2024 Annual Member Meeting

RECORDING: In the spirit of reconciliation, AustralianSuper acknowledges the Traditional Custodians of Country throughout Australia and the connections to land, sea and community. We pay our respects to their Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people who are present today. 

PAULA BENSON: Good evening and welcome to the 2024 AustralianSuper Annual Member Meeting. My name is Paula Benson. I'm the Chief Strategy Officer at your Fund and it's my pleasure to be your MC for this event. I'll begin by acknowledging the Traditional Custodians and Owners of the land on which we meet. We are on the lands of the Wurundjeri people of the Kulin Nation. I pay my respects to their Elders past and present and I extend that respect to all Aboriginal and Torres Strait Islander peoples watching this event.

AustralianSuper has been holding Annual Member Meetings and Briefings for 19 years. It's just one of the ways in which we work to be transparent and accountable to you. This meeting is important for the Fund for three key reasons. First, we want to share an update on AustralianSuper's activities for the FY 2024. We'll provide an update on the Fund's investment performance and the economic outlook and some of the plans and initiatives we're delivering to help you achieve your best financial position in retirement. Secondly, we want to hear directly from you. This meeting is a great opportunity for you to ask questions and make suggestions about your Fund. I will let you know how you can do that at the end of the presentations. And, thirdly, we hope that at the end of the evening, you'll feel more informed about your superannuation and more empowered to make decisions for your life in retirement.

Our Directors are present this evening, along with the Fund's Executive, our actuary and our auditor, Craig Cummins. We aim to have the presentations complete in an hour, followed by a Question and Answer session for up to 45 minutes. You will be able to type a question in the Q&A box, which will be available from 7pm. We will do our best to answer all questions but please note we won't be able to answer questions about your personal circumstances.

It's important to understand that the information we're covering today may include general financial advice which doesn't take into account your personal objectives, financial situation or needs. Before making a decision, please consider if the information is right for you. If you would like to speak to us about your personal circumstances, we would love to hear from you. Please refer to the Contact Us link on this page or the Tools & Advice tab on our website.

This is your Fund and it's the Fund run to benefit over 3.4 million Australians. AustralianSuper is a profit-for-member fund, so we don't pay profits or dividends to shareholders. The money we make is for you, and your best financial interests drive all of our decisions.

I'll now introduce Dr Don Russell to provide an update on behalf of the Board. Don joined the AustralianSuper Board as an Independent Director in May 2019 and was appointed Chair in September of that year. Don is a Director of Super Members Council Australia. His previous Directorships include Deputy Chair of the Centre for Policy Development, the CSIRO and as Chair of State Super. Don has led government departments at both Commonwealth and State levels. He has consulted to the World Bank and Bankers Trust. He has also represented Australia at the OECD and served as Australia's Ambassador to Washington. He was also Principal Adviser to The Honourable Paul Keating, both during his time as Treasurer and Prime Minister. Don has an exceptional background in a wide variety of sectors and brings a deep understanding of finance, superannuation and public policy to the Fund. Please welcome Dr Don Russell.

DR DON RUSSELL: Thank you, Paula, and welcome, everyone. Thank you all for taking the time to join with us tonight. I've always thought it important that the Chair and Directors of your Fund, along with key members of the AustralianSuper staff, should actively engage with members.

Australia's superannuation system has been in place for more than 30 years and members' retirement savings have now grown to the point where people can look forward to a retirement that is quite different from that which faced earlier generations. I can only commend you for wanting to know more about how your retirement savings are being managed and I hope that you find the presentations and then the Question and Answer session helpful. Let us know if you think we have missed the mark or if you have any other feedback from tonight's meeting.

Before I start, I would like to acknowledge my fellow Directors who are with us tonight; in particular, Philippa Kelly. Philippa is the Chair of AustralianSuper's Investment Committee and we will hear from Philippa shortly regarding our investment strategy.

One feature of our system that is often overlooked is the high degree of competition that exists between the funds. I can tell you that we live with the consequences of that competition every day as we strive to deliver better performance and better service. You might think that we might wish that competition was more muted, but this is not the case. We welcome the competition as it drives us on and keeps us from becoming complacent. I think that the need to continually strive to be better is part of the secret sauce that has helped make AustralianSuper the Fund that it is today.

It's been a challenging year for many members, with high living costs, ongoing inflation worries

and uncertainty in financial markets. In this environment, our teams have worked hard to deliver solid investment returns and manage the portfolio to balance growth potential with risk. The Investment team has been adjusting the portfolios based on an improved economic outlook, and Philippa and Mark Delaney will discuss investment performance and the market outlook later in this presentation.

However, I would like to make the obvious point that investment markets do fluctuate and it's important to remember that super is a long-term investment. Even members in or approaching retirement could still be invested for another 20 years after they have left the work force. Having your investment savings continue to work for you while you are retired is a very important consideration.

Last year AustralianSuper welcomed over 445,000 new members and now manages over $340 billion on behalf of 3.4 million members. We remain the largest superannuation fund in Australia and the 16th largest pension fund globally. Being a large and growing fund enables us to deliver more for members because we can spread many of our costs over more members and thus reduce costs for everyone, and our size means we can do things on the investment side that smaller funds would be hard-pressed to replicate. We don't pursue growth for growth's sake but as a way of delivering a better member experience.

As AustralianSuper continues to grow and mature, we will keep evolving our investment model to be able to deliver leading long-term returns to members. We also know that it is vital that our products and services meet the changing needs of members. We seek out, and listen to, member feedback, and in the past year we committed to a considerable multi-year investment to transform our member service model. Initiatives that were implemented this year include establishing an internal Member Resolution Centre for the end-to-end management of member complaints and establishing a dedicated Bereavement Centre to support the loved ones of members who have died. We also transitioned to a new insurance claims assessment model, which has increased the speed, quality and support provided when members need to make a claim. I'm pleased to report that all these initiatives are fully implemented and making significant improvements to how we support members, particularly when they need us most. Rose will talk more about the work the Fund is doing to continually improve and develop services for members.

You may have heard about the number of Australians transitioning from work to retirement. In the next 10 years, an estimated 2.5 million Australians will move from saving for retirement to starting their retirement phase. We estimate over 900,000 AustralianSuper members are either retired, partly retired or approaching retirement, and we're committed to supporting them with new products and services, as well as the help, guidance and advice they need when they need it. We're also advocating for changes to the retirement system so that it is simpler and more flexible for all to use.

Finally, I'd like to touch on another key focus of the Board, and that is culture and performance.

Culture is the foundation for our long-term success. Our aim is to foster a culture that reflects the Fund's purpose and enables every colleague to perform and deliver outstanding service to members.

I would like to acknowledge Paul Schroder, our dedicated and tireless Chief Executive, who is now well along the path he has set himself to ensure that AustralianSuper is an exceptional institution dedicated to the needs of members. Well done, Paul, and I would also like to thank the entire AustralianSuper team, who have worked very hard this year to ensure that AustralianSuper continues to make progress in our relentless task to deliver for members. And thank you all for being a member of AustralianSuper and I look forward to answering your questions.

PAULA BENSON: Thank you, Don, for those opening remarks on the focus of the Board. Our next speaker is the Chief Executive of AustralianSuper, Paul Schroder. Paul is responsible for the overall leadership and strategic direction of the Fund. He has been with the Fund for 16 years in multiple executive roles, including as Chief Risk Officer. Following Paul's address, Rose Kerlin, Chief Member Officer, will speak in more detail on what the Fund has been doing to improve the experience we provide to members. To provide an overview of what the Fund has been delivering for you for the last 12 months to 30 June and the focus for the future, please welcome Paul Schroder.

PAUL SCHRODER: Well, thanks for joining us and it's great to have the opportunity to speak with you again and it's terrific to see so many of you actively taking charge of your super. AustralianSuper is your Fund, and our purpose is to help you achieve your best financial position in retirement. Tonight I'll briefly touch on performance in terms of returns, fees and net benefit, as well as the Fund's strategy.

As Don said, it has been a financially challenging year for many, as high prices and interest rates have continued to put pressure on household budgets and many people's sense of financial security. Throughout this period, our focus has remained on keeping our costs down while continuing to provide the products and services that you want and need, and delivering strong, long-term returns to help secure your retirement.

At AustralianSuper, our job is to help you make the most risk-adjusted money for your retirement. So let's look at investment returns. Investing is always about the future, and it's a future where there are both challenges and opportunities. Over the last few years we've seen a prolonged period of higher interest rates, which may be slowly shifting, increased geopolitical tensions and conflict, and improving economic sentiment and outlook.

The Balanced Investment Option, where most members invest, delivered a return in FY24 of 8.46% for members in super, or the accumulation stage, and 9.25% for Choice Income pension account members. The Balanced option continues to be a top performer over the

long term, with an average annual return for super or accumulation phase of 8.07% over the last 10 years and 9.26% since the Fund started in 1985. But let's see how that compares over different time frames.

Here we have the figures for the poorest performing fund - you'll see that in the light grey - the median fund - in the dark blue - and AustralianSuper - in orange - over 1, 5 and 10 years. You can see that we're slightly behind the median in the short term, which is a direct result of the portfolio being defensively positioned at that time, and Mark and his team have reviewed and adjusted the portfolio in response to changing economic outlook, and Mark will talk more about that in his presentation shortly.

Looking at that 10-year period, right over on the right-hand side, you can see that AustralianSuper outperformed the median fund by more than 1%, an, against the poorest performing fund by about 3%. To illustrate the difference that a per cent or more can make over the long term for you, I'll show you a comparison. This example assumes a member earns $83,200 a year, which is the median full-time earnings according to the ABS, or the Australian Bureau of Statistics. From starting in the work force and remaining in the work force for 40 years - and we'll use that 10-year average annual Balanced Investment Option return of the poorest performing fund, the median fund and AustralianSuper - you can see here a difference in investment performance even of just over 1% in investment returns between the median fund and AustralianSuper results in a difference to that member of nearly $200,000 in retirement savings, and that difference of over 3% between the poorest performing fund in AustralianSuper results in a difference of more than $400,000. Now, we can't predict 40 years of return, and you would have heard that regular disclaimer that past performance is not an indicator of future performance, but this is a clear demonstration that being with a fund with long, strong, long-term investment performance will help you achieve a much better financial position in retirement, and AustralianSuper has a track record of delivering strong, long-term returns for you.

Investment returns are incredibly important to your long-term outcome and so too are fees and costs. Driving down costs and delivering low admin fees for you is an important part of delivering value for you and in building your balance. In relation to your super, the investment return, less the administration and investment fees and less those costs and less transaction costs and take away taxes, well, that's what we call the net benefit, the money in your pocket. When you're comparing the super funds, net benefit is one of the most important things to consider. So let's have a look at net benefit.

This example shows the net benefit to a member in retirement using AustralianSuper's account-based pension over the last 10 years to June 30 - that's this year - against other comparable pension options. The starting age is 65 and the starting balance is $300,000. The income payment is at a rate of 6% of the balance. The comparison uses the difference in investment performance for AustralianSuper compared with the average of all super funds

and the average of just retail funds over the last 10 years. It demonstrates that more money went into the AustralianSuper members' accounts. With more money in their account and using that 6% drawdown figure, AustralianSuper members also have a larger pension payment by between $1,500 and $2,500 compared to the average super fund or the average retail super fund.

So, in addition to receiving more money each year in pension payments, the combination of stronger investment returns and lower fees meant that the AustralianSuper member still had more money in their account at the end of the 10 years than they did when they started, and they had more money than the members in the average of all super funds and the average of just retail funds.

Before I talk briefly about the Fund's strategy, I'd like to touch on a topic that is important to many members engaged tonight and very important to us, and that's our approach to responsible investing. We believe that companies that are well governed and manage environmental and social issues well provide better long-term returns for you. To us, investing responsibly means being an active investor and a steward of your money, with the aim of creating better long-term financial outcomes. We focus on Environmental, Social and Governance - or ESG - risks and opportunities and those that we believe will have the greatest impact, the greatest financial impact, on your returns.

Our approach has three pillars. They're on the slide that I hope you can see at home or wherever you're joining us. They are integration, stewardship and choice. Our global ESG and Stewardship team is integrated into the broader Investment team to incorporate relevant ESG considerations into all our decision-making and stewardship processes. How we apply these pillars may vary for different asset classes and the characteristics of the investment, including whether investing directly or through external managers or whether the investment is actively or passively held. But, regardless of how we apply the pillars, the end goal remains the same, and that is to help make you the most risk-adjusted money for your retirement.

Currently, we have nine focus areas, but tonight I'd like to focus on governance - that 'G' at the bottom. AustralianSuper is a very large Fund and, in many instances, we're a very large shareholder in individual companies, especially in Australia. As an active owner, we exercise the rights and responsibilities of being a large shareholder on your behalf. We aim to communicate our investment interests to companies in a way that is consistent with delivering long-term value for you. We believe that as a large investor, we can, and we do, play a significant role in achieving better corporate governance in companies where we are a large shareholder. We will continue to do this with vigour because good corporate governance is essential for long-term value creation for shareholders and, ultimately, for your investment returns and, in the main game, your superannuation balance. Let me be clear: good governance matters. Now, we're not in the business of creating publicity about it, but we will act on issues that, as an investor, are important to us.

I'll talk briefly about strategy. Our vision on your behalf is to be the leading superannuation fund in the world's best super system for members. Our long-term strategy focuses on three things: leading long-term investment performance. That includes effectively managing members' retirement savings as they continue to grow over time. We will continue to strengthen our size and scale and skill and, over coming years, we're going to have more investors working globally and more funds managed internally. Improving member service and guidance: members' expectations of us are going to increase, and you have every right to have very high expectations of us. Across the Fund we're looking to provide service in different flexible ways. We're committed to the continuous improvement of the experience we deliver to you and, in particular, the help and guidance initiatives that will deliver a world-class value proposition to you. Shortly, Rose will speak more to the key initiatives we have delivered in this area and our focus for FY25.

The third thing is to help members be ready for retirement. As Don mentioned, this is a staggering number: AustralianSuper has more than 3.4 million members, with over 1 million of them either retired, partly retired or approaching retirement. Now, we know that everybody's retirement is unique, and how people think about it, how people plan about it, how people dream about it is different and changing. We're listening to members and we're asking for your views. We're analysing data and we're using better insights to help us deliver for you, ensuring that we have the right products and services and the system has the right settings to help you live the life you want in retirement.

Underpinning this is realising the benefits of our size and operational excellence. We are improving our operations to increase efficiency and deliver more at a lower cost, to improve overall performance by investing in advanced technologies and data analytics, and to achieve sustainable cost reductions and operational efficiencies by streamlining member services and managing more assets internally.

To continue to build the resilience of the Fund's operations, we're working to deepen and mature our risk management framework, consistent with our size and scale in global markets. We have sought assistance from one of the world's leading risk management consultancies, Oliver Wyman, and we're working with the regulator, APRA, to make that happen. Ultimately, everything we're doing here in everything we do, we're determined to deliver great products, services and value to you throughout your time with us.

I will now hand over to Rose Kerlin, your Chief Member Officer, to talk about the work that we have been doing to enhance member services. Rose is accountable for the Fund's growth and ensuring that the members' experience is seamless and valuable to you. Before I do, I want to thank each of you for joining us to hear more about the Fund. It's been a pleasure to speak with you now and I look forward to taking some of your questions after the presentations. Please welcome Rose.

ROSE KERLIN: Thanks, Paul. I am delighted to be here to provide an update on what we are doing to help and support members to make the most of their super and retirement. As you can see from the slide, there are lots of ways members like to keep informed and engaged with their super. Our aim is to continuously improve your experience with us with good-value products and by making it simpler and easier for you to confidently manage your retirement savings. We actively listen to members through a range of channels and welcome your feedback on ways we can meet your needs. We've made changes to streamline our processes, make it easier for you to self-serve online if you want, and ensure we're always here when you need a helping hand.

Your feedback drives our improvements, so keep it coming. We know you want to access information and services online and through the App more frequently and securely. Last year, we enabled authenticated messaging in the Member Portal and mobile app for more secure and efficient interactions. We made it quicker for new members to register for an online account and made it simpler for members to login to the secure portal, first time, every time.

Despite the growing preference for interacting online, we know that there are times when you need to talk to someone, and we've worked hard to reduce our average wait times when you contact us. Last financial year, the average speed of answer at the Contact Centre was 45 seconds. We also made some big changes to improve key services and help members and their loved ones, including halving the time taken to assess insurance claims and working to reduce insurance premiums for the third year in a row. This came into effect in September 2024 when insurance premiums decreased by an average of 7.7% per insured member.

In June, we established a Member Resolution Centre to help resolve complaints efficiently and fairly. It's staffed with experienced colleagues and already we've seen a significant improvement in the time taken to respond to and resolve matters. In April, we established a dedicated Bereavement Centre to provide member's loved ones support as they finalise their super account.

While the Bereavement Centre team are providing improved services, we recognised that we've had an unacceptable delay in processing some claims. A backlog of death benefit claims emerged following the COVID-19 pandemic and we've been working hard to finalise outstanding claims. Over the coming months, we'll be contacting members' beneficiaries who have been impacted by the delays and compensating them to put them back into the position they would have been in, or as close as possible to that position, had the delays in processing the member's death benefit not occurred.

Looking forward, we're continuing to improve what we're doing to help and guide members and to deliver the best value to you. We're currently transitioning our Contact Centre to a new provider with an excellent global track record of exceptional service to make it quicker to get

in touch and get the help you need. We're also introducing new, more secure ways to log into the Member Portal as we prepare for multi-factor authentication. In addition, members can now update their details, submit an insurance claim and join our Choice Income pension online, making it easier and saving time.

A big focus is providing you the more personalised guidance you need when you need it to help you make decisions about your future. We'll leverage our data and technology as part of that. For retired and retiring members, we're updating our products and services to ensure they meet your evolving needs, and an example of this is the development of a product that gives you an income for life.

Thank you for being a member. We're committed to providing you a personalised, timely and seamless experience now and in the future.

PAULA BENSON: Thank you, Paul and Rose for those insights into how the Fund has been continuing to harness our global scale and skill to deliver for members. It is now my pleasure to introduce the Chair of the Investment Committee, Philippa Kelly, to provide an investment overview. Philippa is an Independent Director on the Board with significant experience in senior roles that span law, investment banking and the property industry. In addition to her current Directorships at Hub Australia, River Capital and oOh!media, she is a former Chair of Lifestyle Communities and Deputy Chancellor of Deakin University. We are fortunate to have her breadth of knowledge and experience at both the Board and the Investment Committee.

Following Philippa's address, Mark Delaney, AustralianSuper's Chief Investment Officer and Deputy Chief Executive, will provide a detailed look at our investment performance in the last financial year, as well as the investment outlook and strategy going forward. Please welcome Philippa Kelly.

PHILIPPA KELLY: Thank you, Paula, and good evening, everyone. As mentioned, I'm Philippa Kelly, Chair of the AustralianSuper Investment Committee. It's worth taking a moment to talk about the committee's role. The committee oversees the Fund's investment strategies and return objectives for each Investment Option, and it does this within the risk appetite and liquidity limits which are set by the Board.

Our activity is informed by the global context, geopolitical events and the Investment team's views. This year, we've been watching three key areas which continue to influence markets and investors globally. First, technological advances such as Artificial Intelligence, or AI, and the ongoing strength of the US economy have been the major contributors to US equity market performance, and we've seen this performance continue following the definitive US Presidential election result. Secondly, the conflict across the Middle East and its recent escalation, which has not only had tragic humanitarian consequences but may also have longer term global economic impacts. Finally, here in Australia, the role of the Reserve Bank

in bringing down inflation remains a key focus. Although inflation has fallen, the RBA has not yet cut interest rates.

So these themes and others are factors that our Investment team consider when assessing how best to invest on your behalf. Today we are the 16th largest fund in the world, and within the next five years, we expect to manage around $500 billion in member assets, and that is your retirement savings.

As Paul and Don have mentioned, we currently have over 900,000 members who are retired, partially retired or about to retire, and that number is expected to double by the end of the decade. So by positioning the portfolio to capitalise on future growth opportunities and investing over the longer term, we will manage the overall liquidity needs of the Fund.

It's essential that we preserve your rights to drawdown in relation to your specific needs in retirement, and that's whether it's over the next decade or in 30 or 40 years from now. So what does that look like in practice? We are continuing to increase our exposure to listed markets, particularly International Equities, which will remain an important driver of long-term returns. You will see on the slide behind me that International Equities have a market capitalisation of around $145 trillion, about 33 times the size of the Australian Equities market. But these markets offer far greater scale and sector diversification beyond the Australian Securities Exchange, or ASX. By investing in International Equities, you as members gain exposure to AI and technology-driven stocks, including Facebook, Apple, Google and others. In comparison, the ASX is largely concentrated to banking, financial and mining stocks.

Public Equity markets will always be the largest proportion of the portfolio as we seek to meet your needs to draw down over time. But we will invest more into unlisted or private markets, which are a smaller but important part of the portfolio. This is because they have historically generated higher returns, and you will see this on the next slide behind me.

While private markets may be seen as potentially riskier or less transparent than public markets, their benefits include that they are not subject to daily movements and they often yield higher returns over the longer term. Private Equity, for example, is known for offering the potential of higher return but also typically carries higher risk.

As you may have seen earlier in the year, we experienced this with our investment in a company called Pluralsight, which did not deliver as we had hoped. While the outcome of our Pluralsight investment was very disappointing, it's important that we consider this single investment in the context of the overall portfolio.

Private Equity has been one of AustralianSuper's top-performing asset classes over the long term, with average annual returns of more than 10% over five years and more than 12% over the 10 years to 30 June 2024. So having unlisted assets like Private Equity in our portfolio

does provide the diversification benefits for you as members. A large proportion of these assets are assessed quarterly by independent valuers who are separate from the Investments team, bringing the governance structure that is appropriate to these.

Investing in private markets means we're able to put members' money to work via ownership of critical infrastructure assets in Australia and around the world. Recently, we announced an investment of more than AUD $2 billion into the US data centre platform Databank. Databank owns and operates more than 65 data centres across the US, and our investment will enable them to expand across more than 27 key markets to meet the demand for AI, hyperscale cloud, enterprise and large technology workloads. This follows our investment into Vantage Data Centres in Europe last year and reflects our belief that data and digitalisation will continue to influence global economies into the future. Mark Delaney will touch on this and the importance of AI shortly.

Before finishing, I acknowledge that while our performance was solid last year, there's more work to do. We are absolutely focused on restoring our shorter term performance to match our long-term results for members. We continue to internalise the Fund's portfolio and asset management to put our teams in closer proximity to deals and the assets that we're invested in. By doing so, we expect to save around $1.5 billion per year by 2030.

In closing, I want to thank every member who continues to support the Fund and who trusts us as the custodians of their super. As Chair of the Investment Committee, I believe there is much to look forward to by being part of AustralianSuper. I'll now pass to Mark Delaney, our Chief Investment Officer, to discuss the FY24 performance and market outlook. Thank you.

MARK DELANEY: Thank you, Philippa. Hi, everybody. I'm Mark Delaney, Chief Investment Officer of AustralianSuper. Let me say at the outset it's a great privilege to manage your retirement savings, and building significant retirement balances is a passion we all share here at AustralianSuper and we set out each day to make as much money as we possibly can for you.

Tonight I'm going to talk about how we invest your money, including investment performance, how we're managing the portfolio, and the long-term strategy and outlook we've got.

But let's just get down to the numbers. You've heard a few of these numbers before. The Balanced Plan here earned 8.46% last year, which is a pretty solid result. I think if you look at the longer term numbers on this graph, in the Balanced Plan, the super or accumulation option is in the orangey colour, AustralianSuper orange, and the blue is for the Choice Income or the retirement. And you can see here that the 8.5% is pretty much consistent with what's happened over the medium and the long term. It's pretty solid returns - not spectacular but very solid.

Now let's have a look at the other PreMixed options because I know a lot of people listening on the call will be invested in options other than the Balanced Plan. Now, when we look at these, it's like a ladder, a league ladder. You find that the Indexed Diversified option tops the ladder at 11.5%. High Growth comes second at 10.2%, Socially Aware at 8.4%, Conservative Balanced at 6.5%, and Stable at 4.6%. Indexed Diversified did much better than you would have thought compared to the Balanced Plan for two reasons. The first one was it had no private or unlisted assets in the portfolio and the second one is that it is a fully indexed portfolio and doesn't have any active management. I'll talk a bit more about that later on but, in general, the options which had more shares did better and those which had more unlisted or fixed income style assets did worse.

Now, let's look under the bonnet a little bit and find out what drove those investment returns. You can see here International Shares was the greatest performing asset class, earning almost 19% last year. Australian Shares came second, earning close to 13%. Critically, those two asset classes make up over half the Balanced Plan's portfolio, so most of the money was invested in the highest-returning asset classes. That's what drove the 8% return. Then when you look down the ladder, you see that Unlisted Infrastructure earned 5.8%. That's the biggest allocation in the private market unlisted spectrum, and the other asset classes earned 2s and 3s, and property earnt minus 8.2%, reflecting the poor outlook.

Let's dig a little deeper and have a look at these share returns. As Philippa discussed, it was another year where tech-related businesses dominated. AI, digital - those things mattered a lot. I remember talking last year and saying that AI was meant to be the next big thing in computing. Well, it certainly is and it's certainly a big factor. Nvidia, which makes the chips for these large language models, became the biggest stock in the world. It's hard to believe Nvidia's share price has gone up almost 100% per annum for the last five years. That's how you become the biggest stock in the world. Other companies who use AI, like Facebook and Microsoft, also did really well. And in Australia, financials were boosted by the prospect of lower interest rates.

For private markets, they continue to be affected by high interest rates and, importantly, subdued earnings, and in property, negative earnings. Infrastructure was the best performing of these private markets and our investments in ports, like Peel Ports in the UK, and airports like Sydney Airport also did well.

Property continues to face significant headwinds, with the write-down in values of offices stemming from higher vacancy rates associated with people working from home. There's some prospect a lot of the adjustment in the property market is in now, but there still could be a little bit further to go.

Private Equity returns were affected by the writedown of Pluralsight, which Philippa talked about. This is a most disappointing outcome and reflected the business facing a much more

challenging operating environment.

Finally, fixed income and cash returns. It's pleasing to see fixed income returns were positive this year after a couple of years of pretty poor returns, and cash returns were pretty much around what the cash rate was - just a little under 5%.

Now, that's all for one year. Let's have a look at these asset classes in a bit longer spectrum. Over 10 years, it's somewhat a different picture. What you see here in the blue is the 10-year numbers and you can see that the shares sectors, International Shares and Private Equity were the strongest-returning asset classes in the longer run. Australian Shares and Listed Infrastructure were very solid returners as well. Then the other asset classes have had pretty poor returns over that period. So a portfolio which is geared around those growth assets generated the greatest returns.

Property, which we've got a relatively small exposure to, has been a pretty poor performer for some time. As I said, we're hoping to get toward the bottom of that adjustment. Interestingly, property is a business which has been impacted by structural adjustments brought on by digitalisation, and that's a theme I'll come back to.

Relative performance - yes, last year we were below the median and it's the second year in a row, which is extremely annoying, and only the third time since AustralianSuper was created in 2006. You can see this graph here AustralianSuper is in the orange and the median is in the blue. There's a few things which caused this under-performance relative to the median. The first one was our defensive positioning. As we entered last year, we had the portfolio defensively positioned, expecting that the large rise in interest rates would cause an economic downturn. As you and I know, that didn't happen. We had to course-correct during the year and add to shares and build back our exposure, but we lost some performance along the way because we weren't invested for the whole year at full allocations.

The second thing is that private markets have lagged listed markets. You saw that with the performance of Indexed Diversified, which had 11.5% return for the last year. Now, private markets have had weak returns for the last 18 months to two years or so, as they've adjusted to the higher interest rates and, to some extent, the weaker outlook for earnings. They don't benefit from the digital theme as strongly as a broader equity market. But we're strong believers in the advantage of private markets in the long run, and if you had a look at that previous slide, you can see the returns for Infrastructure over the longer term, which is where most of our private market exposure is, and Private Equity, have been very strong.

The third thing not often talked about is it has been a very challenging environment for stock pickers. The sharemarket has been dominated by a very small number of stocks which have been relatively expensive and many good companies have been left behind. So most fund managers have struggled to keep up with the sharemarket or what's called 'the index', and

they've lagged performance. This is unlikely to continue on indefinitely and there'll be a course correction at some stage. That's why we're sticking with active management.

Now, there's been lots of talks about percentages and basis points and different numbers and decimal points but none of that really matters to you. What really matters is how much money we've made. Investment is really at its core about making money. You have seen this graph before, for those who have listened to this presentation, and this is my favourite graph. It says if you had $100,000 invested in the Balanced Plan in June '04 and did nothing else but left it there, did nothing, went on holidays, came back 20 years later feeling great and said, "How has my super gone for me?". Well, you would look at your super statement and it will say your balance is now $453,000. So your $100,000 you put in before you went on your 20-year holiday is now worth $450,000, with no additional contributions. That is what AustralianSuper has earned over this period. That is the effect of compounding of interest. With 8% or 9% earnings growth compounding over those years and generating a return, it allows a person to more than treble their money. It's just a fantastic outcome.

It also shows the power of diversified portfolios. You can look at these downturns on the graph and there's a period where the balance went down in the period before '07 and '08. That's the financial crisis where sharemarkets corrected - actually, halved - over that period. But a few years on, you can just see there's a wiggle on the graph. Then if you look really hard, you can see around June 2020, there was just this bit of a jagged down, like a part of a cone or something. That was when COVID hit and sharemarkets fell very sharply. But, again, you can't even notice it. These events, these short-term events, really don't matter in the long term. Even something as big as the financial crisis doesn't matter, as long as you stay the course, allow the money to compound away and invest in appropriate portfolios.

Now, there's been lots of talk about what is the economic environment, how is it going and what's going on? Over the last 18 months or two years, we've heard lots of talk about there being a hard landing, which is code for recession, a soft landing, which is code for a slow-down, no landing, which is code for things just keep on going. Now we've got tariffs and talk about higher interest rates again.

In all of this talk, these economies, particularly the US economy, have held up remarkably well and kept on steaming through all of these events. That's despite high interest rates. Consumers kept on spending, using the savings they made from COVID, plus there's been very strong corporate earnings and very strong employment growth in the US.

Other countries aren't doing as well as the US. Australia is not doing as well and Europe hasn't done as well. There's talk of US exceptionalism, how that is working. Now, the big thing why the US has done so well is its digitalisation and AI. This has not only supported companies' earnings but also strongly supported the economy as well. The US is the furthest along the adoption towards digitalisation and AI, and is benefitting the most. Other countries

are further behind and haven't got the same pay-off.

Let's look ahead at what our economic prospects are and other things. It's very difficult to predict the future. Nonetheless, I'll have a go at it. We believe the US economy will grow at a steady pace. It's most likely to be the case. Inflation we also think is set to continue to fall. It may be influenced by how big the tariffs are but, by and large, we think the trend for declining inflation is still on track. That will allow for somewhat lower interest rates, and we use the phrase 'somewhat' guardedly because we don't think there's a case for interest rates to go anywhere near back to what they were four, five years ago. Rates will come off a bit but not a lot. But growth assets, particularly those exposed to the digital theme and strong earnings, will do well. Growth assets are typically shares and those style investments. We also think that some of these unlisted assets, which have had two or three years where they have been adjusting to higher interest rates, should now start to kick in and earn a bit better return. So we're looking for a better response out of Private Equity, for example, and probably better returns out of Infrastructure and we have probably seen the bottom hopefully in property.

Let's turn to the second big theme: Artificial Intelligence and digital transformation. This is the single biggest factor driving equity markets and a lot of other investment classes at the current time. I've got this phrase that if you don't own a digital business, soon you won't have a business. It's going to be that profound in how it impacts upon how things are done. This ongoing technology boom, particularly in AI, will transform how many things are done. It's a bit like the adoption of electricity. It started out as a wholesale thing and gradually got adapted right through the whole ecosytem. Or the advent of the internet. Out of that, we anticipate there to be long-term productivity gains and strong economic growth.

But like most things when there's tech change, people overestimate the impact in the short term and underestimate it in the long term. There is the risk of this happening with AI. As we have certainly seen, it has had some impact on efficiency and productivity but the broader impact is going to take some time. Now, how the markets handle this will be very interesting, and how they pick the future winners. At the current time, most of the stocks going up on the AI digital boom are what's called 'the picks and shovels', using an old gold boom example - things like the chip manufacturers and the large language providers like the big tech companies. But the eventual winners, I suspect, are going to be the applications of this new technology and lie outside this tech we've been currently talking about. So the key in all this is to have an active approach and identify the future opportunities as they emerge.

Finally, I'd like to talk about a couple of longer term issues. We're Australia's largest investor of members' retirement savings. At 30 June, we've got more than $165 billion invested in Australia and that makes us a very significant investor - actually, it doesn't make us; it makes you a very significant investor and supporter of our local economy.

But we also invest a considerable amount of your money overseas. As Philippa said, we want

the members to have access to the big investment opportunities in the world. We want to get a chance for you to have access to stocks like Nvidia, Microsoft, Google, Amazon, why wouldn't you, no matter where they're located. And to do this and to find really high-quality unlisted opportunities, we've continued to build out our investments and our internal teams in the key overseas markets with the offices in the US and the UK. We have made a number of senior hires in those offices and they provide a good foundation for us to build a strong team to manage your money into the future.

Being in those markets also allows us to be much closer to what's happening on the ground, particularly in the private networks, closest to origination and closest to execution. Done well, internalisation and globalisation will save members, your money, up to $1.5 billion per annum in the longer term.

Finally, I'd like to thank the Board, the Investment Committee and our colleagues for enabling us to do what we're most passionate about; that is, investing your money successfully. And most importantly, I'd like to thank each of you, the 3.4 million members, for putting your trust in us. You don't have to do that. You could pick somebody else. So we appreciate your trust and hope to repay it. We remain committed as ever to delivering you the best possible financial outcome in your retirement. Thank you.

PAULA BENSON: Thank you to Philippa and Mark for their insights into our investment strategy, performance and market outlook. That concludes the formal presentations. We will now proceed to the Live Question and Answer session. For those that are not joining us, thank you and we wish you a good evening. For those that are joining us, please note that questions can only be typed into the questions box, which will now appear on your screen. If we aren't able to answer all questions at this meeting, a response will be provided afterwards via the Minutes of this Meeting, which will be available on the AustralianSuper website.

A reminder that if you choose to send any questions to us during the Annual Member Meeting, these questions and our responses may be made publicly available to other meeting attendees in realtime as part of the meeting. They'll also be recorded in the Minutes of the Meeting, which will be made publicly available on our website. To protect your privacy, please do not include any personal information in the messages or questions you submit to us as part of the Annual Member Meeting. We are not able to answer questions relating to your personal account or personal situation. If you have any questions like this, please don't hesitate to contact us via the website, Contact Centre or the AustralianSuper App.

To ask a question, click on the Q&A button at the bottom of your screen and type your question into the questions box. All of the questions submitted by members during registration for the Annual Member Meeting are considered to be questions asked at the meeting, and from the hundreds of questions submitted, we are able to see the most commonly asked questions. We'll answer one of the most commonly asked questions now as we wait for further questions

from you.

We have a question from Taban for Education Manager Peter Treseder: how much money do I need to retire comfortably?

PETER TRESEDER: Well, thanks, Taban, for your question, and it's probably one of the most common questions I get asked and it's probably one of the hardest questions to answer because how much you will need to be comfortable in retirement is different to anyone else. You've probably heard you need $1 million to retire comfortably. Well, it's all going to depend on what you're going to be spending in your retirement life. So maybe it's worthwhile doing a budget to work out what that expense is going to be, then to look at what your super account is today, and given the increase in super contributions from the compulsory 11.5% this year to 12% next year, what that's going to grow to, and if it's going to grow to the amount to fund the retirement income you want to have in retirement, you may have that comfortable retirement you're looking for. So there's a calculator on the AustralianSuper website that may help you do that. You put in your age, your income, what you've got in super today, and it will project forward, with a number of assumptions, what you could have at your designated retirement date, and that amount of super, maybe along with some government pension, might be able to give you that comfortable retirement you need. And you can always get help and advice from AustralianSuper to craft a retirement plan for you to achieve that comfortable retirement you're after. Thanks, Taban.

PAULA BENSON: Thanks, Peter. We now have a question from Mark for Philippa Kelly: with the significant growth in funds under management, how do you expect to outperform the market and what gives members confidence that this is achievable?

PHILIPPA KELLY: Thank you, Mark. That's an insightful question. First, we don't believe that our size restricts our ability to deliver our long-term outperformance. Secondly, as you've heard a number of times tonight, we're an active investor. So our aim is not simply to invest your money passively but we focus on investing in quality assets that we believe will outperform the broader market.

There are a number of advantages that come with our size and scale. It allows us access to deal flow and deal teams that may be unavailable to smaller funds; it allows for economies of scale when it comes to costs per member; and it allows us to attract top-quality people to work in the Fund. It also allows us, as Paul has mentioned tonight, the ability to advocate for good governance to influence decisions with the companies we invest in.

So as member assets continue to grow, we intend to continue using our size, investment capability and global reach for the benefit of members. We're conscious that while we're the largest fund in Australia, we're not the largest in the world, and we have done and will continue to look and learn from other large funds around the world to also understand how they have

harnessed their growth and managed to provide effective investment performance. Thank you, Mark.

PAULA BENSON: Thanks, Philippa. We now have a question from Hayley for our Head of ESG and Stewardship, Andrew Gray: what is your policy or views with regard to climate change?

ANDREW GRAY: Thanks, Paula, and thanks, Hayley, for the question. A way to answer that question, I'll take you through how we're monitoring emissions in the portfolio, how we're engaging with companies and how we're using our stewardship rights, such as voting on climate change.

Certainly AustralianSuper recognises climate change as a significant investment issue, so there's going to be investment risks and opportunities as the economy transitions to low carbon or ultimately net zero. As Paul mentioned in his opening remarks, climate change is one of our nine focus issues, so it's certainly something that my team, the ESG team, is focused on.

One of the key things that we do is monitor the emissions profile of the portfolio. We've actually developed an internal carbon tracking analysis to do this. So, by way of an example, for the internally managed fundamental Aussie shares portfolios, this tracking analysis shows that of the companies that have reported their emissions, 90% of those emissions are accounted for by net zero commitments from those companies.

Also, the analysis tells us that the carbon intensity of the portfolio is projected to decline quite substantially, so the current intensity is 66 tonnes of carbon per million dollars invested in that portfolio, and that's projected to decline to about 5.5 tonnes in 2050, if all those net zero commitments made by investee companies come true.

So, hence, one of the focuses of my team takes us on to our second activity, which is engaging with companies so that we can understand the basis of those commitments and get a feel for the pathway of delivery. So to take you through some of the engagements, in FY24, we conducted 104 engagement meetings directly with ASX 200 companies, and climate change was a part of that engagement in almost half, or in about 50, of those meetings.

As well as doing engagement directly, we will also work collaboratively, so we'll do collaborative engagement with a group called the Australian Council of Superannuation Investors for Australian companies, and we're also a member of Climate Action 100 Plus for international companies. So AustralianSuper was actually one of the founding investors of Climate Action 100 Plus, and that continues to engage with the world's biggest emitters on how they're managing their emissions.

Then I guess the nest step in the process from engagement is voting. So we'll be very active

in assessing climate change related resolutions when it comes to voting time. So, for example, for FY 2024, we voted on 126 climate change shareholder resolutions globally and supported 64% of those. In Australia, for FY24, we voted on four climate change related shareholder resolutions and supported two out of those four. The other vote that we will have sometimes is to vote on climate transition plans at companies. So in FY 2024, there was two of those that were Australian companies and we supported one transition plan and voted against the other.

Just one final thing I'd say in terms of climate change management, I think it's really important to note a recent development, which was the introduction of mandatory climate reporting. The law was passed in 2024 that all large companies and investors such as AustralianSuper will need to report on their emissions and the way they're managing those emissions. We actually see that as quite a useful step for us in trying to manage climate change in the portfolio because it will be a great source of information for us to assess climate change management and risk and opportunity at investee companies, and also for us as AustralianSuper, the reporting requirements will apply to us for FY 2027, and we're certainly welcoming of the opportunity via that mechanism to report further to you and the members on how we're managing climate change. So I hope that's covered your question, Hayley, and thanks very much.

PAULA BENSON: Thanks, Andrew. We now have a question from Darren for our Head of Asset Allocation, Alistair Barker: what's your position on cryptocurrency?

ALISTAIR BARKER: Thanks very much for the question, Darren. The short answer is we're not currently considering cryptocurrency, but it's worthwhile me explaining a little bit how we think about technology, just to follow on from Philippa and Mark's comments in their briefing.

So the first thing is we absolutely believe that technology will and will continue to transform the world. So we are hunting for investment opportunities for you and for all of our members that can capitalise on what technology will do. The second thing I'd say is that we are looking at blockchain as a potential investment opportunity, and we have made some small investments in companies that we believe can use the underlying technology for things like the future of registry businesses.

The final thing I'd say is that one thing we grapple with around cryptocurrency is how to value it as an investment. As a responsible investor, we are required to make sure that every asset is valued fairly, but also as an investor, we have to identify what the worth is of that underlying investment. The critical challenge with cryptocurrency is how to value it. In particular, most assets are valued on the basis of what income they generate, and given those underlying investments don't necessarily generate a great deal of income, it's very difficult to form a view on value. But it's a very good question and, as I mentioned, we continue to look for opportunities in the technology space. Thank you.

PAULA BENSON: Thanks, Alistair. We now have a question from Martha for Rose Kerlin: has AustralianSuper improved your processes on releasing the funds of a deceased member? Last year you promised us improvements.

ROSE KERLIN: Thanks, Martha, and, yes, I'm happy to report we have made improvements. For some context, when a member dies, their super and any applicable insurance payment becomes payable. Often this is to a spouse or other family and sometimes it's to the member's estate. Managing death claims efficiently with empathy and care is the final service that we can provide members, and we take this responsibility seriously. We're committed to ensuring their savings are paid to loved ones quickly and compassionately through our internal dedicated Bereavement Centre that I mentioned earlier. We've got a team now of about 180 colleagues in total whose sole job is to help beneficiaries with the death claims process or support members with complaints. All death claims are now managed internally.

Beneficiaries are now allocated one internal team member to be their case manager, and that's their contact point throughout the entire claims process. Our aim is to resolve non-complex death claims within four months from the date we receive the first claim form. Currently, 70% of claims are non-complex and we are meeting our target. The remaining claims are often complex. They've got multiple beneficiaries, for example. In all of them, we are waiting for more information from the claimant. Between August last year and June this year, we've actually seen a 53% reduction in longstanding claims. So while we're seeing pleasing improvements, we will continue to review and update our processes to ensure the service and support members get for loved ones is the service they expect and that they deserve.

PAULA BENSON: Thanks, Rose. We now have a question from Sarah for Mark Delaney: how do you manage risk and security? How are my funds diversified safely?

MARK DELANEY: Thanks, Sarah. A really good question. The way we try to manage risk is twofold. The first thing we do is that we try and get a diversified portfolio, and by that we mean that we have money invested in shares, both Australian and International shares, as well as unlisted asset classes like Infrastructure and Private Equity, as well as more defensive asset classes like cash and, to some extent, credit or other types of loans. So having a spread of investment types in the portfolio means that it won't be affected by one big macro factor or by one big security factor.

The second thing we do is try to actively manage your portfolio. That means we try to anticipate, if we can, adverse events and position the portfolio to be more defensively positioned, or we try to avoid shares which are overvalued and are likely to perform poorly. So active management of the portfolio is our second leg to try to manage the risk in the portfolio.

PAULA BENSON: Thanks, Mark. We now have a question from Jane for Paul Schroder: what are the top issues at AustralianSuper that keep the CEO awake at night?

PAUL SCHRODER: Thanks, Jane, and also thanks for your concern. There are a number of things that we think very deeply about, but if I just strip them back, the first is to, as the Royal Commission said all these years ago, obey the law. So I spend a lot of time thinking deeply about making sure we understand our obligations, that we've got proper and effective controls in place and that we can meet the law, and not just so we meet the law, but so we can act in a trustworthy way for you and for all the members across the country.

The second is I think a lot and deeply about: are we going to be able to - in answer to the earlier question - make enough money for members, risk-adjusted, so you've got the most money for your retirement?

The third is thinking about member service at a very individual level, making sure that members are being treated well and respectfully and empathetically, because often members are dealing with us at a very difficult time in their lives. It doesn't matter how many members there are in the Fund and it doesn't matter how many times we get it right; every time we get it wrong, it really hurts all of us. So that keeps me awake at night: are we making sure we are doing that properly?

The final thing is: are we employing really talented people, really talented people, with the right culture? Because I don't want anyone working here, I don't want anyone on this panel, I don't want anyone anywhere in AustralianSuper who isn't every single day thinking the culture of the place is to serve members and to help members achieve their best financial position in retirement.

So I would say the four things that I think the most about is making sure we know our obligations and we're meeting all the requirements of the law, that we've got a great plan for continuing to make you risk-adjusted money for your retirement, that we're thinking deeply and caring deeply about member services across the whole spectrum, and that we're only employing really high-calibre people who culturally only care about your result, not theirs. And thanks for asking.

PAULA BENSON: Thank you, Paul. We now have a question from Martin for Kate Leplaw: can you explain how the new contact centre provider will operate? For example, will they be Australia based?

KATE LEPLAW: Thanks, Martin, for your question. We have been talking a lot this afternoon about the ways in which we're seeking to improve member servicing, particularly in critical areas where our members require the most support. This has included our transition of

contact centre services. We went through an extensive process to identify the best partner to transition our contact centre services to. We've chosen an organisation named Concentrix to partner with as the new provider of all of our contact centre services, replacing MUFG Pension & Market Services, who currently provide these services to members. The transition of these services is already underway, with messaging having moved at the end of October, and we plan to move our voice transition in a series of waves between November to close towards the end of next financial year.

There are a number of reasons we chose Concentrix. They are a leader in human-centred design and already provide contact centre services for other superannuation funds, so they're a proven entity in that regard. They share strong cultural alignment with AustralianSuper and offer advanced operational and digital capability. Most importantly, Concentrix also uses an Australia-based work force and provides employment opportunities in regional Australia. The AustralianSuper teams will be based in Brisbane and in Townsville. Our longstanding partnership with MUFG will continue to remain strong, as we work with them to support members and employers into the future on administration, data and risk services. Thank you.

PAULA BENSON: Thanks, Kate. We now have a question from Renato. Another one for Alistair Barker: how do you see the US election affecting performance of the Fund?

ALISTAIR BARKER: Thanks for the question, Renato. Unfortunately, there's not enough minutes in this meeting to go through this in the proper depth but I'll give it a shot in a few minutes for you. The simple fact of the matter is the impact of the election is uncertain and we'll see how it plays out over time. But what I can talk about is how we think about it and the process we go through. So the most critical thing we think about is to what extent can the policies of any government impact the trajectory for growth of the economy, and when we look at what could be happening in terms of announced or potential policies for Trump, there's a mix that are positive, so potential deregulation, potential tax cuts, and there's a mix that are negatives, so tariffs, potential deportations. So there's actually quite a mix of policies and hence why I think it's uncertain.

One thing we do know - and we can look at history, so if we look at the first Trump presidency, it was a period where markets performed reasonably well but there was a lot of volatility. That's probably not a bad starting point to think about the implications. What we know from the first two weeks of market reaction post the election - the reaction has actually been fairly muted. Equity markets are more or less where they were before the election and fixed income markets haven't reacted greatly since the election either. But both those markets reflect a core view that economic growth is OK, interest rates are decreasing but perhaps not as much as what people might have thought around a year ago. So I hope that provides a little bit of colour but, like you, I'm eagerly watching to see what policy announcements are made. Thank you.

PAULA BENSON: Thanks, Alistair. We now have a question from John for our Chief Technology Officer, Mike Backeberg: please outline the measures AustralianSuper is taking or intends to take to minimise super scams for Fund members?

MIKE BACKEBERG: Thank you, John. It's a really interesting question. I'm going to take a moment just to talk about what's changing in the nature of scams. Probably the biggest threat at the moment is the introduction of Artificial Intelligence. So scams have been around for a while, but for members, Artificial Intelligence has become a real threat to how we manage scams. Today we have a set of controls in place which already provide protection over activity across the various assets. That includes things like the Member Portal and the public website. Scams, though, originate usually through a breakdown in human behaviour, and that is people trying to send you information which is malicious, and that will be surfaced through things like emails that have links in them or potentially being contacted by someone who's pretending to represent AustralianSuper. I strongly encourage you to think of it this way: when you receive an email, if you are uncertain, don't click on the link; rather, contact AustralianSuper. That will really help you establish that you're working with somebody you can trust. Secondly, if you are getting advice from someone and you are uncertain, verify that that person is, in fact, entitled to provide you that advice and can give you the guidance that you need to make the right decision. That will really protect you.

The technology is emerging to support what happens in scams and protection of scams, and that's across technology generally. We are working very closely with some of our partners, including our administrator and our Trustee, and we are looking at what's happening in other industries, such as banking, which can really help us mitigate the impact of scams on members. Thank you, John.

PAULA BENSON: Thanks, Mike. We now have a question from Karin for Paul Schroder: please provide an update on the ASIC case and how any penalty would be funded.

PAUL SCHRODER: Thanks, Karin. For those members who were at last year's Member Meeting, you'll know that I reported on this issue, which is described as multiple member accounts. Just to put some context to that, we discovered that there was a process that we should have been employing annually to bring together multiple accounts. In the system there's many people with many accounts at different funds, but you shouldn't have multiple accounts within one fund, unless you've chosen to do it. Us getting that wrong was really humiliating for the organisation because we'd been urging people to bring accounts together and we thought we were doing the right thing, but we found that we weren't from a period of about 2013 to 2019 or 2020.

We found that problem. We fixed that problem. We've repaid everybody so that they're in the position that they would have been in. We reported that to ASIC and, of course, I reported it directly to all of you last year. Since that time, ASIC and AustralianSuper have been engaging.

I need to be very thoughtful because the matter is still before the courts but it's quite likely that the court will penalise the Fund and that we'll incur a fine.

The most important thing I'd like to reassure members of is that the problem has been found and the problem has been fixed, and we've been doing the right thing on this topic for a number of years now. But it is likely that we will fined. If we are to be fined, and noting that all the members have been paid back, so nobody is disadvantaged as we speak, that fine will be paid out of the Trustee risk reserve, and the Trustee risk reserve has been developed over a number of years. So it won't impact admin fees. It won't impact investment performance. We won't need to change prices. The reserve is already in place to deal with that. So, Karin, I hope I've addressed your question.

It was a problem that we found, that we fixed, that we reported. I hope those of you here remember I shared that last year. It's been a really humiliating and difficult time for us because we always strive to do the right thing. In this case, we didn't. We have paid the members affected back. The situation is rectified, but there will be still be most likely a penalty to come, subject to the courts, and we'll be able to cover that penalty from reserves that have already been developed over time. So there'll be no impact on admin fees or investment performance or any need to change any prices.

I thank you for asking the question, and just organisationally, just to reinforce, we felt humiliated and terrible that we hadn't done the right thing. We are now doing the right thing and we're putting it right, but be assured that we've sorted the situation out and we're in a position to pay any penalty without incurring any additional pain for members. Thank you.

PAULA BENSON: Thanks, Paul. We now have a question from Kylie for our Head of Member Operations, Pamela Panagenas: why do member statements take so long to be issued?

PAMELA PANAGENAS: Thanks, Paul. Thanks for your question, Kylie. While the financial year ends on June 30, it takes time to receive and process all of the tax and financial information for the Fund. Then what we have to do is reconcile all of our member accounts to ensure we've got the accuracy and the data quality for meeting our regulatory obligations to produce the annual statements. We endeavour to distribute all of our annual statements by the end of December. We do recognise this time frame doesn't satisfy some of our members' requirements, and we are exploring how we can issue the statements earlier. If you do want to access information early and you've got access to the portal, you'll be able to see all of your data up-to-date, all that information on the website, and that includes balances and transactions for the full financial year that you can access there. Thanks, Paula.

PAULA BENSON: Thanks, Pamela. We now have a question from James for Mark Delaney: what lessons have you directly learnt in the case of Pluralsight?

MARK DELANEY: Thanks, James. Two things I think stand out for me on this. The first one is that despite having the best experts in the world and the best experts in Australia, things can still go wrong and you need to be realistic about it when you undertake these investments, that these things can still go wrong.

The second thing is that when you invest in a company which has taken on a lot of debt, you have to be very suspicious, I think, if it needs to grow its current earnings base substantially to be able to fund the debt payments back into the future. So you need a bit more conservative in the balance sheet than what this company had.

PAULA BENSON: Thanks, Mark. We now have a question from Richard for Rose Kerlin: is AustralianSuper considering a life strategy option that automatically adjusts the investment mix as the member gets older?

ROSE KERLIN: Thanks, Richard. Well, an investment lifestage product is one that automatically reduces exposure to growth assets and associated risks as members age. We have no immediate plans to offer these type of products. However, we are planning to review our default MySuper offer, which is currently our Balanced Investment Option, as well as potential tailored glide path solutions in retirement over the course of the next year, which will likely include consideration of lifestage products. Thank you.

PAULA BENSON: Thanks, Rose. We now have a question from Jing for Don Russell: why did AustralianSuper amend its trust deed to shield its Trustee board directors from fines?

DR DON RUSSELL: Well, thanks, Jing, for the question about the trust deed. It really is quite a complicated area and it's about, at its heart, our profit-for-member model because, as we've said many times, we don't pay dividends or profits to anyone. All benefits go back to members, and this over the years has been a big benefit for our members, but it means that we are different from other financial institutions who do have large shareholder funds, like the banks, and it means that - they have large shareholder funds but that means that they actually have to earn a return on those shareholder funds, and this return is actually paid for by members and customers.

So when changes were made to the super laws in Canberra to make it clear that funds couldn't access fund assets to pay penalties and fines, we had to act because we don't have the shareholders' funds to pay fines and penalties, which means that even a relatively small penalty would have pushed us into insolvency. So we worked with the courts and the late Justice Blue, who was a Justice of the Supreme Court of South Australia, to change our trust deed to set up a Trustee risk reserve which would be available to pay fines and penalties and thereby avoid insolvency, and to do it - and this was very important - in a way that was in the best interests of our members. So I would actually like to pay my respects to the late Justice Blue and to thank him for his wise guidance that enabled us to put in place the provision that

is now there and which the Chief Executive, Paul, talked about so that we are in a position to pay these fines without tripping ourselves up into insolvency. Thank you.

PAULA BENSON: Thank you, Don. We now have a question from Wing Sheng for Philippa Kelly: what risk management steps are in place for investing $500 million in build-to-rent-to-own projects?

PHILIPPA KELLY: Thank you, Wing Sheng, and I'll take it that your question refers to the investment and partnership that the Fund has made with Assemble Futures, which is an affordable housing operator. All our investments are made to provide the best financial outcome for investors, and that's the lens we make all our investment decisions through. So when we were looking at whether an investment was warranted in the affordable housing sector, we undertook thorough due diligence to ensure that it met the appropriate risk-adjusted return requirements that we have and, specifically, we reviewed a number of models in the affordable housing sector. We settled on the build-to-rent-to-own model, which is the one provided by Assemble Futures, and it's one which we believe is sustainable and scalable, and in our view, build-to-rent-to-own offers residents an affordable pathway to home ownership in a very challenging housing market. Thank you.

PAULA BENSON: Thank you, Philippa. We now have a question from Dai Van for Paul Schroder: what will superannuation look like 10 years from now?

PAUL SCHRODER: Thanks, Dai Van. This is a fantastic question as well. First of all, superannuation will look as diverse as the membership of the Fund. There'll be most likely five million members of the Fund and most likely one million of them will be retired themselves, so they'll be having superannuation in a way that means they're going to be spending their own money, which is just what it's all about. So that's terrific.

It's also pretty likely that more people will have more money because the Superannuation Guarantee will have moved from 11.5% to 12%, and so more people will be able to extract those compound interest advantages and the relative outperformance advantages. So the number one thing is more people will have more money and more people will be retired, so more people will be able to spend that money.

Secondly, I'd say that technology will play a really significant role. You'll expect from your super fund to be able to do everything that you can do with any other company, including access your money and spend your money. So that's going to be a fundamental thing. The way I like to think about it is like super in your pocket: your phone is there, your super is there, you've got the App, you know what you're doing. Millions of you are already using the App. So there will be more and more of that. So I think more members will have more money. More members will be able to spend their own money. Technology will make all of these things much easier. And, on the other side of things, Australia will benefit because there'll be a bigger

capital pool in Australia, which will improve Australia's competitiveness; there'll be more capital to fund Australian businesses and Australian jobs; and individuals will have more money in their account. So it's so important that we all keep striving to be the leading super fund in the world's best system so more people have more money, Australia has more advantages, business gets funded, and individuals can live a better life in retirement, usually in conjunction with the Government age pension.

PAULA BENSON: Thanks, Paul. We now have a question from Dale for Mark Delaney: China, our biggest trading partner, seems to be not travelling well at the moment. What does a weakened China mean for the strategy and the Australian economy and the ASX?

MARK DELANEY: Thanks, Dale. China is the second-biggest economy in the world and a big factor in its growth is the performance of the property market. You might say it generates about a third of its economic performance. At its peak in the middle of 2022, China was building about 160 million square metres of floor space for housing. The more recent figures have that down now at 40 million square metres. It's hard to get your mind around 160 million square metres of housing, but that's what they were doing. Now, that's a decline of 75%. So if anybody asked anybody, "If your housing market was declining by 75%, would there be economic implications?", of course there is. So that downturn in the housing market has also fed through to downturn in housing prices. Prices in Beijing are down - for example, apartments are down 30% - and people are cautious about spending.

So the ripple effects of a falling housing market is feeding into the Chinese economy and it really looked like they weren't going to achieve their 5% GDP growth target. There were policy makers who did nothing for a long time who about a month or six weeks ago decided to introduce a large stimulus package to try to get the economy going again and try to stabilise the housing market. Let's just see how they go. They've had a pretty fair attempt at doing this and so we're likely to see, if you like, a short-term bounce in China's economic activity over the next three to six months as these measures feed in.

Interestingly, I had a look at how resources have gone, which were beneficiaries of Chinese economic activity, and in a year whereby the Australian Equity market has done very well, the resources sector has done zero over the 12 months to the end of October. So resources have suffered from the weakness in China and may do a little bit better with the bounceback in China activity.

PAULA BENSON: Thanks, Mark. We now have a question from Anthony for Head of Insurance Product, Richard Land: do the life insurances fees go to a separate for-profit entity? If so, please outline the relationship between AustralianSuper and the insurance entity.

RICHARD LAND: Thanks for the insurance question, Anthony, and, yes, AustralianSuper insurance is provided by TAL, a leading Australian for-profit insurer, and members' insurance

fees do go to provide the cost of the insured risk, expenses for insurance, such as claims assessment, and also a margin for TAL to cover cost of capital and profit. AustralianSuper makes sure we get value-for-money insurance from members by using our scale to get a good deal from the insurer. Thank you.

PAULA BENSON: Thanks, Richard. We now have a question from Deborah for Head of Member Experience, Kate Leplaw: when will you add a search engine function to the Fund's website to make it easier to find information and documents on the website?

KATE LEPLAW: Thanks, Deborah, for your question. We undertake regular enhancements across all our digital channels, informed by member feedback. These improvements are released frequently, sometimes as often as every two weeks. In relation to search particularly, we have heard your feedback that search on our website sometimes fails to effectively retrieve the information that you were looking for. We are currently conducting a review of different tools to uplift search functionality, aiming to enhance results and ensure a better experience. We're also working through other website improvements, including simplifying navigation, improving self-service options and providing better content personalisation. We expect these improvements to roll out progressively for the rest of this year and into the next. Thank you.

PAULA BENSON: Thanks, Kate. We now have a question from Donald for Rose Kerlin: what are you doing to improve services and support for those moving from accumulation to retirement?

ROSE KERLIN: Thank you, Paula, and I appreciate the question from Donald. So improving members' retirement outcomes is a strategic priority for the Board and for the Fund, and work is currently underway to deliver an enhanced retirement solution designed to address the diverse needs and preferences of members, including tailored guidance for them throughout their retirement journey.

This solution that we're developing is going to really help members navigate the complicated financial and life decisions that they have to make, like product choice, investment strategies, and retirement income and spending needs, like how much do they need and how long will it last? We're also very conscious of the critical role that guidance and advice plays in supporting members in their journey from accumulation into retirement. So affordable, timely and appropriate information, guidance and advice helps members feel much more confident about managing their retirement savings.

Right now we offer members access to help and guidance through our website, through seminars, webinars, over the phone, by video and also face to face, and where members have got an external adviser, we also make it easy for that adviser to deal with AustralianSuper via our Adviser Services team and the adviser portal.

Last December, we launched a new resource on our website to help members with their retirement and it's called the Elements of Retirement Guide. You can find a link to this interactive guide under Resources on the home page of tonight's event. That guide answers some of the really commonly asked questions that people have when they're planning for retirement and it's got a heap of information and tools in it, like podcasts, videos, calculators, graphics for all different learning styles and knowledge levels. I'm really pleased that over 100,000 members have used that since it first launched, and I really encourage you to get onto the website and take a look. Thanks.

PAULA BENSON: Thank you, Rose. We now have a question from Susan for Chief Risk Officer Andrew Mantello: can you tell us more about what you're doing to mature risk management?

ANDREW MANTELLO: Thanks for the question, Susan. So, as Paul mentioned earlier, we've engaged the help of Oliver Wyman to help us design a risk management framework that supports our strategy of being the leading Fund in the world's best system for you. And so, in doing that, we're embarking on a program of works to design, implement and embed that framework that puts risk management at the heart of what we do and makes sure that we've got a framework that provides the right outcomes and the right decision points as we make decisions and pursue our activities for members.

From a people perspective, us as leaders will be role modelling what it means to be risk aware and to have that right tone from the top, and we expect all of our colleagues to be risk-aware when they go about everything that they do day-to-day for members. What that requires is a risk architecture that is simple and easy to understand and allows the critical threats and opportunities to bubble up to the surface so they can be effectively managed. It means we need the infrastructure, and it's supported by quality data that allows for quick decision making. So, in effect, what we're looking to do is put in place a framework that allows for the right decisions to be made by the right people at the right time. Thank you.

PAULA BENSON: Thanks, Andrew. We now have a question from Giuseppe for Peter Treseder: I'm 55 years old and retired. What's the earliest age I can transition from the Balanced option to a pension account?

PETER TRESEDER: Hi, Giuseppe, and thanks for your question. To take money out of super, you've generally got to meet a condition of release. Now, you've met one of those by ceasing work. The other condition is you need to be 60 years of age. So the earliest you'll be able to access your super is the age of 60. You can then move your money from that accumulation account to a pension account, and within that pension account, you can choose how it's invested. You have the same investment options that you have with your accumulation account, the difference being, though, in a pension account there's no investment tax paid on the earnings that AustralianSuper makes on your money. So thanks for your question.

PAULA BENSON: Thanks, Peter. Another question for you: can members seek advice from AustralianSuper financial planners to give advice what to do when you retire in terms of financial planning, such as drawing out your money from your super fund and making a long-term plan?

PETER TRESEDER: Well, thanks for your question, Haillin, and it's a good thing you're thinking about planning for the future because when most Australians think of their retirement planning, they take a very Australian attitude of 'she'll be right'. Now, it's not always going to be that case. So AustralianSuper does offer you assistance. That can be assistance over the phone or with a financial planner face to face. We'll engage with you the way you want to engage with us, and it might start simply with one of the calculators, working out are you on track to achieve the retirement outcome you're after, and then talking to a financial planner about what those plans are in retirement and how you can fund those. So by calling AustralianSuper on 1300 300 273 you can start that journey into retirement planning and speak to an adviser and hopefully get that retirement you're looking for. Thanks.

PAULA BENSON: Thanks, Peter. We now have a question from Pierre for Andrew Gray: what is the plan to stop investing in fossil fuel energies?

ANDREW GRAY: Thanks, Paula, and thanks for your question, Pierre. So we recognise as the global economy transitions to net zero, there will be a change in the energy mix across the economy. We believe that fossil fuels will still have a role to play, particularly in the short term, but that will be a diminishing role as renewables take up a bigger share of the energy mix and as climate change solutions start to emerge.

Having said that, though, we're investing to generate the best investment returns for members, so we need to do that by having a diversified portfolio that can invest in a range of opportunities. So, therefore, we do see it important that we have the opportunity to continue to invest in fossil fuels while it remains part of the energy mix, albeit a diminishing part of that mix.

A final thing I would say in terms of ownership: clearly by not owning a company, we're concerned that we may give up ownership rights, such as voting and engagement. So I guess we're just cautious in terms of giving up diversification or giving up ownership rights, which is why we're needing to have the opportunity to invest in fossil fuels. Thank you.

PAULA BENSON: Thanks, Andrew. We now have a question from Maraden for Paul Schroder and Peter Treseder: can funds in AustralianSuper be used to buy a house in the future?

PAUL SCHRODER: Thanks, Maraden. Well, sort of yes and no is the answer. You can't take money out of your super from the contributions of the Superannuation Guarantee, the

things that are part of the law to be put into your super, because that's for your retirement, and if you took that money out, you'd probably lose $4 or $5 for every dollar you took out because you miss out on that compound interest. So you can't take that money out, and, frankly, you shouldn't. It doesn't help with housing and it doesn't help get people into houses and it affects people's retirement balances ultimately. But there is a terrific scheme called the First Home Super Savers Scheme. So if you want to put extra money into your super, it can get all the benefits of earning inside the Fund and all manner of tax advantages and you can build a deposit.

So the first part of the answer is no, you can't take the money that's going in for your retirement, and that's right and that's as it should be, but you can put in additional money over a period of time, get all the benefits of super, build a deposit. But why don't I ask Peter Treseder, who spends a lot of his time talking with members about this, would you mind just explaining a little bit about the First Home Super Saver Scheme, Peter?

PETER TRESEDER: No worries. Thanks, Paul, and thanks, Maraden, for the question. As Paul said, the money going into super from the compulsory superannuation contributions, that can't be withdrawn, but if you put additional money into super, you can take that out at a future date to buy your first home. It is only your first home. The advantage there is the way that contributions are taxed into super. So having some money to save towards that first house, that is great. If you put it into the bank, you're going to be putting it into the bank in after-tax dollars. If you make a salary sacrifice to super, it's only going to be taxed at 15%, so there's a saving there if your marginal tax rate is greater than 15%. Now, of course, everyone's got to look at this from their own personal point of view and advice may be needed. You can then withdraw that money out of super to pay the deposit potentially for your new home. Now, there are some limits about how much can go in each year and how much you can take out in total, and there's more details about the First Home Super Saver Scheme, which is a great alliteration, on our website. So please have a look at that to guide you further, thank you.

PAULA BENSON: Thanks, Peter. We now have a question from Oliver for Philippa Kelly and Mark Delaney: how much money has been invested in Private Equity and what safeguards are in place to protect these funds, given the opaque nature of Private Equity?

PHILIPPA KELLY: Thanks, Oliver. I'll deal with the first part of your question. At the end of June this year, we had approximately $15 billion invested in Private Equity, which is about 4% of the overall Fund and 5% of the Balanced Fund. We've mentioned a couple of times already this evening that it's been one of the Fund's top-performing asset classes, with returns of 10 and 12% respectively over the past five and 10 years as at June 2024.

MARK DELANEY: And the second part is what safeguards are in place. Well, we invest with Private Equity managers and we use a specialist adviser called Hamilton Lane from the US, who is probably the premier manager in selecting Private Equity funds, and so we have a very

select list from them which we choose from and they help us monitor the managers. When we invest in deals alongside the Private Equity managers, we also get all the financials on how these companies are performing, so we've got clear line of sight to the companies and strong feedback and information from the Hamilton Lane advisory service.

PAULA BENSON: Thank you, Mark. Thank you. That concludes the Question and Answer session and this Annual Member Meeting. I apologise to anyone whose question wasn't answered during the meeting but, as I mentioned earlier, we will be putting responses to all your questions and the Minutes of this Meeting onto the AustralianSuper website within one month of the Meeting. These minutes will be available at australiansuper.com/amm. I hope you have found this event informative and that you feel empowered to make decisions about your superannuation and your life in retirement. Thank you for joining us and good evening.