FREQUENTLY
ASKED
QUESTIONS

To withdraw some or all of your investment, we will need to receive a completed and signed Withdrawal Form. There are no withdrawal fees or penalties.

If you invest in the Midlands Smarter PIE Fund, your money is normally on call. You can submit a withdrawal request any day and the funds will be deposited into your verified bank account in three business days. If you need funds regularly to top up your income, you can also set up a regular withdrawal from your investment.

If you invest in the Midlands Income Wholesale Fund, 30, 60 or 90 day notice periods typically apply, depending on how much you are withdrawing.

To instigate a one-off or regular withdrawal you need to complete a withdrawal form which will require all signatories to physically sign the form (as electronic signatures are not authorised.

The withdrawal request must be completed accordance with account signing rules. Withdrawals are governed by the provisions of the Midlands Funds Management Product Disclosure Statement and Governing Document. For the protection of our investors, we will only pay withdrawals into the verified bank account on file. In certain circumstances withdrawals could be suspended or deferred. For more information, see our Product Disclosure Statement.

If you invest with Midlands, you are investing into the Midlands Smarter PIE Fund, which is an actively managed investment fund. Our investors’ money is pooled and then lent out to approved borrowers who meet our strict loan criteria, to purchase commercial, residential, or rural property. These borrowers pay interest on the loans, just like they would if they got a mortgage from a bank.

Management, supervisor and administration fees and expenses totalling 2.10% are deducted and a contribution made to the reserve fund. The remaining interest income received for the quarter is then distributed back to our Investors. These are your “returns”.

Our quarterly returns are generally communicated as an annualised, pre-tax return figure. For example,  a return of 5.85% represents an annualised return of 5.85% that has already had fees deducted but not tax, given the tax investors pay is specific to each investors circumstances.

Before depositing your returns into your account, Midlands will calculate any tax due, based on the Prescribed Investor Rate (PIR) you have provided and transfer this to the IRD. You can read more about tax rates here.

Management, supervisor, administration fees and expenses totalling 2.1% are deducted from the Fund.  We do not charge set-up, withdrawal, performance, penalty or transaction fees. These fees and expenses are subject to change.

Distributions (being the returns earned on your investment after the payment of fees, expenses, reserve fund contributions and tax) are calculated quarterly at the end of March, June, September and December in each year.

Our usual practice is to pay the distributions to investors on the last business day of each of those months (though this may take longer in limited circumstances).

What you see on your statements is what you’ll get delivered directly into your account (other than amounts deducted to pay tax).

When you invest with Midlands, you can choose to either:

1. Have your returns paid directly into your bank account each quarter, OR
2. Re-invest your returns back into the Fund to take advantage of compounding returns and build long term wealth.

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) is designed to help detect and deter money laundering and terrorism financing. Legally, we must comply with the AML/CFT Act, which helps protect our communities from criminal activity. This means that we need to collect and verify information about you, such as your identity, address, nature and purpose of the business relationship, and in some circumstances also your source of funds and wealth.

Biometrics is facial recognition technology – we use it to biometrically match your face to the picture on your ID. We do this to meet our Anti Money Laundering (AML) requirements. In order for us to do this you will be sent a link via a text message.

Using a mobile device you will be asked to:

1. Take a picture of your NZ driver licence or your passport
2. Follow prompts to take a video of your face
3. Verify that the details captured off your driver licence or passport are correct
4. Confirm, amend or add your residential address

We think facial recognition is the fastest and easiest way for you to confirm your identity and for us to identify you. But we do have other options available if you are not comfortable using the biometrics technology, or you don’t have a smartphone.

We can accept certified copies of identification and other documents we need to collect, or you can contact us to discuss your options.

All investments involve some level of risk and the Midlands Smarter PIE Fund is no exception. That’s why we’ve created an entire page dedicated to understanding risk. You can find this here.

Risk is very specific to each individual investor’s position. As such, we recommend seeking professional financial advice before investing.

There are 3 layers of supervision which are designed to help protect investors:

1. Midlands must hold a licence to operate, granted by the Financial Markets Authority (FMA). The FMA is the government entity responsible for overseeing New Zealand’s financial markets. They help protect NZ retail investors by regulating and monitoring retail financial product offers, including the Midlands Smarter PIE Fund.
2. Midlands must be supervised by an independent supervisor who is licensed by the FMA. Midlands Funds Management is supervised by New Zealand’s oldest independent trustee company, Trustees Executors Ltd.
3. Midlands’ financial accounts and internal controls are independently audited annually by PWC, a global ‘Big 4’ accountancy and auditing firm.

Appointed supervisors add a layer of oversight, providing our investors with confidence that their money is in the best of hands and only being invested in accordance with the Trust Deed, which can be found here.

The Fund’s authorised investments are mandated in our Trust Deed and SIPO. These documents stipulate that we can ONLY invest in loans recured by first mortgages over land and buildings in New Zealand, within defined lending ratios.

The Fund also invests in cash and cash equivalents (that is, term deposits up to 90 days) with registered banks.

We do not offer personal loans, vehicle finance or any type of loans on consumer goods such as appliances or any other type of unsecured lending. The Trust Deed and SIPO contain various other rules we must comply with and can be found here.

We do not offer traditional consumer home loans (loans for your own family home). In addition, we do not lend on consumer goods such as appliances, used cars etc.

In New Zealand, you pay tax on the returns, interest and dividends generated by most investments, including savings in the bank, term deposits, KiwiSaver, shares and managed investment funds, like Midlands.

The Midlands Smarter PIE fund is a PIE fund, which is a type of investment entity that has special tax rules. A PIE fund’s returns are taxed at each investor’s Prescribed Investor Rate (PIR), which may be lower than your personal income tax rate or the trust tax rate.  If you invest in a PIE fund, and are resident in NZ, you will not pay more than 28% tax.  You can find out more about PIE tax here.

If you invest in the Midlands Smarter PIE Fund or Midlands Income Wholesale Fund, you pay tax on the quarterly returns generated by your investment, based the Prescribed Investor Rate (PIR) you have provided to us.

How is tax paid?

One of the benefits of investing with Midlands is that we take care of all the tax obligations for you. That is, investors don’t need to file a personal tax return for their Midlands investment (provided they give us the correct PIR). That’s because Midlands will calculate any tax owed based on the tax information you provide. Midlands is responsible for filing income tax returns and physically paying tax to the IRD on behalf of its investors.

When is tax paid?

At the end of the tax year, Midlands will pay the tax owing directly to Inland Revenue on your behalf by redeeming units from your investment. This means your investment balance will reduce by the amount of tax paid. Think of your tax provision as a running total of tax that has accrued on your investment returns but has not yet been paid to Inland Revenue.

Quarterly distributions are not a ‘taxable event’, this means that the tax on your quarterly returns is not paid to the IRD on your behalf at that time. If you get your quarterly returns paid out, they will be paid out ‘gross’ (tax will not be deducted). If you reinvest your quarterly returns, again the ‘gross’ amount will be reinvested, this means you are able to earn returns off your tax until the tax is paid to the IRD at the end of the tax year, increasing your returns for the year. Tax on quarterly distributions will be paid to the IRD at the end of the tax year.

Withdrawals

Withdrawals are treated differently. A withdrawal is a ‘taxable event’ and a portion of any tax owing will be paid to Inland Revenue at the time the withdrawal is processed. The amount of tax paid will be based on the proportion of your investment being withdrawn and the tax liability that has accrued on your investment up to that point. If you have an investment balance of $100,000 and you withdraw $10,000, you are withdrawing 10% of your investment balance and you will pay 10% of the tax you owe when the withdrawal is made. This will be paid via a further redemption of units, which will reduce your remaining balance. For example, using the same example, if the tax component of this withdrawal was $154, your closing balance after the withdrawal would be $89,846 ($100,000 minus $10,000 withdrawal minus $154 tax paid).

Throughout the year, we will keep track of the tax owing on your behalf. Your estimated tax liability (tax provision) will be visible through the investor portal so you can see how much tax is owed.

No, the Midlands Smarter PIE Fund itself does not pay commissions. However, Midlands Funds Management Limited (the Manager of the Midlands Smarter PIE Fund) may do so from its own funds and at its own discretion. For example, if a new investor was introduced to Midlands via a financial adviser, Midlands Funds Management may agree to pay commission to that financial adviser, as is common industry practice. However, that commission is paid out of Midlands Funds Management’s management fee. It is not deducted from investors’ investments in the Fund.

Yes, Midlands does set aside contingency funds as a way to help protect the Fund.

The accountants call these funds ‘specific provisions’ and ‘retained earnings’. Think of them as prudent ‘rainy day funds’ or a safety net that helps the Fund to weather inevitable lending lumps and bumps, provide a buffer against any distressed loans or insulate the Fund against other events that may effect investment returns. However, operating a reserve fund does not guarantee that distributions or unit value will not fall.

The Midlands Smarter PIE Fund is a retail fund under the Financial Markets Conduct Act 2013 (FMCA). By comparison, our Midlands Income Wholesale Fund is a wholesale fund and is only available to wholesale investors.

The terms retail fund and wholesale fund refers to different types of investment funds that cater to distinct categories of investors.

The key differences are:

• Retail funds cater to everyday people, while wholesale funds target wholesale investors only. These are typically institutional and high-net-worth investors.
• Retail funds are more heavily regulated to protect individual investors, whereas wholesale funds have lighter regulatory requirements.
• Anyone can normally invest in a retail fund whereas eligibility criteria applies for people wanting to invest in a wholesale fund. Visit our Wholesale Fund page to find out more.

Yes. The Midlands Smarter PIE Fund uses daily unit pricing. This means the value of each unit in the Fund is calculated every business day based on the value of the Fund’s assets and liabilities.

Daily unit pricing is standard practice across many managed funds in New Zealand and helps ensure that deposits and withdrawals are processed at a price that reflects the current value of the Fund at the time of the transaction.

For investors, this means you can see your investment balance and returns building progressively throughout the quarter via the investor portal, while distributions continue to be paid quarterly.

At Midlands, the unit price usually starts at $1.00 at the start of each quarter. It will normally gradually increase throughout the quarter as the Fund earns income from its underlying assets (net interest income after expenses have been deducted)*.

At the end of each quarter, the Fund’s net income earned will be paid out to investors as a quarterly distribution or reinvested. Once distributions are paid, the unit price resets to $1.00 and the process begins again for the next quarter.

For example, if the unit price increases from $1.00 to $1.0125 over the course of a quarter, the $0.0125 increase represents the net income earned and our investors’ returns for that period. While this may appear small, a quarterly increase of $0.0125 equates to an annualised return of approximately 5.00%, after fees but before tax.

You can think of the unit price as your investment returns gradually building up throughout the quarter before being paid out at quarter end. This cycle repeats each quarter — the unit price rises as net income is earned, then distributions are paid to investors, and the unit price resets.

*In some circumstances the Fund’s unit price could fall below $1.00, but that’s very unlikely in usual market conditions.

Deposits and withdrawals will be processed at the confirmed unit price applying on the day the deposit or withdrawal is processed.

Deposits will be processed the business day after they are received, using the unit price for the day they are received.

Withdrawals will be processed three business days after a completed withdrawal request has been received, using the confirmed unit price applying on that day (which is the unit price for the previous business day). For example, if an investor submits a withdrawal request on a Monday, the withdrawal will be paid on Thursday, using Wednesday’s confirmed unit price, which will reflect investment returns up to the end of Wednesday.

Using the daily unit price helps ensure transactions are processed using a price that reflects the current value of the Fund on that day, providing a fair and accurate value for all investors.

The confirmed unit price used to calculate your withdrawal or deposit will always be included in your investment or withdrawal confirmation.