Third Party Ratings

In this category we are looking for how each fund’s rating compares across various independent rating agencies.

Harbour Mercer, Russell, Morningstar, Research IP, MyFiduciary, Makao, Responsible Investment Association of Australasia and Mindful Money all review Harbour’s Australasian equity and fixed interest investment processes annually.

Asset consultants, Mercer and Russell, along with a number of institutional clients also conduct annual due diligence on Harbour’s operations.

Specifically, the Harbour NZ Corporate Bond Fund has a neutral rating from Morningstar whilst Harbour’s overall process, people, parent, performance and price for NZ Core Fixed Interest Fund is rated Bronze. Mercer and Russell both include Harbour’s fixed interest services in their clients’ implemented portfolios but do not make their ratings publicly available.

Neither the NZ Index Shares not the Sustainable NZ Shares funds have independent ratings, however, Harbour’s overall process, people, parent, performance and price for Harbour’s Australasian Equity and Australasian Equity Income Funds are rated Gold and Bronze by Morningstar respectively. Mercer and Russell both include Harbour’s Australasian equity services in their clients’ implemented portfolios but do not make their ratings publicly available.

BlackRock Lonsec, Morningstar and Zenith currently provide published ratings for iShares Australian Equity Index Fund

Comments

Dimensional Dimensional funds have independent ratings from Lonsec, Morningstar and Zenith, as illustrated below: Several funds are unrated, but that is acceptable.

Macquarie Asset Management (MAM)

NA Funds are unrated Russell Investment Funds Being a recent launch, the funds have yet to receive formal ratings from third parties. Fine.

Reports

In this category we are looking for whether the reports contain all of the information that is necessary and useful to the responsible fiduciary Are the reports consistently provided on a timely basis?

Fund manager Reports - summary Comments

Harbour

Harbour provided samples of monthly reports updated for their NZ Index Shares Fund, Sustainable NZ Shares Fund, along with the NZ Corporate Bond Fund.

Harbour is in the process of transitioning to Vermillion FactSet reporting which is scheduled to go live in November 2022 for October monthly reporting. Following is Harbours current process which will be automated into workflow but still involve the same parties.

• Performance data is provided by the Funds’ investment accountant, TEL

• Each Fund’s portfolio manager writes commentary including performance attribution and market outlook

• Harbour’s Compliance team certifies the Funds’ compliance with reference to the incident log and reports that capture any passive, active and third-party breaches.

• Client Service team collates reporting for clients

• Password-protected transaction statements and fund reports for all Harbour’s Managed investment Schemes are distributed by DataMail.

BlackRock BlackRock provided samples of monthly reports updated for both the BlackRock Indexed Emerging Markets IMI Equity Fund and the BlackRock Indexed Australian Equity Fund

BlackRock has a specialised reporting team responsible for sourcing, assembling and distributing timely and accurate client reporting packages based on standard and custom reporting requirements.

Dimensional Dimensional clients receive a standard set of monthly and, if requested, quarterly reporting including performance, portfolio characteristics, and top ten holdings, as well as attribution analysis with manager commentary describing an overview of the market and its return implications. Monthly reports are provided by the tenth business day of each month, while quarterly reports are produced by the fifteenth business day after quarter end.

Please refer to the document centre on our public website for the reports available by trust: https://www.dimensional.com/au-en/document-centre

Harbour reporting is generally accurate and detailed.

BlackRock did not mention reporting in relation to SUSM, but as we are exiting the fund in the current SAA review we will not pursue this.

Comprehensive.

Macquarie Asset Management (MAM)

Dimensional has an in-house client reporting team within the Global Client Group. This team reviews and approves all reports prior to sending to our clients.

Please see the response above for information regarding the reports we distribute and their frequency.

Macquarie provides fully consolidated monthly performance reporting by the 10th business day of each month and quarterly reporting on the 15th business day of the month following the end of the quarter They attached a sample of their standard monthly and quarterly investment reports.

In addition, Macquarie provides investors with an online reporting tool which is accessed through the Macquarie website. Through this extranet website, clients have access to information on portfolio holdings, valuations, or transactions for any specified date range. Information may be downloaded into an Excel spreadsheet or a PDF document if desired.

Historical monthly and quarterly reports, annual PIE tax information and certificates, along with quarterly management fee summaries are also available to be viewed and downloaded from the extranet website.

Macquarie’s standard reporting is compiled by their communications team in conjunction with portfolio managers.

In addition to their standard reporting, Macquarie were happy to discuss with clients any other reporting which may be required.

Very good.

Russell Investment Funds

Russell noted the following reports can be provided:

➢ A fund fact sheet for each asset class detailing; fund and benchmark results; a commentary outlining the major market themes and fund performance; breakdown of top 10 holdings, geographical allocations, and sector allocations.

➢ A monthly Sustainable Global Shares report, including details as per the factsheet but with further granularity on decarbonization outcomes and performance attribution.

Russell works with each client individually to assess their reporting requirements. If anything, additional to the above list is required, they would work to accommodate the client’s request.

A sample monthly fund factsheet and Sustainable Global Shares monthly report were provided.

Their monthly factsheets are compiled by the Performance & Reporting team based out of Sydney and signed off the Institutional Funds team in Auckland, with a market release target of business day 12. The monthly Sustainable Global Shares report is compiled by the Institutional Funds team in Auckland, with a target market release of business day 15.

This is fine. Vanguard Vanguard provides extensive reporting to all clients invested in Vanguard’s fund range. Vanguard provided their Wholesale Fund Reporting document that details the timing of delivery for these reports.

Vanguard’s clients receive:

• Transaction confirmation statements;

• Monthly transaction statements;

Vanguard’s reporting is sufficient and they have demonstrated they are amenable to providing additional or special reporting where appropriate.

• Income distribution statements;

• Annual Tax statements;

• Fund Fact Sheets - Fund Fact Sheets are updated monthly to provide fund performance and summarised portfolio data;

• Quarterly report - The Quarterly Report includes Fund Fact Sheets for all Vanguard Wholesale Funds

• Annual report (if requested);

• Newsletters –providing economic, educational and performance information; and

• Plain Talk guides – a series of educational booklets including topics on asset allocation.

Follow up items – None.

Requests for information

In this category we are looking for whether the investment manager consistently responds to requests for information by the fiduciary in a timely manner Do the responses contain the information requested? Are the responses easily understood?

Fund manager Requests for information - summary Comments

Harbour

In the instance where Harbour has the information to hand straight away, they will provide this either by email or phone as applicable.

Where information will take more than a day to source, then they will respond to that effect straight away then provide information as soon as possible.

Harbour will provide an acknowledgement or the information itself if available within the business day if received prior to 5pm.

Questions from Consilium can be sent to Ainsley McLaren (Executive Director), Shannon Murphy (Investment Specialist), or directed to portfolio managers Mark Brown, Susanna Lee or Craig Stent.

Questions from advisors can be sent to Shannon Murphy in the first instance (and she will coordinate a response from the Harbour team) or asked during the monthly webinars which the Fixed Income and Equity teams run each month.

Harbour aims to respond within 1 working day. If a query will take some time to investigate or respond to, they will acknowledge the question and say when they can expect a full response. Presentations and articles are put through peer and senior staff review processes. An executive director is required to approve all information Harbour releases.

BlackRock BlackRock provides direct access to multiple account managers. These account managers conduct our annual portfolio review meetings, lead product and market opportunity discussions, and be available for any ad-hoc queries about our portfolio or the markets in general. The team will also help with any service queries, for example, about

Harbour’s response rate and level of detail are commonly of high quality contracts, investing in new funds, portfolio activities, reporting, regulatory compliance, and billing.

Servicing and reporting requirements are facilitated by BlackRock account managers and this is functional.

Dimensional Dimensional believe communication is of prime importance in all their client relationships. To better understand and respond to the clients’ needs, Dimensional has a dedicated client service team that handles client communication, reporting, and servicing needs. Client service professionals and portfolio managers interact on a daily basis to discuss client-specific needs and requirements. This combined approach keeps clients fully informed of current research and developments while addressing any questions or requests they may have.

The client service team for Dimensional’s clients consists of:

• A representative from their Global Client Group who is the primary contact and coordinator for all aspects of client servicing. Tom Fellowes is the appointed Regional Director for Consilium.

• An individual in each of their client service and Operations teams who is available for operational instructions, client reporting and any other ad-hoc requests.

Additionally, a portfolio manager is available for portfolio and strategy meetings in person, via conference call, or by video conference when requested. The Portfolio Management team works with their Research group to provide performance data, analytics, and commentary.

Overall responsibility for responding to requests for information from investors in a timely and accurate manner is held with the relationship manager. Upon receipt of an information request, the relationship manager will make contact (email or phone) as soon as practicable with the sender to acknowledge receipt and discuss time frames for delivery.

Email correspondence is then saved in the client directory which is accessible by the wider NZ Client team. This allows another team member to easily pick up the request in the event that the responsible relationship manager is unavailable to complete the request. The client directory also contains a full history of correspondence.

The relationship managers also have weekly meetings to discuss in detail client requests currently pending and monitor any outstanding requests.

The relationship manager responsible for the account will endeavour to respond to the request, by phone or email, within 24 hours of request. The relationship manager will then communicate with the investor/adviser regarding the information required and deadlines.

Russell New Zealand has an experienced client service team who are able to call on expertise and knowledge of their global colleagues to ensure their clients expectations are exceeded. They ensure their clients are fully informed of the latest market developments through regular reporting, research materials and publications from various global teams within Russell. They believe it is vital to give clients regular access to the people that make the decisions relevant to their investments. Russell also have CRM systems which allow communication lists to be built ensuring the right information is disseminated to the right people at the right time. Russell also looks to leverage their digital technology, such as their website, as a means of disseminating much of their work, including fund factsheets, performance data, key operational data alongside the proprietary research.

Russell has communicated that specific questions from Consilium’s investment committee and advisers will typically be acknowledged within 24hrs of receipt and, depending on complexity, responded to in the following days. Beyond this their experience with other clients suggest quarterly webinars typically suffice.

DFA response times and detail etc are usually excellent.

This is fine and reflects our experience with MAM.

This appears fine.

Vanguard Vanguard offers the following services:

• Direct access to a relationship manager

• Direct access to their Australian based client service team

• Operational support for transactions

• Performance and account reporting

• Due diligence and audit support

• Access to Vanguard's broad range of thought leadership, both business and investment and research papers

It is the role of the Client Services team to work with their clients to deliver high quality operational outcomes. The Client Services team collaborates closely with internal Vanguard departments on day-to-day operational matters.

Vanguard has a response time of up to 48 hours for acknowledging questions or requests for information from investors.

Fine.

Follow up items – None. The managers generally provided comprehensive responses and, in our experience, they all generally respond promptly to any written questions.

Investment education

In this category we are looking at whether the investment manager provides adequate explanation of the investment decisions it makes and the factors it considers in making such decisions, so that we can understand and appropriately monitor such actions We want the investment company to provide support for investment education

Fund manager Investment education - summary Comments

Harbour Harbour provides the following to advisors and can also provide tailored presentations to Consilium advisors and investment team as required.

• Monthly advisor webinars

• Monthly reporting commentaries and outlook pieces

• Biannual seminars and advisor visits across the country

• Regular written Harbour Navigators providing economic, industry, ESG, and market analysis

• Fund fact sheets and updates

BlackRock For clients who are interested, BlackRock has provided training programs and seminars on the investment industry and understanding the outputs of their asset management, risk management, and investment accounting models and services. These programs are customized to the needs of each client and have addressed specific sectors of fixed income, risk management, accounting and operational issues. Less formally, BlackRock is also happy to host meetings for their clients to discuss topics of interest or to educate members of the client’s staff on areas where they have significant expertise.

BlackRock also offers client conferences and smaller seminars in selected cities, subject to compliance with BlackRock’s and client’s internal policies and approvals. They invite clients to attend these events to discuss investment strategies, issues of importance for their clients, and recent developments in the marketplace. Speakers may include BlackRock professionals as well as industry experts.

Harbour are strong proponents of investor communication and education.

BlackRock transfers knowledge in the following ways:

1. Informal discussions and consultations on an on-going basis;

2. Conference calls to present special and relevant studies;

3. Conference calls to present and discuss research and analysis that they may conduct on behalf of clients from time to time.

The BlackRock Investment Institute (BII) brings together BlackRock portfolio managers across asset classes, regions, and investment styles in forums, workshops, and calls to discuss timely investment topics. These investment debates allow portfolio managers to challenge each other’s thinking, generate new investment ideas, refine investment theses, and share best thinking and insights.

Leveraging the insights from BII debates into timely thought-provoking publications is another way BII keeps BlackRock’s portfolio managers and clients informed of the latest investment insights. BII publications highlight BlackRock’s best investment thinking, and showcase the firm’s thought leadership and expertise in investment solutions. BII deepens BlackRock’s engagement with clients through the publications, client events and oneon-one meetings. These foster investment dialogue and help BlackRock pinpoint client solutions.

Dimensional Dimensional noted that in addition to the details provided in question 1.4.1, they also offer clients and prospects the opportunity to attend educational lectures, conferences, customised trainings, and face-to-face meetings with their investment professionals and leading academics. Every year, Dimensional holds several conferences in their global offices to provide clients with opportunities for open and frank discussions on topics of concern with leading economists, experts on the latest academic research, and their senior investment professionals.

Client education, thought leadership, and knowledge transfer are fundamental tenets of Dimensional and underlie many of their interactions with investors Dimensional believe these tenets are crucial to developing and maintaining long-term relationships. It has always been Dimensional’s goal to bridge the gap between academic research and investment practice. Given their strong links to the academic community, they have provided their clients access to some of the leading academics in financial science. They have coordinated with these professors to provide “inhouse” lectures for clients; facilitated strategic discussions with key investment staff and senior management; and worked closely with clients and prospects to develop training programs customised to their needs.

Additionally, Dimensional has a dedicated Practice Management team that works with financial advisors to help them deliver an exceptional client experience. Dimensional’s focus on practice management includes a focus on client communications, helping Financial Advisors develop a framework for effective client education, messaging, and engagement; and business strategy, helping Financial Advisors leverage Dimensional’s practice management research and insights to innovate and grow their business, including detailed business planning through Dimensional’s Future Firm™ strategic visioning, and deep support for M&A and succession planning.

Dimensional’s client service team is dedicated to handling clients’ communication, reporting, and servicing needs. Portfolio managers and client service professionals interact on a daily basis to discuss clientspecific needs and requirements. This team approach keeps clients fully

With their roots in academia, DFA do devote significant time and energy to investment education generally

Macquarie Asset Management (MAM) informed of current research and developments while addressing any questions or requests they may have.

In the past, Macquarie Asset Management in New Zealand has produced a number of communications to ensure their clients are kept up to date with economic issues, market movements and changes to investment strategies. While the future communications framework is unclear until the Mercer transition completes, the following is a lit of prior services provided.

• An Economic and Market Update is produced at the end of each month. This outlines the key drivers of investment performance and market performance updates over the past month.

• Investment Insights are produced on an ad hoc basis covering subjects of a topical nature or to provide more in-depth insights into specific investment issues.

Copies of each of the above reports are available on the Insights hub of the Macquarie New Zealand website https://www.macquarieim.com

In addition, they hold a number of events to support their views in the market for clients. These include a monthly webinar ‘Portfolio Watch’ which covers an update on economic issues as well as their asset strategy. Macquarie also hold an Investment Outlook event at the beginning of each year.

In addition to the above material, Macquarie can provide full attribution to the investor on the Fund, eg full holdings reports.

On a daily basis a compliance report is generated confirming/denying compliance with investment guidelines and mandate. On request a monthly compliance certificate is available.

There is an Internal Controls Report which is an annual review of the internal controls by Ernst Young and is available to clients on request. This review is for the year ended 30th September each year and if the client’s balance date is different from that date we can provide a bridging letter. It will advise if there has been any change to the design of the internal controls or material exceptions identified in the period from the completion of the report to the balance date of the client.

Russell Investment Funds

Russell Investments has been utilising quarterly webinars as a means of providing advisers information around key investment decisions. These webinars provide an opportunity for clients to also ask questions and the recordings and materials are posted to their website. They note these compliment monthly reporting well. As travel restrictions loosen, we would hope to hold annual fund seminars with the relevant Portfolio Managers for the New Zealand based clients.

Russell publish their research and house views extensively through research reports, commentaries, and surveys. As a client, we receive Russell Investments’ research and publications as they are released, as well as full access to all past publications.

Various market and economic updates are also available for clients and advisers on their website, including the quarterly Global Market Outlook and weekly Market Week In Review video from their Global investment strategists.

https://russellinvestments.com/nz/insights/market-week-in-review https://russellinvestments.com/nz/global-market-outlook

Russell believes that it is important for their clients to be fully informed on all aspects of their investments with them They always aim to accommodate any ad hoc requests to provide additional information and if required a one-on-one discussion with the portfolio management team. Russell work collaboratively with their clients to ensure they have all the information they require.

Good.

Vanguard Vanguard provides the following investment information to investors and advisers:

• In office presentations - about Vanguard and the value of our business offered as needed. This can be topic or product specific such as Vanguard’s philosophy on Active Management, ETFs, etc.

• Specialist Access – access to investment product specialists (Product team) and thought leadership (Investment strategy group) based on opportunity and needs.

• Quarterly asset allocation report – providing economic and product reporting for the previous quarter.

Fine.

Follow up items – None. In general, the managers have also all demonstrated a willingness to respond positively to questions in these areas.

Insurance

In this category we are looking for whether the firm has adequate insurance to cover its business activities

Fund manager Insurance - summary Comments

Harbour Harbour has insurance cover for the following:

• Investment Managers Liability

• Statutory Liability

• Director’s & Officers Liability

• Cyber security

Harbour engages with a broker to ensure it is best practice and meets the conditions of our MIS license.

BlackRock BlackRock maintains the following types of global insurance coverage:

▪ Investment advisers professional liability (aka errors & omissions liability)

▪ Fidelity bond (aka crime or financial institution bond)

▪ ERISA Bond (Limits as required under ERISA)

BlackRock maintains professional liability insurance which covers loss, including legal fees and settlements, resulting from claims made against BlackRock, Inc. and its subsidiaries (“BlackRock”) by third parties resulting from a breach of fiduciary duty, error, misstatement, neglect, misleading statement, act or omission (“wrongful acts”) by BlackRock in the rendering or failing to render professional services on behalf of any client pursuant to a contract or agreement.

BlackRock maintains a Cyber Risk insurance which covers loss that BlackRock is legally obligated to pay resulting from a Claim alleging a Security Failure (failure of computer systems, unauthorized access/use of a computer system, virus transmission, denial of service, physical theft of hardware) or a Privacy Event (failure to protect confidential information). The policy also covers costs to restore/recollect/recreate electronic data, forensic investigation costs, notification costs, credit monitoring costs and other costs to comply with federal/statutory regulations incurred by BlackRock following a Security Failure or Privacy Event.

Fine, albeit no coverage amounts are listed.

Good detail except for no coverage amounts.

BlackRock maintains Directors & Officers Liability (D&O) insurance. BlackRock does not disclose any information on its D&O insurance as this information is proprietary and confidential to BlackRock. BlackRock maintains Workers Compensation / Employers’ Liability insurance where required by law and in amounts as required to meet statutory requirement

We do not disclose the insurer information; BlackRock only places coverage with insurers rated “Excellent” by AM Best.

Dimensional Dimensional notes that risk management affects all aspects of their business and the relationships with clients. To accommodate the continuous and evolving nature of risk management, they have adopted a holistic riskmanagement approach, with Dimensional’s Global Risk Review Committee, Investment Committee, and Compliance Department operating independently and in concert to manage and oversee risk firmwide. Dimensional’s insurance details are summarised below:

• Errors & Omissions / Directors & Officers: $10M (USD)

• Financial Institution Bond (Form B-2): $30M (USD)

• Asset Investment Managers Insurance: $14M (AUD)

• Crime Liability: $15M (USD)

• Cyber Security Liability: $3M (USD)

Continuous improvement is employed to adapt the framework to industry best practices and the evolving regulatory landscape.

This is fine.

Macquarie Asset Management (MAM)

Macquarie Group Limited and subsidiary companies are insured for professional indemnity, bankers’ bond and electronic and computer crime insurances, which are considered prudent and appropriate to an organisation of the scale and scope of Macquarie Group. In line with normal market practice for these insurances, typically, the Group renews its insurances annually.

Fine, albeit no coverage amounts are listed.

Russell Investment Funds

Russell Investments maintain a joint professional liability policy provided through multiple insurance carriers with coverage of no less than $60 million. This policy covers actual or alleged errors, misstatements, misleading statements, acts, omissions, or breach of duties by their directors, officers, and employees. Russell also maintain a joint fidelity bond provided through multiple carriers with a coverage limit of $50 million ($25 million per loss). The bond provides coverage against employee forgery, theft, fraud, or extortion. Other key coverages include Cyber Security ($10 million) and excess liability ($26 million). Russell believes this is sufficient coverage, since the levels they are covered at are higher than the amounts typically required by the clients or regulations. Russell notes that they do not anticipate any changes to these coverage levels.

Vanguard Vanguards Investments Australia Ltd insurance details are summarised below:

• Directors & Officers: $5M (AUD)

• Professional Indemnity / Crime: $5M (AUD)

• Crime Insurance: $5M (AUD)

• Combined Maximum Limit for all Coverage Sections: $10M

Insurer is Chubb Insurance Australia Limited

Follow up items

Insolvency

– None

Good.

Adequate

In this category we are looking for whether investors’ funds are secure if the investment management firm were to become insolvent.

Harbour All assets of Harbours Managed Funds are held in custody by New Zealand Guardian Trust, or its appointed custodian Trustees Executors. This means the assets are protected in the very unusual circumstance they were deemed to be insolvent.

As part of their MIS license, Harbour must record a positive Net Tangible Asset (NTA). The NTA is monitored and signed off on a monthly basis and details provided to the Supervisor and Board. If Harbour became insolvent, they would engage with the Supervisor and the regulated body, the Financial Market Authority, to ensure that clients assets were protected in line, and proper process was followed from the Funds Trust Deed.

This is fine.

BlackRock

All client assets are held by a third party custodian which is not part of the BlackRock, Inc. Group. The securities in the investment portfolio with the custodian are held in a designated nominee account on the client’s behalf.

Whilst these outsourcing arrangements give rise to risks associated with a provider service failure, this exposure is considered to be mitigated by the fact that these services are diversified across a number of leading providers and geographic locations. BlackRock has staff with material experience in managing changes between existing providers should the need arise. Detailed service level agreements and key performance indicator reports are actively utilised by the oversight functions to clearly define and monitor the quality of the services received. This is further enhanced by a risk-based approach towards ongoing health check / due diligence visits.

In the event that the custodian, BlackRock, Inc. Group or any one of its affiliated companies become insolvent or default the securities remain in the designated nominee account and are ring-fenced and protected from the creditors of the custodian as the client retains title as the beneficial owner of these assets. However, any cash that the custodian holds on the client’s behalf (for instance, which it may receive through dividend payments, proceeds of sale, etc.) will not be afforded this protection and therefore will be included in the pool of the custodian's assets to be distributed amongst all its creditors.

Dimensional PricewaterhouseCoopers LLP (PwC), Dimensional’s independent auditor, performs an annual audit of the firm’s financial statements and has not identified any significant deficiencies as of the most recent audit.

In the unlikely event of an occurrence that might cause the insolvency of one of Dimensional’s subsidiary organisations, each subsidiary has been legally organised to provide limited liability. That said, Dimensional is financially sound with a capital structure which allows for future growth. The firm generates a meaningful operating profit and maintains sufficient liquidity to meet operating needs.

All assets are legally held in a trust by an independent Custodian and in the event of Dimensional going into bankruptcy, the Regulator (ASIC) or an investor may apply to the Court to appoint a new Responsible Entity. This Responsible Entity would have the power to manage the fund. If the fund itself were viable and solvent, it would continue as normal and investors would be able to redeem their interests as normal.

Good.

Fine.

Macquarie Asset Management (MAM) The funds are unit trusts registered as a managed investment scheme under the Financial Markets Conduct Act 2013 (FMCA). Investors Fine.

Russell Investment Funds

receive units in each fund. Units do not give investors legal ownership of the fund's assets, but they do give investors an entitlement to the returns on the fund's assets.

As required by the FMCA, each fund's assets are held independently of Macquarie Asset Management Public Investments (NZ) Limited (MAMPI), either by The New Zealand Guardian Trust Company Limited (NZGT) as the fund's trustee/supervisor or by BNP Paribas Securities Services (BNP) as NZGT's delegated custodian. The funds are not geared, and MAMPI takes no security or charge over their assets. As such, MAMPI's insolvency would not expose the funds' assets to its creditors. Those assets would continue to be held by NZGT/BNP on trust for investors.

If MAMPI became insolvent, it would cease to be the manager of the funds under the governing trust deed. NZGT, as trustee/supervisor, would be responsible for appointing a new permanent manager that meets the FMCA requirements. If required, a temporary manager could be appointed by NZGT (or the Financial Markets Authority) to hold office for any interim period while a permanent manager was being found.

Unless otherwise terminated, the funds would continue in existence through and beyond this process. There would be no return of assets to investors. Those assets would continue to be independently held by NZGT or BNP on trust for investors and protected from MAMPI's creditors.

Fund assets are not held by IIS (the licensed manager), instead they are held by an independent custodian. BNP Paribas will act as custodian for the Sustainable Global Shares Fund. Public Trust, as supervisor, has the power to remove IIS as manager in the event of bankruptcy. Full details of process are outlined in the Trust Deed, which can be found on the scheme register at www.discloseregister.companiesoffice.govt.nz

Vanguard

The Vanguard funds are structured in a way that they are legally independent of the Vanguard Group. Whilst Vanguard Group companies are appointed in various capacities to assist in the management of the funds, the funds themselves could continue to operate in the unlikely event that the Vanguard Group were to cease its operations. The structural and legal segregation of the Vanguard funds also means that assets held within them cannot be made available to satisfy the claims of creditors of the Vanguard Group.

Were Vanguard to become insolvent or go bankrupt, but still continued to operate as a going concern, it would still be able to provide services to the fund with approval of the relevant fund boards. In the event that Vanguard could not continue to operate as a going concern, the Vanguard Group companies providing services to the relevant fund would need to be replaced by another service provider at the discretion of the relevant fund’s board of directors. Where this was not possible, then the directors have the ability to liquidate the fund and return the assets to fund investors. In any case fund shareholders would not lose money, however it should be pointed out that a change in service provider may result in fund management charges increasing.

In addition, client assets within the Vanguard funds are protected in ring-fenced client accounts in compliance with the relevant client asset rules as stipulated by the FCA and the CBI (as appropriate); all accounts are monitored on a regular basis. Only limited / authorised individuals are provided with access.

In accordance with UCITS rules all Vanguard fund assets must be held with a custodian in a segregated account that cannot be co-mingled with assets belonging to any another legal entity. In the event of an insolvency or bankruptcy event at the custodian, the segregated account would be protected from claims of creditors of the custodian. The contractual arrangements between the relevant Vanguard fund and the custodian stipulate the orderly transfer of custodial assets to another service provider. Again, fund shareholders would not lose money.

Follow up items – None

Independent verification

In this category we are looking for whether the firm is independently audited and by what firm

Fund manager Independent verification - summary Comments

Harbour

Harbour engages KPMG to conduct a controls objective audit on the Harbour business each year. The Controls Report describes the relevant controls and the related control objectives in operation for the year. The report addresses whether the controls were suitably designed to achieve the specified control objectives, whether the controls were implemented and whether the controls operated effectively for the year.

The Controls Report is prepared in accordance with the guidelines in the International Standard on Assurance Engagements (New Zealand) 3402 Assurance Reports on Controls at a Service Organisation (ISAE(NZ)3402) with reference to Australian Auditing Guidance Statement No. 007 Audit Implications of the Use of Service Organisations for Investment Management Services (GS 007).

An audit is conducted every three years (most recently by BDO) of Harbour’s AML (Anti Money Laundering) processes and make sure they are in line with Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT).

BlackRock BlackRock enjoys a strong financial position. The firm serves a diverse universe of institutional and retail investors globally. Products are offered both directly and through financial intermediaries. We seek to leverage our broad capabilities and global perspective to help clients address investment and risk management challenges and access attractive investment opportunities. BlackRock’s most recent annual report and quarterly earnings release can be found on our investor relations website at the following link: http://ir.blackrock.com/

Deloitte & Touche LLP is the company’s principal auditor since 2002 Dimensional The following external compliance audits are conducted annually:

Deloitte Touche Tohmatsu

The results of the annual Report on Internal Controls: GS007 and Compliance Plan audits are reported to Dimensional Australia’s:

• Board;

• Compliance Committee;

• Risk and Fiduciary Committee; and

• Senior Management

PricewaterhouseCoopers

The results of the financial statements audits for Dimensional Australia’s trusts and for Dimensional Australia Limited are reported to Dimensional Australia’s Board and senior management.

The Compliance Group also conducts an annual review of the global compliance program in accordance with SEC requirements and provides a written report of the review to the Board of Directors of the general partner of Dimensional Fund Advisors LP (“Dimensional’s Board”).

Macquarie Asset Management (MAM) External auditors, Ernst & Young, conduct an independent financial audit of Macquarie Investment Funds on an annual basis. As part of this audit, Ernst & Young provide a management letter outlining detailed findings from their audit, including any internal control weaknesses identified. The resolution and completion of these management issues are reported to the Operational Risk & Compliance Committee and the boards of Macquarie Asset Management (NZ) Limited and Macquarie Asset Management Public Investments (NZ) Limited.

Russell Investment Funds

IIS is currently audited by PwC. Audit is in accordance with the NZ equivalents to International Financial Reporting Standards Reduced Disclosure Regime (NZ IFRS RDR).

Vanguard PricewaterhouseCoopers Australia.

(PwC Australia, ABN 52 780 433 757) is engaged to provide a variety of assurance engagements over the financial reporting and regulation of the funds and Vanguard Investments Australia.

Follow up items – None In the next review we will additionally ask for information regarding the audit results of the three most recent audits.

Regulatory reviews

In this category we are looking for whether the fund manager can submit details in respect of any recent regulatory review?

Fund manager Regulatory reviews - summary

Harbour

Harbour has not yet had a regulatory inspection by the local regulator. Harbour does meet with the Funds’ Supervisor quarterly.

BlackRock Regulatory reviews or investigations into BIMAL in the last two years have only comprised industry-wide reviews; including in relation to Greenwashing and RE Governance. BlackRock does not provide details of the findings of regulatory investigations to clients or other third parties.

Dimensional

Macquarie Asset Management (MAM)

Over the last ten years, DFA Australia Limited (“Dimensional”), as licensed Responsible Entity of the Dimensional Wholesale Trusts (“Trusts”), has not been subject to a regulatory inspection by either ASIC or AUSTRAC.

Macquarie Asset Management Public Investments (NZ) Limited is licensed by the Financial Markets Authority as a manager of registered managed investment schemes. As a licensed manager, their supervisor ‘The New Zealand Guardian Trust Company Limited's’ role includes supervising compliance with the relevant market service licence obligations. Macquarie provide regular reporting to the supervisor, as well as meet with them monthly to enable them to monitor the business.

The following audits are undertaken in relation to the business. Some of these are undertaken by the custodian and fund services provider, BNP Paribas.

Comments

Russell Investment Funds

• Audited financial statements are required for the registered managed investment schemes managed by MAMPINZL (due by 31 July).

• Audited financial statements are required for MAMPINZL and its parent, Macquarie Asset Management (NZ) Limited (MAMNZL). For 2023, this is required by 31 July).

• Assurance engagements (Control audits) are undertaken by external auditors on the custodian’s processes. This is required annually, but the Custodian, BNP Paribas, arranges this six-monthly.

• A collective audit on the register (managed by BNP Paribas) is undertaken by an external auditor annually (last July 2022).

• Macquarie also have EY perform a controls audit annually on certain internal processes.

Russell Investments Group Limited is supervised by the FMA for AML/CFT purposes. In January 2019 the FMA requested a copy of Russell Investments Group Limited’s AML audit reports as part of an industry review. As a result, they issued a warning to Russell Investments Group Limited as one of their audits was not completed within 2 years of completion of the prior audit (it was commenced within 2 years but not completed within 2 years). Russell noted this was a technical issue only and it was not clear from the law or readily available guidance exactly how the 2-year requirement was to be interpreted. There were no penalties accompanying the warning.

Vanguard We are not aware of any recent regulatory inspections.

Follow up items – None. It is interesting to note that in many cases the firms have not been subject to a recent regulatory review which limits the effectiveness of this question.

Business continuity

In this category we are looking for whether the firm has a business continuity plan and when was it last enacted

Fund manager

Business continuity - summary

Comments

Harbour Harbour has a BCP plan which is updated annually and approved by their Board. The last time Harbour enacted it was in August 2021, during the COVID-19 lockdown where they were advised to all work from home. This was achieved seamlessly due to their technology infrastructure, Microsoft 365, being cloud based and all staff members having a work set up at home.

Harbour has noted that their BCP is available to us on request.

Good. BlackRock BlackRock exercises its BCPs to verify the procedures for recovering business operations are appropriate, and that key personnel are familiar with documented procedures. Each year, several exercises are performed:

1. Remote Access (i.e., from home or another external location)

2. Alternate location (i.e., dedicated recovery site or alternate BlackRock office)

3. Work transfer (i.e., transferring workload to an unaffected office and team)

4. System fail-over testing, including external vendors where appropriate

5. Evacuation drills, notification system tests, and periodic generator tests

BCM exercise results are documented, reviewed and distributed as appropriate following each exercise. Recommendations for improvements to the recovery process are identified, risk-rated, and any corrective actions clearly defined and assigned to the appropriate personnel.

Did not provide details of last BCP enactment, but good details in relation to the BCP itself.

BlackRock conducts an annual Disaster Recovery test for each of its production data centers. During the test, the data center is isolated from the BlackRock network to simulate a total loss of the facility.

Applications are failed over to secondary data centers within the stated Recovery Time Objective (RTO) and the functionality is validated by qualified testers.

Disaster Recovery test results are documented, reviewed and distributed to key executives following each test. Documentation includes an overview of the recovery times, a pass/fail assessment.

BlackRock has noted that their BCP is unavailable to us on request. Dimensional Dimensional Fund Advisors LP and its affiliates (collectively, “they” or “Dimensional”) have adopted a Business Continuity and Disaster Recovery Policy (“Policy”) with a goal to achieve continuity of their business operations in the event of a disaster or other disruption. In an effort to meet this commitment, Dimensional maintains a Business Continuity and Disaster Recovery Program (the “BC/DR Program”).

The BC/DR Program seeks to address various types of business disruption, broadly defined as any event that prevents access to Dimensional’s critical office spaces, significantly limits Dimensional’s use of its technology, or materially impedes Dimensional’s ability to communicate with clients.

With any disruption, their priority is employee safety and then resumption of the critical processes and systems.

The BC/DR Program is supported by Business Continuity Plans, Disaster Recovery Plans, and Crisis Management Team Plans (collectively, the “Plans”) that include location- and department-specific recovery procedures and contact information for use by that location or department in meeting its recovery responsibilities.

Dimensional’s disaster recovery plans are tested at least on an annual basis. They conduct exercises of their disaster recovery procedures each year, and the plan is modified as needed.

The Business Continuity summary on the public website was updated as of May 2021. Please refer to the BCDR Events and Exercises attachment as of September 2022 for more information about the latest tests. The BCDR plan can be found here: https://www.dimensional.com/au-en/businesscontinuity-and-disaster-recovery

Good, although again no information on the latest BCP enactment.

Macquarie Asset Management (MAM)

Macquarie has a comprehensive disaster recovery plan which is continually reviewed and updated. There are two major components to the plan: business continuity and systems continuity.

Both components of the disaster recovery plan include details on key staff, disaster declaration, evacuation overview, notification procedures, recovery plan activation procedures for each business area, and system. They have disaster recovery sites for both staff premises and data centres where they host applications and infrastructure. The recovery time objectives depend on the business criticality of the application.

The following recovery procedures are currently in existence:

• Servers for all critical applications are backed up in alternate locations.

Good, although no information on the latest BCP enactment.

• Back-ups are performed daily and are kept for 8 weeks; monthly backups are kept for 7 years.

• Backups are stored offsite.

• Replicated servers are located at head office and also at the data recovery site.

Critical applications are recovered within 2 hours, as data are mirrored in real time. This enables critical business functionality to be available and the business to be operational within 2 hours. Other less important systems are recovered within 4, 12 and 24 hour timeframes, depending on their level of importance.

Macquarie have noted they do not provide their BCP to external parties, however, they noted is it available for inspection as part of a site visit. Russell Investment Funds Russell has a current BCP that they partially enacted back in March 2020. This was in response to local authorities' pandemic restrictions, e.g. working from home, instead of the office.

Russell has note that their BCP is available to view on request.

Good. Vanguard Vanguard Investments Australia Ltd (VIA) supplied their business contingency management certificate (BCM) which has internally confirmed that VIA have had appropriate business contingency arrangements for the year ended 30 June 2022 in the following areas:

Good, although no information on the latest BCP enactment.

• Crisis management procedures,

• Business contingency plans; and

• Technology recovery plans

Their Business Contingency Framework was maintained through: a) Regular review and update of the abovementioned plans and supporting documentation; b) Regular drills by VIA crew to exercise the implementation of the Framework; and c) Alignment of relevant processes and supporting documentation to reflect changes in VIA’s business operations.

VIA continues to implement and maintain the Business Contingency Framework, as governed by VIA’s Board delegated risk committee.

Follow up items – None While not all firms confirmed their last enactment of their BCP, it is reasonable to assume that as their businesses were able to effectively navigate the recent Covid lockdowns (from 2020 to 2022), that their BCP operability is working. We will not drop the question from our survey, but we are not sufficiently concerned about this point to chase the firms up to nominate a specific BCP enactment date.