EQT Intrinsic Value International Sharemarkets Fund

Transcription

1 ARSN APIR MMC0110AU EQT Intrinsic Value International Sharemarkets Fund Product Disclosure Statement (Indirect Investors) This Product Disclosure Statement (PDS) was issued on 1 December This PDS is for EQT Intrinsic Value International Sharemarkets Fund ARSN (referred throughout this PDS as the IVIS Fund or the Fund ). The PDS has been prepared and issued by Equity Trustees Limited ABN , Australian Financial Services Licence (AFSL) number in its capacity as the responsible entity of the Fund (referred throughout this PDS as the Responsible Entity, EQT, us or we ). The investment manager of the Fund is Intrinsic Value Investments Limited who is referred to throughout this PDS as the Investment Manager or IVI. The Responsible Entity has authorised the use of this PDS as disclosure to investors and prospective investors of an investor directed portfolio service, master trust, wrap account or an investor directed portfolio servicelike scheme (IDPS). This PDS is only available for use by persons applying for units through an IDPS ( Indirect Investors ). The operator of an IDPS is referred to in this PDS as the IDPS Operator and the disclosure document for an IDPS is referred to as the IDPS Guide. If you invest through an IDPS, your rights and liabilities will be governed by the terms and conditions of the IDPS Guide. Investors should carefully read the terms and conditions before investing in the Fund. Indirect Investors should note that you are directing your IDPS Operator to arrange for your money to be invested in the Fund on your behalf. Indirect Investors do not become unitholders in the Fund or have rights of unitholders. The IDPS Operator becomes the unitholder in the Fund and acquires these rights. The IDPS Operator can exercise or decline to exercise the rights of a unitholder on your behalf according to the arrangement governing the IDPS. Indirect Investors should refer to their IDPS Guide for information relating to their rights and responsibilities as an investor through the IDPS, including information on any fees and charges applicable to your investment. Information regarding how to apply for units in the Fund (including an application form where applicable) will also be contained in the IDPS Guide. Please ask your adviser or IDPS Operator if you have any questions about investing in the Fund through an IDPS. EQT accepts no responsibility for IDPS Operators or any failure by an IDPS Operator to provide investors with a current version of this PDS as provided by EQT or to withdraw the PDS from circulation if required by EQT. This PDS is prepared for your general information only. It is not intended to be a recommendation by the Responsible Entity, any associate, employee, agent of officer of the Responsible Entity or any other person to invest in the Fund. This PDS does not take into account the investment objectives, financial situation or needs of any particular investor. You should not base your decision to invest in the Fund solely on the information in this PDS. You should consider the suitability of the Fund in view of your financial position and investment objectives and needs and you may want to seek advice before making an investment decision. See the Glossary for important terms used in this PDS. The Responsible Entity and the Investment Manager and their respective employees, agents or officers do not guarantee the success, repayment of capital or any rate of return on income or capital or investment performance of the Fund. Units in the Fund are offered and issued by the Responsible Entity to the unitholder on the terms and conditions described in this PDS. The offer made in this PDS is available only to persons receiving this PDS in Australia (electronically or otherwise). Certain information in this PDS is subject to change. We will notify you of any changes that have a materially adverse impact on you, or other significant events that affect the information contained in this PDS. Any updated information which is not materially adverse may be obtained: by calling EQT Client Services on by visiting our website at A paper copy of any updated information will be provided free of charge on request. Responsible Entity Equity Trustees Limited Level 2, 575 Bourke Street, Melbourne, Vic 3000 Telephone Facsimile Unless otherwise stated, all fees quoted in the PDS are inclusive of GST, after allowing for an estimate for Reduced Input Tax Credits (RITCs), and all amounts are in Australian dollars. Page 1 of 13

2 Fund at a Glance Name of Fund EQT Intrinsic Value International Sharemarkets Fund ARSN APIR Code MMC0110AU Fund inception date 12 April 2002 The EQT Intrinsic Value International Sharemarkets Fund is designed for investors seeking Investment Objective medium to long term capital growth and income potential through an investment in selected international sharemarkets, excluding Australia using OPALs. The Fund may hedge currency exposure from time to time. Investments held Investments in the international sharemarkets will be made using OPALS. Consult your IDPS Guide to comply with any minimum initial or additional investment Minimum initial investment amounts, minimum withdrawal amounts and minimum balance requirements of your IDPS Operator. Access to your money 1 Usually within 14 days of receiving a request from your IDPS Operator. Valuation and unit price Generally determined each Business Day based on the Net Asset Value (NAV) of the Fund. Income distribution frequency At least annually (30 June) Management Costs % per annum Buy/Sell spread Buy +0.15% / Sell -0.15% Minimum suggested investment timeframe 6 years Risk profile High Fund size as at 31 October 2008 $221 million Benchmark MSCI World Index, net dividends reinvested (AUD) (unhedged) About the Responsible Entity Equity Trustees Limited Equity Trustees Limited (EQT) is a publicly listed company on the Australian Stock Exchange. Established as a trustee and executorial service provider by a special act of the Victorian Parliament in 1888, today EQT is a dynamic financial services institution which continues to grow the breadth and quality of the products and services which it offers. Specialist services of EQT include the provision of estate management services, trustee services, will preparation, financial and taxation advice, personal investment advice including superannuation and responsible entity services for external fund managers such as Intrinsic Value Investments Ltd. EQT also assists not-for-profit and charitable organisations with their services and financial product needs and offers philanthropy advice to families and individuals seeking to establish charitable trusts. EQT is committed to acting in the best interests of its clients via wealth management solutions over a range of asset classes carrying different risk profiles. About the Investment Manager 3 Intrinsic Value Investments Limited EQT has appointed Intrinsic Value Investments Limited (ABN ) as the investment manager of this Fund (Investment Manager). The Investment Manager s methodology is based on the view that all investments have an Intrinsic Value and this can be calculated by measuring the projected future cash earnings from any investment. The Investment Manager uses investment research and advice from Valu-Trac Investment Management Limited (VIML), a UK-based investment management company founded in 1985 specialising in international investments. The Valu-Trac s investment database dates back to 1973 (but not it s proprietary research). By applying this research methodology to international markets, the Investment Manager believes it is able to identify opportunities that often lead to the generation of superior future profits if the market becomes willing to pay IVI s assessed valuation for these investments. Intrinsic Value is a key measurement used by the Investment Manager, being an objective measure based on an aggregate of each country s earnings stream adjusted to allow direct comparisons to be made between overseas markets. This comparison is not otherwise possible due to the differences brought about by local market conditions, (such as) accounting and tax policies. Intrinsic Value enables a direct comparison of any investment (i.e., stock, bonds, currencies and equities) in order to identify opportunities and risks in individual securities and markets. The use of this proprietary methodology, allows the Investment Manager to identify those countries possessing the most attractive equity Intrinsic Value. 1. Refer to Access to your money section for further details. 2. This is an estimated figure which includes the responsible entity fee and estimated expense recoveries. This figure includes GST and an estimate for RITC. Refer to Fees and Other Costs for further details. 3. Equity Trustees Limited may change the Investment Manager for the Fund at any time, without prior notice to investors. Page 2 of 13

3 About the Fund Investment objective The objective of EQT Intrinsic Value International Sharemarkets Fund is to provide investors with exposure to selected international sharemarkets of developed countries, excluding Australia. The Fund aims to achieve this by holding investments in a minimum of six up to a maximum of 15 sharemarkets at any time. The Fund may hedge currency exposure from time to time. Investments held The EQT Intrinsic Value International Sharemarkets Fund invests in the sharemarkets of those countries where Intrinsic Value is considered by the Investment Manager to be most attractive. Earnings and growth projections for stockmarkets are aggregated within each country and adjusted to identify the countries whose stockmarkets may be expected to generate the highest returns. Upon determining which countries and what percentage in each it will invest in, the Investment Manager executes its decision by purchasing an Optimised Portfolio As Listed Securities (OPALS) for each country. OPALS comprise a basket of stocks designed to replicate each country s widely used stock market index. They are a type of security often referred to as an Exchange Traded Fund (ETF). ETFs reduce the risks inherent with owning individual global stocks and allow timely and cost efficient settlement of buy/ sell transactions. Importantly, in using OPALS, the Investment Manager may convert the OPALS it has purchased to direct ownership of the underlying shares if it so chooses. The Fund may use Forward Currency transactions to reduce currency risk. Such derivatives are not used speculatively and when used are only for hedging purposes. The Investment Manager also ensures that the Funds can pay any obligations which come with the use of Forward Currency transactions. (Refer to Currency management section). Neither Equity Trustees nor the Investment Manager takes into account labour standards or environmental, social or ethical considerations in the selection, retention and realisation of investments in the Fund. The Intrinsic Value investment strategy Investing in a diverse group of international equities has historically been attractive as it offers exposure to industry categories and opportunities that may be inadequately represented on the Australian securities exchange. EQT Intrinsic Value International Sharemarkets Fund takes this approach to a broader level by selecting countries and country weightings instead of individual companies. Investing in a diversified portfolio of countries using exchange traded funds (ETFs) achieves this broad exposure. ETFs are listed securities that are designed to give exposure to an entire market or a segment of a market, rather than just to a particular company. Growth projections are assessed within countries by the Investment Manager to identify which markets possess the most attractive Intrinsic Value and therefore are expected to generate the highest returns. Currency management Currency exposure is managed separately to the individual country selections. The Investment Manager may use Forward Currency transactions to hedge the portfolios against potentially adverse currency movements, within the following criteria: the total exposure to Forward Currency transactions cannot exceed the total gross asset value (excluding cash); and the maximum exposure to Forward Currency transactions in any single currency cannot be greater than the relevant country s market capitalisation weighting in the MSCI World Index OR the actual physical exposure of the portfolio to that country. Asset allocation as at 31 October 2008 North America Europe Asia Investment universe is 22 countries/sharemarkets 1 Minimum number held: 6 Maximum number held: 15 United States Canada Austria Finland Italy Sweden Switzerland Germany France United Kingdom Spain Norway Belgium Denmark Netherlands South Korea Japan Hong Kong Singapore New Zealand Malaysia Taiwan Cash Minimum: 0% Maximum: 5% 1. While the investment universe comprises 22 countries, at the date of this PDS, there are only 19 countries which currently meet the investment data quality criteria required by the Investment Manager for the Fund. Page 3 of 13

4 Country allocation as at 31 October 2008 United States 30.92% Cash 1.69% Canada 15.45% Japan 10.17% Sweden 4.53% United Kingdom 20.81% Singapore 4.39% Switzerland 12.04% Fund Performance to 31 October 2008 For the most recent Fund performance, and more detailed historical performance, please visit the Equity Trustees Limited Web page The Responsible Entity and the Investment Manager do not guarantee the capital, any rate of return on income or capital or investment performance of the Fund. Past performance is not indicative of future performance. EQT Intrinsic Value International Sharemarkets Fund Performance 1 year 2 years (p.a.) 3 years (p.a.) 4 years (p.a.) 5 years (p.a.) Total Net Return % -9.49% -1.39% 4.14% 7.72% Index Return % -9.45% -1.59% 1.92% 3.00% Total Net Return vs. the Index % -0.04% 0.20% 2.22% 4.72% Notes Total Net Return is the Fund return after the deduction of ongoing fees and expenses. This assumes the reinvestment of all distributions. Annualised, compound net returns calculated by EQT using the end of month redemption prices, after taking into account Fund fees and expenses and assumes reinvestment of distributions. From inception (12 April 2002) until January 2003 EQT Intrinsic Value International Sharemarkets Fund held cash as it was of insufficient size to invest in OPALS. Index is MSCI World Index net dividends reinvested (AUD unhedged). Please note that this benchmark includes Australian securities even though the Fund itself invests in securities excluding Australia and returns have been calculated on an Australian Dollar basis. This benchmark is currently used to measure the performance of the Fund. From time to time the method of calculating the benchmark index may change or the benchmark index may be discontinued or replaced. EQT may change or discontinue a benchmark index for the Fund if EQT believes it is no longer appropriate. Managing Risk Investments in the Fund carry risks, including volatility of returns. Volatility is the degree returns may fluctuate around their longer-term average. Each Asset Class, whether it be cash, fixed interest, property, Australian or international shares has associated investment risks and the return achieved by each will vary accordingly. The Responsible Entity and the Investment Manager do not guarantee repayment of capital, any rate of return on income or capital or investment performance of the Fund. Investment in the fund is subject to risks, including possible delays in the payment of withdrawal proceeds, and loss of income and capital. The main risk factors which may affect the returns of the Fund include the following. Market risk Changes in legal and economic policy, political events, technology failure, changes in interest rates, economic cycles, investor sentiment and social climate can all directly or indirectly create an environment that may influence (negatively or positively) the value of your investment in the Fund. A downwards move in the general level of the equity market can have a negative influence on the performance of the Fund. Interest rate risk Changes in official interest rates can directly and indirectly impact (negatively or positively) on investment returns. An increase in interest rates may have an adverse effect on the state of the economy and thus the valuation of investments. Rising interest rates can have a negative impact on a fund s or company s value as increased borrowing costs may cause earnings to decline and the unit value or share price may fall. Page 4 of 13

5 Company/asset specific risk There may be instances where a company or managed investment scheme will fall in value because of company/managed investment scheme specific factors, for example, where a company s major product is subject to a product recall. The value of investments can vary because of changes to management, product distribution, investor confidence, internal operations or the company s business environment. Sharemarket selection risk The Investment Manager may make poor investment decisions resulting in sub-standard returns. This may occur if the Investment Manager gains exposure to a sharemarket that significantly underperforms relative to other sharemarkets. Poor investment decisions may be the result of a change of employees at the Investment Manager or a change of Investment Manager. This risk is mitigated to some extent by the knowledge and experience of the Investment Manager. Liquidity risk There may be times when investments may not be readily sold; this may occur in falling market conditions. Trading volumes in OPALS are generally sufficient to satisfy liquidity requirements when necessary. If there is an interruption of regular trading in the market generally, or for a particular asset of the Fund, there may be delays in processing withdrawal requests. Note that neither the Responsible Entity nor the Investment Manager guarantees the liquidity of the Fund s investments. Derivatives risk Generally, in the case of derivatives, fluctuations in price will reflect movements in the underlying assets, reference rate or index to which the derivatives relate. The use of derivatives to hedge the risk of movements in an underlying asset, reference rate or index involves basis risk, which refers to the possibility that derivatives may not move perfectly in line with the underlying asset, reference rate or index. As a consequence, Derivatives cannot be expected to perfectly hedge the risk of the underlying asset, reference rate or index. Other risks associated with derivatives may include: that they can lose value because of a sudden price move or because of the passage of time; potential illiquidity of the derivative; the Fund being unable to meet payment obligations as they arise; the counterparty to any derivative contract not meeting its obligations under the contract; significant Volatility in prices; or where derivatives are highly leveraged, an increase in the risk associated with an investment. Fund risk As with all managed funds, there are risks particular to the Fund, including that they could terminate, the fees and expenses could change, EQT is replaced as responsible entity or Intrinsic Value Investments Limited is replaced as Investment Manager. There is also a risk that investing in the Fund may give different results than investing directly in securities because of income or capital gain accrued in the Fund and the consequence of withdrawal by other investors. EQT aims to keep Fund risk to a minimum by monitoring the Fund and acting in the best interests of unitholders. Currency risk The Fund is denominated in Australian dollars, but principally has exposure to ETFs that in turn invest in sharemarkets denominated in foreign currencies. The Fund therefore has an exchange rate exposure to those currencies. Where the country allocation of the Fund differs to the MSCI World Index in country and percentage weight, the Fund has further exposure to the currency risk in the MSCI World Index. This is referred to as benchmark risk (see below). The Investment Manager may use Forward Currency transactions to manage the exchange rate (or currency) exposure both to the physical holdings and the Benchmark if the Investment Manager deems this appropriate. Benchmark risk The Funds performance is measured against the performance of the MSCI World Index. Benchmark risk is the risk that the Fund underperforms the Benchmark over a given period. Benchmark risk is being mitigated by the Investment Manager s ability to hedge currencies to the limit of their physical holding or market capitalisation weighting in the MSCI World Index. Minimum suggested investment timeframe The minimum suggested investment timeframe for the Fund is six years. The minimum suggested investment timeframe is a general guide only and does not take into account investors individual circumstances. EQT advises investors to seek professional advice to determine, in their particular circumstances, the appropriate investment period for the Fund. The Fund is a high risk investment and should be viewed over at least a six year period. Page 5 of 13

6 Investing and Withdrawals Reporting to unitholders We give unitholders a number of reports, which may include: an annual report comprising of financial statements and an Auditor s report; transaction reports; quarterly distribution reports and an annual taxation statement. As Indirect Investors do not become unitholders in the Fund the IDPS Operator becomes the unitholder in the Fund Indirect Investors should refer to their IDPS Guide for information as to the reports they will receive regarding their investment in the Fund. Indirect Investors can call their IDPS Operator or visit the EQT website at for updated information on performance, unit prices, Fund size and other general information about the Fund. Distributions A distribution comprises the unitholder s share (based on the number of units held at the end of the distribution period) of any distributable income (including taxable capital gains) earned by the Fund. A unitholder s share of any net income is generally based on the number of units held by the unitholder at the end of the distribution period. However, in some circumstances, a unitholder may receive a distribution from the Fund where they have made a large withdrawal from the Fund. In these circumstances their withdrawal proceeds are taken to include a component of distributable income. Generally, the income entitlements of unitholders are determined at least annually (30 June) and distributions are normally paid by the 15th day of the following month. The constitution of the Funds permit Distributions to be paid up to one month after the relevant Distribution date, or as soon as possible after an audit for the relevant Distribution period has been completed. Indirect Investors should review their IDPS Guide for information on how and when they receive any income distribution. Valuation of the Fund and application price of units The value of the investments of the Fund is generally determined every Business Day in accordance with the Fund s Constitution. The value of a unit is determined in accordance with the Fund s Constitution. Generally, investments will be valued at the next available market value but other valuation methods and policies may be applied by EQT if appropriate, or if otherwise required by law or applicable accounting standards. The application price of a unit in the Fund is based on the Net Asset Value (NAV) of the Fund divided by the number of units on issue which is adjusted up by an allowance for transaction costs incurred in buying investments (the buy spread). The NAV of the Fund is calculated by deducting from the value of the gross assets of the Fund, the value of the liabilities of the Fund. Typically, market value is used in determining the value of the assets of the Fund. A Buy/Sell spread applies for the EQT Intrinsic Value International Sharemarkets Fund. EQT has developed a formal written policy in relation to the guidelines and relevant factors taken into account when exercising any discretion in calculating unit prices (including determining the value of assets and liabilities). A copy of the policy and, where applicable and to the extent required, any other relevant documents in relation to the policy will be made available to investors free of charge on request. Making an application Indirect Investors should review their IDPS Guide for information on how to invest in, and make additional investments in, the Fund. EQT reserves the right to refuse any application without giving a reason. If for any reason EQT refuses or is unable to process an application to invest in the Fund, EQT will return the application money to the applicant, who will not be entitled to any interest on their application money in this circumstance. Access to your money Indirect Investors need to submit their withdrawal request directly to their IDPS Operator. The time to process a withdrawal request will depend on the particular IDPS Operator. The Responsible Entity will generally allow unitholders in the Fund to access their investment within 14 days of receipt of a withdrawal request for the relevant amount. However, the Constitution of the Fund allows the Responsible Entity to make payment within 30 days of receipt of the withdrawal request or a longer period in certain circumstances. The Responsible Entity reserves the right to increase or reduce the redemption period for the Fund. Where a fund is not liquid (as defined in the Corporations Act) a unitholder does not have a right to withdraw from the Fund and can only withdraw where the Responsible Entity makes a withdrawal offer to unitholders in accordance with the Corporations Act. The Responsible Entity is not obliged to make such offers. Page 6 of 13

7 The Fund will be liquid if at least 80% of the assets of the Fund are liquid assets. Broadly, liquid assets are money in an account or on deposit with a financial institution, bank accepted bills, marketable securities, other prescribed property and other assets that the Responsible Entity reasonably expects can be realised for their market value within the period specified in the Constitution for satisfying redemption requests while the Fund is liquid. Withdrawals and withdrawal price Indirect Investors can withdraw their investment by instructing their IDPS Operator in accordance with their IDPS Guide. The withdrawal price of a unit in the Fund reflects the NAV of the Fund divided by the number of units on issue. Refer to the section Valuation of the fund and application price of units for information on determining the NAV of the Fund. The Responsible Entity can also make an allowance for transaction costs required for selling investments in determining the withdrawal price. This allowance is known as the sell spread. In some circumstances, where an investor makes a large withdrawal request (5% or more of the units on issue at the start of the relevant distribution period), their withdrawal proceeds may be taken to include a component of distributable income. Refer to Distributions. Non-listing of units The units of the Fund are not listed on any Stock Exchange and no application will be made to list the units of the Fund on any Stock Exchange. Termination of the Fund The Responsible Entity may resolve at any time to terminate and liquidate a Fund (if it provides investors with notice) in accordance with the Fund s Constitution and the Corporations Act. Upon termination and after conversion of the assets of the Fund into cash and payment of, or provision for, all costs, expenses and liabilities (actual and anticipated), the net proceeds will be distributed pro rata amongst all investors according to the number of units they hold in the Fund. Unitholder satisfaction EQT has a complaints procedure in place, which seeks to resolve potential and actual complaints over the management of the Fund to the satisfaction of unitholders. Indirect Investors should refer to their IDPS Guide for information about the IDPS Operator s complaints procedures. Constitution of the Fund EQT s responsibilities and obligations, as the Responsible Entity of the Fund, are governed by the Constitution of the Fund, as well as the Corporations Act and general trust law. Many of our rights and obligations under the Constitution and rights and obligations of unitholders have been reflected in the information elsewhere in this PDS. The Constitution also deals with: the nature of the units identical rights attach to all units; when we can amend the Constitution generally we can only amend the Constitution where we reasonably believe that the changes will not adversely affect the rights of unitholders, otherwise the Constitution can only be amended if approved at a meeting of unitholders; when we can retire as Responsible Entity or be removed as the Responsible Entity of the Fund which is permitted by Law; and our broad powers to invest, borrow and generally manage the Fund we do not currently intend to borrow funds to acquire assets for the Fund, although this is permitted under the Constitution of the Fund. The Constitution of the Fund also deals with our liabilities in relation to the Fund and when we can be reimbursed out of the assets of the Fund, for example: subject to the Corporations Act we are not liable for acting in reliance and good faith on professional advice; subject to the Corporations Act we are not liable for any loss unless we fail to act in good faith or we act negligently; and we can be reimbursed for all expenses we incur in connection with the proper performance of our duties in respect of the Fund. As mentioned above, EQT s responsibilities and obligations as the Responsible Entity of the Fund, are governed by the Constitution of the Fund as well as the Corporations Act and general trust law, which generally require that we: act in the best interests of investors, and if there is a conflict between investors interests and our own, give priority to investors; ensure the assets of the Fund are clearly identified, held separately from other funds and our assets, and is valued regularly; ensure payments from the assets of the Fund are made in accordance with the Constitution and the Corporations Act; and report to ASIC breaches of the Corporations Act in relation to the Fund which has had, or is likely to have, a materially adverse effect on investors interests. Page 7 of 13

8 Liability and indemnity Subject to the Corporations Act, we are not liable for any loss unless we fail to act in good faith or we act negligently and we are entitled to be indemnified out of the Fund against all liabilities and expenses properly incurred in the execution, or purported execution, of our duties as Responsible Entity under the Corporations Act and the Constitution of the Fund. To the extent permitted by the Corporations Act, this indemnity includes any liability incurred as a result of any act or omission of a delegate or agent appointed by the Responsible Entity. EQT may retain and pay out any monies in its hands all sums necessary to effect such an indemnity. Investor s Liability Generally, a unitholder s liability is limited to the amount (if any), which remains unpaid in relation to their subscription for units in the Fund and any tax owed to the Responsible Entity. It is, therefore, expected that unitholders will not be under any obligation if a deficiency in assets was to occur. However, this view has not been fully tested at law. Consents Intrinsic Value Investments Limited, has given, and at the date of the EQT Intrinsic Value International Sharemarkets Fund Product Disclosure Statement has not withdrawn, its written consent to be named in the PDS as the Investment Manager of the Fund. IVI has also given, and has not withdrawn, its written consent to the inclusion in the PDS of: the statements made about IVI and the Fund of which it is described as Investment Manager; and the tables and statistical information specifically attributed to it in the form and context in which they appear. By providing this consent, IVI confirms that: the statements, tables and statistical information referred to above are correct in every material respect and are not misleading or deceptive in the forms and contexts in which they appear in the PDS; it will, as reasonably required by Equity Trustees Limited, formally verify such statements, tables and statistical information in accordance with EQT s due diligence procedures; and it will notify EQT immediately if it becomes aware that any such statements, tables or statistical information are not correct in every material respect or are misleading or deceptive (whether or not they were correct and not misleading or deceptive at the date of the PDS). Otherwise IVI has not been involved in the preparation of this PDS, nor has IVI caused or otherwise authorised the issue of this PDS. Cooling Off Period No cooling off period applies to the offer made in this PDS as this PDS is only available to Indirect Investors. Please refer to your IDPS Guide in relation to whether you have rights to cool off. Privacy Statement We will not receive or hold any personal information about Indirect Investors who invest through an IDPS. Indirect Investors should contact their IDPS Operator for details on how their personal information is dealt with. Anti-Money Laundering New anti-money laundering laws in Australia will require the Responsible Entity, Investment Manager and Custodian to obtain, in the future, additional information to verify the identity of an investor and any underlying beneficial owner of units in the Fund and the source of any payment. Where we request such information from you, processing of applications or withdrawals may be delayed until the requested information is provided in a satisfactory form to the Responsible Entity, Investment Manager and the Custodian. The Responsible Entity may reject any application where such documents are not provided to the Investment Manager or Custodian prior to or with the application. Page 8 of 13

9 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 member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask the Fund or your financial adviser. TO FIND OUT MORE If you would like to find out more, or see the impact of fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed investment fee calculator to help you check out different fee options. Fees and other costs This table shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the fund assets as a whole. Taxes are set out in another part of this document. You should read all the information about fees and costs because it is important to understand their impact on your investment. 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 Responsible Entity fees Service fees Nil Nil Nil Nil 1.50% p.a. (including GST less RITC) per annum for the Fund There is no establishment fee payable when you set up your investment in the Fund There is no contribution fee payable when you invest in the Fund There is no withdrawal fee payable when you withdraw investments from the Fund There is no termination fee payable when you close your investment in the Fund The Management Cost includes the Responsible Entity fee, Investment Manager fee, Sponsor fee, and the estimated expense recoveries of the Fund. It is calculated and accrued daily based on the NAV of the Fund. The accrued fees are paid in arrears by deduction from the Fund assets at the end of each month. The Management Costs reduce the NAV of the Fund and are reflected in the unit price. This fee can be negotiated. Please see Differential fee arrangements and Commission payable to wholesale investors under the heading Additional explanation of fees and costs for more details. Investment switching fee The fee for changing investment options Nil Not applicable Page 9 of 13

10 Additional Explanation of Fees and Other Costs IDPS Investors investing through an IDPS should note that the fees outlined in the table above are in addition to any other fees imposed by their IDPS Operator. Estimated expense recoveries We are entitled to be reimbursed for certain expenses incurred in managing the Fund. They include expenses properly incurred in the administration, custody, management, compliance and promotion of the Fund. Other expenses including tax and operating costs, such as audit, legal and tax consulting fees, are also recoverable out of the assets of the Fund. We have the right to recover all proper and reasonable expenses from the Fund. As such the actual percentage of expense recoveries may increase or decrease accordingly from that estimated. Performance fees There is no performance fee charged with respect to the Fund. Alternative forms of remuneration As a member of IFSA, we maintain an Alternate Forms of Remuneration Register. The register, which you can review by contacting us, outlines some alternative forms of remuneration that we may pay to or receive from AFS licensees, fund managers or representatives (if any is paid or received at all in relation to the Fund). Differential fee arrangements The Responsible Entity may from time to time negotiate a different fee arrangement (by way of commission or the rebate of Responsible Entity fees) with certain investors who come within the definition of wholesale clients under section 761G of the Corporations Act. For example, we may rebate some of the Responsible Entity fee to an IDPS Operator, because they offer EQT Intrinsic Value International Sharemarkets Fund on their investment menu. The contact details of the Responsible Entity are set out on page 1. There is no particular manner of negotiation. Payments to IDPS Operators We may make payments of up to $15,000 on an annual basis to some IDPS Operators because they offer the Fund on their investment menus (product access payments). We may also make ongoing payments to some IDPS Operators of up to 0.25% of funds under management (fund manager payments). Fund manager payments are effectively rebates of management costs. The amount of product access and fund manager payments is negotiated directly with IDPS Operators and is based on the volume of business generated by the IDPS Operator. Product access and fund manager payments are paid by EQT out of our fees and are not an additional cost to the investor. Transaction and other costs All Government taxes such as stamp duty and GST will be deducted from the Fund as appropriate. Relevant tax information is provided in the Taxation section. RITCs will also be claimed by the Fund where appropriate to reduce the cost of GST to the Fund and investors. The Fund may incur transaction costs. Transaction costs include brokerage, settlement costs (including custody costs), clearing costs and stamp duty. Transaction costs are incurred by the Fund when investors invest in or withdraw from the Fund and when the Fund transacts to meet investment objectives. These costs are an additional cost to the investor but are generally reflected in the unit price (through the buy/sell spread) and not charged separately to the investor. Transaction costs incurred by the Fund, which are not included in the buy/sell spread, are deducted from the assets of the Fund from time to time and as they are incurred and are reflected in the unit price. The exact amount of transaction costs is dependent on a number of different variables, including the level of trading undertaken by the Fund. Accordingly, EQT is unable to provide a meaningful amount or percentage of the estimated transaction costs for the Fund. EQT has developed a formal written policy in relation to the guidelines and relevant factors taken into account when calculating transaction costs, including the buy/ sell spread, and how that affects the unit price. Refer to Valuation of the fund and application price of units. A copy of this policy and, where applicable and to the extent required, any other relevant documents in relation to the policy, will be available free of charge on request. Buy/Sell spread The buy spread for the IVIS Fund is an amount of 0.15% ($30 for an investment of $20,000) and the sell spread for the IVIS Fund is 0.15% ($30 for a withdrawal of $20,000). The Buy/Sell spread will not impact on investors unless they are investing or withdrawing from the IVIS Fund. The Buy/Sell spread is not paid to EQT, but is paid to the IVIS Fund. Page 10 of 13

11 Possible fee changes Fees may change subject to changing economic conditions and changes in regulation. We have the right to recover all proper and reasonable expenses from the Funds incurred in managing the Funds, and as such these fees may increase or decrease accordingly. EQT will generally provide investors with 30 days notice of any proposed change to the Responsible Entity Fee. Expense recoveries and buy/sell spreads may change without notice when it is necessary to protect the interests of existing members and if permitted by law. The Constitution of the Fund in some circumstances defines the maximum fees that can be charged for some items described in this PDS. The Constitution defines the maximum possible level of Responsible Entity Fees the Funds may charge. The maximum contribution fee the Fund can charge is 6% (excluding GST) of the application money which is equivalent to $1,200 for every $20,000 invested in the fund. The maximum Responsible Entity fee the Fund can charge is 1.5% (excluding GST) of the Trust s assets which is equivalent to $300 per annum for every $20,000 invested in the Fund. There are no maximum fee amounts defined for the other fee components which make up the management costs of the Fund. Example of Annual Fees and Costs These tables give an example of how the fees and costs for a Fund can affect your investment over a 1 year period. You should use these tables to compare this product with other managed investment products. EXAMPLE EQT Intrinsic Value International Sharemarkets Fund Contribution Fees Nil Balance of $50,000 with a contribution of $5,000 during year There are no contribution fees for making additional investments into the Fund. PLUS Management Costs 1.53% p.a. 1 And for every $50,000 you have in the fund, you will be charged $765 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 from: $765 2 What it costs you will depend on the fees you negotiate with your fund or your financial adviser NOTE: At the date of this PDS, there are no establishment fees, contribution fees, withdrawal fees, switching fees or termination fees. 1. As contemplated by the Corporations Regulations, this figure is based on the Indirect Cost Ratio (ICR) of the Fund for the 2007/2008 financial year. The ICR is the ratio of the Fund s Management Costs that are not deducted directly from the member s account to the Fund s total average net assets. 2. Additional Fees may apply. This amount assumes a constant investment balance of $50,000 throughout the year. Management Costs will also be charged in relation to any additional contributions you make during the year and the amount you pay will depend on the proportion of the year during which the additional contributions are invested. Taxation The following summary of taxation matters is a general guide that outlines the taxation implications applicable to the Fund and resident Indirect Investors who are not considered to be trading in investments for tax purposes. The summary is based on the tax legislation operative as at the date of this PDS. The tax laws are subject to continual change, and as the tax treatment applicable to particular Indirect Investors may differ, it is recommended that Indirect Investors refer to any Taxation information in the IDPS Guide and seek their own professional advice on the taxation implications relevant to them before investing in the Fund through their IDPS. Taxation of the Fund The Fund is a resident of Australia for tax purposes therefore the Fund is required to determine its net income (taxable income) for the year of income. Where the Fund realises a capital gain on the disposal of an asset, it may be entitled to take into account the discount capital gain concessions in determining the amount of the net capital gain that is included in the Fund s net income. On the basis that investors are presently entitled (which is EQT s intention) to the net income of the Fund (including net taxable capital gains), pursuant to the existing income tax legislation, the Fund should be subject to Australian income tax. Page 11 of 13

12 In the case where the Fund makes a loss for tax purposes, it cannot distribute the loss to investors. However, subject to it meeting certain conditions, it may be able to take into account the losses in future years. Taxation of resident investors Distributions Generally, an Indirect Investor s share of the net income of the Fund for a year of income, (even though it may be received in the following year or reinvested) should be included in their assessable income for that year. The specific taxation implications to the Indirect Investor will depend both on the components of the distribution and the Indirect Investors own tax circumstance. Foreign income The Fund may derive foreign income that is subject to tax in a foreign jurisdiction. Indirect Investors should include their share of the foreign income and foreign tax credits in their assessable income. Some Indirect Investors may be entitled to a foreign tax credit that may be used to offset the Australian tax payable on the foreign source income. Foreign Investment Fund (FIF) The Fund may hold (either directly or indirectly) interests in certain foreign companies and foreign trusts which may be subject to the FIF regime. Broadly, where the FIF regime applies, Indirect Investors in the Fund may be required to include in their assessable income their share of the accretion in value of the FIF investments held by the Fund at the end of the financial year, notwithstanding those gains are unrealised. Indirect Investors should seek professional advice as to whether the FIF regime applies, and if so, whether they are entitled to any FIF exemptions. Non-assessable distributions payments Distributions of non-assessable amounts are generally not subject to tax upon derivation. Examples of nonassessable amounts include distributions comprising amounts attributable to accounting differences in income and expenses. Although the distributions of non-assessable amounts are generally not subject to tax, the receipt of certain non-assessable amounts may have capital gains tax consequences. Capital gains The Indirect Investors share of taxable capital gains derived by the Fund should form part of the assessable income of the Indirect Investor. Indirect Investors should consult their tax advisor to determine their appropriate capital gains tax treatment. Discounted capital gain concession To the extent that the distributed non-assessable amounts consist of a CGT concession amount, no adjustment to the cost base or reduced cost base of the underlying investment in the Fund should be required. Disposal of units by Investors/Indirect Investors Any taxable capital gain arising from the disposal of an investment in the Fund may form part of an investor s assessable income. Investors that are individuals, trusts, and complying superannuation funds may be eligible for the discount capital gain concession if their investment (units) has been held for 12 months or more and, the Fund and the investor satisfy certain other requirements. Tax File Numbers (TFN) and Australian Business Numbers (ABN) It is not compulsory for an IDPS Operator to quote their TFN or ABN. Failure by an IDPS Operator to quote an ABN or TFN or claim an exemption, will require EQT to withhold tax at the top marginal rate plus the Medicare Levy from distributions to the investor. In this case, the investor may be eligible to claim a credit in their tax return for any TFN or ABN tax withheld by the Fund. By quoting their TFN or ABN, the IDPS Operator authorises EQT to apply it in respect of its investments with EQT. If the IDPS Operator does not want to quote their TFN or ABN for some investments, EQT should be advised. Broadly, the receipt of non-assessable amounts may reduce the cost base and/or reduced cost base of the Indirect Investor s investment in the Fund, depending on the type of non-assessable amount received. The impact of a reduction to the cost base and/or reduced cost base may result in either an increased capital gain or a reduced capital loss on the subsequent disposal of the investment in the Fund. Page 12 of 13