making your money work - qsuper fund · 2005/2006 has also been a year of considerable change for...

Another good year for returns Budget makes super simple More insurance for you Five simple case studies inside

Making your money work

SEE INSIDE FOR DETAILS

HOW

YOU COULD SAVE

IN 3 YEARS

SEE PAGE 16

Once again, it’s been a healthy year for investment returns, but 2005/2006 has also been a year of considerable change for QSuper, and for the superannuation industry generally.For the third year in a row, favourable economic conditions and good management of the Fund’s investments have been making your money work, resulting in a pleasing crediting rate of 12.87% for the Accumulation account Balanced option. You’ll fi nd detailed information on investment returns starting on page 28.Of course, it’s important to remember the QSuper Board of Trustees remains committed to investing with long-term objectives in mind, and you will see on page 18 some changes we’re making.So how has the superannuation landscape changed over the past year, and what developments are we likely to see in the year ahead?

Improved insuranceQSuper has made a number of positive changes to the insurance we provide working members with an Accumulation account, or members with a Defi ned Benefi t account who have additional insurance. For more information, see page 6.

Commonwealth BudgetThe Commonwealth Government announced signifi cant changes to how super will be taxed, in their 2006/2007 Budget. The changes, if implemented, will reduce much of the complexity in the current system, and will be a big win for QSuper members. See page 8 for details.

You’ll fi nd more information on many more super developments and a range of other topics in the pages of this year’s Super Scoop. I hope you’ll also fi nd valuable information on how you can help make your money work over the coming year.

AcknowledgementsThe Board appreciates the support of the Auditor-General of Queensland, and would like to thank its major service providers, including the Government Superannuation Offi ce, QIC, Q Invest, and the State Actuary.

Year in review by Gerard Bradley

Under Treasurer and Chairman of the Board

4 Making your money work Find out how QSuper makes your money work, and what you can do to make it work even harder

23 Take advantage of the new personal income tax ratesUse your income tax cut to meet your fi nancial goals

. 24 Super made simpleCommonly misunderstood terms explained

Making the most of your super

contents

Contact Centre1300 360 750 for the cost of a local call+61 7 3404 0928 if you are calling from overseas81 George Street BrisbaneMonday to Thursday 8.30 a.m. to 5.00 p.m.Friday 9.00 a.m. to 5.00 p.m.

Postal addressQSuper GPO Box 200 Brisbane Qld 4001qsuper.qld.gov.au

Contacting QSuper

Low fees

Real service

Better knowledge

Solid returns

your moneywork

Making

See page 31 for details

General advice warningThe information contained in this publication is not fi nancial advice and has been prepared for general purposes only. It is not specifi c to your individual objectives, fi nancial situation, or particular needs. The information may be selective and may therefore not be complete for your needs. Before acting on any of this information you should seek independent advice.

ABN: 60 905 115 063 SFN: 2610 419 41

DisclaimerThe Board of Trustees of the State Public Sector Superannuation Scheme (QSuper Board of Trustees), the Government Superannuation Offi ce, and the State of Queensland do not guarantee or represent the information is up to date or complete and disclaim liability for all claims, losses, damages, costs, or expenses of whatever nature, howsoever occurring which arise as a result of reliance upon the information, regardless of the form of action whether in contract, tort (including negligence), breach of statutory duty, or otherwise.

Are you

to retirement?on track

HOW

YOU COULD SAVE

IN 3 YEARSbrings good news forsuperBudget

6 More insurance for youPositive changes to your insurance

12 Changes to the way Q Invest works for members

19 Having a closer lookYour benefi t statement now includes fees and a transaction history

25 Super changes round upChanges to account rules over the past year

18 Smoother returns, less riskNewly introduced alternative assets help reduce volatility and risk

20 Looking after your money We check out who invests your money

21 Expertise working for you We talk to Simon Hudson, Head of Australian Equities at QIC

26 Market overview and what’s aheadQIC experts review the year and look at what’s ahead

28 2005/2006 returns

31 Financial highlights

Member updates General interest Your investments

About the case studies in this Super Scoop ...We have used the calculators on our website at qsuper.qld.gov.au to calculate fi gures used in the case studies in this edition of Super Scoop. Each calculator on the site shows the assumptions and methodology used to make the calculations.

10 In your best interestsThe dedicated men and women looking after your super

14 The changing face of AustraliaThe social and demographic trends shaping the Australian landscape

22 A burning topicSkin cancer myths and facts

24 Women & superSuper issues affecting women

How much does Super Scoop cost?Super funds are required to send members a benefi t statement and annual report each year. At QSuper, we also think it’s a great opportunity to give you info on how to make the most of your super.

And you might be surprised to learn the cost of printing Super Scoop was only 40 cents per copy this year, so it’s a cost-effi cient way to communicate with you and over 450,000 other QSuper members!

We’re committed to helping you understand your super, and that’s why we have one of the most comprehensive fi nancial education programs in Australia.

Another good year for returnsBudget makes super simpleMore insurance for you Five simple case studies inside


SEE INSIDE FOR DETAILS

HOWYOU COULD SAVE

IN 3 YEARSSEE PAGE 16

Many welcome changes set to reduce complexity

Figure out how much you will actually need in retirement

Save extra super without feeling it in your hip pocket1

QSuper annual report to members Super Scoop 2006 | 3

Voluntary contributionsMake voluntary contributions – even $10 per week from your next pay rise can make a difference.


Sometimes we put off until tomorrow what could be done today. After all, retirement may be a long way off, and there’s always another bill to pay. Yet, we all know there’s no better time than now to get your money working harder for you.

Making your money work harder may be easier than you think. Putting a few extra dollars aside today can make a big difference to the lifestyle you’ll enjoy tomorrow. It may just mean doing things a slightly different way. And in this year’s Super Scoop we show you how easy it is.

What you need to do is think about what you want to achieve, how long you have to achieve it, and what sort of risks you are prepared to take. Whatever your investment needs or goals are, we have investment and account options to help you get where you want to go. If you have an Accumulation account, you can choose from eight different investment options in any mix you like. You can also salary sacrifi ce your super, make extra voluntary contributions, or tailor your super to take full advantage of the Commonwealth Government’s super

co-contribution. And the sooner you start, the

sooner you’ll see results. In the

pages of this Super Scoop we give you the tools to

get started.

How QSuper works harder for you By being a member of QSuper, you already have a head start. You can rest assured our committed and expert staff are always looking out for your interests.

After all, as a not-for-profi t super fund, it’s your interests that really count. We’re not out to make a profi t for shareholders – but we are here to provide you with the best superannuation products and services we can, so you can build a solid fi nancial future.

You may have heard our fees are among the lowest in Australia, and it’s true! With QSuper, you pay no entry fees, no exit fees, and no commissions on your funds. So, the ultimate result is you have more money to invest for your future.

We also know the better informed you are, the better decisions you will make. That’s why we give you a wide range of industry leading information services, at no extra cost, so you have all the info you need to plan your fi nancial future.

You can sign up for any of the 500-plus seminars we present each year, read our guides and fact sheets, and visit the Learn section on our website. Here you can fi nd out more about your super, how to get ahead through investing, or even how to take control of your debts. It’s all designed to guide you through the choices you have, to make the most of your super.

We’re big and we performWith over $19 billion in funds under management, and more than 450,000 members, we are one of the largest and most respected super funds in Australia.

Our investments deliver strong performance, consistently beat industry averages, and provide solid returns over the long term. In fact, the QSuper Accumulation account Balanced option returned 12.87% for the year ending 30 June 2006. This placed QSuper in the top quartile of managers in Australia over 3 years according to independent researcher SuperRatings, outperforming the average balanced fund by 1.1% per annum.*

When we invest your funds, we aim for a strategic investment position that takes full advantage of future markets and boosts your returns over the long term. And, the strong investment performance in 2005/2006 for most QSuper investment options has certainly made your money work harder!

Giving you alternativesWe’re constantly looking for ways to ensure our track record of solid returns continues, and that’s why we are now introducing a new range of investments, called alternatives, into some QSuper investment options. Alternative assets are a way of reducing risk by diversifying your investments across nontraditional assets such as private equity, infrastructure, managed funds, and commodities. The aim of introducing alternative assets into QSuper’s investment options is to provide smoother returns with less risk. For more info on this, please see page 18.

We’re not out to make a profi t for shareholders – but we are here to provide you with the best superannuation products and services we can, so you can build a solid fi nancial future.

4 | Super Scoop 2006 QSuper annual report to members

Sign up for our regular e-newsletterStay informed with all the latest super news.

You’ll fi nd info on:

making the most of your super; changes in legislation; investment returns; and general lifestyle issues.

If you’d like to receive Financing your future, you can subscribe by visiting our website at qsuper.qld.gov.au/newsletter .

1 Consolidation You can consolidate your super accounts from other super funds into QSuper, which may save you fees and make it easier to keep track of your super.

6 Other options Spouse contributions and contribution splitting are other great ways to make more from your money and take advantage of tax incentives.

5 Co-contribution Take advantage of the Commonwealth Government’s co-contribution scheme.

4 Salary sacrifi ce Salary sacrifi ce into your super, and increase your contributions without reducing your take-home pay.

3 Voluntary contributions Make voluntary contributions – even $10 per week from your next pay rise can make a difference to your fi nal retirement benefi t or how soon you can retire.

2 Take controlTake control of your super, by using QSuper’s investment options to set an investment mix, to suit your needs.

TO MAKETIPS

YOUR MONEYWORK HARDER

7 Attend a seminar Why not invest some time in your fi nancial future by attending a QSuper seminar this year?

This information is not personal advice, please refer to the general advice warning on page 2.

Making your money work harderCheck out our tips, to the right, for ways of making your money work harder for you – these simple but effective strategies can give you a head start. In this issue of Super Scoop we also give you fi ve case studies, which show you how some of these strategies can be used to make a big difference to your fi nancial future.*SuperRatings – Superannuation Fund Crediting Rates (30 June 2006)


QSuper annual report to members

More insurance for you Accumulation accountYou’re working for longer, so QSuper now covers you for longer!Under the old arrangements, your income protection insurance, death, and total and permanent disability (TPD) insurance ended at age 60. QSuper understands many of our members are working longer, so your income protection* and TPD insurance now continues until age 65, and death-only insurance continues until age 70.

More for your dollar Each unit of death and TPD insurance is now worth more and still costs you $1 per week ($2.75 per week for police offi cers). If you are aged 35 or under, the value of each unit is now $60,000 – an increase of $10,000! And now from age 65 to 70 we offer death-only insurance, with each unit costing $0.30 a week (not applicable to police offi cers).

Do you need more insurance? QSuper now offers you more! QSuper understands you may need more insurance, and now we can offer you more. For permanent and temporary employees, the maximum amount of insurance is over $1.3 million. For casual employees, the maximum amount of insurance has increased to over $670,000.

If you want more insurance, simply complete the Application for death and total and permanent disability insurance form. This form is included in the product disclosure statement relevant to you. Download it from our website, or call us for a copy.

Changes to your income protection insurance* Your income protection insurance premium has been reduced by up to 24%. But, your level of cover hasn’t changed. If you are unable to work due to an illness or injury and you meet certain criteria, an income protection benefi t is paid at 75% of your base salary.

Currently income protection benefi ts are payable for up to 2 years for the one condition. From 1 October 2006, this will change and income protection benefi ts will be payable for up to 2 years for a condition, or related condition.

What if I don’t need the insurance provided by QSuper? While QSuper insurance benefi ts are provided automatically, you now have the option to cancel your insurance. You can download the Cancel or reduce insurance form from our website, or call us for a copy. It’s important to note, once you have cancelled your insurance, you cannot reverse this decision. However, your insurance will automatically restart if you change Queensland Government employers with a break of 28 calendar days or more, or if your employment status changes.

Defi ned Benefi t accountIf you have a Defi ned Benefi t account, and have chosen to take out additional death and TPD cover, this cover is being extended. Your additional TPD insurance now continues until age 65, and additional death-only insurance is available from age 65 until age 70. Each unit of death and TPD insurance is also increasing in value.

Currently income protection benefi ts are payable for up to 2 years for the one condition. From 1 October 2006, this will change and income protection benefi ts will be payable for up to 2 years for a condition, or related condition.

Also, if you have a Defi ned Benefi t, State, or Police account, and receive a lump sum TPD benefi t, and then die within 12 months of this payment, your dependant children may now receive a fortnightly pension if the cause of your death is the same as, or related to the condition which resulted in your TPD benefi t.

More infoIf you want to know more about QSuper’s insurance, why not visit our website, or give us a call, and we will send you a product disclosure statement.*Police offi cers, casual employees, and members with superannuation guarantee arrangements do not have income protection cover.

6 | Super Scoop 2006

Death and disability insurance is part of the package of benefi ts QSuper offers current Queensland Government employees.

And, from 1 July 2006, these insurance benefi ts have become even better!

Here’s a quick overview of the improved insurance benefi ts.

Super Scoop 2006 | 7QSuper annual report to members

Topics include:Are you on track?

It’s your money – take control!Salary sacrifi ce and co-contributions

Your benefi t statementTo register simply visit qsuper.qld.gov.au

Are you covered for the unexpected? Did you know over 65% of Australians don’t have enough disability insurance to cover them for more than 1 year if they are unable to work due to a disability?**

This is an alarming statistic considering many of us have ongoing expenses that still need to be paid. That’s why it’s good to know as a QSuper member you have access to one of the best superannuation insurance offerings in Australia.

**Investment and Financial Services Association – Investigating the Issue of Underinsurance in Australia (2005)

Last year over 3,300 members benefi ted from the insurance QSuper provided, which meant they could focus on recovering, rather than worrying about how they were going to pay the bills. Here’s what some real members had to say about their experiences with QSuper:

AGE: 37CONDITION

Unforeseen pregnancy complicationsBENEFIT: 3 monthsOCCUPATION: Senior AdvisorKYLIE SAID ‘QSuper’s income protection helped ease my fi nancial strain. It helped me relax knowing I could receive the benefi t while I was unable to work.’

Kylie’s story

AGE: 44CONDITION

Broken hipBENEFIT: 6 monthsOCCUPATION: Dental TechnicianKAY SAID ‘QSuper was a great support to me during my time off work. They handled my claim very professionally. All I had to do was concentrate on getting better.’

Kay’s story

Real insurance for real membersQSuper is proud to offer our members insurance coverage for disability and death which is amongst the best in Australia.

65% of Australians don’t have enough insurance


So what are the major changes, and what do they mean for you as a QSuper member?

Taxation of benefi tsThe tax which currently applies on benefi t payments (both lump sums and pensions) will be abolished, provided the benefi t is paid after you turn 60, and it is paid from a ‘taxed fund’ such as QSuper. However, for members who have a surcharge liability, it is important to note this will still be payable when you receive your benefi t.ASFA has calculated the removal of the end benefi ts tax would mean the average wage earner’s super lump sum would be nearly $9,000* higher at retirement after 30 years. However, in the short term, anyone with super savings over the $135,590 tax-free threshold (indexed annually) at

retirement could benefi t. Because QSuper has higher contribution rates than many funds, many of our members retire with more than $135,590.

Contribution limitsThe Commonwealth Government is proposing a limit of $50,000 each fi nancial year on member and employer contributions where a tax deduction is claimed. Where a member is age 50 or over, a transitional deductible limit of $100,000 each year will apply until 30 June 2012.

Generally, a $150,000 per annum limit will apply for after tax (undeducted) contributions, however this can be averaged over 3 years (with a maximum one-off contribution of $450,000).

RICO’S STORYRico earns $35,000 per annum and currently pays his contributions after tax. This means last year he got a co-contribution from the Commonwealth Government of $1,150. Rico has heard about salary sacrifi ce, and is wondering if this might be a better option, especially now with the Budget proposal he can have his super benefi t tax free from 60.

THE SOLUTION Rico could choose between paying his contributions after tax (and therefore get a co-contribution), or by salary sacrifi ce (and make a tax saving), or he could take advantage of both!

Let’s say Rico chooses to salary sacrifi ce his standard 5% contributions. By salary sacrifi cing, Rico reduces his taxable income, and therefore makes an income tax saving of about $22 per fortnight. So his take-home pay actually goes up, however, because he is salary sacrifi cing, these contributions do not qualify for a co-contribution.

But what if Rico saved this $22 tax saving and at the end of the year paid it to QSuper as a voluntary contribution? This would be an after-tax contribution and would then qualify for a co-contribution.

If Rico could then save another $10 per fortnight to add to the $22, he could get the maximum co-contribution for his salary level. By putting in an extra $32 per fortnight, Rico could get the $1,240 co-contribution.

THE RESULTIn terms of income, Rico is only putting aside an extra $10. And yet there is an extra $32 going into his super (with the other $22 coming from the tax saving Rico made from salary sacrifi cing). The other advantage is Rico now gets a slightly higher co-contribution of $1,240 (up from $1,150) as his taxable income has reduced due to salary sacrifi cing. So Rico is now getting benefi t from both salary sacrifi cing and co-contribution!


NAME: RicoAGE: 25SALARY: $35,000OCCUPATION: CarpenterCURRENT BENEFIT: $20,000RICO’S SITUATION Rico is making 5% after-tax super contributions, and is considering if he should pay his contributions by salary sacrifi ce instead.

CASE STUDY

HERE’S WHAT RICO DID

QSuper, The Association of Superannuation Funds of Australia Limited, and the superannuation industry have been lobbying the government for simplifi cation to our superannuation system for many years.

By Rosemary VilganExecutive Offi cer, QSuper and Chair, Association of Superannuation Funds of Australia (ASFA)

brings good news forsuper

Budget

The proposal to simplify super in the 2006/2007 Commonwealth Budget, handed down on 9 May 2006, delivered a host of welcome changes which, if implemented, will reduce much of the complexity in the current system from 1 July 2007.

Salary sacrifi cing


ANNE’S STORYAnne and her husband both work. Anne has been salary sacrifi cing $300 per fortnight into her super to really give her retirement benefi t a boost. But she was starting to wonder whether her retirement benefi t would reach the reasonable benefi t limit (RBL), where she may start to pay higher tax on her super making it less attractive to keep contributing.

THE SOLUTIONAnne has heard the recent Budget announcements suggesting RBLs will be abolished and there will be no tax to pay on benefi ts over age 60. Instead, to ensure people can’t abuse this tax-free situation, there will be limits on what you can put into super each year.

The proposal is you can salary sacrifi ce $50,000 per year and make after-tax contributions of $150,000 per year. Anne decides to continue with her current contribution level as it is likely she no longer

needs to be concerned about RBLs. She will review how much she is paying into super, to make sure she is making contributions within the new limit.

THE RESULTThe Commonwealth Government Budget proposals have been great news for Anne. She may no longer need to worry about exceeding the RBL. Super will be a lot more simple. She can now continue to plan for her retirement, making contributions which she can afford (within the new contribution limits).


Reasonable benefi t limits It has been proposed reasonable benefi t limits (RBLs) be abolished. Super will be a lot simpler, meaning you can focus on building a super balance that will meet your retirement needs rather than needing to worry about an RBL.

Centrelink pension assets testCurrently, a single homeowner loses $3 per fortnight in pension entitlements for every $1,000 they have in assets over $157,000, and loses all pension entitlements when their assets exceed $325,000. The proposed changes would halve the rate at which entitlements reduce (so single homeowners would lose $1.50 per fortnight in pension entitlements for every $1,000 they have in assets over $157,000, and lose all pension

entitlements when their assets exceed $494,000). Higher rates would apply for homeowner couples.

Compulsory cashing of benefi tsPreviously you had to meet working conditions to keep your money in a lump sum super account after age 65, but you can now leave your money in a lump sum account indefi nitely. This change has already been made. There are tax implications for choosing this option, so you should consider the alternatives before making a decision.

Transition to retirementUnder the proposal, a member using an allocated pension in a transition to retirement strategy could withdraw up to 10% of the allocated pension balance each fi nancial

year. Currently, the maximum limits are the limits that apply to regular allocated pensions (8.7% for a 55 year old).

ConclusionOf course, it’s important to remember many of these changes are just proposals at this stage, and it’s likely to be the end of the year before we know what the fi nal changes will be. Keep an eye on the news section of our website for updates.*Calculated in today’s dollars, using a 3.75% AWE defl ator and assuming an earnings rate of 7%. In reality, earning and infl ation vary signifi cantly over time.

NAME: AnneAGE: 48SALARY: $80,000OCCUPATION: General ManagerCURRENT BENEFIT: $220,000ANNE’S SITUATION Anne needs to review her superannuation saving strategies due to suggested Budget changes.

CASE STUDY

HERE’S HOW ANNE DID IT

Reasonable benefi t limits


In your best interestsDid you know a group of ten dedicated men and women meet every month, looking out for what is best for your super? In this article we introduce you to the QSuper Board of Trustees, who oversee the management and investment of your super fund.

At their meeting each month the QSuper Board discuss a wide range of issues, ensuring your super fund continues to be one of the best in Australia. They keep a close eye on how your money is invested, what products and services you need, as well as considering disability appeals.

In between meetings, the Trustees read a range of policy papers to ensure they are up to date with all the issues affecting you.

As well as many other changes, last year the Trustees doubled the range of investment options available to you, and from 1 July this year they introduced improved insurance

for members still employed within the Queensland Government. Before any major changes such as these take place, the Trustees look closely at market research about what you want from your super fund.

It’s your super fund, and the Trustees always keep this in mind, making sure everything QSuper does is in your best interests.

Now let’s meet your Trustees, half of which are appointed by the Queensland Government, while the other half are nominated by various public sector unions.The Trustees of QSuper are known as the Board of Trustees of the State Public Sector Superannuation Scheme (ABN 60 905 115 063).

Your dedicated TrusteesFrom left to right: Merv Bainbridge (deputy), Steve Ryan, Chris Barrett, Tom Jeffers (deputy), Karen Peut, Gerard Bradley, Terri Hamilton, John Carpendale, Linda Apelt, Tony Hawkins

Thanks Helen!After serving as your Trustee for 6 years, Helen Ringrose retired from her role on 1 June 2006. We would like to thank Helen for being your Trustee since June 2000. Helen attended nine Board meetings last year.


Employer representatives (nominated by the Queensland Government)

Gerard BradleyUnder Treasurer and Chairman of the BoardMeeting attendance: 10(Deputy – Tim Spencer)Gerard took up the leadership challenge to build QSuper during a time of major change. The most important thing for Gerard is to ensure QSuper stays ahead of the game and continues to provide exceptional service and communication to members.

Linda ApeltDirector-General, Department of Communities and Disability Services Queensland Meeting attendance: 9(Deputy – Wayne Cannon)Linda became one of your Trustees so she could look out for your interests. She likes keeping up to date with policy changes, and ensuring all decisions are made with your best interests in mind.

Terri HamiltonDirector, Terri Hamilton Financial ServicesMeeting attendance: 12Terri is committed to looking after the interests of members. She became a Trustee to help members maximise their fi nancial futures and enjoy a secure life in retirement.

Tony HawkinsChief Executive Offi cer,WorkCover QueenslandMeeting attendance: 13Tony takes his role as your Trustee very seriously, as he knows you are relying on him to always have your welfare and future at the top of his mind, in all decisions he makes on your behalf.

John CarpendaleRetired Deputy Executive Offi cer, LG SuperTrustee since: June 2006Meeting attendance: 1John has a long history with QSuper, having worked for QSuper for 37 years, from 1962 to 2000, before working for LG Super. John sees his role as Trustee is to provide direction to ensure QSuper continues to run as effi ciently and effectively as possible.

Chris BarrettAssistant General Secretary, Queensland Council of UnionsMeeting attendance: 12(Deputy – Grace Grace)Chris considers it important that employees’ super is well invested and safeguarded. As a Trustee, he values having a direct input to ensure this happens.

Garry RyanQueensland Branch President and Southern District Secretary, The Australian Workers’ UnionMeeting attendance: 6(Deputy – Tom Jeffers)Garry took the position of Trustee so he could participate in Board decisions and is committed to looking after your interests.

Steve RyanPresident, Queensland Teachers’ UnionMeeting attendance: 13(Deputy – Jeff Backen)Steve sees super as the best working condition an employee can have, as it offers you insurance protection while working, and an income in retirement. He enjoys helping to look after the biggest fi nancial asset many QSuper members will ever have.

Merv BainbridgeOffi cial, Queensland Police Union of EmployeesMeeting attendance: 12(Deputy for Gary Wilkinson)Merv wants to make sure QSuper remains a leader in the super industry, continuing to give you solid returns along with low fees. Merv regularly reviews fund performance to keep QSuper the best super fund you could belong to.

Karen PeutCouncil Delegate, Queensland Public Sector UnionMeeting attendance: 11(Deputy – Alex Scott)Karen also has a long association with QSuper, having been one of your Trustees for over 20 years. Above all else, Karen is dedicated to making sure decisions are made in the best interests of all members.

Member representatives (Nominated by the Combined Public Sector Unions’ Superannuation Committee)

It’s your super fund, and the Trustees always keep this in mind, making sure everything QSuper does is in your best interests.The Superannuation (State Public Sector) Act 1990 provides for the indemnifi cation of the Board of Trustees. The Board has a level of indemnifi cation that is consistent with Commonwealth superannuation laws and other State legislation.

Important changes in the way Q Invest and QSuper work for members

In the last few years, Q Invest has been broadening the scope of advice beyond retirement planning. Demand for Q Invest fi nancial planning services has increased across the State, as superannuation has become a more important issue for members, and as Q Invest has become better known and offered a broader range of services. Q Invest is again pleased to announce further enhancements to the services we offer.

As a result of these appointments, members will experience better access to fi nancial advice especially with those planners permanently based in regional Queensland.

In addition, Q Invest will expand the number of planners in its telephone-based advice services. This will allow more members to access professional advice when they require help with specifi c issues such as salary sacrifi ce decisions or investment choice.

Member co-paymentIn the past, the advice provided by Q Invest about members’ QSuper accounts has been fully subsidised by QSuper.

However, as Commonwealth Government regulation has widened to ensure greater member protection within the industry, the cost of providing fi nancial planning services has increased.

To continue to enhance the level and availability of Q Invest services, and ensure adequate funding of Q Invest’s services into the future, the Trustees will introduce a member co-payment scheme commencing 1 January 2007. This co-payment is a relatively small proportion of the total cost of providing these fi nancial services. QSuper will continue to fund more than 80% of the cost of Q Invest providing advice about members’ QSuper accounts.

There are two rates of member payment, set depending on the type of QSuper advice provided by Q Invest:1. $275 each time comprehensive written personal

advice is provided – usually after a face-to-face meeting with a planner.

2. $55 each time written personal advice addressing a limited set of circumstances is provided – usually following a brief telephone-based discussion with a planner.

The member co-payment ensures that QSuper maintains the balance between improving members’ access to Q Invest fi nancial planning advice when they have the need, and maintaining the Fund’s low fee advantage for all members.

Q Invest and the Fund’s Trustees are committed to providing outstanding value for members. The new co-payment will allow Q Invest to provide substantially more services throughout Queensland as it responds to members’ needs. The quality of advice and the expertise, for which Q Invest’s salaried fi nancial planners are recognised, will not change.

Enhanced service for membersFollowing the success of Q Invest’s Townsville offi ce, additional Q Invest fi nancial planners will now be located in the Brisbane offi ce as well as in other regional areas across the State including:• Darling Downs• North Queensland• Gold Coast• Sunshine Coast• Wide Bay• Central Queensland

The new offi ces will be opening for business during the next 12 months. Keep an eye on the Q Invest website for updates.

Q Invest has been providing QSuper members with unmatched quality of advice since it commenced in 1994. In that time, it has assisted more than 40,000 members make important decisions about their superannuation, retirement income, and insurance benefi ts from the Fund.

So how do I work out what I’ll need?Your current domestic budget is a guideline for what your income needs will be in retirement. Some expenses may stop but others may increase. Your budget will also help plan what you can save between now and then.

Once you have determined your required income, you can use our Super health check calculator to help you see what changes to contribution levels, interest rates, and time to retirement can have on your super savings.


A recent report by AXA revealed that baby boomers will be the fi rst generation to not leave an inheritance for their children. The boomers believe their retirement savings will provide enough income in retirement, and with life expectancies increasing, there has never been a stronger need to make sound fi nancial decisions for your future.

Cost of living has increasedThe cost of comfortable living for retired couples has gone up by over $1,000 a year in the last 12 months, as measured by the Westpac/ASFA Retirement Living Standard. The living costs for a retired Brisbane couple increased to $46,116 a year and $34,522 for singles. Essential items have risen in

price, while the cost of some leisure goods has fallen. Of course, we know many people are satisfi ed with a less costly lifestyle. On a national basis, the cost of a modest retirement lifestyle for a single female rose 2.5% to $17,826. This is due to the increase in the cost of basic items and the table right shows some of the items that increased and decreased.

Some changes will affect retirees, but others won’t. For example, retirees spend little on education, which increased nationally. However, these age groups tend to require increased health services, which rose. Most retirees also have pets, and pet foods also rose by 10%.

Living item Cost increase/decrease

Health services up 4.2%Food up 4.2%Petrol up 15.2%Education up 6.3%Electrical equipment down 6.3%Overseas travel down 2.9%Domestic travel up 4.9%Clothing down 0.8%

Source: ASFA and University of New South Wales Social Policy Research Centre

Many of us wonder how much money we will need to retire comfortably. Almost every day we read about baby boomers infl uencing spending patterns, and health and lifestyle issues. Overseas holidays, a new car, modern kitchen appliances, and home security systems are often considered desirables for a comfortable retirement.

Are you on track to retirement?

Type of lifestyle Annual income – single Annual income – couple

Modest lifestyle $17,849 $24,937

Comfortable lifestyle $34,522 $46,116

What income should you be aiming for?

Source: Westpac/ASFA Retirement Living Standards December 2005Modest lifestyle is better than the age pension, but provides for basic activities like home and car maintenance, and an occasional domestic holiday.Comfortable lifestyle includes a broad range of leisure and recreational activities, health insurance, and occasional overseas holidays.

It’s always a good idea to have your benefi t statement handy when using our calculators, as it might help with some of the projections. And remember, these calculators do not replace fi nancial planning advice, they are simply designed so you can see how your super, and your fi nances in general, are travelling.

The Westpac/ASFA Retirement Living Standards research results below are a simple way of determining how much you’ll need for a modest or comfortable lifestyle in retirement.

Check out these great online tools for yourself at qsuper.qld.gov.au .

Super Scoop 2006 | 13

14 | Super Scoop 2006 QSuper annual report to members14 | Super Scoop 2006

DINKS, gen Xers, KIPPERS… they’re all terms used to describe the many subgroups that exist within Australia’s population. But within our current population of about 20 million, it’s generally considered there are fi ve distinct generational categories: builders, baby boomers, generation X, generation Y, and generation Z. And each of these groups is responsible, in its own unique way, for shaping our social landscape.

The big shiftOne of the major changes the boomers started was the move away from rural Australia. Baby boomers and gen Xers have progressively left country regions, fl ocking to coastal areas (especially the Gold Coast) in

what business advisor and author Bernard Salt refers to as the ‘seachange shift’. This movement forms the basis of Salt’s book, The Big Shift, in which he looks at the changing demographic and social trends throughout Australia. In a by-gone era, many young people stayed on the land, choosing a rural lifestyle, perhaps taking over the family farm. Now more and more country youth are choosing to live in the city, attracted by more education and career opportunities.

Changing householdsOver the past two decades, the composition of the Australian household has changed dramatically. While the boomers and Xers left home in their late teens or early twenties,

today’s Ys are electing to cut costs and stay at home longer with mum and dad.

These 20-somethings are collectively known as KIPPERS (kids in parent’s pockets eroding retirement savings). KIPPERS have no intention of getting married or moving out of home, and differ dramatically from the DINKs of the 80s. The term DINK (double income no kids) was coined to describe young couples that were career driven and materialistic. This trend of delaying children (sometimes indefi nitely) continued with the Xers and even more so with the Ys, many of who claim they never wish to get married or have children. Some think the Ys might be too young and frivolous to give such matters serious thought, and others speculate

BuildersBorn between 1931–1946

Population size approx. 2.4m

AttitudesCautious, hard working, respect authority, and value social order.

Events that shaped their worldThe Great Depression, World War II, the atomic bomb, and the formation of the United Nations.

Baby boomersBorn between 1946–1961

Population size approx. 4.1m

Attitudes‘Me’ mentality, autonomous, and value team work and equality.

Events that shaped their worldFirst modern subcultures, the Vietnam war, the resignation of Richard Nixon following the Watergate conspiracy, and the ‘sexual revolution’.

Generation XBorn between 1961–1976

Population sizeapprox. 4.8m

AttitudesAnti-corporate, loyal, independant, and creative.

Events that shaped their worldMajor political and social shifts such as the crumble of the Berlin Wall, the beginning of the AIDS epidemic, and the end of the Cold War.

QSuper has over 450,000 members from all walks of life, and we know you all have very different needs and attitudes. This feature explores the current social and demographic trends in Australia, and takes a look at what the future may hold.

The changing


maybe they’re jaded by the one in three divorce rate, having experienced their Xer or boomer parents splitting up.

The decision to get married later in life has caused a new wave in consumer spending by female 20-somethings. Salt says the automotive industry has responded swiftly, with advertising aimed at women.

Central business districts in Brisbane, Sydney, Melbourne, and Adelaide have all expanded with row after row of towering residential developments as the DINKs, yuppies, guppies (gay yuppies), and single Ys pursue materialistic, carefree lifestyles. But the combination of career focus and fewer marriages has led to a decline in births Australia wide. Currently mum, dad, and the kids make up about one in three Australian households. However, this is set to change in the near future as couples without children, singles, and one-parent families increase.

By 2011 the traditional nuclear family will make up just 28% of Australian households*, with the end of this decade seeing a rise of nontraditional defacto, single parent, and gay households.

Man droughtAnother interesting trend in Australia is the declining male to female population ratio. A generation ago there were more Australian men than women in every age group up to 55 years, but now it seems men are travelling and remaining overseas in pursuit of their careers and romance. This is especially evident in the 30-something age group, where there are 20,000 more women than men – a stark contrast to 1976 when there were 54,000 more men than women.**

Changing work patternsAustralians are working longer and this trend is set to continue. Research shows one in 18 male employees were working more than 11 hours a day in 1974, but this fi gure had increased to one in eight in 1997.*** Employer and employee attitudes towards work have also morphed. Job share, fl exible scheduling, and casual and part time work have all increased, due in part to the amount of mothers in the workforce who desire greater employment fl exibility.

With so many changes shaping Australian culture over the past three decades, it’s interesting to speculate on what the future holds. But no matter what happens, you can rest assured QSuper will continue to offer you great products and services so you can lead the lifestyle you want in retirement.

Generation YBorn between 1976–1991


AttitudesEthical, socially responsible, driven, and value diversity.

Events that shaped their worldThe Gulf War, the meltdown of the Chernobyl reactor in Ukraine, the Challenger space shuttle explosion, the Columbine tragedy, and immense globalisation of society.

Generation ZBorn between 1991–2006


AttitudesAnalytical, issues based, and hold high standards.

Events that shaped their worldSeptember 11 and other terrorist attacks, Australia hosting the 2000 Olympic games, Princess Diana’s death, and the Y2K scare.

*The Big Picture, Bernard Salt**Brain drain leads to serious man drought, Helen Westerman and Katherine Danks, The Age, July 27, 2005***Australian workplace industrial relations survey

Did you know… ?

• QSuper has over 450,000 members – that’s one in nine Queenslanders!

• More than 60% of QSuper members are female.

More than 30% of QSuper members are aged over 50.

of Australia

HOW YOU COULD SAVE

IN 3 YEARS

Get yourself super savvy!By making sure you combine the benefi ts of salary sacrifi cing, co-contribution, and paying a little more, you can maximise the money going into your super fund. Sometimes this means using one, two, or a combination of all three of these strategies to get your super working!

While saving is often about reducing spending and putting that aside for a future goal, sometimes there are opportunities to get a hand doing this. This article explores how you might be able to build your super by over $5,000 in 3 years without impacting on your current lifestyle.

Salary sacrifi ce your super

CASE STUDY

NAME: JenniferAGE: 33SALARY: $50,000ACCOUNT: Defined BenefitOCCUPATION: Nurse

In this article, we look at Jennifer, who is on a salary of $50,000, and show how she can use a few simple strategies to top up her super without feeling too much pain in her purse.

1 2+ 3+


Salary sacrifi cing your super means paying your super before tax. It reduces your taxable income by having your employer pay your super contribution for you. Because you don’t receive that portion of your salary, you don’t pay the tax you’d normally pay. Instead you pay 15% tax as the money enters your super fund. Should the recently announced Commonwealth Budget proposals be passed, super benefi ts will be tax free when claimed in retirement (after age 60), making this 15% the only tax you pay.

Jennifer currently pays her 5%* Defi ned Benefi t contributions after tax. But by changing this to salary sacrifi ce (before tax), Jennifer could increase her take-home pay by around $25 per fortnight. By contributing this salary sacrifi ced tax saving back into her super, over 3 years this would create around $1,650** extra in Jennifer’s account (without even considering any investment earnings!).

Superco-contribution

Jennifer, on a salary of $46,500 (after salary sacrifi ce), could get a Commonwealth Government co-contribution of $575 by paying $650 herself in after-tax contributions (as shown in step 2). That’s another $1,725 over 3 years, without considering any investment earnings!

There is one thing to be cautious of: some employers cannot pay a mix of salary sacrifi ce and after-tax contributions. This makes it a little harder to ensure you can maximise your benefi t from both. One way around this is to salary sacrifi ce the contributions you pay each fortnight, and send QSuper a cheque for after-tax contributions to qualify for the co-contribution.

Pay a little moreThe second thing you can do is choose to pay a little more into your super. But how can you do that without feeling the pain in your wallet? Well, what about waiting for a time when some funds become available that you may not miss as much?

A good example is a tax cut or pay increase. Jennifer actually got a tax cut of around $20 a fortnight on 1 July 2006. Over 26 fortnights, this would be $520 – which would more than cover the after-tax contribution Jennifer needs to qualify for the co-contribution! And, if Jennifer decided to add another $5 a fortnight to her $20 tax cut, that alone would add up to $1,950 over 3 years – again without any investment earnings!

Salary sacrifi ce gives Jennifer $1,650** over 3 years

Co-contribution gives Jennifer $1,725*** over 3 years

Paying a little more gives Jennifer $1,950 over 3 years

The result

NAME: RituAGE: 35SALARY: $25,000 (part time)ACCOUNT: AccumulationOCCUPATION: Project OfficerRITU’S SITUATION As Ritu is now working part time, and earning less, she needs to consider whether salary sacrifi ce is still the best option for her.RITU’S STORY

Ritu has just gone part time and is now earning $25,000 per annum. She is still paying her contributions by salary sacrifi ce. Now that Ritu is in the 15% tax bracket, salary sacrifi ce is not as effective for her. She also needs to consider if she made her super contributions after-tax instead, she would qualify for the full co-contribution of $1,500 per annum. THE SOLUTION

Ritu went to her pay offi ce and got the forms to change her salary sacrifi ce contributions back to after-tax contributions. She is paying the standard 5% contribution which comes to around $48 a fortnight (or $1,250 a year). Just these standard contributions will qualify her for a co-contribution of $1,500 each year. That’s $1,500 the Commonwealth Government will pay into her super simply because she is also contributing. Ritu also decides that her recent pay rise of $20 a fortnight should go into her super as it is money she wasn’t getting before, and by putting it into her super she will never miss it!THE RESULT

Let’s look at how much extra is going into Ritu’s super over 3 years: Effect over 3 yearsSalary sacrifi ce $0Co-contribution $4,500Pay a little more $1,560Total $6,060

CASE STUDY

NAME: LarsAGE: 45SALARY: $68,000ACCOUNT: AccumulationOCCUPATION: ArchitectLARS’ SITUATION Lars wants to increase his super, without impacting on his current lifestyle.LARS’ STORY

Lars is earning $68,000 per annum. Being on a higher salary makes salary sacrifi ce more attractive to him. However he would have to salary sacrifi ce more than $10,000 of his pay to get his taxable income under $58,000, and start to qualify for a co-contribution. So Lars decides not to worry about the co-contribution and concentrates on how he can combine salary sacrifi ce and paying a little more.THE SOLUTION

Lars decides to salary sacrifi ce an extra $60 (before tax) a fortnight into his Accumulation account. This means his take-home pay is essentially the same, because by salary sacrifi cing he has reduced his taxable income and is therefore paying less income tax. On Lars’ salary, the 1 July 2006 tax cut is worth around $40 a fortnight and he decides to add this to his super as well. The result of this combination is increased super, without impact on Lars’ lifestyle.THE RESULT

Let’s look at how much extra is going into Lars’ super over 3 years:Effect over 3 yearsSalary sacrifi ce $3,978Co-contribution $0Pay a little more $3,120Total $7,098

CASE STUDY

=


Often it can be hard enough to meet normal day-to-day bills and expenses while enjoying current leisure activities. This can make saving diffi cult and many commentators have suggested Australians are certainly not world leaders when it comes to saving!

So how can you get the best from your super? What can you do that has a limited impact on your wallet now, but provides extra savings for later?

Below we’ve combined the benefi ts of contributing a little more, using salary sacrifi ce and accessing the Commonwealth Government’s co-contribution to top up your super.

So Jennifer can actually save an extra $5,325 over 3 years without really causing herself too much pain at all. All she has to do is get her super working by ensuring she is paying her contributions in the most effective way to get the maximum benefi t from salary sacrifi ce and the co-contribution scheme.

So, is your super working as hard as it could? If not, why not use QSuper’s calculators to see how easy it is to boost your super without feeling it in your hip pocket.

Jennifer can make $5,325 over 3 years

Now let’s see what Ritu and Lars did to boost their super!

This information is not personal advice, please refer to the general advice warning on page 2.*Standard contribution rate becomes 5.88% when salary sacrifi cing**Salary sacrifi ce benefi t is calculated net of 15% contribution tax***Based on co-contribution income threshold rules for 2006/2007 fi nancial year

QSuper annual report to members18 | Super Scoop 2006

Initially QSuper will look at investing in the following alternative assets:

Private equity – these are companies not listed on a stock exchange. They can include development of new ventures, capital for existing companies to grow, or additional capital to fund a management buy-out or buy-in.

Infrastructure – these projects tend to be large and capital intensive, and in most cases provide a service the community depends on such as toll-ways, utilities, and airports.

Managed funds – these include absolute return funds and various hedge fund strategies.

Commodities – rather than investing directly in commodities such as gold and coal, this type of alternative investment invests in commodities futures contracts, which are based on price differences of commodities over time.

Other alternatives that are being researched for possible future investment are timber and alternative fi xed interest.

Smoother returnswith less risk

The QSuper Board of Trustees is constantly looking for ways to innovate and ensure our track record of solid returns continues, and is therefore introducing a new range of investments, called alternatives, into some QSuper investment options. In this article our investment manager, QIC, talks about the advantages of introducing alternatives to QSuper’s investment options.

Why invest in alternative assets?We are really proud of our great track record of providing solid returns to QSuper members, and the last few years have provided particularly strong returns. You might, however, remember a few years earlier QSuper and other super funds experienced more volatile returns – including negative returns for some options.

We want to continue our record of giving you solid returns, so we are introducing a new range of assets to some QSuper Ready Made options to provide smoother returns with less risk overall. This new range of assets is called alternative assets, because they are invested in nontraditional types of investments such as private equity, infrastructure, and commodities.

Our extensive research has shown diversifying into these new types of investments will help achieve solid returns, with less risk. In practice this means the QSuper investment options that will be partly invested in alternative assets should have less chance of experiencing a negative return in any 1 year, while continuing to achieve solid long-term returns in a range of economic conditions.

Alternative assets help maximise the benefi ts of diversifi cation by investing in assets which are expected to perform differently to other investments, such as listed shares and property, in different market conditions. The overall return is therefore expected to be smoother from year to year.

Some of these assets are more expensive to invest in (so you may notice investment fees going up slightly), but even after fees and tax they are designed to improve the probability of achieving QSuper’s investment objectives.

Fees for 2006/2007 will be confi rmed in Super Scoop at the end of the 2006/2007 fi nancial year.

Which QSuper accounts will be affected? QSuper’s Accumulation and Allocated Pension accounts will have an allocation to alternative investments introduced into the Balanced, High Growth, and Cash Plus options.

When will these changes occur?The QSuper Board approved allocations to alternative assets from 1 July 2006. We will, however, take a gradual and disciplined approach to investing in these assets to ensure we invest at the right price. This means it may be some time before the full allocation to alternative assets is reached. Visit the QSuper website at qsuper.qld.gov.au for further updates.

What types of alternative assets is QSuper investing in?

Keep an eye on the QSuper website for updates!

DisclaimerQIC (ABN 95 942 373 762) and its subsidiaries and associated entities, and their directors, employees and representatives (the QIC parties) do not warrant the accuracy or completeness of this information. To the extent permitted by law, the QIC parties disclaim all responsibility and liability for any loss or damage of any nature whatsoever which may be suffered by any person, directly or indirectly, through relying on the information, whether that loss or damage is caused by any fault or negligence of the QIC parties or otherwise. The information is not intended to constitute advice and you should seek professional advice before relying on the information.


QSUPER CASH PLUS OPTION

Asset class Old range New rangeAustralian shares 14%–21% 12.5%–17.5%International shares 11.5%–19% 10%–15%Property 2.5%–8% 2.5%–7.5%Fixed interest 2.5%–18.5% 7.5%–12.5%Cash 49%–64.5% 50%–62.5%Alternatives n/a 0%–5%

Chance of negative return 1 in 20 years 1 in 25 years

We are always looking for ways to improve the information we provide to you. This year, for the fi rst time, your statement contains added information on your account transactions and fees.

Of course, the fi rst few pages of your statement still provide the summary of benefi ts you are used to seeing. However, for those eagle eyes who like a closer look, the transaction summary shows details of what happened in your account for the year.

So, what does the new transaction summary show?The transaction summary shows all of the transactions that occurred in your account. You can now see account deposits for the year, including fortnightly contributions, co-contributions made by the Government, and any amounts you deposited or transferred into the fund. You can also see any applicable deductions (such as insurance premiums and tax). And, of course, you can see the fees.

Tell me more about feesThe less you pay in fees, the more money you have working for you. That’s why it’s good to know QSuper’s fees are among the lowest in Australia, and when you consider we charge no entry fees, no exit fees, and no commissions, it adds up to value that’s hard to beat!

We previously reported fees as a management expense ratio (MER). However, all super funds are now required to report fees as a dollar amount. We have chosen to display both. Rest assured this is not a new fee, just another way of reporting fees, making it easier for you to compare funds.

Fee comparison 2004/2005

Investment Total expense**

Cost per $50,000

QSuper Balanced option 0.58% $290Market average 1.05% $527

Source: SuperRatings research 2006. **These fees are as at 30 June 2005. Please note, fees can change from year to year.

Want a closer look at what’s going on in your account? Your statement now shows a whole new level of detail.

QIC’s annual investment seminar for QSuper members on 13 October 2006 will go into more detail about these changes. Register by calling 1300 360 750, or by visiting the QSuper website.

More information

QSUPER BALANCED OPTION

Asset class Old range New rangeAustralian shares 30%–40% 25%–35%International shares 24%–36% 20%–30%Property 5%–15% 5%–15%Fixed interest 5%–35% 15%–25%Cash 3%–23% 0%–25%Alternatives n/a 0%–10%Chance of negative return 1 in 5 years 1 in 6 years

Having a closer

QSuper provisional investment option MERs 2005/2006

OPTION MER* OPTION MER*Balanced 0.55 Cash 0.32Cash Plus 0.43 Fixed Interest 0.43Socially Responsible 0.97 Australian Shares 0.46High Growth 0.54 International Shares 0.66

QSuper’s sole fee pays for:• the cost of account keeping and

reporting;• the provision of a range of seminars,

publications, our Contact Centre, and website tools to assist in explaining your super options; and

• the costs associated with investing your money in a variety of worldwide assets.

So, these fees include investment costs?Yes! In fact around 70% of the fee goes towards investing the superannuation balances of QSuper members. This involves placing money into a number of worldwide markets using a variety of fund managers. It

also includes the costs of buying, developing, and maintaining commercial property across Australia. All of this is done under the supervision of

our fund manager, QIC, who ensure the best companies and best fund managers are used across all the asset types to secure the strongest long-term investment returns.

How does QSuper’s fee compare?QSuper exists solely for your benefi t and that’s why we work hard to keep fees low. QSuper shows its fees as a management expense ratio (MER). MER is an industry standard for measuring total product fees, but not all funds use it so you should be careful when comparing fees from fund to fund. The table below shows QSuper’s fees for the Accumulation account Balanced option, and average fees across a number of typical Australian super funds’ balanced options.

*Management expense ratio (MER) is generally the total expenses of the Fund (e.g. investment, management, trusteeship) as a proportion of the Fund’s net asset value. These fi gures are provisional.

QSUPER HIGH GROWTH OPTION

Asset class Old range New rangeAustralian shares 31%–39% 20%–40%International shares 61%–69% 35%–55%Property n/a 0%–10%Cash -2%–2% -2%–10%Alternatives n/a 0%–20%

Chance of negative return 1 in 3 years 1 in 4 years


The world we invest your money in constantly changes. This environment presents both challenges in terms of new risks to manage, as well as opportunities for us to innovate and deliver better investment outcomes for you.

Our approach to investing your money is built on the following principles:• managing risk is our number one

priority• smart diversifi cation• focus on beating the market• disciplined management

One of the ways QIC provides smart diversifi cation for QSuper members is by investing funds using our own in-house expertise, as well as using the management skills of some of the world’s best fund managers. We currently use more than 30 specialist external fund managers in the various asset classes.

Each manager is fi rst identifi ed based on their specifi c investment style or the method they employ in managing your funds. We then select teams of managers based on their:• proven track record; • stable investment teams with little turnover;• strong team conviction to their investment

process; and• ability to stick to the chosen investment

style.

Looking after your

Australian fund managersAlpha Investment Management Pty LtdSchroder Investment Management Australia LtdPerennial Value Management LtdMaple-Brown Abbott LtdMacquarie Investment Management LtdWestLB Mellon Asset Management Pty LtdPortfolio Partners Ltd

International fund managersAXA Rosenberg Investment Management LtdBarclays Global Investors Australia LtdOechsle International Advisors LLCFiduciary Asset Management LLCArnhold & S. Bleichroeder Advisers LLCAllianceBernstein Australia LtdAQR Capital Management LtdLegg Mason Capital Management IncLegg Mason Asset Management (Asia) Pte LtdWellington Management Company LLPNew Star Asset Management LtdGoldman Sachs JBWere Investment Management Pty LtdIronBridge Capital Management LPCity of London Investment Management Company Ltd

Fixed interest fund managersPIMCO Australia Pty LtdLoomis Sayles & Company LPBlackRock Financial Management IncRogge Global Partners PLC

For a full list of fund managers, visit the performance section on the QSuper website.

IronBridge Capital Management LP IronBridge Capital Management LP (IronBridge) is a new addition to our international shares manager line up. Added to the portfolio in October 2005, IronBridge has been on our radar for a number of years through our manager research and monitoring processes, and existing relationships.

IronBridge is an independent fi rm established in 1999, with headquarters in Chicago and an offi ce in London. It currently manages US$2 to 3 billion in assets, mainly in US shares. And IronBridge’s London team manages a global large cap (large company) investment for QSuper.

Macquarie Funds ManagementMacquarie Funds Management, a part of the Macquarie Bank Group, is one of Australia’s leading fund managers with a reach across the major investment markets of the world.

Macquarie’s investment philosophy is based on the premise that asset prices and relative returns for investors are set by investor expectations on a range of key factors. For the investments they manage for QSuper, Macquarie considers the key factors to be company earnings, valuation measures, and momentum. Investor expectations of these factors change frequently, producing price movements that can be anticipated and capitalised on.

AXA RosenbergIn 1985, Dr Barr Rosenberg established Rosenberg Institutional Equity Management to manage broadly diversifi ed share portfolios in Orinda, California. Dr Rosenberg entered into a strategic alliance with AXA Investment Managers in 1999.

The cornerstone of AXA Rosenberg’s investment philosophy is very simple – investors can profi t by purchasing stocks that are underpriced. In reasonably effi cient markets, any discrepancy between the current price and the fair value of a stock will be corrected over time. These often modest mispricings are the opportunities the AXA Rosenberg investment process is ideally suited to uncover and act upon.

As QSuper’s investment manager, QIC works in partnership with QSuper’s Board of Trustees to deliver solid returns for QSuper members. And to complement their own expertise, QIC also manages over 30 of the world’s best fund managers, making sure your money is invested by experts in many different regions and markets. Here QIC gives you an insight into who some of these fund managers are, and how they are making your money work hard for you.

fter you

Here are just some of the fund managers looking after your super as at 30 June 2006

Now let’s take a closer look at three of these investment managers.


Expertiseworking for you

Tell us about your fi rst job in investment management?My fi rst job was as a research analyst with a major stockbroker in the 1980s. I was a bulletproof 22 year old, fresh out of university. I remember learning early the cardinal rule of investing in shares: ‘don’t always believe what company management says, no matter how impressive they sound’. It was an incredibly powerful lesson about what analysing a company really involves – very detailed and meticulous research, and forming your own view and backing it.

Why did you choose to work at QIC?QIC is highly respected in the industry and has a hard-earned reputation for delivering consistent, above average performance for its clients. QIC is a leading fund manager and takes the responsibility of managing individuals’ life savings very seriously. Unlike other fund managers who are part of larger fi nancial institutions, QIC is not distracted by other businesses. Their sole focus is on investment management and this is something I found appealing.

Investing can be risky business and takes a great deal of industry knowledge and expertise. Simon Hudson, Head of Australian Equities at QIC, is responsible for investing around $4.2 billion of QSuper members’ money, and knows the importance of being at the top of his game. QSuper got an insight into Simon’s background, as well as tips on successful investing in the Australian sharemarket.

How do you invest QSuper members’ money in Australian shares?We have a very robust process of investing in Australian shares that involves extensive economic analysis, industry research, and risk management. We invest in a diverse range of companies listed on the Australian Stock Exchange. We meticulously research the growth potential of companies to identify opportunities (and risks) the market is yet to understand and correctly value. This is the key to our good performance. I believe this is where QIC, with one of the largest and most skilled research teams in Australia, has an advantage over its competitors.

Do you have any advice for individual investors in the sharemarket?I am probably being biased, but I think investors should seriously consider a professional fund manager when investing in shares. While investing in the sharemarket is one of the best ways to beat infl ation and increase real wealth, it does involve challenges and risks, as investors in OneTel and HIH will attest to. Investing with a professional Australian shares manager gives you the peace of mind of investing in a diversifi ed portfolio of shares, and the reassurance that experienced professionals are constantly monitoring the health of these companies. Perhaps one of the biggest challenges for the professional and amateur investor alike is knowing when you are wrong about a stock as quickly as possible. This often separates the good investors from the bad.

With experts such as Simon investing your money, you can rest assured your super is in good hands.


burningburning

Useful websites www.cancer.org.au www.qldcancer.com.au

Australia has one of the highest rates of skin cancer in the world, and Queenslanders are at a particularly high risk, with more melanomas reported than in any other Australian state.

Melanomas are diagnosed in more than 2,300 Queenslanders each year, resulting in about 200 cases of melanoma-related deaths annually.

‘Melanoma is the rarest but most dangerous form of skin cancer,’ Queensland Cancer Fund Prevention and Early Detection Manager, Susan Greenbank, said. ‘The fi rst sign of a melanoma is usually a change in a freckle or mole, or the appearance of a new spot on the skin. Early detection is vital.’

So just as you must make sound decisions about your personal fi nances to ensure a comfortable lifestyle when you retire, you also need to make the right decisions regarding sun safety and skin care now.

After all, what’s the point in contributing to your super if you aren’t going to live long enough to use it?

Skin protectionThe Queensland Cancer Fund recommends the following strategies for staying safe while still enjoying your time in the sun:• ensure the sunscreen you wear is a

broad spectrum SPF 30+ and is water/sweat resistant if you are swimming or playing sports

• reapply sunscreen every 2 hours if you’re active

• remember sunscreens have use-by dates

• lessen your exposure to the sun between 10.00 a.m. and 3.00 p.m.

• ensure there is a shady area nearby, as this can reduce the UV radiation exposure by 75%

The eyes can also be damaged by ultraviolet rays. The Queensland Cancer Fund recommends wearing sunglasses when exposed to prolonged periods of sunlight. ‘Wearing sunglasses minimises the risk of eye damage,’ Susan says. ‘Sunglasses sold in Australia must conform to the Australian Standard AS1067 for UV protection.’

Following the suggestions above will reduce the probability of long-term negative health effects, and will ensure you enjoy your outdoor recreational activities for longer.

We love our sunburnt country, and the international perception of the sun bronzed Aussie refl ects this. However, the lifestyle that allows that bronzed skin can come with dangerous costs.

There are many myths that exist regarding sun safety and skin cancer. Here, we give you the ‘skinny’ on skin protection:

MYTH: A natural tan builds protection against the sun.

FACT: Even tanned skin is damaged by UV radiation.

MYTH: Solariums are a safe way to tan.FACT: Any UV radiation exposure can

increase the risk of skin damage, skin ageing, and skin cancer. Solariums emit UV radiation levels that are up to fi ve times stronger than the midday summer sun.

MYTH: It’s safe to stay out in the sun as long as you reapply sunscreen every 2 hours.

FACT: Sunscreen is not an absolute answer to protection from skin cancer and should not be used to justify spending all day in the sun.

MYTH: You cannot get burnt when it’s overcast.

FACT: It is possible to get burnt when it’s overcast or cloudy. UV rays can still penetrate cloud cover and affect you.

The skinny on skin cancertopictopicaa


The changes to marginal tax rates announced by the Commonwealth Government in the 2006 Budget mean more take-home pay for all Australians earning more than $20,000 a year. The table below shows some examples of the differences when comparing the current and previous income tax rates.

The Budget also proposed changes to Medicare levy thresholds, family tax benefi ts, and some allowances, which will further boost many family incomes.

What can you do with the savings?Depending on your own priorities, saving for a particular goal might become more achievable. While super remains one of the most effective savings options available to Australians, access to money before retirement can be an important consideration.

One of the fi rst areas you can look at is taking the benefi ts from these Budget changes and directing them into a high interest bank account for short-term goals.

If you have a medium to long-term goal, you could consider investment vehicles that provide growth potential as well as fl exibility. One of the simplest and most effective ways is to invest through a managed fund combined with a regular savings plan. Some funds allow you to start with as little as $500 and with regular contributions directly from a bank account from $100 a month.

To fi nd out more about how Q Invest can help you, visit www.qinvest.com.au .

This article has been prepared by Q Invest Limited ABN 35 063 511 580 (Q Invest) (AFS licence 238274) and is general in nature. It does not take into account what you currently have, what you want, or what you need for your fi nancial future. You should consider these issues before you make an investment decision.

How can you take advantage of changes in personal income tax rates?

Taxable income ($)Tax payable ($)

Annual tax saving ($)2005/2006 2006/2007

20,000 2,100 2,100 0

40,000 7,860 7,350 510

60,000 13,860 13,350 510

80,000 21,900 19,850 2,050

100,000 30,550 27,850 2,700

160,000 58,750 52,350 6,400No allowance has been made for the Medicare levy.

Q Invest Limited (ABN 35 063 511 580) (AFSL 238274). The information contained in this advertisement does not take into account what you currently have, what you want, or what you need for your fi nancial future. You should consider these issues and read the Product Disclosure Statement (PDS), before you make a decision. To the extent that the above constitutes general advice by Morningstar, this advice has been prepared by Morningstar Research Pty Ltd ABN: 83 062 096 342, AFSL: 243 161 and does not take account of your objectives, fi nancial situation or needs. Please refer to Morningstar’s Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg . Past performance is not indicative of future returns.


In the 2005/2006 fi nancial year co-contribution payments totalling $84.1 million went to 112,162 QSuper members, an average of $750 per member. And, over 72% of QSuper co-contributions went to women.To ensure you don’t miss out, download the Super co-contribution fact sheet from our website, or call us for more info.

Co-contribution windfall for women

Women often have a harder time than men in saving for their retirement futures, often due to raising families, and caring for relatives.

It is estimated that a tertiary educated woman’s lifetime earnings drop by $239,000 by having one child**, which results in a massive reduction in their super at retirement. Also, as many as 50% of women retiring in the next 10 years will have less than $20,000 in superannuation**.

To help deal with these issues, QSuper has developed a free Women & super seminar which is being held at various locations across Queensland in the second half of 2006. The seminars are designed to give women a better understanding of the unique challenges facing them and assure them that it is not too late to make smarter choices for the future.

Check out QSuper’s website for details. *www.hreoc.gov.au**www.women.nsw.gov.au

Standard contributionIf you are a permanent or temporary employee (and work for a core Queensland Government department), it is compulsory for you to contribute to your super. Your standard contribution is what you pay in, and is a percentage of your base salary, which normally is 5%. If you pay 5%, your employer contributes 12.75%, which is more than the super guarantee amount of 9%. You can contribute less than 5% (down to 2%), however, this means your employer will also contribute less (down to 9.75%). If you are a casual employee it is not compulsory for you to contribute, however if you do, you will receive the higher contribution from your employer. This does not apply if your employer provides only the super guarantee level of contribution, or if you are a former employee, or the spouse of a member.

Voluntary contributionAn additional amount you contribute to your super, either by payroll deduction or as a lump sum. Your employer does not match these contributions.

Spouse contributionA contribution made by one spouse (known as the contributing spouse) to the other spouse’s (known as the receiving spouse) account. The contributing spouse may be able to claim a tax deduction if certain criteria are met.

Co-contributionA payment made by the Commonwealth Government into your super to encourage you to save for retirement. If your income is less than $28,000, for every $1 you contribute (as an undeducted contribution) the Government pays $1.50 (up to a maximum of $1,500 per year). The super co-contribution gradually reduces for incomes over this amount and ends when your income reaches $58,000.

Undeducted contributionContributions made after 30 June 1983, that you have already paid income tax on, and not received a tax deduction for. When you retire this amount is tax free.

Salary sacrifi ceAn agreement between you and your employer where your super contributions are paid from your salary before income tax is deducted. This reduces your taxable income and your tax is less. Contributions made through a salary sacrifi ce arrangement are not undeducted contributions, and do not qualify for the co-contribution.

Reasonable benefi t limit (RBL) A dollar amount that ‘caps’ the amount of concessionally taxed benefi ts you can receive from super. In the 2006/2007 Budget, the Commonwealth Government has proposed to abolish RBLs from 1 July 2007.


We all know super has a language of its own and can

sometimes be diffi cult to understand. So to help shed some

light on the topic, we’ve put together these explanations of

some of the more common terms you might come across.

round up We want to keep you informed on changes to superannuation that affect you. Here we give you an update on the latest changes to superannuation you should be aware of.

Super changes

Portability changesIf you are working outside the Queensland Government, under new portability legislation, you may be able to transfer amounts from the fund your employer uses to QSuper. The other funds will have their own rules governing if, when, and what amounts can be transferred from your account with them to your preferred account (i.e. QSuper). So you’ll need to contact your other super fund to see if this is possible.

Employer contributionsYou may be eligible to receive higher employer contributions under changes to superannuation legislation.

Effective from 1 July 2008, all employers must meet each employee’s entitlement to the superannuation guarantee by calculating a minimum contribution of 9% of ordinary time earnings (OTE). The defi nition of OTE salary can include a range of allowances not included in QSuper’s defi nition of salary. However, many QSuper members will not be affected by these new rules as they already receive employer contributions in excess of the new requirements.

QSuper’s salary defi nition remains the basis for calculating benefi ts, and for standard member and employer contributions. Where the OTE contribution is higher than the standard employer contribution, the employer will contribute the higher amount.

Employees of core government agencies will receive employer superannuation contributions taking OTE into account from 1 July 2006 – 2 years ahead of the required introduction date. All other employers will introduce the changes by 1 July 2008.

More information on OTE can be found at www.ato.gov.au , or you can contact your employer to fi nd out how it may affect your employer contribution.

Contribution splittingCommonwealth Government legislation now enables you to split your Accumulation account contributions made after 1 January 2006, and transfer some of them to your spouse’s account.

Splitting contributions and building two super accounts can be more tax effective than having one large account, particularly between ages 55 and 60. There are various rules on what contributions can be split.

The Commonwealth Government’s 2006/2007 Budget proposal may reduce some of the taxation advantages of contribution splitting. See pages 8 and 9 for more info on the Budget proposals, and visit our website for more details on contribution splitting.

Transition to retirementFrom 1 July 2006, QSuper has been able to offer working members a method of accessing part of their super benefi t. This is available to you when you reach your preservation age (55 to 60 depending on your date of birth) and wish to access part, or all, of your super using a QSuper Allocated Pension account to provide a tax-effective income.

With transition to retirement you could:• maintain the same income and reduce

working hours;• maintain the same income and pay more

into super; or• tailor income (increase or decrease) to

suit your needs while continuing to build superannuation for retirement.

For more info download the Transition to retirement fact sheet from our website, or give us a call.

QSuper may be calling you!With over 450,000 members, it’s a challenge to know what your individual needs are! To fi nd out what you want from your fund, we regularly undertake market research.

Sometimes QSuper staff will contact you, and other times this research is contracted out to market research fi rms. Formal agreements ensure these fi rms comply with strict standards set by QSuper and national privacy legislation. If you are ever contacted for QSuper research, rest assured your participation is voluntary and confi dential.

QSuper values your privacy and the security of your personal information, and follows the requirements of the Queensland Government’s privacy scheme, which is consistent with the Commonwealth Government’s Privacy Act. The personal data we supply to researchers is generally limited to your name and contact details, and the results we receive never identify you. If you are ever in doubt about a call from a researcher, feel free to contact us to verify the call.



Market overview

Beverley MorrisQIC Chief Economist

and what’s ahead

Economic overview

John Gethin-JonesQIC General Manager Global Equities

Sharemarkets

Another year of bumper returns from global sharemarkets has delivered double-digit returns for the QSuper Balanced option for the third year in a row. Robust economic growth in the world’s major economies has driven international shares higher, and strong commodity prices has seen the Australian sharemarket scale new heights.

While returns were strong at the end of fi nancial year, investors were given several reminders of how volatile sharemarkets can be. In early October 2005 sharemarkets fell by around 6% over a matter of days, due to concerns that Hurricane Katrina in the US and the resultant higher oil prices would stall economic growth. Late in the year the market fell by around 5%, following concerns about rising infl ation.

For QIC this recent infl ation rise was expected, and is simply a result of the strong global economic growth we have been seeing in recent years. As excess production capacity was utilised and the labour market tightened, costs and prices were driven higher.

The risk is that infl ation continues to rise, and central banks are required to raise interest rates to a level that will severely constrain economic activity. However, we do not anticipate an infl ation breakout that could derail the world economy. Most major economies including the US, Europe, and Australia have already raised interest rates, and the impact of these rises is likely to keep infl ation under control.

We expect global economic growth to slow in 2006/2007, but the slowdown to remain mild. While interest rates have risen, they remain relatively low. Under these conditions, we expect a ‘soft landing’ for the global economy.

The Australian sharemarket was one of the best performing markets in 2005/2006, returning more than 23%. A combination of good corporate profi ts, favourable merger and acquisition activity, and record prices for Australian produced commodities saw the market reach record levels.

Our experienced team, stock selection skills, and investment process allowed us to identify the better performing companies and continue to provide solid returns for you. Despite the strong returns in recent years the outlook for the market remains optimistic. The major factors behind this optimism being:• solid economic performance of our major trading

partners (China and Japan); • a generally robust Australian economy; • a positive profi t outlook albeit at growth rates lower

than recently experienced;• ongoing low interest rates despite the recent rises; • stronger corporate balance sheets; and• the impact of additional tax cuts in the second half of

2006.

The major risk to the Australian market is a large fall in commodity prices. While declines may occur, they are likely to be moderate, in line with the mild slowdown expected in world economic activity.

International sharemarkets fi nished the fi nancial year 17% higher, as investors gained confi dence in the strength of the global economy throughout the year. The standout performers were the Japanese market that rose 36%, and Europe that gained 21%. After a long period of poor economic performance Japan’s economy is growing strongly, and supported by consumer confi dence, an improving employment market, and strong consumer and investment spending.

The outlook for international shares is positive, with the main risk being that US interest rates are raised higher than expected in an attempt to contain infl ation.


In this feature, QIC experts review global economy shifts, and sharemarket performance for the 2005/2006 fi nancial year, as well as give their predictions for the future.

Susan BuckleyGeneral Manager QIC Global Fixed Interest

Laurie BrindleHead QIC Global Real Estate

Global fi xed interest

Property

Rising cash rates and bond yields across global markets were the major infl uences on fi xed interest returns last fi nancial year. In a rising interest rate environment bond prices fall, and accordingly returns on fi xed interest (bonds) portfolios were lower than the previous few years. Investors can also receive additional returns for investing in corporate bonds, however, the premium received for taking additional risk has also reduced over the fi nancial year.

Though the overall market return was lower, the QIC Global Fixed Interest team achieved returns above the market for QSuper members by anticipating many of the market trends. These strategies included allocations across countries, sectors (e.g. mortgages and corporate bonds), as well as individual security selection. A proven investment process implemented by a skilled and disciplined investment team provided the foundation for this successful performance.

Over the coming year, the return on bonds will largely depend on how much interest rates are raised (particularly in the US) in order to control infl ation. Our expert team will continue to use their skills and research to identify opportunities to achieve superior returns for you.

Susan’s investment industry peers voted her Bond Fund Manager of the Year 2005 in the Insto 7th Annual Distinction Awards.

Both the retail (shopping centre) and commercial offi ce building markets performed well in Australia last year. The high demand for quality regional shopping centres and CBD offi ce buildings from both Australian and international investors saw the value of the property portfolio increase substantially.

With the asking price of both retail and commercial properties high in Australia, we focused on expanding and developing existing properties, as well as constructing new commercial offi ce buildings in the fast growing Brisbane, Canberra, and Gold Coast markets.

Vacancy rates in the Brisbane CBD have fallen to a record low. With only a limited amount of new buildings coming onto the market over the next 2 years, strong rental growth is forecast. This is positive for both our existing commercial buildings and new major developments. New developments include the construction of Central Plaza Three – a high quality commercial offi ce building adjacent to Central Plaza One and Two in Brisbane’s CBD and also owned by

QIC. This is in addition to another commercial offi ce development on the corner of Albert and Elizabeth Streets in Brisbane. Both these developments are planned for completion in the next few years.

While consumer spending is expected to slow moderately, the outlook for the QIC shopping centres remains positive. The commercial offi ce markets in Sydney and Melbourne are likely to improve, and the Brisbane market should remain strong. This points to another solid year for the QIC property portfolio.

In addition to continuing development of existing properties in Australia, our major challenge for the coming year is identifying and investing in opportunities overseas.

DisclaimerQIC (ABN 95 942 373 762) and its subsidiaries and associated entities, and their directors, employees and representatives (the QIC parties) do not warrant the accuracy or completeness of this information. To the extent permitted by law, the QIC parties disclaim all responsibility and liability for any loss or damage of any nature whatsoever which may be suffered by any person, directly or indirectly, through relying on the information, whether that loss or damage is caused by any fault or negligence of the QIC parties or otherwise. The information is not intended to constitute advice and you should seek professional advice before relying on the information.

Investment objectives and asset allocations as at 1 July 2006

BALANCED CASH PLUS SOCIALLY RESPONSIBLE

HIGH GROWTH

Suited to medium to long-term investors who want exposure to assets with potentially higher returns

Suited to investors who are seeking short to medium-term stability

Suited to medium to long-term investors who want an approach that considers the investment’s impact on society and the environment


Objectives

To achieve an average return over rolling 5-year periods of CPI + 4% p.a., after fees and tax


To achieve an average return over rolling 5-year periods of CPI + 3.5% p.a., after fees and tax


Asset allocation Asset allocation Asset allocation Asset allocationRanges Ranges Ranges Ranges

Cash 0%–25% 50%–62.5% 0%–6% -2%–10%Fixed interest 15%–25% 7.5%–12.5% 17%–29% n/aProperty 5%–15% 2.5%–7.5% 3%–21% 0%–10%Australian shares 25%–35% 12.5%–17.5% 39%–45% 20%–40%International shares 20%–30% 10%–15% 17%–23% 35%–55%Alternative assets 0%–10% 0%–5% n/a 0%–20%

BALANCED CASH PLUS SOCIALLY RESPONSIBLE

HIGH GROWTH

Actual asset allocationsYear ended 30 June




2005 2006 2005 2006 2005 2006 2005 2006Cash 9.5% 12.1% 54.7% 56% 8.6% 6.1% 0.3% 0.4%Fixed interest 16.2% 20.9% 8.1% 10.5% 17.1% 19.6% 0% 0%Property 8.0% 6.9% 4.0% 3.5% 0% 11.9% 0% 0%Australian shares 34.8% 31.9% 17.4% 15.9% 37.8% 41.5% 35% 35%International shares 31.5% 28.2% 15.8% 14.1% 36.5% 20.9% 64.7% 64.6%

100% 100% 100% 100% 100% 100% 100% 100%

Crediting rate** Crediting rate** Crediting rate** Crediting rate**

Accum AP Accum AP Accum AP Accum AP2005/2006 12.87% 14.50% 8.80% 10.07% 15.29% 16.99% 14.66% 16.98%

Net return history Net return history Net return history Net return historyAccum AP Accum AP Accum AP Accum AP

2001/2002 -4.15% -4.57% 0.03% -0.01% n/a n/a -11.98% -13.14%2002/2003 -2.37% -2.59% 0.99% 1.26% n/a n/a -3.86% -4.40%2003/2004 16.06% 17.65% 9.93% 11.30% n/a n/a 20.72% 23.60%2004/2005 15.11% 17.04% 9.77% 11.12% 2.10%*** 2.40%*** 16.00% 18.08%2005/2006 14.76% 16.59% 9.65% 11.04% 16.68% 18.56% 17.70% 20.42%3 yr comp. avg. (p.a.) 15.31% 17.09% 9.78% 11.15% n/a n/a 18.12% 20.68%5 yr comp. avg. (p.a.) 7.49% 8.33% 5.98% 6.82% n/a n/a 6.88% 7.86%*Please note these investment returns do not relate to the investment objectives shown above, but relate to the previous objectives that applied up to 30 June 2006. If you would like more information, please give us a call.

Accum = Accumulation account | AP = Allocated Pension account

When you invest money in one or more investment options, you purchase a number of units (which work like shares). When returns are received on investments, your units increase in value. On an annual basis, investment returns are

2005/2006 returns*

The table below shows the objectives for QSuper’s investment options. These objectives changed from 1 July this year, and are now reported on an after fees and tax basis. The actual amounts invested in different asset types vary

Accumulation and Allocated Pension accounts


CONTINUED NEXT PAGE

CASH FIXED INTEREST

AUSTRALIAN SHARES

INTERNATIONAL SHARES

Suited to very short-term investors who want to protect the value of their investments

Suited to short to medium-term investors who are seeking steady returns



To capture the return of a broadly diversifi ed portfolio of cash investments after fees and tax

To capture the return of a broadly diversifi ed portfolio of global fi xed interest investments after fees and tax

To capture the return of a broadly diversifi ed portfolio of Australian shares after fees and tax

To capture the return of a broadly diversifi ed portfolio of international shares after fees and tax

Objectives

Asset allocation Asset allocation Asset allocation Asset allocationRanges Ranges Ranges Ranges100% 0%–5% 0%–5% 0%–5% Cashn/a 95%–100% n/a n/a Fixed interestn/a n/a n/a n/a Propertyn/a n/a 95%–100% n/a Australian sharesn/a n/a n/a 95%–100% International sharesn/a n/a n/a n/a Alternative assets

CASH FIXED INTEREST

AUSTRALIAN SHARES

INTERNATIONAL SHARES





2005 2006 2005 2006 2005 2006 2005 2006100% 100% 0% 0% 0% 0% 0% 0% Cash0% 0% 100% 100% 0% 0% 0% 0% Fixed interest0% 0% 0% 0% 0% 0% 0% 0% Property0% 0% 0% 0% 100% 100% 0% 0% Australian shares0% 0% 0% 0% 0% 0% 100% 100% International shares100% 100% 100% 100% 100% 100% 100% 100%

Crediting rate** Crediting rate** Crediting rate** Crediting rate**Accum AP Accum AP Accum AP Accum AP4.85% 5.78% 1.92% 2.32% 20.27% 21.29% 11.47% 13.22% 2005/2006Net return history Net return history Net return history Net return historyAccum AP Accum AP Accum AP Accum AP3.65% 4.38% n/a n/a n/a n/a n/a n/a 2001/20023.88% 4.64% n/a n/a n/a n/a n/a n/a 2002/20034.37% 5.20% n/a n/a n/a n/a n/a n/a 2003/20044.73% 5.63% 4.24%*** 5.05%*** 7.12%*** 7.38%*** 3.92%*** 4.55%*** 2004/20054.85% 5.78% 2.15% 2.58% 23.32% 24.47% 14.47% 16.71% 2005/20064.65% 5.54% n/a n/a n/a n/a n/a n/a 3 yr comp. avg. (p.a.)4.29% 5.13% n/a n/a n/a n/a n/a n/a 5 yr comp. avg. (p.a.)* *Crediting rates 2005/2006. Note the 2005/2006 crediting rates differ from net returns, due to the 2-day lag in unit prices. ***Based on partial year (option commenced 1 January 2005).

from time to time. The management of these asset allocations occur within set ranges (as shown below), and give QIC, QSuper’s investment manager, the fl exibility to take advantage of investment opportunities.

reported as crediting rates, as shown in the table below. These crediting rates are net of management and tax expenses, and apply to members who have remained in the option/s for the entire year, and made no transactions.



Derivative policyDerivatives are investment products where the value is linked to the value of another investment product, e.g. shares. Derivatives can be bought and sold and may be used to protect an investment portfolio against unfavourable movements, or to switch funds between different investments cost effectively. The QSuper Board of Trustees has obtained and accepted a risk management statement from QIC, which defi nes how QIC can use derivatives. Derivatives have not been used for speculative purposes.

Assets above 5%The following QSuper options had exposures over 5% at the end of the fi nancial year:

Allocated Pension and Accumulation accounts Cash option: 8.39% exposure to National Australia Bank Floating Rate Notes and Bank Bills; Allocated Pension and Accumulation accounts Australian Shares option: 9.82% exposure to BHP Billiton Limited and 5.46% exposure to ANZ Banking Group Limited; Allocated Pension and Accumulation accounts Fixed Interest option: 5.67% exposure to Japanese Government Bonds and 5.00% exposure to Queensland Treasury Corporation Bonds.

ReservesReserves are held aside to pay for specifi c items as they occur. They cover insurance for death and disability, income tax liabilities, and general administration costs, and operate within an established reserving policy, approved by the QSuper Board of Trustees. The reserves are held in a mixture of cash and balanced investments.30 June 2006 30 June 2005 30 June 2004$523.56m $354.52m $268.11m

Top 5 property investments 30 June 2006 Top 5 international shareholdings 30 June 2006 Top 5 Australian shareholdings 30 June 2006

Castle Towers Shopping Centre, Castle Hill, Sydney, NSW Microsoft Corporation BHP Billiton Limited

Canberra Centre, Civic, Canberra, ACT Citigroup Incorporated ANZ Banking Group Limited

Westpoint Shopping Centre, Blacktown, Sydney, NSW Bank of America Corporation Woolworths Limited

Central Plaza Complex, Brisbane, QLD Honeywell International Incorporated Commonwealth Bank of Australia

Eastland Shopping Centre, Ringwood, Melbourne, VIC JPMorgan Chase and Company Westpac Banking Corporation

CONTINUED FROM PREVIOUS PAGE

Defi ned benefi t accountsThe table below shows the objective for QSuper’s defi ned benefi t accounts. This objective changed from 1 July this year, and is now reported relative to AWOTE* (previously CPI). The asset allocation ranges applying from 1 July 2006 are also set out below. The actual amounts invested in different asset types vary from time to time. The management of these asset allocations occur within set ranges (as shown below), and give QIC the fl exibility to take advantage of investment opportunities.

ObjectiveTo achieve an average return over rolling 10 year periods of AWOTE* plus 3.0% per annum, after fees and tax

Asset allocationRanges from 1 July 2006 2005 Actual allocation** 2006 Actual allocation**

Cash 0%–15% 3.2% 20.4%Fixed interest 15%–45% 6.2% 18.9%Property 5%–15% 9.6% 10.1%Australian shares*** 20%–30% 39.6% 23.8%International shares 20%–30% 41.4% 26.8%Alternative assets 0%–15% 0.0% 0.01%

Total n/a 100% 100%*AWOTE is a measure of wage and salary levels of employees in Australia, as measured by the Australian Bureau of Statistics and published monthly.**Please note these actual asset allocations do not relate to the investment objective and ranges shown above, but relate to the previous objective that applied up to 30 June 2006. If you would like more information, please give us a call.***The allocation to Australian shares includes an investment in Q Invest Limited.

Most defi ned benefi t members are not affected by investment returns, as the fi nal benefi t is determined by a formula based on your salary, contribution rate, and length of membership. The crediting rates are net of fees deducted for management, insurance, and tax expenses, and apply to your personal contributions for your defi ned benefi t account, but do not affect the fi nal benefi t you will receive. The details below are provided as information to members as part of our commitment to comprehensive reporting.

Investment returns–defi ned benefi t accountsYear Defi ned Benefi t State Police

Net earning rate

Crediting rate****

Net earning rate

Resignation crediting rate****

Preservation crediting rate****

Net earning rate

Resignation crediting rate****

Preservation crediting rate****

2005/2006 16.67% 12.87% 16.67% 12.47% 12.87% 16.67% 12.47% 12.87%2004/2005 16.57% 15.38% 16.57% 14.98% 15.38% 16.57% 14.98% 15.38%2003/2004 18.76% 15.26% 18.76% 14.86% 15.26% 18.76% 14.86% 15.26%2002/2003 -2.40% 0% -2.40% 0% 0% -2.40% 0% 0%2001/2002 -4.90% 0% -4.90% 0% 0% -4.90% 0% 0%

Compound average5 year (p.a.) 8.44% 8.46% 8.44% 8.23% 8.46% 8.44% 8.23% 8.46%

****A smoothing policy applies to defi ned benefi t accounts to reduce the volatility of the yearly crediting rates. Therefore, the crediting rates might be lower than the net earning rates when markets perform well, while the opposite may occur when markets underperform.

Investment objective and asset allocations as at 1 July 2006

2005/2006 returns

Enquiries and complaints QSuper has procedures in place to ensure any enquiries or complaints are dealt with fairly and promptly. In most cases we will advise you of an outcome within 14 days. You can download QSuper’s Enquiry and complaints procedure fact sheet from the QSuper website.

If you have a complaint about QSuper, either call us, or write to the Enquiries and Complaints Offi cer, QSuper, GPO Box 200, Brisbane Qld 4001, and mark your letter ‘Notice of enquiry or complaint’.

If you are not satisfi ed with the outcome of your complaint, you can take the matter to the Superannuation Complaints Tribunal

(SCT), an independent body set up by the Commonwealth Government to assist members only after they have made use of QSuper’s internal complaints procedure.

If you wish to fi nd out whether the SCT is able to handle your complaint, you should contact them on 1300 780 808, or visit their website at www.sct.gov.au .

QSuper member and employer funds as at 1 July 2005 = $15,682.74m

TOTAL ASSETS $19,362.66m TOTAL LIABILITIES $305.19mInvestments $19,339.60m Provision for fund tax -$16.84mOther assets $23.06m Other liabilities $322.03m

QSuper member funds as at 30 June 2006 $18,770.83mQSuper employer funds as at 30 June 2006 *$286.64mNet assets available to pay benefits at 30 June 2006 $19,057.47m

*Note: This amount represents Defi ned Benefi t advance employer funding.

Fund accountsThis summary of the Fund’s fi nancial position was prepared before the audit of the accounts, using information available at the time of publication. The audited fi nancial statements and auditor’s report will be available from QSuper on request in November 2006.

Financial highlights and summary 2005/2006

Total infl ows $4,842.99m

Investment income $2,627.71mEmployer contributions $963.16m Member contributions $878.11mTransfers in $373.48mOther income $0.53m

Total outfl ows $1,468.26m

Benefi ts paid $1,229.93mAdministration expenses $55.51m Income tax expense $169.55mOther expenses $13.27m

Simply tell us, in 50 words or less, what QSuper means to you and you will go into a random draw to win an Investment Access Funds account worth $2,000.

The Boost your fi nances competition closes on 31 December 2006, so visit our website and get your entry in.

For more information, including the competition terms and conditions, visit the competition page of the QSuper website at qsuper.qld.gov.au .You could boost your fi nances with an

YOURBOOSTFINANCES

Q Invest’s Investment Access Funds can help you build savings through both lump sum deposit and regular contribution options. Q Invest is the responsible entity for the Investment Access Funds. You should consider the current product disclosure statement (which has the application form attached), in deciding whether to acquire, or continue to hold, the product.

Investment AccessFunds account of$2,000!

Superannuation surchargeThe superannuation surcharge was abolished from 1 July 2005. Any existing surcharge liabilities remain payable and will generally be paid when you fi rst withdraw money from your account.

Prize proudly donated by

Q Invest Investment Access Funds


Is your superout of control?

We’ve made it Easy to handle.Keep track of all your super in one account by rolling over to QSuper.

Complete the enclosed Easy transfer form today, or visit our website

or call us on 1300 360 750 for additional forms!

qsuper.qld.gov.auWe recommend you obtain and read the product disclosure statement (PDS) relevant to you before making a decision to invest.

These PDSs are available from our website, or by calling us.

making your money work - qsuper fund · 2005/2006 has also been a year of considerable change for...

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