MCG Multi-Asset Endowment Fund Supplementary Product Disclosure Statement

Transcription

1 MCG Multi-Asset Endowment Fund Supplementary Product Disclosure Statement ARSN APIR SLT0010AU Issue Date 10 August 2012 This is a Supplementary Product Disclosure Statement ( SPDS ) for the MCG Growth Fund (the Fund ) Product Disclosure Statement ( PDS ) dated 29 December The issuer of the SPDS and PDS is Equity Trustees Limited ( EQT ) (ABN , AFSL ), which is the responsible entity of, and issuer of interests in, the Fund. This SPDS should be read in conjunction with the PDS. If you receive this SPDS electronically, EQT will provide you with a paper copy, if requested. The purpose of this SPDS is to update the PDS in relation to: Contents 1. Fund name 2. Minimum initial investments and minimum balances 3. Hedging guidelines 4. Benchmark asset allocation and ranges 1. A change to the name of the Fund from the MCG Growth Fund to the MCG Multi-Asset Endowment Fund; 2. A reduction of the minimum initial investment and minimum balance from $250,000 to $25,000; 3. A change to the guidelines relating to hedging of offshore investments; and 4. Updates to the benchmark asset allocation and allowable ranges of the Fund. Please contact MCG Wealth Management on (02) or investments@mcgwealth.com.au if you have any questions regarding these changes to the Fund. Investment Manager 1. Fund name All references to MCG Growth Fund throughout the PDS are replaced with MCG Multi-Asset Endowment Fund. PMCG Pty Limited trading as MCG Wealth Management ABN AFSL Responsible Entity 2. Minimum initial investments and minimum balances The following content replaces the relevant rows of the Fund at a glance table on page 6 of the PDS: Equity Trustees Limited ABN AFSL Minimum initial investment $25,000 2 Minimum additional investment $5,000 2 Minimum withdrawal $1,000 Minimum balance $25,000 The following text replaces the first sentence of the last paragraph on page 13 of the PDS: At the date of this PDS, the minimum initial investment amount is $25,000. The following text replaces the second paragraph of the Withdrawals and withdrawal price section on page 14 of the PDS: Please note that EQT has the right to fully redeem your investment in the Fund if it falls below the minimum balance of $25,000. MCG Multi-Asset Endowment Fund SPDS Page 1

2 The following table replaces the worked example on page 20 of the PDS: Example MCG Multi-Asset Endowment Fund Contribution Fees PLUS Management costs EQUALS Cost of the Fund Nil 0.97%pa 1 Balance of $50,000 with an investment of $5,000 during the year. There are no contribution fees for making additional investments into the Fund. And for every $50,000 you have in the Fund, you will be charged $485 each year. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees of: $485 2 What it costs you will depend on the fund you choose and the fees you negotiate with your financial adviser. 1. This figure is based on the anticipated Indirect Cost Ratio (ICR) for the Fund (excluding fees and expenses paid by underlying funds, which the Responsible Entity considers cannot be reliably estimated. See Underlying investment management fees above). Generally, the ICR is the ratio of the Management Costs (calculated in accordance with the Corporations Regulations) that are not deducted directly from the investors account to the total average net assets of the Fund. 2. 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. 3. Hedging guidelines The following text replaces the last bullet point in the Investment guidelines section on page 8 of the PDS: Foreign currency exposure and hedging policy: Foreign currency exposures relating to foreign held assets may be Hedged at the underlying investment level by the Underlying Investment Managers. To the extent the Fund may invest in offshore investments not offered in $A denominated share classes, the Investment Manager will seek to Hedge out foreign currency risk through the use of direct currency hedges. 4. Benchmark asset allocation and ranges The following table and accompanying text replaces the Target Asset Allocation table on page 9 of the PDS: Benchmark Range Fixed Income 10% 5-50% Alternative Credit 10% 5-30% Real Estate 10% 5-30% Commodities 3% 0-20% Australian Equities 10% 0-40% Global Equities 20% 0-40% Macro Directional 20% 10-40% Event Driven - Distressed Market Neutral Relative Value 5% 0-30% 5% 0-30% Multi-Strategy 5% 0-30% Cash 2% 2-40% Total 100% Further information in relation to the asset classes: Alternative Credit: Asset class in which the investment managers invest in non-traditional debt securities such as private, infrastructure and mezzanine debt. These debt securities are not directly correlated to the broader debt markets and therefore offer diversification benefits as well as providing higher returns than traditional debt instruments. Macro / Directional: Hedge fund strategy which bases their holdings on overall economic and political views. They will take positions in equity, bond, currency or commodity markets using liquid securities in anticipation of macro-economic events. Market Neutral / Relative Value: These funds take market neutral positions by taking matching long and short positions in different investments, usually in the same industry or sector. Market Neutral funds use their long and short positions to hedge against market risk and seek to profit from the perceived divergence in prices between the related securities. Event Driven / Distressed: A Hedge Fund strategy which finds investment opportunities in corporate transactional events such as mergers, acquisitions and liquidations. They seek to capitalise on valuation inconsistencies in the market before or after the event takes place. The positions they take is based on the predicted movement of the stock in question. Multi Strategy: The manager of these type of hedge fund uses a combination of different strategies within the same pool of assets to reduce overall market risk. Risk is reduced through this divergence across asset classes and strategies and uses both long and short strategies. These funds may narrowly focus on specific sectors or can be broadly diversified across sectors and strategies. Page 2 MCG Multi-Asset Endowment Fund SPDS

3 MCG GROWTH FUND ARSN APIR SLT0010AU PRODUCT DISCLOSURE STATEMENT Equity Trustees Limited (ABN AFSL No ) - Responsible Entity PMCG Pty Limited Trading as MCG Wealth Management (ABN , AFSL ) Investment Manager Date issued 29 December 2009

4 This Product Disclosure Statement ( PDS ) was issued on 29 December This PDS is for the MCG Growth Fund (ARSN ) and is referred to throughout this PDS as the Fund. The PDS has been prepared and issued by Equity Trustees Limited (ABN , Australian Financial Services Licence ( AFSL ) No ) 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 PMCG Pty Limited Trading as MCG Wealth Management (ABN , AFSL ) and is referred to throughout this PDS as the Investment Manager or MCG. Reference to Underlying Investment Managers in this PDS is a reference to the investment managers of the underlying funds into which the Fund invests. 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 or 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 Fund s suitability in view of your financial position and investment objectives and needs and you may want to seek advice before making an investment decision. The Responsible Entity has authorised the use of this PDS for the Fund as disclosure to investors and prospective investors of an investor directed portfolio service, master trust, wrap account or an investor directed portfolio service-like scheme ( IDPS ). This PDS is available for use by persons applying for units in the Fund 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 the IDPS Operator to arrange for your money to be invested in the Fund on your behalf. Indirect Investors do not become unit holders in the Fund or have the rights of unit holders. The IDPS Operator becomes the unit holder in the Fund and acquires these rights. The IDPS Operator can exercise or decline to exercise the rights of a unit holder on your behalf according to the arrangement governing the IDPS. Indirect Investors should refer to the 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 the 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. The Responsible Entity, 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. Past performance is no indication of future performance. Units in the Fund are offered and issued by the Responsible Entity on the terms and conditions described in this PDS. You should read this PDS because you will become bound by it if you become a unit holder of the Fund. The offer made in this PDS is available only to persons receiving this PDS in Australia (electronically or otherwise). If you received this PDS electronically we will provide a paper copy free upon request during the life of this PDS. Please call Brent McGoldrick on (02) for a copy. Certain information in this PDS is subject to change. We will notify you in writing of any changes that have a materially adverse impact on you or other significant events that affect the information in this PDS. Any updated information which is not materially adverse may be obtained: by calling Brent McGoldrick on (02) ; or by visiting MCG Wealth Management s website at A paper copy of the updated information will be provided free of charge on request. 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

5 CONTENTS Glossary of Important Terms 4 The Fund at a Glance 6 About the Responsible Entity 7 About the Investment Manager 7 About the MCG Growth Fund 8 Managing Risk 10 Investing and Withdrawing 12 Fees and Other Costs 17 Taxation 21 Important Additional Information 24 Application Form 28 } 3

6 Glossary of important terms Alternative Assets A term referring to any non-traditional asset with potential economic value that would not be found in a standard investment portfolio and is considered outside of the traditional asset classes of stocks/shares, fixed interest securities and cash. AML/CTF Act Anti-Money Laundering and Counter-Terrorism Financing Act Application Form - The application form used by investors who wish to subscribe for units directly in the Trust (and not indirectly through an IDPS Operator) and attached to this PDS Asset Class A category of asset. The major Asset Classes are shares (eg. securities in infrastructure and real estate companies), fixed interest securities, property, and cash. ASIC Australian Securities and Investments Commission. Business Day - Any day other than Saturday or Sunday on which banks are open for general banking business in Sydney. Cut Off Date Last Business Day prior to the Valuation Date. If the Fund is valued monthly, the Cut Off Date will be the last Business Day of the month. Constitution The Constitution of a managed investment fund describes the rights, responsibilities and beneficial interests of both investors and the responsible entity in relation to the fund. Corporations Act - Corporations Act 2001 (Cth) and Corporations Regulations 2001 (Cth), as amended from time to time. Derivative - A financial contract that derives its value from an underlying security, liability or Index. Derivatives come in many varieties, including forwards, futures, options and swaps. Distribution The amount that is paid to investors after the end of a distribution period. This generally includes any income and realised capital gains. GST Goods and Services Tax. Hedge An investment made in order to reduce the risk of adverse price movements in an investment. ICR Indirect Cost Ratio for a Fund, is the ratio of the Fund s Management Costs, that are not deducted directly from a member s account, to the Fund s total average net assets. IDPS Investor directed portfolio service (including IDPS-like scheme and sometimes called wrap accounts or master trusts). An investment vehicle through which investors access a range of underlying investment options, consolidated reporting and streamlined transactions. IDPS Guide the terms and condition of an IDPS issued by the IDPS Operator. IDPS Operator An entity that operates and offers an IDPS. Index An Index is a way of measuring the change in the value or performance of a market over time. Indirect Investors A person who invests indirectly in units in a Fund through an IDPS. Leverage The use of borrowings, various financial instruments and/or borrowed securities to increase the potential return of an investment. When Leverage is used by an underlying fund, the exposure of the fund to investments exceeds the net asset value of the fund. Management Costs Total costs associated with investment in a Fund, as defined in Schedule 10 of the Corporations Act. Net Asset Value (NAV) The value of assets of the Fund less the value of the liabilities of the Fund (liabilities excludes unitholders funds). } 4

7 Responsible Entity- The responsible entity for the Fund is Equity Trustees Limited (ABN AFSL No ). Responsible Entity Fee - Fee payable to the Responsible Entity for management services provided to the Fund, excluding expenses and external services. RITC Reduced Input Tax Credits. The Responsible Entity will apply for reduced input tax credits where applicable to reduce the cost of GST to the Fund. Underlying Investment Managers - The investment managers of the underlying funds into which the Fund invests. For up to date information on the Underlying Investment Managers of the Fund please see the MCG Wealth Management website or contact Brent McGoldrick on (02) Volatility - The extent of fluctuation in share prices, exchange rates, interest rates, etc. The greater the Volatility, the less certain an investor is of return, and hence Volatility is a measure of risk. Valuation Date The date the Fund is valued for calculating a Unit Price for applications and redemptions. This will be at least monthly. } 5

8 Fund at a glance Registered Fund Name APIR Investment objective Investments held Recommended investment time frame MCG Growth Fund ARSN: SLT0010AU To achieve returns in excess of the Consumer Price Index plus 3% per annum over rolling three to five year periods 1 Listed and unlisted assets across domestic and international fixed income, property, equities and Alternative Assets 3 5 years Minimum initial investment $250,000 2 Minimum additional investment $5,000 2 Minimum withdrawal $1,000 Minimum balance $250,000 Withdrawal of monies under normal circumstances 3 Income Distribution Valuation frequency Unit Price Management Costs 4 Generally within 14 Business Days after the next Valuation Day Semi-annual At least monthly Determined at least monthly, based on the Net Asset Value of the Fund 0.97% per annum Buy-Sell spread 5 Buy % Sell 0.20% Fund Commencement Date May 2007 Investment Manager 6 MCG Wealth Management 1. The investment objective is expressed before the deduction of fees, expense recoveries and taxation. See the Fees and Other Costs section and the Taxation section for more information. The investment objective is not intended to be a forecast. It is only an indication of what the investment strategy aims to achieve over the medium to long term, assuming financial markets remain relatively stable during that time. The Fund may not achieve its investment objective. Returns are not guaranteed. 2. The Responsible Entity may at its discretion accept lower initial or additional investment amounts from qualifying wholesale clients (as defined in the Corporations Act) and alter the minimum amounts at any time without prior notice to investors. 3. Refer to section Access to your money for further information. 4. This includes GST and an estimate for RITC but does not include any allowance for underlying investment management fees. Refer to the Fees and other costs section for further details. 5. Refer to the section Buy-Sell Spread in the fees section. 6. EQT may change the Investment Manager for the Fund at any time, without prior notice to investors. } 6

9 About the Responsible Entity Equity Trustees Limited Equity Trustees Limited ( EQT ) was established in 1888 by its own special Act of Parliament to provide secure trustee services to the people of Victoria. Since it was established, EQT has expanded its services to meet the wealth management requirements of its clients. EQT has been investing on behalf of its clients since As a trustee company EQT prides itself on offering truly personalised service to its clients and is committed to acting in the best interests of its clients via offering wealth management solutions over a range of Asset Classes carrying different risk profiles. EQT s traditional values of integrity, responsibility and service are central to how EQT manages the investments and financial affairs of its clients. 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. For further information see the section Constitution of the Fund. About the Investment Manager MCG Wealth Management is a leading boutique wealth advisory firm, which caters to a select group of families and charitable foundations. Founded in February 2005, MCG currently manages approximately $350 million on behalf of its high net worth clients. MCG has an unconstrained investment approach which does not place a reliance on any industry benchmarks as tools as a basis for constructing portfolios. There is a primary focus on achieving downside protection, and a lesser reliance on equity markets than traditional portfolios. By investing across a broader range of asset classes, combined with a more flexible approach to asset allocation ranges, a portfolios risk return characteristics are able to be improved. The aim of this approach is to reduce shorter term volatility, and provide more consistent and competitive longer term returns. MCG is wholly owned by its Directors, who have considerable experience in managing individual clients portfolios for high net worth investors. The primary focus of the Directors when managing clients money, has been on Risk Management. This focus, aims to best preserve capital across all market cycles, while aiming to achieve a constant reasonable return over the medium term, given the level of risk employed. Paul P McGoldrick - B.Com, M.Com, DipFP, CFP - Over his 35 years in the wealth management industry, Paul has been responsible for assisting private clients and institutions in Australia and globally in Canada, USA, Europe and Asia. Paul was a Vice President with Merrill Lynch in New York and Canada for over 13 years and was a Managing Director of the New York investment banking firm Furman Selz Mager Dietz and Birney who were subsequently acquired by ING. Paul was a consultant to the Canadian investment firm Loewen Ondaatje McCutcheon responsible for international private clients and worked as a full time advisor for a period of time to an ultra-affluent British investor based in Monaco. More recently Paul was a Director of PricewaterhouseCoopers in Sydney and a Director trustee of the PwC Superannuation Fund. Paul ultimately left the world of large financial institutions upon realizing his clients were not receiving the objective advice, access to outside investment services that better suited their needs or the personal services that so many of the affluent needed in order to simplify their lives. Brent McGoldrick - B. Ec - Brent commenced his professional career in 2002, by completing a two year graduate training programme with Marsh Pty Ltd, a world leader in Risk Management. On completion, Brent then joined MCG Wealth Management, where he was responsible for client servicing. In 2006 Brent accepted a position as an Analyst with Goldman Sachs JBWere, working in the Private Wealth Management division. After 2 years with GSJBW, he returned to MCG Wealth, where his responsibilities were expanded to portfolio management. Brent has a Bachelor of Economics from the University of Sydney As at the date of this PDS, MCG had approximately A$350 million in funds under management and advice. } 7

10 About the MCG Growth Fund Investment objective The Fund is a diversified, growth style fund of investment funds which aims to achieve long term, sustainable returns. The Fund aims to earn a return above the Consumer Price Index plus 3% per annum over rolling 5 year periods), whilst accepting a reasonable level of Volatility on returns over shorter periods. 1 Investment strategy MCG invests in a portfolio of listed and unlisted investments across various asset sectors with an exposure to local and international fixed interest, property, equities and Alternative Assets as well as cash. MCG does not choose any particular investment styles in order to achieve its required level of diversification, and selects Underlying Investment Managers who are experts in various sectors, styles and strategies to achieve the investment objective of the Fund. Underlying Investment Managers In selecting Underlying Investment Managers for the Fund, MCG draws on the expertise of the Fund s asset consultant Mercer Investment Consulting ( Mercer ). Mercer is one of the world s leading investment consulting firms, and it provides specialist investment manager research and advice to assist MCG in managing the Fund. Mercer provides advice to assist MCG s investment team to achieve the objective of optimally diversifying across a range of investment managers with complementary investment styles. MCG and Mercer collaborate to form the strategic asset allocation in line with MCG s investment strategy. MCG and Mercer choose the Underlying Investment Managers, and constantly monitor and evaluate them, using the following criteria: depth, quality, calibre and experience of the investment team; investment philosophy, style and process; performance track record; risk management; and the extent to which their performance correlates with that of other Underlying Investment Managers strategies. For up to date information on the Underlying Investment Managers please see the MCG Wealth Management website or contact Brent McGoldrick on (02) Investment guidelines The Fund will have an approximate split between growth and defensive assets of 70%/30%. The Fund will generally be exposed to at least 20 underlying investments, many of which are further diversified. The range for illiquid investments will be 0 to 10%. 'Illiquid' for this purpose is defined as assets which cannot be readily sold at fair value within 3 months. Excluded strategies: No specific investment strategies are explicitly excluded from investment by the Fund. Underlying Investment Managers may use Derivatives as part of their investment strategy however the Fund is not permitted to invest directly in Derivatives. Leverage: The Fund is permitted to invest in funds / strategies which are internally Leveraged. The Fund itself is not permitted to be Leveraged. Foreign currency exposure and hedging policy: Foreign currency exposures relating to foreign held assets may be Hedged at the underlying investment level by the underlying investment managers. 1 The investment objective is expressed before the deduction of fees, expense recoveries and taxation. See the Fees and Other Costs section and the Taxation section for more information. The investment objective is not intended to be a forecast. It is only an indication of what the investment strategy aims to achieve over the medium to long term, assuming financial markets remain relatively stable during that time. The Fund may not achieve its investment objective. Returns are not guaranteed. } 8

11 Target Asset Allocation Asset Class Benchmark % Range % Australian Shares International Shares Property (listed) Property (unlisted) Alternative Assets Total Growth Fixed Interest Cash Opportunistic* Total Defensive Foreign Currency Exposure *This income-orientated Asset Class, will include opportunistic allocations to both domestic and global high yield, investment grade credit, hybrid securities, along with investments in other alternative yield producing assets. Minimum suggested investment timeframe The minimum suggested investment timeframe for the Fund is 3-5 years. The minimum suggested timeframe is a general guide only and does not take into account your individual circumstances. We advise investors to seek financial advice to determine the appropriate investment period for the Fund. Labour standards and environmental social or ethical considerations. EQT, MCG and Mercer do not take into account labour standards, and/or environmental, social and ethical considerations when selecting, retaining or realising the underlying funds in which the Fund invests. However, the Underlying Investment Managers may take these considerations into account when making their investment decisions. Fund performance For up to date information on the performance of the Fund please see the MCG Wealth Management website or contact Brent McGoldrick on (02) Past performance is not indicative of future performance. The Responsible Entity and Investment Manager do not guarantee the capital, any rate of return on income or capital or the investment performance of the Fund. } 9

12 Managing Risk Investment in the Fund carries risks, including Volatility of returns. Each Asset Class, whether 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 the capital, any rate of return on income or capital or investment performance of the Fund. Investment in any 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: Interest rate risk Changes in official interest rates can directly and indirectly impact on investment returns. Generally, an increase in interest rates has a contractionary effect on the state of the economy and thus the valuation of stocks and other assets. Fund risk As with all managed funds, there are risks particular to the Fund, including the possibility it could terminate or that the fees and expenses could change. There is also a risk that investing in the Fund may give different results than investing directly in the underlying securities. We aim to keep Fund risk to a minimum by monitoring the Fund and acting in your best interests. Market risk Changes in legal and economic policy, political events, technology failure, 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 investments in the Fund. In addition, a downward move in the general level of the financial markets can have a negative influence on the performance of the Fund. International investing risk Risks of international investing include adverse currency fluctuations, potential political and economic instability, limited liquidity and Volatility of international investments, limited availability of information regarding international investments, investment and repatriation restrictions and foreign taxation. Emerging markets risk Investing in emerging markets involves exposure to economic structures that are less diverse and mature, and to political systems that are less stable, than those of developed countries. In addition, issuers in emerging markets may experience a greater degree of change in earnings and business prospects than would companies in developed markets. Liquidity risk There may be times when securities may not be readily sold (for example, in a falling market where some traded securities may become less liquid). However, trading volumes of stock are generally sufficient to satisfy liquidity requirements when necessary. The Investment Manager will attempt to mitigate liquidity risk by ensuring the Fund has sufficient cash to meet liquidity requirements. Note that neither the Responsible Entity nor the Investment Manager guarantees the liquidity of the Fund s investments. Legal risk There is a risk that laws, including tax laws, might change or become difficult to enforce. This risk is generally higher in developing countries. Underlying Fund Risks Below are risks which are specific to the underlying funds which the Fund invests in: Currency risk The Underlying Investment Managers may invest in securities denominated in currencies of other countries and, if their currencies change in value relative to the Australian dollar, the value of the investment can change. The Underlying Investment Managers aim to reduce the impact of adverse movements in overseas currencies by Hedging. There can be no assurance that the underlying investments will be Hedged at any, or all, times or that the underlying investments will be successful at employing a Hedging strategy. } 10

13 Company specific risk There may be instances where a company s securities will fall in price because of company specific factors (for example, where a company s major product is subject to a product recall). The value of a company s securities can also vary because of changes to management, product, distribution or the company s business environment. Stock selection risk The Investment Manager or the Underlying Investment Managers may make investment decisions that result in low returns. This risk is mitigated to some extent by the knowledge and experience of the Investment Manager and the Underlying Investment Managers. Leverage risk The use of Leverage by Underlying Investment Managers may magnify any losses as well as any returns for the underlying funds and, indirectly, the Fund. For example if an underlying fund was not Leveraged, assuming that the underlying fund had $100,000 available for investment, the underlying fund could acquire securities/positions with a value of $100,000 and a ten per cent decrease in value would mean a loss of $10,000, and a ten per cent increase in value would mean a gain of $10,000 for the underlying fund. If the underlying fund was Leveraged to twenty per cent it could acquire securities/positions (120% Long and 20% Short) to a value of $140,000 and a ten per cent decrease in value would mean a loss of $14,000, and a ten per cent increase in value would mean a gain of $14,000 for the underlying fund. Derivative 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 reduce 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 Underlying investments 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; and where Derivatives are highly Leveraged, an increase in the risk associated with an investment. Although the underlying investments of the Fund may hold Derivatives, the Fund itself does not hold any Derivatives directly } 11

14 Investing and withdrawing Reporting to Investors Regular, simple to read and complete reports are provided to investors in the Fund. They comprise: Annual Report including financial statements and Auditors Report (you may elect to receive this report by indicating on the application form); Monthly Transaction Reports confirming all additional investments, withdrawals, and distribution payments or reinvestment (available periodically and on request); and Taxation Statements are issued annually and provide investors with taxation information including a detailed summary of the components of any Distributions. Please note, Indirect Investors who invest in the Fund through an IDPS will receive reporting directly from the IDPS Operator, not from the Responsible Entity. However, EQT will be providing the reports described above to relevant IDPS operators. Indirect Investors should refer to their IDPS Guide for information as to the reports they will receive regarding their investment in the Fund. The Fund is not a disclosing entity. If the Fund becomes a disclosing entity, the Fund will be subject to regular reporting and disclosure obligations under the Corporations Act. Copies of documents issued by the Fund disclosing information that may have a material affect on the price or value of units in the Fund to unitholders can be obtained from MCG s website at or by contacting MCG on These documents may include: the most recent annual financial report; any half yearly financial report lodged with ASIC after that financial report but before the date of this PDS; and any continuous disclosure notices lodged with ASIC after that financial report but before the date of this PDS. You can call Brent McGoldrick on (02) or visit the website at for updated information on performance, unit prices, Fund size and other general information about the Fund. If you are an Indirect Investor, contact your IDPS Operator. Income Distributions An income Distribution comprises the investor s share of any net income (including taxable capital gains) earned by a Fund. An investor s share of any distributable income is calculated in accordance with the Constitution of the Fund and is generally based on the number of units held by the investor at the end of the Distribution period. However, in some circumstances, a unit holder may also receive a Distribution from the Fund where they have made a large withdrawal from the Fund, such as where the withdrawal comprises 5% or more of the units on issue. In these circumstances their withdrawal proceeds are taken to include a component of distributable income and there is a reduction in the amount of distributable income distributed at the end of each Distribution period. All income Distribution calculations are semi-annual (30 June and 31 December) and Distributions are normally paid within 10 Business Days of the income Distribution calculation date, although the distribution at the end of a financial year may take longer. Please note this has a dependency in regard to the availability of underlying tax components being received for the distribution purposes. Although EQT proposes to calculate and pay income Distributions semi annually, the Constitution of the Fund allows for a Distribution calculation and payment to occur at least once in every financial year. You can elect to have your income Distribution: all reinvested back into the Fund; or all directly credited to your nominated bank account. If you do not make a direction, your income Distribution will be reinvested. If reinvestment applies, the application will be deemed to be received immediately before the next time of valuation of investments after the end of the relevant Distribution Period. } 12

15 Indirect Investors should review their IDPS Guide for information on how and when they receive any income Distribution. There is no guarantee that any income will be available for distribution at the end of a Distribution period. Valuation of the Fund and Application Price of Units The value of the investments of the Fund are generally determined monthly but may be more frequently in accordance with the Constitution of the Fund. Generally, investments will be valued at the next available market value but other valuation methods and policies may be applied by EQT if appropriate. The value of a unit in the Fund is determined on the basis of the value of the investments in the Fund (after taking into account any liabilities of the Fund), in accordance with the Constitution of the Fund. The application price of a unit in the Fund is based on the NAV of the Fund divided by the number of units on issue plus an allowance for transaction costs required for buying investments in determining the application price of a unit in the Fund. This allowance is known as the buy spread. At the date of this PDS, the buy spread is 0.20%. Unit pricing discretions policy 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 (such as records of any discretions which are outside the scope of, or inconsistent with, the unit pricing policy) will be made available to investors free of charge on request. Making an application To invest, please complete the Application Form accompanying this PDS and attach your cheque and send with relevant identifying documentation as outlined in the Application Form to: Unit Registry - MCG Growth Fund. BNP Paribas Securities Services. PO Box R209, Royal Exchange, NSW 1225 Cheques should be made payable to: Cogent Nominees Pty Ltd ACF MCG Wealth Applications account - MCG Growth Fund Alternatively, EFT to: Bank: Westpac Banking Corporation BSB: Account Number: Account Name: Cogent Nominees Pty Limited ACF MCG Wealth Applications Account Please send the original Application Form via mail or faxed Application Form to (02) Please note that cash cannot be accepted. Investors investing through an IDPS should use the application form attached to their IDPS Guide (and not the application form attached to this PDS) to invest in the Fund. Applications can be made between 9:00am and 5:00pm on any Business Day. For unit pricing purposes and income accrual purposes any application received after 2:00pm on the Cut Off Date will generally be treated as having been received after the Cut Off Date. Applications received prior to 2:00pm on the Cut Off Date will generally receive the application price determined for that month. Please note that we do not pay interest on monies received prior to the Cut Off Date (any interest is credited to the Fund). If you are an Indirect Investor, you need to contact your IDPS Operator regarding the cut-off times for pricing purposes. If the Fund is valued more frequently than monthly, cut-off times will be amended accordingly. EQT reserves the right to refuse any application without giving a reason. If EQT refuses, or is unable, to process your application to invest in the Fund, EQT will, subject to regulatory considerations, return your application money to you. You will not be entitled to any interest on your application money in this circumstance. At the date of this PDS, the minimum initial investment amount is $250,000. If you are an Indirect Investor you should refer to the IDPS Guide or IDPS Operator for the minimum initial investment amount. } 13

16 Additional investments You can make additional investments of $5,000 or more in the Fund at any time by sending BNP Paribas Security Services your additional investment amount together with your investor details (see details above). All applications for additional investments, unless otherwise agreed, should be made on an Application Form to ensure that a record of the investment exists. If you are an Indirect Investor If you are an Indirect Investor you should refer to the IDPS Guide or IDPS Operator for the minimum additional investment amount and contact your IDPS Operator to make additional investments. Access to your money The Responsible Entity will generally allow investors of the Fund (if liquid - see below) to access their funds within 14 Business Days after the next Valuation Date providing your withdrawal request is received within the required Cut Off Date. However, the Constitution of the Fund requires the Responsible Entity to make payment as soon as practicable and, in any event, within 90 days of the redemption monies becoming available. If you an Indirect Investor, you need to provide your withdrawal request directly to your IDPS Operator. The time to process a withdrawal request will depend on your IDPS Operator. Where the Fund is not liquid (as defined in the Corporations Act) an investor does not have a right to withdraw from the Fund and can only withdraw where the Responsible Entity makes a withdrawal offer to investors in accordance with the Corporations Act. The Responsible Entity is not obliged to make such offers. A 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 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. The Responsible Entity is not obliged to satisfy a withdrawal request from its own funds. If compliance with a withdrawal request would result in an investor holding units valued at less than the minimum balance, the Responsible Entity may refuse the withdrawal request or treat the withdrawal request as relating to the balance of the investor holding. The Responsible Entity may at its discretion increase the minimum investment amount and minimum balance and may upon giving 30 days notice to investors redeem any unit holding that is below the minimum balance amount without a withdrawal request. Withdrawals and withdrawal price The withdrawal price of a unit in the Fund is based on the NAV of the Fund divided by the number of units on issue, less an allowance for transaction costs required for selling investments. This allowance is known as the sell spread. At the date of this PDS, the sell spread will be 0.20%. Refer to Valuation of the Fund and Application Price of Units. 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 Income Distributions. Please note that EQT has the right to fully redeem your investment in the Fund if it falls below the minimum balance of $250,000. If you are an Indirect Investor you should refer to the IDPS Guide for the minimum balance. Making Withdrawals Investors of a Fund can withdraw from their investment accounts in a number of ways: Written advice by post Attention : Unit Registry - MCG Growth Fund. BNP Paribas Securities Services. PO Box R209, Royal Exchange NSW 1225 Written advice by fax Originals should be sent by post. The minimum withdrawal amount is $1,000. } 14

17 Withdrawal requests can be made between 9:00am and 5:00pm on any Business Day. For unit pricing purposes any withdrawal request received after 2:00pm on the Cut Off Date will generally be treated as having been received after the Cut Off Date. Withdrawal requests received prior to 2:00pm on the Cut Off Date will generally receive the withdrawal price determined for that month. Withdrawals will be credited directly into your nominated Australian bank account. If the Fund is valued more frequently than monthly cut-off times will be amended accordingly. Alternatively, if you are an Indirect Investor, you will need to provide your withdrawal request directly to your IDPS Operator. You will need to contact the relevant IDPS Operator regarding their withdrawal request cutoff times for pricing purposes. The time to process a withdrawal request will depend on the particular IDPS Operator. You should refer to the IDPS Guide for the minimum withdrawal amount. Terms and conditions for withdrawals EQT can deny a withdrawal request in certain circumstances, including where accepting the request would cause the Fund to cease to be liquid or where accepting the request would unfairly prejudice another investor. EQT will refuse to comply with any request if the requesting party does not satisfactorily identify themselves as the investor. Withdrawals will only be paid to the investor. By lodging a faxed withdrawal you release, discharge and agree to indemnify EQT from and against any and all losses, liabilities, actions, proceedings, account claims and demands arising from the fax withdrawal. You also agree that any payment made in accordance with the fax instructions shall be a complete satisfaction of the obligations of EQT, notwithstanding any fact or circumstance including that the payment was made without your knowledge or authority. You agree that if the payment is made in accordance with these instructions, you and any person claiming through or under you shall have no claim against EQT in relation to the payment. Investments through an IDPS The Responsible Entity is not responsible for the operation of any IDPS. Indirect Investors should note that you are directing the IDPS Operator to arrange for your money to be invested in the Fund on your behalf. Indirect Investors do not become unit holders in the Fund or have rights of unit holders. The IDPS Operator becomes the unit holder in the Fund and acquires these rights. The IDPS Operator can exercise or decline to exercise the rights of a unit holder 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 any 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 contact your adviser or IDPS Operator if you have any questions about investing in the Fund through an IDPS. EQT accepts no responsibility for any failure by an IDPS Operator to provide investors with a current version of this PDS or to withdraw the PDS from circulation if required by EQT. 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 IDPS Guide before investing in the Fund. Joint account operation Joint accounts are normally accessible to any of the named individuals. For joint accounts, both signatories must sign the redemption request. Please ensure both signatories sign the declaration in the application form. Joint accounts are held as joint tenants. Appointment of Authorised Nominee to operate account Investors may elect to appoint an authorised nominee to operate their account. The relevant sections on the application form need to be completed, including the name and signature of the authorised nominee, the signature of the investor and the date. Only investors can appoint authorised nominees. If you appoint an authorised nominee we suggest that you ensure that: they cannot appoint another nominee; and the appointment lasts until cancelled by you in writing or the Responsible Entity. The Responsible Entity may cancel an appointment by giving the investor 14 days notice in writing. If an appointment is cancelled the Responsible Entity will not be obliged to act on the instructions of the authorised nominee. If the instructions are varied, the Responsible Entity will act only in accordance with the varied instructions. } 15