Absolute Return Fund S C - Dalton Street Capital · 2 Dalton Street Capital Absolute Return Fund...

DALTON STREET CAPITALDalton Street CapitalAbsolute Return FundProduct Disclosure StatementISIN AU60ETL04693mFund DSC01

ARSN 609 717 820APIR ETL0469AUIssue Date 18 May 2020

Contents1. Fund at a glance 4

2. ASIC Benchmarks 6

3. Disclosure Principles 7

4. Who is Managing the Fund? 9

5. How the Fund Invests 11

6. Managing Risk 16

7. Investing and Withdrawing 18

8. Keeping Track of YourInvestment 22

9. Fees and Other Costs 23

10. Taxation 27

11. Other Important Information 30

12. Glossary of Important Terms 34

Investment ManagerMantis Funds Pty LtdABN: 77 640 207 021Corporate Authorised RepresentativeofBoutique Capital (ABN 33 621 697 621AFSL 508011)Email: [email protected]: www.mantisfunds.com

Responsible EntityEquity Trustees LimitedABN 46 004 031 298 AFSL No240975GPO Box 2307Melbourne VIC 3001Phone: +61 3 8623 5000Web: www.eqt.com.au

Sub-Investment ManagerDalton Street Capital Pty LtdABN 67 102 757 460Email:[email protected]: www.daltonstreetcapital.com

AdministratorRBC Investor Services TrustGPO Box 4471Sydney, NSW 2001Australia

Custodian and Prime BrokerMorgan Stanley & Co International plc25 Cabot SquareCanary WharfLondon E14 4QAUnited Kingdom

Dalton Street Capital Absolute Return Fund PDS 1

This Product Disclosure Statement (“PDS”) was issued on18 May 2020. This PDS is for the offer of interests inClass B units in the Dalton Street Capital Absolute ReturnFund ARSN 609 717 820 (referred throughout this PDSas the “Fund“).

The PDS has been prepared and issued by EquityTrustees Limited (ABN 46 004 031 298, AustralianFinancial Services Licence (“AFSL”) No. 240975) in itscapacity as the responsible entity of the Fund (referredthroughout this PDS as the “Responsible Entity”, “EquityTrustees”, “us” or “we”). The investment manager isMantis Funds Pty Ltd (referred to throughout this PDS asthe “Investment Manager” or “Mantis Funds”). MantisFunds is an authorised representative of Boutique Capital(AFSL No. 508011). The sub-investment manager of theFund is Dalton Street Capital Pty Limited (“Dalton Street”or “Sub-Investment Manager”). The administrator of theFund is RBC Investor Services Trust and is referred tothroughout this PDS as “RBC” or “the Administrator”. Thecustodian and prime broker of the Fund is MorganStanley & Co International plc and is referred tothroughout this PDS as “Morgan Stanley”, the“Custodian” or the “Prime Broker”.

The Responsible Entity has authorised the use of thisPDS as disclosure to investors and prospective investorswho invest directly in the Fund, as well as investors andprospective investors of an investor directed portfolioservice, master trust, wrap account or an investordirected portfolio service-like scheme (“IDPS”). This PDSis available for use by persons applying for units throughan IDPS (“Indirect Investors”).

The operator of an IDPS is referred to in this PDS as the“IDPS Operator” and the disclosure document for anIDPS is referred to as the “IDPS Guide”. If you investthrough an IDPS, your rights and liabilities will begoverned by the terms and conditions of the IDPS Guide.Indirect Investors should carefully read the IDPS Guidebefore investing in the Fund. Indirect Investors shouldnote that they are directing the IDPS Operator to arrangefor their money to be invested in the Fund on their behalf.Indirect Investors do not become unitholders in the Fundor have the rights of unitholders. The IDPS Operatorbecomes the unitholder in the Fund and acquires theserights. The IDPS Operator can exercise or decline toexercise the rights on an Indirect Investor’s behalfaccording to the arrangement governing the IDPS.Indirect Investors should refer to their IDPS Guide forinformation relating to their rights and responsibilities asan Indirect Investor, including information on any feesand charges applicable to their investment. Informationregarding how Indirect Investors can apply for units inthe Fund (including an application form whereapplicable) will also be contained in the IDPS Guide.Equity Trustees accepts no responsibility for IDPSOperators or any failure by an IDPS Operator to provideIndirect Investors with a current version of this PDS asprovided by Equity Trustees or to withdraw the PDS fromcirculation if required by Equity Trustees.

Please ask your adviser if you have any questions aboutinvesting in the Fund (either directly or indirectly throughan IDPS).

This PDS is prepared for your general information only. Itis not intended to be a recommendation by theResponsible Entity, Investment Manager, theSub-Investment Manager, any associate, employee, agentor officer of the Responsible Entity, Investment Manager,the Sub-Investment Manager or any other person toinvest in the Fund. This PDS does not take into account

the investment objectives, financial situation or needs ofany particular investor. You should not base your decisionto invest in the Fund solely on the information in this PDS.You should consider whether the information in this PDSis appropriate for you, having regard to your objectives,financial situation and needs and you may want to seekprofessional financial advice before making aninvestment decision.

Equity Trustees, the Investment Manager, theSub-Investment Manager and their respectiveemployees, associates, agents or officers do notguarantee the success, repayment of capital or any rateof return on income or capital or the investmentperformance of the Fund. Past performance is noindication of future performance. An investment in theFund does not represent a deposit with or a liability ofEquity Trustees, the Investment Manager, theSub-Investment Manager or any of their associates. Aninvestment is subject to investment risk, includingpossible delays in repayment and loss of income orcapital invested. Units in the Fund are offered and issuedby the Responsible Entity on the terms and conditionsdescribed in this PDS. You should read this PDS in itsentirety because you will become bound by it if youbecome a direct investor in the Fund.

The forward looking statements included in this PDSinvolve subjective judgment and analysis and are subjectto significant uncertainties, risks and contingencies,many of which are outside the control of, and areunknown to, Equity Trustees, the Investment Manager,the Sub-Investment Manager and their officers,employees, agents and associates. Actual future eventsmay vary materially from the forward looking statementsand the assumptions on which those statements arebased. Given these uncertainties, you are cautioned notto place undue reliance on such forward lookingstatements.

In considering whether to invest in the Fund, investorsshould consider the risk factors that could affect thefinancial performance of the Fund. Some of the riskfactors affecting the Fund are summarised in Section 6.

All amounts quoted in this PDS are in Australian dollars(“AUD”) unless stated otherwise.

The offer to which this PDS relates is only available toWholesale Clients (as defined in the Glossary) receivingthis PDS (electronically or otherwise) in Australia andWholesale Investors (as defined in the Glossary)receiving this PDS (electronically or otherwise) in NewZealand who have completed a Wholesale InvestorCertificate attached to the Application Form. Allreferences to dollars or “$” in this PDS are to Australiandollars.

This PDS has not been, and will not be, lodged with theRegistrar of Financial Service Providers in New Zealand,and is not a Product Disclosure Statement under theFinancial Markets Conduct Act 2013 (NZ). New ZealandWholesale Investors wishing to invest in the Fund shouldbe aware that there may be different tax implications ofinvesting in the Fund and should seek their own taxadvice as necessary.

This PDS does not constitute a direct or indirect offer ofsecurities in the United States or to any US Person asdefined in Regulation S under the US Securities Act of1933 as amended (“US Securities Act”). Equity Trusteesmay vary its position and offers may be accepted onmerit at Equity Trustees’ discretion. The units in the Fundhave not been, and will not be, registered under the US

2 Dalton Street Capital Absolute Return Fund PDS

Securities Act unless otherwise determined by EquityTrustees and may not be offered or sold in the US to, orfor, the account of any US Person (as defined) except in atransaction that is exempt from the registrationrequirements of the US Securities Act and applicable USstate securities laws.

If you received this PDS electronically, you will need toprint and read this document in its entirety. We willprovide a paper copy free upon request during the life ofthis PDS. The PDS is available to Wholesale Clients atwww.daltonstreetcapital.com or you can request a copyfree of charge by e-mailing Mantis Funds [email protected].

A paper copy of the updated information will beprovided free of charge on request.

You may also contact Equity Trustees:• by writing to GPO Box 2307 Melbourne VIC 3001;• by calling +613 8623 5000

Unless otherwise stated, all fees quoted in the PDS areinclusive of GST, after allowing for an estimate forReduced Input Tax Credits (“RITC”). All amounts are inAustralian dollars unless otherwise specified. Allreferences to legislation are to Australian law unlessotherwise specified. To the extent permitted by law,Equity Trustees expressly disclaims all liability for anyloss arising from omissions or errors contained in thisPDS

New Zealand Investors: Availability and SellingRestrictionThe offer made to New Zealand investors is available onlyto, and may only be accepted by, a Wholesale Investorwho has completed a Wholesale Investor Certification.Each New Zealand investor acknowledges and agreesthat:

(a) he, she or it has not offered, sold, or transferred, andwill not offer, sell, or transfer, directly or indirectly, anyunits in the Fund; and

(b) he, she or it has not granted, issued, or transferred,and will not grant, issue, or transfer, any interests in oroptions over, directly or indirectly, any units in the Fund;and

(c) he, she or it has not distributed and will not distribute,directly or indirectly, a PDS or any other offeringmaterials or advertisement in relation to any offer of anyunits in the Fund,

in each case in New Zealand other than to a person whois a Wholesale Investor; and

(d) he, she or it will notify Equity Trustees Limited if he,she, or it ceases to be a Wholesale Investor.

All references to Wholesale Investor in this document area reference to an investor who is both a Wholesale Clientunder the Australian Corporations Act 2001 and aWholesale Investor in terms of clause 3(2) of Schedule 1of the Financial Markets Conduct Act 2013 (NewZealand).


1. Fund at a glance

SummaryFor furtherinformation

Name of the Fund Dalton Street Capital Absolute Return Fund Section 5

ARSN 622 974 930 Section 5

Investment objective To deliver Absolute Returns with low correlation to traditionalasset classes over rolling three year periods.

Please note the investment objective is not intended to be aforecast. It is only an indication of what the investment strategyaims to achieve.

Section 5

Fund Performance Hurdle RBA Cash Rate plus 150 basis points (Management Fee). Section 5

Investment strategy andinvestments held

The investment strategy is based on mathematically establishedprinciples of behavioural finance and rigorous logic that aims toprovide positive returns through all market cycles. The portfoliowill hold an underlying portfolio of Pan Asian stocks hedged intoAustralian Dollars. Leveraged long and short positions areachieved through derivative positions over the developed APACequity indices on an intra-day basis. It is anticipated that the NetAsset Value (“NAV”) of the Fund’s exposure is limited between0-300%. It is the intention of the strategy that the Fund carries noleverage outside of the trading hours of the markets it invests in.Given the nature of the investment strategy it is likely that a largepercentage of semi-annual distributions will be income.

Section 5

The type(s) of investorsfor whom the Fund wouldbe suitable

Designed for investors seeking Absolute Returns with lowcorrelation to traditional asset classes.

Section 5

Recommended investmenttimeframe

At least 5 years.

The minimum suggested investment timeframe for the Fund is5 years. We recommend that you consider, with your financialadviser, the suggested investment period for the Fund in relationto your own financial circumstances.

Section 5

Minimum initial investment $25,000 Section 7

Minimum additionalinvestment

$25,000 Section 7

Minimum withdrawalamount

$25,000 Section 7

Minimum balance $25,000 Section 7

Cut off time forapplications andwithdrawals

Unless otherwise determined:• before or on 2pm on a Business Day, the application will be

processed on that Business Day. This means you will receivethe application price calculated for that Business Day, and

• after 2pm on a Business Day, the application will be processedon the next Business Day. This means you will receive theapplication price calculated for the next

IT IS IMPERATIVE THAT FUNDING IS SENT AT THE SAME TIMETHE APPLICATION IS LODGED. IF FUNDING A ROLLOVERPLEASE LODGE APPLICATION WHEN FUNDS ARE RECEIVED.FAILURE TO SEND FUNDS MAY RESULT IN YOUR APPLICATIONBEING REJECTED.

Section 7

Cooling Off Not generally applicable to Wholesale Clients Section 7

Valuation frequency Daily Section 7

Unit pricing Daily Section 7

Applications Daily Section 7

Withdrawals Daily Section 7

Income distribution Semi-annual (30 June and 31 December) Section 7

Management fee2 1.50% p.a. (inclusive of GST and net of RITC) Section 9

Entry fee/ exit fee n/a Section 9


SummaryFor furtherinformation

Buy/Sell Spread 0.35% on the entry price and 0.35% on the exit price wheninvestors buy and sell units.

Section 9

Performance fee 20% (plus GST less RITC) of the investment return of the Classabove the performance hurdle is payable to Dalton Street as anexpense of the Fund.

Section 9


2. ASIC BenchmarksThe Fund is a ‘hedge fund’ for the purposes of Australian Securities and Investments Commission (ASIC) RegulatoryGuide 240. The following table and the tables in Sections 1 and 3 set out a summary of the disclosure ASIC requires forhedge funds, the key features of the Fund and a guide to where more detailed information can be found in this PDS. Acopy of ASIC Regulatory Guide 240 dated October 2013 (as may be amended, supplemented or replaced from time totime) is available from www.asic.gov.au.

The information summarised in the relevant tables and explained in detail in the identified section reference is intendedto assist investors with analysing the risks of investing in the Fund. Investors should consider this information togetherwith the detailed explanation of various benchmarks and principles referenced throughout this PDS and the key risks ofinvesting in the Fund highlighted in Section 6 of this PDS.

ASIC Benchmark

Is thebenchmarksatisfied? Summary

For furtherinformation

Valuation of assets

This benchmark addresseswhether valuations of theFund’s non-exchangetraded assets are providedby an independentadministrator or anindependent valuationservice provider.

Yes Equity Trustees has appointed an independentadministrator, RBC, to provide administration servicesfor the Fund, including valuation services fornon-exchange traded assets.

Section 5

Periodic reporting

This benchmark addresseswhether the responsibleentity of the Fund willprovide periodicdisclosure of certain keyinformation specified byASIC on an annual andmonthly basis.

Yes The Responsible Entity will provide periodic disclosureof certain key information on an annual and monthlybasis.

Section 8


3. Disclosure Principles

Summary

Section (forfurtherinformation)

Investment strategy The investment strategy is based on mathematically establishedprinciples of behavioural finance and rigorous logic that aims toprovide positive returns through all market cycles. The portfoliowill hold an underlying portfolio of Pan Asian stocks hedged intoAustralian Dollars. Leveraged long and short positions areachieved through derivative positions over the developed APACequity indices on an intra-day basis. It is anticipated that the NAVof the Fund’s exposure is limited between 0-300%. It is theintention of the strategy that the Fund is designed to carry zeroleverage outside of the trading hours of the markets it invests in.

Section 5.2

Investment manager Equity Trustees Limited, as responsible entity of the Fund, hasappointed Mantis Funds Pty Ltd as the investment manager of theFund.

Mantis Funds Pty Ltd has appointed Dalton Street Capital Pty Ltdas the Sub-Investment Manager to make the day-to-dayinvestment decisions in relation to the Fund.

See Section 4 in relation to the expertise of the InvestmentManager and the Investment Management Agreement under whichthe Investment Manager has been appointed.

Section 4

Fund structure The Fund is an Australian unit trust registered under theCorporations Act as a managed investment scheme.

The responsible entity of the Fund is Equity Trustees Limited.Equity Trustees Limited may appoint service providers to assist inthe ongoing operation, management and administration of theFund.

The key service providers to the Fund are:

• Mantis Funds, the investment manager of the Fund;

• Dalton Street, the sub-investment manager of the Fund;

• RBC, the administrator of the assets of the Fund; and

• Morgan Stanley, the prime broker and custodian of the assetsof the Fund.

See Section 5.5 for further information on key service providers,Equity Trustees’ role in monitoring the performance of serviceproviders and a diagram of the flow of funds through the Fund.

Section 5.5

Valuation, location andcustody of assets

All positions in the Fund are independently valued by theAdministrator.

RBC is the administrator of the Fund and provides administrative,accounting, registry and transfer agency services. TheAdministrator is responsible for calculating the Fund’s NAV.Morgan Stanley is the custodian of the Fund and providescustodial services.

See section 5.4 for further information on the valuation, custodialarrangements and the geographical location of the Fund’s assets.

Section 5.6

Liquidity Equity Trustees reasonably expects to realise at least 80% of theFund’s assets, at the value ascribed to those assets in calculatingthe Fund’s NAV, within 10 days.

Section 5.7

Leverage The Fund will use leverage every trading day as part of the corestrategy within the allowable limits. The anticipated leverage is200% of gross NAV and the maximum allowable leverage is 300%of gross NAV (for every $1 of the fund’s NAV, the fund is leveraged$2 (with a maximum of $3)).

Section 5.8

Derivatives Exchange traded derivatives, limited to futures on the followingexchanges Australia, Hong Kong, Japan, Singapore, Taiwan andKorea.Forward Foreign Exchange contracts. Swap contracts.

Section 5.9


Summary

Section (forfurtherinformation)

Short selling The Fund does not intend, and is unlikely to, engage in shortselling of equities.

Section 5.10

Withdrawals Daily.

Withdrawal requests must be received by 2pm on any BusinessDay to receive that day’s unit price. The minimum withdrawalamount is $25,000.

See Section 7 for more information on making a withdrawal Risksand limitations on withdrawal are set out in Section 5.9.

Section 5.11


4. Who is Managing the Fund?The Responsible EntityEquity Trustees LimitedEquity Trustees Limited ABN 46 004 031 298 AFSL240975, a subsidiary of EQT Holdings Limited ABN 22607 797 615, which is a public company listed on theAustralian Securities Exchange (ASX: EQT), is the Fund’sresponsible entity and issuer of this PDS. Established as atrustee and executorial service provider by a special Actof the Victorian Parliament in 1888, today Equity Trusteesis a dynamic financial services institution which continuesto grow the breadth and quality of products and serviceson offer.

Equity Trustees’ responsibilities and obligations as theFund’s responsible entity are governed by the Fund’sconstitution (“Constitution”), the Corporations Act andgeneral trust law. Equity Trustees has appointed MantisFunds Pty Ltd as the investment manager of the Fund.Equity Trustees has appointed a custodian to hold theassets of the Fund. The custodian has no supervisory rolein relation to the operation of the Fund and is notresponsible for protecting your interests.

The Investment ManagerMantis Funds Pty LimitedMantis Funds is a newly established boutique platformwhich has been set up by accomplished industryveterans. The team is comprised of executives who haveextensive experience partnering with, operating andgrowing boutique fund managers.

Mantis Funds provides Dalton Street with operational,distribution and marketing services applyingbest-in-class technology to optimise outcomes forinvestors. Key outcomes include operational efficiency,transparency and risk management.

Timothy Cheung is the a co-founder and Director ofMantis Funds and is leads the strategic direction of thebusiness while overseeing distribution, operations andmarketing functions. Timothy has successfully built andled investment teams for more than a decade. Mostrecently he co-founded and launched LSL Partners asChief Investment Officer. Prior to that, at PerpetualInvestments and Morphic Asset Management he focusedon Asian investments as a Senior Analyst and Head ofResearch respectively. Timothy commenced his buy-sidecareer at Colonial First State Global Asset Managementwhere he was the Head of Investment Analytics for theInfrastructure Investment team. Prior to joining ColonialFirst State Global Asset Management, Mr. Cheung was asell-side analyst at Commonwealth Securities coveringAustralian gaming, media and industrial companies.During his career, Mr. Cheung has gained experienceacross all major asset classes including listed equity,private equity and corporate debt.

Mr. Cheung holds a Master of Business Administration(Honours) degree from the Wharton School at theUniversity of Pennsylvania. He also holds a Master ofCommerce (Honours) degree and a combined Bachelorof Commerce/Laws degree from the University of NewSouth Wales.

Damien Hatfield is a co-founder and the Head ofDistribution at Mantis Funds. He leads the firmsdistribution, marketing and client relations functions.Damien has over 30 years experience in the FinancialServices Industry and his firm, Triple A Partners is an

independent fund marketer. Damien has operated as anindependent fund marketer for the last 10 years. Duringthat time, he has consulted and raised funds for AscalonCapital (a Westpac Bank subsidiary) Ramius, a New Yorkbased Alternative Manager, Kapstream, a Sydney basedCredit Manager, Caliburn Capital, a UK Fund of FundsManager, and Mariner group, a New York alternative assetfund manager. Damien Hatfield was previouslyresponsible for the distribution of Pengana’s AlternativeStrategies products. Damien was a Director of PenganaHedgefunds Limited. Prior to Pengana Damien worked atColonial First State as Head of Hedge Funds from March2001 until 2003. Damien has substantial experience inhedge funds and managed futures, having worked withBasis Capital, Deutsche Bank (Australia), DeutscheSecurities (Hong Kong), and ANZ McCaughan. Damienwas the founding Chairman of the Australian Chapter ofthe UK-based Alternative Investment ManagementAssociation (AIMA). Damien was inducted into theAustralian Hedge Fund Industry Hall of Fame forcontribution to the local industry.

Damien has a Bachelor of Business Degree from theUniversity of Technology Sydney and was a VisitingFellow of Macquarie University’s Applied Finance School.

David Gray is a co-founder of Mantis Funds and isresponsible for operations. David has over 25 yearsexperience in leadership roles throughout the financialservices industry in Australia and Asia. At UBS, David wasresponsible for building and managing the PrimeBrokerage and Listed Derivatives business in Australiabefore relocating to Hong Kong to head the UBS APACPrime Services and Listed Derivatives business. Davidoversaw significant growth in these businesses,penetrating new markets and introducing innovative newproducts. While in Asia he joined the Royal Bank ofScotland to head their APAC Prime Service and Listedderivatives business, successfully rebuilding thesebusinesses and expanding their market coverageservicing hedge funds, sovereign wealth funds andinstitutions across the region. David then joined StateStreet Bank and Trust where he was responsible forestablishing the banks Asian Listed derivatives business.David commenced his career in finance at UBS in theearly 1990s. Most recently, David was COO and a Partnerat LSL Partners.David holds a Bachelor of Economics degree from theUniversity of Sydney and is a qualified CharteredAccountant.

Dalton Street Capital Pty LimitedDalton Street is a boutique investment managerestablished in November 2015. The team is made up ofinvestment professionals with deep global equity marketexperience coupled with detailed derivative andleveraged fund management knowledge.

Dalton Street uses complex systematic investmentstrategies that aims to deliver positive Absolute Returnswith low correlation to all major asset classes. Theinvestment strategy is based on mathematicallyestablished principles of behavioural finance andrigorous logic that aims to provide positive returnsthrough all market cycles. The Sub-Investment Managerinvests in a range of geographically diverse marketsbased on quantitative and robust risk managementtechniques.


Alan Sheen is the co-founder and Director of DaltonStreet and is the person responsible for making tradingdecisions on behalf of Dalton Street. Alan will devote40% of his time to the investment strategy. Immediatelyprior to establishing Dalton Street, Alan was Head ofProprietary Trading for Credit Suisse Australia managingsystematic trading across the Asia Pacific region. Prior toCredit Suisse, Alan has held positions as PortfolioManager at AMP Capital Investors, Chief InvestmentOfficer at Challenger Ltd and Chief Investment Officerand Managing Director at Austock Asset Management.Alan has been responsible for managing funds andbusinesses with up to $16.0 billion in funds undermanagement and teams of more than 40 investmentprofessionals. Alan commenced trading equities, futuresand options in 1996 and holds a Master of BusinessAdministration from the Sydney Graduate School ofManagement and a Master of Applied Finance (withdistinction) from the University of Western Sydney.

Rhett Dinsdale is the Deputy Portfolio Manager andTrader at Dalton Street and will devote 50% of his time tothe investment strategy. Rhett has over 15 years ofexperience in portfolio management, trading andanalysis. Rhett has developed and implemented a rangeof successful systematic quantitative equity andderivative trading strategies managing books up to$5 billion in funds under management. Rhett workedpreviously as a Portfolio Manager and Trader at CreditSuisse, where he actively managed systematicquantitative proprietary trading portfolios for the AsiaEquities business. Rhett has held positions as an IndexArbitrage and Proprietary Trader at Merrill Lynch andDelta one Swaps and Global Prime Finance Trader atDeutsche Bank.

Aji Mathews is the Quantitative Trading and TechnologyManager for Dalton Street Capital and will devote 50% ofhis time to the investment strategy. Aji is responsible for

quantitative analysis, portfolio management andmonitoring, trade execution and trading systems. At hisprevious role at Credit Suisse, Aji worked closely withAlan and Rhett on the Trading desk, while managingquantitative trading strategies and IT systems. Aji holds aMaster’s degree in Computer Applications, a Bachelor’sdegree in Commerce and a Post Graduate Diploma inBusiness Administration.

No significant adverse regulatory findingNo significant adverse regulatory findings have beenmade against the Investment Manager, theSub-Investment Manager or the portfolio managers whomanage the Fund.

Termination of the appointment of the InvestmentManagerUnder the Investment Management Agreement betweenthe Investment Manager and Equity Trustees, EquityTrustees can terminate the Investment Manager’sappointment where the Investment Manager becomesinsolvent, materially breaches the agreement, ceases tocarry on its business, if Equity Trustees reasonablyconsiders that it is required to terminate the agreementby law or in certain other circumstances. In the event thatEquity Trustees terminates the Investment Managerfollowing one of these events, the Investment Manager’sappointment would cease upon any termination datespecified in the notice, and the Investment Managerwould be entitled to receive fees in accordance with theagreement until the effective date of termination.

From an investor’s perspective the Responsible Entityconsiders that there are no unusual or materially onerousterms in the investment management agreement.


5. How the Fund Invests5.1 Investment objectiveTo deliver Absolute Returns with low correlation totraditional asset classes over a rolling three year period.

Please note the investment objective is not intended tobe a forecast. It is only an indication of what theinvestment strategy aims to achieve.

5.2 Investment strategyThe investment strategy is based on mathematicallyestablished principles of behavioural finance andrigorous logic that aims to provide positive returnsthrough all market cycles. The Fund provides investorswith long-term asset growth through the investment inan underlying physical portfolio of stocks across theAustralasian equity markets, hedged into AustralianDollars, which acts as collateral to a Managed Futurestrading strategy driven by a complex algorithm. Theprimary quantitative factors feeding into Dalton Street’salgorithm are the rates of change in the volatility andliquidity of the US and developed APAC markets. Thesefactors remain persistent over time due to thesubordinate relationship that the developed APACmarkets have to the US markets.

Dalton Street will leverage the portfolio on an intra-day(only) basis through the purchase or sale of index futurescontracts. All leverage is then completely removedovernight to prevent excess ‘gap’ risk. Dalton Street doesnot envisage the investment strategy changing. If it doesthe Sub-Investment Manager will provide one months’notice to investors.

The Fund employs strategic and tactical investmentstrategies that are proprietary. These strategies arewholly quantitative. The Fund invests across equity andequity derivatives markets with particular emphasis onthe Asia Pacific region.

Dalton Street believe the following:• Long-term fundamentals drive long-term asset

growth• Short-term volatility, liquidity and subordinate market

relationships drive short-term profits• Combining the above dynamics with acceptable

leverage provides superior risk adjusted returnsthrough all market cycles

• All investment markets demonstrate numerousgeneric behaviours, which apply universally acrosssectors, geography and time frames. Because of theirpersistent nature, these generic principles can overthe long term generate significant compound returns.The Investment Manager’s strategy employs a diversearray of proprietary investment techniques to capturethese effects

The following factors may affect the ability of the Fund toproduce investment returns in line with the statedobjectives;• The equity component produces a negative return

due to poor equity markets and/or stock selection• Low intra-day volatility causing the derivative

component to produce a negative return• Breakdown of the subordinate relationship between

the US and APAC markets• Extremely low market volumes• Government intervention• Central Bank intervention• Natural disasters

We may change the investment strategy and investmentrestructures of the Fund. Any material changes of theFund will be notified to investors in accordance with therequirements of the Corporations Act.

5.3 Risk ManagementThe Investment Manager together with the ResponsibleEntity is responsible for the overall risk management ofthe Fund and for reviewing the risk managementprocesses of the Sub-Investment Manager. TheInvestment Manager will ensure effective supervision ofthe portfolio management by the Sub-InvestmentManager, by verifying that the Sub-Investment Manageris carrying out its obligations effectively and incompliance with the investment strategy, the investmentrestrictions, its contractual obligations and applicablelaw and regulation. In monitoring the performance of theSub-Investment Manager and the Fund, the InvestmentManager will rely on periodic reports from, anddiscussions with, the Sub-Investment Manager, as well ascustomised third-party reporting. Such reports willgenerally include details on exposures, key positions,sector weightings and counterparty exposures. TheInvestment Manager will issue instructions to theSub-Investment Manager should the assets of the Fundbecome inconsistent with the investment strategy or theinvestment restrictions.

The Investment Manager together with the ResponsibleEntity will also perform due diligence on, and monitor theperformance of, the Prime Broker and the Administratorto verify that each party is carrying out its obligationseffectively and in compliance with its contractualobligations and applicable law and regulation.

Management of the risk arising from market fluctuationsis an integral part of the strategy. In respect of the Fund,the most important determinant of risk is the level ofgearing. In order to determine the level of gearing,comprehensive information is required about the risksthe Fund is taking, including the Fund long-term andshort-term forecasts of extreme loss frequency andmeasures of margin employment and leverage. The levelof risk borne by the Fund is subject at all times to therestrictions set out under the section headed “InvestmentRestrictions” below.

5.4 Investment RestrictionsInvestment Universe

The Fund may invest in:• Listed equities on the Australian, Singapore, Hong

Kong, Japan, Korea and Taiwan exchange, includingthe potential to gain market exposure via ExchangeTraded Funds on the US stock exchange;

• Exchange traded derivatives, limited to futures on theexchanges listed above;

• Derivative Swap Contracts over financial marketinstruments including but not limited to equities andcurrencies;

• Spot Foreign Exchange instruments for tradesettlement;

• Forward Foreign Exchange contracts to hedgeunderlying equity exposure back to AustralianDollars; and

• Cash or cash equivalent instruments includingcollective investment vehicles.

Exposure limits


It is anticipated that the NAV exposure is generallylimited to between 0-300% of the Fund. All leveragedpositions are opened at the beginning of the trading dayand designed to be closed out at the end of the tradingday

Diversification of underlying investment holdings

The Fund invests in a range of geographically diversemarkets based on sophisticated quantitative and robustrisk management techniques. It is designed to identifyinvestment opportunities across exchanges and deliverstrong performance in all market conditions. The Fundwill typically hold between 25-50 investments inunderlying securities across markets to diversify risk.

All investments carry risks. More information can befound in section 6 “Managing Risks”.

5.5 Fund StructureThe Fund is a registered managed investment scheme. Itis a unit trust governed by the Constitution. The Fundoffers multiples classes of units with different liquidityand fees. The Fund comprises assets which are acquiredin accordance with its investment strategy. Investorsreceive units when they invest. In general, each unitrepresents an individual’s interest in the assets of theFund as a whole subject to liabilities; however it does notgive the investor an interest in any particular asset. The

value of a unit in the Fund is determined by reference tothe assets and liabilities in the Fund. The ResponsibleEntity has engaged a number of professional serviceproviders to provide a range of investment,administration and back office services to the Fundincluding custody, administration services andtransaction execution. The Responsible Entity hasappointed Mantis Funds as the Investment Manager andDalton Street as the Sub-Investment Manager, who arerelated parties. There are no material arrangements inconnection with the Fund that are not on arm’s lengthterms. The Responsible Entity has entered into serviceagreements with the service providers and will, with theassistance of Mantis Funds, regularly monitor theperformance of the service providers against servicestandards set out in the relevant agreements. All costsand expenses of the Fund are included in the estimatedmanagement costs of the Fund. Refer to section 9 “Feesand other costs” for further information. The specificrisks associated with the investment structure of theFund include investment system risk, investment risk,counterparty risk and general risk. An explanation ofthese risks is set out in section 6 “Managing risk”.

The service providers and their relationship to the Fund,and the flow of funds through the Fund are shown in thediagram below.

As at the date of this PDS, the service providers to the Fund are:• Investment Manager and Sub-Investment Manager: Mantis Funds is the investment manager of the Fund. Mantis

Funds has appointed Dalton Street as the sub-investment manager. Dalton Street is responsible for managing theinvestments of the Fund. For further details on Dalton Street’s role please refer to section 4. The diagram aboveshows only Dalton Street who make the investment decisions for the Fund. The Investment Manager andSub-Investment Manager are located in Australia.

• Prime Broker and Custodian: Morgan Stanley acts as the custodian and is located in London.• Administrator: RBC provides fund accounting and unit registry services in connection with the Fund. The

Administrator is located in Australia.

Service providers to the Fund may change without prior notice to investors. Investors will be notified of any change toservice providers in the regular reports available as described in section 8. Risks relating to the use of third partyservice providers are outlined in section 6.


5.6 Valuation, location and custody of assetsAll positions in the Fund are independently valued and reconciled daily by the Administrator.

RBC is the administrator of the Fund and provides administrative, accounting, registry and transfer agency services.The Administrator is responsible for calculating the Fund’s NAV.

The Fund will invest in a diversified portfolio of equities listed on the Australian, Hong Kong, Japan, Singapore, Taiwanand Korean exchanges. These equities will be valued in accordance with the valuation policies of the Administrator.There will also be the potential to gain market exposure via Exchange Traded Funds on the US stock exchange.

Exchange traded derivatives, limited to futures on the following exchanges Australian, Hong Kong, Japan, Singapore,Taiwan and Korea will be valued in accordance with the valuation policies of the Administrator Forward ForeignExchange contracts will be valued in accordance with the valuation policies of the Administrator.

These instruments will be valued in accordance with the constitution of the Fund and the valuation policies of theAdministrator. RBC maintains valuation policy documents across the entire geographical investment universe of theFund. RBC values the Fund’s assets in accordance with standard market practice and market prices are generallyelectronically sourced from third party vendors for the provision of security pricing and data, including software toolsto validate pricing. Where no independent pricing source is available to value an asset, RBC and the Responsible Entitywill agree to determine the value of the asset in accordance with acceptable industry standards.

Morgan Stanley is the custodian of the Fund and provides custodial services.

Asset Class Responsible Custodian Location of Custodian

Assets as a proportion ofNet Asset Value of theFund

Listed Australian Equities Morgan Stanley London 0 –120%

Listed InternationalEquities

Morgan Stanley London 0 –120%

5.7 LiquidityThe majority of assets currently traded and held by the Fund are liquid. The Responsible Entity and InvestmentManager expect that the Fund will be able to realise at least 80% of the Fund’s assets, at the value ascribed to thoseassets in the most recent calculation of NAV, within 10 days.

Generally, it is the Sub-Investment Manager’s policy to ensure that the Fund remains liquid as the size of the Fundgrows.

5.8 LeverageThe Fund uses leverage through the use of exchange traded futures contracts to implement the investment strategyalthough it does not physically borrow to leverage. The Fund typically operates with gross leverage of 1.0x the net assetvalue the Fund with a maximum leverage of 2x net asset and value of the Fund (e.g. for every $1 of the Fund’s net assetvalue, the Fund is leveraged $1). These contracts are opened and closed daily and the Fund is designed to carry zeroovernight leverage, except in the limited circumstances described below.


The Fund will use leverage every trading day as part of the core strategy within the allowable limits. The sources ofleverage are Equity Index Futures up to the anticipated gross leverage limit of 2 times. The assets of the Fund are usedas intraday collateral against the Index Futures positions. It is the intention of the strategy that all futures positons areclosed by the end of each trading day and are cash settled. On occasions due to market liquidity some positions maynot be closed at the end of the day. In these circumstances the Fund may carry leveraged positions overnight.Anticipated leverage is 1 times NAV with maximum allowable leverage of 2 times.

Leverage examples over 24 hour period for $100M fund

Example 1

Time of the day Future Positions Fund Notional Value Leverage

Start of the day No Futures positions $100 million 100%

As 6 APAC Futuresmarkets open

Open LONG futurespositions of equal notionalvalue in 6 markets addingup to a total of$100 million

$200 million 200%

As 6 APAC futures marketsclose

Close all futures positions $100 million 100%

End of day No future positions $100 million 100%

Assuming markets move up or down 1% over the day in this example, profit/loss with and without leverage would be asbelow:

Markets Long Equites Long FuturesProfit/Loss usingLeverage

Profit/Loss notusing Leverage

UP +1% +1% +2% +1%

Down -1% -1% -2% -1%

Example 2 – Short trade signal for futures.

Time of the day Future Positions Fund Notional Value Leverage

Start of the day No Futures positions $100 million 100%

As 6 APAC Futuresmarkets open

Open SHORT futurespositions of equal notionalvalue in 6 markets addingup to a total of$100 million

$0 million 0%

As 6 APAC futures marketsclose

Close all futures positions $100 million 100%

End of day No future positions $100 million 100%

Assuming markets move up or down 1% over the day in this example, profit/loss with and without leverage would be asbelow:

Markets Long Equites Long FuturesProfit/Loss usingLeverage

Profit/Loss notusing Leverage

UP +1% -1% 0% +1%

Down -1% +1% 0% -1%

5.9 Derivatives

The Fund will trade futures, swaps and use foreign exchange forwards for hedging purposes back to Australian dollars.All futures contracts are exchange traded contracts (ETC). Forward Foreign Exchange contracts and swaps areclassified as over the counter (OTC) traded instruments. The derivative counterparties for the trading of ForwardForeign Exchange contracts and swaps are appointed in accordance of an internal risk assessment, review of creditrating and the establishment of formal ISDA or equivalent contract. For more information about Derivatives and howthey are used in the Fund, please see section 5.4 Investment Restrictions and section 5.8 Leverage. See also Derivativeand Counterparty risk in section 6. Managing Risk.

5.10 Short sellingThe Fund does not intend, and is unlikely, to engage in short selling of equities.

5.11 WithdrawalsWithdrawal requests are generally processed within 5 Business Days of receipt Please see section 7 for further detailson applications and withdrawals.


5.12 Suggested investment timeframeThe suggested investment timeframe is 5 years.

5.13 Labour standards and environmental, social and ethical considerationsExcept as noted below, neither Equity Trustees, Mantis Funds nor Dalton Street takes labour standards orenvironmental, social or ethical considerations into account in the selection, retention or realisation of Fundinvestments. However, where those factors negatively impact the investment performance or company stability, DaltonStreet’s investment team will generally discuss these matters with company management and/or review the decision tohold the specific investment. No specific methodology is used for such reviews nor are there pre-determined viewsabout the extent to which such factors will be taken into account in a review.

5.14 Fund performanceFund performance can be obtained by contacting Mantis Funds via e-mail: [email protected] or visiting theDalton Street Capital website www.daltonstreetcapital.com. Past performance is not indicative of future performance.The Responsible Entity, Investment Manager and Sub-Investment Manager do not guarantee the success, repayment ofcapital or any rate of return on income or capital or the investment performance of the Fund.


6. Managing RiskAll investments carry risk. Different investment strategiesmay carry different levels of risk, depending on the assetsacquired under the strategy. Assets with the highestlong-term returns may also carry the highest level ofshort-term risk. The significant risks below should beconsidered in light of your risk profile when decidingwhether to invest in the Fund. Your risk profile will varydepending on a range of factors, including your age, theinvestment time frame (how long you wish to invest for),your other investments or assets and your risk tolerance.Neither Equity Trustees nor Mantis Funds guarantees theliquidity of the Fund’s investments, repayment of capitalor any rate of return or the Fund’s investmentperformance. You may lose money by investing in theFund and your investment in the Fund may not meet yourobjectives. Future returns may differ from past returns. Inaddition neither Equity Trustees nor Mantis Funds offersadvice that takes into account your personal financialsituation, including advice about whether the Fund issuitable for your circumstances. If you require personalfinancial advice, you should contact a licensed financialadviser.

Some of the risks associated with an investment in theFund and how the Investment Manager manages thoserisks are listed below. There is no guarantee that any riskmitigation measure described below will be effective.

Investment System RisksTrade Errors or Connectivity to Trading Systems: TheFund may incur losses or gains as a result of errors inexecuting specific trading instructions. TheSub-Investment Manager is also reliant upon informationtechnology systems to send electronic tradinginstructions to brokers and exchanges across multiplemarkets. Trading systems are subject to risks relating totechnology failure or delays. The Investment Managertogether with the Responsible Entity actively monitorthird party software relationships and the performance ofexecution.

Quantitative Model Limitations: The Fund utilises theSub-Investment Manager’s investment strategy, which isbased on research into past data and the application ofthat research to the development of mathematicalmodels that attempt to forecast returns, risk, correlationand transaction costs. Mathematical models arerepresentations of reality but they may be incompleteand/or flawed and there is an inherent risk that anyforecasts derived from them may be inaccurate,particularly if the research or models are based on, orincorporate, inaccurate assumptions or data.

Investment RiskInternational Investments: The Fund invests ininternational investments which may involve certain risks,including fluctuations in foreign exchange rates, futurepolitical and economic developments and the possibleimposition of exchange controls or other governmentallaws or restrictions. Security prices in different countriesare subject to different economic, financial, political andsocial factors. In addition, investments may be subject tonon-recoverable withholding taxes.

Derivative Risk: The Fund may invest in exchange tradedderivatives. In the case of derivatives, fluctuations inprice will reflect movements in the underlying assets,reference rate or index to which the derivatives relate.The risks associated with derivative instruments includethe potential to lose value because of a sudden price

move or because of the passage of time, potentialilliquidity of the derivative, that the Fund cannot meetpayment obligations as they arise, and that thecounterparty to any derivative contract does not meet itsobligations under the contract. Dalton Street intends ontrading only exchange traded futures.

Swaps: The Fund may enter into swap contracts. Swapsare negotiated contracts between two parties, wherebyan agreement is entered to exchange the differencebetween the value of the instrument’s on a future date.The risks associated with swap instrument’s include;liquidity risk, whereby the underlying instrument isilliquid and counterparty risk, the risk that thecounterparty may not be able to meet current and futureobligations.

Currency and Currency Hedging Risk: The Fund mayinvest in securities on listed foreign exchanges.Movements against the Australian dollar may adverselyaffect the domestic value of the Fund’s investments andthe income from those investments. To reduce thecurrency impact the Fund’s foreign currency exposure ishedged. However, the hedge may not provide completeprotection from adverse currency movements. Currencymarkets can be extremely volatile and are subject to arange of unpredictable forces.

Foreign Exchange Forward Contracts: The Fund willenter into foreign exchange forward contracts to managethe Fund’s equity exposure to exchange rate risk. Foreignexchange forward contracts are currently not traded onexchanges. The contracts do not have limits on dailyprice movements and therefore, under exceptionalcircumstances, may be subject to unusually wide spreadbetween the prices.

Stop Loss Signals: The Sub-Investment Manager hassystematic stop loss/profit triggers that are methodicallyemployed to minimise losses and maximise gains. Thistrigger is deployed the following day after a trigger isidentified. The risk of trading the following trading daymay inadvertently result in realised losses outside ofinternal parameters. However, this risk is mitigated by theuse of an Extreme Event Safeguard which can betriggered intraday.

Commodity-Related Investments: The Fund may investin commodity futures. Exposure to the commoditiesfuture markets may subject the Fund to greater volatilitythan investments in traditional securities. Prices ofcommodities may fluctuate significantly over shortperiods as a result of a variety of factors, includingchanges in supply and demand relationships, changes ininterest or currency exchange rates, population growthand changing demographics and factors affecting aparticular industry or commodity, such as drought, floodsor other weather conditions, transportation bottlenecksor shortages, competition from substitute products,fiscal, monetary and exchange control programs, disease,pestilence, acts of terrorism, embargoes, tariffs andinternational economic, political, military, legal andregulatory developments.

Net Asset Value Considerations: The NAV per unit of theFund is expected to fluctuate over time with theperformance of the Fund’s investments. An investor maynot fully recover their initial investment when theychoose to withdraw their units or on compulsoryredemption if the NAV per unit of the Fund at the time of


such withdrawal is less than the Application Price paid bysuch investor. The NAV will be generated by theindependent Administrator with prices obtained byexternal pricing providers.

Counterparty RiskPrime Broker and Administrator: The Fund is at risk ofthe appointed Prime Broker entering into insolvency. TheFund’s right to the return of securities equivalent to thoseof the Fund’s securities to which a Prime Broker takeslegal and beneficial title or which a Prime Broker borrows,lends, pledges, charges, rehypothecates, sells, transfers,disposes of or otherwise uses for its own purposes is inaccordance with the relevant prime brokerageagreement. However, the Fund will rank as an unsecuredcreditor of the relevant Prime Broker and, in the event ofthe insolvency of the relevant Prime Broker, the Fundmay not be able to recover such equivalent securities infull, or at all.

The Administrator is responsible for calculating the NetAsset Value of the Fund. The valuation of the assets isobtained by third-party pricing providers and inaccordance with the pricing policy of the Administrator.There is a risk that the investor redeems its units from theFund that is either higher or lower than the valueprovider by the external valuator. The InvestmentManager together with the Responsible Entity performsdue-diligence, and monitors the performance of thePrime Broker and Administrator to ensure the servicesprovided meets contractual obligations and operateswithin the applicable law and regulation.

General RisksIlliquidity: There may be times when investments may notbe readily sold (for example, in a falling market wheresome traded securities may become less liquid).

Moreover, some securities may be thinly traded and theremay not be sufficient market depth to facilitate theefficient realisation of those assets at all times. However,in the Investment Manager’s opinion, trading volumes ofinvestments that are to be made by the Fund aregenerally sufficient to satisfy liquidity requirements whennecessary. The Fund generally invests in highly liquidinvestments which are traded in an active market, andcan be readily disposed of. The Investment Managerattempts to mitigate the liquidity risk factor by ensuringthat the Fund has sufficient cash (or cash equivalent)exposure to meet liquidity requirements. Note thatneither the Responsible Entity nor the InvestmentManager guarantees the liquidity of the Fund’sinvestments.

LeverageThe Fund may use leverage for the purpose of makinginvestments. The assets, including securities and cash,plus margin, are held against the value of the position.The use of leverage creates particular risks and maysignificantly increase the Fund’s investment risk.Leverage creates an opportunity for greater yield andtotal return but, at the same time, increases the Fund’sexposure to capital risk and, if leverage is in the form ofborrowing, interest costs. The exposure of a leveragedportfolio to movements in the instruments and markets inwhich it invests can be greater than the value of theassets within the Fund. The use of leverage in a marketthat moves adversely could result in substantial losses tothe Fund, which would be greater than if leverage wasnot used. The Fund is subject to leverage limits and isclosely monitored by the Investment Manager inconjunction with the Prime Broker on a daily basis.


7. Investing and WithdrawingInitial applicationsTo invest please complete the Application Formaccompanying this PDS and send your originalApplication Form online, via facsimile or directly to:

RBC Investor Services Trust Registry Operations

GPO Box 4471Sydney, NSW 2001AustraliaFax: +61 2 8262 5492

Investors can acquire units by completing an ApplicationForm or by making an application through the mFundsettlement service (“mFund”) by placing a buy order forunits with your licensed broker. Investors can alsocomplete the application process online (please go towww.daltonstreetcapital.com for further instructions). Ifyou choose to apply for units in the Fund online you willbe required to register, confirm your acceptance of theterms and conditions, and download a copy of this PDSprior to proceeding. The online application includes theoption of completing your AML and KYC requirementsonline, and submitting the application directly using anelectronic signature.

The minimum initial application amount is $25,000(unless otherwise determined by the Responsible Entity).Initial applications can only be processed when copies ofthe Application Form including relevant supportingidentification documents and cleared funds are received.

If applying directly via mFund, you will need to providethe application money directly to your licensed broker.

Scanned documents can also be sent [email protected]

Initial applications can only be processed when copies ofthe Application Form and the relevant supportingdocuments are received.

Application money MUST be transferred to the bankaccount details shown in the Application Form at thesame time the application forms are lodged. Failure tosend funds may result in your application being rejected.Please note that neither cash nor cheques will beaccepted.

The price at which units are acquired is determined inaccordance with the Constitution (“Application Price”).The Application Price, in general terms, is equal to theNAV of the Fund referable to class A, divided by thenumber of units on issue plus any transaction costs.

Unit prices are calculated daily however, Equity Trusteesmay determine the price on another day, or more or lessoften then daily. Prices can be found atwww.eqt.com.au/insto.

If we receive a correctly completed Application Form,identification documents (if applicable) and clearedapplication money:• before or at 2pm (Melbourne time) on a Business Day

and your application for units is accepted, you willreceive the Application Price calculated for thatBusiness Day; or

• after 2pm (Melbourne time) on a Business Day andyour application for units is accepted you will receivethe Application Price calculated for the next BusinessDay.

The processing cut-off times for applications andwithdrawals referred to in this PDS are Australian EasternStandard Time (Australian EST) and you should take thisinto account when faxing instructions.

Transaction costs may reduce the number of units whichan investor receives when applying for units. See the‘Buy/Sell spread’ and ‘Transaction and other costs’information in the fees section for further information.

The Application Price will vary as the market value ofassets in the Fund rises or falls.

New Zealand investors must complete the WholesaleInvestor certification attached to the Application Form.

Additional applicationsYou can make additional investments into the Fund atany time by sending us confirmation of your additionalinvestment amount together with a completedApplication Form online, via facsimile or directly to:

RBC Investor Services Trust Registry OperationsGPO Box 4471Sydney, NSW 2001Australia

Fax: +61 2 8262 5492

Investors can add to their investment at any time, subjectto Equity Trustees’ approval. The minimum additionalinvestment into the Fund is $25,000 (unless otherwisedetermined by the Responsible Entity).

Terms and conditions for applications

Applications can be made at any time. Applicationcut-off times and unit pricing are set out in the Initialapplications section above.

Please note that we do not pay interest on applicationmonies.

Equity Trustees reserves the right to refuse anyapplication without giving a reason. If we are unable toissue units immediately after the receipt of yourapplication, the money will be held in a non-interestbearing account with an Australian bank. If we are unableto issue units within a period of one month of receipt ofapplication money, within reasonable circumstances, wewill return your application money.

Under the Anti-Money Laundering and Counter-TerrorismFinancing Act 2006, applications made withoutproviding all the information and supportingidentification documentation requested on theApplication Form cannot be processed until all thenecessary information has been provided. As a resultdelays in processing your application may occur.

Cooling off periodNo cooling off period applies to the offer made in thisPDS, as the units offered under this PDS are onlyavailable in Australia to Wholesale Clients and in NewZealand to Wholesale Investors.

The right to cool off may not apply if you are an IndirectInvestor, even if you are a retail client. Indirect Investorsshould seek advice from their IDPS Operator or consultthe IDPS Guide or similar type document as to whethercooling off rights apply.

Making a withdrawal


Subject to the withdrawal limitations described in thisPDS, investors of the Fund can withdraw all or a portionof their investment by written request to:

RBC Investor Services Trust Registry OperationsGPO Box 4471Sydney, NSW 2001Australia

Fax: 02 8262 5492

Or by making a withdrawal request through mFund byplacing a sell order for units with your licensed broker.

There is a minimum withdrawal amount of $25,000(unless otherwise determined by the Responsible Entity).Refer below for “Terms and conditions for withdrawals”.Once we receive your withdrawal request, we may act onyour instruction without further enquiry if the instructionbears your account number or investor details and your(apparent) signature(s), or your authorised signatory’s(apparent) signature(s) or if the withdrawal is receivedvia mFund. The price at which units are withdrawn isdetermined in accordance with the Constitution(“Withdrawal Price”). The Withdrawal Price, in generalterms, is equal to the NAV of the Fund referable to classA, divided by the number of units on issue less anytransaction costs.

Withdrawal requests must be received by 2pm. TheWithdrawal Price for withdrawal requests received by thecut-off time, which are accepted, will be determined as ofthe relevant Business Day. Withdrawal requests receivedafter the cut-off time will not be processed until thefollowing day.

The processing cut-off times for applications andwithdrawals referred to in this PDS are Australian EasternStandard Time (Australian EST) and you should take thisinto account when faxing instructions.

Transaction costs may reduce the amount which aninvestor receives on withdrawal. See the ‘Buy/Sell spread’information in the fees section for further information.

The Withdrawal Price will vary as the market value ofassets referable to the Fund rises or falls.

Minimum withdrawal amounts are subject to theAustralian dollar minimum amounts disclosed above.Withdrawal requests received from New Zealandinvestors must specify:• the withdrawal amount in Australian dollars; or• the number of units to be withdrawn.

We are unable to accept withdrawal amounts quoted inNew Zealand dollars. Please note that the withdrawalamount paid to you will be in Australian dollars and maydiffer from the amount you receive in New Zealanddollars due to:• Foreign Exchange spreads between Australian and

New Zealand dollars (currency rate differs daily); and• Overseas Telegraphic Transfer (“OTT”) costs.

Withdrawals will only be paid directly to the unitholder’sbank account held in the name of the unitholder with anAustralian domiciled bank. Withdrawal payments will notbe made to third parties.

Access to fundsThe Responsible Entity will generally allow you to accessyour investment within 5 days of receipt of a withdrawalrequest by transferring the withdrawal proceeds to yournominated bank account or, where the request isreceived via mFund, to the investor’s licensed broker.However, the Constitution allows the Responsible Entityto make payment up to 21 days after receipt of a valid

withdrawal request (which may be extended in certaincircumstances). The period of time for satisfyingwithdrawal requests may be extended where theResponsible Entity considers that it is in the bestinterests of investors to do so and has taken allreasonable steps to realise sufficient assets, but is unableto do so due to circumstances outside its control. In thesecircumstances the period of time for satisfyingwithdrawal requests is extended for such further periodas those circumstances apply and the Responsible Entitymay suspend consideration of withdrawal requestsduring that period. Withdrawals will not be funded froman external liquid facility. In such circumstances, wherepossible, the Responsible Entity will provide investorswith 30 days’ prior written notice of such extension orsuspension.

Equity Trustees reserves the right to fully withdraw yourinvestment upon 30 days’ notice if your investmentbalance in the Fund falls below the required minimumbalance of $25,000 or such other amount as theResponsible Entity determines from time to time, as aresult of processing your withdrawal request. If EquityTrustees increases this minimum balance, Equity Trusteesmay, after giving 30 days’ notice to an investor who holdsunits with an aggregate Withdrawal Price less than thethen current minimum balance, withdraw that investor’sunits without a need for a withdrawal request. EquityTrustees may also request that an investor dispose theirunits to a person who is an Eligible Person or where theFund is liquid (as defined in the Corporations Act), lodgea withdrawal request in respect of all units the investorholds within 30 days (or such longer period as EquityTrustees may determine from time to time). If theinvestor fails to comply with that request and the Fund isliquid, Equity Trustees may compulsorily withdraw theinvestor’s units.

Terms and conditions for withdrawalsEquity Trustees and/or the Administrator reserve theright to ask for the production of original documents orother information to authenticate the communication. Inthe case of mis-receipt or corruption of any message, youwill be required to re-send the documents.

No withdrawal proceeds will be paid until theAdministrator has received the withdrawal requestsigned by the investor or an authorised signatory. NeitherEquity Trustees nor the Administrator shall beresponsible for any mis-delivery or non-receipt of anyfacsimile. Facsimiles sent to the Administrator shall onlybe effective when actually received by the Administrator.

When you are withdrawing, you should take note of thefollowing:• We are not responsible or liable if you do not receive,

or are late in receiving, any withdrawal money that ispaid according to your instructions.

• We may contact you to check your details beforeprocessing your withdrawal form. This may cause adelay in finalising payment of your withdrawal money.No interest is payable for any delay in finalisingpayment of your withdrawal money.

• If we cannot satisfactorily identify you as thewithdrawing investor, we may refuse or reject yourwithdrawal request or payment of your withdrawalproceeds will be delayed. We are not responsible forany loss you consequently suffer.

• As an investor who is withdrawing, you agree that anypayment made according to instructions received bypost, courier or fax, shall be a complete satisfaction of


our obligations, despite any fact or circumstancessuch as the payment being made without yourknowledge or authority.

• You agree that if the payment is made according tothese terms, you and any person claiming through orunder you, shall have no claim against us about thepayment.

• The Constitution allows Equity Trustees to makepayment up to 21 days after we accept a request(which may be extended in certain circumstances).

• Equity Trustees can deny a withdrawal request whereaccepting the request would cause the Fund to ceaseto be liquid or where the Fund is not liquid (asdefined in the Corporations Act). When the Fund isnot liquid, an investor can only withdraw when EquityTrustees makes a withdrawal offer to investors inaccordance with the Corporations Act. EquityTrustees is not obliged to make such offers.

• The Fund will cease to be liquid if less than 80% of theassets of that Fund are liquid assets. Broadly, liquidassets are money in an account or on deposit with afinancial institution, bank accepted bills, marketablesecurities, other prescribed property and other assetsthat the Responsible Entity reasonably expects canbe realised for their market value within the periodspecified in the Constitution for satisfying withdrawalrequests while the Fund is liquid.

DistributionsThe Fund usually distributes income semi-annually at theend of December and June. Distributions are calculatedon the last day of period end, and are normally paid toinvestors within 14 Business Days of the period end,although the distribution at 30 June may take longer, andthe Constitution allows for a distribution to be paid up to3 months after the distribution period. Equity Trusteesmay amend the distribution frequency without notice.

An investor’s share of any distributable income iscalculated in accordance with the Constitution and isgenerally based on the number of units held by theinvestor at the end of the distribution period and thedistributable income.

Investors can have their distribution reinvested or paid toa nominated bank account. Investors who do not indicatea preference will have their distributions automaticallyreinvested and their application will be taken to bereceived at the end of the relevant distribution period.

The Constitution provides for money payable to aninvestor to be held where the Responsible Entityattempts to pay the money by electronic transfer and theelectronic transfer fails on 3 occasions.

In some circumstances, where an investor makes a largewithdrawal request (5% or more of the units on issue inthe Fund at the start of the relevant distribution period),their withdrawal proceeds may be taken to include acomponent of distributable income.

If New Zealand investors elect to have their distributionpaid in cash, they will need to nominate a bank accountheld in their own name with an Australian domiciledbank. Cash distributions will only be paid in Australiandollars to such an account. When the distribution isreinvested, New Zealand investors will be allotted units inaccordance with the terms and conditions set out above.

The distribution reinvestment plan described in this PDSis offered to New Zealand investors on the followingbasis:• At the time the price of the units allotted pursuant to

the distribution reinvestment plan is set, the

Responsible Entity will not have any information thatis not publicly available that would, or would be likelyto, have a material adverse effect on the realisableprice of the units if the information were publiclyavailable.

• The right to acquire, or require the Responsible Entityto issue, units will be offered to all investors of thesame class, other than those resident outside NewZealand who are excluded so as to avoid breachingoverseas laws.

• Units will be issued on the terms disclosed to you, andwill be subject to the same rights as units issued to allinvestors of the same class as you.

There is available from the Responsible Entity, on requestand free of charge, a copy of the most recent annualreport (if any) of the Fund, the most recent financialstatements (if any) of the Fund, the auditor’s report onthose financial statements, the PDS and the Constitutionfor the Fund (including any amendments). Other than theConstitution, these documents may be obtainedelectronically by Wholesale Clients on request by e-mail:[email protected].

Valuation of the FundThe value of the investments of the Fund is generallydetermined daily. Generally, investments will be valued atthe next available market value but other valuationmethods and policies may be applied by Equity Trusteesor the Administrator if appropriate or if otherwiserequired by law or applicable accounting standards.

The value of a unit in the class is based on the value of theinvestments in the Fund referable to the class (aftertaking into account any liabilities of the Fund) referableto the class in accordance with the Constitution of theFund. For example, the Application Price of a unit in theclass is based on the NAV of the class divided by thenumber of units on issue plus an allowance fortransaction costs required for buying investments. Thisallowance is known as the Buy spread. At the date of thisPDS, the Buy spread is 0.35%.

Joint account operationFor joint accounts, each signatory must sign withdrawalrequests. Please ensure both signatories sign thedeclaration in the Application Form. Joint accounts willbe held as joint tenants.

Authorised signatoriesYou can appoint a person, partnership or company asyour authorised signatory. To do so, please nominatethem on the initial Application Form and have them signthe relevant sections. If a company is appointed, thepowers extend to any director and officer of thecompany. If a partnership is appointed, the powersextend to all partners. Such appointments will only becancelled or changed once we receive writteninstructions from you to do so.

Once appointed, your authorised signatory has fullaccess to operate your investment account for and onyour behalf. This includes the following:• making additional investments;• requesting income distribution instructions to be

changed;• withdrawing all or part of your investment;• changing bank account details;• enquiring and obtaining copies of the status of your

investment; and• having online account access to your investment.


If you do appoint an authorised signatory:• you are bound by their acts;• you release, discharge and indemnify us from and

against any losses, liabilities, actions, proceedings,account claims and demands arising frominstructions received from your authorisedrepresentatives; and

• you agree that any instructions received from yourauthorised representative shall be completesatisfaction of our obligations, even if the instructionswere made without your knowledge or authority.

Electronic instructionsIf an investor instructs Equity Trustees by electronicmeans, such as facsimile, email or internet the investorreleases Equity Trustees from and indemnifies EquityTrustees against, all losses and liabilities arising from any

payment or action Equity Trustees makes based on anyinstruction (even if not genuine) that Equity Trusteesreceives by an electronic communication bearing theinvestor’s investor code and which appears to indicate toEquity Trustees that the communication has beenprovided by the investor eg. a signature which isapparently the investor’s and that of an authorisedsignatory for the investment or an email address which isapparently the investor’s. The investor also agrees thatneither they nor anyone claiming through them has anyclaim against Equity Trustees or the Fund in relation tosuch payments or actions. There is a risk that a fraudulentwithdrawal request can be made by someone who hasaccess to an investor’s investor code and a copy of theirsignature or email address.


8. Keeping Track of Your InvestmentEnquiriesIf you have any questions regarding the Fund you cane-mail Mantis Funds at [email protected].

Complaints resolutionEquity Trustees has an established complaints handlingprocess and is committed to properly considering andresolving all complaints. If you have a complaint aboutyour investment, please contact us on:

Phone: 1300 133 472Post: Equity Trustees LimitedGPO Box 2307, Melbourne VIC 3001Email: [email protected]

We will acknowledge receipt of the complaint as soon aspossible and in any case within 3 days of receiving thecomplaint. We will seek to resolve your complaint as soonas practicable but not more than 45 days after receivingthe complaint.

If you are not satisfied with our response to yourcomplaint, you may be able to lodge a complaint with theAustralian Financial Complaints Authority (“AFCA”).

Contact details are:Online: www.afca.org.auPhone: 1800 931 678Email: [email protected]: GPO Box 3, Melbourne VIC 3001.

The external dispute resolution body is established toassist you in resolving your complaint where you havebeen unable to do so with us. However, it’s important thatyou contact us first.

ReportsWe will make the following statements available to allinvestors:

• A transaction confirmation statement, showing achange in your unit holding (provided when atransaction occurs or on request);

• The Fund’s annual audited accounts for each periodended 30 June;

• Annual distribution, tax and confirmation of holdingsstatements for each period ended 30 June;

• Annual report detailing each of the following:

• the actual allocation to each asset type;

• the liquidity profile of the portfolio assets as atthe end of the period;

• the maturity profile of the liabilities as at the endof the period;

• the derivative counterparties engaged (includingcapital protection providers);

• the leverage ratio (including leverage embeddedin the assets of the Fund, other than listed equitiesand bonds) as at the end of the period; and

• the key service providers if they have changedsince the latest report given to investors,including any change in their related party status.

The latest annual report will be available online from30 September each year at www.eqt.com.au/insto. If youare an Indirect Investor, please contact your IDPSOperator to obtain a copy of these documents.

The following information is available on Mantis Funds’website and/or is disclosed monthly:

• the current total NAV of the Fund and the redemptionvalue of a unit as at the date the NAV was calculated;

• the monthly or annual investment returns over atleast a five-year period (or, if the Fund has not beenoperating for five years, the returns since itsinception);

• key service providers if they have changed since thelast report given to investors, including any change totheir related party status;

• for each of the following matters since the last reporton those matters:

• the net return on the Fund’s assets after fees,costs and taxes;

• any material change in the Fund’s risk profile;

• any material change in the Fund’s strategy; and

• any change in the individuals playing a key role ininvestment decisions for the Fund.

By applying to invest in the Fund, you agree that, to theextent permitted by law, any periodic information whichis required to be given to you under the Corporations Actor ASIC policy can be given to you by making thatinformation available on Equity Trustees’ or MantisFunds’ website.

The Fund is not currently a disclosing entity as definedby the Corporations Act. If it becomes a disclosing entity(generally this will occur when there are 100 investors ormore), it will be subject to regular reporting anddisclosure obligations and investors will have a right toobtain a copy, free of charge, of any of the followingdocuments:

• the most recent annual financial report lodged withASIC by the Fund;

• any half yearly financial report lodged with ASIC bythe Fund after the lodgement of that annual financialreport but before the date of the PDS; and

• any continuous disclosure notices given by the Fundafter the lodgement of that annual financial reportbut before the date of this PDS.

Equity Trustees will comply with its continuous disclosureobligations by lodging documents with ASIC as andwhen required. These documents can also be obtainedfrom ASIC’s website or by visiting www.eqt.com.au/insto.


9. Fees and Other CostsThe warning statement below is required by law to be displayed at the beginning of the ‘Fees and other costs’ sectionof product disclosure statements for managed investment products. The example given in the warning statement doesnot relate to any investments described within this PDS.

DID YOU KNOW?Small differences in both investment performance and fees and costs can have a substantial impact on yourlong-term returns.

For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your finalreturn 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 bettermember services justify higher fees and costs.

You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask thefund or your financial adviser.

TO FIND OUT MOREIf you would like to find out more, or see the impact of the fees based on your own circumstances, the AustralianSecurities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a managed funds feecalculator to help you check out different fee options.

You should read all the information about fees and costs because it is important to understand their impact on yourinvestment. For Indirect Investors, the fees listed in the ‘Fees and other costs’ section of this PDS are in addition to anyother fees and charges charged by your IDPS Operator.

The following table shows fees and other costs that you may be charged. These fees and costs may be deducted fromyour money, from the returns on your investment or from the assets of the Fund as a whole. Information about taxationis set out in Section 10 of this document.

Type of fee or cost Amount How and when paid

Fees when your money moves in or out of the Fund

Establishment feeThe fee to open your investment

Nil There is no establishment feepayable when you set up yourinvestment in the Fund.

Contribution feeThe fee on each amount contributedto your investment

Nil There is no contribution fee payablewhen you invest in the Fund.

Withdrawal feeThe fee on each amount you take outof your investment

Nil There is no withdrawal fee payablewhen you redeem investments fromthe Fund.

Exit feeThe fee to close your investment

Nil There is no exit fee payable whenyou close your investment in theFund.

Management costs

The fees and costs for managingyour investment

Management fees: 1.50% (inclusive ofthe net impact of GST and RITC) p.a.of the NAV of the class.

These costs are calculated andaccrued daily based on the NAV ofthe class. The accrued fees are paidin arrears by deduction from theFund assets referable to the class atthe end of each month. These costsreduce the NAV of the class and arereflected in the unit price.

Performance fees 20.3% (inclusive of the net impact ofGST and RITC) of the investmentreturn of the class above theperformance hurdle for eachperformance period is payable toMantis Funds as an expense of theFund

The performance fee is calculatedand accrued daily, based on the NAVof the class, subject to the highwater mark. It is paid semi-annuallyfrom the Fund’s assets referable tothe class.

This fee can be negotiated. See‘Differential fees’ in the ‘Additionalexplanation of fees and costs’ below.


Type of fee or cost Amount How and when paid

Service fees

Investment switching feeThe fee for changing investmentoptions

Nil Not applicable

Additional Explanation of Fees and CostsWhat do the management costs pay for?Management costs comprise the additional fees or coststhat an investor incurs by investing in the Fund ratherthan by investing directly in the assets.

In addition, management costs do not includetransactional and operational costs (i.e. costs associatedwith investing the underlying assets, some of which maybe recovered through Buy/Sell Spreads).

Management feesThe management fees of 1.50% p.a. of the NAV of theclass are payable to the Responsible Entity of the Fundfor managing the assets and overseeing the operations ofthe Fund. The management fees are accrued daily andpaid from the Fund monthly in arrears. As at the date ofthis PDS, ordinary expenses such as investmentmanagement fees, custodian fees (excludingtransaction-based fees such as trading or settlementcosts incurred by the custodian), administration andaudit fees, and other ordinary expenses of operating theFund are covered by the management fees at noadditional charge to you.

The management fees shown above do not includeextraordinary expenses (if they are incurred in future)such as litigation costs, the costs of convening membermeetings and other costs.

Performance feesPerformance fees are payable to the Investment Managerwhere the investment performance of the class exceedsthe performance of the RBA Cash Rate. The performancefees are 20.3% of this excess, calculated and paidsemi-annually in arrears from the Fund and calculatedbased on the beginning NAV of the class over therelevant six month period ending 30 June or31 December.

No performance fees are payable until any accruedunderperformance (in dollar terms) from prior periodshas been made up (this feature is sometimes referred toas a high-watermark).

Based on the current calculation methodology for theperformance fees, the Responsible Entity has estimatedthat the typical ongoing performance fees payable perannum may be $710.50 assuming an average accountbalance of $50,000 during the year. For furtherinformation, please refer to the “Performance feeexample” section below.

It is not possible to estimate the actual performance feepayable in any given period, as we cannot forecast whatthe performance of the Fund will be, but it will bereflected in the management costs for the Fund for therelevant year. Information on current performance feeswill be updated from time to time and available atwww.eqt.com.au/insto.

Performance fee expenseThe method for calculating the performance fee expensefor each 6 month period ending 30 June and31 December (“Performance Fee Periods”) is as follows

For each Business Day, the daily investment return of theFund (net of capital inflows) is calculated to determinewhether the performance hurdle for the Business Day hasbeen exceeded.

The performance hurdle will be exceeded where the dailyperformance is above the RBA Cash Rate plus theinvestment management fee of 1.50%. p.a. calculated ona daily basis. The daily investment return of the Fund (netof capital inflows) is calculated by dividing the amount ofthe gross asset value of the Fund for the Business Day, bythe gross asset value for the previous Business Day.

The daily investment return of the class (net of capitalinflows) is calculated by dividing the amount of the grossasset value of the class for the Business Day, by the grossasset value for the previous Business Day. The dailyperformance fee amount is accrued and, where theaggregate amount is positive, the amount is reflected inthe daily unit price as an expense provision.

The daily performance fee amount is accrued and, wherethe aggregate amount is positive, the amount is reflectedin the daily unit price as an expense provision.

An accrued performance fee is payable if the class’sperformance is positive and in excess of the performancehurdle of the RBA Cash Rate plus the investmentmanagement fee of 1.50% p.a. of the NAV of the classreferable to class A for the Performance Fee Period.

If no performance fee is payable to the InvestmentManager for the period, then any accrued negativeperformance fee will be carried forward into the nextPerformance Fee Period. This means that negativeperformance of the Fund must be made up before aperformance fee is payable.

Performance fee exampleAssume the following;

• The Fund’s performance for the Performance FeePeriod is 5% before management costs have beendeducted

• The class’s performance hurdle is 1.50% (RBA CashRate as at 1/9/2019) plus 1.50% p.a. (managementfee), that is, effectively 1.50% over the samePerformance Fee Period

• The high water mark is set at zero

• The Fund’s NAV is $250,000

The class’s return above the Fund’s performance hurdle is3.50% (5% - 1.50%) for the period. The performance fee iscalculated as 20.30% x 3.50% x $250,000 = $1,776.25 forthat Performance Fee Period*.

If the class performance is lower than the classperformance hurdle, a performance fee is not chargedbut a negative performance fee is recorded. Before theInvestment Manager becomes entitled to receive a


performance fee for the next Performance Fee Period,any negative performance fee recorded during aprevious Performance Fee Period will need to berecouped.

Please note that the example is used for illustrativepurposes only and does not forecast future performance.

*20.30% is equal to 20% plus GST, less RITC. RITC ratesmay change in the future.

Transactional and operational costsIn managing the assets of the Fund, the Fund may incurtransaction costs such as brokerage, settlement costs,clearing costs and applicable stamp duty when assets arebought and sold. This generally happens when the assetsof a fund are changed in connection with day-to-daytrading or when there are applications or withdrawalswhich cause net cash flows into or out of a fund.

The Buy/Sell Spread is a reasonable estimate oftransaction costs that the Fund will incur when buying orselling assets of the Fund. These costs are an additionalcost to the investor but are incorporated into the unitprice and arise when investing application monies andfunding withdrawals from the Fund and are notseparately charged to the investor. The Buy Spread ispaid into the Fund as part of an application and the SellSpread is left in the Fund as part of a redemption and notpaid to Equity Trustees or the Investment Manager. Theestimated Buy/Sell Spread is 0.35% upon entry and0.35% upon exit ($87.50 for each $25,000 invested orwithdrawn). The Buy/Sell Spread can be altered by theResponsible Entity at any time andwww.daltonstreetcapital.com will be updated as soon aspracticable to reflect any change. The Responsible Entitymay also waive the Buy/Sell Spread in part or in full at itsdiscretion.

Transactional costs which are incurred other than inconnection with applications and redemptions arisethrough the day-to-day trading of the Fund’s assets andare reflected in the Fund’s unit price. As these costs arefactored into the NAV of the Fund and reflected in theunit price, they are an additional implicit cost to the

investor and are not a fee paid to the Responsible Entity.These costs can arise as a result of bid-offer spreads (thedifference between an asset’s bid/buy price andoffer/ask price) being applied to securities traded by theUnderlying Fund. Liquid securities generally have a lowerbid-offer spread while less liquid assets have a higherbid-offer spread reflecting the compensation taken bymarket makers in providing liquidity for that asset.

During the financial year ended 30 June 2019, the totaltransaction costs for the Fund were estimated to be2.23% of the NAV of the Fund, of which 8.71% of thesetransaction costs were recouped via the Buy/Sell Spread,resulting in a net transactional cost to the Fund of 2.04%p.a. However, such costs for future years may differ.

Differential feesA separate fee arrangement may be negotiated fromtime to time with certain investors. Please contact MantisFunds to discuss.

Can the fees change?Yes, all fees can change without investor consent. In mostcircumstances the Constitution defines the maximumfees that can be charged for fees described in this PDS.We have the right to recover all proper and reasonableexpenses incurred in managing the Fund and as suchthese expenses may increase or decrease accordingly.We will generally provide investors with at least 30 daysnotice of any proposed change to the managementcosts. Expense recoveries and Buy/Sell Spreads maychange without notice, for example, when it is necessaryto protect the interests of existing members and ifpermitted by law.

GSTAll fees and other costs quoted include GST less anyreduced input tax credits.

mFundWarning: If you are transacting through mFund, yourstockbroker or accredited intermediary may charge youadditional fees (see their Financial Services Guide).

Managed investment products – Example of annual fees and costs for the FundThis table gives an example of how the fees and costs for the Fund can affect your investment over a 1 year period. Youcan use this table to compare this product against other managed investment products.

Example – Dalton Street Capital Absolute Return Fund

BALANCE OF $250,000 WITH A CONTRIBUTION OF $5,000 DURING YEAR*

ContributionFees

Nil For every additional $5,000 you put in, you will be charged $0.

Plus

ManagementCostscomprising of:

2.31% p.a. And, for every $50,000 you have in the Fund you will be charged $1,155 each year,comprising:

ManagementFees

1.50% p.a. $750

Performance fee 0.81% p.a. $405

EqualsCost of Fund

If you had an investment of $50,000 at the beginning of the year and you put in anadditional $5,000 during that year, you would be charged fees of:$1,155What it costs you will depend on the fees you negotiate.

* This example assumes the $5,000 contribution occurs at the end of the first year, therefore management costs arecalculated using the $50,000 balance only.


**Additional fees may apply. Please note that this example does not capture all the fees and costs that may apply to yousuch as the Buy/Sell Spread. If you have consulted a financial adviser, you may pay additional fees. You should refer tothe Statement of Advice or Financial Services Guide provided by your financial adviser in which details of the fees areset out.

ASIC provides a fees calculator on its website www.moneysmart.gov.au, which you could use to calculate the effects offees and costs on your investment in the Fund.

The performance fees stated in this table shows the actual performance fees for the financial year ended 30 June 2018as a percentage of the Fund’s average NAV. The performance of the Fund, and the performance fees, may be higher orlower or not payable in the future. As a result, the management costs may differ from the figure shown in the table. It isnot a forecast of the performance of the Fund or the amount of the performance fees in the future. See also under theheading “Performance fees” our estimated typical ongoing performance fee payable per annum. The actualperformance fees for the current financial year and for future financial years may differ. For more information on theperformance history of the Fund, visit Equity Trustees’ website at www.eqt.com.au/insto. Past performance is not areliable indicator of future performance.


10. TaxationTaxationThe following information summarises some of theAustralian taxation issues you may wish to considerbefore making an investment in the Fund and assumesthat you hold your investment in the Fund on capitalaccount and are not considered to be carrying on abusiness of investing, trading in investments or investingfor the purpose of profit making by sale. The informationshould be used as a guide only and does not constituteprofessional tax advice as individual circumstances maydiffer.

A number of tax reform measures are currently underreview by the Australian Government. These reforms mayimpact on the tax position of the Fund and its investors.Accordingly, it is recommended that investors seek theirown professional advice, specific to their owncircumstances, of the taxation implications of investing inthe Fund.

General

The Fund is an Australian resident trust for Australian taxpurposes. Therefore, the Fund is required to determineits net income (taxable income) for the year of income.On the basis that investors are presently entitled (whichis the intention of Equity Trustees) to the net income ofthe Fund (including net taxable capital gains) or will beattributed their share of assessable income, exemptincome, non-assessable non-exempt income and taxoffsets (i.e. credits) of the Fund and the Fund is not apublic trading trust, the Fund should be treated as aflow-through trust for tax purposes. This means thatinvestors should be taxed on their share of the Fund’s nettaxable income or the amount attributed to them, andthe Fund should not be subject to Australian income tax.

In the case where the Fund makes a loss for Australiantax purposes, the Fund cannot distribute the tax loss toinvestors. However, the tax loss may be carried forwardby the Fund for offset against taxable income of the Fundin subsequent years, subject to the operation of the trustloss rules.

Attribution Managed Investment Trust (“AMIT”) – corerules

The Fund may qualify as an eligible Attribution ManagedInvestment Trust (AMIT), and if so, intends to elect intothe AMIT regime. The AMIT legislation applies anattribution model whereby Equity Trustees as theResponsible Entity of the Fund attributes amounts oftrust components of a particular character to investorson a fair and reasonable basis consistent with theoperation of the Fund’s Constitution, which includesprovisions in relation to AMIT. Under the AMIT rules, thefollowing will apply:

Fair and reasonable attribution: Each year, the Fund’sdetermined trust components of assessable income,exempt income, non-assessable non-exempt income andtax offsets (i.e. credits) will be allocated to investors on a“fair and reasonable” attribution basis, rather than beingallocated proportionally based on each investor’s presententitlement to the income of the Fund.

Unders or overs adjustments: Where the Fund’sdetermined trust components for a year are revised in asubsequent year (e.g. due to actual amounts differing to

the estimates of income, gains / losses or expenses), thenunders and overs may arise. Unders and overs willgenerally be carried forward and adjusted in the year ofdiscovery.

Cost base adjustments: Where the distribution made isless than (or more than) certain components attributedto investors, then the cost base of an investor’s units maybe increased (or decreased). Details of cost baseadjustments will be included on an investor’s annual taxstatement, referred to as an AMIT Member AnnualStatement (“AMMA”).

Large withdrawals: In certain circumstances, gains maybe attributed to a specific investor, for example, gains ondisposal of assets to fund a large withdrawal beingattributed to the redeeming investor.

Penalties: In certain circumstances (e.g. failure to complywith certain AMIT rules), specific penalties may beimposed.

The new rules are intended to reduce complexity,increase certainty and reduce compliance costs formanaged investment trusts and their investors. Wherethe Fund does not elect into the AMIT regime, or hasmade the election but the election is not effective for theincome year (e.g. the Fund does not satisfy therequirements to be a managed investment trust for theincome year), the Tax Law applicable to non-AMITsshould be relevant. In particular, the Fund should notgenerally pay tax on behalf of its investors and instead,investors should be assessed for tax on any income andcapital gains generated by the Fund to which theybecome presently entitled.

Deemed Capital Gains Tax (“CGT”) Election

Eligible managed investment trusts (“MITs”) may makean election to apply a deemed capital account treatmentfor gains and losses on disposal of certain eligibleinvestments (including equities and units in other trustsbut excluding derivatives, debt securities and foreignexchange contracts). Where the election is made theFund should hold its eligible investments on capitalaccount and gains/(losses) from the disposal of eligibleinvestments should be treated as capital gains/(losses).Capital gains arising on the disposal of eligibleinvestments held for 12 months or greater may be eligibleto be treated as discount capital gains.

Where the CGT election is not made, the Fund shouldhold its eligible investments on revenue account andgains/(losses) from the disposal of eligible investmentsshould be treated as revenue gains or losses.

Controlled Foreign Company (“CFC”) Provisions

There are certain tax rules (i.e. the CFC provisions) whichmay result in assessable income arising in the Fund inrelation to investments in foreign equities, where certaincontrol thresholds are met. If such interests were to beheld at the end of the income year, the taxable income ofthe Fund may include a share of net income and gains(i.e. CFC attributable income) from such investments.

Taxation of Financial Arrangements (“TOFA”)

The TOFA rules may apply to certain “financialarrangements” held by the Fund. In broad terms, theTOFA regime seeks to recognise “sufficiently certain”returns on certain financial arrangements on an accrualsbasis for tax purposes rather than on a realisation basis.


Where returns from derivative instruments are not“sufficiently certain” they will continue to be recognisedon a realisation basis, unless specific tax timing electionsare made.

Taxation Reform

The tax information included in this PDS is based on thetaxation legislation and administrative practice as at theissue date of this PDS, together with proposed changesto the taxation legislation as announced by theGovernment. However, the Australian tax system is in acontinuing state of reform, and based on theGovernment’s reform agenda, it is likely to escalate ratherthan diminish. Any reform of a tax system createsuncertainty as to the full extent of announced reforms, oruncertainty as to the meaning of new law that is enactedpending interpretation through the judicial process.These reforms may impact on the tax position of theFund and its investors. Accordingly, it will be necessary toclosely monitor the progress of these reforms, andinvestors should seek their own professional advice,specific to their own circumstances, of the taxationimplications of investing in the Fund.

Tax File Number (“TFN”) and Australian BusinessNumber (“ABN”)

It is not compulsory for an investor to quote their TFN orABN. If an investor is making this investment in thecourse of a business or enterprise, the investor mayquote an ABN instead of a TFN. Failure by an investor toquote an ABN or TFN or claim an exemption may causethe Responsible Entity to withhold tax at the topmarginal rate, plus the Medicare Levy, on gross paymentsincluding distributions or attribution of income to theinvestor. The investor may be able to claim a credit intheir tax return for any TFN or ABN tax withheld.Collection of TFNs is permitted under taxation andprivacy legislation.

By quoting their TFN or ABN, the investor authorisesEquity Trustees to apply it in respect of all the investor’sinvestments with Equity Trustees. If the investor does notwant to quote their TFN or ABN for some investments,Equity Trustees should be advised.

GST

The Fund is registered for GST. The issue or withdrawal ofunits in the Fund and receipt of distributions are notsubject to GST.

The Fund may be required to pay GST included inmanagement and other fees, charges, costs andexpenses incurred by the Fund. However, to the extentpermissible, the Responsible Entity will claim on behalf ofthe Fund a proportion of this GST as a reduced input taxcredit. Unless otherwise stated, fees and charges quotedin this PDS are inclusive of GST and take into account anyavailable reduced input tax credits. The Fund may beentitled to as yet undetermined additional input taxcredits on the fees, charges or costs incurred. If theResponsible Entity is unable to claim input tax credits onbehalf of the Fund, the Responsible Entity retains theability to recover the entire GST component of all feesand charges.

The impact of GST payments and credits will be reflectedin the unit price of the Fund. Investors should seekprofessional advice with respect to the GSTconsequences arising from their unit holding.

Australian Taxation of Australian Resident Investors

Distributions

For each year of income, each Australian residentinvestor will be required to include within their own taxcalculations and tax return filings the assessable income,exempt income, non-assessable non-exempt income andtax offsets (i.e. credits) of the Fund attributed to them byEquity Trustees as the Responsible Entity of the Fund.

The tax consequences for investors in the Fund dependson the tax components of assessable income, exemptincome, non-assessable non-exempt income and taxoffsets (i.e. credits) of the Fund attributed to them.

Investors will receive an Annual Tax Statement (or an“AMMA” for an AMIT) detailing all relevant taxationinformation concerning attributed amounts and cashdistributions, including any Foreign Income Tax Offset(“FITO”) and franking credit entitlements, returns ofcapital, assessable income, and any upwards ordownwards cost base adjustment in the capital gains taxcost base of their units in the Fund (in the case of anAMIT).

An investor may receive their share of attributed taxcomponents of the Fund or net income in respect ofdistributions made during the year or where they havemade a large withdrawal from the Fund, in which casetheir withdrawal proceeds may include their share of netincome or attributed tax components of assessableincome, exempt income, non-assessable non-exemptincome and tax offsets (i.e. credits). In addition, becauseAustralian investors can move into and out of the Fund atdifferent points in time, there is the risk that taxationliabilities in respect of gains that have benefited pastinvestors may have to be met by subsequent investors.

Foreign Income

The Fund may derive foreign source income that issubject to tax overseas, for example withholding tax.Australian resident investors should include their share ofboth the foreign income and the amount of the foreigntax withheld in their assessable income. In suchcircumstances, investors may be entitled to a FITO for theforeign tax paid, against the Australian tax payable onthe foreign source income. To the extent the investors donot have sufficient overall foreign source income to utiliseall of the FITOs relevant to a particular year of income,the excess FITOs cannot be carried forward to a futureincome year.

Disposal of Units by Australian Resident Investors

If an Australian resident investor transfers or redeemstheir units in the Fund, this may constitute a disposal fortax purposes depending on their specific circumstances.

Where an investor holds their units in the Fund on capitalaccount, a capital gain or loss may arise on disposal andeach investor should calculate their capital gain or lossaccording to their own particular facts andcircumstances. As noted above, proceeds on disposalmay include a component of distributable income. Incalculating the taxable amount of a capital gain, adiscount of 50% for individuals and trusts or 33 & 1/3%for complying Australian superannuation funds may beallowed where the units in the Fund have been held for 12months or more. No CGT discount is available tocorporate investors.


Any capital losses arising from the disposal of theinvestment may be used to offset other capital gains theinvestor may have derived. Net capital losses may becarried forward for offset against capital gains ofsubsequent years but may not be offset against ordinaryincome.

The discount capital gains concession may be denied incertain circumstances where an investor (together withassociates) holds 10% or more of the issued units of theFund, the Fund has less than 300 beneficiaries and otherrequirements are met. Investors who together withassociates are likely to hold more than 10% of the units inthe Fund should seek advice on this issue.

Australian Taxation of Non-Resident Investors

Tax on Income

The Fund expects to derive income which may be subjectto Australian withholding tax when attributed by EquityTrustees as the Responsible Entity of the Fund tonon-resident investors.

Australian withholding tax may be withheld fromdistributions of Australian source income and gainsattributed to a non-resident investor. The variouscomponents of the net income of the Fund which may beregarded as having an Australian source include

Australian sourced interest, Australian sourced othergains, Australian sourced dividends and CGT taxableAustralian property.

We recommend that non-resident investors seekindependent tax advice before investing, taking intoaccount their particular circumstances and the provisionsof any relevant Double Taxation Agreement/ Exchange ofInformation Agreement (“EOI”) between Australia andtheir country of residence.

Disposal of Units by Non-Resident Investors

Based on the Fund’s investment profile, generallynon-resident investors holding their units on capitalaccount should not be subject to Australian capital gainstax on the disposal of units in the Fund unless the unitswere capital assets held by the investor in carrying on abusiness through a permanent establishment in Australia.Australian tax may apply in certain circumstances if thenon-resident holds their units on revenue account. CGTmay also apply in some cases where the Fund has adirect or indirect interest in Australian real property. Werecommend that non-resident investors seekindependent tax advice in relation to the taxconsequences of the disposal of their units.


11. Other Important InformationConsentsMantis Funds has given and, at the date of this PDS, hasnot withdrawn, their written consent:• to be named in this PDS as the Investment Manager of

the Fund; and• to the inclusion of the statements made about them,

the Fund and the tables and statistical information,which are attributed to them, in sections 1, 2, 3, 4, 5, 6and 8.

Mantis Funds has not otherwise been involved in thepreparation of this PDS and have not caused or otherwiseauthorised the issue of this PDS. Mantis Funds and theiremployees and officers do not accept any responsibilityarising in any way for errors or omissions from this PDS,other than in relation to the statements for which it hasprovided its consent.

Dalton Street has given and, at the date of this PDS, hasnot withdrawn, their written consent to be named in thisPDS as the Sub Investment Manager of the Fundincluding statements made about them, the Fund andrelated matters. which are attributed to them.

mFund Settlement ServiceYou must use a mFund accredited and licensed broker tofacilitate your transactions on mFund. Your chosenbroker may charge you additional fees which are notoutlined in the Fees and Costs section of this PDS.

The AdministratorRBC has been appointed as the Fund’s administrator toperform certain administrative, accounting, registrar andtransfer agency services for the Fund.

RBC has not been involved in the preparation of this PDSor caused or otherwise authorised the issue of this PDS.RBC has not independently verified the informationcontained in this PDS and, accordingly, accepts noresponsibility for the accuracy or completeness of theinformation. RBC does not guarantee the success or theperformance of the Fund nor the repayment of capital orany particular rate of capital or income return.

The Custodian and Prime BrokerMorgan Stanley & Co. International plc. (as the “PrimeBroker” and “Custodian”), a member of the MorganStanley Group of companies, based in London, willprovide prime brokerage services to the Fund under theterms of the International Prime Brokerage Agreement(the “Agreement”) entered into between the Fund andthe Prime Broker for itself and as agent for certain othermembers of the Morgan Stanley Group of companies(the “Morgan Stanley Companies”). These services mayinclude the provision to the Fund of margin financing,clearing, settlement, stock borrowing and foreignexchange facilities. The Fund may also utilise the PrimeBroker, other Morgan Stanley Companies and otherbrokers and dealers for the purposes of executingtransactions for the Fund. The Prime Broker is authorisedby the Prudential Regulatory Authority (“PRA”) andregulated by the Financial Conduct Authority (“FCA”)and the PRA.

As security for the payment and discharge of all liabilitiesof the Fund to the Prime Broker and the Morgan StanleyCompanies, the investments and cash held by the PrimeBroker and each such Morgan Stanley Company will becharged by the Fund in their favour and will thereforeconstitute collateral for the purposes of the FCA rules.

Investments and cash may also be deposited by the Fundwith the Prime Broker and other members of the MorganStanley Group of companies as margin and will alsoconstitute collateral for the purposes of the FCA rules.

The Fund’s investments may be borrowed, lent orotherwise used by the Prime Broker and the MorganStanley Companies for its or their own purposes,whereupon such investments will become the propertyof the Prime Broker or the relevant Morgan StanleyCompany and the Fund will have a right against thePrime Broker or the relevant Morgan Stanley Companyfor the return of equivalent assets. The Fund will rank asan unsecured creditor in relation thereto and, in the eventof the insolvency of the Prime Broker or the relevantMorgan Stanley Company, the Fund may not be able torecover such equivalent assets in full.

Neither the Prime Broker nor any Morgan StanleyCompany will be liable for any loss to the Fund resultingfrom any act or omission in relation to the servicesprovided under the terms of the Agreement unless suchloss results directly from the negligence, wilful default orfraud of the Prime Broker or any Morgan StanleyCompany. The Prime Broker will not be liable for thesolvency, acts or omissions of any sub-custodians orother third party by whom or in whose control any of theFund’s investments or cash may be held. The PrimeBroker and the Morgan Stanley Companies accept thesame level of responsibility for nominee companiescontrolled by them as for their own acts. The Fund hasagreed to indemnify the Prime Broker and the MorganStanley Companies against any loss suffered by, and anyclaims made against, them arising out of the Agreement,save where such loss or claims result primarily from thenegligence, wilful default or fraud of the indemnifiedperson.

As the Custodian, Morgan Stanley will also provide acustody service for all the Fund’s investments, includingdocuments of title or certificates evidencing title toinvestments, held on the books of the Custodian as partof its prime brokerage function in accordance with theterms of the Agreement and the rules of the FCA. TheCustodian may appoint sub-custodians, including theMorgan Stanley Companies, of such investments.

In accordance with FCA rules, the Custodian will recordand hold investments held by it as custodian in such amanner that the identity and location of the investmentscan be determined at any time and that such investmentsare readily identifiable as belonging to a customer of thePrime Broker and are separately identifiable from theCustodian’s own investments. Furthermore, in the eventthat any of the Fund’s investments are registered in thename of the Custodian where, due to the nature of thelaw or market practice of jurisdictions outside the UnitedKingdom, it is in the Fund’s best interests so to do or it isnot feasible to do otherwise, such investments may notbe segregated from the Custodian’s own investmentsand in the event of the Custodian’s default may not be aswell protected.

Any cash which the Custodian holds or receives on theFund’s behalf will not be treated by the Custodian asclient money and will not be subject to the client moneyprotections conferred by the FCA’s Client Money Rules(unless the Custodian has specifically agreed with ornotified the Fund that certain cash will be given clientmoney protection). As a consequence, the Fund’s cash


will not be segregated from the Custodian’s own cashand will be used by the Custodian in the course of itsinvestment business, and the Fund will therefore rank asone of the Custodian’s general creditors in relationthereto.

The Prime Broker is a service provider to the Fund and isnot responsible for the preparation of this document orthe activities of the Fund and therefore accepts noresponsibility for any information contained in thisdocument. The Prime Broker will not participate in theinvestment decision-making process.

Non-listing of unitsThe units of the Fund are not listed on any stockexchange and no application will be made to list the unitsof the Fund on any stock exchange.

Termination of the FundThe Responsible Entity may resolve at any time toterminate and liquidate the Fund (if it provides investorswith notice) in accordance with the Constitution and theCorporations Act. Upon termination and after conversionof the assets of the Fund into cash and payment of, orprovision for, all costs (including anticipated costs) ofwinding up the Fund, expenses and liabilities (actual andanticipated), the net proceeds will be distributed pro-rataamong all investors according to the sum of theWithdrawal Price for the units they hold in the Fundagainst the aggregate Withdrawal Price for all the unitson issue in the Fund.

Our legal relationship with youEquity Trustees’ responsibilities and obligations, as theResponsible Entity of the Fund, are governed by theConstitution of the Fund, as well as the Corporations Actand general trust law. The Constitution of the Fundcontains a number of provisions relating to the rights,terms, conditions and obligations imposed on bothEquity Trustees, as the Responsible Entity of the Fund,and investors.

Equity Trustees may amend the Constitution if itconsiders that the amendment will not adversely affectinvestors’ rights. Otherwise the Constitution may beamended by way of a special resolution of investors.

To the extent that any contract or obligation arises inconnection with the acceptance by Equity Trustees of anapplication or reliance on this PDS by an investor, anyamendment to the Constitution may vary or cancel thatcontract or obligation. Further, that contract orobligation may be varied or cancelled by a deedexecuted by Equity Trustees with the approval of aspecial resolution of investors, or without that approval ifEquity Trustees considers the variation or cancellationwill not materially and adversely affect investor’s rights.

A copy of the Constitution of the Fund is available, free ofcharge, on request from Equity Trustees.

Investor liabilityThe Constitution of the Fund provides that unless there isa separate agreement with an investor, no investor can becalled on to contribute to the assets of the Fund or to itscreditors if the Fund is liquidated or becomes insolventexcept to the extent that any amounts remain unpaid inrelation to an investor’s subscription for units. Thereforeit is expected that investors will not be under anyobligation if a deficiency in the assets of the Fund was to

occur. However, this view has not been fully tested at lawand so it is not possible to give an absolute assurancethat an investor’s liability will be limited in allcircumstances.

In general, an investor’s liability is limited to the amount(if any) which remains unpaid in relation to theirsubscription for units in the Fund and any outstandingtax obligations arising from the operation of the Fund.The Responsible Entity may redeem some or all of aninvestor’s units to satisfy an amount of money due fromthe investor to the Responsible Entity. The ResponsibleEntity is also permitted to deduct certain amounts ofmoney from the proceeds of an investor’s withdrawalrequest. The Responsible Entity is entitled to beindemnified in certain circumstances by an investor or aperson who was at any time an investor in respect of anytax referable to that person.

Compliance planEquity Trustees has prepared and lodged a complianceplan for the Fund with ASIC. The compliance plandescribes the procedures used by Equity Trustees tocomply with the Corporations Act and the Constitutionof the Fund. Each year the compliance plan for the Fundis audited and the audit report is lodged with ASIC.

Unit pricing discretions policyEquity Trustees has developed a formal written policy inrelation to the guidelines and relevant factors taken intoaccount when exercising any discretion in calculatingunit prices (including determining the value of assets andliabilities). A copy of the policy and, where applicable andto the extent required, any other relevant documents inrelation to the policy (such as records of any discretionswhich are outside the scope of, or inconsistent with, theunit pricing policy) will be made available to investorsfree of charge on request.

IndemnityEquity Trustees, as the responsible entity of the Fund, isindemnified out of the Fund against all liabilities incurredby it in properly performing or exercising any of itspowers in the proper performance of its duties in relationto the Fund. To the extent permitted by the CorporationsAct, this indemnity includes any liability incurred as aresult of any act or omission of a delegate or agentappointed by the Responsible Entity. Subject to the law,Equity Trustees may retain or pay out from the assets ofthe Fund any sum necessary to affect such an indemnity.

Anti-Money Laundering and Counter TerrorismFinancing (“AML/CTF”)Australia’s AML/CTF laws require Equity Trustees toadopt and maintain a written AML/CTF Program. Afundamental part of the AML/CTF Program is that EquityTrustees must hold up-to-date information aboutInvestors (including beneficial owner information) in theFund.

To meet this legal requirement, we need to collect certainidentification information (including beneficial ownerinformation) and documentation (“KYC Documents”)from new investors. Existing investors may also be askedto provide KYC Documents as part of an ongoingcustomer due diligence/verification process to complywith AML/CTF laws. If applicants or investors do notprovide the applicable KYC Documents when requested,


Equity Trustees may be unable to process an application,or may be unable to provide products or services toexisting Investors until such time as the information isprovided.

In order to comply with AML/CTF Laws, the ResponsibleEntity may also disclose information that it holds aboutthe applicant, an investor, or any beneficial owner, to itsrelated bodies corporate or service providers, or relevantregulators of AML/CTF Laws (whether inside or outsideAustralia).

The Responsible Entity shall not be liable to applicants orinvestors for any loss you may suffer because ofcompliance with the AML/CTF laws.

If you apply for units via mFund you may be required toprovide the KYC documents to your broker (rather thanthe Administrator).

The ConstitutionThe Fund is governed by the Constitution. TheConstitution sets out how the Fund must operate and,together with the PDS, the Corporations Act and otherlaws, regulates the Responsible Entity’s legal relationshipwith investors. If you invest in the Fund, you agree to bebound by the terms of the PDS and the Constitution.

Your privacyThe Australian Privacy Principles contained in the PrivacyAct 1988 (Cth) (“Privacy Act”) regulate the way in whichwe collect, use, disclose, and otherwise handle yourpersonal information. Equity Trustees is committed torespecting and protecting the privacy of your personalinformation, and our Privacy Policy details how we dothis.

It is important to be aware that, in order to provide ourproducts and services to you, Equity Trustees may needto collect personal information about you and any otherindividuals associated with the product or serviceoffering. In addition to practical reasons, this is necessaryto ensure compliance with our legal and regulatoryobligations (including under the Corporations Act, theAML/CTF Act and taxation legislation). If you do notprovide the information requested, we may not be able toprocess your application, administer, manage, invest, payor transfer your investment(s).

You must therefore ensure that any personal informationyou provide to Equity Trustees is true and correct inevery detail. If any of this personal information (includingyour contact details) changes, you must promptly adviseus of the changes in writing. While we will generallycollect your personal information from you, your brokeror adviser or the Investment Manager and Administratordirectly, we may also obtain or confirm information aboutyou from publicly available sources in order to meetregulatory obligations.

In terms of how we deal with your personal information,Equity Trustees will use it for the purpose of providingyou with our products and services and complying withour regulatory obligations. Equity Trustees may alsodisclose it to other members of our corporate group, orto third parties who we work with or engage for thesesame purposes. Such third parties may be situated inAustralia or offshore, however we take reasonable stepsto ensure that they will comply with the Privacy Act whencollecting, using or handling your personal information.The types of third parties that we may disclose yourinformation to include, but are not limited to:• stockbrokers, financial advisers or adviser dealer

groups, their service providers and/or any joint holder

of an investment;• those providing services for administering or

managing the Fund, including the InvestmentManager, Custodian and Administrator, auditors, orthose that provide mailing or printing services;

• our other service providers;• regulatory bodies such as ASIC, ATO, APRA and

AUSTRAC; and• other third parties who you have consented to us

disclosing your information to, or to whom we arerequired or permitted by law to disclose informationto.

Equity Trustees or the Investment Manager may fromtime to time provide you with direct marketing and/oreducational material about products and services theybelieve may be of interest to you. You have the right to“opt out” of such communications by contacting us usingthe contact details below.

In addition to the above information, Equity Trustees’Privacy Policy contains further information about how wehandle your personal information, and how you canaccess information held about you, seek a correction tothat information, or make a privacy-related complaint.

Full details of Equity Trustees’ Privacy Policy is availableat www.eqt.com.au. You can also request a copy bycontacting Equity Trustees’ Privacy Officer on+61 3 8623 5000 or by email to [email protected].

Information on underlying investmentsInformation regarding the underlying investments of theFund will be provided to an investor of the Fund onrequest, to the extent Equity Trustees is satisfied thatsuch information is required to enable the investor tocomply with its statutory reporting obligations. Thisinformation will be supplied within a reasonabletimeframe having regard to these obligations.

Foreign Account Tax Compliance Act (“FATCA”)In April 2014, the Australian Government signed anintergovernmental agreement (“IGA”) with theUnited States of America (“U.S.”), which requires allAustralian financial institutions to comply with the FATCAAct enacted by the U.S. in 2010.

Under FATCA, Australian financial institutions arerequired to collect and review their information toidentify U.S. residents and U.S controlling persons thatinvest in assets through non-U.S. entities. Thisinformation is reported to the Australian Taxation Office(“ATO”). The ATO may then pass that information ontothe U.S. Internal Revenue Service.

In order to comply with the FATCA obligations, we mayrequest certain information from you. Failure to complywith FATCA obligations may result in the Fund, to theextent relevant, being subject to a 30% withholding taxon payment of U.S. income or gross proceeds from thesale of certain U.S. investments. If the Fund suffers anyamount of FATCA withholding and is unable to obtain arefund for the amounts withheld, we will not be requiredto compensate investors for any such withholding andthe effect of the amounts withheld will be reflected in thereturns of the Fund.

Common Reporting Standard (“CRS”)The CRS is developed by the Organisation of EconomicCo-operation and Development and requires certainfinancial institutions resident in a participatingjurisdiction to document and identify reportableaccounts and implement due diligence procedures.


These financial institutions will also be required to reportcertain information on reportable accounts to theirrelevant local tax authorities.

Australia signed the CRS Multilateral CompetentAuthority Agreement and has enacted provisions withinthe domestic tax legislation to implement CRS inAustralia. Australian financial institutions need todocument and identify reportable accounts, implement

due diligence procedures and report certain informationwith respect to reportable accounts to the ATO. The ATOmay then exchange this information with foreign taxauthorities in the relevant signatory countries.

In order to comply with the CRS obligations, we mayrequest certain information from you. Unlike FATCA,there is no withholding tax that is applicable under CRS.


12. Glossary of Important TermsAbsolute ReturnAbsolute return funds aim to deliver returns in both risingand falling markets. To do this, they invest in a wide rangeof asset classes and employ various investmentstrategies.

As a result, the fund’s performance is often not tied to theperformance of traditional asset classes such as shares,property or fixed interest.

AFSLAustralian financial services licence issued by ASIC undersection 913B of the Corporations Act.

Application FormThe Application Form used by investors who wish tosubscribe for units directly in the Fund andaccompanying this PDS.

ASICThe Australian Securities and Investments Commission.

Business DayA day other than a Saturday or Sunday on which banksare open for general banking business in Melbourne or ifthe Administrator primarily performs its administrativefunctions in respect of the Fund in a city other thanMelbourne, the city in which the Administrator performssuch functions.

Buy/Sell spreadThe Buy Spread is the difference between the NAV perunit and the Application Price for units in the Fund,whereas the Sell Spread is the difference between theNAV per unit and the Withdrawal Price of units in theFund. Collectively this is known as the Buy/Sell Spread.The Buy/Sell Spread reflects the estimated transactioncosts associated with buying and selling the assets of theFund, when investors invest in or withdraw from theFund.

ConstitutionThe Constitution of the Fund which describes the rights,responsibilities and beneficial interest of both investorsand the Responsible Entity in relation to the Fund.

Corporations ActThe Corporations Act 2001 (Cth) and CorporationsRegulations 2001 (Cth), as amended from time to time.

DerivativesGenerally, a derivative is a financial contract whose valuedepends upon, or is derived from, the value of anunderlying asset, reference rate or index. Derivatives mayrelate to stocks, bonds, interest rates, currencies orcurrency exchange rates, commodities, and relatedindexes. Examples include options contracts, futurescontracts, forward foreign exchange contracts, optionson futures contracts, swap agreements (including, butnot limited to, long and short credit default swaps andforward swap spread locks) and options on swapagreements.

DistributionThe amount that is paid to investors after the end of adistribution period. This generally includes any incomeand realised capital gains. Eligible Person

Any person:• other than a US Person; or

• other than a person that the Responsible Entity hasdetermined is not eligible to hold units in the Fundfrom time to time.

HedgeThe practice of undertaking one investment activity inorder to protect against loss in another. While hedgescan reduce potential losses, they can also reducepotential profits.

IDPSInvestor-Directed Portfolio Service or investor-directedportfolio-like managed investment scheme. An IDPS isgenerally the vehicle through which an investorpurchases a range of underlying investment options fromnumerous investment managers. In New Zealand, theIDPS needs to be licensed as a Discretionary InvestmentManagement Service provider.

IDPS OperatorsAn entity responsible for operating an IDPS.

LiquidityThe ability of an investment to be easily and quicklyconverted into cash with little loss of capital.

Long positionsA long position is one in which the investor owns sharesin a company. The investor will seek to profit as the priceof the shares appreciates.

Net Asset Value (NAV)The value of assets of the Fund less the value of theliabilities of the Fund (excluding net assets attributable toinvestors).

Pan-Asian stocksPan Asian stocks are listed equities quoted on theexchanges of the following countries Australia, Taiwan,Korea, Hong Kong, Singapore and Japan.

RBA Cash RateCash rate of the Reserve Bank of Australia as at the finalBusiness Day of the Performance Fee Period.

Retail ClientPersons or entities defined as such under section 761G ofthe Corporations Act.

RITCReduced Input Tax Credit. Equity Trustees will apply forreduced input tax credits on behalf of the Fund, whereapplicable, to reduce the GST cost to the Fund.

Short positionsA short position is one in which the Fund has sold sharesthat the Fund doesn’t own. The Fund seeks to profit asthe value of the shares falls, thereby reducing the size ofthe liability to re-purchase the shares. Short sales aregenerally covered, that is, the seller will “borrow” theinvestment to settle the sale and then will buy the sameinvestment in the open market to return the borrowedinvestment. The difference between the sale price andthe purchase price of the investment in the open marketis the profit or loss earned by the Fund.


US PersonA person so classified under securities or tax law in theUnited States of America (“US”) including, in broadterms, the following persons:

(a) any citizen of, or natural person resident in, the US, itsterritories or possessions; or

(b) any corporation or partnership organised orincorporated under any laws of or in the US or of anyother jurisdiction if formed by a US Person (other than byaccredited investors who are not natural persons, estatesor trusts) principally for the purpose of investing insecurities not registered under the US Securities Act of1933; or

(c) any agency or branch of a foreign entity located in theUS; or

(d) a pension plan primarily for US employees of a USPerson; or

(e) a US collective investment vehicle unless not offeredto US Persons; or

(f) any estate of which an executor or administrator is aUS Person (unless an executor or administrator of theestate who is not a US Person has sole or substantialinvestment discretion over the assets of the estate andsuch estate is governed by non-US law) and all the estate

income is non-US income not liable to US income tax;or(g) any trust of which any trustee is a US Person(unless a trustee who is a professional fiduciary is a USPerson and a trustee who is not a US Person has sole orsubstantial investment discretion over the assets of thetrust and no beneficiary (or settlor, if the trust isrevocable) of the trust is a US Person); or

(h) any discretionary account or similar account (otherthan an estate or trust) held by a dealer or other fiduciaryfor the benefit or account of a US Person; or

(i) any non-discretionary account or similar account(other than an estate or trust) held by a dealer or otherfiduciary organised, incorporated or (if an individual)resident in the US for the benefit or account of a USPerson.

Wholesale ClientPerson or entity which is a wholesale client as definedunder section 761G of the Corporations Act.

Wholesale InvestorIn the case of a New Zealand investor, means a WholesaleClient who also meets the definition of wholesale investorunder clause 3(2) of Schedule 1 of the Financial MarketsConduct Act 2013 (New Zealand).


Equity Trustees Application Form – 2020

•

•

•

•

•

Financial details and customer identification declaration

•

•

Equity Trustees Application Form – 2020

RBC Investor Services Tust Registry Operations

GPO Box 4471, Sydney NSW 2001

Additional applications may be faxed to: +61 2 8262 5492

Please complete if you are investing individually, jointly or you are an individual or joint trustee.

See Group A AMUCTF Identity Verification Requirements in Section 9

Investor 1

Title First name(s) Surname

I �---�

Residential address (not a PO Box/RMB/Locked Bag)

Suburb State Postcode

l��l�I ��Country

Email address Contact no.

Date of birth (DD/MM/YYYY)

I I

Country of birth Occupation

Investor 2

Title First name(s)

I � -'-'----� Residential address (not a PO Box/RMB/Locked Bag)

Tax File Number* - or exem tion code

Surname

Suburb State Postcode Country

l��l�I ��Email address Contact no.

Date of birth (DD/MM/YYYY) Tax File Number* - or exem tion code

I I

Country of birth Occupation

If there are more than 2 beneficial owners, please provide details as an attachment.

Do any of the investors named hold a prominent public position or function in a government body (local, state, territory, national or foreign) or in an international organisation or are you an immediate family member or a business associate of such a person?

□ No □ Yes, please give details:

Equity Trustees Application Form - 2020

Beneficial owner 2

Title First name(s)

I ..--------�-------.


Surname



I I

Country


Do any of the beneficial owners named hold a prominent public position or function in a government body (local, state, territory, national or foreign) or in an international organisation or are you an immediate family member or a business associate of such a person?

D No D Yes, please give details:


Please complete if you are investing for a trust or superannuation fund.

See Group C AML/CTF Identity Verification Requirements in section 9

Full name of trust or superannuation fund

Full name of business (if any) Country where established

Australian Business Number* (if obtained)

Tax File Number* - or exem tion code

Trustee details - How many trustees are there?

D Individual trustee(s) - complete section 3 - Investor details - Individuals/Joint

D Company trustee(s) - complete section 4 - Investor details - Companies/Corporate Trustee

D Combination - trustee(s) to complete each relevant section

Type of Trust

D Registered Managed Investment Scheme

Australian Registered Scheme Number (ARSN)

D Regulated Trust (including self-managed superannuation funds and registered charities that are trusts)

Name of Regulator (e.g. ASIC, APRA, ATO, ACNC)

Registration/Licence details

D Other Trust (unregulated)Please describe

Beneficiaries of an unregulated trust Please provide details below of any beneficiaries who directly or indirectly are entitled to an interest of 25% or more of the trust.

1 2

3 4

If there are no beneficiaries of the trust, describe the class of beneficiary (e.g. the name of the family group, class of unit holders, the charitable purpose or charity name):

Please provide the full name of the settlor of the trust where the initial asset contribution to the trust was greater than $10,000 and the settlor is not deceased:

Beneficial owners of an unregulated trust Please provide details below of any beneficial owner of the trust. A beneficial owner is any individual who directly or indirectly has a 25% or greater interest in the trust or a person who exerts control over the trust. This includes the appointer of the trust who holds the power to appoint or remove the trustees of the trust.


All beneficial owners will need to provide Group A AML/CTF Identity Verification Requirements in Section 9

Beneficial owner 1

Title First name(s)

I �---�


Surname



I I

Beneficial owner 2

Title First name(s)

I ��--� Surname

Country

Residential address (not a PO Box/RMB/Locked Bag) �-----------------------,

Suburb State Postcode Country


I I


Do any of the beneficial owners named hold a prominent public position or function in a government body (local, state, territory, national or foreign) or in an international organisation or are you an immediate family member or a business associate of such a person?

□ No □ Yes, please give details:


o

o

o

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