Australian government regulations require the inclusion of the following consumer warning. The information in the box is standardised across all product issuers and does not provide any specific information on the fees and costs applicable to the managed investment product offered under the Product Disclosure Statement. You should refer to the information that follows the consumer warning for the specific fees and costs applicable to the managed investment product offered under the Product Disclosure Statement.

DID YOU KNOW?

Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns.

For example, total annual fees and costs of 2% of your trust balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100 000 to $80 000).

You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs.

You may be able to negotiate to pay lower contribution fees and management costs where applicable. Ask Australian Ethical or your financial adviser.

TO FIND OUT MORE

If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.fido.asic.gov.au) has a managed investment fee calculator to help you check out different fee options.

This section shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from the trust assets as a whole.

Information about taxation is set out in the Product Disclosure Statement.

You should read all the information about fees and costs because it is important to understand their impact on your investment.

This section is divided into three parts:

Fees and costs – a list of the main fees that are payable for investments in the trusts (Table 1);
Additional explanation of fees and costs – an additional explanation of management costs and other fees and costs (Tables 2 and 3);
Example of annual fees and costs for a balanced investment option – an example of annual fees and costs for the Balanced Trust (Table 4).

Fees and costs

Percentages expressed to one or two decimal places in the table may have been rounded. For ease of reading, some monetary amounts are expressed to the nearest dollar.

Table 1: Fees and costs

TYPE OF FEE OR COST	AMOUNT	HOW AND WHEN PAID
Fees when your money moves in or out of the fund
Establishment fee The fee to open your investment.	Nil – we do not charge this fee.
Contribution fee The fee on each amount contributed to your investment	4.1% for contributions to the Balanced, Large Companies Share, Equities and World Trusts. For example, if you invest $5000 into the Balanced Trust the contribution fee (at 4.1%) will be $205. 0.5125% for contributions to the Income Trust. For example, if you invest $5000 into the Income Trust the contribution fee will be $26.	Charged against each contribution. Discounted fees apply for direct investments of $26 000 or above – see Discounted Fees in Table 2 below. This fee may be negotiable for wholesale investments and in other circumstances – see Negotiable Fees in Table 2 below. This fee is negotiable down to 0.5125% if you retain a licensed financial advisor. See Adviser commissions and rebates in Table 2 below.
Withdrawal fee The fee on each amount you take out of your investment.	Nil – we do not charge this fee.
Termination fee The fee to close your investment.	Nil – we do not charge this fee.
Management costs
The fees and costs for managing your investment.	Administration and investment management fee ¹: Balanced, Large Companies Share, Equities and World Trusts 1.9% per annum. For example if you maintained a $50 000 investment in the Balanced Trust for a year, your administration and management fee would be $950 for that year. Income Trust 1.13% per annum. For example if you maintained a $50 000 investment in the Income Trust for a year, your administration and management fee would be $565 for the year.	Your investment/unit holding is valued daily and these fees are taken into account at that time through deduction from the trust’s assets.
	Plus
	Expense recoveries ² (estimates, including net cost of GST): 0.36% per annum (Income Trust), i.e. $180 per annum for a $50 000 investment, 0.15% per annum (Balanced Trust) i.e. $75 per annum for a $50 000 investment, 0.16% per annum (Large Companies Share Trust) i.e. $80 per annum for a $50 000 investment, 0.15% per annum (Equities Trust) i.e. $75 per annum for a $50 000 investment. The World Trust has no history of expense recoveries, however it is anticipated that expense recoveries will be similar to those for the Large Companies Share Trust.	These are estimates based on expense recoveries for the year ended 30 June 2006. The amounts will change from year to year. Your investment/ unit holding is valued daily and these expenses are taken into account at that time.
Service fees ³
Investment switching fee ⁴ The fee for changing investment options.	Maximum 3.6 % fee when switching from the Income Trust to any one of the other trusts, otherwise nil. For example, if you switch $5000 from the Income Trust to the Balanced Trust, the investment switching fee would be a maximum of $180.	Charged at the time of the switch. This fee is reduced for larger switches from the Income Trust to any one of the other trusts. See Discounted fees: Large investments in Table 2 below.

Notes to Table 1

This is the fee to cover the general administration of the trusts and for managing the trust’s investments. We charge one fee for performing both these functions and it is not possible for us to separate them.
This is an estimate of the out-of-pocket expenses Australian Ethical Investment Ltd is entitled to recover from the trust. The figures are based on actual expense recoveries for the year ended 30 June 2006. They change from year to year.
Other service fees are described in the Additional explanation of fees and costs section below.
A switch is treated like a redemption/ withdrawal and you should note this may constitute a realisation for capital gains tax purposes.

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Additional explanation of fees and costs

Table 2: Important additional disclosure items

TYPE OF FEE OR COST	AMOUNT	HOW AND WHEN PAID
Trailing commission/adviser service fee: This is the fee charged by your adviser for advice about your investment(s) in the trusts.	Up to 1% per annum of your account balance as negotiated between you and your adviser. On a $50 000 investment, at 1% per annum this would amount to $500 for the year.	Paid to your advisor quarterly in arrears via redemption / withdrawal of the agreed amount for your investment. See further What is paid to your adviser? in the text below the table.
Adviser commissions and rebates	Up to 3.5% (exclusive of GST) of your contributions to the Balanced, Large Companies Share, Equities and World Trusts. Commissions and rebates do not apply to the Income Trust. This is not an additional fee, but applies to the contribution fee referred to in Table 1 above. See examples provided in the What is paid to your adviser? section below.	If you have an adviser, they may rebate all or part of their commission. See the What is paid to your adviser? section below.
Transaction costs: These are taxes, duties and other costs such as brokerage and other fees related to buying and selling assets in the trust. When you invest, switch or withdraw all or part of your investment, we may use what is called a buy-sell spread, to recover transaction costs from you so that the remaining investors in the fund are not paying the costs of your transaction.	It has never been necessary to levy a buy-sell spread and we cannot predict what the amount might be as it would be an estimate of the actual costs the trust is bearing on transactions if required. The amount would typically be less than 1% of the value of the transaction or less than $1 in every $100.	This would be an additional cost were we ever to charge it. It would be paid in the unusual circumstance where a transaction resulted in costs to other trust unit holders.
Discounted fees: Large investments Discounted fees apply to direct investments in the Balanced, Large Companies Share, Equities and World Trusts. They do not apply to investments made through third parties such as investor directed portfolio services, platforms or advisers.	For single investments of $26 000–$199 999 a 2.05% contribution fee applies. For single investments of $200 000 and over, a 0.5125% contribution fee applies.	Discounts apply at the time a contribution is made. Contributions via multiple cheques must be received on the same day for discounts to apply. Please contact us to discuss whether a discounted fee is available to you.
Negotiable fees: Wholesale investments We may negotiate reduced contribution and other fees at a wholesale rate with professional or sophisticated investors who make direct investments into the Australian Ethical Large Companies Share Trust.	A wholesale discount may apply to contributions into the Large Companies Share Trust for single investment amounts of $500 000 or more, and on additional investments which raise the balance of a unitholding in the Large Companies Share Trust to $500 000 or more. Terms may vary. Usually the contribution fee is waived and administration and management fees are discounted. However redemption or withdrawal fees may apply.	Discounts apply at the time a contribution is made and may apply over the life of the investment. Contributions via multiple cheques must be received on the same day for discounts to apply.
Discounted fees: Staff We provide contribution fee discounts to our staff.	No contribution fee applies.	Discounts apply at the time a contribution is made.
Negotiable fees: Other We may negotiate reduced contribution fees for not-for-profit organisations with 20 or more employees. We may also offer other discounted fees in accordance with the Australian Securities and Investments Commission’s policy and class order 03/217. For example, discounted fees may be offered to wholesale investors. Discounted fees may also be offered to investors who transact with us electronically, or based on the total value of interests held by an investor, or on the total period of time during which an investor has held interests in the trusts or in other financial products offered by us.	This is determined by us when deciding how and to who the discount would be offered.	This is determined by us when deciding how and to who the discount would be offered.
Incidental fees: Another incidental charge you may incur is a cheque dishonour or electronic transfer failure fee.	A $55 administration fee may apply, plus bank charges.	Levied on your contribution amount.
Taxes – please see Taxation at page 42 of the Product Disclosure Statement for a description of tax implications for investments in the trusts. ^ top

GST

Goods and services tax (GST) is not payable on the issue, withdrawal or transfer of units in the trusts, as these are input-taxed financial supplies for GST purposes.
When fees and costs are shown in this section, unless otherwise stated, the net cost of GST is included. If the GST rate or arrangements change, the total amount you pay may change even though fees due to us are not increased.

Changes to fees

All fees can change. Reasons might include changing economic conditions or changes in regulation.

Be aware that we have the right to change fees without your consent and some fees may be indexed. We would always give you at least 30 days’ notice of any proposed increase to our fees, to give you enough time to reconsider your investment.

Our current fees are lower than the maximum allowed in the trusts’ constitution. The constitution sets out the maximum amounts that we may charge. We are entitled to charge a contribution fee of 6% for each trust but we will continue to forgo the 5.5% for the Income Trust and the 2% on the remaining trusts for the life of this document. We are also entitled to an ongoing management fee based on the value of each trust which the constitution sets at the annual percentages of 1.35% for the Income Trust (but we currently forgo 0.25% of this), and 1.85% for the Balanced, Large Companies Share, Equities and World Trusts. In addition, the constitution entitles us to charge a redemption fee of 3% which we have never applied and do not intend to charge for the life of this document. While we are entitled to charge for any additional services we offer, we have not yet done so. We can’t charge more than the maximum set out in the constitution (to change the constitution in this way we would need to have unitholder approval). All fees quoted in this paragraph are exclusive of GST and the net cost of GST would be in addition to the stated fees.

What is paid to your adviser?

If you invest through an adviser, your adviser’s fee details will be in the financial services guide and statement of advice which your adviser will give you.

You should be aware that your adviser acts in accordance with your instructions. We do not have any agency relationships with advisers or dealers, nor do they have authority to act on our behalf.

If an investment is made through a licensed financial adviser part of the contribution fee may be paid to them as commission. An adviser can rebate to investors a significant proportion of the contribution fee. Neither the administration and management fee nor the responsible entity portion of the contribution fee can be reduced through the rebate of commissions. You may also agree to pay your adviser by making regular deductions from your investment in the trusts (this is commonly known as a trail commission).

We administer three types of commission to advisers:

1 Up-front commission – up to a maximum of 3.5% (exclusive of GST) of your contribution fee for all trusts except for the Income Trust – there is no commission payable where an investor invests in the Income Trust. The up-front commission is negotiable between you and your adviser, who may be prepared to waive or accept a lower commission (he or she might also charge a fee for their services). If your adviser rebates some or all of the up-front commission, we will, correspondingly, reduce your contribution fee.

2 Adviser trailing commission – upon your instruction, up to 1% per annum of your account balance may be paid to your adviser in addition to the management fee paid to us. This trailing commission, if any, is an ongoing payment set by negotiation between you and your adviser, and should be reviewed regularly with your adviser. Note this is an additional fee which is paid by you to your adviser quarterly in arrears by redeeming units from your investment. These trailing commission arrangements are different to standard industry practice where trailing commission is typically incorporated into an administration/ management fee. Be aware that a trailing commission is usually ongoing and we continue to pay your adviser quarterly until you instruct us otherwise.

3 Switch commission – up to a maximum of half the difference in contribution fees may be paid as commission when you switch from the Income Trust to one of the other trusts. The commission payable to your adviser is indicated on your switch form.

Table 3: Example of up-front adviser commissions

The contribution amount is assumed to be $5000 and the maximum contribution fee is 4.1% of the contribution amount (inclusive of the net cost of GST). In all cases, the responsible entity retains 0.5% or $25 of the total contribution fee payable by the unitholder.

Up-front commission agreed with adviser (exclusive of GST) – this amount is paid by us to your advisor	Contribution fee payable by investor	Amount invested into the Balanced, Equities, Large Companies Share or World trusts *
3.5% – $175	4.1% – $200	$4795
2.0% – $100	2.5625% – $128.13	$4871
1.0% – $50	1.5375% – $76.88	$4923
0.5% – $25	1.025% – $51.25	$4948
0% – $0	0.5125% – $25.63	$4974

* For ease of comparison, cents have been omitted in this column.

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Example of annual fees and costs for an investment in the Balanced Trust

This table gives an example of how the fees and costs of the Balanced Trust can affect your investment over a one-year period. You should use this table to compare this product with other managed investment products.

Table 4: Example of annual fees and costs

EXAMPLE – the Balanced Trust		Balance of $50 000 with a contribution of $5 000 during year.¹
Contribution fees	0.5125% to 4.1%	For every additional $5000 you put in, you will be charged between $26 and $205.
PLUS management costs	2.055% per annum	And, for every $50 000 you have in the trust you will be charged $1028 each year.
EQUALS cost of trust		If you had an investment of $50 000 at the beginning of the year and you put in an additional $5000 during that year, you would be charged fees of from: $1054 to $1230² What it costs you will depend on the investment option you choose and the fees you negotiate with the responsible entity or financial adviser.

Notes to Table 4

For ease of comparison, amounts are expressed to the nearest dollar.
Additional fees may apply.
If you have agreed to pay your adviser a trailing commission, it will be deducted from your account balance.

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