investment guide - willis towers watson · once you’ve considered your personal circumstances and...

UTC helpline 1800 628 849 1

Investment GuideAccumulation section 1 April 2020

Inside

Your choice 2

Making your decision 3

Investment basics 4

Your investment options 6

Commonly asked questions 13

Issued by Towers Watson Superannuation Pty Ltd (ABN 56 098 527 256, AFSL 236049) as Trustee of the United Technologies Corporation Retirement Plan (ABN 33 227 241 196 MySuper Authorisation number 33227241196186).

United Technologies Corporation Retirement Plan

2 The UTC Retirement Plan

Contact usThe Plan AdministratorUTC Retirement PlanPO Box 1442Parramatta NSW 2124

Helpline: 1800 628 849Email: [email protected]: www.utcsuper.com.au

You can also write to:

The Advisory Policy CommitteeC/- Barry Singer Otis Elevator Company Pty Ltd363 George StreetSydney NSW 2000

Important informationThe information in this document forms part of the Product Disclosure Statement (PDS) dated 1 April 2020 for the Accumulation section of the Plan. It should be read in conjunction with the other documents which form part of the PDS. You should consider that information before making a decision about the product.

The information provided in this PDS is general information only and does not take into account your particular objectives, financial circumstances or needs. It is not personal or tax advice. Any examples included are for illustration only and are not intended to be recommendations or preferred courses of action. You should consider obtaining professional advice about your particular circumstances before making any financial or investment decisions based on the information contained in this document.

Investment returns can be positive or negative and are not guaranteed by the Trustee or the Company. Information on tax and superannuation legislation is current as at 1 April 2020. The Trustee reserves the right to correct any errors or omissions.

Information contained in this document that is not materially adverse is subject to change from time to time and may be updated if it changes. Updated information can be found at www.utcsuper.com.au. In addition, we will provide a hardcopy free of charge on request, if you contact the Plan’s superannuation helpline on 1800 628 849.

Your choiceThe Plan offers you a choice of how to invest your super account. Member investment choice puts you in control, letting you manage your super in a way that is best for you and your family.

Your super is your money, so it’s worth taking the time to consider the investment options available to you as a member of the Plan.

The Plan’s investment options There are four main investment options to choose from. These are:

✜ High Growth

✜ Balanced (the default MySuper option)

✜ Stable

✜ Cash

There are also three 50/50 mix options:

✜ A 50/50 mix of High Growth and Balanced

✜ A 50/50 mix of Balanced and Stable

✜ A 50/50 mix of Stable and Cash

You can choose to invest your super in the investment option that suits you.

This Investment Guide provides you with more information on making your choice, including some investment basics and more details on the investment options available to you.


Step 3 – learn more about your options As a member of the Plan, you can choose to invest your money in one of four main investment options or three 50/50 mix options. Each of these invests in a combination of growth and income assets. For details about the Plan’s investment options, see pages 6 to 12.

Step 4 – speak to a financial adviser If you need help understanding the options available to you, or would like advice about what’s right for your individual needs, you may wish to speak to a financial adviser.

Step 5 – make your choices Once you’ve considered your personal circumstances and understand the investment options available to you, you’re ready to make your choice. And, this is the easiest part!

You can choose to invest your super entirely in one of the High Growth, Balanced, Stable or Cash options, or in one of the 50/50 mix options. Once you’ve selected an option, complete the relevant Application and change form.

Your investment choice will become effective from the first day of any month, providing your instructions are received by the Plan Administrator by the 25th day of the previous month.

Alternatively, you can make your choice online at www.utcsuper.com.au.

If you don’t make a choice, your super will automatically be invested in the Balanced (MySuper) option – this is the Plan’s default option.

Step 6 – review your options Once you have made your investment choice, don’t forget about it! As a rule of thumb, it’s a good idea to review your investment choice every couple of years or when your personal circumstances change. This is particularly important if you’re nearing retirement.

Step 1 – understand your personal circumstances Before you make your investment decisions, it’s important that you spend some time thinking about your own situation. Ask yourself the following questions:

How much will I need when I retire? Financial experts say that to maintain your lifestyle in retirement, you may need an annual income of around 60% – 70% of your final income when you retire.

If your super will be your only form of income in retirement, you may be less inclined to take risk with your super. However, if you have other forms of income, such as property, or other savings and investments, or expect to receive a full or partial age pension, you may be more comfortable with taking investment risks.

How many years do I have before I will need my super? If you have a long investment horizon, short-term ups and downs in returns are usually less of a concern. However, if you need your money in the short term, a risky investment may not be appropriate.

How much risk am I willing to take? Some of us, by nature, do not like to take risk with our money. If you’re likely to lie awake at night worrying about your investments or will panic at the sight of negative returns, you may feel happier investing in moderate or lower risk options. On the other hand, if you are comfortable with the fact that your super savings will go down as well as up, higher risk options may be right for you.

If you are a person who doesn’t like to take risk, bear in mind that if you’re too conservative with your investments, your super may not keep up with inflation, which would make you worse off in retirement.

Step 2 – understand the different types of investments There are two main types of investments, growth and income assets. These are explained on page 4.

Making your decision

Examples…. Jenny is 28 with at least another 30 years of saving ahead of her before she will need to access her super. Jenny has time to ride out the volatility of a higher-risk investment option so she may prefer to choose an option that seeks to maximise her returns over the long term.

David is 57 and is close to retirement. He would like to access his super in the next few years. David is not comfortable with taking on too much risk, given the short time he has until retirement. Instead, David may prefer to choose an investment option that aims to protect his savings in the years leading up to his retirement.

As you can appreciate, Jenny and David are in very different situations and therefore have different considerations for investing their super. It is important for Jenny and David to think about how long it will be before they will need to access their super, and the level of risk they are willing to take.


To make the right choice, it’s important you understand some investment basics.

Asset classes There are five main types of investment assets, including shares, property, fixed interest and cash. The Plan also invests in investments known as “diversity strategies” (see to the right). Each asset type has a different level of risk and return. Generally, as the potential for a high return increases, the risk of fluctuations in value also increases.

The five types of assets can be grouped into two main categories: growth and income.

Income assets include cash and fixed-interest investments. They are expected to provide a lower return over the long term than growth assets, and are less likely to fluctuate in the short term.

Growth assets include property, shares and diversity strategies. They are expected to produce higher returns over the long term (five or more years), but are more likely to fluctuate in value over the short term (one year).

Each of the Plan’s investment options is invested in a different mix of growth and income assets. This influences the level of expected risk and return for each option.

The investment cycle History shows that economies and investment markets typically move in cycles of “boom and bust” or a pattern of “ups and downs”.

Generally this is the case for the different sections of the economy, including property and share markets which rise and fall over time. Some investments, such as shares, are more volatile in that they can change substantially in value within a short period, while others, like fixed interest, can be slower to change.

Investment basicsGrowth assets

Shares – A share is a unit of ownership in a company. Owning shares (or equities) gives an investor a share of the profits the company earns – a dividend. If the value of the shares goes up, shareholders also receive a capital gain. However, if the value of the shares goes down, there is a capital loss.

In addition, international shares can be subject to fluctuations in the value of the Australian dollar relative to international currency. This means that if the share price remains the same and the Australian dollar rises, the value of your international shares will decline. Conversely, if the Australian dollar declines, the value of your international shares will rise.

Property – Owning property means the ownership of an asset such as a house, block of land or shopping centre. Like shares, property will produce both income and capital growth. The value of the property can move up or down, depending on the market. Over the long term, property is expected to earn more than fixed-interest investments, but less than shares.

Diversity strategies – Some of the Plan’s investment options are invested in a number of different investment products that can broadly be described as “diversity strategies”. Diversity strategies are strategies that tend to behave differently to traditional asset classes (such as shares and fixed interest) and can include hedge funds, risk parity funds and funds that employ a more active approach to managing the underlying asset allocation, amongst others. In some cases, they do this by using special financial instruments, including derivatives and a variety of other strategies to assist in managing investment risk. In isolation, diversity strategies (particularly hedge funds) can be volatile in the short term, but when combined with other assets, diversity strategies can help to significantly reduce the overall volatility of the Plan’s investments.

Income assets

Fixed interest – Corporate and government bonds offer financing through sophisticated loan structures. When institutions such as the government want to borrow money, they can offer fixed-interest investments, such as bonds (government and semi-government bodies) and debentures (companies).

Generally, investment returns will tend to be lower than those from shares or property investments, but the returns will also tend to be less volatile (or risky) than those from shares or property.

Cash – Can be invested in short-term government bonds and company debentures, for periods of less than 90 days. Cash typically brings the lowest returns of the asset classes. However, it is also the lowest-risk investment.

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UTC helpline 1800 628 849

Understanding Risk and Return – the two Rs Risk is usually defined as the potential for your super to go up and down in value. Return is the amount of money earned by your super.

Understanding investment risk Risk means different things to different people.

Risk can mean not having enough money to live on in retirement. If you choose an investment option with less risk it may mean you earn a lower return on your money. Over the long term, even a small difference in your investment returns can make a big difference to your final benefit.

Risk can also mean that your money does not keep up with inflation. So if you choose an investment option that doesn’t have the potential for growth, your money may not increase enough before you retire. If your retirement is some way off, remember that your money won’t buy as much when you retire as it does today.

What we mean by investment risks The main types of risks you need to be aware of are:

Inflation risk The rate of inflation may exceed the rate of return achieved on your investment and hence your investment would not retain its purchasing power. This risk can be considered relevant for the Cash and Stable options if investing over long periods.

Individual investment risk Individual investments can (and do) fall in value. This risk affects mainly investments in shares, diversity strategies and property, although it can also affect investments in fixed interest. As a result, it can be considered a relevant risk for the High Growth, Balanced and Stable options.

Market risk Changes in the market value of investments, resulting from changes in economic, political and legal conditions or market sentiment, can affect the value of investments.

This risk affects investments in shares, property and fixed interest. As a result, it can be considered a relevant risk for the High Growth, Balanced and Stable options.

Interest rate risk Changes in interest rates can have a positive or negative impact directly or indirectly on investment value or returns.

This risk affects all investments and can therefore be considered a relevant risk for all options.

Liquidity riskLiquid assets are assets that can be readily converted to cash. Liquidity risk is the risk that some assets may not be able to be converted to cash when needed to pay benefits or process investment switches. Liquidity risk can be considered relevant for all options other than Cash.

Currency risk Some investments are made in other countries. If their currencies change in value relative to the Australian dollar, the value of the investment can change.

This risk only affects investments overseas (which are unhedged – that is, they are not protected from the impact of currency investments). Currency risk is relevant for options with a large proportion of their assets invested overseas, for example, the High Growth and Balanced options.

Derivatives risk The term “derivative” describes any financial product, such as futures or options, which has a value derived from another security, liability or index.

Derivatives are commonly used in hedge funds. Risks associated with using these tools might include the value of the derivative failing to move in line with the underlying asset, potential illiquidity of the derivative, and counterparty risk (where the counterparty to the derivative contract cannot meets its obligations under the contract).

This can be considered a relevant risk for the High Growth and Balanced options.

5


High GrowthOverview This is a diversified option which has a high weighting to growth

assets. This option may be suitable for members who expect to invest their super for more than seven years. Investors in this option may be seeking higher capital growth over the long term. They may be comfortable with a relatively high level of short-term investment volatility, which will include periods of negative returns.

Investment objectives ✜ Achieve a higher return than the Balanced option over the long term, accepting that short-term returns will vary considerably and be significantly negative on occasion.

✜ Achieve returns that are greater than the growth in inflation (CPI) by at least 4% per year when measured over rolling five-year periods.

✜ To limit the probability of negative returns to around five years in 20.

Investment strategy Invest 100% in growth assets.

Benchmark asset allocation

Minimum suggested investment period

7 years or more.

Likelihood of a negative return in any 20-year period*

4 to 6 years out of every 20 years.

Volatility level* High.

* The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk; for instance, it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options.Note that the information about suitability of particular options is general in nature and is included as required by law. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them.

Your investment options

VERY LOW VERY HIGH

Australian shares

International sharesEmerging market shares

Diversity strategies

Property

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%

Australian fixed interest International fixed interest Emerging market shares CashAustralian shares International shares Property Hedge funds

100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%

Balanced/stable Stable

10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%


High Growth / BalancedOverview This is a diversified option which has a high weighting to growth assets.

This option may be suitable for members who expect to invest their super for more than seven years. Investors in this option may be seeking higher capital growth over the long term, but do not wish to have all of their super invested in growth assets. They may be comfortable with a relatively high level of short-term investment volatility, which will include periods of negative returns.

Investment objective Invest in a 50 / 50 mix of the High Growth and Balanced options.

Investment strategy Invest about 85% in growth assets and about 15% in income assets.



7 years or more.





VERY LOW VERY HIGH

Australian shares



Property

Australian fixed interestInternational fixed interest

Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%

The UTC Retirement Plan8

Balanced (MySuper) default optionOverview This is a diversified option which invests across the major asset classes,

but with a significant weighting towards growth assets. This option may be suitable for members who expect to invest their super for more than five years. Investors in this option may be seeking a diversified portfolio which aims to achieve moderate to high capital growth over the medium to long term with a medium to high level of investment volatility (which may include periods of negative returns).

If you do not choose an investment option, your super will be automatically invested in this option.

Investment objectives ✜ Achieve a better return than the Stable option over the medium to long term, accepting that annual returns will vary quite widely and be negative on occasion.

✜ Achieve returns that are greater than the growth in inflation (CPI) by at least 3% per year when measured over rolling five-year periods.

✜ To limit the probability of negative returns to around four years in 20.




5 years or more.




* The volatility level shown is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. It is based on the Standard Risk Measure developed by the industry and is not a complete assessment of all forms of investment risk; for instance; it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they are comfortable with the range of risks and potential losses and gains associated with their chosen investment options.Note that the information about suitability of particular options is general in nature and is included as required by law. It is not intended to be a recommendation or statement of opinion in relation to any particular option. Members are encouraged to seek their own advice if they are uncertain as to which option might be most appropriate for them.

VERY LOW VERY HIGH

Australian shares



Property


Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%


Balanced / StableOverview This is a diversified option which has exposure to the major asset classes.

This option may be suitable for members who expect to invest their super for more than three years. Investors in this option may be seeking a moderate level of capital growth over the medium term and may be comfortable with lower investment volatility than the Balanced option. There may be periods of low or negative returns from this option.

Investment objective Invest in a 50 / 50 mix of the Balanced and Stable options.

Investment strategy Invest about 52.5% in growth assets and about 47.5% in income assets.



3 to 5 years or more.



Volatility level* Medium to High.


VERY LOW VERY HIGH

Australian shares



Property


Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%


StableOverview This is a diversified option which invests mainly in defensive assets. This

option may be suitable for members who expect to invest their super for more than three years. Investors in this option may place a higher priority on reducing investment volatility and may be less concerned about higher levels of growth over the longer term. Although this is a more conservative option, there will be periods of low returns and it is possible that investors in this option may experience negative returns from time to time.

Investment objectives ✜ Provide a better return over the medium term than the Cash option, while accepting a small chance of a negative annual return.

✜ Achieve returns that are greater than the growth in inflation (CPI) by at least 2% per year when measured over rolling three-year periods.

✜ To limit the probability of negative returns to around two years in 20.







Volatility level* Medium.


VERY LOW VERY HIGH

Australian shares



Property


Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%8.

0%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%

UTC helpline 1800 628 849 11

Stable / CashOverview This is a diversified option which invests mainly in defensive assets. This

option may be suitable for members who expect to invest their super for more than one year. Investors in this option may place a higher priority on reducing investment volatility and may be less concerned about higher levels of growth over the longer term. Although this is a more conservative option, there will be periods of low returns and it is possible that investors in this option may experience negative returns from time to time.

Investment objectives Invest in a 50 / 50 mix of the Stable and Cash options.

Investment strategy Invest about 17.5% in growth assets and about 82.5% in income assets.





0.5 to 1 years out of every 20 years.

Volatility level* Low.


VERY LOW VERY HIGH

Australian shares



Property


Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%


Cash Overview This option invests solely in cash and similar assets. This option may be

suitable for members who may be planning to access their super in the short term and whose priority is capital protection. It may also be suitable for investors seeking exposure to cash as part of their portfolio.

Investment objectives ✜ Achieve returns that are at least equal to the increase in inflation (CPI) when measured over rolling three-year periods.

✜ To limit the probability of negative returns to be very low, if any (note that account balances are not guaranteed).

Investment strategy Invest 100% in income assets.



Nil.


Less than 0.5 years out of every 20 years.

Volatility level* Very Low.


VERY LOW VERY HIGH

Cash

10.0%

34.1%

20.0%

7.9%

28.0%

35.0%

10.0%

20.0%

6.0

%

1.0%

8.0

%10.0%

14.8%

27.2%

14.8%

1.7%

10.0%

15.0%

11.0%

19.3%21.6%

2.4%

5.5%

9.7%16.0%

4.8%

9.7%

27.8%

5.2%

22.0%


100%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

xx%

100%

Stable/Cash

54.4%

3.0%0.5%

2.8%

19.1%

10.3%

3.7%

5.6%

100%

19.8%

10.2%

HGHG/B

0.5%

Balanced

1.0%


10.0%

17.5%55.0%

4.0%

5.0%

0.5%

Stable/cash

3.0%

10.0%

5.0%

20.0%

10.0%

20.0%

10.0%

UTC helpline 1800 628 849 13

Who can help me make my investment decision?

Only you can decide which investment option is best for you. You may wish to consult a licensed financial adviser to discuss your overall financial goals before deciding. The Trustee cannot provide advice in relation to your investment choice.

What if I don’t make an investment choice for my super?Your super will be automatically invested in the Balanced (MySuper) option, the Plan’s default investment option.

Remember that your super is your money. So it’s worth taking the time to consider your options and make a decision about what’s best for your own situation.

Can I choose more than one option to invest my super?You can split the way your super is invested by choosing one of the 50/50 mix options – see page 2 for details. Other than the 50/50 mixed options, you cannot invest in more than one option.

Can I change my mind later?Yes, you can switch your investment option on a monthly basis, however, changing your choice too often could affect your investment goals.

When you switch options, the full balance of your account and any future contributions will be invested in the new option you have chosen.

Your new investment option will apply from the first day of any month, providing your instructions are received by the Plan Administrator by the 25th day of the previous month.

Is there a fee for switching my investments?Currently, no fees are charged for switching your investment options. Fees do however sometimes change. Details of the latest fees that apply can be found in the Super Guide available on the website at www.utcsuper.com.au or from the Plan Administrator (see page 2 for details).

Commonly asked questionsWhen will I receive my investment returns?Your account will receive investment returns on a monthly basis, based on the actual investment performance of the option chosen by you. Investment returns are applied to your accounts after any investment fees and taxes have been deducted. You can check the website at www.utcsuper.com.au for the latest monthly investment figures.

If you leave the Plan during the year, you will receive an interim rate for the period from the previous 1 July until the day your benefit is paid. An interim rate may also be used if you switch investment options.

The interim rate is set by the Trustee and is based on the actual monthly net performance of each investment option and the estimated net returns in the last month up to the day your benefit is paid or the switch occurs.

How do I know how my investment is performing?Each year, you’ll receive a copy of the Plan’s Annual Report, which outlines the performance of each of the investment options, together with your Personal Statement of Benefits showing how your super has performed. You can also check your monthly investment returns at www.utcsuper.com.au.

Throughout the year you will also receive regular newsletters which will provide you with updates on the Plan and the performance of each investment option.

14 The UTC Retirement PlanInvestment Guide – Accumulation section Version 14, 1 April 2020

Managing your super investments Investment managers The Trustee appoints professional investment managers to manage the Plan’s investments. Investment managers are selected for their expertise at managing certain asset classes. Refer to the Plan’s Annual Report for details of the Plan’s investment managers. Note that the managers and their products may be changed by the Trustee without prior notice to or consent from members. The Trustee may also alter or close investment options or introduce new options. You will be advised in advance if a significant change to an option is made.

Derivatives A portion of the High Growth, Balanced and Stable options (and the respective 50/50 mix options) is invested in diversity strategies, as explained on page 4. The underlying hedge fund managers for these investments may use derivatives to help achieve their objectives. The managers do not hold uncovered derivatives.

The Plan’s other investment managers generally only use derivatives for risk-control purposes or to more efficiently shift asset allocations.

Investment managers are required to have risk management processes in place in relation to the use of derivatives and the purposes for which they are used. Each year, the Trustee obtains confirmation from the managers that they have complied with their processes.

Socially responsible investmentsThe Trustee does not take in to account social, ethical or environmental considerations, or labour standards when selecting, retaining or realising the Plan’s investments. When the Plan’s investment managers were selected, the Trustee did not consider whether the managers took these factors into account.

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