The Super Advantage

The Super Advantage

November 2003

Important Notes/DisclaimerIn May 2002 the global ING Group formed a joint venture with Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 for the

provision of certain financial products and services in the areas of superannuation and investment products and life insurance policies. The joint

venture company is ING Australia Limited (ING Australia) ABN 60 000 000 779.

ANZMI is a wholly owned subsidiary of ING Australia.

An investment in ANZ Super Advantage is neither a deposit nor a liability of:

> ANZ or any of its related corporations; or

> ING Australia, ING Bank (Australia) Limited ABN 24 000 893 292, ING Investment Management Limited ABN 23 003 731 959 or any other company in

the ING Group, other than ANZ Life Assurance Company (ANZ Life) ABN 63 008 425 652.

This information is current as at the date of its publication in November 2003 but may be subject to change. Past performance is not a reliable indicator

of future performance. The value of investments may rise or fall and repayment of the subscribed capital is not guaranteed. This publication has been

prepared without taking into account a potential investor’s objectives, financial situation and needs. Before making a decision based on this publication

a potential investor should consider the appropriateness of the advice, having regard to their objectives, financial situation and needs.

Although we consider the source of this material reliable and we have prepared it with care and in good faith, no warranty is given and no liability is

accepted by ANZ Managed Investments Limited or any affiliated companies for any statement or opinion or any error or omission.

Full product information including fees, charges, commissions, terms and conditions is available in the ANZ Super Advantage disclosure documents

dated October 2003, available at www.anz.com or by calling 13 38 63.

Welcome to the

latest edition of The

Super Advantage.

This newsletter

is produced

specifically for

members of ANZ

Super Advantage

and is distributed to

you quarterly.

ANZ Super Advantage investment menu changes 3

ING Melbourne Institute Household Savings

and Investment Report 3

Market update 4

The market cycle 5

Topical issues 5

The tide appears to be turning 6

Asset allocation and fund performance 7

We value your feedback!

Please direct any comments on this edition to:

ANZ Super Advantage NewsletterGPO Box 4028Sydney NSW 2001

For more information on ANZ Super Advantage

Telephone 13 38 63 between 8am and 8pm ESTMonday to Friday (excl. public holidays)

Website www.anz.com/wealth/super

Email [email protected]

Facsimile 02 9234 8286

2 The Super Advantage

The TrusteeThe Trustee and issuer of ANZ Super Advantage (ASA) is ANZ Managed Investments Limited (ANZMI) ABN 61 004 392 269, 347 Kent Street Sydney

NSW 2000. Telephone: 13 38 63 Facsimile 02 9234 8286.

Introduction Contents


ANZ Super Advantage investment menu changes

As a result of a recent review, ANZ Managed Investments

Limited (the Trustee) approved changes to ASA’s investment

menu, effective 1 October 2003.

The new menu consists of 44 investment funds, including 16 ING

funds, 14 external manager funds and 14 multi-manager funds.

As part of the investment menu review, a number of

investment funds have been withdrawn and replaced by the

Trustee’s nominated investment funds that are similar in risk

return profile. This replacement process involves investment

holdings in any of the withdrawn funds being automatically

switched to the replacement funds during late November 2003.

Additionally, the existing multi-manager Gateway and Russell

investment funds which currently invest in funds managed by

Russell, have been replaced.

After careful consideration the Trustee believes it is in

members’ best interests to invest them, where feasible, in

funds managed by ING’s subsidiary, Optimix Investment

Management Limited.

You may be aware that the Gateway investment philosophy

regularly balances the proportion of funds allocated to each

asset class back to a fixed benchmark. Conversly, the Optimix

process actively fine tunes exposure to particular asset classes

and investment styles to take advantage of prevailing economic

conditions. The aim of this additional dimension is to enhance

returns and reduce risk, thus benefiting our investors.

There are two options available to you regarding the

automatic switching of funds and these are explained in a

separate communication that you will have recently received.

You will also have received the ANZ Super Advantage Investment

Menu Changes brochure that provides further information on all

changes to the investment menu, including the review process,

costs and changes to specific investment funds.

Available upon request is the ASA Investment Information

Booklet that contains detailed information on the new

investment funds and can assist you in choosing a personal

investment strategy. You should also consider contacting

your ANZ Financial Planner about any changes you may wish

to make to your personal investment strategy.

ING Melbourne Institute Household Savings and Investment Report

The ING Melbourne Institute Household Savings and

Investment Report measures the trends in savings, investment

and debt behaviour of 1000 Australians in a national survey

conducted quarterly.

In the September 2003 quarter, the survey found that:

> Despite rising share markets, investors are still focused on

property investment and debt reduction

> For the second consecutive quarter the number of people

(8.1 per cent) intending to invest new savings in shares

has risen, albeit by a small margin

> Interest in property remains strong with one in three people

indicating they would invest new savings in property

> More than 45 per cent of Australian households surveyed

were debt free and about 34 per cent have only one form

of debt

Market update


Asset class Risk (volatility)and potentialreturn

Short-term historical index performance as at 30/09/20031

3 month 6 month Our view of factors driving performancereturn return

Cash Low 1.19% 2.40% The Reserve Bank of Australia held its official

interest rate at 4.75% over the period. Cash

returns assumed a similarly steady nature.

Australian Fixed Interest Low-medium -0.23% 1.93% The weakness of the domestic bond market was

primarily driven by US economic developments

over the period.

International Fixed Interest Low-medium 0.00% 2.44% Demand for US bonds reduced sharply over

the period as initial concerns over deflation

subsequently gave way to renewed economic

optimism.

Listed Property Medium-high -4.23% -1.19% After significantly outperforming in an

environment of investment pessimism, LPTs

surrendered their early gains as improving

economic sentiment prompted investors to

switch their attention to higher-risk areas of

the sharemarket.

Australian Shares High 6.21% 12.57% The Australian sharemarket recorded strong

gains as the swift conclusion to full-scale combat

in Iraq led investors to focus on increasingly

positive prospects for the global economy.

International Shares High 4.29% 10.43% Global sharemarkets recorded excellent

performance over the quarter as investment

sentiment was buoyed by improving economic

prospects and positive corporate earnings

results in the US and Europe.

Source: IRESS, UBSA, Datastream

1 Data: UBSA Bank Bill Index, UBSA Composite Bond Index (All Maturities), Citigroup WGBI Index excl. Aust in $A (hedged),

S&P/ASX 200 Property Trust Accumulation Index, S&P/ASX 300 Accumulation Index, MSCI World excl. Aust Index in $A (unhedged).

Asset class Risk (volatility)and potentialreturn

Performance as at 30/09/20031

1 year return (p.a.) 3 year return (p.a.) 5 year return (p.a.)

Cash Low 4.89% 5.11% 5.24%

Australian Fixed Interest Low-medium 5.51% 7.28% 5.80%

International Fixed Interest Low-medium 6.79% 9.08% 6.81%

Listed Property Medium-high 6.23% 11.29% 8.49%

Australian Shares High 11.78% 2.67% 8.08%

International Shares High 1.58% -15.95% -1.85%

The market cycle

The Super Advantage 5

SharesThe table opposite outlines the distinct change in share price

momentum since March 2003. This is reflected by the very

strong returns in Australian and international shares over the

last three and six months. In contrast, longer term returns are

still low compared to similar time periods throughout the last

50 years, which demonstrates the extent of the downturn that

investors experienced between 2000 and early 2003. We

believe this is encouraging as it suggests that, even in light of

recent gains, there may still be a good amount of potential

upside in share prices going forward.

Fixed interestFixed interest returns have been weak over the last two

quarters as a result of the softening demand for both

Australian and international bonds. This is not surprising, as

the returns of shares and bonds (fixed interest) often display

an inverse relationship. For example, when shares were

performing poorly throughout 2001 and 2002 fixed interest

returns were very strong.

PropertyListed Property Trusts (LPTs) continue to provide relatively

strong levels of performance, although our view is that this

sector is currently overvalued and is likely to offer lower

returns than shares over the next year or two.

Topical issues

Q There has been a lot of media hype regarding the

possibility of a bubble in the property market. Is this

true, and if so, how would this affect managed funds that

invest in property?

A Residential property prices in Australia have enjoyed an

incredible period of growth over the last five years,

especially in Sydney and Melbourne. The opinion of the

Federal Treasurer and the Reserve Bank of Australia is that

these levels of growth are not sustainable in the long

term, and that some pockets of the residential property

market are currently overpriced.

The good news for investors that hold property as

part of their managed fund portfolio is that the vast

majority of such holdings are via investments in LPTs

rather than direct property. LPTs can invest in

various properties which include hotels, office

towers, industrial factories and shopping centres.

As a result, LPTs offer excellent diversification within

the property market. Furthermore, LPTs offer levels of

income (i.e. yield) that generally exceed other

growth investments.

Patient investors are nowbeing rewardedInvestment markets move in cycles. The previous two or

three years have been a difficult time for investors in

managed funds that invest in Australian or international

shares. However, investors who focused on their long-

term goals and remained invested throughout this period

are now starting to see the benefits of their conviction.

Our view is that the last six months of improved

sharemarket performance is the beginning of a

sustainable, long-term recovery.

For investors with a long-term investment time horizon and

with a high risk tolerance the current market may represent

a good opportunity to consider gearing. Note that gearing is

a strategy that involves increased risk and you should

consult your ANZ Financial Planner to ensure it is suitable

for your individual situation.

Our key messages> Markets move in cycles

> Sharemarkets are improving

> History has demonstrated that long-term

investors have been rewarded

In the last edition of The Super Advantage we highlighted that sharemarkets around the world may be experiencing thebeginnings of recovery following the sustained period ofweakness that has endured since early 2000.

The excellent performance of both Australian and internationalshares over the last three months has provided support for ourview that the market is improving and that the next 12-18months may continue to provide investors with solid gains.

The tide appears to be turning

The graph above illustrates the change in the performance ofshares since March this year, not only in Australia but in mostof the world’s major markets. We believe this rebound is aresult of a combination of factors including:> Signs of improvement in the strength of the US and Japanese

economies> Incentive for businesses and consumers to borrow for

investment, created by the low interest rate environmentaround the world

> Recent fiscal incentives provided by the US Government(including reduction of the tax paid on dividends) toencourage investment activity

> Increased investor confidence, as a result of a combinationof many positive factors including the end of SaddamHussein’s regime in Iraq.

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan-2003 Feb-2003 Mar-2003 Apr-2003 May-2003 Jun-2003 Jul-2003 Aug-2003

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Japan USA UK Germany Australia

Market movements throughout 2003 to date

Source: IRESS

Data: Japan – Nikkei Dow Index, USA – Dow Jones Industrial Average, UK – FTSE Index, Germany – DAX Index, Australia – S&P/ASX 300 Index.


Asset allocation and fund performance – as at 30 September 2003

• Cash 4.0%

• International Shares 96.0%

3 months 2.86%6 months 7.45%1 year 6.02%2 years -1.41%3 years -2.63%5 years 3.22%

ASA size $m 411.150Manager size $m 435.080

3 months 1.09%6 months 1.83%1 year 3.02%2 years 2.36%3 years 2.62%5 years 2.57%


• Cash 100.00%

3 months -0.61%6 months 0.90%1 year 2.79%2 years 2.84%3 years –5 years –


• Cash 1.1%

• Australian Fixed Interest 51.7%

• International Fixed Interest 47.2%

ANZ Money Market Plus FundANZ Wholesale Diversified

Fixed Interest Fund

ANZ Australian Equities FundANZ Wholesale Australian

Imputation Fund



• Cash 49.9%


ANZ Capital Guaranteed Fund

ANZ Growth Fund

3 months 1.95%6 months 4.97%1 year 4.80%2 years 0.24%3 years5 years


ANZ Wholesale Balanced Fund ANZ Wholesale Income FundANZ Diversified Stable Fund

ANZ Wholesale

Property Securities Fund

• Cash 0.2%

• Australian Shares 99.8%

ANZ Wholesale

Wealth Accumulator Fund

ANZ Wholesale Global

Technology Fund

• Cash 5.1%

• Property 6.4%





• Cash 12.5%

• Property 4.6%





• Cash 22.6%

• Property 2.9%







• Cash 52.5%

• Property 4.6%




3 months 0.56%6 months 1.99%1 year 3.60%2 years 2.83%3 years –5 years –


• Cash 1.8%


3 months 7.52%6 months 15.55%1 year 11.63%2 years 1.97%3 years -0.58%5 years 7.39%


• Cash 0.8%


3 months 9.00%6 months 13.06%1 year 6.08%2 years -3.27%3 years –5 years –




• Cash 1.4%

• Property 98.6%

3 months -3.57%6 months -1.24%1 year 4.01%2 years 5.78%3 years –5 years –


3 months 9.52%6 months 25.44%1 year 25.06%2 years -9.76%3 years -37.96%5 years –





• Cash 4.6%

• Property 9.9%





ANZ Balanced Index Fund

3 months 3.62%6 months 9.64%1 year 7.53%2 years -0.70%3 years -4.36%5 years 2.62%

ASA size $m 42.730Manager size $m –

• Cash 0.1%

• Property 5.0%





Gateway Aggressive Fund



• Cash 25.3%

• Property 4.8%





Gateway Conservative Fund



• Cash 8.2%

• Property 9.7%





Gateway Balanced Fund

3 months 4.98%6 months 10.09%1 year 8.54%2 years 3.60%3 years 0.56%5 years –


• Cash 0.2%


ANZ Australian Equities

Index Fund



• Cash 0.9%


3 months 3.19%6 months 7.37%1 year -1.02%2 years -13.19%3 years -15.25%5 years -2.33%

ASA size $m 24.140Manager size $m 2,347.00

• Cash 0.5%


Russell International

Shares Fund – $A Hedged



• Cash 1.2%


Russell Australian

Shares Fund

3 months -3.34%6 months -1.03%1 year 4.97%2 years 5.84%3 years 7.79%5 years 5.57%


• Cash 1.0%

• Property 99.0%

Russell Australian

Property Securities Fund


Shares Fund

3 months 1.41%6 months 6.81%1 year -2.46%2 years -13.45%3 years -15.13%5 years –


• Cash 0.3%


ANZ International Equities

Index Fund



• Cash 5.0%

• Property 7.8%





Gateway Growth Fund

3 months -0.40%6 months 1.03%1 year 3.71%2 years 3.09%3 years 4.29%5 years 3.13%


• Cash 9.3%



Russell Australian

Bond Fund





• Cash 1.0%



Bond Fund – $A Hedged

• Cash 10.1%

• Property 7.5%





• Cash 1.7%


BT Wholesale Balanced

Returns FundBT Wholesale Asian Share Fund

• Cash 2.8%




BT Wholesale Australian

Share Fund

3 months 11.73%6 months 15.88%1 year 6.58%2 years 3.95%3 years -5.95%5 years –








• Cash 0.7%


Colonial First State Wholesale

Imputation Fund



• Cash 1.4%


BT Wholesale European

Share Fund

3 months 2.28%6 months 6.97%1 year -3.29%2 years -14.00%3 years –5 years –


• Cash 2.1%


Citigroup Global Equity Trust

3 months 2.10%6 months 7.04%1 year 6.97%2 years 2.36%3 years –5 years 3.00%


• Cash 5.9%

• Property 9.7%





Citigroup Diversified Trust





Citigroup Tactical

Allocation Trust



• Cash 1.6%


ING Wholesale Australian

Share Trust



• Cash 10.7%

• Property 3.7%





ING Wholesale Balanced Trust



• Cash 2.0%


Colonial First State Wholesale

Leaders Fund





• Cash 0.7%




• Cash 2.1%


Merrill Lynch Wholesale

Imputation Fund


International Share Fund



• Cash 2.2%


Perpetual’s Wholesale

Industrial Fund



• Cash 0.1%



Rothschild Smaller Companies

Wholesale Trust

3 months 4.13%6 months 9.40%1 year 6.39%2 years -0.37%3 years –5 years –


• Property 7.2%




Rothschild Balanced

Wholesale Trust



• Cash 3.0%


Fidelity Perpetual Wholesale

International Fund

• Cash 1.1%


ING Wholesale Fixed Interest

Securities Trust



• Cash 8.6%

• Property 10.4%






Balanced Fund





• Cash 38.2%

• Property 1.2%





ING Wholesale Capital

Stable Trust



Closed funds#

ANZ Australian

Fixed Interest Fund

MLC Investment Trust

Balanced Fund

MLC Investment Trust

Income BuilderANZ Diversified Stable Fund



• Cash 3.7%


Perpetual’s Wholesale

Smaller Companies Fund

• Cash 1.4%

• Australian Fixed Interest 98.6%• Property 4.2%





• Cash 0.1%

• Australian Shares 99.9%• Cash 19.4%

• Property 3.1%





3 months -1.16%6 months 0.31%1 year 2.36%2 years 2.43%3 years 3.83%5 years 2.64%








Notes:

Performance figures are calculated using redemption prices and are net oftaxes and maximum management fees, but exclude entry, exit or switchingfees where appropriate. Any ongoing fees that have a finite life may beexcluded; such as the Administration fee. Returns for periods greater thanone year are annualised.

Past performance is not a reliable indicator of future performance. Since

the value of the investments funds are directly linked to the market value

of the investments, the unit price can rise and fall.

The ANZ Super Advantage fund size quoted reflects the fund assets in theANZ Super Advantage component of the underlying investment fund.

The manager fund size quoted reflects the total assets of the underlyinginvestment pool including ANZ Super Advantage.

# Funds closed to new investment through ANZ Super Advantage

NB. Investments made in the ANZ Capital Guaranteed Fund form part ofANZ Life’s No. 1 Statutory Fund. ANZ Life guarantees that the unit price ofthe ANZ Capital Guaranteed Fund, which includes past gains, will neverfall. Neither ANZ, ING nor any related corporation other than ANZ Lifeguarantees the Fund.

Investments made in all other investment options in ANZ Super Advantageform part of the ANZ Life No. 3 Statutory Fund.


For more information

Telephone: 13 38 63 between 8am and 8pmEST Monday to Friday (excl. public holidays)

Visit: www.anz.com/wealth/super

Email: [email protected]

Address: Level 16, 347 Kent StreetSydney NSW 2000

Postal Address: GPO Box 4028, Sydney NSW 2001

Facsimile: (02) 9234 8286

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