Super Scoop 2008 - for younger members...Q Invest.2 It’s full of great tips about how to make the most of both your super and your finances in general. Always innovating At QSuper,

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

and your super

market

The small book of

10

Remember to read...

small steps

results

2008 QSUPER ANNUAL REPORT TO MEMBERS

Brought to you by Q Invest

2 | Super Scoop 2008 QSuper annual report to members

Tennille Reeves QSuper member since 2008 Tennille has recently joined the Department of Infrastructure and Planning as an administration officer. ‘I really enjoy my job, the team’s a really great group of young, fun people. I wanted to work for the State Government so I could have a great work/life balance and progress my career but start a family at the same time.’

An avid traveller, Tennille spent six months last year travelling. ‘I loved Morocco. The people were amazing, really warm and social. It was the best place. I definitely want to go back!’ And while retirement is still some time away, she already has her sights set on more travel. ‘I would like to have enough money to spoil my grandchildren and just pick up and go anywhere in the world I want.’

Tennille is confident QSuper will take care of her superannuation needs. ‘Because retirement is so far away for me, I don’t really want to have to worry too much about my super. I’m confident that QSuper will take care of all that and help me achieve my retirement goals.’

4 Small steps = big results Making the right choices today for a better future tomorrow

9 Fees – some things are just meant to be low Why our low fees are important for you

8 Market volatility and your super What do the market losses mean for you?

10 Rising to the challenge QSuper and QIC – creating investment strategies for your future

11 QSuper investment and fees update How recent changes affect you

12 Investment objectives and returns 2007/2008

Contacting QSuperContact Centre63 George Street Brisbane1300 360 750 +61 7 3404 0928Monday to Thursday 8.30am to 5.00pm Friday 9.00am to 5.00pm

Postal address QSuper GPO Box 200 Brisbane Qld 4001

qsuper.qld.gov.au

Consent statementAll persons quoted in this annual report have agreed to their comments being published, and have not withdrawn this consent at the date of publication. SuperRatings has given its consent and not withdrawn it in relation to the inclusion of references to its ratings throughout this annual report. SuperRatings does not make, or purport to make, any statement in this annual report other than these references.General advice warningThis publication is issued by the QSuper Board of Trustees (ABN 32 125 059 006) of the QSuper Fund (ABN 60 905 115 063). The QSuper Board is not licensed to give financial product advice. There is no cooling off regime associated with QSuper. The information in this document is not personal advice and has been prepared for general purposes only, without taking into account your financial objectives, situation, or needs. Therefore, before making any decisions based on any information contained in this annual report, you should consider the appropriateness of the information, having regard to your objectives, financial situation, and needs. We also recommend you seek independent financial advice and consider the relevant product disclosure statement (PDS) before you make any decision concerning your benefit entitlements. You can download a PDS from the QSuper website, or call us and request one.DisclaimerAlthough we make every attempt to ensure the information in this document is accurate and up to date at the time of its publication, legislative and other changes after the date of publication may affect the accuracy of some of the information contained in this document. To find out about updated information which is not materially adverse to you, contact us as indicated on this page. The Board of Trustees (the Board) of the QSuper Fund and the State of Queensland do not guarantee the investment performance of the Fund or repayment of capital.

How much does Super Scoop cost?Super funds are required to send members a benefit statement and annual report each year. At QSuper, we also think it's a great opportunity to give you information on how to make the most of your super. And you might be surprised to learn the cost of printing Super Scoop was only 34 cents per copy this year, so it's a very cost-effective way to communicate with you and over 490,000 other QSuper members.

Small steps – big results Super Scoop 2008 | 3

The past year has been a tumultuous one, with sharemarket volatility causing uncertainty for some members as they have watched their super suffer much lower returns. This year’s downturn is a natural part of a financial cycle, and while it can be distressing when it happens, our returns over the longer term show that it is important not to panic and to keep the big picture in mind. In fact, the long-term results have remained solid, with an average return of 10.56% per annum for our Balanced option over the past five years.1 You’ll find more information on this year’s volatility and what it means for your super in the articles on pages 8 and 10.

Small steps, big resultsTaking the long-term view is especially relevant when your

retirement is years or even decades away. You might feel there are better things you could be spending your money on rather than investing in your super, but did you know even small changes now can make a huge difference to

the end result? The article on page 4 will give you some ideas on how to start preparing for a brighter future today

by taking just a few small steps. We’ve also included the handy pocket-sized: The small book of big ideas, brought to you by Q Invest.2 It’s full of great tips about how to make the most of both your super and your finances in general.

Always innovatingAt QSuper, we are always evolving to meet the demands of our members. In February this year, the Board introduced a ninth investment option, Basic Growth. The Basic Growth option is designed for people who want exposure to traditional growth assets such as shares and property, but who may not value the diversification benefits of alternative assets. This option may be suited to members with Accumulation or Allocated Pension accounts who are looking for a low-cost investment choice, and are prepared to accept short-term fluctuations in the value of their investment due to a less diversified asset mix (relative to the Balanced option). More information on the Basic Growth option is available on our website.

We work hard to ensure we offer you the best possible products and services, so we’re delighted to have been awarded a Platinum rating by ratings company SuperRatings for the second consecutive year.

We are also currently considering the option of becoming a regulated fund, a process which we began last year, and you’ll find a full update on our progress on page 6.

AcknowledgementsThe Board appreciates the support of the Auditor-General of Queensland, and would like to thank its major service providers, including QSuper Limited, QIC, Q Invest, Watson Wyatt, Ernst & Young, and the State Actuary.

6 Legislative and business updates Providing you with up-to-date industry news

7 Your winning team QSuper Board of Trustees – delivering results for you

9 We’re moving! Better services for members

15 Financial highlights 2007/2008

Under Treasurer and Chairman of the Board

Year in reviewby Gerard Bradley

PLATINUM

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C 0M 0Y 0K 85

PLATINUM

C 0

M 0

Y 0

K 60

C 0

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Y 0

K 85

and your supermarket

The small book of

10

Remember to read...

small steps

results

2008 QSUPER ANNUAL REPORT TO MEMBERS


The small book of

10to boost your money!tips

1 of 20 iPod

nanos

SEE PAGE 17 FOR DETAILS

Win!


1 Past performance is not a reliable indicator of future performance.2 Q Invest Limited (ABN 35 063 511 580) (‘Q Invest’) AFS licence 238274. Q Invest is

jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity.

QSuper annual report to members4 | Super Scoop 2008

What do you want to do when you retire? Just get by? Or do you want to travel, socialise with friends, or take up a new hobby? Obviously the more money you have invested in superannuation, the more freedom you will have in choosing the lifestyle you want in the future.

Compound interest is the key. As you have money in super, you’re already taking advantage of compound interest. The returns these investments generate is reinvested, so you’re earning interest on your investment plus any interest already earned. Of course, there may be some years with negative returns, so there will be no interest to reinvest. But the earlier you start investing, and the more you invest, the greater the benefits of compound interest.

A little goes a long wayCompound interest really is the gift that keeps on giving. If you make small changes that add even a few dollars here and there to your account, you will earn more interest, and then the interest will earn interest, and so on. Those small amounts that you add each year may add up to big gains by the time you retire.

And they can easily be amounts that you won’t even miss in your everyday life! Buy one less coffee each week, make your lunch sometimes instead of buying it, walk occasionally rather than catching a bus. Have a look at the case study to the right to see what a difference small changes can make.

Assumptions:1. The calculation assumes savings of $20 per week for a time period of 30 years.2. The calculation assumes the interest compounds weekly.3. The interest rate assumed is 6% and is net of fees and taxes.4. The information should not be used as a guide to future performance of any investment.

5. The total saved does not take inflation into account.6. Check with your chosen savings product provider in regard to actual interest calculations.The calculation provides an estimate of the future value of savings which could vary significantly over time if any change is made to these assumptions.

Go to the Calculators section at qsuper.qld.gov.au to try other amounts!

Retirement is probably many years away, so you may not have given it too much thought. But the truth is the small steps you take now can reap big results later in your life, and the sooner you start, the better...

small stepsresults

just one less coffee

a day...Grant is 30 and recently attended a QSuper seminar, during which he learnt about the magic of compound interest. The message about ‘a little extra making a big difference’ has prompted Grant to check his financial position.

Unconvinced that saving small amounts could really have that much of an effect, Grant visited the QSuper website and used the Watch your savings grow calculator to find out exactly what a difference $20 extra a week could make.

Grant was astonished to see that over the 30 years until he plans to retire, his $20 a week equates to him saving an additional $87,814, of which $56,502 is interest.*

That’s just one less coffee a day!

Case study

* Assumes 6% expected earnings rate.

The magic of compound interest

Andrew Stephenson QSuper member

since 2004

$100,000

$90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

Years2 4 6 8 10 12 14 16 18 20 22 24 26 28 30


Even if you don’t have much left over after you pay your rent or mortgage, bills, and other expenses, there are changes you can make to boost your super. Let’s consider what salary sacrificing, the Commonwealth Government co-contribution, and choosing your investments wisely can do for you.

The benefits of salary sacrificingWhen you salary sacrifice, your super contributions are taken from your salary before income tax is paid, instead of after. Salary sacrificing can, therefore, potentially minimise your tax and increase your take-home pay. One option is to then contribute this extra amount in your pay straight back into your super, so you’re taking home the same pay as before, but putting a little bit extra away each fortnight for your future. How easy is that?

Of course, it’s important to remember that any money contributed to your super cannot be accessed until you reach your preservation age (see our website for more details). You should also be aware that you may pay tax on the money contributed via salary sacrifice if you withdraw it before the age of 60.

Bonus moneyThe super co-contribution is a payment made by the Commonwealth Government into your super account to encourage you to save for your retirement. Are you getting your full entitlement? If your income1 is less than $30,342, the Government will contribute $1.50 for every $1 you contribute, up to a maximum of $1,500 per year. This amount progressively reduces as your income goes up, and phases out completely when your income1 reaches $60,342. If you earn less than these thresholds and aren’t making after-tax contributions, you could be missing out on this money from the Government. More information on the co-contribution and eligibility requirements can be found on our website.

Your eligibility for co-contribution payments is subject to a few criteria, but if you are eligible, your co-contribution payment will be calculated automatically by the Australian Tax Office when you lodge your tax return, and deposited into your super a few months later.

It’s important to note that the Government will only make payments for contributions that are made after tax, so if you are salary sacrificing you will need to make additional payments to qualify.

Make the right investment choiceQSuper has nine different investment choices with options to suit various needs and objectives; see pages 12 and 13 for more details. When you join QSuper, your money is automatically invested in the Balanced option. But it’s important you examine your attitude to risk and return, as many people with a long investment timeframe who are comfortable with taking on an increased level of risk in return for the potential of higher returns may find other investment options suit their needs better. And if you need more information to help you decide, simply download the Investment choice guide from our website for information about investment basics and the nine investment options we offer.

Educate yourselfOf course, educating yourself is a great way to build a solid financial foundation. QSuper can make this process a whole lot easier with a range of superannuation and financial calculators designed to help you explore your options, increase your financial literacy, and work towards building up your superannuation nest egg to meet your retirement needs.

Our Super health check calculator can help you perform checks on your super now, and see how it will look in the future. Add extra contributions here, make changes to your retirement age there, and see the difference it can make to your retirement income. Our other calculators allow you to test your attitude to risk, see if salary sacrificing could benefit you, and create a budget.

You’ll also find a heap of financial tips in The small book of big ideas that comes with this edition of Super Scoop.

Seminars If you feel like you don’t know where to start, or there’s more you want to learn, come along to one of our seminars. QSuper runs over 500 seminars throughout

Queensland each year – from beginners’ sessions explaining the fundamentals of super and investment, to investor updates and strategies for supersizing your super. You can find a full list of seminar topics, locations, and dates on our website at qsuper.qld.gov.au.

Ask a specialistWhile QSuper can provide general information about your super, and you can certainly do a lot of research yourself, but you might also find it beneficial to seek personal financial advice. The QSuper Board facilitates access by QSuper members to affordable personal financial advice from Q Invest.2 Q Invest advisers specialise in helping people employed in the Queensland public sector. If you would like to discuss your personal goals and options with a qualified adviser, please call Q Invest on 1800 643 893 or visit their website at www.qinvest.com.au. It’s never too early to get personal financial advice, because every little change you make now can make a big difference to your future.

Check out this great resource designed to help you get on the financial fast track! Brought to you by Q Invest.

Those small amounts that you contribute each year may add up to big gains by the time you retire.

Big help for big results

The small book of

10 to boost your money!tips

1 of 20 iPod nanosSEE PAGE 17 FOR DETAILS

Win!


1 Income means assessable income plus reportable fringe benefits.

2 Q Invest Limited (ABN 35 063 511 580) (‘Q Invest’) AFS licence 238274. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity.

6 | Super Scoop 2008 QSuper annual report to members

Insurance gets even better!

QSuper is pleased to announce further improvements to our insurance arrangements. We’ve always been committed to providing members with the best possible coverage, and now the cover we offer is even better! For members with an Accumulation account who are employed in the Queensland public sector, or those with a Defined Benefit account who have taken out extra insurance units, premiums for death and total and permanent disability (TPD) still remain at $1 per unit per week ($2.75 for police officers). However, the value of insurance units has increased. This means if you are aged 35 or under and currently have insurance, or are thinking of taking out extra cover, the value of each unit of death and total and permanent disability (TPD) insurance has increased from $60,000 to $100,000. Unit values are on a sliding scale and, as usual, will gradually decrease as you become older.

Because we recognise how important it is to know you and your family would be financially secure should the unforeseen happen, we’ve also increased the maximum allowable death and TPD insurance to $2 million ($1 million for casual employees). We’ve also improved our income protection offering,1 by again decreasing premiums – meaning you still get the same cover, but for less. So you can rest assured these changes will continue to keep you covered 24 hours a day, 7 days a week.2

Check out our website for more information about income protection premiums and the value of units for death and TPD cover.

1 Police officers, casual employees, and members with superannuation guarantee arrangements do not have income protection cover.

2 In the first ten years of cover, the insured benefit will not be paid if the cause of your death or disability is related to a medical condition that existed before the cover started.

and business updatesLegislative

Defined benefit notional taxed contributionIn last year’s Super Scoop we updated you on the Commonwealth Government’s Better Super initiatives, which included the introduction of contributions caps. If you have an Accumulation account, measuring your contributions against the caps is as simple as adding up all your concessional (generally employer and salary sacrificed) and non-concessional (generally personal after-tax) contributions.

In defined benefit-style accounts, however, a formula is used to calculate the amount attributed to the concessional contributions cap, called the notional taxed contribution (NTC). This is because employer contributions for a defined benefit aren’t allocated to individual members, but to a pool of funds from which benefits are paid. Transitional arrangements apply as at 5 December 2006. More information can be found in the Options section of our website.

Regulation updateThe QSuper Board of Trustees is currently considering the process of becoming a regulated fund. We began this process last year, and discussions with the relevant Commonwealth bodies are ongoing. We are also looking at being able to cater for members who have left Queensland Government employment, but want their new employer to contribute to their QSuper account. We will, of course, keep you fully updated via our website.

Anti-money laundering measuresThe Commonwealth Government has introduced legislation to make sure Australian financial organisations introduce procedures to deter people from using their services to launder money or finance terrorism.

We are currently enhancing our identification process as part of our program to meet the requirements of the anti-money laundering/counter-terrorism financing legislation. You may be asked in certain circumstances to provide QSuper with proof of identity.

Bankruptcy ActThe Bankruptcy Act 1966 now provides for the administrator handling a bankrupt’s affairs to recover certain contributions from a bankrupt member’s superannuation account. The administrator can only recover contributions that have been paid into superannuation after 28 July 2006, and that were paid with the intention of keeping the money from the bankrupt’s creditors.

So that the administrator can recover these contributions, the QSuper Board has the power to ‘freeze’ a member’s superannuation account, and pay an amount from the member’s account to the administrator. However, the QSuper Board can only exercise these powers on direction from the Commonwealth Government or a Court. If the QSuper Board is directed to freeze a member’s account, or pay an amount from a member’s account, the member will be notified.

New preservation cashing condition QSuper regulations have recently been amended to provide a new preservation cashing condition for your super. If a member has a terminal medical condition they may be eligible to access their preserved super benefits tax-free. For more information, see our website or give us a call.

Joanne SantosQSuper membersince 2002

This year’s Commonwealth Government Budget contained no major superannuation reforms, but there’s still plenty of other changes you need to know about.

Super Scoop 2008 | 7

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* Garry Wilkinson‘s deputy, Merv Bainbridge, attended Board meetings. Number of Board meetings attended

Number of Board meetings the Trustee was eligible to attend

Super Scoop 2008 | 7Small steps – big results

Your winning team

Steve RyanPresident, Queensland Teachers’ UnionAppointed: June 1994

Gay HawksworthState Secretary, Queensland Nurses’ UnionAppointed: December 2007

Tom JeffersVice President, Australian Workers’ UnionAppointed: August 2007

Karen PeutRepresenting the Queensland Public Sector Union of EmployeesAppointed: May 1985

Bob ScheuberFormer Chief Executive, Queensland RailAppointed: December 2007

Peter HennekenDirector General, Department of Employment and Industrial RelationsAppointed: December 2007

Terri HamiltonDirector, Terri Hamilton Financial ServicesAppointed: June 2000

Natalie MacDonaldDirector General, Department of HousingAppointed: December 2007

Gerard BradleyUnder Treasurer and Chairman of the BoardAppointed: August 1998

The QSuper Board of Trustees is responsible for the operation of QSuper and has a particular focus on the future development of the Fund. Meeting 11 times in the 2007/2008 financial year, the Trustees made decisions about important issues, and closely supervised the management of QSuper. The Board is established under the Superannuation (State Public Sector) Act 1990, which was recently amended to expand the number of Trustees from ten to twelve in recognition of the growing size and importance of QSuper. The Board is now made up of six members who are selected by the Queensland Government, and six members nominated by public sector unions. The appointment of a representative of the Queensland Nurses’ Union also recognises that the employees of Queensland Health make up a substantial proportion of QSuper members.

After providing years of valuable contribution and dedication, QSuper farewelled Linda Apelt, Tony Hawkins, Garry Ryan, Chris Barrett, and Gary Wilkinson (and his deputy Merv Bainbridge). We would like to thank each of the former Trustees for their hard work and commitment over the years.

As a result of these changes, six new Trustees joined the Board. They were appointed based on their experience and integrity. QSuper would like to warmly welcome Peter Henneken, Natalie MacDonald, Bob Scheuber, Tom Jeffers, and Gay Hawksworth. QSuper would also like to thank Denis Fitzpatrick, who was appointed in August 2007, but due to changing work circumstances resigned in June 2008.

As QSuper continues to evolve to meet the demands of both our members and an ever-changing super industry, you can rest assured that our experienced and knowledgeable Trustees are confidently guiding the Fund into the future.

The Trustees of QSuper are known as the QSuper Board of Trustees of the State Public Sector Superannuation Scheme (ABN 60 905 115 063). The Superannuation (State Public Sector) Act 1990 provides for the indemnification of the Board of Trustees. The Board has a level of indemnification that is consistent with Commonwealth superannuation laws and other state legislation.

(nominated by the Combined Public Sector Union Superannuation Committee)

(nominated by the Queensland Government)Member representatives Employer representatives

You can rest assured that our experienced and knowledgeable Trustees are confidently guiding the Fund into the future.

John CarpendaleFormer superannuation fund executiveAppointed: June 2006

This position will be filled in the coming months by a nominee of the Queensland Council of Unions.

Position to be filled

Position to be filled This position will be filled in the

coming months by a nominee of the Queensland Council of Unions.


and your supermarket

It’s all about the long termRecent years have seen healthy returns for super funds, but as the saying goes, what goes up must come down. Pulling out of your investment when the markets are falling may be to your disadvantage, especially if you bought when the price was high.

It isn’t unusual for investments in shares to occasionally see negative returns but it is important to step back and look at the bigger picture. The graph below shows historical events, such as world wars, recessions, and sharemarket crashes, that have affected the Australian sharemarket in the past – in several cases much more seriously than the sub prime crisis. And as you can see, each time the market has recovered and continued to grow steadily.

We’re looking out for youAlthough the performance of investment markets is out of our control, we are constantly working to provide as much protection as possible for your super during the ‘bad times’. Over the past two years we have reduced our allocation to equities and raised our investments in unlisted assets in an effort to reduce the impact of listed market volatility. We have also been offering greater diversification, and alternative investments have been a feature of some of our options since July 2006.

The Board places the utmost importance on our investment performance, and has been monitoring the situation very closely over the

past few months. In fact, from 1 July 2008 the Board has approved changes to the strategic asset allocations of three of our investment options to take advantage of emerging opportunities and diversity – see page 11 for more information.

Still going strongThe short-term losses may seem worrying when they happen, but it’s important not to panic – when it comes to your super, it’s the long-term results that count. Our experts are working hard developing strategies to get you the best possible long-term results, and as a result the five-year average return for our Balanced option is a very pleasing 10.56% per annum.1 And QSuper members have more to smile about than most. According to industry research released earlier in 2008, our Balanced option outperformed nearly all the researched balanced investment options of Australian superannuation funds over a five-year period, ranking as one of the top three performers.2 1 Past performance is not a reliable indicator of future

performance.2 Top 10 Super Returns per annum for five years ending

29 February 2008, SuperRatings.

Volatile domestic and international sharemarkets have been big news throughout the year. Super funds have not been immune from the volatility, and if you have an Accumulation or Allocated Pension account you are probably seeing a negative return on your statement for the first time in several years. But what does it really mean for your super in the long term?

You have most likely heard of the United States’ sub prime crisis that sent shockwaves through markets around the world. The result was lenders being less willing to lend, and interest rates rising sharply to cover perceived risks and to curb overspending.

This has left a great deal of volatility, and many super funds across Australia have suffered negative returns. Seeing negative returns for your super can be upsetting, but it’s important not to panic. For many people the knee-jerk reaction might be to withdraw funds or switch to a lower risk investment option. However super is a long-term investment, and attempts to choose the best investment for short-term results are rarely successful, so before making any decision to switch, we recommend you seek financial advice.

8192409620481024

51225612864321684

Year

Major sharemarket falls shown in brackets

Australian shares since 1900

Source: QICPast performance is not a reliable indicator of future performance.

All Ords price index

Start of WWI(-22.4%)

1929 crash(-46%)

WWII(-32%)

Credit squeeze(-23%) 1987 crash

(-50%)

Bond crash (-23%)

Sep 11 attacks

Sub prime crisis (-24%)

Vietnam War

Recession(-32%)

1998 Liquidity

crisisTech wreck

(-22%)OPEC crisis/stagflation

(-59%)

Korean war boom/Wool bust

(-34%)

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

The Board places the utmost importance on our investment performance.


One of the main reasons we are able to provide low fees and offer such good value for our members is our size. Because QSuper is a very large fund, with around $25 billion in funds under management and over 490,000 members, we are able to negotiate lower fees with external providers, such as investment managers.

So why is a low fee so important? Fees may only be one of the considerations to take into account, (investment returns are also relevant), but the graph below shows the impact that just a 1% variation in fees can make to a $100,000 investment over 25 years. That’s a difference of almost 28%, or $98,547. Just imagine the difference that could make to your retirement!

So while investment markets may be unpredictable, our main priority is to keep our eye on the prize – long-term results. Our commitment to solid returns and low fees means we will continue to work with you to achieve the lifestyle you want for your retirement.

This year QSuper’s Accumulation account was awarded a Platinum rating from SuperRatings for the second year in a row. This is the highest possible rating, and puts the overall performance in key assessment areas of the Accumulation account in the top 15% of researched Australian funds. It also positions us as one of the best value for money funds in the country.

We’re committed to having some of the lowest management fees of any super fund in Australia, because the less you pay in fees, the more money you have in your account working for your future.

James VuongQSuper membersince 2007

Some things are just meant to be low

fees

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Years0 5 10 15 20 25

Why a low fee is so important!

5% net return $348,462

6% net return $447,009

Please noteThis calculation compounds interest monthly for a period of 25 years. The calculation is therefore designed to provide an estimate of the future value of your savings, which could vary significantly over time if any change is made to assumptions.For this projection, a net investment return (expected earnings) of 5% and 6% after fees and taxes has been used. Neither the amount saved each period nor the total saved have taken inflation into account, which you may wish to consider if saving for a particular purpose over a significant period. This calculator does not replace personal financial advice and you should seek specific professional advice prior to acting on any information.

We’ve outgrown our building in George Street and will be moving to new premises later this year. This means we will be centrally located in one building and the modern layout will enable us to efficiently house staff. Central Plaza 3 at 70 Eagle Street will feature a modern Contact Centre on the ground floor, and because of the space savings we gain in moving to the new building, the entire first floor will be dedicated to a seminar and member education facility. In the future, most of our Brisbane city seminars will be run from here.

There will be no change to our Contact Centre phone number, and our current Contact Centre at 63 George Street (corner of George and Mary Streets) will remain, providing you with even more convenience in the city.

We’re moving!

Look at the difference!28% more or $98,547

The short-term losses may seem worrying when they happen, but it’s important not to panic.

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85


This achievement is the result of the very strong relationship over many years between the QSuper Board of Trustees and QIC. Through this constructive and collaborative relationship, QSuper members will continue to benefit from a number of innovations. Initiatives in recent years which have had tangible results for members include:

• Managing investments to maximise after-tax returns.

• Increasing the diversification of the QSuper Balanced, High Growth, and Cash Plus investment options by investing in alternative investments – including infrastructure, private equity, and commodities – to smooth your investment returns.

• More flexible asset allocation ranges, which allow QIC to more dynamically manage QSuper portfolios to perform in a range of economic conditions.

After-tax investingWith tax on investment earnings one of the largest costs a superannuation fund faces, it is an obvious area for review. Obvious but not simple, especially given the significant complexities of tax legislation applying in the dynamic and fast-paced environment of investment management. After considerable effort, processes were put in place from July 2007 to manage your investments in order to maximise your after-tax returns.

Diversification into alternativesIn July 2006, we introduced a new range of alternative assets to some QSuper Ready Made options, with the aim of providing smoother returns with less overall risk. Since then, we have been prudently increasing our exposure to private equity, infrastructure, and commodities investments. For example, we now have major stakes in a United Kingdom water company (Thames Water), as well as European port facilities.

These investments, like our property investments, have helped reduce some of the impact of falling sharemarkets during the past year, and we continue to look for opportunities to increase our exposure to quality alternative investments.

While the past year’s returns are disappointing, members should be comforted by the solid longer-term returns over the past five years.

Rising to the

Brad HolzbergerChief Executive QIC Asset Management

Carolyn GillQSuper member

since 2005

In a year dominated by the credit crisis and the subsequent volatility in financial markets, the returns for most QSuper investment options were lower (and in many cases negative) for the financial year. While the past year’s returns were disappointing, members should be comforted by the solid longer-term returns achieved over the past five years (see page 12 for details).


Delivering results in a difficult environment While we acknowledge negative returns are disappointing, the QSuper Balanced option has performed well compared to the balanced options of many other funds during this period of extreme market volatility. During this difficult time, we have implemented strategies aimed at smoothing short-term results and maximising long-term returns for members.

Some specific strategies we have implemented include:

• Reducing our exposure to shares well before this year’s market correction.

• Selling the Central Plaza office complex in the Brisbane CBD for a record price in what was very much a sellers’ market.

• Avoiding exposure to the Australian listed property market – which fell over 30% during the year – having believed for some time that this market was due for a significant correction.

Market outlookConditions in the coming year are likely to continue to be challenging, with lower global economic growth and volatile investment markets.

We are unlikely to see the same double digit returns of the past three to five years in a lower growth environment going forward. In this lower return environment, initiatives such as after-tax investing will have an even more relative impact on returns for members.

investment and feesQSuper

QSuper’s fees are ranked as some of the lowest in Australia.

SuperRatings 2007

This article was supplied by QIC.

Changes to strategic asset allocationsWhen investing your super, QIC works within strict asset allocation ranges as prescribed by the QSuper Board. These ranges apply to most of our Ready Made options and defined benefit monies. However, the Board made the decision from 1 July 2008 to make these asset allocations wider for some options, in recognition of the fact that different investment strategies may be required in different economic and market environments.

Increasing these ranges allows greater diversification and the ability to boost the acquisition of alternative assets, which in turn offers the potential to achieve solid returns with less risk. Additionally, it gives QIC more ability to react to market factors and take advantage of investment opportunities as they arise. All the asset allocation ranges can be found on pages 12 – 13.

Significant market movement policyQSuper’s unit pricing system operates on a two-day lag basis. This means that movements in investment markets for a given day are incorporated into the unit price released to members two business days later. If there is significant market movement – an abnormally large gain or loss within an investment option – QSuper will protect members by suspending processing until the market movement can be incorporated into the unit price.

QSuper uses materiality thresholds (the point at which the market movement has affected an option significantly) to determine whether a significant market movement has occurred. Information on the current materiality thresholds for all our options can be found on our website.

Fees updateThe MERs for the 2007/2008 financial year for all our options can be found in the table below. The MER is made up of a fixed component (fund administration, services, and core investment management fees) and a variable component. The QSuper Board will provide at least 30 days’ notice of any increase in the fixed component, which is currently no more than 0.30% of a member’s Accumulation or Allocated Pension account balance. Given the nature of the variable component, these fees cannot be precisely calculated in advance. We will provide updated fees on the website throughout the year.

During the course of the year, changes made to investment strategies in the Balanced, Cash Plus, and High Growth options resulted in a higher MER than last year. At the same time changes to the Australian Shares and International Shares investment options resulted in a lower MER than last year.

Investment option MER1

Balanced 0.72%

Cash Plus 0.47%

Socially Responsible 0.95%

Basic Growth 0.29%

High Growth 0.85%

Cash 0.32%

Fixed Interest 0.39%

Australian Shares 0.40%

International Shares 0.42%

1 MERs are generally the total expenses of the Fund as a proportion of the Fund’s net asset value.


Investment objectives and returns 2007/2008Accumulation and Allocated Pension accounts

Investment objectives and asset allocations as at 1 July 2008The table below shows the objectives for QSuper’s nine investment options. The actual amounts invested in different asset types vary from time to time. The management of these asset allocations occurs within set ranges (as shown

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.

Suited to medium to long-term investors who are willing to accept a higher level of volatility than the Balanced option in exchange for a lower fee.


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.

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


Asset classAsset allocation Asset allocation Asset allocation Asset allocation Asset allocationRanges Ranges Ranges Ranges1 Ranges

Cash 0% – 20% 50% – 60% 0% – 6% 5% -2% – 10%Fixed interest 5% – 20%2 2.5% – 10%2 17% – 29% 25% 0% – 15%

Property 5% – 15% 2.5% – 7.5% 4% – 22% 10% 0% – 15%Australian shares 25% – 35% 12.5% – 17.5% 35% – 41% 35% 20% – 40%

International shares 20% – 30% 10% – 15% 11% – 33% 25% 30% – 50%Alternative assets 5% – 33% 2.5% – 16.5% 0% – 4% n/a 0% – 36%

Balanced Cash Plus Socially Responsible Basic Growth High Growth

1 The investment management of the Basic Growth option targets the specific asset allocation shown above.2 Transitional arrangements will apply to the Fixed interest allocation for the Balanced (5%-25%) and Cash Plus (2.5%-12.5%) MIC options.

2007/2008 returnsWhen 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

Actual asset allocations Year ended 30 June





Asset class 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008Cash 12.7% 7.0% 56.3% 53.5% 6.9% 4.9% n/a 5.3% 6.2% 4.9%

Fixed interest 22.2% 24.7% 11.1% 12.3% 18.6% 24.3% n/a 25.0% 0% 0%Property 8.9% 9.5% 4.4% 4.8% 13.6% 11.4% n/a 9.6% 4.4% 9.5%

Australian shares 27.7% 28.6% 13.9% 14.3% 39.9% 37.5% n/a 35.1% 28.8% 26.5%International shares 23.9% 23.0% 12.0% 11.5% 21.0% 21.9% n/a 25.0% 52.2% 46.6%

Alternative assets 4.6% 7.2% 2.3% 3.6% 0% 0% n/a 0% 8.4% 12.5%100% 100% 100% 100% 100% 100% n/a 100% 100% 100%

Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3

Accum AP Accum AP Accum AP Accum AP Accum AP2007/2008 -3.61% -3.64% 0.26% 0.48% -8.25% -9.10% -0.74% 4 -0.81% 4 -8.31% -9.06%

Net return history5 Net return history5 Net return history5 Net return history5 Net return history5

Accum AP Accum AP Accum AP Accum AP Accum AP2003/20046 16.06% 17.65% 9.93% 11.30% n/a n/a n/a n/a 20.72% 23.60%2004/20056 15.11% 17.04% 9.77% 11.12% 2.10%7 2.40%7 n/a n/a 16.00% 18.08%2005/20066 14.76% 16.59% 9.65% 11.04% 16.68% 18.56% n/a n/a 17.70% 20.42%2006/2007 13.12% 14.79% 9.12% 10.46% 15.03% 16.79% n/a n/a 17.79% 20.44%2007/2008 -4.68% -4.81% -0.32% -0.17% -9.87% -10.88% -1.78%4 -1.94%4 -9.47% -10.33%

3 yr comp. avg. (p.a.) 7.36% 8.41% 6.05% 6.98% 6.55% 7.26% n/a n/a 7.87% 9.16%5 yr comp. avg. (p.a.) 10.57% 11.90% 7.55% 8.65% n/a n/a n/a n/a 11.94% 13.68%

Accum = Accumulation account AP = Allocated Pension account

Balanced Cash Plus Socially Responsible Basic Growth High Growth

3 Crediting rates 2007/2008. Crediting rates differ from net returns, due to the two-day lag in unit prices. Crediting rates are net of fees and taxes.4 Based on partial year (option commenced 1 February 2008).5 Net return is net of fees and taxes.


Continued over page

below), and give QIC, QSuper’s investment manager, the flexibility to take advantage of investment opportunities.

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 diversified portfolio of cash investments after fees and tax.

To capture the return of a broadly diversified portfolio of global fixed interest investments after fees and tax.

To capture the return of a broadly diversified portfolio of Australian shares after fees and tax.

To capture the return of a broadly diversified portfolio of international shares after fees and tax.

Objectives

Asset allocation Asset allocation Asset allocation Asset allocationAsset classRanges Ranges Ranges Ranges

100% 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

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.





2007 2008 2007 2008 2007 2008 2007 2008 Asset class100% 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 shares0% 0% 0% 0% 0% 0% 0% 0% Alternative assets100% 100% 100% 100% 100% 100% 100% 100%

Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3

Accum AP Accum AP Accum AP Accum AP4.03% 4.81% 3.20% 3.83% -10.88% -11.05% -12.86% -14.63% 2007/2008

Net return history5 Net return history5 Net return history5 Net return history5

Accum AP Accum AP Accum AP Accum AP4.37% 5.20% n/a n/a n/a n/a n/a n/a 2003/20046

4.73% 5.63% 4.24%7 5.05%7 7.12%7 7.38%7 3.92%7 4.55%7 2004/20056

4.85% 5.78% 2.15% 2.58% 23.32% 24.47% 14.47% 16.71% 2005/20066

5.24% 6.24% 4.49% 5.35% 25.90% 27.75% 19.68% 22.79% 2006/20073.99% 4.77% 3.62% 4.32% -13.66% -13.93% -13.77% -15.66% 2007/20084.69% 5.60% 3.41% 4.08% 10.26% 11.03% 5.71% 6.52% 3 yr comp. avg. (p.a.)4.63% 5.52% n/a n/a n/a n/a n/a n/a 5 yr comp. avg. (p.a.)6 Please note: the investment returns for these years 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.

7 Based on partial year (option commenced 1 January 2005).

Cash Fixed Interest Australian Shares International Shares


Defined benefit accounts

The table below shows the objective for QSuper’s defined benefit accounts. The asset allocation ranges applying from 1 July 2008 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 flexibility to take advantage of investment opportunities.

Objective To achieve an average return over rolling 10-year periods of AWOTE1 + 3.0% per annum, after fees and tax.

Asset allocation Ranges from 1 July 2008 2007 actual allocation 2008 actual allocationCash 0% – 15% 6.0% 0.8%Fixed interest 15% – 45% 35.0% 38.9%Property 5% – 15% 12.3% 12.6%Australian shares2 15% – 25% 20.2% 20.4%International shares 15% – 25% 21.8% 20.4%Alternative assets 0% – 25% 4.7% 6.9%Total n/a 100% 100%1 AWOTE is a measure of wage and salary levels of employees in Australia, as measured by the Australian

Bureau of Statistics and published quarterly. 2 The allocation to Australian shares includes an investment in Q Invest Limited.

Most defined benefit members are not affected by investment returns, as the final benefit 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 defined benefit account, but do not affect the final benefit you will receive. The details below are provided as information to members as part of our commitment to comprehensive reporting.

Investment returns – defined benefit accountsYear Defined Benefit 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

2007/2008 -1.86% -3.61% -1.86% -4.01% -3.61% -1.86% -4.01% -3.61%

2006/2007 14.17% 16.30%3 14.17% 13.78% 14.18% 14.17% 13.78% 14.18%

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%

Compound average

5 year (p.a.) 12.60% 10.97% 12.60% 10.16% 10.56% 12.60% 10.16% 10.56%

Investment objective and asset allocations as at 1 July 2008

2007/2008 returns

Continued from previous page

30 June 2008 30 June 2007 30 June 2006 30 June 2005$575.57m $665.49m $478.24m $324.99m

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 defines 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 financial year: Accumulation and Allocated Pension accounts Cash option 11.23% exposure to ANZ Banking Group (cash, bank bills/promissory notes, floating rate notes and other corporate securities), 10.58% exposure to Commonwealth Bank of Australia (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 12.18% exposure to National Australia Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 5.77% exposure to St George Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 10.54% exposure to Westpac Banking Corporation (cash, bank bills/promissory notes, floating rate notes, and other corporate securities); Accumulation and Allocated Pension accounts Cash Plus option 9.40% exposure to ANZ Banking Group (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 8.92% exposure to Commonwealth Bank of Australia (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 10.24% exposure to National Australia Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 8.86% exposure to Westpac Banking Corporation (cash, bank bills/promissory notes, floating rate notes, and other corporate securities); Accumulation and Allocated Pension accounts Australian Shares option 13.89% exposure to BHP Billiton Limited, 5.06% exposure to Commonwealth Bank of Australia; Accumulation and Allocated Pension accounts Fixed Interest option 12.65% exposure to Fannie Mae (medium and long-term US Bonds).

ReservesReserves are held aside to pay for specific items as they occur. The reserves held are a general reserve – which funds taxation and general administration expenses, an investment fluctuation reserve, and an insurance reserve. The reserves operate within an established reserving policy approved by the QSuper Board of Trustees, who also set and annually review the investment strategy of these reserves. In setting the investment strategy for the reserves, consideration is given to the purpose of the reserves, the nature of the underlying liabilities, and investment risk. The reserves are held in a mix of cash and balanced investments.

3 Last year we reported the QSuper Board of Trustees determined a crediting rate of 14.18%. However the actual rate applied, which will stay in effect, was 16.30%.

Top 5 property investments 30 June 2008

Top 5 international shareholdings 30 June 2008

Top 5 Australian shareholdings 30 June 2008

Castle Towers Shopping Centre, Castle Hill, NSW

Nestle S.A. BHP Billiton Limited

Merry Hill Shopping Centre, Brierly Hill, United Kingdom

Total S.A. Commonwealth Bank of Australia Limited

Canberra Centre, Civic, Canberra, ACT

Microsoft Corporation Rio Tinto Limited

Westpoint Shopping Centre, Blacktown, NSW

Occidental Petroleum Corporation

Telstra Corporation Limited

Robina Town Centre, Robina, QLD

E.ON AG National Australia Bank LimitedSource: QIC

Super Scoop 2008 | 15Small steps – big results

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 Officer, QSuper, GPO Box 200, Brisbane Qld 4001, and mark your letter ‘Notice of enquiry or complaint’.

If you are not satisfied 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 want to find 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.

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

QSuper Net Assets available as at 1 July 2007 = $22,698.23m

TOTAL ASSETS $25,017.72m

Investments $24,771.49m

Other assets $246.23m

TOTAL LIABILITIES $479.16m

Current tax liabilities $244.96m

Other liabilities $234.20m

Fund accountsThis summary of the Fund’s financial position was prepared before the audit of the accounts, using information available at the time of publication. The audited financial statements and auditor’s report will be available on the website in November 2008.

Total expenses $1,998.48m

Benefits paid $2,027.05mAdministration expenses $67.21m Income tax expense $(102.57m)Other expenses $6.79m

QSuper Net Assets available as at 30 June 2008 = $24,538.56m

Total revenue $3,838.81m

Investment income $(940.83m)Employer contributions $3,075.30m Member contributions $1,112.41mTransfers in $512.66mGain from net assets transferred in $78.20mOther income $1.07m

We regularly undertake market research to find out first-hand what you want from your fund, and to ensure we provide the range of products and services you need.

All QSuper surveys are conducted by professional research firms such as Enhance Management, and formal agreements ensure these firms comply with strict standards set by QSuper and national privacy legislation. The personal data we supply to researchers is generally limited to your name and contact

QSuper may be calling you!

think superannuation is important in making sure they have adequate retirement savings.

would still contribute if superannuation was not compulsory.

consider QSuper to be trustworthy in looking after their investment in times of volatility.

prefer to receive their statements in hard copy.

of retired members didn't expect to retire at the age they did.

93%

89%

84%

71%

50%

Here are some interesting statistics we gained from surveying QSuper members last year.

details, and the results we receive never identify you. Your participation in the surveys is voluntary and your opinions are completely confidential. If you have questions about any QSuper research you participated in, please don’t hesitate to call our Contact Centre on 1300 360 750.

Financial highlights 2007/2008 Changes in the Net Assets

Net Assets as at 30 June 2008

The Net Assets are represented by: Accumulated funds: $23,962.99m and Reserves: $575.57m.

qsuper.qld.gov.au1QSuper Member Satisfaction Research 2007 – 2008.2SuperRatings 2007.

Lars KjaersgaardQSuper member since 2005

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Super Scoop 2008 - for younger members...Q Invest.2 It’s full of great tips about how to make the most of both your super and your finances in general. Always innovating At QSuper,