dalton street market - eqt.com.au

DALTON STREET CAPITALDalton Street MarketNeutral TrustProduct Disclosure StatementARSN 603 495 692APIR WMF0001AUIssue Date 19 October 2020

Contents1. Fund at a glance 3

2. ASIC Benchmarks 4

3. Disclosure Principles 5

4. Who is Managing the Fund? 7

5. How the Fund Invests 9

6. Managing Risk 16

7. Investing and Withdrawing 18

8. Keeping Track of YourInvestment 21

9. Fees and Other Costs 23

10. Taxation 27

11. Other Important Information 29

12. Glossary of Important Terms 32

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

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

Administrator and CustodianLink Fund SolutionsUnitholder ServicesPO Box 5482Sydney NSW 2001Email: [email protected]: +612 9547 4311Fax: +612 9221 1194

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

Dalton Street Market Neutral Trust PDS 1

This is the Product Disclosure Statement (“PDS”) for theDalton Street Market Neutral Trust (ARSN 603 495 692)(the ‘Fund’) and was issued on 19 October 2020. ThisPDS has been prepared and issued by Equity TrusteesLimited (ABN 46 004 031 298 AFSL 240975) in itscapacity as the Responsible Entity of the Fund (referredto throughout this PDS as the “Responsible Entity”,“Equity Trustees”, “us” or “we”). The Investment Managerof the Fund is Mantis Funds Pty Ltd and is referred tothroughout this PDS as the ‘Investment Manager’ or‘Mantis’. The Sub-Investment Manager, appointed by theInvestment Manager, is Dalton Street Capital Pty Ltd andis referred to throughout this PDS as the “Sub-InvestmentManager” or “Dalton Street”. The Administrator of theFund is Link Fund Solutions Pty Limited (ABN 44 114 91421 AFSL 440118) and is referred to throughout this PDS as‘Link Fund Solutions’ or ‘the Administrator’.

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, Sub-InvestmentManager or any associate, employee, agent or officer ofthe Responsible Entity, Investment Manager, theSub-Investment Manager or any other person to invest inthe Fund. This PDS does not take into account the

investment objectives, financial situation or needs of anyparticular investor. You should not base your decision toinvest in the Fund solely on the information in this PDS.You should consider the suitability of an investment inthe Fund in view of your personal financialcircumstances, investment objectives and needs. Youmay want to seek advice before making an investmentdecision.

Equity Trustees, the Investment Manager, theSub-Investment Manager and each of their respectiveemployees, associates, agents and 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.

The offer made in this PDS is only available to WholesaleClients (as defined in the Glossary) receiving this PDS inAustralia (electronically or otherwise). This PDS is not tobe treated as an offer to sell, or a solicitation of an offerto buy, any units in any jurisdiction in which it is unlawfulto make such an offer or solicitation or to any person towhom it is unlawful to make such an offer or solicitation.If you received this PDS electronically a paper copy willbe provided free upon request during the life of this PDS.Please visit www.daltonstreetcapital.com for a copy.

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 Managerand each of their respective officers, employees, agentsand associates. Actual future events may vary materiallyfrom the forward looking statements and theassumptions on which those statements are based. Giventhese uncertainties, you are cautioned to not place unduereliance on such forward looking statements.

In particular, in considering whether to invest in the Fund,you should consider the risk factors that could affect thefinancial performance of the Fund. The key risk factorsaffecting the Fund are summarised in section 6.

Unless otherwise stated, all fees quoted in the PDS areinclusive of Goods and Services Tax (‘GST’) after allowingfor an estimate for Reduced Input Tax Credits (‘RITCs’),and all amounts are in Australian dollars.

Information in this PDS that is not materially adverse issubject to change from time to time. We may update thisinformation. You can obtain any updated information:

• by visiting Dalton Street website atwww.daltonstreetcapital.com.

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

2 Dalton Street Market Neutral Trust PDS

1. Fund at a glance

SummaryFor furtherinformation

Name of the Fund Dalton Street Market Neutral Trust Section 5

ARSN 603 495 692 Section 5

APIR WMF0001AU Section 5

Investment objective The Fund aims to deliver consistent positive rates of return withrelatively low volatility, whilst maintaining little or no net exposureto the underlying equity market.

Section 5

Investment strategy andinvestments held

The Fund is an equity market neutral product which invests in, orshort sells, shares of companies listed on exchanges including butnot limited to the Australian Securities Exchange (ASX).

Section 5

Benchmark RBA cash rate

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

Investors who are looking for capital growth and income whilehedging equity market risk.

The risk level of the Fund would be considered medium.

Section 5

Recommended investmenttimeframe

At least 5 to 7 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.

You should review this regularly to ensure that the Fund continuesto meet your investment needs.

Section 5

Minimum initial investment $50,000 Section 7

Minimum additionalinvestment

$5,000 Section 7

Minimum withdrawalamount

$5,000 Section 7

Minimum balance $40,000 Section 7

Cut off time forapplications

2:00pm (Australian Eastern Standard Time) on any Business Dayfor receipt of that day’s unit price.

Section 7

Cut off time forwithdrawals

2:00pm (Australian Eastern Standard Time) on any Business Dayfor receipt of that day’s unit price.

Section 7

Valuation of the Fund’sassets

The Fund’s assets are normally valued daily. Section 7

Applications Accepted each Business Day. Section 7

Withdrawals Accepted each Business Day. Withdrawal requests are generallyprocessed and paid within 5 Business Days of receipt of awithdrawal request although a longer period of time is permittedunder the Constitution.

Section 7

Income distribution Determined semi-annually at the end of June and at the end ofDecember and normally paid to investors within 14 days of theperiod end.

You may elect to have your distribution reinvested or directlycredited to an account in your name held at a branch of anAustralian domiciled bank

Section 7

Management costs 1.53% p.a. of the NAV Section 9

Entry fee/ exit fee None Section 9

Performance fee 20.5% p.a. (including GST net of RITC) of the increase in NAVwhich exceeds the benchmark, subject to a high-watermark.

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, Link Fund Solutions, to provideadministration services for the Fund, includingvaluation services.

The Fund satisfies Benchmark 1 by having itsnon-exchange traded assets independently valued bythe Administrator in accordance with its pricing policy.

Over-the-counter (“OTC”) derivatives are generallyvalued by reference to the counterparty settlementprice which is based upon broad financial marketindices.

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 Fund’s investment strategy is an equity market neutralstrategy and seeks to provide attractive, risk adjusted returns withlittle or no net exposure to underlying equity markets.

Diversification guidelines for the Fund are set out in Section 5. Thespecific risks of investing in the Fund are described in Section 6.

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 who have in turn appointed Dalton Street Capital Pty Ltd asthe Sub-Investment Manager. Established in 2015, Dalton are led byRhett Dinsdale and Aji Mathews who have over 20 years’ ofcollective experience managing absolute return portfolios ofAustralian and international shares. Dalton Street comprises ateam of dedicated and experienced investment professionalsbased in Sydney and are supported by Mantis Funds who provideoperational and distribution services.

See Section 4 in relation to the expertise of the InvestmentManager. There have been no significant adverse regulatoryfindings against the Investment Manager or the Sub-InvestmentManager, or any of the senior investment professionals at theseorganisations.

Under the Investment Management Agreement amongst theSub-Investment Manager and the Investment Manager and EquityTrustees, Equity Trustees can terminate the Sub-InvestmentManager or the Investment Manager’s appointment where theSub-Investment Manager or the Investment Manager becomesinsolvent, materially breaches the agreement, ceases to carry onits business or in certain other circumstances. In the event thatEquity Trustees terminates the Sub-Investment Manager or theInvestment Manager following one of these events, theSub-Investment Manager or the Investment Manager’sappointment would cease upon any termination date specified inthe notice, and the Sub-Investment Manager or the InvestmentManager would be entitled to receive fees in accordance with theagreement until the effective date of termination.

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 Pty Ltd and Dalton Street Capital Pty Ltd, the

investment manager and sub-investment manager of the Fundrespectively;

• Link Fund Solutions Pty Limited, the administrator of the assetsof the Fund;

• Morgan Stanley & Co. International plc, the prime broker of theFund;• UBS AG Australia Branch, the secondary prime broker of

the Fund; and• Morgan Stanley & Co. International plc, the custodian of the

assets of the Fund.

See Section 5.3 for further information on other key serviceproviders, Equity Trustees’ role in monitoring the performance ofservice providers and a diagram of the flow of funds through theFund.

Section 5.3


Summary

Section (forfurtherinformation)

Valuation, location andcustody of assets

Link Fund Solutions Pty Limited is the administrator of the Fundand provides administrative, accounting, registry and transferagency services. The Administrator is responsible for calculatingthe Fund’s NAV.

Morgan Stanley & Co. International plc is the custodian andprovides custodial services.

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

Section 5.4

Liquidity The Fund invests predominantly in liquid assets and is expected tobe liquid for the purposes of the Corporations Act.

Section 5.5

Leverage The Fund does not borrow funds for investment. Rather; leverageis created as the proceeds from short-selling borrowed securitiesare reinvested in the long portfolio. Leverage in the form of shortselling is used to hedge the market risk of the long portfolio.

The Fund’s expected level of leverage is measured by the sum ofthe gross exposure levels of its long and short portfolios. At itsmaximum level (which has not been reached in the Fund’s history),for every $1 of investors’ capital, the Investment Manager mayinvest $2 in long positions and $2 in short positions. Historically,the Fund has maintained an average gross exposure of between150-300% in a fully hedged structure, which equates to aninvestment of $1-1.50 in each of the long and short portfolios, forevery $1 of investors’ capital.

Section 5.6

Derivatives The Investment Manager does not generally employ the use ofderivatives as part of the Fund’s investment strategy. However, itdoes retain the flexibility to invest in financial derivatives from timeto time to hedge physical positions, gain market exposure tounderlying securities or for portfolio management purposes.

The types of derivatives that may be used from time to time andthe allocation ranges for both derivatives and the Fund’s otherasset classes are set out in Section 5.2.

All of the Fund’s derivatives counterparties must have, in DaltonStreet’s reasonable opinion, sufficient expertise and experience intrading such financial instruments.

Section 5.8

Short selling In a market neutral strategy, the proceeds of short selling are usedto fund an investment portfolio of shares. As the long portfolio isfunded from the proceeds of the short sales, the structure is fullyhedged, with little or no net market exposure.

Unit holders’ capital is retained in cash at bank and investorsbenefit to the extent the long portfolio of shares outperforms theportfolio of shares that have been short sold. Dalton Streetemploys systematic research to access an attractive source offunds in short proceeds, while taking advantage of the naturalhedge in the structure.

Short sales can involve greater risk than buying a security. Therisks associated with short-selling and the ways in which theInvestment Manager seeks to mitigate those risks are set out inSection 5.7.

Section 5.7

Withdrawals Generally daily.

Withdrawal requests must be received by 2pm on any BusinessDay to receive that day’s unit price.

See Section 7 for more information on making a withdrawal

Risks and limitations on withdrawal are set out in Section 5.9.

Section 5.9


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 as the investment manager of the Fund who havein turn appointed Dalton Street as the sub-investmentmanager. Equity Trustees has appointed a custodian tohold the assets of the Fund. The custodian has nosupervisory role in relation to the operation of the Fundand is not responsible for protecting your interests.

The Investment Manager and Sub-InvestmentManagerEquity Trustees, as Responsible Entity of the Fund, hasappointed Mantis Funds Pty Ltd as the InvestmentManager of the Fund who have in turn appointed DaltonStreet Capital Pty Ltd as the Sub-Investment Manager.

Information in relation to the Investment ManagementAgreement under which they have been appointed is setout in Section 3 of this PDS.

Mantis Funds Management Pty LtdMantis Funds is a newly established boutique managerwhich 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 providesDalton Street with operational, distribution andmarketing services applying best-in-class technology tooptimise outcomes for investors. Key outcomes includeoperational efficiency, transparency and riskmanagement. Timothy Cheung is a co-founder andDirector of Mantis Funds and is leads the strategicdirection of the business while overseeing distribution,operations and marketing functions. Timothy hassuccessfully built and led investment teams for more thana decade. Most recently he co-founded and launched LSLPartners as Chief Investment Officer. Prior to that, atPerpetual Investments and Morphic Asset Managementhe focused on Asian investments as a Senior Analyst andHead of Research respectively. Timothy commenced hisbuy-side career at Colonial First State Global AssetManagement where he was the Head of InvestmentAnalytics for the Infrastructure Investment team. Prior tojoining Colonial First State Global Asset Management,Mr. Cheung was a sell-side analyst at CommonwealthSecurities covering Australian gaming, media andindustrial companies. During his career, Mr. Cheung hasgained experience across all major asset classesincluding 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 firm’sdistribution, marketing and client relations functions.Damien has over 30 years’ experience in the FinancialServices Industry and his firm, Triple A Partners is anindependent 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 years’experience 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 LtdDalton 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 investment strategies that aimsto deliver positive Absolute Returns with low correlationto all major asset classes. The investment strategy isbased on systematically established principles ofbehavioural finance and rigorous logic that aims toprovide positive returns through all market cycles. TheSub-Investment Manager invests in a range ofgeographically diverse markets based on systematic androbust risk management techniques.

Rhett Dinsdale is a Partner and Portfolio Manager atDalton Street. He also serves as the firm’s ManagingDirector. Rhett is responsible for portfolio strategydesign, research and implementation. He spends 50% ofhis time on this investment strategy. Rhett has over15 years of experience in portfolio management, tradingand analysis. Rhett has developed and implemented arange of 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 market neutralproprietary trading portfolios for the Asia Equitiesbusiness. Rhett has held positions as an Index Arbitrageand Proprietary Trader at Merrill Lynch and Delta oneSwaps and Global Prime Finance Trader at DeutscheBank.

Rhett holds a Bachelor of Science (Computer Science)degree from Charles Darwin University.

Aji Mathews is a Partner and Portfolio for Dalton StreetCapital. Aji is responsible for strategy design,quantitative analysis, portfolio management andmonitoring, trade execution and trading systems. Hespends 50% of his time on this investment strategy. Ajihas more than a decade of systematic investmentexperience with a particular focus on risk managementand portfolio systems. At his previous role at CreditSuisse, Aji worked closely with Rhett on the proprietarytrading desk, while managing quantitative tradingstrategies and IT systems.

Aji holds a Master’s degree in Computer Applications, aBachelor’s degree in Commerce and a Post GraduateDiploma in Business Administration.

Stefano Cavaglia is a Senior Advisor to Dalton Street andprovides expert guidance to Rhett and Aji in design andimplementation of their investment strategies. He spends20% of his time on this investment strategy. Stefano also

acts as a risk consultant to Dalton responsible forensuring best practice standards are in place. Stefano hasmore than 20 years of experience in asset management.He was formerly the Head of Quantitative Strategies atUBS where he ran more than $1 billion of external capital.Stefano has also held senior positions at Findex andCentric Wealth where he focused on evaluating externalmanagers across all alternative and traditional assetclasses.

Stefano holds a PhD in International Finance from theUniversity of Chicago, a Master of BusinessAdministration from UC Berkeley and a Bachelor ofCommerce from McGill University.

The Custodian and AdministratorLink Fund Solutions Pty LimitedThe Responsible Entity has appointed Link FundSolutions Pty Limited to act as administrator for theFund. In this capacity, the Administrator performs allgeneral administrative tasks for the Fund, includingkeeping financial books and records and calculating theNet Asset Value of the Fund.

The Responsible Entity has entered into anadministration agreement with the Administrator, whichgoverns the services that will be provided by theAdministrator.

The Investment Manager may at any time, in consultationwith the Responsible Entity, select any otheradministrator to serve as administrator to the Fund.

The Prime Broker and CustodianMorgan Stanley & Co International plc (“MorganStanley”)The Responsible Entity has appointed Morgan Stanley ascustodian of the assets of the Fund. The custodian’s roleis limited to holding the assets of the Fund as agent ofEquity Trustees. The custodian does not makeinvestment decisions in respect of the assets, has nosupervisory role in relation to the operations of the Fundand has no liability or responsibility to investors.

UBS Australia AG Branch (“UBS”)The Responsible Entity has appointed UBS as thesecondary prime broker for the Fund.


5. How the Fund Invests5.1 Investment objectiveThe Fund aims to deliver consistent positive rates ofreturn with relatively low volatility, whilst maintaininglittle or no net exposure to the underlying equity market.

5.2 Investment strategyWhat is a Market Neutral Fund?A market neutral fund aims to profit from the relativeperformance of a long and a short portfolio of shares,bought together in equal value to form a market neutralstructure. It provides investors with the opportunity togain exposure to mispriced listed securities as identifiedby Dalton Street, without being fully exposed to thevolatility and risks of the share market which arise frombeing invested long-only or short-only in those listedsecurities.

Generally speaking the market is efficient at pricing mostsecurities. At any point in time however, there may be aselect group of securities that are mispriced based on aparticular assessment of their value. In a market neutralstructure Dalton Street looks to profit from themispricing of securities while taking advantage of thenatural hedge between long and short positions.

In simple terms, by holding long and short portfolios ofequal value, investors’ exposure to broad basedmovements in the underlying share market is hedged. Ina falling market the value of the fund’s liabilities - whicharise when a security is borrowed and sold-short - fallsalong with the value of the fund’s long positions. Similarlyin a rising market, the increase in value in the longportfolio will be offset by an increase in the fund’sliabilities associated with its short positions. Investors inthe fund profit to the extent that the long portfoliooutperforms the short portfolio. Returns in a marketneutral portfolio will almost entirely reflect DaltonStreet’s success in choosing shares to buy and sell

(short). This is also a key source of risk. If securityselection is poor, the portfolio value may fall.

How is a Market Neutral Portfolio Structured?A sample market neutral portfolio structure is shown inFigure 1. The portfolio’s capital is retained in cash andliquid securities held at a bank. Dalton Street constructs ashort portfolio of securities that are expected tounderperform. The funds raised from selling thesesecurities are then reinvested in securities that areexpected to outperform. As the ‘long’ portfolio and the‘short’ portfolio are of equal value, the exposure togeneral market movements is minimised, while capital isretained in cash earning interest at the bank.

The gross return (before expenses) of the market neutralportfolio will be the interest earned on the cash at bankplus the difference between the performance of the longand short portfolios.

Investment PhilosophyDalton Street believe the following:

• Long-term fundamentals drive long-term assetgrowth;

• Short-term volatility, liquidity and subordinate marketrelationships drive short-term profits; and

• Combining the above dynamics with market neutralinvesting provides superior risk adjusted returnsthrough all market cycles.

All investment markets demonstrate numerous genericbehaviours, which apply universally across sectors,geography and time frames. Because of their persistentnature, these generic principles can over the long termgenerate significant compound returns. The InvestmentManager’s strategy employs a diverse array ofproprietary investment techniques to capture theseeffects.

Figure 1: Sample market neutral portfolio structure showing the flow of funds within the structure (before expenses)and a hypothetical scenario in respect of the portfolio returns.

Note that the sample portfolio structure shown above is an example only: the 5% Outperformance and 5%Underperformance do not reflect the Fund’s actual past performance and are not a forecast of the Fund’s futureperformance.

In selecting securities to buy, Dalton Street will look forlong-term and short-term factors which suggest thestock is undervalued. Conversely, in looking to short sellthe sub-Investment Manager will look to sell the

securities of businesses with both long-term andshort-term factors present that leads Dalton Street tobelieve they are overvalued. By populating the longportfolio with strong businesses which are considered


undervalued and the short portfolio with weakbusinesses that are seen as overvalued, the value of thecombined portfolio has the potential to appreciate overtime.

Dalton Street believes Investors can benefit fromlong/short investing in three key ways:

• they access a further source of potential returnsthrough mispriced shorts;

• they access an attractive source of additional funds,in the form of short proceeds; and

• they potentially benefit from the natural hedge in thestructure, whereby the impacts of external forces onthe share market are mitigated.

Investment ProcessDalton Street conducts detailed systematic analysis ofAustralian companies and industries, seekingopportunities to profit from the mispricing of listedsecurities. Broadly, Dalton apply three differentsub-strategies to take advantage of this mispricing. Asummary of the sub-strategies to be implemented byDalton Street is set out below.

Multi-factor long-short

Dalton have developed systematic market neutral modelwhich takes advantage of a range of longer term

mispriced securities. Often this mispricing is due to‘short-termism’ and behavioural biases amongst marketparticipants. Dalton have designed a strategy that aimsto harvest alpha and expose investors to attractivefactors while maintaining market neutrality.

Pair trading

This strategy takes advantage of the temporarybreakdowns in the relationship between highly correlatedpairs of stocks within the ASX100. Within each pair, along position will be established in the relativelyovervalued stock while a corresponding short positionwill be established in the relatively undervalued stock. Asprices in the stock pairs converge back towards theirlong-term relativities, the Fund stands to benefit.

Event-driven

Event-driven or catalyst investing involves taking short tomedium term positions (long and short) in companieswho are experiencing a significant event such as:

• a firm takeover bid or approach;

• corporate restructuring such as a spin out; and

• a buyback, special dividends or a step change inearnings.

Portfolio Construction

Unlike a traditional fund, the Fund will have (in general terms) two portfolios; a long and a short portfolio. The allocationto sub-strategies and weighting of individual positions in each portfolio will be systematically determined based onanticipated internal rate of return adjusted for risk.

This process seeks to ensure the Sub-Investment Manager constructs portfolios for the Fund around the bestsub-strategies and individual investment ideas, with the highest anticipated returns. As the Fund retains a marketneutral structure, the size of the long and short portfolios is kept in balance, with the net market exposure of the Fund’scapital kept within ±10% to ensure a “hedged” position.

The Investment Manager will also look to construct well diversified portfolios across sectors and industries and willtypically hold between 40-80 positions in each of the long and short portfolios.

The Fund will predominantly hold securities listed on the ASX however, it may also hold up to 20% of its gross exposurein international securities. Where the Investment Manager invests in international securities, it will aim to broadlymanage the Fund’s exposure to currency movements by balancing long and short exposures in foreign currencies.

The Fund’s capital will be retained in cash or cash equivalents with the Prime Broker or an Australian bank. TheInvestment Manager also retains the flexibility to hold instruments other than cash such as hybrid equity, debt or fixedinterest securities although it has not done so in the Fund’s history. The table below sets out the permitted investmentsfor the Fund.

Asset Class Allocation range

Securities listed on the ASX Up to 400% of the Fund’s capital but typically between150-300%

Securities listed on any other licensed securities marketwith regulation and disclosure requirements comparableto the ASX

Up to but typically less than, 20% of the value of each ofthe long and short portfolios

Listed warrants and options Up to 200% of the Fund’s capital but typically zero

Bills of exchange, promissory notes or other negotiableinstruments accepted, drawn or endorsed by any bank,Australian governments or corporations of at least aninvestment grade credit rating

Up to 100% of the Fund’s capital but typically zero

Cash or cash equivalents Up to 110% of the Fund’s capital

Debentures, unsecured notes and bonds of a corporationor government of at least an investment grade creditrating


Units or interests in cash management trusts Up to 110% of the Fund’s capital


Asset Class Allocation range

Any other financial products which Dalton Street mayuse in the management of the Fund’s portfolio inaccordance with its Australian financial services licence


Exchange traded derivatives, such as Share Price IndexFutures


OTC derivatives, such as Interest Rate or ForeignExchange Swaps

Up to 50% of the Fund’s Capital but typically zero

Risk managementRisk philosophy

Risk management sits at the heart of the investment process, playing both a defensive role in helping avoid losses in aleveraged structure as well as an offensive role in identifying shorts where risks are often mispriced.

Whilst most managers view risk in the context of underperforming the share market, Dalton Street considers risk as theprospect of capital loss. Capital loss is best avoided by investing in the shares of well managed companies with soundeconomics when they are undervalued by the share market. By constructing a portfolio of these shares theSub-Investment Manager seeks to maximise the ‘embedded value’ of the Fund’s assets, with the objective ofminimising the prospect of loss. As shorts are a liability on the Fund’s balance sheet, the principles are the same but inreverse. The Manager looks to minimise the value of the liability by selling weaker businesses on occasions when theyovervalued.

In addition, Dalton Street will only enter positions where there is a catalyst for reversion to fair value and/or theindividual positions can be effectively hedged.

The Sub-Investment Manager considers risk from both a bottom-up and top-down perspective. The bottom-up analysisemploys a proprietary risk scoring methodology and considers risk at a security level while the top-down assessmentconsiders risk at a portfolio level.

Risk factors

Concentration risk: The Sub-Investment Manager’s goal is to have well diversified long and short portfolios populatedwith a broad range of investment ideas applying each sub-strategy. The Fund will typically have between 40-80positions in each of its long and short portfolios. Sizes of individual positions are monitored closely based on marketcapitalisation and liquidity measures to avoid concentration risk.

Sector bias: A key source of risk in a long/short portfolio is sector bias between portfolios. It is essential that both longand short portfolios are populated with shares taken from a broad distribution of sectors.

Dalton Street uses the Global Industry Classification Standard (GICS) methodology to segment and monitor sectorexposures. It is the Sub-Investment Manager’s intention to construct long and short portfolios with a broadrepresentation of industries across these sectors. The gross exposure to individual sectors and the net sector weightsare monitored carefully.

Size bias: The portfolio is well represented across the full size-spectrum. The market is broken down by company sizeinto the shares of larger companies, smaller companies and micro-cap companies. The Sub-Investment Manager aimsto hold between 40-70% of the Fund’s gross exposure in the shares of the 100 largest companies listed on the ASX,with the balance in smaller companies. The Investment Manager aims to have a balance in terms of long/shortexposures to large and small companies, to ensure there is no material size bias in the overall portfolio structure.

Factor bias: Factor risks are reviewed separately. Growth, value, volatility, beta, currency and other factor biases areconsidered.

Risk monitoring

The Sub-Investment Manager maintains a proprietary scoring system which is designed to ensure portfolios are builtaround the best individual investment ideas with the highest expected internal rate of return, while retaining a bias infavour of strong, well-managed companies to buy (long), and weaker businesses to sell (short). The scoring systemincorporates business quality, management quality, valuation and risk.

Leverage and short positions

Leverage in the form of short selling will be used to minimise market risk in the portfolio. The Manager does not intendto borrow funds for investment.

Leverage through short selling can magnify gains in the portfolio, but will also magnify losses. With a view to managingthis risk, total market exposure or gross exposure (the sum of the long and short positions combined as a percentage ofunit holders’ capital) will not exceed 400% and will typically fall within a range of 150-300%.

Counterparty risk

The Sub-Investment Manager seeks to minimise counterparty risk to which the Fund is exposed via its prime brokingand banking arrangements. For example, by withdrawing cash from the Prime Broker after taking account of marginand collateral requirements and placing funds in term deposits with an Australian bank, the Sub-Investment Managerreduces the Fund’s exposure to the risks associated with the Prime Broker becoming insolvent.


5.3 Fund Structure

Investment structureThe Fund is an unlisted registered managed investment scheme. In general, each unit in the Fund represents anindividual’s interest in the assets as a whole subject to liabilities; however it does not give the investor an interest in anyparticular asset of the Fund. The Responsible Entity is responsible for the operation of the Fund.

The diagram set out below shows the Fund’s structure and the entities involved in the Fund’s structure, all of whom arelocated in Australia.

Service providersAs at the date of this PDS, the service providers to the Fund are:

Investment Manager: Mantis Funds Pty Ltd as Investment Manager together with Dalton Street Funds Management PtyLtd, as Sub-Investment Manager, are responsible for managing the investments of the Fund. For further details onMantis and Dalton Street‘s role please refer to section 4.

Custodian: Morgan Stanley & Co International plc holds the assets of the Fund on behalf of the Responsible Entity.

Administrator: Link Fund Solutions Pty Limited provides fund accounting, including valuation of the Fund’s assets, andunit registry services to the Responsible Entity in connection with the Fund.

Prime Broker: Morgan Stanley provides prime brokerage services for the Fund. UBS AG, Australia Branch is thesecondary prime broker for the Fund.

The service providers engaged by the Responsible Entity may change without notice to investors. Risks relating to theuse of third party service providers are outlined in section 6.

The Responsible Entity has entered into service agreements with the service providers and will, with the assistance ofDalton Street, regularly monitor the performance of the service providers against service standards set out in therelevant agreements.

5.4 Valuation, location and custody of assetsMorgan Stanley & Co International plc will providecustody services for the Assets of the Fund (but notthose Assets which the Cash Custodian may hold fromtime to time) including documents of title or certificates

evidencing title to investments, held on the books of thePrime Broker as part of its brokerage function inaccordance with the terms of the Customer Documents.Assets held by Morgan Stanley & Co International plc asCustodian are located in Australia.


Equity Trustees and the Sub-Investment Manager do nothave any policy for the geographic location of any asset.

The Fund’s assets are denominated in Australian dollars,except for international securities which aredenominated in the local currency of the country wherethe market on which the securities are listed, is located.Link Fund Solutions Pty Limited is the Administrator andis responsible for valuing the Fund’s assets. The value ofsuch assets will be determined as follows:

• The value of any cash on hand or on deposit, bills anddemand notes and accounts receivable, prepaidexpenses, cash dividends, interest declared oraccrued and not yet received, all of which are deemedto be the full amount thereof, unless in any case thesame is unlikely to be paid or received in full, in whichcase the value thereof is arrived at after making suchdiscount as may be considered appropriate in suchcase to reflect the true value;

• Securities listed on a recognised stock exchange ordealt on any other regulated market will be valued attheir latest available prices, or, in the event that thereshould be several such markets, on the basis of theirlatest available prices on the main market for therelevant security;

• The value of non-U.S. equity securities (foreign equitysecurities) is generally determined based upon thelast sale price on the foreign exchange or market onwhich it is primarily traded and in the currency of thatmarket as of the close of the appropriate exchange or,if there have been no sales during that day, at thelatest bid price. The Administrator has determinedthat the passage of time between when the foreignexchanges or markets close and when the Fundcomputes its net asset values could cause the valueof foreign equity securities to no longer berepresentative or accurate, and as a result, maynecessitate that such securities be fair valued.Accordingly, for foreign equity securities, the Fundmay use an independent pricing service to fair valueprice the security as of the close of regular trading onthe New York Stock Exchange. As a result, the Fund’svalue for a security may be different from the last saleprice (or the latest bid price);

• In the event that the latest available price does not, inthe opinion of the Administrator, truly reflect the fairmarket value of the relevant securities, the value ofsuch securities will be defined by the Administratorbased on the reasonably foreseeable sales proceedsdetermined prudently and in good faith

Investors are allocated a number of units in the Fund.Each of these units represents an equal undividedinterest in the Fund. The unit price of the units will becalculated by the Fund’s administrator on a daily basis,by dividing the NAV by the total number of units held byall unit holders on that day. For subscriptions, thetransaction buy spread of 0.3% referred to in Section 9 isadded.

5.5 LiquidityThe majority of assets currently traded and held by theFund are liquid. The Responsible Entity and InvestmentManager expect that the Fund will be able to realise atleast 80% of the Fund’s assets, at the value ascribed tothose assets in the most recent calculation of net assetvalue, within 10 Business Days.

It is unlikely that liquidity issues will result fromwithdrawal requests. Generally, it is the InvestmentManager’s policy to ensure that the Fund remains liquidas the size of the Fund grows.

5.6 LeverageThe Fund does not borrow funds for investment. Rather;leverage is created as the proceeds from short-sellingborrowed securities are reinvested in the long portfolio.Unlike financial leverage where the liability has a fixedvalue, the value of the borrowed securities that havebeen short sold will typically move up and down alongwith the value of the long portfolio in response tomovements in the broader share market: i.e. there is anatural hedge between assets and liabilities in thisstructure.

In simple terms, because the Fund’s gross exposure(equalling the sum of long and short positions) is greaterthan the amount of investors’ capital, leverage is created.Unlike financial leverage however, the leverage is to thesecurity selection success of the Investment Manageronly.

As an example of how leverage works in the Fund:

The Sub-Investment Manager receives $100 of capitalfrom investors which is placed on deposit with the PrimeBroker/Custodian or with an Australian bank. TheInvestment Manager then short-sells securities with avalue up to $100, creating a liability on the balance sheet.The proceeds of the short sales are invested in a longportfolio of securities that the Sub-Investment Managerprefers creating an asset also worth $100. In this example,the Fund will have a gross exposure to mispricedsecurities of 200% of investors’ capital with a net marketexposure of zero.

Leverage through short selling can magnify gains in theportfolio but can also magnify losses. With a view tomanaging this risk, total market exposure or ‘grossexposure’ (the sum of the long and short positionscombined as a percentage of unit holders’ capital) willnot exceed 400%. The level of gross exposure is aproduct of the number of positions held and the size ofthose positions. Under the Sub-Investment Manager’sinternal guidelines around the number and size ofpositions typically held, gross exposure of the Fund willtypically be between 150-300%

5.7 Short sellingA short sale occurs when the Sub-Investment Managerborrows a security from the Fund’s Prime Broker and sellsthe security to a third party, generating cash proceeds.The Investment Manager will reacquire the same securityonmarket and return it to the lender to close thetransaction. The Fund makes a profit if the price of theborrowed security declines in value in the periodbetween when the Sub-Investment Manager short sellsthe security and when the borrowed security isreacquired. Conversely, the Fund will suffer a loss if theborrowed security increases in value during this period.While the time period for borrowing securities to shortsell may not be fixed, the Prime Broker may on rareoccasions recall the securities and the Sub-InvestmentManager must acquire them on-market to close thetransaction. See Section 6 for more detail.


In a market neutral strategy, the Sub-Investment Manageruses the proceeds of short selling as a means of fundingan investment portfolio of shares. As the long portfolio isfunded from the proceeds of the short sales, thestructure is fully hedged with little or no net marketexposure.

Unit holders’ capital is retained in cash at bank andinvestors benefit to the extent the long portfolio ofshares outperforms the shares that have been short sold.The Sub-Investment Manager is able to employ itsfundamental research process to access an attractivesource of funds in short proceeds, while takingadvantage of the natural hedge in the structure.

Short selling can involve greater risk than buying asecurity, as losses can continue to grow to the extent thatthe price of a security rises. The risk of losses associatedwith the purchase of a security is generally restricted atmost to the amount invested, whereas losses on a shortposition can be greater than the purchased value of thesecurity. Whilst short selling can often reduce risk since itmay offset losses on long positions, it is also possible forlong positions and short positions to both lose money atthe same time.

Dalton Street seeks to manage the risks associated withshort selling in a number of ways:

• by using its fundamental research process to identifystocks to sell short, which are weaker businesses, withpoor management and which are over-priced relativeto the Sub-Investment Manager’s assessment of theirintrinsic value;

• by constructing a diversified portfolio of shortpositions across a broad range of sectors andindustries, thereby reducing the risk that portfolioreturns will be dependent on the performance of anindividual stock, sector or industry;

• by managing the size of the Fund’s short positions,also ensuring that individual positions do not accountfor an unacceptable amount of risk in the shortportfolio; and

• by limiting cash retained by the Prime Broker inaccordance with margin/collateral requirements.Cash withdrawn from the Prime Broker is typicallyheld on deposit with an Australian Bank, therebyreducing the Fund’s exposure to the risk of capitalloss in the event that the Prime Broker becameinsolvent. See section 6 for details on counter-partyrisk.

ExampleThe following example shows how the Fund’s investmentstrategy differs from a traditional ‘long only’ fund. It willalso demonstrate how the fund is leveraged to thesecurity selection success of the Manager rather than tomovements in the underlying share market.

In this example, the Sub-Investment Manager begins with$100 of capital and two publicly listed companies. Theshares of both companies are coincidentally trading at$100 per share on the share market. Company A, is aweaker business which the Sub-Investment Managervalues at just $90 per share and Company B is a strongerbusiness which the Sub-Investment Manager values at$110 per share.

In a traditional ‘long only’ strategy, the Sub-InvestmentManager would invest all of the Fund’s capital in a shareof Company B which the Sub-Investment Managerbelieves is undervalued by 10%. The Fund’s capital would

be fully exposed to market risks given its unhedgedexposure to Company B shares, which would tend tomove up and down with the broader share market.

In a market neutral strategy, the Fund’s capital is retainedin cash earning interest. The Sub-Investment Managerwould start by borrowing and short selling a share ofCompany A which the Sub-Investment Manager believesis overvalued. With the $100 of cash proceeds fromselling the share, the Sub-Investment Manager wouldthen buy a share of Company B which it believes isundervalued. Having established the position, theportfolio would be long $100 worth of shares in CompanyB and short $100 of shares in company A with $100 ofcapital retained in a bank account, earning interest.

If the investment case unfolds as expected with eachshare reaching the Sub-Investment Manager’s pricetarget, the Sub-Investment Manager could then sell itsshare in Company B which has risen to $110, take $90 ofthe cash proceeds from the sale and repurchase theshare in Company A which has fallen. TheSub-Investment Manager would then return theborrowed share to the lender closing the position,realising a 20% gain.

As this is a fully hedged structure with $100 short and$100 invested long, the Fund has no net exposure to theshare market. The Fund’s performance will exclusivelyreflect the relative performance of the shares in the twocompanies and the interest earned on the cash at bank.

This example demonstrates how the Sub-InvestmentManager is able to target twice the return expected fromthe ‘long only” strategy while at the same time,significantly reducing or eliminating the Fund’s exposureto market risk. The Fund’s capital is leveraged in so muchas it has $200 worth of exposure to mispriced securitiesin Company A and Company B shares and $100 ofcapital, versus the ‘long only’ fund which is investeddollar for dollar. This works both ways of course, wherebyif the Sub-Investment Manager is completely wrong andthe price of Company A shares moves to $110 andCompany B shares drop to $90, then the ‘long only’strategy will have lost 10% while the market neutralstrategy will lose 20%.

5.8 DerivativesPurpose and rationaleThe Fund may use exchange traded derivatives andover-the-counter derivatives which may be volatile andspeculative. Derivatives may be used to hedge physicalpositions, gain market exposure to underlying securitiesor for other portfolio management purposes.

Types of derivativesThe Fund can invest in financial derivatives, includingequivalent cash settled instruments, which are traded onan exchange and/or non-exchange traded derivativeinstruments dealt in on an over-the-counter (OTC) basis.The underlying instruments include, but are not limitedto: financial indices, interest rates, foreign exchange ratesor currencies.

Criteria for engaging counterpartiesThe Sub-Investment Manager chooses counterpartiesthat are institutions subject to prudential supervision.


5.9 Labour standards and environmental,social and ethical considerationsDecisions about the selection, retention or realization ofinvestments for the Fund are primarily based onsystematic analysis of company and industryfundamentals. Dalton Street takes into account labourstandards, environmental, social or ethical issues whenmaking these decisions to the extent that these issueshave a material impact on either investment risk or

return. Dalton Street believes that certain environmental,social and corporate governance (“ESG”) issues mayimpact the sustainable value of businesses. In exercisingits authority as Sub-Investment Manager of the Fund,Dalton Street integrates ESG factors into its investmentprocess and ownership practices to the extent that theintegration of such factors is consistent with theinvestment objectives and the economic interests of theFund.

5.10 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 RiskInvestment in any fund carries risks, including volatility ofreturns and permanent loss of capital. Volatility refers tothe degree to which returns may fluctuate around theirlong-term average. Each asset class, whether it is cash,fixed interest, property, Australian or international shareshas associated investment risks and the return achievedby each will vary accordingly.

You should be aware that an investment in the Fundcontains risk and neither the performance of the Fundnor the security of your investment is guaranteed byEquity Trustees or the Investment Manager. Investmentsin the Fund are generally subject to risks, includingpossible delays in the payment of withdrawal proceeds,and loss of income and/ or capital. The followingdiscussion of certain risk factors does not purport to bean exhaustive list or a complete explanation of all therisks involved in an investment in the Fund. Werecommend you talk to an adviser about the risksinvolved in investing in the Fund and how it might impacton your individual financial circumstances.

Equity funds general riskThe value of the equity securities the Fund holds, directlyor indirectly, may decrease in response to the activities ofan individual company or in response to general market,business and economic conditions. Conversely, the valueof the Fund’s short sale liabilities may increase as a resultof the same factors. In each case, the Fund’s unit pricemay decrease.

Investment Strategy RiskThe success and profitability of the Fund depends almostentirely on the ability of the Sub-Investment Manager toconstruct a long portfolio of securities that outperformsa short portfolio of securities. While the short portfolioacts as a hedge for the Fund’s long investments, there is arisk that losses are incurred on the long and shortportfolios at the same time. The performance fee maycreate an incentive for the Sub-Investment Manager tomake investments that are riskier or more speculativethan would be the case in the absence of a fee based onthe performance of the Fund.

Short-Selling RiskIn order to establish a short position, the Sub-InvestmentManager must borrow securities to short-sell. In theory,short-selling is subject to an unlimited risk of loss, asthere is no limit on how much the price of a security mayappreciate. There is a risk that the securities lender mayrecall the securities in which case the Sub-InvestmentManager may be obliged to re-purchase the securities ata higher price than that for which the security was sold,thereby crystalizing a permanent loss.

Leverage RiskWhile the Fund will not use financial leverage to increasethe size of its portfolio, reinvestment of the funds raisedin short-selling securities may result in the Fund having agross exposure to securities that is greater than unitholders’ capital. As such, there is a risk that the Fund willbehave like a leveraged portfolio, where fluctuations inthe value of the Fund’s portfolios and the potential forloss are magnified.

Sub-Investment Manager RiskWith little or no net exposure to broader share marketmovements, Fund returns will depend almost entirely onthe Sub-Investment Manager’s success in selecting

stocks to buy and short-sell. As such, there is a risk thatchanges in key personnel of the Investment Manager maynegatively impact Fund performance.

Market riskThe Fund’s portfolios will be constructed so as tominimise market risks. During a general downturn in thesecurities markets, multiple asset classes may decline invalue simultaneously. Certain events may have a negativeeffect on the price of all types of investments within aparticular market. Conversely, in a strong share market,the Fund may underperform rising market indices, as theportfolio will have little or no net exposure to the sharemarket.

Counterparty RiskThe Fund uses the service of a Prime Broker to facilitatethe lending of securities to short-sell. Until theSub-Investment Manager returns a borrowed security, itwill be required to maintain assets with the Prime Brokeras collateral. As such, the Fund may be exposed tocertain risks in respect of that collateral including that theFund:

• will be required to post initial margin/collateral to thecounterparty in the form of cash. The Fund will needto have sufficient liquid assets to satisfy thisobligation;

• may from time to time, if the value of short positionsmove against it, be required to post variationmargin/collateral with the counterparty on anongoing basis. The Fund will need to have sufficientliquid assets to satisfy such calls, and in the event itfails to do so, the counterparty may have a right toterminate such arrangements; and

• may be subject to the credit risk of the counterparty.In the event the counterparty becomes insolvent at atime it holds margin/collateral posted with it by theFund, the Fund will be an unsecured creditor and willrank behind other secured creditors. In the event ofinsolvency of the Custodian or the Prime Broker, theFund may not be able to recover the entire value ofthe relevant securities.

Liquidity riskInvestments that trade less can be more difficult or morecostly to buy, or to sell, than more liquid or activeinvestments. It may not be possible to sell or otherwisedispose of illiquid securities both at the price and within atime period deemed desirable by the Sub-InvestmentManager.

Small cap stock riskStocks of smaller companies involve greater risk thanthose of larger, more established companies. This isbecause smaller companies may be in earlier stages ofdevelopment, may be dependent on a small number ofproducts or services, may lack substantial capitalreserves and/or do not have proven track records. Smallcap companies may be more adversely affected by pooreconomic or market conditions, and may be traded in lowvolumes, which may increase volatility and liquidity risks.

Portfolio turnover riskThe Fund does not intend to trade, directly or indirectly,portfolio securities for the purpose of realizingshort-term profits. However, the Sub-InvestmentManager will adjust the Fund’s portfolio as consideredadvisable in view of prevailing or anticipated market


conditions and the Fund’s investment objective, andthere is no limitation on the length of time securities mustbe held, directly or indirectly, by the Fund prior to beingsold. Portfolio turnover rate will not be a limiting factorand will vary from year to year. Higher portfolio turnoverrates involve correspondingly higher transaction costs,which are borne directly or indirectly by the Fund. Inaddition, the Fund may realize significant short term andlong-term capital gains.

Derivatives RiskThe Fund may use exchange traded derivatives andover-the-counter derivatives which may be volatile andspeculative. Use of derivative instruments involvesvarious risks such as tracking, liquidity and leverage.


7. Investing and WithdrawingInitial applicationsInvestors can acquire units by completing an ApplicationForm. The minimum investment amount for the Fund is$50,000.

To invest directly please complete the Application Formaccompanying this PDS and send your originalApplication Form to:

Dalton Street Market Neutral Trust RegistryLink Fund SolutionsUnitholder ServicesGPO BOX 5482Sydney NSW 2001

For any queries regarding the applications, you cancontact Link Fund Solutions at +61 2 9547 4311.

Application money should be transferred to the bankaccount details shown in the Application Form. Pleasenote that neither cash nor cheques will be accepted.Investors investing through an Investor Directed PortfolioService (“IDPS”) should use the application formprovided by the operator of the IDPS.

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

Unit prices are calculated daily.

The cut-off time for applications is 2:00 pm (AEST) onany Business Day for receipt of that day’s unit price.

At the date of this PDS, the minimum initial investment inthe Fund is $50,000. Applications can be made between9:00 a.m. and 5:00 p.m. on any Business Day. However,for unit pricing purposes any application received after2:00 p.m. on a Business Day will generally be treated ashaving been received the following Business Day. If youare investing via an IDPS, you need to contact your IDPSOperator regarding the cut-off times for pricingpurposes.

Transaction costs may reduce the number of units whichyou receive when applying for units.

See the ‘Buy/Sell Spread’ information in the fees sectionfor further information.

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

Additional applicationsInvestors can add to their investment by completing anApplication Form accompanying the current PDS. Theminimum additional investment in the Fund is $5,000.Please note Application Forms can be sent by fax+61 2 9221 1194 or by email [email protected]. If you are investingthrough an IDPS you should refer to the IDPS Guide forthe minimum additional investment amount.

Terms and conditions for applicationsApplications 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 (any interest is credited to the Fund).

Equity Trustees reserves the right to refuse anyapplication without giving a reason. If for any reasonEquity Trustees refuses or is unable to process yourapplication to invest in the Fund, Equity Trustees willreturn your application money to you, subject toregulatory considerations, less any taxes or bank fees inconnection with the application. You will not be entitledto any interest on your application money in thiscircumstance.

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.

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 withdrawalYou can withdraw your investment by written requesteither:

By mail to:

Dalton Street Market Neutral Trust RegistryLink Fund SolutionsUnitholder ServicesGPO BOX 5482Sydney NSW 2001Or by fax to +61 2 9221 1194 or by email [email protected].

The price at which units are withdrawn is determined inaccordance with the Constitution (“Withdrawal Price”).The Withdrawal Price, in general terms, is equal to theNet Asset Value of the Fund, divided by the number ofunits on issue less any transaction costs.

Unit prices are calculated daily.

The cut-off time for withdrawals is 2:00 pm (AEST) onany Business Day.

Transaction costs may reduce the amount which youreceive 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 referrable to the Fund rises or falls.

If you are an Indirect Investor, you need to provide yourwithdrawal request directly to your IDPS Operator. Thetime to process a withdrawal request will depend on theparticular IDPS Operator.

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. However, the period of time forsatisfying withdrawal requests may be extended wherethe Responsible Entity considers that it is in the best


interests 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 redemption requests.Withdrawals will not be funded from an external liquidfacility. In such circumstances, the Responsible Entity willprovide investors with 30 days’ prior written notice ofsuch extension or suspension.

The price at which units are withdrawn (“WithdrawalPrice”) is determined in accordance with theConstitution. The Withdrawal Price on a Business Day, isin general terms, equal to the NAV of the Fund, dividedby the number of units on issue and adjusted fortransaction costs (“Sell Spread”). At the date of this PDS,the Sell Spread is 0.3%. The Withdrawal Price will vary asthe market value of assets in the Fund rises or falls.

We reserve the right to fully withdraw your investment ifyour investment balance in the Fund falls below theminimum balance amount as a result of processing yourwithdrawal request. We also reserve the right to fullywithdraw your investment in the Fund, upon giving30 days’ notice, if the minimum balance amount isincreased or your holding falls below the minimumbalance amount.

At the date of this PDS, the minimum balance amount is$40,000.

Terms and conditions for withdrawalsOnce your withdrawal request is received, yourinstruction may be acted on without further enquiry if theinstruction bears your account number or investor detailsand your (apparent) signature(s), or your authorisedsignatory’s (apparent) signature(s).

Equity Trustees and/or the Administrator reserve theright to ask for the production of original documents orother information to authenticate the communication. Inthe case of non-receipt or corruption of any message,you will be required to re-send the documents.

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

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 request. 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 by

post or courier or fax, shall be a complete satisfactionof 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 by a further 30 days incertain 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, you can only withdraw when EquityTrustees makes a withdrawal offer to you inaccordance with the Corporations Act. EquityTrustees is not obliged to make such offers. The Fundwill be liquid if at least 80% of its assets are liquidassets (generally cash and marketable securities).

DistributionsThe Fund usually distributes income semi-annually at theend of June and at the end of December. Distributionsare calculated on the last day of each period end(30 June and 31 December), and are normally paid toinvestors within 14 Business Days of the period endalthough the distribution at 30 June may take longer.Equity Trustees may amend the distribution frequencywithout notice. Your share of any distributable income iscalculated in accordance with the Constitution and isgenerally based on the number of units held by you at theend of the distribution period and the distributableincome.

You can have your distribution reinvested or paid to anominated bank account. If you do not indicate apreference you will have your distributions automaticallyreinvested.

In some circumstances, the Constitution allows for aninvestor’s withdrawal proceeds to be taken to include acomponent of distributable income.

Indirect Investors should review their IDPS guide forinformation on how and when they receive any incomedistribution.

Valuation of the FundThe value of the investments of the Fund is generallydetermined daily by the Administrator. The value of a unitin the Fund is determined on the basis of the value of theinvestments in the Fund (after taking into account anyliabilities of the Fund), in accordance with theConstitution of the Fund. For example, the applicationprice of a unit in the Fund is based on the NAV of theFund divided by the number of units on issue plus anallowance for transaction costs required for buyinginvestments. This allowance is known as the “BuySpread”. At the date of this PDS, the Buy Spread is 0.3%.

Joint account operationFor joint accounts, unless indicated to the contrary onthe Application Form, each signatory must signwithdrawal requests. Please ensure all signatories signthe declaration in the Application Form. Joint accountswill be held as joint tenants unless we are advised to thecontrary in writing.


Appointment of authorised nominee tooperate accountYou 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 bechanged;

• withdrawing all or part of your investment;

• changing bank account details;

• enquiring and obtaining copies of the status of yourinvestment; 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 andagainst 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 you instruct Equity Trustees by electronic means, suchas facsimile or via the internet, you release EquityTrustees from and indemnify Equity Trustees against, alllosses and liabilities arising from any payment or actionEquity Trustees makes based on any instruction (even ifnot genuine):

• that Equity Trustees receives by an electroniccommunication bearing your investor code; and

• which appears to indicate to Equity Trustees that thecommunication has been provided by you (forexample, it has a signature which is apparently yoursignature or your authorised signatory’s or it has anemail address which is apparently your emailaddress).

You agree that neither you nor anyone claiming throughyou has any claim against Equity Trustees or the Fund inrelation to such payments or actions.

There is a risk that a fraudulent withdrawal request canbe made by someone who has access to your investorcode and a copy of your signature or email address.Please take care.


8. Keeping Track of Your InvestmentEnquiriesFor any enquiries regarding your investment or themanagement of the Fund please contact:

Mantis FundsPty LtdABN 77 640 207 021 (CAR of AFSL 508011)Level 40, 161 Castlereagh StSydney NSW 2000Email: [email protected]: www.mantisfunds.com

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.

ReportsRegular, simple to read and complete reports areprovided to investors in the Fund.

These reports comprise:

• Annual Report including financial statements andauditor’s report will be made available on the EquityTrustees website at www.eqt.com.au/insto from30 September each year.

• Transaction Reports confirming all additionalinvestments, withdrawals, and payments (issuedfollowing transactions and on request).

• Distribution Statements as follows:

a) monthly statements to confirm closing units and valueof holding;

b) distribution statements every distribution periodconfirming distribution amount and

reinvestment/payment to nominated account;

c) annual investor statements to confirm closing units,value of investments and income

from investments.

• Tax Statements issued annually, providing you withtaxation information including a detailed summary ofthe components of any distributions.

The Responsible Entity also has and implements a policyto report annually on the following information as soonas practicable after the relevant period end:

• the actual allocation to each asset type;

• the liquidity profile of the portfolio assets as at theend of the period;

• the maturity profile of the liabilities as at the end ofthe period;

• the leverage ratio (including leverage embedded inthe assets of the Fund, other than listed equities andbonds) as at the end of the period;

• the derivative counterparties engaged (includingcapital protection providers);

• the monthly or annual investment returns of the Fundover at least a five-year period (or, if the Fund has notbeen operating for five years, the returns since itsinception); and

• the key service providers if they have changed sincethe latest report given to you, including any change intheir related party status.

The following information is available on Dalton Street’swebsite at www.daltonstreetcapital.com and is disclosedmonthly:

• the current total NAV of the Fund and the redemptionvalue of a unit in each class of units as at the date theNAV was calculated;

• the key service providers if they have changed sincethe last report given to investors, including anychange in their related party status; and

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

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

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

• any material change in the Fund’s investmentstrategy; 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 theInvestment Manager’s website.

Please note that Indirect Investors who access the Fundthrough an IDPS will receive reports directly from theIDPS Operator and not from the Responsible Entity.However, Equity Trustees will be providing the reportsdescribed above to relevant IDPS Operators. IndirectInvestors should refer to their IDPS Guide for informationon the reports they will receive regarding theirinvestment.

If and when the Fund has 100 or more direct investors, itwill be classified by the Corporations Act as a ‘disclosingentity’. As a disclosing entity the Fund will be subject toregular reporting and disclosure obligations. Investorswould have a right to obtain a copy, free of charge, of anyof the following documents:

• the most recent annual financial report lodged withASIC (“Annual Report”);


• any subsequent half yearly financial report lodgedwith ASIC after the lodgement of the Annual Report;and

• any continuous disclosure notices lodged with ASICafter the Annual Report but before the date of thisPDS.

Equity Trustees will comply with any continuousdisclosure obligation by lodging documents with ASIC asand when required.

Copies of these documents lodged with ASIC in relationto the Fund may be obtained through ASIC’s website atwww.asic.gov.au.

You can email Mantis [email protected] for updated informationon performance, unit prices, Fund size and other generalinformation about the Fund. If you are an indirectinvestor investing via an IDPS, contact your IDPSOperator.


9. Fees and Other Costs

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 investment 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 fees. Ask the fund 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) Moneysmart website (www.moneysmart.gov.au) has a managedfunds fee calculator to help you check out different fee options.

Fees and other costsThis section shows fees and other costs that you may be charged. These fees and costs may be deducted from yourmoney, from the returns on your investment or from the assets of the managed investment scheme as a whole.

Taxes are set out in another part of this document. You should read all the information about fees and costs because itis important to understand their impact on your investment.

Fees and Costs Summary

Dalton Street Market Neutral Trust

Type of fee or cost Amount How and when paid

Ongoing annual fees and costs1

Management fees and costs

The fees and costs for managingyour investment

1.53% of the NAV of the Fund The management fees component ofmanagement fees and costs areaccrued daily and paid from theFund monthly in arrears andreflected in the unit price. Otherwise,the fees and costs are variable anddeducted and reflected in the unitprice of the Fund as they areincurred.

The management fees component ofmanagement fees and costs can benegotiated. Please see “Differentialfees” in the “Additional Explanationof Fees and Costs” for furtherinformation.

Performance fees

Amounts deducted from yourinvestment in relation to theperformance of the product

0.65% of the NAV of the Fund2 Performance fees are calculateddaily and paid annually in arrearsfrom the Fund and reflected in theunit price.

Transaction costs

The costs incurred by the schemewhen buying or selling assets

1.32% of the NAV of the Fund Transaction costs are variable anddeducted from the Fund as they areincurred and reflected in the unitprice. They are disclosed net ofamounts recovered by the buy-sellspread.

Member activity related fees and costs (fees for services or when your money moves in or out of the scheme)

Establishment fee

The fee to open your investment

Not applicable Not applicable

Contribution fee

The fee on each amount contributedto your investment




Buy-sell spread

An amount deducted from yourinvestment representing costsincurred in transactions by thescheme

0.30% upon entry and 0.30% uponexit

These costs are an additional cost tothe investor but are incorporatedinto the unit price and arise wheninvesting application monies andfunding withdrawals from the Fundand are not separately charged tothe investor. The Buy Spread is paidinto the Fund as part of anapplication and the Sell Spread is leftin the Fund as part of a redemption.

Withdrawal fee

The fee on each amount you take outof your investment


Exit fee

The fee to close your investment


Switching fee

The fee for changing investmentoptions


1 All fees quoted above are inclusive of Goods and Services Tax (GST) and net of any Reduced Input Tax Credits (RITC).See below for more details as to how the relevant fees and costs are calculated.2 This represents the performance fee of the Fund which is payable as an expense of the Fund to the InvestmentManager.

Additional Explanation of Fees and CostsManagement fees and costsThe management fees and costs include amountspayable for administering and operating the Fund,investing the assets of the Fund, expenses andreimbursements in relation to the Fund and indirect costsif applicable.

Management fees and costs do not include performancefees or transaction costs, which are disclosed separately.

The management fees component of management feesand costs of 1.53% p.a. of the NAV of the Fund is payableto the Responsible Entity of the Fund for managing theassets and overseeing the operations of the Fund. Themanagement fees component is accrued daily and paidfrom the Fund monthly in arrears and reflected in the unitprice. As at the date of this PDS, the management feescomponent covers certain ordinary expenses such asResponsible Entity fees, investment management fees,custodian fees, and administration and audit fees.

The indirect costs and other expenses component of 0%p.a. of the NAV of the Fund may include other ordinaryexpenses of operating the Fund, as well as managementfees and costs (if any) arising from interposed vehicles inor through which the Fund invests and the costs ofinvesting in over-the-counter derivatives to gaininvestment exposure to assets or implement the Fund’sinvestment strategy (if any). The indirect costs and otherexpenses component is variable and reflected in the unitprice of the Fund as the relevant fees and costs areincurred. They are borne by investors, but they are notpaid to the Responsible Entity or Investment Manager.

Actual indirect costs for the current and future years maydiffer. If in future there is an increase to indirect costsdisclosed in this PDS, updates will be provided on EquityTrustees’ website at www.eqt.com.au/insto where theyare not otherwise required to be disclosed to investorsunder law.

Performance feesPerformance fees include amounts that are calculated byreference to the performance of the Fund. Theperformance fees for the Fund are 0.65% of the NAV ofthe Fund.

The performance fee figure that is disclosed in the Feesand Costs Summary is generally based on an average ofthe performance fees over the previous five financialyears, where each performance fee relevant to the Fundis averaged and totalled to give the performance fees forthe Fund.

A performance fee is payable to the Investment Managerwhere the investment performance of the Fund exceedsthe performance of the Fund Benchmark. Theperformance fee is 20.5% (inclusive of GST and net orRITC) of any increase in the NAV of the Fund over anyfinancial year (adjusted for applications and redemptionsand before the payment of any distribution) whichexceeds the Fund Benchmark, subject to the high-watermark. The high-water mark means the highest NAV of theFund at the end of a financial year where a performancefee has been paid, adjusted for applications, redemptionsand subsequent distributions.

The Fund Benchmark is the Reserve Bank of Australia’scash-rate.

The performance fee is calculated daily and payableannually in arrears. In general terms:

1. Each day, the performance of the Fund from theinception date is compared with the performance of theFund Benchmark for the same period. The Fund’sperformance is calculated after the deduction of themanagement costs (paid or accrued) but before thededuction of performance fees and disregarding anyapplications in and withdrawals out of the Fund. Thepositive difference is referred to as ‘outperformance’.

2. A ‘high-water mark’ is then set each time the level ofoutperformance exceeds the previous highest level ofoutperformance since inception of the Fund.


3. The amount by which the Fund’s outperformanceexceeds the previous high-water mark, if any,(Difference) is then calculated.

4. If the previous high-water mark is exceeded for aparticular day, a performance fee of 20.5% (inclusive ofGST and net of RITC) of the Difference, multiplied by theFund’s NAV, is then accrued. The performance fee isgenerally calculated daily and payable annually.

5. However, if the previous high-water mark is notexceeded, no performance fee accrues that day, even ifthe Fund performance has exceeded the FundBenchmark performance on that day.

Please note that the performance fees disclosed in theFees and Costs Summary is not a forecast as the actualperformance fee for the current and future financial yearsmay differ. The Responsible Entity cannot guarantee thatperformance fees will remain at their previous level orthat the performance of the Fund will outperform theBenchmark.

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. Information oncurrent performance fees will be updated from time totime and available at www.eqt.com.au/insto.

Performance fee exampleThe example below is provided for illustrative purposesonly and does not represent any actual or prospectiveperformance of the Fund. We do not provide anyassurance that the Fund will achieve the performanceused in the example and you should not rely on thisexample in determining whether to invest in the Fund.

Assume the following:

• The Fund’s performance for the Performance FeePeriod is 5% after management costs have beendeducted (assuming management costs of 1.50%)

• The Fund Benchmark performance is 1.50%

• The high water mark is set at zero

• The Fund’s NAV is $3,000,000

The Fund’s return above the Fund Benchmark is 3.5%(5%-1.50%) for the period. The performance fee iscalculated as 20.5% (including GST and net of RITC) x3.5% x $3,000,000 = $21,525 for that Performance FeePeriod.

If the Fund’s performance is lower than the FundBenchmark, a performance fee is not charged but anegative performance fee is recorded. Any negativeperformance fee recorded during a Performance FeePeriod must be recouped before the Investment Managerbecomes entitled to a performance fee.

Transaction costsIn managing the assets of the Fund, the Fund may incurtransaction costs such as brokerage, buy-sell spreads inrespect of the underlying investments of the Fund,settlement costs, clearing costs and applicable stampduty when assets are bought and sold. Transaction costsalso include costs incurred by interposed vehicles inwhich the Fund invests (if any), that would have beentransaction costs if they had been incurred by the Funditself. Transaction costs are an additional cost to theinvestor where they are not recovered by the Buy/SellSpread, and are generally incurred when the assets of theFund are changed in connection with day-to-day tradingor when there are applications or withdrawals whichcause net cash flows into or out of the Fund.

The Buy/Sell Spread that is disclosed in the Fees andCosts Summary is a reasonable estimate of transactioncosts that the Fund will incur when buying or sellingassets of the Fund. These costs are an additional cost tothe investor but are incorporated into the unit price andarise when investing application monies and fundingwithdrawals from the Fund and are not separatelycharged to the investor. The Buy Spread is paid into theFund as part of an application and the Sell Spread is leftin the Fund as part of a redemption and not paid toEquity Trustees or the Investment Manager. Theestimated Buy/Sell Spread is 0.30% upon entry and0.30% upon exit. The dollar value of these costs based onan application or a withdrawal of $50,000 is $150 foreach individual transaction. The Buy/Sell Spread can bealtered by the Responsible Entity at any time andwww.eqt.com.au/insto 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. The transaction costs figure in the Fees andCosts Summary is shown net of any amount recovered bythe Buy/Sell Spread charged by the Responsible Entity.

Transaction costs generally arise through the day-to-daytrading of the Fund’s assets and are reflected in theFund’s unit price as an additional cost to the investor, asand when they are incurred.

The gross transaction costs for the Fund are 1.60% p.a. ofthe NAV of the Fund, which is based on the relevant costsincurred during the financial year ended 30 June 2020.

However, actual transaction costs for future years maydiffer.

Can the fees change?Yes, all fees can change without investor consent, subjectto the maximum fee amounts specified in theConstitution. The current maximum management fee towhich Equity Trustees is entitled is 2% of the GAV of theFund. However, Equity Trustees does not intend tocharge that amount and will generally provide investorswith at least 30 days’ notice of any proposed increase tothe management fees component of management feesand costs. In most circumstances, the Constitutiondefines the maximum level that can be charged for feesdescribed in this PDS. Equity Trustees also has the rightto recover all reasonable expenses incurred in relation tothe proper performance of its duties in managing theFund and as such these expenses may increase ordecrease accordingly, without notice.

Payments to IDPS OperatorsSubject to the law, annual payments may be made tosome IDPS Operators because they offer the Fund ontheir investment menus. Product access is paid by theInvestment Manager out of its investment managementfee and is not an additional cost to the investor. Pleasecontact the Investment Manager [email protected] for further information.

Differential feesThe Investment Manager may from time to timenegotiate a different fee arrangement (by way of a rebateor waiver of fees) with certain investors who areAustralian Wholesale Clients. Please contact theInvestment Manager on [email protected] further information.

TaxationPlease refer to Section 10 of the Product DisclosureStatement for further information on taxation.


Example of annual fees and costs for an investment optionThis table gives an example of how the ongoing annual fees and costs in the investment option for this product canaffect your investment over a 1-year period. You should use this table to compare this product with other productsoffered by managed investment schemes.

EXAMPLE – Dalton Street Market Neutral Trust

BALANCE OF $50,000 WITH A CONTRIBUTION OF $5,000 DURING THE YEAR

ContributionFees

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

Plus

Managementfees and costs 1.53% p.a.

And, for every $50,000 you have in the Dalton Street Market Neutral Trust you willbe charged or have deducted from your investment $765 each year

Plus

Performancefees

0.65% p.a. And, you will be charged or have deducted from your investment $325 inperformance fees each year

Plus

Transactioncosts

1.32% p.a. And, you will be charged or have deducted from your investment $660 intransaction costs

EqualsCost of DaltonStreet MarketNeutral Trust

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 and costs of:$1,750*What it costs you willdepend on the investment option you choose and the fees younegotiate.

* 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.

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

Warning: If you have consulted a financial adviser, you may pay additional fees. You should refer to the Statement ofAdvice or Financial Services Guide provided by your financial adviser in which details of the fees are set out.

ASIC provides a fee calculator on www.moneysmart.gov.au, which you may use to calculate the effects of fees andcosts on account balances. The performance fees stated in this table are based on the average performance fee for theFund, over the previous five financial years. The performance of the Fund for this financial year, and the performancefees, may be higher or lower or not payable in the future. It is not a forecast of the performance of the Fund or theamount of the performance fees in the future.

The indirect costs and other expenses component of management fees and costs and transaction costs may also bebased on estimates. As a result, the total fees and costs that you are charged may differ from the figures shown in thetable.


10. TaxationThe following summary of taxation matters is a generalguide and does not constitute tax advice. It provides asummary of the Australian income tax implicationsapplicable to the Fund and investors. In particular, itapplies where investors are resident of Australia forincome tax purposes and hold their investment on capitalaccount for income tax purposes. This summary does notapply where investors are not resident of Australia forincome tax purposes or where any gain in respect of thedisposal of units would be regarded as ordinary incomeor otherwise taxed on revenue account.

The summary is based on the tax laws applicable as atthe date of this PDS. The Australian tax laws are subjectto change, and as the tax treatment applicable toparticular investors may differ, it is recommended that allinvestors seek their own professional advice on thetaxation implications of investing in the Fund.

Taxation of the FundGeneralThe Fund should be treated as an Australian resident forincome tax purposes. As such, it is required to determineits tax net income each income year.

The Fund’s tax net income may comprise dividendincome, interest income, and revenue gains on the sale ofinvestments, derivatives and other financialarrangements. In calculating the Fund’s tax net income,the cash component of any franked dividend incomeshould be grossed up to include franked credits relatingto that dividend income and the cash component of anyforeign income that has been subject to tax in anotherjurisdiction should be grossed up to include foreignincome tax offsets relating to that foreign income. Finally,the Fund’s tax net income should be determined afterhaving taken into account any tax deductibleexpenditure incurred by the Fund.

Public trading trust rulesThe Fund does not intend to derive income other thanfrom an “eligible investment business”. Accordingly, itshould not be subject to tax as a public trading trust.Further, provided the Fund’s investors are presentlyentitled to the Fund’s distributable income each year as isintended, the Fund itself should not be liable to payAustralian income tax in relation to its tax net income.Rather each investor should include a proportionateshare of the Fund’s tax net income in their assessableincome (as discussed below).

LossesWhere the Fund is in a net capital loss or tax loss positionin any income year, Investors should not be able to applythe Fund’s loss to reduce their other taxable capital gainsor income. However, the Fund may be able to utilise thoselosses to reduce its capital gains (in the case of carriedforward capital losses) or tax net income (in the case ofcarried forward tax losses) in subsequent income years.We note, however, that the ability to use tax lossesrequires certain conditions to be satisfied.

Taxation of Australian Resident investorsDistributionsAn investor should include their entitlement (share) tothe tax net income of the Fund for a year of income intheir assessable income irrespective of the amount ofcash distributed to them or whether it is reinvested or

actually paid in a subsequent year. In this regard, theFund will provide an annual distribution statement toinvestors each year to inform them of their share of thetax net income of the Fund, including the componentswhich make up that share. The components included in adistribution will depend on the investments undertakenby the Fund and may include dividend income, frankingcredits, foreign income, foreign income tax offsets,Australian sourced other income and Capital Gains Tax(CGT) amounts. Some of these components arediscussed below.

Franked Dividends and Franking CreditsGenerally, an investor’s share of the Fund’s tax netincome may include franked dividend income. Investorsshould include the franked dividend income, includingany franking credits attaching to that income, in theirassessable income and may be entitled to reduce the taxthey have to pay by some or all of their share of thefranking credits. The Fund may be denied frankingcredits in respect of dividends and distributions oninvestments which the Fund has not owned at riskgenerally for a continuous period of 45 days (ignoringthe day of acquisition and disposal).

Foreign Income and Foreign Income Tax OffsetsGenerally an investor’s share of the Fund’s tax net incomemay include foreign income (which will generallyrepresent foreign dividends for Australian tax purposespaid to the Fund as well as foreign sourced gains.Investors should include the foreign income, includingany foreign income tax offsets attaching to that income,in their assessable income and may be entitled to reducethe tax they have to pay by some or all of their share ofthe foreign income tax offset.

Capital GainsIf an investor’s share of the tax net income of the Fundincludes an amount that consists of discount capitalgains derived by the Fund, the investor needs to first‘gross up’ the discount capital gain (by multiplying it by2). However, (after grossing up any discount capitalgains) investors may be able to reduce the capital gainsdistributed by the Fund by any capital losses which areavailable to them. Furthermore, after applying any loss,individual, trust, and complying superannuation fundinvestors may then be entitled, in determining the netcapital gain that is to be included in their assessableincome, to discount that capital gain by 50% forindividuals and trusts and 33.3% for complyingsuperannuation funds.

Non Assessable Distribution PaymentsDistributions of non-assessable amounts (typicallyreferred to as tax deferred amounts) are generally notsubject to tax. This may arise where the Fund’sdistributable income is higher than its tax net income, forreasons other than the CGT discount (discussed above).Although the receipt of non-assessable amounts aregenerally not subject to tax, the receipt of certainnon-assessable amounts may have CGT consequences.Broadly, the receipt of certain non-assessable amountsmay reduce the cost base and reduced cost base of theinvestor’s investment in the Fund. If the cost basereduces to zero, any additional non-assessable receiptsmay give rise to an immediately taxable capital gain. Ifthe cost base is not reduced to zero, the reduction to the


cost base and reduced cost base may result in either anincreased capital gain or a reduced capital loss on thesubsequent disposal of the Units in the Fund.

To the extent that the investor’s share of the Fund’sdistribution includes a CGT concession component, noadjustment to the cost base or reduced cost base of theunderlying Units in the Fund should be required.

Disposal of units by Australian Resident InvestorsAny taxable capital gain or assessable income arisingfrom the disposal (including redemption) of aninvestment in the Fund may form part of the exitinginvestor’s assessable income. To the extent the disposalgives rise to a capital gain, investors that are individuals,trusts and complying superannuation funds may beeligible for the CGT discount if their investment (Units)has been held for at least 12 months and the Fund and theinvestor satisfy certain other requirements. Any capitallosses arising from the disposal of the investment may beused to offset other capital gains the investor may havederived.

Goods and Services Tax (GST)The Fund will be registered for GST. The acquisition anddisposal of units in the Fund by investors should not besubject to GST. Similarly, the distributions paid by theFund should not be subject to GST. GST is payable onsome ongoing expenses, however the Fund may be ableto claim a reduced input tax credit (RITC) of at least 55%of the GST paid, depending on the precise nature of theexpenses. All fees and expenses are quoted inclusive ofGST.

DutyThe issue or redemption of Units should not attract anyduty. Duty may be payable on the transfer of units.Investors should confirm the duty consequences oftransferring units with their taxation adviser.

Tax File Numbers (TFN) and AustralianBusiness Numbers (ABN)It is not compulsory for an investor to quote their TFN orABN. However, unless exempted, failure by an investor toquote an ABN or TFN will result in tax being withheld bythe trustee on distributions paid to the investor at the topmarginal tax rate plus the Medicare Levy, on grosspayments including Distributions of income to theinvestor. The investor may be able to claim a credit in theinvestors’ tax return for any TFN/ABN tax withheld. Byquoting their TFN or ABN on its application form for theFund, the investor authorises Equity Trustees to apply itin respect of all the investor’s investments with EquityTrustees. If the investor does not want to quote their TFNor ABN for some investments, Equity Trustees should beadvised.

Attribution Managed Investment Trusts(“AMITs”)The Constitution provides, where separate classes ofunits are on issue in respect of the Fund, for incomeallocation to take into account any impact of the

currency overlay that may be in place for the respectiveclasses. The quantum of the distribution is sought to bedetermined on a standalone basis. Prior to the AMITmulti-class election being made (as described below),the Fund is treated as a single taxpayer. As any separateclasses of units would not currently be treated asseparate taxpayers, it is possible under the currenttaxation regime that the tax character of distributionsmade to a particular class may be impacted bytransactions associated with another class. TheConstitution provides a mechanism to seek to minimisethis outcome. Insofar as possible, where separate classesof units are on issue, the Constitution seeks to quarantinethe income associated with a particular class to thatclass.

In May 2016, the Australian Federal Government enactedlegislation establishing a new tax system for AttributionManaged Investment Trusts (AMITs). Trusts that meet theeligibility criteria to be an AMIT may elect into the AMITrules. Equity Trustees is intending that an election intoAMIT be made in respect of the Fund and thereafter 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 tothe 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 baseadjustment will be included on an investor’s annual taxstatement, referred to as an AMIT Member AnnualStatement (AMMA).

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

Multi-class AMITs: A choice is available to elect to treatseparate classes of units as separate AMITs. EquityTrustees is intending that the AMIT multi-class electionbe made in respect of the Fund.

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.


11. Other Important InformationConsentsMantis Funds Pty Ltd and Dalton Street Capital Pty Ltdhaves given and, at the date of this PDS, has notwithdrawn, its written consent:

• to be named in this PDS as the Investment Managerand Sub-Investment Manager of the Fundrespectively; and

• to the inclusion of the statements made about it, theFund and the tables and statistical information, whichare attributed to it, in the form and context in whichthey appear.

Mantis Funds Pty Ltd and Dalton Street Capital Pty Ltdhaves not otherwise been involved in the preparation ofthis PDS and has not caused or otherwise authorised theissue of this PDS. Mantis Funds Pty Ltd and Dalton StreetCapital Pty Ltd and its employees and officers do notaccept any responsibility arising in any way for errors oromissions from this PDS, other than in relation to thestatements for which it has provided its consent.

Constitution of the FundYou will be issued units in the Fund when you invest.Subject to the rights, obligations and restrictions of aclass, each unit represents an equal undivided fractionalbeneficial interest in the assets of the Fund as a wholesubject to liabilities, but does not give you an interest inany particular property of the Fund.

Equity Trustees’ responsibilities and obligations, as theResponsible Entity of the Fund, are governed by theConstitution as well as the Corporations Act and generaltrust law. The Constitution contains a number ofprovisions relating to the rights, terms, conditions andobligations imposed on both Equity Trustees, as theresponsible entity of the Fund, and investors. Some ofthe provisions of the Constitution are discussedelsewhere in this PDS.

Other provisions relate to your rights under theConstitution, and include:

• your right to share in any Fund income, and how wecalculate it;

• what you are entitled to receive when you withdrawor if the Fund is wound up;

• your right to withdraw from the Fund - subject to thetimes when we can cease processing withdrawals,such as if the Fund becomes ‘illiquid’;

• the nature of the units - identical rights attach to allunits within a class; and

• your rights to attend and vote at meetings – howeverthese rights are mainly contained in the CorporationsAct.

There are also provisions governing our powers andduties, including:

• how we calculate unit prices, the maximum amount offees we can charge and expenses we can recover;

• when we can amend the Constitution - generally wecan only amend the Constitution where wereasonably believe that the changes will notadversely affect investors’ rights. Otherwise theConstitution can only be amended if approved at ameeting of investors;

• when we can retire as the Responsible Entity of theFund - which is as permitted by law;

• when we can be removed as the Responsible Entity ofthe Fund - which is when required by law; and

• our broad powers to invest, borrow and generallymanage the Fund.

The Constitution also deals with our liabilities in relationto the Fund and when we can be reimbursed out of theFund’s assets. For example:

• subject to the Corporations Act we are not liable foracting in reliance and good faith on professionaladvice;

• subject to the Corporations Act we are not liable forany loss unless we fail to act in good faith or we actnegligently; and

• we can be reimbursed for any liabilities we incur inconnection with the proper performance of ourpowers and duties in respect of the Fund.

As mentioned above, Equity Trustees’ responsibilitiesand obligations as the Responsible Entity of the Fund aregoverned by the Constitution of the Fund, theCorporations Act and general trust law, which requirethat we:

• act in the best interests of investors and, if there is aconflict between investors’ interests and our own,give priority to investors;

• ensure the property of the Fund is clearly identified,held separately from other funds and our assets, andis valued regularly;

• ensure payments from the Fund’s property are madein accordance with the Constitution and theCorporations Act; and

• report to ASIC any breach of the Corporations Act inrelation to the Fund which has had, or is likely to have,a materially adverse effect on investors’ interests.

Non-listing of unitsUnits in the Fund are not listed on any stock exchangeand no application will be made to list the units of theFund 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, expenses and liabilities (actual andanticipated), the net proceeds will be distributed pro-rataamong all investors according to the aggregate of thewithdrawal price for each of the units they hold in theFund.

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 it considers that the amendment will notadversely affect an investor’s rights. Otherwise theConstitution may be amended by way of a specialresolution of investors.

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

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 you free ofcharge on request.

IndemnityEquity Trustees, as the Responsible Entity of the Fund, isindemnified out of the Fund against all liabilities incurredby it in performing or exercising any of its powers orduties in relation to the Fund. To the extent permitted bythe Corporations Act, this indemnity includes any liabilityincurred as a result of any act or omission of a delegateor agent appointed by the Responsible Entity. EquityTrustees may retain and pay out any monies in its handsall sums necessary to affect such an indemnity.

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 dealergroups, their service providers and/or any joint holderof an investment;

• those providing services for administering ormanaging 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 andAUSTRAC; and

• other third parties who you have consented to usdisclosing 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 are 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].

Anti-Money Laundering and CounterTerrorism Financing (“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, Equity Trusteesmay also disclose information including your personalinformation that it holds about the applicant, an investor,or any beneficial owner, to its related bodies corporate or


service providers, or relevant regulators of AML/CTFLaws (whether inside or outside Australia). EquityTrustees may be prohibited by law from informingapplicants or investors that such reporting has occurred.

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

Indirect InvestorsYou may be able to invest indirectly in the Fund via anIDPS by directing the IDPS Operator to acquire units onyour behalf. If you do so, you will need to complete therelevant forms provided by the IDPS Operator and notthe Application Form accompanying the PDS. This willmean that you are an Indirect Investor in the Fund andnot an investor or member of the Fund. Indirect Investorsdo not acquire the rights of an investor as such rights areacquired by the IDPS Operator who may exercise, ordecline to exercise, these rights on your behalf.

Indirect Investors do not receive reports or statementsfrom us and the IDPS Operator’s application andwithdrawal conditions determine when you can direct theIDPS Operator to apply or redeem. Your rights as anIndirect Investor should be set out in the IDPS Guide orother disclosure document issued by the IDPS Operator.

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

ASICThe Australian Securities and Investments Commission.

Asset allocationThe weighting of assets in an investment portfolio amongdifferent asset classes (such as shares, bonds, propertyand cash).

Business DayAny day (except any weekend or public holiday) onwhich trading banks are open for usual business inSydney, Australia.

Buy/Sell SpreadThe difference between the Application Price andWithdrawal Price of units in the Fund, which reflects theestimated transactions costs associated with buying andselling the assets of the Fund, when investors invest in orwithdraw from the Fund.

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, options on futures contracts, swapagreements (including, but not limited to, long and shortcredit default swaps and forward swap spread locks) andoptions on swap agreements.

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

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.

IDPS GuideInvestor-Directed Portfolio Service guide

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

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

Long PortfolioA portfolio of shares which the investor owns.

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).

Retail ClientPersons or entity which is a retail client as defined undersection 761G of the 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 PortfolioA portfolio of shares that the investor has borrowed andshort sold

Short positionsA short position is one in which the investor has soldshares that the investor doesn’t own. The investor seeksto profit as the value of the shares falls, thereby reducingthe size of the liability to re-purchase the shares. Shortsales are generally covered, that is, the seller will“borrow” the investment to settle the sale and then willbuy the same investment in the open market to return theborrowed investment. The difference between the saleprice and the purchase price of the investment in theopen market is the profit or loss earned by the investor.

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 estateincome is non-US income not liable to US income tax; or


(g) any trust of which any trustee is a US Person (unless atrustee who is a professional fiduciary is a US Person anda trustee who is not a US Person has sole or substantialinvestment discretion over the assets of the trust and nobeneficiary (or settlor, if the trust is revocable) of thetrust 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 the Corporations Act.


DALTON STREET MARKET NEUTRAL TRUST APPLICATION FORM

This application form accompanies the Product Disclosure Statement (PDS)/Information Memorandum (IM) relating to units in the following product/s issued by Equity Trustees Limited (ABN 46 004 031 298, AFSL 240975). The PDS/IM contains information about investing in the Fund/Trust. You should read the PDS/IM in its entirety before applying.


The law prohibits any person passing this Application Form on to another person unless it is accompanied by a complete PDS/IM.

If completing by hand, use a black or blue pen and print within the boxes in BLOCK LETTERS, if you make a mistake, cross it out and initial. DO NOT use correction fluid The investor(s) must complete and sign this form Keep a photocopy of your completed Application Form for your records

U.S. Persons: This offer is not open to any U.S. Person. Please refer to the PDS/IM for further information.

Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)

We are required to collect certain information to comply with FATCA and CRS, please ensure you complete section 7.

If investing with an authorised representative, agent or financial adviser

Please ensure you, your authorised representative, agent and/or financial adviser also complete Section 6.

Provide certified copies of your identification documents

Please refer to section 9 on AML/CTF Identity Verification Requirements.

Send your documents & make your payment

See section 2 for payment options and where to send your application form.

Equity Trustees Application Form –2021

SECTION 1 – YOUR CONSUMER ATTRIBUTES

In relation to our Design and Distribution Obligations (DDO) under the Corporations Act, we seek the following information about your attributes as an investor (please tick only 1 box for each question below)

1. Have you received advice prior to applying to invest in the Fund?

☐ I/We have received personal advice in relation to my investment in this Fund

☐ I/We have received general advice in relation to my investment in this Fund

☐ I/We have not received any advice in relation to my investment in this Fund

2. What is your primary investment objective(s)?

☐ Capital growth ☐ Capital preservation

☐ Capital guaranteed ☐ Income Distribution

3. Please select the intended use of this Fund in your investment portfolio

☐ Solution/Standalone – A large allocation (75%-100% of portfolio)

☐ Core component – A medium allocation (25%-75% of portfolio)

☐ Satellite/Small Allocation – A small allocation (<25% of portfolio)

4. Please select the Intended investment timeframe

☐ Short term (<=2 years) ☐ Medium term (>2 years)

☐ Long term (>8 years)

5. What is your tolerance for risk?

☐ Low - I/we can tolerate up to 1 period of underperformance over 20 years ☐

Medium - I/we can tolerate up to 4 periods of underperformance over 20 years.

☐ High - I/we can tolerate up to 6 periods of underperformance over 20 years ☐

Very High - I/we can tolerate more than 6 periods of underperformance over 20 years

6. What do you anticipate your withdrawal needs may be?

☐ Daily ☐ Weekly

☐ Monthly ☐ Quarterly

☐ Annually or longer

Please note:

1. Failure to complete the above questions may result in your application not being accepted;

2. Acceptance of your application should not be taken as a representation or confirmation that an investment in the Fund is, or is likely to be, consistent with your intentions, objectives and needs as indicated in your responses to these questions; and

3. For further information on the suitability of this product, please refer to your financial adviser and/or the TMD

https://protect-au.mimecast.com/s/PCtiCvl0XZf7yJyOIoxWZt?domain=eqt.com.au/


SECTION 1.2 – ARE YOU AN EXISTING INVESTOR IN THE FUND/TRUST AND WISH TO ADD TO YOUR INVESTMENT?

Do you have an existing investment in the Fund/Trust and the information provided remains current and correct?

☐ Yes, if you can tick both of the boxes below, complete Sections 2 and 8

☐ I/We confirm there are no changes to our identification documents previously provided and that these remain current and valid.

☐ I/We confirm there have been no changes to our FATCA or CRS status

Existing investor number:

If there have been changes in your identification documents or FATCA/CRS status since your last application, please complete the full Application Form as indicated below.

☐ No, please complete sections relevant to you as indicated below:

Investor Type:

☐ Individuals/Joint: complete section 2, 3, 6 (if applicable), 7, 8 & 9

☐ Companies: complete section 2, 4, 6 (if applicable), 7, 8 & 9

☐ Custodians on behalf of underlying clients: complete section 2, 4, 5, 5.1, 6 (if applicable), 7, 8 & 9

☐ Trusts/superannuation funds:

with an individual trustee – complete sections 2, 3, 5, 6 (if applicable), 7, 8 & 9 with a company as a trustee – complete sections 2, 4, 5, 6 (if applicable), 7, 8 & 9

If you are an Association, Co-operative, Partnership, Government Body or other type of entity not listed above, please contact Equity Trustees.


SECTION 2 – INVESTMENT DETAILS

Investment to be held in the name(s) of (must include name(s) of investor(s))

Postal address

Suburb State Postcode Country

Email address Contact no.

FUND/TRUST NAME APIR CODE APPLICATION AMOUNT (AUD)

Dalton Street Market Neutral Trust WMF0001AU $

The minimum initial investment is $50,000.

Distribution Instructions

If you do not select a distribution option, we will automatically reinvest your distribution. If you select cash, please ensure you provide your bank details below.

☐ Reinvest distributions if you select this option your distribution will be reinvested in the Fund/Trust

☐ Pay distributions to the bank if you select this option your distribution will be paid to the bank account below

Investor bank details

For withdrawals and distributions (if applicable), these must match the investor(s)’ name and must be an AUD-denominated bank account with an Australian domiciled bank.

Financial institution name and branch location

BSB number Account number

Account name

Payment method

☐ Direct credit – pay to:

Financial institution name and branch location

ANZ, 115 Pitt St, Sydney, NSW, 2000

BSB number 012 003

Account number 836 058 384

Account name Equity Trustees Limited as RE for Dalton Street Market Neutral Trust

Reference <Investor Name>


Source of investment

Please indicate the source of the investment amount (e.g. retirement savings, employment income):

Send your completed Application Form to:

Link Fund Solutions GPO Box 5482, Sydney NSW 2001 Additional applications may sent by fax to +61 2 9221 1194 or by email to [email protected]

Please ensure you have completed all relevant sections and signed the Application Form

mailto:[email protected]

Equity Trustees Application Form – 2021

SECTION 3 – INVESTOR DETAILS – INDIVIDUALS/JOINT

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

See Group A AML/CTF Identity Verification Requirements in Section 9

Investor 1

Title First name(s) Surname

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


Email address (Statements will be sent to this address, unless you elect otherwise in Section 6)

Contact no.

Date of birth (DD/MM/YYYY) Tax File Number* – or exemption code

/ /

Country of birth Occupation

Does the investor named above 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:

Investor 2





Contact no.

Date of birth (DD/MM/YYYY) Tax File Number* – or exemption code

/ /

Country of birth Occupation

Does the investor named above 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?



SECTION 4 – INVESTOR DETAILS – COMPANIES/CORPORATE TRUSTEE

Please complete if you are investing for a company or where the company is acting as trustee.

See Group B AML/CTF Identity Verification Requirements in Section 9

Full company name (as registered with ASIC or relevant foreign registered body)

Registered office address (not a PO Box/RMB/Locked Bag)


Australian Company Number Tax File Number* – or exemption code

Australian Business Number* (if registered in Australia) or equivalent foreign company identifier

Contact Person



Contact no.

Principal place of business: If the principal place of business is the same as the registered office street address, state ‘As above’ below. Otherwise provide address details. For foreign companies registered with ASIC please provide a local agent name and address if you do not have a principal place of business in Australia.

Principal Place of Business Address (not a PO Box/RMB/Locked Bag)


Registration details

Name of regulatory body Identification number (e.g. ARBN)

Controlling Persons, Directors and Beneficial Owners

All beneficial owners who own, hold or control either directly or indirectly 25% or more of the issued capital of a proprietary or private company that is not regulated i.e. does not have an AFSL or ACLN etc., will need to provide Group A AML/CTF Identity Verification Requirements specified in Section 9. In the case of an unregulated public company not listed on a securities exchange, provide the details of the senior managing official(s) as controlling person(s) (e.g. managing director, senior executive(s) etc. who is/are authorised to sign on the company’s behalf, and make policy, operational and financial decisions) in the following sections. All proprietary and private companies, whether regulated or unregulated, must provide the names of all of the directors.


Names of the Directors of a Proprietary or Private Company whether regulated or unregulated

1 2

3 4

If there are more than 4 directors, please write the other names below.

Names of the Beneficial Owners or Senior Managing Official(s)

Select:

☐ Beneficial owner 1 of an unregulated proprietary or private company; OR

☐ Senior Managing Official of an unregulated, unlisted, public (e.g. Limited) company




Date of birth (DD/MM/YYYY)

/ /

Does the beneficial owner named above 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?


Select:

☐ Beneficial owner 2 of an unregulated proprietary or private company; OR

☐ Senior Managing Official of an unregulated, unlisted, public (e.g. Limited) company




Date of birth (DD/MM/YYYY)

/ /



If there are more than 2 beneficial owners or managing officials, please copy and complete this page for the other persons or alternatively, provide the additional details as an attachment.


SECTION 5 – INVESTOR DETAILS – TRUSTS/SUPERANNUATION FUNDS

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 exemption code

Trustee details – How many trustees are there?

☐ Individual trustee(s) – complete Section 3 – Investor details – Individuals/Joint

☐ Company trustee(s) – complete Section 4 – Investor details – Companies/Corporate Trustee

☐ Combination – trustee(s) to complete each relevant section

Type of Trust

☐ Registered Managed Investment Scheme

Australian Registered Scheme Number (ARSN)

☐ 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 or ABN

☐ 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):


Other Trust (unregulated) Continued

Settlor details

Please provide the full name and last known address of the settlor of the trust where the initial asset contribution to the trust was greater than $10,000.

☐ This information is not required if the initial asset contribution was less than $10,000, and/or

☐ This information is not required if the settlor is deceased

Settlor’s full name and last known address

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 is 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 or Controlling Person 1

Select:

☐ Beneficial owner 1; OR

☐ Controlling Person – What is the role e.g. Appointer:




Date of birth (DD/MM/YYYY) / /



Beneficial owner 2 or Controlling Person 2

Select:

☐ Beneficial owner 2; OR

☐ Controlling Person – What is the role e.g. Appointer:






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



If there are more than 2 beneficial owners or controlling persons, please copy and complete this page for the other persons or alternatively, provide the additional details as an attachment.

SECTION 5.1 – CUSTODIAN ATTESTATION: CHAPTER 4, PARTS 4.4.18 AND 4.4.19 OF THE AML/CTF RULES

If you are a Company completing this Application Form on behalf of an individual, another company, a trust or other entity, in a Custodial capacity, please complete this section.

In accordance with Chapter 4, part 4.4.19 (1)(a) to (d) of the AML/CTF Rules, does the Custodian meet the definition (see ‘Section 10 – Glossary’) of a Custodian?

☐ No ☐ Yes

In accordance with Chapter 4, part 4.4.19 (e) of the AML/CTF Rules, do you, in your capacity as Custodian attest that prior to requesting this designated service from Equity Trustees, it has carried out and will continue to carry out, all applicable customer identification procedures on the underlying account holder named or to be named in the Fund’s register, including conducting ongoing customer due diligence requirements in accordance with Chapter 15 of the AML/CTF Rules?

☐ No ☐ Yes

If you answered YES to all of the above questions, then Equity Trustees is able to apply the Chapter 4, part 4.4 Custodian rules to this account and will rely upon the customer due diligence conducted by the Custodian on the underlying account holder named or to be named in the Fund’s register.

If requested to do so at any time after the provision of this designated service, the Custodian agrees to honour any reasonable request made by Equity Trustees for information or evidence about the underlying account holder in order to allow Equity Trustees to meet its obligations under the AML/CTF Act.

☐ No ☐ Yes

Excepting the below circumstances where the custodian answered NO or did not complete any of the above questions, no other information about the underlying account holder is required to be collected. However, further information about you as the Custodian and as a company is required to be collected and verified as required by the AML/CTF rules. Please complete the rest of this form for the Custodian.

Excepting circumstances:

If you answered NO or did not complete any of the above questions, then we are unable to apply the Chapter 4, part 4.4 Custodian rules to this application. We are therefore obligated to conduct full Know Your Client procedures on the underlying account holder named or to be named in the Fund’s register including any named nominee, as well as the trustees, beneficial owners and controlling persons of the underlying named account in addition to the Custodian. Therefore, please complete the relevant forms and provide identity documents for all parties connected to this account.


SECTION 6 – AUTHORISED REPRESENTATIVE, AGENT AND/OR FINANCIAL ADVISER

Please complete if you are appointing an authorised representative, agent and/or financial adviser.

See Group D AML/CTF Identity Verification Requirements in Section 9

☐ I am an authorised representative or agent as nominated by the investor(s)

You must attach a valid authority such as Power of Attorney, guardianship order, grant of probate, appointment of bankruptcy etc. that is a certified copy. The document must be current and complete, signed by the investor or a court official and permits the authorised representative or agent to transact on behalf of the investor.

Full name of authorised representative or agent

Role held with investor(s)

Signature Date

☐ I am a financial adviser as nominated by the investor

Name of adviser AFSL number

Dealer group Name of advisory firm

Postage address


Email address Contact no.

Financial Advice (only complete if applicable)

☐ The investor has received personal financial product advice in relation to this investment from a licensed financial adviser and that advice is current.

Financial Adviser Declaration

☐ I/We hereby declare that I/we are not a US Person as defined in the PDS/IM.

☐ I/We hereby declare that the investor is not a US Person as defined in the PDS/IM.

☐ I/We have completed an appropriate Customer Identification Procedure (CIP) on this investor which meets the requirements (per type of investor) set out above,

☐ I/We have attached the relevant CIP documents;

Signature Date


Access to information

Unless you elect otherwise, your authorised representative, agent and/or financial adviser will also be provided access to your investment information and/or receive copies of statements and transaction confirmations. By appointing an authorised representative, agent and/or financial adviser you acknowledge that you have read and agreed to the terms and conditions in the PDS/IM relating to such appointment.

☐ Please tick this box if you DO NOT want your authorised representative, agent and/or financial adviser to have access to information about your investment.

☐ Please tick this box if you DO NOT want copies of statements and transaction confirmations sent to your authorised representative, agent and/or financial adviser.

☐ Please tick this box if you want statements and transaction confirmations sent ONLY to your authorised representative, agent and/or financial adviser.


SECTION 7 – FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA), COMMON REPORTING STANDARD (CRS) SELF-CERTIFICATION FORM – ALL INVESTORS MUST COMPLETE

Sub-Section I – Individuals

Please fill this Sub-Section I only if you are an individual. If you are an entity, please fill Sub-Section II.

1. Are you a US tax resident (e.g. US citizen or US resident)?

☐ Yes: provide your US Taxpayer Identification Number (TIN) and continue to question 2

Investor 1

Investor 2

☐ No: continue to question 2

2. Are you a tax resident of any other country outside of Australia?

☐ Yes: state each country and provide your TIN or equivalent (or Reason Code if no TIN is provided) for each jurisdiction below and skip to question 12

Investor 1

Country/Jurisdiction of tax residence

TIN If no TIN available enter Reason A, B or C

1

2

Investor 2



1

2

If more space is needed please provide details as an attachment.

☐ No: skip to question 12

Reason Code:

If TIN or equivalent is not provided, please provide reason from the following options:

Reason A: The country/jurisdiction where the investor is resident does not issue TINs to its residents.

Reason B: The investor is otherwise unable to obtain a TIN or equivalent number (Please explain why the investor is unable to obtain a TIN in the below table if you have selected this reason).

Reason C: No TIN is required. (Note. Only select this reason if the domestic law of the relevant jurisdiction does not require the collection of the TIN issued by such jurisdiction).

If Reason B has been selected above, explain why you are not required to obtain a TIN:

Reason B explanation

Investor 1

Investor 2


Sub-Section II – Entities

Please fill this Sub-Section II only if you are an entity. If you are an individual, please fill Sub-Section I.

☐ Yes: skip to question 12


FATCA

4. Are you a US Person?

☐ Yes: continue to question 5


5. Are you a Specified US Person?

☐ Yes: provide your TIN below and skip to question 7

☐ No: indicate exemption type and skip to question 7

6. Are you a Financial Institution for the purposes of FATCA?

☐ Yes: provide your Global Intermediary Identification Number (GIIN)

If you do not have a GIIN, please provide your FATCA status below and then continue to question 7. If you are a sponsored entity, please provide your GIIN above and your sponsor’s details below and then continue to question 7.

☐ Exempt Beneficial Owner, provide type below:

☐ Deemed-Compliant FFI (other than a Sponsored Investment Entity or a Trustee Documented Trust), provide type below:

☐ Non-Participating FFI, provide type below:

☐ Sponsored Entity. Please provide the Sponsoring Entity’s name and GIIN:

☐ Trustee Documented Trust. Please provide your Trustee’s name and GIIN:

☐ Other, provide details:


3. Are you an Australian complying superannuation fund?


CRS

7. Are you a tax resident of any country outside of Australia and the US?

☐ Yes: state each country and provide your TIN or equivalent (or Reason Code if no TIN is provided) for each jurisdiction below and continue to question 8

Investor 1



1

2

Investor 2



1

2

If more space is needed please provide details as an attachment. Reason Code:







Investor 1

Investor 2


8. Are you a Financial Institution for the purpose of CRS?

☐ Yes: specify the type of Financial Institution below and continue to question 9

☐ Reporting Financial Institution

☐ Non-Reporting Financial Institution:

☐ Trustee Documented Trust

☐ Other: please specify:


9. Are you an investment entity resident in a non-participating jurisdiction for CRS purposes and managed by another financial Institution?

☐ Yes: skip to question 11



Non-Financial Entities

10. Are you an Active Non-Financial Entity (Active NFE)?

☐ Yes: specify the type of Active NFE below and skip to question 12:

☐ Less than 50% of the entity’s gross income from the preceding calendar year is passive income (e.g.

dividends, distribution, interests, royalties and rental income) and less than 50% of its assets during the preceding calendar year are assets held for the production of passive income

☐ Corporation that is regularly traded or a related entity of a regularly traded corporation

Provide name of Listed Entity:

and exchange on which traded:

☐ Governmental Entity, International Organisation or Central Bank

☐ Other: please specify:

☐ No: you are a Passive Non-Financial Entity (Passive NFE). Continue to question 11

Controlling Persons

11. Does one or more of the following apply to you:

Is any natural person that exercises control over you (for corporations, this would include directors or beneficial owners who ultimately own 25% or more of the share capital) a tax resident of any country outside of Australia?

If you are a trust, is any natural person including trustee, protector, beneficiary, settlor or any other natural person exercising ultimate effective control over the trust a tax resident of any country outside of Australia?

Where no natural person is identified as exercising control of the entity, the controlling person will be the natural person(s) who holds the position of senior managing official.

☐ Yes. provide controlling person information below:

Controlling person 1







1

2


Controlling person 2







1

2

If there are more than 2 controlling persons, please provide details as an attachment. Reason Code:







Investor 1

Investor 2


12. Signature and Declaration – ALL investors must sign

☐ I undertake to provide a suitably updated self-certification within 30 days of any change in circumstances which causes the information contained herein to become incorrect.

☐ I declare the information above to be true and correct.

Investor 1 Investor 2

Name of individual/entity Name of individual/entity

Name of authorised representative Name of authorised representative

Signature Signature

Date Date


SECTION 8 – DECLARATIONS – ALL INVESTORS MUST COMPLETE

In most cases the information that you provide in this form will satisfy the AML/CTF Act, the US Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). However, in some instances the Responsible Entity may contact you to request further information. It may also be necessary for the Responsible Entity to collect information (including sensitive information) about you from third parties in order to meet its obligations under the AML/CTF Act, FATCA and CRS. When you complete this Application Form you make the following declarations:

I/We have received the PDS/IM and made this application in Australia (and/or New Zealand for those offers made in New Zealand).

I/We have read the PDS/IM to which this Application Form applies and agree to be bound by the terms and conditions of the PDS/IM and the Constitution of the relevant Fund/Trust in which I/we have chosen to invest.

I/we have carefully considered the features of Fund/Trust as described in the PDS (including its investment objectives, minimum suggested investment timeframe, risk level, withdrawal arrangements and investor suitability) and, after obtaining any financial and/or tax advice that I/we deemed appropriate, am/are satisfied that my/our proposed investment in the Fund/Trust is consistent with my/our investment objectives, financial circumstances and needs.*

I/We have considered our personal circumstances and, where appropriate, obtained investment and/or taxation advice.

I/We hereby declare that I/we are not a US Person as defined in the PDS/IM.

I/We acknowledge that (if a natural person) I am/we are 18 years of age or over and I am/we are eligible to hold units in the Fund/Trust in which I/We have chosen to invest.

I/We acknowledge and agree that Equity Trustees has outlined in the PDS/IM provided to me/us how and where I/we can obtain a copy of the Equity Trustees Group Privacy Statement.

I/We consent to the transfer of any of my/our personal information to external third parties including but not limited to fund administrators, fund investment manager(s) and related bodies corporate who are located outside Australia for the purpose of administering the products and services for which I/we have engaged the services of Equity Trustees or its related bodies corporate and to foreign government agencies for reporting purposes (if necessary).

I/we hereby confirm that the personal information that I/we have provided to Equity Trustees is correct and current in every detail, and should these details change, I/we shall promptly advise Equity Trustees in writing of the change(s).

I/We agree to provide further information or personal details to the Responsible Entity if required to meet its obligations under anti-money laundering and counter-terrorism legislation, US tax legislation or reporting legislation and acknowledge that processing of my/our application may be delayed and will be processed at the unit price applicable for the Business Day as at which all required information has been received and verified.

If I/we have provided an email address, I/we consent to receive ongoing investor information including PDS/IM information, confirmations of transactions and additional information as applicable via email.

I/We acknowledge that Equity Trustees does not guarantee the repayment of capital or the performance of the Fund/Trust or any particular rate of return from the Fund/Trust.

I/We acknowledge that an investment in the Fund/Trust is not a deposit with or liability of Equity Trustees and is subject to investment risk including possible delays in repayment and loss of income or capital invested.

I/We acknowledge that Equity Trustees is not responsible for the delays in receipt of monies caused by the postal service or the investor’s bank.

If I/we lodge a fax application request, I/we acknowledge and agree to release, discharge and agree to indemnify Equity Trustees from and against any and all losses, liabilities, actions, proceedings, account claims and demands arising from any fax application.

If I/we have completed and lodged the relevant sections on authorised representatives, agents and/or financial advisers on the Application Form then I/we agree to release, discharge and indemnify Equity Trustees from and against any and all losses, liabilities, actions, proceedings, account claims and demands arising from Equity Trustees acting on the instructions of my/our authorised representatives, agents and/or financial advisers.

If this is a joint application each of us agrees that our investment is held as joint tenants.

I/We acknowledge and agree that where the Responsible Entity, in its sole discretion, determines that:

I/we are ineligible to hold units in a Fund/Trust or have provided misleading information in my/our Application Form; or

I/we owe any amounts to Equity Trustees, then I/we appoint the Responsible Entity as my/our agent to submit a withdrawal request on my/our behalf in respect of all or part of my/our units, as the case requires, in the Fund/Trust.

For Wholesale Clients* – I/We acknowledge that I am/we are a Wholesale Client (as defined in Section 761G of the Corporations Act 2001 (Cth)) and are therefore eligible to hold units in the Fund/Trust.

For New Zealand applicants* – I/we have read the terms of the offer relating to New Zealand investors, including the New Zealand warning statement.

For New Zealand Wholesale Investors* – I/We acknowledge and agree that:

I/We have read the “New Zealand Wholesale Investor Fact Sheet” and PDS/IM or “New Zealand Investors: Selling Restriction” for the Fund/Trust;

I am/We are a Wholesale Investor and am/are therefore eligible to hold units in the Fund/Trust; and

I/We have not:


▪ Offered, sold, or transferred, and will not offer, sell, or transfer, directly or indirectly, any units in the Fund/Trust;

▪ Granted, issued, or transferred, and will not grant, issue, or transfer, any interests in or options over, directly or indirectly, any units in the Fund/Trust; and

▪ Distributed and will not distribute, directly or indirectly, the PDS/IM or any other offering materials or advertisement in relation to any offer of units in the Fund/Trust, in each case in New Zealand, other than to a person who is a Wholesale Investor; and

I/We will notify Equity Trustees if I/we cease to be a Wholesale Investor; and

I/We have separately provided a signed Wholesale Investor Certification located at the end of this Application Form.

All references to Wholesale Investor in this Declaration are a reference to Wholesale Investor in terms of clause 3(2) of Schedule 1 of the Financial Markets Conduct Act 2013 (New Zealand). * Disregard if not applicable. *Terms and conditions for collection of Tax File Numbers (TFN) and Australian Business Numbers (ABN)

Collection of TFN and ABN information is authorised and its use and disclosure strictly regulated by tax laws and the Privacy Act. Investors must only provide an ABN instead of a TFN when the investment is made in the course of their enterprise. You are not obliged to provide either your TFN or ABN, but if you do not provide either or claim an exemption, we are required to deduct tax from your distribution at the highest marginal tax rate plus Medicare levy to meet Australian taxation law requirements. For more information about the use of TFNs for investments, contact the enquiries section of your local branch of the ATO. Once provided, your TFN will be applied automatically to any future investments in the Fund/Trust where formal application procedures are not required (e.g. distribution reinvestments), unless you indicate, at any time, that you do not wish to quote a TFN for a particular investment. Exempt investors should attach a copy of the certificate of exemption. For super funds or trusts list only the applicable ABN or TFN for the super fund or trust.

When you sign this Application Form you declare that you have read, agree to and make the declarations above

Investor 1 Investor 2

Name of individual/entity Name of individual/entity

Capacity (e.g. Director, Secretary, Authorised signatory)

Capacity (e.g. Director, Secretary, Authorised signatory)

Signature Signature

Date Date

Company Seal (if applicable)


SECTION 9 – AML/CTF IDENTITY VERIFICATION REQUIREMENTS

The AML/CTF Act requires the Responsible Entity to adopt and maintain an Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Program. The AML/CTF Program includes ongoing customer due diligence, which may require the Responsible Entity to collect further information.

Identification documentation provided must be in the name of the investor.

Non-English language documents must be translated by an accredited translator. Provide both the foreign language document and the accredited English translation.

Applications made without providing this information cannot be processed until all the necessary information has been provided.

If you are unable to provide the identification documents described please contact Equity Trustees.

These documents should be provided as an original or a CERTIFIED COPY of the original.

Who can certify?

Below is an example of who can certify proof of ID documents under the AML/CTF requirements:

Bailiff

Bank officer with 5 or more years of continuous service

Building society officer with 5 or more years of continuous service

Chiropractor (licensed or registered)

Clerk of court

Commissioner for Affidavits

Commissioner for Declarations

Credit union officer with 5 or more years of continuous service

Dentist (licensed or registered)

Fellow of the National Tax Accountant's Association

Finance company officer with 5 or more years of continuous service

Judge of a court

Justice of the peace

Legal practitioner (licensed or registered)

Magistrate

Marriage celebrant licensed or registered under Subdivision C of Division 1 of Part IV of the Marriage Act 1961

Master of a court

Medical practitioner (licensed or registered)

Member of Chartered Secretaries Australia

Member of Engineers Australia, other than at the grade of student

Member of the Association of Taxation and Management Accountants

Member of the Australian Defence Force with 5 or more years of continuous service

Member of the Institute of Chartered Accountants in Australia, the Australian Society of Certified Practicing Accountants or the Institute of Public Accountants

Member of the Parliament of the Commonwealth, a State, a Territory Legislature, or a local government authority of a State or Territory

Minister of religion licensed or registered under Subdivision A of Division 1 of Part IV of the Marriage Act 1961

Nurse (licensed or registered)

Optometrist (licensed or registered)

Permanent employee of Commonwealth, State or local government authority with at least 5 or more years of continuous service.

Permanent employee of the Australian Postal Corporation with 5 or more years of continuous service

Pharmacist (licensed or registered)

Physiotherapist (licensed or registered)

Police officer

Psychologist (licensed or registered)

Registrar, or Deputy Registrar, of a court

Sheriff

Teacher employed on a full-time basis at a school or tertiary education institution

Veterinary surgeon (licensed or registered)

When certifying documents, the following process must be followed:

All copied pages of original proof of ID documents must be certified and the certification must not be older than 2 years.

The authorised individual must ensure that the original and the copy are identical; then write or stamp on the copied document “certified true copy”. This must be followed by the date and signature, printed name and qualification of the authorised individual.

In cases where an extract of a document is photocopied to verify customer ID, the authorised individual should write or stamp “certified true extract”.


GROUP A – Individuals/Joint

Each individual investor, individual trustee, beneficial owner, or individual agent or authorised representative must provide one of the following primary photographic ID:

☐ A current Australian driver’s licence (or foreign equivalent) that includes a photo and signature.

☐ An Australian passport (not expired more than 2 years previously).

☐ A foreign passport or international travel document (must not be expired)

☐ An identity card issued by a State or Territory Government that includes a photo.

If you do NOT own one of the above ID documents, please provide one valid option from Column A and one valid option from Column B.

Column A

☐ Australian birth certificate.

☐ Australian citizenship certificate.

☐ Pension card issued by Department of Human Services.

Column B

☐ A document issued by the Commonwealth or a State or Territory within the preceding 12 months that records the provision of financial benefits to the individual and which contains the individual’s name and residential address.

☐ A document issued by the Australian Taxation Office within the preceding 12 months that records a debt payable by the individual to the Commonwealth (or by the Commonwealth to the individual), which contains the individual’s name and residential address. Block out the TFN before scanning, copying or storing this document.

☐ A document issued by a local government body or utilities provider within the preceding 3 months which records the provision of services to that address or to that person (the document must contain the individual’s name and residential address).

☐ If under the age of 18, a notice that: was issued to the individual by a school principal within the preceding 3 months; and contains the name and residential address; and records the period of time that the individual attended that school.


GROUP B – Companies

For Australian Registered Companies, provide one of the following (must clearly show the Company’s full name, type (private or public) and ACN):

☐ A certified copy of the company’s Certificate of Registration or incorporation issued by ASIC.

☐ A copy of information regarding the company’s licence or other information held by the relevant Commonwealth, State or Territory regulatory body e.g. AFSL, RSE, ACL etc.

☐ A full company search issued in the previous 3 months or the company’s last annual statement issued by ASIC.

☐ If the company is listed on an Australian securities exchange, provide details of the exchange and the ticker (issuer) code.

☐ If the company is a majority owned subsidiary of a company listed on an Australian securities exchange, provide details of the holding company name, its registration number e.g. ACN, the securities exchange and the ticker (issuer) code.

All of the above must clearly show the company’s full name, its type (i.e. public or private) and the ACN issued by ASIC.

For Foreign Companies, provide one of the following:

☐ A certified copy of the company’s Certificate of Registration or incorporation issued by the foreign jurisdiction(s) in which the company was incorporated, established or formed.

☐ A certified copy of the company’s articles of association or constitution.

☐ A copy of a company search on the ASIC database or relevant foreign registration body.

☐ A copy of the last annual statement issued by the company regulator.

All of the above must clearly show the company’s full name, its type (i.e. public or private) and the ARBN issued by ASIC, or the identification number issued to the company by the foreign regulator.

In addition, please provide verification documents for each beneficial owner or controlling person (senior managing official and shareholder) as listed under Group A.

A beneficial owner of a company is any person entitled (either directly or indirectly) to exercise 25% or more of the voting rights, including a power of veto, or who holds the position of senior managing official (or equivalent) and is thus the controlling person.


GROUP C – Trusts

For a Registered Managed Investment Scheme, Government Superannuation Fund or a trust registered with the Australian Charities and Not-for-Profit Commission (ACNC), or a regulated, complying Superannuation Fund, retirement or pension fund (including a self-managed super fund), provide one of the following:

☐ A copy of the company search of the relevant regulator’s website e.g. APRA, ASIC or ATO.

☐ A copy or relevant extract of the legislation establishing the government superannuation fund sourced from a government website.

☐ A copy from the ACNC of information registered about the trust as a charity

☐ Annual report or audited financial statements.

☐ A certified copy of a notice issued by the ATO within the previous 12 months.

☐ A certified copy of an extract of the Trust Deed (i.e. cover page and signing page and first two pages that describes the trust, its purpose, appointer details and settlor details etc.)

For all other Unregulated trust (including a Foreign trust), provide the following:

☐ A certified copy of an extract of the Trust Deed (i.e. cover page and signing page and first two pages that describes the trust, its purpose, appointer details and settlor details etc.) If the trustee is an individual, please also provide verification documents for one trustee as listed under Group A.

If the trustee is a company, please also provide verification documents for a company as listed under Group B.

GROUP D – Authorised Representatives and Agents

In addition to the above entity groups:

☐ If you are an Individual Authorised Representative or Agent – please also provide the identification documents listed under Group A.

☐ If you are a Corporate Authorised Representative or Agent – please also provide the identification documents listed under Group B.

All Authorised Representatives and Agents must also provide a certified copy of their authority to act for the investor e.g. the POA, guardianship order, Executor or Administrator of a deceased estate, authority granted to a bankruptcy trustee, authority granted to the State or Public Trustee etc.


Section 10 – Glossary

Custodian – means a company that:

a) is acting in the capacity of a trustee; and

b) is providing a custodial or depository service of the kind described in item 46 of table 1 in subsection 6(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act); and

c) either:

i. holds an Australian financial services licence authorising it to provide custodial or depository services under the Corporations Act 2001; or

ii. is exempt under the Corporations Act 2001 from the requirement to hold such a licence; and

d) either:

i. satisfies one of the ‘geographical link’ tests in subsection 6(6) of the AML/CTF Act; or

ii. has certified in writing to the relevant reporting entity that its name and enrolment details are entered on the Reporting Entities Roll; and

e) has certified in writing to the relevant reporting entity that it has carried out all applicable customer identification procedures and ongoing customer due diligence requirements in accordance with Chapter 15 of the AML/CTF Rules in relation to its underlying customers prior to, or at the time of, becoming a customer of the reporting entity.