Prospectus No 11 Craigs Investment Partners Superannuation Scheme superSTART
Dated 18 September 2015
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Prospectus Craigs Investment Partners Superannuation Scheme dated 18 September 2015
This Index is in accordance with Schedule 6 of the Securities Regulations 2009
1.
Description of scheme ..................................................................................................... 7
2.
Superannuation trustee .................................................................................................... 7
3.
Managers, promoters, auditors, and advisers ............................................................... 8
4.
Description of scheme and its development ................................................................. 9
5.
Summary of financial statements ................................................................................. 35
6.
Guarantors ....................................................................................................................... 37
7.
Acquisition of business or equity securities ............................................................... 38
8.
Interested persons .......................................................................................................... 38
9.
Material contracts ........................................................................................................... 43
10. Pending proceedings...................................................................................................... 43 11. Other terms of offer and scheme .................................................................................. 43 12. Financial statements and auditor's report ................................................................... 44 13. Places of inspection of documents .............................................................................. 44 14. Other material matters .................................................................................................... 45 15. Superannuation trustee's statement............................................................................. 51
This prospectus is dated 18 September 2015. A signed copy of this prospectus, together with copies of the documents required by section 41 of the Securities Act 1978 to accompany the prospectus, were delivered to the Registrar of Financial Service Providers for registration under section 42 of the Securities Act 1978. This prospectus is prepared in accordance with the Securities Act (Multiple Participants Superannuation Schemes) Exemption Notice 2011. This exemption provides that certain details of the Scheme, unless covered in this prospectus, will be found in the investment statement (or supplement that forms part of the investment statement) relevant to the particular prospective member. All of the legislation referred to in this prospectus can be viewed online at www.legislation.govt.nz.
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KEY INFORMATION SECTION
This Key Information Section highlights the main terms of the offer of interests in the Scheme as at the date of this prospectus. Main terms of the offer
For further information
1. Nature of the offer The name of the scheme is Craigs Investment Partners Superannuation Scheme (superSTART®). The investments being offered are interests in the Scheme. The Scheme is a superannuation scheme established under the Superannuation Schemes Act and its Trust Deed.
See page 7 of this prospectus, and the investment statement for the Scheme.
The Scheme is not a KiwiSaver scheme. 2. Parties involved in the offer The manager of the Scheme is Craigs Investment Partners Superannuation Management Limited. The promoters of the Scheme are Craigs Investment Partners Limited and each of its directors.
See pages 7 to 9 of this prospectus, and the investment statement for the Scheme.
The trustee and issuer of the Scheme is The New Zealand Guardian Trust Company Limited. 3. Contributions to the Scheme Contributions may be made by or on behalf of each member by: the member; and the member’s employer (subject to eligibility). Members who are employees of a workplace can elect to contribute from their gross salary or wages. For members who are eligible, their employer may contribute to their Scheme account. These contributions are subject to tax.
See page 18 of this prospectus, and the investment statement for the Scheme.
For individual members, the contribution rate is determined by the member. Minimum regular contributions are $100 per month and minimum lump sum contributions are $1,000.
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4. Withdrawals from the Scheme Withdrawals from the Scheme are governed by the Superannuation Schemes Act and the Trust Deed. Unless a member satisfies the early withdrawal criteria, they may not make a withdrawal from the Scheme until they attain the age of 65 years (being the age of eligibility for New Zealand Superannuation).
See pages 18 to 20 of this prospectus and the investment statement for the Scheme.
At that time, members are able to withdraw some or all of the value of their Scheme account. A member can elect to withdraw some or all of the value of their Scheme account on reaching age 55. If the member is part of a workplace scheme, the employer must consent to the withdrawal. Partial withdrawals may be made before this time in certain circumstances. Withdrawals may be made if the member suffers hardship. Early withdrawals can be made by a member whose employer is part of a workplace scheme if the member: resigns from his or her employer suffers total and permanent disablement has been made redundant Upon a member’s death their balance will be paid to their estate. A member may also transfer to another superannuation scheme. 5. Investment funds Within the Scheme investors can invest into the QuayStreet Unit Trust Funds:
Fixed Interest Fund
Income Fund
Conservative Fund
Balanced Fund
Balanced SRI Fund
Growth Fund
International Equity Fund
New Zealand Equity Fund
Australian Equity Fund
Altum Fund
See pages 22 to 32 of this prospectus, and the investment statement for the Scheme.
Each Fund invests into the QuayStreet Unit Trust of the same name. All references to QuayStreet Unit Trust Funds, Fund, or any individual fund are references to these investments. The Scheme also offers other securities in the range of Nominated Securities, including a range of investments in equities, investment trusts, managed funds, index funds and listed property trusts (available in a range of listed and unlisted markets) together with cash. 4
6. Fees and charges The fees currently payable in relation to the Scheme are: In terms of the management agreement for the Scheme, entry fees and exit fees may be charged to members, up to a maximum of 1.25% of the amount contributed to or withdrawn from a QuayStreet Unit Trust Fund or up to 2.50% of the amount contributed to or withdrawn from a Nominated Security.
See pages 38 to 42 of this prospectus, and the investment statement for the Scheme.
The Manager does not currently charge a switching fee, although it is entitled to do so. Any switching fee cannot exceed 2.5% of the amount being switched. Please note the Manager may charge brokerage (rather than a switching fee) when a member switches Nominated Securities (excluding the QuayStreet Unit Trusts). The Manager is entitled to charge a management fee to members, which includes trustee, registry and custodial fees. This is calculated as a percentage of the gross value of a member’s daily balance in the investment fund as follows: Fixed Interest Fund Income Fund Conservative Fund Balanced Fund Balanced SRI Fund Growth Fund International Equity Fund New Zealand Equity Fund Australian Equity Fund Altum Fund Nominated Securities (included in Self Selected Portfolios)
0.75% p.a. 0.75% p.a. 0.75% p.a. 1.00% p.a. 1.25% p.a. 1.25% p.a. 1.25% p.a. 1.25% p.a. 1.25% p.a. 1.25% p.a. up to 1.25% p.a.
Some Funds in the Scheme are currently invested in the QuayStreet Unit Trusts (the QuayStreet Unit Trusts) which are managed by QuayStreet Asset Management Limited (Investment Manager). To ensure there is no double charging of management fees both within the Scheme and the QuayStreet Unit Trusts, the management fee for those Funds that invest in the QuayStreet Unit Trusts is charged within the QuayStreet Unit Trusts only and no separate management fees are charged to members for investments in those Funds in the Scheme. The Investment Manager charges a management fee for each of the QuayStreet Unit Trusts at the same rates as those set out in the table above. Self Selected Portfolios of other Nominated Securities are charged a management fee within the Scheme as set out above. In relation to the Altum Fund, the Investment Manager is entitled to receive a performance fee of 15% of the Fund’s return (before tax) in excess of the target return, which is the Reserve Bank of New Zealand Official Cash Rate plus 6% per annum. A High Water Mark applies. Further details of the performance fee are explained on 5
page 41. In relation to Nominated Securities that are securities of underlying investment funds, those underlying investment funds may also have fees and expenses, including performance fees in some cases, which are charged by their managers and trustees. These fees and expenses will be reflected in the underlying investment fund’s unit price and may therefore indirectly affect your returns. Prices used to value your holdings and calculate your returns are inclusive of all fees and expenses deducted within any underlying investment fund. GST will be added to any fees if applicable at the prevailing rate. The Manager and the Trustee are also entitled to recover expenses incurred by them in performing their duties. Brokerage of up to 2.5% of the relevant transaction is charged (including when a member changes Nominated Securities (excluding the Quay Street Unit Trusts)). The total entry/exit fees and brokerage will not exceed 2.5% of the transaction value. 7. Risks All investments entail taking some risk. A member’s investment in the Scheme is affected by factors, many of which are common to most superannuation schemes, including those described in section 14 under Other Material Matters. The principal risks are: Market risk.
See pages 45 to 48 of this prospectus, and the investment statement for the Scheme.
Specific investment risk. Currency and hedging risk. Derivative risk. Interest rate risk. Manager risk.
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1.
Description of scheme
The name of the Scheme is the Craigs Investment Partners Superannuation Scheme (Scheme) otherwise branded as superSTART®. It was established on 18 December 2006 in Wellington. The Scheme is a multiple employer superannuation scheme registered under the Superannuation Schemes Act 1989 (Act). The Scheme is a defined contribution scheme which is offered to trustee members and employees through employers who participate in the Scheme. Membership of the Scheme is also offered to other natural persons who are eligible to apply to join as individual investors. The Scheme is not a KiwiSaver scheme.
2.
Superannuation trustee
The New Zealand Guardian Trust Company Limited (Trustee) is the trustee for the Scheme. The Trustee was incorporated in Auckland, New Zealand under the Companies Act 1955 on 7 September 1982 and reregistered under the Companies Act 1993 on 23 April 1997. The ultimate holding company of the Trustee is Bath Street Capital Limited, a company incorporated in New Zealand. As at the date of this prospectus, the directors of the Trustee and their places of residence are:
Andrew Howard Barnes of Auckland
James Earl Douglas of Auckland
Robin Albert Flannagan of Auckland
Timothy James Shaw of Auckland
The Trustee and its directors can be contacted at: The New Zealand Guardian Trust Company Limited PO Box 274, Shortland Street Level 15 191 Queen Street AUCKLAND 1140. The directors of the Trustee may change from time to time. A current list of directors is available online at www.business.govt.nz/companies. Neither the Trustee nor any of its directors have, during the five years preceding the date of registration of this prospectus, been adjudged bankrupt or insolvent, convicted of any crime involving dishonesty, prohibited from acting as a director of a company or placed in statutory management. The Trustee has not been placed in voluntary administration, liquidation or receivership. Under the Scheme's trust deed (Trust Deed), the Trustee is entitled to be indemnified out of the Scheme from and against any expense and liability that may be incurred in connection with the Scheme including in prosecuting or defending any action or suit in respect of the provisions of the Trust Deed, except in the case of fraud or dishonesty or to the extent that any such expense or liability is attributable to the Trustee's failure to show the degree of care and diligence required of the Trustee in its capacity as the trustee of the Scheme. Further, the Trustee is entitled to be indemnified out of the Scheme on the winding up of the Scheme for costs, charges, expenses, claims and demands incurred in connection with the Scheme or arising out of the liquidation of the Scheme.
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The Trustee is independent of the administration and investment manager and promoters of the Scheme. Neither the Trustee nor any of its directors, nor any other person, guarantees the performance of the securities offered in this prospectus or the capital invested in those securities.
3.
Managers, promoters, auditors, and advisers
Craigs Investment Partners Superannuation Management Limited is the administration and investment manager and registrar of the Scheme (Manager) under a management agreement entered into by the Trustee and the Manager, which was amended and restated on 18 September 2014 (Management Agreement). This agreement sets out the obligations of the Manager and the management fees and other amounts payable to the Manager by the Trustee. The Manager has delegated certain of its administration and investment obligations under the Management Agreement to Craigs Investment Partners Limited under an agreement entered into by the Manager and Craigs Investment Partners Limited on 3 July 2015 (the CIP Agreement). The Manager’s address is: Craigs Investment Partners Superannuation Management Limited 158 Cameron Road PO Box 13155 TAURANGA 3141. As at the date of this prospectus, Craigs Investment Partners Superannuation Management Limited is a wholly owned subsidiary of Craigs Investment Partners Limited, which is a promoter of the Scheme. The ultimate holding company of Craigs Investment Partners Superannuation Management Limited and Craigs Investment Partners Limited is CIP Holdings Limited. In addition to the Scheme, the Manager is also the manager of the Craigs Investment Partners kiwiSTART® Select Scheme and the Craigs Investment Partners kiwiSTART® Defined Scheme. Craigs Investment Partners Limited and each of its directors, as at the date of this prospectus, are promoters of the Scheme (Promoters). As at the date of this prospectus, the directors of Craigs Investment Partners Limited are: Frank Maurice Aldridge Michael John Caird Neil John Craig Thomas Peter Davies Vic John Jokovic John Thomas Macfarlane James Malcolm McMurdo Patrick William O’Rourke Michael Hugh Richardson Nigel Kingsley Scott Brett Hiirini Shepherd William Turnbull Stevens The Promoters can be contacted at the office of Craigs Investment Partners Limited: Craigs Investment Partners Limited 158 Cameron Road PO Box 13155 TAURANGA 3141. The directors of Craigs Investment Partners Limited may change from time to time. A current list of directors is available online at www.business.govt.nz/companies. 8
None of the Manager, Craigs Investment Partners Limited, or any of their directors have ever been adjudged bankrupt or insolvent, convicted of any crime involving dishonesty, prohibited from acting as a director of a company or placed in statutory management. Neither the Manager nor Craigs Investment Partners Limited has ever been placed in voluntary administration, liquidation or receivership. Custodian Citibank, N.A. is the Custodian for the Scheme. The Custodian can be contacted at: Citibank, N.A. Citibank Centre P O Box 3429 Level 11, 23 Customs Street East Auckland, 1010 The Scheme’s investments into the QuayStreet Unit Trusts are held in the name of the Trustee on the QuayStreet Unit Trusts unit registers maintained by registrars who are independent of QuayStreet Asset Management Limited. Auditors KPMG Level 2 247 Cameron Road TAURANGA 3110 At the date of this prospectus, KPMG is a registered audit firm in terms of section 25 of the Auditor Regulation Act 2011. This registration is subject to the standard conditions that apply to audit firm registrations. KPMG have considered and confirmed their independence as auditor, their quality procedures, and the objectivity of the audit partners and audit staff. The auditor carries out other assignments for the Manager and other related Craigs Investment Partners companies. These assignments have not impaired the independence of the auditor. Solicitors The solicitor involved in the preparation of this prospectus is Bell Gully, who can be contacted at: Bell Gully Vero Centre 48 Shortland Street AUCKLAND 1010 There are no experts named in this prospectus.
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Description of scheme and its development
With effect on and from 21 September 2012, the Trust Deed was entered into as the Craigs Investment Partners Superannuation Scheme Trust Deed between Craigs Investment Partners Limited, as Sponsor and the Trustee, in accordance with section 64(2) of the KiwiSaver Amendment Act 2011. The Trust Deed was amended by deed dated 5 October 2012. Prior to the entry into the Trust Deed described above, the Scheme was governed by the same trust deed (the Umbrella Deed) as the Craigs Investment Partners kiwiSTART® Select Scheme, which is a KiwiSaver scheme registered under the KiwiSaver Act 2006. Although the Scheme and that KiwiSaver scheme were governed by the same trust deed and had the same
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Trustee, they remained two separate schemes. Members in the Scheme had no interest in that KiwiSaver scheme and vice versa. The Umbrella Deed was rescinded by Craigs Investment Partners Limited, as Sponsor, and The New Zealand Guardian Trust Company Limited, as Trustee, on 21 September 2012, immediately prior to the entry into the Trust Deed referred to above. Summary of the principal terms of the Trust Deed Below is a summary of the principal terms of the Trust Deed not described elsewhere in this document. This is a summary only and the full Trust Deed is available on request – see section 13. The Trust Deed sets out the terms and conditions that, together with the Superannuation Schemes Act 1989, govern the operation of the Scheme. The Scheme provides for membership by employees of participating employers, trustee members and other natural persons who are eligible to apply to join as individual investors. The Trustee The Trustee will exercise due care and skill in carrying out its duties and obligations under the Trust Deed and shall at all times act in the interests of the members. The Trustee shall not be liable for any losses or liability except those arising from its failure to show the degree of care required of it having regard to the provisions of, and the powers, authorities and discretions conferred by, the Trust Deed. Subject to the Trustee Act 1956, the Trustee will not be liable for any loss incurred as a result of any act, omission, deceit, neglect, mistake or default of the Manager or any agent of the Manager except to the extent that the loss is attributable to the Trustee's own wilful or negligent act or default. Unless the Trustee is liable under the above paragraph, the liability of the Trustee shall at all times be limited to the assets of the Scheme. The Trustee may be paid a reasonable fee consistent with the services it performs as agreed with Craigs Investment Partners Limited as Sponsor and, in addition, may also pay or reimburse itself for costs, charges and expenses properly incurred in the administration and management of the Scheme. The maximum amount the Trustee may be paid to cover the trustee fee and to pay the Manager's fee is 5% per annum (plus GST) of the net asset value of the Scheme. Appointment and removal of Trustee The Trustee may be removed from office as Trustee by Craigs Investment Partners Limited as Sponsor. The Trustee must be given at least 30 days' written notice before removal unless the Sponsor reasonably believes that the Scheme will be adversely affected if the Trustee continues to hold office and specifies the grounds on which the Sponsor has formed this belief, in which case the removal may be immediate. No consent will be required for such a removal. The office of the Trustee shall become vacant if an order is made or an effective resolution is passed for the winding up of the Trustee or it is placed in liquidation, receivership or statutory management. The Trustee may retire at any time on giving 30 days' notice in writing to Craigs Investment Partners Limited as Sponsor of its intention to retire. The Trustee is not required to give any reason for its intention to retire. If the office of the Trustee becomes vacant Craigs Investment Partners Limited as Sponsor shall by deed appoint a new trustee.
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Powers and duties of Trustee The Trustee shall have all the powers in respect of the Scheme and its assets which the Trustee could exercise if the Trustee was the absolute owner of the assets and shall have total discretion in the exercise of the trusts, authorities, powers and discretions conferred on it by the Trust Deed. Without limitation, the Trustee may:
subject to any applicable law and to the provisions of the Trust Deed, if requested to do so by the Sponsor, impose any additional fees, penalties or other charges in respect of any member or any employer;
employ or contract with any investment manager, administration manager, custodian, manager or agent on terms and conditions as the Trustee considers expedient;
delegate any of its duties, powers or discretions under the Trust Deed to any person the Trustee appoints to manage the Scheme or any assets of the Scheme;
act on the advice or opinion of any accountant, actuary, barrister, solicitor, stock broker, consultant, medical practitioner, investment adviser, auditor or other professional person or expert (the Trustee will not be responsible for any loss occasioned by so acting);
rely upon entries in the register being correct. Neither the Trustee nor any of the Trustee's agents shall incur any liability or responsibility on account of any mistake in respect of the register;
determine whether there are any costs, expenses or charges incurred by the Scheme that are required to be apportioned between any two or more accounts or any reserve fund of the Scheme. Any determination will be final and binding on all members;
enter into such agreements with the Manager as the Trustee considers necessary or desirable and agree to pay management fees and other amounts to the Manager on the terms contained in the Trust Deed or on such other terms as to payment of fees and charges the Sponsor thinks fit;
enter into any contract, agreement or other arrangement with Craigs Investment Partners Limited or any related company of Craigs Investment Partners Limited or the Trustee, provided the Trustee ensures that the transaction to be effected is on reasonable commercial terms. None of Craigs Investment Partners Limited, any related company or related person of Craigs Investment Partners Limited nor the Trustee shall be liable to account to the Scheme or any member of the Scheme for any profit or loss arising from any related transaction;
if obliged by law, deduct from any beneficiary's benefit or from the relevant member portfolio account or member employer portfolio account, the amount of any tax assessed against or payable by or in respect of the beneficiary with the beneficiary's interest in the Scheme;
realise investments to the extent necessary to make payment of any tax; and
deduct from the member portfolio account, member employer portfolio account or from a relevant reserve fund any other fees, costs, expenses or liabilities payable in respect of a member under the Trust Deed.
The Trustee will ensure proper accounts and records are kept in respect of the Scheme with annual accounts prepared and audited in accordance with the Act.
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Removal and retirement of Manager The Manager will cease to hold office as manager of the Scheme if the Scheme is wound up in accordance with the Trust Deed, or upon the Manager's appointment being lawfully terminated in accordance with the terms of any agreement from time to time in force between the Manager and the Trustee. The Manager may, with the Trustee’s consent, assign its rights and be discharged from its obligations and duties under the Trust Deed. Investment All money belonging to the Scheme and available for investment shall be invested in accordance with the provisions of the Trustee Act 1956 as to the investment of trust funds. The Trustee and any investment manager of the Scheme shall in exercising their power of investment exercise the care, diligence and skill required by section 13B or section 13C of the Trustee Act 1956 notwithstanding anything to the contrary in section 13D(1) of that Act. Every member shall provide the Trustee with an investment direction. At the Trustee’s discretion, a member may during each Scheme Year amend that investment direction for the investment of future contributions, in a form required by the Trustee, or request the Trustee to switch investments. If a member wishes to amend their investment direction or switch investments more than once during a Scheme Year, the Trustee may charge a reasonable fee. Member contributions are credited to a member portfolio account, with employer contributions credited to a member employer portfolio account, in the name of each member which are then invested in a predefined mix of investments through the QuayStreet Unit Trusts (QuayStreet Unit Trusts) or a selection of investments from the schedule of nominated investments accompanying the Investment Statement in respect of this offer (Self Selected Portfolio). If an application from an individual investor is received and an investment direction for the investment of contributions is not provided, the application (and any direct debit authority or cheque accompanying that application) will not be processed until an investment direction has been obtained. Amendment to the Trust Deed Craigs Investment Partners Limited as Sponsor, with the consent of the Trustee (such consent not to be unreasonably withheld), may amend the Trust Deed at any time. However, no amendment may detract from the main purposes of the Trust Deed, namely to provide benefits to members. Any amendment which may adversely affect any member's interest in the Scheme in the manner specified in the Trust Deed, remove any right of members or other beneficiaries of the Scheme to participate in its management, or increase the contributions, fees or charges payable can only be made with the written consent of every member or beneficiary at the date the variation is made who would be adversely affected by the variation. Winding up The Scheme will be wound up if:
the Sponsor resolves that the Scheme be wound up; or
the Financial Markets Authority orders the Scheme be wound up.
Immediately after the winding up date, no further persons will be admitted as members and no further contributions will be received, except those that accrued before the winding up date. The Trustee will realise the assets of the Scheme as soon as practicable and will apply those assets in the following order of priority:
first, in meeting all costs, fees, liabilities and expenses incurred in the administration and winding up of the Scheme and any tax of the Scheme or of members; 12
secondly, in providing for benefits payable under the Trust Deed owing to members prior to the date of winding up, which remain unpaid;
thirdly, in respect of each member who at the winding up date has not become entitled to receive benefits under the Scheme, a benefit equal in value to the sum of the member's portfolio account and member's employer portfolio account at that date;
fourthly, after consultation with the relevant employer, the Trustee may augment any of the above benefits in an equitable manner as determined by the Trustee with payments from the relevant reserve fund; and
fifthly, in allocation to each member of any amounts held in respect of the employees of the employer in an equitable manner.
If, in following the above priorities of payment, there are insufficient monies to satisfy all the obligations, the amount of each benefit will be reduced equitably and proportionately among all members entitled to the benefits. No assets of the Scheme will revert to any employer on a winding up of the Scheme. Accounts When a member joins the Scheme the Trustee will open a member portfolio account and, if the member is an employee, a member employer portfolio account. Member portfolio account A member portfolio account at any given date means:
investments held with regard to contributions paid by the member;
contributions paid by the member that have not been used by way of acquisition of investments;
amounts transferred into the Scheme from any other superannuation scheme;
money received after the sale of investments;
transfers from the relevant reserve fund;
transfers from the member employer portfolio account; and
income and cash returns on investments;
less
any negative returns on investments;
any benefit payments made to or for the benefit of a beneficiary;
benefits transferred from the Scheme to another superannuation scheme;
amounts paid in the acquisition of investments;
fees charged by the Trustee that are to be paid by the member and deducted from the member portfolio account;
payment of the member's share of any other fees, costs, expenses, liabilities or tax which are to be payable by the member and deducted from the member portfolio account; and
provision for or payment of any tax payable under the Trust Deed.
Member employer portfolio account A member employer portfolio account at any given date means:
investments held with regard to contributions paid by the employer; 13
contributions paid by the employer for the benefit of the members that have not been used by way of the acquisition of investments;
amounts transferred to the Scheme from another superannuation scheme;
money received after the sale of investments;
transfers from the relevant reserve fund; and
income and cash returns on investments;
less
any negative returns on investments;
any benefit payments to or for the benefit of a beneficiary;
benefits transferred from the Scheme to another superannuation scheme;
amounts paid in the acquisition of investments;
fees charged by the Trustee that are to be paid by the member and deducted from the member employer portfolio account;
payment of the member's share of any other fees, costs, expenses, liabilities or tax which are to be deducted from the member employer portfolio account;
any payment to the relevant reserve fund when a member is paid a benefit but is not entitled to receive all of the member employer portfolio account balance;
any payment to a member portfolio account; and
provision for or payment of any tax payable under the Trust Deed.
There is no legal segregation between each member's assets, the assets of every member may be called on to meet liabilities of the Scheme. Reserve fund The Trustee shall create and maintain separate accounts to be called reserve funds with respect to each employer. Each employer's reserve fund at any given date means:
any amounts that are in the member employer portfolio account of a member employed by that employer, that are not required to meet the benefits of the member from the Scheme; plus
any benefit forfeited under the terms of the relevant participation agreement in respect of an employee of that employer; plus
any money received following the sale of investments held with regard to the reserve fund.
The Trustee shall, when directed by each employer, apply the relevant employer's reserve fund in any one or more of the following ways:
to purchase investments;
towards providing benefits, other than retirement benefits, on an equitable basis for each member who is an employee of the relevant employer;
towards providing benefits for members who are employees of the relevant employer and their dependants in cases of hardship;
to augment retirement benefits for each member who is an employee of the relevant employer on an equitable basis; 14
to increase all member portfolio accounts or member employer portfolio accounts of employees of the relevant employer on an equitable basis;
towards paying costs, expenses and fees in respect of the Scheme; and
towards payment of employer contributions.
Transfers Subject to the Act, if a member on leaving employment or leaving the Scheme joins or becomes a member of another registered superannuation scheme, the Trustee shall, at the member's request, transfer the benefits which the member is entitled to receive under the Trust Deed to that other scheme on acceptable terms from the transferee scheme trustees. Any transfer of benefits will be subject to any limitation or restrictions on the amount transferred under the Trust Deed. Members in respect of whom a transfer is made shall not be entitled to any other benefit under the Scheme. The receipt of an authorised person for the transferee scheme shall be a complete discharge to the Trustee. For the Trustee to effect such a transfer, members need not cease employment with their employer. Following such a transfer, members will cease to be a member of the Scheme. The Trustee shall accept a transfer amount from any other superannuation scheme that a member may be entitled to receive a benefit from. Any transfer amount will be paid into the Scheme to the relevant member's account unless there are legitimate specific requirements from the transferring scheme trustees that are agreed to by the Trustee. The Trustee shall have regard to any restrictions or limitations or conditions imposed by the transferring scheme trustees on the amount transferred including the imposition of any requirement for the transfer amount to be locked in or withdrawn in the form of an annuity. A participating employer may elect to transfer that part of the Scheme that is relevant to its participation with the consent of all employees in accordance with the Trust Deed. A participating employer may also elect to transfer that part of the Scheme that is relevant to its participation if the Financial Markets Authority is satisfied that terms and conditions of the new scheme are no less favourable to members or beneficiaries than the terms and conditions of the old scheme. The participating employer will be responsible for payment of reasonable costs to the Trustee in response to such a transfer. Unclaimed benefit If the Trustee is unable to trace a beneficiary within six years after the date on which the benefit was due the Trustee may forfeit the benefit to the relevant reserve fund. If the beneficiary unable to be traced is not an employee member the Trustee may forfeit the benefit and apply it under section 77 of the Trustee Act 1956. If a benefit is forfeited, the missing person's benefit and right to any other benefits under the Scheme shall be cancelled. Payment of benefits on death The Trustee shall pay any member's death benefits to the executors or administrators of the member's estate or for the benefit of one or more of the member's nominated beneficiaries as the Trustee in its absolute discretion shall determine. Benefits not assignable The benefits and rights under the Scheme belong only to the member. No member or beneficiary may transfer, assign, charge or mortgage their benefits in any way. Bankruptcy of member Where the Trustee has reason to believe a member is likely to or has committed an act of bankruptcy the member shall forfeit entitlement to all that member's benefits under the Trust Deed. The Trustee shall hold and may apply the benefits which would otherwise have been 15
payable to the member for the benefit of the member or any dependants of the member in such manner as it thinks fit. Minority or incapacity of beneficiary If any benefit is for a beneficiary who is a minor, under a legal incapacity, or in the opinion of the Trustee incapable of managing their own affairs, the Trustee may pay the benefit to another person for the benefit of that beneficiary on the terms the Trustee thinks appropriate. Relationship property The Trustee will give effect to any court order or agreement entered into by a member to make a relationship property settlement with his or her spouse, civil union partner or de facto partner upon documentation required by the Trustee being provided. The Trustee shall not pay an amount to the member and/or his/her partner, which would be greater in value than the benefits to which the member would have been otherwise entitled to receive. Eligibility Any natural person or the trustees of another registered superannuation scheme may apply to join the Scheme as a member by completing an application in such form as prescribed by the Trustee. The Trustee or Craigs Investment Partners Limited, as Sponsor, may refuse any application without giving a reason. Participating employers Any person may apply to participate in the Scheme as an employer by completing a participation agreement. The Scheme is available to any employer who is invited to join by Craigs Investment Partners Limited as Sponsor. Any employer who applies to participate in the Scheme shall provide all relevant information requested by the Trustee, agree with the Trustee the terms governing the membership of the Scheme for employees of that employer and complete and sign a participation agreement. The participation agreement shall contain the following:
the conditions of eligibility for membership;
the contributions to be paid by members and the employer;
the options available for investment of contributions;
the vesting schedule for employer contributions;
any fees payable; and
any other provisions or rules for members who are employees of the employer.
From the date specified in the participation agreement the employer shall become an employer participating in this Scheme and shall be bound by the Trust Deed. Employer ceasing participation An employer shall cease to participate in the Scheme if:
the employer gives notice in writing to the Trustee of the effective date that it intends to cease to continue participating in the Scheme for any reason;
an order is made or resolution is passed for the liquidation or bankruptcy of the employer except for the purposes of amalgamation or reconstruction; or
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Craigs Investment Partners Limited as Sponsor gives at least one month's notice in writing to the employer of the effective date on which the employer's participation shall cease.
If the Trustee receives written notice from the employer, as detailed above, or an order is made or a resolution is passed for the liquidation or bankruptcy of the employer, the Sponsor shall decide, after consultation with the employer, whether there will be a partial wind-up of the Scheme, or whether the Scheme will continue in respect of the employees of the employer. If the Sponsor decides the Scheme is to continue in respect of the employees of the employer, the Trustee will release the employer from all future obligations under the Scheme and the employer will no longer have any rights or powers in respect of the Scheme. Employees of the employer may continue to be members of the Scheme if their employer ceases to participate in the Scheme and the Trustee gives them written notification to this effect. From the effective date that the employer ceases to participate in the Scheme the Sponsor will make all decisions relating to the administration and investment of the Scheme for those members of that employer. If an employer stops participating in the Scheme and the Sponsor decides that the Scheme will be partially wound up the Trustee will give written notification to the members who are the employees of the employer. A member may choose, by giving written notice to the Trustee within one month from the date of receiving the written notification from the Trustee, whether he or she wishes to remain a member of the Scheme or withdraw from the Scheme. If a member does not give written notice within this period the Trustee shall proceed on the basis that the member wishes to withdraw from the Scheme. If a member chooses to remain a member:
the member may continue to contribute to the Scheme in a manner agreed to by the Trustee;
the member employer portfolio account in respect of that member will be transferred or credited to the member portfolio account;
an appropriate portion of the relevant reserve account will be transferred or credited to the member's portfolio account as provided in the Trust Deed;
the employer will be under no obligation whatsoever to make any contributions to the Scheme and will have no rights or powers whatsoever in respect of the Scheme; and
the member will be entitled to a benefit under the Trust Deed.
If any members choose to withdraw from the Scheme the Trustee will as soon as possible realise all relevant accounts that relate to the members withdrawing and allocate the proceeds in accordance with the Trust Deed. Termination of trustee membership Where a trustee of another scheme (the investing scheme) is a member of the Scheme, their membership will terminate if the investing scheme ceases to be a registered superannuation scheme. It may also be terminated by one month's written notice given by the member to the Trustee or vice versa. Trustee members may request a withdrawal of all or part of their benefit in the Scheme at any time upon giving 30 days notice in writing to the Trustee. On termination of membership a trustee member will be paid a termination benefit. The termination benefit will be the member portfolio account at the date of payment and will be paid to the trustee member or transferred to another scheme or fund as agreed between the Trustee and trustee member. 17
Contributions Each member will make regular contributions on the basis specified in the member application unless the member is an employee in which case the member must make regular contributions as required under the relevant participation agreement. A member may make additional contributions on the basis prescribed by the Trustee from time to time. Subject to any legislative requirements the employer will contribute the amount of each member's salary provided for in the participation agreement as a contribution to the Scheme. Before paying any contributions to the Scheme employers will be required to deduct any withholding or other taxes or deductions required to be paid to any regulatory or Government authority. In addition, employers are, subject to the terms of the KiwiSaver Act 2006, required to make contributions to any KiwiSaver scheme or complying superannuation fund of which the member belongs at 3% of the member’s gross salary or wages (less applicable taxes). If the member was a member of the Scheme prior to 1 April 2008 (or could join the Scheme under a collective agreement that was in force before 17 May 2007 and expires after 1 April 2008), any contributions required by the member’s employer to the Scheme, subject to the terms of the KiwiSaver Act 2006, may be made instead of the compulsory employer contributions otherwise required for the member’s KiwiSaver scheme or complying superannuation fund to the extent they vest by the end of the first five years of the member’s membership. Unless the participation agreement provides otherwise the employer may at any time stop contributions, reduce contributions, increase contributions, or make additional contributions. Where additional employer contributions are made the employer shall specify the proportions to be credited to the relevant employee's member portfolio account and member employer portfolio account. The Trustee may set minimum contribution amounts. The employer must give prior notice in writing to both the Trustee and the employees before changing the contribution amounts. A member who is not an employee may on advising the Trustee stop making contributions to the Scheme more than once for any period of time the member wishes. A member who decides to recommence his or her contributions must advise both the employer and the Trustee in writing. A member who is an employee may only suspend contributions to the extent provided for under the relevant participation agreement. When a member stops being a member all contributions cease. Benefits If the member is an employee the benefits payable to the member will be as provided below unless otherwise provided for in the relevant participation agreement. The benefits payable to members who are not employees are detailed below. In relation to a member who transfers UK pension funds to the Scheme (UK Transfer Funds), the benefits described below are subject to the restrictions set out under the heading “United Kingdom tax-relieved funds” below. Normal retirement A member will be entitled to elect to receive the full value of all their portfolio accounts on their normal retirement date being the earlier of the date of the member's 65th birthday, the date the member becomes entitled to receive New Zealand Superannuation or any other date specified in the relevant participation agreement. 18
Members who have transferred UK pensions under the Qualifying Recognised Overseas Pension Scheme rules are required by those rules to apply at least 70% of UK Transfer Funds to generate an income for life. Early retirement Upon attaining the age of 55 years a member may elect to receive the full value of all their portfolio accounts subject to, if the member is an employee and is still employed, the employer's written consent. Redundancy If a member who is an employee leaves employment as a result of the member's job being declared redundant by the employer the member will be entitled to receive the full value of all their portfolio accounts. The employer shall provide a certificate to the Trustee whenever a member's job is declared redundant. Death If a member dies before obtaining a benefit under any of the above clauses the benefit payable is the full value of all portfolio accounts of the deceased member. Total and permanent disability Where the Trustee is of the opinion a member, who is an employee, has ceased to be employed as a result of total and permanent disablement (as defined in the Trust Deed) the member will be entitled to elect to receive the full value of all their portfolio accounts. Resignation If a member is an employee and that employee's employment ends in circumstances where none of the above benefits are payable the member shall be entitled to receive the benefit specified in the vesting schedule of the relevant participation agreement. Benefit following partial windup If a member chooses to remain a member of the Scheme on cessation of his or her employer's participation the member may request the Trustee to pay the total value of the member's portfolio accounts. Hardship benefit The Trustee may at its sole discretion, with the consent of the relevant employer, at any time in the case of hardship pay all or part of the member's portfolio account to the member as a benefit. Withdrawal benefit The Trustee will allow a member to make partial withdrawals from the member's portfolio accounts subject to the Sponsor determining rules for minimum partial withdrawal amounts, frequency and minimum account balances. The current minimum monthly withdrawal following age 55 is $1,000 with the minimum annual lump sum withdrawal prior to age 55 being $10,000, or such other amounts as stated by the Sponsor. In no circumstances will a member be eligible to make a withdrawal where the Trustee considers that payment of such a withdrawal may be prejudicial to the status or treatment of the Scheme, (including the Scheme’s status as a Qualifying Recognised Overseas Pension Scheme), or to any member of the Scheme or to any contribution made by or in respect of a member under the Scheme under any law (including without limitation) tax status or treatment. The maximum permitted withdrawal during a 12 month period is 20% of the total value of the member's accounts at the beginning of the period.
19
Where it is a requirement of any transfer, the Trustee shall, instead of paying to a Member a withdrawal amount under the Trust Deed, arrange for an annuity to be purchased on such terms and conditions as shall be agreed between the Trustee and the provider of the annuity, in consultation with the Member. Deferment of benefit If a member, who is an employee, continues in employment with their employer after their normal retirement date they may elect to defer receiving a benefit until the date upon which they cease employment. United Kingdom tax-relieved funds Where a member has made a transfer of United Kingdom tax-relieved funds from a United Kingdom registered pension scheme to the Scheme on or after 6 April 2012, a member’s UK Transfer Funds will not qualify for withdrawal benefits earlier than they would if pension rule 1 in section 165 of the United Kingdom Finance Act 2004 applied. This is currently age 55, except in circumstances of serious ill health. In addition, the Trustee shall designate at least 70% of the member’s UK Transfer Funds for the purpose of providing the member with an income for life (i.e., an annuity or regular or other payment or payments that satisfy the requirements for an income for life in accordance with such policy as the Trustee sets from time to time in order to meet the requirements of Her Majesty’s Revenue & Customs (United Kingdom) under the United Kingdom Finance Act 2004). The Trustee may agree with the scheme manager of the pension scheme from which the member’s UK Transfer Funds are to be transferred to impose such other terms and conditions on the member’s UK Transfer Funds. The Trustee may impose such other terms and conditions on the member’s UK Transfer Funds as the Trustee may determine as being necessary or desirable or in the interests of the relevant member or the Scheme. The Trustee may, in order to preserve the status of the Scheme as a Qualifying Recognised Overseas Pension Scheme, impose such terms and conditions on a payment to be made to or in respect of a member who transfers funds to the Scheme from a UK pension plan on or after 6 April 2012 as the Trustee in its sole discretion thinks fit. Refer to the section headed “Qualifying Recognised Overseas Pension Scheme (“QROPS”)” in section 14 of this prospectus for more information relating to transfers from UK pension plans. Change of custodian With effect on and from 21 September 2012, Custodial Services Limited resigned as the custodian for the Scheme and was replaced by Citibank, N.A., who was appointed as the new custodian for the Scheme. Investment objectives The investment objectives for the Scheme may be implemented by obtaining the relevant exposures through investment in any one or more investment vehicles. With effect from the Scheme’s commencement on 5 October 2007 (the date of the first investments), the Scheme and each QuayStreet Unit Trust Fund has been invested in accordance with its investment objectives. A description of the investment objectives for each QuayStreet Unit Trust Fund that invests in the QuayStreet Unit Trusts offered under the Scheme as at the date of this prospectus are set out on the following pages. The investment objectives of the QuayStreet Unit Trusts may be changed by the investment manager of those funds, QuayStreet Asset Management Limited (Investment Manager). The investment objectives of the Scheme may be varied at any time by the Manager. 20
The Investment Manager intends that the asset classes held by the QuayStreet Unit Trusts are managed consistent with each QuayStreet Unit Trust Fund’s target asset allocation and investment ranges. However, the QuayStreet Unit Trusts’ actual investments at any time may be different because of factors such as market conditions and the Investment Manager’s ability to buy or sell assets at that time. In September 2014 the newly formed investment team was appointed with responsibility for managing the QuayStreet Unit Trusts. Details of the team’s investment managers and analysts are available on www.quaystreet.com.
21
The investment objectives for each Fund that invests in the QuayStreet Unit Trusts are as follows:
Lower Risk Fund Category Fixed Interest Fund Investment Policy and Objectives The Fixed Interest Fund invests in a diversified portfolio of high quality income assets such as cash, term deposits and securities issued by corporate and government entities. The investment objective is to provide investors with a level of return consistent with the New Zealand fixed interest market. Investment returns will vary from year to year and may be negative. The Fund targets investment grade securities and while international investments are permitted they are hedged back to New Zealand dollars. The investments are spread across multiple issuers, sectors, maturities and regions to provide an appropriate level of risk diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
0%
0%
0%
International Equity
0%
0%
0%
Listed Property
0%
0%
0%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
100%
0%
100%
International Fixed Interest
0%
0%
100%
Cash
0%
0%
40%
0%
0%
0%
100%
100%
100%
Asset Categorisation Growth Assets Defensive Assets
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
22
Income Fund Investment Policy and Objectives The Income Fund invests in a diversified portfolio of income producing assets including cash, term deposits, fixed interest securities, listed property, infrastructure and utility securities and equities. The investment objective is to provide investors with a higher level of income relative to prevailing short term interest rates. The Fund makes quarterly distributions and aims to preserve the real value of investments relative to inflation over the medium term. Investment returns will vary from year to year and may be negative. The Fund targets assets that can provide a sustainable level of income with low levels of volatility in total return. The investments are spread across multiple asset types, geographies, markets, issuers, sectors and maturities to provide a high level of diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return will be measured in New Zealand dollars and currency exposure will be actively managed in a manner consistent with the investment objectives. The asset allocation guidelines are shown below.
Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
10%
0%
30%
International Equity
0%
0%
30%
Listed Property
10%
0%
30%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
70%
0%
100%
International Fixed Interest
0%
0%
100%
Cash
10%
0%
20%
Growth Assets
20%
0%
30%
Defensive Assets
80%
70%
100%
Asset Categorisation
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
23
Conservative Fund Investment Policy and Objectives The Conservative Fund invests in a diversified portfolio of predominantly defensive assets such as cash, term deposits and fixed interest securities but will include a smaller allocation to growth assets such as listed property, infrastructure and utility securities and equities. The investment objective is to provide a level of return consistent with the target asset allocation and risk profile of the Fund. Investment returns will vary from year to year and may be negative. The Fund investments are spread across multiple asset types, geographies, markets, issuers, sectors and maturities to provide a high level of diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives. The asset allocation guidelines are shown below.
Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
10%
0%
20%
International Equity
10%
0%
20%
Listed Property
0%
0%
20%
Unlisted Property
0%
0%
20%
NZ Fixed Interest
60%
0%
100%
International Fixed Interest
0%
0%
100%
Cash
20%
0%
100%
Growth Assets
20%
0%
40%
Defensive Assets
80%
60%
100%
Asset Categorisation
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
24
Medium Risk Fund Category Balanced Fund Investment Policy and Objectives The Balanced Fund invests in a diversified portfolio of defensive and growth assets. The investment objective is to provide a level of return consistent with the target asset allocation and risk profile of the Fund. Investment returns will vary considerably from year to year and may be negative. The Fund investments are spread across multiple asset types, geographies, markets, issuers, sectors and maturities to provide a high level of diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives.
The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
20%
0%
80%
International Equity
40%
0%
80%
Listed Property
0%
0%
40%
Unlisted Property
0%
0%
40%
NZ Fixed Interest
30%
0%
60%
International Fixed Interest
0%
0%
60%
Cash
10%
0%
60%
Growth Assets
60%
40%
80%
Defensive Assets
40%
20%
60%
Asset Categorisation
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
25
Balanced SRI Fund (socially responsible investing) Investment Policy and Objectives The guiding philosophy of the Balanced SRI Fund is to endeavour to have a diversified portfolio of investments that are deemed to be environmentally and socially sustainable, whilst still applying our traditional portfolio investment criteria. The Fund invests in a diversified portfolio of defensive and growth assets. The investment objective is to provide a level of return consistent with the target asset allocation and risk profile of the Fund. The Balanced SRI investible universe is smaller and this may affect the Fund's returns and volatility relative to a traditional balanced portfolio. Investment returns will vary considerably from year to year and may be negative. The Fund investments are spread across multiple asset types, geographies, markets, issuers, sectors and maturities to provide a high level of diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives.
The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
20%
0%
80%
International Equity
40%
0%
80%
Listed Property
0%
0%
40%
Unlisted Property
0%
0%
40%
NZ Fixed Interest
30%
0%
60%
International Fixed Interest
0%
0%
60%
Cash
10%
0%
60%
Growth Assets
60%
40%
80%
Defensive Assets
40%
20%
60%
Asset Categorisation
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity. The securities in the fund and any potential new investments will be monitored for adherence to the environmentally and socially sustainable criteria determined by the manager.
26
Higher Risk Fund Category Growth Fund Investment Policy and Objectives The Growth Fund invests in a diversified portfolio of predominantly growth assets such as listed property, infrastructure and utility securities and equities, but will include a smaller allocation to defensive assets such as cash, term deposits and fixed interest securities. The investment objective is to provide a level of return consistent with the target asset allocation and risk profile of the Fund. Investment returns will vary substantially from year to year and may be negative. The Fund investments are spread across multiple asset types, geographies, markets, issuers, sectors and maturities to provide a high level of diversification. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives.
The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
25%
0%
100%
International Equity
55%
0%
100%
Listed Property
0%
0%
40%
Unlisted Property
0%
0%
40%
NZ Fixed Interest
15%
0%
40%
International Fixed Interest
0%
0%
40%
Cash
5%
0%
40%
Growth Assets
80%
60%
100%
Defensive Assets
20%
0%
40%
Asset Categorisation
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
27
International Equity Fund Investment Policy and Objectives The International Equity Fund invests in a range of instruments to achieve a diversified exposure to international equities. The investment objective is to provide investors with a long run level of return consistent with international share markets as well as diversification away from New Zealand dollar dominated investments. Investment returns will vary substantially from year to year and may be negative. The Fund invests in some or all of the following: listed company shares (including preference and convertible shares), country and/or sector share funds (listed or unlisted), total return swaps, exchange traded funds (ETFs) and specialist sub managers. The Fund also uses derivatives in order to gain exposure to markets, as an alternative to direct share investments or index funds or to reduce risk. The mix of the Fund’s investments will vary and, at any point in time, all or a substantial proportion of the Fund’s exposure may comprise one of the classes of instrument, including derivatives. Generally, it is intended that currency exposure will remain unhedged to enable investors to diversify away from New Zealand dollar denominated investments. However, from time to time, when it is the view of the manager that the New Zealand dollar is likely to appreciate significantly and that this will result in an adverse negative impact on the Fund’s returns, the manager may utilise currency derivatives and/or forward exchange contracts to negate the impact. The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
0%
0%
50%
International Equity
100%
0%
100%
Listed Property
0%
0%
50%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
0%
0%
0%
International Fixed Interest
0%
0%
0%
Cash
0%
0%
80%
100%
20%
100%
0%
0%
80%
Asset Categorisation Growth Assets Defensive Assets
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
28
New Zealand Equity Fund Investment Policy and Objectives The New Zealand Equity Fund invests in a diversified portfolio of New Zealand shares. The investment objective is to provide investors with a level of return consistent with the performance of the New Zealand sharemarket over the long term. Investment returns will vary substantially from year to year and may be negative. The Fund invests predominantly in companies that are in the NZX 50 Index. However there may be an allocation to smaller companies listed on the NZX Main Board or with the intention of listing on a recognised exchange. The Fund may also invest in cash, including when there is a lack of suitable investment options available. The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
100%
0%
100%
Australian Equity
0%
0%
0%
International Equity
0%
0%
0%
Listed Property*
0%
0%
100%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
0%
0%
0%
International Fixed Interest
0%
0%
0%
Cash
0%
0%
30%
100%
70%
100%
0%
0%
30%
New Zealand Equity
Asset Categorisation Growth Assets Defensive Assets
* This will be fully invested in New Zealand securities Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
29
Australian Equity Fund Investment Policy and Objectives The Australian Equity Fund invests in a diversified portfolio of Australian shares. The investment objective is to provide investors with a level of return consistent with the performance of the Australian sharemarket over the long term. Investment returns will vary substantially from year to year and may be negative. The Fund invests predominantly in companies that are in the ASX 200 Index. However there may be an allocation to smaller companies listed on the Australian Stock Exchange or with the intention of listing on a recognised exchange. The Fund may also invest in cash, including when there is a lack of suitable investment options available. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives. The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
0%
0%
0%
100%
0%
100%
International Equity
0%
0%
0%
Listed Property*
0%
0%
100%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
0%
0%
0%
International Fixed Interest
0%
0%
0%
Cash
0%
0%
30%
100%
70%
100%
0%
0%
30%
New Zealand Equity Australian Equity
Asset Categorisation Growth Assets Defensive Assets
* This will be fully invested in Australian securities
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
30
Altum Fund Investment Policy and Objectives The Altum Fund invests in a concentrated portfolio of shares, predominantly listed in New Zealand and Australia. The investment objective is to provide investors with a higher level of return over the long term regardless of sharemarket returns. Investment returns will vary substantially from year to year and may be negative. The Fund invests predominantly in shares where the manager has a high level of conviction in the investment case. As a result, the asset allocation and diversification of the portfolio may change considerably over time. The Fund may also invest in cash or fixed interest securities, including when there are a lack of suitable high conviction investment options available. The Fund has the ability to invest in other funds and may use derivatives for the purposes of risk management or to obtain desired market exposures. The Fund’s return is measured in New Zealand dollars and currency exposure is actively managed in a manner consistent with the investment objectives. The asset allocation guidelines are shown below. Asset
Target Allocation
Minimum Allocation
Maximum Allocation
Australasian Equity
100%
0%
100%
International Equity
0%
0%
100%
Listed Property
0%
0%
100%
Unlisted Property
0%
0%
0%
NZ Fixed Interest
0%
0%
100%
International Fixed Interest
0%
0%
100%
Cash
0%
0%
100%
100%
0%
100%
0%
0%
100%
Asset Categorisation Growth Assets Defensive Assets
Cash is defined as cash, term deposits and any other money market security with twelve months or less until maturity.
31
Warning Note - Past Performance is Not an Indicator of Future Performance Please note past performance is no guarantee of future performance. It is recommended that investors view the latest fund fact sheet to see the most recent QuayStreet Unit Trust Fund performance and portfolio information – see For More Detail below. Investors are recommended to seek financial advice The information in this prospectus does not provide investment advice. It does not take into account an investor’s financial position, financial needs, financial goals or risk tolerance. In providing this prospectus, the Manager has not considered whether the Funds are suitable for a particular investor. It is recommended that investors discuss their individual circumstances and risk appetite with a financial adviser before deciding whether the investment is appropriate for them. For More Detail Monthly fact sheets for each of the Funds that invest in the QuayStreet Unit Trusts showing latest returns and current investments can be viewed on the Investment Manager’s website www.quaystreet.com. None of the Trustee, the Manager, Craigs Investment Partners Limited, or any of their respective directors guarantees the performance of the funds, that any particular rate of return will be achieved, or the return of members’ application monies. Past performance is no guarantee of future performance. Please refer to the “Other material matters” section of this prospectus. The Craigs Investment Partners investment committee oversees the selection of investments included as Nominated Securities other than the QuayStreet Unit Trusts. The investment committee is made up of senior Craigs Investment Partners’ research staff and is supported by the Craigs Investment Partners’ research team. Details of the investment committee members, as at the date of this prospectus, are available on Craigs Investment Partners website at www.craigsip.com/About-Us/Our-People/investment-committee. The members of the investment committee can change without notice to investors.
Self Selected Portfolios These portfolios aim to provide a client with the ability to construct an individual risk-weighted return to suit their personal investment requirements. The portfolio asset weightings can be developed across a client’s total investments. An investor may select their preferred investments from a list of nominated securities including: the QuayStreet Unit Trusts, global, New Zealand and Australian equities, investment trusts, managed funds, index funds, listed property trusts and cash (Nominated Securities). From time to time the Craigs Investment Partners Investment Committee reviews and recommends any additions or deletions to or from the list of Nominated Securities.
Liability of members Members will not incur any liabilities (including contingent liabilities), apart from any additional tax and potential liabilities or interest payable to the Inland Revenue Department, in relation to the Scheme in respect of their contributions to the Scheme except to the extent that fees, costs, expenses and taxes are deductible from contributions. Refer to the section headed “Qualifying Recognised Overseas Pension Scheme (“QROPS”) in section 14 of this prospectus for further information regarding potential United Kingdom tax liability for members who transfer funds to the Scheme from a United Kingdom pension plan. 32
Deutsche Bank Group strategic alliance with Craigs Investment Partners Limited In August 2010, Craigs Investment Partners Limited and the Deutsche Bank Group formed a strategic alliance whereby Deutsche New Zealand Limited acquired a 49.9% equity interest in Craigs Investment Partners Limited. As at the date of this prospectus there have been no other activities or material developments relating to the Scheme since its establishment.
Investment Performance The Scheme holds a range of securities. As each member elects his or her own investments, the returns for each member’s own investment portfolio within the Scheme will necessarily be different from the return for the Scheme as a whole. Each member is provided with a contribution and holdings report 6 monthly, in April and October. This shows the member’s individual security holdings and his or her contributions to the end of the prior March or September. The Scheme’s returns have been calculated on an aggregated basis. As discussed above, the investment performance of each member’s investment portfolio will depend upon the investments selected by that member. For the year ended 31 March 2015 the Scheme returned 10.8% For the year ended 31 March 2014 the Scheme returned 3.4% For the year ended 31 March 2013 the Scheme returned 6.8% For the year ended 31 March 2012 the Scheme returned -4.8% For the year ended 31 March 2011 the Scheme returned 3.3%.
These returns are calculated before tax and after any investment related charges (including trustee fees and management fees). The returns are the percentage change in the value of the Scheme which has been calculated based on the net assets of the Scheme and taking into account cash returns received and unrealised capital gains/losses based on movements in net market value of investments. Returns are affected by movement in international equity and currency markets. The Scheme’s performance is calculated using the closing price of each listed security held by the Scheme (closing price being the last traded price for the security or where there has been no trade the latest offer price on the exchange where the security is listed), or where a security is unlisted, the latest valuation price published by the relevant issuer/manager. By way of illustration, the investment performance for the QuayStreet Unit Trusts in which the Scheme invests is set out in the following table.
33
Funds of the QuayStreet Unit Trusts
No. of units on issue held by the Scheme as at
Market value of units held by the Scheme as at
31-Mar-15
31-Mar-15 $
Closing Price as at
Returns
Return s
Returns
Returns
Returns
31-Mar-15 $
2015
2014
2013
2012
2011
Fixed Interest Fund
3,992,837.8388
4,979,068.79
1.2470
6.8%
1.8%
5.9%
5.3%
6.2%
Conservative Fund
5,011,769.5538
7,295,131.76
1.4556
8.4%
2.9%
7.8%
2.9%
5.9%
Balanced Fund
16,268,341,971 4
24,147,099.99
1.4843
12.7%
3.9%
11.9%
-0.7%
7.6%
Balanced SRI Fund
1,859,593.5239
2,832,904.77
1.5234
11.5%
5.7%
13.2%
-2.2%
5.7%
Growth Fund
5,822,584.6990
8,732,130.27
1.4997
13.2%
4.1%
13.1%
-2.5%
7.6%
1,293,231.2718
1,952,261.93
1.5096
14.0%
5.0%
15.7%
-5.2%
7.5%
958,309.0376
1,634,971.05
1.7061
11.0%
13.8%
22.6%
5.2%
14.83%*
1,176,376.3163
1,555,287.13
1.3221
17.2%
-4.9%
18.5%
-11.4%
42.24%*
Altum Fund
130,975.7965
137,026.88
1.0462
2.9%***
N/A**
N/A**
N/A**
N/A**
Income Fund
173,837.9155
179,105.20
1.0303
2.1%***
N/A**
N/A**
N/A**
N/A**
International Equity Fund New Zealand Equity Fund Australian Equity Fund
1
Please note: Prior to 1 April 2013 the market value of units as per the audited accounts is based on the bid price pursuant to required accounting standards. From 1 April 2013 the audited accounts and the daily unit prices are calculated using the last traded price. The Funds’ individual benchmarks are set out in detail in monthly Fund Fact Sheets which can be viewed on the Investment Manager’s website www.quaystreet.com (under the heading Unit Prices and Fund Fact Sheets). *
Annualised performance are based on actual returns and assume the relevant QuayStreet Unit Trusts fund had been operating for a full year .
** ***
The Altum Fund and Income Fund were not yet established at these dates. As the Altum Fund and Income Fund have not been in existence for a full year returns are calculated since inception and have not been annualised
1
The annual returns for the International Equity Fund are based on the investment policy and objectives in place prior to 19 September 2014, when the Fund was called the Equity Fund. With effect on and from 19 September 2014, the Fund was renamed the International Equity Fund and its investment policy and objectives changed. Members should take this into account when considering the historical performance of the International Equity Fund.
34
Please note that the market valuation of the units as shown in the table above does not agree with the total members’ funds in the summary of financial statements below because the above table does not include members’ individual choices of Nominated Securities from the approved list. The “Returns” are the percentage change in value of the relevant QuayStreet Unit Trusts fund, which has been calculated based on the daily net assets of the QuayStreet Unit Trusts fund and taking into account cash returns received and unrealised capital gains/losses based on movements in net market value of investments and membership activities. The returns are calculated before tax and after any investment related charges (including brokerage, trustee fees and management fees charged). “Closing Price” is the valuation price published by the issuer/manager. “Market Valuation” is the quantity of units held valued at the closing price per unit. Please note that past performance is not necessarily an indicator of future performance. No undertakings are given to members about the return of capital.
5.
Summary of financial statements
The following is the Scheme summary of financial statements for the years ended 31 March as shown in the following table. An auditor's report in relation to the summary and a statement from the auditor consenting to the inclusion of that report are attached in Appendix A. The amounts set out in the summary have been taken from the audited financial statements for the years ended 31 March as shown in the following table which have been authorised and registered under the Financial Reporting Act 1993 with the Registrar of Companies. The auditor's reports on those audited financial statements were not qualified. The summary financial statements cannot be expected to provide as complete an understanding as provided by the full financial statements. All amounts stated in the summary of the financial statements are presented in New Zealand dollars rounded to the nearest dollar, which is the Scheme’s functional and presentation currency. Audited financial statements are available on request and may be inspected during normal business hours at the offices of: Craigs Investment Partners Limited PO Box 13155 158 Cameron Road TAURANGA 3141. or can be accessed on the Companies Office website www.business.govt.nz/companies under “Search other Registers.” The full financial statements for the year ended 31 March 2015 were authorised by the Trustee on 29 June 2015. The full financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice, as applicable for profit oriented entities. The Trustee has made an unreserved statement of compliance with International Financial Reporting Standards in the full financial statements. The information required by clause 5 of Schedule 6 of the Securities Regulations 2009 is set out in the following table.
35
Craigs Investment Partners Superannuation Scheme - superSTART® Summary of Financial Statements (these figures are taken from audited financial statements) Statement of changes in net assets for the period ended 31 March
2015
2014
2013
2012
2011
$
$
$
$
$
Dividend and/or distribution income
2,120,312
897,283
555,851
369,540
235,003
80,712
74,685
112,299
101,157
1,323,816
47,499
(463,041)
(692,300)
(338,452)
(657,800)
248,096
102,076
(164,251)
Interest income Net foreign exchange (loss)/profit (excluding investment assets) Realised changes in fair value of investment assets
115,210
(248,936)
Unrealised changes in fair value of investment assets
15,086,470
Net investment income
18,107,801
2,716,072
3,096,473
(1,373,197)
1,683,072
Brokerage fees
1,037,697
420,686
125,126
165,051
178,358
Custodial service fee
1,025,204
350,779
258,846
150,538
123,873
Audit fee - audit of financial statements
7,475
7,475
6,750
6,750
6,750
Audit fee - other assurance services
3,571
3,392
3,000
3,000
3,000
Other operating expenses
31,261
29,923
20,840
2,250
2,250
Total expenses
2,105,208
812,255
414,562
327,589
314,231
16,002,593
1,903,817
2,681,911
(1,700,786)
1,368,841
677,012
101,043
182,692
752,780
75,093
Net profit / (loss) before membership activities after tax
15,325,581
1,802,774
2,499,219
(2,453,566)
1,293,748
Member contributions
75,388,051
57,985,283
13,105,373
15,830,371
14,905,014
411,969
406,421
4,828,820
-
-
Withdrawals
11,783,406
8,580,104
3,731,106
11,784,692
4,311,760
Net membership activities
64,016,614
49,811,600
14,203,087
4,045,679
Benefits accrued to member’s accounts
79,342,195
51,614,374
16,702,306
1,592,113
Members’ funds at the beginning of the year
109,110,822
57,496,448
40,794,142
39,202,029
27,315,027
Members’ funds at the end of the year
188,453,017
109,110,822
57,496,448
40,794,142
39,202,029
Net (loss)/profit before membership activities Taxation (benefit) / expense
Employer contributions
1,442,482
2,826,902
(998,485) 2,054,093
10,593,254
11,887,002
36
Statement of net assets as at 31 March
Total tangible assets
2015
2014
2013
2012
2011
$
$
$
$
$
188,771,377
109,346,008
57,624,449
40,866,058
38,711,437
0
0
0
0
600,393
188,771,377
109,346,008
57,624,449
40,866,058
39,311,830
318,360
235,186
128,001
71,916
109,801
Net assets attributable to members
188,453,017
109,110,822
57,496,448
40,794,142
39,202,029
Members’ funds
188,453,017
109,110,822
57,496,448
40,794,142
39,202,029
2015
2014
2013
2012
2011
$
$
$
$
$
Total intangible assets – deferred tax Total assets Total liabilities
Statement of Cash Flows for the period ended 31 March
Net cash flows from operating activities
(61,620,210)
(28,054,638)
(13,562,476)
(5,747,883)
(8,989,174)
Net cash flows from financing activities
64,012,970
49,811,600
14,203,087
4,045,679
10,593,254
2,392,760
21,756,962
640,611
(1,702,204)
1,604,080
31,984,672
10,180,211
10,002,641
12,397,145
11,131,517
1,323,816
47,499
(463,041)
(692,300)
(338,452)
35,701,248
31,984,672
10,180,211
10,002,641
12,397,145
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at end of the year
Management fees have been charged in the QuayStreet Unit Trusts funds. These indirect fees total:
Management Fees
2015
2014
2013
2012
2011
$
$
$
$
$
420,871
299,394
183,325
154,106
134,390
The management fees are reflected in the unrealised changes in fair value of investment assets in the summary statement of changes in net assets.
6.
Guarantors
None of the Trustee, the Investment Manager, the investment committee, the Promoters, the Manager, the Sponsor or any of their respective directors, the Crown or any other person guarantees the repayment of members' interests in the Scheme or the payment of any earnings or returns on investment in the Scheme.
37
7.
Acquisition of business or equity securities
No business or equity securities that require disclosure under clause 7 of Schedule 6 of the Securities Regulations 2009 have been acquired for the purposes of the Scheme in the 2 years prior to the date of registration of this prospectus.
8.
Interested persons
Charges – Summary
Entry fee
Up to 1.25% of the amount contributed into a QuayStreet Unit Trust Fund. Up to 2.5% of the amount contributed into a Nominated Security included in a Self Selected Portfolio.
Exit fee
Up to 1.25% of the amount withdrawn from a QuayStreet Unit Trust Fund. Up to 2.5% of the amount withdrawn from a Nominated Security included in a Self Selected Portfolio.
Switch fee
We do not currently charge switching fees, although we are entitled to do so. Any switching fee will be limited to a maximum of 2.5% of the amount being switched. Please note although no switching fee is charged we may charge brokerage when a member switches Nominated Securities (excluding the QuayStreet Unit Trusts).
Management fee (includes Trustee, registry and custodial fees)
0.75% p.a. for investments in Fixed Interest Fund, Income Fund and Conservative Fund. 1.00% p.a. for investments in Balanced Fund. 1.25% p.a. for investments in Balanced SRI Fund, Growth Fund, New Zealand Equity Fund, Australian Equity Fund, International Equity Fund and Altum Fund. Up to 1.25% p.a. for investments in Nominated Security included in a Self Selected Portfolio.
Performance fee (for the Altum Fund only)
A performance fee is payable in relation to the Altum Fund of 15% of the Fund’s return (before tax) in excess of the target return, which is the Reserve Bank of New Zealand Official Cash Rate plus 6% per annum. A High Water Mark applies and is explained on page 41.
Expenses and costs Expenses
Brokerage
Deducted from the Scheme.
Up to 2.5% of the relevant transaction. The total entry/exit fees and brokerage will not exceed 2.5% of the transaction value. 38
The Trustee, Manager and Custodian are entitled to remuneration for the services they provide, and to recover their expenses in respect of the Scheme. A participating employer may determine the level of fees payable in respect of fees applicable to its employees by the Participation Agreement entered into with the Trustee and the amount applicable to the employer's employees will be set out in the applicable supplement to the investment statement. The nature of the services provided by the Trustee, Manager and Custodian and the usual fees, which may apply, subject to any variation agreed between the participating employer and the Trustee, are as follows: Trustee – Functions: The statutory functions of a trustee of a registered superannuation scheme, including monitoring the Manager’s compliance with the requirements of the Trust Deed and the Management Agreement and holding the Scheme’s assets on behalf of members (via the Custodian). Fees and Expenses: The Trustee is entitled to payment of a reasonable fee consistent with the services it performs as agreed with the Sponsor. The Trustee’s fee is, as at the date of this prospectus, settled as described below under “No double charging”. Under the Trust Deed, the maximum amount the Trustee may be paid to cover the Trustee's fee and to pay or reimburse itself for the Manager's fees is 5% per annum of the net asset value of the Scheme (this limit does not apply to entry and withdrawal fees or switching fees charged by the Trustee). These expenses are deducted on behalf of the Trustee by the Manager as described below. In addition the Trustee may be paid or reimbursed for costs, charges and expenses properly incurred in the administration and management of the Scheme. There is no limit on the amount of expenses that the Trustee is entitled to be reimbursed for. Manager – Functions: Management and administration of, and registrar for, the Scheme. Pursuant to the Management Agreement described in section 3, the Manager is responsible for the administration of the Scheme and investment management of the Scheme's assets. The Manager has delegated certain of its administration and investment obligations under the Management Agreement to Craigs Investment Partners Limited under the CIP Agreement. Fees and Expenses: Under the Management Agreement, the Trustee has authorised the Manager to deduct and retain the following annual or other fees in respect of the Scheme:
management fees;
entry fees;
exit fees; and
switching fees.
These fees may be reviewed by either the Trustee or the Manager, provided any new fees must be agreed between them. In addition, the Manager may be paid or reimbursed for expenses, costs or liabilities reasonably incurred in or about acting as Manager of the Scheme. In addition, the Manager is entitled to charge in respect of the Scheme, and to retain, additional fees to compensate it for services in addition to its usual administration and investment responsibilities (as agreed with the Trustee). The Manager will pay or reimburse Craigs Investment Partners Limited, to the extent the Manager is paid or reimbursed for such costs and expenses from the Scheme, for all costs and 39
expenses properly and reasonably incurred by Craigs Investment Partners Limited in accordance with the CIP Agreement. Management fee The Manager is entitled to deduct a management fee of up to 1.25% per annum of the value of Members' portfolio accounts. This fee includes the Trustee's fee, the Manager's fee and the Custodian's fee, and covers the cost of maintaining the member's Scheme account, processing contributions and withdrawals, receiving and actioning correspondence and preparing account position statements. The level of the management fee will vary according to the member's fund selection and will be a percentage of the value of the member's accounts. During the term of this prospectus, the maximum fees charged as the management fee are as follows: the Fixed Interest Fund, the Conservative Fund and the Income Fund will be charged at 0.75% per annum, the Balanced Fund charged at 1.00% per annum, the Balanced SRI Fund, the Growth Fund, the International Equity Fund, the New Zealand Equity Fund, the Australian Equity Fund and the Altum Fund at 1.25% per annum, and the Self Selected Portfolios charged at up to 1.25% per annum. These fees are calculated based on the number of days the position has been held throughout the relevant year. From the management fee, the Manager pays a fee to the Trustee as agreed between the Trustee and the Manager, the Custodian’s fees as agreed with the Custodian, and a fee to Craigs Investment Partners Limited for the administration and investment obligations delegated to it by the Manager under the CIP Agreement, and will retain the balance. No double charging Although the Manager is entitled to charge the management fee on the Funds, it does not currently do so in relation to Funds which invest in the QuayStreet Unit Trusts. This is because there is an equivalent management fee charged within each of the QuayStreet Unit Trusts. The QuayStreet Unit Trusts are managed by the Investment Manager, QuayStreet Asset Management Limited, and have the same trustee as the Scheme. The Investment Manager is a wholly owned subsidiary of Craigs Investment Partners Limited, which is a promoter of the Scheme. To make sure a member is not double charged management fees both within the Scheme and the QuayStreet Unit Trusts, the management fee in relation to Funds which invest in the QuayStreet Unit Trusts is charged within the QuayStreet Unit Trusts only. No separate management fees are charged to the member for the member’s investments in those Funds within the Scheme. The Investment Manager charges a management fee for each of the QuayStreet Unit Trusts as follows: the Fixed Interest Fund, the Conservative Fund and the Income Fund will be charged at 0.75% per annum, the Balanced Fund at 1.00% per annum, and the Balanced SRI Fund, the Growth Fund, the International Equity Fund, the New Zealand Equity Fund, the Australian Equity Fund and the Altum Fund charged at 1.25% per annum. This management fee is calculated daily, on the net value of assets in the relevant QuayStreet Unit Trust. As a result, the Investment Manager management fee impacts the value of the Funds which invest in the QuayStreet Unit Trusts and will have a corresponding effect on the value of a member’s investment in those Funds. Self Selected Portfolios of other Nominated Securities are charged a management fee within the Scheme as set out above. In relation to Nominated Securities that are securities of underlying investment funds, those underlying investment funds may also have fees and expenses, including performance fees in some cases, which are charged by their managers and trustees. These fees and expenses will be reflected in the underlying investment fund’s unit price and may therefore indirectly affect your returns. Information on the fees charged within any underlying investment fund is available on 40
request. Prices used to value your holdings and calculate your returns are inclusive of all fees and expenses deducted within any underlying investment fund.
Performance fees The Investment Manager is entitled to receive from the Altum Fund within the QuayStreet Unit Trusts a performance fee in respect of the investment performance of the Altum Fund, subject to certain criteria being met. The performance fee is equal to 15% of the amount by which the Altum Fund’s return (before tax) for the relevant period exceeds the target return. For this purpose, the Altum Fund’s return is calculated based on the increase in the net asset value per unit (before tax) over the relevant period and the Fund’s target return is the Reserve Bank of New Zealand Official Cash Rate plus 6% per annum for the same period. This means that if the Reserve Bank of New Zealand Official Cash Rate was 5% for the relevant period, then the performance fee would be payable on the amount by which the net asset value per unit of Altum Fund has increased by more than 11% over that period (subject to the operation of the High Water Mark). The calculation and payment of the Altum Fund performance fee is subject to a High Water Mark. The High Water Mark is the net asset value per unit (before tax) of the Altum Fund at the end of the most recent period in respect of which a performance fee is paid to the Investment Manager. A performance fee is only paid if and to the extent that the net asset value per unit (before tax) of the Altum Fund exceeds the High Water Mark. The operation of the High Water Mark ensures that where the value of the Fund goes up, declines and then recovers, no performance fee is payable to the extent that the Investment Manager has already received a performance fee for that investment performance. The initial High Water Mark is the Unit Price at commencement of the Altum Fund (being 24 September 2014) within the QuayStreet Unit Trusts. The High Water Mark can be adjusted downwards to take account of any distributions made from the Fund. The first performance period will be from commencement of the Fund (being 24 September 2014) to 31 March 2016 and then every 12 months up to and including 31 March each year. The performance fee is calculated and accrued daily and payable in arrears within approximately 30 business days of 31 March each year. A worked example of the performance fee is available from the Investment Manager on request. None of the other QuayStreet Unit Trusts charge a performance fee. Custodian – Functions: holds the assets of the Scheme on the Trustee’s behalf. The Custodian is paid a fee by the Manager from the management fee. Other fees The Manager is also entitled to deduct entry and withdrawal fees in accordance with the terms of the Management Agreement referred to in section 3 as follows:
1.25% of any contribution or withdrawal benefit processed for a QuayStreet Unit Trust Fund; or
2.50% of any contribution or withdrawal benefit processed for a Self Selected Portfolio.
Currently, the Manager charges up to 1.25% on any contribution or withdrawal benefit processed for a QuayStreet Unit Trust Fund.
41
Under the Trust Deed, the maximum entry and withdrawal fee that may be charged is up to 5% of the amount processed. Entry and withdrawal fees are deducted from contributions and withdrawal benefits respectively. Pursuant to the Management Agreement described in section 3, the Manager is entitled to deduct a fee if a member wishes to amend their investment direction or switch their investments more than once in a Scheme year. The current fee is 1.25% (QuayStreet Unit Trust Fund) and 2.5% (Self Selected Portfolios) of the amount switched or the amount detailed in a change to an investment direction. A change to a member’s investment direction includes a change to the Nominated Securities a member invests in. Under the Trust Deed, there is no limit on the fee that may be charged as long as it is reasonable. As at the date of this prospectus, no switching fee is charged. Contributions and withdrawals from the Scheme or switches of investments may give rise to brokerage expenses being incurred by the Scheme. That brokerage is paid to Craigs Investment Partners Limited (a Promoter). The brokerage expenses are limited to a maximum of 2.5% of the value of the relevant transaction (taking into account any entry or withdrawal fees charged by the Manager so that the total entry/withdrawal fees and brokerage will not exceed 2.5% of the transaction value). There is no limit on the total amount of the brokerage paid in respect of the Scheme because it is a function of the investment activities undertaken by the Scheme. GST – GST (levied at the prevailing rate) will be payable in addition to all fees as applicable. Subject to the Superannuation Schemes Act 1989 and the terms of the Trust Deed and the management agreement, the Manager reserves the right to change the fees listed in this section and to charge other types of fees upon giving notice to members. As at the date of this prospectus, no directors of the Manager, the Custodian, the Trustee or Craigs Investment Partners Limited (as a Promoter) are members of the Scheme. Directors of the Manager, the Custodian, Craigs Investment Partners Limited and the Trustee are not precluded from joining the Scheme and may do so in the future. Related party services Investment in QuayStreet Unit Trusts: Up to 100% of the value of the assets in the Scheme may at any time be invested in the QuayStreet Unit Trusts, which are unit trusts issued and managed by the Investment Manager, an associated person of the Manager and Craigs Investment Partners Limited. The Investment Manager receives from those QuayStreet Unit Trusts management and administration fees for the services it provides. The Trustee also provides trustee services for the QuayStreet Unit Trusts and receives from those unit trusts fees for those services. As discussed above, because the Scheme invests in the QuayStreet Unit Trusts (which are managed by the Investment Manager and of which the Trustee is the trustee), no separate management fee, trustee fee or custodial fee is charged to members of the Scheme in relation to those Funds that invest in the QuayStreet Unit Trusts. Instead, the Investment Manager charges a management fee within the QuayStreet Unit Trusts only (from which it meets the trustee and custodial fees). The fees charged within the QuayStreet Unit Trusts are included in the summary financial statements in section 5. The QuayStreet Unit Trusts may also incur costs and expenses which are recovered from the QuayStreet Unit Trusts. These costs include audit, legal, brokerage and bank fees. These costs and expenses will impact the value of a member’s investment in the Funds which invest in the QuayStreet Unit Trusts and will have a corresponding effect on the value of those Funds. Some of these costs and expenses will relate to services provided to the QuayStreet Unit Trusts by related companies of the Manager, such as transactional brokerage. These costs and expenses are set on standard commercial terms. 42
Investment in Cash Management Account: The QuayStreet Unit Trusts have, from 1 November 2010, invested in the Craigs Investment Partners Cash Management Account and may continue to do so. Investments in the Craigs Investment Partners Cash Management Account are held by CIP Cash Management Nominees Limited (an associated person of Craigs Investment Partners Limited) as nominee for investors. CIP Cash Management Nominees Limited has a financial interest in respect of those investments as it receives commission from the bank that holds the pooled account in the name of CIP Cash Management Nominees Limited. Craigs Investment Partners Limited also has a financial interest in respect of the QuayStreet Unit Trusts’ investments in the Craigs Investment Partners Cash Management Account because Craigs Investment Partners Limited manages the Craigs Investment Partners Cash Management Account and receives commission in that capacity from CIP Cash Management Nominees Limited. Frank Maurice Aldridge (a director of the Manager and a Promoter), Kenneth Christopher Phillip (a director of the Manager) and Neil John Craig (a Promoter) are directors of CIP Cash Management Nominees Limited. Management of conflicts of interest As manager of the QuayStreet Unit Trusts, QuayStreet Asset Management Limited has conflicts of interest policies to address possible conflicts, particularly in relation to investing in offers of equity and debt securities in which Craigs Investment Partners Limited or associated entities (including Deutsche Craigs Limited), along with entities associated with Deutsche New Zealand Limited, have a role. These include requiring specific QuayStreet Asset Management Limited board approvals for such transactions. The trust deed for the QuayStreet Unit Trusts also contains restrictions on the Investment Manager entering into transactions with related parties without trustee approval (except where the proposed transaction is on normal commercial arm’s length terms).
9.
Material contracts
The material contracts which have been entered into in respect of the Scheme during the two years preceding the date of registration of this prospectus are:
the Management Agreement dated 12 April 2007 (as amended) was amended and restated on 18 September 2014 by The New Zealand Guardian Trust Company Limited and Craigs Investment Partners Superannuation Management Limited. The amendments were to include the Altum Fund and the Income Fund; and
the CIP Agreement entered into by the Manager and Craigs Investment Partners Limited on 3 July 2015 delegating certain of the Manager’s administration and investment obligations under the Management Agreement to Craigs Investment Partners Limited.
10.
Pending proceedings
As at the date of this prospectus, there are no pending legal proceedings or arbitrations that may have a material adverse effect on the Scheme.
11.
Other terms of offer and scheme
This prospectus is prepared in accordance with the Securities Act (Multiple Participants Superannuation Schemes) Exemption Notice 2011. This prospectus relies on certain exemptions set out in that exemption notice. The exemptions relied upon are subject to the following conditions in regard to participating agreements signed by employers.
43
No offer of an interest in the Scheme made on the basis of a participating agreement signed by a participating employer may be made unless the participating agreement (and any amendments):
has been registered by or filed with the Registrar of Financial Service Providers; and
is available for public inspection; and
is referred to in the relevant employer supplement to the investment statement in such a manner that it can be readily identified.
No offer of interests in the Scheme may be made to any person in his or her capacity as an employee of a participating employer unless:
a participating agreement has been signed by the participating employer and the agreement: -
has been registered by or filed with the Registrar of Financial Service Providers; and
-
is available for public inspection; and
the date of the participating Agreement and the date of all amendments to it are contained in the relevant employer supplement to the investment statement; and
an investment statement (and the supplement which forms part of the investment statement) is provided to prospective members.
All further terms of the offer and of the Scheme are set out in this prospectus, other than:
any terms implied by law; or
any terms set out in a document that is registered with a public official, available for inspection and referred to in this prospectus.
12.
Financial statements and auditor's report
Audited financial statements for the Scheme for year ended 31 March 2015 are available on request. The financial statements were registered under the Financial Reporting Act 1993 on 13 August 2015. The date of the auditor's report on those financial statements is 29 June 2015 and that report did not refer to a fundamental uncertainty and was not qualified. The auditor's report in relation to this prospectus (and the auditor’s consent to the report appearing in this prospectus) is attached to this prospectus in Appendix A.
13.
Places of inspection of documents
Copies of the Trust Deed, any amendments to the Trust Deed, the financial statements for the Scheme, and material contracts (including those referred to in this prospectus), the last annual report for the Scheme, and the prospectuses for the QuayStreet Unit Trusts (in which the assets of the Scheme are invested) may be inspected at no charge during normal business hours at the offices of: Craigs Investment Partners Limited 158 Cameron Road TAURANGA 3110. Copies of the Trust Deed, any amendments to the Trust Deed, material contracts and the latest financial statements for the Scheme may also be accessed on the Companies Office website www.business.govt.nz/companies under "Search Other Register". The prospectuses for the QuayStreet Unit Trusts (in which the assets of the Scheme are invested) can also be accessed on the Companies Office website www.business.govt.nz/companies under “Search the Companies Register” against the reference number 1976717. Copies of the documents may also 44
be obtained (a fee will be payable) by calling the Ministry of Business, Innovation and Employment Business Service Centre on 0508 266726. Each year a member will also receive a statement showing the member’s accumulation as at 31 March that year, and the amount of each type of contribution received in respect of the member for that year.
14.
Other material matters
Risks All investments involve risk. There is a chance with any investment of an uncertain outcome, where the actual return is different to what was expected. Risk can cause the value of an investment to go up or down (i.e. be volatile). The extent of any volatility will depend on the specific investment and general market conditions. In extreme circumstances, risk can result in losses which can erode an investment’s entire value. Principal investment risks The Scheme invests in the specific securities included in the list of Nominated Securities. The Scheme’s returns will therefore depend on the investment performance of those securities. Through holding these Nominated Securities, the Scheme is exposed directly and indirectly to a variety of risks. The principal investment risks that could affect members’ returns (which are common to superannuation schemes generally) are:
Market risk: changes in general market conditions that may affect the value of the Scheme’s investments, for example political events, natural disasters, legislative changes and other economic events;
Specific investment risk: an individual investment faces an unforeseen adverse event which affects the value of the underlying business and, in turn, reduces the market price of the investment;
Self Selected portfolio risk: members may select an individual security or fund from the list of Nominated Securities that underperforms the market, or other investment options. Additionally, selecting one or a small number of securities will lead to a concentrated investment portfolio, which lacks adequate diversification;
Currency and hedging* risk: currency movements can have an adverse effect on the New Zealand dollar value of any foreign investments. As a general rule, any foreign fixed interest investment held within the QuayStreet Unit Trusts will be fully hedged to New Zealand dollars while any foreign share investments may be fully, partially hedged or unhedged within the QuayStreet Unit Trusts as the Investment Manager deems this appropriate. When a foreign investment is left unhedged, the New Zealand value of that foreign investment will decline if the New Zealand dollar rises against the currency in which the foreign investment is held; (*Currency hedging is the act of reducing or negating the risks that arise out of changes in the movement of one currency against another, by using financial tools such as forward exchange contracts to mitigate potential losses)
Derivatives* risk: the trustees and managers of the QuayStreet Unit Trusts and the underlying funds into which the Scheme invests have the power to invest in derivatives. Derivatives present a financial risk to the relevant Fund and may result in loss of value depending on market movements; (*A derivative is a financial contract the value of which is dependent on the future value of an underlying asset (such as an index, or interest rate). It has no real value in itself. Derivative transactions can include as an example structured debt obligations, swaps, futures, options, forward contracts, or a combination of these).
Interest rate risk: changes in market interest rates that can have a negative impact, directly or indirectly, on the value of all types of share and fixed interest investments (including property based investments); 45
Counterparty risk: a third party defaulting on their obligations to the Scheme or the Investment Manager may result in a loss of value in the Scheme or the inability of the Scheme or the Investment Manager to complete transactions;
Borrowing: borrowing to invest, or leveraging investments, can present a real risk as an investment’s net equity position erodes more quickly in a declining market. Although the QuayStreet Unit Trusts may borrow, the Investment Manager currently chooses not to leverage QuayStreet Unit Trusts’ investments;
Benchmark risk: the Scheme’s potential returns could differ significantly from the returns of the benchmark against which it is measured;
Relative return risk: the Investment Manager’s investment style and asset allocation may see returns vary differently from the benchmark returns and the returns achieved by alternative investment funds. These variations in relative returns may continue for extended periods; Investment manager risk: the Investment Manager or an underlying investment manager may make poor investment decisions or other decisions which have an adverse impact on investors. Where the Manager employs the ‘manager of managers’ model, the risk is that the Manager could make a poor decision in respect to the appointment or removal of an underlying investment manager. In addition, where the performance of the Scheme is highly dependent on key personnel, the loss of the key personnel could materially affect the performance of the Scheme;
Liquidity risk: the risk associated with an inability on the part of the Scheme to meet monetary obligations in a timely manner. The risk may arise where there is a mismatch between the maturity profile of investments and the amounts required to pay benefits or where there is an investment in an illiquid asset (one where there is no (or limited) secondary market trading activity);
Single trust fund risk: despite different Funds being established within the Scheme, which are designed to enable members to have their savings invested by reference to particular asset classes or mixes of asset classes, the assets of the Scheme comprise a single trust fund. This means that in the unlikely event that the assets attributable to a particular Fund are insufficient to meet the liabilities attributable to that Fund, the assets attributable to any other Fund may be called on to meet those liabilities on an equitable basis; and
Loss of QROPS status risk: the Scheme could lose Qualifying Recognised Overseas Pension Scheme (“QROPS”) status at any time and neither the Trustee nor the Manager represent that the Scheme will continue to have QROPS status. If QROPS status is lost, a member’s UK tax implications may change in relation to their balance in the Scheme and/or future transfers.
Other principal non-investment related risks Investments involve other non-investment related risks, including:
General business risk: disruption to the operations of the Scheme through such events as the loss of key personnel, failure of processes and procedures, the extended loss of power or other technology failure, or the destruction of premises or the loss of power;
Regulatory risk: future changes to tax or superannuation legislation which could affect the operation of the Scheme or members’ interests in the Scheme. The Trust Deed could be amended in a manner that is required or permitted by law that has the effect of reducing the value of members’ interests, or restricting access to members’ entitlements;
Insolvency risk: the Scheme becoming insolvent or being otherwise unable to meet its financial obligations. If this occurs, members may not recover the full amount of their interest in the Funds; and
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Taxation risk: changes to tax legislation could affect the operation of the Scheme or members’ interests in the Scheme. In addition, the risk that the IRD will consider share or unit investments held by the Scheme are held on revenue account, in which case the Scheme would be taxable on gains realised from the sale of those shares or units if the FIF rules did not apply to them.
Asset class risk Asset class risk involves the risks associated with two primary asset classes: defensive assets and growth assets. Defensive assets Defensive assets, such as fixed interest securities, term deposits and cash, have different risk characteristics to growth assets, such as shares. The performance of defensive assets is usually more closely aligned to changes in interest rates than growth assets. A rise in interest rates will generally result in a decrease in the value of a defensive asset and the longer the period to maturity the greater the decline in the market value of a defensive asset. Credit quality will also affect value and if a company has a credit rating downgrade then the value of a defensive asset issued by it may fall. In extreme circumstances, if an issuer defaults on its obligations, a defensive asset issued by it may be worthless. Growth assets The value of a growth asset, such as shares and property, is reflected in the market price of the asset. Prices are generally driven by a company’s performance. If the company performs poorly, or if it needs to reduce or stop paying dividends, its share price will usually decline. There are also many broader market forces that can negatively affect the value of shares, such as a weak economy, increased regulation, political uncertainty or negative investor sentiment. Issues like these, as well as many others, can result in lower share prices. Asset allocation risk Asset allocation risk is risk generated by the mix of defensive and growth assets within the Scheme or a Fund, or the sector and country investment decisions within markets. Research has shown that asset allocation is an important contributor to a Fund’s overall investment return. The Funds that have more defensive assets (fixed interest and cash) are likely over time to provide a lower return with smaller fluctuations in that return. The Funds that have more growth assets (shares and property) are likely over time to provide a higher return but with large variability in the returns from year to year. Sometimes returns can be negative. The asset allocation risk can impact both a Fund’s absolute return and its relative return compared to similar funds that have a different asset allocation. How to manage investment risks The Manager recommends using a variety of strategies to manage investment risks. The Manager believes that prudent investing is founded on appropriate asset allocation and diversification. Asset allocation describes how a portfolio is split between the different types of assets (primarily cash, fixed interest, property and shares) and will largely determine the risk and return profile of your portfolio. Different asset types have different risk and return trade-offs and by changing the mix of these assets you can adopt different risk profiles. Lower risk profiles hold more cash and fixed interest investments, and less property and share investments. Conversely, higher risk profiles have a higher allocation to shares. The Manager advises investors to monitor the actual composition of your portfolio against allocations or targets, ensuring any differences are identified and rectified. Diversification reduces risk by making sure a portfolio is not overly exposed to any one area, investment or issuer. The Manager recommends diversified portfolios which invest in a wide range of securities, in a broad range of industry sectors, across a variety of markets. 47
Craigs Investment Partners produces commentaries on market movements and economic data, looking for economic changes and trends within global markets that could have an impact on a portfolio. The Manager recommends investors take into account any potential impact these may have on asset weightings within your portfolios. The Investment Manager uses similar strategies when managing investment risk in the QuayStreet Unit Trusts. The Investment Manager seeks to identify trends within markets that could have an impact on the QuayStreet Unit Trusts and adjusts the asset weightings and underlying holdings within the portfolios as it sees fit. Management of other principal non-investment related risks The Manager, in conjunction with Craigs Investment Partners, mitigates the other principal risks facing the Scheme (business, regulatory, insolvency and tax risks) by maintaining a business continuity plan, ensuring operating procedures and business processes are appropriately documented, staff are trained and cover is available should staff not be available, roles are appropriately segregated, internal controls operate and being actively involved in legislative reform. Summary All the risk factors affecting the value of an investment cannot be anticipated. It is reasonably foreseeable that an investor may receive less than they invested if any of the risks outlined above apply to them, or if an investor ceases to be an investor shortly after their initial investment. Past investment performance is no guarantee of future performance and investment returns will vary from period to period and they may be positive or negative.
Taxation Returns to members are likely to be affected by taxation. Tax law, its interpretation, the basis on which tax is imposed and tax rates change frequently. The application of tax law depends upon specific circumstances - members should obtain their own tax advice based on their individual circumstances. Members should also periodically monitor the tax implications of investing in the Scheme and should not assume that the position will remain the same as when they start investing. Further, members should note that contributions are 'locked-in' under the Scheme. The following summary of New Zealand taxation matters is a general guide that outlines the New Zealand taxation implications applicable to New Zealand resident members. The summary is based on the New Zealand tax laws as at the date of this prospectus. Under current taxation law, the taxable income of the Scheme is taxable to the Trustee at the rate of 28% and benefits paid to members are free of tax. Members are not required to include the net income of the Scheme or any benefit paid to them in their annual income tax return. The Scheme is not a portfolio investment entity (PIE) for tax purposes. Taxable income of the Scheme The Scheme’s main investments are units in PIE funds (including the QuayStreet Unit Trusts) and non-PIE fund investments. PIE funds The Scheme’s taxable income will include attributed PIE income from the PIE funds, which is attributed to the Scheme under the PIE rules. The attributed PIE income in relation to foreign share and unit trust investments held by the PIE funds will be calculated under the foreign investment fund (FIF) tax rules (except for shares in certain Australian listed companies that are exempt from the FIF tax rules). The income from those investments will most likely be calculated 48
under the fair dividend rate (FDR) method, which will mean that the Scheme is likely to have attributed PIE income equal to 5% of the average daily opening market value of those investments for the relevant tax year. Dividends and gains on sale of those investments derived by the PIE funds are not separately taxed, and therefore do not form part of the taxable income that is attributed to the Scheme under the PIE rules. The Scheme’s attributed PIE income in relation to shares in New Zealand companies and certain Australian listed companies held by the PIE funds will not be calculated under the FIF rules. The Scheme’s attributed income will include dividends derived from those investments, and the Scheme may be entitled to apply tax credits attached to those dividends (including credits for withholding tax deducted from those dividends) against its tax liability. Any gains on sale of those investments realised by the PIE funds are tax-free (provided they remain PIEs), and therefore will not be included in the amount of taxable income attributed to the Scheme. Other investments
The Scheme will calculate its taxable income from its non-PIE fund investments as follows: Share or unit investments (excluding those in New Zealand or certain Australian listed companies): In most cases the Scheme’s income from these investments is calculated under the FDR method, so that each tax year the Scheme will have taxable income equal to 5% of the market value of the investments at the start of the tax year (except in the case of investments bought and sold in the same tax year, which are subject to a separate FDR calculation). Share or unit investments in New Zealand or certain Australian listed companies: The Scheme will be taxed on dividends derived from these investments and may be entitled to apply tax credits attached to those dividends, and tax credits for withholding tax deducted from those dividends, against its tax liability. Any gains on sale of those investments will be tax-free to the Scheme if the Scheme holds the shares on “capital account” (and likewise, any losses will be nondeductible). Other income of the Scheme (e.g. interest on bank deposits) will be subject to the relevant normal tax rules. Tax may be imposed in overseas jurisdictions in relation to overseas investments (although this may give rise to a tax credit in New Zealand). Employer’s Superannuation Contribution Tax (ESCT) All employer contributions to the Scheme are liable to Employer’s Superannuation Contribution Tax (ESCT). The rate of ESCT is determined based on the member’s total amount of salary and wages and gross employer superannuation contributions in the previous tax year (or estimates of those amounts for the current tax year if the member was not employed for all of the previous tax year). The ESCT rates are currently: Total salary and wages and employer contributions
Rate
$0 - $16,800
10.5%
$16,801 - $57,600
17.5%
$57,601 - $84,000
30%
$84,001 upwards
33%
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A member may, with agreement from their employer, elect to treat employer contributions to the Scheme as salary and wages, in which case PAYE will be deducted from the contribution at the appropriate rate instead of ESCT. Qualifying Recognised Overseas Pension Scheme (QROPS). superSTART® is a registered Qualifying Recognised Overseas Pension Scheme (QROPS). UK pension funds transferred to superSTART® from UK Pension plans or other registered superannuation schemes on or after 6 April 2012 are subject to withdrawal restrictions to ensure the Scheme complies with UK QROPS requirements. QROPS requirements and restrictions may change from time to time to meet UK requirements. Funds transferred from UK Pension plans to superSTART® on or after 6 April 2012 will not qualify for withdrawal benefits earlier than they would have, if pension rule 1 in section 165 of the Finance Act 2004 (United Kingdom) applied, currently age 55, except in the circumstances of serious ill health. There is also a requirement that at least 70% of the QROPS transferred funds be used to generate an income for life when a member accesses their funds on retirement. Income for life means an annuity or regular or other payment or payments that satisfy the requirements for an income for life in accordance with such policy as the Trustee sets from time to time in order to meet the requirements of Her Majesty’s Revenue & Customs (United Kingdom) under the Finance Act 2004 (United Kingdom). The Trustee may agree with the scheme manager of the pension scheme from which a member’s UK Transfer Funds are to be transferred to impose such other terms and conditions on the member’s UK Transfer Funds. The Trustee may impose such other terms and conditions on the member’s UK Transfer Funds as the Trustee may determine as being necessary or desirable or in the interests of the relevant member or the Scheme. There is a potential UK Unauthorised Payment Charge of 40% plus an Unauthorised Payment Surcharge of 15% of the amount transferred that can arise when transferring UK Pension monies from the United Kingdom to a non QROPS approved scheme. This may also be applied when withdrawing funds from a QROPS. As the Scheme is a QROPS, the Manager must report any payments (including transfers) from a member’s UK Transfer Funds made from the Scheme until the member has been a Non UK Tax Resident for 5 consecutive UK tax years prior to the payment and there has been a period of 10 years from the date of the relevant member’s original transfer from the UK Scheme. The Scheme could lose QROPS status at any time and neither the Trustee nor the Manager represent that the Scheme will continue to have QROPS status. If QROPS status is lost, a member’s UK tax implications may change in relation to their balance in the Scheme and/or future transfers. To confirm whether the Scheme has QROPS status at any time, and the requirements and restrictions relevant to that status, members should contact their adviser. The Trustee may, in order to preserve the status of the Scheme as a QROPS, impose such terms and conditions on a payment to be made to or in respect of a member who transfers funds to the Scheme from a UK pension plan on or after 6 April 2012 as the Trustee in its sole discretion thinks fit. Craigs Investment Partners Limited and Craigs Investment Partners Superannuation Management Limited are not United Kingdom tax advisers and recommend that members seek professional tax advice regarding their individual circumstances. Taxation of foreign superannuation The foreign superannuation rules, which apply from 1 April 2014, tax transfers from foreign superannuation schemes (other than Australian superannuation schemes) to the Scheme under one of two methods. The methods are the “schedule method”, which deems a specified 50
percentage of the transfer amount to be taxable income, and the “formula method”, which allows a member to pay tax on the actual gains derived on the investment, if such information is available. Members who are transitional residents for tax purposes may be entitled to relief from taxation when transferring foreign superannuation entitlements to the Scheme during their 4 year exemption period. Members who migrate to New Zealand but who are unable to be transitional residents for tax purposes (e.g. returning residents) may also be relieved from taxation on the transfer, provided it occurs within 4 years of them becoming a New Zealand tax resident. Members seeking to transfer foreign superannuation entitlements to the Scheme should seek professional taxation advice as to the impact of these rules. With the exception of the above information, there are no other material matters relating to the offer of securities contained in this prospectus.
15.
Superannuation trustee's statement
The directors of The New Zealand Guardian Trust Company Limited (the Trustee) confirm that, in their opinion, and after due enquiry by them:
the value of the Scheme’s assets relative to its liabilities (including contingent liabilities); and
the ability of the Scheme to pay its debts as they become due in the normal course of business,
have not materially and adversely changed during the period from 31 March 2015 to the date this prospectus is delivered for registration.
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