Kiwibank Investment Portfolio - Investment Statement for the purposes of the Securities Act 1978

 
Kiwibank
Investment
Portfolio
Investment Statement
for the purposes of
the Securities Act 1978

Prepared as at 18 September 2015
AMP Investment Management (N.Z.) Limited is the Issuer and Manager of the Funds offered in this Investment Statement,
  which Kiwibank Investment Management Limited has selected to form part of the Kiwibank Investment Portfolio. AMP Capital
  Investors (New Zealand) Limited is a promoter of the Funds. Kiwibank Investment Management Limited is a distributor of the
  Funds, but not a promoter of the Funds. Kiwibank Investment Management Limited has not prepared this Investment Statement
  and is not responsible for its contents. Investments made in the Funds do not represent deposits or other liabilities of Kiwibank,
  Kiwibank Investment Management Limited, KB Custodial Limited, New Zealand Post Limited or any other member of the
  New Zealand Post Group. They are subject to investment and other risks, including possible delays in payment of withdrawal
  amounts in some circumstances, and loss of investment value. No person, including AMP Investment Management (N.Z.) Limited,
  AMP Limited, Kiwibank, Kiwibank Investment Management Limited, KB Custodial Limited, New Zealand Post Limited or any
  other member of the New Zealand Post Group, the Manager, any member of the AMP Group, the Trustee or the Crown, guarantees
  the performance of the Funds or the return of capital invested by you.
  In this Investment Statement, “you” or “your” refers to the investor or Unit Holder and “we”, “us”, “our” or “Kiwibank
  Investment Management” refers to Kiwibank Investment Management Limited, the distributor of the funds.

Important information                                                Choosing an investment
The information in this section is required under the Securities     When deciding whether to invest, consider carefully the answers
Act 1978.                                                            to the following questions that can be found on the pages
                                                                     noted below:
Investment decisions are very important. They often have long-
term consequences. Read all documents carefully. Ask questions.      Page
Seek advice before committing yourself.                              What sort of investment is this?                                   12
                                                                     Who is involved in providing it for me?                            13
                                                                     How much do I pay?                                                 15
                                                                     What are the charges?                                              15
                                                                     What returns will I get?                                           17
                                                                     What are my risks?                                                 21
                                                                     Can the investment be altered?                                     22
                                                                     How do I cash in my investment?                                    23
                                                                     Who do I contact with inquiries about my investment?               24
                                                                     Is there anyone to whom I can complain if I have
                                                                     problems with the investment?                                      24
                                                                     What other information can I obtain about this investment?         25
                                                                     In addition to the information in this document, important
                                                                     information can be found in the current registered prospectus
                                                                     for the investment. You are entitled to a copy of that prospectus
                                                                     on request.

                                                                                                                                          1
The Financial Markets Authority                                        transition of the Funds to the new FMCA disclosure regime, this
                                                                       Investment Statement will be replaced by a Product Disclosure
regulates conduct in financial                                         Statement with other relevant information about the Funds being
markets                                                                available to investors on the register entry that will be maintained
                                                                       in respect of them. In addition, the Trust Deed will be replaced
The Financial Markets Authority regulates conduct in                   with a new trust deed for the Funds that will comply with the
New Zealand’s financial markets. The Financial Markets                 requirements of the FMCA. Investment in the Funds will continue
Authority’s main objective is to promote and facilitate the            to be available as part of the Kiwibank Investment Portfolio after
development of fair, efficient, and transparent financial markets.     this transition process is completed.
For more information about investing, go to http://www.fma.govt.nz.

                                                                       About the Kiwibank Investment
Financial advisers can help you                                        Portfolio
make investment decisions                                              We are pleased to distribute the Kiwibank Investment Portfolio.
Using a financial adviser cannot prevent you from losing money,        You can choose from the Kiwibank Investment Portfolio
but it should be able to help you make better investment decisions.    investment option (or options) to suit your investment profile,
                                                                       taking into account the level of risk you are prepared to accept and
Financial advisers are regulated by the Financial Markets
                                                                       the anticipated return you would like.
Authority to varying levels, depending on the type of adviser and
the nature of the services they provide. Some financial advisers are   We have selected three Funds from the AMP Capital Investment
only allowed to provide advice on a limited range of products.         Funds range to be a part of the Kiwibank Investment Portfolio:
When seeking or receiving financial advice, you should check:          Investment option         About the option
„„ the type of adviser you are dealing with:                            Responsible              Aims to provide you with above-cash returns over
                                                                        Investment Leaders       time with capital preservation while investing in
„„ the services the adviser can provide you with:                                                line with responsible investment parameters. To
                                                                        Conservative Fund        do this, it uses appropriate diversification across
„„ the products the adviser can advise you on.                                                   asset types, with a distinct bias to income assets
                                                                                                 (e.g., bonds).
A financial adviser who provides you with personalised financial
adviser services may be required to give you a disclosure statement     Responsible              Aims to provide you with high real returns over
                                                                        Investment Leaders       time but has correspondingly high risk while
covering these and other matters. You should ask your adviser
                                                                                                 investing in line with responsible investment
about how he or she is paid and any conflicts of interest he or she     Growth Fund              parameters. It uses diversification across asset
may have.                                                                                        types, with a distinct bias to growth assets (e.g.,
                                                                                                 shares).
Financial advisers must have a complaints process in place and
                                                                        Responsible Investment   Aims to provide you with modest real returns over
they, or the financial services provider they work for, must belong                              time with medium risk while investing in line with
                                                                        Leaders Balanced Fund
to a dispute resolution scheme if they provide services to retail                                responsible investment parameters. To do this, it
clients. So if there is a dispute over an investment, you can ask                                uses diversification across asset types, with a mix
someone independent to resolve it.                                                               of income assets (e.g., bonds) and growth assets
                                                                                                 (e.g., shares).
Most financial advisers, or the financial services provider they
work for, must also be registered on the financial service providers   The Manager has updated its model for calculating the benchmark
register. You can search for information about registered financial    returns for the AMP Capital Investment Funds (including, in
service providers at http://www.fspr.govt.nz.                          respect of the AMP Capital Responsible Investment Leaders
                                                                       Conservative Fund and the AMP Capital Responsible Investment
You can also complain to the Financial Markets Authority if you
                                                                       Leaders Growth Fund, by making these calculations using daily,
have concerns about the behaviour of a financial adviser.
                                                                       rather than weekly, pricing data). This updated model has been
                                                                       applied retrospectively to the calculation of benchmark returns
                                                                       for past periods. Accordingly, the benchmark returns for the
Important notice                                                       Funds disclosed in this Investment Statement may differ slightly
                                                                       from those disclosed in previous Investment Statements (with the
This is an Investment Statement prepared in accordance with the        result that the extent to which the actual gross returns are lower or
Securities Act 1978 and the Securities Regulations 2009, relating to   higher than the corresponding benchmark returns may differ from
an offer of units in certain AMP Capital Investment Funds by AMP       that previously disclosed).
Investment Management (N.Z.) Limited. It is prepared as at, and is
dated, 18 September 2015.                                              When you invest in these Funds through us, your Units in the
                                                                       Funds will be held by KB Custodial as a custodian on your behalf.
We have been advised by AMP Investment Management (N.Z.)               KB Custodial is one of our wholly owned subsidiaries and holds
Limited that it intends transitioning the Funds to the new financial   Units purchased through us on behalf of investors. Although you
markets conduct regime introduced under the Financial Markets          will be the beneficial owner of the Units, as the registered holder,
Conduct Act 2013 (FMCA) in the near future. As part of the

2
only KB Custodial will be able to exercise any rights, benefits and     Kiwibank’s registration
entitlements in relation to the Units. KB Custodial’s Terms and         On 29 November 2001, Kiwibank was registered as a bank under
Conditions, which set out the basis on which it holds your Units        the Reserve Bank of New Zealand Act 1989. Kiwibank is required
and exercises those rights, benefits and entitlements, are set out in   to comply with the conditions of registration as laid down by the
the application form.                                                   Reserve Bank of New Zealand.
In addition to the services detailed in this Investment Statement,      The conditions of registration include, but are not limited to:
Kiwibank provides services to investors, such as internet banking       governance (including board composition); minimum capital
services. Accordingly, you should also refer to, and if you invest      levels; risk measurement processes; and quantitative liquidity
in the Funds, you are bound by, Kiwibank’s General Terms and            risk management requirements. Kiwibank’s full conditions
Conditions. These terms govern your use of these Kiwibank services.     of registration can be found in Kiwibank’s latest Disclosure
Kiwibank’s General Terms and Conditions are available on                Statement and Annual Report at www.kiwibank.co.nz/about-us/
Kiwibank’s website at www.kiwibank.co.nz or at your local               legal-docs.asp.
Kiwibank. KB Custodial’s Terms and Conditions (which govern the
basis on which KB Custodial holds Units on your behalf) are set         Kiwibank’s principal activities
out in the application form attached to this Investment Statement.      Kiwibank offers a range of personal and business transactional
You are required to obtain a copy of this Investment Statement          banking, savings accounts, term deposits, home loans, credit cards
prior to investing in the Funds. You should ensure that you             and revolving credit products. Kiwibank intends to continually add
take the time to read this Investment Statement (including the          to its product suite.
application form and KB Custodial’s Terms and Conditions),
Kiwibank’s General Terms and Conditions, and any other relevant
documentation before making your investment decisions.                  About AMP Investment
                                                                        Management (N.Z.) Limited
About Kiwibank Investment                                               AMP Investment Management (N.Z.) Limited is the Issuer
                                                                        and Manager of the Funds and as such is responsible for the
Management                                                              management and administration of the Funds in accordance with
We are a distributor of the Funds and are not a ‘promoter’ of the       the terms of the Trust Deed.
Funds for securities law purposes.
This Investment Statement has been prepared by the Manager,
rather than us, and we are not responsible for its contents. We are     About AMP Capital Investors
a wholly-owned subsidiary of Kiwibank.                                  (New Zealand) Limited
                                                                        AMP Capital is the investment manager and a Promoter of the Funds.

About Kiwibank Limited                                                  AMP Capital is a leading specialist investment manager managing
                                                                        around $19 billion* for New Zealand investors.
Kiwibank’s background                                                   As a majority owned subsidiary of AMP Limited, AMP Capital
Kiwibank is a wholly-owned subsidiary of New Zealand Post               operates independently with a pure investment focus, but benefits
Limited, a state-owned enterprise under the State-Owned                 from the resources of its parent. With over 200 in-house investment
Enterprises Act 1986. New Zealand Post Limited is the main              professionals throughout Australasia and a carefully selected
postal services provider in New Zealand. Kiwibank opened for            global network of investment partners, the AMP Group offers
business early in 2002, with the vision of making a difference to       significant depth and breadth of investment expertise.
the New Zealand banking industry. Kiwibank sought to prove              Increasingly, delivering superior returns to clients involves looking
that there was room for a New Zealand-owned bank to profitably          beyond traditional techniques to a new generation of investment
provide better service, better products, lower fees and better          portfolios. These require the blending of any number of inputs
interest rates to New Zealanders.                                       such as securities, asset classes, countries, styles and even
Kiwibank’s strategy drew from the country’s past, where                 managers to obtain the optimal risk and return outcome. To do
historically there had been a bank operating through the Post           this well requires real depth of in-house investment expertise, a
Office network, and it looked to the future by embracing new            business philosophy open to partnering, and specialist capabilities
technology and a new way of dealing with customers. Kiwibank’s          designed to integrate and maximise the two. At AMP Capital,
strategy is to capture and retain customers through offering high       there are specialist investment teams across a diverse range of
levels of customer service, competitive pricing and continuous          disciplines. Each team focuses on searching out and creating the
innovation in financial products.                                       best investment outcomes for clients.
As at the date of this Investment Statement, Kiwibank employs
about 1,200 staff across the country.
                                                                        * As at 31 August 2015

                                                                                                                                            3
AMP Capital also collaborates with like-minded investment
specialists around the world, leveraging our joint expertise to
create new investment opportunities.
This investment approach capitalises on the strength and breadth
of AMP Capital’s investment expertise and is characterised by
three distinctive capabilities:
„„ Multiple perspectives: research drives every investment
   decision. Specialist investment teams interact, sharing
   knowledge and insights to gain multiple perspectives.
   This diversity of thought allows AMP Capital to see things
   differently, often producing unique insights that create new
   ways to add value to clients’ portfolios.
„„ Access to rare investment opportunities: scale, brand and
   relationships give AMP Capital a competitive edge in deal
   sourcing and origination. This access to rare assets opens up
   new and different investment opportunities for clients.
„„ Progressive portfolio construction: the new generation of
   investment portfolios demand increasingly complex portfolio
   construction decisions. With this in mind, AMP Capital
   has developed proprietary skills and processes that allow
   it to select and blend a wide range of investment inputs,
   from individual securities to the right investment partner.
   AMP Capital uses these skills to meet the diverse risk return
   objectives of AMP Capital’s clients.
Underpinning these capabilities are AMP Capital’s people. AMP
Capital seeks to attract the best people, invest in their ongoing
professional development, and ensure that their interests are
clearly aligned with those of AMP Capital’s clients.
The combination of scale, breadth and capability provides access
to superior investment opportunities.
Reliably, consistently, repeatedly.

4
Kiwibank Investment
Portfolio
Responsible Investment Leaders                                            Currency management
Conservative Fund                                                         AMP Capital targets a position of the Fund’s exposure to foreign
                                                                          currency (excluding Australian dollar) shares being 50% hedged
                                                                          to the New Zealand dollar (on a net after tax basis, based on the
Investment strategy                                                       current maximum PIR). For Australian dollar shares, AMP Capital
The Responsible Investment Leaders Conservative Fund aims                 targets a position of the Fund’s exposure being 50% gross hedged
to provide you with above-cash returns over time with capital             to the New Zealand dollar. For all other asset classes, AMP Capital
preservation whilst investing in line with responsible investment         targets 100% currency hedging of foreign currency exposure to the
parameters (see the “Approach to responsible investing” section           New Zealand dollar. AMP Capital has the discretion to alter these
on page 12 for more detail). To do this, it uses diversification across   target positions should this be deemed appropriate.
asset types, with a distinct bias to income assets (e.g., bonds).
                                                                          Use of derivatives
Key features                                                              The Fund may use derivatives to manage risk and facilitate
„„ A diverse range of predominantly income assets including               rebalancing and asset allocation.
   fixed interest securities and cash, plus some growth assets
   including shares, property and commodities, across                     Performance objective
   New Zealand and global markets.                                        To outperform, over the medium term, the weighted average
„„ One of the most experienced investment management teams                return of the market indices used to measure performance of the
   for New Zealand investments.                                           underlying funds/assets in which the fund invests.
„„ Active management of asset allocations to suit changing                Annual Returns to 31 March
   investment environments and conditions.                                The return received by you if you invest in this Fund will be less
„„ This Fund will invest primarily in other funds, including funds        than the Gross Return outlined above once Management Fees,
   managed by the Manager or associates of the Manager, but               performance fees (if any), expenses and taxes are deducted.
   may invest in directly held assets. See pages 92 to 94 of the
   Prospectus for a table showing the funds managed by the                                                                                8.90%
   Manager or an associated person of the Manager in which more           2015
                                                                                                                                          9.01%
   than 10% of the value of the Fund has been invested.

Investment guidelines                                                     2014
                                                                                                       3.65%

The benchmark asset mix noted below is the expected average                                                 4.49%
asset mix of the Responsible Investment Leaders Conservative
Fund over the long-term. In the short-term and medium-term, AMP                                                                       8.21%
Capital will actively manage the Fund within the given ranges:            2013
                                                                                                                                         8.83%
                                              Benchmark          Range
                                                    (%)            (%)
                                                                                                                         6.10%
 New Zealand Cash                                    25                   2012
 New Zealand Fixed Interest                          25                                                                  6.13%

 Global Fixed Interest                               25
 Total Cash and Fixed Interest                       75          55-95                                                 6.08%
 Australasian Shares                                  5                   2011
                                                                                                                             6.85%
 Global Shares                                       10
 Commodities                                          3                       0%     1%    2%    3%    4%      5%   6%     7%    8%     9%    10%
 Property1                                            7                                      Gross Return           Benchmark
 Total Growth Assets                                 25           5-45
 Total                                              100                   The performance information set out above shows the performance
                                                                          of the Fund before it commenced investing in accordance with
1 Includes both New Zealand and Global Property.
                                                                          responsible investment parameters on 16 April 2015.

                                                                                                                                                  5
Responsible Investment Leaders                                          Use of derivatives
Growth Fund                                                             The Fund may use derivatives to manage risk and facilitate
                                                                        rebalancing and asset allocation.

Investment strategy                                                     Performance objective
The Responsible Investment Leaders Growth Fund aims to provide          To outperform, over the medium term, the weighted average
you with high real returns over time but has correspondingly            return of the market indices used to measure performance of the
high risk whilst investing in line with responsible investment          underlying funds/assets in which the Fund invests.
parameters (see the “Approach to responsible investing” section on
page 12 for more detail). It uses diversification across asset types,   Annual Returns to 31 March
with a distinct bias to growth assets (e.g., shares).
                                                                                                     13.15%
                                                                        2015
Key Features                                                                                               14.57%
„„ A diverse range of predominantly growth assets including
   shares, property and commodities, plus some income                                         10.31%
   assets including fixed interest securities and cash, across          2014
                                                                                                  10.74%
   New Zealand and global markets.
„„ One of the most experienced investment management teams                                                  15.54%
   for New Zealand investments.                                         2013
                                                                                                             16.27%

„„ Active management of asset allocations to suit changing
   investment environments and conditions.                                           2.29%
                                                                        2012
                                                                                   0.81%
„„ This Fund will invest primarily in other funds, including funds
   managed by the Manager or associates of the Manager, but
   may invest in directly held assets. See page 92 to 94 of the                              8.93%
                                                                        2011
   Prospectus for a table showing the funds managed by the                                   9.48%
   Manager or an associated person of the Manager in which
   more than 10% of the value of the Fund has been invested.                   0             10                 20          30               40
                                                                                               Gross Return           Benchmark
Investment guidelines
The benchmark asset mix noted below is the expected average
                                                                        The performance information set out above shows the performance
asset mix of the Responsible Investment Leaders Growth Fund over
                                                                        of the Fund before it commenced investing in accordance with
the long-term. In the short-term and medium-term, AMP Capital
                                                                        responsible investment parameters.
will actively manage the Fund within the given ranges:
                                                                        The return received by you if you invest in this Fund will be less
                                      Benchmark [%]   Range [%]         than the Gross Return outlined above once Management Fees,
 New Zealand Cash                     5                                 performance fees (if any), expenses and taxes are deducted.
 New Zealand Fixed Interest           2.5
 Global Fixed Interest                2.5
 Total Cash and Fixed Interest
 Australasian Shares
                                      10
                                      22.5
                                                      0-30
                                                                        Responsible Investment Leaders
 Global Shares                        52.5                              Balanced Fund
 Commodities                          5
 Property5                            10                                Investment strategy
 Total Growth Assets                  90              70-100            The Responsible Investment Leaders Balanced Fund aims to
 Total                                100                               provide you with modest real returns over time with medium risk
5 Includes both New Zealand and Global Property.                        whilst investing in line with responsible investment parameters
                                                                        (see the “Approach to responsible investing” section on page 12 for
Currency management                                                     more detail). To do this it uses diversification across asset types,
AMP Capital targets a position of the Fund’s exposure to foreign        with a mix of income assets (e.g., bonds) and growth assets
currency (excluding Australian dollar) shares being 50% hedged          (e.g., shares).
to the New Zealand dollar (on a net after tax basis, based on the
current maximum PIR). For Australian dollar shares, AMP Capital         Key features
targets a position of the Fund’s exposure being 50% gross hedged        „„ A diverse range of growth and income assets including shares,
to the New Zealand dollar. For all other asset classes, AMP Capital        property, commodities, fixed interest securities and cash,
targets 100% currency hedging of foreign currency exposure to the          across New Zealand and global markets.
New Zealand dollar. AMP Capital has the discretion to alter these
target positions should this be deemed appropriate.

6
„„ One of the most experienced investment management teams            Annual Returns to 31 March
   for New Zealand investments.
„„ Active management of asset allocations to suit changing
                                                                                                                           13.06%
   investment environments and conditions.                            2015
                                                                                                                           13.34%
„„ This Fund will invest primarily in other funds, including funds
   managed by the Manager or associates of the Manager, but
                                                                                                          8.78%
   may invest in directly held assets. See pages 92 to 94 of the      2014
   Prospectus for a table showing the funds managed by the                                                        10.95%
   Manager or an associated person of the Manager in which more
   than 10% of the value of the Fund has been invested                                                                     12.92%
                                                                      2013
„„ A robust investment process that combines a sustainability                                                                       14.96%
   focus with stringent financial analysis.
                                                                                                5.87%
Investment guidelines                                                 2012
                                                                                               4.88%
The benchmark asset mix noted below is the expected average
asset mix of the Fund over the long-term. In the short-term and                                         7.82%
medium-term, AMP Capital will actively manage the Fund with           2011
                                                                                                         8.25%
a view to establishing and maintaining the Fund’s asset mix
within the given ranges. There may be times when an asset class
                                                                             0             5               10                  15            20
is not represented (or is not within the specified range) due to
compliance with the responsible investment charter for the Fund.                               Gross Return         Benchmark

                                 Benchmark [%]      Range [%]         The return received by you if you invest in this Fund will be less
 New Zealand Cash                 10                                  than the Gross Return outlined above once Management Fees,
 New Zealand Fixed Interest       15
                                                                      performance fees (if any), expenses and taxes are deducted.
 Global Fixed Interest            15
 Total Cash and Fixed Interest    40                 20-60
 Australasian Shares              15                                  Approach to
 Global Shares
 Commodities
                                  31
                                  4
                                                                      responsible investing
 Property                         10                                  AMP Capital has established a Responsible Investment Committee
 Total Growth Assets              60                 40-80            which is responsible for assessing the investments of the
 Total                            100                                 Responsible Investment Leaders Balanced Fund, the Responsible
                                                                      Investment Leaders Conservative Fund and the Responsible
Currency management                                                   Investment Leaders Growth Fund, from a socially responsible,
                                                                      financial and environmental perspective, and which monitors
AMP Capital targets a position of the Fund’s exposure to foreign
                                                                      adherence to the Responsible Investment Charter that has been
currency (excluding Australian dollar) shares being 50% hedged
                                                                      established for the Funds.
to the New Zealand dollar (on a net after tax basis, based on the
current maximum PIR). For Australian dollar shares, AMP Capital       Where one of the relevant Funds invests in global share funds,
targets a position of the Fund’s exposure being 50% gross hedged      the Responsible Investment Committee will seek out funds or fund
to the New Zealand dollar. For all other asset classes, AMP Capital   managers which are identified leaders across the industries in a
targets 100% currency hedging of foreign currency exposure to the     range of areas including:
New Zealand dollar. AMP Capital has the discretion to alter these     „„ Environmental considerations – including energy and
target positions should this be deemed appropriate.                      resource use and product stewardship (for example, where a
                                                                         company takes into account the life cycle of the product, from
Use of derivatives                                                       manufacture to the extent to which the product can be recycled).
The Fund may use derivatives to manage risk and facilitate
rebalancing and asset allocation.                                     „„ Social considerations – including indigenous relations and
                                                                         community involvement.
Performance objective                                                 „„ Ethical considerations – including meeting fundamental human
To outperform, over the medium term, the weighted average                rights, and articulating and implementing a code of conduct.
return of the market indices used to measure performance of the       „„ Labour standards – including occupational health and
underlying funds/assets in which the fund invests.                       safety, International Labour Organisation standards, working
                                                                         conditions and the exclusion of child labour.
                                                                      „„ Governance considerations – including meeting corporate
                                                                         governance guidelines on board structures and remuneration.

                                                                                                                                              7
Additionally, fund managers and funds will also be well               Each Unit in a Fund is of equal value and confers an equal interest
regarded if they actively participate in corporate engagement and     in that Fund. A Unit gives you a beneficial interest in the Fund’s
governance initiatives.                                               Assets. The benefit is undivided. This means you do not have an
                                                                      interest in any particular part of a Fund or in a particular Asset
Where a Fund invests directly in shares, these share investments
                                                                      of a Fund. The Assets of one Fund cannot be used to cover the
will also be measured against the above considerations. The Fund
                                                                      Liabilities of another Fund.
will (at a minimum) avoid investment in any company which
has a substantial exposure to sectors identified as having a high     The Investment Policy and investment guidelines reflect the
negative social impact. This means the Fund will avoid exposure,      Manager’s current intention in relation to each of the Funds.
either directly or indirectly through underlying managers and         The Manager sets the initial Investment Policy and investment
funds, to companies with material exposure to the production          guidelines for each Fund and obtains the Trustee’s approval to
or manufacture of alcohol, armaments, gambling, pornography,          any changes. Before putting into effect any material changes to the
tobacco and nuclear power (including uranium).                        Investment Policy for a Fund, the Manager will give notice of the
                                                                      changes to Unit Holders of the relevant Fund in accordance with
Material exposure is considered to be where a company derives
                                                                      the terms of the Trust Deed.
more than 10% of its total revenue from these industries.
                                                                      You should note that while markets have generally improved since
In addition, with the combustion of fossil fuels being the main
                                                                      the global financial crisis they do remain volatile and you may
source of global greenhouse gas emissions, each of the Funds
                                                                      experience fluctuations in returns.
seeks to limit exposure to companies which have a material
exposure to the most carbon intensive fossil fuels by excluding       The Investment Policy and investment guidelines for a Fund set
any company that has more than a 20% exposure (as measured by         out the investment objectives, strategy and philosophy for the
percentage of market capitalisation, or other appropriate financial   Fund and may include directions on:
metric) to one, or a combination of, the following:
                                                                      „„ the level of borrowing and the circumstances in which
„„ Mining thermal coal.                                                  a Fund may borrow;
„„ Exploration and development of oil sands.                          „„ the use of derivatives;
„„ Brown-coal (or lignite) coal-fired power generation.               „„ currency management;
„„ Transportation of oil from oil sands.                              „„ exposure limits for certain securities; and
„„ Conversion of coal to liquid fuels/feedstock.                      „„ the duration of securities held by a Fund.

Retention and realisation policy
If an investment falls below these responsible investment
standards, it is the policy of the Responsible Investment
                                                                      Who is involved in providing
Committee to seek to exit that investment within six months after     it for me?
becoming aware of this unless remedial action is taken to bring the
                                                                      The names of the unit trusts established under the Unit Trusts Act
investment back within the responsible investment parameters. An
                                                                      1960 and the Trust Deed and offered in this Investment Statement
investment may also be realised at any time for financial reasons.
                                                                      are:
Further information                                                   „„ AMP Capital Responsible Investment Leaders Conservative Fund
Further information about the responsible investment processes        „„ AMP Capital Responsible Investment Leaders Growth Fund
can be obtained online at www.ampcapital.co.nz.
                                                                      „„ AMP Capital Responsible Investment Leaders Balanced Fund
                                                                      Listed below are the details of the organisations involved in

What sort of investment is this?                                      providing these Funds for you as part of the Kiwibank Investment
                                                                      Portfolio:
The securities offered are Units in the following AMP Capital
Investment Funds:                                                     The Manager
                                                                      AMP Investment Management (N.Z.) Limited
„„ Responsible Investment Leaders Conservative Fund
                                                                      Ground Floor, PWC Tower
„„ Responsible Investment Leaders Growth Fund                         113 – 119 The Terrace
„„ Responsible Investment Leaders Balanced Fund                       PO Box 3764
                                                                      Wellington 6140
The Funds are Unit Trusts established under the Unit Trusts
Act 1960 and the Trust Deed. The Trust Deed was amended and           Telephone: (04) 494 2200
restated on 2 April 2013.                                             Fax:       (04) 494 2100
                                                                      Email:     ampcapital@ampcapital.co.nz

8
Directors of the Manager:                                           Administration Manager
Grant David Hassell                                                 AMP Capital Investors (New Zealand) Limited
BCA – Wellington, New Zealand                                       Ground Floor, PWC Tower
                                                                    113 – 119 The Terrace
George William Carter
                                                                    PO Box 3764
BA (Hons), FNZSA, FIA – Auckland, New Zealand
                                                                    Wellington 6140
Keith John Poore
                                                                    AMP Capital can, and does, contract out some or all of its
BCA (Hons), BSC (Hons), SA Fin – Wellington, New Zealand
                                                                    administration tasks from time to time.
Bevan Trevor Graham
B.Soc.Sci (Economics) – Wellington, New Zealand                     Distributor
Directors of the Manager can be contacted at the Manager’s          Kiwibank Investment Management Limited
address.                                                            Level 12, New Zealand Post House
                                                                    7 Waterloo Quay
The Promoters                                                       Private Bag 39888
AMP Capital Investors (New Zealand) Limited                         Wellington 5045
Ground Floor, PWC Tower                                             Telephone: 0800 11 33 55
113 – 119 The Terrace                                               Fax:       (04) 462 7996
PO Box 3764                                                         Email:     wealthadmin@kiwibank.co.nz
Wellington 6140
The following directors of AMP Capital Investors (New Zealand)      Custodian
Limited who are not also directors of the Manager are also          KB Custodial Services Limited
Promoters:                                                          Level12, New Zealand Post House
                                                                    7 Waterloo Quay
Stephen James Peter Dunne (Chairman)
                                                                    Private Bag 39888
BBus, MBA, CFA, F Fin – Sydney, Australia
                                                                    Wellington 5045
Sharon Beverley Davis
                                                                    Telephone: 0800 11 33 55
BA, Gr Dip Bus (Law), Gr Dip Mgt, Member of the Australian
                                                                    Fax:       (04) 462 7996
Institute of Company Directors, Fellow of FINSIA – Sydney,
                                                                    Email:     wealthadmin@kiwibank.co.nz
Australia
Christopher James Judd                                              The Issuer
AssocDip in Valuations, AdvCert in Real Estate, Cert in Financial   The Issuer for each of the Funds is AMP Investment Management
Markets – Sydney, Australia                                         (N.Z.) Limited. The principal activity for AMP Investment
Peter Raymond Verhaart                                              Management (N.Z.) Limited is the management and administrative
BSc, PGDip FinMath, Dip Bus Stud – Paraparaumu, New Zealand.        control of investment funds. AMP Investment Management
                                                                    (N.Z.) Limited was incorporated as a company on 26 August 1987
Directors of AMP Capital can be contacted at AMP Capital’s
                                                                    and has been carrying on those activities since incorporation.
address.
                                                                    AMP Investment Management (N.Z.) Limited is a wholly-owned
                                                                    subsidiary of AMP Capital and its ultimate holding company
The Trustee
                                                                    is AMP Limited (a company incorporated in New South Wales,
The New Zealand Guardian Trust Company Limited
                                                                    Australia) through a majority shareholding in one of AMP
Level 2, Dimension Data House
                                                                    Investment Management (N.Z.) Limited’s holding companies.
99-105 Customhouse Quay
                                                                    Any sale or disposal of Assets to AMP Investment Management
PO Box 913
                                                                    (N.Z.) Limited or any of its Related Persons (which includes any
Wellington 6140
                                                                    investment fund managed by AMP Investment Management (N.Z.)
Telephone: (04) 901 5406                                            Limited or its Related Persons) or the purchase or acquisition of
Fax:       (04) 901 0108                                            any Assets from AMP Investment Management (N.Z.) Limited must
                                                                    be approved by the Trustee.
                                                                    You should be aware that the names of directors and addresses
                                                                    stated above may change from time to time without notice. Current
                                                                    names and addresses may be obtained by contacting the Manager
                                                                    at its address stated above.

                                                                                                                                    9
How much do I pay?                                                            Payments by cheque are to be made payable to: “KB Custodial
                                                                              Services – Applications Account”.
When you invest through us, the minimum initial lump sum                      Applications may be refused for any reason.
investment for each Fund is $5,000. Thereafter, the minimum
additional investment is $500 per Fund. The Manager may accept                Regular contributions can be made by automatic payment. If you
applications for lesser amounts in its absolute discretion. The Issue         are already a Kiwibank customer, you can set up an automatic
Price for Units in a Fund is the net asset value per Unit calculated          payment from your Kiwibank account for your regular contributions
by the Manager as at the date the application is accepted, unless             by completing section 6 of the application form attached to this
the Trustee gives prior approval for the Issue Price to be the                Investment Statement. If you are not a Kiwibank customer, please
latest net asset value per Unit calculated as at a date before the            contact us on 0800 11 33 55 for assistance. Following the initial
application is accepted.                                                      lump sum investment, the minimum regular contribution when
                                                                              you invest through us is $50 per fortnight per Fund.
You must complete the application form attached to this
Investment Statement. The completed form, along with any                      If a payment is dishonoured or reversed, no Units will be issued in
additional information requested on the application form, can be              respect of that payment or any Units issued based on that payment
provided to us at any Kiwibank branch or sent to:                             will be cancelled.
                                                                              Any funds paid to KB Custodial do not form part of the relevant
KB Custodial Services Ltd                                                     Fund and neither the Manager nor the Trustee has any obligations
c/- Kiwibank Investment Management Limited                                    towards those funds until KB Custodial pays those funds to the
Level 12, New Zealand Post House                                              Manager or Trustee (or a nominated person of either of them) in
7 Waterloo Quay                                                               return for the issue of Units.
Private Bag 39888
Wellington 5045

What are the charges?
The fees set out in the table below are the fees that you will pay as a result of investing in each Fund.

 Fee type                               Amount p.a. (excluding GST unless stated otherwise)     About the fee
 Investment Management Fees:                                                                    This is the annual management fee. See note 1 below.
 Responsible Investment Leaders
 Conservative Fund                      1.00%
 Responsible Investment Leaders
 Growth Fund                            1.20%
 Responsible Investment Leaders
 Balanced Fund                          1.10%
 Trustee Fee:                           Up to 0.1%                                              Paid to the Trustee for services out of each of the
                                                                                                Funds. See note 2 below.
 Entry / Exit fees:                     Entry                         Exit                      The Manager charges these fees on the purchase,
 Responsible Investment Leaders         0.08%                         0.08%                     redemption or repurchase of Units. The fees stated in
 Conservative Fund                                                                              this table are the entry and exit fees payable at the date
                                                                                                of this Investment Statement. The Manager may vary
 Responsible Investment Leaders         0.25%                         0.25%                     the entry and exit fees at any time. The entry and exit
 Growth Fund                                                                                    fees are inclusive GST. See note 3 below.
 Responsible Investment Leaders         0.17%                         0.17%
 Balanced Fund

In addition, the Funds may pay fees as a result of investing in other funds (including other funds managed by the Manager, AMP Capital or
a related company) – see notes 4 and 5 below.

10
Important notes                                                         3. Entry and exit fees are expressed as a percentage of the
1. The Manager is entitled to deduct a management fee to each              relevant aggregate Issue Price or Repayment Price of the
   Fund of up to 2% per annum of the Value of the Assets of                number of Units being purchased, redeemed or repurchased,
   the Fund. The management fees (which are expressed as a                 and are paid into the relevant Fund. The entry and exit fees
   percentage of the Value of the Assets of each Fund) as at the           for each Fund are set by the Manager. The entry fee is a fee
   date of this Investment Statement are set out in the table above        providing for the likely cost of purchasing or developing Assets
   and are payable by quarterly instalments from the Fund. The             for the Fund, and the exit fee is a fee providing for the likely
   Manager may vary the management fee for any Fund. GST is                cost of selling or disposing of Assets of the Fund. The Manager
   charged at 15% on10% of the management fee in accordance                is entitled under the Trust Deed, and reserves the right to
   with the non-binding Inland Revenue agreement with the                  determine the entry and exit fees to be a higher or lower
   Financial Services Council of New Zealand Incorporated on               percentage than that stated in the table above (including zero).
   behalf of the funds management industry. The Inland Revenue             You will be advised of the applicable entry fee when you make
   is reviewing the portion of management fees subject to GST              a subscription and the applicable exit fee when you make a
   and this percentage may change in the future.                           redemption request or your Units are repurchased.

   Upon the termination of a Fund, the Manager is entitled to           4.    Except as set out in note 5 below, no fees are currently charged
   be paid out of the Fund a reasonable fee of such amount as is             in respect of investments made by any of the Funds in any
   approved by the Trustee, based on time spent by the Manager               other funds managed by the Manager, AMP Capital or a related
   on matters relating to the termination of the Fund. There is no           company.
   limit on the amount of this fee, apart from the requirement that     5.    A performance fee may be payable to the Manager, AMP
   it be reasonable in the circumstances and be approved by the              Capital, AMP Capital Investors Limited in Australia or any of
   Trustee.                                                                  the underlying managers used within the Funds. As at the date
   While the Manager has no current intention to do so, the Trust            of this Investment Statement no performance fees are payable
   Deed allows the Manager to charge an initial service fee as               in respect of the Funds or other funds into which the Funds
   determined by the Manager on the issue of any Unit. Any initial           invest.
   service fee, if it were to be charged, would be in addition to any
   entry fee.
                                                                        Switching Units
                                                                        If you wish to switch your investment in one Fund to another Fund
2. The Trustee is entitled to be paid, by way of remuneration for       you should make a request through us. The Manager may refuse a
   its services, a fee out of each of the Funds.                        switch request in its absolute discretion. To effect a switch, Units
   The Trustee’s fee is determined on the basis of a scale agreed       in the relevant Fund will be sold at the applicable Repayment Price
   from time to time between the Trustee and the Manager.               (see the “How do I cash in my investment?” section on page 23 for
   Currently, the Trustee’s fee for each Fund is not to exceed 0.1%     information on calculation of the Repayment Price) and Units in
   per annum of the average daily Value of the Assets of that           the other Fund will be bought at the applicable Issue Price (see
   Fund. There are no other limits on the amount of this fee in         the “How much do I pay?” section on page 15 for information on
   respect of each Fund.                                                calculation of the Issue Price). The entry and exit fees described
                                                                        above will generally apply. The provisions in the Trust Deeds
   In addition, the Trustee is entitled to receive a fee of such
                                                                        applying to redemption or repurchase of Units and issue of Units
   amount as is from time to time agreed between the Manager
                                                                        will apply to switches.
   and the Trustee for convening and attending meetings of
   Unit Holders. There is no limit on the amount of this fee. The
                                                                        Other charges and expenses
   Trustee is also entitled to be reimbursed for various expenses
   in accordance with the Trust Deed.                                   The Funds will incur brokerage and (where applicable) taxation
                                                                        and global custodial charges. Some of these charges may be paid
   On termination of a Fund, the Trustee is entitled to be paid         to AMP Capital for performing investment administration tasks,
   from the Fund a reasonable fee of such amount as is approved         or to other entities to which AMP Capital contracts investment
   by the Manager and based on the time spent by the Trustee            administration tasks. All expenses incurred in the operation of
   on matters relating to the termination of the Fund. There are        the Funds will also be met fully by the Funds. The amount of the
   no limits on the amount of this fee in respect of each Fund,         expenses and charges will be shown in the Financial Statements
   apart from the requirements that it must be reasonable in the        for each Fund.
   circumstances and be approved by the Manager.
                                                                        AMP Capital may, in its discretion, choose to cap the amount of
                                                                        any expenses and charges required to be met by any of the Funds.
                                                                        These charges may be varied from time to time in accordance with
                                                                        the Trust Deed for the relevant Fund. For further information on
                                                                        charges please contact us.

                                                                                                                                           11
What returns will I get?                                                   –– a New Zealand resident trustee of certain testamentary
                                                                              trusts that elects to have a 10.5% PIR;
The return on your investment reflects:                                „„ 17.5% for investors who are:
„„ the increase or decrease in the Unit price; and                         –– New Zealand resident individuals who do not qualify for
„„ income distributions (for those Funds that make distributions,             the 10.5% PIR but who have provided their IRD number
   if any).                                                                   and who derived in either of the last two income years*
                                                                              preceding the current tax year $48,000 or less of taxable
The Unit price of a Fund reflects the value of the underlying
                                                                              income (excluding PIE income) and $70,000 or less in
assets of that Fund. The value of your investment at any time
                                                                              taxable income and PIE income combined; or
will therefore depend on the value of the underlying assets at
that time. The value of Units may vary and, at times may even be           –– a New Zealand resident trustee of a trust (except unit trusts
less than you paid. Key factors that determine the Unit price and             and charitable trusts but including superannuation funds)
income distributions include market fluctuations in the value                 that elects to have a 17.5% PIR;
of Fund investments and the income received on them, tax and           „„ 28% for non-residents, New Zealand resident individuals
fees. You should note that while markets have generally improved          who are not eligible for either the 10.5% PIR or 17.5% PIR and
since the global financial crisis they do remain volatile and you         trusts (except unit trusts and charitable trusts but including
may experience fluctuations in returns. Unit prices may also be           superannuation funds) that elect to have a 28% PIR;
affected by currency movements where Assets are invested outside
of New Zealand. Where considered appropriate, AMP Capital is           „„ 0% for the following entities (if resident in New Zealand):
empowered to use suitable Hedging* techniques to protect the               –– charities, PIEs, companies (including deemed companies
value of investments in New Zealand dollar terms.                             such as unit trusts), proxies; and
No amount of returns, quantifiable as at the date of this Investment       –– superannuation funds and trusts that have not elected to
Statement and enforceable by you, is promised. No guarantees                  have a higher PIR.
of capital or earnings are given, and past performance is not          * Income year has the meaning given in section YA 1 of the Income Tax Act 2007
necessarily indicative of future returns. None of the Trustee or         and for most investors means the year ending on 31 March
its nominee companies, the Manager, AMP Limited, AMP Capital           Your actual rate will depend on your personal circumstances,
or any member of the AMP Group or their respective directors           including your taxable and PIE income in the two years preceding
or officers, Kiwibank, Kiwibank Investment Management, KB              the current tax year and your tax residency. If you have recently
Custodial, New Zealand Post Limited or any other member of the         become a New Zealand tax resident, you must include the total
New Zealand Post Group or any other person guarantees the value        amount of your foreign sourced income in your assessable income
of the Units, repayment of any income on the Units or performance      when determining your PIR. However, you may choose not to
of the Funds.                                                          determine your PIR on this basis in either or both of your first
* See the glossary for an explanation of the term “Hedging”.           two years as a New Zealand tax resident, if you expect that your
                                                                       taxable income in either of these years to be significantly lower
Taxation                                                               than your total income in the income year prior to becoming a
Taxation is likely to affect returns from the Funds.                   New Zealand resident. The description of the PIRs above reflects
The Funds are PIEs. KB Custodial will hold your Units in the Funds     the Manager and KB Custodial’s understanding of tax laws as at
as a proxy for you. Accordingly, the Fund pays tax on the taxable      the date of this Investment Statement.
income (referred to below simply as “income”) attributed to KB         You should check that you have provided the correct PIR.
Custodial on your behalf at 0%, and KB Custodial (as a proxy for
                                                                       If you do not notify us of your PIR, then the default rate of 28%
you) will pay tax on that income at your selected PIR.
                                                                       will apply. In the case of joint investors the higher PIR of the joint
                                                                       investors is used.
What is a Prescribed Investor Rate (PIR)?
Tax is paid by the relevant Fund on the income attributed to you at    The Commissioner of Inland Revenue can require the Manager or
your PIR. A PIR is based on your taxable income (e.g., income from     KB Custodial to disregard the PIR notified to the Manager by you
salary, wages and any additional sources of income that you would      and apply a PIR notified by the Commissioner.
include in your income tax return) and the income attributed to        For more information about PIR and to determine your correct PIR
you from any PIEs in which you invest, whether directly or through     rate please refer to the IRD website “www.ird.govt.nz/toii/pir/” or
a proxy, including the Funds.                                          contact your professional tax adviser.
The following PIRs apply:
                                                                       Tax treatment if you are eligible for and notify
„„ 10.5% for investors who are:                                        us of a 0% PIR
     –– New Zealand resident individuals who have provided             If you elect a 0% PIR, then KB Custodial (as proxy) will not
        their IRD number and who derived in either of the last two     have any tax liability in respect of income attributed to you.
        income years* preceding the current tax year $14,000 or        You must instead include the attributed income and claim any
        less in taxable income (excluding PIE income) and $48,000      attributed losses as deductions in your own tax return. You will be
        or less in taxable income and PIE income combined; or          responsible for payment of tax on the income attributed to you.

12
Tax credits for foreign withholding tax and other types of credits    higher than the New Zealand tax rate that applies to income that
such as imputation credits are attributed to you to be credited       you may get from other comparable New Zealand investments.
against tax payable in your own tax returns.                          (Note that these Funds are not “foreign investment PIEs”, the
                                                                      income from which that is attributed to “notified foreign investors”
Tax treatment if you are eligible for and notify                      can be taxed at different rates.)
us of a PIR greater than 0%                                           Given that there are a number of circumstances where you may
If you are eligible for and notify a PIR which is greater than 0%,    pay more tax in a PIE, rather than other forms of investment, it is
the following will apply to you:                                      important to consult your professional tax advisor to determine
„„ KB Custodial (as proxy) will be liable to pay tax on income        whether a PIE is best for you.
   attributed to you at your PIR. If there are excess tax credits
   for a period or the relevant Fund has a loss rather than net       Why do I need a PIR?
   income for a period, KB Custodial (as proxy) may in certain        The rules relating to the taxation of investment income enable
   circumstances receive a tax refund and may be able to pass on      funds that become PIEs to calculate their tax using PIRs elected
   the benefit of that refund to you.                                 by investors, which can be 28%, 17.5%, 10.5% or 0%, subject to
                                                                      satisfying various conditions. In order for KB Custodial to pay tax
„„ The tax paid on income attributed to you will be a final tax
                                                                      on your attributed income from the Funds at the appropriate rate
   and you will not be required to file a tax return which includes
                                                                      (as a proxy), you need to ensure that you have supplied the correct
   that income, except if you are a trustee that elects the 10.5%
                                                                      PIR and IRD number at all times.
   or 17.5% PIR or if you have recently become a New Zealand tax
   resident and have chosen to disregard foreign income derived
   before becoming a New Zealand resident in determining your
                                                                      When do I need to provide my PIR?
   PIR. Such new residents and trustees that elect the 10.5% or       You should provide your PIR when you invest in a Fund, along
   17.5% PIR will be required to file a tax return including its      with your IRD number. Each year, you will be asked to reconfirm
   attributed income, with a credit allowed for any tax paid by KB    your PIR. You should review your rate each year to ensure it is
   Custodial (as proxy) on that income.                               correct and notify KB Custodial of any changes.

„„ If you have elected a PIR which is too low, or failed to advise    It is important that you provide your PIR when requested. If you
   the Manager that your PIR has increased, you will be liable to     fail to provide your PIR or your IRD number then your investment
   include your attributed income in a tax return and to pay tax      will be taxed at the default rate of 28%. This rate could be higher
   on that income at your relevant marginal tax rate (with a credit   than your PIR. If you provide a PIR that is lower than your correct
   allowed for tax paid on that income). You may also be liable for   PIR, you will be liable to pay tax on the attributed income at your
   any penalties or interest which may apply.                         relevant tax rate after allowing a credit for tax paid on that income
                                                                      by KB Custodial (as proxy) or the Fund (plus any applicable
„„ If you advise a PIR that is higher than your applicable rate,      interest and penalties) and to file a tax return. If you advise a PIR
   then you will not be able to claim back the excess tax paid.       that is higher than the applicable rate, you will not be able to claim
If the tax liability on income attributed to you exceeds your         back the excess tax paid.
investment, some or all of your Units could be redeemed and the
proceeds of the redemption paid to the IRD. To the extent this        KB Custodial’s responsibilities
tax liability is not paid by the Fund, you may need to pay the tax    In relation to your investment in a Fund or Funds through us, KB
directly to the IRD.                                                  Custodial (rather than the Manager) will be responsible for:
                                                                      „„ calculating and organising payment of the tax liability on
The advantage of PIEs
                                                                         income attributed to you, using your PIR;
PIE funds provide some investors with a significant benefit over
holding assets (or investments) directly.                             „„ making adjustments to the Units held on your behalf (by
                                                                         redeeming Units) or the distributions (if any) made to you or
In particular, PIEs or proxies that invest in PIEs on behalf of          requiring you to make a payment to reflect the tax liability on
others, pay tax on income attributed to investors at their relevant      income attributed to you;
PIR which is capped at 28%. Investors in a PIE with a marginal
tax rate of 33% who elect the 28% PIR will therefore obtain a tax     „„ organising the provision of returns and other information to
advantage.                                                               the IRD; and
                                                                      „„ providing the Manager any information concerning you that
Impact of PIE taxation for certain taxpayers                             may be relevant to whether the Fund continues to meet the
In some circumstances your personal marginal tax rate could be           eligibility requirements for a PIE (such as the Maximum
lower than your PIR. In this event investing through a PIE may not       Investor Interests requirement and the Minimum Number Of
be appropriate.                                                          Investors requirement).
In addition, investing in the Funds through KB Custodial (as proxy)   This is because KB Custodial holds your Units on your behalf, as a
may not be appropriate if you are a non-resident in New Zealand       custodian and proxy for you.
for tax purposes. This is because New Zealand tax will be imposed
on income attributed by the Funds to you at 28%, which may be

                                                                                                                                            13
Proxies                                                                  A Fund that holds foreign shares (that is, shares in any company
If you are investing through us as a proxy you will be required          not resident in New Zealand) are subject to the foreign investment
to carry out the responsibilities set out above for the underlying       fund rules and the FDR (fair dividend rate) method is used in
investors you are responsible for and may be required to enter into      respect of such shares, except for shares in certain Australian
contractual arrangements with us and KB Custodial regarding your         resident companies listed on an approved ASX index (taxed under
compliance with the requirements of tax legislation. You will be         ordinary New Zealand tax rules) and certain “non ordinary”
liable to pay KB Custodial an amount equal to any losses liabilities,    shares (which are instead subject to the CV (Comparative Value)
costs or expenses incurred by KB Custodial, the Manager and the          method). Under the FDR method, a Fund that holds foreign shares
Trustee as a result of any breach (in relation to underlying investors   is deemed to derive taxable income equal to 5% of the market
that you are responsible for) of the Maximum Investor Interests          value of the shares, calculated on a daily basis and weighted over
requirement or the Minimum Number of Investors requirement               the income year. Dividends and gains received on such shares are
under the Income Tax Act 2007 including the losses, liabilities          not taxable and losses incurred on the disposal of such shares
costs or expenses arising from any Fund losing PIE status.               are not deductible when the FDR method is applied. Where the
                                                                         CV method is applied (see above) changes in the value of an
Other                                                                    investment over the income year (including those due to foreign
                                                                         exchange movements) are included in the Fund’s income, together
Tax legislation and rates of tax are subject to change. The impact
                                                                         with amounts received during the income year from holding or
of taxation may vary depending on your individual circumstances.
                                                                         disposing of the investment.
It is important to seek professional taxation advice before you
                                                                         The FDR foreign currency hedges tax calculation method has
invest or deal with your investment in any way as the taxation
                                                                         been introduced for foreign currency hedges relating to shares
treatment of your investment will be specific to your circumstances
                                                                         which are taxed under the FDR method or are listed on the ASX.
and to the nature of your investment.
                                                                         The application of this calculation method is optional. Under this
None of the Trustee or its nominee companies, the Manager,               calculation a form of the FDR method is applied to the foreign
the Promoters, the Investment Manager, Kiwibank, Kiwibank                currency hedges instead of the financial arrangement rules. The
Investment Management, KB Custodial, New Zealand Post Limited            adoption of the foreign currency hedges tax calculation method is
or any other member of the New Zealand Post Group, any of their          currently being considered and may or may not be implemented
respective related companies or directors, or any other person           in the future on a Fund by Fund basis, as appropriate. The current
takes responsibility for your taxation liability.                        treatment of foreign currency hedges will continue where FDR
If you receive a request from us or KB Custodial to provide              foreign currency hedges method cannot be applied or is not
information to enable the Manager to determine whether any Fund          adopted.
continues to meet the PIE eligibility requirements you must supply
that information within 30 days of the request.                          Switches and redemptions
                                                                         If you switch from one Fund to another Fund or redeem Units,
The Manager has a wide range of discretions to operate each Fund
                                                                         the tax liability at your PIR on income attributed to you up to
as a PIE including:
                                                                         the switch or redemption will need to be satisfied, either by
„„ discretions relating to the calculation of tax;                       cancellation of Units or deductions from distributions, if any.
„„ adjusting distributions to you or redeeming your Units to meet        If you hold your Units through KB Custodial on capital account
   your liability for tax; and                                           (i.e., if you would not be taxed on a transfer of the Units), then the
„„ taking all steps necessary to ensure that the Fund meets the          entire amount of any Unit redemption proceeds will not be taxable
   PIE eligibility requirements including:                               for you. If you hold your Units through KB Custodial on revenue
                                                                         account (i.e., if you would be taxed on a transfer of the Units),
     –– rejecting applications for Units and transfers of Units to       then you should obtain professional taxation advice as to whether
        ensure the Maximum Investor Interests requirement under          redemption proceeds will be taxable for you.
        the Income Tax Act 2007 is not exceeded; or
     –– if your unit holding exceeds the Maximum Investor                Transfers
        Interests requirement, selling, redeeming or repurchasing        As the Funds are PIEs, applications for the transfer of Units may be
        Units. You will be given notice and an opportunity to            treated as a cancellation of the transferor’s Units and the issue of
        remedy a breach of the Maximum Investor Interests                new Units to the transferee (in which case the entry and exit fees
        requirement (provided that there is time to remedy the           set out on page 16 may be payable). Also, tax at the transferor’s
        breach under the relevant tax legislation). The proceeds         PIR may be payable on income attributed to the transferor for the
        from any sale, redemption or repurchase carried out by           period up to the date of cancellation of the Units. If a transfer of
        the Manager to remedy such a breach (less any costs              Units does occur there may be tax consequences for the transferor,
        and expenses incurred by the Manager in respect of the           depending on the transferor’s tax position.
        same) will be paid to you, and neither the Manager nor
        the Trustee shall be liable for any loss you may incur
        under or in connection with any such sale, redemption or
        repurchase.

14
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