westpac lifetime superannuation service and westpac ... · 2. super is a long-term investment –...

Westpac Lifetime Superannuation Service and Westpac Flexible Income PlanAnnual Reportfor the year ended 30 June 2008

Westpac Securities Administration Limited, ABN 77 000 049 472, AFSL 233731, RSE L0001083, is the trustee (Trustee) of the

Westpac Master Trust - Superannuation Division, ABN 81 236 903 448, RSE R1003970. The following products are part of the

Fund and are covered in this Annual Report:

Westpac Lifetime Superannuation Service

Westpac Flexible Income Plan

The Fund is a resident regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993

(SIS) and is not subject to a direction under section 63 of SIS.

This Annual Report was prepared on 28 November 2008.

Your investment in the Fund is not guaranteed. The value of your investment can rise and fall depending on the investment

returns achieved by the Investment Option(s) you select. You, with the assistance of your Financial Planner, are responsible for

selecting the Investment Options in which you invest. We are not responsible for our decision to invest in the Investment Options

you select and are not liable for any loss or damage you may incur as a result of you deciding to invest in, or withdraw from, a

particular Investment Option.

The information contained with this report is general information only and does not take into account your individual objectives,

financial situation or needs. You should assess whether this information is appropriate to you and talk to your Financial Planner

before making an investment decision.

1

ContentsCEO message 2

Understanding the market –

and what it means for your super 4

Investment overview 5

Investment Options 6

Investment Option profiles 7

Performance 12

Fees and other costs 16

Other important information 20

2

Welcome to your 2007/2008 Annual ReportDear investor

I know the last 12 months has been a tough time for most investors, so I wanted to talk about this here and give you our

views on some things to consider in times like these.

As you’ll know from watching the news headlines over recent months, local and global financial markets have all suffered

unprecedented levels of unpredictability. Markets have taken a steep tumble, with the Australian share market dropping

22% from its November 2007 high to the end of this financial year in June 20081. Since closing off the financial year, the

local market has dropped further, with the S&P/ASX200 Accumulation Index down 29% for the 12 months to the end of

September, when I am writing this message. Similarly, overseas markets have suffered significant falls – with the Shanghai

Composite in China losing 62.3% and the S&P 500 Index in the US down 25.5% – from their October 2007 highs to the

end of September 2008.

Since most superannuation investments are linked to financial markets, you will notice your returns for the past year

have been impacted by these negative market movements. While this is unsettling and potentially worrying for you,

it’s important to keep these returns in perspective. While we have seen very strong returns over recent years and your

superannuation investment has likely benefited from these, you need to remember that when you’re investing in financial

markets, you may experience some years of low, and even negative, returns like the ones we are seeing now.

The good news for most investors is that long-term returns remain positive, and it’s important to keep this in mind when

assessing your investment performance. Australian shares, for example, continue to perform very well over the long-term,

up 171% in the last ten years .

Looking ahead to recovery

The reality is that the market volatility we’ve seen over the last twelve months or so, looks set to continue into next

year, and this will inevitably have an effect on investment returns in the short-term, we have every reason to believe the

outlook for the market is positive and we are confident that it will bounce back over the next 12–24 months. This view is

also supported by history which tells us that the share market generally bounces back sharply after a period of negative

returns. For example, since 1985, the Australian market returned an average of 28% in the year following a negative

return. So, moving your money out of the market now means you could potentially miss out on any positive ‘bounce’

gained in a strong market recovery.

My advice to you would be to keep in mind that superannuation is a long term investment and to try and avoid getting

caught up in the hype of short-term market movements. Stick to your strategy and make sure you get advice from your

financial adviser to confirm you are invested in the right areas of the market, given your needs and the type of investor

you are.

Pension investors

If you are an investor in the Westpac Flexible Income Plan and are drawing down a pension – times like these can be

particularly troubling, as the value of your capital may have dipped and returns are lower than you had perhaps anticipated.

I know some of our pension investors have called us about moving their money out of their fund and in to a term deposit

or a similar cash-based product. If you are concerned about whether your pension still meets your needs in these trying

market conditions, I would strongly suggest you sit down with your financial adviser to discuss your retirement strategy

and look at the best way to fund your income needs, given your personal circumstances.

Some important points to remember about your Westpac pension include that all earnings on the underlying investments

of your pension fund are tax-free; and the income you draw from your pension is tax-free if you are 60 and over (and

concessionally taxed if you are yet to turn 60).

1. As measured by the S&P/ASX200 Accumulation Index.

2. As measured by the S&P/ASX200 Accumulation Index – 10 years to 30 September 2008.

3

Additionally, Westpac Flexible Income Plan has a Guaranteed Money Market investment option which you can move to

and this may be worth considering if you feel you want less exposure to the property and share markets at this time.

It is also important to understand that the interest earned on cash-based investments outside of the superannuation

environment – such as term deposits – may not be tax free, or concessionally taxed. Again, I suggest that you talk these

issues over with your financial adviser if you are concerned.

More information?

If you have questions about how your investment with Westpac has performed, our Customer Relations Consultants

would be very happy to hear from you on 131 817. They can also help you with any questions you have about the Annual

Report or your superannuation generally.

I’d also encourage you to visit our website at www.westpac.com.au, as we have a lot of information there on what’s

happening in the market and why, and tips for investors on how to survive these tough conditions. You can also register

there to receive regular market updates via email from us, which will help keep you up-to-date.

I’d like to take this opportunity to thank you for you continued support of Westpac. I know it’s been a tough year for

investors, but I can assure you that we are very focused on ensuring we do the best job we can for you in what are quite

difficult conditions.

Rob Coombe

Chief Executive Officer

BT Financial Group

Part of the Westpac Group

4

Understanding the market – and what it means for your superIt’s been a tough few months for anyone invested in financial markets, with the US ‘credit crunch’, record-high oil prices,

and rising interest rates in Australia, all contributing to market unpredictability.

This has had a significant impact on superannuation investment returns – with some investors seeing negative returns for

the first time in some years.

But the good news for most investors is, over the long-term, super returns remain positive. As history tells us, the markets

generally bounce back.

In times like this, it’s important to keep the following in mind:

1. Investment markets move in cycles – negative returns are unsettling but are a normal part of the investment cycle.

2. Super is a long-term investment – so it’s important to keep the current market ups and downs in perspective.

3. Moving from one super fund to another after a negative investment return can potentially turn a paper-loss into a

real loss or could result in lower returns over the long-term.

Get the latest on your super investment

Go to www.westpac.com.au for the latest investment insights and tips to help you manage your super

in volatile markets, as well as the latest market outlook, economic and financial commentary and

Westpac fund performance.

You can also subscribe to our e-newsletter, Better Investor Online, at www.bt.com.au/register to get

these resources sent straight to your inbox.

5

Investment OverviewUnderstanding the risks of investing

No matter which Investment Option you choose to invest in, there will always be some level of investment risk.

The variability of returns is known as investment risk. Generally, the higher level of risk you are prepared to accept,

the higher the potential returns, or losses.

Risk can be managed and even minimised, but cannot be eliminated and there is always a chance you may lose money on any

investments you make. You should be aware of these risks when investing and understand that not all risks are foreseeable.

Some common types of investment risks are outlined in the table below.

Risk Type Description of risk

Market risk Markets are subject to a host of factors, including economic conditions, government regulations, market

sentiment, local and international political events and environmental and technological issues. Market risk may

have different impacts on each investment and investment style in that market at different times.

Security specific

risk

An investment in a company may be affected by unexpected changes in that company’s operations (such as

changes in management or loss of a big customer) and business environment.

Currency risk For investments in international assets, a rise in the Australian dollar relative to other currencies, may negatively

impact investment values and returns.

Interest rate risk Changes in interest rates can have a direct or indirect impact on the investment value and/or returns of all

types of assets. Interest rates may affect a company’s cost of borrowings as well as the value of fixed interest

securities.

Credit risk Credit risk refers to a risk of loss arising from the failure of a borrower or other party to a contract to meet its

obligations. This may arise in securities such as derivatives, fixed interest securities and mortgage securities.

Liquidity risk This is the risk that an investment may not be easily converted into cash with little or no loss of capital and

minimum delay because of either inadequate market depth or disruptions in the market place. Securities of small

companies in particular may, from time to time, and especially in falling markets, become less liquid.

Derivative risk The value of derivatives is linked to the value of the underlying assets and can be highly volatile. Potential gains

and losses from derivative transactions can be substantial.

Derivatives

These are investments whose value is derived from other assets, such as shares, and may be used as part of the portfolio

management process. Futures contracts and options are examples of derivatives.

Derivatives may be used to reduce risk and can act as a hedge against adverse movements in a particular market and/or

in the underlying asset. Derivatives can also be used to gain exposure to assets and markets. While derivatives offer the

opportunity for significantly higher gains from a smaller investment (because of the effective exposure obtained) they

can also produce significantly higher losses, sometimes in excess of the amount invested.

The Fund does not invest directly in derivative securities and the use of derivatives to gear the Investment Options

is not permitted.

Net earnings

The earnings rate for members in the Investment Option is reflected in the price of the units, rather than being credited or

debited against the accounts of members. A change in the value of the members’ unit price generally reflects the earnings

of the supporting assets in the Investment Option.

6

Investment OptionsThe Fund has a range of Investment Options. Members can choose to invest in any

combination of these Investment Options (subject to a maximum of five Investment Options at any one time). You cannot

switch between the Contribution Fee and Nil Contribution Fee Investment Options.

The Fund currently invests through a life policy issued by Westpac Life Insurance Services Limited (represents 100% of the

Service). For the Westpac International Share Investment Option and the international share holdings in the Diversified

Investment Options, State Street Global Advisors, Australia Limited has been appointed to manage international shares.

The Investment Option profile section (beginning on the next page) gives you a snapshot of each Investment Option

together with other information including:

he full range of Investment Options available within the Service;

The full range range of Investment Options available within the Service•

The • investment objectives, strategy and fund size of each Investment Option; and

Asset allocation information, including strategic range, target position and allocations for 30 June 2007 and •

30 June 2008.

The following table will assist you with understanding the Investment Option profiles.

Investment

Objective

The investment objective for each Investment Option represents our current target, which may change

over time. These aims may not be achieved and we do not forecast or guarantee the future performance

of any Investment Option.

Strategy The strategy describes the process used by the investment managers when investing in the relevant asset

classes to achieve the investment objective.

Asset allocation

Target Position

(TP) and strategic

ranges

This section provides details on the asset classes, in which each Investment Option invests and the asset

allocation target position and ranges for each Investment Option. The asset allocation target position is

the starting point for all asset allocation decisions. We will actively adjust the exposure within the specified

ranges to maximise the Investment Option’s investment returns.

7

Investment Option profilesWestpac Lifetime Superannuation Service

Conservative Growth Moderate Growth

Investment

Objective

Aims to provide a conservative level of capital

growth over the medium term (at least three years)

and a relatively high level of interest earnings

Aims to provide a moderate level of capital growth

over the medium term (at least three years) and a

moderate level of interest earnings.

Strategy Investing either directly in assets or indirectly

through collective investments (such as life policies

or unit trusts) so that the majority of the underlying

assets provide income for reinvestment. Such assets

include bank-billed and cash on deposit as well as

Australian and international fixed interest. The fund

also invests in growth assets such as shares and

property, to provide potential for higher returns.

Investing either directly in assets or indirectly


or unit trusts) so that the majority of the underlying

assets provide income for reinvestment. Such assets

include bank-billed and cash on deposit as well as

Australian and international fixed interest. The fund

also invests in growth assets such as shares and

property, to provide potential for higher returns.

Asset allocation Asset

allocation

at 30 June

2007

%

Asset

allocation

at 30 June

2008

%

Target

Position

Strategic

Range

Asset

allocation

at 30 June

2007

%

Asset

allocation

at 30 June

2008

%

Target

Position

Strategic

Range

Australian

Shares10 10 10 5-15 17 17 17 7-27

International

Shares

5 5 5 0-10 10 10 10 0-20

Property 5 5 5 0-20 8 8 8 0-20

Australian Fixed

Interest

25 26 25 10-30 30 32 30 20-40

International

Fixed Interest

10 10 10 0-20 10 10 10 0-20

Cash 45 44 45 40-60 25 23 25 15-35

8

Investment Option profilesWestpac Lifetime Superannuation Service

Balanced Growth Dynamic Growth

Investment Objective

Aims to provide a high level of capital growth over

the long term (at lease five years) from a balanced

portfolio of assets.

Aims to maximise capital growth over the long

term (at least five years) from a dynamic portfolio

that includes a high proportion of Australian and

international shares.



or unit trusts) so that the underlying assets of the

Investment Option include assets with long term

growth potential such as Australian and international

shares and property.



or unit trusts) so that a significant proportion

of assets, normally between 60% and 80%, are

invested in Australian and international shares.

Asset Allocation Asset

allocation

at 30 June

2007

Asset

allocation

at 30 June

2008

TP Strategic

Range

Asset

allocation

at 30 June

2007

Asset

allocation

at 30 June

2008

TP Strategic

Range

Australian Shares

33 33 33 23-43 40 40 40 25-55

International Shares

22 21 22 12-32 29 29 30 15-45

Property 10 10 10 0-20 10 10 10 0-25

Australian Fixed Interest

20 21 20 10-30 10 11 10 0-25

International Fixed Interest

10 10 10 0-20 5 5 5 0-20

Cash 5 5 5 0-20 6 5 5 0-40

9

Money Market Australian Property Securities

Investment

Objective

Aims to provide a high level of capital security and

to maximise interest earnings from a portfolio that

invests mainly in money market securities.

Aims to provide investors with a diversified portfolio

of property investments offering potential for long

term capital growth.




Investment Option consist wholly of short term

liquid assets such as bank bills.




Investment Option provide an exposure to various

types of properties throughout Australia such

as office blocks, shopping centres and industrial

buildings.


allocation at

30 June 2007

Asset

allocation at

30 June 2008

Strategic

Range

Asset

allocation at

30 June 2007

Asset

allocation at

30 June 2007

Strategic

Range

Property n/a n/a n/a 99 97 90-100

Cash 100 100 100 1 3 0-10

Australian Shares International Shares

Investment

Objective

Aims to provide access to capital growth and

dividends from investment in Australian shares.

Aims to provide medium to longer term capital

growth from investment in a selection of overseas

share markets.




Investment Option consists of a selection of shares

of companies that offer potential returns from long

term growth and company dividends.




Investment Option consist of shares in a range of

leading international companies.


allocation at

30 June 2007

Asset

allocation at

30 June 2008

Strategic

Range

Asset

allocation at

30 June 2007

Asset

allocation at

30 June 2007

Strategic

Range

Australian

Shares

99 100 90-100 n/a n/a n/a

International

Shares

n/a n/a n/a 98 97 90-100

Cash 1 0 0-10 2 3 0-10

10

Investment Option profilesWestpac Flexible Income Plan

Balanced Growth Dynamic Growth


Aims to provide a high level of capital growth over

the long term (at least five years) from a balanced

portfolio of assets.

Aims to maximise capital growth over the long

term (at least five years) from a dynamic portfolio

that includes a high proportion of Australian and

international shares.




Investment Option include assets with long term

growth potential such as Australian and international

shares and property.

Invests a significant proportion of assets, normally

between 60% and 80% in Australian and

international shares. This means that the likelihood

of short term fluctuations in capital value is

expected to be greater than with other Investment

Options offered.


allocation

at 30 June

2007

Asset

allocation

at 30 June

2008

TP Strategic

Range

Asset

allocation

at 30 June

2007

Asset

allocation

at 30 June

2008

TP Strategic

Range

Australian Shares

34 34 33 23-43 41 41 40 25-55


22 22 22 12-32 30 30 30 15-45

Property 10 10 10 0-20 10 10 10 0-25


21 21 20 10-30 10 11 10 0-25


10 11 10 0-20 5 5 5 0-20

Cash 3 2 5 0-20 4 3 5 0-40

Money Market Australian Property Securities


Aims to provide a high level of capital security and

to maximise interest earnings from a portfolio that

invests mainly in money market securities.

Aims to provide investors with a diversified portfolio

of property investments offering potential for long

term capital growth.

Strategy Invests in short term liquid assets such as bank bills.

Westpac Life provides a guarantee that the unit price

will not fall.

Invests in assets that provide an exposure to various

types of properties throughout Australia such

as office blocks, shopping centres and industrial

buildings.


allocation at

30 June 2007

Asset

allocation at

30 June 2008

Strategic Range Asset

allocation at

30 June 2007

Asset

allocation at

30 June 2007

Strategic

Range

Property n/a n/a n/a 100 100 90-100

Cash 100 100 100 0 0 0-10

11

Moderate Growth Conservative Growth


Aims to provide a moderate level of capital growth over the medium term (at least three years) and a moderate level of interest earnings.

Aims to provide a conservative level of capital growth over the medium term (at least three years) and a relatively high level of interest earnings.

Strategy Invests in assets that provide income for reinvestment. Such assets include bank-backed bills and cash on deposit as well as Australian and international fixed interest. The Investment Option also invests in growth assets, such as shares and property, to provide potential for higher returns.

Invests in assets that provide income for reinvestment. Such assets include bank-backed bills and cash on deposit as well as Australian and international fixed interest. The Investment Option also invests in growth assets, such as shares and property, to provide potential for higher returns.

Asset Allocation Asset allocation at 30 June 2007

Asset allocation at 30 June 2008

TP Strategic Range



TP Strategic Range

Australian Shares

17 18 17 7-27 10 15 10 5-15


10 10 10 0-20 5 5 5 0-10

Property 8 8 8 0-20 5 0 5 0-20


31 32 30 20-40 26 26 25 10-30


10 11 10 0-20 10 11 10 0-20

Cash 24 21 25 15-35 44 43 45 40-60

Australian Shares International Shares


Aims to provide access to capital growth and dividends from investment in Australian shares.

Aims to provide medium to longer term capital growth from investment in a selection of overseas share markets.

Strategy Invests in a selection of shares of companies that offer potential returns from long term growth and company dividends.

Invest in shares in a range of leading international companies.

Asset Allocation Asset allocation at 30 June 2007


Strategic Range Asset allocation at 30 June 2007


Strategic Range

Australian Shares

100 100 90-100 n/a n/a n/a


n/a n/a n/a 100 100 90-100

Cash 0 0 0-10 0 0 0-10

12

PerformanceWestpac Lifetime Superannuation Service

Performance figures are calculated in accordance with the Investment & Financial Services Association (IFSA) standards.

Total returns are calculated:

using withdrawal prices appropriate for the month end;•

taking into account management costs of the relevant Investment Option; and•

taking into account earnings tax up to a maximum of 15% plus withholding tax paid on foreign income (if any).•

Certain other fees such as Contribution fees or Withdrawal fees (if any) are not taken into account.

The latest performance information and more information about how performance is calculated is available from our

website at www.westpac.com.au

Investment returns shown are historical. Investment returns can go up and down and past performance is not a reliable

indicator of future performance. Future performance is not guaranteed.

Contribution Fee Investment Options

One year returns to 30 June Compound average 5yr annual returns to 30 June 2008 % pa

Investment

Option

Inception

date

2004 (%) 2005 (%) 2006 (%) 2007 (%) 2008 (%)

Dynamic Growth 31 March 1999

13.3 11.8 14.7 12.8 -12.97 7.36

Balanced Growth 31 March 1995

10.9 11.2 12.0 11.2 -10.48 6.55

Moderate Growth 31 March 1995

6.5 8.2 7.2 7.6 -4.91 4.78

Conservative

Growth

31 March 1995

4.6 6.5 5.1 5.9 -1.36 4.12

Australian Shares 31 March 2001

17.8 24.5 20.2 21.2 -10.30 13.89

International

Shares

31 March 2001

14.9 -1.3 15.9 5.6 -20.07 2.09

Australian

Property

Securities

31 March 2001

13.6 13.7 14.4 20.6 -32.21 3.84

Money Market 31 March 2001

3.1 3.4 3.4 4.0 4.58 3.71

Cash Plus Fund* 23 August 2000

3.1 3.4 3.5 4.1 4.80 3.78

*This fund is closed to new investors

13

Nil Contribution Fee Investment Options


Investment

Option

Inception

date

2004 (%) 2005 (%) 2006 (%) 2007 (%) 2008 (%)

Dynamic Growth 18 February 2002

12.8 11.3 14.2 12.4 -13.31 6.92

Balanced Growth 17 February 2002

10.4 10.7 11.5 10.8 -10.83 6.10

Moderate Growth 24 February 2002

6.0 7.7 6.7 7.2 -5.27 4.35

Conservative

Growth

25 March 2002

4.2 6.1 4.7 5.5 -1.73 3.71

Australian Shares 20 February 2002

17.4 24.4 19.8 20.7 -10.63 13.55

International

Shares

20 February 2002

14.4 -1.7 15.4 5.1 -20.33 1.69

Australian

Property

Securities

20 February 2002

13.0 14.0 13.9 20.2 -32.54 3.53

Money Market 21 February 2002

2.7 3.0 3.0 3.6 4.15 3.30

14

Performance Westpac Flexible Income Plan

Performance figures are calculated in accordance with the Investment & Financial Services Association (IFSA) standards.

Total returns are calculated:

using withdrawal prices appropriate for the month end;•

taking into account management costs of the relevant Investment Option; and•

taking into account earnings tax up to a maximum of 15% plus withholding tax paid on foreign income (if any).•

Certain other fees such as Contribution fees or Withdrawal fees (if any) are not taken into account.

The latest performance information and more information about how performance is calculated is available from our

website at www.westpac.com.au

Investment returns shown are historical. Investment returns can go up and down and past performance is not a reliable

indicator of future performance. Future performance is not guaranteed.

Contribution Fee Investment Options


Investment Option Inception

date

2008 (%) 2007 (%) 2006 (%) 2005 (%) 2004 (%)

Dynamic Growth

Investment Option

1 July 2000

-14.53 14.91 16.6 13.6 15.4 8.47

Balanced Growth

Investment Option

1 July 2000

-11.69 13.04 13.6 13 12.5 7.59

Moderate Growth

Investment Option

1 July 2000

-5.26 8.95 8.4 9.7 7.6 5.72

Conservative

Growth Investment

Option

1 July 2000

-1.21 7.02 6.1 7.7 5.5 5.54

Australian Shares

Investment Option

18 July 2001

-11.18 24.82 22.9 28.9 20.2 16.11


Investment Option

31 July 2001

-22.36 5.99 17.8 -1.8 17.5 2.28

Australian

Property Securities

Investment Option

19 July 2001

-35.34 23.51 16.4 16.3 15.7 4.58

Guaranteed Money

Market Investment

Option

1 July 2000

5.66 4.9 4.1 4 3.6 4.45

15

Nil Contribution Fee Investment Options


Investment Option Inception

date

2008 (%) 2007 (%) 2006 (%) 2005 (%) 2004 (%)

Dynamic Growth

Investment Option

5 March 2002

-14.87 14.45 16.1 13.1 14.9 8.01

Balanced Growth

Investment Option

5 March 2002

-12.01 12.57 13.1 12.4 12 7.14

Moderate Growth

Investment Option

5 March 2002

-5.6 8.52 7.9 9.2 7.1 5.28

Conservative

Growth Investment

Option

14 April 2002

-1.59 6.53 5.7 7.3 5 4.55

Australian Shares

Investment Option

7 March 2002

-11.55 24.28 22.4 28 19.8 15.59

International

Shares Investment

Option

7 March 2002

-22.59 5.6 17.3 -1.8 16.6 1.87

Australian

Property Securities

Investment Option

7 March 2002

-35.75 23.01 15.9 15.9 15.1 4.11

Guaranteed Money

Market Investment

Option

7 March 2002

5.23 4.5 3.7 3.5 3.2 4.04

16

Fees and other costsWestpac Lifetime Superannuation Service

This section shows the fees and other costs that you may be charged. These fees and costs may be deducted from your

money, from the returns on your investment or from the Service assets as a whole.

The fees shown in this section are the latest available at the time of preparing this report. You should view our website

at www.westpac.com.au for details of any changes to fees and costs.

Type of fee or cost Amount

Contribution fee Investment Options

Nil Contribution fee Investment Options

How and when paid

Contribution fee^ 0% - 3% Nil Deducted from your contribution or transfer amount upon receipt, prior to purchasing units in the relevant Investment Option(s).

Withdrawal fee

The fee on each amount you take out of your investment

Nil In the first year 3%

Year 1 – 2 2.25%

Year 2 – 3 1.50%

Year 3 - 4 0.75%

Year 4+ Nil

Of the amount withdrawn, including any accrued earnings during the first four years following investment of each contribution

Deducted from your Investment Option(s) on a pro-rata basis at the date you leave the Service or make a partial withdrawal

No additional fee is charged for your first two withdrawal transactions (includes transfers and rollovers) in any calendar year. Any additional withdrawals in that year will incur a fee of $70.10^ per withdrawal. If you have chosen the Nil Contribution Fee option, this fee is charged in addition to the withdrawal fee noted above.

The fee is deducted from your gross redemption

Management Costs

The fees and costs for managing your investment

Indirect Cost Ratio# (%) pa Calculated on the asset value of the Investment Options daily and generally deducted on a daily basis and reflected in the unit price

Dynamic Growth 1.68 2.08

Balanced Growth 1.67 2.07

Moderate Growth 1.67 2.07

Conservative Growth 1.66 2.06

Australian Shares 1.66 2.06

International Shares 1.71 2.11

Australian Property Securities 2.05 2.05

Money Market 1.36 1.76

Cash Plus~ 1.36 n/a

Administration fee $5.46 per month* Deducted from your account at the beginning of each month for the preceding month.

The fee is pro-rated across your Investment Option(s)

Service Fees

Investment switching fee

The fee for changing Investment Options

Nil

A Contribution fee (0%-3%) may apply if you are switching from the Money Market Investment Option to another Investment Option

Deducted from the Investment Option you are switching into, on the date of the switch, via a redemption of units.

^ Each year is determined by the anniversary date of each contribution# The Indirect Cost Ratio is comprised of the Issuer Fee and Expense Recoveries combined~ This Investment Option is closed to new investors* These are the fees as at 30 June 2008. These increase on 1 October each year in line with increases in the Consumer Price Index.

17

Westpac Flexible Income Plan

This section shows the fees and other costs that you may be charged. These fees and costs may be deducted from your

money, from the returns on your investment or from the Service assets as a whole. The fees shown in this section are the

latest available at the time of preparing this report. You should view our website at www.westpac.com.au for details of

any changes to fees and costs.

Type of fee or cost Amount

Contribution fee Investment Options

Nil Contribution fee Investment Options

How and when paid

Contribution fee^ 0% - 3% Nil Deducted from your contribution or transfer amount upon receipt, prior to purchasing units in the relevant Investment Option(s).

Withdrawal fee

The fee on each amount you take out of your investment

Nil In the first year 3%

Year 1 – 2 2.25%

Year 2 – 3 1.50%

Year 3 - 4 0.75%

Year 4+ NilOf the amount withdrawn, including any accrued earnings during the first four years following investment of each contribution

Deducted from your Investment Option(s) on a pro-rata basis at the date you leave the Service or make a partial withdrawal

No additional fee is charged for your first two withdrawal transactions (includes transfers and rollovers) in any calendar year. Any additional withdrawals in that year will incur a fee of $70.10^ per withdrawal. If you have chosen the Nil Contribution Fee option, this fee is charged in addition to the withdrawal fee noted above.

The fee is deducted from your gross redemption

Management Costs

The fees and costs for managing your investment

Indirect Cost Ratio# (%) pa Calculated on the asset value of the Investment Options daily and generally deducted on a daily basis and reflected in the unit price

Australian Shares Fund 1.70 2.09

International Shares Fund 1.75 2.15

Australian Property Securities Fund

1.69 2.14

Guaranteed Money Market Fund 1.55 1.94

Dynamic Growth Fund 1.71 2.11

Balanced Growth Fund 1.71 2.10

Moderate Growth Fund 1.70 2.10

Conservative Growth Fund 1.70 2.10

Administration fee $83.10 pa* n/a Deducted annually in advanceThe fee is pro-rated across your Investment Option(s).

Service Fees

Investment switching fee

The fee for changing Investment Options

NilA Contribution fee (0%-3%) may apply if you are switching from the Money Market Investment Option to another Investment Option

Deducted from the Investment Option you are switching into, on the date of the switch, via a redemption of units.

^ Each year is determined by the anniversary date of each contribution# The Indirect Cost Ratio is comprised of the Issuer Fee and Expense Recoveries combined~ This Investment Option is closed to new investors* These are the fees as at 30 June 2008. These increase on 1 October each year in line with increases in the Consumer Price Index.

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Fees and other costs Other fees

Insurance charges

If you have insurance in your Service, the Trustee calculates the cost of insurance each month and deducts it directly from

your account. Tables of insurance charge rates are available on request. The insurance charge depends on your level of

insurance, gender, age, whether you are a smoker or non-smoker, the cover selected and any special acceptance terms

imposed at the commencement of risk by Westpac Life Insurance Limited.

Transaction costs and buy-sell spreads

Transaction costs

Transaction costs are costs relating to the buying and selling of underlying assets (such as brokerage and stamp duty) and

are costs that an investor would incur if he or she invested directly in the underlying assets. These costs are not included

in the management costs and are not deducted directly from your investment. Rather, the costs are borne indirectly by

members by reducing returns generated by the Investment Option and, therefore, the value of your investment.

Buy-sell spread

We apply an adjustment to the unit price so that there is a difference between the contribution and withdrawal price for

an Investment Option. The buy-sell spread is an additional cost to you and is incurred whenever you invest or withdraw

funds. As the cost is built into the unit price, the buy-sell spread will not be shown as a transaction on any statement we

send you.

The buy-sell spread is retained by the Investment Option (it is not a fee paid to us) and represents a contribution to the

transaction costs (such as brokerage) incurred when the Investment Option is purchasing or selling underlying assets.

The purpose of imposing the buy-sell spread is to ensure these costs are fairly borne by members investing into or

withdrawing from an Investment Option, and that other members (ie those not investing into or withdrawing from the

Investment Option at a particular time) are not disadvantaged.

The current buy-sell spread maximum is 0.50% of the net value of the Investment Option’s assets (as defined in the

Service’s Trust Deed), represented as the difference between the contribution price and the withdrawal price. There is no

buy-sell spread on the Money Market Investment Option. We may vary the buy-sell spread for an Investment Option

from time to time and the updated information is available on our website www.westpac.com.au or by calling Customer

Relations. Notice will not ordinarily be provided of any changes.

For example, if you invest $10,000 in an Investment Option at the maximum buy-sell spread of 0.50%, you will generally

incur this cost, being $50 at the time of investment.

Contribution Fee

A contribution fee of 3% of each contribution applies to investments in the Funds. In respect of Members prior to 11

February 2002, there is currently no contribution fee for the Money Market Fund. For investment in the other Funds, a

contribution fee applies for each contribution. The contribution fee is 3% on the first $100,000 and 1.5% on the balance.

Contribution fees are deducted at the time a contribution is received or a transfer is made. Please note that when you

switch from the Money Market Fund to another Fund, any amount that has not already been subject to a contribution fee

will be deducted from the normal contribution fee.

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Other fees

Transaction costs and buy-sell spreads

Transaction costs

Transaction costs are costs relating to the buying and selling of underlying assets (such as brokerage and stamp duty) and

are costs that an investor would incur if he or she invested directly in the underlying assets. These costs are not included

in the management costs and are not deducted directly from your investment. Rather, the costs are borne indirectly by

members by reducing returns generated by the Investment Option and, therefore, the value of your investment.

Buy-sell spread

We apply an adjustment to the unit price so that there is a difference between the contribution and withdrawal price for

an Investment Option. The buy-sell spread is an additional cost to you and is incurred whenever you invest or withdraw

funds. As the cost is built into the unit price, the buy-sell spread will not be shown as a transaction on any statement we

send you.

The buy-sell spread is retained by the Investment Option (it is not a fee paid to us) and represents a contribution to the

transaction costs (such as brokerage) incurred when the Investment Option is purchasing or selling underlying assets.

The purpose of imposing the buy-sell spread is to ensure these costs are fairly borne by members investing into or

withdrawing from an Investment Option, and that other members (ie those not investing into or withdrawing from the

Investment Option at a particular time) are not disadvantaged.

Current buy-sell spread maximum is 0.50% of the net value of the Investment Option’s assets (as defined in the Service’s

Trust Deed), represented as the difference between the contribution price and the withdrawal price. There is no buy-sell

spread on the Money Market Investment Option. We may vary the buy-sell spread for an Investment Option from time

to time and the updated information is available on our website www.westpac.com.au or by calling Customer Relations.

Notice will not ordinarily be provided of any changes.

For example, if you invest $10,000 in an Investment Option at the maximum buy-sell spread of 0.50%, you will generally

incur this cost, being $50 at the time of investment.

Contribution Fee

A contribution fee of 3% of each contribution applies to investments in the Funds. In respect of Members prior to

11 February 2002, there is currently no contribution fee for the Money Market Fund. For investment in the other Funds, a

contribution fee applies for each contribution. The contribution fee is 3% on the first $100,000 and 1.5% on the balance.

Contribution fees are deducted at the time a contribution is received or a transfer is made. Please note that when you

switch from the Money Market Fund to another Fund, any amount that has not already been subject to a contribution fee

will be deducted from the normal contribution fee.

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Other important informationCorrection to the Super Investor Newsletter (Retirement Edition)

An article published in our Retirement Edition of the Super Investor Newsletter informed our customers that pensions

received from Centrelink would be tax free income if you were aged 60 and over.

This article was incorrect, as Centrelink pensions are not always treated as tax free income. We’d like to take this

opportunity to apologise for this error.

For further information about Centrelink entitlements, call Centrelink on 13 2300.

Recent developments in superannuation and Changes to your Plan

Increase in superannuation thresholds

Each year, various thresholds used in the calculation of superannuation benefits and limits are indexed to keep pace

with average weekly ordinary time earnings (AWOTE). Some of the thresholds that apply for the 2008/09 financial

year are as follows:

Low rate cap: $145,000

Concessional contributions cap:

• Age 50 or over $100,000

• Under age 50 $50,000

Non-concessional contributions cap: $150,000

Capital Gains Tax (CGT) cap

(lifetime limit): $1.045 million

Government Co-contributions:

• Maximum co-contribution* $1,500

• Lower threshold $30,342

• Upper threshold (cut off) $60,342

*The maximum co-contribution payable is phased out by 5 cents for every dollar of total income over the lower threshold, until it reaches zero at the upper threshold.

New condition of release: Terminal Medical Condition

A new condition of release is now available to members who suffer from a terminal medical condition. A member

will be taken to be suffering from a terminal medical condition if two registered medical practitioners certify that the

member suffers from an illness, or has incurred an injury that is likely to result in their death within a period of 12 months

(the certification period). One of these certifying practitioners must be a specialist practicing in an area related to the

member’s injury or illness.

If a member satisfies this condition of release, all benefits which have accrued up to this time become unrestricted

non-preserved. This condition of release also covers the certification period, meaning that any further benefits accrued

within the 12 month certification period will also be treated as unrestricted non-preserved benefits.

Taking a cash lump sum as a result of a terminal medical condition

Members who meet this condition of release will also be able to take a lump sum superannuation benefit that is exempt

from tax.

What if you received a cash lump sum under another condition of release?

If you received a superannuation lump sum payment under another condition of release and you have a terminal medical

condition, you may be entitled to a refund of the tax withheld.

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You will need medical certification stating that you had a terminal medical condition (as outlined above):

at the time the payment was made, or;•

within 90 days of receiving the payment, or•

for 2007/08 financial year only, by 30 June 2008.•

If you are applying for a refund after 21 July of the following financial year in which you received the payment, you will

need to apply for a refund from the Australian Taxation Office (ATO). More information can be found on their website

at www.ato.gov.au

Upcoming Legislative Changes

Temporary Residents

The Government recently introduced legislation to change the manner in which superannuation balances of eligible

temporary residents are dealt with. If this legislation is passed unaltered, temporary residents departing Australia will have

six months to claim their accumulated superannuation balances from their superannuation fund by means of the current

Departing Australia Superannuation Payments (DASP) regime. After the six months have expired, the ATO will request

superannuation funds to transfer the remaining superannuation balances of departed temporary residents to the ATO.

Such individuals will then need to apply directly to the ATO for the release of their superannuation benefit.

This legislation also proposes to increase DASP withholding tax rates by 5 percentage points. This means the final

withholding tax rate on:

• the taxable component – taxed element will be 35% (raised from 30%)

• the taxable component – untaxed element will be 45% (raised from 40%).

The current DASP withholding tax rates will continue to apply to payments made on or after the commencement of the

proposed legislation if the DASP requests were made before the commencement date.

Same Sex couples

The Government has recently introduced legislation aimed at reducing discrimination of same-sex couples in relation to

commonwealth laws including superannuation and taxation law. The intention of this law reform is to ensure same-sex

relationships and children of such relationships are treated in the same manner as marital relationships and children of

married relationships in relation to superannuation and taxation matters.

Amendments to superannuation law will ensure that where a member is in a same-sex relationship, their partner and any

children that are a product of the same-sex relationship will be able to receive the member’s superannuation death benefits

as dependants. Other amendments will ensure:

• equal treatment of same-sex couples with respect to superannuation concessions such as concessional tax treatment

of death benefits received as a dependant;

• people in a same-sex relationship will be able to make spouse contributions for their partner and claim a tax offset

(if other eligibility criteria is met);

• members will be able to split certain superannuation contributions in favour of a same-sex partner.

These changes have not yet been made law.

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Other important information

Anti-Money Laundering and Counter Terrorism Financing

We have obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, its corresponding rules

and regulations (referred to as the AML/CTF Act). You should be aware:

the Trustee and Administrator may be required to carry out a procedure to verify your identity before providing services •

to you, and from time to time thereafter;

transactions may be delayed, blocked, frozen or refused where the Trustee or Administrator has reasonable grounds to •

believe that the transaction breaches Australian law or sanctions or the law or sanctions of any other country;

where transactions are delayed, blocked, frozen or refused neither the Trustee, the Administrator, nor their •

correspondents are liable for any loss you suffer (including consequential loss) howsoever caused in connection with,

the Plan; and

the Trustee or Administrator may from time to time require additional information from you to assist them in this process• .

The Trustee and Administrator have certain reporting obligations pursuant to the AML/CTF Act. The legislation prevents

the Trustee and Administrator from informing you that any such reporting may or has taken place. Where legally

obliged to do so, the Trustee and Administrator may disclose the information held about you to regulatory and/or law

enforcement agencies, including the Australian Transaction Reports and Analysis Centre (‘AUSTRAC’), other banks, service

providers or to other third parties. The Trustee and Administrator may also share this information with other members of

the Westpac Group.

Superannuation Contribution Surcharge

If you are liable for superannuation contribution surcharge the amount will be deducted from your account.

Complaints

We have arrangements for dealing with members’ questions or complaints about the operation or management of the

Service. If you have a concern or a complaint, please contact a Customer Relations Consultant on 131 817. Where possible,

member concerns received over the telephone are resolved at that time. If your concerns cannot be resolved in this way,

you can outline your complaint in writing to:

Westpac Lifetime Superannuation Service

The Complaints Officer

GPO Box 3960

Sydney NSW 2001

The Complaints Officer will endeavour to resolve your complaint within 30 days of receiving your letter and is required by

law to deal with your enquiry or complaint within 90 days. However, if you are not satisfied with the response, or have not

received a response within 90 days, you may contact the Superannuation Complaints Tribunal (the Tribunal):

by calling 1300 780 808; or•

writing to:•

Superannuation Complaints Tribunal

Locked Bag 3060

GPO Melbourne VIC 3001

The Tribunal is an independent body established by the Government to help members of super funds resolve complaints.

The Tribunal will attempt to resolve your complaint through conciliation, helping you and us to reach an agreement.

If your dispute cannot be resolved through conciliation, the Tribunal may make a binding determination.

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Indemnity insurance

The Trustee is indemnified by a policy of insurance in respect of its duties as Trustee of the Service.

Financial information

As permitted by the Corporations Act, certain financial and investment information (such as the audited financial statements)

have not been included on the basis that the Service invests through a life policy. You can obtain a complete audited financial

statement for the Westpac Lifetime Superannuation Service after October 2008 by calling Customer Relations.

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Contact Westpac Customer Relations:

131 8178.00am to 6.30pm (Sydney time)

Monday to Friday

You can also access our automated telephone service,

24 hours a day, seven days a week.

Our registered address is:

Level 20, Westpac Place

275 Kent Street

Sydney NSW 2000

Postal address:

Westpac Financial Services

GPO Box 3960

Sydney NSW 2001

Fax: 02 9274 5408

Website: www.westpac.com.au

Overseas enquiries: +61 131 817

Westpac branches

Westpac branches are currently located

throughout Australia. To find out the location

of your nearest branch, simply visit

www.westpac.com.au or call 131 817.

westpac lifetime superannuation service and westpac ... · 2. super is a long-term investment –...

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