Benefits of investing in the Smarter Money Higher Income Fund - Assisted Investor

• The investment manager actively adjusts the Fund's portfolio of Australian cash, bonds, and listed income securities in order to maximise returns while minimising risk.

• Targets returns above the RBA cash rate plus 1.5% to 3.0% per annum after management costs - see Fees and costs section of the PDS for details.

• The Fund invests in wholesale bonds issued by governments, banks and companies that are not always easy for individual investors to access.

• The Fund has no capped or fixed return, as would be the case with a fixed term deposit.

• The Fund has no fixed minimum term, as would be the case with a term deposit.

• Aims to reliably distribute quarterly income above the returns available on traditional cash products.

• You can access your investment anytime without penalties or break costs subject to normal liquidity and spreads.

• Withdrawals generally available in your bank account after 3 Business Days.

Risk level

Low to Medium (SRM 3)

Investor suitability

Those seeking returns in excess of the RBA cash rate plus 1.5% to 3.0% per annum, after management costs, over a rolling 12 month period.

About the Fund

Smarter Money Higher Income is a low duration, short-term fixed-interest investment solution that targets returns that outperform the Reserve Bank of Australia's cash rate by 1.5% - 3.0% per annum after all fees, over rolling 12 month periods.

SMHI actively invest in a portfolio of Australian bank deposits, floating-rate notes and hybrids with a target dollar-weighted average credit rating in the "A band. SMHI does not invest in fixed-rate bonds (unless interest rate risk is swapped out), equities or overseas bonds. SMHI's portfolio managers add value through active asset-selection with materially lower volatility and interest rate duration risk than traditional fixed interest funds.

Investment objective

The Fund targets returns in excess of the RBA cash rate plus 1.5% to 3.0% per annum, after management costs, over a rolling 12 month period. Investors targeting returns above deposits and other "active cash investments may wish to consider the Fund.

How we invest your money

The Investment Manager is an active manager. This entails applying bottom-up fundamental analysis of both issuers of the securities and the credit quality and structural features of the securities themselves to build a diversified portfolio of Australian cash and debt investments, including listed hybrids, that offer attractive total returns whilst minimising the risk of capital loss. Active managers seek to exploit mispricings of assets and/or find undervalued securities in order to produce superior performance.

The Fund offers relatively low interest rate/duration risk with a target of less than 3 months by investing in cash and floating-rate notes, which generally track the returns of the RBA cash rate plus a spread or margin, and limiting the maximum term of any fixed-rate securities to 24 months unless the interest rate has been hedged to floating.

In addition to an active investment philosophy that seeks to profit from mispriced assets, the Fund also employs active asset-allocation between cash and riskier debt/hybrids securities. The Fund retains the agility to switch between cash and debt securities based on the portfolio managers' valuation views of each sector. When credit spreads are wide and the risk-return payoff on debt securities may be higher than cash, the exposure to these debt securities may increase. Equally when credit spreads compress the portfolio weight to cash may rise.

The ability to invest 100% in cash is a defensive attribute of the Fund.

Although the Fund is not the same as a bank account, the Fund does have a considered and diversified investment approach:

• the Fund can invest in bonds issued by Australian incorporated companies (or their wholly-owned subsidiaries) in foreign currencies, subject to hedging the exchange rate risk associated with these bonds (principal and interest) back into Australian dollars.

• all the Fund's investments are Australian dollar-denominated or fully hedged into Australian dollars (so the Fund has no direct exposure to foreign exchange risk, for example), the Fund is diversified, investing across a range of Australian deposits and cash securities, floating-rate notes, fixed-rate bonds, asset-backed bonds and hybrid securities,

• the Fund targets a dollar-weighted average Standard & Poor's 'A' credit rating across its bonds and deposits (or equivalent rating as determined by rating agencies),

• the Fund may also invest in units in an ASX-listed fund or trust that solely invests in Australian-dollar denominated deposits, issued by ADIs that are regulated by APRA,

• the Fund does not hold more than 10% of its portfolio in unrated unlisted debt securities,

• the Fund does not hold more than 15% of its portfolio in ASX listed hybrids,

• the Fund does not invest directly in listed or unlisted ordinary shares (i.e. equities) although it can invest in exchange traded funds (ETFs), listed income securities and convertible preference shares (or hybrids),

• the Investment Manager seeks to limit the Fund's interest rate risk, as defined by changes in capital values resulting from interest rate movements, by investing primarily in short-term deposits and floating-rate debt securities that generally track the RBA's cash rate and fixed-rate bonds with maturities no greater than 24 months unless the interest rate is hedged to floating with a target of keeping the portfolio's interest rate duration risk to less than 3 months,

• the Fund is not permitted to use leverage or gearing to enhance its returns, and

• the Fund has a Low to Medium risk rating under the "standard risk measure (see Section 4 of the PDS for details).

The Fund also has access to liquidity facilities that allow assets that are classified as "eligible securities for repurchase by the RBA to be swapped with major Australian and international trading banks in exchange for cash, subject to these banks accepting these assets as part of their own repurchase operations.

Asset allocation

The Fund is actively managed by the Investment Manager and aims to take advantage of investment opportunities, and assets which are considered mispriced, within the Australian cash, fixed-income and listed hybrid (including bonds and preference shares with equity conversion features) markets. The fund targets holding 30 to 60 bonds, hybrid securities, and cash investments as appropriate, although the actual number of assets may vary from this target.

Investment in the Fund is not the same as putting your money into a bank account. The Fund invests in a range of Australian deposits, money market securities, rated and unrated floating rate notes, fixed-rate bonds, asset-backed bonds, and listed hybrids. The Fund may also invest in units in an ASX-listed fund or trust that solely invests in Australian-dollar denominated deposits, issued by Authorised Deposit-taking Institutions (ADIs) which are regulated by the Australian Prudential Regulation Authority (APRA). It is also possible that from time to time derivatives may be used to manage the Fund's risks when considered appropriate.