Chairman's message
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I am pleased to present the UniSuper Report to members for the financial year ended 30 June 2008.
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A difficult year
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After four years of strong returns, 2007–08 proved to be a particularly difficult year on the investment front. For many, this will be confirmed by the negative returns shown in your June 2008 Member Benefit Statement.
The catalyst for the market downturn was the US sub-prime mortgage crisis, combined with rising oil prices and concerns about the overall direction of the US economy. On the domestic front, while the fundamentals of the Australian economy remained solid, our financial markets followed the global trend. The Australian share market, measured by the ASX 300 Accumulation Index, fell by over 13% for the 2007–08 year.
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Investment Returns – Accumulation Super and Flexi-Pensions
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If you are an Accumulation Super member or Flexi Pensioner, the extent to which this market downturn has affected your returns depends on the investment option or options in which you are invested.
Those options with higher proportions of growth assets, such as shares and property, experienced negative returns for the first time in five years. For example, our flagship Balanced investment option, which has a 70% exposure to growth assets, posted a negative return for accumulation members of –6.03% for the year.
By contrast, those investment options with a greater allocation towards defensive assets, such as our Cash and Capital Stable investment options, posted positive returns, although the Cash option did underperform its market benchmark and industry peers due to its exposure to short-term corporate credit securities.
Full details on the 2007–08 investment performance of each investment option are provided in the section Markets and the Fund.
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Looking beyond the short-term volatility to our medium to longer-term results, I am pleased to report that the performance of UniSuper’s investment options remains sound, both when viewed in absolute terms and when compared with broader industry averages. With the exception of the Socially Responsible High Growth Option, all of UniSuper’s Pre-Mixed Investment options outperformed their respective market benchmarks and survey median returns over a three, five and seven year period to 30 June 2008.
Full details of how each option has performed against its benchmark and peers are provided in the Investment Returns section.
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Defined Benefit Division remains secure
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Despite the investment market downturn, the Defined Benefit Division (DBD) remains in a sound financial position.
The key measures of the financial health of the DBD are the Accrued Benefit Index and the Vested Benefit Index, both of which are regularly reviewed by the Trustee to monitor whether the DBD’s assets are sufficient to meet its obligations to members. These indices stood at 117.9% and 103.3% respectively at 30 June 2008.
A full update on the financial position of the DBD can be found in the Defined Benefit Division section of UniSuper’s financials.
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UniSuper welcomes new CEO
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We were pleased to welcome Terry McCredden as the new CEO of UniSuper in July. Terry was previously the CEO of Telstra Super. We are delighted to have secured the services of such a capable and proven superannuation professional to lead our Fund into the future.
Finally I’d like to thank Ann Byrne, our CEO of seven years who left UniSuper in March this year. Ann’s hard work and commitment helped make UniSuper the outstanding Fund it is today.
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Elizabeth Bryan
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Chairman
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