TOWER KiwiSaver Scheme TOWER Managed Funds is the Scheme provider for the TOWER KiwiSaver Scheme. TOWER Managed Funds is owned by Fisher Funds Management Limited. Investment Statement This investment statement is dated and prepared as at 2 April 2013
Important Information (The information in this section is required under the Securities Act 1978) Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. Choosing an investment When deciding whether to invest consider carefully the answers to the following questions that can be found on the pages noted below: page What sort of investment is this? 18 Who is involved in providing it for me? 19 How much do I pay? 19 What are the charges? 21 What returns will I get? 23 What are my risks? 25 Can the investment be altered? 27 How do I cash in my investment? 28 Who do I contact with inquiries about my investment? Is there anyone to whom I can complain if I have problems with the investment? What other information can I obtain about this investment? In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request. 29 29 30 The Financial Markets Authority regulates conduct in financial markets The Financial Markets Authority regulates conduct in New Zealand s financial markets. The Financial Markets Authority s main objective is to promote and facilitate the development of fair, efficient, and transparent financial markets. For more information about investing, go to http://www.fma.govt.nz Financial advisers can help you make investment decisions Using a financial adviser cannot prevent you from losing money, but it should be able to help you make better investment decisions. Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide advice on a limited range of products. When seeking or receiving financial advice, you should check: the type of adviser you are dealing with; the services the adviser can provide you with; the products the adviser can advise you on. A financial adviser who provides you with personalised financial adviser services may be required to give you a disclosure statement covering these and other matters. You should ask your adviser about how he or she is paid and any conflicts of interest he or she may have. Financial advisers must have a complaints process in place and they, or the financial services provider they work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a dispute over an investment, you can ask someone independent to resolve it. Most financial advisers, or the financial services provider they work for, must also be registered on the financial service providers register. You can search for information about registered financial service providers at http://www.fspr.govt.nz You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser. This is an investment statement for the purposes of the Securities Act 1978. 2
Welcome to the TOWER KiwiSaver Scheme Thank you for taking the time to learn more about the TOWER KiwiSaver Scheme. Investment decisions should not be taken lightly and we have designed this Investment Statement and our other resource materials to make your decision as easy as possible. KiwiSaver makes saving easy Since its introduction in July 2007, KiwiSaver has become the retirement savings vehicle of choice for New Zealanders. As over 2 million Kiwis can attest, joining KiwiSaver is the easy part. We think the most important decision is actually your choice of KiwiSaver scheme provider. TOWER Managed Funds and Fisher Funds 100% Kiwi The TOWER KiwiSaver Scheme is managed by TOWER Managed Funds Limited, a company purchased by Fisher Funds in April 2013.* Fisher Funds is a specialist New Zealand owned investment manager established in 1998. Our objective is straightforward to grow the value of your savings to help you achieve your desired retirement lifestyle. Our investment team is one of the largest and most experienced in New Zealand with more than 150 years combined investment experience. Today, with over 200,000 members Fisher Funds is proudly the largest 100% New Zealand owned and operated KiwiSaver scheme provider. You re in control Our Scheme has been designed to help you and your family make the most of KiwiSaver. It s easy to join or transfer to, you can build your own investment portfolio by choosing from our range of funds, plus you have the flexibility to adjust your investment strategy as your age or your risk profile changes. We re always here to help you We are passionate about keeping you in touch with your KiwiSaver savings. After all, it is your money and your future! You will hear from us regularly so you always know where your money is invested, why and how it is performing. If you have any questions, please call or email one of our KiwiSaver experts who will be happy to help. KiwiSaver is about your future. We would be honoured to share your financial journey with you. We promise to make KiwiSaver easy from the day you join until long after you retire. Please read this Investment Statement carefully. If you would like more information on the TOWER KiwiSaver Scheme, please call one of our KiwiSaver experts on 0800 808 808, email us at investments@tower.co.nz or visit our website www.tower.co.nz/kiwisaver Carmel Fisher Managing Director * Fisher Funds does not guarantee the membership interests in the TOWER KiwiSaver Scheme. 3
Contents Section one - overview What is this KiwiSaver thing anyway? 6 How KiwiSaver can grow your wealth 6 How KiwiSaver makes saving easy 7 Why Fisher Funds? 7 How KiwiSaver can help you buy a first home 8 How investments can work for you 9 Which investment fund may suit you 10 The investment funds 12 Check your balance at any time 15 Changing your investments 15 Portability 15 Manage your money when you retire 15 KiwiSaver for children and grandchildren 15 Cash4Schools initiative 16 Transfer to TOWER KiwiSaver 17 Section two - detail What sort of investment is this? 18 Who is involved in providing it for me? 19 How much do I pay? 19 What are the charges? 21 What returns will I get? 23 How will my investment be taxed? 24 What are my risks? 25 Can the investment be altered? 27 How do I cash in my investment? 28 Who do I contact with inquiries about my investment? Is there anyone to whom I can complain if I have problems with the investment? What other information can I obtain about this investment? Section three - forms 29 29 30 Application form 31 Direct debit authority form 35 Additional lump sum or transfer form 36 Switch form (Cash Enhanced Fund) 37 4
Secure your future Joining KiwiSaver is a smart financial choice as it is a regular form of saving that the government and your employer also contribute to. With regular contributions to your TOWER KiwiSaver Scheme account you are growing a retirement fund that can secure the lifestyle you would like to enjoy in your later years. Retire in style If you retire at 65 and you don t currently have a savings plan you could end up having to rely on the government for 20 or more years. Did you know that the average married couple currently get around $536 a week?* That s just under $28,000 a year for two people to live on. Will relying on this alone provide the retirement lifestyle you re looking forward to? * As at March 2013. Source: Work and Income. Buy your own home KiwiSaver can provide valuable help for someone wanting to buy their first home. You may also qualify for a subsidy of up to $5,000 from the government. Imagine owning your own home, and your employer and the government help you to pay for it! If you have previously owned a home and want a second chance, this facility could also be available to you.
What is this KiwiSaver thing anyway? KiwiSaver is a voluntary savings initiative designed to enable you to grow a retirement fund that can secure the lifestyle you would like to enjoy in your later years. Joining KiwiSaver is a smart financial choice as it is a regular form of saving that the government and your employer also contribute to. What is the purpose of this document? This document provides information about KiwiSaver and explains how the TOWER KiwiSaver Scheme ( TOWER KiwiSaver ) 1 can help you achieve your goals. It begins by explaining in plain English how KiwiSaver works and the options that you have. The back of the document (from page 18 onwards) contains information that must be made available to you by law. By receiving this investment statement, you are either considering joining TOWER KiwiSaver, or, as part of the government s KiwiSaver enrolment process, you were allocated to TOWER KiwiSaver from the date you started your new employment or elected to opt into KiwiSaver. If you decide to join TOWER KiwiSaver, the application form to join is on page 31 of this document. If you have enrolled with TOWER KiwiSaver through your employer we will acknowledge your application on receipt by sending you confirmation. In three months time Inland Revenue will send your contribution details to us, and we ll send you confirmation of your enrolment. If you are not in paid employment, are self employed or are enrolling a child we will initially send you an acknowledgement of your application. Once we receive either your first contribution or the kick start contribution from Inland Revenue (after three months membership) we ll send you confirmation of your enrolment. How KiwiSaver can grow your wealth With KiwiSaver your savings can grow faster than other savings or investment schemes because the government and your employer contribute to your account. With KiwiSaver the government will contribute 50 cents for every $1 you contribute (subject to conditions), up to approximately $521 each year, and, if you re in paid employment and contributing to KiwiSaver, your employer is also required to contribute to your savings. Employer contributions are currently a minimum of 3% of gross salary or wages. When you become a TOWER KiwiSaver member, you may be eligible for a range of benefits currently provided by KiwiSaver. These include: A $1,000 kick start payment from the government Up to approximately $521 government member tax credit per annum (see Member tax credits on page 20) Compulsory employer contributions to your TOWER KiwiSaver account (see How much do I pay? on page 19) Home purchase subsidy and withdrawal to help you buy a first home (see How KiwiSaver can help you buy a first home on page 8) Tax on income at variable rates up to 28% depending on your income (see How will my investment be taxed? on page 24) 6 1 The terms TOWER KiwiSaver and Scheme may be used in this investment statement as abbreviations for the TOWER KiwiSaver Scheme and readers should view those terms interchangeably.
How KiwiSaver makes saving easy Your contributions to your savings plan go either straight from your salary or wages as part of the PAYE system, or for non wage or salary earners, you can set up a regular direct debit or make lump sum payments whenever it suits you (see How much do I pay? on page 19). Members that contribute directly to KiwiSaver through their salary or wages are required to contribute at the current minimum rate of 3% (see page 19 for more information). The table below indicates how much you could currently be contributing to your TOWER KiwiSaver balance depending on your gross salary or wages. The columns show you the annual contribution paid by you, your employer contribution and the government member tax credit. The government member tax credit is an additional benefit not available with traditional investments and savings schemes. If you have existing investment savings and you wish to consolidate them into your TOWER KiwiSaver account, please complete the Additional Lump Sum form (on page 36) and we ll arrange the rest. If you are self-employed or not currently working, and aged between 18 and 65, you can also take advantage of the up to $521 a year government member tax credit (subject to conditions as detailed on page 20). You ll need to contribute approximately $20 a week or $87 a month or $1,042 per annum to be eligible for the full tax credit. Salary/Wages Employee contribution at 3%pa Employer contribution at 3%pa 1 Government Member Tax Credit (annually) Total $20,000 $600 $495 $300 $1,395 $30,000 $900 $742.50 $450 $2,092.50 $40,000 $1,200 $990 $521 $2,711 $50,000 $1,500 $1,237.50 $521 $3,258.50 $60,000 $1,800 $1,260 $521 $3,581 $100,000 $3,000 $2,010 $521 $5,531 Salary wage figures are per annum and before tax. Government member tax credits have been rounded. 1 Contributions after the deduction of Employer s Superannuation Contribution Tax (see page 25 for further details) assuming gross salary/wages plus employer KiwiSaver contributions in the current tax year are the same as the previous tax year and that the only employer superannuation contributions made are KiwiSaver contributions. Need help? There s a lot of information in this document and it s not unusual for people to want clarification at different points. If you decide that you need an explanation of anything that you read here, please talk to a financial adviser, visit our website at www.tower.co.nz/kiwisaver, call 0800 808 808 or email investments@tower.co.nz and our KiwiSaver team will help you. Calls are free and this service is available from 8.30am to 5.00pm weekdays. Why Fisher Funds? One of the best things about KiwiSaver is that you can choose your own provider. Not all providers are the same so if you are looking for a KiwiSaver scheme provider that has: a strong performance track record a straightforward and time-tested investment strategy, and a reputation for open and honest communication then you should seriously consider Fisher Funds and the TOWER KiwiSaver Scheme. We re Kiwis like you We are a 100% New Zealand owned and operated company, managing more than $5 billion for more than 250,000 New Zealanders. We are a specialist investment manager We channel all our efforts into achieving investment returns. Our key staff have an ownership interest in Fisher Funds this means our interests are directly aligned with yours. There s no substitute for experience Our investment team is one of the largest and most experienced in New Zealand with more than 150 years combined investment experience. There aren t many investment conditions that we haven t navigated our way through. Friendly, helpful service every step of the way We focus on getting the basics right. When you invest with Fisher Funds and the TOWER KiwiSaver Scheme, we will not lose you in a large, impersonal database or call centre. We believe that we are differentiated by the personalised service that we offer investors. When you call us you will always talk to a real person and our whole team is accessible and directly available to our clients. Candid communication Our regular and candid communication ensures that you keep in touch with your TOWER KiwiSaver Scheme savings and your future. 7
How KiwiSaver can help you buy a first home First home withdrawal With KiwiSaver you are able to apply to withdraw all, or part, of the value of your contributions and your employer s contributions to put towards buying your first home. You are eligible to make a first home withdrawal if you: Have been a KiwiSaver member for at least three years; Have not made a withdrawal from a KiwiSaver scheme for the purchase of a home before; Are purchasing a property that is, or is intended to be, your principal place of residence; Are purchasing a property that qualifies as an estate in land within the meaning of the KiwiSaver Act 2006; and Are buying your first home (or have a confirmation from Housing New Zealand that you are in the same position as a first home buyer in terms of income, assets and liabilities). The first home withdrawal can only be paid to your solicitor s account once all conditions of the sale and purchase agreement have been met. Acceptance of your application for a first home withdrawal will be at the discretion of the Manager. If your application is accepted, you will continue to be a member of TOWER KiwiSaver and will still be able to make contributions to the Scheme. Government contributions (including member tax credits and the $1,000 government kick start contribution) cannot be withdrawn for the purchase of your home. First home purchase subsidy A first home purchase subsidy of up to $5,000 may also be available to Members who meet all the following criteria and conditions: Be a member of a KiwiSaver scheme, or a complying superannuation fund; Have contributed at least the minimum contribution rate of your income to a KiwiSaver scheme or complying superannuation fund for at least three years; Be buying your first home (or have a confirmation from Housing New Zealand that you are in the same position as a first home buyer in terms of income, assets and liabilities); Be planning to live in the house for at least six months; Be 18 years old or over; Have not received a home purchase subsidy before; Have a combined yearly income of $100,000 or less (before tax) for one or two buyers, or have a combined yearly income of $140,000 or less (before tax) for three or more buyers; and Be buying one or more of the following types of property and land arrangements (for more information on these property types go to www.hnzc.co.nz): Fee simple Stratum estate (freehold and leasehold) Cross-lease (freehold and leasehold) Leasehold In addition to this, there are other eligibility criteria (which include income and regional house price caps) which are set by Housing New Zealand, which administers the first home purchase subsidy facility. For complete and up to date eligibility criteria, please go to www.hnzc.co.nz. Housing New Zealand may change the eligibility criteria at any time. Second chance homes You may have previously owned your home but no longer do so because of adverse circumstances such as (but not limited to) redundancy, illness or a relationship break-up. If that s the case you could have a second chance at home ownership, with the help of KiwiSaver. You may be eligible for the first home withdrawal and the home purchase subsidy (as described above) as long as you: Have not received either the first home withdrawal or the home purchase subsidy (as applicable) before; and Are in a similar position to first home buyers in terms of assets, income and liabilities. You will need to apply to Housing New Zealand for a determination that you are in a similar position to a first home buyer. More detailed eligibility criteria, based on assets, income and liabilities, can be obtained by going to www.hnzc.co.nz. Housing New Zealand may change the eligibility criteria at any time. More information on first or second chance home withdrawals can be obtained by contacting us. 8
How investments can work for you Investment options The TOWER KiwiSaver Scheme has six investment funds (each an investment fund or together the investment funds ), each with a different risk / return profile shown by the mix of assets they are invested in. The investment funds invest in various different asset classes such as cash, fixed income, commercial property, shares and alternative investments, depending on their investment guidelines. Broadly speaking, these five asset classes can be categorised as being either income or growth assets. Growth assets are those which historically have tended to give higher returns over the long term but experience more volatility (ups and downs or risk ) than income assets in the short term. Income assets Income assets aim to provide investors with returns primarily sourced from interest payments, but in some cases capital gains may be received as well. Income assets are generally considered to be lower risk than growth assets, however there is still a potential for capital losses to be incurred. Income assets include: Cash Short-term, easily sold interest-bearing investments such as government bills, bank bills, bank certificates of deposit and short-term debt securities issued by corporate businesses or local authorities. Cash is the lowest risk, most conservative asset class, but generally provides lower returns than the other four classes. Fixed income Medium-term to longer-term fixed interest-bearing investments such as bonds issued by governments or their agencies and mediumterm and long-term debt securities issued by corporate businesses or local authorities. Some capital gains may also be achieved from fixed income securities increasing in market value. There is the potential for capital losses to be incurred from fixed income securities decreasing in market value. Fixed income is higher risk than cash because of the longer-term commitment of funds, but higher returns than cash are generally expected. Growth assets Growth assets provide investors with returns primarily sourced from capital gains (if any), but may also pay income from rentals or dividends received. Growth assets are generally considered to be higher risk than income assets with the potential for capital losses being greater than with income assets. Growth assets include: Commercial property Real estate used for business purposes and broadly classified as retail, industrial, or office and general. Income is received from commercial tenant rentals and capital gain may arise from increases in the market value of the property. Commercial property is higher risk than cash or fixed income, but is generally expected to provide better longer-term returns. Shares Units of ownership (equity) in companies that are usually traded on share markets. Capital appreciation may be generated through shares (equities) increasing in market value, although some income may also be received from dividend payments. There is the potential for capital losses, to be incurred from shares decreasing in market value. Shares have higher risk than cash, fixed income or commercial property, and can fluctuate significantly in market value, but are generally expected to provide greater returns over the longer term. Alternative investments Alternative investments refer to a broad range of assets that do not fall within the main asset classes above. Alternative investments can be based on publicly traded securities like shares and bonds (which include hedge funds, absolute return funds and commodity investments) or private securities (which can include venture capital and private equity). Alternative investments are diverse, with generally higher risk and greater potential return characteristics to the main asset classes. Derivatives Exposure to the asset classes above can be gained directly (by buying the asset), indirectly (by investing in other funds which hold the asset) or synthetically (by purchasing a derivative instrument, or derivative, which has a price that is derived from the price of the underlying asset, such as a share, bond or currency). Examples of derivatives include swaps, warrants, structured notes, futures contracts, options, forward rate agreements and forward foreign exchange contracts. Diversification A diversified investment portfolio is one that combines two or more different asset classes together. Diversification can also be geographic, in that New Zealand assets are combined with overseas investments. A diversified portfolio is described as conservative if it holds more income assets (cash, fixed income) than growth assets (commercial property, shares, alternative investments), and growth if it contains more growth assets than income assets. Conservative portfolios aim for lower risk and return, whereas growth portfolios aim for higher risk and return. The proportions in which the various asset classes are held in combination will influence overall investment portfolio performance. If one of the asset classes underperforms, the others may compensate, helping to smooth out total investment returns over time. 9
Which investment fund may suit you? TOWER KiwiSaver is made up of a number of investment funds that allow you to choose between conservatively managed funds that aim to produce steady growth, or others that are geared for higher growth but with the possibility of greater volatility. TOWER KiwiSaver offers a range of investment funds managed by professional investment managers who invest in a variety of funds on your behalf. Investment managers have the knowledge, expertise and market information to make informed and educated investment decisions. It is their role to seek to achieve the particular investment objectives of each fund. What s your investment profile? This worksheet may help you decide which TOWER KiwiSaver investment fund may best suit your needs. The information is a guide only, contains information of a general nature and does not take into account your particular financial situation or goals. Please provide realistic and honest answers. If you require any help in completing this worksheet, please give us a call on 0800 808 808. If you intend to use your KiwiSaver savings to help you buy your first home (or use them as a second chance home buyer ) then please do not use this investment profiler. It has been designed with retirement saving in mind and may not be suitable for investors with a short term focus such as purchasing a home in 3 to 5 years. In these cases the Preservation Fund may be the most suitable fund for your purposes. Please read the description of this fund, and consider taking advice from a financial adviser before making your fund choice. The first two questions concern your time horizon An investor s time horizon is the number of years they have until they start to withdraw some or all of their investment. You become eligible to withdraw your accumulated KiwiSaver savings when you reach the qualifying age for New Zealand Superannuation (currently at the age of 65), or you have been a member of KiwiSaver for five years (whichever is later). Circle the score next to your answer then add up your score at the end. The next two questions ask about your long-term goals and expectations for this investment. The more realistic you are about your objectives and your attitude to investing, the more accurate your results will be. 1. What is your current age? Score 66 years or more 1 61-65 years 2 56-60 years 3 45-55 years 4 Less than 45 years 5 3. What is your investment goal? Score To avoid losing money 1 To grow your savings with caution 2 To grow your savings moderately 3 To grow your savings significantly 4 To grow your savings aggressively 5 2. When do you expect to start making retirement withdrawals from your KiwiSaver investments? Immediately 1 Not now, but within 5 years 2 In 5-10 years 3 In 10-20 years 4 Not for at least 20 years 5 4. What do you expect from this investment over time? High stability and not to lose money 1 Some stability, with similar returns to a bank term deposit 2 Modest returns, but higher than bank term deposits 3 Good returns, significantly higher than bank term deposits 4 The highest return possible, even with negative returns 5 over the short-term 10
Based on your score, consider the following fund: Overall score 7-12 Preservation Fund 11-15 Cash Enhanced Fund 13-20 Conservative Fund The next two questions concern your reaction to negative returns and thoughts about shorter-term results. Again, answer as honestly as possible. 5. 6. Investment markets can go up and down in value. By how much could the value of your total portfolio go down over one year before you d feel uncomfortable? Any fall in value 1 A fall of 1% 4% 2 A fall of 5% - 10% 3 A fall of 11% - 18% 4 A fall of 19% or more 5 Which of these statements best describes your expectations about the performance of this investment over the next three years? I need to see at least a little return 1 I would have a hard time tolerating any losses 2 I can tolerate a small loss 3 I can tolerate a loss 4 I don t mind if I lose money 5 The final question determines your investment familiarity. 7. Do you have any non-kiwisaver investments in shares or managed funds? None, I have never invested before 1 I have a property only 2 I have invested in managed funds 3 I have invested in shares 4 I have a broad range of investments across shares and managed funds Now add up your scores Total of all scores Using the table in the blue panel on the right, choose which fund might be appropriate for you. You should seek professional financial advice before deciding which fund to invest in. You could also elect to spread your savings across more than one fund and you can change your fund choice at a future date. If you do not choose an investment fund, you will automatically be allocated to the Balanced Fund (explained on page 13). Members allocated to TOWER KiwiSaver by the Inland Revenue will be automatically invested in the Cash Enhanced Fund until they have selected another fund. 5 Fund profiles 21-26 Balanced Fund 27-31 Growth Fund 32-35 Equity Fund Note: in this Investment Statement, short term refers to up to three years, medium term refers to three to seven years and long term refers to over seven years. Preservation Fund This fund generally suits investors who may have a short term until retirement or potential withdrawal of their funds. Preservation Fund investors are generally cautious and do not tolerate losses in their investment in the short term, seeking stable or consistent returns in line with bank deposits. Cash Enhanced Fund This fund is only available to members allocated to TOWER KiwiSaver by the Inland Revenue. The Cash Enhanced Fund generally suits cautious investors who may have a short to medium term until retirement or potential withdrawal of their funds, and who therefore seek comparatively stable returns, with limited fluctuations over the long term. Conservative Fund This fund generally suits cautious investors who may have a medium term until retirement or potential withdrawal of their funds. Conservative Fund investors generally seek comparatively stable returns, with limited fluctuations over the long term. Balanced Fund This fund generally suits investors who have a medium to long term until retirement or potential withdrawal of funds, and are therefore willing to tolerate losses in their investment in the short term. Balanced Fund investors are generally accepting of higher levels of fluctuation in their investment returns than the Conservative Fund (including periods of negative returns) in return for potential capital growth over the long term. Growth Fund This fund generally suits long term investors, with a long term until retirement or potential withdrawal of their funds, who are comfortable with changes in the value of their investment resulting from market movements to achieve above average returns. Growth Fund investors generally seek higher returns, and are therefore willing to accept significant fluctuations in their investment returns (including negative returns) from year to year. Equity Fund This fund generally suits long term investors, with a long term until retirement or potential withdrawal of their funds, wishing to focus their investment solely in equities. Equity Fund investors generally prefer investments, like shares, that potentially produce higher returns over the long term, even though the returns may be more unstable, with significant fluctuations in investment returns (including negative returns), in the short term. Please turn over the page for more information on these investment funds. 11
The investment funds TOWER KiwiSaver has six investment funds to provide a choice of investment options for you. If you are a member who has been automatically enrolled in TOWER KiwiSaver by Inland Revenue and you have yet to choose an investment fund or funds to invest in, you are a default member. KiwiSaver legislation requires default members to be allocated to a default investment fund until they choose another investment fund, at which time they will no longer be a default member. The default investment fund for default members of TOWER KiwiSaver is the Cash Enhanced Fund. Only default members can access the Cash Enhanced Fund. For all other members, there are five other investment funds available to choose from in TOWER KiwiSaver. You can choose to invest in more than one investment fund if you want to. If you do not choose where your contributions are to be invested, then your contributions will be automatically invested in the Balanced Fund. We recommend you refer to the questionnaire on page 10 to help you decide the most suitable investment fund(s) for you. You may change or switch investment funds at any time (see Can the investment be altered? on page 27). Preservation Fund 100.0% Risk profile: Low Investment timeframe: 1+ years Investment type: Cash Fund The investment objective is to provide a return that exceeds the return from the ANZ 90-Day Bank Bill Index on a rolling 12-month basis. The investment strategy is to invest in other managed funds that provide exposure to primarily cash and short-term New Zealand securities with a total duration not exceeding 6 months, such as 90-day bank bills. 6.0% 7.0% 25.0% 7.0% 26.0% 12 The following are investment funds, and the key investment strategies of those funds, that are offered by TOWER KiwiSaver: The pie-charts shown detail the respective benchmark asset allocations as at the date of this investment statement. Those asset allocations may change over time. Key New Zealand Cash New Zealand Fixed Interest International Fixed Interest New Zealand Property TransTasman Shares International Shares Cash Enhanced Fund (The default investment fund) 29.0% Risk profile: Low-medium Investment timeframe: 3+ years Investment type: Conservative Diversified Fund The investment objective is to provide a return that exceeds the return from the ANZ 90-Day Bank Bill Index over the short to medium-term. The investment strategy is to invest in other managed funds that provide exposure to primarily income assets (cash and bonds), with a limited exposure to property and trans tasman and international shares. This investment fund is only open to default members.
10.5% 17.5% 5.0% 6.0% 8.0% 9.0% 36.5% 11.5% 25.0% 12.5% 27.5% 31.0% Conservative Fund Risk profile: Low-medium Investment timeframe: 5+ years Investment type: Conservative Diversified Fund The investment objective is to provide returns with medium-term capital appreciation but with lower volatility than the Balanced Fund. The investment strategy is to invest in other managed funds that provide exposure to primarily income assets (cash and bonds), with a limited exposure to property and trans tasman and international shares. Growth Fund Risk profile: Medium-high Investment timeframe: 7+ years Investment type: Growth Diversified Fund The investment objective is to provide returns with higher long-term capital appreciation, but with higher volatility than the Balanced Fund. The investment strategy is to invest in other managed funds that provide exposure to a range of trans tasman and international shares and bonds as well as cash and property. 7.5% 23.0% 15.0% 50.0% 50.0% 20.0% 22.5% 12.0% Balanced Fund Risk profile: Medium Investment timeframe: 5+ years Investment type: Balanced Diversified Fund The investment objective is to provide returns with medium to long-term capital appreciation, but with lower volatility than the Growth Fund. The investment strategy is to invest in other managed funds that provide exposure to a range of trans tasman and international shares and bonds, as well as cash and property. Equity Fund Risk profile: High Investment timeframe: 10+ years Investment type: Equity Fund The investment objective is to provide returns with higher long-term capital appreciation, but with higher short-term volatility than the Growth Fund. The investment strategy is to invest in other managed funds that provide exposure to a range of trans tasman and international shares. 13
Changes to investment objectives and strategies The investment objectives and strategies of the investment funds are current as at the date of this investment statement, but are subject to change from time to time without notification to members or prospective members. This flexibility is required to ensure that the investment funds can adapt to changes in the investment environment. Please refer to www.tower.co.nz/kiwisaver for up to date information. Asset classes and allocations The investment funds may gain exposure to the asset classes described and shown in the pie charts on pages 12-13 directly (by buying the asset), indirectly (by investing in other managed funds ( underlying funds ) which hold the asset) or synthetically (by purchasing derivatives). As at the date of this investment statement, the investment funds only invest in underlying funds which are managed by TOWER Asset Management Limited (TAM), an entity associated with the Manager and, where applicable, in derivatives for the purposes of foreign currency hedging. The TAM underlying funds managed by TAM are referred to throughout this investment statement as TAM underlying funds. TAM underlying funds may also invest in derivatives, principally as an alternative to investing in underlying assets to enhance returns, but also as a risk management tool. The investment funds and the TAM underlying funds may also hold cash for liquidity purposes. While the asset allocations of each investment fund will, over the long-term, target the benchmark of that investment fund as shown in the applicable pie-chart on page 12 or 13, the actual asset allocations will vary from time to time. Such variations may be due to market movements or due to the Manager (or the manager of the TAM underlying funds) varying the allocations away from the benchmark for a variety of reasons, including with the aim of managing risk, increasing potential returns or managing cashflow requirements. Any variation away from the benchmark must remain within an approved policy range, being the maximum and minimum amounts for each asset class permitted within the relevant investment fund at any time. See the current registered prospectus for the approved policy ranges for each investment fund. To obtain the latest asset allocation information for each investment fund, please visit www.tower.co.nz/kiwisaver Alternative investments The Cash Enhanced Fund, the Conservative Fund, the Balanced Fund and the Growth Fund may also have exposure, either directly or indirectly, to alternative investments from time to time. While the benchmark allocation towards alternative investments for each of these investment funds is currently 0%, the approved policy range for alternative investments for the Cash Enhanced Fund, the Conservative Fund and the Balanced Fund is 0-10% and for the Growth Fund is 0-15%, meaning that the Cash Enhanced Fund, the Conservative Fund and the Balanced Fund may be up to 10% invested, and the Growth Fund up to 15% invested, in alternative investments at any time. Alternative investments are discussed further on page 9. Hedging of foreign currency Currency hedging of international asset classes is undertaken to enhance long-term fund performance. International fixed interest assets (bonds) are usually fully hedged back to New Zealand dollars on a net of tax basis. International shares are usually 70% hedged back to New Zealand dollars, however the Manager or the manager of the relevant TAM underlying fund may vary the actual hedging levels away from this benchmark at times within a permitted range of 0-110% to New Zealand dollars (in each case on a net of tax basis using the prevailing top Prescribed Investor Rate ( PIR )) with the aim of increasing potential returns. Actual hedging levels may also vary due to the changing values of the international assets. Currency hedging may be undertaken at either the investment fund or the TAM underlying fund level. 14
Check your balance at any time You have access to www.supersite.co.nz, our website for members of TOWER KiwiSaver. The site is free for you to use and as a member it also gives you 24-hour, password-protected access to your personal investment information. You can alter or modify your personal investor details, keep track of your savings progress and change the investment funds you invest in. We will also send you an annual report, membership statement and tax certificate each year. KiwiSaver for children and grandchildren TOWER KiwiSaver may also suit children or grandchildren who are under the age of 18. With easy setup options and no minimum payments required (until they begin paid employment), it s an easy way to start their savings fund. If you wish to enrol children you can do so online at www.tower.co.nz/kiwisaver or contact us for an application form at investments@tower.co.nz or 0800 808 808*. *Persons under 16 may only be enrolled by all parents/guardians (acting jointly). Persons aged 16 or 17 must co-sign with a parent or guardian in order to enrol. Changing your investments Should your situation change, you can change or switch your investment fund(s) at any stage (see Can the investment be altered? on page 27). You can also change where your future contributions are allocated. This allows you to make changes should your attitude to investing or other circumstances change. It is recommended that you discuss any changes with your financial adviser. If you don t have a financial adviser contact us for assistance. Portability TOWER KiwiSaver is portable, which means that you can maintain and continue your savings when you change employers. Manage your money when you retire Join now Joining TOWER KiwiSaver is easy. All you need to do is read this investment statement, fill in the forms at the back and send them to us. We ll do the rest. If you have been allocated to TOWER KiwiSaver as part of the government s automatic KiwiSaver enrolment process, you do not need to do anything. When you become eligible to make a retirement withdrawal from KiwiSaver, you can choose to take out lump sums, set up a regular payment to your bank account or leave your money in TOWER KiwiSaver until you need it, subject to minimum withdrawal amounts and minimum account balance requirements. 15
Choose a KiwiSaver scheme that benefits your school Cash4Schools is a fantastic initiative that s helping Kiwi schools reach their full potential. Nominate a school when you sign up or transfer to TOWER KiwiSaver, and we will make a donation to that school. The donations don t stop there, because we will continue to support that school with an ongoing annual donation based on the balance of your TOWER KiwiSaver account! These donations are paid for by us and are at no cost to you. You can switch your nomination between primary and high schools and even tertiary institutions as time goes on, or choose to retain it at one school indefinitely. For terms and conditions please see our website at www.cash4schools.co.nz There are two ways to sign up for TOWER KiwiSaver and nominate your school: 1. Simply nominate your school by inserting the school name in full in section 9 of the TOWER KiwiSaver application form. 2. Sign up online via www.tower.co.nz/kiwisaver Enter the name of your school in full, under the section headed Adviser Details. You will automatically download the TOWER KiwiSaver Investment Statement as part of the process. If you re already a TOWER KiwiSaver member and you have not already nominated a school, you can now do so by visiting www.cash4schools.co.nz and clicking on Nominate Your School. 16
Transfer to TOWER KiwiSaver Transferring to TOWER KiwiSaver from another KiwiSaver scheme is easy. Just read this investment statement and complete the application form on page 31 and we will do the rest. What will we do? Within a week of processing your application we will send you confirmation of your enrolment. We will provide you with information on how to access your account balance details online. Our commitment to help you meet your investment needs and our Cash4Schools initiative provide compelling reasons to choose TOWER KiwiSaver. Investment decisions are very important They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. 17
What sort of investment is this? This investment statement offers membership in TOWER KiwiSaver. TOWER KiwiSaver is a registered KiwiSaver scheme under the KiwiSaver Act 2006, as amended from time to time ( the Act ). TOWER KiwiSaver is the simple way to save for your retirement. New membership of a KiwiSaver scheme is open to natural persons who are: Normally living in New Zealand; New Zealand citizens (or are entitled to be in New Zealand indefinitely); Under the New Zealand Superannuation qualification age (currently 65 years of age); and Not already members of a KiwiSaver scheme (unless transferring to TOWER KiwiSaver). TOWER KiwiSaver is portable, which means that you can maintain and continue your savings when you change employers. When you invest in TOWER KiwiSaver, your investment is placed in your own TOWER KiwiSaver account on your behalf, and the monies in that account are then pooled with the investments of other members of the Scheme into a selection of investment funds. The investment funds available through TOWER KiwiSaver are pools of funds within the Scheme and are outlined on pages 12 and 13. You can specify which investment fund or funds your contributions will be invested in. Your interest in TOWER KiwiSaver is represented by, and measured in, units in the investment fund(s) in which you are invested. Your contributions to TOWER KiwiSaver buy a number of units in an investment fund based on the price per unit, called the unit price, and those units are then allocated to your TOWER KiwiSaver account. The units represent your proportionate holding in the underlying assets of that investment fund. This is not the same as direct ownership of the underlying assets. As the combined value of the underlying assets of an investment fund increases or decreases, so too will the unit price of that investment fund. The performance of your investment will be measured by the rise or fall of the unit price of the investment fund(s) in which you are invested. The TOWER KiwiSaver investment funds are segregated, meaning the assets of each investment fund are the exclusive property of that investment fund, and all liabilities incurred in relation to that investment fund are the exclusive liabilities of that investment fund, with the exception of any tax liabilities or credits relating to a member s interests in investment funds, which may be netted off The investment funds offered by TOWER KiwiSaver are determined by the Manager, and these funds currently invest in other funds that are managed by TAM. In certain circumstances members will be automatically allocated to TOWER KiwiSaver by Inland Revenue This investment statement includes the options available to default members, being those people that Inland Revenue have allocated to the default investment fund of TOWER KiwiSaver and who have not subsequently chosen an investment fund. If you do not select an investment fund, as a default member your contributions are held in a separate account in your name and are automatically invested in the Cash Enhanced Fund, the default investment fund of TOWER KiwiSaver (see The investment funds on pages 12 and 13). Your TOWER KiwiSaver account is allocated units which represent your proportionate share of the Cash Enhanced Fund s assets. You may switch from the default investment fund to any of the other investment funds available to TOWER KiwiSaver members at any time (see Can the investment be altered? on page 27) by completing the form on page 37 of this investment statement. If you do change from the default investment fund, you must withdraw all of your balance from that investment fund at that time and you cannot reinvest in that investment fund. 18
Who is involved in providing it for me? The name of the scheme is TOWER KiwiSaver. The Scheme was established by a trust deed dated 26 March 2007, as amended from time to time ( Trust Deed ). TOWER KiwiSaver is a registered KiwiSaver scheme under the Act and is a default KiwiSaver scheme for the purposes of the Act. The Scheme has accepted members since 1 July 2007. TOWER Managed Funds Limited ( TMF ) is the Manager of TOWER KiwiSaver (the Manager ). It is also appointed as a default provider via an instrument of appointment under the Act. TMF was incorporated in 1989. Its ultimate holding company is Fisher Funds Management Limited ( Fisher Funds ). The directors of TMF at the date of this investment statement are: Carmel Fisher (Auckland) Mark Brighouse (Auckland) Glenn Ashwell (Auckland) TMF and its directors can be contacted at its registered office: Level 1, Crown Centre, 67 73 Hurstmere Road, Takapuna, Auckland 0740 Trustees Executors Limited is the Trustee of TOWER KiwiSaver (the Trustee ). Trustees Executors Limited can be contacted at: Level 5, 10 Customhouse Quay, PO Box 3222, Wellington 6140 Mercer (N.Z.) Limited is the Administration Manager of TOWER KiwiSaver (the Administration Manager ). Mercer (N.Z.) Limited can be contacted at: Level 18, 151 Queen Street, Auckland Central 1010 Director and contact details, as referred to above, can change from time to time. Please contact us on 0800 808 808 for current information. The Trustee and the Manager have fiduciary duties to you in respect of your investment into TOWER KiwiSaver. None of the Crown, TMF, TAM, Fisher Funds, Trustees Executors Limited, or any other person or company, guarantees or promises the repayment of, or returns on, investments in TOWER KiwiSaver. Responsible investment relates to an investment strategy which combines intentions to maximise both financial returns and social good. We do not provide investment funds which include such a strategy. Responsible investment, including environmental, social, and governance considerations, is not taken into account in the investment policies and procedures of Tower KiwiSaver as at the date of this investment statement. How much do I pay? Employees As an employee you are currently required to contribute from your after-tax pay at the rate of 3%, 4%, or 8% of your gross salary or wages unless you opt out of TOWER KiwiSaver or take a contributions holiday. Employees can choose a rate by giving notice to their employer. Only employees automatically enrolled into TOWER KiwiSaver have the option to opt out. You can change your contribution rate at any time, to any one of the above options provided you give notice to your employer that you wish to do so. You can change your contribution rate only once every three months, unless your employer agrees to a shorter time frame. Any change in contribution rate will take effect from the next payment of salary or wages after you have given your notice. If you do not make a choice your contribution rate will be the minimum contribution rate required from time to time by the Act. If you are transferring from another KiwiSaver scheme and contributing at any other rate, you will retain your current contribution rate unless you choose otherwise. However, should you change jobs the minimum contribution rate at that time will apply if you do not notify your contribution rate to your new employer. Currently your employer is required to make a minimum contribution to your TOWER KiwiSaver account of an amount equal to 3% of your gross salary or wages. Your employer contributions may be split between the KiwiSaver scheme you are a member of and another superannuation scheme you are a member of, subject to certain criteria. Any employer contributions will be held in a separate employer account in your name. Employer contributions to KiwiSaver are subject to Employer s Superannuation Contribution Tax ( ESCT ) see page 25 for further details. If you are paid through the PAYE system, your contributions are deducted from your salary or wages to coincide with your pay period and paid to Inland Revenue by your employer. If your employer fails to make payments they will be liable for penalties under the Act. Contributions are initially paid to Inland Revenue and earn interest at the Inland Revenue interest rate. Contributions, together with accumulated interest, will be sent to us by Inland Revenue for crediting to your TOWER KiwiSaver account. 1 If you joined a superannuation scheme offered by your employer prior to 1 April 2008, that was registered before 17 May 2007 (or could join such a scheme under a collective agreement that was in force before 17 May 2007), any contributions required to be paid by your employer to that scheme may count towards the compulsory employer contributions required for TOWER KiwiSaver to the extent they vest by the end of the first five years of your membership. 19