Important changes to Perpetual Mortgage Fund

Transcription

1 19 September 2011 Dear Investor, Important changes to Perpetual Mortgage Fund As an investor in Perpetual Mortgage Fund ( Fund ), we are writing to advise you of some important changes in relation to the Fund and to explain what this means for you. While the Fund has delivered regular income and preserved capital for investors for many years, it has become apparent that in today s market environment, its current structure is not sustainable for investors over the long-term. After much deliberation, we have decided to commence returning capital to investors and to close the Fund on 17 October This also means we are no longer offering quarterly withdrawals from the Fund and there will be no withdrawal payments for September The market environment Since 2007, sustained market volatility has eroded liquidity in the financial system. This issue was exacerbated by the introduction of the government guarantee on bank deposits in late 2008, which prompted an extremely high rate of withdrawals across the mortgage fund sector. In November 2008, Perpetual acted immediately to protect the income and capital of those investors choosing to remain in the Fund by moving to quarterly withdrawals. This approach was to ensure all investors were treated equally. However, we believe the market environment has changed fundamentally in the past three years. Despite managing some of the highest quality mortgage portfolios in the marketplace, we have not seen a material decline in withdrawal rates since Perpetual s response Since 1966, we have prudently managed mortgage funds through numerous market cycles to successfully achieve the primary objectives of delivering regular monthly income and preserving capital. However, due to today s market environment and in particular the ongoing high levels of quarterly withdrawal requests, the existing structure of the Fund is not sustainable. The Fund is limited in its ability to conduct new lending and to take advantage of the strong returns available on mortgage investments. Many of you have been investors in the Fund for a number of years and we value your strong loyalty to Perpetual. It is with the best interests of our investors in mind that we have taken the decision to return capital to all investors and to close the Fund. 2A

2 We will be aiming to return capital to all investors on a six monthly basis with the first payment being in March With the first payment you can expect to receive at least 20 per cent of your investment. We expect to return the majority of your capital to you by mid The Fund will continue to be managed by our investment team. What you need to do Using the enclosed form, you may choose to have the return of capital switched to the Perpetual Cash Fund or another WealthFocus Fund. Alternatively, you can elect to have capital payments made directly into your nominated bank account. To assist you in making a choice, please refer to details of the investment objectives of each Fund and other relevant information in the Perpetual WealthFocus Investment Book (Book) dated 2 October The Book is available on our website at or contact us on If we do not receive your completed form by 24 February 2012, the return of capital payments will be paid to you directly. Further information If you have any questions, please contact your financial adviser or phone us on during business hours (Sydney time). Please also refer to the enclosed Frequently Asked Questions for additional information on changes to the Fund. Alternatively, go to Perpetual s website at Yours sincerely Keith Mclachlan General Manager, Service and Operations 2A

3 Perpetual WealthFocus Investment Funds Perpetual Investment Management Limited ABN AFSL Instructions - return of capital from the Perpetual Mortgage Fund The instructions you provide in this form will be used as your ongoing instruction for the return of capital from the Perpetual Mortgage Fund. Should you wish to change your instructions in the future, please contact us on Investor details client number g g g g g g g g g account number g g g g g g g g g g g account name g g g g g g g g g g g g g g g g g g g g g g g g g 2. Instructions for return of capital A. Switch to another Fund Complete this section only if you wish to have your return of capital switched to another Fund. g Switch from the Perpetual Mortgage Fund to the Perpetual Cash Fund; or g Switch from the Perpetual Mortgage Fund to another Fund of my/our choice Please switch my/our investment to the following Fund: B. Pay to bank account Complete this section only if you wish to have your return of capital paid to your bank account. g Pay into the below bank account name of financial institution branch name branch number (BSB) ggg ggg account number ggggggggg name of account holder Please note: You may only choose one Fund to switch to. If we do not receive your instruction by 24 February 2012, the return of capital will be paid back to you. page 1 of \R_Instruction form_project Empathy_v7.indd 1 15/09/11 9:37 AM

4 Perpetual WealthFocus Investment Funds 3. Declaration and applicant signature(s) (must be completed) I/We have read the current Product Disclosure Statement (PDS) for Perpetual WealthFocus Investment Funds and agree to be bound by the provisions of the Funds constitutions and any other additional restrictions contained in the PDS. signature date gg gg gggg capacity g sole director g director g secretary (company investments only) signature date gg gg gggg capacity g sole director g secretary (company investments only) Important notes Distributions and withdrawals will continue to be paid to your current nominated bank account. Please read Perpetual WealthFocus Investment Funds Product Disclosure Statement Number 6 dated 2 October 2009 (PDS) before completing the switch form. Investors should retain the PDS for making switches during the life of the PDS. In relation to trust investors, only the trustee has rights and obligations under the Fund. Joint applicants will be assumed to be joint tenants unless otherwise specified. If signed under power of attorney, the attorney certifies that he or she has not received notice of revocation of the power of attorney. Please include the power of attorney (or a certified copy) with this form if it has not previously been provided to Perpetual. Perpetual has an absolute discretion to accept or reject any application. For information, please phone us on during business hours (Sydney time), visit or investments@perpetual.com.au Please forward your completed form to us in the reply paid envelope provided. No stamp required if posted in Australia. Mail: Reply Paid 4171 Perpetual Investments, GPO Box 4171, SYDNEY NSW 2001 Fax: page 2 of /R_IFWIFI1_0911_2C_ \R_Instruction form_project Empathy_v7.indd 2 15/09/11 9:37 AM

5 WealthFocus Perpetual s Mortgage Fund Frequently Asked Questions Return of Capital 1. Will I still get monthly income? The Fund has a long history of successfully delivering income and preserving capital. While the assets in the Fund continue to generate income, you will continue to receive monthly income payments. It is important to note that, as assets in the Fund mature and we pay back your capital, your account balance will lower and you are likely to receive less monthly income. 2. How long will it take to get my money back? Perpetual aims to return your capital to you approximately every six months as the assets in the Fund mature. If we have a significant number of assets maturing at one time, we will look to make a payment out of cycle. Based on the current portfolio, we expect to return the majority of your capital to you by mid Details of the assets of the Fund and their maturity profile are available on our website at 3. Why has Perpetual decided to close the Fund and return capital now? Since 1966, we have prudently managed mortgage funds through numerous market cycles to successfully achieve the primary objectives of delivering regular levels of monthly income and preserving capital. The Fund is limited in its ability to conduct new lending and to take advantage of the strong returns available on mortgage investments. It is with the best interests of our investors in mind that we have taken the decision to return capital for the benefit of all investors and to close the Fund. 4. How will the capital be returned to investors? Using the enclosed form, you can choose to switch your return of capital into the Perpetual Cash Fund or another WealthFocus Fund. Alternatively, you can elect to have your capital payments made directly into your nominated bank account. We will return the capital directly back to you if we do not hear from you. 5. What are the differences between the Perpetual Mortgage Fund and the Perpetual Cash Fund? The key difference between the Funds is the distribution frequency, management fees and investments held. The Perpetual Cash Fund is a lower risk option as it only invests in cash investments. Due to today s market environment and in particular the ongoing high levels of quarterly withdrawal requests, the existing structure of the Fund is not sustainable _FAQ 2B_FLYER_v5.indd 1 15/09/11 9:35 AM

6 Perpetual Mortgage Fund 1 Perpetual Cash Fund Suggested length of investment Three years or longer Any time Distribution frequency and date Monthly as at the end of each calendar month Quarterly 31 March, 30 June, 30 September and 31 December Management fee 1.30% 1.05% Objective Investment guidelines Aims to provide investors with capital stability and a regular monthly income by investing predominantly in a pool of quality first registered Australian direct commercial mortgages. Invests predominantly in first registered mortgages. We intend to maintain a minimum cash, enhanced cash and fixed income level of 25% of the net asset value of the Fund. This amount may be greater due to cash flows and lending requirements. Aims to provide investors with capital stability, regular income and easy access to funds by investing in deposits, money market and fixed income securities. Cash 100% 1 Perpetual Mortgage Fund profile prior to commencement of closure Please read Perpetual WealthFocus Investment Funds Product Disclosure Statement Number 6 dated 2 October 2009 for further information on these Funds. 6. I have put in a withdrawal request for the September quarter. Will I get my payment? We will not be making a withdrawal payment for the September 2011 quarter as we begin the process of automatically returning capital to investors. We currently anticipate investors will receive at least 20% of capital back in March 2012 and then approximately every six months from then on. You will not be required to submit any further withdrawal requests to receive your capital back. 7. Do I have to show the return of capital in my income tax return? For tax purposes, a return of capital is similar to a withdrawal from the Fund. A return of capital may result in a capital gain or loss for you, which may need to be included in your tax return. As individual circumstances differ, we recommend you speak to your tax adviser. You will continue to receive your annual tax statement each year. 8. Why is it taking so long to make the first return of capital payment? Perpetual is currently preparing its operations in order to administer the return of capital to all investors. 9. Perpetual currently pays out balances under $1000 in full. Will this continue? Under the Corporations Act, there is no specific provision to pay out investors with an account balance under a certain amount. However, we will be looking at ways to pay out balances under $1000 over the coming months. 10. Will I still be able to withdraw my investment under financial hardship? Your claim will be paid if you meet the eligibility criteria for financial hardship as described on our web site at and if your claim is approved and processed by 17 October After 17 October 2011, we hope to be able to still offer financial hardship claims. We are in the process of applying to ASIC for this purpose /R_IDWFIS1_2B_ _FAQ 2B_FLYER_v5.indd 2 15/09/11 9:35 AM