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CORPORATIONS REGULATIONS 2001 - SCHEDULE 10E

Form and content of Product Disclosure Statement--simple managed investment scheme

(regulation 7.9.11W)

   

1   Length and font size for Product Disclosure Statement for simple managed investment scheme

             (1)  The length of a Product Disclosure Statement for a simple managed investment scheme to which Subdivision 4.2C of Division 4 of Part 7.9 applies (not including any matter in writing that is applied, adopted or incorporated by the Statement) must not exceed:

                     (a)  if it is printed on A4 pages--8 pages; or

                     (b)  if it is printed on A5 pages--16 pages; or

                     (c)  if it is printed on DL pages--24 pages; or

                     (d)  otherwise--if it is formatted to be printed on A4 pages, 8 A4 pages.

             (2)  The minimum font size for text in the Statement is:

                     (a)  for the name, address, ABN (if applicable), ACN (if applicable), ARSN and AFSL (if applicable) of the person giving the Statement--8 points; and

                     (b)  for all other text--9 points.

Note 1:       The Product Disclosure Statement must be worded and presented in a clear, concise and effective manner--see subsection 1013C(3) of the Act.

Note 2:       A person required to a give a Product Disclosure Statement to a vision-impaired person must comply with its obligations under the Disability Discrimination Act 1992 .

2   Minimum content of Product Disclosure Statement for simple managed investment scheme

             (1)  The Product Disclosure Statement must include sections which must be numbered and titled as follows:

                       1.  About [name of responsible entity]

                       2.  How [name of simple managed investment scheme] works

                       3.  Benefits of investing in [name of simple managed investment scheme]

                       4.  Risks of managed investment schemes

                       5.  How we invest your money

                       6.  Fees and costs

                       7.  How managed investment schemes are taxed

                       8.  How to apply.

             (2)  The Statement must include:

                     (a)  a table of contents that sets out the titles mentioned in subclause (1); and

                     (b)  the telephone number of the responsible entity for the simple managed investment scheme to enable a person who invests in the simple managed investment scheme to request a copy of the following under regulation 7.9.11Z:

                              (i)  a copy of the Statement; and

                             (ii)  a copy of a matter in writing that is applied, adopted or incorporated by the Statement.

             (3)  The Statement must:

                     (a)  advise a person reading the Statement that:

                              (i)  it is a summary of significant information and contains a number of references to important information (each of which forms part of the Statement); and

                             (ii)  persons should consider that information before making a decision about the simple managed investment scheme; and

                            (iii)  the information provided in the Statement is general information only and does not take account of the person's personal financial situation or needs; and

                            (iv)  the person should obtain financial advice tailored to the person's personal circumstances; and

                     (b)  display the advice:

                              (i)  at or near the beginning of the document; and

                             (ii)  in a prominent position and style.

             (4)  The Statement:

                     (a)  may include additional sections after sections 1 to 8; and

                     (b)  may include other information;

to an extent that does not have the effect of contravening subclause 1(1).

             (5)  The Product Disclosure Statement does not need to indicate that a particular requirement is not applicable to the simple managed investment scheme.

Note:          The Act, as modified in accordance with Subdivision 4.2C of Division 4 of Part 7.9, requires information to be included in the Product Disclosure Statement only to the extent to which the requirement is applicable to the simple managed investment scheme.

3   Contents of section 1 (About [name of responsible entity])

             (1)  Section 1 of the Product Disclosure Statement must describe, in the form of a summary:

                     (a)  the responsible entity and its role in operating the simple managed investment scheme; and

                     (b)  the investment manager, if the investment manager is different from the responsible entity.

             (2)  If there is more than 1 investment manager, the Statement may describe a particular manager by applying, adopting or incorporating a matter in writing.

4   Contents of section 2 (How [name of simple managed investment scheme] works)

             (1)  Section 2 of the Product Disclosure Statement must describe, in the form of a summary:

                     (a)  how the simple managed investment works; and

                     (b)  the interests that members acquire.

             (2)  Section 2 must:

                     (a)  if applicable--describe, in the form of a summary, the minimum investment amounts; and

                     (b)  provide information about the structure of the simple managed investment scheme; and

                     (c)  state, in general terms, that the price of interests will vary as the market value of assets in the simple managed investment scheme rises or falls; and

                     (d)  describe, in the form of a summary, how members can increase or decrease their investment by acquiring interests or disposing of interests; and

                     (e)  state, in general terms, that in some circumstances, such as when there is a freeze on withdrawals, members may not be able to withdraw their funds within the usual period upon request; and

                      (f)  describe the frequency of distributions and explain how distributions are calculated.

             (3)  The responsible entity:

                     (a)  may provide more detailed information on the acquisition and disposal of interests; and

                     (b)  may provide the information by applying, adopting or incorporating a matter in writing.

5   Contents of section 3 (Benefits of investing in [name of simple managed investment scheme])

             (1)  Section 3 of the Product Disclosure Statement must, before setting out any other information, describe, in the form of a summary:

                     (a)  the significant features of the simple managed investment scheme; and

                     (b)  the significant benefits of the simple managed investment scheme.

             (2)  The responsible entity may provide additional information about:

                     (a)  any feature or benefit of the simple managed investment scheme; or

                     (b)  other features and benefits of the simple managed investment scheme; or

                     (c)  other features and benefits of simple managed investment schemes;

by applying, adopting or incorporating a matter in writing.

6   Contents of section 4 (Risks of managed investment schemes)

             (1)  Section 4 of the Product Disclosure Statement must include statements to the following effect:

                     (a)  all investments carry risk;

                     (b)  different strategies may carry different levels of risk, depending on the assets that make up the strategy;

                     (c)  assets with the highest long-term returns may also carry the highest level of short-term risk.

             (2)  Section 4 must describe, in the form of a summary, the significant risks of the particular simple managed investment scheme.

             (3)  Section 4 must describe the significant risks of managed investment schemes (to the extent only that the description required by subitem (2) has not already described the risk) by including statements to the following effect:

                     (a)  the value of investments will vary;

                     (b)  the level of returns will vary, and future returns may differ from past returns;

                     (c)  returns are not guaranteed, and members may lose some of their money;

                     (d)  laws affecting registered managed investment schemes may change in the future;

                     (e)  the level of risk for each person will vary depending on a range of factors, including:

                              (i)  age; and

                             (ii)  investment time frames; and

                            (iii)  where other parts of the member's wealth are invested; and

                            (iv)  the member's risk tolerance.

             (4)  The responsible entity may provide additional information about significant risks of managed investment schemes by applying, adopting or incorporating a matter in writing.

7   Contents of section 5 (How we invest your money)

             (1)  Section 5 of the Product Disclosure Statement must describe, in the form of a summary, the investment options offered by the simple managed investment scheme.

             (2)  Section 5 must state, in the form of a warning, that the person should consider:

                     (a)  the likely investment return; and

                     (b)  the risk; and

                     (c)  the person's investment timeframe;

when choosing an option in which to invest.

New simple managed investment scheme

             (3)  If the simple managed investment scheme has never previously been offered to investors, and does not offer any investment option mentioned in subclauses (4) and (5) about which section 5 can give information, section 5 must give the following information for the investment option that the responsible entity reasonably believes has the least volatile underlying assets (whether or not section 5 gives that information for any other investment option):

                     (a)  the name of the option and a short description of it, including the type of investors for whom it is intended to be suitable;

                     (b)  a list of the asset classes in which the option invests, setting out the strategic asset allocation of the asset classes in the form of a range or otherwise;

                     (c)  a description of the investment return objective of the option;

                     (d)  the minimum suggested time frame for holding the investment;

                     (e)  a description, in the form of a summary, of the risk level of the option.

Balanced investment option

             (4)  If the simple managed investment scheme has a balanced investment option (within the meaning given by item 101 of Schedule 10), section 5 must give the following information for the balanced investment option (whether or not section 5 gives that information for any other investment option):

                     (a)  the name of the option and a short description of it, including the type of investors for whom it is intended to be suitable;

                     (b)  a list of the asset classes in which the option invests, setting out the strategic asset allocation of the asset classes in the form of a range or otherwise;

                     (c)  a description of the investment return objective of the option;

                     (d)  the minimum suggested time frame for holding the investment;

                     (e)  a description, in the form of a summary, of the risk level of the option.

No balanced investment option

             (5)  If the simple managed investment scheme does not have a balanced investment option (within the meaning given by item 101 of Schedule 10), section 5 must give the following information for the investment option under which the entity has the most funds invested (whether or not section 5 gives that information for any other investment option):

                     (a)  the name of the option and a short description of it, including the type of investors for whom it is intended to be suitable;

                     (b)  a list of the asset classes in which the option invests, setting out the strategic asset allocation of the asset classes in the form of a range or otherwise;

                     (c)  a description of the investment return objective of the option;

                     (d)  the minimum suggested time frame for holding the investment;

                     (e)  a description, in the form of a summary, of the risk level of the option.

             (6)  Section 5:

                     (a)  must make provision for each investment option which is not presented in section 5 in accordance with subclause (3), (4) or (5); and

                     (b)  may make provision for the option by applying, adopting or incorporating matter in a document that:

                              (i)  includes the information mentioned in subclause (3), (4) or (5); and

                             (ii)  presents it in the way mentioned in the subclause.

             (7)  The responsible entity:

                     (a)  must provide information about how a member may switch the member's investments; and

                     (b)  must provide information about:

                              (i)  whether the simple managed investment scheme's investment options may be changed; and

                             (ii)  if so, how the options may be changed; and

                     (c)  must describe, in the form of a summary, the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of investments relating to the simple managed investment scheme; and

                     (d)  may provide the information in paragraphs (a) to (c), and any additional information about investment options, by applying, adopting or incorporating a matter in writing.

8   Contents of section 6 (Fees and costs)

             (1)  For each investment option of the simple managed investment scheme that is presented in section 5 in detail in accordance with subclause 7(3), section 6 of the Product Disclosure Statement must state:

                     (a)  the cost of acquiring the option; and

                     (b)  the fees and costs that are charged in relation to the option.

Note:          The statement will be made using the template set out in subclause (3).

             (2)  Before setting out any other substantive material, section 6 must:

                     (a)  set out the Consumer Advisory Warning in clause 221 of Schedule 10 ; and

                     (b)  give a concise example in the form set out in the Consumer Advisory Warning in clause 221 of Schedule 10.

             (3)  Section 6 must set out the fees and costs for each investment option that is presented in section 5 in detail in accordance with subclause 7(3), using the following template:

 

TYPE OF FEE OR COST

AMOUNT

 

Fees when your money moves in or out of the fund

 

 

Establishment fee

 

 

Contribution fee

 

 

Withdrawal fee

 

 

Termination fee

 

 

Management costs

 

 

The fees and costs for managing your investment

 

[If there are other service fees, such as advisor service fees or special request fees, include a cross reference to the document that contains the information mentioned in paragraph (10)(a).] .

             (4)  The template is to be completed in accordance with Division 3 of Schedule 10 (including definitions applicable to that Division), except that:

                     (a)  clauses 203, 205, 206 and 207 and subclause 208(2) do not apply; and

                     (b)  the reference in clause 204 to clause 205 and clause 206 does not apply; and

                     (c)  the example in subclause 208(1) is to be treated as stating:

                            "(for example, by using an asterisk with a footnote stating 'The amount of this fee can be negotiated')".

             (5)  Section 6 must set out the information about fee changes set out in paragraph 209(k) of Schedule 10.

             (6)  Section 6 must:

                     (a)  state that the information in the template can be used to compare costs between different simple managed investment schemes; and

                     (b)  state concisely, and in general terms, that fees and costs can be paid directly from the person's account or deducted from investment returns.

             (7)  Section 6 must give a worked example as follows:

                     (a)  if the simple managed investment scheme does not have a balanced investment option (within the meaning given by item 101 of Schedule 10), section 6 must give a worked example for the default investment option;

                     (b)  if the simple managed investment scheme does not have a default option, and does not have a balanced investment option, section 6 must give a worked example for the investment option under which the entity has the most funds invested;

in accordance with Divisions 5 and 6 of Schedule 10 (including definitions applicable to those Divisions), except that clauses 211 and 220 do not apply.

             (8)  Section 6:

                     (a)  must refer to the calculator provided by ASIC on its FIDO website or a similar website operated by or on behalf of ASIC; and

                     (b)  may also refer to the calculator (if any) provided by the responsible entity on its website; and

                     (c)  must state that each calculator referred to can be used to calculate the effect of fees and costs on account balances.

             (9)  If additional fees may be payable to a financial advisor, section 6 must:

                     (a)  state, in the form of a warning, that additional fees may be paid to a financial advisor if a financial advisor is consulted; and

                     (b)  refer to the Statement of Advice in which details of the fees are set out.

           (10)  The responsible entity:

                     (a)  must provide the fees and costs of each of the investment options in accordance with Schedule 10, and may do so by applying, adopting or incorporating a matter in writing; and

                     (b)  may provide more detailed information about fees and costs by applying, adopting or incorporating a matter in writing.

9   Contents of section 7 (How managed investment schemes are taxed)

             (1)  Section 7 of the Product Disclosure Statement must state, in the form of a warning, that:

                     (a)  investing in a registered managed investment scheme is likely to have tax consequences; and

                     (b)  persons are strongly advised to seek professional tax advice.

             (2)  Section 7 must also include statements to the following effect:

                     (a)  registered managed investment schemes do not pay tax on behalf of members;

                     (b)  members are assessed for tax on any income and capital gains generated by the registered managed investment scheme.

             (3)  The responsible entity may provide additional information about:

                     (a)  taxation matters relating to the registered managed investment scheme; or

                     (b)  taxation matters relating to registered managed investment schemes;

by applying, adopting or incorporating a matter in writing.

10   Contents of section 8 (How to apply)

             (1)  Section 8 of the Product Disclosure Statement must:

                     (a)  describe, in the form of a summary, how to invest in the simple managed investment scheme; and

                     (b)  explain the cooling-off period that applies to the simple managed investment scheme; and

                     (c)  explain how to make a complaint (by means that include the provision of relevant contact details).

             (2)  The responsible entity:

                     (a)  may provide more detailed information about cooling-off periods, complaints and dispute resolution; and

                     (b)  may provide that information by applying, adopting or incorporating a matter in writing.




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