ASC Superannuation Plan a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund

Member Investment Choice Brochure April 2013

May 2014

Contents • • • • • • • • • • • •

Contents ............................................................................................................................................................... 2 It’s your money – make it work for you! ........................................................................................................ 3 Investment School ............................................................................................................................................. 4 The Fund’s investment options........................................................................................................................ 5 How are they made up? .................................................................................................................................... 5 Allocation to growth and defensive assets for the Fund’s investment options..................................... 6 Risk and return profile....................................................................................................................................... 6 Investment objectives and strategies............................................................................................................ 7 Net earning rates ............................................................................................................................................... 9 What you need to do ....................................................................................................................................... 10 Explanation of investment terms................................................................................................................... 11 How to contact us ............................................................................................................................................ 12

This document has been prepared to provide you with general information only and does not take into account your individual objectives, financial situation or needs. Before acting or relying on any information, you should consider whether it is appropriate for your circumstances having regard to your objectives, financial situation and needs. You should obtain and consider carefully the Product Disclosure Statement (“PDS”) and Incorporated Information Booklet relevant to your category of membership in the ASC Superannuation Plan (“the Plan”) is a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund (“the Fund”) prior to making any decision regarding your benefits in the Fund. Copies of the Plan’s various PDSs and Incorporated Information Booklets are available on the Plan’s website (www.ascsuper.com.au). This brochure has been prepared by KPMG Superannuation Services Pty Limited (AFSL No.: 241366) and is provided to members of the Fund by arrangement with the Fund’s Trustee, Equity Trustees Limited (ABN: 46 004 031 298; RSE Licence No.: L0003904; AFSL No.: 240975). A copy of the Financial Services Guide for KPMG Superannuation Services is available via the Plan’s website (www.ascsuper.com.au). The brochure provides information on the investment options offered by the Fund and how members can access or change their nominated investment options for existing account balances and / or future contributions to the Fund. An Investment Choice Form to allow you to change your nominated options is enclosed at the end of this brochure. The information provided in this brochure with regards to the Fund’s investment options, is based on the Trustee’s Investment Policy Statement for the Fund. May 2014

The ASC Superannuation Plan as a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund (“the Fund”) offers Member Investment Choice. This means that you are able to choose an investment strategy for your superannuation to suit your individual needs and assist in meeting your retirement goals. With life expectancy now up around 80 years, you can reasonably expect to live for 20 years after you retire - that’s a long time to live off your savings. That’s why it’s important to make the right decisions in relation to your superannuation, so that you get the best result when you retire. Taking the time to become informed and to choose the right investment strategy for your superannuation now, can make a big difference to you and your family in the future.

Jack & Jill – the investment hill For example, Jack and Jill both started (at age 25) with $20,000 accumulated in superannuation. They (or their employer) each contribute $5,000 per year into superannuation, up to when they retire at age 65. Jack is quite conservative and concerned about the ups and downs of investments. He also doesn’t understand or consider what is important when he makes his investment strategy decisions. He chose a conservative investment strategy for his superannuation (investing mostly in bonds and cash). Based on how his chosen investment strategy performs, his superannuation earns 4% each year. Jill is more daring and is interested in higher returns on her money. She also understands investments and makes appropriate decisions. She chose a more aggressive investment strategy (invested mostly shares and property). Based on how her chosen investment strategy performs (over the long term, returns on shares and property would be expected to be higher than returns on bonds and cash), her superannuation earns 7% each year.

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Millions

It’s your money – make it work for you! 1.4 1.2 1.0 0.8

Jack

0.6

Jill

0.4 0.2 0.0 25

30

35

40

45

50

55

60

65

By age 65, Jill is far ahead with accumulated superannuation of $1.3m, compared to Jack, who has only accumulated a superannuation benefit of around $600,000. Jill’s superannuation performed better because she recognised some important factors when she made her investment strategy decision: 

She recognised the relationship between risk and return;



She recognised that the time horizon of her investment was long; and



She also took on the level of risk that she was comfortable with and that was appropriate for her circumstances.

It is important that you too understand these factors when considering the investment strategy for your superannuation, in addition to your overall objectives, financial situation and needs.

Investment School Some important concepts must be grasped if you are to make the right investment decision for your circumstances.

The long-term relationship between risk and return

A lower risk investment strategy will give you more security in the level of your end benefit.

Risk in this context means variability of investment returns. A riskier investment strategy may have a high investment return in one year but a low, or even negative return, in the next year.

In considering what your time horizon is, remember that you may choose to continue to invest your superannuation after you retire – if you don’t need all your superannuation when you retire you will probably continue to invest it and draw an income from it each year.

There is an important relationship between risk and return. It is widely recognised that investment strategies that have more risk, in general, tend to have a higher investment return over the long-term.

How well do you sleep at night? Your chosen investment strategy should have a level of risk that you are comfortable with. If you choose a riskier investment strategy, you need to be comfortable with a high degree of variability of returns. You need to be comfortable that you might get a large positive return on your superannuation in one year, which is followed by a low, or negative return in the next year.

How long is your investment road? The level of risk must also fit your time horizon. If you know your superannuation is going to be invested for the next 20 years (as most people’s superannuation will be), shortterm variations in returns are not as important. You can get away with choosing a higher risk investment strategy, in order to increase your expected investment returns over the longterm. Similarly, if your superannuation is going to be invested for a shorter period, say under 5 years, any volatility in returns will have a greater impact on your end benefit. If you invest in a higher risk strategy and experience a year or two where returns are low or even negative, you may not have enough time left for your superannuation to recover.

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How do all these fit together? Your investment decision should take into account all these factors. In our example above, Jill was more adventurous, but she also recognised that her superannuation was going to be invested for a long time. She could take advantage of the long-term relationship between risk and return, safe in the knowledge that she had long enough to ride out any short-term variations in returns. If your investment time horizon is long and you are comfortable with a higher level of risk, you might consider investing similarly to Jill, i.e. a more aggressive, higher risk investment strategy, so that you get the highest return on your superannuation over the long-term. If your investment time horizon is short or you are very uncomfortable with a high level of risk, you might consider investing similarly to Jack, i.e. a more conservative, lower risk investment strategy, so that you have more security in your end benefit. If you’re somewhere in between Jack and Jill, you might choose a more balanced strategy, that has a medium level of risk.

Understanding investment terms See page 12 for an explanation of investment terms referred to on this page and in the rest of this brochure.

The Fund’s investment options The Fund offers four investment options to suit different time horizons and levels of risk. You need to choose the one that best suits your circumstances.

The following four investment options are available to members of the Fund:    

Aggressive option; Balanced option; Conservative option; and Cash option.

Members can split the investment of their existing account balance in any proportion between the Fund’s four investment options. Members can also elect to direct their future contributions to any one of the four investment options. As such, you have the option of maintaining your account balance in your existing strategy, while being able to consider whether you would like to have your future contributions invested in the same option or an alternative strategy.

How are they made up? To provide different levels of risk, each option offers a different combination of growth and defensive assets.

Growth assets

Defensive assets

“Growth assets” include Australian shares, overseas shares, property and private equity. They are called growth assets as they offer the greatest potential for the value of your investment to grow over time. They also however, have the greatest variation in returns, i.e. risk. In the short-term, returns can be negative as well as positive. Growth assets, in general, demonstrate the concept described above, that a higher degree of risk usually results in a higher level of return over the long-term.

“Defensive assets” include Australian bonds, overseas bonds and cash. These assets offer lower potential for the value of your investment to grow. However, they offer a defence against variation in returns, as they offer more stable returns from year to year, i.e. less risk. These assets represent a lower risk and therefore usually give lower returns over the long-term.

The graph below shows where growth and defensive assets sit on the risk and return relationship.

Important note: The actual risk and return figures for each asset class can vary over time. The variability can be such that, for example, (under certain circumstances) bonds can outperform shares over shorter periods (three to five years), inverting the results normally expected. The graph should, therefore, be interpreted as indicative only. It indicates the risk and returns relationship that can be expected over the longer term (10 years or more).

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Allocation to growth and defensive assets for the Fund’s investment options The Fund’s investment options offer the following combinations of growth and defensive assets to achieve different levels of risk and return: Investment option

Growth assets

Defensive assets

Benchmark

Range

Benchmark

Range

Aggressive

95%

75% - 100%

5%

0%- 25%

Balanced

70%

60% - 80%

30%

20% - 40%

Conservative

30%

20% - 40%

70%

60% - 80%

Cash

0%

0% - 5%

100%

95% - 100%

Risk and return profile The following chart shows where the Fund’s investment options are positioned in terms of expected levels of risk and return, based on their benchmark mix of growth and defensive assets.

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The following table also outlines the assessed level of risk (measured as variability of return) and returns for each of the Fund’s investment options. Aggressive

Balanced

Conservative

Cash

Potential long term return

High

Medium – High

Medium

Low

Likely variability of returns

High

Medium – High

Medium

Low

5 in 20 years on average

3 in 20 years on average

2 in 20 years on average

Rarely if ever

Potential for negative annual investment returns

Investment objectives and strategies The Fund’s Trustee has an Investment Policy Statement setting out the objectives and strategies underlying each of the investment options offered by the Fund. The table on the following pages summarises these objectives and strategies. SUMMARY OF INVESTMENT OBJECTIVES AND STRATEGIES Aggressive Option Investment 1 objectives

Balanced Option

Returns (net of tax and investment fees) exceeding:

Returns (net of tax and investment fees) exceeding:

 CPI +4.5% pa over rolling 5 year periods; and

 CPI +3% pa over rolling 5 year periods; and

 The return of the median superannuation fund high growth investment option, as surveyed by SuperRatings 25 High Growth Index over rolling 5 year periods.

 The return of the median superannuation fund growth investment option, as surveyed by SuperRatings 50 Balanced Index over rolling 5 year periods.

Benchmark 2 asset mix FI = fixed interest OS = overseas PE

=

Private

Equity

Aust Shares 57%

OS Shares 32.6%

Aust Shares 38.4%

OS Shares 24.7%

Property 5.3%

PE 0.1%

Property 6.8%

PE 0.1%

Aust FI 2.0%

OS FI 1.5%

Aust FI 16.8%

OS FI 7.2%

Cash 1.5%

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Cash 6.0%

Conservative Option Investment 1 objectives

Cash Option

Returns (net of tax and investment fees) exceeding:

Returns (net of tax and investment fees) that meet or exceed:

 CPI +2% pa over rolling 5 year periods; and

 The growth of the CPI over rolling 5 year periods; and

 The return of the median superannuation fund conservative investment option, as surveyed by SuperRatings 50 Capital Stable Index over rolling 5 year periods.

 The return of the median superannuation fund cash investment option, as surveyed by SuperRatings 50 Cash Index over rolling 5 year periods.

Benchmark 2 asset mix FI = fixed interest OS = overseas PE = Private Equity

Aust Shares 15.8%

OS Shares 9.1%

Property 5.1%

Aust FI 30.5%

OS FI 11.5%

Cash 28.0%

Cash 100%

Notes to the Summary of investment objectives and strategies Note 1 The investment objectives are the investment returns that an investment option aims to achieve over a certain time frame. These objectives are not a promise or guarantee of any particular benefit or return. The objectives are used by the Trustee to measure the performance of the Fund’s investments. References to the SuperRatings Indices are to superannuation funds included in fund manager surveys conducted by SuperRatings.

Note 2 The benchmark asset mix is the investment option’s target allocation to the different asset classes. The actual allocation to the different asset classes will be close to the benchmark asset mix but will be determined by the asset allocations made by the option’s underlying investment managers.

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Net earning rates The following tables summarise the historical net earning rates (net of investment fees and tax) achieved by each of the Fund’s investment options over recent financial years for both the Superannuation and Pension Divisions of the Plan (where available): Superannuation Division

Aggressive

Balanced

Conservative

Cash

Year ended 30 June: 2012 2011

-2.44% 10.68%

1.05% 10.08%

4.41% 6.84%

4.04% 4.35%

2010 2009

11.36% -19.95%

10.83% -11.95%

7.71% -4.08%

3.84% 4.10%

2008

-15.43%

-10.00%

-2.85%

4.09%

Pension Division

Aggressive

Balanced

Conservative

Cash

Year ended 30 June: 2012 2011

-2.75% 11.18%

1.16% 10.29%

5.02% 7.53%

4.61% 4.93%

2010 2009

10.71% -16.32%

10.08% -9.91%

7.12% -0.47%

4.43% 2.76%

-7.81%

1.36%

1.80%*

2008* -16.01% * Calculated from 1 May 2008 to 30 June 2008

Important information in relation to investment performance A superannuation fund’s investment performance typically varies over time. Because superannuation is a longterm investment, longer term returns (such as 5 and 10 year figures) smooth out short-term results. Depending on the nature of each investment option (including its risk profile), an investment option may experience negative returns from time to time and it is generally not appropriate to assess the performance of an investment option by the return for a single year or other short term returns Specific information regarding the Plan’s long term compound average performance for each investment option is available in the Annual Reports for each sub-plan of the Fund which are available on the Plan’s website (www.ascsuper.com.au). Past performance is not a reliable indicator of future performance. As part of any investment choice decision, you should also consider your overall financial goals and objectives, risk profile and the time horizon over which your superannuation will be invested.

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What you need to do The Fund allows you to choose one of the four investment options offered for the investment of your existing superannuation account and future contributions. You can change how your superannuation is invested once a month.

Investment choice for account balances and future contributions You can split the investment of your existing account balance in any proportion between the Fund’s four investment options. You can also elect to direct your future contributions to any one of the four investment options. As such, you have the option of maintaining your account balance in your existing strategy, while being able to consider whether you would like to have your future contributions invested in the same option or an alternative strategy.

How often should I revise my investment choice? An investment strategy, once made in an informed manner, should last for an extended period. Once planned, your strategy should only really need changing a few times over your lifetime. The decision you make now will likely be relevant for several years, provided you do not experience a major change in your circumstances. That being said, your investment strategy is not something you should set up and then forget about. You should review your superannuation strategy regularly, to ensure that it continues to suit your personal circumstances and fits in with your overall objectives and requirements. If you do not have a defined financial plan, you should consider consulting a licensed financial adviser.

How do I change my investment choice? You can switch investment options at any time by visiting the Plan’s website at www.ascsuper.com.au or by submitting a completed Investment Choice Form located at the back of this brochure.

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What if I don’t choose an option? If you don’t choose an option when you first join the Fund, your account balance and future contributions will be invested in the Balanced Option (the Fund’s default option).

How much will it cost to change options? The Trustee does not currently apply a switching fee in respect of any changes of investment options. However, the investment managers underlying the investment options may apply a “buy/sell spread” on any change in the amount of your superannuation accounts invested in them. Due to some overlap between the managers used in the Fund’s investment options, the overall buy/sell spread which may be applied to your account when you change option will depend on which two options you are moving between. The approximate buy/sell spreads which may be applied to a switch are: Investment switch Balanced > Aggressive Conservative > Aggressive Cash > Aggressive Aggressive > Balanced Conservative > Balanced Cash > Balanced Aggressive > Conservative Balanced > Conservative Cash > Conservative Aggressive > Cash Balanced > Cash Conservative > Cash

Buy/sell spread 0.23% 0.42% 0.53% 0.06% 0.20% 0.36% 0.07% 0.02% 0.18% 0.00% 0.00% 0.00%

Explanation of investment terms Asset classes

Australian shares - When you invest in Australian shares you are actually buying a portion, or shares, in public companies listed on the Australian Stock Exchange. Your investment return will depend on how the companies perform over time. The Australian sharemarket, however, represents less than 2% of the world’s sharemarket. Overseas shares - These are shares in overseas publicly listed companies – giving you access to a wide range of companies around the world. Exposure to other economies means that you have more diversified investments, which can reduce the overall risk or volatility because you are not linked to one particular economy. Some of the investment managers utilised by the Fund hedge part of the overseas share component of their investment portfolios against appreciation in the Australian dollar. Property - Buying houses, office buildings, shopping centres, tourist resorts and so on is known as direct property investment. The other way to invest in property is indirectly, where you purchase units in a property trust. The trust then invests in a variety of different properties. Private equity - Investments in shares of Australian companies that are not listed on the Australian Stock Exchange. Private markets potentially offer returns in excess of those provided by public markets, but are a more risky investment. Australian and overseas bonds / fixed interest - These include government bonds, bank bills and debentures. Interest rates on these items are usually fixed, so that you get paid a pre-determined flow of income. Fixed interest securities can be bought and sold. If interest rates go down, then the value of your security goes up, and if interest rates go up then the value of your security goes down. Cash - In investment terms, “cash” means investments made in the short-term money markets (up to 12 months). This includes bank bills where there is a fixed flow of income that will be returned after a set time, with a minimum risk of capital loss (eg $1,000 invested for 12 months at 5% interest will be worth $1,050 at the end of the 12 months).

Benchmark asset mix

The expected split for the option between the various asset classes (shares, property, bonds and cash) over the long-term.

Benchmark portfolio

A way of measuring investment performance against the market. The return on the benchmark portfolio is calculated based on the change in various investment market indices e.g. the ASX All Ordinaries Index for Australian shares, and the benchmark asset mix.

Buy/sell spreads

The difference between the buying price and selling price of units in an investment fund. It is not a charge levied by the investment manager, as the value of the spread goes into the investment fund in order to compensate for the costs of buying and selling assets.

CPI

The Consumer Price Index (CPI) measures quarterly changes in the cost of a “shopping basket” of goods and services. The CPI is the most common method of measuring inflation.

Defensive assets

Australian bonds, overseas bonds and cash. These asset classes are expected to have more stable investment returns but lower returns over the long-term.

Growth assets

Australian shares, overseas shares and property. These asset classes are expected to have higher investment returns over the long-term but more variation in returns over the short-term.

Investment objective

The investment results the investment option aims to achieve. The objectives are not a promise or guarantee of any particular benefit or return. The objectives are used by the Trustee to measure the performance of the Fund’s investments.

Negative return

A loss of your investment. For example a -3% return would mean that the money you had invested decreased by 3%.

Variability of returns

How much an investment varies in its return from year to year. For example, generally shares have the greatest variation in returns, and cash has the smallest variation in returns.

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How to contact us If, having read this brochure, you have any further questions regarding the investment options available from the Plan, please contact the Fund Administrator as follows:

Fund Administrator KPMG Superannuation Services Pty Limited Level 4 10 Shelley Street SYDNEY NSW 2000 or PO Box 67 Australia Square NSW 1215 Email: [email protected] Website: www.ascsuper.com.au Tel: (02) 9335 7852 Fax: (02) 9335 7001

Please return forms to the Fund Administrator, KPMG Superannuation Services Pty Limited, at Level 4, 10 Shelley Street, Sydney NSW 2000 or PO Box 67 Australia Square NSW 1215. Email: [email protected] Telephone: (02) 9335 7852 Fax: (02) 9335 7001

Website: www.ascsuper.com.au

May 2014

ASC Superannuation Plan a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund [ABN: 60 998 717 367] Investment Choice Form Member Details Name: ______________________________________________________________________________________ Member Number: ___________________________________________________ Date of Birth: _____ / ____ / ____ Residential Address: ___________________________________________________________________________ ____________________________________________________________________________________________ Home Telephone: ________________________________ Email: ______________________________________ Investment Choice Existing Account Balance

Future Contributions

I would like to invest my existing account balance in the following investment option (s):

I would like to allocate all future transactions to the following investment option:

% Aggressive Option

% Aggressive Option

% Balanced Option

% Balanced Option

% Conservative Option

% Conservative Option

% Cash Option

% Cash Option

Please ensure that the total percentage nominated above equals one hundred percent (100%).

Please ensure that the total percentage nominated above equals one hundred percent (100%).

Existing account balances can be split between multiple investment options, however, after the split occurs allocations to each option may fluctuate in accordance with market movements Please Note: Both the Existing Account Balance and Future Transactions boxes should be completed before forwarding this form back to the Fund Administrator. Acknowledgement by Member 1.

I have read the Member Investment Choice Brochure explaining the investment choices and understand the effect of, and risks involved in, each of the investment choices.

2.

I understand that the Trustee makes no specific recommendation concerning choice between the investment options.

3.

I understand that this investment selection will remain in effect until I next change my selection in accordance with the Fund rules.

4.

I understand and acknowledge that the value of the investments underlying the options may rise and fall and the Trustee does not guarantee their performance or any particular rate of return.

5.

I have read and understood the attached privacy statement and consent to the Trustee collecting, using, storing and disclosing personal information about me in accordance with that privacy statement.

6.

I understand that my investment switch will occur in line with the dates as outlined in the Plan’s Member Investment Choice Brochure, Product Disclosure Statement and Incorporated Information Booklet.

Member’s signature: _______________________________________________________ Date:____ / ____ / ____ Equity Trustees Limited (ABN: 46 004 031 298; RSE Licence No: L0003904, AFSL No.: 240975) as Trustee for the ASC Superannuation Plan a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund (ABN: 60 998 717 367). Please return forms to the Fund Administrator, KPMG Superannuation Services Pty Limited, Level 4, 10 Shelley Street, Sydney NSW 2000 or PO Box 67 Australia Square NSW 1215. Email: [email protected] Website: www.ascsuper.com.au Telephone: (02) 9335 7852 Fax: (02) 9335 7001

May 2014

The ASC Superannuation Plan a plan in the Employer Sponsored Members Division of The Executive Superannuation Fund [ABN: 60 998 717 367]

Privacy Statement This privacy statement relates to the collection, use, storage and disclosure of personal information about you in all communications with the Trustee. The Trustee collects personal information about you to:

Access Effective 21 December 2001, new privacy laws came into effect. Under these laws, you are entitled to request access to personal information held by the Trustee about you and to ask the Trustee to correct this information where you believe it is incorrect or out of date.

•

process your enrolment in the Fund (in accordance with the Superannuation Industry (Supervision) Act 1993);

•

administer and manage your participation in the Fund and communicate with you about the Fund;

No fee will be charged for an access request. You may be charged the reasonable expenses incurred in giving you any information you have requested (eg searching and photocopying costs).

•

provide you with information about other products or services that may be of assistance to you; and

•

To access personal information about you, or to obtain more information about your rights or our privacy policy, please contact the Fund as follows:

facilitate our internal business operations, including fulfilment of any legal requirements.

Fund Administrator

If you do not provide the personal information sought from time to time, it may mean that your enrolment in the Fund cannot be processed or that services cannot be provided to you. The Trustee may disclose your personal information (as necessary): •

to its agents, contractors or third party service providers that provide financial, administrative or other services in connection with the operation of the Fund or its business, for example where a fund administrator is appointed;

•

to your financial advisor, or sponsoring employer, if any, unless you tell us not to;

•

to an insurer where insurance services are arranged in connection with your enrolment in the Fund;

•

to any new Trustee as may be appointed from time to time;

•

to any party which holds amounts on your behalf which will be transferred to the Fund; and

•

where the law requires or permits us to do so (eg. to law enforcement agencies or other government agencies such as Austrac, the agency responsible for monitoring anti-money laundering and counter-terrorism) or if you consent.

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KPMG Superannuation Services Pty Limited Level 4, 10 Shelley Street SYDNEY NSW 2000 PO Box 67 Australia Square NSW 1215 Email: [email protected] Telephone: Fax:

(02) 9335 7852 (02) 9335 7001

By completing the attached form you agree to the Trustee collecting, using, storing and disclosing personal information about you in accordance with this privacy statement.