The 12-step process of building a great portfolio by Morningstar

Key takeaways

  • To build a robust portfolio, we believe 12-steps need to be agreed and practiced consistently.
  • This process helps take a complex operating system and simplifies it into actionable stages.
  • This is the structure that all portfolios overseen by MeDirect follow, providing dependability of approach.

Investing is often about taking the complex and simplifying it into digestible and relevant chunks. If this can be done repeatedly, you’re well on your way to healthy
risk-adjusted returns. With this in mind, we thought it would be useful to highlight why we decided on a 12-step process that can be consistently used for portfolio
construction—including why this helps an investor to reach their goals.

To start, we must agree that building anything worthwhile requires three core pieces of knowledge. We’ve drawn a parallel with how one would select a sports team, but the
same applies if building a house, building a ship or building a portfolio:

  • Appreciate the rules: Know the goal, including the parameters and any constraints.
  • Rank the players: Obtain a thorough understanding of each implementation option, accounting for both the expected reward and any associated risk.
  • Select the team: Take all available information, consider how each implementation option might work together and find the most appropriate overall solution.

Of course, we must highlight that this process is iterative. We never know how a given player will perform on a given day, nor whether a storm will hit, but if the framework is
holistically followed it should produce results over the long term. Turning this into a specific investment framework, the 12-steps we believe are best placed to help investors
are as follows:
Mandate Morningstar Portfolio MeDirect
 

Collectively, these steps allow us to deliver a clear investment process that increases the likelihood of reaching an investors’ goals. For further context, we now attempt to peel
back some of the jargon and run through each of the 12 steps in order.

1. Outlining investment objectives

It is paramount that we emphasise the importance of the first step—to be clear on the objective. Without this grounding, we risk being boundless and haphazard. This goals-based
approach is essential to your success and is a common feature across every portfolio MeDirect oversees. With a clearly-defined objective in mind, we are then in a position to i
dentify the appropriate parameters, constraints and portfolio construction rules to achieve the given mandate.

2. Identifying portfolio constraints

This is our forward defense and a part of the process we pay particular attention to. When identifying the parameters, constraints and rules we will take into account a variety of
factors, but the main considerations are as follows:

  • The minimum time horizon of an investor profile
  • Any risk limits of the investor profile
  • Any limitations to the investment universe
  • Controls to avoid concentration risk (for example, maximum exposure to a currency)

3. Determining portfolio construction rules

This step guides the construction of portfolios that allocate the most capital to the most attractive opportunities and build positions over time to intelligently align position
sizing with investment conviction levels. To build out the rules of engagement, we might consider the following examples in this step:

  • Position ranges—for example, if the smallest position should exceed a certain level.
  • Position size steps—for example, whether positions should increase or decrease by minimum increments.
  • Low risk/defensive position sizing—for example, whether cash is considered the default asset when the opportunity set is unattractive.
  • Turnover – a maximum turnover level set for the strategy.

4. Identifying investments available for inclusion

Once we have agreed on the mandate and the rules of engagement, we look to populate a portfolio with the best possible investments. Underlying this, we know that asset allocation
decisions will be a key driver of outcomes, so we place a meaningful emphasis on the valuations offered by various asset classes. We also couple this with a comprehensive investment
selection framework, including monitoring our preferred investment vehicles.

It is worth noting from the outset our process is not robotic or overly quantitative. Instead, our asset allocation process follows a consistent and disciplined manner that
considers how attractive eligible investments are relative to the rest of the investment
universe.

In this regard, we must acknowledge that the investment universe is vast and complex, with tens of thousands of open-ended funds in operation and many more direct
equities and bonds. On any given day, we could see a new entrant, a merger or a wind-down of a fund. We can also see changes within each fund, such as the departure
of a regarded manager or new staff with conflicting styles. This imposes a further risk to the portfolio management process and therefore requires careful attention.

At the heart of the qualitative investment selection process is the concept of a five-pillar rating structure. These pillars – People, Process, Performance, Parent, and
Price – serve as the backbone of the investment selection appraisal approach. The process by which we move from analytical research to making selection decisions involves the
construction and ongoing maintenance of a “Buy-list”.

In this sense, finding investment opportunities isn’t just about great ideas; it’s also about selecting investments that complement each other and play an active role in fulfilling
the ultimate objective. From an asset allocation and investment selection perspective, this commences with a thorough understanding of the playing field we operate in and requires
a deep understanding of what role each asset class has in a portfolio.

5. Understand reward versus risk

Risk management at a portfolio level can be complex, multifaceted, and vary over time. Our definition of investment risk (the ‘permanent loss of capital’), means we believe one
of the best ways to control for risk is to buy strong investment vehicles in fundamentally strong asset classes. Integral to all of our analysis, we want to have a firm handle
of whether we are taking the appropriate amount of risk given our view on markets.

To do this, we apply valuation analysis supported by in-depth fundamental research
to find opportunities. We seek to buy overlooked investments, especially those that offer sound fundamentals at an attractive price. Our valuation analysis tells us
how attractively priced an investment is, while insight of the fundamental drivers of asset prices increases the probability that we will get more than we pay for.
For this reason, valuations and risk are joined at the hip.

Ultimately, this part of the portfolio construction process supports the fact that portfolios are managed with a clear understanding of risk as well as the expected rewards on
offer.

6. Assigning conviction levels

Investing requires us to be independent and curious; continually evolving and searching for better ways to allocate money. Therefore, even with the benefit of a broad
opportunity set, investing requires experience, dedication and the application of a robust and repeatable asset allocation process.

This judgement-driven approach allows us to maximise our exposure to our best investment ideas and accounts for the complexity and multifaceted nature of investment risk.
We un-layer these convictions and rank each asset via four means:

  • Absolute valuation – we want a clear understanding of what each asset can be expected to deliver over a 10-year time horizon.
  • Relative valuation – we want to understand how well the asset ranks compared to other markets.
  • Contrarian sentiment – we want to identify whether current sentiment is supportive to our conviction in a long-term context.
  • Fundamental risk – we want to clearly understand the range of possible scenarios, as well as any risk that would cause a judgement error.

7. Ranking the opportunity set

Investing is about the ranking of our convictions and risk management. So, armed with our analysis—our global team works together to rank the available investment universe.
We seek to gain the largest exposure to our best ideas that are the most underpriced (that is, have the largest difference between price and fair value), while building robust
asset allocations designed to stand up to challenging investment environments or investment errors.

Underpinning this, we know that if valuation-driven investors are to succeed they must do so unconventionally. They must overcome their biases and often go against the views
of their peers. Many investors lack the mental toughness to do this, which is why few are able to beat the market benchmark over a long period of time. For this reason, we will
continue to monitor sentiment as a part of our capital markets research, seeking to take a contrarian approach. The general idea is to be overweight to assets with poor
sentiment and vice versa.

In practice, we compile a ranking of the investment universe to understand the landscape in a structured manner.

8. Producing all feasible portfolio iterations

An extremely important evaluation as we monitor portfolios is how the selected investments complement each other. This part of the process involves qualitative judgements which is
supported by due diligence testing. This is built around a variety of factors, including any style and size biases, as over the long term, investors may or may not benefit from
having this exposure.

In many cases, it is not determining the fair value itself that is confronting, but rather what you do when the price is very different from fair value.
We continue to believe a willingness to be different and act on large differences between price and fair value is essential for long-term success.

While this part of the investment process is far more qualitative than quantitative, we will utilise an array of tools where appropriate to allow for decisions to be made with
the greatest sense of confidence. We perform due diligence on all portfolio iterations to arrive at our highest conviction ideas.

9. Development of portfolio quality characteristics

The next step is to pull this together into a portfolio context. It is therefore important to understand risk and return looking ahead into the future, not looking at the past,
just like it would not be safe to drive a car looking only in the rear-view mirror. Our research produces insight into not only future investment opportunities but also their
attendant fundamental drivers of risk. By better understanding these forward-looking risk drivers, we can diversify portfolios for the future rather than basing these decisions
on the past.

For example, we may consider deflation and negative economic growth to be a key risk for a multi-asset portfolio. While bonds may perform well in this environment, we may end up
paying a very high price for this protection, akin to overpriced insurance. This is an expensive strategy that tends to lose value in most environments given the high prices paid.

It is therefore about more than just spreading your eggs, as it’s possible for investments in different asset classes to be affected by the same economic developments.

10. Identifying the most attractive portfolio composition

The primary objective of this stage of the process is to ensure concentration risk is mitigated and that any decision regarding a portfolio has a clear idea of what risks may
be apparent and what mix of investment types may provide the greatest risk-adjusted returns. Inherently, all assets should not be expected to perform well simultaneously.

In order to accomplish this, we apply a robust risk methodology to evaluate asset overlap. This involves analysis of risk, along with traditional correlation assessments to see
how complementary they are within the overall framework. The goal is to establish a specific role for each asset to play in the overall investment mix. With access to this insight
and conviction surrounding our investment process, we can then implement an effective total customer solution. Risk management is therefore at the heart of this part of the process,
which can be accommodated in conjunction with our investment selection framework.

11. Iteration of portfolio sizing

With a firm idea of how the portfolio will behave, we are in a position to populate our views with the right investment vehicles. This means the team can focus the exposure
of the portfolio on the best ideas (that is, selections we believe have the greatest likelihood of outperforming), while maintaining diversification in our selection process.
This is designed in such a manner that it can stand up to challenging investment environments.

As a part of this process, Portfolio Managers are required to consider the following investment considerations:

  • Why do we own it (or should we own it)?
  • What role does it play?
  • What are our expectations?
  • What are the issues/risks?
  • What would cause us to sell it?

12. Finalising holdings

Taking all of the above, we are finally in a position to select the most appropriate solution. This judgement-driven stage allows us to maximise the potential of the portfolio
and account for the complexity of investment risk. To prepare investors for the future, the investment team use their expertise to construct robust investment solutions designed
to perform well in different environments rather than being considered “optimal” based on expected results or a specific environment.

As a general rule, we avoid short-term forecasts based on one’s ability to predict specific environments. Instead, we aim to prepare for different environments through constructing
portfolios that will hold up under many possible scenarios—even ones that we haven’t seen before. In effect, this involves trade-offs to deal with the probability and impact of
negative outcomes.

This provides accountability and ultimately helps ensure the outcomes are in line with the best interests of an end-investor. We hope you found this summary useful and that it
offers comfort.

 


Morningstar Disclaimers:

The opinions, information, data, and analyses presented herein do not constitute investment advice; are provided as of the date written; and are subject to change without notice.
Every effort has been made to ensure the accuracy of the information provided, but Morningstar makes no warranty, express or implied regarding such information. The information
presented herein will be deemed to be superseded by any subsequent versions of this document. Except as otherwise required by law, Morningstar, Inc or its subsidiaries shall
not be responsible for any trading decisions, damages or losses resulting from, or related to, the information, data, analyses or opinions or their use. Past performance is not
a guide to future returns. The value of investments may go down as well as up and an investor may not get back the amount invested. Reference to any specific security is not a
recommendation to buy or sell that security. There is no guarantee that a diversified portfolio will enhance overall returns or will outperform a non-diversified portfolio.
Neither diversification nor asset allocation ensure a profit or guarantee against loss. It is important to note that investments in securities involve risk, including as a
result of market and general economic conditions, and will not always be profitable. Indexes are unmanaged and not available for direct investment.

This commentary may contain certain forward-looking statements. We use words such as “expects”, “anticipates”, “believes”, “estimates”, “forecasts”, and similar expressions to
identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ
materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

The Report and its contents are not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Morningstar or its subsidiaries
or affiliates to any registration or licensing requirements in such jurisdiction.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Morningstar, Inc. No information has been
omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by
MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes
only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any
obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or
solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their
own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or
implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down
as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment and may be
deducted from the invested amount therefore lowering the size of your investment. Any income you get from this investment
may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your
investment return therefrom. Any decision to invest should always be based upon the details
contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta)
plc.

The 12-step process of building a great portfolio by Morningstar

Key takeaways

  • To build a robust portfolio, we believe 12-steps need to be agreed and practiced consistently.
  • This process helps take a complex operating system and simplifies it into actionable stages.
  • This is the structure that all portfolios overseen by MeDirect follow, providing dependability of approach.

Investing is often about taking the complex and simplifying it into digestible and relevant chunks. If this can be done repeatedly, you’re well on your way to healthy
risk-adjusted returns. With this in mind, we thought it would be useful to highlight why we decided on a 12-step process that can be consistently used for portfolio
construction—including why this helps an investor to reach their goals.

To start, we must agree that building anything worthwhile requires three core pieces of knowledge. We’ve drawn a parallel with how one would select a sports team, but the
same applies if building a house, building a ship or building a portfolio:

  • Appreciate the rules: Know the goal, including the parameters and any constraints.
  • Rank the players: Obtain a thorough understanding of each implementation option, accounting for both the expected reward and any associated risk.
  • Select the team: Take all available information, consider how each implementation option might work together and find the most appropriate overall solution.

Of course, we must highlight that this process is iterative. We never know how a given player will perform on a given day, nor whether a storm will hit, but if the framework is
holistically followed it should produce results over the long term. Turning this into a specific investment framework, the 12-steps we believe are best placed to help investors
are as follows:
Mandate Morningstar Portfolio MeDirect
 

Collectively, these steps allow us to deliver a clear investment process that increases the likelihood of reaching an investors’ goals. For further context, we now attempt to peel
back some of the jargon and run through each of the 12 steps in order.

1. Outlining investment objectives

It is paramount that we emphasise the importance of the first step—to be clear on the objective. Without this grounding, we risk being boundless and haphazard. This goals-based
approach is essential to your success and is a common feature across every portfolio MeDirect oversees. With a clearly-defined objective in mind, we are then in a position to i
dentify the appropriate parameters, constraints and portfolio construction rules to achieve the given mandate.

2. Identifying portfolio constraints

This is our forward defense and a part of the process we pay particular attention to. When identifying the parameters, constraints and rules we will take into account a variety of
factors, but the main considerations are as follows:

  • The minimum time horizon of an investor profile
  • Any risk limits of the investor profile
  • Any limitations to the investment universe
  • Controls to avoid concentration risk (for example, maximum exposure to a currency)

3. Determining portfolio construction rules

This step guides the construction of portfolios that allocate the most capital to the most attractive opportunities and build positions over time to intelligently align position
sizing with investment conviction levels. To build out the rules of engagement, we might consider the following examples in this step:

  • Position ranges—for example, if the smallest position should exceed a certain level.
  • Position size steps—for example, whether positions should increase or decrease by minimum increments.
  • Low risk/defensive position sizing—for example, whether cash is considered the default asset when the opportunity set is unattractive.
  • Turnover – a maximum turnover level set for the strategy.

4. Identifying investments available for inclusion

Once we have agreed on the mandate and the rules of engagement, we look to populate a portfolio with the best possible investments. Underlying this, we know that asset allocation
decisions will be a key driver of outcomes, so we place a meaningful emphasis on the valuations offered by various asset classes. We also couple this with a comprehensive investment
selection framework, including monitoring our preferred investment vehicles.

It is worth noting from the outset our process is not robotic or overly quantitative. Instead, our asset allocation process follows a consistent and disciplined manner that
considers how attractive eligible investments are relative to the rest of the investment
universe.

In this regard, we must acknowledge that the investment universe is vast and complex, with tens of thousands of open-ended funds in operation and many more direct
equities and bonds. On any given day, we could see a new entrant, a merger or a wind-down of a fund. We can also see changes within each fund, such as the departure
of a regarded manager or new staff with conflicting styles. This imposes a further risk to the portfolio management process and therefore requires careful attention.

At the heart of the qualitative investment selection process is the concept of a five-pillar rating structure. These pillars – People, Process, Performance, Parent, and
Price – serve as the backbone of the investment selection appraisal approach. The process by which we move from analytical research to making selection decisions involves the
construction and ongoing maintenance of a “Buy-list”.

In this sense, finding investment opportunities isn’t just about great ideas; it’s also about selecting investments that complement each other and play an active role in fulfilling
the ultimate objective. From an asset allocation and investment selection perspective, this commences with a thorough understanding of the playing field we operate in and requires
a deep understanding of what role each asset class has in a portfolio.

5. Understand reward versus risk

Risk management at a portfolio level can be complex, multifaceted, and vary over time. Our definition of investment risk (the ‘permanent loss of capital’), means we believe one
of the best ways to control for risk is to buy strong investment vehicles in fundamentally strong asset classes. Integral to all of our analysis, we want to have a firm handle
of whether we are taking the appropriate amount of risk given our view on markets.

To do this, we apply valuation analysis supported by in-depth fundamental research
to find opportunities. We seek to buy overlooked investments, especially those that offer sound fundamentals at an attractive price. Our valuation analysis tells us
how attractively priced an investment is, while insight of the fundamental drivers of asset prices increases the probability that we will get more than we pay for.
For this reason, valuations and risk are joined at the hip.

Ultimately, this part of the portfolio construction process supports the fact that portfolios are managed with a clear understanding of risk as well as the expected rewards on
offer.

6. Assigning conviction levels

Investing requires us to be independent and curious; continually evolving and searching for better ways to allocate money. Therefore, even with the benefit of a broad
opportunity set, investing requires experience, dedication and the application of a robust and repeatable asset allocation process.

This judgement-driven approach allows us to maximise our exposure to our best investment ideas and accounts for the complexity and multifaceted nature of investment risk.
We un-layer these convictions and rank each asset via four means:

  • Absolute valuation – we want a clear understanding of what each asset can be expected to deliver over a 10-year time horizon.
  • Relative valuation – we want to understand how well the asset ranks compared to other markets.
  • Contrarian sentiment – we want to identify whether current sentiment is supportive to our conviction in a long-term context.
  • Fundamental risk – we want to clearly understand the range of possible scenarios, as well as any risk that would cause a judgement error.

7. Ranking the opportunity set

Investing is about the ranking of our convictions and risk management. So, armed with our analysis—our global team works together to rank the available investment universe.
We seek to gain the largest exposure to our best ideas that are the most underpriced (that is, have the largest difference between price and fair value), while building robust
asset allocations designed to stand up to challenging investment environments or investment errors.

Underpinning this, we know that if valuation-driven investors are to succeed they must do so unconventionally. They must overcome their biases and often go against the views
of their peers. Many investors lack the mental toughness to do this, which is why few are able to beat the market benchmark over a long period of time. For this reason, we will
continue to monitor sentiment as a part of our capital markets research, seeking to take a contrarian approach. The general idea is to be overweight to assets with poor
sentiment and vice versa.

In practice, we compile a ranking of the investment universe to understand the landscape in a structured manner.

8. Producing all feasible portfolio iterations

An extremely important evaluation as we monitor portfolios is how the selected investments complement each other. This part of the process involves qualitative judgements which is
supported by due diligence testing. This is built around a variety of factors, including any style and size biases, as over the long term, investors may or may not benefit from
having this exposure.

In many cases, it is not determining the fair value itself that is confronting, but rather what you do when the price is very different from fair value.
We continue to believe a willingness to be different and act on large differences between price and fair value is essential for long-term success.

While this part of the investment process is far more qualitative than quantitative, we will utilise an array of tools where appropriate to allow for decisions to be made with
the greatest sense of confidence. We perform due diligence on all portfolio iterations to arrive at our highest conviction ideas.

9. Development of portfolio quality characteristics

The next step is to pull this together into a portfolio context. It is therefore important to understand risk and return looking ahead into the future, not looking at the past,
just like it would not be safe to drive a car looking only in the rear-view mirror. Our research produces insight into not only future investment opportunities but also their
attendant fundamental drivers of risk. By better understanding these forward-looking risk drivers, we can diversify portfolios for the future rather than basing these decisions
on the past.

For example, we may consider deflation and negative economic growth to be a key risk for a multi-asset portfolio. While bonds may perform well in this environment, we may end up
paying a very high price for this protection, akin to overpriced insurance. This is an expensive strategy that tends to lose value in most environments given the high prices paid.

It is therefore about more than just spreading your eggs, as it’s possible for investments in different asset classes to be affected by the same economic developments.

10. Identifying the most attractive portfolio composition

The primary objective of this stage of the process is to ensure concentration risk is mitigated and that any decision regarding a portfolio has a clear idea of what risks may
be apparent and what mix of investment types may provide the greatest risk-adjusted returns. Inherently, all assets should not be expected to perform well simultaneously.

In order to accomplish this, we apply a robust risk methodology to evaluate asset overlap. This involves analysis of risk, along with traditional correlation assessments to see
how complementary they are within the overall framework. The goal is to establish a specific role for each asset to play in the overall investment mix. With access to this insight
and conviction surrounding our investment process, we can then implement an effective total customer solution. Risk management is therefore at the heart of this part of the process,
which can be accommodated in conjunction with our investment selection framework.

11. Iteration of portfolio sizing

With a firm idea of how the portfolio will behave, we are in a position to populate our views with the right investment vehicles. This means the team can focus the exposure
of the portfolio on the best ideas (that is, selections we believe have the greatest likelihood of outperforming), while maintaining diversification in our selection process.
This is designed in such a manner that it can stand up to challenging investment environments.

As a part of this process, Portfolio Managers are required to consider the following investment considerations:

  • Why do we own it (or should we own it)?
  • What role does it play?
  • What are our expectations?
  • What are the issues/risks?
  • What would cause us to sell it?

12. Finalising holdings

Taking all of the above, we are finally in a position to select the most appropriate solution. This judgement-driven stage allows us to maximise the potential of the portfolio
and account for the complexity of investment risk. To prepare investors for the future, the investment team use their expertise to construct robust investment solutions designed
to perform well in different environments rather than being considered “optimal” based on expected results or a specific environment.

As a general rule, we avoid short-term forecasts based on one’s ability to predict specific environments. Instead, we aim to prepare for different environments through constructing
portfolios that will hold up under many possible scenarios—even ones that we haven’t seen before. In effect, this involves trade-offs to deal with the probability and impact of
negative outcomes.

This provides accountability and ultimately helps ensure the outcomes are in line with the best interests of an end-investor. We hope you found this summary useful and that it
offers comfort.

 


Morningstar Disclaimers:

The opinions, information, data, and analyses presented herein do not constitute investment advice; are provided as of the date written; and are subject to change without notice.
Every effort has been made to ensure the accuracy of the information provided, but Morningstar makes no warranty, express or implied regarding such information. The information
presented herein will be deemed to be superseded by any subsequent versions of this document. Except as otherwise required by law, Morningstar, Inc or its subsidiaries shall
not be responsible for any trading decisions, damages or losses resulting from, or related to, the information, data, analyses or opinions or their use. Past performance is not
a guide to future returns. The value of investments may go down as well as up and an investor may not get back the amount invested. Reference to any specific security is not a
recommendation to buy or sell that security. There is no guarantee that a diversified portfolio will enhance overall returns or will outperform a non-diversified portfolio.
Neither diversification nor asset allocation ensure a profit or guarantee against loss. It is important to note that investments in securities involve risk, including as a
result of market and general economic conditions, and will not always be profitable. Indexes are unmanaged and not available for direct investment.

This commentary may contain certain forward-looking statements. We use words such as “expects”, “anticipates”, “believes”, “estimates”, “forecasts”, and similar expressions to
identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ
materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

The Report and its contents are not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Morningstar or its subsidiaries
or affiliates to any registration or licensing requirements in such jurisdiction.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Morningstar, Inc. No information has been
omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by
MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes
only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any
obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or
solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their
own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or
implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down
as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment and may be
deducted from the invested amount therefore lowering the size of your investment. Any income you get from this investment
may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your
investment return therefrom. Any decision to invest should always be based upon the details
contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta)
plc.

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