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Frequently asked questions
An investment that can be geared for growth, with in-built safety features and no margin calls.
Perpetual Protected Investments – Series 4 is offered in a Combined
Financial Services Guide and Product Disclosure Statement dated 8
September 2008 (PDS) issued by Perpetual Investment Management Limited ABN 18 000 866 535 AFSL 23 44 26.
Overview
Investing in the Product
Borrowing to invest - Investment Loans
Overview
Who would most suit this investment?
Perpetual
Protected Investments – Series 4 enables investors to build an
investment portfolio that can be geared for growth for over 7 years,
with in-built capital protection and no margin calls. It may appeal to
investors looking to:
- choose from 11 managed funds from a range of fund
managers across Australian and global equities as well as other
specialist asset classes including Chinese and other Asian equities,
global resources and global infrastructure
- borrow 100% of their initial investment amount1 plus the annual interest2, with no margin calls
- borrow up to 55%3 for their self managed super fund (SMSF) plus the annual interest with no margin calls
- safeguard their investment through capital protection to take advantage of potential market highs while being protected from the lows
- access a tax-effective investment by having absolute entitlement to their portfolio.
It may also be suitable for investors who want to make a long term investment for the future – the investment term is approximately 7 years and 4 months.
1 Loans offered are subject to credit approval.
2 Subject to choosing a fixed rate 100% Investment Loan.
3 Estimate only – see the PDS for more details.
When are the key dates?
| Offer opens |
27 October 2008 |
| Final interest rates |
On or about 24 November 2008 |
| Offer closes |
26 November 2008 |
| Investment date (protection start date) |
On or about 19 December 2008 |
| Protection end date |
30 April 2016 |
What funds are being offered to invest in?
| Perpetual’s Wholesale Australian Fund |
AXA Wholesale Global Equity Value Fund
|
Colonial First State Wholesale Global Resources Fund |
| Ausbil Australian Active Equity Fund |
T. Rowe Price Global Equity Fund
|
Macquarie International Infrastructure Securities Fund
|
| Ausbil Australian Emerging Leaders Fund |
Vanguard International Shares Index Fund (Hedged) |
Platinum Asian Fund |
Vanguard Australian Shares Index Fund
|
x |
Premium China Fund
|
How have the funds been selected?
Diversification
is important and so we have made the process of building a diversified
portfolio easier by offering a broad selection of managed funds to
choose from. We have done this with the assistance of Mercer.
Mercer operates an investment consulting business and is one of the
world's leading asset consultants. Mercer has helped us select the
investment managers, with all funds chosen on the basis they are
well-regarded funds in their own right and collectively form a
comprehensive investment menu.
Mercer's view of an investment fund reflects its opinions on the
investment manager's skill, investment process and business management.
Mercer assesses an investment manager's competitive advantage relative
to its peers and the likelihood of its fund achieving stated return
objectives.
What is the minimum investment amount?
Perpetual
Protected Investments – Series 4 is a closed end product which means we
only accept investments up to the offer close date. Additional
investments can not be made during the term.
For the 100% Investment Loan, the minimum amount you can borrow is $50,000, plus multiples of $5,000.
For the Super Investment Loan you must make a
contribution from your super fund (a ‘capital contribution’). The
minimum capital contribution is $25,000 plus multiples of $5,000.
Investors who wish to only invest their own money without taking out
a loan must invest a minimum of $25,000 plus multiples of $5,000.
Investing in the ProductWhat do you need to know about dynamic management?
dynamic management is an investment strategy in its own right, you need
to consider the risks associated with using it to protect your initial
investment in the product. It is important that you read the section
entitled ‘What are the risks?’ and ‘Capital protection: How do we
protect your portfolio’ in the PDS.
How long is the investment for?
Investments
in Perpetual Protected Investments – Series 4 run for approximately 7
years and 4 months - considered to be a medium to long-term investment.
The dynamic management strategy is designed to provide 100% capital
protection only on 30 April 2016 (protection end date). Although
investors can withdraw their investment prior to the protection end
date, any amount withdrawn is not capital protected. Investors should
only invest in the product if they intend to remain invested for the
full term to the protection end date.
Will investors receive any distributions from the funds?
Distributions
from units in the underlying managed funds will generally be
reinvested, in accordance with the dynamic management strategy.
Investors should not rely on receiving income distributions from this
product or to paying any part of their interest payments required on
the loans from distributions.
Any distributions received from the underlying funds will be taxable
as income in the hands of investors even though it is reinvested. For
more information on how distributions are treated, please refer to the
PDS.
What happens at the end of the investment term?
As
your clients own the units in the funds they select, they are able to
decide what they do with them after repaying any loans, on the
protection end date. This means they control the timing of any capital
gains tax event.
On the protection end date (subject to repaying any outstanding loan amounts) investors can:
• continue holding the fund units (with no capital protection)
• redeem them for cash
• potentially roll them over into another series of Perpetual Protected Investments (if one is available). What fees do investors pay for the product?
| Establishment fee |
2.20% (inclusive of GST) |
| Withdrawal fee |
Nil |
| Administration fee |
0.75% pa (inclusive of GST) |
| Dynamic management fee |
0.70% pa of your protected amount (inclusive of GST - reduced to nil if no fund units are held |
| Underlying management costs(applicable to the funds offered in the series) |
Management fees 0.34 – 1.88% pa
|
| Cost recoveries |
nil – 0.30% |
| Performance fees |
nil – 0.30% (estimated) |
| Payment of fees |
The administration fee and dynamic management fees will be
automatically deducted from your portfolio cash account
quarterly by us quarterly. If there is insufficient money in your
portfolio cash account, we may sell fund units under our power of
attorney to pay these fees. |
1 Please
refer to the current PDS for further details on all the fees and other
costs applicable to Perpetual Protected Investments – Series 3.
What commissions are payable in relation to the product?
Adviser remuneration for the product
| Establishment fee (inclusive of GST) |
2.20% |
$1,100 |
What commissions are payable in relation to the loans?
Adviser remuneration for the loans
The lender pays the following remuneration to advisers for the loans:
| Upfront commission |
up to 1.10% of any Investment Loan principal amount |
| Ongoing commission |
up to 0.65%ps of any Investment Loan and Gains Loan principal amount |
| Adviser service fee - One of three options |
i. 0.25% pa
ii. 0.50% pa
iii. 0.75% pa
of any Investment Loan and Gains Loan principal amount. |
This structure gives advisers significant flexibility around their commission options as follows:
- Full commission - as an adviser you can charge 3.30% upfront and receive an ongoing commission of 0.65%pa.
- Waive all commissions - you can choose to waive
all commissions. Your client may receive a 0.80% pa discount on the
interest rate and the 2.20% product establishment fee will not be
deducted on the client's investment amount.
- Waive the 2.20% product establishment fee only - this will not be deducted from your client's investment amount.
- Waive the upfront loan commission of 1.10% only - you will receive an ongoing loan commission of 0.65% pa. Your clients may receive a 0.15% pa discount on the interest rate.
- Waive the upfront loan commission of 1.10% and ongoing loan commission of 0.65% pa only - you will receive no commission on the investment loan. Your clients may receive a 0.80% pa discount on the interest rate.
Borrowing to invest - Investment Loans
What investment loans are available?
Non-superannuation investors1 can borrow to gear their investment with a 100% Investment Loan:
– borrowing 100% of their investment amount with fixed and variable interest rate options, plus
– an Annual Interest Loan2 to borrow and prepay the interest on their 100% Investment Loan in June each year.
Superannuation investors can borrow to gear their investment with a Super Investment Loan:
- borrowing approximately 55%3 of their investment amount with an interest rate fixed for the term, plus
- an Annual Interest Loan to borrow and prepay the interest on their Super Investment Loan in June each year.
In both cases Annual Interest Loans enable investors to pay the annual interest charges by monthly instalments.
1 Loans offered are subject to credit approval.
2 Subject to choosing a fixed rate 100% Investment Loan.
3 Estimate only – see the PDS for more details.
What fees do investors have to pay for the loan?
| Fees - Loan2 |
Amount |
| Loan establishment fee |
Nil |
| Security registration fee |
$175 (corporate investors only) |
| Stamp duty on company charge |
At prevailing rates applicable to relevant Office of State Revenue |
| Early repayment fee |
This fee will be calculated by us and will consist of one month’s
interest plus 0.30% of your loan amount if repaid prior to 31 December
2012 plus break costs (calculated by us) for unwinding hedging and
funding arrangements subject to prevailing interest rates at that time
(if applicable). |
| Interest switching fee |
This fee will be calculated by us and will be $50 plus break costs
(calculated by us) for the cost of unwinding hedging and funding
arrangements, subject to prevailing interest rates at that time (if
applicable). |
| Security release fee |
$100 (corporate investors only) |
| Payment of fees |
The loan establishment fee will be paid at the drawdown of the
loan. The Lender will advise when you have to pay the early repayment
fee, interest switching fee and security registration fee. The security
release fee will be paid at the time your investment loan is repaid. |
2 Please refer to the current PDS for
further details on all the applicable fees and other costs applicable
to Perpetual Protected Investments - Series 4.
Are there any margin calls?
No. With Perpetual Protected Investments – Series 4, investors are not liable to pay margin calls under any loans.
What are the interest rate options for the loan?
For the 100% Investment Loan, investors can choose from one of the following three interest rate options:
1. Variable
2. Fixed annually
3. Fixed for term.
For the Super Investment Loan, the interest rate is fixed for the term of the investment.
An Annual Interest Loan is also available in June
each year for investors who choose a fixed rate 100% Investment Loan or
a Super Investment Loan. The interest rate for the Annual Interest Loan
is the same as the ‘fixed annually’ rate. An Annual Interest Loan
enables investors to make interest payments under their fixed rate 100%
Investment Loan or Super Investment Loan in monthly instalments.
The indicative interest rates are currently available on our website, with the final interest rates being set on or around 24 November 2008.
When will the investor's loan be drawn down?
All Investment Loans will be drawn down on or about 15 December 2008. Interest is charged from this date.
Annual Interest Loans will be drawn down on 25 June each year, commencing in June 2009.
When is the money invested?
All
investment amounts (whether loan proceeds or investor’s own money) will
be invested on or about 19 December 2008 (investment date).
What happens to the money before it is invested?
All
money received for investment (by cheque with an application or by
subsequent direct debit or loan drawdown) is held on trust in our
applications account prior to the investment date. We retain the
interest earned on this account. Application money is held in the
applications account until the investment date (protection start date)
when all application money is transferred to investors’ portfolio cash
accounts and legal interests in the product are issued to investors.
The money is then invested in the underlying funds selected by
investors on the same day. No interest is earned on your portfolio cash
account.
How are interest payments made?
All interest payments are automatically deducted from the account nominated by investors by direct debit.
When are interest payments deducted?
| 100% Investment Loan |
Fixed for term
|
Rate set on or about 24 November 2008 for full term to 30 April 2016 |
Monthly in arrears for first 7 months commencing December 2008 up to 25 June 2009*
Then prepaid annually on 25 June each year commencing June 2009. |
| x |
Fixed annually
|
Rate set on or about 24 November 2008 for the period to 30 June
2010 (approximately 19 months) then reviewed in June each year for 12
months
|
Monthly in arrears for first 7 months commencing December 2008 up to 25 June 2009*
Then prepaid annually on 25 June each year commencing June 2009. |
| x |
Variable |
Reviewed monthly |
Monthly in arrears on the last business day of the month. |
| Annual Interest Loan |
Fixed rate Investment Loans only |
Rate set in June each year
|
Loan principal and interest repaid monthly in arrears over 12
months on the 24th of each month (or next business day) commencing
25 July 2009*. New loan advanced in June each year with lender’s
approval. |
*Important note: If you take out a Super
Investment Loan and do not have an Annual Interest Loan, on or about 25
June 2009, we will automatically deduct from your direct debit account
both the monthly interest payment due for June 2009 and the prepaid
annual interest for 2009/2010. If you have an Annual Interest
Loan we will only deduct the monthly payment due for June.
Super Investment Loan |
Fixed for term on or about 24 November 2008 for full term to 30 April 2016
|
Monthly in arrears for first 7 months commencing December 2008 up to and including 24 June 2009
Then prepaid annually on 25 June each year commencing June 2009. |
Annual Interest Loan |
Rate set in June each year
|
Loan principal and interest repaid monthly in arrears over 12
months on the 24th of each month (or next business day) commencing
25 July 2009*. New loan advanced in June each year with lender’s
approval.
|
*Important note: If you take out a Super
Investment Loan and do not have an Annual Interest Loan, on or about 25
June 2009, we will automatically deduct from your direct debit account
both the monthly interest payment due for June 2009 and the prepaid
annual interest for 2009/2010. If you have an Annual Interest
Loan we will only deduct the monthly payment due for June.
When will the final interest rates be published?
Interest
rates for all Investment Loan options will be determined on or about 24
November 2008 and will be available on our website.
What happens if I already have an Investment Loan with Perpetual?
Investors
who already have an Investment Loan with Perpetual may have to provide
additional information to verify their assets and income in order to
qualify for an additional Investment Loan. This only applies where the
aggregate loans the client has with Perpetual exceeds $600,000.
Can investors withdraw prior to the protection end date?
Investors
can withdraw prior to the protection end date on a quarterly basis,
however, any amount withdrawn will not have the benefit of capital
protection. Any withdrawal also requires repayment of a proportionate
amount of any outstanding loan amount. So depending on the amount of
the withdrawal proceeds, Non-Superannuation Investors may be required
to source additional cash to pay out their loans on an early withdrawal.
What reports will investors receive?
Investors in Perpetual Protected Investments - Series 4 will receive the following reports:
- a loan confirmation statement, confirming the loan amount, type and interest rate charged
- an investment confirmation, confirming their investment
- an initial investment statement showing their fund units and their protected amount
- a distribution statement detailing any distribution from their fund units
- an annual financial report for each financial year ending 30 June
(including financial statements) sent within three months of year end
(optional)
- an annual tax statement for each financial year ending 30 June,
generally sent by the end of August, detailing income and capital gains
information for your client's tax return. This includes realised
capital gains and losses on disposal of assets
- a periodic statement at least yearly or when they exit the product
- a withdrawal statement for any withdrawal(s) made from the product.
This information has been prepared by Perpetual
Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426.
It is general information only and is not intended to provide anyone
with financial advice and does not take into account anyone’s
individual objectives, financial situation or needs. You should
consider, with a financial and tax adviser, whether the information is
suitable for your circumstances. To the extent permitted by law, no
liability is accepted for any loss or damage as a result of any
reliance on this information. Interests in Perpetual Protected
Investments – Series 4 are offered in a combined financial services
guide and product disclosure statement dated 8 September 2008 (PDS)
which has been issued by Perpetual Investment Management Limited ABN 18
000 866 535 AFSL 23 44 26. The PDS should be considered before making
an investment decision. The PDS can be obtained by calling 1800 002 513
or visiting www.perpetual.com.au/ppi4. No company in the Perpetual
Group (Perpetual Group means Perpetual Limited ABN 86 000 431 827 and
its subsidiaries) guarantees the dynamic management strategy, the
performance of any fund, or the return of an investor’s capital.
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