investment guide · 2020. 10. 7. · investment guide the information in this document forms part...

Investment Guide

The information in this document forms part of the Super Member Guide – Product Disclosure Statement. Issued 1 October 2020 for the Labour Union Co-operative Retirement Fund (LUCRF Super) USI LUC0001AU ABN 26 382 680 883 by the Trustee of the Fund, L.U.C.R.F Pty Ltd ABN 18 005 502 090 AFSL 258481.

1 October 2020

lucrf.com.au

Investment

The information in this document forms part of the Super Member Guide – Product Disclosure Statement (PDS). Issued 1 October 2020 for the Labour Union Co-operative Retirement Fund (LUCRF Super) USI LUC0001AU (Super) and USI LUC5140AU (Pension) ABN 26 382 680 883 by the Trustee of the Fund, L.U.C.R.F Pty Ltd ABN 18 005 502 090 AFSL 258481.

You should read the information in this document, and in the relevant Product Disclosure Statement (PDS), the Super Member Guide – Additional Information, our Insurance Guide, our Fees and Costs guide and our Financial Services Guide (FSG), before making a decision to invest. All documents are available at lucrf.com.au or by calling 1300 130 780. The information in this document is general only and does not take into account your personal financial situation, objectives or needs. It is essential that you read the PDS and FSG and consider obtaining financial advice tailored to your own circumstances before making a decision about the Fund.

The Trustee holds Australian Financial Services Licence No. 258481 which authorises it to provide personal financial advice. This Investment Guide, along with the relevant Super Member Guide – Additional Information, PDS, Insurance Guide, Fees and Costs guide and FSG, does not take the place of the Trust Deed, which is a legal document governing the operation of the Fund.

The Trust Deed is binding on the Trustee, all contributing employers and all members of the Fund. A copy of the Trust Deed and Rules is available at lucrf.com.au. Information contained in this document, the PDS and the FSG is current at the date of preparation.

Changes and updatesWhere advance notice is not required or is otherwise impossible, information on changes will be provided as soon as practicable following the change. The most up-to-date copy of this document is available by contacting LUCRF Super on 1300 130 780 or at [email protected], or by visiting lucrf.com.au.

What’s inside

04 Investment overview

06 Risks of super

07 How we invest your money

11 Investment options

17 Investment returns

19 Unit pricing

21 Changing your investment options

25 Super/Pension Investment Choice Form

Contact us 1300 130 780

lucrf.com.au

2 Investment Guide | 1 October 2020

Superannuation is a long-term investment. It’s possibly the largest one you’ll ever make, so it’s important to understand the options available to you.



Investment overview

Superannuation is designed to be put away and not accessed until you reach preservation age (between 55 and 60, depending on when you were born). Choosing the right investments for your super can make a big difference to your nest egg.

What does investing mean? In a nutshell, investing is putting your money into assets (property, shares or bonds, for example) with the aim of making a profit (also known as a return).

Because your super is generally locked away until you reach your preservation age, investing your super is a great way to build your retirement savings over time. Ideally, you want your super to earn more than the rate of inflation (the increase in the cost of living).

It’s also important to remember that your super may need to last throughout the whole of your retirement, as the Age Pension (if you’re eligible to receive it) may not provide you with enough income on its own. Investing your super can boost your retirement income so that you can have a better lifestyle.

Besides growing your retirement savings, are there other benefits to investing in your super? Yes!

You pay less tax on your investment earningsInvestment earnings on your super are taxed at a maximum rate of 15%. Even better, investment earnings in a retirement or disability pension account are tax-free.

If you were to invest money in your own name outside the super system (regardless of whether you’re retired or not), any earnings would be taxed at your normal marginal tax rate (a maximum of 45%, plus the Medicare levy).

You can invest in bigger assetsWhen your super’s held in a fund like ours, it’s pooled together with the money of other fund members, giving us a bigger pot to invest with. This means we can make investments in larger assets, which individuals with smaller amounts of money wouldn’t have access to, such as infrastructure (see page 8).

How do we invest your money?So that you can invest your super to suit your personal circumstances, we offer 10 different investment options to choose from (increasing to 11 options from 8 October 2020). Each option has a different objective and risk level.

The options are split into two categories: ‘pre-mixed’ and ‘asset class’. Pre-mixed options are made up of a blend of assets, while asset class options are groups of a single asset – for example, a group of shares or a group of property investments. See the ‘How we invest your money’ section on page 7 to read about each option.

How do you choose the right investment option?Take time to carefully consider exactly how you’d like your money invested, as the difference between options can be significant depending on the performance of the financial markets. Even a 1% difference in annual returns can have a large impact over the long term.

Understanding the investment options available, how asset classes work and your attitude to risk can help you make a choice. Our Investment Profile Questionnaire, available on our website, can also give you an idea about the kind of investor you are and what options might suit you. And, if you’re ever in doubt, simply call one of our experienced financial advisers on 1300 130 780.

What if you don’t want to choose your own investment options?When you join us, you’re automatically invested in the MySuper Balanced option (or the Balanced option if you’re a LUCRF Pension member), unless you make your own investment choice.

We’ve chosen the MySuper Balanced and pension Balanced options as the defaults because we believe they meet the investment needs of the majority of our members. We understand, though, that everyone has different expectations of their super, so we give you the flexibility to make your own investment choices.

No matter what you decide, we aim to invest and manage your money in a way that provides long-term growth over your working life and retirement.


Investment overview

What’s the risk of investing your super?All investments carry some level of risk. This means that the value of your investments may go up or down depending on returns, which can be positive or negative.

Generally, assets with the highest long-term returns, such as shares, usually carry the highest risk of a negative return in the short-to-medium term. In the same way, assets like cash or fixed interest carry low short-term risk, but are unlikely to produce high long-term returns.

The level of risk suitable for you will vary depending on factors like:

• your age

• your investment time frame (that is, how long until you can access your super)

• where other parts of your wealth are invested

• your investment risk tolerance.

See page 6 for more information about the risks of super.

Fees and costsIt’s important that you understand the impact of fees and costs on your super benefit and your long-term returns.

For details of our investment fees and costs, please refer to our Fees and Costs guide, available at lucrf.com.au or by calling us on 1300 130 780.

We’re here to helpChoosing how to invest your super is an important decision that could make a big difference to how much money you’ll have in your retirement. Call one of our friendly, professional financial advisers on 1300 130 780 and they can:

• talk you through the options available to you

• help you understand the kind of investor you are

• guide you through completing the Investment Choice Form.

Our Investment Profile Questionnaire, available at lucrf.com.au, can also help you understand your attitude to risk and return and decide which investment options may best suit you.


Risks of super

All investments, including super, involve varying levels of risk. Risk is defined as the chance of your investment losing value, or not meeting your objective, over the desired period of time.

There are two main risks associated with super:

1. that your super is invested very conservatively, leading to lower returns and less money in your retirement

2. that your super drops significantly in value and you’re unlikely to recover the loss within your investment time frame.

Factors that can affect your balanceYour investment returns, and ultimately your super balance, are influenced by a number of factors including the performance of the financial markets – both in Australia and overseas – and the broader economic situation.

We invest in various asset classes, which all carry different levels and types of risk. Major risk factors are outlined as follows.

Currency riskWe may hold assets or cash in other currencies. The returns on these can be affected by changes in foreign exchange rates. Investment strategies, such as hedging, aim to reduce this risk.

Market riskThe value of stocks and other securities are driven by supply and demand. If more people want to buy stocks than sell them, the price of these stocks increases, which in turn increases your super balance. Conversely, if more people want to sell than buy stocks, the value of these stocks will naturally decrease.

InflationInflation is the increase in the cost of living, as measured by the consumer price index (CPI). If your investment returns don’t keep up with inflation, over time your money will lose its buying power and be worth less than when you started investing.

Adequacy risk / Longevity riskYour super is designed to provide an income source in retirement, either on its own or to supplement the Age Pension. Adequacy risk is the risk that you won’t have enough super savings for retirement. Longevity risk is the risk that you’ll live longer than your super can provide you with a retirement income. The value of your super, and your adequacy and longevity risks, are all affected by the level of contributions received, investment returns and fees and taxes incurred. For more details, read the ‘How we invest your money’ section on page 7 of this guide.

ImportantWhen making investment choices, you should keep in mind the following:

• Just like any other asset, super carries a level of risk.

• Investment returns can be volatile and may fluctuate from year to year.

• Consider what level of risk you’re comfortable with and the return you want your investment to achieve.

• Past performance is not a reliable indicator of future investment returns.


How we invest your money

We offer multiple investment options to choose from. Each of these options has a different objective and risk level.

Investment options are split into two categories: ‘pre-mixed’ and ‘asset class’.

Pre-mixed optionsOur pre-mixed options are made up of a blend of asset classes (also known as diversified options). Each option has a different mix of growth and defensive assets. Not only does this diversification spread the investment risk, it also means you’re likely to find an option that suits your specific investment profile. These options are:

• MySuper Balanced (default) or Balanced (default for LUCRF Pensions)

• High Growth

• Targeted Return – closing on 8 October 2020*

• Indexed Balanced – opening on 8 October 2020

• Moderate

• Conservative.

Asset class optionsAll of these options invest in a single asset class, so you can build your own mix of investment types. You just need to choose the percentage you’d like from each option to make up your total investment. They are:

• Australian Shares – renamed to Australian Shares (Active) from 8 October 2020

• International Shares – renamed to International Shares (Active) from 8 October 2020

• Indexed Shares – closing on 8 October 2020^

• Australian Shares (Indexed) – opening on 8 October 2020

• International Shares (Indexed) – opening on 8 October 2020

• Property

• Cash.

Note: From time to time, the Trustee may alter our MySuper Balanced or other investment options, or the investment strategy of an investment option. We may also add, close or remove investment options. This may occur without prior notification or your consent.

Handy tipYou can track the performance of our investment options online at lucrf.com.au or by logging in to our mobile app.

MySuper Balanced investment optionMySuper Balanced is our default investment option. Your super is automatically invested in this option unless you notify us of your own investment choice. The funds in this option are invested and managed with the aim of providing long-term growth above the rate of inflation.

Our history shows that despite market fluctuations, our MySuper Balanced option has provided solid long-term returns. Since our inception in 1978, this option has produced an average annual return of 9.44% (1978 to 2020).

Since its inception, our default Balanced option for pensions has produced an average annual return (from 2007 to 2020) of 5.11% for transition to retirement (TTR) pensions, and 5.24% for our retirement pensions.

Please note that past performance isn’t a guarantee of future investment returns.

What’s diversification?Because all investments carry varying levels of risk, it’s a good idea to spread that risk. In other words, don’t put all your investment eggs in one basket.

Diversifying – or spreading – your investments across various asset types can help minimise risk, as not all asset types perform the same way at the same time. For example, the share market could experience a downturn while the property market performs strongly. Making sure you’re invested in more than one asset class is a good way to balance risk and reward.

Active vs. Passive AssetsSome assets (such as shares) may be managed on either an ‘active’ or ‘passive’ basis.

‘Passively invested’ asset classes will typically cost less than comparable ‘actively invested’ asset classes. That’s because actively invested assets are hand-picked, which involves more time and cost, whereas passively invested assets are selected based on an ‘index’ (and are therefore ‘indexed’). For instance, the ASX 100 Index is a mixture of the largest 100 companies on the Australian Securities Exchange, which involves less time and cost.

* On 8 October 2020, all remaining member funds invested in Targeted Return will be transferred 100% to Moderate.

^ On 8 October 2020, all remaining member funds invested in Indexed Shares will be transferred 50% to Australian Shares (Indexed), and 50% to International Shares (Indexed).



Understanding asset classesWe invest your money in various ways according to the investment choices you make and how those options are structured. Asset classes are simply different types of investments, with some riskier than others.

DefensiveDefensive investments are used to protect member balances or reduce the chance of a negative return. They generally have lower capital growth but steady income flows. This means they have a lower long-term return but are more stable over the short term (before adjusting for the effects of inflation). Defensive assets include cash and fixed interest.

CashCash represents deposits held in very short-term, fixed-interest investments or the short-term money market.

Fixed interestMany governments and corporations borrow money from investors at a set interest rate and term. These loans are often referred to as fixed-interest securities or bonds.

GrowthGrowth assets are generally regarded as Australian and international shares. Growth investments also include some of our property and infrastructure investments and some of our investments in alternatives. They’re likely to fluctuate in terms of performance from year to year but have the potential to grow over the longer term and usually have large capital-growth potential. The income flows from these investments are generally less stable than from defensive investments.

Australian and international sharesShares (or equities) represent ownership of a company. The value of shares and the return on investment can be influenced by a number of factors including:

• a company’s profit or loss

• market conditions for the industry in which the company operates

• general economic conditions, such as interest rate fluctuations

• the value of the Australian dollar.

Property and infrastructureOur property and infrastructure investments have both growth and defensive characteristics and may be either listed or unlisted. Listed investments generally involve more volatility, while unlisted investments involve less volatility but less liquidity.

All of our pre-mixed options, except for Targeted Return and Indexed Balanced, have exposure to both listed and unlisted property and infrastructure investments.

Our Property asset class option is invested entirely in Australian listed property shares, which are purely growth assets.

PropertyPartially defensive property investments are generally those that have high-quality tenant agreements with fixed rental growth structures within their leases. This provides a higher level of income security, which can be important during market downturns. These investments typically have lower returns, with lower levels of risk.

Full-growth property investments provide the opportunity to create value over a short-to-medium time frame through development, refurbishment and on-sale.

Factors that influence the return on property include:

• location

• cost and quality of the property

• income from the property (e.g. rent)

• general economic conditions

• manager performance.

InfrastructureInfrastructure includes airports, water and power supply, toll roads, ports, and hospitals. Investment in infrastructure is usually long term and provides strong income in the form of rents, tolls, or service charges.



AlternativesAn alternative is an investment other than traditional assets such as shares, bonds, cash and property. They’re used to reduce overall investment risk through diversification due to their lower correlation with traditional investments. They can have either defensive or growth characteristics. Some alternative investments, such as private equity, are relatively illiquid (that is, they’re not easily convertible to cash). However, other types have high degrees of liquidity.

Our alternative assets may include private equity, hedge funds, commodities and credit.

Hedge fundsHedge funds invest in a range of investment strategies. Quite often these strategies provide returns that are different to traditional share or bond investments, thereby reducing risk through diversification. Hedge funds use a range of investment techniques including leveraging, short selling and derivatives.

Private equityPrivate equity involves investing in companies not publicly traded on an exchange such as the Australian Stock Exchange. Private equity managers aim to increase the value of a company over a period before selling the investment for a profit.

CurrencyThis involves investing in spot, futures or forwards contracts to either gain from anticipated currency movements (trading) or to offset any change in the valuation of foreign currency (hedging).

DerivativesDerivatives are investments that derive their value from an underlying asset such as shares. They can be used to protect against the risk of unfavourable movements in an underlying asset’s price.

Assessing riskEach of our investment options is assessed using the Standard Risk Measure (SRM) guidelines adopted by the super industry. These are based upon each investment option’s assumed number of negative returns over a 20-year period. Each option is graded across seven risk labels and bands, from ‘Very low’ (risk band 1) to ‘Very high’ (risk band 7).

The SRM doesn’t, however, provide a complete assessment of all forms of investment risk. For instance, it doesn’t indicate the volatility of returns or what the actual size of a negative return could be. The table below outlines the estimated number of negative returns over a 20-year period for each SRM risk band and label.

Risk band Risk labelEstimated number of negative annual returns over any 20-year period

1 Very low Less than 0.5

2 Low 0.5 to less than 1

3 Low to medium 1 to less than 2

4 Medium 2 to less than 3

5 Medium to high 3 to less than 4

6 High 4 to less than 6

7 Very high 6 or greater

How we make these risk assessmentsThe risk band and label for each investment option is calculated on the following basis:

• using our investment consultant’s long-term (i.e. over 20 years) capital market assumptions (return, volatility and correlation) for each asset class as updated quarterly. These assumptions include investment manager costs but exclude our administration costs

• using the current strategic asset allocations of each of our investment options

• including franking credits in respect of Australian shares. All other taxation-related issues are ignored. Franking credits have been included as we feel that this:

– provides a more realistic outcome as it shows the full net position

– removes any artificial distortion in the representation of risk between Australian and international equities.


ImportantWhat you should know about expected returnsThe investment objectives for our pre-mixed options are designed to be achieved over the stated investment time frames. These objectives are targets, not actual returns, and are not a guarantee of future performance.

The risks of each investment option are set out using the Standard Risk Measure framework (see page 9), which is based around an estimate of how many years out of 20 we expect each option to experience negative annual returns. These expectations are long-term averages and don’t guarantee that negative returns will occur exactly as described. For example, if an option has 1 year of negative returns expected every 20 years, this doesn’t mean that the option has a lower chance of negative returns in the following year.

The expected number of years of negative annual returns over any 20-year period for each option is based on calculations by our investment consultant, Frontier Advisors.

Environmental, social and corporate governance (ESG) We believe that ESG issues can affect the performance of investment portfolios. With this in mind, we incorporate ESG considerations into our investment decision-making process to deliver sustainable investments for your portfolio.

How do we take ESG principles into account?We integrate ESG principles into our investment process by:

• being a foundation member of the Australian Council of Superannuation Investors (ACSI), which assists its member super funds to manage ESG investment risk

• being a signatory to the United Nations-supported Principles for Responsible Investment (PRI), highlighting our ongoing commitment to the promotion of more sustainable markets and long-term investment using ESG issues to improve investment outcomes (unpri.org)

• assessing, as a standard process, the ESG capabilities of our managers at selection and as part of our ongoing review processes

• acknowledging that investors of equities are, in essence, owners of the companies and therefore:

– influencing company management by voting for or against particular issues at shareholder meetings, and using our voting rights on behalf of members to achieve desired outcomes (we disclose our proxy voting results on our website)

– partnering and positively influencing other companies in the investment industry, creating synergies and increasing the impact of collective activities

– monitoring the carbon footprint of our equity portfolios, using external specialist ESG research

– filing (or co-filing) resolutions to companies’ annual general meetings on issues we feel deserve greater attention from corporations, such as the labour and human rights issues that have been exposed in the Australian horticulture industry

– negatively screening and divesting of tobacco companies and cluster munitions manufacturers from investment portfolios.

• being a member of the Investor Group on Climate Change (IGCC). The group aims to encourage government policies and investment practices that address the risks and opportunities of climate change

• sponsoring, with ACSI, research relating to labour and human rights issues that form part of the ‘S’ component of ESG.

Our Proxy Voting and ESG Issues Policy (available on our website) sets out the framework that documents how we effectively integrate these ESG principles into our investment process.

To learn more about our approach to sustainable investment, visit lucrf.com.au.



Investment options

MySuper Balanced

Strategic asset allocation %

Range %

Australian shares 26 15–40

International shares 30 17–40

Property 8 2–20

Infrastructure 11 2–20

Alternatives 14 0–38

Fixed interest 7 0–25

Cash 4 0–25

Suggested minimum investment time frame

5 years

Expected frequency of negative annual returns in any 20-year period

Approx. 4.5

Risk label and band (1–7) High (6)

Investment objectiveTo achieve a return that exceeds the increase in the consumer price index (CPI) by at least 3.75% per annum net of tax and investment expenses (or 3.41% per annum net of administration cost – based on a $50,000 member balance) over rolling 10-year periods.

Investment strategyTo invest in a diversified range of investments, with a greater proportion in shares, property and alternative investments, and the remainder in cash and fixed interest.

Understanding our investment optionsOur investment options, and the objectives, strategies and risk levels that apply to each, are outlined on the following pages. We’ve provided an example below of how to read the charts and other information.

The name of the investment option

The strategic asset allocation is the percentage of each

asset class within this option. Each percentage falls

within a range that we’re prepared to invest within.

The recommended minimum number of years

you should keep your super invested in this option

The Standard Risk Measure label and band for this option (see page 9 for more details

about the Standard Risk Measure)

The combination of asset classes that make

up this option

The likely number of times that this option will experience a negative annual return over

any 20-year period

A summary of what the investment option aims

to achieve

A snapshot of what the option invests in with the aim of

meeting the objective


MySuper Balanced* High Growth Indexed Balanced – opening on 8 October 2020


Range %



Property 8 2–20




Cash 4 0–25


Range %



Property 9 2–15



Cash 2 0–8


Range %

Passive Australian shares 35 20–50

Passive International shares 35 20–50

Passive fixed interest 28 0–60

Cash 2 0–20


5 years Suggested minimum investment time frame


5 years


Approx. 4.5 Expected frequency of negative annual returns in any 20-year period

Approx. 5 Expected frequency of negative annual returns in any 20-year period

Approx. 5.5

Risk label and band (1–7) High (6) Risk label and band (1–7) High (6) Risk label and band (1–7) High (6)

Investment objectiveTo achieve a return that exceeds the increase in the consumer price index (CPI) by at least 3.75% per annum net of tax and investment expenses (or 3.41% per annum net of administration cost – based on a $50,000 member balance) over rolling 10-year periods.

Investment objectiveTo achieve a return (net of tax and investment expenses) that exceeds the increase in the CPI by at least 4.25% per annum over rolling 10-year periods.


Investment strategyTo invest in a diversified range of investments, with a greater proportion in shares, property and alternative investments, and the remainder in cash and fixed interest.

Investment strategyTo invest in a diversified range of investments, including shares, property, and alternative investments.

Investment strategyTo invest in a diversified range of passive investments, with a greater proportion in shares and the remainder in cash and fixed interest.

*The MySuper Balanced option is the same as the Balanced option available to pension members.

Strategic asset allocations are valid as at 1 October 2020. Visit lucrf.com.au for the latest asset allocations.

Pre-mixed options Each pre-mixed option contains a diversified mix of growth and defensive asset classes.

Investment options


Moderate Conservative


Range %


International shares 20.5 10–28

Property 7 2–15

Infrastructure 10.5 2–20



Cash 12 5–25


Range %

Australian shares 12.5 8–16


Property 5.5 3–10




Cash 26 20–40



3 years


Approx. 3.5 Expected frequency of negative annual returns in any 20-year period

Below 3

Risk label and band (1–7) Medium to high (5) Risk label and band (1–7) Medium (4)



Investment strategyTo invest in a diversified range of investments, including shares, property, alternative investments and fixed interest.

Investment strategyTo invest in a diversified range of investments, with a greater proportion in cash, fixed interest, and defensive property, and the remainder in shares, property and alternative investments.

Pre-mixed options (continued)Each pre-mixed option contains a diversified mix of growth and defensive asset classes.

Investment options


Investment options

Australian Shares – renamed to Australian Shares

(Active) from 8 October 2020

International Shares – renamed to International Shares (Active)

from 8 October 2020

Australian Shares (Indexed) – opening 8 October 2020


Active Australian shares 100^


Active International shares 100^


Passive Australian shares 100^




8 years




Approx. 7

Risk label and band (1–7) Very high (7) Risk label and band (1–7) Very high (7) Risk label and band (1–7) Very high (7)

Investment objectiveTo achieve a return (gross of tax and net of investment expenses) that exceeds the change in the S&P/ASX 300 Accumulation Index over rolling 5-year periods.

Investment objectiveTo achieve a return (gross of tax and net of investment expenses) that exceeds the change in the MSCI World ex-Australia Total Return Index (net dividends reinvested), 70% unhedged and 30% hedged into Australian dollars, over rolling 5-year periods.

Investment objectiveTo achieve a return (gross of tax and investment expenses) matching that of the S&P/ASX 100 Accumulation Index over rolling 3-year periods.

Investment strategyTo invest totally in Australian shares on an actively managed basis.

Investment strategyTo invest in international shares on an actively managed basis.

Investment strategyTo invest totally in Australian shares on a passively managed basis.

^From time to time the investment managers may hold cash.

Asset class optionsEach option invests in a single asset class.


Investment options

International Shares (Indexed) – opening 8 October 2020

Property Cash


Passive International shares 100^


Australian listed property shares 100^


Cash# 100




1 year




Negligible

Risk label and band (1–7) Very high (7) Risk label and band (1–7) Very high (7) Risk label and band (1–7) Very low (1)

Investment objectiveTo achieve a return (gross of tax and investment expenses) matching that of the MSCI World ex-Australia Total Return Index (net dividends reinvested), 70% unhedged and 30% hedged into Australian dollars, over rolling 3-year periods.

Investment objectiveTo achieve a return (gross of tax and investment expenses) that equals the change in the S&P/ASX 300 A-REIT Accumulation Index over rolling 3-year periods.

Investment objectiveTo achieve a return (gross of tax and investment expenses) that is equal to the Bloomberg AusBond Bank Bill Index.

Investment strategyTo invest in international shares on a passively managed basis.

Investment strategyTo invest totally in listed Australian property shares on a passively managed basis.

Investment strategyTo invest in a portfolio consisting primarily of bank deposits, but may include other short-term securities such as highly liquid fixed-interest investments or money market securities.


#The money invested in your cash option is invested in ME Bank deposits, up to the limit as specified in the Financial Claims Scheme (which, as at 1 October 2020, is $250,000). The amount above this level is invested in highly rated cash management trusts.

Asset class options (continued)Each option invests in a single asset class.


Investment options

Closing optionsThe following options will close on 8 October 2020.

Targeted Return (Pre-mixed option)

Indexed Shares (Asset class option)


Range %


Alternatives 55.5 11–90


Fixed interest 22.5 10–60


Passive Australian shares 50^

Passive International shares 50^



7 years



Approx. 6

Risk label and band (1–7) Medium to high (5)

Risk label and band (1–7) Very high (7)


Investment objectiveTo achieve a return (gross of tax and investment expenses) that matches the change in a 50%/50% combination of the S&P/ASX 100 Accumulation Index and the MSCI World ex-Australia Total Return Index (net dividends reinvested unhedged in Australian dollars), over rolling 3-year periods.

Investment strategyTo invest in a portfolio of highly diversified assets which aim to provide strong above-inflation returns with low levels of volatility.

Investment strategyTo invest totally in shares on a passive basis, with approximately half in Australian shares and half in international shares.



Investment returns

Please note that past performance is not a reliable indicator of future investment returns.

Super

Average % returns as at 30 June 2020

Since inception* 10 year 5 year 3 year 1 year

Pre-mixed options

MySuper Balanced (default) 9.44 7.14 5.20 4.70 -0.91

High Growth 8.18 N/A 6.54 6.23 0.20

Targeted Return^ 5.33 N/A 4.50 3.82 0.15

Moderate 6.24 N/A 5.09 4.98 1.35

Conservative 5.10 N/A 4.07 3.97 1.48

Asset class options

Australian Shares# 6.43 7.21 5.13 4.29 -6.01

International Shares## 6.37 11.17 7.79 10.10 7.64

Indexed Shares^ 5.31 9.77 8.10 8.54 0.07

Property 2.56 7.80 4.06 1.86 -19.11

Cash 3.45 2.48 1.74 1.71 1.28

*Inception dates: MySuper Balanced 19/12/78, High Growth 1/9/10, Targeted Return 1/11/12, Moderate and Conservative 1/9/10, Australian Shares, International Shares and Property 22/7/05, Indexed Shares and Cash 1/7/00. ^Closing on 8 October 2020. # Renamed to Australian Shares (Active) from 8 October 2020. ## Renamed to International Shares (Active) from 8 October 2020.

Transition to retirement (TTR) pension



Pre-mixed options

Balanced (default) 5.11 8.02 5.53 4.70 -0.91

High Growth 9.16 N/A 6.93 6.23 0.20


Moderate 6.96 N/A 5.41 4.98 1.35

Conservative 5.74 N/A 4.34 3.97 1.48

Asset class options



Indexed Shares^ 5.73 10.65 8.39 8.54 0.07

Property 0.57 8.79 4.25 1.86 -19.11

Cash 3.44 2.89 1.87 1.71 1.28

Note: Until 30 June 2017, the TTR investment returns mirror the retirement pension investment returns. From 1 July 2017, however, TTR pensions receive the same investment returns as super accounts due to tax changes.

*Inception dates: MySuper Balanced 15/5/07, High Growth 1/9/10, Targeted Return 1/11/12, Moderate and Conservative 1/9/10, all asset class options 1/7/07. ^Closing on 8 October 2020. #Renamed to Australian Shares (Active) on 8 October 2020. ##Renamed to International Shares (Active) on 8 October 2020.

Note: Indexed Balanced, Australian Shares (Indexed) and International Shares (Indexed) are not included as they will open on 8 October 2020.


Investment returns

Retirement pension



Pre-mixed options

Balanced (default) 5.24 8.20 5.87 5.27 -1.04

High Growth 9.38 N/A 7.35 6.97 0.22


Moderate 7.17 N/A 5.83 5.67 1.66

Conservative 5.93 N/A 4.69 4.56 1.80

Asset class options



Indexed Shares^ 5.91 10.89 8.86 9.33 0.19

Property 0.65 8.90 4.46 2.20 -20.70

Cash 3.51 2.99 2.06 2.02 1.51

*Inception dates: MySuper Balanced 15/5/07, High Growth 1/9/10, Targeted Return 1/11/12, Moderate and Conservative 1/9/10, all asset class options 1/7/07. ^Closing on 8 October 2020. #Renamed to Australian Shares (Active) from 8 October 2020. ##Renamed to International Shares (Active) from 8 October 2020.


Unit pricing

Unit prices provide a snapshot of what your super or pension investment option is worth at a specific point in time, so you can work out the value of your super on a daily basis.

When you invest in one of our investment options, your money in that option is represented by units. The number of units allocated to you depends on how much money you’ve invested in that option, and the option’s unit price.

Like shares, unit prices move up and down each day in line with the earnings for each investment option.

Unit prices increase when investment earnings are positive and are greater than the investment fees and investment-related tax for the relevant option.

Unit prices decrease when investment earnings are negative or they’re less than the fees and tax for the relevant option.

All investment earnings are thus reflected in the unit price of each investment option.

Unit prices are calculated net of investment fees and taxes (which are deducted from the gross investment asset valuations, not directly from your account).

How does unit pricing work?A contribution into your super account ‘buys’ units in your chosen investment option based on the daily unit price when the contribution is received by us.

The opposite happens, however, if any money is deducted, or you receive a pension payment. Any deductions from your account (including administration fees) ‘sell’ a number of units in your chosen investment option for the value chosen based on the appropriate daily unit price (dependent on the transaction type).

Any other deductions from your account, such as administration fees and costs (disclosed in our Fees and Costs guide), also involve the sale of some units.

See the following case study for an example of how unit pricing works.

Case study

MichaelContribution Michael opens a new super account with

$150,000 on 1 January 2020 and invests all of his funds in the MySuper Balanced option.

Unit price $1.00 (the unit price for the MySuper Balanced option on 1 January 2020).

How it’s calculated

To work out the number of units he’ll be allocated, Michael divides his funds by the unit price: $150,000 ÷ $1.00 = 150,000 units.

If the unit price increases

If the unit price increases at a later date to $1.10, Michael can work out the value of his super on this date by multiplying the number of units he has (150,000) by $1.10 (150,000 units x $1.10 = $165,000).

If the unit price decreases

If the unit price decreases at a later date to $0.94, the value of Michael’s super on this date will be $141,000 (150,000 units x $0.94).


Unit pricing

How do we calculate unit prices?We use a multi-step process to calculate unit prices:

1. Data is received. Typically, at the end of each business day, we receive data on the day’s transactions. This includes the estimated value of assets from the investment managers responsible for managing our assets using the latest information available. Our custodian then verifies and collates this information.

2. Costs are deducted. We deduct costs, such as the fees accrued to be paid to the investment managers and an estimate for tax on the investment earnings, to establish a ‘net asset value’ for each investment option.

3. Unit prices are calculated. To determine the unit price for each investment option, the ‘net asset value’ is divided by the number of units currently issued for that investment option.

How do we calculate your account balance? Each business day, the new unit prices are calculated as the total value of each investment option’s assets minus their liabilities, divided by the number of units held by members in each option. The unit prices include allowances for tax on investment earnings (where applicable) and investment fees and costs.

Annual returns and unit prices: what’s the difference?At the end of each financial year, you’ll receive a statement outlining how your account balance has performed over the course of the year, or from when you joined the Fund. You may notice a slight difference between the balance and unit price on your account online, and the official annual returns that will be printed on your annual statement.

Although these variations are usually small, they can be confusing.

Differences usually occur because we calculate the daily unit prices based on the most recent available valuations for all the assets held in the investment options following the close of each business day. Valuations for some assets, like Australian shares, are normally accessible at the end of each business day allowing these to be included in the daily unit price. Other asset valuations may lag one to two business days behind, or may not be available daily. Revaluation of unlisted assets, like property and infrastructure, is usually done either quarterly or every six months, so those investment managers typically update their fund values on an infrequent basis.

These small differences are captured when we calculate the monthly and annual returns a few days after the end of each month, which means our published returns are more reflective of the month or year’s market movements.

The differing time of the daily unit prices from the monthly and annual valuations will have a positive or negative impact on investment earnings. However, these changes are captured by each subsequent daily unit price for when they occur.

Also remember that when you check your balance online, it won’t reflect today’s valuations in the underlying assets as this isn’t calculated until the end of the business day. For instance, if the Australian share market rises 1% today, it will be one to two business days before you’ll see this reflected in the unit price applicable for today.

Rollovers and other benefit paymentsIf you roll over your balance to other super or pension funds, full or partial benefit payments (also known as commutations) will receive the unit price of the date of payment. Compassionate payments, severe financial hardship payments and death and total and permanent disablement benefits will also receive the unit price of the date of payment.


Changing your investment options

Your money is automatically invested in our MySuper Balanced option (or Balanced if you have a pension account). If you’d like to be more hands-on with your investment, however, you can mix and match as many investment options as you like.

How do you change investment options?Simply log in to your online account at lucrf.com.au or complete the Investment Choice Form at the back of this guide.

Is there a fee for making an investment change?No. Every time a super fund buys or sells units, they may charge members a fee to cover the costs (e.g. brokerage) of those transactions. This is referred to as a buy/sell spread, typically expressed as a percentage added to or deducted from the unit price of an investment option. The good news is that we don’t charge our members a buy/sell spread, so there’s no fee for making an investment change to one or a mix of options.

When will a change of investment option take effect?You can make one investment change on any business day to your existing available account balance. You cannot make another change until that first change is completed (usually two business days after your first request was received).

If you make a request before 4pm AEST/AEDT on any business day, your account will be invested in your new investment choice effective for the unit price allocated for that day, which won’t be known for at least one to two business days. Your new investment choice will be available in your account two business days after your request has been received.

Requests received on or after 4pm AEST/AEDT on a business day, or on weekends or public holidays, will be effective using the unit price allocated for the next available business day.

How does unit pricing work when you change your investment options?Changing your investment option(s) for your existing available account balance involves selling units in the option you’re currently invested in and using those proceeds to buy units in your new selected investment option.

The transactions are completed on the same business day and use the unit prices for that day. While these unit prices are being calculated, the amount of your account balance submitted for an investment change is removed from your available balance and becomes a pending balance until the unit prices are finalised and the new units are allocated to your account.

If you change how your super is invested, investment earnings will be calculated and ‘locked-in’ (as either a credit or a debit) using the relevant daily unit price as at the date of the change. Your account balance is then invested in your new investment choice according to the percentages you have requested.

The case studies on the following pages explain how unit pricing works when a change of investment option takes effect.

Please note that changing your investment options during times of market volatility may result in locking in a loss.

Is there a limit to the number of investment changes you can make? Frequent changes between investment options, or attempts to time investment market movements, present a risk to your account balance and future earnings. We do not support frequent changes between investment options and we’re not responsible for evaluating the suitability of any change(s) you choose to make.

While we don’t normally limit the number of changes you can make to your investment option(s), we do monitor members’ accounts for frequent changes over short time periods. This type of activity can have a harmful effect on the Fund and other members. If it’s determined that a member’s excessive changing of investment options is having a harmful effect on the Fund and other members, we reserve the right to limit the number of changes that member can make. This is in the best interest of all members.



Case study 1

JillJill has $50,000 in her super account, all of which is invested in MySuper Balanced.

At 3.45pm on a Friday, she logs in to Members Online and requests to change her current investment allocation as follows:

Current allocation New allocation

MySuper Balanced – 100% MySuper Balanced – 25%Australian Shares (Active) – 25% High Growth – 50%

Her total balance then becomes ‘pending’ until the unit prices are finalised and the new units are allocated to her account one to two business days later (i.e. Tuesday morning).

If Jill changes her mind and decides to allocate the 50% in High Growth back to MySuper Balanced she’ll have to wait until Tuesday morning when her original request made on the Friday is completed.



Case study 2

JohnJohn has $50,000 in his super account, 60% of which is invested in MySuper Balanced and 40% in Moderate.

At 4.15pm on a Friday, he logs in to Members Online and requests to change his current investment allocation as follows:

Current allocation New allocation

MySuper Balanced – 60%Moderate – 40%

MySuper Balanced – 30%High Growth – 30% Indexed Balanced – 40%

His total balance then becomes ‘pending’ until the unit prices are finalised and the new units are allocated to his account one to two business days later. Because it missed the 4pm business day cut-off, John’s request to change options becomes effective as of Monday, and his balance will remain pending until Wednesday morning (and will be allocated Monday’s unit prices).

If John later decides he wants to change his investment options again, he’ll have to wait until Wednesday morning when his original request made on the Friday is completed.


Investment Form

Super/Pension Investment Choice Form

Super/Pension Investment Choice Form LS_INVCHOICE_1020 Page 1/4

Issued 8 October 2020 by L.U.C.R.F Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour Union Co-operative Retirement Fund ABN 26 382 680 883 (LUCRF Super).

020.92

Step 1 | Your details

Please read our Personal Information Collection Statement at lucrf.com.au/privacy.

LUCRF Super member number

(please call 1300 130 780 if you don’t know your member number)

Title

Mr Mrs Miss Ms Other (please specify)

First name(s)

Last name

Date of birth Gender

D D / M M / Y Y Y Y X Male X Female X Other

Residential/Street addressUnit/Street number Street name

Suburb/City/Town State Postcode

Postal address – if diff erent to residentialUnit/Street/PO Box number Street name

Suburb/City/Town State Postcode

Contact detailsEmail address

Home phone Work phone Mobile

( ) ( )

From time to time we send marketing material. If you’d prefer not to receive this, please cross this box

Super/Pension

Investment Choice Form

Please print clearly using an in boxes where required.

Complete this form if you’d like to choose how to invest your existing super balance, any future contributions, and/or your LUCRF Pension account.

DID YOU KNOW: You can also make changes to your investment choices at Members Online, where you have convenient 24/7 access to your account. Visit lucrf.com.au for details. To help you make an investment choice that meets your fi nancial needs, read our Investment Guide and complete our Investment Profi le Questionnaire available on our website.


Step 2 | Change your investment choice for your super

Please indicate your investment choices (in percentages) in both column A and column B below. Each column must total 100%. Your investment choices for your existing super balance (column A) and your future contributions (column B) may be the same or diff erent.

Change the investment options for my existing super balance Change the investment options for my future contributions

Investment options Column A (%) Investment options Column B (%)

MySuper Balanced (default) % MySuper Balanced (default) %

High Growth % High Growth %

Indexed Balanced % Indexed Balanced %

Moderate % Moderate %

Conservative % Conservative %

Australian Shares (Active) % Australian Shares (Active) %

International Shares (Active) % International Shares (Active) %

Australian Shares (Indexed) % Australian Shares (Indexed) %

International Shares (Indexed) % International Shares (Indexed) %

Property % Property %

Cash % Cash %

Must total 100% Must total 100%

Important information on how to make an investment choice for your super

Frequently used terms

Existing super balanceThe money currently in your super account.

Future contributionsAny money paid into your super account aft er we’ve processed your investment choice(s).

Investment choiceHow you invest your existing super balance and/or any future contributions. There are 11 investment options you can choose from. You should choose your investment options depending on how much investment risk you’re willing to take on.

If you don’t make an investment choice, your existing super balance and future contributions will be automatically invested in our default option (MySuper Balanced).

No fee is applied when you request a change to your investment choice.

If you’d like help in making an investment choice that meets your fi nancial needs, read our Investment Guide and complete our Investment Profi le Questionnaire at lucrf.com.au. Alternatively, speak with one of our experienced fi nancial advisers on 1300 130 780.


Step 3 | Change your investment choice for your pension

What do you want to do? (please cross one only)

Change the investment options for my LUCRF Pension account and have it drawn using the pro-rata (default) method. (Enter your percentages into Column A only. Leave Column B blank)

Change the investment options for my LUCRF Pension account and have it drawn using the defi ned-proportion method. (Enter your percentages in both Column A and Column B)

Change the investment options for my existingLUCRF Pension account

Draw my LUCRF Pension account using these defi ned proportions

Investment options Column A (%) Investment options Column B (%)

Balanced (default) % Balanced (default) %

High Growth % High Growth %

Indexed Balanced % Indexed Balanced %

Moderate % Moderate %

Conservative % Conservative %

Australian Shares (Active) % Australian Shares (Active) %

International Shares (Active) % International Shares (Active) %

Australian Shares (Indexed) % Australian Shares (Indexed) %

International Shares (Indexed) % International Shares (Indexed) %

Property % Property %

Cash % Cash %

Must total 100% Must total 100%

Important information on how to make an investment choice for your super

Frequently used terms

LUCRF Pension account Refers to both retirement and transition to retirement (TTR) pension accounts.

Pro-rata (default) method (mirrors your investment choices)The money from your LUCRF Pension account is drawn down in the same percentages that you chose for your investment options.

Example If your LUCRF Pension is drawn and you had 50% of your balance invested in the Cash option and 50% in the Indexed Balanced option, 50% of your drawdown payment would come from the Cash option and 50% from the Indexed Balanced option.

Defi ned-proportion method (you choose)Refers to both retirement and TTR pension accounts.

Example1. Your LUCRF Pension payment is drawn from the fi rst investment option that you’ve selected until the money in that option runs out.2. Next, your LUCRF Pension payment is drawn from the second investment option that you’ve selected until the money in that option runs out, and so

on. Once the money in the investment options you’ve selected has run out, your LUCRF Pension payments will automatically default to the pro-rata method (described above).

If you decide to use the defi ned-proportion method, remember to regularly assess your choices to make sure that the drawdown directions you provide still suit your situation. If they don’t, you may want to choose a diff erent set of investment options to draw down from.

Investment choiceThis refers to how you invest your LUCRF Pension account using our 11 investment options. You should choose your investment options depending on how much investment risk you’re willing to take on.

If you don’t make a change to your investment options, the money in your LUCRF Pension is automatically invested in our default option (Balanced).

No fee is applied when you request a change to your investment choice.

If you’d like help in making an investment choice that meets your fi nancial needs, read our Investment Guide and complete our Investment Profi le Questionnaire at lucrf.com.au. Alternatively, speak with one of our experienced fi nancial advisers on 1300 130 780.


Step 4 | Sign and date this form

• I understand that my investment choice will be processed in accordance with my instructions and LUCRF Super’s investment choice procedure.

• I have read and understood the relevant Member Guide (Product Disclosure Statement) and the associated reference material as currently available at lucrf.com.au. I recognise that these do not amount to investment advice materials and they act as general guides only.

• I acknowledge that if I send this form unsigned or incomplete, my request may not be processed.

• I consent to the collection, use and disclosure of my personal information in accordance with the LUCRF Super Personal Information Collection Statement and the Privacy Policy available at lucrf.com.au/privacy.

Signature

Date

D D / M M / Y Y Y Y

Important information on how to make an investment choice for your pension

When will my change of investment option take place?If you make a request to change your investment option before 4pm AEST/AEDT on a business day, your account will be invested in your new investment choice eff ective for the unit price allocated for that day, which won’t be known for at least one to two business days. Your new investment choice will be available in your account two business days aft er your request was received. Requests received on or aft er 4pm AEST/AEDT on a business day, or on weekends or public holidays, will be eff ective using the unit price allocated for the next available business day.

Changing your investment option(s) for your existing available account balance involves selling units in the option you’re currently invested in and using those proceeds to buy units in your new selected investment option. The transactions are completed on the same business day and use the unit prices for that day. While these unit prices are being calculated, the amount of your account balance submitt ed for an investment change is removed from your available balance and becomes a pending balance until the unit prices are fi nalised and the new units are allocated to your account.

Frequent changes between investment options, or att empts to time investment market movements, present a risk to your account balance and future earnings. We do not support frequent changes between investment options and we’re not responsible for evaluating the suitability of any change(s) you choose to make. While we don’t normally limit the number of changes you can make to your investment option(s), we do monitor members’ accounts for frequent changes over short time periods. This type of activity can have a harmful eff ect on the fund and other members. If it’s determined that a member’s excessive changing of investment options is having a harmful eff ect on the fund and other members, we reserve the right to limit the number of changes that member can make. This is in the best interest of all members.

Unit pricesUnit prices move up and down each day, in line with the earnings for each investment option. Unit prices increase when earnings are positive and are greater than the investment fees and investment-related tax for the relevant option. Unit prices decrease when investment earnings are negative, or they’re less than the fees and tax for the relevant option. All earnings are thus refl ected in each investment option’s unit price. Unit prices are calculated net of investment fees and taxes (which are deducted from the gross investment asset valuations, not directly from your account).

How do we calculate unit prices?We use a multi-step process to calculate unit prices:

1. Data is received. Typically, at the end of each business day, we receive data on the day’s transactions. This includes the estimated value of assets from the investment managers responsible for managing our assets using the latest information available. Our custodian then verifi es and collates this information.

2. Costs are deducted. We deduct costs, such as the fees accrued to be paid to the investment managers and an estimate for tax on the investment earnings, to establish a ‘net asset value’ for each investment option.

3. Unit prices are calculated. To determine the unit price for each investment option, the ‘net asset value’ is divided by the number of units currently issued for that investment option.

Super funds may apply a fee to refl ect transaction changes (e.g. brokerage) when units are bought or sold. This is referred to as a buy/sell spread, typically expressed as a percentage added to or deducted from the unit price calculated for the ‘net asset value’. We do not apply a buy/sell spread.

For more information on unit pricing, please see our Investment Guide.

Checklist

Before you send this form to us, make sure:

your investment choice percentages total 100%

you have signed and dated this form at Step 4.

Send this form to

LUCRF Super PO Box 211 North Melbourne VIC 3051Or scan and email it to: [email protected]

If you need any help completing this form, please call us on 1300 130 780 or email [email protected].

This page has been left blank intentionally.

LS_IINGUIDE_1020

1300 130 780

lucrf.com.au

[email protected]

PO Box 211 North Melbourne VIC 3051

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