Product Disclosure Statement 2 October 2010

Transcription

1 MLC Navigator Access Investment Options Product Disclosure Statement 2 October 2010 N A V I G A T O R

2 Disclaimer This Product Disclosure Statement ( PDS ) is issued by Navigator Australia Limited ABN Australian Financial Services Licence ( AFSL ) ( Navigator ). It describes the main features of the MLC Navigator Access Investment Options ( Investment Options ), a range of separately registered managed investment schemes. Navigator is part of the MLC and NAB wealth management division of the National Australia Bank Group ( NAB Group ). Navigator is ultimately owned by National Australia Bank Limited ABN , AFSL ( NAB ). In this PDS Navigator is referred to as us, we, our, operator and administrator. Navigator is also the operator of MLC Navigator Access Investment and the administrator of MLC Navigator Access Super and Pension. This PDS is only for use by current investors of the MLC Navigator Access Investment ( the Investment Service ) or MLC Navigator Access Super and Pension ( the Super and Pension Service ). Throughout this PDS, the term Offer Document is used to describe both the Investor Direct Portfolio Service ( IDPS ) Guide for the Investment Service and the Product Disclosure Statement ( PDS ) for the Super and Pension Service. None of Navigator, NAB, their related bodies corporate nor their respective officers guarantees or accepts liablity in respect of any investment available through the Investment Options. In preparing this PDS, Navigator has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before you make an investment decision on the basis of information contained in this PDS, you need to consider, with or without the assistance of a financial adviser, whether investments in the Investment Options are appropriate in light of your particular investment needs, objectives and financial circumstances. This PDS is made available electronically. The offer or invitation to which this PDS relates is only available to persons receiving a copy (including an electronic copy) of this PDS within Australia. Some of the information contained in this PDS may change from time to time. Where those changes are not materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to invest in the Investment Options, the updated information will be made available through our website mlc.com.au or a paper copy of the updated information will be provided without charge on request if you call Client Services on Contacting us Monday to Friday 8.00am to 6.00pm Melbourne Time services@mlc.com.au mlc.com.au Client Services Navigator Australia Limited GPO Box 2567 Melbourne Victoria 3001 Facsimile: (03)

3 Contents Investment Options at a glance Choosing an investment that is right for you Understanding risk and return Information on investments Investing in the Investment Options Fees and other costs Additional information

4 Section one Investment Options at a glance We offer you the ability to choose from a range of Investment Options including multi-manager diversified Pre Select Investment Options, multi-manager single sector Pre Select Investment Options and single manager Investment Options. The Investment Options provide access to many leading investment managers. Management Costs 1 (% p.a.) Buy/Sell 3 (%) Page Cash Access Cash 1.35 Nil 9 Fixed Interest Access Aviva Investors Premier Fixed Income Access EQT PIMCO Global Bond Diversified Access Pre Select Conservative Access Pre Select Balanced Access Pre Select Growth Access Pre Select High Growth Access ING Tax Effective Income Nil Property Access Property Securities Index Access Macquarie Property Securities Access CFS Colliers International Property Securities Australian Equity Access Australian Share Index Access Pre Select Australian Equity Access Pre Select Boutique Australian Equity Access Perpetual Geared Australian Equity Access Pre Select Australian Small Companies Access Investors Mutual Australian Share Access Perpetual Industrial Access Aviva Investors High Growth Shares Access Schroder Australian Equity (g) 4.18% (n)

5 Management Costs 1 (% p.a.) Buy/Sell 3 (%) Page International Equity Access International Shares Index Access Pre Select International Equity Access AXA Global Equity Value Access Aberdeen Actively Hedged International Equities Fund Access Perpetual International Share Access Platinum International Each of the above Investment Options is a registered managed investment scheme, details of which are set out on page 32 of this PDS. Navigator is the Responsible Entity of each scheme. 1. For further information on fees please refer to the section titled Fees and other costs on page An additional performance fee may also be applicable. Please refer to the section titled Performance fees on page 23 for further information. 3. Please refer to Transaction costs (buy/sell spread) section on page 23 for details on any additional sell spread that may be payable on withdrawals. 4. The management cost for the Access Perpetual Geared Australian Equity Investment Option is an estimated figure calculated on the gross (g) assets of the Investment Option (gross management cost) and the net (n) assets of the Investment Option (net management cost) assuming (in both cases) a gearing ratio of 60% (see page 22 for information about gearing levels relevant to this Investment Option). The gearing level is the underlying fund s borrowings divided by the total gross value of assets. The gearing level will depend on the present levels and future expectation of the underlying fund s net income (income after fees and expenses and excluding franking credits) and the cost of borrowings. Gearing levels will vary from year to year. For example, if the average gearing level over the year is 50%, the gross management cost will be 1.80% and the net management cost will be 3.59%. If the average gearing level over the year is higher than 50%, the gross management cost will be lower and net management cost will be higher. The gross management cost percentage is lower than the net management cost percentage because the assets of the Investment Option used in calculating this figure include assets purchased through borrowings. When comparing costs with other Investment Options, you should use the net management cost percentage as this represents the fees charged as a percentage of your investment. 3

6 Section two Choosing an investment that is right for you Your financial adviser can review your situation, assess your financial needs and objectives and tailor a financial plan to meet your requirements. We appreciate that most people want to take control and have a say in the way their money is invested while taking away the complexity. Our flexible solutions offer you an effective and convenient way of investing. An investment as individual as you With the assistance of your financial adviser, you can select from the range of Investment Options to suit your specific requirements. They have an affordable and competitive fee structure and are all available in the one place. Through the Investment Options, you have access to four major asset classes: cash property fixed interest shares Within each asset class the Investment Options offer a range of different market sectors and management styles allowing you to diversify your investments and spread your risk. You have the flexibility of choosing from the Access Pre Select (multi-manager) or Self Select (single manager) Investment Options. For specific details on Investment Options, refer to pages 9 to 17. Underlying investment managers The Investment Options enable you to access investment managers from around the world. The investment managers currently appointed as at 31 August 2010 are: 452 Capital Limited ( 452 Capital ) # Aberdeen Asset Management Limited ( Aberdeen ) Adam Smith Asset Management Pty Limited ( Adam Smith ) # nabinvest Capital Partners Pty Ltd ( Antares Fixed Income ) Aviva Investors Australia Limited ( Aviva Investors ) AXA Australia^ ( AllianceBernstein ) Ausbil Dexia Limited ( Ausbil Dexia ) # BlackRock Asset Management (Australia) Limited ( BlackRock AM ) # BlackRock Investment Management (Australia) Limited ( BlackRock IM ) # Capital International, Inc. ( Capital International ) # Colonial First State Investments Limited ( Colonial First State ) Greencape Capital Pty Ltd ( Greencape Capital ) # Independent Asset Management Pty Ltd ( Independent ) # ING Investment Management Limited ( ING ) Investors Mutual Limited ( Investors Mutual ) JF Capital Partners Limited ( JF Capital Partners ) # Macquarie Investment Management Limited ( Macquarie ) Perennial Real Estate Investments Pty Ltd ( Perennial )* # Perpetual Investment Management Limited ( Perpetual ) PIMCO Australia Pty Ltd ( PIMCO ) Platinum Investment Management Limited ( Platinum ) Schroder Investment Management Australia Limited ( Schroder ) Vanguard Investments Australia Limited ( Vanguard ) # # Only available through some of the multi-manager Pre Select Investment Options ^ Trading name for National Mutual Funds Management Limited * Subsidiary and Authorised Representative of Perennial Investment Partners Limited 4

7 Section three Understanding risk and return Any investment decision involves some level of risk. It is important you understand the relationship between risk and return prior to making your investment decision, especially in light of the time frame you are considering for your investment. As a general rule, the higher the potential return, the higher the level of risk you must be prepared to accept. Risk relates to the potential for variations in the rate of return as well as for the loss of, or reduction in the value of, the assets in which you invest. One commonly used measure of investment risk is volatility. This refers to the tendency of investment values to fluctuate. Volatility can apply to both the market price and the income of a particular investment. The following table provides a summary of four major asset classes. The table also refers to some of the potential risks associated with each asset class. Asset Class Relative Risk Relative Return Features What to be aware of Cash Low Low Relatively safe compared to the other asset classes, with generally immediate access to funds. Returns fluctuate in line with market interest rates. Fixed interest Medium Medium Generally less volatile when compared to shares and property, however some risk of negative returns. Returns can vary over time and may not keep pace with inflation. Access to funds is not as immediate as for Cash. Property High Medium to high Capital value and returns should rise with inflation in the long-term however the risk of a negative return in any one year is high. Property markets are subject to medium-term volatility and may result in losses over the short to medium-term. Access to funds may be an issue with some investments. Shares High High Returns should be greater than inflation over the longer-term. Risk of a negative return in any one year is high. Volatility of the stock market may result in losses in the short-term. Access to funds is reasonable and diversification is recommended to minimise exposure to any one investment manager, country, industry or company. 5

8 Risk management and other information When you are investing in any of the Investment Options you should consider the liquidity, return, risk and diversification characteristics of each investment to effectively compare between them. Liquidity Liquidity refers to the ease with which an investment can be converted into cash or disposed of at market value. Return The term return refers to the amount earned from an investment or made on its disposal. Risk There are different types of risks applicable to different investment funds. Some of the risks we have identified as applicable to the Investment Options include equity risk, interest rate risk, credit risk, currency risk, regulatory risk, country risk, market risk, derivatives risk, managed fund risk, counterparty risk, agency risk, investment manager risk and gearing risk. For further information regarding these risks please refer to the section titled Additional information on page 37. The relationship between risk and return As you can see from the overview of the asset classes, there is a common relationship between risk and return. Generally, the higher the potential return of the asset class, the higher the level of risk you must be prepared to accept. Growth assets These assets are expected to produce a higher return over the long term, but have a higher level of risk in the short term. Growth assets such as shares can earn double digit returns in one year but have the ability to also provide single digit or even negative returns in another year. Property and equity investments are generally considered to be growth assets. Defensive assets Sometimes called income or conservative assets, they generally earn lower returns over the long term, however they have a correspondingly lower level of risk. The possibility of a defensive asset producing a negative return is usually lower than for growth assets. Cash and fixed interest investments are considered to be defensive assets. Diversification Diversification is the most common method used by investors to help manage exposure to risk. Diversification means spreading your investments across a number of investments with different levels of risk (eg. shares and fixed interest). Your financial adviser will be able to assist you in ensuring that the strategy selected meets your own risk tolerance, needs and objectives. 6

9 Section four Information on investments Pre Select Pre Select investing involves investing with a number of different investment managers rather than investing with one or a number of single investment manager portfolios. A range of Access Pre Select Investment Options have been carefully designed to suit different investment needs. The Pre Select investment process recognises that diversification and management of the overall investment strategy are integral to successful investing. In line with each Pre Select Investment Option s objective and strategy, the Pre Select investments process allocates and rebalances assets to the target asset allocation, diversifying your investment across: asset classes (diversified funds) investment managers investment management approaches Ongoing monitoring and review of the Access Pre Select Investment Options aim to ensures that each option continues to be structured to meet its investment objectives. The below graph illustrates in general terms, the long-term potential risk return properties of the Access Pre Select Investment Options. Long-term potential returns Lower Higher Lower Conservative Fund High Growth Fund Growth Fund Balanced Fund Long-term potential volatility Equity Funds Higher 7

10 We have engaged the services of specialist multi-manager National Corporate Investment Services Limited ABN , AFSL No ( NCIS ). In this role, NCIS monitors the investment structure and performance of each of the Access Pre Select Investment Options with the exception of Access Pre Select Boutique Australian Equity investment option and recommends the percentage to invest in each asset class and with each underlying investment manager. As markets and managers change over time we may alter the target asset allocations and underlying investment managers for the Pre Select Investment Options at our discretion. Current information can be obtained from your financial adviser or mlc.com.au. Self Select The Self Select range of Investment Options is designed to be as individual as you are. This is ideal for individuals with specific needs. Self Select allows you and your financial adviser to further tailor your investments to suit your financial requirements and risk profile by selecting from a range of 18 single manager Investment Options. Investment Option details The following pages contain the descriptions of strategies for the Pre Select and Self Select range of Investment Options. With your financial adviser all you need to do is choose one or more Investment Option(s) that best suit your needs. For information regarding the investment structure of the Investment Options please refer to the section titled Investment structure on page 18. The underlying investment managers are disclosed in the table on pages 9 to 17. While this information is current as at the date shown, it may change from time to time. Current information can be obtained from your financial adviser or from our website mlc.com.au For important updates on the underlying funds refer to the website as per the below links

11 Access Cash Access Aviva Investors Premier Fixed Income Access EQT PIMCO Global Bond Strategy group Cash Fixed interest Australian Fixed interest international Investment objective 1 To achieve a return in the short term that is at least equal to that available in the short-term money market (before taking into account fees and taxes). To outperform the benchmark (75% UBS Australia Composite Bond Index and 25% Barclays Capital Global Aggregate Bond Index, hedged into AUD) over the recommended investor time horizon by investing in a broadly diversified portfolio of fixed income securities (both Australian and international). To achieve maximum total return by investing in global fixed interest securities and to seek to preserve capital through prudent investment management. Strategy 2 Invests primarily in bank deposits and money-market securities issued by the Australian government, state government, banks and companies, but may also invest in longer maturity mortgage/asset backed securities and corporate bonds with floating interest rates. Seeks to enhance returns and improve diversification by including high yield fixed income securities and exposure to bonds issued by overseas governments. Applies a wide range of diverse strategies including duration, credit analysis, relative value analysis, sector rotation and security selection. Appropriate Investor For both short and long-term investors seeking a low risk investment with regular income and capital preservation. Investors seeking a relatively low risk investment providing income and some capital growth over the medium to longer term. Investors who wish to have a broadly diversified exposure to international fixed interest markets. Investor time horizon At least one year Minimum three years Minimum three years Management Costs 3 (% p.a.) Buy/sell spreads 3 (%) Nil Asset allocation at 30 June 2010 (%) Cash Cash 4.2 Australian Fixed Interest 59.2 International Fixed Interest 26.4 High Yield Securities 10.2 Australian Fixed Interest 1.8 International Fixed Interest 98.2 Underlying investment managers as at 31 August 2010 (For index investment options the market index is shown) Antares Fixed Income Aviva Investors PIMCO 1. The objectives are not a forecast or guarantee of the possible performance of the Investment Options in the future. These objectives should be read in conjunction with the risks outlined on pages 5 and This is the means by which Investment Options seek to achieve their investment objectives and the grounds on which the Investment Options objectives are set. 3. For further information on fees and costs, please refer to the section titled Fees and other costs on page 21. 9

12 Access Pre Select Conservative Access Pre Select Balanced Access Pre Select Growth Strategy group Diversified income Diversified balanced Diversified growth Investment objective 1 To provide medium-term returns higher than those generally associated with cash and fixed interest securities, while providing lower volatility in short-term investment returns than funds with a greater proportion of growth assets. To provide medium to long-term returns that are generally higher than those achievable by investing in capital stable funds. To produce higher returns than those expected from capital stable and balanced strategies over the long term Strategy 2 To invest a high proportion of assets in cash and fixed interest securities with the balance in growth assets. The likelihood of the portfolio incurring a negative return in any particular year is moderate. To maintain a balanced spread of investments between growth and defensive assets. The likelihood of the portfolio incurring a negative return in any particular year is moderate. To maintain a high proportion of growth assets, in order to achieve high returns in the long term. The likelihood of the portfolio incurring a negative return in any particular year is high. Appropriate Investor Investors seeking stable returns. Investors who are not concerned about a moderate level of shortterm volatility of returns. Investors who feel comfortable with a higher than average degree of volatility in order to achieve long-term returns. Investor time horizon Minimum three years Minimum five years Minimum six years Management Costs 3 (% p.a.) Buy/sell spreads 3 (%) Asset allocation at 30 June 2010 (%) Cash 20.3 Australian Fixed Interest 25.1 International Fixed Interest 25.1 Australian Property 3.9 Australian Shares 12.8 International Shares 12.8 Cash 10.2 Australian Fixed Interest 20.5 International Fixed Interest 20.5 Australian Property 5.9 Australian Shares 21.3 International Shares 21.6 Cash 2.0 Australian Fixed Interest 14.5 International Fixed Interest 14.5 Australian Property 6.0 Australian Shares 31.3 International Shares 31.7 Underlying investment managers as at 31 August 2010 (For index investment options the market index is shown) AllianceBernstein, Antares Fixed Income, BlackRock AM, BlackRock IM, Colonial First State, Macquarie, Perennial, Perpetual, Vanguard, Capital International, Aviva Investors, Adam Smith AllianceBernstein, Antares Fixed Income, BlackRock AM, BlackRock IM, Colonial First State, Macquarie, Perennial, Perpetual, Vanguard, Capital International, Aviva Investors, Adam Smith AllianceBernstein, Antares Fixed Income, BlackRock AM, BlackRock IM, Colonial First State, Macquarie, Perennial, Perpetual, Vanguard, Capital International, Aviva Investors, Adam Smith 1. The objectives are not a forecast or guarantee of the possible performance of the Investment Options in the future. These objectives should be read in conjunction with the risks outlined on pages 5 and This is the means by which Investment Options seek to achieve their investment objectives and the grounds on which the Investment Options objectives are set. 3. For further information on fees and costs, please refer to the section titled Fees and other costs on page

13 Access Pre Select High Growth Access ING Tax Effective Income Access Property Securities Index Diversified aggressive Diversified growth Property Australian listed To provide higher returns than those expected from capital stable, balanced and growth strategies over the long-term. The fund aims to provide income and achieve returns (before fees, charges, and taxes) that on average exceed inflation by at least 5.0% per annum, over periods of 5 years or more. To closely track the S&P/ASX 200 Property Accumulation Index with the aim of generating returns (before tax and fees and assuming income reinvestment) comparable to the listed property sector of the Australian share market, as measured by that benchmark. Dominated by growth assets with a very low allocation to defensive assets. The likelihood of the portfolio incurring a negative return in any particular year is high. The fund invests in a diversified mix of Australian assets with a bias towards income producing growth assets. The fund is actively managed in accordance with ING Investment Management s investment process. Detailed risk analysis is used to design a portfolio of property securities which provide the greatest likelihood of matching performance of the S&P/ASX 200 Property Accumulation Index. All shares in this option are maintained within a very close margin to their weight in the index. The Investment Option predominantly invests in Australian property securities and therefore does not hedge currency risk. Investors seeking higher returns with a focus on long term outcomes combined with little regard for short term results, including a higher incidence of capital loss. Investors with a long-term view seeking exposure to a diversified portfolio with an emphasis on growth assets, such as listed shares. Investors with a long-term view seeking indirect exposure to property markets via property trusts listed on the Australian Securities Exchange. Minimum seven years Minimum five years Minimum three to five years Nil 0.40 Cash 1.1 Australian Fixed Interest 7.3 International Fixed Interest 7.3 Australian Property 5.0 Australian Shares 39.5 International Shares 39.8 Cash 0.8 Australian Fixed Interest 29.9 Australian Shares 42.7 Australian Property 26.6 Cash 0.20 Australian Shares 1.01 Australian Property AllianceBernstein, Antares Fixed Income, BlackRock AM, BlackRock IM, Colonial First State, Macquarie, Perennial, Perpetual, Vanguard, Capital International, Aviva Investors, Adam Smith ING S&P/ASX 200 Property Accumulation Index 11

14 Access Macquarie Property Securities Access CFS Colliers International Property Securities Access Australian Shares Index Strategy group Property Australian listed Property diversified Australian equities growth Investment objective 1 The fund aims to outperform the S&P/ ASX 200 Property Trust Accumulation Index over the medium to long term (before fees). To maximise the total return to the investor by investing in a broad selection of liquid global property investments from around the world. To closely track the S&P/ASX 200 Accumulation Index with the aim of generating returns (before tax and fees and assuming income reinvested) comparable to the Australian sharemarket as measured by that benchmark. Strategy 2 The Fund provides access to a broad range of listed property securities by investing in securities directly and via other Macquarie managed funds. The Fund will predominantly have exposure to property securities listed on the Australian Securities Exchange. To increase diversification and with the aim of enhancing returns, a proportion of the Fund may have exposure to overseas listed property securities, listed property development companies and securities demonstrating similar investment characteristics to listed property securities such as infrastructure securities. Invests in a range of global listed property securities identified from macroeconomic research focusing on geographic locations and sub sectors of overseas property markets that are benefiting from strong fundamentals and bottom up research to source attractive securities. Detailed risk analysis is used to design a portfolio of shares which provide the greatest likelihood of matching performance of the S&P/ASX 200 Accumulation Index. All shares in this option are maintained within a very close margin to their weight in the index. The Investment Option predominantly invests in Australian companies and therefore doesn t hedge currency risk. Appropriate Investor Investors with a long-term view seeking indirect exposure to property markets via property trusts generally listed on the Australian Securities Exchange. Investors with a long-term view seeking to diversify their property investment portfolio through investment in overseas listed property securities. Investors with a long-term view seeking exposure to the Australian listed sharemarket. Investor time horizon Management Costs 3 (% p.a.) Buy/sell spreads 3 (%) Minimum five years Minimum three to five years Minimum five years Asset allocation at 30 June 2010 (%) Cash 3.2 Australian Property 96.8 Cash 2.89 International Property Cash 0.34 Australian Shares Australian Property 6.15 Underlying investment managers as at 31 August 2010 Macquarie Colonial S&P/ASX 200 Accumulation Index (For index investment options the market index is shown) 1. The objectives are not a forecast or guarantee of the possible performance of the Investment Options in the future. These objectives should be read in conjunction with the risks outlined on pages 5 and This is the means by which Investment Options seek to achieve their investment objectives and the grounds on which the Investment Options objectives are set. 3. For further information on fees and costs, please refer to the section titled Fees and other costs on page The underlying fund s investment universe allows it to invest, directly or indirectly, in stocks listed or to be listed on sharemarket exchanges outside Australia. Exposure to stocks outside of Australia is limited to 20% and currency exposure is generally unhedged. 12

15 Access Pre Select Australian Equity Access Pre Select Boutique Australian Equity Access Perpetual Geared Australian Equity Australian equities growth Australian equities growth Australian equities growth To provide medium to long term capital growth and income by primarily investing in a well diversified portfolio of Australian equities listed on the Australian Securities Exchange. Seeks to outperform the S&P/ASX 300 Accumulation Index over rolling three-year periods. Aims to enhance long-term capital growth through borrowing (gearing) to invest in quality industrial and resources shares and other securities. 4 To invest in a variety of Australian companies whose share price is expected to appreciate over time. These investments are made through specialist Australian equity investment managers. The likelihood of this portfolio incurring a negative return in any particular year is high. The Investment option is designed to provide investors with a manage themanager Australian share portfolio utilising the investment manager expertise of boutique Australian share managers. The key to producing the best possible performance for investors is by selecting a small number of specialist active managers to run concentrated portfolios of securities that they believe have the most potential to out perform. Perpetual researches companies of all sizes using consistent share selection criteria. Perpetual s priority is to select those companies that represent the best investment quality and are appropriately priced. In determining investment quality, investments are carefully selected on the basis of four key investment criteria: conservative debt levels, sound management, quality business, and in the case of industrial shares, recurring earnings. The gearing level 5 is kept within pre determined guidelines (0-60%). Within these guidelines, Perpetual aims to ensure that the gearing level is maximized subject to the cost of borrowing being adequately covered by net income. Investors looking for a portfolio of Australian equities who are comfortable with considerable medium term fluctuations, including the risk of medium term negative returns, and who are investing over a longer term. Investors with a long-term view seeking exposure to the Australian listed sharemarket. Investors looking for long-term capital growth and income via exposure to a portfolio of geared Australian shares. Minimum eight years Minimum eight years Minimum seven years (g), 4.18 (n) Cash 1.0 Australian Shares 99.0 Cash 1.20 Australian Shares Australian Property 3.49 Cash 1.72 Australian Shares Adam Smith, BlackRock AM, Perpetual 4, Aviva Investors JF Capital Partners, Ausbil Dexia, 452 Capital, Greencape Capital, Independent Perpetual 5. The gearing level is the underlying fund s borrowings divided by the total gross value of the assets. The gearing level will depend on the present levels and future expectation of the underlying fund s net income (income after fees and expenses excluding franking credits) and the cost of borrowings. For more information about the underlying fund s gearing strategy, see page The management cost is an estimated figure calculated on the gross (g) assets of the Investment Option (gross management cost) and net (n) assets of the Investment Option (net management cost) assuming (in both cases) a gearing ratio of 60% (see page 19 for information about gearing levels relevant to this Investment Option). Gearing levels will vary from year to year. For example, if the average gearing level over the year is 50%, the gross management cost will be 1.80% and the net management cost will be 3.59%. If the average gearing level over the year is higher than 50%, the gross management cost will be lower and net management cost will be higher. The gross management cost percentage is lower than the net management cost percentage because the assets of the Investment Option used in calculating this figure includes assets purchased through borrowings. When comparing costs with other Investment Options, you should use the net management cost percentage as this represents the fees charged as a percentage of your investment. 13

16 Access Pre Select Australian Small Companies Access Investors Mutual Australian Shares Access Perpetual Industrial Strategy group Australian equities smaller companies Australian equities imputation Australian equities imputation Investment objective 1 To provide medium to longterm capital growth by primarily investing in Australian smaller companies (generally outside the top 100 by market capitalisation) listed on the Australian Securities Exchange Aims to provide investors with a total return that is superior to that provided by the S&P/ASX 300 Accumulation Index, over rolling 4-year periods. Aims to provide long-term capital growth and income through investment in quality Australian industrial shares and other securities. Strategy 2 To invest in a variety of Australian small companies considered to possess strong capital growth potential. These investments are made through specialist managers that exhibit varying investment approaches. The likelihood of this portfolio incurring a negative return in any particular year is very high Invests in a diversified portfolio of quality Australian industrial and resource shares, where these shares are identified by the investment team as being undervalued. Perpetual researches companies of all sizes using consistent share selection criteria. Perpetual s priority is to select those companies that represent the best investment quality and are appropriately priced. In determining investment quality, investments are carefully selected on the basis of four key investment criteria: conservative debt levels, sound management, quality business, and recurring earnings. Appropriate Investor Investors with a long-term view seeking exposure to smaller capitalisation securities listed on the Australian sharemarket and are comfortable with considerable medium-term fluctuations in returns. Investors who are seeking a better than average return from a diversified managed portfolio of shares in Australian Companies. Investors seeking long-term capital growth and income through exposure to Australian listed shares paying a relatively high level of franked dividends. Investor time horizon Management Costs 3 (% p.a.) Minimum eight years Minimum five years Minimum five years Buy/sell spreads 3 (%) Asset allocation at 30 June 2010 (%) Australian Shares Cash 6.23 Australian Shares Cash 2.81 Australian Shares Australian Property 0.73 Australian Fixed Interest 0.02 Underlying investment managers as at 31 August 2010 (For index investment options the market index is shown) Adam Smith, Aviva Investors Investors Mutual Perpetual 1. The objectives are not a forecast or guarantee of the possible performance of the Investment Options in the future. These objectives should be read in conjunction with the risks outlined on pages 5 and This is the means by which Investment Options seek to achieve their investment objectives and the grounds on which the Investment Options objectives are set. 3. For further information on fees and costs, please refer to the section titled Fees and other costs on page

17 Access Aviva Investors High Growth Shares Access Schroder Australian Equity Access International Shares Index Australian equities growth Australian equities growth International equities global To significantly outperform the S&P/ASX 200 Accumulation Index over the long term by investing in a diversified portfolio of Australian Shares. To outperform the S&P/ASX 200 Accumulation Index over the medium to longer term (3 to 5 years). To closely track the MSCI World ex Australia Index with the aim of generating returns (before tax and fees and assuming income reinvested) comparable to the world sharemarkets as measured by that benchmark (unhedged). Uses a range of investment techniques (such as short selling, active trading and enhanced long positions) aimed at providing investors with the opportunity to enhance returns. The long and short positions provide investors with a gross exposure to the sharemarket of up to 150%. This trust is actively traded and returns are taxed on a revenue basis. To invest predominantly in stocks characterised by strong returns on capital and a sustainable business franchise using a fundamental, bottom up, active management style. Detailed risk analysis is used to design a portfolio of shares which provide the greatest likelihood of matching performance of the MSCI ex Australia Index. This Investment Option does not hedge currency risk. Investors with a long-term view seeking exposure to the Australian listed sharemarket. Investors predominantly seeking growth, but also accept that the value of their investment can change. Investors with a long-term view seeking exposure to international shares and willing to accept negative returns from time to time for returns that can be expected to be higher than other asset classes over the longer term. Minimum five years Minimum three to five years Minimum five years 2.25 plus a performance fee equivalent to 20% of the performance of the underlying fund in excess of the index plus 5% p.a Cash 0.6 Australian Shares 99.4 Cash 1.7 Australian Shares 98.3 Cash 5.10 International Shares Aviva Investors Schroder MSCI World ex Australia Index 15

18 Access Pre Select International Equity Access AXA Global Equity Value Access Aberdeen Actively Hedged International Equities Fund Strategy group International equities global International equities global International equities global Investment objective 1 To provide medium to longterm capital growth by primarily investing in a well diversified portfolio of equities listed on stock exchanges around the world. To provide long-term capital growth and to outperform the Morgan Stanley Capital Inter-national World Index (Net Dividends Reinvested) in Australian dollar terms, after costs and over rolling five year periods. 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. Strategy 2 To invest predominantly in international equities through specialist managers. The likelihood of this portfolio incurring a negative return in any particular year is high. The portion of the currency exposure that is hedged to the Australian dollar may move within the range 0% to 100% at our discretion. To invest in a diversified portfolio of global shares in companies whose share prices appear undervalued relative to long-term earnings potential. The investment strategy of the fund is to utilise Aberdeen s proven investment philosophy and approach to invest primarily in a concentrated portfolio of global listed securities that have the potential for capital growth and increased earning potential. Appropriate Investor Investors seeking an investment in a diversified portfolio of overseas equities who are prepared to accept potential capital losses over the short-term from adverse movements in the price of equities as well as from currency fluctuations. Investors prepared to accept a high level of volatility and risk as a trade-off for returns that might typically be expected to be above those returned by other asset classes over the longer term. Investors with a long-term view seeking exposure to international shares and willing to accept negative returns from time to time for returns that can be expected to be higher than other asset classes over the longer term. Investor time horizon Management Costs 3 (% p.a.) Buy/sell spreads 3 (%) Minimum eight years Minimum five years Minimum five years Asset allocation at 30 June 2010 (%) Cash 1.1 International Shares 98.9 Cash 0.71 International Shares Cash 0.93 International Shares Underlying investment managers as at 31 August 2010 AllianceBernstein, Capital International, BlackRock IM, Vanguard AllianceBernstein Aberdeen (For index investment options the market index is shown) 1. The objectives are not a forecast or guarantee of the possible performance of the Investment Options in the future. These objectives should be read in conjunction with the risks outlined on pages 5 and This is the means by which Investment Options seek to achieve their investment objectives and the grounds on which the Investment Options objectives are set. 3. For further information on fees and costs, please refer to the section titled Fees and other costs on page PI Investment Management Limited (PIIML) is a wholly owned subsidiary of Perpetual Limited and is based in Dublin, Ireland. PIIML is responsible for the management of global equities. 16

19 Access Perpetual International Share Access Platinum International International equities global International equities global Aims to provide long-term capital growth through investment in international shares and other securities. The fund aims to provide capital growth over the long-term through searching out undervalued listed (and unlisted) investments around the world. Utilises a fundamental, bottom-up approach to stock selection focusing on quality companies (strong balance sheets, earnings visibility and competitive position) with attractive valuations within a global framework. Currency exposure may be hedged up to 30% of the value of the fund. The portfolio will ideally consist of 100 to 200 securities that Platinum believes to be undervalued by the market. Cash may be held when undervalued securities cannot be found. Platinum may short sell securities that it considers overvalued. The portfolio will typically have 50% or more net equity exposure. Derivatives may be used for risk management purposes and to increase returns. The underlying value of the Derivatives may not exceed 100% of the Net Asset Value (NAV) of the fund and the underlying value of long stock positions and Derivatives will not exceed 150% of the NAV of the fund. Currency exposures are actively managed. Investors with a long-term view seeking exposure to international shares and willing to accept negative returns from time to time for returns that can be expected to be higher than other asset classes over the longer term. The fund may be suited to investors who believe in the long term wealth creation potential of share investments; wish to achieve investment diversification by accessing international share market opportunities; and accept that returns over the shorter term may fluctuate and that returns may even be negative. Five or more years Five or more years Cash 0.85 International Shares Cash 14.4 Australian Shares 0.1 International Shares 85.5 This fund has a short position of 18.6% individual shares and indices. The fund also has a 12.8% exposure to Japanese Government Bonds. PI Investment Management Limited 4 Platinum 17

20 Section five Investing in the Investment Options How to invest You may only invest indirectly into the Investment Options, that is, through the Investment Service or the Super and Pension Service. This means you direct the operator of the Investment Service or the administrator/trustee of the Super and Pension Service to acquire units in each Investment Option on your behalf. As an indirect investor you may rely on and are authorised to use the information in this PDS to direct the operator of the Investment Service or the administrator/trustee of the Super and Pension Service to invest in each Investment Option on your behalf. To invest, simply complete the relevant form for the Investment Service or the Super and Pension Service. If you want to make an additional investment or withdraw from an Investment Option you will have to direct the operator or administrator/ trustee to do so. The operator of the Investment Service and the administrator/trustee of the Super and Pension Service will provide confirmation of transactions, transaction statements, tax statements and financial reports. Investment performance Performance information for all Investment Options is available from: your financial adviser mlc.com.au Client Services on Past performance should not be taken as an indication of future performance. Investor rights As an indirect investor, you are not a unit holder in the Investment Options. Instead, the operator of the Investment Service or the trustee of the Super and Pension Service is the direct unit holder. Accordingly, you do not acquire the rights of a unit holder of the Investment Options, or any direct interest in each of the Investment Options. Therefore: you will not receive reports directly from the Investment Options, but you will get updates from the Investment Service or the Super and Pension Service through which you invest in the Investment Options income distributions from each Investment Option are paid to the operator of the Investment Service or the trustee of the Super and Pension Service and they will then allocate income to your account, less charges, in accordance with the relevant Offer Document you do not vote at unit holder meetings of the Investment Options there will be a time lag from when you request an investment or redemption and when it is processed you do not have the right to request information from the Investment Options, though some requests may be met through the Investment Service or the Super and Pension Service any complaints you have should be directed to the operator of the Investment Service or the administrator of the Super and Pension Service. For further information please refer to the section titled Complaints on page 30 any cooling off rights will apply to your investment in the Investment Service or the Super and Pension Service, not to your investment in an Investment Option Distributions Distributions will contain net income, and may include assessable realised gains, foreign income, franked dividends and tax deferred income. For further information please refer to the section titled Taxation of your investment on page 29. Each Investment Option distributes income at least annually within 90 days of the end of the relevant period. Distributions will be expressed as cents per unit. Except where the investment fund distributes income only by way of reinvestment back into the fund, distributions will be paid to your account by either the operator of the Investment Service or the administrator of the Super and Pension Service in accordance with the relevant Offer Document and any instructions you provide to either the operator or administrator. Your reporting rights and entitlements will be outlined in the relevant Offer Document. Investment structure Each of the Investment Options is a separately registered managed investment scheme of which we are the Responsible Entity. We appoint various investment managers to manage the assets and Investment Options. These appointments are made either by investment management agreement or by 18

21 the Investment Option holding units in an underlying fund managed by the relevant underlying investment manager. In addition, the Investment Options also hold sufficient cash to provide liquidity to fund efficient operations. Underlying investment managers in the Pre Select funds may be altered by us at our discretion. Where we make changes to underlying investment managers in the Self Select funds we intend to replace those managers with investment managers using similar investment styles. The underlying investment managers shown within the section titled Investment Option details on pages 9 to 16 are only a guide and are correct as at the date shown. Material changes will be notified to the operator of the Investment Service or the administrator of the Super and Pension Service. The registered names and ARSNs of the Investment Options are listed on page 32. Access Perpetual Geared Australian Equity The Access Perpetual Geared Australian Equity Investment Option invests into Perpetual Wholesale Geared Australian Fund ( Perpetual W Geared Aust Fund ) which utilises a gearing strategy with the aim of providing long term capital growth. In addition to invested funds, the Perpetual W Geared Aust Fund will borrow money to increase the size of its investment exposure. This strategy is referred to as internal gearing, i.e. the Perpetual W Geared Aust Fund itself borrows rather than the individual unit holder. As such, all obligations to the lender are met within the Perpetual W Geared Aust Fund. The returns of an internally geared fund depend on the types of investments in the fund as well as the level of gearing and the costs of borrowing, including interest rates. A geared fund is considered to have a higher investment risk than an ungeared fund due to the magnification of gains and losses ie. gearing may enhance the returns of a fund in a rising market but may magnify the losses in a falling market. The gearing of the Perpetual W Geared Aust Fund is managed by Perpetual Investment Management Limited ( Perpetual Invest Mgmt Ltd ) using loan facilities which may be from a variety of sources ( Lenders ), and may include companies associated with the Perpetual group. Where funds are borrowed from companies associated with the Perpetual group, the terms are set on a commercial basis. Lenders may receive interest payments and other fees appropriate for providing such facilities. The Lenders may have the right to reduce the gearing level set for the Perpetual W Geared Aust Fund or terminate the lending facility. This means that the Perpetual W Geared Aust Fund may need to promptly reduce the gearing level by selling assets, which may force the sale at unfavourable prices. To control this risk, the Perpetual Invest Mgmt Ltd may establish alternate sources of funding to limit the exposure to any one lender. The gearing level of the Perpetual W Geared Aust Fund will generally not exceed 60% and will change daily due to factors such as market movements, applications, redemptions and changes to the level of borrowings. In certain circumstances, withdrawals in the Perpetual W Geared Aust Fund may be suspended by the Perpetual Invest Mgmt Ltd for instance, if the Perpetual W Geared Aust Fund s gearing level exceeds 75%. If a suspension occurs, the gearing level will promptly be reduced to 60% or lower, which will lift the suspension. Withdrawal requests received by the Perpetual Invest Mgmt Ltd during the suspension will be processed using the exit price applicable after the suspension is lifted. In the event of the Perpetual Invest Mgmt Ltd suspending withdrawals in the Perpetual W Geared Aust Fund, withdrawals from this Investment Option will also be suspended until the Perpetual Invest Mgmt Ltd lifts the suspension on the Perpetual W Geared Aust Fund (subject to any legislative requirements that may apply). Withdrawal requests received by us during the suspension will be processed using the exit price applicable to this Investment Option after the suspension is lifted. Reporting The operator of the Investment Service and administrator of the Super and Pension Service will provide all relevant reports such as confirmation of transaction reports (daily), distribution statements (quarterly), tax statements and financial statements (annually). Your reporting rights and entitlements will be outlined in the Offer Document, you were given on becoming a member of the Service. Entry prices The price of a unit is determined in accordance with the relevant Investment Option s Constitution ( Constitution ) and is based on the net asset value (assets less liabilities) of the Investment Option. It is calculated by dividing the net asset value by the number of units on issue. This price is then increased for the transaction costs (often referred to as transaction cost factors or buy spread) in buying assets for the Investment Option to determine the entry price. For further information on transaction cost factors or buy/sell spread costs, please refer to page 24. The investments of each Investment Option are normally valued each business day and entry unit prices are available from Client Services on The method of valuing a particular investment depends on the type of investment. Exit prices The exit price of units in an Investment Option is calculated by dividing the net asset value (assets less liabilities) by the number of units on issue. The price is then decreased for the transaction costs in selling assets of the Investment Option to determine the exit price (often referred to as transaction cost factors or sell spread). For further information on transaction cost factors or buy/sell spread costs please refer to pages