prospectus westpac mortgage investment fund · it is intended that the home loans will be purchased...
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PROSPECTUS
_____________________________________________________________________________________
WESTPAC MORTGAGE INVESTMENT FUND
_____________________________________________________________________________________
29 August 2011
2
STATUTORY INFORMATION
The following information is included as required under Schedule 4 to the Securities Regulations
2009. In making this offer, the Manager is relying on certain exemptions in the Securities Act
(Externally Managed Group Investment Funds) Exemption Notice 2003, Securities Act (Transition
to Securities Regulations 2009) Exemption Notice 2009 and the Securities Act (BT Funds
Management (NZ) Limited) Exemption Notice 2010, including an exemption from regulation 5(1)(c)
which allows this Prospectus to be prepared by reference to Schedule 4 of the Securities
Regulations, rather than by reference to Schedule 3 of the Securities Regulations.
STATUTORY INDEX
Page
1 DESCRIPTION OF GROUP INVESTMENT FUND 3
2 MANAGERS AND PROMOTERS 4
3 REGISTRAR, CUSTODIAN, AUDITORS, ADVISERS, AND EXPERTS 6
4 INDEPENDENCE OF TRUSTEE AND ANY CUSTODIANS 6
5 UNIT TRUSTEE 6
6 DESCRIPTION OF THE GROUP INVESTMENT FUND AND ITS
DEVELOPMENT
7
7 UNITHOLDER LIABILITY 13
8 SUMMARY OF FINANCIAL STATEMENTS 14
9 MINIMUM SUBSCRIPTION 21
10 GUARANTORS 21
11 ACQUISITION OF BUSINESS OR EQUITY SECURITIES 21
12 OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH 21
13 INTERESTED PERSONS 21
14 MATERIAL CONTRACTS 23
15 PENDING PROCEEDINGS 23
16 ISSUE EXPENSES 24
17 OTHER TERMS OF OFFER AND UNITS 24
18 FINANCIAL STATEMENTS AND AUDITOR’S REPORT 28 and 53
19 PLACES OF INSPECTION OF DOCUMENTS 29
20 OTHER MATERIAL MATTERS 29
3
21 MANAGER’S STATEMENT 32
22 TRUSTEE’S STATEMENT 32 and 52
23 SUMMARY OF THE TRUST DEED 32
Any New Zealand legislation referred to in this prospectus can be viewed at
www.legisation.govt.nz
1 DESCRIPTION OF GROUP INVESTMENT FUND
This Prospectus is for the offer of Units in the Westpac Mortgage Investment Fund (“Fund”),
which is a Group Investment Fund (Group Investment Fund No. 95) established under the
Trustee Companies Act 1967 and a trust deed dated 27 June 2005 (“Trust Deed”). The
Fund was established in Wellington, New Zealand.
The Fund provides the opportunity to invest in home loans secured by registered first
mortgages held by Westpac New Zealand Limited (“Westpac NZ”) over residential
properties in New Zealand.
It is intended that the home loans will be purchased from the Westpac Home Loan Trust. It
is currently intended that home loans not exceeding $500,000 for up to 80% of the home’s
value or up to 90% where home loan insurance is attached will be taken into the Fund.
However, the Manager and the Trustee may change this policy from time to time.
The Fund became a portfolio investment entity (“PIE”) on 1 October 2007.
While the Fund is operating as a PIE there are restrictions on certain Unitholders holding
more than 20% of the units of the Fund and the Trust Deed contains a power to adjust
Income Entitlements for Unitholders or a Unitholders’ Units to reflect tax paid by the Fund on
certain Unitholders’ share of income, and various Unit repurchase rights where the Fund’s
eligibility for PIE status is threatened. More information on taxation and PIEs is set out in
section 17 of this Prospectus.
The Manager manages the Fund’s Assets with the aim of enhancing the returns and helping
to deliver a smooth income stream by the use of interest rate swaps and other derivatives.
The Fund’s aim is to provide a competitive return against cash and short term bank
deposits.
The Fund commenced on 27 June 2005, and will terminate on the day appointed by the
Manager for termination of the Fund by giving not less than two months’ written notice to
Unitholders and the Trustee or the day on which the Trustee retires to the extent that the
Fund is not resettled on a successor Trustee, whichever is earlier.
4
Each Unit represents a beneficial interest in the Assets of the Fund. A Unit does not confer
any interest in any particular part of the Fund or the Assets of the Fund. There is no
maximum number, or amount, of Units on offer.
Units will be issued at the Current Unit Value (which is expected to be $1.00) plus any Entry
Fee. Currently there is no Entry Fee. The Current Unit Value is the Net Asset Value of the
Fund divided by the number of Units on issue for the Fund (rounded to the extent the
Manager decides).
There is currently a minimum of $5,000 for a Unitholder’s initial lump sum investment.
Subsequent lump sum investments can be made for a minimum of $500. Once a Unitholder
has made the initial $5,000 lump sum investment, they can elect to make regular
investments of a minimum of $1,200 per year (at such frequencies as the Manager may
determine from time to time and set out in the Investment Statement).
Although an Exit Fee is not generally charged, an early withdrawal fee equal to 1% of the
amount withdrawn, is normally charged and retained by the Manager if Units are sold
without the minimum notice being given (see section 6 for further details).
Further details of the amounts, or maximum amounts, of the fees payable or deductions that
will be made, for purchasing or selling Units, and the times at which they will be payable or
made are set out in clause 9 of the Trust Deed and sections 23.2, 23.3, 23.12, 23.13 and
23.14 of this Prospectus.
Where a practice of the Manager is referred to, or the description “generally”, “normally” or
“currently” is used in this Prospectus in relation to a practice, the reference is to the practice
of the Manager at the date of this Prospectus. The Manager reserves the right to review and
change such practices without further notice within the terms of the Trust Deed.
This offer is open only to persons who are in New Zealand and have a permanent address
in New Zealand. Unitholders must notify the Manager if they change their address or leave
New Zealand permanently, or if their tax residency is not, or is no longer in, New Zealand.
Underlying investors of custodial services (explained in section 6 of the Prospectus) should
notify the custodial service if they change their address or leave New Zealand permanently
or if their tax residency is not, or is no longer in, New Zealand.
2 MANAGERS AND PROMOTERS
Manager and Issuer
The Manager and issuer of the Fund is BT Funds Management (NZ) Limited.
The names and addresses of the directors of the Manager are:
George Frazis of Auckland, New Zealand,
Ian Nicholas New of Wellington, New Zealand
Mark John Smith of Sydney, Australia
5
Richard Warren Jamieson of Sydney, Australia
David Alexander McLean of Auckland, New Zealand
The directors may change from time to time without notice to investors. A list of directors of
the Manager is available online at www.business.govt.nz/companies.
The registered office of the Manager is Westpac on Takutai Square, 16 Takutai Square,
Auckland, 1010, New Zealand.
The contact address of the Manager and each director is Westpac on Takutai Square, 53
Galway Street, Auckland 1010, New Zealand. Phone: 0800 738 641.
The ultimate holding company of the Manager is Westpac Banking Corporation (ABN 33
007 457 141) (“Westpac”) which is incorporated in Australia. None of the Manager,
Westpac, Westpac NZ or their related entities guarantee the units offered in this Prospectus.
The Manager does not manage any other group investment funds.
Promoter
The Manager is a Promoter of the Fund.
Westpac NZ and its directors are also Promoters of the Fund with the exception of George
Frazis who is also a director of the Manager.
The names and addresses of the directors of Westpac NZ are:
Philip Matthew Coffey of Sydney, Australia
George Frazis of Auckland, New Zealand
Christopher John David Moller of Lower Hutt, New Zealand
Janice Amelia Dawson of Auckland, New Zealand
Ralph Graham Waters of Sydney, Australia
Peter David Wilson of Wellington, New Zealand
The directors of Westpac NZ may change from time to time without notice to investors. A
list of directors of Westpac NZ is available online at www.business.govt.nz/companies.
The registered office of Westpac New Zealand Limited is Westpac on Takutai Square, 16
Takutai Square, Auckland 1010, New Zealand.
The contact address of Westpac NZ and each director is Westpac on Takutai Square, 53
Galway Street. Auckland 1010, New Zealand. Phone: 0800 738 641.
Administration Managers
The Manager has delegated some of the administration functions of the Fund to Trustees
Executors Limited (“Trustees Executors”), MMc Limited (“MMc”) and The Hongkong and
Shanghai Banking Corporation Limited, and they are each therefore classed, for the
purposes of the Securities Regulations 2009, as an Administration Manager for the Fund.
6
The Administration Managers may change from time to time, without notice to investors.
Details of the current Administration Managers can be obtained by calling the Manager on
0800 738 641.
None of the Manager, Administration Managers or Promoter or any director of them, have
during the 5 years prior to the date of registration of this prospectus been:
a) adjudged bankrupt or insolvent; orb) convicted of any crime involving dishonesty; orc) prohibited from acting as a director of a company; ord) placed in statutory management voluntary administration, liquidation or
receivership.
3 REGISTRARS, CUSTODIANS, AUDITORS, ADVISERS, AND EXPERTS
Advisers
The Registrar of the Fund is Trustees Executors Limited.
The Auditor of the Fund is PricewaterhouseCoopers.
The Solicitors involved in the preparation of this Prospectus are Chapman Tripp.
Custodian
The Custodian of the Fund is Home Mortgage Nominees Limited, a subsidiary of The New
Zealand Guardian Trust Company Limited.
4 INDEPENDENCE OF UNIT TRUSTEE AND ANY CUSTODIANS
The Trustee and Custodian are independent of the Manager, the Promoters and the
Administration Managers.
5 UNIT TRUSTEE
The Trustee is:
The New Zealand Guardian Trust Company Limited
Level 7
Vero Centre
48 Shortland Street
Auckland 1010
PO Box 1934
Auckland 1140
New Zealand
The directors of the Trustee are:
John Atkin of Sydney, Australia
John James Anthony Botica of Wellington, New Zealand
7
John Richard Avery of Auckland, New Zealand
Christopher Robert Darlow of Auckland, New Zealand
Timothy James Shaw of Auckland, New Zealand
Michael Privett Reed of Auckland, New Zealand
The directors of the Trustee can be contacted at the Trustee’s address set out above. The
directors may change from time to time without notice to investors. A list of directors of the
Trustee is available online at www.business.govt.nz/companies.
The New Zealand Guardian Trust Company Limited was incorporated in New Zealand under
the Companies Act 1955 on 7 September 1982. It is also governed by the provisions of The
New Zealand Guardian Trust Company Act 1982. On 23 April 1997 it was re-registered
under the Companies Act 1993. The registration number is 115240. Its trustee origins date
back to 1881.
The ultimate parent company of the Trustee is The Trust Company Limited (ABN 59 004
027 749) a trustee company incorporated in Australia and listed on the Australian Securities
Exchange.
The Trustee is indemnified out of the Fund against any losses, costs, and expenses incurred
by it in acting as Trustee of the Fund and against all actions, proceedings, liabilities, costs,
claims, taxes and demands in respect of any matter or thing relating to the Fund, with the
exception of any loss, costs and expenses arising out of fraud, wilful breach of trust, or
dishonesty of the Trustee or any of its officers or employees, or breach of trust where the
Trustee fails to show the degree of skill and care required of it having regard to the
provisions of the Trust Deed.
Neither the Trustee, the Trustee’s nominee companies, nor any member of the Trustee’s
group of companies, guarantees the repayment of the units, the payment of any earnings on
the units, the repayment of capital or the performance or returns of the Fund.
6 DESCRIPTION OF THE GROUP INVESTMENT FUND AND ITS DEVELOPMENT
The Fund was established in Wellington on 27 June 2005 and is governed by the Trust
Deed of that date entered into between the Trustee and the Manager. The Trust Deed was
amended on 29 March 2007 and 28 September 2007. A summary of the principal terms of
the Trust Deed is set out in section 23.
Applications, withdrawals and transfers
Unitholders can invest into the Fund by paying in lump sums, making regular investments,
or both. The Manager can, in its sole discretion, reject any application in whole or in part
without giving any reason. The minimum initial lump sum investment is currently $5,000.
The minimum subsequent lump sum investment is currently $500. Once a Unitholder has
made an initial minimum $5,000 lump sum payment, regular investments can be made of a
minimum of $1,200 per year (at such frequencies as the Manager may determine from time
to time and set out in the Investment Statement). Unitholders can alter the amount they pay
(provided they still pay at least the minimum). If a Unitholder’s investment falls below the
8
Minimum Holding (currently 5,000 units in the Fund) the Manager may redeem all of the
Unitholder’s units. Further details of the “Issue of Units” and the manner in which
applications will be processed are set out in section 23.2 of this Prospectus.
Unitholders can withdraw their investment at any time by giving 30 days’ notice unless a
suspension period is in effect. If a Unitholder is unable to give 30 days’ notice of their
withdrawal request, the Manager may allow an early withdrawal, in such cases as the
Manager shall decide, and charge a 1% early withdrawal fee.
Units will be redeemed at the Current Unit Value (which is expected to be $1.00 per Unit)
plus any undistributed income relating to the Unit being redeemed, less any Exit Fee
(currently nil). Currently, Unitholders can withdraw part of their investment in parcels of 500
units, providing they still hold the Minimum Holding (currently 5,000 Units) in the Fund. The
Manager may refuse to process a withdrawal if it is for less than the minimum withdrawal
amount (currently 500 Units). Regular withdrawals of a minimum of $1,200 per year
(payable at such frequencies as the Manager may determine from time to time and set out
in the Investment Statement) are also permitted, provided the minimum holding is
maintained. If a withdrawal is for a number of units that would leave the Unitholder with less
than the minimum holding then the withdrawal may be deemed to be for the entire holding.
Further details of the “Redemption of Units” is set out in section 23.3 of this Prospectus.
The Manager or Trustee may suspend withdrawals in the circumstances set out in section
23.5 of this Prospectus.
Investors who decide the Westpac Mortgage Investment Fund is not for them have 14 days
to cancel their application (from the time we write to them accepting it). Any investor wishing
to cancel their application will need to let the Manager know in writing within 14 days, and
we will waive the requirement to give 30 days’ notice (unless a suspension period is in
effect) and the associated early withdrawal fee. Investors will receive interest in relation to a
cancelled application.
Units are transferable, however a transfer will not be registered if it is not in the correct form
prescribed by the Manager and/or in compliance with any applicable law or other reasonable
requirements of the Trustee or Manager, if it would result in the transferee holding less than
the Minimum Holding set out above, or if the transferee is not allowed to be a Unitholder
under the Trust Deed. The form of transfer is available from the Manager.
The Manager may refuse to process a transfer, switch or withdrawal where it would threaten
the Fund’s eligibility for PIE status. See section 17 for the tax related consequences of a
transfer, switch or withdrawal.
Custodial services
During the life of this Prospectus, the Fund may be available for investment by individuals
both directly and via certain custodial services.
In this Prospectus, a reference to:
9
an investor or Unitholder is a reference to the operator, custodian or manager of the custodial service, or individual investor;
custodial service is a reference to an investor-directed portfolio service and nominee or custody service;
an underlying investor is a reference to a person who invests through a custodial service;
an individual investor is an individual who invests in the Fund without investing via a custodial service.
The investor is recorded in the register as the Unitholder. As the registered holder of Units,
only the investor will be able to exercise any rights attached to the Units held.
Underlying investors do not become direct investors in the Fund and do not have a direct
relationship with the Manager or the Trustee. Rather, the custodial service invests in the
Fund and the underlying investors have their direct investment relationship with the
custodial service.
A custodial service operator will have an agreement with its clients (underlying investors)
governing the terms of the custodial arrangement. However, underlying investors who invest
in the Fund through a custodial service are required to obtain and read a copy of the Fund’s
Investment Statement before investing or instructing the custodial service to invest on their
behalf. Underlying investors may, on request, obtain a copy of this Prospectus and certain
other information. Although underlying investors do not become registered Unitholders in the
Fund, they are entitled to rely on the Fund’s Investment Statement and Prospectus.
Underlying investors should not complete the Application Form. Rather, the Application
Form must be completed and signed by the relevant entity for the custodial service.
Fund reports and other documentation will be sent directly to the custodial service and all
correspondence will be conducted with the custodial service.
Underlying investors should ascertain from their custodial service:
whether any minimum amounts (other than those specified above) have been
agreed between the Manager and the custodial service; and
the minimum amount that the underlying investor is required to invest and the
consequences of failing to maintain that minimum amount.
The custodial services have entered into an arrangement with the Manager in respect of the
Fund. This Prospectus and the Investment Statement outline the terms and conditions of
investment in the Fund made by the custodial service, which may have been varied by such
an arrangement. Underlying investors should contact their custodial service to ascertain
whether any variations have been agreed between the Manager and the custodial service.
Underlying investors should note that the custodial service is neither a promoter of the Fund
nor the agent of the Manager or the Trustee.
10
Where an underlying investor invests through a custodial service which is a proxy for an
investor in a PIE (" PIE Investor Proxy"), the PIE Investor Proxy will be responsible for the
payment of tax, and the attribution of income, losses, tax credits and refunds for tax
purposes, in respect of the underlying investor. The Manager and the Trustee shall not be
liable for the attribution of income, losses, tax credits or refunds, nor the payment of tax in
respect of units held by Unitholders through PIE Investor Proxies.
Underlying investors should also note that, in addition to fees and charges set out in this
Prospectus, fees or charges will be payable to the custodial service. Underlying investors
should consult the custodial service for information in relation to those fees or charges.
Limitations on investment powers
The Fund is permitted to invest in the Authorised Investments set out in section 23.1. The
Manager is also required to ensure that the Assets of the Fund are invested in accordance
with the Investment Policies (as amended from time to time).
Subject to compliance with the Investment Policies, the Manager may enter into any
contractual transactions in relation to the Fund that the Manager considers are in the
interests of the Unitholders including, without limitation, the sale of any Assets to, or the
purchase of any Assets from, the Manager or any Related Person of the Manager, provided
that such contractual transactions with Related Persons are on normal commercial terms, or
terms as favourable to the Fund as normal commercial terms.
Activities and material developments
The Fund has been invested in accordance with the Investment Policy since the
establishment of the Fund in 2005.
On 1 October 2007, the Fund became a PIE.
In February 2008 the Manager determined to change the financial year end of the Fund from
the 30th day of September of any year to the 31st day of March of any year.
Westpac has had operations in New Zealand through a branch since 1861, when it
commenced operating as the Bank of New South Wales. As a result of a change of policy by
the Reserve Bank of New Zealand requiring all systemically important banks to be
incorporated in New Zealand, Westpac has reorganised its New Zealand operations.
Accordingly, from 1 November 2006, Westpac’s operations in New Zealand have been
conducted through both the existing branch and a locally incorporated subsidiary, Westpac
NZ. On 1 November 2006, Westpac NZ was registered as a registered bank under the
Reserve Bank of New Zealand Act 1989 and, pursuant to the Westpac New Zealand Act
2006, the assets and liabilities of Westpac’s New Zealand branch’s retail operations
(consisting largely of its consumer and business banking businesses) vested in Westpac
NZ.
The assets and liabilities vested in Westpac NZ on 1 November 2006 also include
mortgages previously held by Westpac over residential properties in New Zealand and the
various material contracts that Westpac is a party to in respect of the Fund.
11
Investment objectives and policy
Investment objectives
The objective of the Fund is to produce a consistent income for distribution on a quarterly
basis from a high quality investment portfolio. The Fund aims to provide returns competitive
with cash and short term bank deposits on an ongoing basis by purchasing loans secured
by registered first mortgages over properties located in New Zealand.
Investment policy
To invest in loans made upon the security of first mortgages in respect of property in New
Zealand, bank deposits or other fixed interest debt securities, and only in investments in
which a group investment fund is permitted to invest, being those which fall within the
definition of a Designated Group Investment Fund as defined in the Tax Act. While the Fund
is operating as a PIE, the investment restrictions imposed on Designated Group Investment
Funds for tax purposes do not apply (although the Fund is still subject to some investment
restrictions). As at the date of this Prospectus, it is intended that the Fund will continue to
invest in accordance with the Designated Group Investment Fund investment restrictions
pursuant to the Trust Deed unless the Manager and the Trustee agree otherwise.
It is currently intended that the Fund will purchase equitable interests in secured home
loans, and the mortgages securing those loans, from the Westpac Home Loan Trust. It is
currently intended that the Fund will purchase home loans not exceeding $500,000 of up to
80% of the home’s value or up to 90% where home loan insurance is attached. However,
the Manager may change this policy from time to time.
Neither the Trustee nor the Manager will be entitled to set or vary the interest rate on loans,
and the interest rate will be set solely by reference to Westpac NZ’s lending rates.
For liquidity purposes it is anticipated that under normal circumstances a proportion of the
Net Fund Value will be held in cash, deposits with New Zealand banks, or other fixed
interest securities that meet the requirements for the Fund to qualify as a Designated Group
Investment Fund.
To assist in the provision of a stable and regular income to Unitholders, interest rate swaps
and other derivatives have been arranged with Westpac NZ.
The value of the Fund’s investments is subject to the market prices of the Assets held.
Therefore, any change in the value of the underlying Assets will affect the value of the
investor’s Unitholdings. The value of the derivatives will be affected by interest rate
movements.
Under the Deed of Arrangements, the Investment Policies of the Fund may be amended at
any time by agreement between the Manager and the Trustee. The Trustee will approve any
changes unless it considers that as a result of the changes it may be directed to buy or sell
assets that are manifestly not in the interests of Unitholders.
12
More information regarding the investment objectives and policy of the Fund are set out in
section 23.1.
Investment Performance of the Fund
Returns for the Fund are shown below:
12 month
return to 31
March 2011
12 month
return to 31
March 2010
12 month
return to 31
March 2009
Annualised
6 month
return to 31
March 2008
12 month
return to 30
September
2007
12 month
return to 30
September
2006
% % % % % %
2.69 2.39 6.47 7.871 7.52 6.98
1 Annualised compound rate of return for the period from 1 October 2007 to 31 March 2008.
These returns assume that the investment in the Fund has been held for the full period and
express the change in the value of the Fund's net assets after reinvestment of all
distributions made during the period, as a percentage of total Unitholders’ funds. The
change in the value of the Fund's net assets is calculated after the deduction of
Management and Trustee fees and expenses of the Fund but before the deduction of tax.
Note that the amounts of Management fees Trustee Fees and expenses of the Fund will
vary from time to time and from year to year. Future performance of the Fund is not
guaranteed. Past performance is not a reliable indicator of future performance.
Distribution policy
Within 60 Business Days after the Distribution Date for the Fund, the Manager shall
determine the Income (if any) of the Fund for the Distribution Period ending on that
Distribution Date and, in respect of each Unitholder, the Unitholder’s Income Entitlement, if
any, in respect of the relevant Distribution Period. Payments of Distributions will be made
within 90 days after the last day of the relevant Distribution Period. The Distribution Period is
a period of three months ending on the last days of March, June, September and December.
In determining the Income of the Fund for any Distribution Period, the Manager may take
into account all income due or accrued and all costs, charges and Expenses due or
accrued. Prior to Distribution of Income Entitlements to Unitholders, the Trustee will deduct
any unpaid Trustee and Manager’s fees.
The Manager may from time to time distribute capital (including any capital gains, both
realised and unrealised) of the Fund, at a date determined by the Manager, to Unitholders of
the Fund in cash in proportion to their Unit holdings.
13
Distributions will be made in cash unless the Unitholder elects to reinvest their Distributions
in the Fund by way of additional units. Further information regarding the Fund’s Distribution
policy and this Distribution reinvestment plan is set out in section 23.11.
The distribution reinvestment option complies with the requirements of, and contains the
terms and conditions required under, the Securities Act (Dividend Reinvestment) Exemption
Notice, as amended or substituted from time to time.
7 UNITHOLDER LIABILITY
There are no circumstances in which a Unitholder will incur liabilities (including contingent
liabilities) in relation to the Fund or be obliged to pay any further money, apart from the issue
price of the Unitholder’s Units and any tax liability on the portion of the Trust’s income that is
attributable to the Unitholder or that the Unitholder incurs as a result of advising the wrong
prescribed investor rate (‘PIR’) or failing to advise the Manager when the Unitholder’s PIR
increases.
None of the Trustee, the Manager, Westpac NZ, Westpac, or any other member of the
Westpac group of companies, accepts any responsibility for the impact of an investment in
the Fund on the taxation position of Unitholders. Unitholders should seek independent
professional tax advice.
14
8. SUMMARY OF FINANCIAL STATEMENTS
A summary of the financial statements for the Fund, for year ended 30 September 2007, the six month period ended 31 March 2008, and the years ended 31 March
2009, 31 March 2010 and 31 March 2011 are set out below:
Westpac Mortgage Investment Fund
Summary Statement of Comprehensive Income
Year ended
31 March
2011Year ended 31
March 2010
Year ended 31
March 2009
Six months
ended 31 March
2008
Year ended 30
September 2007
Year ended 30
September
2007$'000 $'000 $'000 $'000 $'000 $'000
NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Total operating income 26,169 42,508 29,391 24,847 33,508 33,792
Total operating expenses 14,930 22,143 13,015 4,117 5,646 5,646
Profit for the period attributable to Unit Holders 11,239 20,365 16,376 20,730 27,862 28,146
Total comprehensive income attributable to Unit Holders 11,239 20,365 16,376 20,730 27,862 28,146
From 1 October 2007, the Fund qualified as a PIE for tax purposes. As a result, it is the unitholders (not the Fund) that pay tax on their taxable income; therefore there is zero
income tax expense in the Fund's statement of comprehensive income.
15
Summary Statement of Changes in Net Assets Attributable to Unit Holders
Year ended
31 March
2011
Year ended
31 March
2010
Year ended
31 March
2009
Six months
ended 31
March 2008
Year ended 30
September
2007
Year ended 30
September
2007$'000 $'000 $'000 $'000 $'000 $'000
NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Net assets attributable to Unit Holders at the beginning of the period 512,960 622,243 593,384 458,734 340,486 337,536
Profit for the period 11,239 20,365 16,376 20,730 27,862 28,146
Total comprehensive income for the period 11,239 20,365 16,376 20,730 27,862 28,146
Applications 24,870 129,090 249,607 207,197 441,023 441,023 Withdrawals (159,441) (242,332) (195,254) (67,537) (322,447) (322,447) Distributions (12,178) (14,387) (36,526) (21,949) (28,190) (28,190) Unit Holder tax liabilities (1,546) (2,019) (5,344) (3,791) - -
Net assets attributable to Unit Holders at the end of the period 375,904 512,960 622,243 593,384 458,734 456,068
Year ended
31 March
2011
Year ended
31 March
2010
Year ended
31 March
2009
Six months
ended 31
March 2008
Year ended 30
September
2007
Year ended 30
September
2007
Units '000 Units '000 Units '000 Units '000 Units '000 Units '000Units on issueUnits on issue at the beginning of the period 525,686 640,944 591,935 456,068 337,536 337,536 Applications - units 24,870 129,090 249,607 212,794 512,632 512,632 Withdrawals - units (160,987) (244,348) (200,598) (76,927) (394,100) (394,100)
Units on issue at the end of the period 389,569 525,686 640,944 591,935 456,068 456,068
16
Summary Balance Sheet
As at 31
March 2011
As at 31
March 2010
As at 31
March 2009
As at 31
March 2008
As at 30
September
2007
As at 30
September
2007
$'000 $'000 $'000 $'000 $'000 $'000NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Current assetsLoans and receivables 2,223 25,383 51,796 227,307 123,115 123,115 Financial assets held at fair value through profit or loss 105,443 101,640 174,464 102,267 63,465 60,730 Other receivables 3,256 3,666 7,401 6,616 16,910 16,979 Cash and cash equivalents 18,046 44,615 50,136 28,552 11,549 11,549
Total current assets 128,968 175,304 283,797 364,742 215,039 212,373
Non current assetsLoans and receivables 266,296 357,367 369,184 244,562 250,435 250,435
Total assets 395,264 532,671 652,981 609,304 465,474 462,808
Current LiabilitiesFinancial liabilities held at fair value through profit or loss 13,517 12,915 18,936 - - - Management fees payable 346 497 570 513 1,089 1,089 Trustee fees payable 21 28 30 29 69 69 Other payables 1,321 1,458 942 757 3,954 3,954 Distributions payable 2,555 2,716 4,828 10,718 1,430 1,430 Expense allowance payable 54 78 88 112 198 198 Tax payable on behalf of unitholders 1,546 2,019 5,344 3,791 - -
Total liabilities 19,360 19,711 30,738 15,920 6,740 6,740
Net assets attributable to Unit Holders 375,904 512,960 622,243 593,384 458,734 456,068
There are no non-current liabilities
17
Summary Cash Flow Statement
Year ended
31 March
2011
Year ended
31 March
2010
Year ended
31 March
2009
Six months
ended 31
March 2008
Year ended 30
September
2007
Year ended 30
September
2007
$'000 $'000 $'000 $'000 $'000 $'000NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Net cash inflow/(outflow) from operating activities 122,457 126,640 14,292 (105,431) (94,972) (94,972)
Net cash (outflow)/inflow from financing activities (149,026) (132,161) 7,292 122,434 91,489 91,489
Net (decrease)/increase in cash and cash equivalents (26,569) (5,521) 21,584 17,003 (3,483) (3,483)
Cash and cash equivalents at the beginning of the period 44,615 50,136 28,552 11,549 15,032 15,032
18,046 44,615 50,136 28,552 11,549 11,549
There are no cash flows from or used in investing activities
Cash and cash equivalents at the end of the period
18
Notes to the Summary Financial Statements
Reporting entity
The reporting entity included in these summary financial statements is the Westpac
Mortgage Investment Fund (referred to throughout this prospectus as the “Fund”).
Relationship to full financial statements
The full financial statements, for the years ended 31 March 2011, 31 March 2010 and
31 March 2009, the six month period ended 31 March 2008 and the year ended 30
September 2007, from which these summary financial statements have been
extracted, have been prepared in accordance with the requirements of the Trustee
Companies Act 1967, the Financial Reporting Act 1993, the Trust Deed, and Generally
Accepted Accounting Practice in New Zealand ("NZ GAAP"). The full financial
statements, except for those prepared in respect of the year ended 30 September
2007, comply with New Zealand equivalents to International Financial Reporting
Standards ("NZ IFRS"), and other applicable Financial Reporting Standards, as
appropriate for profit oriented entities. The full financial statements except for those
prepared in respect of the year ended 30 September 2007, also comply with
International Financial Reporting Standards ("IFRS"). The full financial statements for
the year ended 30 September 2007 comply with the New Zealand Financial Reporting
Standards (“NZ FRS”). The full financial statements have been prepared under the
historical cost convention as modified by the revaluation of financial assets and
liabilities (including derivative financial instruments) at fair value through profit or
loss.
The financial statements for the Fund until 30 September 2007 were prepared in
accordance with NZ FRS. NZ FRS differs in certain respects from NZ IFRS. When
preparing the financial statements for the period ended 31 March 2008, management
amended certain accounting and valuation methods applied in the NZ FRS financial
statements to comply with NZ IFRS. The comparative figures in respect of the year
ended 30 September 2007 have been restated (where appropriate) to reflect any
adjustments.
The following significant measurement changes to the financial statements occurred
as a result of the transition from NZ FRS to NZ IFRS:
NZ IFRS requires that long quoted and unquoted investment positions be
valued at the closing bid prices (excluding provision for disposal costs) on the
relevant trading day. The impact of this was a decrease in fair value of
financial assets from that released in unit pricing.
NZ IFRS also requires the on balance sheet recognition of derivatives. The
Fund is a counterparty to interest rate swaps with Westpac NZ. In the past,
only the current value of the receivable/payable was recognised in the balance
sheet. Under NZ IFRS, the fair value of the instruments are recognised and
their movement reflected in the Statement of Comprehensive Income under net
gain/loss from interest rate swaps.
19
The summary financial statements for the year ended 31 March 2011 have been
extracted from the audited full financial statements which were authorised for issue
on 5 August 2011. The summary financial statements for the year ended 31 March
2010 have been extracted from the audited full financial statements which were
authorised for issue on 13 August 2010. The summary financial statements for the
year ended 31 March 2009 have been extracted from the audited full financial
statements which were authorised for issue on 31 July 2009. The summary financial
statements for the six months ended 31 March 2008 have been extracted from the
audited full financial statements which were authorised for issue on 28 August 2008.
The NZ FRS summary financial statements for the year ended 30 September 2007
have been extracted from the audited full financial statements which were authorised
for issue on 25 February 2008.
The summary financial statements are presented in New Zealand dollars which is the
Fund’s functional and presentation currency. All values are rounded to the nearest
thousand dollars.
The summary financial statements have been prepared in accordance with FRS 43
subject to the Securities Regulations 2009 and comply with NZ GAAP as it relates to
summary financial statements.
The summary financial statements have been authorised for issue by the directors of
the Manager on 29 August 2011.
The Fund is a Group Investment Fund as defined by the Trustee Companies Act 1967
and is subject to the provisions of that Act.
The summary financial statements cannot be expected to provide as complete an
understanding as provided by the full financial statements. A copy of the full financial
statements can be obtained from the Manager's principal place of business at
Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand, or by
calling 0800 738 641.
The full financial statements for the years ended 31 March 2011, 31 March 2010 and
31 March 2009, the six month period ended 31 March 2008 and the year ended 30
September 2007 have been audited by PricewaterhouseCoopers who have issued
opinions in respect of each of the full financial statements that were not qualified and
did not refer to any fundamental uncertainties in any respect.
There have been no changes to accounting policies (other than the change from NZ
FRS to NZ IFRS referred to above) and these policies have been consistently applied
throughout the periods presented.
20
Items of material incidence, size or nature
There are no items of such incidence and size or of such nature that require disclosure to
explain the performance or financial position of the Fund.
Events occurring after the balance sheet date
No significant events have occurred since balance date which would impact on the financial
position of the Fund disclosed in the Balance Sheet as at 31 March 2011 or on the results
and cash flows of the Fund for the year ended on that date.
Additional information
Related party transactions
BT Funds Management (NZ) Limited is the Manager of the Fund. The ultimate holding
company of the Manager is Westpac. Trustee services are provided by The New Zealand
Guardian Trust Company Limited. None of these related parties hold units in the Fund.
In accordance with the Trust Deed, the management fee is calculated on the daily gross
asset value of the Fund and paid monthly. Management fees are a related party expense
paid to the Manager and are shown in the Statement of Comprehensive Income under
"Management fees". Management fees payable are shown in the Balance Sheet under
"Management fees payable". There are no key management personnel associated with the
Fund. Trustee fees are a related party expense paid to the Trustee and are shown in the
Statement of Comprehensive Income under "Trustee fees". Trustee fees payable are shown
in the Balance Sheet under Trustee fees payable.
The Manager incurs the ordinary administrative expenses of the Fund and is reimbursed by
the Fund through an expense allowance. The amount paid to the Manager is shown in the
Statement of Comprehensive Income under "Expense allowance". The amount payable to
the Manager is shown in the Balance Sheet under "Expense allowance payable".
Service fees on mortgages are expenses of the Fund that are paid to Westpac NZ and are shown in the Statement of Comprehensive Income under "Service fees - mortgages". The Fund is also party to fixed and variable rate interest rate swaps with Westpac NZ.
As at 31
March 2011
As at 31
March 2010
As at 31 March
2009
As at 31 March
2008
As at 30
September 2007
As at 30
September 2007
$'000 $'000 $'000 $'000 $'000 $'000NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Westpac New Zealand Limited 21,023 59,577 55,613 34,961 38,535 38,535
The income from investments held with related parties during the period was:Year ended
31 March
2011
Year ended 31
March 2010
Year ended 31
March 2009
Six months ended 31 March
2008
Year ended 30
September 2007
Year ended 30
September 2007
$'000 $'000 $'000 $'000 $'000 $'000NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ FRS
Westpac New Zealand Limited 863 2,028 373 2,327 1,908 1,908
* Investments with Westpac New Zealand Limited include bank account, negotiable certificates of deposit and floating rate notes.
The value of investments held with related parties at balance date were:
21
9 MINIMUM SUBSCRIPTION
Not applicable
10 GUARANTORS
Investments made in the Fund do not represent bank deposits with Westpac NZ or Westpac
and are not liabilities of the banks or other members of the Westpac group of companies.
Investments are subject to investment and other risks, including possible delay in the
payment of withdrawal amounts in some circumstances, and loss of investment value,
including principal invested.
None of the Trustee, the Trustee’s nominee company, the Manager, Westpac NZ, Westpac,
any member of the Westpac group of companies, nor any other person, guarantees the
performance of the Fund or the repayment of any capital.
11 ACQUISITION OF BUSINESS OR EQUITY SECURITIES
No business or equity securities have been acquired for the purposes of the Fund at any
time in the two years preceding the date of this Prospectus.
12 OPTIONS AND UNITS PAID UP OTHERWISE THAN IN CASH
Fully paid up Units in the Fund may be issued to the Westpac Home Loan Trust for non-
cash consideration during the life of this Prospectus. The non-cash consideration will consist
of the transfer to the Fund of the beneficial interests in certain residential mortgages and
associated home loans originated by Westpac NZ and held by the Westpac Home Loan
Trust, and may include other assets (being cash deposits with Westpac NZ and Westpac
and certain investments held in the Austraclear New Zealand system) held by the Westpac
Home Loan Trust. The number of Units to be issued on this basis depends on the value of
the assets being transferred. Other than those Units described above no options to
subscribe for Units have been or are intended to be issued for consideration other than
cash.
13 INTERESTED PERSONS
The following parties all have an interest in the Fund by virtue of the services they provide to
the Fund and the fees they receive:
Trustee
The functions of a trustee of a group investment fund include monitoring the Manager’s
compliance with the requirements of the Trust Deed and holding the Trust’s assets on behalf
of Unitholders. The Trustee’s entitlement to reimbursement of expenses and to be paid a fee
is described in more detail in sections 23.12 and 23.13. Currently the Trustee is paid a fee of
up to 0.075% per annum (plus GST) of the total value of the Fund’s Assets, subject to a
minimum charge of $15,000 per annum (plus GST). The Trustee’s entitlement to
reimbursement of expenses is unlimited.
22
Manager and Administration Managers
The Manager is responsible for the day to day management and administration of the Fund
including investing assets, calculating and paying distributions, and administering the issue
and redemption of units. The Administration Managers (currently, Trustees Executors
Limited, MMc Limited and The Hongkong and Shanghai Banking Corporation Limited),
undertake a number of such administration tasks on behalf of the Manager. The Manager is
entitled to be reimbursed from the Fund for expenses including those relating to
administration services provided by the Administration Managers, which may include unit
registry, asset registry and investment accounting costs and costs associated with the
provision of certain financial information relating to the Fund. The Manager’s entitlement to
reimbursement of expenses and to be paid a fee is described in more detail in sections
23.12 and 23.14. The Manager’s entitlement to a fee is subject to the maximum of 1.5% per
annum (plus GST) on the Market Value of the Assets of the Fund. However, the Manager
may decide to charge a lesser fee in its discretion. At the date of this Prospectus, the
Manager charges 1% per annum (plus GST). The Manager’s entitlement to reimbursement
of expenses is unlimited. The Manager may choose in its absolute discretion not to seek
reimbursement for any of the fees and expenses to which it is entitled from time to time. In
its discretion, the Manager has currently elected to limit the total of the following expenses
(where they are incurred on a normal day-to-day basis) recovered for the Fund up to 0.15%
per annum of the total value of the Fund’s assets:
costs and expenses incurred by the Trustee and the Manager in carrying out their
respective duties, including the fees charged by solicitors, valuers and other
advisers;
bank account charges applicable to the Fund;
costs for administration services, including unit registry, asset registry, unit pricing
and investment accounting costs and costs associated with the provision of
certain financial information related to the Fund.
The Manager may, at its discretion, pay amounts (including non-monetary benefits) from the
fees it receives, to investment advisers or other persons approved by the Manager. These
payments are not an additional cost to Unitholders. Investment advisers are in all respects
acting as agents for the Unitholder (or, where relevant, the underlying investor), and not as
agent for the Manager or the Trustee. Neither the Manager nor the Trustee is responsible
for the advice given by these advisers
Westpac NZ, Westpac and related companies
Westpac NZ and Westpac provide banking services to the Fund. Their banking charges and
expenses are paid out of the Fund’s Assets. There is no limit on these charges and
expenses other than in relation to bank account charges applicable to the Fund.
The Manager pays commission to Westpac NZ from time to time. This commission is not an
additional cost to Unitholders and is borne by the Manager out of its own money.
23
Under the arrangements under which the equitable interest in the home loans is acquired by
the Fund, Westpac NZ (and its custodian) will retain and manage the home loan
documentation and charge a fee, which is unlimited, for doing so. The current custodian
appointed by Westpac NZ is Westpac Nominees -NZ- Limited. Prior to 1 July 2008 the
custodian was Westpac Securities Administration Limited.
Westpac NZ is the swap counterparty.
Westpac Nominees -NZ- Limited previously provided clearing, settlement and accounting
services, including cash transfer and fixed interest, to the Trust. Its fee was paid out of the
Fund’s assets, and was unlimited. On 31 August 2006, Westpac Nominees –NZ- Limited
sold the relevant part of its business to The Hongkong and Shanghai Banking Corporation
Limited.
Prior to 1 May 2008 BT Investment Management (RE) Limited provided investment
management services to the Fund and its charges and expenses for these services were
paid out of the Manager’s management fee.
Directors of the Manager, the Administration Managers, the Trustee or the Custodian may
from time to time hold Units in the Fund.
The Westpac Home Loan Trust, a unit trust managed by the Manager, invests in the Fund
and the Fund may purchase mortgages from the Westpac Home Loan Trust from time to
time.
The Fund is marketed and distributed by Westpac NZ.
14 MATERIAL CONTRACTS
On 11 March 2010, the Manager entered into a Services Agreement with MMc, under which
MMc is to perform certain administrative functions for the Manager, on behalf of the Fund.
MMc is liable to the Manager, on behalf of the Fund, for the performance of MMc’s
obligations under the arrangement.
On 11 February 2010, the Manager entered into a Registry Services Supply Agreement with
Trustees Executors, under which Trustees Executors is to perform certain administrative
functions for the Manager, on behalf of the Fund. Trustees Executors is liable to the
Manager, on behalf of the Fund, for the performance of Trustees Executors’ obligations
under the arrangement.
15 PENDING PROCEEDINGS
At the date of this Prospectus, there are no legal proceedings or arbitrations that are
pending and that may have a material adverse effect on the Fund.
24
16 ISSUE EXPENSES
The estimated issue expenses are approximately $50,000 (excluding GST), including legal
and audit fees.
The Manager may pay brokerage at rates determined by the Manager in respect of any
application, and servicing commission on the amount that any approved investment adviser
has placed with the Manager. These payments are not paid for by the Fund but rather by the
Manager out of its management fee.
17 OTHER TERMS OF OFFER AND UNITS
Taxation
The following is a general statement only relating to the Manager’s understanding of the
current New Zealand income tax law as it affects the Fund investors.
Taxation legislation, its interpretation and the rate and basis of taxation may change. The
application of taxation laws depends on the Unitholder’s individual circumstances.
The Manager and the Trustee do not take any responsibility for the taxation liabilities of
particular Unitholders. Unitholders should seek independent professional advice as to their
particular tax position.
Underlying investors should seek advice from their custodial service as to how their taxable
income will be treated.
The Fund is a PIE for tax purposes.
Fund taxed on financial arrangements
The Fund will be subject to tax on any gain from its financial arrangements.
Fund taxed at investors’ PIR
The Fund will attribute its taxable income for a period to its Unitholders by reference to the
number of Units held by each Unitholder. The Fund will pay income tax on any taxable
income which is attributed to Unitholders that are natural persons (which means in this
section, persons in the ordinary sense of the word, as opposed to trusts, companies and
other entities), non residents, or trusts (other than a unit trust) which elect to have the tax on
their share of the Fund’s taxable income paid by the Fund (“Tax Paid Unitholders”) at the
PIR notified by Unitholders. The PIRs currently applicable for Unitholders are as follows:
a 10.5% rate will apply for a New Zealand tax resident natural person who earned
$14,000 or less of taxable income (excluding income from PIEs) and $48,000 or less in
total of taxable income (including net PIE income after subtracting losses from any
PIEs) in either of the last two income years or a New Zealand tax resident trustee of
certain testamentary trusts which elects to apply the 10.5% rate; and
25
a 17.5% rate will apply for New Zealand tax resident natural persons who do not qualify
for the 10.5% rate, but who earned $48,000 or less of taxable income (excluding
income from PIEs) and $70,000 or less in total of taxable income (including net PIE
income after subtracting attributable PIE losses) in either of the last two income years
or a New Zealand tax resident trustee of a trust (but not a unit trust or a charitable trust)
which elects to apply the 17.5% rate; and
the 28% rate will apply for all other Unitholders who do not qualify for the 17.5% or
10.5% rate, and are not Zero Rated Unitholders (discussed below).
Income years generally commence on 1 April in any year and end on 31 March in the
following year.
The Commissioner of Inland Revenue can require the Fund to disregard the PIR notified by
a Unitholder if the Commissioner considers the rate is incorrect. In such cases the Fund
must apply the rate that the Commissioner considers appropriate.
Tax Paid Unitholders will not be directly entitled to any net losses or excess tax credits of
the Fund which are attributable to them. However, the Fund may in certain circumstances
be entitled to a refundable tax credit in respect of such losses or excess credits, which it will
pass on to the Tax Paid Unitholders (either as a cash distribution or by the issue of
additional Units).
A Unitholder that is a New Zealand tax resident company (including a unit trust and a group
investment fund, other than a designated group investment fund), charity, PIE, PIE investor
proxy or superannuation fund, or trustee of a trust, that has not elected another PIR and
which provides its IRD number to the Fund, will have a PIR of 0% (“Zero Rated
Unitholders”). For Zero Rated Unitholders, the Unitholder itself rather than the Fund will
have to account for any income tax on income attributed to it, provided the Unitholder
notifies the Fund that it qualifies as a Zero Rated Unitholder. These Unitholders will receive
the benefit of any losses or excess tax credits of the Fund directly. Zero Rated Unitholders
will be subject to tax on any taxable income attributed to them regardless of whether it is
actually distributed to them.
Trusts (including family trusts but not unit trusts or charitable trusts) may elect to either be
Zero Rated Unitholders or Tax Paid Unitholders (in the latter case the Fund will pay tax on
their attributed taxable income at the elected PIR). Trustees that elect a PIR that is lower
than the highest PIR must return the PIE income/(loss) and pay any applicable tax
themselves (with a credit for tax paid by the Fund in respect of the PIE income attributed to
the trustee).
The result of the above is that the Fund will pay tax on behalf of some Unitholders but not
others.
To ensure Unitholders bear their appropriate share of tax, the Fund will adjust either:
the Units held by the Tax Paid Unitholders by:
26
o redeeming Units when there is tax payable; or
o issuing additional units for no consideration when there is a refundable tax credit;
or
the distribution, redemption, repurchase or transfer entitlement of Tax Paid Unitholders
(by deducting the amount of tax paid on their behalf).
The Fund currently intends to reflect PIE tax by cancelling for no consideration Units of a
Unitholder equal in aggregate value to the PIE tax paid by the Fund in respect of that
Unitholder. This cancellation will usually occur after the end of the Fund’s income year.
However if a Unitholder redeems, switches, withdraws or transfers Units during the year,
then immediately prior to the redemption, switch, withdrawal or transfer the Fund will cancel
Units held by the Unitholder equal in aggregate value to the PIE tax on the income
attributable to those Units.
Unitholders failure to advise the correct PIR
Tax Paid Unitholders who supply the correct PIR (other than trustees who elect a PIR that is
lower than the highest PIR) will not have any further personal New Zealand tax liability in
respect of taxable income attributed to them from the Fund (as any tax on that taxable
income is payable by the Fund itself).
If a Unitholder does not provide their PIR and IRD number, then tax will be deducted at the
highest PIR (currently 28%).
If a Unitholder advises a lower PIR than their applicable rate, or does not advise a change to
a higher rate, the Unitholder may be obliged to pay any tax shortfall (plus any interest and
penalties) and may be required to file a tax return. Any excess tax paid on a Tax Paid
Unitholder’s behalf if the Unitholder notifies a higher PIR than they are entitled to cannot be
claimed back, as PIE tax is a final tax for Tax Paid Unitholders.
Joint investors will be treated as a single Unitholder with a PIR equal to the highest PIR of
the joint investors. Both investors must notify the Manager of their IRD number and PIR, or
tax will be deducted at the highest PIR (currently 28%).
Unitholders must inform the Manager if their PIR subsequently changes (except where a
change is due to a change in the statutory tax rate rather than a change in their income).
Unitholders not taxed on direct redemptions
No income tax should be payable on the gains made on the direct redemption of Units by
the Fund.
Tax for traders on their sales
A Unitholder should not be subject to tax on any gain made from the transfer of Units or the
repurchase of Units by the Manager, provided that:
27
the Unitholder does not carry on a business of dealing in such securities or in respect
of which the sale of such securities is an ordinary incident;
the Units were not acquired for the dominant purpose of resale; and
the gains on the sale of Units have not been derived from an undertaking or scheme
entered into or devised for the purpose of making a profit.
In other cases the Unitholder may be subject to tax on any gain made from the transfer of
units or the repurchase of units by the Manager (and may be entitled to a deduction for any
loss) unless either:
the Unitholder is a PIE or is exempt from tax (such as a charity); or
the transfer is effected by cancelling the Units held by the transferor and issuing new
Units to the transferee (which is how the Fund currently intends to effect transfers).
No tax on distributions
Unitholders are not taxable on any distributions to them by the Fund. While the Fund
remains a PIE, the Manager may elect to deduct from a Unitholder’s distributions an amount
equal to the tax (if any) paid by the Fund on the net income attributed to the Unitholder as
an alternative to redeeming the Unitholder’s Units for no consideration to fund this tax
liability (although it does not currently intend to do so). Accordingly, where the Fund is a PIE,
Unitholders may receive differing net distributions.
Investing
Applications will only proceed on the basis of the application form found at the back of the
Investment Statement for the Fund.
To make an investment directly into the Fund, the applicant need only complete the
application and lodge it, together with a cheque made payable to Home Mortgage Nominees
Limited and crossed “not transferable”, with:
any branch of Westpac NZ in New Zealand, or with a Westpac NZ adviser, for delivery
to “The Manager”, BT Funds Management (NZ) Limited; or
the applicant’s authorised investment adviser, for prompt delivery to BT Funds
Management (NZ) Limited;
or the applicant may post to Freepost 802 (no stamp required), BT Funds Management (NZ)
Limited, PO Box 695, Wellington 6140 Telephone 0800 738 641.
Applications made through a custodial service will need to be made in accordance with the
underlying investor’s arrangements with the custodial service.
All Units are issued and applications accepted at the discretion of the Manager and the
Manager reserves the right to decline applications.
28
Units will be issued at the Current Unit Value determined at the Valuation Time before or
immediately after the relevant application is to be processed. Unitholders should note that
the Current Unit Value applied to applications will be the price ruling at the time the
application is to be processed by the Manager. This price may vary from the price ruling on
the day of mailing or lodgement of the application form.
It should be noted that receipt by an investment adviser or Westpac NZ is not receipt by the
Manager, the Trustee, or Home Mortgage Nominees Limited. No application shall be
deemed to have been received by the Manager, the Trustee or Home Mortgage Nominees
Limited before it has actually been received by the Manager.
Confirmation of Unit Holding
You will receive written confirmation of the total number of Units issued at the date on which
the application is accepted for processing. This confirmation is not negotiable and is merely
evidence of an interest in the Fund.
The Manager will issue a written statement of holdings to all Unitholders at three monthly
intervals. A statement of holdings is also available at any time on request to the Manager.
Investment Advisers
Authorised investment advisers who are not employees of Westpac NZ or Westpac will hold
a Confirmation of Authority issued by the Manager and this is available on request either
from the adviser or the Manager. Investment advisers are therefore in all respects acting as
an agent of the applicant and not the Manager, the Trustee or Home Mortgage Nominees
Limited.
Other terms of this offer are set out in the Investment Statement, which should be read
together with this Prospectus. Unitholders will receive a copy of the Investment Statement
before applying for units. All the terms of the offer and of the Units are set out in this
Prospectus, other than those implied by law, or set out in a document that is registered with
a public official and is available for public inspection and is referred to in this Prospectus.
18 FINANCIAL STATEMENTS AND AUDITOR’S REPORT
The financial statements for the Fund for the year ended 31 March 2011 comply with the
Trustee Companies Act 1967 and have been prepared in accordance with the Financial
Reporting Act 1993. The full audited financial statements were registered with the Registrar
of Companies on 22 August 2011.
The Auditor’s Report on the financial statements for the Fund dated 5 August 2011 did not
refer to a fundamental uncertainty and was not qualified in any respect.
The Auditor’s Report on the summary of financial statements is attached at the end of this
Prospectus.
No prospective financial information is shown.
29
19 PLACES OF INSPECTION OF DOCUMENTS
Copies of the Trust Deed, material contracts, latest annual report and financial statements
may be inspected during normal business hours by any person who so requests at the
offices of the Manager at Westpac on Takutai Square, 16 Takutai Square, Auckland without
payment of a fee. Copies of the Trust Deed and any Deeds of Amendment are available
from the Manager for a fee which is currently 20 cents per page.
Copies of the above documents, excluding the annual report, are also filed on a public
register at the Companies Office, and are available under the Manager’s file reference on
the Companies Office website www.business.govt.nz/companies (search the register for BT
Funds Management (NZ) Limited). Copies may also be obtained (on payment of the
relevant fee) by telephoning the Ministry of Economic Development Business Service
Centre on 0508 266 726 or emailing [email protected].
Copies of the Services Agreement between the Manager and MMc dated 11 March 2010
and the Registry Services Supply Agreement between the Manager and Trustees Executors
dated 11 February 2010, are available for inspection at the offices of the Manager (during
normal business hours and free of charge) and may also be viewed on the Manager’s file on
the Companies Office website at www.business.govt.nz/companies (free of charge) (search
the register for BT Funds Management (NZ) Limited). The copies of those agreements shall
exclude the provisions set out in the schedule to the Securities Act (BT Funds Management
(NZ) Limited) Exemption Notice 2010. These provisions have been excluded from the
copies of the agreements available for inspection because they contain commercially
sensitive information. The excluded provisions relate to:
the fees payable by the Manager to MMc and Trustees Executors for the respective
services they provide, including clauses relating to possible reductions of those fees;
and
the minimum amount of insurance that MMc and Trustees Executors must maintain.
The directors of the Manager warrant to investors that the exclusion of the excluded
provisions from the Services Agreement and the Registry Services Supply Agreement
referred to above do not make the prospectus misleading in any material particular by
reason of a failure to refer, or give proper emphasis, to any adverse circumstances.
20 OTHER MATERIAL MATTERS
Deed of Arrangement and Deed of Indemnity
The Trustee has entered into a Deed of Arrangements with the Manager, pursuant to which
the Manager and its authorised agents will undertake certain of the day to day administrative
functions of the Fund that would otherwise have been performed by the Trustee. The Deed
of Arrangements is dated 27 June 2005 (as amended from time to time).
BT Financial Group (NZ) Limited has entered into a Deed of Indemnity with the Trustee,
indemnifying the Trustee in respect of actions to be performed by the Manager and its
30
authorised agents under the Deed of Arrangements referred to above. The Deed of
Indemnity is dated 27 June 2005.
Exemptions applicable to externally managed group investment funds
The Financial Markets Authority has granted the following exemptions in respect of this offer
subject to the terms and conditions contained in the Securities Act (Externally Managed
Group Investment Funds) Exemption Notice 2003 (as modified by the Securities Act
(Transition to Securities Regulations 2009) Exemption Notice 2009):
i. an exemption from sections 33(3) and 33(7) of the Securities Act 1978; and
ii. an exemption from sections 52(1) and (3) of the Securities Act 1978; and
iii. an exemption from section 54 of the Securities Act 1978; and
iv. an exemption from regulation 5(1)(c) of the Securities Regulations 2009; and
v. an exemption from regulation 28 of the Securities Regulations 2009.
Risks
All investments have some level of risk. In general terms, the lower the risk, the lower the
potential returns will be over the long-term. The principal risks faced by you, as an investor,
are that you will not get all of your money back or you will receive a lower return than you
anticipated.
Your returns will vary, as with any investment that is linked to market variables (in this case
market interest rates and prepayments by borrowers). However the Fund is managed with
the objective of providing a return that is competitive with cash and short term bank
deposits. The risk of the capital value of your investment falling is expected to be low.
The main risks to Unitholders’ capital and returns are variations in the market value of the
Fund’s assets (the home loans and contractual arrangements) and market interest rate
movements. Markets are affected by a host of factors including economic, taxation and
regulatory conditions, market sentiment, political events, movements in interest rates and
currency, and environmental and technology issues.
This includes the possibility that the Fund may not be able to recover the full amount of the
loan or interest outstanding in the event of a default by the borrower, particularly if the value
of the mortgaged property has fallen and the fund’s bad debt provision has been exhausted
(in which case the release price for units could fall below $1.00 and it is reasonably
foreseeable that investors will receive less than the amount they invested). This risk is
mitigated by restricting the level of any borrowing to 80% of the home’s value, or by having a
home loan insurance policy in place for any home loans up to 90%. There is also provision
for an asset impairment reserve. The Manager is authorised to use contractual
arrangements to reduce the volatility of the returns and the risk of obtaining lower than
anticipated returns.
There is a risk that a third party may fail to pay an amount due or properly provide services
to the Fund.
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In addition, if there are a large number of withdrawals to be paid, it may be necessary to
delay the payment of withdrawals (see section 23.5 for details of suspensions). The
Manager will endeavour to minimise this risk by holding sufficient liquid assets to meet
expected withdrawals.
Changes may be made to the Fund from time to time including changing the Fund’s aim,
strategy or asset allocation targets, benchmarks and the underlying investment managers,
adding to, closing or winding up the Fund, changing the fees and charges or minimum
amounts.
Any change in tax or other applicable legislation or regulation could also impact on the
Fund’s returns.
As a PIE there is a risk that if the Fund fails to satisfy the PIE eligibility criteria (as set out in
the Tax Act), and that failure is not remedied within the period permitted under the Tax Act,
the Fund may lose its PIE status, in which case you will be personally taxed on distributions
by the Fund at your marginal tax rate. The Manager has implemented processes to monitor
ongoing PIE eligibility compliance for the Fund, and has a number of powers available to it
to proactively manage this risk. You may incur a tax liability as a result of advising the wrong
PIR or failing to advise the Manager when your PIR increases.
There is operational risk, which includes risks associated with a failure of internal processes
and procedures, fraud, litigation, disruption to business by industrial disputes, systems
failures, pandemics, natural disasters and other unforeseen external events which might
affect the business of the Manager or the Fund and its investments.
Complaints
The Manager is a member of the independent dispute resolution scheme operated by the
Banking Ombudsman and approved by the Ministry of Consumer Affairs, for the purposes of
the Financial Service Providers (Registration and Dispute Resolution) Act 2008.
Under the terms of this scheme, the Manager has three months to resolve your complaint. If
you are not satisfied by the Manager’s response you may refer the matter to the Banking
Ombudsman. You can contact the Banking Ombudsman as follows:
Physical address: Level 11, BP House
20 Customhouse Quay, Wellington 6011
Email: [email protected]
Phone: 0800 805 950
Write to: Freepost 218002
PO Box 10573, The Terrace,
Wellington 6143
New Zealand
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21 MANAGER’S STATEMENT
In the opinion of the directors of the Manager, after due enquiry by them:
a) the value of the Fund’s assets relative to its liabilities (including contingent liabilities);
and
b) the ability of the Fund to pay its debts as they become due in the normal course of
business
has not materially and adversely changed during the period between the date of the latest
financial statements referred to in this prospectus and the date of registration of this
Prospectus.
22 TRUSTEE’S STATEMENT
Please refer to page 52 of this Prospectus for the Trustee’s Statement.
A SIGNED COPY OF THIS PROSPECTUS, TOGETHER WITH COPIES OF THE
DOCUMENTS REQUIRED BY SECTION 41 OF THE SECURITIES ACT 1978 TO BE
ATTACHED TO THE PROSPECTUS, BEING THE AUDITOR’S REPORT AND CONSENT,
WERE OR HAVE BEEN DELIVERED TO THE REGISTRAR OF FINANCIAL SERVICE
PROVIDERS FOR REGISTRATION UNDER SECTION 42 OF THE SECURITIES ACT
1978.
23 SUMMARY OF THE TRUST DEED
Important Notes
The following is a summary of the principal terms and conditions of the Trust Deed. It is a
generic summary which describes the terms of the Trust Deed as they apply.
Copies of the Trust Deed are available to prospective and current Unitholders, for a fee,
upon request from the Manager at the address set out in section 2. The Trust Deed may
also be inspected at the offices of the Manager.
Defined terms are set out in the Glossary at the back of this Prospectus.
Set out below is a summary of the current terms of the Trust Deed.
23.1 Establishment of Funds
The Trust Deed governs the group investment fund known as the Westpac Mortgage
Investment Fund. The Trust Deed can be extended to new group investment funds as varied
or supplemented by the conditions of establishment and issue terms of such Funds. The
Trust Deed sets out the terms on which money is received for investment in a Fund and also
governs the trust and agency arrangements which are to be invested through the Fund.
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Unitholders are entitled to a beneficial interest in the Assets invested through the Fund, but
do not have any interest in respect of any particular part of the Fund or the Assets of the
Fund.
The Trust Deed provides that the trust arrangement may invest through the Fund in any
property or securities including cash, Cash Equivalents and loans made upon the security of
first mortgages, provided that until the Manager and Trustee agree otherwise the Fund will
be invested in loans made upon the security of first mortgages in respect of property in
New Zealand, bank deposits or other fixed interest debt securities and only in investments
permitted for designated group investment funds under the Tax Act.
For the avoidance of doubt the Trustee, at the direction of the Manager, may purchase the
equitable interest in loans and related first mortgages in respect of property in New Zealand
originated by the Westpac group of companies from The New Zealand Guardian Trust
Company Limited, in its capacity as trustee of the Westpac Home Loan Trust (the HLT
Trustee), and, provided those loans and related mortgages comply with the Authorised
Investments criteria set out above and until the Manager and Trustee agree to the contrary,
such loans and related mortgages will constitute Authorised Investments of the Fund.
In the event that the Trustee purports to acquire any mortgage from the HLT Trustee that
does not fall within the criteria set out above (being a Non GIF Compliant Mortgage) and the
Fund is not a PIE:
(a) the Trustee shall be deemed never to have acquired any title (whether legal or
beneficial) in such Non GIF Compliant Mortgage and it shall remain the property of
the HLT Trustee;
(b) the purported acquisition by the Trustee of such Non GIF Compliant Mortgage shall
be deemed not to be a breach of trust;
(c) the amount paid by the Trustee in respect of such Non GIF Compliant Mortgage
shall not be, and shall be deemed not to be, on account of any purchase price paid,
or to the extent that any Units are issued by the Trustee to the HLT Trustee, in
respect of such Non GIF Compliant Mortgage, such Units shall be deemed not to be
on account of (or in satisfaction of) the purchase price for such mortgage,
with the effect that:
(d) the Trustee shall be deemed to have held on bare trust for the HLT Trustee
(separate from the Fund) since the Closing Date in relation to such mortgage:
(i) any such Non GIF Compliant Mortgage; and
(ii) all interest and principal (whether prepaid or otherwise), and all other
amounts, received or accrued but unpaid on, or in respect of, such Non GIF
Compliant Mortgage (including any consideration or amounts received or
accrued but unpaid as a consequence of any sale of such Non GIF
34
Compliant Mortgage) (together being the Non GIF Compliant Mortgage
Receivables) since the said Closing Date;
(e) the Trustee shall account to the HLT Trustee (or the manager of the Westpac Home
Loan Trust on its behalf (the HLT Manager)) for the Non GIF Compliant Mortgage
Receivables, and shall pay to the HLT Trustee (or the HLT Manager on its behalf)
such amount on demand;
(f) in the case of any amount paid by the Trustee to the HLT Trustee in consideration
for such Non GIF Compliant Mortgage, the HLT Trustee shall be deemed to have
held on bare trust for the Trustee (separate from the Westpac Home Loan Trust)
since the Closing Date in relation to such mortgage:
(i) a proportion of the Certificate of Deposit that it holds in an amount equal to
the aggregate of the funds provided by the Trustee (or the Manager on its
behalf) in respect of such Non GIF Compliant Mortgage (being an amount
equal to the principal outstanding amount of the Non GIF Compliant
Mortgage as at the Cut-Off Date in relation to such mortgage); and
(ii) an amount equal to any interest or other amounts that have been received or
accrued and unpaid on the proportion of the Certificate of Deposit referred to
in subclause (f)(i) above since the said Closing Date, which such amount
shall either be capitalised and form part of the said Certificate of Deposit or
be held on deposit with the Westpac group of companies,
(g) and the HLT Trustee (or the HLT Manager on its behalf) shall pay to the Trustee (or
the Manager on its behalf) such amount on demand; and in the case of Units issued
by the Trustee to the HLT Trustee in consideration for such Non GIF Compliant
Mortgage:
(i) such Units shall be deemed never to have been issued, and deemed not to
be held by the HLT Trustee, and the Register shall be adjusted to reflect the
position; and
(ii) the HLT Trustee shall be deemed to have held on bare trust for the Trustee
(separate from the Westpac Home Loan Trust) an amount equal to the
distributions (if any) or other amounts received or accrued and unpaid, since
the Closing Date in relation to such mortgage, on Units equal in number to
the number of Units referred to in subclause (g)(i) above which amount shall
be held on deposit with the Westpac group of companies, and the HLT
Trustee (or the HLT Manager on its behalf) shall pay to the Trustee (or the
Manager on its behalf) such amount on demand.
23.2 Issue of Units
Units may be subscribed for only by the transfer to the Fund of Cash, Authorised
Investments or a combination of them as the Manager determines in its absolute discretion.
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The Manager may refuse an application without the need to give any reason. No interest will
be paid on any application amounts refused.
The Manager may set (and vary) a Minimum Subscription amount for the application for
Units. Applications will be processed within 2 Business Days of the Valuation Time for the
issue of such Units on or as at the date that the Manager accepts the application or on or as
at the date of receipt of the subscription amount by the Manager or the Registrar on behalf
of the Manager, whichever happens later. Prior to being processed, subscription amounts
are held on trust by the Trustee as a separate trust. Units are issued at the Current Unit
Value plus any Entry Fee determined at the Valuation Time before or immediately after (as
the Manager shall decide in respect of applications generally from time to time) the relevant
application is to be processed.
The Manager and Trustee may collect and apply any fees, commission, brokerage or
charge on subscriptions, provided the value of the Assets per Unit transferred to the Fund in
exchange for Units is equal to the Current Unit Value at the relevant Valuation Time, plus
any Entry Fee.
The Manager may in its discretion suspend the issue of Units at any time.
23.3 Redemption of Units
Unitholders may redeem Units by giving a Redemption Request to the Manager or, at the
Manager’s election, the Registrar. This must be in the prescribed form and is irrevocable.
The redemption of Units shall be completed within 2 Business Days following a Valuation
Time and within 30 days of the receipt of the Redemption Request by the Registrar. The
Manager may, at its discretion, permit a Redemption Request to be processed earlier and
may charge a fee for such earlier redemption.
The Manager may, in its discretion, at any time offer to buy back Units for the Redemption
Amount, whether or not it is willing to accept other Redemption Requests.
A Unit shall be redeemed at the Current Unit Value less any Exit Fee at the Valuation Time
either immediately before or after the Manager’s acceptance of the Redemption Request (as
the Manager shall decide from time to time). The Redemption Amount shall be paid at the
Payment Time together with the distribution of accrued Income Entitlements of the Units
redeemed.
The Manager on behalf of the Trustee may, in its sole discretion, redeem the Units of a
Unitholder if the number of the Unitholder’s Units in the Fund (after excluding the number of
Units to which the Redemption Request relates) is less than the Minimum Holding and may
refuse a Redemption Request where the Redemption Request is for less than the Minimum
Parcel of Units that may be redeemed.
The Manager on behalf of the Trustee may, in its sole discretion, redeem Units in order to
satisfy the indemnities under clauses 8.6 and 15.1 of the Trust Deed.
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The Manager may make adjustments to a Unitholder’s Units or deductions, from any
distributions or redemption proceeds of an amount equal to any tax paid by the Fund on
the income attributed to the Unitholder, and may (and intends to) redeem Units when
necessary to preserve the Fund’s PIE status.
The Manager may refuse to process a transfer where the transfer would threaten the
Fund’s eligibility for PIE status. The tax related consequences of redeeming Units are set
out in further detail in section 17.
23.4 Switching
Unitholders may apply to switch their investments in the Fund to such other funds as the
Manager may determine from time to time. A switch request will be treated as a Redemption
Request for the purposes of the Trust Deed and must comply with the relevant provisions of
the Trust Deed relating to the redemption of Units and the relevant provision of any other
trust deed under which the application for units in the switch request relates.
The Manager may refuse to process a switch where the switch would threaten the Fund’s
eligibility for PIE status. The tax related consequences of switching Units are set out in
further detail in section 17.
23.5 Suspension rights
If by reason of:
a decision to terminate the Fund; or
financial, political or economic conditions applying in respect of any real estate or
the financial markets; or
the nature of any Investment; or
the distribution of capital or Income; or
the calculation of the distribution amount or Redemption Amounts; or
the occurrence or existence of any other circumstances or event,
the Manager or the Trustee, in good faith, form the opinion that it is not practicable, or would
be materially prejudicial to the interests of Unitholders, for the Trustee to redeem Units, then
the Manager or the Trustee may give a Suspension Notice.
Redemptions are suspended until the cancellation of the Suspension Notice by the Manager
except that the Trustee may, if it thinks fit, cancel a Suspension Notice if the suspension
period has extended beyond 90 days. There is no maximum suspension period under the
Trust Deed. The Redemption Price that applies to unsatisfied Redemption Requests is the
Current Unit Value of the Fund at the last day of the period of suspension.
The Manager and the Trustee may collect and apply any fees, commission, brokerage or
charge on redemptions.
37
23.6 Transfers of Units
Unitholders may transfer their Units. A transfer instruction must be in writing in a form
satisfactory to the Registrar and must comply with any applicable law and any other
reasonable requirements the Trustee and Manager may prescribe from time to time.
Subject to any relevant legal requirements, the Manager may suspend the registration of
transfers for such periods (not exceeding 30 days in any year) as the Manager may from
time to time determine.
Under the Trust Deed, the Manager may elect to effect a transfer request either by
registering a transfer of Units from the transferor to the transferee, or by cancelling without
payment to the transferor the number of Units sought to be transferred (less any units
cancelled within the terms of the Trust Deed (including for tax reasons)) and issuing the
same number of Units as are cancelled to the transferee.
The Manager may refuse to process a transfer where the transfer would threaten the Fund’s
eligibility for PIE status. The tax related consequences of transferring Units are set out in
further detail in section 17.
23.7 Termination of the Fund
The Fund commenced on 27 June 2005 and will terminate on the first of the following days:
on a day appointed by the Manager by giving not less than 2 months’ written notice
to Unitholders and the Trustee; or
on the day on which the Trustee retires to the extent the Fund is not resettled on a
successor Trustee.
If there is no Manager, the Trustee shall use its best endeavours to secure a Successor
Manager. If the Manager goes into liquidation or ceases to carry on business (except for the
purpose of amalgamation or reconstruction) or a receiver or receiver manager is appointed
and is acting in respect of the undertaking of the Manager, or the Manager is in default in
any material respect of a material obligation owed to the Trustee under the Trust Deed
(other than as a result of a bona fide dispute), and the Manager has not rectified the matter
within 20 Business Days of receipt of notice identifying the matter and the Trustee
reasonably believes and certifies that the Manager is unable to comply with its obligations
under the Trust Deed and that it is in the interests of Unitholders generally that the Manager
cease to hold that office, the Trustee may remove the Manager by giving 3 Business Days’
notice in writing. Within 60 days of this event, the Trustee must terminate the Fund unless
the Manager has consented, in its absolute discretion, to the continuation of the Fund.
Upon the Fund being terminated, subject to the appointment of a Successor Trustee, the
Trustee shall discharge the liabilities and Expenses of the Fund (and distribute all Income
Entitlements in Cash) and then distribute to each Unitholder that Unitholder’s Share of the
net Assets of the Fund in such manner and within such period after the termination of the
Fund as the Trustee considers advisable. Such distribution may be in cash or in specie (for
example, by distributing assets which are held by the Fund) or both as the Trustee in its sole
discretion may determine.
38
Subject to the Manager being reasonably satisfied that in each case it is not, nor likely to
become materially prejudicial to the interests of Unitholders generally, the Manager may,
subject to the prior approval of the Trustee:
require Unitholders to accept repayment in respect of all or any of their Units and
apply the proceeds towards Units in an alternative fund with an investment policy
similar in all material respects to this Fund; and
transfer the Assets and liabilities of this Fund to the new Fund; and
terminate this Fund as set out above.
23.8 Investments of the Fund
The Fund shall invest only in Authorised Investments as set out in the Trust Deed and
according to any investment policy.
All Investments must be in the name of the Trustee or its nominee company. Subject to the
Trust Deed, the Trustee’s primary duty shall be to act on any direction or request by the
Manager to invest the Fund in Authorised Investments in accordance with the Issue Terms.
The Trustee shall not, however, act on any direction of the Manager to invest in, acquire or
dispose of any investment if in the opinion of the Trustee, conveyed in writing to the
Manager, the proposed investment, acquisition or disposition is manifestly not in the
interests of Unitholders or is contrary to the provisions of the Trust Deed. The Trustee shall
not be liable to Unitholders or the Manager for refusing to act on any such directions, or for
acting on any direction given by the Manager in respect of the investment, acquisition or
disposal of any investment in accordance with the Trust Deed.
23.9 Valuations
The Manager shall value each Asset of the Fund on the first Business Day of every Month,
on any other day on which the Redemption Amount is calculated, or the Current Unit Value
is to be determined in accordance with clause 3.3(b) of the Trust Deed, or at such times as
agreed by the Trustee and Manager. The Market Value of the Assets is determined in
accordance with clause 9.2 of the Trust Deed and excludes any gains or losses derived
from any interest rate swap contract or other derivative contract. Any gains or losses on
such contracts are dealt with as income and allocated to the Swap Payments Account for
the meeting of expenses.
The Manager must ascertain the Net Asset Value and Current Unit Value of the Fund at
least once a month and on any Business Day that the Redemption Amount is calculated or
the Issue Amount is to be determined in accordance with clause 3.3(b) of the Trust Deed.
The Net Asset Value of the Fund means such amount as is from time to time ascertained by
the Manager by subtracting from the Market Value of all Assets of the Fund, the total of:
(i) all liabilities of the Fund (other than a liability for PIE tax where the Manager
considers it appropriate to do so); and
(ii) all net undistributed Income; and
39
(iii) all amounts credited to the Asset Impairment Account (formerly known as the
Bad Debt Reserve).
The Current Unit Value of the Fund equals the Net Asset Value of the Fund at that time
divided by the number of Units on issue for the Fund.
23.10 Financial Statements
The Manager must prepare or cause to be prepared annual Financial Statements within 5
months of the Fund’s balance date and as required by the Exemption Notice.
The annual Financial Statements must be audited by the Auditor who shall report as
required by the Financial Reporting Act 1993 and the Trust Deed. Within 6 months of the
end of each annual balance date, the Manager shall forward a copy of the Financial
Statements of the Fund for such financial period together with the Auditors’ report to each
person who is a Unitholder.
The Auditor may be removed by the Trustee after consultation with the Manager. The
Auditor may retire by giving 90 days’ notice to the Trustee in writing.
23.11 Income and distributions
All Income accruing to the Fund shall be allocated to the Fund’s Income Account, other than
income representing accounts received on any interest rate swap or other derivative
contracts in respect of the Fund, which shall be allocated to the Fund’s Swap Payments
Account. All distributions from the Fund are deducted from the Fund’s Income Account. The
Manager may allocate amounts from the Income Account into the Asset Impairment Account
(formerly known as the Bad Debt Reserve), as it thinks fit, and may distribute to Unitholders
or allocate back to the Income Account any surplus which the Manager determines has
arisen in the Asset Impairment Account. All Expenses accruing to the Fund shall first be
deducted from the Swap Payments Account. Where there are insufficient funds in the Swap
Payments Account to pay such Expenses, the Manager may deduct such Expenses from
the Income Account. In determining Income of the Fund, the Manager shall take into
account all income due or accrued and all costs, charges and expenses due or accrued.
Any amounts received on any interest rate swap or other derivative contracts that are not
used to pay Expenses will not be taken into account for the purposes of determining the
Income of a Fund available for distribution to Unitholders as Income Entitlements (however
while the Fund is a PIE, such amounts will still form part of the Income allocated to
Unitholders for tax purposes).
Within 60 Business Days after the Distribution Date of the Fund, the Manager shall
determine in respect of each Unitholder, the Unitholder’s Income Entitlement in respect of
the relevant Distribution Period. As soon as practicable after the end of every Distribution
Period, the total of each Unitholders’ Income Entitlements shall be determined and, subject
to the Trust Deed, distributed to those Unitholders. The Income Entitlements of a Unitholder
for a Distribution Period may be rounded down to not less than the nearest whole cent.
Payments of Income Entitlements shall be made within 60 days after the last day of the
Distribution Period to which they relate.
40
Prior to distributions of income to Unitholders the Trustee will deduct from the Unitholder’s
income any unpaid Trustee and Manager’s fees.
Income Entitlements will be distributed in Cash unless the Unitholder elects, to have their
Income Entitlements distributed to them by way of the issue of additional units in the Fund.
In such case the Trustee shall on the direction of the Manager on the first Business Day of
the month immediately after the direction is made, apply and capitalise the whole or part of
the Unitholder’s Income Entitlements towards paying up in full new Units to be issued and
distributed as fully paid Units.
Unitholders may, if the Manager so elects, make a written request to the Manager on the
relevant application for Units or in such other form as may from time to time be agreed
between the Manager and the Trustee, to have their Income Entitlements distributed to them
by the way of additional Units in the Fund. Such request may be varied or terminated by
notice in writing to the Manager at any time. At the discretion of the Manager, a Unit issued
in lieu of Income Entitlements in Cash following the end of the last day of a Distribution
Period may entitle its holder to participate in the distribution for the next Distribution Period
in full, irrespective of the number of days it has been on issue during the relevant
Distribution Period.
The Manager may from time to time distribute capital of the Fund to Unitholders in Cash in
proportion to their Unitholdings.
Income Entitlements in respect of Units redeemed for the period from the previous
Distribution Date to the Valuation Time for the redemption will be distributed in Cash at the
Payment Time for the redemption.
The tax related consequences of distributions are set out in section 17 of this Prospectus.
23.12 Trustee/Manager may incur Expenses
In addition to their respective fees described below, the Manager and the Trustee are
respectively entitled to be reimbursed out of the Fund for all Expenses (including anticipated
expenses), costs or liabilities incurred by either of them in connection with acting as Trustee
and Manager under the Trust Deed. Generally, the amount of these expenses cannot be
ascertained until they are incurred and will vary from time to time. Without limiting the
generality of the foregoing, the Trustee and Manager shall be entitled to be reimbursed out
of the Fund for Expenses including, but not limited to:
all costs, charges and expenses incurred in connection with the ordinary administration
of the Fund;
any other expenditure properly and reasonably incurred by the Manager and Trustee in
connection with carrying on its duties under the Deed in relation to a Fund;
all other Fund related expenses, including compliance costs, transaction and cash
management fees, and unit pricing costs.
41
The Trustee and the Manager may incur and pay any charges or Expenses, which charges
or Expenses are, in the reasonable opinion of the Trustee, necessary, incidental to or
desirable for the carrying out of any of the purposes of the Fund or conducting the
undertaking of the Fund.
23.13 Trustee's remuneration
The Trustee shall be entitled to receive and retain for its own use and benefit out of the
Fund or out of any distribution from the Fund, such reasonable fees (plus any GST) as may
be agreed upon in writing between the Trustee and the Manager for the Trustee’s services
in respect of the Fund.
23.14 Manager's remuneration
The Manager shall be entitled to receive from the Fund a management fee of up to 1.5% per
annum (plus any GST) of the Market Value of the Assets of the Fund, such fee being
calculated daily on the basis of the Market Value of the Assets at the end of each day.
However, the Manager may decide to charge a lesser fee in its discretion, and currently
charges a management fee of 1% (plus any GST) of the Market Value of the Assets of the
Fund. The Manager’s fee shall be paid monthly in arrears in each year during which the
Manager is managing the Fund (and may be deducted by the Manager from the Fund).
The Manager may employ other members of the Westpac group of companies to provide
services. These providers may be paid from the Fund.
Any agency fees the Manager or Trustee may be entitled to for any service they undertake
as agent for the Unitholder are in addition to the above fees.
23.15 Delegation by Trustee/Manager
The Trustee and Manager may each delegate any of their powers and duties as Trustee or
Manager, respectively, to any one or more agents, representatives, officers, employees,
independent contractors or other persons without liability in the case of delegates prudently
selected, and subject, in the Manager’s case, to the Trustee’s consent.
23.16 Trustee's powers and duties
The Trustee has a duty to hold the Assets according to the directions of all Unitholders
relating to the management of the trust relationships, the assets of which are to be invested
in the Fund and the Fund itself, and shall exercise reasonable diligence to ascertain whether
or not any breach of the Trust Deed or of the offer of Units has occurred.
The Trustee, subject only to the specific limitations contained in the Trust Deed, shall have,
without further or other authorisation and free from any power of control on the part of the
Unitholders, full, absolute, and exclusive power, control and authority over the Assets to be
invested through the Fund to the same extent as if the Trustee were the sole owner in its
own right, to do all such acts and things as in its sole judgment and discretion are necessary
or incidental to, or desirable for, the carrying out of any of the purposes of the Fund.
The Trustee has the power to, at the direction of the Manager, where the Manager in good
faith determines it necessary or desirable in the general interests of Unitholders or for the
42
purposes of conducting the operation of the Fund pursuant to the Trust Deed and if the
Investment Policies so allow, borrow for the purposes of the trustee relationships governed
by the Trust Deed and/or the Fund and may give any guarantee or undertaking in relation to
the repayment of money upon such terms and conditions as the Trustee and the Manager
may think fit. However, the aggregate total borrowings by the Trustee together with any
amounts guaranteed may not exceed fifty per cent (50%) of the value of the Assets of the
Fund or, if secured against a particular Asset, 50% of the value of that Asset.
The Trustee is empowered to, at the direction of the Manager, and provided the Investment
Policies so allow, lend any money or provide any financial accommodation to, or acquire
loans secured by mortgages from, any parties for the purposes of the trust relationships
governed by the Trust Deed and may obtain security in relation to the repayment of such
loan upon terms and conditions the Trustee and Manager think fit. Such loan transactions
shall only be entered into where the Manager determines in good faith that they are
necessary or desirable to achieve the Investment Policies of the Fund.
The Trustee in relation to the Trust Deed may rely on advice from certain persons listed in
the Trust Deed, the Manager’s advice, recommendations or request, and on statements
contained in any certificates given under the Trust Deed.
The Trustee shall (except as otherwise provided in the Trust Deed) as regards all the
powers, authorities and discretions vested in it by the Trust Deed, or by operation of law,
have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and,
provided it shall not have acted fraudulently or negligently by act or omission, the Trustee
shall not be responsible for any loss, costs, damages, expenses or inconvenience that may
result from the exercise or non-exercise thereof.
The Trustee or any Related Person of the Trustee may purchase, hold, sell, invest in or
otherwise deal with Units, securities or other property of the same class and nature as any
Asset, whether on the Trustee’s or the Related Person’s own account or for the account of
another, and use in other capacities knowledge gained in the Trustee’s capacity as Trustee
provided that the Trustee or Related Person may not use any specific confidential
information that, if generally known, might be expected to affect materially the value of a
Unit or any Asset.
The Trustee and Manager may rely on the Register of the Fund as being correct if such
reliance is based on a reasonable belief that the entry in question is accurate in all material
respects.
The Trustee may with the consent of the Manager enter into arrangements for the holding
by a Custodian, on behalf of the Trustee, of Assets to be held by the Trustee in respect of
the Fund. The Trustee is entitled to be reimbursed from the Fund for any cost incurred for
engaging a Custodian.
The Trustee’s primary duty shall be to act on any direction or request by the Manager to
invest the Fund in Authorised Investments in accordance with the Issue Terms.
43
The Trustee and the Manager are not required to exercise any care, diligence and skill that
a prudent person might otherwise exercise in diversifying the Assets, to the intent that the
benefit to be derived by Unitholders and the investment risks they bear shall continue to
reflect the relevant Investment Policies.
The Trustee has covenanted to exercise reasonable diligence to ascertain whether any
breach of the Trust Deed or terms of the offer has occurred and except where it is satisfied
that the breach will not materially prejudice the interests of Unitholders, the Trustee shall do
all such things as it is empowered to do to cause any such breach to be remedied.
When the Securities Trustees and Statutory Supervisors Act 2011 comes into effect,
expected to be on 1 October 2011, any Trustee must hold a licence under that Act that
covers the Fund.
23.17 The Manager's powers and duties
The Manager is appointed by the Trustee to manage the trust relationships to be governed
by the Trust Deed and the Fund as agent for the Trustee.
Subject to the Trust Deed, the Manager shall exercise all powers and discretions reasonably
necessary or desirable to perform the functions contemplated in the Trust Deed.
Notwithstanding any other provision in the Trust Deed, the Manager has the same liability as
Manager as it would if it were exercising or performing its functions, powers or duties as
trustee of the Fund, and is entitled to the same relief from liability as it would have had if it
were the trustee.
Subject to the Investment Policies the Manager has the absolute discretion to manage the
investment of any Cash governed by the Trust Deed and the purchase, sale, transfer,
exchange or alteration of any investments governed by the Trust Deed.
Subject to the Investment Policies, the Manager may cause to be effected any contractual
transactions which the Manager considers are in the interests of Unitholders including
contractual transactions with Related Persons of the Manager provided that such
contractual transactions with Related Persons are on normal commercial terms, or terms as
favourable to the Fund as normal commercial terms.
The Manager or any Related Person of the Manager may purchase, hold, sell, invest in or
otherwise deal with Units, and securities or other property of the same class and nature as
any Asset without being liable to account therefore and without being in breach of the trusts
established under the Trust Deed, provided in the case of the Manager, that any dealings by
it with Units are on normal commercial terms, or terms as favourable to the Fund as normal
commercial terms, and in accordance with the Investment Policies.
The Manager covenants that it will:
use its best endeavours and skill to ensure that the affairs of the Fund are conducted
in a proper and efficient manner;
44
use due diligence and vigilance in the exercise of its functions, powers and duties as
Manager;
account to Unitholders of the Fund for all money it receives on behalf of the Fund;
not pay out, invest or apply any money belonging to the Fund for any purpose that it
is not directed by, or authorised in, the Trust Deed;
use its best endeavours to carry on and conduct its business as Manager under the
Trust Deed in a proper and efficient manner and to ensure that any undertaking,
enterprise, or scheme to which the Trust Deed relates is carried on and conducted in
a proper and efficient manner;
use its best endeavours to ensure that the Assets of the Fund are properly managed
in accordance with the Investment Policies,
except with the approval of the Trustee, not issue any Unit otherwise than at the
Current Unit Value;
make available to the Trustee for inspection all the books of the Manager relating to
the Fund;
pay all money belonging to the Fund, received by the Manager, to a bank account or
bank accounts, opened by the Manager in the name of the Fund as soon as practical
after receipt and in accordance with the Trustee’s directions;
ensure that all money received on behalf of the Fund is paid into a trust account
operated by the Trustee or its nominee as soon as practicable;
provide the Trustee with a copy of the Prospectus and Investment Statement and
allow the Trustee a reasonable time to comment on such Prospectus and Investment
Statement prior to its issue;
forward without delay to the Trustee all notices, reports, circulars and other
documents received by it relating to the Trustee;
forward to the Trustee all notices, reports, circulars and other documents sent by it to
Unitholders at the same time as that material is sent to Unitholders; and
provide the Trustee with quarterly certifications in relation to the Fund.
The Manager may request any Unitholder to provide information to the Manager to enable
the Manager to determine whether the Fund continues to meet the PIE eligibility
requirements and, in particular, the Manager may request any Unitholder to:
i) provide details of Units held by any associated person (as defined in the Tax Act) of
the Unitholder (including any associated person for whom units are held by a PIE investor
proxy) where the associated person holds 5% or more of the Units in the Fund; and
ii) confirm that the Unitholder either is or is eligible to be a PIE.
If the Manager requests a Unitholder to provide information to the Manager pursuant to this
clause the Unitholder shall supply information within 30 days of the request.
23.18 Trustee and Manager’s Indemnity and Limits on Liability
The Trustee and the Manager have an indemnity out of the Fund against any and all losses,
costs, and expenses incurred by the Trustee or Manager in performing any of their
respective duties, or exercising any of their respective powers pursuant to the Trust Deed
and against all actions, proceedings, liabilities, costs, claims, taxes and demands in respect
45
of any matter relating to the Fund except to the extent that any such loss, costs and
expenses have arisen out of fraud, wilful breach of trust or dishonesty on the part of the
person claiming the indemnity or, in the case of the Trustee, breach of trust where the
Trustee fails to show the degree of care and diligence required of the Trustee having regard
to the provisions of the Trust Deed. The Trustee and the Manager may retain and pay out of
monies held by them under the Trust Deed to meet this indemnity (in priority to any claims
by Unitholders) and have a lien on any part of any Asset for indemnity.
Unitholders may by Extraordinary Resolution further release the Trustee or Manager or both
either with respect to specific acts or omissions or on the Trustee or the Manager ceasing to
act in relation to the Fund.
The Trustee and the Manager may retain and pay in priority to any claim by Unitholders their
respective fees and Expenses out of moneys held in the Fund and in respect of any
indemnity to which they are entitled.
Neither the Trustee nor the Manager shall incur any liability to anyone in respect of any
failure to perform or do any act or thing which, by reason of any provision of any present or
future law or ordinance, rule, regulation or bylaw made pursuant thereto or of any decree,
order or judgment of any competent court, the Trustee or the Manager shall be hindered,
prevented or forbidden from so doing or performing.
Neither the Trustee nor the Manager shall be liable to account to any Unitholder or
otherwise for any payments or for any deductions made by the Trustee or the Manager in
good faith, on account of taxes, in reliance on any Unitholders statement, to or in respect of
Unitholders or any transaction under the Trust Deed notwithstanding that any such payment
or deductions need not have been made.
Neither the Trustee nor the Manager shall incur any liability in respect of any action taken or
thing suffered by the Trustee or Manager in reliance upon any notices or other papers or
documents reasonably believed by the Trustee or the Manager (as the case may be) to be
genuine.
The Trustee, in relation to the Trust Deed may rely on:
advice from certain persons listed in the Trust Deed without being responsible for
any loss occasioned by acting on such advice provided the Trustee had no reason to
believe the advice was not authentic;
certain statements or advice of the Manager; and
certificates given under the Trust Deed.
The Manager may act on the advice, or certificate, or any information obtained from certain
persons listed in the Trust Deed (including Related Persons) without being responsible for
any loss occasioned from so acting, provided the Manager had no reason to believe that the
opinion or advice was not authentic.
46
Except in respect of fraud or wilful default on the part of the Trustee or the Manager, in no
event shall they be bound to make any payment to Unitholders except out of funds held by it
for that purpose under the Trust Deed.
Subject to the provisions of the Trust Deed neither the Trustee nor the Manager will be liable
for the failure of any person to carry out any agreement with the Trustee or the Manager.
The Trustee and the Manager shall not be liable for the actions of their delegates, provided
they have been reasonably selected and appointed, and that the delegate is responsible to
the Fund (on reasonable commercial terms) for its non-performance.
The Manager shall (except as otherwise provided in the Trust Deed) as regards all the
powers, authorities and discretions vested in it by the Trust Deed, or by operation of law,
have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and,
provided it shall not have acted fraudulently or negligently by act or omission, the Manager
shall not be responsible for any loss, costs, damages, expenses or inconvenience that may
result from the exercise or non-exercise thereof.
The Trustee shall (except as otherwise provided in the Trust Deed) as regards all the
powers, authorities and discretions vested in it by the Trust Deed, or by operation of law,
have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and,
provided it shall not have acted fraudulently or negligently by act of omission, the Trustee
shall not be responsible for any loss, costs, damages, expenses or inconvenience that may
result from the exercise or non-exercise thereof.
None of the Trustee or the Manager, or any director or officer of the Trustee or the Manager
are indemnified against any liability for breach of trust where any such person fails to show
the degree of care and diligence required of that person in that capacity, having regard to
the provisions of the Trust Deed provided that this does not apply to a release validly given
by Extraordinary Resolution of Unitholders.
The liability of the Manager and Trustee under the Trust Deed or at law is limited to the
Assets of the Fund.
23.19 Retirement of Trustee
The Trustee must retire if required by an Extraordinary Resolution of Unitholders of the
Fund. The Manager may appoint a Successor Trustee. The Trustee may retire by giving
90 days’ notice to the Manager subject to the appointment of a Successor Trustee. On
retirement the retiring Trustee must vest the Assets in the new trustee.
23.20 Retirement of Manager
The Manager may retire, upon the appointment of a successor, by giving 90 days’ notice to
the Trustee. The Manager is entitled to receive payment or a benefit which has accrued
pursuant to the terms of the Trust Deed prior to the date of or arising on the Manager’s
retirement.
47
Notwithstanding any other provision of the Trust Deed, the Manager may, with the consent
of the Trustee, assign the benefit of its office of Manager to any other member of the
Westpac group of companies, and the Trustee hereby consents to the assumption of the
Manager’s obligations under the Trust Deed by such person.
23.21 Register of Unitholders
The Manager shall cause an up-to-date register of Unitholders to be maintained in the
Trustee’s books in respect of the Fund. The Register shall include the names and addresses
of Unitholders, the number of Units held by each Unitholder, the number of, and dates on
which Units were allotted, or transferred to or redeemed by, the Unitholder, and any other
particulars that the Manager or Trustee may consider necessary or desirable to include. The
Manager on behalf of the Trustee shall cause the Register to be audited by the Auditors
annually. The Trustee and the Manager shall be entitled to rely absolutely on an entry in the
Register as being correct if such reliance is based upon a reasonable belief that the entry is
accurate in all material respects. A Unitholder shall receive, upon request, a copy or printout
or other reproduction of any entry in the Register which relates to that Unitholder, and the
Manager shall provide the Trustee with a copy of the Register, and of all changes to it upon
request by the Trustee. The Trustee and the Manager shall for all purposes be entitled to
treat the Unitholder in whose name any Unit is registered as the absolute owner any notice
to the contrary notwithstanding, and may deal with any Unit on the direction of the
Unitholder whether named as trustee or otherwise. Except as otherwise provided in the
Trust Deed, only Unitholders whose Units are recorded in the Register shall be entitled to
exercise or enjoy the rights of Unitholders in respect of the Fund. To the extent permitted by
law from time to time, the Registrar may close the Register for inspection by Unitholders for
such period as the Registrar with the agreement of the Manager may determine.
23.22 Certificates and transfers and transmissions
Certificates shall be issued in respect of Units (including in electronic form) if and as
required by law.
If by virtue of an exemption from the Securities Act 1978, the Manager is relieved from the
requirement to issue certificates in respect of Units on the condition it sends or causes to be
sent written statements to Unitholders evidencing the nature and ownership of their Units,
the Manager shall issue such statements in accordance with the exemption.
A transfer instruction shall be in writing in form and execution satisfactory to the Registrar,
and shall comply with any applicable law and any other reasonable requirements as the
Trustee or the Manager may from time to time prescribe. Subject to any relevant legal
requirements, if applicable, registration of transfers may be suspended at such times and for
such period or periods (not exceeding in the whole 30 days in any year) as the Manager
may from time to time determine.
Any person becoming entitled to any Units in consequence of the death or bankruptcy of
any Unitholder may, upon producing such evidence as the Manager shall think sufficient to
establish that person’s entitlement to such Units, be registered as the holder of such Units
and, subject to the provisions as to the transfer contained in the Trust Deed, may transfer
such Units.
48
The Trustee or the Registrar on behalf of the Trustee may decline to register any transfer or
transmission if the provisions relating to the transfer forms, or any applicable statutory
provisions have not been complied with, or where registration would result in the transferee
having less than a Minimum Holding, or if any transfer or transmission administration fee
payable under the Issue Terms or the Trust Deed has not been paid, or if the transfer or
transmission is in respect of less than 1 Unit (or such other amount as the Manager may
from time to time determine), or if any Certificates relating to the Units to be transferred or
transmitted are not presented, or if the prospective holder of Units is subject to Relevant
Investment Restrictions or the transfer would threaten the Fund’s eligibility for PIE status.
The Manager on behalf of the Trustee may sell Units in a Fund of any Unitholder with less
than the Minimum Holdings on 3 months’ prior written notice to the relevant Unitholder.
The Manager on behalf of the Trustee may sell the Units of any Unitholder who becomes
subject to Relevant Investment Restrictions which threaten to cause, or cause, material
adverse effects to any of the Trustee, the Manager, the Registrar or Unitholders generally.
23.23 Meetings of Unitholders
The Trustee may at any time, and must upon requisition in writing of the Manager or
Unitholders holding not less than 10% of the value of Units on issue for the Fund, summon a
meeting of all Unitholders. The Manager must summon a meeting of Unitholders upon the
requisition in writing of the Trustee, or of Unitholders holding not less than 10% of the value
of Units on issue for the purpose of giving the Trustee the opinions or directions of
Unitholders in relation to the exercise of its powers. The Trustee may of its own volition or at
the request of the Manager, and must upon requisition in writing of Unitholders holding not
less than 10% of the value of Units of the Fund then on issue, summon a meeting of
Unitholders for the purpose of giving the Trustee their opinions or directions of Unitholders in
relation to the exercise of its powers. Any requisitions must state the purpose of the
meeting, the nature of the business to be conducted and the terms of any resolution to be
proposed at the meeting.
At least 14 days' written notice of a meeting is required to be given to all Unitholders by
leaving a notice at the Unitholder’s last known address and to the Trustee and Manager in
accordance with the Trust Deed.
The quorum necessary for a meeting shall be at least 5 persons present in person or by
proxy holding or representing by proxy or as attorney at least 10% of the number of Units of
the Fund on issue at the date of the meeting. If within 30 minutes from the time appointed
for any meeting a quorum is not present the meeting shall, if called by the Trustee or
Manager stand adjourned until such time and such place as the party calling the meeting
shall decide, or if called pursuant to a request of Unitholders, lapse, or if called for the
purpose of passing an Extraordinary Resolution, otherwise than pursuant to a request of
Unitholders, stand adjourned for such period as the chairman shall direct provided that not
less than 10 days’ notice of the proposed Extraordinary Resolution and of the fact that those
present in person or by proxy or by attorney will constitute a quorum at any adjourned
meeting and the place, day and hour of such adjourned meeting is given to the Unitholders
by the Trustee. At any adjourned meeting the Unitholders present in person or by proxy or
49
by attorney (whatever their number and whatever the number of Units held by them) shall
form a quorum. At every meeting of Unitholders a person nominated in writing by the
Trustee or, failing that, by Unitholders present at the meeting (who may or may not be a
Unitholder) shall preside as Chairman.
Every question submitted to a meeting of Unitholders shall be decided by voice or, if the
chairman thinks necessary or desirable, by a show of hands unless a poll is properly
demanded. The Chairman has the casting vote. If at any meeting a poll is demanded, it shall
be taken in such manner and either at once or after an adjournment as the chairman of the
meeting directs and the result of such poll shall be deemed to be the resolution of the
meeting at which the poll was demanded. The demand for a poll may be withdrawn. On a
vote by voice or show of hands every Unitholder of the Fund who is present in person or any
person who is present and representing a Unitholder of the Fund as his proxy, attorney or
representative shall have one vote. On a poll every Unitholder of the Fund who is present in
person or by proxy or by attorney or representative shall have one vote for each Unit in the
Fund carrying the right to vote at that meeting of which he is the registered holder or in
respect of which he has the authority to vote for the registered holder. The instrument
appointing a proxy or an attorney shall be in writing under the hand of the appointer or his
attorney duly authorised in writing or if the appointer is a corporation either under its
common seal or under the hand of an officer or attorney so authorised. The instrument
appointing a proxy or attorney must be given to the Manager no less than 2 clear days
before the time of the meeting.
An Extraordinary Resolution may:
sanction any alteration, release, modification waiver, variation or compromise of any
arrangement in respect of the rights of Unitholders;
assent to any alteration, modification of, variation, or addition to the provisions of the
Trust Deed or the conditions attaching to Units (except that the provision that the
Fund will be terminated on the removal of the Manager cannot be amended or
removed without the consent of the Manager);
subject to the Act give any sanction, assent, release or waiver of any breach or
default by the Manager or the Trustee under the Trust Deed;
subject to the Act discharge, release or exonerate the Manager or Trustee from all
liability for which the Manager or Trustee has or may become responsible under the
Trust Deed; or
require the Trustee to retire.
A resolution shall be deemed to have been duly passed if passed by separate ballot or at a
separate meeting of the Unitholders of the Fund.
23.24 Notices
Any notice, direction or other communication required or permitted to be sent or given, shall
be in writing and shall be given by facsimile or other means of electronic communication or
by hand delivery or post.
50
23.25 Variations to Trust Deed and Issue Terms
The Trust Deed and Issue Terms may be amended if the change:
(a) is in the opinion of the Trustee and the Manager necessary or expedient to comply
with the provisions of any statute, ordinance, regulation or by-law, or any law made
under the authority of any statute, regulation, by-law or ordinance, or is the
requirement of any competent authority; or
(b) is in the opinion of the Trustee and the Manager required by or in consequence of or
consistent with any amendment to the Act and in the opinion of the Trustee is not
materially prejudicial to the interests of Unitholders generally; or
(c) is in the opinion of the Trustee made to correct a manifest error or is of a formal,
technical or administrative nature only; or
(d) is in the opinion of the Trustee necessary or desirable for the more convenient,
economical, or advantageous working management, or administration, of the Fund,
or for safeguarding, or enhancing, the interests of the Fund, or Unitholders; or
(e) is in the opinion of the Trustee not materially prejudicial to the Unitholders of the
Fund generally; or
(f) is approved by separate Extraordinary Resolutions of Unitholders of each Fund
which in the opinion of the Trustee is likely to be affected by the proposed change; or
(g) relates only to a new Fund which is to be constituted; or
(h) is otherwise expressly authorised by the Deed; or
(i) in all other cases if the Manager has given all Unitholders and the Trustee three
months’ written notice of its intention to amend the Deed and/or the Issue Terms.
55
The following defined terms used in this Prospectus are drawn from the definitions in the Trust
Deed (all clause references are to clauses in the Trust Deed and modifications have been made to
enable incorporation of the definitions into this Prospectus) and other sources.
Act means the Trustee Companies Act 1967;
Asset Impairment Account means, in relation to a Fund, an account for accounting purposes into
which amounts are credited by the Manager from the Income Account, or from Assets in the
Balance Sheet for the Fund, as a reserve for credit impairments for all financial Assets and from
which amounts are taken to address such impairments. The Asset Impairment Account was
formerly known as the Bad Debt Reserve;
Assets means in relation to the Fund the Authorised Investments and any other tangible and
realisable assets of the Fund;
Auditors or Auditor means a chartered accountant or firm of chartered accountants appointed as
auditor or auditors of the Fund, pursuant to clause 13.2 of the Deed;
Authorised Investment means in respect of the trust arrangements, the funds and assets of which
are to be invested in the Fund, the classes of assets specified in clause 2.8 of the Deed;
Bank means any bank carrying on in New Zealand the business of banking and includes the
Reserve Bank;
Business Day means a day on which:
(a) the Manager is open for business; and
(b) the Fund’s Bank is open for business in Auckland;
Cash includes cheques, bank cheques, bank transfers and bank drafts;
Cash Equivalents means deposits in, or negotiable instruments, in each case having maturities
which are not later than the times at which the proceeds of realisation thereof are expected to be
required, and on which there is full indefeasible liability of:
(a) a New Zealand registered bank (having the meaning given to that term by the Reserve
Bank of New Zealand Act 1989) approved by the Manager for the purpose; or
(b) the New Zealand government; or
(c) a bank in which an amount is held by or under control of the Custodian;
Certificate means a certificate issued under Article 4 of the Deed evidencing that a Unit is
registered in the name of the person named in the certificate, if any;
56
Certificates of Deposit means the Certificate(s) of Deposit issued by Westpac or Westpac NZ and
held by the HLT Trustee from time to time;
Closing Date means in respect of mortgages purchased under the mortgage purchase agreement
in respect of the Home Loan Trust mortgages dated on or around the date of the Deed, the 25th
day of each month, except that the first Closing Date shall be the date specified as such in the first
Sale Notice issued under that agreement;
Cut-Off Date means, in relation to a mortgage, the date specified in the Sale Notice, as defined in
the mortgage purchase agreement in respect of the Home Loan Trust mortgages for that mortgage;
Current Unit Value means in relation to a Fund the Net Asset Value divided by the number of Units
on issue for the Fund (rounded to the extent the Manager decides);
Custodian means a custodian appointed by the Trustee with the consent of the Manager in respect
of that Fund and holding appointment from time to time pursuant to Article 10 of the Deed to hold
assets on behalf of the Trustee in respect of the Fund;
Deed or Trust Deed means the Trust Deed for the Westpac Mortgage Investment Fund dated
27 June 2005 between the Trustee and the Manager as amended from time to time;
Distribution means a payment of income or capital to Unitholders pursuant to the Deed;
Distribution Date means the periodic date the Manager may fix on behalf of the Trustee from time
to time for the purposes of determining Distributions of Income and includes the date the Fund is
terminated;
Distribution Period means the period from and including the date of the Deed for the Fund to and
excluding the first Distribution Date for the Fund and thereafter the period from and including a
Distribution Date to and excluding the next Distribution Date;
Entry Fee means such fee (if any) per Unit as the Manager may from time to time determine on
behalf of the Trustee, generally or in relation to a particular issue of Units to be a fair fee, in relation
to the Units to be issued, to provide for the likely cost of purchasing or developing Assets for the
Fund, as set out in the current offering documents for the Fund;
Exemption Notice means the Securities Act (Externally Managed Group Investment Funds)
Exemption Notice 2003;
Exit Fee means such sum (if any) per Unit as the Manager may from time to time determine on
behalf of the Trustee, generally or in relation to a particular redemption of Units to be the fair fee
payable in relation to the redemption of the Units having regard to the Manager’s estimate of the
per Unit costs, charges, expenses, disbursements, commissions, brokerage and other usual fees
which would be likely to be incurred in respect of the sale or disposal of the Assets on the date of
calculation of the Redemption Amount if all of such Assets were sold or disposed of on such date,
as set out in the current offering documents for the Fund;
57
Expenses means the expenses incurred in relation to the Fund, including those described in
clause 11.4 of the Deed;
Extraordinary Resolution is a resolution passed, at a meeting of Unitholders or the Unitholders of a
Fund, as the case may be, duly convened and held in accordance with the provisions contained in
the Deed, by at least three-fourths of the persons voting at that meeting upon a show of hands, or if
a poll is demanded, by at least three-fourths of the votes given on such a poll, voting in favour of the
resolution;
Financial Statements means the financial statements prepared in accordance with the Trust Deed,
the Financial Reporting Act 1993 and the Act;
Fund means a group investment fund established by the Trustee as a means to invest the
subscription amounts and other assets held by the Trustee under the Deed, and which is to be
governed by the terms and conditions contained in the Deed;
HLT Trustee means The New Zealand Guardian Trust Company Limited, in its capacity as trustee
of the Westpac Home Loan Trust;
Income means:
(a) in relation to any Distribution Period, the net income earned by the Fund during the
Distribution Period determined in accordance with Article 6 of the Deed; and
(b) in relation to tax, the net income of the Fund as calculated under the Tax Act;
Income Account means, an account for accounting purposes into which all gross income earned by
the Fund is credited (other than income representing amounts received on any interest rate swap or
other derivative contracts in respect of the Fund) until it is distributed to Unitholders and from which
Expenses may be deducted;
Income Entitlement in relation to a Unitholder and the Income of the Fund in a Distribution Period,
means the Unitholder’s Share (calculated on a daily basis and aggregated for each day in the
Distribution Period) of the Income accruing to the Fund on each day of the Distribution Period, after
deducting all expenses and costs relating to the Fund accruing on that day, which the Manager
decides on behalf of the Trustee to distribute in respect of that Distribution Period;
Investment means any investment (including Cash) made or held or to be made or held at any
relevant time by the Fund;
Investment Policies means, the policies in relation to investment and other matters affecting the
financial position in respect of the Fund set by the Manager which shall not include investments in
Investments other than Authorised Investments;
Issue Terms means in relation to any Fund any terms and conditions on which Units are held from
time to time as stated in the latest issued prospectus relating to the Fund which:
58
(a) prescribe Payment Times;
(b) permit telephone and electronic communication subject to the terms and conditions in
clauses 19.3 to 19.7 of the Deed;
(c) specify other terms and conditions relating to telephone and electronic communication
(clause 1.2(j) of the Deed);
(d) regulate the collection and application of any fees, commission, brokerage or charge on
subscriptions and/or redemptions (clauses 3.3(e) and 5.1 (o) of the Deed);
(e) prescribe transmission administration fees (clause 4.7(a) of the Deed);
(f) vary the entitlement to request redemption contained in clause 5.1(g) of the Deed;
(g) alter the investment duty of the Trustee or Manager (clause 12.9 of the Deed);
(h) stipulate that only certain methods or means of payment or delivery of any consideration for
the issue or redemption of Units, or of any distribution in respect of the Units, shall be
adopted or the means by which such payments or deliveries will be effected (clause 19.9) of
the Deed;
Manager means BT Funds Management (NZ) Limited, or any successor appointed by the Trustee
pursuant to clause 14.7 or 14.10 of the Deed;
Market Value means the Value of an Investment determined in accordance with Article 9 of the
Deed;
Minimum Holding means the aggregate value of Units prescribed by the Manager as the minimum
aggregate value of Units which may be held by a Unitholder or any Unitholder in a class of
Unitholders;
Minimum Parcel means the aggregate value of Units prescribed by the Manager as the minimum
value of Units which can be redeemed in any particular case;
Month means calendar month;
Net Asset Value (NAV) means in relation to a Fund such amount as is from time to time
ascertained by the Manager using the following formula:
NAV = A – (L + I + B)
where:
A = the Market Value of all Assets of the Fund, including all accrued and unreceived Income and
any other amounts which, in the opinion of the Manager, should be included for the purpose
of making a fair and reasonable determination of the total value of the Fund having due
59
regard to clause 9.2 of the Deed and generally accepted accounting practice (with any
modifications which in the opinion of the Manager, after prior consultation with the Trustee,
should be made in determining such matters) as defined in the Financial Reporting Act
1993 in respect of the Financial Statements of the Fund;
L = all liabilities of the Fund, including accrued expenses, costs and any other amounts which, in
the opinion of the Manager should be included in such aggregate for the purpose of making
a fair and reasonable determination of the total net value of the Fund having due regard to
generally accepted accounting practice (with any modifications which in the opinion of the
Manager, after prior consultation with the Trustee, should be made in determining such
matters) as defined in the Financial Reporting Act 1993 in respect of the Financial
Statements of the Fund, but excluding any amount which results from treating Units as
liabilities and any liability for PIE tax where the Manager considers it appropriate to do so;
I = all net undistributed Income (including all accrued and unreceived Income) recorded in the
Fund’s Income Account or Swap Payments Account, after deduction of all expenses and
costs (including accrued expenses and costs);
B = all amounts credited to the Asset Impairment Account (formerly known as the Bad Debt
Reserve);
Payment Time means in relation to a Unit the time prescribed in this Deed, or the Issue Terms in
relation to the issue or redemption of that Unit, for delivery of the consideration therefore. Unless it
is otherwise prescribed or requested by the Manager or the Trustee (in accordance with
section 31(2)(a) of the Act);
(a) in relation to the issue of Units it shall be the time of acceptance of the application for units;
and
(b) in relation to a redemption of Units it shall be as is reasonably practical (but no later than 2
Business Days) after the valuation Time for the transaction or the acceptance of the
Redemption Request, whichever is later;
PIE means a portfolio investment entity;
Redemption Amount means in respect of any Units the amount determined in accordance with
clause 5.1(f) of the Deed in respect of those Units;
Redemption Notice means a notice from the Manager to the Registrar which requests the
redemption of Units;
Redemption Request means a request to redeem Units in such form as the Manager may from
time to time accept on behalf of the Trustee, by a Unitholder in a Fund or the Unitholder’s agent,
requesting redemption of the number of that Unitholder’s Units stipulated in the request by the
payment of the Redemption Amount for the Units being redeemed, or the transfer from the Fund of
the Assets, referred to in clause 5.1(f) of the Deed;
60
Register means the register established and maintained in the Trustee’s books under clause 4.1 of
the Deed in respect of the Fund;
Registrar means the person from time to time holding appointment from the Manager with the
approval of the Trustee to keep on behalf of the Trustee and the Manager the register pursuant to
clause 4.1 of the Deed;
Related Person in respect of the Manager or the Trustee (as the case may be) means any of the
following in respect of that person:
(a) a “related body corporate” of that person meaning:;
- a body corporate that is the holding company or subsidiary of
another; or
- a body corporate where there is another body corporate to which
both the first and second bodies corporate are related by virtue of
(a) above;
(b) any director or shareholder of that person;
(c) any person in which a person referred to in paragraphs (a) or (b) above has a material
financial interest; or
(d) any unit trust, registered superannuation scheme or group investment fund or similar
scheme that is owned by, managed by or controlled by that person or a related body
corporate of that person;
Relevant Investment Restrictions means any statutory, regulatory or other restriction, ruling,
requirement or condition:
(a) imposed by or under any jurisdiction other than that of New Zealand and applying as a
result of an offer of Units, or of a person becoming a Unitholder with or without an offer, the
effect of which is to cause the Trustee, the Manager or the Registrar, or any person acting
for or on behalf of any of them to be liable to any proceedings, penalty, tax, duty, fine or
advertising, registration or filing requirements or other onerous obligation, other than an
obligation voluntarily accepted in writing by the person so liable; or
(b) which in New Zealand or elsewhere may attach a disability to the Fund by virtue of the
acquisition or holding of Units by a category of persons determined under any such
legislation, regulation, ruling, requirement, condition, or restriction (whether by classification
as overseas persons or otherwise) where the Manager and the Trustee determine that the
disability is material and adverse to the attainment of the objects of the Fund, or to the
interests of Unitholders generally;
Securities Act means the Securities Act 1978;
Securities Regulations means the Securities Regulations 2009;
61
Suspension Notice means a notice given by the Manager or the Trustee under clause 5.1(e) of the
Deed;
Swap Payments Account means an account for accounting purposes into which all amounts
received on any interest rate swap or other derivative contracts in respect of the Fund are credited
by the Manager in order to pay the Expenses of the Fund;
Tax Act means the Tax Administration Act 1994 and the Income Tax Act 2007;
Trustee means The New Zealand Guardian Trust Company Limited or any trustee on which the
Assets of the Fund are resettled in accordance with clauses 12.12 and 12.13 of the Deed (being a
trustee company as defined in the Act) or which assumes the rights and duties of trustee under this
Deed in accordance with clauses 12.12 and 12.13 of the Deed;
Unit means a unit of beneficial interest in the Assets invested through the Fund and in relation to
the Fund, means a Unit in that Fund;
Unitholder means a person whose name appears in the Register as a holder or a joint holder of a
Unit in the Fund;
Unitholder’s Share means the product of dividing a total amount to be shared by the number of
Units on issue at the relevant time and then multiplying the product by the number of Units held by
the Unitholder at that time;
Valuation Day means any Business Day, whether periodic or otherwise, specified as the day on
which the Net Asset Value and Current Unit Value are determined in accordance with Article 9 of
the Deed;
Valuation Time means in relation to a Fund the time determined for the valuation of the Assets of
the Fund in accordance with clause 9.1 of the Deed;
Westpac means Westpac Banking Corporation;
Westpac NZ means Westpac New Zealand Limited.