HUB24 Super Fund Annual Report for the year ended 30 June 2015 This is the Annual Report for the HUB24 Super Fund RSE registration number R1074659, ABN 60 910 190 523 ( Fund ) and should be read in conjunction with your Annual Statement as at 30 June 2015. This Annual Report is issued by The Trust Company (Superannuation) Limited ABN 49 006 421 638, AFSL number 235153, RSE licence number L0000635 as trustee of the Fund. The Fund is promoted by HUB24 Custodial Services Ltd (ABN 94 073 633 664, AFSL 239122) ( HUB24 ) which is a wholly owned subsidiary of HUB24 Limited. Page 1
Contents Welcome - HUB24 s Super Fund Annual Report About the HUB24 Super Fund About HUB24 Page 3 4 4 Investments 4 Objectives and Strategy 4 Investment options 5 Further information about available investment choices or options 6 Allocation of investment earnings 7 Fund s asset allocation for the year ended 30 June 8 Single investments exceeding 5% of Fund assets 8 Use of financial derivatives 8 Financial Statements 9 Audited accounts 9 Other Important information 11 Approved guarantee 11 Expense reserve 11 Compliance 11 Eligible Rollover Fund (ERF) 11 Government Surcharge Tax 12 Indemnity insurance The Trustee Contact us 13 How you keep us informed 13 12 12 Page 2
Welcome - HUB24 s Super Fund Annual Report Keeping in touch with what s happening in your super is becoming more important than ever. This year we ve made some changes to the look and feel of InvestorHUB, the online gateway to your account, including improving your mobile device access. These changes were made with you in mind, to help save you time, and make it easier to stay up to date with important information relating to your account. Improved access to your account As well as our dedicated iphone/ipad app, we ve now created a new Android app. These apps have been designed to give you complete and easy access to all the features, functionality and account reports currently available via your desktop computer. Download the app from the App Store or Google Play and simply click through via your mobile phone or tablet, to instantly keep track of your account anywhere, anytime. Our new updates led to HUB24 being awarded the Best Tablet/Smartphone Access by Investment Trends in the 2014 Platform Report*. In addition, we were ranked in the top three superannuation and investment platforms in Australia for functionality, against other long established players*. A new online service centre We re committed to making it easier for you to find the answers to any questions related to your account. SupportHUB is a new online service centre, accessible via InvestorHUB, where you can find user guides, frequently asked questions, videos and other helpful tools. You can also submit requests for help through SupportHUB and keep track of them. Making contributions easier We re always focused on improvements that can help you. The new pre-populated super choice fund nomination form makes it quicker to direct your employer superannuation contributions into your account. All you need to do is print the document from InvestorHUB, complete your employment details, sign and send the form directly to your employer. We re pleased for the Trustee to issue this annual report for the HUB24 Super Fund for the period ended 30 June 2015. If you have any questions about this report please contact your adviser or call us on 1300 854 994. Kind regards Andrew Alcock Managing Director, HUB24 *The Investment Trends December 2014 Platform Benchmarking Report was based on extensive analyst reviews of 22 platforms across 466 functional points. Page 3
About the HUB24 Super Fund The Fund is a public offer superannuation fund established under a trust deed that provides accumulation, account-based pension and transition to retirement pension accounts to help build your superannuation savings and draw a pension in retirement. The Fund has a number of benefits and features to help make your super account easy to manage: flexibility during your working life and retirement wide investment choice to help build and preserve your savings a range of insurance cover choices access to your account anytime award-winning technology About HUB24 HUB24 is a financial services company listed on the Australian Stock Exchange. HUB24's investment and superannuation platform offers a comprehensive range of investment options, with superior transaction and reporting solutions, for all types of investors individuals, companies, trusts, associations or selfmanaged super funds. HUB24 was established in 2007 by a team with a very strong track record of delivering market-leading solutions in the financial services industry. HUB24 is committed to offering a broad universe of investments via the platform. As an independent, nimble organisation with award-winning technology, we can react quickly to market developments and respond with the right solutions to cater to the different needs of both financial advisers and investors. Investments The Trustee has appointed HUB24 as the Investment Manager to invest and manage the assets of the Fund on terms contained in an agreement between the Trustee and HUB24. HUB24 selects and appoints a range of investment managers and portfolio managers for managed funds and managed portfolios and Approved Deposit Institutions (ADI s) for cash and term deposits, subject to approval from the Trustee, to manage the investments on behalf of members. For a full list of current investment options please refer to the Investment Menu available on InvestorHUB or from your adviser. Objectives and Strategy The general investment objectives of the Fund are: To offer you with a range of different investment options by potential return, risk profile and style to suit your individual circumstances and promote diversification of your strategies. To achieve competitive investment returns for you commensurate with risk. Page 4
In order to achieve the investment objectives, the investment strategy determined by the Trustee is to: Select an appropriate range of Managed Funds within each asset class based on managers capabilities, investment style and performance. Provide you with a selection of cash products (including Term Deposits) issued by Approved Deposit Institutions (ADI s). Approve an appropriate range of direct investment options (listed securities including Exchange Traded Funds and Listed Investment Companies) within selected asset classes. Provide members with access to a range of Managed Portfolios. The Trustee of the Fund considers each investment option as an investment strategy in its own right and aims to provide you with wide investment choices that will enable you and your adviser to select an investment strategy that takes into consideration: your personal needs your personal investment objectives and long-term goals and circumstances your risk tolerance, and the expected investment timeframe. With the help of your adviser, you can construct and implement an appropriate investment strategy by choosing investments from the range of available investment options within the Fund. You can change your investment strategy or options at any time. Your adviser is responsible for placing instructions on your behalf and ensuring your required investment strategies are implemented. The investment options available to you will depend on the product you hold. You should refer to the latest Investment Menu for the product you hold for details of the Investment Options currently available to you. A copy of the latest Investment Menu is available on InvestorHUB or from your adviser. Investment Options Neither the Trustee nor HUB24 manages the underlying investment options. Consequently, the Trustee and HUB24 have no control over the performance of the underlying investment options. However, the Trustee may place restrictions on the percentage that you may invest in a particular investment option. Please refer to the relevant Product Disclosure Statement and the Investment Menu for further details regarding any investment restrictions. Returns for investment options will generally be generated from growth assets and defensive (income) assets. Growth assets include shares (Australian and international), listed property & infrastructure and alternative assets. Defensive assets include fixed interest investments (Australian and international) and cash. Growth Assets Shares, property & infrastructure and alternative assets are generally considered high-risk and highreturn investments and are suitable for longer-term investors with a timeframe of five years or more. Historically, these growth assets have provided long-term growth well above inflation. However returns are likely to be volatile in the short term. Investors can expect a negative return once in every four to five years, which is why exposure to these assets is suited to longer term investors. Time greatly reduces, but does not eliminate, the volatility in these returns. Growth asset prices move in cycles, reflecting the underlying strength of the economy, political factors, industry trends and market sentiment. On any given day interest rate and inflation expectations, Page 5
company profits, dividends, economic growth figures and the rise or fall of currencies can impact these prices. Defensive Assets Fixed interest (Bond) investments are low- to medium- risk investment options suitable for investors with a timeframe of three years or more. Total bond returns can include income from interest payments and growth from price fluctuations if traded on the secondary market. In addition to providing a regular income stream, fixed interest can provide a stabilising effect during periods of share market volatility. Bond yields and prices can fluctuate regularly based on the economic outlook, inflation expectations, the rise or fall of currencies as well as the credit status and risk of the issuers of the fixed income securities. Bond investors can expect a negative return once in every five to six years. They tend to provide better returns than cash over the long term, but lower returns than property and shares. Cash and cash like instruments (including Term Deposits) provide the safest of the investment options (with lowest volatility), but generally the lowest return over the medium to long term. Investment in cash and cash like instruments are not expected to produce a negative return in any year. Diversification In order to reduce market risk, members should ensure that they spread investment across a range of asset sectors and investment options offered by the Trustee. As the performance of asset classes and sectors differ over time, holding investments with low or negative correlations reduces overall return volatility. Diversification can be achieved in the following ways: Spreading exposure across the different asset sectors; shares, property & infrastructure, alternatives and fixed interest and cash Holding a spread of investments within each asset sector; different countries, industries, companies and securities Investing in a number of funds managed by different fund managers in order to diversify manager risk. The level of exposure to the various asset sectors and investment options will be determined by the requirement to meet the individual needs of each member. Determining these needs is the joint responsibility of the member and financial adviser. The Trustee takes no responsibility in making this determination other than to provide a suitable list of investments and ensure that this list remains suitable for members at all times. Given the broader nature of investment choice (through a range of underlying investment options summarised above) across the Fund, the Trustee has a number of policies that outline how the Trustee manages its investment related responsibilities. HUB24, in conjunction with the Trustee, regularly reviews the overall investment strategy. Page 6
Further information about available investment choices or options The investment options available in the Fund as at 30 June 2015 fall generally into the categories as shown in the following table. For more details about the investment choices available, refer to the relevant PDS (including incorporated information) available on InvestorHUB. The Trustee may add or remove investment options from time to time, in consultation with HUB24. Managed portfolios A managed portfolio is a professionally-managed investment portfolio with a specific investment strategy, and can be single-sector or multi-sector. When investing in a managed portfolio, you invest in line with the composition of the manager s portfolio by purchasing ASX-listed securities and/or managed funds and/or other managed portfolios. The value of the portfolio is determined by the value of the underlying investments. The Fund provides access to a range of investment managers with different investment portfolio strategies and objectives to advise on a variety of managed portfolios. The managers design each portfolio based on a number of factors such as investment style, investment objectives and different risk profiles, and may use strategic and/or tactical asset allocation to achieve the investment objectives Exchange Traded Funds (ETFs) The Fund provides access to a range of ETFs. Exchange Traded Funds ( ETFs ) are investment funds, traded on an exchange, that invest in a basket of securities or other assets and that generally seek to track the performance of a specified index or benchmark (such as the S&P/ASX 200 Index). They are typically registered managed investment schemes and investors hold units in a unit trust rather than shares in a company that operates the investment fund. Each ETF security (or unit) represents an interest in a portfolio of securities, currencies or commodities. Further information about available ETFs may be found in disclosure documents issued by the relevant ETF provider. Listed Investment Companies (LICs) Listed investment companies are closed-end collective investment schemes similar to ETFs but structured as companies, not as trusts. Like ETFs, they invest in a basket of securities or other assets and may also be specifically defined to track an index or benchmark. Further information about LICs can be found in disclosure documents issued by the relevant company. Listed securities Members can invest in a selection of direct share securities and similar listed instruments. The Fund provides access to a broad selection of direct share securities predominantly from the S&P/ASX All Ordinaries Index. Term deposits The Fund provides access to term deposit accounts with a range of durations, typically three months, six months or one year. The Fund may provide access to other term deposits with differing durations and features. Further information about available term deposits can be found in disclosure documents issued by the relevant term deposit provider. The current terms offered are published on InvestorHUB each week (usually on a Monday). Managed funds The Fund offers access to a large range of wholesale managed funds, enabling diversification across the asset classes. Further information about available managed funds can be found in disclosure documents issued by the relevant underlying fund manager. Allocation of investment earnings The net return achieved by the investments selected by you and your adviser (after taking into account gains or losses of a revenue or capital nature and any expenses or tax applicable) and the cash holding in respect of a member (after allowances for tax and expenses including reasonable estimates for tax and expenses where the exact amount may not be known), is passed on to members accounts. Page 7
Your annual return is equal to the gross income generated by the selected underlying investment options less any relevant fees, costs and taxes during each financial year. More information about the fees and costs can be obtained by reviewing the fees and costs information in the current PDS (including incorporated information) applicable to your membership of the Fund. Any income, relevant fees, costs and taxes are used to update your account balances if you leave the Fund during the financial year. Amounts of fees, costs and taxes may be estimated where they are not actually known or apportioned as determined by, or on behalf of, the Trustee where they relate to the Fund as a whole. Fund s asset allocation for the year ended 30 June 2015 2014 Cash 28.5% 24.5% Fixed interest 14.5% 15.0% Property 4.3% 4.3% Australian shares 32.2% 36.8% International shares 18.7% 15.6% Alternatives* 1.8% 3.8% *Alternatives include investments in emerging markets, technical investment trading, commodities, and foreign exchange currencies and global infrastructure assets. More information about these investments can be obtained from your adviser or HUB24. Single investments exceeding 5% of Fund assets The following exceed 5% of the total of the Fund s assets. Investment Valuation method % of total assets Cash Redemption 19 Use of financial derivatives The Fund does not invest directly in derivative instruments. Investment managers may use derivatives in managing pooled investment vehicles in which the Trustee invests. The Trustee allows the use of derivatives within these vehicles, for certain circumstances including but not limited to: protecting the assets against, or minimise liability from a fluctuation in market values reducing the transaction cost, or setting the desired asset allocation or investment profile to obtain prices that may not be available to the Fund in other markets For further information on the use of financial derivatives, please refer to the relevant underlying disclosure documents for your chosen investment option(s) which are available from your adviser or InvestorHUB. Page 8
Financial Statements Audited accounts Included in this report is the audited abridged financial information. Audited financial statements and the auditor s report for the year ended 30 June 2015 are available on request from HUB24. Abridged financial information The following financial information is extracted from the Fund s audited financial statements as at 30 June 2015. Operating statement for the year ended 30 June 2015 2015 2014 $ $ Investment revenue Interest 1,697,064 803,130 Distributions 20,290,849 7,357,809 Changes in net market values 15,137,437 12,091,197 37,125,350 20,252,136 Contributions revenue Concessional contributions 15,077,104 5,942,678 Non-concessional contributions 73,884,354 43,400,740 Transfers in 389,590,052 203,403,051 478,551,510 252,746,469 Insurance recovery 8,883 7,911 Total revenue 515,685,743 273,006,516 Less: General administration expenses Adviser fees 9,771,153 2,709,847 Insurance costs 1,700,081 614,665 Plan management fees 3,070,864 1,037,967 Surcharge tax - 1,394 Other expenses 447,573 65,923 Total expenses 14,989,671 4,429,796 Benefits accrued before income tax 500,696,072 268,576,720 Income tax expense/(benefit) 845,645 711,819 Benefits accrued after income tax 499,850,427 267,864,901 Page 9
Statement of financial position as at 30 June 2015 Assets 2015 2014 $ $ Cash and cash equivalents Cash at bank 157,300,400 60,721,520 Trade and other receivables Distributions receivable 1,859,293 1,383,653 GST receivable 70,709 26,695 Investments Financial assets Direct shares and unit trusts 671,035,342 308,878,743 Tax assets Deferred tax assets 121,391 39,033 Total assets 830,387,135 371,049,644 Liabilities Trade and other payables Accounts payable Unsettled investment transactions 1,255,074 1,301,079 1,089,809 979,856 Tax liabilities Deferred tax liability 960,503 861,698 Income tax payable 539,056 2,699 Total liabilities 4,055,712 2,934,062 Net assets available to pay benefits 826,331,423 368,115,582 Represented by: Liabilities for accrued benefits Allocated to members accounts 826,115,747 367,999,157 Not yet allocated 215,676 116,425 826,331,423 368,115,582 Page 10
Other Important Information Approved guarantee The Trustee satisfies its capital requirements under Section 29 DA (3) of the Superannuation Industry (Supervision) Act through an approved guarantee to the sum of $5 million. A copy of the approved guarantee is available for review at the Trustee s offices. Expense reserve allowance The expense recovery is an allowance for costs relating to expenses of the Fund not covered by the expense recovery which may be deducted from member accounts. Transfers to the reserve include income, RITC and recovery of capital gain tax losses of members who have left the Fund. Transfers out cover the storage costs of archived records and the issue costs of annual member statements. Under the Trust Deed, the Trustee and its directors can be indemnified (out of Fund assets) from and against any liabilities and expenses incurred in its capacity as Trustee of the Fund. This indemnity extends to the Trustee s remuneration. Any such liabilities, expenses or remuneration may form part of the expense recovery. The expense recovery allowance is fully invested in the Fund Cash Account. Movement for the last three years. Transfers to reserve Transfers from reserve Balance Opening balance 26 2013 movement 42,435 444 42,017 2014 movement 74,683 275 116,425 2015 movement 99,251 0 215,676 Compliance The Fund is administered at all times to comply with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and all other relevant legislation. The Trustee has lodged with APRA all relevant annual returns and disclosure documents. The Trustee has not received a notice from APRA stating that the Fund is non-compliant with relevant law during the reporting period. No penalties have been imposed on the Fund and/or the Trustee for any kind of non-compliance during the 2014/2015 financial year. Eligible Rollover Fund (ERF) Subject to any obligation on the Trustee to pay superannuation benefits to the Australian Taxation Office, the Trustee may transfer your account balance to an ERF if: you haven t made a contribution within a 12 month period and your balance falls below a minimum amount of $2,000, we lose contact with you and can t locate you, or you no longer have a financial adviser appointed in relation to your account. The ERF we currently use is the Australian Eligible Rollover Fund and its contact details are as follows:- Page 11
Address: Locked Bag 5429 Parramatta NSW 2124 Telephone: 1800 677 424 Facsimile: (02) 9947 4411 Email: aerfenquiries@perpetual.com.au We ll tell you in writing at your last known address if we intend to transfer your account and we ll proceed if you don t respond with instructions on your account. Please note: the ERF has a different fee structure, different governing rules, different investment strategy and does not offer insurance benefits. On transfer to the ERF, you ll also cease to be a member of the Fund and your insurance cover (if any) will stop. If your account is transferred to the Australian Eligible Rollover Fund, you should obtain a copy of their product disclosure statement. Government Surcharge Tax During the reporting period, we may have received a surcharge assessment from the Australian Taxation Office (ATO). The amount payable in respect of members was deducted from the relevant member s account and remitted to the ATO at the time that it fell due. Indemnity insurance The Trustee maintains an appropriate level of professional indemnity insurance to protect its directors and officers from any liability they may incur in carrying out their duties. Protection from liability does not extend to loss incurred through gross negligence or willful misconduct and is subject to the terms of the relevant insurance policy. The Trustee The Trust Company (Superannuation) Limited (ABN 49 006 421 638, AFSL No. 235153) is the Trustee of the Fund and is responsible for making sure the Fund is run in accordance with the Trust Deed and governing legislation. The Trustee works on members behalf to ensure the best possible management and performance by the Fund and the Trustee s first and foremost responsibility is to protect and advance the interests of the Fund s members. The Trust Company (Superannuation) Limited is the issuer of this Annual Report. Contact us HUB24 Custodial Services Ltd (ABN 94 073 633 664) (AFSL 239122) Contact: Client Services Officer Mailing address: GPO Box 529 Sydney NSW 2001 Telephone: 1300 854 994 Fax: 1300 781 689 E-mail: admin@hub24.com.au Website: http://www.hub24.com.au/super If you have a complaint, you should contact HUB24 (see contact details provided above). We take complaints seriously as they give us information about how we can improve services to you. We have an internal complaints handling policy which you can access free of charge. For more complex issues, the Trustee will keep you updated regularly as to the progress of your complaint. Page 12
How you keep us informed You should contact HUB24 if you wish to: advise us of a change of your name or contact details change your beneficiary(ies) apply to increase or change your insurance cover claim a benefit from the Fund receive a copy of the accounts and other Regulatory documents for the Fund receive a hard copy of this Annual Report in the mail (free of charge) Page 13