Your premium investment solution. Investment Service. Investor Guide (incorporating Financial Services Guide)

Transcription

1 Your premium investment solution Investment Service Investor Guide (incorporating Financial Services Guide) 1 July 2014

2 Contents Section Page Important information 3 About OnePath 4 What is PortfolioOne? 5 What is the PortfolioOne Investment Service? 6 Risks 9 Fees and other costs 11 What are the investment opportunities? 16 Difference between investing via PortfolioOne and investing directly 17 What role does my financial adviser play? 19 How does the PortfolioOne Investment Service work for me? 20 What do I need to know about withdrawals? 26 What do I need to know about taxation? 28 What else do I need to know? 30 How to complete the Application Forms 34 Entity details in this Investor Guide (Guide) Name of entity Registered numbers Abbreviated term used throughout the Guide PortfolioOne Investment Service PortfolioOne Cash Management Service OnePath Custodians Pty Limited ABN RSE L AFSL Investment Service, Service, PortfolioOne PortfolioOne CMS OnePath Custodians, Operator of the Service, Operator, us, we, our Australia and New Zealand Banking Group Limited ABN AFSL ANZ Bond Street Custodians Limited ABN Bond Street OnePath Funds Management Limited ABN AFSL OnePath Funds Management Macquarie Investment Management Limited ABN AFSL MIML, Administrator Macquarie Bank Limited ABN AFSL Macquarie Bank 2

3 Important information PortfolioOne Investment Service is an investor directed portfolio service (IDPS), as that term is defined in Class Order 13/763 (IDPS Class order) issued by the Australian Securities and Investments Commission (ASIC). Generally, an IDPS is an investment and reporting service,through which you may make an indirect investment. OnePath Custodians is the Operator of the Service and the issuer of this Guide. We are authorised to operate the Service and provide general financial product advice in relation to it. The Guide describes the Service and our role in relation to it. The Australian Securities and Investments Commission (ASIC) Class Order CO 13/763 and ASIC Regulatory Guide 148 specify that the Operator of an Investor Directed Portfolio Service (IDPS) must be a public company. OnePath Custodians Pty Limited (OPC) is currently the Operator of the Personal Portfolio Service (known as the PortfolioOne Investment Service). As OPC is structured as a proprietary company and whilst it is awaiting relief from ASIC, it does not currently meet this requirement. The purpose of this requirement is to ensure that operators have suitable operating structures to conduct their business and promote greater transparency, including through increased financial accountability requirements and disclosure requirements. OPC has undertaken measures to address the requirements of Class Order 13/763 and ASIC Regulatory Guide 148 however effective 1 July 2014, the PortfolioOne Investment Service does not meet the requirement of being a public company. Upon resolution of this matter, OPC shall notify all investors of its compliance via online notification. The operator of the Service is a wholly owned subsidiary of ANZ. ANZ is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). Although the operator of the Service is owned by ANZ, it is not a Bank. Except as described in the Guide, an investment in the Service is not a deposit or other liability of ANZ or its related group companies and none of them stands behind or guarantees the issuer or the capital or performance of the investments in the Service. Your investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. This Guide is an IDPS Guide which also incorporates the Financial Services Guide (FSG). The purpose of this Guide is to provide you with information associated with investing through the Service. In particular this Guide is designed to assist you in deciding whether to use the services offered under the Service. This Guide also contains specific information about the remuneration that may be paid to the operator of the Service and other relevant persons as well as information about the complaints resolution procedures in place. This Guide is deemed to contain the provisions specified in paragraph 6 of the IDPS Class Order. To the extent a provision of this Guide is inconsistent with the IDPS Class Order, that provision must be read down or severed. The information contained in this Guide is of a general nature only and does not take into account your personal needs and financial circumstances. You should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. The invitation to invest through this Service is only available to persons receiving this Guide in Australia. The issuer is not bound to accept an application to invest through the Service. Information that is not materially adverse is subject to change from time to time and may be updated through ClientView. A paper copy of any updated information is available free of charge upon request. You should carefully read through this Guide and the relevant disclosure document for the underlying products before choosing to invest through the Service. Both this Guide and the relevant disclosure documents are available by request from your financial adviser, or may be obtained from ClientView at no additional cost to you. The operator of the Service has appointed Bond Street as the custodian to hold assets within the Service and MIML as administrator of the Service. These entities have consented to be named in this Guide in the form and context in which they are included and they have not withdrawn their consent at the time of preparation of this Guide. OnePath Funds Management is a related company of the operator of the Service. OnePath Funds Management is the issuer of some of the accessible investments available via the Service and is entitled to fees on these investments as disclosed in the relevant disclosure documents. The operator of the Service is responsible for the day-to-day operations of the Service, such as overseeing that investments are made properly and in accordance with instructions, providing investors with all relevant communications and ensuring all procedures dealing with money of investors and compensation are properly followed. Some of these duties are carried out by the administrator of the Service. The custodian of the Service is responsible for holding the assets of the Service on trust, separately from its own assets and assets of other trusts. 3

4 Important information (continued) The initial and subsequent cash portions of your portfolio will be held in the PortfolioOne CMS. The PortfolioOne CMS is an investment in an at-call cash management account held with Macquarie Bank. For more information about the PortfolioOne CMS, refer to the PortfolioOne CMS Product Information Statement available free of charge on request. Except as described in the relevant disclosure documents, an investment in funds offered through the Service is not a deposit or other liability of Macquarie Bank or its related group companies and none of them stands behind or guarantees the issuer or the capital or performance of the investments made through the Service. Term deposits with Macquarie Bank and the cash account of the Service (the PortfolioOne CMS) are deposits with Macquarie Bank. This Guide has not been lodged with ASIC and is not required to be lodged with ASIC under the Corporations Act 2001 (Cth). Neither ASIC nor any of its officers take any responsibility for the contents of this Guide. Operator contact details OnePath Custodians Pty Limited 242 Pitt Street Sydney NSW 2000 About OnePath Helping you shape and protect your future OnePath is ANZ s specialist brand for wealth, insurance and advice solutions. The OnePath name has helped Australians grow and protect their wealth for over 130 years, previously as Mercantile Mutual and more recently as ING Australia. ANZ is committed to building lasting partnerships with our customers, shareholders and communities in 33 countries including Australia and New Zealand throughout Asia and the Pacific, and in the Middle East, Europe and America. We provide a range of banking and financial products and services to around eight million customers and employ 47,000 people worldwide. At ANZ we value and appreciate our customers, our staff and the communities we operate in. We are committed to acting with the highest standards and to meeting our corporate responsibilities. We also encourage and support staff involvement in volunteering and charitable activities supporting the wider community. ANZ actively participates in forums looking at regulatory and industry change. We also regularly review and conduct research to ensure we are attuned to changing customer and market needs. There is a comprehensive range of OnePath wealth and insurance products available through financial advisers or direct to customers, making it easier for you to find the solution that best suits your needs. 4

5 What is PortfolioOne? Take control of your financial future PortfolioOne is a full service wrap account providing a diverse range of investment options. With the help of your financial adviser, PortfolioOne enables you to develop investment strategies for your particular investment goals. PortfolioOne allows for broad diversification across markets, asset classes, and between fund managers. You can select from an investment menu of managed funds, approved Australian Securities Exchange (ASX) listed securities and term deposits. You can also add your existing share investments and any managed funds available from the Investment Menu to your portfolio to consolidate your investments. Managed fund options can be viewed on ClientView or can be obtained from your financial adviser. A copy will be provided to you at your request, free of charge. PortfolioOne can meet your investment needs PortfolioOne is designed to provide an investment and administration solution for the more active investor. You can manage and review your portfolio on a regular basis. PortfolioOne gives you and your financial adviser access to over 200 different managed funds from one convenient access point. With PortfolioOne you and your financial adviser can: receive regular consolidated reports tailored for your personal circumstances trade shares switch between managed funds access selected term deposits consolidate your funds make regular investments set up Dollar Cost Averaging into investments receive regular income; and simplify your tax time with one taxation statement for all your investments in the PortfolioOne Investment Service. PortfolioOne is available in: Investment Service (which is covered by this Guide) Superannuation and Pension Service. * PortfolioOne is a registered trademark of OnePath Australia Limited. * PortfolioOne Superannuation and Pension Service is issued by OnePath Custodians. You should consider the Product Disclosure Statement available from the issuer in deciding whether to acquire, or to continue to hold, the product. 5

6 What is the PortfolioOne Investment Service? The PortfolioOne Investment Service is an administration service that allows you to manage and review your portfolio on a regular basis. The PortfolioOne Investment Service is a flexible and effective way to achieve a diversified portfolio, providing you with access to: over 200 managed funds all approved ASX listed securities selected term deposits You can only access the PortfolioOne Investment Service through a financial adviser who is registered with OnePath Custodians and PortfolioOne. Your financial adviser will play an integral part in managing your investment portfolio. How the PortfolioOne Investment Service works This diagram shows how the PortfolioOne Investment Service works. All your investments are drawn together around a central cash hub the PortfolioOne Cash Management Service (PortfolioOne CMS). This allows for easy administration of your portfolio as all buying, selling, income tracking and reporting occurs in the one place. Together with your financial adviser, your PortfolioOne Investment Service account can help you manage your total investment portfolio. Investor Consolidated investment and tax reports Initial and subsequent investments Withdrawals PortfolioOne PortfolioOne CMS Fees Adviser recommends and places transactions Managed funds Listed securities Term deposits Fund A Fund B Fund C A Limited B Limited TD A TD B Distributions and Withdrawals Dividends and Sales Proceeds Principal and Interest 6

7 Features at a glance This table contains a brief outline of the major features of the PortfolioOne Investment Service. It is intended as a quick and easy reference source. The table should not be used as a substitute for reading the detailed information contained in this Guide prior to you making any decision to invest. Investment choice Managed funds Listed securities Term deposits Cash Account Over 200 wholesale managed funds. Approved ASX listed securities. Selected term deposits with a range of maturity periods. Used to settle your transactions and pays you a competitive interest rate. Investment minimums Minimum initial investment $50,000 Minimum Cash Account balance $5,000 recommended Minimum additional investment $250 Minimum switch per managed fund $1,000 Minimum application amount for each term deposit $10,000 Minimum cash withdrawal $500 Features Page Automatic rebalancing Ensures the allocation in your portfolio stays in line with your investment strategy. 23 Automatic cash management facility Ensures your Cash Account balance remains within set limits. 23 Dollar Cost Averaging Allows you to invest regularly from your Cash Account into nominated managed funds. 21 Direct Deposit facility Direct Debit Transfer assets Fees and other costs Allows you or your employer to make ad hoc transfers from your financial institution account into your Cash Account. Allows you to invest regularly from your nominated financial institution account into your Cash Account. Transfer in generally yes (only for approved ASX listed securities and managed funds that are included on the Investment Menu). Transfer out generally yes Refer to pages for further information on fees and costs. Administration Fees Balance Fee p.a. $0 $100, % $100,000 $250, % $250,000 $500, % $500,000 $1,000, % $1,000,000 $2,000, % Balance over $2,000, % Fee aggregation Allows you to link portfolios to increase your total account balance and thereby reduce your average Administration Fee rate (refer to page 15). Reporting Consolidated reporting ClientView Quarterly investor reports and an annual tax statement. For more information, please refer to page 8. You will also receive a six monthly statement report for your PortfolioOne CMS. An online service allowing you to view the details of your account, including your portfolio valuation, asset allocation and transactions. We reserve the right to vary any minimum requirements specified above or to impose new minimum requirements (relating to balances, transactions or fees) in the future. 7

8 Benefits The PortfolioOne Investment Service offers you a range of key benefits. Consolidated reporting on assets The PortfolioOne Investment Service provides you with extensive investment choice allowing you, in conjunction with your financial adviser, to build a portfolio of investments to suit your needs. We consolidate information received on all assets held through the Service and provide you with an extensive range of reports such as portfolio valuation, asset allocation, transactions, income and expenses. You can access this information at any time using our secure website, ClientView. Wide investment choice The PortfolioOne Investment Service makes it possible for you and your financial adviser to build a suitable portfolio by offering: a broad range of investment funds funds investing in Australia and internationally funds investing in all major asset classes funds managed by a range of fund managers, using different investment styles funds with different levels of risk approved ASX listed securities selected term deposits. Flexibility You can change your investment selection at any time without incurring switching fees. This may help you to maximise your returns and allows you to change your strategy to keep pace with your needs and any changes in the market. Buy/sell spreads may apply (refer to page 14). Wholesale prices Through the PortfolioOne Investment Service, you can access a range of wholesale managed funds. These funds have lower investment management fees than retail funds and may not be available to retail investors. Margin lending The PortfolioOne Investment Service allows you the opportunity to gear your portfolio with the flexibility of a choice of margin lending providers. Transfer existing assets into your portfolio You can transfer into your portfolio managed funds available on the Investment Menu, approved ASX listed securities and other approved assets owned by you. You cannot transfer term deposits either into or out of your portfolio. Online access to your portfolio Using ClientView, you can track your portfolio by viewing a range of financial reports online. These reports are generally updated each business day. Diversification The PortfolioOne Investment Service allows you to diversify your investments by providing access to a wide range of managed funds, listed securities and term deposits. Diversification is achieved by holding more than one type of investment. Investors are able to achieve diversification using one, or a combination, of the following: holding different assets such as shares in different companies investing in different asset classes such as shares, property and fixed interest investing with several fund managers all with different investment styles. Depending on how you diversify your investments, underperformance in one area may be offset by positive performance in another. Detailed information about the managed funds offered through the PortfolioOne Investment Service is available through your financial adviser. 8

9 Risks Investment risks Risk and return Generally, the return of an investment is dependent on the risk associated with the investment. With a higher risk investment, such as listed securities, there is the potential for higher returns but also a greater potential for volatility in the value of the investment. With a lower risk investment, such as cash or a capital stable managed fund, the potential returns are usually lower and the potential volatility is also less. Your adviser should help you to assess your tolerance to risk and return objectives. Your chosen investments should reflect this. Individuals have different preferences when it comes to risk and return. Those seeking to maximise returns may be less concerned about short-term losses because of a higher tolerance to risk or a longer investment time horizon. Those seeking to preserve their capital may be more concerned about short-term losses because of a lower tolerance to risk or a shorter time horizon. In terms of your account, the level of risk will mainly depend on the investment strategy you and your adviser select and the individual investments you invest in. In order to understand the risks specific to a particular investment, you should read the PDS or other disclosure documents for that investment. Risk factors The Investment Service provides you with access to investments and is not an investment itself. Therefore, the investment risks explained below arise from the investments you may select. Investment performance The performance of investments will depend on such factors as the investments chosen, the prevailing market conditions and the state of domestic and international economies. Neither the Operator nor the product issuers guarantee the performance of any investment option through the Investment Service. Investment volatility Investment volatility is a measure of the uncertainty of an investment s performance. Generally, with a higher risk investment, such as shares, there is the potential for higher returns but also a greater potential for uncertainty in its performance. With a lower risk investment, such as cash or a capital stable managed fund, the level of uncertainty around its performance is usually lower but the potential returns are also less. Investment specific risk The value of an investment such as a share in a company can be affected by events that are specific to that company. For example, changes to management, profit and loss announcements and changes to its business or regulatory environment are all events that can have a positive or negative effect on the value of the company. Product issuer risk For managed funds, the product issuer may underperform compared to other managers of the same or similar type (for example, the product issuer misreads the market). Liquidity risk Investment in mortgages, direct property, unlisted property, small specialised markets or alternative investments are often illiquid, i.e. hard to buy and sell quickly. Some managed funds may also be illiquid if redemptions from an investment are suspended by the product issuer, which could cause delays in your ability to withdraw or switch investments. Risk of borrowing to invest Borrowing to invest, by applying a margin loan to your account can magnify the gains and losses in the value of the investments you hold through the Investment Service. You should discuss with your adviser whether a margin loan is appropriate for you and consider the appropriate lenders disclosure document. Use of financial derivatives The managers of the underlying assets in the managed funds may use financial derivatives such as futures, options, swaps and forward rate agreements. Whether financial derivatives are used depends on the investment strategies of the individual managed funds. For more information about the risks associated with each managed fund, please refer to the separate PDS for each managed fund, which can be obtained from your adviser. Credit risk A decline in the credit quality of a bond or the ability of the issuer to pay the interest or principal on a bond can adversely affect the value of a bond. Currency risk Investments that have an asset allocation to international investments, may be exposed to fluctuations in the value of foreign currencies against the Australian dollar. Currency management strategies may be utilised by some product issuers but this does not remove the risk associated with international investment. Investors should note that currency gains and/or losses may be a part of their overall investment performance. 9

10 Warrants Warrant prices are affected by the same risks that affect all stock market investments. The present and anticipated economic environment, interest rate and currency expectations, investor sentiment and volatility will all impact the performance of warrants. Most warrants offer some degree of leverage. Leverage means that small percentage changes in the price of the underlying share can result in greater percentage changes in the warrant value. It is important to recognise that leverage applies equally to increases and decreases in the underlying share price. That is, when using leverage, small decreases in the price of the underlying share will have a greater percent decrease in the value of the warrant. You should only invest in warrants if you understand the nature of the products (specifically your rights and obligations) and the extent of your exposure to risk. Before you invest you should carefully assess your experience, investment objectives, financial resources and other relevant considerations and discuss these with your adviser. Diversifying to reduce risk Investments are affected differently by economic, political and other factors. Generally, risk may be reduced by diversifying investment across different: asset sectors (cash, fixed interest, property, shares) Diversification is amongst the most important principles in investment management, as it can significantly reduce the variability of a portfolio s returns. By not having all your eggs in one basket, diversification helps reduce the risk of suffering a short-term fall in value and fluctuations in investment value and returns. A well-diversified portfolio of moderately risky investments may actually have a lower overall risk than a poorly-diversified portfolio of less risky investments. Non-investment risks As with any service that uses technology, there is a risk that the system may fail, which would cause delay in the processing and reporting on your investments. How non-investment risks are managed As with any service that uses technology, there is some risk that the Administrator s system s hardware and software may fail, causing a delay in the processing and reporting on your account. The Administrator has sought to address this risk and the risks associated with other unforeseen circumstances in their business resilience plans and risks management framework. This includes processes to back up their computer systems and regular reviews of their systems and control procedures including an external, independent audit on an annual basis. Even so, the Administrator does not accept responsibility where such failures are outside of their control. investment markets (Australian and international) product issuers investment management styles. 10

11 Fees and other costs Did you know? Small differences in both investment performance and fees and costs can have a substantial impact on your long-term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100, 000 to $80, 000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. Your employer may be able to negotiate to pay lower administration fees. Ask the fund or your financial adviser #. To find out more If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website ( has a managed investment fee calculator to help you check out different fee options. Disclosure of fees and other costs This document shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the assets of the Service as a whole. Taxes and insurance costs are set out in another part of this document. You should read all the information about fees and costs because it is important to understand their impact on your investment. # The fees payable to your adviser can be negotiated with your adviser. Type of fee or cost Amount How and when paid Fees when your money moves in or out of your account Establishment fee The fee to open your investment. Contribution fee The fee on each amount contributed to your investment. Withdrawal fee The fee on each amount you take out of your investment. Exit fee The fee to close your investment. Management costs Investment Management fee Nil Nil Nil Nil 0.00% p.a. 7.15% p.a. of the balance of the relevant managed investment. Performance based fees, ranging from 0% to 25% of outperformance apply to certain managed investments. See Additional explanation of Other fees and costs for further information. Not applicable Not applicable Not applicable Not applicable This fee (including any applicable performance fee) is deducted from the assets of each managed investment and is included in the unit price. This is an indirect fee charged by the product issuer of each managed investment. Please refer to the PDS of the relevant managed investment for how and when the fee is charged. 11

12 Type of fee or cost Amount How and when paid Administration fee The fees and costs for managing your investment. CMS Assets Non-CMS Assets Nil Refer to the CMS Product Information Statement for information on fees payable on your CMS. Balance Fee p.a. $0 $100, % $100,000 $250, % $250,000 $500, % $500,000 $1,000, % $1,000,000 $2,000, % Balance over $2,000, % A minimum administration fee of $50 per month applies. Member Fee $5.00 per month Calculated and charged on the average daily balance of your portfolio. Deducted monthly from your PortfolioOne CMS in the first week of the following month. Deducted monthly from your PortfolioOne CMS in the first week of the following month. Service fees Switching fee The fee for changing investment options. Nil Not applicable Refer to the Additional explanation of fees and costs section of this Guide for information on other service fees. Examples of annual fees and costs Example of annual fees and costs for a balanced investment option* This table gives an example of how the fees and costs in a balanced investment option for this product can affect your investment over a one year period. You should use this table to compare this product with other products. Example Vanguard Wholesale Balanced Trust Fee Balance of $50,000 with a contribution of $5,000 during year Contribution Fee Nil For every additional $5000 you put in, you will be charged $0. PLUS Management Costs 1.20% pa Administration fee + $60 pa Member Fee % management costs And, for every $50,000 you have in the balanced investment option you will be charged $830 each year. EQUALS Cost of the fund If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees of $830. What it costs you will depend on the investment option you choose and the fees you negotiate with your adviser. * The balanced investment option chosen for this example is the Vanguard Wholesale Balanced Trust. The Investment Management fee for this option is 0.34% pa. Please note that the Investment Management fee for other balanced options available in the investment Service may be higher or lower than 0.34% pa. For this example, it is assumed that a balance of $50,000 is invested in the Vanguard Wholesale Balanced Trust. This must be read subject to the requirement that the Cash Account minimum is maintained. The Administration Fee is tiered, based on the balance of your portfolio (refer to the table on page 11 for further information). The Administration Fee minimum of $50 per month applies in this example. Therefore the effective Administration Fee is 1.20% pa (($50 x 12)/$50,000). The Member Fee is $60 pa ($5 x 12 months). Additional fees may apply. What it costs you will depend on the investment options your account is invested in, your account balance, and the fees you negotiate with your adviser. 12

13 Additional examples of annual fees and costs The following examples show an account invested for 12 months and should only be used as a guide for investing through the Investment Service. It is provided for illustration only, is based on the factors stated, and should not be taken to contain an estimate or guarantee. The fees in the table below are shown inclusive of GST and less RITC (where applicable). Example 1: $250,000 account The example consists of an average account balance of $250,000, including: An average daily balance of $5,000 in the CMS A term deposit of $15,000 Two managed funds with an average balance of $40,000 each Three listed securities with an average balance of $50,000. Administration Fee CMS $0 $100,000 x 0.99% $990 $145,000 x 0.70% $1,015 Member Fee $5 x 12 $60 Investment Management Fees CMS $5,000 x 0 $0 Term Deposit $15,000 x 0 $0 Managed fund 1 (Balanced Fund) $40,000 x 0.95% $380 Managed fund 2 (Conservative Fund) $40,000 x 0.61% $244 Listed securities $150,000 x 0.00% $0 Brokerage Costs One trade at $50,000 $50,000 x 0.12% $60 Total 1.10% $2,749 Adviser Service Fee (negotiable with your Adviser) $1,500 Example 2 The example consists of an average account balance of $650,000, including: An average daily balance of $10,000 in the CMS A term deposit of $40,000 Two managed funds with an average balance of $125,000 each Three listed securities, two with an average balance of $100,000, the third with an average balance of $150,000. Administration Fee CMS $0 $100,000 x 0.99% $990 $150,000 x 0.70% $1,050 $250,000 x 0.35% $875 $140,000 x 0.30% $420 Member Fee $5 x 12 $60 Investment Management Fees CMS $10,000 x 0 $0 Term Deposit $40,000 x 0 $0 Managed fund 1 (Balanced Fund) $125,000 x 0.95% $1, Managed fund 2 (Conservative Fund) $125,000 x 0.61% $ Listed securities $400,000 x 0.00% $0 Brokerage Costs One trade at $50,000 $50,000 x 0.12% $60 One trade at $150,000 (maximum brokerage) $100 $100 Total 0.85% $5,505 Adviser Service Fee (negotiable with your Adviser) $2,500 13

14 General information about fees and costs The total fees and charges you pay will include the costs and fees of the Service as well as the costs of the underlying investments that you select as part of the Service. Fees and costs for particular managed investments are set out in their relevant PDSs. These fees and costs are additional to the fees and costs of the Investment Service. You must look at both this Guide and the PDS for a particular investment option in order to know all of the fees and costs that are payable. Additional explanation of fees and costs Management Costs Investment Management Fee Investment Management fees will apply if you choose to invest in a managed investment through the Investment Service. Investment Management fees are the fees and costs (including investment and custody costs) charged by the product issuers for operating the managed investments. The Investment Management fees charged in respect of the managed investments will vary and are detailed in the PDS for the relevant managed investment. The Investment Management fee charged in respect of managed investments may also change as determined by the product issuers. The Investment Management fees in respect of the managed investments may also include performance based fees when investment performance of a managed investment exceeds set benchmarks or other criteria as specified in the relevant managed investment PDS. Performance based fees range from 0% to 25% of outperformance above the set benchmark or other criteria, depending on the managed investment chosen. For example *, consider a situation where investment returns are 20% for one year and the hurdle (benchmark) is 10% for the same period, i.e. the investment return has exceeded its benchmark by 10%. The performance fee of say, 25% is then applied to the 10% outperformance and the product issuer would receive 2.50%. In some cases, product issuers need to make good prior losses before a performance fee is payable. * This example is provided for illustration only, is based on the factors stated and should not be taken to contain an estimate or guarantee. Adviser Remuneration You may agree to pay your financial adviser an Adviser Service Fee for advice and other services provided. These fees will be deducted from your account. This is an optional fee. This fee may be based on a percentage of your portfolio balance or a flat dollar amount per annum. Ongoing Adviser Service Fee This fee may be changed on an ongoing basis as a flat dollar amount per annum and/or as a percentage of your account balance per annum and is inclusive of GST. If an Adviser Service Fee is based on a percentage of your portfolio balance, it will be calculated on the average daily balance of your portfolio. The Adviser Service Fee (percentage or flat dollar amount) will be deducted monthly from your PortfolioOne CMS in the first week of the following month and payments will appear on your PortfolioOne CMS statement. You may cancel or change this arrangement at any time by notifying us in writing. One-off Adviser Service Fee You may also request a one-off Adviser Service Fee to be deducted from your account. This fee may be charged on a one-off basis as a flat dollar amount or as a percentage of your account balance and is inclusive of GST. This fee is negotiable with your adviser. In addition to any payments you agree to with your adviser, we may make payments to dealer groups based on commercial arrangements. These payments are made by us and not charged to you or your portfolio. These payments are made up to a maximum of 0.25% pa on funds under management (inclusive of GST). Buy/sell spread A buy/sell price spread represents the difference between the purchase and sale price of units in a managed investment. The purpose is to compensate remaining investors for transaction costs incurred when buying or selling assets as investors enter or leave an investment option. At the date of issue of this Guide the buy/sell range of (investment/withdrawal) managed investments ranges from 0.00% 1.10% (for example, if you invest or withdraw $10,000 in or from a managed investment, you may pay between $0 and $110 as a result of buying or selling the investment). This is an additional cost when you purchase or sell units in a managed investment. Generally, no part of the buy/sell spread differential is paid to the Operator or product issuer. Share Transaction Costs (Brokerage) The settlement costs of direct share purchase or sales, such as any brokerage or government charges, are calculated and payable at the time of each transaction and will be added to the cost, or deducted from the proceeds, of the transaction. The charges to buy and sell shares are set by the broker used to facilitate the transactions. These costs can change from time to time. You should consult your financial adviser or nominated broker to obtain a copy of the most up to date information on share transacting costs. 14

15 When you open your account, an Authorised Broker will be automatically nominated as the online broker authorised to purchase and sell approved securities on your account. At the time of preparing this Guide, the Authorised Broker charges brokerage at a rate of 0.12 % of the amount transacted up to a maximum brokerage charge of $100. A minimum brokerage charge of $30 applies to each online transaction. For example, for a trade of $100,000 the Authorised Broker will receive a maximum amount of $100. You will pay only $100 of brokerage. Please refer to the Authorised Broker s Financial Services Guide, available from your adviser, for more details on brokerage rates for online trades. Failed Trade Fees For listed securities, if you have insufficient cash in your PortfolioOne CMS to pay for a purchase or if you instruct us to sell securities that are not held in your portfolio, a fail trade fee of $36.00 per trade per day will be charged until settlement or the trade is cancelled. The ASX and/or your broker may also charge a fee. Sell fails (inclusive of GST) $36 per day Buy fails (inclusive of GST) $36 per day Transfers of listed securities and managed funds out of the PortfolioOne Investment Service If you request an in specie transfer of assets out of your account, an asset transfer fee of $65 per asset will be charged on each asset transfer. Other Costs And Related Issues Goods and Services Tax (GST) The fees and expenses that the PortfolioOne Investment Service incurs may be subject to GST. However, the Service may be entitled to claim a Reduced Input Tax Credit (RITC) at the applicable rate on certain fees and expenses. The fees shown in this Guide are the fees you will pay and include GST where applicable less any entitlement to RITCs that the Service may have in relation to fees and expenses it incurs. Fee aggregation We offer a facility which allows you and a member of your immediate family to link portfolios for the purpose of calculating the Administration Fee. This facility recognises and rewards investors for placing larger amounts through the PortfolioOne Investment Service by reducing the Administration Fee. Please note, only two investors can be linked for fee aggregation, however, each of these investors can have multiple accounts. For example, an investor who has a PortfolioOne Superannuation and Pension Service account is regarded as a single investor for the purposes of fee aggregation. Minimum administration fees will apply to each account. Talk to your financial adviser about whether you may qualify. Expenses Under the PortfolioOne Investment Service s constitution, we are entitled to be reimbursed for expenses that we reasonably and properly incur in the administration of the Service, including audit fees, taxes, registry costs and any fees payable to regulatory authorities. Alterations to Fees We reserve the right to change any of our fees and charges from their current levels without your consent, however, any increase will only take effect after we have provided you with 30 days written notice. Fees deducted from your PortfolioOne CMS You direct us to debit your PortfolioOne CMS with all the fees and charges relating to your portfolio and to make payment of those fees to the person entitled to them (including us and our associates). We may suspend services to you if any fees remain unpaid. Payments from underlying investment providers Where permitted by law, our administrator, Macquarie Investment Management Limited (MIML) may receive a product access payment from product issuers, which is typically up to $30,000 but no more than $150,000 per issuer per annum. For each investment option included in the PortfolioOne Investment Service menu, they may also receive up to $10,000 per annum. In some instances, if an investment option requires additional administration by MIML, these amounts may be increased by MIML to $15,000 per annum. These payments may charge without notification to you. Some investment providers may pay us commission based on the volume of funds invested through this service, when permitted by law. The exact commission and service access payment is negotiated with each product issuer. These payments come from each product issuer s own resources. They are not additional fees to you. Remuneration and other benefits we receive. Our employees and directors receive a salary from us. They do not receive commissions, however, they may be eligible for performance-related bonuses and other staff related benefits which can include discounted financial service products and study assistance etc. You may receive advice about our products and services from financial advisers who do not work for us directly (although they may work for another licensee within the ANZ Group of companies). These advisers may receive remuneration from us if you invest in one or more of our products or if you use our services, pursuant to their recommendation. Financial advisers are also required by law to provide you with a copy of their Financial Services Guide and/or Statement of Advice. These documents list the remuneration (including commissions) and other benefits (including non-monetary forms of remuneration, such as paying for conferences, sponsorships etc) they receive for providing you with financial advice, including for recommending certain financial products to you. 15

16 What are the investment opportunities? When you invest through the PortfolioOne Investment Service you can access managed funds from the Investment Menu, approved ASX listed securities and term deposits. With help from your financial adviser, you can select managed funds, shares, other securities and term deposits that match your investment goals, and are in line with your risk profile. A list of the available managed funds can be obtained from your financial adviser. Selecting investments The PortfolioOne Investment Service allows you to diversify your portfolio across many investments, choosing from an extensive range of investment options and fund managers. Before selecting your investment portfolio, you should consider your financial goals, the type of returns required to meet your goals, the level of risk you can tolerate in order to achieve those returns, and how long you intend to hold your investment. You should consider this information in light of your particular investment objectives, financial situation and needs. The available categories of investment are: Managed funds Managed fund investments are managed by investment professionals who buy investments according to the investment objectives and strategies of the managed fund. These investments range from cash to international equities and absolute return funds. Generally, the increased amount and diversity of the investments within a fund helps reduce risk and produce more consistent investment returns than investing directly into a single security. For each managed fund you select, you must read the relevant disclosure document issued by the fund manager. These documents are available online via ClientView or from your financial adviser. Approved ASX listed securities PortfolioOne allows you to invest into securities listed on the ASX. Investing in listed securities may expose your investment to more risk than investing in managed funds because the returns from single securities can fluctuate significantly from year to year. It may also be more risky than managed funds due to the lack of the extra layer of skills in selecting particular securities provided by fund managers. You should consult with your financial adviser about these types of investments. Term deposits Selected term deposits may be available through PortfolioOne. Your adviser will be able to inform you of the term deposits available. For each term deposit you select, you must read the relevant disclosure document from the issuer of the term deposit. These are available from your adviser. Changing investment options Over time, new investment options will be added and existing options may be withdrawn from the Investment Menu. If we determine that an investment option is to be withdrawn we will notify your financial adviser. You will generally be given the choice of retaining or disposing of that investment option. Your financial adviser will be able to assist you in determining what you should do in these circumstances. Note: We may, at any time, remove an investment option due to questions regarding the administration, liquidity or performance of the investment option and we may be required to withdraw your funds from this option if we believe this is an appropriate course of action. Risk profile Before you invest, you need to carefully consider how much of your capital you are prepared to risk to pursue potential returns. Each type of investment has different risk/return features as illustrated below. The level of risk appropriate for your portfolio will depend on many factors, such as your initial reason for investing, the time you want to hold your investment, and what sort of results you hope to achieve. Before you invest you should consider the risks and benefits of investing and discuss these with your financial adviser. Generally there is a proportional relationship between the risks associated with different investments and their potential returns. Investments with higher risk usually producing higher returns over the medium to long-term. The value of investments can go up and down. Past performance is not necessarily indicative of future performance. Neither OnePath Custodians nor any other company in ANZ guarantees investment performance or earnings or return of capital invested in PortfolioOne Investment Service. High Relative Return Fixed Interest Property Shares Low Low Cash Relative Risk High 16

17 Difference between investing via PortfolioOne and investing directly When you invest through the PortfolioOne Investment Service, you do not hold legal title to the investments in your portfolio. You have beneficial entitlement to those investments, and subject to this Guide and the Service s constitution, we act on your instructions to buy or sell. We keep a record of assets we, or our custodian, hold for your portfolio. The tables below summarise the main differences between using the PortfolioOne Investment Service and investing directly. For managed funds Investing through the PortfolioOne Investment Service You receive regular consolidated reports and other information described in this Guide on all investments held in your portfolio. You choose from a range of mostly wholesale managed funds. Income is paid into your PortfolioOne CMS or reinvested. Time to complete purchases and sales of investments is dependent on our procedures and those of the underlying fund managers. Notices of meetings for managed fund investments or notices of changes in fees etc. are not sent directly to you. We will tell you if any matters we consider important come to our attention. We do not vote or seek your instructions in relation to voting. However, at our discretion, we may vote as per your instructions. Through participation in Dollar Cost Averaging, you are able to invest regular amounts into a range of managed funds. We, or our custodian, hold legal title to the investments in your portfolio. You retain the beneficial interest. You may not have available to you the withdrawal rights available under s724 (disclosure documents for securities) and s1016e (PDS for managed investments) if the relevant PDS or disclosure document is defective or contains conditions stated in those documents are not met. Cooling off rights (the right to return a financial product within a specified time) are not available to you in respect of financial products including managed investments. Investing directly You receive reports and statements from each fund manager and you need to consolidate them yourself to get a complete picture of your portfolio. You generally only have access to retail managed funds. Income can generally be reinvested or paid directly to you. Time to complete purchases and sales of investments is dependent on the procedures of each fund manager. You receive the notices of meetings and any other changes directly from each fund manager. You are able to vote in relation to the units in the managed funds you own. If you want to invest regularly, you will need to make appropriate arrangements with each fund manager. You hold legal title to your investments. You will have available to you certain rights s1016e, including that the product issuer would either have to return your investment monies or give you corrected disclosure documents and an option to withdraw) if the relevant PDS or disclosure document is defective or contains conditions stated in those documents are not met. Cooling off rights are available to you in respect of financial products including managed investments. For listed securities and investments other than managed funds Investing through the PortfolioOne Investment Service You receive regular consolidated reports and other information described in this Guide on all investments held in your portfolio. You instruct us to participate in dividend reinvestment plans on your behalf, where available. Where rights issues, options or conversions are offered by a company, we will contact your financial adviser. You do not have proxy voting rights to participate in company meetings. However, in exceptional circumstances, for example, where there could be an adverse outcome for you, the Operator will seek your instructions. Investing directly You receive information from each company you hold shares in and each term deposit issuer. You need to consolidate the information to get a complete picture of your portfolio. You can choose to participate in any dividend reinvestment plans offered by the companies. If there is a rights issue or other offering, you will be contacted directly by the company. You may participate in all proxy votes where investments are held directly in your name. 17

18 Investing through the PortfolioOne Investment Service We, or our custodian, are the registered owner of the investments in your portfolio. You retain the beneficial interest. Maturity proceeds of term deposits are paid into your PortfolioOne CMS. Time to complete purchases is dependent on our procedures and those of each term deposit issuer. Your term deposit investment will be pooled with those of other investors and held as a single asset by the custodian. You may not have available to you the withdrawal rights available under s724 if the relevant PDS or disclosure document is defective or contains conditions stated in those documents are not met. Cooling off rights (the right to return a financial product within a specified time) are not available to you with respect of financial products including managed investments. You may participate in all corporate actions via your adviser. Investing directly You hold your investments in your own name. Term deposit proceeds are paid as directed by you. Time to complete purchases is dependent on the procedures of each term deposit issuer. Each term deposit is held as an individual asset in your name. You will have available to you certain rights under s724, including that the product issuer would either have to return your investment monies or give you corrected disclosure documents and an option to withdraw) if the relevant PDS or disclosure document is defective or contains conditions stated in those documents are not met. Cooling off rights are available to you in respect of financial products including managed investments. You may participate in all corporate actions where investments are held directly in your name. 18

19 What role does my financial adviser play? Your financial adviser plays an integral part in managing your portfolio. The role of your financial adviser is to ensure that: the paperwork required to set up your portfolio is completed we are advised of your investment instructions you are informed of the potential risks and returns related to your investment decisions your portfolio is regularly reviewed and you receive advice on any changes you receive a copy of the PDS for each underlying managed fund you invest in and any other relevant disclosure document. To use the PortfolioOne Investment Service, your financial adviser must be registered with OnePath Custodians and PortfolioOne. If they are not registered, they can contact us to arrange registration. When you open your portfolio, your financial adviser will be authorised to place instructions on your behalf online. These instructions may include instructions to buy and sell investments. You also authorise your adviser to transact on your PortfolioOne CMS on your behalf for the purpose of buying assets for your portfolio or receiving the proceeds of selling assets in your portfolio. We act on instructions received from your financial adviser as if they were from you. Therefore, you should give your financial adviser specific instructions, and not give them any discretion. We assume your financial adviser is acting on your behalf. Generally, we also make available to your financial adviser any information which we either send to you, or hold on file regarding your account. For these reasons it is important you notify us immediately in writing if you wish to change your financial adviser. Otherwise we will continue to accept instructions from the financial adviser currently nominated. We cannot change details of your financial adviser over the phone. We may notify your adviser of changes to underlying managed funds or other important information and rely on your adviser to pass this information on to you where appropriate. Your financial adviser can delegate reporting functions to others within their organisation, and this may help provide a more efficient service. They generally remain responsible for their delegates. Your financial adviser cannot: change your externally nominated account change your account name request funds to be transferred to your externally nominated account withdraw funds from the PortfolioOne Investment Service. For these requests, we require your specific instruction these requests must be made in writing and signed by you. If the change of account details relates to a change of name, we will require supporting documentation, such as a certified copy of the legal documents relating to the change of name. Where you provide an instruction, authority or direction in this Guide, you agree not to vary it. 19

20 How does the PortfolioOne Investment Service work for me? PortfolioOne Cash Management Service (CMS) The PortfolioOne CMS forms the hub of your portfolio. Using your PortfolioOne CMS, you can buy investments, receive income and dividends and pay administration and adviser fees. Money going into the PortfolioOne Investment Service will go through your PortfolioOne CMS and all withdrawals from the PortfolioOne Investment Service will come out of your PortfolioOne CMS. This makes it easy to track details at tax time, and removes the hassles of writing cheques for costs associated with running a portfolio and transacting via the postal system. The PortfolioOne CMS is offered by Macquarie Bank. Opening your portfolio To open your portfolio, you are required to complete and sign an Application Form for the PortfolioOne Investment Service. By opening your portfolio, you agree to be bound by the terms and conditions of this Guide and the PortfolioOne Investment Service constitution. You can obtain a copy of the constitution from us free of charge. This Guide and the constitution form our contract with you. The initial investment required to open your portfolio is $50,000. This can be made up of cash (in the form of a cheque) and/or the market value of managed funds and securities transferred into the PortfolioOne Investment Service. The PortfolioOne Investment Service application will automatically open your portfolio as well as your PortfolioOne CMS. Please read the accompanying PortfolioOne CMS Product Information Statement before completing the attached form. To open your PortfolioOne CMS, your adviser will need to send us a cheque made out to: PortfolioOne Investment Service [insert full account name] When you first invest When you open your portfolio, you will receive confirmation of the initial balance of your PortfolioOne Investment Service portfolio. You will also receive your access code (if you do not already have one). In addition to being able to access your PortfolioOne CMS via ClientView and over the phone, you can use your access code to view a number of portfolio reports via the internet if you elect to use ClientView. Please refer to page 23 for more information on ClientView. Your instructions To buy investments through the PortfolioOne Investment Service you must give us instructions via your financial adviser. Generally, instructions will be acted on as soon as practicable. If you cannot contact your financial adviser, you can also give us written instructions yourself, provided that for purchases, you confirm to us that you have received the current disclosure document for the investments. If instructions are received to buy more than one investment and you have insufficient cleared funds in your PortfolioOne CMS to cover all purchases, we have absolute discretion as to which (or which combination of) instructions will be acted on (if any). See Minimum balance on page 21 for more information about your instructions. In certain circumstances set out in the constitution, your assets can be sold as if we had received your instructions, with the proceeds paid to your PortfolioOne CMS. You are responsible for any associated fees. Managed funds We will process instructions from your financial adviser as quickly as practicable, depending on the application process of each fund manager. Payment for your unlisted managed fund applications will generally be deducted from your PortfolioOne CMS on the day that we apply for units from the fund managers. Fund managers have different rules in relation to when applications and withdrawals will be accepted or processed into their funds. Details of these rules can be found in the disclosure document of each fund. Where requests are received by us by 12 noon (AEST) on a business day, instructions to the fund manager will usually be sent on the same day. Where unlisted managed funds have minimum investment requirements or the fund manager does not calculate a unit price daily, it may take longer to process your instructions. The unit price that you receive for the unlisted managed funds is determined by the fund manager, usually at the time they issue the units. Approved ASX listed securities We will pay for the transactions you have made using your authorised broker from your PortfolioOne CMS. We will withdraw funds to pay for the transaction on the same day, or within one business day, from when you execute the trade. 20