Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund 1

Transcription

1 Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund 1 ARSN APIR code MGL0021AU Distributor of the Fund: Navigator Australia Limited ABN Australian Financial Services Licence No Issuer and Responsible Entity: Deutsche Managed Investments Limited ABN Australian Financial Services Licence No Date issued: 17 May 2007 Product Disclosure Statement 1. For further details regarding Capital Protection see page 8.

2 Distributor Navigator Australia Limited ( Navigator ) ABN St Kilda Road Melbourne VIC 3004 GPO Box 2567W Melbourne VIC 3001 Aviva Investor Services Telephone Monday to Friday 8:00am to 6:00pm (Melbourne time) Facsimile (03) services@avivagroup.com.au Website Issuer and Responsible Entity Deutsche Managed Investments Limited ABN Level 16, Deutsche Bank Place Cnr. Hunter & Phillip Streets Sydney NSW 2000 Auditor PricewaterhouseCoopers Darling Park Tower Sussex Street GPO Box 2650 Sydney NSW 1171 Contacts If you have any questions regarding your investment or if you want to obtain up-to-date information on the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund, please contact Aviva Investor Services on Important information to remember Units in the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund 1 do not represent deposits or other liabilities of Deutsche Bank AG (ABN ), Deutsche Managed Investments Limited or any other member of the Deutsche Bank AG Group. Investing in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. Although the Fund is capital protected in certain circumstances, neither Deutsche Bank AG, Deutsche Managed Investments Limited, Navigator Australia Limited, any entity in the Deutsche Bank AG Group or the Aviva Group nor any other entity guarantees the performance of the Fund or the repayment of capital invested in the Fund. For further details regarding capital protection see page 8. The capital protection offered by this Fund may, having regard to the basis upon which the initial capital protected price is determined (see page 8), mean that the initial capital protected price may be higher than the price paid for your units this is the 100%+ feature of the Fund. The Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund is the managed investment scheme registered with ASIC as the Pre Select 100%Plus Cap. Protected Aust. Equities (1) Fund ARSN References in this PDS to the Fund or to the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund are references to this managed investment scheme. Responsible Entity Client Services Telephone Monday to Friday 8:30am to 5:30pm (Sydney time) Facsimile (02) cltserv@db.com Website 1. For further details regarding Capital Protection see page 8.

3 Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund Contents You are invited to invest in the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund. We hope you find this document easy to use. We encourage you to read it all before you make any investment decision. Before you start About managed funds About Navigator and Aviva About the issuer and responsible entity Fund features at a glance About the Fund Risks of investing Investing in the Fund Accessing your money Unit pricing Income distributions and reinvestment Fees and other costs Consumer Advisory Warning Additional explanation of fees and costs Keeping you informed Tax Additional information for investors Key dates Fund inception date May 2007 Application period opens June 2007 Capital protection start date June 2007 Application period closes May 2008 Capital protection maturity date May 2013 Applications may be made on and from 17 May 2007, however units in the Fund will not be issued until the application period opens.

4 SECTION ONE: Before you start You should read this Product Disclosure Statement (PDS) carefully before investing in the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund 1. It will help you to decide if this Fund will meet your needs and assists you to compare this fund to others you may be considering. The issuer of units in the Fund and responsible entity of the Fund under the Corporations Act is Deutsche Managed Investments Limited, AFS Licence No , referred to in this PDS as we, us, our, the responsible entity or Deutsche Managed Investments Limited. We are a member of the Deutsche Bank group of companies. Subject to the capital protection offered in respect of the Fund, neither we nor any company in the Deutsche Bank Group promises that you will earn any return on your investment or that your investment will gain or retain its value unless otherwise stated. The capital protection only applies to investments redeemed on the capital protection maturity date. Capital protection is subject to the creditworthiness of the capital protection provider. For further details see page 26. No Deutsche Bank Group company other than Deutsche Bank and Deutsche Managed Investments Limited makes any statement or representation in this PDS. Neither Deutsche Managed Investments Limited nor Deutsche Bank AG or any other member of the Deutsche Bank AG Group endorses any statement regarding Navigator Australia Limited. None of Aviva plc or any of their related companies or their related entities take any responsibility for this PDS except in respect of statements made in relation to the particular Aviva group entity concerned. This Fund is only available in Australia to persons investing through an investor directed portfolio service, master trust, wrap account or Navigator feeder fund ( Portfolio Administration Services ) administered or operated by Navigator or a related company or entity. For further information see page 4. The Fund is not available in any other country. 1. For further details regarding capital protection see page 9. If you have received this PDS electronically the responsible entity will provide a paper copy free on request. Any information contained in this PDS is general information only and does not take into account your individual objectives, tax and financial situation or particular needs or circumstances. You should assess whether the information is appropriate for you with regards to your specific circumstances. We recommend that you get professional advice from your financial adviser and/or your tax adviser before investing. Certain information in this PDS is subject to change and may be updated from time to time. We will notify unitholders of any changes that have a materially adverse impact on their investment or other significant events that affect the information in this PDS. A paper copy of any updated information will be provided to unitholders free of charge on request. Information regarding any Fund updates can be obtained from your financial adviser, or directly from Aviva Investor Services on All references to monetary amounts in this PDS are in Australian dollars (unless otherwise specified). Need help? If you need help about investing generally, then we suggest you speak to a licensed financial adviser. The Australian Securities and Investments Commission (ASIC) can help you check if they re licensed. They have a website at gov.au as well as a helpline you can call on If you have any questions with regard to your investment in the Fund offered by this PDS, or if you want to obtain up-todate information on the Fund, please contact your financial adviser. Alternatively, you can contact Aviva Investor Services on

5 SECTION TWO: About managed funds The Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund is a managed fund. The term managed fund is a general term for funds that pool the money of several investors and are managed by a team of investment professionals. Which managed fund you choose will depend on the investment strategy you wish to use to achieve your financial goals. This is best determined with the assistance of your financial adviser who can help you decide on an investment approach suited to your individual needs. Choosing the right managed fund as part of your investment strategy can be a very effective way of achieving your financial goals. It is important to realise that no two funds are the same and investing in a managed fund should be viewed over the longer term. If you decide to invest in the Fund you must accept that the value of your investment will go up and down, subject to the capital protection offered in respect of the Fund. The capital protection only applies to investments redeemed on the capital protection maturity date. Capital protection is subject to the creditworthiness of the capital protection provider. You should be aware that the capital protected price per unit as at the capital protection maturity date is unlikely to have the same real value as it would today due to the effect of both the time value of money and inflation over the capital protection period. For further details see page 9. Investing in a managed fund can offer a number of benefits to you. These benefits include: professional investment management. Your money is managed by a team of professionals who use their resources, experience and specialist skills to make the investment decisions on behalf of all investors in the fund; and managing investor needs. Investing in managed funds can offer diversification benefits, that is, not putting all your eggs in one basket. Diversification (or spreading your investments around) allows you to be exposed to those investments that are performing well, while minimising your exposure to those investments which are not performing so well, hence smoothing out your investment returns. Diversification can also assist you in maintaining an investment portfolio that suits both your risk and investment return profile. There are several different managed investment structures. Most managed funds are structured so that you buy units in the fund. The number of units you will receive depends on the amount of money invested and the unit price at the date of application. The value of the units will change over time due to fluctuations in the market value of the fund. Within a given structure, managed investments can be further categorised by the type of assets they invest in (including cash, fixed interest, property, shares and alternative investments like infrastructure) and the location of those assets (Australia or overseas). increased purchasing power. The sheer size of a managed fund means it can buy and sell assets at a cheaper cost than an individual investing directly; investment opportunities. Managed funds give you the opportunity to access a range of domestic and international assets that you could not normally access as an individual investor; 3

6 SECTION THREE: About Navigator and Aviva Navigator is part of the Aviva plc group, the world s fifth largest insurance group. Aviva plc is the largest insurer in the United Kingdom and the leading provider of life and pension products in Europe. Globally, the Aviva plc group s main activities are long term savings, funds management and general insurance. In Australia, the Aviva plc group brings investment, superannuation and protection products to the market through the Aviva brand and the Navigator Portfolio Administration Service. The Navigator Portfolio Administration Service was set up in 1990 to help Australians invest and is committed to the ongoing development of innovative and competitive products and services. The Navigator Portfolio Administration Service is now one of the largest portfolio administration services in Australia, with over $17.6 billion 1 in funds under administration. For further details contact your financial planner or Aviva Investor Services on As at 12 January

7 SECTION FOUR: About the issuer and responsible entity, Deutsche Managed Investments Limited Deutsche Managed Investments Limited is part of Deutsche Asset Management, an integral part of Deutsche Bank AG (the Bank ), one of the world s strongest financial institutions. Globally, Deutsche Asset Management manages around A$918 billion 1 on behalf of clients with operations in more than 60 1 countries. In Australia, we are one of a few truly global fund managers with a strong local presence managing over A$36 billion 1, 2 for local clients across international asset classes. The Bank s extensive resources, combined with our established investment capabilities, means investors are offered global expertise and research capacity. 1 As at 31 March, Please refer to our website for the most up-to-date information. 2 Includes funds under management of around A$11 billion and A$2 billion managed under joint venture arrangements with DB RREEF Trust and CKI, respectively. 5

8 SECTION FIVE: Fund features at a glance You are invited to invest in the Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund ( the Fund ). The Fund is an open-ended unlisted unit trust and is a registered managed investment scheme for the purposes of the Corporations Act. The table below is a summary of the key features of the Fund and a guide to where more detailed information can be found in this PDS. Product features Investment objective The Pre Select 100%+ Cap. Protected Aust. Equities (1) Fund aims to provide investors with exposure to Australian shares and cash assets via a portfolio that is managed with the objective to provide long term capital growth, with an element of protection of initial capital invested. There is no guarantee that this investment objective will be achieved. Fund inception date 17 May 2007 Application period 29 June May 2008 Capital protection The value of each unit redeemed on the capital protection maturity date will be at least equal to the capital protected price applying at that time (adjusted for transaction costs). Having regard to the basis upon which the initial capital protected price is determined, the initial capital protected price may be higher than the price paid for your units this is the 100%+ feature of the Fund. For further details see page 8. Capital protection period 29 June May 2013 The capital protection only applies to investments (including distributions which are reinvested) held until and redeemed on the capital protection maturity date. Capital protection is subject to the creditworthiness of the capital protection provider. For further details see page 8. 6

9 Product features (continued) Capital protected price The capital protected price will initially be determined at the end of the application period by reference to the highest net asset value the Fund achieves on the last business day of any one month during the application period (ignoring any distribution entitlements), divided by the number of units on issue that day. Capital protection maturity date 31 May 2013 The capital protected price will be adjusted to take into account the effect of distributions which are reinvested before the capital protection maturity date. For further details see page 8. Suggested minimum investment period The suggested investment period is to the capital protection maturity date. Minimum transaction and balance requirements We recommend that you review the appropriateness of the investment period regularly with your financial adviser to ensure it continues to meet your investment needs. Indirect investors We suggest you contact your Portfolio Administration Service for minimum transaction and balance requirements. What are the costs of investing in the Fund Distributions For details regarding the fees and costs payable, please see page 18. Income distributions Any income available for distribution is usually distributed annually after 30 June. Any distributions will be automatically reinvested as additional units in the Fund as detailed on page 17 of this PDS. The capital protection also applies in respect of reinvestments, however distribution reinvestment reduces the capital protected price per unit. For further details see page 9. Transaction confirmations and reporting Monthly and quarterly investment reports Monthly and quarterly investment reports providing updates on the Fund can be viewed at soon after the end of the relevant month or quarter. Unit pricing Valuation and unit pricing Unit prices are generally calculated on the last business day of each month based upon the net asset value of the Fund divided by the number of units on issue in the Fund. In unusual circumstances, however, unit prices may be calculated more frequently. Unit prices for the last business day of each month from 29 June 2007 to 31 May 2008 will be available at For further details see page 16. 7

10 SECTION SIX: About the Fund The Fund aims to provide investors with exposure to Australian shares via a portfolio that is managed with the objective to provide long term capital growth, with an element of protection of initial capital invested 1. The Fund will invest in one or more managed funds to gain exposure to Australian shares. As at the date of this PDS, the Fund will invest in the van Eyk Blueprint Australian Shares Fund to gain this exposure. The Fund may invest in one or more Australian share funds from time to time (at the responsible entity s discretion) which are consistent with the Fund s investment objective. For the Fund s most recent asset allocation information, please contact your financial adviser or Aviva Investor Services on The Fund will also have exposure to derivative investments and may also have exposure to cash deposits to facilitate the offering of capital protection on the initial capital invested by unitholders. Who is the Fund best suited to? The Fund is best suited to investors who seek: capital protection at the capital protection maturity date; diversified exposure to Australian shares invested across a number of quality investment managers, and investment styles; strong long-term capital growth but seek protection against investment loss; and more certainty in their retirement portfolio. 1 The capital protection only applies to investments held until the capital protection maturity date. Capital protection is subject to the creditworthiness of the capital protection provider. See page 26 of this PDS for details. The Fund is best suited to investors who can accept: a holding period until at least the capital protection maturity date on 31 May 2013; the possibility of losing part of their initial capital invested if units are not held until and redeemed on the capital protection maturity date in accordance with the Fund s withdrawal requirements; and the risk that volatility in investment returns may be experienced. What does the capital protection mean? Normally the net asset value of a fund may rise or fall depending on movements in the value of the underlying fund assets. The capital protection offered by this Fund is intended to lock in the highest net asset value achieved, ignoring any distribution entitlements (discussed below), by the Fund on the last business day of any one month during the application period (29 June May 2008) for an investor who redeems on the capital protection maturity date in accordance with the Fund s withdrawal requirements. This means that, depending on the change in the Fund s net asset value during the application period, the initial capital protected price may be higher than the price paid for your units. This is the 100%+ feature of the Fund. An investor redeeming on the capital protection maturity date (31 May 2013) in accordance with the Fund withdrawal requirements will receive at least the capital protected price for each unit redeemed on that date (less any applicable transaction costs). The capital protected price for all investors will initially be determined at the end of the application period by reference to the highest net asset value achieved by the Fund on the last business day of any one month during the application period, divided by the number of units on 8

11 issue on that day. For the purposes of determining the initial capital protected price, where the end of a month is the end of a distribution period the net asset value will be reduced to take into account distribution entitlements. The capital protected price will also be adjusted downwards to reflect any distributions reinvested prior to the capital protection maturity date. This means, for example, that if you held your initial investment until the capital protection maturity date, it is likely that you will have a greater number of units in the Fund due to distribution reinvestment, and the capital protected price at that time is likely to be lower than the initial capital protected price. However, the amount of your investment which obtains the benefits of capital protection through the Fund should remain the same notwithstanding your investment is represented by more units. The capital protection only applies to units held until and redeemed on the capital protection maturity date in accordance with the Fund s withdrawal requirements. This means that withdrawals of units requested prior to the end of the capital protection period will not receive the benefit of capital protection. Similarly, withdrawal of units after the capital protection maturity date will not get the benefit of capital protection and will be redeemed at the withdrawal price on the date of withdrawal. Where a partial withdrawal of units is made prior to the end of the capital protection period, capital protection will only apply to the remaining units held in the Fund provided that they are redeemed by the investor on the capital protection maturity date in accordance with the Fund s withdrawal requirements. An investor should take care to seek expert advice from their financial adviser well ahead of the capital protection maturity date to determine what their ongoing investment strategy should be. What does the Fund invest in during the capital protection period? During the capital protection period, we will implement a strategy known as Constant Proportion Portfolio Insurance (CPPI) as a mechanism to provide the capital protection in respect of the capital invested by unitholders. Essentially the CPPI strategy involves dynamically allocating the assets of the Fund between a low risk asset class (in this case cash deposits with Deutsche Bank AG (London branch)) and a growth oriented asset class (in this case, the van Eyk Blueprint Australian Shares Fund or any funds we may use in the future). The CPPI strategy aims to ensure that there is sufficient cash on deposit during the capital protection period so that at the capital protection maturity date, units can be redeemed at the capital protected price. In a falling market, the allocation of the Fund to growth oriented assets under a CPPI strategy would normally reduce and could be as low as 0%. Coupled with the CPPI strategy, the Fund will also invest in a derivative instrument issued by Deutsche Bank AG (London branch) in order to cover the risk that the Fund might not hold sufficient cash deposits to deliver the capital protected price on the capital protection maturity date in the event of an unexpected market movement. If this derivative instrument is exercised during the capital protection period, the Fund assets will be allocated wholly to cash deposits for the remainder of the capital protection period until the capital protection maturity date. If the CPPI strategy dictates a relatively high allocation towards the low risk asset class (cash deposits) early in the capital protection period, the Fund s potential for growth during the capital protection period may be adversely impacted. This is because the Fund relies upon the growth assets (the investment in the van Eyk Blueprint Australian Shares Fund or any funds we may use in the future) to provide the Fund with growth. If the Fund holds a substantial amount of cash deposits instead, there will be less opportunity for the Fund to obtain growth beyond the return it can earn on those cash deposits. Further, an investor who withdraws from the Fund prior to the capital protection maturity date will not obtain any benefit from capital protection, notwithstanding that the CPPI strategy will mean the Fund s assets are invested in a manner consistent with that strategy. You should be aware that the capital protected price per unit as at the capital protection maturity date is unlikely to have the same real value as it would today due to the effect of both the time value of money and inflation over the capital protection period. In addition, and as identified above, the capital protected price per unit is likely to reduce over time having regard to the effect of distribution reinvestments. Although it is not likely, the provider of the capital protection could fail to honour its commitments. If this situation arises you could lose some or all of your investment in the Fund. For further details about Deutsche Bank AG see page 26. The responsible entity may from time to time use derivatives in lieu of direct exposure to growth oriented assets. During the capital protection period, the Fund has the following asset allocation investment ranges: Managed funds with exposure to Australian shares Minimum (%) Maximum (%) Cash deposits You should be aware that the investment allocation can change significantly and sometimes quickly. If there is a material change in the nature or liquidity of any managed funds we may invest in, the capital protection provider may require that they be substituted with another fund with similar strategy, objectives, guidelines and investment policy. If this occurs, we will notify unitholders within 30 days of the change occurring. For the most recent asset allocations of the Fund, please contact your financial adviser or Aviva Investor Services on

12 What does the Fund invest in after the capital protection period? After expiry of the capital protection period following the capital protection maturity date, the Fund will no longer be implementing the CPPI strategy involving the dynamic allocation between the low risk asset class and growth oriented asset class. As a result, it is intended that the Fund s asset allocation will be directed predominantly towards the growth asset class. Following the capital protection maturity date, it is intended that the Fund will generally have the following asset allocation investment ranges: Managed funds with exposure to Australian shares Minimum (%) Maximum (%) Cash deposits 0 10 We will generally actively adjust the investment allocation within these investment ranges. However, we may temporarily move outside of these ranges due to factors such as significant cash flows into the Fund. We will aim to bring the Fund back to within its asset allocation ranges as soon as is practicable. You should be aware that the investment allocation can change within the ranges significantly and sometimes quickly. We intend to change the name of the Fund following the capital protection maturity date to reflect the fact that the capital protection has expired. We may also consider accepting further applications into the Fund, and changing the frequency of when we can accept applications and withdrawals. We may also consider terminating the Fund. What about the Fund s size and performance? The Fund was launched on 17 May 2007 so no performance history or asset allocations were available at the date of this PDS. For the most recent fund size, asset allocation or performance information, please contact your financial adviser or Aviva Investor Services on A paper copy of any updated information will be provided to you free of charge on request. It is important to remember that returns are volatile and, subject to the capital protection feature, may go up and down significantly and sometimes quickly. 10

13 SECTION SEVEN: Risks of investing Understanding investment risk All investments are subject to varying risks and generally all go down as well as up in value (that is, subject to the capital protection feature, you can experience investment losses or investment gains). Volatility can be used as a measure of investment risk. In general, the higher the volatility of returns from an investment, the higher the risk and potential return. Different types of investments perform differently at different times and have varying risk characteristics and volatility. You should be aware that the value of your investment will rise and fall depending on the value of underlying assets. Changes in the value of an investment can be significant and can happen quickly. Managing risk You can assist in reducing your overall level of volatility by diversifying your investments across a number of asset classes. This is due to the fact that usually if one asset class moves up, another asset class usually moves down, resulting in a less volatile total investment portfolio and smoothing out of returns. It is important that you plan your investment strategy before investing. This should be discussed with your financial adviser and should take into consideration matters such as: how long you would like to invest for; what level of volatility you are willing to tolerate; the level of diversification of your investment portfolio across the asset classes; and your expected level of return from the Fund (be it growth or income return). The risks associated with investing in a managed fund may be general or specific to a particular asset class or fund. The responsible entity aims to manage the impact of the risks of this Fund by using prudent investment guidelines. We can t eliminate all risks and can t promise that the way we manage them will always be successful. In such an event, the amount of any distributions from the Fund may be lower than expected, or there may be none at all, and the value of your investment could fall. General risks Investment objective risk is the risk that an investor s objectives will not be met by their choice of investments. Liquidity risk exists when particular investments are difficult to purchase or sell, preventing a fund from repositioning or rebalancing within a timely period and at a fair price. While every effort is made for the Fund to be able to meet all redemptions, the nature of the underlying securities and the capital protection mechanism means that in certain circumstances, we may not be able to meet all redemption requests soon after they are received. Inflation risk is the risk that the prices of goods and services will rise faster than the value of the investments. Manager risk refers to the risk that the underlying managers of managed funds with exposure to Australian shares we may invest in will not achieve their performance objectives or not produce returns that compare favourably against their peers. Risks specific to this Fund The main investment risks that apply to this Fund are explained below. Counterparty risk. The Fund is exposed to counterparty risk (by virtue of entering into various contracts with Deutsche Bank AG (London branch)) to facilitate the 11

14 provision of capital protection. Although it is not likely, the provider of the capital protection, Deutsche Bank AG (London branch) could fail to honour its commitments. If this occurs, an investor could lose some or all of their investment. For more information about Deutsche Bank AG, please refer to page 26. Manager performance risk/potential cash exposure. If the CPPI strategy dictates a relatively high allocation towards the low risk asset class (cash deposits) early in the capital protection period, the Fund s potential for growth during the capital protection period may be adversely impacted. This is because the Fund relies upon the growth assets to provide the Fund with growth. If the Fund holds a substantial amount of cash deposits instead, there will be less opportunity for the Fund to obtain growth beyond the returns it can earn on those cash deposits. Substitution risk. If there is a material change in the nature or liquidity of any managed funds we may invest in, the capital protection provider may require that this fund be substituted with another fund with similar strategy, objectives, guidelines and investment policy. Active management. The underlying investment managers actively seek attractive securities to invest in, rather than investing in a predetermined basket of securities such as an index. An underlying fund may underperform relative to its stated primary investment universe due to securities choices and short term variations in asset allocation away from the primary investment universe. Individual investment risk. Individual investments the underlying managers buy, for example, securities on a stock exchange, can and do fall in value for many reasons such as changes in a company s internal operations or management, or in its business environment. The underlying managers normally aim to reduce these risks with careful analysis of research from many sources and by talking to those people who run companies and are responsible for changes which may impact on our investments. Market risk. Economic, technological, political, tax, regulatory or legal conditions, and even market sentiment, can (and do) change, and changes in the value of investment markets can affect the value of the investments in the underlying funds and therefore the Fund. We use research and analysis to form a view on these matters as best we can and then rebalance the investment mix of the Fund to reduce their impact. Fund risk. Risks particular to a managed fund include potential termination of a fund, change of the fees and expenses, or change in investment professionals. There is also a risk that investing in a fund may give different results than investing individually because of income or capital gains accrued, and the consequences of applications and withdrawals by other investors. We aim to keep this risk to a minimum by monitoring the Fund and acting in your best interests. Risks of small capitalisation investing. The underlying funds may invest in small capitalisation securities, which generally have a lower degree of liquidity (i.e. they are generally more difficult to trade) than larger capitalisation securities. Underlying strength of the cashflows. Returns are affected by the underlying strength of the cashflows, balance sheets and management of the entities in which the underlying funds invest. Distributions and taxing risk. As Fund distributions are reinvested, unitholders will have to pay tax on distributions from their own sources (and will need to ensure that such sources are sufficient). For further information about distributions, please refer to page 17. Use of financial derivatives and associated risks In addition to derivatives used for capital protection purposes, derivatives may be used to reduce risk or gain exposure to other types of investments when appropriate. Derivatives are not used by the Fund for speculative purposes, or to gear the Fund. When derivatives are used, the Fund must be in a position to pay all of the associated obligations from the investments of the Fund. Risks associated with using these tools might include the values of the derivative failing to move in line with the underlying asset, potential illiquidity of the derivative, and counterparty risk (this is where the counterparty to the derivative contract cannot meet its obligations under the contract). The aim is to keep derivative risk to a minimum by constantly monitoring the Fund s use of derivatives, by making sure that its obligations are met with respect to the derivative contracts and by entering into derivative contracts with reputable counterparties. The responsible entity has a Derivatives Risk Statement (DRS) which is reviewed annually. The DRS summarises the policies we have in place covering the use of derivatives, the controls on their use and the processes for assessing compliance with those controls. A DRS is available upon request from the responsible entity s client service team toll free on

15 SECTION EIGHT: Investing in the Fund Your interest as an indirect investor in the Fund Investment in this Fund is only available through a Portfolio Administration Service administered or operated by Navigator or related company or entity. References in this PDS to the unitholder are references to the operator/trustee of the Portfolio Administration Service. People who invest through a Portfolio Administration Service are referred to as indirect investors. We authorise the use of this PDS as disclosure to indirect investors and prospective indirect investors acquiring interests in the Fund through the Portfolio Administration Service. The rights and liabilities of indirect investors investing through the Portfolio Administration Service are governed by the terms and conditions of the Portfolio Administration Service. Indirect investors should carefully read the relevant terms and conditions before investing in the Fund. As an indirect investor you may use the information in this PDS to direct the Portfolio Administration Service to acquire units in this Fund on your behalf. Investors investing in the Fund indirectly via a Portfolio Administration Service do not themselves become investors in the Fund, and accordingly have no rights as a unitholder. The operator/trustee of the Portfolio Administration Service becomes the unitholder and acquires these rights. The offer document for the relevant Navigator Portfolio Administration Service has further details. For example, as an indirect investor: you won t receive reports directly from the Fund, but you will get updates from your Portfolio Administration Service you do not attend or vote at Fund unitholder meetings there will be a time lag from when you request an investment or redemption and when it is processed information is not directly available from the Fund, however you can contact your Portfolio Administration Service with your requests any complaints you have should be directed to your Portfolio Administration Service the tax information in this PDS does not specifically cater for you as an indirect investor. You should refer to the relevant Portfolio Administration Service offer document for further information. The offer document for the relevant Navigator Portfolio Administration Service has further details in relation to the rights and liabilities of indirect investors, including information on any fees and charges applicable to your investment through the Portfolio Administration Service. Information regarding how to apply for units in the Fund (including an application form where applicable) will also be contained in the offer document for the relevant Portfolio Administration Service. To invest in this Fund you will need to complete the Investment Allocation Authority found in the relevant Portfolio Administration Service offer document. If you want to make an additional investment or withdraw from this Fund you will have to direct the request to the Portfolio Administration Service to do so. We will provide confirmation of transactions, transaction statements, tax statements and financial reports to the operator/trustee of the Portfolio Administration Service. You should also refer to the relevant Portfolio Administration Service offer document for your rights and entitlements, including any relevant cooling off provisions and minimum application amounts. This is available from your financial adviser. You will also incur the fees and expenses applicable to the Portfolio Administration Service, as well as the Fund fees and costs. 13

16 Making an application Applications by the Portfolio Administration Service into the Fund can only be made before 2:00pm on the fourth last business day of each month from the Fund inception date (17 May 2007). Units will be issued during the application period, which commences on 29 June 2007 and closes on 31 May For the purpose of this PDS business day means any day on which banks are open for business in Sydney excluding a Saturday, Sunday or public holiday. No further applications can be made after this date, except for reinvestment of distributions, unless otherwise advised. The effective date for valid applications by the Portfolio Administration Service will be the date our administrators receive both a valid application form, and the application money is received into our bank account. If these are received by the administrator before 2:00pm on the fourth last business day of the month, units will be issued at the price calculated for the last business day of the month. If a valid application is received by the administrator after 2.00pm on the fourth last business day of the month, units will be issued at the unit price calculated for the last business day of the following month. You should check with your Portfolio Administration Service to determine the cut-off times applicable to you at the time of your application, any minimum application amounts and for details regarding Portfolio Administration Service transaction statements. Additional investments Applications for additional investments by the Portfolio Administration Service into the Fund during the application period can be made in accordance with the procedure described above. However, no further additional contributions can be made after 31 May 2008 until after the capital protection maturity date, except for reinvestment of distributions. We may accept further applications after the capital protection maturity date. Additional investment requests during the application period should be directed to your Portfolio Administration Service. You should check with your Portfolio Administration Service to determine the cut-off times applicable to you and any minimum application amounts. Investor identification In order to comply with regulations aimed at the prevention of money laundering, you may be required to provide verification of your identity and/or the source of the funds being invested. Where such information is requested from you, your application will be processed on the date on which the requested documents are received in a satisfactory form. We may, in our absolute discretion, accept or reject any application in whole or in part. In certain circumstances we can suspend the processing of applications. Please see under the heading Constitution on page 27 for more information. 14

17 SECTION NINE: Accessing your money You may request to withdraw part or all of your investment at any time. Funds will be paid in accordance with the terms of your Portfolio Administration Service. Withdrawals requested prior to the end of the capital protection period will not receive the benefit of capital protection. Where a partial withdrawal is made prior to the end of the capital protection period, capital protection will continue to apply to the remaining units held in the Fund if they are redeemed on the capital protection maturity date in accordance with Fund withdrawal procedures. Under these circumstances, the balance that would be payable on the capital protection maturity date would be determined by calculating the number of units held on the capital protection maturity date multiplied by the higher of the capital protected price or the redemption unit price for that date. Withdrawals made up until 30 June 2009 may be subject to a greater sell differential on redemption as detailed in the Fee details section on page 21. Withdrawal payments will not be paid to third parties. Withdrawal requests should be directed to your Portfolio Administration Service. Please refer to the relevant Portfolio Administration Service offer document for details on minimum withdrawal amounts. Making a withdrawal Valid withdrawal requests received from the Portfolio Administration Service by the administrator before 2:00pm on the fourth last business day of each month will be processed using the unit price next calculated after 2:00pm on the last business day of the month. Valid withdrawal requests received from the Portfolio Administration Service by the administrator after 2:00pm on the fourth last business day of the month will be processed using the unit price calculated for the last business day of the following month. Valid withdrawal requests are normally paid within 10 business days of the last business day of the month (though we have a much longer period to do so in accordance with the Constitution of the Fund and may suspend the redemption of any units in certain circumstances). Please see under the heading Constitution on page 27 for more information. You should check with your Portfolio Administration Service to determine the cut-off times applicable at the time of your withdrawal request and for details regarding Portfolio Administration Service transaction statements. In certain circumstances we can suspend the redemption of any units. Please see under the heading Constitution on page 27 for more information. The Fund is not listed on any stock exchange like the Australian Stock Exchange, so units cannot be sold through a stockbroker. 15

18 SECTION TEN: Unit pricing Unit prices are generally calculated on the last business day of each month based upon the net asset value of the Fund divided by the number of units on issue in the Fund. In unusual circumstances, however, unit prices may be calculated more frequently. There may be a short delay in determining unit prices where the Fund or its underlying investments are determining distribution entitlements. The Constitution allows unit prices to be adjusted for transaction costs. For more information, please see the Fees and Other Costs section of the PDS on page 21. We will exercise any discretion that we have under the Constitution for the Fund in relation to unit pricing in accordance with our unit pricing policy. We will provide unitholders with a copy of our unit pricing policy at any time on request, at no charge. Monthly unit prices for the Fund can be obtained by contacting Aviva Investor Services on Timing changes Unitholders will be notified if we change the frequency of distributions or valuing the Fund, or the frequency or timing of unit pricing. 16

19 SECTION ELEVEN: Income distributions and reinvestment The Fund intends to distribute income, if any, annually, calculated as at 30 June to unitholders in proportion to unitholdings on these dates by no later than two months from the end of the relevant distribution period. We may cause a special distribution of capital or income to be made at any time during the year. All income distributions on units in the Fund will be automatically reinvested as additional units in the Fund. Such units will be issued at a price determined immediately after the end relevant distribution period, and will not be subject to any transaction costs. However we may, at any time, notify unitholders that subsequent distributions will be paid in cash and not be reinvested and subsequently withdraw any such notification. capital protected price. For further details see page 9. Please note that although unitholders will not physically receive distributions, they will have to pay any tax on those distributions from their own sources. For further details, see page 24. Unit prices fall after the end of the distribution period to reflect the distribution entitlements. Particularly if a unitholder invests just before the end of a distribution period, they may find that they quickly receive some of their capital as income. Similarly, if a unitholder withdraws their investment before the last day of the distribution period, they will receive their share of any accrued income as capital. Reinvested distributions will receive the benefit of capital protection. However, they will also impact on the per unit 17

20 SECTION TWELVE: Fees and other costs 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 investor services justify higher fees and costs. You may negotiate to pay lower contribution fees and management costs where applicable. Ask the fund or your financial adviser. To find out more If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed investment fee calculator to help you check out different fee options. Please note that indirect investors should contact their Portfolio Adminstration Service to negotiate fees and management costs. Fees and other costs This document shows fees and other costs you may be charged. These fees and costs may be deducted from your money, the returns on your investment or from the Fund assets as a whole. Taxes are set out in the Tax 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. 18

21 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 Service fees Investment switching fee: The fee for changing to investment options Nil Nil A buy differential will apply when money moves into the Fund. For more information see the Additional Explanation of Fees and Costs section below. Nil A sell differential will apply when money moves out of the Fund. The sell differential will differ depending upon when a withdrawal takes place. For more information see the Additional Explanation of Fees and Costs section below. Nil 0.80% per annum of the net asset value of the Fund. Nil Not applicable Not applicable Not applicable Not applicable This fee is calculated and accrued daily and paid monthly from the Fund. Not applicable Example of annual fees and costs This table gives an example of how the fees and costs for this product can affect your investment over a 1 year period. You should use this table to compare this product with other managed investment products. Example Balance of $50,000 with a contribution of $5,000 during year Contribution fees Nil For every additional $5,000 you put in, you will be charged $0. PLUS Management costs 0.80% And, for every $50,000 you have in the Fund you will be charged $ each year. EQUALS Cost of fund 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: $400.00* What it costs you will depend on the investment option you choose and the fees you negotiate with your fund or financial adviser. * Assumes the $5,000 was invested at the end of the year. Additional fees may apply. 19

22 Example of annual fees and costs (continued) A buy and sell differential will apply to contributions and withdrawals from the Fund respectively. Please see the Additional Explanation of Fees and Costs section below for more information. Indirect investors will also incur the fees and expenses applicable to their Portfolio Administration Service. Please note this is an example. The actual cost of investing in year one in the Fund will be dependent on how much is invested, the investment balance of an account (as this varies over time), the number and type of transactions made over the year, and the net asset value of the Fund. If you want to work out your own fee structure and the impact this has, then ask your financial adviser for help or visit where ASIC offers a fee calculator to help you compare the fees of different products. The Indirect Cost Ratio (ICR) used to calculate the management costs in the example above illustrates the cost of investing through a managed fund, compared with investing directly in the underlying assets of the Fund. The ICR is calculated by dividing the total fees and expenses (but not transaction costs) by the Fund s total average net assets over a financial year and expressing the figure as a percentage of the average net asset value of the Fund. The capital protection mechanism is an asset of the Fund and therefore is not reflected in the Fund s ICR. As this is a new Fund, at the date of this PDS, no historical ICR figures are available and the ICR used in the example above has been calculated based on a reasonable estimate of the expected applicable fees and costs for the Fund. 20

23 SECTION THIRTEEN: Additional explanation of fees and costs Cost of protection As part of providing the capital protection, the Fund will hold a derivative instrument as part of the assets of the Fund. This instrument will cost the Fund 0.60% per annum, based on the net asset value of the Fund. The capital protection mechanism is an asset of the Fund and therefore is not reflected in the Fund s management costs or Indirect Cost Ratio (ICR). The cost of the capital protection will apply from the start of the application period and will continue to be charged up until the capital protection maturity date, even if the derivative instrument described on page 9 is exercised prior to this date. Navigator have agreed with Deutsche Bank AG (the derivative counterparty) to subsidise the cost of capital protection. In the event that this arrangement is terminated for any reason, then the cost of the derivative instrument will increase to 0.65% per annum, based on the net asset value of the Fund. Capital protection will not apply after the capital protection maturity date. Transaction costs (buy/sell differential) When an investor applies for or withdraws all or part of their investment, we apply what is called a buy/sell differential to the transaction. The buy/sell differential is an additional cost to investors. It operates to increase (for each application) or decrease (for each withdrawal) the unit price received by the investor to recover transaction costs associated with buying and selling the Fund s assets, such as broking charges associated with the purchase or sale of securities. The purpose of the buy/sell differential is to protect long-term investors from the costs associated with those investors who come into the Fund and leave the Fund. The current buy differential for units in the Fund as at the date of this PDS is +0.25%. For example, a buy differential on an application of $25,000 into the Fund would be $ The current sell differential, ignoring any component referable to the time of withdrawal, for units in the Fund as at the date of this PDS is -0.25%. The sell differential will be increased to include a component which depends upon when the withdrawal occurs, as set out below: Time of withdrawal Additional % added to sell differential Withdrawals satisfied up to and including 30 June % Withdrawals satisfied after 30 June 2008 and up to and including 30 June % Withdrawals satisfied after 30 June % 21

24 The time related component of the sell differential may be waived in whole or part at the responsible entity s discretion. We would always provide unitholders one (1) month s notice of any proposed change to the buy/sell differential. Maximum fees we are allowed to charge We may increase all the fees noted above, or introduce new fees due to reasons such as changing economic conditions and changes in regulations. Under the Constitution, the responsible entity can charge the following maximum fees: contribution fees (entry fees): 2% of your application money for units, withdrawal fees (exit fees): 2% of the withdrawal price of units; and the management fee component of management costs: 2% per annum of the net asset value of the Fund. We would always provide unitholders with at least one (1) month s notice of any proposed fee change. This notice period should give unitholders sufficient time to withdraw from the Fund if so desired. We cannot charge more than the Constitution allows (to change the Constitution in this regard, we would need to obtain unitholder approval). Different fees for different investors Individual negotiation of management costs and transaction costs may be available to sophisticated and professional investors, as defined in the Corporations Act, such as IDPS operators/superannuation master trusts. Differential fees may be charged but only in accordance with the Corporations Act 2001 requirements and any ASIC Class orders on differential fees. We are not permitted to enter into individual fee arrangements with retail investors. Taxation All fees in this PDS are shown inclusive of the net effect of Goods and Services Tax (GST) unless otherwise stated. For further information regarding the taxation implications of an investment in the Fund, please refer to page 24. Financial adviser remuneration Dealer groups and your Portfolio Administration Service, Navigator, may receive certain payments and other nonmonetary benefits from us, such as business and technical support, professional development and entertainment. The provision of such benefits is governed by our Alternative Remuneration Policy. These payments and benefits are not an additional cost to unitholders. Alternative brokerage arrangements In managing the Fund, the responsible entity or its delegates may deal through a broker, dealer or market-maker pursuant to an alternative brokerage arrangement or agreement. The responsible entity or its delegates may receive certain benefits under these arrangements. Our policy is to only enter into arrangements if the only benefits that may be provided are for goods and/or services that can reasonably be expected to assist in the provision of investment services to the Fund and/or provide demonstrable assistance to us in the performance of our investment decision making. Register of alternative forms of remuneration The responsible entity maintains a register of material forms of remuneration paid to distributors of our products, or which may be received from providers of products available through the responsible entity. The register is publicly available and can be accessed by contacting the client service team for the responsible entity on

25 SECTION FOURTEEN: Keeping you informed We will provide certain reports and statements to the Portfolio Administration Service. The Portfolio Administration Service will provide you with all relevant reports such as confirmation of transaction reports, distribution statements, tax statements and financial statements. The first annual financial statement to be prepared for the Fund will be for the 2007/08 financial year. Your reporting rights and entitlements will be outlined in the relevant Portfolio Administration Service offer document. Certain information in this PDS is subject to change and may be updated from time to time. We will notify the Portfolio Administration Service of any changes that have a materially adverse impact on them as a unitholder in the Fund or other significant events that affect the information in this PDS. A paper copy of any updated information will be provided to the Portfolio Administration Service, free of charge, on request. Information regarding any Fund updates can be obtained by contacting your financial adviser, or Aviva Investor Services on

26 SECTION FIFTEEN: Tax Investing in the Fund has tax and potential social security implications, depending upon an investor s particular situation. The summary below reflects the fact that the unitholder is the Portfolio Administration Service rather than you directly. We recommend that you carefully read the relevant offer document for the Portfolio Administration Service and obtain professional advice on the tax implications of investing. This PDS provides general information only. The unitholder and each investor s situation is different and tax laws may change. The Fund is resident in Australia for tax purposes. The Fund is generally not liable for Australian income tax as the entire taxable income of the Fund will be distributed each year. Will the unitholder or investors in the Portfolio Administration Service be liable to pay tax on income received from the Fund? A unitholder in the capacity of a trustee of a separate trust will include the taxable share of the Fund as net income of that trust, even though the cash distribution will be reinvested as additional units in the Fund. A share of taxable income for a year may exceed the amount of the cash distribution for that year. The reinvestment of distributions means that you (as an investor in the Portfolio Administration Service) may have to pay tax on distributions from your own sources. The distributions from the Fund will be net of any tax withheld or incurred (for example, for the non-quotation of a tax file number or of non-resident withholding tax). The benefits of any imputation or foreign tax credits received by the Fund are generally passed on to unitholders. The unitholder will be able to pass these tax credits on to you. Your ability to utilise these tax credits will depend upon your own particular taxation circumstances, including your level of taxable income and marginal tax rate for the financial year to which the credits relate. Each year, the unitholder will be sent a tax statement that will indicate the composition of distributions from the Fund, including any revenue or capital gains, foreign income and tax credits. You should refer to your Portfolio Administration Service for details of the tax statements which will be provided to you. The managed funds the Fund invests in, through its investment in other funds, may beneficially hold investments in companies or trusts located outside Australia. Under the Foreign Investment Fund ( FIF ) tax rules, the taxable income of the Fund can include unrealised gains attributable to investments held at the end of the financial year in certain foreign companies and trusts, unless the investments fall within certain exceptions. It is our intention to manage the portfolio of investments held by the Fund such that no FIF liability will arise in the Fund. However, if we are unable to achieve this, the annual tax statement to unitholders will show the additional amount required to be included in their tax return. 24

27 Will the unitholder or investors in the Portfolio Administration Service be liable for tax when they leave the Fund? If the unitholder disposes of units in the Fund (by way of withdrawal or otherwise) it may derive a capital gain or incur a capital loss. You, as an investor in the Portfolio Administration Service, should be entitled to a share of any capital gain. You may not be entitled to a share of a capital loss. A capital gain or loss calculation may be affected by any non-taxable amounts previously received from the Fund. Do you need to give your tax file number or Australian business number? It is not compulsory for a unitholder to quote a tax file number, exemption or Australian business number, but if one of these is not quoted, then the Fund is required to deduct tax from any income distribution payable at the maximum personal tax rate plus Medicare levy and any other applicable government charges. We are authorised to collect TFNs under tax law. 25

28 SECTION SIXTEEN: Additional information for investors Related party transactions The Fund may be involved in related party transactions, such as using a related party broker, investing in another fund or assets of which the responsible entity or its associate is the responsible entity, manager, trustee or promoter, or transferring assets from such a fund. Any such arrangements are subject to strict legal and compliance guidelines to protect the interests of unitholders, including that they be allowable under the terms of the Fund documentation and are on an arm s length basis. The responsible entity, Deutsche Managed Investments Limited, is a wholly-owned subsidiary of Deutsche Bank AG. Deutsche Bank AG will enter into the deposit agreement and derivative instrument described below with the responsible entity on arm s length commercial terms. Capital protection contracts with Deutsche Bank The Fund offers a level of capital protection at the capital protection maturity date through various contracts it enters into with Deutsche Bank AG. Deutsche Bank AG is a banking institution and a stock corporation incorporated under the laws of Germany. Deutsche Bank is the parent company of a group consisting of banks, capital market companies, fund management companies, property finance companies, instalment financing companies, research and consultancy companies and other domestic and foreign companies. Further information on Deutsche Bank is available on the bank s website, As noted on page 9, as part of its CPPI strategy, the responsible entity may invest part of the Fund in cash deposits held with Deutsche Bank AG (London branch). Under the terms of the deposit agreement, Deutsche Bank AG will pay an agreed amount to the Fund on the capital protection maturity date, provided that the Fund deposits cash into the deposit account as notified by Deutsche Bank AG from time to time. The amounts held on deposit are determined by reference to an agreed Bond Floor. The Bond Floor is the present value (expressed as a percentage of the notional amount) of present and future payments under a notional discount bond used by Deutsche Bank to determine the amount of cash required to be held at any time during the capital protection period in order to deliver the agreed amount on the capital protection maturity date. Coupled with the CPPI strategy, the Fund will also invest in a derivative instrument issued by Deutsche Bank AG (London branch). The purpose of this instrument is to cover the risk that in the event of an unexpected market movement, the net asset value of the Fund drops below the Bond Floor, and the amount of cash held under the deposit agreement with Deutsche Bank AG is insufficient to deliver the agreed amount on the capital protection maturity date. The Fund will acquire an AUD denominated Fund linked CPPI gap risk put option issued by Deutsche Bank AG (London branch) which will terminate on the capital protection maturity date. If the net asset value of the Fund falls below the Bond Floor during the capital protection period, the gap risk put option will be exercised automatically. When this occurs, Deutsche Bank AG will deliver cash equal to the gap between the net asset value of the Fund and the Bond Floor into the Fund cash deposits held under the deposit agreement. Once the gap risk put option has been exercised, the put option will terminate and the Fund assets will be allocated wholly to cash deposits for the remainder of the capital protection period. 26