LA TROBE AUSTRALIAN CREDIT FUND. Supplementary Product Disclosure Statement. High Yield Credit Portfolio Investment.

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1 A Blackstone Portfolio Company LA TROBE AUSTRALIAN CREDIT FUND High Yield Credit Portfolio Investment Supplementary Product Disclosure Statement 28 February _03E_052

2 HIGH YIELD CREDIT PORTFOLIO SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT La Trobe n Credit Fund ARSN Key Parties The Credit Fund - The La Trobe n Credit Fund ARSN (the Credit Fund). Responsible Entity - La Trobe Financial Asset Management Limited ACN AFSL ACL (La Trobe Financial). La Trobe Financial was incorporated on 14 November 1989 to operate the La Trobe Financial Group s retail investment and funds management arm. The Investment Manager - The HYCP Investment Account is managed by La Trobe Financial Services Pty Limited ACN ACL (Investment Manager), which has been managing credit assets for over sixty five years. In your interest Please take time to read through this Supplementary Product Disclosure Statement (SPDS) regarding our managed investments and discuss it with your financial adviser. This is a Supplementary Product Disclosure Statement that supplements the Product Disclosure Statement (PDS) for the Credit Fund dated 8 November This SPDS is to be read together with the PDS. Where any inconsistency arises between the SPDS and PDS or other documents relating to the Fund, this SPDS shall prevail. From time to time we may update and/or vary the terms and conditions of this SPDS. Your investment will be governed by the terms and conditions that apply from time to time. Investment tip In preparing this SPDS, we have not taken into account your investment objectives, financial position or particular needs. La Trobe Financial and its Authorised Representatives do not provide financial product advice. For peace of mind, you must determine which investment account is best for you. You must consider your attitude to risk and return so that you do not worry if the value of your investment changes. You must take responsibility for your own investment decisions and to this end you should consider obtaining independent advice before making any investment or financial decisions. Supplementary Product Disclosure Statement This SPDS has been issued by La Trobe Financial. This SPDS has not been lodged with the n Securities and Investments Commission (ASIC) and is not required by the Corporations Act to be lodged with ASIC. ASIC takes no responsibility for the contents of this SPDS. Purpose The investments in the the Fund are issued by La Trobe Financial. The investment is an agreement between the Investor and La Trobe Financial governed by the terms and conditions which are contained in the PDS, this SPDS and the Credit Fund s Constitution (Terms). It is important that Investors and potential Investors read the Terms in full as these set out an Investor s rights and obligations in relation to the investment. Disclaimer The investments offered or sold by La Trobe Financial: have not taken into account your investment objectives, financial position or particular needs; and are subject to investment risks, including the possible loss of the capital amount invested. The investments do not represent a deposit or other liability of La Trobe Financial or any related body corporate and these entities do not guarantee or stand in any way behind either the capital value or performance of the investments. La Trobe Financial is not a bank and is not subject to regulatory supervision by n Prudential Regulatory Authority (APRA), but is regulated by ASIC. Questions If Initial you have any questions concerning the information contained in this SPDS please contact La Trobe Financial on LA INVESTOR TROBE FINANCIAL S COPY COPY 03_03E_007 2 LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement

3 HIGH YIELD CREDIT PORTFOLIO SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT La Trobe n Credit Fund ARSN INVESTMENT OBJECTIVES TARGET RETURNS INVESTMENT UNIVERSE MINIMUM INVESTMENT TERM You are investing in the High Yield Credit Portfolio (HYCP), which is part of the High Yield Investment Account of the Credit Fund. The HYCP is designed to provide a steady income stream with capital stability across economic cycles. The HYCP aims to outperform its benchmark (Bloomberg AusBond Index +3%) through market cycles. Bloomberg AusBond Index +3% over any rolling 4 year period and to provide positive returns over any rolling 12 month period. The HYCP invests in medium term credit assets secured by n residential and commercial real property and includes: n Residential Mortgage Backed Assets (RMBA); n Commercial Mortgage Backed Assets (CMBA); and Cash and Term Deposits. AUD $250,000 (Two hundred and fifty thousand) 4 years MANDATED INVESTMENT ALLOCATION RANGES RMBA CMBA Cash and Term Deposits Minimum 25% 0% 0% Maximum 100% 50% 100% HIGH YIELD CREDIT PORTFOLIO (AT 31 DECEMBER 2017) RMBA 100% CMBA 0% Cash and Term Deposits 0% RETURNS CURRENT PORTFOLIO YIELD LIQUIDITY Variable return paid monthly to your nominated financial institution account 7.00% p.a. net of fees To manage the internal liquidity of the HYCP, while the Investment Manager targets investments in short term cash of not more than 10%, it can hold more when required. The Investment Manager reserves the right to return investment funds to Investors (or with Investor consent, reinvest some funds into other Accounts of the Credit Fund for liquidity management). Initial LA INVESTOR TROBE FINANCIAL S COPY COPY LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement 3

4 HIGH YIELD CREDIT PORTFOLIO SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT La Trobe n Credit Fund ARSN INVESTMENT RETURNS AND WITHDRAWALS INVESTMENT RETURNS WITHDRAWALS Investment returns are variable, being declared within five (5) business days of the start of each month in relation to the previous month. They are dependent on the performance of the underlying assets of the HYCP and are not guaranteed. To withdraw your investment at the end of the initial four year period, you must provide written notice of your intention to withdraw at least thirty (30) days prior to your maturity date. Where no notice is received your investment will automatically roll for a further four years. FEES AND COSTS MANAGEMENT FEE ENTRY FEE EARLY WITHDRAWALS PERFORMANCE FEE EXIT FEE Up to 1.5% p.a. of the value of the investments. No Entry Fee applicable. At the discretion of La Trobe Financial and subject to a fee equal to 3.5% of the amount being withdrawn. No performance or out-performance fees are applicable. No Exit Fee is applicable where the investment is held to maturity. INVESTMENT REPORTING REGULAR REPORTING The Investment Manager will maintain a quarterly report on the HYCP. Investors will receive the following regular reports: A receipt of investment made; Detailed transaction statements; Financial Year Annual Taxation Statement (if applicable); The Credit Fund s Annual Report (if requested in the Credit Fund Application); and Quarterly HYCP portfolio reports. DEFINITIONS RESIDENTIAL MORTGAGE BACKED ASSETS (RMBA) COMMERCIAL MORTGAGE BACKED ASSETS (CMBA) CASH & TERM DEPOSITS RMBA is an investment that is secured by n residential mortgages and includes Residential Mortgage Backed Securities (RMBS), Residential Mortgage Backed Loans (RMBL) and direct residential mortgages. RMBS and RMBL are secured against a pool of residential mortgages. Each pool supports a number of tranches of investments with different risk/return characteristics and priorities. RMBS and RMBL can be rated by external rating agencies or unrated. The majority of investments issued in respect of RMBS and RMBL are repaid within a period of 1 to 4 years. However, the maximum investment term could be longer, up to the length of the longest mortgage term loan in the portfolio (generally, up to 30 years). CMBA is an investment that is secured by commercial mortgages and includes Commercial Mortgage Backed Securities (CMBS), Commercial Mortgage Backed Loans (CMBL) and direct commercial mortgages. CMBS and CMBL are secured against a pool of commercial mortgages. Each pool supports a number of tranches of investments with different risk/return characteristics and priorities. CMBS and CMBL can be rated by external rating agencies or unrated. The majority of investments issued in respect of CMBS and CMBL are repaid within a period of 1 to 4 years. However, the maximum investment term could be longer, up to the length of the longest mortgage term loan in the portfolio (generally, up to 25 years). Cash and term deposits are held to meet liquidity requirements of investor redemptions. Cash and term deposits will only be held with recognised n Authorised Deposit taking institutions. Initial LA INVESTOR TROBE FINANCIAL S COPY COPY 4 LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement

5 HIGH YIELD CREDIT PORTFOLIO SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT La Trobe n Credit Fund ARSN Liquidity & capital provisioning policies Investment term The HYCP is a four (4) year minimum term investment. Your investment will mature four calendar years from the date of your initial investment. No entry or exit fee is retained by the Investment Manager for investments that are held to maturity. Although it is not expected that this will occur frequently, the Investment Manager reserves the right to return funds to Investors for the purposes of liquidity management at any time without prior notice. Redemptions of investment To redeem your investment at the end of the initial four year period, you must provide written notice of your intention to redeem to La Trobe Financial at least thirty (30) days prior to your Maturity Date. Where no such notice is received, your investment will automatically roll for a further four years. The same requirements apply to redemptions of investments that have rolled a further four years or terms. In the absence of thirty (30) days written notice, your investment will automatically roll for a further four years. Generally, eligible redemptions will be made within twenty one (21) days of the end of the month in which your Maturity Date occurs. However, La Trobe Financial may take up to twelve (12) months from your Maturity Date to pay out eligible redemption requests. Early redemptions Requests for redemptions prior to your Maturity Date may be considered at the sole discretion of La Trobe Financial and will be subject to a 3.5% Early Redemption Fee. Redemption management While La Trobe Financial aims to maintain appropriate cash levels within the HYCP, this may be subject to short term fluctuations or adverse portfolio events. If eligible redemption requests in any one month exceed available cash, the redemption requests will be satisfied proportionately in accordance with the following formula: Available cash x Individual redemption request amount Total redemption request amount Capital provisioning La Trobe Financial operates a capital provisioning policy in relation to losses incurred on individual portfolio assets. The primary aim of this policy is to effect an equitable distribution of any capital losses amongst all relevant investors in the HYCP. In this case, redemptions will be adjusted in proportion to the total capital in the HYCP. Initial LA INVESTOR TROBE FINANCIAL S COPY COPY LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement 5

6 HIGH YIELD CREDIT PORTFOLIO SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT La Trobe n Credit Fund ARSN Specific HYCP Risks There is some degree of risk in all types of investments and these are outlined in Section 9 of the PDS. In making your investment decision, it is important that you understand the risks relevant to the HYCP and how they relate to your own financial needs and objectives. The HYCP is not guaranteed by the n government, La Trobe Financial or any related entity. In addition to the risks outined in the PDS, some of the key risks specifically relevant to the HYCP include: Subordination risk The HYCP seeks to generate competitive risk-adjusted returns for investors by investing in mezzanine and junior credit of various kinds. In the event of a default by the underlying borrower or borrowers, these investments will rank behind senior credit providers and this could reduce your interest and/or capital return. Counterparty concentration risk Predominantly, the HYCP will invest in loans and asset-backed securities originated and managed by the Investment Manager. This gives the Investment Manager greater control over the assets than would ordinarily be the case for a portfolio of this nature, but also exposes you to increased counterparty concentration. Eight Benchmark disclosures ASIC requires operators to provide information about specific operating benchmarks and disclosure principles. More information can be seen in section 4 of the PDS and on La Trobe Financial s website at latrobefinancial.com. The specific disclosure relating to the HYCP is: Benchmark 6. Lending principles: loan-to-valuation ratios The HYCP does not comply with this benchmark and disclosure principle. In some cases, the HYCP might have some exposure to loans with a higher loan to value ratio than the benchmark 75%. Comprehensive details of the HYCP s investments can be obtained from the quarterly portfolio summary available to HYCP investors. Initial LA INVESTOR TROBE FINANCIAL S COPY COPY 6 LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement

7 La Trobe n Credit Fund High Yield Credit Portfolio Investor Details & Approval Authority La Trobe n Credit Fund ARSN LA TROBE INVESTOR FINANCIAL S COPY COPY Please Please sign retain and return for your within records 7 days Investor Details & Approval Authority I/We would like to invest in the High Yield Credit Portfolio, which is part of the High Yield Investment Account of the La Trobe n Credit Fund. Investor Name Investor Number Investment Amount (Minimum AUD $250,000.00) Investor acknowledgements I/we acknowledge that: 1. I/We have received and read the Product Disclosure Statement and this Supplementary Product Disclosure Statement and understand and accept their contents. 2. I/We confirm that this SPDS was complete prior to my acceptance of this investment. 3. The communications that have taken place between me/us and La Trobe Financial and/or its Authorised Representative concerning my/our investment contain factual information only. 4. I/We acknowledge that La Trobe Financial and/or its Authorised Representative are not suggesting or implying a recommendation to hold a particular financial product and that La Trobe Financial and/or its Authorised Representative have recommended that I/we consider obtaining independent advice before making any investment or financial decisions. EXECUTION Companies must execute in accordance with s127(1) of the Corporations Act Investor representatives must state their capacity to execute and attach appropriate authority unless already provided. Signed Signed Date Date Print Name Print Name Capacity to Execute (if not investor) Capacity to Execute (if not investor) IMPORTANT NOTES: La Trobe Financial and the Authorised Representatives of La Trobe Financial do not give financial product advice in relation to the Fund or on a particular investment. Before making an investment decision, you need to consider with or without the assistance of a financial adviser, whether this investment and your investment in the Credit Fund are appropriate in light of your particular investment needs, objectives and financial circumstances. We advise that the directors and staff of La Trobe Financial and our Authorised Representatives do not have a material interest in this investment, although they may earn commissions or brokerage on the investment. We believe the factual information herein is accurate and reliable, but no warranty of accuracy or reliability is given. Neither La Trobe Financial Asset Management Limited, the Investment Manager, or their employees or any other company in the La Trobe Financial Group, nor the Authorised Representatives of La Trobe Financial guarantees the performance of the underlying investment or the repayment of capital invested. These investments are subject to investment and other risks. This could involve delays in repayment, or loss of income or principal. Please read the Product Disclosure Statement for a full description of the investment risks. LA TROBE AUSTRALIAN CREDIT FUND INVESTOR DETAILS & APPROVAL AUTHORITY 1 of 1

8 The Credit Fund La Trobe n Credit Fund ARSN Level 25, 333 Collins Street Melbourne, Victoria 3000 Responsible Entity La Trobe Financial Asset Management Limited ACN AFSL ACL Level 25, 333 Collins Street Melbourne, Victoria 3000 Investment Manager La Trobe Financial Services Pty Limited ACN ACL Level 25, 333 Collins Street Melbourne, Victoria 3000 Level 18, Chifley Tower 2 Chifley Square Sydney New South Wales 2000 Level 16, 626 Jiahi Plaza No 138 Ping Xing Guan Road Shanghai, China /F, Tower One Lippo Centre 89 Queensway Hong Kong Custodian Perpetual Corporate Trust Limited ABN AFSL Level 18, 123 Pitt Street Sydney New South Wales 2000 Statutory auditor of the Fund Statutory auditor of the Responsible Entity Statutory auditor of the Compliance Plan KPMG Tower Two, Collins Square 727 Collins Street Melbourne, Victoria LA TROBE AUSTRALIAN CREDIT FUND - HIGH YIELD CREDIT PORTFOLIO - Supplementary Product Disclosure Statement 03_03E_014

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