We re writing to provide you with your copy of the 2017 Annual Report for the AvWrap Retirement Service (the Fund).

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1 «Cust_Acct_Name» «Address_Line1» «Address_Line2» «Address_Line3» «Suburb» «State» «Postcode» «Country» Date Dear Member, AvWrap Retirement Service Annual Report year ended 30 June 2017 We re writing to provide you with your copy of the 2017 Annual Report for the AvWrap Retirement Service (the Fund). For your convenience, we ve also made this report available online at yourwrap.com.au/acquire under the Product information tab. If you no longer require a printed copy, please us at wrapsolutions@macquarie.com or call us on Need help? Please speak to your adviser or contact us on Yours sincerely, Renato Mota General Manager Distribution IOOF Holdings Limited IOOF Investment Management Limited ABN Australian Financial Services Licence #230524

2 Macquarie Investment Management Limited ABN AFSL (MIML) is the Operator of Acquire Investment Service and AvWrap Investment Service (IDPS). IOOF Investment Management Limited ABN AFSL RSEL L (IIML) is the trustee of Acquire Retirement Service and AvWrap Retirement Service, part of the AvWrap Retirement Service ABN RSE R (Fund). IIML has appointed Macquarie Investment Management Limited ABN AFSL (MIML) as the administrator of the Fund, and Bond Street Custodians Limited ABN AFSL (BSCL) to hold the Fund s investments in custody. BSCL also liaises with the product issuers of those managed investments that appear on the investment menu. BSCL and MIML are wholly owned subsidiaries of Macquarie Bank Limited ABN In deciding whether to acquire or continue to hold an investment you should consider the current Investor Directed Portfolio Service (IDPS) Guide or Product Disclosure Statement (PDS) which is available from us. MIML is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959, and MIML's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML. This information has been prepared by MIML and does not take into account your objectives, financial situation or needs. Before acting on this information you should consider whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. Investments in the IDPS or Fund, other than any holdings in term deposits or other deposits with Macquarie Bank Limited ABN are not deposits with or other liabilities of Macquarie Bank Limited or of any Macquarie Group company, and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank Limited, MIML, IIML, Macquarie Life Limited ABN AFSL nor any other investment managers referred to in the relevant IDPS Guide or PDS, nor any other member company of the Macquarie Group guarantees the performance of the IDPS or Fund or the repayment of capital from the IDPS or Fund or any particular rate of return of the investments purchased through the IDPS or Fund. Macquarie Life Limited ABN AFSL nor any other investment managers referred to in the relevant IDPS Guide or PDS, nor any other member company of the Macquarie Group guarantees the performance of the IDPS or Fund or the repayment of capital from the IDPS or Fund or any particular rate of return of the investments purchased through the IDPS or Fund.

3 Acquire Retirement Service and AvWrap Retirement Service Annual Report to members for the year ended 30 June 2017 IOOF Investment Management Limited ABN AFSL RSEL L

4 Contents Acquire Retirement Service and AvWrap Retirement Service Contents Welcome 1 Investment strategies and asset allocation 2 Important information 5 Government reforms in superannuation 7 Abridged financial statements 10 Acquire Retirement Service and AvWrap Retirement Service are part of the AvWrap Retirement Service superannuation fund (Fund) RSE R The Trustee for the Fund is IOOF Investment Management Limited ABN AFSL RSEL L (IIML, the Trustee, we, us, our). IIML has appointed Macquarie Investment Management Limited (MIML) ABN AFSL as the administrator of the Fund, and Bond Street Custodians Limited (BSCL) ABN AFSL to hold the fund s investments in custody. BSCL and MIML are wholly owned subsidiaries of Macquarie Bank Limited MIML is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MIMLs obligations do not represent deposits or other liabilities of Macquarie Bank Limited. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML. Investments in Acquire Retirement Service and AvWrap Retirement Service are not deposits with or other liabilities of Macquarie Bank Limited or of any Macquarie Group company, and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank Limited, MIML, Macquarie Life Limited ABN AFSL , Macquarie Equities Limited ABN , any other investment managers referred to in this Annual Report, nor any other member company of the Macquarie Group guarantees the performance of Acquire Retirement Service and AvWrap Retirement Service or the repayment of capital from Acquire and AvWrap Retirement Service. The information contained in this Annual Report is dated 15 December 2017 and is general information only. We have not taken into account your objectives, financial situation or needs. You should consider the appropriateness of this information, taking into account your objectives, financial situation and needs and the applicable PDS available from us or your adviser, before acting on any of the information in this Annual Report. 2

5 Welcome 15 December 2017 Dear Member, Welcome to the Annual Report for the Acquire Retirement Service and AvWrap Retirement Service for the year ended 30 June This Annual Report provides you with general information about the management and financial position of the AvWrap Retirement Service superannuation fund (Fund), a legislative update and details of matters concerning the investments in the Fund (such as overall asset allocation). This report should be read with your Annual Statement for the year ended 30 June 2017, which gives details of your benefits in the Fund. Yours sincerely, Renato Mota General Manager Distribution IOOF Holdings Limited This annual report includes information on: Acquire Retirement Service and AvWrap Retirement Service Super; accumulation superannuation products, and Acquire Retirement Service and AvWrap Retirement Service Pension; retirement income solutions. 1

6 Investment strategies and asset allocation The Trustee formulates and gives effect to investment strategies and objectives for the Fund. These strategies and objectives take into account the whole of the circumstances of the Fund, including investment risk, diversification, liquidity and the ability of the Fund to discharge liabilities. The Trustee has placed restrictions on certain investments designed to reduce the potential for large losses by encouraging diversification, ensuring adequate liquidity, and satisfying regulatory requirements. In line with our obligations, the Trustee reviews these strategies and applicable limits on an ongoing basis. Please contact your adviser for further information on these limits or refer to the relevant Product Disclosure Statement (PDS). Acquire Retirement Service and AvWrap Retirement Service allows you to spread your super or pension account across many investment strategies, choosing from a range of investment options and product issuers. The combination of investments you choose will be based on your individual circumstances. Information on the individual investment options can be found in the PDS available from ClientView or from your adviser. You should consider the PDS before deciding to invest in, or switch between, investment options. Investment strategy Cash Enhanced cash Australian fixed interest Objective Aims to achieve returns over the short-term with a high level of capital security. Aims to achieve returns over the short-term with a medium to high level of capital security. Aims to achieve returns via income and capital growth over the medium to long-term with a high to medium level of capital security. Strategy Exposure to short-term money market securities and fixed interest securities with maturities of less than 12 months. Exposure to short-term money market securities and fixed interest securities with maturities that can be greater than 12 months. Exposure to money market securities and fixed interest securities, both long and shortterm, of Australian governments, semi-government, companies and asset backed securities. Target return (% pa) 3.0% to 4.5% 3.0% to 4.5% 3.0% to 5.0% Target risk (% pa) 0.5% to 1.5% 0.5% to 4.0% 2.5% to 5.0% Standard Risk Measure 1 1 to to 5 (SRM) range Suggested minimum timeframe No minimum 3 years 4 years Sub strategy N/A N/A Term deposits Annuities Sector specific 1 Term deposits and Annuities are assigned an SRM of 1. Enhanced Specialist Diversified Investment strategy Global fixed interest Australian property Global property Objective Aims to achieve returns over the medium to long-term via income and capital growth with a medium to low level of capital security. Aims to achieve returns over a medium to long-term via income and capital growth with a medium to low level of capital security. Aims to achieve returns over a medium to long-term via income and capital growth with a medium to a low level of capital security. Strategy Exposure to money market securities and fixed interest securities, both long and shortterm, of global government, semi-government companies and asset backed securities. Exposure to Australian property equity, in listed, unlisted and direct forms. Exposure to global property equity, in listed, unlisted and direct forms. Target return (% pa) 3.0% to 5.5% 6.0% to 8.0% 5.5% to 7.5% Target risk (% pa) 3.0% to 6.0% 8.0% to 18.0% 8.5% to 17.5% SRM range 4 to 6 5 to 7 5 to 7 Suggested minimum timeframe 4 years 6 years 6 years Sub strategy Sector specific Enhanced Specialist Diversified Listed Unlisted Diversified Listed Unlisted Diversified 2

7 Acquire Retirement Service and AvWrap Retirement Service Investment strategies and asset allocation Investment strategy Australian shares Global shares Specialised global shares Objective Strategy Aims to achieve returns over a medium to long-term via income and capital growth with a low level of capital security. Exposure to equity of Australian companies, via shares and other securities primarily listed on the ASX. Aims to achieve returns over a medium to long-term via income and capital growth with a low level of capital security. Exposure to equity of global companies, via shares and other securities primarily listed on approved exchanges. Aims to achieve returns over a medium to long-term via income and capital growth with a low level of capital security. Exposure to equity of global companies, via shares and other securities primarily listed on approved exchanges. Investments may focus on specific sectors, themes, countries or regions. Target return (% pa) 6.5% to 10.0% 6.0% to 8.0% 5.5% to 8.5% Target risk (% pa) 15.5% to 21.0% 11.0% to 17.0% 11.0% to 23.0% SRM range 6 to 7 6 to 7 6 to 7 Suggested minimum timeframe 6 years 6 years 8 years Sub strategy Index Small cap Specialist Unlisted Sector specific Diversified Index Diversified Sector specific Specialist Unlisted Investment strategy Alternative investments Australian listed securities Objective Aims to achieve returns over a medium to long-term via income and capital growth with a medium to low level of Aims to achieve returns over a medium to long-term via income and capital growth with a low level of capital security. capital security. Strategy Exposure to a wide range of investments, including but not limited to shares, Exposure to securities primarily listed on the ASX or expected to be listed. bonds, property, funds, futures, options, commodities, insurance contracts and derivatives. Returns will be driven by factors other than traditional asset class exposure. Target return (% pa) 3.5% to 12.0% 6.5% to 10.0% 2 Target risk (% pa) 4.0% to 25.5% 15.5% to 24.2% 2 SRM range 3 to 7 6 to 7 3 Suggested minimum timeframe 11 years 9 years Sub strategy Absolute return Commodities Real assets Insurance Diversified Common shares Listed company options Listed warrants and hybrid securities Share rights ETFs/LITs/LICs 4 Listed property investments 4 2 Range assumes a diversified investment portfolio. 3 Please refer to the Standard Risk Measure (SRM) section of the PDS for more information. 4 The Trustee may categorise selected listed securities such as ETFs, LITs, LICs and Listed Property investments to another investment strategy where such investment strategy is more consistent with the underlying investment characteristics of the security. 3

8 Acquire Retirement Service and AvWrap Retirement Service Investment strategies and asset allocation Investment strategy Conservative Balanced Growth Objective Strategy Aims to achieve returns over the short to medium-term via income and capital growth with a medium to high level of capital security. A diversified mix of income assets such as money market, and fixed interest securities, and growth assets such as property and shares. The weighting to growth assets will generally not exceed 33%. May include absolute return, private equity and other alternative investments. Aims to achieve returns over the medium to long-term via income and capital growth with a medium to low level of capital security. A diversified mix of income assets such as money market, and fixed interest securities, and growth assets such as property and shares. The weighting to growth assets will generally fall between 33% and 67%. May include absolute return, private equity and other alternative investments. Aims to achieve returns over the long-term via income and capital growth with a low level of capital security. A diversified mix of income assets such as money market, and fixed interest securities, and growth assets such as property and shares. The weighting to growth assets will generally exceed 67%. May include absolute return, private equity and other alternative investments. Target return (% pa) 4.0% to 6.5% 5.0% to 7.5% 6.0% to 8.5% Target risk (% pa) 3.5% to 7.0% 5.0% to 13.0% 11.0% to 16.5% SRM Range 3 to 4 4 to 6 6 Suggested minimum timeframe 3 years 5 years 7 years Sub strategy Not applicable Not applicable Not applicable Asset allocation The table below shows how the Fund is invested across different asset classes. Asset class 30/06/ /06/2016 Cash % 19.00% Commodities 0.05% 0.04% Australian equities 26.48% 27.35% International equities 20.92% 18.38% Australian Fixed interest 14.45% 14.47% International fixed interest 8.48% 9.08% Property 7.49% 8.47% Other 3.74% 3.21% Total 100% 100% Through an Acquire Retirement Service or AvWrap Retirement Service account, you can invest in a number of different term deposits, managed investments and approved ASX-listed securities. If a managed fund invests across a number of asset classes, we will treat the asset allocation based on a look through basis using the managed fund s individual asset allocations. The asset allocation for each managed fund is determined by the investment managers and provided either by the investment managers directly or from a third party 6. Asset allocations can vary over time within ranges specified by the individual product issuers. Information on the asset allocation ranges for the individual investment options can be found in the PDS. 5 Includes term deposits. 6 All asset allocations in this document were current at the time of publishing. 4

9 Important information Amendments to the Fund s trust deed There were no amendments to the trust deed during the 2016/17 financial year period. Significant events During this financial year, a significant event notice was issued on 1 October 2016 regarding Macquarie transferring part of its life insurance business to Zurich Australia Limited. A copy of all significant event notices can be accessed at yourwrap.com.au/acquire Changes to offer documents During the financial year the following change was made to the offer documents for products offered through the Fund: a Supplementary Product Disclosure Statement (SPDS) was issued on 1 October 2016 updated Further Information Booklets (FIBs) were issued 1 February Following the end of this financial year, there were some changes to offer documents for products offered through the Fund, as follows: updated Technical Information Booklets (TIBs) were issued 1 July 2017 an updated SPDS was issued 30 September 2017 updated FIBs were issued 30 September 2017 updated TIBs were issued 30 September A copy of the latest offer documents can be accessed at yourwrap.com.au/acquire Ongoing changes to investment strategies and available investment options The Investment Menu outlines all available investment strategies and investment options made available by the Trustee to you and your adviser. The investment strategies and investment options available within the Fund are subject to change from time to time, at the discretion of the Trustee. Any changes to investment strategies and available investment options will be published on a monthly basis in the Investment Menu available from yourwrap. com.au/acquire/supermenu Consolidation of multiple accounts Each year, the Trustee is obliged to identify and review members who hold more than one superannuation account within the Fund. Where the Trustee reasonably determines that it is in the best interests of the member, the member s superannuation benefits may be consolidated into a single account. Members may be provided with the opportunity to elect not to consolidate their accounts. Trustee Board The Board of the Trustee is comprised of a majority of independent directors. Information about the Trustee s directors and executive Officers is available from yourwrap.com.au/acquire Accessing your Annual Report You can view the latest Annual Report for the Fund online at any time by visiting yourwrap.com.au/acquire Further information More information about the Fund is available from yourwrap.com.au/acquire, including: the Trustee company s constitution and financial statement for the previous financial year the trust deed for the Fund information about the Trustee s directors and executive officers policies relating to conflicts management and proxy voting. Trustee and fund management information The Trustee of the Fund is IOOF Investment Management Limited ABN AFSL RSEL L The Board of the Trustee comprises of one managing director and five independent non-executive directors. During the 2016/17 financial year, the Fund held the following assets directly or indirectly with a value of greater than 5 per cent of the Fund s total assets: in Macquarie Group Limited ($ million) in Russell Investment Management Limited ($ million), and in Magellan Asset Management Limited ($ million). The Trustee is covered by the professional indemnity insurance taken out by IOOF. The Trustee has formulated a strategy for establishing, implementing, managing and maintaining an ORFR in accordance with the relevant superannuation prudential standard. The APRA levy To fund the costs associated with implementation of the Government s SuperStream reforms, a temporary SuperStream levy is imposed on Australian Prudential Regulation Authority (APRA) regulated superannuation funds from 1 July 2012 until 30 June The next APRA levy instalment will be debited from members accounts no later than February

10 Acquire Retirement Service and AvWrap Retirement Service Important information Eligible Rollover Fund (ERF) The Trustee reserves the right to pay all accounts with a balance up to $10,000 to an ERF, which accepts small amounts. The ERF chosen is called the Super Safeguard Eligible Rollover Fund. APRA has approved the Super Safeguard Eligible Rollover Fund to operate as an ERF. The Trustee is Trust Company Superannuation Services Limited ABN AFSL RSEL L Should your benefit be transferred to the Super Safeguard Eligible Rollover Fund, all subsequent enquiries relating to your benefit should be directed to: Super Safeguard Eligible Rollover Fund GPO Box 3426 Melbourne VIC 3001 Phone: Fax: enquiries@supersafeguard.com.au Website: supersafeguard.com.au Should your benefit be transferred to the Super Safeguard Eligible Rollover Fund: your interest in the Fund, including your insurance cover, will cease you will become a member of the Super Safeguard Eligible Rollover Fund and will be subject to its governing rules your account will be invested according to the investment strategy of the Super Safeguard Eligible Rollover Fund the Super Safeguard Eligible Rollover Fund may charge fees to your account, and you may not be offered insurance cover. You should refer to the PDS for the Super Safeguard Eligible Rollover Fund for more information. We reserve the right to change the chosen ERF without notice to you. Complaints If you have a complaint, please contact your adviser and discuss your enquiry or complaint with them. If you are not satisfied with the result, please contact us on Alternatively please write to us at the below address. Acquire GPO Box 4045 Sydney NSW 2001 We will respond to your written enquiry or complaint as soon as possible and always within 45 days of receipt. If you are still not satisfied with our response after 90 days, you may wish to refer the matter to the Superannuation Complaints Tribunal, an independent body set up by the Federal Government to review trustee decisions relating to individual members. You can contact the tribunal on Further information The relevant PDS is available from either your adviser, by contacting us or online at yourwrap.com.au/acquire. 6

11 Government reforms in superannuation Changes and developments in superannuation Superannuation reforms commenced 1 July 2017 New reforms to the tax treatment of superannuation commenced on 1 July These reforms were originally announced in the 2016 Federal Budget and were passed into law in November The key changes are: 1. Transfer balance cap This is a limit of $1.6 million to the amount of super benefits that can transfer to the tax-free pension phase. The cap applies to the value of existing retirement-phase pensions on 30 June 2017 and any new pensions that commence from 1 July The amount counted against the cap is reduced by any lump sum withdrawals or rollovers from the pension after 1 July 2017 and any amounts that relate to compensation for personal injury. The Trustee is required to report to the ATO the 30 June 2017 value of all existing pensions and the commencement value of new pensions, along with any post 1 July 2017 withdrawals from pension accounts and personal injury compensation contributions. 2. Tax on earnings of transition to retirement (TTR) pensions From 1 July 2017, investment earnings on TTR pensions will be taxed at 15 per cent the same basis as accumulation super accounts. The Trustee has taken advantage of tax relief available for these pensions and any capital growth on eligible investments to 30 June 2017 will not be taxable if investments are sold after 1 July The value of TTR pensions are not counted under the transfer balance cap or reported to the ATO until age 65 or earlier retirement. 3. $100,000 non-concessional contributions cap The annual non-concessional contribution cap has reduced to $100,000 from 1 July 2017, or up to $300,000 over 3 years if under age 65. Also this cap will drop to $0 for 2017/18 if the member s total super balance across super and pension accounts on 30 June 2017 is $1.6 million or more. Where balances are between $1.4 million and $1.6 million, the ability to bring forward any future years cap entitlements will be restricted. This total super balance is assessed 30 June each year to determine the ability to make non-concessional contributions for the following financial year. The Trustee will report to the ATO, the withdrawal value on 30 June 2017 for all super and pension accounts, so the ATO can calculate the total super balance for each member. 4. Tax deductible personal super contributions for employees From 1 July 2017 employees with assessable income will be able to claim a tax deduction for personal contributions to super. This means many more members will be able to make pre-tax super contributions, without having to enter into salary sacrifice arrangement with their employer. Before claiming all personal contributions as a tax deduction, members should consider any potential Government co-contribution if no tax deduction was claimed. 5. $25,000 concessional contributions cap The annual concessional contributions cap has reduced to $25,000 per annum for 2017/18. For the 2018/19 and later years, any unused cap amount can be carried forward and contributed in a later year for up to 5 years, but only capturing unused amounts accruing from 1 July 2018 and only accessible for members with a total super balance less than $500, Other tax changes from 1 July 2017 The income threshold for additional tax on concessional contributions for high income earners (Division 293 tax) has reduced to $250,000. Also the spouse income threshold for a tax offset for spouse contributions has increased to $37,000 per annum. However anti-detriment payments for lump sum death benefits are abolished where death is after 30 June 2017 or where the death benefit is paid after 30 June Superannuation thresholds for 2017/18 Concessional contributions cap $25,000 NCC cap $100,000; or $300,000 over 3 years if under age 65 and less than $1.4 million in super and pension on 30 June 2017, or $200,000 over 2 years if under age 65 with between $1.4 million and $1.5 million in super and pension on 30 June $0 with $1.6 million or more in super or pension on 30 June Superannuation guarantee (SG) rate 9.5% SG maximum contributions base $52,760 ordinary time earnings per quarter or $211,040 pa (up from $51,620 per quarter 2016/17). The maximum contributions base cannot generate an annual contribution amount that would exceed the concessional contributions cap. 7

12 Acquire Retirement Service and AvWrap Retirement Service Government reforms in superannuation Superannuation thresholds for 2017/18 Preservation age Age 56 for those who turned age 56 before 1 July Benefits can be accessed on retirement Age 57 for those who turn age 56 after 30 June % tax on low rate threshold (below) Low rate threshold $200,000 (up from $195,000 for 2016/17). 0% tax under age 60 for cash lump sums CGT cap amount $1,445,000 (up from $1,415,000 for 2016/17). excluded from NCC cap Government co-contribution income Full co-contribution $36,813 p.a. or less (up from $36,021 pa 2016/17). No co-contribution $51,813 pa or more (up from $51,021 pa 2016/17). Spouse contributions tax offset Maximum of $540 if annual spouse income less than $37,000 (up from $10, /17). Offset ceases at $40,000 (up from $13, /17) Departing Australia Super Payment 35% on taxable component (65% for working holiday makers). tax rate Centrelink Age pension age Age 65 if you turn age 65 before 1 July Age 65 and 6 months if you turn age 65 after 30 June Age pension age increases by 6 months every 18 months from 1 July 2017 until it reaches age 67 by 1 July Proposed super reforms to commence 1 July 2018 The Government has proposed further changes to super to commence 1 July These changes have been introduced to parliament, but are not yet law. First home saver super scheme: From 1 July 2018, super fund members will be able to request a withdrawal of voluntary contributions (personal contributions and salary sacrifice contributions) made since 1 July 2017 to help purchase a first home. Voluntary contributions of up to $15,000 a year or $30,000 in total plus ATO calculated earnings can be withdrawn. Note that only 85 per cent of voluntary concessional contributions are able to be accessed. Members have 12 to 24 months after the funds are released to enter into a contract to purchase or build their first home. Downsizer contributions to super: Members and spouses aged 65 or more can contribute up to $300,000 each of the proceeds of the sale of their main residence, where the sale occurs after 1 July The contributions are not counted under the non-concessional contributions cap and no maximum age or work test applies. To make downsizer contributions, the individual or their spouse must have owned the property for at least 10 years and made the contribution within 90 days of settlement. This contribution is only able to be triggered once, even if the full $300,000 is not used future sales will not qualify for additional contributions. Super guarantee to exclude salary sacrifice: Salary sacrifice contributions will no longer count under an employer s obligation to make compulsory Super guarantee contributions. From 1 July 2018 an employer will be required to make contributions of 9.5 per cent of ordinary time earnings before any salary sacrifice contributions are determined. Fund choice for new enterprise agreements: Enterprise agreements and workplace determinations signed from 1 July 2018 must ensure that employees have full choice of which super fund can receive compulsory employer contributions. Employers will be required to issue new employees with a Standard Choice Form and provide a form to existing members on request. Currently an enterprise agreement can fix which super fund(s) contributions can be made to, and employees are deemed to have made a choice of fund by voting to approve the enterprise agreement. 8

13 Acquire Retirement Service and AvWrap Retirement Service Government reforms in superannuation ATO developments Single Touch Payroll to start 1 July 2018 Single Touch Payroll is where employers report employee payments and PAYG withholding amounts to the ATO at the time they are paid. Payments include salary, wages, bonuses, termination payments. Employers are also required to report super contributions when they are paid. Employees will be able to see payment details and amounts withheld through their mygov account. Single Touch Payroll reporting is compulsory from 1 July 2018 for employers with 20 or more employees on 1 April 2018, and the Government intends to extend it to smaller employers from 1 July As part of Single Touch Payroll, the Government announced it will introduce streamlined processes for providing TFN declarations and choice of super fund forms. New employees can provide their TFN declaration and can make a choice of fund electronically using their new employer s payroll software, payroll provider or through mygov as part of their commencement process. Centrelink developments Income Stream Reviews direct reporting to Department of Human Services Before the end of 2018, under changes to the legislation, ongoing paper Centrelink schedules will not be issued and the fund will be required to provide a direct report of all pensions (including TTR Pensions) to the Department of Human Services in July and February. Paper Centrelink schedules will continue to be issued when a pension commences and will still be available online if required. Super funds to report to the ATO on a real time basis in 2018 Currently super funds make an annual report to the ATO after the end of the financial year of all the contributions received during the year plus the account balances at the end of the year for all pension and super accounts. For the 1 July 2017 super reforms, the Trustee will make an additional report setting out the values of existing retirement phase pensions on 30 June 2017, the value of any new pensions plus any withdrawals or commutations from pension accounts after 1 July This report will be provided on a monthly basis for new pensions and new withdrawals from December Over the calendar year 2018 these reports will be replaced by two ongoing reports to the ATO: Member Account Attribute Service from April This provides account identification details to the ATO, such as TFN, member details, account number etc. Once reported to the ATO, only new or changed information will be reported to the ATO within 5 business days the change, such as a new account opening, an account closing, name change etc Member Account Transaction Service after 1 July This report will provide all contributions received; new pension accounts commenced, and any withdrawals from pension accounts within 10 business days of the transaction occurring. The July report will also include the 30 June values of the withdrawal benefit and the account balance for all super and pension account in the fund. Where possible information reported by the Trustee to the ATO will be uploaded onto the individual s mygov account as soon as available. 9

14 Abridged financial statements Set out below are the abridged financial statements detailing the Fund s financial transactions for the year ended 30 June If you would like to obtain a copy of the full audited fund financial statements and related audit reports for the year (free of charge), please contact our client services team or us. The auditor has issued an unmodified audit report in respect of the financial statements. Extract of accounts for the year ended 30 June 2017 ($ 000) 2016 ($ 000) Revenue Investment income 31,108 5,923 Employer contributions 3,060 3,354 Member contributions 21,623 15,212 Transfers from other funds 18,296 24,777 Total revenue 74,087 49,266 Expenses Benefits paid 32,688 37,251 Management fees 5,000 5,097 Group life and income protection premiums Income tax expense (218) (1,895) Total expenses 37,984 40,942 Increase in members funds 36,103 8,324 Balance brought forward 375, ,820 Net Assets available for Member Benefits 411, ,144 Represented by Assets Investments 388, ,301 Cash and cash equivalents 18,239 12,243 Sundry debtors 4,912 3,256 Current tax asset 1,186 1,778 Total assets 412, ,578 Liabilities Creditors and accruals Deferred tax liability Total liabilities 1, Member benefits 410, ,271 Net assets Equity Operational risk financial requirement reserve Total equity

15 Acquire Retirement Service and AvWrap Retirement Service Abridged financial statements Operational Risk Financial Requirement The Operational Risk Financial Requirement (ORFR) has been established to meet the requirements of Prudential Standard SPS 114 Operational Risk Financial Requirement. The prudential standard requires the Trustee to maintain adequate financial resources to address losses arising from operational risks that may affect the Fund. Investment earnings generated by the ORFR are credited to the ORFR account. The ORFR may be invested in: Cash and/or cash equivalents Unlisted unit cash trusts, and Term deposits. As part of the Trustee s regular review of the Fund s investment strategy, the Product Investment Committee and the Trustee will review and revise, as necessary, the investment strategy of the ORFR. ORFR Reserve 2017 ($ 000) 2016 ($ 000) 2015 ($ 000) Opening balance Transfer to reserves Closing balance Should an operational risk event occur in the future, additional deductions against members accounts may be required to restore the ORFR back to the target amount. Concentration of assets of the Fund As at 30 June 2017, no underlying investments exceeded five per cent of the total assets of the Fund. The Trustee acknowledges that, as a result of the discretion which can be exercised by account holders, individual accounts may have a greater than five per cent exposure to a single investment. Further, the Trustee acknowledges that when considered in aggregate (across all managed fund options in which the Trustee holds assets on behalf of members of the Fund), the Fund may be construed as having a total exposure to a single shareholding (or to a composite interest in the investment assets of a single issuer) and this exposure may exceed five per cent of the total value of Fund assets. Derivative policy Derivatives may be used in accordance with the investment strategy and objectives of the Fund and at the investment option level in order to: to protect the investment from upward or downward movements in rates or prices through hedging protect funds from the range of market risks change the overall asset allocation in a timely manner without exposure to the timing and liquidity constraints or higher transaction costs associated with the physical market permit ongoing management of funds invested during periods of uncertainty where liquidity is not available in the physical market minimisation of transaction costs associated with spread on physical market transactions facilitating switching between asset classes or as an alternative to physical investment. Derivatives will not be used to gear funds, for speculative purposes or trading. The investment managers of the underlying funds which members elect to invest in may use derivatives such as options, futures, and swaps. The Trustee has controls and procedures in place relating to the investment managers derivative use in order to ensure that it is suitable to the Trustee s and its members own investment strategies and objectives. Allocation of earnings into members accounts Earnings from a particular investment of the Fund will be allocated into the members accounts in proportion to the member s interest in the investment. 11

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17 Acquire Retirement Service and AvWrap Retirement Service Abridged financial statements 13

18 IOOF Investment Management Limited Level 6, 161 Collins Street Melbourne VIC MW337 12/17