LM Australian Structured Products Fund (ARSN: 149875669)

LMASPF3 - Australian Equities: Fixed Income Capital Protection1


The LM Australian Structured Product Fund provides a series of closed end structured product offers linked to underlying Australian indices or stocks. Investment is currently available for the "LMASPF3 - Australian Equities: Fixed Income Capital Protection" which offers fixed income return and capital protection.1 The underlying assets are linked to shares in six Australian companies listed on the Australian Securities Exchange. The offer is now open and closes on 27 January 2012.

Investment Class: LMASPF3 - AUSTRALIAN EQUITIES: FIXED INCOME CAPITAL PROTECTION

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Product Manager

LM Investment Management Ltd.

Fixed Income Return Net to Investor2

AUD = 12.50%pa
EUR = 10.00%pa
GBP = 9.00%pa
NZD = 11.50%pa
USD = 9.00%pa
 

Investment Term

1 Year

Underlying Assets

Share in six Australian companies listed on the Australian Securities Exchange. The companies are:-
Sector                           Company
Banking & Finance      Commonwealth Bank (CBA.AX)
                                         Macquarie Group Limited (MQG.AX)
Mining                             Newcrest Mining Limited (NCM.AX)
                                         Rio Tinto Limited (RIO.AX)
Metals                             Fortescue Metals Group (FMG.AX)
Retail                              Wesfarmers Limited (WES.AX)

Notes Issuer and Protection Provider

Deutsche Bank AG, London Branch (rated well by the ratings houses).

100% Capital Protection

Subject to 70% barrier. Further details outlined on this page and full details contained in the PDS.
Launch Date 15 November 2011
Close Date 27 January 2012
Minimum Investment AUD1,000 or currency equivalent
Investment Allocation 100% Investment Allocation
Secondary Market Availability provided by Deutsche Bank AG3

 


Investment in the LM Funds is only accepted via and following recommendation of financial advisers, intermediaries and institutions. For complete details of the Fund, those recommending the LM Funds and investors should read the Product Disclosure Statement (PDS), both Parts 1 and relevant Part 2, including any relevant Supplementary PDS (available at www.LMaustralia.com) and information provided at the bottom of the page.
 


About the Offer

Investment via LMASPF3 - Australian Equities: Fixed Income Capital Protection provides fixed income linked to the performance of the shares of six Australian companies listed on the ASX, whilst carrying a capital protection feature from global institution, Deutsche Bank AG.

Fixed Income Return2,3

Fixed income return is paid at maturity regardless of the stock performance.

Capital Protection1,3

As well as receiving fixed income, there is a capital return at maturity subject to a 70% barrier. 100% capital return at maturity, provided no single stock drops by 30% or more. During the year, if any one of the stocks drops 30% or more of its original value, then returned investment capital will equate to the value of the lowest performing stock at maturity.
 
  • Stock hold option at maturity.

How Does it Work

Scenario 1:
Barrier Level Not Breached - Fixed Interest & 100% Return of Investment Capital at Maturity
If all of the basket trades above 70% of its original value during the investment year.
Investor Return: 100% of Capital
Plus
Fixed Interest Net:

AUD12.50%pa
EUR10.00%pa
GBP9.00%pa
NZD11.50%pa
USD9.00%pa


Figure 1


 
The graph above is not intended to depict any possible performance of the six shares on the Australian Securities Exchange. The graph is for illustration purposes so that example data can be assessed in context.

Scenarios 2 and 3:
Barrier Level Breached
If any or all of the shares in the basket trades below 70% of its original value
Investor Return: Capital value is equal to the lowest stock value at maturity (capital could be taken in shares of the specific company)
Plus
Fixed Interest Net:
AUD12.50%pa
EUR10.00%pa
GBP9.00%pa
NZD11.50%pa
USD9.00%pa

If the Barrier Level is breached it triggers different events ("Barrier Events") that may result in the Fund not receiving 100% of the initial investment capital at maturity. Outlined below are details of different events that could occur at maturity if the Barrier Level of 70% of the initial share value is breached.

If any one of the underlying shares closes at 70% or below of their initial share value at any time during the investment term the Fund will receive:-
 
(a) the fixed interest amount;and
(b) a percentage of the initial investment capital determined on the lowest performing share of the six underlying shares at maturity, but will not be more than 100% of initial investment capital.

For example: six months after commencement of the investment, the Commonwealth Bank of Australia (CBA) share performance falls to 70% of the initial share value, which breaches the 70% barrier. Then at the maturity date CBA share has recovered and returned to 110% of the initial share value, but at maturity the lowest performing share is Fortescue Metals Group and its performance is 90% of the initial share value, then 90% of the initial capital investment will be paid at maturity (see Figure 2 below for illustration). If however, at maturity the performance of all six underlying shares is 100% or above the initial share value, 100% of the investment capital will be returned. The return of investment capital at maturity will never exceed 100% (see Figure 3 below for illustration).


Figure 2



The graph above is not intended to depict any possible performance of the six shares on the Australian Securities Exchange. The graph is for illustration purposes to that example data can be assessed in context.

Figure 3


 
The graph above is not intended to depict any possible performance of the six shares on the Australian Securities Exchange. The graph is for illustration purposes so that example data can be assessed in context.

Payment of Investor Income and Capital if Barrier Level Breached and Less than 100% of Capital Returned3
 


If a Barrier Event occurs and less than 100% of capital is returned, the method which Deutsche Bank AG will pay the investments proceeds at maturity changes. At maturity the fixed interest component will be paid by Deutsche Bank AG in the relevant currency of investment, and the relevant percentage of investment capital payable will be returned to the Fund by way of shares in the lowest performing company.

LM will decide, after consultation with investors, to either:-

(a) sell the shares at the current market price applicable at maturity and upon receipt of the fixed interest component and sale proceeds of the shares automatically proceed to pay investor withdrawals relevant to their unit holdings;

or

(b) LM will continue to hold the shares until such time that the value of the shares increased to 100% of their initial value or LM considers it is in the best interest of investors to sell the shares, and the maturity date of that Investment Class will be extended accordingly.

In this scenario, LM would contact investors prior to maturity and allow them to choose to continue with their investment or to redeem their investment at maturity. The final decision to proceed to hold the shares after maturity will however be determined by LM. Non-Australian dollar investors should be aware that if LM decided to continue to hold the shares after maturity, non-Australian dollar investors will be subject to currency exchange exposure when the shares are sold and withdrawal proceeds are paid by the Fund.

 

Secondary Market3


Saleable in secondary market prior to maturity, provided by Deutsche Bank AG, however neither the fixed interest or return of capital will apply and will be subject to Deutsche Bank AG being able to facilitate the buy-back and normal market conditions prevailing at the time of trade.

Currencies of Investment

AUD, EUR, GBP, NZD and USD

Who can Invest

Investment into the LMASPF3 - Australian Equities: Fixed Interest Capital Protection can only be made via financial advisers, intermediaries and institutions.

The Fund will allow for investment from:- 
 
  • Individual/joint investors, sole traders, company investors, superannuation fund/trust investors or partnership investors investing directly in the series; and
  • Operators of global platforms, global portfolio bonds
 

For US Resident's Only

Investment Documents

Product Disclosure Statement Part 2 (NEW ZEALAND INVESTORS ONLY) File size: 988KB Pages: 14
Product Disclosure Statement Part 2 (EXCLUDING NEW ZEALAND INVESTORS) File size: 989KB Pages: 14
Product Disclosure Statement (PDS) Part 1 (EXCLUDING NEW ZEALAND INVESTORS), Application and AML Requirements File size: 2000KB Pages: 56
Product Disclosure Statement (PDS) Part 1 (NEW ZEALAND INVESTORS ONLY) File size: 1930KB Pages: 52



This communication is intended as general information only, not as financial product advice. LM is the product issuer, is licensed as a fund manager and not as a provider of financial product advice. LM recommends investors seek independent financial advice which takes into account their personal financial situation, objectives and needs and read and consider the Fund’s current Product Disclosure Statement (PDS), Parts 1 and 2, and any Supplementary PDS (available at www.LMaustralia.com or by contacting LM on the below details) before making any decision about the product. The PDS documents the Fund’s cooling off provisions.
 
1Capital protection is dependent on the performance of the underlying basket of shares, the issuer of the underlying structured product asset and the holding of the asset until maturity. For details on the capital protection mechanism, refer to the section headed “Capital Protection” included above and “Description of Capital Protection Mechanism” in Part 2 of the PDS.
 
2The issuer of the underlying Structured Product (Deutsche Bank) undertakes to pay the fixed income rate displayed, which is not dependant on the performance of the basket of shares but the underlying Issuer’s ability to perform, to the Fund if the Notes are held until maturity. Fixed Income amounts are net of advisor fees, non-resident withholding tax of 10%, fund fees and expenses.
 
3 The risks associated with this product (including the availability of secondary market sales and payment of coupon amount) are dependent on the performance of the underlying investment, and Deutsche Bank as the Issuer of the underlying structured product asset (Notes).

PRODUCTS AND SERVICES ARE NOT AVAILABLE TO THE HONG KONG PUBLIC