PROSPECTUS WESTPAC MORTGAGE INVESTMENT FUND

Transcription

1 PROSPECTUS WESTPAC MORTGAGE INVESTMENT FUND 30 August 2012

2 STATUTORY INFORMATION The following information is included as required under Schedule 4 to the Securities Regulations In making this offer, the Manager is relying on certain exemptions in the Securities Act (Externally Managed Group Investment Funds) Exemption Notice 2003 and the Securities Act (Transition to Securities Regulations 2009) Exemption Notice 2009 including an exemption from regulation 5(1)(c) which allows this Prospectus to be prepared by reference to Schedule 4 of the Securities Regulations, rather than by reference to Schedule 3 of the Securities Regulations. STATUTORY INDEX Page 1 DESCRIPTION OF GROUP INVESTMENT FUND 3 2 MANAGERS AND PROMOTERS 4 3 REGISTRAR, CUSTODIAN, AUDITORS, ADVISERS, AND EXPERTS 6 4 INDEPENDENCE OF TRUSTEE AND ANY CUSTODIANS 6 5 UNIT TRUSTEE 7 6 DESCRIPTION OF THE GROUP INVESTMENT FUND AND ITS DEVELOPMENT 8 7 UNITHOLDER LIABILITY 13 8 SUMMARY OF FINANCIAL STATEMENTS 14 9 MINIMUM SUBSCRIPTION GUARANTORS ACQUISITION OF BUSINESS OR EQUITY SECURITIES OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH INTERESTED PERSONS MATERIAL CONTRACTS PENDING PROCEEDINGS ISSUE EXPENSES OTHER TERMS OF OFFER AND UNITS FINANCIAL STATEMENTS AND AUDITOR S REPORT 29 and PLACES OF INSPECTION OF DOCUMENTS OTHER MATERIAL MATTERS MANAGER S STATEMENT 32 2

3 22 TRUSTEE S STATEMENT 32 and SUMMARY OF THE TRUST DEED 32 In this Prospectus, where the words us, we or our are used, they refer to BT Funds Management (NZ) Limited (the Manager ), as the context requires. Where we use the words you or your, this refers to Unitholders or investors, as the context requires. Where a practice of ours is referred to, or the description generally, normally or currently is used in this Prospectus in relation to a practice, the reference is to our practice at the date of this Prospectus. We reserve the right to review and change such practices without further notice within the terms of the Trust Deed. Any New Zealand legislation referred to in this Prospectus can be viewed at 1 DESCRIPTION OF GROUP INVESTMENT FUND This Prospectus is for the offer of Units in the Westpac Mortgage Investment Fund ( Fund ), which is a Group Investment Fund (Group Investment Fund No. 95) established under the Trustee Companies Act 1967 and a trust deed dated 27 June 2005 ( Trust Deed ). The Fund was established in Wellington, New Zealand. The Fund provides the opportunity to invest in home loans secured by registered first mortgages held by Westpac New Zealand Limited ( Westpac NZ ) over residential properties in New Zealand. It is intended that the home loans will be purchased from the Westpac Home Loan Trust. It is currently intended that home loans not exceeding $500,000 for up to 80% of the home s value or up to 90% where home loan insurance is attached will be taken into the Fund. However, we and the Trustee may change this policy from time to time. The Fund became a portfolio investment entity ( PIE ) on 1 October While the Fund is operating as a PIE there are restrictions on you holding more than 20% of the units of the Fund in certain circumstances and the Trust Deed contains a power to adjust your Income Entitlements or your Units to reflect tax paid by the Fund on your share of income, and various Unit repurchase rights where the Fund s eligibility for PIE status is threatened. More information on taxation and PIEs is set out in section 17 of this Prospectus. We manage the Fund s Assets with the aim of enhancing the returns and helping to deliver a smooth income stream by the use of interest rate swaps and other derivatives. The Fund s aim is to provide a competitive return against cash and short term bank deposits. 3 The Fund commenced on 27 June 2005, and will terminate on the day appointed by the Manager for termination of the Fund by giving not less than two months written notice to

4 Unitholders and the Trustee or the day on which the Trustee retires to the extent that the Fund is not resettled on a successor Trustee, whichever is earlier. Each Unit represents a beneficial interest in the Assets of the Fund. A Unit does not confer any interest in any particular part of the Fund or the Assets of the Fund. There is no maximum number, or amount, of Units on offer. Units will be issued at the Current Unit Value (which is expected to be $1.00) plus any Entry Fee. Currently there is no Entry Fee. The Current Unit Value is the Net Asset Value of the Fund divided by the number of Units on issue for the Fund (rounded to the extent the Manager decides). Currently, you must invest a minimum of $5,000 as an initial lump sum investment. You can make subsequent lump sum investments of a minimum of $500 each. Once you have made your initial $5,000 lump sum investment, you can elect to make regular investments of a minimum of $1,200 per year (at such frequencies as we may determine from time to time and set out in the Investment Statement). Although you are not generally charged an Exit Fee, we normally charge and retain a withdrawal fee equal to 1% of the amount withdrawn if Units are to be withdrawn without the minimum notice being given (see section 6 for further details). Further details of the amounts, or maximum amounts, of the fees payable or deductions that will be made, for purchasing or selling Units, and the times at which they will be payable or made are set out in clause 9 of the Trust Deed and sections 23.2 and 23.3 of this Prospectus. This offer is open only to persons who are in New Zealand and have a permanent address in New Zealand. You must notify us if you change your address, leave New Zealand permanently, or if your tax residency is not, or is no longer in, New Zealand. If you invest through a custodial service (explained in section 6 of the Prospectus), you should notify the custodial service if you change your address, leave New Zealand permanently or if your tax residency is not, or is no longer in, New Zealand. 2 MANAGERS AND PROMOTERS Manager and Issuer The Manager and issuer of the Fund is BT Funds Management (NZ) Limited. As at the date of this Prospectus, our directors are: Leigh James Bartlett of Auckland, New Zealand Peter Graham Clare of Auckland, New Zealand Richard Warren Jamieson of Sydney, Australia David Alexander McLean of Auckland, New Zealand Ian Nicholas New of Wellington, New Zealand Simon James Power of Auckland, New Zealand 4

5 The directors may change from time to time without notice to investors. A list of directors is available online at It is intended that David Alexander McLean will step down as a director during the last quarter of Our registered office is Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand. Our contact address and the contact address of each director is Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand. Phone: The Manager was incorporated in New Zealand under the Companies Act 1955 on 29 November 1989 and was re-registered under the Companies Act 1993 on 23 December Our principal activities can generally be described as investment and funds management. Our ultimate holding company is Westpac Banking Corporation (ABN ) ( Westpac ) which is incorporated in Australia and we have been a member of the Westpac group of companies since 31 October None of the Manager, Westpac, Westpac NZ or their related entities guarantee the units offered under this Prospectus. We do not manage any other group investment funds. Promoters We are a Promoter of the Fund. Westpac NZ and its directors are also Promoters of the Fund with the exception of Peter Graham Clare who is also a director of the Manager. As at the date of this Prospectus, the names and addresses of the directors of Westpac NZ are: Peter Graham Clare of Auckland, New Zealand Philip Matthew Coffey of Sydney, Australia Janice Amelia Dawson of Auckland, New Zealand Christopher John David Moller of Lower Hutt, New Zealand Ralph Graham Waters of Sydney, Australia Peter David Wilson of Wellington, New Zealand The directors of Westpac NZ may change from time to time without notice to investors. A list of directors of Westpac NZ is available online at It is anticipated that Ralph Graham Waters will retire from the Board at the end of August The registered office of Westpac NZ is Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand. The contact address of Westpac NZ and each director is Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand. Phone: Administration Managers We have delegated some of the administration functions of the Fund to Trustees Executors Limited ( Trustees Executors ), MMc Limited ( MMc ) and The Hongkong and Shanghai

6 Banking Corporation Limited, and they are each therefore classed, for the purposes of the Securities Regulations 2009, as an Administration Manager for the Fund. The Administration Managers are regularly monitored and reviewed. Accordingly, they may change from time to time, without notice to investors. Details of the current Administration Managers can be obtained by calling us on None of the Manager, Administration Managers, or Promoter or any director of them, have during the 5 years prior to the date of registration of this Prospectus been: a) adjudged bankrupt or insolvent; or b) convicted of any crime involving dishonesty; or c) prohibited from acting as a director of a company; or d) placed in statutory management voluntary administration, liquidation or receivership. 3 REGISTRARS, CUSTODIANS, AUDITORS, ADVISERS, AND EXPERTS The Registrar of the Fund is Trustees Executors Limited. The Auditors of the Fund are PricewaterhouseCoopers. The Auditors and the Auditors partners have obtained transitional licences under the Auditor Regulation Act The transitional licences are effective from 1 May The Auditors carry out other assignments for the Manager and related entities of the Manager in the areas of taxation advice and other assurance and advisory services. These services have not impaired the Auditors independence as auditors of the Manager or auditors of the Fund. The Solicitors involved in the preparation of this Prospectus are Chapman Tripp. The Custodian of the Fund is Home Mortgage Nominees Limited, a subsidiary of The New Zealand Guardian Trust Company Limited. 4 INDEPENDENCE OF UNIT TRUSTEE AND ANY CUSTODIANS The Trustee and Custodian are independent of the Manager, the Promoters and the Administration Managers. 6

7 5 UNIT TRUSTEE The Trustee of the Fund is: The New Zealand Guardian Trust Company Limited Level 7 Vero Centre 48 Shortland Street Auckland 1010 PO Box 1934 Auckland 1140 As at the date of this Prospectus, the directors of the Trustee are: John Atkin of Sydney, Australia John Richard Avery of Auckland, New Zealand Christopher Robert Darlow of Auckland, New Zealand David Roko Grbin of Glebe, Australia Michael Privett Reed of Auckland, New Zealand Timothy James Shaw of Auckland, New Zealand The directors of the Trustee can be contacted at the Trustee s address set out above. The directors may change from time to time without notice to investors. A list of directors of the Trustee is available online at The New Zealand Guardian Trust Company Limited was incorporated in New Zealand under the Companies Act 1955 on 7 September It is also governed by the provisions of The New Zealand Guardian Trust Company Act On 23 April 1997 it was re-registered under the Companies Act The registration number is Its trustee origins date back to The ultimate parent company of the Trustee is The Trust Company Limited (ABN ) a trustee company incorporated in Australia and listed on the Australian Securities Exchange. The Securities Trustees and Statutory Supervisors Act 2011 came into effect on 1 October 2011 and requires the Trustee to apply to the Financial Markets Authority for a licence to act as a trustee for a range of financial products. The Trustee lodged its licensing application with the Financial Markets Authority in The Trustee currently holds a temporary licence to act as a trustee of financial products under the transitional provisions of that Act. The temporary licence expires on 30 September 2012 or such earlier date on which a new licence is granted or the Financial Markets Authority approves or declines the Trustee s application. The outcome of that licensing decision will be publicly available on the Financial Markets Authority s website. 7 If the Trustee does not hold an appropriate licence, then we would be obliged to seek and appoint another trustee.

8 Under the Trust Deed, the Trustee is indemnified out of the Fund from and against: any and all losses, costs and expenses incurred by the Trustee in performing any of its duties or exercising any of its powers in relation to the Fund; and all actions, proceedings, liabilities, costs, claims, taxes and demands in respect of any matter or thing relating to the Fund, with the exception of any loss, costs and expenses arising out of fraud, wilful breach of trust, or dishonesty of the Trustee or any of its officers or employees, or breach of trust where the Trustee fails to show the degree of skill and care required of it having regard to the provisions of the Trust Deed. None of the Trustee, the Trustee s nominee companies, any member of the Trustee s group of companies or any other person guarantees the repayment of the units, the payment of any earnings on the units, the repayment of capital or the performance or returns of the Fund. 6 DESCRIPTION OF THE GROUP INVESTMENT FUND AND ITS DEVELOPMENT The Fund was established in Wellington on 27 June 2005 and is governed by the Trust Deed of that date entered into between us and the Trustee. The Trust Deed was amended on 29 March 2007 and 28 September A summary of the principal terms of the Trust Deed is set out in section 23. Applications, withdrawals and transfers You can invest into the Fund by paying in lump sums, making regular investments, or both. We can, in our absolute discretion, reject any application in whole or in part without giving any reason. The minimum initial lump sum investment is currently $5,000. The minimum subsequent lump sum investment is currently $500. Once you have made an initial minimum $5,000 lump sum payment, regular investments can be made of a minimum of $1,200 per year (at such frequencies as we may determine from time to time and set out in the Investment Statement). You can alter the amount you pay (provided you still pay at least the minimum). If your investment falls below the Minimum Holding (currently 5,000 units in the Fund), we may redeem all of your units. Further details of the Issue of Units and the manner in which applications will be processed are set out in section 23.2 of this Prospectus. You can withdraw your investment at any time by giving 30 days notice unless a suspension period is in effect. If you are unable to give 30 days notice of your withdrawal request, we may allow an early withdrawal, in such cases as we shall decide, and charge a 1% early withdrawal fee. 8 Units will be redeemed at the Current Unit Value (which is expected to be $1.00 per Unit) plus any undistributed income relating to the Unit being redeemed, less any Exit Fee (currently nil). Currently, you can withdraw part of your investment in parcels of 500 units, providing you still hold the Minimum Holding (currently 5,000 Units) in the Fund. We may refuse to process a withdrawal if it is for less than the minimum withdrawal amount (currently 500 Units). Regular withdrawals of a minimum of $1,200 per year (payable at such frequencies as we may determine from time to time and set out in the Investment Statement) are also permitted, provided the Minimum Holding is maintained. If a withdrawal

9 is for a number of units that would leave you with less than the Minimum Holding then the withdrawal may be deemed to be for the entire holding. Further details of the Redemption of Units is set out in section 23.3 of this Prospectus. We or the Trustee may suspend withdrawals in the circumstances set out in section 23.5 of this Prospectus. If you decide the Fund is not for you, you have 14 days to cancel your application. If you wish to cancel your application, you will need to let us know in writing within 14 days of the time we write to you accepting your application, and we will waive the requirement to give 30 days notice (unless a suspension period is in effect) and the associated early withdrawal fee. You will receive interest in relation to a cancelled application. Units are transferable, however a transfer will not be registered if it is not in the correct form prescribed by us and/or in compliance with any applicable law or other reasonable requirements of us or the Trustee, if it would result in the transferee holding less than the Minimum Holding set out above, or if the transferee is not allowed to be a Unitholder under the Trust Deed. The form of transfer is available from us. We may refuse to process a transfer, switch or withdrawal where it would threaten the Fund s eligibility for PIE status. See section 17 for the tax related consequences of a transfer, switch or withdrawal. Custodial services During the life of this Prospectus, the Fund may be available for investment by you both directly and via certain custodial services. In this Prospectus, a reference to: an investor, Unitholder or you is a reference to the operator, custodian or manager of the custodial service, or individual investor (an individual who invests in the Fund without investing via a custodial service); custodial service is a reference to an investor-directed portfolio service and nominee or custody service; and an underlying investor is a reference to a person who invests through a custodial service. If you are an individual investor, you are recorded in the register as the Unitholder. As the registered holder of Units, only you will be able to exercise any rights attached to the Units held. If you are an underlying investor, you do not become a direct investor in the Fund and do not have a direct relationship with us or the Trustee. Rather, the custodial service invests in the Fund and you (as an underlying investor) have a direct investment relationship with the custodial service. 9 A custodial service operator will have an agreement with you (as an underlying investor) governing the terms of the custodial arrangement. However, if you invest in the Fund

10 through a custodial service, you are required to obtain and read a copy of the Fund s Investment Statement before investing or instructing the custodial service to invest on your behalf. You may, on request, obtain a copy of this Prospectus and certain other information. Although as an underlying investor, you do not become a registered Unitholder in the Fund, you are entitled to rely on the Fund s Investment Statement and Prospectus. If you are an underlying investor, you should not complete the Application Form. Rather, the Application Form must be completed and signed by the relevant entity for the custodial service. Fund reports and other documentation will be sent directly to the custodial service and all correspondence will be conducted with the custodial service. You should ascertain from your custodial service: whether any minimum amounts (other than those specified above) have been agreed between us and the custodial service; and the minimum amount that you are required to invest and the consequences of failing to maintain that minimum amount. Any custodial service will have entered into an arrangement with us in respect of the Fund. This Prospectus and the Investment Statement outline the terms and conditions of investment in the Fund made by any custodial service, which may have been varied by such an arrangement. You should contact your custodial service to ascertain whether any variations have been agreed between us and the custodial service. If you are an underlying investor, you should note that the custodial service is neither a promoter of the Fund nor the agent of us or the Trustee. Where you (as an underlying investor) invest through a custodial service which is a proxy for an investor in a PIE (" PIE Investor Proxy"), the PIE Investor Proxy will be responsible for the payment of tax, and the attribution of income, losses, tax credits and refunds for tax purposes, in respect of you. We and the Trustee shall not be liable for the attribution of income, losses, tax credits or refunds, nor the payment of tax in respect of units held by you through PIE Investor Proxies. If you are an underlying investor, you should also note that, in addition to fees and charges set out in this Prospectus, fees or charges will be payable to your custodial service. You should consult your custodial service for information in relation to those fees or charges. Limitations on investment powers The Fund is permitted to invest in the Authorised Investments set out in section We are also required to ensure that the Assets of the Fund are invested in accordance with the Investment Policies (as amended from time to time). Subject to compliance with the Investment Policies, we may enter into any contractual transactions in relation to the Fund that we consider are in the interests of the Unitholders including, without limitation, the sale of any Assets to, or the purchase of any Assets from, us or any Related Person of us, provided that such contractual transactions with Related 10

11 Persons are on normal commercial terms, or terms as favourable to the Fund as normal commercial terms. Activities and material developments The Fund has been invested in accordance with the Investment Policy since the establishment of the Fund in On 1 October 2007, the Fund became a PIE. In February 2008, we and the Trustee agreed to change the financial year end of the Fund from the 30 th day of September of any year to the 31 st day of March of any year. Investment objectives and policy Investment objectives The objective of the Fund is to produce a consistent income for distribution on a quarterly basis from a high quality investment portfolio. The Fund aims to provide returns competitive with cash and short term bank deposits on an ongoing basis by purchasing loans secured by registered first mortgages over properties located in New Zealand. Investment policy To invest in loans made upon the security of first mortgages in respect of property in New Zealand, bank deposits or other fixed interest debt securities, and only in investments in which a group investment fund is permitted to invest, being those which fall within the definition of a Designated Group Investment Fund as defined in the Tax Act. While the Fund is operating as a PIE, the investment restrictions imposed on Designated Group Investment Funds for tax purposes do not apply (although the Fund is still subject to some investment restrictions). As at the date of this Prospectus, it is intended that the Fund will continue to invest in accordance with the Designated Group Investment Fund investment restrictions pursuant to the Trust Deed unless we and the Trustee agree otherwise. It is currently intended that the Fund will purchase equitable interests in secured home loans, and the mortgages securing those loans, from the Westpac Home Loan Trust. It is currently intended that the Fund will purchase home loans not exceeding $500,000 of up to 80% of the home s value or up to 90% where home loan insurance is attached. However, we may change this policy from time to time. Neither we nor the Trustee will be entitled to set or vary the interest rate on loans, and the interest rate will be set solely by reference to Westpac NZ s lending rates. For liquidity purposes it is anticipated that under normal circumstances a proportion of the Fund will be held in cash, deposits with New Zealand banks, or other fixed interest securities that meet the requirements for the Fund to qualify as a Designated Group Investment Fund. To assist in the provision of a stable and regular income to you, interest rate swaps and other derivatives have been arranged with Westpac NZ. 11

12 The value of the units in the Fund is linked to the value of the Assets held. Therefore, any change in the value of the underlying Assets will affect the value of your Unit holding. The value of the derivatives will be affected by interest rate movements. Under the Deed of Arrangements, the Investment Policies of the Fund may be amended at any time by agreement between us and the Trustee. The Trustee will approve any changes unless it considers that as a result of the changes it may be directed to buy or sell assets that are manifestly not in the interests of Unitholders. More information regarding the investment objectives and policy of the Fund are set out in section Investment Performance of the Fund Returns for the Fund calculated to 31 March for each of the 5 accounting periods preceding the date of this Prospectus, are shown below: 12 month return to 12 month return to month return to month return to 31 Annualised 6 month 31 March March March March return to March 2008 % % % % % As 31 March 2012 was not a Business Day, returns are effectively calculated for the period to 30 March Annualised compound rate of return for the period from 1 October 2007 to 31 March 2008 due to the Fund becoming a PIE from 1 October The above returns assume, for each period, that an investment in the Fund has been held for the full period and represents the percentage change in the value of that investment after reinvestment of all distributions made during the relevant period and after deduction of management fees and Trustee fees and the expenses of the Fund but before the deduction of PIE tax or refund of PIE tax credits. Note that the amounts of Management fees, Trustee Fees and expenses of the Fund will vary from time to time and from year to year. Future performance of the Fund is not guaranteed. Past performance is not an indicator of future performance. 12

13 Distribution policy Within 60 Business Days after the Distribution Date for the Fund, we shall determine the Income (if any) of the Fund for the Distribution Period ending on that Distribution Date and, in respect of each Unitholder, the Unitholder s Income Entitlement, if any, in respect of the relevant Distribution Period. Payments of Distributions will be made within 60 days after the last day of the relevant Distribution Period. The Distribution Period is a period of three months ending on the last days of March, June, September and December. In determining the Income of the Fund for any Distribution Period, we may take into account all income due or accrued and all costs, charges and Expenses due or accrued. Prior to Distribution of Income Entitlements to you, the Trustee will deduct any unpaid Trustee and Manager s fees. We may from time to time distribute capital (including any capital gains, both realised and unrealised) of the Fund, at a date determined by us, to you in cash in proportion to your Unit holding. Distributions will be made in cash unless you elect to reinvest your Distributions in the Fund by way of additional units. Further information regarding the Fund s Distribution policy and this Distribution reinvestment plan is set out in section The distribution reinvestment option complies with the requirements of, and contains the terms and conditions required under, the Securities Act (Dividend Reinvestment) Exemption Notice , as amended or substituted from time to time. 7 UNITHOLDER LIABILITY There are no circumstances in which you will incur liabilities (including contingent liabilities) in relation to the Fund or be obliged to pay any further money, apart from the issue price of your Units and any tax liability on the portion of the Fund s income that is attributable to you, that you incur as a result of advising the wrong prescribed investor rate ( PIR ) or failing to advise us when your PIR increases (except where an increase is due to a change in the statutory tax rate rather than a change in your income). None of the Trustee, the Manager, Westpac NZ, Westpac, or any other member of the Westpac group of companies, accepts any responsibility for the impact of an investment in the Fund on your taxation position. You should seek independent professional tax advice. 1 The Securities Act (Dividend Reinvestment) Exemption Notice 1998 can be viewed at 13

14 8. SUMMARY OF FINANCIAL STATEMENTS A summary of the financial statements for the Fund, for the six month period ended 31 March 2008, and the years ended 31 March 2009, 31 March 2010, 31 March 2011 and 31 March 2012 are set out below: Westpac Mortgage Investment Fund Summary Statement of Comprehensive Income For the Year Ended 31 March 2012 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Six months ended March 2012 March 2011 March 2010 March March 2008 $'000 $'000 $'000 $'000 $'000 Net investment income 24,393 26,169 42,508 29,391 24,847 Total expenses 10,357 14,930 22,143 13,015 4,117 Profit for the period attributable to Unitholders 14,036 11,239 20,365 16,376 20,730 Total comprehensive income attributable to Unitholders 14,036 11,239 20,365 16,376 20,730 14

15 Westpac Mortgage Investment Fund Summary Statement of Changes in Net Assets Attributable to Unitholders For the Year Ended 31 March 2012 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Six months ended March 2012 March 2011 March 2010 March March 2008 $'000 $'000 $'000 $'000 $'000 Net assets attributable to Unitholders at the beginning of the period 375, , , , ,734 Profit for the period 14,036 11,239 20,365 16,376 20,730 Total comprehensive income for the period 14,036 11,239 20,365 16,376 20,730 Applications 14,798 24, , , ,197 Withdrawals (94,627) (159,441) (242,332) (195,254) (67,537) Distributions (7,991) (12,178) (14,387) (36,526) (21,949) Unitholders tax liabilities (954) (1,546) (2,019) (5,344) (3,791) Net assets attributable to Unitholders at the end of the period 301, , , , ,384 Year ended 31 March 2012 Year ended 31 March 2011 Year ended 31 March 2010 Year ended 31 March 2009 Six months ended 31 March 2008 Units '000 Units '000 Units '000 Units '000 Units '000 Units on issue Units on issue at the beginning of the period 389, , , , ,068 Applications - units 14,798 24, , , ,794 Withdrawals - units (95,583) (160,987) (244,348) (200,598) (76,927) Units on issue at the end of the period 308, , , , ,935 15

16 Westpac Mortgage Investment Fund Summary Balance Sheet As at 31 March 2012 Current assets Loans and receivables Financial assets held at fair value through profit or loss Other receivables Cash and cash equivalents As at 31 March As at 31 March As at 31 March As at 31 March As at 31 March $'000 $'000 $'000 $'000 $'000 1,707 2,223 25,383 51, ,307 87, , , , ,267 2,662 3,256 3,666 7,401 6,616 19,096 18,046 44,615 50,136 28,552 Total current assets 110, , , , ,742 Non current assets Loans and receivables 201, , , , ,562 Total assets 312, , , , ,304 Liabilities Financial liabilities held at fair value through profit or loss 7,694 13,517 12,915 18,936 - Management fees payable Trustee fees payable Other payables 495 1,321 1, Distributions payable 1,763 2,555 2,716 4,828 10,718 Expense allowance payable Tax payable on behalf of unitholders 954 1,546 2,019 5,344 3,791 Total liabilities 11,236 19,360 19,711 30,738 15,920 Net assets attributable to Unitholders 301, , , , ,384 There are no non-current liabilities 16

17 Westpac Mortgage Investment Fund Summary Cash Flow Statement For the Year Ended 31 March 2012 Year ended 31 Year ended 31 Year ended 31 Year ended 31 Six months ended March 2012 March 2011 March 2010 March March 2008 $'000 $'000 $'000 $'000 $'000 Net cash flow from/(used in) operating activities 92, , ,640 14,292 (105,431) Net cash flow (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period (91,310) (149,026) (132,161) 7, ,434 1,050 (26,569) (5,521) 21,584 17,003 18,046 44,615 50,136 28,552 11,549 Cash and cash equivalents at the end of the period 19,096 18,046 44,615 50,136 28,552 17

18 Notes to the Summary Financial Statements Reporting entity The reporting entity included in these summary financial statements is the Westpac Mortgage Investment Fund (referred to throughout this Prospectus as the Fund ). Relationship to full financial statements The full financial statements, for the years ended 31 March 2012, 31 March 2011, 31 March 2010, 31 March 2009 and the six month period ended 31 March 2008, from which these summary financial statements have been extracted, have been prepared in accordance with the requirements of the Trustee Companies Act 1967, the Financial Reporting Act 1993, the Trust Deed, and Generally Accepted Accounting Practice in New Zealand ("NZ GAAP"). The full financial statements comply with New Zealand equivalents to International Financial Reporting Standards ("NZ IFRS"), and other applicable Financial Reporting Standards, as appropriate for profit oriented entities. The full financial statements make an explicit and unreserved statement of compliance with International Financial Reporting Standards ("IFRS"). The full financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative financial instruments) at fair value through profit or loss. The summary financial statements for the year ended 31 March 2012 have been extracted from the audited full financial statements which were authorised for issue on 22 August The summary financial statements for the year ended 31 March 2011 have been extracted from the audited full financial statements which were authorised for issue on 5 August The summary financial statements for the year ended 31 March 2010 have been extracted from the audited full financial statements which were authorised for issue on 13 August The summary financial statements for the year ended 31 March 2009 have been extracted from the audited full financial statements which were authorised for issue on 31 July The summary financial statements for the six months ended 31 March 2008 have been extracted from the audited full financial statements which were authorised for issue on 28 August The full financial statements for the years ending 31 March 2012, 31 March 2011, 31 March 2010, 31 March 2009 and the six month period ending 31 March 2008 have been authorised for issue by the directors of the Manager and the directors of the Trustee. The summary financial statements are presented in New Zealand dollars which is the Fund s functional and presentation currency. All values are rounded to the nearest thousand dollars. The summary financial statements have been prepared in accordance with FRS 43 Summary Financial Statements subject to the Securities Regulations 2009 and comply with NZ GAAP as it relates to summary financial statements. The summary financial statements have been authorised for issue by the directors of the Manager on 30 August

19 The Fund is a Group Investment Fund as defined by the Trustee Companies Act 1967 and is subject to the provisions of that Act. The summary financial statements cannot be expected to provide as complete an understanding as provided by the full financial statements. A copy of the full financial statements can be obtained from the Manager s principal place of business at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand, or by calling The full financial statements for the years ended 31 March 2012, 31 March 2011, 31 March 2010, 31 March 2009and the six month period ended 31 March 2008 have been audited by PricewaterhouseCoopers who have issued opinions in respect of each of the full financial statements that did not refer to any fundamental uncertainties and were not qualified in any respect. There have been no changes to accounting policies and these policies have been consistently applied throughout the periods presented. Items of material incidence, size or nature There are no items of such incidence and size or of such nature that require disclosure to explain the performance or financial position of the Fund. Events occurring after the balance sheet date No significant events have occurred since balance date which would impact on the financial position of the Fund disclosed in the Balance Sheet as at 31 March 2012 or on the results and cash flows of the Fund for the year ended on that date. Additional information Related party transactions BT Funds Management (NZ) Limited is the Manager of the Fund. The ultimate holding company of the Manager is Westpac. Trustee services are provided by The New Zealand Guardian Trust Company Limited. None of these related parties hold units in the Fund. In accordance with the Trust Deed, the management fee is calculated on the daily gross asset value of the Fund and paid monthly in arrears. Management fees are a related party expense paid to the Manager and are shown in the Statement of Comprehensive Income under "Management fees". Management fees payable are shown in the Balance Sheet under "Management fees payable". There are no key management personnel associated with the Fund. Trustee fees are a related party expense paid to the Trustee and are shown in the Statement of Comprehensive Income under "Trustee fees". Trustee fees payable are shown in the Balance Sheet under Trustee fees payable. The management fees and trustee fees referred to in this paragraph are found in the Statement of Comprehensive Income and Balance Sheet in the full financial statements for the year ended 31 March We incur the ordinary administrative expenses of the Fund and are reimbursed by the Fund through an expense allowance. The amount paid to us is shown in the Statement of Comprehensive Income under "Expense allowance". The amount payable to us is shown in the Balance Sheet under "Expense allowance payable". The Expense allowance and

20 Expense allowance payable referred to in this paragraph are found in the Statement of Comprehensive Income and Balance Sheet in the full financial statements for the year ended 31 March Service fees on mortgages are expenses of the Fund that are paid to Westpac NZ and are shown in the Statement of Comprehensive Income under "Service fees - mortgages". The Service fees mortgages referred to in this paragraph is found in the Statement of Comprehensive Income and Balance Sheet in the full financial statements for the year ended 31 March There have been transactions between the Fund and other entities also managed by the Manager. The Fund purchased fixed interest investments from related entities totalling $nil (the year ended 31 March 2011: $499,014). All transactions were made at prevailing market prices and without brokerage expenses. The mortgages held within the Fund are purchased from Westpac NZ. As part of the ordinary course of business, certain mortgages within the Fund are discharged by way of customer instigated refinancing through Westpac NZ. During the financial year ended 31 March 2012, the value of refinanced mortgages within the Fund was $22.1 million (31 March 2011: $46.3 million). The Fund enters into interest rate swap derivative contracts using prevailing market rates and on terms that are at arms length with Westpac NZ. During the financial year ended 31 March 2012, the Fund paid $5,769,000 (31 March 2011: $8,184,000) interest to Westpac NZ as counterparty of interest rate swaps. The value of investments held with related parties at balance date were: Westpac New Zealand Limited As at 31 March As at 31 March As at 31 March As at 31 March As at 31 March $'000 $'000 $'000 $'000 $'000 32,578 21,023 59,577 55,613 34,961 The income from investments held with related parties during the period was: Year ended 31 Year ended 31 Year ended 31 Year ended 31 Six months ended March 2012 March 2011 March 2010 March March 2008 $'000 $'000 $'000 $'000 $'000 Westpac New Zealand Limited , ,327 * Investments with Westpac New Zealand Limited include bank account, negotiable certificates of deposit and floating rate notes. 9 MINIMUM SUBSCRIPTION Not applicable. 10 GUARANTORS 20 Investments made in the Fund do not represent bank deposits with Westpac NZ or Westpac and are not liabilities of the banks or other members of the Westpac group of companies. Investments are subject to investment and other risks, including possible delay in the payment of withdrawal amounts in some circumstances, and loss of investment value, including principal invested.

21 None of the Trustee, the Trustee s nominee company, the Manager, Westpac NZ, Westpac, any member of the Westpac group of companies, nor any other person, guarantees the performance of the Fund or the repayment of any capital. 11 ACQUISITION OF BUSINESS OR EQUITY SECURITIES No business or equity securities have been acquired for the purposes of the Fund at any time in the two years preceding the date of this Prospectus. 12 OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH Fully paid up Units in the Fund may be issued to the Westpac Home Loan Trust for noncash consideration during the life of this Prospectus. The non-cash consideration will consist of the transfer to the Fund of the beneficial interests in certain residential mortgages and associated home loans originated by Westpac NZ and held by the Westpac Home Loan Trust, and may include other assets (being cash deposits with Westpac NZ and Westpac and certain investments held in the Austraclear New Zealand system) held by the Westpac Home Loan Trust. The number of Units to be issued on this basis depends on the value of the assets being transferred. Other than those Units described above no options to subscribe for Units have been or are intended to be issued for consideration other than cash. 13 INTERESTED PERSONS The following parties all have an interest in the Fund by virtue of the services they provide to the Fund and the fees they receive: Trustee The functions of a trustee of a group investment fund include monitoring our compliance with the requirements of the Trust Deed and holding the Trust s assets on behalf of Unitholders. The Trustee s entitlement to reimbursement of expenses and to be paid a fee is described in more detail in sections and Currently the Trustee is paid a fee of up to 0.075% per annum (plus GST) of the Market Value of the Assets of the Fund, subject to a minimum charge of $15,000 per annum (plus GST). The Trustee s entitlement to reimbursement of expenses is unlimited. Manager and Administration Managers We are responsible for the day to day management and administration of the Fund including investing assets, calculating and paying distributions, and administering the issue and redemption of units. The Administration Managers (currently, Trustees Executors, MMc and The Hongkong and Shanghai Banking Corporation Limited), undertake a number of such administration tasks on behalf of us. 21 The fees paid to us are detailed in section of this prospectus and are limited as described in that section. We are also entitled to reimbursement of expenses from the Fund including those relating to administration services provided by the Administration Managers, which may include unit registry, asset registry and investment accounting costs and costs associated with the provision of certain financial information relating to the Fund. Our entitlement to reimbursement of expenses and to be paid a fee is described in more detail in

22 sections and Our entitlement to a fee is subject to the maximum of 1.5% per annum (plus GST) on the Market Value of the Assets of the Fund. However, we may decide to charge a lesser fee in our discretion. At the date of this Prospectus, we charge 1% per annum (plus GST). Our entitlement to reimbursement of expenses is unlimited. We may choose in our absolute discretion not to seek reimbursement for any of the fees and expenses to which we are entitled from time to time. In our discretion, we have currently elected to limit the total of the following expenses (where they are incurred on a normal dayto-day basis) recovered for the Fund up to 0.15% per annum of the total value of the Fund s assets: costs and expenses incurred by us and the Trustee in carrying out our respective duties, including the fees charged by solicitors, valuers and other advisers; bank account charges applicable to the Fund; costs for administration services, including unit registry, asset registry, unit pricing and investment accounting costs and costs associated with the provision of certain financial information related to the Fund. We may, at our discretion, pay amounts (including non-monetary benefits) from the fees we receive, to financial advisers or other persons approved by us. These payments are not an additional cost to you. Financial advisers are in all respects acting as agents for you (or, where relevant, the underlying investor), and not as agent for us or the Trustee. Neither we nor the Trustee are responsible for the advice given by these financial advisers. Westpac NZ, Westpac and related companies Westpac NZ and Westpac provide banking services to the Fund. Their banking charges and expenses are paid out of the Fund s Assets. There is no limit on these charges and expenses other than in relation to bank account charges applicable to the Fund. We pay fees to Westpac NZ for distribution and marketing of the Fund from time to time. These fees are not an additional cost to you and are borne by us out of our own money. Under the arrangements under which the equitable interest in the home loans is acquired by the Fund, Westpac NZ (and its custodian) will retain and manage the home loan documentation and charge a fee, which is unlimited, for doing so. The current custodian appointed by Westpac NZ is Westpac Nominees -NZ- Limited. Prior to 1 July 2008, the custodian was Westpac Securities Administration Limited. Westpac NZ is the swap counterparty. Prior to 1 May 2008 BT Investment Management (RE) Limited, provided investment management services to the Fund and its charges and expenses for these services were paid out of our management fee. Directors of the Manager, the Administration Managers, the Trustee or the Custodian may from time to time hold Units in the Fund. 22

23 The Westpac Home Loan Trust, a unit trust managed by us, invests in the Fund and the Fund may purchase mortgages from the Westpac Home Loan Trust from time to time. The Fund is marketed and distributed by Westpac NZ. 14 MATERIAL CONTRACTS No material contracts have been entered into in respect of the Fund at any time in the two years preceding the date of this Prospectus other than contracts entered into in the ordinary course of business of the Fund. 15 PENDING PROCEEDINGS There are no pending proceedings or arbitrations as at the date of this Prospectus which may have a material adverse effect on the Fund. 16 ISSUE EXPENSES The estimated amount of issue expenses (which consist of legal and audit expenses, prospectus registration and other incidental expenses) is approximately $50,000 (excluding GST). We may pay brokerage at rates determined by us in respect of any application, and servicing commission on the amount that any approved financial adviser has placed with us. These payments are not paid for by the Fund but rather by us out of our management fee. 17 OTHER TERMS OF OFFER AND UNITS Taxation The following is a general statement only relating to our understanding of the current New Zealand income tax law as it affects the Fund s investors. Different tax rules may apply if you are a New Zealand resident who is not an individual or if you are not a New Zealand resident. Taxation legislation, its interpretation and the rate and basis of taxation may change. The application of taxation laws depends on your individual circumstances. We and the Trustee do not take any responsibility for your taxation liabilities. You should seek independent professional advice as to your particular tax position. If you are an underlying investor, you should seek advice from your custodial service as to how your taxable income will be treated. The Fund is a PIE for tax purposes. Fund taxed on financial arrangements The Fund will be subject to tax on any gain from its financial arrangements. 23

24 Fund taxed at investors PIR The Fund will attribute its taxable income for a period to you by reference to the number of Units you hold in the Fund. The Fund will pay income tax on any taxable income which is attributed to you, if you are a natural person (which means in this section, person in the ordinary sense of the word, as opposed to a trust, company or other entity), a non-resident, or a trust (other than a unit trust) and you elect to have the tax on your share of the Fund s taxable income paid by the Fund ( Tax Paid Unitholder ) at the PIR you notify to us for the Fund. As at the date of this Prospectus, the applicable PIRs are as follows: a 10.5% rate will apply to you if you are a New Zealand tax resident natural person who earned $14,000 or less of taxable income (excluding income from PIEs) and $48,000 or less in total of taxable income (including attributed PIE income after subtracting attributed PIE losses) in either of the last two income years or if you are a New Zealand tax resident trustee of certain testamentary trusts which elect to apply the 10.5% rate; and a 17.5% rate will apply to you if you are a New Zealand tax resident natural person who does not qualify for the 10.5% rate, but who earned $48,000 or less of taxable income (excluding income from PIEs) and $70,000 or less in total of taxable income (including attributed PIE income after subtracting attributed PIE losses) in either of the last two income years or if you are a New Zealand tax resident trustee of a trust (but not a unit trust or a charitable trust) which elects to apply the 17.5% rate; and the 28% rate will apply to you if you do not qualify for the 17.5% or 10.5% rate, and you are not a Zero Rated Unitholder (discussed below). Income years generally commence on 1 April in any year and end on 31 March in the following year. When you determine your PIR, you must include non-new Zealand sourced income when calculating your taxable income for a particular income year, even if you were not a New Zealand tax resident when that income was earned. This is especially important for new residents to consider. New residents will be able to elect out of this treatment in some cases (see Inland Revenue s website for more information at The Commissioner of Inland Revenue can require the Fund to disregard your notified PIR if the Commissioner considers the PIR is incorrect. In such cases, the Fund must apply the PIR that the Commissioner considers appropriate. If you are a Tax Paid Unitholder, you will not be directly entitled to any net losses or excess tax credits of the Fund which are attributable to you. However, the Fund may in certain circumstances be entitled to a refundable tax credit in respect of such losses or excess credits, which it will pass on to you (either as a cash distribution or by the issue of additional Units). 24 If you are a New Zealand tax resident company (including a unit trust and a group investment fund, other than a designated group investment fund), charity, PIE, PIE Investor Proxy or superannuation scheme or trustee of a trust (that has not elected another PIR) and you provide your IRD number to the Fund, you will have a PIR of 0% ( Zero Rated

25 Unitholder ). If you are a Zero Rated Unitholder, you rather than the Fund will have to account for any income tax on income attributed to you, provided you notify the Fund that you qualify as a Zero Rated Unitholder. As a Zero Rated Unitholder, you will receive the benefit of any losses or excess tax credits of the Fund directly. If you are a Zero Rated Unitholder, you will be subject to tax on any taxable income attributed to you regardless of whether it is actually distributed to you. Trusts (including family trusts but not unit trusts or charitable trusts) may elect to either be Zero Rated Unitholders or Tax Paid Unitholders (in the latter case the Fund will pay tax on their attributed taxable income at the elected PIR). Trustees that elect a PIR that is lower than the highest PIR must return the PIE income/(loss) and pay any applicable tax themselves (with a credit for tax paid by the Fund in respect of the PIE income attributed to the trustee). The result of the above is that the Fund will pay tax on behalf of some Unitholders but not others. To ensure that you bear your appropriate share of tax, the Fund will adjust either: the Units held by you as a Tax Paid Unitholder by: o redeeming Units when there is tax payable; or o issuing additional units for no consideration when there is a refundable tax credit; or the distribution, redemption, repurchase or transfer of your entitlement if you are a Tax Paid Unitholder (by deducting the amount of tax paid on your behalf). The Fund currently intends to reflect PIE tax by cancelling for no consideration Units held by you equal in aggregate value to the PIE tax paid by the Fund in respect of you. This cancellation will usually occur after the end of the Fund s income year. However if you redeem, switch, withdraw or transfer Units during the year, then immediately prior to the redemption, switch, withdrawal or transfer the Fund will cancel Units held by you equal in aggregate value to the PIE tax on the income attributable to those Units. Unitholders failure to advise the correct PIR If you are a Tax Paid Unitholder and supply the correct PIR (other than trustees who elect a PIR that is lower than the highest PIR), you will not have any further personal New Zealand tax liability in respect of taxable income attributed to you from the Fund (as any tax on that taxable income is payable by the Fund itself). If you do not provide your PIR and IRD number, then tax will be deducted at the highest PIR (currently 28%). If you notify a lower PIR than your applicable PIR, or do not advise a change to a higher PIR, you may be obliged to pay any tax shortfall at your income tax rate (plus any interest and penalties) and may be required to file a tax return. If you notify a higher PIR than the 25

26 one you are entitled to, any excess tax paid cannot be claimed back as PIE tax is a final tax for Tax Paid Unitholders. Joint investors will be treated as a single Unitholder with a PIR equal to the highest PIR of the joint investors. If you are a joint investor, then you and the other joint investor(s) must notify us of your PIRs and IRD numbers, or tax will be deducted at the highest PIR (currently 28%). You must inform us if your PIR changes (except where a change is due to a change in the statutory tax rate rather than a change in your income). Unitholders not taxed on direct redemptions No income tax should be payable on the gains made on the direct redemption of Units by the Fund. Tax for traders on their sales You should not be subject to tax on any gain made from the transfer of Units or the repurchase of Units by us, provided that: you do not carry on a business of dealing in such securities or in respect of which the sale of such securities is an ordinary incident; the Units were not acquired for the dominant purpose of resale; and the gains on the sale of Units have not been derived from an undertaking or scheme entered into or devised for the purpose of making a profit. In other cases you may be subject to tax on any gain made from the transfer of units or the repurchase of units by us (and may be entitled to a deduction for any loss) unless either: you are a PIE or are exempt from tax (such as a charity); or the transfer is effected by cancelling the Units held by the transferor and issuing new Units to the transferee (which is how the Fund currently intends to effect transfers). No tax on distributions You are not subject to tax on any distributions from the Fund. While the Fund remains a PIE, we may elect to deduct from distributions made to you an amount equal to the tax (if any) paid by the Fund on the net income attributed to you as an alternative to redeeming your Units for no consideration to fund this tax liability (although it does not currently intend to do so). Accordingly, where the Fund is a PIE, Unitholders may receive differing net distributions. Tax related adjustments In this Prospectus, wherever there is a reference to the redemption, repurchase, transfer or transmission of Units or to withdrawing Units, this is a reference to such Units that remain after any adjustment to the number of Units at that time to reflect tax paid or payable on income attributed to you under the PIE tax regime. 26

27 Advantages of the Fund being a PIE As a PIE, the Fund may provide you, as an individual or trustee Unitholder, with a benefit over holding assets or investments directly. This is because, as described above, the Fund pays tax on income attributed to you at your notified PIR at a maximum rate of 28%, and PIRs are calculated using your previous two years income and an extra allowance for PIE income. No further tax will be payable by you on the attributed income provided you have notified the correct PIR (except for trusts which notify a PIR of less than 28%). Individual Unitholders If you are an individual with an income tax rate that is more than 28% and have a PIR of 28%, you will pay less tax in respect of your unitholding than you would have paid if you held the equivalent amount of assets or investments directly. If you are an individual with an income tax rate of less than 28%, you may also pay less tax on income earned through the Fund than income earned directly. This is more likely where you have taxable income that is near the upper limit of your tax bracket (for example, $13,000 or $47,000), or where you had relatively little income (compared to your current year income) in one of the two previous years. The Fund may also provide a benefit to you as an individual Unitholder if you would be subject to withholding tax on investment income earned directly. Tax is generally not payable on the income earned through the Fund as a PIE, until the earlier of the time you withdraw some or all of your Units, or on or around the end of the tax year. An earlier tax payment may occur if we consider it necessary or desirable to enable compliance with the PIE tax regime. For certain individual investors, investing in the Fund could result in more tax being paid than would have been paid had assets or investments been held directly. This is more likely where you had a relatively high amount of income (compared to your current year income) in both of the last two years. If you hold Units jointly, the highest PIR of the joint Unitholders will be applied. This can result in more tax being paid than if the joint Unitholders were to separate their investments. You should therefore seek individual tax advice to determine whether investing in the Fund is suitable for you. Trust Unitholders If you are a trustee of a trust (excluding a charitable trust or superannuation scheme), you may notify a PIR of 28% and save tax, as PIE attributed income does not need to be included in the trust s tax return. This creates a tax saving where income would normally be taxed as trustee income (33%) or as beneficiary income (for beneficiaries on income tax rates higher than 28%). However, more tax could be paid where income is to be treated as beneficiary income and the trust s beneficiaries have a lower income tax rate than 28%. If a trustee of a trust elects a PIR lower than 28%, then PIE income will need to be included in the trust s tax return, therefore losing the PIE advantages mentioned above. 27

28 Other Unitholders There is unlikely to be a tax saving if you are another type of entity, such as a company, investing in a PIE. However, there could be other benefits (such as time value of money) and other disadvantages (such as impact on provisional tax) that should be considered. Investing Applications will only proceed on the basis of the application form found at the back of the Investment Statement for the Fund. To make an investment directly into the Fund, you need only complete the application and lodge it, together with a cheque made payable to Home Mortgage Nominees Limited and crossed not transferable, with: any branch of Westpac NZ in New Zealand, or with a Westpac NZ Financial Adviser, for delivery to The Manager, BT Funds Management (NZ) Limited; or the applicant s approved financial adviser, for prompt delivery to BT Funds Management (NZ) Limited; or the applicant may post to Freepost 802 (no stamp required), BT Funds Management (NZ) Limited, PO Box 695, Wellington 6140 Telephone Applications made through a custodial service will need to be made in accordance with your arrangements with the custodial service. All Units are issued and applications accepted at our absolute discretion and we reserve the right to decline applications. Units will be issued at the Current Unit Value determined at the Valuation Time before or immediately after the relevant application is to be processed. You should note that the Current Unit Value applied to applications will be the price ruling at the time the application is to be processed by us. This price may vary from the price ruling on the day of mailing or lodgement of the application form. It should be noted that receipt by a financial adviser or Westpac NZ is not receipt by us, the Trustee, or Home Mortgage Nominees Limited. No application shall be deemed to have been received by us, the Trustee or Home Mortgage Nominees Limited before it has actually been received by us. Confirmation of Unit Holding You will receive written confirmation of the total number of Units issued at the date on which the application is accepted for processing. This confirmation is not negotiable and is merely evidence of an interest in the Fund. We will issue a written statement of holdings to you at three monthly intervals. A statement of holdings is also available at any time on request to us. 28

29 Financial Advisers Financial advisers approved by us, who are not employees of Westpac NZ or Westpac, will hold a Confirmation of Authority issued by us and this is available on request either from the financial adviser or us. Financial advisers are therefore in all respects acting as an agent of you and not us, the Trustee or Home Mortgage Nominees Limited. Other terms of this offer are set out in the Investment Statement, which should be read together with this Prospectus. You will receive a copy of the Investment Statement before applying for units. All the terms of the offer and of the Units are set out in this Prospectus, other than those implied by law, or set out in a document that is registered with a public official and is available for public inspection and is referred to in this Prospectus. 18 FINANCIAL STATEMENTS AND AUDITOR S REPORT The financial statements for the Fund for the year ended 31 March 2012 comply with the Trustee Companies Act 1967 and have been prepared in accordance with the Financial Reporting Act The full audited financial statements were registered with the Registrar of Companies on 28 August The Auditor s Report on the financial statements for the Fund dated 22 August 2012 did not refer to a fundamental uncertainty and was not qualified in any respect. The Auditor s Report on the summary of financial statements is attached at the end of this Prospectus. No prospective financial information is shown. 19 PLACES OF INSPECTION OF DOCUMENTS Copies of the Trust Deed, the latest annual report and financial statements may be inspected during normal business hours by any person who so requests at our offices at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand without payment of a fee. Copies of the Trust Deed and any Deeds of Amendment are available from us for a fee which is currently 20 cents per page. Copies of the above documents, excluding the annual report, are also filed on a public register at the Companies Office, and may be viewed on our and/or the Fund s file on the Companies Office website. Copies may also be obtained (on payment of the relevant fee) by telephoning the Ministry of Business, Innovation and Employment Business Service Centre on or ing info@companies.govt.nz. 20 OTHER MATERIAL MATTERS Deed of Arrangement and Deed of Indemnity The Trustee has entered into a Deed of Arrangements with us, pursuant to which we and our authorised agents will undertake certain of the day to day administrative functions of the Fund that would otherwise have been performed by the Trustee. The Deed of Arrangements is dated 27 June 2005 (as amended from time to time). 29

30 BT Financial Group (NZ) Limited has entered into a Deed of Indemnity with the Trustee, indemnifying the Trustee in respect of actions to be performed by us and our authorised agents under the Deed of Arrangements referred to above. The Deed of Indemnity is dated 27 June Exemptions applicable to externally managed group investment funds The Financial Markets Authority has granted the following exemptions in respect of this offer subject to the terms and conditions contained in the Securities Act (Externally Managed Group Investment Funds) Exemption Notice 2003 (as modified by the Securities Act (Transition to Securities Regulations 2009) Exemption Notice 2009): i. an exemption from sections 33(3) and 33(7) of the Securities Act 1978; and ii. iii. iv. an exemption from sections 52(1) and (3) of the Securities Act 1978; and an exemption from section 54 of the Securities Act 1978; and an exemption from regulation 5(1)(c) of the Securities Regulations 2009; and v. an exemption from regulation 28 of the Securities Regulations Risks All investments have some level of risk. In general terms, the lower the risk, the lower the potential returns will be over the long-term. The principal risks faced by you, as an investor, are that you will not get all of your money back or you will receive a lower return than you anticipated. Your returns will vary, as with any investment that is linked to market variables (in this case market interest rates and prepayments by borrowers). However the Fund is managed with the objective of providing a return that is competitive with cash and short term bank deposits. The risk of the capital value of your investment falling is expected to be low. The main risks to your capital and returns are variations in the Market Value of the Fund s Assets (the home loans and contractual arrangements) and market interest rate movements. Markets are affected by a host of factors including economic, taxation and regulatory conditions, market sentiment, political events, movements in interest rates and currency, and environmental and technology issues. This includes the possibility that the Fund may not be able to recover the full amount of the loan or interest outstanding in the event of a default by the borrower, particularly if the value of the mortgaged property has fallen and the fund s bad debt provision has been exhausted (in which case the release price for units could fall below $1.00 and it is reasonably foreseeable that you will receive less than the amount they invested). This risk is mitigated by restricting the level of any borrowing to 80% of the home s value, or by having a home loan insurance policy in place for any home loans which are up to 90% of the home s value. There is also provision for an asset impairment reserve. To assist in the provision of a stable and regular income to you, we may enter into interest rate swaps and other derivatives in respect of the Fund. An interest rate swap is a contract 30

31 to exchange interest rate cashflows, and is generally used to manage exposure to fluctuations in interest rates. Risks associated with derivatives include the Fund not being able to meet its payment obligations as they arise and the risk that the other party to the derivative contract will fail to perform its contractual obligations (known as counterparty risk ). The swap counterparty for any derivative contract entered into by us in respect of the Fund is Westpac NZ. We are authorised to use contractual arrangements, such as interest rate swaps, to reduce the volatility of the returns and the risk of obtaining lower than anticipated returns. There is a risk that a third party may fail to pay an amount due or properly provide services to the Fund. In addition, if there are a large number of withdrawals to be paid (over a short period), it may be necessary to delay the payment of withdrawals (see section 23.5 for details of suspensions). We will endeavour to minimise this risk by holding sufficient liquid assets to meet expected withdrawals. Changes may be made to the Fund from time to time including changing the Fund s aim, strategy or asset allocation targets, benchmarks and any underlying investment managers, adding to, closing or winding up the Fund, changing the fees and charges or minimum amounts. These changes could impact on the Fund's returns. Any change in tax or other applicable legislation or regulation could also impact on the Fund s returns. As a PIE there is a risk that if the Fund fails to satisfy the PIE eligibility criteria (as defined in the Tax Act), and that failure is not remedied within the period permitted under the Tax Act, the Fund may lose its PIE status, in which case you may be personally taxed on distributions by the Fund at your income tax rate. We have implemented processes to monitor ongoing PIE eligibility compliance for the Fund, and have a number of powers available to us to proactively manage this risk. You may incur a tax liability as a result of advising the wrong PIR or failing to advise the us when your PIR increases (except where an increase is due to a change in the statutory tax rate rather than a change in your income). There is operational risk, which includes risks associated with a failure of processes and procedures, fraud, litigation, disruption to business by industrial disputes, systems failures, pandemics, natural disasters and other unforeseen external events which might affect our business or the Fund and its investments. If the risks eventuate, it is reasonably foreseeable that you may receive less than the amount you invested on withdrawal. Complaints We are a member of the independent dispute resolution scheme operated by the Banking Ombudsman and approved by the Ministry of Consumer Affairs, for the purposes of the Financial Service Providers (Registration and Dispute Resolution) Act Under the terms of this scheme, we have three months to resolve your complaint. If you are not satisfied by our response, you may refer the matter to the Banking Ombudsman (at no cost). You can contact the Banking Ombudsman as follows: 31

32 Physical address: Level 11, BP House 20 Customhouse Quay, Wellington Phone: Fax: Write to: Freepost PO Box 10573, The Terrace, Wellington 6143 New Zealand 21 MANAGER S STATEMENT In the opinion of the directors of the Manager, after due enquiry by them: a) the value of the Fund s Assets relative to its liabilities (including contingent liabilities); and b) the ability of the Fund to pay its debts as they become due in the normal course of business has not materially and adversely changed during the period between the date of the latest financial statements referred to in this Prospectus and the date of registration of this Prospectus. 22 TRUSTEE S STATEMENT Please refer to page 51 of this Prospectus for the Trustee s Statement. A signed copy of this Prospectus, together with copies of the documents required by section 41 of the Securities Act 1978 to be attached to the Prospectus, being the auditor s report and consent, were or have been delivered to the Registrar of Financial Service Providers for registration under section 42 of the Securities Act SUMMARY OF THE TRUST DEED Important Notes The following is a summary of the principal terms and conditions of the Trust Deed. It is a generic summary which describes the terms of the Trust Deed as they apply. Copies of the Trust Deed are available to prospective and current Unitholders, for a fee, upon request from us at the address set out in section 2. The Trust Deed may also be inspected at our offices. Defined terms are set out in the Glossary at the back of this Prospectus. 32

33 Set out below is a summary of the current terms of the Trust Deed Establishment of Funds The Trust Deed governs the group investment fund known as the Westpac Mortgage Investment Fund. The Trust Deed can be extended to new group investment funds as varied or supplemented by the conditions of establishment and issue terms of such Funds. The Trust Deed sets out the terms on which money is received for investment in a Fund and also governs the trust and agency arrangements which are to be invested through the Fund. You are entitled to a beneficial interest in the Assets invested through the Fund, but do not have any interest in respect of any particular part of the Fund or the Assets of the Fund. The Trust Deed provides that the trust arrangement may invest through the Fund in any property or securities including cash, Cash Equivalents and loans made upon the security of first mortgages, provided that until we and the Trustee agree otherwise the Fund will be invested in loans made upon the security of first mortgages in respect of property in New Zealand, bank deposits or other fixed interest debt securities and only in investments permitted for designated group investment funds under the Tax Act. For the avoidance of doubt the Trustee, at our direction, may purchase the equitable interest in loans and related first mortgages in respect of property in New Zealand originated by the Westpac group of companies from The New Zealand Guardian Trust Company Limited, in its capacity as trustee of the Westpac Home Loan Trust (the HLT Trustee), and, provided those loans and related mortgages comply with the Authorised Investments criteria set out above and until we and the Trustee agree to the contrary, such loans and related mortgages will constitute Authorised Investments of the Fund. In the event that the Trustee purports to acquire any mortgage from the HLT Trustee that does not fall within the criteria set out above (being a Non GIF Compliant Mortgage) and the Fund is not a PIE: (a) the Trustee shall be deemed never to have acquired any title (whether legal or beneficial) in such Non GIF Compliant Mortgage and it shall remain the property of the HLT Trustee; (b) the purported acquisition by the Trustee of such Non GIF Compliant Mortgage shall be deemed not to be a breach of trust; (c) the amount paid by the Trustee in respect of such Non GIF Compliant Mortgage shall not be, and shall be deemed not to be, on account of any purchase price paid, or to the extent that any Units are issued by the Trustee to the HLT Trustee, in respect of such Non GIF Compliant Mortgage, such Units shall be deemed not to be on account of (or in satisfaction of) the purchase price for such mortgage, with the effect that: (d) the Trustee shall be deemed to have held on bare trust for the HLT Trustee (separate from the Fund) since the Closing Date in relation to such mortgage: 33

34 (i) any such Non GIF Compliant Mortgage; and (ii) all interest and principal (whether prepaid or otherwise), and all other amounts, received or accrued but unpaid on, or in respect of, such Non GIF Compliant Mortgage (including any consideration or amounts received or accrued but unpaid as a consequence of any sale of such Non GIF Compliant Mortgage) (together being the Non GIF Compliant Mortgage Receivables) since the said Closing Date; (e) the Trustee shall account to the HLT Trustee (or the manager of the Westpac Home Loan Trust on its behalf (the HLT Manager)) for the Non GIF Compliant Mortgage Receivables, and shall pay to the HLT Trustee (or the HLT Manager on its behalf) such amount on demand; (f) in the case of any amount paid by the Trustee to the HLT Trustee in consideration for such Non GIF Compliant Mortgage, the HLT Trustee shall be deemed to have held on bare trust for the Trustee (separate from the Westpac Home Loan Trust) since the Closing Date in relation to such mortgage: (i) a proportion of the Certificate of Deposit that it holds in an amount equal to the aggregate of the funds provided by the Trustee (or the Manager on its behalf) in respect of such Non GIF Compliant Mortgage (being an amount equal to the principal outstanding amount of the Non GIF Compliant Mortgage as at the Cut-Off Date in relation to such mortgage); and (ii) an amount equal to any interest or other amounts that have been received or accrued and unpaid on the proportion of the Certificate of Deposit referred to in subclause (f)(i) above since the said Closing Date, which such amount shall either be capitalised and form part of the said Certificate of Deposit or be held on deposit with the Westpac group of companies, (g) and the HLT Trustee (or the HLT Manager on its behalf) shall pay to the Trustee (or the Manager on its behalf) such amount on demand; and in the case of Units issued by the Trustee to the HLT Trustee in consideration for such Non GIF Compliant Mortgage: (i) such Units shall be deemed never to have been issued, and deemed not to be held by the HLT Trustee, and the Register shall be adjusted to reflect the position; and (ii) the HLT Trustee shall be deemed to have held on bare trust for the Trustee (separate from the Westpac Home Loan Trust) an amount equal to the distributions (if any) or other amounts received or accrued and unpaid, since the Closing Date in relation to such mortgage, on Units equal in number to the number of Units referred to in subclause (g)(i) above which amount shall be held on deposit with the Westpac group of companies, and the HLT Trustee (or the HLT Manager on its behalf) shall pay to the Trustee (or us on its behalf) such amount on demand. 34

35 23.2 Issue of Units Units may be subscribed for only by the transfer to the Fund of Cash, Authorised Investments or a combination of them as we determine in our absolute discretion. We may refuse an application without the need to give any reason. No interest will be paid on any application amounts refused. We may set (and vary) a Minimum Subscription amount for the application for Units. Applications will be processed within 2 Business Days of the Valuation Time for the issue of such Units on or as at the date that we accept the application or on or as at the date of receipt of the subscription amount by us or the Registrar on behalf of us, whichever happens later. Prior to being processed, subscription amounts are held on trust by the Trustee as a separate trust. Units are issued at the Current Unit Value plus any Entry Fee determined at the Valuation Time before or immediately after (as we shall decide in respect of applications generally from time to time) the relevant application is to be processed. We and the Trustee may collect and apply any fees, commission, brokerage or charge on subscriptions, provided the value of the Assets per Unit transferred to the Fund in exchange for Units is equal to the Current Unit Value at the relevant Valuation Time, plus any Entry Fee. We may in our discretion suspend the issue of Units at any time Redemption of Units You may redeem Units by giving a Redemption Request to us or, at our election, the Registrar. This must be in the prescribed form and is irrevocable. The redemption of Units shall be completed within 2 Business Days following a Valuation Time and within 30 days of the receipt of the Redemption Request by the Registrar. We may, at our discretion, permit a Redemption Request to be processed earlier and may charge a fee for such earlier redemption. We may, in our discretion, at any time offer to buy back Units for the Redemption Amount, whether or not we are willing to accept other Redemption Requests. A Unit shall be redeemed at the Current Unit Value less any Exit Fee at the Valuation Time either immediately before or after our acceptance of the Redemption Request (as we shall decide from time to time). The Redemption Amount shall be paid at the Payment Time together with the distribution of accrued Income Entitlements of the Units redeemed. We on behalf of the Trustee may, in our sole discretion, redeem your Units if the number of your Units in the Fund (after excluding the number of Units to which the Redemption Request relates) is less than the Minimum Holding and may refuse a Redemption Request where the Redemption Request is for less than the Minimum Parcel of Units that may be redeemed. We on behalf of the Trustee may, in our sole discretion, redeem Units in order to satisfy the indemnities under clauses 8.6 and 15.1 of the Trust Deed. 35

36 We may make adjustments to your Units or deductions, from any distributions or redemption proceeds of an amount equal to any tax paid by the Fund on the income attributed to you, and may (and intends to) redeem Units when necessary to preserve the Fund s PIE status. We may refuse to process a transfer where the transfer would threaten the Fund s eligibility for PIE status. The tax related consequences of redeeming Units are set out in further detail in section Switching You may apply to switch your investments in the Fund to such other funds as we may determine from time to time. A switch request will be treated as a Redemption Request for the purposes of the Trust Deed and must comply with the relevant provisions of the Trust Deed relating to the redemption of Units and the relevant provision of any other trust deed under which the application for units in the switch request relates. We may refuse to process a switch where the switch would threaten the Fund s eligibility for PIE status. The tax related consequences of switching Units are set out in further detail in section Suspension rights If by reason of: a decision to terminate the Fund; or financial, political or economic conditions applying in respect of any real estate or the financial markets; or the nature of any Investment; or the distribution of capital or Income; or the calculation of the distribution amount or Redemption Amounts; or the occurrence or existence of any other circumstances or event, we or the Trustee, in good faith, form the opinion that it is not practicable, or would be materially prejudicial to the interests of Unitholders, for the Trustee to redeem Units, then we or the Trustee may give a Suspension Notice. Redemptions are suspended until the cancellation of the Suspension Notice by us except that the Trustee may, if it thinks fit, cancel a Suspension Notice if the suspension period has extended beyond 90 days. There is no maximum suspension period under the Trust Deed. The Redemption Price that applies to unsatisfied Redemption Requests is the Current Unit Value of the Fund at the last day of the period of suspension. We and the Trustee may collect and apply any fees, commission, brokerage or charge on redemptions Transfers of Units You may transfer your Units. A transfer instruction must be in writing in a form satisfactory to the Registrar and must comply with any applicable law and any other reasonable requirements we and the Trustee may prescribe from time to time. 36

37 Subject to any relevant legal requirements, we may suspend the registration of transfers for such periods (not exceeding 30 days in any year) as we may from time to time determine. Under the Trust Deed, we may elect to effect a transfer request either by registering a transfer of Units from the transferor to the transferee, or by cancelling without payment to the transferor the number of Units sought to be transferred (less any units cancelled within the terms of the Trust Deed (including for tax reasons)) and issuing the same number of Units as are cancelled to the transferee. We may refuse to process a transfer where the transfer would threaten the Fund s eligibility for PIE status. The tax related consequences of transferring Units are set out in further detail in section Termination of the Fund The Fund commenced on 27 June 2005 and will terminate on the first of the following days: on a day appointed by us by giving not less than 2 months written notice to Unitholders and the Trustee; or on the day on which the Trustee retires to the extent the Fund is not resettled on a successor Trustee. If there is no manager, the Trustee shall use its best endeavours to secure a Successor Manager. If we go into liquidation or cease to carry on business (except for the purpose of amalgamation or reconstruction) or a receiver or receiver manager is appointed and is acting in respect of the undertaking of us, or we are in default in any material respect of a material obligation owed to the Trustee under the Trust Deed (other than as a result of a bona fide dispute), and we have not rectified the matter within 20 Business Days of receipt of notice identifying the matter and the Trustee reasonably believes and certifies that we are unable to comply with our obligations under the Trust Deed and that it is in the interests of Unitholders generally that we cease to hold that office, the Trustee may remove us by giving 3 Business Days notice in writing. Within 60 days of this event, the Trustee must terminate the Fund unless we have consented, in our absolute discretion, to the continuation of the Fund. Upon the Fund being terminated, subject to the appointment of a Successor Trustee, the Trustee shall discharge the liabilities and Expenses of the Fund (and distribute all Income Entitlements in Cash) and then distribute your Share of the net Assets of the Fund to you in such manner and within such period after the termination of the Fund as the Trustee considers advisable. Such distribution may be in cash or in specie (for example, by distributing assets which are held by the Fund) or both as the Trustee in its sole discretion may determine. Subject to us being reasonably satisfied that in each case it is not, nor likely to become materially prejudicial to the interests of Unitholders generally, we may, subject to the prior approval of the Trustee: 37

38 require you to accept repayment in respect of all or any of your Units and apply the proceeds towards Units in an alternative fund with an investment policy similar in all material respects to this Fund; and transfer the Assets and liabilities of this Fund to the new Fund; and terminate this Fund as set out above Investments of the Fund The Fund shall invest only in Authorised Investments as set out in the Trust Deed and according to any investment policy. All Investments must be in the name of the Trustee or its nominee company. Subject to the Trust Deed, the Trustee s primary duty shall be to act on any direction or request by us to invest the Fund in Authorised Investments in accordance with the Issue Terms. The Trustee shall not, however, act on any direction of us to invest in, acquire or dispose of any investment if in the opinion of the Trustee, conveyed in writing to us, the proposed investment, acquisition or disposition is manifestly not in the interests of Unitholders or is contrary to the provisions of the Trust Deed. The Trustee shall not be liable to you or us for refusing to act on any such directions, or for acting on any direction given by us in respect of the investment, acquisition or disposal of any investment in accordance with the Trust Deed Valuations We shall value each Asset of the Fund on the first Business Day of every Month, on any other day on which the Redemption Amount is calculated, or the Current Unit Value is to be determined in accordance with clause 3.3(b) of the Trust Deed, or at such times as agreed by us and the Trustee. The Market Value of the Assets is determined in accordance with clause 9.2 of the Trust Deed and excludes any gains or losses derived from any interest rate swap contract or other derivative contract. Any gains or losses on such contracts are dealt with as income and allocated to the Swap Payments Account for the meeting of expenses. We must ascertain the Net Asset Value and Current Unit Value of the Fund at least once a month and on any Business Day that the Redemption Amount is calculated or the Issue Amount is to be determined in accordance with clause 3.3(b) of the Trust Deed. The Net Asset Value of the Fund means such amount as is from time to time ascertained by us by subtracting from the Market Value of all Assets of the Fund, the total of: (i) all liabilities of the Fund (other than a liability for PIE tax where we consider it appropriate to do so); and (ii) all net undistributed Income; and (iii) all amounts credited to the Asset Impairment Account (formerly known as the Bad Debt Reserve). The Current Unit Value of the Fund equals the Net Asset Value of the Fund at that time divided by the number of Units on issue for the Fund. 38

39 23.10 Financial Statements We must prepare or cause to be prepared annual Financial Statements within 5 months of the Fund s balance date and as required by the Exemption Notice. The annual Financial Statements must be audited by the Auditor who shall report as required by the Financial Reporting Act 1993 and the Trust Deed. Within 6 months of the end of each annual balance date, we shall forward a copy of the Financial Statements of the Fund for such financial period together with the Auditors report to you. The Auditor may be removed by the Trustee after consultation with us. The Auditor may retire by giving 90 days notice to the Trustee in writing Income and distributions All Income accruing to the Fund shall be allocated to the Fund s Income Account, other than income representing amounts received on any interest rate swap or other derivative contracts in respect of the Fund, which shall be allocated to the Fund s Swap Payments Account. All distributions from the Fund are deducted from the Fund s Income Account. We may allocate amounts from the Income Account into the Asset Impairment Account (formerly known as the Bad Debt Reserve), as we think fit, and may distribute to you or allocate back to the Income Account any surplus which we determine has arisen in the Asset Impairment Account. All Expenses accruing to the Fund shall first be deducted from the Swap Payments Account. Where there are insufficient funds in the Swap Payments Account to pay such Expenses, we may deduct such Expenses from the Income Account. In determining Income of the Fund, we shall take into account all income due or accrued and all costs, charges and expenses due or accrued. Any amounts received on any interest rate swap or other derivative contracts that are not used to pay Expenses will not be taken into account for the purposes of determining the Income of a Fund available for distribution to you as Income Entitlements (however while the Fund is a PIE, such amounts will still form part of the Income allocated to you for tax purposes). Within 60 Business Days after the Distribution Date of the Fund, we shall determine in respect of each Unitholder, the Unitholder s Income Entitlement in respect of the relevant Distribution Period. As soon as practicable after the end of every Distribution Period, the total of your Income Entitlements shall be determined and, subject to the Trust Deed, distributed to you. The Income Entitlements of you for a Distribution Period may be rounded down to not less than the nearest whole cent. Payments of Income Entitlements shall be made within 60 days after the last day of the Distribution Period to which they relate. Prior to distributions of income to you, the Trustee will deduct from your income any unpaid Trustee and Manager s fees. Income Entitlements will be distributed in Cash unless you elect to have your Income Entitlements distributed to you by way of the issue of additional units in the Fund. In such cases, the Trustee shall on our direction, on the first Business Day of the month immediately after the direction is made, apply and capitalise the whole or part of your Income Entitlements towards paying up in full new Units to be issued and distributed as fully paid Units. 39

40 You may, if we so elect, make a written request to us on the relevant application for Units or in such other form as may from time to time be agreed between us and the Trustee, to have your Income Entitlements distributed to you by the way of additional Units in the Fund. Such request may be varied or terminated by notice in writing to us at any time. At our discretion,, a Unit issued in lieu of Income Entitlements in Cash following the end of the last day of a Distribution Period may entitle its holder to participate in the distribution for the next Distribution Period in full, irrespective of the number of days it has been on issue during the relevant Distribution Period. We may from time to time distribute capital of the Fund to you in Cash in proportion to your Unitholdings. Income Entitlements in respect of Units redeemed for the period from the previous Distribution Date to the Valuation Time for the redemption will be distributed in Cash at the Payment Time for the redemption. The tax related consequences of distributions are set out in section 17 of this Prospectus Trustee/Manager may incur Expenses In addition to our respective fees described below, we and the Trustee are respectively entitled to be reimbursed out of the Fund for all Expenses (including anticipated expenses), costs or liabilities incurred by either of us in connection with acting as Trustee and Manager under the Trust Deed. Generally, the amount of these expenses cannot be ascertained until they are incurred and will vary from time to time. Without limiting the generality of the foregoing, we and the Trustee shall be entitled to be reimbursed out of the Fund for Expenses including, but not limited to: all costs, charges and expenses incurred in connection with the ordinary administration of the Fund; any other expenditure properly and reasonably incurred by us and the Trustee in connection with carrying on our duties under the Deed in relation to a Fund; all other Fund related expenses, including compliance costs, transaction and cash management fees, and unit pricing costs. We and the Trustee may incur and pay any charges or Expenses, which charges or Expenses are, in the reasonable opinion of the Trustee, necessary, incidental to or desirable for the carrying out of any of the purposes of the Fund or conducting the undertaking of the Fund Trustee's remuneration The Trustee shall be entitled to receive and retain for its own use and benefit out of the Fund or out of any distribution from the Fund, such reasonable fees (plus any GST) as may be agreed upon in writing between us and the Trustee for the Trustee s services in respect of the Fund Manager's remuneration We shall be entitled to receive from the Fund a management fee of up to 1.5% per annum 40

41 (plus any GST) of the Market Value of the Assets of the Fund, such fee being calculated daily on the basis of the Market Value of the Assets at the end of each day. However, we may decide to charge a lesser fee in our discretion, and currently charge a management fee of 1% (plus any GST) of the Market Value of the Assets of the Fund. Our fee shall be paid monthly in arrears in each year during which we are managing the Fund (and may be deducted by us from the Fund). We may employ other members of the Westpac group of companies to provide services. These providers may be paid from the Fund. Any agency fees we or the Trustee may be entitled to for any service we undertake as agent for you are in addition to the above fees Delegation by Trustee/Manager We and the Trustee may each delegate any of our powers and duties as Trustee or Manager, respectively, to any one or more agents, representatives, officers, employees, independent contractors or other persons without liability in the case of delegates prudently selected, and subject, in our case, to the Trustee s consent Trustee's powers and duties The Trustee has a duty to hold the Assets according to the directions of all Unitholders relating to the management of the trust relationships, the assets of which are to be invested in the Fund and the Fund itself, and shall exercise reasonable diligence to ascertain whether or not any breach of the Trust Deed or of the offer of Units has occurred. The Trustee, subject only to the specific limitations contained in the Trust Deed, shall have, without further or other authorisation and free from any power of control on the part of the Unitholders, full, absolute, and exclusive power, control and authority over the Assets to be invested through the Fund to the same extent as if the Trustee were the sole owner in its own right, to do all such acts and things as in its sole judgment and discretion are necessary or incidental to, or desirable for, the carrying out of any of the purposes of the Fund. The Trustee has the power to, at our direction, where we in good faith determine it necessary or desirable in the general interests of Unitholders or for the purposes of conducting the operation of the Fund pursuant to the Trust Deed and if the Investment Policies so allow, borrow for the purposes of the trustee relationships governed by the Trust Deed and/or the Fund and may give any guarantee or undertaking in relation to the repayment of money upon such terms and conditions as we and the Trustee may think fit. However, the aggregate total borrowings by the Trustee together with any amounts guaranteed may not exceed fifty per cent (50%) of the value of the Assets of the Fund or, if secured against a particular Asset, 50% of the value of that Asset. 41 The Trustee is empowered to, at our direction, and provided the Investment Policies so allow, lend any money or provide any financial accommodation to, or acquire loans secured by mortgages from, any parties for the purposes of the trust relationships governed by the Trust Deed and may obtain security in relation to the repayment of such loan upon terms and conditions we and the Trustee thinks fit. Such loan transactions shall only be entered into where we determine in good faith that they are necessary or desirable to achieve the Investment Policies of the Fund.

42 The Trustee in relation to the Trust Deed may rely on advice from certain persons listed in the Trust Deed, our advice, recommendations or request, and on statements contained in any certificates given under the Trust Deed. The Trustee shall (except as otherwise provided in the Trust Deed) as regards all the powers, authorities and discretions vested in it by the Trust Deed, or by operation of law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and, provided it shall not have acted fraudulently or negligently by act or omission, the Trustee shall not be responsible for any loss, costs, damages, expenses or inconvenience that may result from the exercise or non-exercise thereof. The Trustee or any Related Person of the Trustee may purchase, hold, sell, invest in or otherwise deal with Units, securities or other property of the same class and nature as any Asset, whether on the Trustee s or the Related Person s own account or for the account of another, and use in other capacities knowledge gained in the Trustee s capacity as Trustee provided that the Trustee or Related Person may not use any specific confidential information that, if generally known, might be expected to affect materially the value of a Unit or any Asset. We and the Trustee may rely on the Register of the Fund as being correct if such reliance is based on a reasonable belief that the entry in question is accurate in all material respects. The Trustee may with our consent enter into arrangements for the holding by a Custodian, on behalf of the Trustee, of Assets to be held by the Trustee in respect of the Fund. The Trustee is entitled to be reimbursed from the Fund for any cost incurred for engaging a Custodian. The Trustee s primary duty shall be to act on any direction or request by us to invest the Fund in Authorised Investments in accordance with the Issue Terms. We and the Trustee are not required to exercise any care, diligence and skill that a prudent person might otherwise exercise in diversifying the Assets, to the extent that the benefit to be derived by you and the investment risks you bear shall continue to reflect the relevant Investment Policies. The Trustee has covenanted to exercise reasonable diligence to ascertain whether any breach of the Trust Deed or terms of the offer has occurred and except where it is satisfied that the breach will not materially prejudice the interests of Unitholders, the Trustee shall do all such things as it is empowered to do to cause any such breach to be remedied The Manager's powers and duties We are appointed by the Trustee to manage the trust relationships to be governed by the Trust Deed and the Fund as agent for the Trustee. Subject to the Trust Deed, we shall exercise all powers and discretions reasonably necessary or desirable to perform the functions contemplated in the Trust Deed. 42 Notwithstanding any other provision in the Trust Deed, we have the same liability in our role as the Manager as we would if we were exercising or performing our functions, powers or

43 duties as trustee of the Fund, and are entitled to the same relief from liability as we would have had if we were the trustee. Subject to the Investment Policies, we have the absolute discretion to manage the investment of any Cash governed by the Trust Deed and the purchase, sale, transfer, exchange or alteration of any investments governed by the Trust Deed. Subject to the Investment Policies, we may cause to be effected any contractual transactions which we consider are in the interests of Unitholders including contractual transactions with Related Persons of us provided that such contractual transactions with Related Persons are on normal commercial terms, or terms as favourable to the Fund as normal commercial terms. We or any Related Person of us may purchase, hold, sell, invest in or otherwise deal with Units, and securities or other property of the same class and nature as any Asset without being liable to account therefore and without being in breach of the trusts established under the Trust Deed, provided in our case, that any dealings by us with Units are on normal commercial terms, or terms as favourable to the Fund as normal commercial terms, and in accordance with the Investment Policies. We covenant that we will: use our best endeavours and skill to ensure that the affairs of the Fund are conducted in a proper and efficient manner; use due diligence and vigilance in the exercise of our functions, powers and duties as Manager; account to you for all money we receive on behalf of the Fund; not pay out, invest or apply any money belonging to the Fund for any purpose that we are not directed by, or authorised in, the Trust Deed; use our best endeavours to carry on and conduct our business as Manager under the Trust Deed in a proper and efficient manner and to ensure that any undertaking, enterprise, or scheme to which the Trust Deed relates is carried on and conducted in a proper and efficient manner; use our best endeavours to ensure that the Assets of the Fund are properly managed in accordance with the Investment Policies, except with the approval of the Trustee, not issue any Unit otherwise than at the Current Unit Value; make available to the Trustee for inspection all our books relating to the Fund; pay all money belonging to the Fund, received by us, to a bank account or bank accounts, opened by us in the name of the Fund as soon as practical after receipt and in accordance with the Trustee s directions; ensure that all money received on behalf of the Fund is paid into a trust account operated by the Trustee or its nominee as soon as practicable; provide the Trustee with a copy of the Prospectus and Investment Statement and allow the Trustee a reasonable time to comment on such Prospectus and Investment Statement prior to its issue; forward without delay to the Trustee all notices, reports, circulars and other documents received by us relating to the Trustee; 43

44 forward to the Trustee all notices, reports, circulars and other documents sent by us to Unitholders at the same time as that material is sent to Unitholders; and provide the Trustee with quarterly certifications in relation to the Fund. We may request you to provide information to us to enable us to determine whether the Fund continues to meet the PIE eligibility requirements and, in particular, we may request you to: i) provide details of Units held by any associated person (as defined in the Tax Act) of you (including any associated person for whom units are held by a PIE investor proxy) where the associated person holds 5% or more of the Units in the Fund; and ii) confirm that you either are or are eligible to be a PIE. If we request you to provide information to us pursuant to this clause, you shall supply information within 30 days of the request Trustee and Manager s Indemnity and Limits on Liability We and the Trustee have an indemnity out of the Fund from and against: any and all losses, costs, and expenses incurred by us or the Trustee in performing any of our respective duties, or exercising any of our respective powers pursuant to the Trust Deed; and all actions, proceedings, liabilities, costs, claims, taxes and demands in respect of any matter relating to the Fund except to the extent that any such loss, costs and expenses have arisen out of fraud, wilful breach of trust or dishonesty on the part of the person claiming the indemnity or, in the case of the Trustee, breach of trust where the Trustee fails to show the degree of care and diligence required of the Trustee having regard to the provisions of the Trust Deed. We and the Trustee may retain and pay out of monies held by us under the Trust Deed to meet this indemnity (in priority to any claims by you) and have a lien on any part of any Asset for indemnity. Unitholders may by Extraordinary Resolution further release us or the Trustee or both either with respect to specific acts or omissions or on us or the Trustee ceasing to act in relation to the Fund. We and the Trustee may retain and pay in priority to any claim by you, our respective fees and Expenses out of moneys held in the Fund and in respect of any indemnity to which either of us are entitled. Neither we nor the Trustee shall incur any liability to anyone in respect of any failure to perform or do any act or thing which, by reason of any provision of any present or future law or ordinance, rule, regulation or bylaw made pursuant thereto or of any decree, order or judgment of any competent court, we or the Trustee shall be hindered, prevented or forbidden from so doing or performing. 44 Neither we nor the Trustee shall be liable to account to you or otherwise for any payments or for any deductions made by us or the Trustee in good faith, on account of taxes, in

45 reliance on your statement, to or in respect of you or any transaction under the Trust Deed notwithstanding that any such payment or deductions need not have been made. Neither we nor the Trustee shall incur any liability in respect of any action taken or thing suffered by us or the Trustee in reliance upon any notices or other papers or documents reasonably believed by us or the Trustee (as the case may be) to be genuine. The Trustee, in relation to the Trust Deed may rely on: advice from certain persons listed in the Trust Deed without being responsible for any loss occasioned by acting on such advice provided the Trustee had no reason to believe the advice was not authentic; certain statements or advice of us; and certificates given under the Trust Deed. We may act on the advice, or certificate, or any information obtained from certain persons listed in the Trust Deed (including Related Persons) without being responsible for any loss occasioned from so acting, provided we had no reason to believe that the opinion or advice was not authentic. Except in respect of fraud or wilful default on the part of us or the Trustee, in no event shall either of us be bound to make any payment to you except out of funds held by either of us for that purpose under the Trust Deed. Subject to the provisions of the Trust Deed neither we nor the Trustee will be liable for the failure of any person to carry out any agreement with us or the Trustee. We and the Trustee shall not be liable for the actions of either of our delegates, provided they have been reasonably selected and appointed, and that the delegate is responsible to the Fund (on reasonable commercial terms) for its non-performance. We shall (except as otherwise provided in the Trust Deed) as regards all the powers, authorities and discretions vested in it by the Trust Deed, or by operation of law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and, provided we shall not have acted fraudulently or negligently by act or omission, we shall not be responsible for any loss, costs, damages, expenses or inconvenience that may result from the exercise or non-exercise thereof. The Trustee shall (except as otherwise provided in the Trust Deed) as regards all the powers, authorities and discretions vested in it by the Trust Deed, or by operation of law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and, provided it shall not have acted fraudulently or negligently by act of omission, the Trustee shall not be responsible for any loss, costs, damages, expenses or inconvenience that may result from the exercise or non-exercise thereof. 45 None of the Trustee or the Manager, or any director or officer of the Trustee or the Manager are indemnified against any liability for breach of trust where any such person fails to show the degree of care and diligence required of that person in that capacity, having regard to

46 the provisions of the Trust Deed provided that this does not apply to a release validly given by Extraordinary Resolution of Unitholders. The liability of us and the Trustee under the Trust Deed or at law is limited to the Assets of the Fund Retirement of Trustee The Trustee must retire if required by an Extraordinary Resolution of Unitholders of the Fund. We may appoint a Successor Trustee. The Trustee may retire by giving 90 days notice to us, subject to the appointment of a Successor Trustee. On retirement the retiring Trustee must vest the Assets in the new trustee. The Successor Trustee must hold a licence to act as a trustee for the Fund under the Securities Trustees and Statutory Supervisors Act Retirement of Manager We may retire, upon the appointment of a successor, by giving 90 days notice to the Trustee. We are entitled to receive payment or a benefit which has accrued pursuant to the terms of the Trust Deed prior to the date of or arising on our retirement. Notwithstanding any other provision of the Trust Deed, we may, with the consent of the Trustee, assign the benefit of our office of Manager to any other member of the Westpac group of companies, and the Trustee hereby consents to the assumption of our obligations under the Trust Deed by such person Register of Unitholders We shall cause an up-to-date register of Unitholders to be maintained in the Trustee s books in respect of the Fund. The Register shall include the names and addresses of Unitholders, the number of Units held by each Unitholder, the number of, and dates on which Units were allotted, or transferred to or redeemed by, the Unitholder, and any other particulars that we or the Trustee may consider necessary or desirable to include. We on behalf of the Trustee shall cause the Register to be audited by the Auditors annually. We and the Trustee shall be entitled to rely absolutely on an entry in the Register as being correct if such reliance is based upon a reasonable belief that the entry is accurate in all material respects. You shall receive, upon request, a copy or printout or other reproduction of any entry in the Register which relates to you, and we shall provide the Trustee with a copy of the Register, and of all changes to it upon request by the Trustee. We and the Trustee shall for all purposes be entitled to treat the Unitholder in whose name any Unit is registered as the absolute owner any notice to the contrary notwithstanding, and may deal with any Unit on the direction of the Unitholder whether named as trustee or otherwise. Except as otherwise provided in the Trust Deed, only Unitholders whose Units are recorded in the Register shall be entitled to exercise or enjoy the rights of Unitholders in respect of the Fund. To the extent permitted by law from time to time, the Registrar may close the Register for inspection by Unitholders for such period as the Registrar, with our agreement, may determine Certificates and transfers and transmissions Certificates shall be issued in respect of Units (including in electronic form) if and as required by law. 46

47 If by virtue of an exemption from the Securities Act 1978, we are relieved from the requirement to issue certificates in respect of Units on the condition we send or cause to be sent written statements to you evidencing the nature and ownership of your Units, we shall issue such statements in accordance with the exemption. A transfer instruction shall be in writing in form and execution satisfactory to the Registrar, and shall comply with any applicable law and any other reasonable requirements as we or the Trustee may from time to time prescribe. Subject to any relevant legal requirements, if applicable, registration of transfers may be suspended at such times and for such period or periods (not exceeding in the whole 30 days in any year) as we may from time to time determine. Any person becoming entitled to any Units in consequence of your death or bankruptcy may, upon producing such evidence as we shall think sufficient to establish that person s entitlement to such Units, be registered as the holder of such Units and, subject to the provisions as to the transfer contained in the Trust Deed, may transfer such Units. The Trustee or the Registrar on behalf of the Trustee may decline to register any transfer or transmission if the provisions relating to the transfer forms, or any applicable statutory provisions have not been complied with, or where registration would result in the transferee having less than a Minimum Holding, or if any transfer or transmission administration fee payable under the Issue Terms or the Trust Deed has not been paid, or if the transfer or transmission is in respect of less than 1 Unit (or such other amount as the Manager may from time to time determine), or if any Certificates relating to the Units to be transferred or transmitted are not presented, or if the prospective holder of Units is subject to Relevant Investment Restrictions or the transfer would threaten the Fund s eligibility for PIE status. We, on behalf of the Trustee, may sell your Units in a Fund with less than the Minimum Holdings on 3 months prior written notice to you. We, on behalf of the Trustee, may sell your Units if you become subject to Relevant Investment Restrictions which threaten to cause, or cause, material adverse effects to any of us, the Trustee, the Registrar or Unitholders generally Meetings of Unitholders The Trustee may at any time, and must upon requisition in writing of us or Unitholders holding not less than 10% of the value of Units on issue for the Fund, summon a meeting of all Unitholders. We must summon a meeting of Unitholders upon the requisition in writing of the Trustee, or of Unitholders holding not less than 10% of the value of Units on issue for the purpose of giving the Trustee the opinions or directions of Unitholders in relation to the exercise of its powers. The Trustee may of its own volition or at the request of us, and must upon requisition in writing of Unitholders holding not less than 10% of the value of Units of the Fund then on issue, summon a meeting of Unitholders for the purpose of giving the Trustee their opinions or directions of Unitholders in relation to the exercise of its powers. Any requisitions must state the purpose of the meeting, the nature of the business to be conducted and the terms of any resolution to be proposed at the meeting. 47

48 At least 14 days' written notice of a meeting is required to be given to all Unitholders by leaving a notice at the Unitholder s last known address and to us and the Trustee in accordance with the Trust Deed. The quorum necessary for a meeting shall be at least 5 persons present in person or by proxy holding or representing by proxy or as attorney at least 10% of the number of Units of the Fund on issue at the date of the meeting. If within 30 minutes from the time appointed for any meeting a quorum is not present the meeting shall, if called by us or the Trustee stand adjourned until such time and such place as the party calling the meeting shall decide, or if called pursuant to a request of Unitholders, lapse, or if called for the purpose of passing an Extraordinary Resolution, otherwise than pursuant to a request of Unitholders, stand adjourned for such period as the Chairman shall direct provided that not less than 10 days notice of the proposed Extraordinary Resolution and of the fact that those present in person or by proxy or by attorney will constitute a quorum at any adjourned meeting and the place, day and hour of such adjourned meeting is given to the Unitholders by the Trustee. At any adjourned meeting the Unitholders present in person or by proxy or by attorney (whatever their number and whatever the number of Units held by them) shall form a quorum. At every meeting of Unitholders a person nominated in writing by the Trustee or, failing that, by Unitholders present at the meeting (who may or may not be a Unitholder) shall preside as Chairman. Every question submitted to a meeting of Unitholders shall be decided by voice or, if the Chairman thinks necessary or desirable, by a show of hands unless a poll is properly demanded. The Chairman has the casting vote. If at any meeting a poll is demanded, it shall be taken in such manner and either at once or after an adjournment as the Chairman of the meeting directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. On a vote by voice or show of hands every Unitholder of the Fund who is present in person or any person who is present and representing a Unitholder of the Fund as his proxy, attorney or representative shall have one vote. On a poll every Unitholder of the Fund who is present in person or by proxy or by attorney or representative shall have one vote for each Unit in the Fund carrying the right to vote at that meeting of which he is the registered holder or in respect of which he has the authority to vote for the registered holder. The instrument appointing a proxy or an attorney shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under its common seal or under the hand of an officer or attorney so authorised. The instrument appointing a proxy or attorney must be given to us no less than 2 clear days before the time of the meeting. An Extraordinary Resolution may: sanction any alteration, release, modification waiver, variation or compromise of any arrangement in respect of the rights of Unitholders; assent to any alteration, modification of, variation, or addition to the provisions of the Trust Deed or the conditions attaching to Units (except that the provision that the Fund will be terminated on the removal of the Manager cannot be amended or removed without the consent of the Manager); 48

49 subject to the Act give any sanction, assent, release or waiver of any breach or default by us or the Trustee under the Trust Deed; subject to the Act discharge, release or exonerate us or the Trustee from all liability for which we or the Trustee have or may become responsible for under the Trust Deed; or require the Trustee to retire. A resolution shall be deemed to have been duly passed if passed by separate ballot or at a separate meeting of the Unitholders of the Fund Notices Any notice, direction or other communication required or permitted to be sent or given, shall be in writing and shall be given by facsimile or other means of electronic communication or by hand delivery or post Variations to Trust Deed and Issue Terms The Trust Deed and Issue Terms may be amended if the change: (a) (b) (c) (d) (e) (f) (g) (h) (i) is in the opinion of us and the Trustee, necessary or expedient to comply with the provisions of any statute, ordinance, regulation or by-law, or any law made under the authority of any statute, regulation, by-law or ordinance, or is the requirement of any competent authority; or is in the opinion of us and the Trustee, required by or in consequence of or consistent with any amendment to the Act and in the opinion of the Trustee is not materially prejudicial to the interests of Unitholders generally; or is in the opinion of the Trustee, made to correct a manifest error or is of a formal, technical or administrative nature only; or is in the opinion of the Trustee, necessary or desirable for the more convenient, economical, or advantageous working management, or administration, of the Fund, or for safeguarding, or enhancing, the interests of the Fund, or Unitholders; or is in the opinion of the Trustee, not materially prejudicial to the Unitholders of the Fund generally; or is approved by separate Extraordinary Resolutions of Unitholders of each Fund which in the opinion of the Trustee is likely to be affected by the proposed change; or relates only to a new Fund which is to be constituted; or is otherwise expressly authorised by the Deed; or in all other cases if we have given all Unitholders and the Trustee three months written notice of our intention to amend the Deed and/or the Issue Terms. 49

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