Letter from the Chairman

Dear Unitholder,

On 3 August 2020, Magellan Asset Management (Magellan) announced a restructure proposal to simplify its global equities retail product offering. The restructure proposal, should it proceed, will have the effect of combining Magellan Global Trust (MGG) and the Magellan Global Equities Fund (MGE) with the Magellan Global Fund.

On behalf of the Directors of Magellan, as responsible entity of MGG (Directors), I am pleased to provide you with this Explanatory Memorandum which contains details about the restructure proposal and the implications for you as an existing investor in MGG.

Overview of the Restructure

As a unitholder in MGG, your investment is managed by Magellan in accordance with MGG’s investment strategy.

Should the proposed restructure be implemented, you will instead be invested in and hold units in the Magellan Global Fund and your money will be invested in accordance with our flagship global equities strategy that is managed by Hamish Douglass, the co-founder of Magellan and Chief Investment Officer (the Global Equities Strategy). Both MGG and the Global Equities Strategy leverage Magellan’s investment philosophy and investment processes, however there are some differences between each investment mandate. A comparison of the differences is outlined in Section 7.4.

The Magellan Global Fund will have two unit classes on issue:

To effect the restructure, Magellan Global Fund is proposing to acquire all of the units in MGG and all the units in MGE by way of two separate but inter-conditional trust schemes.

As a unitholder in MGG, you will receive Closed Class Units in exchange for your existing units in MGG, with the exchange ratio based on the respective net asset values on the Effective Date. The number of Closed Class Units you receive will be equal to the number of units in MGG you hold on the MGG scheme record date. The Closed Class Units will, in many respects, look and feel similar to the units in MGG you hold today.

Separately, unitholders in MGE will be offered Open Class Units in exchange for their existing units in MGE. The terms of the Open Class Units have been designed to substantially replicate the experience of unitholders in MGE today, however unitholders in MGE will also gain the ability to apply for or redeem their investment directly with Magellan Global Fund RE.

The structure of the Magellan Global Fund following implementation of the restructure is detailed in the following diagram:

 Click image to view larger version

MGF Partnership Offer and Bonus MGF Option Issue

Should the restructure proceed, and subject to the necessary regulatory approvals, Magellan Global Fund RE intends to:

  • Issue to all Closed Class Unitholders in Magellan Global Fund one MGF Option for every two Closed Class Units held on the Bonus MGF Option Record Date which is expected to be on 26 February 2021 (Bonus MGF Option Issue); and
  • Offer to all unitholders in the Magellan Global Fund, following implementation of the restructure, the ability to subscribe for new Closed Class Units (MGF Partnership Offer). Magellan Global Fund RE expects to launch the MGF Partnership Offer in January 2021. The subscription price for the new Closed Class Units under the MGF Partnership Offer will be the NAV per Closed Class Unit on the Business Day immediately prior to their allotment. Successful applicants will also receive a valuable benefit in the form of additional Closed Class Units worth 7.5% of their subscription and a MGF Option for each new Closed Class Unit allotted.

Each MGF Option issued (both as part of the MGF Partnership Offer and Bonus MGF Option Issue) will be exercisable into one Closed Class Unit with the exercise price set at a 7.5% discount to the prevailing net asset value of Closed Class Units at the time of exercise. The MGF Options will have a three year term and be exercisable in the period commencing three months following their issue. It is intended that MGF Options will be quoted on ASX.

As part of Magellan Group’s partnership approach with investors in Closed Class Units and to minimise dilution, Magellan Group will fund both the 7.5% additional Closed Class Unit partnership benefit and the 7.5% MGF Option exercise price discount.

Further details of the MGF Partnership Offer and Bonus MGF Option Issue are outlined in Sections 7.23 to 7.25.

MGG Trust Scheme and Magellan Directors' Recommendation

As noted above, the restructure will involve the acquisition of all of the units in MGG by Magellan Global Fund RE in exchange for Closed Class Units by way of a trust scheme (the MGG Trust Scheme). It is the MGG Trust Scheme that is the subject of this Explanatory Memorandum and on which MGG Unitholders are being asked to vote at a virtual Meeting proposed to be held at 12.00pm (Sydney time) on 25 November 2020.

The Notice of Meeting contained in Schedule 1 provides further details about how to vote and the arrangements for the virtual Meeting.

The Directors unanimously recommend that MGG Unitholders vote in favour of the MGG Trust Scheme in the absence of a Superior Proposal. Each Director intends to vote all MGG units held or controlled by them in favour of the MGG Trust Scheme. The Directors believe that the restructure will provide a range of meaningful benefits to MGG unitholders, including:

  • the potential for greater efficiency in ASX trading of your Closed Class Units;
  • the opportunity to participate in Magellan Group “partnership benefits” including the MGF Partnership Offer and Bonus MGF Option Issue; and
  • an investment in Magellan Global Fund, whose investment returns have outperformed MGG since its inception in 2017, noting that past performance is not necessarily indicative of future results.

Section 3.4 of this Explanatory Memorandum provides a further explanation of the key benefits, disadvantages and risks for the MGG Trust Scheme.

When considering the recommendation of Directors, MGG Unitholders should note that Dr. Brett Cairns’ (CEO of the Magellan Group and director of MGG RE) annual short-term incentive payment takes into account, amongst a range of criteria, the delivery of key strategic projects, such as the restructure. The implementation of the restructure may contribute to the total annual short-term incentive payable to Dr. Cairns for the 2021 financial year. The maximum amount payable to Dr. Cairns, should he satisfactorily achieve all of the conditions governing the payment of his short term incentives, as a result of the delivery of key strategic projects including implementation of the restructure, is $193,125. This matter and other interests of the MGG RE directors in relation to the restructure are set out in Sections 12.1 and 12.2. Dr. Cairns considers that, despite these arrangements, it is appropriate for him to make a recommendation on the restructure. The MGG RE Board (excluding Dr. Cairns) also considers that it is appropriate for him to make a recommendation on the MGG Trust Scheme given his role in the operation and management of MGG and his deep industry knowledge.

The MGG Trust Scheme and restructure are subject to a number of conditions, including approvals by unitholders in MGG, Magellan Global Fund and MGE, regulatory approvals (including ASX quotation) and receipt of judicial advice from the Court.

Independent Expert’s Opinion

The Directors have appointed Lonergan Edwards & Associates Limited as the Independent Expert to provide an opinion on the MGG Trust Scheme (set out in Schedule 2).

The Independent Expert has concluded that the MGG Trust Scheme is fair and reasonable and in the best interests of MGG Unitholders in the absence of a Superior Proposal.


If, after reading this Explanatory Memorandum, you have any questions regarding the Restructure or the MGG Trust Scheme, please call the MGG Unitholder Information Line on 1300 005 016 (Australia) or +61 2 9290 9600 (International), between 8.15am and 5.30pm Monday to Friday (Sydney time), or consult your legal, investment or other professional adviser.

I look forward to your participation at the Meeting on 25 November 2020 and encourage you to vote in favour of the MGG Trust Scheme.

Yours sincerely

Robert Fraser
as responsible entity of Magellan Global Trust

Explanatory Memorandum (MGG)

And other important documents

How to vote (MGG)

The unitholder meeting for MGG will be held at 12.00pm Wednesday, 25 November 2020 (AEDT). Registered holders of MGG as at 7.00pm Monday 23 November 2020 (AEDT) are eligible to vote at the meeting.

To vote online prior to the meeting, visit: https://www.votingonline.com.au/mgg2020 and follow the prompts and instructions. You will need your Voter Access Code. Votes are due by 9.00am, 23 November 2020 (AEDT).

To participate and vote during the meeting, visit: https://web.lumiagm.com/342631726. Please ensure you have your Voting Access Code as this is the username that you will need to login. Your password is your postcode registered on your holding if you are an Australian unitholder or your country of residence if you are an overseas investor. Click here to download a Virtual Meeting User Guide.

Relevant ASX Releases (MGG)




Contact us (MGG)

Should you have any queries regarding your holding or the upcoming MGG Meeting, please call the MGG Unitholder Information Line on 1300 005 016 (Australia) or +61 2 9290 9600 (International), between 8.15am and 5.30pm Monday to Friday (AEDT), or consult your legal, investment or other professional adviser.

If you have questions in relation to the proposed restructure, please contact a member of the Magellan distribution team on 1800 6243 5526.