Bendigo Managed Funds

Transcription

1 wealth Bendigo Managed Funds Product Disclosure Statement Dated 30 September 2010 The Responsible Entity and Issuer of the Bendigo Managed Funds is Sandhurst Trustees Limited, ABN AFSL , a subsidiary of Bendigo and Adelaide Bank Limited, ABN AFSL Issuer

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3 Contact information For all queries please contact our Customer Service Centre, from Monday to Friday 8.30am 5.00pm Victorian time. Ph: Fax: Postal address Bendigo Managed Funds Level 5, 120 Harbour Esplanade Docklands VIC 3008 The Funds Bendigo Conservative Fund ARSN APIR STL0008AU Investment Managers At the date of issue of this Product Disclosure Statement (PDS) the chosen Investment Managers of the Funds are: Sandhurst Trustees Limited Investors Mutual Limited (IML) ABN Perennial Investment Partners Limited (Perennial) ABN MLC Investments Limited (MLC) ABN Please refer to the Signifi cant features section on page 5 for details on the particular Investment Managers of each Fund. Bendigo Balanced Fund ARSN APIR STL0009AU Bendigo Future Growth Fund ARSN APIR STL0010AU Sandhurst Industrial Share Fund ARSN APIR STL0100AU Sandhurst Future Leaders Fund ARSN APIR STL0011AU Referred to collectively as the Bendigo Managed Funds, the Funds or individually as the Fund. The fi rst three Funds listed are also referred to as the Diversifi ed Funds. The remaining two Funds are also referred to as the Australian Share Funds. Responsible Entity and issuer of the Funds Sandhurst Trustees Limited (Sandhurst or Responsible Entity) ABN AFSL Sandhurst is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited (the Bank) ABN AFSL Sandhurst Trustees Limited 1

4 Important information It is important that you read this PDS carefully in its entirety before deciding whether to invest and before lodging an application for Units in any of the Funds. We suggest that you keep this PDS and any supplementary information for future reference. This PDS is dated 30 September This PDS describes the features and benefi ts of the Bendigo Managed Funds and, it will help you to: decide whether these Funds will meet your needs; and compare these Funds with other funds you may be considering. The information contained in this PDS is general information only. It does not constitute advice or contain a recommendation to invest in any of the Funds. The PDS has not been prepared taking into account the particular objectives, fi nancial situation or needs of any Investor. Before making an investment in any of the Funds, you should consider the appropriateness of the investment having regard to your objectives, fi nancial situation and needs. The offer to invest in the Funds is available to persons receiving a copy (electronic or otherwise) of the most upto-date PDS for the Funds within Australia. If you receive this PDS electronically, you should ensure that you have received the complete Application Form and PDS. If you are unsure whether the electronic document is complete, you should contact Sandhurst. A printed copy is available free of charge. This PDS does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer including, but not limited to, investors in the United States of America. Applications from outside Australia will not be accepted. All references to dollar amounts and application and withdrawal prices in this PDS are in Australian currency. Words and expressions that are capitalised in this PDS are defi ned in the Glossary (refer to page 37). A copy of this PDS has not been lodged with ASIC and ASIC takes no responsibility for the contents of this PDS. This PDS has been prepared by Sandhurst alone. To help you make an informed investment decision, you should consider obtaining professional advice from a licensed fi nancial adviser before investing in any of the Funds. All investments have inherent risk, including a reduction in the capital value of the amount invested, a less than expected return on funds invested or a delay in payment. For this reason, neither Sandhurst, the Bank, nor any company in the Bendigo and Adelaide Bank Group, nor any Associated Company (nor any of their offi cers, employees or agents) guarantees the repayment of capital invested, the payment of income or the investment performance of the Funds. The Bank does not stand behind or guarantee the performance of Sandhurst. Importantly, an investment in the Funds is not a deposit, or other liability of, the Bank, Sandhurst, any Associated Company or any other company in the Bendigo and Adelaide Bank Group. Sandhurst is not an authorised deposit-taking institution within the meaning of the Banking Act 1959 (Cth). 2 Bendigo Managed Funds

5 Contents Page Why choose the Bendigo Managed Funds? 4 Signifi cant features 5 The Funds: a snapshot 7 About this PDS 10 About the Funds 11 Benefi ts and risks 13 Fees and other costs 17 How to invest 24 Taxation information 29 Other information 31 Glossary 37 Guide to completing your Application Form 39 Application Form 45 Sandhurst Trustees Limited 3

6 Why choose the Bendigo Managed Funds? The Bendigo Managed Funds provide a simple cost effective solution to help you save for your future. A simple and convenient way to invest Our Funds are designed to make investing easy for you. We handle all the paperwork and administration and provide you with regular information and reporting on your investment. Our application and regular contribution process is straightforward and our friendly staff are on hand to assist you with any queries regarding your investment at every step along the way. Ready made diversification Our Funds give you the opportunity to broaden your exposure across a range of diversifi ed investments and/or Asset Classes, allowing you to moderate the volatility of your investment risk and return over the long term. Managed by leading professional Investment Managers Our Funds give you access to the resources and knowledge of investment experts who specialise in managing specifi c Asset Classes and who research and monitor investment markets to fi nd the best opportunities. Capital growth with regular income An investment in the Funds is a medium to long term investment that aims to deliver capital growth with a regular source of income. If you choose to reinvest your distribution income you ll benefi t from the power of compounding, which allows you to generate returns on your reinvested distributions to optimise your investment earnings over the long-term. Regular savings plan The Funds offer the convenience of a regular savings plan so you can add to your investment on a regular basis with as little as $100 per month. Regular investments can be deducted straight from your bank account. A Responsible Entity with a proven record Sandhurst acts as Responsible Entity of the Funds and since 1888 has assisted Australian families with their fi nancial needs. Adopting the motto Mindful, Faithful and Lasting, Sandhurst is a highly experienced provider of investment solutions and trustee services that create, enhance and protect wealth. With more than $2.5 billion in funds currently under management, Sandhurst embraces a prudent investment philosophy and is committed to delivering high quality investment solutions. 4 Bendigo Managed Funds

7 Signifi cant features Diversified Funds Bendigo Conservative Fund Bendigo Balanced Fund Bendigo Future Growth Fund Asset Class Diversifi ed Diversifi ed Diversifi ed Investment Manager 1 Sandhurst, Perennial, IML and MLC Sandhurst, Perennial, IML and MLC Sandhurst, Perennial, IML and MLC Access to current information For the most up-to-date information, including the most recent Fund performance, current asset allocations and the size of the Funds, you can: visit our website at contact our Customer Service Centre on ; visit your local Bendigo Bank branch; or write to us (see page 1 for our contact details). Distributions 2 30 June and 31 December 30 June and 31 December 30 June and 31 December Unit Pricing Minimum initial investment Minimum additional investment Minimum withdrawal amount Minimum switch amount Daily refer to page 27 for more details $2,000 refer to page 24 for more details $500 or $100 per month via the regular savings plan refer to page 24 for more details $1,000 refer to page 26 for more details $500 refer to page 25 for more details Maximum Indirect Cost 2.10% p.a. 2.10% p.a. 2.10% p.a. Ratio (ICR) 3 Establishment Fee 3 Up to 3.00% of the Application money paid on your initial application refer to page 18 for more details Savings plan Yes refer to page 24 for more details Asset allocations 4 Aust Sh Australian shares Int Sh International shares Prop Listed property trusts Aust FI Australian fi xed interest Int FI International fi xed interest Cash Cash & cash equivalents Aust Sh 20% Int Sh 10% Prop 5% Aust FI 35% Int FI 15% Cash 15% Aust Sh 25% Int Sh 25% Prop 10% Aust FI 25% Int FI 10% Cash 5% Aust Sh 40% Int Sh 30% Prop 10% Aust FI 10% Int FI 7% Cash 3% 1 Investment Managers are current as at date of this PDS. For up to date details on the current Investment Managers please visit our website 2 Distributions will be paid within two months of these distribution calculation dates. Please refer to page 27 for more details regarding distributions. 3 Please refer to page 18 for more details on fees and costs. 4 These asset allocations represent a neutral position and the actual allocation for each fund may be higher or lower. Please refer to page 7 for more details regarding target asset allocations. Sandhurst Trustees Limited 5

8 Signifi cant features continued Australian Share Funds Sandhurst Industrial Share Fund Sandhurst Future Leaders Fund Asset Class Australian industrial shares Australian shares outside the top 50 ASX listed shares Investment Manager 1 IML and Sandhurst IML Access to current information For the most up-to-date information, including the most recent Fund performance, current asset allocations and the size of the Funds, you can: visit our website at contact our Customer Service Centre on ; visit your local Bendigo Bank branch; or write to us (see page 1 for our contact details). Distributions 2 30 June and 31 December 30 June and 31 December Unit Pricing Minimum initial investment Minimum additional investment Minimum withdrawal amount Minimum switch amount Daily refer to page 27 for more details $2,000 refer to page 24 for more details $500 or $100 per month via the regular savings plan refer to page 24 for more details $1,000 refer to page 26 for more details $500 refer to page 25 for more details Maximum Indirect Cost Ratio 2.10% p.a. 2.10% p.a. (ICR) 3 Establishment Fee 3 Up to 3.00% of the Application money paid on your initial application refer to page 18 for more details Savings plan Yes refer to page 24 for more details Asset allocations 4 Aust Sh Australian shares Aust Sh 80% Cash 20% Aust Sh 80% Cash 20% ¹ Investment Managers are current as at date of this PDS. For up to date details on the current Investment Managers please visit our website 2 Distributions will be paid within two months of these distribution calculation dates. Please refer to page 27 for more details regarding distributions. 3 Please refer to page 18 for more details on fees and costs. 4 These asset allocations represent a neutral position and the actual allocation for each fund may be higher or lower. Please refer to page 9 for more details regarding target asset allocations. 6 Bendigo Managed Funds

9 The Funds: a snapshot Important: This is a general description of the Funds. You should read the entire PDS to make an informed decision about whether to invest in the Funds. Diversified Funds Investment objective Describes the objective of the Fund, however the objective is not an indication or guarantee of the possible performance of the Fund in the future. Investment strategy This is the means by which the Fund seeks to achieve its investment objectives and the grounds on which the Fund s investment objectives are set. Investment timeframe This is the suggested timeframe in which to invest in the Funds in order to achieve investment objectives. Target asset allocation¹ This provides an indication of the intended holdings in the Fund. The actual asset allocation may be higher or lower from time to time. Bendigo Conservative Fund To achieve a moderate level of capital growth and income over the medium-term (i.e. 3-4 years), whilst minimising the risk of capital loss by investing in a diversifi ed conservative portfolio. To invest via a selection of high quality Investment Managers that specialise in managing specifi c Asset Classes. The Fund will invest predominantly in income generating assets. Recommended for at least a three year investment period. Australian shares Range: 15-25% Neutral position: 20% International shares Range: 5-15% Neutral position: 10% Listed property trusts Range: 0-10% Neutral position: 5% Australian fixed interest Range: 30-40% Neutral position: 35% International fixed interest Range: 10-20% Neutral position: 15% Cash and cash equivalents² Range: 10-20% Neutral position: 15% Bendigo Balanced Fund To achieve a combination of capital growth and income over the medium to longterm (i.e. 4 years or greater) by investing in a diversifi ed asset portfolio. To invest via a selection of high quality Investment Managers that specialise in managing specifi c Asset Classes. The Fund will invest in a range of Asset Classes with a diversifi ed exposure to growth assets and income generating assets. Recommended for at least a four year investment period. Australian shares Range: 20-30% Neutral position: 25% International shares Range: 20-30% Neutral position: 25% Listed property trusts Range: 5-15% Neutral position: 10% Australian fixed interest Range: 20-30% Neutral position: 25% International fixed interest Range: 5-15% Neutral position: 10% Cash and cash equivalents² Range: 0-10% Neutral position: 5% Sandhurst Trustees Limited 7

10 The Funds: a snapshot continued Diversified Funds (continued) Investment objective Describes the objective of the Fund, however the objective is not an indication or guarantee of the possible performance of the Fund in the future. Investment strategy This is the means by which the Fund seeks to achieve its investment objectives and the grounds on which the Fund s investment objectives are set. Investment timeframe This is the suggested timeframe in which to invest in the Funds in order to achieve investment objectives. Target asset allocation¹ This provides an indication of the intended holdings in the Fund. The actual asset allocation may be higher or lower from time to time. Bendigo Future Growth Fund To achieve medium to long-term capital growth (i.e. 4 years or greater), together with an income return by investing in a diversifi ed growth portfolio. To invest via a selection of high quality Investment Managers that specialise in managing specifi c Asset Classes. The Fund focuses on investment in capital growth assets through a higher exposure to growth assets. Some exposure is also allocated to income generating assets. Recommended for at least a fi ve year investment period. Australian shares Range: 35-50% Neutral position: 40% International shares Range: 20-35% Neutral position: 30% Listed property trusts Range: 5-15% Neutral position: 10% Australian fixed interest Range: 5-15% Neutral position: 10% International fixed interest Range: 5-15% Neutral position: 7% Cash and cash equivalents² Range: 0-8% Neutral position: 3% 1 The Funds gain exposure to their asset allocations through investments in Underlying Managed Investment Schemes, except for the Sandhurst Industrial Share Fund which invests directly in a pool of Australian industrial shares and cash and short-term securities. Small amounts of cash are also held by the Funds in operating accounts with the Bank. 2 In exceptional market conditions the Funds may have higher levels of cash where, in the Investment Manager s opinion, more attractive investment opportunities cannot be found. The Diversifi ed Funds may have some level of exposure to the Sandhurst Cash Common Fund and the Sandhurst Select Mortgage Fund. Current asset allocations are updated on our website each quarter. 8 Bendigo Managed Funds

11 Australian Share Funds Investment objective Describes the objective of the Fund, however the objective is not an indication or guarantee of the possible performance of the Fund in the future. Investment strategy This is the means by which the Fund seeks to achieve its investment objectives and the grounds on which the Fund s investment objectives are set. Investment timeframe This is the suggested timeframe in which to invest in the Funds in order to achieve investment objectives. Target asset allocation¹ This provides an indication of the intended holdings in the Fund. The actual asset allocation may be higher or lower from time to time. Sandhurst Industrial Share Fund To achieve, over the longterm (i.e. more than 5 years), capital growth and income and to deliver a return (after fees and expenses and before taxes) that is in excess of the S&P/ASX 300 Industrial Accumulation Index on a rolling four year basis. The Fund will predominantly invest directly in a diversifi ed portfolio of quality Australian industrial shares (including listed property trusts) included in the S&P/ASX 300 Industrial Accumulation Index, where these assets are identifi ed by the Investment Manager as being undervalued. Recommended for at least a fi ve year investment period. Australian shares (industrial)* Range: % Cash and cash equivalents² Range : 0-20% *The Fund may invest directly a maximum of 10% of Fund assets in unlisted equities provided that the relevant company s securities are expected to list within 12 months of making the investment. Sandhurst Future Leaders Fund To achieve, over the long term (i.e. more than 5 years), capital growth and income and to deliver a return (after fees and expenses and before taxes) that is in excess of the S&P/ASX 300 Accumulation Index (excluding S&P/ASX 50 and property trusts) on a rolling four year basis. The Fund will predominantly invest directly in a diversifi ed portfolio of quality Australian shares outside the top 50 shares listed on the ASX (by market capitalisation), where these assets are identifi ed by the Investment Manager as being undervalued. The Fund will seek exposure to these shares by investing in the IML Future Leaders Fund. Recommended for at least a fi ve year investment period. Australian shares (outside S&P/ASX 50 Index)* Range: % Cash and cash equivalents² Range: 0-20% *The Fund may invest indirectly a maximum of 5% of Fund assets in unlisted equities provided that the relevant company s securities are expected to list within 12 months of making the investment. 1 The Funds gain exposure to their asset allocations through investments in Underlying Managed Investment Schemes, except for the Sandhurst Industrial Share Fund which invests directly in a pool of Australian industrial shares and cash and short-term securities. Small amounts of cash are also held by the Funds in operating accounts with the Bank. 2 In exceptional market conditions the Funds may have higher levels of cash where in the Investment Manager s opinion, more attractive investment opportunities cannot be found. Sandhurst Trustees Limited 9

12 About this PDS Accessing up-to-date investment information Some of the information contained in this PDS may change from time to time. Where these changes are not materially adverse to Investors, we may not always update or replace this PDS to refl ect the changes. For up to date Fund information, including the size of the Funds, performance summaries, current asset allocations and information about our Investment Managers, you can: visit our website at Contact the Customer Service Centre on visit your local Bendigo Bank branch; or write to us (see page 1 for our contact details). A paper copy of any updated information will be provided to you free of charge upon request. Please note that past performance is not a reliable indicator of future performance. 10 Bendigo Managed Funds

13 About the Funds General Fund information Sandhurst aims to create wealth for Investors by providing investment opportunities that are managed by professional Investment Managers. The Funds aim to achieve this by investing either directly in the market or indirectly through Underlying Managed Investment Schemes managed by a selection of quality Investment Managers, including Sandhurst itself. This approach involves allocating investment decisions to a variety of managers who specialise in managing specifi c Asset Classes. We call this the manage the manager approach. This approach is founded on our belief that it is unlikely one manager will be successful across all Asset Classes in the medium to long-term. The Investment Managers we select all share one common characteristic - they have expertise in their fi eld and have a record of delivering competitive investment performance over the long-term. Structure Sandhurst is the Responsible Entity and issuer of Units in the Funds. The Funds are registered Managed Investment Schemes regulated under the Corporations Act. At the date of this PDS, Sandhurst has chosen Investors Mutual Limited, Perennial Investment Partners Limited and MLC Investments Limited as Investment Managers to invest the assets of the Funds. Sandhurst itself is the Investment Manager of the cash and cash equivalents Asset Class for the Diversifi ed Funds and the Sandhurst Industrial Share Fund. The Sandhurst Industrial Share Fund predominantly invests directly in a pool of Australian industrial shares managed by IML (please refer to page 32 for details of the Investment Management Agreement between Sandhurst and IML). The cash and cash equivalents portion of the Fund is managed by Sandhurst. The Sandhurst Future Leaders Fund predominantly invests in an Underlying Managed Investment Scheme known as the IML Future Leaders Fund, which is in turn managed by IML. The Diversifi ed Funds predominantly invest into a corresponding wholesale fund of which Sandhurst is also the Responsible Entity. The wholesale fund then invests in Underlying Managed Investment Schemes managed by the selected Investment Managers (currently IML, Perennial, MLC and Sandhurst itself). Each of the Funds also hold some cash in operating accounts with the Bank. In an endeavour to ensure that we achieve the best possible result for our Investors, the overall performance of the Investment Managers we select will be regularly reviewed. This may result in the portion of monies allocated to each Investment Manager changing or Investment Managers being selected, replaced or rejected at any time without prior notice to you. As a result, the weightings of investments, the identity and number of Investment Managers and Underlying Managed Investment Schemes may change from time to time. For up to date information on each Investment Manager and their underlying investments, please visit our website Who manages the Funds? Sandhurst Trustees As well as acting as Responsible Entity for the Funds, Sandhurst is the Investment Manager of the cash and cash equivalents Asset Class of the Diversifi ed Funds and the Sandhurst Industrial Share Fund. Established in 1888, Sandhurst is a highly experienced provider of investment solutions and trustee services that create, enhance and protect wealth for its clients. Sandhurst aims to create wealth for investors by employing a disciplined and conservative approach to managing quality assets. This approach means making investment decisions based on an assessment of which authorised investments are likely to maximise the potential for both income and capital stability. Sandhurst is an experienced investment manager of mortgages, cash and cash equivalents and, together with the Bank, has a high quality investment team committed to delivering value added performance to investors. Investors Mutual Limited Investors Mutual Limited is an Australian equities specialist, and since its inception in May 1998, it has grown to more than $3.5 billion in funds under management (as at 31 March 2010). IML has a conservative investment style with a long-term focus, and aims to deliver consistent returns for clients through the disciplined application of a fundamental and value-based approach to investing. Sandhurst Trustees Limited 11

14 IML s investment philosophy is based on the belief that a company s share price will refl ect its underlying value in the long-term. IML has an active, bottom-up approach to identifying, researching and valuing quality companies with a systematic and disciplined approach focusing on fi nding companies that meet their investment criteria and then determining an appropriate valuation for those companies. Perennial Investment Partners Perennial Investment Partners Limited, a subsidiary of IOOF Holdings Limited, is a specialist, active investment management fi rm, comprising a suite of specialist investment management boutiques. In 1999, Perennial pioneered the boutique partnership approach, building a suite of boutique investment fi rms on the basis of sharing equity ownership with their investment professionals. Perennial now invest over $20 billion on behalf of their wholesale and retail clients and believe that this ownership structure changes the focus from simply investing to a shared passion and focus. Perennial believes that through careful research of investment fundamentals and the application of a disciplined investment process, market ineffi ciencies can be identifi ed and exploited by experienced investment professionals applying an active investment approach. All the Perennial portfolios are positioned for long-term investment performance outcomes with the objective to add value over the medium to long term, relative to a recognised market benchmark, in a risk effi cient manner. MLC The MLC group of companies are the wealth management division of the National Australia Bank (NAB) and provide investment, superannuation, insurance and private wealth solutions to individual and institutional customers. The MLC group of companies manage more than $114.2 billion on behalf of individual investors and corporate customers in Australia (as at 31 March 2010). 12 Bendigo Managed Funds

15 Benefi ts and risks What are the benefits? An investment in the Funds has certain advantages including: a choice of Funds offering different investment objectives; ready made diversifi ed investments across different Asset Classes and geographic regions via the Diversifi ed Funds; ready made diversifi ed Australian share portfolio via the Australian Share Funds; access to the investment expertise of a team of professionals who have access to investment techniques that may not be directly available to retail investors; fund managers can usually invest at a lower cost than individual investors; generally you can apply to withdraw your investment on any Business Day (refer to page 26 for details on withdrawing from the Funds); from its investments, the Funds aim to generate for Investors: dividends; franking credits; interest; and capital gains All investments are subject to varying risks and generally go up as well as down in value. Different Asset Classes perform differently at different times and have different risk characteristics and volatility. Generally, the higher the expected return of an investment, the higher the risk and the greater the variability of returns and the risk of loss of capital. When you consider an investment in one or more of the Funds, you should take into account your personal risk tolerance. The signifi cant risks for the Funds, and the way we aim to manage them, are discussed below. The performance of the Funds and the return of capital are not guaranteed and the value of your investment may go up or down depending on the value of the Funds assets. investments can begin with as little as $2,000 in a Fund with the option to further contribute via additional investments or a regular savings plan (see page 24 for further details). What are the risks? It is important to understand that there are inherent risks in any investment. The purpose of this section is to inform you of the types of risks that may apply to an investment in the Funds. This section is a summary of what we consider to be the signifi cant risks that should be considered before deciding to invest in the Funds. However, this section does not purport to be a comprehensive summary of all the risks of investing in the Funds. Whilst we are not able to remove all the risks associated with an investment in any of the Funds, Sandhurst and its Investment Managers employ a range of investment and risk management strategies to identify, evaluate and manage these risks. Sandhurst Trustees Limited 13

16 Benefi ts and risks continued What is the risk? Funds affected by the risk Bendigo Conservative Fund Bendigo Balanced Fund Bendigo Future Growth Fund Sandhurst Industrial Share Fund Sandhurst Future Leaders Fund Individual investment risk Individual investments made by the Funds will fl uctuate in value, meaning that they can, and do, fall in value for many reasons including changes in the business environment. For example, a company s share price may fl uctuate as a result of changes to its fi nancial or operating circumstances. This is an inherent risk associated with all managed funds. Yes Yes Yes Yes Yes How we manage the risk We aim to reduce this risk by selecting Investment Managers that are experienced and have expertise in managing the Asset Classes they are chosen to manage. Market, country and political risk The Funds may be impacted either directly or indirectly by market, country and/or political risk. Market risk relates to the performance of the market as a whole impacting on the Funds investment returns. Factors that may infl uence the market include economic, technological, political, taxation, country, legal conditions and even market sentiment. Yes Yes Yes Yes Yes How we manage the risk The Investment Managers undertake research and analysis to form a view on these matters as best they can and then adjust the investments to reduce the impact of these risks where possible. Each Fund invests in a diversifi ed portfolio of investments within its prescribed Asset Classes (refer pages 7 to 9 for asset allocation) to reduce the impact of market, political and/or country risk. The Diversifi ed Funds invest in diversifi ed portfolios across Asset Classes to reduce the impact of these risks. Foreign currency risk There is a risk that currency movements will adversely affect the value of international investments. The Diversifi ed Funds invest indirectly in other countries, and if their currencies change in value relative to our dollar, the value of the investment can change. Yes Yes Yes No No How we manage the risk The relevant Investment Managers intend to prudently manage the Underlying Managed Investment Schemes foreign currency exposures to minimise adverse movements in the dollar arising from changes in exchange rates. 14 Bendigo Managed Funds

17 What is the risk? Funds affected by the risk Bendigo Conservative Fund Bendigo Balanced Fund Bendigo Future Growth Fund Sandhurst Industrial Share Fund Sandhurst Future Leaders Fund Interest rate risk Changes in interest rates can have a positive or negative impact directly or indirectly on investment values or returns. For example government and bank accepted bills, cash and other interest-bearing securities have a direct relationship to fl uctuations in interest rates. Sandhurst (as the Investment Manager of underlying cash and cash equivalents) regularly monitors the impact of changes in interest rates on the underlying portfolios and considers the impact of any rate changes in its investment decisions. Yes Yes Yes Yes Yes How we manage the risk Sandhurst and the Investment Managers consider the impact that interest rates may have on investments held that have a high sensitivity to interest rate changes. Each Fund invests in a diversifi ed portfolio of investments within its prescribed Asset Class (refer page 7 to 9 for asset allocation) to reduce the impact of interest rate risk. Fund risk Risks particular to the Funds include the risk that they could be terminated, the fees and expenses could change, Sandhurst could be replaced as the Responsible Entity, any of the Investment Managers could be replaced as Investment Manager, or any individual portfolio manager and other key personnel could change. Yes Yes Yes Yes Yes How we manage the risk Sandhurst aims to keep Fund risk to a minimum by monitoring how these risks may impact on the Funds and by acting in the best interests of Fund members. There is also a risk that investing in the Funds may give different results than investing directly in securities because of income or capital gains accrued in the Funds, and the consequences of investments and withdrawals by other Investors. Derivatives risk Except for the Sandhurst Industrial Share Fund, the Funds do not directly invest in derivatives. However, the Underlying Managed Investment Schemes in which the Funds invest may invest in derivatives (see Use of derivatives on page 35). The Sandhurst Industrial Share Fund may invest directly in derivatives. Derivatives risk includes: the value of derivative positions not moving in line with the movement in the underlying asset; potential illiquidity of the derivative; and being unable to meet payment obligations in relation to derivative contracts, and hence impacting on the value of the net assets of the Funds. Yes Yes Yes Yes Yes How we manage the risk Although not all of these risks can be eliminated, the Investment Managers manage these risks as far as practicable by: regular monitoring of the derivative exposure of the investment portfolios they manage; monitoring the investment portfolios they manage to ensure the portfolios can pay all of the obligations associated with derivatives from the appropriate amount of cash or physical assets held by the investment portfolio; not borrowing against the assets of the investment portfolio for the purposes of leveraging the investment portfolios they manage; only investing in derivatives that the Investment Managers consider to have adequate market depth; and using intermediaries that the Investment Managers consider reputable. Sandhurst Trustees Limited 15

18 Benefi ts and risks continued What is the risk? Funds affected by the risk Bendigo Conservative Fund Bendigo Balanced Fund Bendigo Future Growth Fund Sandhurst Industrial Share Fund Sandhurst Future Leaders Fund Liquidity risk Liquidity risk is the risk that assets of the Funds may not be able to be converted into cash in a timely manner in order to pay withdrawal requests. Yes Yes Yes Yes Yes How we manage the risk Sandhurst manages liquidity risk by investing in assets that can be readily converted into cash in ordinary circumstances. The Funds invest a portion of total assets in cash and cash equivalents to help reduce liquidity risk. Counterparty credit risk Counterparty credit risk represents the loss that would be recognised if counterparties (i.e. the other parties to the contract) failed to perform as contracted. Yes Yes Yes Yes Yes How we manage the risk Sandhurst minimises counterparty credit risk by carefully selecting and monitoring Investment Managers. All Investment Managers have a proven track record. In the event of a failed counterparty it is anticipated that Sandhurst could replace that counterparty with minimal disruption. All assets are held separate to the assets of the counterparty. Investment Manager risk Investment Manager risk is the risk that the Investment Manager s investment strategy is not successful, resulting in underperformance of the Fund, either in absolute terms, or when considered with respect to the market, or relative to its peers. Yes Yes Yes Yes Yes How we manage the risk Sandhurst continually monitors the performance of the Investment Managers and has the power to remove and replace underperforming Investment Managers subject to any management agreements entered into with those Investment Managers. Concentration risk Concentration risk is the risk that poor performance in a group of investments common to a particular section of the market will signifi cantly affect the performance of a fund. No No No Yes Yes How we manage the risk In order to minimise risk to Investors, each of the Investment Managers will seek to diversify the assets held in the relevant funds within the terms of their investment mandate. Sandhurst has selected each Investment Manager on the basis of their track record in delivering competitive, risk adjusted returns over the long term. 16 Bendigo Managed Funds

19 Fees and other costs This section shows fees and other costs that you may be charged. These fees and other costs may be deducted from your money, from the returns on your investment or from the Fund assets as a whole. Information on taxation is set out on page 29. You should read all of the information about fees and costs because it is important to understand their impact on your investment. CONSUMER ADVISORY WARNING 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 fund 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 fi nd out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website do.asic.gov.au has a managed investment fee calculator to help you check out different fee options. Sandhurst Trustees Limited 17

20 Fees and other costs continued All fees and charges set out in the table below are expressed inclusive of GST, less the maximum applicable reduced input tax credits (please refer to item 7 in the Additional explanation of fees and costs section on page 22 for further information). Table of fees and costs 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. 2 Please refer to item 1 in the Additional explanation of fees and costs section on page 20 for an explanation of Management Costs. Up to 3.00% of Application Money 1 (capped at $300 if you invest personally without an adviser or internet advisory service). Nil Nil Nil Up to 2.10% per annum for each Fund. This Establishment Fee is payable to Sandhurst and is the percentage that will be deducted from your initial contribution (i.e. on the Application Money received as a part of your initial application) before it is invested. The Establishment Fee does not apply to reinvested distributions, additional contributions or regular savings plan contributions or switches. Your adviser or internet advisory service may refund all or part of this fee (see the Adviser and distributor remuneration section on page 22 for more details concerning commissions). Where you invest personally without an adviser or internet advisory service, the Establishment Fee is capped at $300. If you choose to pay the Optional Adviser Service Fee to your adviser (see below), your adviser will organise for the Establishment Fee to be waived in full. You should contact your adviser or internet advisory service to find out whether or not they are able to refund or waive the Establishment Fee. Not applicable Not applicable Not applicable This fee is calculated on the Net Asset Value of each Fund. This fee is accrued daily and refl ected in the Unit Price of each Fund. The fee is paid quarterly in arrears to Sandhurst from the assets of each Fund. The Management Costs include the fees payable to the Investment Managers directly or indirectly through investments in Underlying Managed Investment Schemes. 18 Bendigo Managed Funds

21 Type of fee or cost Amount How and when paid Service fees: Investment switching fee: The fee for changing investment options. 3 Optional Adviser Service Fee: This is an optional fee charged, as agreed with your fi nancial adviser for advice sought about your investment. We do not charge this fee if you have not invested via a fi nancial adviser. 4 Nil $0 up to a maximum of $5,000 Not applicable Your fi nancial adviser may arrange with Sandhurst and you to charge an Optional Adviser Service Fee. This is an optional fee negotiated between you and your fi nancial adviser. Payment is deducted from your initial and/or additional investments into the Funds and paid by Sandhurst to your fi nancial adviser. The payment is inclusive of GST. If you choose to pay the Optional Adviser Service Fee, the Establishment Fee will be waived in full. Alternatively, if the Establishment Fee is paid, the Optional Adviser Service Fee will not be payable. You should contact your financial adviser to find out whether they are able to charge the Optional Adviser Service Fee through Sandhurst and whether they are able to waive the Establishment Fee. 1 There have been a number of proposed legislative reforms relating to payment of commissions, fees, incentives and other forms of remuneration to investment advisers. If as a result of these reforms, certain fees are no longer payable to your adviser or internet advisory service, then the fees will not be paid to those parties. The reforms are expected to take effect from 1 July This fee includes any amount payable to an adviser or internet advisory service. Please refer to item 5 in the Additional explanation of fees and costs section on page Transaction costs may apply. Please refer to item 3 in the Additional explanation of fees and costs section on page 21 for an explanation of transaction costs. 4 Please refer to item 6 in the Additional explanation of fees and costs section on page 22 for an explanation of Optional Adviser Service Fees. Sandhurst Trustees Limited 19

22 Fees and other costs continued Example of annual fees and costs The table below gives an example of how the fees and costs of the Bendigo Balanced Fund can affect your investment over a one year period. You should use this table to compare this Fund with other managed investment products. Balance of $50,000 with a contribution of $5,000 during year. Example the Bendigo Balanced Fund Contribution Fees PLUS Management Costs EQUALS Cost of Fund Nil Balance of $50,000 with a contribution of $5,000 during year. Not applicable 2.10% p.a. AND, for every $50,000 you have in the Fund, you will be charged $1,050 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 of $1,050.* What it costs you will depend on the investment option you choose and the fees you negotiate with your financial adviser. * Additional fees may apply. Assumes the $50,000 balance was not contributed during the one year period and the additional $5,000 is contributed at the end of the year. Any Establishment Fee would have been charged at the time the contribution was made. Establishment Fee: Up to 3.00% of your initial contribution. For an initial contribution of $50,000 you will be charged between $0 and $1,500 if you invest through an adviser. However, the Establishment Fee will be waived in full if you negotiate an Optional Adviser Service Fee with your adviser. The Establishment Fee is capped at $300 if you invest directly, without an adviser. There have been a number of proposed legislative reforms relating to payment of commissions, fees, incentives and other forms of remuneration to investment advisers. If as a result of these reforms, certain fees are no longer payable to your adviser or internet advisory service, then the fees will not be paid to those parties. The reforms are expected to take effect from 1 July Additional explanation of fees and other costs 1. Management Costs Management Costs are the total fees and costs incurred in managing the Funds and your investment. They include costs such as Investment Management fees, Responsible Entity fees, administration expenses and other expense recoveries. Management Costs are deducted from the Fund assets as a whole. The Management Costs include the fee paid to Sandhurst as Responsible Entity and fees and costs of the Investment Managers. The Constitutions of the Funds allow Sandhurst to recover all proper expenses incurred in administering the Funds. At the date of this PDS, until otherwise notifi ed, we will cap the Management Costs at 2.10% p.a. for each Fund. 2. Indirect Cost Ratio (ICR) The ICR is a useful measure of the ongoing fees and costs you can expect to pay if you invest in the Funds. It is the total of Management Costs (that is, ongoing fees and costs) of each Fund during a fi nancial year represented as a percentage of the average Net Asset Value of the relevant Fund. Sandhurst has agreed to not exceed the ICR at the following percentages until Investors are otherwise notifi ed as set out in item 8 on page 23. Bendigo Conservative Fund 2.10% p.a. ($1,050 p.a. for every $50,000) Bendigo Balanced Fund 2.10% p.a. ($1,050 p.a. for every $50,000) Bendigo Future Growth Fund 2.10% p.a. ($1,050 p.a. for every $50,000) Sandhurst Industrial Share Fund 2.10% p.a. ($1,050 p.a. for every $50,000) Sandhurst Future Leaders Fund 2.10% p.a. ($1,050 p.a. for every $50,000) The ICR includes the ICR of the underlying managed funds in which the Funds invest. The ICR does not include transaction costs (e.g. the buy/sell spread). 20 Bendigo Managed Funds

23 3. Transaction costs (buy/sell spread) Application and withdrawal prices of the Funds refl ect an adjustment known as the buy/sell spread. The buy/sell spread is incorporated in the Unit Pricing to cover the cost of buying investments (in the case of an application) and the cost of selling investments (in the case of a withdrawal). The buy/sell spread is an additional cost payable by Investors. The buy/sell spread does not represent a fee or income to Sandhurst or the Investment Managers. The purpose of charging the buy/sell spread is to fairly allocate the costs associated with buying and selling securities as a result of Investors acquiring or withdrawing Units in the Funds. The buy/sell spread refl ects the underlying buy/sell spreads charged by the Underlying Managed Investment Schemes in which the Funds invest. The buy/sell spreads as at 30 June 2010 are: Bendigo Managed Funds Buy Spread Sell Spread Bendigo Conservative Fund +0.10% -0.10% Bendigo Balanced Fund +0.15% -0.15% Bendigo Future Growth Fund +0.20% -0.20% Sandhurst Industrial Share Fund Sandhurst Future Leaders Fund +0.25% -0.25% +0.25% -0.25% For instance, if on a particular date the valuation of the Bendigo Balanced Fund Units, determined as described in the section Application and withdrawal Unit Prices on page 27, is $1.00 then the application and withdrawal prices calculated for that day s transaction will be $ and $ respectively. This equates to a transaction cost of $75.00 when you invest or withdraw $50,000 into or from the Fund. The buy/sell spread is Sandhurst s reasonable estimate of the total cost of buying/selling the assets of the Funds expressed as a percentage of the Net Asset Value per Unit. The buy/sell spread may be altered by Sandhurst at any time without prior notice. Up-to-date buy/sell spreads are displayed on our website. 4. Maximum fees and waiver Under the Constitution of each Fund, we are permitted to charge the following maximum fees (plus GST if applicable): Establishment Fee or Contribution fee Up to 5% of the Application Money. Withdrawal fee Up to 5% of the Aggregate Redemption Price for the Units withdrawn. Switching fee Up to 5% of the Aggregate Redemption Price for the Units withdrawn. Management fee Up to 5% per annum of the Gross Asset Value of the Fund. Performance fee 1 Up to 25% of the net realised and unrealised appreciation in the Net Asset Value of the Fund. 1 In respect of the Sandhurst Future Leaders Fund, the Sandhurst Future Leaders Fund invests directly in the IML Future Leaders Fund, of which IML is the Responsible Entity and Investment Manager. IML is entitled to charge a performance fee in relation to the IML Future Leaders Fund. However, for as long as the Strategic Alliance Agreement is in place (see page 33), IML has agreed that no performance fee will be on-charged to the Sandhurst Future Leaders Fund. Each Fund s Constitution also gives us the right to accept lower fees than we are entitled to receive under the Constitution, to defer payment, or to waive our entitlement to such fees. We do not currently charge a withdrawal fee, switching fee or performance fee and do not currently intend to introduce such fees. The Funds Constitutions also allows Sandhurst to recover all proper expenses from the Funds. These are commonly referred to as expense recoveries and include, but are not limited to, audit, taxation, legal, establishment, administration, stationery, postage and compliance costs. At the date of this PDS, such fees will only be charged to the Funds where the total fees and costs of each Fund remains under 2.10% p.a. Please refer to Can the fees change? at item 8 on page 23 for information on the circumstances in which fees charged by us may change. Sandhurst Trustees Limited 21