Artesian Corporate Bond Fund
- Class A
Reference Guide
Issue Date 19 July 2022

About this Reference Guide

Contents

This Reference Guide (“RG”) has been prepared and issued by Equity Trustees Limited(“Equity Trustees”, “we” or “Responsible Entity”). The information in this document forms
part of the Product Disclosure Statement (“PDS”) for the Artesian Corporate Bond Fund Class A (“Fund”) dated 19 July 2022.

1. Investing in the ArtesianCorporate Bond Fund - Class A
2. Managing your investment

The information provided in this RG is for general information only and does not take into
account your individual objectives, financial situation or needs. You should obtain financial
and taxation advice tailored to your personal circumstances.

3. Withdrawing your investment
4. Features and benefits
5. Additional information on fees
and costs

Updated information
Information in the PDS and this RG is subject to change. Before making an investment in theFund, you should ensure that you have read the current PDS and RG as at the date of yourinvestment.
You can request a copy of the PDS and RG by emailing the Investment Manager on
bondoperations@artesianinvest.com,
visiting
www.artesianinvest.com
orcalling+61 3 9028 7392. A paper copy of the updated information will also be provided free of charge
on request.

Investment Manager
Artesian Corporate Bond Pty Ltd
ACN 618 342 895
Authorised representative number 001260177
of Artesian Venture Partners Pty Ltd AFSL
284492
Level 3, 45 Wangaratta Street,
Richmond, VIC 3121
Ph: +61 3 9028 7392
Web: www.artesianinvest.com

Administrator and Custodian
Mainstream Fund Services Pty Ltd
ACN 118 902 891
GPO Box 4968
Sydney NSW 2001
Ph: 1300 133 451
Web: www.mainstreamgroup.com

6. Other important information
7. Direct Debit Request Service
Agreement
8. Glossary

Responsible Entity
Equity Trustees Limited
ABN 46 004 031 298, AFSL 240975
GPO Box 2307
Melbourne VIC 3001
Ph: +61 3 8623 5000
Web: www.eqt.com.au/insto

Artesian Corporate Bond Fund - Class A Reference Guide11. Investing in the Artesian Corporate
Bond Fund - Class A••

Application cut-off times••

If we receive a correctly completed Application Form, identification
documents (if applicable) and cleared application money:••

before 2pm (Melbourne time) on a Business Day and yourapplication for units is accepted, you will generally receive theApplication Price calculated for that Business Day; or
on or after 2pm (Melbourne time) on a Business Day and yourapplication for units is accepted, you will generally receive theApplication Price calculated for the next Business Day.

Please see the PDS for information regarding how to apply.

Application terms
We will only start processing an application if:•••

we consider that you have correctly completed the Application
Form;
you have provided us with the relevant identification documents
if required; andwe have received the application money (in cleared funds) statedin your Application Form.

changing bank account details; andenquiring and obtaining copies of the status of your investment.

If you do appoint an authorised signatory:•

you are bound by their acts;
you release, discharge and indemnify us from and against any
losses, liabilities, actions, proceedings, claims and demands
arising from instructions received from your authorised
signatory; andyou agree that our acting on any instructions received from yourauthorised signatory shall amount to complete satisfaction of ourobligations, even if these instructions were made without yourknowledge or authority.

Reports
Investors will be provided with the following reports:•••

application and withdrawal confirmation statements;
transaction statements; and(where applicable), distribution and tax statements.

Annual audited financial accounts are available on Equity Trustees’
website.

3. Withdrawing your investment

Regular savings plan

Withdrawal cut-off times

The regular savings plan enables investors to invest in the Fund eachmonth via direct debit from a nominated account. To start a regularsavings plan, simply complete the relevant sections of the
Application Form or complete the Direct Debit Request Service
Agreement which can also be found at www.eqt.com.au/insto.

If we receive a withdrawal request:

Your nominated account will be debited for the specified amount onor around the 15th day of each month or, if not a Business Day, thenext Business Day (RSP Date). Your application to commence a
regular savings plan must be received at least three Business Days
before the RSP Date on which you wish your instructions to takeeffect.
Units will be issued on the basis of information contained in the PDS
and this document current at the time the contributions are made.
Should a replacement PDS or Reference Guide be issued, we will
notify you and inform you of any changes or updates (if any) if you
continue to participate in the regular savings plan.
You may change, stop or defer a debit payment, or terminate the
Direct Debit Request Service Agreement at any time with at least
seven days’ notification by writing to us. You should ensure that we
receive your instructions to change, stop or defer a debit payment,or terminate the Direct Debit Request Service Agreement at least
seven days before the RSP Date on which you wish your instructions
to take effect.
If two consecutive debits are dishonoured due to insufficient funds,
we may suspend your regular savings plan.

2. Managing your investment
Authorised signatories
You can appoint a person, partnership or company as yourauthorised signatory. To do so, please nominate them on the
Application Form and have them sign the relevant sections. If a
company is appointed, the powers extend to any director and officerof the company. If a partnership is appointed, the powers extend to
all partners. Such appointments will only be cancelled or changed
once we receive written instructions from you to do so.
Once appointed, your authorised signatory has full access to operate
your investment account for and on your behalf. This includes thefollowing:•••

making additional investments;
requesting income distribution instructions be changed;
withdrawing all or part of your investment;

2

Artesian Corporate Bond Fund - Class A Reference Guide••

before 2pm (Melbourne time) on a Business Day and yourwithdrawal request is accepted, you will generally receive theWithdrawal Price calculated for that Business Day; or
on or after 2pm (Melbourne time) on a Business Day and yourwithdrawal request is accepted, you will generally receive theWithdrawal Price calculated for the next Business Day.

Please see the PDS for information regarding how to request a
withdrawal.

Withdrawal terms
Once we receive your withdrawal request, we may act on yourinstruction without further enquiry if the instruction bears youraccount number or investor details and your (apparent) signature(s),or your authorised signatory’s (apparent) signature(s).
We may contact you to check your details before processing yourwithdrawal request but are not obliged to. This may cause a delay infinalising payment of your withdrawal money. No interest is payable
for any delay in finalising payment of your withdrawal money.
We are not responsible or liable if you do not receive, or are late inreceiving, any withdrawal money that is paid according to yourinstructions.
When you are withdrawing, you should take note of the following:
•
•

•

•

•

Withdrawals will only be paid to the investor.
We reserve the right to fully redeem your investment if, as aresult of processing your request, your investment balance in theFund falls below the minimum balance set out in the PDS.
If we cannot satisfactorily identify you as the withdrawing
investor, we may reject your withdrawal request or payment of
your withdrawal proceeds will be delayed. We are notresponsible for any loss you consequently suffer.
As an investor who is withdrawing, you agree that any payment
made according to instructions received by post, courier or fax,
shall be a complete satisfaction of our obligations, despite any
fact or circumstances such as the payment being made without
your knowledge or authority.
You agree that if the payment is made according to these terms,
you, and any person claiming on your behalf, shall have no claim
against us with regards to such payment.

Withdrawal restrictions

Diversification to growth asset risk

Under the Corporations Act, you do not have a right to withdraw
from the Fund if the Fund is illiquid. In such circumstances, you will
only be able to withdraw your investment if Equity Trustees makes awithdrawal offer in accordance with the Corporations Act. Equity
Trustees is not obliged to make such offers.

Investing in bonds is usually associated with taking a defensive
investment strategy. When added to a portfolio of high growth
assets such as equities, it can have the effect of reducing the overall
volatility of returns. Investment returns from bond portfolios are lessvolatile than equities and are also negatively correlated, further
increasing diversification and reducing volatility.

The Fund will be deemed liquid if at least 80% of its assets are liquid
assets (generally cash and marketable securities). In addition, we may
at any time suspend consideration of withdrawal requests or defer
our obligation to pay withdrawal proceeds if it is not possible, or notin the best interests of investors or former investors for us to do so,due to circumstances outside our control (such as restricted orsuspended trading in a Fund asset).

4. Features and benefits
Fund overview
Artesian has been managing fixed income funds for over 10 years,
with each partner of the business having more than 20 years’
experience in Australian fixed income markets. The Fund will aim toachieve returns above the RBA cash rate +2.25% to 3.25%, byleveraging Artesian’s extensive network of employees andrelationships, combined with its lengthy experience in the bondmarkets throughout major periods of both turmoil and calm.
Note the target return is not a forecast. It is merely an indication ofwhat the Fund aims to achieve over the medium term on theassumption that credit markets remain relatively stable throughout
the investment timeframe. The Fund may not be successful inmeeting the target return. Returns are not guaranteed.
The Fund aims to provide investors with daily liquidity and quarterly
distributions through investment in an actively managed anddiversified portfolio of Australian fixed income securities, such as
floating and fixed rate corporate bonds. The Investment Manager
will leverage its trading, research and analysis teams while seeking toenhance the yield of the Fund in a low yield environment notpreviously experienced in Australia. The Fund’s concentrated
floating rate note exposure aims to provide investors with a higher
yield than prevailing interest rates.

Investment approach
The Investment Manager’s strategy for the Fund is to invest in adiversified portfolio of liquid, corporate bonds. At the date of thisReference Guide, with Australian interest rates at all-time lows,
floating rate note securities (“FRNs”) offer fixed income investors
opportunities to take advantage of potentially rising rates. Although
the Fund will also invest in fixed rate securities, more emphasis will
be placed on FRNs to mitigate interest rate risk.

Why invest in corporate bonds?
Income stream

Capital preservation
A key feature of bonds is that there is a known maturity date and, atthat date, the issuer returns the principal amount of the bonds toinvestors. The only risk to this occurring is if the issuer defaults. To
mitigate this risk, the Investment Manager will invest at least 90% offunds not invested in cash, in investment grade debt. Investment
grade bonds have a credit rating of BBB- or higher (rated byStandard & Poor’s or Fitch), or Baa3 or higher (rated by Moody’s), andare deemed to be lower risk than non-investment grade bonds but
higher risk than Australian government issued debt. The regularincome of bonds with a known principal repayment date, allows
investors to manage their cash flows and preserve capital.

Low correlation
Fixed income as an asset class has relatively low correlation to othergrowth assets such as traditional equities. Investors can lower the risk
and volatility of their portfolios by including fixed income in theirasset allocation.

5. Additional information on fees andcosts
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 yourinvestment 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 fees. Ask the fundor your financial adviser.

TO FIND OUT MORE
If you would like to find out more, or see the impact of the fees
based on your own circumstances, the Australian Securities andInvestments Commission (ASIC) Moneysmart website(www.moneysmart.gov.au) has a managed funds fee calculator
to help you check out different fee options.

The principal source of return for bonds is coupon income. It is
expected the Fund will comprise a diversified portfolio of corporate
bonds, and that the coupon payments will provide a regular flow ofincome to the Fund. The Investment Manager intends to offer dailyliquidity in the Fund from this income flow. Due to the ongoing andactive management of the Fund, the general level of income willchange over time as new bonds are issued into the market at theprevailing rates.

Fees and other costs
This section 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 assets of the managed investment scheme 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 tounderstand their impact on your investment.

Artesian Corporate Bond Fund - Class A Reference Guide

3

Artesian Corporate Bond Fund - Class A
Type of fee or cost

AmountHow and when paid

1

Ongoing annual fees and costs
Management fees and costs

0.88% of the NAV of the FundThe fees and costs for managing yourinvestment

The management fees component ofmanagement fees and costs are accrued
daily and paid from the Fund monthly inarrears and reflected in the unit price.
Otherwise, the fees and costs are variableand deducted and reflected in the unit priceof the Fund as they are incurred.
The management fees component ofmanagement fees and costs can be
negotiated. Please see “Differential fees” inthe “Additional Explanation of Fees andCosts” for further information.

Performance fees

Not applicableNot applicable

0.00% of the NAV of the FundTransaction costs are variable and deductedfrom the Fund as they are incurred andreflected in the unit price. They aredisclosed net of amounts recovered by the
buy-sell spread.

Amounts deducted from your investment inrelation to the performance of the productTransaction costs
The costs incurred by the scheme whenbuying or selling assets

Member activity related fees and costs (fees for services or when your money moves in or out of the scheme)
Establishment fee

Not applicableNot applicableNot applicableNot applicable

0.10% upon entry and 0.10% upon exit

These costs are an additional cost to theinvestor but are incorporated into the unit
price and arise when investing application
monies and funding withdrawals from theFund and are not separately charged to theinvestor. The Buy Spread is paid into theFund as part of an application and the Sell
Spread is left in the Fund as part of aredemption.

Not applicableNot applicableNot applicableNot applicableNot applicableNot applicable

The fee to open your investment
Contribution fee
The fee on each amount contributed to yourinvestment
Buy-sell spread
An amount deducted from your investment
representing costs incurred in transactions
by the scheme

Withdrawal fee
The fee on each amount you take out ofyour investment
Exit fee
The fee to close your investment
Switching fee
The fee for changing investment options
1

All fees quoted above are inclusive of Goods and Services Tax (GST) and net of any Reduced Input Tax Credits (RITC). See below for moredetails as to how the relevant fees and costs are calculated.

Additional Explanation of Fees and Costs
Management fees and costs
The management fees and costs include amounts payable foradministering and operating the Fund, investing the assets of theFund, expenses and reimbursements in relation to the Fund andindirect costs if applicable.
Management fees and costs do not include performance fees ortransaction costs, which are disclosed separately.

4

Artesian Corporate Bond Fund - Class A Reference Guide

The management fees component of management fees and costs of
0.88% p.a. of the NAV of the Fund is payable to the Responsible
Entity of the Fund for managing the assets and overseeing theoperations of the Fund. The management fees component is
accrued daily and paid from the Fund monthly in arrears andreflected in the unit price. As at the date of this PDS, themanagement fees component covers certain ordinary expenses such
as Responsible Entity fees, investment management fees, custodian
fees, and administration and audit fees.

The indirect costs and other expenses component of 0.00% p.a. of
the NAV of the Fund may include other ordinary expenses ofoperating the Fund, as well as management fees and costs (if any)arising from interposed vehicles in or through which the Fundinvests. The indirect costs and other expenses component is variable
and reflected in the unit price of the Fund as the relevant fees andcosts are incurred. They are borne by investors, but they are not paid
to the Responsible Entity or Investment Manager. The indirect costs
and other expenses component is based on the relevant costs
incurred during the financial year ended 30 June 2021.
Actual indirect costs for the current and future years may differ. If in
future there is an increase to indirect costs disclosed in this PDS,
updates will be provided on Equity Trustees’ website atwww.eqt.com.au/insto where they are not otherwise required to bedisclosed to investors under law.

Transaction costs
In managing the assets of the Fund, the Fund may incur transaction
costs such as brokerage, buy-sell spreads in respect of theunderlying investments of the Fund, settlement costs, clearing costs
and applicable stamp duty when assets are bought and sold.
Transaction costs also include costs incurred by interposed vehicles
in which the Fund invests (if any), that would have been transaction
costs if they had been incurred by the Fund itself. Transaction costs
are an additional cost to the investor where they are not recovered by
the Buy/Sell Spread, and are generally incurred when the assets of
the Fund are changed in connection with day-to-day trading or when
there are applications or withdrawals which cause net cash flows intoor out of the Fund.
The Buy/Sell Spread that is disclosed in the Fees and Costs Summaryis a reasonable estimate of transaction costs that the Fund will incur
when buying or selling assets of the Fund. These costs are an
additional cost to the investor but are incorporated into the unit
price and arise when investing application monies and funding
withdrawals from the Fund and are not separately charged to theinvestor. The Buy Spread is paid into the Fund as part of an
application and the Sell Spread is left in the Fund as part of aredemption and not paid to Equity Trustees or the Investment
Manager. The estimated Buy/Sell Spread is 0.10% upon entry and0.10% upon exit. The dollar value of these costs based on an
application or a withdrawal of $25,000 is $25 for each individualtransaction. The Buy/Sell Spread can be altered by the Responsible
Entity
at
any
time
and
www.artesianinvest.com/
australian-corporate-bond-fund will be updated as soon aspracticable to reflect any change. The Responsible Entity may also
waive the Buy/Sell Spread in part or in full at its discretion. The
transaction costs figure in the Fees and Costs Summary is shown net
of any amount recovered by the Buy/Sell Spread charged by the
Responsible Entity. Depending on the liquidity of the fixed income
market, the Buy/Sell Spread will vary, widening as risk and spreads
increase. The Australian iTraxx Index (“Index”) is calculated daily by
Markit, an independent data and valuation provider. The Index
comprises 25 equally-weighted investment grade Australian
corporate entities. We use the Index as a guide when determining
the appropriate Buy/Sell Spread for the Fund. Table 7 shows theindicative Buy/Sell Spread for the Fund using the Index as a guide.
Table 7. Indicative Buy/Sell Spread applicable to the units of theFund as at the date of this PDS.
Australia iTraxx Index

Indicative Buy/Sell Spread

0-100 bps

0.10%

101-150 bps

0.125%

151-300 bps

0.20%>300 bps

0.50%

The index level is published on https://source.markit.com
Transaction costs generally arise through the day-to-day trading of
the Fund’s assets and are reflected in the Fund’s unit price as anadditional cost to the investor, as and when they are incurred.

The gross transaction costs for the Fund are 0.02% p.a. of the NAV of
the Fund, which is based on the relevant costs incurred during thefinancial year ended 30 June 2021.
In relation to the costs that have been estimated, they have been
estimated on the basis of typical fees and costs of similar investments
obtained through research in the market.
However, actual transaction costs for future years may differ.

Can the fees change?
Yes, all fees can change without investor consent, subject to the
maximum fee amounts specified in the Constitution. The current
maximum management fee to which Equity Trustees is entitled is
2.00% of the GAV of the Fund. However, Equity Trustees does notintend to charge that amount and will generally provide investors
with at least 30 days’ notice of any proposed increase to the
management fees component of management fees and costs. In
most circumstances, the Constitution defines the maximum level thatcan be charged for fees described in this PDS. Equity Trustees also
has the right to recover all reasonable expenses incurred in relation
to the proper performance of its duties in managing the Fund and assuch these expenses may increase or decrease accordingly, without
notice.

Payments to IDPS Operators
Subject to the law, annual payments may be made to some IDPS
Operators because they offer the Fund on their investment menus.
Product access is paid by the Investment Manager out of its
investment management fee and is not an additional cost to theinvestor.

Differential fees
The Investment Manager may from time to time negotiate a different
fee arrangement (by way of a rebate or waiver of fees) with certain
investors who are Australian Wholesale Clients or New Zealand
Wholesale Investors.. Please contact the Investment Manager on+61 3 9028 7392 for further information.

Taxation
Please refer to Section 7 of the Product Disclosure Statement andSection 6 of this Reference Guide for further information on taxation.

6. Other important information
Taxation
The following information summarises some of the Australian
taxation issues you may wish to consider before making an
investment in the Fund and assumes that you hold your investment in
the Fund on capital account and are not considered to be carrying ona business of investing, trading in investments or investing for the
purpose of profit making by sale. The information should be used asa guide only and does not constitute professional tax advice as
individual circumstances may differ.
A number of tax reform measures are currently under review by theAustralian Government. These reforms may impact on the tax
position of the Fund and its investors. Accordingly, it isrecommended that investors seek their own professional advice,specific to their own circumstances, of the taxation implications ofinvesting in the Fund.
GeneralThe Fund is an Australian resident trust for Australian tax purposes.
Therefore, the Fund is required to determine its net income (taxable
income) for the year of income. On the basis that investors arepresently entitled (which is the intention of Equity Trustees) to the net
income of the Fund (including net taxable capital gains) or will be
attributed their share of assessable income, exempt income,non-assessable non-exempt income and tax offsets (i.e. credits) of
the Fund and the Fund is not a public trading trust, the Fund shouldbe treated as a flow-through trust for tax purposes. This means thatinvestors should be taxed on their share of the Fund’s net taxable
income or the amount attributed to them, and the Fund should not
be subject to Australian income tax.
Artesian Corporate Bond Fund - Class A Reference Guide5

In the case where the Fund makes a loss for Australian tax purposes,
the Fund cannot distribute the tax loss to investors. However, the tax
loss may be carried forward by the Fund for offset against taxable
income of the Fund in subsequent years, subject to the operation of
the trust loss rules.
Attribution Managed Investment Trust (“AMIT”) – core rules
The Fund may qualify as an eligible Attribution Managed Investment
Trust (AMIT), and if so, intends to elect into the AMIT regime. The
AMIT legislation applies an attribution model whereby Equity
Trustees as the Responsible Entity of the Fund attributes amounts oftrust components of a particular character to investors on a fair andreasonable basis consistent with the operation of the Fund’sConstitution, which includes provisions in relation to AMIT. Under the
AMIT rules, the following will apply:
Fair and reasonable attribution: Each year, the Fund’s determined
trust components of assessable income, exempt income,non-assessable non-exempt income and tax offsets (i.e. credits) willbe allocated to investors on a “fair and reasonable” attribution basis,
rather than being allocated proportionally based on each investor’spresent entitlement to the income of the Fund.
Unders or overs adjustments: Where the Fund’s determined trust
components for a year are revised in a subsequent year (e.g. due toactual amounts differing to the estimates of income, gains / losses or
expenses), then unders and overs may arise. Unders and overs will
generally be carried forward and adjusted in the year of discovery.
Cost base adjustments: Where the distribution made is less than (ormore than) certain components attributed to investors, then the costbase of an investor’s units may be increased (or decreased). Details of
cost base adjustments will be included on an investor’s annual tax
statement, referred to as an AMIT Member Annual Statement(“AMMA”).
Large withdrawals: In certain circumstances, gains may be attributed
to a specific investor, for example, gains on disposal of assets to funda large withdrawal being attributed to the redeeming investor.
Penalties: In certain circumstances (e.g. failure to comply with certain
AMIT rules), specific penalties may be imposed.
The new rules are intended to reduce complexity, increase certainty
and reduce compliance costs for managed investment trusts andtheir investors. Where the Fund does not elect into the AMIT regime,or has made the election but the election is not effective for theincome year (e.g. the Fund does not satisfy the requirements to be a
managed investment trust for the income year), the Tax Law
applicable to non-AMITs should be relevant. In particular, the Fundshould not generally pay tax on behalf of its investors and instead,investors should be assessed for tax on any income and capital gains
generated by the Fund to which they become presently entitled.
Deemed Capital Gains Tax (“CGT”) Election
Eligible managed investment trusts (“MITs”) may make an election to
apply a deemed capital account treatment for gains and losses on
disposal of certain eligible investments (including equities and units
in other trusts but excluding derivatives, debt securities and foreignexchange contracts). Where the election is made the Fund should
hold its eligible investments on capital account and gains/(losses)
from the disposal of eligible investments should be treated as capitalgains/(losses). Capital gains arising on the disposal of eligible
investments held for 12 months or greater may be eligible to betreated as discount capital gains.
Where the CGT election is not made, the Fund should hold its
eligible investments on revenue account and gains/(losses) from thedisposal of eligible investments should be treated as revenue gains
or losses.
Controlled Foreign Company (“CFC”) Provisions
There are certain tax rules (i.e. the CFC provisions) which may resultin assessable income arising in the Fund in relation to investments inforeign equities, where certain control thresholds are met. If suchinterests were to be held at the end of the income year, the taxable
income of the Fund may include a share of net income and gains (i.e.
CFC attributable income) from such investments.
6

Artesian Corporate Bond Fund - Class A Reference Guide

Taxation of Financial Arrangements (“TOFA”)
The TOFA rules may apply to certain “financial arrangements” heldby the Fund. In broad terms, the TOFA regime seeks to recognise“sufficiently certain” returns on certain financial arrangements on an
accruals basis for tax purposes rather than on a realisation basis.
Where returns from derivative instruments are not “sufficiently
certain” they will continue to be recognised on a realisation basis,
unless specific tax timing elections are made.
Taxation Reform
The tax information included in this PDS is based on the taxation
legislation and administrative practice as at the issue date of this
PDS, together with proposed changes to the taxation legislation as
announced by the Government. However, the Australian tax system
is in a continuing state of reform, and based on the Government’s
reform agenda, it is likely to escalate rather than diminish. Any reformof a tax system creates uncertainty as to the full extent of announced
reforms, or uncertainty as to the meaning of new law that is enacted
pending interpretation through the judicial process. These reforms
may impact on the tax position of the Fund and its investors.
Accordingly, it will be necessary to closely monitor the progress ofthese reforms, and investors should seek their own professional
advice, specific to their own circumstances, of the taxation
implications of investing in the Fund.
Tax File Number (“TFN”) and Australian Business Number (“ABN”)
It is not compulsory for an investor to quote their TFN or ABN. If an
investor is making this investment in the course of a business orenterprise, the investor may quote an ABN instead of a TFN. Failureby an investor to quote an ABN or TFN or claim an exemption may
cause the Responsible Entity to withhold tax at the top marginal rate,plus the Medicare Levy, on gross payments including distributions or
attribution of income to the investor. The investor may be able toclaim a credit in their tax return for any TFN or ABN tax withheld.
Collection of TFNs is permitted under taxation and privacy
legislation.
By quoting their TFN or ABN, the investor authorises Equity Trustees
to apply it in respect of all the investor’s investments with Equity
Trustees. If the investor does not want to quote their TFN or ABN forsome investments, Equity Trustees should be advised.
GST
The Fund is registered for GST. The issue or withdrawal of units in theFund and receipt of distributions are not subject to GST.
The Fund may be required to pay GST included in management andother fees, charges, costs and expenses incurred by the Fund.
However, to the extent permissible, the Responsible Entity will claim
on behalf of the Fund a proportion of this GST as a reduced input tax
credit. Unless otherwise stated, fees and charges quoted in this PDS
are inclusive of GST and take into account any available reduced
input tax credits. The Fund may be entitled to as yet undetermined
additional input tax credits on the fees, charges or costs incurred. If
the Responsible Entity is unable to claim input tax credits on behalfof the Fund, the Responsible Entity retains the ability to recover theentire GST component of all fees and charges.
The impact of GST payments and credits will be reflected in the unit
price of the Fund. Investors should seek professional advice withrespect to the GST consequences arising from their unit holding.
Australian Taxation of Australian Resident Investors
Distributions
For each year of income, each Australian resident investor will be
required to include within their own tax calculations and tax return
filings the assessable income, exempt income, non-assessable
non-exempt income and tax offsets (i.e. credits) of the Fundattributed to them by Equity Trustees as the Responsible Entity of theFund.
The tax consequences for investors in the Fund depends on the tax
components of assessable income, exempt income, non-assessable
non-exempt income and tax offsets (i.e. credits) of the Fundattributed to them.

Investors will receive an Annual Tax Statement (or an “AMMA” for anAMIT) detailing all relevant taxation information concerning
attributed amounts and cash distributions, including any Foreign
Income Tax Offset (“FITO”) and franking credit entitlements, returnsof capital, assessable income, and any upwards or downwards costbase adjustment in the capital gains tax cost base of their units in theFund (in the case of an AMIT).
An investor may receive their share of attributed tax components of
the Fund or net income in respect of distributions made during theyear or where they have made a large withdrawal from the Fund, inwhich case their withdrawal proceeds may include their share of net
income or attributed tax components of assessable income, exempt
income, non-assessable non-exempt income and tax offsets (i.e.
credits). In addition, because Australian investors can move into andout of the Fund at different points in time, there is the risk that
taxation liabilities in respect of gains that have benefited past
investors may have to be met by subsequent investors.
Foreign Income
The Fund may derive foreign source income that is subject to tax
overseas, for example withholding tax. Australian resident investors
should include their share of both the foreign income and theamount of the foreign tax withheld in their assessable income. In
such circumstances, investors may be entitled to a FITO for theforeign tax paid, against the Australian tax payable on the foreignsource income. To the extent the investors do not have sufficient
overall foreign source income to utilise all of the FITOs relevant to aparticular year of income, the excess FITOs cannot be carriedforward to a future income year.
Disposal of Units by Australian Resident Investors
If an Australian resident investor transfers or redeems their units in
the Fund, this may constitute a disposal for tax purposes dependingon their specific circumstances.
Where an investor holds their units in the Fund on capital account, a
capital gain or loss may arise on disposal and each investor should
calculate their capital gain or loss according to their own particular
facts and circumstances. As noted above, proceeds on disposal may
include a component of distributable income. In calculating thetaxable amount of a capital gain, a discount of 50% for individuals
and trusts or 33 & 1/3% for complying Australian superannuation
funds may be allowed where the units in the Fund have been held for
12 months or more. No CGT discount is available to corporate
investors.
Any capital losses arising from the disposal of the investment may be
used to offset other capital gains the investor may have derived. Net
capital losses may be carried forward for offset against capital gains
of subsequent years but may not be offset against ordinary income.
The discount capital gains concession may be denied in certain
circumstances where an investor (together with associates) holds
10% or more of the issued units of the Fund, the Fund has less than
300 beneficiaries and other requirements are met. Investors who
together with associates are likely to hold more than 10% of the units
in the Fund should seek advice on this issue.

Disposal of Units by Non-Resident Investors
Based on the Fund’s investment profile, generally non-resident
investors holding their units on capital account should not be subject
to Australian CGT on the disposal of units in the Fund unless theunits were capital assets held by the investor in carrying on abusiness through a permanent establishment in Australia. Australian
tax may apply in certain circumstances if the non-resident holds theirunits on revenue account. CGT may also apply in some cases where
the Fund has a direct or indirect interest in Australian real property.
We recommend that non-resident investors seek independent tax
advice in relation to the tax consequences of the disposal of theirunits.

Your privacy
The Australian Privacy Principles contained in the Privacy Act 1988
(Cth) (“Privacy Act”) regulate the way in which we collect, use,
disclose, and otherwise handle your personal information. Equity
Trustees is committed to respecting and protecting the privacy of
your personal information, and our Privacy Policy details how we do
this.
It is important to be aware that, in order to provide our products andservices to you, Equity Trustees may need to collect personal
information about you and any other individuals associated with the
product or service offering. In addition to practical reasons, this isnecessary to ensure compliance with our legal and regulatory
obligations (including under the Corporations Act, the AML/CTF Act
and taxation legislation). If you do not provide the information
requested, we may not be able to process your application,
administer, manage, invest, pay or transfer your investment(s).
You must therefore ensure that any personal information you provide
to Equity Trustees is true and correct in every detail. If any of thispersonal information (including your contact details) changes, youmust promptly advise us of the changes in writing. While we will
generally collect your personal information from you, your broker oradviser or the Investment Manager and Administrator directly, we
may also obtain or confirm information about you from publicly
available sources in order to meet regulatory obligations.
In terms of how we deal with your personal information, Equity
Trustees will use it for the purpose of providing you with our products
and services and complying with our regulatory obligations. Equity
Trustees may also disclose it to other members of our corporategroup, or to third parties who we work with or engage for these same
purposes. Such third parties may be situated in Australia or offshore,
however we take reasonable steps to ensure that they will comply
with the Privacy Act when collecting, using or handling your personal
information.
The types of third parties that we may disclose your information to
include, but are not limited to:••Australian Taxation of Non-Resident Investors
Tax on Income
The Fund expects to derive income which may be subject toAustralian withholding tax when attributed by Equity Trustees as the
Responsible Entity of the Fund to non-resident investors.

•••

stockbrokers, financial advisers or adviser dealer groups, theirservice providers and/or any joint holder of an investment;
those providing services for administering or managing theFund, including the Investment Manager, Custodian and
Administrator, auditors, or those that provide mailing or printing
services;
our other service providers;regulatory bodies such as ASIC, ATO, APRA and AUSTRAC; andother third parties who you have consented to us disclosing yourinformation to, or to whom we are required or permitted by law
to disclose information to.

Australian withholding tax may be withheld from distributions ofAustralian source income and gains attributed to a non-resident
investor. The various components of the net income of the Fundwhich may be regarded as having an Australian source include
Australian sourced interest, Australian sourced other gains,
Australian sourced dividends and CGT taxable Australian property.

Equity Trustees or the Investment Manager may from time to time
provide you with direct marketing and/or educational material about
products and services they believe may be of interest to you. You
have the right to “opt out” of such communications by contacting ususing the contact details below.

We recommend that non-resident investors seek independent tax
advice before investing, taking into account their particular
circumstances and the provisions of any relevant Double Taxation
Agreement/Exchange of Information Agreement (“EOI”) between
Australia and their country of residence.

In addition to the above information, Equity Trustees’ Privacy Policy
contains further information about how we handle your personal
information, and how you can access information held about you,seek a correction to that information, or make a privacy-related
complaint.
Artesian Corporate Bond Fund - Class A Reference Guide

7

Full details of Equity Trustees’ Privacy Policy are available atwww.eqt.com.au. You can also request a copy by contacting Equity
Trustees’ Privacy Officer on +61 3 8623 5000 or by email toprivacy@eqt.com.au.

The Constitution
The Fund is governed by a constitution that sets out the Fund’s
operation (the “Constitution”). The Constitution, together with theFund’s PDS, the Corporations Act and other laws, regulate our legal
relationship with investors in the Fund. If you invest in the Fund, youagree to be bound by the terms of the Fund’s PDS and the Fund’sConstitution. You can request a copy of the Constitution free ofcharge from Equity Trustees. Please read these documents carefully
before investing in the Fund.
We may amend the Constitution from time to time in accordancewith the provisions in the Constitution and the Corporations Act.

Anti-Money Laundering and Counter Terrorism
Financing (“AML/CTF”)
Australia’s AML/CTF laws require Equity Trustees to adopt andmaintain a written AML/CTF Program. A fundamental part of the
AML/CTF Program is that Equity Trustees must hold up-to-date
information about investors (including beneficial owner information)in the Fund.
To meet this legal requirement, we need to collect certain
identification information (including beneficial owner information)and documentation (“KYC Documents”) from new investors. Existing
investors may also be asked to provide KYC Documents as part of an
ongoing customer due diligence/verification process to comply with
AML/CTF laws. If applicants or investors do not provide theapplicable KYC Documents when requested, Equity Trustees may beunable to process an application, or may be unable to provide
products or services to existing investors until such time as theinformation is provided.
In order to comply with AML/CTF Laws, Equity Trustees may also
disclose information including your personal information that it holds
about the applicant, an investor, or any beneficial owner, to its
related bodies corporate or service providers, or relevant regulatorsof AML/CTF Laws (whether inside or outside Australia). Equity
Trustees may be prohibited by law from informing applicants orinvestors that such reporting has occurred.

Foreign Account Tax Compliance Act (“FATCA”)
In April 2014, the Australian Government signed anintergovernmental agreement (“IGA”) with the United States ofAmerica (“U.S.”), which requires all Australian financial institutions tocomply with the FATCA Act enacted by the U.S. in 2010.
Under FATCA, Australian financial institutions are required to collectand review their information to identify U.S. residents and U.Scontrolling persons that invest in assets through non-U.S. entities.
This information is reported to the Australian Taxation Office(“ATO”). The ATO may then pass that information onto the U.S.
Internal Revenue Service.
In order to comply with the FATCA obligations, we may request
certain information from you. Failure to comply with FATCA
obligations may result in the Fund, to the extent relevant, being
subject to a 30% withholding tax on payment of U.S. income or grossproceeds from the sale of certain U.S. investments. If the Fund suffers
any amount of FATCA withholding and is unable to obtain a refund
for the amounts withheld, we will not be required to compensate
investors for any such withholding and the effect of the amounts
withheld will be reflected in the returns of the Fund.

Common Reporting Standard (“CRS”)
The CRS is developed by the Organisation of Economic
Co-operation and Development and requires certain financial
institutions resident in a participating jurisdiction to document andidentify reportable accounts and implement due diligenceprocedures. These financial institutions will also be required to reportcertain information on reportable accounts to their relevant local tax
authorities.
Australia signed the CRS Multilateral Competent Authority
Agreement and has enacted provisions within the domestic tax
legislation to implement CRS in Australia. Australian financial
institutions need to document and identify reportable accounts,
implement due diligence procedures and report certain information
with respect to reportable accounts to the ATO. The ATO may thenexchange this information with foreign tax authorities in the relevant
signatory countries.
In order to comply with the CRS obligations, we may request certain
information from you. Unlike FATCA, there is no withholding tax thatis applicable under CRS.

Equity Trustees shall not be liable to applicants or investors for any
loss you may suffer because of compliance with the AML/CTF laws.

7. Direct Debit Request Service
Agreement

Indirect Investors

This information applies only if you have indicated that you wish foryour initial or additional investment amounts to be paid by direct
debit. Please ensure you have provided the details of your financial
institution and completed the direct debit request in the relevant
sections of the Application Form.

You may be able to invest indirectly in the Fund via an IDPS bydirecting the IDPS Operator to acquire units on your behalf. If you doso, you will need to complete the relevant forms provided by the
IDPS Operator and not the Application Form accompanying the
PDS. This will mean that you are an Indirect Investor in the Fund andnot an investor or member of the Fund. Indirect Investors do notacquire the rights of an investor as such rights are acquired by the
IDPS Operator who may exercise, or decline to exercise, these rights
on your behalf.
Indirect Investors do not receive reports or statements from us andthe IDPS Operator’s application and withdrawal conditions
determine when you can direct the IDPS Operator to apply or
redeem. Your rights as an Indirect Investor should be set out in the
IDPS Guide or other disclosure document issued by the IDPS
Operator.

Information on underlying investments
Information regarding the underlying investments of the Fund will be
provided to an investor of the Fund on request, to the extent Equity
Trustees is satisfied that such information is required to enable theinvestor to comply with its statutory reporting obligations. This
information will be supplied within a reasonable timeframe having
regard to these obligations.
8

Artesian Corporate Bond Fund - Class A Reference Guide

The following is your Direct Debit Service Agreement (“Agreement”)
with Mainstream Fund Services Pty Ltd ABN 81 118 902 891(“Mainstream”), who acts as the Administrator of the Fund. The
Agreement is designed to explain what your obligations are when
undertaking a direct debit arrangement with Mainstream. It alsodetails what Mainstream‘s obligations are to you as your direct debit
provider. We recommend you keep this information in a safe place
for future reference. It forms part of the terms and conditions of yourDirect Debit Request in the relevant sections of the Application
Form.

Definitions:
Account means the account held at Your Financial Institution fromwhich We are authorised to arrange for funds to be debited
Agreement means the Direct Debit Request Service Agreement
between You and UsBanking Day means a day other than a Saturday or a Sunday or apublic holiday listed throughout Australia
Debit Day means the day that payment by You to Us is due

Direct Debit Request means the direct debit request in the
Application Form
Us or We means Mainstream, (the “Debit User”) You have authorisedby signing a Direct Debit Request
You means the customer who has signed or authorised by othermeans the Direct Debit Request
Your Financial Institution means the financial institution nominatedby You on the Direct Debit Request at which the account ismaintained.

1. Debiting your Account
1.1 By signing a Direct Debit Request or by providing Us with a valid
instruction, You have authorised us to arrange for funds to be
debited from your Account. You should refer to the Direct Debit
Request and this Agreement for the terms of the arrangement
between Us and You.
1.2 We will only arrange for funds to be debited from your Account asauthorised in the Direct Debit Request; or
We will only arrange for funds to be debited from your Account if We
have sent to the address nominated by You in the Direct Debit
Request, a billing advice which specifies the amount payable by You
to Us and when it is due.
1.3 If the Debit Day falls on a day that is not a Banking Day, We may
direct Your Financial Institution to debit your Account on thefollowing Banking Day. If You are unsure about which day yourAccount has or will be debited you should ask Your Financial
Institution.

2. Amendments by Us
2.1 We may vary any details of this Agreement or a Direct Debit
Request at any time by giving You at least fourteen (14) days written
notice.

3. Amendments by You

5.2 If We conclude as a result of our investigations that your Accounthas been incorrectly debited We will respond to your query byarranging for Your Financial Institution to adjust your Account(including interest and charges) accordingly. We will also notify You in
writing of the amount by which your Account has been adjusted.
5.3 If We conclude as a result of our investigations that your Accounthas not been incorrectly debited We will respond to your query byproviding You with reasons and any evidence for this finding inwriting

6. Accounts
6.1 You should check:a) with Your Financial Institution whether direct debiting is available
from your Account as direct debiting is not available on all accounts
offered by financial institutions; andb) your Account details which you have provided to Us are correct bychecking them against a recent Account statement; andc) with Your Financial Institution before completing the Direct Debit
Request if You have any queries about how to complete the Direct
Debit Request.

7. Confidentiality
7.1 We will keep any information (including your Account details) inyour Direct Debit Request confidential. We will make reasonable
efforts to keep any such information that We have about You secureand to ensure that any of our employees or agents who have accessto information about You do not make any unauthorised use,
modification, reproduction or disclosure of that information.
7.2 We will only disclose information that we have about You:a) to the extent specifically required by law; orb) for the purposes of this Agreement (including disclosing
information in connection with any query or claim).

3.1 You may change, stop or defer a debit payment, or terminate thisAgreement by providing Us with at least fourteen (14) days
notification by writing to:

8. Notice

Unit Registry, Mainstream Fund Services Pty Ltd, GPO BOX 4968,
Sydney NSW 2001

Mainstream Fund Services Pty Ltd GPO Box 4968 Sydney NSW
2001

or

8.2 We will notify You by sending a notice in the ordinary post to theaddress You have given Us in the Direct Debit Request.

by telephoning Us on 1300 133 451 during business hours;orarranging it through Your Financial Institution.

8.1 If You wish to notify Us in writing about anything relating to thisAgreement, You should write to:

8.3 Any notice will be deemed to have been received on the third
Banking Day after posting.

4. Your Obligations
4.1 It is your responsibility to ensure that there are sufficient clear
funds available in your Account to allow a debit payment to be madein accordance with the Direct Debit Request.

8. Glossary

4.2 If there are insufficient clear funds in your Account to meet a debit
payment:

The Application Form that accompanies the PDS.

a) You may be charged a fee and/or interest by Your Financial
Institution;

Australian Taxation Office.

b) You may also incur fees or charges imposed or incurred by Us; andc) You must arrange for the debit payment to be made by anothermethod or arrange for sufficient clear funds to be in your Account by
an agreed time so that We can process the debit payment.
4.3 You should check your Account statement to verify that theamounts debited from your Account are correct.
4.4 If We are liable to pay goods and services tax (“GST”) on a supply
made in connection with this Agreement, then You agree to pay Us
on demand an amount equal to the consideration payable for the
supply multiplied by the prevailing GST rate.

5. Dispute
5.1 If You believe that there has been an error in debiting yourAccount, You should notify Us directly on 1300 133 451 and confirm
that notice in writing with Us as soon as possible so that We canresolve your query more quickly. Alternatively You can take it up withYour Financial Institution directly.

Application Form
ATO
AUSTRAC
Australian Transaction Reports and Analysis Centre.

Business Day
A day other than Saturday or Sunday on which banks are open forgeneral banking business in Melbourne or if the administrator of theFund primarily performs its administrative functions in respect of theFund in a city other than Melbourne, the city in which theadministrator performs such functions.

Corporations Act
The Corporations Act 2001 (Cth) and Corporations Regulations 2001
(Cth) and as amended from time to time.

Indirect Investors
Individuals who invest in the Fund through an IDPS.

Artesian Corporate Bond Fund - Class A Reference Guide

9

IDPS

(c) any agency or branch of a foreign entity located in the US; orInvestor-Directed Portfolio Service or investor-directed portfolio-likemanaged investment scheme. An IDPS is generally the vehicle
through which an investor purchases a range of underlying
investment options from numerous investment managers.

(d) a pension plan primarily for US employees of a US Person; or

IDPS Guide
Investor-Directed Portfolio Service guide

IDPS Operator
The entity responsible for operating an IDPS.

Net Asset Value (NAV)
The value of the assets of the Fund less the value of the liabilities ofthat Fund.

Retail Client
Persons or entities defined as such under section 761G of the
Corporations Act

US Person
A person so classified under securities or tax law in the United Statesof America (“US”) including, in broad terms, the following persons:(a) any citizen of, or natural person resident in, the US, its territories
or possessions; or(b) any corporation or partnership organised or incorporated under
any laws of or in the US or of any other jurisdiction if formed by a
US Person (other than by accredited investors who are notnatural persons, estates or trusts) principally for the purpose ofinvesting in securities not registered under the US Securities Act
of 1933; or

10 Artesian Corporate Bond Fund - Class A Reference Guide(e) a US collective investment vehicle unless not offered to US
Persons; or(f) any estate of which an executor or administrator is a US Person(unless an executor or administrator of the estate who is not a US
Person has sole or substantial investment discretion over theassets of the estate and such estate is governed by non-US law)and all the estate income is non-US income not liable to US
income tax; or(g) any trust of which any trustee is a US Person (unless a trustee who
is a professional fiduciary is a US Person and a trustee who is not
a US Person has sole or substantial investment discretion over
the assets of the trust and no beneficiary (or settlor, if the trust is
revocable) of the trust is a US Person); or(h) any discretionary account or similar account (other than an estateor trust) held by a dealer or other fiduciary for the benefit or
account of a US Person; or(i)any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organised,
incorporated or (if an individual) resident in the US for the benefit
or account of a US Person.

We, usRefers to Equity Trustees.

Wholesale Client
Persons or entities defined as such under section 761G of the
Corporations Act.