1 BT Lifetime Super Employer Plan Part 2 - Additional Information Booklet Part 2 Dated: 1 September 2016 Last updated: 1 September 2016 About this Additional Information Booklet This document is Part 2 of the Additional Information Booklet for BT Lifetime Super Employer Plan (BT Super). The information in this document forms part of the Product Disclosure Statement (PDS) for BT Super dated 1 July BT Lifetime Super Employer Plan forms part of the Retirement Wrap (the Fund) ABN and is issued by BT Funds Management Limited ABN , AFSL BTFM, Trustee, we, our or us, the trustee of Retirement Wrap. The Additional Information Booklet is in three parts: Part 1 General Part 2 Part 3 Insurance This Additional Information Booklet Part 2 (this Booklet) will be updated from time to time without notice. You should read the latest edition of this document, together with the PDS, before making a decision to invest in BT Super. Please contact us to ensure you have the current edition.
2 How we invest your money Your Options 1 Understanding Your Options 2 Option Choices 10 Menu Review 12 Option Profiles 13 The information in this Booklet is general information only and does not take into account your personal financial situation or needs. You should consult a financial adviser to obtain financial advice tailored to your personal circumstances. The PDS and this Booklet can only be used by persons receiving it (electronically or otherwise) in Australia and applications from outside Australia will not be accepted. The Trustee may accept or reject an application without giving reasons. An investment in BT Super is not an investment in, deposit with, or any other liability of, Westpac Banking Corporation (Westpac) ABN , or any other company in the Westpac Group. It is subject to investment risk, including possible delays in repayment or loss of income and principal invested. Except as expressly disclosed in the PDS or Additional Information Booklet, Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of any investment options or any related assets of BT Super. Information in the PDS or this Booklet is subject to change from time to time and may be updated by us. Updated information, if it is not materially adverse, can be obtained by going to our website at bt.com.au, contacting the financial adviser for your BT Super account (your Financial Adviser) or by calling BT Customer Relations. You can request a paper copy of the PDS, the Additional Information Booklet or any updated information at any time and this will be provided free of charge at bt.com.au or by calling us on Contact us If you have any questions about your super, please call BT Customer Relations on between 8.00am and 6.30pm (Sydney time), Monday to Friday or
3 How we invest your money Your Options Our aim is to bring you the very best opportunities, to help you achieve your specific investment s. We encourage you to consider choosing a combination of investment options to suit your life stage, specific needs and tolerance for risk. You have two alternatives for how you may invest your money with BT Super. Changes to Options To ensure that the range of investment options continues to suit the investment needs of our investors, we regularly monitor our investments. We may add, close, vary or terminate investment options without prior notice to investors. From time to time, the asset class allocations for an investment option may be temporarily outside the asset allocation ranges. If an investment option is terminated, we may switch your account balance in that investment option to another investment option of our choice. We will notify you about any material changes to the investment options. Alternative 1: Default Option If you don t make a choice, your money will be invested in the BT MySuper Lifestage Option applicable for your age. Your BT MySuper Lifestage Option aims to achieve an appropriate level of risk and return by automatically adjusting the mix of assets throughout your life. When you re younger (and you have more time to withstand ups and downs in your investment), your BT MySuper Lifestage Option will be more growth oriented to target a higher return. The asset allocation and ranges of your BT MySuper Lifestage Option change as you get older as your investment option becomes more conservative by reducing the allocation of growth assets, such as shares and property, and increasing the allocation of defensive assets, such as fixed interest and cash. We may change the asset allocation to suit market conditions but will stay within the minimum and maximum range shown in brackets. Please refer to the table below for the strategic asset allocation and ranges as at 1 July 2016 or Section 5 of the PDS for more information about the BT MySuper Lifestage Options. BT MySuper Lifestage Option Asset Type (%) 1940 s 1950 s 1960 s 1970 s 1980 s 1990 s 2000 s Equity Australian (Listed) Range (0-26) (0-30) (12-42) (22-52) (22-52) (22-52) (22-52) Equity International (Listed) Range (0-23) (0-28) (12-42) (24-54) (24-54) (24-54) (24-54) Property Australian (Listed) International (Listed) Australian (Unlisted) International (Unlisted) Range (0-21) (0-21) (0-25) (0-27) (0-27) (0-27) (0-27) Commodities International (Listed) 0 (0-5) 1 (0-6) 1 (0-6) 2 (0-7) 2 (0-7) 2 (0-7) 2 (0-7) Other Growth Alternatives Other Defensive Alternatives Range (0-9) (0-9) (0-10) (0-10) (0-10) (0-10) (0-10) Fixed Income Australian Range (11-41) (8-38) (0-26) (0-16) (0-16) (0-16) (0-16) Fixed Income International Range (14-44) (10-40) (0-28) (0-16) (0-16) (0-16) (0-16) Cash Australian Range (0-31) (0-28) (0-21) (0-18) (0-18) (0-18) (0-18) 1
4 Alternative 2: Choose your own investment option You can choose from more than 40 investment options, managed by a range of leading investment companies, covering a broad range of risk and return profiles. You can choose multiple investment options and can change your investment choice at any time. Please refer to investment option choices in this section for a list of available investment options. Understanding Your Options Each of the investment options available within BT Super is managed in one of the following ways: > > BT Management (Institutional) Limited (BTIM) > > BT Multi-, a range of s selected by our specialist investment team (BT Multi) > > BT Partner Options (BT Partner) > > External Managers (External). BT Management Options BT Multi- Options BT Partner Options The BT Management Options are managed by BT Management (Institutional) Limited (BTIM) ABN AFSL and a number of external s with complementary capabilities. BTIM offers investors a range of investment choices including Australian shares and listed property, fixed income and cash, absolute return investments, international shares and property. To complement its in-house expertise, BTIM partners with leading global and domestic investment s. The BT Multi- Options provide exposure to a range of complementary investment s that have been assessed by Advance Asset Management Limited (Advance) ABN AFSL as being among the best from Australia and around the world. Each of these investment options offers a single investment option that can diversify across three levels: > > across types of asset classes like shares, property, cash investments etc > > within each of the asset classes such as different companies, geographies, industries and currencies > > across investment s. This multi-level diversification helps to reduce risk and aims to improve the consistency of returns by taking advantage of the highs and the lows, and spreading risk across different types of investments. Advance is a specialist asset management business within the BT Financial Group. Its focus is on asset allocation and risk management, implemented through a multi- process. The Advance investment team provides in-depth monitoring and analysis of the funds and the underlying investment s to determine the asset allocation, and to select and blend the investment s, aiming to deliver consistent outperformance across the business cycle within an actively managed risk management framework. Each BT Partner Option is managed by a carefully selected external investment with a distinct investment style, making it easy for you to choose one investment style, or diversify across multiple investment styles, in both Australian shares and international shares. s tend to concentrate on a particular investment style defined as growth, value or core. > > Growth investing in shares of companies whose sales or earnings are expected to grow faster than the average for the market. > > Value investing in shares of companies that have generally fallen out of favour with the market, with their share price being low compared with their earnings or assets. > > Core investing in both growth and value shares, without a predetermined growth or value bias. Advance is a specialist asset management business within the BT Financial Group. Its focus is on asset allocation and risk management. The Advance investment team provides in-depth monitoring and analysis of the funds and the underlying investment s. 2
5 External Manager Options The External Manager Options are managed by a range of leading investment s. These Options give you the ability to diversify across asset classes and investment s without having to deal separately with each investment. Currently, the External Manager Options invest in funds operated by the individual investment s as set out in the investment option profiles. The investment s may invest the assets in managed funds that they operate or they may manage the fund s assets directly. We regularly monitor and review the quality of the External Manager Options. Asset classes explained The four major asset classes are shares, property, fixed interest securities and cash. Alternative investments are an additional asset class. Shares Property Fixed interest securities Cash Alternative investments Shares (also known as equities) represent a part ownership in a company. Investors are entitled to share in the future of that company, including receiving income (dividends) as well as the potential for capital gains if the share price rises. Shares have historically delivered the best return of the major asset classes over the longer term. However, they are the most volatile over the short term as their value can be impacted by the expectation of their earnings and profits, industry trends and general market sentiment. Property includes residential, commercial and industrial property. s in property may be made directly or indirectly via property trusts or by buying shares in property companies which may be listed on a stock exchange. Property trusts and companies can invest in shopping centres, office towers, hotels and factories or in unlisted property investment vehicles such as private equity vehicles, mortgage securities and mortgage trusts. Property can produce a return in the form of capital growth (from the rising value of the investment) and income (typically from rent). Property related investments are historically less volatile than shares and provide potential for higher returns than fixed interest securities and cash. However, they are also subject to market sentiment and are influenced by general economic conditions and events that affect the overall share market. Fixed interest securities represent loans to borrowers such as governments, banks or companies who may be financing investment projects. They include bonds and structured finance products. The borrower generally pays a pre-determined rate of interest for an agreed term. When the term has expired, the fixed interest security may be redeemed for cash. Fixed interest securities are generally less volatile than shares or property but historically they have also earned less over the long term. They are subject to movements in interest rates. Generally, as market interest rates rise, the value of the fixed interest security will fall. Cash generally refers to investments in the short-term money market including short-term bonds issued by high quality companies or governments. Short-term typically refers to investments that mature in less than 12 months. Cash is the least risky of the four major asset classes. Historically it has generated the lowest returns of the four major asset classes over the longer term and values may be eroded by inflation. Alternative investments refers to investments that don t fall within the main asset classes. Alternative investments can be based on publicly traded securities like shares, bonds and derivatives, and include hedge funds, absolute return funds and commodity investments. Some alternative investments are based on private securities and include venture capital and private equity. strategies that may be found in some alternative investments include the use of gearing, short selling (selling something you don t own with a view to buying it back later at a lower price) and more extensive use of derivatives. Alternative investments have a very wide range of return, risk and correlation characteristics. Some have high return expectations and can be risky. Some have lower return expectations and can be less risky. Some have low correlation to the traditional asset classes although this is not always the case. When added to a portfolio of traditional assets they have the potential to improve the return of that portfolio, reduce the risk of that portfolio or a combination of both. How can you change your investment option? > > Online at bt.com.au log in to your BT Super account online and make your selection, or > > Choice/Switch Request form complete the form available on our website at bt.com.au. Important: Before you decide how you want your super to be invested, you must consider the likely investment return, risk and your investment timeframe. 3
6 Seek advice from a financial adviser Choosing your investment option is best done with the support of a financial adviser. A financial adviser will take a holistic view of your financial s and your risk profile and make recommendations on which investment options will be the best for you. If a financial adviser has not been appointed for your BT Super account and you want to be put in touch with a financial adviser, please call BT Customer Relations on and we will help you find one in your area. An important note about references to assets and asset classes A reference in this Booklet to the Fund, BT Super or an investment option investing in a specific asset or asset class includes all types of investments which give exposure to that asset and the related asset class, directly or indirectly, including through derivatives and investment in other funds (including other BT funds), and through any type of investment which would ordinarily be understood in financial markets to be included in that class. For example, investment in Australian shares includes investment in Australian share futures, derivatives based on an index of Australian shares and funds which invest primarily in Australian shares. Australian shares also includes any shares, units or other securities listed on an Australian exchange or issued or guaranteed by an Australian entity. An investment in international shares includes investment in international share futures, derivatives based on an index of international shares and funds which invest primarily in international shares. A statement that the investment option invests in a particular class of asset does not preclude investment in other types of assets where we consider it appropriate to do so in the interests of investors. Other investment techniques and securities s may use various investment techniques and securities to protect and enhance returns. Currency management Investing in assets that are denominated in foreign currencies means you re exposed to movements in those currencies. Currency markets can be extremely volatile and affected by a host of factors. Currency hedging is an investment that aims to reduce risk, thereby protecting and potentially improving returns. However, it may also reduce the potential gain from investments. Derivatives such as forward foreign exchange contracts are used to reduce the impact of fluctuations. An investment option with exposure to international assets can have the exposure unhedged, partially or fully hedged and/or actively managed. Unhedged investment options are fully exposed to the impact of movements in the Australian dollar, relative to foreign currencies for all international assets. Passive management through hedging, attempts to smooth out the effects of fluctuation. This involves either fully or partially hedging portfolios with assets denominated in foreign currencies. Some investment s employ active management. This investment approach seeks to use trading on foreign exchange markets as an independent source of fund returns. Active management has the potential to add further value but can also expose a fund to greater risk. Derivatives These are investments whose value is derived from other assets, such as shares, and these may be used as part of the portfolio management process. Futures contracts and options are examples of derivatives. Derivatives may be used to reduce risk and can act as a hedge against adverse movements in a particular market and/or in the underlying asset. Derivatives can also be used to gain exposure to assets and markets. While derivatives offer the opportunity for significantly higher gains from smaller investment (because of the effective exposure obtained) they can also produce significantly higher losses, sometimes in excess of the amount invested. The investment s are required to have strict policies and procedures on the use of derivatives and generally are not permitted to use derivatives to gear the investment options unless otherwise stated. Hybrid securities These are securities that combine both debt and equity characteristics and are used by companies to raise money. They include convertible preference shares and notes, preferred units and stapled preference shares and notes. These securities usually provide a fixed rate of return. Manager selection process We apply a robust, structured research process to the selection of s. Our size, scale and research capabilities ensure you have access to the world s best specialist investment s. For the BT Multi- Options, Advance s team of investment specialists is responsible for selecting and monitoring the line-up to ensure it s the right blend for the current and future anticipated market conditions. We may also use the services of specialist investment consultants to assist, where we consider it appropriate. 4
7 Changes to investment s and investment options We review investment s and investment options to ensure we continue to offer a quality range of investment options. As part of this review process, we may remove or add an investment, change investment consultants and, for the BT Multi- Options, change the way in which the funds invest in underlying assets. For the BT Management Options, BTIM may change which assets they manage internally or outsource to an external. For the External Manager Options, we may change an investment and change the name of the corresponding investment option. We may do these things at any time and in some cases without notice. Where we don t give notice, we will notify investors of any material changes relating to the investment options in the next regular communication following the change, or as otherwise required or permitted by relevant law. We can change an investment option s and (including the benchmark), asset allocation neutral position and ranges, and (if any), without prior notice. We provide no assurance that any investment options currently available in BT Super will continue to be available in the future. Changes to investment s together with information about current investment s for particular investment options will generally be posted on our website at bt.com.au. Labour standards and environmental, social and ethical considerations The underlying investment s may have various policies regarding the extent to which they take into account labour standards or environmental, social or ethical considerations when investing. Other than as disclosed in the following pages, we do not consider such factors when selecting, monitoring or replacing investment s. For more information, please refer to the underlying PDSs for the investment options on our website at bt.com.au/employerplan. BT MySuper Lifestage Options A significant proportion of the BT MySuper Lifestage Options international shares and Australian shares exposure is invested in strategies for which environmental, social and corporate governance (ESG) factors are key drivers of the investment process. Other than in these strategies, we do not use labour standards, environmental concerns, or social or ethical considerations as the sole basis to make investment decisions, appoint investment s or enter into investment strategies, though we may consider ESG factors where such factors have potential to affect the financial performance of investments. The proportion of international and Australian shares where ESG factors are taken into account in investment decision making are not set, and may vary from time to time at the discretion of the underlying investment s of the BT MySuper Lifestage Options. In these strategies, ESG factors may be the sole basis for investment decision making. Neither we nor the investment of the BT MySuper Lifestage Options have pre-determined views regarding what constitutes labour standards or environmental, social or ethical considerations or how (or the extent to which) these matters should be incorporated into investment practices. Once appointed, to the extent an underlying investment of the BT MySuper Lifestage Options considers it appropriate and having regard to its investment, ESG factors will be included in their investment processes. We take an integrated approach to the consideration of ESG factors and we believe this enhances our ability to meet the long-term investment s for the BT MySuper Lifestage Options and provides greater insight into investment risks across all time frames. The level of ESG integration included in an investment s and the individual investment capabilities is a factor we consider as part of our investment selection process. We have no predetermined view as to how far the level of ESG integration should be taken into account in the selection process. Once appointed, to the extent an investment considers it appropriate and having regard to its investment, we encourage an investment to include ESG factors in their investment processes (although we do not mandate that they are obliged to take such factors into account). We re committed to practising active ownership and to working with s to ensure voting rights are exercised appropriately. Further detail concerning the Australian and International share components Underlying investment s assign an environmental, social and financial ranking to each company. These rankings are taken into account when the fund invests, and may result in companies being excluded from the investible universe on the basis of these rankings. Companies representing all major industry sectors are included in the s portfolio, though companies with higher rankings within individual sectors are generally favoured. The ranking criteria applied to the fund s investments may exclude some companies from the investible pool of the fund s portfolio. For this reason the fund s performance may vary when compared to other funds that are able to invest in these companies. 5
8 BT Ethical Share Option For the BT Ethical Share Option, BTIM takes labour standards, environmental, social and ethical considerations into account, as well as key financial criteria, when selecting, retaining or realising investments of the underlying fund. s are: > > negatively screened for companies involved in uranium, alcohol, tobacco, gaming products, weapons, pornography and companies with environmental or human rights prosecutions, and > > positively screened for companies with a sustainable approach to the production of goods or services. The sustainability criteria employed includes areas such as environmental issues, employment practices, and corporate governance and ethics. The positive and negative screening process conducted for the underlying fund is described below. Negative screening means that BTIM excludes companies which do not meet their criteria as set out below. Negative screens are used to exclude companies as follows: > > Uranium: companies which directly mine uranium for the purpose of weapons manufacture > > Alcohol and tobacco: producers of these products > > Gaming: manufacturers and providers of gaming facilities > > Weapons: manufacturers of weapons and armaments > > Pornography: manufacturers and distributors of pornography are excluded if revenues from manufacture or distribution of pornography represent greater than 10% of revenues > > Environment: companies that have committed significant or recurrent breaches of environmental regulation > > Workplace and business ethics: companies that have committed significant or recurrent breaches of workplace health and safety, anti-discrimination, equal opportunity, trade practices, or industrial relations legislation. Positive screening means that BTIM actively identifies companies that meet specific criteria either through involvement in Sustainable Industries or by exhibiting a Leadership Position on Sustainability. Sustainable Industries Companies that provide sustainable products and services are identified through active assessment of product/service characteristics. This may include products and services that provide a direct benefit to social and/or environmental outcomes such as: > > Environmental management or remediation > > Environmental technologies > > Energy efficiency and renewable energy > > Low-impact products or products that reduce ecological footprint > > Sustainable buildings and property development > > Sustainable land use and food production > > Improved health and community wellbeing. BTIM looks for any company with significant involvement in these industries. Leadership Position on Sustainability This includes companies which rate above sector peers on BTIM s valuation driven process. In assessing this BTIM have regard to sustainability, policy, management and performance in the following areas: > > Environmental management including for example, climate change, greenhouse gas emissions, energy and water use > > Business ethics and conduct, including stakeholder relations > > Occupational health and safety management and performance > > Human capital management, including workplace relations, equal opportunity, consultation and participation in the workplace and employee conditions and benefits. s are monitored and reviewed regularly to ensure they remain within the guidelines and screening process relating to labour standards and environmental, social and ethical considerations (usually monthly, but this timeframe is not fixed). If BTIM s review process identifies that an investment ceases to comply with the investment guidelines and screening process for the fund, the investment will usually be sold as soon as reasonably practicable, having regard to the interests of investors (but this may vary on a case by case basis). For more information about BTIM s approach to labour standards and environmental, social and ethical considerations, please refer to the underlying PDS available on our website at bt.com.au/employerplan. BT Property Securities Option additional restrictions on withdrawals and early fund termination The BT Property Securities Option invests in the BT Property Securities Fund (referred to as underlying fund in this section) which is managed by BTIM. BT Funds Management Limited is the responsible entity of the underlying fund (the Responsible Entity). It is important you understand the risks of investing in the BT 6
9 Property Securities Option in relation to liquidity risk and the ability to make withdrawals. There may be circumstances where your ability to withdraw from the investment option is restricted. We may suspend a payment or transfer of a member s benefit if we are unable to redeem sufficient underlying investments due to the suspension or delay of withdrawals from the underlying fund. Withdrawal requests may be suspended or delayed by us if sufficient assets of the underlying fund cannot be realised to finance the withdrawal benefits due to circumstances outside our control e.g. restricted or suspended trading in the market for an underlying asset or where the underlying fund becomes illiquid. If the underlying fund s assets are illiquid (as defined in the Corporations Act) withdrawals from the investment option will only be possible if the Responsible Entity of the underlying fund makes a withdrawal offer in accordance with the Corporations Act. Under the Corporations Act, a fund is illiquid if it has less than 80% liquid assets (generally cash and marketable securities). The Responsible Entity is not obliged to make a withdrawal offer. However, if it does, we will only be able to redeem underlying investments to satisfy members withdrawal benefits in accordance with the terms of a current withdrawal offer. If an insufficient amount of money is available from the underlying assets specified in the withdrawal offer to satisfy withdrawal requests, the requests will be satisfied proportionately amongst those investors wishing to withdraw from the underlying fund. This will affect the proceeds available to us to finance members withdrawal benefits. The constitution of the underlying fund also contains specific provisions in relation to withdrawals. These provisions are summarised in the PDS for the underlying fund. For more information, visit bt.com.au/employerplan. Managing liquidity As the investment of the underlying fund, BTIM will endeavour to maintain sufficient liquid assets and limit the underlying fund s exposure to unlisted property investments. There is a risk, however, that the underlying fund s illiquid assets may exceed this level due to circumstances outside BTIM s control such as unusually high withdrawals from the underlying fund or market movements. Where the Responsible Entity of the underlying fund is of the opinion that the withdrawal of units from the underlying fund would be prejudicial to the interests of its investors as a whole, it may suspend the processing and payment of withdrawals. Where the Responsible Entity believes there is a continuing risk that processing withdrawals will or may have the effect of disadvantaging investors of the underlying fund, it may in addition: > > apply the withdrawal procedures prescribed under the Corporations Act for illiquid schemes (if the underlying fund is deemed illiquid as described above) > > with investors consent, transfer the underlying fund s illiquid investments to investors in full or partial payment of their withdrawal requests, or > > determine whether it is in the best interest of all investors to terminate the underlying fund if the underlying fund is terminated, the assets of the underlying fund will be realised as soon as practicable and the proceeds paid to investors as soon as they become available. In the case of illiquid assets, it may be a considerable period of time before the proceeds of realisation of those assets become available for distribution, and it may not be possible to realise them at their optimum value. Where the Responsible Entity of the underlying fund exercises any of its powers in relation to withdrawals this will also affect our ability to finance withdrawal requests from the Option (i.e. withdrawal requests are likely to be suspended or delayed by us). After taking into account the information above you should carefully consider, in consultation with your Financial Adviser, whether an investment in the BT Property Securities Option will meet your financial needs and in particular, whether you may have a need now or in the future, to be able to withdraw all of your investment within a short timeframe. Underlying PDS A number of the investment options invest in separate financial products, which are each issued by an external fund, which have their own disclosure document (e.g. PDS) referred to as an underlying PDS in this section. Each underlying PDS includes important details which are in addition to the information provided in the investment option tables on the following pages. Please refer to the table on the following page for information on the differences in the rights you have when investing through BT Super compared to investing directly in the underlying funds. To understand all of the fees in relation to an investment option, you must consider both the BT Super PDS and the relevant underlying PDS. The underlying PDS for each investment option is available on our website at bt.com.au/employerplan. You can also obtain a paper copy without additional charge by contacting BT Customer Relations on or your Financial Adviser. You should only make a decision in relation to an investment option (including an initial investment, additional investment or switch) after considering the relevant underlying PDS. 7
10 Investing through BT Super and investing directly the differences There are differences between the rights you have when investing through BT Super and the rights you would have if you invested directly in shares or other vehicles. The table below outlines the differences. Investing through BT Super Access to wholesale managed funds BT Super may give you access to a range of wholesale managed funds (depending on the investment option you select). Consolidated reporting You will receive consolidated reporting on your BT Super account. Beneficial ownership of your managed funds The Trustee is the legal owner of your units in the underlying managed funds, although they are held for your benefit. No communications from other fund s Because the Trustee holds the underlying wholesale managed fund units for your benefit, you will not normally receive communications in respect of the underlying managed funds, such as annual or other reports, notices of meetings, or notification of changes in investment policies and fees, from the fund s. You can obtain this information by providing us with instructions specifying the information you require. If you do instruct us to provide this information, we reserve the right to charge a minimum of $10 for each item requested. This charge would be deducted from your BT Super account. Cooling-off right exercisable against the Trustee Some members are entitled to a 14-day cooling-off period with respect to BT Super. Please refer to Cooling-off period in the Other information section in the Additional Information Booklet Part 1 General for information about cooling-off. Cooling-off rights are exercisable against the Trustee. There is no direct cooling-off right against the underlying fund s. Access to BT Super complaints resolution arrangements If you have an enquiry or complaint about your investment in BT Super you may utilise the BT Super complaints resolution arrangements. Please refer to Complaints resolution in Section 9 of the PDS for more information. Investing directly Limited access to wholesale managed funds You would not normally have access to the range of wholesale managed funds that BT Super may give you access to (depending on the investment option you select) unless you have large sums of money to invest. Reporting is not consolidated Your reporting would be on a fund-by-fund basis. Direct ownership of your managed fund investment You would be the legal and beneficial owner of your units in the managed funds and acquire all rights attaching to unit ownership. Reporting is not consolidated You would receive regular communications directly from each fund in respect of the managed funds including annual reports, notices of meetings and notification of changes to fees and investment policies. Cooling-off right exercisable directly against fund s You may be entitled to a 14-day cooling-off period with respect to your managed funds. Your cooling-off right would be exercised directly against the relevant fund s. Access to fund s complaints resolution arrangements You may utilise the complaints resolution arrangements made available by the relevant fund s. 8
11 Things you should know about investing in the BT Multi- and External Manager Options An investment in the BT Multi- or External Manager Options is not a direct investment in the underlying fund(s) operated by the external investment (s). For the External Manager Options, the following may differ from that of the underlying fund(s): > > Asset allocation we may retain cash to ensure more prompt processing of withdrawals, so the asset allocation neutral position of the investment options will differ from that of the underlying fund(s). > > Performance due to factors such as valuation timing differences, differences in fees and charges, distributions (as we may retain cash for liquidity purposes) and higher cash holdings, the performance of the investment options may not track that of the underlying fund(s). Performance information The latest information about performance and how performance is calculated is available from our website at bt.com.au, BT Customer Relations or your Financial Adviser. returns are historical and can be volatile. Past performance is not a reliable indicator of future performance and future performance is not guaranteed. The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The Standard Risk Measure allows you to compare the level of risk of the investment options within BT Super as well as other investment options available through other super funds. When comparing the level of risk of investment options, it s important to take into consideration the investment option s investment, investment and the strategic asset allocation. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for example, it does not detail what the size of the negative return could be or the potential for a positive return to be less than the return you require to meet your investment s. It also does not take into account the impact of administration fees and tax on the likelihood of a negative return. You should ensure you re comfortable with the risks and potential losses associated with the investment options you choose to invest in. For information on the methodology used in the calculation of the Standard Risk Measure, please go to bt.com.au/help/standard-risk-measure.asp. Standard Risk Measures We have allocated each of the investment options a Standard Risk Measure. Please refer to the Option Choices tables for the Standard Risk Measure for each investment option. Please refer to the PDS for the Standard Risk Measures for the BT MySuper Lifestage Options. The Standard Risk Measure for each investment option is based on an estimate of the number of negative annual returns that may be experienced over any 20 year period as shown in the table. Standard Risk Measure Estimated number of Risk negative annual returns Risk label band over any 20 year period 1 Very low Less than Low 0.5 to less than 1 3 Low to medium 1 to less than 2 4 Medium 2 to less than 3 5 Medium to high 3 to less than 4 6 High 4 to less than 6 7 Very high 6 or greater 9
12 Option Choices Risk category Asset category 1 Option Option name Standard Risk Measure 2 Estimated fee 3 (% pa) Estimated Performance fee (% pa) Estimated Buy sell spread 4 (%) Stable Cash BTIM BT Cash 2. Low 0.35 N/A 0.00 Conservative Diversified BT Multi BT Multi- Conservative 3. Low to medium Conservative Diversified BTIM BT Conservative Outlook 3. Low to Medium Conservative Conservative Fixed Interest Fixed Interest BT Multi BT Multi- Fixed Interest 3. Low to Medium External Macquarie Diversified Fixed Interest 6 3. Low to Medium N/A N/A N/A 0.16 Moderate Diversified BT Multi BT Multi- Balanced 5. Medium to High Moderate Diversified BTIM BT Balanced Returns 5. Medium 0.60 N/A 0.25 to High Dynamic Diversified BT Multi BT Multi- Growth 6. High Dynamic Diversified BTIM BT Future Goals 6. High 0.60 N/A 0.31 Dynamic Property BTIM BT Property Securities 7. Very High 0.60 N/A Diversified (or multi-sector) investment options provide you with access to investments across multiple asset classes in one investment option. Asset classes are explained in detail under Asset classes explained in this section. 2 Standard Risk Measures have been determined independently and have not been provided by the investment s. Please refer to Standard risk measures in this section for more information. 3 Estimates are based on the latest available figures at the date of this document and may include underlying expense recoveries, where applicable. 4 Estimates are based on the latest available figures at the date of this document. The cost of the buy-sell will generally be incurred partly when you invest and partly when you withdraw from an Option. Please refer to Transaction costs in the Fees and other costs section in the Additional Information Booklet Part 1 General. 5 This is an estimate based on the performance fees paid, over the 12 months to 31 March 2016, to the underlying investment s and an assumption that the Option had an investment with these underlying investment s, prior to 31 March These estimates are not a representation as to likely future performance. The actual performance fee and therefore the total indirect cost ratio will depend on the performance of the relevant underlying investment s and so will likely vary from these estimates. Please refer to the Additional Information Booklet Part 1 General. 6 The Option does not charge a performance fee but may invest in underlying funds that charge performance fees. Such performance fees will be borne by the Option and reflected in the Option s unit price. Please refer to Performance fee Macquarie Conservative and Macquarie Diversified Fixed Interest Option in the Fees and other costs section in the Additional Information Booklet Part 1 General. 10
13 Risk category Asset category 1 Option Option name Standard Risk Measure 2 Estimated fee 3 (% pa) Estimated Performance fee (% pa) Estimated Buy sell spread 4 (%) Dynamic Dynamic Dynamic Dynamic Dynamic Dynamic Dynamic Dynamic Australian Shares Australian Shares Australian Shares Australian Shares Australian Shares Australian Shares Australian Shares Australian Shares BT Multi BT Multi- Australian 6. High 0.90 N/A 0.60 Share BTIM BT Australian Share 6. High 0.60 N/A 0.50 BTIM BT Ethical Share 6. High 0.60 N/A 0.40 External Aberdeen Australian Small Companies 7. Very high 1.26 N/A 0.50 External Colonial First State Australian 6. High 0.96 N/A 0.40 Shares 5 External Fidelity Australian Equities Fund 6. High 0.85 N/A 0.50 External External Investors Mutual Australian Share Vanguard Australian Shares Index Fund 6. High 0.99 N/A High 0.18 N/A 0.20 Aggressive Diversified BT Multi BT Multi- High Growth 6. High Aggressive Aggressive Aggressive Aggressive Aggressive Aggressive Australian Shares International Shares International Shares International Shares International Shares International Shares External BT Multi Colonial First State Wholesale Geared Share BT Multi- International Share 6. High 2.17 N/A High 1.10 N/A 0.40 BTIM BT International Share 6. High 0.60 N/A 0.10 External Aberdeen Select Actively Hedged International Equities 6. High 1.15 N/A 0.50 External Platinum International Fund 6. High 1.54 N/A 0.50 External Vanguard International Shares Index Fund Aggressive Diversified External Vanguard Growth Index Fund 5. Medium to High 6. High 0.18 N/A N/A Diversified (or multi-sector) investment options provide you with access to investments across multiple asset classes in one investment option. Asset classes are explained in detail under Asset classes explained in this section. 2 Standard Risk Measures have been determined independently and have not been provided by the investment s. Please refer to Standard risk measures in this section for more information. 3 Estimates are based on the latest available figures at the date of this document and may include underlying expense recoveries, where applicable. 4 Estimates are based on the latest available figures at the date of this document. The cost of the buy-sell will generally be incurred partly when you invest and partly when you withdraw from an Option. Please refer to Transaction costs in the Fees and other costs section in the Additional Information Booklet Part 1 General. 5 The underlying fund is the Colonial First State Wholesale Imputation fund APIR code FSF0003AU. 6 This is an estimate based on the performance fees paid, over the 12 months to 31 March 2016, to the underlying investment s and an assumption that the investment option had an investment with these underlying investment s, prior to 31 March These estimates are not a representation as to likely future performance. The actual performance fee and therefore the total indirect cost ratio will depend on the performance of the relevant underlying investment s and so will likely vary from these estimates. Please refer to the Additional Information Booklet Part 1 General. 7 Transaction costs depend on the specific gearing level of the underlying fund. 11
14 Menu Review Based on customer feedback we are reviewing and simplifying the investment menu. In December 2016 we intend to make a decision regarding the closure of the investment options listed below and it is likely that some or all of them will be closing. If your super is invested in any of these investment options at the time we make the decision, we ll inform you of the change and how it impacts you. Please refer to bt.com.au from January 2017 for confirmation of the options that will be closing. Risk category Asset category 1 Option Option name Standard Risk Measure 2 Estimated fee 3 (% pa) Estimated Performance fee (% pa) Estimated Buy sell spread 4 (%) 12 Conservative Diversified External Macquarie Conservative 5 2. Low 0.84 N/A 0.32 Conservative Fixed BTIM BT Australasian Bond 3. Low to 0.60 N/A 0.10 Interest Medium Conservative Fixed BTIM BT Global Bond 3. Low to 0.70 N/A 0.10 Interest Medium Moderate Diversified BTIM Westpac Balanced 5. Medium 0.60 N/A 0.30 to High Moderate Diversified External Schroder Balanced 5. Medium 0.90 N/A 0.45 to High Moderate Diversified External BlackRock Scientific Diversified 6. High 0.79 N/A 0.50 Growth Dynamic Diversified External MLC Growth 6. High Dynamic Property BTIM BT Global Property 7. Very High 0.63 N/A 0.25 Dynamic Property External AMP Capital Listed Property 7. Very High 0.46 N/A 0.50 Trusts Dynamic Australian BT BT Partner Australian Shares 6. High 0.89 N/A 0.60 Shares Partner Core 1 Dynamic Australian External OnePath Australian Shares 6. High 0.90 N/A 0.26 Shares Dynamic Australian BT BT Partner Australian Shares 6. High 0.89 N/A 0.60 Shares Partner Value 1 Dynamic Australian BT BT Partner Australian Shares 6. High 0.89 N/A 0.60 Shares Partner Growth 1 Aggressive International BT BT Partner International Shares 6. High 1.05 N/A 0.40 Shares Partner Core 1 Aggressive International BT BT Partner International Shares 6. High 1.05 N/A 0.40 Shares Partner Growth 1 Aggressive International Shares External Aberdeen Emerging Opportunities Fund 7. Very High 1.50 N/A Diversified (or multi-sector) Options provide you with access to investments across multiple asset classes in one Option. Asset classes are explained in detail under Asset classes explained in this section. 2 Standard Risk Measures have been determined independently and have not been provided by the investment s. Please refer to Standard risk measures in this section for more information. 3 Estimates are based on the latest available figures at the date of this document and may include underlying expense recoveries, where applicable. 4 Estimates are based on the latest available figures at the date of this document. The cost of the buy-sell will generally be incurred partly when you invest and partly when you withdraw from an Option. Please refer to Transaction costs in the Fees and other costs section in the Additional Information Booklet Part 1 General. 5 The Option does not charge a performance fee but may invest in underlying funds that charge performance fees. Such performance fees will be borne by the Option and reflected in the Option s unit price. Please refer to Performance fee Macquarie Conservative and Macquarie Diversified Fixed Interest Option in the Fees and other costs section in the Additional Information Booklet Part 1 General. 6 A performance fee may be charged. The performance fee will generally fall between 0.00% 0.10 p.a. however, in cases of exceptional performance, fees may be outside this range. This will only apply when the investment s returns exceed a specified level.
15 Processing delays in October 2016 In October 2016 we will be moving some members balances to MySuper as a result of legislative requirements. So we can efficiently move large amounts of super, there will be a delay in processing financial transactions such as contributions, rollovers, switching of investments and withdrawals from around 11 to 24 October The exact date of the move to MySuper, and the start and end dates of the expected delay in processing financial transactions will be made available from 5 September 2016 at bt.com.au/mysupermember. The effective date of the transactions will be the business day the money or valid request is received, if received by 4pm Sydney time on a business day. If the money or valid request is received after the daily cut-off time, it will be processed using the price for the next business day. There may be a delay in reflecting these transactions in your account until we have finished the move of members balances. Any non-financial transactions, such as address changes, will continue as usual. You can still make contributions, rollovers and request investment switches or withdrawals during this period. Option Profiles Key to understanding the investment option profile Level of risk Benchmark Asset allocation neutral position (NP) and ranges s Details the return the investment option aims to provide. Where an investment option aims to provide an overall return against a benchmark, this return is before the deduction of fees, taxes and other expenses. The aim for each investment option represents the current target which may change over time. These aims may not be achieved and we don t forecast or guarantee the performance of any investment option. The describes the process used by the investment when investing in the relevant asset classes to achieve the investment. Investing involves risk. Before making an investment choice you should consider the length of time your money will be invested, the amount of money you re investing, your attitude to risk, the level of risk you re comfortable with, the level of earnings you re expecting from your investments and other investments you may already have. Please refer to Risks of super in the Additional Information Booklet Part 1 General for information about the risk categories and minimum suggested investment timeframes. The investment appointed to manage your money. The is responsible for day-to-day investment decisions such as buying, holding or selling assets within the investment option. The term benchmark here refers to an index or measurement that is used by an investment to assess the relative risk and performance of an investment option. For the diversified Options, the benchmark is the weighted average of various indices used by each investment, according to the strategic asset allocation (SAA) shown in the profiles. Further information on these indices can be found on our website at bt.com.au. Details the asset allocation neutral positions and ranges, where applicable, for the asset classes in which each investment option invests. The asset allocation neutral position is the starting point for all asset allocation decisions. The investment may adjust the exposure within the specified minimum and maximum ranges, based on investment views. The most current neutral positions and ranges can be found on our website at bt.com.au. Outlines the the investment adopts to manage the exposure of any international assets that an investment option holds. More information More detailed information on the investment options can be found in the Fund Fact Sheets at bt.com.au. 13