NZ Mortgage Income Trust (No. 2 Fund) Group Investment Fund


Fund Managers Otago Limited as a managed investment scheme manager does not offer investment advice. For investment advice we recommend that you make contact with a qualified registered investment advisor. Fund Managers Otago Limited is licensed under the Financial Markets Conduct Act 2013 [FSP30687] as the managed investment scheme manager of the NZ Mortgage Income Trust (No. 2 Fund) Group Investment Fund which is a Managed Investment Scheme (MIS) under the Financial Markets Conduct Act 2013.

View licence here. To view our schemes on the NZ Companies Office website – the Disclose Register.

Our Current Rate of Return

No 2 Fund Return for Quarter Ending 31 March 2018

If you would like to invest or find out more, we’d be happy to discuss how we can help you.

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Investment Application Form

Product Disclosure Statement

Statement of Investment Policy Objectives

2018 Annual Report

Notice of Withdrawal


Amended and Restated Trust Deed

Key Investment Points

This is an opportunity to invest in units in a group investment fund called the NZ Mortgage Income Trust (No. 2 Fund) Group Investment Fund (“Fund”) which is a Managed Investment Scheme (MIS) under the Financial Markets Conduct Act 2013 (MIS).

Fund Managers Otago Limited is the Manager of the Fund which invests in registered first mortgages and term deposits with registered banks solely within New Zealand. The Fund distributes its income to investors quarterly on the first day of April, July, October and January of each year.

The Fund was formed by Fund Managers Otago Limited in October 2007 to meet the needs of those investors who may be disadvantaged by the Portfolio Investment Entity (P.I.E.) regime.

The Fund aims to provide returns to investors benchmarked against the weighted average six month term deposit rate as published by the Reserve Bank of New Zealand. This rate is the advertised interest rate paid for a six month term deposit of $10,000. It is weighted by each of the surveyed registered banks share of household deposits from the aggregate bank statistical returns supplied to the Reserve Bank of New Zealand.

The Manager, Fund Managers Otago Limited, is a company that is focused on maximising returns for investors. Although managed from Dunedin, the Fund operates nationwide and lends nationwide to ensure a geographic spread of quality registered first mortgages.

Investors in the Fund benefit from the Fund being managed by an experienced Fund Manager, Fund Managers Otago Limited. The funds that are invested in registered first mortgages were invested in accordance with strict investment guidelines under the supervision of the trustee, Trustees Executors Limited.

The Fund comes under the Resident Withholding Tax regime and we recommend to that potential investors seek taxation advice from a professional financial advisor or tax specialist before investing in the Fund.

Further Fund Information

    • The minimum investment in the Fund is $500.
    • Returns can either be paid into an investor’s bank account or re-invested in further units in the Fund.
    • There is no fixed term for investments, although the Fund is geared towards medium to long term investors (2+ years).
    • Withdrawals will be paid within 90 business days after the Manager receives a withdrawal notice.
    • There are no entry fees and no application fees however the Manager has the discretion to charge a fee of up to 2% on any money withdrawn during the first 12 months after investment and up to 1% on any money withdrawn more than 12 months but less than 24 months after investment. There are no withdrawal fees for withdrawers following the second full year of investment.
    • Investments are subject to regular fees as set our in the Product Disclosure Statement.
    • Investors can make regular contributions to their investment.
    • This investment is available to NZ residents only.
    • View more key investment points here.
    • All information on this page relates to the NZ Mortgage Income Trust (No. 2 Fund) Group Investment Fund as at 14 June 2018, unless stated otherwise. For further information please contact your adviser or download our current Product Disclosure Statement.
    • The above return is based on a $0.9200 unit value and on an investor being in the Fund for the entire quarter. Any investor who joined the Fund or withdrew from the Fund during the quarter would not necessarily earn the same return. The return to investors is calculated quarterly, after all fees and expenses have been deducted, and is expressed as a per annum equivalent before tax. Details on the return calculation are set out in the Product Disclosure Statement relating to the Fund that is available on request. Past returns do not guarantee future performance. Average quarterly returns are the mean average return and have not been compounded.

Material Matters

During 2016, the Fund received notice of District Court proceedings issued by the Crown seeking an order for the forfeiture of properties over which the fund held first mortgages. At the time of the notification the first mortgages supported two loans owing to the Fund. Since then all of the relevant securities have been sold and some of the cash realised was being held in the trust account of the Fund’s lawyers, pending the outcome of these proceedings. The forfeiture proceedings followed a criminal offence committed by one of the legal owners of the securities with the case being heard in the Christchurch District Court late December 2016. Further to previous updates on the forfeiture application, the Fund is constrained in how much detail it can provide at this stage, but the dispute is ongoing.

During October 2017 the Fund was required to transfer the cash held by its solicitors to the Crown and, as a result changed the manner in which the forfeiture claim is treated in the Fund’s accounts. The amount transferred to the Crown has reduced the net assets of the Fund and accordingly the unit valuation has been reduced to 92.5 cents per unit as at 30 September 2017.

The lawyer acting for the Fund and Borrowers at the time of the original loans being made has admitted negligence in relation to the transaction. As a result, the Fund has filed a civil action against this lawyer to recover any loss incurred as a result of his actions.

In the meantime, the Fund will be paying out redemptions to 90 cents in the dollar rather than the unit valuation to take into account the impact of these proceedings. All new units in the Fund will be issued at current unit valuation. This is to ensure that all investors are treated fairly if at a later date a loss was to occur. If the effect on the value of the units in the Fund is less than 10 cents per unit then the difference between the funds retained and the loss suffered by the Fund will be paid out to redeeming investors once the matter is finalised.