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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Client Testimonial

“My name is James Loan (Jimmy)I have been a client of the NZ Mortgage Income Trust for the past 15 years. Over this period I have been extremely satisfied with the returns on my investment. I can’t say enough about the staff of Fund Managers Otago, they are very courteous, patient and efficient when making enquiries, and when necessary there is easy access to the Managing Director, Mr Peter Hutchison.

I would have no hesitation in recommending this firm to anyone. By the way, when you call Fund Managers Otago a real person answers the telephone.”

Investment Application Form

Product Disclosure Statement

Statement of Investment Policy Objectives

2019 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).
    • The Manager has the right to charge withdrawal fees of up to 2% of the amount withdrawn during the first year of investment and 1% of the amount withdrawn during the second year of investment.  The Manager has historically not charged these fees and has decided not to charge any withdrawal fees for the foreseeable future.
    • Withdrawals will usually be paid within 90 business days after the Manager receives a withdrawal notice.
    • Investments are subject to 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.
    • 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.

Litigation Risk

There is a risk that Fund’s borrowers and/or other third parties bring claims against the Scheme.  Depending upon the nature and extent of the claims bought against the Scheme, the income returns of the Fund and/or the capital value of the Scheme may be affected

During 2016, the Scheme received notice of District Court proceedings issued by the Crown seeking a forfeiture order for properties over which the Scheme held first mortgages. That action was successful based on the finding that a criminal offence was committed by one of the borrowers. As a result, the cash realised by the Scheme from the sale of the properties secured by those mortgages was required to be paid to the Court. The District Court decision was subsequently appealed to the High Court. The appeal was unsuccessful. Leave to appeal the High Court decision has been lodged in the Court of Appeal. The outcome of this application is at this time not known.

The amount transferred to the Crown as a result of the District Court decision reduced the net assets of the Scheme and the unit valuation reduced to 92 cents per unit as at 31 March 2019. Legal fees incurred since the transfer to the Crown are currently being met from the income earned by the Scheme prior to any distribution to investors each quarter.

The Scheme filed a civil action against the lawyer acting for the Scheme and Borrowers at the time of the original loans were made to recover any loss incurred as a result of his actions. The civil action has now been settled and a substantial sum has been paid to the Scheme in settlement of all claims against the lawyer.  The settlement is confidential to the parties which limits the disclosures possible at this time.  As a result of the settlement the unit value of the Scheme has increased.

In the meantime, the Scheme will continue pay out redemptions at 90 cents in the dollar rather than the unit valuation to take into account the impact of the Crown Forfeiture Order for all units in the Scheme issued prior to 15 September 2016. This is to ensure that all investors who had invested in the Scheme prior to 15 September 2016 (being the date on which investors in the Scheme were notified of the redemption retention associated with the forfeiture) are treated fairly. If the effect on the value of the units in the Scheme is less than 10 cents per unit then the difference between the funds retained and the loss suffered by the Scheme will be paid out to those redeeming investors once the matter is finalised.

All unitholders who have invested or invest in the Scheme after 15 September 2016 will be unaffected by the 90 cents in the dollar restriction.