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Investment Statement Milford Funds Limited 18 June 2015 Milford Unit Trust PIE Funds
Milford Unit Trust PIE Funds
Important
information
(The information in this section is required under the Financial advisers can help you make
Securities Act 1978.) investment decisions
Investment decisions are very important. They often have Using a financial adviser cannot prevent you from losing
long-term consequences. Read all documents carefully. money, but it should be able to help you make better
Ask questions. Seek advice before committing yourself. investment decisions.
Financial advisers are regulated by the Financial Markets
Choosing an investment
Authority to varying levels, depending on the type of adviser
When deciding whether to invest, consider carefully the and the nature of the services they provide. Some financial
answers to the following questions that can be found advisers are only allowed to provide advice on a limited range
on the pages noted below: of products.
What sort of investment is this? 22 When seeking or receiving financial advice,
you should check:
Who is involved in providing it for me? 22
> The type of adviser you are dealing with;
How much do I pay? 25
> The services the adviser can provide you with;
What are the charges? 26
> The products the adviser can advise you on.
What returns will I get? 28
A financial adviser who provides you with personalised
What are my risks? 31
financial adviser services is required to give you a Disclosure
Can the investment be altered? 34 Statement covering these and other matters. You should ask
your adviser about how he or she is paid and any conflicts of
How do I cash in my investment? 35
interest he or she may have.
Who do I contact with inquiries about my investment? 36
Financial advisers must have a complaints process in place
Is there anyone to whom I can complain if I have and they, or the financial services provider they work for, must
problems with the investment? 37 belong to a dispute resolution scheme if they provide services
to retail clients. So if there is a dispute over an investment,
What other information can I obtain about
you can ask someone independent to resolve it.
this investment? 38
Most financial advisers, or the financial services provider
In addition to the information in this document,
they work for, must also be registered on the financial service
important information can be found in the current
providers register. You can search for information about
registered prospectus for the investment. You are
registered financial service providers at www.fspr.govt.nz
entitled to a copy of that prospectus on request.
You can also complain to the Financial Markets Authority if
The Financial Markets Authority regulates you have concerns about the behaviour of a financial adviser.
conduct in financial markets
Capitalised terms are defined throughout this document,
The Financial Markets Authority regulates conduct in or in the glossary on page 51.
New Zealand’s financial markets. The Financial Markets
Authority’s main objective is to promote and facilitate This document is an Investment Statement for the purposes
the development of fair, efficient, and transparent of the Securities Act 1978. It is dated and prepared on
financial markets. 18 June 2015.
For more information about investing,
go to www.fma.govt.nz
Investment Statement 18 June 2015
Letter from the
Manager of the
Milford Unit
Trust PIE Funds
Dear Investor
We are delighted to offer you an when our performance means we Please read this document in full
opportunity to access the investment have earned them; and to ensure that the approach and
skills of Milford Asset Management objectives for the Funds are consistent
> a commitment to transparency so
Limited through a range of Unit Trust with your investment requirements.
that our investors can see clearly the
PIE Funds designed to meet a variety If you have any questions, please visit
investments that make up these Funds.
of investment needs. These Funds our website at www.milfordasset.com
include the Dynamic, Trans-Tasman, Milford will be a strong advocate on or call us on 09 921 4700 or
Global, Active Growth, Balanced and your behalf, particularly in terms of 0800 662 345.
Income Funds. corporate governance of the entities
We hope that you will join the
we invest in.
Our Active Growth Unit Trust PIE Fund increasing number of people that
is not currently accepting new investors. The Milford Unit Trust PIE Funds are have seen what our approach can
offered by Milford Funds Limited, offer as a fund manager.
At Milford, our primary aim is to make
a 100% owned subsidiary of Milford
money for you – our clients. We do this by Yours sincerely,
Asset Management Limited. Milford
taking a highly active approach to investing
continues to go from strength to
in order to take advantage of changing
strength and we now manage over
market conditions and opportunities.
$3 billion on behalf of investors.
Milford will bring its unique and
We believe the Funds described in
successful investment approach to
this Investment Statement are suitable Brian Gaynor
each Fund including:
for medium to long-term investors. Director, Milford Funds Limited
> s earching for the best opportunities All of the Milford Unit Trust PIE Funds 18 June 2015
in all market conditions through are Portfolio Investment Entities (‘PIEs’)
extensive company visits and research; which means all the income is taxed
within the Fund, at the tax rate selected
> h
aving fair and reasonable fees that
by you. The minimum initial investment
only provide us with higher rewards
for each Fund is $10,000.
1Milford Unit Trust PIE Funds
Key information
These tables provide
a snapshot of key
information about the
Funds. You should read
them in conjunction with the
detailed information set out
elsewhere in this Investment
Statement and in the
Funds’ Prospectus.
The Funds are unit trusts managed by Milford Milford makes the investment management
Funds Limited as the manager. The trustee of decisions but the assets of the Funds are held
the Funds is Trustees Executors Limited. separately from, and independent of, Milford.
As an investor, you will receive units in a trust
A unit trust is an investment structure where a
(in this case, one or more of the Funds).
trustee (or a custodian appointed by a trustee)
holds the assets of the unit trust for the benefit The Funds are Portfolio Investment Entities
of all investors who hold units in that trust. (‘PIEs’) for tax purposes. This means any income
attributed to you is taxed within the Fund at the
tax rate selected by you.
Fund objective and investment policy
Income Fund
The Income Fund is an actively managed, diversified investment portfolio, that consists of mainly New Zealand and global
fixed interest securities, hybrid securities (such as convertible debt), high yielding equities, property equities, cash and other
high yielding New Zealand and global securities as well as potentially unlisted entities and unit trusts. The Fund may short-sell
securities, use derivative products and utilise active currency management. For more details about this Fund, please see
pages 15 to 21.
Key Fund risks Fees and expenses
The key Fund risks of investing in the > No entry, exit or switching fees are currently charged.
Income Fund include:
> We will be paid a capped management fee of 0.65% (including
> Market risk applicable GST) per annum of the gross asset value of the Fund.
> Entity risk > We may be paid a performance fee from the Fund.
> Interest rate risk > The Fund may invest into other Milford Funds but is not
charged any management or performance fees by those Funds.
For more details, please see page 31.
For more details, please see pages 21, 26 and 27.
2Investment Statement 18 June 2015
Balanced Fund
The Balanced Fund is an actively managed portfolio that typically contains a mix of asset classes such as New Zealand equities
and fixed interest securities and global equities and fixed interest securities and potentially unlisted entities, unit trusts and global
underlying managed funds. The Fund may short-sell securities, use derivative products and utilise active currency management.
For more details about this Fund, please see pages 15 to 21.
Key Fund risks Fees and expenses
The key Fund risks of investing in the > No entry, exit or switching fees are currently charged.
Balanced Fund include:
> We will be paid a capped management fee of 1.05%
> Market risk (including applicable GST) per annum of the gross
asset value of the Fund.
> Entity risk
No performance fee is paid directly from the Balanced
>
> Currency risk
Fund, although we will potentially receive performance
For more details, please see page 31. fees on any Balanced Fund investments in the Milford
Income, Active Growth, Global, Trans-Tasman and
Dynamic Funds in our capacity as manager of these
other Funds.
> The Fund may invest into other Milford Funds but will
be rebated for the management fees charged within
those Funds.
For more details, please see pages 21, 26 and 27.
Active Growth Fund
The Active Growth Unit Trust PIE Fund is not currently accepting new investors. Current investors in the Active Growth Fund may
continue to make new investments in the Fund at our discretion (although this may change). For more details about this Fund,
please see pages 15 to 21.
Key Fund risks Fees and expenses
The key Fund risks of investing in the > No entry, exit or switching fees are currently charged.
Active Growth Fund include:
> We will be paid a capped management fee of 1.05%
> Market risk (including applicable GST) per annum of the gross asset
value of the Fund.
> Entity risk
> We may be paid a performance fee from the Fund.
> Currency risk
> The Fund may invest into other Milford Funds but is not
For more details, please see page 31.
charged any management or performance fees by those Funds.
For more details, please see pages 21, 26 and 27.
3Milford Unit Trust PIE Funds
Global Fund
The Global Fund is an actively managed portfolio that consists of global direct investments (including listed equities, exchange
traded funds, derivatives, fixed interest securities and cash) and global underlying managed funds. The Fund may also invest in
New Zealand and Australia. The Fund may borrow up to 25% of the value of the Fund, may short-sell securities, use derivative
products and utilise active currency management. For more details about this Fund, please see pages 15 to 21.
Key Fund risks Fees and expenses
The key Fund risks of investing in the > No entry, exit or switching fees are currently charged.
Global Fund include:
> We will be paid a capped management fee of 1.15% (including
> Market risk applicable GST) per annum of the gross asset value of the Fund.
> Currency risk > We may be paid a performance fee from the Fund.
> Entity and underlying managed fund risk > The Fund may invest into other Milford Funds but is not
charged any management or performance fees by those Funds.
For more details, please see page 31.
For more details, please see pages 21, 26 and 27.
Trans-Tasman Fund
The Trans-Tasman Fund is an actively managed portfolio that consists of New Zealand and Australian listed entities and cash,
and potentially unlisted New Zealand entities and unit trusts. The Fund may also hold selected foreign currencies. The Fund
may short-sell securities, use derivative products and utilise active currency management. For more details about this Fund,
please see pages 15 to 21.
Fees and expenses
Key Fund risks
> No entry, exit or switching fees are currently charged.
The key Fund risks of investing in the
Trans-Tasman Fund include: > We will be paid a capped management fee of 1.05% (including
applicable GST) per annum of the gross asset value of the Fund.
> Market risk
> We may be paid a performance fee from the Fund.
> Entity risk
> The Fund may invest into other Milford Funds but is not
> Currency risk charged any management or performance fees by those Funds.
For more details, please see page 31. For more details, please see pages 21, 26 and 27.
4Investment Statement 18 June 2015
Dynamic Fund
The Dynamic Fund is an actively managed portfolio that consists of predominantly Australasian small and medium sized
listed companies. In addition the Fund may also invest in fixed interest securities, derivatives and cash. The Fund can borrow
up to 25% of the value of the Fund, may short-sell securities, use derivative products and utilise active currency management.
For more details about this Fund, please see pages 15 to 21.
Key Fund risks Fees and expenses
The key Fund risks of investing in the > No entry, exit or switching fees are currently charged.
Dynamic Fund include:
> We will be paid a capped management fee of 1.35% (including
> Market risk applicable GST) per annum of the gross asset value of the Fund.
> Entity risk > We may be paid a performance fee from the Fund.
> Currency risk > The Fund may invest into other Milford Funds but is not
charged any management or performance fees by those Funds.
For more details, please see page 31.
For more details, please see pages 21, 26 and 27.
All Milford Unit Trust PIE Funds
Benefits Withdrawals
The key benefits that an investment in a Fund offers include: You may withdraw all or part of your investment in a Fund at
any time by correctly completing a Withdrawal Request Form
> The Funds are actively managed portfolios that provide
and complying with our withdrawal process.
a broad range of investment options.
The withdrawal amount payable to you is the total of the net
> The Funds are investment vehicles that provide for a
asset value per unit multiplied by the number of units being
range of investment time frames to suit investors’ needs.
redeemed, less any costs to complete this transaction.
> The Funds utilise the benefits of a unit trust structure At the date of this Investment Statement, there are no exit
under the PIE tax regime. fees payable.
> The Funds are managed by us, a wholly owned subsidiary At the date of this Investment Statement, a lump sum or
of Milford Asset Management Limited. regular withdrawal request must be for a minimum value of
$1,000 per withdrawal (unless a withdrawal request relates
Application for units to all units held by you in the relevant Fund or a withdrawal
relates to the Income Fund regular withdrawal where the
You determine the amount you wish to invest, subject to the
minimum value is $200 per withdrawal). For more information,
minimum investment amount of $10,000.
please see page 35.
If you wish to apply for units in a Fund, you must correctly
complete, and lodge with us, an application and pay the Related Party transactions
application monies. We may in our absolute discretion
We may:
accept or refuse to accept, in whole or in part, any application.
We may also postpone the processing of the application > Cause any monies of a Fund to be invested or lodged
until we are in receipt of cleared funds and a compliant with us or any related party of us; or
application.
> Sell, purchase or otherwise dispose of or acquire any
The price payable for a unit at any time will always be the assets or investments to or from us or any related party; or
net asset value of the relevant Fund at that time, divided by
> Enter into any contract, agreement or other
the number of units currently issued.
arrangement with any related party of us to provide
For more information (including the Application Form) management or consultancy services or any other
please see page 40. services that we consider desirable.
Our directors, our staff and the directors of the Trustee,
and its related parties may invest in a Fund from time to time.
5Milford Unit Trust PIE Funds
Introduction to
Milford Asset
Management
Limited
We strongly believe
in the benefits of
being an employee
controlled company.
Milford Asset Management Milford’s core values are to: The benefits of this include:
Limited was formed in 2003 > Operate with honesty and integrity > Attracting and retaining
by a highly experienced > Consistently seek to deliver superior
the best people
team of individuals who investment returns > Understanding our clients’
recognised the need for needs and objectives
> Be client focused
an investment company > Focusing our resources to generate
> Strive for best practice
that New Zealanders the best returns for clients
in managing our clients’ capital
can trust and which > Reacting quickly to changing market
> Remain majority New Zealand
provides a premium service. conditions and new opportunities
and employee owned
In 2007, Milford Funds Limited > Aligning our success to the
was created to enable investors performance of our clients’ capital
to gain access to Milford’s
investment expertise and vast
experience through our family
of funds.
6Investment Statement 18 June 2015
What’s behind
the name
Milford Asset
Management?
We wanted a name with Firstly, we wanted something that Finally, because of the serenity and
makes people think of New Zealand. peacefulness associated with Milford
a New Zealand flavour
We chose a New Zealand icon Sound. We wanted investors to think
and chose ‘Milford Asset because we are proud to be of investing with us as a pleasant
Management’ for three a New Zealand employee and rewarding journey, as we aim to
main reasons. controlled company. consistently produce superior returns
while protecting our clients’ capital.
Secondly, we wanted to invoke
the image of Mitre Peak, rising
slowly and steadily in the distance.
Like Mitre Peak, we intend to be
around for a very long time.
7Milford Unit Trust PIE Funds
The A key to success for any
Investor’s investment management
business is having the
Rights right people. We believe
that we have one of the
highest calibre teams in
the market in terms of
We created ‘The Investor’s Rights’ which detail experience and expertise.
fundamental rights that we believe every investor should
expect from organisations who look after investors’ money.
The seven Investor’s Rights are set out as follows.
1. The right to have someone you a Fund’s performance and market proactively altering our investment
can trust looking after your money. performance. We also provide strategy if our view of the market, a
We have brought together some of monthly online reports for your own company’s management or trading
the country’s most experienced and investments. conditions change. Our policy of
respected investment experts, each seeking to protect your capital
4. The right to know the value of
with an impressive track record for means when we believe markets
your investments at any time.
making quality financial decisions. will fall significantly, we don’t expect
You are able to view the value of
Our investment team is committed you to simply weather the storm.
your investments, month end
to protecting and building the wealth Instead, we act to preserve your
portfolio reports and a history of
of our clients. capital.
all transactions at any time online.
2. The right to know your investment 7. The right to fair and reasonable
5. The right to sell your
manager will act in your best interests. fees with a ‘pay for performance’
investments without penalty.
Our investment focus is on entities philosophy.
Unlike some other institutions,
that we believe demonstrate We charge a capped management
we do not penalise you if your
the highest levels of corporate fee which varies depending on the
financial situation changes and you
governance and a strong commitment type of investment Fund. This fee
need to liquidate assets. You are
to their stakeholders. And if we covers the normal operating costs
able to sell all or a part of your
believe our standards are not being associated with managing a Fund
holdings at any time without penalty.
met, we will seek change or sell our and making investment decisions
shareholding in an effort to protect 6. The right to expect your (including audit, trustee, registry and
your investment in the process. investment manager to make legal fees). It excludes brokerage
decisions designed to protect and any performance fee. A
3. The right to know exactly where
and grow your investment. performance fee is only charged
your money is being invested.
We constantly assess everything if a Fund exceeds its stated
We provide monthly Fund
that affects the value of your investment target.
updates which include details of
investments. This includes
8Investment Statement 18 June 2015
Milford’s We believe we have one of the
Investment most experienced investment
teams in New Zealand.
Team
For more biographies of our
wider Milford team,
please see our website
www.milfordasset.com
Auckland, New Zealand Office
Brian is Chairman of Milford’s Investment Forum and head of Milford’s portfolio
management and investment analysis activities. Brian is one of New Zealand’s most
experienced and well-known investment analysts. Brian’s career includes roles as a
Partner and Head of Research at stockbrokers Jarden & Co, a member of the New
Zealand Stock Exchange, Chairman of the New Zealand Society of Investment Analysts
and Chairman of the Asian Securities Analysts Council. Brian is Portfolio Manager of
the Milford Active Growth Fund, the New Zealand equity portion of the Milford
Trans-Tasman Fund and the Milford KiwiSaver Plan Active Growth Fund.
Brian Gaynor
Jonathan has a wide range of financial markets and investment experience both in New Zealand
and internationally. Prior to joining Milford in 2008, Jonathan worked for Gartmore Investment
Management in London where he was Portfolio Manager for the Royal Bank of Scotland
Pension scheme which had assets in excess of NZ$25 billion. While at Gartmore, Jonathan was
also responsible for investment strategy and investments into individual private equity funds
and companies across Europe and Asia. Prior to Gartmore, Jonathan worked for BT Funds
Management, Frank Russell and the New Zealand Dairy Board (now Fonterra). Jonathan is a
Chartered Financial Analyst (‘CFA’) charterholder and is Portfolio Manager of the Milford Income
Fund, the Milford Balanced Fund, the Milford KiwiSaver Plan Balanced Fund and the Milford
Jonathan Windust
KiwiSaver Plan Conservative Fund.
Felix has a wide range of investment experience across global financial markets. Prior to joining
Milford in October 2012, Felix was a partner at equity research firm Ji Asia in Hong Kong, an
associate of French bank Societe Generale, covering China focused medium sized companies
across multiple sectors. Felix began his career in London in 2004 with The Black Ant Group as
an analyst, and later Junior Portfolio Manager, and helped manage a long/short global mandate
that invested across the capital spectrum. He holds a Master of Arts from the University of
Cambridge, where he studied chemical engineering. Felix is a CFA charterholder and is Portfolio
Manager of the Milford Global Fund.
Felix Fok
9Milford Unit Trust PIE Funds
Milford’s
Investment
Team
Auckland, New Zealand Office
David joined Milford in early 2013 from Merrill Lynch where he was a Senior Director, working
for eight years in various roles in global credit markets based in Sydney and London. These roles
in London included Financial Institutions Credit Analyst and Head of Emerging Market Credit Research.
While in Sydney, David worked on proprietary risk positions in Merrill Lynch’s Special Situations
business, which focussed on high yield, loan, and distressed opportunities in Australia and
New Zealand. Prior to Merrill Lynch, David spent four years as a fixed income analyst at BT Funds
Management and its then-parent company Principal Global Investors, based in Sydney and London.
At Milford, David is the Portfolio Manager of the Milford Trans-Tasman Bond Wholesale Fund. David
has a Bachelor of Commerce in Economics from the University of Canterbury, a Master of Commerce in
David Lewis
Finance from the University of Sydney, and is a CFA charterholder.
Stephen has a wide range of investment experience across global financial markets and
different asset classes. Prior to joining Milford in 2013, Stephen was a partner at London
based Adelante Asset Management where he was a Senior Portfolio Manager, managing
an Emerging Market Equity Fund. Prior to Adelante, Stephen was a Portfolio Manager in
London at Threadneedle Investments and Convivo Capital Management, managing various
Emerging Market Funds. Stephen holds a Bachelor of Laws and a Bachelor of Commerce from
the University of Otago and was admitted to the Bar as a Barrister and Solicitor of the High
Court of New Zealand in 1995.
Stephen Johnston
Brooke is a Senior Investment Analyst with a particular emphasis on special situations for
Milford’s Funds, including non-listed opportunities. Brooke previously worked for Macquarie
Securities in New Zealand as a Senior Research Analyst covering a variety of sectors including
manufacturing, agriculture, mining and oil and gas. Brooke was ranked as one of the top three
analysts in a number of INFINZ awards in 2010, 2011 and 2012. Prior to joining Macquarie,
Brooke was a Vice President at Morgan Stanley in London, covering Pan-European retail
companies. Brooke also worked for the corporate finance and property team of Marks
and Spencer in the UK and as a management consultant for Cap Gemini. He qualified as
a Chartered Accountant with Ernst & Young. Brooke is a CFA charterholder.
Brooke Bone
10Investment Statement 18 June 2015
David is a Senior Investment Analyst with a particular emphasis on Australian and NZ equities,
including IPOs. Prior to joining Milford in March 2014, David was a Senior Equity Research
Analyst with Goldman Sachs and Credit Suisse in London covering the Support Services sector.
In his 10 years overseas his remit spanned small caps to FTSE100 firms in industries as diverse
as Recruitment, Temporary Power, Equipment Rental, Distribution, Testing & Inspection,
Facilities Management, BPO and Credit Analytics. He holds a Master of Management Studies
and BSc from Victoria University of Wellington, where he studied Technology Management,
Physics and Mathematics.
David Rigby
Sam joined Milford in early 2014 as an Investment Analyst. Sam is responsible for conducting
research analysis across both listed New Zealand equities and non-listed companies to identify
outstanding investment opportunities. Sam previously worked for Craigs Investment Partners
as an Associate in the Equity Capital Markets team advising on a wide range of equity issuance
including the IPOs of the Fonterra Shareholders’ Fund and Summerset Group Holdings. Prior to
joining Craigs Investment Partners, Sam was an Analyst for two years in the Corporate Finance
team at PwC. Sam graduated from the University of Otago with a Masters of Business (Dist)
and Bachelor of Commerce majoring in Finance.
Sam Trethewey
Shing graduated from the University of Auckland in 2014 with a Bachelor of Engineering (Hons)
and Bachelor of Commerce, majoring in Finance. He joined Milford full time in November 2014
after completing an internship there earlier in the year. At Milford, Shing is an Investment
Analyst for the Milford Income Fund and Milford Trans-Tasman Bond Wholesale Fund, focused
on identifying investment opportunities in the utilities and infrastructure space. Shing’s previous
internship experiences spans across multiple industries in New Zealand and Australia, including
Investment Banking, Engineering and Higher Education. Shing has passed level I of the CFA
program and continues to work towards becoming a CFA charterholder.
Shing Zhu
Mark has a wide range of global equity market experience and an in-depth knowledge of
equity derivatives. Prior to joining Milford in November 2014, Mark was an Executive Director
at Morgan Stanley, trading Equity Index Derivatives. Mark began his career in London in 2003
with Morgan Stanley, trading derivatives on European equity indices. He moved on to manage
a global derivative book out of London before taking the opportunity to move to Hong Kong
to run the Asia ex-Japan index derivative trading team. Mark is the senior central dealer at
Milford, responsible for executing transactions on behalf of Milford’s portfolio managers and
for managing the Central Dealing Desk. Mark has a Master of Engineering degree from the
University of Bath, UK.
Mark Riggall
Sean joined Milford on the Central Dealing Desk in April 2015, where he is responsible for
executing transactions on behalf of Milford’s portfolio managers. Before joining Milford, he
traded interest rate derivatives and New Zealand government bonds, whilst also providing back
up to the credit trading book, at Westpac Institutional Bank. Prior to this, he was a Manager
of the Market & Liquidity Risk team. Sean graduated from the University of Otago with a Post
Graduate Diploma in Management and a Bachelor of Commerce majoring in Accounting and
Management. Sean is also a CFA Charterholder.
Sean Harrison
11Milford Unit Trust PIE Funds
Milford’s
Investment
Team
Sydney, Australia Office
William is the Head of Australian Investments with specialist experience investing in small and
medium sized companies. Since joining Milford in early 2010, William has focused on selecting
small and medium sized companies for Milford’s Funds and has also covered the resource,
energy, utility and property sectors. As the Portfolio Manager for the Milford Dynamic Fund,
William has primary responsibility for the performance of that Fund. William visits and speaks
to hundreds of companies every year and conducts detailed investment analysis to uncover top
class investments. William has a Bachelor of Commerce from the University of Auckland majoring
in Finance and Economics.
William Curtayne
Australian born Marc has considerable experience in financial markets working in Sydney, with
over 14 years in equity analysis. Prior to joining Milford in 2010, Marc was an Associate Director
at Lazard Asia Pacific Asset Management in Sydney, specialising in technology, telecoms,
media, financials, gaming and developers and contractors. Marc held an earlier position in
equity analysis with UBS Australia, where he specialised in telecommunications research.
Marc is the Portfolio Manager of the Australian equity portion of the Milford Trans-Tasman
Fund. Marc is a CFA charterholder.
Marc Whittaker
Victoria graduated from the University of Canterbury in 2010 with a Bachelor of Commerce,
double majoring in Economics and Finance. Victoria’s previous experience includes an
internship in the financial services industry in Auckland, New Zealand. Victoria joined Milford in
2011 in client services, and she has since moved into an Investment Analyst role. Victoria’s role
involves researching and analysing companies for potential investment, as well as undertaking
performance calculations for the various Funds. Victoria covers retail and technology companies
in Australia and New Zealand.
Victoria Harris
12Investment Statement 18 June 2015
Investment
Style
We adopt a highly active Key principles of our unique > Managing risk through appropriate
approach are: portfolio diversification
approach to portfolio
management in order to > Active portfolio management; > Focusing on our key competencies.
attempt to take advantage of we do not follow a ‘buy and Where we do not currently have
hold’ approach the skills or knowledge we identify
changing market conditions partners who do.
and investment opportunities. > A focus on looking to preserve
capital and invest more aggressively We believe that our approach and
in better times philosophy will consistently generate
superior results for our clients.
> Detailed investment research
and regular entity visits
> Understanding changes in
the global and local economic
environment and how this will
impact clients’ investments
Investment
Process
Our investment selection We focus on the following issues What we believe to be the best
when considering existing and investment ideas are then included,
process aims to identify
potential investments: where applicable, in each Fund by
investments which have the Portfolio Manager responsible
prospects that have not > Industry growth prospects
for that Fund.
and dynamics
been recognised by other At the date of this Investment
investors in the market. > Competitive position and strategy
Statement, we can use external fund
We conduct in-depth research > Management and governance managers for certain investments
into potential and current investments outside of Australasia. In selecting
> Financial prospects
to understand the key drivers of these managers, we have a preference
performance and future prospects. > Valuation. for managers that have similar
We place significant importance characteristics to us, namely,
Our investment analysis is
on meeting companies and have a that these managers are:
supplemented by detailed economic
disciplined entity visit programme. analysis which focuses on following > Specialist investment firms
We are also able to leverage off the key economic indicators from
extensive knowledge and experience > Majority employee owned
New Zealand and overseas.
of our investment team. > Staffed by highly experienced
The result of the investment analysis is
investment professionals
typically discussed at our twice weekly
Investment Forum meetings. > Operating with a like-minded
investment philosophy and approach.
13Milford Unit Trust PIE Funds
Milford’s Investment Process
Cash Unlisted
New Zealand and Global
New Zealand entities
listed entities
INVESTMENT
UNIVERSE
Global Investment New Zealand and Global
Managers fixed interest securities
Industry Analysis Assessment of
Global Themes
management and
governance
ECONOMIC AND INVESTMENT ANALYSIS
Company Meetings Manager Financial Analysis
Research
INVESTMENT FORUM
Brian Gaynor (Chairman)
Brooke Bone
William Curtayne
Felix Fok
Victoria Harris
Sean Harrison
Stephen Johnston
David Lewis
David Rigby
Mark Riggall
Sam Trethewey
Marc Whittaker
Jonathan Windust
Shing Zhu
CONSIDERS RECOMMENDATIONS
INVESTMENT DECISIONS
CONFIRMED
PORTFOLIO MANAGER
IMPLEMENTS
14Investment Statement 18 June 2015
Introducing the
Milford Family
of Funds
We have six investment funds to > The Milford Dynamic Fund is for Plan which is offered through a separate
meet the requirements of Unit Trust investors with at least a five year Investment Statement. KiwiSaver offers
investors with different risk tolerances. time horizon, who are looking you incentives to save, while requiring
This Investment Statement outlines for growth from an actively that in most circumstances your funds
our Unit Trust PIE Funds. managed portfolio of primarily remain invested until retirement. The
Australasian small and medium Milford Unit Trust PIE Funds allow
> The Milford Income Fund is
sized listed companies. you more flexibility than the Milford
for investors who are primarily
KiwiSaver Plan to withdraw your funds,
investing for an income rather All of our Unit Trust and Milford
if required.
than capital growth; and KiwiSaver Plan Funds are Portfolio
Investment Entity (‘PIE’) registered. Together our family of funds offers
> The Milford Balanced Fund is
This has potential tax benefits to you, you a range of alternatives depending
for investors who wish to have a
enabling your investment to be taxed at on your investment requirements,
diversified fund including investments
a rate equivalent to your own marginal investment goals and tolerance for risk.
outside of Australasia; and
tax rate (the rate of tax the IRD taxes Our family of funds is pictured on the
> The Milford Active Growth Fund you at individually for your last dollar following page.
(this Fund is not currently accepting of income) with a top rate of 28%.
Investors in our Unit Trust PIE Funds
new investors) is for investors Generally, gains made by any Fund on
that are KiwiSaver members or who
looking for an investment with the sale of equities in New Zealand
wish to start investing for their
the objective of producing steady resident entities or Australian resident
retirement may consider the option
compounding growth, primarily from listed entities (on an ASX approved
of our KiwiSaver range.
New Zealand and Australian listed index) will not be liable for capital gains
entities; and tax. The Milford Global Fund is our only To find out more or for an Investment
foreign investment zero-rate PIE Fund. Statement for the Milford KiwiSaver
> The Milford Global Fund is for
Please see pages 29 to 30 for more Plan, please visit our website at
investors looking for an investment
information. www.milfordasset.com or call
with a global emphasis and at least
us on 09 921 4700 or 0800 662 346.
a five-year time horizon; and We also offer the Milford KiwiSaver
Plan Conservative Fund, the Milford
> The Milford Trans-Tasman Fund is
KiwiSaver Plan Balanced Fund and the
for investors who require a fund that has
Milford KiwiSaver Plan Active Growth
an actively managed split of Australian
Fund, through the Milford KiwiSaver
and New Zealand equities; and
15Milford Unit Trust PIE Funds
Milford Unit Trust
Milford KiwiSaver Plan
PIE Funds
Income Fund Conservative Fund
Balanced Fund Balanced Fund
Active Growth Fund
(This Fund is not currently Active Growth Fund
accepting new investors.)
Global Fund
Trans-Tasman Fund
Dynamic Fund
16Investment Statement 18 June 2015
Introduction to
our Unit Trust
PIE Funds
We have six PIE registered Unit Trust Funds focused upon generating long-term growth for
available to investors. As its name suggests, their investors and incur varying levels of risk to
the Income Fund is focused on generating achieve this. Stock selection within these Funds
income for its investors. The Balanced, Active benefits from our rigorous research process and
Growth (not currently accepting new investors), the expertise of the Investment Forum.
Global, Trans-Tasman and Dynamic Funds are
High
Illustrative Expected Risk and Return Profile
for the Milford Unit Trust PIE Funds
Dynamic Fund
Trans-Tasman Fund
Expected Relative Return Profile
Global Fund
Active Growth Fund
Balanced Fund
Income Fund
Bank Term Deposit
or Cash
Low Expected Relative Risk/Volatility Profile High
17Milford Unit Trust PIE Funds
What is the
difference between The key difference
the Funds?
between the Funds
is their investment
objectives and relative
risk profiles.
The key difference between the Funds fixed interest securities and equities, (‘OCR’) plus 5% (after the capped
is their investment objectives and either directly or indirectly through management fee and before tax and
relative risk profiles. The chart overleaf pooled funds. It will be actively the performance fee). The Fund can
illustrates the difference between the managed in terms of the sector hold material levels of cash should
Funds individually in terms of their weightings and currency exposure attractive investment opportunities
expected risk and return characteristics to reflect our investment outlook. It be scarce. The Fund will dynamically
over the longer term. The following can hold material levels of cash or hedge foreign currency exposures.
outlines some key differences in the low-risk investments when attractive
The Milford Trans-Tasman Fund’s
>
Funds ranking them from lowest to investment opportunities are scarce.
objective is to outperform a
highest expected risk levels.
The Milford Active Growth Fund’s
> 50/50 mix of the New Zealand
The Milford Income Fund looks to
> objective is to generate positive and Australian sharemarkets.
generate income for investors with annual returns of at least 10% over The Fund normally has more than
an investment horizon of at least the medium to longer term (after 80% invested in New Zealand and
three years. The Fund’s objective is the capped management fee and Australian equities and will more
to provide a return (after the capped before tax and the performance closely track the performance of
management fee and before tax fee). To achieve this, the Fund is markets compared to the Active
and the performance fee) over the actively managed and will usually be Growth Fund. It focuses on
90-Day Bank Bill Index over a three primarily invested directly in equities companies that we believe are in
year period. However, the nature in New Zealand, Australian and global attractive industries, have a strong
of its fixed interest securities and listed entities. However, it can hold competitive position and excellent
equity investments means that the material levels of cash and fixed management and Board.
capital value (unit price) of the Fund interest securities when attractive
The Milford Dynamic Fund looks to
>
will move up and down. The Milford opportunities are scarce.
provide capital growth for investors,
Income Fund will take an active
The Milford Global Fund’s objective
> taken over the longer term, by mainly
approach to fixed interest securities
is to provide capital growth for investing in Australasian small and
and equity sector allocations and the
investors over the long term by medium sized listed companies. The
securities chosen within each sector.
investing in global direct investments Fund targets a return of at least the
The Milford Balanced Fund’s
> (including equities, exchange traded ASX Small Industrials Accumulation
objective is to provide capital growth funds, derivatives, fixed interest Index (after the capped management
over the medium to longer term from securities and cash) and global fee and before tax and the
a diversified mix of investments, underlying managed funds. The performance fee).
including New Zealand fixed interest Fund targets returns of at least the
securities and equities and global New Zealand Official Cash Rate
18Investment Statement 18 June 2015
Who are
these Funds
suitable for?
The Milford Income Fund is suited to The Milford Global Fund is suited to Investors do have the ability to ‘top
investors who are more conservative investors who want global exposure up’ Trans-Tasman Fund distributions by
and/or who have a shorter investment in their portfolio and have a long withdrawing units, but must recognise
horizon and who are looking to receive investment time horizon. The Fund this can reduce their investment capital
regular income from their investments. invests globally via direct global listed in the Trans-Tasman Fund.
The Income Fund makes quarterly equity holdings and carefully selected
The Dynamic Fund is suited to
distributions. Investors do have global managed funds (foreign currency
investors who want small and medium
the ability to ‘top up’ Income Fund exposures that come with global
Australasian company exposure in
distributions by withdrawing units, but investing are actively managed) and may
their portfolio and have a long-term
must recognise this can reduce their also have New Zealand and Australian
investment horizon. The Fund invests
investment capital in the Income Fund. holdings. The Global Fund is the only
primarily in Australia and New Zealand
foreign investment zero-rate PIE Fund
The Active Growth, Balanced and but will invest in other markets if good
Milford offers and any zero-rated
Global Funds are more suited to opportunities are found. The Fund is for
investor is subject to the requirements
investors who want us to actively investors who have a higher tolerance
of a notified foreign investor (please see
manage their investments and make for risk and is expected to be the most
page 29 for more information).
the decision about when to increase volatile Fund offered by Milford.
or decrease the exposure to equities. The Milford Trans-Tasman Fund is more
At the date of this Investment
These Funds look to preserve capital suited to investors who want to access
Statement, the minimum initial
in addition to generating growth. New Zealand and Australian share
investment amount is $10,000 for
Because of this, these Funds may market returns, but want the benefit
each of the Funds. We may at our
hold significant amounts of cash and of our ability to actively select entities
discretion vary this amount for any
may underperform in a strongly rising which are expected to outperform
of the Funds. A summary of the key
market. However, if we can successfully others. The Milford Trans-Tasman Fund
features of the Funds is shown on the
avoid losses in falling markets, the is expected to generally outperform the
next page.
Funds are more likely to perform well Active Growth Fund in rising markets
over time with less volatile returns. and underperform the Active Growth
Fund in falling markets. Therefore,
The Active Growth Fund focuses on
the Milford Trans-Tasman Fund is
New Zealand and Australian investments,
expected to be more volatile than
while the Balanced and Global Funds are
the Milford Active Growth Fund.
likely to have more of their investments
The Milford Trans-Tasman Fund makes
outside of Australasia when compared
a half yearly distribution to investors.
to the Active Growth Fund.
19Milford Unit Trust PIE Funds
Milford Income Fund Milford Balanced Fund
Recommended At least three years At least five years
Investment Time Frame
Investment Objective To provide a return above the 90-Day Bank Bill Capital growth over the medium to longer term
Index return over a three year period (after the
capped management fee and before tax and the
performance fee)
Investment Policy To actively manage a diversified mix of yield To actively manage a diversified investment portfolio
oriented investments (including fixed interest including New Zealand and global equities, fixed
securities and equities) and take an active approach interest securities, cash, unit trusts, global underlying
to sector and security selection. The Fund can short- managed funds and potentially unlisted entities.
sell securities and use derivative products The Fund can short-sell securities and use derivative
products
Distribution Policy Quarterly distributions are made by this Fund No distributions are made by this Fund
Regular withdrawal $200 per regular withdrawal $1,000 per regular withdrawal
Minimum payment†
Milford Active Growth Fund* Milford Global Fund
Recommended At least five years At least five years
Investment Time Frame (This Fund is not currently open to new investors)
Investment Objective A return of 10% over the medium to longer term To provide capital growth returns for investors that
(after the capped management fee and before tax exceed the New Zealand Official Cash Rate (‘OCR’) plus
and the performance fee) 5% per annum over the longer term (after the capped
management fee and before tax and the performance fee)
Investment Policy To actively manage equities in New Zealand, To actively manage a portfolio of global direct
Australian and global listed and unlisted entities investments (included listed equities, exchange traded
and unit trusts, cash and fixed interest securities. funds, derivatives, fixed interest securities and cash)
The Fund can borrow, short-sell securities and use and global underlying managed funds. The Fund can
derivative products borrow, short-sell securities and use derivative products
Distribution Policy No distributions are made by this Fund No distributions are made by this Fund
Regular withdrawal $1,000 per regular withdrawal $1,000 per regular withdrawal
Minimum payment†
Milford Trans-Tasman Fund Milford Dynamic Fund
Recommended At least five years At least five years
Investment Time Frame
Investment Objective To exceed a mix of 50% ASX 200 Total Return Index To exceed the ASX Small Industrials Accumulation
(in NZ dollars) and 50% NZX 50 Gross Index (after Index (after the capped management fee and before tax
the capped management fee and before tax and the and the performance fee)
performance fee)
Investment Policy To actively manage a portfolio of New Zealand To actively manage a portfolio of predominantly
and Australian listed entities, cash and potentially Australasian small and medium sized listed companies.
unlisted New Zealand entities and unit trusts. The In addition the Fund may hold fixed interest securities,
Fund can short-sell securities and use derivative derivatives and cash. The Fund can borrow, short-sell
products securities and use derivative products
Distribution Policy Half yearly distributions are made by this Fund No distributions are made by this Fund
Regular withdrawal $1,000 per regular withdrawal $1,000 per regular withdrawal
Minimum payment†
* Note that we are not currently accepting new investors into the Active Growth Fund. Existing investors in the Active Growth Fund may continue to make
new investments in the Active Growth Fund at our discretion. You should note that if you are an existing investor in the Active Growth Fund and you
subsequently redeem all of your units from the Active Growth Fund, you will not currently be able to make any further investments in the Active Growth
Fund after you have redeemed all of your units.
† The maximum number of regular withdrawals per year is 12.
20Investment Statement 18 June 2015
Fair and Simple Fees No management fee will be charged to a Fund by any other
Milford Fund that the Fund invests into either directly or
You should be able to see clearly both what investments
indirectly.
are being made on your behalf and how much you can expect
to pay for our management. This can equally apply to the There are no entry, exit or switching fees for the Milford Unit
cost of any advice that you may receive about how to invest. Trust PIE Funds.
The cost of advice should be clear and separate from the
cost of investment management. There are no advice costs Performance Fee
built into our Funds – you should seek separate financial
To incentivise ourselves to do well for our investors, we
advice if you feel that you need to do so.
also charge a performance fee in most of our Funds if
There are two types of fees when you invest in the we achieve certain investment objectives (or benchmarks).
Milford Unit Trust PIE Funds.
To the extent that assets of the Milford Balanced Fund are
invested in any other Milford Fund, any performance fee
Capped Management Fee
charged by us in respect of that Fund will remain payable.
We combine the investment management, Trustee,
To the extent the Income, Active Growth, Global,
custodial, Fund accounting, unit pricing, registry, audit,
Trans-Tasman or Dynamic Funds are invested into other
legal and other normal fund operating expenses in one
Milford wholesale funds, the investing Fund will not be
capped management fee.
charged a management or performance fee.
The fees for the Milford Unit Trust PIE Funds are
summarised below.
Milford Income Fund Milford Balanced Fund
Capped 0.65% p.a. 1.05% p.a.†
management fee*
Performance fee 10% of the performance of the Income Fund (after None directly paid from the Balanced Fund, although we
deducting the capped management fee) above the will potentially receive performance fees on any Balanced
investment objective is potentially payable to us (see Fund investments into the Milford Income, Active Growth,
pages 26 and 27 for more details) Global, Trans-Tasman and Dynamic Unit Trust PIE Funds
in our capacity as manager of those other Funds
Milford Active Growth Fund Milford Global Fund
Capped 1.05% p.a. 1.15% p.a.†
management fee*
Performance fee 15% of the performance of the Active Growth Fund 15% of the performance of the Global Fund (after
(after deducting the capped management fee) above deducting the capped management fee) above the
the investment objective is potentially payable to us investment objective is potentially payable to us
(see pages 26 and 27 for more details) (see pages 26 and 27 for more details)
Milford Trans-Tasman Fund Milford Dynamic Fund
Capped 1.05% p.a. 1.35% p.a.
management fee*
Performance fee 15% of the performance of the Trans-Tasman Fund 15% of the performance of the Dynamic Fund (after
(after deducting the capped management fee) above deducting the capped management fee) above the
the investment objective is potentially payable to us investment objective is potentially payable to us
(see pages 26 and 27 for more details) (see pages 26 and 27 for more details)
* Includes management fee paid to us as well as fees for Trustee, custody, registry, Fund accounting, unit price, audit services and any other normal
operating costs of running the Funds (including applicable GST). It excludes abnormal costs, brokerage and any performance fees.
† The Milford Balanced and Global Funds usually have an allocation to external global managers. Any global management fees charged by international
underlying fund managers are in addition to any of our fees and are deducted within each fund that the Milford Balanced and Global Funds invest into.
21Milford Unit Trust PIE Funds
INFORMATION REQUIRED BY THE SECURITIES ACT 1978
What sort of
investment is this?
The investments offered in this Investment Statement are The value of units in the Funds fluctuates according to the
units in the Milford Income Fund, the Milford Balanced Fund, changing value of the assets in which the Funds have
the Milford Active Growth Fund (for existing investors only), invested in. It is intended that the Funds will be priced daily.
the Milford Global Fund, the Milford Trans-Tasman Fund
The Funds are managed under the Trust Deed for our Unit
and the Milford Dynamic Fund (each a Fund and together
Trusts dated 20 August 2007 - as amended.
the Funds), unit trusts under the Unit Trusts Act 1960.
Our duties are supervised by Trustees Executors Limited,
A unit trust is an investment that enables you to pool your
the independent trustee of the Funds.
funds with those of others. Your interests are represented
by units, which confer an equal interest in a Fund and are of This Investment Statement is dated 18 June 2015
equal value. Pooling resources can enable access to a wider and is an Investment Statement for the purposes of the
variety of assets and provide greater diversity than you may Securities Act 1978.
achieve on your own.
Who is involved in
providing it for me?
The manager of the Funds is Milford Funds Limited. At the date of this Investment Statement, our Directors are:
We were incorporated in New Zealand under the Companies
> Richard John Somerville BCom, CA, ACIS
Act 1993 on 3 August 2007 to become the manager for the
Chairman and Director, Wanaka
Funds and other funds which we may create in the future.
There are no promoters of the Funds. Richard is a Chartered Accountant with a 25 year
career in Investment Banking, specialising in mergers
There are six Funds offered in this Investment Statement.
and acquisitions. Richard was previously a Director of
The Milford Active Growth Fund (Active Growth Fund), offered Southpac Corporation Limited, Chief Executive of Lloyds
to existing unitholders only and the Milford Trans-Tasman Fund Corporate Finance Limited in Sydney and most recently
(Trans-Tasman Fund), were established in Auckland on 20 was the Chief Executive of Societe Generale’s Investment
August 2007 under Conditions of Establishment forming part Banking business in Australia, trading under the name
of the Trust Deed. of SGHambros. Richard was also a Deputy Chairman of
New Zealand’s largest meat processing and marketing
The Milford Income Fund (Income Fund) and the Milford
organisation, Silver Fern Farms and is a Director of a
Balanced Fund (Balanced Fund) were established in
number of private companies in the areas of farming, wine
Auckland on 19 March 2010 under Deeds of Establishment
distribution, vehicle testing and infrastructure development.
supplemental to the Trust Deed.
He has private interests in aquaculture, viticulture and
The Milford Global Fund (Global Fund) was established in property. Richard is a foundation shareholder in Milford
Auckland on 11 March 2013, under a Deed of Establishment Asset Management Limited and has been Chairman of the
supplemental to the Trust Deed. board since Milford Asset Management Limited’s formation
in 2003.
The Milford Dynamic Fund (Dynamic Fund) was
established in Auckland on 3 September 2013, under a > Andrew (Mark) Cross BBS CA
Deed of Establishment supplemental to the Trust Deed. Director, Auckland
The investment policies, and more details about the six Mark Cross is a professional director and consultant,
Funds are set out earlier in this Investment Statement. following an investment banking career of over 20 years.
The investment policies may be amended by us from time He is currently chairman of MFL Mutual Fund Limited and
to time with the Trustee’s approval. Superannuation Investments Limited, and a director of
Genesis Energy Limited, Argosy Property Limited, Triathlon
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