Changes to the Product Disclosure Statement for:

Transcription

1 Changes to the Product Disclosure Statement for: FirstChoice Investments FirstChoice Personal Super FirstChoice Pension New Product Disclosure Statement: Issue No. 2013/1, dated 11 June 2013 Old Product Disclosure Statement: Issue No. 2012/1, dated 28 May 2012 This brochure highlights the significant changes we have made to the Product Disclosure Statement (PDS) dated 28 May 2012 (Old PDS) for FirstChoice Personal Super, FirstChoice Pension and FirstChoice Investments. You should read this brochure to assess whether this information affects your investment decision. We recommend you speak to your financial adviser before making an investment decision. The changes in this brochure are included in the new PDS dated 11 June 2013 (New PDS). You can obtain a copy of the most up to date PDS on our website at colonialfirstate.com.au or by calling us on

2 Contents New investment options 4 PIMCO Global Bond 4 Acadian Global Managed Volatility Equity 4 Colonial First State Global Resources Tactical 4 Manager replacements 4 FirstChoice multi manager changes 7 Manager changes 7 FirstChoice Global Property Securities 7 FirstChoice Australian Small Companies 7 FirstChoice Global Share 7 FirstChoice Global Share Hedged 7 FirstChoice Fixed Interest 7 FirstChoice Australian Share 7 Transition to new investment strategy 7 FirstChoice Boutique Australian Share 7 FirstChoice Geared Boutique Australian Share 7 Investment option name changes and re openings 7 BlackRock Australian Share 7 Colonial First State Developing Companies 7 Colonial First State Colliers Global Property Securities 7 Colonial First State Colliers Geared Global Property Securities 7 Magellan Global 7 Challenger Property Securities 7 Investment option changes 8 Changes of investment objective due to APRA Prudential Standards 8 Changes in asset allocation ranges 8 Minor changes to strategy wording 8 Changes to wording in strategy and objective 8 Termination of investment options 8 BlackRock Asset Allocation Alpha 8 Changes to insurance 8 Changes to insurance premiums 8 Changes to rollover of insurance cover 10 Other insurance changes 10 2

3 Reduction in management and performance fees 12 Acadian options 12 Acadian Australian Equity 12 Acadian Australian Equity Long Short 12 Acadian Quant Yield Fund 12 Acadian Global Long Short 12 PM Capital Absolute Performance 12 Transaction cost changes 13 Other changes 15 Change to member protection requirement 15 Fee name change 15 3

4 New investment options To continue offering you more investment choice we have added the following investment options to the FirstChoice menu: New investment option PIMCO Global Bond Acadian Global Managed Volatility Equity Colonial First State Global Resources Tactical Category Fixed interest and income Global share Global specialist To find out more about these new investment options, please refer to the new Product Disclosure Statement. Manager replacements Two managers have been replaced as follows: Previous manager and option name PM Capital Australian Share AXA Global Equity Value New manager and option name Antares Elite Opportunities Altrinsic Global Equity Antares Elite Opportunities (formerly PM Capital Australian Share) Previous objective New objective To provide positive investment returns over a three year plus investment horizon by investing in a concentrated portfolio of Australian equities listed on the Australian Securities Exchange or dual listed on an overseas stock exchange. The goal of the option is not to replicate the standard industry benchmarks such as the ASX 200 and it is likely to have varied outcomes from those of a traditional index benchmarked option. Previous strategy The option invests in a focused yet diversified portfolio with approximately Australian equity positions. All of the portfolio positions are subject to intensive research and peer group review. The option will hold between 80% and 100% of its exposure in listed Australian securities and interest bearing debt/hybrid securities of Australian companies, with at least 50% of the portfolio invested in companies in the ASX 100 Index. To outperform the S&P/ASX 200 Accumulation Index, before fees and taxes, over rolling five year periods by investing in an actively managed and highly concentrated portfolio of Australian shares. New strategy The option is a concentrated portfolio of Australian shares containing only Antares highest conviction investment ideas. The option is relatively unconstrained at the stock and sector level allowing the Manager s best ideas to be represented in the portfolio. 4

5 Antares Elite Opportunities (formerly PM Capital Australian Share) Previous strategy (cont) New strategy (cont) If PM Capital cannot find appropriate opportunities, the option may hold up to 20% cash until new opportunities arise. PM Capital can also use derivatives (including futures, options, swaps, forwards and warrants) as a risk management tool to reduce the net effective exposure of the option to a 50% net invested position where the manager believes the sharemarket to be fully valued. Derivatives may also be used for hedging purposes or to synthetically create an underlying position. The option is managed from an Australian investor s perspective. Tax management is an important consideration in the daily management of the PM Capital Australian Share option. Previous asset allocation Australian shares % (benchmark 100%) Debt securities 0 30% (benchmark 0%) Cash 0 20% (benchmark 0%) Minimum investment timeframe The investment style applied to the option is bottom up, meaning investment decisions are made by undertaking in depth proprietary research and analysis of individual companies and securities. Antares aims to invest in companies where the current share price does not fully reflect the Manager s view of the potential value of the company s business. Through company contact and detailed financial and non financial analysis, research analysts gain a first hand understanding of Australian businesses and the industries in which they operate. Asset allocation Australian shares % (benchmark 100%) Cash 0 5% (benchmark 0%) Minimum investment timeframe 7 years 7 years Risk rating Risk rating 6 6 Altrinsic Global Equity (formerly AXA Global Equity Value) Previous objective New objective The objectives are twofold: to provide long term capital growth and to outperform the MSCI World (ex Australia) Index (net dividends reinvested), in Australian dollar terms, after costs and over rolling five year periods. To deliver superior, risk adjusted growth of capital over the long term and to outperform the MSCI All Country World Index (ex Australia) net dividends reinvested in AUD over rolling three year periods before fees and taxes. 5

6 Altrinsic Global Equity (formerly AXA Global Equity Value) Previous strategy New strategy The investment strategy for the option is to buy stocks with the greatest amount of long term earnings for the best price. Bernstein Value Equities manages the option s global equities using a research driven active value style. Bottom up stock selection is the primary source of added value country, sector and currency allocation are considered by products of the selection process. Research is organised globally by industry, with analysts located in all the major regions of the world. Proprietary quantitative models are used to help focus the efforts of fundamental company analysts on stocks with the potential for high returns, as well as to measure and align the risk taken with the return opportunity. The option holds a diversified portfolio of stocks in companies with a market capitalisation generally in excess of US$500 million. These stocks are typically priced low in relation to their long term earnings power and dividend paying capabilities. The option s investments in foreign markets will generally be exposed to the relevant foreign currencies. Currency hedging may be used at times. Asset allocation Global shares % (benchmark 100%) Cash 0 5% (benchmark 0%) Altrinsic is a high conviction fundamental value orientated global equity manager. Altrinsic specialises in company research and identifies investment opportunities across the full market cap spectrum in both developed and emerging markets. Altrinsic s investment philosophy is based on the belief that a company s valuation is a function of its future financial productivity (ie a return on capital relative to cost of capital) adjusted for associated risk. The firm implements this philosophy by capitalising on mispriced securities in the world s equity markets and by taking a long term view and leveraging Altrinsic s: individual company analysis; global industry knowledge and a distinct cross-border frame of reference. Currency hedging may be used at times. Asset allocation Global emerging markets 0 30% (benchmark 14%) Global developed markets % (benchmark 86%) Cash/equivalent 0 10% (benchmark 0%) Minimum investment Minimum investment timeframe timeframe 7 years 7 years Risk rating Risk rating 6 6 6

7 FirstChoice multi manager changes Manager changes Investment option FirstChoice Global Property Securities FirstChoice Australian Small Companies FirstChoice Global Share FirstChoice Global Share Hedged FirstChoice Fixed Interest FirstChoice Australian Share Category Global property securities Australian share small companies Global share Global share Fixed interest Australian share For more information please refer to the new Product Disclosure Statement or visit the Latest news section on our website. Transition to new investment strategy Previous strategy FirstChoice Boutique Australian Share FirstChoice Geared Boutique Australian Share New strategy FirstChoice Lower Volatility Australian Share FirstChoice Geared Australian Share To find out more about the new investment strategies, please refer to the Product Disclosure Statement. Investment option name changes and re openings Current investment option name BlackRock Australian Share Colonial First State Developing Companies Colonial First State Colliers Global Property Securities Colonial First State Colliers Geared Global Property Securities New investment option name BlackRock Scientific Australian Equity n/a Colonial First State Global Property Securities Colonial First State Geared Global Property Securities Re opening Yes Yes n/a n/a Magellan Global Magellan Global Share n/a Challenger Property SG Hiscock Property n/a Securities Securities 7

8 Investment option changes A variety of minor changes have been made to asset allocations, benchmarks, strategies and objectives for a number of funds. The nature of the changes are indicated below. For full details of changes, please visit the Latest news section on our website. Changes of investment objective due to APRA Prudential Standards To continue to meet the prudential standards of the Australian Prudential Regulation Authority (APRA) we have updated the objective of a number of the investment options to provide further clarification about how the options are managed. Changes in asset allocation ranges FirstChoice Defensive FirstChoice Conservative FirstChoice Multi Index Conservative PM Capital Enhanced Yield Magellan Global Share PM Capital Absolute Performance Integrity Australian Share Minor changes to strategy wording FirstChoice Property Securities FirstChoice Global Property Securities FirstChoice Global Infrastructure Securities Perpetual Conservative Growth Perpetual Diversified Growth Perpetual Balanced Growth Macquarie Income Opportunities Changes to wording in strategy and objective RealIndex Australian Share RealIndex Australian Small Companies RealIndex Global Share RealIndex Global Share Hedged RealIndex Emerging Markets Termination of investment options We have terminated the following investment option from the FirstChoice menu: Investment option name BlackRock Asset Allocation Alpha Category Alternatives Changes to insurance Changes to insurance premiums Increased premiums CommInsure, as the insurer for your FirstChoice Personal Super account, regularly reviews the insurance premiums. The insurer has not increased the underlying death and Total and permanent disablement (TPD) rates since 2001 and since 2004 for salary continuance (when this cover was first introduced to the product). From 11 June 2013 insurance premiums for death, TPD and salary continuance will increase by 3%. 8

9 What is the impact of this change? FirstChoice Personal Super Current average Monthly premium New average Average increase Death cover $31.39 $32.33 $0.94 Total & permanent $17.93 $18.46 $0.54 disablement cover Salary continuance $13.65 $14.06 $0.41 Changes for new members or if your adviser changes from 11 June 2013 From 11 June 2013 new investors or existing investors who change the dealer group from whom they receive financial advice (that is the group through which your financial advisers is licensed) may have some additional changes to their insurance premium. These are: The premium charged will not include adviser commission of up to 22%. Our administration fee, which forms part of the premium and is not an additional cost, will be increased. This is to cover the costs of administering insurance and to allow us to continue to enhance the insurance offering for members. For death and TPD cover the insurance administration fee will increase from 6.4% to 10%, and from 5% to 10% for salary continuance insurance. The change in your insurance premiums will reflect both the removal of the adviser commission and the increase in the insurance administration fee. For new members on standard rates this will mean a net decrease of up to 20% in premiums. However, if your adviser has previously negotiated a discount on adviser commission, the percentage decrease may be less or there may be a net increase in premiums. Please note this change in fees will not impact your level of cover. If you don t hold insurance through your account this change in fees will only apply to you if you take up insurance in the future or if there is a change in dealer group. An example of the net effects of these changes is outlined in the following table. This is an example only and is based on a 50 year old, non smoker, white collar male on standard rates. This comparison includes the 3% increase by the insurer to the underlying rates. What is the impact of this change? FirstChoice Personal Super Monthly premium Current New Decrease Death cover 1 $47.08 $37.29 $9.79 Total & permanent $35.00 $27.92 $7.08 disablement cover 1 Salary continuance insurance 2 $52.08 $42.24 $ Premiums based on $250,000 death and TPD cover. 2 Premiums based on $50,000 annual salary, 30 day waiting period and a two year benefit period. The premiums assume a benefit amount of 75% of salary. 9

10 Changes to rollover of insurance cover Rollover of existing cover from a retail policy Currently only rollovers of cover held under a group policy from another insurer can be rolled over to FirstChoice Personal Super. From 11 June 2013 the product has been enhanced to allow you to rollover insurance cover under an existing retail policy to your FirstChoice Personal Super account. Rollovers between Colonial First State personal super policies If you rollover your insurance cover between FirstChoice Personal Super and FirstChoice Wholesale Personal Super and Colonial First State Rollover and Superannuation Fund you do not need to satisfy the eligibility criteria for insurance cover. Your existing cover amount will rollover, although you will be subject to the terms and conditions of the new policy. Also, if you are transferring from FirstChoice Employer Super to FirstChoice Personal Super and FirstChoice Wholesale Personal Super you will not need to satisfy the eligibility criteria. Limits on the rollover of existing cover from another insurer There will be limits on the insurance you can rollover to FirstChoice Personal Super. From 11 June 2013 rollover of cover will be limited to members under age 55 and will be capped as follows: death only, or death and TPD $1,500,000 in total cover salary continuance $10,000 per month. This means you can rollover death and TPD cover, provided your total cover held within FirstChoice Personal Super does not exceed $1,500,000. Other insurance changes Definition of medical practitioner updated The definition of medical practitioner has been updated for death, TPD and salary continuance to include someone who is registered and practising as a medical practitioner in Australia, other than the insured member or a direct family member or business partner, associate, employer or employee of the insured member or a person who practises in the same medical centre or clinic as the insured member. Maximum death cover to be capped at $5 million Our FirstChoice super products currently offer unlimited death cover, however from 11 June 2013 death cover will be capped at $5 million for existing and new members. Pandemic clause as an exclusion A pandemic clause has been included as a death (and terminal illness) exclusion. A pandemic illness exclusion is where the insurer will not pay a benefit if the member dies, or is terminally ill, directly or indirectly because of a pandemic illness or other condition caused by or related to the pandemic illness in any way and the death, or terminal illness, is within 30 days of your cover starting, recommencing or increasing. Tax treatment of allowance for 10% superannuation (when receiving a salary continuance benefit) For investors who elected to allow 10% for superannuation contributions, this will be treated as a personal contribution (that is, a post tax contribution). From 11 June 2013 this means that tax will be deducted as PAYG prior to the contribution being made to the superannuation fund. 10

11 Non super policies will reduce the salary continuance benefit The insurance policy has been amended to clarify that any benefit received from a non superannuation policy will reduce the monthly salary continuance benefit received by the member from the FirstChoice super product. Salary continuance benefit maximum When you receive a salary continuance benefit for a period of more than two years, the insurer will index the benefit by the lesser of CPI or 7.5% pa. The indexation of the benefit will be capped to the product maximum cover amount of $25,000 per month. 11

12 Reduction in management and performance fees Acadian options The Acadian options available on FirstChoice will have changes to the management costs and performance fees from 11 June 2013, as detailed below. Investment option Management cost Performance fee Current New Current New Acadian Australian Equity 1.90% 1.70% No change No change Acadian Australian Equity Long Short 1.90% 1.80% 15% applied gross of management fees 15% applied net of management fees Acadian Quant Yield Fund No change No change 20% applied gross of management fees 20% applied net of management fees Acadian Global Long Short No change No change 15% applied gross of management fees 15% applied net of management fees PM Capital Absolute Performance The performance fee benchmark for the PM Capital Absolute Performance option will change from 0% after management fees to the RBA cash rate after management fees from 11 June This means that the investment manager will need to outperform a higher performance hurdle before receiving a performance fee. 12

13 Transaction cost changes Transaction costs such as brokerage, government taxes/duties/levies, bank charges and account transaction charges are paid from each investment option. When an investor invests, switches or withdraws all or part of their investment, we use what is called a buy/sell spread to recover transaction costs incurred. Because there are costs in buying and selling assets, we use the buy/sell spread to direct these costs to the investors who transact rather than other investors in the option. Transaction costs are not fees paid to us, they are paid to the investment managers who manage the investment option. The buy/sell spread is applied to the entry and exit unit price for your investment option to recover transaction costs. We regularly review the transaction costs of our investment options to ensure that they reflect the actual transaction costs paid by the investment option. As a result, most of the transaction costs of the following options have been reduced. You will only incur this cost if you invest, redeem or switch in or out of the investment options listed: 13

14 Spread per transaction Investment option/portfolio name Current New Difference BT Core Global Share 0.25% 0.20% 0.05% Colonial First State Index Australian Share 0.15% 0.10% 0.05% DWS Global Equity Thematic 0.25% 0.20% 0.05% MFS Global Share 0.25% 0.20% 0.05% Acadian Global Equity Long Short 0.40% 0.35% 0.05% Generation Global Share 0.25% 0.20% 0.05% Platinum International 0.35% 0.30% 0.05% Acadian Geared Global Equity 0.25% 0.65% 0.20% 0.50% 0.15% Colonial First State Geared Global Share 0.25% 0.45% 0.20% 0.35% 0.10% Colonial First State Global Share 0.25% 0.20% 0.05% Acadian Global Equity 0.25% 0.20% 0.05% FirstChoice Global Share 0.25% 0.20% 0.05% FirstChoice Global Share Hedged 0.25% 0.20% 0.05% FirstChoice Multi Index Balanced 0.20% 0.15% 0.05% Capital International Global Share 0.25% 0.20% 0.05% Perpetual International Share 0.25% 0.20% 0.05% 14

15 Spread per transaction Investment option/portfolio name Current New Difference Realindex Australian Share 0.15% 0.10% 0.05% Realindex Australian Small Companies 0.15% 0.10% 0.05% Realindex Global Share 0.20% 0.15% 0.05% Realindex Global Share Hedged 0.20% 0.15% 0.05% Realindex Emerging Markets 0.25% 0.20% 0.05% Other changes Change to member protection requirement Previously, Federal Government regulations generally limited the amount of charges that could be deducted from a member s account when their account balance fell below $1,000. From 1 July 2013 this requirement will be withdrawn. Fee name change The Adviser trail rebate will be renamed Fee rebate. 15

16 Colonial First State Investments Limited ABN , AFS Licence (Colonial First State) is the issuer of interests in First Choice Personal Super and FirstChoice Pension from the Colonial First State FirstChoice Super annuation Trust ABN Colonial First State also issues interests in FirstChoice Investments other than FirstRate Term Deposits and FirstRate Saver which are deposit products of Commonwealth Bank of Australia ABN AFS Licence (the Bank). Colonial First State is a wholly owned subsidiary of the Bank. The Bank and its subsidiaries do not guarantee the performance or FirstChoice or the repayment of capital by FirstChoice. This booklet provides information and general advice. It does not take into account your individual objectives, financial situation or needs. A copy of the new Product Disclosure Statement (PDS) is enclosed and for any of the other FirstChoice products are available from 11 June 2013 at Colonialfirststate.com.au or by calling us on Investors should read the PDS and consider talking to their financial adviser before making any investment decision in relation to FirstChoice products /FS4502/0613