INSIGNIA FINANCIAL LTD - Capital/Financing Update 2012

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26 October 2012

Dear Sirs

IOOF Holdings Limited attaches a prospectus for the IOOF Advice Division offer of Performance Rights (“ Prospectus ”).

The Prospectus was lodged with the Australian Securities and Investments Commission on 26 October 2012.

Yours sincerely

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Danielle Corcoran Company Secretary

Prospectus – IOOF Advice Division offer of Performance Rights

IOOF Holdings Limited

(ABN 49 100 103 722)

This Prospectus is an important document and requires your immediate attention. You should carefully consider all of the information contained in this Prospectus before you decide whether to participate.

If you have any questions about any part of this Prospectus please contact your legal, investment or other professional adviser. If you have any questions about the Offer, please call Michael Carter on (02) 9028 1000 at any time between 9.00am to 5.00pm Monday to Friday (Melbourne time) during the Offer Period. Alternatively, please email your enquiries to [email protected] during the Offer Period.

IOOF Holdings Limited

Important information

This Prospectus is an important document. You should read the entire Prospectus before deciding whether to participate in the Offer. In particular, you should consider the risk factors outlined in section 4 of this Prospectus. You should consider these factors in light of your personal circumstances (including financial and taxation issues). If you are in any doubt as to what you should do, you should consult your legal, investment or other professional adviser immediately.

About this Prospectus

This document is a prospectus issued by IOOF Holdings Limited ( Company or IOOF ) for the purposes of Part 6D of the Corporations Act.

This Prospectus was prepared in accordance with section 713 of the Corporations Act. This Prospectus is dated 26 October 2012 and was lodged with ASIC on that date. This Prospectus expires on 26 October 2013 ( Expiry Date ). No Performance Rights will be issued on the basis of this Prospectus after the Expiry Date.

Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus nor for the merits of the investment to which this Prospectus relates.

Not investment advice

This Prospectus does not purport to contain all the information that you may require before deciding whether to participate in the Offer and does not take into account the investment objectives, financial situation or needs of you or any particular investor. You should conduct your own independent review, investigation and analysis of the Performance Rights and IOOF Shares. You should obtain any professional advice you require to evaluate the merits and risks of an investment in the Company before making any investment decision based on your investment objectives.

Future performance

Any statements in this Prospectus about the future, including forward looking statements relating to the financial position and strategy of the Company are generally based on stated or implied assumptions.

These assumptions may prove to be incorrect and involve known and unknown risks, uncertainties and other important factors (including general economic conditions, the regulatory environment, structural changes in the financial services industry and competitive pressures) that could cause the actual results, performance or achievements of the Company to be materially different from any future conduct, results, performance or achievements, expressed or implied by such statements. Deviations as to future conduct, results, performance and achievements are both normal and to be expected.

None of the Company, its officers, advisers, or any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this Prospectus will actually occur. You are cautioned about relying on these forward looking statements. The forwarding looking statements in this Prospectus reflect the views held only as at the date of this Prospectus.

Prospectus availability

A printed copy of this Prospectus and a personalised Application Form will be sent to each Eligible Adviser who is located in Australia. During the Offer Period, an electronic Prospectus (without an Application Form) will also be available to Eligible Advisers at www.ioof.com.au.

The Corporations Act prohibits any person from passing an Application Form to another person unless it is accompanied by the complete and unaltered Prospectus.

The following conditions apply to the electronic Prospectus:

Eligible Advisers must access and download the entire Prospectus;
applications to participate in the Offer will only be considered if an Eligible Adviser completes and submits their personalised Application Form which accompanies and has been issued together with the printed copy of this Prospectus. A printed copy of this Prospectus and a personalised Application Form will be sent to each Eligible Adviser who is located in Australia. The Prospectus (without an Application Form) will also be available to Eligible Advisers in electronic form at www.ioof.com.au (refer to section 2 of this Prospectus for further information); and
the Offer under this Prospectus is only available to Eligible Advisers in Australia and is not available to persons in any other jurisdiction (including the United States).

Neither this Prospectus nor the accompanying Application Form may be distributed to investors in, or otherwise distributed within, the US, nor may they be distributed to investors that are, or are acting on behalf of or for the account or benefit of, a US Person.

Foreign jurisdictions

No action has been taken to register or qualify the Offer, the Performance Rights or the IOOF Shares, in any jurisdiction other than Australia and the Offer is not being extended to any person outside Australia.

This Prospectus is neither an offer to sell, nor a solicitation of an offer to buy, securities as those terms are defined under the US Securities Act. This Prospectus does not constitute an offer in the US or to a US Person (or to any person acting for the account or benefit of a US Person), or in any other place in which, or to any

person to whom, it would not be lawful to make such an offer and may not be distributed into the US or to a US Person (or to any person acting for the account or benefit of a US Person).

Neither the Performance Rights nor the IOOF Shares have been, nor will be, registered under the US Securities Act or the securities laws of any state of the US and may not be offered, sold or resold in the US, or to, or for the account or benefit of, a US Person, except in a transaction exempt from the registration requirements of the US Securities Act and applicable US state securities laws.

The distribution of this Prospectus (including an electronic copy) outside Australia may be restricted by law. If you come into possession of this Prospectus, you should observe any such restrictions and should seek your own advice on such restrictions. Any failure to comply with such restrictions may contravene applicable securities laws.

Disclaimer

No person is authorised to give any information or make any representation in connection with the Offer, which is not contained in this Prospectus. Any information or representation not contained in those documents may not be relied on as having been authorised by the Company in connection with the Offer.

Financial amounts

Money as expressed in this Prospectus is in Australian dollars unless otherwise indicated.

Definitions

Defined terms used in this Prospectus are explained in the Glossary in section 8.

Contents	Contents
Important information		3
1	Details of the Offer	5
2	How to participate	11
3	Effect of the Offer on IOOF	12
4	Risks	13
5	About IOOF	18
6	Taxation	20
7	Additional Information	25
8	Glossary	30
9	Appendix- Terms	32

Key dates

Key dates
Opening Date	7 November 2012
Closing Date	28 November 2012
Grant Date	30 November 2012
Vesting Period	30 November 2012 – 30 November 2015

All times and dates stated in this Prospectus are references to Melbourne time and are subject to change. IOOF reserves the right, subject to the Corporations Act, ASX Listing Rules and other applicable laws to vary the dates of the Offer, including extending the Offer or accepting late applications, either generally or in particular cases, without notice. IOOF will publicly announce any changes to the dates to ASX. Accordingly, you are encouraged to submit your Application Form as soon as possible after the Opening Date if you wish to participate.

1 Details of the Offer

1.1 Overview

IOOF is offering Eligible Advisers the opportunity to apply for Performance Rights (the Offer ). The number of Performance Rights that will be made available to each adviser is set out in their personalised Application Form.

A Performance Right gives you the right to be provided with one fully paid ordinary share in the issued capital of IOOF (an IOOF Share ) if the Performance Right vests in accordance with the Terms.

A Performance Right can only vest (and will only be exercised) if certain conditions are satisfied, including that you continue to be an “Eligible Adviser” at the end of the Vesting Period. These conditions are described in more detail in section 1.6 and in the Terms.

You do not need to pay any money to apply for a Performance Right and you do not need to pay any money to exercise the right.

1.2 Who may apply for Performance Rights

The Offer is being made to selected advisers connected with the IOOF Advice Division that are determined by the IOOF Board to be eligible to participate in the Offer (an Eligible Adviser ).

IOOF reserves the right to determine whether a person is an Eligible Adviser and reserves the right to reject any application which it believes comes from, or relates to, a person who is ineligible to participate in this Offer.

1.3 How eligibility to receive Performance Rights is determined

The eligibility criteria and the number of Performance Rights made available to you have been determined by the IOOF Board after consultation with Bridges or Executive Wealth Management (as applicable). The number of Performance Rights for which you are eligible to apply is set out in your personalised Application Form. This number is confidential and in certain circumstances you could forfeit your Performance Rights if you disclose this number to another person – this is described in more detail in section 1.6 under “Lapse of Performance Rights”.

1.4 Applying for Performance Rights

To apply to participate in the Offer, you must complete and return your personalised Application Form in accordance with the procedures outlined in section 2 and as set out on your personalised Application Form.

You must complete and return your personalised Application Form so that it is received by the Closing Date.

If you do not apply to participate in the Offer by the Closing Date, you will not be provided with any Performance Rights. Cash will not be provided as an alternative.

1.5 Amendment or withdrawal

The IOOF Board may, in its absolute discretion, decide to suspend or cancel the Offer at any time before the close of the Offer Period.

Subject to the ASX Listing Rules, the IOOF Board may also amend the Terms from time to time (including after the Closing Date) provided that the amendment does not reduce the rights of a participating Eligible Adviser.

The IOOF Board’s decision as to the interpretation, effect or application of the Terms and the Plan is final and conclusive. The IOOF Board may make further rules for the operation of the Terms and the Plan. Any powers or discretions that are conferred on the IOOF Board under the Terms and the Plan may be exercised by the IOOF Board or any person or persons appointed to act on its behalf.

1.6 Description of the Terms

Set out below is a summary of the Terms. This summary is not intended to be a complete or exhaustive description of the Terms. The Terms of the Performance Rights are set out in full in the Appendix.

Grant of Performance Rights	If you participate in the Offer, you will be granted Performance Rights. Even if you have validly submitted your personalised Application Form, to be eligible to be granted Performance Rights, you must continue to be an Eligible Adviser on the Grant Date. The number of Performance Rights that are eligible to vest (if any) will be determined at the end of the Vesting Period unless they lapse earlier.

Vesting Period	The Vesting Period for the Performance Rights granted under the Offer is 3 years. It starts on 30 November 2012 (which is the Grant Date) and ends on 30 November 2015. Your continued association with IOOF and your compliance record during this period will determine the number of Performance Rights (if any) that are eligible to vest.

Your rights and entitlements	The Performance Rights will not be listed on the ASX or any other stock exchange or regulated trading facility. You will not be able to sell, assign or otherwise deal in your Performance Rights. As a holder of Performance Rights you will not be entitled to any dividends or distributions or to exercise any voting rights.

Testing the Conditions	Following the end of the Vesting Period and provided your Performance Rights have not otherwise lapsed, the Conditions will be assessed by IOOF to determine the number of Performance Rights (if any) that are eligible to vest. The assessment will be final, conclusive and binding. There will be no reassessment at a later date if a Condition is not fully satisfied.

Lapse of Performance Rights	All of your Performance Rights that are not exercised will lapse (and you will not be provided with any IOOF Shares on exercise of the Performance Rights) if: • you cease to be an Eligible Adviser (for example, if you cease to be a Representative of Bridges or Executive Wealth Management, whichever is applicable to you) before the end of the Vesting Period, - unless you are a “Good Leaver”; • the IOOF Board provides you with a notice that the applicable Condition has not been satisfied during the Vesting Period; • Bridges or Executive Wealth Management (whichever is applicable to you) ceases to be to be a Subsidiary of IOOF, ceases to hold an Australian Financial Services Licence or ceases to hold an Australian Financial Services Licence on substantially the same terms as at the Opening Date (in each case, unless otherwise determined by the IOOF Board); or • you disclose the number of Performance Rights offered or granted to you under this Offer to another person other than: • your professional adviser; • as required by law; or • with the prior written consent of IOOF. The IOOF Board has discretion to determine that your Performance Rights will vest even if one of the above events occurs, including if you cease to be an Eligible Adviser before the end of the Vesting Period and you are determined by the IOOF Board to be a Good Leaver. You may also request that some or all of your Performance Rights lapse.

Exercise of Performance Rights	After the end of the Vesting Period, you will be notified of how many Performance Rights have vested. Your Performance Rights which have vested will be automatically exercised. You do not need to pay any money to exercise these rights and you will automatically be provided with IOOF Shares. Any unvested Performance Rights will lapse.

Tax indemnity	If a company in the IOOF Group is required to pay an amount or account to an authority for Tax in relation to your Performance Rights or your IOOF Shares provided on exercise of your Performance Rights (if

1.7

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Conditions

any)	then:
•	that company may recover an amount in
	respect of the Tax from you; or
•	you may be required to indemnify that
	company or make a payment to that
	company in respect of the Tax or otherwise
	enter into an arrangement to secure
	payment of the Tax.
See	clause 13 of the Terms for further detail on this
tax indemnity.

There are two Conditions that will apply to your Performance Rights:

Condition	Percentage of Performance Rights subject to each Condition

Service Condition	50% - these are referred to as Service-based Performance Rights.
Compliance Condition	50% - these are referred to as Compliance-based Performance Rights. You must also continue to be an Eligible Adviser until the end of the Vesting Period for the Compliance- based Performance Rights to vest.

More detailed information about the Conditions can be found in the Terms.

Service-based Performance Rights

For your Service-based Performance Rights to vest, you must continue to be an Eligible Adviser until the end of the Vesting Period. If you cease to be an Eligible Adviser before the end of the Vesting Period, your Performance Rights will lapse unless the IOOF Board determines otherwise.

Compliance-based Condition

For your Compliance-based Performance Rights to vest, during the Vesting

Period you must:

satisfy the Compliance Condition (the specific requirements of the Compliance Condition are set out in the Terms); and
meet the Service Condition (that is, you must continue to be an Eligible Adviser until the end of the Vesting Period).

1.8 What happens when your Performance Rights vest

If the relevant Conditions are satisfied and your Performance Rights have not otherwise lapsed, you will be notified and your relevant Performance Rights will vest and be automatically exercised. You do not need to pay any money to exercise these rights and you will automatically be provided with IOOF Shares.

If you are provided with IOOF Shares, you will be free to deal with those IOOF Shares in the same manner as other IOOF Shareholders.

In certain limited circumstances, your Performance Rights may vest even though the Vesting Period has not elapsed or the Conditions have not otherwise been satisfied. These circumstances are set out in the Terms and are intended to cover extraordinary events such as a takeover bid, a change of control, a compromise or arrangement involving a scheme of arrangement, voluntary winding up or compulsory winding up of IOOF.

1.9 Risks

Simply participating in the Offer and being granted Performance Rights does not guarantee that you will be able to exercise the rights and receive IOOF Shares. As outlined in sections 1.6 and 4.1, there is a risk that the Performance Rights will not vest or lapse. In addition, the changing regulatory landscape and the application of the tax rules may adversely impact on the effect or benefit of the Performance Rights to you. See section 4.1 for more information. As a potential owner of IOOF Shares, it is important that you consider and understand the risks which are set out in sections 4.2 and 4.3. Specifically, section 4.2 includes an explanation of general investment risks associated with holding equity in a company and section 4.3 outlines some specific risks relating to IOOF including:

changes in investment market conditions and/or IOOF’s inability to continue to provide competitive services to its customers could lead to a decline in IOOF’s FUMA which could adversely impact IOOF’s future earnings;
competitive pressures could result in loss of market share, price reductions or reduced margins, any of which could adversely affect the business of IOOF;
a complete or partial failure of relevant information systems and technology could adversely impact IOOF’s ability to conduct its daily operations and its financial performance and position;
adverse publicity could adversely impact the brands and reputation associated with IOOF’s business and could have a material impact on IOOF’s operations and revenue;
IOOF may be exposed to reputation and brand damage or litigation if the advice given by its financial planners and/or authorised representatives is judged to be of poor quality and/or incorrect;
the loss or deterioration of some or all of IOOF’s key business relationships including its relationships with financial planners, superannuation trustees or superannuation funds could materially impact the business of IOOF;
the termination of any contracts which are important to the future of IOOF’s business may have a material adverse effect on IOOF;
litigation and the costs of responding to the threats of legal action could have a material adverse impact on IOOF’s financial position, earnings and share price;
IOOF could be adversely impacted by increases in the cost of insurance premiums or an inability to access insurance coverage arising from circumstances that might or might not be related to the business of IOOF;
errors in unit pricing of investments may result in significant financial losses, breaches of compliance obligations and brand damage to IOOF;

the loss of key executives (including key investment personnel) could cause material disruption to IOOF’s activities and operations in the short to medium term;
the success of IOOF’s financial planning business may be adversely affected if it is unable to retain productive financial planners;
operational risk has the potential to have a material adverse effect on IOOF’s financial performance and position as well as its reputation;
the effect of an extraordinary event on the business of IOOF and the inability of IOOF to recover from or to operate its business in an uninterrupted manner following that event may adversely affect IOOF’s financial performance and position;
the decisions made by the IOOF Group to invest in certain funds or financial markets could lead to poor investment performance; and/or
there is a risk that potential acquisitions of other businesses by IOOF could adversely affect IOOF’s performance and financial position.

1.10 Ranking of new IOOF Shares

If the Performance Rights vest and are exercised, IOOF may purchase on-market some or all of the IOOF Shares to be provided to a participating Eligible Adviser or it may issue new shares. If new IOOF Shares are issued they will be fully paid shares in the capital of IOOF and will rank equally with existing IOOF Shares and IOOF will, as soon as reasonably practicable of that issue, make application to ASX for quotation of those IOOF Shares.

1.11 Bonus issues, rights issues and capital reorganisations

The rights and entitlements attaching to your Performance Rights may be adjusted if IOOF undertakes a bonus or rights issue or a capital reconstruction in relation to IOOF Shares. The Terms set out these adjustments. Generally, where IOOF takes certain actions that affect its share capital, there will be no change to the zero exercise price for the Performance Rights but in certain circumstances the number of IOOF Shares that you are provided upon the exercise of Performance Rights may be altered.

2 How to participate

2.1 Alternatives available to you

If you are eligible to participate in this Offer, you may:

apply for all (and not some) of the Performance Rights set out in your personalised Application Form; or
choose not to apply for the Performance Rights in which case you will not be granted any Performance Rights under this Offer.

2.2 Accessing the Prospectus and Application Form

A printed copy of this Prospectus and a personalised Application Form will be sent to each Eligible Adviser.

During the Offer Period, this Prospectus (without the Application Form) will also be made available to you in electronic form at www.ioof.com.au. Before you access the electronic Prospectus you should read section 2 and the “Prospectus availability” paragraph of the “Important information” section at the start of this Prospectus.

2.3 What to do if you want to participate

If you wish to apply for Performance Rights, you must:

complete and sign your personalised Application Form which accompanies and has been issued together with the printed Prospectus in accordance with the instructions on the form; and
return your completed personalised Application Form to the addresses specified on the business reply paid envelope provided with your personalised Application Form.

You must complete and return your personalised Application Form so that it is received by 28 November 2012 (the Closing Date ) in accordance with the instructions provided on your form.

Late applications will not be accepted so you should submit your personalised Application Form early if you want to participate.

If you do not want to apply for Performance Rights you should do nothing. If you do not apply to participate in the Offer, you will not be provided with any Performance Rights. Cash will not be provided as an alternative.

2.4 Payment

No payment is required by you to participate in the Offer.

2.5 Who to contact if you have questions about how to apply

If you have any questions about how to complete your personalised Application Form, please call Michael Carter on (02) 9028 1000 at any time between 9.00am to 5.00pm Monday to Friday (Melbourne time) during the Offer Period. Alternatively, you can email your queries to [email protected] during the Offer Period.

3 Effect of the Offer on IOOF

3.1 Effect of the Offer on IOOF’s capital structure

Immediately before the date of this Prospectus, the capital structure of IOOF was as follows:

IOOF Shares	Options	Performance Rights
232,037,606	4,014,249	1,071,413

A maximum of 513,000 Performance Rights may be issued under the Offer. If all of those Performance Rights are issued, the effect of the Offer would be to increase the number of Performance Rights that IOOF currently has on issue to 1,584,413.

A lesser number of Performance Rights may be issued if not all Eligible Advisers apply to participate. There is no minimum subscription requirement attached to the Offer which means that the Offer may proceed regardless of how many Eligible Advisers participate.

If the Performance Rights vest and are exercised, IOOF Shares will be provided to participating Eligible Advisers. Under the Terms, IOOF may satisfy its obligation to deliver IOOF Shares by purchasing some or all of those shares onmarket and/or by issuing new shares. No decision has been made by IOOF as to how it will satisfy its obligations to deliver IOOF Shares following the exercise of Performance Rights under the Offer.

If IOOF decides to issue IOOF Shares, the number of IOOF Shares to be issued cannot be determined as at the date of this Prospectus as it will depend on:

the extent to which the Conditions are satisfied; and/or
the number of Performance Rights (if any) that have lapsed before the end of the Vesting Period in accordance with the Terms.

However, based on IOOF’s capital structure immediately before the date of this Prospectus, if all Performance Rights under the Offer were issued and exercised, the maximum number of IOOF Shares which could be issued following the end of the Vesting Period is 513,000, representing 0.221% of IOOF’s current issued shares.

3.2 Financial effect of the Offer on IOOF

As participating Eligible Advisers do not need to pay any money to apply for Performance Rights or to exercise them, the Offer will not directly raise any funds for IOOF. The Offer is not being made for the purposes of fundraising.

Costs associated with the Offer are outlined in Section 7.7.

4 Risks

4.1 Risks associated with Performance Rights

The number of Performance Rights (if any) that are eligible to vest will be determined after the end of the Vesting Period. Following the end of the Vesting Period, the Condition will be tested and some or all of the Performance Rights granted to a participating Eligible Adviser may lapse if the Condition is not satisfied.

If some of the Performance Rights lapse, a participating Eligible Adviser will only be provided with the number of IOOF Shares that corresponds to the number of Performance Rights that were eligible to vest. That number may be less than the number of IOOF Shares that a participating Eligible Adviser had initially expected to receive.

If, following the end of the Vesting Period, all of the Performance Rights lapse, the Performance Rights will not be exercised and a participating Eligible Adviser will not receive any IOOF Shares. Cash will not be provided as an alternative.

In certain other circumstances, the Performance Rights may lapse (eg if you cease to be a Representative of Bridges or Executive Wealth Management, whichever is applicable to you). These circumstances are described in section 1.6 and are set out in more detail in the Terms. If any of these circumstances occur, you may not be provided with IOOF Shares.

It is expected that IOOF will become subject to the Future of Financial Advice ( FOFA ) legislation from 1 July 2013. Among other things, this legislation contains restrictions on the manner in which financial advisers may be remunerated. It is possible that once more information about the new FOFA regime (including regulatory guidance) becomes available, the Terms may need to be modified or the Performance Rights lapsed.

The Offer has been designed for employees of the IOOF Group or other persons who provide services under an arrangement to a member of the IOOF Group. In general, the Offer seeks to allow participants to obtain tax deferral under the employee share scheme tax rules on the Performance Rights they acquire under the Offer.

However, whether a participating Eligible Adviser is entitled to obtain tax deferral on their Performance Rights is a function not only of the terms of the Offer, but also of the personal circumstances of that participating Eligible Adviser. To obtain tax deferral, the circumstances of a participating Eligible Adviser must be such that the Performance Rights are subject to a “real risk of forfeiture” at the time they are granted.

If tax deferral is not available, then a participating Eligible Adviser may be subject to tax on the Performance Rights at the time they are granted (even though they do not vest until a later time).

If a participating Eligible Adviser is neither an employee of the IOOF Group nor regarded as providing services for the purposes of the employee share scheme rules under an arrangement to a member of the IOOF Group then tax deferral will not be available. There may be adverse tax consequences if that is the case.

There is some uncertainty generally regarding when rights such as the Performance Rights are subject to a “real risk of forfeiture”, and whether a person provides services under an arrangement to a company where they are not an employee of the relevant company.

4.2 General investment risks

Certain risks are common to all companies. IOOF is subject to these inherent risks and as a potential owner of IOOF Shares it is important to understand some of the general risks that may affect IOOF. Set out below is a list of some of the more important general risks that could affect IOOF.

General share investment risk

There are various risks associated with investing in any form of business and with investing in listed entities generally. The value of IOOF Shares will depend upon general stock market and economic conditions as well as the specific performance of IOOF. There is no guarantee of profitability, dividends, return of capital, or the price at which the IOOF Shares will trade on ASX. The past performance of IOOF Shares is not necessarily an indication as to future performance as the trading price of shares can go down or up in value.

General economic conditions

Factors, such as, but not limited to, domestic and international political changes, interest rates, exchange rates, inflation levels, commodity prices, industrial disruption, environmental impacts, international competition, taxation changes, changes in employment levels and labour costs may all have an adverse impact on IOOF’s revenues, operating costs, profit margins and share price.

These factors are beyond the control of IOOF and IOOF cannot, to any degree of certainty, predict how they will impact on IOOF.

Regulatory and legislative changes

Changes in laws, regulations and government policy may affect IOOF and the attractiveness of an investment in IOOF positively or negatively. The financial services sectors in which IOOF operates are subject to extensive legislation, regulation and supervision by a number of regulatory bodies in multiple jurisdictions.

The regulatory regimes governing the business activities of IOOF are complex and subject to change. For example, the new FOFA regime has not, at the date of this Prospectus, been fully implemented and there is uncertainty as to its potential impact on IOOF’s business. The impact of future regulatory and legislative change upon the business of IOOF cannot be predicted. In addition, if the amount and complexity of new regulation increases, so too may the cost of compliance and the risk of non-compliance.

The tax regimes that govern an acquisition of Performance Rights or IOOF Shares are also complex and subject to change. The impact of future regulatory and legislative changes to the tax rules cannot be predicted. The changes may adversely impact on the attractiveness of acquiring Performance Rights or IOOF Shares.

4.3 Risks associated with IOOF

A list of some of the more important risks that may affect IOOF specifically is set out below. Many of these are common to all companies that are involved in the funds management sector. As a potential owner of IOOF Shares, it is important to consider and understand these risks.

Changes in investment markets

IOOF derives a significant proportion of its earnings from fees and charges based on the level of FUMA of IOOF. The level of FUMA will reflect (in addition to other

factors such as the amount of funds flowing into and out of FUMA) the investment performance of those funds. Therefore, changes in domestic and/or global investment market conditions and/or IOOF’s inability to continue to provide competitive services to its customers could lead to a decline in IOOF's FUMA, adversely impacting the amount it earns in fees and charges. A deterioration in investment market conditions could also lead to reduced consumer interest in IOOF's financial products and services.

Competition in the financial services sector

While the financial services sectors in which IOOF operates are widely recognised as growth industries, they are highly competitive and subject to change. Competitive pressure could result in loss of market share, price reductions or reduced margins, any of which could adversely affect the business of IOOF. IOOF also faces the risk that its inability to continue to provide innovative and competitive services to customers could adversely impact IOOF’s financial performance and position.

Information technology

IOOF is highly dependent on information systems and technology and there is a risk that these, or other information technology services that IOOF uses or is dependent on, might fail (including if such systems or technology cannot be restored or recovered in acceptable timeframes or adequately protected). A complete or partial failure of relevant information systems or technology may adversely impact IOOF’s ability to conduct its daily operations and IOOF’s financial performance and position.

IOOF also faces the risk (in common with other sector participants) that further information technology changes will be required in order for it to provide competitive services to its customers. This could result in a substantial increase in costs.

Brands and reputation

The business of IOOF relies to a large extent upon the brands and reputation of its businesses in order to attract and retain customers and to develop and maintain its business relationships and strategy. There is a risk that adverse publicity could have a material impact upon IOOF's operations and revenues.

Provision of investment advice

IOOF’s financial planners and authorised representatives provide advice to clients. IOOF may be exposed to reputation and brand damage or litigation if this advice is judged to be of poor quality and/or incorrect or if the authorised representatives otherwise become liable for client losses.

Key relationships

IOOF obtains a significant portion of its FUMA through financial planners. IOOF has a series of strong business relationships, where it provides products and services that are distributed by third parties. A decline in the use by financial planners of IOOF’s products could materially impact IOOF’s business.

IOOF also has a number of key relationships with superannuation trustees and superannuation funds in relation to the provision of platforms and investment management services. The loss or deterioration of one or more of these relationships could materially impact the business of IOOF.

Contract risk

IOOF has entered into contracts which are important to the future of its business. The termination of any of these agreements (for failure to perform or otherwise) may have a material adverse effect on IOOF.

Litigation

Legal proceedings arise from time to time in the course of the business of IOOF. Given the scope of IOOF’s activities and the wide range of parties it deals with, IOOF may be exposed to potential litigation from among others, customers, regulators, employees and business associates. To the extent that these risks are not covered by IOOF’s insurance policies, litigation and the costs of responding to the threats of legal action could have a material adverse impact on IOOF’s financial position, earnings and share price.

Insurance

IOOF has insurance, including errors and omissions (professional indemnity) and directors' and officers' insurance, which it believes to be commensurate with industry standards, and adequate having regard to the business activities of IOOF. However, there are risks that insurance coverage will be insufficient to meet a very large claim or a number of large claims, that IOOF is unable to secure insurance to satisfactorily cover all anticipated risks, or that the cost of insurance will increase beyond anticipated levels.

Accordingly, IOOF could be adversely impacted by increases in the cost of insurance premiums or an inability to access insurance coverage arising from circumstances that might or might not be related to the business of IOOF.

Additionally, IOOF uses insurance underwriters to provide fund members with certain insurance. Accordingly, IOOF could be adversely affected by the failure of the underwriters to fulfil their obligations.

Unit pricing errors

Systems failures or errors in unit pricing of investments are issues affecting the broader funds management industry that may result in significant financial losses, breaches of compliance obligations and brand damage to a number of financial services organisations, including IOOF.

Dependence on key personnel and key investment managers

IOOF's performance is dependent on the talents and efforts of key senior executives and key investment managers. IOOF’s continued ability to compete effectively depends on the capacity of IOOF to retain and motivate existing employees as well as attract new employees. The loss of key executives (including key investment personnel) could cause material disruption to IOOF's activities and operations in the short to medium term.

Dependence on financial planners

The success of IOOF’s financial planning business is largely driven by the quality of the relationships the business maintains with its planner group and its ability to retain productive planners through high levels of service.

Operational risks and control

Operational risk relates to the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events which impact on IOOF's operations. IOOF is exposed to operational risks including risks arising

from administrative or process error, fraud, system failure, failure of security and physical protection systems, and unit pricing errors. Operational risk has the potential to have a material adverse effect on IOOF's financial performance and position as well as reputation.

Business continuity

Extraordinary events such as (but not restricted to) cyclones, floods, earthquakes, and the economic and financial market implications of such events on domestic and global conditions may adversely impact IOOF’s ability to continue operating its business. The effect of an extraordinary event on the business of IOOF and the inability of IOOF to recover from or to operate its business in an uninterrupted manner following that event may adversely affect IOOF’s financial performance and position.

Investment decisions

Investment decisions made within the IOOF Group can significantly affect IOOF’s financial performance and position. The decisions made by the IOOF Group to invest in certain funds or financial markets could lead to poor investment performance.

IOOF invests in a range of different funds and markets and accordingly, is exposed to risk and volatility in those markets generally and in the securities and other assets in which it invests including changes in interest rates, exchange rates, commodity prices and returns from equity.

Acquisition of other businesses by IOOF

IOOF regularly evaluates and undertakes acquisitions of other business. There is a risk that IOOF may not achieve expected synergies from an acquisition as a result of difficulties in integrating systems and processes, not achieve expected cost savings or otherwise incur losses. This may adversely affect IOOF’s performance and financial position.

In addition, there is a risk that IOOF may experience disruptions to its existing business resulting from difficulties in integrating the systems and processes of the acquired business.

5 About IOOF

5.1 Overview of IOOF Group

The IOOF Group is an independent Australian financial services provider. IOOF is the parent company in the IOOF Group and is a public company limited by shares, incorporated in Australia. It was registered in Victoria on 3 April 2002 and has its registered office at Level 6, 161 Collins Street, Melbourne, Victoria, 3000. IOOF was admitted to the official list of ASX in December 2003 (ASX: IFL) and IOOF shares continue to be quoted on ASX.

IOOF has been helping Australians secure their financial future for over 160 years, and in that time has grown to become a key provider of financial services and partner for financial advisers and their clients. IOOF is a fully integrated financial services company with offices in every state of Australia.

As at 31 March 2012, IOOF had approximately $110.2 billion in funds under management, administration, advice and supervision.

5.2 History of IOOF Group

IOOF originated in Melbourne in 1846 as a friendly society. By the late 1980s, IOOF was the largest friendly society in Australia, with approximately 200,000 members.

IOOF demutualised in 2002, and has grown steadily, both organically and by acquisition. A chronology of some of the key acquisitions made by IOOF is set out below.

Year	Event
2003	• Acquired Sydney-based financial services company AM Corporation prior to IOOF’s listing on ASX
2009	• Acquired the Australian Skandia operations • Acquired ASX listed financial services company Australian Wealth Management Limited
2011	• Acquired the remaining shares in DKN Financial Group Limited that IOOF did not already own

5.3 Overview of IOOF Group’s business operations

The IOOF Group is a fully integrated financial services company offering:

(a) Financial advice and distribution services via its network of financial advisers and stockbrokers. The IOOF Group advises retail clients on investment strategies, wealth protection and accumulation, stockbroking and retirement planning.
(b) Platform management and administration for advisers, their clients and hundreds of employers in Australia. The IOOF Group's platforms allow clients, employers and advisers to manage a wide range of superannuation and investment options, including managed funds and direct shares.
(c) Investment management products that are designed to suit the needs of investors. The IOOF Group offers multi-manager products with investment options across a range of asset classes. Through Perennial

Investment Partners Limited, a leading boutique investment house, investors can access investments in Australian shares, international shares, Australian listed property, global listed property, fixed interest and cash.

(d) Trustee services including estate planning and corporate trust services. Australian Executor Trustees’ (AET) team of estate planning lawyers prepare estate plans, wills and powers of attorney and manage deceased estates on behalf of their clients. AET also provide trustee services. The AET Corporate Trust team act as the custodian for managed investment schemes, trustee or security trustee for securitisation and structured finance transactions, and trustee for note and other debt issues.

IOOF operates under a variety of brands including Bridges Financial Services, Consultum Financial Advisers, Lonsdale Financial Group, Perennial Investment Partners Limited, Australia Executor Trustees Limited (AET), Spectrum Super, Pursuit, Wealth Builder and Ord Minnett.

5.4 Publicly available information

IOOF is a company listed on ASX and subject to the continuous and periodic disclosure requirements of ASX and the Corporations Act. A substantial amount of information is publicly available concerning IOOF and may be accessed by referring to www.ioof.com.au. Refer to section 7.1 for details on where you can access IOOF’s most recent financial results for the financial year ended 30 June 2012.

6 Taxation

The following provides a summary of some of the Australian income tax consequences that may apply to Performance Rights granted under the Offer.

The information is general in nature and is intended only as a summary of some of the Australian income tax issues associated with receiving Performance Rights under the Offer. It does not purport to be a complete analysis of the potential tax consequences. It is not tailored to any individual circumstances and so should not be a substitute for specific advice from an appropriate professional adviser.

Importantly, this summary assumes that you either:

are an employee of a member of the IOOF Group; or
provide services for the purpose of the employee share scheme rules under an arrangement to a member of the IOOF Group (by acting as a Representative of Bridges or Executive Wealth Management or otherwise).

This assumption is crucial to whether this tax guide will apply to you.

If you are not an employee of a member of the IOOF Group, whether you provide services for the purpose of the employee share scheme rules under an arrangement to a member of the IOOF Group will depend on your individual circumstances.

It will depend, for example, on the terms of any arrangements between you and members of the IOOF Group and Bridges or Executive Wealth Management (whichever is applicable to you), and between Bridges or Executive Wealth Management (whichever is applicable to you) and members of the IOOF Group. If you are not an employee of a member of the IOOF Group, it is important that you confirm that you are for the purpose of the employee share scheme rules regarded as providing services under an agreement to a member of the IOOF Group.

This assumption is important as it affects whether and how you are treated as an “employee” of the IOOF Group for the purposes of the Australian employee share scheme rules, and, in turn, whether the Australian employee share scheme rules apply to you.

The tax treatment will be different if a participating Eligible Adviser is neither an employee of a member of the IOOF Group nor regarded as providing services for the purposes of the employee share scheme rules under an arrangement to a member of the IOOF Group. In that case, there would be no tax deferral for that participating Eligible Adviser. That participating Eligible Adviser may have adverse tax consequences if their Performance Rights are forfeited.

This tax guide assumes that you are, and, accordingly, that the Australian employee share scheme rules will apply to determine how you are taxed on the Performance Rights granted under the Offer.

This summary also assumes that you are not, for Australian income tax purposes:

a foreign resident;
a “temporary resident”; or
engaged in employment outside Australia.

You should obtain independent professional tax advice that is based on your own specific circumstances regarding your participation in the Offer and your relationship with IOOF. This is particularly important if this summary does not apply to you.

General
overview - tax
on grant
unless “real
risk of
forfeiture”

You cannot make a choice as to when you will be taxed on Performance
Rights you receive under the Offer.
The Australian employee share scheme tax rules provide that you may be
taxed on your Performance Rights in the year they are granted to you,
unless they qualify for tax deferral. In general, where Performance Rights
granted are subject to a “real risk of forfeiture”, a taxpayer may be entitled
to tax deferral and therefore may be assessed on Performance Rights in
the year in which the “ESS deferred taxing point” occurs.
Real risk of forfeiture generally includes situations in which a share or right
is subject to meaningful performance conditions, or will be forfeited if a
minimum term of employment is not completed.
IOOF anticipates that the terms of the Performance Rights granted under
the Offer are such that the rights should be subject to a “real risk of
forfeiture”. This is because the terms of the Performance Rights granted
under the Offer generally provide that you will forfeit your Performance
Rights if you:
•
cease to be an “Eligible Adviser” under the Terms, other than as a
result of death, disability or redundancy; or
•
if the relevant arrangements between Bridges or Executive Wealth
Management (whichever is applicable to you) and the IOOF
Group are terminated,
The “real risk of forfeiture” test takes into account the facts and
circumstances in each and every case and for each and every taxpayer.
Therefore, there is a risk that your Performance Rights may not qualify for
tax deferral based on your individual circumstances. This may be the case
if, for example, the terms of your particular arrangements with Bridges or
Executive Wealth Management (whichever is applicable to you) are such
that there is no real risk that you will cease to be a Representative of
Bridges or Executive Wealth Management (whichever is applicable to
you).

Why is
whether I
cease
“relevant
employment”
important?

You should be taxed on your Performance Rights at the “ESS deferred
taxing point”, unless they lapse on or before that time. This is on the basis
that your Performance Rights qualify for tax deferral.
The “ESS deferred taxing point” differs depending on whether you cease
“relevant employment” for the purposes of the employee share scheme
rules (see below) prior to the vesting of your Performance Rights.

What does cease “relevant employment” mean?	“Relevant employment” has different meanings depending on whether you are an employee of the IOOF Group at the time the Performance Rights are granted to you, or if you are not so employed but you are a Representative of Bridges or Executive Wealth Management (whichever is applicable to you). *If you are an IOOF employee* If you are an employee of the IOOF Group, you cease “relevant employment” if you cease to be employed by any of: • your employer at the time you are granted the Performance Rights; • IOOF; or • a subsidiary of IOOF. *If you are not an IOOF employee* If you are not an employee of the IOOF Group and you are a Representative of Bridges or Executive Wealth Management, you should cease “relevant employment” where you no longer provide services for the purpose of the employee share scheme rules under an arrangement to the member of the IOOF Group, to whom you provided the services at the time the Performance Rights were granted to you. When this occurs will depend on your individual circumstances. Importantly, it will depend on the structure and terms of the arrangement under which you provide services to the IOOF Group. This, in turn, depends (as discussed above) on the terms of any arrangements between you and members of the IOOF Group and Bridges or Executive Wealth Management (whichever is applicable to you), and between Bridges or Executive Wealth Management (whichever is applicable to you) and the IOOF Group. If you provide services under an arrangement to a member of the IOOF Group, there are a number of ways in which you could cease “relevant employment”. For example, you could cease “relevant employment” if the terms of any arrangements between you and the IOOF Group directly cease to operate, or if you leave Bridges or Executive Wealth Management (whichever you were a part of when the Performance Rights were granted to you). You could also cease “relevant employment” if, for example, Bridges or Executive Wealth Management (whichever is applicable to you) terminates its arrangements with IOOF. You should seek independent professional tax advice regarding whether you have ceased “relevant employment” if anything occurs with respect to your relationship with Bridges or Executive Wealth Management (whichever is applicable to you), or the relationship between Bridges or Executive Wealth Management (whichever is applicable to you) and IOOF.

When will I be taxed if I don’t cease “relevant employment”?	If you do not cease “relevant employment” (see above) prior to the vesting date of the Performance Right, then the “ESS deferred taxing point” is, subject to the 30-Day Rule described below, generally the date the Performance Rights vest. If your Performance Rights lapse prior to the vesting date of the Performance Right, then they are not generally subject to tax.

When will I be taxed if I do cease “relevant employment”?	If you cease “relevant employment” prior to the date your Performance Rights vest, and they lapse on the cessation of that employment, those Performance Rights should generally not be taxable. If you cease “relevant employment” prior to the vesting date but continue to hold your Performance Rights (e.g. because you are a “Good Leaver”), the date of cessation of employment should be your “ESS deferred taxing point”. This is subject to the 30-Day Rule described below. In this situation, if the Performance Right subsequently lapses, you may be able to amend your tax return for the relevant year to seek a refund of any tax previously paid.

If I am taxed, what is the taxable amount?	You should be taxed based on the “market value” of an IOOF Share, received on the vesting of the Performance Right, at the “ESS deferred taxing point”. A capital gain or loss generally does not arise from a Performance Right lapsing.
30-Day Rule	If you dispose of the IOOF Shares you are provided with on exercise of your Performance Right within 30 days of the “ESS deferred taxing point” for the Performance Right, your “ESS deferred taxing point” should be deferred until the time of disposal. This is known as the “30-Day Rule”. The 30-Day Rule applies to ensure that no capital gain or loss is made on the disposal of shares received from the exercise of rights, if they are disposed of within 30 days. This rule has no effect on the taxable amount of your Performance Rights upon exercise.

Subsequent disposal of IOOF Shares	Subject to the 30-Day Rule discussed above, you may realise a capital gain or loss when you dispose of your IOOF Shares. In simple terms, the amount of the capital gain is generally the excess of the sale proceeds over the “cost base” of your IOOF Shares. If the sale proceeds are less than the cost base, you will generally make a capital loss. The cost base of the IOOF Shares should generally equal the amount on which you were assessed in respect of your Performance Rights at the ESS deferred taxing point. A 50% capital gains tax discount may be available (subject to certain rules) if at least 12 months have passed from the time your Performance Rights were exercised. You should obtain independent tax advice before and after you dispose of your IOOF Shares to ascertain the tax consequences.

Quotation of TFN	If you have not quoted a TFN to IOOF, IOOF is required to remit TFN withholding tax on the amount you would otherwise be assessed on for the Performance Rights. This applies irrespective of whether you are an employee of the IOOF Group. IOOF may recover any TFN withholding tax it pays in respect of your Performance Rights from you. This may be done by deducting the amount of the tax from your salary and wages, or any other amounts that IOOF is obligated to pay to you. This may also be done by requiring you to pay the taxable amount to IOOF, or by having any shares you are entitled to on the vesting of your Performance Rights sold on your behalf and having part of the sale proceeds paid to IOOF. If you are not an employee of the IOOF Group, then it is important that you should consider whether you wish to quote your TFN to IOOF for the purposes of the Offer. In this case, it is unlikely to have already quoted a TFN to IOOF in respect of your employment or for any other reasons. In that case, if a TFN is not quoted, IOOF is required to remit TFN withholding tax on the amount you would otherwise be assessed on for the Performance Rights.

The collection of your TFN is authorised and regulated by the tax laws and the Privacy Act 1988 (Cth). It is not compulsory to provide your TFN to IOOF and it is not an offence if you decline to provide your TFN. If you are an employee of the IOOF Group and have made a TFN declaration to your employer, you are taken to have provided your TFN to IOOF and no withholding tax should be deducted from your salary and wages in respect of your Performance Rights. By completing your personalised Application Form, if you have already quoted the TFN to IOOF, you authorise IOOF to disclose any TFN you have quoted to our share registry, or our agent, as reasonably necessary in order to comply with the reporting requirements under Division 392 of the Taxation Administration Act 1953 (Cth) in respect of the grant of the Performance Rights. Will I receive You will be provided with a statement that includes information about your more Performance Rights in both the year that the Performance Rights are information? granted to you, and the year that IOOF considers that the “ESS deferred taxing point has occurred”. This statement should be provided to you by no later than 14 July after the end of the income tax year. You will need this information, together with advice from your taxation adviser, to complete your income tax return.

7 Additional Information

7.1 Nature of this Prospectus and continuous disclosure

This Prospectus is a document to which the special content rules under section 713 of the Corporations Act apply. That provision allows the issue of a more concise document in relation to the offer of securities in classes which have been continuously quoted by ASX for the 3 months prior to the date of this Prospectus.

IOOF is a “disclosing entity” under the Corporations Act and is subject to regular reporting and disclosure obligations under the Corporations Act and the ASX Listing Rules, including the preparation of annual reports and half yearly reports.

A detailed list and full copies of all documents released to the ASX under continuous disclosure obligations of IOOF is available to the public from the ASX.

Copies of documents lodged with ASIC in relation to IOOF may be obtained from or inspected at an ASIC office.

IOOF will provide a copy of each of the following documents, free of charge to Eligible Advisers who request a copy before the Closing Date:

IOOF’s 2012 Annual Report for the financial year ended 30 June 2012 (being the most recent audited annual report lodged with ASIC before the date of this Prospectus); and
any continuous disclosure notices given by IOOF after lodgement of the annual financial report referred to above and before the lodgement of this Prospectus with ASIC.

All requests for copies of the above documents may be made by calling Michael Carter on (02) 9028 1000 at any time between 9.00am to 5.00pm Monday to Friday (Melbourne time) during the Offer Period. Alternatively, you can email your request to [email protected] during the Offer Period. The above information may also be obtained from IOOF’s website (www.ioof.com.au).

IOOF’s 2012 Annual Report includes a discussion of IOOF’s performance for the most recent financial year as well as summary and detailed financial information on IOOF’s financial position and performance and information on any significant post year end events that have arisen. It also includes information on senior management and the IOOF Board and IOOF’s corporate governance structures.

7.2 Rights and liabilities attaching to IOOF Shares

IOOF Shares are provided on the exercise of Performance Rights. The rights and liabilities that attach to IOOF Shares are set out in the Constitution of IOOF and in certain circumstances regulated by the Corporations Act and the general law.

The following is a broad summary of the rights, privileges and restrictions which are attached to IOOF Shares. It is not intended to be an exhaustive or definitive statement.

Rights	Summary
Voting at general meetings	Subject to the Corporations Act, the Constitution of IOOF and any restrictions affecting any class of IOOF Shares, every IOOF Shareholder has the right to vote at general meetings.

Rights	Summary
	On a show of hands, each IOOF Shareholder present and entitled to vote has one vote. On a poll, each IOOF Shareholder present and entitled to vote has one vote for each fully paid IOOF Share held and the proportionate value of a vote for the amount paid up or agreed to be considered as paid up on every partly paid IOOF Share.
Notice of general meetings	Each IOOF Shareholder is entitled to receive notice of and attend general meetings of IOOF and to receive all financial statements, notices and other documents required to be sent to members under the Constitution of IOOF or the Corporations Act.
Dividends	The IOOF Directors may from time to time determine to pay interim or final dividends to IOOF Shareholders and fix the amount, time for payment and method of payment of any such dividend. Subject to any rights or restrictions on the holders of IOOF Shares, dividends are payable on each IOOF Share in proportion to the amounts paid up, agreed to be considered paid or payable on the share held by them.
Issue of further IOOF Shares	The issue of IOOF Shares is under the control of the IOOF Directors. Subject to the Corporations Act, the ASX Listing Rules and the Constitution of IOOF, the IOOF Directors may issue IOOF Shares or other securities as they may determine and on any terms they consider to be appropriate.
Winding up	If IOOF is wound up, the liquidator may divide among all or any of the contributories any part of the assets of IOOF, and may vest any part of the assets of IOOF in trustees on any trusts for the benefit of all or any of the contributories as the liquidator thinks fit.
Variation of class rights	Subject to the Corporations Act, IOOF may vary or cancel rights attached to IOOF Shares by a special resolution of IOOF and a special resolution passed at a meeting of IOOF Shareholders holding shares in that class or with the written consent of IOOF Shareholders who are entitled to at least 75% of the votes that may be cast in respect of shares in that class.
Amendment to the Constitution of IOOF	The Constitution of IOOF can be amended by way of a special resolution of IOOF Shareholders. A special resolution needs to be passed by at least 75% of the votes cast by shareholders who are entitled to vote on the resolution.

Rights	Summary
Preference shares	IOOF is entitled to create and issue preference shares. The rights which attach to preference shares may include a preferential right to dividends and certain priorities on redemption of shares and in a winding-up of IOOF. Holders of preference shares would be entitled to vote at general meetings on only a limited range of questions and proposals.
Share buy backs	IOOF may buy IOOF Shares in itself on the terms and at the times determined by the IOOF Directors, to the extent and in the manner permitted by the Corporations Act.
Indemnification of officers and Directors	Each officer of IOOF and its subsidiaries may be indemnified by IOOF against any liability incurred (other than a liability to IOOF and its related bodies corporate, or for a pecuniary penalty order or compensation order) arising out of the conduct of the business of IOOF or the discharge of their duties as an officer of IOOF, except where the liability arises out of conduct involving a lack of good faith on their part. Officers of IOOF are also indemnified by IOOF for costs incurred in defending proceedings in which judgement is given in their favour or in which they are acquitted, or the claim is withdrawn. For the purposes of this indemnification, an officer includes an IOOF Director, a company secretary, or any person appointed as a trustee by IOOF or who acts as a trustee at the request of IOOF.
Unmarketable parcels	In certain circumstances, IOOF may give notice to IOOF Shareholders holding unmarketable parcels of IOOF Shares that it proposes to sell the IOOF Shares. The notice must set a period of six weeks within which the IOOF Shareholder can notify IOOF that they wish to retain the IOOF Shares. If the IOOF Shareholder does not do that or increase their IOOF Shareholding to a marketable parcel (within the meaning of the ASX Listing Rules), IOOF may sell their IOOF Shares and distribute the proceeds of sale to the IOOF Shareholder.
IOOF's right to recover certain payments relating to IOOF Shares	If a law imposes a liability, or future or possible liability, on IOOF to make any payment in respect of IOOF Shares held by an IOOF Shareholder, then IOOF has certain rights including an entitlement to recover that payment from the IOOF Shareholder and their personal representatives and assigns, including by way of lien or charge on the IOOF Shares and benefits in respect of the IOOF Shares.

7.3 Consents

King & Wood Mallesons has consented to being named in this Prospectus as legal and tax adviser in the form and context in which its name appears and to the inclusion of:

(a) each statement it has made; and

(b) each statement which is based on a statement it has made,

in this Prospectus in the form and context in which those statements appear and has not withdrawn that consent as at the date immediately before the date of this Prospectus.

7.4 Interests of directors

Immediately before the date of this Prospectus, no IOOF Director, or proposed Director of IOOF, holds or has held in the two years prior to that date, an interest in the formation or promotion of IOOF, any property acquired or proposed to be acquired by IOOF in connection with its formation or promotion of the Offer, other than in their capacity as an IOOF Shareholder.

Immediately before the date of this Prospectus, no one has paid or agreed to pay any amount or given or agreed to give any benefit to any IOOF Director or proposed Director of IOOF to induce them to become, or qualify them as, an IOOF Director, or for services provided by that person in connection with the formation or promotion of IOOF or the Offer.

Immediately before the date of this Prospectus, each of the following IOOF Directors (and their associates) had the following relevant interests in IOOF Shares:

Director	Number of IOOF Shares held	Number of performance rights held


Dr Roger Sexton	55,940
Mr Christopher Kelaher	4,300,631	300,000
Mr Ian Griffiths	3,212,519
Ms Jane Harvey	13,045
Mr George Venardos	20,013
Mr Kevin White	80,000

7.5 Substantial holders

Based on substantial shareholder notifications immediately before the date of this Prospectus, each of the following persons (and their associates) had the following substantial shareholdings in IOOF Shares:

IOOF Shareholder	Number of IOOF Shares held	% of issued ordinary share capital of IOOF

National Nominees Limited	34,767,259	14.98%
Trust Company Fiduciary Services Limited	27,412,867	11.81%
J P Morgan Nominees Australia Limited	23,421,585	10.09%
HSBC Custody Nominees (Australia) Limited	17,881,224	7.71%

7.6 Interests of experts and advisers

Other than as set out in this Prospectus:

no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; and
no promoter of IOOF,

(each, a “relevant person”)

holds at the date of this Prospectus, or has held in the two years prior to that date, any interest in:

the formation or promotion of IOOF;
the Offer; or
any property acquired or proposed to be acquired by IOOF in connection with its formation or promotion.

Other than as set out in this Prospectus, no one has paid or agreed to pay any amount, or given or agreed to give any benefit, to such persons for services provided in connection with the formation or promotion of IOOF or the Offer. The amounts set out below are exclusive of GST and disbursements (where applicable).

Expert or adviser	Fees
King & Wood Mallesons	$31,670

7.7 Expenses of the Offer

The expenses of the Offer are expected to be approximately $43,500. These expenses will be paid out of existing working capital.

7.8 Directors’ consents and authorisation

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors. Each Director has consented to the lodgement of this Prospectus with ASIC and has not withdrawn that consent prior to lodgement with ASIC.

8 Glossary

Application Form	means the application form issued with and accompanying
	this Prospectus.
ASIC	means Australian Securities and Investments Commission.
ASX	means ASX Limited (ABN 98 008 624 691) or the market
	conducted by it, as the context requires.
ASX Listing Rules	the official listing rules of ASX.
Bridges	means Bridges Financial Services Pty Limited (ABN 60 003
	474 977).
Closing Date	the last day on which an Application Form will be accepted,
	which is expected to be 28 November 2012.
Compliance Condition	means the compliance behaviours which must be exhibited
	by a participating Eligible Adviser over the Vesting Period, as
	set out in the Terms, for Compliance-based Performance
	Rights to vest.
Compliance-based	means a Performance Right that is subject to the
Performance Right	Compliance Condition and the Service Condition, as provided
	for in the Terms.
Condition	means a Service Condition or a Compliance Condition
	attaching to a Performance Right, as the case requires.
Corporations Act	means the Corporations Act 2001 (Cwth).
Eligible Adviser	means a person, selected by the IOOF Board in its absolute
	discretion, who is a Representative of Bridges or Executive
	Wealth Management who either:
	• is an employee of a member of the IOOF Group; or
	• provides services under an arrangement to a
	member of the IOOF Group (by acting as a financial
	adviser or otherwise).
Executive Wealth	means Executive Wealth Management Financial Services
Management	Pty Ltd (ABN 38 078 629 973).
Expiry Date	means 26 October 2013.
FUMA	means funds under management and administration.
Good Leaver	means where the IOOF Board determines that a participating
	Eligible Adviser has ceased to be an Eligible Adviser as a
	result of death, disability or redundancy.
Grant Date	means the date on which the Performance Rights are
	granted to a participating Eligible Adviser in accordance this
	Prospectus and the Terms which is expected to be 30
	November 2012.
IOOF	means IOOF Holdings Limited (ABN 49 100 103 722).
IOOF Advice Division	means Bridges Financial Services Pty Ltd (ABN 60 003 474
	977) and Executive Wealth Management Financial Services
	Pty Ltd (ABN 38 078 629 973).
IOOF Board	means all or some of the directors of IOOF acting as a board
	or a committee or authorised delegate of those directors.
IOOF Director	means a person holding office as a director of IOOF from

	time to time.
IOOF Group	means IOOF and each body corporate that is a subsidiary of
	IOOF under Division 6 of Part 1.2 of the Corporations Act.
IOOF Share	means a fully paid ordinary share in the capital of IOOF.
IOOF Shareholder	means a holder of an IOOF Share.
Offer	means the offer under this Prospectus to Eligible Advisers to
	apply for Performance Rights.
Offer Period	means the period from the Opening Date to the Closing Date.
Opening Date	means the first day on which Application Forms will be
	accepted which is expected to be 7 November 2012.
Performance Right	means a right granted under the Plan to acquire IOOF
	Shares.
Plan	means the IOOF Adviser Performance Rights Plan.
Prospectus	means this Prospectus which was lodged with ASIC on 26
	October 2012.
Representative	has the meaning given to it in section 910A of the
	Corporations Act.
Tax	means all kinds of taxes, duties, imposts, deductions,
	charges and withholdings imposed by a government,
	together with interest and charges.
Terms	means the terms of the Plan which are set out in the
	Appendix.
TFN	means tax file number.
Service Condition	means the Condition that must be satisfied, as set out in the
	Terms, for the Service-based Performance Rights to vest.
Service-based	means a Performance Right that is only subject to the
Performance Right	Service Condition, as set out in the Terms.
Subsidiary	has the meaning given to it in Part 1, Division 6 of the
	Corporations Act.
Vesting Period	means the period commencing on the Grant Date and ending
	on the date that is 3 years after the Grant Date.

9 Appendix- Terms

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IOOF Holdings Ltd Adviser Plan

IOOF Advice Division Performance Rights Terms

IOOF Holdings Limited (ABN 49 100 103 722)

Performance Rights Terms

This document contains the terms of Performance Rights to be granted to eligible advisers in the IOOF advice division on or about 31 October 2012 under the Plan.

1 Entitlement

1.1 Subject to term 8, each Performance Right that vests in accordance with these terms entitles the Holder to be allotted, credited as fully paid, or transferred one IOOF Share upon exercise of the Performance Right.
1.2
A Holder need not pay any exercise price upon exercise of a Performance Right.
1.3 Subject to the Listing Rules, IOOF must allot, or procure the transfer of, an IOOF Share on exercise of a Performance Right in accordance with the Plan.
1.4 IOOF Shares issued on the exercise of Performance Rights will rank pari passu with all existing IOOF Shares from the date of issue and will be entitled in full to those dividends which have a record date for determining entitlements after the date of issue.
1.5 There will be no restriction on the trading of IOOF Shares provided on the exercise of Performance Rights under these terms.

2

2.1 Vesting of Performance Rights

Eligibility of a Performance Right to vest

A Performance Right becomes eligible to vest if the applicable Conditions specified in these terms are satisfied or the Performance Right otherwise vests in accordance with these terms. If the applicable Condition is not satisfied during the Vesting Period and the Performance Right does not otherwise vest, the Performance Right will lapse.

2.2 How Performance Rights vest

A Performance Right vests:

(a) if it becomes eligible to vest in accordance with the rules set out in the Schedule and IOOF has notified the Holder that it has vested in accordance with these terms; or
(b) if the IOOF Board gives notice to a Holder under term 3; or
(c) if the IOOF Board so determines.

2.3 Automatic exercise

If a Performance Right becomes a Vested Performance Right then it will be automatically exercised at the time and in a manner determined by the IOOF Board in its absolute discretion. A Performance Right cannot be exercised in any other way.

2.4 When Performance Rights will lapse

Subject to applicable law relating to the provision of benefits (including Part 2D.2 of the Corporations Act), a Performance Right (whether or not it is a Vested Performance Right) that is not exercised will lapse on the first to occur of:

(a) unless the Holder is a Good Leaver with respect to the Performance Right, the day a Holder ceases to be an Eligible Adviser, provided this occurs prior to the end of the Vesting Period;
(b)
a time determined by the IOOF Board;
(c) the receipt by IOOF of a notice from the Holder that the Holder wishes the Performance Right to lapse;
(d) the Performance Right not becoming a Vested Performance Right following the applicable testing date and upon IOOF providing the Holder with a notice that the applicable Condition has not been satisfied during the Vesting Period;
(e) the date that Bridges or Executive Wealth Management (as applicable to the Holder): (i) ceases to be a Subsidiary of IOOF; (ii) ceases to hold an Australian Financial Services Licence; or (iii)

ceases to hold an Australian Financial Services Licence on substantially the same terms as at the Opening Date; and

(f) the Holder disclosing the number of Performance Rights offered and/or granted to it to another person other than: (i) to the Holder’s professional adviser; (ii) as required by law; or (iii) with the prior written consent of IOOF,

unless determined otherwise by the IOOF Board in its absolute discretion.

3 Notice to Holder

The IOOF Board must give a notice to a Holder for the purposes of term 2.2(b) that a Performance Right which has not lapsed has vested if:

(a) a takeover bid is made to the holders of IOOF Shares (other than as a result of an allotment approved by the IOOF Board), where the bidder obtains a relevant interest in more than 50% of IOOF Shares and the takeover bid becomes or is declared unconditional;
(b) a statement is lodged with the ASX to the effect that a person has become entitled to not less than 50% of the IOOF Shares (other than as a result of an allotment approved by the IOOF Board);
(c) the Court sanctions a compromise or arrangement for the purpose of or in connection with a scheme for the reconstruction of IOOF or its amalgamation with any other companies under Part 5.1 of the Corporations Act;
(d) IOOF passes a resolution for voluntary winding up; or
(e) an order is made for the compulsory winding up of IOOF.

4 Constitution of IOOF

Each Holder agrees to be a shareholder of IOOF and to be bound by IOOF’s constitution as in force from time to time.

5 No Transfers

Performance Rights may not be transferred.

6 Restricted transactions

A Holder must not enter into any transaction, scheme or arrangement:

(a) that is prohibited or restricted under IOOF’s securities trading policy or similar policy in place from time to time; or
(b) which hedges or otherwise affects the Holder’s economic exposure to the Performance Rights before they become Vested Performance Rights.

7 Quotation of Performance Rights and IOOF Shares

(a) Performance Rights will not be quoted on the ASX.
(b) IOOF will make application to the ASX for official quotation of IOOF Shares issued on the exercise of Performance Rights, if other IOOF Shares are listed at that time, as soon as practicable after the IOOF Shares are issued.

8 Participation in future issues

8.1 Participation generally

A Holder may only participate in new issues of securities to holders of IOOF Shares if the Performance Right has been exercised, if participation is permitted by its terms and the IOOF Shares in respect of the Performance Right have been allotted or transferred to the Holder before the record date for determining entitlements to the new issue.

8.2 Bonus issues

If IOOF makes a bonus issue of shares or other securities pro rata to holders of IOOF Shares (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) and no IOOF Shares have been allotted or transferred to the Holder in respect of a Performance Right before the

record date for determining entitlements to the bonus issue then the rights attaching to that Performance Right will be altered as follows:

(a) the number of IOOF Shares which the Holder is entitled to be provided with on exercise of the Performance Right (S) is determined by the formula:

S = N + (N x R)

where:

N = The number of IOOF Shares per Performance Right which the Holder is entitled to be provided with on the record date to determine entitlements to the bonus issue; and
R = The number of IOOF Shares (including fractions) offered under the bonus issue for each IOOF Share held; and
(b) the zero exercise price per Performance Right will not be changed.

8.3 Rights issues

If IOOF makes an offer of ordinary shares pro rata to all or substantially all holders of IOOF Shares (whether or not an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) then the number of IOOF Shares which the Holder is entitled to be provided with on exercise of the Performance Right will be changed in a manner determined by the IOOF Board consistent with the Listing Rules.

8.4 Aggregation

If Performance Rights are exercised simultaneously then the Holder may aggregate the number of IOOF Shares or fractions of IOOF Shares or other securities to which the Holder is entitled to be provided with under those Performance Rights. Fractions in the aggregate number only will be disregarded in determining the total entitlement to subscribe.

8.5 Reorganisation

In the event of any reorganisation of the issued ordinary capital of IOOF before the exercise of a Performance Right, the number of IOOF Shares attaching to each Performance Right will be reorganised in the manner specified below or otherwise to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

If the manner is not specified then the IOOF Board will determine the reorganisation. In any event, the reorganisation will not result in any additional benefits being conferred on Holders which are not conferred on shareholders of IOOF (subject to the same provisions with respect to rounding of entitlements as sanctioned by the meeting of shareholders approving the reorganisation of capital) and in all other respects the terms for the exercise of Performance Right will remain unchanged.

In the case of any reorganisation of IOOF’s issued capital, the zero exercise price per Performance Right will not be changed.

In the event of any consolidation or sub-division of shares or reduction or cancellation of capital then the reorganisation will be determined by the following formulae:

(a) Consolidation; and
(b) Subdivision:

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(c) Reduction of capital by return of share capital: S = C;
(d) Reduction of capital by cancellation of ordinary shares that is either lost or not represented by available assets:
S = C;
(e) Pro rata cancellation of fully paid ordinary shares (not within (c) or (d)):

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where:

A = The total number of IOOF Shares in issue before the capital reorganisation;
B = The total number of IOOF Shares in issue after the capital reorganisation;
C = The number of IOOF Shares which the Holder is entitled to be provided with on exercise of an Performance Right before the reorganisation;
S = The number of IOOF Shares which the Holder is entitled to be provided with on exercise of a Performance Right after the reorganisation.

9 Lapse

A Holder may request that some or all of the Performance Rights held by that Holder lapse.

10 Advice

IOOF must give notice to each Holder of any adjustment to the number of IOOF Shares which the Holder is entitled to be provided with on exercise of a Performance Right in accordance with the Listing Rules.

11 Notices

Notices may be given by IOOF to the Holder in the manner prescribed by IOOF’s Constitution for the giving of notices to members of IOOF and the relevant provisions of the IOOF’s Constitution apply with all necessary modification to notices to Holders. In addition, where the IOOF Board considers it appropriate, electronic notices may be given by IOOF to a Holder.

12 Additional terms

12.1
All Performance Rights are granted subject to the terms of the Plan.
12.2 By applying for Performance Rights, the Holder agrees that and authorises IOOF and its subsidiaries to:
(a) collect, use, process and transfer personal data of the Holder, including the Tax File Number of the Holder, amongst themselves; and
(b) transfer personal data to any third parties, including Link Market Services Limited or any successor or replacement registry;

for the purposes of implementation, administration and management of a Holder’s participation in the Plan or assisting in the implementation, administration and management of the Plan more generally.

13 Indemnity

13.1 If a company in the IOOF Group is required to pay an amount or account to an authority for Tax in relation to Performance Rights or an IOOF Share allocated on exercise of a Performance Right in respect of a Holder, then:
(a) the company may recover an amount in respect of the Tax from the Holder in such manner as the IOOF Board thinks fit; and
(b) the Holder may be required as either or both a condition of the grant or vesting of the Performance Right or the allocation, sale or transfer of IOOF Shares to do any of the following:
- (i) indemnify the company in respect of the Tax;
- (ii) make a payment to the company of an amount in respect of the Tax; or
- (iii) enter into an arrangement with the company to secure a payment to the company, including by providing authority that a person may procure the sale on behalf of the Holder of some or all of the IOOF Shares that would otherwise be allocated to or acquired or held for the Holder and authorising the payment of the relevant amount to the company.
13.2 If a Holder fails to comply with this term 13 in relation to a Performance Right or an IOOF Share (as the case may be), then the Holder’s Performance Rights will lapse and the Holder’s interest in the IOOF Shares will be forfeited.

14 Definitions and interpretation

14.1 In these Performance Rights terms, the following words and expressions have the meanings indicated unless the contrary intention appears:

ASX means ASX Limited (ABN 98 008 624 691) or the market conducted by it, as the context requires.

Bridges means Bridges Financial Services Pty Limited (ABN 60 003 474 977).

Compliance Condition means the compliance behaviours which must be exhibited by the Holder over the Vesting Period, as set out in this Schedule, for Compliance-based Performance Rights to vest.

Compliance-based Performance Right means a Performance Right that is subject to the Compliance Condition and the Service Condition, as provided for in the Schedule.

Condition means a Service Condition or a Compliance Condition attaching to a Performance Right, as the case requires.

Corporations Act means the Corporations Act 2001 (Cwlth).

Eligible Adviser means a person, selected by the IOOF Board in its absolute discretion, who is a Representative of Bridges or Executive Wealth Management, who either:

(a) is an employee of a member of the IOOF group; or
(b) provides services under an arrangement to a member of the IOOF group (by acting as a financial adviser or otherwise).

Executive Wealth Management means Executive Wealth Management Financial Services Pty Ltd (ABN 38 078 629 973).

Good Leaver means where the IOOF Board determines that the Holder has ceased to be an Eligible Adviser as a result of death, disability or redundancy.

Grant Date means the date the Performance Rights are granted, as determined by the IOOF Board.

Holder means the holder of a Performance Right.

Listing Rules means the Listing Rules of ASX.

IOOF means IOOF Holdings Limited (ABN 49 100 103 722).

IOOF Board means all or some of the directors of IOOF acting as a board or a committee or authorised delegate of those directors.

IOOF Group means IOOF and each body corporate that is a subsidiary of IOOF under Division 6 of Part 1.2 of the Corporations Act.

IOOF Share means a fully paid ordinary share in the capital of IOOF.

Opening Date means the first date on which application forms will be accepted under the prospectus issued by IOOF in connection with this Plan.

Performance Right means a right granted under the Plan to acquire IOOF Shares.

Plan means the IOOF Adviser Performance Rights Plan.

Representative has the meaning given to it in section 910A of the Corporations Act.

Service Condition means the condition that must be satisfied, as set out in the Schedule, for the Service-based Performance Rights to vest.

Service-based Performance Right means a Performance Right that is only subject to the Service Condition, as provided for in the Schedule.

Subsidiary has the meaning given to it in Part 1, Division 6 of the Corporations Act.

Vested Performance Right means a Performance Right that has vested in accordance with term 2.2.

Vesting Period means the period commencing on the Grant Date and ending on the date that is 3 years after the Grant Date.

In these terms unless the contrary intention appears:

14.2

(a) the singular includes the plural and vice versa;
(b) reference to a rule, a statute or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them; and
(c) a reference to a person includes a reference to the person’s legal personal representatives, executors, administrators and successors, a firm or a body corporate.
14.3 Headings are inserted for convenience and do not affect the interpretation of these terms.

SCHEDULE

1. Conditions attaching to Performance Rights

Each Performance Right is subject to conditions that need to be satisfied for the Performance Right to be eligible to become a Vested Performance Right.

There are two conditions that apply to the Performance Rights. The percentage of Performance Rights subject to each condition is set out in the table below.

Condition	Percentage of total Performance Rights granted
Service Condition	50% of the Performance Rights – these are referred to as Service-based Performance Rights in these terms
Compliance Condition	50% of the Performance Rights – these are referred to as Compliance-based Performance Rights in these terms. Compliance-based Performance Rights are also subject to the Service Condition.

2. Condition terms

2.1 Service Condition

For your Service-based Performance Rights and your Compliance-based Performance Rights to vest, you must continue to be an Eligible Adviser until the end of the Vesting Period. If you cease to be an Eligible Adviser before the end of the relevant Vesting Period, you may forfeit your Performance Rights (refer to term 2.4).

2.2 Compliance Condition

For your Compliance-based Performance Rights to vest, during the relevant Vesting Period you must, in addition to meeting the Service Condition:

maintain your Representative status;
receive an adviser compliance audit score of more than one-star for each compliance audit conducted during the Vesting Period;
attend all professional development days (unless your non-attendance is approved by IOOF management);
meet all applicable yearly Continuing Professional Development requirements;
achieve quality advice outcomes (i.e. advice that meets clients’ personal needs and circumstances);
improve skills, experience, qualifications and competency to meet and maintain any ASIC standards for advisers; and
align with IOOF Group culture, including promoting the IOOF Group, demonstrating an understanding of the IOOF Group strategy and exhibiting IOOF Group values.

Achievement of the Compliance Condition will be assessed and determined by the IOOF Board in its absolute discretion. If the IOOF Board determines that each element of the above Compliance Condition has been met, 100% of your Compliance-Based Performance Rights will be eligible to vest in accordance with these terms and you meet the Service Condition.

3. Vesting

Following the end of the Vesting Period, the IOOF Board must, as soon as reasonably practicable, test the relevant Conditions and determine how many Performance Rights (if any) are eligible to vest. The IOOF Board’s determination will be final, conclusive and binding. Any Performance Rights which do not vest will lapse as provided for under term 2.4(d). There will be no re-testing of Performance Rights at a later date.

4. Notification

(a) Subject to the restrictions in paragraph 4(b), as soon as reasonably practicable after the IOOF Board has determined how many Performance Rights (if any) are eligible to vest, the IOOF Board must notify the

Holders of the Performance Rights of the number of the Performance Rights that they hold which vest (if any).

(b) Unless determined otherwise by the IOOF Board, the IOOF Board must not provide the notice referred to in paragraph 4(a) to Holders of Performance Right at a time when the Holder of the Performance Right is prevented from dealing in IOOF Shares under IOOF Group Securities trading policy. If the first time that the IOOF Board is reasonably able to provide the notice referred to in paragraph 4(a) is during a period when the Holder is prevented from dealing in IOOF Shares under IOOF Group Securities trading policy, then the IOOF Board must provide the notice referred to in paragraph 4(a) to the Holder as soon as reasonably practicable after the first time after that time the Holder is able to deal with IOOF Shares under the IOOF Group Securities trading policy.
(c) Nothing in this clause 4 will be taken to incorporate any of the restrictions on dealing contained in the IOOF Group Securities trading policy into the terms of this Plan.