ASIC Benchmarks

1. have cash flow estimates for the scheme for the next 3 months; and
2. ensure that at all times the scheme has cash or cash equivalents (but not including undrawn amounts under bank overdraft or lending facilities) sufficient to meet is projected cash needs over the next 3 months.

Responsible entities of unlisted pooled mortgage schemes should also disclose the policy of the scheme on balancing the maturity of their assets and the maturity of their liabilities. For example, is a scheme has a policy of ensuring that sufficient assets are held in readily realisable investments to meet future withdrawal requests, the responsible entity should state this in their PDS and report against this in their ongoing disclosures.

If an unlisted mortgage scheme has borrowed funds (whether on or off balance sheet), the responsible entity should disclose certain information.

A responsible entity of an unlisted mortgage scheme (other than a Contributory Mortgage Scheme) should disclose the current nature of the mortgage scheme’s investment portfolio.

A responsible entity of an unlisted mortgage scheme who transacts with related parties of the scheme, including lending or investing scheme funds with related parties should disclose their approach to these transactions, including: details of any loans, investments and transactions

1. they have made to or with any related party;

The Assured Mortgage Funds meets this Benchmark. In accordance with The Assured Management’s Compliance Plan, the Assured Mortgage Fund cannot and does not lend to related parties.

The Assured Mortgage Fund uses the following related parties for services:

1. Davoren Associates for Legal Services.
2. Justfine Pty Ltd for Finance, Accounting, Custodial and Support Staff.

For further details we refer you to clause 10.2 of the PDS.

1. their policy on related party transactions, including the assessment and approval process for related party lending and arrangements to manage conflicts of interest; and

These have been entered into on normal arms length trading terms. We refer you to clause 10.1 of the PDS.

Furthermore the Manager, Assured Management Limited offers the investor The Assured Interest Programme. You are referred to clause 2.7 of the PDS.

1. how the processes and arrangements are monitored to ensure their policy is followed.

The Manager, their employees and advisors are also entitled to apply for an interest in the fund. You are referred to clause 10.1 of the PDS.

A responsible entity of an unlisted mortgage scheme should take the following approach to valuations of properties over which it has taken security:

1. Properties (i.e. real estate) should be valued on an ‘as is’ and (for development property) also on an ‘as if complete’ basis.
2. The responsible entity should have a clear policy on how often they obtain valuations, including how recent a valuation has to be when they make a new loan.
3. The responsible entity should establish a panel of valuers and ensure that no one valuer conducts more than 1/3 of the responsible entity’s valuation work for the scheme, calculated by value of properties (other than for Contributory Mortgage Schemes). The responsible entity should also include information about the valuation of a particular property for an unlisted mortgage scheme where a loan secured against the property accounts for 5% or more of the total value of scheme’s loan book. The responsible entity of a Contributory Mortgage Scheme only needs to provide an investor with information about the valuation of a property securing a loan if the investor has, or is being offered, an interest in the loan.

We expect responsible entities to only use valuers who:

1. Where possible, are registered under one of the state/territory valuer registration regimes or a relevant overseas registration regime; and
2. Include a statement in their valuation reports on whether the valuation complies with all relevant industry standards and codes.

The Assured Mortgage Fund meets this Benchmark. All new loans must be supported by a valuation that is not more than three (3) months old. Valuations older that three (3) months will only be accepted in exceptional circumstances. Valuations must be on an ‘as is’ basis and if the loan is also for construction / development an ‘as if complete’ valuation is also obtained.

Assured Management Ltd maintains a Panel of Valuers and only accepts valuations from valuers on that Panel. Valuers on the Panel are registered under the relevant state registration regime and all Valuers make a statement in their valuation reports that the valuation complies with all relevant industry standards and codes. On all rollovers, updated evidence as to value is required. A new valuation is not always required and the Manager may accept other evidence such as a Real Estate Agents letter of Appraisal. You are referred to Clause 4.4 of the PDS.

A responsible entity of an unlisted mortgage scheme should maintain the following loan-to-valuation ratios for loans made by the scheme:

1. Where the loan relates to property development – 70% on the basis of the latest ‘as if complete’ valuation; and
2. In all other cases – 80% on the basis of the latest market valuation.

Where the loan relates to property development, the responsible entity should ensure that the scheme only provides funds to the developer in stages, based on external evidence of the progress of the development.

The Assured Mortgage Fund meets this Benchmark and in fact lends to a maximum of 70% loan-to-valuation ratio in all cases. You are referred to clauses 4.1, 4.2, 4.3 and the definition of Loan to Value Rations in section 12 of the PDS.

If an unlisted mortgage scheme is making or forecasts making distributions to members, the responsible entity should disclose:

1. The source of the current distribution (e.g. from income earned in the relevant distribution period, financing facility, application monies);
2. The source of any forecast distribution;
3. If the current or forecast distribution is not solely sourced from income received in the relevant distribution period, the reasons for making those distributions; and
4. If the current distribution or forecast distribution is sourced other than from income, whether this is sustainable over the next 12 months.

If the scheme promotes a particular return on investments, the responsible entity should clearly disclose details of the circumstances in which a lower return may be payable, together with details of how that lower return will be determined.

The Assured Mortgage Fund meets this Benchmark and the details of its Distribution Practices are disclosed in its Product Disclosure Statement.

Income comes from interest paid by the Borrower. Income distributions are paid monthly. Refer to clauses 1.2 and 2.4 of the PDS.

The Manager operates the Assured Interest Programme to give investors the added assurance of continuing payments of interest in the event of Borrowers defaulting in payment of interest. In this event the investors income is from the Assured Interest Programme. The Managers capacity to meet its obligations under this programme are dependant on a number of factors. You are referred to clause 2.7 of the PDS.

In the event of default investors are advised within 90 days.

A responsible entity of an unlisted mortgage scheme should provide details of whether investors will be able to withdraw from a scheme. If investors are given the right to withdraw from a scheme, the responsible entity should clearly disclose:

1. The maximum withdrawal period allowed under the constitution for the scheme (this disclosure should be at least as prominent as any shorter withdrawal period promoted to investors);
2. Any significant risk factors or limitations that may affect the ability of investors to withdraw from the scheme (including risk factors that may affect the ability of the responsible entity to meet a promoted withdrawal period)
3. The approach to rollovers, including whether the ‘default’ is that investments in the scheme are automatically rolled over; and
4. If withdrawals from the scheme are to be funded from an external liquidity facility, the material terms of this facility, including any rights the provider has to suspend or cancel the facility.

If the scheme promotes a fixed redemption unit price for investments (e.g. $1 per unit), the responsible entity should clearly disclose details of the circumstances in which a lower amount may be payable, together with details of how that amount will be determined.

The Assured Mortgage Fund meets this Benchmark.

Assured Management discloses this information in its Product Disclosure Statement.

Investors who have had their funds allocated to a mortgage are unable to withdraw their funds until such a time as the mortgage is repaid. You are referred to clause 2.5 of the PDS.

Loans will not be automatically rolled over on the maturity date. Borrowers must request that a loan be rolled over and a loan will then only be rolled over with the approval of the Loans Approval Committee. When the loan is rolled over the investor will have the option to continue to invest in the loan or to withdraw their investment. Where there is a rollover, a new Mortgage Summary will be made available.

Any loans which are not rolled over on maturity will be monitored and dealt with by the Credit Committee. It will take such steps as it deems necessary to ensure that the loan is repaid in a timely fashion, however the investors investment will not be returned until such time as the loan has been repaid. There may be a delay in the return of an investment under these circumstances.

You are referred to Clause 4.6 of the PDS.