Measures in place to manage the Fund’s liquidity and security arrangements

Measures in place to manage the Fund’s liquidity:

Capital Protection Reserve

The Fund’s investment manager (IPO Wealth Pty Ltd) is entitled to receive a performance fee, which is the excess of the interest payments received from the borrower over the target return for the relevant investment period.

The investment manager is required to set aside up to 10% of the gross asset value of the Fund (Capital Protection Reserve) from its performance fees as follows:

• 10% of the Fund’s gross asset value below $20 million; plus
• 7.5% of the Fund’s gross asset value above $20 million and below $50 million; plus
• 5% of the Fund’s gross asset value above $50 million.

The purpose of the Capital Protection Reserve is to top up the Fund’s asset pool in the event of any capital losses. There is no certainty that the Capital Protection Reserve will be sufficient to cover any capital losses incurred by investors and repayment of investors’ capital is not guaranteed.

The balance of the Capital Protection Reserve as at 30 June 2018 was $526,802.74. There is also a provision of $651,358.89 for performance fees which will be added to the Capital Protection Reserve at 30 June 2019.

Please request a copy of the Fund’s disclosure document for more information.

Cash Reserve

The Fund’s investment manager (IPO Wealth Pty Ltd) aims to keep 10% of the Fund’s capital invested in cash and cash equivalent assets (such as term deposits offered by ADIs) or such similar credit worthy and liquid investments for liquidity purposes as determined by the investment manager from time to time. Any funds awaiting distribution to investors may be similarly invested at the discretion of the investment manager. However, in spite of the cash reserve, any failure or delay by Mayfair 101 Holdings in meeting its loan repayment obligations could cause significant delays in the Fund satisfying withdrawal notices and therefore you may not be able to access your money in the Fund in a timely fashion.

General Security Agreement

The loan between the Fund’s trustee, Vasco Trustees Limited and the borrower IPO Wealth Holdings Pty Ltd t/a Mayfair 101 Holdings includes a General Security Agreement (GSA). Generally speaking, a GSA provides security over all of the presently acquired and future property acquired by the borrower. The trustee can enforce its security interest if there is a default by Mayfair 101 Holdings under the loan agreement in certain circumstances.

Purchase Money Security Interest

The loan between the trustee and the borrower (Mayfair 101 Holdings) includes a Purchase Money Security Interest (PMSI). Generally speaking, a PMSI provides specific security over any assets purchased by the borrower using the borrowed funds. The trustee can enforce its security interest if there is a default by Mayfair 101 Holdings under the loan agreement in certain circumstances.

Financial Services Licence

IPO Wealth Pty Ltd is a Corporate Authorised Representative of DH Flinders Pty Ltd, holder of Australian Financial Services Licence No 353001.

Legal Adviser Engagement

The Fund’s Loan Agreement with IPO Wealth Holdings Pty Ltd, General Security Agreement and Purchase Money Security Interest were prepared and reviewed by qualified Australian legal practitioners.

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