Howard Mortgage Fund

The Howard Mortgage Fund and Howard Wholesale Mortgage Fund are closed to new and additional investments, including the reinvestment of distributions

Update of information

Since the introduction of the Ongoing Withdrawal Facility in October 2010, 10% of the Howard Mortgage Fund's net assets has been made available each quarter to investors seeking to redeem their units. Since that time, the Howard Mortgage Fund has distributed more than $1.5 billion to investors through the various withdrawal facilities previously approved by investors.

Fidante Partners Limited, as responsible entity of the Howard Mortgage Funds, has conducted a detailed review of all aspects of the funds and their operations. Following this review, and after careful consideration, we have determined that it is currently in the best interests of investors as a whole to now commence a process of returning capital to all investors on a monthly basis. This initiative will also require some other changes to the operation of the funds which are outlined below.

Summary of changes
Capital to be returned to all investors each month On or around 7 January 2013, we will make an initial repayment of capital to you of $0.10 per unit - which equates to a 10% return of capital - based on the value of your investment in the relevant fund as at 31 December 2012. For example, if you held 100 units on 31 December 2012, you will receive a capital payment of $10.00. Then, from February 2013 we will start repaying capital to you initially at the rate of $0.05 per unit per month, based on the value of your investment in the relevant fund as at 31 December 2012. Payments will be made within the first 10 business days of each month. For the Howard Mortgage Fund, these capital repayments will be made through the automatic redemption of units at the relevant time having a value equal to the capital repayment. For the Howard Wholesale Mortgage Fund, these capital repayments will result in a fall in the unit price of the fund in proportion to the level of capital distributed at that time. There will be no change to the number of units that you currently hold in the fund. The capital repayment rate will be monitored on an ongoing basis, and may change in the future depending upon the realisation of the Howard Mortgage Fund's assets. You will not need to contact us to lodge a withdrawal request.
Suspension of existing withdrawal facilities The pro rata return of capital to all investors is replacing the existing regular withdrawal facilities. The Periodic Small Balance Withdrawal Facility and the Ongoing Withdrawal Facility have been suspended with effect from 15 November 2012. As a result, any withdrawal requests submitted for the December quarter 2012 will not be processed.
Closure of the Howard Mortgage Fund and Howard Wholesale Mortgage Fund to new and additional investments, including the reinvestment of distributions Effective 15 November 2012, the Howard Mortgage Fund and Howard Wholesale Mortgage Fund are closed to new and additional investments, including the reinvestment of distributions. Regular savings plans have also been cancelled. We will continue to monitor all aspects of the operations of the Howard Mortgage Funds on an ongoing basis, and we will consider whether any changes need to be made to reflect the circumstances of the funds and notify investors of any such changes, should they occur. This ongoing monitoring will include the appropriateness of the monthly capital repayments and income distributions and the suspension of the ongoing withdrawal and periodic small balance withdrawal facilities.

Summary of changes

Capital to be returned to all investors each month
On or around 7 January 2013, we will make an initial repayment of capital to you of $0.10 per unit - which equates to a 10% return of capital - based on the value of your investment in the relevant fund as at 31 December 2012. For example, if you held 100 units on 31 December 2012, you will receive a capital payment of $10.00.

Then, from February 2013 we will start repaying capital to you initially at the rate of $0.05 per unit per month, based on the value of your investment in the relevant fund as at 31 December 2012. Payments will be made within the first 10 business days of each month.

For the Howard Mortgage Fund, these capital repayments will be made through the automatic redemption of units at the relevant time having a value equal to the capital repayment.

For the Howard Wholesale Mortgage Fund, these capital repayments will result in a fall in the unit price of the fund in proportion to the level of capital distributed at that time. There will be no change to the number of units that you currently hold in the fund.

The capital repayment rate will be monitored on an ongoing basis, and may change in the future depending upon the realisation of the Howard Mortgage Fund's assets.

You will not need to contact us to lodge a withdrawal request.

Suspension of existing withdrawal facilities
The pro rata return of capital to all investors is replacing the existing regular withdrawal facilities.

The Periodic Small Balance Withdrawal Facility and the Ongoing Withdrawal Facility have been suspended with effect from 15 November 2012. As a result, any withdrawal requests submitted for the December quarter 2012 will not be processed.

Closure of the Howard Mortgage Fund and Howard Wholesale Mortgage Fund to new and additional investments, including the reinvestment of distributions
Effective 15 November 2012, the Howard Mortgage Fund and Howard Wholesale Mortgage Fund are closed to new and additional investments, including the reinvestment of distributions. Regular savings plans have also been cancelled.

We will continue to monitor all aspects of the operations of the Howard Mortgage Funds on an ongoing basis, and we will consider whether any changes need to be made to reflect the circumstances of the funds and notify investors of any such changes, should they occur. This ongoing monitoring will include the appropriateness of the monthly capital repayments and income distributions and the suspension of the ongoing withdrawal and periodic small balance withdrawal facilities.

Changes to Goods and Services Tax (GST) from 1 July 2012

This update is to be read together with the Fund's Product Disclosure Statement (PDS) (if applicable) and has been issued to update the PDS regarding GST changes that commence on 1 July 2012.

All fees and costs expressed in the Fund's PDS (if applicable) are quoted inclusive of any GST and net of reduced input tax credits (RITCs) that are expected to be available to the Fund.

For acquisitions before 1 July 2012, the prescribed RITC rate was 75%. Under recent changes to the GST law, acquisitions by affected trusts from 1 July 2012 can attract RITCs at a prescribed rate of either 75% or 55%, depending on the nature of the acquisition. However, under the finalised rules, "mortgage schemes" (as defined), which includes this Fund, are not subject to the changes. As a result, the Fund is not affected by the changes. Fees stated in the PDS (if applicable) are rounded to two decimal places.

The information in this update is up-to-date at the time of preparation. However, some information can change from time to time. For updated information about the Fund, please contact your financial adviser, call our Investor Services team on 13 51 53 or refer to this website. We will also send you a copy of the updated information free of charge upon request.

Overview

The Howard Mortgage Fund was established in 1985 and has built a reputation as one of Australia's most experienced mortgage managers. The Fund invests in a diversified portfolio of primarily commercial mortgage loans and interest bearing securities. The Fund may also invest in cash and other short-term investments.

Interests in the Howard Mortgage Fund (ARSN 090 464 074) and Howard Wholesale Mortgage Fund (ARSN 093 720 159) are offered by Fidante Partners Limited (ABN 94 002 835 592) (AFSL 234668). All mortgage funds carry some investment risk. They are not bank deposits. Past performance is not a reliable indicator of future performance.

Investment objective

To provide investors with a diversified income producing portfolio that aims to provide regular income and capital stability.

Investment approach

Our mortgage lending team employs a conservative approach to managing the mortgage investments of the Fund. We adopt an active approach to managing investments in the interest bearing and other short-term securities portion of the portfolio.

WARNING TO UNITHOLDERS - Unsolicited offer to purchase units

We received a request from Direct Share Purchasing Corporation Pty Ltd (DSPC) for a copy of the unitholder register for the Howard Mortgage Fund. Under the Corporations Act, we are required to provide this information to DSPC. We provided the information to DSPC in late August 2010. We can confirm that DSPC and National Exchange Pty Ltd (NEX), a related entity of DSPC has sent unsolicited offers to unitholders to purchase their units at a price below the current value of the units, i.e. below $1 per unit. If you receive an offer from DSPC or NEX, we strongly recommend that you carefully read the offer including the offer price and timing of any payment and seek financial advice prior to making any decision. Further information about unsolicited offers may be found on ASIC's website MoneySmart in the Investing section.

For more information contact your financial adviser or call our Investor Services team on 13 51 53.