Investment booklet. Issued 1 October 2014

Transcription

1 Investment booklet Issued 1 October 2014 The information in this document forms part of the Product Disclosure Statement for Club Plus Super Industry and Personal Division dated 1 October A Member Investment Choice is attached at the back of this booklet.

2 Contents Your investment choice 3 1. Understanding risk 4 2. Asset classes 5 3. Diversification 6 Section A Managed Investments - Let us manage your super 7 1. Selecting investment managers 8 2. Range of investment options 9 3. Fees and costs 14 Section B Direct Investment Option - Self-manage your super Overview Direct Investment Options fees Getting started Term Deposit Shares and exchange traded funds Tax 23 This Investment Booklet is for the Club Plus Personal and Industry Divisions issued by Club Plus Superannuation Pty Ltd ABN Australian Financial Services Licence No , as Trustee for the Club Plus Superannuation Scheme ABN Club Plus Superannuation Pty Ltd holds Registrable Superannuation Entity Licence No.L and Club Plus Superannuation holds Fund Registration No. R The information in this Investment Booklet is only a guide. It does not take into account your particular goals, financial situation or needs. Before acting on information in the Investment Booklet you should consider the appropriateness of the information having regard to your particular goals, financial situation and needs. We recommend that you speak with a qualified and independent financial adviser. The issue of this Investment Booklet is authorised solely by Club Plus Superannuation Pty Ltd (Trustee, we and us). No other person or company (whether or not related to the Trustee) is responsible for any information contained in the Investment Booklet. The information in this Investment Booklet may change from time to time. Information that is not materially adverse may be updated without the provision of a revised Investment Booklet or a supplementary Investment Booklet. This updated information can be obtained from the Club Plus Super website. Further, a paper copy of the updated information can be obtained without charge by contacting us. In all other instances, this Investment Booklet will be updated either with a supplementary Investment Booklet or a revised Investment Booklet. Furthermore, we can change matters which are the subject of notice. If you would like to consult a qualified financial planner before making your decision, you can obtain no-commission based professional financial advice from Club Plus Financial Planning on a range of financial issues including superannuation, retirement planning, wealth creation, income protection and personal life insurance. Club Plus Financial Planning Pty Ltd (Club Plus Financial Planning), ABN acting as Corporate Authorised Representative # of Adviser Network Pty Ltd, ABN ( Licensee ). The Licensee holds a current Australian Financial Services Licence # and is responsible for the financial services provided to you.

3 Your investment choice Where you invest today can make a big difference to your future lifestyle. There are many factors to consider and there s plenty of support available to help you stay on the right track. Knowing what type of investor you are is vital to determining what investment is right for you at each stage of your life. This Investment Booklet provides an overview of the investment choices available with Club Plus Super whether you want to leave it to the experts or take a more hands on approach but if you are in doubt, please contact us for more information or to arrange for professional advice with Club Plus Financial Planning. A super investment Investing with Club Plus Super gives you the opportunity to plug your retirement savings into some of the industry s leading investment talent through one of Australia s best value super providers. We strive for superior investment outcomes and the utmost security of your money while offering you some of the lowest fees available, maximising your earnings potential. For investors that want to leave investing their super to the experts, our Managed Investments provide a range of diversified, professionally managed investment options which provide access to all the major asset classes in predetermined allocations. To see the asset allocation ranges of each option refer to page You can invest across one or more of the following investment options: Industry Division Cash Conservative MySuper Growth High Growth Australian Shares International Shares Personal Division Cash Conservative Balanced Growth High Growth Australian Shares International Shares Please note: Contributions from members of the Industry Division who have not specified one or more of the above options will be invested in our MySuper option. Members of the Personal Division must specify one or more of the above options. You may transfer (switch) part or all of your account balance between investment options, provided certain conditions are met. (See Switching investments on page 13.) Direct Investment Option: Self-manage your super If you want to manage some of your super directly, Club Plus Super offers you the opportunity to invest in Term Deposits, exchange traded funds (ETFs) and shares listed on the S&P/ASX 300 Index. For more information, refer to Section B from page 15. 3

4 Your investment choice (cont.) 1. Understanding risk The term risk takes on a wide variety of meanings depending on your financial requirements now and your future goals. While most of us would agree that the biggest risk when it comes to investing is that you lose money how you measure that loss is not as easy as it sounds. Factors such as your investment time horizon, attitude to risk and your investment objectives play a big part in determining what market movements actually mean to you. While they are related issues, it s worth thinking about each of these in turn. Investment time horizon Your time horizon is how long you intend to invest your money for. Most people s super is invested until at least the age of 55, so if you re 35 (for example) your investment time horizon is a minimum of 20 years. As that is a relatively long time, it s important to focus on your investment s long term performance rather than its daily, weekly or monthly value fluctuations. Attitude to risk Most investment textbooks say there is a trade off between risk and return. In other words, higher risk investments have greater potential to generate higher returns over time than low risk investments. High risk investments generally have more exposure to share markets and assets with greater potential to generate growth. The flipside is their values can change rapidly over small timeframes. So, although a high risk, high return investment is likely to fluctuate in value (both positively and negatively) more dramatically in the short term, over the long term it has the potential to deliver stronger returns. Investment objectives Your age and attitude to risk plays a big part in understanding your investment objectives. If you have a sizeable amount of money invested and only a few years left until you retire, you might consider reducing your exposure to more volatile assets like equities in favour of more conservative ones like cash and term deposits. If you have just started your career and retirement is a long way off, investing conservatively comes with its own risks. When you re young, investing everything in cash risks the possibility of not keeping up with inflation, leaving your nest egg worth less in the future than it is today. Investment risks All investments carry some form of risk, the most common of which are highlighted below. Market risk Economic impacts, regulatory conditions and political events Company risk Changes to management, profit/loss announcements Credit risk Borrowers not meeting loan obligations Inflation risk Erosion of the real value of investment Investment return risk Investment movements affecting the value of certain assets Liquidity risk Illiquid (difficult to sell) assets. Unlisted or alternative investments may be particularly illiquid Currency risk International investments may be negatively affected by currency movements. Standard Risk Measure The Standard Risk Measure is based on industry guidelines 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 is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or whether any positive returns will be sufficient to meet a member s investment objective. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option(s). Risk band Risk label Estimated number of negative returns over any 20 year period 1 Very low Less than 0.5 Your investment needs are likely to change as your life evolves over time. The best way to ensure your investments continue to meet your needs is through regular consultations with a financial adviser. Make an appointment with Club Plus Financial Planning today by calling or visit 2 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 4

5 Liquidity risk Before selecting investment options, it s important to consider the liquidity of their underlying assets. Liquidity refers to how easily an asset can be sold. The risk of receiving a lower than desired sell price increases with options exposed to higher proportions of illiquid assets. This is because their value may fall in the time it takes to complete their sale. Club Plus Super defines illiquid as an asset which cannot be converted to cash within 30 days. The following table shows the current exposure of our investment options to assets subject to liquidity risk. Investment option % of assets subject to liquidity risk* Cash 0% Conservative 27% Bonds Also known as fixed income or fixed interest securities, these investments have a fixed value that is paid to investors at a predetermined future date (known as the bond s maturity date). Up until that date, these investments may pay a regular income stream to the bond holder known as a coupon payment. Bond funds typically invest in a wide variety of fixed income securities and therefore like any investment fund involve a certain degree of risk. Direct property This term refers to the outright ownership of property, or ownership through an unlisted property trust. Income is derived from the rental and sale of commercial or residential properties. Investing in direct property is usually a long-term investment strategy as there may be delays in selling, making it unsuitable for those who need quick access to invested funds. Direct property generally experiences less fluctuation in value as a result of being less liquid. My Super/Balanced 30% Growth 27% High Growth 22% Australian Shares 0% International Shares 0% *Represents % of assets allocated to property, infrastructure and certain alternative investments. 2. Asset classes The term asset class refers to a category of investment. Different asset classes have distinctive characteristics and therefore should perform differently at different points in time. Australian shares Investors can buy and sell shares in listed shares in Australian companies on the Australian Stock Exchange (ASX) or unlisted shares off market. Australian shares investment managers employed by Club Plus Super only invest in the shares of Australian companies listed on the ASX. International shares International share markets span every corner of the globe. International share investment managers invest in companies listed in indices in many different countries according to their stated investment objectives. Club Plus Super hedges a portion of our international currency exposure to minimise the negative effect of movements in currency. Listed property securities These are property investment trusts where ownership is represented by units, which are traded on the Australian Stock Exchange in a similar way to listed shares. These trusts may borrow or use capital provided by unit holders to purchase buildings. The value of these securities can fall and rise in response to trading activity and the effect of interest rate movements on their borrowings. Term Deposits A savings account or certificate of deposit which pays a fixed rate of interest for a fixed investment term. Exchange Traded Funds (ETFs) Exchange Traded Funds, or ETFs, are pooled funds made up of a number of shares in various companies and usually aim to reflect the performance of the index or benchmark of the shares in which they invest. ETFs offer a low cost option to access a wide range of shares and industry sectors in Australian and international markets, without the need to select stocks yourself. Cash Rather than the notes and coins in your pocket, cash within our super fund refers to cash deposited in a bank or term deposits with less than 12 months to maturity. Alternative investments These are investments outside of the more traditional classifications of shares, bonds, property and cash. They may include venture capital, private equity, absolute return funds and unlisted companies. Super funds can invest in these directly, or through purchasing shares in unit trusts. 5

6 Your investment choice (cont.) 3. Diversification Each asset class generally performs differently in response to various market and economic conditions. For example, shares may perform poorly during a recession while bond markets do well (and the opposite may occur during periods of economic strength). The aim of diversification is to achieve more consistent long-term returns by investing across a broad range of different types of investment. In addition, each asset class is diversified within by investing in a mix of investments managers with different styles designed to complement each other. Risk vs. return Club Plus Super managed investment options The below chart illustrates the various characteristics of Club Plus Super s managed investment options. Expected returns are based on the investment objective of each option over their suggested time horizons. The Direct Investment Option is not shown on this chart as each investor will have their own individual risk vs. return profile based on their individual investment mix. Expected return High MySuper/ Balanced Risk level Medium to high Cash Risk level Very low Conservative Risk level Low Growth Risk level High High Growth Risk level High Australian Shares Risk level Very high International Shares Risk level Very high Low Low The above diagram is for illustrative purposes only. Risk level High Key Australian Shares International Shares Property Infrastructure Growth Alternatives Defensive Alternative Australian Bonds International Bonds Cash 6

7 Section A Managed Investments Let us manage your super 7

8 1. Selecting investment managers Review and appointment of investment managers The Trustee, Investment Consultant and Management Team monitor the performance of our investment managers. The continued employment of our investment managers depends on their ability to exceed benchmarks set by the Trustee. Each asset class contains a mix of investment managers that are designed to complement each other and provide adequate diversification within that asset class. If an underperforming investment manager must be replaced, or a new one added to our panel, the Trustee will create a shortlist of suitable candidates in consultation with our Investment Consultant. Each of these investment managers will be interviewed by the Trustee s Investment Committee before an appointment to determine if they will be suitable. A note on derivatives Investment managers employed by Club Plus Super are permitted to use derivatives for hedging purposes, but not to engage in speculative activity. All investment managers must submit copies of their risk management statements to us to ensure they comply with that requirement. No manager employed by Club Plus Super will use derivatives as a core investment asset apart from the Fund s currency manager. Investment managers Below is a list of investment managers that Club Plus Super use to invest members funds as at the date of this Investment booklet. The Trustee may change investment managers at any time. Investment manager name Asset class covered 66 Hunter Street Direct Property ANZ AMP Capital Ausbil Dexia Babson Capital Australia Bentham Colonial First State Hastings Infrastructure Capital Group IFM Industry Super Property Trust Janus Kapstream Lasalle Aust Club Trust Lend Lease MFS Investment Management NAB Perpetual PIMCO Platinum Schroders Super Loans Trust Tribeca Vinva Investment Management Wellington Westpac Cash Alternative Investments, Australian Fixed Interest, Cash Australian Equities Alternative Investments Alternative Investments Direct Property Alternative Investments Infrastructure Infrastructure Direct Property Overseas Equities Alternative Investments Direct Property Direct Property Emerging Markets Currency Hedging Australian Equities Overseas Fixed Interest Alternative Investments, Overseas Equities Overseas Equities Australian Fixed Interest Australian Equities - Small Companies Australian Equities Alternative Investments Cash 8

9 2. Range of investment options Cash Investment objective Annual rate of inflation to 30 June % 2.40% 1.20% 3.50% 3.10% S o u r c e : A u s t r a l i a n B u r e a u o f S t a t i s t i c s ( A B S ) All Groups CPI Australia Conservative Investment objective To outperform UBS Bank Bill Index on an annual basis. Strategy The Cash option is for members with a short investment horizon (three years or less), who are seeking cash-like returns with virtually no chance of capital loss. Asset allocation CPI + 2% over 10 rolling year periods Strategy The Conservative option is structured for members with a short to medium investment horizon (three years plus) who are seeking medium to low levels of consistent return and are sensitive to volatility. This strategy provides exposure to mostly defensive assets, with a lesser exposure to growth assets. Asset allocation Asset allocation Benchmark ranges 0% 0% Australian Shares 0% 0% International Shares 0% 0% Property 0% 0% Infrastructure 0% 0% Growth Alternatives 0% 0% Total Growth Assets 0% 0% Defensive Alternative 0% 0% Australian Bonds 0% 0% International Bonds 100% 100% Cash 100% 100% Total Defensive Assets Estimated number of negative annual returns for every 20 year period Less than 0.5 Asset allocation Benchmark ranges 9% 10-25% Australian Shares 7% 0-20% International Shares 10% 0-15% Property 5% 0-10% Infrastructure 4% 0-10% Growth Alternatives 35% 25-45% Total Growth Assets 10% 0-20% Defensive Alternative 14% 0-30% Australian Bonds 11% 0-20% International Bonds 30% 0-35% Cash 65% 55-75% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 0.5 to less than 1 Risk band Risk label Risk band Risk label 1 Very low Suggested investment timeframe (time horizon) Any 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 3.86% p.a. 2 Low Suggested investment timeframe (time horizon) Minimum 3 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 6.46% p.a % 3.75% 4.26% 4.60% 3.90% % 7.50% 4.66% 6.40% 7.10% 9

10 Range of investment options (cont.) MySuper (Industry div) / Balanced (Personal div) Investment objective CPI + 3% on rolling 10 year periods Strategy This option is structured for members with a medium to long term investment horizon (five years or more) who are seeking a steady rate of returns and can tolerate moderate to high levels of volatility. This strategy invests in a diverse range of asset classes and is designed to provide a high level of exposure to growth assets. Asset allocation Growth Investment objective CPI + 3.5% on rolling 10 year periods Strategy The Growth option is structured for members with a long term investment horizon (seven years or more) who are seeking high levels of return and can tolerate high levels of volatility. This strategy invests in a diverse range of asset classes and is designed to provide exposure to mostly growth assets. Asset allocation Asset allocation Benchmark ranges 27% 25-50% Australian Shares 23% 5-30% International Shares 12% 5-20% Property 6% 0-10% Infrastructure 7% 0-15% Growth Alternatives 75% 60-80% Total Growth Assets 5% 0-15% Defensive Alternative 8% 0-20% Australian Bonds 5% 0-15% International Bonds 7% 0-20% Cash 25% 20-40% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 3 to less than 4 Asset allocation Benchmark ranges 31% 30-55% Australian Shares 30% 20-40% International Shares 10% 0-15% Property 7% 0-10% Infrastructure 7% 0-15% Growth Alternatives 85% 75-95% Total Growth Assets 5% 0-20% Defensive Alternative 5% 0-15% Australian Bonds 2% 0-15% International Bonds 3% 0-15% Cash 15% 5-25% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 4 to less than 6 Risk band Risk label Risk band Risk label 5 Medium to high Suggested investment timeframe (time horizon) Minimum 5 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 8.33% p.a. 6 High Suggested investment timeframe (time horizon) Minimum 7 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 8.57% p.a % 13.00% 0.00% 7.20% 9.80% % 14.50% -2.06% 7.40% 10.50% 10

11 High Growth Investment objective CPI + 4% on rolling 10 year periods Strategy The High Growth option is structured for members with a long term investment horizon (ten years or more) who are seeking equity like returns and can tolerate very high levels of volatility. This strategy invests in a diverse range of asset classes and designed to provide a high level of exposure to growth assets. Asset allocation Australian Shares Investment objective Outperform the return of the S&P/ASX 300, after tax and investment manager fees over rolling three year periods. Strategy The Australian Shares option is structured for members with a long term investment horizon (ten years or more) who are seeking Australian equity returns and can tolerate very high levels of volatility. This strategy provides exposure to Australian equities and is diversified by manager and style. Members should understand that there is a high degree of volatility with this option. Asset allocation Asset allocation Benchmark ranges 38% 35-55% Australian Shares 38% 25-45% International Shares 10% 0-15% Property 7% 0-10% Infrastructure 7% 0-15% Growth Alternatives 100% 100% Total Growth Assets 0% 0% Defensive Alternative 0% 0% Australian Bonds 0% 0% International Bonds 0% 0% Cash 0% 0% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 4 to less than 6 Asset allocation Benchmark ranges 100% 100% Australian Shares 0% 0% International Shares 0% 0% Property 0% 0% Infrastructure 0% 0% Growth Alternatives 100% 100% Total Growth Assets 0% 0% Defensive Alternative 0% 0% Australian Bonds 0% 0% International Bonds 0% 0% Cash 0% 0% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 6 or greater Risk band Risk label Risk band Risk label 6 High Suggested investment timeframe (time horizon) Minimum 10 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 9.14% p.a % 17.50% -4.02% 7.80% 10.20% 7 Very high Suggested investment timeframe (time horizon) Minimum 10 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance 9.29% p.a % 19.50% % 8.60% 13.50% 11

12 Range of investment options (cont.) International Shares Investment objective Outperform the return of the MSCI AC World Ex-Australia, after tax and investment manager fees over rolling three year periods. Strategy The International Shares option is structured for members with a long term investment horizon (ten years or more) who are seeking International equity returns and can tolerate very high levels of volatility. This strategy provides exposure to International equities (ex Australia) and is diversified by manager and style. Members should understand that there is a high degree of volatility with this option. There is a level of currency hedging in this option which may fluctuate from time to time. Asset allocation Asset allocation Benchmark ranges 0% 0% Australian Shares 100% 100% International Shares 0% 0% Property 0% 0% Infrastructure 0% 0% Growth Alternatives 100% 100% Total Growth Assets 0% 0% Defensive Alternative 0% 0% Australian Bonds 0% 0% International Bonds 0% 0% Cash 0% 0% Total Defensive Assets Estimated number of negative annual returns for every 20 year period 6 or greater Risk band Risk label 7 Very high Suggested investment timeframe (time horizon) Minimum 10 years 5 year performance to 30 June past performance is not an indicator or guarantee of future performance N/A Not applicable as option available from 1 July

13 How your investment returns are allocated The following section relates to the managed investment options and does not apply to the Direct Investment Option. A. Weekly Crediting Rate Every Thursday, a Weekly Crediting Rate is declared for each investment option (excluding Direct Investment Options). This is the estimated earning rate for the week ending the prior Monday close of business. The Weekly Crediting Rate also includes 0.01 per cent deduction to cover unaudited information supplied by our Investment Managers and Custodian. We will hold this weekly 0.01 per cent as a reserve and re-distribute any accumulated amount through the final end of year crediting rate. If you switch investment options or leave Club Plus Super within a financial year, your investment return will be calculated using the applicable Weekly Crediting Rate to determine your year-to-date (YTD) return. B. Final Crediting Rate Investment Managers supply final statements as at 30 June containing audited figures and take into account all taxes payable by the Investment Managers. We allocate investment returns to members accounts annually through the Final Crediting Rate for each investment option as at 30 June. The Final Crediting Rate is typically declared in September, once investment information (including tax statements) has been received from all investment managers. Weekly and Final Crediting Rates are dependent on which investment option(s) your super is invested in. Club Plus Super does not maintain cash reserves to smooth returns. It is the Trustee s intention to return all earnings to members, less a nominal reserve to cover costs, in the year which they are earned. Switching investments You can nominate your chosen investment options on the Member Investment Choice form provided in this booklet and our website. Contributions from members of the Industry Division who have not specified one or more of the above options will be invested in the MySuper option. Members of the Personal Division must specify one or more of the above investment options. You can request to change (switch) investment options as often as you like, and all switches take effect on the Thursday following our weekly switch cut-off each Sunday at 11:59pm. There are no switching fees with Club Plus Super. Please note: It may take up to nine working days for switch requests to apply. For that reason, with the exception of Direct Investment Option, the value of options switched to and from may be higher or lower than when you request a switch. To switch, simply visit MemberAccess at or download a Member Investment Choice form from the Tools and Forms section of our website. You may invest in one or more investment options, provided: any option in which you invest is allocated at least 10% of your overall account balance percentages allocated to investment options are whole numbers (e.g. 10%, 27% - not 10.3%, 27.8%) the total percentage of your chosen investment options amounts to 100%. If the option allocations nominated on your Member Application or Member Investment Choice forms don t amount to 100 per cent, the form will be invalid and will be returned to you. A great value, highly competitive industry super fund run only to benefit members. 13

14 3. Fees and costs Investment Management Costs Investment management costs are the overall fees charged for the management of the Fund expressed as a percentage. This encompasses fees paid to investment managers including performance fees (if applicable), currency hedging fees and custody fees (fees charged by a bank to hold the Fund s assets). The Club Plus Super Trustee has estimated investment management fees for each option taking into account the effect these factors could have on the overall fee for each option. The estimated fees for each option appear below. These fees are not deducted directly from your account. The investment returns applied to your account is calculated after the deduction of these fees, and any taxes that are payable by the Fund. Investment option Estimated fee per annum * Estimated performance fee * Total Investment Management fee amount per $50,000 per annum Cash 0.00% 0.00% $0 Conservative 0.26% 0.01% $135 MySuper/ Balanced 0.43% 0.03% $230 Investment Performance Fees Some of the investment managers used by Club Plus Super may occasionally be eligible for additional performance based fees. Performance based fees are structured so that the investment manager shares in the investment return achieved over a suitable benchmark index. Typically investment managers who are eligible for potential performance based fees charge a lower base fee. Managers who are paid performance fees are only paid for returns which they generate in excess of their benchmark index return. Usually, any prior underperformance must be made good before they qualify for a performance-based fee. A benchmark index is a standard measure for the performance of an asset sector, or a group of related shares or securities. These fees are not deducted from your account. The investment returns applied to your account are calculated after the deduction of these fees. Investment Transaction Fee When Club Plus Super purchases or sells assets, there are investment related expenses incurred on the purchase or sale of underlying assets as a result of those transactions. These additional transaction costs are deducted prior to the declaration of investment returns and are included in the estimated Investment Management Fee. Growth 0.42% 0.03% $225 Investment options Estimated buy costs Estimated sell costs Total High Growth 0.45% 0.04% $245 Australian Shares International Shares 0.32% 0.07% $ % 0.08% $260 *Estimated fees for the investment options for the 2013/2014 financial year. Investment management fees are estimates based on current manager structure and asset allocation. Where an investment manager has exceeded the agreed benchmark, a performance fee may be payable. Performance fee estimates are based on an average of 3 years of performance fees paid. Please note that changes in asset allocation and underlying investment manager would affect the estimated base fees. Assumptions were used in calculating the estimated base fees above. The following assumptions were used to estimate the base fees: The Fund s Strategic Asset Allocation (SAA), outlined in Club Plus Superannuation Scheme s Asset Management Report, is used to determine the asset allocation of each investment option. The SAA is assumed to remain unchanged throughout the year. For managers that have been terminated, the average Management Expense Ratio (MER) of the asset class the terminated manager belonged to or the fee charged by the replacing manager (if applicable) is used as proxy. Cash 0.00% 0.00% 0.00% Conservative 0.14% 0.14% 0.28% MySuper/ Balanced 0.25% 0.25% 0.50% Growth 0.29% 0.29% 0.58% High Growth 0.27% 0.27% 0.54% Australian Shares International Shares 0.26% 0.26% 0.52% 0.17% 0.17% 0.34% For fees and costs relating to Direct Investment Options, please refer to Direct Investment Option fees on page 17. You will receive a Member Statement each year that includes details of the fees and amount deducted from your account during the preceding twelve months. 14

15 Section B Section B Direct Investment Option Self-manage your Direct Investment Option Self-manage your super A bit like a self-managed super fund (SMSF), Club Plus Super s Direct Investment Option gives you more control over your super - without the hassle of endless paperwork or potentially hefty accounting and legal expenses. It offers access to a selection of exchange traded funds (ETFs) and shares on the S&P/ASX 300, online trading, expert market information, independent information and tools to help manage your portfolio all at what may be a fraction of the cost of a self-managed super fund.

16 Direct Investment Option 1. Overview Features Easy-to-use online investment facility Low administration and brokerage fees Greater investment control with access to shares listed on the S&P/ASX 300, a selection of exchange traded funds (ETFs) and Term Deposits Access to market information and analysis Online trading What is the Direct Investment Option? Our Direct Investment Option gives you access to a range of direct investment options, including: Shares listed on the S&P/ASX 300 A selection of exchange traded funds (ETFs) Term Deposits Who is the Direct Investment Option suitable for? The Direct Investment Option provides investors with greater flexibility and choice in managing their super, but it is not suitable for everyone. The Direct Investment Option is designed for members with the skill, time and inclination to take control of their super s investment strategy and portfolio construction a role similar to that of a professional fund manager. If you are unsure whether direct investment options are for you, it s important to seek professional financial advice. A financial adviser is qualified to help you establish if the Direct Investment Option is appropriate for you and your long term investment strategy. The Direct Investment Option may be for you if you: are comfortable taking an active role in managing a portion of your super investment have a thorough understanding of investing have clear, long term investment objectives and are not tempted to speculate by chasing short term gains understand the importance of a diversified investment portfolio understand the importance of appropriate lifecycle investing understand the consequences of trading too often and in response to emotion. Direct Investment Option at a glance Objective To enable members to invest a proportion of their pension in: shares listed on the S&P/ASX 300 Index a wide choice of exchange traded funds (ETFs) Term Deposits (1, 3, 6 and 12 months). Risk level The level of risk differs for shares, ETFs and Term Deposits. This risk also varies between individual ETFs, shares and your overall investment mix. As a general rule, these are the risk levels for each direct investment option: Term Deposits Very low Risk Band 1 Shares in S&P/ASX 300 Index Very high risk Risk Band 7 ETFs Very high risk Risk Band 7 Minimum investment timeframe As a guide the minimum suggested timeframes to invest in the Direct Investment Option are: Term Deposits 12 months or less Shares in S&P/ASX 300 Index 7 to 10 years ETFs 7 to 10 years Online reporting You can track your investments within the Direct Investment Option account online. The online service provides an up to date summary of your investments and a number of online reports are also available. These reports are generally updated each weekday (with data as at the close of the previous business day) and include details of: your Direct Investment Option account balance, the latest available market value of your investments and all transactions on your account details of income you have received from your investments, including your DIO Cash Account your realised and unrealised gains and losses (superannuation only) ASX listed company, ETF and market information. 16

17 2. Direct Investment Option fees There is no start-up fee to participate in the Club Plus Super Direct Investment Option. There is a portfolio administration fee of $15 per month for members who invest in shares and ETFs. Any brokerage fees incurred due to equity transactions will be added to their purchase cost or taken from the proceeds of their sale. If you have no shareholdings, no fees will be charged on your account while you are invested in term deposits. Details of the other fees that apply to the Direct Investment Option are provided below. Brokerage fees Trade amount Brokerage fees^ (including GST) $0 $4,167 $13.75 Eligibility To invest in Club Pus Super s Direct Investment Option you must: be an eligible Club Plus Super member with at least $12,500 in your Club Plus Super account maintain a minimum balance of $5,000 in one or more of Club Plus Super s standard investment options (i.e. Cash, Conservative, Balanced, Growth, High Growth, Australian Shares, International Shares) not invest more than 80 per cent of your total Club Plus Super account in the Direct Investment Option have access to the internet and provide a current address read, understand and accept the terms and conditions upon application provide a tax file number. $4,168 $10, % $10,001 $30, % $30,001 $50, % $50,001 $100, % $100,001 $10,000, % ^ Brokerage fees in the above table have been rounded up to three decimal places. Service fees A cost effective, convenient way to self-manage your super or your pension Control and flexibility Provides a greater control and flexibility, letting you mix your own investment portfolio with a choice of shares, ETFs and Term Deposits. Type of fee or cost Term Deposit break fee ETF investment fees Amount and frequency A fee of 25% of any interest earned currently applies if your request to break your term deposit before maturity is approved. This will be taken from the interest earned on your Term Deposit before it is deposited in your DIO Cash Account. Investment fees relating to ETFs vary from 0.09% to 0.67% depending on the ETFs you chose to invest in. These fees are built in to the value of ETFs or in their returns and not taken directly from your account. Less paperwork Club Plus Super takes care of all your administration, compliance and reporting requirements when you invest through the Direct Investment Option. Low costs There s no set up fee to invest through Club Plus Super s Direct Investment Option. Ongoing fees are low too, with a portfolio administration fee of just $15 per month that is only applicable when investing in shares and/or ETFs. 17

18 Direct Investment Option (cont.) 3. Getting started 1. Log on to MemberAccess Log on to MemberAccess at memberaccess and go to the Direct Investment Option. If you haven t yet registered for MemberAccess, simply visit click on Register and follow the prompts. Important: Applications for the Direct Investment Option can only be made via MemberAccess. We cannot accept written applications. 2. Register Once logged on to MemberAccess, go to the Direct Investment Option and follow the prompts to register. Read the terms and conditions and compete the online application. For security reasons, you will receive a Direct Investment Option code and password by separate mail generally within four business days of successful application. 3. Activate your account Once you receive your code and password, log on to the Direct Investment Option via MemberAccess, you may transfer money to your Direct Investment Option account upon registering (you do not need your access code to do this). There must be a minimum of $500 in your DIO Cash Account at all times. 4. Start investing Once you have transferred your money and it is showing as being available for trade, you re free to start trading. The minimum trade for shares is $500. For Term Deposits the minimum investment is $5000 and the maximum investment is $1,000,000 (or 80 per cent of your total account balance with Club Plus Super). Member warning Club Plus Super s Direct Investment Option Online Service gives you the ability to invest up to 80 per cent of your super and pension holdings in a range of direct investment options including S&P/ ASX 300 shares, a selection of exchange traded funds (ETFs), and Term Deposits. In that respect, you take control of the day-to-day investment decisions of your investment in the Direct Investment Option. The Trustee reminds you that taking control of these decisions is a significant responsibility and you should be conscious of the impact your decisions may have on the immediate and long term positions of your super or pension account balance. We would like to point out that there are a number of risks that arise from investing in S&P/ASX 300 shares, ETFs and Term Deposits to be mindful of prior to and while investing. We strongly recommend that you read this Investment Booklet to understand the risks of investments, and in particular that both the S&P/ASX 300 shares and ETFs have a Standard Risk Measure Band rating of seven (very high), meaning that in every 20 years, six or more years may produce a negative return. You should also be mindful that, while you may invest to a maximum of 20 per cent of your total super or pension balance in a single ETF or share (i.e. 80 per cent of your total super balance in as few as four securities), please remember that failure to adequately diversify increases the risk of a negative return. Also be aware that a number of tax issues relating to investing in ETFs and S&P/ASX 300 shares through the Direct Investment Option may arise, including, but not limited to: In the event that you wish to transfer from holding a Direct Investment Option holding from your superannuation account into a Club Plus Pension, you will be required to liquidate the assets in your superannuation account and transfer the proceeds of its sale to the Pension account, resulting in capital gains and losses. Financial year tax adjustments (including franking credits and capital tax) may not be allocated for up to five months after the end of the financial year. In the event that you leave the Direct Investment Option prior to these being allocated, you must understand that you may forgo any beneficial tax adjustment. When investing in S&P/ASX 300 shares and ETFs within the Direct Investment Option, you must be aware of the additional monthly fee and brokerage that will be incurred from investing in these securities. These fees are disclosed in Direct Investment Option fees on page 17. You should always consult a professional financial adviser before making investment decisions. The Direct Investment Option is designed to meet the needs of a specialised group of investors. A financial adviser can help you establish whether the Direct Investment Option is appropriate for your individual needs and investment strategy. To discuss your options with an adviser, request an appointment with Club Plus Financial Planning on (02) or advice@clubplussuper.com.au. 18

19 4. Term Deposit Your direct investment options Provider Term Deposits provide a rate of return advised in advance, for an agreed period of time. The following table outlines key features of investing in Term Deposits. The Direct Investment Option is provided through Macquarie Investment Management Limited, ABN , AFSL (Macquarie). Other than as expressly described in relation to the DIO Cash Account and Term Deposits which are deposits with Macquarie Bank Limited, Macquarie Investment Management Limited nor any member of the Macquarie group of companies guarantees the performance of the Direct Investment Option. DIO Cash Account Your Direct Investment Option account operates with a central cash flow account, or DIO Cash Account. The DIO Cash Account serves as a flexible transactional facility. All transactions in or out of your Direct Investment Option account, including dividends and associated taxes, are processed through this DIO Cash Account. The DIO Cash Account is held through the Fund s custodian with Macquarie Bank Limited (MBL) ABN AFSL Please contact the Fund if you would like information on how the Federal Government s Financial Claims Scheme may apply to the DIO Cash Account. The interest you earn on the DIO Cash Account will be calculated daily and paid monthly in arrears on or around the last business day of the month. Accrued interest will not be reported on your account until it is paid. The interest rate is set by Macquarie Bank Limited and varies on a daily basis. Accordingly, there is no guarantee of a particular rate of interest being earned. The DIO Cash Account will be used to: buy and sell investments receive income from investments, and pay any fees taxes and charges related to your DIO account Before transacting on your account, you must have sufficient available cash in your DIO Cash Account. Terms Minimum / Maximum deposit Earnings How do I invest? Checking What happens at maturity? 1 month, 3 month, 6 month or 12 months The minimum investment in each Term Deposit is $5,000, up to a maximum of 80% of your Club Plus subject to a maximum investment in term deposits of $1,000,000. The reason for a maximum deposit amount is so any fees or premiums can be deducted from your balance without breaking your investment in the Term Deposit option. Earnings payable from the Term Deposits are payable at maturity. It is at this point in time that any tax on earnings will be deducted from your DIO Cash Account. When 30 June occurs during the term, the Annual Member Statement will not reflect any accrued earnings or tax applicable to the Term Deposit. Investments in Term Deposits can be made by logging on to your Direct Investment Option. You must have available cash in your Direct Investment Option account before you can purchase a Term Deposit. You can track your Term Deposits online through MemberAccess at au/memberaccess and clicking through to the Direct Investment Option area. When investing in Term Deposits, you will see on-screen confirmation that your Term Deposit application has been received. For Term Deposits invested online through the DIO, you will receive an approximately two weeks prior to maturity. If you have not selected a rollover option, your Term Deposit proceeds return to your DIO Cash Account. Your selection must be requested online via the Direct Investment Option website only. It is not possible to provide your selection by . If you sell assets within your account, the proceeds cannot be used for another transaction or withdrawal until settlement occurs and your proceeds are cleared in your DIO Cash Account. Important: Please note that the DIO Cash Account is a transactional holding account and does not provide the same return as the Club Plus Super Cash investment option. 19

20 Direct Investment Option (cont.) Breaking your Term Deposit option If required, there are two grounds for Term Deposit option breaks: (a) Compulsory break There may be an occasion where we are required to break an investment in the Term Deposit option to comply with legislative requirements. In the case where a member has insufficient funds from which to draw administration fees or premiums, we will provide five days advance written warning that, to avoid a compulsory break, the Trustee must receive adequate funds or specific instructions. If no payment or instruction is received, we must break the full value of that Term Deposit option and transfer proceeds to the Cash investment option, ensuring our legislative obligations are met. (b) Voluntary break You can break a Term Deposit option if you need to withdraw funds or change your super s investment strategy. In this case, please complete a Voluntary Break application form detailing the reason for your break. By investing in the Term Deposit option you acknowledge that the Trustee may use its discretion in determining the validity of your request and reserves the right to reject it. To obtain a Voluntary Break application form, visit or call What happens to my earnings if my Term Deposit option is broken? You will be entitled to 75 per cent of the accrued earnings from your investment in the Term Deposit option from commencement date up until the date of the break. (This is the current implication for breaking a Term Deposit and is subject to change.) Please note: Early withdrawal request may take up to two weeks to be processed. The Term Deposits are held through the Fund s custodian for DIO assets with Macquarie Bank Limited (ABN ). Please contact the Fund if you would like information on how the Federal Government s Financial Claim Scheme may apply to term deposits. Term Deposit interest rates The interest earned on Term Deposits will be fixed for the term of the investment. Interest is calculated daily and paid on maturity. The interest rate applicable will be the advertised rate on the day the Term Deposit closes to applications. The advertised rate is available on the Direct Investment Option website. Interest on Term Deposits can be: paid to your DIO Cash Account upon maturity; or reinvested, along with the principal, into another Term Deposit by making a maturity election via the Direct Investment Option website. Processing your instructions The minimum Term Deposit application is for $5,000 per Term Deposit. The maximum investment into Term Deposits per member is $1,000,000. Applications can be made online daily. We will only purchase Term Deposits periodically and we will draw the funds from your DIO Cash Account on the day our application is made to the issuer of the Term Deposit. You must have sufficient funds in your DIO Cash Account at the time of making your application and at the time your application is processed. Your investment will be pooled with other investors funds who wish to invest for the same term. Maturity Before your Term Deposit matures, you will be sent a notification . All purchases of Term Deposits will be made from your DIO Cash Account. At maturity the amount invested (your principal) and interest earned will be paid into your DIO Cash Account. (The time it takes for these funds to be available in your DIO Cash Account will depend on when we receive the funds from the Term Deposit issuer and the time it takes for the proceeds to be cleared in your DIO Cash Account.) Any associated fees and taxes will also be processed through your DIO Cash Account. 20