Thank you for requesting this Product Disclosure Statement from Funds
Focus.
Fee Reduction
As highlighted within our offers page, most investment loans typically pay an adviser
a trail commission of between 0.3%-0.7%pa. Applications lodged through Wealth
Focus receive a rebate enhancing the interest rate you pay.
How to Apply
Please have a read through the PDS and if you would like to invest the
application pages can generally be found towards the back of the document.
You will only need to send the application section back with a cheque payable
direct to the investment company (not ourselves). You should take note of any
minimum investment amounts that may apply.
Then mail the completed application directly to us.
We will then check to ensure your form is completed correctly before
forwarding your document on to the investment provider on your behalf.
Wealth Focus Pty Ltd
Reply Paid 760
Manly
NSW 1655
Please note that we are unable to track applications mailed directly to the
product provider and therefore cannot guarantee that your discounts have
been applied in these instances.
Should you wish to take advantage of our free annual valuation and tax report
for all your investments you should complete our broker nomination form for
The Wealth Focus Investment Service.
Regards
Sulieman Ravell
Managing Director
Wealth Focus Pty Ltd
ABN 87 123 556 730
56 The Corso, Manly, NSW 2095
Postal Address: Reply Paid 760, Manly, NSW 1655
Requirements for verifying your identity under the new Anti Money Laundering
(AML)/Counter Terrorism Financing (CTF) Act
The AML/CTF Act came into effect on the 12th December 2007. All financial
planning and fund management companies are now required to collect, verify and
store specific customer information before arranging investment services for a client.
It is designed to prevent, detect and protect Australian business from money
laundering and the financing of terrorist activities.
As such, we request that all new applications are sent with ‘certified documentation’.
We have found that the easiest way to provide the required documentation is to
have a copy of your driving licence or passport certified by Australia Post or a
Justice of the Peace (please see following page for a full list of individuals that
can certify documentation).
Once this has been completed, under the current requirements we will not
require you to send identification again.
What you need to do
You will need to enclose a certified piece of photographic evidence or one piece of
primary non-photographic evidence and one piece of secondary evidence (please refer
to the Identification Form for document requirements), with your application form
and post to us at the following address
Wealth Focus Pty Ltd
Reply Paid 760
Manly
NSW 1655
Please do not send us original driving licences or passports as these can very easily
get lost in the post. Copies of documents can be certified by an authorised individual,
they will need to sight and verify that the copy is a ‘certified true copy’, sign, date,
print their name and list their qualification.
ANTI-MONEY LAUNDERING REQUIREMENT FOR NEW APPLICATIONS
IDENTIFICATION FORM GUIDE TO COMPLETING THIS FORM
o Please contact us on 1300 55 98 69 if you have any queries.
o If you wish to apply in the name of a trust or company, please contact us for an alternative identification form.
SMSF's and retail superannuation applications do not need to provide ID (an online check will be performed for SMSFs)
Attach a certified copy of the ID documentation used as proof of identity. ID enclosed should verify your full name; and
EITHER your date of birth or residential address.
o Complete Part I (or if the individual does not own a document from Part I, then complete either Part II or III.)
PART I – ACCEPTABLE PRIMARY ID DOCUMENTS
Select ONE valid option from this section only
Australian State / Territory driver’s licence containing a photograph of the person
Australian passport (a passport that has expired within the preceding 2 years is acceptable)
Card issued under a State or Territory for the purpose of proving a person’s age containing a photograph of the person
Foreign passport or similar travel document containing a photograph and the signature of the person*
PART II – ACCEPTABLE SECONDARY ID DOCUMENTS – should only be completed if the individual does not own a document from Part I
Select ONE valid option from this section
Australian birth certificate
Australian citizenship certificate
Pension card issued by Centrelink
Health card issued by Centrelink
AND ONE valid option from this section
A document issued by the Commonwealth or a State or Territory within the preceding 12 months that records the provision of
financial benefits to the individual and which contains the individual’s name and residential address
A document issued by the Australian Taxation Office within the preceding 12 months that records a debt payable by the
individual to the Commonwealth (or by the Commonwealth to the individual), which contains the individual’s name and
residential address. Block out the TFN before scanning, copying or storing this document.
A document issued by a local government body or utilities provider within the preceding 3 months which records the provision
of services to that address or to that person (the document must contain the individual’s name and residential address)
If under the age of 18, a notice that: was issued to the individual by a school principal within the preceding 3 months; and
contains the name and residential address; and records the period of time that the individual attended that school
Who can verify customer identity documents?
Please find below a list of all the Approved Individuals that can certify documents:
•
A Justice of the Peace
•
An agent of the Australian Postal Corporation who is in charge of an office supplying postal services to the public, or a
permanent employee with more than two years continuous service (who is employed in an office supplying postal services to
the public)
•
A notary public (for the purposes of the Statutory Declaration Regulations 1993)
•
A person who is enrolled on the roll of the Supreme Court of a State or Territory, or the High Court of Australia, as a legal
practitioner (however described)
•
A judge, magistrate, registrar or deputy registrar of a court
•
A chief executive officer of a Commonwealth Court
•
A police officer
•
An Australian consular or diplomatic officer (within the meaning of the Consular Fees Act 1955)
•
An officer or finance company officer with two or more continuous years of service with one or more financial institutions (for
the purposes of the Statutory Declaration Regulations 1993)
•
An officer with, or authorised representative of, a holder of an Australian Financial Services Licence, having two or more
continuous years of service with one or more licensees, and
•
A member of the Institute of Chartered Accountants in Australia, CPA Australia or the National Institute of Accountants with
more than two years continuous membership.
COLONIAL GEARED INVESTMENTS
Colonial Margin Loan
Colonial Margin Loan
Product Disclosure Statement (PDS)
ISSUE DATE 30 JANUARY 2012
Page ii of 4
Contents
This document contains the following information:
1. About the Commonwealth Bank and the Colonial Margin Loan
2. Benefits of a Colonial Margin Loan
3. How a Colonial Margin Loan works
4. What is a Margin Call?
5. The risk of losing money
6. The costs
7. How to apply
For more information, visit www.colonialgearedinvestments.com.au,
call 1800 252 351 between 8.30am and 6pm (Sydney time), Monday to
Friday or contact your financial adviser.
Use the ! references marked to find more information about this
product on our website or call us on 1800 252 351.
Issue date: 30 January 2012
Issued by: Commonwealth Bank of Australia
Ground Floor, Tower 1, 201 Sussex Street, SYDNEY NSW 2000
ABN 48 123 123 124 Australian Financial Services Licence 234945
Important information. Colonial Margin Lending facilities are provided by the Commonwealth Bank of Australia ABN 48 123 123 124
AFSL 234945 (CBA) and administered by its wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited ABN 60 067
254 399 AFSL 238814 (CommSec), a Participant of the ASX Group.
This PDS contains a summary of significant information about the product and contains a number of references to important information
(each of which forms part of the PDS).
The information contained in this PDS is general information only and does not take into account the investment objectives, financial
situation and needs of any particular individual. Because of that, you should assess with the help of legal, financial and taxation advice,
whether the information is appropriate in light of your own circumstances before acting on it.
Information in this PDS may be updated from time to time where that information is not materially adverse to clients. CBA may provide
updated information on the Colonial web site, colonialgearedinvestments.com.au . A copy of the updated information is also available
upon request free of charge by contacting Colonial Geared Investments. CBA may be required to issue a supplementary PDS as a result
of certain changes, in particular where the changes are materially adverse from the point of view of a reasonable person deciding as a retail
client whether to open a Colonial Margin Loan. This PDS and any supplementary PDS are available in paper form and in electronic form
from our web site at colonialgearedinvestments.com.au or by calling 1800 252 351.
Page 1 of 4
1. About the
Commonwealth Bank
and the Colonial
Margin Loan
A Colonial Margin Loan
allows you to borrow money
to invest in accepted shares
and managed funds, using
existing investments or
cash as security.
Key information about Margin Lending:
> The Commonwealth Bank of Australia is one of Australia’s leading providers of integrated
financial services and is a listed company on the Australian Securities Exchange.
> By enabling you to invest more money, a margin loan has the potential to improve your
>
>
>
>
>
2. Benefits of a Colonial
Margin Loan
Margin Lending can provide you with the following benefits:
> Increasing the size of your investment portfolio can allow you to accelerate your wealth
>
>
>
>
3. How a Colonial
Margin Loan works
1.
2.
3.
4.
We lend you money using
your own money or existing
portfolio as security. Security
can include cash, shares or
managed funds.
You may then use the loan
to invest.
You should regularly monitor
your portfolio and take steps
to avoid or respond to any
potential Margin Calls.
You will own the investments
you buy at all times, however
they will be used as security
for your margin loan. This
means that they may be sold
to repay your loan if your
obligations are not met.
investment returns and help you reach your financial goals sooner.
Borrowing money to invest in this way (also known as ‘gearing’) can increase the gains
from an investment, but may also multiply any losses.
You must regularly monitor your margin loan so you can take steps to prevent a Margin
Call, minimise any losses and to be aware of any changes to the terms of your loan.
Should you receive a Margin Call, you may be required to pay additional funds or sell
some or all of your investments to reduce the loan balance, at short notice. In some
instances, we may sell your investments without giving you prior notice.
If the sale of your investments does not clear the Margin Call, you will be required to
access funds from elsewhere.
We are required by law to assess whether a margin loan is ‘not unsuitable’ for you.
This assessment is available on request should your application be approved.
faster and depending on your investment, may earn you more dividends or distributions.
A larger investment amount can allow for greater diversification, helping you to better
manage risk as you can spread your money across a wider range of investments.
Most shares and managed funds can be bought and sold on most business days,
so you can sell all or part of your investment quickly if needed.
By borrowing against your portfolio, you can unlock the equity to increase the size of
your investment without having to sell your portfolio and potentially incur capital gains tax.
May provide tax effectiveness depending on your situation. You should seek
independent advice from a tax adviser.
How much can you borrow?
The maximum amount you can borrow depends on:
> How much money you have to invest or the value of the assets you provide as security.
> Which shares or managed funds you invest in, as we lend different amounts for
different types of investments.
> The Borrowing Limit for each accepted security is set out in our Accepted Securities Lists.
Borrowing Limits, which we determine, may change from time to time at our discretion.
!
You should read the important information about the latest list of Accepted
Securities and associated Borrowing Limits before making a decision. Go to:
www.colonialgearedinvestments.com.au and click on the ‘Accepted
Securities’ tab or call 1800 252 351. The material relating to the Accepted
Securities may change between the time when you read this PDS and the day
when you sign the application form.
For example
You wish to purchase $10,000 of Managed Fund XYZ which we assign a Borrowing Limit of
70%. This means if you put in $3,000 of your own money you could borrow up to $7,000.
Your Capital
$3,000
+
Margin Loan
(up to)
$7,000
=
Total investment
(up to)
$10,000
70% Borrowing Limit
> To simulate how different borrowing amounts, Borrowing Limits and gearing levels can
affect a margin loan, use the ASIC calculator at www.fido.gov.au
> As a client, you will also have access to our ‘What If Calculator’ which allows you to
simulate transactions and view the resulting loan positions.
Other important terms that will help you manage your margin loan:
> LSR stands for Loan to Security Ratio (also known as, and is the same as, Loan to Value
Ratio [LVR]).
Page 2 of 4
3.
How a Colonial Margin Loan works
continued from previous page
> Base LSR is the maximum loan amount that you can borrow against your accepted
>
>
>
>
securities, expressed as a percentage.
Current LSR is your loan amount divided by the value of your accepted investment(s)
expressed as a percentage. Also known as your gearing level.
Margin Call LSR is a point when your account will be subject to a Margin Call. It is when
your Current LSR exceeds the Base LSR plus the Buffer.
Buffer is a percentage amount that is provided to allow for market fluctuations and
provides the opportunity to restore the gearing level of your portfolio before a Margin Call
is triggered. The current Buffer amount is published on our Accepted Securities List.
Maximum Gearing Ratio (MGR) is the maximum level of gearing we will allow,
expressed as a percentage against your portfolio (disregarding any Financial Products
with a Borrowing Limit of 0%) as determined by us from time to time. The current MGR is
published on our Accepted Securities Lists.
Details of your rights and obligations are set out in the Colonial Margin Loan Terms
and Conditions. We recommend you carefully read the Colonial Margin Loan Terms
and Conditions.
For more information on how a Colonial Margin Loan works, visit
www.colonialgearedinvestments.com.au, or call 1800 252 351.
4. What is a
Margin Call?
A Margin Call occurs when:
> your Current LSR exceeds
the Margin Call LSR; or
> your Current LSR exceeds
the Maximum Gearing Ratio.
A Margin Call can occur when:
>
>
>
>
The market value of your portfolio falls; and/or
we reduce the Borrowing Limit of an investment securing your margin loan; and/or
we reduce the Buffer amount; and/or
interest that is capitalised to your loan.
In the event of a Margin Call:
> We will take reasonable steps to notify you and your adviser (if applicable) by SMS,
email or phone. You must ensure you are contactable at all times in the event of a
Margin Call. Please ensure you keep us informed of your current contact details.
> You must adjust your gearing level within the timeframes stipulated in the Colonial
Margin Loan Terms and Conditions so that it is below the lower of:
> the Base LSR; and
> the Maximum Gearing Ratio.
How to resolve a Margin Call:
If a Margin Call is triggered on your account, you have the following options to resolve it:
> Deposit money into your margin loan to reduce your loan balance; and/or
> provide us with additional accepted shares or managed funds to increase your
portfolio value; and/or
> sell a sufficient amount of your portfolio to reduce your loan balance and gearing level.
For example
We calculate your portfolio’s Base LSR as 60%. If you have a margin loan balance of
$10,000 and the market value of your portfolio is $20,000, your gearing level will be 50%
($10,000/$20,000) which is below the Base LSR of 60%.
However, if the value of your portfolio falls to $14,000, your gearing level will increase from
50% to 71% ($10,000/$14,000). As this is above the calculated Base LSR and the Buffer
allowed (10% in this instance), a Margin Call will occur and you will be required to reduce
your gearing level by either paying money into your loan account, contributing additional
investments to your portfolio, or selling some or all of your investments.
Initial Position
After Portfolio Drop
$14,000
Portfolio Market Value
$20,000
Loan Balance
$10,000
$10,000
Current LSR
50%
71%
Base LSR
60%
60%
Margin Call LSR
70%
70%
Portfolio Lending Value
$12,000
$8,400
Cash Available
$2,000
-$1,600
Loan Status
Account in Order
Margin Call
In this example, the Margin Call amount will be $1,600. This is the minimum payment
required to bring the Current LSR back to the Base LSR.
Page 3 of 4
5. The risk of
losing money
All investments are subject
to risk. This means that you
may lose money on your
investments or fail to meet
your financial objectives.
6. The costs
The key risks of Margin Lending include:
> Adverse market conditions may result in your portfolio value being reduced and
subsequently your gearing level may increase, triggering a Margin Call.
> We may reduce or remove the Borrowing Limit applied to some or all of your investments
at any time, which may result in a Margin Call.
> The variable interest rate may increase resulting in higher interest costs, which may
exceed the portfolio’s return.
> Margin Calls may require investments to be sold by you or us quickly at unfavourable
prices or may trigger unwanted capital gains if you are unprepared.
> Tax legislation or marginal tax rates may change and have an adverse impact on your
tax position.
> The loss of any assets (including property) if they have been mortgaged as security or to
provide security to the margin loan.
> Default events or enforcement events (as defined in the terms and conditions)
occurring. The consequences of such an event includes all amounts owing
becoming immediately payable.
Default events include a materially adverse change to your financial position, or to
the financial position of any Guarantor or Mortgagor; and/or where the All Ordinaries
Index falls by 10% or more in any one trading day or by 20% or more over any three
consecutive trading days.
> Your financial situation may materially change, adversely affecting your margin loan.
> Adverse market and/or security specific conditions may result in the value of your security
being insufficient to repay your loan.
For general information on the risks involved, visit www.asic.gov.au/fido.
For more information on Margin Lending visit www.colonialgearedinvestments.com.au.
Interest
We offer both fixed and variable interest rates.
> A variable rate loan is when the interest rate can change at any time. Interest is
calculated daily on the outstanding loan balance. You must pay accrued interest monthly
in arrears either by direct debit or by capitalising it to the loan.
> You can also request a fixed rate loan which allows payment (in advance or arrears) of
interest on all or part of your loan balance.
A default interest rate may apply if you do not pay on time.
!
You should read the important information about current interest rates before
making a decision. Go to: www.colonialgearedinvestments.com.au, and click
on the ‘Rates and Fees’ tab or call 1800 252 351. The material relating to the
current interest rates may change between the time when you read this PDS and
the day when you sign the application form.
Fees and charges
There are no application fees, establishment fees or account keeping fees unless you are
applying as a trustee. Government charges may apply. Fees and charges are subject to
change at any time.
!
For a full list of fees and charges visit www.colonialgearedinvestments.com.au,
and click on the ‘Rates and Fees’ tab, or call 1800 252 351. The material relating
to the current fees and charges may change between the time when you read this
PDS and the day when you sign the application form.
Commission
We may pay a commission to your financial adviser when your margin loan is approved
and for the period it is maintained. For more information on what commission may be
payable, please refer to the Statement of Advice provided to you by your financial adviser.
7. How to apply
Colonial Margin Loans
are available to approved
applicants who are 18 years
of age or older, are assessed
as being ‘not unsuitable’ and
are an individual, company
or trustee.
Page 4 of 4
To apply for a Colonial Margin Loan
1. Speak to your financial adviser to see if margin lending is suitable for you.
2. Read the Colonial Margin Lending Terms and Conditions’ after reading this PDS.
3. Contact your financial adviser to arrange a Colonial Margin Loan for you.
What should I do if I have a complaint?
If you have any complaints regarding your loan or application, please call us on 1800 252 351.
A phone call is all that is required to resolve most issues. If at this stage your complaint has not
been resolved to your satisfaction, please contact our Customer Relations team.
Phone: 1800 805 605 Fax: 1800 028 542
Web: www.commbank.com.au/feedback
Post: CBA Group Customer Relations, Reply Paid 41, Sydney NSW 2001
If you feel that the response from Customer Relations is unsatisfactory, you may also lodge
a complaint with the Financial Ombudsman Service (FOS) on 1300 780 808.
Page 5 of 4
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