There will be a Q&A session at the end of the webinar where you can ask questions, but we’ve answered a few ahead of time. If you have any more questions, please get in touch with our team.
Q: Why are these changes taking place?
Our primary objective over the past 18 months has been to re-establish the Fund’s long-term outperformance. And so far, we have so far continued last year’s strong performance into the 2022 financial year. The Fund has also outperformed the All Ordinaries Accumulation Index by 4% per annum since inception 12 years ago (returns net of all manager fees, listing costs and operating expenses). We believe that, along with continued outperformance, a reliable distribution yield can improve the attractiveness of the Fund for long-term investors.
Q: What was the previous distributions policy?
As a trust, the previous policy of the Fund was to pay 100% of the Fund’s taxable income every year in distributions. Due to the volatile nature of the Fund’s returns, that led to distributions as low as $0.01 per unit in 2020 and as high as $0.21 per unit in the 2018 financial year. The new policy is designed with the aim to smooth the distribution payments. Please note that the long-term returns from the Fund are still entirely dependent on the performance of the underlying portfolio of investments.
Q: What are the tax considerations of these changes?
Investors’ taxable income from the Fund is unchanged by the distributions policy. They will be taxed on all of the taxable income of the Fund, regardless of how much is distributed in cash. Where the taxable income is less than the cash distributions, the excess will be treated as a capital return, reducing investors’ cost base. Where the taxable income is greater than these distributions, investors will receive an increase in the cost base of their investment. These details will be provided in investors’ annual tax statements. Please seek advice from relevant financial, stockbroking, taxation, legal or other professionals before acting on any information.