we’re all going there

The future, we’re all going there Super Scoop 2007 | �

2007 QSUPER ANNUAL REPORT TO MEMBERS

FEATURE ARTICLE

we’re all going therethe futurebe prepared with QSuper

SIMPLE WAYS TO BOOST YOUR BALANCEBUDGETING & SAVINGS BASICS

PUT YOURSELF IN ThE PICTURE AND WIN

QSUPER GOES PLATINUM

$2,000$2,000

QSuper annual report to members2 | Super Scoop 2007

contents

4 Simple ways to boost your balance What you can do to make your money work even harder for your future

14 Look before you leap Some good advice on seeking advice

14 Find your lost super 15 Super comparison

Compare us with other super funds and find out why we’re one of the best

6 Simpler super and you Rosemary Vilgan, QSuper’s CEO, explores the simpler super changes

10 Q Invest – the right advice, right now An update on Q Invest’s services

10 QSuper licensing update QSuper considers becoming a regulated fund

11 A winning team With the QSuper Board of Trustees looking out for you, you’re backed by a winning team

11 More insurance for you See how your QSuper insurance shapes up

23 Financial highlights 2006/2007

4 The future, we’re all going there. Be prepared with QSuper Find out what you can do now to make a difference to your future

7 QSuper may be calling you! Some interesting stats from our research

8 Following your dreams Meet three QSuper members and find out about their dreams and goals

16 For the thrill of it What kind of a sensation seeker are you?

David O’Sullivan QSuper member since 2006

Managing your finances Member updates Features

Super Scoop 2007

win$2,000$2,000PUT YOURSELF IN ThE PICTURE

SEE PAGE 23

Low fees

Real service

Betterknowledge

Solidreturns

Contacting QSuper

Contact Centre 1300 360 750 +61 7 3404 0928 81 George Street Brisbane

Monday to Thursday 8.30am to 5.00pm Friday 9.00am to 5.00pm

Postal address QSuper GPO Box 200 Brisbane Qld 4001

qsuper.com.auqsuper.qld.gov.au

The future, we’re all going there

10 More investment choice for you12 Investing for the long term

Keeping an eye on the bigger picture

18 Your global portfolio QIC discuss how they invest your money

19 Market overview QIC experts review the year and look at what’s ahead

20 Investment objectives and returns 2006/2007

Your investments

The past year has been significant for your superannuation benefits, with the Commonwealth Government finalising all the new rules it proposed in the 2006 Budget. This range of changes was implemented on 1 July 2007. You’ll find more information about the changes in the article on page 6.

Of course, we know how easy it can be to put super to the back of your mind, as retirement can seem like such a long way off. However the future is somewhere we’re all going, and taking some time to understand your super and what you can do to maximise it today will really pay off later on in life.

A great yearProviding solid returns is an important part of our commitment to you and, once again, it’s been a good year for investments as the Balanced option has returned a pleasing crediting rate of 14.18%. In addition, QSuper has had great recognition over the past twelve months. We received a prestigious Platinum rating from respected ratings company SuperRatings. SuperRatings also named our Accumulation account its ‘Rising Star’ for 2006/2007 and our Allocated Pension account ‘Runner Up – Pension Fund of the

Year’. We also received Silver and Gold awards from the Conference of Major Superannuation Funds – the Gold

being for our revamped website.

Licensing changesThe QSuper Board of Trustees has also spent the last year making preparations for becoming fully regulated

by the Commonwealth Government. This means we will become subject to the same regulatory rules as

most other super funds in Australia, which is appropriate considering our status as a very large fund. In the final quarter of

2007, the Board of Trustees will make a decision whether to proceed with becoming regulated. As part of preparing for regulation, we have established a dedicated company to manage QSuper day to day. This will provide QSuper with some increased efficiencies, but the same staff and high standards will still apply. There’s an article on page 10 which outlines more about the processes and issues surrounding regulation.

As a member, however, you’ll find no difference in your day-to-day dealings with us if we do become regulated – our primary focus is, and always has been, our members. We exist purely to help you reach your goals, whatever they may be, and providing the products and services you need will continue to be our only priority.

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

Year in review by Gerard Bradley Under Treasurer and Chairman of the Board

Super Scoop 2007 | �

General advice warning The information in this annual report to members is not personal financial product advice and has been prepared for general purposes only, from sources we believe to be reliable and accurate. Therefore, it doesn’t take into account what you currently have, or what you want and need for your financial future. This information could be selective and, therefore, not complete for your needs. Because of this, before acting on this general advice you should consider the appropriateness of the advice, having regard to what you currently have, and what you want and need for your financial future.You should obtain and read the product disclosure statement (PDS) relevant to your circumstances before you make a decision. You can get a PDS from our website, or call us and we’ll send you one. You should also consider whether you need to seek personal financial advice before you act or rely on any of the information in this annual report to members.ABN: 60 905 115 063 SFN: 2610 419 41 Disclaimer Legislative and other changes made after the publication of this annual report to members may affect the accuracy of the information it contains. The Board of Trustees of the State Public Sector Superannuation Scheme (QSuper Board of Trustees), QSuper Limited, and the State of Queensland do not guarantee or claim this information is accurate, up to date, or complete. And they disclaim the liability for all claims, losses, damages, costs, or expenses of whatever nature, however occurring, which arise as a result of reliance upon this information, regardless of the form of action taken – whether in contract, tort, negligence, breach of statutory duty, or otherwise.

QSuper annual report to members� | Super Scoop 2007

It’s easy to get wrapped up in the day-to-day aspects of life, and to put off thinking about your future. But taking a little time to get your super on track today can make a big difference tomorrow. At this point in your life you may be focused on what’s happening today, not what could happen tomorrow. But getting yourself in gear for a great retirement doesn’t take a lot of time or effort. You have a range of options when it comes to super – salary sacrifice, investment choice, and voluntary contributions are all simple things that may boost your savings. And if you’re smart about your super now, you’ll be able to relax when retirement becomes a reality.

Choices, choicesOne of the easiest ways to make sure you’re getting the most from your super is to ensure your investment choice suits your investment timeframe. The process of deciding on an investment strategy may not seem exciting, but smart investing could be the key to maximising your super’s growth. QSuper has eight different investment options for you to choose from, and you can mix and match these options to build an investment strategy to suit you.

A little extraOf course, the most obvious way to build your super is to make voluntary contributions. If you’re employed, strategies like salary sacrifice may help you put a little bit extra away without hurting your wallet. And then there’s the free money from the Commonwealth Government! If you earn less than $28,980 and contribute $1,000 of after-tax money into your super, you could score $1,500 from the Commonwealth Government super co-contribution. And even if you earn up to $58,980 you could still be eligible for some co-contribution. This strategy can give you up to a 150% return on your money.

We make super easyThey say the best relationships are easy, so we try to make things easy for you. After all, our low fees, solid returns, and award-winning products and services are just some of the benefits you enjoy as a QSuper member.

One of our main goals is to arm you with the right tools and information to make the financial decisions that are best for you – after all, everyone knows knowledge is power. That’s why our Contact Centre staff go through comprehensive training programs, and our website includes a wealth of resources, including calculators and financial tools, to help you make the most of your super.

Additionally, our seminar presenters are experts at making super easy. Our free seminars are held all over Queensland and cover a range of topics. So whatever you need to know, and whatever your age, we’ve got the seminar for you.

we’re all going therethe futurebe prepared with QSuper

There’s a handful of ways you can make your super work harder without straining your wallet. Options available to kick-start your retirement savings include reviewing your investment options, finding your lost super, and rolling everything into one account.

Simple ways to BOOST your balance Investment choice is an important part of

growing your super – and it doesn’t cost you anything. It’s important you know how your super’s invested and then make sure it’s invested to suit the level of risk you’re comfortable with, and how long your money will stay invested.

An easy choice

You have an award-winning fund working for you.

Superior super

1.

The future, we’re all going there Super Scoop 2007 | �

More than superSuper isn’t just about saving money for tomorrow – it’s here to help you today, too. We automatically provide many members with income protection and death and total and permanent disability insurance. We offer some of the best value insurance in Australia, so we’re here for you if things get tough.

How low can you go?Low fees play an important part in how your super grows, and we’re proud to have some of Australia’s lowest fees. We know low fees are important, so we make a point of keeping them as low as possible.

The table below shows our fees as management expense ratios (MERs) for the 2006/2007 financial year.

Option Provisional MER*Balanced 0.59%Cash Plus 0.44%Socially Responsible 0.74%High Growth 0.66%Cash 0.32%Fixed Interest 0.40%Australian Shares 0.48%International Shares 0.64%

*MERs are generally the total expenses of the Fund (e.g. investment, management, trusteeship) as a proportion of the Fund’s net asset value.

People firstWe have one priority – to ensure you have the best possible retirement. When you stick with us, you know you’re with one of Australia’s largest super funds and getting some of the best value for money available.

Experts in the super industry recognise our commitment to you, and as a result we’ve won a number of awards this year. SuperRatings awarded us the ‘Rising Star’ award for our Accumulation account and ‘Runner-up – Pension Fund of the Year’ for our Allocated Pension account. We also received a coveted Platinum rating from SuperRatings, an honour given to only the best super funds in Australia.

You can’t escape the future; it’ll be here before you know it. So it’s good to know you’ve got a partner along the way helping you prepare for the retirement you deserve. And although none of us can predict the future, we can assure you that when you stick with us, you’ll reap the benefits of belonging to a super fund with size, strength, and integrity.

You may have had more than one job during your working life – and you’ll probably have a different super fund for each job. Fees and charges could eat away at your balance – so it may pay to get everything in one place.

Roll over and over3.If you think you might have lost some of your super along the way, you can give the Australian Taxation Office (ATO) a call on 13 1020. They keep track of Australia’s lost super, and right now there’s over $9 billion in unclaimed money under their watch.

Lost something?2.

General seminars ad

To book your place, visit qsuper.com.au or call us on 1300 360 750.

Topics include:

- Super made simple

- Making your money work harder

- Are you on track?

- Investments demystified

- Super strategy

- Women & super

2007 seminarprogram

Put your super under

investigation at one of the

500 seminars we hold around

Queensland every year.

“Attending a QSuper seminar helped me understand salary sacrifice.”

Rebecca Sheppard QSuper member since 1996


If we don’t have yours, we can’t accept your personal after-tax contributions and your employer and salary sacrifi ce contributions could be taxed at 46.5%. There’s been a lot of communication targeted at both employers and members to ensure we have everyone’s TFN, but if for any reason you have slipped through the net you should register it with us straight away. To fi nd out if we have yours, have a look at the top of your benefi t statement. If we don’t have your TFN, simply visit our website at qsuper.com.au to register it with us.

It’s now more important than ever to make sure you have given us your tax fi le number (TFN).

As the new rules cover nearly all aspects of superannuation, the chances are you’ll be affected in some way. However, I know with so much going on in day-to-day life it can be easy to put superannuation issues to the back of your mind. Or maybe you haven’t really heard much about the changes and are a little unsure as to what they may mean for you. So now the new rules have been in place a couple of months, it seems a good time to review what their impact will be.

Making contributionsOne of the biggest changes under the new rules is that controls have been put on your contributions in the form of limits on how much you can put into your super.

Non-concessional (after-tax) contributions have now been limited to a capped amount per person each fi nancial year ($150,000 for the 2007/2008 fi nancial year). However if you had plans to invest a large amount of cash into super, perhaps through the sale of an investment property or similar, there’s no need to panic. Anyone who is under the age of 65 at any time during the fi nancial year the contribution is made can bring forward an additional two years of contributions, and invest up to $450,000 into super in one hit.

Concessional contributions, which for most people are employer* and salary sacrifi ce

contributions, have been limited to a capped amount each year ($50,000 for the 2007/2008 fi nancial year). If you’re planning on salary sacrifi cing large amounts to your super you need to be very careful you don’t exceed these limits, as anything over the cap will be taxed at an additional 31.5% (including Medicare levy of 1.5%) on top of the normal 15% contributions tax.

Super for the self-employedBig winners under the new rules are self-employed people, who now have more opportunities to increase their super. The biggest bonus if you’re self-employed is that you now have access to the Commonwealth Government super co-contribution.

Under this initiative, the government will contribute $1.50 for every $1 of after-tax income you contribute to your super, up to a maximum of $1,500 a year. You are only eligible to receive the full $1,500 if you earn $28,980 a year or less. If you earn more than $28,980 you could still benefi t, as the maximum of $1,500 is slowly reduced for every extra dollar you earn and doesn’t cut out completely until your income hits $58,980.

Additionally, age based deduction limits have been abolished, meaning the self-employed can claim full tax deductions for their before-tax contributions up to the age of 75.

SimplerOver the past few months you’ve probably heard a lot of references to changes in the super industry. I know I haven’t been able to fl ick through a newspaper recently without being bombarded by ads from various organisations encouraging me to discover how I can take advantage of the new rules.

By Rosemary VilganChief Executive Offi cer, QSuper and Chair, Association of Superannuation Funds of Australia

Changes in rules inevitably lead to changes in terminology, and simpler super is no different. Some of this new terminology has come about because on 1 July 2007 the number of components your super can be made up of was slashed to just two – tax-free and taxable. The following short glossary explains these two terms in more detail, and introduces a few more you need to be aware of.

Tax-free componentThe tax-free component of your super benefi t is generally made up of contributions from your after-tax income, plus any super you accrued before 1 July 1983. This component is paid tax-free to you when you receive your super benefi t.

Taxable componentThe taxable component of your super benefi t is the total value of your super benefi t less the tax-free component (outlined above). The taxable component is made up of any salary sacrifi ce contributions you have made, and all employer and tax deductible contributions. Any earnings on all contributions also make up part of your taxable component. Of course if you are age 60 or over, you can withdraw your super and generally pay no tax on your taxable component anyway.

Low rate capThe low rate cap applies if you’re at or over your preservation age and under age 60. It’s the limit of money within the taxable component that has a zero tax rate, and was formerly known as the tax-free threshold. The low rate cap for the 2007/2008 fi nancial year is $140,000.

Non-concessionalNon-concessional contributions are contributions you make after you have already paid tax on them. The main examples of these are personal after-tax contributions and spouse contributions, which were both previously known as undeducted contributions.

ConcessionalConcessional contributions are generally those that are made before tax is paid (e.g. employer contributions and salary sacrifi ce contributions) or contributions for which you claim a tax deduction (generally self-employed people).

Simpler super glossaryglossary

GlossaryGlossary

The future, we’re all going there Super Scoop 2007 | 7

It’s now more important than ever to make sure you have given us your tax file number (TFN).

Simplerand you

Employment termination paymentsThere has also been a bit of change regarding employer eligible termination payments. These are now known as employment termination payments and can no longer be rolled over into super – unless based on a contract predating 9 May 2006 and received before 1 July 2012. You can of course invest your employment termination payment into your super after you have paid tax on it, but be careful you don’t exceed the contribution caps discussed previously.

And finally…These are only a few of the changes that have been implemented. Others that you should be aware of include:

• tax is no longer charged on super benefits if they are withdrawn on or after the age of 60

• the removal of reasonable benefit limits, meaning there are no longer penalties for accumulating large amounts in super

• tax components are more straightforward for super withdrawals before age 60

• allocated pensions have become more flexible

• no tax payable on death benefits if paid to a dependant.

More info about all these changes can be found on the special Simpler super section of our website at qsuper.com.au, or you can call us on 1300 360 750 and speak to one of our friendly Information Officers.

super

*For Defined Benefit accounts, employer contributions are not paid into your account. Instead, they are paid into a pool of money that is used to pay the benefits of all Defined Benefit members as required. Therefore, employer contributions for the Defined Benefit account are notionally determined using a formula (refer to our website for details).

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

All QSuper surveys are conducted by professional research firms who undertake the research in accordance with strict national privacy guidelines, so your opinions and details will always be completely confidential and non-attributable. If you have questions about any QSuper research you

participated in, please don’t hesitate to call our Contact Centre.

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

• 79% of members who contacted QSuper rated our service as excellent!

• 52% of the members we surveyed have taken action to improve their financial knowledge in the last twelve months!

have you visited our website recently? Members surveyed who visited our website did so for the following reasons – with some members using our website for a number of reasons:

5% update account details 6% look for seminars 7% check how to make a contribution22% check unit prices/returns30% general browsing54% check account balance

QSuper members are proactive about their super!66% of members surveyed have contacted QSuper within the last twelve months in the following ways – with some members contacting us more than once.

50% contacted us by phone20% visited the website15% wrote to QSuper13% spoke to a Q Invest financial adviser11% attended a seminar9% emailed us6% visited our office

QSuper may be calling you!

dreams

Amanda Casey, 25Hydrologist, Department of Natural Resources and Mines QSuper member since 2002

As a Hydrologist for the Department of Natural Resources and Mines, Amanda assists in the development of water management policy.‘Due to the water crisis, the work I do is very high profile at the moment,’ Amanda said. ‘I enjoy my job because I can really see my work is making a difference in enabling the right decisions to be made on water management policy.’In her spare time Amanda enjoys playing netball, horse riding, and photography.‘I’m the captain of a netball team called The Crickets,’ Amanda said. ‘I just play netball for the fun of it, and not to be competitive. It’s a great way to keep fit and there’s also a social aspect. I often go out for pizza or drinks with the team.’Amanda has some short-term and long-term financial goals.‘I’m currently still renting, so I want to first concentrate on buying a home, and also get myself a newer car,’ Amanda said.‘I put 5% of my pay into QSuper to get the most out of the Queensland Government contribution, and I’ve also been benefiting from the Commonwealth Government super co-contribution.‘The Queensland Government contribution and the co-contribution are a great bonus, and definitely encourage me to put money into my super,’ Amanda said.‘Once I get my short-term goals out of the way I will start thinking about saving more through my super.‘When I think about retirement, I hope to have achieved all of my financial goals, own my own home, and be able to spend more time on my interests,’ Amanda said.

We all have different dreams and different journeys in life. Wouldn’t it be boring if we all had the same interests? You may enjoy

spending your free time travelling, or you might like playing sport, spending time with your family, or being involved in a club.

In this article we profile three QSuper members to find out a bit about them, what they enjoy doing, and how QSuper is helping them achieve their financial goals.

yourFollowing

QSuper annual report to members� | Super Scoop 2007

Ted Clark, 39Teacher, TAFE QSuper member since 1988

David O’Sullivan, 32Paediatric Registered Nurse, Queensland Health QSuper member since 2006

The future, we’re all going there

This information is not personal advice; please refer to the general advice warning on page 3.

Ted’s interest in fishing goes back to his childhood, and his children are now following in his footsteps.‘My dad first took me fishing when I was ten years old and I now have two boys who are eight and six, and a daughter who is five,’ Ted said.‘I’m looking forward to taking my kids fishing this summer and following on from what I did with my dad.‘I feel really proud to spend time with my kids – and it’s great to do this while enjoying the peace and serenity of the environment, and being able to teach my kids about fishing and how to look after nature.’Before becoming a plumbing teacher, Ted was self employed as a plumber for 15 years. Ted used to have apprentices and found he really enjoyed teaching them, which led him to take on a full-time role as a teacher.

‘I love teaching as it lets me pass on the skills I have learnt over the years, and give others a good foundation for their future,’ Ted said.Ted used to have super in other funds but decided to move it all to QSuper.‘I moved my other super to QSuper as I didn’t like paying the higher fees charged by the other funds, and I now feel more happy and secure,’ Ted said.

‘I like knowing I don’t have to worry about my super, as I feel QSuper is looking after it for me.‘I have a five-year plan of putting more contributions into my super and taking advantage of the Commonwealth Government super co-contribution to save more for retirement,’ Ted said.

“I like knowing I don’t have to worry about

my super.”

David moved to the Gold Coast from Sydney two years ago, wanting to enjoy a more relaxed lifestyle.‘I love the beach, so another reason I decided to move to the Gold Coast was to be by the ocean,’ David said.‘I’m a Paediatric Nurse, so I get to work with kids,’ David said. ‘Kids just want to be well and bounce back quickly, which makes my job really rewarding.‘In my spare time I enjoy swimming. I have a lap pool where I live and, in summer, I also swim in the surf.‘Swimming is a form of meditation for me,’ David said. ‘I find it a relaxing way to unwind after a long day.’David is preparing his finances now for an early retirement. ‘I’m salary sacrificing my super contributions which increases my take-home pay. I also make extra contributions to my super.’

David recently consolidated his super, using QSuper’s easy transfer process to combine all his previous super accounts into QSuper.‘I found QSuper’s easy transfer process really painless. I just downloaded the form from the QSuper website, sent it in, and then got a letter telling me it all went through – it was really easy.

‘When I retire, I hope to enjoy an even more relaxed lifestyle,’ David said. ‘I hope to travel regularly – take one small trip in Australia, as well as an overseas trip each year.‘I might work casually at home for some spare cash, but look forward to the flexibility of not having to work if I don’t want to.’

“I found QSuper’s easy transfer process

really painless.”

Super Scoop 2007 | �

QSuper licensing updateAs one of Australia’s largest leading super funds, we believe it’s important to stay innovative – and that means looking outside the box for ways we can make QSuper better for you. So you may have heard we’ve been considering becoming a regulated superannuation fund.

QSuper is currently overseen by the Queensland Government, rather than directly regulated by the Australian Prudential Regulation Authority (APRA). QSuper does, however, comply with the spirit of Commonwealth Government laws. A regulated superannuation fund answers directly to APRA and must comply with a wide range of requirements, which are designed to protect members’ interests. In addition, a regulated fund must comply with the Australian Securities and Investments Commission’s (ASIC) licensing requirements which aim to protect consumers. Over the past months, we’ve made good progress towards applying to become a regulated fund.

Why is QSuper considering becoming a regulated super fund?Firstly, we would like to be able to cater for members who have left Queensland Government employment, but want their new employers to contribute to their QSuper account. The Commonwealth Government is only likely to allow this if we become a regulated fund.

Also, the reason for QSuper’s original exemption from Commonwealth regulation has changed. Over time, QSuper has moved from primarily being a defined benefit fund, where the Queensland Government bears the investment risk, to primarily being an accumulation style fund with members choosing their own investment options. So the rationale for us being exempt from Commonwealth regulation today isn’t as compelling as it was when the exemption was granted in 1994.

What’s happened so far?We had to make some changes to the QSuper Act and Deed to ensure they catered for the type of business processes and corporate structure the regulators require. This places us in a position to apply for a licence from the Commonwealth Government regulators.

An Amendment Act was passed in February 2007, and some of the provisions were proclaimed in April and June this year. These provisions mainly relate to QSuper’s structure – ensuring we’re able to comply with the strict detail of the Commonwealth legislation, so we can make our licence applications.

Up until 30 June this year, the administration of QSuper was provided by the Government Superannuation Office (GSO) as part of Queensland Treasury. However, in a regulated environment the Board needs to have control over its administration structure. To make this happen, a new company, QSuper Limited, was established as a subsidiary of the Board. From 1 July 2007, QSuper Limited has been administering the Fund under an administration agreement, and the assets, liabilities and some staff from the GSO have moved to QSuper Limited.

Other changes include the process for the appointment and removal, as well as the number, of members on the QSuper Board of Trustees. Our governing rules now specifically state the Board can have no less than eight and no more than thirteen members at any time, which may include an independent trustee.

In addition, the Board has the power to choose its investment manager(s) for Accumulation accounts. While the Board is very happy with the solid returns QIC, our current investment manager, provides for our members, this provision needs to be in our Act before we can become licensed.

What happens now? In the last quarter of 2007, the Board of Trustees will consider whether or not we should proceed with becoming regulated. By the time the decision is made, we’ll have completed all of the work required to become regulated. This means if the Board approves our move toward regulation, we’ll simply need to prepare the applications for our licences and submit them to APRA and ASIC with our supporting documents.

For now, keep an eye out for updates via our website and member newsletters.

The right advice, right nowThis last year has seen Q Invest increase its regional presence to better service members across Queensland.

Additional advisers and support staff were appointed in Brisbane and Townsville, and Q Invest opened new offices in:

▪ Toowoomba ▪ Gold Coast▪ Sunshine Coast ▪ Bundaberg ▪ Rockhampton.

Q Invest advisers are Queensland public sector experts and can provide you with competitively priced advice on issues such as wealth creation, insurance strategies, and how best to plan for your retirement.

For more information check out www.qinvest.com.auThis article has been prepared by 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.

At QSuper we pride ourselves on our innovative products and services, and that means constantly evolving to make sure we’re always meeting your needs. For this reason, the QSuper Board of Trustees is currently considering a number of new investment options to give you even more choice when it comes to your super.

Keep an eye on our website and upcoming newsletters for updates and all of the details.

MORE INVESTMENT ChOICE FOR YOU!

QSuper annual report to members�0 | Super Scoop 2007

Our Trustees have an important job guiding the future development of the Fund. They meet once a month to make the final calls on big decisions, and closely supervise the management of QSuper.

The Trustees are chosen because of their experience, understanding, and integrity. They all have different areas of expertise, and lend an impartial view to strategic decisions.

Half of the Trustees are chosen by public sector unions, and the other half are selected by the Queensland Government. This means the Board has a strong understanding of your needs. With the QSuper Board of Trustees on your side, you can be confident you’re backed by a winning team.

Employer representatives (nominated by the Queensland Government)

Gerard BradleyUnder Treasurer and Chairman of the BoardMeeting attendance: 9 (Deputy – Tim Spencer)

Linda ApeltDirector-General, Department of Communities and Disability Services Queensland Meeting attendance: 9 (Deputy – Wayne Cannon)

Terri HamiltonDirector, Terri Hamilton Financial ServicesMeeting attendance: 11

Tony HawkinsChief Executive Officer, WorkCover QueenslandMeeting attendance: 12

John CarpendaleFormer superannuation industry executiveMeeting attendance: 12

Chris BarrettAssistant General Secretary, Queensland Council of UnionsMeeting attendance: 12 (Deputy – Grace Grace)

Garry RyanQueensland Branch President and Southern District Secretary, The Australian Workers’ UnionMeeting attendance: 6 (Deputy – Tom Jeffers)

Steve RyanPresident, Queensland Teachers’ UnionMeeting attendance: 12 (Deputy – Jeff Backen)

Merv BainbridgeDeputy representing the Queensland Police Union of EmployeesMeeting attendance: 12 (Deputy for Gary Wilkinson)

Karen PeutRepresenting the Queensland Public Sector Union of EmployeesMeeting attendance: 12 (Deputy – Alex Scott)

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

The Trustees of QSuper are known as the 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.

A winning team

MORE INSURANCE FOR YOU

QSuper is proud to offer our members insurance cover for disability and death which is amongst the best in Australia. And, from 1 July 2007, the maximum amount of death and total and permanent disability (TPD) insurance you can apply for has increased.

If you have an Accumulation account and are still employed by the Queensland Government, you can apply for death and TPD cover up to the maximum cover of $1,400,000 ($700,000 for casuals).

If you have a Defined Benefit account, you can apply for additional insurance up to $1,400,000.

If you would like to increase your insurance, simply complete the Application for death and total and permanent disability insurance form. This form is included in the product disclosure statement relevant to you, which you can download from our website, or call us and we’ll send you one.

Application for death and TPD insurance

I declare I am the person named on this form.I confirm I am currently employed by the

Queensland Government.I understand in the first ten years of this insurance starting, a benefit will not be paid if the cause of my death or disability is related to a medical condition that already exists.I understand QSuper will not check to

see if I have a pre-existing condition unless a death or TPD claim is made.

I understand the insurance premium is deducted quarterly from my account balance, and I will need to make sure there are enough funds available to cover the cost of my insurance premium.

I understand if there are not enough funds available to cover the cost of my insurance premium, my insurance will be cancelled.

I understand if I finish employment, I will be provided with four weeks of free death and TPD insurance if I am under 65, or death-only insurance if I am age 65 or over but under age 70. This only applies to units of insurance.I understand I can cancel my death and

TPD insurance at any time by completing a Cancel or reduce insurance form.

I have not previously cancelled my QSuper death and TPD insurance, since 1 July 2006.I have read and understood the insurance

coverage information in the product disclosure statement to which this form is attached.

PART D DECLARATION AND AUTHORISATION

//

(Signature)

(Date – dd/mm/yyyy)

SIGN HERE

After completing this form, please send to QSuper.

PART C DEATH AND TPD INSURANCE PREMIUMSThe cost and value of each unit of death and TPD insurance cover is shown below:

*From the age of 65, the cost of each unit of death-only cover will reduce to $0.30 cents per week (not available to

police officers).

Age at death or disabilityValue of each unit which costs $1 per week

($0.30 cents from age 65)($2.75 for police officers)





up to age 35 $60,00047 $24,500

59 $5,100

36 $56,60048 $22,300

60 $4,500

37 $53,20049 $20,100

61 $4,000

38 $49,90050 $18,000

62 $3,500

39 $46,50051 $16,200

63 $3,000

40 $43,20052 $14,400

64 $2,650

41 $40,30053 $12,600

65 $2,350*

42 $37,40054 $10,800

66 $2,100*

43 $34,50055 $9,000

67 $1,900*

44 $31,70056 $8,000

68 $1,700*

45 $28,80057 $6,750

69 $1,500*

46 $26,60058 $5,750

70 $0

The total number of insurance units I would like is: Please note this number of units includes any extra units you are applying for in addition to any units

you already have prior to making this application.A Request to vary contributions form can be completed and sent to your pay office to ensure

there are enough funds in your account to pay your insurance premium.

© The State of Queensland (Queensland Treasury) 2007

2214

FO24 (in PDS) 07/2007

qsuper.qld.gov.au

Your privacyThe privacy of your personal information is important to us. We are collecting

the information on this form to administer your superannuation account. If

you would like further information about our privacy policy, you can download

QSuper’s Your privacy fact sheet from our website. Alternatively, call us and

we will send you a copy.

Contacting QSuper81 George Street BrisbaneGPO Box 200 Brisbane Qld 4001Phone 1300 360 750Fax 07 3235 4357

SFN: 2610 419 41ABN: 60 905 115 063

Page 2 of 2

Continued from previous page

If you are a permanent ortemporary employee, yourmaximum insurance is $1.4million. For more information,please read the insuranceinformation in the productdisclosure statement to whichthis form is attached. If you are a casual employee,your maximum insuranceis $700,000. For moreinformation, please read theinsurance information in theproduct disclosure statement towhich this form is attached.

PLEASE NOTE:

Continued over page

What do I use this form for?

You should complete this form if you would like to apply for:

• death and total and permanent disability (TPD) insurance

• death-only insurance (if you are age 65 or over)

• extra units of death and TPD insurance cover.

Application for death and total and

permanent disability insurance

PART A QSUPER ACCOUNT DETAILS

Please enter your QSuper account number in the box

below. Account number: (if known)

Accumulation account:

Defined Benefit account:

Title:

Surname:

Given names:

Address:

State:

Phone number (home):

(mobile):

Email address:

Date of birth:

Employer:

Payroll number:

Mr Mrs Miss Ms Dr

Postcode:

PART B PERSONAL DETAILS

// (dd/mm/yyyy)

(work):

Page 1 of 2

You can find your

account number on your

benefit statement.

HelPIng HAnD

Complete this form if you

would like death and TPD

insurance and:

• you turned 60 before

1 July 2006, and your

death and TPD insurance

automatically ended

• your death and TPD

insurance was cancelled

because the balance of your

account was not enough to

pay your insurance premium

• you cancelled your death and

TPD insurance before

1 July 2006.

You can also use this form if

you currently have death and

TPD insurance and would like

extra units of cover.

PLEASE NOTE:

In the first ten years of this

cover starting, a benefit will

not be paid if the cause of your

death or disability is related to a

medical condition that already

exists.

When you turn 65, your TPD

insurance will end.

When you turn 70, your

death-only insurance will end

(death-only insurance is not

available for police officers).

PLEASE NOTE:

The future, we’re all going there Super Scoop 2007 | ��

QSuper annual report to members�2 | Super Scoop 2007 QSuper annual report to members

Source: QIC Note: Market returns exclude fees and taxes

It’s the long-term results that count!

This graph shows how the QSuper Balanced option, which is made up of 50% – 80% growth assets, has performed since 1999. As you can see, there have been years where returns have been negative, but these are compensated by years of very high returns. This means that over the past nine years returns have averaged out at a very pleasing 8.72% per annum (represented by the yellow line).

20%

15%

10%

5%

0%

-5%

-10% 1998/1999

Average return of Balanced option Annual return of Balanced option

2006/2007 2005/2006 2003/2004 2002/2003 2001/2002 2000/2001 1999/2000 2004/2005

Impact of not investing on the best 30 days

50%

0%

-50%

100%

150%

200%

1998 1999 2000 2001 2002 2003 2004 2005 20061997

Australian stockmarket accumulation index

250%

13.4% p.a.

5.9% p.a.

Cumulative return Cumulative return minus best 30 days

long termfor theInvestingMany experts say it’s all about time in the market, not timing the market. In this article, we examine why it’s so important to consider your long-term goals when investing in shares. A booming sharemarket has meant healthy returns into super accounts over the last few years. However, what goes up must come down, so what should you do if the sharemarket starts falling?Often, the best answer is do nothing. It’s very easy to panic when you see the value of your investment falling, but the important thing to remember is that this is a natural part of the investment cycle. Shares are by nature a volatile investment and should always be part of a long-term, rather than short-term, strategy. By pulling out your investment when the sharemarket is falling, you also stand a very real risk of losing money, especially if you bought in when the price was relatively high.It isn’t unusual for investments in shares to occasionally see negative returns, but you need to step back and look at the bigger picture. As you’ll see from the graph below, the Australian sharemarket has its ups and

downs, and has sustained some pretty heavy losses over the past ten years. The catastrophic events of September 11, for example, caused a sharp drop in the market, but it wasn’t long before the value of investments began to rise again. This was probably the most significant dip over the last decade, but there have been plenty of others. Overall, however, the results have been overwhelmingly positive.

It’s all about time in the marketThe graph also highlights the dangers of trying to time the market.

The sharemarket is notoriously unpredictable, and by pulling your money out when you believe the market is falling you could miss out on an unexpected surge. The bottom line of the graph shows the returns you would have achieved had you been out of the market for the 30 best days over the last ten calendar years (1997 – 2006). The long-term return is considerably less… 5.9% per annum compared to 13.4% per annum.

Super Scoop 2007 | ��

As the economy moves through cycles, so too do investor emotions, as illustrated above. As the market booms your optimism can drive every investment purchase. As your expectations become reality, excitement, thrill, and euphoria can take over. This is when you reach the point of maximum financial risk, as overconfidence means you could be propelled into a ‘buy, buy, buy’ state of mind, resulting in the purchasing of investments at overheated prices.As the soaring market begins to taper off, feelings of anxiety and denial start to creep in, and when a dramatic fall sets in so does desperation, panic and depression. However, this is the point of maximum financial opportunity, as the best time to invest is when the market is at its lowest. This also highlights the importance of having a long-term strategy and not letting your emotions guide your investments, as a downturn is invariably followed by an upturn as you see your money grow again.

Cycle of investor emotions

Point of maximum financial risk

Point of maximum financial opportunity


long term

OptimismPanic

Capitulation

Despondency Depression

Hope

Relief

Optimism

Excitement

Thrill

EuphoriaAnxiety

Denial

Fear

Desperation

Another example of how getting the market wrong can have a devastating impact on your investment is demonstrated by a classic study published by Chicago research firm Ibbotson Associates. It revealed that if an investor had put $1 in the American S&P 500 in 1926, it would have grown to $1,114 by 1995 (including reinvested dividends). This may not seem like much in the grand scheme of things, but if that same investor had been out of the market during the 35 best months out of the 840 months this period of time covers, their dollar would only have grown to a measly $10. That’s quite a difference!

What’s your profileIt’s always important to make sure your super is invested in the best way for your circumstances. If you head to the calculators section of our website you’ll find a risk profiler. This profiler outlines which QSuper investment options may be suitable for you, taking into account factors such as your investment timeframe and your level of comfort with risk. You’ll also find the risk profiler in our Investment choice guide, along with more information about all our investment options.Even if you do feel your circumstances have changed, it’s important to remember you do not have to switch your entire account balance to another investment option – you can ‘mix and match’ a combination to suit you. If you’re not sure what investment mix is most appropriate for you, the best thing to do is to seek personal financial advice.

Craig Dunk QSuper member

since 200�

QSuper annual report to members�� | Super Scoop 2007

Our financial decisions can have a big impact on our lives. That’s why if you’re making a significant financial decision, it’s a good idea to do your research and seek advice.

Many of us will see a financial adviser when we’re considering our investments, or a mortgage broker when choosing which lender and loan are best for us. Before you meet with an adviser, it’s worthwhile taking the time to do some basic research – it could end up saving you a lot of time and money.

One crucial area you should always look into before seeking any financial advice is how an adviser or mortgage broker charges you for their services – because there will always be a charge or some form of commission.

Fees are charged in a number of different ways. They may be in the form of a commission or an entry fee to the products in which you invest. You may be charged a trail commission where you pay a percentage of your account balance each year to your adviser, you could be charged at an hourly rate for the services provided to you, charged a set fee for specific advice or services, or a combination of any of these.

Now let’s take a look at some things to keep an eye out for when seeing a financial adviser or mortgage broker.

Mortgage brokersBuying property may well be the single most expensive purchase you make during your lifetime. A mortgage broker will help you decide upon the best loan and lender for you.

• If it’s claimed there are no fees, ask whether any fees will be deducted when your property settles.

• While interest rates are important, consider application and monthly fees. If the deal requires you to open an account such as a savings account with the lender, find out whether it’s suitable for your needs.

• Find out how many lenders the broker deals with and what commissions each lender pays and ask why certain loans are recommended and others aren’t.

• Be honest with yourself about what you can comfortably repay.

Financial advisersThere are many qualified financial advisers who can help you get your finances on track, no matter what age you are. An adviser can help you meet your financial goals, manage your debt, develop your investment strategies and consider your insurance needs and retirement planning.

Before choosing an adviser:

• Write down your financial and lifestyle goals.

• Find out the adviser’s credentials and if the adviser is licensed and a member of an industry or professional association.

• Ask what type of clients they usually see.

• Look into negotiating lower fees, such as the upfront fee.

• Ensure fees are shown separately.

• Consider whether you feel like you’re in a sales or advice environment and ensure you understand the advice.

Remember, it’s your responsibility to find out the facts so you can make informed decisions. What we’re talking about is improving your financial literacy so you are more aware of risks, better understand your rights as a consumer, and are more confident and able to make personal life choices about financial issues.

You can access competitively-priced financial advice from Q Invest* on a range of issues covering superannuation, retirement planning, wealth creation, salary packaging, and personal life insurance. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. To make an appointment call 3008 8100, or 1800 643 893 if you are calling from outside Brisbane.

We all constantly make financial decisions, but why do we put more effort into researching some purchases and investments, and less into others?

Find YourFind Your

There’s over $9 billion in hidden treasure being kept safe under the watchful eye of the

Australian Taxation Office.

To see if a share of the lost super is rightfully yours, go to www.ato.gov.au

and begin your treasure hunt today.

Look before you SOME TIPS

1. Remember, good advice is money well spent.

2. Never buy or invest simply because a prominent person endorses a product.

3. Don’t be distracted by glossy brochures and a professional appearance.

4. Consider how to find out what you don’t know.

5. If investment returns seem too good to be true, they probably are.

LEAPLEAPLEAP

There’s over $9 billion in hidden treasure being kept safe under the watchful eye of the

Australian Taxation Office.

To see if a share of the lost super is rightfully yours, go to www.ato.gov.au

and begin your treasure hunt today.

*Q Invest Limited ABN 35 063 511 580 (Q Invest) (AFS licence 238274).

Super comparison

The above information relates to members with standard membership arrangements. More info can be found in our product disclosure statements.Note: Our Defined Benefit account is structured in a different way, with the above factors either being not relevant or automatically built into the account. More info can be found in our product disclosure statement for the Defined Benefit account.

Fill in the other fund’s info here

In fact we actively encourage you to compare us to other super funds, so you can really see what benefits we offer you. We’ve even provided you with the table below so you can see how well our Accumulation account stacks up against any other funds you might want to compare us with.

We know we’re one of the best, but we don’t expect you to just take our word for it.

Product feature QSuper

Insurance cover for members employed by Queensland Government

Death

Total and permanent disability (TPD)

Income protection (not available to casual employees or police officers)

FeesProvisional management expense ratio (MER) for 2006/2007

0.32% p.a. – 0.74% p.a. of account balance (each investment option has a different MER)

Contribution/entry Nil

Asset based administration Nil

Trustee fee Nil

Transfer/roll in Nil

Withdrawal fee Nil

Investment switch Nil

Investment management Included in MERs

Performance fee 0% – 0.08% of account balance (depending on investment option)

Buy/sell spreads Nil

Death and TPD cover $1 per week per unit ($0.30 per week for death-only cover for over 65s); $2.75 per week per unit for police officers

Income Protection 0.11% – 1.21% of salary, depending on age

Services for members • Online access to account info 24/7• Free state-wide seminars• Access to very competitively-priced financial

advice from Q Invest• Online superannuation and financial literacy tours

and calculators

QSuper Accumulation account

Super Scoop 2007 | ��The future, we’re all going there

Are you an adrenaline junkie or do you prefer a more tranquil life? The extent to which we seek out new sensations has an effect on many areas of our lives. What kind of sensation seeker are you?

QSuper annual report to members�6 | Super Scoop 2007

If your idea of a good weekend involves going surfing, hanging out with a wide and varied group of friends, and lots of wild partying, chances are you’d be considered a high sensation seeker. On the other hand, if you’d rather spend time at home, cook a nice meal, and curl up on the couch, you may be a low sensation seeker.

Sensation seeking is a term used by psychologists to describe a generalised preference for high or low levels of sensory stimulation. Or put another way, what level of risk do you feel comfortable taking in your day-to-day life, and to what extent do you feel the need to seek out new and exciting experiences?

The extent to which we seek novelty and excitement can impact upon nearly every aspect of our lives, including:• engagement in risky sports • relationship satisfaction • tastes in music, art and entertainment • driving habits • food preferences • job choices and satisfaction • humour, creativity, and social attitudes.

American psychologist Marvin Zuckerman first described sensation seeking as a personality trait in 19711 and developed the sensation seeking scale (SSS) to measure an individual’s inclination to sensation seek.

Those who rate highly on the SSS prefer a high level of stimulation, while low sensation seekers prefer modest levels of sensory stimulation, and tend to choose tranquility over excitement.

Life in the fast lane or the quiet life?Most people are moderate sensation seekers and fall somewhere between very high

sensation seekers and those who avoid excitement altogether. This means they have a moderate desire to seek out new experiences, but do not push things too far.

Zuckerman identified four common characteristics of high sensation seekers. These are:

Thrill and adventure seekingHigh sensation seekers engage in activities that may involve a physical risk such as mountain climbing, skydiving, surfing, and scuba diving.

Experience seekingThey are more likely to try activities they know little about, or enjoy extensive travel, provocative art, wild parties, and a varied group of friends.

DisinhibitionHigh sensation seekers are less inhibited and are more prone to drink heavily, use drugs, gamble, and experiment sexually.

Susceptibility to boredom High sensation seekers have a low tolerance for routine and repetition, and can easily become bored.

Zuckerman also pointed out that risk-taking is not the main point of sensation seeking but the price people pay for certain kinds of activities that satisfy their need for novelty, change, and excitement.

Some high sensation seekers enjoy activities that do not involve any risk, such as watching horror movies, travelling to exotic places, and partying without drugs2.

Chilled outLow sensation seekers cope better with routine and bring stability and order to society. They prefer less high-risk pursuits and may spend

time doing activities such as crafts, painting, gentle exercise, or relaxing with a handful of close friends.

Risky businessSome high sensation seeking behaviour, such as reckless driving, may be considered anti-social because it puts the lives of the risk-takers and others in danger.

However, as a species, humans are risk takers; over a relatively short period of time, from an evolutionary point of view, the human population grew and spread to cover the entire globe. Therefore, it was exactly this kind of high-risk behaviour that also ensured our survival as a species3.

Sensation seeking and shoppingDo you love to shop ’til you drop? When it comes to shopping, high sensation seekers are more likely to be compulsive buyers4.

High sensation seekers are also more likely to shop online more frequently and to purchase a wider variety of products over the internet. One study highlighted a link between online shopping and innovativeness, which is another characteristic associated with high sensation seeking5.

Whether you are a low or a high sensation seeker, both types are completely normal personality traits and are essential to a diverse and progressive society.

1 Zuckerman, M., ‘Dimensions of sensation seeking’, Journal of Consulting and Clinical Psychology, 1971, vol. 36, no. 1, 45–52

2 Zuckerman, M., ‘Are you a risk taker?’, Psychology Today Magazine, November/ December 2000

3 Zuckerman, M., ‘Are you a risk taker?’, Psychology Today Magazine, November/ December 2000

4 Arehart-Treichel, J., ‘Alcoholism Susceptibility Linked To Compulsive Gambling, Shopping’, Psychiatric News, 2002, vol. 37, no. 14, p.21

5 Blake, B. F., Neuendorf, K. A., Valdiserri, C. M., ‘Innovativeness and variety of internet shopping’, Internet Research: Electronic Networking applications and Policy, 2003 vol. 13, no. 3, 156-169

The future, we’re all going there Super Scoop 2007 | �7

1 I would really enjoy skydiving. true

false

2 I can imagine myself driving a sports car in a race and loving it. true

false

3 My life is usually very safe and secure – the way I like it. true

false

4 I usually like emotionally expressive or artistic people, even if they are sort of wild. true

false

5 I like the idea of seeing many of the same supportive warm faces in my everyday life. true

false

6 I like doing adventurous things and would have enjoyed being a pioneer in the early days of this country. true

false

7 A good photo should express peacefulness creatively. true

false

8 The most important thing in living is fully experiencing all emotions. true

false

9 I like creature comforts when I go on a trip or vacation. true

false

10 Doing the same things each day really gets to me. true

false

11 I love snuggling in front of a fire on a wintry day. true

false

12 Drinking and being rowdy really appeals to me on the weekend. true

false

13 Rational people try to avoid dangerous situations. true

false

Sensation seeking scaleQuestions Answers Score

TOTAL

Give yourself one point for answering ‘true’ to the following items: 1,2,4,6,8,10, and 12. Also give yourself a point for answering ‘false’ to the following items: 3,5,7,9,11, and 13. Add up your points and compare your total to the following norms:

Bear in mind that this is a shortened version of the sensation seeking scale and that it provides only a rough approximation of your status on this personality trait6. 6 Grasha, A.F. and Kirschenbaum, D.S., Adjustment and

competence: Concepts and applications (1986) St. Paul MN: West Publishing

Take our Quiz to find out what kind of sensation seeker you are.

13

12

10

8

6

4

2

0

high

moderate

mild

QSuper annual report to members�� | Super Scoop 2007

What would you say if we told you that next time you head to the shops you could actually be helping your

retirement savings?^ You’d probably think we’d gone a little mad.

Well, you may think it sounds strange, but it’s true. As a QSuper member you’re an investor in several shopping centres across Australia and the UK, and a shareholder in dozens of global companies. This means if you go out and buy a new outfit, restock your pantry, or even have dinner and catch a movie, you could be helping to put money into your super account.

So, how have you managed to accumulate such a wide portfolio? Well at QIC we use a large proportion of the funds invested in QSuper accounts to buy property, including shopping centres, and Australian and international shares.

A global portfolioQIC’s share portfolio is incredibly diverse, meaning a lot of your day-to-day spending is likely to be with companies your super is invested in. Next time you need to do a spot of DIY, head to Bunnings and you’ll be helping fill more than just the toolshed, as QIC is a major shareholder in Bunnings’ parent company Wesfarmers. If you shop at Woolworths or update your PC with the latest Microsoft software you could also be boosting your super, as both companies feature among QIC’s top shareholdings.

Shop around the world!As a QSuper member you have an investment in the major shopping centre in Robina on the Gold Coast, and Grand Central Shopping Centre in Toowoomba, as well as having a 50% share in the shopping centre in Helensvale and the huge Logan Hyperdome.

If you’re off on an interstate trip, check out the Castle Towers and Westpoint shopping centres in Sydney, the Watergarden and Woodgrove shopping centres in Melbourne, and the Canberra Centre in the ACT. QIC has even taken its first steps into the global shopping market, with a recent 50% purchase of one of the UK’s largest shopping centres, the Westfield Merry Hill centre near Birmingham.

If you want to find out more about how your super is invested, head to the Performance section of the QSuper website. You’ll find info about QIC’s property holdings and top shareholdings, along with links to the companies of which you own a small part. Head to qsuper.com.au and discover a few new excuses to treat yourself!

Your global portfolioIn this article, our investment manager QIC discuss how they invest your money, and why it means you are an investor* in many Australian and global companies.

Merry hill Shopping Centre Birmingham, UK

* All investments are owned indirectly by QSuper members. Whilst QSuper is a significant investor in the QIC funds which contain these assets, there are other institutional investors in the funds.

^ Many factors impact on the performance of investments such as company decisions, market conditions, performance of competitors, etc.

QIC is no stranger to the global market, and this year saw the addition of a major UK shopping centre to our property portfolio.

QIC bought a 50% share in the Merry Hill shopping centre (Australian company Westfield is the co-owner). This is an investment with a value of $1.3 billion, making it a significant purchase.

Located just outside Birmingham, the UK’s second largest city, Merry Hill covers a huge 150,000 square metres and is home to major stores such as Marks & Spencer, Debenhams, ASDA, and Sainsbury’s, as well as over 250 speciality stores. The complex also incorporates a cinema, a four-star hotel, and various bars and restaurants, and the long-term development plan is to link the complex to the traditional high street of the local town, to create a new urban centre.


In this feature, QIC experts review global economy shifts and sharemarket performance for the 2006/2007 financial year, and give you their predictions for the future.

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

Market overview and what’s ahead

Sharemarkets

PropertyBoth the retail (shopping centre) and commercial office building markets performed well in Australia last year. Strong investor demand for property assets has seen property prices escalate. In this environment, QIC has ramped up the development and extension of existing shopping centres, a strategy designed to deliver higher risk-adjusted returns than purchasing properties in an overheated market.

In December 2006, QIC Real Estate expanded into international markets by purchasing a 50% share in one of the UK’s largest shopping centres. Valued at $1.3 billion, QIC’s share in Westfield Merry Hill provides you with a greater international diversification within the property assets in your QSuper investment options.

The Australian sharemarket had yet another bumper financial year, returning 29%. Merger and acquisition activity was the major driver behind the strong result. Commodity prices, although weaker in the first part of the year, finished the year strongly, which helped the resources sector achieve another good year.

International sharemarkets finished the financial year 24% higher, as investors gained confidence the US economy would not suffer a ‘hard landing’. The standout performer was the European sharemarket, which rose by 30%. While most of Europe performed well, Germany has benefited the most from a strong global environment via both improved business investment and exports.

The outlook for global shares is largely positive, with a soft landing in the US economy expected. However, there remains some risk that weaker consumer spending and corporate profitability may produce a ‘hard landing’ for the US economy. We are also likely to experience more volatility in markets until there is more certainty about the profit outlook and economic outcomes.

Economic overview

Bruce WanQIC Economist

In a year that saw the slowing of the US economy, global sharemarkets continued to rise strongly and delivered double digit returns for the QSuper Balanced option for the fourth successive year.

It wasn’t all smooth sailing for markets during the year. In late February a 9% fall on the Chinese stock market, combined with rising tensions between the US and Iran and concerns about the US housing markets, triggered a significant decline in markets. However, the markets quickly recovered as the US economy performed above expectations.

In a repeat of this year, we expect global economic growth to be moderate in 2007/2008. The mild slowdown in the US is likely to continue, while Europe, Japan, and China should maintain their robust economic growth.

Global fixed interestThe QIC Global Fixed Interest team achieved returns above the relatively low market for QSuper members by positioning the portfolio to capitalise on market movements. These strategies included allocations across countries and sectors (e.g. mortgages and corporate bonds), as well as individual security selection. A proven investment process implemented by a skilled and disciplined investment team provided the foundation for this successful performance.

Over the coming year the return on bonds will largely depend on how much interest rates are raised. Our expert team will continue to use their skills and research to identify opportunities to achieve superior returns for you.

John Gethin-JonesGeneral Manager QIC Global Equities

Laurie BrindleHead, QIC Global Real Estate

Susan BuckleyGeneral Manager QIC Global Fixed Interest


Investment objectives and asset allocations as at 1 July 2007The table below shows the objectives for QSuper’s investment options. 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,

Investment objectives and returns 2006/2007

BALANCED CASh PLUS SOCIALLY RESPONSIBLE

hIGh GROWTh

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

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

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


ObjectivesTo 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 3-year periods of CPI + 3% 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 10-year periods of CPI + 5% p.a., after fees and tax

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

2006/2007 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

BALANCED CASh PLUS SOCIALLY RESPONSIBLE

hIGh GROWTh

Actual asset allocations Year ended 30 June




Asset class 2006 2007 2006 2007 2006 2007 2006 2007Cash 12.0% 12.7% 56.0% 56.3% 6.1% 6.9% -0.4% 6.2%Fixed interest 20.2% 22.2% 10.1% 11.1% 19.6% 18.6% 0% 0%Property 7.1% 8.9% 3.5% 4.4% 11.9% 13.6% 0% 4.4%Australian shares 31.9% 27.7% 16.0% 13.9% 41.5% 39.9% 34.8% 28.8%International shares 28.8% 23.9% 14.4% 12.0% 20.9% 21.0% 65.6% 52.2%Alternative assets 0% 4.6% 0% 2.3% 0% 0% 0% 8.4%

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

Crediting rate** Crediting rate** Crediting rate** Crediting rate** Accum AP Accum AP Accum AP Accum AP2006/2007 14.18% 15.96% 9.58% 10.97% 15.90% 17.76% 19.81% 22.75%

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

2002/2003* -2.37% -2.59% 0.99% 1.26% n/a n/a -3.86% -4.40%2003/2004* 16.06% 17.65% 9.93% 11.30% n/a n/a 20.72% 23.60%2004/2005* 15.11% 17.04% 9.77% 11.12% 2.10%*** 2.40%*** 16.00% 18.08%2005/2006* 14.76% 16.59% 9.65% 11.04% 16.68% 18.56% 17.70% 20.42%2006/2007 13.12% 14.79% 9.12% 10.46% 15.03% 16.79% 17.79% 20.44%3 yr comp. avg. (p.a.) 14.32% 16.14% 9.51% 10.87% n/a n/a 17.16% 19.64%5 yr comp. avg. (p.a.) 11.11% 12.41% 7.83% 8.96% n/a n/a 13.29% 15.14%

*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.

Accum = Accumulation account | AP = Allocated Pension account

Accumulation and Allocated Pension accounts

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QSuper’s investment manager, the flexibility to take advantage of investment opportunities.

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

CASh FIXED INTEREST

AUSTRALIAN ShARES

INTERNATIONAL ShARES

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

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



To capture the return of a broadly 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 allocationRanges Ranges Ranges Ranges Asset class100% 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 INTEREST

AUSTRALIAN ShARES

INTERNATIONAL ShARES





2006 2007 2006 2007 2006 2007 2006 2007 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 rate** Crediting rate** Crediting rate** Crediting rate**Accum AP Accum AP Accum AP Accum AP5.22% 6.23% 4.82% 5.75% 27.34% 29.27% 21.55% 24.97% 2006/2007

Net return history Net return history Net return history Net return historyAccum AP Accum AP Accum AP Accum AP3.88% 4.64% n/a n/a n/a n/a n/a n/a 2002/2003*4.37% 5.20% n/a n/a n/a n/a n/a n/a 2003/2004*4.73% 5.63% 4.24%*** 5.05%*** 7.12%*** 7.38%*** 3.92%*** 4.55%*** 2004/2005*4.85% 5.78% 2.15% 2.58% 23.32% 24.47% 14.47% 16.71% 2005/2006*5.24% 6.24% 4.49% 5.35% 25.90% 27.75% 19.68% 22.79% 2006/20074.94% 5.89% n/a n/a n/a n/a n/a n/a 3 yr comp. avg. (p.a.)4.61% 5.50% n/a n/a n/a n/a n/a n/a 5 yr comp. avg. (p.a.)

* *Crediting rates 2006/2007. Note the 2006/2007 crediting rates differ from net returns, due to the two-day lag in unit prices. ***Based on partial year (option commenced 1 January 2005).

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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:

Allocated Pension and Accumulation accounts Australian Shares option: 10.78% exposure to BHP Billiton Limited, 6.16% exposure to Commonwealth Bank of Australia, and 5.66% exposure to National Australia Bank Limited; Allocated Pension and Accumulation accounts Fixed Interest option: 6.24% exposure to Fannie Mae (medium and long-term US bonds).

Reserves Reserves are held aside to pay for specific items as they occur. They cover insurance for death and disability, income tax liabilities, and general administration costs, and operate within an established reserving policy approved by the QSuper Board of Trustees. The reserves are held in a mixture of cash and balanced investments.

30 June 2007 30 June 2006 30 June 2005$747.75m $523.56m $354.52m

Top 5 property investments 30 June 2007 Top 5 international shareholdings 30 June 2007 Top 5 Australian shareholdings 30 June 2007

Merry Hill Shopping Centre, Brierly Hill, United Kingdom Exxon Mobil Corporation BHP Billiton Limited

Castle Towers Shopping Centre, Castle Hill, Sydney, NSW General Electric Company Commonwealth Bank of Australia

Canberra Centre, Civic, Canberra, ACT Microsoft Corporation National Australia Bank Limited

Central Plaza Complex, Brisbane, QLD AT & T Incorporated ANZ Banking Group Limited

Westpoint Shopping Centre, Blacktown, Sydney, NSW Citigroup Incorporated Westpac Banking Corporation

Continued from previous page

Defined benefit accounts

The table below shows the objective for QSuper’s defined benefit accounts. The asset allocation ranges applying from 1 July 2007 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 AWOTE* plus 3.0% per annum, after fees and tax

Asset allocation Ranges from 1 July 2007 2006 Actual allocation 2007 Actual allocationCash 0% – 15% 20.4% 6.0%Fixed interest 15% – 45% 18.9% 35.0%Property 5% – 15% 10.0% 12.3%Australian shares** 20% – 30% 23.8% 20.2%International shares 20% – 30% 26.7% 21.8%Alternative assets 0% – 15% 0.2% 4.7%Total n/a 100% 100%

*AWOTE is a measure of wage and salary levels of employees in Australia, as measured by the Australian Bureau of Statistics and published quarterly. **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***

2006/2007 14.17% 14.18% 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%2002/2003 -2.40% 0% -2.40% 0% 0% -2.40% 0% 0%Compound average5 year (p.a.) 12.47% 11.38% 12.47% 11.07% 11.38% 12.47% 11.07% 11.38%

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

Investment objective and asset allocations as at 1 July 2007

2006/2007 returns

The future, we’re all going there Super Scoop 2007 | 2�

Defined benefit accounts

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). The SCT is 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 member and employer funds as at 1 July 2006 = $19,057.47m

TOTAL ASSETS $23,472.48m TOTAL LIABILITIES $693.87mInvestments $23,429.86m Provision for fund tax $2.11mOther assets $42.62m Other liabilities $691.76m

QSuper member funds as at 30 June 2007 $22,101.24mQSuper employer funds as at 30 June 2007 *$677.37mNet assets available to pay benefits at 30 June 2007 $22,778.61m

*Note: This amount represents Defined Benefit advance employer funding.

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 from QSuper on request in November 2007.

Total inflows $5,768.34m

Investment income $2,806.07mEmployer contributions $1,206.25m Member contributions $1,199.36mTransfers in $477.64mGain from net assets transferred in $78.20mOther income $0.82m

Total outflows $2,047.20m

Benefits paid $1,370.51mAdministration expenses $59.45m Income tax expense $604.04mOther expenses $13.20m

Financial highlights 2006/2007

Prize donated by Q Invest’s Investment Access Funds. Q Invest Limited ABN 35 063 511 580 (Q Invest) (AFS licence 238274). Q Invest Limited is the responsible entity for the Investment Access Funds. You should consider the current product disclosure statement (which has the application form attached), in deciding whether to acquire, or continue to hold, the product. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. For more info, including the competition terms and conditions, visit the competition page on the QSuper website.

Put yourself in the picture

At QSuper, we’re all about real service for real members. And that’s why we need you! We’re looking for real members to be profiled in our future publications and we’d love to hear all about you.

To make things a bit more interesting, we’re giving all members who submit their details the chance to win a Q Invest Investment Access Funds

account worth $2,000!

All you need to do is tell us about your interests and leisure pursuits, and get ready for your close-up!So for your shot at fame and fortune, and to find out more about the competition terms and conditions, visit the competition page of the QSuper website at qsuper.com.au.

Win an Investment Access Funds account worth $2,000!

win

$2,000$2,000

QSuper member and employer funds as at 1 July 2007 = $22,778.61m

Low fees

Real service

Better knowledge

Solid returns

qsuper.com.au

Super is a lifelong investment, and we’re in it with you for the long run. So even if you’re no longer working for the Queensland Government, you can leave your super with us.

That way you don’t miss out on the great benefits we provide – like some of the lowest fees in the country, and over 500 free seminars a year. And of course, we also offer award-winning products and services, solid returns, and one of Australia’s best educational programs.

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We recommend you obtain and read the product disclosure statement (PDS) relevant to you before you make a decision to invest. The PDSs are available from our website or by calling us.

You don’t have to leave QSuper!

we’re all going there

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