Making smart choicescase study

page 5

What’s new at QSuperpage 6

A solid performance2010/2011 report card

page 11

Natalie Clarke, member since 1989

AUGUST 2011 FOR MEMBERS AGED 36 TO 49

JugglingJugglingdebt&superpage 2

SuperScoop

Debt vs superFor many people, their thirties and forties can feel like a

financial balancing act. Mortgage, school fees, credit cards,

car loans… the demands on your wallet are seemingly never

ending. And nagging at the back of your mind is the knowledge

that you really should be adding more to your super.

The commonly held theory is that it’s better to pay off your non-deductible debts,

such as mortgages and credit cards, before you start investing in super. However,

with super being such a tax-effective vehicle, the decision to choose paying off debt

over building super is not simple, and is dependent on a number of factors including

your age, your income level and tax bracket, interest rates and super returns.1

FOR MEMBERS AGED 36 TO 49

Conquering debtThe biggest advantage of

channelling any extra money into

debt repayments is that the sooner

you pay off debt, the less interest

you pay.

For example, paying just $2 per day, or $60 extra

a month, off a $300,000 mortgage can reduce

the total amount you pay by around $19,500.2

Additionally, investing extra money into your

mortgage effectively gives you an after-tax

investment return equivalent to your mortgage rate.

There’s also the security that comes with having

no debt. Reducing your debt means your monthly

expenses decrease, which would provide greater

peace of mind in the event that you lost your job or

couldn’t work due to illness or injury. Most people

would probably agree that not having to find $2,000

a month to pay the mortgage could certainly take

the pressure off! On a similar note, many mortgages

nowadays have a redraw facility, so should you have

a cash flow crisis you can access the extra funds you

have invested.

Contacting QSuperContact Centres70 Eagle Street Brisbane63 George Street Brisbane

Ph 1300 360 750+617 3239 1004 (international) Fax 1300 240 602+617 3239 1111 (international)

Monday to Friday 8.30am to 5.00pm AEST

GPO Box 200Brisbane Qld 4001

qsuper.qld.gov.au

SuperRatings Platinum awards 2011, QSuper

Accumulation and QSuper Pension accounts,

www.superratings.com.au.

Super Scoop August 2011

is printed by a certified

ISO14001 company

promoting sustainable

forest management.

Important information This document is issued

by the Fund Administrator, QSuper Limited

(ABN 50 125 248 286, AFSL 334 546), on

behalf of the QSuper Board of Trustees

(ABN 32 125 059 006). The QSuper Board of Trustees

is the issuer of interests in the QSuper Fund

(ABN 60 905 115 063). Where the term ‘QSuper’ is

used in this document, it represents the QSuper

Board of Trustees, the QSuper Fund, and QSuper

Limited, unless expressly indicated otherwise. The

content of this document is aimed at providing

general background information on a range of

subjects. The information has been prepared for

general purposes only, without taking into account

your financial objectives, situation, or needs, so it

may not be appropriate for your circumstances. You

should read the product disclosure statement (PDS)

and consider your circumstances before you make

an investment decision. You can download a PDS

from our website at qsuper.qld.gov.au, or call us

on 1300 360 750 and we’ll send you a copy. Before

acting on any of the information, you may wish to

consider obtaining personal financial advice.

a cash flow crisis you

have invested.

Visit our website from September 2011 to download the other versions.

Did you know there are four different versions of Super Scoop tailored to different member audiences?

2 QSuper Super Scoop August 2011

conquer the balancing act

1. Any contributions you make to your super cannot be accessed until after you reach your preservation age or meet another condition of release, and caps apply on how much can be contributed to super. For more information download the Accumulation account product disclosure statement or call us and we’ll send you a copy.

2. Assumes interest rate of 8% p.a. and a 20 year repayment period. Previously, minimum repayments were being made.

3. Q Invest Limited (Q Invest) ABN 35 063 511 580, AFS licence 238274. Q Invest is wholly owned by the QSuper Board of Trustees, and is a separate legal entity which takes full responsibility for the financial services and products it provides.

Having it allSo which one do you choose?

Paying off debt or investing more into your super?

The good news is that when it comes to debt and super, there doesn’t have to be a

choice – you can do both. It can pay at this stage in your life to consistently chip

away at your debt while simultaneously growing your super. And this can all be

done without stretching the budget too much! Everyone’s situation is different, and

what will work for one person may not be right for you, but the following basic tips

are a good starting point:

Reducing debt

Pay off debts with the highest interest rate first.

Pick the card or loan with the highest interest rate, focus your repayments on that,

then move on to the next one. In the long term this will reduce the interest you pay.

Make fortnightly payments.

If your mortgage is say $2,000 a month and you are making monthly repayments, try

changing this to paying $1,000 a fortnight instead, because this means that over a year

you will be paying $26,000 off your debt rather than $24,000. Every little bit helps!

Consider consolidating. If you have multiple debts, you may find that consolidating into one lower-interest

loan could help you pay it off faster and ultimately pay less in interest and fees.

Boosting super

Salary sacrifice. If you make personal contributions into your super, you may

find that making them before tax, instead of after tax, could create a tax saving that

increases your take home pay. You could then contribute this tax saving into your

super account, and boost your super without reducing your take home pay.1

Co-contribution. If you earn less than $61,920 and make an after-tax

contribution, the Commonwealth Government may make an additional

contribution to your super on your behalf. See qsuper.qld.gov.au/growsuper to

see if you could benefit from the co-contribution.

Make extra contributions.

Due to the principle of

compounding, even an additional

$20 a week could make a real

difference to your end benefit,

and if you take it out of your

next pay rise, it’s money you’re less

likely to miss.

Saving into superFor some people, concentrating

on super rather than debt can

result in having more money

in retirement.

In essence, the idea is that whereas most

debt repayments come from your income

after you have already paid tax, super

contributions can be made from your

pre-tax income through salary sacrifice. This

means you only pay 15% tax on your super

contributions (rather than your marginal

rate) and therefore, depending on your

marginal tax rate, may have extra income

available which you could use to make

additional contributions into your super.1

Then after retiring at age 60 or later, you

can choose to pay off your remaining debt

by drawing on tax-free funds from your

super. In some cases this could mean you

end up with a lump sum greater than you

would have had if you’d used your surplus

income to pay off your debt while you

were still working.

Another plus for super is the fact investment

earnings on your contributions are taxed

concessionally at a maximum of 15%. So,

as you can see, in some cases there can be

great tax benefits when investing in super.

The next step Use the Super vs mortgage calculator on the Commonwealth Government’s

MoneySmart website at moneysmart.gov.au to see if you could be better off

putting spare money into your super or your mortgage.

Get financial advice. QSuper members have access to subsidised financial

advice from Q Invest3 about their QSuper benefit — call 1800 643 893 to

make an appointment.

n the Commonwealth Governmenttttt’’’’s’s’s’s

ff

Check out the mortgage vs super case study on page 5 to see how the numbers added up for one couple.

y

super account, and bo

Co-contributioncontribution, the Com

contribution to your s

see if you could benef

Make extra con

3QSuper Super Scoop August 2011

We know from talking to members that

two of the most important questions

people have about their super and

retirement are:

How much you are on track to receive is

the easier question to answer - naming

the actual dollar amount you’ll need

to live on can be more difficult, and

the answer will vary considerably from

person to person. However, having

enough to live comfortably and to at

least maintain their current lifestyle is the

common theme that runs through many

members’ responses.

To help you answer these important

questions more accurately, QSuper

has launched a new online Retirement

Income Calculator. The new calculator

will help you answer these questions,

and also let you explore the effects of

taking a career break, making additional

contributions, or entering your partner’s

details to estimate a combined

retirement income.

If there is a gap between the result you

wanted and the result you are on track

for, you can use this tool to explore

various options and see the effects of

making some changes.

Visit the QSuper website today at

qsuper.qld.gov.au/retirementincome

to see how the new calculator can

help you!

QS

UP

ER

ON

LIN

E

Easy steps to use the Retirement Income Calculator

Step 1.Go to

qsuper.qld.gov.au/

retirementincome

Step 2.Enter your

details.

Step 3.Select the annual

income you think you’ll

need to fund the lifestyle

you want in retirement

(our online tool can help

with this).

Step 4.Click ‘Show results’

to receive your

retirement income

estimate.

How much income am I on track to receive?

What income will I need to fund the lifestyle I want in retirement?

What else is new?

The QSuper website

has had a facelift!

To improve your online experience,

and to make it easier for you to get

the info you want, we’ve given our

website a new look and feel.

Check it out today!

QSuper Super Scoop August 20114

MORTGAGE VS SUPERANNUATIONMORTGAGE VS SUPERANNUATION

SituationQSuper members Grant and Simone would

like to retire when Grant turns 64, and are

hoping for a comfortable standard of living

in retirement that will allow them to travel.

They think it is unlikely the Age Pension will

be available to them, and they recognise

that they will need to fund their own

retirement. Grant and Simone have reviewed

their budget and feel they have surplus

income they can save. They estimate they

can save $100 per week ($5,200 per annum)

and decide to see a Q Invest Adviser to see if

it would be best to invest this money in their

super or use it to pay off their mortgage.

The Q Invest Adviser shows them that by

doing nothing their loan will take 21 years

to repay and they will pay approximately

$327,000 in interest. At their current rate of

contribution their super will provide them

with an annual retirement income of around

$60,400 in today’s money.

See what $100 a week in savings can do

for their super or mortgage!

OptionsOption 1 Invest $5,200 into super via

salary sacrifice

Grant and Simone will still repay their mortgage over 21

years, therefore saving no interest on the loan. The extra

contribution to their super will boost their estimated

annual retirement income substantially to approximately

$70,500. However they will not be able to access any

money they contribute to their super until they reach

preservation age.

Option 2 Invest half into super via salary sacrifice and half to extra mortgage repayments

By investing $2,600 into extra repayments and salary

sacrificing the remaining half to super, Grant and Simone

will repay their mortgage over approximately 17 years

and save an estimated $70,000 in interest. After repaying

their mortgage, Grant and Simone will direct $5,200 into

their superannuation account. At retirement this strategy

will provide them with an estimated minimum annual

retirement income of around $66,300.

Option 3 Invest all of the $5,200 into the mortgage

Grant and Simone repay their mortgage over 14 years and

save $114,000 in interest. After repaying their mortgage,

they then direct the $5,200 into their super, which will

provide them with an estimated minimum annual

retirement income of approximately $61,500.

Their DecisionGrant and Simone consider these

options with their Q Invest Adviser

and decide Option 2 would be

the best for them. This option

would give them a good income

in retirement, will mean they are

paying less in interest on their

mortgage and, because they would

be salary sacrificing their super

contributions, will reduce the

amount of income tax they pay. The

Q Invest Adviser also recommends

Grant and Simone redirect their

loan repayment money into their

super once their mortgage has

been paid off to boost their super

and provide them with an even

better income in retirement.

Take control and get the right advice today.

Call Q Invest on 1800 643 893 to

find out how a Q Invest Adviser can

help you get your super moving.

Grant and Simone’s StoryGrant: aged 40 Salary: $75,000 p.a. Accumulation account balance: $134,000 Personal super contributions: 5% salary sacrificeMortgage: $300,000Monthly repayments: $2,450

Grant and Simone hope to have a lifestyle where they are able to travel and eat out occasionally in retirement.

Simone: aged 38 Salary: $60,000 p.a.Accumulation account balance: $98,000

Sit

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Assumptions for the case study: • Interest rate (mortgage) 8.5%, an offset account is in use • Gross earnings rate 7.99% • CPI 2.5% • AWOTE 3.8% • Standard contributions (super) 5% •

Employer contributions (super) 12.75% • Extra contributions to superannuation and mortgage repayments are a fixed amount for the term of the loan • Marginal tax rate for 2010/2011

year • Medicare included in calculations • Insurance has not been considered • Superannuation account balances at retirement are net of any excess contributions tax • Present values are

used for superannuation income amounts • Interest payable on mortgage is not discounted by CPI • The flood levy has not been considered in the calculation for this case study.

This article is brought to you by Q Invest Limited (ABN 35 063 511 580, AFSL 238274) and is for general information only. It does not take into account individual goals, financial situation,

or needs. You should consider these before you make any investment decision based on this information. Q Invest is wholly owned by the QSuper Board of Trustees, and is a separate

legal entity which takes full responsibility for the financial services and products it provides.

Brought to you by

5QSuper Super Scoop August 2011

The year in reviewAs you’ll see in “The year at a glance”

summary, we’re continuing to deliver on

our commitment to provide you with

great value and service, solid returns, and

the information you need to understand

your options.

While QSuper received industry recognition

in the form of a platinum rating from

SuperRatings for the fifth year running,

I believe the real test is how well we’re

meeting the needs of our members.

That’s why we’ve been working on how

we can improve the products and services

we offer you.

A new way of thinkingAs you would have seen when you

opened this newsletter, QSuper has a

new logo and fresh look and feel to its

communications. But the changes we’re

undergoing are far deeper than a new

look; we’re rethinking the way in which we

help members accumulate enough super

to live their desired lifestyle in retirement.

It’s an unfortunate fact that many older

Australians retire with insufficient funds to

live comfortably. Increased life expectancy

also means that some people have to face

the additional worry of their money

running out too soon.

Everyone has different needs These factors have led the QSuper Board

of Trustees to consider whether we need

to change the way we look at super, and

how we can better meet the needs of

members. Events such as the global

financial crisis (GFC) have certainly

highlighted that the environment can shift

unexpectedly, and there is not a ‘one size

fits all’ approach to saving for retirement.

Everyone has a different view on what

constitutes a comfortable retirement, as

the quotes on the right from our members

by Rosemary Vilgan, Chief Executive Officer

Making super work for you

illustrate, and it is this individuality in

situation and outlook that makes it

all the more important for QSuper to

keep improving.

Growing your super together While every member’s superannuation

journey is different, QSuper is committed

to being your partner on this journey. To

help improve this partnership with our

members, QSuper is proactively looking

at all aspects of the Fund to see what we

can do to better support you and help you

reach your retirement goals.

Over the next few years we are looking

to make our communications even

more relevant to ensure you are always

receiving information that’s better

targeted to your situation so you can

make better decisions about your super.

So what’s new?We also recognise that to achieve your

‘retirement lifestyle goal’ you first need

to understand how much you will need

to fund that lifestyle, then work out how

much you are likely to have accumulated

by the time you stop working. This is

why we have created our new online

Retirement Income Calculator. This exciting

new tool will help you answer these

questions, as well as provide you with the

information and help you need if you’re

currently falling short.

This is just the first of many services that

will be rolled out over the next eighteen

months, so keep an eye out in future

editions of Super Scoop for more details.

This has been a year of growth

and development for QSuper as

we continue to deliver on our

commitment to helping members

achieve better retirement

outcomes. It has also been a year

of challenges, as the floods that

devastated much of Queensland

earlier this year also forced the

temporary closure of our Brisbane

CBD office. However, I’m pleased

to say we continued to provide the

quality service you have come to

expect from us over this period.

Rosemary V i l ganmember s ince 1982

The year at a glance

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1 Awarded by SuperRatings. SuperRatings is an independent superannuation ratings agency.

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thththee e QQSQSQ upuppupererer BBBBalaalalananaancececed ddd (D(DDefefe auauultltttl )) opopopptititiionononon

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thththe e YeYeYearara .11

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nenenearararlylyy 2220,0,,0000000.000.

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ofoff mmmememembebebersrsr ...

6 QSuper Super Scoop August 2011

Gemma Riversmember s ince 2005

The way forwardLike any organisation, QSuper needs to evolve to ensure we continue to

deliver good value and are meeting the changing expectations of our

members. Going forward this means we will be placing a greater focus

on your individual needs, so we can help you make better decisions

about your financial future.

As always, any changes we make will be carefully considered and

focused on helping you achieve your retirement goals. In practical terms

this may mean creating new products, rethinking investment strategies

or improving the way we communicate with you. We are currently

developing our next strategic plan and I look forward to sharing it with

you in the near future.

Bob Scheuber,

Chairman of the QSuper Board of Trustees

Read the complete Chairman’s report in the Annual Report to Members

on the QSuper website at qsuper.qld.gov.au/annualreport

Bob Scheubermember s ince 1974

“To continue to live the way we have lived and not have to rely on the Age Pension.”

wwwwwnnnnnnnnAAAAAAAAAA

“Retirement to me isn’t about just trying to stay alive, it’s about learning how to live more.”

“Retirement to me means being able to live comfortably and go on holidays and do what I want to do without worrying if I can afford it.”

Jean Dwyermember s ince 199 1

Pab l o Fernandezmember s ince 2006

Mart in Kr ippe lmember s ince 2009

Nata l i e C larkemember s ince 1989

ererrreee 1919191999199999999919911999191191991991991911919911911919191919919919999999999999999999999999999999999999999999999999999999999

Duncan McKe l lar

member s ince 1989

pp lKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKr ir ir ir iiir iiiiir ir iiir ir ir ir ir ir ir ir ir ir iirrr ir irrrrrrrrrrrrrrr ppppppppppppppppppppppppppKKKKKKK

Gemma Riversmember s ince 2005

e le le le le lll alalll alalllllllllllllllllllllllllllllllllllllllllllllllllcKcKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKele le lee le le lllceeeeeeeeeeeeeeeininnccccececececccccecccccccccccccccccccc

Sarah-Jayne Lofthouse member s ince 2008

Nata l i e C larkemember s ince 19889

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Garry Dwyer

member s ince 1983

7QSuper Super Scoop August 2011

The investment priority of the QSuper Board of

Trustees is to achieve the long-term targets for

our investment options with the least

amount of investment risk. That’s

why the last few years have

seen us diversify into

infrastructure

assets.

What are infrastructure assets?In simple terms, infrastructure can be defined as the

fundamental facilities and networks serving a community.

Infrastructure assets can include toll roads, ports, and

water distribution networks. The revenue from these assets

comes from the people using these facilities. Alternatively,

infrastructure investments can involve the provision of just

the physical asset, while a third party provides the services.

Due to our size and ability to meet the capital outlay often

necessary when investing in infrastructure, QSuper has

access to investments that in many cases are not available

to individual investors. For example, in 2006 an interest in

established British company Thames Water was acquired on

our behalf by QIC, who are one of our investment managers

(see right for more information).

Why does QSuper invest in infrastructure assets?The recent global financial crisis highlighted the importance

of diversification as a way to reduce the impact of a period of

volatility on investment returns. Infrastructure is particularly

attractive to QSuper because of the steady, long-term nature

of its revenue stream.1

QSuper first started investing in infrastructure in 2006 as

part of a careful strategy to smooth out the volatility in our

multi-asset class Ready Made investment options. Over the

past few years a slow and measured approach has been

taken to build QSuper’s infrastructure portfolio as suitable

investments have become available.

The nuts and bolts of by Brad Holzberger, Chief Investment Officer.

The benefits of investing in infrastructure

BENEFIT 1 :

A reliable, steady income streamas many utilities have a monopoly status and are

regulated by government bodies, and other infrastructure

assets such as privatised airports have natural limitations

on competition. This means customer demand can

be predicted with relative certainty for assets that are

already operating.

BENEFIT 2 :

More predictable cash flowsmeans the capital risk of investing in mature infrastructure

is typically low compared to investments in shares.

BENEFIT 3 :

Creates diversification in an

investment portfolio because there is less sensitivity to the cyclical swings that

can create volatility in sharemarkets. For example, people

continue to use essential services like clean water through

a recession.

BENEFIT 4 :

New infrastructure developmentsmay offer attractive long-term capital growth. In general,

projects can be expected to increase in value as they move

from the planning and construction stage to becoming

fully functional and revenue earning.

8 QSuper Super Scoop August 2011

infrastructureINVESTMENTS

What do we look for in infrastructure investments?The most important factor when making any

investment is whether it is likely to increase the

chances of an investment option achieving its

return objective. When it comes to infrastructure

investments, the key is to invest in the right assets at

the right time for the right price. QSuper’s investment

managers analyse many opportunities, but only a

handful of these assets are ultimately acquired.

There are certain characteristics that are viewed

more favourably. Established assets are generally

less risky than investing in a project from scratch, as

usage and income data is factual and historic rather

than projected. Additionally, investing in an existing

asset that has previously been undermanaged offers

the possibility of higher returns through growth and

improved efficiencies.

As with all investments, it comes down to striking the

right balance and choosing assets that complement

each other and the other asset classes in the portfolio.

To minimise risk and optimise returns, a balanced

approach is taken. For example, it is not ideal to

have too many assets in one industry in a particular

country, as risk exposure would increase if that sector

underwent a demand downturn.

The majority of QSuper’s infrastructure investments

are unlisted equity investments, which means we

have part ownership of an infrastructure company

that is not listed on the stock exchange. This

normally requires a larger capital outlay than listed

infrastructure investments, and we are able to do

this due to our scale as an institutional investor.

This approach is likely to deliver investment

opportunities not available in listed investments

and the ability to directly control assets, both of

which can benefit members.

Where are the future opportunities?

Looking ahead, our investment experts will

continue to source quality infrastructure investment

opportunities. We anticipate that some of these

opportunities may come from overseas, as

international governments with high levels of debt

may decide to privatise infrastructure to release much

needed funds.

As always, we will consider each opportunity on its

own merits and choose only those we believe will

offer the best results for members.

Asset Profile Thames WaterIn 2006 QSuper’s infrastructure manager, QIC, acquired an interest in Thames Water, providing QSuper members with an equity stake in the largest water and wastewater services company in the United Kingdom.

Thames Water provides services to millions of users across London and the Thames Valley, and employs almost 5,000 people. Its revenues are regulated, which provides comparatively stable and predictable cash flows set on a five-yearly cycle. Its asset base continues to grow, and it is this asset base which provides the company with its returns.

With its transparent regulation, predictable cash flows and position as a stable, monopoly business providing essential services, Thames Water is a particularly attractive infrastructure investment. It is one that we expect will continue to provide stable returns for the longer-term benefit of QSuper members.1

1. Past performance is not a reliable indicator of future performance. 9QSuper Super Scoop August 2011

be a permanent measure, any member

will only be able to access this refund

option the fi rst time they exceed the cap.

Co-contribution thresholds remain frozenUnder the superannuation

contribution scheme the Government

matches the after-tax contributions

made by eligible members, up to a

maximum of $1,000 a year. Last year

the Government announced that for

the 2011/2012 financial year the lower

income limit (the amount up to which

you are eligible for the full super

co-contribution) and the upper limit

(the amount at which entitlement to

the co-contribution stops) would be

frozen at the 2010/2011 thresholds of

$31,920 and $61,920 respectively. The

Government has now proposed that

these thresholds remain frozen for the

2012/2013 financial year.

Still committed to super reformMany of the proposals made last year

following reviews of the taxation and

superannuation systems have yet

to be legislated. However after this

year’s Budget was handed down, the

Treasurer reaffi rmed the Government’s

commitment to measures such as the

$500 contribution for low income

earners and, the centerpiece of last year’s

proposed reforms, the gradual increase

of the superannuation guarantee rate

from 9% to 12%.

The Commonwealth Government’s 2011 Budget contained a few superannuation related announcements that may aff ect some members.

Concessional contributions capThe 2011 Budget saw a couple of

proposals in relation to the concessional

contributions cap, which is a cap on

the amount of employer and before

tax (salary sacrifi ce) contributions that

can go into your super. At the moment

the general cap is $25,000 a year, with a

transitional cap of $50,000 for members

aged 50 or over that was due to end on

30 June 2012. The Government has now

proposed that for eligible members aged

50 or over with total account balances

under $500,000, the concessional

contributions cap should be permanently

set at $25,000 higher than the general

cap, eff ective 1 July 2012.

Currently, if your concessional

contributions exceed the cap, these

contributions are taxed at a higher

rate. However, in recognition of the

fact that some people exceed this cap

unintentionally, the Government is

proposing that from the 2011/2012

fi nancial year members will have the

option to have excess contributions up

to $10,000 refunded and taxed at their

marginal tax rate. Although proposed to

The fl ood levy and your super

The Temporary Flood and Cyclone

Reconstruction levy was not released

in the Budget, but it has already been

legislated for eff ect from 1 July 2011,

and will remain in eff ect until 30 June

2012. The levy applies to all taxable

income, including income streams and

lump sum payments, although how

much, if any, levy you pay does depend

on your taxable income. If you are aged

60 or over, any payments from super are

tax free, and so the levy will not apply.

You will also not need to pay the levy

if you were a recipient of the Australian

Government Disaster Relief Payment, or

fall into another exemption category, and

have completed the appropriate form.

You can fi nd more details on these

and other Budget proposals,

including the phasing out of

drawdown relief for pensioners,

in the Annual Report to Members at

qsuper.qld.gov.au/annualreport.

What’s the scoop?

INDUSTRY NEWS

It’s important to remember!Measures announced in the Budget are only proposals, and are dependent on legislation being passed through Parliament. We’ll keep you updated on current and future proposals via our website and in future editions of Super Scoop.10 QSuper Super Scoop August 2011

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Report Card 2010/2011

You can read the full report on our investment

options for the year ending 30 June 2011 in

the QSuper Annual Report to Members, which

can be found on our website at

qsuper.qld.gov.au/annualreport.

NOTE:

• Past performance is not a reliable indicator of future performance. Returns may vary considerably over time.

• Each of our options has a different objective, risk profile, and asset allocation. Visit the Investment options page on our website for more detailed information.

• Changes to inflation, fees, asset allocations, option objectives, and risk play a significant part in the return of any investment option.

• On 1 July 2006 alternative investments (such as infrastructure, private equity, managed funds, and commodities) were introduced into the QSuper Balanced (Default), QSuper Moderate and QSuper Aggressive options.

• On 19 August 2010 QSuper renamed six of its nine investment options.

faredfaredsuper

How your

QSuper Annual report to members 1

A N N UA L R E P O R T TO M E M B E R S 2011

QSuper investment options

Management fees for 2010/2011% p.a.

1 year% p.a.

3 year% p.a.

5 year% p.a.

7 year% p.a.

DEFAULT OPTION

QSuper Balanced (Default)

0.66% 7.81% 2.14% 3.24% 6.24%

READY MADE OPTIONS

QSuper Moderate 0.47% 5.87% 3.32% 3.92% 5.44%

QSuper Socially Responsible 0.89% 5.89% 1.45% 2.12% n/a

QSuper Indexed Mix 0.39% 9.19% 3.14% n/a n/a

QSuper Aggressive 0.79% 9.99% -0.32% 1.70% 5.47%

YOUR CHOICE OPTIONS

Cash 0.26% 4.05% 3.90% 4.19% 4.36%

Diversifi ed Bonds 0.40% 5.33% 9.63% 7.35% n/a

International Shares 0.28% 17.18% -1.62% 0.17% n/a

Australian Shares 0.26% 7.09% 0.40% 2.81% n/a

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Investment returns

11QSuper Super Scoop August 2011

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It has been an eventful

six months for the world

economy and fi nancial

markets. After encouraging

gains over most of 2010,

global stock markets

(including Australia’s)

advanced more slowly over

the fi rst six months of the

2011 calendar year, with

Australia’s market giving

back some of the gains made

over the previous six months.

As devastating natural disasters struck

parts of Australia, the south island of

New Zealand and the east coast of Japan,

fi nancial market volatility increased and

investors retreated to less risky assets such

as government bonds and cash.

The uncertainty around the likely economic

impact of these disasters subsided

somewhat over the period to mid May

2011. Since then however, investor doubts

have resurfaced as economic data in

advanced economies has been weaker than

expected, and as the ongoing European

sovereign debt crisis further stretches

investors’ patience.

Concerns over the level of debt in the

United States economy have risen over the

past six months as its politicians struggle to

maintain fi nancial obligations to which they

have committed. Meanwhile, the second

installment of the US Federal Reserve’s

quantitative easing (government bond

buying) program, initiated in November

2010, concluded at the end of June 2011.

Since its inception, this program has been

helpful in supporting global share markets.

However global investors are becoming

more cautious about the future due to

the winding down of this program, along

with mounting concerns regarding the

sustainability of the US economic recovery.

Brad Holzberger, Chief Investment Offi cer, shares his opinion on the fi nancial markets and investment performance for the period January to June 2011.

Looking ahead

We expect the global economic recovery to

remain broadly intact in the period ahead.

However as global policymakers withdraw

previously generous stimulus measures,

and as authorities are less able to inject

additional monetary and fi scal support to

off set ailing economic activity and high

unemployment, we advocate a conservative

approach with respect to fi nancial market

risk taking.

Overall, navigating global markets and

the associated economic cycle has been

diffi cult over the past six months. We have

positioned the QSuper portfolio to refl ect

our cautious view of what the future holds.

This is so we can better balance the risks

we see on the horizon with the returns

expected from our investments.

Australia’s economy and fi nancial markets

have not been immune to the increased

uncertainty about global markets. Although

the Reserve Bank of Australia (RBA) has left

interest rates unchanged since the end

of 2010, rising infl ation, weakening house

prices and falling consumer confi dence

levels have off set a buoyant resources

sector, which is still benefi ting from high

commodity prices.

How has this aff ected QSuper’s investment options?

The QSuper Moderate, Diversifi ed Bonds

and Cash investment options achieved

stronger returns over the past six months,

consistent with the retreat to less risky

assets by global investors during this time.

However the returns for those QSuper

options with greater exposure to equities

– QSuper Balanced (Default), QSuper

Indexed Mix, QSuper Aggressive, QSuper

Socially Responsible, Australian Shares and

International Shares – have generally been

more modest. Despite the challenges of

the past six months, strong returns were

recorded across all nine QSuper investment

options for the 2010/2011 year.

QSuper regularly undertakes member market research to ensure we are off ering the products and services you need.

QSuper has established relationships with professional

research fi rms, and formal agreements require these fi rms to

comply with the strict privacy standards set by QSuper and

state and national privacy legislation. The personal data

supplied to researchers is generally limited to your name and

contact details, and the results QSuper receives never identify you.

Your participation in any research is voluntary. If you have

any questions about any QSuper research, would like a

copy of our privacy policy, or if you would prefer not

to be contacted by our market researchers, call our

Contact Centre on 1300 360 750.

InvestmentUpdate

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It’s your call

About Brad Holzberger

As QSuper’s Chief Investment Officer,

Brad’s role is to oversee and implement

the investment policy of the Fund.

Before his appointment at QSuper in

February 2009, Brad spent 15 years at QIC

as an executive in asset management.

Brad is a Senior Fellow of the Financial

Services Institute of Australasia (FINSIA),

and is also a member of The Association

of Superannuation Funds of Australia

(ASFA) Investment Policy Committee.