Member Information Booklet - REI Super

following are some forms of risk
you may want to consider
market risk
The Trusts invest into investment markets, and the performance
of these markets will have an impact on returns. These
markets are affected by a range of conditions (e.g. economic,
technological or political) that impact returns. As the risk relates
to the market as a whole, it cannot be diversified away simply by
holding a greater variety of securities within that market.
Currency risk
Movements in exchange rates between the Australian dollar
and foreign currencies can affect performance.
Where foreign currencies fall in value relative to the Australian
dollar, this can have an adverse impact on investment returns.
Some managers may use currency hedging to reduce the
magnitude of currency risk.
Contractual risk
In the interests of efficient investment, we may act on an
investment application before confirmation of receiving the
application monies. If an investor were to fail to meet its
contractual obligations to pay the application monies, this could
result in a loss of capital to the relevant Trust.
Changes in laws
The value of investments may be affected by changes in laws,
such as taxation. Before investing, it is important that you
understand the risk created by legislative change involved in
the investment you are making.
Country risk
Some of the Trusts invest in overseas securities. There is a risk
that a country in which the Trusts invest may become politically
or economically unstable, which may prevent assets (such
as shares) being sold or the proceeds being repatriated to
Australia. This risk is generally higher in countries classified as
emerging markets.
derivatives risk
Some of the investment managers that Ibbotson chooses for
REI Super may use derivatives (such as options, futures, swaps,
forward rate agreements and forward foreign exchange
contracts) in managing the assets of the Trusts. Risks associated
with using derivatives might include the value of the derivative
failing to move in line with the underlying asset, potential
illiquidity of the derivative, the relevant Trust not being able to
meet payment obligations as they arise, and counterparty risk
(this is where the counterparty to the derivative contract cannot
meet its obligations under the contract).
page 12
inflation risk
Increasing inflation reduces the purchasing power of assets or
income. Changes in inflation may impact on the value of your
investments in the Trusts.
interest rate risk
When interest rates change, the value of fixed income securities
will fluctuate. When interest rates rise, the market value of fixed
income securities declines and vice versa. Changes in interest
rates may also affect the valuation of other products such as
shares.
Liquidity risk
Is the risk that a security may not be easily converted into cash
with little or no loss of capital and minimum delay. Liquidity
will be affected by market conditions in countries where the
securities are held. Liquidity risk may also be magnified by
exposure to alternative investment strategies, due to the nature
of the underlying investments and the instruments used to gain
access to them.
manager risk
The investment managers that Ibbotson chooses may fail to
meet their investment objectives from time to time, resulting in
sub-standard returns for some or all of the Trusts. For example,
this may be brought about by a change of employees at a
particular investment manager or a change of investment
manager that may affect the future performance of the Trusts.
Counterparty or default risk
There is a risk that a party that Ibbotson or IIML (the Responsible
Entity – see page 14) contracts with in relation to the Trust fails to
meet its contractual obligations, resulting in a loss of capital for
the Trust. Counterparties include clearing brokers for exchange
traded futures and options, foreign exchange counterparties,
and borrowers under any stock-lending agreements.