ARSN 156 183 872 PRODUCT DISCLOSURE STATEMENT APN Funds Management Limited ACN 080 674 479 AFSL No 237500 ISSUE DATE: 23 MAY 2012
CONTENTS Key Features 1 Introduction 2 About the Fund 3 Benefits 5 Risks 6 Investing in the Fund 10 Fees and Other Costs 13 Taxation 17 Additional Information 19 Glossary 24 Corporate Directory 26 Before you invest This Product Disclosure Statement (PDS) is for the offer of units in the APN Unlisted Property Fund ARSN 156 183 872 (Fund). This PDS is dated 23 May 2012. Investors should read this PDS in its entirety before making a decision about whether to invest in the Fund. Investment in the Fund is offered and managed by APN Funds Management Limited ABN 60 080 674 479, AFSL No. 237500 (referred to in this PDS as APN FM, we or us). APN FM is the issuer of this PDS and of units in the Fund. APN FM is a wholly owned subsidiary of APN Property Group Limited ACN 109 846 068 (APD), a company listed on the Australian Securities Exchange (ASX) (ASX Code APD). However, APD is not the issuer of this PDS. The information contained in this PDS is general information only and does not take into account an investor s individual objectives, financial situation, needs or circumstances. APN FM recommends that investors obtain professional advice from a licensed financial adviser before investing in the Fund. Certain information in this PDS is subject to change and may be updated from time to time without the need to notify investors, if not materially adverse. APN FM will notify investors of any changes that may have a material adverse impact on investors or any other significant event that affects the information in this PDS. APN FM may also provide updated information on its website at www.apngroup.com.au or on request, at no charge. Current information on, and performance details of the Fund can be obtained from: Investor Services: 1800 996 456 (toll free) Adviser Services: 1300 027 636 Website: www.apngroup.com.au Postal Address: PO Box 18011, Melbourne Collins Street East VIC 8003. APN FM does not guarantee the success of the Fund, the repayment of capital invested in the Fund or any particular rate of return on an investment in the Fund. An investment in the Fund does not represent a deposit with or a liability of APN FM, APD or any member of the APN Property Group. An investment is subject to investment risk, including possible delays in repayment and loss of income or capital invested. None of APN FM, APD, and any member of the APN Property Group or any of their officers, advisers, agents or associates in any way guarantee the performance of the Fund nor any return of capital. PDS Availability This PDS is available in electronic format, including via APN FM s website. Investors receiving this PDS electronically should ensure that they have received the complete PDS and should contact APN FM if unsure whether the electronic document is complete. A printed copy is available free of charge. Selling restrictions This PDS does not constitute an offer or invitation in any place where, or to any person to whom, it would not be lawful to make such an offer or invitation. No action has been taken to register or qualify the Fund or the offers or otherwise to permit a public offering of the units in the Fund in any jurisdiction outside Australia. Accordingly, the distribution of this PDS in jurisdictions outside Australia is limited and may be restricted by law. Persons holding copies of this PDS who are not in Australia should familiarise themselves with and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of securities law. Units in the Fund may be offered to professional and sophisticated investors in certain jurisdictions outside Australia if that offer is made in accordance with the laws of that jurisdiction. Units in the Fund to which this PDS relates will only be issued to investors who are already invested in the APN Property for Income Fund (APN PFIF) or the APN Property for Income Fund No. 2 (APN PFIF2) and who have applied to withdraw their investment in the APN PFIF or APN PFIF2 under a withdrawal offer. The offer of units under this PDS is only available to persons receiving a printed or electronic copy of this PDS in Australia. Currency All amounts quoted in this PDS are in Australian dollars (AUD) unless stated otherwise. Photographs The assets depicted in photographs in this PDS may not be assets in which the Fund or its controlled entities have an interest. Investing through an Investor directed portfolio service (IDPS) or IDPS-like service (such as a master trust or wrap account) APN FM proposes to make investments in the Fund available to clients of an IDPS or IDPS-like service (such as a master trust or wrap account or a nominee or custody service) who are already invested in the APN PFIF or APN PFIF2. If investing in the Fund through an IDPS, IDPS-like service or nominee or custody service, investors should note that the operator or custodian of the service will be recorded in the register as the unitholder in the Fund and will have the rights attaching to Units. APN FM is not responsible for the operation of any of these services through which investors may invest. Therefore, certain rights of unitholders in the Fund will not apply to an investor if they are investing through any of these services, such as the right to receive reports and statements from APN FM, the right to attend meetings, and the right to make a complaint to APN FM. Investors investing through an IDPS, IDPS-like service or nominee or custody service, should also take into account the fees and charges of the operator of the service.
1. APN Unlisted Property Fund - Key Features APN Unlisted Property Fund Fund Establishment Fund Type Withdrawals and Fund Liquidity The Fund has been established to enable APN Property for Income Fund (APN PFIF) and APN Property for Income Fund No.2 (APN PFIF2) unitholders to withdraw from those funds and realise part of their investments. The portfolio of investments of the Fund will comprise unlisted property trust assets (i.e. Illiquid assets) that were held by APN PFIF and APN PFIF2. An unlisted public unit trust investing in unlisted property trusts. The portfolio of the Fund will comprise unlisted property trusts (referred to as underlying investments) that were held by APN PFIF and APN PFIF2 (please refer to section 2.1 for a list of the portfolio). The Fund is an Illiquid Fund. Any withdrawals will be subject to the terms and conditions of any withdrawal offers made by APN FM. APN FM s primary objective for the APN Unlisted Property Fund is to achieve an orderly realisation of the Fund s assets within 5 years of the Fund s commencement, in order to provide investors with progressive liquidity. APN FM s secondary objective for the APN Unlisted Property Fund is to manage the existing investments to achieve consistent income combined with some capital growth. Investment Objectives Suggested Investment Time Frame Income Distributions* Distribution Reinvestment Minimum initial and/or additional investment amounts for units acquired as a result of a withdrawal offer from APN PFIF, or APN PFIF2 Management Costs Unit Pricing Buy/Sell Spread Borrowing Cooling Off APN FM will also aim to maximise income and growth returns by managing the existing portfolio of assets to the extent that this is consistent with the primary objective to realise the Fund s assets. APN FM as responsible entity of the Fund will not invest in any new unlisted property trusts. As a condition of the relief obtained from the Australian Securities and Investments Commission (ASIC) relating to APN PFIF and APN PFIF2 withdrawal offers (Withdrawal Offers), APN FM as responsible entity of APN Unlisted Property Fund is not permitted to invest additional capital into existing investments, except via reinvestment of distributions. 3 to 5 years based on the Fund s objective of realising its assets within 5 years of the Fund s commencement. However, APN FM cannot provide any assurances as to if or when investors may be able to withdraw from the Fund. Semi-annual. Not currently available. No minimum. Capped for 5 years at 1.08% per annum of the Net Asset Value of the Fund. APN FM will pay APN PFIF and APN PFIF2 a cash rebate for the management costs attributable to their respective investments in the Fund. Daily. The Constitution of the Fund allows APN FM to charge a Buy/Sell spread. Currently APN FM has no intention to charge the Buy/Sell spread. APN FM will advise investors if this changes. The Constitution of the Fund allows APN FM to borrow on behalf of the Fund. It is APN FM s current intention that the Fund will not undertake direct borrowing. The unlisted property trusts held by the Fund, however, will usually borrow. The Fund is Illiquid and investors have no cooling off rights in respect of the Fund. If you receive Units under a withdrawal offer from APN PFIF or APN PFIF2 you will not be entitled to a cooling off period. *Subject to variation at APN FM s discretion Note: You should read the entire PDS to make an informed decision about the Fund. APN UNLISTED PROPERTY FUND 1
2. Introduction The Fund was established to enable APN PFIF and APN PFIF2 unitholders to withdraw from APN PFIF and APN PFIF2 and realise part of their investment. Accordingly, the Fund s portfolio of investments will comprise interests in unlisted property trusts (some held indirectly) transferred to the Fund as consideration for units in the Fund for which APN FM (as responsible entity of the APN PFIF and APN PFIF2) has subscribed. All of the investments in the portfolio are Illiquid assets under the Corporations Act. The Fund will also hold a limited amount of cash to cover operational expenses. 2.1 Portfolio The Fund s portfolio of investments will include the unlisted property trusts set out in the table below. The table also provides indicative percentages for each investment in the portfolio (based on information as at 30 April 2012). Information on the Fund s current portfolio is available at www.apngroup.com.au. Information on each underlying investment of the Fund can be found on the relevant investment manager s website Unlisted Property Trust Percentage of portfolio Unlisted Property Trust Percentage of portfolio LaSalle Australia Core-Plus Fund 14.05% Australand Wholesale Property Fund No.6 13.15% APN Direct Property Fund 8.67% APGF PFA Diversified Property Trust 7.12% Colonial Diversified Property Pool 5.29% Goodman Australia Industrial Fund 4.65% APN Regional Property Trust 4.57% MAB Diversified Property Trust 4.51% Centro MCS 28 3.96% APN Property Plus Portfolio 3.73% APN Wholesale Direct Property Pool 3.40% Centro MCS 33 3.29% APN National Storage Property Trust 2.99% Centuria Diversified Direct Property Fund 2.81% APN Diversified Property Fund 2.76% Australian Unity 5th Commercial 2.67% Centro MCS 21 2.30% 360 Capital Canberra Trust 2.20% Australian Unity Second Industrial 2.18% APN Vienna Retail Fund 1.87% 360 Capital Industrial Fund 0.84% 360 Capital Retail Fund 0.74% Rimcorp Property Trust No.3 0.66% APGF Domaine Diversified PT 0.52% APGF Domaine Hunter Fund 0.44% Centro MCS 23 - Property Trust 0.29% Centro MCS 23 - Investment Trust 0.14% Centro MCS 16 0.14% APGF Real Estate Investment Trust 0.07% APN Poland Retail Fund 0.00% 1 BGP Holdings 0.00% 1 Timbercorp Orchard Annuity Bonds 0.00% 2 Timbercorp Orchard Units 0.00% 2 The portfolio weights are indicative as at 30 April 2012. 1 Each of these investments currently has zero value based on the last reported Net Tangible Asset (NTA) backing provided by the responsible entity of the underlying unlisted property trust. 2 APN FM has ascribed a zero value to these investments as in its view it is unlikely to be able to realise these investments. 2.2 About the Manager, APN Funds Management For information about APN Funds Management Limited, its directors and investment professionals please refer to the About us tab at www.apngroup.com.au. 2 APN UNLISTED PROPERTY FUND
3. About the Fund 3.1 Fund objective APN FM s primary objective for the APN Unlisted Property Fund is to achieve an orderly realisation of the Fund s assets within 5 years from the Fund s commencement, in order to provide investors with progressive liquidity. Notwithstanding this objective, APN FM cannot provide any assurances as to if or when investors may be able to withdraw from the APN Unlisted Property Fund. APN FM s secondary objective for the APN Unlisted Property Fund is to manage the existing investments to achieve consistent income combined with some capital growth. APN FM will also aim to maximise income and growth returns by managing the existing portfolio of assets to the extent that this is consistent with the primary objective to realise the Fund s assets. APN FM as responsible entity of the Fund will not invest in any new unlisted property trusts. As a condition of the relief obtained from ASIC relating to the APN PFIF and APN PFIF2 withdrawal offers, APN FM as responsible entity of the APN Unlisted Property Fund is not permitted to invest additional capital into existing investments, except via reinvestment of distributions. Subject to the Fund s primary objective, APN FM aims for the Fund to: provide investors with a consistent income whilst endeavouring to liquidate assets within 5 years from the Fund s commencement, in order to provide investors with liquidity; and have a tax advantaged income component of more than 20% of distributed income. 3.2 Realisation Strategy Since 2007, APN FM has realised approximately $115 million worth of investments in unlisted property trusts held by APN PFIF and the APN PFIF2. APN FM will continually monitor the market in order to assess the most suitable opportunity for realising unlisted investments and is having ongoing discussions with relevant market participants to identify potential buyers. Whilst selling conditions have been difficult over the past few years, as investor confidence returns and markets recalibrate, APN FM is of the view that the opportunity to realise unlisted assets at or near NTA will progressively improve over the coming years. While APN FM s key objective is to realise investments within the target time frame, APN FM also has the objective of maximising value. Selling unlisted assets at as close to NTA as possible remains critical in order to protect the capital value for all investors. Typically, Illiquid assets may be realised in circumstances where: we sell investments to third parties; investee entities sell properties they hold to make cash available for redemptions; investee entities come to the end of their term with all available proceeds from asset sales distributed to investors; investee entities list on a stock exchange thereby creating liquidity; or we procure an early wind-up of an investee entity if we hold a significant stake and we believe it is in the Fund s best interest to do so. APN FM may give investee entities adequate time to prepare assets in order to maximise sale values. For example, this allows time to renegotiate lease terms with major tenants or to undertake necessary capital expenditure to bolster buyer interest. 3.3 Underlying Assets and Asset Allocation The Fund s portfolio of investments comprises unlisted property trusts. In accordance with the Fund s primary objective, APN FM intends to realise these investments over time. The Fund is not invested directly in: real property or mortgages; or mortgage trusts or securitised mortgage instruments that advance loan money secured by properties that are subject to development or being held for speculative purposes. APN FM as Responsible Entity of the Fund will not act as a: property developer; contractor; or project manager. APN UNLISTED PROPERTY FUND 3
3. About the Fund 3.4 Investment Performance and Asset Allocation APN FM will provide investors with a paper copy of investment performance and asset allocation information upon request or alternatively this information can be accessed by visiting the APN website at www.apngroup.com.au. It is important to note that performance returns may be volatile and that past performance is not a reliable indicator of future performance. 3.5 Liquidity As the Fund invests wholly in unlisted property trusts, the Fund is Illiquid within the meaning of the Corporations Act. 3.6 Borrowing The Constitution of the Fund allows APN FM to borrow on behalf of the Fund. It is APN FM s intention that the Fund will not undertake direct borrowing. The funds or companies in which the Fund invests will usually borrow. 3.7 Derivatives The Fund will not invest in derivatives. 3.8 Cooling Off The Fund is Illiquid and investors have no cooling off rights in respect of the Fund. If an investor receives Units as part of a withdrawal offer from APN PFIF or APN PFIF2 they will not be entitled to a cooling off period. 3.9 Withdrawal offers whilst the Fund is Illiquid As the Fund is Illiquid, withdrawals can only be made pursuant to a withdrawal offer. Periodic offers to withdraw from the Fund may be made to all investors as cash becomes available from liquidating investments. APN FM cannot provide any assurance as to if or when investors may be able to withdraw from the Fund. APN FM will notify investors of any offers to withdraw resulting from the liquidation of assets. 3.10 Unit Pricing APN FM (as responsible entity of APN PFIF and APN PFIF2) will subscribe for Units, and transfer unlisted assets of APN PFIF and APN PFIF2 to the Fund as consideration for the Units, which will be issued to APN PFIF and APN PFIF2. The Issue Price for the units will be $1 and the number of units issued to each of the APN PFIF and APN PFIF2 will equate to the value of the assets transferred to the Fund at the date of issue. As part of the withdrawal process for investors in APN PFIF and APN PFIF2, units in the Fund held by those funds will be transferred to withdrawing investors who will then become unitholders in the Fund. The unit price for the units in the Fund is calculated as at the close of business every Business Day. The unit price is an amount equal to the Net Asset Value of the Fund divided by the total number of units on issue. Issue Price Applications for units as part of a withdrawal from APN PFIF or APN PFIF2 received and accepted by APN FM by 12 noon on the day the relevant acceptance period closes will be processed at the Issue Price to be determined on that day. The Issue Price is an amount equal to the Net Asset Value per unit plus the buy spread (if any). Withdrawal Price The Withdrawal Price for units redeemed pursuant to any withdrawal offers made by APN FM will be calculated on the basis of the Fund s Net Asset Value, in accordance with the Fund s Constitution and the Corporations Act. The Withdrawal Price is an amount equal to the Net Asset Value per unit less sell spread (if any). In accordance with the Fund s Constitution and APN FM s Unit Pricing Policy, APN FM may round the Withdrawal Price to four decimal places. 4 APN UNLISTED PROPERTY FUND
4. Benefits There are a number of potential benefits of being invested in the Fund. These may include: Receipt of income Unitholders in the Fund will have a right to receive income distributions, subject to investment performance. APN FM intends to make semi-annual income distributions from the Fund. It is expected that the end of June distribution will include any net capital gains. Distributions may also carry imputation or other tax credits (see page 11 for further details on income distributions). Lower volatility than listed property securities As the Fund will primarily be invested in unlisted property trusts, the volatility of returns can be lower when compared to investing in listed property securities. Exposure to property market The performance of the Fund is referable to the performance of the underlying property market. Investment in the Fund can form part of a broader, diversified investment strategy, of which some exposure to unlisted property trusts is desirable. Access to trained investment specialists Investment of the assets of the Fund will be managed by APN FM, a specialist funds manager with considerable experience in property investment markets (please refer to the About us tab at www.apngroup.com.au for further details about APN FM). No entry and withdrawal fees Investors will not be charged any entry fee for investing in the Fund or withdrawing an investment from the Fund (see pages 13-16 for further details about fees and expenses). APN UNLISTED PROPERTY FUND 5
5. Risks Risk and Return All investments are subject to risks. Investments may go down as well as up in value and investors can experience investment gains and investment losses. Changes in value can be significant and they can happen quickly. Different types of investments perform differently at different times and have different risk characteristics and volatility. One way of managing risk is by investing in different types of investments (often called diversification). Investing in the Fund enables investors to gain exposure to unlisted property trusts, and may form part of a broader diversified portfolio of investments. APN FM urges investors to speak to a financial adviser about diversification. Standard Risk Measure APN FM has adopted the Standard Risk Measure developed by the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC) set out in the paper Standard Risk Measure: Guidance Paper For Trustees (available to download from the APN website at www.apngroup.com.au). The Standard Risk Measure is based on industry guidance to allow unitholders to compare investments that are expected to deliver a similar number of negative annual returns over any 20 year period. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a unitholder may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Investors should still ensure they are comfortable with the risks and potential losses associated with their chosen investments. The Standard Risk Measure adopts the following seven-level classification system to assist product comparison: Risk Band Risk Label APN FM has determined that the Fund falls within Risk Band 4. Risks and Risk Management Estimated number of negative annual returns over any 20 year period 1 Very low Less than 0.5 2 Low 0.5 to less than 1 3 Low to medium 1 to less than 2 4 Medium 2 to less than 3 5 Medium to high 3 to less than 4 6 High 4 to less than 6 7 Very high 6 or greater As discussed above, the Fund s primary objective is to manage and realise an existing portfolio of unlisted assets transferred from the APN PFIF and APN PFIF2. As a result, investors in the Fund will be exposed to the risks associated with the holding of those assets. It is APN FM s aim to minimise those risks in order to achieve the investment objectives of the Fund. As the Fund s assets will be Illiquid it is expected that it will take a long period to realise the assets at optimal value. The income and potential growth components of the Fund s returns on assets are also likely to be subject to fluctuation. Therefore the Fund is not considered suitable for those expecting assets to be realised in a short period of time. APN FM aims to provide low volatility in returns. However, there may be periods when returns are negative. The significant risks of investing in the Fund, and the ways in which APN FM aims to manage them, are discussed over page. APN FM cannot eliminate all risks and cannot guarantee that the ways in which it manages them will always be successful. 6 APN UNLISTED PROPERTY FUND
The significant risks associated with the Fund and its underlying investments may include: (1) Fund specific risks Liquidity risk Liquidity risk is the risk of being unable to realise an investment in the Fund within a reasonable period of time. As the Fund is Illiquid, investors will only be able to redeem their investments when APN FM makes a withdrawal offer. Realising investments in unlisted property trusts inherently involves longer lead-times than listed property securities. Accordingly, APN FM cannot guarantee when withdrawal offers will be made, if at all. The Fund is not suitable for investors that do not intend on investing for the long term. If APN FM is unable to realise the investments of the Fund, you may not be able to withdraw from the Fund within the objective timeframe of 5 years or any longer period. Fund risk These are risks specific to all funds. These risks include that the Fund could terminate, the fees and expenses of the Fund could change, APN FM may be replaced as responsible entity and manager and its investment team may change. There is also a risk that investing in the Fund may lead to a different result than investing in the market personally because of income or capital gains accrued in the Fund and the consequences of investment by and withdrawal of other investors. If any of these risks are realised, the returns that you receive from the Fund may be reduced. APN FM aims to keep fund risk to a minimum by monitoring the Fund and the Fund s investments at all times and acting in what APN FM believes to be investors best interests. Key personnel risk This is the risk that key individuals are no longer able to fulfil their obligations in respect of the investment and administrative process of the Fund. The performance of the Fund may be dependent on the management skill of a particular individual. If key personnel are no longer able to fulfil their obligations there is a risk that APN FM may not be able to find suitably qualified replacement personnel and the performance of the Fund may suffer as a result. APN FM will ensure that APN FM has sufficient resources to enable the Fund to continue unaffected should any member of the APN FM team leave. Regulatory risk This is the risk that domestic or international laws or regulations are changed adversely or that regulatory supervision of transactions and reporting is performed by managers and their custodians at less than an appropriate standard. APN FM cannot predict what the outcome of any of these risks occurring maybe. However, an outcome could be that the performance of the Fund is negatively impacted. These risks are managed by APN FM by regularly and closely reviewing changes in the law. (2) Underlying investment risks Investment risks The underlying investments of the Fund may fall in value for many reasons, such as changes in an unlisted property trust s internal operations or management, or in the business environment in which the unlisted property fund operates. If underlying investments fall in value, the value of an investment in the Fund will also fall in value. In making the decision to invest in the portfolio of assets as responsible entity of the APN PFIF and APN PFIF2, APN FM sought to reduce the investment risk associated with choosing the underlying investments of the Fund by: investing in reputable trusts with investment strategies consistent with the investment objectives of the Fund (refer to section 2.1); closely monitoring the performance of those trusts; limiting the level of exposure to any one investment; and careful analysis and research of the investment manager of the underlying investments and its associated investment vehicle prior to investing on behalf of the Fund. APN FM has regular, programmed meetings with investee fund investment managers (where applicable) to ensure that the underlying investments and investment process remains consistent with the investment objective of the Fund. APN UNLISTED PROPERTY FUND 7
5. Risks Asset risk Asset risk is risk related to market changes or poor investment performance of an asset. This risk is usually mitigated by diversification among several asset classes, so that poor performance in one asset class can be offset by better performance in another asset class. As the Fund is only invested in unlisted property trusts, diversification among several asset classes is not possible, and accordingly, the performance of the Fund will be directly impacted by the performance of the direct property asset class. Market risk Economic, technological, political or legal conditions, and even market sentiment, can (and do) change. These changes can lead to volatility in the value of property investments and the overall level of liquidity in the market. This can affect the value of the Fund s underlying investments, and APN FM s ability to realise the Fund s underlying investments. To the extent possible, APN FM aims to reduce this risk by continuously engaging in research and analysis to form a view of the market. The Fund s investment strategy is tailored to meet the Fund s investment objectives in the light of APN FM s view on the market. Re-financing risk Unlisted property trusts typically use financing facilities with periodic maturity dates, which require re-financing at regular intervals. In times of poor market liquidity, unlisted property trusts may find it difficult to re-finance their investments. This means that the value of the Fund s underlying investments will be negatively impacted if they are unable to re-finance their finance facilities or if they can only refinance on unfavourable terms. Interest rate risk Changes in interest rates can have a positive or negative impact directly or indirectly on the Fund s investment values or returns. For example, as a result of interest rate changes, the cost of the borrowings of the investee entities in which the Fund invests can decrease or increase or the income return on a fixed interest security can become more or less favourable. In respect of the Fund, APN FM does not borrow on behalf of the Fund and, therefore, the Fund is not directly exposed to interest rate risk. However, the Fund s underlying investments may borrow and the Fund may be indirectly exposed to interest rate risk through borrowing by its underlying investments. Fund risk This risk is specific to trusts. This is risk that underlying investments, which are structured as trusts, could terminate, the fees and expenses of those trusts could change, the responsible entity, trustee or manager may be replaced and/or its investment team may change. If any of these risks occur, the returns that you receive from the Fund may be reduced. APN FM aims to keep fund risk to a minimum by monitoring the underlying investments at all times and acting in what APN FM believes to be investors best interests. Key personnel risk This is the risk that key individuals are no longer able to fulfil their obligations in respect of underlying investments in which the Fund may invest. The performance of underlying investments may be dependent on the management skill of a particular individual. If key personnel are no longer able to fulfil their obligations there is a risk that the underlying trusts in which the Fund may invest may not be able to find suitably qualified replacement personnel and the performance of the Fund may suffer as a result. Information risk Information risk is the risk of not being fully informed of pertinent, price sensitive information about investments or markets. In the context of property investments, information risk relates to political, town planning, business or even cultural issues. Information risk is particularly relevant for investments with non-australian assets. If any of the underlying trusts in which the Fund invests do not have all of the necessary local information, the returns that an investor receives from the Fund and the value of their investment in the Fund may be reduced. The Fund only holds investments in Australian entities that hold offshore assets that have demonstrated satisfactorily to APN FM their ability to manage information risk. APN FM also maintains direct relationships with independent global property securities experts to assist in verifying information where necessary. 8 APN UNLISTED PROPERTY FUND
Regulatory risk This is the risk that domestic or international laws or regulations which are relevant to the Fund s underlying investments are changed adversely or that regulatory supervision of transactions and reporting is performed by managers and their custodians at less than an appropriate standard. These risks are managed by APN FM by regularly and closely reviewing changes in the law. Derivative risk Derivatives can be used to reduce risk or gain exposure to other types of investments. Risks associated with investing in derivatives may include the value of the derivative failing to move in line with an underlying investment, potential illiquidity of the derivative, and the Fund not being able to meet payment obligations as they arise and counterparty risk (that is, where the counterparty to the derivative contract cannot meet its obligations under the contract). The use of derivatives by the underlying trusts in which the Fund is invested may cause those trusts to lose money which they would not have otherwise lost had they not used derivatives. If this occurs the value of an investment in the Fund may be reduced. APN FM as responsible entity of the Fund does not use derivatives. Currency risk The Fund may hold units in unlisted property trusts which hold underlying investments in countries other than Australia. If the value of overseas currencies changes relative to the Australian dollar, the value of the Fund s investments can change. APN FM had taken into account an investment manager s currency management strategy when originally selecting the investments to be held by the Fund. Refer also to the Derivative Risk above. APN UNLISTED PROPERTY FUND 9
6. Investing in the Fund 6.1 Applying and Paying for Units APN PFIF and APN PFIF2 withdrawing investors Investors in the APN PFIF and the APN PFIF2 may only become unitholders in the Fund by accepting the withdrawal offer made by APN FM in respect of those funds. The Fund will not otherwise accept new investment. The Fund will not be issuing new units. 6.2 Confirmation Confirmation of the number of units to be issued to an investor will be forwarded to that investor as soon as is reasonably practicable, which will usually be within five Business Days of units being issued. 6.3 Investing through an investor directed portfolio service (IDPS) Investors who hold APN PFIF and APN PFIF2 units through an IDPS should contact the IDPS operator in the first instance. To acquire units in the Fund and apply for redemption of units in the APN PFIF and APN PFIF2 held through an IDPS, investors will need to obtain and complete the relevant application forms provided by the IDPS operator. Any investor communications, reports and other information will be provided by the IDPS operator. Any additional enquiries should be made through the IDPS operator. IDPS investors should receive confirmation from the IDPS operator regarding their investment in the Fund. IDPS investors should note that the IDPS operator is registered as the Fund s unitholder and is therefore entitled to certain investor rights, such as the right to receive reports and statements, to attend meetings and to make complaints. IDPS investors should contact their IDPS operator regarding each of these matters. 6.4 Valuation of the Fund s assets APN FM may determine valuation methods and policies for each category of assets held within the Fund. The value of assets for the purpose of calculating Net Asset Value will generally be its market value. Where there is no market value, the valuation methods and policies applied by APN FM will be capable of resulting in a calculation of the Issue Price or Withdrawal Price that is independently verifiable. 6.5 Unit Pricing Policy The unit price for the Fund may vary and may increase or decrease depending on the performance of the Fund. APN FM has adopted a unit pricing policy which sets out how APN FM makes certain decisions in calculating the unit price. A copy of the unit pricing policy with any discretions exercised by APN FM in respect of the Fund (and any departures from the policy) is available free of charge on request and is also available on the APN website. 10 APN UNLISTED PROPERTY FUND
6.6 Income Distributions The Fund will earn income from its various investments, which may include dividends and distributions. The Fund may also make gains and incur losses from the sale of its investments. Generally, net income is accrued and distributed at the end of each distribution period. The distribution period is intended to be semi-annual. Income distributions are usually paid within 10 days following the end of a distribution period. If the 10th day falls on a non-business Day, then payment will be made by the next Business Day. The Fund s Constitution allows for payment of income distributions at any time up to 60 days following the end of a distribution period. The Fund s income distributions are based on the distributable amount per unit set by APN FM at the end of the period multiplied by the number of units held by each unitholder in the Fund on the last day of the period. In determining the distributable amount per unit APN FM s current distribution policy is to maintain, as far as possible, a stable and sustainable level of distributions over the course of a financial year. Consequently, the distributable amount for a period may be either more or less than the taxable income of the Fund for that distribution period. However, under the Fund s Constitution, APN FM must ensure that the total income distributions for a financial year at least equal the taxable income for that financial year. The distributions made during each financial year (12 months to 30 June) will include the taxable portion of any capital gains earned by the Fund for that year. The amount of the income distribution attributed to taxable capital gains will be notified to investors in their annual taxation statement. APN FM may also make capital distributions. An investor s income distributions will be paid by electronic funds transfer into their nominated Australian bank, building society, or credit union account (payment by cheque will not be offered as an option although APN FM reserves the right to do so in exceptional circumstances). An investor may change their distribution instructions by notifying APN FM in writing at least 30 days before the end of the relevant distribution period. 6.7 Investor Communications Investors will receive the following acknowledgments, statements and reports relating to their investment in the Fund: a transaction statement for each application for units or withdrawal request made. A copy of each transaction statement will be forwarded to an investor s financial adviser (if any); a semi-annual distribution statement including income distributions paid to an investor or reinvested in additional units (if available) in the Fund and the balance of their investment at the end of the distribution period; an annual taxation statement showing the detail of the distributed income and its components for the last financial year; and any other information that is required by legislation. An annual report including APN FM s report to investors and the Fund s audited financial statements will be made available for download from the APN FM website at www.apngroup.com.au. Investors may elect to receive a copy by notifying APN FM in writing. If investing through an IDPS, an IDPS like service such as a master trust or wrap account, or a nominee or custody service, investors will receive reports on their investment from the operator of that service, not from APN FM. APN UNLISTED PROPERTY FUND 11
6. Investing in the Fund 6.8 Privacy When making an application to redeem units from either APN PFIF or APN PFIF2 and investing in the Fund, APN FM will collect personal information from investors. APN FM may also collect additional personal information from investors by other means in the future. Investors with any questions about the personal information collected should contact APN FM. Investors can request access to or change their personal information held by APN FM by writing to APN FM. APN FM will assess these requests in accordance with the National Privacy Principles. The personal information that investors supply to APN FM will be used for the primary purpose of establishing an investment in the Fund. Personal information will also be used for the purposes of processing an investor s application, administering their investment, complying with applicable laws and regulations for purposes related to APN FM product and service development. APN FM will also use personal information to forward to investors, from time to time (including by e-mail), details of other investment opportunities available from APN FM or any member of the APN Property Group. However, if an investor requests, no information of that nature will be sent. APN FM will take reasonable steps to protect the personal information that APN FM collects and ensure that the information is accurate and up-to-date. Investor information is held on secure servers or in storage locked in controlled environments. APN FM employees are required to maintain the confidentiality of any personal information held by APN FM. If an investor does not supply APN FM with all the information APN FM needs, APN FM may be unable to establish their investment in the Fund, process their application and administer their investment. The types of organisations to which APN FM may disclose the information provided by you include: with an investor s consent, their adviser and dealer group; any third party service provider APN FM may engage to provide custody, administration, technology, auditing, mailing, printing or other services; government authorities when, and to the extent, required by law; and APN FM s professional advisers (including legal and accounting firms, auditors, consultants and other advisers). Investors can update or change their personal information by notifying APN FM in writing at any time (including by facsimile, email and internet see page 22 for more details on electronic instructions) or by phone, subject to passing APN FM s security checks. 12 APN UNLISTED PROPERTY FUND
7 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 the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a managed investment fee calculator to help you check out different fee options. This section shows fees and other costs that you may be charged. These fees and other costs may be deducted from your application money, directly from the returns on your investment in the Fund or from the Fund s assets as a whole. Information on taxation is set out on page 17. The Fund s reporting year is the financial year. References to per annum relate to the financial year. You should read all of the information about fees and other costs before making a decision to invest in the Fund, as it is important to understand their impact on your investment. All amounts are GST inclusive less any reduced input tax credits and stamp duty unless otherwise stated. IDPS investors should note that the IDPS operator is registered as the Fund s unitholder. The fees and costs you may be charged are determined by your IDPS operator. IDPS investors should contact their IDPS operator regarding each of these matters. APN UNLISTED PROPERTY FUND 13
7 Fees and Other Costs Type of Fee or Cost Amount How and When Paid Fees when your money moves in or out of the Fund Establishment fee This is the fee to open your investment. Contribution fee This is the fee on each amount contributed to the Fund. Withdrawal fee This is the fee for withdrawals from the Fund (including any installment payments and final payments). Nil Nil Nil Not applicable Not applicable Not applicable Termination fee This is the fee when you finally close your investment. Management costs The fees and costs for managing your investment. Nil Capped at 1.08% per annum of the Net Asset Value of the Fund. Made up of: Investment management fee of 0.87% per annum of the Net Asset Value of the Fund; 1 Expense recoveries estimate of up to 0.21% per annum. 2 APN FM will pay APN PFIF and APN PFIF2 a cash rebate for the management costs attributable to their respective investments in the Fund. Not applicable Payable out of the assets of the Fund. Accrues daily and is payable quarterly, in arrears, based on the Net Asset Value of the Fund at the end of each quarter. Payable as incurred and deducted from the Fund s assets. Service fees Switching fee This is the fee for when you switch between investment options. Nil Not applicable 1 The Investment management fee may be negotiated with Wholesale Clients as defined under the Corporations Act. 2 See item 4 in the Additional Explanation of Fees and other Costs section for an explanation of the expense recoveries. 14 APN UNLISTED PROPERTY FUND
7.1 Example of annual fees and costs The table below gives an example of how the fees and costs of the Fund can affect your investment over a one year period. You should use this table to compare the Fund with other managed investment products. Example Balance of $50,000 with a contribution of $5,000 during a year Contribution Fees 0% Nil PLUS Management Costs EQUALS Cost of Fund 1.08% p.a. 1 AND, for every $50,000 you have in the Fund, you will be charged $540 each year. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 1 during that year, you would be charged fees of: $540 What it costs you will depend on the investment option you choose and the fees you negotiate with your Fund or financial adviser. 1 The Management Cost estimate is based on the latest available figures for the Indirect Cost Ratio (ICR) of the Fund as at the date of this PDS. Please note that this is an example only. Actual fees and expenses are based on the value of the Fund which fluctuates. The amount assumes a constant investment of $50,000 throughout the year and the additional contributions are made at the end of the year. 7.2 Additional Explanation of Fees and other Costs 1. Management costs The management costs outlined in the fees and other costs table above include amounts payable for expense recoveries (discussed at item 4 over page) for administering the Fund, custodian fees, investment management fees payable to APN FM and the costs and fees relating to the management and administration of underlying investments of the funds through which the Fund invests. They do not include buy/sell spreads, transaction costs and costs (related to a specific asset or activity to produce income) that an investor would incur if the investor invested directly in the asset. The benefit of any tax deductions in respect of the management fees will not be passed on to you in the form of a reduced fee or cost. The management costs set out in the table above are an estimate only and the actual management costs could vary. Example of management costs The following illustrates in dollar terms the amounts you are likely to pay by way of management costs in respect of an investment, per annum, inclusive of GST net of input tax credits, based on an investment in the Fund valued at $50,000: $50,000 1.08% per annum = $540 per annum APN UNLISTED PROPERTY FUND 15
7 Fees and Other Costs 2. Winding up fee Under the Constitution, APN FM is permitted to charge a winding up fee of up to 1% of the net proceeds from the sale of the assets of the Fund upon the winding up of the Fund. Example of winding up fee The following illustrates in dollar terms the amounts you are likely to pay by way of winding up fee upon winding up of the Fund, based on your net realised proceeds on winding up of the Fund being valued at $50,000. $50,000 x 1% = $500. 3. Fee increases and alterations Fees and charges are current at the date of this PDS. APN FM may increase fees up to the maximum amounts permitted under the Fund s Constitution (see below) or by amending the Fund s Constitution (subject to Unitholder approval) to increase the current permitted maximums. However, APN FM will provide investors with at least 30 days notice of any increases in fees before they take effect, to allow investors to make other arrangements if they wish. Under the Fund s Constitution, APN FM is permitted to charge the following maximum fees: application fee of up to 2% of the application money paid to acquire units; management fee of up to 2% of the gross asset value of the Fund; redemption fee of up to 2% of the aggregate redemption price for the units withdrawn; and termination fee of up to 1% of the gross asset value of the Fund on the date of termination of the Fund. APN FM does not currently intend to increase the fees and charges set out in this PDS to the extent that the fees and charges described in this PDS are determined by APN FM. Under the Fund s Constitution, APN FM may accept lower fees than APN FM is entitled to receive or may defer payment for such period and on such terms as APN FM determines. APN FM does not intend to alter the fees described in this PDS, and will notify you if this intention changes. 4. Expense recoveries APN FM is entitled under the Fund s Constitution to be reimbursed out of the assets of the Fund for a broad range of costs and expenses properly incurred in relation to the Fund. These expenses typically include costs incurred in connection with the establishment of the Fund, unit registry and custodial services, investor communications, unit pricing, auditors fees, compliance costs associated with being included on various IDPS lists and PDS preparation. A list of expenses that may be reimbursed to APN FM out of the Fund is set out in the Fund s Constitution. A copy of the Fund s Constitution may be obtained from APN FM on request. APN FM is also entitled to be indemnified out of the Fund for any liability properly incurred by APN FM in operating the Fund. An estimate of the expense recoveries in the Fund is included in the management costs set out in the fees and costs table on page 14, however the level of expense recoveries may change without notice to investors. 5. Different fees for different investors Subject to the Corporations Act and the Fund s Constitution, APN FM may negotiate lower or different fees in certain circumstances, with certain investors, including with respect to wholesale clients as defined in the Corporations Act. APN FM will pay APN PFIF and APN PFIF2 a cash rebate for the management costs attributable to their respective investments in the Fund. 6. Working out fee structures If you wish to work out your own fee structure and the impact this has on your investment, you should ask your financial adviser or visit www.moneysmart.gov.au where ASIC offers a fee calculator to help investors compare the fees and costs of different financial products. 16 APN UNLISTED PROPERTY FUND
8 Taxation The following is a discussion of taxation issues relevant to an investment by an investor in the Fund. Tax payable by an investor in respect of investment in the Fund will depend upon their particular circumstances. Investors should seek their own professional tax advice. The net taxable income of the Fund for a financial year will be distributed to investors each financial year. APN FM may also distribute certain other amounts not included in the net taxable income of the Fund. Under existing taxation legislation, APN FM will not be liable for income tax in respect of the Fund, provided all net taxable income is distributed to resident investors each financial year. The Federal Government has recently changed the law to allow eligible Managed Investment Schemes to make an irrevocable election to treat certain assets on capital account. These assets include certain shares and non-share equity interests, units in unit trusts, and land or interests in land. The Fund has made such an election. The Federal Government has also amended the definition of a managed investment trust (MIT) for access to allow broader withholding tax concessions. The Federal Government has announced that it will put in place a new tax system for MITs under which investors will be taxed on a fair and reasonable basis having regard to their interest in the Fund. If these changes are enacted, investors will be taxed on income which is attributed to them, rather than to which they are entitled. Furthermore, the new tax system for MITs may allow for minor discrepancies between the Fund s taxable income at the time of distribution and at the time of lodging its income tax return to be carried forward and applied in the following income year. These announcements potentially mean that investors may be liable to pay tax on amounts they have not received, or may not receive minor amounts to which they are entitled. These changes may impact how the Fund and investors are taxed in the future. 8.1 Income All net taxable income to which an investor becomes entitled during the financial year, including reinvested income, forms part of their assessable income in the year in which the entitlement arises. 8.2 Capital Gains Tax APN FM will generally distribute from the relevant Fund s capital gains that have been realised throughout the financial year. Taxable capital gains that an investor becomes entitled to should be included as part of their assessable income. The capital gains distributed to an investor can be offset by capital losses incurred by them from other sources. If the capital gains relate to assets held by the Fund for more than 12 months before the disposal and the investor is an individual, trustee or superannuation fund, who has held units in the Fund for more than 12 months, they may be entitled to reduce the net capital gain by applying the discount capital gains tax concession. To the extent that capital gains to which an investor becomes entitled are not assessable as a result of the discount capital gains tax concession, no adjustment to the cost base of their units will be required. 8.3 Disposal of Units Under the capital gains tax provisions, any taxable capital gain arising from the redemption of an investor s units may form part of their assessable income. An investor may be eligible for the discount capital gains tax concession if the units are held for 12 months or more. Investors should consult their tax adviser about the capital gains tax implications of a redemption of units in the Fund. If an investor carries on a business of trading in units or securities, they may be assessed in relation to dealings in units as ordinary income rather than under the capital gains tax provisions. In such cases the investor will not be eligible for the discount capital gains tax concession. APN UNLISTED PROPERTY FUND 17
8 Taxation 8.4 Foreign Tax Credits Where the Fund pays foreign tax in respect of a foreign investment, an investor may be entitled to receive a foreign tax credit. The amount of foreign tax credits received will be detailed in the tax report provided to an investor for inclusion in their assessable income. The Federal Government has repealed the Foreign Investment Fund (FIF) provisions with effect from 1 July 2010 and is in the process of introducing new specific anti-avoidance rules. 8.5 Tax Deferred Components of Income A portion of the Fund s distributed income may include non-assessable amounts that are derived from the Fund s investment in units in property trusts or property syndicates. These include, for example, certain distributions in respect of capital allowances and non-assessable capital gains. Certain non-assessable distributions to you will reduce the cost base of an investor s units in the Fund. This will be relevant when calculating the capital gain or loss (for capital gains tax purposes) on a subsequent redemption of units on the withdrawal of the investment. For example, non-assessable distributions of amounts attributed to building allowances will reduce the cost base of an investor s units. In addition, if these non-assessable distributions exceed the cost base of an investor s units in the Fund, the investor will realise a separate capital gain. The Fund aims to provide a tax advantaged income component (from capital allowances and non-assessable capital gains) of more than 20% of distributed income of the Fund. The new tax system for MITs announced by the Federal Government may result in adjustments to the cost base of an investor s units where the amount distributed to the investor is more or less than the taxable income attributed to them. This information will be detailed in the tax report sent to investors annually. 8.6 GST All fees stated in this PDS are inclusive of GST unless otherwise stated. The Fund is entitled to input tax credits under the GST legislation for GST paid in respect of services provided to it (generally limited to 75% of the GST paid in respect of certain acquisitions and changing to 55% from 1 July 2012). The Fund may be entitled to a refund of excess reduced input tax credits. 8.7 Tax File Number (TFN) and Australian Business Number (ABN) It is not compulsory for an investor to quote their TFN or ABN. If an investor is making an investment in the Fund in the course of a business or enterprise carried on by them, the investor may quote an ABN instead of a TFN. Failure by the investor to quote an ABN or TFN or claim an exemption may oblige APN FM to withhold tax at the top marginal rate (including Medicare levy) on gross payments (including distributions of income) to the investor. 8.8 Non-Resident Investors Appropriate statutory deductions of Australian tax will be made from income distributed to non-resident investors. Capital gains realised upon the disposal or redemption of units owned by non-resident investors will only be subject to Australian capital gains tax if the units are taxable Australian property. This will generally be the case where the relevant non-resident investor has a non-portfolio interest in the Fund (ie greater than 10% interest) and more than 50% of the market value of the Fund s assets are attributable to Australian real property. The amount that is withheld by the Fund will depend on the character of the income attributed and the non-resident s country of residence. Also, special rules apply to exempt non-resident investors in Australian resident managed funds from capital gains tax. APN FM strongly suggests non-resident investors obtain their own tax advice. 18 APN UNLISTED PROPERTY FUND
9 Additional Information 9.1 Custody RBC Dexia Investor Services Trust ABN 75 116 809 824 (RBC) is the custodian of the Fund property under a custody agreement. RBC s role as custodian is limited to holding assets of the Fund as agent of APN FM. RBC has no supervisory role in relation to the operation of the Fund and is not responsible for protecting investors interests. The custody agreement between APN FM and RBC provides that RBC will have no liability or responsibility to investors for any act done by or omission of APN FM. RBC was not involved in preparing, nor takes any responsibility, for this PDS. RBC does not guarantee the success of the Fund, the repayment of capital invested in the Fund or any particular rate of return on investments in the Fund. 9.2 Constitution The Fund s Constitution complies with the Corporations Act. Some of the provisions of the Fund s Constitution have been summarised below. Copies of the Constitution are available free of charge from APN FM offices during normal business hours. Retirement and Removal of Responsible Entity APN FM may retire or may be removed by Unitholders in accordance with the law. Investments Under the Constitution, APN FM is permitted to invest in a wide range of assets including investing in a broad range of property-related assets. However, this is subject to the investment objective and investment strategy specified in this PDS. Rights of an Investor Unitholders rights are governed by the Constitution of the Fund, the Corporations Act and general law. Under the Constitution of the Fund, the rights of investors include the right to receive income, to request redemption of units and to requisition and attend investor meetings. Termination of the Fund The Fund will terminate 80 years after the Fund s commencement unless terminated earlier by APN FM following notification to investors or in accordance with the Corporations Act. Following termination, APN FM is required to sell and realise the assets of the Fund and distribute the proceeds, less expenses, to investors in proportion to their respective unit holdings at the time of termination. Amending the Constitutions or any contract with unitholders APN FM may amend the Constitution of the Fund where APN FM reasonably considers that the changes will not adversely affect Unitholders rights. Otherwise APN FM must obtain Unitholder approval prior to making the amendments. To the extent that any contact or obligation arises in connection with acceptance of an application for units in the Fund or reliance upon this PDS by a Unitholder, any amendment to the Constitution may vary or cancel that contract or obligation. The contract or obligation may also be varied or cancelled by a deed executed by the responsible entity with the approval of a special resolution of Unitholders, or without that approval if the responsible entity reasonably considers the variation or cancellation will not materially and adversely affect Unitholders. Unitholders Liability The Constitution of the Fund provides that the liability of investors is limited to their investment in the Fund and any unpaid amounts in relation to the investor s units in the Fund. However, such a limitation has not been fully tested in the courts and therefore no absolute assurance can be given that the liability of Unitholders will be so limited. Investors are liable to indemnify the responsible entity for any taxation amount not already deducted from payments made to investors. APN FM s Liabilities APN FM is entitled to be indemnified out of the assets of the Fund for any liability incurred by APN FM in properly performing its duties in relation to the Fund. Subject to the Constitution and the Law, this indemnity will also apply to any liability incurred as a result of any act or omission of a delegate or agent appointed by APN FM. 9.3 Compliance Committee and Compliance Plans As the majority of APN FM s directors are independent directors, the Fund is not required to have a Compliance Committee under the Corporations Act. However, the Board of APN FM has established an Audit, Compliance and Risk Management Committee whose responsibilities include oversight on Fund compliance. A compliance plan has been lodged with ASIC for the Fund. An external auditor has been appointed to audit the compliance plan for the Fund at least once a year. The external auditor will report to the Fund s compliance committee. APN UNLISTED PROPERTY FUND 19
9 Additional Information 9.4 Related Party Transactions The Constitution does not prevent APN FM from: dealing with itself, as the responsible entity for the Fund or in any other capacity, an associate or any Unitholder; being interested in any contract or transaction with itself, as the responsible entity for the Fund or in any other capacity, an associate or Unitholder or retaining profits or benefits derived from any such contract or transaction, but those persons must act, in connection with those contracts or transactions, in a fiduciary relationship to all Unitholders; or acting in the same or similar capacity in relation to any other managed investment scheme. The Fund may transact with other funds managed by APN FM and/or members of the APN Property Group (including APN FM in its own right). Such dealings may include: holding a nominal number of units which APN FM or a related entity hold as a result of establishing the Fund; the remuneration to which APN FM is entitled in its capacity as responsible entity, which is described in the Fees and other Costs section on page 13; investing in other funds managed by APN FM (if the Fund invests in other funds managed or promoted by APN FM, APN FM may receive fees in relation to those funds); acquiring and disposing of interests in the Fund from or to another fund managed by APN FM or a member of the APN Property Group; voting as a Unitholder at Unitholder meetings held by funds managed by APN FM in which the Fund invests; borrowing from the APN Property Group; provision of accounting and registry operations; and other transactions. APN FM has a conflicts of interest and related party transactions policy which ensures that all transactions engaged in by APN FM are assessed for any conflict of interest and to ensure they are reasonable arm s length transactions based on appropriate commercial terms. Investors should note that this policy does not require APN FM to avoid conflicts of interest. The Fund s portfolio of investments will comprise interests in unlisted property trusts (some held indirectly) transferred to the Fund (as for units in the Fund) for which APN FM (as responsible entity of the APN PFIF and APN PFIF2) has subscribed, to enable APN PFIF and APN PFIF2 investors to realise part of their investment in the APN PFIF and APN PFIF2. The transaction was a related party transaction as APN FM is the responsible entity of the Fund, the APN PFIF and the APN PFIF2. However, the transaction was a reasonable arm s length transaction based on appropriate commercial terms based on the market value of APN PFIF s and the APN PFIF2 s unlisted property securities, and entered into in accordance with the relevant fund constitutions and APN FM s conflicts of interest and related party transactions policy. 9.5 Complaints The Fund s Constitution contains procedures for the handling of complaints from investors. If you have a complaint, you may write to APN FM (including name, address and investor number). APN FM is required to acknowledge receipt of a written complaint as soon as practicable. APN FM must give proper consideration to the complaint and must act in good faith to deal with a complaint. The determination relating to the complaint, the remedies (if any) available to the investor and information regarding any further avenue for complaint must be communicated within 45 days of receipt of the complaint. APN FM is a member of the Financial Ombudsman Service (FOS). FOS is authorised to deal with complaints that cannot be resolved with APN FM. Investors can contact FOS on 1300 780 808, or GPO Box 3 Melbourne, VIC, 3001. If investing through an IDPS, IDPS like service such as a master trust or wrap account or nominee and custody service then enquiries and complaints should be directed to the operator of that service, not APN FM. 20 APN UNLISTED PROPERTY FUND
9.6 Appointment of an Agent Investors may appoint (in writing) an agent to act on their behalf in respect of their investment in the Fund. If an agent is appointed, APN FM will act in accordance with the instructions of the appointed agent until the appointment is revoked in writing by the investor. 9.7 Consents RBC Dexia Investor Services Trust has given and not withdrawn its consent to be named as custodian in the form and context in which it was named. It has not authorised or caused the issue of this PDS other than the reference to its name and the information contained on page 19 in relation to its role as Custodian of the Fund. Hall & Wilcox has given and not withdrawn its consent to be named in this PDS in the form and context in which it was named. It has not authorised or caused the issue of this PDS other than the reference to its name. Deloitte Touche Tohmatsu (the external auditor of the Fund) has given and not withdrawn its consent to be named in this PDS in the form and context in which it is named. It has not authorised or caused the issue of this PDS other than the reference to its name. 9.8 Statement regarding labour standards, and environmental, social or ethical considerations APN FM does not take into account labour standards and environmental, social or ethical considerations in the context of making investment decisions relating to the Fund, except to the extent that APN FM considers these issues when they have the potential to materially impact investments. This means that should the sustainability of the value of the investments of the Fund be adversely affected due to unacceptable environmental, social or ethical factors, APN FM may choose not to invest further or choose to dispose of the investment. 9.9 Continuous Disclosure Under the Corporations Act, if there are 100 or more investors in the Fund, the Fund will be a disclosing entity and, as such, will be subject to regular reporting and disclosure obligations ( continuous disclosure requirements ) under the Corporations Act. As at the date of this PDS, APN FM anticipates that the Fund will become a disclosing entity under the Corporations Act and will be required to comply with continuous disclosure requirements. Copies of documents lodged with ASIC in relation to the Fund may be obtained from, or inspected at, an ASIC office. Where the Fund is a disclosing entity, if an investor wishes to obtain a copy of: the Fund s annual financial report most recently lodged with ASIC; any half-year financial report of the Fund lodged with ASIC after the lodgement of the annual report and before the date of this PDS; or any continuous disclosure notices given by the Fund after lodgement of the annual report and before the date of this PDS, the investor should telephone 1800 996 456 and APN FM will provide them with copies of these documents free of charge. Investors may also obtain a copy of any continuous disclosure notices given by the Fund at the APN FM website www.apngroup.com.au in accordance with ASIC s good practice guidance for website disclosure. In any period when the Fund has less than 100 investors, APN FM will place the above documents on its website. APN UNLISTED PROPERTY FUND 21
9 Additional Information 9.10 Electronic Instructions If an investor instructs APN FM by electronic means, such as facsimile, email or internet the investor releases APN FM from and indemnifies APN FM against, all losses and liabilities arising from any payment or action APN FM makes based on any instruction (even if not genuine) that APN FM receives by an electronic communication bearing your investor code and which appears to indicate to APN FM that the communication has been provided by the investor eg. a signature which is apparently the investor s and that of an authorised signatory for the investment or an email address which is apparently the investor s. The investor also agrees that neither they nor anyone claiming through them has any claim against APN FM or the Fund in relation to such payments or actions. There is a risk that a fraudulent withdrawal request can be made by someone who has access to an investor s investor code and a copy of their signature or email address. Please take care. 9.11 Anti-Money Laundering Regulations By applying for units in the Fund, investors are taken to agree to the following terms: investors warrant that they comply with all applicable anti-money laundering laws and regulations, including but not limited to the anti-money laundering laws and regulations of Australia (in force from time to time); investors are not aware and have no reason to suspect that: the money used to fund their investment in the Fund has been or will be derived from or related to any money laundering or other activities deemed illegal under applicable laws or regulations or otherwise prohibited under any international convention or agreement ( illegal activities ); the proceeds of their investment in the Fund will be used to finance illegal activities; and investors agree to promptly provide APN FM with all information that APN FM reasonably requests in order to comply with all applicable laws and regulations relating to anti-money laundering. APN FM is required to obtain certain identification and verification information from you in respect of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. APN FM may collect information from you to discharge its obligations. 22 APN UNLISTED PROPERTY FUND
APN UNLISTED PROPERTY FUND 23
Glossary ABN ASX Australian Business Number. The official list of the Australian Securities Exchange Limited. APN FM APN Funds Management Limited ABN 60 080 674 479. APN Unlisted Property Fund APN Unlisted Property Fund ARSN 156 183 872. APD APN Property Group Limited ABN 30 109 846 068. APN PFIF or APN Property for Income Fund APN PFIF2 or APN Property for Income Fund No. 2 APN Property Group ASIC AUD Board Business Day Compliance Committee Constitution Corporations Act CPI Custodian FIF FOS FUM APN Property for Income Fund ARSN 090 467 208. APN Property for Income Fund No. 2 ARSN 113 296 110. APD and its wholly owned subsidiaries (including APN FM). Australian Securities and Investments Commission. Australian dollars. APN FM s board of directors. Any day excluding a Saturday or Sunday on which Australian banks are open for business in Melbourne. A compliance committee as contemplated by Part 5C.5 of the Corporations Act. The constitution of the Fund registered with ASIC. The Corporations Act 2001 (Cth). Consumer Price Index. RBC Dexia Investor Services Trust. Foreign Investment Fund. Financial Ombudsman Service. Funds under management. Fund APN Unlisted Property Fund ARSN 156 183 872. GST As defined in A New Tax System (Goods and Services Tax) Act 1999. IDPS Illiquid Issue Price Investor directed portfolio service. Where the Fund is Illiquid because less than 80% of its assets are Liquid Assets in accordance with s601ka(4) and s601ka(5) of the Corporations Act. An amount equal to the Net Asset Value per unit, plus the buy spread (if any). 24 APN UNLISTED PROPERTY FUND
Liquid Assets MIT Net Asset Value or NAV NTA PDS As defined in s601ka(5) of the Corporations Act. Managed Investment Trust. The value of the Fund s assets less the Fund s liabilities as calculated under the Constitution of the Fund. Net Tangible Asset value. This product disclosure statement. RBC RBC Dexia Investor Services Trust ABN 75 116 809 824. Responsible Entity Securities or securities TFN Withdrawal Price Unit Unitholder APN FM or any other responsible entity properly appointed under the constitution of the Fund. Securities as defined in section 761A of the Corporations Act and interests in managed investment schemes. Tax File Number. An amount equal to the Net Asset Value per unit, less the sell spread (if any). A unit in the Fund. The registered holder of a unit in the Fund. APN UNLISTED PROPERTY FUND 25
Corporate Directory Responsible Entity APN Funds Management Limited ABN 60 080 674 479 Registered Office Level 30 101 Collins Street Melbourne Victoria 3000 Telephone: (03) 8656 1000 Facsimile: (03) 8656 1010 Freecall: 1800 996 456 Email: apnpg@apngroup.com.au Web: apngroup.com.au Directors of the Responsible Entity Please refer to the APN FM website www.apngroup.com.au Lawyers to the Responsible Entity Hall & Wilcox Level 30 Bourke Place 600 Bourke Street Melbourne Victoria 3000 Custodian RBC Dexia Investor Services Trust ABN 75 116 809 824 Level 17 2 Park Street Sydney New South Wales 2000 External Auditor to the Fund Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne Victoria 3000 26 APN UNLISTED PROPERTY FUND
apngroup.com.au APN Property Group Limited Level 30, 101 Collins Street, Melbourne, Victoria 3000 Investor Services 1800 996 456 Adviser Services 1300 027 636 Email apnpg@apngroup.com.au Website apngroup.com.au