BT Wholesale Australian Long/Short Fund
Additional information to the Product Disclosure Statement
Issued 22 June 2011
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This additional information forms part of the Product Disclosure Statement for the BT Wholesale Australian Long/Short Fund (Fund) dated 22 June 2011 (PDS). You should read this information together with the PDS before making a decision to invest into the Fund.
This additional information is general information only and does not take into account your personal financial situation or needs. BT® is a registered trade mark of BT Financial Group Pty Ltd and is used under licence.
1. Restrictions on withdrawals
There may be circumstances where your ability to withdraw from the Fund is restricted. The following text contains further information on restrictions on withdrawals and should be read in conjunction with the PDS.
If the Fund is illiquid (as defined in the Corporations Act), withdrawals from the Fund will only be possible if we make a withdrawal offer in accordance with the Corporations Act. We are not obliged to make such an offer. However, if we do, you are only able to withdraw your investment in accordance with the terms of a current withdrawal offer. If an insufficient amount of money is available from the assets specified in the withdrawal offer to satisfy withdrawal requests, the requests will be satisfied proportionately amongst those investors wishing to withdraw from the Fund. Under the Corporations Act, a trust is illiquid if it has less than 80% liquid assets (generally cash and marketable securities).
The constitution of the Fund also contains specific provisions that provide us with powers in relation to withdrawals. The specific provisions in the constitution are summarised below.
| Provision | Explained |
|---|---|
| Payment of withdrawals by transfer of assets | We may transfer assets to you rather than pay cash in satisfaction of all or any part of your withdrawal request. These assets (together with any cash paid to you) must be of the same value as the amount of your withdrawal. We may require you to pay for the costs involved in the transfer of the assets or we may deduct such costs from the amount payable to you. |
| Large withdrawals from a single investor | If we receive a large withdrawal request from a single investor on a day which, in our view, would be likely to result in a withdrawal payment exceeding the specified limit (currently 5% of the Fund's value) we can sell selected assets of the Fund that have a total value (as at the time the exit price is calculated) equal to the withdrawal amount and pay the net proceeds of the sale instead of the withdrawal amount to the investor, even if those proceeds do not equal the withdrawal amount. |
| Large withdrawals from multiple investors | If we receive a large amount of withdrawal requests in a single day which exceed the specified limit (currently 10% of the Fund's value), then a proportion of the withdrawal requests may not receive the exit price for that day and may be deemed to be received on the next Business Day. |
| Delay in realising assets | If after taking all reasonable steps, we are unable to realise sufficient assets to satisfy a withdrawal request due to circumstances beyond our control (such as restricted or suspended trading in a market) or if we believe it is not in the best interests of unitholders to realise assets, the period allowed to satisfy withdrawal requests may be extended by the number of days during which the circumstances apply. |
| Suspension of withdrawals | We may suspend withdrawal requests at any time and for such period as we consider appropriate in the circumstances (which may include where the Fund becomes illiquid). If we do so, the period we take to satisfy withdrawal requests will be extended by the period of the suspension. The exit price will be determined as at the next time we value the Fund after the suspension is lifted. |
| Net asset value falls by 5% | If we consider that the net asset value of the Fund has fallen by 5% or more after the exit price for a withdrawal request has been calculated (but before the unit has been redeemed), we may recalculate the exit price as at a valuation time determined by us. |
2. Indirect investors
The following text contains further information on indirect investors and should be read in conjunction with the PDS.
An investment in the Fund offered under the Fund’s PDS through a master trust or wrap account does not entitle you to a direct interest in the Fund.
This means that the rights that apply to a person who invests directly in the Fund are not available to indirect investors but rather, to the operator or custodian of the master trust or wrap account. The operator or custodian of the master trust or wrap account will be recorded in the register as the investor and will be the person who exercises the rights and receives the benefits of an investor.
Persons who invest through a master trust or wrap account may be subject to different conditions from those referred to in the PDS, particularly in regard to:
- how to transact on your investment (initial and additional investments and withdrawals are determined by the master trust or wrap account operator);
- cooling-off period and rights (no cooling-off rights apply to any investments in the Fund acquired through a master trust or wrap account operator);
- timing of distributions, withdrawals and the processing of transactions are determined by the master trust or wrap account operator;
- cut-off times for transacting (e.g. applications and withdrawals) are determined by the master trust or wrap account operator;
- fund reporting and other documentation (Fund reports and investor notices are sent to the master trust or wrap account operator who then provide this information to indirect investors);
- fees and other costs (additional fees and expenses may be charged by the operator or custodian of the master trust or wrap account).
Investors in the master trust or wrap account should contact their financial adviser or master trust or wrap account operator for any investor queries.
3. Additional information about fees and costs
The following section provides detailed information about the main fees and costs that you may be charged for investing in the Fund along with further information about the additional fees and costs that could apply to your investment. This information should be read in conjunction with the PDS.
| Type of Fee or Cost 1 | Amount | How and when paid |
|---|---|---|
| Fees when your money moves in or out of the Fund | ||
|
Establishment fee The fee to open your investment |
Nil | Not applicable |
|
Contribution fee The fee on each amount contributed to your investment by you |
Nil | Not applicable |
|
Withdrawal fee The fee on each amount you take out of your investment |
Nil | Not applicable |
|
Termination fee The fee to close your investment |
Nil | Not applicable |
| Management costs | ||
| The fees and costs for managing your investment 2 | At the date of this PDS, management costs consist of the following components: Issuer fee 0.85% pa Performance fee 15% x the Fund's performance in excess of the performance hurdle 3 |
The issuer fee is paid from the assets of the Fund and reflected in the unit price of your investment. The fee is calculated on the value of the Fund each Business Day and paid to us after the end of each month. The performance fee (if positive) is paid from the assets of the Fund and reflected in the unit price of your investment. The fee is calculated each Business Day based on the investment performance and value of the Fund on that day. If we are entitled to a performance fee, it is paid to us as at 30 June each year. |
| Service fees | ||
|
Investment switching fee The fee for changing investment options |
Nil | Not applicable |
1 Fees in this PDS can be individually negotiated if you are a wholesale client under the Corporations Act.
2 This fee may include an amount payable to an adviser.
3 The performance hurdle is the performance of the Fund’s benchmark (S&P/ASX 200 Accumulation Index).
Additional explanation of fees and costs
Performance fees
When is BTIM entitled to be paid a performance fee?
BTIM is entitled to be paid a performance fee if the Fund's investment performance exceeds the performance hurdle and any performance deficit has been recouped.
The performance hurdle is the performance of the benchmark (S&P/ASX 200 Accumulation Index). If a performance fee is payable, it is charged in addition to the issuer fee.
How and when is the performance fee calculated?
The performance fee is calculated in dollar terms each Business Day based on the daily performance and value of the Fund compared to its performance hurdle. This daily fee can be a positive or negative amount depending on whether the Fund has exceeded the performance hurdle on that day.
Each day's performance fee is added to the previous days' fee. When the total amount is positive, the performance fee is accrued and reflected in the Fund's unit price. When the total amount is negative, it is carried forward as a ‘performance deficit'. The performance deficit must first be recovered in dollar terms before any performance fee can be accrued and reflected in the unit price.
When is the performance fee paid?
If a performance fee has accrued in the unit price as at 30 June, then the fee is paid to us as at that date. The performance fee is payable in relation to the performance of the Fund as a whole during the year and does not necessarily reflect the performance of any individual unitholder's investment.
As the performance fee is based on the daily performance and value of the Fund, applications, withdrawals and market movements may mean that the performance fee in dollar terms for the year may not be equivalent to 15% of the Fund's performance in excess of the performance hurdle in percentage terms. In some circumstances, this could mean that we are paid a performance fee for a year where the Fund underperforms its performance hurdle in percentage terms.
What happens when there is a performance deficit?
Any performance deficit as at 30 June is carried forward to the next year. Any performance deficit is shared across all investors including those investors who join the Fund after the performance deficit has arisen. Similarly, any performance deficit is not reduced as a result of investors leaving the Fund.
Examples of performance fees
To help you better understand how performance fees can affect your investment, the following examples show the dollar effect for a hypothetical investor over a two year period.
The examples assume that investor A has $50,000 invested continuously in the Fund for one or two years (to 30 June) and has not made any transactions during the period. The examples also assume that the Fund has had no applications or withdrawals during the period and do not include the issuer fee.
| Example1 | Performance Fee |
|---|---|
Year 1
|
A performance fee of $525 is payable as at 30 June of year 1 as the Fund has outperformed the performance hurdle. $50,000 × 7% × 15% = $525 |
| Example 2 | |
Year 1
|
A performance fee of $1,050 is payable as at 30 June of year 1 as the Fund has outperformed the performance hurdle. $50,000 × 14% × 15% = $1,050 |
| Example 3 | |
Year 1
|
A performance fee of $525 is payable as at 30 June of year 1 as the Fund has outperformed the performance hurdle. $50,000 × 7% × 15% = $525 |
Year 2
|
Year 2 A performance fee is not payable as at 30 June of year 2 as the Fund has not outperformed the performance hurdle. The performance deficit (in dollar terms) is carried forward to the next year. |
| Example 4 | |
Year 1
|
Year 1 A performance fee is not payable as at 30 June of year 1 as the Fund has not outperformed the performance hurdle. The performance deficit (in dollar terms) is carried forward to year 2. |
Year 2
|
Year 2 A performance fee is not payable as at 30 June of year 2 as the Fund's performance fee for year 2 has been offset by the performance deficit carried forward from year 1. The remaining performance deficit (in dollar terms) is carried forward to the next year. |
The above examples are provided for illustrative purposes only and do not represent any actual or prospective performance of the Fund. It is not possible to estimate the actual performance fee payable for any given period as we cannot accurately forecast the Fund's performance.
BTIM does not provide any assurance that the Fund will achieve any performance shown and you should not rely on this in determining whether to invest in the Fund. You should also be aware that for periods of high outperformance, the performance fee may be substantial.
Indirect investors — additional master trust or wrap account fees
For investors accessing the Fund through a master trust or wrap account, additional fees and costs may apply. These fees and costs are stated in the offer document provided by your master trust or wrap account operator.
Fund manager and product access payments
Some wrap platforms, master trusts or other investment administration services (Platforms) charge fees for having the Fund included on their investment menus. We may, therefore, pay amounts from the fees we receive to any Platform through which the Fund is made available.
We make two types of payments to Platforms:
product access payments (as a flat dollar amount each year) for administration and investment related services, which may be an amount of up to $14,000 pa (GST inclusive) per Platform; and
- fund manager payments (based on the volume of business generated), which may be an amount of up to 40% of our issuer fee for Platforms external to the Westpac Group (i.e. up to 0.34% pa of the funds invested via the Platform) and an amount of up to 100% of our issuer fee for Platforms provided by members of the Westpac Group (i.e. up to 0.85% pa of the funds invested via the Platform).
The amount of these payments may change during the life of the PDS. As these amounts are paid by us out of our own resources, they are not an additional cost to you.
After 1 July 2012, the Government has proposed that volume based payments by product issuers to platform providers will no longer be permitted. After this date BTIM will no longer make volume based payments to Platforms where this is not allowed. Product access payments based on a flat dollar amount will continue to be permitted.
Fees paid to financial advisers and other persons
If you have a financial adviser, we may pay commissions to them and other persons approved by us (for example adviser dealer groups) from the fees we receive and at no additional cost to you. This amount may be at a rate of up to 0.85% pa (i.e. 100% of our issuer fee), calculated based on the value of your investment.
After 1 July 2012, the Government has proposed that arrangements for the payment of commissions by product issuers to financial advisers will no longer be permitted. After this date BTIM will no longer pay commissions to financial advisers and other persons, where this is not allowed.
Alternative forms of adviser remuneration
We may provide remuneration to financial advisers indirectly by paying them additional amounts (such as marketing support payments) and/or non-monetary benefits (such as business and technical support, professional development, conferences etc). If these amounts or benefits are provided, they are payable out of the fees and costs we receive and are not an additional cost to you.
We maintain a register that outlines the material alternative forms of remuneration that we pay to financial advisers and some distributors of our products, or receive from providers of some of the products available through us.
The register is publicly available and you can obtain a copy by contacting the BT Contact Centre.
Ability to negotiate fees — wholesale investors
If you are classed as a wholesale investor (such as a professional investor) under the Corporations Act, in accordance with Australian Securities and Investments Commission (ASIC) policy, all fees described in this PDS may be individually negotiated. There is no set manner or method of negotiating fees. Please contact the BT Contact Centre for further information.
Incidental fees and costs
Standard Government fees, duties and bank charges may also apply to your investments and withdrawals including dishonour fees and conversion costs.
Taxes
Unless otherwise stated, all fees quoted in the PDS are quoted on a GST inclusive basis and net of any applicable Reduced Input Tax Credits (RITCs).
Rebates/waivers for interfunding arrangements
The Fund may invest from time to time in other funds that we, or a related entity, manage (related fund).
Our current policy is:
- no contribution fee is payable to the related fund;
- issuer fees and any performance fees are either not collected by the related fund or if they are, they are rebated in full to the investing fund;
- certain expense recoveries (if any) are fully rebated to the investing fund,
however, we may change these arrangements at any time, in which case, we will give investors 30 days notice.
