[PDF] Investment Choice Guide - QSuper - Queensland Government

Contents4 Introduction5 Investment basics8 QSuper’s investment options11 QSuper Lifetime15 Ready Made options17 Your Choice options19 QSuper Self Invest21 Managing your investment strategy23 Investments in detail28 GlossaryImportant informationThis is the Investment Choice Guide.This guide contains detailed information about QSuper’s investment options, the risks of investing and investment timeframes, and the feesfor managing your investment in relation to the QSuper Accumulation account and Income account products.The information in this guide forms part of the QSuper Accumulation Account Product Disclosure Statement (PDS) issued 1 September 2014.This guide may also reference important information contained in the:• Accumulation Account Guide• Accumulation Account Insurance Guideall issued at 1 September 2014 and which form part of the QSuper Accumulation Account PDS.The Accumulation Account Guide provides detailed information about the QSuper Accumulation account product and other importanttopics such as fees and taxation.The Accumulation Account Insurance Guide outlines the insurance offered by QSuper to eligible members, and includes information aboutthe cost of insurance, eligibility, exclusions and how to claim.Before you make a decision about the QSuper Accumulation account product you should consider the information in the QSuperAccumulation Account PDS, this guide and the other guides.This guide forms Part 2 of the Income Account Product Disclosure Statement (PDS) issued 1 September 2014.Before you make a decision about the Income account product you should consider the information in the Income Account PDS andthis guide.If you need any of these documents you can download them from our website, or call us and we’ll send you the copy you need.Keeping you informedThere may be changes from time to time to information contained in this Investment Choice Guide. Information about any change that isn’tmaterially adverse to you can be obtained by visiting our website at qsuper.qld.gov.au, or calling us on 1300 360 750. We’ll also send youa copy of the updated information on request, free of charge.About this guideThis Investment Choice Guide has been prepared and issued by the Board of Trustees of the State Public Sector Superannuation Scheme(ABN 32 125 059 006) (QSuper Board) as trustee for the State Public Sector Superannuation Scheme (ABN 60 905 115 063) (QSuper Fund).Where the term ‘QSuper’ is used it represents the QSuper Board, the QSuper Fund or QSuper Limited (as applicable), unless the contextindicates otherwise.This information in this Investment Choice Guide is general information only and does not take into account your personal objectives, financialsituation, or needs and should not be relied on as legal or taxation advice, nor does it take the place of such advice. Any statements of law orproposals are based on our interpretation of the law or proposals as at the time of printing. You should consider taking financial advice that istailored to your personal circumstances.The QSuper Board is not licensed to provide financial product advice. If you would like advice you can call QSuper Limited (ABN 50 125 248 286AFSL 334546) for general advice or QInvest Limited (ABN 35 063 511 580 AFSL 238274) for personal advice. QSuper Limited and QInvest Limitedare both ultimately owned by the QSuper Board as trustee for the QSuper Fund.The QSuper Board, QSuper Limited and QInvest Limited don’t guarantee the investment performance of the Accumulation Account and theQSuper Income Account or the repayment of capital. If there is any inconsistency between the information in the Investment Choice Guide andQSuper’s Trust Deed, the Trust Deed will prevail. You can access the Trust Deed, also known as the Superannuation (State Public Sector) Deed 1990, atlegislation.qld.gov.au or from qsuper.qld.gov.au.Using the Investment Choice GuideThroughout this guide, any QSuper publications, forms and important terms we refer to will be in italics. Important terms are definedin the glossary on pages 25 and 26.3

Investment basicsSequence riskThe risk of receiving lower or negative returns early in aperiod when withdrawals are made from the underlyinginvestments. The order or the sequence of investmentreturns is a primary concern for those individuals whoare retired and living off the income and capital oftheir investments.Investment manager riskWhere an investment manager may not achieve theirtargeted level of performance.Legislative riskWhere changes in legislation relating to superannuationand tax negatively affect your investment.Liquidity riskNot being able to draw on your funds quickly and easilywithout losing value.Timing riskThe buying or selling an investment that’s not welltimed, and as a result value is lost.What are asset classes?An asset class describes the type of investment inwhich you’re investing your money. Asset classesinclude traditional assets such as cash, bonds, propertyand shares, as well as non-traditional assets such asalternative assets.QSuper’s investment options are made up of one or acombination of these asset classes. Asset classes can besplit into two categories: defensive or growth. Alternativeassets can be either defensive or growth orientated, or acombination of both.DefensiveCash (including term deposits) and fixed interest areknown as defensive assets. Investment in defensiveassets aims to minimise the risk of a negative returnor a decrease in investment value. Because of thislower-risk characteristic, defensive assets usually producelower returns. Investment in defensive assets generallysuits short to medium-term investment timeframes.GrowthShares and property are known as growth assets due totheir potential to increase in real value over the long term.Historically growth assets have earned the highestlong-term investment returns, thereby maximising thegrowth of investments. However in the short to mediumterm, growth assets carry a much higher risk of deliveringlow or negative returns. Investing in growth assets generallysuits medium to long-term investment timeframes.Alternative assetsAlternative assets are non-traditional assets and candisplay characteristics of both defensive and growthassets. QSuper’s alternative assets include severalcategories: incubator assets and private equity, anddiversified investments such as managed funds,commodities and timber. You’ll find more informationabout our investment options and the amount ofexposure each option has to alternative assets (if any) onpages 8 to 18. Alternative assets can provide investorswith additional diversification benefits that wouldn’tbe found in traditional assets. You can find moreinformation about alternative assets on our website.DiversificationDiversification is a simple concept that essentiallymeans ‘not putting all of your eggs in one basket’.In investment terms, diversification means spreadingor mixing your money across a variety of assets,asset classes or countries. This can help minimise risk,as the poor performance of one asset class may becounterbalanced by a strong performance in anotherover the same time period.Your money is also diversified within the asset classesthat make up Lifetime, Ready Made and Your Choiceinvestment options.Diversifying your money can help to minimiserisk, as poor performance in one asset class over agiven period may be counterbalanced by strongperformance in another.How does Self Invest allow me to investin asset classes?With our new option, Self Invest, you also have theopportunity to invest in shares, term deposits andexchange traded funds (ETFs).When investing in QSuper Self Invest you shouldremember that it is important to take a diversifiedapproach to your investments in order to protectagainst the risk of loss through having too muchexposure to any single asset, asset class or sector.6Investment Choice Guide September 2014

QSuper’s investment optionsExpected risk of QSuper’s investment optionsThe table below shows the placement of QSuper’s investment options and their expected risk over the long term.Very low Low Low to medium Medium Medium to high High Very highQSuperLifetimeReadyMadeSustain 2 Sustain 1 Focus 1 OutlookFocus 2 Aspire 1Focus 3 Aspire 2Moderate Balanced SociallyResponsibleAggressiveYourChoiceCash DiversifiedBondsInternationalSharesAustralianSharesSelfInvestCashTransactionaccountTermDepositsSharesETFsNote: This graph gives only a broad indication of risk for QSuper’s various investment options.Return objectivesWhen investing in a superannuation environment it’simportant to remember that the primary objective ofyour investment is to provide you with an adequateincome in retirement. The level of savings you havewhen you reach retirement can determine the standardof living you’ll be able to maintain. Therefore, whenchoosing an investment option, you need to takeinto account how much you think you’ll need for acomfortable retirement, and how best to reach that goal.The balance between risk and returnIt’s difficult to think about risk without return and viceversa. The graphs on the following page illustrate thevolatility in the QSuper Accumulation and Incomeaccount options by showing the highest and lowestannual returns recorded since each option’s first financialyear of returns.There’s potential for these returns to be higher or lowerin the future. As the graphs demonstrate, the optionsconsidered to be higher risk have had a greater rangeof returns, and the lower-risk options have had a smallerrange of returns.Market volatilityIt’s important to be aware that markets move in cyclesand periods. Negative returns aren’t an exception;they’re a normal part of the cycle.Consistent with our investment strategy, we seek toposition QSuper Lifetime (Accumulation accounts only),Ready Made options – Moderate, Balanced, SociallyResponsible and Aggressive – aggressively should theexpected returns of these investments outweigh the risks.Investment Choice Guide September 2014 9

QSuper’s investment optionsThese graphs illustrate the volatility in the Accumulation account and Income account investment options by showingthe highest and lowest annual returns recorded since inception of each option.Range of annual returns – QSuper Accumulation account as at 30 June 2014High(%)Low(%)3020100-10-20-30Investmentoption9.90-4.53Moderate 119.9715.3816.11-10.32-11.96-19.64Balanced 1 Socially AggressiveResponsible5.222.06Cash18.061.92DiversifiedBonds27.34-19.38AustralianShares22.12-26.53InternationalSharesRange of annual returns – QSuper Income account as at 30 June 2014High(%)Low(%)3020100-10-20-30Investmentoption11.27-4.39Moderate 122.7517.3418.80-11.62-12.60-20.22Balanced 1SociallyResponsibleAggressive6.232.43Cash14.822.32DiversifiedBonds29.27-20.82AustralianShares25.76-28.66InternationalShares1 Prior to 1998 the Moderate and Balanced options didn’t have returns reported daily.Note: Returns are reflective of each investment option’s investment returns. Past performance is not a reliable indicator of future performance. Returns for QSuperLifetime have not been included, as this option does not yet have a full year of returns to record. Returns for Self Invest cannot be shown as the nature of the optionmeans the returns for each member will be individual to them.10 Investment Choice Guide September 2014

QSuper LifetimeQSuper Lifetime is the default investment option for the Accumulation account.QSuper Lifetime uses a lifecycle investment strategy that’s designed to meet your investment needs throughout thedifferent stages of your life. This option uses your age and Lifetime account balance to determine how your funds areinvested, based on when it may be appropriate to focus on seeking higher returns at a greater level of risk, and whensafeguarding your funds from volatility may become more important.QSuper Lifetime has eight groups, each with a different investment objective and asset allocation ranges.When you join QSuper Lifetime we’ll determine which group applies to you. Additionally, we’ll review the membership ofeach QSuper Lifetime group every six months, May and November, and change your group if required. This means yourexisting funds in QSuper Lifetime, and any new contributions, will be invested in the group that applied to you at thetime of the most recent review.QSuper Lifetime isn’t available for Income account members.Outlook – You’re under 40 Aspire 1 – You’re 40-49Outlook is the group for all default Accumulation accountmembers under 40 years.Suitable for long-term investors who want exposureto assets with potentially higher returns.TimeframeSuited to investors with a minimum recommendedinvestment timeframe of 10 years.ObjectiveTo achieve an annual return of CPI + 4.5 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 3 and 4 times in every 20 years.Very low Low Low tomediumMediumMediumHigh Very highto highAsset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 0 – 35Property 0 – 25Australian shares 5 – 30International shares 5 – 45Alternative assets 0 – 30Infrastructure 0 – 25Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.98%.Estimated investment fee 5Investment baseInvestment performanceTotal investment fee0.33% p.a.0.13% p.a.0.46% p.a.Aspire 1 is the group for all default Accumulation accountmembers aged between 40-49 with less than $50,000invested in Lifetime.Suitable for medium to long-term investors with loweraccount balances who want exposure to assets withpotentially higher returns.TimeframeSuited to investors with a minimum investment timeframe of10 years.ObjectiveTo achieve an annual return of CPI + 4.5 per cent p.a. after feesand tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 3 and 4 times in every 20 years.Very low Low Low tomediumAsset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 0 – 35Property 0 – 25Australian shares 5 – 30International shares 5 – 45Alternative assets 0 – 30Infrastructure 0 – 25Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.98%.Estimated investment fee 5Investment baseInvestment performanceTotal investment feeMediumMediumHigh Very highto high0.29% p.a.0.11% p.a.0.40% p.a.1 Asset allocation ranges are current as at the issue date of this guide. QSuper has the flexibility to invest within these predetermined ranges. 2 In the Lifetime option and Ready Madeoptions these assets provide diversification, a hedge against inflation and target yield enhancement. This asset class is also referred to as bonds, see the Glossary for more information.3 Past performance isn’t a reliable indicator of future performance. 4 Return net of fees and taxes. 5 This is the estimated investment fee for the 2014/2015 financial year, which may differ fromthe future fee. Both the investment fee and an administration fee of 0.22% are deducted daily from the unit price before the unit price is declared. Additional fees may be charged for insurance andother services. Please refer to the QSuper Accumulation Account Product Disclosure Statement for more information.Investment Choice Guide September 2014 11

QSuper LifetimeAspire 2 – You’re 40-49 Focus 1 – You’re 50-57Aspire 2 is the group for all default Accumulation accountmembers aged between 40-49 with $50,000 or moreinvested in Lifetime.Suitable for medium to long-term investors with higheraccount balances who want exposure to assets withpotentially higher returns.TimeframeSuited to investors with a minimum investment timeframeof 10 years.ObjectiveTo achieve an annual return of CPI + 4.0 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 3 and 4 times in every 20 years.Very low Low Low tomediumAsset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 10 – 60Property 0 – 25Australian shares 5 – 30International shares 5 – 45Alternative assets 0 – 30Infrastructure 0 – 25Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.82%.Estimated investment fee 5Investment baseInvestment performanceTotal investment feeMediumMediumHigh Very highto high0.29% p.a.0.11% p.a.0.40% p.a.Focus 1 is the group for all default Accumulation accountfor members aged between 50-57 with a Lifetime accountbalance of less than $100,000.Suitable for medium-term investors with low balances whowant exposure to assets with potentially higher returns.TimeframeSuited to investors with a minimum investment timeframeof 5 years.ObjectiveTo achieve an annual return of CPI + 4.0 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between two and three times in every 20 years.Very low Low Low toMediummediumMediumto highHighVery highAsset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 10 – 60Property 0 – 25Australian shares 5 – 30International shares 5 – 45Alternative assets 0 – 30Infrastructure 0 – 25Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.94%.Estimated investment fee 5Investment baseInvestment performanceTotal investment fee0.27% p.a.0.09% p.a.0.36% p.a.You can combine the QSuper Lifetime option with any of our other Ready Made or Your Choice options. As ituses a lifecycle investment strategy it may be a more effective investment strategy when you have 100 per centof your QSuper Accumulation account balance invested in it.1 Asset allocation ranges are current as at the issue date of this guide. QSuper has the flexibility to invest within these predetermined ranges. 2 In the Lifetime optionand Ready Made options these assets provide diversification, a hedge against inflation and target yield enhancement. This asset class is also referred to as bonds, seethe Glossary for more information. 3 Past performance isn’t a reliable indicator of future performance. 4 Return net of fees and taxes. 5 This is the estimated investmentfee for the 2014/2015 financial year, which may differ from the future fee. Both the investment fee and an administration fee of 0.22% are deducted daily from theunit price before the unit price is declared. Additional fees may be charged for insurance and other services. Please refer to the QSuper Accumulation Account ProductDisclosure Statement for more information.12Investment Choice Guide September 2014

QSuper LifetimeFocus 2 – You’re 50-57 Focus 3 – You’re 50-57Focus 2 is the group for all default Accumulation accountmembers aged between 50-57 with a Lifetime accountbalance of $100,000 to less than $250,000.Suitable for medium-term investors with moderate balanceswho want exposure to assets with potentially higher returns.Focus 3 is the group for all default Accumulation accountmembers aged between 50-57 with $250,000 or moreinvested in Lifetime.Suitable for medium-term investors with high balances whowant exposure to assets with potentially higher returns.TimeframeSuited to investors with a minimum investment timeframeof 5 years.ObjectiveTo achieve an annual return of CPI + 3.75 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 2 and 3 times in every 20 years.TimeframeSuited to investors with a minimum investment timeframeof 5 years.ObjectiveTo achieve an annual return of CPI + 3.5 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 2 and 3 times in every 20 years.Very low Low Low toMediummediumMedium High Very highVery low Low Low toMediumto highmediumMediumto highHighVery highAsset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 20 – 70Property 0 – 20Australian shares 5 – 25International shares 5 – 40Alternative assets 0 – 25Infrastructure 0 – 20Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.92%.Asset allocation ranges (%)Ranges1Cash 0 – 15Fixed interest 2 30 – 75Property 0 – 20Australian shares 0 – 20International shares 5 – 35Alternative assets 0 – 25Infrastructure 0 – 20Investment returns 3, 4Investment returns since this option’s inception at 26 May2014 to 30 June 2014 are 0.90%.Estimated investment fee 5Investment baseInvestment performanceTotal investment fee0.27% p.a.0.09% p.a.0.36% p.a.Estimated investment fee 5Investment baseInvestment performanceTotal investment fee0.27% p.a.0.09% p.a.0.36% p.a.1 Asset allocation ranges are current as at the issue date of this guide. QSuper has the flexibility to invest within these predetermined ranges. 2 In the Lifetime optionand Ready Made options these assets provide diversification, a hedge against inflation and target yield enhancement. This asset class is also referred to as bonds, seethe Glossary for more information. 3 Past performance isn’t a reliable indicator of future performance. 4 Return net of fees and taxes. 5 This is the estimated investmentfee for the 2014/2015 financial year, which may differ from the future fee. Both the investment fee and an administration fee of 0.22% are deducted daily from theunit price before the unit price is declared. Additional fees may be charged for insurance and other services. Please refer to the QSuper Accumulation Account ProductDisclosure Statement for more information.13

QSuper LifetimeSustain 1 – You’re 58 and overSustain 1 is the group for all default Accumulation accountmembers aged 58 or over with less than $300,000 investedin Lifetime.Suitable for investors who are close to or in retirement.TimeframeSuited to investors with a minimum investment timeframeof 2 years.ObjectiveTo achieve an annual return of CPI + 2.5 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected less than once in every 20 years.Sustain 2 – You’re 58 and overSustain 2 is the group for all default Accumulation accountmembers over aged 58 with $300,000 or more invested inLifetime.Suitable for investors who are close to or in retirement.TimeframeSuited to investors with a minimum investment timeframeof 2 years.ObjectiveTo achieve an annual return of CPI + 2.0 per cent p.a. afterfees and tax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected less than 0.5 times in every 20 years.Very lowLowLow tomedium Medium Mediumto highHighVery highVerylowLowLow tomedium Medium Mediumto highHighVery highAsset allocation ranges (%)Ranges1Cash 0 – 75Fixed interest 2 0 – 35Property 0 – 20Australian shares 0 – 30International shares 0 – 45Alternative assets 0 – 25Infrastructure 0 – 20Investment returns 3, 4Investment returns since this option’s inception at16 December 2013 to 30 June 2014 are 4.06%.Asset allocation ranges (%)Ranges1Cash 0 – 90Fixed interest 2 0 – 35Property 0 – 20Australian shares 0 – 30International shares 0 – 45Alternative assets 0 – 25Infrastructure 0 – 20Investment returns 3, 4Investment returns since this option’s inception at16 December 2013 to 30 June 2014 are 4.41%.Estimated investment fee 5Estimated investment fee 5Investment base0.18% p.a.Investment base0.18% p.a.Investment performance0.06% p.a.Investment performance0.06% p.a.Total investment fee0.24% p.a.Total investment fee0.24% p.a.Fees for LifetimeThe fees you will pay depend on which Lifetime group you’re in. Investment fees are calculated using the same methodologyas our other investment options. QSuper deducts an investment fee (including investment base and investment performancefees) and an administration fee of 0.22 per cent on a daily basis. You can find more information on fees on our website or in theAccumulation Account Guide.1 Asset allocation ranges are current as at the issue date of this guide. QSuper has the flexibility to invest within these predetermined ranges. 2 In the Lifetime option andReady Made options these assets provide diversification, a hedge against inflation and target yield enhancement. This asset class is also referred to as bonds, see the Glossaryfor more information. 3 Past performance isn’t a reliable indicator of future performance. 4 Return net of fees and taxes. 5 This is the estimated investment fee for the 2014/2015financial year, which may differ from the future fee. Both the investment fee and an administration fee of 0.22% are deducted daily from the unit price before the unit price is declared.Additional fees may be charged for insurance and other services. Please refer to the QSuper Accumulation Account Product Disclosure Statement for more information.14Investment Choice Guide September 2014

Ready Made optionsModerateSuitable for investors who want short to medium-termstability and some exposure to growth assets with potentialfor moderate returns. Investors in the Moderate optionshould also be prepared to sacrifice the potential for higherreturns in exchange for short to medium-term stability.TimeframeSuited to investors with an investment timeframe of morethan 3 years.ObjectiveTo achieve a return of CPI + 2.5 per cent p.a. after fees andtax, measured over rolling 3-year periods.RiskInvestors should be aware that a negative annual return isexpected less than once in every 20 years.Very lowLowLow tomedium Medium Mediumto highFor more information on our Ready Made options, themost up-to-date actual asset allocations and our mostrecent investment returns, visit qsuper.qld.gov.au.HighVery highAsset allocation ranges (%)Ranges1Cash 40 – 70Fixed interest 2 2.5 – 17.5Property 0 – 10Australian shares 2.5 – 15International shares 2.5 – 22.5Alternative assets 0 – 12.5Infrastructure 0 – 10Investment returns as at 30 June 2014 (%) 3, 4AccumulationaccountIncomeaccount3 months 1.87 2.136 months 3.24 3.581 year 8.55 9.653 years p.a. 5 6.95 7.985 years p.a. 5 7.16 7.9910 years p.a. 5 5.89 6.73Estimated investment fee 6Investment baseInvestment performanceTotal investment fee0.20% p.a.0.06% p.a.0.26% p.a.BalancedThis is the default investment option for the Incomeaccount.Suitable for medium to long-term investors who want exposureto assets with potentially higher returns. Investors in theBalanced option should also be prepared to accept fluctuationsin the value of their investments over the short term.TimeframeSuited to investors with an investment timeframe of morethan 5 years.ObjectiveTo achieve a return of CPI + 3.5 per cent p.a. after fees andtax, measured over rolling 10-year periods.RiskInvestors should be aware that a negative annual return isexpected between 2 and 3 times in every 20 years.Very low Low Low toMediummediumMediumto highHighVery highAsset allocation ranges (%)Ranges1Cash 0 – 25Fixed interest 2 5 – 35Property 0 – 20Australian shares 5 – 30International shares 5 – 45Alternative assets 0 – 25Infrastructure 0 – 20Investment returns as at 30 June 2014 (%) 3, 4AccumulationaccountIncomeaccount3 months 3.11 3.626 months 5.55 6.381 year 13.41 15.083 years p.a. 5 9.90 11.235 years p.a. 5 9.94 11.2810 years p.a. 5 7.32 8.40Estimated investment fee 6Investment baseInvestment performanceTotal investment fee0.33% p.a.0.13% p.a.0.46% p.a.1 Asset allocation ranges are correct as at the issue date of this guide. QSuper has the flexibility to invest within these predetermined ranges. 2 In the Lifetime option andReady Made options these assets provide diversification, a hedge against inflation and target yield enhancement. This asset class is also referred to as bonds, see the Glossary formore information. 3 Past performance isn’t a reliable indicator of future performance. 4 Return, net of fees and taxes. 5 Compound annualised return, net of fees and taxes.6 This is the estimated investment fee for the 2014/2015 financial year, which may differ from the future fee. Both the investment fee and an administration fee of 0.22% arededucted daily from the unit price before the unit price is declared. Additional fees may be charged for insurance and other services. Please refer to the QSuper AccumulationAccount Product Disclosure Statement or the Income Account Product Disclosure Statement, whichever is relevant, for more information.Investment Choice Guide September 2014 15

Ready Made optionsSocially Responsible 1Suitable for medium to long-term investors who want anapproach that considers the investment’s impact on society andthe environment. Investors in the Socially Responsible optionwho want exposure to assets with potentially higher returnsshould also be prepared to accept fluctuations in the value oftheir investments over the short term.TimeframeSuited to investors with an investment timeframe of morethan 5 years.ObjectiveTo achieve a return of CPI + 3.5 per cent p.a. after fees andtax, measured over rolling 10 year periods.RiskInvestors should be aware that a negative annual return isexpected between 4 and 6 times in every 20 years.Very low Low Low tomedium Medium Mediumto highHighVery highAsset allocation ranges (%)Ranges2Cash 0 – 15Fixed interest 0 – 18Property 0 – 10Australian shares 25 – 40International shares 15 – 30Alternative assets 0 – 6Infrastructure 0 – 6Investment returns as at 30 June 2014 (%) 3, 4AccumulationaccountIncomeaccount3 months 2.64 3.016 months 3.25 3.721 year 13.36 15.303 years p.a. 5 9.78 11.295 years p.a. 5 9.03 10.3010 years p.a. 5 n/a n/aEstimated investment fee 6Investment baseInvestment performanceTotal investment fee0.69% p.a.0.00% p.a.0.69% p.a.1 For more information about the Socially Responsible option, see page 22.2 This option is managed externally through AMP Capital Investors Limited. Assetallocation ranges are current at the issue date of this guide and are subject tochange from time to time. Performance fees for this option are paid by AMP CapitalInvestors Limited to their multi-managers as part of their investment fee. Moreinformation is available in the AMP Responsible Investment Leaders Fund productdisclosure statement, which is available from www.ampcapital.com.au. 3 Pastperformance isn’t a reliable indicator of future performance. 4 Return net of fees andtaxes. 5 Compound annualised return, net of fees and taxes. 6 This is the estimatedinvestment fee for the 2014/2015 financial year, which may differ from the futurefee. Both the investment fee and an administration fee of 0.22% are deductedAggressiveSuitable for long-term investors who want exposure to assetswith potentially higher returns. Investors in the Aggressiveoption should also be prepared to accept fluctuations in thevalue of their investments over the short to medium term.TimeframeSuited to investors with an investment timeframe of morethan 10 years.ObjectiveTo achieve an average return of CPI + 4.5 per cent p.a. afterfees and tax over rolling 10 year periods.RiskInvestors should be aware that a negative annual return isexpected between 4 and 6 times in every 20 years.Very low Low Low tomedium Medium Mediumto highHighVery highAsset allocation ranges (%)Ranges7Cash 0 – 15Fixed interest 3 0 – 20Property 0 – 20Australian shares 15 – 45International shares 25 – 55Alternative assets 0 – 25Infrastructure 0 – 20Investment returns as at 30 June 2014 (%) 3, 4AccumulationaccountIncomeaccount3 months 3.53 4.036 months 5.31 5.951 year 17.81 20.123 years p.a. 6 11.79 13.395 years p.a. 6 11.49 13.3410 years p.a. 6 7.33 8.73Estimated investment fee 6Investment baseInvestment performanceTotal investment fee0.36% p.a.0.15% p.a.0.51% p.a.For more information on our Ready Made investmentoptions, the most up-to-date actual asset allocationsand our most recent investment returns, visitqsuper.qld.gov.au.daily from the unit price before the unit price is declared. Additional feesmay be charged for insurance and other services. Please refer to the QSuperAccumulation Account Product Disclosure Statement or the Income AccountProduct Disclosure Statement, whichever is relevant, for more information.7 Asset allocations are current as at the issue date of this guide. QSuper hasthe flexibility to invest within these predetermined ranges.16Investment Choice Guide September 2014

Your Choice optionsCashSuitable for short-term investors who want to protect thevalue of their investments. Investors in the Cash option shouldalso be willing to accept very little short-term real growth.TimeframeSuited to investors with an investment timeframe of lessthan 1 year.ObjectiveTo match the return of the UBS Bank Bill index after fees andtax.RiskInvestors should be aware that a negative annual return isnot expected over 20 years.VerylowLowLow tomedium Medium Mediumto highHighVery highAsset allocation ranges (%)Ranges1Cash 100Fixed interest 0Property 0Australian shares 0International shares 0Alternative assets 0Infrastructure 0Investment returns as at 30 June 2014 (%) 2, 3AccumulationaccountIncomeaccount3 months 0.50 0.596 months 1.00 1.191 year 2.06 2.433 years p.a. 4 2.78 3.265 years p.a. 4 3.26 3.8110 years p.a. 4 3.88 4.55Estimated investment fee 5Investment baseInvestment performanceTotal investment fee0.07% p.a.0.00% p.a.0.07% p.a.Diversified BondsSuitable for short to medium-term investors who want steadyreturns. Investors in the Diversified Bonds option should alsobe prepared to accept small to moderate fluctuations in thevalue of their investment in the short term.TimeframeSuited to investors with an investment timeframe of morethan 3 years.ObjectiveTo match the return of a 40 per cent Australian and 60 percent International Diversified Bond index (hedged in AUD)after fees and tax.RiskInvestors should be aware that a negative return is expectedless than 1 year in every 20 years.Very lowLowLow tomedium Medium Mediumto highHighVery highAsset allocation ranges (%)Ranges6Cash 0 – 10Fixed interest 7 90 – 100Property 0Australian shares 0International shares 0Alternative assets 0Infrastructure 0Investment returns as at 30 June 2014 (%) 2, 3AccumulationaccountIncomeaccount3 months 2.11 2.466 months 4.46 5.191 year 7.37 8.553 years p.a. 4 6.70 7.845 years p.a. 4 8.60 8.9010 years p.a. 4 n/a n/aEstimated investment fee 5Investment baseInvestment performanceTotal investment fee0.16% p.a.0.05% p.a.0.21% p.a.For more information on our Your Choice investment options, the most up-to-date actual asset allocations and ourmost recent investment returns, visit qsuper.qld.gov.au.1 This option is fully invested in cash. 2 Past performance isn’t a reliable indicator of future performance. 3 Return net of fees and taxes. 4 Compound annualised return, netof fees and taxes. 5 This is the estimated investment fee for the 2014/2015 financial year, which may differ from the future fee. Both the investment fee and an administration feeof 0.22% are deducted daily from the unit price before the unit price is declared. Additional fees may be charged for insurance and other services. Please refer to the QSuperAccumulation Account Product Disclosure Statement or the Income Account Product Disclosure Statement, whichever is relevant, for more information. 6 This option is generallyfully invested in a single asset class; however it may be appropriate to hold up to 10% in cash to accommodate market changes and timing of transactions. 7 Fixed interest, forthe purpose of this investment option, is defined as any interest bearing security or equivalent derivative instruments. Within the Diversified Bonds option, this asset class isprimarily targeting capital preservation, and some yield enhancement. This asset class is also referred to as bonds, see the Glossary for more information.Investment Choice Guide September 2014 17

Your Choice optionsInternational SharesSuitable for long-term investors who want potentially higherreturns over the long term. Investors in the International Sharesoption should also be prepared to accept fluctuations in thevalue of their investment over the short to medium term.TimeframeSuited to investors with an investment timeframe of morethan 10 years.ObjectiveTo match the return of the MSCI World Developed Marketsex-Australia net dividends reinvested accumulation index,hedged after fees and tax.RiskInvestors should be aware that a negative annual return isexpected between 4 and 6 times in every 20 years.Australian SharesSuitable for long-term investors who want exposure to assetswith potentially higher returns over the long term. Investorsin the Australian Shares option should also be prepared toaccept fluctuations in the value of their investment over theshort to medium term.TimeframeSuited to investors with an investment timeframe of morethan 10 years.ObjectiveTo match the return of the S&P/ASX 200 Accumulation indexafter fees and tax.RiskInvestors should be aware that a negative annual return isexpected greater than 6 times every 20 years.Very low Low Low tomedium Medium Mediumto highHigh Very highVery low Low Low tomedium Medium Mediumto highHighVeryhighAsset allocation ranges (%)Ranges1Cash 0 – 10Fixed interest 0Property 0Australian shares 0International shares 90 – 100Alternative assets 0Infrastructure 0Investment returns as at 30 June 2014 (%) 2, 3AccumulationaccountIncomeaccount3 months 5.50 6.396 months 6.04 6.931 year 22.04 25.193 years p.a. 4 14.26 16.425 years p.a. 4 14.09 17.3710 years p.a. 4 n/a n/aAsset allocation ranges (%)Ranges1Cash 0 – 10Fixed interest 0Property 0Australian shares 90 – 100International shares 0Alternative assets 0Infrastructure 0Investment returns as at 30 June 2014 (%) 2, 3AccumulationaccountIncomeaccount3 months 2.94 3.406 months 4.88 5.581 year 19.17 21.943 years p.a. 4 11.37 13.205 years p.a. 4 11.64 13.0910 years p.a. 4 n/a n/aEstimated investment fee 5Estimated investment fee 5Investment base0.07% p.a.Investment base0.07% p.a.Investment performance0.00% p.a.Investment performance0.00% p.a.Total investment fee0.07% p.a.Total investment fee0.07% p.a.For more information on our Your Choice investment options, the most up-to-date actual asset allocations and ourmost recent investment returns visit qsuper.qld.gov.au.1 This option is generally fully invested in a single asset class; however it may be appropriate to hold up to 10% in cash to accommodate market changes and timingof transactions. 2 Past performance isn’t a reliable indicator of future performance. 3 Return net of fees and taxes. 4 Compound annualised return, net of fees andtaxes. 5 This is the estimated investment fee for the 2014/2015 financial year, which may differ from the future fee. Both the investment fee and an administration feeof 0.22% are deducted daily from the unit price before the unit price is declared. Additional fees may be charged for insurance and other services. Please refer to theQSuper Accumulation Account Product Disclosure Statement or the Income Account Product Disclosure Statement, whichever is relevant, for more information.18Investment Choice Guide September 2014

QSuper Self InvestSelf InvestSelf Invest is a direct investment option that allows you to invest part of your super directly in term deposits,Australian shares listed on the S&P/ASX 300, and a range of exchange traded funds (ETFs). Unlike other QSuperinvestments, where the investment strategy and return objectives and asset allocation are set by the QSuper Board,performance in Self Invest will depend on your management skill, the investment you choose and the decisionsyou make. While some general assumptions can be made about the assets, and are shown below, the nature ofthe option means that timeframes, objectives and risk will be individual for each member. It is also not possible torecord returns for each investment types within Self Invest as again these will be individual to each member.Term DepositsSuitable for investors who have a hands-on approach tomanaging their super and are wanting interest rate certaintyfor an agreed term.TimeframeSuited to investors with an investment timeframe of lessthan one year. Terms range from 30 days to 365 days.ObjectiveTo provide a fixed rate of return for a fixed term.Risk 1The investment in term deposits is low risk as the rate andterm are fixed.Very lowLowLow tomedium Medium Mediumto highHighVery highShares (S&P/ASX 300)Suitable for long-term investors who have a hands-onapproach managing their super and want exposure to shareswith potentially higher returns over the long term.TimeframeSuited to investors with an investment timeframe of morethan 10 years.ObjectiveTo generate returns through potential share price growthand/or income paid as dividends.Risk 1Investing in the Australian sharemarket carries a highinvestment risk. The investment in a single company or asmall number of companies carries a significantly higherinvestment risk.Very low Low Low tomedium Medium Mediumto highHighVeryhighCash Transaction AccountThe transaction account is automatically openedupon your first transfer to Self Invest. It is suitable forthe temporary holding of funds you intend to investin term deposits, S&P/ASX300 shares or ETFs within SelfInvest, or that you intend to transfer back to otherQSuper investment options. Funds in the transactionaccount are used to pay fees and taxes applicable inthe Self Invest option.The transaction account is not suitable for investmentover long timeframes. Funds within the transactionaccount will receive the ANZ official cash rate creditedto the account monthly.Exchange Traded Funds (ETFs)Suitable for long-term investors who have a hands-onapproach to managing their super and want exposure toassets with potentially higher returns over the long term.TimeframeSuited to investors with an investment timeframe of morethan 10 years.ObjectiveTo duplicate as closely as possible, before expenses, the totalreturn of a prescribed index of securities, assets such as listedproperty and bonds.Risk 1The investment in ETFs carries a very high risk applicableto ETFs as an asset class. Individual ETFs can carry a lowerinvestment risk, for example, investing in a diversified bond ETF.Very low Low Low tomedium Medium Mediumto highHighVeryhigh1 The standard risk measure (SRM) methodology could not be applied to produce this illustration, however the closest related investment risk profile has been shown, basedupon the known asset class behaviours and the direct investment environment.Investment Choice Guide September 2014 19

QSuper Self InvestQSuper Self Invest at a glanceAccumulation accountIncome accountAccount balance eligibility $50,000 $50,000Minimum initial transferto the Self Invest transaction account$5,000 $5,000Minimum retained balance in otherQSuper investment options$10,000 24 months of your current Incomeaccount paymentsInvestment limitsFeesTerm deposits Shares S&P / ASX 300 ETFsSingle term deposit– $5,000 to $5MMaximum share exposure – 85% of your QSuper Accumulation or Income accountbalance.Maximum single share exposure – 25% of your QSuper Accumulation or Incomeaccount balance in a single share or ETF.A minimum trade of $1,500 and a maximum trade amount of $250,000 for every shareor ETF transaction (buying or selling).Access fee – $204 per annum pro rata, calculated daily and deducted monthlyAdministration fee – 0.22% p.a. 1Cash management fee – 0.40% p.a. of transaction account balanceNo transaction fees Brokerage feeOrder Value Fee per Trade 2,3up to $10,000 $19.50$10,001 - $27,500 $29.50$27,501 + 0.11%ETF management feesIncluded in ETF fees and deducted from the returns of the underlyingETF investment by the ETF managers1 An annual cap applies to the administration fee, please see the Accumulation Account Guide or Income account PDS for more information. 2 An order may be filledover a number trades resulting in a separate fee per individual trade. 3 These rates exclude GST. GST is applied to the brokerage fee and you will be entitled to a creditof 75% of any GST paid.How Self Invest worksThe first time you make a transfer to Self Invest, a transaction account is created which is the central hub betweenyour existing QSuper investment options and your Self Invest investments. The transaction account is also your tradingaccount, which you use to invest in shares, ETFs and term deposits, and where investment returns will be applied and feesdeducted from.The diagram below shows how your super moves between your other QSuper investment options and your Self Investassets, via your transaction account.S&P/ASX 300OtherQSuperInvestmentoptionsSELF INVESTTRANSACTIONACCOUNTETFsTermdeposits20Investment Choice Guide September 2014

Managing your investment strategyIf you’re ready to make an investmentchoice, this section outlines the processfor making a switch, and the importanceof monitoring your investment option.What is my investment mix and how do Ichange the mix?We offer you a number of investment options. Youcan invest your account balance in any combination ofthese options. This is called your investment mix. If wehaven’t received investment instructions from you, yourbalance will be invested entirely in QSuper Lifetime ifyou’re an Accumulation account member, and in theBalanced option if you’re an Income account member.You can request a switch whenever you like, 1 and thereis currently no fee for making a switch.If you do decide that making a change to yourinvestment strategy is the right choice for you, you canswitch your investments in Member Online or completea Switch Investments in an Accumulation Account form ora Switch Investments in an Income Account form. You candownload these forms from our website, or call us andwe’ll send you the form you need.How to I transfer funds to QSuper SelfInvest?If you have a balance of at least $50,000 in yourAccumulation or Income account you can transfer fundsto Self Invest. 2 Self Invest operates entirely online, so youmust first register for Member Online. Once logged intoMember Online you can request a transfer to Self Invest.If you’re invested in more than one Ready Made or YourChoice option, all transfers in or out of Self Invest willbe made according to your investment mix. You cannotrequest transfers to or from Self Invest via a SwitchInvestments in an Accumulation Account or a SwitchInvestments in an Income Account form.Contribution investment preference andincome payment preferenceYou can also change your investment preferenceor income payment preference. With a QSuperAccumulation account your investment preferencelets us know how you’d like your future contributionsinvested, including lump sum contributions or rolloversfrom other funds. If you don’t indicate an investmentpreference, any future contributions will be investedaccording to your existing investment preference.If you have an Income account your income paymentpreference tells us which investment option you’d likeyour income payments withdrawn from.QSuper Self invest can’t receive direct contributionsor pay out funds directly. Income payments can onlybe made from other QSuper investment options.You’ll need to transfer funds to one of QSuper’sother investment options before making lump sumwithdrawals or income payments.If you’re unsure of your current investment mix, investmentpreference or income payment preference, you can visitMember Online, check your benefit statement or call us.When is my request to change myinvestments made?Requests to change your investment mix, investmentpreference or income payment preference betweenQSuper’s Ready Made, Your Choice and Lifetime optionsare generally processed within three working daysof being received by QSuper. The unit price applied isthe unit price two working days after a valid requestis received. This unit price reflects the net asset valueon the day the switch was submitted. Any changerequest submitted to QSuper after 3pm on a workingday, or at any time on a non-working day (weekendsor public holidays including Brisbane public holidays),will be considered as having been received on the nextBrisbane working day. You can withdraw your requestany time before 3pm on the Brisbane working day wereceive your request but not after that time.1 The QSuper Board reserves the right to limit switches. 2 Minimum transfer amounts and minimum balance requirements apply. Please see the Self Invest Guide formore information.Investment Choice Guide September 2014 21

Managing your investment strategyWhen are transfers to and in Self Investmade?A request to transfer funds between Self Invest andQSuper other options will generally take two workingdays. The same 3pm cut off for making or withdrawingrequest applies. However you cannot cancel your first orfinal transfer to and from Self Invest.Within the Self Invest option you can place orders forterm deposits, Australian shares listed on the S&P/ASX 300and ETFs. These orders can be placed at any time, butdifferent cut off times apply for the order to have beenconsidered placed on that business day. Please see theSelf Invest Guide for details on the cut-off times for thedifferent types of investments.Monitoring your investment optionsperformanceSuper is a long-term investment, and as you progressthrough life your investment objectives may change.We recommend you regularly review your investmentstrategy and monitor your chosen investment mix toensure it continues to meet your needs. You shouldalso check that fluctuations and returns are within theranges you expect – keeping in mind that short-termfluctuations are normal in financial markets.Switching your investment options can affect yourretirement outcomes, so you should consider seekingfinancial advice before making an investment decision.22Investment Choice Guide September 2014

Investments in detailIf you’re seeking further details, thissection gives you more information aboutinvesting with QSuper.How objectives are setThe QSuper Board sets the objectives and relatedinvestment strategy for each investment option. TheBoard has established the Investment Committee toprovide assistance to the Board by recommendinginvestment objectives and policy for the QSuperFund, as well as monitoring investment performance.Strategies are developed for the Board’s considerationby QSuper Limited’s internal investments team.Implementation and governance of approved strategyis undertaken by QSuper Limited’s investments team onbehalf of the Board. The Board also regularly reviews theappropriateness of the implemented strategies.Who invests your money?QSuper Limited provides investment managementservices and advice to the QSuper Board, and also actsas a manager of managers, selecting and monitoringspecialised fund managers.Managers include AEW Europe LLP, Alinda CapitalPartners, AMP Capital Investors Ltd, AQR CapitalManagement, LLC, Bridgewater Associated, LP,Dimensional Fund Advisors Australia Limited, FirstState Media Group, Global Endowment Management,LP, Global Infrastructure Partners, Graham CapitalManagement, LP, Invesco Advisers Inc, JamestownPremier GP, LP, Makena Capital Management, LLC,Northwater Capital Management, Inc, Partners Group,Principal Global Investors Australia Ltd, QIC Limited,State Street Bank and Trust Company, State Street GlobalAdvisors Australia Limited, and Vanguard InvestmentsAustralia Ltd.These managers are responsible for managing in excessof 40 individual mandates covering all asset classes inwhich QSuper invests. Managers may change from timeto time, and are monitored regularly by the QSuper Board.Socially responsible investment policyFor the majority of QSuper’s investment options, theprimary consideration is to achieve competitive levelsof return within an acceptable level of risk. Investmentmanagers aren’t formally required to take into accountlabour standards or environmental, social or ethicalconsiderations when making investment decisionsexcept for in the Socially Responsible investmentoption. If you are invested in Self Invest these decisionsare your own.Socially Responsible optionQSuper offers members a socially responsible option –Socially Responsible – which utilises the skills of fundmanager AMP Capital Investors through its ResponsibleInvestment Leaders Balanced Fund.As a balanced fund, this option is invested across arange of asset classes. However the socially responsibleinvestment (SRI) focus is currently only applied toAustralian and international shares, direct propertyinvestments and corporate bonds. The SRI selectionapproach may be applied to the other asset classes inthe option as products become available.The QSuper Board has the discretion to vary the currentinvestment with AMP or change the investmentmanager of the Socially Responsible option at any time.AMP Capital Investors’ SRI approach takes into accountlabour standards, together with environmental, socialand ethical considerations, as part of the decision tobuy, hold or sell shares. Key areas assessed include:• environmental responsibility; for example productlifecycles, resource use and waste management• the treatment of employees; for example health andsafety, employee rights and working conditions• social responsibility; for example communityinvolvement and public reporting• corporate responsibility; for example corporategovernance and codes of conduct.Investment Choice Guide September 2014 23

Investments in detailAMP selects SRI managers based on three key criteria:1 The financial assessment process and the abilityto factor labour standards, and ethical, social andenvironmental factors into company selection.2 Avoiding exposure to companies with a materialexposure (greater than 10 per cent on key financialmeasures) to the production or manufacture oftobacco, uranium, armaments, gambling, alcoholor pornography.3 Selecting optimal manager combinations.These managers adopt the same standards outlinedabove regarding consideration of labour standards, andenvironmental, social and ethical considerations in theselection, retention and realisation of assets.Other than the above process, there is no pre-determinedview as to how far labour standards or environmental,social or ethical considerations will be taken intoaccount in the selection and retention of investments.While companies are monitored on an ongoing basis,AMP Capital Investors formally reassesses each companyif a significant change occurs, such as a takeover, or amajor environmental incident. If a company falls belowSRI standards it’s sold within six months.There’s more information available in the AMP ResponsibleInvestment Leaders Fund product disclosure statement,which you can download from ampcapital.com.au.Unit pricesThe QSuper Accumulation and Income accounts areunitised. The value of your superannuation account isdetermined by the number of units you hold and thevalue of those units.When you invest in a QSuper investment option, youpurchase a number of units in that option. The numberof units you buy is equal to the amount you investeddivided by the applicable unit price. The value of youraccount will vary according to changes in the unit pricesof your chosen investment option or options, which canbe positive or negative.QSuper’s unit prices are a reflection of the movementin the value of the portfolio’s underlying assets fromtwo working days earlier. This means that movementsin investment markets for a given day are incorporatedinto the unit price we release to you two workingdays later.When you make a withdrawal, you sell a number ofunits in that investment option. The number of unitsyou sell is equal to the amount you want to withdrawdivided by the unit price of your investment option onthe day the payment is made.Each investment option has a unit price that’s set daily(Monday to Friday), and is net of fees and taxes. Theseunit prices change daily to reflect investment returnsand changes in market values.ExampleIf the unit price was 1.0100, and then three months laterthe unit price was 1.0467, the return over this periodwould be calculated as:1.0467 – 1.0100x 100 = 3.63%1.0100QSuper reserves the right to temporarily suspend unitprices at any time as a result of circumstances such asextreme market volatility or where valuations can’t bedetermined due to circumstances outside of QSuper’scontrol. Where QSuper suspends unit prices on any or allinvestment options, QSuper may temporarily suspendtransaction processing until unit prices are released.QSuper will provide members with details of anytemporary suspension of unit prices via our website.This unit price information does not apply to any fundsyou have invested in Self Invest. When you makea transfer to Self Invest you sell a number of unitsin the investment option/s you transfer the fundsfrom, and this dollar value is transferred to your SelfInvest transaction account. Your Self Invest balanceis calculated by adding together your transactionaccount balance, and the dollar value of your termdeposit, share and ETF investments on a given day.Fees are deducted directly from your transactionaccount. When you transfer money back to QSuper’sother investment option you purchase a number ofunits in that investment option/s as you would if youwere making a contribution to your account.24Investment Choice Guide September 2014

Investments in detailForeign currency hedgingFor Australian investors, returns on internationalinvestments are affected by changes in the value of theAustralian dollar. While over the longer term QSuperviews the return from currency will be zero, we recognisecurrency fluctuations can significantly add to or reducereturns from international assets over shorter timeframesand, accordingly, require separate consideration. Thehedging of currency exposures acts to remove any gainsand losses resulting from currency fluctuations, andtherefore provides a return on international investmentswhich solely reflects the performance of the underlyingforeign investment; for example, shares.The following QSuper investment options contain someexposure to foreign currency (partially hedged):• Lifetime• Moderate• Balanced• Aggressive• Socially Responsible.The following QSuper investment options are notexposed to foreign currency (fully hedged):• Diversified Bonds• International Shares.Tax on investment returnsSuperannuation investment returns are taxed at aconcessional rate of 15%. However some capital gainsincluded in the investment returns of the QSuper Fundmay be eligible to be taxed at an effective rate of 10%.The QSuper Board sets provisional tax rates for eachof the investment options, excluding the QSuperSelf Invest investment option (the tax treatment forthis option is set out to the right). These are adjustedon a quarterly basis. These provisional tax rates areadjusted for any offsets available to QSuper, potentiallyproviding a lower effective tax rate than the standardsuperannuation tax rate of 15%.Allowances for the estimated tax due are included indaily unit prices. Comparisons of the estimated tax andactual tax are performed on a quarterly basis.Investment returns on the Income account aren’t taxed.Income account members also receive the benefit of anyoffsets such as imputation credits. This is why the returnsfor the Accumulation account and Income account differ.Tax within Self InvestSelf Invest will withhold the estimated tax attributableto your account on any return paid, whether that beinterest paid, dividends or distributions, at the time ofreceiving the payment These amounts are generallywithheld at the standard superannuation rate of 15%,with the exception of some capital gains which aresubject to a reduced rate of 10%. These capital gainsmay be reduced or eliminated by any capital losses alreadyincurred and carried forward in your Self Invest option.You will also receive the benefit of certain tax offsetssuch as franking credits associated with returns creditedto your account.Returns on income accounts aren’t taxed, howeverincome account members also receive the benefit ofany franking credits associated with dividends creditedto their account.Another consideration is that you receive 10% of anyunused capital losses when you transfer out of the SelfInvest option (applicable for the Accumulation accountonly) or when you use your Self Invest funds from yourAccumulation account to open an Income account.You also have the benefit of having the value of frankingcredits received by QSuper attributed to your accountat the time a share dividend is paid, rather than havingto wait for a tax return as you would with any other typeof investment. With Self Invest this means you have theopportunity to reinvest this money sooner.And if you decide to open an Income account, SelfInvest allows you to do this without having to sell theexisting assets such as shares and ETFs. This means thatnot only are you saving time and brokerage fees by nothaving to sell and re-buy these assets, you also won’t haveany capital gains tax applied to your account as a result oftransferring funds to open your new Income account.Self Invest provides transparency with regard to howthe Fund’s taxation is applied to your account, givingyou visibility over taxation outcomes. Comprehensivetaxation reporting and transaction histories are alsoavailable to Self Invest option holders.See the QSuper Self Invest Guide for more information ontaxation. If you don’t have this document you can downloadit from our website, or call us and we’ll send you a copy.Investment Choice Guide September 2014 25

Investments in detailDerivative policyDerivatives are investment products where the valueis linked to the value of another investment productsuch as shares. Derivatives can be bought and sold, andmay be used to protect an investment portfolio againstunfavourable movements, or to switch funds betweendifferent investments cost-effectively. The QSuperBoard ensures that derivative exposures are managedin accordance with Australian Prudential RegulationAuthority requirements. Derivatives are not used forspeculative purposes.ReservesReserves can be regarded as funds which form partof the net assets of QSuper that have been set asidefor a clearly stated purpose. There are four reserves atQSuper: the General Reserve, the Insurance Reserve, theUnallocated Contributions Reserve and the OperationalRisk Financial Requirement Reserve (ORFR Reserve).The General Reserve has the primary purpose ofensuring there’s adequate provisioning to meetQSuper’s current and future liabilities associated withadministration costs, strategic initiatives and operationalrisk. Fees deducted from unit prices are transferred intothe General Reserve. The General Reserve operates undera policy approved by the QSuper Board, which also setsand reviews the investment strategy of the reserve.The Insurance Reserve is held by the QSuper Boardas part of the QSuper Fund and is maintained for thepurpose of holding QSuper’s Accumulation accountinsurance premiums and meeting QSuper’s self-insuranceobligations as and when they fall due. The InsuranceReserve operates under a policy approved by the QSuperBoard and on an annual basis is reviewed by the StateActuary, which determines the adequacy of the reserve.The Unallocated Contributions Reserve bears therisk of any movement in investment earnings duringthe contributions allocation process. This reserve ismonitored and reviewed by management quarterly,and by the QSuper Board.The purpose of the ORFR Reserve is to ensure thatQSuper has adequate financial resources to coveroperational risks where one or more beneficiaries havesustained a loss or have been deprived of a gain towhich they otherwise would have been entitled. TheORFR Reserve operates under a policy approved by theQSuper Board, who also set and review the investmentstrategy of the reserve.26Investment Choice Guide September 2014

More informationNeed more information?Call us if you have any questions about this InvestmentChoice Guide, or your super in general – we’re here to help.Online tools and resourcesOur website contains plenty of information to helpyou plan for your retirement and make an informedinvestment decision, including:• historical and up-to-date investment returnsand unit prices• quarterly updates on the performance of yourinvestment option/s and how your super is invested –you can also subscribe to these updates and havethem sent directly to your inbox• performance graphs to compare historical unitprices and to see how your investment option hasperformed since its inception• the Investment Choice Calculator to help you designan investment mix that suits your personal needs• the Retirement Income Calculator to help yousee whether you’re on track to meet yourretirement goals.We also offer seminars and webinars on a wide range oftopics, including investments. Call us or visit our websitefor more information.Investment Choice Guide September 2014 27

GlossaryDefined feesActivity feeAn activity fee is a fee that relates to costs incurred bythe trustee of a superannuation fund that are directlyrelated to an activity that the trustee is engaged in atthe request, or with the consent, of a member, or thatrelates to a member and is required by law, and thosecosts are not otherwise charged as an administrationfee, an investment fee, an advice fee or an insurance fee.Administration feeAn administration fee is a fee that relates to theadministration or operation of the QSuper Fund andincludes costs incurred by QSuper that relate to theadministration or operation of the QSuper Fund, andaren’t otherwise charged as an investment fee, anadvice fee, an activity fee or an insurance fee.Advice feeAn advice fee is a fee that relates directly to costsincurred by QSuper because of the provision of financialproduct advice to a member by QInvest, and those costsaren’t otherwise charged as an administration fee, aninvestment fee, an activity fee or an insurance fee.Indirect costs/feesAn amount that has been deducted from yourinvestment and includes amounts that have reducedthe return on your investment but are not chargeddirectly to you as a fee.Investment feeAn investment fee is a fee that relates to the investmentof the assets of the QSuper Fund and includes fees inpayment for the exercise of care and expertise in theinvestment of those assets (including performancefees), and costs incurred by QSuper that relate to theinvestment of assets of the QSuper Fund, and aren’totherwise charged as an administration fee, an activityfee, an advice fee or an insurance fee.Switching feeQSuper currently doesn’t charge switching fees. Aswitching fee is a fee to recover the costs of switching allor part of a member’s interest in a superannuation fundfrom one class of beneficial interest in the fund to another.Other defined termsAlternative assetsAlternative assets are known as non-traditionalinvestments as they can contain characteristics ofboth defensive and growth assets. QSuper’s alternativeassets include incubator assets and private equity,and diversified investments such as managed funds,commodities and timber.Asset allocationThe distribution of investments among various assetclasses such as shares, property, cash, alternative assetsand bonds.Asset classA category of financial assets. The major asset classesare shares, property, alternative assets, bonds and cash.These can be categorised further into Australian orinternational shares, Australian or international fixedinterest, direct or indirect property, and so on. Eachasset class has different risk and return characteristics.Bonds (also referred to as fixed interest)Investments where the interest rate (coupon) is set inadvance and capital is repaid at maturity. Examplesinclude bonds and debentures issued by bothGovernments and Corporate entities. Bond portfolioscan be structured to target different outcomes includingcapital preservation, return (yield) enhancement,diversification and as a hedge against inflation. Exposurecan be achieved through either physical assets orderivative instruments. They can be actively traded withtheir market value varying as yields change, which canresult in the potential for positive or negative returns.Within the Diversified Bonds option, this asset class isprimarily targeting capital preservation, and some yieldenhancement.In the Lifetime option and Ready Made options theseassets provide diversification, a hedge against inflationand target yield enhancement.It is important to note fixed interest in the DiversifiedBonds option differs from the Lifetime option andReady Made options. As a result the returns from thisasset class may differ between investment options.Brokerage feeA brokerage fee is an amount paid or payable to abroker for undertaking a transaction to buy or sell afinancial product such as shares.28Investment Choice Guide September 2014

GlossaryCapital gainThe profit made by buying an asset and then sellingit for a higher price.CashCash as an asset class is usually invested in theshort-term money market and can also include depositsat call, bank bills and negotiable certificates of deposit.Cash is considered the most secure asset class and ishighly liquid. Over the long term, returns will generallybe lower than bonds, property and shares. In the Cashoption there is no guarantee of capital gain or returns,which can be positive or negative.Cash management feeThis is a fee paid by QSuper for the management of allavailable cash deposits held in QSuper Self Invest. Thefee is not charged directly to your transaction accountbut is deducted before interest is credited. This ischarged as part of the investment fee.CommoditiesCommodities include goods such as metals andraw materials.CPI (consumer price index)An inflationary indicator that measures the quarterlychange in the cost of a fixed basket of goods andservices, including housing, electricity, food andtransportation. The CPI is released by the AustralianBureau of Statistics and is the most common methodof measuring the rate of price inflation.Defensive assetsAssets that are characterised by lower risk and can beused to try to protect portfolios from making losses.The downside of defensive assets is that they generallydeliver lower returns, sometimes not even enough tokeep pace with inflation. Examples are cash and certaintypes of bonds. See also growth assets.DiversificationSpreading your investments over a number of differentassets to minimise the impact of poor performance byone asset.ETF management feeQSuper does not charge any investment fees directlyto your account in relation to the management of anyETF exposures you hold. Any investment fees and otherexpenses are included in the ETF fees and are deductedfrom the returns of the underlying ETF investment bythe ETF managers. The price quoted on the ASX reflectsall fees and expenses incurred in the management ofthe ETF.Exchange Traded Fund (ETF)An ETF is traded on an exchange (ASX) like shares butit’s structured like a managed fund. ETFs are madeup of a number of companies, usually representinga particular market index (example, S&P/ASX 200Resources Sector ETF) or for assets such as internationalshares, fixed income products, precious metals andcommodities. An ETF is a low cost way for investors togain access to a wide range of companies in Australianand international markets and different industry sectorswithout having to select the companies.Growth assetsAssets that have the potential to achieve capital growthover the medium to long term – primarily shares andproperty. Also called aggressive assets as they arecharacterised by higher risk. See also defensive assets.HedgingTaking steps to protect against, or reduce, the riskof a loss.Incubator assetsEarly capital investment into start-up businesses,new products and ideas.InfrastructureInvestment in infrastructure can be either directly intoassets or into externally managed infrastructure funds.These investments aim to achieve returns through bothincome and potential capital gain when the assets aresold. Examples are roads, utilities and water.International sharesShares in a company based outside of Australia. Alsocalled overseas or global shares. The Australian sharemarket represents approximately 3 per cent of the valueof the world’s total share markets.Investment mixAt QSuper, this indicates the investment option/s yourQSuper Accumulation or Income account is invested in.Investment Choice Guide September 2014 29

GlossaryLifetimeLifetime, also referred to as QSuper Lifetime, is QSuper’sapproved MySuper product. Lifetime uses a lifecycleinvestment strategy that changes as your age andLifetime balance change throughout your life. You canfind more information on lifecycle invest and the Lifetimeoption in the Accumulation Account Guide, available onour website, or call us and we’ll send you a copy.Managed fundsManaged funds are pooled investment vehicles forthe purpose of investing in assets such as shares, bonds,money market instruments and similar assets.MSCI World Developed Markets ex-Australia netdividends reinvested accumulation index, hedgedAn index designed to measure the equity marketperformance of 22 developed market country indices.This index is a market capitalisation weighted index.Private equityAn investment, usually in a company, outside of publiccapital markets.PropertyProperty investments include commercial, industrial andresidential real estate. Considered a growth asset andexpected to generate higher returns than cash or fixedinterest securities over the long term.ReturnThe dividends, interest payments or other income, plusthe capital gains or losses, generated on an investment.RiskThe chance that the actual return on an investmentis different to the expected return.Trust DeedThe Superannuation (State Public Sector) Deed 1990,which established the scheme under which QSuperadministers the provision of services to members.UBS Bank Bill indexThe Australian UBS Bank Bill index is constructed as abenchmark to represent the performance of a passivelymanaged short-term money market portfolio. Itcomprises 13 bank bills of equal face value, each with amaturity seven days apart. The average term to maturityis approximately 45 days. A bank bill is a non-interestbearing security issued by a bank whereby the banktakes on an obligation to pay an investor a fixed amount(face value) at a fixed future date. It is sold to an investorat a discount to the face value. Bank bills are short-termmoney market investments with maturities usuallybetween 30 days and 180 days.Unit priceEach investment option other than QSuper Self Investhas a unit price that is set daily, depending on the valueof the assets held in the option. When you invest, youbuy a number of units at the applicable price. As theinvestments increase in value, the unit price goes up.Unit prices can also go down if investments decreasein value.VolatilityVolatility refers to the variability of investment returnsover time. A more volatile investment has a larger rangeof returns over a given period of time. A less volatileinvestment has more stable returns. The higher thevolatility, the riskier the security.S&P/ASX 300 Accumulation indexThe S&P/ASX 300 includes up to 300 of Australia’sbiggest large-cap, mid-cap and small-cap companieslisted on the Australian Securities Exchange, selected onthe basis of their market capitalisation and liquidity.SharesA security by a company which gives the purchasercertain rights, including receiving a proportion of thecompany’s profits in the form of dividend payments.Term depositA term deposit is an investment held in a financialinstitution for a fixed rate of return and for a fixed term.30Investment Choice Guide September 2014

Contact Centres70 Eagle Street Brisbane63 George Street BrisbanePh 1300 360 750(+617 3239 1004 if overseas)Fax 1300 241 602(+617 3239 1111 if overseas)Monday to Friday8.30am to 5.00pmGPO Box 200Brisbane Qld 4001qsuper.qld.gov.auPDS8 | 7580 | 09/2014 © QSuper Fund 2014.