or the securities laws of any state of the United States and may not be offered, ..... and the Ordinary Units are set ou
Australian Credit Fund Information Memorandum 17 August 2017
Confidential: for Wholesale Clients only
Trustee and Issuer: Evolution Trustees Limited ABN 29 611 839 519 | AFSL 486217 as trustee of the UBT Invest Australian Credit Fund Investment Manager: Mason Stevens Asset Management Pty Limited ABN 91 141 447 654 Corporate Authorised Representative (AR 461312) of Mason Stevens Limited AFSL 351578
Important Notices and Disclaimers This Information Memorandum (IM) is issued by Evolution Trustees Limited ABN 29 611 839 519 AFSL 486217 (Trustee) in its capacity as the trustee of the UBT Invest Australian Credit Fund (Fund). The Fund was established on 17 August 2017. The Trustee reserves the right to update, withdraw or change this IM. Terms used in this IM are defined in the Glossary. The Fund is not registered with ASIC and this IM is not a product disclosure statement. This IM has not and will not be lodged with ASIC. Class A Units in the Fund have been issued to UBT Marketing Pty Limited ABN 13 162 091 796 (UBT
Marketing). Those Units give UBT Marketing certain rights in relation to critical actions relating to the Fund (Reserve Powers) and an entitlement to an annual distribution from Fund income (Class A Distribution) (see sections 2 and 8 of this IM). This IM contains information in relation to the Fund and invites applications for investment in Ordinary Units in the Fund (Ordinary Units). The Trustee is the issuer of this IM and the issuer of the Ordinary Units. Ordinary Units to which this IM relates may only be applied for using an Application Form accompanying this IM. Invitations to apply for Ordinary Units (Offers) are only available to Qualified Investors. Qualified Investors must meet both of the following requirements: • •
qualify as a wholesale client as defined in section 761G of the Corporations Act (Wholesale Client); and be approved by the Class A Unitholder (currently UBT Marketing) in its absolute discretion.
If you are unsure whether you qualify as a Wholesale Client please contact your legal or financial adviser. Applications will only be considered from Qualified Investors who, unless otherwise approved by the Trustee, receive this IM, and make their application, in Australia. This IM does not constitute an offer or invitation in any place where, or to any person to whom, it would be unlawful to make such an offer or invitation. The distribution of this IM in jurisdictions outside Australia may be restricted by the laws of those jurisdictions. No action has been taken to register or qualify the Ordinary Units or the Offer, or otherwise to permit a public offering of the Ordinary Units in any jurisdiction outside Australia. The Trustee does not represent that this IM may be lawfully made available in any jurisdiction outside Australia and does not assume any responsibility for any such distribution or offering. In particular, the Fund and the Ordinary Units have not been and will not be registered under the US Securities Act or the securities laws of any state of the United States and may not be offered, sold, delivered or transferred in the United States or to, or for the account of, any “US Person” (as defined in Regulation S under the US Securities Act). Neither this IM nor any Application Form or other material relating to this product may be distributed in the United States. Mason Stevens Asset Management Pty Limited ABN 91 141 447 654 (Mason Stevens Asset Management) has been appointed as the investment manager of the Fund assets. Mason Stevens Asset Management is a corporate authorised representative AR 461312 of Mason Stevens Limited AFSL 351578 (MSL). The Fund and any investment in Ordinary Units is intended to be a medium term investment and is subject to investment and trading risks, including possible delays in repayment and loss of income and capital invested. Your investment does not represent a deposit or other liability of the Trustee, Mason Stevens Asset Management, MSL, UBT Marketing (the Class A Unitholder) or any other person. None of the Trustee, the Class A Unitholder, Mason Stevens Asset Management, MSL, or any other member of the Mason Stevens group of companies or any other person guarantees in any way the repayment of capital from the Fund or the performance or any particular return from, or any value, of the Fund. This IM has been prepared without taking into account the investment objectives, financial situation or needs of any particular investor. Prospective investors are not to construe the contents of this IM as tax, legal or investment advice. You should consult with your financial adviser and obtain professional advice about an investment in Ordinary Units in the Fund having regard to your particular investment needs, objectives and financial circumstances before investing. To the maximum extent permitted by law, neither the Trustee, Mason Stevens Asset Management
1
nor any of their associates, related parties, directors, officers, employees, advisers (including financial, accounting and legal advisers) or representatives make any recommendation in relation to the Fund, or make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information contained in this IM. This IM does not purport to contain all of the information that a prospective investor may require in evaluating an investment in the Fund. This IM must be read in conjunction with the Fund’s Trust Deed and other Fund documents, copies of which are available (free of charge) by contacting the Trustee. To the extent there are any inconsistencies between the Trust Deed and this IM, the Trust Deed will prevail. Each recipient of this IM receives it on the basis that they agree and acknowledge that they must rely on their own investigations and enquiries with respect to making any decision to invest in the Fund and, as this IM is general information only (and may be out of date), does not rely on the information set out in this IM in making an investment decision. Information in this IM is current as at the date of this IM but may change from time to time. Changes in information regarding the Fund are posted on www.ubteam.com.au. A paper copy of this information is also available free of charge on request from the Trustee (please see contact details set out in the Corporate Directory at the back of this IM). Forward looking statements that may, for instance, contain the words “believe”, “intend”, “estimate”, “expect” and similar expressions involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. There can be no assurance that such statements, estimates or projections will be realised. Except in certain circumstances (including fraud, negligence or default by the Trustee), the Trustee enters into transactions in relation to the Fund in its capacity as trustee of the Fund only, and its liability in relation to those transactions is limited to its rights of indemnity from the assets of the Fund.
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Table of Contents Important Notices and Disclaimers ...................................................................................................................... 1 Table of Contents .................................................................................................................................................... 3 Key Dates.................................................................................................................................................................. 4 Key Features of the Fund ....................................................................................................................................... 4 1.
Trustee ............................................................................................................................................................ 14
2.
UBT Class A Unitholder ................................................................................................................................. 14
3.
Investment Manager ..................................................................................................................................... 14
4.
Investment Objective and Investment Strategy ........................................................................................ 17
5.
Risk Management Process ........................................................................................................................... 19
6.
Risks................................................................................................................................................................. 20
7.
Fees and Other Costs .................................................................................................................................... 23
8.
Distributions to the Class A Unitholder ...................................................................................................... 26
9.
Tax ................................................................................................................................................................... 28
10.
Applications, Redemptions and Distributions ...................................................................................... 31
11.
Valuation .................................................................................................................................................... 34
12.
Administrator ............................................................................................................................................ 35
13.
Custodian ................................................................................................................................................... 35
14.
Additional Information............................................................................................................................. 36
15.
Glossary ..................................................................................................................................................... 41
Corporate Directory .............................................................................................................................................. 44
3
Key Dates Qualified Investors (i.e. Wholesale Clients that are approved by the Class A Unitholder (currently UBT Marketing) in its absolute discretion) are invited to apply for Ordinary Units in the Fund. First Issue Date First Issue Price Subsequent Issue Dates Issue Cut Off Time
Issue Price for Subsequent Issues
on or around 31 August 2017 $1.00 per Ordinary Unit As at the last day of each month for Applications received by the Issue Cut Off Time Applications and cleared funds must be received by 12:00 noon Sydney time on the second last Business Day before the Issue Date to participate in that issue. Applications received after the Issue Cut Off Time for an Issue Date will be processed for the subsequent Issue Date. Based on an adjusted Fund Net Value per Ordinary Unit plus the Buy Spread. At the date of this IM the Buy Spread is 0.2%.
These dates may be changed by the Trustee at any time and any Offer or issue may be cancelled or deferred. Please check the Fund website at www.ubteam.com.au for any updates or call 1300 01 01 02
Key Features of the Fund Key features of the Fund and the Ordinary Units are set out below with references to other sections of the IM that contain further information. Please read the entire IM, obtain and consider any further information that you need and consult with your professional advisers before deciding whether to invest in Ordinary Units in the Fund.
Fund Structure
Summary The Fund is a Unit Trust. There are two classes of Units in the Fund: • Class A Units that are held by UBT Marketing, and • Ordinary Units that are available for investment by Qualified Investors (as described below).
Section 14
2, 8,
This IM is an invitation to Qualified Investors to apply for Ordinary Units. A Unit is an undivided beneficial interest in the Fund held on the terms in the Trust Deed for the Fund. The Trustee (or a custodian that it appoints) is the legal owner of the Fund assets. An investor in Ordinary Units or Class A Units does not have an interest in any particular Fund asset and has no right to any particular Fund asset or to an in specie distribution of Fund assets. Only cash payments from the Fund will be made to investors holding Ordinary Units or Class A Units. 4
Fund’s Investment objective
Summary Mason Stevens Asset Management has been appointed to select and manage the Fund’s assets.
Section 3, 4, 5
Its objective is to manage the Fund’s assets with the aim of generating returns in excess of the RBA Cash Rate (Benchmark) by 3% per annum before deduction of the Fund’s fees and expenses and before deduction of the Class A Distribution Provision Accrual, over a period of 3 to 5 years. There is no guarantee the objective will be accomplished. Any return would be calculated monthly and distributed Quarterly between the Ordinary and Class A Unitholders as described below. Please see below and sections 7 and 8 of this IM for the Fund’s fees and expenses and the Class A Distribution Provision Accrual as they will affect any returns. Some fees and expenses have a minimum or fixed component. This means that, the smaller the Fund’s gross value the larger the proportional effect these fees and expenses will have on any returns. Mason Stevens Asset Management seeks to achieve the objective by selecting Fund investments (directly or indirectly) in fixed income securities For the risks associated with achieving these objectives, see section 6. Investment Strategy and Fund Composition
The fixed income securities into which the Fund invests will typically be cash and interest rate securities such as corporate debt, Hybrid Securities and Structured Debt Securities, including residential mortgage backed securities (RMBS) and asset backed securities.
4, 5, 11
The assets will either be purchased directly or an investment may be made by investing into a managed investment schemes or trust that invests in such assets.
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Trustee of the Fund and Issuer of the Ordinary Units UBT Marketing – Class A Unitholder
RELEVANT PARTIES Summary Evolution Trustees Limited ABN 29 611 839 519 AFSL 486217. UBT Marketing Pty Limited ABN 13 162 091 796, as trustee of a discretionary trust, is the holder of all Class A Units in the Fund.
Section 1
2
UBT Marketing is not liable to the Ordinary Unitholders in the Fund or to any Fund creditor or the Trustee or any of its service providers. The Trustee is required to obtain the approval of UBT Marketing as the Class A Unitholder before it may take actions that are critical to the direction of the Fund (Reserve Powers). These Reserve Powers cover actions such as Unit issues; suspending or refusing Unit redemptions; terminating and winding up the Fund; changing the terms of the Trust Deed or changing the Fund investment objectives or strategy. The Class A Units are entitled to an aggregate payment of $100 on redemption or termination and winding up of the Fund. During the life of the Fund the Class A Unitholder is entitled to an annual income payment described in this IM as the Class A Distribution Provision Accrual. The payment is capped at 0.6%pa of the net asset value of the Fund (Net Fund Value). This payment reduces the amount of net income available for distribution amongst the Ordinary Units. See section 8 of this IM. The Class A Unitholder has established an investment committee to advise it on the exercise of its Reserve Powers. The investment committee will not advise the Trustee or Mason Stevens Asset Management, although advice given by the investment committee to the Class A Unitholder may affect that Unitholder’s exercise of its Reserve Powers and that can affect the actions taken by the Trustee or investments made by Mason Stevens Asset Management. Investment Manager
Mason Stevens Asset Management Pty Limited ABN 91 141 447 654, AR 461312 (of Mason Stevens Limited AFSL 351578).
3
Fund Administrator
FundBPO Pty Limited ABN 81 118 902 891.
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Custodian
Mason Stevens Limited (ABN 91 141 447 207, AFSL 351578)
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6
INVESTOR INFORMATION Summary Qualified Investors
Applications
Section
Ordinary Units will only be issued to investors who are: •
approved by the Class A Unitholder (currently UBT Marketing) in its absolute discretion; and
•
qualify as a Wholesale Client and therefore may invest in Ordinary Units without a product disclosure statement in accordance with Part 7.9 of the Corporations Act.
Unless the Trustee determines otherwise, Ordinary Units will be issued as at the last day of each month at the prevailing Issue Price.
10
Applications for Ordinary Units will generally be processed once a month as at the last day of the month. The Trustee reserves the right to reject any Application in whole or part. Certificates are not issued for Ordinary Units. Investors will receive a confirmation statement as to the Ordinary Units issued to them and the Issue Price. Applications and cleared funds must be received and accepted by the Administrator by 12 noon Sydney time on the second last Business Day of the month (Issue Cut Off Time) in order for Ordinary Units to be issued as at the last day of the month (Issue Date). Applications received after that time will generally be held over to the next month. Ordinary Units will be issued at the Issue Price calculated as at the Issue Date when they are issued. Issue Price of Ordinary Units
The Issue Price for the first issue of Ordinary Units on the First Issue Date (on or around 31 August 2017) is $1 per Unit.
7, 8, 10, 11
The Issue Price for Ordinary Units issued after that time is the Adjusted Fund NAV per Ordinary Unit in issue at that time plus the Buy Spread. The Adjusted Fund NAV for this purpose and for calculation of the amount payable on redemption of the Ordinary Units is the Fund Net Value less each of the following to the extent not taken into account when calculating the Fund Net Value: • Fund fees, expenses and liabilities; • $100 provision for redemption of all of the Class A Units; and • the accruing unpaid Class A Distribution Provision Accrual (if any) for that financial year as at the end of the month.
7
The Buy Spread is set by the Trustee on advice from the Investment Manager. As at the date of this IM, the Buy Spread is 0.20% of the Adjusted Fund NAV per Ordinary Unit. Please check the Fund website for any updates. Class A Distribution Provision Accrual
Income is distributed to the Class A Unitholder at the end of each financial year. However, Distributable Income for the Fund is calculated at the end of each month. When that calculation is completed the amount calculated as the Class A Distribution Provision Accrual is a provision that is deducted from the Fund value when calculating the Ordinary Unit value for the purpose of determining the Ordinary Unit Issue Price and Redemption Price.
8
The Class A Distribution Provision Accrual is 50% of the positive Performance Surplus up to an annual cap of 0.6%pa of Fund Net Value and subject to a minimum or floor of zero. The calculation and methodology for determining the Class A Distribution Provision Accrual and the Performance Surplus is described in section 8 of this IM. If Performance Surplus in any month is less than zero it is carried forward to the next month and there is no Class A Distribution Provision Accrual until the Performance Surplus is positive. There is no guarantee that there will be Distributable Income in any month or other period or that the Class A Unitholder will receive any income in any period. Income Distribution on the Ordinary Units
Income will be calculated and paid Quarterly to the Ordinary Unitholders pro rata to the number of Ordinary Units that they hold at the end of the Quarter.
7, 8, 11
Distributable Income for a Quarter that is available for distribution amongst Ordinary Unitholders is: • net of all Fund fees and expenses for the Quarter (including fees payable to the Trustee and Investment Manager); and • net of the accruing Class A Distribution Provision Accrual. Distributable Income will generally exclude any unrealised gains and losses on the Fund’s investments. Each Quarter for distribution ends 30 September, 31 December, 31 March and 30 June. Distributions will be paid within 15 Business Days after the end of the Quarter. All fees and expenses of the Fund will be paid or provided for before any income is distributed to the Unitholders (both Ordinary and Class A). If in any Quarter the amount of income is insufficient to meet
8
fees and expenses of the Fund then the amount of the Distributable Income for the Class A Unitholder for any prior Quarter of the same financial year can be used to meet those fees and expenses. This is because the amount paid to the Class A Unitholder is not distributed until the end of the financial year. There is no guarantee that there will be Distributable Income in any month or other period or any Ordinary Unitholder will receive any income in any period. Notwithstanding the above, the Trustee has the right to determine at its discretion, the amount of distributions in any period. Frequency of Income Distributions
Quarterly. However, there may be some Quarters where there is no net income to pay. This could occur where the Fund has not earned sufficient interest income or realised gain after paying the Fund fees and expenses.
10
Taxation
An investment in Ordinary Units will have taxation consequences. A general overview of the anticipated taxation implications is set out in this IM. The tax implications for each individual investor may vary depending on their individual circumstances. Each investor should consult their own professional adviser to understand the taxation and other implications of investing before applying for Ordinary Units.
9
Minimum initial investment
$50,000 or such other amount as the Trustee determines.
10
Minimum additional investment
$10,000 or such other amount as the Trustee determines.
10
Minimum balance
Ordinary Units with an aggregate Redemption Price of $5,000 or such other amount as the Trustee determines.
10
Redemptions
Redemptions of Ordinary Units are generally effected as at the last day of each month.
10
To have Ordinary Units redeemed, the Administrator must receive a completed redemption request by 12 noon Sydney time on the 15th day of the month (or the following Business Day if the 15th day is not a Business Day) (Redemption Cut-off Time) in order for it to be processed as at the last day of that month (Redemption Day). The minimum number of Ordinary Units that your redemption request can relate to is Units with a redemption price of $10,000 or, if less, all of your Ordinary Units.
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The Redemption Price for Ordinary Units is the Adjusted Fund NAV per Ordinary Unit in issue at that time less the Sell Spread. The Adjusted Fund NAV for this purpose is the Fund Net Value (ie gross asset value less Fund fees, expenses and liabilities) less each of the following to the extent not taken into account when calculating the Fund Net Value: • $100 provision for redemption of all of the Class A Units; and • the accruing unpaid Class A Distribution Provision Accrual (if any) for that financial year as at the end of the month. The Sell Spread is set by the Trustee on advice from the Investment Manager. As at the date of this IM, the Sell Spread is 0.40% of the Adjusted Fund NAV per Ordinary Unit. Please check the Fund website for any updates. Redemption proceeds will generally be paid within 10 Business Days from the relevant Redemption Day. The Trustee may also process redemptions on other days than the last day of a month. For example, if the Trustee receives a large redemption request and decides to process it, it may do so immediately instead of waiting until the last day of a month. In some circumstances, such as where Fund assets cannot be realised within the required time, redemptions of Ordinary Units will not be effected. Payment of redemption proceeds may also be delayed in certain circumstances. If the number of Ordinary Units that you hold falls below the required minimum (currently Ordinary Units with an aggregate redemption price of $5,000) your Ordinary Units may, if determined by the Trustee, be compulsorily redeemed even though you do not wish to exit your investment. Minimum redemption
$10,000 or, if less, your entire holding of Ordinary Units or such other amount as the Trustee determines.
10
Valuations
Monthly, as at the last day of each month, and such other times as the Trustee determines.
11
10
FEES AND EXPENSES Contribution Fee and Withdrawal Fee Management fee Administration and other expense
Summary Nil.
Section 7
0.55% p.a. of the value of the Fund assets (including GST net of RITC).
7 7
The % p.a varies depending on the gross value of the Fund (including GST net of RITC). Some fees and expenses have a minimum or fixed component. This means that, the smaller the Fund’s gross value the larger the proportional effect these fees and expenses will have on any returns.
Costs incurred in investing and divesting the Fund to process applications and redemptions
Currently, 0.20% of the Adjusted Fund NAV per Ordinary Unit and 0.40% of the Adjusted Fund NAV per Ordinary Unit. These amounts may change at any time without notice to you.
7
11
Risks
KEY RISKS OF THE FUND AND AN INVESTMENT IN ORDINARY UNITS There are risks associated with investing in the Fund. The risks include but are not limited to the key risks described below. Section 6 of this IM also sets out a description of some of the main risks that investors should consider in consultation with their financial advisers before deciding to invest in the Fund.
6. Also see the IM generally and in particular sections of the IM below
Interest Rate Risk
The risk that the value of the Fund may be adversely affected when interest rates rise or fall. As the Fund is invested in fixed rate or floating rate securities, the value and income of the Fund can fluctuate significantly in response to changes in interest rates.
4
Market Risk
The risk of adverse movements in markets (including asset and share prices, volatility, changes in interest rates or other market variables) impacting upon assets held in the Fund.
4
Liquidity Risk
There is a risk that a particular investment held in the Fund will be unable, or will not easily be able, to be liquidated at or near the previous market price, due to inadequate market depth or to disruptions in the marketplace.
4, 10
If the investments of the Fund are made by investing in another managed investment scheme then the Trustee’s ability to effect withdrawals will depend on realisations being effected from that scheme. For instance, if that scheme becomes illiquid or there are delays in redemptions of investments in that scheme due to large volumes of withdrawals from that scheme, this will in turn affect the redemption of Ordinary Units in the Fund and payment of the Redemption Price. There is also a risk that the Fund may become illiquid. If this were to happen, the Trustee may not process any redemption requests. If this were to happen, investors would be unable to redeem their Ordinary Units. Withdrawals may also be suspended in certain circumstances, including where it is considered that processing withdrawals would be adverse to investors in the Fund as a whole. The Fund is not quoted on a securities exchange and Ordinary Units are not listed. It is not expected that there will be a secondary market for them. Credit Risk
The Fund may not receive income and may suffer a capital loss on any investment held in the Fund. This could occur, for example, where the issuer of the
4
12
investment does not meet its obligations to pay interest or principal in full or on time or, if an indirect investment becomes illiquid and cannot be realised or realisation of the investment or payment of any realisation amount is delayed. No guarantee of any income, return or repayment of amount invested in Ordinary Units
There is no guarantee that a Unitholder will receive any or any particular income or rate of return from their investment in Ordinary Units (including returns in excess of the RBA rate) or that they will receive back the amount that they initially investment in the Ordinary Units on redemption of the Ordinary Units or if the Fund is wound up.
Investments in Ordinary Units are not deposits and do not have any government guarantee
Investments in Ordinary Units in the Fund are not 3, 4
Issue Price and Redemption Price based on the Class A Distribution Provision Accrual at the time of calculation
The Class A Distribution Provision Accrual in the Fund’s books at the time that the Issue Price or Redemption Price for Ordinary Units is calculated reduces that price. The Issue Price for Units that have been issued and the redemption price for Units that have been redeemed is not subject to subsequent adjustment if the Class A Distribution Provision Accrual changes in subsequent months. For instance, if it increases or decreases over subsequent months or is a greater or lesser amount when actually distributed as at the end of the financial year, this will not result in any recalculation of prior Issue Prices or Redemption Prices.
8, 10
Redemption risk
Although Unitholders may request redemption of their Ordinary Units each month, in certain circumstances, redemptions may not be effected or the payment of redemption proceeds may be delayed indefinitely.
10
deposits and therefore do not have the benefit of priority and rank behind any creditors in relation to Fund fees, expenses and liabilities and, unlike some bank deposits, an investment in Ordinary Units does not have the benefit of any government guarantee.
In certain circumstances the Trustee may compulsorily redeem your units without your consent. Such circumstances may include where you cease to be Qualified Investor, that is, you cease to be a Wholesale Client or cease to be approved by the Class A Unitholder (currently UBT Marketing) in its absolute discretion. Taxation Risk
There is a risk that changes in the taxation rules, regulations and laws (or changes in the manner in which the relevant taxation commissioner or agency may interpret those rules, regulations or laws) in Australia or other countries in which the Fund may invest, may adversely affect the Fund or Investors.
9
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1.
Trustee
Evolution Trustees Limited (ETL or the Trustee) is a professional corporate trustee holding AFS Licence Number 486217. Evolution Trustees Limited is the Fund’s trustee and issuer of this IM. ETL is a business servicing Australian and offshore asset managers and institutions with a select range of fiduciary services including corporate trustee, MIT trustee and responsible entity services. ETL’s approach is to tailor its service offering to specifically meet the needs of each structure in a manner which is consistent with Australian laws and regulations. ETL is independent and focused on advancing the best interests of the investors in the funds it takes care of. ETL’s responsibilities and obligations as the Fund’s trustee are governed by the Fund’s Trust Deed, the Corporations Act, ASIC Act other statutory laws and general trust law. ETL has delegated the investment management functions to Mason Stevens Asset Management under an Investment Management Agreement (IMA). ETL reviews the activities of Mason Stevens Asset Management as the Investment Manager on an ongoing basis to ensure that it is managing the investments of the Fund within the terms of the IMA.
2.
UBT Class A Unitholder
The sole holder of Class A Units in the Fund is UBT Marketing Pty Limited (UBT). It holds those Class A Units as the trustee of a discretionary trust which supports schools operated by the Brethren and other purposes. The Class A Distribution Provision Accrual from the Fund as at the end of each financial year, will be paid to UBT and UBT can decide which beneficiary of the discretionary trust will receive them. As the Class A Unitholder it can exercise the Reserve Powers under the Trust Deed.
3.
Investment Manager
Mason Stevens Asset Management is the investment management arm of the Mason Stevens group of companies (Mason Stevens Group). The Mason Stevens Group is a privately owned financial services firm based in Sydney, founded in 2010. The Mason Stevens Group specialises in offering separately managed accounts supported by a comprehensive investment and administration platform, as well as bespoke investment solutions to both retail and wholesale investors. As at 30 June 2017, the Mason Stevens Group has over $2.5billion (AUD) in funds under management and administration, employing over 45 staff.
14
Investment Philosophy Mason Stevens Asset Management believes that the price of a security may differ from its true value at any point in time for a variety of reasons. For example, market dislocation through different supply and demand levels can impact the market price of securities. Mason Stevens Asset Management also believes that it is possible to construct a portfolio that will enhance an investor’s return by actively managing the portfolio of securities to capture these price volatilities and/or also use derivative instruments to capture price inefficiencies and for risk management. This investment philosophy is predicated on the following beliefs: • Financial markets are not always efficient. In fact, over the short-term, markets often misprice financial assets. • All investments involve a degree of risk and an investment manager’s job is to manage risk rather than to avoid risk. Mason Stevens Asset Management aims to provide the following advantages to investors: •
Access Provide access to investment opportunities that are typically reserved for institutions and professional investors.
•
Performance Active investment management with a long term focus in delivering consistent positive returns while endeavouring to preserve capital through prudent investment management.
•
Service Excellence Mason Stevens Asset Management can communicate with, and deliver investment management services to its investors commensurate with the experience of its investment team.
•
Integrity Mason Stevens Asset Management is committed to transparency and fairness across its investment team.
Investment Management Team The Mason Stevens Asset Management Investment Management team has many years of senior management and transactional experience in the banking, finance and investment sectors, spanning multiple business cycles and across a range of asset classes. As at the date of this IM, the Investment Management team for the Fund includes Vincent Hua, Leanne Leong and Alwyn Hung. More information on each of these individuals is set out below.
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Investment Management Team Vincent Hua BEc (Macquarie), MEc (Macquarie), FIAA Chief Investment Officer Vincent is an experienced trading and portfolio manager with 20 years’ experience in the Australian and Asian markets. He has held senior positions at several financial organisations including General Manager of Trading and Products at the Global Markets & Treasury division of the Commonwealth Bank of Australia (“CBA”), Head of Asset & Liability Management and Head of the Management Science Group at Westpac, Managing Director and Head of Liquid Market Trading for Lehman Brothers (Australia) and General Manager of Markets Division for Shinsei Bank in Tokyo, Japan. During his tenure at Shinsei Bank, Vincent was responsible for managing an equity portfolio of approximately US$20 billion. Vincent is a Fellow of the Institute of Actuaries of Australia.
Leanne Leong BComm (Accounting), Master of Applied Finance (UTS) Portfolio Manager Leanne has over 25 years’ experience in the Australian banking industry with institutions such as Citigroup, HSBC and most recently as General Manager of Structured Finance, Capital Management and Securitisation at CBA. In her role at CBA, Leanne was instrumental in raising efficient capital and bank funding through the securitisation of more than $30 billion of assets. In addition, Leanne headed up one of Australia’s largest originators of structured cross-border financing as General Manager of Structured Finance at CBA. Leanne has a range of diverse skills in financing, tax, accounting, law and management.
Alwyn Hung BComm/BEc (Australian National University) Portfolio Manager Alwyn has more than 20 years of institutional financial markets and investment management experience primarily focusing on international debt markets. He has a strong track record of analysing, formulating and developing investment ideas and views from an interest rate, foreign exchange and credit perspective. Alwyn has a deep understanding across the global fixed income credit product suite through direct experience gained from trading and portfolio management roles held in Australia, Hong Kong, London and New York, including senior roles at Dixon Advisory, HSBC and ABN AMRO Bank.
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4.
Investment Objective and Investment Strategy
Investment Objective The Fund aims to generate returns in excess of 3% per annum above the RBA Cash Rate before the Fund’s fees and expenses and before deduction of the Class A Distribution Provision Accrual, over a period of 3 to 5 years. There is no guarantee that the investment objective will be achieved or that the Fund will have any particular rate of return. Any returns to the Ordinary Unitholders will also be net of the amount payable as the Class A Distribution Provision Accrual. Please see sections 7 and 8 of this IM for descriptions of the Fund’s fees and expenses and the Class A Unitholder Distributable Amount.
Investment Strategy The Fund aims to deliver its investment objective by investing in an actively managed portfolio of interest rate securities including corporate debt, Hybrid Securities and Structured Debt Securities such as residential mortgage backed securities (RMBS) and asset backed securities (ABS). The investments held in the Fund can be denominated in any major currency and will generally be hedged. Please refer to section 6 under the sub-heading “Foreign Currency Risk” for more information on the extent to which the Fund’s foreign currency exposure will be hedged. The Fund’s investment strategy is to invest in a selection of interest rate securities that pay a fixed or floating rate of return. The Fund can be invested in any interest rate securities including corporate debt, Hybrid Securities and Structured Debt Securities such as residential mortgage backed securities and asset backed securities. The securities must be rated by a reputable rating agency. Investment in these securities will have the potential to deliver higher returns over the medium term compared to cash. The portfolio of securities will be primarily investment grade, with no more than 5% of the assets of the Fund being comprised of securities that are below investment grade. Should any securities ever become nonrated or converted to other form, it will be disposed of within an appropriate time level so as not to exit at a distressed price. In addition, the Fund may employ a range of active and dynamic investment strategies across the corporate debt markets, locally. The ability to source, understand and analyse the risk of the underlying securities and the issuers may enable a higher success of risk/return reward for investors. •
Asset Composition – The Fund aims to invest in interest rate related securities and cash. There is no specific asset allocation in relation to the types of interest rate securities and cash held in the Portfolio, however no more than 10% of the assets of the Fund may be exposed to a single issue. There is no minimum or maximum levels of cash required to be held in the Fund.
•
Risk - The Fund aims to maximise the gross income of the Fund, and thus the income paid to Unitholders, subject to an acceptable level of risk. These risks may include credit, market, interest rate, foreign currency, convertibility, duration and liquidity risks. Engaging in active investment management will mitigate such risk and enable the Fund to enhance return to investors.
•
Special Situations – Professional fund managers or institutional investors are often given preferred access to wholesale market and private placements. By having access to the wholesale market, the Fund can profit from opportunities that are not ordinarily available to individual investors.
The dynamic nature of these strategies may provide opportunities for the Fund to generate additional returns from individual securities, sectors, special events or momentum-driven themes within the Australian market.
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Portfolio Construction When selecting investments to be included in the Fund, Mason Stevens Asset Management will utilise a range of strategies including interest rate duration analysis, credit analysis, industry allocation and security selection. Investments are continuously evaluated in order to determine their inclusion in the Fund through the fully integrated risk management process. For more information please refer to Section 5.
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5.
Risk Management Process
The Fund aims to deliver its investment objective subject to the Mason Stevens Asset Management assessment of an acceptable level of risk. The core risk management philosophy for the Fund is diversification. The aim is for the Fund to be invested in a range of interest rate securities such as: •
Senior secured, unsecured or subordinated debt;
•
Structured Debt Securities, such as asset-backed securities (ABS) and residential mortgagebacked securities (RMBS); and
•
Hybrid Securities including convertible notes.
Mason Stevens Asset Management will select investments for inclusion in the Fund based on their riskadjusted return opportunity. In order to create a balance of risk, return and, liquidity in the Fund, the Investment Team will use the following investment criteria as part of the risk management process: •
Maximum exposure to the securities of any single issue is limited to 10% of the assets of the Fund;
•
No more than 5% of the assets of the Fund will be exposed to non-investment grade credits ( i.e. below Standard & Poor’s BBB- or equivalent credit);
•
Maximum currency exposure is limited to 10% of the total Fund value;
•
No more than 50% of the total value of the Fund will be invested in Structured Debt Securities (which include RMBS or ABS securities) at any one time; and
•
The Fund may hold “fixed-rate” instruments and as such will carry a higher interest rate (or duration) risk than it would otherwise. This risk is managed (including using derivatives) so that the average interest rate duration risk of the Fund is no more than 2 years.
The Fund’s exposure to relevant markets or foreign currencies may be managed by using derivatives. Derivatives may also be used to manage investment risk. From time to time, a certain amount of cash may be held in the Fund to facilitate future investment opportunities as they arise. As the factors giving rise to these opportunities are varied, the holding period of individual exposures within the Fund may vary greatly. There is no minimum level of cash required to be held in the Fund.
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6.
Risks
All investments involve risk and there can be no guarantee against loss resulting from an investment in the Fund, nor is there any assurance that the Fund's investment objectives will be achieved. Mason Stevens Asset Management employs risk management policies and procedures designed to mitigate investment risks. Some of the risks with investing in the Fund are summarised below.
Interest Rate Risk Interest rate risk represents the risk that the value of the Fund may be adversely affected when interest rates rise or fall. As the Fund may invest in fixed rate or floating rate securities, the value and income of the Fund can fluctuate significantly in response to changes in interest rates.
Foreign Currency Risk Foreign currency risk represents the risk that the Fund may make a loss when the exchange rate rises or falls. This may occur if the Fund has any exposure to foreign currency assets or liabilities.
Market Risk Market risk represents the risk of adverse movements in markets (including asset and share prices, volatility, changes in yield curve, changes in interest rates or other market variables) impacting upon assets held in the Fund.
Liquidity Risk There is a risk that a particular security held in the Fund will be unable, or will not easily be able, to be liquidated at or near the previous market price, due to inadequate market depth or to disruptions in the marketplace. There is also a risk that the Fund may become illiquid. If this were to happen, it may not be possible to redeem Ordinary Units and the Class A Unitholder could direct the Trustee not to process any redemption requests and investors would be unable to redeem their Ordinary Units. Redemptions may also be suspended in certain circumstances, including where the Class A Unitholder considers that processing withdrawals would be adverse to Unitholders in all classes as a whole. The Ordinary Units are not listed on any securities exchange and there is not expected to be a secondary market for them.
Credit Risk Income may not be paid on assets held in the Fund and they may also be subject to a capital loss. This could occur, for example, where the issuer of the security does not meet its obligations to pay interest and/or principal in full and/or on time. Credit risk also relates to the Fund’s exposure to movement in credit risk ratings of the underlying securities held in the Fund. Credit risk rating is an assessment of an issuer’s ability to meet its financial obligations. An adverse change in credit risk rating may reduce the underlying securities value and which may in turn reduce the value of the Fund and thus the amount to be paid to Unitholders.
Compliance and Counterparty Risk There is also the risk that someone involved with your investment (even remotely) does not meet their obligations or perform as expected, assets may be lost, not recorded properly or misappropriated, laws may adversely change, payments may not be received when expected, systems may fail and any insurance may be inadequate. Investment decisions by Mason Stevens Asset Management or the managers of underlying funds, are not always successful.
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Counterparty risk is part of this risk. It is the risk that a counterparty to a contract will fail to perform contractual obligations (e.g. default in either whole or part) under the contract. Counterparties may include, among others, brokerage and trading firms and banks.
Legal Risk The Fund and the Ordinary Units may be affected by the actions of governments and regulatory bodies. Legislation (including legislation relating to tax) or regulation may be introduced which may have an effect on the Fund, Ordinary Units or on your investments. The Fund is not registered with ASIC as a managed investment scheme and protections associated with registered schemes do not apply to the Fund or investing in the Fund.
Fund and Structure Risk Risks particular to the Fund may include the termination of the Fund, which will occur if the Class A Unitholder decides that it should be terminated. There is also a risk that the fees and expenses could change which would have the effect of reducing the returns payable to Unitholders. The Trust Deed that establishes the Fund provides that the Trustee may not take certain acts or make certain determinations in relation to particular issues without the consent of the Class A Unitholder (Reserve Powers). If the Class A Unitholder gives the Trustee a direction in relation to one of these issues or otherwise consents to a proposed course of action by the Trustee, the Trustee will almost certainly comply with the direction, even if the Trustee does not agree with it. The reservation of a portion of the income earned by the Fund (the Class A Distribution Provision Accrual) so that it can be distributed to the Class A Unitholder will have the effect of reducing the amount of income that may be paid to the Ordinary Unitholders. There is a risk that the Trustee may retire or be removed or that Mason Stevens Asset Management ceases to be the investment manager of the Fund. The success of Mason Stevens Asset Management’s active portfolio management and the investment performance is to a large degree dependent upon the services of its senior portfolio management team and the investment committee that oversees the portfolio management team. The loss of the services of these individuals could result in Mason Stevens Asset Management’s inability to manage the Fund effectively. In addition, there is no guarantee that any of the current employees of Mason Stevens Asset Management will continue to work with Mason Stevens Asset Management in the future. If the Fund is invested in another fund or managed investment scheme then there are similar risks involved in that fund that can affect the Fund, your investment, its performance and liquidity.
Redemption Price and Issue Price risk The Class A Distribution Provision Accrual in the Fund’s books at the time that the Issue Price or Redemption Price for Ordinary Units is calculated reduces that price. The Issue Price for Units that have been issued and the redemption price for Units that have been redeemed is not subject to subsequent adjustment if the Class A Distribution Provision Accrual changes in subsequent months. For instance, if the Class A Distribution Provision Accrual increases or decreases over subsequent months or is a greater or lesser amount when actually distributed as at the end of the financial year, this will not result in any recalculation of prior Issue Prices or Redemption Prices (see section 8 of this IM).
Redemption Risk The Trustee has the ability to compulsorily redeem Ordinary Units in certain circumstances, including where the minimum holding of Ordinary Units is not maintained. If the Fund assets are not sufficiently liquid redemptions may not be met at the end of a month or there may be a delay in payment of the Redemption Price for the redeemed Units. 21
Operational Risk Disruptions to administrative procedures or operational controls may challenge day to day operations. Adverse impacts may arise internally through human error, technology or infrastructure changes or through external events such as regulatory changes.
No Operating History Risk The Fund is new and Ordinary Units (other than the 100 Class A Units issued to establish the Fund) have not previously been issued. There is, therefore, no operating history upon which investors can evaluate the performance of the Fund. There can be no assurance the Fund will achieve its investment objective or that any particular rate of return will be received on the Ordinary Units. The past investment performance of the investment team and other persons associated with Mason Stevens Asset Management are not necessarily indicative of the future performance of the Fund. In particular, the past investment performance of other funds managed by Mason Stevens Asset Management in accordance with the same investment objective and strategy are not indicative of the future performance of the Fund.
Taxation Risk Changes in tax law (including goods and services taxes and stamp duties), or changes in the way taxation laws are interpreted may impact the tax liabilities of the Fund and its investors. Under current Australian income tax legislation, ‘flow-through’ trusts are generally not liable for Australian income tax, including Capital Gains Tax (“CGT”), provided investors are presently entitled to all of the income of the trust each year or provided hat the Fund is an Attribution Managed Investment Trust (AMIT). Should the actions or activities of a ‘flow-through’ trust (their controlled entities or funds in which they hold an interest) result in the relevant trust falling within the operative provisions of Division 6C of the Income Tax Assessment Act 1936 (Cth), the relevant trust would be taxed on its net (i.e. taxable) income at a rate which is currently equivalent to the corporate income tax rate of 30 per cent.
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7.
Fees and Other Costs
Unless otherwise stated, all fees set out in this section are inclusive of any applicable Goods and Services Tax (“GST”) and net of any applicable reduced input tax credits. Further information about taxes is set out in Section 9. You should read all information about fees and costs because it is important to understand their impact on your investment. Management costs
Estimated Amount*
How and when paid
Management fee
Estimated to be 0.55% p.a. (inclusive of GST and net of any applicable RITC) of the Fund’s gross value.
Calculated monthly and reflected in the value of the Units. Paid monthly.
Administration expense
Due to certain minimum fees and expenses, the %pa of Fund’s gross value varies with Fund value see example below
Calculated monthly and reflected in the value of the Units. Paid monthly.
Other expenses
Due to certain minimum fees and expenses, the %pa of Fund’s gross value varies with Fund value see example below
Reflected in the value of the Units. Paid as and when due and payable.
•
Please note that some fees and some expenses have minimums based on gross or net asset value of the Fund. As a result, the percentage of Fund gross value represented by these fees and expenses will depend on the Fund value. See below
Example of %pa management and administration expense (inclusive of GST net of RITC) at different Fund gross values: Fund gross value
$20m*
$35m*
$50m*
Management fee
0.5500%
0.5500%
0.5500%
Administration expense
0.4941%
0.3059%
0.2307%
Other expense
0.1045%
0.0597%
0.0418%
Total fees & expenses
1.1486%
0.9156%
0.8225%
* used for the purpose of illustration only, gross value could be higher or lower. As at the date of this IM the Fund has no investors other than the Class A Unitholder who invested $100.
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Additional Explanation of Fees and Costs Administration expenses Units in the Fund will be charged administration fees. These administration fees include the fees payable to the Trustee for acting as trustee of the fund, the ordinary costs of administration of the Fund, fees paid to Mason Stevens Limited for acting as the custodian and reporting. It does not include the fees payable to Mason Stevens Asset Management for managing the assets of the Fund – they are listed below. Administration fees are calculated monthly and reflected in the value of the Units. They are payable out of the Fund within 10 days of the end of each month. The Trust Deed provides that the trustee is entitled to be paid an establishment fee, an ongoing fee and a termination fee. The establishment fee of $15000 was paid by the Class A Unitholder and will not be recouped from the Trust Fund. The Trustee’s ongoing fee is calculated and paid monthly in arrears and is the greater of: • $35,000 per annum (increased annually from and including 30 June 2018 in proportion to any increase in CPI); or • 0.04% per annum of the Fund’s gross value up to a threshold of $500m in Fund assets and 0.03%per annum of the Fund assets over the $500m threshold. The $500m threshold is calculated by adding in all other funds of which it acts as trustee for UBT Marketing’s Qualified Investors and allocating the fees between the funds pro rata based on relative gross value. If the Trustee’s appointment is terminated within 2 years of the date of the Trust Deed other than for breach of duty or retirement, the Trustee is entitled to the amount by which all fees that have been paid to it are less than $70,000. The Trustee cannot increase its current fee without the approval of the Class A Unitholder under its Reserve Powers.
Other Expenses Under the Trust Deed, the Trustee may recover all expenses in establishing and operating the Fund. These expenses include legal, accounting and tax fees, as well as any unforeseen expenses such as legal proceedings costs, costs associated with running special investor meetings, and costs associated with changes to the Trust Deed, changing the Trustee or investment manager. There are no limits to the amount that the Trustee can recover from the Fund as long as those expenses are properly incurred in operating the Fund. Ordinary expense recoveries include accounting, tax and compliance costs. Any extraordinary expenses, such as legal proceedings costs or costs associated with holding a meeting of investors, will also be charged to the Fund.
Costs incurred with investing proceeds of Units and realising assets in the Fund Certain expenses are incurred in managing the Fund’s investments, such as brokerage, bank charges, government duties and any bid offer (or similar) spreads charged on the underlying assets held in the Fund (“transaction costs”). These transaction costs are paid directly from the Fund and therefore will affect the value of the Ordinary Units and the amount that may be received as net income or upon redemption.
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Some of these transaction costs are recovered by charging an amount to investors when they acquire Ordinary Units or exit the Fund by redeeming Ordinary Units; this is often referred to as a “buy/sell spread”. A buy/sell spread is charged because applications or redemptions may involve the purchase or sale of Fund assets, thereby incurring transaction costs. Imposing a buy/sell spread aims to ensure that existing investors do not bear a disproportionate amount of any costs associated with investment of funds from applications or realisations of Fund assets on redemptions. The Trustee on advice from Mason Stevens Asset Management determines the spread charged. At the date of this IM:
•
the Buy Spread is 0.20% of the Adjusted Fund NAV per Ordinary Unit and is added into the issue price of an Ordinary Unit; and
•
the Sell Spread is also 0.40% of the Adjusted Fund NAV per Ordinary Unit that is deducted from the amount paid on redemption of a Unit.
Please check the Fund website for any updates. Buy/sell spreads are Fund moneys; they are not a fee paid to the Trustee or Mason Stevens Asset Management. These costs are in addition to the management fees and expenses stated above. Please check the www.ubteam.com.au website for any updates.
Taxation Government taxes which include GST, stamp duty, withholding or transfer taxes will be a cost to the Portfolio. The amount of fees and costs disclosed in the table and examples above are inclusive of GST and take into account any reduced input tax credits, where applicable. Investors should be aware that any adviser fee will be subject to GST, however, an input tax credit or a reduced input tax credit may not be available to investors.
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8.
Distributions to the Class A Unitholder
A distribution of Fund income is calculated at the end of each month even though no distribution is payable to the Ordinary Unitholders until the end of each Quarter and there is no distribution to the Class A Unitholder until the end of each financial year. As it is deducted from the Fund’s net asset value, the accumulating Class A Unitholder Distributable Amount calculated at the end of each month affects the value of the Ordinary Units for the purpose of their Issue Price and Redemption Price and affects income that is available for distribution to the Ordinary Unitholders at the end of each Quarter. The Class A Distribution Provision Accrual is calculated by reference to the Performance Surplus of the Fund at the end of the relevant month and is subject to a cap. The calculation methodology is described below. There is no Class A Distribution Provision Accrual for a month unless the cumulative Performance Surplus is positive. That is, where Performance Surplus of the Fund is negative for a particular month, the negative performance is carried forward to the next month and the negative performance must be recovered before there is any Class A Distribution Provision Accrual for a month.
Calculation Methodology The Class A Distribution Provision Accrual is 50% of the cumulative year to date monthly Performance Surplus up to an annual cap of 0.60% p.a. of the Fund Net Value (before deduction of the Class A Distribution Provision Accrual and income distributions to the Ordinary Unitholders), and an annual minimum (or floor) of zero. The Performance Surplus for a month is the difference between the Fund Net Value at the end of the month compared to the Fund Net Value at the beginning of the month. The Fund Net Value at the end of a month is calculated before deduction of the Class A Distribution Provision Accrual and any Ordinary Unit Income distributions to be made as at the end of that month. The net effects of any Applications and Redemptions effected as at the beginning of the month (ie from the end of the prior month) are included in the Fund Net Value at the beginning of the month and the calculation of the Performance Surplus is made before any Applications and Redemptions are effected as at the end of the month. In this way, the Performance Surplus only takes into account performance on the net amount which was available for investment by the Fund during the month and does not take into account the net inflow or outflow itself as if it were performance of the Fund’s investments. The provision for Class A Distribution Provision Accrual calculated for any month will affect the Quarterly income payable to the Ordinary Unitholders. As the Class A Distribution Provision Accrual is not finally determined and paid until the end of a financial year, the provision for the Class A Distribution Provision Accrual in the Fund’s books in any month may change as a result of performance in subsequent months of the same financial year and may be reduced by fees and expenses of the Fund that cannot be met from income in any subsequent month of the same financial year.
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The Class A Distribution Provision Accrual in the Fund’s books at the time that the Issue Price or Redemption Price for Ordinary Units reduces that price and the price is not subject to subsequent variation in the Class A Distribution Provision Accrual. For instance, if the amount subsequently increases or decreases, this will affect future Issue Prices and Redemption Prices but it will not result in any recalculation of prior Issue Prices or Redemption Prices. See section 2 of this IM for further information about the Class A Unitholder.
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9.
Tax
Set out below is a brief summary of the Australian tax consequences of investing in the fund for Australian resident natural person Investors who hold their Units as capital assets rather than as assets of a trading or other business. The issues discussed below are of a general nature and do not take into account specific characteristics of an Investor. This section assumes that the Fund will have at least 25 members and is, not required to be registered under the Corporations Act. It also assumes that the assets of the Fund do not exceed $100 million in value. The Tax Act includes a set of rules, known as the AMIT Regime, which provides more certainty and flexibility in relation to the taxation of managed investment schemes and their members. As at the date of this IM it is not entirely certain if the Fund will elect to be taxed under the AMIT regime but it is expected that such an election may be made in the event that the Fund has at least 25 Investors.
Taxation of the Fund Having regard to the investment strategy of the fund it is likely that all gains and losses of the fund will be on revenue account. It is not expected that the Fund will have any amounts taxed as net capital gains or net capital losses. It is expected that the Fund will be taxed as a Trust and not as a Company. Losses of the Fund are not passed to Investors but will be able to be carried forward by the Fund as under the AMIT Regime the Fund will be treated as a fixed trust for tax purposes.
Taxation of Investors – Fund Income and Distributions The Fund does not expect to be liable to pay tax on any taxable income as it intends, as required by the AMIT Regime, to give a statement (AMMA Statement) to each Investor within three months of the end of each financial year setting out the amount and character of tax-related amounts attributed to that Investor. Such amounts may include assessable income, exempt income, tax offsets, capital gains and other amounts details of which are required by the taxpayer to prepare their tax return. The amounts included in an Investor’s AMMA statement are determined on a non-discriminatory basis having regard to the number of units held by each Investor during the period, the duration for which they are held, the distributions received and the effect of any redemptions of units of or issues of new units (including terms of issue) to the Investor and any other matter which the Trustee considers fair and reasonable to be taken into account. The Trustee will not take into account individual tax characteristics of Investors. Under the AMIT Regime there is provision for subsequently-discovered errors in calculating Fund assessable income or other tax-related amounts of one financial year (referred to in the AMIT regime as unders and overs) to be adjusted in a subsequent financial year with the effect that the amount of tax paid by Investors in a particular year may reflect unders or overs of a prior year.
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Taxation of Investors – Disposal of Units It is not expected that there will be significant differences between the amount of Fund income actually distributed to Investors in a financial year and the amount of assessable income attributed to investors in their AMMA statement. However, in the event of any such difference, the cost base of their Units will be adjusted – upwards if the attributed assessable income is greater and downwards if it is less than the actual amount of Trust income distributed. Such adjustments will be notified in the AMMA Statement. On redemption of units, the amount by which the redemption price exceeds the cost base will be taken to be a capital gain. However, the Trustee has power to determine that part of the redemption price is instead to be treated as a distribution of income of the Fund. For example, in the event that the redemption price is funded by the disposal of assets of the Fund at a gain which is taxable to the Fund, that gain may be distributed to the Investor separately as Fund income and a corresponding amount attributed to the Investor in the Investor’s AMMA Statement. Where the redemption price of Units is less than their cost base, the Investor will make a capital loss on redemption. If an Investor sells Units to another person the Investor will make a capital gain (to the extent that the disposal proceeds exceed the cost base of the Units) or capital loss (to the extent the cost base exceeds the disposal proceeds). Discount capital gains tax treatment may be available to Investors who otherwise qualify for it.
Fund Not Subject to the AMIT Regime If, for any reason, the AMIT Regime does not apply to the Fund it is not expected that the tax position of Investors will be significantly different from that set out above. In this case it is expected that: • The Investors will be presently entitled to all of the income of the Fund (provided there is Fund income) in proportion to their unit-holdings and will have their share of Fund’s taxable income included in their assessable income under s.97 of the Act. • It is not expected that there will be significant differences between the amount of Fund income actually distributed to Investors in a financial year and the amount of taxable included in the assessable income of Investors under s.97 of the Tax Act. However, to the extent that the amount of income distributed to Investors is less than the amount included in their assessable income, the cost base of their Units will be adjusted downwards. There is no upward adjustment in cost base for the reverse situation. • Each Investor will be provided with a distribution and taxation statement each year setting out tax information relating to their investment in the Fund. • Tax losses cannot be passed on to investors. Instead losses may accumulate in the Fund and may be offset against future assessable income or gains provided certain loss recoupment tests are satisfied. • Investors who hold their Units on capital account may crystallise a capital gain or capital loss on disposal or redemption of their Units in the Fund. As noted above the Trustee may determine that part of the redemption price is to be treated instead as a distribution of Fund income. • Discount capital gains tax treatment may be available to Investors who otherwise qualify for it. For investors residing in an offshore jurisdiction, withholding tax may be withheld on distributions or withdrawal proceeds carrying a taxable component. Investors residing in an offshore jurisdiction should seek their own tax advice.
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Goods and Services Tax (GST) GST will not be imposed on the application for, or withdrawal of, Units. However, the services for which any fees are payable under the “Fees and other costs” section of this IM, are likely to be subject to GST. The Fund is unlikely to be entitled to claim a full input tax credit for any GST paid on fees and other costs payable by it. The Fund may be entitled to claim a reduced input tax credit ("RITC") equal to 55% or 75% of the GST payable depending on the nature of the services acquired.
Tax File Number (TFN) or Australian Business Number (ABN) Investors who have not provided a TFN, ABN or alternatively provided exemption details may have tax deducted from their distributions at the highest marginal tax rate plus the Medicare Levy (currently 47%).
Stamp Duty The acquisition, redemption or transfer of Units should not attract stamp duty.
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10. Applications, Redemptions and Distributions For initial investments, investors need to complete the Application Form accompanying this IM. Investments must be made by EFT, cheque or direct debit. The minimum initial investment amount is $50,000. The Trustee may waive or change this amount in its absolute discretion. Your original signed completed Application Form, payment and required client identification information should be forwarded to: FundBPO – UBT Invest Australian Credit GPO Box 4968 Sydney NSW 2001 Provided completed applications and cleared funds are received and accepted at the offices of the Administrator by 12:00 noon (Sydney time) on the second last Business Day of the month (Issue Cut Off Time), Ordinary Units will generally be issued as at the last day of that month (Issue Date) at the Issue Price calculated as at that day. Unless the Trustee determines otherwise, applications received after the Issue Cut Off Time will be processed the following month or may be returned to the applicant. The Trustee may reject an application for Ordinary Units in whole or in part in its absolute discretion. A confirmation note will be sent to the applicant confirming that the applicant has been entered on the register. Unit certificates will not be issued. Any interest earned on the applications account will not be attributed to any particular applicant, but will be paid into the Fund.
Issue Price The Issue Price of Ordinary Units issued on the First Issue Date is AU$1.00 per Unit, After the First Issue Date, the Issue Price for the Ordinary Units will be the Adjusted Fund NAV per Ordinary Unit plus the Buy Spread. The Fund Net Value is the net asset value of the Fund ie Fund assets less Fund liabilities. The Adjusted Fund NAV is the Fund Net Value less $100 as provision for the redemption of the Class A Units and the accruing unpaid Class A Distribution Provision Accrual (if any) for that financial year described in section 8 of this IM. The Buy Spread is set by the Trustee on advice from Mason Stevens Asset Management. As at the date of this IM, the Buy Spread is 0.20% of the Adjusted Fund NAV per Ordinary Unit. Please check the Fund website for any updates.
Additional Investments The minimum additional investment amount is $10,000. The Trustee may waive or change this amount in its absolute discretion. You will need to complete the Additional Investment Form available online at www.ubteam.com.au website Additional investments are made subject to the IM current as at the time of the investment. An electronic copy of the current IM is available online at www.ubteam.com.au
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No Cooling Off Period Cooling off rights do not apply.
Redemptions You may request redemption of all or some of your Ordinary Units by providing the Administrator with a properly completed redemption request form, subject to maintaining the minimum balance of Ordinary Units with an aggregate Redemption amount of $5,000. The minimum redemption that you can request is Units with an aggregate redemption amount of $10,000 or your entire holding if that is less. The Trustee may waive or change these amounts in its absolute discretion. Redemption requests received by the Administrator by the 15th day of each month (or the following Business Day if the 15th day is not a Business Day) (Redemption Cut-off Time) will generally be processed as at the last day of the month (Redemption Day) using the Redemption Price calculated as at that day. Redemption requests received after the Redemption Cut-off Time will generally be processed the following month. The Trustee may, in its discretion, accept redemption requests that are received after the Redemption Cut-off Time and may change the notice periods and the place at which redemption requests must be sent. Once submitted, redemption requests may not be withdrawn without the consent of the Trustee. To make a redemption request, please complete the redemption request form available online at www.ubteam.com.au website Redemption requests may be sent by facsimile or electronically, however, payment of redemption proceeds will not be made until the original completed withdrawal request is received. The Redemption Price for Ordinary Units is the Adjusted Fund NAV per Ordinary Unit less the Sell Spread. The Adjusted Fund NAV is the net asset value of the Fund less $100 as provision for the redemption of the Class A Units and the accruing unpaid Class A Distribution Provision Accrual for that financial year described in section 8 of this IM. The Sell Spread is set by the Trustee on advice from Mason Stevens Asset Management. As at the date of this IM, the Sell Spread is 0.40% of the Adjusted Fund NAV per Ordinary Unit. Please check the Fund website for any updates. Redemption proceeds will be paid net of any bank charges to your nominated bank account. Generally redemption proceeds will be paid within 10 Business Days of the Redemption Day. However under the Trust Deed, the Trustee has up to 60 days to pay redemption proceeds. Furthermore, in certain circumstances, the time for paying redemption proceeds is extended until the Trustee determines that the circumstances have passed. If the Trustee determines that the payment of redemption proceeds is not in the interests of Unitholders as a whole or is materially adverse to Unitholders as a whole or that market conditions are such that liquidation of assets in the Fund to facilitate the redemption is difficult, not desirable or impossible, then the Trustee need not pay the redemption amount to a Unitholder until the Trustee has determined that the relevant circumstances have ceased to exist. You should note that the Fund may hold Structured Debt Securities (up to the limits referred to in the Portfolio Investment Parameters – see section 5 of this IM). Those securities may be less liquid than other interest rate securities for the purpose of realisation for providing funding of any redemption request. The Trustee also has the right to redeem compulsorily Units without a redemption request in certain circumstances, including where the Minimum Investment Amount is not maintained, the Unitholder has ceased to be a Qualified Investor or the Unitholder contravenes any applicable law. 32
The Trustee may also process withdrawals on other days than the last day of the month. For example, if the Trustee receives a large redemption request and decides to process it, it may do so immediately instead of waiting until the last day of the month.
Why does the Fund only have monthly redemptions? In order to achieve its target investment return, the Fund is expected to invest in a range of Structured Debt Securities including RMBS. These securities are often illiquid. The longer redemption period is designed to maximise the time that the investment manager has to exit positions and manage the sale of less liquid securities in an orderly fashion.
Distributions The Trustee expects to make Quarterly distributions of any net Fund income (after deduction of the provision for Class A Unit redemption of $100 and any Class A Unit income). Income payments are generally expected to be paid within 15 Business Days after the end of each Quarter (March, June, September and December). The Trust Deed allows 90 days for the Trustee to make distribution payments. Unless an investor indicates otherwise on their Application Form or the Trustee has determined that reinvestment no longer applies, income due to be paid will be reinvested in Units as at the first day on which Units are issued following the relevant distribution date. Units will be taken to be issued at the Issue Price applicable for that date. The Trustee may withdraw or suspend the reinvestment of Income at any time. Units issued pursuant to income reinvested in Units will not incur a Buy Spread. Investors can elect to receive their Income in cash through their nominated bank account by indicating this on the Application Form or by contacting the Administrator at least 10 Business Days prior to the last Business Day of any Quarter.
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11. Valuation Most of the Fund’s underlying investments will not be listed on any exchange and their valuation will be obtained from independent sources. However, if the market values of the underlying securities are not available or if the Trustee in conjunction with Mason Stevens Asset Management reasonably believes that the market values do not represent a fair value, then Mason Stevens Asset Management may use another valuation method provided that it can be verified under a methodology approved by the Trustee.
Unit Prices The value of an Ordinary Unit at any time will be equal to the Adjusted Fund NAV per Ordinary Unit in issue at that time. The net asset value of the Fund is the value of the assets of the Fund, less the value of the Fund liabilities. The Adjusted Fund NAV is the net asset value of Fund less $100 as provision for redemption of the Class A Units and less the accruing unpaid Class A Distribution Provision Accrual for that financial year. Fund liabilities include accruals for management costs, administration fees, expense recoveries, provisions and contingent liabilities. Units are issued on a forward priced basis which means that Unitholders will only know their Issue Price or Redemption Price after applications and redemption requests are accepted and processed.
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12. Administrator FundBPO is a fund administration and processing specialist and is a wholly owned subsidiary of MainstreamBPO Pty Ltd ABN 48 112 252 114. Its business is the provision of ‘back-office’ functions for fund managers and financial institutions. It employs dedicated and experienced operational management and process personnel for Unit Registry, Investment Administration and Fund Accounting services. The Trustee has appointed FundBPO to provide all back office fund administration processes including investor services, Unit pricing and fund accounting. FundBPO has given and not withdrawn its consent to be named as the Administrator in this IM. It has not been involved in the preparation of any part of this IM. It has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for any part of this IM. Other than reference to its name it takes no responsibility for the contents of this IM. If you have any questions, please contact FundBPO on 02 9247 3326 or at the following address: FundBPO Pty Ltd Level 1 51-57 Pitt Street Sydney NSW 2000
13. Custodian The Trustee has appointed Mason Stevens Limited as custodian of the Fund. Mason Stevens Limited ABN 91 141 447 207 AFSL 351578 is licensed by the Australian Securities and Investments Commission to provide custodial services to clients and has appointed a licensed sub-custodian to hold client monies and all financial products. The current sub-custodian as at the date of this IM is listed below and may change from time to time: National Australia Bank Limited Level 12 500 Bourke Street Melbourne VIC 3000 NB: National Australia Bank has engaged Citibank N.A. as its global sub-custodian. The Mason Stevens group of companies (Mason Stevens Group) is a privately owned financial services firm based in Sydney, founded in 2010. The Mason Stevens Group specialises in offering separately managed accounts supported by a comprehensive investment and administration platform, as well as bespoke investment solutions to both retail and wholesale investors. As at 30 June 2017, the Mason Stevens Group has over $2.5 billion (AUD) in funds under management and administration, employing over 40 staff.
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14. Additional Information Keeping you informed Members in the Fund will receive their reports from the Trustee. When you invest in the Fund you will receive the following: • • •
A confirmation note for each investment or withdrawal. A distribution statement at the end of each distribution period. A tax statement on an annual basis.
Updated information Updated information on the Fund is available online at www.ubteam.com.auThe information available includes investment performance history, Current Unit Value, fund updates and the current offer document.
Anti-Money Laundering The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and other applicable anti-money laundering and counter terrorism laws, regulations, rules and policies which apply to the Trustee (AML/CTF Requirements), regulate financial services and transactions in a way that is designed to detect and prevent money laundering and terrorism financing. The AML/CTF Act is enforced by the Australian Transaction Reports and Analysis Centre (AUSTRAC). In order to comply with the AML/CTF Requirements, the Trustee and the Administrator (the Entities) are required to, amongst other things: •
verify your identity and source of your application monies before providing services to you, and to re-identify you if they consider it necessary to do so; and
•
where you supply documentation relating to the verification of your identity, keep a record of this documentation for 7 years.
The Entities reserve the right to request such information as is necessary to verify the identity of an applicant and the source of the payment. In the event of delay or failure by the investor to produce this information, the Entities may refuse to accept an application and the application monies relating to such application or may suspend the payment of withdrawal proceeds if necessary to comply with AML/CTF Requirements applicable to them. Neither the Entities nor their delegates shall be liable to the applicant for any loss suffered by the applicant as a result of the rejection or delay of any subscription or payment of withdrawal proceeds. The Entities have implemented a number of measures and controls to ensure they comply with their obligations under the AML/CTF Requirements, including carefully identifying and monitoring investors. As a result of the implementation of these measures and controls: • transactions may be delayed, blocked, frozen or refused where an Entity has reasonable grounds to believe that the transaction breaches the law or sanctions of Australia or any other country, including the AML/CTF Requirements; •
where transactions are delayed, blocked, frozen or refused the Entities are not liable for any loss you suffer (including consequential loss) caused by reason of any action taken or not taken by them as contemplated above, or as a result of their compliance with the AML/CTF Requirements as they apply to the Fund; and
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•
an Entity may from time to time require additional information from you to assist it in this process.
The Entities have certain reporting obligations under the AML/CTF Requirements and are prevented from informing you that any such reporting has taken place. Where required by law, an entity may disclose the information gathered to regulatory or law enforcement agencies, including AUSTRAC. The Entities are not liable for any loss you may suffer as a result of any compliance with the AML/CTF Requirements.
Trust Deed The Fund is governed by the Trust Deed which, together with relevant laws, regulates the Fund and the legal relationship with investors. This IM describes certain aspects of the Trust Deed. To the extent that any inconsistencies exist between this IM and the Trust Deed, the terms of the Trust Deed prevail. A copy of the Trust Deed is available on request from the Trustee. The Trust Deed seeks to limit investors' liability to the amount that they have invested in the Fund and that the Trustee and its creditors in relation to the Fund have no further clams against the investors except for amounts incurred by the Trustee as a result of actions or requests of the investor (for instance as to any taxation that may be payable on account of the investor as a unitholder). However, these provisions are subject to determination by the courts, therefore no assurance can be given that investors' liability is limited. The Trust Deed may be amended from time to time. Other provisions in the Trust Deed also deal with: • • • • • • • • •
duties and rights of the Trustee; calculations applicable to investors including Unit Issue Prices and Redemption Prices, and Fund value; investor’s rights, including rights to receive income distributions and to make redemptions from the Fund and transfer Units; power of the Trustee to suspend or delay redemptions and payments; fees and charges and the Trustee’s indemnity from the Fund; the Class A Unitholder’s rights and Reserve Powers; termination and winding up of the Fund; and amendment of the Trust Deed; unitholder meetings.
Complaints If you have a complaint about any aspect of your investment, please contact us by writing to: Evolution Trustees Limited Suite 306, 5-11 Burns Philp Building Bridge Street, Sydney 2000 Fax +61 2 8866 5151 Email
[email protected] We have a structured internal complaints procedure. Every effort will be made to address your complaint. We generally will acknowledge your complaint within 5 business days and seek to resolve it within 40 days with a written response. 37
Privacy Your privacy is important to us and we are committed to managing your personal information responsibly and in accordance with our legal obligations including the requirements of the Privacy Act 1988 and with the Australian Privacy Principles. These laws and principles regulate, among other things, the way we collect, use, disclose, keep secure, and give you access to your personal information. Personal information is information or an opinion about you from which you can be reasonably identified. Evolution Trustees collects personal information from investors in the Fund so that we can provide you with an investment in Ordinary Units in the Fund including our services and comply with our legal obligations such as those under taxation laws and the Anti-Money Laundering and CounterTerrorism Financing Act. If we do not collect your personal information, we may not be able to provide you with an investment in Ordinary Units in the Fund. In applying to invest in Ordinary Units in the Fund, you are providing the Trustee, and its service providers for the Fund (including FundBPO and Mason Stevens Asset Management) with certain personal information. The Trustee uses this information to establish and manage that investment for you. The kinds of personal information that we may collect and hold about you include: • •
• • • • •
full name, date of birth, gender and contact details including telephone, address, e-mail and fax; a copy of your driver licence and/or passport or other identification documentation for the purpose of verifying identity and to ensure compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) and/or other legislation and regulations regarding identification verification, and tax reporting and withholding; your tax file number (TFN) and bank account details for the purpose of administering investor accounts and tax reporting and withholding; investor contribution details; details about authorised signatories on your investments or accounts with us; detailed contact information about your financial adviser; and copies of any relevant trust deeds, partnership agreements or constitutions, which may be relevant to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act.
Generally, we will not collect sensitive information about you (such as your race, political beliefs or religion). If we need sensitive information, we will ask for your consent when we collect this information (unless an exemption applies). Under the Privacy Act 1988 (Cth) you can access personal information about you held by us, except in limited circumstances. Please let the Trustee know if you think the information is inaccurate, incomplete or out of date. You can also tell the Trustee at any time not to pass on your personal information by advising it in writing. If you do not provide your contact details and other information required in the Application Form, then the Trustee may not be able to process your application to invest. Under various laws and regulatory requirements, the Trustee may have to pass-on certain information to other organisations, such as the Australian Tax Office (ATO) or the Australian Transaction Reports and Analysis Centre (AUSTRAC).
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By applying to invest, you give the Trustee permission to pass information it holds about you to other companies which are involved in helping the Trustee administer the Fund, or where they require it for the purposes of compliance with AML/CTF law (including to pass it on to AUSTRAC and the ATO). The Trustee may also use your information to provide you with details of future investment offers made by the Trustee. Your Application for any Ordinary Units will also be provided to the Class A Unitholder in the Fund (currently UBT Marketing) as Applications will not be accepted without its approval. You may contact us to request access to the personal information we hold about you at any time. You may also ask us to correct information about you that you may believe is inaccurate, incomplete or out of date. We will need to verify your identity before giving you access, or correcting your information. In certain circumstances, we may not be able to correct or provide you with access to your information. In these circumstances, we will write to you to explain and provide the reasons why. Please see our Privacy Policy at http://www.evolutiontrustees.com.au/privacy-policy and FundBPO’s privacy policy at http://www.mainstreambpo.com/mbpo/Privacy-Policy
FATCA & Common Reporting Standards (CRS) Australian law gives effect to an intergovernmental agreement with the United States to facilitate the implementation of the “Foreign Account Tax Compliance Act” or FATCA which requires participating non-U.S. financial institutions to report certain information about financial accounts held directly or indirectly by U.S. persons to the Australian Taxation Office (ATO). The ATO will, in turn, provide this information to the U.S. Internal Revenue Service (IRS). To comply with these requirements, these participating financial institutions will be required to: •
undertake certain identification and due diligence procedures with respect to its existing and new account holders;
•
report annually to the ATO on U.S. persons who directly or indirectly own financial accounts; and
•
generally deduct and withhold a tax equal to 30% of any withholdable payment (including U.S. source income and gross proceeds from the sale of property that generates US source interest or dividends) made to U.S. account holders failing to provide certain information. Beginning in 2017, withholding may also be required by participating non-U.S. financial institutions on certain other payments of foreign source income.
Accordingly, when you apply to invest you agree to: •
provide us certain identification and other information that we may need in order for us to comply with our obligations under FATCA including obligations under any agreement with the IRS;
•
waive any provision of foreign law that would, absent a waiver, prevent us from complying with our obligations under FATCA including obligations under any agreement with the IRS and acknowledge that, if you fail to provide such a waiver, we may withhold any payments to you;
•
acknowledge that if you fail to provide information on a timely basis, you may be subject to a 30% U.S. withholding;
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•
acknowledge that if you fail to comply with such obligations and such failure could result in us being unable to enter into or comply with any agreement with the IRS, we can terminate your investment; and
•
acknowledge that you will indemnify us and the other investors for any losses resulting from your failure to meet your obligations under this provision, including any withholding tax imposed by FATCA as a result of such failure.
Common Reporting Standards (CRS) The CRS is a tax reporting regime developed by the Organisation for Economic Co-operation and Development (OECD). Australia has committed to implementing the CRS by signing the Multilateral Competent Authority Agreement with the OECD and passing appropriate supporting legislation enabling tax information to be exchanged between tax authorities. From 1 July 2017, the CRS requires financial institutions to identify and report foreign resident account holder information to their local tax authority, which will in turn exchange the information with the tax authorities of participating foreign jurisdictions.
Further Information Prospective investors should read the Trust Deed and obtain professional investment advice before deciding whether to invest in the Fund. Documents are available on request from the Trustee (see the Directory at the back of this IM).
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15. Glossary ABS
Asset backed securities.
Adjusted Fund NAV
As at the end of a month is the Fund Net Value at that time less each of the following amounts to the extent not taken into account when calculating the Fund Net Value: •
the Class A Distribution Provision Accrual for that financial year; and
•
$100 as provision for redemption of the Class A Units.
Administrator
FundBPO Pty Limited ABN 81 118 902 891
AML/CTF Act
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 as amended from time to time.
ASIC
Australian Securities and Investments Commission.
Benchmark
Reserve Bank of Australia Cash Rate Target, as set by the Reserve Bank of Australia from time to time.
Business Day
A day, other than a Saturday or Sunday, on which trading banks are open for general banking business in Sydney.
Buy Spread
The amount added to the price of a Unit as provision for the estimated costs and expenses associated with investing new funds. The Buy Spread at the date of this Information Memorandum is 0.20% of the Adjusted Fund NAV per Ordinary Unit other than on the First Issue where it is zero. Please check the Fund website for any updates.
Capital Gains Tax or CGT
Capital gains tax in Australia applies when a profit is made on the happening of a CGT event in relation to a capital asset that was acquired after 20 September 1985. Capital assets are defined in the legislation to be “any kind of property” or “a legal or equitable right that is not property.”
Class A Unit
A unit in the Fund designated as a Class A Unit in the Fund Register which gives the holder the right to receive any Class A Unit Distribution and to exercise the Reserve Powers
Class A Unitholder
UBT Marketing in its capacity as the trustee of Invest Holdings Trust.
Class A Distribution Provision Accrual
At the end of any month is the Class A Unit portion of any Distributable Income calculated as described in section 8 of this IM.
Corporations Act
Corporations Act 2001 (Cth) as amended from time to time.
Custodian
Mason Stevens Limited ABN 91 141 447 207 AFSL 351578
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Derivative
A security whose price is dependent upon or derived from one or more underlying assets. The value of a derivative is influenced by fluctuations in the underlying asset and would be reasonably expected to be determined by reference (but not necessarily equivalent) to the underlying asset. The most common types of derivatives are forward contracts, futures, Options and swaps. Derivatives may be traded on exchanges (exchange-traded derivatives) or contractual arrangements between 2 parties (over-the-counter, or OTC derivatives).
Distributable Income
For a period is the amount specified in the Trust Deed. See section 8 of this IM.
Fund
UBT Invest Australian Credit Fund, an Australian domiciled unit trust that is not registered with ASIC as a managed investment scheme.
Fund Net Value
Value of the Fund assets less the Fund liabilities, fees and expenses.
Hybrid Securities
Securities that have a combination of debt and equity characteristics such as regular coupon payment with a conversion to equity at a future date.
IM
This information memorandum as amended, updated or supplemented from time to time.
Issue Cut Off Time
For issues of Ordinary Units is 12:00 noon Sydney time on the second last Business Day of each month and such other times as the Trustee determines from time to time.
Issue Date
Ordinary Units are issued as at the last day of each month.
Issue Price
The price at which an Ordinary Unit is issued, being $1.00 for the first issue of Units, and thereafter, the Adjusted Fund NAV divided by the number of Ordinary Units in issue as at the end of the month plus the Buy Spread.
Mason Stevens Asset Management
Mason Stevens Asset Management Pty Limited ABN 91 141 447 654 AR 461312
MSL
Mason Stevens Limited AFSL 351578
Offer
An invitation to apply for Ordinary Units.
Options
A derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date).
Ordinary Unit
A unit in the Fund designated as an Ordinary Unit in the Fund Register that gives the holder the rights described in the Trust Deed.and under applicable law.
OTC
Over the counter financial instruments which refers to a type of derivative.
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Performance Surplus
The Fund performance surplus for a calculation period which is described in section 8 of this IM.
Qualified Investor
A Wholesale Client approved by the Class A Unitholder (currently UBT Marketing) in its absolute discretion.
Quarter
Each 3 month period ending March, June, September and December.
RBA
Reserve Bank of Australia.
Redemption Cut Off Time
12.00 noon Sydney time on the 15th day of a month or following Business Day if the 15th is not a Business Day.
Redemption Day
The last day of each month, and such other day determined by the Trustee from time to time.
Redemption Price
The price at which a Unit is redeemed from the Fund, being the Adjusted Fund NAV less the Sell Spread.
Reserve Powers
Actions relating to the Trust that require approval of the Class A Unitholder as provided in the Trust Deed. This is described in section 2 of this IM.
RMBS
Residential mortgage backed securities.
Sell Spread
The amount deducted from the amount payable on redemption of a Unit as provision for the estimated costs and expenses associated with realising investments of the Fund. The Sell Spread at the date of this Information Memorandum is 0.40% of the Adjusted Fund NAV per Ordinary Unit. Please check the Fund website for any updates.
Structured Debt Securities
Debt securities that are structured and secured by pool of loans or assets such as mortgage loans, auto loans or leases, commonly known as residential mortgage-backed securities (RMBS) and asset-backed securities (ABS).
Tax Act
The Income Tax Assessment Act 1936 (C’th) (1936 Act), the Income Tax Assessment Act 1997 (C’th) (1997 Act) or both the 1936 Act and the 1997 Act, as appropriate.
Trust Deed
The trust deed establishing the Fund dated 17 August 2017, as amended from time to time.
Trustee
Evolution Trustees Limited ABN 29 611 839 519 | AFSL 486217.
UBT Marketing
UBT Marketing Pty Limited ABN 13 162 091 796.
Unit
An undivided beneficial interest in the assets (subject to the liabilities) of the Fund as provided for in the Trust Deed.
Wholesale Client
A person or entity that meets the definition of a wholesale client under section 761G(7) of the Corporations Act.
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Corporate Directory Trustee Evolution Trustees Limited ABN 29 611 839 519 AFSL 486217 Suite 306 5–11 Bridge Street, Sydney NSW 2000 Australia Tel: Website:
+61 2 8866 5150 www.evolutiontrustees.com.au
UBT UBT Marketing Pty Limited ABN 13 162 091 796 10 Herb Elliott Ave Sydney Olympic Park NSW 2127 Australia Tel: Email: Website:
1300 01 01 02 +61 2 8831 6031
[email protected] www.universalbusinessteam.com
Administrator FundBPO Pty Limited Level 1 51 – 57 Pitt Street Sydney NSW 2000 GPO Box 4968 Sydney NSW 2001 Australia Fax: Call Centre: Email: Website:
+612 9251 3525 1300 133 451
[email protected] www.fundbpo.com
Custodian Mason Stevens Limited Level 21 9 Castlereagh Street Sydney NSW 2000 Australia Tel: Fax: Website:
1300 98 88 78 +612 8270 0298 www.masonstevens.com.au
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