AMP CAPITAL DYNAMIC MARKETS FUND

Transcription

1 AMP CAPITAL DYNAMIC MARKETS FUND Product Disclosure Statement Personal investors Issued 30 October 2017 Issued by AMP Capital Funds Management Limited ABN AFSL

2 CONTENTS About AMP Capital About the AMP Capital Dynamic Markets Fund ASIC benchmarks and disclosure principles Our investment approach Fund profile Risks of investing Fees and other costs Taxation Distributions Investing in the Fund Accessing your money Keeping you informed Other important information Applying for an investment Contacting AMP Capital About this Product Disclosure Statement (PDS) This PDS contains important information about investing in the AMP Capital Dynamic Markets Fund (the Fund). Before making a decision about investing or reinvesting in the Fund, you should consider the information in the PDS. A copy of the current PDS can be obtained free of charge, on request by contacting us on Information in this PDS can help you compare the Fund to other funds you may be considering. The information in this PDS is general information only and does not take into account your personal objectives, financial situation or needs. You are encouraged to obtain appropriate financial advice before investing and to consider how appropriate the Fund is to your objectives, financial situation and needs Important information AMP Capital Funds Management Limited is the Responsible Entity of the AMP Capital Dynamic Markets Fund (the Fund) and issuer of this PDS. AMP Capital has been appointed by the Responsible Entity to provide investment management and associated services in respect of the Fund, including the preparation of this PDS on behalf of the Responsible Entity. No company in the AMP Group other than the Responsible Entity is responsible for the preparation and issue of this PDS or for any statements or representations made in this PDS. AMP Capital has provided consent to the statements made by or about AMP Capital in this PDS and has not withdrawn that consent prior to the issue of this PDS. The Fund is a managed investment scheme structured as a unit trust and registered under the Corporations Act 2001 (Cth), referred to in this PDS as the Corporations Act. The Fund is subject to investment risks, which could include delays in repayment, and loss of income and capital invested. No company in the AMP Group or any investment manager assumes any liability to investors in connection with investment in the Fund or guarantees the performance of our obligations to investors or that of the Responsible Entity, the performance of the Fund or any particular rate of return. The repayment of capital is not guaranteed. Investments in the Fund are not deposits or liabilities of any company in the AMP Group or of any investment manager. The offer in this PDS is available only to eligible persons as set out in this PDS, who receive the PDS (including electronically) within Australia. We can only accept applications signed and submitted from within Australia. We cannot accept cash. Unless otherwise specified, all dollar amounts in this PDS are Australian dollars. AMP CAPITAL DYNAMIC MARKETS FUND Issued Issuer and responsible entity Investment manager Fund Unit class 30 October 2017 AMP Capital Funds Management Limited referred to in this PDS as the Responsible Entity. AMP Capital Investors Limited (ABN , AFSL ) referred to in this PDS as AMP Capital, we, our or us. AMP Capital Dynamic Markets Fund also referred to in this PDS as the Fund (ARSN , APIR code AMP1946AU) Off-Platform Class H

3 ABOUT AMP CAPITAL AMP Capital is a global investment manager with a large presence in Australia. AMP Capital is 85% owned (indirectly) by AMP Limited. As part of the AMP Group, we share a heritage that spans over 160 years. Our home strength in Australia and New Zealand has enabled us to grow internationally, and today we have operations established in China, Hong Kong, Dubai, India, Ireland, Japan, Luxembourg, the United Kingdom and the United States. We also collaborate with a network of global investment partners, leveraging our shared capabilities to provide greater access to new investment opportunities. Our asset class specialists, investment strategists and economists work together with the aim of delivering strong investment outcomes for clients. That is why our clients trust us to invest over A$178.9 billion (as at 30 June 2017) on their behalf, across a range of single sector and diversified funds. AMP Capital has been appointed by the Responsible Entity to provide investment management and associated services in respect of the Fund. This includes being responsible for selecting and managing the Fund's investments. AMP Capital has also been appointed by the Responsible Entity, under an agreement, to provide other Fund related services, including responding to investor enquiries and the preparation of this PDS on behalf of the Responsible Entity. More information about AMP Capital is available online at ABOUT THE AMP CAPITAL DYNAMIC MARKETS FUND The AMP Capital Dynamic Markets Fund aims to provide a total return (income and capital growth) before costs and before tax above the benchmark (being the rate of inflation (1) plus 4.5% per annum), on a rolling 5 year basis, by investing in a portfolio that is diversified across asset classes. The aim of the Fund is to maintain a portfolio that is relevant to market conditions, and which more closely matches the needs of the outcome-based investor. The Fund is actively managed in terms of asset allocation and currency hedging, with the flexibility to change the asset class mix and currency hedging level at any time within broad ranges. This allows us to move the Fund s asset allocation mix across a range of asset classes in order to take advantage of opportunities arising from market mispricing. The Fund provides investors with diversification by investing across a range of traditional asset classes such as shares, listed property, commodities, fixed income, credit and cash. The underlying asset class exposures within the Fund are achieved by investing in passively managed investments such as index funds, exchange traded funds (ETFs) and derivatives. Investment team The Fund is managed by one of Australia s most experienced asset allocation teams. The team applies its skills in asset allocation, economic and market analysis, portfolio construction and robust risk management with the aim of generating outstanding investment outcomes for clients. In addition to this, the team also benefits from access to AMP Capital s broader investment management resources and capabilities. 1 The Reserve Bank of Australia inflation rate (Consumer Price Index) - trimmed mean (published on rba.gov.au) AMP Capital Dynamic Markets Fund Product Disclosure Statement 3

4 At a glance Investment return objective Performance benchmark Suggested minimum investment timeframe Who can invest? Minimum investment amounts Management costs Distribution frequency To provide a total return (income and capital growth), before costs and before tax, above the benchmark, on a rolling 5 year basis The Reserve Bank of Australia inflation rate (Consumer Price Index) trimmed mean (published on plus 4.5% pa 5 years Individual and joint investors 18 years of age or over Partnerships Companies Trusts Superannuation funds Initial $10,000 Additional $5,000 Regular investment plan $500 per month 0.71% pa See the Fees and other costs section of this PDS for the management costs components, other fees and costs that may apply and a worked example of management costs that may be payable in a year. The total amount of fees you will pay will vary depending on the total value of your investment. The Fund aims to pay distributions half-yearly (see the Distributions section of this PDS). See the Fund profile section of this PDS for more detailed information about the Fund. ASIC benchmarks and disclosure principles The Fund has certain characteristics which the Australian Securities and Investments Commission (ASIC) considers are characteristics of hedge funds. To assist investors in understanding the characteristics and risks of such funds, ASIC has released benchmarks and disclosure principles. Information about how these benchmarks and disclosure principles apply to the Fund is provided in the ASIC benchmarks and disclosure principles section of this PDS. See the Fund profile section of this PDS for more detailed information about the Fund. 4 AMP Capital Dynamic Markets Fund Product Disclosure Statement

5 Benefits of investing in the Fund The Fund provides investors with access to a diversified portfolio which is actively managed at the asset allocation level, and seeks an excess return of 4.5% above inflation (2) per annum over a rolling 5 year period. Potential for an improved risk-return outcome at a lower cost A cost-effective way to access active asset allocation management. Investment in the Fund may provide an improved risk/return outcome over the investment time horizon when used as part of a blended portfolio solution. Aims to more closely match an outcome-based investors financial needs By seeking to provide a return of 4.5% above inflation before costs and tax per annum, over a rolling 5 year period, rather than outperforming a market index, the Fund aims to provide an investment outcome which more closely matches the needs of the outcome based investor. Capture opportunities at various stages of the economic cycle We adopt an investment approach known as dynamic asset allocation where we seek to negotiate the ups and downs of the market. The aim is to sell away from overpriced situations and buy in to underpriced opportunities. Managed by one of Australia s most experienced asset allocation teams The team applies its skills in asset allocation, economic and market analysis, portfolio construction and robust risk management with the aim of generating outstanding investment outcomes for clients. liquidity assets subject to liquidity risk may be difficult to trade and it may take longer for their full value to be realised, and in circumstances where the Fund s portfolio ceases to be liquid for Corporations Act purposes, there may be significant delays or a freeze on withdrawal requests. securities lending although engaging in securities lending may benefit the Fund by providing increased returns, there is a risk of capital loss. The Risks of investing section of this PDS provides further information about some of the risks noted above, as well as information about other investment risks of which you should be aware. Further information If you have questions about investing in the Fund or require further information, please contact our Client Services team on between 8.30 am and 5.30 pm Sydney time, Monday to Friday. Further information about the Fund is also available online at This information may include performance reports. When reading Fund performance information, please note that past performance is not a reliable indicator of future performance and should not be relied on when making a decision about investing in the Fund. Investment risks All investing involves risk, and you should consider investment risks before making an investment decision. The risks specific to the Fund may include or be associated with: asset allocation the Fund s asset allocation strategy does not guarantee positive investment performance at all stages of the investment cycle. share market investments the value of the Fund s investment in listed securities may decrease as a result of adverse share market movements. international investments including losses related to currency exchange rates, hedging, and changes in the state of the Australian and world economies. counterparty or default risk substantial losses can be incurred if a counterparty fails to deliver on its contractual obligations or experiences financial difficulties. derivatives the use of derivatives may magnify any losses incurred. interest rates including the risk of capital loss in a rising interest rate environment. investment management there is a risk that the investment manager will not perform to expectation or factors such as changes to the investment team or a change of investment manager may affect the Fund s performance. 2 The Reserve Bank of Australia inflation rate (Consumer Price Index) - trimmed mean (published on rba.gov.au) AMP Capital Dynamic Markets Fund Product Disclosure Statement 5

6 ASIC BENCHMARKS AND DISCLOSURE PRINCIPLES The information below provides an overview of the benchmarks and disclosure principles to be included in the PDS or incorporated by reference that relate to the Fund and are required to be disclosed in this PDS under ASIC Regulatory Guide 240 (RG240) Hedge funds: Improving disclosure. Further information is provided in the ASIC benchmarks and disclosure principles for the AMP Capital Dynamic Markets Fund document (ASIC Disclosure Principles), which is taken to be included in this PDS and should be read in conjunction with this PDS. This document is available online at (go to the Fund page) and can be obtained free of charge, on request. Benchmarks BENCHMARK SUMMARY FURTHER INFORMATION Valuation of assets This benchmark addresses whether valuation of non exchange-traded assets are provided by an independent administrator or valuation service provider. The Responsible Entity meets this benchmark requirement. See Valuations in the Fund profile section of this PDS and Benchmark 1 in the ASIC Disclosure Principles. Periodic reporting This benchmark addresses whether or not the Responsible Entity has and implements a policy to provide periodic reporting of certain key information about the Fund, annually and monthly. The Fund does not meet the requirements of this benchmark in full. The Fund provides you with key information in relation to the Fund on our website ( or free of charge on request. The Fund meets the benchmark with the exception of the following: In relation to Annual Reporting, the Fund does not report on the following information: liquidity profile this report is not relevant as all assets are highly liquid (are either exchange traded or have daily redemption terms) or can otherwise be liquidated on a daily basis maturity profile this report is not relevant for the reasons noted above under liquidity profile, and leverage ratio - the Fund does not use leverage (ie financial products or debt to amplify the exposure to an investment), as part of its investment strategy. The actual asset allocation and investment return information is not provided on an annual basis due to the fact that we report this information more frequently, on a monthly basis. See the Keeping you informed section of this PDS and Benchmark 2 in the ASIC Disclosure Principles. 6 AMP Capital Dynamic Markets Fund Product Disclosure Statement

7 Disclosure principles DISCLOSURE PRINCIPLE SUMMARY FURTHER INFORMATION Investment strategy The Fund: See the following sections of this PDS: aims to achieve growth with smoother returns over the Fund's investment Investment strategy time horizon by adopting a flexible approach to asset allocation Fund profile, and invests across a range of traditional asset classes such as shares, listed Risks of investing. property, commodities, fixed income, credit and cash See also Disclosure Principle 1 in the ASIC aims to produce investment returns through the use of dynamic asset Disclosure Principles. allocation does not use leverage or short selling uses derivatives for implementing the investment objectives of the Fund and enhancing returns, and has exposure to risks including those associated with share market and international investments and derivatives. The Fund's assets are global and are primarily located in Australia, North America, Europe and Asia. The currency denominations of the assets are predominately in Australian or United States dollars. The strategy's ability to produce investment returns is dependent on certain key assumptions, including, for example, global capital markets functioning and being inefficient. The Fund's investment strategy adopts certain diversification guidelines and limits at both the growth/defensive and asset class levels. Specific risks associated with the Fund's investment strategy are described in the 'Risks of investing' section of the PDS. The Responsible Entity may, from time to time, vary the investment objective or strategy for the Fund. Any significant change will be notified to investors via a supplementary or new PDS. Investment management The Fund is managed by one of Australia s most experienced asset allocation teams. The team applies its skills in asset allocation, economic and market analysis, portfolio construction and robust risk management with the aim of generating outstanding investment outcomes for clients. In addition to this, the team also benefits from access to AMP Capital s broader investment management resources and capabilities. See Investment management in the Fund profile section of this PDS and Disclosure Principle 2 in the ASIC Disclosure Principles. Updated asset allocations are available online at (go to the Fund page). Fund structure The Fund is an Australian registered managed investment scheme structured as a unit trust. For a diagram showing the flow of investment money through the structure, as well as the names of the key service providers involved in the operation of the Fund, and a description of their services, see the 'Fund structure' section. All key service providers are domiciled in Australia. The risks associated with the Fund s structure are described in the 'Risks of investing' section. Also, as we outsource certain key functions, such as custody, fund administration (including valuations and unit pricing) and unit registry, to third party service providers, there is the risk that service providers will default in performing their obligations (whether intentionally or unintentionally) and cause loss to the Fund. However, the Responsible Entity has entered into agreements with and has procedures in place to monitor key service providers to ensure compliance with their obligations. The Fund may invest in derivatives, exchange traded funds or index funds. Related party protocols have been established between key entities. See Fund structure in the Fund profile section of this PDS and Disclosure Principle 3 in the ASIC Disclosure Principles. AMP Capital Dynamic Markets Fund Product Disclosure Statement 7

8 DISCLOSURE PRINCIPLE SUMMARY FURTHER INFORMATION Valuation, location and custody of assets Liquidity Leverage The Fund primarily invests in Australian and global securities which are exchange traded and prices are available on exchanges. The Fund does not invest in direct assets. Investments in underlying index funds and currency forward contracts are valued on a daily basis by an independent administrator BNP Paribas Fund Services Australasia Pty Limited. The target allocation ranges for the Fund are shown in the 'Our investment approach' section. The Fund does not have a geographic location policy. The Fund s investments are global and are primarily located in Australia, North America, Europe and Asia. The Responsible Entity can reasonably expect to realise at least 80% of its assets, at the value ascribed to those assets in calculating the Fund s net asset value, within 10 days. Gearing is not permitted in the Fund. The Fund may have an overdraft limit up to 10% of Fund NAV to meet its short term liquidity needs. The Fund uses derivatives but not to amplify the exposure to an investment. See the Fund profile section of this PDS and Disclosure Principle 4 in the ASIC Disclosure Principles. See the Accessing your money section of this PDS and Disclosure Principle 5 in the ASIC Disclosure Principles. See Leverage in the Fund profile section of this PDS and Disclosure Principle 6 in the ASIC Disclosure Principles. Derivatives Short selling The Fund primarily uses derivatives to gain exposure to asset classes or to hedge foreign currency exposure. The types of derivatives which we expect to utilise for the Fund include both exchange traded and over-the-counter derivatives, such as equity index futures contracts, treasury bond futures contracts, commodity futures contracts, currency forward contracts, listed options and swaps. We adopt certain criteria for engaging counterparties, such as credit ratings and background analysis. The Fund does not engage in short selling. See Derivatives in the Fund profile section of this PDS and Disclosure Principle 7 in the ASIC Disclosure Principles. See Short selling in the Fund profile section of this PDS and Disclosure Principle 8 in the ASIC Disclosure Principles. Withdrawals Withdrawal requests are generally processed each business day. We aim to process withdrawal requests within 5 Business Days (1) of receipt however payment and processing of withdrawal requests may take up to 30 days, or longer in some circumstances such as if there is insufficient cash available in the Fund to meet withdrawal requests within the 30 day period. See the Accessing your money section of this PDS. 1 A Business Day for us is any day other than Saturday, Sunday or a bank or public holiday in Sydney, NSW 8 AMP Capital Dynamic Markets Fund Product Disclosure Statement

9 OUR INVESTMENT APPROACH Dynamic asset allocation The Fund adopts AMP Capital s dynamic asset allocation investment approach which aims to negotiate the ups and downs of the market cycle. The dynamic asset allocation approach invests with the principal aim of achieving growth with smoother returns over the longer term. This is done by adopting a flexible approach to asset allocation to actively adjust the allocation of investments across asset classes in response to expected market changes. When markets have fallen, the Fund may favour growth assets such as shares, whereas when markets are peaking, the Fund may favour more defensive assets such as fixed income and cash. Essentially, the approach seeks to sell away from overpriced situations and buy into underpriced opportunities. Further information Information about the Fund s investment strategy is also provided in the ASIC Disclosure Principles document, which is taken to be included in this PDS and should be read in conjunction with this PDS. This document is available online at and can be obtained, free of charge, on request. FUND PROFILE The Fund s investments The Fund invests across a range of traditional asset classes such as shares, listed property, commodities, fixed income, credit and cash. Exposure to a broad range of asset classes is achieved through passive investments such as index funds*, exchange traded funds (ETFs) and derivatives. * An index fund is an unlisted fund that seeks to replicate the exposure and returns of an index. Asset class allocations and ranges ASSET CLASS Growth assets Australian shares International shares (developed and emerging markets) Global REITs Commodities Global high yield credit Defensive assets Australian sovereign bonds Global sovereign bonds Global investment grade credit Global inflation linked bonds Cash Total assets Currency hedge ratio RANGE (%) NEUTRAL ASSET ALLOCATION (%) Neutral asset allocation The neutral asset allocation represents only a guide as to where the portfolio may be positioned in the absence of any asset allocation views. Actual asset allocation will vary from the neutral asset allocation. Our active views on the allocation of a particular asset class will result in moves away from the neutral asset allocation, within the specified range. Fund structure The Fund may invest in derivatives, exchange traded funds or index funds, as illustrated in the diagram below. Jurisdictions The Fund s investments are primarily in securities listed on exchanges in Australia and international markets. Due diligence process When deciding the form of implementation, consideration is given to liquidity, cost and attaining the most efficient exposure. In addition, for example when choosing the potential provider for exchange traded funds, further consideration is given to whether the ETFs are physically backed. Key service providers BNP Paribas Fund Services Australasia Pty Limited has been appointed to provide certain accounting, custodian and registry services to the Fund. Ernst & Young has been appointed as auditor to the Fund. Further information Information about the Fund s structure is also provided in the ASIC Disclosure Principles document, which is taken to be included in this PDS and should be read in conjunction with this PDS. This document is available online at (go to the Fund page) and can be obtained, free of charge, on request. AMP Capital Dynamic Markets Fund Product Disclosure Statement 9

10 Currency management Where we determine it is in the best interests of investors, we may adjust the level of hedging, including to be fully hedged, partially hedged or not hedged, for certain intervals. The currency hedge ratio is managed at the total portfolio level and the broad range is to provide the flexibility to adapt to market conditions and aim to preserve the value of the portfolio s investments. Currency exposures and hedging are co-ordinated and overseen by the Exposures Management team with the team performing daily monitoring and position adjustments to reflect any changes to underlying currency exposures. Currency hedges are monitored at both the portfolio and individual currency level. Leverage Gearing is not permitted. The Fund may have an overdraft limit up to 10% of Fund NAV to meet its short term liquidity needs. Derivatives The Fund may use derivatives with the aim of: implementing the investment objectives of the Fund enhancing returns by taking advantage of favourable mispricings within a market, as a cost-effective alternative to purchasing physical assets, and protecting against risks such as unfavourable changes in an investment s price brought about by, for example, changes in interest rates, credit risk, equity prices, currencies or other factors. We impose restrictions on the use of derivatives within the Fund and monitor the implementation of these restrictions in accordance with the AMP Capital Derivatives Risk Statement, which can be obtained online at or by contacting us. Short selling The Fund does not engage in short selling. Investment management Investment team The Fund s investment team is made up of professionals with extensive experience in asset allocation, economic and market analysis, portfolio construction and risk management. In addition to this, the team also benefits from access to AMP Capital s broader investment management resources and capabilities. Further information Updated information about investment management, including the individuals who manage the Fund s investments, and their qualifications and commercial experience, is provided in the ASIC Disclosure Principles document, which is taken to be included in this PDS and should be read in conjunction with this PDS. This document is available online at (go to the Fund page) and can be obtained free of charge, on request. Securities lending The Fund engages in securities lending. Securities lending is an investment practice whereby securities of a fund are lent to a third party (the borrower) for a period of time in return for a fee. Title to the securities is transferred to the borrower, but that fund s exposure to capital movements and investment income remain unchanged. For the duration of the loan, the borrower is required to provide collateral in excess of the value of the securities loaned. Collateral is held by the Fund's custodian on behalf of the Fund. Subject to any restrictions deemed necessary by the investment manager, up to 95% of each individual security held by the Fund may be lent under the securities lending program. See the Other important information section for further details on securities lending, including associated risks and how we mitigate and manage them. Environmental, social and governance (ESG) considerations Over the next 12 months, AMP Capital will be changing its approach to how labour standards, environmental, social, ethical and governance (ESG) considerations are taken into account. To date, decisions made by us about whether to buy, hold or sell investments are based primarily on financial and economic factors, and ESG issues may be taken into account by us only where we believe these factors may have a financially material impact on the value and performance (risk and/or return) of the investment. Going forward, AMP Capital will take account of labour standards, environmental, social, ethical or governance considerations in the selection, retention or realisation of investments across all asset classes (other than cash, sovereign bonds, derivatives and exchange traded funds), in the manner set out in the Other important information section of this document. However, where AMP Capital or an investment manager invests in a pooled vehicle or fund managed by an external investment manager and AMP Capital is unable to influence exclusive control over the investable universe of such a vehicle or fund, the negative screening outlined is not applied and such an investment will be subject to whatever ESG policy is adopted by the investment manager of that vehicle or fund. The negative screening will also not apply to cash, sovereign bonds, derivatives and exchange traded funds. Investors should note that as the Fund invests primarily in derivatives and exchange traded funds, these ESG considerations may not apply. 10 AMP Capital Dynamic Markets Fund Product Disclosure Statement

11 RISKS OF INVESTING All investing involves risk Generally, the higher the expected return, the higher the risk. Assets with the highest long term returns may also carry the highest level of short term risk, particularly if you do not hold your investment for the minimum suggested investment timeframe. Additionally, different investment strategies may carry different levels of risk, depending on the assets in which a fund invests. Whilst the Fund is managed with the aim of providing competitive investment returns against the Fund s performance benchmark and protecting against risk, you should be aware that the Fund is subject to investment risks, which could include delays in repayment, the non-payment of distributions and loss of capital invested. When you invest in a fund, you should be aware that: returns are not guaranteed future returns may differ from past returns, and the level of returns may vary, and the value of your investment may vary, and there may be the risk of loss of invested capital. Investment risks can affect your financial circumstances in a number of ways, including: your investment in the Fund may not keep pace with inflation, which would reduce the future purchasing power of your money the stated aims and objectives of the Fund may not be met the amount of any distribution you receive from the Fund may vary or be irregular, which could have an adverse impact if you depend on regular and consistent distributions to meet your financial commitments, and your investment in the Fund may decrease in value, which means you may get back less than you invested. The value of your investment in the Fund may be affected by the risks listed in this section and by other risks or external factors such as the state of the Australian and world economies, consumer confidence and changes in government policy, taxation and other laws. Other factors such as your age, the length of time you intend to hold your investment, other investments you may hold, and your personal risk tolerance will affect the levels of risk for you as an investor. As the risks noted in this section do not take into account your personal circumstances, you should consider the information provided in Making an investment decision at the end of this section, before making a decision about investing or reinvesting in the Fund. Risks specific to the Fund Asset allocation There is no guarantee that the Fund s asset allocation approach will provide positive investment performance at all stages of the investment cycle. Share market investments Share market investments have historically produced higher returns than cash or fixed interest investments over the long term. However, the risk of capital loss exists, especially over the shorter term. You should be aware that past share market investment performance is not an indication of future performance. Specific risks may include a slowdown in economic growth, individual companies reporting disappointing profits and dividends, and management changes. Where a fund is invested in listed securities, the value of these securities may decrease as a result of these and other events. International investments Changes in the state of the world economies may affect the value of your investment in the Fund. Currency exchange rates where the Fund s investments are located overseas, the relative strength or weakness of the Australian dollar against other currencies may influence the value of, or income from, an investment. Currency hedging where international investments are primarily hedged back to Australian dollars, the Fund could still incur losses related to hedging or currency exchange rates. Such losses may affect the Fund s taxable income and its subsequent ability to pay distributions. Risks such as illiquidity or default by the other party to the hedging transaction may also apply. Less protection under laws outside of Australia the laws under which assets located outside of Australia operate may not provide equivalent protection to that of Australian laws, which may mean that the Fund is unable to recover the full or part value of an offshore investment. Emerging markets securities markets in emerging markets are smaller and have been more volatile than the major securities markets in more developed countries. This is often a reflection of a less developed country s greater political instability or uncertainty, exchange rate uncertainty, lower market transparency or uncertain economic growth. Clearance and settlement procedures in an emerging country s securities market may be less developed which could lead to delays in settling trades and registering transfers of securities. Operational risk investing across multiple markets and currencies magnifies risks associated with international investments. AMP Capital Dynamic Markets Fund Product Disclosure Statement 11

12 Counterparty or default risk Entry into some financial transactions, such as swaps, creates counterparty risks. Substantial losses can be incurred if a counterparty fails to deliver on its contractual obligations, or experiences financial difficulties. The value of assets within the Fund can change due to changes in the credit quality of the individual issuer, or counterparty, and as a result of changes in the values of other similar securities, which can affect the volatility of the Fund and its returns. Where the Fund invests in certain strategies such as derivatives, fixed income, credit or high yield investments, it may be subject to the risk that the credit issuer may default on interest payments, the repayment of capital or both, or that a third party ratings agency downgrades a credit rating, or that a counterparty to a transaction may default on financial or contractual obligations. The Fund may also invest in government, corporate or other securities with a non-investment grade credit rating (that is, Standard and Poor's BB+ rating or equivalent, or less) and, as such, there is an increased risk, compared to investment grade securities, that the credit issuer may default on interest payments, the repayment of capital or both. Derivatives There are risks of losses to the Fund through the use of derivatives, and where derivatives are used by underlying funds in which the Fund invests, including: the value of a derivative may not move in line with the value of the underlying asset a derivative position cannot be reversed losses may be magnified, and the party on the other side of a derivative contract defaults on financial or contractual obligations. Interest rates Cash and fixed income investments will be impacted by interest rate movements. While capital gains may be earned from fixed income investments in a falling interest rate environment, capital losses can occur in a rising interest rate environment. The risk of capital gain or loss tends to increase as the term to maturity of the investment increases. Investment management There is a risk that the investment manager will not perform to expectation or factors such as changes to the investment team or a change of investment manager may affect the Fund s performance. Liquidity Liquidity refers to the ease with which an asset can be traded (bought and sold). An asset subject to liquidity risk may be more difficult to buy or sell and it may take longer for the full value to be realised. Where the Fund has exposure to investments which are generally considered to be illiquid, it may be subject to liquidity risk. We manage the Fund's portfolio with the aim of ensuring that exposure to illiquid assets is no greater than 20%. However, in circumstances where the Fund's portfolio consists of less than 80% in value of liquid assets, we may not be able to meet withdrawal requests within the periods specified under the 'Payment times' section of this document, and may suspend processing all withdrawal requests for such period as we determine. In addition, we will not meet withdrawal requests if the Fund ceases to be 'liquid' for the purposes of the Corporations Act. However, although we are not obliged to, we may offer investors the opportunity to make withdrawals where the Fund is not 'liquid' during this period, as set out under the 'Processing withdrawal requests' section of this document. Securities lending Although engaging in securities lending may benefit the Fund by providing increased returns, there is a risk of capital loss. This may arise if the borrower fails to return the borrowed securities, or if some of the collateral provided by the borrower to cover the value of the lending is affected by the share market investments risk listed below, or the insolvency of a party to the arrangement, including where collateral is pooled and/or held under the laws of a foreign country. The greater volume of securities lent, the greater potential for capital loss. Other risks Other risks of investing may apply and you should seek appropriate advice before investing. Making an investment decision As the risks noted in this PDS do not take into account your personal circumstances, you should consider the following before making a decision about investing or reinvesting in the Fund: Obtain professional advice to determine if the Fund suits your investment objectives, financial situation and particular needs. Read a current AMP Capital Dynamic Markets Fund PDS. Consider the suggested minimum investment timeframe for the Fund, as set out in the Fund s PDS. Regularly review your investments in light of your investment objectives, financial situation and particular needs. 12 AMP Capital Dynamic Markets Fund Product Disclosure Statement

13 FEES AND OTHER COSTS 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 investment balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 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 fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed funds fee calculator to help you check out different fee options. This PDS 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 assets of the managed investment scheme as a whole. Taxes are set out in the 'Taxation' section of this document. You should read all the information about fees and costs because it is important to understand their impact on your investment. Unless otherwise specified, all dollar amounts are Australian dollars. AMP Capital Dynamic Markets Fund Product Disclosure Statement 13

14 Table 1 AMP Capital Dynamic Markets Fund TYPE OF FEE OR COST AMOUNT HOW AND WHEN PAID Fees when your money moves in or out of the managed investment product 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. Exit fee The fee to close your investment. Management costs 1 The fees and costs for managing your investment. Service fees Nil Nil Nil Nil Switching fee The fee for changing investment options. 0.71% pa of the Fund's net assets Nil Not applicable Not applicable Not applicable Not applicable Management costs are comprised of: a management fee 2 - calculated daily and paid monthly out of the Fund's assets and reflected in the unit price. a performance fee 3 - calculated daily and paid quarterly in arrears out of the Fund's assets where the aggregate of all performance fees for a performance fee period is positive, and reflected in the unit price. indirect costs 4 - paid out of the Fund's assets or interposed vehicle's 5 assets once the cost is incurred and reflected in the unit price. Calculated on the basis of the Responsible Entity's reasonable estimate or knowledge of such costs. Not applicable 1. This amount comprises the management fee, an estimated performance fee and estimated indirect costs. The sum of these figures may differ to the total management costs, due to rounding. For more information about management costs, see 'Management costs' under the heading 'Additional explanation of fees and costs'. 2. The management fee may be negotiated with investors who are wholesale clients for the purposes of the Corporations Act. See 'Differential fees' under the heading 'Additional explanation of fees and costs'. 3. A performance fee may not be payable if there is no relevant outperformance. For more information on the calculation of the performance fee, see 'Performance fee' under the heading 'Additional explanation of fees and costs'. 4. For more information on the meaning and calculation of indirect costs, see 'Indirect costs' under the heading 'Additional explanation of fees and costs'. 5. For more information on the meaning of interposed vehicles, see 'Indirect costs' under the heading 'Additional explanation of fees and costs'. Important Advice fees agreed between you and your financial adviser and other service fees may apply to your investment in the Fund. Advice fees may be in the form of an investment advice fee and/or an ongoing advice fee. Please refer to 'Payments to your financial adviser' in this section for information about the advice fees that may be payable. 14 AMP Capital Dynamic Markets Fund Product Disclosure Statement

15 Example of annual fees and costs Table 2 gives an example of how the fees and costs in the Fund can affect your investment over a one year period. You should use this table to compare this product with other managed investment products. The fees and costs shown in this table are an example only and are not additional to the fees and costs described in Table 1. Table 2 EXAMPLE AMP CAPITAL DYNAMIC MARKETS FUND Contribution fees Plus Management costs 1 Nil 0.71% pa of the Fund's net assets BALANCE OF $50,000 WITH A CONTRIBUTION OF $5,000 DURING THE YEAR For every additional $5,000 you put in, you will be charged $0. And, for every $50,000 you have in the Fund you will be charged $355 2 each year. Equals If you had an investment of $50,000 at the beginning of the year and you put in an additional Cost of the Fund 3 $5,000 during that year, you would be charged a fee of: $355 2 What it costs you will depend on the fund you choose and the fees you negotiate. 1. Management costs are expressed as a percentage of the Fund's net assets. Management costs are made up of a management fee of 0.58% pa, an estimated performance fee of 0.00% pa and estimated indirect costs of 0.13% pa. The sum of these figures may differ to the total management costs, due to rounding. 2. This cost does not include the management costs charged on the additional $5,000 investment. The additional management costs would be $35.50 if you had invested the $5,000 for a full 12 months. 3. This cost does not include any advice fees paid to your financial adviser. *The performance fee of 0.00% pa is an estimate of the prospective performance fee. This estimate considers a range of factors, including the actual performance fees payable for the year ended 30 June 2017 for this unit class. This estimate is inclusive of Goods and Services Tax (GST) less reduced input tax credits. It is provided as an example only and is not a forecast. The actual performance fee may be higher, lower or not payable at all. Additional explanation of fees and costs Management costs Management costs are expressed as a percentage of the Fund's net assets, rounded to two decimal places. Management costs are made up of a management fee, an estimated performance fee (if applicable) and estimated indirect costs. Any management fees, performance fees or indirect costs charged by interposed vehicles are included in the management costs in Table 1; they are not an additional cost to you. Management costs components The management costs shown in Table 1 comprise the following components. The sum of these figures may differ to the total management costs, due to rounding. All figures in the table below are expressed as a percentage of the net assets of the Fund. MANAGEMENT FEE (% PA) ESTIMATED PERFORMANCE FEE (% PA) INDIRECT COSTS (% PA) RECOVERABLE EXPENSES ESTIMATED OTHER INDIRECT COSTS 0.58% 0.00% 0.03% 0.10% AMP Capital Dynamic Markets Fund Product Disclosure Statement 15

16 Management fee The management fee is charged by the Responsible Entity for managing and operating the Fund. The management fee of 0.58% pa is charged on the value of the gross assets of the Fund. When calculating the value of the gross assets of the Fund for this purpose, we may value any units held by the Fund in underlying funds by reference to the gross assets of the underlying funds (that is, disregarding the value of any borrowings, other liabilities or provisions in those underlying funds) rather than the net asset value. For the purposes of the management costs calculation in Table 1, the management fee has been expressed as a percentage of the Fund's net assets. Performance fee The performance fee is charged by the Responsible Entity as an amount calculated by reference to the performance of the Fund as a whole, subject to the satisfaction of certain conditions. A performance fee of % (inclusive of Goods and Services Tax (GST) less reduced input tax credits) of the outperformance of the Fund may be charged, based on the Fund s total return over its performance benchmark (the Reserve Bank of Australia inflation rate (Consumer Price Index) - trimmed mean, plus 4.5%). Outperformance is measured on an after management fee basis. Estimated performance fees are included in the management costs in Table 1. The performance fee is normally calculated each Business Day and is calculated separately for each unit class. The daily performance fee calculation can be a positive or negative amount depending on whether or not the benchmark return has been exceeded. If the aggregate of all performance fee calculations for a performance fee period* is positive, a performance fee is payable to us. If the amount is negative, no performance fee is payable and the performance fee payable for the next performance fee period, and any subsequent performance fee periods, is reduced by that negative amount. * Quarter ending 31 March, 30 June, 30 September and 31 December. Performance fee example If you invested $50,000 in the Fund and the Fund outperforms its performance benchmark index by 0.5% in a year, the cost to you (which is reflected in the unit price) would be $ This estimate is inclusive of GST less reduced input tax credits, and is provided as an example only and is not a forecast. The actual performance fee may be higher, lower or not payable at all. Indirect costs Indirect costs are generally any amount the Responsible Entity knows or estimates will reduce the Fund's returns, that are paid from the Fund's assets or the assets of interposed vehicles. Generally, an interposed vehicle is a body, trust or partnership in which the Fund's assets are invested. It includes, for example, an underlying fund. The amount of indirect costs include, but are not limited to: recoverable expenses of the Fund management costs of an interposed vehicle (including recoverable expenses, performance-related fees and any other indirect costs of underlying managers or interposed vehicles in which the Fund invests), and a reasonable estimate of the costs of investing in over-the-counter (OTC) derivatives (either at the Fund level or in interposed vehicles), which may be used by the Fund to gain economic exposure to assets. The amount of indirect costs shown in the 'Management costs component' table is based on the Responsible Entity's knowledge of, or where required, reasonable estimate of, such costs. Indirect costs are generally calculated on the basis of indirect costs paid by the Fund in the Fund s previous financial year. As such, the actual indirect costs may differ from the amount shown in the 'Management costs components' table. Indirect costs are deducted from the returns on your investment or from the Fund's assets as a whole. They are reflected in the unit price and are not an additional cost to you. Estimated indirect costs are included in the management costs in Table 1. Recoverable expenses The Fund s constitution entitles the Responsible Entity to be reimbursed from the Fund for any expenses incurred in relation to the proper performance of its duties. The Responsible Entity may also recover other expenses relating to the operation of the Fund. These expenses include but are not limited to audit and legal fees, tax and accounting services, custody, administration and registry services, regulatory compliance, the cost of preparing disclosure documents and costs associated with a securities lending program (if applicable). Internal expenses incurred in connection with these matters may also be recovered from the Fund. Recoverable expenses are included in the management costs in Table AMP Capital Dynamic Markets Fund Product Disclosure Statement