AMP CAPITAL DYNAMIC MARKETS FUND

Transcription

1 AMP CAPITAL DYNAMIC MARKETS FUND Product Disclosure Statement Platform (Class A units) Issued 23 May 2016 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) and may be used by master trusts or platform operators, referred to in this PDS as platform operators, to apply for units in the Fund, and to give to their customers (indirect investors) to provide them with Fund information they may use in making a decision about instructing the platform operator to invest in the Fund on their behalf. Platform operators are unitholders in the Fund; their rights differ from the rights of indirect investors, who are not unitholders (see the Other important information section of this PDS). Before making a decision about investing or reinvesting in the Fund, all investors 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 investors compare the Fund to other funds they may be considering. The information in this PDS is general information only and does not take into account any investor s personal objectives, financial situation or needs. All investors should obtain financial advice that is tailored to their circumstances 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. Mitsubishi UFJ Trust and Banking Corporation (MUTB) and AMP Capital have each provided consent to the statements about their organisation in this document and have not withdrawn that consent prior to the issue of this document. MUTB is a leading Japanese trust bank with whom AMP Capital has a strategic business and capital alliance. 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, MUTB, The Trust Company 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, MUTB, The Trust Company 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 23 May 2016 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 or us. AMP Capital Dynamic Markets Fund also referred to in this PDS as the Fund (ARSN , AMP1932AU) On-Platform Class A

3 ABOUT AMP CAPITAL AMP Capital is one of the largest investment managers in the Asia Pacific region. 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 Bahrain, China, Hong Kong, 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$159.8 billion (as at 31 December 2015) on their behalf, across a range of single sector and diversified funds. 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 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 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. AMP Capital Dynamic Markets Fund Product Disclosure Statement 3

4 At a glance Investment return objective Benchmark Suggested minimum investment timeframe Who can invest? Minimum investment amounts Management costs Distribution frequency ASIC benchmarks and disclosure principles 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 - investing directly in the Fund - investing in the Fund through a master trust or platform Initial $500,000 Additional $5,000 Management fee 0.48% pa Recoverable expenses 0.02% pa (estimate) Performance fee Up to % of the Fund s performance above its benchmark (see the Performance fee section of this PDS) Minimum investment amounts, fees and costs are subject to the arrangements between indirect investors and their platform operators. See the Fees and other costs section of this PDS for 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). 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 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 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. 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 For platform operators, if you have questions about investing in the AMP Capital Dynamic Markets Fund or require further information, please contact our Client Services team on between 8.30am and 5.30pm Sydney time, Monday to Friday. should contact their financial adviser or platform operator. 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. 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. international investments including losses related to currency exchange rates, hedging, and changes in the state of the Australian and world economies. legal, regulatory and foreign investments any change in taxation, corporate or other relevant laws, regulations or rules may adversely affect your investment. 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. share market investments the value of the Fund s investment in listed securities may decrease as a result of adverse share market movements. 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: aims to achieve growth with smoother returns by adopting a flexible approach to asset allocation over the Fund's investment time horizon invests across a range of traditional asset classes such as shares, listed property, commodities, fixed income, credit and cash aims to produce investment returns through the use of dynamic asset 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 denomination of the assets is 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. See the following sections of this PDS: Investment strategy Fund profile, and Risks of investing. See also Disclosure Principle 1 in the ASIC Disclosure Principles. 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 Derivatives 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. 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 and currency forward contracts. We adopt certain criteria for engaging counterparties, such as credit ratings and background analysis. 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. See Derivatives in the Fund profile section of this PDS and Disclosure Principle 7 in the ASIC Disclosure Principles. Short selling The Fund does not engage in short selling. 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 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. 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 split of investment 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 benchmarks and disclosure principles for the AMP Capital Dynamic Markets Fund 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 benchmarks and disclosure principles for the AMP Capital Dynamic Markets Fund 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. 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 Derivative Risk Statement, which can be obtained 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 benchmarks and disclosure principles for the AMP Capital Dynamic Markets Fund 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 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 the 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. Up to 95% of Fund assets may be lent under the securities lending program. Securities lending exposes the Fund to additional risks which may cause a loss of capital, in particular the risk that the borrower defaults by failing to return the securities. However, processes are in place to manage and substantially mitigate these risks, including: loans may only be made to approved borrowers, who are carefully selected taking into account credit risk aggregate borrowing limits are set and monitored acceptable collateral must be high quality and highly liquid, including cash, shares in larger companies and government bonds; in the event of default, collateral may be liquidated to fund the purchase of replacement securities borrowers are required to maintain collateral equal to the value of the securities on loan plus a margin of 5-10% depending on type of collateral market movements of both securities on loan and collateral are monitored on a daily basis and adjustments made where necessary to ensure that loans remain fully collateralised restrictions may be placed on which securities are available to be loaned and limits on the proportion of securities that may be loaned, and loans may be recalled at any time at the discretion of the responsible entity and the securities lending agreement may be terminated at short notice should market conditions warrant such action. In addition, the Fund has further risk mitigation in place against possible capital loss resulting from insolvency of a borrower by a legally enforceable indemnity from the securities lending agent (a related party of the Fund's custodian), who would make up any shortfall between the collateral and the cost to repurchase a loaned security. Income earned from securities lending is returned to the Fund after the deduction of operational costs and fees payable to the securities lending agent (for operation of the program and the provision of the indemnity) and to AMP Capital for monitoring, governance and oversight. These fees are 30% and 10% of securities lending revenue respectively which are in line with normal commercial rates. Ethical policy Selecting, retaining and realising investments Decisions made by us about whether to buy, hold or sell investments are based primarily on economic and investment factors, with environmental, social and ethical considerations and labour standards taken into account only where they may be seen to have a material impact on the value of an investment. 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 managed investment scheme, 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. 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. AMP Capital Dynamic Markets Fund Product Disclosure Statement 11

12 International investments 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 noted in this section. Changes in the state of the world economies may affect the value of your investment in the Fund. Legal, regulatory and foreign investment risk Any change in taxation, corporate or other relevant laws, regulations or rules may adversely affect your investment. In particular, for funds investing in assets outside Australia, your investment may also be adversely impacted by changes in broader economic, social or political factors, regulatory change and legal risks applicable to where the investment is made or regulated, including differing insolvency regimes. 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 consist of less than 80% in value of liquid assets, we may not be able to meet withdrawal requests within the periods specified under 'Payment times', 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 'Processing withdrawal requests'. 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. 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. 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 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 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 investment fee calculator to help you check out different fee options. This section shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the Fund assets as a whole. Taxes are set out in the 'Taxation' section of this PDS. You should read all the information about fees and costs because it is important to understand their impact on your investment. Fee amounts in this PDS Fee amounts shown in this PDS are the fees the Responsible Entity charges platform operators investing through this PDS. If you are an indirect investor, please contact your financial adviser or platform operator for details of the fee amounts relating to your investment in the Fund. Fees may be payable to your financial adviser; these fees are additional to the fees noted in Table 1 (refer to the Statement of Advice provided by your adviser). Other fees such as buy and sell spreads may also apply to your investment in the Fund, as set out in the following pages. Unless otherwise specified, all dollar amounts are Australian dollars. Table 1 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. Exit fee The fee to close your investment. Management costs The fees and costs for managing your investment. Nil Nil Nil Nil Management fee 0.48% pa of the Fund's gross assets Not applicable Not applicable Not applicable Not applicable Calculated daily on the gross assets of the Fund. Paid to us monthly out of the Fund s assets and reflected in the unit price. The amount of this fee may be negotiable (see 'Differential fees' in this section) Recoverable expenses 0.02% pa estimate of the Fund's gross assets Paid to us out of the Fund s assets once the expense is incurred, and reflected in the unit price. Performance fee Paid quarterly in arrears out of the assets of the Fund where the % of the Fund s performance aggregate of all performance fees for a performance fee period above its benchmark (see 'Performance is positive, and reflected in the unit price (see Performance fee fee' in this section) in this section). Service fees Switching fee The fee for changing funds. Nil Not applicable AMP Capital Dynamic Markets Fund Product Disclosure Statement 13

14 Additional explanation of fees and costs Management costs Management costs are made up of a management fee, recoverable expenses and a performance fee (if applicable). Any management fees, recoverable expenses and performance fees charged by underlying funds are included in the management costs in Table 1; they are not an additional cost to you. Management fee The management fee is charged by the Responsible Entity for managing and operating the Fund. The management fee 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. 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, 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. Estimated recoverable expenses are included in the management costs in Table 1. Performance fee A performance fee of up to % of the outperformance of the Fund may be charged by the Responsible Entity, based on the Fund s total return over its 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. The performance fee is normally calculated each business day and is calculated separately for each class of units. 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 $500,000 in the Fund and the Fund outperforms its benchmark index by 0.5% in a year, the cost to you would be $ This is an example only; it is not an estimate or forecast. The fee may be higher, lower or not payable at all. Maximum fees The maximum fees that can be charged under the Fund s constitution (exclusive of GST) are: Contribution fee 5% of the application amount. Currently, no contribution fee is charged. Withdrawal fee 5% of the withdrawal amount. Currently, no withdrawal fee is charged. Management fee 3% per annum of the value of the assets of the Fund. As per Table 1, the current management fee charged is 0.48% per annum. Performance fee up to 30% of the Fund's performance above its benchmark. Currently, up to % of the Fund's performance above its benchmark is charged. Under the Fund's constitution, the Responsible Entity is entitled to be paid an additional amount on the above fees, on account of GST, calculated in accordance with the Fund's constitution. Buy and sell spreads Investments and withdrawals may incur buy and sell spreads, which are designed to ensure, as far as practicable, that any transaction costs incurred as a result of an investor entering or leaving the Fund are borne by that investor, and not other investors. Buy and sell spreads are calculated based on the actual or estimated costs the Fund may incur when buying or selling assets. They will be influenced by our experience of the costs involved in trading these assets or the costs that the Fund has actually paid, and will be reviewed whenever necessary to ensure they remain appropriate. When you enter or leave the Fund, any buy or sell spread applicable at that time is a cost to you, additional to the fees noted in Table 1, and is reflected in the unit price. The buy and sell spreads are retained within the Fund; they are not fees paid to the Responsible Entity, us or any investment manager. The buy spread is taken out of application amounts. The sell spread is taken out of withdrawal amounts. As at the date of this PDS, a buy spread of 0.15% and a sell spread of 0.15% apply to the Fund. Current buy and sell spreads can be obtained online at or by contacting us. Based on the buy and sell spreads noted above, an investment of $500,000 would incur a buy spread of $750, and a withdrawal of $500,000 would incur a sell spread of $750. This is an example only; it is not an estimate or forecast. The actual buy and/or sell spreads may be higher or lower. Other costs Transactional and operational costs Transactional and operational costs associated with dealing with the Fund s assets may be recovered from the Fund in addition to the fees noted in Table 1. Transactional and operational costs may include transactional brokerage, clearing costs, stamp duty and the buy and sell spreads of any underlying fund. These costs will differ according to the type of assets in the Fund, and will be paid out of the Fund. Costs related to a specific asset or activity to produce income The Fund may also incur costs (related to a specific asset or activity to produce income) that an investor would incur if they invested directly in a similar portfolio of assets, for example the costs of gearing or manager transition costs. These costs will be paid out of the Fund and are additional to the fees noted in Table 1. Liabilities properly incurred The Fund s constitution entitles the Responsible Entity to be indemnified from the Fund for any liability properly incurred. 14 AMP Capital Dynamic Markets Fund Product Disclosure Statement

15 Derivative costs The Fund may access exposure to some asset classes via derivatives. Currently this is done via investing in futures contracts. Costs to the Fund in connection with futures include a fee dependent on brokerage for each trade and contract size. Changes to fees and costs The Responsible Entity may change the fees noted in this PDS at its discretion and without the consent of platform operators or indirect investors. For example, fees may be increased where increased charges are incurred due to government changes to legislation, where increased costs are incurred, if there are significant changes to economic conditions, or if third parties impose or increase processing charges. However, we will give platform operators 30 days written notice of any intention of the Responsible Entity to increase the existing fees, expenses or recovery of expenses, or introduce contribution or withdrawal fees. Goods and Services Tax (GST) Unless otherwise stated, the fees shown in Table 1 are inclusive of Goods and Services Tax (GST) and any applicable stamp duty, less reduced input tax credits or other input tax credits claimable. For information about the tax implication of investing in the Fund, refer to the 'Taxation' section of this PDS. Differential fees A rebate of part of the management fee or a lower management fee may be negotiated with investors who are wholesale clients for the purposes of Section 761G and Section 761GA of the Corporations Act or with AMP staff. Further information can be obtained by contacting us. Alternative forms of remuneration AMP Capital and the Responsible Entity may provide alternative forms of remuneration, such as professional development, sponsorship, and entertainment for financial advisers, dealer groups and master trust or investor directed portfolio service (IDPS) operators, where the law permits. Where such benefits are provided, they are payable by us or the Responsible Entity and are not an additional cost to you. We and the Responsible Entity maintain a register to record any material forms of alternative remuneration they may pay or receive. We will provide you with a copy of our register free of charge, on request. Payments to your financial adviser Although we do not make any payments to financial advisers whose clients invest in the Fund through the Fund s PDS, your financial adviser may receive payments and/or other benefits from the dealer group or organisation under which they operate. These payments and benefits are not a cost to the Fund. Other payments Payments may be made to entities such as dealer groups, platform operators, master trusts and investment administration services in relation to the Fund, where the law permits. These payments are not a cost to you. The amount of these payments may change during the life of this PDS. For further information, please refer to the offer document issued by the relevant entity. 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 shown in this table are an example only and are not additional to the fees described in Table 1. Table 2 EXAMPLE AMP CAPITAL BALANCE OF $500,000 WITH A CONTRIBUTION DYNAMIC MARKETS OF $5,000 DURING THE YEAR FUND Contribution fees Plus Management costs 1 Equals Cost of the Fund 3 Nil 0.50% pa For every additional $5,000 you put in, you will be charged $0. And, for every $500,000 you have in the Fund you will be charged $2,500 2 each year. If you had an investment of $500,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged a fee of $2,500 What it costs you will depend on the fund you choose and the fees you negotiate. 1. Management costs are made up of a management fee of 0.48% pa, estimated recoverable expenses of 0.02% pa and an estimated performance fee of 0.00% pa (see 'Performance fee estimate' below). 2. This cost does not include the management costs charged on the additional $5,000 investment. The additional management costs would be $25 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. Performance fee estimate The performance fee estimate of 0.00% was calculated based on the actual performance fees payable for the year ended 31 December 2015 for this unit class, the assumption that the Fund outperforms its benchmark by 0.50% over a one year period, together with the current cumulative watermark position of the Fund. This estimate is inclusive of GST less reduced input tax credits, and is provided as an example only and is not a forecast. The performance fee may be higher, lower or not payable at all. AMP Capital Dynamic Markets Fund Product Disclosure Statement 15