Member Investment Choice

The Fire and Emergency Services Superannuation Fund offers a range of investment choices to all members with an accumulation account. Member Investment Choice allows you to take an active role in the growth of your superannuation account and select an investment plan to suit your personal approach towards investment risks and returns.

If you have investments outside of the Fire and Emergency Services Superannuation Fund, Member Investment
Choice allows you to choose an investment plan for your superannuation that fits in with your overall investment savings strategies.

If you have a Defined Benefit Account, you will not have access to Member Investment Choice for that account, as
the calculation of your benefit is predetermined – investment returns do not affect your benefit. However, if you
make voluntary contributions, or have rolled other money into the Fund, these funds will be placed in an
accumulation account where you can choose an investment plan to suit your needs.

As everyone's financial situation is different, the investment plan you choose should be determined with your
personal circumstances in mind.

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INVESTMENT BASICS

The Fire and Emergency Services Superannuation Fund invests in two main types of investments – ‘income investments' and ‘growth investments'.

As a general rule, ‘income investments' are more secure than growth investments, that is, they are less likely to lose capital in any one year. Income investments are expected to earn lower investment returns over the long term as capital is eroded by inflation and are generally considered more suited to shorter-term investments.

‘Growth investments' are less secure, that is, they are more likely to lose capital in any one year. Growth investments are expected to earn higher investment returns over the long term and are generally considered more suited to longer-term investments.

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INCOME INVESTMENTS

Cash, fixed interest and inflation-linked bonds are referred to as income investments as they provide stability and defend against the threat of an overall poor return.

Cash

Cash is a secure investment as the value of your investment increases with the interest paid and your capital is
not at risk of decreasing. Over many years, cash investments usually earn much lower returns compared to other investments and your capital is eroded by inflation each year. Cash investments include term deposits, cash management trusts and bank bills.


Fixed Interest

With a fixed interest investment, you usually receive regular interest payments throughout the term and your capital repaid on maturity. Fixed interest securities can be traded and their market values go up and down as interest rates change. An investment in fixed interest usually provides higher returns than an investment in cash, but lower returns than shares or property over the longer-term. Fixed interest investments include Australian and State Government bonds, Statutory Authority bonds and Corporate fixed interest securities.


Inflation-linked Bonds

Inflation-linked bonds are issued with an interest rate or maturity value that is indexed to inflation, rather than
being fixed when the bond is issued. Governments, semi-government authorities or companies usually issue these
in return for cash. The most common varieties are capital-indexed bonds and indexed annuity bonds.

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GROWTH INVESTMENTS

Property and shares are referred to as growth investments as they are used to maximise the growth of your investment.


Property

Property provides both income and growth. The income comes from the rents paid by tenants and the growth comes from the increase in the value of the property. Property investments are expected to earn higher returns than income investments over the longer-term. Property values go up and down, so capital gains and losses do occur from time
to time. Property investments include office buildings, warehouses, factories, shopping centres and housing.


Shares

Shares provide investors with both income and growth. The income comes from any dividend paid out of company profits each year and the growth comes from any increase in share price over time. Shares are bought and sold on stock exchanges all over the world. A share investment is an important part of any long-term investment portfolio
and is expected to provide the highest returns of all these investment sectors over the longer-term. Share prices go up and down from day to day, so capital gains and losses do occur. Share investments include shares in companies such as BHP, Coles Myer, Wesfarmers, etc.

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INVESTMENT OPTIONS

There are six (6) investment options ranging from low risk and return to high risk and return. You can choose and
one or a combination of these options, giving you even greater flexibility in determining your investment strategy.

Example:
Your existing accumulation account is to be invested 80% in the Smoothed Option and 20% in the Share Option.
Your future additional voluntary contributions are to be invested 100% in the Share Option.

To find out more about the features of each investment choice option please click below

• Cash Option
• Capital Stable Option
• Smoothed Option
• Growth Option
• Share Option
• Australian Share Option
• SRI Option (Not Availible from 1st July 2009).

CASH OPTION
Who Should Use It? Suited to very short-term investors who want to protect the value of their investments.     Aim To provide stable returns.     Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To earn investment returns competitive with other cash investments, after administration fees but before tax.     How Is It Invested? Invested 100% in cash style investments, such as bank deposits and fixed term deposits.     Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. None.
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CAPITAL STABLE OPTION
Who Should Use It? Suited to investors who are seeking short to medium-term stability.     Aim To provide a consistent return that is above the cash rate.     Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To achieve an average return of cash + 1.0% pa after administration fees but before tax     How Is It Invested? Invested 66% in cash and fixed interest and 34% in Australian shares.     Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. One in every 10 years. Large negative returns (< -5%) once every 100 years.
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SMOOTHED OPTION
Who Should Use It? Suited to medium to long-term investors who want exposure to assets with potentially higher returns.     Aim To provide medium to long-term growth. The returns are ‘smoothed', that is setting aside some of the investment returns when performance is good to improve the interest rate when investment returns are down.     Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To earn 4% pa in excess of the average salary increases over a rolling 10 year period.     How Is It Invested? The pie chart above shows the long term benchmark asset allocation, however the fund has the flexibility to invest within the following ranges: - Australian Shares 20% - 50% - Overseas Shares 5% - 35% - Property 5% - 25% - Australian Fixed Interest 10% - 40% - Overseas Fixed Interest 0% - 10% - Indexed Bonds 0% - 10% - Alternative Assets 0% - 10% - Cash 0% - 60%     Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. One year in every 4 years. Large negative returns (< -5%) once every 10 years. This is the default option. The Smoothed Option has the annual investment returns smoothed using investment reserves. Generally, the smoothing process works by building the reserves in years when the investment returns are higher, by paying a reduced investment return to members' accounts. In years of poorer investment returns, the reserves can be used to increase the investment return credited to members' accounts. The smoothing process provides members with greater certainty that their year to year investment returns will be less volatile than if they were exposed to the full market movements. Over the years, the smoothed investment returns should average out to be approximately the same as the actual investment returns. In order to protect the investment reserves in the Smoothed Option, any monies moved out of the Smoothed Option into any other investment option cannot be transferred back into the Smoothed Option at a later time, except on commencement of an Allocated Pension.
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GROWTH OPTION
Who Should Use It? Suited to medium to long-term investors who want exposure to assets with potentially higher returns.     Aim To provide medium to long-term growth with actual (not smoothed) annual investment returns.     Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To earn 4% pa in excess of the average salary increases over a rolling 10 year period.     How Is It Invested? Invested 65% in shares and property and 35% in cash and fixed interest.     Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. One year in every 4 years. Large negative returns (< -5%) once every 10 years.
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SHARE OPTION
Who Should Use It? Suited to investors who are comfortable with the value of their investment fluctuating over the short term, in order to obtain higher returns over the long term.   Aim To provide high returns over the long term.   Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To achieve at least the benchmark return for share returns, after administration fees but before tax.   How Is It Invested? Invested totally in shares, 50% international, and 50% Australian.   Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. One in every 3 years. Large negative returns (< -5%) once every 6 years. A very large negative return (< -10%) is expected on average once every 11 years.
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AUSTRALIAN SHARE OPTION
Who Should Use It? Suited to investors who are comfortable with the value of their investment fluctuating over the short term, in order to obtain higher returns over the long term.   Aim To provide high returns over the long term.   Objective Note: This objective represent the Fire and Emergency Services Superannuation Board's assessment of expected returns and are not a guarantee of returns. To achieve at least the benchmark return for share returns, after administration fees but before tax.   How Is It Invested? Invested totally in Australian Shares   Expectation of a Negative Return A negative return over any period of time means the value of capital invested has gone down over that period. One in every 3 years. Large negative returns (< -5%) once every 6 years. A very large negative return (< -10%) is expected on average once every 11 years.
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WHICH OPTION IS BEST FOR YOU?

When choosing your investments, the first and most important decision you need to get right is your ‘growth profile'. Your ‘growth profile' is the percentage of your total assets to be invested in the ‘growth investments' that are shares and property. The rest of your assets will then be invested in the ‘income investments' that are cash and fixed
interest investments.

As your ‘growth profile' increases, so do your expected investment returns and the likelihood of short-term capital losses. For example, a range of ‘growth profiles' are shown below:

* Based on the past 50 years of share returns

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CHANGING YOUR OPTION

You can change your investments at any time during the year. You can make up to four (4) changes to your investments in any one financial year without incurring a fee. Subsequent investment changes are charged an administration fee of $50, which is debited from your account.

To change your investments, you simply need to complete an Investment Choice Form. If your request is received
no later than five (5) working days before the end of the month, your investments will be changed with effect from
the first day of the following month.

If you are making an investment choice for the first time, you only need to complete the form if you would prefer an alternative option to the Smoothed Option.

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