Investment Choice Guide

Investment Choice Guide

www.australiansuper.com

Effective 1 November 2014MySuper Authorised 65 714 394 898 856 Issued by AustralianSuper Pty Ltd ABN 94 006 457 987 AFSL 233788 Trustee of AustralianSuper ABN 65 714 394 898 Level 33, 50 Lonsdale Street Melbourne VIC 3000

Investing for your future

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1300 300 273B How much control do you want over your super?

Contents

How to choose an investment option 1

1. How much control do you want over your super? 2 Choose your level of control 2 What’s in our investment options? 3 A snapshot of your investment options 4

2. Consider the risks, your needs and investment timeframe 6

How the different asset classes have performed in the past 7

Risks and your investment timeframe 8 Short-term risks are different to long-term risks 9

3. Compare investment options 10 Investment choice checklist 10 Risk levels of investment options 11 Ranges of potential retirement balances 12 PreMixed options 18 DIY Mix options 26

4. Make your choice 37 Changing your investment options 37

Performance 38

Fees 40

How we invest your super 41

Environmental, social and governance issues 42

About the risk data in this document 43

Get some advice before you choose an option We strongly encourage you to seek advice from a licensed financial adviser before choosing an option. A professional financial adviser can help you develop an investment strategy to meet your personal circumstances and needs.

AustralianSuper can help you get the advice you need in two ways*:

› Over the phone super advice: our specialist team of superannuation advisers can help you decide which investment option or options are right for you.

› Face-to-face discussion with a financial adviser: If you need more complex financial advice, we can refer you to an external licensed financial adviser. Initial consultations are free for AustralianSuper members. Your adviser can prepare a financial plan, if necessary, on a no-commission, fee-for-service basis.

* The financial advice you receive will be provided under the Australian Financial Services Licence of third parties and not by AustralianSuper Pty Ltd (AustralianSuper) and therefore is not the responsibility of AustralianSuper.

Your risks change with your investment timeframe. Make sure you understand how different risks can impact your retirement savings over different time periods.

You can choose or change your investment options by logging into your online account at www.australiansuper.com/login. If you can’t make your choice online, call us on 1300 300 273 between 8am – 8pm (AEST/AEDT) weekdays.

Decide how involved you want to be in managing your super. Are you happy to choose one option and leave it to us or would you prefer to make some investment decisions yourself?

Look at the objectives, investment strategy, risks and potential ranges of returns of each investment option. You can choose one or a combination of options.

Make your choice

How much control do you want over your super?

Consider the risks, your needs and investment timeframe

Compare investment options

How to choose an investment option

Decisions you make now can impact how much super you have for your retirement. So take a few moments to consider your circumstances and needs before choosing an investment option.

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www.australiansuper.com How to choose an investment option 1

This guide is for Superannuation members. If you’re a retirement income member read the Choice Income Product Disclosure Statement for your investment choices.

Visit www.australiansuper.com/RetirementGuide

For more information on your advice options with AustralianSuper call 1300 300 273 between 8am – 8pm (AEST/AEDT) weekdays or visit www.australiansuper.com

http://www.australiansuper.com

1300 300 2732 How much control do you want over your super?

With AustralianSuper you can choose the level of control you want over your super. You can select the Pre-Mixed option that best matches your needs and leave the rest to us. If you prefer a more hands-on approach, you can build your own strategy using our DIY Mix options or invest your super in the Member Direct investment option.

Choose your level of control

PreMixed options DIY Mix options Member Direct investment option

Less control

Select the mix that best suits you.

These options combine different mixes of asset classes that AustralianSuper manages for you. Professional fund managers manage the investments within each asset class.

These options suit members who want to choose an option and leave the rest to us.

More control

Build your own strategy with these single asset class portfolios. You choose how much you want to invest in each. Professional fund managers select and manage the investments in each portfolio.

These options suit members who want to choose their own asset allocation but not the individual investments.

Most control

Invest your own super with a choice of listed securities, including stocks in the S&P/ASX 300 Index and exchange traded funds (ETFs), and term deposits.

You must be an AustralianSuper member with $10,000 or more in your account to invest in this option and keep $5,000 or more invested in one or more of our PreMixed or DIY Mix investment options.

This option offers the most control of all AustralianSuper options and suits members who want to be highly involved in managing their super.

Don’t want to make a choice?If you don’t make a choice your super will be invested in the AustralianSuper’s Balanced option – our MySuper Authorised option.

For Choice Income members the default option is the Balanced option up to age 75, after which it is the Conservative Balanced option. See our Choice Income Product Disclosure Statement for details of Choice Income’s investment options. Visit www.australiansuper.com/RetirementGuide

You can change your investment option at any time. See pages 18 to 36 for details of our options.

1. How much control do you want over your super?

www.australiansuper.com How much control do you want over your super? 3

For more information on absolute return strategies, read our factsheet Derivatives – an overview available at www.australiansuper.com

What’s in our investment options?Our investment options are made up of different investment types, called asset classes. Some investment options invest in one asset class, while others include a mix.

Asset classes we invest in

SharesPart of a company that you can buy and sell on a securities exchange. You can access large and small companies across a range of industries in Australia and overseas.

Historically, shares have provided long-term returns above inflation. Returns can combine increases in share prices (capital growth) and payments of dividends (income), but can fluctuate widely over shorter periods.

Private equityInvestment in companies that are not listed on a securities exchange. They can include Australian and international companies.

Private equity can provide long-term returns above inflation. Returns come from increases in the value of the company from a revaluation, recapitalisation or sale. Over shorter periods returns can fluctuate more than listed shares.

Fixed interest (also called bonds)Loans to governments, private companies, banks and other corporations that are issued as securities, which pay regular interest over a set term.

Bonds that are traded have different interest rates (income) and returns to those held until maturity.

Fixed interest returns are typically higher than cash and lower than shares over the long term. Returns can fluctuate over the short term but are usually more stable than shares.

PropertyDirect investments in real estate such as office buildings, shopping centres, hotels, resorts and industrial properties.

Property has historically produced long-term returns above inflation. Returns come from rental income and increases in property values. Returns can fluctuate more than cash but are generally more stable than shares.

Infrastructure Assets that provide essential public facilities and services such as roads, airports, seaports and power supply and generation in Australia and overseas.

Infrastructure has historically provided long-term returns above inflation, steady income and more stable returns than shares. Returns can fluctuate more than cash over shorter periods.

CashInvestments in money market securities, such as bank bills and short-term bonds, which generally pay regular interest over a period of 12 months or less. Investments are held with banks, the Australian Government and some companies.

Cash provides stable short-term returns and has the lowest volatility of all asset classes. Based on historical performance, it also has the lowest potential to grow above inflation over the long term.

Absolute return strategies, also called hedge funds, may also be included in each asset class. These strategies are an alternative way of investing in securities like bonds, shares, currencies and commodities. They are used to improve performance potential, protect capital and improve diversification in certain market conditions and can include strategies like short selling, leverage (using borrowed capital), swaps and arbitrage.

1300 300 2734 How much control do you want over your super?

PreMixed options See page

High GrowthWith a focus on maximising long-term returns, this option has a high allocation to Australian and international shares. Infrastructure, direct property and a small cash allocation help to stabilise returns.

19

Balanced

This is our MySuper authorised option. Your super will be invested in this option if you don’t make a choice. It invests in a wide range of assets, with a higher allocation to shares, infrastructure and property than fixed interest and cash. It’s designed to provide long-term growth with more stable returns than the High Growth option.

20

Sustainable Balanced

Same investment mix as the Balanced option, but with a different selection of international and Australian shares. Only companies that are performing well by financial as well as environmental, social and corporate governance standards are considered for inclusion in the share investments.

21

Indexed DiversifiedUses indexing strategies to invest within each asset class. The high allocation to shares aims to provide long-term growth while fixed interest and cash help to stabilise returns. There are no infrastructure, property or private equity investments.

22

Conservative BalancedA lower allocation to shares and a higher allocation to fixed interest and cash than the Balanced option. It’s designed to provide a balance between capital stability and capital growth over the medium term.

23

Stable For members with a higher focus on capital stability than capital growth, this portfolio is split between fixed interest and cash; and shares, direct property and infrastructure assets. 24

Capital Guaranteed Designed for members who want to protect their capital, this option only invests in deposits with Approved Deposit-taking Institutions. 25

A snapshot of your investment options Super is a long-term investment. If your needs or circumstances change along the way you can change your investment options.

Each option has a different investment mix Mixing together asset classes in different proportions to form a portfolio is called asset allocation. Each investment option has a different asset allocation, which is designed to meet different objectives and investment timeframes.

If you invest in our PreMixed options we manage the asset allocation for you. If you invest in our DIY Mix options or the Member Direct investment option you do it yourself.

www.australiansuper.com How much control do you want over your super? 5

DIY Mix options See page

Australian Shares This option invests in a wide range of Australian shares listed on the Australian Securities Exchange.

27

International Shares This option invests in a wide range of international shares across developed and emerging markets. Currency hedging is not used in this option.

28

International Shares – Hedged

This option invests in a wide range of international shares across developed and emerging markets. It is hedged into the Australian dollar, which reduces the impact of currency movements.

29

Australian Sustainable Shares

Only companies that are performing well by financial as well as environmental, social and corporate governance standards are considered for inclusion in this option.

30

International Sustainable Shares

A diversified portfolio of international shares. Only companies that are performing well by financial as well as environmental, social and corporate governance standards are considered for inclusion in this option. Currency hedging is not used in this option.

31

Property A portfolio of Australian and international properties with the potential to provide medium-term growth and less volatility than shares.

32

Australian Fixed Interest

A diversified portfolio of Australian bonds and short-term income producing securities with the potential to provide stable returns and higher returns than cash over the short to medium term.

33

International Fixed Interest

A diversified portfolio of international bonds and short-term income producing securities with the potential to provide stable returns and higher returns than cash over the short to medium term.

34

Diversified Fixed Interest

A diversified portfolio of Australian and international bonds and short-term income producing securities with the potential to provide stable returns and higher returns than cash over the short to medium term.

35

Cash Invests in short-term money market securities to provide stable returns above the official cash rate.

36

Self managed option

Member Direct investment option

Designed for members who want more control and choice. You can buy and sell listed securities, such as S&P/ASX 300 shares and Exchange Traded Funds, or select a term deposit from the investment menu.

Interested in the Member Direct investment option?

Read the information in this guide in conjunction with the booklet, Your Guide to the Member Direct investment option, available at www.australiansuper.com/MemberDirectGuide

Listed Securities (including shares and ETFs), Term Deposits and Cash

Your guide to the AustralianSuper Member Direct investment option

More control and choice for direct investors

14 July 2014

www.australiansuper.com/MemberDirect

1300 300 2736 Consider the risk and your investment timeframe and retirement savings needs

All investments have risks, which can impact your super in different ways.

Type of risk What is it?

Adequacy This is when you don’t have enough super to meet your needs when you retire. It’s similar to longevity risk, which is the risk that you outlive your retirement savings.

Volatility Also called market risk. Market fluctuations can cause the value of your investment to rise and fall. Volatility is sometimes measured by how often you can expect to receive a negative annual return within a particular period of time.

Inflation Your investment returns don’t grow enough above inflation to meet your long-term objectives.

Market timingThe risk that you buy or sell your investments at the wrong time. For example, if prices are low when you sell you may lose money. If you wait until prices pick up before you buy, you might miss the market upswing and it might take longer for the value of your investment to grow. This can be a risk when switching investment options.

CurrencyMovements in exchange rates can impact the value of your investments. For example, an increase in the Australian dollar compared to other currencies can reduce returns on international investments. A lower Australian dollar can improve returns.

Interest rate Interest rates movements can impact your investment returns. While lower interest rates are usually good for the economy, they can lead to low returns for investors relying on cash for income.

Liquidity The risk that your investment can’t be sold at the right time or when you need your money.

Agency The risk that the third parties who manage investments and the administration for AustralianSuper do not perform as expected.

Credit Also called counterparty risk. This is the risk that the issuer of a security (like a bond) doesn’t pay back the money borrowed when it is due.

Policy The risk that changes to super rules and industry regulations will impact your investment.

2. Consider the risks, your needs and investment timeframe

www.australiansuper.com Consider the risk and your investment timeframe and retirement savings needs 7

Asset class highs and lows

The information in these graphs has been prepared using data from the following market indices: Australian shares – S&P/ASX 300 (All Ordinaries before 1/4/2000); International shares (all countries (unhedged)) – MSCI All Countries World ex Australia NET WHT (unhedged); Direct property – Mercer/IPD Australian Unlisted Pooled Property Fund Index; Australian bonds – UBSA Composite Bond All Maturities; International bonds (hedged) – Citigroup WGBI HDG AUD; Cash – UBSA 90 Day Bank Bill.

Australian Shares

International Shares

Direct Property

Australian Bonds

International Bonds

40%

30%

20%

10%

0%

-10%

-20%

-30%

29.21%

(2007)

- 20.34%

(2009)

37.97%

(1998)

-22.87%

(2002)

19.08%

(2007)

-12.42%

(2009)

2.33%

(2004)

16.81%

(1997)

1.20%

(2006)

13.10%

(1995) 7.75%

(1996)

2.71%

(2014)

Cash

Long-term growth from each asset class

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

$70,000$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

01994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Australian Shares


Direct Property

Australian Bonds

International Bonds

Cash

This chart shows you the highest and lowest returns from each asset class over each of the last 20 financial years, to 30 June 2014.

How the different asset classes have performed in the past

This chart shows how $10,000 invested in each asset class has grown over the 20 years to 30 June 2014.

The risk-return trade off There is a risk-return trade off when investing. For example, assets that are less volatile over the short-term, such as cash, often lack the ability to build your retirement savings above inflation over time. Likewise, investments that have the potential for strong long-term growth are often more volatile over the short term.

$62,628

$57,357

$49,533

$41,703

$30,923$28,741

10.52%

7.25%9.31%

7.46% 8.38%5.43%

AVERAGE ANNUAL RETURN

HIGHEST RETURN

LOWEST RETURN


Risks and your investment timeframeThe main risk when investing your superannuation is that your savings will fall short of your needs for income in your retirement. This is why your investment timeframe is one of the most important factors to consider when choosing your investment option.

Your investment timeframe can vary depending on a range of factors including your age and retirement income goals. For example, if you’re planning to retire soon and use your super savings in the next few years, you may have a short investment timeframe. If you’re planning to keep your super invested during your retirement your investment timeframe will be longer.

What’s your investment timeframe? If you’re going to rely on your superannuation savings in retirement, your super may be invested for longer than you think. With current life expectancies your superannuation may need to last you 20 years or more if you retire when you’re 65.

This table shows estimated investment timeframes based on current life expectancies in Australia. It gives you an indication of how long your super may need to be invested if you’re planning to live off your super when you retire.

Current ageInvestment timeframe

Male Female

20 60 years 65 years






Source: Australian Bureau of Statistics, Life Tables, Australia, 2010-2012, November 2013.

Source: The above example assumes an annual inflation rate of 3.66% per annum.

Takeaway coffee

$4.00

2044: $11.75

2044: $8.81

Movie ticketCarton of milkLoaf of bread

2044: $

49.9

3

2014

: $17

.00

2014:$4.00

2014:$3.00

2044:$4.41

2014:$1.50

Why is inflation so important?

Inflation can eat away at your super savings. That’s why it’s important to consider investment strategies that have the potential to grow above inflation over time, particularly if your super is going to stay invested for many years.

This graph shows how much a variety of goods purchased today would cost in thirty years’ time.

Total cost of these goods: Today = $25.50 2044 = $74.90

In 30 years time you’ll need almost three times as much money to buy what you can today.


The key short-term risk is annual volatilityIf you have a short investment timeframe (five years or less) preserving your capital is likely to be your main focus. You may not want to lose money due to short-term fluctuations in investment markets. So your key risk is volatility of investment returns and you may not want your investment strategy to be too aggressive.

The key long-term risk is inflationIf you have a much longer investment timeframe (20 years plus) your focus is likely to be on growing your capital and maximising your returns. Volatility is not such a big issue as you probably have time to ride out short-term ups and downs in the market. Your key risk is that your capital doesn’t grow sufficiently above inflation over the long-term to meet your objectives.

Short-term risks are different to long-term risks


3. Compare investment options

Investment choice checklist

Here are a few things to consider when making your investment choice and some tips to help you manage your investment strategy.

Avoid market timing Watching your super balance go up and down can make

you anxious. While it can be tempting to change investment options when markets are down, often you’re better off staying put.

One of the risks of changing investment options when they’re performing poorly is that you could ‘lock in a loss’. You may also miss out on potential growth when markets regain their value. This can make a big difference to your final retirement savings.

Keep on top of your investment strategy Market movements can shift the asset allocation of your

portfolio away from its original strategy and change your risk level. AustralianSuper actively adjusts the asset allocation of its PreMixed options to ensure it reflects our strategy.

If you invest in our DIY Mix or Member Direct investment options you’ll need to manage the asset allocation yourself. From time to time, you may need to add or reduce the amount you invest in each investment option to bring it back in line with your desired asset allocation. This is called ‘rebalancing’.

Review your strategy when your circumstances change You should consider reviewing your investment option or options

when your circumstances or objectives change. For example, you might be nearing retirement and need to access some of your super in the short-term.

Get professional financial advice The best option is the one that suits your investment

timeframe, circumstances and goals. If you’re not sure which option is right for you a professional financial adviser can help you.

Getting financial advice upfront can save you money and make a big difference to your retirement savings over the long term.

* The financial advice you receive will be provided under the Australian Financial Services Licence of third parties and not by AustralianSuper Pty Ltd (AustralianSuper) and therefore is not the responsibility of AustralianSuper.

Decide your investment timeframeOne of the most important things to consider when choosing your investment options is your investment timeframe. Your investment needs are different over different timeframes and so are the risk levels and potential ranges of returns for each investment option.

Compare the risk levels for your timeframe The risk levels for each investment option are shown over the short, medium and long term. This way you can compare investment options with the most appropriate risk level for your timeframe.

For example, investment options with a higher focus on preserving capital have a lower short-term risk level. They also have a higher long-term risk level as they have historically produced lower long-term returns. This means they’re unlikely to keep up with inflation or significantly increase your super savings over time. These options are more suited to members with shorter investment timeframes.

Investment options that are designed to increase your super savings over time may experience higher volatility over shorter periods. They have a higher short-term risk level and lower long-term risk level. These options are suited to members with longer investment timeframes.

Compare the potential ranges of balances While some investment options have similar risk levels over the same timeframe, there are differences in their expected ranges of returns.

To help you compare investment options, we’ve shown examples on the following pages of how the expected investment returns can impact your retirement balance over the short, medium and long term. These are shown as a range of potential balances to give you can idea of how different market conditions can impact investment returns.

Diversify to reduce volatility Investing in different asset classes and investments

is called diversification. Different investments usually perform well at different times. Diversification can reduce volatility as your better performing investments can help to offset your investments that aren’t performing so well. While it can reduce some of the highs, diversification can also reduce the lows and provide more consistent investment returns.

Diversification is an important factor to consider, especially if you’re planning to build your own strategy or invest your own super. AustralianSuper’s PreMixed options are already diversified, with a different mix of assets in each option.

AustralianSuper can help you get the advice you need.* Call us on 1300 300 273 or visit www.australiansuper.com to find out more.


Risk levels of investment options AustralianSuper has a range of investment options with different risk levels over different timeframes.

Investment option

Risk level for the time invested

Short-termIf savings are required

in 5 years or less

Medium termIf savings are required

after 5 to 20 years

Long termIf savings are required after 20 years or more

PreMixed investment options

High Growth High Medium Low to Medium

Balanced High Medium Low

Sustainable Balanced High Medium Low to Medium

Indexed Diversified High Low to Medium Low

Conservative Balanced Medium to High Low to Medium Low

Stable Medium Low to Medium Low

Capital Guaranteed Very Low Medium to High High

DIY Mix investment options

Australian Shares High Medium Low to Medium

International Shares High Medium Low to Medium

International Shares – Hedged High Medium Low to Medium

Australian Sustainable Shares Very High High Medium to High

International Sustainable Shares Very High Medium to High Medium

Property Medium to High Medium Low to Medium

Australian Fixed Interest Low to Medium Medium High

International Fixed Interest Low to Medium Medium High

Diversified Fixed Interest Medium Medium to High High

Cash Very Low Medium to High High

Please see page 44 for information on how the risk levels for each option are determined.

In the table below:

› Short-term risk is the risk that your super savings will be reduced by volatility of investment markets. This is the same as the Standard Risk Measure. See page 44.

The short-term risk level is also called the Standard Risk Measure. See page 44.

› Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation

› Long-term risk is the risk that your super savings will not keep up with inflation


$200,000

$175,000

$150,000

$125,000

$100,000

$75,000

$50,000

$25,000

$0

Ranges of potential retirement balances

What Nick notices

› His most likely balances in the Balanced and Australian Shares option are higher than his most likely balance in the Cash option.

› Cash doesn’t grow as much as the other options, but it doesn’t have the potential to lose as much either.

› Australian Shares has the highest growth potential, but it could provide the lowest minimum expected balance.

What Nick needs to consider

› There is a 5% probability that Nick’s balances will be lower and a 5% probability that they will be higher than these ranges.

› Returns from shares can go up and down significantly over shorter time frames.

› While cash provides the most stable returns for Nick, it doesn’t have the potential to increase his super above inflation like the other options.

› While the lowest expected balance from the Balanced option is not as low as the one from Australian Shares, over five years it could still be lower than cash.

See page 43 for more details on how the data in the graph is calculated.

Australian Super - Bob and Marion in colour

100%

Pantone 158

Pantone 274

Pantone 431

90% 75% 50% 25%

Balance (today’s dollars)

AUSTRALIAN SHARES

BALANCEDCASH

Nick’s ranges of potential retirement balances in 5 years

The line near the middle of each range below shows Nick’s most likely balance. The top is the highest expected balance and the bottom is the lowest expected balance.

I’ve only got a small super balance. I’m planning to

retire in the next 5 years and use my super to pay off

some small debts.

Note: Scale is $0 to $200,000

$47,179

$67,130

$80,658

$42,384$37,908 $33,305

$44,899$50,878

$53,243

Nick is comparing three of AustralianSuper’s investment options to see how much super he could potentially save over 5 years. He currently earns $46,000 a year and has a starting balance of $28,000.

5 years


$200,000

$175,000

$150,000

$125,000

$100,000

$75,000

$50,000

$25,000

$0

What Yolanda notices

› Cash doesn’t have the potential to grow as much as the other options, but it doesn’t have the potential to lose as much either.

› Balanced and Australian Shares both have higher most likely balances than Cash.

› Australian Shares has the highest growth potential, but it could provide the lowest minimum expected balance.

What Yolanda needs to consider

› There is a 5% probability that her balances will be lower and a 5% probability that they will be higher than these ranges.

› While Cash provides the most stable returns, it doesn’t have the potential to increase her super above inflation like the other options.

› While the most likely balances for the Balanced and Australian Shares options are similar, the Australian Shares option has the potential to increase and decrease more than Balanced. This shows how returns from Australian shares can go up and down significantly over shorter time periods.

See page 43 for details on how the data in the graph is calculated.

Australian Super - Bob and Marion in colour

100%

Pantone 158

Pantone 274

Pantone 431

90% 75% 50% 25%


AUSTRALIAN SHARES

BALANCEDCASH

Yolanda’s ranges of potential retirement balances in 10 years

The line near the middle of each range below shows Yolanda’s most likely balance. The top is the highest expected balance and the bottom is the lowest expected balance.

Note: Scale is $0 to $200,000

$65,607

$110,012

$140,730

$56,821 $51,548$43,765

$61,479

$74,837$78,799

The potential ranges of returns for each of AustralianSuper’s investment options are shown on pages 19 to 36.

Yolanda is comparing three of AustralianSuper’s investment options over 10 years. She currently earns $46,000 a year and has a starting balance of $28,000.

10 years

I’m not sure whether I’ll take my super as a lump sum or an income

when I retire in 10 years’ time.


$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0

What Vince notices

› The Balanced and Australian Shares options have much higher most likely balances than Cash.

› Cash has a smaller range of balances and doesn’t have the potential to grow or fall as much as the other options.

› While the Balanced option doesn’t have the potential to increase as much as Australian Shares it doesn’t decrease as much either.

What Vince needs to consider

› There is a 5% probability that his balances will be lower and a 5% probability that they will be higher than these ranges.

› Cash may not grow enough above inflation to meet his retirement income needs.

› While it is likely that the share market’s ups and downs will smooth out and provide growth over a 20-year timeframe, there is still a chance that the lowest expected balance for Australian Shares will be below that of Cash.



AUSTRALIAN SHARES

BALANCEDCASH

Vince’s ranges of potential retirement balances in 20 years

The line near the middle of each range below shows Vince’s most likely balance. The top is the highest expected balance and the bottom is the lowest expected balance.

$101,650

$219,843

$330,441

$85,426 $79,037 $67,363$93,548

$134,282 $150,020

I’m still a long way from retirement and I want to

increase my super as much as I can before then. I’d like to know what could happen with

the different options.

Note: Scale is $0 to $1.6 million


Vince is comparing three of AustralianSuper’s investment options to see how much super he could potentially save over 20 years. He currently earns $46,000 a year and has a starting balance of $28,000.

20 years


$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0

What Mary notices

› Cash doesn’t grow as much as the other options and it has the lowest expected minimum balance of all options.

› Australian shares has the biggest and highest bar – it has the largest range of returns and highest expected maximum balance.

› Her most likely balance is much higher for the Balanced and Australian Shares options than Cash.

› The Balanced option has a smaller range of balances than Australian Shares, but a higher expected minimum balance.

What Mary needs to consider

› There is a 5% probability that Mary’s balances will be lower and a 5% probability that they will be higher than these ranges.

› Cash may not grow enough above inflation to meet Mary’s retirement income needs.

› Mary has time on her side. While share markets can go up and down from year to year, by having her money invested for 40 years it is likely that the ups and downs will smooth out and provide growth over time.



AUSTRALIAN SHARES

BALANCEDCASH

Mary’s ranges of potential retirement balances in 40 years

The line near the middle of each range below shows Mary’s most likely balance. The top is the highest expected balance and the bottom is the lowest expected balance.

I want to keep my super invested after I finish work at 65 and live on

my savings.

Note: Scale is $0 to $1.6 million

$171,156

$604,318

$1,136,210

$139,742$166,584 $147,879

$154,159

$311,622$381,288

The potential ranges of returns for each of AustralianSuper’s investment options are shown on pages 19 to 36.

Mary is comparing three of AustralianSuper’s investment options over 40 years. She currently earns $46,000 a year and has already saved $28,000 in super.

40 years



$1,000,000

$900,000

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

10 years5 years

AUSTRALIAN SHARES

AUSTRALIAN SHARESBALANCED BALANCEDCASH CASH

10 years

› Cash can’t increase or decrease as much as the other options.

› The most likely balances are higher for Balanced and Australian Shares than Cash.

› The Australian Shares option has the lowest expected minimum balance.

5 years › Cash can’t increase or decrease as

much as the other options. › The most likely balances are higher

for Balanced and Australian Shares than Cash.

› Australian Shares can both increase and decrease the most.

TIME INVESTED


$47,179$65,607

$110,012

$140,730

$67,130$80,658

$42,384$56,821 $51,548 $43,765

$37,908 $33,305

$44,899$61,479 $74,837

$78,799

$50,878 $53,243

This graph shows how the ranges of potential balances a member could achieve from three different investment options change over different investment timeframes.

There is a 5% probability that this member’s balances will be lower and a 5% probability that they will be higher than the ranges shown.

This member currently earns $46,000 a year and has a starting balance of $28,000. Please see page 43 for details on how the data in this graph is calculated.


40 years20 years

$1,400,000

$1,300,000

$1,200,000

$1,100,000

$1,000,000

$900,000

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

20 years › The most likely balances are higher

for Balanced and Australian Shares than Cash.

› Cash can’t grow as much as the other options.

› The Balanced option doesn’t increase or decrease as much as Australian Shares.

40 years › Australian Shares has the highest

expected maximum balance.

› Cash has the lowest expected minimum balance – even lower than Australian Shares.

› Even the most likely balance for Cash is lower than the lowest expected balance for Balanced.

POTENTIAL BALANCES

Highest expected

Most likely

Lowest expected

AUSTRALIAN SHARES

AUSTRALIAN SHARESBALANCED BALANCEDCASH CASH

TIME INVESTED


$101,650

$171,156

$604,318

$1,136,210

$330,441

$219,843

$85,426

$139,742

$166,584$147,879

$67,363$79,037

$93,548

$154,159

$311,622

$381,288

$150,020$134,282

18 Compare investment options 1300 300 273

PreMixed optionsSelect the mix that best suits you.


Each PreMixed option invests in a different mix of asset classes. The asset allocation ranges and strategic asset allocation show how it is invested in each asset class. The asset allocation ranges are the minimum and maximum amounts we invest in each asset class for each PreMixed option.

Each year, we set a strategic asset allocation within these ranges based on our outlook for the economy and investment markets. We will move towards or away from the strategic asset allocation (but keep within the ranges) during the year based on our outlook for each asset class.

www.australiansuper.com Compare investment options 19

High Growth

Description This option invests mainly in Australian and international shares, with smaller allocations to infrastructure, direct property and cash. It’s designed for members seeking strong long-term returns who are willing to accept short-term fluctuations in returns.

Investment objectives

To outperform (after fees and taxes) the return of the median growth fund and an average annual return of CPI + 5% over the medium to long term*.

Investment mix Strategic asset allocation Range• Australian shares 37% 20–50%• International shares 38% 20–50%• Direct property 8% 0–30%• Infrastructure 11% 0–30%• Private equity 5% 0–10%• Cash 1% 0–10%

Plus: Fixed interest 0–20%

Minimum investment timeframe

Be prepared to stay invested in this option for at least 12 years before it meets its objectives. See the information below for the risk level that corresponds to your investment timeframe.


This graph shows the range of potential retirement balances a member investing in this option could expect to achieve over different timeframes. This member earns $46,000, has a starting balance of $28,000 and contributions of 9.5%.†

Risk levels › Short-term risk is the risk that your super savings will be reduced by volatility of investment markets.

› Medium-term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation.

› Long-term risk is the risk that your super savings will not keep up with inflation.


Short term (If savings are required in 5 years or less) High (Risk Band 6)

Medium term (If savings are required after 5 to 20 years) Medium

Long term (If savings are required after 20 years or more) Low to medium

How often you can expect a negative annual return

Approximately 4 to 5 out of every 20 years.

* CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how this

data is calculated. Strategic asset allocations and other information are current as at November 2014. The Trustee may alter the Strategic Asset Allocation or the composition of individual

asset classes from time to time to suit prevailing market conditions. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

40 years20 years10 years5 years

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0

Balance(today’s dollars)

Potential balances

HigHest expected

Most likely

lowest expected

tiMe invested

$70,943 $118,550

$236,419

$694,948

$35,971 $48,385 $73,973

$154,707$51,396 $74,954

$134,260

$314,598



Balanced (MySuper option)

Description This option invests in a wide range of assets, with a higher allocation to shares, infrastructure and property than fixed interest and cash. It’s designed for members seeking medium to long-term growth who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the median balanced fund and an average annual return CPI + 4% over the medium to long term*.

Investment mix Strategic asset allocation Range• Australian shares 31% 20–45%• International shares 31% 10–40%• Direct property 9% 0–30%• Infrastructure 13% 0–30%• Private equity 3% 0–10%• Fixed interest 10% 0–25%• Cash 3% 0–15%











Long term (If savings are required after 20 years or more) Low


Approximately 4 out of every 20 years.





$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$67,130 $110,012

$219,843

$604,318

$37,908 $51,548$79,037

$166,584 $50,878 $74,837

$134,282

$311,622

HigHest expected

Most likely

lowest expected

PreMixed investment options (continued)



Sustainable Balanced

Description This option invests in a wide range of assets, with a higher allocation to Australian and international shares, infrastructure and property than fixed interest and cash. Only companies that are performing well by financial as well as environmental, social and corporate governance standards are considered in the share holdings. We apply a ‘best of sector’ approach when selecting shares using various sustainable selection criteria. An additional overlay screens out investment in companies that manufacture tobacco products, land mines or cluster bombs.

This option is designed for members seeking medium to long-term growth who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the median balanced fund and an average annual return CPI + 4% over the medium to long term*.





This graph shows the range of potential retirement balances a member investing in this option could expect to achieve over different timeframes. This member earns $46,000, has a starting balance of $28,000 and contributions of 9.5%. †







Long term (If savings are required after 20 years or more) Low to Medium







$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$69,710 $113,838

$229,224

$653,595

$36,925 $49,701 $71,369$149,853

$50,786 $73,702 $133,334

$300,318

HigHest expected

Most likely

lowest expected



Indexed Diversified

Description This option has a high allocation to Australian and international shares and also includes fixed interest and cash. There are no infrastructure, property or private equity investments. It uses indexing strategies to invest in each asset class.

It’s designed for members who prefer an indexed investment approach, and who are seeking medium to long-term growth and willing to accept short-term fluctuations in returns.


To match (after fees and taxes) the return of the median balanced fund and an average annual return of CPI + 4% over the medium to long term*.

Investment mix Strategic asset allocation Range

• Australian shares 35% 20–50%

• International shares 35% 20–50%

• Fixed interest 20% 0–50%

• Cash 10% 0–25%










Medium term (If savings are required after 5 to 20 years) Low to Medium




* CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how

this data is calculated. Strategic asset allocations and other information are current as at November 2014. The Trustee may alter the Strategic Asset Allocation or the composition of individual



$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$65,605 $106,493

$204,508

$561,443

$38,048 $52,041 $79,618$166,860$50,516 $74,103

$133,201

$300,082

HigHest expected

Most likely

lowest expected




Conservative Balanced

Description This option has a lower allocation to shares and a higher allocation to fixed interest and cash than the Balanced option. It also invests in direct property and infrastructure. It’s designed for members seeking a balance between capital stability and capital growth over the medium term.


To outperform (after fees and taxes) the return of the median conservative balanced fund and an average annual return of CPI + 3% over the medium term*.










Short term (If savings are required in 5 years or less) Medium to High (Risk Band 5)









$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$61,975 $96,987 $184,471

$478,402

$40,207 $55,472 $86,189

$177,889$49,922 $72,963$128,767

$283,873

HigHest expected

Most likely

lowest expected




Stable

Description This option invests in a wide range of assets, with a higher allocation to fixed interest and cash than Australian and international shares, direct property and infrastructure. It’s designed for members who have a higher focus on capital stability than capital growth.


To outperform (after fees and taxes) the return of the median capital stable fund and an average annual return of CPI + 2% over the medium term*.

Investment mix Strategic asset allocation Range• Australian shares 13% 0–20%• International shares 13% 0–15%• Direct property 8% 0–15%• Infrastructure 12% 0–20%• Fixed interest 30% 0–40%• Cash 24% 0–50%Plus: Absolute return strategies 0–15% Private equity 0–3%









Short term (If savings are required in 5 years or less) Medium (Risk Band 4)





* CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how this data

is calculated. Strategic asset allocations and other information are current as at November 2014. The Trustee may alter the Strategic Asset Allocation or the composition of individual



$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$56,494 $85,848 $152,624

$333,901

$41,435 $57,010 $89,532$175,106

$48,380 $69,561 $118,293

$238,047

HigHest expected

Most likely

lowest expected



Description This option invests in deposits with Authorised Deposit-taking Institutions.* It is suitable for members who want to preserve their capital and accumulated returns.†


To guarantee a member’s capital and outperform (after fees and taxes) the return of the Bloomberg AusBond Bank Bill Index‡ over the short-term.

Investment mix Strategic asset allocation

• Cash 100%


Be prepared to stay invested in this option for at least 1 year before it meets its objectives. See the information below for the risk level that corresponds to your investment timeframe.







Short term (If savings are required in 5 years or less) Very Low (Risk Band 1)

Medium term (If savings are required after 5 to 20 years) Medium to High

Long term (If savings are required after 20 years or more) High


Not expected .̂

*

Authorised Deposit-taking Institutions are corporations authorised under the Banking Act 1959 and include banks, building societies and credit unions.† The Capital Guaranteed option invests in deposits with Authorised Deposit-taking Institutions. The nature of the investments means that the original capital amount invested

cannot reduce due to poor investment returns. The option will never have a negative daily return.‡ Adjusted for tax. # The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how this


asset classes from time to time to suit prevailing market conditions. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.^ The capital guarantee might not be met in certain situations, for example, if one of the Authorised Deposit-taking institutions fails to pay back deposits.


$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$47,391 $66,133 $103,097

$42,574 $57,269 $86,611 $143,224

$45,100 $61,970 $94,868

$175,636$158,074

HigHest expected

Most likely

lowest expected


Capital Guaranteed

DIY Mix optionsBuild your own strategy with these single asset class portfolios.

Each DIY Mix option invests 100% of its portfolio in a single asset class, such as shares or fixed interest. This is called its strategic asset allocation. In these options you choose your own mix of investment options and manage the asset allocation yourself.

The DIY Mix options are different to the PreMixed options where AustralianSuper decides and manages the asset allocation for you.



Australian Shares

Description This option invests in a wide range of companies listed on the Australian Securities Exchange. It’s designed for members seeking strong long-term capital growth, who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the S&P/ASX 300 Accumulation Index*.


• Australian shares 100%


See the information below for the risk level that corresponds to your investment timeframe.












* Adjusted for tax.

† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how this data is calculated.

Strategic asset allocations and other information are current as at November 2014. The Trustee may alter the Strategic Asset Allocation or the composition of individual asset classes from time to time to suit prevailing market conditions. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.


$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$80,658$140,730

$330,441

$1,136,210

$33,305 $43,765$67,363

$147,879$53,243 $78,799$150,020

$381,288

HigHest expected

Most likely

lowest expected




Description This option invests in a wide range of companies listed on securities exchanges around the world, including developed and emerging markets. Currency hedging is not used in this option. This means movements in exchange rates can impact the value of your investments both positively and negatively.

This option is designed for members seeking strong long-term capital growth, who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the MSCI World All Countries (ex Australia) Unhedged Index* .


• International shares 100%














* Adjusted for tax.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$73,196$126,999

$758,217

$33,061 $45,460 $68,245$123,927$50,171 $74,591

$133,637

$311,407 $273,628

HigHest expected

Most likely

lowest expected

DIY Mix investment options (continued)



International Shares – Hedged

Description This option invests in a wide range of companies listed on securities exchanges around the world, including developed and emerging markets. It is fully hedged into Australian dollars to reduce the impact of currency movements.

This option is designed for members seeking strong long-term capital growth who are willing to accept short-term fluctuations in returns but want to be protected from currency movements.


To outperform (after fees and taxes) the return of the MSCI World All Countries (ex Australia) Hedged Index*.






This graph shows the range of potential retirement balances a member investing in this option could expect to achieve over different timeframes. This member earns $46,000, has a starting balance of $28,000 and contributions of 9.5%..†

Risk levels › Short term risk is the risk that your super savings will be reduced by volatility of investment markets.

› Medium term risk balances two risks. The first is that your super savings will be reduced by volatility and the second is that your super savings will not keep up with inflation

› Long term risk is the risk that your super savings will not keep up with inflation











$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$73,286 $128,308

$795,971

$33,124 $44,664 $61,258$124,685$51,261 $73,267

$129,134

$289,139 $253,402

HigHest expected

Most likely

lowest expected



Australian Sustainable Shares

Description This option invests in a selection of Australian shares listed on the Australian Securities Exchange that are performing well by financial as well as environmental, social and corporate governance standards. We apply a ‘best of sector’ approach when selecting shares using various sustainable selection criteria. An additional overlay screens out investment in companies that manufacture tobacco products, land mines or cluster bombs.

This option is designed for members seeking strong medium to long-term capital growth who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the S&P/ASX 300 Accumulation Index*.


• Australian shares 100%









Short term (If savings are required in 5 years or less) Very High (Risk Band 7)

Medium term (If savings are required after 5 to 20 years) High

Long term (If savings are required after 20 years or more) Medium to High







$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$91,418$163,288

$1,199,517

$27,647 $33,936 $44,218$81,846$51,713 $74,634

$130,738

$311,893$366,082

HigHest expected

Most likely

lowest expected





Description This option invests in a selection of shares listed on securities exchanges around the world that are performing well by financial as well as environmental, social and corporate governance standards. We apply a ‘best of sector’ approach when selecting shares using various sustainable selection criteria. An additional overlay screens out investment in companies that manufacture tobacco products, land mines or cluster bombs. Currency hedging is not used in this option. This means movements in exchange rates can impact the value of your investments both positively and negatively.

This option is designed for members seeking strong long-term capital growth who are willing to accept short-term fluctuations in returns.


To outperform (after fees and taxes) the return of the MSCI World (net dividend reinvested) Unhedged Index*.











Short term (If savings are required in 5 years or less) Very High (Risk Band 7)


Long term (If savings are required after 20 years or more) Medium



* Adjusted for tax.




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$79,375$133,068

$903,372

$29,140 $38,333 $56,134$92,970$50,277

$72,963$128,189

$284,368$294,543

HigHest expected

Most likely

lowest expected



Property

Description This option invests directly in a range of Australian and international properties including office buildings, shopping centres, hotels, resorts, factories and warehouses. It’s designed for members seeking strong medium to long-term capital growth with lower volatility than shares.


To outperform (after fees and taxes) the return of the Mercer/IPD Australian Pooled Property Fund Index* and an average annual return of CPI + 3% over the medium term‡.


• Direct property 100%









Short term (If savings are required in 5 years or less) Medium to High (Risk Band 5)





* Adjusted for tax.

‡ CPI stands for Consumer Price Index, which is used as a measure of inflation.




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$60,129 $95,204$185,770

$461,097

$38,459 $52,725$82,644

$154,719$49,977 $72,088

$124,207

$265,293

HigHest expected

Most likely

lowest expected




Australian Fixed Interest

Description This option invests in a mix of medium to long-term Australian bonds and shorter-term securities including Australian government bonds, non-government bonds and high yield loans. From time to time, the portfolio may include a small exposure to international securities to provide further diversification and enhance returns#.

This option is designed for members seeking more capital stability than shares and higher returns than cash over the short to medium term.


To outperform (after fees and taxes) an average annual return of CPI + 1% over the short-to-medium term‡.


• Fixed interest 100%









Short term (If savings are required in 5 years or less) Low to Medium (Risk Band 3)





# The international exposure is fully hedged into Australian dollars to reduce the impact of currency movements.

‡ CPI stands for Consumer Price Index, which is used as a measure of inflation.




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$49,800 $70,832$114,517

$41,230 $55,691 $83,074$136,051$45,594 $63,005

$97,223

$205,111$166,650

HigHest expected

Most likely

lowest expected



International Fixed Interest

Description This option invests in a range of international bonds in developed and emerging markets including government bonds, non-government bonds and high yield loans. It is mostly hedged into Australian dollars to reduce the impact of currency movements.

This option is designed for members seeking more capital stability than shares and higher returns than cash over the short to medium term.


To outperform (after fees and taxes) an average annual return of CPI + 1% over the short-to-medium term‡.


• International fixed interest 100%









Short term (If savings are required in 5 years or less) Low to Medium (Risk Band 3)





‡ CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$49,251 $69,500 $110,956$196,706

$41,353$56,027 $82,946

$137,857$45,490 $62,538 $96,586

$163,504

HigHest expected

Most likely

lowest expected




Diversified Fixed Interest

Description This option invests in a wide range of Australian and international bonds including government bonds, non-government bonds and high yield loans. The international component is mostly hedged into Australian dollars to reduce the impact of currency movements.

This option is designed for members seeking capital stability and higher returns than cash over the short to medium term.


To outperform (after fees and taxes) an average annual return of CPI + 1% pa over the short-to-medium term‡.

Investment mix Strategic asset allocation Range

• Australian fixed interest 50% 0–100%

• International fixed interest 50% 0–100%




This graph shows the range of potential retirement balances a member investing in this option could expect to achieve over different timeframes. This member earns $46,000 has a starting balance of $28,000 and contributions of 9.5%.†





Short term (If savings are required in 5 years or less) Medium (Risk Band 4)





‡ CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$50,725 $71,359$116,470

$208,353

$40,267 $54,433 $80,332$131,271$45,458 $62,469 $97,475

$163,236

HigHest expected

Most likely

lowest expected



Cash

Description This option invests in short-term money market securities (such as term deposits) and some short-term bonds. It’s designed for members seeking stable returns above the official cash rate.


To match (after fees and taxes) the return of the Bloomberg AusBond Bank Bill Index* and outperform the annual return of CPI‡.


• Cash 100%


Be prepared to stay invested in this option for at least one year before it meets its objectives. See the information below for the risk level that corresponds to your investment timeframe.







Short term (If savings are required in 5 years or less) Very Low (Risk Band 1)




Not expected.

* Adjusted for tax.‡ CPI stands for Consumer Price Index, which is used as a measure of inflation.† The projected retirement balances shown are for illustrative purposes and will be different for different members. Please see page 43 for more information on how




$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0


Potential balances

tiMe invested

$47,179 $65,607 $101,650$171,156

$42,384 $56,821$85,426

$139,742$44,899 $61,479 $93,548$154,159

HigHest expected

Most likely

lowest expected



www.australiansuper.com Make your choice 37

Changing your investment options You can change which investment options your existing balance is invested in once a day (except on weekends and national public holidays*).

If you make a request before 4pm AEST/AEDT on any business day, your account will be invested in your new investment choice the next business day. Your new investment choice will show in your account the following business day.

Requests received on or after 4pm AEST/AEDT on a business day, or on weekends or public holidays, will take an extra day.

You can also change which investment options your future contributions are invested in. Your account will be invested in your new investment choice when we receive your request.

To find out more about choosing or switching your investment options visit www.australiansuper.com/switching

*plus Queen’s Birthday (all states except Queensland and Western Australlia)

4. Make your choice

You can change how you invest your super through your AustralianSuper online account. There are no fees to change your investment choice, unless you invest in the Member Direct investment option.

Make your choice onlineLog into your online account at: www.australiansuper.com/login

If you can’t make a choice online call us on 1300 300 273 between 8am – 8pm (AEST/AEDT) weekdays.

‘I can change investment options as my life changes.’

Tara, AustralianSuper member

38 Make your choice 1300 300 273

We compare the performance of our investment options against industry and market benchmarks so you can track how your super is performing.

Our PreMixed options are measured against other super funds in the SuperRatings Fund Crediting Rate Survey, as well as the Consumer Price Index (CPI). Our DIY Mix options are measured against a relevant asset class market index or the CPI.

What are crediting rates?

AustralianSuper sets a crediting rate for each investment option every day, based on investment returns after allowances for investment expenses and tax on earnings. The crediting rate can be positive or negative depending on investment performance.

Investment returns are credited (or debited) to your balance in each option annually, or on the date you close your account (daily compounding). If you change your investment options, investment returns will be credited (or debited) to your balance in the investment option on the date of the switch.

You can view an estimate of your current balance at any time, taking into account all transactions and investment returns, by logging into your online account.

Balanced option performance to 30 June 2014

Balanced option

SR50 Balanced Index

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

10.04%

9.21%

5 years (pa)

6.78%

10 years (pa)

9.68%

Since inception (pa)#

Keep up-to-date

For up-to-date performance and more information on how returns are calculated visit www.australiansuper.com/investments

Unallocated monies

Under Government legislation, monies received by a super fund that cannot be applied immediately to the issue of a superannuation interest (unallocated monies) must be maintained in a cash account until the allocated monies are released from the account. Any interest on unallocated monies is not retained by the trustee of AustralianSuper and is allocated to the general pool of Fund assets for the benefit of all members.

#Inception date: August 1985

13.88%

12.66%

1 year

Performance

7.64%

AustralianSuper has been one of the top ten best performing super funds over the past decade


AustralianSuper investment option performance as at 30 June 2014

This table compares AustralianSupers’ investment options against the performance benchmarks noted below. For a performance comparison of our options against their CPI-linked benchmarks visit www.australiansuper.com/CPIperformance

Investment option10 years (% pa) 5 years (% pa) 3 years (% pa) 1 year

A’Super B’mark A’Super B’mark A’Super B’mark A’Super B’mark

PreMixed options

High Growth 7.43% 6.53% 10.58% 9.96% 10.63% 9.97% 16.23% 14.01%

Balanced 7.64% 6.78% 10.04% 9.21% 9.96% 9.06% 13.88% 12.66%

Sustainable Balanced 7.41% 6.78% 10.85% 9.21% 11.08% 9.06% 14.93% 12.66%

Indexed Diversified N/A N/A N/A N/A 7.56% 9.06% 11.43% 12.66%

Conservative Balanced N/A N/A 9.44% 8.10% 8.98% 7.41% 11.25% 9.64%

Stable 6.59% 5.76% 7.93% 7.14% 7.46% 6.52% 8.31% 7.34%

Capital Guaranteed 4.24% 3.83% 3.70% 2.88% 3.54% 2.58% 2.27% 1.87%

DIY Mix options

Australian Shares 9.42% 7.60% 11.54% 9.65% 10.88% 8.75% 17.43% 15.76%

International Shares 4.44% 2.98% 9.81% 8.89% 12.43% 12.56% 17.32% 16.02%

International Shares – Hedged* N/A N/A N/A N/A N/A N/A 19.83% 19.38%

Australian Sustainable Shares 9.76% 7.27% 14.29% 9.36% 11.78% 8.56% 18.22% 15.46%


2.53% 2.94% 9.27% 9.57% 15.36% 14.08% 19.37% 17.39%

Property 6.12% 7.38% 6.25% 6.74% 6.80% 7.56% 7.49% 7.64%

Australian Fixed Interest 5.56% 3.77% 6.46% 3.65% 6.90% 3.20% 5.63% 4.02%

Diversified Fixed Interest 6.58% 3.77% 8.38% 3.65% 8.05% 3.20% 6.23% 4.02%

International Fixed Interest 4.89% 3.77% 6.01% 3.65% 6.06% 3.20% 4.28% 4.02%

Cash 4.53% 4.21% 3.74% 3.28% 3.36% 2.95% 2.56% 2.23%

Consumer Price Index 2.77% 2.65% 2.20% 3.02%

AustralianSuper returns are net of fees and tax. The one, three, five and ten year figures are rolling annual returns as at 30 June 2013. In calculating historical returns that begin before 1 July 2006, where both ARF and STA offered equivalent options, we have used combined ARF and STA returns. If only one of the funds previously offered the option, the returns for that option have been used. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns. Benchmarks High Growth: SuperRatings SR50 Median Growth. Balanced: SuperRatings SR50 Median Balanced. Sustainable Balanced: SuperRatings SR50 Median Balanced. Indexed Diversified: SR50 Median Balanced. Conservative Balanced: SuperRatings SR25 Median Conservative Balanced. Indexed Diversified: SR50 Median Balanced. Stable: SuperRatings SR50 Median Capital Stable. Capital Guaranteed: Bloomberg AusBond Bank Bill Index. Australian Shares: S&P/ASX300 Accumulation index. International Shares: MSCI AC World ex Australia (in $A) Index. International Shares – Hedged: MSCI AC World ex Aust Net Dividends Reinvested Hedged Index. Australian Sustainable Shares: S&P/ASX300 Accumulation Index. International Sustainable Shares: MSCI World Net Dividend Reinvested Unhedged Index. Property: the Mercer / IPD Australian Pooled Property Fund Index. Australian Fixed Interest: CPI +1%. International Fixed Interest: CPI +1%. Diversified Fixed Interest: CPI +1%. Cash: Bloomberg AusBond Bank Bill Index. SuperRatings returns are net of fees and tax. Index returns are adjusted for tax.


As an industry super fund, AustralianSuper is run only to benefit members. This means we only charge fees to cover our costs of operation.

An investment fee applies to each PreMixed and DIY Mix investment option. It is charged as a percentage of your super balance and is deducted from your investment returns before they are credited to or debited from your account. The fee for each option may change from year to year.

Investment fees include investment management, custodian and asset consultant fees. We pay management fees to external investment managers to manage the assets within our options. These may include performance fees when investment returns are above the agreed benchmarks. Benchmarks vary for each manager and there is no guarantee that a manager will earn a performance fee every year.

Investment fees for each option for the year ended 30 June 2014

Investment option Investment costs (%)

Investment performance fees (%)

Total investment fees (%)

PreMixed options

High Growth 0.62% 0.11% 0.73%

Balanced 0.52% 0.07% 0.59%

Sustainable Balanced 0.56% 0.05% 0.61%

Indexed Diversified 0.21% 0.00% 0.21%

Conservative Balanced 0.41% 0.03% 0.44%

Stable 0.35% 0.02% 0.37%

Capital Guaranteed 0.49% 0.00% 0.49%

DIY Mix options

Australian Shares 0.30% 0.00% 0.30%

International Shares 0.45% 0.05% 0.50%

International Shares – Hedged 0.58% 0.05% 0.63%

Australian Sustainable Shares 0.41% 0.00% 0.41%

International Sustainable Shares 0.51% 0.00% 0.51%

Property 0.64% 0.00% 0.64%

Australian Fixed Interest 0.18% 0.00% 0.18%

Diversified Fixed Interest 0.36% 0.01% 0.37%

International Fixed Interest 0.24% 0.00% 0.24%

Cash 0.06% 0.00% 0.06%

What’s a Custodian?A Custodian safeguards and holds assets on behalf of other people or organisations. JP Morgan Nominees Australia Limited is AustralianSuper’s master custodian. They:

› pay for and hold the investments AustralianSuper makes › collect dividends, interest and the proceeds of sales of assets

› provide a range of accounting and other services

The AustralianSuper Member Direct investment option has different fees. Visit www.australiansuper.com/memberdirect for further details.

Fees

http://www.australiansuper.com/memberdirect


Investment option Target currency exposure for 2014/15

High Growth 27.0%

Balanced 22.0%

Sustainable Balanced 22.0%

Indexed Diversified 22.0%

Conservative Balanced 16.0%

Stable 9.0%

International Shares 100.0%

International Shares – Hedged 0.0%

International Sustainable Shares 100.0%

Property 0.0%

International Fixed Interest 0.0%

Diversified Fixed Interest 0.0%

When investing your super AustralianSuper aims to maximise your investment returns and keep costs low. This is how we do it.

Asset allocation – this is how we mix together different proportions of asset classes to form a portfolio. Each PreMixed option has asset allocation ranges, which are the minimum and maximum amounts we can invest in each asset class. Each year, we set the strategic asset allocation within these ranges based on our outlook for the economy and investment markets.

Investment objectives – these are the performance benchmarks we aim to match or outperform. Benchmarks can include a group of competitors, a market index or inflation.

Investment Committee – makes recommendations to the Trustee Board on the investment objectives and strategic asset allocation for each investment option. It also reviews and monitors the asset allocation and structure of each portfolio and selects and monitors our external investment managers.

Investment team – we have an in-house team of investment specialists who research the economic environment and investment markets and identify opportunities and risks. They make investment recommendations to the Investment Committee and implement its decisions.

Professional investment managers – a combination of internal and external investment managers select and manage the investments within each asset class. We choose external managers based on their:

› company strength, management structure and ownership › investment philosophy and process › investment team experience › track record

Asset consultants – they provide strategic advice and research to our investment team on asset allocation, sectors within each asset class and investment managers.

How we manage currency

When you invest in international assets, your returns can be impacted by changes in the value of investments as well as currency movements. For example, a higher Australian dollar compared to other currencies can reduce returns on international investments. Conversely, a lower Australian dollar can increase returns.

Currency hedging can protect portfolios with international assets from adverse movements in exchange rates. It involves converting a percentage of the value of a portfolio’s international assets into Australian dollars. When we set our strategic asset allocations every year we set a target currency exposure for each investment option that includes international assets.

Our foreign currency targets for the financial year 2014/15 are shown below. They show the target foreign currency exposures for investment options with international assets after hedging has been applied.

Active and index management

We believe an active management approach is the best way to invest at the asset allocation, asset class and individual investment levels. This means we select specific sectors, assets and stocks that we believe will outperform the broader market.

While our overall approach is generally active, we use index managers in some options to lower overall portfolio costs or where active management opportunities are smaller. Typically, index managers aim to track the performance of a market index by investing in all or most of its holdings.

How we invest your super

Related party investments

AustralianSuper enters into contracts and investment transactions with a related party only where it considers there to be equivalent or enhanced benefits for AustralianSuper’s members.

Related parties may include organisations that conduct business with AustralianSuper, where AustralianSuper or an AustralianSuper representative may be a shareholder, part owner or director of or have significant influence on that organisation.

You can view details of our related party investments and transactions at www.australiansuper.com/governance

To view AustralianSuper’s investment managers and investment holdings visit www.australiansuper.com/investments


Environmental, social and governance (ESG) issues are important considerations in our investment process as they can impact the future value and performance of the companies in our portfolios.

Our active owner program

We believe that companies which actively consider and manage ESG issues are more likely to maximise the long-term returns to our members, which is our primary responsibility.

Our dedicated investments governance team pro-actively identifies ESG issues and engages with various stakeholders to help achieve investment outcomes that are in the best interests of our members.

Our active owner program includes the following activities:

› Researching and developing policies on key ESG issues.

› Identifying and managing ESG exposures in our portfolios including engagement with external fund managers.

› Being an active member of the Australian Council of Superannuation Investors (ACSI), which engages with policy makers and companies on ESG issues.

› Collaborating with other investors, industry groups and policy makers. For example, we participate in the Carbon Disclosure Project, a global initiative encouraging disclosure of investment-related information on greenhouse gas emissions for larger companies; ESG Research Australia, which encourages better investment decision making through better research and the Investor Group on Climate Change, which aims to incorporate climate change risks and opportunities into the investment process.

› Voting on Annual General Meeting (AGM) resolutions for companies in the ASX 200 Index and 500 global companies.

United Nations Six Principles for Responsible Investment

As a signatory, we follow the six United Nations Principles for Responsible Investment (UNPRI). We are measured annually against these principles.

Best of sector approach to sustainable investing

We offer three investment options that invest according to various ‘sustainability’ criteria:

› Australian Sustainable Shares

› International Sustainable Shares

› Sustainable Balanced

We use a ‘best of sector’ approach when selecting investments for these options. The ‘best of sector’ approach allows investment across almost all industry sectors, with reference to the ESG criteria shown opposite.

How we vote

Stock voting is one of the ways we influence the companies we invest in. As a general rule, we adopt ACSI’s Corporate Governance Guidelines and subscribe to their proxy voting advice for domestic listed companies. Voting outcomes take into account governance advice from ACSI, investment advice from our fund managers and fund policy. We then arrive at a final position that we believe will be in the long-term interests of our members.

We actively vote on matters relating to the companies we hold shares in from the S&P/ASX 200 Index. We also vote on 500 global companies. AustralianSuper publishes its voting decisions for ASX 200 companies each quarter at www.australiansuper.com

Under a ‘best of sector’ stock selection process, rather than screening out entire industries we may choose to invest in a company from any industry, based on its high level of performance against a range of ESG measures. This approach encourages and rewards good ESG practices across all industries, with the benefits that come from a diversified portfolio in terms of investment returns.

AustralianSuper has adopted an investment screening framework which is overlaid on the best of sector approach for our three sustainable investment options. This framework excludes investment in companies that manufacture tobacco products, land mines or cluster bombs.

Under our best of sector approach we appoint specialist investment managers to evaluate an investment’s ESG practices.

ESG criteria

When determining a company’s eligibility to be included in a sustainable investment portfolio, an investment manager typically considers a range of criteria, such as:

› Ethics and governance of the company, including a safe, fair and equal working environment.

› Environmental policies including pollution, the management of carbon emissions and waste products, and policies to protect biodiversity in the environment.

› Commitment to minimising usage of energy, water and materials, and the lifecycle of the products they make.

› Corporate social responsibility and a commitment to supporting the communities in which the business is based.

› Transparent reporting processes, including environmental impact disclosure history and the reporting of improvements compared to policy targets.

For more information on our best of sector approach and screening framework, read our Sustainable Investment fact sheet available at www.australiansuper.com/sri

Environmental, social and governance issues


The risk information in this document is not a complete assessment of all forms of investment risk.

The projected retirement savings shown in this document are for illustrative purposes and will be different for different members. Your results will depend on your own personal situation, timeframe and chosen investment option/s. You should not rely on these projections as a true representation of any actual superannuation entitlements or benefits from any particular scheme or as a basis upon which alter your financial situation. You should ensure you are comfortable with the risks and potential losses associated with your chosen investment option/s.


The ranges of potential retirement balances shown in this document are for a member earning $46,000 a year with a starting balance of $28,000 and super guarantee contributions of 9.5%.

The ranges of balances show the potential outcomes, taking into account fluctuating investment earnings which reflect the experience of the different asset classes and economic conditions over the last 40 years. This period includes major boom and bust periods including the 1970s oil shock, the 1987 share market crash and Global Financial Crisis.

The ranges of balances are based on 1,000 possible outcomes for each investment type, rather than specific predictions of

future earnings. Calculations are based on modelling by Rice Warner Actuaries. The model takes into account a wide range of economic and investment market factors including inflation, expected asset class returns; volatilities and other mathematic and statistic relativities. It is based on and calibrated against Australian and international experience, often going back over 40 years. For unlisted/alternative assets, where historical data is limited, a range of proxy measures are adopted and overlayed with knowledge and judgement to calibrate their return distribution.

Where necessary, asset class returns have been adjusted to take into account the characteristics of AustralianSuper’s investment portfolios. We have assumed that each PreMixed option is rebalanced to its Strategic Asset Allocation each year. The risk profile of an investment option may change from time to time due to tactical tilts within the portfolio.

Each year the projected balance is discounted for inflation (using wage inflation), which results in a projected account balance valued in today’s dollars. The returns are net of contributions and earnings tax and investment fees (excluding investment performance fees). Fees are indexed annually to price inflation using the CPI and contributions are indexed to wage inflation.

There is no guarantee that unusual future events will not cause different results. For the member in these examples, there is a 5% probability that their balances will be lower and a 5% probability that they will be higher than the ranges shown.

About the risk data in this document


Short-term risk level

The short-term risk level is calculated by:

› Estimating the probability of an investment option delivering a negative annual return in any one year and multiplying this by 20. This provides an estimate of how often you can expect to receive a negative annual return in any 20 year period. Calculations are based on the Rice Warner modelling described on the previous page.

› Investment options are then categorised into risk levels and bands based on their expected frequency of negative annual returns as follows:

Risk level (label)

Number of negative annual returns over any 20 year period

Risk band

Very Low Less than 0.5 1

Low 0.5 to less than 1 2

Low to Medium 1 to less than 2 3

Medium 2 to less than 3 4

Medium to High 3 to less than 4 5

High 4 to less than 6 6

Very High 6 or greater 7

Medium-term risk level

The medium-term risk level is a combination of the short-term risk level and the long-term risk level.

Over the medium term, both volatility and inflation can be a risk so you may need to find a balance between the two. While you have a longer period to recover from potential market falls there is still a possibility that your super savings could be reduced by market volatility. At the same time, you may need to choose an option that has the potential to grow your super savings above inflation over time to meet your objectives.

Long-term risk level

The long-term risk level is determined by considering the capacity of investments in each option to produce returns in excess of inflation.

Each option is rated as follows:

Risk level Probability of underperforming inflation

Low Less than 10%

Low to Medium 10% to 18%

Medium 18% to 27%

Medium to High 27% to 35%

High Greater than or equal to 35%

Standard Risk Measure

The short-term risk level is the same as the Standard Risk Measure, which is used across the super industry to help members compare the risk levels of investment options. The short-term risk level classifies investment options according to their expected level of annual volatility in investment returns.

Risk levels of investment options


This guide was issued in November 2014 by AustralianSuper Pty Ltd ABN 94 006 457 987 AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. This document is of a general nature and does not take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, consider your financial requirements and read our Product Disclosure Statement, available at www.australiansuper.com/pds or by calling 1300 300 273. Statements made by AustralianSuper members in this brochure have been reproduced with the members’ continuing consent.SuperRatings does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for details of its ratings criteria. Go to www.australiansuper.com/ratings for details on the Heron Partnership’s rating of AustralianSuper.

It’s Australian. And it’s super.Questions ? We’re here to help

Call 1300 300 273

Fax 1300 366 273

Secure email www.australiansuper.com/email

Website www.australiansuper.com

Mail GPO Box 1901 MELBOURNE VIC 3001

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Documents

Investment Choice Guide