Fund Overview
	Fund Assets
	Fund Benefits
	Performance & Financial Information
	Unit Prices
	Distributions
	Redemptions

 

DAF Fund Update - 28 April 2010

DAF has been successfully recapitalised as part of a recently completed series of transactions. RFM expects to recommence distribution payments in May. DAF has benefited from it’s major asset, RFM RiverBank completing a leasing transaction. This will result in Select Harvests Ltd leasing the majority of RFM RiverBank’s almond orchards for the next 20 years, effectively replacing RFM RiverBank’s previous lessee.

RFM considers the new leasing arrangements as a very positive development as it removes farming operational risk and provides the opportunity for RiverBank (in which DAF is the majority Unitholder) to revert to its original objective of owning and leasing land and water assets.

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DAF Capital Raising

Units under the DAF Capital Raising were allotted to investors on 21 April following the completion of the Conditions Precedent set out in the DAF Product Disclosure (PDS) dated 4 November 2009 and Supplementary PDS dated 17 February 2010.

The DAF remains open for investment. Please click on Offer Documents under Key Documents to download a copy of the PDS and Supplementary PDS along with related research and marketing materials.

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Fund Overview

The DAF aims to provide investors with an opportunity to benefit through exposure to a diversified portfolio of Australian agricultural assets. An investment in the DAF is designed to provide investors with competitive risk-adjusted returns through select investments in agricultural assets with a bias towards agricultural property and infrastructure holdings.

The DAF invests in registered managed investment schemes whose underlying assets are primarily agricultural in nature. DAF may also directly invest in operating agricultural assets, listed agricultural equities, cash and short-term bank-backed securities.

The DAF is designed to deliver returns to Investors through a mix of both growth and distributions. To achieve this, the DAF invests across a range of agricultural sectors, geographic regions, climatic zones and asset classes.

Table 1: DAF Summary

¹ Prior to October 2007, the Fund was known as the RFM Diversified Agribusiness Fund. Prior to 17 August 2009, the Fund was known as the Great Southern Rural Opportunities Fund.
² The Responsible Entity may at its discretion accept lower initial or additional investment amounts from qualifying wholesale Investors (as defined in the Corporations Act) and otherwise alter the minimum amounts at any time without prior notice to Investors.
³ The Indirect Cost Ratio is expressed as a percentage of the net asset value of the Fund. This includes GST reduced by the estimated Reduced Input Tax Credits. Refer to the Product Disclosure Statement for details of fees and costs.

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Fund Assets

As at 30 June 2009, the DAF held approximately $79 million in a range of agricultural assets across a number of geographic locations. RFM is also the responsible entity for each of the underlying funds into which the DAF invests.

DAF Existing Investments

Property and infrastructure: horticultural land, infrastructure and water entitlements
DAF holds an investment in RFM RiverBank (RBK) – a fund managed by RFM and established in February 2005. RBK is a unit trust which primarily invests in horticultural land, water and infrastructure. RBK generally does not undertake farming activities on its own accord; rather it leases assets to third parties.

As at 30 June 2009, the DAF held 78% of RBK's units on issue, with the remaining units held by third party investors.

The DAF also holds an investment in the RFM Ultra Premium Vineyard Fund (UPVF) – a fund managed by RFM. The UPVF was established in 2002 with the aim of producing wine grapes for the ultra premium and icon wine categories. In April 2008, the UPVF undertook a fundamental change in the nature of its operations, moving from operating three vineyards to leasing its vineyards, resulting in UPVF becoming a property and infrastructure fund. The UPVF is currently in the process of reverting to an operational entity.

As at 30 June 2009, the DAF held 40% of the UPVF's units on issue, with the remaining units held by third party investors.

Property and infrastructure: poultry infrastructure
The DAF holds an investment in the RFM Chicken Income Fund (CIF) – a fund managed by RFM. The CIF is a unit trust established in August 2003, which invests in poultry infrastructure used for contract chicken growing operations.

As at 30 June 2009, the DAF held 10% of the CIF's units on issue, with the remaining units held by third party investors.

Operational assets: vineyards
The DAF holds an investment in the Agricultural Income Trust Fund 1 (AIT). The AIT is a unit trust established in 2000 which invests in vineyards growing wine grapes under contract for the ultra premium and icon wine categories. Ultra premium in this context refers to wine grapes that are of sufficient quality to produce wine that is sold at a retail price of between $15 and $50 per bottle.

As at 30 June 2009, the DAF held 6% of the AIT's units on issue, with the remaining units held by third party investors.

Operational assets: floriculture
In September 2006, RFM established the DAF Flower Holdings Trust (FHT), a unit trust with the DAF as its sole unitholder. The FHT is also managed by RFM and was created by RFM for the purpose of producing cut and potted flowers for the wholesale market, specifically Zantedeschia (Calla Lilies) blooms and tubers.

The tubers are grown on the FHT's leased property near Mildura, VIC and the mature blooms are sold to various wholesale and retail outlets.

Operational assets: irrigated cropping
The DAF holds an investment in the RFM Australian Cotton Fund (ACF) – a fund managed by RFM. The ACF is a unit trust established in April 2002. The ACF's sole asset is a shareholding in the unlisted public company, Lachlan Farming Limited (LFL).

As at 30 June 2009, the DAF held 17% of the ACF's units on issue, which in turn owned 46% of the shares in LFL. The remaining units and shares in these entities are held by third party investors.

Figure 1: DAF Sector Allocation

 

The table below sets out existing and target asset allocation of the Fund.

Table 2: DAF Asset Allocation

¹ The current allocation is expected to fall within the target allocation as assets are acquired over the medium term.

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Fund Benefits

• Portfolio diversification: Agricultural investments are influenced by seasonal variations in crop production which contributes to price volatility for agricultural commodities. Additionally, most agricultural investments, including those offered by DAF, are not traded on a stock market. These factors often cause agricultural investments to generate returns that are not synchronised with those of traditional asset classes.
  
  
• Capital Growth: A significant portion of DAF funds are invested in land and water assets. These assets have the potential to appreciate in value, particularly when coupled with quality developments. Land and water assets have the potential to appreciate in value, particularly where developed by RFM.
  
  
• Unique asset class: Investing in DAF provides exposure to the newly developing water market. The importance and value of water is expected to increase as this market expands and matures on the same fee structure as direct investors and without needing to invest the minimum amount in each separate fund.

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Performance & Financial Information

Table 3: DAF Financial Year Returns

Returns inclusive of Franking Credits.
Past performance is not a reliable indicator of future performance.

 

Table 4: DAF Rolling Annual Returns

* Annualised figures.
¹ Effective return including Franking Credits distributed to Unitholders.

 

Figure 2: DAF Growth since inception

* Inception date is April 2002. Values are based on post fee performance returns with distributions reinvested.

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Unit Prices

Unit prices are quoted in Australian dollars and are calculated on the 15th day of the month or the following Business Day, if the 15th is not a Business Day. Prices are based on the NAV calculated using the preceding month's financial results.

Click here for historical unit price information

Table 5: DAF Unit Price History

Following the completion of the transactions to recapitalise DAF, RFM expects to publish units prices at the next Unit Price Set Date on 15 May 2010.

Reinvested units and units purchased via rebated trail will be issued at the most recently published unit price.

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Distributions

The historical composition of the DAF's distributions since its inception is shown in the table below.

Table 6: DAF Distribution Summary since inception

¹ Figures rounded to nearest percentage.
² Represents tax paid by DAF, or funds in which DAF has invested, which may be available to Unit Holders as a tax offset.
³ The tax deferred proportion is the percentage of the distribution which is generally not included in the Unit Holder's assessable income in the year of the distribution. These amounts may have capital gains tax implications for Unit Holders.

 

DAF distribution payments are paid quarterly. Please note that distributions are taxable in the year of receipt.

Distributable income is allocated to Unit Holders on a per-Unit basis according to the number of Units held at the end of the distribution period.

Reinvested distributions will be reinvested using the NAV Price calculated on the next Unit Price set date following the distribution period.

Cash distributions will be paid to Unit Holders by the 14th of the month following the Reinvestment Date.

Table 7: DAF Distribution History

Following the completion of the transactions to recapitalise DAF, RFM recommenced distributions with the first distribution having a record date of 30 April 2010 and Payment Date of 14 May 2010.

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Redemptions

RFM intends, subject to available funds, to make a Redemption Offer for the DAF, on an annual basis from November 2011 in accordance with the DAF Constitution and the provisions of the Corporations Act regulating offers for non-liquid managed investment schemes.

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• Offer Documents
• Newsletters
• Lonsec Research May 2010 (Recommended)

  14 May 2010

• Unitholder Meeting Minutes

  25 March 2010

• RFM Adviser Brief

  Select Harvests Ltd (SHV) Heads of Agreement on Yilgah

  17 March 2010

• Half Year Report

  31 December 2009

• Frequently Asked Questions

  6 November 2009

• Adviser Edge Research (3¾ stars)

  November 2009

• Annual Report

  30 June 2009