FirstChoice Margin Lending - Colonial First State

FirstChoice
Margin Lending
Offering more value, service and choice.
Adviser use only

FirstChoice
makes
margin lending
easy
FirstChoice Margin Lending is the first fully integrated platform
margin lending service.
Traditionally, margin lending businesses and platforms have
run as separate businesses.
For you and your clients this has generally meant two
application forms, two call centres, two websites and two
administration teams to process transactions.
We have seen the opportunity to cut through this complexity
and offer a truly innovative and integrated investment and
loan product to you and your clients.
By completely integrating margin lending into the FirstChoice
platform you receive a real service breakthrough.

FirstChoice Margin Lending offers a simple way of gearing
your clients’ portfolios with great service, a compelling
interest rate and the full choice of the FirstChoice
investment menu.
FirstChoice Margin Lending is designed for your clients who
have simpler gearing needs and may not require the bells
and whistles of full margin lending products.
The unique, integrated product design provides you with:
W One …
PDS and streamlined application form for hassle‐free
establishment
W One …
market leading loan approval and transaction execution time
(T+1)* to save you time and reduce market risk
W One …
administration team and call centre makes dealing with us easy
W One …
fully integrated website for easy transactions and reporting
W One …
consolidated confirmation letter and statement for your clients
to avoid confusion, and
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simple LVR makes it straight-forward to explain to your clients.
Margin Lending 1

What’s different about
FirstChoice Margin Lending
FirstChoice Margin Lending is different because the loan and investment are
both administered on the same system. This gives superior control over the
accuracy and timeliness of the service provided to you and your clients.
One PDS application form
Margin lending is fully integrated
into FirstChoice. A section of the
FirstChoice PDS application form is all
that is required to establish margin
lending on your client’s account.
This streamlined process saves you
and your clients valuable time.
One T+1* execution time
A mandate structure provides you
with leading administrative speed
and efficiency. The same (T+1)*
execution timeframe of transact
today, price for today and receive
a confirmation tomorrow applies
to margin lending.
This is a market leading service
standard.
One administration team
and call centre
FirstChoice Margin Lending offers
one single point of contact, the same
Colonial First State call centre and
administration team you trust today.
T+1
2 FirstChoice

One integrated website
FirstChoice Margin Lending is fully
integrated into FirstNet Adviser, your
online platform. Transact, monitor
and report across your client’s
margin loan and investments at
the click of a button.
One consolidated
confirmation and
statement
FirstChoice gives you a consolidated
confirmation and statement across
loan and investments. This means
account reports are never out of
sync. FirstChoice’s unique design also
means that clients will receive their
margin lending quarterly reports
weeks, if not months, earlier than
most platforms.
One simple LVR
Every FirstChoice investment option
has an LVR of 50%, which means that
for every $1 your client invests they
can borrow up to an additional $1, to
invest a total of $2. This makes it easy
for you to explain to your clients how
margin lending works.
50% loan to
value ratio
Your capital
$50,000
+
Margin loan
$50,000
=
Total investment
$100,000
Margin Lending 3

Benefits of margin lending to your clients
A powerful wealth accumulation strategy
Gearing can be a highly effective means of growing your clients’ wealth. By adding borrowed funds to
your clients’ own assets the potential for greater returns over time are clear. Margin lending can also be
one of the most effective ways of growing wealth outside of super.
Diversification to reduce risk
A larger pool of investment capital can mean that your clients can spread their risk across more
investment options which can reduce the overall volatility in their portfolio.
Highly tax-effective
Building an investment portfolio using margin lending can provide some highly effective ways of
managing your clients’ tax position.
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Interest on loans is tax deductible.
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Tax deductions on interest payments can be brought forward by up to 12 months if your
clients prepay.
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Margin lending can magnify any franked income received on your client’s investment. This can
further reduce tax on your client’s income.
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By taking out a loan on existing assets, your clients can take advantage of other investment
opportunities without having to sell-down assets and incur capital gains.
Naturally, gearing will not be a suitable strategy for everyone and it is important to consider
the suitability of gearing for each of your clients.
Prepay interest prior to 30 June and lock in your client’s tax deduction
FirstChoice Margin Lending offers a one year fixed rate loan for a short period prior to 30 June
each year. In this offer period, we will provide an indicative interest rate for the fixed loan
commencing on 30 June. At the commencement date, the rate is finalised and interest prepaid
for the whole year.
This has a number of benefits for your client:
WWyour client can prepay interest up to 12 months in advance, and bring forward any tax
deduction they may be entitled to
WWyour client has the peace of mind of not being exposed to interest rate increases during the year
WWby paying interest early, your client doesn’t need to worry about allocating cash flow to make
interest payments for the next 12 months, and
WWyour client saves time by not having to hunt around for loans in the days prior to 30 June.
4 FirstChoice

Benefits of FirstChoice Margin Lending
to you and your business
FirstChoice Margin Lending aims to make it simple for you to recommend,
implement and manage margin lending for your clients. This simplicity is
brought about by the complete integration of the loan into the FirstChoice
platform and means the same service standards you have grown to expect
from FirstChoice are now available for margin lending.
Easy to explain
FirstChoice Margin Lending’s strength is in the simplicity of its product design. This makes the product
easy to explain to your clients.
Easy to manage
FirstChoice Margin Lending has been completely integrated into FirstNet Adviser. This means that
you have the tools to more easily manage the level of gearing for your clients so less time is spent
on paperwork and more time is spent with clients and growing your business.
Easy to implement
Existing FirstChoice Investments clients can easily leverage their investment by using their FirstChoice
account as security to grow their wealth tax-effectively. Activating margin lending for existing
clients is simple; through FirstNet Adviser or by a simple form. This is all done in market leading
T+1* execution timeframe.
For these reasons and more, it’s easy to see why FirstChoice Margin Lending
was awarded the Best New Functionality 2007.*
* Source: 2007 Investment Trends Platform Report: Competitive Analysis & Benchmarking.
Margin Lending 5

FirstChoice Margin Lending is fully integrated
into FirstNet Adviser, your online platform
Online applications
Apply for margin lending with ease by using the
existing FirstChoice online application capability.
Ongoing transactions and monitoring
FirstNet Adviser’s margin loan manager makes
monitoring and transacting on your clients’
accounts easy. Make ongoing transactions on your
client’s account including loan drawdown and
repayments and setting interest payment options.
Real-time lending ratios are available so you can
see the impact of any transaction on your client’s
margin loan.
6 FirstChoice

Business reporting
Use business reporting to run lists of all your clients
with margin lending and order clients by LVR status.
Easily monitor your clients’ loan positions to reduce
the risk of margin call.
Work-in-progess tool
Keep up-to-date with new margin
loan applications and transaction
progress on the work-in-progress tool.
Margin Lending 7

Value
FirstChoice Margin Lending offers your clients the best combination of low
platform fees and a compelling interest rate. FirstChoice Margin Lending also
offers you very competitive remuneration.
Service
Service is at the heart of our business. The market-leading administration that
you expect from Colonial First State also extends to margin lending. The uniquely
integrated product design allows us to set a market leading service benchmark.
Choice
Your clients can borrow across over 95 investment options from more than
40 of the most well-known Australian and international investment managers.
With specialist boutique managers to leading industry names we give your
clients genuine choice.
Your clients can choose to borrow one-off amounts or build their geared
portfolio with the regular monthly gearing facility.
FirstChoice Margin Lending marketing and sales support
To assist you to understand and
promote FirstChoice Margin Lending
we have prepared a range of materials.
These include:
WWa guide to managing your margin lending clients
WWsimple margin lending strategies brochure
WWclient flyer, and
WWmargin lending calculator.
All of these tools are available on FirstNet Adviser.
This easy to use calculator displays the magnifying
effect of gearing (both gains and losses) over
time and provides an after tax view considering
deductibility of interest.
8 FirstChoice

FirstChoice Margin Lending at a glance^
Eligible products
Who can apply
Loan features
Loan approval
and investment
Eligible investment options
Minimum loan balance
Interest rate options
Lending ratio (LVR)
Buffer 20%
Margin call LVR
Margin calls
Loan application fee
Loan transaction fees
New or existing clients in FirstChoice Investments or
FirstChoice Wholesale Investments
Individuals
(including all joint account holders)
Companies, partnerships, superannuation funds and
trustee investors cannot apply
FirstChoice Margin Lending gives your clients the choice of:
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Borrowing a lump sum and/or
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Borrowing a regular investment amount in line with their
regular investment plan
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Loan approved, funds invested and confirmed within
two business days of receipt of a correctly completed
application form
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All investment options
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No minimum †
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Variable rate loan
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One year fixed rate loan
– this loan is only available at the end of financial year (30 June)
– current rates can be accessed at colonialfirststate.com.au
Flat 50% Loan to Value Ratio (LVR) limit
Up to $1 capital invested + $1 loan = up to $2 invested
70% (50% LVR + 20% buffer)
Notification at 55% LVR (email to you plus letter to client)
Second notification at 65% LVR (email to you plus letter to client)
Margin call at 70% LVR (attempt to phone you and your client)
Nil
Nil
† Please note that product minimums still apply.

Find out more about FirstChoice
Please contact your local Business Development Manager, call Adviser Services on 13 18 36
or visit colonialfirststate.com.au .
14143/FS2776/1109
* Except in the case of suspended, restricted or unavailable investment options. There are special conditions that apply to applications made for FirstRate Term Deposits and FirstRate Wholesale
Term Deposits from 1 to 9 July each year. Please refer to the relevant Product Disclosure Statement for information.
^ The lender and provider of the FirstChoice margin loan product is the Commonwealth Bank of Australia ABN 48 123 123 124 AFS Licence No 234945. Colonial First State has been appointed
by the lender to administer FirstChoice Margin Lending. This information is for adviser use only and should not be distributed to clients.
Colonial First State – FirstChoice and FirstChoice Wholesale Investments are issued by Colonial First State Investments Limited ABN 98 002 343 352 AFS Licence Number 232468. Product Disclosure
Statements (PDSs) describing the features of the products are available at colonialfirststate.com.au or by calling us on 13 18 36. Your clients should consider the relevant PDS in deciding whether
to acquire or continue to hold options. This is general information only and does not take into account any individual objectives, financial situation or needs. These should be considered before
making an investment decision.
Adviser use only