Your investment options

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1 IAG & NRMA Superannuation Plan Your investment options The information in this document forms part of the Product Disclosure Statement (PDS) of the IAG & NRMA Superannuation Plan (Plan) dated 30 September September 2017 (V9.0) Factsheet 2 This factsheet contains information that applies to: Accumulation members of the Plan Defined benefit members with a voluntary account. In this factsheet, you ll find information about: z Investment overview...1 z Investment basics...2 z Asset classes...2 z Risk and return...2 z How Plan assets are managed...4 z Measuring performance...5 z Your investment options in detail...6 z Units and unit prices...9 z Making an investment choice...9 Forms referred to in the PDS and this factsheet can be found on the Plan website, or by calling the Plan Helpline on The Plan offers you flexibility and choice when it comes to investing your super. Investment overview As a member of the Plan, you can choose from six investment options for your account. You can choose a single investment option or a mix of investment options. Here s a quick summary of the investment options: Options at a glance Investment options Investment option combinations Buy/ Sell spread Investment switches z Australian Shares z Overseas Shares z MySuper z Balanced z Conservative z Cash z You can choose a single investment option or a mix of investment options. z You can choose different options for your current account balance and for your future contributions. Nil Available on business days in Sydney. You can request a switch: z Online through your personal account on the Plan website, or z Complete and return a Changing your investment options form. The Plan does not charge a fee for investment switches. Plan Helpline

2 Investment basics Each of the options is described in detail later in this factsheet, but first some general information about investments to help you understand some of the basics. Each investment option is invested in one or more asset classes comprised of assets that can be classified as either defensive or growth assets. Defensive assets Defensive assets are included in an investment portfolio to help stabilise investment returns and typically receive a large component of their return in the form of income. While defensive assets are lower risk investments, they generally produce lower returns over the long term. Traditional defensive assets are income producing assets such as cash, fixed interest and defensive alternatives. Growth assets These assets are included to provide capital growth to an investment portfolio, along with some investment income. Growth assets are riskier than defensive assets but, over the long term, are expected to produce higher returns. Growth assets include shares, property, infrastructure and growth alternative assets. Asset classes To understand the investment options available under the Plan, you need to consider the asset classes which make up each option. Different asset classes carry different levels of risk over the short, medium and long term. Short term less than 3 years; medium term 3-10 years; long term more than 10 years. Each investment option is made up of some or all of the following asset classes. Shares Companies issue shares which are typically listed and traded on a stock exchange. Because the price of shares in any company is driven by market forces, share prices rise and fall. As a result of these changes in prices, shares can be a highly volatile investment. While individual company shares may perform poorly, historical returns on shares as an asset class, have generally been higher than returns on less risky asset classes over the long term, although not always over shorter periods. Most share portfolios consist of both Australian and overseas shares. Investment in overseas markets diversifies investment return and therefore investment risk. The Australian share market represents a very small proportion of the world investment market making it generally necessary to invest outside Australia to participate fully in global developments. Overseas shares are exposed to changes in the value of foreign currencies against the Australian dollar and returns from investment in overseas shares will therefore reflect changes in currency exchange rates as well as changes in share prices. The Trustee has adopted a policy to hedge part of this currency risk. Property Investment in commercial, retail and/or industrial property is made through property trusts which pool the investments of a number of investors to obtain sufficient scale to allow diversification across a range of properties. Some of these property trusts (or REITs Real Estate Investment Trusts) are listed on the stock exchange while others are unlisted. The value of these investments is market driven and may rise or fall. Therefore, this asset class is relatively volatile. However, like shares, historical returns on property have generally been higher than returns on less risky asset classes over the long term. Infrastructure Investment in assets that provide essential public utilities such as airports, roads, port facilities and energy, both in Australia and overseas. Infrastructure has historically provided long-term returns above inflation with lower volatility than investments in shares. Returns will fluctuate more than cash or fixed interest over shorter periods. Alternatives Alternatives are investments in products other than the traditional asset classes of cash, fixed interest, shares and property. The alternatives asset class can include a wide variety of non-traditional investments such as commodities, private equity, hedge funds, insurance linked strategies and various debt instruments. Alternatives can be classified as either growth or defensive depending on the characteristics of the investment. Fixed interest These are securities issued by governments, companies and other bodies that generally pay a fixed rate of interest over an agreed period. Because the interest rate and investment period are normally fixed, these are relatively stable investments. As a result, these assets are described as defensive assets. However, it should be noted that fixed interest investments may rise or fall in value. Historically, whilst returns on fixed interest investments have been more consistent than returns on growth assets, over the long term fixed interest has generally not produced as high a return as shares and property. Cash Cash refers to deposits in banks, bills of exchange, promissory notes and other short term securities. Cash is the most stable investment with virtually no risk of capital loss. As a result, cash is also described as a defensive asset. Cash has historically produced positive but relatively low returns over the long term. Risk and return There is some element of risk in just about everything we do in life, and investments are no different. With most investments there is a possibility of either making a profit or suffering a loss as the markets go up or down. The variations in investment returns and the possibility of negative returns are the major risks associated with investments. 2

3 The frequency of up and down swings in the market (i.e. volatility) and the predictability of these swings has a lot to do with the level of risk associated with a particular type of investment. No-one likes the thought of losing money. So our investment objective is generally to achieve the best returns possible for the level of risk we are comfortable with. In assessing an acceptable level of risk, the time frame of the investment is very important. There has historically been a direct link between the return achieved by an investment and the level of risk associated with that particular investment type. However, the link may not be apparent in the short, or even the medium term. One of the ways to reduce the level of risk associated with an investment portfolio is to spread the investments across a range of assets with different types and levels of risk. This is known as diversification. By spreading investments across the various asset classes, losses in one asset class may be countered by stability in others. What is your risk tolerance? There is a trade-off between risk and return and you need to consider both aspects. As a general rule, it is unrealistic to expect an investment to be both low risk and provide high returns. How much risk (or volatility) can you tolerate in pursuit of higher returns? If you want low risk, will you be satisfied with lower returns? The answer will usually be different for each member, so it is worth taking the time to assess your individual tolerance for risk. Diversification All asset classes fluctuate in value over time. However, it is unusual (but not unknown) for them all to perform poorly at the same time. Diversification means having a mixture of investments in different asset classes (e.g. shares, property and cash) and within each asset class (e.g. different shares), in the expectation that, if one or more investments are performing poorly, the others may be doing better. Diversification reduces (but does not eliminate) the risk of a negative return on your total investment. It should be noted that while shares are expected to have the highest long term returns on average, they cover a very wide range of one-year returns, including significant negative returns. Cash will not normally experience a negative return, but is expected to have a low but positive long term return. Australian and overseas shares have produced negative one-year returns on a number of occasions. However, when five-year or longer periods are considered, the number of average returns that are negative is sharply reduced. Before making any investment decisions, you should carefully consider the risks that apply to each of the investment options available. This is important as your investment in any of the investment options is not guaranteed and as such you may get back less money than you invest. You should be aware that investment returns can be volatile and the value of your investments may rise or fall over time. Also you should not rely on past performance as an indicator of the future performance of any of the investment options. We strongly recommend that you speak to your financial adviser before making any investment decisions. Significant risks associated with investing As each investment option has a different mix of investments, the risk of investing in each option is different. The types of investment risks which may have an impact on your investment in the Plan include: z Individual asset risk the risk attributable to individual assets within a particular asset class. z Market risk the risk of major movements of a particular asset class as a whole. z Political risk domestic and international political stability can impact on your investment as can adverse changes to tax legislation. z Inflation risk the risk that money may not maintain its purchasing power due to increases in the price of goods and services (i.e. inflation). z Timing risk the risk that, at the date of investment, your money is invested at higher market prices than those that were recently available, or that would have been available soon thereafter. Alternatively, it can also mean the risk that, at the date of redemption, your investments are redeemed at lower market prices than those that were recently available, or that would have been available soon thereafter. z Investment manager risk the risk that a particular investment manager will underperform. This could be because their view on markets is wrong or because of their investment style or because they lose key investment personnel. z Credit risk the risk that the issuer of a fixed interest security will not pay interest and principal as they fall due for payment. z Liquidity risk the risk of being unable to redeem an investment at the chosen time. z Currency risk the risk that overseas investments gain or lose value resulting from rises or falls in the Australian currency. Plan Helpline

4 How Plan assets are managed The Trustee has appointed a number of investment managers and has engaged JANA Investment Advisers Pty Ltd (AFSL #230693), as the asset consultant for the Plan. Depending on the strategy applying for each investment option, the investment managers may invest in securities such as Australian shares, overseas shares, property, fixed interest securities, cash and any other investments authorised by the Trustee. For each investment option, the Trustee has determined a strategy which it believes is reasonably likely to enable the option to meet its aims. Most options include a mix of investments (asset classes) that supports the option s objectives. This mix is chosen after considering the advice of the asset consultant who can also provide advice on choosing and monitoring the investment managers. The asset consultant uses sophisticated financial models that use historical data and economic forecasts to project the future performance of each asset class. The asset consultant uses this financial modelling to determine achievable investment objectives for each investment option and an appropriate investment strategy (including benchmark asset allocation) to achieve these investment objectives. This set of investment objectives and investment strategies then become the objectives and strategies that the asset consultant advises the Trustee to adopt for the options. There is a benchmark asset allocation for each of the Plan s options which reflects its particular risk and return characteristics. The higher the proportion of growth assets included (such as shares and property), the greater the potential for higher returns, but also the higher the associated risk. For each option, the benchmark asset allocation is the proportion of that option that would ideally be invested in each asset class if the Trustee had no particular view that one asset class was likely to outperform any other asset class. However, within the ranges specified in this factsheet, the Trustee may decide to invest more than the benchmark allocation in an asset class it expects to outperform and less in one it expects to underperform. The aim is to maintain the asset allocations for each investment option within the target ranges stated in this factsheet. However, from time to time, cash flows and market movements may cause the actual allocation to temporarily fall outside the target ranges. This will normally be addressed at the next available rebalancing opportunity. Details of the actual asset allocations for each investment option at the end of the financial year are set out in the Annual Report for the Plan, available on the Plan website Based on the experience and expertise of the asset consultant and investment managers, the Trustee believes that the chosen strategies give the investment options a reasonable probability of meeting their objectives. There is no guarantee however that a particular objective will be met over a particular period. The Trustee regularly reviews the performance of the asset consultant and investment managers against the investment objectives. Use of derivatives Investment managers are allowed to use derivatives to assist with the effective management of Plan assets. Derivatives are special contracts e.g. futures and forward exchange rate agreements which can be used to manage the risk of changes in the future value of investments. Investment managers are permitted to use derivatives in the management of the Plan assets, but not for speculative purposes. Derivatives are typically used for the following purposes: z hedging seeking to protect against adverse changes in the market value of assets and currency movements z to obtain prices that may not be available if assets are bought directly z to reduce the costs of buying and selling assets directly z to change the term of a fixed interest security z to manage cash flows efficiently z to manage asset weighting for the different asset classes. 4

5 Our commitment to being environmentally and socially responsible The Trustee has developed an Environmental, Social and Governance (ESG) Investment Policy. Under this policy, the Trustee will consider environmental, social and governance issues in selecting and retaining the Plan s investment managers and deciding whether to make or realise investments in pooled investment vehicles. The Trustee will not specifically consider labour standards or ethical issues under the ESG Policy. The ESG Policy incorporates consideration of ESG issues into the Plan s investment decision-making and ownership practices with the aim of enhancing the sustainability of the long term returns delivered to members. The ESG Policy is directed at encouraging positive ESG behaviour where the Trustee believes such behaviour can have a favourable effect on investment performance. The Trustee has signed the United Nations Principles of Responsible Investment (UNPRI). By doing so, the Trustee has made a commitment to adopt and implement these principles consistent with its fiduciary responsibilities. In that regard, the following principles underlie the ESG Policy: 1. Incorporate ESG issues into investment analysis and decision-making processes. 2. Be active owners and incorporate ESG issues into our ownership policies and practices. 3. Seek appropriate disclosure on ESG issues by the entities in which we invest. 4. Report on our activities and progress towards implementing the UNPRI principles. As the Trustee does not invest the Plan s assets directly, the primary focus of the ESG Policy is on the selection of investment managers and the pooled investment vehicles in which the Plan invests. The Plan s investment options are each made up of one or more asset classes. Because the application of the ESG Policy varies by asset class, the extent to which the ESG Policy applies to an option depends on the mix of asset classes making up the option. In selecting, retaining or terminating investment managers and/or pooled investment vehicles for the Plan s Australian and overseas shares and property exposure, the Trustee takes ESG factors into account along with a number of other factors including, but not limited to, the style of manager, its investment philosophy, past performance, the depth and experience of its personnel, fees and how well it fits with the Plan s other managers. The ESG rating and other relevant information provided by the Plan s asset consultant is the main source of information for this purpose. There is no predetermined approach or weighting given to ESG factors. Because of the nature of alternatives, it is not generally practicable for the Trustee to apply ESG principles in selecting and retaining investments in this asset class. (Alternatives comprise a wide range of investments that are typically not listed on stock exchanges, for example hedge funds and commodities). The majority of the Plan s fixed interest and cash assets are debt instruments issued by Australian federal or state governments, government instrumentalities or supranationals (like the International Bank for Reconstruction & Development, the European Investment Bank and the Asian Development Bank). The remaining fixed interest and cash investments are predominantly issued by the big four Australian banks. The Plan s ownership of these fixed interest and cash investments does not allow it to exert significant influence over the ESG practices of the governments or companies concerned. Accordingly, the Trustee has determined to exclude fixed interest and cash assets from the ESG Policy. The Plan s full ESG Policy is available on the Plan website, The Trustee will report regularly to members on progress in implementing the ESG Policy and on the performance of the Plan s investment managers in relation to the matters included in the ESG Policy. Measuring performance The investments are reviewed to monitor how they are performing against investment objectives. The following are the benchmarks used by the Trustee to measure the performance of each asset class. For the asset classes the Trustee invests in, these performance benchmarks are: Asset type Australian shares Overseas shares Property Alternatives Fixed interest Cash Performance benchmark S&P/ASX 300 Accumulation Index MSCI All Country World ex Australia Index (30% hedged) net dividends reinvested Composite benchmark consisting of 50% of the FTSE EPRA/NAREIT Global REIT Index (100% hedged) and 50% of the Mercer IPD Unlisted Property Index Composite benchmark consisting of 50% of the S&P/ASX Bank Bill Index and 50% of the MSCI World (ex Australia) Accumulation Index with net dividends reinvested (unhedged) S&P/ASX Australian Fixed Interest 0+ Index S&P/ASX Bank Bill Index Plan Helpline

6 Your investment options in detail Australian Shares Overseas Shares MySuper Investment strategy Aims to invest 100% of assets in Australian shares (apart from a small cash holding). Aims to invest 100% of assets in overseas shares (apart from a small cash holding). Aims to invest the majority of the portfolio (70%), in growth assets such as Australian and overseas shares, property and alternative investments, and the remaining 30% in less volatile defensive assets (fixed interest and cash). Investment objective Risk profile (if historical patterns are repeated)** Likelihood of a negative return in any one year approximately*** If you choose this option, you should be comfortable with: return* that matches the return on the S&P/ASX 300 Accumulation Index over rolling three year periods. return* that matches the benchmark return over rolling three year periods. The benchmark return is calculated using the the MSCI All Country World ex Australia Index (30% hedged) net dividends reinvested. Very high Very high High 6 in 20 6 in 20 5 in 20 Potentially high levels of variability in returns over some years, and the possibility of negative returns. Potentially high levels of variability in returns over some years, and the possibility of negative returns. return* of at least 3.0% p.a. above inflation (CPI) over rolling ten year periods. Moderate to high levels of variability in returns over some years including the possibility of negative returns. Benchmark asset allocation Australian Shares Overseas Shares Property & infrastructure Growth alternatives Defensive alternatives Fixed interest Cash 100% Australian Shares 100% Overseas Shares 25% Australian Shares 25% Overseas Shares 10% Property & infrastructure 10% Growth alternatives 10% Defensive alternatives 15% Fixed interest 5% Cash Ranges Australian shares % Cash 0 10% Growth/Defensive split Growth 100% Defensive 0% Overseas shares % Cash 0 10% Growth 100% Defensive 0% Australian shares 15 40% Overseas shares 15 40% Property & infrastructure 0 20% Growth alternatives 0 20% Defensive alternatives 0 30% Fixed Interest 5 35% Cash 0 20% Growth 70% Defensive 30% * The net investment return is calculated after the investment fee, indirect cost ratio and taxes on investment income. Note that the net investment return does not take into account the administration fee. ** These risk profile ratings are based on the Standard Risk Measure specified by the Australian Prudential Regulation Authority for use by superannuation funds. *** The likelihood of a negative return in any one year has been calculated based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The likelihood of a negative return in any one year is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option(s). 6

7 Your investment options in detail (cont d) Balanced Conservative Cash Investment strategy Investment objective Risk profile (if historical patterns are repeated)** Likelihood of a negative return in any one year approximately*** If you choose this option, you should be comfortable with: Benchmark asset allocation Australian Shares Overseas Shares Property & infrastructure Growth alternatives Defensive alternatives Fixed interest Cash Aims to have 50% of the portfolio in growth assets, which will participate in the higher returns expected from shares, property and alternative investments, but will be cushioned from the associated high volatility by an equal allocation (50%) to defensive assets. return* of at least 2.0% p.a. above inflation (CPI) over rolling five year periods. Aims to invest mainly in fixed interest bonds and cash, which are defensive investments producing a more predictable return that can be expected to be lower than those of the previous options in the longer term. The growth component of this portfolio consists of a relatively small investment in shares and property. return* of at least 1.0% p.a. above inflation (CPI) over rolling three year periods. Medium to high Low to medium Very low Invests solely in deposits in banks, bills of exchange, promissory notes and other short term securities. Cash is the most defensive and stable investment with very little risk over the short term. Whilst more consistent, the long term performance of cash has historically been lower compared with the other options, particularly during periods of high inflation. return* that matches the return on the S&P/ASX Bank Bill Index (after allowance for tax) over rolling one year periods. 4 in 20 2 in 20 Very small, less than 1 in 20 Moderate levels of variability in returns over some years, including the possibility of a negative return. 18% Australian shares 18% Overseas shares 7.5% Property & infrastructure 6.5% Growth alternatives 15% Defensive alternatives 20% Fixed interest 15% Cash Relatively low level of variability in returns, offering a comparatively modest level of capital growth and small probability of a negative return. 6.5% Australian shares 6.5% Overseas shares 7% Property & infrastructure 5% Growth alternatives 25% Defensive alternatives 30% Fixed interest 20% Cash Relatively low returns over the longer term. 100% Cash Ranges Australian shares 15 35% Overseas shares 15 35% Property & infrastructure 0 15% Growth alternatives 0 15% Defensive alternatives 0 25% Fixed interest 10 55% Cash 0 30% Growth/Defensive split Growth 50% Defensive 50% Australian shares 0 20% Overseas shares 0 20% Property & infrastructure 0 15% Growth alternatives 0 15% Defensive alternatives 0 35% Fixed interest 15 65% Cash 0 50% Growth 25% Defensive 75% Cash 100% Growth 0% Defensive 100% * The net investment return is calculated after the investment fee, indirect cost ratio and taxes on investment income. Note that the net investment return does not take into account the administration fee. ** These risk profile ratings are based on the Standard Risk Measure specified by the Australian Prudential Regulation Authority for use by superannuation funds. *** The likelihood of a negative return in any one year has been calculated based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The likelihood of a negative return in any one year is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option(s). Plan Helpline

8 Range of annual net investment returns for the period 1 July 2000 to 30 June 2017 The net investment returns for each investment option in the table below are shown after the investment fee, indirect cost ratio and taxes on investment income. Note that these returns do not take into account the administration fee. For information about fees and costs, see Factsheet 3, Fees, costs, tax and your super available on the Plan website You can find up-to-date monthly investment returns for each investment option in the investment section of the Plan website, 30% 25% % % Average return 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -18.7% 2009 Australian Shares** 6.1% -15.7% 2009 Overseas Shares* 6.7% % -11.3% % -6.3% % 5.9% 5.9% 5.7% -1.5% % 3.6% 1.5% 2017 MySuper Balanced Conservative Cash** * Before 1 May 2017 this option was known as the Shares option and was invested in a mix of Australian and Overseas shares. ** These options were introduced on 1 July The average performance return figures shown reflect the average since inception for these options. It is important to understand that while past performance is useful as a guide, in reviewing the historical investment returns, it should not be relied upon as indicative of future performance and does not guarantee such performance. Your super is invested in your chosen investment option(s) (or the MySuper option if you do not make a choice) and the amount you have invested in an option is represented by units in that option. Investment earnings for an investment option may be positive or negative. The value of the units depends on the performance of your chosen option(s). The price of these units will go up and down as investment markets shift, affecting the value of your units and consequently the value of your investment. 8

9 Units and unit prices The assets of each investment option are divided into units of equal value. Every dollar you add to your account purchases units in an investment option at the time the transaction is processed. We calculate unit prices in two steps. Firstly, we calculate the value of the assets we attribute to the option and take away the value of the liabilities (including the fees and costs which are deducted from the investment option, tax and allowances for tax payable on the investment earnings). Then we divide this value by the number of units we have on issue in the option to provide a per unit price. Changes in the value of the assets attributed to the investment option are reflected in a change to the unit price. To find the most recent unit prices, please visit the Plan website, For information about fees and costs, see Factsheet 3, Fees, costs, tax and your super available on the Plan website, In certain circumstances, for instance where investment markets become volatile, we may temporarily suspend unit pricing, and therefore transactions including switches, until we are satisfied that a fair unit price can be determined. Transaction requests received during a suspended period will be processed following the resumption of unit pricing, generally at the unit price applicable on the date of processing the transaction. This process for temporarily suspending unit pricing is consistent with general industry practice and is only undertaken during periods of extreme market volatility. The Trustee has engaged JP Morgan Chase Bank N.A. (AFSL #238367) as the Plan s custodian and to provide unit pricing services. How can unit prices go down? Your Plan account is different from a bank account. Your super is invested in financial markets and receives the returns (positive or negative) that reflect movement in those markets. Markets are cyclical and often experience volatility and so short term rises and falls are inevitable. This also means that unit prices will rise and fall on a regular basis even when the long term performance trend is upwards. Remember that super generally is a long term investment and short term performance is not indicative of long term performance. Unless you are retiring in the near future, five to ten, or more, year returns are more relevant than returns for shorter periods. While defensive investments are expected to provide more consistently positive returns, the returns are likely to be low. Over the long term, growth investments such as shares and property are expected to provide higher returns. Making your investment choice Follow these steps to making your investment choice: z Step 1: Read this factsheet carefully. To help you to understand how comfortable you are with risk and the types of investments that suit you, you can use the risk profile quiz, What type of investor are you? available on the Planning tools page on the Plan website, z Step 2: It s important that you make an informed decision when choosing your investment options. If you need help in making your choice, you can call the Plan Helpline on for limited personal advice over the phone (at no cost), this advice will be provided by Mercer Financial Advice (Australia) Pty Ltd. You can choose different options for your Plan account balance and your future contributions if you want to. Use the following table to record your choice for reference. Your investment options Australian Shares Overseas Shares MySuper Balanced Conservative Cash Total (must add up to 100%) % of contributions (Please note that the minimum allocation in any investment option is 1%) Current account balance Future contributions Step 3: Once you have made your investment choice(s), indicate it on your Application for Membership form. If you did not initially make a choice or you d like to change your choice, you can make a change online through your account on the Plan website. Or you can complete and return a Changing your investment options form. You can make different choices for your account balance and your future contributions if you wish. Which investment option may suit you? Each member has differing needs, goals, risk tolerances and personal circumstances. Whilst the Trustee has determined MySuper as the default option, it is up to you to determine the investment option(s) most appropriate for you. Here are some things to think about when making your choice. You may also wish to seek limited financial advice through the Plan Helpline , this advice will be provided by Mercer Financial Advice (Australia) Pty Ltd. Plan Helpline

10 Things to think about How old are you now and when you will retire? When you plan to retire may influence the level of risk you are prepared to accept. If you are younger, you may decide to pursue higher long term returns and be prepared to accept negative returns in the short term. If you are close to retirement, you may not be prepared to take the risk of a market downturn just before you retire and so may choose to accept the likelihood of lower returns from a more conservative investment strategy. How long will you be retired for? Of course, this is generally impossible to know but the longer you are retired, the more money you will need. This may mean increasing the amount you save or changing your strategy while you are still working to gain a higher return. What other investments do you have? The answer to this may influence the amount you need to save and the type of assets you invest your super in. You can diversify by investing your super in asset classes you do not already own. Past performance may not be indicative of long term performance When you select your investment option(s), you may consider past performance. While this could indicate future performance, it is not a reliable guide. At the very least, you should consider performance over a number of years because short term returns can be misleading. Timing Not even investment experts can predict when markets will rise or fall with any certainty. Making frequent changes to your investment option(s) to try to anticipate which asset class will perform best in the next few months can be unwise. It is generally better to stick to a long term investment strategy that suits your needs and only change it if there is a long term fundamental change in investment markets or your personal circumstances dictate that a change is warranted. Rebalancing your investment mix If you have chosen a mix of investment options, the proportions will change over time as the various options will achieve different returns. We will not automatically rebalance your account balance back to your original chosen proportions. You can choose to either allow the better performing option to increase as a proportion of your account balance or you can change back to your original investment proportions by requesting a switch between options. When should you review your decision? Superannuation is generally a long term investment designed to provide you with a benefit at retirement. Although investment choice is intended to enable you to make the most of your superannuation and to adopt an investment strategy that more closely meets your needs, you should give careful consideration to any changes you make. You may want to consider changing your investment decisions as you move from one stage in life to the next or more frequently as you require. Changing your investment option what you can change and when You may change investment option(s) at any time. You can change where: z your existing account balances are invested. You can invest this money in more than one option, in whole % lots. z your future contributions are invested. You can invest this money in more than one option, in whole % lots. The Plan allows you to switch investments on business days in Sydney. Frequently asked questions How do you change your investment option? You can provide instructions for a switch online on the Plan website, or by submitting a Changing your investment options form. When will your change be implemented? The effective date of your switch will depend on when your instructions are received by the Administrator. You will receive an acknowledgement that your switch request has been processed. Unless unit pricing is temporarily suspended (see page 9), your investment change will be carried out effective on the business day* in Sydney that your valid instruction is received by the Administrator, provided it is received by 4.00pm (Sydney time) on that day. Currently unit prices are determined each business day in Sydney. All requests for changes not received by 4.00 pm (Sydney time) will be carried out effective the next business day in Sydney*. You will receive written confirmation of your switch. * Where no unit price is declared for a business day, your change of investment option will be processed on the next business day for which a unit price is declared. This factsheet provides a summary of your investment options for the IAG & NRMA Superannuation Plan. You should consider all the information contained in the PDS (including this factsheet) before making a decision about investing in the IAG & NRMA Superannuation Plan. The information provided in this factsheet is general information only and does not take into account your personal financial situation or needs. If you need assistance to help you with your investment options under the Plan, you should consult a licensed, or appropriately authorised financial adviser. General advice is available from Mercer Financial Advice (Australia) Pty Ltd on the Plan Helpline You should obtain financial advice that is tailored to your personal circumstances. The IAG & NRMA Superannuation Plan website and Plan Helpline are provided by Mercer Outsourcing (Australia) Pty Ltd ABN AFS Licence # Financial advice via the Plan Helpline is provided by Mercer Financial Advice (Australia) Pty Ltd ABN AFS Licence # Issued by IAG & NRMA Superannuation Pty Limited ABN AFS Licence # as Trustee of the IAG & NRMA Superannuation Plan ABN _FS#2_Your investment options_