Investment Fund Annual Report 2013 by Geoff Bowers

STATE SUPER INVESTMENT FUND

Annual Report 2013 LIVERPOOL OFFICE OPENED FEBRUARY 2013

PERTH OFFICE OPENED JULY 2013

WODEN OFFICE OPENED APRIL 2013

State Super Investment Fund Responsible Entity: State Super Financial Services Australia Limited ABN 86 003 742 756 Level 7, 83 Clarence Street, Sydney NSW 2000 Investment Funds:

Cash Fund Fixed Interest Fund Capital Stable Fund Moderate Fund Balanced Fund Growth Fund Growth Plus Fund Australian Equities Fund International Equities Fund

State Super Investment Fund â&#x20AC;&#x201C; Annual Report 2013

ARSN 090 078 443 ARSN 150 755 249 ARSN 090 078 961 ARSN 150 755 150 ARSN 090 077 991 ARSN 090 078 103 ARSN 150 755 141 ARSN 150 755 196 ARSN 150 755 294

› Contents STATE SUPER INVESTMENT FUND Chairman and Managing Director’s Report

Company News

Your Trustees

Performance of the Funds

Directors’ Report

Auditor’s Independence Declaration

Independent Auditor’s Report

Financial Statements

Notes to the Financial Statements

Directors’ Declaration

Directory

›› Did you know that SSFS …? ◆◆ is an expert in public sector super schemes ◆◆ is available to all public sector employees and their families ◆◆ has a local presence with 18 offices around Australia ◆◆ can help maximise your opportunities; both in your scheme and Centrelink ◆◆ builds an ongoing relationship with you that can help you make better, more

informed and disciplined financial decisions ◆◆ can provide you with statements and annual reports online; reducing costs and

helping the environment. Find out more at www.ssfs.com.au or call 1800 620 305.

Find out more at www.ssfs.com.au or call 1800 620 305

› Chairman and Managing Director’s Report ›› Your SSFS SSFS has continued to grow in the past year and we currently help over 53,000 clients achieve their financial and lifestyle goals. To cater for this growth we have opened new offices in Perth, Canberra and Liverpool, bringing the total number of SSFS offices to 18. As our office network expands, this enables us to reach out and offer our expertise in public sector schemes to individuals in new areas. This helps them make better financial decisions today, to enhance their financial circumstances in the future. The map below shows our office locations across Australia.

Queensland Brisbane - City New South Wales Sydney CBD - Clarence Street Sydney CBD - Pitt Street Parramatta Penrith Liverpool Ballina Gosford Newcastle Orange Port Macquarie Tamworth Wagga Wagga Wollongong

Western Australia Perth - City Victoria Melbourne - City

Australian Capital Territory Canberra - City Canberra - Woden

We have also increased the number of financial planners in the organisation to help us honour our commitment to providing the highest levels of service, advice and customer satisfaction. We believe strongly in the professional education of our financial planners and require all of our financial planners to be on a pathway to obtaining the Certified Financial Planner® (CFP) certification. The CFP is the highest level of certification a financial planner can achieve and is internationally recognised. SSFS continues to have the highest proportion of Certified Financial Planners® compared to other large advice firms (Largest 30, Money Management, July 2013).

State Super Investment Fund – Annual Report 2013

› Chairman and Managing Director’s Report

›› Managing money in retirement requires a different approach As specialists in retirement planning our approach to managing money is constantly evolving, and we have spent the last 18 months refining our approach to constructing client portfolios. Clients in or approaching retirement have unique investment needs, partly because it is a stage of life when their investment portfolio is at its largest, but also because retirees are required to draw on their investments to meet lifestyle expenses over time. We therefore think of a retirement portfolio as having different compartments with each compartment designed to meet different lifestyle requirements. Each compartment can then be invested differently in accordance with its purpose. Some funds need to be set aside for emergencies or short-term capital needs; this is the “Cash Reserve” compartment. The largest part of the portfolio is normally required to meet long-term living expenses throughout retirement; this is termed the “Lifestyle” compartment. A sub-component of the “Lifestyle” compartment is set aside to meet income needs in the short to medium term; the “Income Certainty” compartment. Finally, for some clients, additional capital can be set aside to provide for the future, this is the “Future Goals” compartment. One aim of the “Future Goals” compartment is to provide funds for increasing health care expenses or permit greater choices of aged care accommodation. The diagram below illustrates the different compartments.

Cash Reserve

Capital Certainty

Lifestyle

Income Certainty Short-Term

Future Goals

Long-Term Strategy Broadly Diversified

$ Looking at a retirement portfolio in this way we strive to ensure our clients can maintain their required spending level throughout retirement. The approach also takes into account the effect inflation can have on spending power and reduces the risk that clients have to sell assets at depressed prices in poor investment market conditions. When you next meet with your financial planner, they will explain our new approach to you in more detail.

Find out more at www.ssfs.com.au or call 1800 620 305

› Chairman and Managing Director’s Report

›› Planning for growth in a changing environment The past year saw significant changes in the regulatory environment including the introduction of the Future of Financial Advice (FoFA) reforms. SSFS, as a pioneering leader in providing retirement income planning advice, has embraced these reforms and believes they will help more Australians achieve their retirement objectives. To prepare for these changes the SSFS Board, in 2011, agreed on a multi-year business transformation plan, to be implemented in stages. This plan is designed to improve client engagement and the delivery of SSFS’ services to our clients. This year, we have implemented work practices that meet all of the FoFA requirements, so you can be confident of receiving high quality advice that is in your best interests. SSFS also believes transparency is important because it helps builds trust between us and our clients. We launched a new class of units in the Investment Fund, where the advice fee is separated from the product management fee. We have also changed the way we disclose fees in statements to give clients more transparency in terms of our fees by separating fees for your investments from those that provide for ongoing access to your financial planner. In the near future, new technologies will allow us to reduce unnecessary paperwork. Other key benefits for clients include an improved online registration process and new client communication channels. We expect that by streamlining our operations, your experiences with us will become simpler.

›› Investment markets performed strongly last year At the outset of the financial year 2012 – 2013, the investment outlook was rather unsettled, however, the subsequent performance of many asset classes was strong and this demonstrates the benefits of adhering to a disciplined approach to investing. Most asset classes generated good, above average returns and as a result, investment performance for most SSFS Funds over the year was strong. Further information relating to the Investment Fund’s performance is available on page 11. The economy of the United States (US) continued its gradual recovery and unemployment fell. Share market investors embraced the improving outlook and drove US shares to a record high, surpassing the previous peak set just before the Global Financial Crisis. Europe meanwhile did not fare as well, with austerity measures crimping growth and unemployment rising in many countries. The divergence in economic conditions between countries in Europe continues to grow. Encouragingly, interest rates on government bonds, particularly in the peripheral European countries, declined. This reflects greater investor confidence in the ability of these countries to work through their debt issues. Investors’ primary concern shifted away from the European debt crisis towards the slowdown of the Chinese economy. China is in the middle of transforming itself from an investment led economy to one that is driven more by consumer consumption. This takes time and will be associated with transitional turbulence. Arguably, China’s economic growth rate is more important to Australia than the European debt crisis because China is Australia’s top trading partner.

State Super Investment Fund – Annual Report 2013

Looking forward, we suggest that global economies will continue to gradually improve, although Europe remains likely to see limited growth over the coming year. The US offers a more positive backdrop and this supports the potential for growth assets, such as shares, to provide positive returns in the year ahead. The expected, associated, reduction in policy stimulus in the US will continue to raise the likelihood that interest rates will increase and this suggests that returns for fixed income assets will remain below their long-term averages. We are continuing to position portfolios to manage risks but also to take opportunities to generate positive portfolio outcomes. Over the coming year, SSFS will continue to strengthen and grow our business with the aim of helping more clients across the country achieve a fulfilling retirement. We expect a lull in the volume of regulatory change related to financial services, which will be welcome after the extremely busy past year. The Federal election has been a source of distraction and uncertainty for business and clients. As this uncertainty lifts, the higher degree of clarity around policy direction may prove beneficial for businesses, consumers and the economy. On behalf of the Board of Directors and your client service team at State Super Financial Services, we thank you for being a client and look forward to assisting you and your family achieve your financial and lifestyle goals in the future.

Peeyush Gupta Chairman

Michael Monaghan Managing Director

One of the most valuable aspects of an ongoing partnership with a financial planner is that it helps clients stay committed to their investment plan. This is really important, especially when markets become volatile, as holding fast to their investment plan enables clients to reap the benefits when investment markets recover. Michael Monaghan, Managing Director

Find out more at www.ssfs.com.au or call 1800 620 305

› Company News ›› The benefits of advice SSFS carries out market research to find out more about how our clients view our services and us. We ask TNS, a leading market research company, to ask our clients what they think of our services. The results are pleasing, with 96% of clients rating SSFS as ‘very good’ or ‘excellent’ (March 2013). We believe this result reflects our commitment to ensuring clients receive high quality financial planning advice. The benefits of ongoing advice are not always straightforward and easy to measure. Possibly one of the most important benefits is providing peace of mind. Peace of mind for clients can be attained by giving advice that helps clients make better decisions today; this then leads to the achievement of lifestyle and financial goals tomorrow. Advice also helps clients understand their choices and the consequences of those choices. Choices almost always involve trade-offs, meaning there is not always a right or wrong answer; it often depends on the individual’s personal circumstances and attitudes.

›› Enhancements to our investment approach SSFS is committed to enhancing the wellbeing of clients in retirement. This is achieved through appropriate financial planning advice, a disciplined approach to investing and delivering appropriate outcomes for clients. Investment markets are in a state of constant flux and this means the investment team is never standing still. Instead, through rigorous research, they continually strive to enhance our investment approach. The past year has been no different, with the introduction of several enhancements. Two new asset classes were added to the Investment Fund; these were Australian direct property and global high yield debt. The direct property sector invests in a core, unlisted property fund that owns a combination of prime office, industrial and retail commercial properties. Investment returns from direct property are generated from a combination of rental income and any increases in the capital value of the properties. There are several benefits stemming from investing in unlisted property, including stable returns over the longer term and its low correlation to equities and bonds, which improves diversification. Global high yield debt is the name given to loan securities that are rated below investment grade by credit rating agencies. The lower credit rating means investors demand a higher interest rate or coupon to be paid, hence the name high yield. Global high yield debt possesses several attractive characteristics. A large proportion of the total return is driven by income and not capital price increases, with coupon rates in the range of 8%-10% pa during the last 15 years. These high coupon rates and relatively short maturities mean the sector has less sensitivity to interest rate changes than many other fixed interest assets. The addition of global high yield debt, within the growth asset allocation, has boosted the level of diversification in the diversified funds because the drivers of returns are quite different to other asset classes.

›› New advertising campaign To increase awareness of SSFS’ services we launched an advertising campaign in Canberra using radio, buses and newspapers. The campaign was very successful and boosted our profile in Canberra. We will continue to invest in targeted advertising as it enables us to reach more potential customers and to raise awareness of our specialist skills in providing financial planning advice to public sector employees.

›› Your client service Our services are available to current and former Commonwealth, State and Local Public Sector employees and their families across Australia. We encourage you to refer eligible colleagues or family members to us, so they too can benefit from our financial planning services.

State Super Investment Fund – Annual Report 2013

› Company News

›› What SSFS stands for Our mission is to provide financial planning services to Australians, which will improve their financial wellbeing, especially in retirement. We aim to achieve this by: ◆◆ Empowering clients to make better financial choices ◆◆ Helping clients achieve goals they may not have otherwise set themselves ◆◆ Changing financial habits to improve financial wellbeing ◆◆ Providing a sense of control over the future; and ◆◆ Assisting clients in meeting unforeseen challenges SSFS has six core values that are constantly demonstrated by our employees. These are shown below:

Cli

tric

“C me an d nta o” lity

rity

Int

Conviction, confidence to lead

ork

mw Tea

Constantly learning

›› Do you want to receive information online? Our secure online client website provides you with the speed, convenience and security of viewing your personal account details at any time. We can also send you email alerts to advise when your annual and six monthly statements are available to view online. To quickly gain access to this service, simply go to www.ssfs.com.au and click on the client login section to register.

›› Need more information? If you require any assistance, please give your client service team a call at your local regional office.

Find out more at www.ssfs.com.au or call 1800 620 305

› Your Trustees ›› Peeyush Gupta Chairman of the Board Member of the Investment Committee Member of the Human Resources Committee Peeyush Gupta was a co-founding Director and inaugural Chief Executive Officer of Ipac Securities Limited, a pioneering and leading Australian wealth management firm. Since 2009, Peeyush has pursued a portfolio career, including boards, consulting and investing activities. He is currently on the boards of NAB’s Wealth Management Holdings including MLC, BNZ Life, Charter Hall Direct Property, SIRCA, Safety Return to Work and Support, and Quintessence Labs. Peeyush has a degree in Computer Science and a Master of Business Administration in finance. He is also an alumnus of Harvard University and London Business School.

›› Michael Monaghan Managing Director Member of the Enquiries and Complaints Committee Member of the Investment Committee Michael Monaghan is the Managing Director of State Super Financial Services Australia Limited. He is an actuary and has over 30 years’ experience in superannuation, banking, funds management and investment consulting. He has previously been a partner of Deloitte Touche Tohmatsu, Chief Executive Officer of Intech Investment Consultants and held senior executive positions with Deutsche Bank, IBM and Lend Lease Corporation. He is also a non-executive director of HammondCare, an independent Christian charity which specialises in dementia and palliative care.

›› Michael Carapiet Chairman of the Human Resources Committee Michael Carapiet is Chairperson of the SAS Trustee Corporation, Safety Return to Work and Support Board that comprises the WorkCover Authority of NSW, the Lifetime Care and Support and Motor Accidents Authority. He is a Director of Southern Cross Media Limited and Clean Energy Finance Corporation and is on the advisory Boards of Norton Rose Australia and Transfield Holdings. Michael has more than 30 years’ experience in the financial sector and has held a number of senior roles with the Macquarie Group, where he was a member of Macquarie’s Executive Committee from 2005. Prior to his retirement in 2011, his roles included Global Head of Advisory and Specialised Funds and Executive Chairman of Macquarie Capital and Macquarie Securities. Michael has a Master of Business Administration from Macquarie University.

State Super Investment Fund – Annual Report 2013

› Your Trustees

›› Ron Davis Chairman of the Enquiries and Complaints Committee Member of the Audit and Compliance Committee Member of the Due Diligence Committee Member of the Human Resources Committee Ron Davis is an executive Director of SAS Trustee Corporation, a position he has held since 1 January 2002. Previously Ron was a Valuation Manager with the State Valuation Office. He is the NSW Branch Assistant Secretary for the Professional Officers’ Association Sub-Branch and past president of the Professional Officers Association. He also represents members as a delegate to the Unions New South Wales Public Sector Employees’ Superannuation Committee. Ron is a Fellow of the Australian Institute of Superannuation Trustees, a Fellow of the Association of Superannuation Funds of Australia (ASFA) and a member of ASFA’s New South Wales Division Executive Committee.

›› Rod Harty Member of the Human Resources Committee Member of the Enquiries and Complaints Committee Resigned 2 May 2013

›› Michael Lambert Chairman of the Audit and Compliance Committee Member of the Due Diligence Committee Member of the Investment Committee Michael Lambert is a consultant to the Asia Pacific investment bank, CIMB and prior to that was a Managing Director in investment banking with ABN AMRO followed by the Royal Bank of Scotland. Earlier in his career, Michael was the Secretary of the New South Wales Treasury and held various senior positions in the NSW public sector. He has extensive experience and expertise in financial analysis and advising governments and clients on financial and strategic issues. He is a non-executive Director of SAS Trustee Corporation and of the Sax Institute. Michael has a Bachelor of Economics (Honours) and Master of Economics.

Find out more at www.ssfs.com.au or call 1800 620 305

› Your Trustees

›› Paul Scully Chairman of the Investment Committee Member of the Audit and Compliance Committee Member of the Due Diligence Committee Paul Scully is the Managing Director of Decision Horizons, a consulting enterprise through which he offers his services based on 30 years of experience in financial services and investment management. He is an actuary and was, until July 2003, Chief Executive Officer for the Asia Pacific region of ING Investment Management and a member of its global board. Paul has also held executive positions in life insurance and retail funds management. He is also a non-executive Director of SAS Trustee Corporation and Vantage Private Equity Group and an independent member of APPF Retail and Commercial Investor Review Boards.

›› Sue Walsh Member of the Audit and Compliance Committee Member of the Due Diligence Committee Sue Walsh is the President of the Public Service Association of New South Wales and has worked in the New South Wales public sector for over 20 years. She has held a number of senior delegate positions in the Public Service Association of New South Wales and is the President of the New South Wales Branch of the Community and Public Sector Union and a vice president of that organisation’s Federal Executive, Federal Council and a member of the Federal Education Industry Committee. Sue is on the Executive of Unions New South Wales, a delegate to the Australian Council of Trade Unions and is a nonexecutive Director of SAS Trustee Corporation.

›Our › Custodian We have appointed an independent organisation as custodian to hold all of the Funds’ assets. The current custodian is: JPMorgan Chase Bank, N.A. ABN 43 074 112 011 Level 18 85 Castlereagh Street Sydney NSW 2000 JPMorgan Chase & Co is one of the world’s largest global custodians with over $US17 trillion in assets under custody for institutional investors around the world. In Australia, they are a market leader in providing custody services for some of Australia’s largest institutional investors.

State Super Investment Fund – Annual Report 2013

› Performance of the Funds ›› Returns of the Funds – Years ended 30 June (net of all fees) – Class A Fund

Return*

Cash

Annual (%)

2.4

3.72

4.01

2.92

4.51

5 Year Return # (%)

3.5

4.32

4.66

4.82

5.16

Annual (%)

2.9

n/a

5 Year Return # (%)

n/a

Annual (%)

5.2

4.27

4.89

7.36

1.98

5 Year Return # (%)

4.7

3.54

4.18

4.46

4.75

Annual (%)

9.1

n/a

5 Year Return # (%)

n/a

13.9

0.81

9.44

12.00

-11.35

4.5

-0.01

2.39

3.04

2.93

19.1

-1.46

10.68

12.55

-18.01

3.7

-2.65

0.71

1.77

1.78

22.1

n/a

21.9

n/a

25.5

n/a

Fixed Interest^

Capital Stable

Moderate^

Balanced

Annual (%) 5 Year Return # (%)

Growth

Annual (%) 5 Year Return # (%)

Growth Plus^

Annual (%) 5 Year Return # (%)

Australian Equities^

Annual (%) 5 Year Return # (%)

International Equities^

Annual (%) 5 Year Return # (%)

2013

2012

2011

2010

2009

# Compound average annual return * Returns are based on the movement of the transactional unit prices over the relevant period, and assume reinvestment of income distributions ^The Fixed Interest, Moderate, Growth Plus, Australian Equities and International Equities were incepted in July 2011 and consequently long term performance information is not available.

Inflation

Annual (%)

2.5

1.20

3.64

3.03

1.5

Find out more at www.ssfs.com.au or call 1800 620 305

› Performance of the Funds

›› Statistics as at 30 June 2013 – Class A The following information has been extracted from the audited Financial Statements of each Fund comprising the State Super Investment Fund included in this report.

Fund

Cash

Net Assets $’000

Total Distribution Cents/unit

Income %

Growth %

Total return*

68,462

2.43

8,608

5.92

5.74

-2.87

2.87

106,543

4.40

3.87

1.36

5.23

27,125

3.97

3.75

5.35

9.10

124,070

3.87

3.12

10.81

13.93

64,315

2.61

2.56

16.56

19.12

Growth Plus^

1,543

3.63

3.33

18.73

22.06

Australian Equities^

4,152

3.86

3.54

18.38

21.92

859

1.15

0.98

24.52

25.50

Fixed Interest^ Capital Stable Moderate^ Balanced Growth

International Equities^

* Returns are based on the movement of the transactional unit prices over the financial year, and assume reinvestment of income distributions

›› Statistics as at 30 June 2013 – Class B^ Fund

Net Assets $’000

Total Distribution Cents/unit

Income %

Growth %

Total return*

Cash

825

0.60

n/a

Fixed Interest

472

4.30

n/a

Capital Stable

2,445

2.78

n/a

Moderate

1,835

2.87

n/a

Balanced

2,422

2.17

n/a

Growth

1,238

2.15

n/a

Australian Equities

675

2.30

n/a

International Equities

330

0.89

n/a

^ These Funds were launched on 2 April 2013 and therefore meaningful historical performance information is not yet available

State Super Investment Fund – Annual Report 2013

› Directors’ Report In accordance with the Corporations Act 2001, State Super Financial Services Australia Limited, the Responsible Entity for the State Super Investment Fund (the ‘Trust’), reports as follows for the year ended 30 June 2013.

›› Principal Activities During the financial year the Trust offered nine managed investment schemes – Cash, Fixed Interest, Capital Stable, Moderate, Balanced, Growth, Growth Plus, Australian Equities and International Equities. On 2 April 2013 the following investment options were formed into the existing Trusts whereby unit holders can elect to take or not take advice. Investment options offered without advice are Cash, Fixed Interest, Capital Stable, Moderate, Balanced, Growth, Australian Equities and International Equities. These are called Class B units where the above existing investment options are included advice fees and are called Class A units. Each scheme has a separate investment strategy and the assets of each scheme are managed by external specialist investment managers through a series of discrete investment trusts that State Super Financial Services Australia Limited is the Trustee. The Trust’s Product Disclosure Statement sets out details of the investment process. There were no other significant changes in the nature of the Trust’s activities during the year.

›› Directors of the Responsible Entity The names of the directors of the Responsible Entity during or since the end of the financial year are: P. K. Gupta (Chairman) M. Monaghan (Managing Director) M. Carapiet R. M. Davis R. N. Harty (Resigned 2 May 2013) M. G. Lambert P. F. Scully S. Walsh

Front row (left to right): R. Harty; S. Walsh; P. Gupta. Back row (left to right): R. Davis; M. Carapiet; P. Scully; M. Monaghan; M. Lambert.

Find out more at www.ssfs.com.au or call 1800 620 305

› Directors’ Report

›› Review of Operations Results The results of the operations of the State Super Investment Fund are disclosed in the Statements of Comprehensive Income of the attached financial statements. The net profit / (loss) attributable to unit holders for the year ended 30 June 2013 was:

Year ended 30 June 2013 $’000

Year ended 30 June 2012 $’000

1,626

2,460

Fixed Interest Fund

220

234

Capital Stable Fund

5,001

3,695

Moderate Fund

1,499

339

Balanced Fund

15,648

549

Growth Fund

11,733

(1,703)

Growth Plus Fund

242

Australian Equities Fund

455

(13)

International Equities Fund

134

36,558

5,582

Cash Fund

Total

Performance The following graph and table show the performance of the Trust over the past five years. The graph illustrates the accumulated value of $10,000 invested in the Trust on 1 July 2008 assuming that all income from the Trust is reinvested, and excluding the effects of income tax and inflation.

Value of $10,000 Invested 5 Years Ago

Value ($) 13,000 12,000 11,000 10,000 9,000 8,000 7,000

2008

2009

2010

2011

2012

2013

■ Cash Fund ■ Capital Stable Fund ■ Balanced Fund ■ Growth Fund

On 19 May 2011 the Trust registered five additional managed investment schemes. These schemes were only available for new investments from 18 July 2011 and accordingly are not included in the above graph.

State Super Investment Fund – Annual Report 2013

› Directors’ Report

›› Review of Operations (continued) Distributions paid and/or declared In respect of the financial year ended 30 June 2013 a final distribution was paid to unit holders on 13 July 2013. The distributions paid and or declared in respect of the financial year ended 30 June 2013 are detailed below:

Quarter Ended Cents/unit

31 March 2012

30 June 2012

31 March 2013

30 June 2013

Cash Fund – Class A

0.87

0.80

0.55

0.53

Fixed Interest Fund – Class A

1.20

1.08

0.85

3.51

Capital Stable Fund - Class A

1.03

0.96

0.70

2.29

Moderate Fund - Class A

0.94

0.99

0.61

2.32

Balanced Fund - Class A

0.94

1.08

0.59

2.23

Growth Fund - Class A

1.50

1.84

Growth Plus Fund - Class A

1.56

2.79

Australian Equities Fund - Class A

1.66

2.34

International Equities Fund - Class A

0.87

0.81

Quarter Ended Cents/unit

31 March 2012

30 June 2012

31 March 2013

30 June 2013

Cash Fund – Class B

0.60

Fixed Interest Fund – Class B

4.30

Capital Stable Fund - Class B

2.78

Moderate Fund - Class B

2.87

Balanced Fund - Class B

2.17

Growth Fund - Class B

2.15

Australian Equities Fund - Class B

2.30

International Equities Fund - Class B

0.89

Distributions paid and/or payable by the Trust during the year are shown in Note 3 to the financial statements.

Find out more at www.ssfs.com.au or call 1800 620 305

› Directors’ Report

›› Review of Operations (continued) Unit price history The following table shows the after-distribution Exit Price for the Scheme at the close of business on the reporting date for the past five years and the highest and lowest Exit Price for each of the past five years.

Class A Funds After-Distribution Exit Price

2013 $

2012 $

2011 $

2010 $

2009 $

At 30 June

1.0000

High during year

1.0000

Low during year

1.0000

At 30 June

1.0149

1.0441

High during year

1.0702

1.0584

Low during year

1.0424

0.9975

At 30 June

1.1283

1.1145

1.1056

1.0949

1.0541

High during year

1.1643

1.1267

1.1268

1.1178

1.1156

Low during year

1.1157

1.0915

1.0919

1.0508

1.0429

At 30 June

1.0601

1.0087

High during year

1.1083

1.0329

Low during year

1.0124

0.9696

At 30 June

1.2526

1.1341

1.1538

1.1167

1.0286

High during year

1.3168

1.1770

1.2275

1.2109

1.2100

Low during year

1.1390

1.0758

1.1074

1.0083

0.9067

At 30 June

1.0426

0.8977

0.9314

0.8875

0.8076

High during year

1.1123

0.9518

1.0019

0.9853

1.0216

Low during year

0.8996

0.8409

0.8773

0.7840

0.6829

At 30 June

1.1103

0.9401

High during year

1.2034

1.0118

Low during year

0.9391

0.8798

At 30 June

1.1061

0.9396

High during year

1.2147

1.0372

Low during year

0.9315

0.9118

At 30 June

1.2189

0.9811

High during year

1.2563

1.0574

Low during year

0.9713

0.8893

Cash Fund

Fixed Interest Fund

Capital Stable Fund

Moderate Fund

Balanced Fund

Growth Fund

Growth Plus Fund

Australian Equities Fund

International Equities Fund

State Super Investment Fund – Annual Report 2013

› Directors’ Report

›› Review of Operations (continued) Class B Funds After-Distribution Exit Price

2013 $

2012 $

2011 $

2010 $

2009 $

Cash Fund At 30 June

1.0000

High during year

1.0000

Low during year

1.0000

At 30 June

1.1489

High during year

1.1919

Low during year

1.1489

At 30 June

1.1760

High during year

1.2038

Low during year

1.1760

At 30 June

1.1782

High during year

1.2069

Low during year

1.1782

At 30 June

1.1868

High during year

1.2085

Low during year

1.1868

At 30 June

1.1914

High during year

1.2130

Low during year

1.1914

At 30 June

1.1665

High during year

1.1895

Low during year

1.1665

At 30 June

1.2823

High during year

1.2911

Low during year

1.2823

Fixed Interest Fund

Capital Stable Fund

Moderate Fund

Balanced Fund

Growth Fund

Australian Equities Fund

International Equities Fund

Find out more at www.ssfs.com.au or call 1800 620 305

› Directors’ Report

›› Changes in State of Affairs There were no significant changes in the state of affairs of the Trusts during the financial year.

›› Subsequent Events There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Trust, the results of those operations, or the state of affairs of the Trust in future financial years.

›› Future Developments The Trust will continue to be managed in accordance with its investment objectives and guidelines as set out in the current Product Disclosure Statement and in accordance with the provisions of the Consolidated Constitution of the Trust. Future results will accordingly depend on the performance of the investment markets to which the Trust is exposed.

›› Insurance and Indemnification No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to either the Responsible Entity or Auditor of the Trust. So long as the officers of the Responsible Entity act in accordance with the Consolidated Constitution of the Trust and the Law, the Responsible Entity remains fully indemnified out of the assets of the Trust against any losses incurred while acting on behalf of the Trust. The Auditor of the Trust is not indemnified out of the assets of the Trust.

›› Scheme Information in the Financial Report The value of the Scheme’s assets as at the end of the financial year is disclosed in the Statements of Financial Position as “Total Assets” and the basis of valuation is included in Note 2(a) to the financial statements. Fees paid to the Responsible Entity out of Scheme property during the financial year are disclosed in Note 4(a) to the financial statements. The Indirect Cost Ratio for each Fund is disclosed in Note 4(d) to the financial statements. The number of units in the Scheme held by the Responsible Entity or its associates as at the end of the financial year are disclosed in Note 7(d) to the financial statements.

State Super Investment Fund – Annual Report 2013

› Directors’ Report

›› Environmental Regulation The operations of the Trust are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law.

›› Rounding of Amounts The Trust is of a kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that Class Order, amounts in the Financial Statements have been rounded to the nearest thousand dollars, unless otherwise indicated.

›› Auditor’s Independence Declaration The auditor’s independence declaration is included on page 19 of the financial report. Signed in accordance with a resolution of the Board of Directors pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors

Michael Monaghan Managing Director 27 August 2013

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› Auditor’s Independence Declaration

State Super Investment Fund – Annual Report 2013

› Independent Auditor’s Report

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› Independent Auditor’s Report

State Super Investment Fund – Annual Report 2013

› Financial Statements for the Financial Year ended 30 June 2013 ›› Statements of Profit or Loss and other Comprehensive Income CASH FUND NOTE

2013 $’000

FIXED INTEREST FUND

2012 $’000

2013 $’000

2012 $’000

CAPITAL STABLE FUND 2013 $’000

MODERATE FUND

2012 $’000

2013 $’000

2012 $’000

INCOME 28

2,256

3,073

612

157

5,285

4,045

1,199

311

Unrealised changes in the fair value of investments

(292)

106

918

712

543

107

Realised gains/(losses) on disposal of investments

(13)

(5)

(25)

(19)

(16)

2,284

3,112

(308)

259

6,224

4,756

1,726

404

658

652

1,223

1,061

227

658

652

1,223

1,061

227

1,626

2,460

220

234

5,001

3,695

1,499

339

1,626

2,460

525

133

4,080

3,008

975

248

(305)

101

921

687

524

1,626

2,460

220

234

5,001

3,695

1,499

339

NET PROFIT/(LOSS)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Interest Distributions received

TOTAL INCOME EXPENSES Responsible Entity’s fee

4(a)

TOTAL EXPENSES PROFIT/(LOSS) ATTRIBUTABLE TO UNIT HOLDERS

FINANCE COSTS ATTRIBUTABLE TO UNIT HOLDERS Distributions to unit holders Change in net assets attributable to unit holders

3(b)

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

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› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Profit or Loss and other Comprehensive Income BALANCED FUND NOTE

GROWTH FUND

GROWTH PLUS FUND

AUSTRALIAN INTERNATIONAL EQUITIES FUND EQUITIES FUND

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

5,252

4,427

2,465

2,437

183

Unrealised changes in the fair value of investments

11,577 (1,321)

9,968

(991)

192

311

(39)

124

(1)

Realised gains/(losses) on disposal of investments

210 (1,168)

101 (2,256)

(2)

INCOME Interest Distributions received

TOTAL INCOME

17,052

1,955 12,547

(794)

257

495

(6)

139

EXPENSES 1,404

1,406

814

909

TOTAL EXPENSES

1,404

1,406

814

909

PROFIT/(LOSS) ATTRIBUTABLE TO UNIT HOLDERS

15,648

549 11,733 (1,703)

242

455

(13)

134

1,544

144

11,787 (2,489) 10,069 (3,247)

203

311

(41)

124

(1)

15,648

242

455

(13)

134

Responsible Entity’s fee

4(a)

FINANCE COSTS ATTRIBUTABLE TO UNIT HOLDERS Distributions to unit holders Change in net assets attributable to unit holders

3(b)

3,861

3,038

1,664

549 11,733 (1,703)

NET PROFIT/(LOSS)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

State Super Investment Fund – Annual Report 2013

› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Financial Position as at 30 June 2013 CASH FUND NOTE

2013 $’000

2012 $’000

FIXED INTEREST FUND

CAPITAL STABLE FUND

2013 $’000

2012 $’000

MODERATE FUND

2012 $’000

2013 $’000

2012 $’000

ASSETS Cash and cash equivalents

9(a)

4,048

4,671

201

165

4,355

4,358

572

Financial assets at fair value through profit or loss

65,121

66,264

8,956

5,344

104,425

88,719

28,096

10,958

Distribution receivable

501

681

340

2,548

1,074

744

142

Other accounts receivable

860

266

215

209

227

70,530

71,882

9,578

5,580

111,543

94,360

29,639

11,763

905

627

183

331

338

520

315

2,224

802

637

114

1,243

1,147

498

2,555

899

679

125

69,287

70,735

9,080

5,512

108,988

93,461

28,960

11,638

(69,287) (70,735)

(9,080)

(5,512) (108,988) (93,461)

(28,960)

(11,638)

TOTAL ASSETS LIABILITIES Accounts payable and accrued expenses Distribution payable

3(b)

TOTAL LIABILITIES (excluding liabilities attributable to unit holders) NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS Liabilities attributable to unit holders NET ASSETS

5(b)

The above Statements of Financial Position should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

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› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Financial Position as at 30 June 2013 BALANCED FUND NOTE

2013 $’000

GROWTH FUND

2012 $’000

2013 $’000

2012 $’000

GROWTH PLUS FUND

AUSTRALIAN INTERNATIONAL EQUITIES FUND EQUITIES FUND

2013 $’000

2012 $’000

2013 $’000

2012 $’000

ASSETS Cash and cash equivalents

9(a)

Financial assets at fair value through profit or loss

Distribution receivable Other accounts receivable TOTAL ASSETS

3,974

3,905

3,949

4,031

121,809

113,214

61,664

64,617

1,591

755

4,734

1,370

1,188

2,638

1,457

1,154

813

534

128,955

118,616

66,820

69,472

1,621

764

4,933

1,416

1,198

208

109

306

2,255

1,117

1,158

1,139

101

2,463

1,131

1,267

1,445

106

126,492

117,485

65,553

68,027

1,543

751

4,827

1,390

1,189

(751) (4,827) (1,390) (1,189)

(74)

LIABILITIES Accounts payable and accrued expenses Distribution payable

3(b)

TOTAL LIABILITIES (excluding liabilities attributable to unit holders) NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS Liabilities attributable to unit holders NET ASSETS

5(b)

(126,492) (117,485) (65,553) (68,027) (1,543) -

The above Statements of Financial Position should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

State Super Investment Fund – Annual Report 2013

› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Changes in Equity for the Financial Year ended 30 June 2013 EQUITY ATTRIBUTABLE TO UNIT HOLDERS CASH FUND $’000

FIXED INTEREST FUND $’000

CAPITAL STABLE FUND $’000

MODERATE FUND $’000

Balance at 1 July 2011

Total comprehensive income for the year

Balance at 30 June 2012

Total comprehensive income for the year

Balance at 30 June 2013

EQUITY ATTRIBUTABLE TO UNIT HOLDERS BALANCED FUND $’000

GROWTH FUND $’000

GROWTH PLUS FUND $’000

AUSTRALIAN EQUITIES FUND $’000

INTERNATIONAL EQUITIES FUND $’000

Balance at 1 July 2011

Total comprehensive income for the year

Balance at 30 June 2012

Total comprehensive income for the year

Balance at 30 June 2013

The above Statements of Changes in Equity should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

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› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Cash Flows for the Financial Year ended 30 June 2013 CASH FUND

FIXED INTEREST FUND

CAPITAL STABLE FUND

MODERATE FUND

Inflows (Outflows) NOTE

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

CASH FLOWS FROM OPERATING ACTIVITIES Interest received Responsible Entity’s fees paid Reduced input tax credit received Net cash flows used by operating activities

9(b)

(699)

(701)

(89)

(23)

(1,281)

(1,134)

(224)

(59)

(624)

(614)

(81)

(22)

(1,175)

(1,033)

(203)

(57)

(57,371)

(45,100)

(7,281)

(5,961)

(19,632)

(9,000)

(18,011)

(12,786)

60,950

48,400

3,704

807

8,658

9,200

1,995

2,088

3,579

3,300

(3,577)

(5,154)

(10,974)

200

(16,016)

(10,698)

104,978

7,904

6,530

34,300

24,188

19,297

13,539

(124,163) (107,659)

(4,193)

(1,187)

(22,047)

(22,895)

(3,044)

(2,210)

CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of investments Receipts from sale of investments Net cash flows generated/ (used) by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES 120,646

Proceeds from applications by unit holders Payments for redemptions by unit holders Distributions received/(paid)

(61)

(100)

(17)

(2)

(107)

(159)

(34)

(2)

Net cash flows generated/ (used) by financing activities

(3,578)

(2,781)

3,694

5,341

12,146

1,134

16,219

11,327

Net increase/(decrease) in cash and cash equivalents

(623)

(95)

165

(3)

301

572

Cash and cash equivalents at the beginning of the financial year

4,671

4,766

165

4,358

4,057

572

4,048

4,671

201

165

4,355

4,358

572

Cash and cash equivalents at the end of the financial year

9(a)

The above Statements of Cash Flows should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

State Super Investment Fund – Annual Report 2013

› Financial Statements for the Financial Year ended 30 June 2013

›› Statements of Cash Flows for the Financial Year ended 30 June 2013 (continued) BALANCED FUND

GROWTH FUND

GROWTH PLUS AUSTRALIAN INTERNATIONAL FUND EQUITIES FUND EQUITIES FUND

Inflows (Outflows) NOTE

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

2013 $’000

2012 $’000

CASH FLOWS FROM OPERATING ACTIVITIES 13

Responsible Entity’s fees paid

(1,479)

(1,529)

(866)

(996)

(15)

(5)

(39)

(6)

(5)

Reduced input tax credit received

101

107

(1,365)

(1,405)

(793)

(910)

(14)

(5)

(35)

(4)

(5)

(744) (3,352) (1,817) (1,140)

(47)

Interest received

Net cash flows used by operating activities

9(b)

CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of investments

(8,638)

(4,100)

(4,674)

(3,100) (1,001)

Receipts from sale of investments

15,900

26,600

19,820

22,460

403

7,262

22,500

15,146

19,360

(598)

11,936

6,198

4,874

1,012

744

3,420

1,742

1,102

(22,823) (32,480) (20,577) (23,139)

(409)

(2)

(359)

(315)

(115)

(3)

(166)

(4)

(5,828) (20,991) (14,435) (18,431)

612

742

3,057

1,427

987

Net cash flows generated/ (used) by investing activities

128

(737) (2,953) (1,393) (1,012)

(44)

399

424

CASH FLOWS FROM FINANCING ACTIVITIES 17,148

Proceeds from applications by unit holders Payments for redemptions by unit holders

(153)

Distributions received/(paid) Net cash flows generated/ (used) by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year

9(a)

(447)

(56)

104

(82)

(30)

3,905

3,801

4,031

4,012

3,974

3,905

3,949

4,031

The above Statements of Cash Flows should be read in conjunction with the accompanying notes and it is consolidated with both Class A and Class B schemes for each Fund.

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›N otes to the Financial Statements for the Financial Year ended 30 June 2013 ›› 1. The Trust The State Super Investment Fund (‘the Trust’) was established 22 November 1991. The Trust offers 9 managed investment schemes ‘the Funds’. Each Fund has a separate investment strategy and the assets of each Fund are managed by external specialist investment managers through a series of discrete investment trusts of which State Super Financial Services Australia Limited is the Trustee. The Trust’s Product Disclosure Statement sets out details of the investment process. The Responsible Entity for the 9 Funds comprising the Trust is State Super Financial Services Australia Limited (ABN 86 003 742 756). ‘THE FUNDS’:

CLASS A EFFECTIVE DATE

CLASS B EFFECTIVE DATE

State Super Investment Fund – Cash Fund

22-Nov-1991

2-Apr-2013

State Super Investment Fund – Capital Stable Fund

22-Nov-1991

2-Apr-2013

State Super Investment Fund – Balanced Fund

22-Nov-1991

2-Apr-2013

State Super Investment Fund – Growth Fund

15-Jun-1997

2-Apr-2013

State Super Investment Fund – Fixed Interest Fund

18-Jul-2011

2-Apr-2013

State Super Investment Fund – Moderate Fund

18-Jul-2011

2-Apr-2013

State Super Investment Fund – Growth Plus Fund

18-Jul-2011

Not Applicable

State Super Investment Fund – Australian Equities Fund

18-Jul-2011

2-Apr-2013

State Super Investment Fund – International Equities Fund

18-Jul-2011

2-Apr-2013

To give effect to the investment objectives of the nine Funds of the Trust, the Responsible Entity has established similarly named Feeder Funds, into which the respective Funds predominantly invest. The Feeder Funds invest in one or more Sector Trusts, each taking on the name of the asset class in which it invests. There are nine Feeder Funds: ◆◆ Cash Fund ◆◆ Capital Stable Fund ◆◆ Balanced Fund ◆◆ Growth Fund ◆◆ Fixed Interest Fund ◆◆ Moderate Fund ◆◆ Growth Plus Fund ◆◆ Australian Equities Fund ◆◆ International Equities Fund

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 1. The Trust (continued) There are ten Sector Trusts: ◆◆ Australian Equities ◆◆ Australian Fixed Interest ◆◆ Australian Unlisted Property ◆◆ Cash ◆◆ Enhanced Cash ◆◆ Global High Yield Debt ◆◆ Global Listed Infrastructure Securities ◆◆ Global Listed Property Securities ◆◆ International Equities ◆◆ International Fixed Interest The Trustee of the Feeder Funds and Sector Trusts is State Super Financial Services Australia Limited.

›› 2. Summary of Accounting Policies Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes thereto comply with International Financial Reporting Standards. The financial statements were authorised for issue by the directors of the Responsible Entity on 27 August 2013.

Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian Dollars. In the application of the Trust’s accounting policy, judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources are made. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making these judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

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› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 2. Summary of Accounting Policies (continued) Adoption of new and revised Accounting Standards In the current year, the Funds have adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2012. The adoption of these new and revised Standards and Interpretations has made no financial impact on the financial statements of the Funds. The following new and revised Standards and Interpretations have been adopted in these financial statements: AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project. AASB 124 Related Party Disclosures (revised December 2009), AASB 2009-12 Amendments to Australian Accounting Standards. At the date of authorisation of the financial report, the following Standards and Interpretations which are expected to be relevant were in issue but not yet effective: Standard / Interpretation

Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

AASB 9 Financial instruments; and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9

1 January 2015

30 June 2016

AASB 10 Consolidated Financial Statements; and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards

1 January 2013

30 June 2014

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Standards arising from AASB 13

1 January 2013

30 June 2014

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle

1 January 2013

30 June 2014

AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures

1 January 2013

30 June 2014

These Standards and Interpretations will be first applied in the financial report of the Funds that relates to the annual reporting period beginning after the effective date of each pronouncement. The Directors anticipate that the adoption of these standards will not have a significant financial effect on the Fund.

Significant accounting policies The significant accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2013 and the comparative information presented in these financial statements. The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 2. Summary of Accounting Policies (continued) (a) Valuation of financial assets at fair value To give effect to the investment objectives of the Cash, Fixed Interest, Capital Stable, Moderate, Balanced, Growth, Growth Plus, Australian Equities and International Equities Funds of the Trust, the Funds predominantly invest in similarly named Feeder Funds. The Feeder Funds invest in one or more Sector Trusts, each taking on the name of the asset class in which it invests. The Feeder Funds and Sector Trusts are unit trusts. The Funds recognise their investment in Feeder Funds at fair value through profit and loss. Unit prices of the unit trusts reflect the fair value of the underlying assets.

Net market values of the underlying assets are determined after deducting selling costs, as follows: ◆◆ L isted securities, foreign securities quoted on a recognized stock exchange, derivative financial instruments and government and other fixed interest securities are stated at market quotations as at the reporting date ◆◆ U nit trust and managed fund investments are stated at the redemption price quoted by the trust managers as at the reporting date ◆◆ U nlisted securities are stated at the Trustee’s valuation based on the advice of the Fund’s investment managers as at the reporting date ◆◆ L ife office policies included in the financial statements are based on the present values of the policies as advised by the insurer as at the reporting date ◆◆ I nvestment properties, which comprise readily realisable interests in land and buildings held for the purpose of letting to produce rental income, are included in the financial statements on the basis of the Trustee’s valuation of net market value as at the reporting date.

(b) Accounting for financial assets at fair value Investment transactions are recorded on a trade date basis. The investments are stated at fair value, with any unrealised gains or losses on remeasurement recognised in profit or loss. Fair value is determined in the manner described in Note 10(d). On disposal, proceeds are set against the carrying value and the resulting realised gain or loss is included in the Statements of Comprehensive Income. (c) Investment income Distribution income is recognised on a receivable basis as of the date the unit value is quoted exdistribution. Interest revenue is recognised on a time proportionate basis taking into account the effective yield on the financial assets. Gains or losses arising from changes in the fair values of financial instruments are included in profit or loss in the period in which they arise. (d) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments. (e) Income tax Under current income tax legislation the Funds are not liable to pay income tax as the net income of the Funds is assessable in the hands of the beneficiaries (the unit holders) who are ‘presently entitled’ to the income of the Funds. There is no income of the Funds to which the unit holders are not presently entitled and additionally, the Consolidated Constitution of the Trust requires the distribution of the full amount of the net income of the Funds to the unit holders each period. As a result, deferred taxes have not been recognised in the financial statements in relation to differences between the carrying amounts of assets and liabilities and their respective tax bases, including taxes on capital gains which could arise in the event of a sale of investments for the amount Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 2. Summary of Accounting Policies (continued) at which they are stated in the financial statements. In the event that taxable gains are realised by the Fund, these gains would be included in the taxable income that is assessable in the hands of the unit holders as noted above. Realised capital losses are not distributed to unit holders but are retained within the Sector Trusts to be offset against any realised capital gains. The benefit of any carried forward capital losses are also not recognised in the financial statements. If in any period realised capital gains exceed realised capital losses, including those carried forward from earlier periods and eligible for offset, the excess is included in taxable income that is assessable in the hands of unit holders in the period and is distributed to unit holders in accordance with the requirements of the Consolidated Constitution of the Trust. (f) Distributions In accordance with the Consolidated Constitution of the Trust, the Funds fully distribute their distributable income to unit holders by cash or reinvestment in the Fund. The Cash, Fixed Interest, Capital Stable, Moderate and Balanced Funds distribute income to unit holders on a quarterly basis. Distributable income of the Growth, Growth Plus, Australian Equities and International Equities Funds is distributed to unit holders half yearly. Distributions are recognised in the Statements of Comprehensive Income as finance costs attributable to unit holders. The distribution amount payable to investors as at the reporting date is recognised separately on the Statements of Financial Position as unit holders are presently entitled to the distributable income as at 30 June 2013. (g) Increase/decrease in net assets attributable to unit holders Non-distributable income is transferred directly to net assets attributable to unit holders and may consist of unrealised changes in the fair value of financial instruments at fair value through profit and loss, accrued income not yet assessable, expenses provided or accrued for which are not yet deductible, net capital losses and tax free or tax deferred income. Net capital gains on the realisation of any financial instruments at fair value through profit or loss (including any adjustments for tax deferred income previously taken directly to net assets attributable to unit holders) and accrued income not yet assessable will be included in the determination of distributable income in the same year which it becomes assessable for tax. (h) Accounts payable and accrued expenses Accounts payable and accrued expenses are recognised when the Fund becomes obliged to make future payments resulting from the purchase of goods and services. Payables are measured at their nominal values. (i) Financial liabilities issued by the Funds In accordance with AASB 132 unit holders funds are classified as a financial liability and disclosed as such in the Statements of Financial Position. (j) Goods and Services Tax (‘GST’) GST is usually incurred on the costs of various services provided to and paid by each Fund. The current rate of GST is 10%. Each Fund is eligible to claim a Reduced Input Tax Credit (‘RITC’) at the rate of 62.08% (2012: 75%) of the GST incurred on these services. In the Statements of Comprehensive Income, fees and expenses have been recognised inclusive of the GST paid less the RITC claimed from the Australian Taxation Office (‘ATO’). In the Statements of Financial Position, creditors and accruals are shown inclusive of GST payable, while the amount of the RITC recoverable from the ATO is included in sundry debtors. Cash flows relating to GST are included in the Statements of Cash Flows on a gross basis.

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 2. Summary of Accounting Policies (continued) (k) Applications and redemptions Applications received for units in each Fund are recorded at the unit price on issue for units in the Fund. All Funds are open to additional investments. Redemptions from each Fund are recorded at the unit price on issue for units in the Fund. The proceeds of redemption from a Fund may be applied to the acquisition of units in another Fund.

Unit prices are determined as the net asset value of the Fund divided by the number of units on issue.

(l) Rounding off of amounts The Trust is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order amounts in the Financial Statements have been rounded to the nearest thousand dollars, unless otherwise indicated. (m) The Trust financial reports reported in a single report The Responsible Entity for the Trust is State Super Financial Services Australia Limited (ABN 86 003 742 756). As such, the Trust is of a kind referred to in ASIC Class Order 06/441 which allows the financial statements of each Fund in the Trust to be reported using a single document. The financial statements and notes thereon have been prepared under ASIC Class Order 06/441.

›› 3. Distributions (a) Distributions of Income Details of the distributions paid or payable to unit holders during the year ended 30 June 2013 were as follows: Quarter ended 2013

CASH FUND c/unit

CLASS

FIXED INTEREST FUND c/unit

CAPITAL STABLE MODERATE FUND BALANCED FUND FUND c/unit c/unit c/unit A

30 September 2012

0.68

0.42

0.59

0.32

0.30

31 December 2012

0.62

1.14

0.82

0.72

0.73

31 March 2013

0.55

0.85

0.70

0.61

0.59

30 June 2013

0.53

0.60

3.51

4.30

2.29

2.78

2.32

2.87

2.23

2.17

TOTAL

2.38

0.60

5.92

4.30

4.40

2.78

3.97

2.87

3.85

2.17

3.65

3.80

3.76

2.99

2.88

2012 TOTAL Quarter ended 2013 CLASS

GROWTH FUND c/unit A

GROWTH PLUS FUND c/unit A

AUSTRALIAN EQUITIES FUND c/unit A

INTERNATIONAL EQUITIES FUND c/unit A

30 September 2012

31 December 2012

0.77

0.84

1.51

0.33

30 June 2013

1.84

2.15

2.79

2.34

2.30

0.81

0.89

TOTAL

2.61

2.15

3.63

3.85

2.30

1.14

0.89

1.98

2.13

2.92

0.87

31 March 2013

2012 TOTAL

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› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 3. Distributions (continued) (b) Distribution Paid and Payable 2013 $’000

2013 c/unit

2012 $’000

2012 c/unit

Cash Fund – Class A 1,288

1.85

1,940

2.85

336

0.53

520

0.80

1,624

2.38

2,460

3.65

Distributions paid during the year

Distribution payable – June

0.60

Distributions paid during the year

210

2.41

2.72

Distribution payable – June

297

3.51

1.08

507

5.92

133

3.80

4.30

Distributions paid during the year

1,856

2.11

2,206

2.80

Distribution payable – June

2,166

2.29

802

0.96

4,022

4.40

3,008

3.76

2.78

Distributions paid during the year

338

1.65

134

2.00

Distribution payable – June

593

2.32

114

0.99

931

3.97

248

2.99

2.87

Distributions paid during the year

1,606

1.62

1,921

1.80

Distribution payable – June

2,211

2.23

1,117

1.08

3,817

3.85

3,038

2.88

Distributions paid during the year Distribution payable – June Cash Fund – Class B

Fixed Interest Fund – Class A

Fixed Interest Fund – Class B Distributions paid during the year Distribution payable – June Capital Stable Fund – Class A

Capital Stable Fund – Class B Distributions paid during the year Distribution payable – June Moderate Fund – Class A

Moderate Fund – Class B Distributions paid during the year Distribution payable – June Balanced Fund – Class A

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

› ›3. Distributions (continued) (b) Distribution Paid and Payable 2013 $’000

2013 c/unit

2012 $’000

2012 c/unit

Balanced Fund – Class B -

2.17

506

0.77

405

0.48

1,136

1.84

1,139

1.50

1,642

2.61

1,544

1.98

2.15

Distributions paid during the year

0.84

0.57

Distribution payable – June

2.79

1.56

3.63

2.13

Distributions paid during the year

1.51

1.26

Distribution payable – June

2.34

1.66

131

3.85

2.92

2.30

Distributions paid during the year

0.33

Distribution payable – June

0.81

0.87

1.14

0.87

Distributions paid during the year

Distribution payable – June

0.89

Distributions paid during the year Distribution payable – June Growth Fund – Class A Distributions paid during the year Distribution payable – June Growth Fund – Class B Distributions paid during the year Distribution payable – June Growth Plus Fund – Class A

Australian Equities Fund – Class A

Australian Equities Fund – Class B Distributions paid during the year Distribution payable – June International Equities Fund – Class A

International Equities Fund – Class B

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› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 4. Expenses (a) Responsible Entity’s Fee Fees charged by the Responsible Entity State Super Financial Services Australia Limited (ABN 86 003 742 756) for performing its respective obligations are calculated daily as a rate per annum of the net asset value of each Fund and paid monthly from each Fund. The Consolidated Constitution of the Trust permits the Responsible Entity to charge a fee of up to 1.5% per annum of the net asset value of each Fund. However, during the year ended 30 June 2013, the Responsible Entity charged fees which were lower than the maximum fee as follows: CASH FUND CLASS

FIXED INTEREST FUND

CAPITAL STABLE FUND

% pa

2013 Responsible Entity fee (excl. GST)

0.9274

0.3494

0.9493

0.3048

1.1634

0.4341

Add GST

0.0927

0.0349

0.0949

0.0305

0.1163

0.0434

Less RITC

(0.0576)

(0.0217)

(0.0589)

(0.0189)

(0.0722)

(0.0269)

Net Charge to the Funds

0.9625

0.3626

0.9853

0.3164

1.2075

0.4506

0.9582

0.9991

1.1965

2012

MODERATE FUND CLASS

BALANCED FUND

GROWTH FUND

% pa

2013 Responsible Entity fee (excl. GST)

1.0849

0.3509

1.0916

0.3936

1.1513

0.4227

Add GST

0.1085

0.0351

0.1092

0.0394

0.1151

0.0423

Less RITC

(0.0674)

(0.0218)

(0.0678)

(0.0244)

(0.0715)

(0.0262)

Net Charge to the Funds

1.1260

0.3642

1.1330

0.4086

1.1949

0.4388

1.1215

1.1295

1.1786

2012

AUSTRALIAN EQUITIES FUND CLASS

INTERNATIONAL EQUITIES FUND

GROWTH PLUS FUND

% pa

2013 Responsible Entity fee (excl. GST)

1.1834

0.4530

1.0759

0.3515

1.1214

Add GST

0.1183

0.0453

0.1076

0.0352

0.1121

Less RITC

(0.0735)

(0.0281)

(0.0668)

(0.0218)

(0.0696)

Net Charge to the Funds

1.2282

0.4702

1.1167

0.3649

1.1639

1.2575

1.1226

1.1364

2012

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 4. Expenses (continued) (b) Investment Management Fee External investment managers provide investment management services directly to the Feeder Funds and Sector Trusts and accordingly investment management fees are paid to the investment managers out of the assets of the underlying Feeder Funds and Sector Trusts. These fees are included in the Indirect Cost Ratio of the relevant Fund, as shown in Note 4(d).

(c) Custody Fee The Custodian of the Cash, Fixed Interest, Capital Stable, Moderate, Balanced, Growth, Growth Plus, Australian Equities and International Equities Funds receives a fee for safe custody services. Custody fees are paid to the Custodian out of the assets of the underlying Sector Trusts and are included in the Indirect Cost Ratio of the relevant Fund, as shown in Note 4(d).

(d) Indirect Cost Ratio (‘ICR’) The ICR for each Fund is the expression of the total fees and charges of a Fund as a percentage of the net asset value of the Fund. It is calculated as the aggregate of the total amounts paid to the Responsible Entity, the Custodian and other expenses payable either directly or indirectly by the Fund including the fees paid to the external investment managers, expressed as a percentage of the average net asset value of each Fund.

The ICR of each Fund for the past 3 years is shown in the following table: 2013

2012

2011

Cash Fund

0.99

Fixed Interest Fund

1.15

Capital Stable Fund

1.30

Moderate Fund

1.35

Balanced Fund

1.40

Growth Fund

1.50

Growth Plus Fund

1.50

Australian Equities Fund

1.50

International Equities Fund

1.50

2013

2012

2011

Cash Fund

0.39

Fixed Interest Fund

0.50

Capital Stable Fund

0.57

Moderate Fund

0.61

Balanced Fund

0.70

Growth Fund

0.77

Australian Equities Fund

0.77

International Equities Fund

0.77

Class A

Class B

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› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 4. Expenses (continued) (e) Reimbursement of Operating Expenses Under the Consolidated Constitution of the Trust, certain administrative, legal and other expenses directly related to the operations of the Trust which have been incurred and paid by the Responsible Entity on behalf of the Trust, are subject to reimbursement from the Trust. For the year ended 30 June 2013, the Responsible Entity elected to waive its right of reimbursement from the Trust for all of the expenses incurred by it on behalf of the Trust.

(f) Remuneration of Auditors The Trust’s auditor is the Auditor General of New South Wales. Deloitte Touche Tohmatsu has been appointed agent of the Auditor General. During the financial year, the following fees (shown exclusive of GST) were paid to the Auditor General or Deloitte Touche Tohmatsu by the Responsible Entity from its own resources in connection with the Trust. 2013 $

2012 $

Audit of the financial statements – Audit Office of New South Wales

64,745

62,500

Audit of the compliance plans – Deloitte Touche Tohmatsu

25,750

25,000

90,495

87,500

›› 5. Net Assets Attributable to Unit Holders (a) Number of Units Attributable to Unit Holders

Movements in the number of units on issue during the year were as follows: CASH FUND CLASS A Units on issue at the beginning of the financial year Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

2013 Units

2012 Units

69,853,939

5,279,372

120,888,044

107,737,427

7,272,795

6,443,500

(123,161,106)

(106,856,057)

(4,070,253)

(1,164,128)

68,462,247

70,735,309

8,481,914

5,279,372

2013 Units

2012 Units

MODERATE FUND 2013 Units

2012 Units

Units on issue at the beginning of the financial year

83,857,737

79,498,606

11,537,921

Units issued during the year

29,611,224

24,891,189

16,782,756

13,732,396

(19,046,504)

(20,532,058)

(2,732,916)

(2,194,475)

94,422,457

83,857,737

25,587,761

11,537,921

Units redeemed during the year Units on issue at the end of the financial year

2013 Units

70,735,309

CAPITAL STABLE FUND CLASS A

FIXED INTEREST FUND

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (a) Number of Units Attributable to Unit Holders (continued) BALANCED FUND

GROWTH FUND

CLASS A

2013 Units

2012 Units

Units on issue at the beginning of the financial year

103,591,805

115,039,077

75,779,619

91,427,109

14,299,085

17,093,440

6,578,697

10,090,963

(18,843,350)

(28,540,712)

(20,671,631)

(25,738,453)

99,047,540

103,591,805

61,686,685

75,779,619

Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

2013 Units

AUSTRALIAN EQUITIES FUND CLASS A

2013 Units

2012 Units

INTERNATIONAL EQUITIES FUND

2012 Units

2013 Units

2012 Units

Units on issue at the beginning of the financial year

1,478,882

74,810

Units issued during the year

2,604,291

1,793,141

736,470

78,006

(329,529)

(314,259)

(107,285)

(3,196)

3,753,644

1,478,882

703,995

74,810

Units redeemed during the year Units on issue at the end of the financial year

GROWTH PLUS FUND CLASS A

2013 Units

2012 Units

Units on issue at the beginning of the financial year

799,124

Units issued during the year

984,329

800,979

(393,996)

(1,855)

1,389,457

799,124

Units redeemed during the year Units on issue at the end of the financial year

As stipulated within the Consolidated Constitution of the Trust, each unit confers on its holder an equal interest in the net assets of the Fund to which the unit relates. This interest does not extend to an interest to the underlying assets in each Fund. There are no separate classes of units in the Funds.

Movements in the number of units on issue during the year were as follows: CASH FUND CLASS B Units on issue at the beginning of the financial year Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

2013 Units

FIXED INTEREST FUND

2012 Units

2013 Units

2012 Units

2,107,598

452,395

(1,283,346)

(42,049)

824,252

410,346

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (a) Number of Units Attributable to Unit Holders (continued) CAPITAL STABLE FUND CLASS B

2013 Units

Units on issue at the beginning of the financial year Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

MODERATE FUND

2012 Units

2013 Units

2,457,157

1,683,408

(378,359)

(126,375)

2,078,798

1,557,033

BALANCED FUND CLASS B

2013 Units

Units on issue at the beginning of the financial year Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

GROWTH FUND

2012 Units

2013 Units

Units on issue at the beginning of the financial year Units issued during the year Units redeemed during the year Units on issue at the end of the financial year

2012 Units

2,088,034

1,039,023

(47,579)

(22)

2,040,455

1,039,001

AUSTRALIAN EQUITIES FUND CLASS B

2012 Units

2013 Units

INTERNATIONAL EQUITIES FUND

2012 Units

2013 Units

2012 Units

578,575

257,158

578,575

257,158

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders

Movements in the value of units on issue during the year were as follows: CASH FUND CLASS A Net assets attributable to unit holders at beginning of period

2013 $’000

FIXED INTEREST FUND

2012 $’000

2013 $’000

2012 $’000

70,735

69,854

5,512

(101)

70,735

69,854

5,411

Applications for the period

119,141

105,238

7,442

6,530

Redemptions for the period

(123,161)

(106,856)

(4,313)

(1,193)

Value of units issued upon reinvestment of distributions

1,747

2,499

250

Movement in value of units on issue during the period

(2,273)

881

3,379

5,411

(182)

101

68,462

70,735

8,608

5,512

Non distributable income Value of units on issue at beginning of the period

Non distributable income Net assets attributable to unit holders

CAPITAL STABLE FUND CLASS A

2013 $’000

2012 $’000

MODERATE FUND 2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

93,461

87,896

11,638

Non distributable income

(1,058)

(370)

(91)

Value of units on issue at beginning of the period

92,403

87,526

11,547

Applications for the period

31,347

24,327

17,410

13,625

Redemptions for the period

(21,807)

(22,761)

(2,905)

(2,210)

Value of units issued upon reinvestment of distributions

2,552

3,311

417

132

Movement in value of units on issue during the period

12,092

4,877

14,922

11,547

2,048

1,058

656

106,543

93,461

27,125

11,638

Non distributable income Net assets attributable to unit holders

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) BALANCED FUND

GROWTH FUND

CLASS A

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

117,485

132,728

68,027

85,156

12,757

10,268

24,058

20,810

130,242

142,996

92,085

105,966

Applications for the period

15,127

11,959

4,977

4,874

Redemptions for the period

(22,951)

(32,220)

(20,384)

(23,098)

Value of units issued upon reinvestment of distributions

2,570

7,507

1,589

4,343

Movement in value of units on issue during the period

(5,254)

(12,754)

(13,818)

(13,881)

(918)

(12,757)

(13,952)

(24,058)

124,070

117,485

64,315

68,027

Non distributable income Value of units on issue at beginning of the period

Non distributable income Net assets attributable to unit holders

2013 $’000

GROWTH PLUS FUND CLASS A Net assets attributable to unit holders at beginning of period

AUSTRALIAN EQUITIES FUND

2012 $’000

2013 $’000

2012 $’000

751

1,390

(6)

745

1,433

Applications for the period

1,014

744

2,730

1,742

Redemptions for the period

(447)

(2)

(359)

(315)

Value of units issued upon reinvestment of distributions

Movement in value of units on issue during the period

589

745

2,435

1,433

Non distributable income

209

284

(43)

1,543

751

4,152

1,390

Non distributable income Value of units on issue at beginning of the period

Net assets attributable to unit holders

2013 $’000

2012 $’000

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) INTERNATIONAL EQUITIES FUND CLASS A

2013 $’000

Net assets attributable to unit holders at beginning of period

2012 $’000 74

Applications for the period

790

Redemptions for the period

(114)

(3)

Movement in value of units on issue during the period

678

Non distributable income

107

Net assets attributable to unit holders

859

Non distributable income Value of units on issue at beginning of the period

Value of units issued upon reinvestment of distributions

CASH FUND CLASS B

2013 $’000

FIXED INTEREST FUND

2012 $’000

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

Non distributable income

Value of units on issue at beginning of the period

Applications for the period

2,108

544

Redemptions for the period

(1,283)

(50)

825

494

(22)

825

472

Value of units issued upon reinvestment of distributions Movement in value of units on issue during the period Non distributable income Net assets attributable to unit holders

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) CAPITAL STABLE FUND CLASS B

2013 $’000

MODERATE FUND

2012 $’000

2013 $’000

Net assets attributable to unit holders at beginning of period

Non distributable income

Value of units on issue at beginning of the period

Applications for the period

2,973

2,030

Redemptions for the period

(459)

(153)

2,514

1,877

(69)

(42)

2,445

1,835

Value of units issued upon reinvestment of distributions Movement in value of units on issue during the period Non distributable income Net assets attributable to unit holders

BALANCED FUND CLASS B

2013 $’000

GROWTH FUND

2012 $’000

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

Non distributable income

Value of units on issue at beginning of the period

2,532

1,274

(57)

2,475

1,274

(53)

(36)

2,422

1,238

Applications for the period Redemptions for the period Value of units issued upon reinvestment of distributions Movement in value of units on issue during the period Non distributable income Net assets attributable to unit holders

2012 $’000

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) AUSTRALIAN EQUITIES FUND CLASS B

2013 $’000

INTERNATIONAL EQUITIES FUND

2012 $’000

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

Non distributable income

Value of units on issue at beginning of the period

693

313

Redemptions for the period

Value of units issued upon reinvestment of distributions

Applications for the period

Movement in value of units on issue during the period

693

313

Non distributable income

(18)

Net assets attributable to unit holders

675

330

CASH FUND CONSOLIDATED Net assets attributable to unit holders at beginning of period

2013 $’000

FIXED INTEREST FUND

2012 $’000

2013 $’000

2012 $’000

70,735

69,854

5,512

(101)

70,735

69,854

5,411

Applications for the period

121,249

105,238

7,986

6,530

Redemptions for the period

(124,444)

(106,856)

(4,363)

(1,193)

Value of units issued upon reinvestment of distributions

1,747

2,499

250

Movement in value of units on issue during the period

(1,448)

881

3,873

5,411

(204)

101

69,287

70,735

9,080

5,512

Non distributable income Value of units on issue at beginning of the period

Non distributable income Net assets attributable to unit holders

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) CAPITAL STABLE FUND CONSOLIDATED

2013 $’000

2012 $’000

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

93,461

87,896

11,638

Non distributable income

(1,058)

(370)

(91)

Value of units on issue at beginning of the period

92,403

87,526

11,547

Applications for the period

34,320

24,327

19,440

13,625

Redemptions for the period

(22,266)

(22,761)

(3,058)

(2,210)

Value of units issued upon reinvestment of distributions

2,552

3,311

417

132

Movement in value of units on issue during the period

14,606

4,877

16,799

11,547

1,979

1,058

614

108,988

93,461

28,960

11,638

Non distributable income Net assets attributable to unit holders

BALANCED FUND

GROWTH FUND

CONSOLIDATED

2013 $’000

2012 $’000

Net assets attributable to unit holders at beginning of period

117,485

132,728

68,027

85,156

12,757

10,268

24,058

20,810

130,242

142,996

92,085

105,966

Applications for the period

17,659

11,959

6,251

4,874

Redemptions for the period

(23,008)

(32,220)

(20,384)

(23,098)

Value of units issued upon reinvestment of distributions

2,570

7,507

1,589

4,343

Movement in value of units on issue during the period

(2,779)

(12,754)

(12,544)

(13,881)

(971)

(12,757)

(13,988)

(24,058)

126,492

117,485

65,553

68,027

Non distributable income Value of units on issue at beginning of the period

Non distributable income Net assets attributable to unit holders

MODERATE FUND

State Super Investment Fund – Annual Report 2013

2013 $’000

2012 $’000

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 5. Net Assets Attributable to Unit Holders (continued) (b) Net Assets Attributable to Unit Holders (continued) GROWTH PLUS FUND CONSOLIDATED Net assets attributable to unit holders at beginning of period

2013 $’000

AUSTRALIAN EQUITIES FUND

2012 $’000

2013 $’000

2012 $’000

751

1,390

(6)

745

1,433

Applications for the period

1,014

744

3,423

1,742

Redemptions for the period

(447)

(2)

(359)

(315)

Value of units issued upon reinvestment of distributions

Movement in value of units on issue during the period

589

745

3,128

1,433

Non distributable income

209

266

(43)

1,543

751

4,827

1,390

Non distributable income Value of units on issue at beginning of the period

Net assets attributable to unit holders

INTERNATIONAL EQUITIES FUND CONSOLIDATED Net assets attributable to unit holders at beginning of period

2013 $’000

2012 $’000 74

Applications for the period

1,103

Redemptions for the period

(114)

(3)

Movement in value of units on issue during the period

991

Non distributable income

124

1,189

Non distributable income Value of units on issue at beginning of the period

Value of units issued upon reinvestment of distributions

Net assets attributable to unit holders

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 6. Net asset backing of each unit The net tangible assets attributable to unit holders of each unit in the Trust as at 30 June 2013 was: 2013 $

2012 $

2013 $

2012 $

CASH FUND

1.0000

FIXED INTEREST FUND

1.0149

1.0441

1.1489

CAPITAL STABLE FUND

1.1284

1.1145

1.1760

MODERATE FUND

1.0601

1.0087

1.1782

BALANCED FUND

1.2526

1.1341

1.1868

GROWTH FUND

1.0426

0.8977

1.1914

GROWTH PLUS FUND

1.1103

0.9398

AUSTRALIAN EQUITIES FUND

1.1061

0.9396

1.1665

INTERNATIONAL EQUITIES FUND

1.2200

0.9810

1.2823

CLASS

›› 7. Related party disclosures (a) Responsible Entity The Responsible Entity of the nine Funds comprising the Trust is State Super Financial Services Australia Limited (ABN 86 003 742 756). State Super Financial Services Australia Limited is an unlisted public company incorporated and operating in Australia. The Responsible Entity is wholly owned by the Pooled Funds of which the SAS Trustee Corporation is the Trustee.

Registered office and principal place of business of State Super Financial Services Australia Limited is:

Level 7 83 Clarence Street SYDNEY NSW 2000 Tel: (02) 9333 9555 Administration of the nine Funds comprising the Trust is conducted by State Super Financial Services Australia Limited.

(b) Key Management Personnel (i) Directors The names of each person holding the position of director of the Responsible Entity during all or part of the year were: ◆◆ P. K. Gupta (Chairman) ◆◆ M. Monaghan (Managing Director) ◆◆ M. Carapiet ◆◆ R. M. Davis ◆◆ R. N. Harty (resigned 2 May 2013) ◆◆ M. G. Lambert ◆◆ P. F. Scully ◆◆ S. Walsh

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 7. Related party disclosures (continued) (b) Key Management Personnel (continued) (ii) Other Key Management Personnel The names of other key management personnel of the Responsible Entity during all or part of the year were: ◆◆ J. T. Andriessen (General Manager, Marketing, Product & Advice) ◆◆ S. Bradley (General Manager, Financial Planning) ◆◆ T. Elliott (Chief Financial Officer) (Appointed 25 March 2013) ◆◆ D. Graham (Chief Investment Officer) ◆◆ H. M. Harms (General Manager, Information Technology) ◆◆ K. S. Hughes (Company Secretary) ◆◆ T. A. Murphy (General Manager, Human Resources) ◆◆ T. Reid (General Manager, Corporate Development) ◆◆ R. A. Dinham (Chief Investment Officer) (1 July 2012 to 30 July 2012) ◆◆ J. Clark (Chief Financial Officer) (Resigned 12 October 2012) ◆◆ P. Brook (Chief Financial Officer) (15 October 2012 to 24 March 2013)

(c) Key Management Personnel Compensation Key management personnel are paid by State Super Financial Services Australia Limited. Payments made from the nine Funds comprising the Trust to State Super Financial Services Australia Limited do not include any amounts directly attributable to the compensation of key management personnel.

(d) Holding of Units by Related Parties As at 30 June 2013, the Responsible Entity held total of 2,289,152 units in the Trust (2012: Nil). No units were held by nominees or associates of the Responsible Entity other than as indicated below. The other key management personnel of the Responsible Entity, State Super Financial Services Australia Limited, held 47,408 (2012: 33,549) units in the Trust as follows: CLASS A

Units held by:

CASH FUND

FIXED INTEREST FUND

CAPITAL STABLE FUND

MODERATE FUND

BALANCED FUND

Units

2013 Key management personnel

177

Total

177

Key management personnel

173

Total

173

2012

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 7. Related party disclosures (continued) (d) Holding of Units by Related Parties (continued) CLASS A Units held by:

GROWTH FUND

GROWTH PLUS FUND

AUSTRALIAN EQUITIES FUND

INTERNATIONAL EQUITIES FUND

Units

2013 Key management personnel

40,263

Total

40,263

Key management personnel

33,376

Total

33,376

2012

CLASS B Units held by:

CASH FUND

FIXED INTEREST FUND

CAPITAL STABLE FUND

MODERATE FUND

Units

2013 Key management personnel

Responsible Entity

208,108

416,216

Total

208,108

416,216

Key management personnel

Responsible Entity

Total

2012

CLASS B Units held by:

BALANCED FUND

GROWTH FUND

AUSTRALIAN EQUITIES FUND

INTERNATIONAL EQUITIES FUND

Units

2013 -

6,968

Responsible Entity

416,216

416,181

208,108

Total

416,216

423,149

208,108

Key management personnel

Responsible Entity

Total

Key management personnel

2012

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 7. Related party disclosures (continued) (e) Transactions with related parties Transactions with related parties have taken place at arm’s length and in the ordinary course of business. Responsible Entity fees of $4,309,306 (exclusive of GST) (2012: $4,031,343), calculated in accordance with Note 4(a), were paid to the Responsible Entity. 2013 $

2012 $

633,849

635,853

FIXED INTEREST FUND

83,886

24,712

CAPITAL STABLE FUND

1,178,819

1,035,427

MODERATE FUND

218,778

63,761

BALANCED FUND

1,352,051

1,372,027

783,897

887,171

GROWTH PLUS FUND

14,710

5,449

AUSTRALIAN EQUITIES FUND

37,730

6,794

5,586

149

CASH FUND

GROWTH FUND

INTERNATIONAL EQUITIES FUND

›› 8. Financial assets at fair value through profit or loss As at 30 June 2013, the market value of the proportion of the units held by each Fund, in the respective Feeder Fund, is shown below: Units in an unlisted unit trust 2013 $’000

2012 $’000

65,121

66,264

FIXED INTEREST FUND

8,956

5,344

CAPITAL STABLE FUND

104,425

88,719

MODERATE FUND

28,096

10,958

BALANCED FUND

121,809

113,214

61,664

64,617

GROWTH PLUS FUND

1,591

755

AUSTRALIAN EQUITIES FUND

4,734

1,370

INTERNATIONAL EQUITIES FUND

1,188

CASH FUND

GROWTH FUND

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 9. Notes to the Statements of Cash Flows CASH FUND 2013 $’000 (a) Cash and cash equivalents

2012 $’000

FIXED INTEREST FUND

CAPITAL STABLE FUND

2013 $’000

2012 $’000

4,048

4,671

201

165

4,355

4,358

Finance cost attributable to unit holders

1,626

2,460

220

234

5,001

3,695

Profit attributable to unit holders

1,626

2,460

220

234

5,001

3,695

(2,256)

(3,073)

(612)

(157)

(5,285)

(4,045)

Net (gains)/loss on financial instruments at fair value

305

(101)

(922)

(687)

(Increase)/decrease in reduced input tax credit receivable

(2)

Increase/(decrease) in accrued expenses

(2)

(1)

Net cash used by operating activities

(624)

(614)

(81)

(22)

(1,175)

(1,033)

2,256

3,073

612

157

5,285

4,045

1,747

2,499

250

2,551

3,311

(b) Reconciliation of profit attributable to unit holders for the period to net cash used by operating activities Net Profit

Income reinvested in unit trusts

(c) Non-Cash Investing Activities Distributions reinvested in unit trusts (d) Non-Cash Financing Activities Distributions reinvested by unit holders

MODERATE FUND 2013 $’000 (a) Cash and cash equivalents

BALANCED FUND 2013 $’000

2012 $’000

GROWTH FUND

2012 $’000

2013 $’000

2012 $’000

572

3,974

3,905

3,949

4,031

Finance cost attributable to unit holders

1,499

339

15,648

549

11,733

(1,703)

Profit attributable to unit holders

1,499

339

15,648

549

11,733

(1,703)

(1,199)

(311)

(5,252)

(4,427)

(2,465)

(2,437)

2,489 (10,069)

3,247

(b) Reconciliation of profit attributable to unit holders for the period to net cash used by operating activities Net Profit

Income reinvested in unit trusts Net (gains)/loss on financial instruments at fair value

(524)

(91) (11,786)

(5)

Increase/(decrease) in accrued expenses

(19)

(3)

(20)

Net cash used by operating activities

(203)

(57)

(1,365)

(1,405)

(793)

(910)

1,199

311

5,252

4,427

2,465

2,437

417

132

2,570

7,507

1,589

4,343

(Increase)/decrease in reduced input tax credit receivable

(c) Non-Cash Investing Activities Distributions reinvested in unit trusts (d) Non-Cash Financing Activities Distributions reinvested by unit holders

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 9. Notes to the Statements of Cash Flows (continued) GROWTH PLUS FUND 2013 $’000 (a) Cash and cash equivalents

2012 $’000

AUSTRALIAN EQUITIES FUND

INTERNATIONAL EQUITIES FUND

2013 $’000

2012 $’000

Finance cost attributable to unit holders

242

455

(13)

134

Profit attributable to unit holders

242

455

(13)

134

Income reinvested in unit trusts

(54)

(21)

(183)

(33)

(15)

(1)

(203)

(6)

(310)

(125)

(Increase)/decrease in reduced input tax credit receivable

Increase/(decrease) in accrued expenses

Net cash used by operating activities

(14)

(5)

(35)

(4)

(5)

183

(b) Reconciliation of profit attributable to unit holders for the period to net cash used by operating activities Net Profit

Net (gains)/loss on financial instruments at fair value

(c) Non-Cash Investing Activities Distributions reinvested in unit trusts (d) Non-Cash Financing Activities Distributions reinvested by unit holders

›› 10. Financial instruments (a) Financial Instrument Management To give effect to the investment objectives of the nine Funds of the Trust, the Responsible Entity has established similarly named Feeder Funds, into which the respective Funds predominantly invest. The Feeder Funds invest in one or more Sector Trusts, each taking on the name of the asset class in which it invests. There are nine Feeder Funds: Cash Fund, Capital Stable Fund, Balanced Fund, Growth Fund, Fixed Interest Fund, Moderate Fund, Growth Plus Fund, Australian Equities Fund, International Equities Fund. There are ten Sector Trusts: Australian Equities, Australian Fixed Interest, Australian Unlisted Property, Cash, Enhanced Cash, Global High Yield Debt, Global Listed Infrastructure Securities, Global Listed Property Securities, International Equities, International Fixed Interest. The Trustee of the Feeder Funds and Sector Trusts is State Super Financial Services Australia Limited. The allocation of investments made by each Feeder Fund and Sector Trusts is dependent on the investment objectives of each Fund. These are generally reviewed annually and may be reviewed on an ad hoc basis if required. The Responsible Entity mitigates the risk that the longer term strategic asset allocation of each Fund may not achieve its investment objectives by careful research using the Responsible Entity’s expertise and that of specialist asset consultants. The Responsible Entity researches possible new specialist managers to manage the investments of each Sector Trust. Prior to an appointment the Responsible Entity conducts research and due diligence on each specialist investment manager. The Responsible Entity conducts formal reviews of each appointed specialist investment managers performance. Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (a) Financial Instrument Management (continued) Generally on an annual basis the Responsible Entity reviews the existing Sector Trusts including the number and type of investment managers, possible new asset classes or possible termination of asset classes. The Responsible Entity receives advice from specialist asset consultants on the nature and type of Sector Trusts including the possible opening or closure of Sector Trusts. The performance of each investment manager is calculated monthly, reviewed continuously throughout the financial year and compared to benchmarks such as predetermined market based investment benchmarks. Daily the Custodian monitors and reports (on an exceptions basis) on each specialist investment manager’s compliance with their investment mandate. Monthly the investment performance of each Fund is calculated and disclosed on the Responsible Entity’s website. JP Morgan Chase N.A. acts as the master custodian on behalf of the Responsible Entity and provides services such as physical custody and safe keeping of assets, settlement of investment trades and collection of dividends. JP Morgan Chase N.A. also provides other services such as accounting, monitoring and reporting functions for each Fund and the Feeder Funds and Sector Trusts.

(b) Significant Accounting Policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset and financial liability are disclosed in Note 2 to the financial statements.

(c) Capital Risk Management The Responsible Entity for the State Super Investment Fund is required under license requirements to maintain at least $5,000,000 in liquid assets at all times. The Responsible Entity has complied with its financial obligations throughout the financial year.

(d) Categories of Financial Instruments The Feeder Funds and Sector Trusts are unit trusts. The Funds’ investments in the Feeder Funds are valued using unit prices which reflect the fair value of the underlying assets. Net market value approximates fair value. Changes in net market value are recognised through the Statements of Comprehensive Income. The Funds have investments in the following categories of financial assets and liabilities: CASH FUND 2013 $’000

FIXED INTEREST FUND

2012 $’000

2013 $’000

2012 $’000

Financial Assets Financial assets held at fair value through profit and loss

65,121

66,264

8,956

5,344

Cash and cash equivalents

4,048

4,671

201

165

Receivables *

1,361

947

421

1,243

1,147

498

Financial Liabilities Payables

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (d) Categories of Financial Instruments (continued) CAPITAL STABLE FUND 2013 $’000

MODERATE FUND

2012 $’000

2013 $’000

2012 $’000

Financial Assets Financial assets held at fair value through profit and loss

104,425

88,719

28,096

10,958

Cash and cash equivalents

4,355

4,358

572

Receivables *

2,763

1,283

971

233

2,555

899

679

125

Financial Liabilities Payables

BALANCED FUND 2013 $’000

GROWTH FUND

2012 $’000

2013 $’000

2012 $’000

Financial Assets Financial assets held at fair value through profit and loss

121,809

113,214

61,664

64,617

Cash and cash equivalents

3,974

3,905

3,949

4,031

Receivables *

3,172

1,497

1,207

824

2,463

1,131

1,267

1,445

Financial Liabilities Payables

GROWTH PLUS FUND 2013 $’000

AUSTRALIAN EQUITIES FUND

2012 $’000

2013 $’000

2012 $’000

Financial Assets Financial assets held at fair value through profit and loss

1,591

755

4,734

1,370

100

106

Cash and cash equivalents Receivables * Financial Liabilities Payables

INTERNATIONAL EQUITIES FUND 2013 $’000

2012 $’000

Financial Assets Financial assets held at fair value through profit and loss Cash and cash equivalents Receivables *

1,188

Financial Liabilities Payables * All receivables are current and there are no amounts past due or impaired.

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (e) Financial Risk Management Objectives

he Funds have an exposure to the Feeder Funds and Sector Trusts. As a result, the Funds are T exposed to a variety of financial risks. These risks include credit risk, liquidity and cash flow risk and market risk (including interest rate risk management, foreign currency risk and price risk). The Funds’ risk management and investment policies, as approved by the Responsible Entity, seek to minimise the potential adverse effects of these risks on the Funds’ financial performance.

(f) Credit Risk Credit risk is the risk that the counterparty will fail to perform contractual obligations, either in whole or in part, under contract resulting in a financial loss.

Concentrations of credit risk are minimised primarily by: ◆◆ T he Funds investing in units in the Feeder Funds and the Feeder Funds investing in units in the Sector Trusts. ◆◆ E nsuring that Feeder Funds and Sector Trust transactions are undertaken with a large number of counterparties. ◆◆ W here appropriate Sector Trusts undertake transactions on recognised exchanges and with a variety of counterparties. ◆◆ T he appointment of investment managers with appropriate credit assessment skills, setting and monitoring limits in investment manager mandates.

The Funds do not have a concentration of credit risk to underlying counterparties. The maximum credit risk to which the Funds are exposed to is equal to the Fund’s carrying value of the units in the Feeder Funds and the cash balances.

(g) Liquidity and Cash Flow Risk Liquidity and cash flow risk is the risk that the Funds will experience difficulty either realising assets or otherwise raising sufficient funds to satisfy commitments associated with financial instruments. Ultimate responsibility for liquidity risk management rests with the Responsible Entity. The Responsible Entity has built an appropriate risk framework for the management of each Fund’s liquidity management requirements. In particular, the liquidity of each Fund is managed in accordance with each Fund’s investment strategy. The Fund’s net cash flows are continually monitored. The liquidity risk associated with the need to satisfy unit holders’ requests for redemptions are mitigated by new contributions and maintaining adequate liquidity to satisfy usual levels of demand. The overall strategy to manage liquidity risk remains unchanged from 2012. Liabilities attributable to unit holders, accounts payable and distributions payable are at call.

(h) Market Risk

arket risk arises from factors such as economic, technological, political or legal conditions which can M adversely affect investment markets. In turn, this can cause market prices to fluctuate and affect the value of investment portfolios.

Market risk comprises three types of risk: foreign exchange (currency risk), market interest rates (interest rate risk) and market prices (price risk). The policies and procedures put in place to mitigate the Funds’ exposure to market risk are detailed in the Responsible Entity’s investment policies and Risk Management Strategy and Plan. There has been no change in the Funds’ exposure to market risk or the manner in which it manages or measures risk.

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (h) Market Risk (continued) The Funds, predominantly invest into similarly named Feeder Funds. The Feeder Funds in turn, invest in one or more Sector Trusts, each taking on the name of the asset class in which it invests. Concentrations of market risk are minimised primarily by: ◆◆ Careful research of strategic asset allocation of each Fund. ◆◆ Use of, and advice from, specialist asset consultants. ◆◆ Careful research, hiring and monitoring of professional specialist investment managers. ◆◆ S ector Trusts using a diversified mix of specialist investment managers who the Responsible Entity believes are the most appropriate for each asset class. ◆◆ W here appropriate, Sector Trusts undertaking transactions on recognised exchanges and with a variety of counterparties. This risk is managed by ensuring that all activities are transacted in accordance with investment mandates, overall investment strategy and within approved limits.

(i) Foreign Exchange Risk

oreign currency contracts are used primarily to manage the foreign exchange risk implicit in the value F of Sector Trust portfolio securities denominated in foreign currency, and to secure a particular exchange rate for a planned purchase or sale of securities. The terms and conditions of these contracts rarely exceed twelve months.

The Funds through their investment in units in Feeder Funds have a risk associated with movements in the value of financial assets and or liabilities denominated in foreign currencies. Foreign currency risk is mitigated by hiring specialist foreign currency managers ensuring that all activities are transacted in accordance with mandates, overall investment strategy and within approved limits. Movements in foreign currencies are reflected in the value of units invested in Feeder Funds and in the value of units invested by Feeder Funds in Sector Trusts.

(j) Interest Rate Risk Interest rate risk is the risk the value of financial assets will fluctuate due to changes in market interest rates. Interest rate risk is managed through the allocation of investments made by each Feeder Fund in Sector Trusts that have an exposure to market interest rates. The Funds, through their investments in units in Feeder Funds and direct holdings in cash, have a risk associated with movements in interest rates. Movements in market interest rates are reflected in the value of units of the Funds, value of units invested in Feeder Funds and in the value of units invested by Feeder Funds in Sector Trusts. Interest rate risk is mitigated by hiring professional, specialist investment managers ensuring all activities are transacted in accordance with mandates, overall investment strategy and within approved limits.

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (j) Interest Rate Risk (continued) CASH FUND 2013

FIXED INTEREST FUND

2012

2013

2012

CAPITAL STABLE FUND 2013

2012

Weighted Average Interest Rate

2.02%

2.82%

2.02%

2.82%

2.02%

2.82%

Variable Interest Rate Instruments

$'000

4,048

4,671

201

165

4,355

4,358

65,121

66,264

8,956

5,344

104,425

88,719

Distribution receivable

501

681

340

2,548

1,074

Other receivable

860

266

215

209

70,530

71,882

9,578

5,580

111,543

94,360

Cash at bank Non-Interest Bearing Units in an unlisted unit trust

Total

MODERATE FUND 2013

BALANCED FUND

2012

2013

GROWTH FUND

2012

2013

2012

Weighted Average Interest Rate

2.02%

2.82%

2.02%

2.82%

2.02%

2.82%

Variable Interest Rate Instruments

$'000

572

3,974

3,905

3,949

4,031

28,096

10,958

121,809

113,214

61,664

64,617

Distribution receivable

744

142

2,638

1,457

1,154

813

Other receivable

227

534

29,639

11,763

128,955

118,616

66,820

69,472

Cash at bank Non-Interest Bearing Units in an unlisted unit trust

Total

GROWTH PLUS FUND 2013

AUSTRALIAN EQUITIES FUND

2012

2013

2012

INTERNATIONAL EQUITIES FUND 2013

2012

Weighted Average Interest Rate

2.02%

2.82%

2.02%

2.82%

2.02%

2.82%

Variable Interest Rate Instruments

$'000

1,591

755

4,734

1,370

1,188

1,621

764

4,933

1,416

1,198

Cash at bank Non-Interest Bearing Units in an unlisted unit trust Distribution receivable Other receivable Total

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (k) Other Market Price Risk Market price risk is the risk that the total value of investments will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or other factors affecting instruments traded in the market. The Fund through their investments in units in Feeder Funds have a risk associated with movements in market prices. Movements in market prices are reflected in the value of units invested in Feeder Funds and in the value of units invested by Feeder Funds in Sector Trusts. Other market price risk is mitigated by hiring professional, specialist investment managers ensuring that all activities are transacted in accordance with mandates, overall investment strategy and within approved limits.

(l) Fair Value Measurements Recognised in the Statement of Financial Position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. ◆◆ L evel 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. ◆◆ L evel 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). ◆◆ L evel 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Financial Assets at Fair Value Through Profit and Loss

2013 Level 2 $’000

2013 Total $’000

2012 Level 2 $’000

2012 Total $’000

CASH FUND Units in an unlisted unit trust

65,121

66,264

8,956

5,344

104,425

88,719

28,096

10,958

121,809

113,214

61,664

64,617

1,591

755

FIXED INTEREST FUND Units in an unlisted unit trust CAPITAL STABLE FUND Units in an unlisted unit trust MODERATE FUND Units in an unlisted unit trust BALANCED FUND Units in an unlisted unit trust GROWTH FUND Units in an unlisted unit trust GROWTH PLUS FUND Units in an unlisted unit trust

Find out more at www.ssfs.com.au or call 1800 620 305

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (l) Fair Value Measurements Recognised in the Statement of Financial Position (continued) Financial Assets at Fair Value Through Profit and Loss

2013 Level 2 $’000

2013 Total $’000

2012 Level 2 $’000

2012 Total $’000

AUSTRALIAN EQUITIES FUND Units in an unlisted unit trust

4,734

1,370

1,188

INTERNATIONAL EQUITIES FUND Units in an unlisted unit trust

There were no transfers between any of the three levels in the period.

The Funds’ investment in the Feeder Funds (which are unlisted unit trusts) is valued using unit prices which reflect the fair value of the underlying assets.

(m) Sensitivity Analysis The following table summarises the sensitivity of each Fund’s Statement of Comprehensive Income and Statement of Financial Position to foreign exchange risk, interest rate risk and other market price risk through its investment in the Feeder Funds and Sector Trusts. The sensitivity analyses below have been determined based on the exposure to change in the value of units in each Fund at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. The Responsible Entity has sought and received advice from a specialist asset consultant on possible changes in the unit prices of the Funds due to possible changes in market risk. The changes in the investment returns of the Funds used to prepare the sensitivity analysis set out below equate to a measure of the long term assumptions for the expected standard deviation of an asset class or financial variable. Management believes that using standard deviation as a risk measure is appropriate for measuring each category of market risk that the individual funds are exposed to. Based on the advice from specialist asset consultants, management is satisfied with the use of a single overall risk variable for the sensitivity analysis as set out below. The long term assumptions used in the calculation of standard deviation are intended to be forward looking, and have been set using a combination of actual historical returns, economic theory and current market conditions. This methodology is consistent with the approach adopted and used in the sensitivity analysis for 2013. However, actual movements in investment returns may be greater than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of economies, market and securities in which the Sector Trusts invest. As a result, historic variations in risk variables are not a definitive indicator of future variations in the risk variables.

State Super Investment Fund – Annual Report 2013

› Notes to the Financial Statements for the Financial Year ended 30 June 2013

›› 10. Financial instruments (continued) (m) Sensitivity Analysis (continued) CASH FUND

FIXED INTEREST FUND 2013 $’000

2012 $’000

CAPITAL STABLE FUND

2013 $’000

2012 $’000

Net Assets attributable to unit holders

69,287

70,735

9,080

5,512

108,988

93,461

Change in variable rate

1.30%

2.20%

3.50%

2.90%

3.50%

+ % Effect

901

1,556

318

160

3,161

3,271

- % Effect

(901)

(1,556)

(318)

(160)

(3,161)

(3,271)

MODERATE FUND

BALANCED FUND

2013 $’000

2012 $’000

2013 $’000

2012 $’000

Net Assets attributable to unit holders

28,960

11,638

126,492

Change in variable rate

4.90%

6.70%

+ % Effect

1,419

- % Effect

(1,419)

2012 $’000

GROWTH FUND 2013 $’000

2012 $’000

117,485

65,553

68,027

7.70%

10.00%

11.60%

13.90%

780

9,740

11,749

7,604

9,456

(780)

(9,740)

(11,749)

(7,604)

(9,456)

GROWTH PLUS FUND 2013 $’000

2013 $’000

2012 $’000

AUSTRALIAN EQUITIES FUND 2013 $’000

2012 $’000

INTERNATIONAL EQUITIES FUND 2013 $’000

2012 $’000

1,543

751

4,827

1,390

1,189

13.80%

17.30%

17.40%

19.20%

15.70%

17.60%

+ % Effect

213

130

840

267

187

- % Effect

(213)

(130)

(840)

(267)

(187)

(13)

Net Assets attributable to unit holders Change in variable rate

›› 11. Contingent assets and contingent liabilities As at 30 June 2013, the Trust did not have any contingent assets and contingent liabilities (2012: $ nil).

›› 12. Subsequent events There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Trust, the results of those operations, or the state of affairs of the Trust in future financial years.

Find out more at www.ssfs.com.au or call 1800 620 305

›D irectors’ Declaration The financial report of the State Super Investment Fund (‘the Trust’) for the year ended 30 June 2013 has been prepared by State Super Financial Services Australia Limited, the Responsible Entity. The Trust comprises the Cash Fund, Fixed Interest Fund, Capital Stable Fund, Moderate Fund, Balanced Fund, Growth Fund, Growth Plus Fund, Australian Equities Fund and International Equities Fund (‘the Funds’). The Directors of the Responsible Entity declare that: a) In the Directors’ opinion, there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable; b) In the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 2 to the financial statements; c) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Trust; and d) The Directors have been given the declarations required by s.295A of the Corporations Act 2001. Signed in accordance with a resolution of the Directors of the Responsible Entity made pursuant to s.295(5) of the Corporations Act 2001. On behalf of the Directors of the Responsible Entity, State Super Financial Services Australia Limited.

Michael Monaghan Managing Director 27 August 2013

State Super Investment Fund – Annual Report 2013

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SSIFAR0913