NZ Funds KiwiSaver Scheme - Product Disclosure Statement
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NZ Funds KiwiSaver Scheme Product Disclosure Statement Issued by New Zealand Funds Management Limited 29 March 2019 This document replaces the Product Disclosure Statement dated 28 March 2018 This document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer on disclose-register.companiesoffice.govt.nz. New Zealand Funds Management Limited has prepared this document in accordance with the Financial Markets Conduct Act 2013. You can also seek advice from a financial adviser to help you to make an investment decision.
. Key information summary
What is this?
This is a managed investment scheme. Your money will be pooled You may apply to make an early withdrawal in limited
with other investors’ money and invested in various investments. circumstances, including:
New Zealand Funds Management Limited (NZ Funds, we, us or our) • First home purchase;
will invest your money and charge you a fee for its services. The
• Significant financial hardship;
returns you receive are dependent on the investment decisions of
NZ Funds and the performance of the investments. The value of • Serious illness; and
those investments may go up or down. The types of investments • Permanent emigration (other than to Australia).
and the fees you will be charged are described in this document.
If you permanently emigrate to Australia, you can apply to
transfer your investment to an Australian complying
What will your money be invested in? superannuation fund.
The NZ Funds KiwiSaver Scheme (Scheme) offers you four
Your ability to withdraw from the Scheme may be affected by
investment options to choose from: three funds (called the
NZ Funds' ability to suspend withdrawals.
Income Strategy, the Inflation Strategy, and the Growth Strategy)
and a life cycle investment option (called the LifeCycle Process). See section 2 of this PDS ‘How does this investment work?’
The LifeCycle Process is the default investment option. on page 6 for more information.
These investment options are summarised in the table on page 4.
How will your investment be taxed?
More information about the investment target and strategy for
each investment option is provided on page 10. The Scheme is a portfolio investment entity (PIE).
The LifeCycle Process investment option automatically allocates The amount of tax you pay in respect of a PIE is based on your
your investment across the three funds in the Scheme each year, prescribed investor rate (PIR). To determine your PIR, go to
based on your age. The portion of your investment allocated to www.ird.govt.nz/toii/pir/.
each fund will change over time. We have selected three examples See section 6 of this PDS ‘What taxes will you pay?’ on page
(age 0-54, age 65, and age 75) as specified life cycle stages to 14 for more information.
provide information on the LifeCycle Process investment option
in this Product Disclosure Statement (PDS). Where can you find more key information?
Who manages the NZ Funds KiwiSaver Scheme? NZ Funds is required to publish quarterly updates for each fund
and for each specified life cycle stage in the LifeCycle Process.
The manager of the Scheme is NZ Funds. The updates show the returns, and the total fees actually charged
See section 7 of this PDS ‘Who is involved?’ on page 14 for to investors, during the previous year. The latest fund updates are
more information. available at www.nzfunds.co.nz. NZ Funds will also give you copies
of those documents on request.
How can you get your money out? Some of the features of this offer, including the use of derivatives,
KiwiSaver is designed to help you save for retirement. Unless you may mean an investment in the Scheme is not appropriate for
satisfy one of the early withdrawal criteria, you cannot withdraw you. We recommend you discuss the features of this offer with a
your investment until you reach the Qualifying Age which, at the financial adviser before deciding whether to invest.
date of this PDS, is the later of:
• The age at which you become eligible for New Zealand
Superannuation (currently 65); or
• The date on which you have been a member of a KiwiSaver
scheme for five years, or if you transferred from a complying
superannuation fund, five years after you joined that fund (the
five year membership requirement).
If you first join a KiwiSaver scheme on or after 1 July 2019, your
Qualifying Age will usually be the age at which you become eligible
for New Zealand Superannuation (currently 65) regardless of
whether you meet the five year membership requirement.
Once you have reached the Qualifying Age, you can withdraw
some or all of your investment at any time.
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 3. Key information summary (continued)
fund /
investment estimated annual
option name objective strategy summary risk indicator fund charges
The Strategies are able to invest in a wide range of assets and do not have a target investment mix.
They may be invested in permitted assets in any proportion. The Strategies may invest directly, indirectly through derivatives,
and use specialist investment managers. The Strategies may also take active foreign currency positions.
To provide exposure It is anticipated that the Strategy will
to income assets mainly hold cash and cash equivalents, and 1.12%
Income using an active Australasian and international bonds. It may
management also invest in other permitted assets.*
Strategy
approach.
To mitigate the It is anticipated that the Strategy will mainly
impact of inflation hold inflation-sensitive assets including 1.42%
Inflation on your investment cash and cash equivalents, Australasian and Includes estimated
over the medium international bonds, and Australasian and performance fees.
Strategy
and/or long term international shares. It may also invest in See page 12.
by investing in other permitted assets.*
income and growth
assets using an
active management
approach.
To grow your It is anticipated that the Strategy will mainly
investment over hold Australasian and international shares, 1.67%
Growth the long term by and/or hedge funds. It may also invest in Includes estimated
Strategy investing in income other permitted assets.* performance fees.
and growth assets See page 12.
using an active
management
approach.
To allocate your Strategy allocation:
investment 1.62%
LifeCycle across the three Includes estimated
Strategies based 5% performance fees.
Process Age
10%
on your age to 0-54 See page 12.
– age 0-54 ensure that your 85%
investment is
allocated in a
manner that is
consistent with Strategy allocation:
your investment 1.43%
timeframe. Includes estimated
LifeCycle 27% performance fees.
Process Age
34%
65 See page 12
– age 65 Note: The
39%
LifeCycle Process
is the default
investment
option.
Strategy allocation:
1.39%
Includes estimated
LifeCycle 35% performance fees.
Process Age
34%
75 See page 12.
– age 75 31%
Income Strategy Inflation Strategy Growth Strategy
* See section 3 of this PDS for a list of permitted assets for each Strategy.
You also pay an administration fee of $36.00 per year ($3.00 per month) to the Scheme’s Administration Manager.
See page 11 for an explanation of the risk indicator and for information about other risks that are not included in the risk indicator. To help you
clarify your own attitude to risk, you can seek financial advice or work out your risk profile at www.nzfunds.co.nz/AdviceSolutions/RiskProfile/
4 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019contents
1. Key information summary 3
2. How does this investment work? 6
3. Description of your investment options 10
4. What are the risks of investing? 11
5. What are the fees? 12
6. What taxes will you pay? 14
7. Who is involved? 14
8. How to complain 14
9. Where you can find more information 14
10. How to apply 14
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 52. how does this investment work?
The NZ Funds KiwiSaver Scheme (Scheme) is registered under manner in which a Strategy is exposed to each security or asset
the Financial Markets Conduct Act 2013 as a KiwiSaver scheme class; investing directly or indirectly; using derivatives and/or
and is governed by an amended and consolidated trust deed any resulting leverage; using collective investment vehicles;
(Trust Deed) dated 12 October 2016, between NZ Funds and the using specialist investment managers (including hedge funds);
Scheme’s supervisor, The New Zealand Guardian Trust Company taking foreign currency positions; applying hedging; or taking
Limited (Supervisor). short positions.
The Scheme is designed to help you save for retirement. It is a The way in which our active management approach is implemented
'defined contribution' scheme. This means that you contribute may change over time. This may result in the Strategies being
to the Scheme over time and the benefits payable depend on constructed with different combinations of investments.
the amount of contributions made by you, your employer and the
Wholesale trusts and specialist investment managers
Government, investment returns on those contributions, and tax
and fees deducted. The Strategies may invest directly, or indirectly via wholesale
trusts. A wholesale trust is a wholesale fund managed by
The Scheme is made up of three actively managed funds (also
NZ Funds which holds investments. Those investments may
referred to as Strategies in this PDS): the Income Strategy, the
include directly held securities and/or investments in funds,
Inflation Strategy and the Growth Strategy. The money you
managed by either NZ Funds or external specialist investment
invest into a Strategy is pooled with other investors’ money to
managers (including hedge funds). The wholesale trust
purchase assets. You will be allocated units in each Strategy
structure provides an effective way for investors to access
you invest in which represent your proportionate holding in
these specialist investment managers. Specialist investment
the Strategy. The units do not give you legal ownership of the
managers may be selected where NZ Funds considers their
Strategy’s assets but they give you the right to a share of any
investment approach will help meet the objectives of the
returns from those assets.
Strategies. The current specialist investment managers are
The number of units you are allocated is based on the price per available on our website.
unit, called the unit price. The performance of your investment
Use of derivatives
will be measured by the rise or fall of the unit price. As the
combined value of the assets owned by a Strategy increases or It is important that you know that each Strategy has the ability
decreases, so too will the unit price. to use derivatives. A derivative is a financial instrument, the
value of which is derived from changes in the value of another
It is important to note that no person guarantees the
asset (for example, a share market index, a commodity, a bond,
performance of the Scheme, including any returns or repayment
or a currency). Examples of derivatives include futures, options,
of your investment. There is no Government guarantee for any
forwards and swaps.
KiwiSaver scheme or any KiwiSaver fund you invest in.
Some examples of how derivatives may be used in a Strategy
The assets of a Strategy are not available to meet the liabilities
include:
of any other Strategy in the Scheme.
• To gain exposure to an asset and/or asset class;
Features and benefits • To modify exposure to an asset and/or asset class; and
Some of the features of this offer, including the use of derivatives, • To hedge or seek to mitigate exposure to an asset and/or
may mean an investment in the Scheme is not appropriate for asset class.
you. We recommend you discuss the features of this offer with a The use of derivatives can result in a Strategy being leveraged
financial adviser before deciding whether to invest. which means small changes in the value of an underlying asset on
LifeCycle Process which the Strategy holds a derivative may result in substantial
gains or losses for the Strategy.
The LifeCycle Process is the default investment option. The
LifeCycle Process automatically allocates your investment Economic exposure
across the three Strategies each year, based on your age. Economic exposure is a measure developed and used by
Regularly reallocating your investment can have a significant NZ Funds to illustrate a Strategy's total exposure. The use of
bearing on the long term success of your investment in KiwiSaver. derivatives can result in a Strategy's economic exposure being
Active management greater than it's net asset value. There are limits on the economic
exposure that may be incurred by some Strategies. For more
NZ Funds uses an active investment management approach that information on the Strategies’ economic exposure, see the ‘Other
seeks to maintain a balance between preserving your capital Material Information’ document on the offer register at disclose-
and growing your wealth in a manner that is consistent with each register.companiesoffice.govt.nz.
Strategy’s objective.
In managing the Strategies, we take a wide variety of actions and
are not constrained by a benchmark or target asset allocation.
The actions we take include, but are not limited to: altering the
proportion invested in each security or asset class; altering the
6 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 20192. how does this investment work? (continued)
Joining the Scheme The LifeCycle Process is designed for investors who want
to remain invested through their retirement years and draw
As at the date of this PDS, you can join the Scheme if you are: down on their savings regularly. It may not be appropriate for
• A New Zealand citizen or entitled to be in New Zealand investors who plan to withdraw all or a significant portion of their
indefinitely; investment when they reach the Qualifying Age or early into their
• Living or normally living in New Zealand (with some retirement years. The LifeCycle Process may also be unsuitable
exceptions); and for investors who plan to make a first home purchase withdrawal
• Under the age of eligibility for New Zealand Superannuation in the short to medium term.
(currently 65) unless you are transferring from another MemberChoice Process
KiwiSaver scheme.
If the LifeCycle Process is not suitable for you, you can invest
From 1 July 2019, you no longer need to be under the age of using the MemberChoice Process. Under the MemberChoice
eligibility for New Zealand Superannuation (currently 65) to join Process, you choose which Strategy or Strategies your
the Scheme, so long as you meet the other eligibility criteria above. contributions will be invested in (and the proportion to be
You can join the Scheme by completing an application form at the invested in each Strategy).
back of this PDS or by applying online at www.nzfunds.co.nz. If you are thinking about opting out of the LifeCycle Process, you
should discuss your options with a financial adviser or NZ Funds.
Investment choices
You can switch between the LifeCycle Process and MemberChoice
You can invest in the Scheme in one of two ways: using either the
Process at any time, subject to NZ Funds' ability to suspend
LifeCycle Process or the MemberChoice Process. It is generally
switches. See page 9 for more information on how to switch.
intended that members will use the LifeCycle Process which
ensures their investment is allocated across the Strategies based Making investments
on their age. Your investment will automatically be allocated
according to the LifeCycle Process, unless you select the Member contributions
MemberChoice Process. You can contribute to the Scheme in the following ways:
LifeCycle Process • For employees only, by payments via your employer through
the PAYE system.
The LifeCycle Process automatically allocates your investment
across the Strategies each year, based on your age. Until you turn • For all members (including employees), by regular or lump sum
55, your allocation across the Strategies will remain constant and payments made directly to the Scheme or to Inland Revenue.
your investment will be largely in the Growth Strategy. As you get If you are an employee, you can elect a contribution rate of 3%,
closer to retirement, more of your investment will automatically 4%, 6%, 8%, or 10% of your before-tax salary or wages. If you
be allocated to the Inflation Strategy and the Income Strategy. don’t elect a contribution rate, your contribution rate will be set at
The chart below shows the current Strategy allocations under the 3%. You can change your contribution rate at any time by telling
LifeCycle Process. You should be aware that these allocations your employer.
may change from time to time.
LifeCycle Process - current Strategy allocations
This chart shows the current Strategy allocations under the LifeCycle Process. These allocations may change from time to time.
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 72. how does this investment work? (continued)
Your employer will deduct your contributions from your after-tax Withdrawing your investments
salary or wages and pay them to Inland Revenue who will forward
them to the Scheme. KiwiSaver is designed to help you save for retirement. Under
the KiwiSaver Act 2006, unless you satisfy one of the early
If you are an employee, and under the Qualifying Age, you must withdrawal criteria, you cannot withdraw (other than to transfer
contribute at the minimum employee contribution rate (3%) to another KiwiSaver scheme) until you reach the Qualifying Age.
unless you take a savings suspension.
If you first join a KiwiSaver scheme on or after 1 July 2019,
Any member (including if you are self employed or not employed) your Qualifying Age will usually be the age at which you become
can make voluntary contributions to the Scheme by lump sum eligible for New Zealand Superannuation (currently 65). However,
payments or regular contributions. There is currently no minimum if you first joined a complying superannuation fund before that
amount for voluntary lump sum or regular contributions. We will date (and then transfer to a KiwiSaver scheme from that fund)
notify you if we introduce a minimum contribution amount. you must still meet the five year membership requirement.
If you choose to make a lump sum contribution, payment can be From 1 April 2020, you can opt out of the five year membership
made directly to the Scheme or to Inland Revenue. To make a requirement by notifying us (meaning that your Qualifying Age
payment directly to the Scheme, you will need to complete a lump will then be the age at which you become eligible for New Zealand
sum contribution form and send it to the Administration Manager. Superannuation (currently 65)). However, if you opt out, you will
This form is available on our website. no longer be eligible to receive any Government contributions or
If you choose to make regular contributions, you will need to compulsory employer contributions once you become eligible for
complete the direct debit form at the back of this PDS. New Zealand Superannuation.
Employer contributions Reaching KiwiSaver Qualifying Age
You may be eligible to receive compulsory employer contributions Once you reach the Qualifying Age, you can withdraw some or all
if you: of your investment at any time. There is no obligation for you to
withdraw when you reach the Qualifying Age.
• Are an employee and contributing to the Scheme through your
salary or wages; Early withdrawals
• Are aged 18 years or older; and You may apply to withdraw some or all of your investment before
• Have not reached the Qualifying Age. you reach the Qualifying Age in the following circumstances:
Compulsory employer contributions are currently 3% of your First home purchase
before-tax salary or wages.
You can apply to withdraw some of your investment to purchase a
Your employer does not have to make compulsory employer first home in New Zealand if you meet all of the following:
contributions to the Scheme if you are not contributing (for • You have been a member of a KiwiSaver scheme or complying
example, if you are taking a savings suspension or are on leave superannuation fund for a combined total period of at least
without pay). Your employer may choose to make voluntary three years;
employer contributions to the Scheme at any time over and above
• The property you are going to purchase is, or is intended to be,
the compulsory employer contribution rate.
your principal place of residence;
All employer contributions will be subject to employer’s • You have never owned property before (unless Housing New
superannuation contribution tax (ESCT) which is deducted from the Zealand confirms you are in the same financial position as a
employer contributions before these are forwarded to the Scheme. first time home buyer); and
Government contributions • You have not made a withdrawal for a first home purchase
before.
You may also be eligible to receive a member tax credit from the
Government at the rate of 50 cents for each dollar you contribute You must leave $1,000 and any amount transferred from an
up to a maximum of $521.43 per year. Australian complying superannuation fund in your KiwiSaver
account after the withdrawal.
Member tax credits are calculated annually based on the total
contributions you have made during the last year (1 July to 30 Significant financial hardship
June) and the number of days during that year that you were
If you are suffering or are likely to suffer significant financial
eligible to receive member tax credits. You will be eligible if you:
hardship, you may apply to the Supervisor to withdraw some
• Are aged 18 years or older; of your investment. To withdraw on the grounds of significant
• Have not reached the Qualifying Age; and financial hardship, the Supervisor must be reasonably satisfied
• Live (or normally live) in New Zealand (subject to some you are suffering (or are likely to suffer) significant financial
exceptions). hardship and that reasonable alternative sources of funding have
been exhausted.
To receive the maximum, you must have been eligible for the full
year (1 July to 30 June).
8 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 20192. how does this investment work? (continued)
The Supervisor may limit the amount withdrawn to an amount Payment of withdrawal proceeds
that it considers is sufficient to alleviate the particular hardship
Withdrawal proceeds are normally paid to your nominated bank
and you cannot withdraw any Government contributions.
account within 35 days of the withdrawal request being received
Serious illness and processed by the Administration Manager.
If you are suffering from a serious illness, you may apply to the Suspension of withdrawals, transfers or switches
Supervisor to withdraw your entire investment.
In certain circumstances, NZ Funds may suspend withdrawals,
The Supervisor will require medical evidence from you to support transfers or switches where it considers it is not practicable or
your application to withdraw for reasons of serious illness. would prejudice the interests of members.
Death For more information on withdrawals, see the ‘Other
Material Information’ document on the offer register at
If you die while a member of the Scheme, your personal
disclose-register.companiesoffice.govt.nz. Withdrawal
representatives (the executors or administrators of your estate)
forms are available on our website.
can apply to withdraw the balance of your investment in the
Scheme which will be paid to your estate.
How to switch between funds
Permanent emigration
If you invest using the LifeCycle Process, your investment will be
If you move overseas and do not intend to return to New Zealand reallocated between the Strategies each year based on your age.
to live, you may apply to withdraw your investment (less the You do not need to complete a switch form for this to occur as
member tax credits and any amounts transferred from an your holdings will be switched automatically.
Australian complying superannuation fund) one year after you
If you invest using the MemberChoice Process and wish to
have permanently left New Zealand.
change the allocation of your investment, or if you wish to switch
These rules do not apply if you permanently move to Australia. between the LifeCycle Process and the MemberChoice Process,
If you permanently move to Australia, you may apply to transfer you will need to complete a switch form and send it to the
your investment in the Scheme (including member tax credits) to Administration Manager. This form is available on our website.
an Australian complying superannuation fund.
NZ Funds may suspend switches in certain circumstances as
Other withdrawals outlined above.
If you have transferred savings from an Australian complying
superannuation fund to a KiwiSaver scheme you can withdraw
that amount when you reach age 60 and satisfy the 'retirement'
definition in Australian legislation.
If you make a transfer from a foreign superannuation or pension
scheme (excluding an Australian scheme) and New Zealand tax
is payable by you in connection with the transfer, or an additional
student loan repayment obligation arises as a result of the
transfer, you may be able to make a withdrawal from the Scheme
to pay that tax or repayment obligation.
The Supervisor and NZ Funds will comply with the provisions of
any legislation or Court order that requires either to release some
or all of your investment from the Scheme whether or not you
have reached the Qualifying Age (for example, in relation to the
Property (Relationships) Act 1976).
Conditions apply to each of the above withdrawals. For example,
you will need to provide information confirming that you are
eligible to make a withdrawal.
Transfer to another KiwiSaver scheme
You may apply at any time to transfer your investment in the
Scheme to another KiwiSaver scheme. You can only be a member
of one KiwiSaver scheme at a time. If the provider of the KiwiSaver
scheme to which you are transferring accepts your application
for membership, NZ Funds will transfer your investment to that
scheme and you will cease to be a member of the Scheme.
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 93. description of your investment options
minimum
fund / suggested
investment strategy risk investment
option name objective permitted assets* summary category timeframe
The Strategies are able to invest in a wide range of assets and do not have a target investment mix.
They may be invested in permitted assets in any proportion. The Strategies may invest directly, indirectly through derivatives,
and use specialist investment managers. The Strategies may also take active foreign currency positions.
To provide exposure to • Cash and cash equivalents It is anticipated that the Strategy will 2 years+
income assets using an active • New Zealand fixed interest mainly hold cash and cash equivalents,
Income management approach. • International fixed interest and Australasian and international
Strategy bonds. It may also invest in other
• Alternative securities**
permitted assets.
To mitigate the impact of • Cash and cash equivalents It is anticipated that the Strategy will 5 years+
inflation on your investment • New Zealand fixed interest mainly hold inflation-sensitive assets
Inflation over the medium and/or • International fixed interest including cash and cash equivalents,
Strategy long term by investing in Australasian and international bonds,
• Australasian equities
income and growth assets and Australasian and international
using an active management • International equities shares. It may also invest in other
approach. • Listed property permitted assets.
• Commodities
• Alternative securities**
To grow your investment over It is anticipated that the Strategy 10 years+
the long term by investing in will mainly hold Australasian and
Growth income and growth assets international shares, and/or hedge
Strategy using an active management funds. It may also invest in other
approach. permitted assets.
To allocate your investment At age 0-54, your investment will be allocated as follows: 10 years+
across the three Strategies
LifeCycle based on your age to ensure
that your investment is 5% Income Strategy
Process Age
– age 0-54 allocated in a manner that 10% Inflation Strategy
0-54
is consistent with your 85% Growth Strategy
investment timeframe.
At age 65, your investment will be allocated as follows: 10 years+
LifeCycle
Process 27% Income Strategy
Age
– age 65 65
34% Inflation Strategy
39% Growth Strategy
At age 75, your investment will be allocated as follows: 5 years+
LifeCycle
Process 35% Income Strategy
Age
– age 75 34% Inflation Strategy
75
31% Growth Strategy
* The asset classes listed are from the Financial Markets Conduct Regulations 2014 (Regulations), except for ‘alternative securities’ which falls under ‘Other’ in the Regulations. These are
the same asset classes used in the fund updates. For more information on each asset class, see the Statement of Investment Policy and Objectives (SIPO).
** ‘Alternative securities’ means asset classes not usually accessed by retail investors, for example, private equity, venture capital and hedge funds. These tend to be asset classes where
valuation and liquidity may be uncertain and returns may be volatile.
For more information on NZ Funds’ investment approach, see the Statement of Investment Policy and Objectives (SIPO). NZ Funds may
make changes to the SIPO at any time after consulting with the Supervisor. A description of any material changes to the SIPO will be
included in the Scheme’s annual report. Where required by the Trust Deed or law, you will receive notice of material changes before they
occur. The current SIPO for the Scheme is available on the scheme register at disclose-register.companiesoffice.govt.nz.
Responsible investment, including environmental, social, and governance considerations, is taken into account in the investment
policies and procedures of the Scheme as at the date of this PDS. You can obtain an explanation of the extent to which responsible
investment is taken into account in those policies and procedures at our internet site at www.nzfunds.co.nz.
Further information about the assets in each Strategy can be found in the fund updates at www.nzfunds.co.nz.
10 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 20194. what are the risks of investing?
Understanding the risk indicator be high risk. The use of these instruments and techniques may
increase the volatility of a Strategy and may also significantly
Managed funds in New Zealand must have a standard risk indicator. increase the risk and extent of any loss. Examples include:
The risk indicator is designed to help investors understand the
• Derivatives. A derivative is a financial instrument, the value
uncertainties both for loss and growth that may affect their
investment. You can compare funds using the risk indicator. of which is derived from changes in the value of another asset
(for example, a share market index, a commodity, a bond, or
The risk indicators for the investment options offered under this a currency). The use of derivatives can result in a Strategy
PDS can be found on page 4. being leveraged which means small changes in the value of an
underlying asset on which the Strategy holds a derivative may
result in substantial losses for the Strategy.
4 • Short positions. When taking a short position, the seller seeks
to profit from a fall in the price of a security. However, there is
no assurance that the price will fall and if it rises a loss will
be incurred.
The risk indicator is rated from 1 (low) to 7 (high). The rating
reflects how much the value of the fund’s assets goes up and down • Asset concentration. The Strategies can hold permitted asset
(volatility). A higher risk generally means higher potential returns classes and securities in any proportion or concentration,
over time, but more ups and downs along the way. meaning that the Strategies may not be diversified. For example,
a Strategy may be predominantly invested in a specific security,
To help you clarify your own attitude to risk, you can seek financial
specialist investment manager, asset class, country or sector
advice or work out your risk profile at www.nzfunds.co.nz/
and may be particularly exposed to any adverse circumstances
AdviceSolutions/RiskProfile/.
affecting them.
Note that even the lowest category does not mean a risk-free • Higher risk securities and/or managers. The Strategies can
investment, and there are other risks (described under the heading invest in some securities or managers (for example, hedge funds)
'Other specific risks') that are not captured by this rating. which are higher risk than the risk indicator of the Strategy
The risk indicator is not a guarantee of a fund’s future where NZ Funds assesses that the investment will not materially
performance. The risk indicator is based on the returns data for alter the Strategy’s risk indicator. In making this assessment,
the five years to 31 December 2018. While risk indicators are NZ Funds may consider the different types of risk a Strategy is
usually relatively stable, they do shift from time to time. You can exposed to, asset correlations, liquidity and NZ Funds' active
see the most recent risk indicator in the latest fund update for management approach. However, actual results may differ,
the relevant investment option. increasing the risk and/or extent of any loss.
The risk indicator is based on historical returns only. It takes no Other specific risks
account of expected future risk or potential returns. It may not be
a reliable indicator of future risk, volatility or expected returns. Other circumstances that can significantly increase the risk
to returns for investors and that are not reflected in the risk
General investment risks indicator include:
Some of the things that may cause a Strategy’s value to move up LifeCycle Process risk
and down, which affect the risk indicator, are: There is a risk that the predefined age-based asset allocation
Market risk used in the LifeCycle Process may not be suitable for you as it
does not take into account your personal circumstances, such as
Market risk is the risk of volatility or loss caused by a change
your attitude to risk or your financial circumstances. If you have
in the value of the investments held by a Strategy. Market risk
any concerns about the LifeCycle Process you should discuss
arises from uncertainty about the future value of investments
them with a financial adviser or NZ Funds.
held by a Strategy. These changes may be caused by factors
specific to an investment, or as a result of factors affecting Active management
financial markets generally.
NZ Funds uses an active management approach. An active
Illiquid securities management approach is subject to different risks (which may be
The Strategies may hold illiquid securities. Illiquid securities are considered higher risks) than a non-active management approach.
assets that cannot quickly be converted or exchanged for cash (or As a result, NZ Funds’ active management approach may cause
not without a significant loss in value). Illiquid securities generally the returns and capital stability of the Strategies to significantly
carry a greater risk than liquid securities, particularly during times differ from the returns and capital stability of the underlying
of market turmoil. Investment illiquidity may make it difficult to asset classes utilised.
value, acquire or dispose of assets. Wide mandates
Certain investment instruments and techniques The Trust Deed and SIPO for the Scheme enable NZ Funds to
NZ Funds and underlying specialist investment managers are able invest in a wide range of assets and to change assets quickly
to use certain investment instruments and techniques which can and without notice to investors. As part of its investment
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 114. what are the risks of investing? (continued)
management process, NZ Funds has developed internal loss. NZ Funds has a due diligence process for appointing specialist
investment guidelines which assist in the oversight of investment managers and all managers are monitored and reviewed.
each Strategy. Key person risk
Specialist investment managers The Strategies may be dependent on the services of key personnel
NZ Funds’ investment strategy may include the selection of of NZ Funds and may be adversely affected by the departure or
underlying specialist investment managers. There are a number performance of key personnel.
of risks associated with investing with a specialist investment For more information on the risks of investing in the Scheme,
manager, including wide mandates, redemption restrictions, and see the 'Other Material Information' document on the offer
the risk that a manager selected underperforms or generates a register at disclose-register.companiesoffice.govt.nz.
5. what are the fees?
You will be charged fees for investing in the Scheme. Fees are deducted from your investment and will reduce your returns. If NZ Funds
invests in other funds, those funds may also charge fees. The fees you pay will be charged in two ways:
• Regular charges (for example, annual fund charges). Small differences in these fees can have a big impact on your investment over
the long term.
• One-off fees (for example, certain transfer fees).
fund name/ base fee service specialist nz funds total other charges
investment option charges investment performance fees annual fund
(estimated) manager fees (estimated) charges
(estimated) (estimated)
Income Strategy 0.95% + 0.17% + n/a + n/a = 1.12%
Inflation Strategy 1.05% + 0.17% + 0.18% + 0.02% = 1.42%
Administration
Growth Strategy 1.10% + 0.17% + 0.38% + 0.02% = 1.67% fee of $36.00
per annum per
LifeCycle Process – age 0-54 1.09% 0.17% 0.34% 0.02% 1.62% member.
LifeCycle Process – age 65 1.04% + 0.17% + 0.21% + 0.01% = 1.43%
LifeCycle Process – age 75 1.03% 0.17% 0.18% 0.01% 1.39%
The figures in the table above are expressed as a percentage of the net asset value of each Strategy. The total annual fund charges include a combination of fixed and
variable (performance-based) fees and therefore actual fund charges will vary from the estimates depending on performance. Annual fund charges are deducted from the
Strategy or the underlying funds it invests in (as applicable) and reflected in the Strategy’s unit price.
Description of the above fee categories:
fee description
Base fee Each Strategy is charged an annual base fee by NZ Funds for managing the Strategy. The base fees are fixed as a percentage
of the gross asset value of each Strategy. For the purposes of the table above, these charges have been estimated as a
percentage of net asset value. Base fees are accrued daily and paid to NZ Funds monthly in arrears.
Service charges These cover estimated charges for services provided to the Strategies and related underlying funds (wholesale trusts) that
the Strategies invest in, such as fund administration, custody, audit and legal, including the Supervisor’s fees.
Specialist investment These cover fees, including performance fees, that may be charged by underlying specialist investment managers (not related to
manager fees NZ Funds). These fees are an estimate. Actual specialist investment manager fees will depend on the managers selected (which
will change from time to time) and on their performance, and will vary from the estimates. Past performance is not indicative of
future performance.
NZ Funds NZ Funds may charge a performance fee in certain wholesale trusts that a Strategy invests in when specific performance
performance fees targets are met. These fees are an estimate. Actual performance fees will depend on the performance of the relevant wholesale
trust where a performance fee is charged and will vary from the estimates. Past performance is not indicative of future
performance. For more information on NZ Funds performance fees, see ‘NZ Funds performance-based fees’ on page 13.
Other charges The Administration Manager charges you an administration fee of $3.00 per month for the administrative services it performs
for the Scheme. The fee is deducted from your investment each month in arrears.
For more information on the above fees and charges, including the basis of estimates, see the 'Other Material Information'
document on the offer register at disclose-register.companiesoffice.govt.nz.
12 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 20195. what are the fees? (continued)
NZ Funds performance-based fees Individual action fees
None of the Strategies are charged a performance fee directly by There are currently no establishment, contribution, termination or
NZ Funds. However, the Inflation and Growth Strategies currently withdrawal fees charged.
invest in the Private Dividend Yield Trust, a wholesale trust in
All fees are stated exclusive of GST or other similar tax. This
which NZ Funds may charge a performance fee. This performance
means that if any GST, or other similar tax, is payable on any fee,
fee is based on a hurdle rate of return. The hurdle rate is the
that tax will be payable in addition to the amount of the fee.
minimum return the Private Dividend Yield Trust must achieve
before being able to charge a performance fee. NZ Funds may, in its discretion and from its own funds, reduce,
pay, contribute to or rebate some of the fees and expenses
The performance fee charged by the Private Dividend Yield Trust
described in this section.
is detailed in the table below:
Hurdle rate 70% S&P/NZX 50 Portfolio Index Gross with Example of how fees apply to an investor
of return* Imputation, 30% S&P/ASX Accumulation 200
Index. Liam invests $10,000 in the Growth Strategy. He is charged
Amount of 15% of the amount by which the performance of the management and administration charges (comprising base
performance Private Dividend Yield Trust (with imputation credits fee, service charges, and specialist investment manager
fee but before tax and after deduction of a notional base fees), which work out to about $165 (1.65% of $10,000).
fee**) exceeds the hurdle rate of return. These fees might be more or less if his account balance has
increased or decreased over the year.
Frequency of A performance fee is accrued if the performance
calculation of the Private Dividend Yield Trust has exceeded Liam may also be indirectly charged a performance-based
and payment its hurdle rate of return. However, the payment of fee if the Private Dividend Yield Trust (a related underlying
any performance fee can only occur once the high fund) in which the Growth Strategy is invested earned more
water mark is achieved. than its target.
The performance fee is calculated and accrued Over the next year, Liam pays other charges of $36.
on a daily basis and is payable annually in arrears estimated total fees for the first year
within 30 days of 31 March each year. Fund charges $167*
High Water A high water mark is the value a fund must reach Other charges $36
Mark before the manager can be paid a performance * Includes estimated NZ Funds performance-based fee of $2.
fee. The Private Dividend Yield Trust’s high water See the latest fund update for an example of the actual
mark is the net asset value per unit the last returns and fees investors were charged over the past year.
time a performance fee was determined to be This example applies only to the Growth Strategy. If you
payable or 31 March 2019 in the case of the first are considering investing in other investment options in the
performance fee. Scheme, this example may not be representative of the actual
The Private Dividend Yield Trust uses a fees you may be charged.
combination of recognised market indices as its
performance hurdle rate. The high water mark
ensures all underperformance is recovered before The fees can be changed
a performance fee is payable. If the high water
Under the KiwiSaver Act, all fees charged to you must be
mark is not achieved, performance gains are
‘reasonable’. NZ Funds, the Supervisor, and the Administration
carried forward to the next year.
Manager may alter the fees described in this section or introduce
Maximum There is no limit on the amount of performance new fees, subject to the KiwiSaver Act and the Trust Deed.
amount fee that may be paid.
NZ Funds must publish a fund update for each fund and each
Changing the NZ Funds may alter the rate and basis of calculation specified life cycle stage showing the fees actually charged
performance of the performance fee by providing one month’s during the most recent year. Fund updates including past updates,
fee notice to all investors in the relevant Strategy. are available at www.nzfunds.co.nz.
* The hurdle rate of return for the performance-based fee payable to NZ Funds
is based on the performance of the Private Dividend Yield Trust. This means a
performance-based fee may be charged indirectly to you even if the Inflation or
Growth Strategy’s overall performance is below the market index as reported in
the fund updates.
** The Private Dividend Yield Trust is not charged a base fee by NZ Funds.
However, for the purposes of calculating performance fees a notional base fee
of 0.40% per annum is deducted.
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 136. what taxes will you pay? 8. how to complain
The NZ Funds KiwiSaver Scheme is a portfolio investment entity. In the first instance, please contact NZ Funds. Our contact details
The amount of tax you pay is based on your prescribed investor are set out in section 7 of this PDS ‘Who is involved?’.
rate (PIR). To determine your PIR, go to www.ird.govt.nz/toii/ Complaints about an investment can also be made direct to
pir/. If you are unsure of your PIR, we recommend you seek the Supervisor:
professional advice or contact the Inland Revenue Department.
Attention: NZ Funds Relationship Manager
It is your responsibility to tell NZ Funds your PIR when you invest The New Zealand Guardian Trust Company Limited
or if your PIR changes. If you do not tell NZ Funds, a default rate Level 14, 191 Queen Street
may be applied. PO Box 274
If the advised PIR is lower than the correct PIR, you will need to Auckland 1140
complete a personal tax return and pay any tax shortfall, interest, T. 09 909 5100
and penalties. If the default rate or the advised PIR is higher than E. ct-auckland@nzgt.co.nz
the correct PIR, you will not get a refund of any overpaid tax.
For more information on tax, see the 'Other Material Dispute resolution scheme
Information' document on the offer register at disclose- NZ Funds and the Supervisor are both members of an approved
register.companiesoffice.govt.nz. dispute resolution scheme run by Financial Services Complaints
Limited (FSCL). If your complaint has not been resolved to your
satisfaction, you can contact FSCL:
7. who is involved? Attention: Early Assistance Officer
Financial Services Complaints Limited
PO Box 5967
About NZ Funds Wellington 6145
NZ Funds is the manager of the NZ Funds KiwiSaver Scheme. T. 04 472 3725 or 0800 347 257
E. complaints@fscl.org.nz
NZ Funds makes decisions about what assets the Strategies
W. www.fscl.org.nz
invest in and may appoint underlying specialist investment
managers. NZ Funds is also responsible for the design of the
FSCL will not charge a fee to any complainant to investigate or
LifeCycle Process. Our contact details are:
resolve a complaint.
Attention: Head of Client Services
New Zealand Funds Management Limited
Level 16, 21 Queen Street 9. where you can find more information
Private Bag 92163
Auckland 1142
T. 09 377 2277 or 0508 733 337 Further information relating to the Scheme and the Strategies,
E. info@nzfunds.co.nz such as financial statements, annual reports, quarterly fund
W. www.nzfunds.co.nz updates, the 'Other Material Information' document, the
Trust Deed and the SIPO for the Scheme, is available on the
Who else is involved? offer register and the scheme register at disclose-register.
companiesoffice.govt.nz. A copy of information on the offer
title name role register and the scheme register is available on request to the
Registrar of Financial Service Providers.
Supervisor and The New Zealand Supervisor of the Scheme
Custodian Guardian Trust under the Financial Markets Fund updates and other information relating to the Strategies
Company Limited Conduct Act 2013, (including the ‘Other Material Information’ document and the
responsible for supervising SIPO) is also available on our website. You may request a copy of
NZ Funds as manager of the
Scheme and holding Scheme
this information from us free of charge.
property on trust for the
Scheme.
Administration Link Market Appointed as the 0. how to apply
Manager Services Limited administration manager of the
Scheme, responsible for the
day-to-day administration of You can apply to join the NZ Funds KiwiSaver Scheme by
the Scheme and each Strategy,
completing an application form at the back of this PDS or by
including maintaining the
register of members. applying online at www.nzfunds.co.nz. You will be required to
verify your identity and address for the purposes of the Anti-
Money Laundering and Countering Financing of Terrorism Act
2009 (AML/CFT Act).
14 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019Application Form
NZ Funds KiwiSaver Scheme Product Disclosure Statement dated 29 March 2019.
Return to Freepost NZ Funds KiwiSaver Scheme, Private Bag 92050, Victoria Street West, Auckland 1142, or by email to
nzfkiwi@linkmarketservices.com.
1 | Applicant details
Name
title first name middle name(s) surname
Date of birth
day month year
Residential address (not PO box)
street
suburb town / city postcode
Postal address (if different)
street / PO box
suburb town / city postcode
Phone
mobile home business
Email address
If you supply an email address, we will send you information relating to your investment by electronic means.
No email
We suggest using your personal rather than work email address as this is less likely to change over time.
Are you a member of another KiwiSaver scheme?
Yes No/I don't know If Yes, please name the scheme.
IRD number Prescribed Investor Rate (PIR) (Please select one rate only)
10.5% 17.5% 28%
You must provide your IRD number and select a PIR for this investment. The amount of tax you pay on your NZ Funds KiwiSaver Scheme
investment is based on your PIR.
To determine your PIR, go to www.ird.govt.nz/toii/pir/. If a rate is not selected, the default rate of 28% will apply. See section 6 of the
Product Disclosure Statement ‘What taxes will you pay?’ for more information.
Continued over...
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 : : application form 152 | Investment options (Please select one only*)
LifeCycle Process - I wish to allocate to the Strategies based on the LifeCycle Process.
OR
MemberChoice Process - I wish to make my own allocation to the following Strategy or Strategies:
% allocation
Income Strategy
Inflation Strategy
Growth Strategy
Total 100%
* I f neither option is ticked, your investment will be allocated according to the LifeCycle Process.
For details of the LifeCycle Process and each Strategy, see the Product Disclosure Statement.
3 | Employment status (Please select one only)
Employed Self employed Not employed
Minor (under 16 years old) Minor (16 to 18 years old)
Occupation
Employer name (if applicable)
4 | Payment options (Please select one or more)
I wish to contribute from my salary and wages: 3% 4% 6% 8% 10%
If you are employed and new to KiwiSaver, please ensure you complete the KiwiSaver deduction form (KS2) and provide this to
your employer. A copy of this form is available either from your employer or from the Inland Revenue website.
I wish to make a lump sum contribution of $ by way of cheque.
Please make any cheques payable to NZ Guardian Trust - NZ Funds KiwiSaver Scheme marked ‘Account Payee Only’.
I wish to make regular contributions per the completed Direct Debit Form attached.
Continued over...
16 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 : : application form5 | Applicant declaration
By signing this Application Form, I confirm that:
• All details provided in this Application Form are correct. • I authorise NZ Funds to disclose personal information to the
Financial Markets Authority as may be required from time to time
• I have received, read and understood the Product Disclosure under the Financial Markets Conduct Act 2013 or any other law.
Statement dated 29 March 2019 to which this Application Form
was attached. I understand that additional information about the • I consent to NZ Funds and the Administration Manager
NZ Funds KiwiSaver Scheme is available on the online register entry communicating with me, and providing me with information,
at disclose-register.companiesoffice.govt.nz. by electronic means (i.e. by email, as provided by me, and/or by
providing me with a URL link, or with information through an
• I agree to be bound by the terms and conditions contained in electronic facility). These communications may include, but not be
the Product Disclosure Statement, the Trust Deed (as amended limited to, general correspondence, investment updates, and legally
from time to time) and the online register entry relating to the required communications or documents (including annual reports,
NZ Funds KiwiSaver Scheme. annual member statements (confirmation information), and annual
tax statements).
• I meet the eligibility criteria for joining the NZ Funds KiwiSaver
Scheme set out in the Product Disclosure Statement. • NZ Funds, the Supervisor and the Administration Manager are
entitled to rely on my elected PIR for all investments I have made
• I understand that personal information provided in this Application
for this account.
Form and any personal information provided by me in the future
will be used by NZ Funds, the Administration Manager and the • I understand the value of my investment in the Scheme
Supervisor, and any related companies of these parties, together can rise and fall depending on market conditions and
with my financial adviser, for administering the investment, other circumstances prevailing at the time, and that
including satisfying the requirements of the AML/CFT Act (this may there is no promise or guarantee made by any person as
include using my personal information for the purpose of electronic to the performance of any investment or the return of any
identity verification using various third party databases including funds invested.
the Department of Internal Affairs database). I understand my
personal information may also be shared with relevant authorities
including Inland Revenue. NZ Funds may also use my personal
information to provide me with information about other products
and services. I acknowledge that I have the right to access and
correct this information.
Signature (if applicant is 16 years or older) Parent/guardian signature* day month year
Parent/guardian signature* day month year
* If the applicant is under the age of 16, both parents/all legal guardians must sign the Application Form. If the applicant is 16 or 17,
one parent/legal guardian must sign the Application Form.
Important
• The AML/CFT Act requires verification of identity of the applicant. Please ensure the relevant identity information on the following
pages is completed in full.
• Each parent or guardian signing on behalf of a minor must also complete an 'Identity Information for a Parent or Guardian’ form.
Adviser use only
adviser name adviser FSP number
adviser company adviser code
Continued over...
nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 : : application form 176 | Identity verification
NZ Funds is required by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) to collect identity
and address information on its clients.
All new clients must complete identity and address verification and provide the appropriate documents.
Existing clients may be required to complete identity and address verification or update their identity documents. NZ Funds or your
financial adviser will advise if this is required.
There are three options to complete identity verification:
Please tick option selected.
Option 1
Electronic identity verification by your • You do not need to complete section 6.
financial adviser • Your financial adviser will need to attach a completed Electronic Verification Certificate.
Option 2
Documents verified face-to-face by • Please complete section 6A and take your original documents along to your financial
your financial adviser or an NZ Funds adviser or an NZ Funds office to have section 6C(i) completed.
employee*
Option 3
Documents certified face-to-face by a • Please complete section 6A and take your original documents along to a Trusted Referee to
Trusted Referee** certify your documents and complete section 6B.
AND • Please send the original certified copies to your financial adviser who will verify these and
Verified by your financial adviser or an complete section 6C(ii). If you do not have a financial adviser, please send your form and
NZ Funds employee* original certified copies to: New Zealand Funds Management Limited, Private Bag 92226,
Auckland, 1142.
* To complete verification, the adviser, employee or other authorised person must be listed on NZ Funds’ Register of Individuals Authorised
to Perform CDD’.
** A Trusted Referee must be either a Justice of the Peace, a Lawyer, a Notary Public, a Chartered Accountant, a Registered medical doctor
or a Registered teacher. A Trustee Referee cannot:
• Be your spouse or partner;
• Be related to you;
• Live at the same address as you; or
• Be involved in the transaction or business requiring certification.
Where documents are being certified outside of New Zealand, your Trusted Referee must be a person who is authorised to take statutory
declarations under the laws of the country, state or territory where the documents are being certified.
Important
• Document certification by a Trusted Referee must occur no earlier than three months prior to the date of presentation.
• Please ensure certified copies of the original documents are attached to this form.
• Where an individual is unable to supply documents as required, please contact NZ Funds on 0508 733 337 or via email at
clientservices@nzfunds.co.nz.
Continued over...
18 nz funds kiwisaver scheme : : product disclosure statement : : 29 march 2019 : : application formYou can also read
