BNP PARIBAS INVESTMENT FUNDS SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT
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BNP PARIBAS INVESTMENT FUNDS
SUPPLEMENTARY
PRODUCT DISCLOSURE STATEMENT Paris, June 2004
MFS™* Global Equity Trust
APIR: MIA0001AU
ARSN: 093 197 221
MFS™* Fully Hedged Global Equity Trust
APIR: ETL0041AU
ARSN: 112 310 442
MFS™* Global Growth Trust
APIR: ETL0066AU
ARSN: 120 566 878
Equity Trustees Limited ABN 46 004 031 298 – Responsible Entity and Issuer
Australian Financial Services Licence Number: 240975
BNP Paribas Investment Management (Australia) Limited ABN 88 003 165 160 – Investment Manager
Australian Financial Services Licence Number: 237405
* Registered in the European Community and the United States, among other countries.
Date Issued 1 June 2007BNP PARIBAS INVESTMENT FUNDS
SUPPLEMENTARY PRODUCT DISCLOSURE STATEMENT
Responsible Entity: Equity Trustees Limited ABN 46 004 031 298, AFSL No. 240975 (EQT)
Investment Manager: BNP Paribas Investment Management (Australia) Limited
ABN 88 003 165 160, AFSL No. 237405 (BNPPIM)
Date: 1 June 2007
This document is a Supplementary Product Disclosure Statement (SPDS) to the Product Disclosure Statement dated 16 August
2006 for the “BNP Paribas Investment Funds Product Disclosure Statement”, Issue No.1 (PDS).
This SPDS is to be read together with the PDS, with effect on and from 1 June 2007.
Terms defined in the PDS have the same meaning in this SPDS except where otherwise defined in the SPDS or where the
context otherwise requires.
The purpose of this SPDS is to update the PDS regarding the following.
Brand Name Change
BNP Paribas Investment Management (Australia) Limited will be changing its brand name from BNP Paribas Asset
Management to BNP Paribas Investment Partners effective 1 June 2007.
The section below on anti-money laundering is to be displayed under the Compliance and Taxation section, between the
"cooling off period" and "privacy statement" sections of the PDS.
Anti-Money Laundering
New anti-money laundering laws in Australia may require the Responsible Entity, Investment Manager and Custodian to obtain,
in the future, additional information to verify the identity of an investor and any underlying beneficial owner of units in a Fund and
the source of any payment. Where we request such information from you, processing of applications or withdrawals may be
delayed until the requested information is provided in a satisfactory form to the Responsible Entity, Investment Manager and the
Custodian. The Responsible Entity may reject any application where such documents are not provided to the Investment
Manager or Custodian prior to or accompanying, the investor application.
The section below on unit pricing discretions policy is to be displayed under the Fees and other costs section of the PDS. This
text replaces the last paragraph in the 'buy-sell spread" section (without a separate heading).
Unit pricing discretions policy
EQT has developed a formal written policy in relation to the guidelines and relevant factors taken into account when exercising
any discretion in calculating unit prices (including determining the value of assets and liabilities). A copy of the policy and,
where applicable and to the extent required, any other relevant documents in relation to the policy will be made available to
investors free of charge on request.
If you have any queries regarding this SPDS or the PDS, please contact:
Client Services
BNP Paribas Investment Management (Australia) Limited
GPO Box 269, SYDNEY NSW 2001
Phone: 1800 267 726 or (02) 9619 6291
Client Services Email: ip@au.bnpparibas.com
BNP Paribas Investment Management (Australia) Limited 2
GPO Box 269, Sydney NSW 2001 Australia
Telephone: +61 2 9619 6291 Fax: +61 2 9619 6951BNP PARIBAS INVESTMENT FUNDS
PRODUCT DISCLOSURE STATEMENT Paris, June 2004
MFS Global Equity Trust
TM*
APIR: MIA0001AU
ARSN: 093 197 221
MFS Fully Hedged Global Equity Trust
TM*
APIR: ETL0041AU
ARSN: 112 310 442
MFS Global Growth Trust
TM*
APIR: ETL0066AU
ARSN: 120 566 878
Equity Trustees Limited ABN 46 004 031 298 – Responsible Entity and Issuer
Australian Financial Services Licence Number: 240975
BNP Paribas Investment Management (Australia) Limited ABN 88 003 165 160 – Investment Manager
Australian Financial Services Licence Number: 237405
* Registered in the European Community and the United States, among other countries.
Date Issued 16th August 2006Contents
About the Managers .......................................................................................................................................3
MFS Trusts at a Glance .................................................................................................................................4
How are the MFS Global Equity and MFS Fully Hedged Global Equity Trusts managed? ..........................5
MFS Global Equity Trust ................................................................................................................................6
MFS Fully Hedged Global Equity Trust .........................................................................................................7
How is the MFS Global Growth Trust managed? ..........................................................................................8
MFS Global Growth Trust ..............................................................................................................................9
Managing Risk..............................................................................................................................................10
Investing, Switching, Withdrawals and Reporting........................................................................................11
Fees and other costs....................................................................................................................................13
Compliance and Taxation ............................................................................................................................17
How to Invest in the MFS Trusts..................................................................................................................20
MFS Trusts Application Form ......................................................................................................................21
MFS Trusts Application Form ......................................................................................................................23
MFS Trusts Application Form ......................................................................................................................25
Contact Us - Client Service Enquiries..........................................................................................................27
This Product Disclosure Statement (“PDS”) was issued on 16th August 2006.
This PDS for the MFS Global Equity Trust (“Trust”), the MFS Fully Hedged Global Equity Trust (“Trust”) and the MFS
Global Growth Trust (“Trust”) has been prepared and issued by Equity Trustees Limited (ABN 46 004 031 298) in its
capacity as the responsible entity of the Trusts (referred throughout this PDS as the “Responsible Entity”, “EQT”, “us” or
“we”).
The Responsible Entity has authorised the use of this PDS as disclosure to investors and prospective investors of an
investor directed portfolio service, master trust, wrap account or an investor directed portfolio service - like scheme
(“IDPS”), as well as direct investors.
This PDS is prepared for your general information only. It is not intended to be a recommendation by the Responsible
Entity, its employees, any associate of the Responsible Entity or any other person to invest in the Trusts. This PDS does
not take into account the investment objectives, financial situation or needs of any particular investor. You should not
base your decision to invest in the Trusts solely on the information in this PDS. You should consider the Trusts’ suitability
in view of your financial position and investment objectives and needs and you may want to seek professional advice
before making an investment decision.
The Responsible Entity and the Investment Manager do not guarantee the success, repayment of capital or any rate of
return on income or capital or investment performance of the Trusts. Past performance is no indication of future
performance.
Units in the Trusts are offered and issued by the Responsible Entity on the terms and conditions described in this PDS.
You should read this PDS because you will become bound by it if you become a unit holder of the Trusts.
The offer made in this PDS is available only to persons receiving this PDS in Australia (electronically or otherwise).
If you received this PDS electronically, we will provide a paper copy free upon request during the life of this PDS. Please
call BNP Paribas Investment Management Client Services on 1800 267 726 for a copy.
Unless otherwise stated, all fees quoted in the PDS are inclusive of GST.
Information in this PDS is subject to change. We will notify you of any changes that have a materially adverse impact on
you or other significant events that affect the information in this PDS. Any updated information which is not materially
adverse may be obtained:
• from your financial adviser
• by calling BNP Paribas Investment Management Client Services on 1800 267 726
• on BNP Paribas’ website at www.bnpparibas.com.au
A paper copy of the updated information will be provided free of charge on request.
BNP Paribas Investment Funds Product Disclosure Statement 2About the Managers
About the Investment Managers
MFS Investment Management
BNPPIM provides distribution and client servicing for
Massachusetts Financial Services (“MFS”) in Australia.
BNP Paribas Group MFS is a subsidiary of Sun Life Assurance Company of
BNP Paribas is a European leader of global magnitude Canada and is America’s oldest mutual fund
with over AUD $492 billion in funds under management organisation with a history of money management
as at 30 June 2006. BNP Paribas employs 110,000 dating from 1924.
staff worldwide and is represented in over 85 countries In 1932 MFS established an internal equity research
including all major financial centres. According to department and proprietary research approach. MFS
Fortune Global 500 (2006) BNP Paribas is the world’s has since grown to be one of the most respected names
th
34 largest corporation and fifth-largest bank in terms of in investment management managing over AUD $238
revenues. billion as of 31 March 2006. BNPPIM is delighted to
BNP Paribas is the oldest and one of the largest foreign have this close association with MFS.
banks in Australia. Established in Australia in 1881 BNPPIM currently distributes the MFS Global Equity
(principally for the financing of the wool trade between Trust, the MFS Fully Hedged Global Equity Trust and
Europe and Australia), BNP Paribas has offices in the MFS Global Growth Trust to Australian investors.
Sydney, Melbourne, Brisbane and Perth and is currently
a banker to over half of Australia’s top 150 companies.
BNP Paribas is celebrating 125 years of operations in
the Australian markets in 2006.
BNP Paribas commenced funds management through
Overlay Asset Management
its private banking services in 1848.
BNPPIM provides distribution and client servicing
BNP Paribas Asset Management’s (BNPPAM) core distribution for Overlay Asset Management (OAM) funds
strengths are in European equity and fixed interest management capabilities in Australia and New Zealand.
portfolio management and global distribution. BNPPAM
has developed an open architecture approach to OAM, wholly owned by BNPPAM, was established in
distribution which includes its internal portfolio 1998 to focus on currency overlay solutions primarily for
management and external “best of breed” portfolio corporate treasuries, pension and superannuation
managers. BNPPAM will often take an economic funds, and as a sub-advisor to fund managers. As of 30
interest in such portfolio managers ensuring stability June 2006, OAM had in excess of AUD $15 billion
and matching of goals between BNPPAM and the assets under management.
external portfolio manager. OAM, as a specialist currency manager, uses
quantitative techniques for active or passive currency
BNPPAM has taken an economic interest in and
management. OAM also manages currency hedge
globally distributes:
funds. As a passive currency manager, OAM aims to
• Fischer Francis Trees and Watts – a global bond continuously manage foreign exchange exposures to
manager and manager of global inflation linked minimise tracking error and lower execution costs.
income securities;
• Overlay Asset Management – a specialist currency
overlay manager; About the Responsible Entity
• Fauchier Partners – a fund of hedge fund and fund
of long/short strategies manager, and
• Cooper Neff – convertible arbitrage and other
single hedge fund strategies.
BNP Paribas Investment Management (Australia) Equity Trustees Limited
Limited (BNPPIM) is responsible for distributing the
group’s funds management capabilities in Australia and Equity Trustees Limited (“EQT”) is the Responsible
New Zealand, and has a strategic alliance with Entity of the MFS Global Equity Trust, the MFS Fully
Massachusetts Financial Services (MFS) which has Hedged Global Equity Trust and the MFS Global
been in place since June 2000. As of 30 June 2006, Growth Trust. EQT has appointed BNPPIM as
BNPPIM had raised in excess of AUD $11 billion for the investment manager. BNPPIM is responsible for
above managers. appointing sub-investment managers to the Trusts,
including MFS and OAM.
BNPPIM provides superior client servicing and the
EQT was established in 1888 by its own special Act of
flexibility to meet client objectives and guidelines.
Parliament to provide secure trustee services to the
Frequent and regular communication with clients
people of Victoria. After 118 years EQT has expanded
ensures that they:
its services to meet the requirements of its clients.
• are fully appraised of their investment; As a trustee company EQT prides itself on offering truly
• are aware of current views and strategy on the personalised service to its clients and is committed to
markets relevant to their investment; and acting in the best interests of its clients.
• know their transactions history, income
distributions and taxation reporting requirements.
BNP Paribas Investment Funds Product Disclosure Statement 3MFS Trusts at a Glance
Trust Name MFS Global Equity Trust MFS Fully Hedged Global Equity MFS Global Growth Trust
Trust
ARSN 093 197 221 112 310 442 120 566 878
APIR Code MIA0001AU ETL0041AU ETL0066AU
Eligible Investors The Trusts are only available to wholesale clients as defined in Section 761G of the Corporations Act 2001. Refer
page 17.
Investment Objective To seek capital appreciation over To seek capital appreciation over the To seek capital appreciation by
the longer term by investing in a longer term by investing in a diversified investing in a diversified portfolio of
diversified portfolio of global shares portfolio of global shares (fully global shares (unhedged) which
(unhedged). hedged). originate from growth industries and
are expected to outperform over the
longer term.
Investments All types of common stocks and All types of common stocks and All types of common stocks and
equivalents of international and equivalents of international and equivalents of international and
domestic issuers. domestic issuers. Spot and forward domestic issuers.
exchange contracts and related
derivatives.
Risk Profile High Risk – commensurate with equity investing.
Benchmark Index The Index is the Morgan Stanley The Index is the Morgan Stanley The Index is the Morgan Stanley
Capital International (MSCI) World Capital International (MSCI) World Capital International (MSCI) All
Index (with net dividends reinvested Index (with net dividends reinvested Country World Growth Index (with
before fees) measured in Australian before fees) fully hedged into net dividends reinvested before
dollars. Australian dollars. fees) measured in Australian
dollars.
Minimum Investment1 $500,000. No minimum for additional investments.
Minimum Balance1 $500,000
2
Access to funds Usually within 3 business days after receipt of the redemption request.
Income Distribution At least annually (30 June)
Valuation Daily
Unit Price Variable – generally determined each NSW banking business day based on the net asset value of the Trust
Management costs 3 Capped at 0.7688% for the life of Capped at 0.7996% for the life of this Capped at 0.7688% for the life of
this PDS PDS this PDS
Buy/Sell spread 0.70% (buy spread 0.35% / sell spread 0.35%)
Switching Yes. No additional charges apply for switches; however the relevant spread will apply for all switches to/from the
MFS Global Growth Trust.
Entry Fee / Exit Fee Nil
(% of investment)
Recommended 5 years plus is the recommended investment timeframe.
Investment
Timeframe
Investment Manager4 BNPPIM has wholly subcontracted BNPPIM has subcontracted hedging to BNPPIM has wholly subcontracted
investment management to MFS. OAM and hence OAM is responsible investment management to MFS.
for passively hedging the portfolio into
Australian dollars. BNPPIM has
subcontracted all other investment
management functions to MFS.
1
The minimum balance is $500,000. The Responsible Entity may in its discretion accept an initial investment amount lower
than $500,000 where subsequent additional investments ensure the minimum balance is equal to or greater than $500,000 in
the near term. Where a redemption request takes the balance below the minimum level of $500,000, a full redemption is
required.
2
Refer to page 11 for further details on withdrawal periods.
3
Includes GST (after allowing for Reduced Input Tax Credits (“RITCs”). Refer to page 13 and 14 for details of fees.
4
EQT may change the Investment Manager for the Trusts at any time, without previous notice to investors. However, if EQT
considers that a change in Investment Manager is a material change or significant event, it will give you 30 days notice before
the change takes effect.
BNP Paribas Investment Funds Product Disclosure Statement 4How are the MFS Global Equity and MFS Fully
Hedged Global Equity Trusts managed?
MFS’ philosophy is based on the belief that original, Valuation
fundamental, bottom-up research is the best means of
Earnings models are used to project 24-36 month earnings
uncovering high quality companies with above
forecasts and to identify potential change in stock
average, sustainable earnings growth and attractive
valuations. Buy, hold, or sell ratings for every security are
investment opportunities.
assigned along with a 12-18 month price target for each
Investment Style "buy". At any given time, approximately 550-650 stocks
merit a “buy” rating.
The MFS Global Equity team believes that stock
selection is the most reliable method of adding value to Relative Value Analysis
a client's portfolio. Their (on the ground) research
Relative value analysis completes the portfolio construction
provides an effective opportunity to identify
process with the selection of approximately 80 - 120
inefficiencies in global markets and to invest in high
stocks. Valuations and expected growth rates of “buy”
quality companies (at attractive valuations) which have
rated securities are compared to determine which will be
above average sustainable growth.
included in the portfolio. In-depth cash flow analysis is
employed to ensure accuracy in comparing companies on
a global basis.
Sell Discipline
The MFS Global Equity portfolio manager may sell a stock
if:
• the sell target price has been reached,
• the fundamentals decline, or
• another stock is seen to offer better value.
Portfolio Construction
Exposure to a single industry is limited to 25% of a
portfolio. The maximum allocation to any given security is
5% of the portfolio at purchase. Country allocations are an
outcome and are not targeted. The Trust can have up to
15% invested in emerging markets.
Currency Management
MFS Global Equity Trust
Investment Process Screening MFS does not manage the currency exposure of their
global equity investments. Currency hedging is rare and
Screens are applied to reduce a universe of 5,000
usually only undertaken for defensive purposes and as a
global securities to 2000 - 2500 which are actively
part of the security selection process. Therefore, there is
followed by the MFS equity research analysts. These
no overall currency management strategy for the MFS
screens exclude companies with unattractive
Global Equity Trust and the Trust is considered to be
fundamentals (eg. negative, low, or volatile EPS
“unhedged”.
growth), are relatively illiquid, or domiciled in countries
with obvious political risk or economic crises. MFS Fully Hedged Global Equity Trust
As currency exposures can have a significant impact on
performance, the MFS Fully Hedged Global Equity Trust
has been established to offer the performance of the MFS
Global Equity Trust less the effect of currency movements.
The fully hedged trust aims to achieve this by applying a
currency overlay that fully hedges, as far as is practical, all
foreign currency exposures into Australian dollars. This
approach is passively applied meaning that the currency
overlay manager’s objective is to remove currency risk
without trying to add to returns by actively managing
currency positions. This Trust is considered to be “fully
hedged”.
Risk Management
MFS monitors the portfolio's risk exposure for the purpose
of determining that investment guidelines and
diversification parameters are being followed. The MFS
Compliance Department measures and evaluates the
accounting, financial, and operational activities of MFS and
its affiliates from a regulatory perspective. Managers
within the Equity Department review risk exposures on a
regular basis and work with the Portfolio Management
teams to keep risk exposures consistent with the portfolio's
investment discipline and preset standards.
BNP Paribas Investment Funds Product Disclosure Statement 5MFS Global Equity Trust
This Trust is registered with the Australian Securities and Trust Size History:
Investments Commission (“ASIC”) as the MFS Global Equity
Trust. The inception date of this Trust is 1 July 1997. 1500
Investment Objective
1250
The Trust is designed for investors seeking capital
appreciation over the longer term by investing in a diversified
portfolio of international shares (unhedged) and aims to 1000
outperform its benchmark (the MSCI in AUD) over rolling 3
to 5 year periods, before taking into account Trust fees and
$ million
expenses. 750
Investments Held
500
The Trust invests in all types of ordinary shares and
equivalents of US and non-US issuers. The MFS’ style
ensures that companies are selected as opposed to 250
countries which may lead to country over/underweightings
relative to the MSCI World Index.
0
Dec Dec Dec Dec Dec Dec Dec Dec Jun
Top 10 Holdings 98 99 00 01 02 03 04 05 06
at 30 June 2006
Source: BNP Paribas Securities Services
Security Country % of Portfolio
Trust Performance (after fees)
Reckitt Benckiser Great Britain 3.3
The table below shows how the Trust has performed since
Nestle SA Switzerland 3.2 inception. Please call 1800 BNP PAM (1800 267 726) for more
Johnson & Johnson United States 3.1 recent performance data.
Roche Holdings Switzerland 2.2 To Net Trust Variation to
American Express United States 2.2 30 June 2006 Return Benchmark Benchmark
Air Liquide France 2.2 3 months % -2.4 -4.5 2.1
Schneider Electric France 2.1 1 year % 23.4 20.0 3.4
Sanofi-Aventis France 2.0
3 years % p.a. 14.1 12.9 1.2
UBS AG Switzerland 1.9
5 years % p.a. 1.3 -2.0 3.3
Walt Disney Co United States 1.9
7 years % p.a. 5.0 0.7 4.3
Regional Weightings Inception % p.a. 8.0 5.5 2.5
MFS Source: BNP Paribas Securities Services (net returns calculated by BNP Paribas
Securities Services after taking into account Trust fees and expenses and assumes
To Global Variation to reinvestment of income).
30 June 2006 Equity Benchmark benchmark Benchmark: MSCI World Index (with net dividends reinvested), in Australian dollars,
before fees (unhedged).
Asia ex Japan 2.3 3.7 -1.4 Trust inception: 1 July 1997.
These figures represent past returns and are not necessarily an indicator of future returns.
Emerging 2.6 0.0 2.6
Markets
Europe ex UK 33.2 20.3 12.9 Growth of $500,000 Invested (after fees).
In dollar terms, the Trust has achieved its objective over time
Japan 8.0 11.5 -3.5
after fees have been deducted.
North America 38.4 53.3 -14.9 $1,050,000 $1,003,294
United 13.5 11.3 2.2
Kingdom
$850,000 $805,547
Trust Size
AUD $1.35 billion at 30 June 2006, MFS also manages Australian
sourced Global Equity mandates.
$650,000
Australian sourced MFS investments as at 30 June exceeded
MFS Global Equity Fund
AUD $5 billion.
MSCI World Index (net div) $A
$450,000
Jul97 Jul98 Jul99 Jul00 Jul01 Jul02 Jul03 Jul04 Jul05 Jun06
Source: BNP Paribas Securities Services.
These figures represent past returns and are not necessarily an indicator of future
returns.
BNP Paribas Investment Funds Product Disclosure Statement 6MFS Fully Hedged Global Equity Trust
This Trust is registered with the Australian Securities Growth of $500,000 Invested (after fees).
and Investments Commission (“ASIC”) as the MFS Fully In dollar terms, the Trust has achieved its objective over
Hedged Global Equity Trust. The inception date of this time after fees have been deducted.
Trust is 14 January 2005. $700,000
MFS Fully Hedged Global Equity Trust
Investment Objective
MSCI World Index (net div) (AUD)
$638,590
fully hedged into AUD
The Trust is designed for investors seeking capital
appreciation over the longer term by investing in a
diversified portfolio of international shares which are
$600,000
fully hedged into Australian dollars. The Trust aims to $604,029
outperform its benchmark (the MSCI fully hedged
benchmark in AUD) over rolling 3 to 5 year periods,
before taking into account Trust fees and expenses.
Investments Held $500,000
Jan05 Jul05 Jan06 Jun06
The MFS Fully Hedged Global Equity Trust invests
Source: BNP Paribas Securities Services
directly into the MFS Global Equity Trust and the
currency hedging is undertaken by OAM. Refer to These figures represent past returns and are not necessarily an indicator
of future returns.
Currency Management below.
Top 10 Holdings at 30 June 2006
Please refer to the table on the previous page which Currency Management
refers to the Top 10 Holdings of the MFS Global Equity The MFS Fully Hedged Global Equity Trust aims to
Trust. manage all overseas equity positions back into
Australian dollars. That is, for each overseas equity
Regional Weightings and cash holding in the Trust, the overseas currency
Please refer to the table on the previous page which position related to that holding is, as far as is practical,
refers to the Regional Weightings of the MFS Global 100% hedged back into Australian dollars.
Equity Trust. OAM receives weekly reports of the currency exposure
Trust Size at 30 June 2006 of the underlying global equity portfolio as managed by
MFS. OAM then implements currency transactions to
The inception date of this Trust is 14 January 2005. ensure outstanding currency positions in the underlying
Since then the Trust has grown to AUD $358.1 million portfolio are hedged back to Australian dollars. OAM
as at 30 June 2006. may use their judgment to determine whether the cost
of daily transacting outweighs the benefit of
Trust Performance (after fees)
implementing a transaction. Rebalancing of the
The table below shows how the Trust has performed since portfolio’s currency exposure back to Australian dollars
inception. Please call 1800 BNP PAM (1800 267 726) for should occur at least monthly and more regularly if the
more recent performance data. currency manager believes appropriate.
Performance:
To Net Trust Variation to
30 June 2006 Return Benchmark Benchmark
3 months % -0.9 -3.3 2.4
6 months % 6.2 2.7 3.5
1 year % 21.0 15.5 5.5
Inception % p.a. 18.7 14.2 4.5
Source: BNP Paribas Securities Services (net returns calculated by BNP
Paribas Securities Services after taking into account Trust fees and expenses
and assumes reinvestment of income).
Benchmark: MSCI World Index (with net dividends reinvested), fully hedged into
Australian dollars, before fees.
Trust inception: 14 January 2005.
These figures represent past returns and are not necessarily an indicator of future
returns.
BNP Paribas Investment Funds Product Disclosure Statement 7How is the MFS Global Growth Trust managed?
MFS’ philosophy for Global Growth is also based upon Finally, the MFS growth team wants to identify stocks where
active management and fundamental research. The MFS their growth expectations differ from the market. MFS seeks to
growth team seek to identify earnings growth that is not “look ahead” because companies can look expensive on near
anticipated by the market in order to identify stocks with the term estimates. Looking ahead allows MFS to identify where
potential for price appreciation. Fundamental research is the growth in future years has been underappreciated by the
most reliable way to identify companies with superior market. MFS analysts seek to recognise a company’s
earnings and cash flow growth prospects. strengthening competitive position before the market or when a
Investment Style company is poised to benefit from an emerging growth
opportunity. Early recognition of the duration of growth is
The MFS Global Growth investment process consists of the
important especially where it can be longer or greater than the
following steps:
market expects. By recognising improving growth trends, MFS
analysts can invest in companies when multiples are low and
subsequently generate superior returns for investors as the
company’s multiple expands.
Buy Discipline
In constructing the MFS Global Growth Trust, the MFS team
buy stocks upon gaining conviction, on dips caused by
temporary factors, and when growth potential is not
appreciated by the market.
Sell Discipline
The MFS team sells securities when they reach price targets,
when there is a change in investment thesis, or when they
have a better alternative idea. The portfolio contains
approximately 110 to 140 high conviction names, is biased
toward growth industries, and is generally all-cap in nature.
Portfolio Construction
Exposure to a single industry is limited to 25% of the portfolio.
The maximum allocation to any given security is 5% of the
portfolio at purchase. Country allocations are an outcome and
are not targeted. The Trust can have up to 25% invested in
emerging markets.
Fundamental Research
Analysts are responsible for following companies within their
Currency Management
specific industry coverage, and typically cover two sectors. MFS does not manage the currency exposure of their global
Analysts develop and maintain their own in-depth financial equity investments. Currency hedging is rare and usually only
models, visit company management, and interview undertaken for defensive purposes and as a part of the
competitors, suppliers and customers in order to form an security selection process. Therefore, there is no overall
opinion on each company. They seek to identify well- currency management strategy for the MFS Global Growth
managed companies with a sustainable competitive Trust and this Trust is considered to be “unhedged”.
advantage that are able to generate superior returns.
Risk Management
Ultimately, this process leads to a “buy,” “hold,” or “sell”
rating for each stock that MFS follow. MFS monitors the portfolio's risk exposure for the purpose of
determining that investment guidelines and diversification
MFS analysts follow 2000-2500 global securities and have parameters are being followed. The MFS Compliance
buy ratings on 550-650 of them. Department measures and evaluates the accounting, financial,
and operational activities of MFS and its affiliates from a
Stock Selection regulatory perspective. Managers within the Equity
Department review risk exposures on a regular basis and work
Growth stocks identified must exceed minimum growth
with the Portfolio Management teams to keep risk exposures
hurdles of revenue growth and earnings per share growth.
consistent with the portfolio's investment discipline and preset
The screen also identifies companies with consistent growth
standards.
over time.
Using the analysts’ research, the MFS growth team analyse
a company’s fundamentals to identify the stocks that fit with
our buy criteria. MFS seeks companies with:
• Strong secular growth outlook
• Large potential opportunity set
• Sustainable competitive advantage
• Superior business model
• Strong management team
BNP Paribas Investment Funds Product Disclosure Statement 8MFS Global Growth Trust
This MFS Global Growth Trust is registered with the
Australian Securities and Investments Commission Trust size at 30 June 2006
(“ASIC”) as the MFS Global Growth Trust. The The MFS Global Growth Trust was launched for
inception date of this Trust is 16th August 2006. Australian investors on 16 August 2006.
Investment Objective
Performance (after fees)
The Trust is designed for investors seeking capital
appreciation over the longer term by investing in The MFS Global Growth Trust is a new fund and
companies MFS believes will have superior growth therefore does not have performance history.
prospects and returns. The Trust aims to outperform Performance information quoted below is based on an
the MSCI All Country World Growth Index (in AUD) asset-weighted composite of MFS Global Growth
over a full market cycle, typically three to five years, Equity accounts (reported in AUD).
before taking into account Trust fees and expenses.
The inception date of this composite is 1 December
Investments Held 2003. An account is eligible for inclusion in this
The Trust invests in all types of ordinary shares and composite if: it is a mutual fund, institutional trust or
equivalents of US and non-US issuers. The Trust seeks separate account managed in accordance with this
to add value by using the bottom-up fundamental style, full discretionary authority has been granted, and
research of MFS equity investment professionals to the account has at least AUD $7 million in net assets.
select equity securities that are expected to
Please call 1800 BNP PAM (1800 267 726) for more
demonstrate superior long-term earnings growth.
recent performance data.
All of the information below on investment allocations is
based on a representative portfolio, managed as part of Net
the MFS Global Growth Equity strategy. Composite
To Return Benchmark Variation to
Top 10 Holdings at 30 June 2006 30 June 2006 (AUD) (AUD) Benchmark
1 month % 1.4 1.3 0.1
Security Country Sector
3 months % -6.3 -6.0 -0.3
Total S.A. France Energy
1 year % p.a. 21.2 19.8 1.4
BHP Billiton Australia Basic Materials
LVMH France Retailing 2 Years % p.a. 9.8 8.6 1.2
HSBC Holdings U.K. Financial Services Inception %p.a. 13.1 11.2 1.9
Tesco U.K. Retailing Source: Factset, SPAR
Benchmark: MSCI All Country World Growth Index (in AUD)
Procter & Gamble United States Consumer
Composite inception: 1 December 2003.
Staples
These figures represent past returns and are not necessarily an indicator of
GlaxoSmithKline U.K. Health Care future returns.
WPP Group U.K. Leisure
Johnson & Johnson United States Health Care
Roche Holding Switzerland Health Care
Regional Weightings
MFS
Global
Variation to
To Growth
benchmark
30 June 2006 Composite Benchmark
Asia ex Japan 7.4 3.7 3.7
Emerging 8.8 7.1 1.7
Markets
Europe ex UK 29.2 19.2 10.0
Japan 9.1 10.6 -1.5
North America 34.5 48.9 -14.4
United 11.0 10.5 0.5
Kingdom
BNP Paribas Investment Funds Product Disclosure Statement 9Managing Risk
There are a number of significant risks that may potentially “basis risk”, which refers to the possibility that derivatives
affect the value of your investment and the return from the positions may not move perfectly in line with the physical
Trusts. Investment in any Trust is subject to a degree of risk, security. As a consequence, the derivative positions cannot
including possible delays in the payment of withdrawal be expected to perfectly hedge the risk of the physical
proceeds and loss of income and capital. These risks have to security. In addition, derivatives can lose value because of a
be considered in the context of the timing of your decision to sudden price move, or because of the passage of time.
make an investment in, or a withdrawal from, the Trusts, in
particular, the then state of the market and the length of time
Currency Risk (MFS Global Equity Trust and MFS Global
you either plan to invest in, or have been invested in the Trusts. Growth Trust)
Whilst it is not possible to identify every risk factor relevant to Currency risk is the sensitivity of the portfolio value to movement in
investing in these Trusts, the following identifies a number of foreign exchange rates. MFS quantifies the risk of each individual
risk factors which may affect the returns of these Trusts. security but does not actively manage currencies in aggregate.
The Responsible Entity and the Investment Manager do not Currency Risk (MFS Fully Hedged Global Equity Trust)
guarantee the capital, any rate of return on income or capital
or investment performance of the Trust. Investment in any Currency risk, as defined above, is the sensitivity of the portfolio
fund is subject to risks, including possible delays in the value to movement in foreign exchange rates. OAM aims to
payment of withdrawal proceeds, and loss of income and minimise this risk by hedging foreign exchange positions back into
capital. the Australian dollar.
Interest Rate Risk Counterparty Credit Risk
Counterparty risk is the sensitivity of security or portfolio value due
Changes in official interest rates can directly or indirectly to a counterparty in a transaction who is unwilling or unable to
impact (negatively or positively) on investment returns. For honour the terms of the contract. Counterparty risk arises when two
instance, rising interest rates can have a negative impact on entities enter into a contract, agreeing to the terms and conditions of
a trust’s or company’s value as increased borrowing costs a financial transaction involving the exchange of cash flows, under
may cause earnings to decline. As a result, the unit value or which they are obligated for a stated period. MFS exercises extreme
share price may fall. conservatism when assessing the credit quality of our
Market Risk counterparties. The following set of guidelines is used by MFS in
assessing counterparty risk: Review financial information concerning
The value of, and returns from, many investments may
counterparty (equity analyst summary); Review credit rating of
fluctuate significantly over short periods of time. These
counterparty's parent corporation; Assess the counterparty's history
fluctuations can be caused by changes in interest rates,
of sound management evidence by, a record (either individual or
economic cycles, investor sentiment, political, social,
together with its parent organisation, if any) of at least five years'
technological and legal events. These changes can directly
continuous operation as a dealer of the particular derivative or the
or indirectly create an environment that influences
adviser's past experience with the counterparty, if any; Individual is
(negatively or positively) the value of the investments in the
responsible for assessing whether counterparty is financially
Trusts. In addition, a downwards move in the general level
responsible. This should be reviewed at least annually. Portfolio
of the equities market can have a negative impact on the
managers have access to reports highlighting exposure to
performance of the Trusts.
counterparties.
Company Specific Risk
The value of investments can vary because of changes to a Operational Risk
company’s management, product distribution or the
company’s business environment. An investment in shares Operational risk addresses the risk of trading and back office errors
carries the risk of a decline in value or a failure to pay that result in a loss to the portfolio. For example, this could be the
distributions because of a fall in investor confidence, poor result of negligence, ineffective securities processing procedures,
management or changes in a company’s competitive computer systems problems and human error. MFS has an
environment or internal operations. Operational Risk Management group under the supervision of the
Chief Compliance Officer. The group provides a framework for an
Stock Selection Risk enterprise-wide focus on risk management in order to ensure that
MFS may make poor investment decisions resulting in sub- business and operational risks are addressed across MFS. The
standard returns (for example where MFS invests in a group also helps create an overall risk awareness among staff and
company that significantly underperforms the share market). management across the company. In addition, the group
This risk is mitigated to some extent by the knowledge and coordinates the organisation’s corporate risk identification and
experience of the Investment Manager and the management activities that are implemented by the individual
diversification of stocks held in the portfolio. business units. The Chief Compliance Officer reports to the Chief
Regulatory Officer and is a member of the Risk and Compliance
Liquidity Risk Committee. The Risk and Compliance Committee, which meets
There may be times when securities may not be readily sold monthly, provides a company- wide forum for the review of
(for example, in a falling market where companies may significant business, operating and regulatory risks and for
become less liquid). However, trading volumes of stocks are monitoring the company’s internal control and compliance systems.
generally sufficient to satisfy liquidity requirements when
necessary. Note that neither the Responsible Entity nor the
Investment Managers guarantee the liquidity of the Trusts’ Fund Risk
investments. As with all managed funds, there are risks particular to each of the
Trusts including: that the Trusts could be terminated; the fees and
Derivatives expenses could change, EQT is replaced as Responsible Entity or
BNPPIM is replaced as Investment Manager. There is also risk that
In the case of derivatives, fluctuations in price will reflect investing in the Trusts may give different results than investing
movements in the underlying assets, reference rate or index directly in the securities because of income or capital gains accrued
to which the derivatives relate. The use of derivative in the Trusts and the consequences of withdrawal by other
positions to hedge the risk of physical securities involves investors.
BNP Paribas Investment Funds Product Disclosure Statement 10Investing, Switching, Withdrawals and Reporting
Valuation of the Trusts & Application Price of Units Access to your investment
The value of the investments of the Trust are generally The Responsible Entity will generally allow investors of the
determined every business day in accordance with the Trusts to access their funds within 3 business days of receipt of
Trusts’ constitutions. A business day is defined as a redemption request for the relevant amount. However, the
being any day other than Saturday or Sunday on which constitutions of the Trusts allow the Responsible Entity to make
banks are open for general banking business in payment up to 30 days after receipt of a redemption request
Sydney. (which may be extended at the discretion of the Responsible
The value of a unit is determined on the basis of the Entity in accordance with the Trusts’ constitutions).
value of the investments of the Trust (after taking into Where a Trust is not liquid, as defined in the Corporations Act
account any liabilities), in accordance with the Trusts’ 2001 (Cth), an investor does not have a right to withdraw from
constitutions. The application price of a unit in the Trust the Trust and can only withdraw where the Responsible Entity
is the value of a unit plus an allowance for transaction makes a withdrawal offer to investors in accordance with the
costs required for buying investments. Corporations Act. The Responsible Entity is not obliged to
This means that the value of a unit can fluctuate up or make such offers. A Trust will be liquid if at least 80% of the
down with the value of the assets of the Trust. When assets of the Trust are liquid assets. Broadly, liquid assets are
calculating the number of units allotted for applications, money in an account or on deposit with a financial institution,
we divide the application monies by the entry unit price. bank accepted bills, marketable securities, other prescribed
For unit redemptions, we divide the amount you wish to property and other assets that the Responsible Entity
redeem by the exit unit price. For full redemptions, we reasonably expects can be realised for their market value
multiply the total number of units you own by the exit within the period specified in the constitutions for satisfying
unit price. redemption requests while the Trust is liquid.
Minimum Balance Switching
The minimum balance is $500,000. The Responsible Investors can switch at no additional charge, however, the
Entity may in its discretion accept an initial investment relevant spreads will apply for all switches to/from the MFS
amount lower than $500,000 where cashflows will Global Growth Trust. Switching between the MFS Global
ensure the minimum balance is equal to or greater than Equity Trust and the MFS Fully Hedged Global Equity Trust is
$500,000 in the near term. Where a redemption request treated as redeeming your existing investment in one Trust and
takes the balance below the minimum level of making an equivalent dollar value application in the second
$500,000, a full redemption is required. Trust. In this process, units will be redeemed at the net asset
value of the first Trust and new units will be purchased at the
Making an Application net asset value of the second Trust. Switching may incur
The offer in this PDS is only available to “Wholesale Capital Gains Tax. You should seek professional investment
Clients” as defined under the Corporations Act 2001 advice from your financial accountant or planner.
(refer to Eligible Investors page 17). In order to switch your investments, simply complete a
To invest, please follow the instructions outlined in the redemption form for your current Trust and an application form
“How to Invest” section commencing on page 20 then at the back of the current PDS for the Trust you wish to switch
complete the application form accompanying this PDS. to and forward these to BNP Paribas Investment Management.
Please note that cash cannot be accepted. Please contact the BNP Paribas Investment Management
Alternatively, if you are investing via an IDPS you may Client Services Team if you require a current PDS or
need to complete a separate application form and redemption form (contact details listed in “Contact Us” on page
provide a cheque payable to your IDPS provider. 27). Switching processing is usually within 3 business days.
Applications can be made between 9:00am and 5:00pm Withdrawals and withdrawal price
on any business day. However, for unit pricing
The withdrawal price of a unit in the Trust is the net asset value
purposes and income accrual purposes any application
of a unit less an allowance for transaction costs required for
received after 2:00pm Sydney time will generally be
selling investments. Refer to section ‘Valuation of the Trusts
treated as having been received the following business
day. If you are investing via an IDPS you may need to and Application Price of Units.’ For further information, please
refer to “Minimum Balance” above.
contact the relevant IDPS provider regarding the cut-off
times for pricing purposes. Making Withdrawals
EQT reserves the right to refuse any application without Investors of the Trusts can withdraw from their investment
giving a reason. If for any reason EQT refuses or is accounts in a number of ways:
unable to process your application to invest in the • Written advice by post –
Trusts, EQT will return your application money to you. BNP Paribas Investment Management (Applications &
You will not be entitled to any interest on your Redemptions) c/- Unit Registry
application money in this circumstance. Any interest PO Box R209
accrued will be credited to the benefit of the Trusts. ROYAL EXCHANGE NSW 1225
For further information, please refer to “Minimum
Balance” above. • Written advice by fax (02) 9222 0010.
All withdrawals, unless otherwise agreed, should be made on a
Additional investments redemption form to ensure that a record of the withdrawal
You can make additional investments in the Trusts at exists. All withdrawal requests should be received by 2:00pm
any time by sending us your additional investment Sydney time for processing that day. Any withdrawal received
amount together with your investor details (refer to after that time will generally be treated as being received the
“Making an Application” above). All applications for following day. Alternatively, if you have invested indirectly
additional investments, unless otherwise agreed, should through an IDPS, you may need to provide your withdrawal
be made on an application form to ensure that a record request directly to your IDPS provider.
of the investment exists.
BNP Paribas Investment Funds Product Disclosure Statement 11Terms for Fax Withdrawals Investors Liability
EQT will refuse to comply with a fax request if the The constitutions of the Trusts provide that unless there
sender does not satisfactorily identify themselves as the is a separate agreement with an investor, no investor
investor. Cheques will only be drawn payable to the can be called on to contribute to the Trusts or to their
investor or authorised nominee. By lodging a faxed creditors in the event of their being any deficiencies in
withdrawal, you release, discharge and agree to assets of the Trusts. It is, therefore, expected that
indemnify EQT from and against any and all losses, investors will not be under any obligation if a deficiency
liabilities, actions, proceedings, account claims and in assets was to occur.
demands arising from any fax withdrawal. In general, an investor’s liability is limited to the amount
You also agree that any payment made in accordance (if any) which remains unpaid in relation to their
with the fax instructions shall be a complete satisfaction subscription for units in the Trusts.
of the obligations of EQT, notwithstanding any fact or Non-Listing of Units
circumstance including that the payment was made The Trusts’ units are not listed on any Stock Exchange.
without your knowledge or authority. You agree that if
the payment is made in accordance with these Termination of Trusts
instructions, you and any person claiming through or The Responsible Entity may resolve at any time to
under you shall have no claim against EQT in relation to terminate a Trust (if it provides investors with notice)
the payment. and liquidate it in accordance with the Trusts’
Joint Account Operation constitutions and the Corporations Act. Upon
termination and after conversion of a Trusts’ assets into
Joint accounts are normally accessible to both of the cash and payment of, or provision for, all costs, and
named individuals. For joint accounts, either signatory liabilities (actual and anticipated), the net proceeds will
is required to sign the redemption request. Please be distributed pro-rata amongst all investors according
ensure both signatories sign the declaration in the to the number of units they hold in the Trust.
application form.
Income Distributions
Appointment of Authorised Nominee to
An income distribution comprises your share of any “net
Operate Account income” (including taxable capital gains) earned by the
Investors may elect to appoint an authorised nominee. Trusts. The Trusts’ constitutions allow for a distribution
The relevant sections on the application form need to period of up to 12 months. Distribution calculations are
be completed, including name and signature of the at least yearly at June end with an annual distribution
nominee, signature of investor and date. paid as soon as possible thereafter.
Only investors can appoint authorised nominees. If you You can have your income distribution reinvested or
appoint an authorised nominee we suggest you ensure: directly credited to your nominated bank account. If you
• That they do not appoint another nominee do not make an election, your income distribution will
• That the appointment lasts until cancelled by you automatically be reinvested.
in writing or by the Responsible Entity. Reporting to Investors
The Responsible Entity may cancel an appointment by Regular and simple to read reports are provided to
giving the investor 14 days notice in writing. If an investors of the Trusts, they comprise:
appointment is cancelled, the Responsible Entity will not
• Annual Report to Investors, including financial
be obliged to act on the instructions of the authorised
statements and Auditor’s Report (you may elect not to
nominee. If the instructions are varied in writing, the
receive this report);
Responsible Entity will only act in accordance with the
varied instructions. • Transaction Reports confirming all additional
investments, withdrawals, units held in the Trusts,
By completing and lodging the relevant sections on
application unit price, value of investments, payments
authorised nominees on the application form, you
and fees (available periodically and on request);
release, discharge and agree to indemnify EQT from
and against any and all losses, liabilities, actions, • Distribution Reports issued annually notifying you of
proceedings, account claims and demands arising from the value of your investment, income from your
EQT acting on the instructions of your authorised investments and confirming your requirements for
nominee. reinvestment or payment to your bank account;
• Investment Reports issued monthly and quarterly
You also agree that any instructions of your authorised
nominee to EQT, which are acted on by EQT, shall be a provide information on the Trusts including a review of
market conditions, investment strategy and
complete satisfaction of the obligations of EQT,
notwithstanding any fact or circumstance, including that performance, as well as a market outlook (emailed upon
request or also available on BNP Paribas’ website);
the instructions were made without your knowledge or
authority. • Tax Reports issued yearly summarises the income and
capital gains components of distributions, as well as
You agree that if the authorised nominee’s instructions
credits for dividend imputation and foreign tax (if any).
are followed by EQT, you, and any person claiming
through or under you, shall have no claim against EQT The Trusts are disclosing entities and have regular
in relation to the instructions. reporting and disclosure obligations under the
Corporations Act.
Powers of an Authorised Nominee
You can call the BNP Paribas Client Service Team on
An authorised nominee can, but is not limited to:
1800 267 726 or your IDPS provider or visit BNP
1. Apply for additional investment units Paribas’ website at www.bnpparibas.com.au for
2. Request that income distribution instructions be altered updated information on performance, unit prices, fund
3. Redeem all or part of your investment and direct where sizes and other general information about the Trusts.
and to whom this redemption shall be paid
4. Make enquiries and obtain copies of statements in
relation to the status of your investment.
If a company is appointed as an authorised nominee,
the powers will extend to any director and authorised
officer of the company. If a partnership, the powers will
extend to all partners.
BNP Paribas Investment Funds Product Disclosure Statement 12Fees and other costs
Below is a Consumer Advisory Warning which is required by law to be displayed at the beginning of the Fees and other
costs section of this PDS. The fee example given in the Consumer Advisory Warning does not relate to any investments
described within this PDS, and is a standard example defined by the regulations.
Detailed information about the fees and other costs related to the Trust described in this PDS are provided in the section
following the Consumer Advisory Warning.
Consumer Advisory Warning
The following Consumer Advisory Warning is a requirement of the Australian Securities and Investments Commission
(ASIC). As these Trusts are only available to wholesale investors, our management and contribution fees are not
negotiable.
DID YOU KNOW?
Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns.
For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduce your final return 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 better member services justify higher fees and
costs.
You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask the Fund or your financial adviser.
TO FIND OUT MORE
If you would like to find out more, or see the impact of fees based on your own circumstances, the Australian Securities and Investments
Commission (ASIC) website (www.fido.asic.gov.au) has a managed investment fee calculator to help you check out different fee options.
Fees and other costs table
This table shows fees and other costs that you may be charged. These fees and costs may be deducted from your
money, from the returns on your investment or from the Trust’s assets as a whole.
Taxes are set out in another part of this document.
You should read all the information about fees and costs because it is important to understand their impact on your
investment.
TYPE OF FEE OR COST AMOUNT HOW AND WHEN PAID
Fees when your money moves MFS Global MFS Fully Hedged MFS Global
in or out of the Trust Equity Trust Global Equity Growth Trust
Trust
Establishment fee There is no establishment fee payable when you
Nil Nil Nil
The Fee to open your investment set up your investment in the Trust.
Contribution fee Not applicable.
The fee on each amount
The constitution of the MFS Fully Hedged Global
contributed to your investment
Equity Trust and the MFS Global Growth Trust
Nil Nil Nil allows us to charge a contribution fee of up to
6% per annum (excluding GST) of the applicable
moneys for this Trust.
We do not intend to charge any amount for the
life of the PDS.
Withdrawal fee Not applicable.
The fee on each amount you The constitutions of the Trusts allow us to
take out of your investment charge a withdrawal fee of the aggregate
Nil Nil Nil redemption price of the units being redeemed
(1% per annum excluding GST for the MFS
Global Equity Trust, 6% per annum excluding
GST for the MFS Fully Hedged Global Equity
Trust, and 6% per annum excluding GST for the
MFS Global Growth Trust).
We do not intend to charge any amount for the
life of the PDS.
Termination fee There is no termination fee payable when you
Nil Nil Nil
The fee to close your investment withdraw from the Trust.
BNP Paribas Investment Funds Product Disclosure Statement 13You can also read
