Investment Bonds

Flexible Investment Bonds

Our Flexible Investment Bonds have many features that make them one of the most flexible investment products in Australia.  They are designed to encourage medium to long-term investment and wealth creation for any purpose. The Flexible Investment Bonds offer investors a choice of 6 investment options, each with a different objective, investment strategy and risk profile.

With our Flexible Investment Bonds you have the flexibility to switch between any of the 6 Bonds without affecting the taxation status of your investment. This is a very important feature of our bonds, especially in volatile and turbulent times, you can manage your investment by switching to the Bond that best suits your current risk tolerance, investment objectives and economic outlook without triggering any taxation consequences for your investment.

You may select a low risk Capital Guaranteed Bond or a Bond that has a higher risk which may provide exposure to potentially higher returns. You may also select or switch into any of the Flexible Investment Bonds based on the asset classes to which the Bond is exposed. Each of the Flexible Investment Bonds has a different risk profile, depending on the investment strategy and assets that they hold. The graph below provides an illustrative example of the risk profile of each Bond.

For further information about our Flexible Investment Bonds please click on one of the following links;

• Australian Shares Bond
• Balanced Bond
• Capital Guaranteed Bond
• Growth Bond
• High Growth Bond
• Income Accumulation Bond

 *Risk is measured using the 3-year standard deviation of gross returns for each Bond.

Unless otherwise stated, the information in this section is current as at 5th August 2010. Performance data and the latest available asset allocation and Bond size information is available on our website or by calling our Investor Services Team on 1300 50 50 50.

             Latest Insight Newsletter - August 2010

What is a Flexible Investment Bond?

When you invest in a Flexible Investment Bond you are purchasing an investment bond, which is a type of life insurance policy operated under a friendly society benefit fund structure. Unlike traditional life risk insurance products which provide financial protection, the Flexible Investment Bonds' focus is investment and wealth creation.

Investors in a Flexible Investment Bond are required to select a Life Insured(s) who is named on the Bond. In the event of the death of the Life Insured, the Bond's investment proceeds are paid out to the Bond Owner or their estate or to any nominated beneficiaries.

A Flexible Investment Bond does not distribute regular income to investors. Instead, growth is allocated to the investor's Bond account periodically (either each year as bonuses or daily if the Bond's value is expressed as a unit price), and the growth is effectively re-invested to achieve a compounding effect. This means that the investor is not personally taxed on the accruing growth, which is instead taxed in the hands of Over Fifty Mutual Friendly Society Limited (OFMFS). A withdrawal (or part-withdrawal) from a Bond can be made at any time, and the growth component of a withdrawn amount can be either personally tax-free or assessable and tax-rebatable as explained further in this PDS.

Flexible Investment Bonds have many features that make them one of the most flexible investment products in Australia and are designed to encourage medium to long-term investment and wealth creation for any purpose.

Who should consider investment in bonds?

Because of how tax works with Bonds, they can be tax-efficient for investors in the following circumstances:

1. Investors who are currently on high tax rates - such as high-income earners or children under age 18 years, who expect to withdraw at a future time when amounts are either
   • tax-free - because the time of withdrawal is after the '10-year period', or
   • taxed at a lower marginal rate - because the investor's earnings are lower, or
   • taxed at a lower marginal rate - because the investor is no longer a child aged under 18 years. [Investment income of minors has a much lower tax-free threshold, and excess amounts are taxed at high rates.]
2. Investors who prefer simple set-and-forget investments - without having to worry about tax reporting of investment income and having to pay tax on it. For some of these investors, a Bond investment may even help avoid the need to prepare and lodge annual tax returns - because on-going earnings are not counted as personal assessable income.
3. Investors on lower tax rates - but where the inclusion of investment income in their personal tax calculations also reduces their entitlement to certain tax offsets or benefits or increases certain charges. For some of these investors, the combined effect of including investment income in their personal tax calculations can be higher than the Bond's current 30% tax rate.
4. Investors in shares, units trusts and property whose investment returns normally include both income and capital gains - where income and undiscounted capital gains are taxed at their full marginal rate, and only discounted capital gains are taxed at half their marginal rate.
   For some of these investors, the averaged tax rate can be higher than the Bond's current 30% tax rate.

Investors should note that the above points are only a summary of the Bond tax rules, and those rules can change from time to time. Also, tax is usually only one of the considerations to be taken into account before making an investment decision, and appropriate and independent investment advice is always recommended. Further detail about our Bonds and their tax treatment can be found in the Product Disclosure Statement.

Flexible Investment Bonds Product Disclosure Statement

Flexible Investment Bonds PDS

Flexible Investment Bonds Supplementary PDS

To be able to view these documents you will need to have Adobe Acrobat. To receive your free copy of Adobe Acrobat reader click here.