Westpac Home Loan Trust Prospectus Number September 2015

Transcription

1 Westpac Home Loan Trust Prospectus Number September 2015

2 GENERAL INFORMATION Prospectus: This Prospectus relates to the offer of units in the Westpac Home Loan Trust. It has been prepared in accordance with the requirements of the Securities Act 1978 and Schedule 4 of the Securities Regulations Among other things, it summarises the key terms of the trust deed for the unit trust. For further details of the terms of the offer you should read the trust deed. For the purposes of clause 6(3) of Schedule 4 to the Financial Markets Conduct Act 2013 ("FMCA"), we have elected for the Securities Act 1978 to apply to the offer in the Westpac Home Loan Trust. This election can continue to apply up until 1 December 2016 but we may elect to apply the FMCA to the offer of units in the Westpac Home Loan Trust prior to that date by notifying the Financial Markets Authority and the Registrar of Financial Services Providers. How to read this Prospectus: In this Prospectus: the words you or your refer to you and to other persons who apply for units in the Westpac Home Loan Trust or who are allotted units and become unitholders in the unit trust, as the context requires; the words we, us or our refer to BT Funds Management (NZ) Limited, which is the manager and issuer of the Westpac Home Loan Trust. We provide further detail on ourselves in section 2; we refer in some places to things that we generally, normally or currently do. This describes our particular practice as at the date of this Prospectus only. We can review and change our practices without any notice to you, so long as we comply with the trust deed; and unless we say otherwise, when we refer to sections, we mean sections in this Prospectus. Information in this Prospectus: The information in this Prospectus is correct, and any statements are made, as at the date of this Prospectus. Investment Statement: You can obtain the last available Investment Statement (dated 18 September 2014) in relation to the offer from us by contacting us via the details below or by contacting any Westpac Financial Adviser. Restriction: This offer is open only to persons who are in New Zealand. Legislation: You can view any New Zealand legislation referred to in this Prospectus online at Our contact details: If you have any questions regarding this offer, please contact us: Phone:

3 Postal Address: The Manager Westpac Home Loan Trust, PO Box 695, Wellington 6140, New Zealand Change of Address: If you invest in the Westpac Home Loan Trust, you must notify us if you change address, or if you leave New Zealand permanently. 2

4 GLOSSARY Below is a list of certain terms that are used in this Prospectus. Any terms that are capitalised in this Prospectus and not explained below are either explained in the relevant sections of this Prospectus as they are introduced or are defined in the Trust Deed. Administration Managers are companies that provide administration services to the Trust. See section 2.5 for further information on who the current Administration Managers are. ASX means the Australian Securities Exchange. Authorised Investments are those investments in which the Trust is permitted to invest. See section 6.3 for further information and the Trust Deed for the full definition. Benchmark performance index means the index against which the Trust s performance is measured. Cash refers to assets such as bank deposits, money market securities and fixed interest securities of a short term nature. Custodian is any company other than the Trustee in whose name the Trust s assets may be held. See section 3 for further information on who the Custodian currently is. Derivatives is a term typically used to describe financial contracts whose value depends on the future value of underlying assets such as shares, fixed interest, commodities, currency or cash. Fixed interest securities are investments that generate income in the form of agreed interest payments over an agreed period of time. Interest rate swaps are derivative instruments used to manage exposure to fluctuations in interest rates by exchanging variable rate interest payments for fixed rate interest payments. Manager means us, BT Funds Management (NZ) Limited. See section 2 for further information and the Trust Deed for the further details of our role and responsibilities in respect of the Trust. Money market securities are short-term income assets usually issued by governments, banks, corporates or other financial entities. PIE means portfolio investment entity as that term is defined in the Income Tax Act See section 1.8 for further information. PIR means your prescribed investor rate for tax purposes. This is the rate that any income in the Trust that is attributed to you will be taxed at. See section 20 for further information. Tax Paid Unitholder means a Unitholder who has a PIR of 10.5%, 17.5% or 28%. See section 20 for further information. Trust means the Westpac Home Loan Trust. See section 1.1 for further information. Trustee means The New Zealand Guardian Trust Company Limited. See section 5.1 for further information and the Trust Deed for further details of its role and responsibilities in respect of the Trust. Trust Deed is the document governing the Trust. See section 6.1 for further information. Unitholder means an investor who holds Units in the Trust. If you hold Units in the Trust, you will be a Unitholder. See the Trust Deed for the full definition. Units represent the interests of Unitholders in the Trust. See the Trust Deed for the full definition. Westpac means Westpac Banking Corporation. Westpac NZ means Westpac New Zealand Limited. 3

5 Zero Rated Unitholder means a Unitholder who has a PIR of zero. See section 20 for further information. 4

6 Westpac Home Loan Trust Prospectus Number 17 CONTENTS: (following the order of Schedule 4 of the Securities Regulations 2009) Page Benchmark performance index means the index against which the Trust s performance is measured DESCRIPTION OF UNIT TRUST MANAGERS AND PROMOTERS REGISTRAR, CUSTODIAN, AUDITORS, ADVISERS, AND EXPERTS INDEPENDENCE OF UNIT TRUSTEE AND ANY CUSTODIANS UNIT TRUSTEE DESCRIPTION OF UNIT TRUST AND ITS DEVELOPMENT UNITHOLDER LIABILITY SUMMARY FINANCIAL STATEMENTS MINIMUM SUBSCRIPTION GUARANTORS ACQUISITION OF BUSINESS OR EQUITY SECURITIES OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH INTERESTED PERSONS MATERIAL CONTRACTS PENDING PROCEEDINGS ISSUE EXPENSES OTHER TERMS OF OFFER AND UNITS FINANCIAL STATEMENTS AND AUDITORS REPORT PLACES OF INSPECTION OF DOCUMENTS OTHER MATERIAL MATTERS MANAGER S STATEMENT UNIT TRUSTEE S STATEMENT Manager s Responsibilities Auditors Responsibilities Opinion on the Summary Financial Statements Other Matters Restriction on Use of our Report

7 WESTPAC HOME LOAN TRUST PROSPECTUS DATED 18 SEPTEMBER Relationship Manager - Corporate Trusts

8 KEY INFORMATION ABOUT THE WESTPAC HOME LOAN TRUST This section answers the main questions you may have about the Westpac Home Loan Trust. You ll find more detail on the relevant pages of this Prospectus. The information may be subject to change but is correct as at the date of this Prospectus. On 18 September 2014, the Trust closed to new investors, but existing Unitholders can continue to subscribe for new Units. What is the Westpac Home Loan Trust? Who looks after the Trust? How much do I need to invest? How can I withdraw my money? The Trust is designed to give you a regular income, by investing the majority of its assets in home loans secured by first mortgages on residential property in New Zealand and cash, including deposits, money market securities and fixed interest securities of a short term nature. The Trust is a New Zealand unit trust, set up under the Unit Trusts Act We (BT Funds Management (NZ) Limited) are the Manager of the Trust and the investment arm of Westpac in New Zealand. We are supervised by the Trustee. How much you invest is largely up to you. You can invest by way of lump sum investments or regular investments. The minimum holding in the Trust is $5,000. You can invest lump sums of $500 or more or make regular investments. If you choose to make regular investments, you can do so weekly, fortnightly, monthly or quarterly. You must invest a minimum of $1,200 per year. Generally, you can withdraw any or all of your investment at any time by giving at least 30 days notice. You can make lump sum withdrawals of at least $500 or 500 Units (whichever is less) or regular withdrawals of at least $1,200 per year, as long as you maintain the minimum holding of $5,000 or 5,000 Units (whichever is less). For more information See pages See pages See pages See pages and

9 How will my money be invested? What are the charges? The Trust aims to provide regular stable income distributions by investing in home loans and cash (which includes deposits, money market securities and fixed interest securities of a short term nature). We also use derivatives for the purpose of maintaining a stable and regular income for investors. The charges are: Management Fee This is 0.80% per annum of the value of the Assets (calculated daily and paid to us from the Trust monthly in arrears). Trustee Fee This is 0.035% per annum of the value of the Assets (calculated daily and paid to the Trustee from the Trust monthly in arrears). Early Withdrawal Fee This is 1% of the amount withdrawn by you if you withdraw without giving at least 30 days notice. Home Loan Servicing Fee This is a fee incurred for the management of the home loans, payable to Westpac NZ. This fee is currently 0.14% per annum of the average daily balance of the principal amount of the home loans held by the Trust. Expenses Expenses will be incurred in relation to the Trust (including the Trustee s expenses in supervising us). These will generally be paid by the Trust. GST GST will be added to any fees where applicable. Custodial Service Fees If you invest through a custodial service, additional fees or charges will be payable to the custodial service. You should consult with the custodial service for further information in relation to those fees or charges. See pages See pages 12 and

10 What are the risks? Every investment has some level of risk and can go up or down in value. The main risk is investment risk that you may not get back the money you invest or that your returns are less than you expect, due to changes in the value of the assets in the Trust. There are also other risks described in section 20. See pages Do we use related parties? Who can I ask for help? We may enter into transactions with, and use the services of, parties related to us (such as Westpac NZ and Westpac) in respect of the Trust. These arrangements will be conducted on standard commercial terms and include: the purchase of the home loans held within the Trust from Westpac NZ; the Trust entering into interest rate swap derivative contracts with Westpac NZ; and the Trust having bank deposits with Westpac NZ. We may invest the Trust s assets directly or indirectly in funds where we are (or a related company is) the trustee or manager. The Trust will not incur any additional entry or management fees for these investments. Call our team on or drop in to any Westpac NZ branch. See pages 24, 30, 36 and 37. See pages 1 and

11 1. DESCRIPTION OF UNIT TRUST 1.1 Name The name of the unit trust is the Westpac Home Loan Trust (the Trust ), and this Prospectus relates to the offer of Units in the Trust. 1.2 Establishment The Trust is a unit trust: The Trust is a unit trust under the Unit Trusts Act 1960, and it is governed by the Trust Deed, as amended from time to time. What is a unit trust? A unit trust is an investment structure where a trustee holds the assets of the unit trust for the benefit of all investors who hold units in that trust. There is a separate manager that is independent of the trustee. As an investor in the Trust, you will receive Units in the Trust. We (as Manager of the Trust) make all the investment decisions and look after the general operation of the Trust. Our duties are supervised by the Trustee. Date of Establishment: The Trust was established in Wellington on 14 April 2000 and commenced on 17 April Duration The Trust will remain in existence until it is wound up. The Trust will be wound up on the earlier of: (a) (b) the date we specify by giving not less than three months written notice to the Trustee; or the date on which the Trust is otherwise terminated under the Trust Deed or by operation of law. 1.4 Brief description of the Units An investment in the Trust is represented by Units: Your investment in the Trust will be represented by Units. The number of Units that you hold represents your proportional interest in the Trust. Units only give a beneficial interest in the Trust: Each Unit represents an equal interest in the assets of the Trust. The Units you hold do not give you any interest in any particular asset of the Trust or the right to participate in the management of the Trust. This means that you cannot, for example, request or require us, or the Trustee, to transfer to you any asset of the Trust. You can only access the value of your investment in the Trust by withdrawing the Units that you hold. All Units have equal value: Each Unit in the Trust has the same value as each other Unit in the Trust. We provide an Allocation Price for new investments and a Release Price for withdrawals. You can calculate the current value of your 10

12 investment by multiplying the number of Units that you hold by the Release Price. Part Units: We may issue part-units in the Trust. For example, if the Allocation Price was $2, $1 would buy half a Unit. 1.5 No maximum The Trust may issue any number of Units that we choose. There is no maximum number of Units that may be issued from the Trust. 1.6 Prices for Units Unit prices: Units have two relevant unit prices under the Trust Deed - the Allocation Price and the Release Price. The Allocation Price is the price that you pay to acquire Units in the Trust. The Release Price is the price that you receive when you withdraw Units from the Trust. These two prices may be different, but our current practice is to have the Allocation Price equal the Release Price. Unit price calculation: For information about how we calculate the Allocation Price and the Release Price, please see section and the Trust Deed. Allowance: The Allocation Price payable for Units may include an allowance for the expenses involved (such as brokerage) in purchasing assets. Similarly, the Release Price may include an allowance for the expenses involved in disposing of assets (see section for further details). These allowances (if any) are retained within the Trust until payment is required. The allowances are not retained by us. Timing of calculation: We normally calculate Unit prices once on each business day but we may do so more or less frequently. Any application for Units or withdrawal request accepted before 4pm on a business day (or such later time as we may accept) will, in normal circumstances, receive the Unit price applicable for that business day. You can obtain the Unit price applicable to any day by contacting us. Investment minimums: Currently, the minimum amounts you may invest, withdraw and continue to hold in the Trust are: Minimum holding Minimum withdrawal Minimum subsequent investment $5,000 or 5,000 Units (whichever is less) $500 (or 500 Units, whichever is less) $1,200 per year for regular withdrawals (payable at such frequencies as we may 11 $500 each lump sum $1,200 per year for regular investment (payable weekly, fortnightly, monthly or quarterly)

13 permit from time to time and set out in the Investment Statement) If the value of your investment falls below the required minimum holding, we may redeem or repurchase all of the Units you hold in the Trust. Regular Investment: You can make regular investments by direct debit, direct credit or automatic payment authority. If you fail to make a regular investment payment, you will not be issued Units in respect of that non-payment. 1.7 No entry or exit fees We currently do not charge you any fees for purchasing Units in the Trust. However, if you want to withdraw Units without giving us the minimum notice period of 30 days, you will be charged a fee equal to 1% of the amount withdrawn. Please see section for details on all other fees and charges relating to the Trust. 1.8 The Trust is a PIE for tax purposes The Trust is a portfolio investment entity ( PIE ) that is a multi-rate PIE for tax purposes. Broadly, this means that all the income of the Trust will be attributed to you and the other Unitholders in the Trust in proportion to the Units that each of you and the other Unitholders hold in the Trust. Any taxable income attributed to you by the Trust is taxed within the Trust at your PIR. If you are a Tax Paid Unitholder and certain requirements are met, you may receive the net proceeds as excluded income. This means that you may not need to include this income amount in your tax return. Because of this tax treatment, we will adjust your distribution entitlements from the Trust, or your Units, to reflect any tax paid by the Trust in respect of the income attributed to you. The Trust must comply with certain requirements to maintain its PIE status. We have powers under the Trust Deed to ensure that those requirements are met. For example, while the Trust is a PIE you may be restricted from holding more than 20% of the Units in the Trust. We have the power to restrict your purchase of Units, or compulsorily withdraw some or all of your Units, in the Trust if the number of your Units breaches, or will breach, that 20% limit and threatens the Trust s eligibility for PIE status. Where Units are held through an investor-directed portfolio service, nominee or custodial service that is a proxy for an investor in a PIE ( PIE Investor Proxy ), the PIE Investor Proxy will be responsible for the payment of tax, and the attribution of income, losses, tax credits and refunds for tax purposes, in respect of the Units. Neither we nor the Trustee will be liable for the attribution 12

14 of income, losses or refunds or the payment of tax in respect of Units held through PIE Investor Proxies. More information on the PIE tax regime is set out in section MANAGERS AND PROMOTERS 2.1 Manager and directors of the Manager Manager: We (BT Funds Management (NZ) Limited) are the Manager of the Trust. Under the Trust Deed, we are responsible for the overall management of the Trust. We are also the issuer of the Units in the Trust for the purposes of the Securities Act We were incorporated in New Zealand under the Companies Act 1955 on 29 November 1989 and re-registered under the Companies Act 1993 on 23 December Our registration number is Our principal activities are investment and funds management. The directors of the Manager: Our directors are currently: (a) (b) (c) (d) Cherise Leanne Barrie of Auckland, New Zealand; Patrick Keble Farrell of Sydney, Australia; David Alexander McLean of Auckland, New Zealand; and Ian Nicholas New of Wellington, New Zealand. A biography of each Director follows. Our directors may change from time to time without notice to you. An up to date list of our directors is available online at Cherise Barrie Appointed a director of the Manager on 1 July 2015 Acting Chief Financial Officer, Westpac New Zealand Limited Cherise Barrie, a Chartered Accountant by training, has close to 25 years experience in business and financial management roles. Cherise first joined Westpac NZ in January 2011 as Financial Controller, before progressing to Head of Business Performance Management in June Cherise was appointed as Acting Chief Financial Officer in July Immediately prior to joining Westpac NZ, Cherise was a director at KPMG. Before that, from 2002 to 2010, she held various senior finance and business roles at ANZ National Bank Limited and National Bank of New Zealand Limited. Cherise has also held Senior Manager roles at PricewaterhouseCoopers and 13

15 senior finance roles at Consultus New Zealand Limited and ENZAFRUIT New Zealand International Limited. Cherise graduated from Massey University with a Bachelor of Business Studies in Accountancy and is a registered Chartered Accountant with Chartered Accountants Australia and New Zealand. Patrick Farrell Appointed a director of the Manager on 8 November 2012 Chief Investment Officer BT Financial Group (the Australian wealth division of the Westpac Group of companies). Patrick has headed up the investment team at Advance Asset Management Limited (Advance) since June Following the merger of St George with Westpac in December 2008, Advance became part of BT Financial Group. In 2014, the broader asset management capabilities of the BT Financial Group consolidated into one division, BT Investment Solutions, to which Patrick serves as the Chief Investment Officer. Patrick has more than 25 years experience in the investment industry, managing direct institutional portfolios across a broad range of disciplines. He has extensive knowledge of fixed interest, multi-manager and tactical asset allocation portfolio management. Prior to BT Financial Group, Patrick was Head of Multi-Manager and Tactical Asset Allocation at IAG Asset Management. Patrick has also served on a variety of Investment Committees and Superannuation Boards. David McLean Appointed a director of the Manager on 1 December 2014 Chief Executive Officer, Westpac NZ David McLean is an experienced banker who was appointed as the Chief Executive Officer of Westpac NZ in February David joined Westpac in February 1999 to head the Debt Capital Markets group in New Zealand. He was appointed Head of Westpac Institutional Bank New Zealand in January In 2009, he was also appointed as General Manager for Private, Wealth and Insurance. In 2012, David was appointed Managing Director of the Westpac New York Branch. In June 2014, David returned to New Zealand to take up the role of acting Chief Executive Officer of Westpac NZ. Prior to joining Westpac, David worked as a lawyer in private practice and as in-house counsel for Natwest, before joining the Capital Markets Group of Southpac/National Bank in Joining Deutsche Morgan Grenfell in 1994, David was responsible for starting and developing a new debt capital markets origination business. He also established the New Zealand branch of Deutsche Bank and was New Zealand Resident Branch Manager. David has an LLB (Hons) from Victoria University of Wellington and is a Barrister & Solicitor of the High Court of New Zealand. 14

16 Ian New Appointed a director of the Manager on 30 June 2004 Chief Actuary, Westpac NZ An actuary by training, Ian has 36 years experience in financial services, including 26 years with Westpac in New Zealand. Over the years, Ian has also been deeply involved with risk management and aspects of Westpac NZ s banking business. Ian currently fulfils the Appointed Actuary responsibilities for Westpac Life, a statutory role with reporting responsibilities to Westpac Life s Board and the Reserve Bank of New Zealand. Ian is currently a trustee of the Westpac New Zealand Staff Superannuation Scheme. He has also maintained an active involvement with the actuarial profession over many years. A former member of the Council of the NZ Society of Actuaries, Ian has previously served as President of this professional body. Originally from the United Kingdom, Ian had seven years experience with a UK life insurer before moving to another Australasian financial services provider. Ian graduated from Imperial College, London University with a Mathematics degree before qualifying as a Fellow of the UK Institute of Actuaries. The following roles are key to the management of our business. The roles and the people holding those roles may change from time to time without notice to you. You can obtain up to date information regarding key roles and personnel by calling us on , or by visiting and searching for the document entitled Key roles within BT Funds Management : Role Responsibility Currently held by Head of Oversees the team Kate Investments & responsible for Armstrong Insurance establishing and managing a range of investment products, including our managed Head of Investment Products Head of Investment Solutions Senior Manager, Wealth Operations funds. Oversees the product management, client communications, projects, investment operations and business development functions for the Manager. Oversees the team responsible for investing activities across our managed funds. Oversees the administration function, including the registry for our managed funds. Nigel Jackson Matthew Goldsack Philippa Newlove Time in Industry role Experience 2 years 22 years 4 years 22 years 7 years 16 years 4 years 18 years 15

17 Our principal place of business: Our principal place of business is BT Funds Management (NZ) Limited, Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand. Our contact address: Our contact address is BT Funds Management (NZ) Limited, 53 Galway Street, Auckland 1010, New Zealand. Each director can also be contacted at this address. 2.2 Ultimate holding company Our ultimate holding company is Westpac Banking Corporation (ABN ) ( Westpac ), an Australian incorporated company. Westpac is listed on the ASX. We have been a member of the Westpac group of companies since 31 October Management of other unit trusts As an investment and funds manager, we also manage other unit trusts, including the: (a) (b) (c) (d) (e) (f) (g) (h) (i) Westpac Cash PlE Fund; Westpac Term PIE Fund; Westpac Notice Saver PIE Fund; Westpac Active Conservative Trust; Westpac Active Balanced Trust; Westpac Active Growth Trust; Westpac Active Income Strategies Trust; Westpac Active Moderate Trust; and BT Private Selection. 2.4 Promoters: Promoter is a special term defined under the Securities Act It means any person or entity instrumental in the planning or development of a unit trust. The Promoters of the Trust are: 16

18 (a) (b) (d) us; Westpac New Zealand Limited ( Westpac NZ ); and the directors of Westpac NZ (except anyone who is a director of both Westpac NZ and the Manager). The directors of Westpac NZ who are promoters are currently: Malcolm Guy Bailey of Feilding, New Zealand; Philip Matthew Coffey of Sydney, Australia; Janice Amelia Dawson of Auckland, New Zealand; Jonathan Parker Mason of Auckland, New Zealand; and Christopher John David Moller of Lower Hutt, New Zealand. The directors of Westpac NZ may change from time to time without notice to you. An up to date list of Westpac NZ s directors is available online at Administration Managers Administration Managers: From time to time we may appoint third parties to perform certain administrative functions on our behalf in relation to the Trust (the Administration Managers ). The current Administration Managers of the Trust are The Hongkong and Shanghai Banking Corporation Limited, Trustees Executors Limited and MMC Limited. The Administration Managers are regularly monitored and reviewed. We may change the Administration Managers without notice to you. The identity and number of Administration Managers for the Trust may therefore vary from time to time. You can obtain details of the Administration Managers by calling us on Important disclosure Neither we, nor our directors have, and none of the Administration Managers or Promoters or any of their directors have, during the five years prior to the date of this Prospectus, been: (a) (b) (c) (d) adjudged bankrupt or insolvent; convicted of any crime involving dishonesty; prohibited from acting as a director of a company; or placed in statutory management, voluntary administration, liquidation or receivership. 17

19 3. REGISTRAR, CUSTODIAN, AUDITORS, ADVISERS, AND EXPERTS 3.1 Registrar, Custodian, Auditors and Solicitors Registrar: We are the Registrar of the Trust. We have appointed Trustees Executors Limited to provide certain unit registry services to us. Custodian: Assets of the Trust may be registered in the name of Home Loan Nominees Limited (a subsidiary of the Trustee) as the Custodian of the Trust. Auditors: PricewaterhouseCoopers are the Auditors of the Trust. The Auditors are registered under the Auditor Regulation Act The Auditors carry out other assignments for, and provide taxation advice and other assurance and advisory services to, us and our related entities. These services have not impaired the Auditors independence as our auditors or as auditors of the Trust. Solicitors: Chapman Tripp were the Solicitors involved in the preparation of this Prospectus. 4. INDEPENDENCE OF UNIT TRUSTEE AND ANY CUSTODIANS The Trustee and the Custodian are independent of us, the Promoters and the Administration Managers. 5. UNIT TRUSTEE 5.1 Trustee and directors of the Trustee Trustee: The New Zealand Guardian Trust Company Limited is the Trustee of the Trust. The directors of the Trustee: The directors of the Trustee are currently: (a) (b) (c) (d) Andrew Howard Barnes of Auckland, New Zealand; James Earl Douglas of Auckland, New Zealand; Robin Albert Flannagan of Auckland, New Zealand; and Timothy James Shaw of Auckland, New Zealand. 18

20 These directors may change from time to time without notice to you. An up to date list of the Trustee s directors is available online at Trustee s contact address: The Trustee s contact address is: The New Zealand Guardian Trust Company Limited, Level 14, 191 Queen Street, Auckland PO Box 1934, Auckland Each director of the Trustee can also be contacted at this address. 5.2 Relevant statute The Trustee was incorporated in New Zealand under the Companies Act 1955 on 7 September 1982, and was re-registered under the Companies Act 1993 on 23 April It is also governed by the provisions of The New Zealand Guardian Trust Company Act Its trustee origins date back to Ultimate holding company The Trustee s ultimate holding company is Bath Street Capital Limited, a company incorporated in New Zealand. 5.4 Indemnity Under the Trust Deed, the Trustee is entitled to be indemnified out of the assets of the Trust from, and against: (a) (b) any and all losses, costs and expenses incurred by the Trustee in performing any of its duties or exercising any of its powers pursuant to the Trust Deed in relation to the Trust; and all actions, proceedings, costs, claims and demands in respect of any matter or thing relating to the Trust (including in relation to the offer and issue of Units), except any loss, costs and expenses arising from a breach of trust where the Trustee fails to show the degree of care and diligence required of a trustee having regard to the provisions of the Trust Deed and the powers, authorities and discretions conferred on the Trustee, provided that the Unitholders may, by Extraordinary Resolution, release the Trustee from any such liability and indemnify the Trustee from and against any such liability either with respect to specific acts or omissions or on the Trustee ceasing to act. The Trustee will also have a right of indemnity out of the assets of the Trust in respect of any liability arising from the Trustee acquiring or disposing of any asset of the Trust, except to the extent that the liability may be attributable to the Trustee s own negligence, wilful act or wilful default. 19

21 5.5 No guarantee The Trustee does not guarantee the payment of any money to you. 5.6 Licence The Trustee has been issued a licence under section 16(1) of the Financial Markets Supervisors Act 2011 to act as a trustee in respect of debt securities, unit trusts, and KiwiSaver schemes, and as a statutory supervisor for participatory securities, for a term expiring 16 March A copy of the Trustee s licence, including the conditions on the licence, can be obtained at the Financial Markets Authority s website: by clicking on Compliance, Supervisors, Licensed Supervisors, Lists and Registers, The New Zealand Guardian Trust Company Limited or the Trustee s website: All conditions and reporting obligations have been duly satisfied by the required dates. If you have any queries about the licence, please contact the Trustee in the first instance. If at any time the Trustee does not hold an appropriate licence, then we will be obliged to seek and appoint another trustee. 6. DESCRIPTION OF UNIT TRUST AND ITS DEVELOPMENT 6.1 Date of the Trust Deed The Trust is governed by the Trust Deed, which currently comprises: (a) (b) the trust deed dated 14 April 2000; and deeds of amendment to the trust deed dated 30 June 2000, 5 March 2002, 29 March 2007 and 28 September Summary of principal terms of the Trust Deed and material features of the Trust In the following sections, we provide a summary of the principal terms and material features of the Trust. If you require further detail, you should consult the Trust Deed. The places where you can access the Trust Deed are set out in section Issue of New Units: We can issue new Units at any time. We must issue Units at the relevant Allocation Price. See section for further details on how this is calculated. We may issue new Units for cash or in return for the transfer of Authorised Investments to the Trust. If you wish to apply for, or acquire Units, you must follow the instructions in section 17. Application monies are paid to a subscription account for 20

22 the Trust. The subscription account is a non-interest bearing bank account with Westpac NZ. Therefore, you do not earn interest on any monies held in the subscription account. We may, in our absolute discretion, accept or decline in whole or in part, any application for Units or postpone the processing of the application pending receipt of cleared funds. If we do so, we will not be required to assign any reason for such refusal or postponement Withdrawals: Except in the limited cases described below and in the Trust Deed, you can withdraw some or all of your Units from the Trust. To withdraw Units, we must receive a completed withdrawal request in the form we specify. Once given to us, you cannot cancel a withdrawal request unless we agree that you can. For Units to be released without incurring a withdrawal fee (as outlined in section 1.7), you must give us at least 30 days notice. The period of 30 days commences on the date that we receive the completed withdrawal request. We will generally action withdrawals by redeeming the Units. We can also buy your Units from you. This is called a Manager repurchase. Please refer to section 20 under the heading Taxation, regarding the potential tax treatment of each withdrawal method. We will work out your withdrawal amount from the Trust by multiplying the number of Units to be withdrawn by the Release Price determined as at the Request Date. The Request Date is the date that the notice period ends in relation to an approved withdrawal request you have submitted to us. The Release Price is calculated in the way described in section You may withdraw an investment in whole or in part. We do not have to process a withdrawal request of less than the minimum amount. If a withdrawal would cause your holding in the Trust to fall below the minimum holding, we may withdraw your entire holding in the Trust. See section 1.6 for further information on current investment minimums. Notwithstanding anything contained elsewhere in this Prospectus, where: 21

23 (a) (b) (c) you hold less than the Minimum Holding; we give you three months notice in writing that we intend at the expiration of that period to require repurchase or redemption of all of your Units; and at the expiration of that period you still hold less than the Minimum Holding, we may repurchase or redeem your holding in the Trust. The Trust Deed allows us to suspend all withdrawal requests given by you and other Unitholders, if we determine in good faith at our sole discretion that it is desirable for the protection of the assets of the Trust or in the interests of Unitholders to do so, by giving a Suspension Notice to you if you have requested a withdrawal. In the event that the suspension lasts for more than 14 days after the giving of the Suspension Notice, we will notify all Unitholders of the giving of the Suspension Notice. Where the suspension continues for another six months, we will again notify all Unitholders that the Suspension Notice remains in effect. The Suspension Notice shall cease to have effect after another six months from the giving of the second notification, unless a majority of Unitholders resolve otherwise. We will deem any withdrawal request received during that suspension period to have been received immediately following the expiry of the suspension period. We may adjust your Units or deduct from any distributions or withdrawal proceeds, an amount equal to any tax payable by the Trust on the net income attributable to you, and we may redeem or repurchase your Units when necessary to preserve the Trust s PIE status. We may, where necessary, refuse a withdrawal request to preserve the Trust s eligibility for PIE status. The tax related consequences of withdrawing Units are set out in further detail in section Switching: Moving your investment from the Trust to another retail unit trust offered by us is called switching. There may be a fee payable when switching to another trust if the trust switched into has an initial service fee. If less than 30 days notice of the switch is given, a withdrawal fee of 1% of the amount switched from the Trust is payable to us (see section 1.7). Requests to switch Units should be in a form we specify. We do not have to process a request to switch Units of less than the minimum amount. A switch must not cause your holding in the Trust to fall below the minimum holding, and must satisfy minimum holding requirements for any trust switched into. We reserve the right to refuse a request to switch Units. 22

24 A switch is treated as a withdrawal of Units in the Trust and an immediate issue of units in the other trust. We may refuse a switch request where necessary to preserve the Trust s eligibility for PIE status. The tax related consequences of switching Units are set out in section Allocation Prices and Release Prices: The Allocation Price for Units is obtained by aggregating the value of the Trust s assets, and deducting all liabilities, provisions, fees, expenses and any net income received since the most recent distribution and retained in the Income Account of the Trust, and then dividing that amount by the number of Units on issue. This is known as the mid price. The Allocation Price will generally be at or close to $1.00. In determining the Allocation Price an allowance may be added to the mid price representing all, or a proportion of, estimated transaction costs (such as brokerage and any taxes). This allowance, which is currently nil, is determined by us and is reviewed regularly. It may therefore vary from time to time. The number of Units to be issued at any time will be determined by dividing the amount invested by the Allocation Price and rounding down to four decimal places. The Release Price for Units being withdrawn is obtained by adding to the mid price (see paragraph above) the amount of any net income held in the Income Account for the Trust and accruing to the Units being withdrawn and reducing the sum by such allowance as we deem to be equitable representing all, or a proportion of, estimated transaction costs (such as brokerage and any taxes). This allowance, which is currently nil, is reviewed regularly. It may therefore vary from time to time Transferring Units: You may apply to transfer your Units to another person by completing and returning a transfer form in the form we specify. The process for actioning a transfer together with the circumstances in which we may refuse to action a transfer are set out in the Trust Deed. Information on the transmission of Units upon the death of a Unitholder is also set out in the Trust Deed. The register of the Trust will be closed to transfers up to 14 days prior to the end of each relevant Distribution Period (see section 6.7). The tax related consequences of a transfer of Units are described in section Fees and Expenses: In addition to the fees described in section 1.7 and the allowance described in section 6.2.4, the following fees and expenses relate to the Trust: 23

25 Management Fee We may charge an annual management fee in respect of services we perform for the Trust (the Management Fee ) of up to 1.5% (plus any applicable GST) per annum of the value of the Assets. The Management Fee is currently 0.80% (plus any applicable GST) per annum of the value of the Assets. It is calculated daily and is payable from the Trust to us monthly in arrears. Fees and expenses charged by other funds The Trust may gain exposure to assets directly (by buying the asset) or indirectly, by investing in other funds where we are, or a related entity of ours is, the trustee, manager or responsible entity. If the Trust invests in such funds, the entry fee (if any) and the management fee for those funds will not be payable by the Trust (or if so paid, will be refunded). If the trustee of such a fund is the Trustee (or a related company) then any trustee fee paid by the Trust in respect of its investment in such fund will be refunded. Any other fees or expenses of such funds will not be rebated and will therefore affect the value of the Trust. Trustee Fee The Trustee charges an annual Trustee fee in respect of its services performed for the Trust (the Trustee Fee ). The Trustee Fee is currently 0.035% (plus any applicable GST) per annum of the value of the Assets. The Trustee Fee is calculated daily and is payable from the Trust to the Trustee monthly in arrears. Home Loan Servicing Fee A service fee for the management of the home loans is payable to Westpac NZ (and its custodian). This fee is currently 0.14% per annum of the average daily balance of the principal amount of the home loans held by the Trust. Reimbursement of Expenses We and the Trustee have an unlimited entitlement to be reimbursed from the Trust for costs, charges, fees, expenses (including anticipated expenses), taxes and other liabilities properly referable to the Trust or you. 24

26 Other costs/deductions currently met by the Trust include: costs and expenses incurred by us and the Trustee, including the fees charged by auditors, solicitors, valuers and other service providers; any interest on any borrowing; costs of acquisition, disposal, registration and custody of, or other dealings with assets; costs incurred in convening Unitholder meetings; payments under contracts seeking to smooth out returns; banking service charges, including any payable to Westpac NZ or Westpac; GST and any other taxes payable; and costs for administration services, including unit registry, asset registry, unit pricing, and investment accounting costs, and costs associated with the provision of certain financial information relating to the Trust. These costs, together with the Management Fee and Trustee Fee, are taken into account when the Trust s net income is calculated, and will affect your returns. From time to time, we may choose not to seek reimbursement for any of the above fees and expenses. Expense cap We have, at our discretion, elected to limit the total of the following expenses (where they are incurred on a normal day-to-day basis) that we currently recover from the Trust to 0.15% per annum of the value of the Assets: costs and expenses incurred by us and the Trustee in carrying out each of our respective duties (including the fees charged by solicitors, valuers and other advisers); bank account charges applicable to the Trust; and costs for administration services, including unit registry, asset registry, unit pricing and investment accounting costs and costs associated with the provision of certain financial information related to the Trust. Where such expenses are not recovered from the Trust, they are borne by us out of our own money. All expenses paid by the Trust are shown in the Trust s financial statements. Fees to your financial adviser We may pay amounts (including non-monetary benefits) to your financial adviser or other persons approved by us. Any amounts that we pay to financial advisers or other persons approved by us are paid out of the fees that we receive from the Trust. These payments are not an additional cost to you. 25

27 Variation to fees We, and the Trustee may vary the fees and charges within the limits set out in the Trust Deed (including the introduction of new charges) Appointment and Removal of the Trustee: The Trustee may retire by giving us at least 90 days notice (or such lesser period as agreed between us and the Trustee). However, the Trustee s retirement is subject to the appointment of a new trustee and the transfer to such new trustee of all assets of the Trust. The High Court may remove the Trustee from office on an application by us. We have the power to appoint a new trustee. If we fail or refuse to exercise this power, a new trustee may be appointed by Unitholders. We have no unilateral power to remove the Trustee. Any new trustee must hold a licence to act as a trustee under the Financial Markets Supervisors Act Duties and Powers of Trustee: The Trustee: (a) (b) (c) (d) receives and holds all the cash and investments of the Trust; receives and distributes the income of the Trust; oversees our compliance (including the administration of the Trust); and may delegate certain activities and actions (including to us) in accordance with the terms of the Trust Deed Borrowing Powers: The Trustee may, at our request, borrow or make other funding arrangements on behalf of the Trust, provided that the total of such liabilities does not exceed 50% of the Value of the Assets of the Trust at the date of making such arrangements or, if secured against a particular asset, 50% of its value. Currently, we only direct the Trustee to borrow if funds are needed to effect settlement. If such borrowing occurs, the Trust would be indebted to another person (and that person may be one of our related companies) Appointment and Removal of the Manager: We may retire as Manager by giving at least 90 days notice to the Trustee. A shorter notice period may be agreed with the Trustee. Our retirement is subject to the appointment of a new or temporary manager. 26

28 We may be removed from office by the High Court on an application by the Trustee, you or any other Unitholder, or the Financial Markets Authority. We will also cease to hold office if: (a) (b) (c) the Trustee certifies that it is in the interests of you and the other Unitholders that we should cease to hold office; you and the other Unitholders direct that we should cease to hold office in accordance with the provisions in the Unit Trusts Act 1960; or a receiver is appointed, or an order is made or resolution passed to liquidate or wind us up. The power of appointing a new temporary manager is vested in the Trustee. To appoint a new manager, the Trustee must call a meeting of the Unitholders and take such steps as the Unitholders require to secure the appointment of a new manager. If the Trustee fails or refuses to do this, or Unitholders at a meeting wish to appoint an alternative manager, a new manager may be appointed by Unitholders in accordance with the Unit Trusts Act Manager s Powers: We have all powers necessary to manage and administer the Trust, subject to the investment policies set out in section 6.5, except to the extent that the Trust Deed reserves any powers for the Trustee. Our powers include the ability to: (a) (b) (c) (d) (e) (f) (g) manage and deal with the assets of the Trust; make all decisions relating to the assets of the Trust; make all decisions relating to borrowings of the Trust (subject to the restrictions set out in section 6.2.9); place on deposit with any bank or other person any cash of the Trust; enter into (or direct the Trustee to enter into) hedging or swap contracts; manage the Trust as a PIE; and withdraw your Units if your investment falls below the minimum holding. We have the power to delegate to our officers or employees, or to any other person related to us, all of our powers, authorities and discretions. 27

29 We may request that you provide us with information within 30 days to enable us to determine whether the Trust continues to meet the PIE eligibility requirements Meetings of Unitholders: We may convene a meeting of Unitholders of the Trust at any time. We will also convene a meeting of Unitholders following notice by: (a) (b) (c) the Trustee; 10% of the Unitholders of the Trust (by number) at the date of request; or Unitholders holding 10% or more of the value of the Trust at the date of request. The quorum and procedural requirements for meetings are set out in the Trust Deed Register of Unitholders: We maintain a register of Unitholders ( the Register ) that constitutes the official record of each Unitholder s details on record and entitlement. You can inspect the Register by appointment during normal business hours at our offices Joint Unitholders: Where you and at least one other person are registered as joint holders of Units, each of you will be jointly and severally liable for any amount payable in respect of each Unit. We will deliver certificates, notices, statements of holding or make payments in respect of the Units only to the person whose name is first in the register. At meetings of Unitholders, only one of the joint Unitholders may vote Procedure on termination of the Trust: On termination of the Trust, the Trustee must realise all assets of the Trust and pay all liabilities, unpaid fees of ours and the Trustee and meet the expenses (including anticipated expenses) of termination. The balance must be distributed amongst Unitholders first according to their entitlements to Distributable Amounts and then in proportion to the number of Units held by them in the Trust. The realisation of assets of the Trust should be completed as soon as practicable after termination Power to amend Trust Deed The Trust Deed may be amended if: (a) in the opinion of the Trustee, the amendment is made to correct a manifest error or is of a formal, technical or administrative nature; 28

30 (b) (c) (d) (e) (f) we and the Trustee are of the opinion that the amendment will enable the more convenient or advantageous administration of the Trust Deed and is not materially prejudicial to the Unitholders generally; in the opinion of the Trustee, the amendment is not materially prejudicial to the Unitholders generally; the amendment is authorised by an Extraordinary Resolution of Unitholders; we and the Trustee are of the opinion that the amendment is required by, or is as a consequence of, an amendment to the law; or we and the Trustee are of the opinion that the amendment is necessary or expedient to comply with the law. 6.3 Limitations on investment powers Authorised Investments: The Trust may invest in any of the following Authorised Investments and assets: (a) cash (including deposits, money market securities and fixed interest securities of a short term nature); (b) property (as defined in the Trustee Act 1956); (c) (d) (e) securities; rights (contractual or otherwise); or interests (equitable or otherwise) including classes of investments agreed between us and the Trustee and notified to Unitholders Limitations: We have absolute discretion as to how the Trust is invested, subject to the following: (a) (b) Although the Trust Deed does not limit the percentage of the assets of the Trust which may be invested in any one company, class of companies, investments or property, we must invest the assets of the Trust in accordance with the Trust s investment policy as summarised in section 6.5 below. We may invest the assets of the Trust in ourselves or any related company, or sell assets to, or purchase assets from, ourselves or any related company on normal commercial terms or terms equally favourable to the Trust. However, the Trustee may refuse to act on our directions to buy or sell assets where, in the Trustee s opinion, the transaction is manifestly not in the interests of Unitholders or is contrary to the provisions of the Trust Deed. 29

31 (c) The PIE regime places additional restrictions on what the Trust can invest in to ensure the Trust continues to be eligible as a PIE. However, these additional restrictions are not expected to affect the Trust s current investment strategy. 6.4 Material developments during the five years preceding the date of this Prospectus Investment activities: The Trust has carried on investment activities for the five years preceding the date of this Prospectus. Those investment activities were provided, and will continue to be provided, in accordance with the Investment Policy of the Trust set out in section 6.5 below. There have been no material developments to the investment activities of the Trust during this period. From 18 September 2014, the Trust has been closed to new investors however existing Unitholders can continue to subscribe for new Units. 6.5 Investment objectives and policies The Trust is authorised under the Trust Deed to invest in a range of Authorised Investments (see section 6.3). Investment policy: To invest in loans secured by registered mortgages and cash (which includes deposits, money market securities and fixed interest securities of a short term nature). Objectives: To achieve regular stable income distributions on a quarterly basis. Nature of investments: The majority of the Trust is intended to be invested in a range of registered mortgages issued by Westpac NZ in New Zealand. We may purchase home loans for up to 80% of the home s value or up to 90% where home loan insurance is attached. The remainder of the Trust will be invested in cash. We will manage the Trust s assets with the aim of: (a) enhancing the returns and helping to deliver a smooth income stream; and (b) providing a return that is competitive with cash and short term bank deposits. The Trust s investments in the registered mortgages are investments in equitable interests in home loans and in the mortgages over residential properties securing those loans. The Trust is able to purchase equitable interests in home loans, and the mortgages securing those loans, from Westpac NZ pursuant to a Mortgage Purchase Agreement. The ability of the Trustee to perfect its title to the home loans and the mortgages securing those loans in which it purchases an interest under that agreement is limited to circumstances where certain primarily credit related events occur in respect of Westpac NZ. Prior to the occurrence of any such 30

32 event, the Trustee is not entitled to take steps to perfect its legal title to those loans, and the mortgages securing those loans, or to give notice to any party to the loan, or mortgage securing the loan. Neither we nor the Trustee are entitled to set or vary the interest rate on loans, and the interest rate will be set solely by reference to Westpac NZ s lending rates. During the life of this Prospectus, it is intended that the Trust will gain some or all of its exposure to mortgages by holding units in the Westpac Mortgage Investment Fund (as described in section 13 of this Prospectus). Cash: A proportion of the Trust will be held in cash (where cash refers to assets such as bank deposits, money market securities and fixed interest securities of a short term nature). The Trust s investment in the cash sector may be obtained through an investment in a fund (including any fund issued by us or a related party of us). Derivatives: To assist in the provision of a stable and regular income to investors, interest rate swaps and other derivatives may be utilised. Derivatives is a term typically used to describe financial contracts whose value depends on the future value of underlying assets such as shares, fixed interest, commodities, currency or cash. Benchmark Performance Index: The Trust s performance is measured against the NZX 90 Day Bank Bill Index. Value: The value of Units is linked to the value of the Trust s assets. Therefore any change in the value of the underlying assets will affect the value of your holding. The value of the derivatives will be affected by interest rate movements. Alterations: We can change the investment policy for the Trust with the consent of the Trustee, but will give you at least 60 days notice of any material alteration (as determined by us). Further information regarding the Authorised Investments for the Trust is contained in the investment guidelines for the Trust, a copy of which can be obtained from us on request. 6.6 Returns for the Trust Returns calculated for the years ended 31 March in each of 2011 to 2015 are: Year ending: 31 March March March March 2012* 31 March 2011 Annualised Returns 3.18% 2.27% 2.25% 2.25% 2.66% *Returns for the period ended 31 March 2012 are effectively calculated to 30 March 2012 (the last business day of the period). 31

33 The returns assume, for each period, that an investment in the Trust has been held for the full period and represents the change in the value of that investment for the relevant period after the deduction of Management Fees, Trustee Fees and expenses, but before the deduction of PIE tax or the refund of PIE tax credits. In addition, it is assumed that any distributions from the Trust are reinvested. Past performance is not indicative of future performance. Returns can be negative as well as positive. 6.7 Distributions Distribution dates We will generally pay distributions to you within 60 days after each distribution date. Distribution dates are the last days of March, June, September and December each year. We may make interim distributions at shorter periods by giving advance notice to the Trustee. Distribution amount If we decide to pay distributions from the Trust, the amount of distributions (if any) will be so much of the capital and income of the Trust as we determine to be appropriate from time to time, to distribute to you according to such method as is consistent with your entitlements under the Trust Deed. The net income earned in any Distribution Period will be accrued in the Trust and held in an Income Account until distribution of that income within 60 days of the end of the Distribution Period, unless you withdraw your Units, in which case you will receive your share of the accrued income (subject to any deduction on account of any tax payable on net income attributed to you while the Trust is operating as a PIE). The net accrued income in any period is income received less liabilities, provisions, fees, expenses and taxes payable by the Trust. Income distributions will be made among Unitholders in proportion to their holdings during the relevant Distribution Period (or as at such other dates as we decide) on a basis that reflects the length of time since the previous distribution was made that the Units have been held. Payment and reinvestment Income distributions paid in cash will be effected by direct credit to a bank account nominated by you. If you choose to reinvest your distribution, we will issue Units in your name at the Allocation Price applicable on the first business day following the end of the relevant Distribution Period. There is no minimum level of reinvestment. 32

34 We will close the Register 14 days prior to the end of each relevant Distribution Period and you will not be able to change your existing distribution instructions during this period. You will, however, still be able to apply for, or withdraw, Units during this period. The reinvestment option complies with the requirements of the Securities Act (Dividend Reinvestment) Exemption Notice 1998, as amended or substituted from time to time. Tax consequences The tax treatment of distributions is set out in section No undertakings as to return of capital There are no undertakings given to Unitholders in relation to the repayment of any capital. 7. UNITHOLDER LIABILITY If you invest in the Trust you will only be obliged to pay: (a) (b) (c) the purchase price for your Units; any fees payable by you as set out in this Prospectus (or permitted under the Trust Deed); and any tax liability on the portion of the Trust s income that is attributable to you or that you incur as a result of advising the wrong PIR or failing to advise us when your PIR increases (except where an increase is due to a change in the statutory tax rate rather than a change in your income). You indemnify the Trustee and us for tax paid on income attributed to you by the Trust. This indemnity only applies if your interest in the Trust was not sufficient to meet any tax liability on income attributed to you by the Trust. Other than in the circumstances set out above, you will not incur any liabilities (including contingent liabilities) or be obliged to pay any further money in relation to an investment in the Trust. 33

35 8. SUMMARY FINANCIAL STATEMENTS The summary financial statements for the Trust for the years ended 31 March in each of 2011 to 2015 are contained in the schedule to this Prospectus. The summary financial statements have been prepared in accordance with Financial Reporting Standard No 43, subject to the Securities Regulations 2009, and comply with Generally Accepted Accounting Practice in New Zealand as it relates to summary financial statements. The summary financial statements do not include all the disclosures provided in the full financial statements and cannot be expected to provide as complete an understanding as provided by the full financial statements. A copy of the full financial statements can be obtained from us. The full financial statements for the years ended 31 March in each of 2011 to 2015 have been audited by PricewaterhouseCoopers who have issued opinions in respect of each of the full financial statements that were not qualified in any respect and did not refer to any fundamental uncertainties in any respect. 9. MINIMUM SUBSCRIPTION There is no minimum level of subscription for the Trust to operate. 10. GUARANTORS No guarantee as to the performance of the Trust or the repayment of any capital is given by: (a) (b) (c) (d) (e) (f) (g) us; the Trustee; any of the Trustee s nominee companies; Westpac NZ; Westpac; any member of the Westpac group of companies; or any other person. Investments made in the Trust do not represent bank deposits with Westpac NZ or Westpac and are not liabilities of the banks or other members of the Westpac group of companies. 34

36 Investments are subject to investment and other risks. These risks include possible delay in the payment of withdrawal amounts in some circumstances, and the loss of investment value, including principal invested. For further information on risks see section ACQUISITION OF BUSINESS OR EQUITY SECURITIES We have not acquired (and do not currently intend acquiring) any business or equity securities of a kind to which clause 11 of schedule 4 to the Securities Regulations 2009 applies. That clause applies to buying a business or any unlisted securities if the purchase price exceeds one-fifth of a fund s assets. 12. OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH The Trust Deed permits Units to be paid for in cash, or, if we agree, in return for the transfer of Authorised Investments. No options to subscribe for Units have been or are to be, issued. We do not currently intend to issue Units for consideration other than in cash. 13. INTERESTED PERSONS 13.1 Persons entitled to remuneration for services or to recover expenses The following persons all have an interest in the Trust by virtue of the services they provide to the Trust and the fees they receive and expenses they recover: The Trustee: The assets of the Trust will be vested in the Trustee (or companies it nominates, including the Custodian) which performs the trustee duties specified in the Trust Deed. The Trustee is paid a Trustee Fee limited as agreed with the Manager, but has an unlimited entitlement to be reimbursed for the expenses it incurs in performing its duties from the assets of the Trust. For further details see section The Manager: We are responsible for the management of the Trust and its investments, and the day to day administration of the Trust. The day to day administration includes: (a) (b) maintaining appropriate Unitholder records; providing you with any information required by statute; 35

37 (c) (d) (e) (f) (g) investing assets; recording and reconciling your investments; calculating and paying distributions; administering the issue and withdrawal of Units; and preparing and filing tax returns for the Trust. The Administration Managers undertake a number of these administration tasks on our behalf. We are paid a Management Fee and are entitled to receive a withdrawal fee, which are both limited by the Trust Deed. For further details see sections and section 1.7. We are entitled to be reimbursed for expenses from the Trust, including those expenses relating to administration services provided by the Administration Managers, which may include unit registry, asset registry and investment accounting costs and costs associated with the provision of certain financial information relating to the Trust. For further details see section Administration Managers: The Administration Managers perform certain administration functions that we have delegated to them. The fees that we may pay to the Administration Managers are unlimited (except in relation to the fees payable to Trustees Executors Limited which are fixed for the life of this Prospectus, however are subject to change in the future without notice). Westpac NZ, Westpac, and other related parties: Westpac NZ and Westpac provide banking services to the Trust. We currently pay their normal day to day banking charges and expenses out of Trust assets. There is no limit on these charges and expenses other than in relation to bank account charges applicable to the Trust as described in section The Trust may also use related parties to provide services in respect of the Trust. These arrangements will be conducted on standard commercial terms. In addition, we or our directors (or associated persons of us) may invest or become Unitholders of the Trust. Westpac NZ may receive fees for marketing and distributing the offer documents of the Trust. We pay these fees out of our Management Fee. Such fees are not an additional cost to you or the Trust. It is intended that Westpac NZ will provide the majority of the loans that the Trust invests in. Under the agreement, under which the equitable interest in the home loans is acquired by the Trust on standard commercial terms, Westpac NZ (and its custodian) will retain and manage the home loan documentation and charge a service fee for doing so, which is currently 0.14% per annum of the average daily balance of the principal amount of the home loans held by the 36

38 Trust. This fee is currently unlimited. The current custodian appointed by Westpac NZ is Westpac Nominees-NZ-Limited. For further details see section Westpac NZ is the swap counterparty in respect of the interest rate swaps described in section 20. Westpac Mortgage Investment Fund: The Westpac Mortgage Investment Fund is a group investment fund managed by us which provides exposure to cash and beneficial interests in fixed and variable home loans. The Westpac Mortgage Investment Fund was launched on 28 June 2005, at which point the Trust owned 100% of the units on issue in that fund. As at 31 March 2015, the Trust held 47.40% of the units in the Westpac Mortgage Investment Fund (which represents 67.30% of the value of the Assets). The Trustee is also the trustee of the Westpac Mortgage Investment Fund and is paid a trustee fee from that fund for that role, while we are paid a management fee from that fund for our role. However, any trustee fee or management fee paid by the Trust in respect of its investment in the Westpac Mortgage Investment Fund will be refunded to the Trust. We and the Trustee, in our respective capacities as the manager and the trustee of the Westpac Mortgage Investment Fund, may recover certain expenses from that fund. You may obtain a copy of the Westpac Mortgage Investment Fund prospectus dated 30 August 2012 by calling us on MATERIAL CONTRACTS No material contracts have been entered into in respect of the Trust at any time in the 2 years preceding the date of this Prospectus other than contracts entered into in the ordinary course of business of the Trust. 15. PENDING PROCEEDINGS There are no pending proceedings or arbitrations as at the date of this Prospectus which may have a material adverse effect on the Trust. 16. ISSUE EXPENSES The estimated amount of issue expenses (which consist of legal and audit expenses, prospectus registration fees and other incidental expenses) is $25,000 (excluding GST). The full amount of the actual issue expenses will be recovered from the Trust. 37

39 17. OTHER TERMS OF OFFER AND UNITS 17.1 Investing Applications: You can apply for additional Units by completing an application form, available from us on request, and returning that form with payment: (a) (b) to any branch of Westpac NZ, or to a Westpac Financial Adviser, for delivery to us; or by post to Freepost 802 (no stamp required), BT Funds Management (NZ) Limited, PO Box 695, Wellington, Our telephone number if you have any queries is You may also apply by such other method and/or form approved by the Trustee. Applications made through a custodial service will need to be made in accordance with the arrangements agreed with the custodial service. We must receive the Application Form: You should note that receipt of an application form by a financial adviser or Westpac NZ is not receipt by us, the Trustee or Home Loan Nominees Limited. No application shall be deemed to have been received by us, the Trustee or Home Loan Nominees Limited before it has actually been received Statement of Unitholdings Currently, we issue a statement of your Unitholdings to you at three monthly intervals. A statement of Unitholdings is also available on request to us. 18. FINANCIAL STATEMENTS AND AUDITORS REPORT Registered financial statements: The financial statements for the Trust for the year ended 31 March 2015 are prepared in compliance with the Unit Trusts Act 1960 and the Financial Reporting Act The full financial statements were registered with the Registrar of Companies on 31 July Auditor s report: The Auditors Report on the financial statements for the Trust was dated 29 July 2015, and did not refer to a fundamental uncertainty and was not qualified in any respect. The Auditors Report on the summary financial statements is attached as a schedule to this Prospectus. 38

40 19. PLACES OF INSPECTION OF DOCUMENTS At our offices: You may inspect copies of the Trust Deed (and any amendments), financial statements and the latest annual report during normal business hours at our offices at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand. You will not be charged a fee to inspect copies. Public register: You may also inspect copies of the same documents (except for the annual report), on the Companies Office s public register. These documents will be found on either our file or the Trust s file on the Companies Office website at You may obtain copies of the documents from the Companies Office on payment of the relevant fee by telephoning the Ministry of Business, Innovation and Employment Business Service Centre on or ing [email protected]. 20. OTHER MATERIAL MATTERS Risks What is risk? Risk is the likelihood that you may not get back the money you invest or that your returns are less than you expected. All investments have some level of risk. The level of return from your investment is usually related to the level of risk in the Trust and the length of time you are invested. Your returns will vary, as with any investment that is linked to market variables (in this case primarily market interest rates and prepayments by borrowers). Main risks of investing: The main risk is investment risk the risk of negative or lower than expected returns on your investment. All investments have investment risk. If market conditions are volatile or you invest for a short time it is reasonably foreseeable that your overall returns from the Trust may be less than you expect or may even be negative for a period of time. If returns are less than charges paid and you withdraw your money at this time it is possible that you could receive back less money than you put in. We have identified the following principal risks that may produce this result and below we also describe how we seek to manage these risks (where possible). It is important to note that risks can only be managed to a certain extent. market risk many factors affect market performance generally and, therefore the value of assets in which the Trust invests. These can include the state of both domestic and overseas economies, tax laws and other regulatory conditions, market sentiment, political events, inflation, movements in interest rates and broader events like changes in technology or environmental events; 39

41 interest rate risk changes in interest rates (whether in New Zealand or internationally) can have a negative impact directly or indirectly on your investment value or returns. We seek to manage this risk through the use of derivatives to assist in the provision of a stable and regular income to investors; investment manager risk the allocation of the Trust s investments between home loans and cash will affect returns, as will the performance of the underlying investments themselves. Although we utilise professional investment managers to make the investment decisions, the outcomes cannot be predicted with certainty and the results will vary accordingly; inflation risk - there is a risk that the value of your investment may not keep pace with inflation. This could mean that even though you receive regular income from the Trust, your money may not have the same buying power in the future as you would expect in today s money; credit default risk if a borrower defaults on a loan, there is a risk that the Trust may not be able to recover the full amount of the loan or any interest outstanding. This can happen if the value of the mortgaged property has fallen. Similarly where the Trust invests in money market securities and fixed interest securities of a short term nature, there is always a risk that a borrower or other counterparty s creditworthiness may decline or they may default and not make the required payments. We seek to manage credit default risk at the time the loans are purchased by restricting the level of any borrowing to 80% of the home s value, or by ensuring a home loan insurance policy is in place for any loans between 80% and 90% of the home s value. We also seek to manage the credit default risk for the Trust s investments in money market securities and fixed interest securities through diversification. There is also provision for a bad debt and other credit impairments reserve; liquidity risk there is a risk that it may not always be easy to cash-up an investment without losing capital or causing delay, or both. This can especially be an issue in the case of investments such as home loans if there are disruptions in the market place or if there are several large withdrawals. This risk may also increase where the Trust invests through other managed funds, which may suspend or restrict withdrawals or otherwise become illiquid. The Trust currently invests in the Westpac Mortgage Investment Fund. As with any managed fund, there is a risk that the Trust may be limited in its ability to meet your withdrawal request. We seek to manage liquidity risk by holding cash and liquid investments to meet current and expected withdrawals in normal market conditions; derivatives risk derivatives may be used by the Trust as permitted by the Trust Deed. Derivatives are financial contracts whose value depends on the future value of underlying assets such as shares, bonds, currency or cash. We currently enter into interest rate swaps in respect of the Trust to help 40

42 maintain a stable and regular income from the home loan investments. Other derivatives may also be held in managing the Trust s cash assets. The contribution to the returns of the Trust from the interest rate swaps may be either positive or negative depending on, amongst other factors, changes in interest rates and home loan margins. Other risks associated with derivatives include the Trust not being able to meet its payment obligations as they arise and the risk that the other party to the derivative contract will fail to perform its contractual obligations (known as counterparty risk ). To seek to manage derivatives risk, we operate a derivative risk policy (available from us on request) which sets out the guidelines around the use of derivatives in the Trust. Other risks which may be relevant at different times include: contractor risk a third party may fail to pay an amount due or properly provide services to the Trust. We have selected reputable third parties to provide services to the Trust. All third parties are required to meet agreed service levels and are subject to ongoing monitoring and review by us. concentration risk the Trust s assets may be concentrated in particular securities, types of securities, geographical areas or industries. Where the assets of the Trust are concentrated, there may be increased volatility which will impact the Trust s returns. product risk changes may be made to the Trust from time to time including changing the Trust s aim, strategy or benchmark asset allocation, adding to, closing or winding up the Trust, changing the fees and charges or minimum amounts. These changes could impact the Trust's returns. Any material changes are made after consultation with the Trustee or notice to the Trustee and will be subject to our internal approval processes. political, economic and regulation risk political and economic events and any change in tax or other applicable legislation or regulation could impact on the Trust's returns. tax related risk if the Trust fails to satisfy the PIE eligibility criteria (as set out in the Income Tax Act 2007), and that failure is not remedied within the period permitted under that Act, the Trust may lose its PIE status in which case the Trust will be taxed as a unit trust at 28% on its taxable income and any distributions and withdrawals may become taxable to you. We have implemented processes to monitor ongoing PIE eligibility compliance for the Trust, and have a number of powers available to us to proactively manage this risk. You may incur a tax liability (plus any interest and penalties) as a result of advising the wrong PIR or failing to advise us when your PIR increases (except where an increase is due to a change in the statutory tax rates rather than a change in your income). operational risk risks may arise from a failure of processes and procedures, fraud, litigation, disruption to business by industrial disputes, 41

43 systems failures, pandemics, natural disasters and other unforeseen external events which might affect our business or the Trust and its assets. We seek to manage this risk with a risk governance framework that includes core principles as well as policies and processes for measuring and monitoring risk. In addition, we and our administration managers have regularly tested business continuity plans in place to address certain instances of business disruption. Taxation The following is a general statement only relating to our understanding of the current New Zealand income tax law as it affects the Trust and New Zealandresident investors. Different tax rules may apply if you are not a New Zealand resident. Taxation legislation, its interpretation and the rates and bases of taxation may change. The application of taxation laws depends on your individual circumstances. We and the Trustee do not take any responsibility for your taxation liabilities. You should seek independent professional advice as to your particular tax position. Underlying investors should seek advice from their custodial service as to how their taxable income will be treated. The Trust is a PIE for tax purposes. Trust not taxed on distributions from the Westpac Mortgage Investment Fund The Trust will not be subject to tax on any distributions from the Westpac Mortgage Investment Fund, while the Westpac Mortgage Investment Fund remains a PIE. Trust taxed on financial arrangements The Trust will be subject to tax on any gain from its financial arrangements (such as investments in NZ term deposits). Taxable income to the Trust is taxed based on the PIR provided by you The Trust will attribute its taxable income for a period to you by reference to the number of Units you hold in the Trust. You must advise us of both your IRD number and PIR otherwise the highest PIR will apply. The Trust will pay income tax on any taxable income which is attributed to you at the PIR provided by you, if you are: 42

44 (a) (b) (c) a natural person (which means person in the ordinary sense of the word, as opposed to a trust, a company or other entity); a non-resident; or a trustee (other than a trustee of a unit trust or charitable trust) who elects to have the tax on their share of the Trust s taxable income paid by the Trust. We refer to such investors as Tax Paid Unitholders. You will also be a Tax Paid Unitholder if you fail to notify us of your IRD number or your PIR. Calculating your PIR The current PIRs that may apply to you are as follows: New Zealand tax resident individual investors Your PIR will be either: 10.5% If in either the last two income years: Your taxable income (excluding income from PIEs) was $14,000 or less; and Your total income (including PIE income after subtracting PIE losses) was $48,000 or less. 17.5% If you don t qualify for the 10.5% rate but in either of the last two income years: Your taxable income (excluding income from PIEs) was $48,000 or less; and Your total income (including PIE income after subtracting PIE losses) was $70,000 or less. 28% If you don t meet the requirements for the 10.5% or 17.5% rates or fail to notify a PIR or provide us with your IRD number. Other investors: Your PIR will be 0% If you a New Zealand tax resident, you provide us with your IRD number and are a: Company Registered charity PIE Investor Proxy Unit trust Group investment fund (other than a designated group investment fund) PIE Superannuation fund or trustee of a trust 43

45 (that has not elected another PIR) together referred to as Zero Rated Unitholders. You can select a PIR of 0%, 17.5% or 28% Your PIR will be 28% If you are a New Zealand tax resident trustee of a trust (including a family trust or superannuation fund but not a unit trust or charitable trust). Trustees of certain testamentary trusts can also select a 10.5% PIR. If you are not a New Zealand tax resident, or fail to notify a PIR or your IRD number. Income years generally commence on 1 April in any year and end on 31 March in the following year. When calculating your taxable income to determine your PIR, you must include any non-new Zealand sourced income for the relevant income year, even if you were not a New Zealand tax resident when that income was earned. This may be relevant for you if you are a new resident. If you are a new resident, you can elect out of this treatment in some cases. We suggest that you contact Inland Revenue for further information. Inland Revenue can instruct us to disregard your notified PIR if Inland Revenue considers that the rate you notified is incorrect. In such cases, we must apply the rate that the Commissioner of Inland Revenue considers appropriate. If you are a Tax Paid Unitholder and the Trust derives a net loss or has excess tax credits that are attributable to you, you will not be entitled to include those in your personal tax return. Instead, we may be entitled to claim a refundable tax credit in respect of such losses or excess credits on behalf of the Trust, which we will pass on to you by way of a cash distribution or by the issue of additional Units in the Trust. If you are a Zero Rated Unitholder, then you rather than the Trust will have to account for any income tax on any taxable income attributed to you. As a Zero Rated Unitholder, you will receive the benefit of any losses or excess tax credits of the Trust directly. If you are a Zero Rated Unitholder, you will be subject to tax on any taxable income attributed to you regardless of whether it is actually distributed to you. Trustees of trusts (including family trusts and superannuation funds but not unit trusts or charitable trusts) may elect to either be Zero Rated Unitholders or Tax Paid Unitholders (in the latter case the Trust will pay tax on their attributed taxable income at the elected PIR). If a trustee of a trust (other than a unit trust or charitable trust) elects a PIR of 28%, tax paid by the Trust on PIE attributed income will be a final tax. Trustees that elect a PIR that is lower than 28% must include the PIE income in their tax return and pay any applicable tax 44

46 themselves (with a credit for any tax paid by the Trust in respect of the PIE income). The result of the above is that the Trust will pay tax on behalf of some Unitholders, but not others. The Trust currently reflects PIE tax by cancelling, for no consideration, Units held by you equal in aggregate value to the PIE tax paid by the Trust in respect of you. This cancellation will usually occur after the end of the Trust s income year. However if you withdraw, switch or transfer Units during the year, then immediately prior to the withdrawal, switch or transfer, the Trust will cancel Units held by you equal in aggregate value to the PIE tax on the income attributable to those Units. Failure to advise your correct PIR If you are a Tax Paid Unitholder and supply the correct PIR (other than trustees who elect a PIR that is lower than the highest PIR), you will not have any further personal New Zealand tax liability in respect of taxable income attributed to you from the Trust (as any tax on that taxable income is payable by the Trust itself). If you do not provide your PIR and IRD number, then tax will be deducted at the highest PIR (currently 28%). If you notify a lower PIR than your applicable PIR, or if you do not advise a change to a higher PIR, you may be obliged to pay any tax shortfall at your income tax rate (plus any interest and penalties) and may be required to file a tax return. If you have notified a higher PIR than the one you are entitled to, any excess tax paid on income attributed to you cannot be claimed back as PIE tax is a final tax for Tax Paid Unitholders in this situation. Joint investors are currently treated as a single Unitholder with a PIR equal to the highest PIR of the joint investors. If you are a joint investor, then you and the other joint investor(s) must notify us of your PIRs and IRD numbers, or tax will be deducted at the highest PIR (currently 28%). You must inform us if your PIR subsequently changes (except where a change is due to a change in the statutory tax rate rather than a change in your income). You are not taxed on direct redemptions You should not be liable for any income tax on the proceeds of your investment in the Trust when you redeem your Units. You may be taxed on the transfer or repurchase of Units You should not be subject to tax on any gain made from the transfer of Units or when we repurchase your Units, provided that: 45

47 (a) (b) (c) you do not carry on a business of dealing in such securities or in respect of which the sale of such securities is an ordinary incident; you did not acquire the Units for the dominant purpose of resale; and you did not make the gains on the sale of Units from an undertaking or scheme entered into or devised for the purpose of making a profit. In other cases you may be subject to tax on any gain made from the transfer of Units or the repurchase of Units by us (and may be entitled to a deduction for any loss) unless either: (a) (b) you are a PIE or are exempt from tax (such as a charity); or the transfer is effected by us cancelling your Units and issuing new Units to the transferee (which is how the Trust currently intends to effect transfers). No tax on distributions You are not subject to tax on any distributions from the Trust, while the Trust remains a PIE. The Trust may elect to deduct from distributions made to you an amount equal to the tax (if any) paid by the Trust on the net income attributed to you as an alternative to redeeming your Units for no consideration to fund this tax liability (although we do not currently intend to do so). Accordingly, Unitholders may receive differing net distributions. Advantages of the Trust being a PIE As a PIE, the Trust may provide you, as an individual or trustee Unitholder, with a benefit over holding assets or investments directly. This is because, as described above, the Trust pays tax on income attributed to you at your notified PIR at a maximum rate of 28%, and PIRs are calculated using your previous two years income and extra allowance for PIE income. No further tax will be payable by you on the attributed income provided you have notified the correct PIR, except for trustees of trusts (other than unit trusts or charitable trusts) which notify a PIR of less than 28%. If you are an individual Unitholder with an income tax rate that is more than 28% and have a PIR of 28%, you will therefore pay less tax by holding Units than if you held the equivalent amount of assets or investments directly. If you are an individual with an income tax rate of less than 28%, you may also pay less tax on income earned through the Trust than income earned directly. This is more likely where you have taxable income that is near the upper limit of your tax bracket (for example, $13,000 or $47,000), or where you had relatively little income (compared to your current year income) in one of the two previous years. 46

48 The Trust may also provide a benefit to you as an individual Unitholder if you would be subject to withholding tax on investment income earned directly. Tax is generally not payable on the income earned through the Trust as a PIE, until the earlier of the time you withdraw some or all of your Units, or on or around the end of the tax year. An earlier tax payment may occur if we consider it necessary or desirable to enable compliance with the PIE tax regime. If you are a trustee of a trust (excluding a unit trust or charitable trust) you may notify a PIR of 28% and save tax, as PIE attributed income which is taxed at 28% does not need to be included in the trust s tax return. This creates a tax saving where income would normally be taxed as trustee income (at a rate of 33%) or as beneficiary income (for beneficiaries on income tax rates higher than 28%). Disadvantages of a PIE for certain investors There are some situations where investing in a PIE may result in more tax being paid on returns. These include: 1) Investors on different incomes who want to invest jointly In PIEs, joint investors are treated as a single investor with the highest PIR applying to the investment, resulting in one investor being potentially overtaxed. To address this you may want to split your investment and invest separately in the Trust. 2) Individual with a decrease in earnings PIE tax is based on your income over the last two income years. If you experience a decrease in earnings in the current income year, PIE tax could be higher than tax paid if you invest in assets directly. 3) Certain trustees of a trust who elect the 28% PIR A trustee of a trust (other than a unit trust or charitable trust) who elects a 28% PIR will not be able to offset PIE income against any other tax losses available to the trustee, as PIE tax is paid at the 28% PIR as a final tax in these circumstances. If the trust were to treat this PIE income as beneficiary income, more tax may have been paid where a beneficiary has an income tax rate lower than 28%. 4) Individuals with more than $48,000 total income (taxable income + PIE income) with a high proportion of PIE income Your PIR is determined taking PIE income into account. If you have a PIR that is higher than your income tax rate, you will pay more tax if you invest through a PIE than if you invest directly. 47

49 5) Other investors There is unlikely to be a tax saving if you are another type of entity, such as a company, investing in a PIE. However, there could be other benefits (such as time value of money) and other disadvantages (such as impact on provisional tax) that should be considered. Complaints If there is a problem with your investment you can call a financial adviser or the Customer Relations Team on , visit a local Westpac NZ branch or write to: The Manager Westpac Home Loan Trust PO Box 695 Wellington If you are still not happy you can contact the Trustee at the address set out in section 5. We are a member of the independent dispute resolution scheme operated by the Banking Ombudsman and approved by the Ministry of Consumer Affairs, for the purposes of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 ( FSP Act ). Under the terms of this scheme, we have three months to resolve your complaint. If you are not satisfied by our response you may refer the matter to the Banking Ombudsman (at no cost). You can contact the Banking Ombudsman as follows: Level 5, Huddart Parker Building, 1, Post Office Square, Wellington [email protected] Phone: Fax: Write to: Freepost PO Box 25327, Featherston Street, Wellington 6146 The Trustee is a member of the independent dispute resolution scheme operated by Financial Services Complaints Limited ( FSCL ), which is also approved by the Ministry of Consumer Affairs for FSP Act purposes. Under the terms of that scheme, the Trustee has 40 working days to respond to your complaint. If you are not satisfied by the Trustee s response you may refer the matter to FSCL as follows: 48

50 Financial Services Complaints Limited Level Lambton Quay PO Box 5967 Lambton Quay, Wellington [email protected] Phone: Full details of how to access the FSCL scheme can be obtained from FSCL s website fscl.org.nz. There is no cost to you to use the services of FSCL. Complaints about your investment may also be made in certain circumstances to: Financial Markets Authority Level 5, Ernst & Young Building 2 Takutai Square DX Box CX10033, PO Box Auckland 1143 Phone: Fax: Deed of Arrangements and Deed of Indemnity The Trustee has entered into a deed of arrangements with us, pursuant to which we and our authorised agents will undertake certain day to day administrative functions of the Trust. The Deed of Arrangements is dated 14 April 2000 (as amended from time to time). Westpac Holdings-NZ-Limited has also entered into a deed of indemnity with the Trustee, indemnifying the Trustee in respect of actions to be performed by us and its authorised agents under the deed of arrangements referred to above. The Deed of Indemnity is dated 31 January 2001 (as acknowledged from time to time). No listing We do not intend to list the Units in the Trust with NZX or on any other registered securities exchange. 49

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53 SUMMARY FINANCIAL STATEMENTS Westpac Home Loan Trust Summary Statement of Comprehensive Income For the Year Ended 31 March 2015 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Year ended 31 March 2015 March 2014 March 2013 March 2012 March 2011 $'000 $'000 $'000 $'000 $'000 Net investment income 4,716 5,505 6,873 9,687 10,961 Total expenses 1,074 1,560 2,330 3,680 5,171 Profit and total comprehensive income attributable to Unitholders 3,642 3,945 4,543 6,007 5,790 Summary Statement of Changes in Unitholders' Funds For the Year Ended 31 March 2015 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Year ended 31 March 2015 March 2014 March 2013 March 2012 March 2011 $'000 $'000 $'000 $'000 $'000 Unitholders' funds at the beginning of the year 120, , , , ,019 Total comprehensive income for the year 3,642 3,945 4,543 6,007 5,790 Applications 5,386 18,377 4,237 6,053 6,541 Withdrawals (26,990) (25,688) (38,573) (43,639) (63,741) Distributions (3,504) (2,797) (3,265) (4,092) (5,977) Unitholders' funds at the end of the year 99, , , , ,632 Summary Balance Sheet As at 31 March 2015 Assets Residential mortgages Financial assets at fair value through profit or loss Other current assets Cash and cash equivalents As at 31 March As at 31 March As at 31 March As at 31 March As at 31 March $'000 $'000 $'000 $'000 $'000 23,345 31,069 43,229 60,752 83,764 74,423 86,318 84,343 98, , ,913 1,277 1,058 3,332 5,342 1,712 5,430 6,704 Total assets 101, , , , ,336 Total liabilities 2,672 2,817 4,294 5,752 9,704 Net assets attributable to Unitholders 99, , , , ,632 Summary Cash Flow Statement For the Year Ended 31 March 2015 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Year ended 31 March 2015 March 2014 March 2013 March 2012 March 2011 $'000 $'000 $'000 $'000 $'000 Net cash flows from operating activities Net cash flows used in financing activities 23,062 13,962 34,094 42,449 44,254 (25,072) (10,332) (37,812) (43,723) (62,853)

54 Notes to the Summary Financial Statements for the Year Ended 31 March 2015 Reporting entity The reporting entity included in these summary financial statements is the Westpac Home Loan Trust (the Trust ). The Trust is a unit trust as defined by the Unit Trust Act 1960 and is subject to the provisions of that Act. Relationship to full financial statements The summary financial statements are for the years ended 31 March 2015, 31 March 2014, 31 March 2013, 31 March 2012 and 31 March These summary financial statements have been extracted from the audited full financial statements relating to those years. The full financial statements from which these summary financial statements have been extracted have been prepared in accordance with the requirements of the Unit Trust Act 1960, the Financial Reporting Act 1993, the Trust Deed and Generally Accepted Accounting Practice in New Zealand ( NZ GAAP ). The full financial statements comply with New Zealand equivalents to International Financial Reporting Standards ( NZ IFRS ) and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The full financial statements make an explicit and unreserved statement of compliance with International Financial Reporting Standards. The full financial statements for the year ended 31 March 2015 were authorised for issue by the Directors of the Manager on 29 July The full financial statements from which these summary financial statements have been extracted have been audited by PricewaterhouseCoopers who have issued opinions in respect of each of the full financial statements that did not refer to any fundamental uncertainties and were not modified in any respect. The summary financial statements do not include all the disclosures provided in the full financial statements and cannot be expected to provide as complete an understanding as provided by the full financial statements. A copy of the full financial statements can be obtained from the Manager s principal place of business at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand, or by calling The summary financial statements are presented in New Zealand dollars which is the Trust s functional and presentation currency. All values are rounded to the nearest thousand dollars. The summary financial statements have been prepared in accordance with Financial Reporting Standard No.43, subject to the Securities Regulations 2009 and comply with NZ GAAP as it relates to summary financial statements. Changes in Accounting Policies No new standards have been adopted by the Trust that have a significant impact on the Trust's reported result or financial position.

55 Events occurring after the balance sheet date No significant events have occurred since balance date which would impact on the financial position of the Trust disclosed in the full financial statements as at 31 March 2015 or on the results and cash flows of the Trust for the year ended on that date. Related party transactions There have been transactions between the Trust and other entities also managed by BT Funds Management (NZ) Limited and the Trust may from time to time in the normal course of business, trade in securities that have been issued by Westpac New Zealand Limited. Details of related party holdings and transactions are provided in the full financial statements.

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59 18 September 2015 The Directors BT Funds Management (NZ) Limited (The Manager) Westpac on Takutai Square 16 Takutai Square Auckland 1010 Dear Sirs, WESTPAC HOME LOAN TRUST PROSPECTUS DATED 18 SEPTEMBER 2015 The New Zealand Guardian Trust Company Limited (Trustee) is the trustee of the Westpac Home Loan Trust (the Trust). In accordance with clause 22 of Schedule 4 to the Securities Regulations 2009 in respect of the accounting period ended 31 March 2015, in the Trustee s opinion the Manager has managed the Trust during that period in accordance with the provisions of the Master Trust Deed and the offer of Units set out in the Prospectus. In connection with this opinion note that: 1. The Manager is responsible for managing the Trust and issuing the Prospectus. 2. Our responsibility is to express an opinion on the management of the Trust based on our supervisory role under the Unit Trusts Act We do not provide any guarantees or assurances about the offer of interests in the Trust. 3. We have obtained sufficient assurance from undertaking our supervisory activities to provide a basis for our opinion. However, there are inherent limitations in performing a supervisory role and we cannot provide an absolute assurance regarding the management of the Trust. 4. We have disregarded any matter which we consider to be immaterial to investors in the Trust. 5. The inclusion of this Trustee s statement in the Prospectus should not be taken to imply that the Trustee has responsibility for the material in this Prospectus other than the Trustee s statement. Signed for and on behalf of the Trustee The New Zealand Guardian Trust Company Limited Asif Saleem Relationship Manager - Corporate Trusts

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