Investment Structure

The specialist investment structure has two key benefits:

• To achieve greater stability of investment returns; and
• To make the structure more efficient.

Our 'Manager of Managers' approach is very efficient and flexible. By utilising sector specialist investment managers, we can easily change the managers and even add new asset classes with minimum disruption to the overall structure (and hence minimise the transition costs to clients).

There are four main products:

1. Personal Retirement Plan;
2. Allocated Pension Fund;
3. Term Allocated Pension Fund;and
4. Investment Fund.

Each has four investment options: Cash, Capital Stable, Balanced and Growth. The long term or strategic asset allocations for each of our Funds are reviewed at least annually and revised if necessary. The current asset allocations for each fund are setout below.

The investment options source their investments from eight sector trusts - Cash, Enhanced Cash, Australian Equities, Australian Fixed Interest, Australian Listed Property Trusts, Global Listed Property Securities, International Equities and International Fixed Interest.

The Role of the Custodian

We have appointed an independent organisation as Custodian to hold all of the Funds' assets. The current Custodian is JPMorgan Chase Bank (JPMC).

JPMC is one of the world's largest global custodians with over $US15 trillion in assets under custody for institutional investors around the world. In Australia, JPMC is a market leader in providing custody services with over $A340 billion (as at June 2007) in assets under custody for some of Australia's largest institutional investors.

The role of the Custodian is to:

• Hold all of the assets of the Trusts as our agent on behalf of investors; and
  
• To perform certain administrative and accounting functions.

Currency Management

Whenever an international investment is made the total return from the investment has two components - a local market return and a currency return. Both of these can be positive or negative contributions to the total return. Our investment philosophy in relation to currency management is to take a strategic approach to managing currency risk.

Our currency strategy is to ensure that a certain percentage of the international equity exposure is hedged back into Australian dollars. A hedge is an investment management technique aimed at protecting an investor's overseas currency exposure. Our international fixed interest exposure is 100% hedged back into the Australian dollar and the international equity exposure is hedged to a benchmark of 50% the Australian dollar. As these are targets, the actual level of hedging may change from time to time.