Our Approach To Investment Advice

Our advisers look at long term expectations. As Advisers recognise that results from investment decisions
have to be seen both in terms of the dollar value and the suitability of the returns.

This suitability of returns may be that returns are as capital gains or as income, with or without volatility.

Suitability might also take into account the consequential risk of any investment (that is, if something does go
wrong, what might be the flow-on effects to your given circumstances). Targeted results will come largely
from the strategic allocation between investment sectors (Australian shares, international shares, property,
fixed interest, etc).

Our Advisers are not tactical sector allocators; we do not advise you on how to make short term bets on
which sector will outperform another. Rather, we advise on a diversified and appropriate long term target
allocation that might vary strategically over time and in line with long term forecasts and comparative
opportunities. We define ourselves as ‘medium to long term strategic sector re-allocators’.

Market returns can be compressed into three elements: income; growth in income; and, the effect of changing
valuation ratios. We look at long-term expectations of market drivers and expects reversions to the long term
means or trends of the key indicators. Such key indicators include: Price to Earnings Ratios, Earnings per
Share, Corporate Profits as Share of GDP, Price Earnings of Australian Shares compared to International
Shares, etc.

We also believe that, where possible and in order to save transaction costs, changes over time in the strategic
allocation of capital to investment sectors should generally be made with new capital or from the earnings
from existing investments in preference to selling one investment to buy another.