Salt Investment Funds

Transcription

1 Salt Investment Funds Salt Javelin Fund Salt NZ Dividend Appreciation Fund Salt Listed Property Fund Salt Long Short Fund Prospectus dated 31 July

2 Key Information about the Salt Investment Funds Set out below is a snapshot of key information about certain funds within the range of unit trusts known as the Salt Investment Funds. You should read it in conjunction with the detailed information set out elsewhere in this prospectus, and with the Salt Investment Funds investment statement. Overview The Salt Investment Funds are a suite of unit trusts managed by us, Salt Investment Funds Limited, a wholly-owned subsidiary of Salt Funds Management Limited, a boutique investment management firm specialising in managing New Zealand-centric listed equity and property mandates. The trustee of the Salt Investment Funds is The New Zealand Guardian Trust Company Limited. A unit trust is an investment that pools your money with other investors. We invest that pooled money, and the Trustee supervises us. Available investment options Four separate unit trusts are offered under this prospectus: the Salt Javelin Fund, the Salt NZ Dividend Appreciation Fund, the Salt Listed Property Fund, and the Salt Long Short Fund. These are referred to as the Funds throughout this prospectus. Each Fund invests in different types of investments. You can choose to invest in one Fund or a combination of Funds. Your investment is applied towards units in the Fund you choose. The value of your units change to reflect the returns of those Fund(s) (either positive or negative), as well as the Fund s fees and expenses. The Funds invest as follows: Fund Salt Javelin Fund Salt NZ Dividend Appreciation Fund Salt Listed Property Fund Salt Long Short Fund Primarily invests in A portfolio of securities that represent our best ideas in the New Zealand and Australian equity markets. The Fund also has the ability to hold cash while it awaits compelling investment opportunities as determined by us. A portfolio of shares of New Zealand companies that may, in our opinion, pay high and sustainable dividends. A portfolio of shares of New Zealand and Australian property trusts, companies and other property related securities with exposure to commercial, residential, retail, tourism, industrial, medical, educational, rural, retirement, leisure and other property sectors. The Fund aims to deliver positive absolute returns in all market environments. In addition to holding long-only New Zealand and Australian securities, the Fund may, at our discretion, short sell securities, hold cash, lever its assets and 2

3 utilise active currency management to generate returns. However, the Fund does not borrow money except for settlement purposes and financial leverage will only occur through the use of short selling and derivatives. For more information, see section 6.5. Making investments Investments of any amount can usually be made into each Fund, provided the following minimums are met for each Fund: Initial investment $25,000 Additional lump sum investment $5,000 Regular investment $1,000 per month These minimums could change in the future see paragraph for more information. Investments in the Funds may also be made through an administration service approved by us. Any such investment will be held by the administration service s custodian on your behalf and different minimum investment levels may apply to the particular service that you use. Contact us for a list of approved administration services at any time. For more information, see paragraphs to and the Salt Investment Funds investment statement. Withdrawing your money and switching between Funds You can usually withdraw units from a Fund at any time provided you withdraw a minimum of $5,000 from that Fund and your remaining investment in the Fund is at least $25,000. You can also usually switch between Funds at any time provided you switch at least the minimum amount for an additional lump sum investment in the Fund you are switching to, as set out above, (or your whole unit holding in a Fund) and your remaining holding in the relevant Fund is at least $25,000. For more information see paragraphs to Principal risks The principal risks applying to all of the Funds that could affect your returns are investment risk (including market risk or volatility in the markets, changes in general economic conditions and the impact of changing interest rates, inflation and exchange rates), the risk of loss of key persons, the risk of key investors withdrawing, counterparty risk, liquidity risk, regulatory risk, and taxation risk. Please note that short selling risk, leverage risk, and credit risk are also principal risks that apply to the Salt Long Short Fund and could affect your returns. These unique risks mean that the Fund will not be suitable for all investors. For more information see section Investments in the Funds are not guaranteed. Fees and expenses Fees and expenses generally The following fees (plus any GST) are payable by each Fund, per annum: 3

4 Management fee Fund Fee (% of Fund s gross fund value) Salt Javelin Fund 0.85% Salt NZ Dividend Appreciation Fund 0.95% Salt Listed Property Fund 0.85% Salt Long Short Fund 1.50% Administration fee Up to: 0.10% for the Salt Long Short Fund 0.07% for every other Fund, of the relevant Fund s gross fund value, subject to a minimum annual fee of $30,000 per Fund Performance fee For the following two Funds only, the following percentage of the relevant Fund s return in excess of its performance target, which is the Reserve Bank of New Zealand Official Cash Rate plus 5% per annum: Salt Javelin Fund: 10% Salt Long Short Fund: 15% A high-water mark applies, and is explained in section Trustee fee Custodian fee Up to 0.06% of each Fund s gross fund value, subject to a minimum fee of $10,000 for the first year the Funds are in operation, and $20,000 per annum after the first year, which is spread across all of the Funds that have commenced operations Currently set as 0.018% of each Fund s gross fund value. This fee excludes transaction costs We can also agree to pay each of the Trustee and the administration manager special fees from a Fund for any additional services that they provide in respect of that Fund. At the Registration Date, we do not charge contribution, withdrawal, or switching fees (and do not intend to do so). However, transaction costs, which reflect the costs of buying and selling underlying investments, are reflected in the Funds unit prices (that is, a buy/sell spread is applied when you purchase or redeem units). GST is charged on some fees. In addition, expenses incurred in operating each Fund are usually deducted from that Fund. The additional expenses include audit and legal fees, and the costs of buying and selling the Fund s investments. Fees and expenses cap At the Registration Date, we have agreed to cap the maximum amount of fees and expenses, other than management fees, transaction costs, buy/sell spreads, borrowing and short-selling costs (where relevant), performance fees (where relevant), and other extraordinary or special 4

5 fees or expenses at the following percentage of each Fund s average daily gross fund value: Long Short Fund: 0.25% per annum, excluding GST All other Funds: 0.20% per annum, excluding GST. These fees and expenses may change in the future see paragraph 13.1 for more information. Tax Each Fund is a multi-rate PIE for tax purposes, meaning that tax is usually paid on your behalf at a rate approximating your marginal tax rate (but capped at 28%). For more information see section

6 Contents 1 Description of unit trusts 8 2 Managers and promoters 8 3 Registrar, custodian, auditors, advisers, and experts 11 4 Independence of unit trustee and any custodians 12 5 Unit trustee 12 6 Description of the unit trust and its development 13 7 Unit holder liability 37 8 Summary financial statements 38 9 Minimum subscription Guarantors Acquisition of business or equity securities Options and units paid up otherwise than in cash Interested persons Material contracts Pending proceedings Issue expenses Other terms of offer and units Financial statements and auditor s report Places of inspection of documents Other material matters Manager s statement Unit trustee s statement 52 Registered prospectus under the Securities Act 1978 In accordance with clause 6 of Schedule 4 to the Financial Markets Conduct Act 2013, this prospectus contains an offer of units in the Funds to which the Securities Act 1978 applies. Accordingly, this prospectus has been prepared in accordance with the Securities Act 1978 and the Securities Regulations The Financial Markets Conduct Act repealed a number of enactments on 1 December 2014, including the Unit Trusts Act However, under transitional arrangements in respect of the Financial Markets Conduct Act those repealed enactments will continue to apply to each Fund until the earlier of 30 November 2016 or the date the Fund opts in to the Financial Markets Conduct Act. A signed copy of this prospectus and copies of the documents required by section 41 of the Securities Act 1978 were delivered for registration to the Registrar of Financial Service Providers on 31 July 2015 ( Registration Date ). Legislation All legislation referred to in this prospectus is available online at 6

7 Glossary A glossary of defined terms used in the prospectus is set out at the end of this prospectus. Defined terms are generally capitalised throughout the prospectus. 7

8 1 Description of unit trusts 1.1 The Salt Investment Funds range of unit trusts are governed by a master trust deed dated 16 April 2014 ( Trust Deed ). The Funds offered in this prospectus are the: Salt Javelin Fund Salt NZ Dividend Appreciation Fund Salt Listed Property Fund Salt Long Short Fund (the Funds ). 1.2 Each of the Funds was established on 16 April 2014 in Auckland. The Funds are unit trusts under the Unit Trusts Act 1960 ( Act ). They offer a pooled investment providing exposure to different types of underlying investments (see section 6.5). Your investment in a Fund is represented by units purchased with investments you make. 1.3 Each Fund has a duration of 80 years from the date it was established unless it is terminated earlier (as described in paragraph of this prospectus). 1.4 Each Fund is created by its own establishment deed, dated the date of its establishment ( Establishment Deed ), that forms part of the Trust Deed. 1.5 There is no maximum number or amount of units in any of the Funds. 1.6 The price of units in each Fund varies each day. The issue price for units is the unit value of the particular Fund prevailing on the day they are issued, plus any transaction costs (our estimate of the total cost of acquiring further investments, which may be a deemed percentage), and any applicable contribution fees. The unit value is determined as the market value of all investments of the Fund, less the aggregate of the Fund s liabilities (other than PIE tax), including any costs, charges, and other outgoings incurred or accrued in connection with the Fund s liabilities which have not been paid, divided by the number of units on issue. 1.7 Contribution and withdrawal fees may be charged on the issue and redemption of units (see paragraphs and ). However, as at the Registration Date, switching, contribution, and withdrawal fees are not charged. The only deductions made for purchasing and selling units are transaction costs, which are incorporated into the unit price when units are issued or withdrawn. See paragraph for more information. 2 Managers and promoters The manager and its directors 2.1 Salt Investment Funds Limited (referred to as we, us, and our ) is the manager of the Funds. Our address is: Salt Investment Funds Limited Level 3, The Imperial Buildings 44 Queen Street Auckland 8

9 2.2 As at the Registration Date, our directors are: Matthew Goodson Managing Director CFA, BA, MCA (Hons, 1st) Auckland Matthew has more than 22 years experience in the finance sector. In addition to being a Director of Salt Investment Funds Limited, Matthew is also a Director and Shareholder of our parent company, Salt Funds Management Limited. As at the Registration Date, Matthew is the Portfolio Manager for the Salt NZ Dividend Appreciation Fund, Salt Listed Property Fund and Salt Long Short Fund. Matthew started his career as an Economist with Garlick & Co from before becoming Head of Research from He then spent seven years in New York working for BZW and Goldman Sachs JB Were as Director, Wholesale Equities before returning to New Zealand in 2004 to work for First NZ Capital also as Director, Wholesale Equities until During this time Matthew also managed a long short fund for First NZ Capital from Immediately prior to joining Salt Funds Management Limited, Matthew was employed for over four years as Portfolio Manager at BT Funds Management (NZ) Limited, a wholly owned subsidiary of Westpac Financial Services Group Limited. Matthew has a Bachelor of Arts degree and Masters in Commerce and Administration (First Class Honours) from Victoria University of Wellington and is a holder of the right to use the Chartered Financial Analyst designation. Paul Harrison Managing Director BCA, CA, MBA Auckland Paul has more than 25 years experience in the finance sector. In addition to being a Director of Salt Investment Funds Limited, Paul is also a Director and Shareholder of our parent company, Salt Funds Management Limited. As at the Registration Date, Paul is the Portfolio Manager for the Salt Javelin Fund. Paul started his career as an Accountant with Ernst & Whinney in He then spent nine years working as an Associate Director for Southpac Investment Management and five years as Investment Manager for Goldman Sachs JB Were Asset Management. Other roles have included Director and CFO for software company EstarOnline Limited and an Institutional Adviser for share broker Doyle Paterson Brown. Immediately prior to joining Salt Funds Management Limited, Paul was employed for over five years as Portfolio Manager at BT Funds Management (NZ) Limited, a wholly owned subsidiary of Westpac Financial Services Group Limited. Paul has a Bachelor in Commerce and Administration from Victoria University of Wellington and a Masters of Business Administration from Auckland University. He also holds the Chartered Accountant (CA) designation. 2.3 Our directors can be contacted at the address set out in paragraph Our address, our directors, and our directors addresses may change from time to time. You can obtain the current addresses and the names of our current directors by calling us on

10 Parent company 2.5 We are a subsidiary of Salt Funds Management Limited ( Salt ), a boutique investment management firm specialising in managing New Zealand-centric listed equity and property mandates. Salt does not guarantee any investment in the Funds. As at the Registration Date, the other key members of our and Salt s investment and management team are: David Oxley Head of Research BCom (Hons, 2:1), ACIS David has more than 23 years experience in the finance sector. He is employed by Salt Investment Funds Limited s parent company in the role of Head of Research and has overall responsibility for Salt s investment research process. David is also a shareholder of Salt Investment Funds Limited s parent company, Salt Funds Management Limited. David is a career investment analyst and has experience in both New Zealand and the United Kingdom. He began his career as Investment Analyst, UK Equities for Sun Alliance Investment Management in He then became Investment Analyst, Pan-European Equities for Royal & Sun Alliance Investment Management following his previous company s merger with Royal Insurance in He then took up a role as Investment Analyst and Team Leader for Pan-European Equities for Morley Fund Management in David moved to New Zealand in 2005 and joined ABN Amro Craigs (later Craigs Investment Partners) as Director, Senior Research Analyst. In 2011 he moved to the Guardians of New Zealand Superannuation as Senior Analyst, Active Return Strategy. Immediately prior to joining Salt Funds Management Limited, David was employed as Head of Research at BT Funds Management (NZ) Limited, a wholly owned subsidiary of Westpac Financial Services Group Limited. David has a Bachelor of Commerce degree, from the University of Birmingham (Honours 2:1) and holds the ACIS designation as an Associate member of the Institute of Chartered Secretaries and Administrators professional body. Anthony Sowerby Chief Operating Officer CFA, BSc(Tech) Anthony has more than 15 years experience in the finance sector. He is employed by Salt Investment Funds Limited s parent company in the role of Chief Operating Officer and has overall responsibility for operations, compliance and client relationship management. Anthony is also a Shareholder of Salt Investment Funds Limited s parent company, Salt Funds Management Limited. Anthony has held a variety of finance roles in both New Zealand and Ireland. He has held business development roles for KBC Asset Management from before returning home to New Zealand, where he was employed by AMP Financial Services. He then took a position with AMP Capital Investors in 2007 working firstly as Retail Sales Manager and then Business Development Manager for six years before leaving to join Salt. Anthony has a Bachelor of Science Technology, from Waikato University and is a holder of the right to use the Chartered Financial Analyst designation. 10

11 Details on other members of Salt s investment team can be found on our website at Other unit trusts 2.6 We do not manage any other retail unit trusts. We do manage one wholesale unit trust, the Salt Core NZ Equities Fund (although, as at the Registration Date, the Salt Core NZ Equities Fund has not yet commenced operation). Promoters 2.7 As at the Registration Date, Salt Funds Management Limited and any of its directors that are not also our directors are the promoters of the Funds. As at the Registration Date, Salt s directors are also our directors and therefore not promoters. The directors may change from time to time. You can find the current names of the promoters by contacting us at the address set out in paragraph 2.1. Administration and investment managers 2.8 We have appointed MMC Limited as administration manager ( Administration Manager ) to provide unit pricing and registry services for the Funds. 2.9 As at the Registration Date we undertake all the investment management functions in respect of the Funds. We have not appointed any separate investment managers, although we could do so in the future. Bankruptcy, insolvency, dishonesty convictions, and director bans 2.10 During the five years preceding the Registration Date, none of us, Salt, the Administration Manager, or any of our or their directors have been (as applicable): adjudged bankrupt or insolvent convicted of any crime involving dishonesty prohibited from acting as a director of a company placed in statutory management, voluntary administration, liquidation, or receivership. 3 Registrar, custodian, auditors, advisers, and experts 3.1 MMC Limited is the Funds registrar. 3.2 The New Zealand Guardian Trust Company Limited is the Funds custodian ( Custodian ). The Custodian may delegate some or all of its custodial functions from time to time. 3.3 PricewaterhouseCoopers are the Funds auditors. PricewaterhouseCoopers and its partners have obtained auditor licences under the Auditor Regulation Act Other than in its capacity as auditor, PricewaterhouseCoopers has no relationships with, or interests in, the Funds. 3.4 Ernst & Young is the Salt Long Short Fund s tax advisor. 3.5 The solicitors involved in the preparation of this prospectus are Kensington Swan. 3.6 No other professional advisers were involved in the preparation of this prospectus, and no experts are named in this prospectus. 11

12 4 Independence of unit trustee and any custodians 4.1 The Trustee and the Custodian are independent of us, Salt, and the Administration Manager. 5 Unit trustee 5.1 The New Zealand Guardian Trust Company Limited ( Trustee ) is the trustee of the Funds. Its address is: The New Zealand Guardian Trust Company Limited Level Queen Street Auckland 5.2 As at the Registration Date, the Trustee s directors are: Robin Albert Flannagan of Auckland, New Zealand James Earl Douglas of Auckland, New Zealand Andrew Howard Barnes of Auckland, New Zealand Timothy James Shaw of Auckland, New Zealand Christopher Robert Darlow of Auckland, New Zealand. 5.3 The Trustee s directors can be contacted at the Trustee s address set out above in paragraph The Trustee s address, directors, and directors address may change from time to time and can all be obtained from the Companies Office website or by calling the Trustee on or The Trustee was incorporated in New Zealand under the Companies Act 1955 on 7 September 1982 and was re-registered under the Companies Act 1993 on 23 April The ultimate holding company of the Trustee is Bath Street Capital Limited. Bath Street Capital Limited is incorporated in New Zealand. 5.7 The Trustee has been granted a licence under section 16(1) of the Financial Markets Supervisors Act 2011 to act as a trustee in respect of superannuation schemes, debt securities, unit trusts, and KiwiSaver schemes, and as a statutory supervisor for participatory securities, for a term expiring on 16 March A copy of the Trustee s licence, including the conditions on the licence, can be obtained at the FMA s website: and clicking on Help Me Comply, Supervisors, Licenced Supervisors, The New Zealand Guardian Trust Company Limited or on the Trustee s website: As at the Registration Date, all conditions and reporting obligations have been duly satisfied by the required dates. If you have any queries about the licence please contact the Trustee in the first instance. 5.9 None of the Trustee, Bath Street Capital Limited, or any other party guarantees any investment in the Funds The Trustee is entitled to an indemnity out of the assets of a Fund if it is held personally liable in respect of any debt, liability, or obligation incurred by or on behalf of that Fund or for any action 12

13 taken or omitted in connection with that Fund. The indemnity extends to the costs of any litigation or other proceedings in which liability is determined However, the Trustee is not entitled to be indemnified out of the assets of a Fund in respect of any liability for breach of trust where it fails to show the degree of care and diligence required of it in that capacity, having regard to the provisions of the Trust Deed and the powers, authorities, and discretions conferred by the Trust Deed. The Trustee is also expressly liable for any loss arising out of its own wilful default or wilful breach of trust In addition, the Trustee is entitled to be reimbursed for PIE tax paid or payable by it by cancelling relevant unit holders units. 6 Description of the unit trust and its development This section of the prospectus covers the following: Subject Paragraph Date of the Trust Deed and Establishment Deeds 6.1 Summary of the principal terms of the Trust Deed 6.2 Restrictions on investments 6.3 Investment and other material activities, and material developments, in the last five years 6.4 Investment objectives and policy 6.5 Investment performance 6.6 Distributions 6.7 Return of capital Date of the Trust Deed and Establishment Deeds The Trust Deed and each Establishment Deed are dated 16 April 2014, and have not been amended since that date Each Establishment Deed forms part of the Trust Deed (and references in this prospectus to the Trust Deed include each Establishment Deed, unless the context requires otherwise). 6.2 Summary of the principal terms of the Trust Deed This section of the prospectus contains a summary of the principal terms of the Trust Deed. The Trust Deed contains other provisions which govern the Funds. For details on how to view a copy of the Trust Deed, see section 19. Creation and structure of the Funds The Trust Deed allows us and the Trustee to establish new unit trusts within the Salt Investment Funds by entering into an Establishment Deed. We and the Trustee have entered into an Establishment Deed for each of the Funds. 13

14 6.2.3 To the extent we and the Trustee consider it necessary or appropriate in respect of the relevant Fund, each Establishment Deed sets out the trust particulars in relation to that Fund, being: a b c d e f g h i j authorised investments; investment strategy; frequency of valuation days; the effective valuation day for the issue of units; the period for processing withdrawals; limitations on borrowing; distribution policy; performance fees; any amendment of the Trust Deed applicable to the Fund; and any other matter we and the Trustee deem appropriate or necessary Each Fund commences on the date we specify in writing to the Trustee, or if we do not specify a date, the date we first accept payments for units in that Fund Each Fund is a single trust fund. This means that the assets of one Fund cannot be used to satisfy the liabilities of another. The Trustee holds the trust fund of each Fund (which includes all investments held by the Trustee in respect of the Fund, including the proceeds of selling any investments and any income earned on investments but not yet reinvested or distributed) in trust for the relevant unit holders, upon and subject to the terms and conditions contained or implied in the Trust Deed We can, after giving the Trustee and all affected unit holders at least two months written notice and subject to relevant law, amalgamate any Funds together or divide any Fund into separate Funds, by way of a deed amendment. We cannot do this during the period of any suspension (see paragraph ). Units The beneficial interest in each Fund is divided into units. Each unit confers an equal interest in that Fund. It does not confer any right or interest in the individual investments or any other part of that Fund or those of any other Fund. We may consolidate or subdivide units by notice to affected unit holders and the Trustee, and units can be denominated in part-units. Applications for units We can invite offers for units in any Fund and any such issue may be underwritten. This prospectus is an invitation in respect of the Funds You can apply for units in a Fund by completing the relevant application form and returning it to us with the required consideration (which must be cash, or if we permit, in a form other than cash such as existing investments). You can make a standing application for units, which means you apply for units in a Fund or Funds for an amount per month (or other period we determine), including by direct debit, without filling out a new application form. 14

15 Investments in the Funds can be made either directly, as outlined in paragraph 6.2.9, or through an administration service approved by us. Any such investment will be held by the administration service s custodian on your behalf and different minimum investment levels to those set out below may apply to the particular service that you use. Contact us for a list of approved administration services at any time We have an absolute discretion to accept or refuse to accept any application for units in whole or in part. If we reject an application we do not need to give reasons. If we reject an application, we will promptly refund the money paid. Interest will not generally be paid on application moneys refunded We can also redeem or treat as void any units that could or would result in the Fund losing its status as a portfolio investment entity. Where units are voided the applicant will be paid their subscription monies and (subject to maintaining equity between unit holders) any other compensation we consider appropriate We may set a minimum holding and/or application amount for any Fund. The minimum investment and holding amounts as at the Registration Date are: Type of minimum Minimum per Fund Minimum initial investment $25,000 Minimum additional lump sum investment Minimum regular investment $5,000 $1,000 per month We can waive these minimums either generally or in a particular case. We can also change these minimums from time to time. We will give you one month s notice if we increase these minimums. Contributions and how they are applied We will treat applications for units as a subscription for units in the relevant Fund(s) at the current issue price The issue price is the unit value plus any transaction costs (our estimate of the total cost of acquiring further investments, which may be a deemed percentage) The unit value is the amount calculated on the most recent valuation day (see paragraph ) by dividing the trust fund value of the relevant Fund by the number of units on issue. We calculate the trust fund value for a Fund each valuation day by deducting from the gross fund value of the Fund the aggregate of any accruals for fees and expenses (including our fees and the Trustee s fees). We calculate the gross fund value for a Fund by deducting from the aggregate of: a b c the cash held by the Fund; the market value (which is fixed by reference to market transactions, valuations, or our reasonable determination, depending upon the type of investment) of all other investments held by the Fund; the value of any other assets of the Fund (fixed by us, having regard to generally accepted 15

16 accounting principles); d the benefit of adjustments made to unit holders interests on account of PIE tax, the aggregate of the liabilities of the Fund, excluding PIE tax unless it has been recovered from unit holders but including all unpaid costs, fees, and charges of the Fund accrued to that date As at the Registration Date, valuation days occur each business day, although we could change this by giving written notice to the Trustee. Generally, if we receive a valid application before 1.00pm on a valuation day, we will issue units at the issue price set using the market value of the Fund s investments on that day. If we receive the application on or after 1.00pm, we will issue units at the issue price set using the market value of the Fund s investments on the next valuation day. However, we may defer processing applications if we consider it necessary or desirable We may charge a contribution fee of an amount determined by us from time to time (including for switching see paragraph ). As at the Registration Date we do not charge contribution fees. We may decide to charge a contribution fee in the future of up to 5% of the consideration paid for units We can, by notice to the Trustee, determine that no further units in a particular Fund or Funds will be issued for a specified period or until that Fund is terminated. Withdrawals You may make a withdrawal from any Fund by giving us a withdrawal notice. A withdrawal notice may be in writing or by electronic means. We have a discretion to accept verbal notices, but as at the Registration Date do not intend to do so. A withdrawal notice must specify the Fund you wish to withdraw from, the dollar amount or number of units to be withdrawn, and must comply with any specifications we prescribe. A withdrawal notice is irrevocable once given Withdrawals will be processed as soon as possible after we receive a valid withdrawal notice, and in any case for every Fund but the Salt Long Short Fund will be processed within 10 business days of receipt of that withdrawal notice. In the case of the Salt Long Short Fund, withdrawals will be processed within 15 business days of receipt of the withdrawal notice. However, if, in our opinion, it is not practical or desirable to do so on that valuation day by reason of any of the circumstances set out under Suspension of withdrawals and Large withdrawals below, we will process the withdrawal on the first valuation day we consider practicable. Unless we defer or suspend withdrawals, valid withdrawal notices received on a valuation day before 1.00 pm will be processed using the unit price set using the market value of the Fund s investments on that day. Withdrawal notices received on or after 1.00 pm will be processed using the withdrawal value set using the market value of the Fund s investments on the following valuation day The withdrawal value of a unit will be the unit value on the relevant valuation day less transaction costs (our estimate of the total cost of selling investments, which may be a deemed percentage) We may satisfy a withdrawal request by (through the Trustee) transferring investments of the Fund to you. If your withdrawal is for less than 5% of a Fund s trust fund value for the relevant valuation day, your and the Trustee s agreement is required before a transfer of investments can occur. These investments will have a market value equal to the amount that you would have received in cash (that is, after deduction of any applicable transaction costs). Where we 16

17 transfer assets to you, we will determine which investments to transfer to you after considering your and the other unit holders interests A withdrawal from a Fund is subject to the deduction of any duty or tax payable, the payment of any withdrawal fee, and our and the Trustee s right to be reimbursed for expenses (see paragraphs and ). As at the Registration Date we do not charge withdrawal fees. We may decide to charge a withdrawal fee in the future of up to 5% of the amount withdrawn The number of units withdrawn and the number of units remaining must satisfy the minimum requirements set by us from time to time, unless the withdrawal is for all of your units in the relevant Fund. The minimum withdrawal and holding amounts as at the Registration Date (which we can waive) are: Type of minimum Minimum per Fund Minimum withdrawal amount $5,000 Minimum remaining Fund holding after withdrawal $25, To satisfy a redemption we may direct the Trustee to realise investments of the Funds and/or borrow (if permitted in respect of a Fund) on behalf of a Fund to provide moneys to pay the amount withdrawn. Switching You can switch a dollar amount or number of units between Funds by giving us a switching notice that specifies the Fund or Funds you want to switch between. Any minimums applying to switches and minimum holdings must be met, and a notice is irrevocable once given unless we agree otherwise. Switching notices must comply with any specifications we prescribe. As at the Registration Date the minimum switch and holdings following a switch (unless the switch is for all units in the existing Fund) are: Type of minimum Minimum per Fund Minimum switch amount $5,000 Minimum remaining Fund holding after switch $25, Withdrawal and/or contribution fees may be charged if you switch between Funds. As at the Registration Date we do not charge either fee, although we may decide to do so in the future A switching notice takes effect as a withdrawal of units from the existing Fund and an application for units in the requested Fund(s). The provisions of the Trust Deed relating to withdrawals (including, for example, the ability to suspend withdrawals) apply with all necessary modifications We require unit holders to provide us with evidence of their identity before giving effect to any withdrawal or switch. We may decline to implement a switch in our sole discretion, including where the switch could or would result in a Fund losing PIE status. We do not need to give reasons where we decline to implement a switch From time to time we can set a minimum holding for a Fund or a unit holder, and if the a unit holder s holding falls below the relevant minimum, they will be deemed to have given a 17

18 withdrawal notice for their remaining units. Suspension of withdrawals If as a result of: a a decision to wind-up a Fund or Funds (see paragraph ); b c d e the suspension of trading on any exchange; financial, political, or economic conditions in any financial market; the nature of any investment; or the occurrence or existence of any other circumstance or event relating to the Fund or generally, we form the opinion in good faith that it is not practicable, or would be materially prejudicial to the interests of unit holders generally for units specified in a withdrawal or switching notice to be redeemed, we may suspend withdrawals and switches from that Fund by giving a notice to that effect to the Trustee and any unit holder of that Fund that gives or has given a withdrawal or switching notice that has not been given effect to A suspension may last up to three months, unless the Trustee agrees to an extension. We must cancel a suspension if the circumstances that gave rise to the suspension cease to apply. There is no limit on the period that a suspension can be extended for with the Trustee s agreement. Large withdrawals If a withdrawal or switching notice, or a series of withdrawal and/or switching notices have been received within three months and those notices in aggregate relate to more than 5% of the units on issue in a Fund at the time of the last notice (or any other percentage we specify by at least 30 days prior notice to unit holders and the Trustee), we can defer the redemption of those units We will give notice to the Trustee and affected unit holders of any deferral, and that notice will set out the intended dates of redemption of units. We are able to redeem affected units progressively by instalments with effect from one or more valuation days falling in a period we specify, and/or in total at the expiry of a period we determine. In each case, the period cannot be longer than 90 days unless the Trustee approves, and the Trustee cannot unreasonably withhold its approval. The withdrawal value of affected units will be calculated on the valuation days on which they are redeemed. Transfers and assignment of units You can transfer units to another person by completing and signing a transfer form approved by us The number of units transferred and the number of units remaining must satisfy the minimum requirements set by us from time to time. As at the Registration Date the minimum transfer and remaining holding amounts (unless the existing unit holder transfers all of his or her units) are: 18

19 Type of minimum Minimum per Fund Minimum transfer amount $5,000 Minimum remaining Fund holding after switch (both existing unit holder and transferee) $25, We may suspend transfers from time to time. We cannot suspend transfers for more than 30 working days in a calendar year without the Trustee s agreement. We may also decline a transfer, including where the transfer would or could result in an affected Fund losing its status as a portfolio investment entity. Before a transfer can occur, the existing unit holder must pay all duties, taxes, and other commissions, fees, and charges in respect of that transfer We will recognise the executors or administrators of a deceased unit holder (or in the case of joint unit holders, the surviving unit holder(s)) as having title to, or interest in, a deceased unit holder s units. However, if a unit holder sold or otherwise disposed of units and delivered a transfer instrument to the transferee prior to their death then we are able to register that transfer of units even if we are aware of the unit holder s death Any person who has authority to administer the estate of a mentally disordered person, or who becomes entitled to units due to the bankruptcy or liquidation of a unit holder, will be registered as the holder of those units, or be permitted to transfer these units, upon producing such evidence of capacity or title as we think sufficient Unless we determine otherwise, we will process a transfer as a withdrawal and subsequent application for units in the relevant Fund. However, the issue price for units issued will be the same as the withdrawal value for the units withdrawn to facilitate the transfer. This means that the transferee will receive the same number of units that the existing unit holder held, less any units redeemed to pay the existing unit holder s tax liability. Investments Each Fund is invested in authorised investments, which means any investment, security, derivative, interest, or estate, whether in New Zealand or any other country and whether legal or equitable, corporeal or incorporeal, freehold, leasehold, or some other tenure as agreed between us and the Trustee from time to time. Each Fund s particular authorised investments are set out in its Establishment Deed and listed in section When a Fund is established, the Establishment Deed will contain a brief statement of its investment strategy. Each Fund is invested in accordance with that investment strategy, and in accordance with any investment policy and guidelines for the Fund agreed between us and the Trustee from time to time see section We and the Trustee can change the authorised investments and investment strategy for a Fund by amending the Establishment Deed (see paragraph ). We can change the investment policy and guidelines for a Fund by agreement with the Trustee. We will give affected unit holders two months notice of any material changes to the investment strategy and investment objectives and policy for a Fund The assets of each Fund are vested in the Trustee or its nominee. We direct the Trustee in relation to the acquisition, sale, transfer, replacement, investment, management, amendment, modification, and disposition of the investments of a Fund, and the entering into of any 19

20 commitments or liabilities related to the authorised investments of a Fund The Trustee must refuse to act on a direction to acquire or dispose of any investment if, in the Trustee s opinion, the acquisition or disposition is contrary to the provisions of the Trust Deed, would result in a breach by the Trustee of any obligations or duties imposed on the Trustee by law, or is manifestly not in the interests of unit holders. The Trustee can also, before entering into any transaction, security, or liability, require that its liability is restricted or limited to its satisfaction to the investments of the relevant Fund. Dealings with related parties Unless the relevant transaction is on normal commercial arm s length terms, we cannot, without the prior approval of the Trustee: a b c cause any part of any of the Funds trust funds to be invested or lodged with us, any of our directors, or any of our related parties (as defined in the Financial Markets Conduct Act 2013); sell, purchase, or otherwise dispose of or acquire any asset or investment to or from one of our related parties, or a group investment fund, unit trust, KiwiSaver scheme, superannuation scheme, or other trust we or a related party manage; or enter into any contract, agreement, or other arrangement with a related party to provide management, consultancy, or other services to or in respect of a Fund Any required approval can be given in either specific or general terms, and cannot be unreasonably withheld by the Trustee. Distributions and bonus units We can distribute amounts from a Fund at any time, which may be made up of all or part of the income or capital of that Fund. If we do decide to make distributions, we will determine the amount to be distributed after giving prior notice to the Trustee, and in doing so may (in our discretion) take into account a range of factors, including the net income of the Fund, any tax that is or may become payable, and the cash flow requirements of the Fund Unless we decide otherwise and notify unit holders, each unit holder s entitlement to distributions will be calculated and distributed in proportion to the number of units they hold Distributions will either be paid to unit holders or if we allow, reinvested at the unit holder s direction. As at the Registration Date, distributions are not made see section If we recommend, and the Trustee accepts that recommendation, the Trustee will capitalise the whole or any part of the income or capital of a Fund and apply it towards paying in full new units to be issued and distributed as fully paid bonus units to unit holders as if those units were distributions. Valuation of investments The market value of investments in each Fund on any valuation day means the following: a For investments which are listed on a stock exchange, the value we determine with reference to the price quoted for the last sale of the investment on or before that valuation day. However, if there has been no such sale or if in our reasonable opinion the last sale is not an accurate measure of the value of the investment, the value will be the value that 20

21 we determine, acting reasonably and after giving prior notice to the Trustee, having regard to any information we consider appropriate, including the advice of a valuer. b c d For investments which are valued by the issuer of those investments, the most recent valuation made of those investments that we are aware of prior to the relevant valuation day. If, in our reasonable opinion, that valuation is not an accurate measure of the value of the investment, the value will be the value we determine using some other form of appropriate determination in respect of any specific investment from time to time as we determine and the Trustee agrees to. For real property investments, the value fixed by a valuer within the last 12 months. If, in our reasonable opinion, that valuation is not an accurate measure of the value of the investment, the value will be the value we determine using some other form of appropriate determination in respect of any specific investment from time to time as we determine and the Trustee agrees to. For any other investment, the value we fix according to proper prudent principles of valuation agreed with the Trustee or, failing agreement, according to principles of valuation determined by a valuer Where the required valuation information in relation to investments listed on a stock exchange or valued by the relevant issuer is not received within 24 hours of the time fixed for valuation of those investments, the value that applied on the previous valuation day will be used. Borrowing If allowed by the relevant Establishment Deed, the Trustee may, and must if we direct, borrow and raise money for the purposes of a Fund on any terms we and the Trustee think fit. We can give security from the relevant Fund for borrowings We can only borrow if we determine in good faith that it is necessary or desirable for the sole purpose of conducting the operation of the trust fund of any Fund (including facilitating the payment of withdrawals). In addition, borrowing can only occur if the principal amount owing will not exceed the limit on borrowing set out in the relevant Establishment Deed see section 6.5 for the limit (if any) on borrowing for each Fund In addition, the Trustee does not need to comply with any direction to borrow or grant security for borrowing in relation to a Fund unless satisfied that the above conditions are met and that: a b c its liability is restricted to the investments of the relevant Fund; investments belonging to another Fund will not become liable in respect of the relevant Fund s borrowing; and any security for borrowing or other obligations will not impose any unreasonable obligations on the Trustee. The Trustee The Trustee acts as trustee for the unit holders of each Fund and to hold the trust fund of each Fund in trust for those unit holders, upon and subject to the terms and conditions contained or implied in the Trust Deed The Trustee must: 21

22 a b c be a body corporate incorporated in New Zealand; not be an associated person of us (within the meaning of subpart YB of the Income Tax Act 2007); and otherwise be entitled by law to act as the trustee of the relevant Fund, including where required by law holding an appropriate license under the Financial Markets Supervisors Act 2011 (see paragraph 5.7) The Trustee must exercise reasonable diligence to ascertain whether or not any breach of the terms of the Trust Deed or of the terms of the offer of units in the Funds has occurred. The Trustee must do all the things that it is empowered to do to cause any such breach to be remedied (except if it is satisfied that the breach will not materially prejudice the interests of unit holders) The Trustee is entitled to a fee from each Fund of up to 0.075% plus any GST per annum of the gross fund value of that Fund as agreed with us. However, the Trustee is entitled to a minimum fee of $10,000 plus any GST for the first year the Funds are in operation, and $20,000 plus any GST per annum after the first year, which is spread equitably across all of the Funds that have commenced operations In addition, the Trustee is entitled to: a b c d special fees, which will be paid from the relevant Fund(s), for services of an unusual or onerous nature outside the Trustee s regular services (including, for example, convening meetings of unit holders, breaches of trust, and exercising discretions), as we agree with the Trustee from time to time; the reimbursement of expenses incurred in performing services in respect of each Fund; charge GST, any value added tax or duty, or similar tax payable in respect of its fees; and review its fee on an annual basis and increase its fee with our agreement by giving at least one month s prior notice to affected unit holders. See section 13.1 for details of the fees the Trustee charges as at the Registration Date The Trustee can be removed in the following ways: a b We can remove the Trustee with the approval of the High Court. We can remove the Trustee under section 23 or 38 of the Financial Markets Supervisors Act The Trustee may retire by giving us at least 90 days notice where: a b c all of the functions and duties of the position have been performed; another appropriately licensed person has been appointed and has accepted that appointment by agreeing to be bound by the Trust Deed, and all of the Funds investments have been transferred to that person; or the High Court consents We may appoint a replacement trustee if the Trustee is removed or resigns. If we fail or refuse to appoint a new trustee within 90 days, unit holders may do so by an extraordinary resolution at a meeting of unit holders of all of the Funds within the Salt Investment Funds. The outgoing 22