Annual report to members 2009 - QSuper - Queensland Government

2009 Annual report to members Important informationAnnual reportto members2009*SuperRatings platinum rating QSuper Accumulation account 2009 and QSuper Pension account 2009

Contents2 Chairman’s report4 Board of Trustees5 QSuper highlights6 The Commonwealth Governmentbudget and your super7 About QSuper’s investments8 Changes to your investment options9 QSuper investment policies10 QSuper investment options13 Defined Benefit accounts14 More important information15 Financial statementsThis annual report will assist you to understand yourbenefit statement. You should read your benefitstatement in conjunction with this annual report.Together these documents comprise your PeriodicStatements for the year ended 30 June 2009.Additional copiesYou can obtain additional copies of thisannual report by visiting the QSuper websiteat qsuper.qld.gov.au or calling QSuperon 1300 360 750.Important InformationThis document is issued by the Board of Trusteesof the State Public Sector Superannuation Scheme(ABN 32 125 059 006) (“QSuper Board of Trustees”or “QSuper Board”). The QSuper Board of Trusteesis the issuer of interests in the State Public SectorSuperannuation Scheme (ABN 60 905 115 063)(trading as “QSuper”). Where the term ‘QSuper’is used in this document, it represents both theQSuper Board of Trustees and the QSuper Fund.General Advice WarningThe QSuper Board is not licensed to providefinancial product advice. The information in thisannual report has been prepared for generalpurposes only, without taking into account yourfinancial objectives, situation, or needs, so it maynot be appropriate for your circumstances.You should read the product disclosure statement(PDS) and consider your circumstances beforeyou make an investment decision. You candownload a PDS from the QSuper website atqsuper.qld.gov.au, or call us and we’ll send youa copy.Before acting on any of the information, youmay wish to consider obtaining personalfinancial advice.DisclaimerAlthough we make every attempt to ensurethe information in this document is accurateand up to date at the date of its publication,legislative and other changes after the date ofpublication may affect the accuracy of some ofthe information contained in this document. Tofind out about updated information which is notmaterially adverse to you contact QSuper. TheBoard of Trustees and the State of Queensland donot guarantee the investment performance of theFund or repayment of capital.*SuperRatings platinum ratingQSuper Accumulation account 2009 andQSuper Pension account 2009www.superratings.com.auContacting QSuperContact Centre70 Eagle Street Brisbane63 George Street Brisbane1300 360 750(+617 3239 1004 if overseas)Monday to Thursday8.30am to 5.00pmFriday 9.00am to 5.00pmGPO Box 200Brisbane Qld 4001Fax 1300 241 602qsuper.qld.gov.auOver the past year the biggestchallenge we have faced hasbeen the global financial crisisand the resulting impact onsuperannuation investments.The year that wasThe global financial crisis has had asignificant effect on the performanceof financial markets and in turn onthe performance of super funds.Disappointing lower or negative returnsare real issues faced by QSuper membersand we understand many members maybe concerned about the impact these willhave on their financial future.As a QSuper member, you’re with one ofAustralia’s largest superannuation funds,with over 520,000 members and over$22 billion funds under management. 1On behalf of the Board of Trustees, I’dlike to reassure you that managing yourmoney is our number one priority andwe are determined to continue to takewhatever action is necessary to manageyour savings prudently in these uncertaintimes. QSuper’s strict governance controlsare designed to protect members andensure we retain our focus on deliveringsolid long-term outcomes.Over the past year, QSuper has increasedits level of education and communicationwith members about the economicsituation, so that members can makeinformed and proactive decisionsabout their super. Our aim during thistime has been to keep members up todate with the latest market impacts andeducate members about strategies thatmay be employed to help weather thecurrent crisis, as well as positioning formarket recovery.1 As at 30 June 20092 | QSuper Annual report to members

Chairman’s reportby Bob ScheuberChairman of the BoardDespite the recent harsh economicoutcomes on investment returns, QSuperstrives to provide members with a solidgreat-value product.Our member-centric philosophy guideseverything we do, so we’re pleased toinform you that SuperRatings awardedQSuper a position in the top ten finalistsfor the SuperRatings Fund of the Yearaward. In addition, QSuper was alsoawarded SuperRatings top award, theSuperRatings Platinum award in 2009for both our Accumulation and QSuperPension accounts.An exciting new initiativeWe work hard to provide the bestpossible products and services to allof our members. Since 1 July 2009,eligible QSuper members have beenable to request their non-QueenslandGovernment employers to makesuperannuation contributions into QSuper.For QSuper members, this means they cancontinue their relationship with a fundthey have come to know and trust. Formore information on this exciting newinitiative please visit the QSuper website.RegulationAs you may be aware, QSuper hasbeen working towards becominga fund regulated by the AustralianPrudential Regulation Authority(APRA). QSuper has recently receivedits Registrable Superannuation Entitylicence from APRA which meansQSuper is now a regulated fund andsubject to the same CommonwealthGovernment requirements as most othersuperannuation funds in Australia.AcknowledgementsAfter dedicating ten years to guidingthe development of QSuper to meetmembers’ needs, Mr Gerard Bradleyresigned from the position as Chairman ofthe QSuper Board of Trustees on 31 May2009. On behalf of the Board, I would liketo thank Mr Bradley for his great work asChairman and his commitment to QSuper.On 1 June 2009, I was appointed as thenew Chairman of the QSuper Board ofTrustees. I joined the QSuper Board inDecember 2007 and was previously aTrustee from 1996 to 2001. I am honouredto be the new Chairman and thank myfellow Board members for entrusting mewith this position.On behalf of myself, Mr Bradley, and theBoard, I would like to thank Chief ExecutiveOfficer Rosemary Vilgan, the ExecutiveManagement team, and the staff ofQSuper Limited for all of their hard workthroughout this challenging year.The Board appreciates the support ofthe Auditor-General of Queensland andwould like to thank its major serviceproviders, including QIC Limited, Q Invest,Watson Wyatt, Ernst & Young, and theState Actuary.Looking aheadWe look toward the futurewith renewed excitement anddetermination to overcome anychallenges and reinforce ourposition as one of Australia’slargest superannuation funds.Our three-year strategic plan has justbeen finalised and, as a result, the comingyears will see QSuper undertaking arange of innovative measures to continuebuilding on our vision to improveretirement outcomes for its members. Thisvision encapsulates QSuper’s memberphilosophy, purpose, and core values ofbetter knowledge, great value, real service,and solid returns. It is the driver for thekey programs we will be implementingover the next three years. By undertakingthese programs QSuper will seek toenhance the member product and serviceoffer, proactively manage regulatorychange, and improve the efficiency andresponsiveness of its operating platform.QSuper will maintain its history ofinnovation and continuous improvementto ensure the Fund remains relevant andvalued by our members.Although the coming years will no doubtcontinue to bring many challenges, I amconfident QSuper faces these challengesfrom a position of strength. We are excitedabout the opportunities that lie ahead, aswe continue to reaffirm our commitmentto helping members prepare for a brighterfinancial future and cement QSuper’sposition as one of Australia’s largestsuper funds.Bob ScheuberChairman of the BoardQSuper Annual report to members | 3

Board ofTrusteesEmployer trusteesMember entity trusteesEstablished under theSuperannuation (State PublicSector) Act 1990, the QSuperBoard of Trustees(ABN 32 125 059 006)is responsible for theadministration of the QSuperFund (ABN 60 905 115 063).The QSuper Board consists of twelvetrustees, and has equal representationfrom both employer and member entity(employee) organisations. The day-to‐dayrunning of QSuper is delegated by theQSuper Board to the Chief ExecutiveOfficer and Executive Management teamof QSuper Limited (ABN 50 125 248 286,AFSL 334546). However, the QSuperBoard retains responsibility for theoperation of QSuper.The membership of the QSuper Boardchanged during the year, with Mr WalterIvessa, Ms Norelle Deeth, and Mr MichaelBarnes joining the Board and bringing withthem extensive financial managementexperience.Mr Bob Scheuber was appointed as thenew Chairman after Mr Gerard Bradleyresigned from his position in May 2009.Mr Cameron Pope and Ms Terri Hamiltonresigned from the QSuper Board in March2009 and April 2009 respectively.The QSuper Board would like to extendits appreciation to Mr Bradley, Mr Pope,and Ms Hamilton for their contributionto QSuper. Mr Bradley and Ms Hamiltoneach contributed many years of serviceto the QSuper Board and both playedan important role in the Fund’s strategicdirection.The Superannuation (State Public Sector Act) 1990provides for the indemnification of the QSuper Board.In this regard, the QSuper Board has taken out indemnityinsurance under a Trustee Liability Policy. The Boardhas a level of indemnification that is consistent withCommonwealth superannuation laws and otherState legislation.Six employer trustees are nominated bythe Queensland Treasurer. Details of thecurrent employer trustees are listed inthe following table.Meeting attendanceBob ScheuberJohn CarpendaleBob Scheuber (Chairman)Former Chief Executive,Queensland RailAppointed: December 2007John CarpendaleFormer superannuationfund executiveAppointed: June 2006Natalie MacDonaldAssociate Director-General,Queensland Department ofPublic WorksAppointed: December 2007Peter HennekenActing Director-General,Department of Employment,Economic Development andInnovationAppointed: December 2007Walter IvessaAssistant Under Treasurer,Queensland TreasuryAppointed: June 2009Norelle DeethFormer Director-General,Department of Child SafetyAppointed: June 2009Natalie MacDonaldEmployer trusteesPeter HennekenWalter Ivessa(appointed June 2009)Norelle Deeth(appointed June 2009)Gerard Bradley(departed May 2009)Terri Hamilton(departed April 2009)Six member entity trustees are nominatedas follows: one representative by theAustralian Workers’ Union Queenslandand five other representatives by theQueensland Council of Unions. Details ofthe current member entity trustees arelisted in the following table.Karen PeutKaren PeutExecutive Director,Department of Main RoadsAppointed: May 1985Steve RyanPresident, QueenslandTeachers’ UnionAppointed: June 1994Tom JeffersVice-President, AustralianWorkers’ UnionAppointed: August 2007Gay HawksworthState Secretary, QueenslandNurses’ UnionAppointed: December 2007Amanda RichardsAssistant General Secretary,Queensland Council of UnionsAppointed: September 2008Michael BarnesGeneral Secretary, QueenslandPolice Union of EmployeesAppointed: June 2009Member entity trusteesSteve RyanTom JeffersGay HawksworthAmanda Richards(appointed September 2008)Michael Barnes(appointed June 2009)Cameron Pope(appointed September 2008– resigned March 2009)13 14 11 12 1 1 9 11 13 14 9 14 9 1 314 14 14 14 1 1 13 11 14 14 14 14 12 1 7Number of Board meetings attendedNumber of Board meetings the trustee was eligible to attend4 | QSuper Annual report to members

The Commonwealth Governmentbudget and your superThe CommonwealthGovernment’s Budget2009/2010 had someinteresting outcomes for thesuperannuation industry.Since first announced, some proposalshave been enacted in legislation underthe Tax Laws Amendment (2009 BudgetMeasures No.1) Act 2009, the SuperannuationIndustry (Supervision) AmendmentRegulations 2009 (No.4) and the SocialSecurity And Other Legislation Amendment(Pension Reform And Other 2009 BudgetMeasures) Act 2009. Some of the measuresannounced include:Minimum draw-down amountA regulation amendment passed inJune 2009 extended the reducedminimum drawdown for account basedpensions to the end of the 2009/2010financial year. This change applies tomembers with a QSuper Pension accountand members using the transition toretirement option. For more informationabout this change, please see the QSuperPension account documents includedwith your QSuper benefit statement, orcontact QSuper.Super co-contributionsTemporary reductions to the super cocontributionhave been included in the2009/2010 Budget. These reductions willbe scaled back up to the 2008/2009 rateby 2014/2015.In 2008/2009, the matching rate foreligible members was $1.50 for every $1.00contributed, up to a maximum of $1,500.The matching rate drops to $1.00 for $1.00,up to a maximum of $1,000, starting fromthe 2009/2010 financial year.In the 2012/2013 and 2013/2014 financialyears, the matching rate and maximumcontribution will increase to $1.25 for every$1.00 contributed (up to $1,250) and in the2014/2015 financial year, the full matchingrates and co-contribution will be restored.As these changes only become effectivefrom 1 July 2009, the 2008/2009co‐contributions will not be affected.Concessional contributions capThe Government has reduced the capon concessional (including employer andpersonal before-tax i.e. contributions madethrough salary sacrifice) contributions from$50,000 to $25,000 p.a., for the 2009/2010financial year, and the transitionalarrangement for those 50 or over from$100,000 to $50,000 p.a. from 1 July 2009to 30 June 2012. If your concessionalcontributions exceed the cap, you arerequired to pay additional tax on anyamount above the cap.Subject to any conditions to be imposedby the Government under legislation,special arrangements will apply to theconcessional contributions of memberswith defined benefit interests at 12 May2009, including the method by whichthese concessional contributions(which, for defined benefit interests arecalled notional taxed contributions) arecalculated. This is because employercontributions into these interests arenot always attributable to individualmembers. Where these members’ notionaltax contributions exceed the reducedconcessional contributions cap, theywill be deemed to have met the cap.These arrangements are similar to thearrangements that were applied when theconcessional contributions cap was firstintroduced in July 2007. This arrangementonly applies to concessional contributionsmade in respect of a Defined Benefitaccount. For further information on thesespecial arrangements, please refer to theQSuper website.Non-concessionalcontributions capChanges to the non-concessional(after‐tax) contributions cap havealso been legislated. The currentnon‐concessional contributions capis set at three times the concessionalcontributions cap of $50,000, which equals$150,000 p.a., or $450,000 under the ‘bringforward rule’.The cap will stay at the same level forthe 2009/2010 financial year, and willbe calculated at six times the level ofthe concessional contributions cap infollowing financial years.The following proposalsannounced in the 2009/2010Commonwealth GovernmentBudget are still beingconsidered:Lost or unclaimed superThe Government has announced thatfrom the 2010/2011 financial year,superannuation providers will be requiredto transfer to the Australian Tax Office, lostaccounts which have balances less than$200, or that have been inactive for fiveyears, and for which there are insufficientrecords to identify the owner of theaccount.Trans-Tasman portabilityThe Budget announcement also includeda proposal to continue the Government’scommitment to establish a scheme fortrans-Tasman portability of retirementsavings. This means once an agreementis reached, retirement savings could betransferred between certain Australian andNew Zealand funds. As yet, no details ofhow this scheme will operate have beenreleased, but we will keep you updated viathe website.6 | QSuper Annual report to members

About QSuper’s investmentsWho invests your money?The QSuper Board has appointedQIC Limited (ABN 95 942 373 762,ACN 130 539 123) as the investmentmanager for QSuper. As well as managingQSuper money directly, QIC Limited (QIC)acts as a manager of managers, selectingand monitoring specialised fund managersto complement its own expertise. Thesemanagers change from time to time andare monitored daily by QIC. The QSuperBoard has the discretion to change theinvestment manager at any time. To keepup to date with any changes, visit theQSuper website.Allocation of investment returnsQSuper Accumulation and Pensionaccounts are unitised. Your Accumulationor Pension benefit is expressed as anumber of units, and so the value of yourbenefit is determined by the number ofunits held and the value of those units.Your investment option has a unit pricethat is set daily. These unit prices changeto reflect investment returns and changesin market values.The QSuper Board has the discretion tosuspend unit prices if it requires furthervalidation of a unit price for any reason.If the QSuper Board uses this discretion,information will be available on theQSuper website.Unit pricing error compensationQSuper ensures extensive controls arein place to minimise the chance of unitpricing errors. In the unlikely event thatan error occurs and you are negativelyaffected by transacting at an incorrectprice, QSuper will aim to compensate youso that you are returned to the financialposition that would have existed had theerror not occurred.In the event of an error, exited memberswill be awarded compensation if theamount of compensation is greater thanor equal to $20.Investment fees and costsThe Management Expense Ratios (MER)for the 2008/2009 financial year for allour options are outlined in the tables onpages 10-12. The MER is made up of afixed component (fund administration,financial planning services, and coreinvestment management fees) and avariable component (non-core investmentmanagement fees including externalmanagers). Performance fees are includedin the calculation of MERs. The QSuperBoard will provide at least 30 days’ noticeof any increase in the fixed component,which is currently not more than 0.30%of a member’s Accumulation or QSuperPension account balance. Given the natureof the variable component, these feescannot be precisely calculated in advance.We will provide updated fees on thewebsite throughout the year. For moreinformation on fees and costs please referto the product disclosure statement.During the course of the year,changes made to investmentstrategies resulted in changesto MERs.The Balanced, Cash Plus, High Growth,Cash and Fixed Interest options allresulted in a higher MER than last year.The Basic Growth, Australian Shares andInternational Shares options all resulted ina lower MER than last year.Assets above 5% of funds undermanagementQSuper’s exposure to the CommonwealthBank of Australia at the end of the financialyear was 5.71%.QSuper Annual report to members | 7

Changes to your investment optionsChanges to strategic assetallocationsWhen investing your super, QIC workswithin strict asset allocation ranges asprescribed by the QSuper Board. Theseranges apply to most of our Ready Madeoptions and defined benefit monies.In recognition of the fact that differentinvestment strategies may be requiredin different economic environments, theBoard made the decision to make theseasset allocation ranges wider for someoptions from 1 July 2008. This providesQIC with a greater ability to react to marketfactors and take advantage of investmentopportunities as they arise.Increasing these ranges also allows greaterdiversification and the ability to furtherboost the acquisition of alternative assets.This in turn offers the potential to achievesolid returns with less risk. Due to theilliquid nature of some investments, likeinfrastructure, this change is taking time toeffect.Balanced and High GrowthoptionsThe following changes were made to theBalanced and High Growth options:• Definitions of infrastructure and realestate were expanded to include bothlisted and direct assets. This providesgreater flexibility, responsiveness toopportunities, broader diversification,and lower associated costs.Socially Responsible optionAs a result of changes from the externalinvestment manager, AMP, the assetallocation ranges of the SociallyResponsible option were changed from20 April 2009. The change consisted of anincrease to the asset allocation ranges forall asset classes within the portfolio. Formore information regarding the SociallyResponsible option refer to page 10.Asset classCash Plus optionCash 0% – 6% 0% – 8%The Cash Plus option consists of 50% cashand Fixed 50% interest of the Balanced 17% – 29% option. 13% Changes – 33%to Property the Cash Plus option 4% – reflect 22% the 0% changes – 28%to both cash exposures and the BalancedAustralian shares 35% – 41% 33% – 43%investment option.International shares 11% – 33% 9% – 37%All the asset allocation ranges can befound Alternative on pages assets 10–12. 0% – 4% 0% – 6%Cash Plus optionRanges as at Ranges as14 July 2008 at 20 AprilThe Cash Plus option consists of 50% cashand 50% of the Balanced option. Changesto the Cash Plus option reflect the changesto both cash exposures and the Balancedinvestment option.All the asset allocation ranges can befound on pages 10–12.Cash optionIn March 2008 the QSuper InvestmentCommittee considered the then emergingglobal financial crisis and its impact onthe returns for the Cash option andother cash exposures across all of theinvestment options.This resulted in the committee approvingan immediate reduction in the risk of theCash option and the 50% cash allocationof the Cash Plus option. Both portfolioswould be transitioned over a two‐yearperiod to a low risk cash portfoliomirroring the UBS Bank Bill Index. Thismove was to reduce the effect of marketvolatility for the Cash and Cash Plusoptions, while also allowing the rest ofthe investment options to retain someexposure to the long-term value if thesesecurities were held to maturity.This move has seen the Cash optionsomewhat buffered from the full effects ofmarket volatility.8 | QSuper Annual report to members

QSuper investment policiesGeneral ReserveThe primary function of the QSuperGeneral Reserve is to ensure QSuper’scurrent and future liabilities associatedwith tax and administration areprovided for. Fees and tax deductedfrom members’ accounts are transferredinto the General Reserve. Generaladministration expenses and tax liabilitiesare paid from the General Reserve.The General Reserve operates under apolicy approved by the QSuper Board,which also sets and annually reviewsthe investment strategy of the reserve.In setting the investment strategy forthe reserve, consideration is given to thepurpose of the reserve, the nature of theunderlying liabilities, and investment risk.The General Reserve is currently investedin the Cash Plus and Balanced options.General Reserve $’00030 June 2009 157,14530 June 2008 408,08730 June 2007 519,60730 June 2006 352,038Derivatives policyDerivatives are investment products forwhich the value is linked to the value ofanother investment product. Derivativescan be bought and sold, and may beused to protect an investment portfolioagainst unfavourable movements inthe market, or to switch funds betweendifferent investments cost-effectively. TheQSuper Board of Trustees has obtainedand accepted a Derivative Risk Statementfrom QIC which defines how QIC can usederivatives.The QSuper Board of Trustees does notinvest directly in derivatives and monitorsQIC to ensure derivatives are used inaccordance with the Derivative RiskStatement and have not been used forspeculative purposes.Strategy and ObjectivesQSuper aims to be recognised for itscontribution to the quality of eachmember’s life through better knowledge,real service, great value and solid returns.VPP closed investment optionQSuper provides the members of theclosed Voluntary Preservation Plan(VPP) with a capital guarantee that theearning rate for a full financial year willnot be negative. In return for this capitalguarantee, VPP members are levieda premium of 0.35% on 30 June eachyear. This option is invested in a CashPlus strategy and consists of 25% to40% growth assets (such as shares andproperty), 52.5% to 70% defensive assets(such as fixed interest and cash), and 2.5%to 16.5% in alternative assets (such asinfrastructure and commodities).The VPP crediting rate for the 2008/2009financial year was applied to VPP memberaccounts before the capital guarantee feewas debited. The VPP crediting rate forthe 2008/2009 financial year was 0%.QSuper Annual report to members | 9

QSuper investment optionsDefault optionReady Made optionsBalancedCash PlusSocially ResponsibleInvestment objectivesSuited to medium to long-term investorswith an investment timeframe of at least fiveto seven years, and who want exposure toassets with potentially higher returns. Investorsin the Balanced option should also be preparedto accept fluctuations in the value of theirinvestments over the short term.ObjectiveTo achieve an average return over rolling5-year periods of CPI + 4% p.a., afterfees and tax.Suited to investors who are seeking shortto medium-term stability, and who have aninvestment timeframe of three to five years,who want some exposure to growth assetswith potential for moderate returns. Investors inthe Cash Plus option should also be preparedto sacrifice the potential for higher returns inexchange for short to medium-term stability.ObjectiveTo achieve an average return over rolling3-year periods of CPI + 3% p.a., afterfees and tax.Suited to medium to long-term investorswho want an approach that considers theinvestment’s impact on society and theenvironment, and have an investmenttimeframe of at least five to seven years. Investorsin the Socially Responsible option who wantexposure to assets with potentially higher returnsshould also be prepared to accept fluctuationsin the value of their investments over the shortterm.ObjectiveTo achieve an average return over rolling5-year periods of CPI + 3.5% p.a., afterfees and tax.RiskNegative return expected1 year in every 6 years.Negative return expected1 year in every 25 years.Negative return expected1 year in every 5 years.Asset allocationsActual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 11.3 7.0 0–20Fixed interest 10.8 24.7 5–20Property 9.2 9.5 5–15Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 55.7 53.5 50–60Fixed interest 5.4 12.3 2.5–10Property 4.6 4.8 2.5–7.5Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 6.5 4.9 0–8Fixed interest 21.3 24.3 13–33Property 12.3 11.4 0–28Australian shares 32.1 28.6 25–35Australian shares 16.0 14.3 12.5–17.5Australian shares 38.6 37.5 33–43International shares 26.7 23.0 20–30International shares 13.4 11.5 10–15International shares 21.3 21.9 9–37Alternative assets 9.9 7.2 5–33Alternative assets 4.9 3.6 2.5–16.5Alternative assets 0.0 0.0 0–6Investment returnsAccum 1 QP 2Crediting rate (%)12 months -11.96 -12.603 years p.a. -1.04 -0.785 years p.a. 4.76 5.5810 years p.a. 4.96 5.50Accum 1 QP 2Crediting rate (%)12 months -4.53 -4.393 years p.a. 1.60 2.165 years p.a. 4.63 5.4810 years p.a. 4.75 5.41Accum 1 QP 2Crediting rate (%)12 months -10.32 -11.623 years p.a. -1.57 -1.835 years p.a. n/a n/a10 years p.a. n/a n/aFeesMER for 2008/20090.73% p.a.MER for 2008/20090.55% p.a.MER for 2008/20090.95% p.a.1 Accumulation account.2 QSuper Pension account.10 | QSuper Annual report to members

QSuper investment optionsReady Made optionsYour Choice optionsBasic Growth High Growth CashSuited to medium to long-term investors whohave an investment timeframe of at least fiveto seven years, and who are willing to accept ahigher level of volatility than the Balanced optionin exchange for a lower fee. Investors in the BasicGrowth option who want exposure to assetswith potentially higher returns should also beprepared to accept more fluctuation in the valueof their investment over the short term (relativeto the Balanced option).ObjectiveTo achieve an average return over rolling5-year periods of CPI + 3.5% p.a., after feesand tax.Negative return expected1 year in every 5 years.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges 3 (%)from 1 July 2009Cash 5.5 5.3 5Fixed interest 25.0 25.0 25Property 9.7 9.6 10Australian shares 35.1 35.1 35International shares 24.7 25.0 25Alternative assets 0.0 0.0 0Accum 1 QP 2Crediting rate (%)12 months -12.09 -13.153 years p.a. n/a n/a5 years p.a. n/a n/a10 years p.a. n/a n/aMER for 2008/20090.28% p.a.Suited to long-term investors who wantexposure to assets with potentially higherreturns, and who have an investment timeframeof more than ten years. Investors in the HighGrowth option should also be preparedto accept fluctuations in the value of theirinvestments over the short to medium term.ObjectiveTo achieve an average return over rolling10-year periods of CPI + 5% p.a., after feesand tax.Negative return expected1 year in every 4 years.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 8.4 4.9 -2–10Fixed interest 0.0 0.0 0–15Property 9.2 9.5 0–15Australian shares 29.6 26.5 20–40International shares 39.2 46.6 30–50Alternative assets 13.6 12.5 0–36Accum 1 QP 2Crediting rate (%)12 months -19.64 -20.223 years p.a. -4.07 -3.795 years p.a. 3.32 4.3010 years p.a. n/a n/aMER for 2008/20090.91% p.a.Suited to very short-term investors with aninvestment timeframe of less than one year whowant to protect the value of their investments.Investors in the Cash option should alsobe willing to accept very little short-termreal growth.ObjectiveTo capture the return of a broadly diversifiedportfolio of cash investments after fees and tax.Negative return not expected over 1 year.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 100.0 100.0 100Fixed interest 0.0 0.0 0Property 0.0 0.0 0Australian shares 0.0 0.0 0International shares 0.0 0.0 0Alternative assets 0.0 0.0 0Accum 1 QP 2Crediting rate (%)12 months 3.72 4.073 years p.a. 4.32 5.035 years p.a. 4.51 5.3010 years p.a. n/a n/aMER for 2008/20090.33% p.a.Investment objectives RiskAsset allocations Investment returns Fees1 Accumulation account.2 QSuper Pension account.3 The investment management of the Basic Growth option targets the specific asset allocation shown above.QSuper Annual report to members | 11

QSuper investment optionsYour Choice optionsFixed Interest Australian Shares International SharesInvestment objectivesSuited to short to medium-term investors whoare seeking steady returns – and who have aninvestment timeframe of three to five years.Investors in the Fixed Interest option shouldalso be prepared to accept small to moderatefluctuations in the value of their investment inthe short term.ObjectiveTo capture the return of a broadly diversifiedportfolio of global fixed interest investmentsafter fees and tax.Suited to long-term investors who have aninvestment timeframe of more than tenyears, and who want exposure to assets withpotentially higher returns. Investors in theAustralian Shares option should also be preparedto accept fluctuations in the value of theirinvestment over the short to medium term.ObjectiveTo capture the return of a broadly diversifiedportfolio of Australian shares after fees and tax.Suited to long-term investors who have aninvestment timeframe of more than ten yearsand who want potentially higher returns overthe long term. Investors in the InternationalShares option should also be prepared to acceptfluctuations in the value of their investment overthe short to medium term.ObjectivesTo capture the return of a broadly diversifiedportfolio of international shares after feesand tax.Asset allocations RiskNegative return expected1 year in every 11 years.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 0.0 0.0 0–5Fixed interest 100.0 100.0 95–100Property 0.0 0.0 0Negative return expected1 year in every 3 years.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 0.0 0.0 0–5Fixed interest 0.0 0.0 0Property 0.0 0.0 0Negative return expected1 year in every 3 years.Actual asset allocations (%)Year ended 30/06/09Actual asset allocations (%)Year ended 30/06/08Ranges (%)from 1 July 2009Cash 0.0 0.0 0–5Fixed interest 0.0 0.0 0Property 0.0 0.0 0Australian shares 0.0 0.0 0Australian shares 100.0 100.0 95–100Australian shares 0.0 0.0 0International shares 0.0 0.0 0International shares 0.0 0.0 0International shares 100.0 100.0 95–100Alternative assets 0.0 0.0 0Alternative assets 0.0 0.0 0Alternative assets 0.0 0.0 0Investment returnsAccum 1 QP 2Crediting rate (%)12 months 5.97 6.243 years p.a. 4.66 5.275 years p.a. n/a n/a10 years p.a. n/a n/aAccum 1 QP 2Crediting rate (%)12 months -19.38 -20.823 years p.a. -2.92 -3.085 years p.a. n/a n/a10 years p.a. n/a n/aAccum 1 QP 2Crediting rate (%)12 months -26.53 -28.663 years p.a. -8.02 -8.705 years p.a. n/a n/a10 years p.a. n/a n/aFeesMER for 2008/20090.41% p.a.MER for 2008/20090.34% p.a.MER for 2008/20090.35% p.a.1 Accumulation account.2 QSuper Pension account.12 | QSuper Annual report to members

Defined benefit accountsQSuper’s Defined Benefitaccounts include memberswith Parliamentary, State orPolice accounts.About these accountsA defined benefit is calculated using aformula of a multiple times your salaryfor superannuation purposes. Each yearyour multiple grows relative to your rateof contributions. Members with DefinedBenefit accounts generally contributebetween 2% and 5% of their salary forsuperannuation purposes. If you workpart‐time, your multiple growth is adjustedto reflect your part-time hours.The way a defined benefit is calculatedis fixed. This means you can be certain ofthe benefit you will receive, dependingon your salary, the contribution rate youchoose, and your length of membership.The employer is required to pay thebalance of all defined benefits that arenot paid from member contributions andinterest earned.Members with Defined Benefit accountsdo not choose their own investmentstrategy for their Defined Benefit account.However, as part of our commitment tocomprehensive reporting, details of thedefined benefit investment strategy andobjectives are reported below.The Queensland Government passedlegislation to close the Defined Benefitaccount to new members, effective12 November 2008. This means that nonew Defined Benefit accounts can beopened. Parliamentary, State or Policeaccounts are also closed to new members.Investment objectiveThe table below shows the investment objective for QSuper’s Defined Benefit accounts.The asset allocation ranges applying from 1 July 2009 are also set out below. The actualamounts invested in different asset types vary from time to time. The management of theseasset allocations occurs within set ranges (as shown below) and gives QIC the flexibility totake advantage of investment opportunities.Investment objectivesObjectivesTo achieve an average returnover rolling 10-year periods ofAWOTE 1 plus 3.0% p.a., after feesand tax.Asset allocationRanges (%)from 1 July 2009Actual allocation (%)as at 30 June 2009Actual allocation (%)as at 30 June 2008Cash 0 – 15 6.8 0.8Fixed interest 15 – 45 34.3 38.9Property 5 – 15 13.1 12.6Australian shares 2 15 – 25 16.9 20.4International shares 15 – 25 16.7 20.4Alternative assets 0 – 25 12.2 6.9Total n/a 100.0 100.01 AWOTE is a measure of wage and salary levels of employees in Australia, as measured by the Australian Bureauof Statistics and published quarterly.2 The allocation to Australian shares includes an investment in Q Invest Limited.2008/2009 returnsThe crediting rates are net of the fees deducted for management, insurance, and taxexpenses, and apply to your compulsory personal contributions for your Defined Benefitaccount. As part of our commitment to comprehensive reporting, the details below areprovided for the information of members.Investment returnsDefined Benefit Parliamentary State PoliceCrediting rate (%)Crediting rate (%)Resignation creditingrate (%)Preservation creditingrate (%)Resignation creditingrate (%)Preservation creditingrate (%)12 months -11.96 -11.96 -12.36 -11.96 -12.36 -11.963 years p.a. -0.44 -1.98 -1.45 -1.04 -1.45 -1.045 years p.a. 5.15 4.40 4.36 4.76 4.36 4.7610 years p.a. 5.86 n/a 5.33 5.65 5.34 5.66QSuper Annual report to members | 13

More important informationSalary sacrificeThe Commonwealth Government hasexpanded the definition of income sothat from 1 July 2009, salary sacrificecontributions will now be includedwhen calculating your income for superco‐contribution purposes.Preservation cashing conditionsPreservation cashing conditions pertainingto the Defined Benefit and Accumulationaccounts provide for the release ofbenefits upon persons becoming totallyand permanently disabled (TPD). Onceassessed as TPD, persons must first ceaseemployment prior to claiming a benefit.Consistent with amendments toCommonwealth superannuation legislation,QSuper now provides for persons to accesstheir accrued superannuation benefitswhere they have been certified as sufferingfrom a terminal medical condition. Wherea member meets this condition of release,benefits which have accrued up to thattime and any benefits which accrue duringthe certification period (twelve months)may be accessed (conditions apply).Income protectionIn some circumstances, members maybecome entitled to an income protectionbenefit if they are temporarily disabled andhave been on sick leave without salary fora continuous period of 14 calendar days.QSuper’s rules now provide that membersmust exhaust all paid sick leave prior tobecoming entitled to an income protectionbenefit.Contributions for membersaged over 65Members aged between 65 and 75 arerequired to meet a minimum work test inorder to make contributions. QSuper returnscontributions, within 30 days of receipt, inrespect of members who do not meet thework test, consistent with Commonwealthsuperannuation legislation.14 | QSuper Annual report to membersMember identificationrequirementsThe Anti-Money Laundering andCounter‐Terrorism Financing Act 2006(the AML/CTF Act) was introduced bythe Commonwealth Government in 2006to combat money laundering and thefinancing of terrorism.The AML/CTF Act requires superannuationfunds to comply with certain obligationswhen providing services. This includes‘know your customer’ obligations, whichverify the identification of a member orthe agent of a member.QSuper has changed all forms affectedby the AML/CTF Act to help membersmeet the new identification requirements.Members can download the latest formsfrom the QSuper website.In addition, QSuper is continuing toimplement due diligence and monitoring,in line with the AML/CTF Act, to ensurethat our members and their fundsare protected.Family law and same-sexlegislation changesThe Commonwealth Government passedlegislation in late 2008 to eliminatediscrimination against same-sex couplesand children of same-sex relationships.The Commonwealth Government hasamended legislation to allow:• the splitting of a superannuationinterest between de facto couples(including same-sex couples) as part ofa family law property settlement;• same-sex couples to make spousecontributions (and claim a taxdeduction if within prescribed limits);• the same-sex partner of a deceasedperson to receive a superannuationdeath benefit; removing the needto demonstrate an interdependentrelationship or financial dependence onthe deceased;• superannuation contributions splittingbetween same-sex couples; and• the children of each partner in ade facto relationship (includingsame-sex) to receive a death benefit,removing the need to demonstrate aninterdependent relationship.The QSuper Deed has been amended toallow for contribution splitting betweensame-sex couples. Changes to the QSuperDeed providing for the extension ofchildren’s pensions to include the childof each partner in a de facto relationship(including same-sex relationships) will takeeffect in the 2009/2010 financial year.SurchargeThe superannuation surcharge wasabolished from 1 July 2005. Any existingsurcharge liabilities remain payable tothe ATO and will generally be deducedfrom your entitlements when you claim abenefit from QSuper or if you roll over toanother complying superannuation fund.To find out if you have a surcharge liabilityrecorded for your account, please see yourbenefit statement.Enquiries and complaintsQSuper has procedures in place to ensureany enquiries or complaints are dealtwith fairly and promptly. The Fund has90 days to deal with complaints. You candownload QSuper’s Enquiry and complaintsprocedure fact sheet from the QSuperwebsite, or call us and we’ll send you one.If you have a complaint about QSuper,write to the Enquiries and ComplaintsOfficer, QSuper, GPO Box 200, BrisbaneQld 4001, and mark your letter ‘Notice ofenquiry or complaint’.If you are not satisfied with the outcome ofyour complaint, you can take the matter tothe Superannuation Complaints Tribunal(SCT), an independent body set up by theCommonwealth Government to assistmembers only after they have made useof their superannuation fund’s internalcomplaints procedure.If you want to find out whether the SCTis able to deal with your complaint, youshould contact them on 1300 780 808, orvisit their website at www.sct.gov.au.

Financial statementsThe QSuper Fund’s abridged financial statements have been prepared before the audit of the accounts,using information available at the time of publication. The audited financial statements and auditor’sreport will be available on the QSuper website in November 2009.Statement of net assetsas at 30 June2009$’0002008$’000Statement of changes in net assetsfor the year ended 30 June2009$’0002008$’000ASSETSCash 53,869 44,503ReceivablesEmployer contributions receivable 22,270 20,381Member contributions receivable 3,367 3,205GST receivable 2,341 2,077Interest receivable 145 198Sundry receivables and prepayments 3,199 2,19231,322 28,053InvestmentsInvestment in unit trusts 22,900,826 24,741,485Investment in QSuper Limitedand Q Invest Limited 37,529 30,05322,938,355 24,771,538Deferred tax asset 611,318 173,674TOTAL ASSETS 23,634,864 25,017,768LIABILITIESPayablesBenefits payable 8,155 15,562Administration and investmentmanagement fees payable 14,085 15,170Sundry payables 628 74422,868 31,476Tax liabilitiesCurrent tax liabilities (33,868) 244,958Deferred tax liability 152,102 48,867Provision for superannuationcontributions surcharge 74,832 77,734193,066 371,559TOTAL LIABILITIES 215,934 403,035NET ASSETS AVAILABLETO PAY BENEFITS 23,418,930 24,614,733Represented by:Reserves 330,553 575,571Accumulated funds 23,088,377 24,039,162NET ASSETS AVAILABLETO PAY BENEFITS 23,418,930 24,614,733NET ASSETS AVAILABLETO PAY BENEFITSat the beginning of the financial year 24,614,733 22,698,230Investment revenueDistributions from unit trusts 340,798 2,097,721Change in net market value of investments (3,399,048) (3,002,416)Investment management fees (61,281) (38,054)Interest revenue 1,898 1,971(3,117,633) (940,778)Contribution revenueEmployer contributions 2,653,399 3,075,303Member contributions 729,932 1,112,419Transfers from other funds 346,190 512,6583,729,521 4,700,380Other revenueSundry revenue 436 1,069Gain from net assets transferred in – 78,200436 79,269Total revenue 612,324 3,838,871Less:Benefits paid 1,745,774 2,027,051General administration expensesAdministration fee 69,238 54,527Financial planning fee 13,744 12,684Superannuation contributions surcharge 5,044 5,135Insurance premiums 3,977 1,65692,003 74,002Total expenses 1,837,777 2,101,053Total change in net assetsbefore income tax (1,225,453) 1,737,818Income tax expense (29,650) (178,685)Total change in net assetsafter income tax (1,195,803) 1,916,503NET ASSETS AVAILABLETO PAY BENEFITSat the end of the financial year 23,418,930 24,614,733QSuper Annual report to members | 15

2009 Annual report to membersMajor service providersAdministratorQSuper Limited(ABN 50 125 248 286AFSL 33 45 46)Central Plaza Three70 Eagle StreetBrisbane Qld 4000Investment manager andInvestment consultantQICLevel 6, Central Plaza Two66 Eagle StreetBrisbane Qld 4000Financial planningQ Invest LimitedLevel 8, Central Plaza Two66 Eagle StreetBrisbane Qld 4000Internal auditorErnst & YoungLevel 5, Waterfront Place1 Eagle StreetBrisbane Qld 4000External auditorQueensland Audit OfficeLevel 11, Central Plaza One345 Queen StreetBrisbane Qld 4000ActuaryState ActuaryLevel 233 Charlotte StreetBrisbane Qld 4000Investment consultantWatson WyattAustralia Pty LimitedLevel 41 Collins StreetMelbourne Vic 3000© QSuper Board of Trustees 2009 3700 QSuper Annual report to members