Put your money to work for you ANZ Investment Funds

Transcription

1 Put your money to work for you ANZ Investment Funds INVESTMENT STATEMENT 17 DECEMBER 2014

2 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: What sort of investment is this? 12 Who is involved in providing it for me? 24 How much do I pay? 16 What are the charges? 23 What returns will I get? 13 What are my risks? 17 Can the investment be altered? 22 How do I cash in my investment? 21 Who do I contact with inquiries about my investment? 37 Is there anyone to whom I can complain if I have problems with the investment? 37 What other information can I obtain about this investment? 25 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 that prospectus on request. The Financial Markets Authority regulates conduct in financial markets The Financial Markets Authority regulates conduct in New Zealand s financial markets. The Financial Markets Authority s main objective is to promote and facilitate the development of fair, efficient, and transparent financial markets. Financial advisers can help you make investment decisions Using a financial adviser cannot prevent you from losing money, but it should be able to help you make better investment decisions. Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide advice on a limited range of products. When seeking or receiving financial advice, you should check: the type of adviser you are dealing with the services the adviser can provide you with the products the adviser can advise you on. A financial adviser who provides you with personalised financial adviser services may be required to give you a disclosure statement covering these and other matters. You should ask your adviser about how he or she is paid and any conflicts of interest he or she may have. Financial advisers must have a complaints process in place and they, or the financial services provider they work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a dispute over an investment, you can ask someone independent to resolve it. Most financial advisers, or the financial services provider they work for, must also be registered on the financial service providers register. You can search for information about registered financial service providers at You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser. For more information about investing, go to This is an investment statement for the ANZ Investment Funds for the purposes of the Securities Act The information in this investment statement was correct as at 17 December 2014, the date on which this investment statement was issued. The ANZ Investment Funds are offered and managed by ANZ New Zealand Investments Limited. Your investment with the ANZ Investment Funds is not guaranteed by ANZ Bank New Zealand Limited, Australia and New Zealand Banking Group Limited (together ANZ Group ), The New Zealand Guardian Trust Company Limited, any of their directors, or any other person.

3 Welcome to the ANZ Investment Funds This investment statement explains the choices available to you. Making the right decisions now could help you achieve your financial goals. What s in this investment statement? Overview Pages 2 to 9 Key terms Page 10 More information Pages 11 to 26 Forms Pages 27 to 35 1

4 An overview of the ANZ Investment Funds What are the main benefits? You benefit from investing in diversified Funds, giving you access to a broad range of assets you might not be able to invest in yourself. You also benefit from flexible investment and withdrawal options. You choose: how much and when to invest when to withdraw your money which Fund your money is invested in. The Funds are also tax efficient, as each Fund is a portfolio investment entity (PIE). This means the maximum tax is 28%. For more information, see Tax and your returns on page 13. You decide how much to invest You have two options: Regular payments You can stop or start regular payments whenever you wish. Lump sum payments You can make a lump sum payment at any time. There are minimum payment amounts. For more information, see How much do I pay? on page 16. You can withdraw at any time Withdrawing is simple you decide when to take money out of your Fund. You can also set up a regular withdrawal. There is no minimum or maximum investment period. There are minimum withdrawal amounts. For more information, see You can make a withdrawal on page 21. You decide which Fund to invest in We offer five investment Funds. Each Fund invests in a different asset class mix. Each Fund has a different risk/ return profile. You can choose the Fund that is best suited to you. For more information, see Decide where your money is invested on pages 6 and 7. What are the fees? Each Fund has a maximum fee that can be charged per year. The Fund fee ranges from 1.30% to 1.50% of the net assets of a Fund, depending on the Fund you choose. We deduct the relevant fee from the Fund and it affects your returns. For more information, see What are the charges? on page 23. Investing involves risks Investing in the Funds will involve taking some risk. The risks mean that: the value of your investment might go up and down over time your return could be less than you expect you might lose some or all of your investment. The level of risk will vary depending on the Fund you invest in. You need to decide how these risks apply to your personal financial circumstances. We recommend that you talk to an authorised financial adviser about the investment options available to you. Call to speak with an ANZ Authorised Financial Adviser or contact your authorised financial adviser. Your investment is not guaranteed Your investment in the Funds is not guaranteed by anyone. How do you join? It s easy to join the Funds. All you need to do is: 1. read the information in this investment statement 2. complete and send us an application form. If you still have questions about the Funds after reading this investment statement, contact your authorised financial adviser or contact us through: anz.co.nz/investmentfunds service@anzinvestments.co.nz

5 How savings grow over time Bridget and Greg want to save some money to put towards their grandson Jack s future tertiary education. From when Jack is one year old, they plan to make regular payments of $100 a month into a Balanced Fund investment account in Jack s name. The combination of time, regular payments, and investment performance means that, by the time Jack turns 18, he could have a total of around $31,000 ($22,000 after adjusting for inflation). For background information and numbers used in this case study, see About our case studies on page 5. 3

6 A flexible option George (52) and Karen (51) own a farm in the Waikato. They ve worked hard over the past 30 years and managed to save a nest egg of $500,000. They want to continue building that sum while they re still working. On top of their lump sum, they can afford to invest a further $2,000 each month until they re ready to retire probably when George turns 65. So they re looking for an investment that offers both flexibility and moderate risk. Karen and George are drawn to the Funds for several reasons. They like the wide range of assets within the Funds. They also like the discipline of contributing regularly, and the flexibility to add a lump sum investment whenever their cash flow allows. They can also make a withdrawal from the Funds if they need to. They initially invest in the Balanced Fund but change to the Conservative Balanced Fund when George turns 61. By the time he s 65, their savings could have grown to $1,280,000 (or $990,000 after adjusting for inflation). Depending on their circumstances, they could change to the Conservative Fund, review their regular payment amount, perhaps start a regular withdrawal, or even think about a large withdrawal for a dream holiday. For background information and numbers used in this case study, see About our case studies on page 5. 4

7 Why invest with the ANZ Investment Funds? A diversified investment The Funds are multi-asset-class funds that spread their investments over hundreds of assets across local and international markets. For more information, see Decide where your money is invested on pages 6 and 7. Easy exposure to different assets The Funds give you access to a broad range of assets you might not otherwise be able to invest in. For more information, see Decide where your money is invested on pages 6 and 7. A flexible option The Funds have flexible investment and withdrawal options, so that you can add to your investment whenever you wish, and cash in some or all of your investment whenever you need to. For more information, see How much do I pay? on page 16 and You can make a withdrawal on page 21. A complement to other savings and investments The Funds work well with other types of savings or investments, such as term deposits and KiwiSaver. The Funds are more diversified than a term deposit (because they invest in more asset classes) and more flexible than KiwiSaver (because you can withdraw your money at any time). You re always connected If you bank with ANZ, you can find up-to-date information about all your ANZ savings and investment products, including the Funds: through ANZ Internet Banking at anz.co.nz by using the ANZ gomoney app on your smartphone or tablet. You can also view unit prices and fund performance details at anz.co.nz/investmentfunds. Don t just take our word for it The Funds are managed by ANZ Investments, ANZ s award-winning fund manager. We have a strong record of investment performance in New Zealand and are the proud holder of the: 2014 FundSource Fund Manager of the Year award 2014 FundSource KiwiSaver Manager of the Year award. See anz.co.nz/anzinvestments for our full awards history. About our case studies All of the case studies in this investment statement are examples to help you understand how an investment in a Fund can help you achieve your investment goals. The figures used are for illustration only and may not reflect actual returns. The figures in our case studies: show projected savings both: where they haven t been adjusted for the effect of rising prices over time (that is, inflation), in which case the amount does not reflect the real buying power in the future where they have been adjusted for inflation of 2% per year to show the real buying power of the savings in the future assume salaries will increase by 2.5% each year assume positive investment performance each year (after charges and taxes at a prescribed investor rate of 28%) of 3.9% for the Conservative Balanced Fund and 4.6% for the Balanced Fund generally round savings to the nearest $1,000 account for tax when appropriate assume that no withdrawals are made during the course of the investment. 5

8 Decide where your money is invested Fund Fund description Conservative Invests mainly in cash and fixed interest assets, with a smaller exposure to share and listed property assets. Conservative Balanced Invests mainly in cash and fixed interest assets, with some exposure to share and listed property assets. Balanced Invests in cash and fixed interest assets, with similar amounts of share and listed property assets. Balanced Growth Invests mainly in share and listed property assets, with some exposure to cash and fixed interest assets. Growth Invests mainly in share and listed property assets, with a smaller exposure to cash and fixed interest assets. All of the Funds may invest in alternative assets. Check the fund fact sheets on anz.co.nz/investmentfunds to see what each Fund is currently invested in. Returns and risk are related The relationship between risk and return is very important. If you re seeking higher returns, you need to be willing to accept more risk. If you re seeking low risk, you need to be willing to accept lower returns. Each Fund has its own risk/return profile, as set out below. For more information, see Different asset classes have different risks on page 17. More help on choosing a Fund We recommend that you discuss your investment options with an authorised financial adviser. Call to speak with an ANZ Authorised Financial Adviser, or contact your authorised financial adviser. 6

9 Risk/return profile Benchmark asset class mix Less Risk Return More Listed property and shares 20% Cash assets and fixed interest 80% Less Risk Return More Listed property and shares 35% Cash assets and fixed interest 65% Less Risk Return More Listed property and shares 50% Cash assets and fixed interest 50% Less Risk Return More Listed property and shares 65% Cash assets and fixed interest 35% Less Risk Return More Listed property and shares 80% Cash assets and fixed interest 20% Tell us your choice Once you ve read this investment statement and chosen one of the Funds, tell us by filling out the relevant application form at the back of this investment statement. If you wish to invest in more than one Fund, please contact us on or your authorised financial adviser to discuss the requirements. You can change your Fund choice at any time. For more information, see Can the investment be altered? on page 22. 7

10 Clever thinking Andrew is 30 years old and earns $65,000 (before tax). He contributes 3% of his salary to his KiwiSaver scheme. He wants to save more money for his future, but he won t receive any more Government benefits if he increases his KiwiSaver contribution rate to 4% or 8% of his salary. Also, all his money would be locked in until he s 65. For his additional savings, flexibility is important. He wants a diversified investment that he can access at any time. So he decides to make regular payments of 5% of his salary into the ANZ Investment Funds Balanced Fund. Here s what Andrew s investment looks like at different ages. We also show what his investment would be if, instead, he only invested 3% of his salary into the ANZ Investment Funds Balanced Fund. 8

11 A smart way to invest more for your retirement $400,000 $350,000 5 % $389,000 1 $300,000 $250,000 $200,000 3 % $234,000 2 $150,000 $100,000 $50,000 $ Age 1 $195,000 after adjusting for inflation 2 $117,000 after adjusting for inflation For background information and numbers used in this case study, see About our case studies on page 5. 9

12 Terms used in this investment statement ANZ: ANZ Bank New Zealand Limited. ANZ Group: ANZ, Australia and New Zealand Banking Group Limited, and their subsidiaries including ANZ Investments. ANZ Investments: ANZ New Zealand Investments Limited. asset class: a group of assets with the same or similar features and behaviours. The main asset classes we invest in are: cash, fixed interest, listed property, and shares. The Funds may also invest in alternative assets that don t fit into one of these classes. asset class mix: the mix of asset classes within a Fund, expressed as a percentage based on the market value of the assets in each class. Market movements will change the value of assets and therefore the actual asset class mix. authorised financial adviser: a financial adviser who meets legal requirements (qualification and professional standards) for giving personalised financial advice about financial products including unit trusts, and who has been authorised by the Financial Markets Authority. benchmark asset class mix: the asset class mix used as a starting point for deciding how much a Fund invests in each asset class. We have ranges that state how far from the benchmark the actual asset class mix can be. Fund: a pool of money made up of investments from a number of investors. The money is used to invest in assets, with the aim of producing capital gains and/or income for the Fund. ANZ Investment Funds, which are made up of five different funds (referred to individually in this investment statement as a Fund), each with its own asset class mix. investment account: an account within the Funds that is established in your name. investment performance: the gains or losses made when the assets in which a Fund invests, change in value and/or earn income. Manager: ANZ New Zealand Investments Limited, also referred to as we, our, us or ANZ Investments, is the company that administers the Funds, and selects and manages its investments. ANZ Investments is a wholly owned subsidiary of ANZ Bank New Zealand Limited, which is part of ANZ Group. market: in financial terms, a broad term describing all possible buyers and sellers of all available financial investments or investment products. market movements: changes in the overall value of assets traded in a market. Portfolio Investment Entity (PIE): a company, superannuation fund, unit trust, or group investment fund registered with Inland Revenue to allow tax on investment income at the prescribed investor rate of its investors, rather than at its own tax rate. PIEs also have different rules about what is, and isn t, taxable. prescribed investor rate (PIR): the investor s tax rate for PIE income, which is the rate a PIE uses to calculate and pay tax on that investor s taxable income. return: the total amount that you receive when you withdraw (in full or in part) from the Funds. risk: the chance that an outcome, for example the change in value or income received from an investment, will be different than expected. risk/return profile: the level of probable risk and level of expected investment performance for a particular investment, asset class, or fund. statement of investment policies and objectives (SIPO): the document that sets out the ANZ Investment Funds investment policies, together with the objectives and investment strategies for each Fund. Trust Deed: an agreement between the Trustee and the Manager. The Trust Deed includes the unit trust schedules referred to on page 24. The Trust Deed records each party s rights and responsibilities, and requirements for how the Funds will be managed. By joining the Funds you agree to be bound by the terms of the Trust Deed and have the rights set out within it. Trustee: currently The New Zealand Guardian Trust Company Limited. The Trustee is independent of the Manager and supervises how the Manager runs the Funds, for the benefit of you and other investors. unit: units in any and each of the Funds. You receive units each time money is paid into your investment account. The price of each unit you receive depends on the value of the relevant Fund at the time you invest. you: any existing or potential investor in the Funds. For an investor or potential investor aged 17 and under, this also includes parents or guardians. 10 See the prospectus for the meanings of other financial terms.

13 More information on the ANZ Investment Funds What s in this section? What sort of investment is this? 12 What returns will I get? 13 How much do I pay? 16 What are my risks? 17 How do I cash in my investment? 21 Can the investment be altered? 22 What are the charges? 23 Who is involved in providing it for me? 24 What other information can I obtain about this investment? 25 How will you use my information? 26 We take instructions from you 26 About the WriteMark and our awards 26 11

14 What sort of investment is this? The Funds are unit trusts The Funds are unit trusts established under the Unit Trusts Act Your investment is pooled with the investments of other investors. You receive units each time money is paid into your investment account. The price of each unit you receive depends on the value of the relevant Fund at the time you invest. The number of units you have, when multiplied by the unit price, represents the value of your investment in the Funds, not including any unpaid tax or refunds. You can view the latest unit prices at anz.co.nz/investmentfunds. Who can invest in the Funds? You need to be in New Zealand to invest in the Funds. There are no other eligibility requirements. How the Funds invest ANZ Investment Funds has five multi-asset-class Funds. The Funds invest in underlying funds The Funds invest in other funds (called underlying funds) that we manage. Each underlying fund focuses its investments on a specific asset class. The assets of these underlying funds are either selected by us or by carefully chosen external managers. We monitor what these external managers do and how they perform. We believe this management structure benefits you because it creates efficiencies and we have greater control of the overall cost to you. See the prospectus for further information on the underlying funds and our external managers. The Funds have benchmarks and ranges The table on pages 6 and 7 shows the benchmark asset class mix for each Fund. We vary the asset class mix by adjusting allocations to asset classes which we believe will perform strongly or poorly in the future (this is called active asset allocation). We also vary the asset class mix to manage risk and manage cash flow. We can also adjust the level of our currency hedging for foreign share assets depending on our view of the relative strength (or weakness) of the New Zealand dollar. We have ranges that state how far from the benchmark the actual asset class mix can be. This may differ from other investment products that we manage. You can see the benchmarks, ranges, and actual asset class mix (including any alternative assets) for each of our Funds at any time. Just check our website anz.co.nz/investmentfunds or us at service@anzinvestments.co.nz. Other things you should know about the Funds Each Fund is allowed to invest up to 10% in alternative assets. Our Funds are allowed to borrow. However, apart from a short-term overdraft facility, we don t intend for our Funds to borrow. See the prospectus and the Trust Deed for more information on borrowing. 12

15 What returns will I get? Your returns on your investment in the Funds will be the amount you receive when you withdraw some, or all, of your investment in the Funds. The Funds will not pay you any income or other amounts before you withdraw. Your returns depend on three factors. First, the amount you invest The amount you invest is made up of any regular payments and lump sum payments made into your investment account. Second, the costs you pay The costs you pay are: charges, see What are the charges? on page 23 for more information taxes, see Tax and your returns on this page for more information. Third, investment gains or losses Your investment can go up or down because of the investment performance of the Fund you invest in. Investment performance reflects gains or losses made when the assets the Funds invest in change in value or earn income. Tax and your returns Each Fund is a Portfolio Investment Entity (PIE). This means that each Fund s taxable income is shared by its investors based on the number of units they hold. We use your prescribed investor rate (PIR) to calculate how much tax to pay on your share of a Fund s taxable income. We pay this tax for you by cancelling units in your investment account equal to the value of the tax you need to pay. We will do this: at the end of the tax year (following 31 March) when you withdraw, transfer, or switch all of your investment from a Fund at any other time when the value of your units is insufficient to cover your accrued tax liability. In certain circumstances a Fund receives tax refunds on your behalf. When that happens to a Fund you re invested in, we add units to your investment account equal to the value of your share of the tax refund. You need to tell us your prescribed investor rate On page 14 is a table that helps you determine your prescribed investor rate. You need to tell us your prescribed investor rate and let us know if it changes. You also need to tell us your IRD number. If you don t give us both your prescribed investor rate and IRD number, the default prescribed investor rate of 28% will apply. If you give us a prescribed investor rate that is: too low, you may need to file a tax return and be responsible for paying any additional tax, penalties, and interest too high, you will not be able to claim a refund of overpaid tax from Inland Revenue. Inland Revenue can require us to use a different prescribed investor rate if they consider that you have given us an incorrect prescribed investor rate. If you give us the correct prescribed investor rate, we will pay the correct amount of tax for you on your share of a Fund s taxable income. Most investors who are individuals (and not trustees of trusts) will not need to pay any further tax or fill out a tax return for this income. Seek advice from a tax professional to determine if you need to file a tax return and have further tax to pay. 13

16 If you re an individual Trustees of trusts are not individuals and should read the information under If you re not an individual below. Are you a New Zealand tax resident? Yes No Your PIR is 28% In either of the two income years before the relevant year was your taxable income $14,000 or less? No In either of the two income years before the relevant year was your taxable income $48,000 or less? No Your PIR is 28% Yes Yes Was your total taxable income and attributed PIE income (after deducting any attributed PIE loss)* in that year $48,000 or less? No Was your total taxable income and attributed PIE income (after deducting any attributed PIE loss)* in that year $70,000 or less? No Your PIR is 28% Yes Yes Your PIR is 10.5% Your PIR is 17.5% If having considered the two previous income years you qualify for two rates, your PIR is the lower rate. * Your attributed PIE income or loss for an income year is the amount of income or loss attributed to you by PIEs (including the ANZ Investment Funds) in that income year, as recorded in the tax certificates issued by PIEs to you at the end of each income year. An income year generally runs from 1 April of the previous year to 31 March of the current year. If you re not an individual Are you a New Zealand tax resident company, unit trust, charity, superannuation scheme, PIE or PIE investor proxy? Your PIR is 0%. You will need to pay any tax on your attributed PIE income yourself. Superannuation schemes that are trusts may select another PIR see below. Are you a New Zealand tax resident trustee (other than of a charitable trust)? Seek advice from a tax professional to help you choose the PIR that best suits your beneficiaries. 14

17 If you re investing with another person If you re investing jointly with another person and your prescribed investor rates are the same, tell us which investor to attribute the income to and the applicable prescribed investor rate. If your prescribed investor rates are not the same, we must attribute the income to the investor with the highest prescribed investor rate. If you do not make a selection, we attribute the income to the first-named investor at the default rate of 28%. Get advice if you re uncertain How an investment in the Funds affects your tax may depend on your individual circumstances. If you re uncertain, you should consult a tax adviser. Other information about returns As Manager of the Funds, we are legally responsible for paying your Fund returns. Returns are not due on any particular date or frequency and no amount of returns is promised. We can defer withdrawals from a Fund in certain circumstances, such as when: we receive a high level of withdrawal requests the market suffers an event with a significant undesirable effect. We may separate out certain assets within a Fund s portfolio and make special arrangements for those assets, if doing so will protect investors interests. This may affect you accessing part of your investment. Your share of the Funds income will be included as income for the purposes of determining your: student loan repayment obligations ability to receive family assistance and student allowances from 1 April 2016, child support payment obligations. 15

18 How much do I pay? You can invest in the Funds by: making regular payments making lump sum payments. You must do at least one of these when you first join a Fund. Regular payments You can make regular payments straight from your bank account. The minimum regular payment per Fund is $50. How to make regular payments If you want to make regular payments, complete the direct debit form at the back of this investment statement and send it to us. You can increase, reduce (subject to the minimum payments), or suspend your regular payments at any time by sending us a new direct debit form. Lump sum payments If you do not want to make regular payments, you must make an initial lump sum payment of $500 or more when you first join a Fund. How to make a lump sum payment when you first join To make a lump sum payment when you first join a Fund, complete and send us the application form at the back of this investment statement, together with your cheque, or arrange for a direct credit to: The Unit Trusts Application Account ANZ Please include the following information on the back of your cheque or in the reference fields on your direct credit: your surname your date of birth in the following format DDMMYYYY one of: your IRD number your ANZ investor number your ANZ customer number. How to make additional lump sum payments You can make additional lump sum payments of $500 or more at any time, whether or not you have a regular payment set up. For additional lump sum payments, complete and send us the transaction form at the back of this investment statement. Enclose your cheque or arrange for a direct credit (as described on this page). 16

19 What are my risks? The Funds are investments. Like any investment, they involve taking some risk. The level of risk will vary depending on the Fund you are invested in, as each Fund is exposed to different levels and types of risk. You need to decide how these risks apply to your personal circumstances. In very general terms: if you re seeking higher returns, you need to be willing to accept more risk if you re seeking lower risk, you need to be willing to accept lower returns. In this section, we discuss the most significant risks that apply to an investment in the Funds. These (and other) risks may mean you get back less from your investment in the Funds than you hoped for, and it is also possible that you might not receive back the full amount you invested in the Funds. Asset class risks Different asset classes have different risks Different asset classes have different levels and types of risk. For example, share and listed property assets are considered to be more risky than cash and fixed interest assets. These characteristics mean that Funds with larger portions invested in share and listed property assets are typically exposed to more risk than those Funds with larger portions invested in cash and fixed interest assets. The table on page 18 describes the main risks associated with the different asset classes our Funds invest in. We decide which risks are significant by thinking about how likely the unwanted event is and what effect it might have if it happens. You should consider the information set out in this section and the prospectus, and talk to an authorised financial adviser if you need more information. See the prospectus for more information about risks. Understanding the risks of the Fund you re invested in For the Funds, we believe that the most significant risks will usually fall into the following broad categories: asset class risks risks from the asset class or classes a Fund invests in investment management risks risks that arise because of the way we manage the Funds general risks risks that apply to any investment in the Funds. We discuss these broad risk categories, and how we mitigate them, in greater detail on pages 18 to 20. You should familiarise yourself with these risks and how they relate to the Fund, or Funds, you re invested in. 17

20 Asset class What are these assets? What are the main risks? Affected Funds Cash assets Fixed interest assets Cash assets are interest-bearing deposits with one or more New Zealand-registered banks (such as term deposits), shortterm debt securities, and floating rate notes. Fixed interest assets are securities issued by governments, corporations, local authorities, and banks (called issuers). The issuer generally pays a set (or fixed) interest rate for a set period of time. Risks for cash and fixed interest assets are similar and include the risk that the issuer is not able to pay interest or repay principal. For fixed interest assets and also some cash assets, added risks are that the value of the investment will fall if: interest rates in the market increase the creditworthiness of the issuer decreases. Most affected: Conservative Fund Conservative Balanced Fund Balanced Fund Least affected: Balanced Growth Fund Growth Fund Share assets Share assets represent partownership of a company or similar entity and include units, shares, or other equity securities. Shareholders share any profits or losses of the relevant entity. Risks for share and listed property assets are similar, and include the risk that if the company performs poorly: share or unit prices may drop below the purchase price or even to zero dividends may not be paid. Most affected: Balanced Fund Balanced Growth Fund Growth Fund Least affected: Conservative Fund Listed property assets Listed property assets are represented by shares or units in listed property trusts or companies. Those trusts or companies own or invest directly in commercial property, buildings, or land (including ports, airports, toll roads, utility networks, and retirement villages). The value of shares is affected by many things, including market movements and companyspecific issues. Share and listed property assets are considered to be more risky than cash and fixed interest assets. Conservative Balanced Fund Alternative assets Alternative assets are assets that don t fit into the four asset classes described above. They can include commodities, hedge funds, and private equity. Alternative assets have their own risk and expected investment performance characteristics. Some are considered more risky than shares and listed property and some are considered less risky. All Funds can invest in alternative assets. However, no Funds are invested in alternative assets at the date of this investment statement. 18

21 Multi-asset-class Funds Although the multi-asset-class Funds are exposed to the risks that apply to the asset classes in which they invest, these risks are reduced because they hold: more than one type of asset class investments in many organisations investments in multiple industries and countries. The significance of any risks will vary depending on how much of that Fund s assets are invested in each asset class. By investing in a multi-asset-class Fund, poor performance by a single-asset class has less impact on your investment and, in addition, investment losses from one asset class may well be offset by investment gains from another. We try to mitigate these risks even further by varying the asset class mix for each Fund depending on how we believe each asset class is likely to perform (we call this active asset allocation). Investment management risks The way we manage the Funds gives rise to some specific risks from active management, currency rate changes, and our use of derivatives. Active management risk All of our Funds are actively managed. The aim of active management is for a Fund to have better investment performance than a particular index or market. Passive management, by contrast, tries to accurately track a particular index or market. Active management risk is the risk that our Funds perform worse than the particular index or market because of poor investment decisions. With active management, we risk: choosing investments that underperform the particular index or market mistiming market changes. An active management approach can lead to better investment performance than passive management. For example, when the share market has an overall fall, the investment decisions we ve made might mean our Funds do not decrease in value or decrease by less. We seek to mitigate active management risk by employing investment professionals who have successfully applied a consistent investment strategy over a number of years. Currency risk All of our Funds are exposed to currency risk, but the extent of each Fund s exposure varies. Currency risk is the risk of changes in currency rates. Our Funds face currency risk when we invest in international assets denominated in foreign currencies. For example, for Funds with foreign currency exposure: if the New Zealand dollar falls in value against a given foreign currency, all else being equal, the New Zealand dollar value of a Fund s investments will increase if the New Zealand dollar increases in value against a given foreign currency, all else being equal, the New Zealand dollar value of a Fund s investments will fall. We seek to mitigate currency risks for the Funds by hedging currency exposure from foreign fixed interest assets, foreign listed property assets, and for some of the currency exposure from foreign share assets. See the prospectus or our statement of investment policies and objectives for more information on our benchmark asset class mix hedging levels. Risks associated with derivatives The Funds can enter into derivative contracts. The value of a derivative is usually linked to (that is, derived from) changes in the value of another asset, an index (such as a share market index or a commodity index), an interest rate, or an exchange rate. Specific risks with derivatives are: losses because of changes in the value of the underlying assets, indices, or rates losses if the other party to the derivatives contract fails to meet its contract obligations exaggerations in the effect of any increase or decrease in the value of the underlying assets, indices, or rates. We seek to mitigate these risks by: taking into account the financial strength of any counterparties to derivatives contracts, and monitoring to make sure that we re using derivatives in accordance with our statement of investment policies and objectives. 19

22 General risks Changes to the Funds We can make changes to the Funds, provided that those changes are allowed by the Trust Deed. These changes might include changes to a Fund s: statement of investment policies and objectives (including benchmark asset class mix and ranges) fees and expenses minimum investment amounts. We can also add, close, or wind up Funds. These changes may affect the level of risk and returns you can expect. Changes to the law Changes to PIE status, or to tax and other legislation, may affect the returns and benefits that you receive. For example, if a Fund loses PIE status, it will be taxed at 28% rather than your notified prescribed investor rate. You may need to pay more money to Inland Revenue, the Trustee, or us As well as the risks described above, there is also a risk that you may need to pay more money in addition to the amounts described in the section How much do I pay? on page 16. This will only occur if you owe tax. You can mitigate this risk by: telling us your correct prescribed investor rate advising us of any increase in your prescribed investor rate telling us your correct IRD number advising us if you re no longer a New Zealand tax resident. If you don t give us the information we need to pay the correct taxes, you may need to complete a tax return and pay additional tax to Inland Revenue. Penalties and interest might apply. In some circumstances (for example, if you ve withdrawn most of your investment), you may not have enough money left to meet the amount of tax payable on your share of a Fund s taxable income. If this happens, we or the Trustee may need to pay tax for you out of the assets of the relevant Funds. By investing in the Funds, you agree that, if this happens, you will repay us or the Trustee. See The New Zealand Guardian Trust is the trustee on page 24 for more about who the Trustee is and what they do. If a Fund becomes insolvent (that is, cannot pay its debts), the most you can lose is the value of your investment account. You will not have to pay any money to any other person as a result of the insolvency. You may still be required to make payments to Inland Revenue if you ve paid the wrong tax. The Funds can be wound up We can wind up a Fund (or all the Funds) if we decide to do so, after giving all required notices. If we wind up a Fund (or all the Funds), we will first pay all creditors, costs, and liabilities of the Fund. Your share of what remains will be paid to you. When we calculate each investor s share of what remains we will (if necessary) reduce the value of each investor s investment account in equal proportions. Financial Markets Conduct Act 2013 The Financial Markets Conduct Act 2013 (FMCA) is the new law that will govern how financial products are created, promoted and sold. It also sets out the responsibilities of those who offer, deal in and trade financial products. The FMCA was passed into law in September 2013 and comes into force in phases. The first phase began on 1 April The second phase began on 1 December Under the second phase, new governance and disclosure requirements will begin applying to all managed investment schemes, including the Funds. For a transitional period an existing scheme, such as the Funds, can choose the date on which it will opt in to the FMCA regime. This transitional period expires on 1 December 2016, by which time all schemes must have opted in to the FMCA regime. To opt in to the FMCA regime, we will need to: replace the Funds investment statement with a product disclosure statement amend its Trust Deed replace its prospectus with an online register be licensed as a fund manager. The FMCA will also require fund managers, such as us, to be licensed. We intend to lodge an application for a fund manager licence with the Financial Markets Authority (FMA) in time for us to be licensed by the required date, 1 December Licences are issued at the discretion of the FMA. Apart from payments to us, the Trustee, or Inland Revenue for outstanding taxes, you won t need to pay any money to any person beyond what you ve invested. 20

23 How do I cash in my investment? You can make a withdrawal You can withdraw some or all of your investment at any time. The minimum amount you can withdraw in a lump sum is $500. You can also set up a regular monthly, quarterly, six-monthly, or annual withdrawal from your investment account. The minimum amount for a regular withdrawal is $100 per Fund. To make a withdrawal, please send us a completed withdrawal form. Call us on for a copy of this form or just check our website, anz.co.nz/investmentfunds. We usually process withdrawals and make payment to your bank account within a week after we receive your request. We don t currently charge a fee for withdrawals. Other information about withdrawals In some circumstances, we can defer or suspend withdrawals or separate out certain assets. For more information, see Other information about returns on page 15. If a Fund is wound up, we will distribute the assets of the Fund as required by the Trust Deed and legislation. See The Funds can be wound up on page 20 for more information. We may redeem or nullify your units to ensure a Fund s PIE status is maintained. If your units are nullified, you will receive a refund of the price you paid to purchase those units. Any additional compensation is at our discretion. See the prospectus for more information. You can transfer your units You can sell some or all of your units to someone else. We can refuse a transfer in some circumstances. A transfer is treated as a withdrawal for the seller and a purchase for the buyer. We don t currently charge a fee for transfers. We do not offer a secondary market for the sale of units. We don t believe there is an established secondary market for the sale of units. 21

24 Can the investment be altered? You choose when to make payments and withdrawals You can make payments into your investment account and you can change the amount of any regular payment at any time, subject to the minimum payment amounts. You can also suspend regular payments for a period of time. See Regular payments on page 16 for more information. At any time, you can withdraw some or all of your investment or you can transfer some or all of your units to someone else. (We can defer or suspend withdrawals in some circumstances, as described in Other information about returns on page 15). See How do I cash in my investment? on page 21 for more information about making withdrawals. You choose where your money is invested You don t have to stay with your first choice of Fund. At any time, you can switch your investment from one Fund to another Fund. You can also switch back. To make a switch, read the latest investment statement and then complete the transaction form at the back of the latest investment statement. We can set requirements for switching, including minimum switch amounts and restrictions on redirecting contributions to another Fund. See the prospectus for more information. You may wish to speak with an authorised financial adviser about the best options for you. The Funds might change Changes to Funds and fees We can change: the Funds we offer the way we invest (including the benchmark asset class mix and the ranges) the fees and expenses any minimum investment and withdrawal amounts. We need to comply with legislation and the Trust Deed. Changes to the Trust Deed We can also, with the Trustee, change the terms of the Trust Deed and the unit trust schedules. Investors can also approve a change to such terms, by an extraordinary resolution. Changes to the law The Funds comply with the Unit Trusts Act 1960 and other legislation. If the law changes, we will change the Funds to fit. Your unit holding might change We can adjust your unit holding to pay the correct amount of tax for you on your share of a Fund s taxable income. See Tax and your returns on page 13 for more information. We can redeem or nullify your units or reject applications (including switch and transfer requests) if necessary to ensure that the Funds continue to be eligible for PIE status. See the prospectus for more information. 22

25 What are the charges? A Fund fee charged to each Fund per year is the only charge that currently applies to investors. Fund fee A Fund fee is charged to each Fund per year (calculated as a percentage of the net assets of the Fund). The Fund fee is calculated daily and will reduce a Fund s unit price. We deduct the Fund fee from the Funds; you won t see this on your investment account statement. The actual fee may vary each year because expenses vary. Although you ll not pay more than the Fund fee, expenses can be carried forward and recovered in future years. See Fund expenses below for more information. The current annual maximum Fund fees are shown in the table below. Fund Fund fee (percentage of net assets) Conservative 1.30% Conservative Balanced 1.35% Balanced 1.40% Balanced Growth 1.45% Growth 1.50% What s included in the Fund fee? The Fund fee is made up of the following: our management fee the trustee fee Fund expenses fees and expenses of underlying funds (that is, other funds in which the Funds invest). Management fee We charge a management fee. The fee is different for each Fund, since some Funds need more management than others. The fee is a percentage of the net assets of each Fund. The current annual management fee is shown in the table below. Fund Management fee (percentage of net assets) Conservative 1.05% Conservative Balanced 1.10% Balanced 1.15% Balanced Growth 1.20% Growth 1.25% As at the date of this investment statement, under an arrangement between the Financial Services Council and Inland Revenue, GST is currently calculated on only 10% of the management fee for the Funds. This agreement is currently under review, and therefore the percentage of the management fee subject to GST may change. We use part of our management fee to pay commission to distributors (including members of the ANZ Group). We can also use part of the management fee to pay commission of between 0.20% and 0.25% on your investment each year. We can also use part of the management fee to pay for the services of specialist asset managers. Trustee fee The Trustee charges a trustee fee for overseeing the Funds and for holding the Funds assets. The fee is 0.047% of the net assets of each Fund. At the date of this investment statement, GST is charged on 75% of the trustee fee. However, from 1 April 2015, GST will be charged on 100% of the trustee fee. This increase will not change the Fund fee shown on this page. Fund expenses We and the Trustee recover expenses, such as audit costs, postage, and legal fees that we or the Trustee incur on behalf of the Funds. Each Fund is charged up to 0.153% of net assets for its share of these expenses. The actual expenses vary each year and expenses could be carried forward and recovered in future years. Currently, you won t be charged more than 0.153% of net assets for Fund expenses. We don t include investment costs, that is, costs that come about as a direct cost of an investment by a Fund, as an expense. We account for these costs when we calculate a Fund s investment performance. Fees and expenses of underlying funds The Funds invest in underlying funds that charge fees and expenses (including administration or other charges). To calculate the Fund fee, we ve estimated these fees and expenses at 0.05% of the net assets of each Fund. Where a Fund invests in an underlying fund managed by us, we don t charge a separate management fee for that underlying fund. The Fund will only pay the management fee set out in the table above. Where the Trustee is also the trustee for an underlying fund that a Fund invests in, the total trustee fee paid by a Fund and its underlying funds will be the trustee fee stated above. Services provided by our related companies Our related companies will sometimes provide services to a Fund or manage assets for a Fund. For example, a Fund may invest in deposits, or enter foreign exchange contracts, with ANZ. When this happens, any charges and expenses our Funds pay are determined on standard commercial terms. Other things to know about charges We don t currently charge a fee to enter or leave our Funds or to switch between Funds. GST, when it applies, is included in the Fund fee shown above. We can change fees from time to time, and can introduce new fees in line with the Trust Deed. See the prospectus for more information. The management fee and any other fee payable to us may be increased from time to time. We need to give three months notice of any increase to investors. 23