REPORT MEMBERS - State Super...KEY FACTS AT 30 JUNE 2010 MEMBER SERVICES n 2,777 personal interviews conducted n 5,064 members attended a seminar n 5,152 items of correspondence received

REPORT MEMBERS

www.statesuper.nsw.gov.au

ABN: 29 239 066 746

KEY FACTSAT 30 JUNE 2010

MEMBER SERVICESn 2,777 personal interviews conducted

n 5,064 members attended a seminar

n 5,152 items of correspondence received by post

n 9,438 items of correspondence received by email

n 106,378 telephone calls from members

MEMBER STATISTICSn 44,022 active members in SASS

n 17,855 active members in SSS

n 2,138 members in PSS

n 14,217 deferred benefit members

n 57,790 pensioners

SALARY SACRIFICECONTRIBUTIONS% of members salarysacrificing in:

SASS SSS PSS

51% 71.3% 52.5%

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TAX FILE NUMBERS: TIME HAS RUN OUTThere are still 630 members who have not provided our administrator with their TFN, or who havean invalid TFN recorded against their personal details.

These members will be taxed an additional 31.5% on all employer contributions (including salarysacrifice contributions) received after 1 July 2007. Scheme legislation has been amended to allowthe Trustee to recover the additional tax from members. The provisions will be effective from thedate of proclamation (likely to be in early October 2010).

Please check the Personal Details of your annual benefit statement to ensure a valid TFN has beenrecorded for you.

We recommend that you discuss the effects of not providing your TFN with your financial planneror accountant.

Chairperson’s report 4 – 5

CEO’s report 6 – 7

Your Trustee Board* 8 – 9

Your STC Schemes at a glance 10

Investment performance 11

How is the Pooled Fund invested? 12 – 13

Investment Update 14 – 16

How is the Pooled Fund managed? 17

Pooled Fund Investment Managers 18

Commonwealth & Scheme Update 19

Environmental, Social and Governance (ESG) Policy 20 – 21

Key tax tables 22 – 23

Direct fees 24

Indirect fees 25

Compliance 26

Complaints and disputes 27

Financial reports at 30 June 2010 28 – 29

What information is available? 30

Contact details 31

CONTENTS

*Trustee Board means the Board of the Trustee, SAS Trustee Corporation (STC). STC is the Trustee ofthe closed NSW Public Sector superannuation schemes – SSS, SASS, PSS and SANCS.

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CHAIRPERSON’S REPORT

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THE YEAR IN REVIEW

There was encouraging newslast year.

Markets continued to be veryvolatile but overall the PooledFund earned a significantpositive return being 9.5% forthe year to 30 June 20101. Earlyon, valuations surged ahead asequity markets rebounded.However late in the year therewas something of a correctionas it became apparent thatmarkets had been too optimisticabout the strength of therecovery in the world economy.

The Trustee Board had theFund positioned to benefitfrom a recovery in globalmarkets but the Fund also haddefensive qualities to provide adegree of protection if marketswere to fall. Notwithstandingthe funds defensive positions,we were able to earn a returnnot that different from the9.9% earned by similar superfunds2. Over longer periods,the Fund remains comfortablyahead of the median superfund.

We can anticipate continuedvolatility as markets come togrips with a global recoverythat at times may look patchyand uncertain, particularly indeveloped countries. We aremore optimistic aboutemerging economies.Notwithstanding theuncertainties, we continue tobelieve that a well diversifiedgrowth oriented portfolio witha range of defensive assetsstrikes the right balance.The Board is working hard toprovide better services to

1 The investment return is 9.5%. The declared rate is 9.2% after taking into account fund assets and liabilities not underinvestment custody such as tax obligations and operating cash.

2 Mercer Survey of Superannuation Funds (60-80% growth assets)

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members. In April 2010 weintroduced Multiple InvestmentChoice for SASS members andSASS members were able toaccess benefit quotes onlinefrom September 2010. We aredoing further work on our newadvice model. Late last year webecame a 100% owner ofState Super Financial Services(SSFS), purchasing theremaining equity held by ARIA,the large super fund forCommonwealth publicservants. SSFS now has a keyrole in providing advice to our

members about their StateSuper entitlements. And whenit comes to retirement, SSFS isable to advise our members onhow they might structure theirinvestments.

I would like to welcome BobLipscombe who is the Presidentof the NSW TeachersFederation and joins the Boardas a new employeerepresentative. Bob replacedMaree O’Halloran. I particularlywant to acknowledge the veryimportant contribution that

Maree made to the Board andwish her well in her newactivities.

Dr Don RussellChairpersonSeptember 2010

ABOUT YOUR CHAIRPERSONAs well as being Chairperson of State Super, Dr Don Russell is also the Independent Chairof the Investment Committee of LUCRF a Melbourne based superannuation fund. UntilMarch 2010, he was Global Investment Strategist at BNY Mellon Asset ManagementAustralia. He joined WestLB Mellon Asset Management (Australia) in 2001. Between 1997and 2000, Dr Russell worked in New York for Sanford C. Bernstein, a money managementand research company. Between 1985 and 1993 and again in 1996, he was PrincipalAdviser to the Hon Paul Keating during his time as Treasurer and Prime Minister. Between1993 and 1995 he served as Australia’s Ambassador to the US in Washington. Dr Russellworked for the Commonwealth Treasury; when he joined Paul Keating’s Office in 1983 hewas Assistant Secretary, Economic Branch where he was responsible for economic forecastsand assessments of the Australian economy. Dr Russell was at various times a consultantto the World Bank, Bankers Trust, Westpac Bank and Counsellor in the Australiandelegation to the OECD in Paris. Dr Russell has a PhD from the London School ofEconomics, a MEc from ANU and a BEc (Hons) from Flinders University. Dr Russell alsoholds the Chartered Financial Analyst designation (CFA) 2007.

CEO’S REPORT

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STC PERFORMANCESTC’s investment performanceover the last year reflectedmuch stronger investmentconditions in growth asset(shares and property) marketscompared to the previous year.The declared crediting rate forthe Growth Strategy of 9.2%represented a positiveturnaround of nearly 20% onthe previous year’s return of -10.3%. While this outcome ismore pleasing in an absolutesense, in the ten years to 30 June 2010, the return forthe Growth Strategy was belowthe primary objective ofachieving CPI+4.5% p.a. In fact,four of the last ten financialyear returns have been negativewhich makes the experience ofthe last decade unusually poor.While this experience has beencommon across growth fundsfor the industry, STC remainsvery competitive whenmeasured next to similar fundsover this period, with STC beingranked in the second quartile ofgrowth funds for 3, 5, 7 and 10year periods to 30 June 2010.

As a long term investor, STC has

also taken steps to ensureadequate downside protectionstrategies are built into thestrategic asset allocation. A keyinitiative in this regard is theBoard’s quarterly review of theongoing appropriateness of thestrategic asset allocation inrelation to prevailing marketconditions and to capitalise onrelative value opportunities.

STC continues to produceabsolute return volatility lowerthan comparable funds and hasmade more explicit its objectiveto provide a pattern of returnsthat is more defensive whenmarkets are falling. This hasbeen achieved in practice through:

• The establishment of aprogram for alternative assets,which do not tend to behavewith the same level of volatilityas listed equity markets;

• The maintenance of a fixedincome allocation,predominantly comprised ofsovereign bonds and cashwhich produces absolutecapital protection in fallingmarkets; and

• The development of further

diversification of assets andstrategies within the PooledFund.

The investment implementationprogram has seen a number ofmanager changes over the lastyear with the major equitiesasset classes reviewed forperformance and value. Thenumber of managers in theseasset classes has been slightlyreduced overall with meaningfulimprovement to cost outcomesand conviction in the managersretained by STC.

KEY ENHANCEMENTSDuring late 2009, the STCBoard approved an expansionof STC’s seminar programthrough the introduction of“Understanding YourSuperannuation” seminars as apilot program in 2010. Theobjective of these seminars is toextend the availability ofseminars with relevant contentto all STC members. Memberresponse has been favourableso STC will continue to offerthese seminars in 2011.

STC implemented multipleinvestment choice for SASS

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ABOUT YOUR CEOChris Durack trained as an economist at Melbourne University (undergrad) and SydneyUniversity (post grad) and is also a Fellow of FINSIA.

Mr Durack started his career in Canberra working for the Australian Bureau of Statisticseventually moving to Sydney working as a research economist. He then moved into assetconsulting where he ran research functions and consulted to large superannuation andinvestment clients. From there, he progressed into funds management where hemanaged investment teams and external relationships. Mr Durack joined State Super inFebruary 2009 as the CEO.

members in April 2010 enablingmembers to select investmentoptions in the proportions oftheir choice. (See page 19)

Provision of online benefitquotes for SASS members wasanother initiative implementedduring the year with membersable to access online quotesfrom September 2010.

STC also increased its ownershipof State Super Financial Services(SSFS) to 100% during the year.SSFS offers financial planningservices to STC’s membersunder an access agreement toensure members continue tohave access to high quality andcost competitive advice inrelation to their superannuationand retirement planning.

REVIEW OF MEMBERSERVICESIn 2009, STC reviewed theadvice services it provides to itsmembers and established thefollowing principles:

• All members of STC Schemesshould have access toinformation and advice inrelation to investment

decisions related to their super.

• STC outsources the provisionof its advice services to SSFS –the quality of the adviceprovided is paramount andalignment of planners with thebest interest of clients iscritical.

• STC offers at no charge tomembers, access to seminarsand other resources, includingan expanded range of self-help tools, to assist inunderstanding their benefitsand Scheme rules.

• STC offers at no charge tomembers, advice servicesthrough SSFS to members toassist their decision makingaround their benefits.

• STC offers commerciallycompetitive advice servicesthrough SSFS to members toassist them to make decisionsin relation to their overallfinancial needs.

THE YEAR AHEADSTC retains a steady focus onmeeting its core objectives:

• Achieving the investmentobjectives set by the Board to

generate real returns formembers in an environmentthat will continue to challengeinvestors; and

• Providing relevant and qualityservices to members costeffectively.

Our team continues to applyitself to delivering theseobjectives efficiently, with astrong focus on riskmanagement and in acollaborative manner with all ourstakeholders and serviceproviders. As always wewelcome the feedback from ourmembers and one of our keyinitiatives for the coming yearincludes surveying members inearly 2011 to ensure that theservices offered (including thenew initiatives rolled out and theway in which they are delivered)meet members’ requirements.We will continue to pursuerelative value in markets wheredislocation is generating bothrisk and opportunities andaddress the CommonwealthGovernment’s new industryrequirements following itsresponse to the Cooper Review.

YOUR TRUSTEE BOARD

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HOW YOURTRUSTEE BOARD ISAPPOINTED

YOUR TRUSTEE BOARDThe SAS Trustee Corporation (STC) is the Trustee of the group of closed NSW Public Sectorsuperannuation schemes known as the STC Schemes. The Board of the Trustee (the Trustee Board) isrequired to act in the best interests of scheme members.

The functions of the Trustee Board include the administration of the schemes, the determination ofdisputes, payment of benefits, and the investment and management of funds. The Trustee Boardand each Director are covered by professional indemnity insurance.

The STC Schemes are:SASS - State Authorities Superannuation SchemeSSS - State Superannuation SchemePSS - Police Superannuation SchemeSANCS - State Authorities Non-contributory Superannuation Scheme

The assets of the STC Schemes are known as the Pooled Fund. STC holds all assets of the PooledFund in trust.

The Directors of the TrusteeBoard are appointed by theMinister (currently theTreasurer of NSW). The TrusteeBoard consists of:

• An independent chairperson;

• Four employerrepresentatives; and

• Four employeerepresentatives, nominatedby Unions NSW.

To be eligible for appointmentas Chairperson, a person musthave significant knowledge of,and experience in, the conduct

of superannuation schemes,investments, financialmanagement or publicadministration and beindependent of employers andemployees and their respectiveinterests.

To be eligible for appointmentas an employer representative,a person must have aknowledge of, and experiencein, the conduct ofsuperannuation schemes,investments, financialmanagement or publicadministration.

9

DR DON RUSSELL IAN BLAIR RON DAVIS

ROD HARTY MICHAEL LAMBERT NICK LEWOCKI

BOB LIPSCOMBE ANNE DE SALIS PAUL SCULLY

Chairperson,Independent Chair of theInvestment Committee ofLUCRF Super

Employee Representative,Advocate and IndustrialOfficer for the PoliceAssociation of NSW.

Employee Representative,President, NSW TeachersFederation.

Employer Representative,Company Director.




Employee Representative,Retired Secretary of theRail, Tram and Bus Union.

Employee Representative, Full-time Board Member.

YOUR STC SCHEMES AT A GLANCE . . .

10

All STC Schemes – SSS, SASS, PSS and SANCS – are defined benefit schemes governed underNSW legislation (see page 26). This means the retirement, retrenchment/disengagement, death anddisablement benefits are primarily calculated using a formula based on a percentage of your salaryfor each year of scheme membership. SSS and PSS members do not have investment choice with allfunds – including any Commonwealth Government Co-contribution account – invested in theGrowth Investment Strategy.

HOW SASS WORKS

Your compulsory personalcontribution “buys” apercentage of your salary atretirement for each year ofscheme membership. Forexample, a net 6% contributionin any year provides themaximum employer-financedbenefit of 15% of your FinalAverage Salary at retirement forthat year (less 15% contributiontax). A 1% contribution “buys”2.5%.

Importantly, an average 6%contribution rate throughoutyour period of schememembership provides themaximum employer-financedbenefit on retirement.

You also receive your PersonalAccount balance.

HOW SASS INVESTMENTCHOICE WORKS

Only SASS members haveinvestment choice. For SASS contributorymembers, investment choiceapplies to their PersonalAccount. For SASS deferred benefitmembers, investment choiceapplies to their whole deferredbenefit.

Investment choice does notapply to:

• the lump sum SANCS BasicBenefit

• any CommonwealthGovernment Co-contributionaccount

• any superannuationguarantee shortfall amount

The Growth Strategy is thedefault strategy that applies if aSASS member does not makean investment choice.

HOW SSS WORKS

The amount of pension youreceive depends on your salaryand the number of units youcontributed towards. While SSSprimarily provides a pension onretirement, there are variouslump sum options. The pensionis payable for life and is indexedeach year in line with CPImovements. It also containsvaluable reversionaryentitlements for eligiblespouses/defacto partners andchildren. Apart from the cashresignation benefit, investmentperformance does not affectscheme benefits as they aredefined benefits.

HOW PSS WORKS

The amount of pension youreceive when you retire dependson your salary at retirement andyour years of membership.While PSS primarily provides apension on retirement, there arevarious lump sum options. Thepension is payable for life and isindexed each year in line withCPI movements. It also containsvaluable reversionaryentitlements for eligible spousesand children as well assignificant disability provisions.Apart from the cash resignationbenefit, investmentperformance does not affectscheme benefits as they aredefined benefits.

HOW SANCS WORKS

In addition to the schemebenefits outlined above, allmembers receive the lump sumSANCS Basic Benefit.

Please note that theinformation above is notintended as acomprehensive summary ofthe STC Schemes. Furtherdetails are included in theFact Sheets (on our website)and the Scheme Acts.

INVESTMENT PERFORMANCE

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Compound declared rateper annum over 10 yearsto 30 June 2010 is 3.9%

Past performance is noguarantee of futureperformance.

GROWTH STRATEGY DECLARED RATES

DECLARED RATES

Note: The figures above are after allowance for tax and investment management expenses. Past returns are noguarantee of future returns. The value of a Personal Account balance of a SASS member, CommonwealthGovernment Co-contribution accounts and deferred benefits are not guaranteed and can go up or down withinvestment gains or losses. SASS members should seek professional financial advice to help them select aninvestment strategy that best suits their personal circumstances.

Year Ended Growth Balanced Conservative Cash CPI30 June Growth

% pa % pa % pa % pa % pa2006 15.8 11.4 8.1 4.9 4.02007 14.9 11.6 8.9 5.4 2.12008 -7.2 -3.2 0.7 6.1 4.52009 -10.3 -4.2 0.6 4.7 1.52010 9.2 8.4 7.1 3.4 3.1Compound rate:Over 2 Years -1.0 1.9 3.8 4.1 2.3Over 3 Years -3.2 0.2 2.7 4.7 3.0Over 4 years 1.1 2.9 4.2 4.9 2.8Over 5 years 3.9 4.6 5.0 4.9 3.0

Over 10 years 3.9 3.2These strategies were introduced in December 2003, therefore there are no 10 year crediting rates.

HOW IS THE POOLED FUND INVESTED?

75.9%24.1% 50.8% 49.2%

growthassets

defensiveassets

growthassets

defensiveassets

GROWTH STRATEGYInvestment objective:To exceed the CPI plus 4.5%pa. over rolling 10 year periods.

Risk: There may be volatility in annual returns andthere is a chance that a negative return may berecorded, on average 2 years in 8 years. Thismeans that on average the risk of a negativereturn in any one year is 25%.

Net Asset Value of Growth Strategy at 30 June 2010: $30,328.3 million

Asset Allocation at 30 June 2010

BALANCED STRATEGYInvestment objective:To exceed the CPI plus 3.0%pa. over rolling 7 year periods.

Risk:There may be volatility in annual returns andthere is a chance that a negative return may berecorded, on average 2 years in 12 years. Thismeans that on average the risk of a negativereturn in any one year is 17%.

Net Asset Value of Balanced Strategy at 30 June 2010: $158.6 million


ASSET SECTOR ALLOCATION

2009 2010 % %Australian Equities 32.3 29.7International Equities 26.1 26.8Property 9.7 9.5Alternative Assets 12.8 14.2Australian Fixed Interest 6.3 6.0International Fixed Interest 4.7 4.2Cash 8.1 9.5 100.0 100.0



ASSET ALLOCATION

The proportions allocated to growth and defensive assets remain within a margin of plus orminus 5% of the percentages shown. However, the allocation to the asset sectors that makeup these broader categories may change. Asset allocations are formally reviewed at leastonce a year and are monitored throughout the year.

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70.4%

29.6%100%

defensiveassets

growthassets

defensiveassets

CONSERVATIVE GROWTH STRATEGYInvestment objective:To exceed the CPI plus 2.0%pa. over rolling 4 year periods.

Risk: There may be volatility in annual returns andthere is a chance that a negative return may berecorded, on average 1 year in 9 years. Thismeans that on average the risk of a negativereturn in any one year is 11%.

Net Asset Value of Conservative GrowthStrategy at 30 June 2010: $88.6 million


CASH STRATEGYInvestment objective:To exceed the CPI plus 1.5%pa. over rolling 3 year periods.

Risk: N/A.

Net Asset Value of Cash Strategy at 30 June2010: $167.7 million






Notes: The return objectives for the variousinvestment strategies are expected to beearned with reasonable likelihood over therolling periods specified. However, annualreturns may be volatile and negative returnsmay occur in consecutive years. The aboveindicative likelihood of negative returns hasbeen determined over a number of years.

Growth assets include equities, property and50% of alternative assets.*Defensive assets include cash deposits, fixedinterest securities and 50% of alternative assets.*

* alternative assets include unlisted equities, infrastructure andabsolute return funds.

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INVESTMENT UPDATE

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What has happened to theGlobal Financial Crisis – Is itover?The Global Financial Crisis waslike a financial earthquake, whichwas stronger than any previousepisodes experienced by people ofworking age. Although theepicentre was in the US, theintegration of the global economymeant that it reverberated aroundthe world and caused a lot ofdestruction and fear.

If it had been a real earthquake, itwould take years to repair thedamage and this financial crisiswas no different. It will take yearsfor the global economy torecover. There are no quick andeasy solutions. It will take time,hard work and patience for theglobal economy to recover, but arecovery is underway. It will bevery uneven across the world, assome countries includingAustralia have come through thecrisis relatively unscathed whilstothers are still mired in problems,Greece is a case in point.

Although the “clean-up” processstill has a long way to go,governments will have to start to

repair their balance sheets, whichin some cases were severelydamaged as a result of the crisis.However, it is unlikely that this partof the “clean-up” process will startuntil there are clear signs that therecovery is self-sustaining and nolonger reliant on governmentassistance. At the moment thesignals are mixed.

How did the investmentmarkets perform in 2009/2010?The financial year started verystrongly, there was optimismsurrounding the recovery and thatwas reflected in a strong investorappetite for growth assets. In theSeptember quarter 2009, theAustralian share market returned21.5%, the listed property sectorreturned 30.5% whereasAustralian bonds and cashreturned a more modest 1.8%and 0.8% respectively.

The recovery continued at a moremoderate pace in the December2009 and part of the March 2010quarters, and by the June 2010quarter the optimism had beenreplaced by fear that the recoverywould take much longer thananticipated to come through. In

that quarter Australian andInternational equity markets(hedged) lost around 11% andthe moderate returns fromAustralian bonds (+3.6%) andcash (+1.1%) looked attractive.

Looking back on the year, all thereturns were generated in the firstquarter of the financial year.

The performance ofinvestment markets in alonger-term perspectiveThe financial year 2009/2010 wasa good year. The returns availablefrom the various asset classes,which are the building blocks forstrategies like Growth, Balancedor Conservative Growth,compared very favourably withthe average returns available overthe past 3, 5 and 10 years. As anexample, Australian sharesreturned 13.1% for the yearended 30 June 2010, but despitethe strong one year return, theasset class delivered an averagenegative return of 7.9% p.a. forthe 3 years. Over the past 10years the return from Australianshares averaged 7.0%, which wasroughly in line with the long-termexpected return for that assetclass. Most of the other growthrelated asset classes havegenerated disappointing returnsover the past 10 years. Bycontrast, both Australian andInternational bonds did wellthrough the decade. These assetclasses did not experience thevolatility that the growth assetsdid. In fact, they benefitted fromthe volatility in the equity markets.

Table A shows asset class returnsover various periods.

Table A *Returns % per annum1 3 5 10

Asset class year year year yearAustralian shares 13.1 -7.9 4.5 7.0International shares (unhedged) 5.2 -11.5 -2.2 -4.6International shares (hedged) 11.5 -11.6 -0.7 -2.1Australian listed property 20.4 -23.8 -8.0 2.9Australian fixed interest 7.9 7.7 6.1 6.4International fixed interest (hedged) 10.0 8.2 6.1 8.0Cash 3.9 5.6 5.8 5.5

* Returns quoted are before allowance for tax and fees and taken fromcommonly reported indices.

INVESTMENT UPDATE

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How is State Super moneyinvested?There are four investmentstrategies in the Pooled Fund –Growth, Balanced, ConservativeGrowth and Cash. Details of theasset classes and weightings ineach strategy are provided onpages 12-13 of this Report andcan be found in the Investmentsection of the State Super website.

Investment Choice is only availableto SASS members (with theGrowth Strategy as the defaultstrategy where members do notmake an investment choice). Forother members, all member andemployer contributions areinvested in the Growth strategy toprovide the defined benefitspecified by the scheme rules. Thedefined benefit is not affected byinvestment results.

How did State Super performin 2009/2010?At the end of June 2010, theGrowth strategy accounted for98.7% of funds undermanagement for the Pooled Fund.For the 2009/2010 year, thedeclared rate was 9.2%.

The declared rates for all strategieswere as follows:• Growth: 9.2%• Balanced: 8.4%• Conservative Growth: 7.1%• Cash: 3.4%

As superannuation is a long terminvestment, you need to view thisyear’s returns in the context ofperformance over a longer timehorizon.

The short term and compoundState Super member returns areshown on page 11 of this Report.

How is my benefit affected?Some members have a Co-contribution account (which isan accumulation account investedin SANCS). The Co-contributionaccount is invested in the Growthstrategy.

For SSS and PSS members, yourscheme benefits (other than thecash resignation benefit) are notaffected by investment returns asthey are defined benefits underthe scheme rules.

If you are an active SASS member,in addition to your employer-financed defined benefit, youreceive an accumulation benefitof your compulsory personalcontributions plus investmentgains or losses at the declaredrate based on your choseninvestment strategy/strategies.(Personal Account balance.)

If you are a deferred SASS member,your entire benefit is anaccumulation benefit and is directlyaffected by fluctuations ininvestment returns and thereforedependent on your choseninvestment strategy/strategies.

Time reduces risk:For the part of the benefit subjectto investment risk, the balancewill fluctuate in line with marketmovements. It is great, wheninvestment markets generatestrong returns, but painful wheninvestment markets turn negative.It is very easy to get caught up inshort-term volatility and forgetthe long-term. Graph A on page16 shows the movement in a$100 investment in the GrowthStrategy from 31 July 1992(around the time SASS closed tonew members) to 30 June 2010.

The Balanced, ConservativeGrowth and Cash strategies havebeen offered to members sinceNovember 2003 and the growthof $100 invested in thoseproducts since inception is shownin Graph B. (page 16)

We recommend that you seekprofessional financial advicebefore you make decisions inrelation to your investmentstrategy or yoursuperannuation benefit.

Are other superannuation funds posting similar returns?This year STC’s defensive investment policy, which served it very wellduring the last 2 years caused it to fall slightly behind the medianGrowth Fund for the 12 months to 30 June 2010. However, for thelast 3 years STC’s Growth strategy has generated 2nd quartileperformance relative to a universe of around 65 other growth funds inthe Mercer Survey of Superannuation Funds (60-80% growth assets).

1 year ended 3 years ended 5 years ended 30 June 2010 30 June 2010 30 June 2010

Growth Strategy return** 9.5% -3.1% 4.0%Mercer Median Return* 9.9% -3.6% 3.0%Quartile Ranking 3rd 2nd 2nd

**The investment return is 9.5%. The declared rate is 9.2% after taking into account fund assetsand liabilities not under investment custody such as tax obligations and operating cash.*The Mercer Growth Survey covers a wide selection of Australian superannuation funds with asimilar risk profile. At 30 June 2010, 65 funds had reported their returns.

INVESTMENT UPDATE

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Should I alter my SASScontribution?As a member of SASS, every timeyou contribute 1% of yourannual salary for one year, youremployer provides a further2.5% (or in some cases 3%) ofyour Final Average Salary atretirement. The employer doesthis up to a maximum average of6% for each year of membership.

If you reduce your contributionrate below an average of 6%each year, you will not onlyreduce your savings in yourPersonal Account, but you willalso reduce your entitlement tobenefits paid by your employer.

Again, we recommend you obtainprofessional financial advice toensure that you maximise yourbenefit entitlements in SASS.

What is expected in themarkets in 2010/2011?There are signs that globalgrowth is losing momentum, butit was always expected that theglobal recovery would occur atan uneven pace. At this point inthe recovery the signals aremixed and that often leads tovery volatile investmentconditions. There remainsignificant downside risks to thegrowth outlook, but there arealso risks to the upside. Currently,the biggest risk appears to bethat confidence in the recoveryfalters in advanced economies,resulting in lower demand,tighter credit conditions andcontinued weakness in the labourmarket. However, the focus couldquickly change should growthrecover faster than anticipated

leading to stronger employmentgrowth and an easing of pressureon government balance sheets.

The challenge for the TrusteeBoard is to remain disciplined andto continue to invest in keepingwith its long-term investmentobjectives. In doing so, STC, withthe assistance of its assetconsultant, closely monitors theglobal and domestic investmentmarkets for opportunities and theinvestment strategy is reviewedon an ongoing basis to assess therelative merits of suchopportunities.

The performance of fundmanagers is also monitoredthroughout the year andmanagers may be added orreplaced as deemed appropriate.

Jul 1

992

Jun

1993

Jul 1

993

Jun

1994

Jul 1

994

Jun

1995

Jul 1

995

Jun

1996

Jul 1

996

Jun

1997

Jul 1

997

June

199

8

Jul 1

998

Jun

1999

Jul 1

999

Jun

2000

Jul 2

000

Jun

2001

Jul 2

001

Jun

2002

Jul 2

002

Jun

2003

Jul 2

003

Jun

2004

Jul 2

004

Jun

2005

Jul 2

005

Jun

2006

Jul 2

006

Jun

2007

Jul 2

007

Jun

2008

Jul 2

008

Jun

2009

Jul 2

009

Jun

2010

Value of $100 invested 31 July 1992 to 30 June 2010380.0

330.0

280.0

230.0

180.0

130.0

80.0

STC Growth $337

Nov

2003

Jan

2004

Mar

200

4

Jul 2

004

Sep

2004

Nov

2004

Jan

2005

Mar

200

5

Jul 2

005

Sep

2005

Nov

2005

Jan

2006

Mar

200

6

Jul 2

006

Sep

2006

Nov

2006

Jan

2007

Mar

200

7

Jul 2

007

Sep

2007

Nov

2007

Jan

2008

Mar

200

8

Jul 2

008

Sep

2008

Nov

2008

Jan

2009

Mar

200

9

Jul 2

009

Sep

2009

Nov

2009

Jan

2010

Mar

201

0

Growth of $100 invested 30 November 2003 to 30 June 2010

180.0

170.0

160.0

150.0

140.0

130.0

120.0

110.0

100.0

90.0

Growth $149.8 Balanced $149.7 Cash $136.7Conservative Growth $147.4

Graph A

Graph B

HOW IS THE POOLED FUND MANAGED?

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INVESTMENT RESERVES

The Trustee Board hasdetermined investmentearnings will not be placed inan investment reserve.Therefore all availableinvestment gains or losses,after providing for tax andinvestment expenses, aredistributed to employers andmembers, based on a declaredrate which is determinedmonthly. When a memberleaves their STC Scheme, adaily interim rate is applied,where appropriate.

DERIVATIVES

Derivatives, including futuresand options, can be used byfund managers. However,investment mandates clearlystate that derivatives may onlybe used to facilitate efficientcash flow management or tohedge the portfolio againstadverse market movements andcannot be used for speculativepurposes or gearing theinvestment portfolio. During theyear to 30 June 2010, themanagers made limited use ofderivatives, except for thepassive rebalancing programmewhich makes extensive use ofindex futures.

HEDGING

The Trustee Board’s policy inregard to currency hedging is:

International fixed interest: 100% hedged into Australiandollars.

International equities: Specialist currency managershave been engaged to managethe currency exposure ofinternational equities. Duringthe year ended 30 June 2010,the level of hedging was ableto vary from 0% up to 70%.

Other international assetsand securities:To 31 December 2009, 100%hedged into Australian dollars.From 1 January 2010, the levelof hedging was able to varyfrom 50% up to 100%.

CUSTODIAN

The Trustee Board engagesJPMorgan Chase Bank, NA, ascustodian to hold Pooled Fundassets. The custodian valuesassets daily and monitors eachfund manager’s daily activity toensure compliance with theirinvestment mandate.

LARGE INVESTMENTS

During the year, there was noindividual investment directlyheld by the Pooled Fund thatexceeded 5% of totalinvestments.

PASSIVE REBALANCING

The tradeable asset classes ofthe Pooled Fund are passivelyrebalanced in a disciplinedmanner. Each day after theportfolio is valued, the indexmanager - State Street GlobalAdvisors, Australia, Limited -reviews the asset allocation foreach strategy. If a sector hasdeviated outside a set rangerelative to the target allocation,the manager reallocates fundsbetween sectors to returnallocations within the agreedrange. This rebalancing processmay involve the use ofderivatives.

ASSET CONSULTANT

The Trustee Board engagesFrontier Investment ConsultingPty Ltd as investmentconsultant advising on strategicasset allocation and fundmanager selection.

POOLED FUND INVESTMENT MANAGERS

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Australian EquitiesAllianceBernstein InvestmentManagement Australia Ltd

BlackRock InvestmentManagement (Australia) Limited

BT Investment Management(RE) Limited

GMO Australia Limited

Lazard Asset ManagementPacific Co

Macquarie InvestmentManagement Limited

Maple-Brown Abbott Limited

Northcape Capital

Perennial Value ManagementLimited

Platypus Asset Management PtyLtd

State Street Global Advisors,Australia, Limited

Wallara Asset Management PtyLimited

International Equities (andcurrency)AllianceBernstein InvestmentManagement Australia Ltd

Altrinsic Global Advisors LLC

AQR Capital Management, LLC

Arrowstreet Capital L.P.

AXA Rosenberg InvestmentManagement Asia Pacific Ltd

Axiom International InvestorsLLC

BlackRock InvestmentManagement (Australia) Limited

Capital International, Inc

Fidelity International Limited

Lazard Asset ManagementPacific Co

Pareto Investment ManagementLimited


Trilogy Global Advisors, LLC

PropertyDEXUS Funds ManagementLimited

EG Funds Management Pty Ltd

Franklin Templeton InvestmentsAustralia Limited

LaSalle InvestmentManagement (Securities) L.P.

Vanguard Investments AustraliaLtd

Australian Fixed Interest &CashDeutsche Asset Management(Australia) Limited

New South Wales TreasuryCorporation


International Fixed InterestState Street Global Advisors,Australia, Limited

Alternative AssetsAccess Capital Advisers Pty Ltd

Deutsche Asset Management(Australia) Limited

GMO Australia Limited

Kaplan Funds Management PtyLimited

Propel Investments Pty Ltd

RARE Infrastructure Limited

Siguler Guff & Company


Vanguard Investments AustraliaLtd

INVESTMENT MANAGERSThe assets of the STC Schemes are held in trust by STC in what is known as the Pooled Fund. ThePooled Fund’s assets are managed by external fund managers appointed by the Trustee Board onthe advice of the asset consultant, Frontier Investment Consulting Pty Ltd. The performance of eachfund manager is monitored throughout the year and managers may be added or replaced. The fundmanagers at 30 June 2010 were:

COMMONWEALTH & SCHEME UPDATE

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HENRY REVIEW*

On 2 May 2010, theCommonwealth Governmentreleased the first phase of itstax plan in response to theHenry Review’s Report onAustralia’s Future Tax System.

The key superannuationproposals are:

• The superannuationguarantee will increase fromthe current 9% to 12%,with increments of 0.25%effective from the 2013/14year, increasing to 0.5%from 2015/16 and reaching12% by 2019/20.

• From 1 July 2013, thesuperannuation guaranteeage limit will be raised fromage 70 to age 75.

• Persons earning less than$37,000 per annum will beeligible for a contribution ofup to $500 from theGovernment.

• From 1 July 2012, theconcessional contributionscap will be $50,000 forthose who are over the ageof 50 years, with totalsuperannuation of less than$500,000.

COMMONWEALTH BUDGET*

In the 2009/10 budget, theCommonwealth Governmentannounced a temporaryreduction in theCommonwealth GovernmentCo-contribution.

However, this reduction wasmade permanent in the2010/11 Budget. This meansthat the matching rate willremain at 100%, with themaximum Co-contributionamount being $1,000.

The Government has alsoannounced that the Co-contribution incomethresholds that determinewhether an individual qualifiesfor any portion of the Co-contribution will be frozenfor 2 years (lower threshold of$31,920 and higher threshold$61,920).

*(Commonwealth initiativesare subject to legislation beingpassed.)

LEGISLATIVE AMENDMENTS

The Superannuation LegislationAmendment Act 2010 waspassed on 28 June 2010. Theamendments which will beeffective from the date ofproclamation (likely to be inearly October 2010) are asfollows:

• SASS deferred members willbe able to remain in SASSafter reaching age 58.

• STC will be able to recoverthe additional contributionstax imposed on the Fund, formembers who have notprovided a valid TFN, fromthe members’ benefits.

• Subject to Regulations beingpassed, Ambulance Officerswith SASS Additional BenefitCover (ABC) who arecovered under their awardfor death or incapacitybenefits, will be able to optout of ABC.

MULTIPLE INVESTMENTCHOICE – SASS MEMBERS

In April 2010, STC wrote to allcontributory and deferred SASSmembers to announce greaterinvestment flexibility in SASS.

Previously, SASS provided achoice of four investmentstrategies in which 100% ofcertain parts of a member’sbenefit could be invested.

From April 2010, members canchoose to invest in one ormore investment strategies inwhatever proportion suits.Contributory members can alsonominate a differentcombination of strategies forthe account balance and futurecontributions.

More detail is provided in SASSFact Sheet 15 – Choosing anInvestment Strategy, which isavailable on our website. Ofcourse, STC recommends thatyou should seek professionalfinancial advice before makingany decisions in relation toyour investment strategy.

ENVIRONMENTAL, SOCIAL ANDGOVERNANCE (ESG) POLICY

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EXAMPLES OF ESG ISSUES

Some examples of ESG issues are:

Environmental - the mostobvious example is climatechange and carbon emissions.All companies are affected inone way or another. Whilethere isn't an emissions tradingscheme or a carbon tax inAustralia at this time, investorsneed to make assumptionsabout potential future carboncosts when valuing the futurecashflows of companies.

Another example of anenvironmental issue is thepotential for resourcecompanies to triggercatastrophes such as oil spillsand mudflows or to pollutelakes and rivers.

Social - apart from obviousOH&S issues such asinjuries/fatalities, what aboutthe supply chain? Are productssourced in developingcountries, and if so are thereissues with child labour, forced

labour, locked-downdormitories? In the case ofresource projects in developingcountries, how disruptive arethey to the local culture? Dothey bring benefits likeelectricity, clean water,healthcare and schools? Or dothey bring polluted rivers,HIV/AIDS and violation ofindigenous sacred sites?

Governance - typicalgovernance issues relate toboard composition (e.g., arethere enough independentdirectors?) or executiveremuneration (whatperformance hurdles doExecutives have to clear toqualify for an incentivepayment?)

WHAT DOES STC DO ABOUTESG ISSUES?

STC invests using external fundmanagers, because that iswhat the SuperannuationAdministration Act 1996requires STC to do. However,

this does not prevent STC frombeing a responsible corporatecitizen.

STC requires all fund managersto vote on all resolutions at allmeetings as they believe bestserves the interests of theportfolio they manage for STCand to report to STC on allvoting and explain any voteswhen so required by STC.

STC subscribes to the CGIGlass Lewis proxy votingadvisory service andbenchmarks fund managervoting against the adviceprovided.

STC is developing a databaseon the carbon emissions ofits investments, with initialfocus on Australian equitiesinvestments.

STC engages with companieson ESG issues indirectlythrough its managers, throughbeing a client of RegnanGovernance Research &

On 28 July 2010, STC approved its Environmental, Social and Governance (ESG) Policy. Youcan view a copy of the Policy on our website www.statesuper.nsw.gov.au

STC believes that “companies that manage ESG risks, impacts, and opportunities well willbe more financially sustainable in the long-term and will deliver better long-termfinancial performance than those that don't.”

Attention to ESG issues by pension funds in deciding investment policy and asset allocation,and by fund managers in analyzing securities and constructing portfolios, has the potentialto enhance returns and reduce risk.

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Engagement and a memberof the Australian Council ofSuperannuation Investors(ACSI). As well as engagementwith companies, both Regnanand ACSI also conduct researchand engage with governmentin relation to policy formation.

STC is a member of ESGResearch Australia which wasformed to encourage theproduction of quality ESGresearch by stockbrokers.

STC is a member of theInvestor Group for ClimateChange which has the aim ofensuring that the risks andopportunities associated withclimate change areincorporated into investmentdecisions; and the CarbonDisclosure Project whichcollects climate change andcarbon emissions data frommore than 2,000 largecompanies globally each year.

In association with its assetconsultant Frontier

Investment Consulting, STCincludes assessment of the ESGcapabilities of fund managersas part of due diligence inmanager selection and inperiodic reviews of incumbentmanagers.

STC arranges relevantcontinuing education forBoard Members and staff andencourages participation byBoard Members and staff inrelevant industry bodies andforums.

STC includes ESG reporting as astandard Agenda Item atmeetings of the STC Board.

STC is developing a programmefor disclosure of its treatmentof ESG issues to stakeholders.

KEY TAX TABLES

LUMP SUM TAX RATES

The tax rates applying to the TaxableComponent of a lump sum benefit payment:

Tax1

Before you reach your preservation2 age 20%

On reaching your preservation age before age 60:

amount under the threshold Nil

amount over the threshold 15%

On or after reaching age 60 Nil

Notes: 1 The tax rates shown above do not include theMedicare levy. These tax rates assumemembers have provided a valid Tax FileNumber to the Trustee.

2 Your preservation age is shown on your BenefitStatement and is age 55 if you were bornbefore 1 July 1960 and increases in yearlysteps to age 60 for those members born after1 July 1964.

Threshold amount for 55 years and over:

Year Amount

2010/11 $160,0002009/10 $150,0002008/09 $145,0002007/08 $140,0002006/07 $135,590

INCOME TAX RATES 2010/11

Taxable income Tax payable*

$1-$6,000 Nil$6,001 - $37,000 15%$37,001 - $80,000 $4,650 + 30%$80,001 - $180,000 $17,550 + 37%$180,001+ $54,550 + 45%

*Does not include Medicare levy of 1.5%.

CONTRIBUTION LIMITS

Year Concessional contributions TransitionalCap1 Cap2

2010/11 $25,000 $50,0002009/10 $25,000 $50,0002008/09 $50,000 $100,0002007/08 $50,000 $100,000

1 Subject to indexation.2 Between 1 July 2007 and 30 June 2012, thetransitional contributions cap will apply forpeople aged 50 and over.

Year Non-concessional contributions cap3

2010/11 $150,0002009/10 $150,0002008/09 $150,0002007/08 $150,000

3 Will be 6 times the concessional contributionscap from 2009/10.

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KEY TAX TABLES

SUPER CO-CONTRIBUTIONFor the year ending 30 June 2011:

The maximum Co-contribution amount is $1,000.

For annual incomes up to $31,920*, the Co-contribution is $1 for every $1 of non-concessional (after-tax) contribution made in afinancial year, subject to the maximum amount($1,000).

For annual incomes above $31,920* up to$61,920*, the maximum ($1,000) reduces by3.333 cents for each dollar of income above$31,920*, so that it phases out completely at$61,920*.*Subject to indexation.

Co-contribution income thresholds

Year Lower Higherincome incomethreshold threshold

1Jul 10 – 30 Jun 11 $31,920 $61,9201Jul 09 – 30 Jun 10 $31,920 $61,9201 Jul 08 – 30 Jun 09 $30,342 $60,3421 Jul 07 – 30 Jun 08 $28,980 $58,9801Jul 04 – 30 Jun 07 $28,000 $58,000

SUPERANNUATION SURCHARGEINCOME THRESHOLDS

Year Minimum MaximumThreshold Threshold

2005/06 and later n/a n/a2004/05 $99,710 $121,0752003/04 $94,691 $114,9812002/03 $90,527 $109,9242001/02 $85,242 $103,507

The maximum contributions surcharge tax ratesare as follows:

2005/06 and later Nil2004/05 12.5%2003/04 14.5%Up to 2002/03 15%

FURTHER INFORMATION

For more information, see the following All Schemes Fact Sheets:All Schemes 1: Information about the Commonwealth Contributions Surcharge All Schemes 3: TaxationAll Schemes 13: Information about the Commonwealth Government’s SuperannuationCo-contribution

For more information on the concessional contributions caps, see the following Fact Sheets:SASS 16: SASS Concessional Contributions CapSSS 23: SSS Concessional Contributions CapPSS 16: PSS Concessional Contributions Cap

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DIRECT FEES

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SASS MEMBERS

Management feeAn annual administration feeof $45 is payable by members.This fee is deducted in equalmonthly instalments from thePersonal Account.

Investment switch feesA member can switch betweeninvestment strategies onceeach year ending 30 Junewithout incurring any fee. Aswitch fee of $25 is applied foreach additional switch in theyear. This fee is deducted fromthe Personal Account at thetime of the switch.

Additional benefit coverWhere a member hasAdditional Benefit Cover, theamount to be deducted willvary as it is based on age andthe amount of cover. Whereapplicable, deductions aremade from Personal Accountseach month.

DEFERRED SASS MEMBERS

Management feeAn annual administration feeof $45 is payable for a deferredSASS only account. The annualfee is $65 if the deferredbenefit includes a deferredSANCS Basic Benefit. The fee isdeducted in equal monthlydeductions from the PersonalAccount.

Investment switch feesA member can switch betweeninvestment strategies onceeach year ending 30 June freeof charge. A switch fee of $25is applied for each additionalswitch in the year. This amountis deducted from the PersonalAccount at the time of theswitch.

SSS & PSS MEMBERS

Generally, most of the directfees and costs associated withSSS and PSS are paid by theemployer. However, deferredbenefit members are subject toa management fee outlinedbelow.

DEFERRED SSS & PSSMEMBERS

Management feeAn annual administration feeof $20 is payable by membersalso holding a deferred SANCSBasic Benefit. The fee isdeducted from the SANCSBasic Benefit account in equalmonthly instalments.

FAMILY LAW FEES

A fee of $275 ($110 forPensioner members) is chargedfor all requests for informationfrom a member or spouse of themember in regard to Family Lawmatters. The amount is payableby cheque by the personrequesting the information.These fees include GST.

From 1 October 2010, a fee of$1,225 (excluding GST) ischarged to split a benefit. Halfis deducted from the benefit ofthe non-member spouse. Themember’s half is payable bycheque if the member is notentitled to a benefit paymentat the time of the family lawsplit. If a benefit payment isdue to the member at the timeof the family law split, the feecan be deducted from themember’s benefit.

INDIRECT FEES

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APPLIES TO ALL MEMBERS

Investment managementcostsIndirect fees and costs arethose which are not deducteddirectly from members’accounts.

They are fees and costs whichare deducted from investmentgains or losses before adeclared rate is determined.

By deducting investmentmanagement expenses frominvestment gains or lossesbefore determining thedeclared rate, those expensesare borne indirectly bymembers by way of a reducedrate of investment return.

Declared rates are net of thesefees and costs, as well asinvestment taxes.

For contributory members,investment gains or lossesaffect the balance of thefollowing accounts:

• the Personal Account

• the Reserve Units Accountfor SSS members

• CommonwealthGovernment Co-contributionaccount

For deferred benefit membersinvestment gains or lossesaffect the amount of:

• the Immediate Lump Sum

• Deferred Lump Sum

• SANCS Basic Benefit

• CommonwealthGovernment Co-contributionaccount

For PSS and SSS members, theindirect fees and costs are notborne by members who receivea retirement benefit from theScheme, as retirement benefitcalculations do not directly relyon the balance of the accountsmentioned previously.

Calculating investmentmanagement costsThe amount shown asinvestment management costson your Benefit Statement is anestimate of the amount ofindirect costs incurred.

It is calculated by multiplyingthe average balance inapplicable accounts over theyear, by an indirect costpercentage.

As investment fees vary foreach of the investmentstrategies, an estimatedindirect cost percentage iscalculated. These percentagesare as follows:

Strategy % of averagetotal assets

Growth 0.29

Balanced 0.23

Conservative Growth 0.19

Cash 0.04

The investment managementcosts shown on your BenefitStatement are only estimatesof the amounts notionallyattributable to your account.

The averaging methods used tocalculate the amount generallydo not result in exact amountsbeing calculated.

COMPLIANCE

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COMPLIANCE

STC Schemes are exemptpublic sector superannuationschemes under theCommonwealth Government’sSuperannuation Industry(Supervision) Act 1993 (SIS).The SIS legislation treatsexempt public sectorsuperannuation schemes ascomplying superannuationfunds for concessional taxationand superannuation guaranteepurposes.

Under a Heads of Governmentagreement, the New SouthWales Government undertakesto ensure STC Schemesconform with the principles ofthe CommonwealthGovernment’s RetirementIncomes Policy relating topreservation, vesting, reportingto members, and adequateprotection of members’benefits.

The New South WalesGovernment prudentiallymonitors and audits theSchemes and Trustee Boardactivities in a mannerconsistent with the prudentialcontrols of the SIS legislation.These provisions are in additionto other legislative obligationson the Trustee Board andinternal processes that monitorthe Trustee Board’s adherenceto the principles of theRetirement Incomes Policy.

GOVERNMENTINFORMATION (PUBLICACCESS) ACT

As a NSW Government body,the Trustee must comply withrelevant legislation, includingthe NSW GovernmentInformation (Public Access) Act2009 (the GIPA Act). From 1July 2010, the GIPA Actreplaced the Freedom ofInformation Act (1989) NSW.

Under the GIPA Act, allgovernment agencies mustmake certain information,known as open accessinformation, publicly available,unless there is an overridingpublic interest againstdisclosure. Generally, openaccess information must beavailable on an agency’swebsite, and at least onemethod of access must be freeof charge.

STC publications that can beobtained free of charge fromthe State Super websiteinclude:

• policy documents andprocedure manuals;

• STC’s publication guide,which describes the structureand functions of the Trustee;

• a disclosure register offormal applications that havebeen made by membersrequesting “open access”information;

• a register of STC’s contractswith private sectororganisations that are worthmore than $150,000;

• documents that have beentabled in Parliament by or onbehalf of STC; and

• a record of ‘open access’information identifyinginformation that will not bemade publicly available onthe basis of an overridingpublic interest againstdisclosure.

For further information, pleaserefer to the STC All SchemesFact Sheet 9, GovernmentInformation (Public Access) Act& Privacy.

The STC Schemes aregoverned under NSWlegislation:

SSS – the SuperannuationAct 1916

SASS – the StateAuthoritiesSuperannuation Act 1987

PSS – the Police Regulation(Superannuation) Act 1906

SANCS – the StateAuthorities Non-contributorySuperannuation Act 1987

COMPLAINTS AND DISPUTES

27

COMPLAINTS AND DISPUTES

If you have a question aboutyour account or benefits, youshould initially contactCustomer Service. If you aredissatisfied with anadministrative action, you maylodge a complaint with thescheme administrator (PillarAdministration).

If you feel you have beenunfairly treated or aredisadvantaged by a decision ofthe scheme administratorrelating to a benefitentitlement, you may lodge anotice of dispute with theTrustee Board within twoyears of being notified of thedecision. Send the notice to:

The Manager,Disputes and Appeals,SAS Trustee Corporation,PO Box N259, Grosvenor Place NSW 1220.

You may then be requested toclarify certain details relating toyour dispute and to provideadditional supporting evidence.Your dispute will then bereferred to the DisputesCommittee for consideration.

You will be notified of theoutcome of the DisputesCommittee review.

If you are dissatisfied with thereview of that decision, youmay lodge an appeal with theIndustrial Court of New SouthWales within six months ofbeing notified of the outcomeof the review, or within afurther time allowed by theCourt.

The CommonwealthSuperannuation ComplaintsTribunal does not action STCScheme member complaints.

KEEPING IN CONTACT WITHMEMBERS

The Trustee Board must ensureits records of members’personal details are up-to-dateand accurate. Therefore it maybe necessary to disclosemembers’ personal informationto third parties. The TrusteeBoard takes steps to ensurethere is no unauthorised use ordisclosure of members’information by those thirdparties. For more informationon how members’ informationis protected, please visit thewebsite.

PRIVACY

As a NSW Government body,the Trustee Board must complywith relevant legislation,including the Privacy andPersonal Information ProtectionAct 1998 (the Privacy Act) andthe Health Records andInformation Privacy Act 2002(HRIP Act).

The Trustee Board hasdeveloped a PrivacyManagement Plan (Plan) and,with the assistance of thescheme administrator, Pillar,has implemented the Plan’spolicies and procedures. APrivacy Statement is availableto members explaining howthe Trustee Board deals withmembers’ personal and healthinformation that may becollected and used in thecourse of administering STCSchemes.

The Privacy Statement detailshow STC and Pillar complywith the requirements of thePrivacy and HRIP Acts and isavailable on request and on thewebsite.

FINANCIAL REPORTS AT 30 JUNE 2010

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STATEMENT OF NET ASSETS2010 2009 $m $m

Investments Short Term Securities 2,945.2 2,693.0Australian Fixed Interest 2,772.2 2,762.7International Fixed Interest 2,588.5 2,071.0Australian Equities 9,329.8 8,433.2International Equities 6,905.9 6,419.0Property 2,717.3 2,545.9Alternatives 3,421.1 3,584.6

30,680.0 28,509.4

Other AssetsCash and Cash Equivalents 4.0 1.3Receivables 354.0 447.7Plant and Equipment 0.3 0.2Current Tax Asset – 39.6Deferred Tax Asset 59.9 110.3

418.2 599.1

Total Assets 31,098.2 29,108.5

Liabilities Reserve Units 2.3 3.2Payables 279.0 257.6Current Tax Liability 73.7 –

Total Liabilities 355.0 260.8

Net Assets Available to Pay Benefits 30,743.2 28,847.7

The following tables provide abridged financial information about STC Schemes for the last twoaccounting periods to 30 June. The financial report for the year to 30 June 2010 is currently beingaudited by the Auditor-General of New South Wales. The audited financial report and the Auditor-General’s report will be available on request after they have been tabled in the NSW Parliament.

29

STATEMENT OF CHANGES IN NET ASSETS 2010 2009 $m $m

Net Assets Available to Pay Benefits at Beginning of Financial Year 28,847.7 34,213.8

Contribution Revenue Employer Contributions 1,733.6 1,152.2Member Contributions 540.1 545.6

2,273.7 1,697.8Transfers Scheme Mobility Transfer (0.2) (1.1)Refunds to Employers (0.1) (0.3)

(0.3) (1.4)Investment Revenue Short Term Securities 34.0 44.8Australian Fixed Interest 115.2 138.5International Fixed Interest 35.2 67.3Australian Equities 449.0 710.5International Equities 192.3 302.4Property 157.7 162.4Alternatives 247.8 227.5

1,231.2 1,653.4

Changes in Net Market Values of Investments 1,936.8 (5,782.3)3,168.0 (4,128.9)

Investment Expenses (90.4) (85.4)Net Investment Revenue 3,077.6 (4,214.3)

Other Revenue 2.8 2.3

Total Revenue 5,353.8 (2,515.6)

Benefits Paid (3,258.2) (3,020.8)Scheme Administration Expenses (32.9) (34.1)Superannuation Contributions Surcharge 7.0 4.9Other Expenses (0.2) (0.3)

Total Expenses (3,284.3) (3,050.3)

Change in Net Assets Before Income Tax 2,069.5 (5,565.9)Income Tax Benefit/(Expense) (174.0) 199.8

Change in Net Assets Available to Pay BenefitsAfter Income Tax 1,895.5 (5,366.1)

Net Assets Available to Pay Benefits at End of Financial Year 30,743.2 28,847.7

WHAT INFORMATION IS AVAILABLE?

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FACT SHEETS

Details about the rules, benefit entitlements andmembership conditions of each STC Scheme areprovided in a series of Fact Sheets. For copies,visit the website or contact Customer Service.

PERSONAL INTERVIEW SERVICE

Please see the page opposite for details aboutthe locations where free personal interviews areconducted.

Visit us on the web at www.statesuper.nsw.gov.au

• Information about your scheme• Fact Sheets for all STC Schemes• Salary Sacrifice calculators• Advise a change of address• Information about STC seminars• Latest investment information• Online benefit quotes for SASS members

FREEDOM OF INFORMATION (FOI)

(1 July 2009 – 30 June 2010)

Every effort is made to meet the reasonableexpectations of members seeking information.At times, however, information of a confidentialor sensitive nature may require an applicationunder the Freedom of Information Act 1989.

GOVERNMENT INFORMATION (PUBLICACCESS) ACT (THE GIPA ACT)

(from 1 July 2010)

Requests for information which were previouslymade under FOI are now required to be madeunder the GIPA Act. For more information, seepage 26 of this Report.

Please contact Customer Service to confirm thatno other avenue for gaining information existsbefore deciding to apply under the GIPA Act.

NEED HELP WITH ENGLISH?

For members who need help with the English language, Customer Service can make arrangementsfor information to be translated through the Government Interpreter Service.

CONTACT DETAILS

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State Authorities Superannuation Scheme (SASS) 1300 130 095

State Superannuation Scheme (SSS) 1300 130 096

Police Superannuation Scheme (PSS) 1300 130 097

Pensioners 1300 652 113

Deferred Benefits 1300 130 094

PERSONAL INTERVIEW SERVICEFor an interview appointment in Sydney, call (02) 9238 5540.You can also arrange interviews at:Newcastle (telephone: 1800 807 855)Parramatta (telephone: 1800 626 000)Port Macquarie (telephone: 1800 676 839)Wollongong (telephone: 1800 060 166)

FAX SERVICE(02) 4253 1688

WEBSITEwww.statesuper.nsw.gov.au

[email protected]

MAILING ADDRESSFor Customer Service and Pillar Administration: PO Box 1229 Wollongong NSW 2500

For SAS Trustee Corporation (the Trustee Board)and the Office of the Full-time Board member: PO Box N259, Grosvenor Place NSW 1220

ABN: 80 976 223 967

CUSTOMER SERVICE8.30 am to 5.30 pm, Monday to Friday for the cost of alocal call (except from a mobile or pay phone)

ABN: 29 239 066 746

• Use the Salary Sacrifice calculators to work out what’s best for you

• SASS members – request an online benefit quote, check your benefit pointsand contribution rate

• Deferred SASS members – request an online benefit quote

• SSS, PSS and Deferred SSS and PSS – request a quote or benefit estimate

• See the salary used to calculate your benefit estimate

• Look up your last Benefit Statement

• Download Fact Sheets, SuperViews newsletters, forms and the latestinvestment information

Keep track of your benefits on the web at

Register as a user and access the Member Services area

www.statesuper.nsw.gov.au

This report contains general information. Relevant information is subject to the Acts that govern theSchemes mentioned in this document and those Acts will prevail to the extent of any inconsistency. Inpreparing the report, SAS Trustee Corporation (STC) has not taken into account your objectives, financialsituation or needs and, because of this, you should consider your personal circumstances and possibly seekprofessional advice before making any decision that affects your future. To the extent permitted by law,STC, its directors and employees do not warrant the accuracy, reliability or completeness of the informationand exclude liability for any decision taken on the basis of information contained in or omitted from thisreport. STC cannot guarantee any particular rate of return and past investment performance is not areliable guide to future investment performance.

Documents

REPORT MEMBERS - State Super...KEY FACTS AT 30 JUNE 2010 MEMBER SERVICES n 2,777 personal interviews conducted n 5,064 members attended a seminar n 5,152 items of correspondence received