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New contributions to and withdrawals from the Fund ceased in April 2008 and the Fund is in the process of being wound up. Capital is being returned to investors in instalments as the Fund’s assets are liquidated. To date there have been pro-rata payments of capital on 16 May 2008, 15 August 2008, 14 November 2008, 6 March 2009, 5 August 2009, 18 December 2009, 4 March 2010, 2 June 2010, 20 October 2010, 1 July 2011 and 13 October 2011.
The July 2011 capital repayment also included income generated by the Fund for the year ended 31 March 2011 and was 2.47% per annum of the average balance of unitholder investment for the period. The Fund continues to earn interest, and this interest, net of expenses, will be paid out at the direction of the Trustee. The timing and the amount of the next income distribution will be determined by the Trustee after the audited financial statements for the year ending 31 March 2012 have been issued.
The amount returned to investors depends on the ability of the mortgagees to refinance or repay their loans, or the Fund's ability to sell loans to other lenders. Every effort is being made to preserve investor’s capital during the wind up process.
At 31 March 2011, the mortgage portfolio was comprised of 67 mortgages with a value of $23.9 million (net of $0.1m loan provisioning). Total arrears in MortgagePlus have decreased from $1.0m at 30 September 2010 to $0.45m at 31 March 2011.
Capital will continue to be repaid to the Fund’s investors as the mortgages are repaid, refinanced or sold. The last payment of capital paid on 13 October 2011 brought the total capital repaid to investors to 92%.
The current economic conditions and the nature of the Fund’s assets make it extremely difficult to predict the timing of future capital repayments.
MortgagePlus is in the process of being wound-up in an orderly manner and as it does so, it continues to earn income on its assets. The last distribution of income was made in respect of the 12 months to 31 March 2011 and was paid in July 2011. This amount was equivalent to 2.47% per annum of the average balance of unitholder investment for the period.
The Fund continues to earn interest, and this interest, net of expenses, will be paid out at the direction of the Trustee. The timing and amount of the next income distribution will be determined by the Trustee after the audited financial statements for the year ending 31 March 2012 have been issued.
TOWER cannot guarantee full repayment, and the amount returned depends on the ability of the mortgagees to refinance or repay the loans, or the Fund’s ability to sell loans to other lenders.
The audited financial statements for the year ended 31 March 2011 show 6.1% of mortgages having a maturity profile greater than 5 years.
The next payment may not take place until after the completion of the audited financial statements for the year ending 31 March 2012, when we intend to next make an income distribution.
A recent review of the Fund has shown that due to current and expected ongoing withdrawals the Fund is reducing to a size no longer economically liable.
In light of these factors, TOWER, in consultation with the Trustee, has decided to wind-up the Fund.
Once TOWER decided to wind up the Fund it became necessary to halt all investments and withdrawals into the Fund so that all the Fund’s investors could be treated equitably while the Fund’s assets are being liquidated in anticipation of the Fund’s wind-up. This ensures that, should any costs or issues arise in respect of the realisation of the Fund’s assets, these are shared equally between all the investors who were invested in the Fund at the time the decision to wind-up the Fund was made.
TOWER is legally obliged to treat all investors in the Fund equitably, which also means that TOWER had to treat both investments and withdrawals even-handedly by halting both at the same time once the decision to wind up the Fund was taken.
TOWER cannot treat either investments or withdrawals differently in a way that might advantage or disadvantage the Fund’s investors who request those transactions versus other investors in the Fund.
No, effective 19 July 2011, TOWER has already arranged for this to stop.
Your investment will be worth the market value of the assets of the Fund at the time it is terminated less any fees and expenses applicable upon winding up the Fund.
Not at all. Each fund is held separately in trust and its assets are completely separate to TOWER’s assets.
The decisions that have been made in relation to the Fund have been based on TOWER’s obligation to act in the best interests of investors and to treat investors equitably.
No. As each fund is held in a separate trust, the decisions made in respect of the Fund have no effect on any other investments you have with TOWER.
A letter and Investor Direction Form were sent to all investors on 13 December 2011. A further reminder was sent on 7 March 2012 to investors who had not provided their instructions asking for the Investor Direction Form to be completed and returned to TOWER. If you have not done so already, please send this information to TOWER promptly. The Investor Direction Form allows you to elect whether to transfer your wind-up proceeds to another TOWER fund/s or elect to have your wind-up proceeds paid to a nominated bank account.
If you have misplaced the Investor Direction Form, please contact us immediately on 0800 379 372 for another copy.
The Investor Direction Form allows you to elect how you wish your wind-up proceeds to be treated on wind-up of the Fund. Following wind-up of the Fund your wind-up proceeds will be paid across to the Trustee, Trustees Executors Limited, in June 2012 and held in a non-interest bearing account until this form is received.
Your Form can be returned by post to TOWER Investments, PO Box 590, Wellington 6140, faxed to 0800 808 181, or you can email a scanned copy to investments@tower.co.nz.
A reminder notice was sent on 7 March 2012 to all investors who had not provided instructions, along with another copy of the Investor Direction Form.
This is a TOWER bank account that the wind-up proceeds have been credited to pending receipt of your instructions. Please complete and return the Investor Direction Form to enable us to pay your wind-up proceeds
Yes, the payment of your wind-up proceeds was a full and final payment of your investment in the Fund.
Yes, however as the majority of the assets of the Fund comprised of cash from 1 November 2011, we voluntarily reduced the Investment Management Fee from 1.75%p.a. to 0.60%p.a. from this date in order to recognise the lower costs of investment management of cash holdings.
No. This particular Fund was becoming no longer financially viable as an investment fund due to expected ongoing withdrawals, so the decision was based on the Trustee’s and TOWER’s obligation to act in the best interests of investors. Each TOWER fund is held in a separate trust so the decisions made with regards to this Fund have no effect on any other investments you have with TOWER.
The Fund held illiquid investments that could only be sold in the secondary market at a value less than their previously recorded value. This resulted in a decrease in the unit price for the Fund of approximately -2.79%.
Please contact your financial adviser, call TOWER on 0800 379 372, or email investments@tower.co.nz.
A review of the Fund showed that due to expected ongoing withdrawals, the Fund was no longer meeting client needs.
TOWER Managed Fund Investments Limited (‘TOWER’), in consultation with the Trustee, investigated converting the Fund into an emerging markets fund, the review indicated that converting the Fund was not supported by sufficient demand and that further withdrawals would follow, reducing the Fund to a size that would no longer be economically viable.
Consequently, the Trustee in consultation with TOWER made the decision to wind-up the Fund
This is a TOWER bank account that the wind-up proceeds have been credited to pending receipt of your instructions. Please complete and return the Investor Direction Form to enable us to pay your wind-up proceeds. If you have misplaced the Investor Direction Form, please contact us immediately on 0800 379 372 for another copy.
Once the Trustee, in consultation with TOWER, decided to review the investment strategy of the Fund it became necessary to halt all investments into and withdrawals out of the Fund. This was required so that all investors could be treated equitably while the Fund’s assets were being realised prior to the potential transition into an emerging markets fund. This ensured that had any costs been incurred or issues arisen in respect of the realisation of the Fund’s assets, these would have been shared equally between all investors (note these would only be costs involved in selling the Fund’s assets, not costs associated with purchasing new assets).
TOWER could not treat investments or withdrawals differently or in a way that might advantage or disadvantage the Fund’s investors who requested those transactions versus other investors in the Fund.
Withdrawals from the Fund which represented wind-up proceeds were distributed to investors in accordance with their instructions (where provided) during the week ending 9 March 2012.
Yes, your funds continued to remain invested throughout the suspension and until the wind-up proceeds were paid on 7 March 2012.
The Trustee provided approval for immediate liquidation of the Fund’s investments following the decision to suspend and review the Fund. As such, TOWER requested the underlying investment manager (GAM Hong Kong Limited) to liquidate the assets of the Fund. The majority of assets held by the Fund were liquidated and were held in cash within the Fund.
To recognise the lower investment management costs associated with cash holdings, TOWER voluntarily reduced its Investment Management Fee on the Fund from 1.75% p.a. to a concessionary rate of 0.60% p.a. from 1 November 2011.
Wind-up proceeds were distributed to investors in accordance with their instructions (where provided) during the week ending 9 March 2012.