Arnhem New Zealand Investors Factsheet Issue Date 25 June 2013

Transcription

1 Arnhem New Zealand Investors Factsheet Issue Date 25 June 2013 Investment Manager BNP Paribas Investment Partners (Australia) Limited (ABN , AFSL ) Delegated Portfolio Manager Arnhem Investment Management Pty Ltd (ABN , AFSL ) Client Services BNP Paribas Investment Partners Phone: (Australia) or Fax: Web: Responsible Entity Equity Trustees Limited ABN AFSL Phone: About the Arnhem New Zealand Investors Fact Sheet Updated Information New Zealand: WARNING STATEMENT This New Zealand ( NZ ) Fact Sheet has been prepared and issued by Equity Trustees Limited and is a summary of significant information for persons receiving the Arnhem Australian Equity Fund, Arnhem Concentrated Australian Equity Fund or Arnhem Long Short Australian Equity Fund Product Disclosure Statements ( PDS ) in New Zealand. Throughout this NZ Fact Sheet the Fund means each of the Arnhem Australian Equity Fund, Arnhem Concentrated Australian Equity Fund or Arnhem Long Short Australian Equity Fund. This NZ Fact Sheet does not form part of the PDS but it is important that you read it before investing in the Fund. The information provided in this NZ Fact Sheet is general information only and does not take account of your personal financial situation or needs. You should obtain financial advice tailored to your personal circumstances. Information in this NZ Fact Sheet is subject to change. We will notify you of any changes that have a materially adverse impact on you or other significant events that affect the information contained in this NZ Fact Sheet. Any updated information which is not materially adverse may be obtained online at or or by calling BNP Paribas Investment Partners Client Services on (Australia) or A paper copy of the updated information will be provided free of charge on request. (a) This offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act 2001 and Corporations Regulations In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings Australia) Regulations (b) This offer and the content of the offer document are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001 and Regulations (Australia) set out how the offer must be made. (c) There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime. (d) The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and compensation arrangements for New Zealand securities. (e) Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this offer. If you need to make a complaint about this offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint. (f) The taxation treatment of Australian securities is not the same as for New Zealand securities. (g) If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser. (h) The offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. (i) If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars. The Responsible Entity will provide a copy of the relevant constitutional documents in respect of the Responsible Entity or the offer to offerees on request. Page 1

2 Investing in the Fund Direct Investors Indirect Investors Direct investors can acquire units in the Fund by following the instructions outlined in the Application Form accompanying the PDS. All applications must be made in Australian dollars. Minimum application amounts are subject to the Australian dollar minimum amounts disclosed in the PDS. If you wish to invest indirectly in the Fund through an IDPS your IDPS Operator will complete the application for you. Your IDPS Operator will advise what minimum investment amounts relate to you. Withdrawing your investment Direct Investors Indirect Investors Direct investors in the Fund can withdraw their investment by faxing a withdrawal request to BNP Paribas Investment Partners on , or alternatively by sending a written request to BNP Paribas Investment Partners, Applications and Withdrawals, C/- Unit Registry, PO Box R209, Royal Exchange NSW Minimum withdrawal amounts are subject to the Australian dollar minimum amounts disclosed in the PDS. Withdrawal requests received from New Zealand investors must specify: the withdrawal amount in Australian dollars; or the number of units to be withdrawn. We are unable to accept withdrawal amounts quoted in New Zealand dollars. Please note that the withdrawal amount paid to you will be in Australian dollars and may differ from the amount you receive in New Zealand dollars due to: Foreign exchange spreads between Australian and New Zealand dollars (currency rate differs daily); and Overseas Telegraphic Transfer ( OTT ) costs. Withdrawals will only be paid directly to the investor s bank account held in the name of the investor with an Australian domiciled bank. Withdrawal payments will not be made to third parties. If you have invested indirectly in the Fund through an IDPS, you need to provide your withdrawal request directly to your IDPS Operator. The time to process a withdrawal request will depend on the particular IDPS Operator. Managing your investment Distributions Processing Cut Off Times Cooling Off Rights New Zealand investors can only have their distribution reinvested. When the distribution is reinvested, New Zealand investors will be allotted units in accordance with the terms and conditions set out in the PDS and the Constitution for the Fund. Please see the PDS for a description of distributions and the terms and conditions of the reinvestment of distributions. When the distribution is reinvested, New Zealand investors will, within 30 days of the day on which the units in the Fund are allotted to them, be sent a statement of the amount of the distribution and the number of units in the Fund that have been allotted to them. In addition, there is available from the Responsible Entity, on request and free of charge, a copy of the most recent annual report of the Fund, the most recent financial statements of the Fund, the PDS and the Constitution of the Fund (including any amendments). The processing cut off times for applications and redemptions referred to in the PDS are Sydney Australia times and you should take this into account when faxing instructions. Cooling off rights may apply to investors in New Zealand. If you wish to exercise your cooling off rights you should contact the Responsible Entity of the Fund. The PDS contains further information about the rights that may apply. Taxation New Zealand Resident Taxation If you are a New Zealand resident wishing to invest in Australia, we strongly recommend that you seek independent professional tax advice. New Zealand resident investors will be taxed on their units under the foreign investment fund rules or ordinary tax rules, depending on their circumstances. Australian tax will be withheld at prescribed rates from distributions to non-residents to the extent that the distributions comprise of relevant Australian sourced income or gains. Page 2

3 Arnhem Long Short Australian Equity Fund ARSN APIR: ARO0019AU Supplementary Product Disclosure Statement (SPDS) Responsible Entity - Equity Trustees Limited (ABN AFSL ) Investment Manager - BNP Paribas Investment Partners (Australia) Limited (ABN AFSL ) Delegated Investment Manager Arnhem Investment Management Pty Ltd (ACN AFSL ) Date Issued: 1 July 2014 This is a Supplementary Product Disclosure Statement (SPDS) for the Arnhem Long Short Australian Equity Fund (ARSN ) (the Fund) Product Disclosure Statement (PDS) dated 25 June This SPDS should be read in conjunction with the PDS. If you receive this SPDS electronically, we will provide you with a paper copy, free of charge, on request. Terms defined in the PDS have the same meaning in this SPDS unless defined otherwise in this SPDS. The purpose of this SPDS is to update the information in the PDS in relation to changes to the Australian Privacy Principles, FATCA and MySuper Regulations. The following replaces the warning statement in 9) Fees and other costs on page 29: DID YOU KNOW? Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $ to $80 000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. Your employer may be able to negotiate to pay lower administration fees. Ask the fund or your financial adviser. TO FIND OUT MORE If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed investment fee calculator to help you check out different fee options. 1

4 The following replaces the Example of annual fees and costs section in 9) Fees and other costs on page 32: Example of annual fees and costs for the Fund This table gives an example of how the fees and costs for this managed investment product can affect your investment over a 1 year period. You should use this table to compare this product with other managed investment products. Example Arnhem Long Short Australian Equity Fund BALANCE OF $50,000 AND A CONTRIBUTION OF $5000 DURING THE YEAR. Contribution Fees Nil For every $5,000 you put in, you will be charged $0. Plus Management Costs Equals Cost of Fund 1.08% And, for every $50,000 you have in the Fund you will be charged $540 each year. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees from: $540 * What it costs you will depend on the fees you negotiate. The following replaces the Privacy Statement section in 11. Other important information on page 37: When you provide instructions to EQT or its related bodies corporate or agents, EQT will be collecting personal information about you. You must ensure that all personal information which you provide to EQT is true and correct in every detail, and should your personal details change it is your responsibility to ensure that you promptly advise EQT of the changes in writing. This information is needed to facilitate, administer and manage your investment, and to comply with Australian taxation laws and other laws and regulations. Otherwise, your application may not be processed or EQT and its delegates will not be able to administer or manage your investment. The information that you provide may be disclosed to certain organisations, including but not limited to: the ATO, AUSTRAC and other government or regulatory bodies; your broker, financial adviser or adviser dealer group, their service providers and/or any joint holder of an investment; organisations involved in providing, administering and managing the Fund, the administrator, custodian, auditors, or those that provide mailing or printing services; and those where you have consented to the disclosure and as required by law. In some cases, the organisations to which EQT and its agents disclose your information may be located outside Australia (including but not limited to France, Hong Kong, India, Luxembourg, New Zealand, Poland, Portugal Singapore, the United Kingdom, and the United States of America), though it is not practicable to list all of the countries in which such recipients are likely to be located. EQT may from time to time provide you with direct marketing and/or educational material about products and services EQT believes may be of interest to you. Should you not wish to receive this information from EQT (including by or electronic communication), you have the right to opt out by advising EQT by telephoning , or alternatively by contacting us via at privacy@eqt.com.au. Subject to some exceptions allowed by law, you can ask for access to your personal information. We will give you reasons if we deny you access to this information. EQT s Privacy Statement outlines how you can request to access and seek the correction of your personal information. EQT s Privacy Statement is available at 2

5 and can be obtained by contacting EQT s Privacy Officer on , or alternatively by contacting us via at privacy@eqt.com.au. EQT s Privacy Statement contains information about how you can make a complaint if you think EQT has breached your privacy and about how EQT will deal with your complaint. You should refer to EQT s Privacy Statement for more detail about the personal information that EQT collects and how EQT collects, uses and discloses your personal information. The following is added under 11) Other important information on page 37: FATCA: The Fund will be required to comply with the US Foreign Account Tax Compliance Act ( FATCA ) when arrangements are made under Australian tax law. To comply with these requirements, we will collect certain additional information from you and will disclose such information to the ATO or the US Internal Revenue Service, where required. The following is added under 12) Glossary of important terms on page 39: US Person: A person so classified under securities or tax law in the United States of America ( US ) including, in broad terms, the following persons: (a) (b) (c) (d) (e) any citizen of, or natural person resident in, the US, its territories or possessions; or any corporation or partnership organised or incorporated under any laws of or in the US or of any other jurisdiction if formed by a US Person (other than by accredited investors who are not natural persons, estates or trusts) principally for the purpose of investing in securities not registered under the US Securities Act of 1933; or any agency or branch of a foreign entity located in the US; or a pension plan primarily for US employees of a US Person; or a US collective investment vehicle unless not offered to US Persons; or (f) any estate of which an executor or administrator is a US Person (unless an executor or administrator of the estate who is not a US Person has sole or substantial investment discretion over the assets of the estate and such estate is governed by non-us law) and all the estate income is non-us income not liable to US income tax; or (g) (h) (i) any trust of which any trustee is a US Person (unless a trustee who is a professional fiduciary is a US Person and a trustee who is not a US Person has sole or substantial investment discretion over the assets of the trust and no beneficiary (or settlor, if the trust is revocable) of the trust is a US Person); or any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a US Person; or any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated or (if an individual) resident in the US for the benefit or account of a US Person. 3

6 Arnhem Long Short Australian Equity Fund (ARSN APIR ARO0019AU) Product Disclosure Statement Date issued 25 June 2013 Responsible Entity Equity Trustees Limited (ABN AFSL ) Investment Manager BNP Paribas Investment Partners (Australia) Limited (ABN , AFSL ) Administrator BNP Paribas Fund Services Australasia Pty Ltd (ACN ) trading as BNP Paribas Securities Services Delegated Investment Manager Arnhem Investment Management Pty Ltd (ACN , AFSL )

7 This Product Disclosure Statement ( PDS ) was issued on 25 June This PDS is for the offer of interests in the Arnhem Long Short Australian Equity Fund ARSN (referred throughout this PDS as the Fund ). The PDS has been prepared and issued by Equity Trustees Limited (ABN , Australian Financial Services Licence ( AFSL ) ) in its capacity as the Responsible Entity of the Fund (referred throughout this PDS as the Responsible Entity, EQT, us or we ). The Investment Manager is BNP Paribas Investment Partners (Australia) Limited (referred to throughout this PDS as BNP Paribas Investment Partners or the Investment Manager ). BNP Paribas Investment Partners has delegated the investment management functions (including research and portfolio management) of the Fund to Arnhem Investment Management Pty Ltd (ACN , AFSL ) (referred to throughout this PDS as Arnhem" or "Delegated Investment Manager ). The Responsible Entity has authorised the use of this PDS as disclosure to investors and prospective investors who invest directly in the Fund, as well as investors and prospective investors of an investor directed portfolio service, master trust, wrap account or an investor directed portfolio service-like scheme ( IDPS ). This PDS is available for use by persons applying for units through an IDPS ( Indirect Investors ). The operator of an IDPS is referred to in this PDS as the IDPS Operator and the disclosure document for an IDPS is referred to as the IDPS Guide. If you invest through an IDPS, your rights and liabilities will be governed by the terms and conditions of the IDPS Guide. Indirect Investors should carefully read these terms and conditions before investing in the Fund. Indirect Investors should note that they are directing the IDPS Operator to arrange for their money to be invested in the Fund on their behalf. Indirect Investors do not become unitholders in the Fund or have rights of unitholders. The IDPS Operator becomes the unitholder in the Fund and acquires these rights. Indirect Investors should refer to their IDPS Guide for information relating to their rights and responsibilities as an Indirect Investor, including information on any fees and charges applicable to their investment. Information regarding how Indirect Investors can apply for units in the Fund (including an application form ( Application Form ) where applicable) will also be contained in the IDPS Guide. EQT accepts no responsibility for IDPS Operators or any failure by an IDPS Operator to provide Indirect Investors with a current version of this PDS as provided by EQT or to withdraw the PDS from circulation if required by EQT. Please ask your adviser if you have any questions about investing in the Fund (either directly or indirectly through an IDPS). This PDS is prepared for your general information only. It is not intended to be a recommendation by the Responsible Entity, Investment Manager or Delegated Investment Manager, any associate, employee, agent or officer of the Responsible Entity, Investment Manager or Delegated Investment Manager or any other person to invest in the Fund. This PDS does not take into account the investment objectives, financial situation or needs of any particular investor. You should not base your decision to invest in the Fund solely on the information in this PDS. You should consider the suitability of the Fund in view of your financial position and investment objectives and needs and you may want to seek advice before making an investment decision. EQT, the Investment Manager, the Delegated Investment Manager and BNP Paribas SA or any member of the BNP Paribas Group and their employees, agents or officers do not guarantee the success, repayment of capital or any rate of return on income or capital or the investment performance of the Fund. Past performance is no indication of future performance. Units in the Fund are offered and issued by the Responsible Entity on the terms and conditions described in this PDS. You should read this PDS in its entirety. The Fund offered in this PDS is not a deposit with or liability of BNP Paribas SA or any other member company of BNP Paribas SA. The forward looking statements included in this document involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, EQT, the Investment Manager, the Delegated Investment Manager and their officers, employees, agents or associates. Actual future events may vary materially from the forward looking statements and the assumptions on which those statements are based. Given these uncertainties, you are cautioned to not place undue reliance on such forward looking statements. There are references to past performance in this PDS. Past performance is no guarantee of future performance. In particular, in considering whether to invest in the Fund, investors should consider the risk factors that could affect the financial performance of the Fund. Some of the risk factors affecting the Fund are summarised in Section 6. All amounts quoted in this PDS are in Australian dollars ( AUD ) unless stated otherwise. 2

8 The offer made in this PDS is available only to persons receiving this PDS in Australia and New Zealand (electronically or otherwise). New Zealand investors must read the Arnhem New Zealand Investors Factsheet before investing in the Fund. If you received this PDS electronically we will provide a paper copy free upon request during the life of this PDS. Please call BNP Paribas Investment Partners Client Services on (Australia) or for a copy. This PDS does not constitute a direct or indirect offer of securities in the US or to any US Person as defined in Regulation S under the US Securities Act of 1933 as amended ( US Securities Act ). EQT may vary its position and offers may be accepted on merit at EQT's discretion. The units in the Fund have not been, and will not be, registered under the US Securities Act unless otherwise determined by EQT and may not be offered or sold in the US to, or for, the account of any US Person (as defined) except in a transaction that is exempt from the registration requirements of the US Securities Act and applicable US state securities laws. Information in this PDS that is not materially adverse is subject to change from time to time. We may update this information. You can obtain any updated information: by calling BNP Paribas Investment Partners Client Services on (Australia) or ; or by visiting BNP Paribas Investment Partners website at A paper copy of the updated information will be provided free of charge on request. You may also contact EQT: by writing to GPO Box 2307 Melbourne Vic 3001; and by calling (Australia) or Unless otherwise stated, all fees quoted in the PDS are inclusive of GST, after allowing for an estimate for Reduced Input Tax Credits ( RITC ), and all amounts are in Australian dollars. 3

9 Contents 1. Fund at a glance 5 2. Benchmarks 7 3. Disclosure Principles 9 4. Who is managing the Fund? How the Fund invests Managing risk Investing and withdrawing Keeping track of your investment Fees and other costs Taxation Other important information 36 Glossary of important terms 38 Application form 4

10 1) Fund at a glance Summary For further information Name of the Fund Arnhem Long Short Australian Equity Fund Page 1 ARSN Page 1 APIR ARO0019AU Page 1 Investment objective Investment strategy and investments held Fund type The type(s) of investors for whom the Fund would be suitable Recommended investment timeframe The Arnhem Long Short Australian Equity Fund is designed and aims to outperform the S&P/ASX 200 Accumulation Index ( the Benchmark ) by 5% to 7% per annum over rolling 3-5 year periods. The Fund seeks to be fully invested in securities listed on the ASX or securities of ASX listed companies that are dual listed on other OECD member countries stock exchanges. The Fund may also invest in nonexchange traded securities where there is a reasonable expectation of listing on the ASX within 6 months. The Fund uses Fundamental Research to invest in both Long and Short Positions in Australian equities. Long exposures generally being around 130% of the value of the Fund and short exposures generally being around 30% of the value of the Fund. The Fund may use Derivatives to reduce risk or gain exposure to physical investments. The Fund may also invest in other asset types such as convertible bonds, convertible preference shares, preference shares, listed options, listed warrants, futures, and other listed Derivatives where consistent with the investment strategy. Unlisted registered managed investment scheme which invests in both Long and Short Positions in Australian equities. The Fund is designed for investors seeking capital appreciation over the medium-term (5 years) by investing in both Long and Short Positions in Australian listed shares. The risk level of the Fund would be considered High. The minimum suggested investment timeframe for the Fund is 5 years. We recommend that you consider, with your financial adviser, the suggested investment period for the Fund in relation to your own financial circumstances. You should review this regularly to ensure that the Fund continues to meet your investment needs. Section 5.1 Section 5.2 Section 3, Section 5.3 Minimum initial investment Minimum additional investment Minimum withdrawal amount The minimum investment amount for this Fund is $20,000. Section 7 The minimum additional investment into the Fund is $1,000. Section 7 The minimum withdrawal amount is $1,000. Section 5.10 Minimum balance The minimum balance is $5,000. Section 5.10 Cut off time for applications and withdrawals Before or at 2 pm (12 pm for applications made by cheque) on a Business Day for a correctly completed Application Form or withdrawal request. If you are an Indirect Investor, you need to contact the relevant IDPS Operator regarding the cut-off times for applications and withdrawals. Section 5.10, Section 7 Cooling Off Applicable to Retail Clients. Section 7 Valuation frequency Daily. Section 2, Section 3, Section 5.5, 5

11 Unit pricing Variable generally determined each Business Day, based on the Net Asset Value of the Fund Section 7 Section 2, Section 5.5, Section 7, Section 11 Applications Accepted each Business Day within the cut off time. Section 2, Section 5.5, Section 7, Section 9 and Section 11 Withdrawals Income distribution Management costs Entry fee/ exit fee Performance Fee Accepted each Business Day within the cut off time. Payment is generally within 3 Business Days of receipt of a withdrawal request. A withdrawal request can be denied if the Fund is not liquid (as defined in the Corporations Act). Annually (for the financial year ending 30 June). Distributions will be paid as soon as possible after year end. Distributions can be reinvested in the Fund or paid to a nominated bank account. Capped at 1.08% p.a. excluding Performance Fee (including GST less RITCs). Nil 15% of the Fund s performance above the S&P/ASX 200 Accumulation Index plus 2%. Section 2, Section 3, Section 5.10, Section 7, Section 9, Section 11 Section 2, Section 7, Section 8 Section 3, Section 9 Section 3, Section 9 Buy/Sell Spread +/- 0.30% of the NAV of a unit. Section 5.5, Section 5.10, Section 7, Section 9 6

12 2) Benchmarks The information summarised in the following tables and explained in detail in the identified section reference is intended to assist investors with analysing the risks of investing in the Fund. Investors should consider this information together with a detailed explanation of various benchmarks and principles referenced throughout this PDS and the key risks of investing in the Fund highlighted in Section 6 of this PDS. Is the benchmark satisfied? For further information Valuation of assets This benchmark addresses whether valuations of the Fund s non-exchange traded assets are provided by an independent administrator or an independent valuation service provider. The Fund seeks to be fully invested in securities listed on the ASX or securities of ASX listed companies that are dual listed on other OECD member countries stock exchanges. The Fund does not invest in non-exchange traded securities, with the exception of entities where there is a reasonable expectation of listing on the ASX within 6 months. The Responsible Entity has appointed a third party, BNP Paribas Securities Services, as Administrator of the Fund ( Administrator ). BNP Paribas Securities Services has a pricing policy in place with specific provisions for fund accounting, which incorporates valuation reporting, investment accounting, taxation, unit pricing, financial reporting, performance measurement and post trade compliance. BNP Paribas Securities Services will value any non-exchange traded securities in accordance with its pricing policy. The Fund does not technically satisfy Benchmark 1 because the Administrator, BNP Paribas Securities Services and the Investment Manager are part of the same global banking group. However, EQT reasonably considers that the relationship between the Administrator and the Investment Manager will not affect investors because: - EQT is not related to the Administrator and will manage its conflicts under the administration agreement; - the Administrator is a professional administrator of managed funds (including funds which are not managed by related parties) and will apply the same policies and services standards which are applicable to unrelated managed funds to the valuations of the Fund; and - the Administrator and EQT deal with each other on arm s length terms pursuant to a written administration agreement. The valuation of assets for the Fund generally takes place each Business Day. Please refer to pages 17 and 25 of this PDS for further information. No Please refer to page 17 and 25 of this PDS for further information. Periodic reporting This benchmark addresses whether the Responsible Entity of the Fund will provide periodic disclosure of certain key information on an annual and monthly basis. The Responsible Entity has and implements a policy to report on the following information as soon as practicable after the relevant period end: Annual Report to Investors, including financial statements and auditor s report; Transaction Reports confirming all additional investments, withdrawals, and payments (issued following transactions and on request); Yes Please refer to page 27 of this PDS for further information. 7

13 Distribution Statements issued annually notifying the investor of the value of their investment, income from investments and confirming the reinvestment or payment to the investor s bank account; Investment Reports issued monthly, quarterly and annually provide information on the Fund including a review of market conditions and Fund performance, Fund size, sector allocation and holdings. Tax Statements issued annually, providing investors with taxation information including a detailed summary of the components of any distributions. The frequency and content of the current reporting for the Arnhem Long Short Australian Equity Fund is considered adequate. The latest investment report is available on BNP Paribas Investment Partners website at or can be ed upon request. Please refer to page 27 of this PDS for further information. 8

14 3) Disclosure Principles Investment strategy Investment manager Fund structure Summary Arnhem s approach to long short Australian equity investing is based on the belief that superior long-term equity performance is driven by above average, sustainable earnings growth. Likewise, inferior equity performance is an outcome of below average unsustainable returns. Industry structure and a company s relative position within an industry are critical determinants of earnings sustainability. The Fund will primarily invest in Australian equities, cash and Derivatives (where required). The Fund may also invest in other asset types such as convertible bonds, convertible preference shares, preference shares, listed options, listed warrants, futures, and other listed Derivatives where consistent with the investment strategy. The investment guidelines of the Fund allow the use of Derivatives and leverage in certain circumstances. The investment strategy of the Fund is unlikely to change but the required notification would be provided to investors should any material change occur. The risks associated with the investment strategy and the Fund s risk management strategy are set out in Sections 5.2 and 6. BNP Paribas Investment Partners has delegated the investment management functions (including research and portfolio management) of the Fund to Arnhem Investment Management Pty Ltd. Arnhem is an investment management company whose team has been focussed on identifying unique opportunities to deliver superior investment performance for its clients for more than 12 years. Arnhem is an experienced and well-resourced team of 10 investment professionals with an average industry experience of 19 years. As at the date of this PDS, the lead portfolio manager responsible for the Fund is George Clapham (Managing Partner, Head of Australian Equities) who has been part of the investment team since 2000 and has 28 years industry experience. George holds an Agricultural Economics degree from the University of Sydney (1984). He is an Affiliate of FINSIA and was the Principal Lecturer in Equity Analysis for approximately 5 years. Within Arnhem s Australian equity investment process, industry and stock analysis is an iterative process performed by the entire investment team. As Head of Australian Equities at Arnhem, George has overall responsibility for oversight of the investment team and spends approximately 50% of his time on a weekly basis executing the investment strategy of the Fund. Under the investment management agreement between the Investment Manager and EQT, EQT can terminate the Investment Manager s appointment where the Investment Manager becomes insolvent, materially breaches the agreement, ceases to carry on its business or in other circumstances stated in Section 4. In the event that EQT terminates the Investment Manager following one of these events, the Investment Manager s appointment would cease upon any termination date specified in the notice, and the Investment Manager would be entitled to receive fees in accordance with the agreement until the effective date of termination. This Fund is registered with ASIC as the Arnhem Long Short Australian Equity Fund ARSN The Fund s units are not listed on any securities exchange. All of the investment functions (including research and portfolio management) for the Fund are delegated by BNP Paribas Investment Section (for further information) Refer to Sections 5.2 and 6 Refer to Section 4 Refer to Section 5.3 9

15 Valuation, location and custody of assets Liquidity Leverage Partners to Arnhem. BNP Paribas Fund Services Australasia Pty Ltd ACN trading as BNP Paribas Securities Services has been contracted to provide administration and custodial services for unencumbered, unleveraged assets. It is noted that whilst the Custodian and Administrator and the Investment Manager are members of the BNP Paribas Group, they are each appointed independently by the Responsible Entity and each paid on an arm s length basis for their services. At the date of this PDS, Deutsche Bank AG (London Branch) has been appointed as Prime Broker to provide a range of services, including execution, stock lending, margin loans, OTC Derivatives exposure and custody. PricewaterhouseCoopers has been appointed as the auditor for the Arnhem Long Short Australian Equity Fund. EQT ensures that key service providers comply with their service level obligations through its service provider monitoring program. The management cost of the Fund (excluding Performance Fee) is 1.08%, capped, except for extraordinary expenses. If the total management costs exceed the cap, BNP Paribas Investment Partners will reimburse the amount of the excess costs to the Fund unless the excess is due to an extraordinary expense. See Section 9 for further details on fees and expenses. The Arnhem Long Short Australian Equity Fund will primarily invest in Australian Equities, cash and Derivatives (where required). The Fund may also invest in other asset types such as convertible bonds, convertible preference shares, preference shares, listed options, listed warrants, futures, and other listed Derivatives where consistent with the investment strategy. EQT has appointed BNP Paribas Fund Services Australasia Pty Ltd ACN trading as BNP Paribas Securities Services as custodian and administrator of the Fund ("Custodian and Administrator"). As Custodian and Administrator, BNP Paribas Securities Services has overall responsibility for custody and valuation of the assets of the Fund, although it may appoint sub-custodians from time to time. The assets of the Fund are generally valued every Business Day, in line with BNP Paribas Securities Services pricing policy. The Responsible Entity expects that the Fund will generally be liquid for the purposes of the Corporations Act. Payment is generally within 3 Business Days of receipt of a withdrawal request. However, refer to Section 5.7 and Section 7 for further explanation of withdrawal procedures where the Fund is not liquid. The investment guidelines of the Fund allow leverage through the use of Derivatives, short selling or direct borrowing from a bank in certain circumstances. Where short selling is used to generate leverage, the counterparty will be the Prime Broker and the assets of the Fund may be used as collateral for the securities borrowed from the Prime Broker. The gross equity exposure (excluding Share Price Index futures) is limited to 180% and in ordinary circumstances is generally in the range of 110% to 160%. The net exposure to securities will be in the range of 95% to 105%; that is the Fund will, under certain circumstances, hold as much as 5% cash or be leveraged at a maximum of 5% of the Fund value. An example of how leverage could impact the Fund s returns is set out in Section 5.4. Refer to Section 5.5 Refer to Section 5.7 and Section 7 Refer to Section 5.4 Derivatives The Fund may use options, futures and other Derivatives to reduce Refer to Section 10

16 Short selling Withdrawals risk or gain exposure to physical investments. Derivatives used may only be exchange traded Derivatives. In the case of Derivatives, fluctuations in price will reflect movements in the underlying assets, reference rate or index (as applicable) to which the Derivatives relate. The use of Derivative positions to Hedge the risk of physical securities involves basis risk, which refers to the possibility that Derivative positions may not move perfectly in line with the physical security. As a consequence, the Derivative positions cannot be expected to perfectly Hedge the risk of the physical security. In addition, Derivatives can lose value because of a sudden price move, or because of the passage of time. The Fund may use short selling strategies. The objective is to try and profit from a decrease in the value of the security. Generally, short selling involves borrowing the security from another party to make the sale. Short sales can involve much greater risk than buying a security, as losses are generally restricted at most to the amount invested, whereas losses on a Short Position can be much greater than the purchased value of the security. Whilst short selling can often reduce risk since it may offset the risk of loss with Long Positions, it is also possible for Long Positions and Short Positions to both lose money at the same time. The Responsible Entity will generally allow investors of the Fund to access their funds within 3 Business Days of receipt of a withdrawal request for the relevant amount. However, the Constitution of the Fund allows the Responsible Entity to make payment up to 65 days after receipt of a withdrawal request. Where the Fund is not liquid, as defined in the Corporations Act, an investor does not have a right to withdraw from the Fund and can only withdraw where the Responsible Entity makes a withdrawal offer to investors in accordance with the Corporations Act. The Responsible Entity is not obliged to make such offers. The Fund will be liquid if at least 80% of the assets of the Fund are liquid assets. Broadly, liquid assets are money in an account or on deposit with a financial institution, bank accepted bills, marketable securities, other prescribed property and other assets that the Responsible Entity reasonably expects can be realised for their market value within the period specified in the Constitution for satisfying withdrawal requests while the Fund is liquid. 5.9 Refer to Section 5.8, Section 5.9 Refer to Section 5.10, Section 7. 11

17 4) Who is managing the Fund? About the Responsible Entity About the Investment Manager Equity Trustees Limited EQT is a publicly listed company on the Australian Securities Exchange. Established as a trustee and executorial service provider by a special Act of the Victorian Parliament in 1888, EQT today is a dynamic financial services institution which will continue to grow the breadth and quality of the products and services on offer. Specialist services of EQT include the provision of estate management services, trustee services, financial and taxation advice, personal investment advice including superannuation and responsible entity services for external fund managers. EQT s responsibilities and obligations, as the responsible entity of the Fund, are governed by the Fund s constitution ( Constitution ) as well as the Corporations Act and general trust law. EQT also assists not-for-profit and charitable organisations with their services and financial product needs and offers philanthropy advice to families and individuals seeking to establish charitable trusts. EQT is committed to acting in the best interests of its clients via wealth management solutions over a range of Asset Classes carrying different risk profiles. EQT has appointed BNP Paribas Investment Partners (Australia) Limited as the Investment Manager of the Arnhem Long Short Australian Equity Fund. BNP Paribas Investment Partners (Australia) Limited EQT has appointed BNP Paribas Investment Partners (Australia) Limited ( BNP Paribas Investment Partners ), the Australian asset management business line of BNP Paribas SA, as the Investment Manager of the Fund. BNP Paribas SA is a listed company with a market capitalisation of EUR 53.4 billion as at 31 December BNP Paribas Investment Partners provides investors with access to the most efficient specialists in asset management via a unique network of specialised partners, including its internal portfolio manager, BNP Paribas Asset Management, and external best of breed portfolio managers. BNP Paribas will often take an economic interest in the external managers ensuring stability and the matching of goals with BNP Paribas Investment Partners. In Australia, BNP Paribas Investment Partners distributes for a range of Australian and international investment managers, including Arnhem Investment Management. EQT may terminate the Investment Manager s appointment as investment manager of the Fund at any time with written notice where, in summary: an insolvency event occurs in relation to the Investment Manager; the Investment Manager ceases to carry on business as an investment manager, or sells its main business other than for the purposes of a corporate reconstruction on terms approved by EQT; the Investment Manager breaches a material provision of its agreement with EQT, or fails in a material way to observe any representations given under that agreement, and does not correct that breach within 10 Business Days of receiving written notice from EQT; the Investment Manager ceases to be a member of the BNP Paribas Group; the law requires EQT to terminate the agreement, or the Investment Manager becomes a disqualified person for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth); or EQT reasonably considers that it is the best interests of investors to do so, or if it reasonably considers it must do so to act consistently with its duties and obligations. In the event that EQT terminates the Investment Manager following one of these events, the Investment Manager s appointment would cease upon any termination date specified in the notice, and the Investment Manager would be entitled to receive fees in accordance with the agreement until the effective date of termination. About the Delegated Investment Manager Arnhem Investment Management Pty Ltd All of the investment functions (including research and portfolio management) for the Fund have been delegated by BNP Paribas Investment Partners to Arnhem Investment Management Pty Ltd. Arnhem is an investment management company whose team has been focussed on identifying unique opportunities to deliver superior investment performance for its clients for more than 12 years. Arnhem is an experienced and well resourced team of 10 investment professionals with an average industry 12

18 experience of 19 years. Within Arnhem s Australian equity investment process, industry and stock analysis is an iterative process performed by the entire investment team, the current details of which are outlined below. Name Position Investment Team* / Industry Experience Sector Responsibility George Clapham Head of Australian Equities 13 / 28 Basic Materials (ex-resources) & Steel, Industry Research Neil Boyd-Clark Portfolio Manager / Analyst 13 / 19 Metals & Mining, Media Mark Nathan Portfolio Manager / Analyst 13 / 21 Martin Duncan Research Analyst 5 / 28 Bruce Low Research Analyst 7/ 23 Banks, General Insurance, Financial Services, Contractors Retail, Property, Wealth Management, Life Insurance Transport, Infrastructure, Utilities, Energy (Oil and Gas) Amanda Munro Research Analyst 9 / 13 Small Industrials, Healthcare, Food & Beverages Kirsten Thomson Research Analyst 3 / 20 Micro-Industry Analysis Chris Tynan Research Analyst 4 / 4 Quantitative Industry Analysis Theo Maas Research Analyst 6/18 Gaming, Telecommunications, Internet Services, Technology Simon Twiss Dealer 8 / 17 Dealer, Commodities As at the date of this PDS, the lead portfolio manager responsible for the Arnhem Long Short Australian Equity Fund is George Clapham (Managing Partner, Head of Australian Equities) who has been part of the investment team since 2000 and has 28 years industry experience. George holds an Agricultural Economics degree from the University of Sydney (1984). He is an Affiliate of FINSIA and was the Principal Lecturer in Equity Analysis for approximately 5 years. Arnhem investment staff own 60 percent of Arnhem and BNP Paribas Investment Partners owns the remaining 40 percent. Investment management services have been provided by the Arnhem investment team for their stable of products since April The Arnhem board includes three members of the management team, who are also shareholders, and two representatives from BNP Paribas Investment Partners. This structure provides a boutique style entity with appropriate incentives while retaining access to the resources of a global funds management organisation. Neither the Investment Manager nor the Delegated Investment Manager has been subject to any significant adverse regulatory finding. About the Administrator EQT has appointed BNP Paribas Fund Services Australasia Pty Ltd ACN trading as BNP Paribas Securities Services as Custodian and Administrator of the Fund. As Custodian and Administrator, BNP Paribas Securities Services has overall responsibility for custody of the assets of the Fund, although it may appoint sub-custodians from time to time. 13

19 5) How the Fund invests 5.1 Investment objective The Arnhem Long Short Australian Equity Fund is designed to outperform the S&P/ASX 200 Accumulation Index by 5% to 7% per annum over rolling 3-5 year periods. Arnhem s investment style can be characterised as having a bias towards industries and companies that have above average long-term growth prospects, offset by under-weighting to industries and companies that have less sustainable growth prospects. Buy and sell decisions are based on fundamental, long-term strategic analysis and are not particularly sensitive to short-term market noise. However, short selling of stocks does incorporate tactical or short-term trading strategies. The investment style of the Fund can be described as industry-centric, relying on a deep focus on company and industry fundamentals. The Fund seeks to achieve this objective by taking both Long and Short Positions in securities listed on the ASX or securities of ASX listed companies that are dual listed on other OECD member countries stock exchanges. The Fund is a concentrated portfolio of between 25 to 40 positions and the returns may be volatile when compared with the Benchmark return. A number of risks are relevant to an investment in this Fund, including: market risk; asset risk (shares); interest rate risk; and other fund risks. These risks are explained in Section 6. The Fund seeks to be fully invested. 5.2 Investment strategy The Arnhem Long Short Australian Equity Fund will primarily invest in Australian equities, cash and Derivatives (where required). The Fund may also invest in other asset types such as convertible bonds, convertible preference shares, preference shares, listed options, listed warrants, futures, and other listed Derivatives where consistent with the investment strategy. The Fund invests in companies listed on the Australian Securities Exchange or securities of ASX listed companies that are dual listed on other OECD member countries stock exchanges. The Fund may also invest in non-exchange traded securities where there is a reasonable expectation of listing on the ASX within 6 months. The Fund is denominated in Australian dollars. The investment guidelines of the Fund allow the use of Derivatives in certain circumstances. The gross equity exposure (excluding Share Price Index futures) is limited to 180% and in ordinary circumstances is generally in the range of 110% to 160%. The net exposure to securities will be in the range of 95% to 105%; that is the Fund will, under certain circumstances, hold as much as 5% cash or be leveraged at a maximum of 5% of the Fund value. In addition the Fund has guidelines in relation to the maximum level of exposure to individual securities and sectors within the portfolio. These guidelines are designed to ensure that the Fund does not have a significant exposure to an individual security or sector. Therefore the target asset allocation ranges are: Australian equities 95 to 105% Cash & Cash Equivalents -5 to 5% The Fund may generally have Long Positions of up to 130% and Short Positions of up to 30% of the Fund s Net Asset Value. A Long Position is created when securities are bought and held, with the expectation that the securities will rise in value. The Fund will borrow securities from a securities lender and sell those securities to create Short Positions with the expectation that they can be bought from the market and returned to the lender at a price lower than the borrowed price. Short selling will be used when Arnhem expects that the price of a security will fall in value or when that security is expected to underperform the Benchmark index, being the S&P/ASX 200 Accumulation Index. Arnhem s approach to long short Australian equity investing is based on the belief that superior long-term equity performance is driven by above average, sustainable earnings growth. Likewise, inferior equity performance is an outcome of below average unsustainable returns. Industry structure and a company s relative position within an industry are critical determinants of earnings sustainability. Arnhem s focus is on: buying companies with superior growth prospects which are competitively placed in well structured industries; selling companies that are over capitalised due to a misperception of growth prospects (i.e. overpriced companies); and selling companies that face earnings risks due to inadequately recognised industry factors, or have under recognised financial risk. A substantial portion of the research effort is directed towards industry analysis. It is through industry assessment that Arnhem can identify those companies that are best positioned to deliver strong and sustainable profit growth the key ingredients to long-term share price outperformance. Conversely, the industry centric approach is also suited to identifying companies that are poorly positioned to deliver growth and which in turn results in share price underperformance. Arnhem seeks to exploit the market inefficiencies which emerge when the market misprices the value of a company s medium to long-term earnings. This typically occurs because market participants do not fully recognise the structural characteristics of the industry in which a company operates or the way these are changing over time. A key benefit of the Fund s long short investment strategy is that it broadens the range of opportunities available to generate outperformance of the Fund s return against the Benchmark. The specific risks associated with the Fund s investment strategy include Active Management Risk, Credit Risk, Company Specific Risk, Counterparty Risk, Derivative Risk, Fund Risk, Interest Rate Risk, Legal Risk, Liquidity Risk, Market Risk, Medium 14

20 and Small Company Risk, Operational Risk, Short Selling Risk, Stock Selection Risk, Underlying Strength of Cash flow Risk and Risk Management. These risks are all covered in more detail in Section 6, under the heading Managing Risk. Arnhem monitors the Fund's risk exposure for the purpose of determining that investment guidelines and diversification parameters are being followed. Individuals at management level within the equity department review the risk exposures of the Fund on a regular basis and work with the portfolio management team to keep risk exposures consistent with the Fund's investment guidelines and preset standards. The investment strategy of the Fund is unlikely to change but the required notification would be provided to investors should any material change occur. 5.3 Fund Structure The Fund is a registered managed investment scheme. The Fund is governed by the Constitution. The Fund comprises assets which are acquired in accordance with the Fund s investment strategy. Investors receive units in the Fund when they invest. In general, each unit represents an equal interest in the assets of the Fund subject to liabilities; however it does not give the investor an interest in any particular asset of the Fund. The Funds units are not listed on any securities exchange. The Responsible Entity of the Fund is Equity Trustees Limited. BNP Paribas Investment Partners has been appointed as Investment Manager to manage the assets of the Fund. All of the investment functions (including research and portfolio management) for the Fund are delegated by BNP Paribas Investment Partners to Arnhem. The Custodian and Administrator of the Fund is BNP Paribas Securities Services. At the date of this PDS, Deutsche Bank AG (London Branch) has been appointed as Prime Broker. PricewaterhouseCoopers has been appointed as the auditor for the Arnhem Long Short Australian Equity Fund. Cash Outflow (Withdrawals & Distributions) Investors Administrator Cash Inflow (Applications & Distributions Reinvested) Application Redemption Responsible Entity Fees FUND Fees Fees Investment Manager Fees Delegated Investment Manager Assets held in name of the Fund Stock borrowing Custodian Fees Fees Cash for Long Only Investing Prime Broker Safekeeping of physical assets Assets (Australian Equities/Cash) It is noted that whilst the Custodian and Administrator and the Investment Manager are members of the BNP Paribas Group, they are each appointed independently by the Responsible Entity and each paid on an arm s length basis for their services. There are no other related party relationships in existence between the entities mentioned above and all material arrangements in connection with the Fund are on an arm s length basis. The Responsible Entity ensures that its key service providers comply with their service level obligations through a service provider monitoring programme. This involves a quarterly compliance certification, complemented by a six monthly review meeting with a standard agenda and a predefined list of documents that need to be submitted by the service provider. All key service providers conduct their business operations partially or entirely in Australia and are subject to the jurisdiction of Australian laws. The risk of the Fund investing in overseas assets is very limited as the vehicle will primarily invest in Australian equities listed on the ASX or securities of ASX listed companies that are dual listed on other OECD member countries stock exchanges. The Fund is denominated in Australian dollars. 15

21 5.4 Leverage The investment guidelines of the Fund allow the use of leverage in certain circumstances. The Fund can be leveraged in three ways: 1) Firstly, leverage will result from the Fund short selling securities. The short selling of securities involves borrowing securities from the Prime Broker at a cost to the Fund (approximately 0.5% to 1.0% per annum). The proceeds of the short sale (effectively leveraged funds) are reinvested in securities. Short selling will result in a leverage ratio (stock loan liabilities as a percentage of gross Fund value) of approximately 20% of the gross Fund value. The gross equity exposure (excluding Share Price Index futures) is limited to 180% and in ordinary circumstances is generally in the range of 110% to 160%. The Fund may generally have Long Positions of up to 130% and Short Positions of up to 30% of the Fund s Net Asset Value. The collateral used for stock borrowing is the total assets of the Fund held by the Prime Broker. The diagram below describes the investment strategy of the Arnhem Long Short Australian Equity Fund, a 130/30 fund that takes advantage of Long and Short Positions. Refer to Section 5.2 Investment Strategy for an explanation of Long Positions and Short Positions. In essence, 30% of the Fund is shorted to fund 30% of additional Long Positions, targeting significantly more outperformance against the Benchmark than a long only fund while maintaining the same level of overall market exposure. $30 $30 Market Exposure ($) $ 30 Fund borrows $30 worth of stock, short sells it and receives $30 in cash proceeds Fund uses short sale proceeds (or leverage) to invest a further $30 in long stock positions Fund invests $100 in long stock positions Source: Arnhem Investment Management Fund is fully invested with $130 long/$30 short $ 30 2) Secondly, leverage can result from gearing the Fund through the Prime Broker, Deutsche Bank AG (London Branch). The net exposure to securities will be in the range of 95% to 105%; that is the Fund will, under certain circumstances, hold as much as 5% cash or be geared at a maximum of 5% of the Fund value. 3) Thirdly, the Fund may own Derivatives such as stock options, partly paid shares, stock warrants or stock rights that incorporate a leverage component. Such Derivatives typically require a commitment of the holder to make a payment in the future or when the option is exercised to convert the Derivative into a fully paid security. Worked Example A long short fund can utilise leverage to gain a greater portfolio weight in individual securities than a typical long only fund. For example, assume a long only fund with a fund value of $10,000 can have a maximum portfolio position of 5% or $500 invested in Company X shares. A 10% increase/decrease in Company X s share price would result in a $50 profit/loss on this investment or a 0.5% increase/decrease in the fund s performance, assuming no change in the value of other portfolio holdings. A long short fund using a 130/30 strategy can typically have larger portfolio weightings than a long only fund as the fund, through short selling, has additional capital to reinvest in its Long Positions. A long short fund could for example have a maximum position or active weight that is twice that of a long only fund. For example, a long short fund with a similar number of stocks as a long only fund may have a maximum portfolio position of 10% or $1000 invested in Company X shares. Thus a 10% increase/decrease in Company X s share price would result in a $100 profit/loss on the investment and a 1.0% increase/decrease in the fund s performance, assuming no change in the value of other portfolio holdings. 16

22 Thus by using leverage from the proceeds of short selling the impact of a change in Company X s share price on the portfolio s performance is increased by a factor of two. 5.5 Valuation, location and custody of assets EQT has appointed BNP Paribas Fund Services Australasia Pty Ltd ACN trading as BNP Paribas Securities Services as Custodian and Administrator of the Fund. As Custodian and Administrator, BNP Paribas Securities Services has overall responsibility for custody of the assets of the Fund, although it may appoint sub-custodians from time to time. BNP Paribas Securities Services has a pricing policy in place with specific provisions for fund accounting which incorporates valuation reporting, investment accounting, taxation, unit pricing, financial reporting, performance measurement and post trade compliance. The value of a unit is generally determined every Business Day and is determined on the basis of the Net Asset Value of the Fund. The Net Asset Value is calculated by deducting from the gross value of the Fund s assets the value of the liabilities of the Fund. Generally, investments will be valued at the next available valuation day but other valuation methods and policies may be applied by BNP Paribas Securities Services if appropriate or if otherwise required by law or applicable accounting standards. Units are issued at the prevailing Application Price. The Application Price of a unit in the Fund is based on the Net Asset Value divided by the number of units on issue in the Fund. The Responsible Entity can also make an allowance for transaction costs required for buying investments when an investor acquires units; this is known as the Buy Spread. As at the date of this PDS the Buy Spread is 0.30% of the Net Asset Value of a unit. Refer to the "Fees and other costs" section for additional information on Buy Spreads. Units in the Fund are redeemed at the Withdrawal Price. The Withdrawal Price of a unit in the Fund is based on the Net Asset Value of the Fund divided by the number of units on issue. The Responsible Entity can also make an allowance for the transaction costs required for selling investments to satisfy a withdrawal request which is known as the Sell Spread. As at the date of this PDS the Sell Spread is 0.30%. Refer to "Fees and other costs" for additional information on Sell Spreads. The Fund will primarily invest in Australian listed equities, Cash Equivalent investments and Derivatives, including exchange traded Derivatives (where required). The Fund may also invest in other asset types such as convertible bonds, convertible preference shares, preference shares, listed options, listed warrants, futures, and other listed Derivatives where consistent with the investment strategy. The gross equity exposure (excluding Share Price Index futures) is limited to 180% and in ordinary circumstances is generally in the range of 110% to 160%. The Fund may have generally Long Positions of up to 130% and Short Positions of up to 30% of the Fund s Net Asset Value. The net exposure to securities will be in the range of 95% to 105%; that is the Fund will, under certain circumstances, hold as much as 5% cash or be leveraged at a maximum of 5% of the Fund value. In addition the Fund has guidelines in relation to the maximum level of exposure to individual securities and sectors within the portfolio. These guidelines are designed to ensure that the Fund does not have a significant exposure to an individual security or sector. Therefore the target asset allocation ranges are: Australian equities 95 to 105% Cash & Cash Equivalents -5 to 5% It is the Responsible Entity s policy to keep custody of the Fund s assets in Australia. Presently, material assets of the Fund are held in Australia by Australian based custodians. 5.6 Lending guidelines At the date of this PDS, Deutsche Bank AG (London Branch) has been appointed as Prime Broker to provide a range of services, including execution, stock lending, margin loans, Derivatives exposure and custody. The Fund does not currently lend securities. 5.7 Liquidity The Responsible Entity expects that the Fund will generally be liquid for the purposes of the Corporations Act. The Responsible Entity reasonably expects to realise at least 80% of the Fund s assets, at the value ascribed to those assets in calculating the Fund s Net Asset Value, within 10 days. Payment is generally within 3 Business Days of receipt of a withdrawal request. However refer to Section 7 for further explanation of withdrawal procedures where the Fund is not liquid. 5.8 Short selling The Fund may use short selling strategies. The objective is to try and profit from a decrease in the value of the security. Generally, short selling involves borrowing the security from another party to make the sale. Short sales can involve much greater risk than buying a security, as losses are restricted at most to the amount invested, whereas losses on a Short Position can be much greater than the purchased value of the security. Whilst short selling can often reduce risk since it may offset the risk of loss with Long Positions, it is also possible for Long Positions and Short Positions to both lose money at the same time. Arnhem manages the risk of short selling through: 1. maintaining a maximum total short position weighting which is typically less than 20% of the total Fund value; 17

23 2. maintaining active weight limits of the short positions; 3. active diversification of short positions; 4. constantly monitoring intraday and day to day movements of all short positions; 5. utilising the resources of Arnhem's experienced research team to provide fundamental analysis of all short positions; and 6. checking changes in stock borrow rates from a range of prime brokers and total short holdings as reported by the ASX. 5.9 Derivatives The Fund does not generally use Derivatives but can use stock derivatives (stock options or warrants) provided they are listed on an OECD member country s stock exchange. Such Derivatives may be traded should they provide an attractive means to purchase or short a security. The Fund will only use futures if there are circumstances such as a large redemption with limited time to meet the required outflow, or a large cash inflow with limited time to invest the proceeds. As the Fund needs to maintain its minimum equity exposure at 95%, the Fund may hold Share Price Index (SPI) contracts as an equity market proxy for a short period. The Fund does not generally use stock Derivatives in the shorting process, but will short sell the underlying security instead. Derivatives used may only be exchange traded Derivatives. In the case of Derivatives, fluctuations in price will reflect movements in the underlying assets, reference rate or index (as applicable) to which the Derivatives relate. The use of Derivative positions to Hedge the risk of physical securities involves basis risk, which refers to the possibility that Derivative positions may not move perfectly in line with the physical security. As a consequence, the Derivative positions cannot be expected to perfectly Hedge the risk of the physical security. In addition, Derivatives can lose value because of a sudden price move, or because of the passage of time Withdrawals information All withdrawal requests must be received by 2 pm on a Business Day for processing that day. Any withdrawal request received after that time will be treated as having been received the following Business Day. Investors in the Fund can withdraw their investment by faxing a withdrawal request to BNP Paribas Investment Partners on , or alternatively by sending a written request to BNP Paribas Investment Partners, Applications and Withdrawals, C/- Unit Registry, PO Box R209, Royal Exchange NSW The minimum withdrawal amount is $1,000. Once we receive your withdrawal request, we may act on your instruction without further enquiry if the instruction bears your account number or investor details and your (apparent) signature(s), or your authorised signatory s (apparent) signature(s). While the Fund is liquid, EQT will generally allow investors in the Fund to access their investment within 3 Business Days of receipt of a withdrawal request by transferring the withdrawal proceeds to your nominated bank account. However, the Constitution allows EQT to make payments up to 65 days after receipt of a withdrawal request. The price at which units are withdrawn is determined in accordance with the Constitution. The Withdrawal Price on a Business Day, is in general terms, equal to the Net Asset Value of the Fund, divided by the number of units on issue and adjusted for transaction costs ( Sell Spread ). The Withdrawal Price will vary as the market value of assets in the Fund rises or falls. We reserve the right to fully withdraw your investment if your investment balance in the Fund falls below $5,000 as a result of processing your withdrawal request. Withdrawals from the Fund will not be funded using an external liquid facility provider. Required notification under the law would be provided to investors if there is any material change to their withdrawal rights. If you have invested indirectly in the Fund through an IDPS, you need to provide your withdrawal request directly to your IDPS Operator. The time to process a withdrawal request will depend on the particular IDPS Operator. When you are withdrawing, you should take note of the following: Withdrawal payments will only be made to a bank account held in the name of the investor(s). Payments will not be made into third party bank accounts. We are not responsible or liable if you do not receive, or are late in receiving, any withdrawal money that is paid according to your instructions. We may contact you to check your details before processing your withdrawal form. This may cause a delay in finalising payment of your withdrawal money. No interest is payable for any delay in finalising payment of your withdrawal money. If we cannot satisfactorily identify you as the withdrawing investor, we may refuse or reject your withdrawal request or payment of your withdrawal proceeds will be delayed. We are not responsible for any loss you consequently suffer. As an investor who is withdrawing, you agree that any payment made according to instructions received by post, courier or fax, shall be a complete satisfaction of our obligations, despite any fact or circumstances such as the payment being made without your knowledge or authority. 18

24 You agree that if the payment is made according to these terms, you and any person claiming through or under you, shall have no claim against EQT, BNP Paribas Investment Partners, Arnhem or any member companies of BNP Paribas SA in relation to the payment. The most significant risk factor or limitation that may affect the ability of investors to withdraw from the Fund is Liquidity Risk, see Section 6 below. EQT can deny a withdrawal request in certain circumstances, including where accepting the request would cause the Fund to cease to be liquid or where the Fund is not liquid (as defined in the Corporations Act). When the Fund is not liquid, an investor can only withdraw when EQT makes a withdrawal offer to investors in accordance with the Corporations Act. EQT is not obliged to make such offers. The Fund will be liquid if at least 80% of its assets are liquid assets (generally cash and marketable securities) Suggested investment timeframe The suggested investment timeframe is at least 5 years Labour standards and environmental, social and ethical considerations Decisions about the selection, retention or realisation of investments for the Fund are primarily based on company and industry fundamentals. The Responsible Entity, Investment Manager and the Delegated Investment Manager do not explicitly take into account labour standards, environmental, social or ethical issues when making these decisions except to the extent that these issues have a material impact on either investment risk or return Fund performance Up to date information on the performance of the Fund will be available by calling BNP Paribas Investment Partners Client Services on (Australia) or or by visiting the BNP Paribas Investment Partners website at 19

25 6) Managing risk Investment in any fund carries risks, including volatility of returns. Volatility refers to the degree to which returns may fluctuate around their long-term average. Each Asset Class, whether it is cash, fixed interest, property, Australian or international shares, has associated investment risks and the return achieved by each will vary accordingly. You should be aware that an investment in the Fund contains risk and neither the performance of the Fund nor the security of your investment is guaranteed by EQT, BNP Paribas Investment Partners or Arnhem. Investments in the Fund and the underlying investments in which it invests are generally subject to risks, including possible delays in the payment of withdrawal proceeds, and loss of income and/or capital. The following discussion of certain risk factors does not purport to be an exhaustive list or a complete explanation of all the risks involved in an investment in the Fund or the underlying investments. We recommend you talk to an adviser about the risks involved in investing in the Fund and how it might impact on your individual financial circumstances. Key Risks Active Management Risk: Arnhem does not invest in a predetermined basket of securities, such as a basket of securities that reflects an index, but instead selects specific securities that meets its investment criteria. This carries with it the risk that the Fund may underperform the market or indices generally. Credit Risk: The Fund faces several types of credit risks including market, counterparty, prime brokerage and custodian risk. Market risk can result from explicit or implicit exposure to market instruments such Australian equities and Derivatives. Counterparty risk can result when a party to a credit transaction fails to meet its obligations, such as a counterparty defaulting under a Derivative contract or a securities lender failing to deliver a borrowed security (see Counterparty Risk below for further information). Risk from Prime Brokers exists because they do not usually guarantee the return of collateral held there and that collateral can be lost in the event of insolvency of the Prime Broker. Any assets of the Fund which are taken as collateral by a Prime Broker become the property of the Prime Broker and the Prime Broker can use the Fund s assets for any purpose. The Fund will rank as an unsecured creditor in relation to the Fund s assets that are used by the Prime Broker and, in the event of the insolvency of the Prime Broker, the Fund may not be able to recover such equivalent assets in full. The Prime Broker may rehypothecate (i.e. use the assets which the Fund has provided as collateral) up to 100% of the value of the amount due to the Prime Broker in the Fund s account. Where the Fund is only using a single Prime Broker, this concentrates credit risk. Were a Prime Broker to have financial difficulties; even where the Fund is able to recover all of its capital, its trading could be materially disrupted in the interim, potentially resulting in material losses. Custodian risk can result from a failure of the custodian to secure custody of assets held there. Company Specific Risk: The value of investments can vary because of changes to a company s management, internal operations, product distribution or the company s business environment. Returns are affected by the underlying strength of the cash flows, balance sheets and management of the companies in which the Fund invests. An investment in securities carries the risk of a decline in value or a decrease in, or failure of payment in distributions because of a number of factors, including a fall in investor confidence, poor management or changes in a company s competitive environment or internal operations. Counterparty Risk Counterparty risk is the risk that any of the Responsible Entity s or the Investment Manager s or the Delegated Investment Manager s trading counterparties, including any Derivative counterparties, custodians, or any issuer or guarantor of securities held by the Fund, becomes insolvent or cannot otherwise meet their obligations to settle or repay money. Derivative Risk In the case of Derivatives, fluctuations in price will reflect movements in the underlying assets, reference rate or index (as applicable) to which the Derivatives relate. The use of Derivative positions to Hedge the risk of physical securities involves basis risk, which refers to the possibility that Derivative positions may not move perfectly in line with the physical security. As a consequence, the Derivative positions cannot be expected to perfectly Hedge the risk of the physical security. In addition, Derivatives can lose value because of a sudden price move, or because of the passage of time. Fund Risk As with all managed funds, there are risks particular to the Fund including: that the Fund could be terminated, the fees and expenses could change, EQT is replaced as Responsible Entity or BNP Paribas Investment Partners is replaced as Investment Manager, or Arnhem is replaced as Delegated Investment Manager. There is also risk that investing in the Fund may give different results than investing directly in the securities because of income or capital gains accrued in the Fund and the consequences of withdrawal by other investors. 20

26 Interest Rate Risk Changes in official interest rates can directly or indirectly impact (negatively or positively) on investment returns. For instance, rising interest rates can have a negative impact on the Fund s or a company s value as increased borrowing costs may cause earnings to decline. As a result, the unit value or share price may fall. Legal Risk: The Fund may be affected by the actions of governments and regulatory bodies. Legislation could be imposed retrospectively or may be issued in the form of internal regulations of which the public may not be aware. Legislation (including legislation relating to tax) or regulation may be introduced which inhibits the Fund from pursuing its strategy or which renders an existing strategy less profitable than anticipated. Such actions may take any form, for example nationalisation of any institution or restrictions on investment strategies in any given market sector (for example restrictions on short selling in the financial sector) or changing requirements (for example increased disclosure to market) and imposed without prior warning by any regulator. This risk is generally higher in developing countries. Liquidity Risk: There may be times when securities may not be readily sold (for example, in a falling market where companies may become less liquid). If this occurs and it results in the Fund becoming illiquid, withdrawals of units from the Fund must be processed only in accordance with a withdrawal offer under the Corporations Act. EQT is under no obligation to make a withdrawal offer to investors in the Fund. Trading volumes of stocks are generally sufficient to satisfy liquidity requirements when necessary. Neither the Responsible Entity, the Investment Manager, the Delegated Investment Manager or any other member companies of BNP Paribas SA guarantees the liquidity of the Fund s investment. Market risk The value of investments may fluctuate significantly over short periods of time. These fluctuations can be caused by changes in interest rates, economic cycles, investor sentiment, and political, social, technological and legal events. These changes can directly or indirectly create an environment that influences (negatively or positively) the value of the investments in the Fund. In addition, a downward move in the general level of the equities market can have a negative impact on the performance of the Fund. Medium & Small Company Risk: The volume of securities in small to medium sized companies that are listed on stock exchanges is limited. Therefore, if there is a fall in the prices of securities in these companies, these securities will fall more sharply and more rapidly than large capitalisation companies. Moreover, small and medium sized company securities may be thinly traded thereby increasing the liquidity risk of the Fund. Operational Risk Operational risk addresses the risk of trading and back office or administration issues that may result in a loss to the portfolio. This could be the result of oversight, ineffective security processing procedures, computer system problems or human error. The Responsible Entity, the Investment Manager and the Delegated Investment Manager have instituted certain practices and processes within their respective operations and business administrations designed to wherever possible mitigate the operational risk consequences that arise. Short Selling Risk: The Fund may use short selling strategies. The objective is to try and profit from a decrease in the value of the security. Generally, short selling involves borrowing the security from another party to make the sale. Short sales can involve much greater risk than buying a security, as losses are restricted at most to the amount invested, whereas losses on a Short Position can be much greater than the purchased value of the security. Whilst short selling can often reduce risk since they may offset the risk of loss with Long Positions, it is also possible for Long Positions and Short Positions to both lose money at the same time. Stock Selection Risk: Arnhem may make poor investment decisions resulting in sub-standard returns (for example where it invests in a company that significantly underperforms the share market). This risk is mitigated to some extent by the knowledge and experience of Arnhem and the diversification of securities held in the Fund. Underlying Strength of the Cash Flows Returns are affected by the underlying strength of the cash flows, balance sheets and management of the companies in which the Fund invests. 21

27 Risk Management: Arnhem monitors the Fund's risk exposure for the purpose of determining that investment guidelines and diversification parameters are being followed. Arnhem s compliance committee measures and evaluates the accounting, financial, and operational activities of Arnhem and its affiliates from a regulatory perspective. Individuals at management level within the equity department review risk exposures on a regular basis and work with the portfolio management team to keep risk exposures consistent with the Fund's investment guidelines and preset standards. 22

28 7) Investing and withdrawing IDPS investors Initial applications Additional applications Terms and conditions for applications The Responsible Entity has authorised the use of this PDS as disclosure to investors or prospective clients of IDPS and IDPS-like schemes. These are sometimes known as wraps or platforms. They provide investors with a menu of investment opportunities. Investors who invest through an IDPS may rely on the information in this PDS to give a direction to the operator of the IDPS to invest in the Fund on their behalf. The Responsible Entity agrees to provide notice to the operators of the IDPS promptly of any supplementary or replacement PDS that is issued under the Corporations Act. Importantly, investors who invest in the Fund through an IDPS do not become unitholders of the Fund. In those instances the unitholder of the Fund is the operator of the IDPS. The unitholder s rights set out in this PDS may only be exercised by the operator of the IDPS on behalf of the investor for whom they have acquired the units. Investors should read this PDS in conjunction with the offer documents issued by the IDPS Operator. Investors should complete the Application Form for their IDPS or IDPS-like scheme and will receive reports concerning the Fund from their IDPS Operator. Enquiries should be directed to the IDPS Operator. To invest, please complete the Application Form accompanying this PDS and attach your cheque and send with relevant certified identification documentation as outlined in the Application Form to: BNP Paribas Investment Partners, Applications and Withdrawals, C/- Unit Registry, PO Box R209, Royal Exchange, NSW Cheques should be made payable to: BNP Paribas Nominees Pty Ltd ACF BNP Paribas Investment Funds Arnhem Long Short Australian Equity Fund APP A/C Alternatively, transfer funds via EFT as per the instructions in the Application Form. Please note that cash cannot be accepted. Investors investing through an IDPS should use the Application Form attached to their IDPS Guide or any other application document provided by the IDPS provider (and not the Application Form attached to this PDS) to invest in the Fund. At the date of this PDS, the minimum initial investment amount is $20, If you are an Indirect Investor you should refer to the IDPS Guide or IDPS Operator for the minimum initial investment amount. For additional applications, you can either mail your completed Application Form to the address above, or fax it to the following number: , Attention: BNP Paribas Investment Partners, Applications and Withdrawals, C/- Unit Registry PO Box R209, Royal Exchange, NSW The same terms apply as for initial applications. Applications can be made at any time however for unit pricing purposes and income accrual purposes any application received after 2 pm (12 pm for applications made by cheque) on a Business Day will generally be treated as having been received on the next Business Day. Applications received prior to 2 pm on a Business Day will generally receive the Application Price determined for that Business Day. If we receive correctly completed Application Forms, identification documents (if applicable) and cleared application money: before or at 2 pm (12 pm for applications made by cheque) on a Business Day, the application will generally be processed on that Business Day. This means you will receive the Application Price calculated for that Business Day; and after 2 pm on a Business Day, the application will generally be processed on the next Business Day. This means you will receive the Application Price calculated for the next Business Day. If you are an Indirect Investor, you need to contact your IDPS Operator regarding the cut-off times for pricing purposes. We will only start processing an application if: we consider that you have correctly completed the Application Form; you have provided us with the relevant identification documents; and we have received the application money (in cleared funds) stated in your Application Form. The time it takes for application money to clear varies depending on how you transfer the money and your bank (it may take up to four Business Days). 23

29 We reserve the right to accept or reject applications in whole or in part at our discretion and delay processing of applications where we believe this to be in the best interest of all the investors of the Fund, without giving any reason. EQT reserves the right to refuse any application without giving a reason. If for any reason EQT refuses or is unable to process your application to invest in the Fund, EQT will return your application money to you, subject to regulatory considerations, less any taxes or bank fees in connection with the application. You will not be entitled to any interest on your application money in this circumstance. Under the Anti-Money Laundering and Counter- Terrorism Financing Act 2006 applications made without providing all the information and supporting identification documentation requested on the Application Form or otherwise required under the anti-money laundering laws cannot be processed until all the necessary information has been provided. As a result delays in processing your application may occur. Cooling off period Making a withdrawal Access to funds If you are a Retail Client you may have a right to cool off in relation to an investment in the Fund within 14 days of the earlier of: confirmation of the investment being received or available; and the end of the fifth Business Day after the units in the Fund are issued or sold. A Retail Client may exercise this right by notifying BNP Paribas Investment Partners Client Services at GPO Box 269 Sydney NSW A Retail Client is entitled to a refund of their investment adjusted for any increase or decrease in the relevant Application Price between the time we process your application and the time we receive the notification from you, as well as any other tax and other reasonable administrative expenses and transaction costs associated with the acquisition and termination of the investment. The right of a Retail Client to cool off does not apply in certain limited situations, such as if the issue is made under a distribution reinvestment plan, switching facility or represents additional contributions required under an existing agreement. Also, the right to cool off does not apply to you if you choose to exercise your rights or powers as a unit holder in the Fund during the 14 day period. This could include selling part of your investment or switching it to another product. Indirect Investors should seek advice from their IDPS Operator as to whether cooling off rights apply to an investment in the Fund by the IDPS. The right to cool off in relation to the Fund is not directly available to an Indirect Investor. This is because an Indirect Investor does not acquire the rights of a unit holder in the Fund. Rather, an Indirect Investor directs the IDPS Operator to arrange for their monies to be invested in the Fund on their behalf. The terms and conditions of the IDPS guide or similar type document will govern an Indirect Investor s investment in relation to the Fund and any rights an Indirect Investor may have in this regard. Investors in the Fund can withdraw their investment by faxing a withdrawal request to BNP Paribas Investment Partners on , or alternatively by sending a written request to BNP Paribas Investment Partners, Applications and Withdrawals, C/- Unit Registry, PO Box R209, Royal Exchange NSW Once we receive your withdrawal request, we may act on your instruction without further enquiry if the instruction bears your account number or investor details and your (apparent) signature(s), or your authorised signatory s (apparent) signature(s). While the Fund is liquid, EQT will generally allow investors in the Fund to access their investment within 3 Business Days of receipt of a withdrawal request by transferring the withdrawal proceeds to your nominated bank account. However, the Constitution allows EQT to make payments up to 65 days after receipt of a withdrawal request. The price at which units are withdrawn is determined in accordance with the Constitution. The Withdrawal Price on a Business Day, is in general terms, equal to the Net Asset Value of the Fund, divided by the number of units on issue and adjusted for transaction costs ( Sell Spread ). The Withdrawal Price will vary as the market value of assets in the Fund rises or falls. EQT can deny a withdrawal request in certain circumstances, including where accepting the request would cause the Fund to cease to be liquid or where the Fund is not liquid (as defined in the Corporations Act). When the Fund is not liquid, an investor can only withdraw when EQT makes a withdrawal offer to investors in accordance with the Corporations Act. EQT is not obliged to make such offers. If you have invested indirectly in the Fund through an IDPS, you need to provide your withdrawal request directly to your IDPS Operator. The time to process a withdrawal request will depend on the particular IDPS Operator. Except where the Fund is not liquid (see below), the Responsible Entity will generally allow investors to access their funds within 3 Business Days of receipt of a withdrawal request for the relevant amount. However, the Constitution of the Fund allows the Responsible Entity to make payment up to 65 days after receipt of a withdrawal request. The Responsible Entity reserves the right to postpone the processing and payment of withdrawals for the 24

30 Fund subject to the above extensions of time. If you have invested indirectly in the Fund through an IDPS, you need to provide your withdrawal request directly to your IDPS Operator. The time to process a withdrawal request will depend on the particular IDPS Operator. Where the Fund is not liquid (as defined in the Corporations Act) an investor does not have a right to withdraw from the Fund and can only withdraw where the Responsible Entity makes a withdrawal offer to investors in accordance with the Corporations Act. The Responsible Entity is not obliged to make such offers. A Fund will cease to be liquid if less than 80% of the assets of the Fund are liquid assets. Broadly, liquid assets are money in an account or on deposit with a financial institution, bank accepted bills, marketable securities, other prescribed property and other assets that the Responsible Entity reasonably expects can be realised for their market value within the period specified in the Constitution for satisfying withdrawal requests while the Fund is liquid. Terms and conditions for withdrawals Distributions Valuation of the Fund Joint account operation Appointment of authorised nominee to operate account The Responsible Entity is not required to give effect to a withdrawal request if it is for less than the minimum withdrawal amount. The minimum withdrawal amount is $1,000. EQT has the right to change the minimum withdrawal amount or fully redeem an investor s investment in the Fund where their holding falls below the minimum balance amount. EQT will refuse to comply with any withdrawal request if the requesting party does not satisfactorily identify themselves as the investor. Withdrawal payments will not be made to third parties (including authorised nominees), and will only be paid directly to the investor s bank account held in the name of the investor at a branch of an Australian domiciled bank. By lodging a facsimile withdrawal request the investor releases, discharges and agrees to indemnify EQT from and against any and all losses, liabilities, actions, proceedings, account claims and demands arising from any facsimile withdrawal request. The investor also agrees that any payment made in accordance with a facsimile withdrawal request shall be a complete satisfaction of the obligations of EQT, notwithstanding any fact or circumstance including that the payment was made without the investor s knowledge or authority. The investor agrees that if the payment is made in accordance with a facsimile withdrawal request, the investor and any person claiming through or under them shall have no claim against EQT in relation to the payment. A distribution comprises the investor s share of any distributable income earned by the Fund. An investor s share of any distributable income is calculated in accordance with the Constitution of the Fund and is generally based on the number of units held by the investor at the end of the distribution period. The Fund s distribution is calculated annually as at 30 June. Distributions can be reinvested in the Fund or paid to a nominated bank account. If the investor does not make an election, their income distribution will automatically be reinvested. Please note this has a dependency in regard to the availability of underlying tax components being received for the distribution purposes. Indirect Investors should review their IDPS Guide for information on how and when they receive any income distribution. The value of a unit is generally determined every Business Day and is determined on the basis of the Net Asset Value of the Fund. The Net Asset Value is calculated by deducting from the gross value of the Funds assets the value of the liabilities of the Fund. Generally, investments will be valued at the next available valuation day but other valuation methods and policies may be applied by EQT if appropriate or if otherwise required by law or applicable accounting standards. Units are issued at the prevailing Application Price. The Application Price of a unit in the Fund is based on the Net Asset Value divided by the number of units on issue in the Fund. The Responsible Entity can also make an allowance for transaction costs required for buying investments when an investor acquires units; this is known as the Buy Spread. As at the date of this PDS the Buy Spread is 0.30% of the Net Asset Value of a unit. Refer to the "Fees and other costs" section for additional information on Buy Spreads. For joint accounts, each signatory must sign withdrawal requests. Please ensure both signatories sign the declaration in the Application Form. Joint accounts will be held as joint tenants. Investors may elect to appoint an authorised nominee to operate their account. The relevant sections on the Application Form need to be completed, including the name and signature of the authorised nominee, the signature of the investor and the date. Only investors can appoint authorised nominees. If you appoint an authorised nominee we suggest that you ensure that: they cannot appoint another nominee; and the appointment lasts until cancelled by you in writing or by the Responsible Entity. If the Responsible Entity determines that the circumstances require, the Responsible Entity may cancel an appointment by giving the investor 14 days notice in writing. If an appointment is cancelled, the 25

31 Responsible Entity will not be obliged to act on the instructions of the authorised nominee. If the instructions are varied, the Responsible Entity will act only in accordance with the varied instructions. By completing and lodging the relevant sections on authorised nominees on the Application Form you release, discharge and agree to indemnify the Responsible Entity from and against any and all losses, liabilities, actions, proceedings, account claims and demands arising from the Responsible Entity acting on the instructions of your authorised nominee. You also agree that any instructions of your authorised nominee to the Responsible Entity, which are followed by the Responsible Entity, shall be a complete satisfaction of the obligations of the Responsible Entity, notwithstanding any fact or circumstance, including that the instructions were made without your knowledge or authority. You agree that if the authorised nominee s instructions are followed by the Responsible Entity, you and any person claiming through or under you shall have no claim against the Responsible Entity in relation to the instructions. An authorised nominee can, among other things: apply for additional investment units; request that distribution instructions be altered; change bank account details, withdraw all or part of your investment; and enquire as to the status of your investment and obtain copies of statements. Withdrawal payments will not be made to third parties. If a company is appointed as an authorised nominee, the powers will extend to any director and authorised officer of the company. If a partnership, the powers will extend to all partners. Electronic instructions If an investor instructs EQT by electronic means, such as facsimile, or internet the investor releases EQT from and indemnifies EQT against, all losses and liabilities arising from any payment or action EQT makes based on any instruction (even if not genuine) that EQT receives by an electronic communication bearing the investor s investor code and which appears to indicate to EQT that the communication has been provided by the investor eg. a signature which is apparently the investor s and that of an authorised signatory for the investment or an address which is apparently the investor s. The investor also agrees that neither they nor anyone claiming through them has any claim against EQT or the Fund in relation to such payments or actions. There is a risk that a fraudulent withdrawal request can be made by someone who has access to an investor s investor code and a copy of their signature or address. Please take care. 26

32 8) Keeping track of your investment Enquiries Complaints Reports For any enquiries regarding your investment or the management of the Fund please contact BNP Paribas Investment Partners Mail: Attention: Client Services BNP Paribas Investment Partners, GPO Box 269, Sydney, NSW Phone: (Australia) or Fax: Web: EQT seeks to resolve complaints over the management of the Fund to the satisfaction of investors. If an investor wishes to lodge a formal complaint please write to: Mail Compliance Team Equity Trustees Limited GPO Box 2307 Melbourne VIC 3001 Australia compliance@eqt.com.au Or by calling EQT on (Australia) or EQT will seek to resolve any complaint and will respond as soon as possible and in any case will respond within 14 days of receiving the letter. If we are unable to resolve your complaint, you may be able to seek assistance from the Financial Ombudsman Service. Financial Ombudsman Services GPO Box 3 Melbourne Vic 3001 Phone : (Australia) or info@fos.org.au Please include the EQT FOS membership number with your enquiry: FOS is an independent body that can assist you if EQT cannot. FOS may not consider a dispute where the value of a person s claim exceeds $500,000. For claims lodged from 1 January 2012 FOS is only able to make a determination of up to $280,000 per managed investment claim (excluding compensation for costs and interest payments). If you are investing through an IDPS, then enquiries and complaints should be directed to the IDPS Operator, not EQT. We will make the following statements available to all investors; A transaction confirmation statement, showing a change in your unit holding (provided when a transaction occurs or on request); The Fund s annual audited accounts for each period ended 30 June; Annual distribution, tax and confirmation of holdings statements for each period ended 30 June; Annual report detailing each of the following: the actual allocation to each asset type; the liquidity profile of the portfolio assets as at the end of the period; the maturity profile of the liabilities as at the end of the period; the derivative counterparties engaged (including capital protection providers); and the key service providers if they have changed since the latest report given to investors, including any change in their related party status. The latest annual report will be available online from The following information is available on BNP Paribas Investment Partners website and/or is disclosed monthly: 27

33 the current total Net Asset Value of the Fund and the redemption value of a unit in each class of units as at the date the Net Asset Value was calculated; the leverage ratio (including leverage embedded in the assets of the Fund, other than listed equities and bonds) as at the end of the period; the monthly or annual investment returns over at least a five-year period; the key service providers if they have changed since the last report given to investors, including any change in their related party status; and for each of the following matters since the last report on those matters: the net return on the Fund s assets after fees, costs and taxes; any material change in the Fund s risk profile; any material change in the Fund s strategy; and any change in the individuals playing a key role in investment decisions for the Fund. The Fund is not a disclosing entity. If the Fund becomes a disclosing entity, the Fund will be subject to regular reporting and disclosure obligations under the Corporations Act. Copies of documents issued by the Fund disclosing information that may have a material affect on the price or value of units in the Fund to unitholders can be obtained from BNP Paribas Investment Partners Client Services on (Australia) or These documents may include: the most recent annual financial report; any half yearly financial report lodged with ASIC after that financial report but before the date of this PDS; and any continuous disclosure notices lodged with ASIC after that financial report but before the date of this PDS. You can contact BNP Paribas Investment Partners Client Services on (Australia) or for updated information on performance, unit prices, Fund size and other general information about the Fund. If you are an Indirect Investor, contact your IDPS Operator. 28

34 9) Fees and other costs The warning statement below is required by law to be displayed at the beginning of the Fees and Other Costs section of this PDS. The example given in the warning statement does not relate to any investments described within this PDS. DID YOU KNOW? Small differences in both investment performance and fees and costs can have a substantial impact on your longterm returns. For example, total annual fees and costs of 2% of your Fund balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $ to $80 000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask the Fund or your financial adviser. TO FIND OUT MORE If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed investment fee calculator to help you check out different fee options. This table shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the Fund s assets as a whole. Information about taxation is set out in another part of this document. You should read all the information about fees and costs because it is important to understand their impact on your investment. For Indirect Investors, the fees listed in the Fees and other costs section of this PDS are in addition to any other fees and charges charged by your IDPS Operator. Type of fee or cost Amount How and when paid Fees when your money moves in or out of the Fund Establishment fee The fee to open your investment Contribution fee The fee on each amount contributed to your investment Withdrawal fee The fee on each amount you take out of your investment Termination fee The fee to close your investment Management costs The fees and costs for managing your investment* Performance Fees** Nil Nil Nil Nil 1.08% (Based on a constant investment of $20,000 the amount in dollars is A$216) At the end of each financial year ending 30 June ( Performance Fee Period ) a Performance Fee of 15% of the There is no establishment fee payable when you set up your investment in the Fund There is no contribution fee payable when you invest in the Fund There is no withdrawal fee payable when you redeem investments from the Fund There is no termination fee payable when you close your investment in the Fund These costs are calculated and accrued daily based on the NAV of the Fund. The accrued fees are paid in arrears by deduction from the Fund assets at the end of each month. These costs reduce the NAV of the Fund and are reflected in the unit price. Performance Fees are generally calculated daily. They accrue daily and, if positive, are reflected in the unit price. Any 29

35 investment performance of the Fund above the S&P/ASX 200 Accumulation Index plus 2% ( Performance Hurdle ) is payable to the Investment Manager out of the Fund s assets as an expense of the Fund. underperformance of the Fund against the Performance Hurdle will have the effect of reducing any Performance Fee accrued in that Performance Fee Period. Any underperformance against the Performance Hurdle at the end of a Performance Fee Period is carried forward and the underperformance must be recouped before Performance Fees will accrue. Performance Fees are calculated on the performance of the Fund and not on the performance of an investor s investment in the Fund. In addition to the performance of the Fund, the Investment Manager s entitlement to receive a Performance Fee will be affected by the timing and volume of applications and withdrawals. Service fees Investment switching fee The fee for changing investment options Nil Nil Not applicable * This fee can be negotiated. See Differential fees below. Until further notice, the management costs (excluding Performance Fees) are capped, except for extraordinary expenses. If the total management costs exceed the cap, BNP Paribas Investment Partners will reimburse the amount of the excess costs to the Fund unless the excess is due to an extraordinary expense. ** Please note that no Performance Fees have been included in the calculation above. It is not possible to provide a meaningful estimate of the Performance Fee payable in any given Performance Fee Period, as we cannot accurately forecast performance of the Fund against the Performance Hurdle. Additional Explanation of Fees and Costs What do the Management costs pay for? IDPS Buy/Sell spread Alternative forms of remuneration Differential fees Performance Fees The management costs include Responsible Entity fees, investment management fees, custodian fees (excluding transaction costs), administration fees, the Performance Fee and other expenses. The management costs are calculated and accrued daily based on the NAV of the Fund. The accrued fees are paid in arrears from the Fund at the end of each month. The management costs reduce the NAV of the Fund and are reflected in the unit price. For Indirect Investors, the fees listed in the Fees and Other Costs section of this PDS are in addition to any other fees and charges by your IDPS Operator. The Buy/Sell Spread reflects the estimated costs incurred in buying or selling assets of the Fund when investors invest in or withdraw from the Fund. The Buy/Sell Spread is an additional cost to the investor but is incorporated into the Application Price and Withdrawal Price of the units in the Fund. The Buy/Sell Spread is paid into the Fund and not paid to EQT or the Investment Manager. The estimated Buy/Sell Spread is 0.30% upon entry ($60 for each investment of $20,000) and 0.30% upon exit ($60 for each $20,000 withdrawn). As a member of the Financial Services Council, we maintain an Alternate Forms of Remuneration Register. The register, which you can review by contacting us, outlines some alternative forms of remuneration that we may pay to or receive from AFS licensees, fund managers or representatives (if any is paid or received at all in relation to the Fund). The Responsible Entity or the Investment Manager may from time to time negotiate a different fee arrangement (by way of a rebate or waiver of fees) with investors who are Wholesale Clients. The Performance Hurdle for the Arnhem Long Short Australian Equity Fund is the return of the Benchmark plus 2%. How the Performance Fee is calculated The Fund maintains a notional account ( Performance Fee Account ) that is used to track, in dollar terms, the amount of Performance Fees that accrue to the Investment Manager or the amount of underperformance that must be recovered before Performance Fees accrue. The Performance Fee is calculated each time the NAV of the Fund is calculated. 30

36 There are three main steps carried out to calculate the Performance Fee: 1. determine the Fund s outperformance or underperformance relative to the Performance Hurdle. This determination is made after taking into account the base management fee payable to the Responsible Entity; 2. multiply the outperformance or underperformance by 15% and by the number of units on issue in the Fund; and 3. adjust the Performance Fee Account to reflect the outperformance or underperformance in respect of the units on issue in the Fund during the relevant period. If the Fund has outperformed the Performance Hurdle, an amount will be added to the Performance Fee Account. If the Fund has underperformed the Performance Hurdle, an amount will be subtracted from the Performance Fee Account. If there is a positive balance in the Performance Fee Account at the end of a financial year (this is the Performance Fee Period ), the Investment Manager will be entitled to that amount. If there is a negative amount in the Performance Fee Account at the end of a financial year, the negative amount is carried forward and the Investment Manager must eliminate this negative amount by outperforming the Performance Hurdle in subsequent financial years before any future Performance Fees will accrue. Any Performance Fees due and payable are deducted from the Fund as at the end of each financial year and are paid to the Investment Manager within 7 days of the end of the financial year. Performance Fees reflected in unit price Any positive balance in the Performance Fee Account (i.e. any Performance Fee that has accrued to the Investment Manager) is also included in the calculation of the NAV of the Fund. This means that any Performance Fees accrued in respect of previous outperformance will be reflected in the Application Price of any new units issued and those units will not bear the liability of the Performance Fee payable in respect of that outperformance which those units did not enjoy. This also means that the Withdrawal Price will reflect any accrued Performance Fees that may become payable and the units that have benefited from the outperformance will crystallise their liability for this Performance Fee upon withdrawal. Any negative balance in the Performance Fee Account, on the other hand, will not be reflected as an asset in the NAV of the Fund since there is no obligation on the Investment Manager to pay any amount in respect of any underperformance of the Fund. The Responsible Entity must regain any underperformance by eliminating any negative number from the Performance Fee Account before any future Performance Fees will accrue. This means that those units issued while there is a negative balance in the Performance Fee Account will not bear any Performance Fee while the negative balance is being eliminated. Impact of applications and redemptions on Performance Fees As the number of units on issue is one of the variables in the calculation of the amounts that are added to, and subtracted from, the Performance Fee Account, the amount of accrued Performance Fees (and the amount of underperformance that must be recouped) will be affected by applications and redemptions of units. The larger the number of units on issue, the larger the amounts of the additions and deductions will be to the Performance Fee Account. This could lead to situations where the Investment Manager may be entitled to a Performance Fee as at the end of a financial year, even though the Fund has underperformed against the Performance Hurdle. This could occur, for example, where a Performance Fee accrues when there are a large number of units on issue, which are then withdrawn before the end of the financial year, and before the subsequent underperformance of the Fund may be recovered during the remainder of that financial year. Other aspects of the operation of the Performance Fees Even though the Fund may have negative performance, a Performance Fee may still accrue provided that the Fund is outperforming the Performance Hurdle. This could be the case, for example, in a declining market where the value of the Benchmark (and therefore the Performance Hurdle) is decreasing, but the value of the Fund is decreasing by a smaller amount. Example of Performance Fees The following assumptions apply for the purposes of this example: there were 1,000,000 units on issue during the entire financial year; each unit was issued on 1 July at a price of $1; the balance in the Performance Fee Account at 1 July was zero; and there were no applications or redemptions during that year. Assume that, during that financial year, the value of each unit decreased to $0.94, meaning the Fund lost 6% (after management fees) and the Benchmark gained 2%. The Fund would have underperformed the Performance Hurdle (which is the return of the Benchmark +2%) by 10% (i.e. 6% - (2% + 2%), and there would have been $15,000 subtracted from the Performance Fee Account (i.e. 15% (Performance 31

37 Fee rate) x [-6% - (2% + 2%)] (Fund performance against the Performance Hurdle) x 1,000,000 (number of units on issue)). This amount would have to be recovered before any Performance Fee would become payable in the future. In contrast, had the value of each unit increased to $1.06 during that financial year, then the Fund would have achieved a 6% return (after management fees). Consider further that, if during this same time, the Benchmark only achieved 2% for that year, then the Fund would have outperformed the Performance Hurdle by 2% (i.e. 6% - 4%= 2%). A Performance Fee of $3,000 would have been payable as at 30 June. This amount would be calculated as follows: (i.e. 2% (outperformance) x 1,000,000 (number of units on issue) x 15% (Performance Fee rate), for a total Performance Fee of $3,000). The actual Performance Fee will depend upon the actual performance of the Fund and so will most likely vary from this estimate. There is no guarantee that the Fund will have any particular rate of performance or returns in the future. Payments to IDPS operators Transaction and other costs Can the fees change? GST Subject to the law, payments of up to $20,000 on an annual basis may be paid to some IDPS Operators because they offer the Fund on their investment menus. Product access is paid by BNP Paribas Investment Partners out of the investment management fee component of management costs and is not an additional cost to the Investor. If the payment of annual fees to IDPS Operators is limited or prohibited by the law, EQT will ensure the payment of such fees is reduced or ceased. All Government taxes such as stamp duty and GST will be deducted from the Fund as appropriate. Relevant tax information is provided in the Taxation section. Reduced Input Tax Credits ( RITCs ) will also be claimed by the Fund where appropriate to reduce the cost of GST to the Fund and investors. The Fund may incur transaction costs. These transaction costs include brokerage, settlement costs (including custody costs), clearing costs and stamp duty. Transaction costs include costs incurred by the Fund when investors invest in or withdraw from the Fund and when transacting to meet investment objectives. These costs are an additional cost to the investor but are generally reflected in the unit price (through the Buy/Sell spread) and not charged separately to the investor. Transaction costs which are not recovered through the Buy/Sell spread are deducted from the Fund from time to time and as they are incurred and are reflected in the unit price. The exact amount of transaction costs is dependent on a number of different variables, including the level of trading undertaken by the Fund. As such, EQT is unable to provide a meaningful amount or percentage of the estimated transaction costs for the Fund. Yes, all fees can change without investor consent. In most circumstances the Constitution defines the maximum fees that can be charged for fees described in this PDS. We have the right to recover all proper and reasonable expenses incurred in managing the Fund and as such these expenses may increase or decrease accordingly. We will generally provide investors with at least 30 days notice of any proposed change to the management costs. Expense recoveries and Buy/Sell Spreads may change without notice, for example, when it is necessary to protect the interests of existing members and if permitted by law. All fees and other costs quoted include GST less any Reduced Input Tax Credits. Example of annual fees and costs These tables give an example of how the fees and costs for the Fund can affect your investment over a one year period. You can use this table to compare this product against other managed investment products. Example Arnhem Long Short Australian Equity Fund Balance of $50,000 Contribution Fees Nil For every $5,000 you put in, you will be charged $0. Plus Management Costs Equals Cost of Fund 1.08% And, for every $50,000 you have in the Fund you will be charged $540 each year. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees from: $540 * What it costs you will depend on the fees you negotiate with your Fund or financial adviser. * These examples assume a constant balance so the management costs on the additional contribution are not taken into account. Additional fees may apply. Please note that this example does not capture all the fees and costs that may apply to you such as the Buy/Sell Spread. This example assumes the additional $5,000 investment is made at the beginning of the year and the investment balance is constant at $50,000 during the year. This example does not include an estimate for the Performance 32

38 Fee. It is not possible to provide a meaningful estimate of the Performance Fee payable in any given Performance Fee Period, as we cannot accurately forecast performance of the Fund against the Performance Hurdle. ASIC provides a fees calculator on its website which you could use to calculate the effects of fees and costs on your investment in the Fund. 33

39 10) Taxation The following information summarises some of the Australian taxation issues you may wish to consider before making an investment in the Fund and assumes that you hold your investment in the Fund on capital account and are not considered to be trading in investments for tax purposes. The information should be used as a guide only and does not constitute professional tax advice as individual circumstances may differ. A number of tax reform measures are currently under review by the Australian Government, including a proposed new regime for the taxation of managed investment trusts as well as the taxation of trusts more broadly. These reforms may impact on the tax position of the Fund and its investors. Accordingly, it is recommended that investors seek their own professional advice, specific to their own circumstances, of the taxation implications of investing in the Fund. Taxation Treatment of the Fund General The Fund is a resident trust estate for Australian tax purposes. On the basis that the Fund has distributable income and investors are presently entitled to all of the Fund s distributable income, (which is the Responsible Entity's intention) and the Fund is not a public trading trust, the Fund should be taxed as a flow-through trust. This means that investors should be taxed on their share of the Fund s net taxable income, and the Fund should not be subject to Australian income tax. In the case where the Fund makes a loss for Australian tax purposes, the Fund cannot distribute the tax loss to investors. However, the tax loss may be carried forward by the Fund for offset against taxable income of the Fund in subsequent years, subject to the operation of the trust loss rules. Deemed Capital Gains Tax (CGT) election Eligible Managed Investment Trusts (MITs) may make an irrevocable election to apply a deemed capital account treatment for gains and losses on disposal of certain eligible investments (including equities and units in other trusts but excluding Derivatives and foreign exchange contracts). The Fund has made an election for deemed capital account treatment. On this basis, the realised gains or losses on disposal of eligible investments by the Fund will be capital gains or losses where the Fund qualifies as a MIT throughout any given income year. Where the relevant investments have been held for more than 12 months, the Fund should be entitled to the capital gains discount concession of one-half. Capital losses must be offset against the grossed up or nominal amount of discount capital gains. Controlled Foreign Company (CFC) and Foreign Accumulation Fund (FAF) Provisions The Government intends to introduce an anti-avoidance rule which is referred to as the Foreign Accumulation Fund regime. In broad terms, the FAF rules are intended to apply to low risk offshore investment vehicles that accumulate (or roll-up) rather than distribute income, in certain circumstances. These investments may effectively be taxed on an accruals basis. In addition to the proposed FAF rules, the Government has also announced significant changes to the current CFC regime. However, the FAF rules and rewrite of the CFC rules have not yet been legislated. In the 14 May 2013 Federal Budget, it was announced that the FAF measures, as well as the proposed changes to the CFC rules, will be reconsidered when the Organisation for Economic Co-Operation and Development (OECD) has completed its work on base erosion and profit shifting. As such, the commencement date of the FAF rules remains unknown at the date of this PDS. However, the rules should not take effect until 1 July after the date on which the legislation receives Royal Assent. The Responsible Entity will monitor the progress of the CFC and FAF amendments to determine the impact on the Fund once they have been enacted. Taxation of Financial Arrangements (TOFA) Broadly, the TOFA regime seeks to recognise sufficiently certain returns from financial arrangements on an accruals basis for tax purposes rather than on a realisation basis. Where returns from derivative instruments are not sufficiently certain they will continue to be recognised on a realisation basis, unless specific tax timing elections are made. The TOFA provisions may apply to the Fund in the future and tax certain financial arrangements on a compounding accruals basis. The Administrator and the Investment Manager of the Fund will assist the Responsible Entity with ongoing compliance with the TOFA rules. Tax File Number (TFN) and Australian Business Number (ABN) It is not compulsory for an investor to quote their TFN or ABN. If an investor is making this investment in the course of a business or enterprise, the investor may quote an ABN instead of a TFN. Failure by an investor to quote an ABN or TFN or claim an exemption may cause the Responsible Entity to withhold tax at the top marginal rate, plus the Medicare Levy, on gross payments including distributions of income to the investor. The investor may be able to claim a credit in their tax return for any TFN or ABN tax withheld. Taxation of Australian Resident Investors Distributions Each Australian resident investor will be subject to taxation on their proportionate share of the net taxable income derived by the Fund. Such income will retain its character as it flows through the Fund, and may include capital gains and Australian and foreign sourced income. Where the Fund realises a capital gain on the disposal of an asset, the Fund may be entitled to take 34

40 into account the discount capital gain concession (see below) in determining the amount of the net capital gain that is included in the Fund s net income. Generally, an Australian resident investor s entitlement (share) to the net income of a fund for a year of income, including amounts that are received in a subsequent year of income or which are reinvested, forms part of their assessable income for that year. Investors who become entitled to a distribution from the Fund in respect of a financial year will receive an annual tax statement detailing all relevant taxation information concerning distributions, including any franking credits and Foreign Income Tax Offset ( FITO s ) entitlements. Franking credits and franked dividends Income distributions from the Fund may include an entitlement to franked dividends. Generally, investors should include the franked dividends and the franking credits (imputation credits) they receive in their assessable income. Certain additional requirements, including the 45 day holding period rule may need to be satisfied in order to obtain franking credits in relation to dividends. The investor s particular circumstances (and that of the Fund) will be relevant to determine whether the investor is entitled to any franking credits, in respect of the investor s share of the franked dividends. Any excess franking credits may be refundable to some investors, such as individuals and complying superannuation funds, and may give rise to a tax loss for companies. Foreign income The Fund may also derive foreign sourced income that might be subject to foreign tax. Australian resident investors should include their share of both the foreign income and the amount of any foreign tax withheld in their assessable income. In such circumstances, investors may be entitled to a FITO for the foreign tax paid, against the Australian tax payable on the foreign sourced income. To the extent the investors do not have sufficient overall foreign sourced income to utilise all of the FITOs relevant to a particular year of income, the excess FITOs cannot be carried forward to a future income year. Non-assessable distribution payments Under current practice, distributions of non-assessable amounts are generally not subject to tax in the hands of passive investors. Broadly, the receipt of certain non-assessable amounts will generally reduce the cost base of the Australian resident investor's units in the Fund for CGT purposes. This results in either an increased capital gain, or a reduced capital loss, upon the subsequent disposal of the investor's units in the Fund. However, in certain circumstances, such amounts may be assessable to an investor rather than giving rise to a CGT cost base adjustment. Investors should have regard to the ATO s views expressed in ATOID 2011/58 and any further ATO pronouncements on this issue, and seek professional advice if necessary. Disposal of Units by Australian Resident Investors If an Australian resident investor transfers or redeems their units in the Fund, this will constitute a disposal for tax purposes. Where an investor holds their units in the Fund on capital account, a capital gain or loss on the disposal may arise and each investor should calculate their capital gain or loss according to their own particular facts and circumstances. In calculating the taxable amount of a capital gain, a discount of 50% for individuals and trusts or 33 1/3% for complying Australian superannuation funds may be allowed where the units in the Fund have been held for more than 12 months. No CGT discount is available to corporate investors. Australian Taxation of Non-Resident Investors Tax on Income The Fund is required to withhold Australian tax from distributions to non-resident investors for certain types of Australian sourced net taxable income, including any Australian sourced, unfranked dividend and interest income, Australian sourced other income (e.g. foreign exchange gains) and taxable Australian property capital gains. The rate of tax deducted will depend on the type of income or gain distributed, the type of investor, and the country of residence of the investor. We recommend that non-resident investors seek independent tax advice before investing, taking into account their particular circumstances and the provisions of any relevant Double Taxation Agreement/ Exchange of Information Agreement (EOI) between Australia and their country of residence. Disposal of Units by Non-Resident Investors Based on the Fund s investment profile, generally non-resident investors should not be subject to Australian capital gains tax on the disposal of units in the Fund unless the units were capital assets held by the investor in carrying on a business through a permanent establishment in Australia. Australian tax may apply in certain circumstances if the non-resident holds their units on revenue account. We recommend that non-resident investors seek independent tax advice in relation to the tax consequences of the disposal of their units. 35

41 11) Other important information Consents The Administrator Non-listing of units Termination of the Fund Our legal relationship with you Compliance Plan Unit pricing discretions policy Indemnity BNP Paribas Investment Partners has given and, at the date of this PDS, has not withdrawn, its written consent to be named in this PDS as the Investment Manager of the Fund; and to the inclusion of the statements made about them and the Fund in Sections 1, 2, 3, 4, 5, 6, 7, 8 and 9 of this PDS, in the form and context in which they appear, BNP Paribas Investment Partners has not otherwise been involved in the preparation of this PDS and has not caused or otherwise authorised the issue of this PDS. BNP Paribas Investment Partners and its employees and officers do not accept any responsibility arising in any way for errors or omissions from this PDS, other than in relation to the statements for which they have provided their consent. Arnhem Investment Management has given and, as of the date of this PDS, has not withdrawn, its written consent to be named in this PDS as the Delegated Investment Manager of the Fund; and to the inclusion of the statements made about it or the Fund which are attributed to it in Sections 1, 2, 3, 4 and 5 of this PDS, in the form and context in which they appear. Arnhem Investment Management has not otherwise been involved in the preparation of this PDS and has not caused or otherwise authorised the issue of this PDS. Arnhem Investment Management and its affiliates, employees and officers do not accept any responsibility arising in any way for errors or omissions from this PDS, other than in relation to the statements for which it has provided its consent. BNP Paribas Securities Services has been appointed as the Fund s Administrator to perform certain administrative, accounting, registrar and transfer agency services for the Fund. BNP Paribas Securities Services has not otherwise been involved in the preparation of this PDS and has not caused or otherwise authorised the issue of this PDS. BNP Paribas Securities Services and its employees and officers do not accept any responsibility arising in any way for errors or omissions from this PDS. The units of the Fund are not listed on any stock exchange and no application will be made to list the units of the Fund on any stock exchange. The Responsible Entity may resolve at any time to terminate and liquidate the Fund (if it provides Investors with notice) in accordance with the Constitution and the Corporations Act. Upon termination and after conversion of the assets of the Fund into cash and payment of, or provision for, all costs, expenses and liabilities (actual and anticipated), the net proceeds will be distributed pro-rata among all investors according to the aggregate of the Withdrawal Price for each of the units they hold in the Fund. EQT s responsibilities and obligations, as the responsible entity of the Fund, are governed by the Constitution of the Fund, as well as the Corporations Act and general trust law. The Constitution of the Fund contains a number of provisions relating to the rights, terms, conditions and obligations imposed on both EQT, as the responsible entity of the Fund, and investors. EQT may amend the Constitution if it considers that the amendment will not adversely affect investor s rights. Otherwise the Constitution may be amended by way of a special resolution of investors. To the extent that any contract or obligation arises in connection with the acceptance by EQT of an application or reliance on this PDS by investors, any amendment to the Constitution may vary or cancel that contract or obligation. Further, that contract or obligation may be varied or cancelled by a deed executed by EQT with the approval of a special resolution of investors, or without that approval if EQT considers the variation or cancellation will not materially and adversely affect investors rights A copy of the Constitution of the Fund is available, free of charge, on request from EQT. EQT has prepared and lodged a compliance plan for the Fund with ASIC. The compliance plan describes the procedures used by EQT to comply with the Corporations Act and the Constitution of the Fund. Each year the compliance plan for the Fund is audited and the audit report is lodged with ASIC. EQT has developed a formal written policy in relation to the guidelines and relevant factors taken into account when exercising any discretion in calculating unit prices (including determining the value of assets and liabilities). A copy of the policy and, where applicable and to the extent required, any other relevant documents in relation to the policy (such as records of any discretions which are outside the scope of, or inconsistent with, the unit pricing policy) will be made available to investors free of charge on request. EQT, as the responsible entity of the Fund, is indemnified out of the Fund against all liabilities incurred by it in performing or exercising any of its powers or duties in relation to the Fund. To the extent permitted by the Corporations Act, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Responsible Entity. EQT may retain and pay out any monies in its hands all sums necessary to affect such an indemnity. 36

42 Privacy Statement Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) Prime Broker Information on underlying investments When you complete the Application Form for units in the Fund, EQT will be collecting personal information from you. EQT may collect additional personal information from you in the future. EQT needs to collect personal information from investors for the primary purpose of providing investors with an investment in the Fund (including assessing your application and identifying you). There are also a number of related purposes for which your personal information will be collected and these are to process your application, administer and manage your investment in the Fund, and comply with Australian taxation laws, the Corporations Act, the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) and other laws and regulations. If you do not provide EQT with all the information that we require then we may not be able to process your application, administer or manage your investment or tell you about investment opportunities in which you may be interested. EQT may also collect personal information (including sensitive information) about you from third parties, to meet its obligations under the AML/CTF Act. The information collected by EQT about an investor may be disclosed to certain organisations. The types of organisations or persons to whom EQT usually discloses the information provided by investors include: the Australian Taxation Office and other government or regulatory bodies; your adviser or adviser dealer group, their service providers and any joint holder of your investment; organisations involved in providing, administering or managing the Fund such as any third party service provider engaged by EQT to provide administration, custody, investment management, technology, auditing, registry, mailing or printing services; and those where you have consented to such disclosure, or as required or authorised by law. Your information may also be used in connection with the purposes for which it was collected. You can gain access to the personal information EQT holds about you, subject to some exceptions allowed by law. EQT will give you reasons if we deny access. If you have any queries in relation to EQT s Privacy Statement, would like to request a copy of EQT s Privacy Policy, or if you have any questions about how EQT handles your personal information, or if you wish to access the personal information that it holds about you please contact the EQT Privacy Officer on (03) Australia s AML/CTF laws require EQT to adopt and maintain an Anti-Money Laundering and Counter Terrorism Financing program. A fundamental part of the AML/CTF program is that EQT knows certain information about investors in the Fund. To meet this legal requirement, we need to collect certain identification information and documentation ( KYC Documents ) from new investors. Existing investors may also be asked to provide KYC Documents as part of a re-identification process to comply with the AML/CTF laws. Processing of applications or redemptions will be delayed or refused if investors do not provide the KYC Documents when requested. Under the AML/CTF laws, EQT may be required to submit reports to AUSTRAC. This may include the disclosure of your personal information. EQT may not be able to tell you when this occurs and, as a result, AUSTRAC may require EQT to deny you (on a temporary or permanent basis) access to your investment. This could result in loss of the capital invested, or you may experience significant delays when you wish to transact on your investment. Neither EQT nor the Investment Manager for the Fund are liable for any loss you may suffer because of compliance with the AML/CTF laws. Deutsche Bank AG (London Branch) has been appointed as Prime Broker of the Arnhem Long Short Australian Equity Fund to provide a range of services, including execution, stock lending, margin loans, Derivatives exposure and custody. Information regarding the underlying investments of the Fund will be provided to a member on requests, to the extent EQT is satisfied that such information is required to enable the member to comply with its statutory reporting obligations. This information will be supplied up to 30 days after a satisfactory request has been received. 37

43 Glossary of important terms Application Form ASIC Application Price Asset Class ASX ATO Benchmark Business Day Buy/Sell spread Cash Equivalents Constitution Corporations Act Custodian and Administrator Delegated Investment Manager Derivative Fundamental Research GST Hedge IDPS IDPS Operator Indirect Investor Investment Manager Leverage The Application Form used by investors who wish to subscribe for units directly in the Fund (other than indirectly through an IDPS Operator) and attached to this PDS. Australian Securities and Investments Commission. The Net Asset Value of the Fund divided by the number of units on issue, plus the Buy Spread. A category of financial assets. The major asset classes are shares, property, fixed interest securities and cash. Australian Securities Exchange Australian Taxation Office S&P/ASX 200 Accumulation Index A day other than a Saturday or Sunday on which banks are open for general banking business in Sydney. The difference between the Application Price and Withdrawal Price of units in the Fund, which reflects the estimated transaction costs associated with buying and selling the assets of the Fund, when investors invest in or withdraw from a Fund. Cash Equivalents are securities that perform in a manner similar to cash in terms of volatility e.g. a listed preference share, corporate bond and convertible note. The Constitution of the Fund describes the rights, responsibilities and beneficial interests of both investors and the Responsible Entity in relation to the Fund, as amended from time to time. The Corporations Act 2001 (Cth) and Corporations Regulations 2001 (Cth), as amended from time to time. BNP Paribas Fund Services Australasia Pty Ltd trading as BNP Paribas Securities Services. Arnhem Investment Management Pty Ltd ACN , AFSL A financial contract that derives its value from an underlying security, liability or Index. Derivatives come in many varieties, including forwards, futures, options and swaps. Analysis of the value of shares and other interests in a company based on factors such as sales, earnings and assets that are fundamental to the enterprise of the company in question. Goods and Services Tax. An investment made in order to reduce the risk of adverse price movements in an investment. Investor Directed Portfolio Service. An IDPS is generally the vehicle through which an investor purchases a range of underlying investment options from numerous investment managers, with the IDPS Operator providing the investor with consolidated and streamlined transaction statements and other reporting. An entity that operates and offers an IDPS. A person who invests indirectly in units in the Fund through an IDPS. BNP Paribas Investment Partners (Australia) Limited ABN , AFSL The use of borrowings, various financial instruments and/or borrowed securities to increase the potential 38

44 return of an investment. When Leverage is used by the Fund, the exposure of the Fund to investments exceeds the Net Asset Value of the Fund. Long Position Net Asset Value ( NAV ) Prime Broker Retail Client Responsible Entity or EQT RITC Performance Fee Performance Fee Period Performance Hurdle Short Position Wholesale Client Withdrawal Price Long Position means the buying of a security, commodity, or currency, with the expectation that the asset will rise in value. The value of assets of the Fund, less the value of the liabilities of the Fund. Deutsche Bank AG (London Branch) is the Prime Broker for the Arnhem Long Short Australian Equity Fund as at the date of this PDS. Persons or entities defined as retail clients under section 761G of the Corporations Act. Equity Trustees Limited ABN , AFSL Reduced Input Tax Credit. EQT will apply for Reduced Input Tax Credits on behalf of the Fund, where applicable, to reduce the GST cost to the Fund. 15% of the Fund s performance above the S&P/ASX 200 Accumulation Index plus 2%. Each financial year ending 30 June. The S&P/ASX 200 Accumulation Index plus 2%. Short Position means the sale of a security, commodity, or currency (which is not owned, but generally borrowed in the market for the purpose of meeting obligations under the sale). Persons or entities defined as wholesale clients under section 761G of the Corporations Act. The Net Asset Value of the Fund divided by the number of units on issue, less the Sell Spread. 39