KiwiSaver Scheme Investment Statement & Application Form Prepared at 29 January 2014
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: What sort of investment is this? 26 Who is involved in providing it for me? 26 How much do I pay? 27 What are the charges? 28 What returns will I get? 31 What are my risks? 32 Can the investment be altered? 35 How do I cash in my investment? 35 Who do I contact with inquiries about my 37 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. 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. 37 37 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. Certain terms in this investment statement have defined meanings. The terms, we, us or our refer to Fisher Managed Funds Limited as the Manager of the Fisher Funds TWO KiwiSaver Scheme. The terms you and your refer to any Member or Default Member. Any capitalised terms in this investment statement not otherwise defined in this investment statement are defined in the Trust Deed of the KiwiSaver Scheme. 2 KiwiSaver Scheme
it's all about you... Welcome to the KiwiSaver Scheme ( the Scheme ). Thank you for taking the time to learn more about the 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. Fisher Funds 100% Kiwi The Scheme is managed by Fisher Managed Funds Limited ( FMF ), a subsidiary of Fisher Funds Management Limited ( Fisher Funds ). Fisher Funds is a specialist New Zealand owned investment manager which was 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 200 years combined investment experience. Today, with over 200,000 members across two KiwiSaver schemes, Fisher Funds is proudly the largest 100% New Zealand owned and operated KiwiSaver scheme provider. TWO - the latest model We have called this the KiwiSaver Scheme because that s what it is. It is the second of Fisher Funds KiwiSaver schemes, as we launched our first in July 2007 and then acquired this scheme in April 2013. Second does not mean second rate, far from it. Second instead means the latest edition following a successful first model! We believe the KiwiSaver Scheme has some attractive features and characteristics just as you d expect from the latest model and we encourage you to read this investment statement to find out more. You re in control The 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 Scheme, please call one of our KiwiSaver scheme experts on 0800 20 40 60, email us at kiwisavertwo@fisherfunds.co.nz or visit our website www.ff2kiwisaver.co.nz Carmel Fisher Managing Director KiwiSaver Scheme 3
Contents Section one - overview What s your plan? 5 Key Information Summary 6 What is KiwiSaver? 8 How KiwiSaver can grow your wealth 8 How KiwiSaver makes saving easy 8 Why invest with Fisher Funds? 9 How KiwiSaver can help you buy a first home 10 How your KiwiSaver savings are invested 12 Your investment options 14 Fund profiles 15 Which investment strategy is best for me? 18 Check your balance at any time 23 Changing your investments 23 Portability 23 Manage your money when you retire 23 KiwiSaver for children and grandchildren 23 Cash4Schools initiative 24 Transfer to the KiwiSaver Scheme 25 Section two - detail What sort of investment is this? 26 Who is involved in providing it for me? 26 How much do I pay? 27 What are the charges? 28 What returns will I get? 31 How will my investment be taxed? 31 What are my risks? 32 Can the investment be altered? 35 How do I cash in my investment? 35 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? How do I invest? 38 Section three - forms Application form 39 Direct debit authority form 43 Switch form (Cash Enhanced Fund) 47 Additional lump sum or transfer form 49 37 37 37 4 KiwiSaver Scheme
What s your plan? Retire in style If you retire at 65 without a savings plan in place 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 $550 a week from NZ Superannuation?* That s around $28,600 a year for two people to live on. Will relying on this alone provide the retirement lifestyle you re looking forward to? * As at October 2013. Source: Work and Income. Secure your future Joining KiwiSaver is a smart financial choice - it s a regular form of saving that the government and your employer also contribute to (if you are employed and contributing, and are otherwise eligible). With regular contributions to your Scheme account you are growing a retirement fund that can help secure the lifestyle you would like to enjoy in your later years. Buy your own home KiwiSaver can provide you with valuable help to buy your first home. In addition to potentially being able to withdraw your and your employer s contributions, 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 helping 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. Some conditions apply see page 10 for further details. Whatever your plan, the KiwiSaver Scheme can help you achieve it. KiwiSaver Scheme 5
Key Information Summary Key terms What is KiwiSaver? Who can join the Scheme? What are the benefits? When can I withdraw my money from KiwiSaver? Who is the Scheme provider? Further information KiwiSaver is a voluntary savings initiative that was set up by the government. It is designed to help you grow a retirement fund that can help secure the lifestyle you would like to enjoy in later years. New membership in the Scheme is open to natural persons who are: normally living in New Zealand; New Zealand citizens (or are entitled to live in New Zealand indefinitely); and under the New Zealand Superannuation qualification age (currently 65 years of age), unless they are transferring from another KiwiSaver scheme. The government provides a one-off $1,000 kick-start contribution when you first join KiwiSaver. If you are over 18 and below the KiwiSaver Qualifying Age (see When can I withdraw my money from KiwiSaver? below), and contributing to a KiwiSaver scheme account through your salary or wage, your employer will generally also contribute a minimum of 3% (less tax) of your gross salary or wage. If you are over 18 (and below the KiwiSaver Qualifying age) you may also receive a member tax credit of up to $521 a year (50 cents for every $1 you contribute up to a maximum of $1,043). You may be entitled to use your KiwiSaver savings to help you buy a first home, and you may also be entitled to a first home purchase subsidy. Generally, you will not be able to access your KiwiSaver savings until you reach the KiwiSaver Qualifying Age. This is the New Zealand Superannuation age (currently 65 years of age) or once you have been a member of a KiwiSaver scheme or a complying superannuation fund for 5 years, whichever is later. In limited circumstances you may be eligible for an early withdrawal of your KiwiSaver savings (which may or may not include the government kick-start contribution or member tax credits). These circumstances include: buying your first home; significant financial hardship; serious illness; permanent emigration (other than to Australia in which case your KiwiSaver savings can be transferred to an Australian complying superannuation scheme if they are below the maximum amount set out in Australian legislation, currently $400,000, though this is subject to change. KiwiSaver savings that are above the maximum amount that has been set cannot be transferred in whole or in part); death (in which case your KiwiSaver savings will be paid to executors or administrators of your estate); and where any Act or Court order requires a withdrawal to be made. Fisher Managed Funds Limited ( FMF ) is the Manager and provider of the Scheme. FMF s ultimate holding company is Fisher Funds Management Limited ( Fisher Funds ). Fisher Funds is a 100% New Zealand owned and operated company, managing more than $5 billion for more than 250,000 New Zealanders. For more information See pages 8 and 26 See page 26 See pages 8, 10 and 11 See pages 35 and 36 See page 262 6 KiwiSaver Scheme
Key terms What funds can I invest in? Further information The Scheme has a total of six Funds. If you have been automatically enrolled in the Scheme by Inland Revenue, you are a Default Member and your contributions will be invested exclusively in the Cash Enhanced Fund. This Fund is not available to other Scheme members. All Scheme members can select from six investment strategies (a carefully designed investment mix to fit a specific investor profile) or you can build your own investment strategy by choosing one or a mix of any of the five individual Funds below: For more information See pages 14 to 21 Preservation Fund; Balanced Fund; Equity Fund. Conservative Fund; Growth Fund; and How much do I have to pay? What are the risks? What are the charges? Does anyone guarantee the investment? Does the Scheme use related parties? Who can I contact for further information? For help with choosing an investment strategy see Your investment options on page 14. If you are an employee, you are currently required to contribute at the rate of 3%, 4% or 8% of your before tax salary or wages. The amount is deducted from your after-tax salary or wages. If you are self-employed or not working, you can choose the amount that you contribute. There is currently no minimum contribution requirement. You can choose to make regular contributions or lump sum payments to your Scheme account. All investments involve a degree of risk. The potential return on an investment is generally related to the risk of the investment. The key factor that determines your returns is the investment performance of the Fund(s) you are invested in. The performance of a Fund is determined by the Fund s asset allocation. Generally, Funds that are invested in a higher proportion of growth assets will have the potential for higher returns in the long term but experience more volatility. Funds that are invested in a higher proportion of income assets will have lower potential returns but have less volatility and therefore have less risk attached to them. Each Fund is charged a management fee which is deducted from the assets of the Fund and paid to us. A Trustee fee and an administration fee are deducted from your Scheme account. Each Fund may invest in other funds which may charge fees and incur expenses. We do not charge Scheme expenses to the Cash Enhanced Fund (or to your Scheme account while you are invested in that Fund) except in limited circumstances. The other five Funds are charged expenses in respect of the Scheme. None of the Crown, FMF, Fisher Funds, the Trustee, or any other person or company, guarantees or promises the repayment of, or returns on, investments in the Scheme. The Scheme may use related parties to provide services in respect of the Funds. As at the date of this investment statement all of the Funds invest in underlying funds managed by Fisher Funds. All arrangements are conducted on arms length commercial terms. You can check the balance of your account, obtain information and check your membership details through www.supersite.co.nz. If you have any questions about your account, you can contact your financial advisor (if you have one), email us at kiwisavertwo@fisherfunds. co.nz, call us on 0800 20 40 60 or write to us at our address. See pages 27 and 28 See pages 32 to 35 See pages 28 to 30 See page 37 KiwiSaver Scheme 7
What is KiwiSaver? KiwiSaver is a voluntary savings initiative designed to enable you to grow a retirement fund that can help 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 Scheme can help you achieve your goals. It begins by explaining how KiwiSaver works and the options that you have. The back of the document contains information that must be made available to you by law. If you are reading this investment statement, you are either considering joining the Scheme, or, as part of the government s KiwiSaver enrolment process, you were allocated to the Scheme from the date you started your new employment, or elected to opt into KiwiSaver. If you decide to join the Scheme, the application form is on page 39. We will confirm that we ve received your application, and once we receive either your first contribution or the kick-start contribution from Inland Revenue 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 investments because the government and your employer contribute to your account. When you join KiwiSaver you will receive a $1,000 kick start payment from the government. You may be eligible for a range of other benefits including: up to approximately $521 government member tax credit per year (see page 28 Member tax credits ); compulsory employer contributions of a minimum of 3% of your salary or wages to your Scheme account (see page 27 How much do I pay? ); home purchase withdrawal and subsidy to help you buy a first home (see page 10 How KiwiSaver can help you buy a first home ); tax on income at variable rates up to 28% depending on your income (see page 31 How will my investment be taxed? ). How KiwiSaver makes saving easy Your contributions to the Scheme come from your salary or wages as part of the PAYE system, or for non wage or salary earners, through regular direct debit or lump sum payments (see page 27 How much do I pay? ). Members who contribute directly to a KiwiSaver scheme account through their salary or wages are required to contribute at the current minimum rate of 3% (see page 27 for more information). The table below shows how much you could currently be contributing to your Scheme account (depending on your gross salary or wages). If you are aged between 18 and the KiwiSaver Qualifying Age and qualify for both employer and government contributions, you will notice that in addition to employee and employer contributions, the government contributes a member tax credit which is an additional benefit not available with other investments and savings schemes. If you have existing investment savings and you wish to consolidate them into your Scheme account, please complete the Additional Lump Sum form on page 49 and we ll arrange the rest. If you are self-employed or not currently working, and are over 18 but under the KiwiSaver Qualifying Age you can also take advantage of the member tax credit of up to approximately $521 a year (see page 28 for conditions). You ll need to contribute approximately $20 a week, $87 a month or $1,043 a year to be eligible for the full member tax credit. The table below shows the total amount that could be contributed to your Scheme account over a year. Salary/Wages Employee contribution at 3%pa Employer contribution at 3%pa 1 Government Member Tax Credit (annually) Total $20,000 $600 $495.00 $300 $1,395.00 $30,000 $900 $742.50 $450 $2,092.50 $40,000 $1,200 $990.00 $521 $2,711.00 $50,000 $1,500 $1,237.50 $521 $3,258.50 $60,000 $1,800 $1,260.00 $521 $3,581.00 $100,000 $3,000 $2,010.00 $521 $5,531.00 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 32) 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 contributions to a KiwiSaver scheme account. 8 KiwiSaver Scheme
Why invest with Fisher Funds? Fisher Funds was established in 1998 with two goals in mind. Firstly, we wanted to deliver great investment performance by investing in good quality companies. Our second goal was to demystify investing and make it enjoyable, understandable and profitable for New Zealand investors. Our commitment to these goals has not wavered over time and in fact we are more passionate than ever about delivering our clients a successful investing experience. We are a specialist investment manager Investing is all we do. We channel all our efforts into achieving investment returns. An experienced, respected team Our 15 strong investment team is one of New Zealand s largest and collectively our team has more than 200 years investing experience in New Zealand and around the world. Our best of breed approach ensures that you benefit from experienced, informed decision making by seasoned professionals. Biographies of our investment team are available online at www.ff2kiwisaver.co.nz. 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. Friendly, helpful service every step of the way We focus on getting the basics right. When you invest with Fisher Funds and the Scheme, we will not lose you in a large, impersonal database or call centre. We believe that we are different because of the personalised service that we offer you. When you call us you will always talk to a real person and our whole team is accessible and directly available to you. Candid communication Since our establishment in 1998 we ve developed a reputation for open and honest communication. We ve found that investors appreciate knowing where their money is invested and why. Our regular and candid communication ensures that you keep in touch with your Scheme savings and your future. KiwiSaver Scheme 9
How KiwiSaver can help you buy a first home First home withdrawal With KiwiSaver you can apply to withdraw all, or part, of your and your employer s contributions to put towards buying your first home. You can 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 buying your first home (or have 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 FMF. If your application is accepted, you will continue to be a member of the Scheme and will still be able to make contributions. 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 (administered by Housing New Zealand) of up to $5,000 may also be available if you meet all the following criteria and conditions. You must: be a member of a KiwiSaver scheme, or a complying superannuation fund; have contributed at least the minimum contribution rate of income to a KiwiSaver scheme or complying superannuation fund for at least three years; be buying your first home or property (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); live in the house for at least six months from settlement date (otherwise you will need to repay the first home purchase subsidy); not be purchasing an investment property; be 18 years old or over; have not received a home purchase subsidy before; have a yearly income of $80,000 or less (before tax) in the last 12 months and are buying a home yourself (for one buyer), or have a combined yearly income of $120,000 or less (before tax) in the last 12 months (for two or more buyers); 10 KiwiSaver Scheme
have a deposit of at least 10% of the purchase price (for this purpose, any KiwiSaver first home withdrawal or first home purchase subsidy you may be eligible for can be counted towards this deposit amount, even though they are not paid out until settlement); 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; if buying land: a house must be built within 12 months of purchase; and you must show you will have funding for the construction of the house; and the total cost of land and building must be within the house price caps; and the land is ready to build on. There are other eligibility criteria (which include regional house price caps) which are set by Housing New Zealand. 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 a home but no longer do so. If that s the case you may 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 before; and are in a similar position to first home buyers in terms of assets, income and liabilities (because of adverse circumstances such as, but not limited to, redundancy, illness or a relationship break-up). 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 Housing New Zealand. KiwiSaver Scheme 11
How your KiwiSaver savings are invested Your KiwiSaver savings will be invested in different asset classes such as cash, fixed interest, commercial property, equities and alternative investments, depending on the investment guidelines of the Fund/s you are invested in. Broadly speaking, the asset classes which the Funds invest in can be categorised as being either income or growth assets. Growth assets are those which tend to give higher returns over the long term but experience more volatility (movements up or down in the value of your investment) than income assets in the short term. The mix of income and growth assets therefore determines the risk/return profile of the Funds. Note: short term refers to up to three years, mediumterm refers to three to seven years and long-term refers to over seven years. 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 potential for capital losses. Income assets include: Cash Short-term, easily sold interest-bearing investments, eg. 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 asset classes. Fixed interest Medium-term to longer-term fixed interest-bearing investments, eg. bonds issued by governments or their agencies and medium-term and long-term debt securities issued by corporate businesses or local authorities. Some capital gains may also be achieved if the fixed interest securities increase in market value. There is also the potential for capital losses to be incurred if the fixed interest securities decrease in market value. Fixed interest is higher risk than cash because of the longer-term commitment of funds, but higher returns than those from cash are generally expected. Fixed interest assets can be sourced locally or from overseas. Growth assets Returns from growth assets are primarily sourced from capital gains, but may also comprise of 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. There is also the potential for capital losses if the market value of the properties declines. Commercial property is higher risk than cash or fixed interest, but is generally expected to provide better longer-term returns. Equities Units of ownership (shares, or equity) in companies that are usually traded on share markets both locally and overseas. Capital gains may be generated through equities when they increase in market value. In addition some income may also be received from dividend payments. There is also the potential for capital losses if equities decrease in market value. Equities have higher risk than cash, fixed interest 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 referred to 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 than the main asset classes. Derivatives Exposure to various asset classes can be gained directly (by buying the asset), indirectly (by investing in other funds which hold the asset) or artificially (by purchasing a 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 12 KiwiSaver Scheme
Need help? There s a lot of information in this document and it s not unusual for people to have questions at different stages. 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.ff2kiwisaver.co.nz, call 0800 20 40 60 or email kiwisavertwo@fisherfunds.co.nz and our KiwiSaver team will help you. Calls are free and this service is available from 8.30am to 5.00pm weekdays. agreements and forward foreign exchange contracts. They may also be used to reduce an exposure to a particular asset. For example, foreign currency may be hedged to reduce the New Zealand dollar exposure of an asset held in a foreign currency. Diversification A diversified investment portfolio is one that invests in 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 significantly more income assets (cash, fixed interest) than growth assets (commercial property, shares, alternative investments), and growth if it contains significantly 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 returns. If one of the asset classes underperforms, the others may compensate, helping to make the variations in total investment returns less extreme over time. KiwiSaver Scheme 13
Your investment options We provide a choice of investment options for you. If you are a Default Member If you have been automatically enrolled in the Scheme by Inland Revenue you are a default member (Default Member) and your contributions will be invested exclusively in the Cash Enhanced Fund (the Default Fund). The Default Fund is not available to other Scheme members. You can choose a Fund more appropriate to your needs at any time. Your options if you are not a Default Member If you are not a Default Member you can invest in any of the Funds (other than the Cash Enhanced Fund which is only for Default Members) in any proportion that you wish. If you join the Scheme and do not choose a Fund or Funds, then your contributions will be automatically invested in the Balanced Fund. All members can build their own investment strategy by choosing to invest in one or more of five Funds available in the Scheme. The diagrams show details for each Fund including their respective long term asset allocations as at the date of this investment statement. Those asset allocations may change over time. Please refer to www.ff2kiwisaver.co.nz for current information. Not sure what Fund(s) to choose? You can opt for one of our six investment strategies (a carefully designed investment mix to suit a specific investor profile) by completing a questionnaire on pages 18 and 19 where an investment strategy will be suggested for you. These include: Preservation Strategy (100% Preservation Fund) Conservative Strategy (100% Conservative Fund) Conservative Balanced Strategy (50% Conservative Fund, 50% Balanced Fund) Balanced Strategy (100% Balanced Fund) Balanced Growth Strategy (40% Balanced Fund, 60% Growth Fund) Growth Equity Strategy (40% Growth Fund, 60% Equity Fund). Whatever decision you make, you may change or switch Funds or investment strategies at any time (see page 35 Can the investment be altered? ). 14 KiwiSaver Scheme
Fund profiles New Zealand Cash 100% New Zealand Fixed Interest 0% International Fixed Interest 0% New Zealand Property 0% Trans-Tasman Shares 0% International Shares 0% Preservation Fund Risk/return profile: Investment type: Low Cash Fund Investment objective: To provide a return that exceeds the ANZ 90-Day Bank Bill Index on a rolling 12-month basis. Investment policy: 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. Who is the Fund suitable for? The Preservation Fund is designed for a very short term or extremely cautious investor who is nearing retirement age and intends making a withdrawal, or is saving to buy a first home in the next 12 months. It also suits an investor who is primarily concerned with maintaining the capital value of their investment. In exchange, they are prepared to accept the likelihood of lower returns. 7.0% 26.0% 6.0% 7.0% 25.0% 29.0% New Zealand Cash 25.0% New Zealand Fixed Interest 29.0% International Fixed Interest 26.0% New Zealand Property 7.0% Trans-Tasman Shares 6.0% International Shares 7.0% Cash Enhanced Fund (Default Fund - only available for Default Members) Risk/return profile: Investment type: Low-medium Conservative Diversified Fund Investment objective: To provide a return that exceeds the ANZ 90-Day Bank Bill Index over the short to medium-term. Investment policy: To invest in other managed funds that provide exposure to primarily income assets (cash and fixed interest), with a limited exposure to growth assets (property and trans tasman and international shares) and, at our discretion, alternative assets and/or derivatives. Who is the Fund suitable for? The Cash Enhanced Fund has been designed to meet the requirements of a default fund as defined by the government. It is suitable for a short-term or naturally cautious investor who is nearing retirement age and intends making a withdrawal, or is saving to buy a first home in the short-term. It also suits an investor who is primarily concerned with maintaining the capital value of their investment. In exchange, they are prepared to accept the likelihood of lower returns. KiwiSaver Scheme 15
Fund profiles 11.5% 8.0% 10.5% 27.5% 17.5% 25.0% New Zealand Cash 17.5% New Zealand Fixed Interest 25.0% International Fixed Interest 27.5% New Zealand Property 11.5% Trans-Tasman Shares 8.0% International Shares 10.5% Conservative Fund Risk/return profile: Investment type: Low-medium Conservative Diversified Fund Investment objective: To provide returns with medium-term capital appreciation but with lower volatility than the Balanced Fund. Investment policy: To invest in other managed funds that provide exposure to primarily income assets (cash and fixed interest), with a limited exposure to growth assets (property and trans tasman and international shares), and, at our discretion, alternative assets and/or derivatives. Who is the Fund suitable for? The Conservative Fund is designed for a short term or naturally cautious investor who is nearing retirement age and intends making a withdrawal, or is saving to buy a first home in the short term. It also suits an investor who is primarily concerned with maintaining the capital value of their investment. In exchange, they are prepared to accept the likelihood of lower returns. 36.5% 5.0% 6.0% 9.0% 12.5% 31.0% New Zealand Cash 5.0% New Zealand Fixed Interest 6.0% International Fixed Interest 9.0% New Zealand Property 12.5% Trans-Tasman Shares 31.0% International Shares 36.5% Growth Fund Risk/return profile: Investment type: Medium-high Growth Diversified Fund Investment objective: To provide returns with higher long-term capital appreciation, but with higher volatility than the Balanced Fund. Investment policy: To invest in other managed funds that provide exposure to a range of growth assets (property and trans tasman and international shares) and income assets (fixed interest and cash) with a greater focus on growth assets. At our discretion the Growth Fund may also invest in alternative assets and/or derivatives. Who is the Fund suitable for? The Growth Fund is designed for a long-term investor who wants good growth potential and is willing to accept a fair amount of positive and negative fluctuations in the short term in anticipation of achieving high returns in the long-term. This type of investor also has time to wait for the value of their investment to recover if it goes down. 16 KiwiSaver Scheme
20.0% 23.0% 7.5% 15.0% 22.5% 12.0% New Zealand Cash 7.5% New Zealand Fixed Interest 15.0% International Fixed Interest 22.5% New Zealand Property 12.0% Trans-Tasman Shares 20.0% International Shares 23.0% Balanced Fund Risk/return profile: Investment type: Medium Balanced Diversified Fund Investment objective: To provide returns with medium to long-term capital appreciation, but with lower volatility than the Growth Fund. Investment policy: To invest in other managed funds that provide exposure to a range of growth assets (property and trans tasman and international shares) and income assets (fixed interest and cash), and, at our discretion, alternative assets and/or derivatives. Who is the Fund suitable for? The Balanced Fund is designed for an investor who wants to achieve a balance between maintaining the capital value of their investment and growing that investment over the medium to long-term. It also suits an investor who wants to split their investments more evenly between growth and income assets (even in the short term). 50.0% Trans-Tasman Shares 50.0% International Shares 50.0% Equity Fund Risk/return profile: Investment type: High Equity Fund Investment objective: To provide returns with higher long-term capital appreciation, but with higher short-term volatility than the Growth Fund. Investment policy: To invest in other managed funds that provide exposure to a range of trans tasman and international shares. Some cash will be held for liquidity purposes. Who is the Fund suitable for? The Equity Fund is designed for a long-term investor who is willing to accept positive and negative fluctuations in the short term in anticipation of achieving higher returns in the long-term. It is designed for an investor who has time to wait for the value of their investment to recover if it goes down and who wants to invest solely in shares. KiwiSaver Scheme 17
Which investment strategy is best for me? One of the most important decisions to make when joining KiwiSaver is how you want your savings to be invested. You might not have the skills or experience to manage investments (that s what we do for you) but it is in your best interests to tell us which investment strategy you prefer so that we can manage your savings appropriately. We understand that every investor has different investment goals (and timeframes in which to achieve these) and that investors have varying appetites for risk. We have developed our Scheme to allow you to select the investment strategy that you consider meets your needs. Important consideration when choosing your investment strategy Before choosing your investment strategy (a carefully designed investment mix to fit a specific investor profile), it is important that you think about: Your investment timeframe (how long you will be saving before you take out money for your first home or retirement); and Your risk tolerance (how comfortable you are with the value of your savings fluctuating). Investment Tip The longer your investment timeframe, the more you may be comfortable with an investment strategy that consists of more growth assets. We think growth assets are important, as most KiwiSaver members have a long time to save for their retirement. Historically, investing in growth assets has produced better long term investment returns than other asset classes, minimising the impact of inflation over time. However, if you are nearing retirement or saving for your first home, you may want to have a more conservative investment approach. Income assets such as cash and fixed interest typically produce more stable returns in the short term. Don t fret! You re not locked into an investment strategy for life. If your situation or thinking changes you can change your investment strategy at no cost. This questionnaire is a guide only, containing information of a general nature. It is not personalised financial advice and does not take into account your particular situation or goals. To help decide the investment strategy that you consider is best for you, simply answer the questions below. If you require any assistance, contact us on 0800 20 40 60. Section 1: Your Investment Timeframe Question 1: How many years will you be saving before you take out money for your first home or for your retirement? Investment Timeframe: Section 2: Your Risk Tolerance Circle each answer and note the total score for this section at the end. year/s Question 2: Which of the following best describes your attitude to investment risk? Score I am a very low risk taker 1 I am a low risk taker 2 I am an average risk taker 3 I am a high risk taker 4 I am a very high risk taker 5 Question 3: Which of the following statements best describes your understanding of the financial markets and investments? I am only familiar with bank term deposits and savings accounts I know a little about investments outside bank term deposits and savings accounts but not enough to make an informed decision on how to invest I understand different types of investments have different levels of risk and the degree of risk is relevant to the possibility of fluctuation in value I understand all types of investments (including shares and property) and understand the various influences on their returns I am very experienced with all types of investments and consider myself well educated when it comes to risk versus reward and the opportunities available Score 1 Question 4: I am willing to accept more risk to possibly achieve higher returns. Strongly disagree Score 1 Disagree 2 Neutral 3 Agree 4 Strongly agree 5 2 3 4 5 18 KiwiSaver Scheme
Question 5: If the value of my investment fluctuated up or down more than 10% over a short time frame it would make me very nervous. Strongly agree 1 Agree 2 Neutral 3 Disagree 4 Strongly disagree 5 Question 6: I am willing to experience the ups and downs (fluctuations) of the market for the potential of greater returns over the long term. Score Score Strongly disagree 1 Disagree 2 Neutral 3 Agree 4 Strongly agree 5 Question 8: If I consider current interest rates, the overall level of return that I reasonably expect to achieve from my investments over the period I wish to invest is: Term deposit returns with minimal risk of losing 1 any capital 4-6% 2 5-7% 3 7-9% 4 Over 9% 5 Question 9: After I have made a significant financial decision, I normally feel Score Score Very concerned 1 Concerned 2 A little uneasy 3 Content I have made the right decision 4 Optimistic that the decision I have made will 5 provide substantial benefits Question 7: My main concern is protection of my capital. Keeping my money protected is more important than earning higher returns. Score Strongly agree 1 Agree 2 Neutral 3 Disagree 4 Strongly disagree 5 Add your scores together for questions 2 to 9 and see the following page for details. Risk Tolerance Score: How did you score? The table below uses your scores from the questionnaire. To determine your investment strategy, find your Investment Timeframe across the top (using your score from Section 1) and your Risk Tolerance Score along the left side (using your score from Section 2). Where they intersect is your suggested investment strategy. Descriptions of each investment strategy are listed on the next page. You should read the descriptions to ensure you are comfortable with your investment strategy. Your Risk Tolerance Score Your Investment Timeframe (years) <1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15+ 0-8 9-14 15-20 21-26 27-32 33-40 Preservation Conservative* Conservative Balanced Balanced Balanced Growth Growth Equity * If you have been allocated to the KiwiSaver Scheme by Inland Revenue and suit a Conservative investment strategy, we recommend that you remain in the Cash Enhanced Fund (default fund) in which you are currently invested. The scores are designed to provide an indication only of what might be the most suitable investment strategy for you. Before making a choice, you should consider all factors relevant to your decision. You are not limited to these six options you can build your own investment strategy by choosing a mix of Funds in any proportions you wish. Remember that you are responsible for choosing an investment strategy neither FMF, Fisher Funds or the Trustee is responsible for the choice you make. KiwiSaver Scheme 19
Investment Strategy Indicative Asset Mix* Suitable for investors... Fund(s) that make(s) up this strategy Preservation Very Low Risk / Return 100% income The Preservation Strategy is designed for a very short term or an extremely cautious investor who: Is nearing retirement age and intends making a withdrawal, or is saving to buy a first home in the next 12 months; or Is primarily concerned with maintaining the capital value of their investment. In exchange, they are prepared to accept the likelihood of lower returns. 100% Preservation Fund New Zealand Cash 100% Conservative Low Risk / Return 70% income 30% growth New Zealand Cash 17.5% New Zealand Fixed Interest 25.0% International Fixed Interest 27.5% New Zealand Property 11.5% Trans-Tasman Shares 8.0% International Shares 10.5% The Conservative Strategy is designed for a short-term or a naturally cautious investor who: Is nearing retirement age and intends making a withdrawal, or is saving to buy a first home in the short-term; or Is primarily concerned with maintaining the capital value of their investment. In exchange, they are prepared to accept the likelihood of lower returns. While this investment strategy is designed to be conservative, the value of your investment may go down as well as up. 100% Conservative Fund If you have been allocated to the Fisher Funds TWO KiwiSaver Scheme by Inland Revenue and suit a conservative investment strategy, we recommend that you remain in the Cash Enhanced Fund (default fund). Conservative Balanced Low to Medium Risk / Return 57.5% income 42.5% growth New Zealand Cash 12.5% New Zealand Fixed Interest 20.0% International Fixed Interest 25.0% New Zealand Property 11.8% Trans-Tasman Shares 14.0% International Shares 16.7% The Conservative Balanced Strategy is designed for a short to medium-term or a cautious investor who: Is approaching retirement age and intends making a withdrawal, or is saving to buy a first home in the medium-term; or Wants to keep their investment relatively low risk but is also interested in returns; this type of investor is cautious but realises that some risk may be necessary. 50% Conservative Fund / 50% Balanced Fund 20 KiwiSaver Scheme
Investment Strategy Indicative Asset Mix* Suitable for investors... Fund(s) that make(s) up this strategy Balanced Medium Risk / Return 45% income 55% growth New Zealand Cash 7.5% New Zealand Fixed Interest 15.0% International Fixed Interest 22.5% New Zealand Property 12.0% Trans-Tasman Shares 20.0% International Shares 23.0% The Balanced Strategy is designed for an investor who: Wants to achieve a balance between maintaining the capital value of their investment and growing that investment over the medium to longterm; or Wants to split their investments more evenly between growth and income assets (even in the short-term). 100% Balanced Fund Balanced Growth Medium to High Risk / Return 30% income 70% growth New Zealand Cash 6.0% New Zealand Fixed Interest 9.6% International Fixed Interest 14.4% New Zealand Property 12.3% Trans-Tasman Shares 26.6% International Shares 31.1% The Balanced Growth Strategy is designed for a long-term investor who: Wants good growth potential and is willing to accept a fair amount of positive and negative fluctuations but not as much as a portfolio invested primarily in growth assets; and Has time to wait for the value of their investment to recover if it goes down. 40% Balanced Fund / 60% Growth Fund Growth Equity High Risk / Return 8% income 92% growth The Growth Equity Strategy is designed for a long-term investor who: Is willing to accept positive and negative fluctuations in the value of their investment in the short term in anticipation of achieving higher returns in the long run; and Has time to wait for the value of their investment to recover if it goes down. 40% Growth Fund / 60% Equity Fund New Zealand Cash 2.0% New Zealand Fixed Interest 2.4% International Fixed Interest 3.6% New Zealand Property 5.0% Trans-Tasman Shares 42.4% International Shares 44.6% We know that life is forever changing and that we must change with it. We recommend that you review your choice periodically, especially if there are significant changes to your financial situation. This may require you to complete this questionnaire again. You can change your investment option at any time. * The pie-charts shown detail the respective long term target asset allocations of the investment funds and strategies as at the date of this investment statement. Those asset allocations may change over time. KiwiSaver Scheme 21
Asset classes and allocations The Funds may gain exposure to the asset classes described on page 12 directly (by buying the asset), indirectly (by investing in other managed funds which hold the asset) or artificially (by purchasing derivatives). As at the date of this investment statement, the Funds gain investment exposure to international fixed interest investments as follows: Cash Enhanced Fund, Conservative Fund and Growth Fund by investment in underlying funds which hold a segregated pool of assets of which Pacific Investment Management Company LLC ( PIMCO ) is the investment manager as well as a further segregated pool of assets of which Wellington International Management Company Pte Ltd ( Wellington ) is the investment manager. Balanced Fund via investment in an underlying fund which invests in the PIMCO Cayman Global Bond (NZD-Hedged) Fund, a managed fund of which PIMCO is the investment manager, and a segregated pool of assets of which Wellington is the investment manager. As at the date of this investment statement, PIMCO undertakes foreign currency hedging on the international fixed interest investments it manages in respect of the Cash Enhanced Fund, Conservative Fund, Balanced Fund and Growth Fund, however this may change in the future. As at the date of this investment statement, investment exposure to emerging market shares for the Cash Enhanced Fund, Conservative Fund, Balanced Fund, Growth Fund, and Equity Fund is gained via investment in an underlying fund which invests in the PFS Somerset Emerging Markets Dividend Growth Fund, a managed fund of which Somerset Capital Management LLP is the investment manager. We may invest in other managed funds and use other underlying investment managers, and changes may be made without notice to you. For more information please visit www.ff2kiwisaver.co.nz or contact us on 0800 20 40 60. While the asset allocations of each Fund will, over the long-term, target the levels for the Funds as shown in the diagrams on pages 15 to 17, the actual asset allocations will vary from time to time. Such variations may be due to market movements or due to us (or the manager of the underlying funds) varying the allocations away from the target levels for a variety of reasons, including managing risk, increasing potential returns or managing cashflow requirements. Any variation away from the target asset allocation levels must remain within a permitted range. The current registered prospectus describes the approved asset classes and permitted allocation ranges for each Fund. 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 target asset allocation level for alternative investments for each of these Funds is currently 0%, the Cash Enhanced Fund, the Conservative Fund and the Balanced Fund may each invest up to 10% of their value and the Growth Fund may invest up to 15% of its value in alternative assets. Alternative investments are discussed further on page 12. 22 KiwiSaver Scheme
Join now Joining the Scheme 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 the Scheme as part of the government s automatic KiwiSaver enrolment process, you do not need to do anything. Hedging of foreign currency The Cash Enhanced, Conservative, Balanced, Growth and Equity Funds all invest in asset classes that are denominated in foreign currencies. To reduce the risk of adverse currency fluctuations, foreign currency hedging (taking an offsetting position) is undertaken. International fixed interest assets (bonds) are usually fully offset against the New Zealand dollar. International shares may be offset to some degree against the New Zealand dollar, however we or the manager of the relevant underlying fund may vary the actual hedging levels at times 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 by the Fund or the underlying funds. We recommend that you obtain personalised advice from an Authorised Financial Adviser before making a decision to invest or to change your investment strategy in the Scheme. Check your balance at any time You have access to www.supersite.co.nz, our website for members of the Scheme. 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 change your personal details, keep track of your savings progress and change the Funds you invest in. In addition to the information available on supersite, we will also send you an annual report, annual member statement and tax certificate each year. Changing your investments You can change or switch Fund(s) at any time (see page 35 Can the investment be altered? ). You can also change where your future contributions are allocated. It is recommended that you discuss any changes with your financial adviser. If you don t have a financial adviser contact us for assistance on 0800 20 40 60. Portability The Scheme is portable, which means that you can continue your savings when you change employers. Manage your money when you retire 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 the Scheme until you need it, subject to minimum withdrawal amounts and minimum account balance requirements. KiwiSaver for children and grandchildren The Scheme may also suit children or grandchildren who are under the age of 18. With easy set-up options and no minimum payments required (until they begin paid employment), it s an easy way to start their savings. If you wish to enrol children you can do so online at www.ff2kiwisaver.co.nz or contact us for an application form at kiwisavertwo@fisherfunds.co.nz or 0800 20 40 60. 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. KiwiSaver Scheme 23
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 the Scheme, 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 Scheme 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.ff2kiwisaver.co.nz There are two ways to sign up for the Scheme and nominate your school: 1. Simply nominate your school by inserting the school name in full in the School nomination (Cash4Schools ) section of the application form. 2. Sign up online through www.ff2kiwisaver.co.nz. Enter the name of your school in full, under the section headed Adviser Details. You will automatically download the Scheme investment statement as part of the process. If you re already a Scheme member and you have not already nominated a school, you can now do so by visiting www.ff2kiwisaver.co.nz and clicking on How do I nominate my school. 24 KiwiSaver Scheme
Transfer to the Fisher Funds TWO KiwiSaver Scheme Transferring to the Scheme from another KiwiSaver scheme is easy. Just read this investment statement and complete the application form on page 39 and we will do the rest. What will we do? Within a week of processing your application we will send you confirmation of your transfer to the Scheme. We will provide you with information on how to access your Scheme account balance details online. Our commitment to help you meet your investment needs and our Cash4Schools initiative provide compelling reasons to transfer. Investment decisions are very important They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. KiwiSaver Scheme 25