FOR ADVISER USE ONLY
1. Advice and description
1.1. Invest into the Winton Global Alpha Fund
Following my evaluation of your personal circumstances, I have formed a strategy which aims to meet your stated goals and objectives. This strategy has been specifically tailored to your circumstances using an investment allocation consistent with your Investment Risk Profile.
We recommend that you invest the amount of $xxx,xxx into the Winton Global Alpha Fund. This fund provides the potential for the following key benefits:
· Attractive long-term returns
· Overall diversification, when combined with exposure to other asset classes or markets such as Australian or international equities
· Potential to generate positive returns in rising or falling markets.
This investment may be funded from <remember to include a clear strategy regarding how the investment may be financed i.e. cash, sell down/replace existing products, borrow money – if borrowing show any implications to the client.>
Insert commentary on the reasons for the recommendation and how it will meet the client’s goals and objectives.
Insert a description of the range of financial products, classes of financial products or investment strategies considered by the adviser in formulating their recommendation.
Please refer to Section X for more detailed information, including the potential benefits and disadvantages of this advice.
1.2. Product description
To obtain the full benefits of investing in the Winton Global Alpha Fund (the “fund”), funds should be invested for a minimum of 5 years.
The fund is managed by Winton Capital Management Limited (“Winton”). Winton is a global investment management company, based in London, who focus on statistical research in financial markets and global managed futures.
The fund invests in futures and cash. “Futures” refers to futures and forwards and the fund only trades futures that are traded on an exchange. Futures and forwards are contracts to buy or sell a particular asset on a specified future date at an agreed price.
They provide returns linked to movements in particular investments, such as a share, bond or interest rate index, a currency, or a commodity.
Listed futures are generally liquid (that is, they are readily bought and sold), valued in real time and can be inexpensive to trade when compared to these underlying investments. This means that futures are potentially an efficient way of accessing markets.
The fund can be expected to trade in over 100 individual futures markets worldwide across the following five broad categories:
Futures over: / Examples of markets traded (not exhaustive)Share indices / · S&P500 (US)
· SFE SPI 200 (Australia)
· Dow Jones EURO STOXX (Europe)
· Hang Seng (Hong Kong)
Bonds / · US Treasury 10 year and 5 year Bonds
· Australian Commonwealth 10 year and 3 year Bonds
· Japanese Government Bonds
Interest Rates / · Australian Bank Bills
· Canadian Bank Bills
· Fed Funds
Currencies / · Australian Dollar
· Brazilian Real
· British Pound
Commodities (meats, grains, energies, base metals and precious metals) / · Pork Bellies
· Coffee
· Crude Oil
· Aluminium
· Gold
The fund will take both long and short positions in futures.
· A long position means the fund has bought a futures contract and will make money if the price of the future goes up and conversely lose money if the price goes down.
· Short positions are the opposite. The fund will lose money if the price of the future goes up and make money if the price goes down.
The fund generally distributes income, if any, semi-annually as at 30 June and 31 December in proportion to your unit holdings. Any net gains on the trading of futures positions, as well as interest earned from investments in cash, will be distributed to you as income.
The Fund has accepts applications and redemptions daily. Please refer to the PDS for more information.
1.3. Benefits of the Winton Global Alpha Fund
Investing into the Winton Global Alpha Fund provides you with the following benefits:
Access to Winton Capital Management’s investment skill
Winton is a managed futures adviser specialising in the quantitative management of futures portfolios. It was founded in London in 1997 by David Harding.
During the 10 years since its inception, Winton has established a strong track record. It is ranked amongst the top performing futures managers and has performed well in absolute returns.
Attractive long term returns
Over the past 10 years, Winton’s flagship strategy1 has delivered annual compound returns of over 19% pa. The Winton Global Alpha Fund which was launched in May 2007 has also delivered strong returns for investors. Past performance is no indication of future performance.
Diversification
The returns delivered by Winton have historically had very low correlation with other major asset classes (eg: Australian shares, international shares, listed property and fixed interest). Due to this low correlation, including Winton in a diversified portfolio may lead to improved risk and return characteristic.
Potential to generate positive returns in rising or falling markets
As the fund will take both long and short position in futures contracts the fund has the potential to generate positive returns in rising or falling markets.
1.4. Disadvantages and risks of the Winton Global Alpha Fund
You should also be aware that there are risk factors which could affect the performance of an investment into the Winton Global Alpha Fund. A number of risks that should be considered before deciding whether to invest are provided below:
Over the
1 The Winton Futures Fund. The fund’s performance will differ from the Winton Futures Fund and these differences maybe significant. In particular, Macquarie charges fees to the fund that are not charged on the Winton Futures Fund. The performance of the Winton Futures Fund is provided only for the purpose of illustrating Winton’s experience and expertise in managing future’s portfolios.
Volatility
In order to achieve returns the strategy of the fund targets a defined but high level of risk, which means that there may be large movements in the unit price of the fund within short or long periods of time. In some circumstances, these movements may also result in a reduction or loss of your initial investment.
Use of leverage
Futures are leveraged instruments. Leverage may mean that a small movement in the market price of a future may result in an amplified profit or loss. Furthermore, the face value of the fund’s combined long and short positions will frequently be greater than 100% of the value of the fund. As the market value of these positions is variable, gains or losses may be incurred, and may be greater than for a fund that is not leveraged.
Investment Manager risk
The Investment Manager (Winton) may fail to achieve the fund’s performance or risk objectives. Many factors can negatively impact the Investment Manager’s ability to generate acceptable returns from its strategy, for example loss of key staff. In addition, if the Investment Manager were to resign or its appointment were to be terminated, it might not be possible to find a suitable replacement within a reasonable time frame.
Short positions
The fund may enter into short positions (as described on page 3 of the PDS). In taking short positions the fund bears the risk of an increase in the price of the investment over which the short position is taken. Such an increase could lead to a substantial loss.
Currency risk
Units in the fund are denominated in Australian Dollars. However, Winton actively trades currencies, and the fund’s futures positions are mostly denominated in US Dollars or other currencies. Currency exposure in the fund may be part of Winton’s trading strategy, or may be incidental. Movements in the exchange rate between the Australian Dollar and the other currencies may cause the value of the fund’s investments to decline. We may seek to mitigate unwanted currency risk in relation to foreign currency holdings by converting foreign currency holdings back to Australian dollars from time to time.
Liquidity of the fund’s investments
Certain types of futures positions can be difficult to purchase or sell, and this may prevent the fund from executing transactions within a timely period and at a fair price. However, Winton aims to invest in markets that are sufficiently liquid to enable them to enter and exit positions within a timely period and at a fair price.
All significant risks specific to an investment in the Winton Global Alpha Fund can be found on pages 6-7 of the PDS. Additional general risks are also disclosed on page 7 of the PDS. Prospective investors should carefully consider the risks involved in investing in the Winton Global Alpha Fund and obtain professional advice before deciding whether to invest.
2. Fees & Costs (for Product Replacement/Disclosure)
2.1. Fees & Costs
This section shows the significant fees and costs that apply in relation to the Winton Global Alpha Fund. All information in regard to fees and other costs set out on pages 8-11 of the PDS should be read, as it is important to understand the impact they have on the investment.
Further information about the remuneration received by [Insert Dealer Group] and your adviser is set out later in this SoA on page [x].
2.1.1. Establishment Costs
There is no establishment fee applicable to this investment.
2.1.2. Withdrawal Fee
There is no withdrawal fee applicable to this investment.
2.1.3. Management Fee
The fees and costs for managing your investment are 1.88% pa of the net asset value of the fund, comprised of the management fee and recoverable expenses.
2.1.4. Performance Fee
The fee payable to Winton and referable to the performance of the fund is 20.5% of the dollar value of net profit (if any) from futures trading, provided that any carried forward losses from futures trading have been made up.
Disclaimer
Winton Global Alpha Fund (“the fund”) is offered by, Macquarie Investment Management Limited ABN66002867003 (“MIML”).
Investments in the fund are not deposits with or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie Bank”) or of any Macquarie Group company and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank, MIML nor any other member company of the Macquarie Group guarantees any particular rate of return or the performance of the fund, nor do they guarantee the repayment of capital from the fund.
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