How we invest your money Employer-sponsored and personal superannuation members. This document was prepared on 3 August 2015. The information in this document forms part of the Statewide product disclosure statement (PDS) prepared on 3 August 2015. www.statewide.com.au/join
Contents Investing in your future 2 Your super investment planning for the long term 3 Statewide s investment options 6 What else do you need to know about investment? 10 Important information The information in this booklet forms part of the Statewide product disclosure statement (PDS) prepared on 3 August 2015 for employer-sponsored and personal superannuation members which offers an interest in Statewide, division 1 and 2 respectively within the Statewide Superannuation Trust (the fund). The fund is a regulated and complying superannuation fund. Statewide Superannuation Pty Ltd ABN 62 008 099 223 Australian Financial Services Licence (AFSL) Number 243171, is the issuer and Registrable Superannuation Entity (RSE) licensee and trustee of the fund and is authorised to offer a MySuper product (unique identifier 54 145 196 298 820). The information in this booklet is not personal advice. In providing this information to you we have not taken into account your objectives, financial situation or needs. We recommend that you seek professional financial advice from a licensed adviser. Investing in your future Super is probably one of the most important investments you ll ever have. It s a long-term investment that requires care and nurturing. And Statewide is committed to making super easy for you by helping you every step of the way! We know that investment information can sometimes seem overwhelming, especially if you re unfamiliar with some of the jargon often used. But understanding the basics can help you make good decisions now that could really benefit you in years to come. You don t need to be an expert that s what we re here for! Simply understanding your options and how to make the most of them will put you in a great position and help you achieve your goals for retirement. This booklet provides you with all the information you need to know about your investment in super, your options and how you can get good advice for your situation. This booklet may be updated or replaced at any time. Changes that are not materially adverse will be updated and made available on our website at www.statewide.com.au. Page 2 How we invest your money
Your super investment planning for the long term Saving for retirement is a long-term strategy that generally takes the best part of 20 or 30 years to realise, which is why the performance of your super should be judged over time. It s important not to focus on the returns made in a single year. Instead, try to ride the market s short-term highs and lows and stick with your long-term investment plans. If you make a hasty decision and change your investment strategy without having a sound plan, you may do your retirement savings more harm than good. We recommend that you talk to a financial planner to determine which investment option(s) best suit you (see page 4 for more information on getting financial advice). Let s take a closer look at super investment Whatever stage of life you re at, Statewide offers a range of investment options to help you reach your retirement goals. You can choose to invest in one or more of our diversified or single asset class investment options (see the definitions below). When you first join Statewide you re able to choose your investment option(s). If you don t make a choice, your money is automatically placed in the MySuper option (see page 7). For more information on how MySuper works in Statewide, please refer to the Statewide product disclosure statement, available at www.statewide.com.au or by calling us on 1300 65 18 65. Asset classes explained An asset class is a category of similar financial assets. Each asset class has its own risk and return characteristics. Statewide invests across a range of asset classes. The major asset classes are: shares property diversified bonds cash infrastructure alternatives. These can be broken down further to include Australian or international shares, private equity, Australian or international fixed interest, direct or indirect property investments, alternative debt and absolute return funds. What are diversified options? Diversified options invest in a range of asset classes which help to reduce the level of risk. The level of risk for each option varies according to the proportion held in each asset class. For example, the MySuper investment option is considered less risky than the High Growth investment option due to a higher exposure to cash and fixed interest (which may be less volatile or a lower risk in the short term). You can choose from Statewide s six diversified options: Conservative Conservative Balanced Active Balanced Sustainable Diversified MySuper High Growth. The default investment option is the MySuper option. What are single asset class options? The single asset class options generally have higher risk because, unlike diversified investment options, investments are not spread across a range of asset classes. By mixing these options with other investment options or other investments to increase diversification, you may reduce the level of risk your investments are exposed to. The exception to this is the Cash option, which is a low risk alternative. The four single asset class options are: Cash Diversified Bonds Australian Shares International Shares. Choosing what s right for you There are a number of things you need to consider when choosing your investment option(s): Are you comfortable taking bigger risks to make potentially higher long-term gains? What level of income do you want when you retire? How long do you have before retirement? How much super do you already have? Do you have any other investments? Are you happier having a steady but lower investment return? How long will you have your money invested in super? Use the risk profile calculator available on our website to help you work out what type of investor you are. For more information on risks associated with investing, please refer to the Risks of super booklet, available from www.statewide.com.au or by calling us on 1300 65 18 65. Get calculating! Our risk profile calculator can help you work out what type of investor you are. To use it, go to the Calculators page in the Tools section at www.statewide.com.au and follow the prompts! Two important things to remember: Super is a long-term investment, so focus on your long-term goals, and not the short-term fluctuations of your investment. Your investment needs and attitudes to risk may change over time, so you should regularly review your investment strategies. How we invest your money Page 3
Where can you get advice? We strongly recommend you seek professional financial advice to help you work out which investment option(s) will best suit your own financial needs and goals. We have a range of advice services available refer to our AskUS brochure for detailed information. This brochure is available online at www.statewide.com.au, or if you d like a hard copy, please call us on 1300 65 18 65. Our client services officers can give you general information about your super. Our member solutions advisers can give personal advice about your super relating to investments, insurance and personal contributions. Both of these services are available at no additional cost. If you need more detailed advice, why not talk to a financial planner *? Our planners can provide advice on a wide range of topics, including helping you make informed decisions about your super and investments. There are no hidden costs with Statewide financial planning. All fees are agreed upon in advance and your first fact finding appointment is free and without obligation. Your financial planner will help you work out your needs and objectives, and if you need a financial plan, we ll confirm and agree on the cost for your plan straight away and arrange a second appointment. If you don t need further assistance, there will be no charge to you. How to pay As a Statewide member, you can ask for the financial planning fees that relate to your super investment and membership of Statewide to be deducted straight from your Statewide account. You ll be invoiced for financial planning relating to advice outside of super. To make an appointment contact one of our client services officers on 1300 65 18 65. * Financial information and general advice may be provided by representatives of the fund s administrator and wholly owned company, Statewide Financial Management Services Limited, ABN 69 092 109 209 Australian Financial Services Licence No. 239063. Any personal advice may be provided by an authorised representative of Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514. Fees may apply for financial planning advice. IFS is responsible for the advice given to you by its authorised representatives. Page 4 How we invest your money
Investment returns We update our unit prices on a daily basis. For the latest investment performance for each investment option, as well as daily unit prices, visit the Investments section of our website, www.statewide.com.au. More about your investment earnings Statewide operates daily unit pricing. All contributions and other amounts paid into your account buy units in the investment option(s) you have chosen. The investment earnings of each option are reflected in movements in unit prices (up or down). What is unitisation? When you invest in any of the Statewide investment options, your money is placed in a pool of investments along with the funds of every other member who s chosen the same option as you. All contributions and transfers into your Statewide account buy units in the investment option(s) you have chosen. Unit prices reflect the underlying value of the investments of your chosen investment option(s). Put simply, unit prices are a way of managing the changes in your account and tracking the performance of your investment option(s). See the example below: Don has $7,500 invested in the Conservative option. The unit price for the Conservative option on 1 July is $1.00, so Don has 7,500 units as at 1 July ($7,500 $1.00 = 7,500). The unit price for the Conservative option increases from $1.00 to $1.05 * on 23 July. This means that the value of Don s 7,500 units also increases, from $7,500 to $7,875 (7,500 x $1.05 = $7,875). How does unitisation affect switching? Unitisation means that when you switch your investment option(s), you ll be selling units in one investment option to buy units in another, using the unit prices that apply to both your old and new investment option(s) on the day your switch is processed. To find out more information about switching see page 10. When are unit prices declared? Unit prices will generally be determined each business day and will therefore be available on the Statewide website the next day. However, there may be some instances where daily unit pricing may be delayed. These would be abnormal circumstances where the information to determine unit prices is not available, or an extraordinary event has occurred. If this was to occur, a notice would be placed on our website. Unit pricing errors Our Unit pricing policy ensures that current members will have their account corrected in the unlikely event a material error should occur. For people who are no longer members, but were members at the time the error was made, no payment will be made if the error amounted to less than $20. Should an error occur that financially advantages the member, the decision to recover this amount will be made by the chief executive. Further information on Statewide s Unit pricing policy is available on request by calling 1300 65 18 65. But if the unit price dropped to $0.95 * from $1.00 on 23 July, the value of Don s 7,500 units would decrease from $7,500 to $7,125 (7,500 x $0.95 = $7,125). Other factors will also impact the value of Don s investment, such as contributions and transfers in, and withdrawals or transfers out. Tax, fees and the value of the assets that make up the Conservative option are taken into account when determining the daily unit price. *Please note that this example is for illustration purposes only. What happens to my units when a withdrawal is made from my account? When you: withdraw or transfer an amount of money from your account, or have fees, tax or insurance premiums deducted from your account the number of units you have will reduce. This is because your unit balance will reduce by the amount of money withdrawn. How we invest your money Page 5
Statewide s investment options Diversified investment options Conservative This is a diversified asset option with a low to moderate exposure to risk. It is suitable for people who are more interested in less volatile returns than higher long-term returns, and who may be cashing out their super in three to five years. However, negative returns are still possible in a particular year. To achieve returns after tax and fees that exceed Consumer Price Index (CPI) + 1.5% per annum over rolling five-year than one year in 20. median conservative option in an appropriate industry survey over rolling five-year Benchmark Range % Cash 25% (10-35) Diversified Bonds 40% (20-60) Alternative Debt 5% (0-15) Infrastructure 3% (0-7) Property 10% (0-15) International Shares 7% (0-15) Australian Shares 10% (0-15) Time horizon 3-5 years Risk Low - moderate Investment management fee 2015 16 * - 0.33% Conservative Balanced Benchmark Range % This is a diversified asset option with a moderate exposure to risk. It is suitable for people looking for relatively high returns over the medium to longer term who want the growth provided by shares but want lesser fluctuations in returns from year to year. Suitable for people who may be cashing out their investment in five years or more. To achieve returns after tax and fees that exceed CPI + 2% per annum over rolling five-year Limit the probability of generating a negative return to not more than three years in 20. median conservative balanced option in an appropriate industry survey over rolling five-year Cash 10% (5-25) Diversified Bonds 35% (20-50) Alternative Debt 5% (0-10) Infrastructure 5% (0-10) Growth Alternatives 2% (0-10) Property 10% (0-15) International Shares 14% (10-30) Australian Shares 19% (10-30) Time horizon 5+ years Risk Moderate Investment management fee 2015 16 * - 0.47% Active Balanced Benchmark Range % This is a diversified asset option with a moderate to high exposure to risk. It is suitable for people looking for relatively high returns over the medium to longer term who want the growth provided by shares but want lesser fluctuations in returns from year to year than those provided by sharemarkets, and accept negative returns in some years. Suitable for people who may be cashing out their investment in seven years or more. To achieve returns after tax and fees that exceed CPI + 3% per annum over rolling seven-year than four years in 20. median balanced option in an appropriate industry survey over rolling seven-year Cash 5% (0-20) Diversified Bonds 20% (10-30) Alternative Debt 5% (0-10) Infrastructure 8% (0-15) Growth Alternatives 2% (0-15) Property 10% (0-20) International Shares 20% (10-50) Australian Shares 30% (10-50) Time horizon 7+ years Risk Moderate - high Investment management fee 2015 16 * - 0.63% * The fees stated for 2015 16 are estimated third-party investment management fees (including performance fees), based on our current asset allocation and the investment managers who currently manage money for that investment option. The fees stated are therefore predictive and may differ materially from the fees actually incurred. The actual investment management fees are calculated at the end of each year when returns for the year are known. These are published in the annual report. Page 6 How we invest your money
Sustainable Diversified Benchmark Range % This is a diversified asset option with a moderate to high exposure to risk. It is suitable for people who have a preference for a sustainable approach to investing and are looking for relatively high returns over the medium to long term who can handle fluctuations in returns, even negative returns, from year to year, and who won t be cashing out their super for seven years or more. To achieve returns after tax and fees that exceed CPI + 3% per annum over rolling seven-year Limit the probability of generating a negative return to not more than four years in 20. median balanced option in an appropriate industry survey over rolling seven-year Cash 5% (0-15) Australian Bonds 13% (0-20) International Bonds 12% (0-25) GREITs 4% (0-10) Direct Property 5% (0-10) Direct Infrastructure 3% (0-7) International Shares 27% (0-40) Australian Shares 30% (20-40) Growth Alternatives 1% (0-6) Time horizon 7+ years Risk Moderate - high Investment management fee 2015 16 * - 0.80% MySuper Benchmark Range % This is a diversified asset option with a high exposure to risk. It is suitable for people looking for relatively high returns over the medium to long term who can handle fluctuations in returns, even negative returns, from year to year, and who won t be cashing out their super for seven years or more. To achieve returns after tax and fees that exceed CPI + 4% per annum over rolling 10-year than four years in 20. To earn a rate of return after tax and fees that is in excess of the median growth option in an appropriate industry survey over rolling 10-year Cash 6% (0-15) Diversified Bonds 11% (0-30) Alternative Debt 3% (0-20) Infrastructure 10% (0-20) Growth Alternatives 4% (0-20) Property 10% (0-20) International Shares 23% (10-50) Australian Shares 33% (10-50) Time horizon 7+ years Risk High Investment management fee 2015 16 * - 0.68% High Growth Benchmark Range % This is a diversified asset option with a very high exposure to risk. It is suitable for people looking for high long-term returns who can handle wide fluctuations in returns, including negative returns, from year to year, and who won t be cashing out their super for seven years or more. To achieve returns after tax and fees that exceed CPI + 5% per annum over rolling seven-year Limit the probability of generating a negative return to not more than five years in 20. median high growth option in an appropriate industry survey over rolling seven-year Cash 2% (0-10) Alternative Debt 3% (0-10) Infrastructure 10% (0-20) Growth Alternatives 5% (0-20) Property 7% (0-20) International Shares 29% (10-50) Australian Shares 44% (20-60) Time horizon 7+ years Risk Very high Investment management fee 2015 16 * - 0.80% * The fees stated for 2015 16 are estimated third-party investment management fees (including performance fees), based on our current asset allocation and the investment managers who currently manage money for that investment option. The fees stated are therefore predictive and may differ materially from the fees actually incurred. The actual investment management fees are calculated at the end of each year when returns for the year are known. These are published in the annual report. How we invest your money Page 7
Statewide s investment options Single asset class investment options Cash This is a single asset class option with a low exposure to risk. It is suitable for people who are willing to accept a moderate return to protect the value of their super and/or who may be cashing out their super within three years. However, negative returns are still possible in any particular year in extreme circumstances. To achieve returns after tax and fees that are closely aligned with the Bloomberg AusBond Bank Bill Index over rolling 12-month than one in 50 years. To earn a rate of return after tax and fees that is in excess of the median cash option in an appropriate industry survey over rolling five-year Time horizon 1-2 years Risk Very low Investment management fee 2015 16 * - 0.07% Diversified Bonds This is a single asset class option with a low to moderate exposure to risk. It is suitable for people who are seeking higher returns than cash over the medium term and who may be cashing out their super in three to five years. However, negative returns are still possible in a particular year. To outperform the weighted average return from the Bloomberg AusBond Composite Bond Index, after tax and fees over rolling five-year than four in 20 years. median diversified bonds option in an appropriate industry survey over rolling five-year Time horizon 3-5 years Risk Low - moderate Investment management fee 2015 16 * - 0.29% * The fees stated for 2015 16 are estimated third-party investment management fees (including performance fees), based on our current asset allocation and the investment managers who currently manage money for that investment option. The fees stated are therefore predictive and may differ materially from the fees actually incurred. The actual investment management fees are calculated at the end of each year when returns for the year are known. These are published in the annual report. Page 8 How we invest your money
Australian Shares This is a single asset class option with a very high exposure to risk. It is suitable for people looking for high long-term returns who can handle wide fluctuations in returns, including negative returns, from year to year, and who won t be cashing out their super for seven years or more. To outperform the S&P/ASX 300 Accumulation Index, after tax and fees over rolling seven-year than six years in 20. median Australian equities option in an appropriate industry survey over rolling seven-year Time horizon 7+ years Risk Very high Investment management fee 2015 16 * - 0.51% International Shares This is a single asset class option with a very high exposure to risk. It is suitable for people looking for high long-term returns who can handle wide fluctuations in returns, including negative returns, from year to year, and who won t be cashing out their super for seven years or more. To outperform the MSCI ACWI (ex-australia) Index (with net dividends reinvested) after tax and fees over rolling seven-year than six years in 20. median international equities option in an appropriate industry survey over rolling seven-year International Shares 100% Time horizon 7+ years Risk Very high Investment management fee 2015 16 * - 0.75% * The fees stated for 2015 16 are estimated third-party investment management fees (including performance fees), based on our current asset allocation and the investment managers who currently manage money for that investment option. The fees stated are therefore predictive and may differ materially from the fees actually incurred. The actual investment management fees are calculated at the end of each year when returns for the year are known. These are published in the annual report. How we invest your money Page 9
What else do you need to know about investment? Changing your investment option(s) When you first join Statewide you re able to choose your investment option(s). If you don t make a choice, your money is automatically placed in the MySuper option. Statewide provides you with the ability to switch your investment option. You can switch options as often as you like. If you are registered for Statewide.On.Line you can even switch your investments online. For more information on how to switch your investments online, visit our website at www.statewide.com.au or call us on 1300 65 18 65. How can I switch my investment option(s)? You can nominate a percentage of your account (the total value of your super) to switch. If you would like to change your investment option(s), the Member investment choice/switching form is available in the Forms section of the website, www.statewide. com.au, or by contacting us on 1300 65 18 65. The switch will generally be processed within three business days after Statewide receives a complete request. This applies to investment switching of your current account balance only but you can change investment options for future transactions at any time. Future transactions include: future contributions rollovers fees and insurance premium deductions. How much does switching cost? The first switch in a financial year is free. Additional switches in the same financial year cost $20 per switch and will be deducted from your super account. What if my account doesn t have a rounded dollar figure, i.e. $50,000? It s likely that most members won t have a rounded dollar figure in their accounts that s OK. If you don t have the exact amount in your account to purchase a whole unit, you ll be allocated a portion, or percentage, of a unit. Your money will be fully allocated because we allocate fractions of units, up to five decimal places. Overseas currency hedging When Statewide invests in other countries, the value of the investment can be impacted by both the movement in value of the underlying investment and the movement in value of the Australian dollar compared to the local currency of the investment. The effects of the changes in international currency values can be reduced by currency hedging. Statewide s international investments will be partially hedged, with the level of currency hedging varying from time to time in accordance with our foreign currency hedging policy. Statewide currently outsources management of the currency hedge to a specialist currency manager. In addition to the overall currency hedging arrangements implemented by Statewide, a number of individual managers that invest in international assets on our behalf also manage currency exposure as part of their overall portfolio management. Your super and responsible investment considerations Responsible investment practices are used to assess the possible future financial performance of assets, alongside other investment factors. Within the investment industry, so-called environmental, social and governance (ESG) factors are a subset of non-financial performance indicators that are incorporated into investment analysis and decision making. They include factors such as labour standards, corporate ethics and disclosure, occupational health and safety practices and the way in which environmental legislation is managed. Statewide has an Environmental, social and governance (ESG) investment and proxy voting policy. This policy sets out the way in which we aim to incorporate responsible investment considerations, including ESG factors, into our decision making. Statewide has no predetermined approach or set of specific factors for considering ESG issues, rather it seeks to optimally protect and manage investments over time by addressing potential material risks to the extent that they may impact on financial value. Currently ESG factors are considered to varying degrees across our investment options and by the professional investment managers the trustee appoints to manage investments. The ESG investment policy does not specifically mention issues relating to labour standards as these generally fall under the social bracket of factors, i.e. the s in ESG. Ethical screens are not a feature of the policy and do not apply to our investment options with the exception of the Sustainable Diversified investment option, which is described below. Sustainable Diversified investment option Statewide has invested in the AMP Capital Investors Responsible Investment Leaders Balanced Fund. This fund uses a multi-manager approach to give investors access to responsible investment opportunities across a wide range of asset classes and to provide greater diversification. In selecting managers, consideration and assessment is made from a financial, social and environmental perspective. From a social and environmental perspective, AMP Capital seeks out managers that are identifying leaders across industries, in their responsible approach to the following issues: environmental considerations including energy and resource use and product stewardship (for example, where a company takes into account the life cycle of the product, from manufacture to the extent to which the product can be recycled) social considerations including Indigenous relations and community involvement ethical considerations including meeting fundamental human rights, and articulating and implementing a Code of Conduct labour standards including Occupational Health and Safety, International Labour Organization standards, working conditions and the exclusion of child labour governance considerations including meeting corporate governance guidelines on board structures and remuneration. Page 10 How we invest your money
Managers are also required to avoid companies operating within sectors with recognised high negative social impact. This means the fund will avoid exposure, either directly or indirectly through underlying managers and funds, to companies with material exposure to the production or manufacture of alcohol, armaments, gambling, pornography, tobacco and nuclear power (including uranium). Material exposure is considered to be where a company derives more than 10% of its total revenue from these industries. In addition to these industries, AMP Capital Investors also seeks to limit the fund s exposure to companies which have a material exposure to the most carbon intensive fossil fuels. Any company that has more than a 20% exposure (as measured by percentage of market capitalisation, or other appropriate financial metric) to one, or a combination, of the activities below will be excluded from the fund s investable universe: mining thermal coal exploration and development of oil sands brown coal (lignite) coal-fired power generation transportation of oil from oil sands conversion of coal to liquid fuels/feedstock. If a company falls below the stated responsible investing standards, it is AMP Capital Investors policy that the relevant manager sells its investment in the company within six months. This policy is monitored and if a manager breaches the policy, AMP Capital Investors may terminate the services of the relevant underlying manager. The policy also requires that the managers review individual companies if there are major changes, such as takeovers or major environmental incidents. Presently the responsible investing approach applies to the Australian and international share components of the fund, together with direct property investments, corporate and government bonds, and alternative investments. Currently the fund does not take environmental, social and ethical considerations, labour standards and corporate governance factors into account in respect of listed property and cash, although they may be included for consideration in the future. Further information on Statewide s responsible investment activities is available on the Responsible investing page in the Investments section at www.statewide.com.au. Changes to investment options The trustee may, in its discretion from time to time, change the available investment options (including their asset allocations and performance objectives) and add or remove investment options. The trustee may also change the default option from time to time (subject to MySuper requirements), and switch your investment options as a result of any changes. You ll be provided with written notice of any changes to investment options and defaults. How we invest your money Page 11
Significant benefits and risks The fund assists you to save for your retirement in a tax-effective environment. It enables you to tailor your investment strategies to your own needs and attitude to risk, as well as offering you a choice of insurance cover for death, total and permanent disablement and income protection. You should be aware that if you leave the fund within a few years of joining, you may get back less than the amount of contributions paid in because of the level of investment returns earned by the fund, the fund s charges and the impact of tax. This booklet is based on current laws, and laws affecting superannuation may change at any time. The trustee is committed to ensuring that the fund is prudently managed. This commitment is evident via a number of measures such as corporate governance policies and codes of conduct. Information on these can be found on our website. The trustee wants to make the following information clear to you: Neither the performance of the fund, the repayment of capital nor any particular rate of return is guaranteed by the trustee, the investment managers, service providers or associated companies of the parties mentioned in the booklet. Investment markets do fluctuate. If the investment options you choose are not right for you, you may not achieve the goals you set. Member Services: 1300 65 18 65 Email: info@statewide.com.au Address: 211 Victoria Square, Adelaide, SA 5000 Postal address: GPO Box 1749, Adelaide SA 5001 Statewide Superannuation Pty Ltd ABN 62 008 099 223 (AFSL 243171) trustee and RSE licensee of Statewide Superannuation Trust ABN 54 145 196 298. The information provided is of a general nature. It does not consider your specific needs nor is it intended to be financial product advice. You should obtain independent financial advice and consider the applicable product disclosure statement before making an investment decision. Financial information and general advice may be provided by representatives of the fund s administrator and wholly owned company, Statewide Financial Management Services Limited, ABN 69 092 109 209 Australian Financial Services Licence No. 239063. Any personal advice may be provided by an authorised representative of Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514. Fees may apply for financial planning advice. IFS is responsible for the advice given to you by its authorised representatives. How we invest your money_030815