BNZ Managed Funds Investment Statement 29 June 2005 - Expertly managed investment funds designed to build your investment portfolio and help you ...
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BNZ Managed Funds Investment Statement 29 June 2005 Expertly managed investment funds designed to build your investment portfolio and help you achieve your savings and investment goals
Important information
(The information in this section is required under the Securities Act 1978)
Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask
questions. Seek advice before committing yourself.
Choosing an investment Choosing an investment adviser
When deciding whether to invest, consider carefully the You have the right to request from any investment adviser a
answers to the following questions that can be found on the written disclosure statement stating his or her experience
pages noted below: and qualifications to give advice.
Page That document will tell you:
What sort of investment is this? 7 • whether the adviser gives advice only about particular types
of investments; and
Who is involved in providing it for me? 7
• whether the advice is limited to the investments offered by
How much do I pay? 8 one or more particular financial organisations; and
• whether the adviser will receive a commission or other
What are the charges? 9
benefit from advising you.
What returns will I get? 10 You are strongly encouraged to request that statement. An
investment adviser commits an offence if he or she does not
What are my risks? 11 provide you with a written disclosure statement within five
working days of your request. You must make the request at
Can the investment be altered? 12
the time the advice is given or within one month of receiving
How do I cash in my investment? 13 the advice.
In addition:
Who do I contact with enquiries about my investment? 14
• if an investment adviser has any conviction for dishonesty or
Is there anyone to whom I can complain if I have has been adjudged bankrupt, he or she must tell you this in
problems with the investment? 14 writing; and
What other information can I obtain about • if an investment adviser receives any money or assets on
this investment? 14 your behalf, he or she must tell you in writing the methods
employed for this purpose.
In addition to the information in this document, important
Tell the adviser what the purpose of your investment is. This
information can be found in the current registered Prospectus
is important because different investments are suitable for
for the investment. You are entitled to a copy of that
different purposes.
Prospectus on request.
This is an Investment Statement for the purposes of the Securities Act 1978, prepared as at 29 June 2005. There are registered
Prospectuses containing offers of securities to which this Investment Statement relates.
BNZ Managed Funds (the “Funds”) are offered and managed by BNZ Investment Management Limited. Any investment in the Funds
does not constitute a deposit with, or other liability of, Bank of New Zealand and is subject to investment risk including possible
loss of income or principal invested. The performance of and the returns on investment or the return of any capital is not
guaranteed (in full or in part) by BNZ Investment Management Limited or any of its related companies, including Bank of New
Zealand and National Australia Bank Limited, or any other parties. Any references to tax rates are to rates that are current at the
date of this Investment Statement and may change if tax legislation changes.
Differences can exist between investments which may influence the ultimate return to the investor. Investors should take care to
understand the disclosure documents when making comparisons between any investments.
Please note that BNZ Investment Management Limited is not a registered bank.
1BNZ Mortgage Distribution Fund
Designed to provide investors with capital stability and quarterly income Fund summary
payments by investing primarily in a diversified portfolio of first registered Entry fee*: Nil.
mortgages held over residential and commercial properties within New Zealand.
Early withdrawal fee*: 1% of the amount withdrawn or $200
Investment strategy (whichever is the lower) if you make a withdrawal within
The Fund invests in first registered mortgages over two years of commencing your investment in this Fund. This
residential and commercial property in New Zealand, along fee does not currently apply to withdrawals by way of
with some exposure to cash. switches into another Fund or Funds, other than a switch into
the BNZ New Zealand Cash Management Trust.
The Fund applies strict lending criteria and lends money to
borrowers, who in turn, provide property as security for the Management fee*: 1.25% p.a. of the Fund’s average daily
loan. Borrowers then repay their loans with interest and it is gross asset value (plus GST on 10% of the management fee).
these interest payments that provide returns to investors. Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
To meet market demand some of the Fund’s lending is on the asset value (plus GST on 75% of the trustee fee).
basis of fixed interest rates and interest rate instruments are Switching fee*: A switching fee will only apply where the
used by the Fund to minimise the effect of rising interest switch is into a Fund with a higher entry fee, in which case
rates on this lending. The recommended minimum the fee will be the difference between the entry fees.
investment period for this Fund is two years. * The Manager and/or Trustee can vary the current fees or impose
fees from time to time. Please refer to question 4 on page 9 for
What are the risks associated with this strategy? further information on fees and costs.
Investing in mortgages carries a very low degree of risk that
Taxation policy: The Fund is a group investment fund and, as
the value of your investment may fall. As a consequence,
such, income you receive is generally subject to Resident (or
there is likely to be only a minimal degree of fluctuation in the
Non-Resident) Withholding Tax. Please see page 10 for further
value of your investment and it is unlikely that you will ever
information on how your investment is taxed.
experience a negative return.
Assets invested in: New Zealand mortgages and cash.
Does the Fund distribute income? Potential return variability: Low.
Yes – income is allocated to investors by way of quarterly Potential returns: Modest outperformance of traditional cash
income distributions. You can choose to have these investments such as bank term deposits.
distributions paid to your bank account, or reinvest them by
Recommended minimum investment period: Two years.
purchasing further units in the Fund.
BNZ Mortgage Investment Fund
Designed to provide investors with capital stability and steady growth by Fund summary
investing primarily in investments backed by first registered mortgages held Entry fee*: Nil.
over residential and commercial properties within New Zealand.
Early withdrawal fee*: 1% of the amount withdrawn or $200
Investment strategy (whichever is the lower) if you make a withdrawal within
This Fund invests directly into the BNZ Mortgage Distribution two years of commencing your investment in this Fund. This
Fund. The BNZ Mortgage Distribution Fund invests in first fee does not currently apply to withdrawals by way of
registered mortgages over residential and commercial switches into another Fund or Funds, other than a switch into
property in New Zealand, along with some exposure to cash. the BNZ New Zealand Cash Management Trust.
The BNZ Mortgage Distribution Fund applies strict lending Management fee*: 1.25% p.a. of the Fund’s average daily
criteria and lends money to borrowers who, in turn, provide gross asset value (plus GST on 10% of the management fee).
property as security for the loan. Borrowers then repay their
loans with interest and it is these interest payments that Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
provide returns to investors. To meet market demand some of asset value (plus GST on 75% of the trustee fee).
the BNZ Mortgage Distribution Fund’s lending is on the basis Switching fee*: A switching fee will only apply where the
of fixed interest rates and interest rate instruments are used switch is into a Fund with a higher entry fee, in which case
by the BNZ Mortgage Distribution Fund to minimise the effect
the fee will be the difference between the entry fees.
of rising interest rates on this lending. The recommended
minimum investment period for this Fund is two years. * The Manager and/or Trustee can vary the current fees or impose
fees from time to time. Please refer to question 4 on page 9 for
What are the risks associated with this strategy? further information on fees and costs.
Investing in mortgages carries a very low degree of risk that
Taxation policy: As the Fund is taxed like a company, all
the value of your investment may fall. As a consequence,
taxable income and capital gains are taxed at 33 cents in
there is likely to be only a minimal degree of fluctuation in the
the dollar.
value of your investment and it is unlikely that you will ever
experience a negative return. Assets invested in: New Zealand mortgages and cash.
Potential return variability: Low.
Does the Fund distribute income?
No – the Fund reflects income in the growth of the unit price. Potential returns: Modest outperformance of traditional cash
If you are looking for regular income distributions from your investments such as bank term deposits.
investment you should consider the BNZ Mortgage
Recommended minimum investment period: Two years.
Distribution Fund.
2BNZ Balanced Fund
Designed to provide investors with solid capital growth of their savings over Fund summary
the medium to long-term by investing in an actively managed, balanced Entry fee*: Nil.
range of investment sectors.
Early withdrawal fee*: 1% of the amount withdrawn or $200
Investment strategy (whichever is the lower) if you make a withdrawal within
The Fund’s assets are invested in a balanced range of two years of commencing your investment in this Fund. This
domestic and international investment sectors that include fee does not currently apply to withdrawals by way of
cash, fixed interest and shares. In line with the balanced switches into another Fund or Funds, other than a switch into
nature of the Fund, the total exposure to these asset classes the BNZ New Zealand Cash Management Trust.
is as follows: Management fee*: 1.75% p.a. of the Fund’s average daily
Asset Class Benchmark Allowable Range gross asset value (plus GST on 10% of the management fee).
Cash and fixed interest 65% Between 55% and 75% Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
asset value (plus GST on 75% of the trustee fee).
Shares 35% Between 25% and 45%
Switching fee*: A switching fee will only apply where the
The exposure between investment sectors can be varied to switch is into a Fund with a higher entry fee, in which case
take advantage of perceived stronger opportunities as they the fee will be the difference between the entry fees.
arise. The recommended minimum investment period for this
* The Manager and/or Trustee can vary the current fees or impose
Fund is five years.
fees from time to time. Please refer to question 4 on page 9 for
further information on fees and costs.
What are the risks associated with this strategy?
In exchange for seeking the potential for higher returns than Taxation policy: As the Fund is taxed like a company, all
taxable income and capital gains are taxed at 33 cents in
traditional cash investments, you need to accept a higher
the dollar.
degree of risk. The balanced range of investments within this
Fund means that the overall risk to investors is medium. Assets invested in: Domestic and international investment
sectors that include cash, fixed interest and shares.
While you are invested in this Fund the value of your
investment is likely to fluctuate. This may result in you Potential return variability: Medium.
experiencing a negative return from time to time (i.e. a loss of Potential returns: Solid capital growth.
capital value) – the risk of this is increased if you invest for a
Recommended minimum investment period: Five years.
short period of time.
BNZ Active Growth Fund
Designed to provide investors with strong capital growth of their savings Fund summary
over the medium to long-term by investing in an actively managed range of Entry fee*: Nil.
investment sectors that are weighted towards shares.
Early withdrawal fee*: 1% of the amount withdrawn or $200
Investment strategy (whichever is the lower) if you make a withdrawal within
The Fund’s assets are invested in a range of domestic and two years of commencing your investment in this Fund. This
international investment sectors that include cash, fixed fee does not currently apply to withdrawals by way of
interest and shares. The total exposure to these asset switches into another Fund or Funds, other than a switch into
classes is as follows: the BNZ New Zealand Cash Management Trust.
Asset Class Benchmark Allowable Range Management fee*: 1.75% p.a. of the Fund’s average daily
gross asset value (plus GST on 10% of the management fee).
Cash and fixed interest 40% Between 27.5% and 52.5%
Shares 60% Between 47.5% and 72.5% Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
asset value (plus GST on 75% of the trustee fee).
The exposure between investment sectors can be varied to Switching fee*: A switching fee will only apply where the
take advantage of perceived stronger opportunities as they switch is into a Fund with a higher entry fee, in which case
arise. The recommended minimum investment period for this the fee will be the difference between the entry fees.
Fund is seven years.
* The Manager and/or Trustee can vary the current fees or impose
fees from time to time. Please refer to question 4 on page 9 for
What are the risks associated with this strategy?
further information on fees and costs.
In exchange for seeking the potential for higher returns than
traditional cash investments, you need to accept a higher Taxation policy: As the Fund is taxed like a company, all
degree of risk. The investments of this Fund are weighted taxable income and capital gains are taxed at 33 cents in
towards shares, which means that the overall risk to the dollar.
investors is medium/high.
Assets invested in: Domestic and international investment
While you are invested in this Fund the value of your sectors that include cash, fixed interest and shares.
investment is likely to fluctuate. This may result in you
Potential return variability: Medium/high.
experiencing a negative return from time to time (i.e. a loss of
capital value) – the risk of this is increased if you invest for a Potential returns: Strong capital growth.
short period of time.
Recommended minimum investment period: Seven years.
3BNZ New Zealand Cash Management Trust
Designed to provide investors with capital stability by investing in low risk Fund summary
short-term wholesale cash investments. Entry fee*: Nil.
Investment strategy Early withdrawal fee*: Nil.
The Fund’s assets are invested primarily in short-term
Management fee*: 0.75% p.a. of the Fund’s average daily
deposits and investments on the wholesale money market. It
gross asset value (plus GST on 10% of the management fee).
may also invest up to 20% in mortgages by investing directly
into the BNZ Mortgage Distribution Fund. Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
asset value (plus GST on 75% of the trustee fee).
The investments are actively managed to enhance returns
and the maturity of most of the investments is within Switching fee*: A switching fee will only apply where the
365 days. However, longer-term investments can be included switch is into a Fund with a higher entry fee, in which case
if this is considered appropriate. the fee will be the difference between the entry fees.
The recommended minimum investment period for this Fund * The Manager and/or Trustee can vary the current fees or impose
is one year. fees from time to time. Please refer to question 4 on page 9 for
further information on fees and costs.
What are the risks associated with this strategy?
Taxation policy: As the Fund is taxed like a company, all
Investing in short-term deposits and wholesale money
taxable income and capital gains are taxed at 33 cents in
market investments carries a minimal degree of risk that
the dollar.
the value of your investment will fall. The benefit of seeking
lower but steady returns from these types of investments is Assets invested in: Fixed interest deposits, investments on
that there is likely to be a low degree of fluctuation in the the wholesale money market and mortgages.
value of your investment.
Potential return variability: Low.
Potential returns: In line with bank call accounts.
Recommended minimum investment period: One year.
BNZ New Zealand Strategic Bond Trust
Designed to provide investors with moderate capital growth by investing in Fund summary
an actively managed diversified portfolio of selected New Zealand fixed Entry fee*: 3% of the amount of each contribution made.
interest investments.
Early withdrawal fee*: Nil.
Investment strategy
Management fee*: 1.25% p.a. of the Fund’s average daily
The Fund accesses a variety of investment opportunities
gross asset value (plus GST on 10% of the management fee).
(including derivatives) found in the fixed interest market to
enhance returns. The Fund’s investment mix will depend on Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
available opportunities and it is likely that, over time, most of asset value (plus GST on 75% of the trustee fee).
the investments in the Fund will be non-Government fixed
Switching fee*: A switching fee will only apply where the
interest investments. Therefore, the Fund has a slightly
switch is into a Fund with a higher entry fee, in which case
higher credit risk profile compared to a fund where
the fee will be the difference between the entry fees.
Government stock is the main investment.
* The Manager and/or Trustee can vary the current fees or impose
The Fund seeks to add value through active management of
fees from time to time. Please refer to question 4 on page 9 for
the non-Government fixed interest investments. Disciplined
further information on fees and costs.
credit criteria and review procedures are used in determining
the Fund’s selection and mix of fixed interest investments. At Taxation policy: As the Fund is taxed like a company, all
the date of this Investment Statement there is no intention to taxable income and capital gains are taxed at 33 cents in
leverage the assets of the Fund or to borrow. The the dollar.
recommended minimum investment period for this Fund is
Assets invested in: New Zealand fixed interest investments.
five years.
Potential return variability: Medium.
What are the risks associated with this strategy?
Potential returns: Moderate capital growth.
Investing in fixed interest investments carries a medium
degree of risk that the value of your investment may fall, Recommended minimum investment period: Five years.
particularly in the short-term during times when interest
rates are rising. In exchange for seeking a moderate, medium-
term, return from an exposure to fixed interest investments,
there is likely to be a medium degree of fluctuation in the
value of your investment.
4BNZ International Bond Trust
Designed to provide investors with moderate capital growth by investing in What are the risks associated with this strategy?
an actively managed, diversified portfolio of selected international fixed Investing in international fixed interest investments with some
interest investments. actively managed currency exposure carries a medium degree of
Investment strategy risk that the value of your investment may fall, particularly in the
The Fund is managed using a multi-manager investment style. short-term if interest rates are rising and/or there are adverse
To achieve this, BNZ Investment Management Limited utilises foreign currency exchange rate movements.
the extensive research resources of MLC Investments Limited
(“MLC”), a related company and one of the largest multi- Fund summary
managers in the world. MLC appoint and monitor Specialist Entry fee*: 3% of the amount of each contribution made.
Managers who manage the assets of this Fund. By combining Early withdrawal fee*: Nil.
Specialist Managers, investors should benefit from greater Management fee*: 1.25% p.a. of the Fund’s average daily
consistency of overall performance with reduced volatility than gross asset value (plus GST on 10% of the management fee).
would be expected from a single-manager.
Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
The Specialist Managers access a wide variety of investment asset value (plus GST on 75% of the trustee fee).
opportunities which are to be found in global fixed interest Switching fee*: A switching fee will only apply where the
markets (including derivatives) to assist in achieving the switch is into a Fund with a higher entry fee, in which case
objective of the Fund. While the Specialist Managers may the fee will be the difference between the entry fees.
select some investments with low credit ratings, the overall * The Manager and/or Trustee can vary the current fees or impose
average credit rating must remain above Standard and Poor’s fees from time to time. Please refer to question 4 on page 9 for
AA-. At the date of this Investment Statement there is no further information on fees and costs.
intention to leverage the assets of the Fund or to borrow. The
Taxation policy: As the Fund is taxed like a company, all
majority of the Fund’s currency exposure will be hedged.
taxable income and capital gains are taxed at 33 cents in
However, in seeking to increase investors’ returns through
the dollar.
changes in currency exchange rates, the Specialist Managers
are able to take a combined active currency exposure on up to Assets invested in: International fixed interest investments.
22.5% of the Fund’s assets. Potential return variability: Medium.
The recommended minimum investment period for this Fund Potential returns: Moderate capital growth.
is five years. Recommended minimum investment period: Five years.
BNZ New Zealand Equities Discovery Trust
Designed to provide investors with strong capital growth by investing in an Fund summary
actively managed portfolio of selected companies which are identified as Entry fee*: 5% of the amount of each contribution made.
having good return potential.
Early withdrawal fee*: Nil.
Investment strategy
The Fund’s assets are invested in a portfolio of New Zealand Management fee*: 1.50% p.a. of the Fund’s average daily
shares that, based on fundamental company research, are gross asset value (plus GST on 10% of the management fee).
viewed as being under-valued. The portfolio’s construction is Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
primarily based on this research and is not intended to asset value (plus GST on 75% of the trustee fee).
necessarily resemble the composition of the NZSX40 index.
Switching fee*: A switching fee will only apply where the
The investments are actively managed to identify and take switch is into a Fund with a higher entry fee, in which case
advantage of opportunities as they arise. Once a company is
the fee will be the difference between the entry fees.
identified as being under-valued and shares of the company
are bought by the Fund, a disciplined approach to monitoring * The Manager and/or Trustee can vary the current fees or impose
their performance is undertaken. fees from time to time. Please refer to question 4 on page 9 for
further information on fees and costs.
As part of the Fund’s active management style, up to 50% of
its assets can be held in cash when it is believed that cash Taxation policy: As the Fund is taxed like a company, all
provides a better short-term investment opportunity. The taxable income and capital gains are taxed at 33 cents in
recommended minimum investment period for this Fund is the dollar.
seven years.
Assets invested in: New Zealand shares.
What are the risks associated with this strategy? Potential return variability: Medium/high.
In exchange for seeking a strong, long-term return from an
exposure to New Zealand shares, you need to accept a higher Potential returns: Strong capital growth.
degree of risk. Investing in shares means that the overall risk Recommended minimum investment period: Seven years.
to investors is medium/high.
While you are invested in this Fund the value of your
investment is likely to fluctuate. This may result in you
experiencing a negative return from time to time (i.e. a loss of
capital value) – the risk of this is increased if you invest for a
short period of time.
5BNZ International Equity Trust
Designed to provide investors with strong capital growth by investing in an Fund summary
actively managed, diversified portfolio of international shares. Entry fee*: 5% of the amount of each contribution made.
Investment strategy Early withdrawal fee*: Nil.
Franklin Templeton Investments Australia Limited has been
Management fee*: 1.50% p.a. of the Fund’s average daily
appointed to manage the assets of this Fund. The Fund’s
gross asset value (plus GST on 10% of the management fee).
assets are invested in a portfolio of companies from around
the world that, based on thorough research, are viewed as Trustee fee*: 0.065% p.a. of the Fund’s average daily gross
being under-valued. asset value (plus GST on 75% of the trustee fee).
Franklin Templeton Investments Australia Limited uses a Switching fee*: A switching fee will only apply where the
worldwide network of experienced research resources to switch is into a Fund with a higher entry fee, in which case
identify investment opportunities. Information is examined on the fee will be the difference between the entry fees.
a company-by-company basis in a range of countries and
* The Manager and/or Trustee can vary the current fees or impose
industries. Companies are selected for inclusion in the
fees from time to time. Please refer to question 4 on page 9 for
portfolio if they are expected to produce the strongest returns
further information on fees and costs.
over time. Under normal circumstances, the Fund’s currency
exposure will be unhedged. The recommended minimum Taxation policy: As the Fund is taxed like a company, all
investment period for this Fund is seven years. taxable income and capital gains are taxed at 33 cents in
the dollar.
What are the risks associated with this strategy?
Assets invested in: International shares.
In exchange for seeking a strong, long-term return from an
exposure to international shares, you need to accept a higher Potential return variability: Medium/high.
degree of risk. Investing in unhedged international shares
Potential returns: Strong capital growth.
means that the overall risk to investors is medium/high.
Recommended minimum investment period: Seven years.
While you are invested in this Fund the value of your
investment is likely to fluctuate. This may result in you
experiencing a negative return from time to time (i.e. a loss of
capital value) – the risk of this is increased if you invest for a
short period of time.
On the next few pages you will find the section “Answers to
commonly asked questions”. If you have any further questions
while reading this Investment Statement please call your financial
adviser, Bank of New Zealand representative, or contact one of our
Customer Relationship Representatives toll free on 0800 808 648.
6Answers to commonly asked questions
1. What sort of investment is this? register of unitholders, correspondence and support
BNZ Managed Funds comprise one group investment fund functions, is carried out by Managed Funds Administration, a
(BNZ Mortgage Distribution Fund) and eight unit trusts (BNZ division of BNZ Investment Management Limited.
Mortgage Investment Fund, BNZ Balanced Fund, BNZ Active
The Trustee of the Funds is Public Trust whose address is
Growth Fund, BNZ New Zealand Cash Management Trust,
117-125 Lambton Quay, Wellington.
BNZ New Zealand Strategic Bond Trust, BNZ International
Bond Trust, BNZ New Zealand Equities Discovery Trust and The Manager utilises Franklin Templeton Investments
BNZ International Equity Trust), collectively known as the Australia Limited to manage the investments of the BNZ
“Funds” and individually as a “Fund”. International Equity Trust. Specialist managers, appointed
and monitored by MLC Investments Limited (“MLC”) or its
The BNZ Balanced Fund and the BNZ Active Growth Fund
related companies, manage the assets of the BNZ
are multi-sector funds. This means each of these
International Bond Trust.
Funds invests in more than one investment sector,
thereby reducing your exposure to the risks of any one The Manager may remove or replace any investment manager
sector as the different investment sectors react at any time and the specialist managers may be added,
differently to changing economic and market conditions. removed, or replaced at any time without prior notice to
These Funds invest in cash, and New Zealand and investors.
international fixed interest and share investments (either Details of any current investment managers or specialist
directly or by investment in other Funds or pooled managers can be obtained by contacting the Manager.
investment schemes).
Bank of New Zealand and its Directors (except those who are
The BNZ New Zealand Cash Management Trust, BNZ also Directors of the issuer, BNZ Investment Management
Mortgage Investment Fund, BNZ Mortgage Distribution Fund, Limited) are the promoters of the Funds. The address of Bank
BNZ New Zealand Strategic Bond Trust, BNZ International of New Zealand is Level 14, BNZ Tower, 125 Queen Street,
Bond Trust, BNZ New Zealand Equities Discovery Trust and Auckland. The names and addresses of the Directors of Bank
BNZ International Equity Trust are single-sector funds which of New Zealand as at the date of this Investment Statement
means they are each primarily invested in a single investment are set out in the directory of this Investment Statement. The
sector, be that cash, mortgages, New Zealand or international Funds offered under this Investment Statement are:
fixed interest or share investments. This means that the
• the BNZ New Zealand Cash Management Trust, a unit trust
performance of any of these particular Funds should largely
which was established by a Trust Deed dated 16 September
reflect the characteristics of the particular investment sector
1987 and invests in the New Zealand wholesale money
over the same period of time.
market and mortgages;
The Funds are known as “pooled” investments, because the
• the BNZ Mortgage Investment Fund, a unit trust which was
contributions of many investors are grouped together so each
established by a Trust Deed dated 25 March 1988 and invests
investor can benefit from greater investment diversity than
in cash and the BNZ Mortgage Distribution Fund;
would be possible as a typical individual investor.
• the BNZ Mortgage Distribution Fund, a group investment fund
By investing into a Fund you buy “units” in that Fund – the
which was established by a Trust Deed dated 27 February
more money you invest, the more units that are purchased.
2002 and invests in cash and first registered residential and
Subject to minimum investment requirements, units may be
commercial mortgages within New Zealand;
purchased by lump sum, regular contributions or a
combination of both. • the BNZ Balanced Fund, a unit trust which was established by
These Funds are only available for subscription from within a Trust Deed dated 16 September 1987 and invests in a
New Zealand. Please note that requests to switch, balanced range of cash, and New Zealand and international
commence regular contributions or make lump sum fixed interest and share investments;
investments will not be accepted from outside of • the BNZ Active Growth Fund, a unit trust which was
New Zealand. established by a Trust Deed dated 18 March 1994 and invests
For a more detailed description of each of the Funds, please a high proportion in New Zealand and international shares,
refer to pages 2 to 6. with the remainder invested in cash and New Zealand and
international fixed interest investments;
• the BNZ New Zealand Strategic Bond Trust, a unit trust which
2. Who is involved in providing it for me?
was established by a Trust Deed dated 16 September 1987 and
The Manager of the Funds is BNZ Investment Management
invests in selected New Zealand fixed interest investments;
Limited whose address is Level 8, BNZ Trust House,
50 Manners Street, Wellington, telephone 0800 808 648, • the BNZ International Bond Trust, a unit trust which was
facsimile 04-382 2596. The day-to-day management of the established by a Trust Deed dated 25 March 1988 and invests
7in an actively managed portfolio of selected international Other things you should consider include the fact that by
fixed interest investments; pooling together the savings of many investors, you benefit
from a greater diversity of underlying investments than would
• the BNZ New Zealand Equities Discovery Trust, a unit trust
be possible as a typical individual investor. It also means you
which was established by a Trust Deed dated 16 September
gain access to some international markets that are not easily
1987 and primarily invests in an actively managed portfolio of
accessible by a typical individual investor.
New Zealand listed companies; and
• the BNZ International Equity Trust, a unit trust which was
established by a Trust Deed dated 16 September 1987 and
3. How much do I pay?
As long as you meet the minimum requirements from time to
invests primarily in an actively managed portfolio of selected
time for a regular contribution or for a lump sum investment,
international shares.
the decision is entirely over to you. At the date of this
BNZ Investment Management Limited is a member of the Investment Statement, the minimum regular and lump sum
National Australia Bank Limited group of companies of contributions are:
which Bank of New Zealand is also a member. Any
investment in the Funds does not constitute a deposit Regular (per Fund) Lump Sum
with, or other liability of, Bank of New Zealand.
Weekly $50 Initial* $5,000
Investments in the Funds are subject to varying degrees of
Fortnightly $100 Additional (per Fund) $500
investment risk including possible loss of income or
principal invested. The performance of or returns from the Monthly $200
Funds, or the repayment of capital, is not guaranteed (in Quarterly $600
full or in part) by the Manager, Bank of New Zealand,
Annually $2,400
National Australia Bank Limited, the Trustee or any other
parties. Please note that BNZ Investment Management * If you invest in two or more Funds the minimum initial lump
Limited is not a registered bank. sum investment in any one Fund is $2,500.
What is the independent Trustee’s role? The Manager may decline applications for units, including
The Trustee’s role is to monitor whether the Manager has where the application does not meet these required
managed the Funds in accordance with the provisions of the minimums. As small holdings of units can be uneconomic to
Trust Deeds and the offer of units in the relevant Fund. administer, if your investment in any Fund is below the current
minimum balance level of $1,000 per Fund, the Manager may
In relation to the BNZ Mortgage Distribution Fund, the Trustee
purchase your remaining units in that Fund in accordance with
is expressly required to exercise reasonable diligence to the relevant Trust Deed. This will not apply while you are
ascertain whether or not the Manager has breached the contributing regularly to the Funds or if your regular
terms of the Trust Deed or the offer of units. contributions are temporarily suspended (for up to six months).
The Trustee does not guarantee the performance or returns of When investing into the Funds you pay the “unit price” for
the Funds, or the repayment of capital. each unit you purchase.
Should I consider investing in more than one a) Unit trusts
BNZ Managed Fund? The unit price is calculated on each business day by
The choice of Funds allows you to construct a portfolio totalling the market value of each unit trust’s assets and
that matches your risk/return profile by selecting individual deducting liabilities (including incurred or accrued fees,
Funds, or a combination of Funds. Your financial adviser expenses and tax). The resulting value is divided by the
will guide you in the selection of Funds that match your number of units on issue in the particular Fund to give
risk/return profile. that day’s unit price.
Why should I entrust my investment savings to b) BNZ Mortgage Distribution Fund
BNZ Investment Management Limited? The unit price for the BNZ Mortgage Distribution Fund is
At the date of this Investment Statement, the Manager’s fixed at $1.00.
investment team has a combined total of approximately
Regular contributions can be made by direct debit to BNZ
134 years investment experience.
Investment Management Limited as Manager of the Funds.
The Manager has been managing investments on behalf of Lump sum contributions can be made by cheque made
clients since 1981 and now has approximately NZ$2.5 billion payable to “BNZ Investment Management Limited” and
of funds under management, making it one of the largest marked “not transferable” with reference to “or bearer”
investment managers in New Zealand. It is also crossed out, and sent to the Manager at the address listed
complemented by some of the world’s leading international for its principal place of business in the directory of this
investment managers. Investment Statement.
84. What are the charges? What is the Management Expense Ratio?
The charges vary between Funds. At the date of this The Management Expense Ratio (“MER”) measures the total
Investment Statement the fees payable in respect of each amount that has been charged to each Fund to meet
Fund are detailed below. expenses and is calculated at the end of each Fund’s
financial year.
Any fees paid to investment managers for any of the Funds
are paid by the Manager out of its management fee for the Expenses that can be deducted from the Funds include legal,
relevant Fund. For the BNZ International Bond Trust, fees accounting, professional, auditing, transaction, custodial,
payable to any specialist manager are payable by MLC. communication, registry and other expenses associated with
Fees payable to any custodian of a Fund will be payable out the Funds, for services provided by the Manager or any third
of the assets of that Fund. party provider.
Fees payable to any custodian of a collective investment For the BNZ Mortgage Distribution Fund these expenses may
vehicle in which the assets of a Fund are invested will be include commissions paid to mortgage brokers and
payable out of those assets. contributions toward the legal expenses of borrowers from
this Fund as well as issue and promotion expenses.
Bank of New Zealand receives commission for arranging
investments in the Funds. This commission is payable out of The MER adds together the annual management fee and
the Manager’s annual management fee. expenses that are deducted from the Fund and subtracts the
tax deductibility of these fees and expenses.
In the event that a Fund is terminated, the Trustee is
entitled to be paid a fee of 0.5% (or another agreed The MER is expressed as a percentage of each Fund’s
amount) of the gross asset value of the Fund at the date average monthly fund size and represents the actual historic
of termination. costs to investors.
The Trust Deeds governing the Funds allow the Manager Details of current and historic MERs for each Fund may be
and/or Trustee to vary the current fees or impose fees from obtained by contacting the Manager or by referring to Bank of
time to time. New Zealand’s website www.bnz.co.nz.
Fund name Management fee1 Entry fee (deducted from Early withdrawal fee
the amount of each
contribution made)
BNZ Mortgage Distribution Fund 1.25% p.a. 0% 1% or $2002
BNZ Mortgage Investment Fund 1.25% p.a. 0% 1% or $2002
BNZ Balanced Fund 1.75% p.a. 0% 1% or $2002
BNZ Active Growth Fund 1.75% p.a. 0% 1% or $2002
BNZ New Zealand Cash Management Trust 0.75% p.a. 0% 0%
BNZ New Zealand Strategic Bond Trust 1.25% p.a. 3% 0%
BNZ International Bond Trust 1.25% p.a. 3% 0%
BNZ New Zealand Equities Discovery Trust 1.50% p.a. 5% 0%
BNZ International Equity Trust 1.50% p.a. 5% 0%
A switching fee will apply where the switch is into a Fund with a higher entry fee, in which case the fee will be the difference between the entry fees.
Out of the assets of each Fund the Trustee is paid a trustee fee of 0.065% p.a. of the Fund’s average daily Gross Asset Value. In addition to the trustee fee,
goods and services tax (“GST”) is payable on 75% of the amount of the trustee fee.
1 The management fee is calculated as a percentage of the Fund’s average daily Gross Asset Value and is paid out of the assets of each Fund. In addition to the
management fee, GST is payable on 10% of the amount of the management fee.
2 If you make a withdrawal from this Fund within two years of commencing your investment in the Fund (including an early withdrawal following a switch into the
Fund), an early withdrawal fee of 1% of the amount withdrawn or $200 (whichever is the lower) will be deducted from the proceeds of the withdrawal (unless
you became an investor in any of the Funds through a financial intermediary, or before 1 March 2001, and your unitholder account opened at that time remains
open (whether or not you have subsequently withdrawn your units), in which case you will not be charged an early withdrawal fee). At the date of this
Investment Statement, the early withdrawal fee does not apply to withdrawals from this Fund by way of a switch into another Fund or Funds, other than a switch
into the BNZ New Zealand Cash Management Trust.
95. What returns will I get? against the risk of borrowers defaulting. The BNZ Mortgage
Returns will vary between Funds because of the different Distribution Fund pays tax on any increase in the Loan Loss
investment sectors the Funds are exposed to. Negative Reserve (net of any allowable borrower default deductions).
returns (i.e. the loss of capital value) may occur during some This may affect the returns of the BNZ Mortgage Distribution
periods. Factors that may affect the performance of a Fund Fund and those funds that invest into the BNZ Mortgage
and that determine returns (if any) include foreign currency Distribution Fund, namely the BNZ New Zealand Cash
exchange rate changes, national or international economic Management Trust and the BNZ Mortgage Investment Fund.
developments, interest rate movements, the performance of
the relevant investment sector, the performance of individual What income distributions are made?
investments within a Fund’s portfolio and investment Except for the BNZ Mortgage Distribution Fund, no Fund
management performance. currently makes income distributions. The Manager is entitled
to change the policy and frequency of distributions at any time.
BNZ Investment Management Limited, as Manager of the
Funds, is the party legally liable to pay returns out of the
How is my investment taxed?
assets of the Funds. No amount of returns is promised or
The following description is based on the law as it is enacted
guaranteed (in full or in part) by BNZ Investment Management
and interpreted as at the date of this Investment Statement.
Limited, any of its related companies (including National
Australia Bank Limited and Bank of New Zealand), the Trustee
a) Unit trusts
or any other parties.
Currently all those Funds that are unit trusts are taxed at
a) Unit trusts 33 cents in the dollar on taxable income and capital gains,
Returns, if any, will be the increase in the value of your which will affect returns. Tax is paid out of the assets of each
investment. On each business day, the market value of each unit trust so that the unit trust’s returns are net of tax.
Fund’s assets are totalled. From this, liabilities (including When withdrawing or switching from a unit trust you will
incurred or accrued fees, expenses and tax) are deducted. The be asked which method of withdrawal (Manager
resulting value is divided by the number of units on issue in Repurchase or Direct Redemption) you wish to have applied
the particular Fund to give a unit price. This value includes to the transaction. The method you select may affect the
any returns earned by each Fund and is the price at which you taxation treatment of any gains or losses you have made
cash in your investment. As you can withdraw from any of the on your investment.
Funds whenever you choose to, the dates or frequency with
which returns will be due and paid is unknown. How do I decide between the two switching and withdrawal
options?
b) BNZ Mortgage Distribution Fund The two options determine the tax treatment of gains on
Returns, if any, will be in the form of income earned on your your investment – the option you select will depend upon
investment. Income is accrued daily and is allocated to your own individual circumstances. While the summary
investors when there is a quarterly distribution or when the which follows is intended as a guide, it is important to
investor chooses to make a full withdrawal, transfer or switch seek professional tax advice on what is most appropriate
from their investment. Income is not allocated to investors on for your individual circumstances before deciding
a partial withdrawal, partial transfer or partial switch. Units between the two options – namely Manager Repurchase
will start to accrue income on the first day of investment but and Direct Redemption. Where you request the Manager
not on the day they are withdrawn from the Fund. Income will Repurchase option, the Manager has the right to refuse to
be determined for each distribution period and every investor purchase your units and instead process your withdrawal
can elect to have a distribution either reinvested by allocating using the Direct Redemption option.
additional units or direct credited to a nominated bank account
as specified on the Application Form or by giving written notice
i) Manager Repurchase option
to the Manager at least 30 days prior to the end of the current Under this option the Manager will buy your units when you
distribution period. If you do not specify your preference you withdraw from a unit trust. Provided you are not treated as a
will receive your income by allocation of additional units. “share trader” (either as an individual or as a business
Additional units are issued and subject to the same rights as depending on how you are investing), and did not buy the units
other units. An investor’s income entitlement for each unit held as part of a business and did not acquire the units for the
is determined by multiplying the number of days the unit is dominant purpose of resale, you should not be liable for tax
held during the distribution period by the return calculated for on any capital gains on your units being withdrawn.
each of those days. In normal circumstances any capital gains on your units being
Distributions (if any) will be made at the end of February, May, withdrawn will not be treated as income with this option and
August and November. Distributions may vary from one period will not be declarable on your tax return. You will not receive a
to another and are not guaranteed. Dividend Statement under this option.
The Manager maintains a Loan Loss Reserve Account in ii) Direct Redemption option
respect of the BNZ Mortgage Distribution Fund, which is built Under this option your units are redeemed or sold direct to
up from income. This reserve is used to act as a buffer the relevant unit trust. Increases in the value of the units
10redeemed are generally treated as a taxable dividend and, If in any three-month period an investor requests the Manager
where available, imputation credits for the tax paid on the to repurchase or redeem more than 2% of the total units of a
dividend may be attached. Fund, and the Trustee and Manager agree it is in the best
interests of all investors to defer the redemption or
Any excess imputation credits attached to the income portion
repurchase of all the units, the Manager may elect to
of the redemption can be used to offset any tax payable on
repurchase or redeem the units in instalments over a period
other income.
approved by the Trustee, or in total at the end of that period.
If you select this option you are required to disclose the
dividend on your investment in your tax return. If you are on a
personal tax rate of 39% you may have additional tax to pay 6. What are my risks?
as a result of using this option. If the dividend cannot be fully Risk relative to return
imputed you may have further tax to pay or withholding tax All types of investment involve some degree of risk. Generally,
may be deducted from part of the dividend. the degree of risk is related to the potential return from the
investment. A low risk investment typically provides predictable
For either option mentioned above, you can specify the
and stable returns. A high risk investment has the potential to
method of your choice at the time of switching or
fluctuate significantly in value – this includes the possibility of a
withdrawal, either verbally using the Telephone Transaction
negative return (i.e. a loss of capital value). However, over the
Service, or by specifying the appropriate option on the
longer-term, higher risk investments are expected to deliver
Change Request Form (please refer to question 7 on
greater returns than lower risk investments.
page 12). Where no selection is made, the default option will
be Manager Repurchase. The Funds are positioned to offer varying levels of risk and
potential return, from the low risk BNZ New Zealand Cash
b) BNZ Mortgage Distribution Fund Management Trust, BNZ Mortgage Distribution Fund and
Income investors receive from the BNZ Mortgage Distribution BNZ Mortgage Investment Fund through to our higher risk
Fund is generally subject to Resident Withholding Tax (“RWT”) but potentially higher earning New Zealand and international
or Non-Resident Withholding Tax (“NRWT”), which will affect share Funds (BNZ New Zealand Equities Discovery Trust and
your returns. RWT is deducted at the investor’s nominated tax BNZ International Equity Trust).
rate – 19.5%, 33% or 39% for New Zealand residents liable
Understanding the level of risk that your investment carries
for RWT. New Zealand residents can elect their correct rate
(as well as the level of risk that you are willing to accept) is
on the Application Form. If no IRD number is supplied, RWT
will be deducted at 39%. If an IRD number is supplied, but no one of the most important steps to successful investing.
rate specified, RWT will be deducted at 19.5%. If an investor In choosing an appropriate investment it is important to
holds a Tax Exemption Certificate and provides the Manager align your own risk profile with that of the investment or mix
with a copy, RWT will not be deducted. NRWT is deducted at of investments you are choosing. In this regard, you need to
either 10% or 15% for non-residents liable for NRWT consider the following questions:
(depending on the country of residence). • Over short periods of time, what degree of volatility (this is
Full details of income received and withholding tax paid will the fluctuation in investment returns that may cause
be provided in your annual Tax Certificate. decreases as well as increases in the value of your
investment) can you accept?
Historic returns • What level of return are you seeking from your investment?
Details of the historic returns for each Fund may be obtained
• How long until you are likely to require your investment?
by contacting the Manager or by referring to Bank of
New Zealand’s website www.bnz.co.nz. • Are you likely to want to cash in your investment before then?
Please remember that historic performance is not a The principal risk of you receiving less than you invested and
guarantee of future performance or returns. not receiving the returns referred to in question 5 on page 10
is adverse market performance. In no circumstance will you
Suspension of repurchase or redemption of units be required to pay more money for each unit you purchase
The Manager may suspend the repurchase or redemption of than that disclosed under question 3 on page 8.
units for a period not exceeding 30 days if it determines that
such repurchase or redemption: If over the period you are invested in a Fund there is adverse
market performance, it is reasonably foreseeable that you
• is not practicable; or
may receive less than you invested when you withdraw your
• would or may be materially prejudicial to the general investment. The risk of this is increased if you invest for a
interests of investors; or short period of time and/or have paid an entry fee.
• is not desirable for the protection of the Fund.
Market risk
The Manager must notify the Trustee of its intention to Each Fund invests predominantly in either a single
suspend any repurchase date prior to any such suspension investment sector or, in the case of the BNZ Balanced Fund
being imposed. and BNZ Active Growth Fund, a number of different
11investment sectors. The type of investment sector, or split of If a Fund is put into liquidation or the Manager or the Trustee
investment sectors in the case of multi-sector funds, resolves to wind up a Fund, the costs and expenses of
determines the risk profile of each Fund. liquidating or winding up will be paid from the relevant Fund
before any money is distributed to investors. These costs and
Those investment sectors that have the potential for higher
expenses and other Fund liabilities, including any
returns, and therefore carry a higher risk, are New Zealand
remuneration payable to the Trustee or Manager, rank ahead
and international shares. Investment sectors that carry a
of claims of investors if a Fund is put into liquidation or
medium degree of risk are New Zealand and international
wound up. After the costs and expenses and other Fund
fixed interest investments. The lowest risk investment
liabilities have been paid, any money remaining in the relevant
sectors are typically cash and mortgages. The performance
Fund will be distributed to investors in proportion to their
and fluctuation in returns of each Fund are linked to the
respective holdings in the Fund. All investors’ claims on the
investment sectors in which it invests and the performance
assets of a Fund in which they hold units rank equally with
of the investment manager. As with any investment which is
each other.
linked to market performance, the value of each Fund can
fluctuate according to movements in the underlying
investments. This means that over some periods the value of 7. Can the investment be altered?
a Fund could actually go down resulting in a negative return a) By you?
(i.e. loss of capital value). You may do the following (subject to minimum contribution,
Investment markets do experience volatility and are affected withdrawal and balance requirements – please refer to
by many factors including currency fluctuations, economic question 8 on page 13):
events and changes in government policy, both here and • alter the amount of your regular contributions;
overseas. It is possible that investment markets may
• change the frequency of your regular contributions;
experience negative returns that continue over a number of
years, and may impact the performance of the Funds. • make one-off lump sum contributions;
• stop and start regular contributions at any time;
Currency risk
Movements in currency exchange rates may affect those • switch your investment between Funds; and
Funds with an exposure to international investment sectors.
• withdraw all or part of your investment.
The currency exposure policies for each of these Funds at the
date of this Investment Statement are detailed below: Investors in the BNZ Mortgage Distribution Fund may also
alter their RWT rate and distribution preference by contacting
• The BNZ International Equity Trust is unhedged against
the Manager at least 30 days prior to the end of the current
currency movements.
distribution period.
• The majority of the BNZ International Bond Trust’s currency
For details on entry fees for each contribution made and any
exposure is hedged. However, an active currency exposure
early withdrawal fees or switching fees which may apply
may be taken by the Specialist Managers on up to 22.5% of
please refer to question 4 on page 9. Please note that a
the Fund’s assets.
switch is processed as a withdrawal of units from one Fund
• For the BNZ Balanced Fund and the BNZ Active Growth Fund, and a new application for units in another.
currency exposure in relation to international shares and
Our Telephone Transaction Service (see below) allows you to
international fixed interest investments is the same as that
alter your investment as described above (apart from making
for the BNZ International Equity Trust and BNZ International
lump sum contributions) simply by calling toll free on
Bond Trust respectively.
0800 808 648.
Insufficient imputation credits It is important to note that where any additional lump sum,
If a Fund (other than the BNZ Mortgage Distribution Fund) does withdrawal or switch request is accepted before 4.00 p.m. on
not have sufficient imputation credits to fully impute any any business day, it is the valuation which takes effect as at
dividend arising at the time you make a withdrawal by the Direct 4.00 p.m. that day that is used to determine the price at
Redemption method, or if the Fund is wound up, you may have which requests will be actioned. Any request received after
withholding tax deducted from the proceeds of your withdrawal 4.00 p.m. on any business day will be valued at 4.00 p.m. on
or distribution entitlement upon winding up to the extent that the next business day.
there are not sufficient imputation credits available.
b) By the Manager?
Borrowing, insolvency and winding up of the Funds The Manager may also alter the terms of the investment by
Although the Trustee has the power under the Trust Deeds altering minimum investment, balance and withdrawal
to borrow, it is not the current intention to do so. In the amounts, and increasing or imposing fees in accordance with
unlikely event that a Fund becomes insolvent you will not the Trust Deeds. In certain circumstances the Manager and
be required to pay money to any person or the Fund as a the Trustee may alter the Trust Deeds. The circumstances are
result of the insolvency. explained more fully in the current registered Prospectus for
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