ASB Retail Unit Trusts

Transcription

1 29 June 2007 ASB Retail Unit Trusts INVESTMENT STATEMENT A simple and effective way to access investment opportunities in New Zealand and around the world.

2 > This document is an Investment Statement for the purposes of the Securities Act It was prepared as at 29 June A prospectus has been registered under that Act containing an offer of the securities to which this Investment Statement relates and a copy is available upon request. Neither the Manager, the Trustee, ASB Bank Limited or its subsidiaries (the Banking Group ), Commonwealth Bank of Australia, nor any other company in the Commonwealth Bank of Australia Group, nor any of their directors, nor any other person guarantees the securities offered in this Investment Statement (including the repayment of any capital invested) or the performance of those securities (including any of the investments or returns made in respect of the securities). The securities offered in this Investment Statement do not represent bank deposits or liabilities of the Banking Group or the Commonwealth Bank of Australia and are subject to investment risk including the loss of income and principal invested.

3 > Important information (The information in this section is required under the Securities Act 1978). Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. > Choosing an investment When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below: Section Page No. 1 What sort of investment is this? 3 2 Who is involved in providing it for me? 13 3 How much do I pay? 14 4 What are the charges? 17 5 What returns will I get? 20 6 What are my risks? 28 7 Can the investment be altered? 31 8 How do I cash in my investment? 32 9 Who do I contact with enquiries about my investment? Is there anyone to whom I can complain if I have 34 problems with the investment? 11 What other information can I obtain about this investment? Calculate your Prescribed Investor Rate 36 1 In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of the prospectus on request.

4 > Choosing an Investment Adviser You have the right to request from any investment adviser a written disclosure statement stating his or her experience and qualifications to give advice. That document will tell you: > whether the adviser gives advice only about particular types of investments; > whether the advice is limited to the investments offered by one or more particular financial organisations; and > whether the adviser will receive a commission or other benefit for advising you. You are strongly encouraged to request this statement. An investment adviser commits an offence if he or she does not provide you with a written disclosure statement within five working days of your request. You must make the request at the time the advice is given, or within one month of receiving the advice. In addition: > if an investment adviser has any conviction for dishonesty or has been adjudged bankrupt, he or she must tell you this in writing; and > if an investment adviser receives any money or assets on your behalf, he or she must tell you in writing the methods employed for this purpose. Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes. > ASB Investment Advisers ASB offers you access to a nationwide team of friendly, professional ASB Investment Advisers. ASB Investment Advisers are a dedicated, specialist team who will help you to achieve your investment and retirement goals. Their investment advice is complimentary and you are under no obligation to invest. The Investment Advisers are supported by a nationwide team of specialist investment accredited Personal Bankers who assist with investment enquiries and your everyday banking needs. To arrange an appointment with an ASB Investment Adviser or an investment accredited Personal Banker, phone us on ASB Funds

5 > 1. What sort of investment is this? The ASB Retail Unit Trusts are unit trusts established in accordance with the Unit Trusts Act What is a Unit Trust? A Unit Trust is an investment where individual unitholders ( Unitholders ) pool their savings. A Unit Trust is operated by a Manager (in the case of the ASB Retail Unit Trusts, this is ASB Group Investments Limited) who accepts contributions from a number of Unitholders, and then collectively invests those contributions in specified assets. The assets of a Unit Trust are held in the name of a Trustee (in the case of ASB Retail Unit Trusts, this is Trustees Executors Limited), on behalf of all the Unitholders in that Trust. Your personal investment in this pool is measured in units ( Units ). When you invest, you are effectively buying a number of Units at what is known as the entry unit price ( Entry Unit Price ). As the investments made by a Unit Trust rise or fall in value, so too will the value of each individual unit usually rise and fall (except in the case of the ASB Money Market Trust and the ASB Residential Mortgage Trust prior to 1 October 2007). The ASB Money Market Trust will have fixed Entry and Exit Unit Prices of 1.00 until and including 30 September 2007, while the ASB Residential Mortgage Trust has a fixed Entry Unit Price of and will have a fixed Exit Unit Price of 1.00 until and including 30 September Unit Trusts are a simple and effective way to diversify your funds across a wide range of different investment options. Unit Trusts allow you to diversify your investments to an extent which most individuals are not able to achieve on their own, because your funds are effectively pooled with those of other Unitholders. ASB Retail Unit Trusts The ASB Retail Unit Trusts range currently includes nine trusts ( Trusts ), which are available to retail Unitholders. Each Trust has a unique risk/return profile, and invests primarily in one main investment class. The ASB Retail Unit Trusts range is as follows: > ASB Money Market Trust > ASB Residential Mortgage Trust* > ASB Diversified Income Trust > ASB NZ Fixed Interest Trust > ASB World Fixed Interest Trust > ASB NZ Property Trust > ASB World Shares Trust > ASB NZ Shares Trust > ASB Emerging Markets Shares Trust * From 29 June 2005 the ASB Residential Mortgage Trust was closed to new investors. Units in the ASB Residential Mortgage Trust will continue to be issued prior to 19 July 2007 to investors who were existing Unitholders as at 29 June From 19 July 2007 the ASB Residential Mortgage Trust will be closed to all investors. Therefore from 19 July 2007, no Units will be issued in the ASB Residential Mortgage Trust. Investment Management Style A summary of the investments of each Trust is detailed on the following pages. Apart from the ASB NZ Property Trust, the ASB Residential Mortgage Trust, and the ASB Diversified Income Trust, each of the Trusts adopts an essentially index investment approach by investing in portfolios of assets, and/or wholesale investment funds, or trusts in an index or indices, which reflect the Trust s chosen investment market. This approach reduces the transaction and management costs of these Trusts. An investment asset mix for each of the Trusts is also described in the following sections. These mixes represent the benchmark mixes the Manager will aim to maintain as far as practically possible. However, you should be aware that the Manager, with the consent of the Trustee, can change the management approach, objectives, and the investment asset mixes of the Trusts (other than the ASB World Shares Trust and ASB NZ Shares Trust ) at any time. This flexibility ensures these Trusts, some of which are long term investment vehicles, can adapt to changes in the investment environment. You will be notified if any such changes occur. 3

6 > ASB Money Market Trust Objective To provide Unitholders with competitive returns consistent with a lower risk investment strategy. Risk profile Lower risk / return profile Time frame Short-term, three months plus - refer ASB Investment Guide Fees Service Fee 0.00% Management Fee 0.50% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.06% p.a. Next 50m 0.035% p.a. Thereafter 0.03% p.a. Management expense ratio 0.42% (for the year ended 31 March 2006) Income distribution period Monthly Nature of Investments The Trust primarily invests in money market deposits and aims to achieve an investment performance that tracks, as closely as possible, the NZX 90 day Bank Bill Index. The ASB Money Market Trust will have a fixed Entry and Exit Unit Price of 1.00 until and including 30 September For more information on the implications of fixed Entry and Exit Unit Prices, please refer to The return on your investment will be reflected in the following two ways on page 20. Regular Withdrawal Option Unitholders in the ASB Money Market Trust have a Regular Withdrawal Option whereby they can choose to request regular fortnightly or monthly withdrawals from this Trust. The Regular Withdrawal Option will withdraw Units from the Trust and deposit the proceeds in a nominated bank account. Please refer to Regular Withdrawal Option on page 32. for more information. Who should invest in this Trust? The ASB Money Market Trust should appeal to Unitholders who: > want a short-term, lower risk investment > seek regular income > wish to balance their investments with the consistent returns offered by cash investments > have an investment time frame of three months or more. Investment Asset Mix Benchmark % n New Zealand cash deposits 100 4

7 > ASB Residential Mortgage Trust From 29 June 2005, the ASB Residential Mortgage Trust was closed to new investors. Units in the ASB Residential Mortgage Trust will continue to be issued prior to 19 July 2007 to Investors who were existing Unitholders as at 29 June From 19 July 2007, no Units will be issued in the ASB Residential Mortgage Trust. Objective To provide Unitholders with competitive returns over timeframes greater than one year by investing (directly or indirectly) in loans secured by mortgages over properties in New Zealand. Risk profile Time frame Lower risk / return profile Short-term, one year plus - refer ASB Investment Guide Fees Service Fee 0.25% Management Fee 1.40% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.07% p.a. Next 200m 0.06% p.a. Thereafter 0.03% p.a. Management expense ratio 1.02% (for the year ended 31 March 2006) Income distribution period Monthly Nature of Investments The Trust invests in the NZ Mortgage Income Fund which is a group investment fund established under part 4 of the Public Trust Act 2001 and managed by the Manager. The NZ Mortgage Income Fund purchases interests in mortgages over property in New Zealand originated by a registered bank or other entity selected by the Manager. The Trust may also purchase interests in loans which are secured by registered first mortgages over property in New Zealand, and interests in the mortgages which secure the loans purchased by the Trust. An agreement ( the Sale, Nomination and Administration Agreement ) has been entered into between the Trustee, the Manager and ASB Bank Limited ( ASB ), pursuant to which the Trustee can, at the direction of the Manager, purchase a beneficial interest in loans, and the mortgages securing the loans, from companies within the ASB Group. Holding a beneficial interest means that the Trustee is not recognised as the legal owner of the relevant loans and mortgages, and may only sell the beneficial interest in those loans and mortgages subject to certain conditions. The market for on-sale may be small. The Trustee can only obtain legal title to the loans and mortgages if certain credit related events occur in respect of the ASB Group of companies. In the case of such investments, the income of the Trust is derived from the loan interest payments received. The Trust may only purchase an interest in loans which, at the time of the purchase, were equal to no more than 80% of the purchase price or the agreed value of the secured property. The investment guidelines followed by the NZ Mortgage Income Fund are consistent with those stated above. A pool of cash is maintained between the NZ Mortgage Income Fund and the ASB Residential Mortgage Trust for liquidity purposes. The Manager will set aside an amount out of income at the end of each month, which can be used toward meeting loan losses should they arise. The ASB Residential Mortgage Trust has a Fixed Entry Unit Price of and will have a Fixed Exit Unit Price of 1.00 until and including 30 September Regular Withdrawal Option Unitholders in the ASB Residential Mortgage Trust have a Regular Withdrawal Option whereby they can request regular fortnightly or monthly withdrawals from this Trust. The Regular Withdrawal Option will withdraw units from the Trust and deposit the proceeds in a nominated bank account. Please refer to Regular Withdrawal Option, on page 32 for more information. The exit fee is not applicable to withdrawals made via the Regular Withdrawal Option. This Trust s underlying investment exposure is relatively illiquid. Applications for withdrawals, including the Regular Withdrawal Option, may be deferred if the Trust does not have sufficient liquid investments from which to process these applications. Please refer to Withdrawals on page 21 for more information. Who should invest in the Trust? The ASB Residential Mortgage Trust, which was closed to new investors as at 29 June 2005 and will be closed to all investors from 19 July 2007, should appeal to Unitholders who: > want a lower risk investment > seek regular income > wish to balance their investments with the consistent returns offered by mortgage investments > have an investment time frame of one year or more. Investment Asset Mix Allowable range % n New Zealand residential loans n New Zealand cash

8 > ASB Diversified Income Trust Objective To provide Unitholders with a regular income over a two year plus time frame and to generate returns that outperform the NZX90 Day Bank Bill Index after adjusting for a 33% tax rate. Risk profile Time frame Lower risk / return profile Short to medium term, 2 years plus refer ASB Investment Guide Fees Service Fee 0.25% Transaction Allowance 0.10% Management Fee up to 1.15% p.a. of the gross asset value of the Trust* Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 100m 0.05% p.a. Next 150m 0.04% p.a. Thereafter 0.03% p.a. * The actual management fee for the ASB Diversified Income Trust will vary based on the actual asset allocation within the allowable ranges as set out above. Management expense ratio 0.76% annualised based on the period from establishment to 31 March See Management Expense Ratio section on page 19 for more details. The asset allocation and fee structure changed as of 29 August 2005 and as such the MER also reflects the prior management fee. Income distribution period Monthly Nature of Investments The Trust invests (directly or indirectly) in at call or short term securities, NZ loans secured by mortgages over properties located in NZ and International corporate debt securities. The Trust invests in the Colonial First State Wholesale Global Credit Income Fund. The aim of that fund is to generate an income based return over the medium term through exposure to a diversified portfolio of higher yielding international fixed interest investments. These investments include Australasian and overseas corporate bonds, high yield debt securities (including securities credit rated below BBB-), derivatives and cash. The Wholesale Global Credit Income Fund seeks to provide returns in excess of the UBS Warburg Australian Bank index, over rolling three year periods. The Fund is an Australian registered managed investment scheme actively managed by Colonial First State Investments Limited, and has a current rating of A/MR2, representing Moody s opinion of, respectively, the investment quality and market risk of the Fund. A market risk of MR2 means that the Wholesale Global Credit Income Fund has been rated as having a low sensitivity to changing interest rates and other market conditions. The Trust also invests in the NZ Mortgage Income Fund which is a group investment fund established under part 4 of the Public Trust Act 2001 and managed by the Manager. The NZ Mortgage Income Fund purchases interests in mortgages over property in New Zealand originated by a registered bank or other entity selected by the Manager. The Trust may also invest in the Investors Wholesale Cash Trust, a New Zealand wholesale unit trust managed by the Manager. The Wholesale Cash Trust invests primarily in New Zealand cash deposits and short term securities to provide an income based return. However, it is anticipated that the majority of the cash deposits and short term securities of the Trust will be held in the NZ Mortgage Income Fund in which the Trust will invest a proportion of its assets. There is no double charging of management fees on any investment in the Investors Cash Wholesale Trust or the NZ Mortgage Income Fund. The Manager uses foreign exchange contracts or derivatives to reduce the risk of currency movements. The risk of movements in interest rates is reduced through the use of derivatives. A small pool of cash is also retained by the Manager for liquidity purposes. Regular Withdrawal Option Unitholders in the ASB Diversified Income Trust have a Regular Withdrawal Option whereby they can choose to request regular fortnightly or monthly withdrawals from this Trust. The Regular Withdrawal Option will withdraw Units from the Trust and deposit the proceeds in a nominated bank account. Please refer to Regular Withdrawal Option on page 32 for more information. The Exit Fee is not applicable to withdrawals made via the Regular Withdrawal Option. Who should invest in this Trust? The ASB Diversified Income Trust should appeal to Unitholders who: > want a lower risk investment > are comfortable to invest in a diversified portfolio of international corporate debt securities that includes below investment grade securities > seek regular income > have an investment time frame of two years or more. Investment Asset Mix Benchmark % Allowable range % n International corporate debt securities n New Zealand loans and mortgages securing those loans n Cash deposits and short term securities

9 > ASB NZ Fixed Interest Trust Objective To provide Unitholders with competitive returns consistent with a conservative investment strategy. Risk profile Lower risk / return profile Time frame Medium-term, five years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 0.85% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.075% p.a. Next 50m 0.06% p.a. Thereafter 0.04% p.a. Management expense ratio 0.75% (for the year ended 31 March 2006) Income distribution period Quarterly (31 March, 30 June, 30 September, 31 December) Nature of Investments The Trust invests in a portfolio of New Zealand Government fixed interest securities that attempts to match the composition and weightings of the NZX Government Stock Index. The Trust also holds a portfolio of New Zealand corporate fixed interest securities that attempts to match the composition and weightings of the NZX A Grade Corporate Bond Index. A small pool of cash is also retained by the Manager for liquidity purposes. In addition to the Management Fee referred to above, the Manager is entitled to receive a fee for additional investment management services in respect of the Trust s portfolio of New Zealand fixed interest securities. Please refer to Management Fee on page 18 for more details. Who should invest in this Trust? The ASB NZ Fixed Interest Trust should appeal to Unitholders who: > want a lower risk investment > wish to balance their investments with the relatively consistent returns offered by fixed interest securities > have an investment time frame of five years or more. Investment Asset Mix Benchmark % n New Zealand cash 2 n New Zealand Government fixed interest securities 49 n New Zealand corporate securities 49 7

10 > ASB World Fixed Interest Trust Objective To provide Unitholders with competitive returns consistent with a conservative investment strategy. Risk profile Lower risk / return profile Time frame Medium-term, five years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 0.85% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.075% p.a. Next 50m 0.06% p.a. Thereafter 0.04% p.a. Management expense ratio 0.78% (for the year ended 31 March 2006) Income distribution period Quarterly (31 March, 30 June, 30 September, 31 December) Nature of Investments The Trust primarily invests in the SSgA Fixed Income Index Trust, which is an Australian wholesale unit trust managed by State Street Global Advisers, Australia Limited. The SSgA Global Fixed Income Index Trust attempts to match the composition and weightings of the Citigroup World Government Bond Index by investing in a portfolio of diversified government bonds of countries situated in a number of continents, which will usually include the United States of America, Japan, Germany, the United Kingdom, France and Canada. The ASB World Fixed Interest Trust s investment in the SSgA Global Fixed Income Index Trust is 100% (plus or minus 2.5%) hedged back into New Zealand dollars. A small pool of cash is also retained by the Manager for liquidity purposes. In addition to the Management Fee referred to above, a fee may be paid in respect of investment management services to State Street Global Advisers, Australia Limited. This fee will be charged to the Trust. Please see Management Fee on page 18 for more details. Who should invest in this Trust? The ASB World Fixed Interest Trust should appeal to Unitholders who: > want a lower risk investment > wish to balance their investments with the relatively consistent returns offered by fixed interest securities > have an investment time frame of five years or more. Investment Asset Mix Benchmark % n New Zealand cash 2 n World Government bond portfolio 98 Includes the following countries: United States, Japan, Germany, United Kingdom, France and Canada 8

11 > ASB NZ Property Trust Objective To provide Unitholders with long-term capital growth through investing in a diversified portfolio of New Zealand property investments. Risk profile Medium risk / return profile Time frame Long-term, eight years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 1.50% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.07% p.a. Next 50m 0.06% p.a. Thereafter 0.05% p.a. Management expense ratio 1.21% (for the year ended 31 March 2006) Income distribution period Six monthly (31 March, 30 September) Nature of Investments The Trust predominantly invests in the AMP Investments NZ Property Fund which owns a diversified spread of commercial, industrial and retail property. The Trust also invests in companies listed on the New Zealand sharemarket which have a property emphasis. A small pool of cash is retained by the Manager for liquidity purposes. The Manager has appointed AMP Capital Investors (New Zealand) Limited to manage this Trust s portfolio of New Zealand property investments. In addition to the Management Fee referred to above, a fee may be paid in respect of investment management services to AMP Capital Investors (New Zealand) Limited. This fee will be charged to the Trust. Please see Management Fee on page 18 for more details. AMP Capital Investors (New Zealand) Limited is one of New Zealand s largest fund managers. Who should invest in this Trust? The ASB NZ Property Trust should appeal to those Unitholders who: > seek the potential for long-term capital growth > wish to invest in a well diversified portfolio of New Zealand property investments > have an investment time frame of eight years or more. Investment Asset Mix Benchmark % n New Zealand cash 2 n New Zealand property portfolio 70 n New Zealand property shares 28 9

12 > ASB World Shares Trust Objective To track, as close as practically possible, the performance of the AMP World Index (as adjusted for a 50% net currency hedge into NZ dollars) which is made up of shares in companies listed on major world sharemarkets. Risk profile Higher risk / return profile Time frame Long-term, eight years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 1.00% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.075% p.a. Next 50m 0.065% p.a. Thereafter 0.05% p.a. Management expense ratio 0.90% (for the year ended 31 March 2006) Income distribution period Six monthly (31 March, 30 September) Nature of Investments The Trust invests in AMP Investments World Index Fund, a fund managed by AMP Capital Investors (New Zealand) Limited. That fund holds a portfolio of international shares and attempts to match the composition and weighting of the AMP World Index by investing in companies situated in a number of continents and countries including the United Kingdom, Germany, Australia, Canada, the United States of America and Japan. To reduce the impact of currency movements, the Manager may take out currency hedging (by ASB) to New Zealand dollars from time to time. A small pool of cash is also retained by the Manager for liquidity purposes. In addition to the Management Fee referred to above, a fee may be paid in respect of investment management services to AMP Capital Investors (New Zealand) Limited. This fee will be charged to the Trust. Please see Management Fee on page 18 for more details. Who should invest in this Trust? The ASB World Shares Trust should appeal to Unitholders who: > seek the potential for higher long-term capital growth > are comfortable investing in higher risk investments and will accept a greater degree of volatility in Unit Prices > have an investment time frame of eight years or more. Investment Asset Mix Benchmark % Allowable range % n New Zealand cash n World portfolio of shares Includes the following countries: United States, United Kingdom, Japan, Germany, Canada and Australia 10

13 > ASB NZ Shares Trust Objective To track, as close as practically possible, the performance of the NZSX 50 Index, which comprises companies listed on the New Zealand sharemarket. Risk profile Higher risk / return profile Time frame Long-term, eight years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 1.00% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.075% p.a. Next 50m 0.06% p.a. Thereafter 0.05% p.a. Management expense ratio 0.96% (for the year ended 31 March 2006) Income distribution period Six monthly (31 March, 30 September) Nature of Investments The Trust invests in AMP Investments Tracker Fund, a fund managed by AMP Capital Investors (New Zealand) Limited. That fund holds a portfolio of New Zealand shares and convertible notes listed on the New Zealand Exchange. A small pool of cash is also retained by the Manager for liquidity purposes. In addition to the Management Fee referred to above, a fee may be paid in respect of investment management services to AMP Capital Investors (New Zealand) Limited. This fee will be charged to the Trust. Please see Management Fee on page 18 for more details. Who should invest in this Trust? The ASB NZ Shares Trust should appeal to Unitholders who: > seek the potential for higher long-term capital growth > are comfortable investing in higher risk investments and will accept a greater degree of volatility in Unit Prices > have an investment time frame of eight years or more. Investment Asset Mix Benchmark % Allowable range % n New Zealand cash n New Zealand portfolio of shares Includes the following companies: Telecom, Carter Holt Harvey, Contact Energy, The Warehouse and Sky Network. 11

14 > ASB Emerging Markets Shares Trust Objective To provide Unitholders with long-term capital growth through investing in a diversified portfolio of higher risk emerging markets shares. Risk profile Higher risk / return profile Time frame Long-term, twelve years plus refer ASB Investment Guide Fees Service Fee 0.50% Management Fee 1.00% p.a. of the gross asset value of the Trust Trustee Fee a percentage of the gross asset value of the Trust according to the following scale: First 50m 0.07% p.a. Next 50m 0.06% p.a. Thereafter 0.05% p.a. Management expense ratio 0.99% (for the year ended 31 March 2006) Income distribution period Six monthly (31 March, 30 September) Nature of Investments The Trust aims to achieve its objective by tracking, as close as practically possible, the performance of the Morgan Stanley Capital International Select Emerging Markets (Free) Index ( MSCI Emerging Markets Index ) which comprises listed companies located in emerging markets of Europe, Asia, Africa and Latin America. The Trust invests primarily in The Vanguard International Equity Index Fund Emerging Markets Portfolio ( The Vanguard Emerging Markets Fund ). This fund is managed by The Vanguard Group, one of the largest US mutual fund managers with total assets of over US750 billion as at 13 September The Manager has selected this fund because of The Vanguard Group s size, reputation and experience with passive investment management. The Vanguard Emerging Markets Fund holds a portfolio of shares in countries such as China, Brazil, South Korea, Taiwan, Israel, Mexico and South Africa, and attempts to match the composition and weighting of the MSCI Emerging Markets Index. A small pool of cash is also retained by the Manager for liquidity purposes. In addition to the Management Fee referred to above, a fee may be paid in respect of investment management services to The Vanguard Group. This fee will be charged to the Trust. Please see Management Fee on page 18 for more details. Who should invest in this Trust? The ASB Emerging Markets Shares Trust should appeal to Unitholders who: > seek the potential for higher long-term capital growth > are comfortable investing in higher risk investments and will accept relatively greater volatility in Unit Prices > have an investment time frame of twelve years or more. Investment Asset Mix Benchmark % n New Zealand cash 2 n Emerging Markets portfolio of shares 98 Includes the following countries: China, Mexico, South Africa, Brazil, South Korea, Taiwan and Israel. 12

15 > 2. Who is involved in providing it for me? The names of the ASB Retail Unit Trusts covered in this Investment Statement are: > ASB Money Market Trust > ASB Residential Mortgage Trust > ASB Diversified Income Trust > ASB NZ Fixed Interest Trust > ASB World Fixed Interest Trust > ASB NZ Property Trust > ASB World Shares Trust > ASB NZ Shares Trust > ASB Emerging Markets Shares Trust Each of these Trusts were established in October 1997 (other than the ASB Residential Mortgage Trust which was established in April 1999, the ASB World Fixed Interest Trust which was established in October 1999, and the ASB Diversified Income Trust which was established in January 2005) by a separate Unit Trust Establishment Deed, as amended from time to time (together the Establishment Deeds ) between the Manager and the Trustee. In addition, all of the ASB Retail Unit Trusts are governed by a Master Trust Deed, as amended from time to time ( the Master Deed ), which is also between the Manager and the Trustee. The ASB Residential Mortgage Trust was closed to new Unitholders with effect from 29 June Units in the ASB Residential Mortgage Trust will only be issued prior to 19 July 2007 to investors who were existing Unitholders as at 29 June 2005 and who have continued to be Unitholders. From 19 July 2007, no Units will be issued in the ASB Residential Mortgage Trust. The Manager and Promoter ASB Group Investments Limited is the Manager and Promoter of each of the ASB Retail Unit Trusts, and is a wholly owned subsidiary of ASB Group (Life) Limited and a related company of ASB. ASB is involved in the marketing and distribution of the ASB Retail Unit Trusts, but is not a promoter (as that term is defined in the Securities Regulations 1983) of the Trusts. ASB is also the Administration Manager of the ASB Residential Mortgage Trust. The Manager is responsible for the day to day management of the ASB Retail Unit Trusts. This includes the implementation of investment strategies and guidelines for each ASB Retail Unit Trust, monitoring the performance of any appointed Investment Managers, and administering and promoting the ASB Retail Unit Trusts. The directors of ASB Group Investments Limited as at the date of this Investment Statement are P S Hall, J W Duncan, J S N Mitchell, L A Wood, G H Burrett, S R S Blair and S B McRobie. The directors may change from time to time. The registered office of ASB Group Investments Limited and contact address for each director is: Level 28, ASB Bank Centre, 135 Albert Street (P O Box 35, Shortland Street), Auckland 1140, New Zealand. The principal place of business of ASB Group Investments Limited is: Level 1, Hurstmere Road, Takapuna, Auckland, New Zealand. You may also contact the Manager or ASB by phoning The Trustee Trustees Executors Limited is the appointed Trustee of each of the ASB Retail Unit Trusts. The Trustee monitors the Manager s compliance with the requirements of the Master Deed and each Establishment Deed. The Trustee is independent of the Manager and holds all of the assets of each Trust on behalf of all Unitholders. You may contact the Trustee by writing to: Trustees Executors Limited, Level 12, 45 Queen Street (P O Box 4197), Auckland, New Zealand. You may also contact the Trustee by phoning No Guarantors Neither the Manager, the Trustee, ASB or its subsidiaries (the Banking Group ), the Commonwealth Bank of Australia, nor any other company in the Commonwealth Bank of Australia Group, nor any of their directors, nor any person, guarantees the securities offered in this Investment Statement (including the repayment of any capital invested) or the performance of those securities (including any of the investments or returns made in respect of these securities). The securities offered in this Investment Statement do not represent bank deposits or liabilities of the Banking Group or the Commonwealth Bank of Australia, and are subject to investment risk including the loss of income and principal invested. It is impossible to predict future returns of the ASB Retail Unit Trusts and past returns are no indication of future performance. Returns may be negative and Unitholders may receive back less than their principal invested. 13

16 > 3. How much do I pay? Lump sum investment or regular savings plan You may invest in the ASB Retail Unit Trusts by way of lump sum investments, or by regular fortnightly or monthly savings, or a combination of both. You may vary your regular savings or suspend them at any time. Prior to 19 July 2007, investments in the ASB Residential Mortgage Trust will only be accepted from investors who were existing Unitholders as at 29 June From 19 July 2007, no investments will be accepted in the ASB Residential Mortgage Trust. Whether you choose to invest by way of lump sum investments or by regular savings will determine the minimum level of investment required in ASB Retail Unit Trusts. Those minimum levels, calculated (except in the case of the ASB Residential Mortgage Trust and the ASB Diversified Income Trust) by reference to your total investment in all ASB Retail Unit Trusts, are set out below. Minimum levels of investment in ASB Retail Unit Trusts > Minimum Lump Sum Investments Initial lump sum investment ASB Residential Mortgage Trust* and the ASB Diversified Income Trust 10,000 Initial lump sum investment all other ASB Retail Unit Trusts 2,000 Additional lump sum investment 500 > Regular Savings Plan** Minimum initial regular savings investment 100 Minimum regular savings contributions 100 each month, or 50 each fortnight > Minimum Holding*** ASB Residential Mortgage Trust and the ASB Diversified Income Trust All other ASB Retail Unit Trusts 10,000^ 2,000^ > Minimum Withdrawal Amount unless your entire investment in a Trust is being withdrawn 500 > Minimum Regular Withdrawal applies only to the ASB Money Market Trust, ASB Residential 100 each month Mortgage Trust and ASB Diversified Income Trust or fortnight > Minimum Switching Amount unless your entire investment in a Trust is being switched 500 * Maximum and minimum levels of investment in the ASB Residential Mortgage Trust. In the case of the ASB Residential Mortgage Trust only, the Manager may prevent any single Unitholder from holding more than 5% of the number of Units on issue in the Trust at that time, or from holding a portion of the Units on issue in the Trust which, when aggregated with the number of units on issue in the Trust held by associated persons (as defined in the Securities Act 1978) of that person, exceeds more than 5% of the number of Units on issue in the Trust at that time. ** The regular savings plan option is not available for the ASB Residential Mortgage Trust or the ASB Diversified Income Trust unless the minimum holding of 10,000 has been met. *** If the minimum holding is not maintained, the Manager has the discretion to implement a withdrawal of the investment and pay the withdrawal amount to you. Unitholders making regular savings contributions are not permitted to withdraw funds (other than the full amount) until the prescribed minimum holding is attained, but are not required to have reached this minimum holding until they have been investing in the ASB Retail Unit Trusts for two years. ^ After allowing for any adjustment for PIE tax on taxable income attributed to your Units in a Trust. See the Taxation Summary on page 23 for more information. The minimum investment amounts and holdings set out above may be varied from time to time by the Manager. 14

17 > How do I invest and who do I pay my money to? Initial and additional investments Investing in ASB Retail Unit Trusts is easy. You need only complete the attached application form and lodge it with any branch of ASB, your ASB Investment Adviser, or send it to ASB Group Investments Limited (Freepost Authority No. ASB BANK, P O Box 35, Auckland). You can authorise the transfer of investment amounts from your nominated ASB account by completing the appropriate sections of the application form. The Manager reserves the right to decline applications for any reason. Any application moneys received will be refunded in full in these circumstances. Applications received by the Manager before 5pm on any business day will normally be invested, if accepted, at the Unit Price for that day. After that time, applications received will normally be invested at the Unit Price applicable for the next business day. We recommend that you talk to an ASB Investment Adviser or investment accredited Personal Banker and complete an Investment Acknowledgment form. Where regular savings are made, the Unit Price will normally be calculated on the date the regular savings payment is received by the Manager. Regular savings plan If you want to invest under the regular savings plan, please complete the attached direct debit form together with the application form. The amount of your regular savings will be deducted from your bank account automatically. ASB Share Swap Service The ASB Share Swap Service is one way of exchanging your existing shareholdings in publicly listed companies for Units in the ASB Retail Unit Trusts. If you choose to use this service, ASB will arrange for the sale of your shares on your behalf. The scale of brokerage fees for shares sold by ASB on your behalf as at the date of this Investment Statement are shown below. Note: Pricing subject to change. Scale of Brokerage Rates (NZ) Shares) Scale of Brokerage Rates (Australian Shares) less than 50, % less than 50, % 50,000 and above 0.3% 50,000 and above negotiable minimum brokerage NZ30.00 minimum brokerage AU30.00 For shares sold by ASB on your behalf in any country other than Australia or New Zealand, brokerage fees are negotiable. For more information on the ASB Share Swap Service, contact an ASB Investment Adviser or an investment accredited Personal Banker by phoning 0800 ASB FUNDS ( ) or by visiting any ASB branch. 15

18 Telephone Transaction Service Once your application form has been accepted and your ASB Retail Unit Trusts investment processed, you can take advantage of our Telephone Transaction Service. If you hold a current ASB account, additional investments can be made by transferring funds from that account and investing them in your nominated ASB Retail Unit Trust. In addition, the Telephone Transaction Service lets you switch between Trusts and make withdrawals from any of the Trusts over the telephone (fees may apply). Using our Telephone Transaction Service is easy. Simply call us on 0800 ASB FUNDS ( ). Indemnities and releases The following indemnities and releases apply in relation to all transactions entered into through the Telephone Transaction Service. If you use the Telephone Transaction Service, you are deemed to have agreed to these conditions. > Subject to the following terms, the Manager agrees to act on telephone instructions communicated by you or your nominee or agent (as authorised by you in writing) for requests relating to any of: (i) The withdrawal of Units held by you; (ii) The switching of Units from one ASB Retail Unit Trust into those in another; (iii) The purchase of additional Units in an ASB Retail Unit Trust; and such withdrawals, switches, or purchases will be governed in all respects by the provisions of the Master Deed and each applicable Establishment Deed. > If you have jointly invested in ASB Retail Unit Trusts, the Manager may act on the telephone instructions of just one Unitholder. > You release, discharge and agree to indemnify the Manager and the Trustee from and against all actions, proceedings, accounts, claims, demands and liabilities arising from or in relation to telephone instructions. > You agree that neither you, nor your nominee or agent, will have any claim against any ASB Retail Unit Trust, the Manager, or the Trustee in relation to any payment made or purporting to be made pursuant to telephone instructions, notwithstanding that the payment relates to a request which has been made without your knowledge or authority, or in any other circumstances. > You will be asked to select a confidential customer password as part of this service. This password (in addition to any other identification or security requirements) will be required prior to processing any transaction. You will remain responsible for the confidentiality of the password and must not disclose it to any other person (including family members). > If deemed necessary by the Manager, telephone conversations may be electronically recorded, or additional means of identification requested prior to processing a transaction. Keeping you up to date Once your initial application is accepted, the Manager will register your name(s) on the ASB Retail Unit Trusts Register and mail to you an ASB Retail Unit Trusts Investment Certificate evidencing title to the Units purchased in ASB Retail Unit Trusts. The Manager will also send you a consolidated ASB Retail Unit Trusts Investment Certificate every six months to let you know how many Units you have purchased or withdrawn in the ASB Retail Unit Trusts during that period. This Investment Certificate will supersede all previous Investment Certificates sent to you and should be kept in a safe place. You may also request that a certificate be sent to you by writing to the Manager at the address set out on page 13 of this Investment Statement. The Manager may alter this procedure, if required, to comply with the Securities Act 1978 or the Unit Trusts Act

19 > 4. What are the charges? Summary of fees for ASB Investment Strategies Investment Strategy Current Total Initial Fees (% of the application moneys) Current Total Annual Fees (% of gross asset value) Conservative 0.425% % Moderate 0.450% % Balanced 0.450% % Growth 0.480% % Dynamic 0.500% % The above Investment Strategies are set out in the ASB Investment Guide. The annual fees will vary depending on the day to day valuation changes of the assets. What fees do I pay when I invest? ASB Retail Unit Trusts Current Service Fee paid to the Manager (% of the application moneys) Initial costs Current Transaction Allowance retained by the specific ASB Retail Unit Trusts (% of the application moneys) Total Initial Cost ASB Money Market Trust 0.00% 0.00% 0.00% ASB Residential Mortgage Trust 0.25% 0.00% 0.25% ASB Diversified Income Trust 0.25% 0.10% 0.35% ASB NZ Fixed Interest Trust 0.50% 0.00% 0.50% ASB World Fixed Interest Trust 0.50% 0.00% 0.50% ASB NZ Property Trust 0.50% 0.00% 0.50% ASB World Shares Trust 0.50% 0.00% 0.50% ASB NZ Shares Trust 0.50% 0.00% 0.50% ASB Emerging Markets Shares Trust 0.50% 0.00% 0.50% Note: All Entry Costs are factored into the Entry Price quoted for a Trust and are applied to every deposit to the particular Trust. Service Fee A Service Fee is deducted from all moneys invested in an ASB Retail Unit Trust (including regular contributions) and is paid to the Manager. The Service Fee is set from time to time by the Manager and can be no greater than 3% of the application moneys received, unless the Establishment Deed in respect of the relevant ASB Retail Unit Trust is first amended. The current Service Fees are set out in the above table. Transaction Allowance After deduction of the Service Fee (if any), moneys received for investment are used to acquire Units in the relevant ASB Retail Unit Trust. A Transaction Allowance for asset acquisition and selling costs may be retained by the Trust to help preserve equity between existing, new and outgoing Unitholders. This is not a fee payable to the Manager but is retained by the Trust you are investing in. Its purpose is to cover the costs of investing the application moneys in the assets of the relevant Trust and other administration costs relating to the issue or redemption of Units. The Transaction Allowance is set from time to time by the Manager and will not exceed 3% of the application moneys received, unless the Establishment Deed in respect of the relevant ASB Retail Unit Trust is first amended. The ASB Diversified Income Trust retains a Transaction Allowance of 0.10% of application monies. Currently, no Transaction Allowance is retained by any of the other ASB Retail Unit Trusts. 17

20 Switching between ASB Retail Unit Trusts As no Service Fee is currently charged in respect of the ASB Money Market Trust, Unitholders switching from that Trust will be required to pay the Service Fee of the Trust(s) into which they switch. Otherwise, neither a Service Fee nor a Transaction Allowance (with the exception of a switch into the ASB Diversified Income Trust) is charged on switching. Other fees No other fees are currently charged to the Unitholders when they initially invest. However, the Manager has the discretion to introduce certain other fees such as withdrawal, switching, or transfer charges. You will be notified in writing at least one month before any such charge is introduced. At the date of this Investment Statement, only the ASB Residential Mortgage Trust charges (and only in certain circumstances) a fee in respect of withdrawals. Such circumstances are outlined on page 19. What are the ongoing fees paid by the ASB Retail Unit Trusts? ASB Retail Unit Trusts Management Fee (% of the gross asset value) Trustee Fee (Maximum % of the gross asset value) ASB Money Market Trust 0.50% 0.060% ASB Residential Mortgage Trust 1.40% 0.070% ASB Diversified Income Trust up to 1.15% 0.050% ASB NZ Fixed Interest Trust 0.85% 0.075% ASB World Fixed Interest Trust 0.85% 0.075% ASB NZ Property Trust 1.50% 0.070% ASB World Shares Trust 1.00% 0.075% ASB NZ Shares Trust 1.00% 0.075% ASB Emerging Markets Shares Trust 1.00% 0.070% Note 1: Note 2. Management Fees do not appear on investors statements they are calculated on the total pool and primarily affect the overall return of the Fund. The Management Fee above does not include any fees payable in respect of investment management services provided by the parties performing such services as described below under the heading Management Fee. The annual fees will vary depending on the day to day valuation changes of the assets. The Trustee fee applied to each of the Trusts is calculated on a tiered basis as set out on pages 4 to 12. A minimum Trustee Fee applies. GST is currently payable on the Management Fee and Trustee Fee in part, as agreed with the Inland Revenue Department. Management Fee The Manager charges each Trust an annual Management Fee for investment management and other functions based on the gross asset value of the Trust calculated on a daily basis and payable quarterly in arrears. The Management Fee is set by the Manager from time to time and cannot exceed 3% annually of the gross asset value of each Trust calculated daily unless the Establishment Deed in respect of the relevant ASB Retail Unit Trust is first amended. The Management Fee (plus any GST) is paid from the funds of the relevant Trusts. The current Management Fees are set out in the table above What are the ongoing fees paid by the ASB Retail Unit Trusts? In addition to the annual Management Fee referred to above, a fee may be paid in respect of investment management services to the parties performing such roles within each Trust (the Investment Managers). These fees will be charged to the respective Trusts up to a maximum of 0.15% per annum of the proportion of the gross asset value of the respective Trust that each Investment Manager manages (plus any GST). They are calculated and accrued daily and paid quarterly. In cases where the remuneration payable to an Investment Manager exceeds 0.15% per annum of the proportion of the gross asset value of the respective Trust that each Investment Manager manages, the amount in excess of 0.15% is met by the Manager. 18

21 Trustee Fee The Trustee is paid an annual fee for its trustee and custodial services from the funds of the ASB Retail Unit Trusts. This fee is based on the gross asset value of each Trust calculated on a daily basis (plus any GST) and payable quarterly in arrears. The Trustee Fee is tiered and paid to a maximum percentage (see the table under the heading What are the ongoing fees paid by the ASB Retail Unit Trusts? on page 18) as agreed from time to time by the Manager and the Trustee, such amount being no less than 9,500 annually in the case of the ASB World Fixed Interest Trust and 5,000 annually for each of the other ASB Retail Unit Trusts. The current Trustee Fees are outlined on pages 4 to 12. The Trustee is also able to charge special fees to reflect additional services provided. Other expenses of the Trusts In addition to the fees described in this section, under the Master Trust Deed both the Trustee and the Manager are entitled to be reimbursed out of the funds of a Trust for all costs, charges and expenses properly and reasonably incurred in connection with the operation and administration of that Trust. In addition, ASB, as Administration Manager of the ASB Residential Mortgage Trust, is entitled to be reimbursed out of the funds of the Trust for each cost, expense and charge which it necessarily incurs in the performance of its services as Administration Manager, and has the right to be paid an Administration Fee by the Manager for which the Manager may likewise be reimbursed. Although the Manager has currently met all of the costs associated with establishing, marketing and promoting the ASB Retail Unit Trusts (and intends to continue doing so), it does reserve the right to charge such costs to the relevant Trust. The current fee structure (including the timing of payments to the Trustee and Manager and the introduction of any new or special fees) may be increased by the Manager or Trustee by giving you one month s written notice. Any decrease in fees or charges payable will be introduced without the need to give prior notice. Management Expense Ratio The Management Expense Ratios (MERs) represent the cost incurred in generating the returns from a Trust. The MERs do not show the actual on-going fees and other expenses of the Trusts or of any individual investor in the Trusts. They show the maximum rate of on-going fees and other expenses of the Trusts as a percentage of the average size of the Trusts over the relevant financial year. The MERs for the current financial year or any future period are not guaranteed. For example, if the average size of a Trust reduces, generally the MER for that Trust will increase. The MERs for previous financial years are set out in the current registered prospectus. The MERs do not take into account non-recurring fees such as entry or exit fees. The actual MERs may be lower than those shown if a rebate is applied to fees or other expenses. The MERs which apply to each of the ASB Retail Unit Trusts for the year ended 31 March 2006 are set out on pages 4 to 12 and are calculated in accordance with the following formula: MER = NDE + [DE x (1- T)] x 100 Average Fund Size Where NDE DE T = Fees and recovered expenses that are non-deductible for tax purposes. = Fees and recovered expenses that are deductible for tax purposes. = The income tax rate applicable to the Trust for the relevant period. It is expected that the way MERs are calculated will be reviewed and modified to reflect the Portfolio Investment Entity (PIE) regime from 1 October The Manager will comply with any new MER standards that may apply from time to time, for ASB Unit Trusts that are PIEs. For more information about the PIE regime and the ASB Unit Trusts refer to the Taxation Summary on page 23. What fees do I pay when I withdraw? Exit Fee An Exit Fee is not currently charged on any of the Trusts. 19

22 > 5. What returns will I get? ASB Retail Unit Trusts are pooled funds. The money you invest in an ASB Retail Unit Trust entitles you to a share of that pool that share is expressed as Units. The amount of the return on your investment will be reflected as an increase or decrease in a fund s Unit Price. A Unit Price incorporates both capital growth of a fund s assets and any capital losses, and income after payment of expenses and taxes. The Trustee is legally liable to pay any returns. Understanding Entry and Exit Unit Prices Except in the case of the ASB Money Market Trust prior to 1 October 2007, two Unit prices are quoted for each ASB Retail Unit Trust. The Entry Unit Price is the price at which you can purchase Units. The Exit Unit Price is the price you receive when you want to redeem your Units (subject to any adjustment for PIE tax deducted in respect of those Units). In short, the Exit Unit Price of a Trust (other than prior to 1 October 2007 for the ASB Money Market Trust and the ASB Residential Mortgage Trust, which have fixed Exit Unit Prices until and including 30 September 2007) is determined by dividing the net asset value of that Trust on each business day by the number of Units on issue. The Entry Unit Price is determined by adding the Service Fee and Transaction Allowance to the relevant Exit Unit Price. Applications received by the Manager before 5pm on any business day will normally be invested, if accepted, at the Entry Unit Price for that day. Other applications will normally be invested at the Entry Unit Price applicable for the next business day. Where regular savings are made, the Entry Unit Price will normally be that applicable on the date the regular savings payment is received by the Manager. The return on your investment will be reflected in the following two ways: > Any increase or decrease in the relevant Exit Unit Price (other than prior to 1 October 2007 in respect of the ASB Money Market Trust or the ASB Residential Mortgage Trust where the Exit Unit Price is fixed until and including 30 September 2007); and > Any distributions from the relevant Trust. You should be aware that no rate of return is indicated or promised. The key factor determining the returns of each Trust will be the type of asset purchased by the Trust and the investment performance of those assets, which may depend on the performance of the market or markets in which the Trust invests. The charges and taxes payable by both the ASB Retail Unit Trusts and Unitholders (as set out in section 4 of this Investment Statement and on page 23 under the heading Taxation Summary ) will also affect returns. While the Exit Unit Price for both the ASB Money Market Trust and the ASB Residential Mortgage Trust are fixed, returns on investment in those Trusts can only be received through distributions. Accordingly, if at any time prior to 1 October 2007 the total of the Exit Unit Price of all Units on issue in either Trust is greater than the net asset value of that Trust (as a result of, for example, a negative distribution amount), the Manager may arrange for sufficient Units in the relevant Trust to be forfeited to remove the deficiency. In that event, the Unitholder whose Units will be forfeited, and the number of Units of each Unitholder that will be forfeited, shall be determined by the Manager and the Trustee in a manner they consider equitable, taking into account the reason for the deficiency and the period over which it has arisen. 20 1

23 The valuation of the ASB Retail Unit Trusts may also include deferred tax losses or tax assets which the Manager reasonably expects over time will be recovered by the Trust. Tax assets used in the calculation of Unit Prices are valued by the Manager and may be capped where it is determined by the Manager with the agreement of the Trustee that it is inappropriate for them to be recorded at full value. The value attributed to tax assets for Unit Pricing purposes may therefore change from time to time. When the Manager is valuing tax losses of an ASB Unit Trust it shall have regard to the ASB Unit Trust s stated policies (if any) from time to time and if an ASB Retail Unit Trust is a PIE, tax legislation. Please note that the valuation of tax losses does not apply to the ASB Money Market Trust or the ASB Residential Mortgage Trust prior to 1 October The ASB Money Market Trust will have fixed Entry and Exit Unit Prices until and including 30 September The ASB Residential Mortgage Trust has a fixed Entry Unit Price and will have a fixed Exit Unit Price until and including 30 September As a consequence of the reduction in the corporate tax rate from 33% to 30% for the 2008/2009 and following income years, any accumulated tax losses will decrease in value to reflect the fact that each 1.00 of tax loss will only relieve a Trust of 0.30 of tax rather than 0.33 as currently. Past performance of ASB Retail Unit Trusts and indices Your Investment Adviser will be able to discuss historical returns with you (as and when they become available), and the ASB Investment Guide also contains information on the expected range of annual returns. However, past performance is no indication of future performance. ASB will also make information available on the latest returns, which you can obtain by: > visiting > phoning 0800 ASB FUNDS ( ) > obtaining a copy of the ASB In Touch, which will be posted to you six monthly, and which is also available from your nearest ASB branch. Withdrawals You can normally withdraw all or part of your investment in any of the ASB Retail Unit Trusts at any time. On receiving a withdrawal request, the Manager has the discretion to action such a withdrawal request by way of redemption of Units or the sale of Units to the Manager. It is intended that withdrawal moneys will be paid within seven business days of your withdrawal request. However, the Manager is not able to redeem (or repurchase) Units in the ASB Residential Mortgage Trust if the Trust does not have sufficient funds invested in liquid investments to do so. The Manager of the ASB Residential Mortgage Trust is not obliged to realise any of that Trust s investments in order to meet any redemption (or repurchase) request. Further, in certain exceptional circumstances, the Manager may suspend or defer redemption (or repurchase) in all or any of the Trusts for periods determined by the Manager. Some examples are where an adverse change has occurred in the underlying investments or the Manager considers this action to be in the interests of the Unitholders, or a period of time is required to sell some of the Trusts underlying investments before a withdrawal request can be met. Unitholders making regular savings contributions are not permitted to withdraw funds, other than their full holding, from any of the ASB Retail Unit Trusts until the prescribed minimum holding is attained (currently 2,000 for all ASB Retail Unit Trusts except the ASB Residential Mortgage Trust and the ASB Diversified Income Trust for which it is 10,000) calculated (in the case of all of the ASB Retail Unit Trusts except the ASB Residential Mortgage Trust and the ASB Diversified Income Trust) by reference to their total investment in the ASB Retail Unit Trusts. Finally, in certain circumstances an exit fee may be deducted by the Manager in respect of funds withdrawn from the ASB Residential Mortgage Trust as discussed on page 19. When the ASB Retail Unit Trusts become PIEs, the Manager may elect to either redeem a portion of your Units immediately prior to the withdrawal or deduct from the proceeds of withdrawal an amount equal to any tax paid on the taxable income of the Trusts attributed to you in respect of the withdrawn Units (although the Manager currently intends to do the former and not the latter). 21 1

24 How do I find out the value of my investment? You can find out the current value of your investment by phoning 0800 ASB FUNDS ( ). The Unit Prices of the ASB Retail Unit Trusts are also reported in most major weekend newspapers, although these may not be as up to date as the prices available from the Manager. The ASB Retail Unit Trust Exit Unit Prices are posted daily on the ASB website To calculate the current dollar value of your investment, simply multiply the number of Units you currently have in a particular ASB Retail Unit Trust, by the Exit Unit Price for that Trust. When the ASB Retail Units Trust become PIEs, the method above will calculate the current before tax value of your investment. To obtain the after tax value of your investment phone 0800 ASB FUNDS ( ). Distribution of income ASB Money Market Trust, ASB Residential Mortgage Trust and ASB Diversified Income Trust The income of these Trusts is calculated at the end of each calendar month. The Manager then apportions some or all of that net income amongst Unitholders in proportion to the number of days during the month on which each Unitholder was a Unitholder in the relevant Trust and the number of Units in that Trust held by each Unitholder on each such day. Income distributions are then made at the end of the month. For Units redeemed during the month, income is accrued to the date of redemption and will be distributed to Unitholders after the end of the relevant month. If following a redemption a Unitholder ceases to become a Unitholder in any of the ASB Retail Unit Trusts, at the Manager s discretion, income may be distributed at the date of redemption. In the unlikely event of a negative income distribution amount for the ASB Residential Mortgage Trust or the ASB Money Market Trust prior to 1 October 2007, sufficient Units would be cancelled from Unitholders accounts in the relevant Trust to cover the loss and no income payment would be payable to Unitholders. The Exit Unit Price of the ASB Money Market Trust and the ASB Residential Mortgage Trust, which are fixed at 1.00 until and including 30 September 2007, reflects the current capital value of your investment only and will not include accrued income. ASB NZ Fixed Interest Trust and ASB World Fixed Interest Trust The ASB NZ Fixed Interest Trust and the ASB World Fixed Interest Trust will normally distribute income, if any, for each quarter ending 31 March, 30 June, 30 September and 31 December. All other ASB Retail Unit Trusts All other ASB Retail Unit Trusts will normally distribute net income, if any, for each six month period ending 31 March and 30 September. For each Trust, other than the ASB Money Market Trust and the ASB Residential Mortgage Trust prior to 1 October 2007, income earned between distribution dates (if any) will be reflected in that Trust s Exit Unit Price until a distribution occurs. After a distribution of income, Unit Prices reduce accordingly. Except for the ASB Money Market Trust and the ASB Residential Mortgage Trust, distributions are made in proportion to the number of Units held in the relevant Trust as at the last day of the relevant income distribution period. When the ASB Retail Unit Trusts become PIEs, the Manager may deduct from the distribution an amount equal to any tax paid by the Trustee on the taxable income attributed to you (although the Manager does not currently intend to make such deductions). 22

25 Timing of payment of distributions Each of the ASB Retail Unit Trusts calculates income distributions at the end of its relevant income distribution period. Actual distributions are made as soon as practicable thereafter, usually within six business days, but no later than two months following the end of the relevant income distribution period. However, the Manager may vary the length of the distribution period and method of calculating entitlements. In addition, the Manager may make special distributions from time to time, or decide not to distribute all or any of the net income of a Trust. Payment and reinvestment of income distributions With the exception of distributions from the ASB Residential Mortgage Trust from 19 July 2007, you may choose to have your income distributions either reinvested in Units in the same Trust or direct credited to a nominated bank account. From 19 July 2007, distributions from the ASB Residential Mortgage Trust will be direct credited to a nominated bank account. Please select the method of payment you prefer on the application form. If you do not make a selection, you will automatically have your distribution amounts reinvested in additional Units in the same Trust except for distributions from the ASB Residential Mortgage Trust from 19 July Where distributions are reinvested, the additional Units will be issued at an ex-distribution Exit Unit Price calculated as at the end of the relevant distribution period. Taxation Summary The following comments are intended to be a general summary and indication of the relevant law as at the date of this Investment Statement. Neither the Trustee nor the Manager accepts any responsibility for the taxation consequences of you investing in ASB Retail Unit Trusts. You should consider your own tax position before investing in the investments offered pursuant to this Investment Statement and seek expert tax advice. The Government has recently amended the taxation of investments by introducing a new concessionary portfolio investment entity ( PIE ) tax regime. Qualifying entities may elect to become PIEs from 1 October 2007 onwards. The Manager intends for all the ASB Retail Unit Trusts to become PIEs on or about 1 October If this date changes, then the Manager will advise you in writing prior to 1 October Tax on investments owned by the ASB Retail Unit Trusts The fair dividend rate (FDR) method will generally apply to the calculation of taxable income to the extent that an ASB Retail Unit Trust invests in shares or units issued by non-new Zealand resident companies or unit trusts (excluding shares in companies and units in unit trusts (if any) which are taxed in Australia as Australian resident companies and included on an approved ASX index). Under FDR income subject to tax each year from those shares or units mentioned in the paragraph above will be 5% of the average daily market value of the investment for that income year. Any dividends or profits from the sales of those shares or units will not be subject to tax. No tax deduction may be claimed for any losses in respect to those shares or units. Foreign tax credits may be available to offset any tax payable. The ASB World Shares Trust and the ASB NZ Shares Trust are currently not taxed on capital gains and losses on the disposal of shares or units and this has been confirmed by private binding rulings issued by Inland Revenue Department (IRD). The current binding rulings expire on 30 June 2007, but an application to renew the binding rulings has been made. Should the IRD decline to renew the binding rulings, the ASB NZ Shares Trust may be subject to capital gains tax from 1 July 2007 and the ASB World Shares Trust may be subject to tax on capital gains from 1 July When each of the ASB Retail Unit Trusts becomes a PIE, capital gains and losses from New Zealand shares and certain Australian shares and units (those not subject to FDR, as referred to earlier in this section) will not be subject to tax. Any dividends from these investments will be subject to tax. Income and capital gains from other investments will be subject to tax. Where an ASB Retail Unit Trust invests in a PIE, income and capital gains earned by the underlying PIE will be taxed in the same way as if they had been held by the ASB Retail Unit Trust directly. 23

26 For ASB Retail Unit Trusts that are not PIEs The ASB Retail Unit Trusts will provide for tax on income and capital gains subject to tax (as described in the above paragraphs) at the rate of 33% (reducing to 30% from 1 April 2008). The ASB Retail Unit Trusts utilise imputation credits, withholding payment credits and resident withholding tax, as applicable, to satisfy their tax liability on dividends and interest received. ASB Retail Unit Trusts may derive foreign dividends which are exempt from income tax but are subject to foreign dividend withholding payments ( FDWP ) at the rate of 33% (reducing to 30% from 1 April 2008). Both income tax and FDWP will generate imputation credits and FDWP credits for the ASB Retail Unit Trusts, which may be passed on to Unitholders and offset against their personal taxable income. Any excess imputation credits can be carried forward (in some cases by conversion into a net loss) by the Unitholders (subject to the standard loss carry forward rules) while any excess FDWP credits are refundable in cash. For ASB Retail Unit Trusts that are PIEs The ASB Retail Unit Trusts will be taxed on income and capital gains (as described in the above paragraphs) in line with the PIE regime, as described below. Converting to the PIE regime The Manager has the power to take all steps and do all things as the Manager thinks necessary or desirable, in its complete discretion, to convert an ASB Retail Unit Trust into a PIE. To convert the ASB Retail Unit Trusts to PIEs, the Manager will defer the processing of any Application, Redemption, Transfer or Switch requests received during the week prior to the date of the PIE conversion to the first week that the ASB Retail Unit Trusts operate as PIEs. For example, if the ASB Retail Unit Trusts are converted to PIEs on 1 October 2007 the Manager will defer the processing of any Application, Redemption, Transfer or Switch requests received between 24 September 2007 and 30 September 2007 until the week of 1 October 2007 to 5 October Upon becoming a PIE, each ASB Retail Unit Trust will be deemed to sell any New Zealand shares and certain Australian shares and units (those not subject to FDR, as referred to earlier in this section) for their market value on that date and to have immediately reacquired them. This will give rise to a tax liability for the ASB Retail Unit Trust where it holds such shares on revenue account. However this should not affect the Unit Price, as each ASB Retail Unit Trust currently provides for such tax in its accounts. On converting an ASB Retail Unit Trust to be a PIE the Manager will identify the value of any losses that the ASB Retail Unit Trust is permitted to carry forward under tax legislation immediately prior to the ASB Retail Unit Trust becoming a PIE. These losses will be known as Formation Losses. The Manager will allow for any Formation Losses of an ASB Retail Unit Trust in the daily calculation of taxable income (or loss) that is attributed to the Unitholders of that ASB Retail Unit Trust in accordance with tax legislation. PIE Regime As previously stated, the Manager intends for each of the ASB Retail Unit Trusts to be a PIE on or about 1 October If this date changes then the Manager will advise you in writing prior to 1 October Under the PIE legislation, the Manager will calculate the amount of taxable income (or loss) of each ASB Retail Unit Trust which is attributable to a Unitholder in each ASB Retail Unit Trust each day. This amount will be determined taking into account the number of Units a Unitholder holds in each ASB Retail Unit Trust each day and the taxable income (or loss) (after allowing for the Trustee Fee, Management Fee, and other costs and expenses and Formation Losses) of the ASB Retail Unit Trust on that day. Any management or administration fees paid by the Manager which are attributable to that Unitholder personally will then be deducted from that amount. The resulting taxable income will be attributed to a Unitholder and be taxed at the tax rate selected by the Unitholder, known as the Unitholder s Prescribed Investor Rate ( PIR ). The Manager will also attribute daily to a Unitholder any tax that has already been deducted at the source of the taxable income (tax credits) and any other information required to do an individual daily tax calculation in respect of a Unitholder s investment in an ASB Retail Unit Trust under the PIE regime. Prescribed Investor Rate (PIR) The PIR is the rate at which taxable income attributed to a Unitholder in a PIE in a given year will be taxed. This rate is either 0%, 19.5% or 33% under current legislation, although from 1 April 2008 the top rate changes to 30%. A Unitholder s PIR will be 0% for a year if the Unitholder is a New Zealand tax resident and is not an individual, such as a Registered Charity or Company (we refer to such Unitholders as Zero Rated Unitholders in the remainder of this section). A Family Trust may elect a PIR of 0% or 33%. 24

27 A Unitholder s PIR will be 19.5% for a tax year if he or she is an individual who is a New Zealand resident and, in either one of the two tax years (years ending 31 March) before the current tax year of the ASB Retail Unit Trust: > his or her taxable income (excluding his or her share of taxable income from PIEs) was 38,000 or less; and > his or her taxable income plus his or her share of net taxable income from PIEs was 60,000 or less. If a Unitholder determines his or her PIR to be 19.5% and the Unitholder notifies the Manager accordingly and provides his or her IRD number, the taxable income attributable to that Unitholder will be taxed at the rate of 19.5% with a PIE. If a Unitholder does not qualify for a PIR of 0% or 19.5% or if a Unitholder does not provide the Manager with his or her PIR or does not provide his or her IRD number, then any taxable income attributable to that Unitholder for the applicable tax year will be taxed at the rate of 33% (or 30% for all years beginning on or after 1 April 2008). We refer to Unitholders with a PIR of 19.5%, 30% or 33% as Tax Paid Unitholders in the remainder of this section. In the case of joint Unitholders the Manager will apply the highest PIR to the taxable income attributed in respect of those Units held by the joint Unitholders. Once the Manager has deducted tax in respect of a Unitholder s share of the taxable income attributed to a Unitholder, should the Unitholder change his or her PIR the Manager will not reassess the tax deducted in respect of that income. The new PIR will apply to all untaxed income attributed to the Unitholder s Units in the ASB Retail Unit Trust. If a Tax Paid Unitholder s PIR does not change during a tax year, or decreases, any taxation deducted from a Unitholder s Units in an ASB Retail Unit Trust will be a final tax, meaning that the Unitholder will not need to file an income tax return as a result of receiving such taxable income, or need to pay any further taxes. The Unitholder must inform the Manager of its PIR for each income year. If a Unitholder s PIR increases and the Manager is not advised before tax deducted on respect of taxable income attributed to the Unitholder from an ASB Retail Unit Trust then the Unitholder will need to include on his or her income tax return information about the taxable income attributed that was taxed at 19.5%. This may result in the Unitholder being liable to pay any difference in tax payable directly to Inland Revenue together with any penalties determined by tax legislation. The Manager will provide you with the relevant information for your income tax return. Under current tax legislation there is no impact on eligibility for family assistance, student loan repayment obligations or child support payment obligations as a result of investing in a PIE and being attributed with a share of the PIE s taxable income. More information on PIRs and how to calculate your PIR is detailed on page 36 of this document. You can also call 0800 ASB FUNDS ( ) during normal business hours, by ing [email protected], or looking at or Adjustment of Tax Paid Unitholder s Interest and payment of tax At tax year end The ASB Retail Unit Trusts tax year runs from 1 April to 31 March. Each year, shortly after 31 March, the Manager (on behalf of the Trustee) will pay the tax on taxable income attributable to each Tax Paid Unitholder in respect of each Tax Paid Unitholder s investment in an ASB Retail Unit Trust for that year to the Inland Revenue. The Manager will reflect this tax payment by cancelling Units in the ASB Retail Unit Trust equal in value to the amount of the tax payable on the date of the cancellation. This cancellation may occur before the tax is required to be paid to the Inland Revenue. The Manager (on behalf of the Trustee) will pass the tax deducted in respect of taxable income attributed from a Tax Paid Unitholder s investment in a ASB Retail Unit Trust, and provide certain information about the Unitholder s investment in the ASB Retail Unit Trust (as determined by taxation legislation), to the Inland Revenue. If there is a tax loss attributable to a Tax Paid Unitholder by a ASB Retail Unit Trust, or the tax credits attributable to the Tax Paid Unitholder are greater than the tax payable on the taxable income attributable to the Unitholder, the Manager (on behalf of the Trustee) will apply to the Inland Revenue for a rebate for the tax loss or excess credit (except in the case of any credit for foreign tax) and will in most cases be able to provide the Unitholder with additional Units in the ASB Retail Unit Trust(s) to reflect that rebate. During the year Should a Tax Paid Unitholder withdraw from the ASB Retail Unit Trust (either in part or full), switch part or all of his or her investment in one or more ASB Retail Unit Trust to another ASB Retail Unit Trust(s) or if the Tax Paid Unitholder s Units are sold during the year for any other reason, the Manager will deduct the tax in respect of the taxable income attributed to the amount of the Unitholder s Interest that is withdrawn, switched, transferred or sold from the relevant ASB Retail Unit Trust or Trusts. 25

28 If there is a tax loss attributable to a Tax Paid Unitholder in respect of Units that are withdrawn, switched, transferred, or sold, or the tax credits attributable to the Tax Paid Unitholder are greater than the tax payable on the taxable income attributable to Units that are withdrawn, switched, transferred or sold, the Manager (on behalf of the Trustee) will apply to the Inland Revenue for a rebate of the tax loss or excess credit (except in the case of any credit for foreign tax) and will in most cases be able to provide the Unitholder with additional Units in the ASB Retail Unit Trust(s) to reflect that rebate. Once the Manager has paid tax on the taxable income attributable to a Unitholder s investment in an ASB Retail Unit Trust, should the Unitholder change his or her PIR the Manager will not reassess the tax already paid on that income. The new PIR will apply to all untaxed income attributed to the Unitholder s Interest in the ASB Retail Unit Trust. Payment of tax for Zero-Rate Unitholders In the case of Zero Rated Unitholders, the Unitholder itself rather than the Manager will pay any income tax on taxable income attributed to the Unitholder in respect of the Unitholder s Units in the ASB Retail Unit Trusts provided the Unitholder gives the Manager its IRD number and notifies the Manager that it qualifies as a Zero Rated Unitholder. Zero Rated Unitholders will receive the benefit of their share of any losses or excess tax credits of the relevant ASB Retail Unit Trust directly. Zero Rated Unitholders will be subject to tax on any taxable income attributed to them regardless of whether it is actually distributed to them. Income distributions to Unitholders from ASB Retail Unit Trusts that are not PIEs You will be subject to tax on distributions received from the Trusts on the same basis as shareholders in a company are taxed on dividends. The ASB Retail Unit Trusts attach full imputation or withholding payment credits to all distributions of income, to the extent that they are able to do so. These can be used by Unitholders resident in New Zealand to meet their tax liability on distributions. However, if there are insufficient credits, resident withholding tax will be deducted from income distributions. Imputation and withholding payment credits are only available in the ASB Retail Unit Trusts if certain continuity of ownership rules are met. Income distribution to Unitholders from ASB Retail Unit Trusts that are PIEs When the ASB Retail Unit Trusts become PIEs, income distributions from the Trust will not be taxed themselves. When the ASB Retail Unit Trusts become PIEs, the Manager may deduct from the distribution an amount equal to any tax payable on the taxable income attributed to you (although the Manager does not currently intend to make such deductions). Non-Resident Unitholders Non-resident Unitholders are subject to tax on distributions received from the Trusts and any other amounts which are deemed to be dividends for tax purposes. Dividends paid to non-resident Unitholders by the Trusts are liable for nonresident withholding tax at the rate of 30% reduced to 15% in cases where dividends are fully imputed or where the non-resident is resident in a country with which New Zealand has a double tax treaty. Where possible, the ASB Retail Unit Trusts will pay a supplementary dividend to non-resident Unitholders, which will effectively cover the non-resident withholding tax due. From the date the ASB Retail Unit Trusts are PIEs income distributions to non-resident Unitholders will be the same as if the Unitholder was a resident. Withdrawal If you wish to realise all or some of your Units you will be able to do so (subject to the restrictions and qualifications detailed on page 21 under the heading Withdrawals ) by way of either sale of Units to the Manager or redemption of Units at the discretion of the Manager. The tax consequences of the sale of Units and redemption of Units are described below. From the date the ASB Retail Unit Trusts are PIEs withdrawals will be effected by way of redemption unless you request otherwise. 26

29 Disposal of Units owned by a Unitholder The tax treatment of profits or losses realised on the sale of units to the Manager or losses realised on the redemption of Units depends upon your tax position. Generally, profits from the sale of Units will be subject to tax if: > You acquired the Units for the dominant purpose of sale or other disposal or as part of a profit-making scheme. > You carry on a business involving dealing in the Units or other similar property. The above tax treatment of a sale of Units will apply regardless of whether the Trust is a PIE. In addition, tax may be payable on the redemption of Units from a Trust that is not a PIE on the basis set out below. Redemption of Units from ASB Retail Unit Trusts that are not PIEs ASB Money Market Trust and ASB Residential Mortgage Trust The redemption of Units in the ASB Money Market Trust and the ASB Residential Mortgage Trust is subject to the dividend rules. These Trusts issue Units on the basis that any redemption of Units will be subject to the slice rule. Under the slice rule, a dividend arises to the Unitholder to the extent that the amount paid on redemption exceeds the Entry Unit Price. The dividend portion of any redemption will have imputation credits attached by the Trust to the extent that they are available. All other ASB Retail Unit Trusts The redemption of Units in all other ASB Retail Unit Trusts is also subject to the dividend rules. These Trusts issue Units on the basis that any redemption of Units will be subject to the ordering rule. Under the ordering rule the proceeds of redemption of Units are excluded from the dividend definition, unless any of the Trusts have insufficient available subscribed capital per share cancelled. If this occurs, a dividend will arise on redemption and imputation credits will be attached to the dividend portion to the extent that they are available. Disposal of Units owned by a Unitholder and Redemption of Units from ASB Retail Unit Trusts that are PIEs When the ASB Retail Unit Trusts become PIEs, redemptions will not be directly taxable. See Adjustment of Unitholder s Units and payment of tax and Payment of tax for Zero-Rate Unitholders for more information. The taxation summary above is based on the Manager s understanding of New Zealand tax law as at the date of this Investment Statement. It is possible that tax law will change in a manner which could adversely affect the tax treatment of the ASB Retail Unit Trusts or Unitholders. 27

30 > 6. What are my risks? The nature of investment markets Understanding Risk and Return The balance of risk and return is the key to understanding your investments. Generally speaking, if the investment return over the short-term is fairly predictable, the investment is said to be of lower risk. If the return has the potential to fluctuate widely over the short-term, the investment is said to be of higher risk. Over the long-term however, the potential returns on higher risk investments are expected to be greater. It is important to note that investment returns in ASB Retail Unit Trusts will fluctuate up and down. They are subject to market risk in relation to the performance of the assets in which they invest. Returns can be negative or insufficient to cover charges and costs. This means it is possible there will not be a distribution in respect of particular periods and, particularly over shorter periods, that you could receive back less than the total of your investment when you redeem your Units. The ASB Investment Guide has further information on risk and return, which we recommend investors read and understand prior to investing. Your ASB Investment Adviser will also be able to discuss risk and return with you. Specific investment sector risks, as well as other risks involved with investing, are detailed below. These sector specific risks can be minimised by taking a diversified approach to investing. This involves spreading your savings across several investment sectors. Cash Cash is a lower risk investment, providing consistent returns. The key risk with cash is that the return is eroded by inflation, meaning that your purchasing power may not be increasing over time. For this reason, we recommend cash as being suitable for short-term requirements and as part of an overall investment portfolio, to balance higher risk investments. Fixed interest Fixed interest securities are lower risk investments, suitable for a medium-term time frame. The key risks with fixed interest investments are: > Capital risk There is a capital risk associated with interest rate changes. When interest rates rise, the capital value of existing bonds declines. Conversely, when interest rates fall, the value of existing bonds rises. > Credit risk There is a credit risk associated with the borrowers not meeting their obligations for the fixed interest security. Fixed interest securities are often rated by ratings agencies such as Standard and Poor s or Moodys. A credit rating is the rating agency s current opinion of the ability of a company to meet its obligations in respect of the rated security. Ratings are typically given in a range from AAA to D, where AAA indicates extremely strong and ratings below this progressively less strong. Grades between AAA and BBB- are commonly referred to as Investment grade. The ASB NZ Fixed Interest Trust and the ASB World Fixed Interest Trust invest only in investment rated Government Bonds and Corporate A Grade fixed interest securities. The ASB Diversified Income Trust invests the majority of its assets in Colonial First State s Wholesale Global Credit Income Fund, which in turn is exposed to a diversified portfolio of world fixed interest securities, credit rated in a range from AAA to C grade. > Re-investment risk There is a re-investment risk that proceeds available for re-investment must be re-invested at a lower interest rate than the instrument that generated the proceeds. Mortgage Loans Mortgages are investments which are suitable for short to medium-term time frames. The key risks with mortgage investments are: > Credit risk The risk that borrowers may be unable to make repayments on their loan in a timely manner is a key risk around mortgage investments. This would adversely impact returns. 28 1

31 > Default risk This is the risk that borrowers are unable to repay their loans at all (i.e. default). The associated risk with default is the risk that the sale price of the property, on which the mortgage is held, is insufficient to cover the outstanding loan. The ASB Residential Mortgage Trust invests (directly or indirectly) only in loans that have a loan to value ratio of 80% or less at the time the loan is purchased. > Interest Rate risk Returns on mortgages are dependent on interest rate levels. Movement in interest rates will cause fluctuations in the returns available to Unitholders. > Liquidity risk This is the risk that the fund will be unable to meet redemptions in a timely manner due to difficulties in onselling the loans. The ASB Residential Mortgage Trust maintains a proportion of the gross asset value in liquid investments. Property Property investments are medium risk, suitable for a long-term time frame. The key risks with property investments are: > Property market risk Supply and demand for individual properties based on use, location and quality, among other factors, will impact on the rental stream and therefore the value of the property. By holding a portfolio of quality properties that is diversified both geographically and by use, the risk of a downturn in any one area is mitigated. > Sharemarket risk There is a sharemarket risk associated with listed property share investments. General sharemarket sentiment and returns will impact on the value of listed property share investments. World shares World share investments are higher risk, suitable for a long-term time frame. The key risks with world share investments are: > Company specific risk Individual companies profits, cash flow, growth and management are some of the factors that impact on the value of the companies shares. By holding shares in a large number of companies in a diverse range of industries, the impact of individual company performance is lessened. > Country risk The economic performance of each country can influence sharemarket returns, as can the legislation and governance of those countries. The ASB World Shares Trust invests in a number of countries around the globe, including the largest economies in the world. > Market risk The sharemarket as a whole can be influenced by a variety of factors including investor sentiment in the short-term, and economic growth in the long-term. New Zealand shares New Zealand share investments are higher risk, suitable for a long-term time frame. The key risks with New Zealand share investments are: > Company specific risk Individual companies profits, cash flow, growth and management are some of the factors that impact on the value of the companies shares. By holding shares in a large number of companies across a range of industries, the impact of individual company performance is lessened. > Country risk The economic performance of New Zealand can influence sharemarket returns, as can the legislation and governance of New Zealand. > Market risk The sharemarket as a whole can be influenced by a variety of factors including investor sentiment in the short-term, and economic growth in the long-term. Emerging markets shares Share investments in emerging markets are higher risk, suitable for a long-term time frame. The key risks with emerging markets share investments are: > Company specific risk Individual companies profits, cash flow, growth and management are some of the factors that impact on the value of the companies shares. By holding shares in a large number of companies in a diverse range of industries, the impact of individual company performance is lessened. > Country risk The economic performance of each country can influence sharemarket returns, as can the legislation and governance of those countries. The ASB Emerging Markets Shares Trust invests in a number of emerging markets around the globe. > Market risk The sharemarket as a whole can be influenced by a variety of factors including investor sentiment in the short-term and economic growth in the long-term. 29

32 Index investment management style The aim of the ASB Retail Unit Trusts which adopt a index investment strategy, is to provide you with investment risk and return characteristics which closely match the underlying index the Trust aims to track. Hence, no account is taken of the underlying prospects of the companies or investments which comprise the Trust s assets. The Manager does not monitor the investment mix or financial condition of investments and does not trade securities with the aim of enhancing the Trusts returns. The focus is on matching the performance and risk of the chosen index as close as practically possible. The ASB Retail Unit Trusts are not able to track indices with absolute accuracy. For instance, changes in index composition take some time to be replicated by the Manager. Nonetheless, the Manager s objective is to match each ASB Retail Unit Trust s chosen index risk and return, to the best of its ability. Currency risk The ASB World Shares Trust, the ASB Diversified Income Trust, the ASB World Fixed Interest Trust and the ASB Emerging Markets Shares Trust invest in funds which buy and sell international investments. This means that currency movements will affect the investment performance of these Trusts. To reduce the impact of currency movements, the Manager may take out currency hedging (by ASB) to New Zealand dollars from time to time. However, the ASB Emerging Markets Shares Trust is not hedged. This is mainly due to difficulties involved in buying and selling forward foreign exchange contracts for currencies of smaller developing emerging market countries. Performance of the parties Various parties will be involved in the operation of the ASB Retail Unit Trusts, including the Manager, the Trustee, certain Investment Managers, Administration Managers and other investment parties. If any of these parties fail to perform their obligations, this could adversely affect ASB Retail Unit Trust Unitholders. There is no reason to believe that any such failure will occur. Realisation The Manager is not able to procure the redemption (or repurchase) or effect a switch in respect of Units in the ASB Residential Mortgage Trust if it does not have sufficient funds invested in liquid investments from which to do so, or if redemption of units held in the NZ Mortgage Income Fund are restricted by the Trustee of that fund. The Manager would usually invest between 5% and 10% of the ASB Residential Mortgage Trust s assets in liquid investments. If the ASB Residential Mortgage Trust does not have sufficient liquid investments to redeem (or repurchase or effect a switch of) a Unitholder s Units, that Unitholder s ability to realise those Units would be limited to their ability to sell those Units to another party. As noted on page 33, in the Manager s opinion, it is unlikely that there will be an established market for the sale of Units. Further, the Trustee has a limited ability to realise the interests in loans and the mortgages securing those loans which it purchases from ASB in respect of the ASB Residential Mortgage Trust. For example, if the Trustee wishes to sell those interests, it must first offer to sell them to ASB and, if ASB decides not to purchase them, the interests cannot be sold to a third party on terms and conditions which are better than those which were offered to ASB. In addition, any third party purchaser must agree to hold the interests on the same terms and conditions as the Trustee held them. Insolvency of the Manager or a Unit Trust There are no circumstances in which you will, or may, be liable to pay additional money to any person as a result of the insolvency of the Manager or a Trust. If a Trust is put into liquidation or wound up, the Trustee will meet any liabilities properly incurred or payable out of the funds of the Trust, including costs relating to the winding up, and will distribute the remaining funds (if any) to the Unitholders, pro-rata to the number of Units they hold in the Trust. 30

33 > 7. Can the investment be altered? The minimum levels of investment in the ASB Retail Unit Trusts (as detailed on page 14 of this Investment Statement) can be altered by the Manager at any time. If Unitholders do not wish to comply with the minimum levels set by the Manager, they have the option of withdrawing their Units (subject to the restrictions and qualifications on redemption (or repurchase) as set out on page 21 under the heading Withdrawals ). The charges applicable to Unitholders or to the ASB Retail Unit Trusts can also be altered at any time by the Manager. However, in respect of all of the Trusts, neither the Service Fee, nor the Transaction Allowance, can exceed 3% of the amount in respect of which those fees are charged, and the Management Fee cannot exceed 3% annually of the gross asset value of the relevant ASB Retail Unit Trust, unless in each such case the Establishment Deed of the relevant ASB Retail Unit Trust is first amended. The Manager can also impose additional charges on Unitholders in relation to the switching or withdrawal of Units or the transfer of Units. The Trustee and the Manager may at any time alter the Master Deed or an Establishment Deed if it is to correct a manifest error, or is of a formal or technical nature, or if it is necessary or desirable for the more efficient operation or administration of any of the ASB Retail Unit Trusts, or it is necessary to make any provision of the Master Deed or the relevant Establishment Deed consistent with any change in the law affecting the Trusts, or if it is authorised to do so by an Extraordinary Resolution of the relevant Unitholders. An Extraordinary Resolution can only be passed by a 75% majority of Unitholders voting on a show of hands or a 75% majority of votes cast by way of a poll at a meeting of Unitholders. A full description of the ability of the Manager and the Trustee to amend the Master Deed and the Establishment Deeds is set out in the Prospectus. Only one signature is required for all subsequent changes to jointly invested ASB Retail Unit Trust accounts, or, in respect of telephone instructions, the Manager may act on the telephone instructions of just one Unitholder. Similarly, the Manager may accept instructions from any one signatory of a Unitholder which is a Company or Trust. While a Trust is a PIE, the Manager may adjust your Unit holding in the Trust to reflect the PIE tax liability arising with respect of your Units in that Trust. For further information see Taxation Summary on page 23. The Manager has the power to take all steps necessary to ensure a Trust is eligible, or continues to be eligible, for PIE status or otherwise complies with the requirements of tax legislation relating to PIEs, including but not limited to, rejecting Applications, Transfer Requests and Switching Requests, redeeming or repurchasing a Unitholder s Unit or switching a Unitholder s Units from one Trust to another Trust as if the Manager had received an Exit Request or Switching Request to that effect from the Unitholder. 31 1

34 > 8. How do I cash in my investment? Withdrawal Requests You may make a request to withdraw all or part of your investment at any time. When you do so, at their discretion, the Manager will arrange for the relevant Units to be redeemed or repurchased by the Manager (subject to the restrictions and qualifications detailed on page 21 under the heading Withdrawals ). Requests received before 5pm on any business day will (if accepted) normally be redeemed (or repurchased) at the Exit Unit Price for that day. Otherwise, redemption (or repurchase) will be at the Exit Unit Price for the following business day, less an Exit Fee where applicable. Funds withdrawn from the ASB Residential Mortgage Trust and the ASB Diversified Income Trust within 12 months of investment may have an Exit Fee of 0.50% deducted from the amount of the withdrawal requested (in the case of the ASB Residential Mortgage Trust for Units purchased after 1 January 2004 and, in the case of the ASB Diversified Income Trust, for Units purchased after 29 August 2005). For more information on the Exit Fee please refer to page 19. The minimum amount which can be withdrawn at any one time is currently 500, unless the entire amount of your investment in a Trust is withdrawn. If your withdrawal request would leave you with less than 2,000 in the ASB Retail Unit Trusts (or 10,000 in the case of the ASB Residential Mortgage Trust or the ASB Diversified Income Trust), then your withdrawal request will be deemed to apply to your entire investment in ASB Retail Unit Trusts. The Manager has the discretion to implement a withdrawal of your investment in the ASB Retail Unit Trusts and pay the withdrawal amount to you, if your investment falls below 2,000 across all investments in ASB Unit Trusts (or 10,000 in the case of the ASB Residential Mortgage Trust or the ASB Diversified Income Trust), for example, as a result of falls in Unit Prices. To make a withdrawal, simply complete a Withdrawal Request Form which is available from your local ASB Investment Adviser or ASB branch, or phone 0800 ASB FUNDS ( ). The Manager does reserve the right to suspend or defer a withdrawal request, or refuse to process a withdrawal request where a current ASB Retail Unit Trusts Investment Certificate has not been sighted, or in exceptional circumstances examples of which are mentioned on page 21 under the heading Withdrawals. Following acceptance, verification and processing of your request, it is intended that payments will normally be made within seven business days by direct credit to your nominated bank account. Only one signature is required for all withdrawals to jointly invested ASB Retail Unit Trust accounts. Similarly, the Manager may accept instructions from any one signatory of a Unitholder which is a Company or Trust. Regular Withdrawal Option applying to the ASB Money Market Trust, the ASB Residential Mortgage Trust and the ASB Diversified Income Trust. Unitholders in the ASB Money Market Trust, the ASB Residential Mortgage Trust and the ASB Diversified Income Trust have a Regular Withdrawal Option whereby they can request regular fortnightly or monthly payments from these Trusts (subject to the restrictions and qualifications detailed on page 21 under the heading Withdrawals ). Withdrawals from the ASB Residential Mortgage Trust or the ASB Diversified Income Trust using the Regular Withdrawal Option will not be subject to any Exit Fee. The minimum amount which can be withdrawn each fortnight or month is 100; there is no maximum amount. Unitholders have the flexibility to change or suspend the withdrawal amount whenever they wish (subject to the 100 minimum). 32 1

35 The Regular Withdrawal Option will redeem (or repurchase) units from the Trust and deposit the proceeds into a nominated bank account. If your regular withdrawal payment plus the PIE tax attributable to your holding is less than the income generated by the relevant Trust in a withdrawal period, then the overall value of your holding in that Trust will increase, despite your regular withdrawals. However, if the amount of your regular withdrawal payment plus the PIE tax attributable to your holding is at any time greater than the income earned by the relevant Trust in that withdrawal period, the value of your holding in that Trust will diminish to the extent of that excess. If you wish to participate in this Regular Withdrawal Option, simply complete the Regular Withdrawal Option section in the ASB Retail Unit Trusts application form at the back of this Investment Statement. The Manager has the right to cancel or vary the terms of this service on 14 days written notice. A Unitholder using this service is deemed to have agreed to indemnify and release the Manager and the Trustee from all actions, claims, proceedings, accounts, demands, costs, expenses or liabilities suffered by that Unitholder, in respect of the use, operation, or purported use or operation of the Regular Withdrawal Option. The Manager reserves the right to decline a Regular Withdrawal Option request. Switching With the exception of switches into the ASB Residential Mortgage Trust, you can switch between any of the ASB Retail Unit Trusts at any time (subject to the restrictions and qualifications detailed on page 21 under the heading Withdrawals ). A switch will be treated as a withdrawal request of your existing Units and an application for Units in a new ASB Retail Unit Trust. Prior to 19 July 2007, only investors who were Unitholders in the ASB Residential Mortgage Trust as at 29 June 2005 may switch from another ASB Retail Unit Trust into that Trust. From 19 July 2007, no Unitholders can switch into the ASB Residential Mortgage Trust. The Manager reserves the right to decline a switching request. To make a switch, simply complete a Switch Request Form which is available from your local ASB Investment Adviser or ASB branch, or phone 0800 ASB FUNDS ( ). Transfers of Units Units may be transferred in the form approved by the Manager. A transfer will remain the Unitholder until the transfer is registered in the Unit Register. The Manager may decline to register transfers of Units for up to 30 business days in aggregate in each year, or for additional periods, with the consent of the Trustee. The Manager may decline to register any transfer which does not comply with any law or which would result in a Unitholder holding less than the minimum holding amount required, for reasons of liquidity, where the transfer would threaten the Trust s eligibility for PIE status, or where it breaches the 5% maximum rule for the ASB Residential Mortgage Trust. In the Manager s opinion, it is unlikely there will be an established market for Units. Unitholders will normally realise their investments by way of withdrawal rather than transfer. There is currently no transfer fee, but the Manager has the discretion to charge such a fee. Termination of the Trusts Any of the ASB Retail Unit Trusts may be terminated by the Manager or by the relevant Unitholders passing an Extraordinary Resolution. Where this occurs the assets of the Trust remaining after meeting all expenses and liabilities of the Trust will be distributed to Unitholders. 33

36 > 9. Who do I contact with enquiries about my investment? If you have any questions about ASB Retail Unit Trusts please write to: ASB Group Investments Limited Level 28, ASB Bank Centre 135 Albert Street (P O Box 35, Shortland Street) Auckland 1140 New Zealand Or contact an ASB Investment Adviser or investment accredited Personal Banker at that address, or by phoning: 0800 ASB FUNDS ( ). > 10. Is there anyone to whom I can complain if I have problems with the investment? Any complaints about your investment should be directed to the directors of the Manager, ASB Group Investments Limited, at the address or telephone number set out on page 13 of this document. You may also make a complaint to the Trustee at the address and telephone number set out on page 13 of this document. If your concerns cannot be resolved you may wish to take your complaint to: The Insurance and Savings Ombudsman BDO House, Customhouse Quay P O Box Wellington Or by telephoning (04)

37 > 11. What other information can I obtain about this investment? There are a number of ways that you, as an ASB Retail Unit Trusts Unitholder, can find out more about your investments. > Speak to your ASB Investment Adviser or investment accredited Personal Banker at your nearest ASB branch. > Phone ASB on 0800 ASB FUNDS ( ). > [email protected] > Check ASB s website, Keeping you fully informed The Manager will send you a consolidated ASB Retail Unit Trusts Investment Certificate showing the current value of your investment, plus details of all the transactions on your account every six months. You will also receive a copy of the ASB In Touch six monthly newsletter to keep you up to date with information about your investment. Prospectus and Financial Statements Additional information about the ASB Retail Unit Trusts is contained in the registered prospectus for the ASB Retail Unit Trusts and will be contained in financial statements relating to the ASB Retail Unit Trusts that will be prepared in accordance with, and as required by, law. The prospectus and financial statements can be obtained free of charge by contacting your ASB Investment Adviser or investment accredited Personal Banker at your nearest ASB branch, or by phoning ASB on 0800 ASB FUNDS ( ). Alternatively, you may obtain copies free of charge from the address in section 9 on page 34 of this document. The following documents relating to the ASB Retail Unit Trusts are filed on a public register at the Securities and Corporate Compliance Unit of the Ministry of Economic Development and are available for public inspection: > The prospectus for the ASB Retail Unit Trusts and any amendments to it. > The financial statements. > The Master Deed and the Establishment Deeds, and any amendments to them. > A list of the Unitholders of each Trust (and the number of Units they hold) and information about distributions made by each Trust. The Manager is required to file this information on an annual basis. > The material contracts detailed in section 12 of the Prospectus, including a Sale, Nomination and Administration Agreement (being the agreement referred to on page 5 of this Investment Statement). Annual Information Each year you will be sent an ASB Retail Unit Trusts Annual Report including the ASB Retail Unit Trusts financial statements, an auditor s report in respect of those statements, and a summary of any amendments made to the Master Deed and the relevant Establishment Deed over the past year. Other information available on request A copy of the Master Deed, each Establishment Deed, any amendments to those deeds, the most recent Investment Statement and the most recent annual information relating to the ASB Retail Unit Trusts can be obtained, free of charge, in the same way as you can obtain a copy of the prospectus (see above). You may also request an updated ASB Retail Unit Trusts Investment Certificate. If you require any other information about the ASB Retail Unit Trusts you should make an enquiry as explained in section 9 on page 34. The prospectus contains further details about your ability to inspect certain documents relating to the ASB Retail Unit Trusts. 35 1

38 > 12. Calculate your Prescribed Investor Rate START Are you a NZ resident? No Your PIR is 33% (30% from 1 April 2008) Yes You can choose to have PIE income taxed at 0% or 33% Yes Are you an individual? Yes No Are you a Trust? No You are a company, charity or non-profit organisation etc. Your PIR is 0% Was your Taxable Income* 38,000 or less in either of the last two years (1 April to 31 March)? Yes In the year (or one of the years) your Taxable Income* was 38,000 or less, did you have any PIE investments? No Your PIR is 19.5% No Yes Yes Your PIR is 33% (30% from 1 April 2008) No In the year (or one of the years) your Taxable Income was 38,000 or less, was your Taxable Income plus Income from all your PIE investments** 60,000 or less? For more information please read the Investment Statement. More information about Portfolio Investment Entities (PIEs) and PIRs can be found at If you do not provide us with an IRD number, we will use a PIR of 33%. If you don t know your IRD number you can ask your employer or call the IRD on For investments held in joint names, both investors will need to provide their PIRs. The highest PIR will be used to calculate tax in respect of the joint investment in the PIE. If you don t know your Taxable Income you can contact the IRD on for a personal tax summary or talk to your accountant. If you have any questions about calculating your PIR please call us on 0800 ASB FUNDS ( ). Your PIR will used to calculate tax in respect of your PIE investment with ASB. If you elect a PIR of 19.5% or 33% and this is the correct rate for your personal circumstances then any tax paid in respect of your PIE investment will be a final tax, meaning that you will not need to file a tax return as a result of receiving such income, or need to pay any further taxes. If you elect a PIR of 0% or incorrectly elect a 19.5% or 33% PIR, you will need to include information about your PIE investment in your annual tax return. * What is Taxable income? If you filed an income tax return for either of the last two years, then use the taxable income figure shown in that return. If your only income is from salary and wages then this will be your taxable income. You can request a personal tax summary for the IRD to assess your taxable income. For more information see Below is a list of income items that are included as taxable income: > A payment from an employer, including salary, wages, bonus, extra emolument, commission or other payment for services, Earnings Related Compensation, Income Tested Benefits, NZ Superannuation, Students Allowances, Certain Pensions and Superannuation, Retiring Allowances, Parental Leave, Tips and Gratuities, > Withholding payments, Dividends, Interest, > Rent, > Royalties, > Sales of rights, > Beneficiary income from an estate or trust, > Income from foreign investments funds, > Income from controlled foreign companies > Income from any business, trade or profession including illegal activities, > Income from a partnership > income from any undertaking or scheme entered into for the purposes of making a profit The income is after allowable deductions and losses. **What is Income from all your PIE investments? Income from any PIE investments is any income that was allocated to you by a PIE less any loss so allocated. Add this to the Taxable Income calculated above. The information shown on this page does not constitute specific tax advice to any person. ASB Group Investments Limited ( ASBGI ) recommends that investors seek independent advice. Neither ASBGI, its related companies, nor their directors, officers or employees or the Trustee accept any liability for any loss or damage of any kind arising out of the use of or reliance on the information provided in the above diagram, including without limitation, any loss of profit or other damage. 36

39 > APPLICATION FORM: ASB Retail Unit Trusts 29 June 2007 ASB Retail Unit Trusts Account No. 1 2 > 1. Customer Details This information will be treated in the strictest confidence. Surname / Company / Trust Name (Title) Title Other Date of Birth Mr Mrs Miss Ms Dr First Names Day Month Year Home Address IRD Tax Number Prescribed Investor Rate (refer to page 36) 0% 19.5% Telephone Home Work Mobile 33% (30% from 1 April 2008) Customer Selected Password Address Fax New ASB Customers Please also complete the Customer Information Application Forms. > 2. Joint Customer Details This information will be treated in the strictest confidence. Surname / Company / Trust Name (Title) Title Other Date of Birth Mr Mrs Miss Ms Dr First Names Day Month Year Home Address IRD Tax Number Prescribed Investor Rate (refer to page 36) 0% 19.5% Telephone Home Work Mobile 33% (30% from 1 April 2008) Customer Selected Password Address Fax New ASB Customers Please also complete the Customer Information Application Forms. > 3. Investment Details Lump sum investors and regular savings contributors. I / We wish to invest Statement and / or any future Investment Statement in respect of ASB Retail Unit Trusts. ASB Retail Unit Trusts ASB Money Market Trust ASB Residential Mortgage Trust*** ASB Diversified Income Trust + ASB NZ Fixed Interest Trust ASB World Fixed Interest Trust ASB NZ Property Trust ASB World Shares Trust ASB NZ Shares Trust ASB Emerging Markets Shares Trust Initial Investment Amount ( Value) Total * in ASB Retail Unit Trusts, upon the terms of the current Investment Regular Savings Amount ( Value) per month/per fortnight** Regular Savings and / or Additional Investments (% of Total) % % % % % % % % % 100 % * Minimum initial investment is 2,000 for Lump Sum investors, or 100 Regular Savings contributors for all Trusts, except the ASB Residential Mortgage Trust and the ASB Diversified Income Trust where the minimum investment is 10,000. ** Minimum regular savings amount is 100 per month/50 per fortnight per ASB Retail Unit Trusts account. The minimum holding in ASB Retail Unit Trusts, except for the ASB Residential Mortgage Trust and the ASB Diversified Income Trust, is 2,000, which for Regular Savings contributors must be achieved within 2 years. *** Prior to 19 July 2007 applications for investment in the ASB Residential Mortgage Trust will only be accepted from investors who were existing Unitholders as at 29 June 2005 and who have continued to be Unitholders. From 19 July 2007, applications for Units in the ASB Residential Mortgage Trust will not be accepted. + A Transaction Allowance of 0.10% of application monies is retained by the ASB Diversified Income Trust. Payment Details I/We authorise you to transfer the Initial Investment amount specified in section 3 above from my / our ASB account no. > 4. Investment Details Regular savings contributors only. Commencement date of regular savings contributions Day Month Year Bank Account Number from which regular savings contributions are to be deducted I/We would like my / our regular savings contributions adjusted annually in line with the Consumer Price Index. (Please tick) Yes No Regular Savings Contributors must also complete the Direct Debit Authority attached to this Investment Statement. > 5. Regular Withdrawal Option I / We wish to have (minimum amount 100) Commencement date of regular withdrawals withdrawn from my ASB Money Market Trust /ASB Residential Mortgage Trust / ASB Diversified Trust each Fortnight Month and direct credited to Day Month Year the nominated bank account in section 6. I / We accept the releases and indemnities stated on page 16 of the Investment Statement attached to this application form and / or any subsequent Investment Statement in respect of ASB Retail Unit Trusts. PTO

40 > 6. Bank Account Details (for all payments) Bank Account Number > 7. Income Distribution Details initial initial Please indicate (by ticking the box) how you would like to receive your ASB Retail Unit Trusts income distributions: Reinvest in additional Direct credit to the nominated If you are not a New Zealand tax resident, please specify your country of residence for tax purposes. units in the same Trust bank account in section 6 With the exception of the ASB Residential Mortgage Trust from 19 July 2007, distributions will automatically be reinvested in additional units in the same Trust if neither box is ticked. From 19 July 2007 the ASB Residential Mortgage Trust will be closed to reinvestment. If you would like to invest your distribution in another Trust, please talk to your Investment Adviser. > 8. Telephone Transaction Service 0800 ASB FUNDS ( ) I/We wish to be able to make additional investments, withdrawals and/or switch investments by telephone, utilising the ASB Telephone Transaction Service (and accept releases and indemnities as stated on page 16 of the Investment Statement attached to this application form and in any subsequent Investment Statement in respect of the ASB Retail Unit Trusts). I/We agree that withdrawals can only be credited to the bank account nominated by me/us in section 6. > 9. Privacy Authorisation Pursuant to the PRIVACY ACT 1993 I/we understand that: > The personal information provided by me/us will be collected and held by the Manager and ASB Bank Limited, PO Box 35, Shortland Street, Auckland This information may also be disclosed to, and held by, the following: > the providers of my/our nominated investments; > the advisers of the ASB Retail Unit Trusts; > other companies within the ASB Group of Companies; > research firms engaged by the ASB Group to carry out customer surveys in respect of ASB Group products and services. This and any other personal information obtained will be used for purposes relating to: > the administration, marketing, operation, management and investment of the Trusts; > the payment of withdrawals to me/us; > statistical purposes; > keeping me/us informed about the ASB Retail Unit Trusts and other financial opportunities, products, or services offered by the ASB Group; > research and direct marketing companies employed by the ASB Group, for the purpose of undertaking customer surveys and research. I/We have rights of access to, and correction of, personal information supplied to and held by the ASB Group. > 10. Acknowledgements /Authorisations > I/We wish to apply for units in ASB Retail Unit Trusts upon the terms of the current ASB Retail Trusts Investment Statement and any subsequent Investment Statement. > I/We have read and understood the current ASB Retail Unit Trusts Investment Statement to which this application relates, and agree to be bound by the terms and conditions of the Master Trust Deed and each Establishment Deed and in the case of the ASB Residential Mortgage Trust, all contractual and other arrangements entered into by that Trust relating to its investments. > I/We understand that units in the ASB Retail Unit Trusts are not bank deposits or other liabilities of ASB Bank Limited or its subsidiaries (the Banking Group ), and that investment returns are not guaranteed by the Trustee, the Banking Group, Commonwealth Bank of Australia, nor any company in the Commonwealth Bank of Australia Group, nor any directors of any of them, nor any other person. > I/We understand that the capital value of my/our investment can rise or fall depending upon market conditions and that the capital value of my/our investment is not guaranteed by the Banking Group or any other party. I/We may receive back less than I/we invested. > I am authorised to provide personal information on behalf of the customer, and evidence of this authority is provided; (if someone other than the customer supplies the information). > The Manager may in its absolute discretion refuse any application if following such application the number of units held by the applicant or the Investor (or any associated person) would exceed 5% of the number of units on issue at that time in the ASB Residential Mortgage Trust. > I/We have read and understood the provisions of the above Authorisations as they may affect my/our investment in ASB Retail Unit Trusts, as outlined above. > The promoter of the ASB Retail Unit Trusts is ASB Group Investments Limited. Neither ASB Bank Limited nor ASB Group (Life) Limited is a promoter (as defined in the Securities Regulations 1983) of the Trusts. Customer s Signature Joint Customer s Signature (if applicable) Day Month Year For Companies or Trusts, the signatures of Directors or Trustees are required above. For Bank Use Only Method of identification Customer Method of identification Joint Customer Customer Internal Number Joint Customer Internal Number Accepted by User ID/Surname Signature(s) verified by User ID/Surname) Date Stamp Introduced by User ID/Surname Please send directly to ASB Group Investments, Takapuna ASB Bank Limited

41 ASB Group Investments Limited Name of Account Customer (Debtor) to complete Bank/Branch Number and Account Number and Suffix of Account to be debited Authority to Accept Direct Debits) (Not to operate as an assignment or an agreement) Bank Branch Number Account Number Suffix To: The Manager (Insert name of Bank and Branch) Date Address (PO Box) Town/City Authorisation Code (Hereinafter referred to as the initiator) I/We authorise you until further notice in writing to debit my/our account with you all amounts which ASB Group Investments Limited the registered Initiator of the above Authorisation Code may initiate by Direct Debit. I/We acknowledge and accept that the bank accepts this authority only upon the conditions listed on the reverse of this form. Information to appear in my/our Bank Statement Payer Particulars Payer Code Payer Reference Your signature must appear here Name of Account Customer (Debtor) to complete Name of Account Authorised Signature(s) Authorised Signature(s) For Bank Use Only Date Received Recorded by Approved / 9 2 Checked by Bank Stamp

42 Conditions of this Authority to Accept Direct Debits 1. The Initiator: (a) The Initiator has agreed to give written advance notice of the net amount of each Direct Debit and the due date of debiting at least 10 calendar days before (but not more than 2 calendar months) the date the Direct Debit will be initiated. The advance notice will be provided either: (i) (ii) in writing; or by electronic mail where the Customer has provided prior written consent to the Initiator. The advance notice will include the following message: Unless advice to the contrary is received from you by (*date), the amount of will be directly debited to your Bank account on (initiating date). *This date will be at least two (2) days prior to the due date to allow for the amendment of Direct Debits. (b) May, upon the relationship which gave rise to this Authority being terminated, give notice to the Bank that no further Direct Debits are to be initiated under the Authority. Upon receipt of such notice the Bank may terminate this Authority as to future payments by notice in writing to me/us. 2. The Customer may: (a) (b) At any time, terminate this Authority as to future payments by giving written notice of termination to the Bank and to the Initiator. Stop payment of any Direct Debit to be initiated under this Authority by the Initiator by giving written notice to the Bank prior to the Direct Debit being paid by the Bank. 3. The Customer acknowledges that: (a) (b) (c) (d) (e) This authority will remain in full force and effect in respect of all Direct Debits made from my/our account in good faith notwithstanding my/our death, bankruptcy, or other revocation of this authority until actual notice of such event is received by the Bank. In any event this Authority is subject to any arrangement now or hereafter existing between me/us and the Bank in relation to my/our account. Any dispute as to the correctness or validity of an amount debited to my/our account shall not be the concern of the Bank except in so far as the Direct Debit has not been paid in accordance with this authority. Any other disputes lie between me/us and the Initiator. The Bank accepts no responsibility or liability for the accuracy of information about payments on Bank Statements. The Bank is not responsible for, or under any liability in respect of: any variations between notices given by the Initiator and the amounts of Direct Debits. the Initiator s failure to give written advance notice correctly nor for the non-receipt or late receipt of notice by me/us for any reason whatsoever. In any such situation the dispute lies between me/us and the Initiator. 4. The Bank may: (a) (b) (c) In its absolute discretion conclusively determine the order of priority of payment by it of any monies pursuant to this or any other Authority, cheque or draft properly executed by me/us and given to or drawn on the Bank. At any time terminate this authority as to future payments by notice in writing to me/us. Change its current fees for this service in force from time-to-time.

43 > APPLICATION FORM: ASB Retail Unit Trusts 29 June 2007 ASB Retail Unit Trusts Account No. 1 2 > 1. Customer Details This information will be treated in the strictest confidence. Surname / Company / Trust Name (Title) Title Other Date of Birth Mr Mrs Miss Ms Dr First Names Day Month Year Home Address IRD Tax Number Telephone Home Work Mobile Prescribed Investor Rate (refer to page 36) 0% 19.5% 33% (30% from 1 April 2008) Customer Selected Password Address Fax New ASB Customers Please also complete the Customer Information Application Forms. > 2. Joint Customer Details This information will be treated in the strictest confidence. Surname / Company / Trust Name (Title) Title Other Date of Birth Mr Mrs Miss Ms Dr First Names Day Month Year Home Address IRD Tax Number Telephone Home Work Mobile Prescribed Investor Rate (refer to page 36) 0% 19.5% 33% (30% from 1 April 2008) Customer Selected Password Address Fax New ASB Customers Please also complete the Customer Information Application Forms. > 3. Investment Details Lump sum investors and regular savings contributors. I / We wish to invest Statement and / or any future Investment Statement in respect of ASB Retail Unit Trusts. ASB Retail Unit Trusts ASB Money Market Trust ASB Residential Mortgage Trust*** ASB Diversified Income Trust + ASB NZ Fixed Interest Trust ASB World Fixed Interest Trust ASB NZ Property Trust ASB World Shares Trust ASB NZ Shares Trust ASB Emerging Markets Shares Trust Initial Investment Amount ( Value) Total * in ASB Retail Unit Trusts, upon the terms of the current Investment Regular Savings Amount ( Value) per month/per fortnight** Regular Savings and / or Additional Investments (% of Total) % % % % % % % % % 100 % * Minimum initial investment is 2,000 for Lump Sum investors, or 100 Regular Savings contributors for all Trusts, except the ASB Residential Mortgage Trust and the ASB Diversified Income Trust where the minimum investment is 10,000. ** Minimum regular savings amount is 100 per month/50 per fortnight per ASB Retail Unit Trusts account. The minimum holding in ASB Retail Unit Trusts, except for the ASB Residential Mortgage Trust and the ASB Diversified Income Trust, is 2,000, which for Regular Savings contributors must be achieved within 2 years. ***Prior to 19 July 2007 applications for investment in the ASB Residential Mortgage Trust will only be accepted from investors who were existing Unitholders as at 29 June 2005 and who have continued to be Unitholders. From 19 July 2007, applications for Units in the ASB Residential Mortgage Trust will not be accepted. + A Transaction Allowance of 0.10% of application monies is retained by the ASB Diversified Income Trust. Payment Details I/We authorise you to transfer the Initial Investment amount specified in section 3 above from my / our ASB account no. > 4. Investment Details Regular savings contributors only. Commencement date of regular savings contributions Day Month Year Bank Account Number from which regular savings contributions are to be deducted I/We would like my / our regular savings contributions adjusted annually in line with the Consumer Price Index. (Please tick) Yes No Regular Savings Contributors must also complete the Direct Debit Authority attached to this Investment Statement. > 5. Regular Withdrawal Option I / We wish to have (minimum amount 100) Commencement date of regular withdrawals withdrawn from my ASB Money Market Trust /ASB Residential Mortgage Trust / ASB Diversified Trust each Fortnight Month and direct credited to Day Month Year the nominated bank account in section 6. I / We accept the releases and indemnities stated on page 16 of the Investment Statement attached to this application form and / or any subsequent Investment Statement in respect of ASB Retail Unit Trusts. PTO

44 > 6. Bank Account Details (for all payments) Bank Account Number > 7. Income Distribution Details initial initial Please indicate (by ticking the box) how you would like to receive your ASB Retail Unit Trusts income distributions: Reinvest in additional Direct credit to the nominated If you are not a New Zealand tax resident, please specify your country of residence for tax purposes. units in the same Trust bank account in section 6 With the exception of the ASB Residential Mortgage Trust from 19 July 2007, distributions will automatically be reinvested in additional units in the same Trust if neither box is ticked. From 19 July 2007, the ASB Residential Mortgage Trust will be closed to reinvestment. If you would like to invest your distribution in another Trust, please talk to your Investment Adviser. > 8. Telephone Transaction Service 0800 ASB FUNDS ( ) I/We wish to be able to make additional investments, withdrawals and/or switch investments by telephone, utilising the ASB Telephone Transaction Service (and accept releases and indemnities as stated on page 16 of the Investment Statement attached to this application form and in any subsequent Investment Statement in respect of the ASB Retail Unit Trusts). I/We agree that withdrawals can only be credited to the bank account nominated by me/us in section 6. > 9. Privacy Authorisation Pursuant to the PRIVACY ACT 1993 I/we understand that: > The personal information provided by me/us will be collected and held by the Manager and ASB Bank Limited, PO Box 35, Shortland Street, Auckland This information may also be disclosed to, and held by, the following: > the providers of my/our nominated investments; > the advisers of the ASB Retail Unit Trusts; > other companies within the ASB Group of Companies; > research firms engaged by the ASB Group to carry out customer surveys in respect of ASB Group products and services. This and any other personal information obtained will be used for purposes relating to: > the administration, marketing, operation, management and investment of the Trusts; > the payment of withdrawals to me/us; > statistical purposes; > keeping me/us informed about the ASB Retail Unit Trusts and other financial opportunities, products or services offered by the ASB Group; > research and direct marketing companies employed by the ASB Group, for the purpose of undertaking customer surveys and research. I/We have rights of access to, and correction of, personal information supplied to and held by the ASB Group. > 10. Acknowledgements /Authorisations > I/We wish to apply for units in ASB Retail Unit Trusts upon the terms of the current ASB Retail Trusts Investment Statement and any subsequent Investment Statement. > I/We have read and understood the current ASB Retail Unit Trusts Investment Statement to which this application relates, and agree to be bound by the terms and conditions of the Master Trust Deed and each Establishment Deed and in the case of the ASB Residential Mortgage Trust, all contractual and other arrangements entered into by that Trust relating to its investments. > I/We understand that units in the ASB Retail Unit Trusts are not bank deposits or other liabilities of ASB Bank Limited or its subsidiaries (the Banking Group ), and that investment returns are not guaranteed by the Trustee, the Banking Group, Commonwealth Bank of Australia, nor any company in the Commonwealth Bank of Australia Group, nor any directors of any of them, nor any other person. > I/We understand that the capital value of my/our investment can rise or fall depending upon market conditions and that the capital value of my/our investment is not guaranteed by the Banking Group or any other party. I/We may receive back less than I/we invested. > I am authorised to provide personal information on behalf of the customer, and evidence of this authority is provided; (if someone other than the customer supplies the information). > The Manager may in its absolute discretion refuse any application if following such application the number of units held by the applicant or the Investor (or any associated person) would exceed 5% of the number of units on issue at that time in the ASB Residential Mortgage Trust. > I/We have read and understood the provisions of the above Authorisations as they may affect my/our investment in ASB Retail Unit Trusts, as outlined above. > The promoter of the ASB Retail Unit Trusts is ASB Group Investments Limited. Neither ASB Bank Limited nor ASB Group (Life) Limited is a promoter (as defined in the Securities Regulations 1983) of the Trusts. Customer s Signature Joint Customer s Signature (if applicable) Day Month Year For Companies or Trusts, the signatures of Directors or Trustees are required above. For Bank Use Only Method of identification Customer Method of identification Joint Customer Customer Internal Number Joint Customer Internal Number Accepted by User ID/Surname Signature(s) verified by User ID/Surname) Date Stamp Introduced by User ID/Surname Please send directly to ASB Group Investments, Takapuna ASB Bank Limited

45 ASB Group Investments Limited Name of Account Customer (Debtor) to complete Bank/Branch Number and Account Number and Suffix of Account to be debited Authority to Accept Direct Debits) (Not to operate as an assignment or an agreement) Bank Branch Number Account Number Suffix To: The Manager (Insert name of Bank and Branch) Date Address (PO Box) Town/City Authorisation Code (Hereinafter referred to as the initiator) I/We authorise you until further notice in writing to debit my/our account with you all amounts which ASB Group Investments Limited the registered Initiator of the above Authorisation Code may initiate by Direct Debit. I/We acknowledge and accept that the bank accepts this authority only upon the conditions listed on the reverse of this form. Information to appear in my/our Bank Statement Payer Particulars Payer Code Payer Reference Your signature must appear here Name of Account Customer (Debtor) to complete Name of Account Authorised Signature(s) Authorised Signature(s) For Bank Use Only Date Received Recorded by Approved / 9 2 Checked by Bank Stamp

46 Conditions of this Authority to Accept Direct Debits 1. The Initiator: (a) The Initiator has agreed to give written advance notice of the net amount of each Direct Debit and the due date of debiting at least 10 calendar days before (but not more than 2 calendar months) the date the Direct Debit will be initiated. The advance notice will be provided either: (i) (ii) in writing; or by electronic mail where the Customer has provided prior written consent to the Initiator. The advance notice will include the following message: Unless advice to the contrary is received from you by (*date), the amount of will be directly debited to your Bank account on (initiating date). *This date will be at least two (2) days prior to the due date to allow for the amendment of Direct Debits. (b) May, upon the relationship which gave rise to this Authority being terminated, give notice to the Bank that no further Direct Debits are to be initiated under the Authority. Upon receipt of such notice the Bank may terminate this Authority as to future payments by notice in writing to me/us. 2. The Customer may: (a) (b) At any time, terminate this Authority as to future payments by giving written notice of termination to the Bank and to the Initiator. Stop payment of any Direct Debit to be initiated under this Authority by the Initiator by giving written notice to the Bank prior to the Direct Debit being paid by the Bank. 3. The Customer acknowledges that: (a) (b) (c) (d) (e) This authority will remain in full force and effect in respect of all Direct Debits made from my/our account in good faith notwithstanding my/our death, bankruptcy or other revocation of this authority until actual notice of such event is received by the Bank. In any event this Authority is subject to any arrangement now or hereafter existing between me/us and the Bank in relation to my/our account. Any dispute as to the correctness or validity of an amount debited to my/our account shall not be the concern of the Bank except in so far as the Direct Debit has not been paid in accordance with this authority. Any other disputes lie between me/us and the Initiator. The Bank accepts no responsibility or liability for the accuracy of information about payments on Bank Statements. The Bank is not responsible for, or under any liability in respect of: any variations between notices given by the Initiator and the amounts of Direct Debits. the Initiator s failure to give written advance notice correctly nor for the non-receipt or late receipt of notice by me/us for any reason whatsoever. In any such situation the dispute lies between me/us and the Initiator. 4. The Bank may: (a) (b) (c) In its absolute discretion conclusively determine the order of priority of payment by it of any monies pursuant to this or any other Authority, cheque or draft properly executed by me/us and given to or drawn on the Bank. At any time terminate this authority as to future payments by notice in writing to me/us. Change its current fees for this service in force from time-to-time.

47

48 ASB Bank Limited