1. What are Westpac Self-Funding Instalments?
Westpac Self-Funding Instalments (SFI) are a listed geared investment package that may provide enhanced returns on an equity portfolio.

With a “built-in” loan, SFI allow investors to purchase leading Australian Shares and Units (underlying Securities) in two payments or “instalments”.  After making the first payment investors obtain many of the benefits of share ownership and potentially advantages of gearing.


2. What does Self-Funding mean?
Self Funding means that the dividends investors receive for holding the SFI will be used to reduce the amount of the Loan.

Given this reduction, the Loan will also be further reduced through a reimbursement of the pro rata amount of the interest paid.

3. What are the features and benefits of Westpac SFIs?
The key benefits of investing in Westpac SFI are:

• a low maintenance geared equity “package”;
• no margin calls;
• 5 and 10 year investment terms
• no loan application or credit checks;
• the repayment of the Loan is not obligatory, although Westpac does have a mortgage over the Underlying Securities to cover the Loan. If the Loan is not repaid, Westpac will sell the Underlying Securities and use the proceeds to repay the Loan;
• cash dividends are used to reduce the Loan Amount;
• low minimum investment amount;
• ability to build a portfolio through regular investments;
• eligible for SMSF and other superannuation funds, in certain circumstances;
• potential interest deductions;
• interest is paid only on the actual Loan Amount;
• a liquid investment traded on the ASX;
• unlock cash from existing share holdings (not available to superannuation entities); and
• increased exposure to capital growth, dividends and franking credits (in certain circumstances) in a range of leading Australian Securities.

4. What are the minimum investment amounts for each Westpac SFI?
For each Underlying Listed Entity, the minimum subscription amount is $2,000.

5. Who should consider investing in Westpac SFIs?
Westpac SFI have features that may appeal to a wide range of investors. They can potentially suit investors who want to:

• build a portfolio with a reduced initial outlay;
• diversify a current holding with little or no extra cash;
• use the cash Dividends to pay off the Loan;
• gear into the equity market without the inconvenience of loan applications, credit checks and margin calls;
• reduce the capital risk of their portfolio;
• introduce economic leverage into their superannuation fund (conditions apply);
• benefit from the deductibility of interest (conditions apply); and
• unlock some of the value of their current holdings without triggering a Capital Gains Tax event.

6. What are the key risks of Westpac SFI?
The key risks of investing in Westpac SFI are:

• interest rates are variable, therefore the cost of funding the Loan can increase or decrease over time;
• as Westpac SFI are a geared investment, their value will fluctuate more, (in percentage terms), than fluctuations in the price of the Underlying Securities;
• the future Dividends paid on the Underlying Securities is dependent on the relevant company's or trust's financial performance which may fluctuate over time. Therefore the reductions in the Loan Amount from Dividend payments may be different to those anticipated;
• an Extraordinary Event may result in the Completion Date being brought forward and a Corporate Action may change the Underlying Securities;
• special dividends or repayment of capital, made by Listed Entities, will generally be used to reduce the Loan Amount instead of being paid directly to Holders;
• Westpac is under no obligation to accept or reject a buy-back offer made in relation to the Underlying Securities;
• unless you make the Completion Payment, you will not become the legal owner of the Underlying Securities;
• possible illiquidity of the secondary market for Westpac SFI;
• Westpac SFI is not guaranteed by the Australian Stock Exchange National Guarantee Fund;
• tax laws and practice may vary over time, possibly with retrospective application; and
• many general economic and specific market factors can affect the value of the Underlying Securities and thus the Westpac SFI.

7. How do I purchase Westpac SFIs?
Two methods of purchasing SFI exist:

i. Primary market
This method involves filling out the application form in the Product Disclosure Statement (PDS).

ii. Secondary market
This is exactly the same method as purchasing shares.  This can be done by either contacting a financial adviser/broker or trading through an online account.

8. What methods of applying exist?
You can apply for a Westpac SFI in three ways

i. As a Cash Applicant
With this application method, investors use their own funds to make the first payment, which is approximately 50% of the current market price of the underlying Security. The underlying Security is held by the Security Trustee on behalf of the investor.

ii. As a Securityholder Applicant
An alternative to selling existing securities is to “exchange” them for Westpac SFI. Using the Securityholder Application investors can “exchange” certain securities for Westpac SFI. In doing so, investors keep their exposure to the security, mortgaged to Westpac, and the associated dividends while at the same time releasing some cash for other income-generating investments without triggering a CGT liability.

The cash investors receive from Westpac (the Cash Back Amount) is equal to the Loan Amount less the sum of:

• the Put Option Fee;
• interest applicable until the next Annual Interest Date; and
• the Borrowing Fee (if any).

iii. As a Rollover Applicant
You already hold Prior Series Westpac Instalments and would like to roll that Series into a new Series of Westpac SFIs.

Westpac will provide you with a Loan, the proceeds with which you pay the Prior Series Completion Payment and discharge the previous Loan from the Prior Series Westpac Instalments.

9. Can I use Westpac SFI in my SMSF?
Trustees of SMSFs and other superannuation entities are able to acquire Westpac SFI via a Cash Application or on the ASX. Westpac does not offer and will not accept Securityholder or Rollover Applications from trustees of superannuation entities.

10. What are my options if I want to get out of my investment?
You can sell your Westpac SFI on the ASX.  Westpac, as market maker, will arrange for buy and sell quotations to be made on the ASX to provide liquidity for the Westpac SFI.

11. What happens at maturity?
On the Completion Date, investors have several options. Each option involves a different cash flow and has different tax implications, as set out below.

Option	Form Used	CGT Event from Underlying Security
Pay off the Loan and the Holder receives the Underlying Security within 20 Business Days.	Completion Notice	No
Ask Westpac to sell the Underlying Security and pay off the Loan with the proceeds. The Holder receives the net proceeds.	Put Option Exercise Notice	Yes
Defer paying the Loan Amount by rolling your current series into a new series of Westpac SFI (if available). You can either owe or be entitled to a Rollover Payment, depending on how the Underlying Security has performed.	Rollover Application Form	No
Do nothing. Westpac sells the Underlying Security to pay off the Loan with the proceeds. The Holder receives the net proceeds.	None – it’s do nothing!	Yes

12. What are the important dates for SFI holders?
There are two important dates to remember:

i. Annual Interest Date
In accordance with the Loan agreement, interest will be automatically added to the loan for the following interest period (until the next Annual Interest Date).

Completion Payments may also be made on this date if you wish to take delivery of the Underlying Securities.

Completion Date
There are several options available to you:

• Defer the Completion Payment by rolling your Westpac SFI into the next available series of Westpac SFI (if any).
• Deliver the Completion Payment Notice and receive the underlying Securities.
• Exercise your Put Option Exercise Notice and receive payment for the difference between the market price of the underlying security and the Completion Payment.
• If you do nothing on the Completion Date, the underlying Securities will be sold and you will receive payment for the difference between the market price of the Underlying Security and the Completion Payment.

13. What are some possible tax advantages of investing in Westpac SFI?
Westpac SFI offer potential tax advantages, depending on your individual circumstances, which include:

• a possible deduction for the pre-payment of up to 12 months’ interest;
• access to franking credits, which may be used to offset other tax liabilities; and
• the ability to convert your fully paid Securities into Westpac SFI without triggering a capital gains liability. (This option is not available for superannuation entities).

For more information, please read Section 7 of the Product Disclosure Statement.

14. What commissions are paid to advisers?
Westpac will pay an upfront commission of 2% p.a. and trail commission of 0.50% p.a., which is generally calculated as a percentage of the Loan Amount.

15. Will I be able to participate in reinvestment plans and do I have voting rights in relation to the Underlying Securities?
No. You cannot participate in reinvestment plans or other share plans associated with the Underlying Securities.  Nor do you have the right to attend general meetings of the relevant Underlying Security.

16. How can I identify an SFI issued by Westpac?
Each Instalment listed on the ASX can be identified by its six-letter code.

The first three letters indicate the underlying Security	CBA
The fourth letter indicates the warrant type	S – Structured product or “Self-Funding”
The fifth letter indicates the issuer	W – Westpac Banking Corporation
The sixth letter indicates the warrant series	“A” means it is the first series of Westpac Self-Funding Instalments. SWB and SWZ series are also available.

17. How do I check details about my Westpac SFI holding?
Call the Registrar, Computershare Investors Services Pty Limited on 1300 850 505.

18. What information will I receive from Westpac?
Holders will receive an annual statement which gives the Annual Interest Amount plus other information.

19. How is interest charged and what is the rate?
Interest is initially charged on the Loan at a rate determined when you purchase SFIs.

Interest is paid in advance for the period to the next Annual Interest Date as part of the first payment (Cash Applicants) or from the Loan amount by your direction (Securityholder and Rollover Applicants).

At each Annual Interest date, interest is charged at the then determined rate on the Loan amount for the upcoming interest period.

As at 26 April 2006, the 5 year SFI interest rate is 7.70% p.a. and the 10 year SFI interest rate 7.8% p.a.

20. Who do I contact if I have any questions?
For more information, simply contact your Financial Planner or Westpac on 1800 990 107.

Important Information
Westpac Banking Corporation ABN 33 007 457 141, AFSL 233714 (“Westpac”) is the issuer of the Westpac Self-Funding Instalments (“SFI”). A product disclosure statement (“PDS”) is available for the SFI. A copy of the PDS and a copy of Westpac’s Financial Services Guide can be obtained by calling 1800 990 107 or visiting www.westpac.com.au/structuredinvestments. You should obtain and consider the PDS before deciding whether to acquire, continue to hold or dispose of the SFI.
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness having regard to your objectives, financial situation or needs.  The taxation position described is a general statement only and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Westpac financial planners are not qualified to give tax advice. The individual situation of investors may differ and investors should seek independent professional tax advice on any taxation matters.  The Product Ruling issued by the Australian Taxation Office is only a ruling on the application of taxation law and is no way expressly or implied as a guarantee or endorsement of the commercial viability of Westpac SFI, or the soundness or otherwise of the Westpac SFI as an investment, or of the  reasonableness or commerciality of any fees charged in connection with the Westpac SFI. The Product Ruling is only binding on the Commissioner if the Westpac SFI is implemented in the specific manner provided in the Product Ruling.  Information for trustees of SMSF. In certain circumstances, under guidelines issued by the Australian Prudential Regulation Authority and Australian Tax Office (the “Super Regulators), Instalments can be an eligible investment for self-managed superannuation funds when acquired using a Cash Application or on market. However, trustees of super funds should read the guidelines before deciding to invest. Under the law, superannuation fund investors are subject to restrictions on the types of investments they can make and activities they can undertake, including restrictions on borrowing and charging their assets. The Super Regulators require trustees of superannuation funds to consider an investment in the context of the superannuation fund’s particular investment strategy and to ensure they are familiar with the risks involved in investing in Instalments, have appropriate risk management procedures in place prior to making the investment and disclose to members the details of the fund’s investment strategy. Superannuation fund trustees will need to ensure that they have the power to acquire Instalments or other derivatives, ensure they have sufficient liquidity in the superannuation fund to pay the Completion Payment, or have an investment strategy in place that contemplates the superannuation fund electing not to make the Completion Payment, and therefore not acquiring the underlying Security.
Information is current as at 26 April 2006.