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									       2006 Trustee Report




Continuing
    the journey
contents
Chairman & CEO report                                                     3
Introducing AustralianSuper                                               6
Market in Focus                                                           8
Investment Returns                                                      10
Your AustralianSuper Investment Options                                 12
Investment Managers                                                     14
Member Investment Choice                                                15
Fees and Costs                                                          16
Financials                                                              18
Extra Member Benefits                                                   19




This document is of a general nature and does not take into account your personal objectives, situation or needs. Before
making a decision about AustralianSuper Finsuper division, consider your financial requirements and read our Product
Disclosure Statement (PDS) available at www.australiansuper.com or by calling 1300 367 037.
Investment returns are not guaranteed as all investments carry some risk. Past performance gives no indication of future returns.
This Trustee Report is issued by Insuper (ABN 58 006 823 892, AFSL 233721). The Trustee of AustralianSuper
(RSE R1001693, SPIN STA0100AU) is AustralianSuper Pty Ltd (ABN 94 006 457 987, AFSL 233788, RSEL L0000796).
‘Lifetime of Difference’ logo used with permission of Industry Fund Services (IFS) and this consent had not been withdrawn
as at the date of this publication.
Continuing your journey...
     with AustralianSuper
         Seeking the maximum financial performance.



       clear vision
       of how your
       money should
       be driven                         financial
                                         powerhouse
                                         under the
                                         bonnet




         secure
         handling for
         your future
Chairman’s report




Report from the Chairman
Welcome to the Finsuper Trustee Report, coming to
you on the back of a new beginning as a division of
AustralianSuper following the success of the merger
on 1 July 2006.
The past year has been very dynamic for Finsuper      Some of the great benefits you enjoy as a member
at many levels, and the Trustee Board are confident   of the Finsuper division of AustralianSuper from
that we have established a sound framework to         1 July 2006 include:
deliver improvements to the services and outcomes
                                                         • continued access to Finsuper's low-cost,
for members in this increasingly competitive
                                                           flexible group life insurance;
environment.
                                                         • a reduction in total fees and costs, e.g. your
When one door closes...                                    weekly account keeping fee was reduced from
                                                           $1.50 to $1;
During the year, the Trustee Board undertook a
                                                         • access to an increased number of investment
strategic review of the Fund and concluded that a
                                                           options, including the ASX 200 Shares
merger with Superannuation Trust of Australia (STA)
                                                           Investment Option; and
would be in the best interests of all members and
participating employers.                                 • access to a greater range of other value-added
                                                           products and services.
Following a completion of the due diligence
process undertaken by both the Trustee Boards
of Finsuper and STA, the merger with STA by way
                                                      Investment performance and assets
of a Successor Fund Transfer took place on
                                                      under management at 30 June 2006
30 June 2006.                                         The investment markets in 2005/06 started very
                                                      well, with many superannuation rating agencies
You may have read in the media that STA also
                                                      and the media predicting another year of high
merged with Australian Retirement Fund (ARF)
                                                      returns for members. However, in the June 2006
on the same date. The newly merged fund,
                                                      quarter, we saw a correction in share markets,
encompassing Finsuper, STA and ARF, is called
                                                      resulting in all markets being weaker at the end
AustralianSuper and comprises one of the largest
                                                      of the financial year.
superannuation funds in the country.
Finsuper is now established as a division within
AustralianSuper. It will continue to specialise
in providing superannuation solutions for people
working in the financial services and
insurance industries.


4
Despite this correction, Finsuper's assets                                             Exciting times are ahead
performed well in comparison to the market indices,
                                                                                       The superannuation industry has
particularly for asset classes such as Australian and
                                                                                       continued to be in the spotlight
International Shares.
                                                                                       in recent months, especially
20.30% p.a. & 16.70% p.a.! These are the respective                                    since the May 2006 Budget
crediting rates for Finsuper's High Growth and Moderate                                announcements.
Growth (default) investment options for the twelve
                                                               John Burge, Chairman We are conscious of the
months to 30 June 2006.
                                                                importance of maintaining members' confidence in
                                                                this changing landscape, and remaining competitive
Member Handbook (PDS)                                           in the industry. But there is no doubt that exciting
An AustralianSuper Finsuper Division Member                     times are ahead.
Handbook, the Product Disclosure Statement (PDS)
                                                                The launch of AustralianSuper marked an exciting new
for the division, was issued to all Finsuper members
                                                                era in Australian superannuation. With $20 billion in
at the end of July. The new handbook contains
                                                                assets and $1.25 million members, the scale of the
details of the new investment options available
                                                                new entity is inspiring. Being a part of a fund this
under AustralianSuper, changes to fees and costs,
                                                                size means that we can forge a new path, offering
as well as updated application forms.
                                                                members more opportunities to grow their retirement
If you haven't received your copy and would like                savings.
to obtain one, please call the Finsuper Division on
                                                                I would like to take this opportunity to thank my
1300 367 037 or you can download a copy from
                                                                fellow Trustee Directors, staff and service providers
our website at www.australiansuper.com
                                                                for their past and ongoing commitment to excellence
                                                                in service delivery. It has been a team effort all the
                                                                way, and I am proud for the journey we have taken.
                                                                Finally, I would like to thank you for your support
                                                                and continued membership over the years. I am
                                                                confident that AustralianSuper will continue with
                                                                our commitment to deliver healthy returns and
                                                                provide real growth to your retirement savings.
                                                                Yours sincerely




The Finsuper Trustee Board


                                                                John Burge
                                                                Chairman

                                                   Financial year                                Compound crediting rate
                                                   to 30th June                                      to 30th June

                             2002        2003          2004           2005            2006        3 Years        5 Years

 High Growth                 -4.81       0.10         14.80          13.40            20.30       15.1            8.3
 % p.a.
 Moderate Growth             -1.94       2.00         12.31          13.00            16.70       13.2            8.2
 % p.a.
 Stable Growth               1.90        4.30           7.26         10.10            11.20         9.5           6.9
 % p.a.
 Cash Plus                   3.90        4.35           4.16          4.90             5.90         5.0           4.7
 % p.a.

The above table illustrates Finsuper’s past performance results, net of fees and Government taxes. Please note that past
performance is not an indication of future investment returns.
                                                                                                                           5
Introducing AustralianSuper


Introducing your new Fund                                  • Run only to profit members – we don't pay
                                                             dividends to shareholders, sales commissions
On 1 July 2006, ARF and STA – two leading industry
                                                             or inducements
super funds of similar size and outlook – merged to
become AustralianSuper. At the same time, as a             • Low fees – including a flat administration fee
result of the transition into STA, Finsuper also             of $1 per week (other fees apply)
joined the new entity.                                     • Wide investment choice – 15 investment
                                                             options for members to suit your needs
As a result, Finsuper members are now members
of AustralianSuper's Finsuper Divison.                     • Insurance – that protects you and your
                                                             family: including Death, Total and Permanent
This was done after the Finsuper Trustee Board,
                                                             Disablement (TPD) and Income
following careful deliberation and analysis of
                                                             Protection cover.
regulatory, investment and cost implications,
became convinced that to merge was                         • Members Services – workplace seminars,
overwhelmingly in the best interests of members.             member telephone enquiries, member
                                                             education programs, and a comprehensive
The launch of AustralianSuper is an exciting                 website with secure online transactions
development that will mean very real gains for
                                                           • Financial planning – access to member
members. The size of the combined entity means
                                                             seminars and commission-free planners
we can offer more investment choices, insurance
                                                             and financial advisers.
better suited to the needs of our members, and
an expanded range of member services. So,                  • Extra benefits – access to competitive home
paradoxically, the larger we grow, the more 'in tune'        and personal loans, credit cards and savings
with the needs of our members we can become.                 accounts; low-cost health insurance; and
And, best of all, our increased size means we can            discounted computers and Internet access.
achieve economies of scale to keep fees low.            We are now one of Australia's largest
In building on the strengths of Finsuper, ARF and       superannuation funds. We invest over $20 billion
STA, the merger will enable us to provide excellence    in the retirement savings of 1.3 million members:
in superannuation services for our members:             1 in 10 working Australians. We are open to any
                                                        Australian eligible to contribute to superannuation,
      • Performance – Strong, long-term investment      from any industry or profession.
        returns: a hypothetical AustralianSuper
        Balanced Investment Option would have           But while AustralianSuper is one of Australia's
        returned 15.26% over the past 3 years to        largest superannuation funds, we continue to be run
        30 June 2006, against a benchmark1 return       only to profit members through a combination of low
        of 13.5% over the same period.                  fees and high returns. And that, coupled with our
                                                        size, is what makes us unique.
1
    SuperRatings survey Balanced Option median
                                                        AustralianSuper: working just for you.




6
AustralianSuper: award winning                                SuperRating Fund of the Year
performers                                                    Both ARF and STA
With the beginning of the new choice of fund                  were both amongst
system, where millions of Australians can now                 the 10 finalists in
choose their preferred fund, there has been greater           the 2005/2006
competition between funds to attract members.                 Superannuation Fund of
For industry super funds like Finsuper (and now               the Year Award). ARF has
AustralianSuper), that has resulted in the “compare           previously won this award twice.
the pair” television campaign, which you may have
seen. The campaign has been designed to spread                SuperRating Platinum rating
widely our central message – that low fees can
                                                              Both ARF and STA have been
make a big difference to your final super payout.
                                                              awarded Platinum rating by
It has also resulted in increased emphasis on                 SuperRatings. Platinum is the highest
recognition from awards and ratings, as independent           rating available from SuperRatings.
advisory companies try and sort the wheat from the            The Fund Ratings included most of
chaff for consumers.                                          Australia's largest multi-employer superannuation
Industry super funds, like Finsuper and STA (and              funds, including retail master trusts, industry funds,
now AustralianSuper) have always welcomed the                 public sector and corporate funds.
chance to compete on a level playing field.
                                                              AAA rating
SuperRatings                                                  Both STA and ARF have achieved
SuperRatings is an independent research organization          the highest possible AAA rating in
that aims to provide ratings of funds to help members         SelectingSuper's independent
compare the overall value for money of super funds.           analysis of super fund quality. The
Over 70 superannuation funds participate in the               rating is a detailed analysis of 330
awards that involves a comprehensive six-monthly              areas of a super fund's operation and management
analysis by SuperRatings.                                     and is designed to offer both employers and
                                                              members an easy-to-use reference for the overall
                                                              quality of super funds.


      Case Study

                           “I have been a member of Finsuper for a long time. I appreciate their simple
                           design and reasonable fee approach to super.
                           I can go online and separate the investment split of my existing account
                           balance and future contributions – I like knowing that I am in control of my
                           retirement benefits. It will help make a lifetime of difference to my retirement.”
                           Mark Merton



                           Mark Merton, a Finsuper member since 1999, has consented to his testimonial and photo being placed
                           in this Trustee Report.




                                                                                                                                7
Market in focus




Finsuper's investment advisers –                             the hardest, such as the Japanese and Emerging
JANA Investment Advisers Pty Ltd,                            Markets, suffering the steepest falls. The weakness
                                                             was exaggerated by a rise in the Australian dollar
examines the year’s results
                                                             against other currencies.
Another good year for Finsuper members
                                                             Bond investors had a weak 12-month period with
In the June 2006 quarter we saw a correction in share        both short and long dated yields rising. Returns for
markets resulting in all markets being weaker at the end     both Australian and International Bonds were below
of the financial year. However, despite this correction      Cash as investors in this asset class became
total returns were still strong, finishing the year at 24%   concerned about a renewed outbreak of inflation
and 20% for asset classes such as Australian Shares          caused by high commodity prices, record oil prices,
and Global Shares (ex Australia) respectively.               and low levels of unemployment. Finsuper's
The weakness over the June 2006 quarter did                  Moderate Growth (default) investment option has
not reflect the onset of an economic recession,              been well served by holding less Bonds over the
but rather a reflection of some nervousness due              year than in previous years.
to continued increases in interest rates by central          Property markets performed strongly, with unlisted
banks in the USA, Europe, Asia and even Australia.           property trusts rising by over 17% for the year, while
With oil prices still at record levels, inflation has        listed property trusts were even stronger, up 18%.
started to manifest itself widely, and bond yields           Finally, with the recent pull-back in prices of most
have reacted by rising yields (falling prices),              financial assets, valuations are not excessive, but
which have further added to the anxieties in                 there are still risks such as rising inflation, and
the share markets.                                           interest rates, and highly geared consumers,
The Australian share market has now risen by almost          which may derail markets once again.
24% p.a. for the past three years. This has been an          As ever, we suggest that caution and diversification
exceptionally rapid rise and it is difficult to see this     will remain important to avoid any nasty surprises.
pace of price appreciation continuing, especially
as the main drivers have been resource shares such
                                                             Finsuper's investment performance
as BHP and Rio Tinto, which have benefited from
the resources boom. Although World economic                  During 2005/06, Finsuper's assets have
growth remains solid, higher interest rates are              performed well in comparison to the market indices,
removing one of the props of the share market.               particularly for asset classes such as Australian
                                                             and Global Shares.
International share markets were also stronger
over the year – up 20% – notwithstanding negative
returns for the June 2006 quarter where we saw
a volatile period, with the markets that had run


8
The individual investment options have also once          Significant savings have already been achieved with
again delivered competitive returns – 20.30% for          the negotiation of a master custodian to hold most of
High Growth, 16.7% for Moderate Growth (the               the assets for the new merged fund, compared to the
default), 11.2% for Stable Growth and 5.9% for            costs incurred by Finsuper, ARF and STA previously.
Cash Plus investment options for the twelve               The rationalisation of investment managers, the
months to 30 June 2006.                                   awarding of larger investment mandates and eliminating
A major objective of the Fund has been to diversify the   duplication of advisors and other services will see further
range of assets to increases the sources of return and    cost savings. Even small reductions are meaningful for
reduce risk. The success of this policy can be seen in    a large fund. For example, a saving of just 1 basis point
the returns for the Fund's default investment option,     (1%) equates to over $2m across the fund as a whole –
Moderate Growth that delivered a return of 14.3%.         all of which will flow directly to member accounts.
                                                          Greater assets under management will also mean
Elana Rubin from AustralianSuper's                        that we will be able to be more active in specialised
Investment Committee examines the                         investments, both in Australia and overseas. Many
formation of AustralianSuper and its                      of these investments are very difficult for smaller
benefits for members                                      funds to access and expensive to manage.
While both ARF and STA were ranked in the top tier        AustralianSuper will be able to access opportunities
of superannuation funds in Australia by independent       only available to large funds, and will have the scale
ratings organisations, including SuperRatings             to manage the costs efficiently.
(where they were both amongst the 10 finalists            The new fund starts with 15 investment options
in the 2005/2006 Superannuation Fund of the Year          including the ASX 200 Shares Investment Option.
Award), and Rainmaker, (both hold their highest level     While our Member Investment Choice program is
AAA ranking), the merger will deliver more improved       pretty good compared to other industry funds,
benefits to members and employers.                        there are other investment options we would like
Our investigation into the merits of a merger             to develop. The recent budget changes are likely
identified three areas where superior member and          to result in members giving more attention to
employer benefits could be achieved:                      investment options. Developing new options is
                                                          time consuming, resource intensive and costly –
   • Development of new products and services
                                                          but much less so when you have over 1 million
   • Enhanced marketing capacity and creation of          members and over $21 billion in assets.
     a single, stronger brand
                                                          Our new size will also enable us to bring some
   • Greater economies of scale
                                                          investment functions in-house, which will deliver
The superannuation industry is becoming                   both cost savings and also enable us to undertake
increasingly competitive. A fund with more than           the work with a single focus. More dollars to invest,
1 million members and over $21 billion in assets          and greater cash flow, means that we have to be
can achieve substantial economies of scale that           more innovative, work harder and faster to find the
can be used for the benefit of members and to             really good investment opportunities, and be more
keep overall costs low.                                   proactive in developing new investment instruments.
Not surprisingly, market research shows that              This will be easier with an internal professional
members value investment returns highly when              investment department, and our new size will enable
assessing their funds, and investments are a good         us to do this more cost effectively than ever before.
example of where the merger will be able to deliver       I'm also confident the new merged fund will be an
real benefits to members.                                 overwhelming success. Our new size will give us the
With over $21 billion in assets almost from               platform to deliver superior benefits and services to
inception, AustralianSuper will be able to negotiate      members and employers, and we will continue to
lower investment fees with our investment managers        work hard to achieve the full potential of the merger.
than two separate funds – savings that will go            Elana Rubin
directly to members.                                      Deputy Chairperson
                                                          AustralianSuper Investment Committee
                                                                                                                   9
  Investment returns as at 30 June 2006
           Returns for    Investment                 Type of              Target return             Investor time
           12 months to   objectives                 asset                                          horizon
           30 June 2006                              classes
                                                     included

 High      20.30%         To achieve strong          Predominantly        Averaging significantly   Long:
Growth                    returns over the long      Australian and       more than inflation       7–10 years
                          term by investing in       international        measured over
                          a diversified mix of       shares, property     the time horizon.
                          assets weighted more       and alternatives.    CPI + 4% p.a.
                          towards shares and
                          other growth assets.




Moderate   16.70%         To achieve a balance       A balance of         Averaging more than       Medium to long:
 Growth                   of risk and return by      Australian           inflation measured        5+ years
(Default                  investing in a portfolio   and international    over the time horizon.
 option)                  weighted towards           shares, property,    CPI + 3% p.a.
                          growth assets.             alternatives,
                                                     fixed interest
                                                     and cash.




Stable     11.20%         To achieve a stable        Predominantly        Averaging more than       Medium:
Growth                    pattern of returns,        Australian           inflation measured        3+ years
                          while maintaining          and international    over the time horizon.
                          low probability of         fixed interest and   CPI + 2% p.a.
                          a negative return in       cash, with a small
                          any financial year.        proportion in
                                                     shares, property
                                                     and alternatives.




 Cash      5.90%          To earn a higher rate      Predominantly cash   To outperform             Short
 Plus                     of return than cash,       securities with a    the cash index
                          while minimising the       small amount in      each year.
                          risk of capital loss in    Australian and
                          any financial year.        international
                                                     fixed interest.




  10
Level of     Expected        Asset allocation
investment   frequency
risk         of a negative   (The asset allocation proportions shown represent the normal or benchmark weight for each option.
                             There are short term variations around these benchmarks.)
             return

High         Once in                                                                       Investment          Actual as at
             5 years                                                                         ranges           30th June 2006
                                                                                            (Effective from
                                                                                           18th May 2005)

                                                                                             Range %              Actual %

                                                       40% Aus. Shares              25 – 55                          40.0
                                                       30% Int. Shares              15 – 45                          30.0
                                                       10% Alternatives (Growth)     0 – 20                          10.0
                                                        5% Alternatives (Defensive) 0 – 15                            5.0
                                                       15% Property                  0 – 25                          15.0
                                                        0% Fixed Interest            0 – 10                           0.0
                                                        0% Cash                      0 – 25                           0.0

Moderate     Once in
             6 years

                                                                                             Range %              Actual %

                                                        35% Aus. Shares                     20    –   50             37.0
                                                        20% Int. Shares                      5    –   35             20.0
                                                        10% Alternatives (Growth)            0    –   20             10.0
                                                         5% Alternatives (Defensive)         0    –   15              3.0
                                                        10% Property                         0    –   20              7.0
                                                        15% Fixed Interest                   0    –   40             12.0
                                                         5% Cash                             0    –   25             11.0


Low          Once in
             7 years

                                                                                             Range %              Actual %

                                                       20% Aus. Shares              5 –               35             20.0
                                                       10% Int. Shares              0 –               25             10.0
                                                        5% Alternatives (Growth)    0 –               10              5.0
                                                        5% Alternatives (Defensive) 0 –               10              5.0
                                                       10% Property                 0 –               20             10.0
                                                       40% Fixed Interest          25 –               75             40.0
                                                       10% Cash                     0 –               25             10.0


Very low     Rare


                                                                                             Range %              Actual %

                                                        10% Fixed Interest                   0 – 25                 10.0
                                                        90% Cash                            75 – 100                90.0




                                                                                                                                 11
Your AustralianSuper Investment Options

On transfer to the Finsuper division of AustralianSuper, the following mapping of your investment
option(s) occured:
•   If   you   invested   in   Finsuper   High Growth, this was mapped into High Growth.
•   If   you   invested   in   Finsuper   Moderate Growth (default option), this was mapped into Balanced (default option).
•   If   you   invested   in   Finsuper   Stable Growth, this was mapped into Stable.
•   If   you   invested   in   Finsuper   Cash Plus, this was mapped into Cash.
Please note that the mapping of your investment option(s) represent the “best fit” as at the date of transfer.
For more information on AustralianSuper investment options from 1st July 2006, please refer to the AustralianSuper
Member Investment Choice Guide.

                   Finsuper                                                       AustralianSuper – Finsuper division
               Up to 30th June 2006                                                          From 1st July 2006
    The four investment options, where you can choose                             There are a total of 15 investment options to
    and mix from are:                                                             choose and mix from in AustralianSuper, including
                                                                                  ASX 200 Shares. They are:
    Diversified options:                                                          Diversified options:
    • High Growth                                                                 • High Growth
    • Moderate Growth (default option)                                            • Balanced (default option)
    • Stable Growth                                                               • Sustainable Balanced
    • Cash Plus                                                                   • Stable
                                                                                  • Capital Guaranteed
                                                                                  Asset class/single sector options:
                                                                                  • Australian Shares
                                                                                  • International Shares
                                                                                  • Australian Sustainable Shares
                                                                                  • International Sustainable Shares
                                                                                  • Property
                                                                                  • Diversified Fixed Interest
                                                                                  • Australian Fixed Interest
                                                                                  • International Fixed Interest
                                                                                  • Cash
                                                                                  ASX 200 Shares option:
                                                                                  • ASX 200 Shares



          Case Study

                                          “I like the fact that the fees charged by Finsuper are amongst the lowest I have
                                          seen, so I have a greater chance of acquiring more for my super savings.
                                          Their returns have been good over the past few years too, which will help
                                          make a lifetime of difference at retirement for my family and I.”
                                          Renee Nardelli




                                          Renee Nardelli has been a member of Finsuper since 2002, and has consented to her testimonial and
                                          photo being placed in this Trustee Report.




12
Your AustralianSuper                                       ASX 200 Shares Investment Option
Investment Options                                         This option allows eligible members to invest in any
One of the real benefits of AustralianSuper has been       one, or combination of, the top 200 shares listed on
the launch of an expanded range of investment              the Australian Stock Exchange through a trust and
options. That means you are better able to find the        receive the benefits of dividends, where available,
investment choice that best suits your needs and           and capital movement.
circumstances.
The new options include three sustainable (or 'ethical')   Strong, long-term investment returns
options, a property option that features both direct       AustralianSuper is committed to providing members
and listed property elements, and the ASX 200              with strong, consistent investment returns on their
Shares Investment Option.                                  superannuation investment. The table below lists
AustralianSuper investment choices are made from           what returns would have been using a combination
the PreMixed and DIY Mix Investment Options. The           of comparable investment options offered by STA
PreMixed Investment Options provide a ready-made,          and ARF to 30 June 2006. Returns are net of fees
diversified investment portfolio that meet specific        and taxes (ie. all investment charges and taxes are
investment objectives, whereas the DIY Mix                 deducted before the interest is applied to your
Investment Options allow you to create your own            account).
investment portfolio by combining a range of asset
classes in the proportions you choose.                     AustralianSuper's PreMixed Investment
You can choose from any combination of five                Options over 1, 2 and 3 years to
PreMixed Investment Options:                               30 June 2006
   •   Balanced (default)
                                                                       Plan                 1 Year      2 Years      3 Years
   •   High Growth
                                                            Balanced                       17.52%       15.94%       15.26%
   •   Sustainable Balanced
                                                            Sustainable Balanced           13.71%       12.86%       11.26%
   •   Stable
                                                            High Growth                    19.84%       17.12%       16.80%
   •   Capital Guaranteed
                                                            Stable                          9.01%        9.26%        8.63%
You can also choose from any combination of nine
DIY Mix Investment Options:                                 Capital Guaranteed              5.04%        4.68%        4.55%

   •   Australian Shares
                                                           Important information: In calculating historical returns for
   •   International Shares                                AustralianSuper, where only one of the merging funds (ARF or STA)
                                                           previously offered an option equivalent to that offered in the new
   •   Property                                            product suite, the returns of that option have been used.
   •   Australian Fixed Interest                           Where both funds offered an equivalent option, the returns have been
                                                           asset weighted across both options on a monthly basis, as per
   •   International Fixed interest
                                                           industry best practice. Where asset data isn't available for one or
   •   Diversified Fixed Interest                          both of the equivalent options, the monthly returns have been
                                                           averaged. Further information is provided in the Member Investment
   •   Australian Sustainable Shares                       Choice Guide. Contact us on 1300 300 273 or visit our website at
   •   International Sustainable Shares                    www.australiansuper.com for a copy.

   •   Cash
You can select any combination of PreMixed or DIY
Mix options you like, as long as your total investment
allocation adds up to 100%.




                                                                                                                            13
Investment Managers


In general, Finsuper combined all members’ money                            managers. With the assistance of JANA, Finsuper
and invested the large pool of money with several                           regularly reviewed the performance of these
carefully selected, specialist fund managers. The                           investment managers.
Trustee Board engaged the services of JANA                                  Finsuper’s investment managers as at
Investment Advisers Pty Ltd (JANA) to guide                                 30th June 2006 were:
them with selecting and managing investment
                                                                                                                          30th June 2006
Australian Shares                                                                                                            $ Millions
Concord Capital                                                                                                             87,156,859
GMO Australia                                                                                                               46,154,416
Macquarie Investment Management                                                                                             40,622,963
State Street Global Advisors                                                                                                23,110,690
Total Australian Equities                                                                                                 197,044,928
International Shares
Alliance Bernstein                                                                                                          40,585,301
Bank of Ireland Asset Management                                                                                            29,845,995
Legg Mason Asset Management                                                                                                 10,829,202
MFS Investment Management                                                                                                   29,514,917
Total International Equities                                                                                              110,775,415
Alternatives (Growth)
Bridgewater                                                                                                                  7,102,479
AMP Capital Investors                                                                                                        8,957,343
Lazard Asset Management                                                                                                     19,382,592
IFBT                                                                                                                         1,939,800
IFM (Industry Funds Management)                                                                                              2,847,507
IFAT (Industry Funds Administration Trust)                                                                                     208,333
Hastings Utilities Trust of Australia                                                                                       11,769,505
Alternatives (Defensive)
Barclays Global Investors                                                                                                    9,721,118
GMO Australia                                                                                                                8,609,512
Total Alternatives                                                                                                          70,538,189
Property
AMP Capital Investors                                                                                                       22,180,292
ISPT (Industry Superannuation Property Trust)                                                                               22,838,783
Total Property                                                                                                              45,019,075
Fixed Interest
Macquarie Investment Management                                                                                             28,667,951
Credit Suisse Asset Management                                                                                              29,714,790
Total Fixed Interest                                                                                                        58,382,741
Cash
ME Portfilio Management Limited                                                                                              2,156,543
Perennial Investment Partners Limited                                                                                       54,663,629
Total Cash                                                                                                                  56,820,172
Total Investments                                                                                                         538,580,520



 Derivatives – are special financial contracts that can be used to fix or “hedge” the future price of the Fund’s assets. For example, share options
 are one type of derivative, as their value is linked to the value of the actual shares. Futures are another type of derivative, where one party is
 obliged to deliver an agreed commodity, currency or security to another party on a fixed future date for an agreed price.
 Finsuper’s Trust Deed allowed the Trustee to invest in derivatives. However, the Trustee did not enter into any derivative contracts directly.
 Labour standards or environmental, social or ethical considerations were not taken into account in the selection, retention or realisation
 of investments. To the extent those factors impact on investment performance, they were considered in that context.

14
Member Investment Choice


Reserving policy                                         Investment earnings – how they
Since 1st January 1999, Finsuper maintained a reserve    are allocated to your account
for administration and operational purposes only, not    The earnings credited to your account reflect the
for investment smoothing. This reserve was maintained    performance of the investment option(s) you have
by deducting an amount of 0.2% p.a. from the interim     selected. Finsuper’s investment adviser calculates
and monthly crediting rates. The Trustee Policy was to   the actual (gross) return for each investment option
maintain the level of this reserve at approximately 1%   on a monthly basis, and after the deduction of
of the assets of the Fund.                               investment and operational costs, plus Government
This reserve protected members against any               taxes, a monthly crediting rate is declared for each
differences in actual taxation compared to estimated     investment option.
taxation, final crediting rates compared to interim      Earnings, in the form of crediting rates, are credited
crediting rates and other administration, compliance,    to your account at the end of each financial year, or
legislative and operational factors that may impact      when you withdraw from the Fund. The annual
on member account balances (e.g. member benefit          crediting rate (see page 4) is the compounded total
protection for small accounts).                          rate of return for each of the 12 monthly crediting
                                                         rates, for each option.
    Year ended 30 June              Reserves $
           2006                     11,866,423           If your account balance and/or future contributions
           2005                      4,497,679           are invested in the same investment option for the
           2004                      3,118,875           entire financial year, you will receive the crediting rate
           2003                      2,745,805
                                                         for that investment option.
                                                         If, however, you switch between options during the
                                                         year, the relevant crediting rate will be calculated on
                                                         a pro-rata basis to the effective date of your switch.
                                                         For information on the latest investment trends and
                                                         monthly crediting rates, visit our website at
                                                         www.australiansuper.com



      Case Study
                            Kerry Hughes, CEO of Foresters Friendly Society, and a Finsuper
                            participating employer since 2002, recently said:
                            “I realise that fees can make a huge difference to our staff’s super savings in
                            the long run. With Finsuper, their fees are among the lowest in the industry,
                            and their returns are quite good. On top of that, their insurance offerings are
                            very competitive.
                            I feel better knowing that our staff are getting a good deal when it comes to
                            their super.”




                                                                                                                15
Fees and Costs


As a result of the merger in AustralianSuper, there will be some small changes
to the fees you pay. Because AustralianSuper is an industry superannuation
fund, these fees are designed to simply cover costs and not make a profit
for shareholders.

                Finsuper                                      AustralianSuper – Finsuper division
          Up to 30th June 2006                                         From 1st July 2006

    • The administration cost, also referred to as            • The administration cost will be reduced to $1
      a “member account keeping fee”, is $1.50                  per week.
      per week.

    • Operational cost, to pay for Trustee, administration,   • Nil
      operational and compliance expenses of the Fund,
      is 0.2% p.a. ($2.00 per $1,000).+

    • Withdrawal fee, also referred to as “benefit            • The withdrawal fee will be reduced to $35.
      payment fee” is $45.

    • Investment cost as at 30th June 2006, which             • Investment cost for AustralianSuper will be
      is to pay for expenses in relation to managing            available from 1st July 2006. However, the
      the investment:                                           following investment cost of ARF Diversified
      High Growth: 0.73%                                        Options as at 30th June 2005 can be used
      Moderate Growth (default option): 0.68%                   as a guide:
      Stable Growth: 0.43%                                      Active: 0.61%
      Cash Plus: 0.16%                                          Balanced: 0.52%
                                                                Stable: 0.32%
                                                                Cash: 0.04%

    • Investment switching fee is nil.                        • Investment switch fee will remain nil. However,
                                                                to participate in the ASX 200 Shares investment
                                                                option under AustralianSuper, a participation fee
                                                                of $39 is charged and transaction costs apply.

    • Family Law enquiry fee is $100.                         • The Family Law enquiry fee will be reduced to $50.

    • Family Law split fee is $100.                           • This fee will be reduced to $70.



* For more information on Finsuper’s fees & costs up to 30th June 2006, please refer to the Member Handbook
(PDS). For more information on AustralianSuper’s fees & costs from 1st July 2006, please refer to the Finsuper
division of AustralianSuper Member Handbook (PDS).
+ To date, Finsuper has maintained a reserve for administration and operational purposes only, i.e. not for
investment smoothing. This reserve is maintained by deducting an amount of 0.2% p.a. from the interim
and monthly crediting rates. The target level of reserves has been approximately 1% of the assets of the Fund.
As a consequence of Finsuper’s merger with AustralianSuper on 30th June 2006, this reserving policy will no
longer be applicable. However, in accordance with the Successor Fund Transfer Deed, Finsuper will need to
make provision for the expected cost of closing Finsuper and transferring member benefits to AustralianSuper,
plus accrued taxation and other expenses. The Trustee of AustralianSuper may determine a future policy
regarding reserves and will then communicate that policy to members.




16
Additional explanation of                                    we must ensure that the account keeping
fees and costs                                               fee you incur will not be greater than the
                                                             investment earnings credited to your account.
  • Investment costs, the expenses for investing             However, in any review period where total
    the assets (which include fees charged by                investment earnings to be distributed are
    investment managers, asset consultant and                insufficient to cover your total administration
    the bank), are calculated as at 30th June                costs, member benefit protection may not
    each year. As investment costs are based on              apply in the way described above. In such a
    investment manager fees and asset allocation,            period, we are able to charge an amount equal
    they may vary without prior notice, or without           to the investment earning credited, plus $10.
    members’ consent, and will be updated on
                                                             The cost of MBP varies from year to year.
    our website.
                                                             The cost in 2005/06 was 0.02%. These costs
  • Family Law enquiry fee is the fee for a request          are deducted from the Fund’s gross earnings
    for information about your investment and can            prior to setting weekly interim and final monthly
    be made by either yourself, your spouse, or              crediting rates, as part of the operational cost.
    any other person/s considering entering into
                                                           • Finsuper’s fees may be altered as necessary.
    a superannuation agreement with you.
                                                             In such instances, Finsuper will provide
  • Family Law split fee is the fee charged when             members at least 30 days advance written
    an investment is split into two investments              notice of any increase. Factors influencing fee
    as provided under the Family Law legislation.            changes include cost changes from service
  • Insurance costs (if applicable), will be deducted        providers, increased regulatory costs and
    directly from your account on a monthly basis.           changes in investments.
  • Details of Government taxes are set out in          Please refer to the fees & costs section in the
    the PDS.                                            Member Handbook (PDS) for a full explanation
  • Member Benefit Protection (MBP) costs are           of fees & costs.
    the costs of protecting members with small
    account balances from administration fees,
    as required by Federal law. If you have less
    than $1,000 in your account on the
    30th June each year, you are covered by
    Member Protection provisions. This means




                                                                                                           17
Financials


The following abridged financial information has been taken from Finsuper's latest unaudited financial report.
If you wish to obtain a copy of the auditor's report and the full audited financial report, which will be available from
1 October 2006, please contact us.
Statement of Financial Position                                                       2006                         2005
                                                                                         $                            $
Investments
Cash and fixed interest                                                        115,202,913                   95,876,821
Shares                                                                         307,820,343                  238,213,199
Property                                                                        45,019,075                   38,318,756
Alternatives                                                                    70,538,189                   58,287,730
Total investments                                                              538,580,520                  430,696,506
Other assets
Cash at bank                                                                     1,149,767                    1,071,453
Receivables                                                                        375,847                    3,478,719
Fixed assets                                                                             0                       46,989
Total other assets                                                               1,525,614                    4,597,161
Total assets                                                                   540,106,134                  435,293,667
Liabilities
Income tax payable                                                               5,179,472                    3,741,869
Deferred tax liability                                                           5,781,287                    3,842,611
Payables                                                                           820,775                      847,116
Total liabilities                                                               11,781,534                    8,431,596
Net assets available to pay benefits before
successor fund transfer                                                        528,324,600                  426,862,071
Less amount transferred to successor fund                                      528,324,600                            0
Net assets available to pay benefits after successor fund transfer                        0                 426,862,071
Represented by:
Liability for accrued benefits
Members' funds                                                                            0                 422,364,392
Reserve                                                                                   0                   4,497,679
                                                                                          0                 426,862,071
Operating statement
Net investment revenue
Interest                                                                         1,478,134                    3,250,685
Distributions and dividends                                                     48,246,591                   29,033,611
Changes in net market value of investments                                      27,886,712                   20,596,420
Direct investment expenses                                                        (714,487)                    (437,727)
                                                                                76,896,950                   52,442,989
Contribution revenue
Employer                                                                        41,948,537                   39,436,082
Member                                                                           3,960,109                    1,967,056
Transfers from other superannuation funds                                       28,080,335                   25,753,054
                                                                                73,988,981                   67,156,192
Other revenue
Group life proceeds                                                              1,241,085                    1,533,300
Other income                                                                       386,800                      267,467
                                                                                 1,627,885                    1,800,767
Total revenue from ordinary activities                                         152,513,816                  121,399,948
Expenses from ordinary activities
Superannuation contributions surcharge                                             929,981                    1,390,229
Insurance premiums                                                               2,897,829                    2,415,280
Administration                                                                   4,031,634                    2,815,766
Total expenses from ordinary activities                                          7,859,444                    6,621,275
Benefits accrued as a result of operations before income tax                   144,654,372                  114,778,673
Less income tax expense                                                         11,441,371                    9,900,169
Benefits accrued as a result of operations                                     133,213,001                  104,878,504


18
Extra Member Benefits


Other value-added products                                                As they do not work on a commission basis,
and services                                                              IFFP financial planners can act more like “financial
                                                                          guidance counsellors” – providing clients with advice
To add more value to your Finsuper membership, we                         ranging from how to stick to a budget, through to
have a range of other financial products and services                     tax planning, superannuation and savings options
at competitive rates that may be of interest to you.                      for future education expenses.
                                                                          Call IFFP directly on 1300 138 848 or visit
Members Equity Bank
                                                                          www.iffp.com.au
Members Equity Bank (ME) was
created to provide all industry fund                                      Industry Fund Pensions (IRIS)
members with low cost banking
services. ME is 100% owned by                                             Many people like the security of
some of Australia’s leading industry                                      a regular income when they retire.
superannuation funds.                                                     It certainly can make it easier
                                                                          to budget.
Today, ME has grown to become a significant
financial institution with $13 billion in assets under                    As a member of Finsuper, when
management and 155,000 customers.                                         you are ready to retire, you can
                                                                          roll-out your super into Industry Fund Pensions
ME aims to offer members real value for money,                            (IRIS Allocated and Term Allocated Pensions). IRIS
keep banking costs low whilst delivering a high                           Pensions allow you to receive your superannuation
level of service, provide simple, no nonsense                             payout as a regular income stream, similar to
banking products and services, and conduct                                receiving a salary.
business with honesty and integrity.
                                                                          Contact IRIS directly on 1300 367 485 or visit
For further information on the products offered by                        www.irispensions.com.au
Members Equity Bank to Finsuper members call
13 15 63 or visit www.membersequitybank.com.au
                                                                          Super Members Health Plan
Industry Fund Financial Planning                                          Super Members
                                                                          Health Plan (SMHP) is
                                                                          underwritten by GMHBA Ltd,
                                                                          one of Australia’s longest
                                                                          established “not-for-profit”
As Finsuper is not licensed to provide personal                           health funds. SMHP offers Finsuper members
financial advice, we have appointed Industry                              a broad range of private health cover options at
Fund Financial Planning (IFFP) to provide financial                       special discounted rates. Feel free to call the SMHP
planning services to members. Under this                                  Member Hotline on 1300 136 650 for an obligation
arrangement, Finsuper members are entitled                                free health cover review, to ensure you are getting
to a free fact-finding initial consultation with them.                    the right cover and real value for money. You could
IFFP is a financial planning group who operates on                        be pleasantly surprised with the potential savings
a fee-for-service basis. During the initial consultation,                 you could make.
IFFP will assess your financial position and provide                      For more information about the above-mentioned
a fixed price quote for the services that could be                        value-added products and services please visit
provided, taking into account the time it would take                      www.australiansuper.com.
to complete specific tasks.



AustralianSuper and Finsuper do not recommend, endorse or accept any responsibility for these products or services. Terms and conditions
apply – these should be obtained from the relevant third party organisation. AustralianSuper and Finsuper do not accept any liability for any
loss or damage caused by the products and services provided by these third parties. AustralianSuper and Finsuper may invest in these third
parties but do not receive any commissions from these organisations as a result of members using their products or services.


                                                                                                                                                19
contact details
Whether you prefer to click, call or write, there are many ways to get hold of us:
             AustralianSuper Finsuper Division,
             PO Box 2468 KENT TOWN SA 5071.         ✆     1300 367 037               1300 369 892


             email@finsuper.australiansuper.com           www.australiansuper.com


8651 09/06

								
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