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Investments & fees

Supplement

The investment and fees information in this Supplement only applies if you are an in-service (employee) member of our Defined Benefit (DB) Division CB, CC, CD, CE, CF, CH, CN or CO and you have accumulation-style accounts within your division that are eligible for investment choice. Note: This Supplement does not apply to Accumulate Plus or Retirement Access accounts – for these accounts you should refer to the applicable Member Guide (Product Disclosure Statement) and Reference Guides available from our website.

THIS SUPPLEMENT WAS ISSUED ON 9 AUGUST 2018.The information in this Supplement should be read in conjunction with the Member Booklet for your Defined Benefit division and is not intended to be read as a document in its own right.

This Supplement was prepared and issued by Commonwealth Bank Officers Superannuation Corporation Pty Limited (ABN 76 074 519 798, AFSL 246418), the trustee of Commonwealth Bank Group Super (the fund) (ABN 24 248 426 878, SPIN OSF0001AU).

We may change any of the matters about the fund as described in this Supplement at any time. If a change adversely affects you, we will notify you as required by law. If a change is not materially adverse, we may not update the Supplement but instead issue an update notice, either before or after the change occurs. You should check for any update notices, or for the most up-to-date Member Booklet or Supplement, which are available free of charge from oursuperfund.com.au/memberbooklets or by calling us on 1800 135 970. It’s possible that changes can occur in the future, which may be without prior notice to you.

The information in this Supplement is general information only and does not take into account your individual objectives, financial situation or needs. You should consider the information contained in the Member Booklet for your division and this Supplement and its appropriateness, having regard to your own objectives, financial situation and needs, before making a decision about this product. The Member Booklet is available and can be obtained from our website or by calling us. You should seek professional advice tailored to your personal circumstances from an authorised financial adviser.

Commonwealth Bank Group Super

Defined Benefit members

oursuperfund.com.au

1800 135 970 from 8am to 7pm (AEST) Monday to Friday

via online member login at oursuperfund.com.au/login

GPO Box 4303, Melbourne VIC 3001

(03) 9245 5827

In this Supplement:

Part 1: Invest your account 2

Choosing investment options 2

Keeping track of your account balance and unit pricing 5

How your investments are managed 6

Managing investment risks 7

Understanding some investment basics 9

Part 2: Fees and other costs 10

Fee summary 10

Additional explanation of fees and costs 10

We may pass on our tax benefit 13

Changes to fees and charges 13

Tax may also apply 13

DEFINED BENEFIT SUPPLEMENT: INvESTMENTS & FEES (ISSUED 9 AUGUST 2018)

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Part 1: Invest your accountImportant Like many investments, there are some risks associated with accumulation-style super accounts. Before making any decision about investing, you should carefully consider each investment option and make sure your choices suit your personal circumstances and goals. You may also wish to seek professional financial advice before finalising any investment decision.

Looking for help or advice?As part of the services we offer, we have a team of financial advisers available to provide advice to you over the phone. As a member, there is generally no cost to you to use this service for advice relating to options about your Defined Benefit super, e.g. super contributions or investment options. A fee may apply if advice is provided outside this scope – the adviser will let you know these details beforehand if this is the case. To talk with this team, simply call us on 1800 135 970 and ask to speak with the Advice team1.

If you also have an Accumulate Plus or Retirement Access account in our fund, you have the option to have the fees you agree with any authorised financial adviser of your choice for advice about your super in our fund deducted from that account balance – some conditions apply. This may make it easier to pay for financial advice, as fees are paid from your super account rather than your disposable income.

Visit oursuperfund.com.au/advice for more information on obtaining financial advice.

Choosing investment optionsInvestment options available for your accountYou can choose one or more of the following investment options for any accumulation-style accounts within your Defined Benefit (DB) division that are eligible for investment choice. Each investment option has a different level of investment risk and potential return, giving you the flexibility to tailor an investment selection to suit your own circumstances and goals.

Refer to ‘Investment option summary’ starting on page 3 for more information on each option.

Diversified investment options

The diversified investment options are Conservative, Moderate, Balanced and Growth.

For these investment options, we have pre-mixed a combination of asset classes to help spread your investment exposures and risk. Each option has a different level of growth and income assets, so you can choose an overall level of risk/return that suits your needs.

Single asset class investment option

The Cash investment option invests in one asset class only.

Important note: We reserve the right to vary the features of or close any of our investment options, or introduce new investment options at our discretion at any time without your consent. We will notify you of any changes as required by law.

If you don’t make a choice, your account is invested in the default Balanced optionWhen an accumulation-style account is opened, we will generally invest your first contribution in the default investment option, unless you tell us otherwise.

The default option is the Balanced option.

Your account balance, and any future contributions and transfers, will remain invested in the default option unless you notify us otherwise.

We do not make any representations about whether the default option is the most appropriate option for you. You should consider your own circumstances and/or seek professional financial advice to decide which options are best for you.

Changing your investment selectionYou can choose any one or more of the investment options from pages 3–4 for your accumulation-style accounts.

When choosing which option or combination of options to invest in, or deciding if the default option is right for you, you should consider the investment objective, potential investment return, level of risk and investment timeframe of the option.

You can generally change your investment selection at any time, effective for any NSW bank business day subject to our transaction cut-off time outlined below. This is called switching.

When you nominate a new investment selection, you can choose to apply it to your existing account balance, or apply it only to any future contributions, or apply it to both.

We do not charge an investment switching fee and there is no limit to the number of switches you can make.

To switch investment options

Log in at oursuperfund.com.au/login and go to ‘Change your investments’ under the Investments menu option.

Note: Through online switching, you can only choose an investment selection that will apply both to your account balance and to future contributions. To choose an investment selection for future contributions that is different to your account balance, or to choose an investment selection that will only apply to your account balance, please complete the form below.

Complete our Investment selection – Divisions CB–CO form available from oursuperfund.com.au/forms

Call us on 1800 135 970

1 Advice relating to DB divisions is provided by Mercer Financial Advice (Australia) Limited (ABN 79 153 168 293, AFSL 411766).


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Investment option summary

Investment option name

Cash Conservative Moderate

Description This single asset class option invests 100% in the cash asset class.

This diversified option invests across most major asset classes. It is dominated by income assets, with a smaller proportion in growth assets.

This diversified option invests across most major asset classes. It is broadly balanced between growth assets and income assets.

Investment objective

To achieve an average return (before applicable taxes and fees) that exceeds that of the Bloomberg AusBond Bank Bill Index over a 1-year period.

To achieve an average return (after applicable taxes and fees) over a 3-year period as follows:

• DB accumulation-style accounts: CPI + 1% p.a.


• DB accumulation-style accounts: CPI + 1.5% p.a.

Expectation of negative annual returns

Not expected for this option 3 years in every 20 years 4 years in every 20 years

Minimum suggested investment timeframe2

Short term – 1 year or more Short to medium term – 3 years or more

Medium to long term – 5 years or more

Investment risk

Very low

1 765432Medium

1 765432Medium–High

1 765432

Strategic asset allocation3

Fixed Interest & Cash

100% (100%)

The Fixed Interest & Cash allocation for this option invests 100% in cash.


67% (62−72%)Alternatives

5% (2−8%)

Real Assets8% (3−13%)Multi-Assets10% (7−13%)Shares10% (7−13%)


42% (37−47%)Alternatives7% (3−11%)


Historic investment performance4

Annual returns are as at 30 June of the relevant year; 5-year and since inception returns are as at 30 June 2018.

Please remember that past performance is not a reliable indicator of future performance.

Super

2013–14 2.1%

2014–15 2.2%

2015–16 1.9%

2016–17 1.9%

2017–18 1.8%

5-year 2.0% pa

Since inception 3.8% pa

Inception date 22/2/01

Super

2013–14 7.3%

2014–15 4.6%

2015–16 3.1%

2016–17 4.6%

2017–18 3.5%

5-year 4.6% pa



Super

2013–14 9.6%

2014–15 5.7%

2015–16 3.3%

2016–17 6.6%

2017–18 5.1%

5-year 6.1% pa



2 Timeframes have been determined having regard to the investment objective for the option.3 The longer-term targets are shown for each investment option but the trustee may vary the benchmark allocation within the ranges shown in brackets. The actual

proportion of individual asset classes may vary slightly from the benchmark due to investment fluctuations. Within the Shares asset allocation, all developed market currency exposure of the international shares is 25% hedged with the emerging market currency exposure unhedged.

4 Investment performance for super options is based on taxable unit prices, after taxes and investment fees and asset (percentage) based administration fees.


4

Investment option summary (continued)...

Investment option name

Balanced Growth

Description This diversified option invests across most major asset classes. It is dominated by growth assets, with a smaller proportion in income assets.

This diversified option invests across most major asset classes. It is dominated by growth assets, with a smaller proportion in income assets.

Investment objective


• DB accumulation-style accounts: CPI + 2.5% p.a.


• DB accumulation-style accounts: CPI + 3% p.a.

Expectation of negative annual returns

5 years in every 20 years 5 years in every 20 years

Minimum suggested investment timeframe2

Medium to long term – 5 years or more Long term – 7 years or more

Investment risk

High

1 765432High

1 765432

Strategic asset allocation3



10% (5−15%)




10% (5−15%)


Historic investment performance4

Annual returns are as at 30 June of the relevant year; 5-year and since inception returns are as at 30 June 2018.

Please remember that past performance is not a reliable indicator of future performance.

Super

2013–14 11.7%

2014–15 6.7%

2015–16 3.3%

2016–17 9.0%

2017–18 6.5%

5-year 7.4% pa



Super

2013–14 13.7%

2014–15 8.1%

2015–16 3.0%

2016–17 11.5%

2017–18 8.0%

5-year 8.8% pa



2 Timeframes have been determined having regard to the investment objective for the option.3 The longer-term targets are shown for each investment option but the trustee may vary the benchmark allocation within the ranges shown in brackets. The actual

proportion of individual asset classes may vary slightly from the benchmark due to investment fluctuations. Within the Shares asset allocation, all developed market currency exposure of the international shares is 25% hedged with the emerging market currency exposure unhedged.

4 Investment performance for super options is based on taxable unit prices, after taxes and investment fees and asset (percentage) based administration fees.


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Transaction cut-off timeIf we receive a valid and complete transaction request before 4pm (AEST) on a NSW bank business day, it will be processed using the unit price determined for that day. This cut-off time applies to all transaction requests, whether made online, or by phone or form where available.

Unit prices are calculated at the close of trading of all markets for that day, therefore it is generally not known until the following NSW bank business day. It is important to consider this when making any transaction requests. For more information on unit pricing, refer to the following section on this page.

If we determine that a request is incomplete, it will be processed on the date that we receive the completed information from you, subject to the cut-off time above. The unit price that applies will depend on the time we receive and can reasonably process the completed information.

If your transaction request involves super moving out of your account, in normal circumstances and where we have received all necessary information5 please keep in mind the following transaction times:

• Transfers to another Australian super fund will generally be processed within three business days.

• Cash withdrawals will generally be paid within five business days.

• For any request that involves a withdrawal from one account and a deposit into another account in our fund, the timing of the separate transactions on each account means that there will generally be at least one NSW bank business day where the funds are not invested. For example, this may occur when a DB super benefit has become payable and you request for it to be paid into an Accumulate Plus or Retirement Access account in our fund.

We reserve the right to delay a transaction where there may be a concern over its legitimacy or for the security of our members. If a transaction is delayed, you will receive the unit price that applies on the day your request is processed.

Keeping track of your account balance and unit pricingThe value of your accumulation-style account balance depends on the number of units you hold in an investment option and the unit price for that investment option at any given time.

You can check daily unit prices and investment performance on our website oursuperfund.com.au/unitprices.

Investment returns for your accumulation-style accounts are based on taxable unit prices.

The actual investment return that applies to your account depends on your investment options and the timing of any transactions into and out of these options. These transactions may include contributions, investment switches or withdrawals.

You can also check your account balance at any time by logging into your DB super at oursuperfund.com.au/login.

Units are the basis for your account When you choose an investment option, or if the default option applies, you are allocated a number of units in that option based on the relevant value of your account and the unit price for the investment option for the transaction date.

If you invest or switch into a new investment option, or if contributions or transfers are added to your account, you are allocated additional units based on the value of the switch or investment divided by the relevant investment option’s unit price.

In a similar way, your units in an investment option will decrease each time you switch out of an option or money is withdrawn from your account.

Example Your accumulation-style account balance is invested in the Growth investment option. You decide to switch 25% of your balance into the Cash option, which is a transaction amount of $2,500. The unit price for Growth on the transaction date is $2.7020, which means your Growth balance will decrease by 925.2406 units ($2,500 divided by the Growth unit price). The Cash unit price on the transaction date is $1.8033, which means your Cash balance will increase to 1386.3473 units ($2,500 divided by the Cash unit price).

Your balance is based on the units you holdThe value of your account depends on the number of units you hold in an investment option and the unit price for that investment option at any given time. To work out how much your account is worth, multiply the number of units you hold in an investment option by the unit price for that option for the day.

Example If you have 10,300 units in the Balanced option and its unit price for a particular day is $2.9422, your investment is worth $30,304.66 as at that day, calculated as your number of units multiplied by the unit price.

To check unit prices

Visit oursuperfund.com.au/unitprices

5 A completed request includes a correctly completed form (if applicable), together with any material we may ask for to establish your identity. Where the completed request is received in our office before 4pm (AEST) on a NSW bank business day, it will be processed as at the date of receipt. If applicable, funds will be debited from your account on the day we process your completed request. We may not be able to process your request if another transaction exists for your account for the same day, e.g. a contribution.


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How we calculate unit prices When you invest in an investment option, you are allocated a number of units. Each unit represents an equal part of the market value of the portfolio of investments that the investment option holds. As a result, each unit has a dollar value, or unit price.

The unit price is calculated by taking the total market value of the investment option’s assets on a particular day, including income entitlements such as dividends and distributions, adjusting for any liabilities such as taxes and fees, then dividing the net investment option value by the total number of units held by all investors in that investment option on that day.

Although your unit balance in an investment option will stay constant unless there is a transaction on your account, the unit price and therefore your account balance will change.

We determine the market value of each investment option based on the most current and recently available information that is independently verified; some exceptions may apply. Unit prices are determined for each NSW bank business day and are calculated at the close of trading of all markets for that day, meaning they are not generally known until the following NSW bank business day.

The unit price for a particular NSW bank business day is used to process all transactions received before 4pm AEST on that day for the relevant investment option.

The trustee has the discretion to amend the way unit prices are calculated at any time. We also have the discretion to vary the method used to determine unit prices or to suspend unit prices for short-term periods when we determine that unit price valuations cannot be calculated reliably or in respect of particular circumstances, e.g. if there is a delay in performing the standard unit price calculations.

Note: We currently have one unit price for each investment option, which means that the buy price when investing in an option is equal to the sell price when withdrawing from that investment option. In the future, we reserve the right to introduce different unit prices for buying and selling, which means there would be different unit prices when investing in and withdrawing from an investment option. The difference between the two unit prices generally reflects different costs associated with buying or selling of assets and is commonly known as a buy/sell spread.

Unit pricing adjustmentsThere are a number of factors used to calculate unit prices, including asset valuations, liabilities, debtors, number of units on issue and transaction costs.

If the factors used to calculate the unit prices are incorrect, an adjustment to the unit price may be required. We generally use a variance of 0.30% in the unit price, or a 0.05% variance for a cash investment option, before correcting the unit price.

If you have had a transaction on your account using an incorrect unit price and the unit pricing error is greater than or equal to the applicable variance, we will:

• compensate your account balance or make other adjustments as we may consider appropriate, or

• where your account is closed, we will send you a rollover payment if the amount of the adjustment is more than $20.

The tolerance levels are consistent with regulatory practice guidelines and industry standards. In some cases, we may compensate where the unit pricing error is less than the tolerance levels.

How your investments are managedThe trustee selects a range of professional investment managers to manage the fund’s assets, which includes the super in your account. Each investment manager is allocated a portion of the fund’s assets to manage based on its specialist skills.

A list of our investment managers is included on our website at oursuperfund.com.au/managers.

The trustee regularly monitors each investment manager’s activities and investment performance. You will find information about the investment arrangements each year in the fund’s Annual Report, available from oursuperfund.com.au or by calling us.

Note: Your investment does not mean that you have direct investments with our investment managers, nor does it mean that the investment managers enter into any direct relationships with you or provide financial services to you. Investment managers are the trustee’s service providers and may be altered at any time without prior notice to you.

Are labour standards or environmental, social and ethical considerations taken into account? The trustee considers the integration of sustainable investing concepts, sometimes referred to as environmental, social and governance (ESG) factors, to have an influence on the long-term investment outcomes of the fund and therefore considers these factors when determining the fund’s investment strategy.

As the trustee outsources the implementation of its investment strategy to external investment managers, it is expected that each investment manager will have regard for ESG factors, if they believe they will have a meaningful impact on investment performance. Each investment manager may have its own policy on the extent to which labour standards or environmental, social and ethical issues are taken into account when making investment decisions. The policies of each individual manager are considered when selecting managers and monitoring their management of ESG factors and risks.


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The trustee does not have any pre-determined views on ESG factors when considering the fund’s investment strategy. However, the trustee does have a decision-making framework that it may apply to assist in considering and evaluating the appropriate course of action for specific ESG factors. The trustee currently applies a negative screen to companies whose primary purpose is tobacco manufacturing or production of controversial weapons, based on the trustee’s agreed screening application. The trustee’s decision not to invest in these companies was for both financial and social reasons. These exclusions apply to the fund’s direct holdings in listed shares and fixed interest portfolios. For indirect holdings, e.g. including derivatives, unit trusts and structures like exchange traded funds, the trustee does not maintain the same degree of control over individual investments, therefore these exclusions may not apply to these investments.

Managing investment risksAs with many investment products, your accumulation-style accounts are subject to certain risks. Each of our investment options has a different investment objective, asset mix and investment fee and therefore may be subject to a different level of investment risk. Some of the significant risks are outlined below.

Asset class risk

Asset classes perform differently over time. You can reduce this risk by diversifying your account. If one asset or asset class is not performing well at a particular time, others may be performing better. Our diversified investment options do this for you automatically by investing in a pre-mixed range of asset classes and assets.

Investment manager risk

Some investment managers have an investment style and philosophy that suits certain market and economic conditions better than others. To minimise this risk, the trustee selects a range of investment managers for a complement of styles and philosophies.

Inflation In some cases inflation, measured by the CPI, may exceed investment returns. We aim to reduce this risk for each of the diversified investment options by allocating a portion of the fund’s assets to growth assets with the aim of providing some capital growth over the longer term.

Market risk

Economic, technological, political or legal conditions, and even market sentiment, can affect investment markets and therefore the performance of different investment options. In some cases, the trustee has appointed a number of investment managers for their specialist research and investment skills to reduce this risk.

Interest rate risk

Interest rate changes can have a positive or negative impact, either directly or indirectly, on investment value or returns of interest bearing asset classes, e.g. when interest rates change, the capital value of fixed interest assets may change and the income return on the assets can become more or less favourable. Generally, the value of fixed interest assets fluctuates more than cash assets.

Derivatives risk

A derivative is an investment-related agreement whose value is derived from other securities or assets. Derivatives can be used to manage certain investment risks but they may also increase other risks in the investment or expose the investment to additional risks. Risks associated with the use of derivatives include:

• failure of the value of the derivative to move in line with the underlying asset or the derivative is illiquid, meaning the derivative position may be difficult or costly to reverse;

• currency and interest rate risks; and

• counter-party risk, where the counter-party to the derivative contract cannot meet its obligations under the contract, resulting in loss to the fund.

The use of derivatives, such as futures and options, is authorised under the trust deed and may be used as part of the trustee’s investment strategy. As part of our risk management plan, we must pre-approve the use of derivatives for each investment manager. Derivatives are used primarily to achieve transactional efficiency, hedge various market and asset exposures, reduce volatility and reduce transaction costs.

We do not permit the use of derivatives for speculative purposes.

Credit and security-specific risk

Individual assets such as shares or corporate bonds are exposed to risks as well as benefits associated with the company that issues them, e.g. a change in management, business environment or profitability. These influences can cause the value of the assets and their returns to increase or decrease.

Currency risk

If an overseas currency changes in value relative to the Australian dollar, the value of international investments can change, in turn influencing the performance of investment options that use international investments. Some asset classes may incorporate currency hedging, which is a management strategy that involves reducing or removing the impact of currency movements on the value of the investment.

All of the fund’s direct international investments aim to be fully (100%) hedged, other than international shares. The international shares’ developed market currency exposure aims to be 25% hedged, with the emerging market currency exposure remaining unhedged. The fund’s multi-asset investment managers have discretion to change the fully hedged currency exposure of these investments.

Liquidity risk

Occurs when an asset or security cannot be easily converted into cash for a certain period of time without affecting the price of the asset.

Tax and super laws

Changes to tax and super laws can affect the value of your account and the level of investment returns.


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Income assets versus growth assets The value of asset classes with higher investment risk might rise and fall in the short term but they generally have the potential for higher investment returns over the longer term. These are known as growth or return-seeking assets and they aim to provide capital growth, e.g. shares, real assets and alternatives.

Asset classes that have lower investment risk might produce more stable investment returns in the short term but they generally have the potential for lower returns over the longer term. These are known as income or risk-controlling assets and they aim to provide income rather than capital growth, e.g. cash and fixed interest.

Returns on income assets are mainly determined by an income return and returns on growth assets are mainly determined by capital returns or movement in the underlying asset value. However, capital movements can sometimes occur with income assets and similarly, growth assets can have an income component of return.

Generally, capital returns are the component that is most likely to rise and fall, particularly over shorter periods, e.g. movement in a share price. There is a greater potential for overall negative returns with growth assets. However, it is also possible that income assets can produce overall negative returns.

For our fund’s Multi-Assets asset class, the underlying exposures are a mix of both growth and income assets, with this mix being managed dynamically in response to changes in the investment market outlook.

The risk profile of your account Each investment option has a different level of investment risk and potential investment return.

For example, the investment objective for the Growth option is to achieve an average return after applicable taxes and fees of at least CPI + 3% per annum over a 7-year period. Although the Growth option has a high level of investment risk, it also has the potential to produce higher average returns.

The investment objective for the Cash investment option, however, is to achieve an average return before applicable taxes and fees that exceeds the Bloomberg AusBond Bank Bill index over a one-year period. It has a very low level of investment risk and also the potential for lower average returns.

Each investment option also has a negative return objective to give an indication of how often an investor may expect a negative investment return over a given period of time. Investment options with higher levels of investment risk may produce negative returns more frequently than options with lower risk levels.

Standard risk measures

The Standard Risk Measure (SRM) scale is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period.

The SRM is not a complete assessment of all forms of investment risk, for example it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return.

You should still ensure you are comfortable with the risks and potential losses associated with your chosen investment options, or the default investment option if applicable.

The SRM uses a 7-point scale as shown in the table below. The SRM applicable for each of our investment options is shown under ‘Investment risk’ in the tables on pages 3–4.

Risk band

Risk label

Estimated number of years with a negative annual return over any 20-year period

1 Very low Less than 0.5

2 Low 0.5 to less than 1

3 Low to medium 1 to less than 2

4 Medium 2 to less than 3

5 Medium to high 3 to less than 4

6 High 4 to less than 6

7 Very high 6 or more

Investment timeframe The length of time you expect to have your investment is an important factor in choosing investment options for your account.

Over the shorter term, investment returns for higher-risk growth assets can fluctuate but there is a greater chance of these ups and downs smoothing out over the longer term and potentially producing higher average returns. On the other hand, lower-risk income assets may produce a more stable range of investment returns over the shorter term but lower average returns over the longer term.

The investment option or combination of options that are best suited to you depend on your personal circumstances. When deciding which investment options to choose, you should consider the level of investment risk you are comfortable with and the level of investment return you would like from your account.

Diversifying to reduce your investment risk Diversification is an important tool for managing investment risk. Diversifying simply means spreading investments across different asset classes and/or assets. This means that if one of your assets or asset classes is not performing well at a particular time, others that may be performing better at that time may help reduce your overall risk exposure.

Our diversified investment options do this diversification for you automatically by investing in a pre-mixed range of different asset classes and assets.

You should consider seeking professional advice tailored to your personal circumstances from an authorised financial adviser.


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Understanding some investment basicsAssets and asset classesAn asset is something that can be invested in with the objective of financial gain. Groups of similar assets are known as asset classes. For example, , ‘shares’ is an asset class, shares in Company XYZ are assets. An overview of the main asset classes that make up the investment options in our fund is shown in the table below.

Growth and risk Growth refers to the potential for an asset to increase in value over time. Risk is the likelihood that the value of an asset will fluctuate in a positive or negative direction over time. These terms are often used to describe assets and asset classes.

Growth and risk both have an impact on investment returns. You should consider the growth and risk characteristics of each asset class when choosing how and where to invest to suit your needs.

Risk and return generally go hand in hand There is generally a close relationship between investment risk and investment returns over the long term. Generally, the higher the potential for an asset to increase in value, the higher the level of investment risk. Diversifying your investment may reduce your overall risk exposure. Some additional information about risk and return for the asset classes that make up the strategic asset allocation for our investment options (pages 3–4) is provided in the table below.

Asset class Description Investment return is derived from...

Expected level of growth and risk

Might suit investors who want...

Cash Bank bills, short-term deposits with financial institutions and corporate promissory notes.

Interest payments or capital growth or loss if traded before maturity.

Low growth

Low risk

Security and stability

Fixed Interest Usually represents loans to government or corporate organisations.

Interest payments or capital growth or loss if traded before the loan matures.

Low growth

Low to medium risk over the long-term, with elevated risk over the short to medium term

Typically a more consistent rate of return over a shorter timeframe, however in the current low interest rate environment we envisage heightened risk and volatility in the rate of returns

Alternatives Various investment strategies that access alternative return drivers. These strategies typically have a strong emphasis on providing diversification and focus on niche markets.

A range of alternative return sources to the traditional asset classes, i.e. insurance, momentum, carry and value.

Medium to high growth

Medium to high risk

Higher investment returns over the medium to longer term

Multi-Assets Multi-asset class portfolio dynamically manages investments across a range of asset classes in response to changes in the respective investment managers’ investment market outlook. The mix of asset classes could include shares, fixed interest, high yield credit, listed infrastructure, absolute return strategies and cash.

A range of sources, e.g. income returns and capital growth or loss from the mix of assets determined by the investment manager.

Medium to high growth

Medium to high risk

Higher investment returns over the medium to longer term

Real Assets A combination of Australian and international property and infrastructure assets either owned directly or indirectly through listed or unlisted trusts.

Unlisted property includes commercial and retail land and buildings. Unlisted infrastructure includes airport, electricity generation and transmission and toll-road assets.

Change in the value of the assets over time, and therefore potential sale price, and net income.

High growth

High risk

Higher investment returns over the longer term

Shares (both Australian and international)

Investment in companies listed in Australian and international markets.

Capital growth or loss, i.e. the difference between the buy and sell price of the shares, and any dividends that may be paid.

High growth

High risk

Higher investment returns over the longer term


10

Part 2: Fees and other costs Fees and other costs do not generally apply in relation to your DB super in our fund. However, fees and other costs will apply for any accumulation-style accounts within your DB division that are eligible for investment choice.

This section shows fees and other costs that you may be charged for those eligible accumulation-style accounts. These fees and other costs are deducted from the returns on your investment. Taxes are set out in the Member Booklet for your division. You should read all the information about fees and other costs because

it is important to understand their impact on your investment. The fees and other costs for each investment option are set out on pages 11–12.

Note: If you also have an Accumulate Plus or Retirement Access account in our fund, different and/or other fees will apply to those accounts. You should refer to the relevant Product Disclosure Statement available from oursuperfund.com.au/memberbooklets for more information.

Fee summaryType of fee Amount (net of GST) How and when paid

Investment fee6,7 0.08% – 0.58% of accumulation-style account balance per year (estimated for the 12 months to 30 June 2018), depending on the investment option – refer to page 11 for fees for particular investment options

Deducted daily from the option’s assets and factored into unit prices and investment returns

Administration fee6 0.17% of accumulation-style balance per year Deducted daily from the option’s assets and factored into unit prices and investment returns

Buy/sell spread Nil Not applicable

Switching fee Nil Not applicable

Exit fee Nil Not applicable

Other fees and costs Fees for personal advice may apply if you use this feature – refer to page 13 for more information

Amount is agreed between you and your adviser and paid directly, or may be deducted from an Accumulate Plus or Retirement Access balance in our fund if you have one

Indirect cost ratio Nil Not applicable – the trustee has determined to include all indirect costs in investment fees

Additional explanation of fees and costsDefined feesThe following fees and costs may be charged to you in relation to any accumulation-style accounts within your DB division that are eligible for investment choice. For more information about the type and amount of the fees and costs that apply, refer to the following sections.

Type of fee Definition More information

Investment fee

An investment fee is a fee that relates to the investment of the fund’s assets and includes (a) fees in payment for the exercise of care and expertise in the investment of those assets (including performance fees), and (b) costs that relate to the investment of fund’s assets, other than (i) borrowing costs; and (ii) indirect costs that are not paid out of the fund that the trustee has elected in writing will be treated as indirect costs and not fees, incurred by the trustee or in an interposed vehicle or derivative financial product; and (iii) costs that are not otherwise charged as an administration fee, buy-sell spread, switching fee, exit fee, activity fee, advice fee or insurance fee. Note: this fee does not include implicit transaction costs, borrowing costs or property operating costs.

Refer to page 11.

Administration fee

An administration fee is a fee that relates to the administration or operation of the fund and includes costs that relate to that administration or operation, other than (a) borrowing costs; and (b) indirect costs that are not paid out of the fund that the trustee has elected in writing will be treated as indirect costs and not fees, incurred by the trustee or in an interposed vehicle or derivative financial product; and (c) costs that are otherwise charged as an investment fee, buy-sell spread, switching fee, exit fee, activity fee, advice fee or insurance fee.

Refer to page 11.

Buy-sell spread A buy/sell spread is a fee to recover transaction costs incurred by the trustee in relation to the sale and purchase of the fund’s assets.

Does not apply.

Switching fee

A switching fee is a fee to recover the costs of switching all or part of your interest in the fund from one investment option or product to another.

Does not apply.

6 The actual fees applied will be less than the figures shown above, as any tax concession that the fund is entitled to in relation to these fees is passed on to members as reduced administration and investment fees (page 13).

7 Remember that past costs are not a reliable indicator of future costs.


11

Type of fee Definition More information

Exit fee An exit fee is a fee to recover the costs of disposing of all or part of your interests in the fund. Does not apply.

Advice fees A fee is an advice fee if (a) the fee relates directly to costs incurred by the trustee because of the provision of financial product advice to you by the trustee or another person acting as an employee of, or under an arrangement with, the trustee, and (b) those costs are not otherwise charged as an administration fee, investment fee, switching fee, exit fee, activity fee or insurance fee.

May apply only if you use this feature – refer to page 13.

Indirect cost ratio

The indirect cost ratio (ICR) for an investment option offered by the fund is the ratio of the total of the indirect costs for the investment option to the total average net assets of the fund attributed to the investment option. Note: A dollar-based fee deducted directly from your account is not included in the ICR.

Does not apply – the trustee has determined to include all indirect costs in investment fees.

Administration feesAn administration fee applies to any accumulation-style accounts that are eligible for investment choice. This asset-based fee is 0.17% (gross) of your account balance per year. This fee is not deducted directly from your account balance but is deducted from the assets of the investment option and factored into unit price calculations and investment returns.

Note: The actual administration fee applied may be less than the gross figure shown above because we may pass our tax benefit on to you (page 13).

Investment feesThe investment fee that applies to your accumulation-style accounts that are eligible for investment choice is different for each investment option, as shown in column B of Table 1 below. This fee is not deducted directly from your account balance but is deducted from the assets of the investment option and factored into unit price calculations and investment returns.

Depending on the investment options that apply to your account, the investment fee for the 12 months to 30 June 2018 is estimated to be between 0.08% p.a. and 0.58% p.a. of your account balance invested in the option. Please note that past costs are not a reliable indicator of future costs – refer to the ‘Important note’ on this page for more information.

The investment fee has two components:

i) An investment management component includes fees paid to the trustee’s investment managers and custodian either directly,

where assets are managed via a mandate structure, or indirectly, where we invest through an external unit trust.

ii) A component of other investment-related costs includes costs such as brokerage, buy/sell spread of unit trust investments, settlement and clearing costs, stamp duty costs, and over-the-counter (OTC) derivative costs.

Estimate of fees and costs affecting investment returns

Table 1 below gives an estimate of the total gross investment and administration fees and costs that are deducted from the assets of the investment option and factored into unit price calculations and returns for each investment option.

Important note:Investment fees are estimates of fees and costs paid in the 12 months to 30 June 2018. Past costs are not a reliable indicator of future costs, and costs may vary from year to year depending on the allocation of assets between the fund’s investment managers and the investment activity of each manager.

As a guide, we estimate that the investment fee (total) for 2018-19 for each investment option may vary by up to 0.05% from the figures in Table 1 (column B). For example, the investment fee for 2018-19 for the Balanced option could be between 0.51% p.a. and 0.61% p.a. The estimates for 2018-19 are based on information available as at the date this document was issued but may be updated in the future. You can refer to oursuperfund.com.au/memberbooklets for any update notices that we may issue in regards to fee estimates.

Table 1: Estimate of total fees and costs affecting investment returns for the 12 months ending 30 June 2018Note: The actual administration and investment fees applied will be less than the gross figures shown below as any tax benefit the fund is entitled to may be passed on to you (page 13).

Investment option

Asset-based administration

fee (% p.a.)

Estimated investment fees (% p.a.) Estimated indirect cost ratio (% p.a.)

Total estimated fees affecting

returns (% p.a.)Investment fee (total)

Investment management

Other investment-

related costs(A) (B) (C) (D) (E) =A+B+E

Cash 0.17 0.08 0.07 0.01 0 0.25

Conservative 0.17 0.35 0.25 0.10 0 0.52

Moderate 0.17 0.48 0.34 0.14 0 0.65

Balanced 0.17 0.56 0.41 0.15 0 0.73

Growth 0.17 0.58 0.43 0.15 0 0.75

= +


12

Transaction costs Transaction costs apply to any accumulation-style accounts that are eligible for investment choice. These costs include custody, brokerage, stamp duty, clearing costs or other charges associated with buying, selling and holding the fund’s assets. If the amount payable to acquire an investment exceeds the price for which it would be disposed of at that time, the difference is also a transaction cost. Some transaction costs, such as brokerage, vary depending on trading activity in our investment portfolios.

Table 2 below shows the total estimated transaction costs for each investment option as a percentage of the value of the option.

The transaction costs in column B of Table 2 are already included in the investment fee from Table 1 (column B) and therefore do not represent an additional cost to you. These explicit costs are often the known amounts that may be paid out from the fund to implement a transaction or paid for in other ways, e.g. offset against sale proceeds.

Some transaction costs are not included in the investment fee from Table 1 but are included as part of the net purchase or sale price for the underlying asset. These implicit costs, shown in column C of Table 2, represent an additional cost to you but they are not deducted directly from your account balance; they are deducted from the assets of the investment option and factored into unit price calculations and investment returns.

The trustee does not currently charge a buy/sell fee for any of our investment options, so no portion of the total transaction costs are recoverable in this way.

All costs in Table 2 are estimates of costs paid in the financial year ending 30 June 2018. The figures include the net effect of GST but exclude any tax benefit that may be passed on to you (page 13).

Please note that past costs are not a reliable indicator of future costs.

Borrowing costs

The borrowing costs included in Table 2 (column D) include all costs of borrowing such as interest, legal fees and other related costs for the fund’s Real Assets investments (property and infrastructure). These costs represent an additional cost to you but

they are not deducted directly from your account balance; they are deducted from the assets of the investment option and factored into unit price calculations and investment returns.

Additional property operating costs

Property operating costs relate to the management of property assets and may include costs such as council and water rates, utilities, lease renewal costs, security, elevator and air conditioning maintenance and general property management costs. These costs are excluded from the investment fees in Table 1 and transaction costs in Table 2.

An estimate of the total property operating costs is shown in Table 3 below. A portion of these costs has no impact to you as some costs are paid by the property tenants. Costs that are not recoverable from tenants are deducted at least monthly from the relevant option’s unit price and will represent an additional cost to you but they are not deducted directly from your account balance; they are deducted at least monthly from the assets of the investment option and factored into unit price calculations and investment returns.

All costs in Table 3 are estimates of costs paid in the financial year ending 30 June 2018. The figures include the net effect of GST but exclude any tax benefit that may be passed on to you (page 13).

Please note that past costs are not a reliable indicator of future costs.

Note: Property operating costs only apply to the fund’s investment options that have an asset allocation to the fund’s Real Assets investments.

Table 3: Estimate of total property operating costs for the 12 months ending 30 June 2018

Investment option Estimated total property operating costs (% p.a. gross)

Cash n/a

Conservative 0.08

Moderate 0.13

Balanced 0.17

Growth 0.18

Table 2: Estimate of total transaction costs and borrowing costs for the 12 months ending 30 June 2018

Investment option

Estimated transaction costs (% p.a. gross) Estimated borrowing costs (% p.a. gross)

Total transaction costs

Costs already included in investment fee from

Table 1

Costs not included in investment fee

Costs not included in investment fee

(A) (B) (C) (D)

Cash 0.02 0.01 0.01 n/a

Conservative 0.10 0.05 0.05 0.01

Moderate 0.13 0.07 0.06 0.01

Balanced 0.14 0.08 0.06 0.01

Growth 0.17 0.10 0.07 0.01

= +


13GroupSuper/1344/0818

Advice feesAs part of the services we offer, we have arranged for a specialist team of financial advisers, Mercer Financial Advice (Australia) Limited (ABN 79 153 168 293, AFSL 411766) (Mercer), to provide advice to you over the phone about your DB super. A fee does not apply if you use this service for advice relating to investment options, super contributions or benefit options for your DB super – this is known as intra-fund advice. If you would like to talk to one of these advisers, call us on 1800 135 970 and ask to speak with the Advice team.

Advice fees for financial advice may apply if you request advice about your super in our fund in the following circumstances:

• A fee may apply if you receive super-related advice provided by the Mercer Financial Advice team that is outside the scope of intra-fund advice.

• If you receive financial advice from any authorised financial adviser of your choice in relation to your super in our fund.

If you agree to an advice fee in these circumstances, the fee cannot be deducted from your DB super. However, if you also have an Accumulate Plus or Retirement Access account in our fund, you may elect for us to pay that fee to your adviser and deduct the amount from that account balance. In this case, an advice fee will only be deducted from your account where both you and your financial adviser agree and complete our ‘Request to pay advice fee’ form, available from oursuperfund.com.au/forms. The payment of an advice fee will be deducted from your account effective the first business day on or after the 5th day of each month. A new form is required for each fee deduction request.

A limit of one advice fee payment can be deducted from an Accumulate Plus or Retirement Access account in a 12-month period and the maximum payment amount of the advice fee is $5,000 (including GST). The payment of any advice fee cannot reduce your Accumulate Plus or Retirement Access account balance below any applicable minimum account balance required.

Note: We do not supervise, and we are not responsible for, the provision of financial advice services by any financial adviser, other than intra-fund advice provided by the Mercer Financial Advice team.

The cost of any financial advice that does not relate to your super in our fund cannot be deducted from an account.

We may pass on our tax benefit The fund is entitled to a tax benefit on the gross administration fees and investment fees that we pay to our service providers. We may pass this tax benefit on to members by reducing the fees that you pay.

Fees will generally be shown as the gross amount in this Supplement. The actual net amount that you pay after any tax benefit is applied may be less than the figures shown. This may also apply to an advice fee we may pay from an Accumulate Plus or Retirement Access account at your request.

On your benefit statement and in some other documents, you may see both the gross and net figures reflected for fees.

Changes to fees and charges We strive to ensure our fees and costs remain competitive to help you save more for your retirement.

We reserve the right to vary our fees or introduce a new fee at any time without your consent. If we increase a fee other than investment fees or introduce any new fee, we will notify you at least 30 days before the change is to take effect. If we increase investment fees, we will notify you as required by law.

Tax may also applyDepending on your circumstances, tax may also apply to lump sum withdrawals, pension payments and death benefits paid from your DB super. For more information, you should refer to the ‘Tax’ chapter of your Member Booklet, which is available from oursuperfund.com.au/memberbooklets.

Documents

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