investment manager performancerisk: investment managers havedifferent approaches to managingportfolios, which invariably results indifferent investment returns. No singleinvestment approach is guaranteed tooutperform all others in all marketconditions. Changes to investmentmarkets and within an investmentmanager's firm may also affect aninvestment manager's performance.

Scheme risk: risks specific to the SMAinclude the risk that the SMA, or aparticular Model Portfolio, or aninvestment manager's services, couldbe terminated and that the fees andcosts could change. Where aninvestment manager is replaced thenwe may appoint a replacementinvestment manager and pay fees tothat investment manager, includingwhere the investment managerappointed is a related party to NAB.There is also a risk that investingthrough the SMA may give differentresults than self-directed investing.

Liquidity risk: this is the risk that asecurity or managed fund may not beable to be sold without incurring largetransaction costs or quickly enough toprevent or minimise a loss (eg if asecurity is suspended from trading onthe market or a managed fund is frozenor has redemptions suspended). A lackof liquidity may affect our ability torebalance a Model Portfolio or theamount of time it takes us to satisfywithdrawal requests.


Things to consider before you invest

Concentration Risk: in a concentratedportfolio of up to 40 equities, a ModelPortfolio’s returns may be more volatilethan those of a more diversifiedportfolio. Its exposure to a smallernumber of investments means it ismore sensitive to changes in the valueof those investments.

Implementation risk: the performanceof your Model Portfolio may differ tothe reported performance of therelevant Model Portfolio due to anumber of factors such as cash flows,portfolio reweighting and timingdifferences.

Valuation risk: is the risk that assetsheld by you in the Model Portfoliocannot be valued due to delays inreceiving unit prices or asset values ina timely manner.

VolatilityPeriods of volatility can be unsettling andmay occur regularly. You may find itreassuring to know that ofteninvestments that produce higher returnsand growth over long periods tend to bemore volatile in the short term.

By accepting that volatility will occur,you’ll be better able to manage yourreaction to short-term movements. Thiswill help you stay true to your long-terminvestment strategy.

When choosing your investment, it’simportant to understand that:

its value and returns will vary over time

assets with higher long-term returnpotential usually have higher levels ofshort-term risk

returns aren’t guaranteed and you maylose money, and

future returns will differ from pastreturns.

Diversify to reduce volatility andother risksDiversification – investing in a range ofinvestments – is a sound way to reducethe short-term volatility of a portfolio’sreturns. That’s because different types ofinvestments perform well in differenttimes and circumstances. When some areproviding good returns, others may notbe.

Portfolios can be diversified acrossdifferent asset classes, industries,securities and countries, as well as acrossinvestment managers with differentapproaches.

The more you diversify, the less impactany one investment can have on youroverall returns.

One of the most effective ways ofreducing volatility is to diversify across arange of asset classes.

A financial adviser can help you clarifygoals and assist with creating afinancial plan which helps you managerisk and consider issues such as:

how many years you have to invest

the savings you'll need to reach yourgoals

the return you may expect from yourinvestments, and

how comfortable you are withvolatility.



Types of assetsAsset classes are generally grouped as defensive, growth or alternatives based on their different characteristics.

Multi-asset portfolios are usually invested across these groups because each has different return and volatility characteristics. Forexample, defensive assets may help to provide returns in a portfolio when share markets are weak. On the other hand, growth assetsmay be included in a portfolio because of their potential to produce higher returns than cash in the long term.

However, in some market conditions, all types of assets may move in the same direction, delivering low or negative returns at thesame time.

The main differences between these types of assets are:

AlternativesGrowthDefensiveA very diverse group of assets andstrategies. Some examples includeprivate assets and hedge funds.Because alternatives are diverse,they may be income, defensive orgrowth assets.

Shares and listed property securities.Cash and fixed income securities.Asset classesincluded

To provide returns that aren’tstrongly linked with those ofmainstream assets. They may beincluded for their defensive orgrowth characteristics.

To provide long-term capitalgrowth and income.

To generate income and stabilisereturns.

How they aregenerally used

Expected to produce returns andvolatility that aren’t strongly linkedto mainstream assets such as shares.Risk and return characteristics ofdifferent alternative investmentscan vary significantly.

Expected to produce higher returns,and be more volatile, than defensiveassets over the long term.

Expected to produce lower returns,and be less volatile, than growthassets over the long term.

Risk and returncharacteristics



Indicative volatility

Lower Higher

Higher

Shares

Fixed income

Indi

cati

ve re

turn

s

Listed property securities

Cash

Indicative returns and volatility over a market cycle

Defensive alternatives

Growth alternatives

Source: MLC Asset Management Services Limited

Asset classesAsset classes are groups of similar typesof investments. Each class has its risksand benefits, and goes through its ownmarket cycle.

A market cycle can take a couple of yearsor many years as prices rise, peak, fall andstabilise. Through investing for the longterm, at least through a whole marketcycle, you can improve your chance ofbenefiting from a period of strong returnsand growth to offset periods of weakness.

The illustration above shows indicativereturns and volatility for the main assetclasses over a whole market cycle. Buteach market cycle is different, sounfortunately it isn’t possible toaccurately predict asset class returns ortheir volatility. Depending on theconditions at the time, actual returnscould be significantly different from thoseshown.

Here are the main asset class risks andbenefits.

Cash

Cash is generally a low risk investment.

Things to consider:

Cash is often included in a portfolio tomeet liquidity needs and stabilisereturns.

The return is typically all income andis referred to as interest or yield.

Cash is usually the least volatile type ofinvestment. It also tends to have thelowest return over a market cycle.

The market value tends not to change.However, when you invest in cash,you’re effectively lending money tobusinesses or governments that coulddefault on the loans, resulting in a losson your investment.

Many cash funds invest in fixed incomesecurities that have a very short termuntil maturity.

Fixed income (listed andnon-listed)

When investing in fixed income you’reeffectively lending money to businessesor governments. Bonds are a commonform of fixed income security. Fixedincome is also known as fixed interest.

Things to consider:

Fixed income securities are usuallyincluded in a portfolio for theirrelatively stable return characteristics.

Returns typically comprise interest andchanges in the market value of the fixedincome security. Fixed incomesecurities’ values tend to move inopposite directions to interest rates. Sowhen interest rates rise, fixed incomesecurities’ values tend to fall and wheninterest rates fall, values can rise.Short-term fixed income securities aregenerally less sensitive to interest ratechanges than longer-term securities.

While income from fixed incomesecurities usually stabilises returns, fallsin their market value may result in aloss on your investment. Market valuesmay fall due to concern about defaultson loans or an increase in interest rates.When interest rates are low, the risk ofrates rising and market values falling,is greatest.

There are different types of fixedincome securities and these will havedifferent returns and volatility.

Investing in fixed income securitiesoutside Australia may expose yourportfolio to movements in exchangerates.



Listed property securities

Property securities are listed on sharemarkets in Australia and around theworld. Listed property securities are alsoreferred to as Real Estate InvestmentTrusts (REITs).

Things to consider:

Listed property securities areusually included in a portfolio for theirincome and growth characteristics.

Returns typically comprise income(such as distributions from REITs) andchanges in REIT values.

Returns are driven by many factorsincluding the economic environmentin various countries.

The global REIT market is far morediversified than the Australian REITmarket.

Listed property securities' returns canbe volatile.

Investing outside Australia may exposeyour portfolio to movements inexchange rates.

Australian shares

This asset class consists of investmentsin companies listed on the AustralianSecurities Exchange (and other regulatedexchanges). Shares are also known asequities.

Things to consider:

Australian shares can be volatile andare usually included in a portfolio fortheir growth and income characteristics.

The Australian share market is lessdiversified than the global marketbecause Australia is currentlydominated by a few industries such asFinancials and Resources.

Returns usually comprise dividendincome and changes in share prices.

Dividends may have the benefit of taxcredits attached to them (known asfranking or imputation credits).

Returns are driven by many factorsincluding the performance of theAustralian economy.

Companies listed on the Australianshare market can be grouped as small,medium and large capitalisation (cap)based on factors including the totalmarket value of their listed shares andliquidity. Investors in small capcompanies generally experience greaterprice volatility than shares in large capcompanies because small capcompanies trade less frequently and inlower volumes. They may alsounderperform large cap companies formany years.

When investing in listed investmentssuch as direct shares, you should beaware that a company’s share price isaffected by events within and outsideof the company. These events include: – changes to management– profit and loss announcements– the expectations of investors

regarding the company– competitive pressures – legal action against the company– social and government issues– climate change, and– environmental issues.

Global shares

Global shares consist of investments incompanies listed on securities exchangesaround the world.

Things to consider:

Global shares can be volatile and areusually included in a portfolio for theirgrowth characteristics.

The number of potential investmentsis far greater than in Australian shares.

Returns usually comprise dividendincome and changes in share prices.

Returns are driven by many factorsincluding the economic environmentin various countries.

When you invest globally, you’re lessexposed to the risks associated withinvesting in just one economy.

Investing outside Australia meansyou’re exposed to movements inexchange rates.

Alternatives

These are a very diverse group of assets.Some examples include private assets,hedge funds, real return strategies,gold, listed infrastructure securities andunlisted infrastructure.

Things to consider:

Because alternatives are diverse, theymay be included in a portfolio for theirdefensive or growth characteristics.

Alternative investments are usuallyincluded in portfolios to increasediversification and provide returns thataren’t strongly linked with theperformance of mainstream assets.

Investment managers includealternative investments in a portfoliobecause they generally expect thereturn and diversification benefits ofalternative investments to outweighthe higher costs often associated withthem.

Some alternative strategies aremanaged to deliver a targeted outcome.For example, real return strategies aimto produce returns exceeding increasesin the costs of living (ie inflation).

For some alternatives, such as hedgefunds, derivatives may be usedextensively and it can be less obviouswhich assets you’re investing incompared to other asset classes.

Some alternative investments areilliquid, which makes them difficult tobuy or sell.

To access alternative investments yougenerally need to invest in a managedfund that, in turn, invests inalternatives.

Because most alternative investmentsaren’t listed on an exchange,determining their value for a fund’s unitprice can be difficult and may involvea considerable time lag.

Alternatives invested outside Australiamay expose your portfolio tomovements in exchange rates.



Investment approachesInvestment managers have differentapproaches to selecting investments,which invariably results in differentreturns. No single investment approachis guaranteed to outperform all others inall market conditions.

There are generally two broad approaches:passive and active management.

Passive management

Passive, or index, managers chooseinvestments to form a portfolio which willdeliver a return that closely tracks amarket benchmark (or index). Passivemanagers tend to have lower costsbecause they don’t require extensiveresources to select investments.

Active management

Active managers select investments theybelieve, based on research, will performbetter than a market benchmark over thelong term.

They buy or sell investments when theirmarket outlook alters or investmentinsights change.

The degree of active management affectsreturns. Less active managers take smallpositions away from the marketbenchmark and more active managerstake larger positions. Generally, the largeran investment manager's positions, themore their returns will differ from thebenchmark.

Active managers have differentinvestment styles that also affect theirreturns. Some common investment stylesare:

Bottom-up – focuses on forecastingreturns for individual companies, ratherthan the market as a whole.

Top-down – focuses on forecastingbroad macroeconomic trends and theireffect on the market, rather thanreturns for individual companies.

Growth – focuses on companies theyexpect will have strong earningsgrowth.

Value – focuses on companies theybelieve are undervalued (their pricedoesn’t reflect earning potential).

Income – focuses on generating aregular income stream through selectingcompanies, trusts and other securitiesthey believe will deliver income, orthrough using derivatives and otherstrategies.

Core – aims to produce competitivereturns in all periods.



Investment techniquesOur investment managers may usedifferent investment techniques that canchange the value of an investment.

Some of the main investment techniquesare explained below.

Derivatives

Derivatives are contracts that have a valuederived from another source such as anasset, market index or interest rate. Thereare many types of derivatives includingswaps, options and futures. They are acommon tool used to manage risk orimprove returns.

Some derivatives allow investmentmanagers to earn large returns from smallmovements in the underlying asset’sprice. However, they can lose largeamounts if the price movement in theunderlying asset is unfavourable.

Risks particular to derivatives include therisk that the value of a derivative may notmove in line with the underlying asset,the risk that counterparties to thederivative may not be able to meetpayment obligations and the risk that aparticular derivative may be difficult orcostly to trade.

Currency management

If an investment manager invests inassets in other countries, its returns inAustralian dollars will be affected bymovements in exchange rates (as well aschanges in the value of the assets).

A manager of international assets maychoose to protect Australian investorsagainst movements in foreign currency.This is known as ‘hedging’. Alternatively,the manager may choose to keep theassets exposed to foreign currencymovements, or ‘unhedged’.

Returns from exposure to foreign currencycan increase diversification in a portfolio.

Gearing

Gearing can be achieved by using loans(borrowing to invest), or through investingin certain derivatives, such as futures.

Gearing magnifies exposure to potentialgains and losses of an investment. As aresult, you can expect larger fluctuations(both up and down) in the value of yourinvestment compared to the sameinvestment which is not geared.

Investment managers can take differentapproaches to gearing. Some change thegearing level to suit different marketconditions. Others maintain a target levelof gearing.

It’s important to understand the potentialrisks of gearing, as well as its potentialbenefits. When asset values are rising bymore than the costs of gearing, the returnswill generally be higher than if theinvestment wasn't geared. When assetvalues are falling, gearing can multiply thecapital loss. If the fall is dramatic therecan be even more implications for gearedinvestments. For example, where thelender requires the gearing level to bemaintained below a predetermined limit,if asset values fall dramatically, thegearing level may rise above the limit,forcing assets to be sold when values maybe continuing to fall.

In turn, this could lead to more assetshaving to be sold and more losses realised.Withdrawals (and applications) may besuspended in such circumstances,preventing you from accessing yourinvestments at a time when values arecontinuing to fall.

Although this is an extreme example,significant market falls have occurred inthe past. Recovering from such falls cantake many years and the gearedinvestment’s unit price may not return toits previous high.

Other circumstances (such as the lenderrequiring the loan to be repaid for otherreasons) may also prevent a gearedinvestment from being managed asplanned, leading to losses.

You need to be prepared for all types ofenvironments and understand theirimpact on your geared investment.

Short selling

Short selling is used by an investmentmanager when it has a view that an asset’sprice will fall. The manager borrows theasset from a lender, usually a broker, andsells it with the intention of buying it backat a lower price. If all goes to plan, a profitis made. The key risk of short selling isthat, if the price of the asset increases, theloss could be significant.

Ethical investingInvestment managers may take intoaccount labour standards, environmental,social or ethical considerations whenmaking decisions to buy or sellinvestments. We expect our activeinvestment managers to consider anymaterial effect these factors may have onthe returns from their investments,however we don’t require them to.



Transacting

Moving securities or units inmanaged funds into the SMA

You can move securities or units inmanaged funds held in your platformaccount into the SMA without cashingthem in. Only securities and managedfunds currently available in the chosenModel Portfolio can be transferred. To findout which assets can be transferred youor your Adviser can find out more viamlc.com.au. Please note that we do notaccept transfer of NAB shares into theSMA.

If the securities or units in managed fundsthat you transfer into your Model Portfolioresult in that particular asset having agreater weighting than the relevantallocation of that asset determined for theModel Portfolio, some of the securities orunits will be sold to purchase othersecurities or units that form part of theModel Portfolio.

All transaction requests have to bemade through your platform. Beforeyou transact, please make sure yourefer to your platform offer documents.

Moving securities or units inmanaged funds out of the SMA

You can also move securities out of theSMA.

If you only move some securities,managed fund units or cash out of a ModelPortfolio, the remaining assets in yourModel Portfolio will be automaticallyrebalanced. This could result in the sameassets you’ve moved out beingrepurchased.

Frozen assets in Model Portfolios

From time to time, assets held in yourModel Portfolio may become subject totrading restrictions beyond our control(for instance, if the asset becomes illiquid).In these circumstances, we maydetermine that the relevant asset (frozenasset) is no longer available to form partof the Model Portfolio. If we make such a

determination, members of the SMA inrelation to whom the frozen asset is held(that is, the platform operator of yourplatform) will be taken to have given us astanding instruction to transfer (to theextent practicable) the frozen asset inspecie to the platform operator (or itsnominee). Following this transfer, thefrozen asset will no longer be held in yourModel Portfolio, and will instead be heldby (or for) the platform operator as partof your platform account

Switching between ModelPortfolios

You can switch between Model Portfolios.There are two ways you can do this:

selling securities or units of managedfunds in one Model Portfolio topurchase securities in a new ModelPortfolio

transferring securities or units ofmanaged funds that are common toboth Model Portfolios, and then sellingthe assets that are not common topurchase the assets needed to matchthe new Model Portfolio.

When you request to transfer a specifieddollar amount, the transaction will beinitiated using the market value of thesecurities on the date we receive yourinstruction. These values may changeduring the time it takes to complete thetransfer and your transfer amount maybe greater or less than the last reportedvalue.

Withdrawals

Withdrawals will be initiated within fivebusiness days of receipt of the platform’srequest to do so. The length of time ittakes to process your withdrawal willdepend on various factors, such as howoften the investment is priced or traded,the composition of your investment, howcomplex it is, and how liquid it is on theday we process your request. If yourmoney isn’t immediately available to us,it may take up to 30 business days ormore.

For partial withdrawals, you may receiveless than requested if there is anunexpected downward movement in

security prices.

We require you to maintain a minimumin each Model Portfolio as described inPart 2 of the PDS.

Investment incomeThe frequency and amount of income thatyou receive will depend on the ModelPortfolio/s that you have selected toinvest in.

Investment income is initially depositedinto the cash component of the ModelPortfolio.

Where a Model Portfolio has automaticpayment of investment income, dividendand interest income are automaticallypaid to your platform cash account afterthe initial deposit into the cashcomponent of the Model Portfolio. For allother model portfolios your dividend andinterest income will be paid into the cashallocation of your Model Portfolio and willbe re-invested when the Model Portfoliois rebalanced.

Any income received after you haveclosed your Model Portfolio will beautomatically transferred to your platformCash Account.


How the SMA is managed


RebalancingThe Model Portfolios are monitored byprofessional investment managers thatprovide us with changes to asset selectionand weightings on a regular basis. We thengenerally rebalance the Model Portfoliosso that they are consistent withinvestment manager’s recommendedweightings.

Rebalancing will generally occur when:

an investment manager advises us tochange the holdings or weightings of aModel Portfolio

a new investment is made

a withdrawal is made, or

the balance of the cash component ofone of your Model Portfolios falls belowthe minimum required.

There may be some circumstances whenyour Model Portfolio doesn’t exactlymatch the weightings recommended bythe investment manager in relation toModel Portfolio. This may happen where:

a security is suspended from trading;

a trade doesn’t meet the minimumtrade size requirements;

units of assets are rounded to wholeunits;

there are differences in the timing of,and amounts paid or received inconnection with, transactions to buy orsell assets forming part of you ModelPortfolio.

These differences will mean that there isa difference in the performance of yourModel Portfolio and the performance ofthe portfolio of assets in relation to whichthe investment manager advises us.

Changes to, and termination of,model portfoliosAvailable Model Portfolios may changefrom time to time, and existing ModelPortfolio may be varied (for instance, tochange the investment mandate orcomposition, and changes to theinvestment manager appointed to managethe Model Portfolio). We will notify you ofchanges at the relevant time.

Model Portfolios may also be terminatedif we think this would be appropriate. If aModel Portfolio is to be terminated, wewill notify you in writing.

Where a Model Portfolio is terminated wewill provide you with written notice of thetermination and your options in order tomanage your investment which mayinclude, transfer to an alternative ModelPortfolio, redeem your investments tocash or in-specie transfer your holdingsinto the Model Portfolio to single stockholdings in your platform account.

Minimum trade sizeFor listed securities only, the minimumtrade size is equal to the greater of:

0.10% of the balance of your investmentin a Model Portfolio, or

$250.

The minimum trade size may not beapplied for:

initial investments

withdrawals

trades as a result of a re-weight initiatedto bring the cash component within aModel Portfolio back to the minimum,and

an investment manager has requestedan entire holding of a security to beremoved from the Model Portfolio.

Minimum cash balanceEach Listed Security Model Portfolio mustcontain a cash component of at least 1%,and each Multi-Asset Model Portfoliomust contain a cash component of at least2%. If the balance falls below theminimum, then the Model Portfolio willbe rebalanced. This means that securitieswould be sold to bring the cashcomponent back to the requiredminimum. This cash component is heldin your chosen platform’s Cash Account.This is currently allocated across a rangeof cash deposits managed by the NABGroup.

As tax is complex, we recommend thatyou contact your registered tax agentor the Australian Tax Office atato.gov.au

Tax considerationsWhile you may have to pay tax on yourinvestments, you could be eligible to claimsome of the fees as a tax deduction.

At the end of each financial year theplatform will send you a report to assistyou in completing your income tax return.

ReportingThe Platform may provide reporting suchas confirmation of transaction reports(daily), distribution statements (quarterly),tax statements and financial statements(annually). See your platform's offerdocument to understand what reportingit provides.

Constitutions and CompliancePlansCopies of the Constitution andCompliance Plan for the SMA are availablefree of charge upon request.

Please call us to obtain a copy.



https://www.ato.gov.au/

Investors’ rightsBecause investing in the SMA through aplatform is different to investing directly,there are some things you should be awareof:

you don’t have the right to attendmember meetings, vote or participatein such meetings, and

you won’t receive communicationsrelating to rights issues or corporateactions or provide us with any directionon how to act or vote. We will act inaccordance with the direction providedby the relevant investment manager,and

you don’t have access to the 14 daycooling-off period in the SMA, butplease seek advice from the platformoperator as to whether cooling-offrights apply to you, in relation to yourplatform account and

you generally can’t participate individend re-investment schemes.

Rights issues and corporateactionsInvestors in the SMA will not receivecommunications relating to rights issuesor corporate actions or provide us withany direction on how to act or vote.

We will act in accordance with the adviceor recommendation provided by therelevant investment manager.

Investors’ liabilityThe SMA’s underlying assets are ownedby NAL on behalf of investors. TheConstitution limits investors’ liability totheir investment in the SMA. However,we cannot give an absolute assurance thatyour liability to the SMA is limited in allcircumstances, as the issue has not beenfinally determined by a superior court.

ConsentsEach investment manager has given itswritten consent to being named andquoted in this PDS, and to the inclusionof statements made by it or said to bebased on statements made by it. As at thedate of this PDS these consents have notbeen withdrawn.

EligibilityThis offer is made in Australia in line withAustralian laws and will be regulated bythese laws.

Resolving complaintsIt’s important to us to provide a high levelof service, so we value feedback on howwe can do things better. If you have acomplaint, we can usually resolve itquickly over the phone on 132 652, or ifyou’d prefer to put your complaint inwriting, you can email us or send us aletter.

We’ll conduct an internal review andprovide you with an outcome in writingwith the reasons for our decision. Formore information, visitmlc.com.au/complaint

If you’re not satisfied with our resolution,or we haven’t responded to you in 45 days,you can lodge a complaint with theAustralian Financial Complaints Authority(AFCA).

Website: afca.org.auEmail: [email protected]: 1800 931 678 (free call)In writing to: Australian FinancialComplaints Authority, GPO Box 3,Melbourne, VIC 3001

AFCA is an external dispute resolutionscheme that deals with complaints fromconsumers in the financial system. AFCAprovides fair and independent financialservices complaint resolution that’s freeto consumers.

If you have a complaint about financialadvice you receive, you should follow thecomplaint resolution explained in theFinancial Services Guide provided by yourfinancial adviser.



https://www.mlc.com.au/adviser/nav_top/contact-us

https://afca.org.au/

mailto:[email protected]

For more information call us fromanywhere in Australia on 132 652 orcontact your financial adviser.

Postal addressGPO Box 2567Melbourne VIC 3001

Registered officeGround Floor, MLC Building105–153 Miller StreetNorth Sydney NSW 2060

mlc.com.au

Navigator Australia Limited ABN 45 006 302 987 AFSL 236466. Part of the National Australia Bank Group ofCompanies. An investment with MLC is not a deposit or liability of, and is not guaranteed by, NAB.

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