BT Personal Portfolio Service

Transcription

1 BT Personal Portfolio Service Superannuation and Pension Annual Report for the year ended 30 June 2017

2 Contents Recent developments in Superannuation 1 Proposed changes to Superannuation 4 Understanding your investment 6 Understanding the risks of investing 8 Performance overview - Superannuation Service 9 Performance overview - Pension Service 11 Portfolios - Westpac Classic Strategies 13 Portfolios - Westpac Sector Funds 15 Portfolios - Other Funds Managers 16 Portfolios - Asset Allocation 28 Other important information 31 This Annual Report dated 1 December 2017 is issued by Westpac Securities Administration Limited ABN , AFSL No ( Trustee ), the issuer and trustee of BT Personal Portfolio Service: The Superannuation information in and this Booklet Pension is ( Service ), general information which is issued only and under does a sub-plan not take into of the account Westpac your MasterTrust personal financial situation or Superannuation needs. You should Division consult ABN a financial adviser 448 to ( Fund ). obtain financial All assets advice of the tailored Service to are your invested personal in a circumstances. policy issued The by PDS Westpac and this Life Booklet Insurance can Services only be used Limited by persons ABN 31 receiving it (electronically ( Westpac Life ) or otherwise) from its in No. Australia 2 Statutory and applications Fund. from Westpac outside Life Australia is also will responsible not be accepted. for the administration The Trustee may of the accept Service. or reject an application without giving reasons. An The investment Trustee is in a BT wholly Super owned is not subsidiary an investment of Westpac in, deposit Banking with, Corporation any other (ABN liability 33 of, 007 Westpac ) Banking ( Westpac ). Corporation ABN An investment in 141 the (Westpac), Service is not or any a deposit other company with, or any in the other Westpac liability Group. of, Westpac It is subject or any to other investment company risk, in the including possible Westpac delays Group in of repayment, companies. or It loss is subject of Income to investment and principal risk, invested. including Westpac possible and delays its related in repayment entities of do withdrawal not stand behind proceeds or otherwise and loss guarantee of income and the capital principal value invested. or investment No company performance in the Westpac of any Group stands Options behind or any or otherwise related assets guarantees of BT Super. the capital value or investment performance of the Service or any investment portfolio. Information This document in the may PDS contain or this Booklet material is provided subject by to third change parties from derived time to from time and sources may believed updated to be by accurate us. at its Updated issue date. information, While such if it material is not materially is published adverse, with necessary can be obtained permission, by going no to company our website in the at Westpac bt.com.au, Group contacting accepts the financial any responsibility adviser for for your the BT accuracy Super account or completeness (your Financial of, or Adviser) endorses or any by calling such material. BT Customer Except Relations. where contrary You can to law, request we intend a paper by this copy notice of the to exclude PDS, this liability Booklet for or this any material. updated information at any time and this will be provided free of charge The Trustee at bt.com.au cannot or give by tax calling advice. us on Any 132 tax 135. considerations outlined in this Annual Report are general statements, Contact based on usan interpretation of the current tax law, and do not constitute tax advice. The tax implications of the If Service you have can any impact questions individual about situations your super, differently please call and BT you Customer should seek Relations specific on tax 132 advice 135 from from 8.00am a registered to 6.30pm tax (Sydney agent or time), registered Monday tax to (financial) Friday or adviser. customer.relations@btfinancialgroup.com. The information contained in this Annual report is general in nature only and does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of this information, taking into account your objectives, financial situation and needs. You should speak to your adviser before acting on any of the information in this Annual Report. Information in this Annual Report is current as at 1 December 2017.

3 Recent developments in superannuation /18 superannuation thresholds The superannuation contributions caps and various other superannuation thresholds that apply for the current financial year are as follows: Concessional contributions cap $25,000 Non-concessional contributions cap $100,000 1 Capital Gains Tax (CGT) Cap (lifetime limit) Government Co-contributions: Maximum co-contribution 2 $500 $1,445,000 Lower threshold $36,813 Upper threshold (cut off) $51,813 Superannuation Guarantee (SG) rate³ 9.5% Low rate cap $200,000 1 If you were under age 65 on 1 July 2017 and satisfy other conditions you may be able to make larger non-concessional contributions over two or three financial years. Once your total super balance has reached $1.6 million, however, your non-concessional contribution cap will be nil. Your total super balance is assessed as at 30 June of the previous financial year. 2 The maximum co-contribution payable is phased out by cents for every dollar of total income over the lower threshold, until it reaches zero at the upper threshold. 3 The SG rate is currently 9.5% where it will remain until 30 June From 1 July 2021, the SG rate will increase to 10% and thereafter will increase by 0.5% each financial year until it reaches 12% at 1 July Non-Concessional Contributions cap reduced From 1 July 2017, the non-concessional contributions cap has reduced to $100,000 (from $180,000). If your total super balance is $1.6 million or more on 30 June of the previous financial year, your non-concessional contributions cap will be nil. If you were under age 65 on 1 July of a financial year and satisfy other conditions, you may be eligible to utilise bring-forward arrangements to allow you to make larger non-concessional contributions over a two or three year period. If you were under age 65 on 1 July 2017 and had a total super balance of less than: > > $1.4m, you may be able to make non-concessional contributions of up to $300,000 over a three year period. > > $1.5m, you may be able to make non-concessional contributions of up to $200,000 over a two year period. If you triggered the bring-forward arrangements in the 2015/16 or 2016/17 financial years and have not contributed your full bring-forward amount before 1 July 2017, transitional arrangements apply to reduce your non-concessional contributions cap. If this applies to you, we recommend you refer to the ATO or seek professional advice to determine your non-concessional contributions cap. 3. Concessional contributions cap reduced From 1 July 2017, the concessional contributions cap has reduced from $30,000 (or $35,000 for individuals over age 49) to $25,000 per financial year, irrespective of age. From 1 July 2019, if your total super balance is less than $500,000 on 30 June of the previous financial year, your concessional contributions cap will be increased by the total unused amounts of your concessional contributions cap from the previous 5 years. You commence accumulating unused cap amounts from 1 July Reduced division 293 tax threshold The threshold for division 293 tax has been reduced from $300,000 per annum to $250,000 per annum from 1 July If your combined adjusted taxable income1 and concessional contributions to superannuation (less excess concessional contributions) exceeds the $250,000 threshold in a financial year, you will have an additional 15% tax imposed on the lesser of: > > the amount of your combined adjusted taxable income and concessional contributions (excluding excess concessional contributions) above $250,000, or > > your concessional contributions less your excess concessional contributions. 5. Transfer balance cap From 1 July 2017, you can only invest up to your transfer balance cap in superannuation income streams that are in the retirement phase (this generally includes income streams that receive an earnings tax exemption). The transfer balance cap will be set at $1.6 million for the 2017/18 financial year and will be indexed to CPI each year rounded down to the nearest $100,000. Amounts in excess of your transfer balance cap will need to be removed from your income stream(s) and may attract additional taxes and charges. 1

4 To keep track of your transfer balance cap and the amounts that are added and deducted from your cap, the ATO will create a transfer balance account for you: > > when you first commence a superannuation income stream that is eligible for an earnings tax exemption on or after 1 July 2017, or > > on 1 July 2017 if you had one or more existing superannuation income streams that are eligible for an earnings tax exemption. Modifications to your transfer balance cap may also apply in certain circumstances including where you have made personal injury contributions to superannuation or if you are a child death benefit beneficiary. Special rules also apply to certain types of income streams such as lifetime, term and market-linked income streams. We recommend you refer to the ATO or seek professional advice to determine your transfer balance cap. 6. Changes to the tax treatment of Transition to Retirement (TTR) income streams From 1 July 2017, earnings on your investments within a transition to retirement income stream are taxed at a maximum rate of 15% until you have reached age 65 or notified the trustee that you have satisfied one of the following prescribed conditions of release: > > retiring after reaching preservation age > > becoming permanently incapacitated > > suffering from a terminal medical condition. You ll no longer be able to maintain your TTR account when you turn 65, or notify us that you ve met a prescribed condition of release. This means, when you turn 65, or we re notified that you have met a prescribed condition of release, we ll move your benefit to a pension account and close your TTR account, unless you tell us otherwise. Once your benefit has been moved to a pension account: > > your investment earnings will be exempt from tax, > > all your details (including your death benefit nomination) will be applied to your pension account, and > > your account balance will count towards your $1.6 million transfer balance cap. 7. Low Income Super Tax Offset (LISTO) The Low Income Superannuation Tax Offset (LISTO) is a government superannuation payment that applies in relation to concessional contributions made on or after 1 July You may be entitled to receive a LISTO payment of up to $500 in respect of your concessional contributions made to superannuation in 2017/18 or a later financial year if your adjusted taxable income1 for the financial year is less than $37,000. Other conditions apply. For further details refer to the ATO website at ato.gov.au. Note that Low Income Superannuation Contributions (LISCs) will not be payable in respect of concessional contributions made on or after 1 July LISC will continue to be paid for eligible individuals until 30 June 2019 in respect of concessional contributions made in financial years 2012/13 to 2016/17 inclusive. 1 Adjusted taxable income is the sum of taxable income, adjusted fringe benefits, target foreign income, total net investment loss, tax-free pension or benefits and reportable superannuation contributions less deductible child maintenance expenditure. 8. Eligibility for Government co-contributions From 1 July 2017, to be eligible to receive a government co-contribution in respect of personal contributions made to your super, you: > > must have a total super balance less than the transfer balance cap ($1.6 million for 2017/18) as at 30 June of the previous financial year, and > > must not have made contributions above your nonconcessional contributions cap for the financial year. All other existing eligibility criteria remain unchanged. For further details refer to the ATO website at ato.gov.au. 9. Tax deductions for personal contributions If you are aged under 75, you may be able to claim an income tax deduction for personal superannuation contributions made on or after 1 July 2017, regardless of your employment status. Previously, this tax deduction was only available to persons who were not employed or who were substantially self-employed. If you are a member of a Commonwealth public sector superannuation scheme, a constitutionally protected fund (CPF), or certain other funds that offer defined benefit interests, you may not be eligible to claim a deduction for personal contributions you make to these funds. 2

5 10. Extending the spouse tax offset From 1 July 2017, the spouse tax offset income threshold has increased to $37,000 (from $10,800). You may be able to claim up to the maximum tax offset amount of $540 for contributions made to your spouse s super fund where your spouse s income is equal to or below this threshold. The tax offset amount you may be entitled to will gradually reduce for income above this threshold and completely phases out when your spouse s income reaches $40,000 (from $13,800). In addition, from 1 July 2017, you will not be entitled to the tax offset if your spouse: > > exceeds their non-concessional contribution cap for the relevant financial year, or > > has a total superannuation balance equal to or greater than the transfer balance cap ($1.6 million for 2017/18) as at 30 June of the previous financial year. All other existing eligibility criteria remain unchanged. For further details refer to the ATO website at ato.gov.au. 11. Removal of anti-detriment payments Anti-detriment payments are now only payable in respect of certain death benefit payments where the member died before 1 July 2017 and the payment is made by 30 June An anti-detriment payment is an increased amount that is payable when a death benefit payment is paid as a lump sum to a person who is a spouse, former spouse or child of the member. An anti-detriment payment represents a refund of contributions tax paid on all contributions made to the fund by the member since joining the fund. 13. Tax on Departing Australia Superannuation Payments From 1 July 2017, tax will be withheld at a rate of 65% from the taxable component of a Departing Australia Superannuation Payment (DASP) paid to a departed temporary resident who held a working holiday maker visa and received superannuation contributions while they held the visa. Existing tax treatment continues to apply to all other DASPs. Refer to the ATO website at ato.gov.au for further details. 14. Temporary Budget Repair Levy no longer applies The Temporary Budget Repair (TBR) Levy ceases to apply from the 2017/18 financial year. The TBR Levy of 2% applied to the amount of a person s taxable income above $180,000 for 2014/15, 2015/16 and 2016/17 financial years only. This may impact the tax withheld from some payments you receive from your pension and super accounts. See the Upcoming changes to superannuation Medicare Levy increase section below for details of the tax rates that will apply to payments for the 2017/18 financial year. 12. Superannuation death benefit payments can be rolled over From 1 July 2017, eligible beneficiaries are able to transfer superannuation death benefits or death benefit income streams to another provider to commence a death benefit income stream, however cannot combine this benefit with other superannuation monies. Eligible beneficiaries include your spouse or former spouse, your children under 18, a person who was wholly or substantially financially dependent on you at the time of your death and a person with whom you were in an interdependency relationship at the time of your death. 3

6 Proposed changes to superannuation The Federal Government announced a number of changes to superannuation in the 2017 Federal Budget. The proposed changes, as described below, are not yet law and are subject to change. Medicare Levy increase From 1 July 2019, the Medicare Levy is proposed to increase to 2.5% (from 2%) to ensure that the National Disability Insurance Scheme is fully funded. The increased Medicare Levy will impact the tax withheld from some payments you receive from your pension and super accounts as outlined below. Income payments For the 2017/18 financial year, the tax payable on income payments you receive from your pension will no longer include the Temporary Budget Repair (TBR) Levy where applicable. Lump sum payments Tax withheld from lump sum payments you, or your non-dependant (tax) beneficiaries1, receive from your pension or super account will not include the TBR Levy. From 1 July 2017 if you are eligible to access your superannuation as a lump sum, the tax we are required to withhold will depend on your age and the tax components within your benefit, as shown in the table below. Age Tax withheld on the Taxable component Under A rate of 22% Nil preservation age 2 (including the Medicare Levy) Preservation Up to $200,000 3 : Nil Nil age 2 to 59 Above $200,000 3 : a rate of 17% (including the Medicare Levy) 60 or over Tax-free Nil Tax withheld on the Tax-free component Death benefits paid on or after 1 July 2017 as a lump sum to a non-dependant for tax purposes¹ will have tax withheld in the following manner: Component Tax-free Taxable (taxed element) Taxable (untaxed element) Tax withheld Nil Taxed at 17% (including the Medicare Levy) Taxed at 32% (including the Medicare Levy) 1 Death benefits paid as a lump sum to your dependants (for tax purposes) are tax-free. A dependant for tax purposes includes your spouse or former spouse, your children under 18, a person who was wholly or substantially financially dependent on you at the time of your death and a person with whom you were in an interdependency relationship at the time of your death. 2 Your preservation age is between 55 and 60 depending on your date of birth. 3 This is the low rate cap which provides a lifetime limit of $200,000 for 2017/18, indexed to AWOTE rounded down to the nearest $5,000 in subsequent years. First Home Super Saver Scheme From 1 July 2018, individuals will be able to apply to the Australian Taxation Office (ATO) to withdraw voluntary contributions made to superannuation on or after 1 July 2017 for the purposes of purchasing a first home. Voluntary contributions include salary sacrifice contributions made with before tax money and personal contributions made with after tax money. These voluntary contributions must be made within your contribution caps. Up to $15,000 of voluntary contributions made in a financial year count towards the amount that can be released. The maximum amount that can be released is $30,000 of personal contributions plus an associated deemed earnings amount. Concessional (before tax) contributions and earnings that are withdrawn will be taxed at marginal tax rates, less a 30% tax offset. 1 Death benefits paid as a lump sum to your dependants (for tax purposes) are tax-free. A dependant for tax purposes includes your spouse or former spouse, your children under 18, a person who was wholly or substantially financially dependent on you at the time of your death and a person with whom you were in an interdependency relationship at the time of your death. 2 Your preservation age is between 55 and 60 depending on your date of birth. 4

7 Downsizer contributions From 1 July 2018, if you are age 65 or over and satisfy other eligibility conditions, you will be able to contribute up to $300,000 to superannuation from the proceeds of the sale of your main residence. The main residence must have been owned by you or your spouse for at least 10 years prior to disposal on or after 1 July 2018 and you cannot have made contributions from an earlier disposal of a main residence. Other eligibility conditions will apply. Once you are satisfied that a contribution qualifies under the rules, the contribution must be made within 90 days of the disposal of your main residence. You will need to notify your superannuation provider that the contribution is a downsizer contribution at the time of making the contribution. Qualifying downsizer contributions will be exempt from the contributions caps. You will need to seek professional advice about whether your contributions qualify under these rules. 5

8 Understanding your investment Assets of the Service currently invest in a policy issued by Westpac Life Insurance Services Limited (represents 100% of the assets of the Service). The Service does not invest directly in derivatives securities. Investing in the Service The Service has a range of Portfolios. Members can choose to invest in any combination of these investment portfolios. You can switch between investment portfolios at any time. Westpac Portfolios The Trustee, in conjunction with professional investment specialists, from time to time sets a core asset mix and strategic range for each investment sector for each of the Westpac Classic Strategies. The core asset mix represents the current long term investment allocation in each asset sector that aims to achieve the objective of each Westpac Classic Strategy. The strategic ranges represent the current maximum and minimum that each Westpac Classic Strategy can invest in each sector. The actual percentage invested in each asset sector at any time may be different from the core mix (but usually within the strategic range) due to the impact of market movements, cash flows or investment decisions undertaken in the strategies. Other Fund Manager Portfolios The Service also includes investment portfolios from selected other Fund Managers. These other Fund Managers include: BT Management Limited, Aberdeen Asset Management, Macquarie Management Limited, MLC s Limited, Colonial First State Managers (Australia) Limited, BlackRock Management (Australia) Limited, Schroder Management Australia Limited and UBS Global Asset Management. The Trustee s investment objective for these other investment portfolios is to achieve returns in line with the Underlying Fund, before the deduction of fees and expenses charged by the Service and tax. The Trustee aims to meet this objective by investing either directly in the Underlying Fund or indirectly through collective investments (such as life policies or unit trusts) which in turn invest in the Underlying Fund. Further information on the Underlying Fund s investment objectives and strategies is shown on pages of this report. This is based on information provided by the respective Fund Managers. Derivatives These are investments whose value is derived from other assets such as shares, and may be used as part of the portfolio management process. Futures contracts and options are examples of derivatives. Derivatives may be used to reduce risk and can act as a hedge against adverse movements in a particular market and/or in the underlying asset. Derivatives can also be used to gain exposure to assets and markets. While derivatives offer the opportunity for significantly higher gains from a smaller investment (because of the effective exposure obtained) they can also produce significantly higher losses, sometimes in excess of the amount invested. The investment managers are required to have strict policies and procedures on the use of derivatives and generally are not permitted to use derivatives to gear the investment options unless otherwise stated. Net earnings The earnings rate for members of the Service is reflected in the price of the units, rather than being credited or debited against the accounts of members. A change in the value of the members units reflects the earnings of the assets in the investment portfolio. Net value of an Portfolio The net value of an Portfolio is the value of all investments and cash held by the Portfolio less amounts owing or payable in respect of the Portfolio including any provision that is considered necessary. For example, provision might be made for possible future losses on an investment that is considered to be overvalued or cannot be fairly determined. A full description of the valuation method is given in the Trust Deed. 6

9 The net value of an investment option may include an asset known as Deferred Tax Asset (DTA). A DTA arises when, for tax purposes, a loss is available to offset a future gain (ie so as to reduce the amount of gain that might otherwise be taxable). Our policy is to recognise DTAs as a separate asset of the relevant investment option. Like any other asset in an investment option, the value of a DTA is reflected in the unit price for that investment option, through the calculation of the net asset value. The value of a DTA can change over time based on the likelihood of being able to offset the losses against future gains and the time at which they can be used. Accordingly, changes in the value of a DTA may cause unit prices to change, as is the case with a change in the value of any other asset in the investment option. The level of a DTA recorded in the unit price of an investment option may be capped, taking into account the probability that accumulated losses are able to be offset against future gains. The Joint ASIC and APRA Unit Pricing Guide to Good Practice, and BT policy requires that a DTA only be recognised in the net asset value and unit price of an investment option to the extent that the deferred tax benefit is expected to be realisable in the future. It may be necessary to reduce the level of a DTA to ensure that the value of the investment option (and the unit price) is not over-stated. Changes to Portfolio details To maintain the quality and diversity of our product range of Portfolios we may make changes to the Portfolios at any time including: > > adding, closing or terminating an Portfolio (including transferring an Portfolio into other Portfolios); > > changing an Portfolio s objective, investment strategy, asset allocation neutral position and ranges or currency strategy (if any); > > changing the rules that govern an Portfolio (eg changing fees, notice periods or withdrawing features); and > > removing or adding an investment manager or investment consultant. In certain circumstances we reserve the right to delay or suspend unit prices, apply a special price or not process future application, switching or withdrawal requests. We are only required to transfer or rollover your benefits after receiving all relevant information as set out in the SIS Regulations. Ordinarily, if you haven t made an investment selection we must transfer or rollover your benefits within 3 days, or 30 days if you ve made an investment selection, of receiving all relevant information that is necessary to process your request. However, if you hold managed investments in your account that are illiquid/ suspended or become illiquid/suspended, it may take longer to transfer your full benefit. s exceeding 5% As at 30 June 2017, the following combinations represent aggregate investments exceeding 5% of the total assets of BT Personal Portfolio Service: Superannuation and Pension. > > Westpac Classic Strategy: Balanced Growth represents 15.25% > > Westpac Sector Funds: Australian Shares represents 9.88% > > Colonial First State Wholesale Imputation Fund represents 7.45% > > Westpac Classic Strategy: Diversified Growth represents 6.13% > > Westpac Sector Funds: Cash and Short-Term Securities represents 5.12%. There are no other combinations of investments that the Trustee knows or ought reasonably to know are invested, directly or indirectly, in a single enterprise or single group of associated enterprises and that have a combined value in excess of 5% of the total assets of BT Personal Portfolio Service: Superannuation and Pension as at 30 June Restriction on applications, switching and withdrawals In certain circumstances allowed under superannuation law and the Trust Deed (for example, where it would prejudice the interests of other members of the Fund), we may delay, suspend or not process your contribution, switching or withdrawal requests. 7

10 Understanding the risks of investing No matter which investment option you choose to invest in, there will always be some level of investment risk. The variability of returns is known as investment risk. Generally, the higher level of risk you are prepared to accept, the higher the potential return, or losses. Risk can be managed and even minimised, but cannot be eliminated and there is always a chance you may lose money on any investments you make. You should be aware of these risks when investing and understand that not all risks are foreseeable. Some common types of investment risks are outlined in the table below. Risk type Market risk Security specific risk International investments risk Currency risk Interest rate risk Credit risk Liquidity risk Derivative risk Description Markets are subject to multiple factors, including economic conditions, government regulations, market sentiment, local and international political events and environmental and technological issues. Market risk may have different impacts on each investment and investment style in that market at various times. An investment in a company may be affected by unexpected changes in that company s operations (such as changes in management or loss of a big customer) and business environment. Investing internationally in one of the major asset classes will give exposure to different or potentially greater risks that are not associated with investing in Australia. International investments may be more affected by political and economic uncertainties, lower regulatory supervision, movements in foreign currency and interest rates and more volatile, less liquid markets. For investments in international assets, a rise in the Australian dollar relative to other currencies, may negatively impact investment values and returns. Changes in interest rates can have a direct or indirect impact on the investment value and/or returns of all types of assets. Interest rates may affect a company s cost of borrowings as well as the value of fixed interest securities. Credit risk refers to a risk of loss arising from the failure of a borrower or other party to a contract to meet its obligations. This may arise in securities such as derivatives, fixed interest securities and mortgage securities. This is the risk that an investment may not be easily converted into cash with little or no loss of capital and minimum delay because of their inadequate market depth or disruptions in the market place. Securities of small companies in particular may, from time to time, and especially in falling markets, become less liquid. The value of derivatives is linked to the value of the underlying assets and can be highly volatile. Potential gains and losses from derivative transactions can be substantial. Performance Figures are calculated in accordance with Financial Services Council (FSC) standards. 8

11 Performance overview Superannuation Service Performance Figures are calculated in accordance with Financial Services Council (FSC) standards. > > Total returns are calculated: using withdrawal prices appropriate for the month end > > taking into account management costs (other than member fees and issuer fees) of the relevant investment portfolio, and taking into account earnings tax up to a maximum of 15% plus withholding tax paid on foreign income (if any). returns shown are historical. returns can go up and down. Past performance is not a reliable indicator of future performance. Future performance is not guaranteed. Portfolio Start date One year returns to 30 June 5 years 10 years Since com p com p incept to aver. To 30 June 2016 aver. To 30 June June 2016 % % % % % % pa % pa % pa Aberdeen Select May Actively Hedged International Equities Fund Australian Fixed Interest Jan Australian Shares Jan Balanced Growth Feb BlackRock Scientific May Australian Equity Fund BlackRock Scientific Feb Diversified Growth Fund BlackRock Scientific Jul International Equity Fund BlackRock Wholesale May Australian Share Fund BlackRock Wholesale Feb Balanced Fund BT Wholesale Active Jan Balanced Fund BT Wholesale Balanced Jan Returns Fund BT Wholesale Core Australian Sep Share Fund BT Wholesale International Aug Share Fund BT Wholesale Smaller Jul Companies Fund Cash and Short-term securities Jan Colonial First State Wholesale May Diversified Fund Colonial First State Wholesale Jul Imputation Fund Conservative Growth Feb Diversified Growth Jan Dynamic Growth Feb International Fixed Interest Jun International Shares Jan

12 Portfolio Start date One year returns to 30 June 5 years 10 years Since com p com p incept to aver. To 30 June 2016 aver. To 30 June June 2016 % % % % % % pa % pa % pa MLC Wholesale Platinum May Global Fund Moderate Growth Jan Platinum International Fund Sep Property Jan Schroder Wholesale Australian Equity Fund Jun

13 Performance overview Pension Service Performance Figures are calculated in accordance with Financial Services Council (FSC) standards. > > Total returns are calculated: using withdrawal prices appropriate for the month end, and > > taking into account management costs (other than member fees and issuer fees) of the relevant investment portfolio. No reduction is made to the unit price (or performance) to allow for tax you may pay as an investor, other than withholding tax paid on foreign income (if any). returns shown are historical. returns can go up and down. Past performance is not a reliable indicator of future performance. Future performance is not guaranteed. Portfolio Start date One year returns to 30 June 5 years com p aver. To 30 June years com p aver. To 30 June 2016 Since incept to 30 June 2016 % % % % % % pa % pa % pa Aberdeen Australian Jun Equities Fund Aberdeen Select Jun Actively Hedged International Equities Fund Australian Fixed Interest Mar Australian Shares May Balanced Growth Apr BlackRock Scientific Australian Jun Equity Fund BlackRock Scientific Feb Diversified Growth Fund BlackRock Scientific Feb Diversified Stable Fund BlackRock Scientific Jul International Equity Fund BlackRock Wholesale May Australian Share Fund BlackRock Wholesale Mar Balanced Fund BT Wholesale Active Mar Balanced Fund BT Wholesale Asian May Share Fund BT Wholesale Balanced Feb Returns Fund BT Wholesale Core Australian Aug Share Fund BT Wholesale Core Hedged Jun Global Share Fund BT Wholesale Geared Mar Imputation Share Fund BT Wholesale International Share Fund Jul

14 Portfolio Start date One year returns to 30 June 5 years com p aver. To 30 June years com p aver. To 30 June 2016 Since incept to 30 June 2016 % % % % % % pa % pa % pa BT Wholesale Smaller Jun Companies Fund Cash and Short-term securities Feb Colonial First State Wholesale May Diversified Fund Colonial First State Wholesale Jul Imputation Fund Conservative Growth Feb Diversified Growth Feb Dynamic Growth May International Fixed Interest Jul International Shares Nov Macquarie Wholesale Property Aug Securities Fund MLC Wholesale Horizon 4 Aug Balanced Portfolio MLC Wholesale Platinum Jun Global Fund MLC Wholesale Property Aug Securities Fund Moderate Growth Feb Platinum International Fund Sep Property Feb Schroder Credit Securities May Fund Wholesale Class Schroder Wholesale Australian Equity Fund May

15 Portfolios Westpac Classic Strategies objective and Dynamic Growth Aims to maximise capital growth over the long term. The minimum suggested time frame for investment is at least five years. Invests either directly or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio consist of a diversified portfolio of predominantly growth assets, including Australian, international shares and property, to provide the potential for long-term capital growth. Balanced Growth Aims to provide a high level of capital growth over the long term from a balanced portfolio of assets. The minimum suggested time frame for investment is at least five years. Invests either directly or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio consist of a diversified portfolio of mainly growth assets (Australian and international shares and property) and to provide for the potential for long term. Strategic range % Australian Equities International Equities Australian Property 0 10 International Property 0 10 Australian Fixed Interest 0 20 International Fixed Interest 0 20 Alternatives 0 20 Cash 0 10 Australian Equities International Equities Australian Property 0 10 International Property N/A Australian Fixed Interest 5 32 International Fixed Interest 0 20 Alternatives 0 20 Cash 0 10 objective and Diversified Growth Aims to provide capital growth over the medium to long term from a portfolio that is well diversified among the major asset classes. The minimum suggested time frame for investment is at least three years. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets: consist of a diversified portfolio across the major investment sectors have a significant emphasis on fixed interest and Australian and international shares. Moderate Growth Aims to provide a moderate level of capital growth over the medium term and a moderate level of interest earnings. The minimum suggested time frame for investment is at least three years. Invests either directly or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the Option consist mainly of interest bearing investments (such as Australian and international bonds, debt securities, bank-backed bills and cash on deposit) and a moderate holding of growth assets (such as shares and property). Strategic range % Australian Equities International Equities Australian Fixed Interest 5 40 Cash 0 20 Australian Equities 5 25 International Equities 0 18 Australian Property 0 10 International Property N/A Australian Fixed Interest International Fixed Interest 5 35 Alternatives 0 20 Cash BT has the right to change the investment strategy and benchmark for the Fund without prior notice. 13

16 Conservative Growth objective and Aims to provide a conservative level of capital growth over the medium term and a relatively high level of interest earnings. The minimum suggested time frame for investment is at least three years. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that: most of the underlying assets provide income for reinvestment. Such assets include bank-backed bills and cash on deposit part of the underlying assets of the investment portfolio includes growth assets, such as shares and property, to provide potential for higher returns. Strategic range % Australian Equities 5 15 International Equities 0 10 Australian Property 0 20 International Property N/A Australian Fixed Interest International Fixed Interest 0 20 Alternatives 0 20 Cash BT has the right to change the investment strategy and benchmark for the Fund without prior notice. 14

17 Portfolios Westpac Sector Funds objective and Australian Shares Aims to provide access to capital growth and dividends from investment in Australian shares. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets: consists of a selection of shares of companies that offer potential returns from long term growth and company dividends provide exposure to both industrial and resource shares with a focus on those companies perceived to have the best potential for long term returns. International Shares Aims to provide medium to longer term capital growth from investment in a selection of overseas share markets. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio consist of shares in a range of leading international companies. Strategic range % Australian shares Cash 0 10 International shares Cash 0 10 objective and Property Aims to provide investors with a diversified portfolio of property investments offering potential for long term capital growth. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio provide an exposure to various types of properties throughout Australia such as office blocks, shopping centres and industrial buildings. Australian Fixed Interest Aims to provide competitive returns, reflecting those available in the Australian fixed interest market. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio: consist of securities or instruments that include those issued by the Commonwealth Government, Australian State Governments or major/state trading banks and other corporate bodies may include investments in other interest bearing securities such as corporate bonds, mortgages, corporate loans or infrastructure bonds. Strategic range % Property Income-only investments 0 10 Australian fixed interest Cash 0 10 objective and International Fixed Interest The Fund aims to provide a return (before fees, costs and taxes) that exceeds the JP Morgan GBI Global Traded Index, hedged in Australian dollars, over the medium term. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio consist of short term money market securities, fixed term debt securities and derivative contracts intended to replicate a fully hedged exposure to international fixed interest markets. Cash and Short-term Securities Aims to provide a relatively secure investment in cash and money market securities. To reduce short term capital fluctuations. Investing either directly in assets or indirectly through collective investments (such as life policies or unit trusts) so that the underlying assets of the investment portfolio consist of short term money market investments such as bank deposits, bank accepted bills and certificates of deposit. Strategic range % International fixed interest Cash 0 10 Neutral position Cash and money market securities 100% 1 BT has the right to change the investment strategy and benchmark for the Fund without prior notice. 15

18 Portfolios Other Fund Managers objective Aberdeen Australian Equities Fund The investment objective of the Fund is to outperform the benchmark, the S&P/ ASX 200 Accumulation Index, after fees, over rolling three year periods. Our equity managers seek to identify and invest in good quality Australian listed securities through first hand company visits. Quality is chiefly an evaluation of a company s management, balance sheet and business model. Only those companies which pass our rigorous quality screen are assessed for value. We see risk in terms of investing in a poor quality company, or overpaying for a good one, and do not view risk in benchmark relative terms. We therefore downplay benchmarks in portfolio construction since these provide little indication of future performance. We are comfortable not holding companies if they do not satisfy our disciplined quality and valuation criteria, regardless of their benchmark weight. The minimum suggested for holding investments in the Fund is five years. Aberdeen International Equity Fund The investment objective is to provide investors with high capital growth over the medium to long term by seeking exposure to companies listed on securities exchanges around the world. Our global equities team, located in Edinburgh, Scotland, draws on the research capabilities of our regional investment teams located worldwide. Through their own proprietary research each regional team creates a concentrated regional model portfolio of best ideas. This is based on a rigorous appraisal of each company s fundamentals and relative valuation. The aggregate of the regional models forms the global buy list. The global buy list is then used by the global equity team to undertake further comparative analysis and construct a final concentrated portfolio of truly diversified businesses. We see risk in terms of investing in a poor quality company, or overpaying for a good one, and do not view risk in benchmark relative terms. We therefore downplay benchmarks in portfolio construction since these provide little indication of future performance. We never invest in a company without first meeting the management. The minimum suggested for holding investments in the Fund is five years. Strategic range % Australian shares Cash 0 10 International shares Cash BT has the right to change the investment strategy and benchmark for the Fund without prior notice. 16

19 objective Aberdeen Select Actively Hedged International Equities Fund The objective of the fund is to provide investors with high capital growth over the medium to long term by seeking exposure to companies listed on securities exchanges around the world. Our global equities team, located in Edinburgh, Scotland, draws on the research capabilities of our regional investment teams located worldwide. Through their own proprietary research each regional team creates a concentrated regional model portfolio of best ideas. This is based on a rigorous appraisal of each company s fundamentals and relative valuation. The aggregate of the regional models forms the global buy list. The global buy list is then used by the global equity team to undertake further comparative analysis and construct a final concentrated portfolio of truly diversified businesses. We see risk in terms of investing in a poor quality company, or overpaying for a good one, and do not view risk in benchmark relative terms. We therefore downplay benchmarks in portfolio construction since these provide little indication of future performance. We never invest in a company without first meeting the management. The suggested investment is 5 years. BlackRock Scientific Australian Equity Fund The Fund aims to achieve superior investment performance through providing returns that exceed those of the S&P/ASX 300 Accumulation Index (the Index ) by 2.20% p.a., after fees, over rolling 3-year periods, while maintaining a similar level of investment risk to the Index. Our active Australian equity strategy is designed to be highly diversified, providing broad exposure to the Australian equity market. Rather than making large and inherently risky investments in a few individual stocks, smaller investments are made across many individual stocks. This process diversifies active risk across a broad spectrum of stocks in a variety of industries and is designed to provide more consistent active returns over time. decisions are made through a disciplined investment process which we refer to as the Alpha Tilts process. The minimum suggested for holding investments in the Fund is five years. Strategic range % International shares Cash 0 10 The Fund s assets are generally exposed 100% to the Australian equity market. Australian shares Cash BT has the right to change the investment strategy and benchmark for the Fund without prior notice. 17