Your choice for the future 2013 Annual Report

Transcription

1 013 Dow Australia Superannuation Fund Your choice for the future 2013 Annual Report Women and super: bridging the gap Super update: what you need to know about your super

2 INSIDE In this year s Report 1 Our 2013 super performance 4 Your super investment options 6 Important information about your Fund 13 The Fund s financial summary 15 Contact us 16 FEATURES Women and super: bridging the gap 2 Super update: what you need to know about your super 3 About this This Annual Report has been prepared for members of the Dow Australia Superannuation Fund (ABN ). It outlines how the Fund has performed during the past 12 months, how your Fund is managed and includes some general news about super. The information in this document is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommendations or preferred courses of action. You should consider obtaining professional advice about your particular circumstances before making any financial or investment decisions based on the information contained in this document. Issued by Dow Australia Superannuation Fund Pty Limited (ABN ), as Trustee of the Dow Australia Superannuation Fund (ABN ). Preparation of this Annual Report was completed on 29 April Throughout this Annual Report, we refer to the Company. This means the employer for employees of Dow Chemical (Australia) Ltd, Dow AgroSciences Australia Limited, Rohm and Haas Australia Pty Ltd and affiliated companies. ii Dow Australia Superannuation Fund 2013 Annual Report

3 in this year s report We are pleased to present this year s Annual Report for members of the Dow Australia Superannuation Fund ( Dow Fund ) for the year to 31 December Your 2013 super performance The Fund s investment options ended 2013 on a high with the Assertive, Growth, International shares and Australian shares options earning double digit returns. This was mainly due to the improvement in share markets, both in Australia and globally, as well as the weakening of the Australian dollar which boosted the value of the Fund s global investments that are unhedged. Your super s performance is dependent on the investment option you have chosen. Each option will have various assets that are affected differently by global and Australian market performance. For more information on the Fund s investment options, see pages 8 to 12. New Member Centre In December 2013, a new Member Centre was launched on the Fund s website. The Member Centre offers new features and improved access so you can easily manage your superannuation account online. Details on how to access the Member Centre are in the Fund s February 2014 Super News found under What s New? on the Fund s website. Women and super: bridging the gap Did you know that women have less super on average than men? Find out why this shortfall exists and discover some easy ways to bridge the super gap for women. Taking an active interest in your own or your partner s super today can help you get the lifestyle you desire in retirement! Super update: what you need to know about your super Last year the Government made a number of changes to super that you may have heard about. As mentioned in last year s May issue of Super News, the most significant one is the introduction of Stronger Super which is a set of reforms that aim to make our superannuation system more efficient and to maximise retirement income for members. Read about what s new on page 3 and what this means for you as a member of the Fund. We encourage you to spend some time reading this Report to understand how the past year has affected the Fund and your super. As Trustee, our role is to manage the Fund for your benefit. As always, we welcome your questions and feedback. See page 16 for our contact details. The Trustee Dow Australia Superannuation Fund The Fund s performance Past performance is not necessarily a reliable indicator of future performance. Employee, Spouse and Account-Based Pension members Retained Benefit members Property Fixed Interest Cash Note: Investment returns for Employee, Spouse and Retained Benefit members are shown after tax and investment fees have been deducted, while investment returns for Account-Based Pension members are after investment fees only. Administration fees have not yet been deducted from the above investment returns. See the Fees and Tax Sheet for your membership category for more information on fees, available on the Dow Fund s website at under About the Fund then Forms & Publications. Fund assets at 31 December % 13.2% 5.8% Assertive 30.2% 23.1% Growth $84,767,340 $92,297, % 0.6% 2.5% Conservative International Shares Membership at 31 December Australian Shares $ Million Number of members % 15.1% 6.7% 34.6% 26.0% 5.3% 1.0% 3.0% Dow Australia Superannuation Fund 2013 Annual Report 1

4 FEATURE Women and super: bridging the gap Fact Did you know? Upon retirement, Australian women have less super (on average) than men. Given that women s life expectancy is higher than men s (women aged 65 can expect to live at least three years longer 1 ), this fact can present quite a challenge in retirement. Some of the reasons for the gap in super include: Career breaks Women often take time off from work to raise children or care for family members. Lost super When a woman changes her name due to marriage or divorce, it can become difficult for super funds to track her super down. Lower earnings On average, women working full time earn 17.6% less than men working full time 2. Today, take an active interest in you and your partner s super so that in retirement, you can enjoy the lifestyle you desire! Statistics suggest that on retirement women have on average around $80,000 less in super than men 3. By taking an active interest in super, women can reduce this short-fall and adequately prepare for their retirement. If you or your partner are female, consider some of the tips shown on the right. The Government provides options that can assist you in getting more out of your super. The co-contribution scheme provides an additional contribution to your super for after-tax contributions you make, providing you are eligible. You don t need to do anything to claim these benefits. The ATO will make the payments to your super fund if you are eligible. Call the Fund Administrator on if you have any queries about your super. To ensure you maximise the benefits that super can provide, consider the following: Add to your super contributions You can make extra voluntary contributions on top of employer contributions. Even a small amount added frequently can make a substantial difference to your super in the years leading up to retirement. Remember that contribution caps apply. If you are planning your retirement as a couple, you may wish to discuss your contribution decisions together to ensure you are optimising your super savings and any available tax concessions and rebates. Consolidate your super If you have super in multiple funds, think about consolidating them into one fund. Having multiple funds can increase the fees you pay. If you are considering leaving another fund, you should check to see if they charge any exit fees or if you will lose any benefits such as insurance. Update your details If you have changed your name or contact details, ensure that you let your fund know so that you can be updated on important information like investment choices, fees and government regulations. You should also update your beneficiaries if your personal circumstances change (e.g. if you marry, divorce or have a child). This ensures your fund knows who to pay your super benefit to should the unexpected happen. Review your investment choices Find out how your super is being invested and review the options that your fund provides. Choosing the investment option that works best for you is generally dependent on the option s strategy, objectives (the amount of return it aims for) and its risks as well as your own risk tolerance and time horizon. 1. Australian Bureau of Statistics (ABS), November 2012, Australian Life Tables, ABS (2012), Average Weekly Earnings November ASFA Superannuation Statistics November Dow Australia Superannuation Fund 2013 Annual Report

5 FEATURE Super update: what you need to know about your super The past year has seen further developments in superannuation, including changes in the way super is taxed for some members and advancements in the implementation of the Stronger Super reforms. Most of the changes are now in effect. We encourage you to read the updates below as some of these changes may affect you. Stronger Super The Stronger Super legislation has now been passed by Parliament. A lot of the changes are happening behind the scenes and are intended to improve the processing and administration of your super benefits. One of the changes under the Stronger Super reforms is the introduction of a new product called MySuper. MySuper products are intended to look after the super of people who do not actively choose their superannuation fund and investment strategy. The Trustee has decided to continue the choice nature of the Fund and is not offering a MySuper product. Instead, affected members were asked to confirm their membership of the Fund and their preferred investment strategy. The Trustee has contacted all members who are affected and is pleased to advise that all Employee and Spouse members confirmed their choice of the Dow Fund as well as most of the Retained Benefit members. Only a small number of Retained Benefit members are yet to respond. If you have not yet confirmed your membership of the Dow Fund, the Trustee encourages you to advise your choice. The Membership Confirmation form Retained Benefit/Frozen members is available on the Fund s website at under About the Fund then Forms & Publications. Increase in Medicare levy The biggest change in 2013 affecting super tax was the increase in the Medicare levy from 1.5% to 2.0% from 1 July 2014 which will be used to help fund the National Disability Insurance Scheme called DisabilityCare Australia. The Medicare levy is being added to a number of tax rates that apply to super and these flow-on changes have been passed by Parliament. Tax increase for high income earners In last year s Budget, the Government proposed to reduce the superannuation contribution tax concession available for individuals with income, including concessional contributions, greater than $300,000. The increased tax on concessional contributions for high income earners now applies to the 2012/13 financial year. Changes to concessional contribution cap The Government has changed the concessional contribution cap for older employees. This cap limits the annual amount you can contribute to super at concessional tax rates. For the 2012/13 year the limit was $25,000 regardless of age. Contributions in excess of the cap were taxed at 46.5%. This included the 15% contributions tax that applies to all concessional contributions and an additional 31.5% (equals 46.5%). From 1 July 2013, the cap increased to $35,000 (not indexed) for individuals who are aged 59 or over on 30 June From 1 July 2014, the $35,000 cap will be extended and apply for individuals who are aged 49 or over on the last day of the previous financial year. The cap will not be indexed. Individuals (regardless of age) are now able to withdraw any excess concessional contributions made from 1 July In addition, the Government is taxing excess concessional contributions at the individual s marginal tax rate rather than the top marginal tax rate. The Government has also imposed an interest charge as this tax is collected later than normal income tax. You should note that the increase in the Medicare levy from 1 July 2014 will also affect the tax on contributions above the cap this tax will increase by 0.5%. Other changes These include: Extending the deeming rules to income streams from Account-Based Pensions that commence on or after 1 January 2015 for the purposes of the age pension income test. Extending concessional tax treatment to deferred lifetime pensions. Proposed change A further change that is under consideration is: Increasing the threshold for transferring certain lost accounts to the ATO from $2,000 to $4,000 on 31 December 2015 and then to $6,000 by 31 December Dow Australia Superannuation Fund 2013 Annual Report 3

6 Our 2013 super performance The performance of your super will vary from year to year. In most cases though, super is a long-term investment. This means that returns over a longer term (such as ten years, rather than one or two years) will be a better indicator of how your super is performing in general. Returns are shown here and recent returns can be found on the website at Simply click on About the Fund then Investment returns. Returns to 31 December Past performance is not necessarily a reliable indicator of future performance. Investment option Five-year compound average return (per year) Employee, Spouse and Retained Benefit members 4 Dow Australia Superannuation Fund 2013 Annual Report 10-year compound average return (per year)* Assertive 26.8% 16.6% -5.6% 2.8% 25.4% 12.5% 9.0% Growth 13.2% 14.1% -0.8% 5.8% 18.3% 9.9% 7.4% Conservative 5.8% 10.0% 4.4% 6.3% 10.1% 7.3% 6.0% International 30.2% 15.7% -2.7% 5.3% 14.6% 12.1% 5.0% Shares* Australian Shares* 23.1% 17.3% -9.7% 0.3% 36.8% 12.3% 2.7% Property* 4.4% 21.7% 1.1% 18.0% 23.4% 13.3% 0.6% Fixed Interest* 0.6% 7.4% 9.6% 6.5% 3.6% 5.5% 6.3% Cash* 2.5% 3.2% 4.4% 3.9% 3.1% 3.4% 3.9% Account-Based Pension members Assertive 30.5% 18.4% -6.5% 3.1% 25.9% 13.4% 9.3% Growth 15.1% 16.1% -0.9% 6.6% 19.0% 10.9% 7.7% Conservative 6.7% 11.6% 5.0% 7.3% 10.8% 8.3% 6.7% International 34.6% 18.2% -3.0% 5.9% 15.4% 13.5% 5.5% Shares* Australian Shares* 26.0% 18.5% -9.9% 0.2% 37.0% 13.1% 3.1% Property* 5.3% 25.8% 1.1% 21.0% 25.6% 15.3% 0.2% Fixed Interest* 1.0% 8.9% 11.4% 7.7% 4.3% 6.6% 7.5% Cash* 3.0% 4.1% 5.1% 4.6% 3.6% 4.1% 4.7% CPI change 2.7% 2.2% 3.1% 2.7% 2.1% 2.6% 2.8% * The Fund s five asset class options were introduced on 1 January For these options, the ten-year average return is only a six-year average. For Account-Based Pension members, the Assertive, Growth and Conservative returns shown are since 1 July 2004, the date the Account-Based Pension section commenced. How investment performance affects your super $ MONEY IN Positive earnings Contributions Roll-ins Co-contributions MONEY OUT YOUR SUPER ACCOUNT Negative earnings Taxes, fees and costs: e.g. administration and insurance fees Benefit payments Note: Investment returns for Employee, Spouse and Retained Benefits members are shown after tax and investment fees have been deducted, while investment returns for Account-Based Pension members are after investment fees only. Administration fees have not yet been deducted from the investment returns shown. See the Fees and Tax Sheet for your membership category for more information on fees, available on the Dow Fund s website at under About the Fund then Forms & Publications.

7 Investment market update The 2013 calendar year was characterised by a strong performance across international share markets. This was supported by the US Federal Reserve s decision to postpone the tapering of its asset purchasing programme, concerns around a European sovereign debt crisis subsiding and a surge in investor confidence during the year. Economic conditions in Australia were mixed in 2013, with unemployment rising 0.4% to 5.8% over the year. In an attempt to stimulate the Australian economy, the Reserve Bank of Australia (RBA) lowered the cash rate by 0.25% in both May and August, cutting it from 3% to 2.5% by year end. Consumer sentiment, as measured by the Westpac-Melbourne Institute survey, rose from 100 to 105 during the year this indicates that the RBA s interest rate cuts appeared to genuinely boost consumer confidence Economic conditions in the US improved in 2013, with the unemployment rate decreasing from 7.8% to 6.7% over the course of the year. The Institute of Supply Management s Purchasing Manager Index (PMI) closed the year at 57.0, up from 50.7 at the beginning of the year, suggesting expansion in the US manufacturing sector for the year. European economic conditions also showed signs of improvement in 2013, with the Eurozone Manufacturing PMI registering a positive reading for the first time in 17 months in September (signalling economic expansion) and going on to reach a 31 month high in December. The European Central Bank (ECB) lowered interest rates in May and November, ending the year at 0.25%. According to the ECB, the reasons for the interest rate cuts included low levels of inflation and the need to stimulate the economy. The Australian share market had another strong calendar year with the S&P/ASX 300 Accumulation Index returning 19.7% for the second consecutive year. Consumer Discretionary (40.7%), Financials (30.3%) and Telecommunication Services (28.7%) were the best performing sectors in 2013, while Materials (-2.0%), Utilities (8.0%) and Energy (11.5%) performed the worst. On the back of improving global economic conditions, international share markets performed extremely well in 2013, with the MSCI World ex-australia Accumulation Index returning 32.3% in hedged Australian dollar terms and 48% in unhedged Australian dollar terms over the year. The Australian dollar fell by approximately 14% against the US dollar during the year, dropping from US cents to 89.2 US cents. The Australian dollar also fell 11% (from 77.1 to 68.9) against major trading partners as measured by the Trade Weighted Index (TWI). The fall was influenced by the two interest rate cuts implemented by the RBA during the year, along with strengthening US and global economies. The Australian property market, as measured by the S&P/ASX300 A-REIT Accumulation Index, returned 7.3% for the year, underperforming the broader share index by 12.4%. Australian fixed interest performance was softened by both rising bond yields and falling cash rates. The UBS Composite Bond Index (All Maturities) returned 2.0% for the year, while the UBS Bank Bill returned 2.9% for the year. Similarly, global fixed interest, as measured by the Barclays Global Aggregate Index (hedged to the Australian dollar) also performed poorly in 2013, returning 2.3% for the year. Note: This investment commentary does not constitute advice. All investment figures quoted relate to before-tax performance of the relevant industry benchmark. Returns on your accounts Your accounts receive the Declared Earning Rate which is the actual investment return for your chosen option after allowing for tax, investment fees and administration fees if you are an Employee, Spouse or Retained Benefit member, or just investment fees and administration fees if you are an Account-Based Pension member. The Declared Earning Rate also allows for a small deduction towards the Fund s Operational risk financial requirement (ORFR) reserve. The Declared Earning Rates for each option are shown on your Anual Benefit Statement. Fees are shown each year on your Annual Benefit Statement and can also be found online and in the Fund s Product Disclosure Statement available at Simply click About the Fund then Forms & Publications. Interim rate Earning Rates are calculated each month. If your super needs to be paid out before the monthly earnings rates have been calculated, an interim earning rate will be used. This will cover the period from the previous month until the date your benefit is paid or your transfer request is processed. An interim earning rate may also be used if you change investment options. The interim rate is based on the Fund s estimated monthly net investment returns, reduced for administration fees, ORFR deduction and allowing for estimated tax (if applicable). Dow Australia Superannuation Fund 2013 Annual Report 5

8 Your super investment options The Fund has eight different investment options for you to choose how your super is invested. See pages 8 to 12 for details. You must make an investment choice as a member of the Fund. Investment objectives Investment objectives are specific goals that the Trustee sets for the performance of the Fund and each investment option. They are not intended as forecasts or guarantees of future investment returns. Generally, the Trustee aims to: Invest the Fund s assets prudently as permitted by the Trust Deed and by superannuation law, Invest across a diverse range of assets, Ensure that the Fund is able to make benefit payments to members when they are due, and Monitor the performance of the Fund s investment managers to ensure they exercise integrity, prudence and professional skill in fulfilling the investment tasks delegated to them. See pages 8 to 12 for the specific investment objectives for each option. Investment strategy An investment strategy is the plan the Trustee follows to achieve the objectives of an investment option. Each investment option has its own investment strategy, see pages 8 to 12 for details. Investment managers The Trustee appoints professional investment managers to manage the Fund s investments. These managers and their products may be changed from time to time without prior notice to, or consent from, members. Since May 2013, the Fund no longer invests in the BT Global Return Fund. In August 2013, the Trustee replaced international shares investment manager Zurich Global Thematic Share Fund with the Schroder Investment Management Australia Limited s Global Active Value Fund I Class. The Fund s investment managers are listed on pages 8 to 12. Asset allocation Each of the Fund s packaged investment options are invested in various asset classes. The Trustee places limits or ranges on the Fund s exposure to each asset class and nominates a neutral or benchmark position for the Fund. The Trustee reviews these asset allocation ranges from time to time. Derivatives The Fund s investment managers only use derivatives for risk-control purposes or to more efficiently shift asset allocations. Investment managers are required to have risk management processes in place in relation to the use of derivatives and the purposes for which they are used. Each year, the Trustee obtains confirmation from the managers that they have complied with their processes. Transition manager The Fund s transition manager is Goldman Sachs JBWere. Their role is to implement any changes to the Trustee s investment strategy by transferring assets between investment managers when required. The transition manager s role is to efficiently manage the transfer of assets, reduce transaction costs and protect the Fund as much as possible from not being fully invested in investment markets. They may use derivatives to carry out this role. 6 Dow Australia Superannuation Fund 2013 Annual Report

9 Reserves Operational reserve The Trustee may maintain an operational reserve and it is expected that this reserve will be of the order of 0.10% to 0.25% of assets (0.25% to 0.50% of assets prior to 1 July 2013). The reserve is used to facilitate the efficient operation of the Fund. The operational reserve is invested in the Growth option. The level of the reserve over the past three years is shown to the right. Operational risk financial requirement (ORFR) reserve From 1 July 2013, super funds are required by law to set aside financial resources to address their operational risks. The Trustee has therefore established an operational risk financial requirement (ORFR) reserve in the Fund for risk management purposes. The ORFR reserve was initially established by a transfer of 0.1% of assets from the existing operational reserve. It will be built up to 0.25% of Fund assets over the three years from 1 July 2013 by gradually setting aside a small proportion of the Fund s investment earnings. The Trustee has decided that the ORFR reserve will be invested in the same way as the Growth option. In subsequent Annual Reports, the Trustee will update members on the status of the reserve. Once the reserve reaches its desired level of 0.25% of Fund assets, it will then be monitored periodically by the Trustee to ensure that it remains close to this level. As at 31 December Operational reserve ORFR reserve 2013 $396,369 # (0.43*) $114,227 (0.12*) 2012 $278,077 (0.33*) n/a 2011 $252,801 (0.32*) n/a * % of Fund assets. # Includes $253,070 of December 2013 contributions paid in January Operational reserve after allowing for allocation of members December contributions and contributions tax is $198,058 or 0.21% of Fund assets. You can either: Keep it simple by investing in one of the Fund s three packaged investment options Assertive, Growth or Conservative; or Do it yourself by building your own portfolio with any combination of the three packaged options or the Fund s five asset class options International Shares, Australian Shares, Property, Fixed Interest and Cash. Dow Australia Superannuation Fund 2013 Annual Report 7

10 Your packaged investment options Assertive What are the investment objectives for this option? What investment strategy does this option use? Volatility level* To achieve a return (after tax and investment fees) that is at least 5% per year more than movements in the Consumer Price Index (CPI) over moving five-year periods. To avoid 6 or more negative annual returns over 20 years. To invest totally in shares with about 50% in Australian shares and 50% in international shares, with half the international shares currency hedged into Australian dollars. High Growth To achieve a return (after tax and investment fees) that is at least 4% per year more than movements in CPI over moving five-year periods. To invest about 71% in growth assets and about 29% in income assets. High To avoid more than 4 negative annual returns over 20 years. Conservative To achieve a return (after tax and investment fees) that is at least 2% per year more than movements in CPI over moving five-year periods. To invest about 65% in income assets and about 35% in growth assets. Low to Medium To avoid 2 or more negative annual returns over 20 years. The volatility level shown is 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 (see the chart on page 12). It is based on the Standard Risk Measure developed by the industry and 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. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 8 Dow Australia Superannuation Fund 2013 Annual Report

11 Who manages the option s assets? Assertive: At 31 December 2013 Karara Capital Limited (Karara Australian Equities Fund Series 1) Northcape Capital Pty Limited (Northcape Capital Core Australian Shares Fund) Schroder Investment Management Australia Limited (Schroder Australian Equity Fund) MFS Institutional Advisors, Inc. (MFS Fully Hedged Global Equity Trust) Schroder Investment Management Australia Limited (Schroder Global Active Value Fund I Class) How is the option invested? Asset mix at 31 December 2013 and % 50% Growth: At 31 December 2013 Karara Capital Limited (Karara Australian Equities Fund Series 1) Northcape Capital Pty Limited (Northcape Capital Core Australian Shares Fund) Schroder Investment Management Australia Limited (Schroder Australian Equity Fund) MFS Institutional Advisors, Inc. (MFS Fully Hedged Global Equity Trust) Schroder Investment Management Australia Limited (Schroder Global Active Value Fund I Class) Ironbark Asset Management (Fund Services) Ltd (Ironbark RREEF Global Property Securities Fund) Macquarie Investment Management Limited (Macquarie True Index Australian Fixed Interest Fund) BlackRock Investment Management (Australia) Limited (BlackRock Australian Government Inflation Linked Bond Fund) PIMCO Australia Pty Ltd (PIMCO Global Credit Fund) State Street Global Advisors (SSgA) (SSgA Australian Cash Trust) Bell Asset Management Ltd (Bridgewater All Weather Fund) Conservative: At 31 December 2013 Karara Capital Limited (Karara Australian Equities Fund Series 1) Northcape Capital Pty Limited (Northcape Capital Core Australian Shares Fund) Schroder Investment Management Australia Limited (Schroder Australian Equity Fund) MFS Institutional Advisors, Inc. (MFS Fully Hedged Global Equity Trust) Schroder Investment Management Australia Limited (Schroder Global Active Value Fund I Class) Ironbark Asset Management (Fund Services) Ltd (Ironbark RREEF Global Property Securities Fund) Macquarie Investment Management Limited (Macquarie True Index Australian Fixed Interest Fund) BlackRock Investment Management (Australia) Limited (BlackRock Australian Government Inflation - Linked Bond Fund) PIMCO Australia Pty Ltd (PIMCO Global Credit Fund) State Street Global Advisors (SSgA) (SSgA Australian Cash Trust) Bell Asset Management Ltd (Bridgewater All Weather Fund) Asset mix at 31 December % 0.4% 21.3% 9.4% 8.6% 25.2% 27.9% Asset mix at 31 December 2013 and % 17% 36% 10% 6.6% 0.9% 20.2% 10.6% 9.7% 0.6% 10% 5% 10% 25.8% 25.6% Australian shares International shares Hedge funds Property Risk parity (structured beta) Australian fixed interest International fixed interest Cash Dow Australia Superannuation Fund 2013 Annual Report 9

12 Your asset class options International shares What are the investment objectives for this option? What investment strategy does this option use? Volatility level* To achieve a return (after tax and investment fees) that is at least 5% per year more than movements in CPI over moving five-year periods. To avoid 6 or more negative annual returns over 20 years. To invest totally in a diversified portfolio of international shares, with approximately half currency hedged into Australian dollars. High Australian shares To achieve a return (after tax and investment fees) that is at least 5% per year more than movements in CPI over moving five-year periods. To invest totally in a diversified portfolio of Australian shares. High To avoid 6 or more negative annual returns over 20 years. Property To achieve a return (after tax and investment fees) that is at least 3% per year more than movements in CPI over moving five-year periods. To invest totally in global listed property trusts (including listed property in Australia) which are totally currency hedged into Australian dollars. High To avoid 6 or more negative annual returns over 20 years. Fixed interest To achieve a return (after tax and investment fees) that is at least 2% per year more than movements in CPI over moving five-year periods. To invest totally in a diversified portfolio of government and non-government bond investments, including about three quarters in Australian and a quarter in international bond securities. Low To avoid 1 or more negative annual returns over 20 years. The currency exposure for the international bond securities is fully hedged into Australian dollars. The volatility level shown is 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 (see the chart on page 12). It is based on the Standard Risk Measure developed by the industry and 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. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. 10 Dow Australia Superannuation Fund 2013 Annual Report

13 Who manages the option s assets? International shares: At 31 December 2013 MFS Institutional Advisors, Inc. (MFS Fully Hedged Global Equity Trust) Schroder Investment Management Australia Limited (Schroder Global Active Value Fund I Class) How is the option invested? Asset mix at 31 December 2013 and % Australian shares: At 31 December 2013 Karara Capital Limited (Karara Australian Equities Fund Series 1) Northcape Capital Pty Limited (Northcape Capital Core Australian Shares Fund) Schroder Investment Management Australia Limited (Schroder Australian Equity Fund) Asset mix at 31 December 2013 and % Property: At 31 December 2013 Ironbark Asset Management (Fund Services) Ltd (Ironbark RREEF Global Property Securities Fund) Asset mix at 31 December 2013 and % Fixed interest: At 31 December 2013 Macquarie Investment Management Limited (Macquarie True Index Australian Fixed Interest Fund) BlackRock Investment Management (Australia) Limited (BlackRock Australian Government Inflation Linked Bond Fund) PIMCO Australia Pty Ltd (PIMCO Global Credit Fund) Asset mix at 31 December 2013 and % 75% Australian shares International shares Hedge funds Property Risk parity (structured beta) Australian fixed interest International fixed interest Cash Dow Australia Superannuation Fund 2013 Annual Report 11

14 What are the investment objectives for this option? What investment strategy does this option use? Volatility level* Who manages the option s assets? How is the option invested? Cash To achieve a return (after tax and investment fees) that is at least 1% per year more than movements in CPI over moving three-year periods. To invest totally in cash investments such as bank deposits, bank bills, and short-dated securities. Very Low At 31 December 2013 State Street Global Advisors (SSgA) (Australian Cash Trust) Asset mix at 31 December 2013 and % To avoid a negative annual return over 20 years. Australian shares International shares Hedge funds Property Risk parity (structured beta) Australian fixed interest International fixed interest Cash The volatility level shown is 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 (see the chart below). It is based on the Standard Risk Measure developed by the industry and 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. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options. Expected return and volatility level of investment options Below is a chart showing the expected return and associated volatility level for each investment option. See pages 8 to 12 for more information on each option. Expected return per year (% p.a.) Volatility level: Expected number of negative annual returns over 20 years Cash Fixed interest Conservative Growth International Shares Assertive Property Australian Shares 12 Dow Australia Superannuation Fund 2013 Annual Report

15 Important information about your Fund How we manage the Fund Your Trustee The Trustee of the Fund is Dow Australia Superannuation Fund Pty Limited (ABN ). The sole purpose of this company is to be Trustee of the Fund. A Board of six directors carries out the Trustee s responsibilities. Half the directors are appointed by the Company and half are elected by Fund members. During the year, the Trustee Directors were: Employer Appointed Darren McConville Nathan Rowe John Valassis Member Nominee Brian Cowie (Dow Chemical electorate) Joe Mercieca (Dow Altona Maintenance/Operations electorate) Mark Siversen (Dow AgroSciences electorate) The next Trustee election will be held in July Details of the Trustee s election policy can be obtained from the Fund Administrator (see page 16 for contact details). Indemnity insurance The Trustee is currently covered by a Trustee Professional Indemnity insurance policy that protects the Fund s assets from a legal liability to the extent allowed by law and the policy conditions. The Trust Deed The Fund is managed and administered in accordance with its Trust Deed. The Trust Deed is the legal document that sets out details of members benefits and the rules and operating requirements of the Fund. A complying fund The Fund is a complying superannuation fund for tax purposes. The Trustee has lodged all necessary returns and certificates with the Australian Prudential Regulation Authority. The returns for the year ending 31 December 2013 will be lodged after the audit of the Fund s Financial Statements has been completed. Advisers to the Fund The following organisations provide specialist services to the Trustee. Consultant and actuary Administrator Investment consultant Auditor Insurer Towers Watson Australia Pty Ltd Towers Watson Australia Pty Ltd (outsourced to Link Super Pty Limited (ABN ) a Corporate Authorised Representative (No ) of Pacific Custodians Pty Limited (ABN , AFSL )) Towers Watson Australia Pty Ltd Crowe Horwath AIA Australia Limited Member Protection From 1 July 2013, the Fund no longer offers Member Benefit Protection. Previously, if your total account balance was less than $1,000, the Fund was required to ensure that administration fees deducted from your account did not exceed the investment earnings applied to your account. This was designed to protect small balances from erosion by fees. The Benefit Protection rules were abolished by the Government with effect from 1 July 2013, and so the Trustee has determined in the interests of all Fund members that the Fund will no longer offer this protection. Surcharge The surcharge tax was abolished with effect from 1 July 2005; however assessments may still be received for you for previous years. Any surcharge assessed by the ATO as being applicable to you is deducted from your accounts when the assessment is received by the Fund and reduces all of your benefits in the Fund. What happens if you leave When you leave the Company (or if you are a Spouse member, and your partner leaves the Company or stops making contributions for you), your benefit is immediately transferred into the Fund s Retained Benefits Section. You will then be contacted by the Fund Administrator and asked how you want to receive your super benefit. If your balance is less than $5,000 and no instructions are received from you within 90 days or the fund you nominate won t accept your benefit, your benefit will be transferred to the Eligible Rollover Fund nominated by the Trustee. Dow Australia Superannuation Fund 2013 Annual Report 13

16 Your benefit can stay in the Retained Benefits Section as long as it is over $5,000 until you advise otherwise. It will remain invested in your current investment option until you choose another option. If your super is in the Retained Benefits Section of the Fund, you must tell the Fund Administrator if your contact address changes. If any documents mailed to your home address are returned unclaimed and you don t notify the Fund Administrator of your new address within the next 90 days, your super will be transferred to the ERF. The ERF is: The Administrator Colonial SuperTrace Approved Eligible Rollover Fund Locked Bag 5429 Parramatta NSW 2124 Phone: Once your benefit is transferred to the ERF, you stop being a member of the Dow Fund and no longer have any rights under the Fund. You will then need to contact the ERF directly about your benefit. You can also obtain the ERF s Product Disclosure Statement using the contact details above. The investment and crediting rate policy of the ERF may be different to those that applied in the Fund. Also, the ERF may not offer any insurance cover. You should seek advice from a licensed financial adviser about whether the ERF is a suitable investment for you. Establishing proof of identity Before you withdraw a benefit from the Fund, you may need to establish your identity by providing certified copies of certain documents. The Trustee may also need to obtain additional identification information and to verify your identity from time to time. In some cases, the Trustee may have to disclose information about you to the Australian Transaction Reports and Analysis Centre (AUSTRAC), the regulator of this legislation. Due to the sensitive nature of the information, the Trustee is not permitted to inform you if this happens. If you have a problem or concern We try to ensure that the Fund s level of service meets your expectations. Sometimes however, problems may arise. When you first have an enquiry or complaint, you should contact the Fund Administrator (see page 16 for contact details). The Trustee has a formal process for reviewing enquiries and complaints if you are not satisfied with the response you receive. To make a formal enquiry or complaint, please obtain an Enquiry or Complaint form from the Fund Administrator. The Trustee will respond to you within 90 days. In certain circumstances, you may be able to request the Trustee s reasons for its decision on your complaint. A copy of the Trustee s Enquiries and Complaints Policy is available from the Fund s website (see box to the right for website details). If you are not happy with the Trustee s handling of your enquiry or complaint, you may then contact the Superannuation Complaints Tribunal. The Tribunal is an independent body set up by the Federal Government to deal with certain enquiries or complaints that the Trustee has not dealt with to your satisfaction. You can contact the Tribunal on or by to info@sct.gov.au. There are some complaints that the Tribunal cannot consider, such as those relating to the management of the Fund as a whole. Time limits also apply to certain complaints relating to total and permanent disability claims and to complaints about objections to the payment of death benefits. If your complaint is in relation to one of these areas, please contact the Fund Administrator or refer to the Tribunal s website at as soon as possible for further information. For privacy-related matters, the Office of the Australian Information Commissioner (OAIC) may review your complaint. You can contact the OAIC on or by to enquiries@oaic.gov.au. Want to know more? Other information is available if you are interested. This includes information about your benefits such as your choices for contributions, investments and insurance levels. Refer to the Fund s Product Disclosure Statement (PDS) for your membership category, available at under About the Fund then Forms & Publications. You can also obtain a PDS by calling the Fund Administrator (see page 16 for contact details). Members, former members and their dependants are also able to request copies of various other Fund documents and Trustee policies, or they can be found on the Fund s website. 14 Dow Australia Superannuation Fund 2013 Annual Report

17 The Fund s financial summary Here is a summary of the Fund s audited financial accounts for the year to 31 December The audited financial accounts and auditor s report are available on request from the Fund Administrator (see page 16 for contact details). Current assets include amounts in the Fund s bank account. All contributions due at 31 December 2013 have now been paid to the Fund. Change in net assets during the year $ Net assets at the start of the year 84,767,340 Plus income Contributions 3,390,737 Rollovers 150,238 Net investment income 12,791,102 Other 6,973 Less Benefit payments and benefits payable (6,502,363) outgoings Insurance fees and premiums (176,509) Tax due (1,367,860) No-TFN tax (3,920) Expenses and charges (757,992) Net assets at the end of the year 92,297, Net assets at the end of the year Investments Macquarie True Index Australian Fixed Interest Fund 12,223,181 11,867,725 BlackRock Australian Government Inflation-Linked Bond Fund 5,899,244 5,966,732 MFS Fully Hedged Global Equity Trust 10,447,783 12,514,217 BT Wholesale Funds BT Global Return Fund 328,684 Ironbark RREEF Global Property Securities Fund 5,594,776 5,905,237 Karara Australian Equities Fund Series 1 7,206,879 8,813,661 Northcape Capital Core Australian Shares Fund 7,018,323 8,596,554 Schroder Australian Equity Fund 7,168,934 8,787,134 Schroder Global Active Value Fund I Class 13,051,742 SSgA Australian Cash Trust 3,705,162 3,408,635 Zurich Investments Global Thematic Share Fund 10,020,709 PIMCO Global Credit Fund 5,911,630 5,956,860 Bell Asset Management Bridgewater All Weather Fund 6,518,740 6,397,658 Current assets 3,005,168 2,203,174 Current Benefits payable (52,923) liabilities Taxation payable (including no-tfn tax) (196,724) (898,814) Other (85,149) (219,846) Net assets at the end of the year 84,767,340 92,297,746 Dow Australia Superannuation Fund 2013 Annual Report 15

18 Contact us General enquiries and complaints The Fund Administrator Dow Australia Superannuation Fund PO Box 1442 Parramatta NSW 2124 Phone: Website: The Trustee Current employees can also contact: James Foster Human Resources Generalist Dow Chemical (Australia) Ltd Level 17, 8 Exhibition Street Melbourne VIC 3000 Phone: FosterJ@dow.com 16 Dow Australia Superannuation Fund 2013 Annual Report