Netcash Product Disclosure Statement

Transcription

1 Netcash Product Disclosure Statement 1 October 2017 APIR code NET0034AU ARSN This Product Disclosure Statement ( PDS ) is a summary of significant information you need to make a decision about investing in Netcash. General information only The information provided in this PDS is general information only and is not intended to imply any recommendation or opinion about a financial product. This information does not take into account your personal objectives, financial situations or needs. You should consider whether Netcash is appropriate for you in light of your personal objectives, financial situation and needs, and you should consider consulting a financial adviser before making a decision about whether to invest in Netcash. The offer to which this PDS relates is only available to persons receiving this PDS in Australia. Contents Issuer/responsible entity Netwealth Investments Limited ABN AFSL Head office Level 8/52 Collins Street Melbourne VIC 3000 Postal address PO Box 336 South Melbourne VIC About Netwealth 2 2 How Netcash works 2 3 Benefits of investing in Netcash 4 4 Risks of managed investment schemes 4 5 How we invest your money 5 6 Fees and costs 6 7 How managed investment schemes are taxed 8 8 How to apply 8 9 Additional information 8 Information in this PDS may change from time to time in the future. Where the changes are not materially adverse, the updated information may be made available to you on our website at netwealth.com.au or by contacting us on Freecall A paper copy of any updated information is available from us free of charge on request. This document is subject to copyright. No part of it may be reproduced without Netwealth s consent. To request a printed copy of this PDS please contact us on: Freecall Phone Fax contact@netwealth.com.au Web netwealth.com.au

2 About Netwealth 1 About Netwealth In this PDS, Netwealth, we, us and our all mean Netwealth Investments Limited. Netwealth holds Australian Financial Services Licence No and is a member of the Financial Services Council. What is our role as the responsible entity of Netcash? As the responsible entity of Netcash, we are responsible for all aspects of the management and administration of Netcash. We determine the investment objectives and the investment strategy of Netcash and implement the investment strategy. We are also responsible for holding the investments, keeping records of each member s investment, distributing the income earned on investments and preparing Netcash s accounts. In performing our roles, we have an obligation to act in the best interests of members. 2 How Netcash works What is Netcash? Netcash is a unit trust that is registered as a managed investment scheme by the Australian Securities and Investments Commission ( ASIC ). When you contribute money to a unit trust such as Netcash, your money is pooled with other people s money. This pooled money is then invested in investments chosen by us. ASIC has a website moneysmart.gov.au that has more information on managed investment schemes ( managed funds ). Who can invest in Netcash? You can only invest in Netcash through an account in a Netwealth platform that includes Netcash as an available investment option. In this PDS Netwealth platform means a Netwealth Wrap Service product (including Netwealth Wealth Accelerator and Netwealth Investment Wrap) or a Netwealth Superannuation Master Fund product (including Netwealth Super Accelerator or Netwealth Super Wrap). To invest in Netcash, you must have an account with a Netwealth platform (a platform account ). If you do not already have a platform account, you will first need to open one before you can invest in Netcash. You should refer to the applicable product disclosure statement, investor directed portfolio service (IDPS) guide or information guide ( platform disclosure document ) available on our website for information on how the relevant Netwealth platform works and how to open a platform account. Netwealth will not accept investments in Netcash where the platform account is held by a company, except where that company holds the account as the trustee of a trust (including a self managed superannuation fund). What does Netcash invest in? Currently we have contracted with Australia and New Zealand Banking Group Limited, ABN ( ANZ ) that Netcash will only invest in an at-call deposit with ANZ. However, on expiry of that contract we have discretion to revise the investment strategy and invest in a range of high quality short-term money market and bank-issued or bankbacked securities, bank deposits, government securities or corporate securities with a minimum investment grade credit rating. We will not invest Netcash in anything other than deposits with ANZ without giving members at least 30 days notice. The notice will include details of the revised investment strategy. Members will therefore have the opportunity to withdraw their investment before a change of investment strategy is implemented. What is the investment return? The investment return will be in the form of income distributed to members and any movement in the unit price. Income will be earned at a rate calculated by us based on the income earned on deposits or other assets in which Netcash invests, less the management costs and any expenses of operating Netcash. What are units? As the name suggests, a unit trust is divided into units. A unit represents a beneficial interest in the assets of Netcash as a whole (but not to any particular asset). When you invest in Netcash through a Netwealth platform, units are acquired by the Netwealth platform on your behalf. The number of units acquired is determined by how much is invested and the entry price ( Entry Price ) of the units acquired. When you direct the Netwealth platform to withdraw your investment, the amount paid into your account depends on the number of units redeemed and the exit price ( Exit Price ) of the units. What are the Entry Price and the Exit Price? The Entry Price is the price paid for units when you direct the Netwealth platform to invest your money in Netcash. The Exit Price is the price received for the units when you direct the Netwealth platform to take your money out of Netcash. The Entry Price and Exit Price are determined for every business day in Melbourne based on the value of Netcash s underlying investments at the end of that business day. The Entry Price and the Exit Price apply from 12 noon on a business day in Melbourne until 12 noon on the next business day in Melbourne. The Entry Price for a business day applies to all money invested on that business day. Similarly, the Exit Price for a business day applies to all money withdrawn on that business day. As at the date of this PDS, the Entry Price and the Exit Price are both $1.00. As Netcash is currently intended to be invested in deposits with ANZ, it is currently unlikely that the value per unit of the underlying investments will change 2 Netcash Product Disclosure Statement 1 October 2017

3 How Netcash works which means it is unlikely the Entry Price and the Exit Price will change. However, Netcash is not capital guaranteed and the Entry Price and Exit Price can change if, for example, we change our investment strategy in the future to invest in a range of investments such as fixed interest securities. In that situation, it is possible the value per unit of underlying investments of Netcash could change and the Entry Price and Exit Price would then go up or down as the value per unit of the investments of Netcash goes up or down. The Entry Price is determined in this way: first, the total asset value of Netcash s investments (excluding undistributed income) is calculated and adjusted for Netcash s expenses and liabilities (this is called the net asset value ); transaction costs (if any) are then added to the net asset value; and the net asset value is divided then by the number of units in Netcash. The Exit Price is determined in this way: first, the net asset value of Netcash is calculated; and transaction costs (if any) are then subtracted from the net asset value; and the net asset value is then divided by the number of units in Netcash. Generally, each of the underlying investments is valued at its most recent market price. We have prepared a policy which sets out how we will exercise our discretion in calculating unit prices. We will provide a copy of this policy free of charge on request. How do you invest in Netcash? To have money invested in Netcash, all you need to do is provide us with an investment instruction through your platform account. Additional investments in Netcash can be made at any time through your platform account. Netcash itself has no minimum investment amount. The minimum investment you can make in Netcash depends on what minimum investment is allowed under the terms and conditions of your platform account. When you use your platform account to invest in Netcash, units in Netcash will be issued to us as trustee or operator of the account, rather than to you, and we will hold those units on your behalf. You should refer to the platform product disclosure document for information on how the Netwealth platforms work and how to open a platform account. How and when is income paid? Income in Netcash accrues on a daily basis. The amount of income accruing on units in Netcash is based on the net income earned by Netcash for the month, allocated in proportion to the number of units there are in total in Netcash and how long the units have been on issue. Therefore, the amount that each unit earns is based in part on the number of days the unit has been on issue during the month. The income from your investment in Netcash is paid into your platform cash account. This is generally done within five business days of the end of each month, although a maximum of one month is permitted. If you withdraw part of your investment in Netcash during the month, the income on the amount withdrawn is paid into your platform account after the end of the month at the same time as the rest of the income from your investment is paid. If you withdraw all of your investment in Netcash during a month, your income entitlement up to the date of withdrawal is paid into your platform account at the same time as the rest of the withdrawal amount is paid. How do you find out what the rate of income is from Netcash? Contact our investor services team at the numbers on page 1. Remember that the rate of income may change from time to time. Can you reinvest income in Netcash? Income cannot automatically be reinvested in Netcash; all income is paid into your platform cash account. If you wish to reinvest income paid from Netcash, you need to do this by providing us with an investment instruction through your platform account. How do you get your investment out of Netcash? To take your money out of Netcash, all you need to do is direct us to withdraw your funds using your platform account online facility or provide an investment instruction to us. The investment instruction can relate to some or all of your investment in Netcash. Any amount withdrawn will be paid into your platform cash account. We normally process withdrawal requests within three business days although we are entitled to take up to 21 days or longer in certain unusual circumstances, such as where withdrawal of bank deposits is suspended. As you can only invest in this product through a Netwealth platform, if you choose to close your platform account you will need to withdraw your investment from Netcash. Can you transfer your units? As all units must be held through a platform account, we normally do not permit units to be transferred. Does Netcash borrow? No, it is not intended that Netcash will borrow. Could withdrawals from Netcash be frozen? Except in very unusual circumstances, Netcash will be liquid and you will be able to arrange a withdrawal of your investment at any time. A managed fund such as Netcash is liquid if liquid assets account for at least 80% of the value of the assets of that managed fund. Assets are generally liquid assets if the responsible entity of the fund (Netwealth 3 Netcash Product Disclosure Statement 1 October 2017

4 Benefits of investing in Netcash in the case of Netcash) reasonably expects that the assets can be realised for their market value within the 21-day period for satisfying withdrawal requests while the managed fund is liquid. It is therefore highly likely that Netcash will remain liquid. However, in the unlikely event that Netcash ceases to be liquid, you would only be able to withdraw in accordance with the terms of a withdrawal offer (if any) made by us in accordance with the Corporations Act. In that situation, we would have discretion whether or not to make a withdrawal offer and you would have no right to withdraw until a withdrawal offer was made. If no withdrawal offer was made, you would have no right to withdraw from Netcash. Whether or not Netcash is liquid, the constitution permits us to suspend redemptions or payments of redemption proceeds if doing so is required or is in the best interests of members, due to circumstances beyond our control. Do we have discretion to withdraw funds without your direction? No, we will not withdraw any part of your investment in Netcash, except at your direction. The Netcash constitution permits us to redeem units without a direction in some circumstances, though we do not intend to exercise these powers while Netcash is in at-call deposits with ANZ. 3 Benefits of investing in Netcash Superior rate of return By pooling the investments of a number of investors, made through their platform accounts, we are often able to negotiate better rates of return with financial institutions than individual investors are able to obtain. The buying power of Netcash therefore means that Netcash can provide members with a superior rate of return. Regular income Netcash pays income monthly into your platform cash account, usually within five business days of the end of each month. Capital stability Netcash currently invests only in bank deposits with ANZ. If we vary the investment strategy in the future, Netcash will still be restricted to investing in high quality short-term money market and bank-issued or bank-backed securities, bank deposits, government securities or corporate securities with a minimum investment grade credit rating. While these investment strategies are considered low risk, there is no guarantee that the value of your investment will not fall. Liquidity The underlying investments of Netcash are liquid which means investments can normally be withdrawn and paid into your platform cash account within three business days. Ease of operation You can move money in and out of Netcash from your platform cash account through your online platform account, or you can provide us with an Investment instruction form for your platform account. 4 Risks of managed investment schemes Investment risks All investments carry risk. Different investment strategies carry different levels of risk, depending on the assets that make up the investment strategy. Assets with the highest long-term returns may also carry the highest level of shortterm risk. The risks set out below are considered by us to be the most significant risks of investing in Netcash. Interest rate risk Netcash pays a variable rate of interest calculated monthly and therefore the principal risk of investing in Netcash is that interest rates may drop, which will reduce the income returns of Netcash. If this occurs and you no longer find the interest rate attractive, you have the option of withdrawing your investment from Netcash. Credit risk There is a risk that the bank or other financial institution that takes a deposit or issues a security purchased by Netcash will default in the payment of interest or the repayment of principal. As Netcash currently invests in deposits with ANZ, we consider this risk to be low. Even if the investment strategy of Netcash is changed in the future, the range of investments would still be limited to high quality short-term money market and bank issued or bankbacked securities, bank deposits, government securities or corporate securities with an investment grade credit rating, so we consider the risk would still be low. Fixed Income risk This risk does not exist for so long as Netcash is invested in at-call deposits with ANZ but, if the investment strategy of Netcash is changed in the future to allow investment in a wider range of investments including fixed interest investments, there will be a risk that the capital value of the fixed interest investments will rise and fall as a consequence of changes in interest rates. A fall in the capital value of fixed interest investments could lead to the Exit Price of units in Netcash falling. If interest rates rise, the value of fixed rate securities generally falls. The magnitude of the fall generally depends on the term to maturity of the investment. In general, an investment with a longer term to maturity is more affected by interest rate changes. If the investment strategy of Netcash is varied to permit investment in fixed interest investments, we will 4 Netcash Product Disclosure Statement 1 October 2017

5 How we invest your money endeavour to manage the maturity profile of those investments so as to minimize this risk. Liquidity risk This is the risk that an asset of Netcash cannot be readily sold for a reasonable price due to events such as a rapidly falling market or lack of participants in the market. In relation to deposits with financial institutions, it can also arise if for any reason a freeze or restriction is placed on deposits. While it is unlikely, it is possible that a restriction could be placed on withdrawal of bank deposits. Under the terms of Netcash s constitution, we may suspend the processing of redemptions in certain situations such as this. Regulatory and taxation risk There is a risk that changes in laws, taxes or regulatory policies could have an adverse impact on Netcash or its investments. For example, a tax or levy could be imposed on Netcash or the ability to withdraw money from Netcash could be limited by changes in law. Netwealth-specific risks Managed funds are also subject to specific risks associated with the operator. The risks set out below are considered by us to be the most significant Netwealthspecific risks associated with investing in Netcash. Operator risk Risks relating to Netcash include that Netcash could be wound up, we could be replaced as the responsible entity or our main service providers could change. We aim to keep risks associated with Netcash to a minimum by endeavouring to always act in members best interests. Systems risk Losses can be caused by a breakdown in systems. An example would be if there was an interruption or fault in any part of our computer or telecommunications systems. Such interruption may be caused by breakdown, system overload, virus attack, unauthorised access, denial of service, or other malicious attacks. We have assessed the capacity required for our systems including our website, and put in place reasonable contingencies. However, our website could become congested due to abnormal activity. Such abnormal activity may occur if the stock market falls significantly and many investors wish to simultaneously access the website to review their investments and/or sell them. Significant risks of managed investment schemes It is important for you to understand that: the value of investments will vary (though this is unlikely for Netcash while it only invests ANZ deposits); the level of investment returns will vary and future returns may differ from past returns; returns are not guaranteed and you may lose some of your money; laws affecting registered managed investment schemes such as Netcash may change in the future; and the appropriate level of risk for you to take depends on a range of personal factors, including your age, your investment time frames, where other parts of your wealth are invested (because diversification of your investments generally reduces your risk), and your risk tolerance (how comfortable you are with taking risks with your investments). 5 How we invest your money Warning: When it comes to choosing to invest in Netcash, you should consider the likely investment return, the risk and your investment timeframe. Investment strategy Currently the investment strategy is for Netcash to invest all of its funds in an at-call deposit with ANZ. We will not alter this investment strategy without first giving members at least 30 days notice of the change of investment strategy. If in the future we consider it is appropriate to change this strategy, we may invest in a range of high quality short-term money market and bank issued or bank-backed securities, bank deposits, government securities or corporate securities with a minimum investment grade credit rating. Investment return objective Netcash s current investment return objective is to provide members with a rate of return after fees and costs above the Reserve Bank of Australia Cash Rate. We cannot guarantee that this investment return objective will be achieved as it will depend on the availability of suitable deposit rates or income investments. We may change the investment return objective from time to time in the future. Strategic asset allocation Currently Netcash is 100% invested in an at-call deposit with ANZ. If in the future we alter the investment strategy, it is likely that the strategic asset allocation will be 100% cash and short term securities. Minimum suggested investment timeframe No minimum Netcash is suitable for short term investors. Summary risk level Low Risk. Type of investors for whom Netcash is intended to be suitable Conservative investors seeking a competitive income return and a high assurance of capital stability. 5 Netcash Product Disclosure Statement 1 October 2017

6 Fees and costs Can you change investment options within Netcash? Netcash has only one investment option and therefore, if you wish to change investment options, you will need to switch your investment through your platform account. Switching your investment You can switch all or part of your investment in Netcash to any other investment available through your platform account by instructing us at any time. Before you switch, you must obtain and consider a copy of the product disclosure statement (where applicable) for the investment you are switching into. We normally complete switch requests within three business days of receipt. As a switch involves withdrawing from Netcash and investing in another investment, any limitation on withdrawals from Netcash will apply and there may be tax consequences as a result of disposing of your investment in Netcash. You will also incur buy-sell spread costs when you switch your investment. Labour standards, environmental, social and ethical considerations We do not take into account labour standards or environmental, social or ethical considerations for the purpose of selecting, retaining or realising investments of Netcash. 6 Fees and 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 account 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 the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed funds fee calculator to help you check out different fee options. Fees and costs of Netcash The following table shows the main fees and costs you may be charged for investing in Netcash. This information can be used to compare costs between different simple managed investment schemes. The fees and costs may be deducted from your Netcash interest or deducted from the returns on your investment. TYPE OF FEE OR COST AMOUNT Fees when your money moves in or out of Netcash Establishment fee Contribution fee Withdrawal fee Termination fee Management costs The fees and costs for managing your investment We set our fee for managing Netcash so that, after deducting the fee, the income earned by members is no less than the official cash rate 1 plus 0.25% p.a. We estimate the management cost will be between 0.70% p.a. and 0.75% p.a. 2 of the value of the fund, but this may change if there are changes in the official cash rate and/or the interest rate we receive. 1 The official cash rate is the target cash rate set by the Reserve Bank of Australia during the month. 2 We may negotiate these fees and costs with certain wholesale investors. This figure includes GST after taking into account any Reduced Input Tax Credits, if applicable. In addition, unusual or non-recurrent expenses can also be paid out of Netcash s assets where permitted by the constitution. 6 Netcash Product Disclosure Statement 1 October 2017

7 Example of annual fees and costs This table gives an example of how the fees and costs for Netcash can affect your investment over a one-year period. You should use this table to compare Netcash with other managed investment products. Example - Netcash Contribution Fees PLUS Management Costs EQUALS Cost of Netcash Up to 0.75% p.a. Balance of $50,000 with a contribution of $5,000 during year For every additional $5,000 you put in, you will be charged $0. And, for every $50,000 you have in Netcash you will be charged up to $375 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 up to $ What it costs you will depend on the fees you negotiate. If you would like to calculate the effect of fees and costs on your Netcash interest, the Australian Securities and Investment Commission s website has a managed funds fee calculator, visit moneysmart.gov.au. The fees and costs shown above do not include the fees and costs of the Netwealth platform through which you invest in Netcash. Information about the fees and costs of the Netwealth platform is available in the applicable platform disclosure document. Additional explanation of fees and costs Management costs The management costs for Netcash include administration and other fees charged by us and expenses incurred in operating Netcash. The expenses include such items as custody fees, audit fees, cost of meetings of members, fees to regulatory bodies and compliance costs. In addition to usual management costs referred to above, in unusual circumstances additional expenses such as government levies, litigation or winding up Netcash may also be incurred. These are unusual and non-recurring expenses. If this happens, they will be in addition to the management fees referred to above and recovered directly from the assets invested in Netcash. No costs of this sort are anticipated at present. Buy-sell spread A buy-sell spread is an adjustment to the Entry Price and Exit Price to reflect transaction costs, so that these costs are borne by investors who come in or go out of a fund, rather than the remaining investors. Netcash currently has no buy-sell spread which means that, at any point in time, the Entry Price and the Exit Price of Netcash are always the same as each other. We will give you at least 30 days notice if we introduce a buy-sell spread in the future. Other transactional and operational costs There are no other transactional or operational costs. Performance fees No performance fees are charged in relation to Netcash. Goods and Services Tax ( GST ) on these fees and costs All fees and costs shown include GST. Netcash is expected to be entitled to receive reduced input tax credits ( RITCs ) on the GST payable on certain fees. The amount of the RITCs is determined under the GST law and it is possible that this may change in the future. Changes to fees and charges We will provide investors with at least 30 days notice of any proposed change in fees or charges. There is, however, no change currently contemplated. We may change fees that we charge without member consent, however we may not, and will not, charge more than the maximum fees payable under the constitution for Netcash (in respect of those fees charged by us). 3 This figure assumes that the $5,000 contribution occurs on the last day of the year and that there is a constant account balance of $50,000 throughout the year. 7 Netcash Product Disclosure Statement 1 October 2017

8 7 How managed investment schemes are taxed Warning about tax: Investing in a registered managed investment scheme is likely to have tax consequences. You are strongly advised to seek professional tax advice. Who has to pay tax on income? The following general comments are relevant to members who are residents of Australia for income tax purposes and are based on current tax law. Under current law Netcash does not generally pay tax on the income or gains made by Netcash, provided all the income of Netcash is attributed to members each financial year. We intend that all income of Netcash will be attributed to members. Therefore, Netcash is not expected to pay tax on behalf of members and members will generally be assessed for tax on any income generated by Netcash. Your attributed amount of taxable income of Netcash for the relevant year of income is expected to form part of your assessable income for that income year. Will there be tax when you withdraw your investment? Given the nature of Netcash s investments and potential investments, it is unlikely that the Exit Price of units will increase or decrease such that there would be any gain or loss on the disposal of units when you withdraw your investment. However, in the event that there is such a gain or loss, this may also give rise to income tax or capital gains tax implications to you. In these circumstances, you should seek your own advice as to the taxation implications of your withdrawal. 8 How to apply Netcash is only open to investors with a platform account. To invest, all you need to do is provide us with an investment instruction through your platform account. Cooling off provisions if you change your mind after investing As investments in Netcash can only be made through your platform account in our name and as we are not a retail investor, the 14 day cooling-off period that generally applies to managed fund investments does not apply. How to make a complaint if you are not satisfied with our service We have arrangements in place to consider and seek to resolve any complaints about the services we provide to you. If you have a complaint about us, Netcash, your platform account or our other services, you may contact us by or telephone as shown on page 1 of this PDS or in writing to: The Manager Investor Services Netwealth Investments Limited PO Box 336 South Melbourne VIC 3205 We will respond to you within 45 days of receipt of the complaint. We are a member of the Financial Ombudsman Service ( FOS ), an external dispute resolution scheme. In the event that you are not satisfied with the outcome of your complaint, you have the right to refer the matter to FOS. You can contact FOS on , go to their website fos.org.au or you can send your enquiry or complaint to: Financial Ombudsman Service Limited GPO Box 3 Melbourne VIC 3001 To allow FOS to easily identify us, please quote our code number Additional information Investing via a platform account When you invest in Netcash through your platform account, we, as custodian or trustee of investments held through that account, are the member of Netcash. It follows that we have the rights of a member and can exercise them in accordance with the terms of your platform account. However, we agree that you can rely on the information in this PDS even though you are not a direct investor. You should also take into account the fees and charges of the platform account. If you are a new investor in a Netwealth platform, in addition to reading this PDS, you should read the applicable platform disclosure document. These documents can be obtained on our website, from your financial adviser or by contacting us. Performance is not guaranteed Investment in Netcash involves investment and other risks which are set out in section 4. We have duties including those of honesty, care and diligence to members of Netcash. However, we and our associated companies do not promise or guarantee that there will be no loss of capital invested or that Netcash will achieve its investment return objective over any particular period of time or that you will be able to withdraw your investment within a particular time frame. Your investment does not represent a loan to, a deposit with or other liability of Netwealth or ANZ. 8 Netcash Product Disclosure Statement 1 October 2017