Investment Objective
All contributions and assets of the Fund will be invested by the Trustee in accordance with the Fund’s investment strategy. The Trustee’s objective is to exceed the average annual inflation rate over the medium to long term by at least 2% p.a. Thus, for example, if the long term inflation rate is 2% p.a.,
the Trustee will be aiming to earn at least 4% p.a.

The Trustee has broad powers of investment and is authorised to invest in any investments which it, in its absolute discretion, decides are appropriate. This is always subject to the limitations imposed by legislation and prudential standards.

The Fund offers two investment choices, balanced and conservative. Investment choice is available in both the Accumulation Fund and the Pension Fund. More information is available on the balanced and conservative funds on pages 12 and 13 of the Product Disclosure Statement dated 1 July 2008.

When choosing investments, the Trustee considers the following (among other things):

• the level of investment earnings (return) which it is hoping for; and
• the level of risk with which it is comfortable.

Historically, growth assets such as Australian and overseas shares, and property, carry a higher level of investment risk over shorter periods, with the possibility of higher returns over the longer term. Returns may be negative in some years.

Defensive assets such as bonds, cash and deposits have a lower investment risk, but offer lower returns in the long run.

Investment Strategy
The Trustee formulates its Investment Strategy after taking into account the advice of such professionals as the Trustee considers necessary. Broadly, in giving effect to its Investment Strategy, the Trustee seeks to invest in a broad spread of investments including equities and fixed interest securities, so as to ensure adequate liquidity to meet all benefits payable, and to provide returns satisfactory to members.

Balanced Fund
The asset allocations and more information on the balanced option for the Accumulation and Pension Funds can be found on page 12 of the PDS dated 1 July 2008.

Conservative Fund
The asset allocations and more information on the conservative option for the Accumulation and Pension Funds can be found on page 13 of the PDS dated 1 July 2008.

Ethical Investments
The Trustee and the Investment Manager do not take into account environmental, social or ethical considerations, nor labour standards, when investing, retaining or divesting investments of the Fund.

Who manages the investments?
Whilst the Trustee does have ultimate responsibility for the management of the Fund’s investments, the Trustee does not implement any direct investment. Instead, the Trustee utilises the services of the Investment Manager.

Asset Allocation definitions
• Cash includes at-call deposits, bank deposits, cash management accounts and short term deposits.
• Australian Fixed Interest includes government and corporate bonds, debentures, term deposits, mortgages, listed income securities, hybrid securities, preference shares, convertible notes, corporate notes, fixed interest and mortgage styled Managed Funds and bank bills.
• Australian Shares includes ordinary shares, options, stapled securities and partly-paid shares that are listed on a recognised Stock Exchange in Australia and Managed Funds that have the majority of their assets invested in Australian shares.
• International Shares includes direct investments in shares listed on a recognised overseas Stock Exchange and Managed Funds that have the majority of their assets invested outside Australia.
• Australian Property includes real property, property syndicates, Property Managed Funds and both listed and unlisted property and/or infrastructure trusts and securities.

Reserving Policy
The Trustee’s reserving policy is to retain a proportion of earnings to help smooth the crediting rate from year to year.
It is anticipated that the average level of reserves will represent approximately 2% to 3% of the Fund assets with an upper limit of 5%. The actual level of reserves will be determined by the Trustee from time to time and will depend on the current investment environment.
The reserve will be invested in accordance with the Fund’s Investment Strategy as outlined above.

Understanding risk and returns
Investment risk means the value of your investment could fall. Rises and falls in investment value occur for a variety of reasons. Factors that can negatively impact on your investments include:
• market risk – i.e. the risk that negative events such as poor economic performance or adverse political events adversely affect investment performance;

• changes in government policies and laws – i.e. the risk that polices or laws change and adversely affect investments;
• movement in currency markets – i.e. the risk that the value of overseas currency falls against the Australian dollar, meaning that overseas assets fall in value in $A terms;
• changes in interest rates – i.e. the risk that interest rates rise and have a negative effect on the value of non-cash investments;
• company risk – i.e. the risk that a particular company in which the Fund invests performs poorly, resulting in a decrease in its value; and
• investment decisions made by underlying fund managers – i.e. the risk that a poor investment decision is made resulting in a decrease in the value of the underlying investments.

The Trustee addresses these risks by a variety of means, including diversifying across different companies and asset sectors, not placing significant funds with one particular underlying fund manager and, in the case of currency risk, not investing significant amounts in overseas assets.
Investments with a higher proportion of growth assets, such as shares and property, have historically provided better long-term returns than those which have a higher exposure to income producing assets, such as fixed interest and cash.

However, investments with a higher proportion of growth assets are also generally subject to a higher risk of a short-term loss in value. Investments with a higher proportion of income producing assets are generally subject to a lower risk of a short-term loss in value.

Due to the investment performance and the Fund’s charges, there is a risk that you may get back less than you paid in if you leave the Fund within a few years of joining.

How investment earnings are paid to your account
At each Review Date, the net investment return is determined. This return is net of all fees, expenses and taxes. Provision is made for an addition to or reduction in the investment reserve and the crediting rate is determined accordingly. This is used to determine the interest to be distributed to the accounts of members.

If you leave the Fund before the Review Date, you will receive an interim crediting rate equal to the most recent 30 Day Bank Bill Rate published by the Reserve Bank of Australia. This interim crediting rate will be calculated against the balance of your account from time to time over the period beginning from the last Review Date to the date that you leave the Fund.

Current information about reserves
Up-to-date information about the level of the Fund’s reserves and about the Fund’s investment returns is provided each year in the Trustee’s annual report to members. The most recent annual report can be obtained on request from the Administrator.

Please note that past performance should not be taken as an indication of future performance. Future performance is dependent upon future conditions that cannot be guaranteed.