The Chair welcomed members to TelstraSuper’s Annual Members’ Meeting and acknowledged the traditional owners of the land and paid her respects to the Elders - past, present and emerging.

She noted the investment market fluctuations during the year, influenced by geopolitical tensions, slowing economic growth, rising interest rates and increasing inflation. She emphasised however, that superannuation is a long-term investment, and that the Fund continues to focus on its long-term strategy.

The Chair provided an overview of the meeting including the presentations and the question and answer session.

She advised that:

• any information shared is general in nature and does not consider members’ personal circumstances and objectives. Therefore, members should consider obtaining advice before taking action and read any relevant product disclosure guides; and
• past performance figures are not an indicator of future performance.

The Chair introduced the CEO.

The CEO welcomed all members to the meeting. He also acknowledged the traditional owners.

The CEO gave a Fund update presentation and shared a story regarding the membership journey of a long-standing Fund member.

The CEO addressed the following key areas in his presentation:

• Delivery of a series of positive Fund outcomes during the year, including:
  • Fee reductions
  • A new suite of retirement investment options
  • Sustained, strong relative investment returns
  • Progressing the Smart Income program, focused on retirement products and services for members; and
  • Uplifting the digital portal and enabling more self-service features.

• Thanking staff for their ongoing commitment and engagement during the year.
• The focus on delivering best possible outcomes to members, favourable member satisfaction and high member engagement results.
• The administration fee percentage is now at the lowest level it has been in the Fund’s history
• The Fund received the SuperRatings Momentum Award, and also maintained its SuperRatings Platinum rating for an eighteenth successive year. This is awarded for good performance in investments, fees and charges, insurance, member servicing, governance and administration.
• The Fund was also named as a 2022 ESG leader by Rainmaker, for its implementation of environmental, social and governance principles to a high level. Consideration of ESG practices helps the Fund to futureproof investment returns for our members.

• Activities as an active investor, which have included:
  • Engaging with Australian listed companies and voting on decisions at their company meetings
  • Divesting and excluding Russian assets
  • Announcing a goal to achieve net zero greenhouse emissions within the Fund’s risk portfolio by 2050, with an interim goal to reduce emissions by 45% by 2030
  • Publishing a Climate Change report and initiating actions to address climate change related activity. To date, carbon emissions across the Fund’s listed equities portfolio have been reduced by 15%
  • Joining the Responsible Investment Association of Australia.
  • Receiving strong results on the Fund’s annual assessment undertaken by the UN Principles of Responsible Investing
  • Considering ESG in the way the Fund itself is run.

• The Fund was recognised as a Workplace Gender Equity Agency Employer of Choice for Gender Equality.
• Expansion of the Fund’s advice offering, to make it more affordable and accessible, by introducing affordable, single-topic advice for members, at all stages of their lives.

The CEO introduced the CIO.

The CIO gave a presentation which:

• outlined investment performance over the 12 months to 30 June 2022
• provided an update on performance since this period and discussed the market outlook; and
• explained how the Fund’s portfolios are currently positioned.

Investment Performance over the 12 months to 30 June 2022

• The second half of the financial year saw steep falls in global share markets and fixed interest markets. As a result of this, almost all super funds reported negative returns to their members for the year to 30 June 2022.
• In the Fund’s case, these returns were moderately negative in the diversified investment options. For RetireAccess members, returns were generally higher, although still negative. The best performing investment option for the year was the Property option.
• The Fund’s returns in the diversified options were substantially higher than most other Australian super fund returns.
• Super is a long-term investment, which even for retired members, will remain invested for many years. The Fund’s medium and longer-term investment track record remains strong. The Fund has consistently exceeded its long-term investment objectives and its performance over five-year and ten-year periods is above the industry median in all diversified options.
• Reasons for negative returns over the last financial year have included higher inflation and higher interest rates, with inflation being stoked by the Russian invasion of Ukraine as well as COVID related supply bottlenecks. This has caused investors to become fearful that economic growth will slow and led to asset sell-downs, including shares and fixed interest securities. Whereas property and infrastructure assets performed strongly over the year.
• In order to provide some protection for members from market falls, the Fund sold down some exposure to shares in advance of markets falling and maintained our long-held strategy of holding less fixed interest securities than long-term targets.

Performance since 30 June 2022 and Market Outlook

• Since 30 June 2022, the same forces of higher inflation, higher interest rates and geopolitical tensions have continued to influence markets. This has led to significant volatility. However, returns from diversified options between 1 July and 31 October 2022 have been positive, although the Fixed Interest single sector option return was negative.
• For the remainder of the financial year, the Fund considers that the investment outlook will continue to be shaped by similar forces that applied last year. Ultimately, we expect that this will slow down the pace of economic growth. The key unknown is how high interest rates will need to rise, in order to reduce inflation. We will also continue to monitor political developments in Russia and China.

Current Portfolio Positioning

• The Fund’s portfolio is currently positioned somewhat cautiously, with exposure to shares having been reduced further, following a strong start to the financial year.
• Australian share exposures are currently at their long-term strategic levels, whereas international shares exposure targets are currently below long-term levels. Fixed interest targets are also generally below long-term levels although the Fund has begun to increase these, as long-term interest rates have risen.

The CIO handed back to the Chair.

The Chair provided a Fund strategy and governance update and reflected on the year ahead, addressing the following key areas:

• The Fund is in the second year of its three-year strategy, having met all major milestones.
• The Fund has received overwhelming positive feedback from members in the yearly satisfaction survey and from the industry, via industry awards.
• Engagement scores are high, with a high level of take-up of Fund services.
• The strategic pillars include being more efficient, delivering more innovative products, improving member experience through enhanced tools and services, and continuing to invest in and grow our team.
• Anyone can now join the Fund, with the key growth focus being on partnering with a small group of mid-to-large-sized corporations, who are closely aligned with our current partners, as well as our values and vision. The Fund will continue to provide personal and bespoke services to members.
• The Fund continues to be well funded and maintains several reserves.
• Several Directors were re-appointed during the year, providing continuity as the Fund faces into macroeconomic changes and continues to execute the three-year strategy.
• In terms of legislation, recent Government changes have not negatively impacted on the number of new members joining the Fund. The Fund’s MySuper performance continues to be comfortably higher than the legislative threshold required by the prudential regulator, APRA.
• The newly elected Labor Federal Government has announced a Housing Accord, for the provision of social and affordable housing. The Fund anticipates being part of the discussions to implement the policy framework to participate and invest in this initiative.
• Other legislative changes have included lowering the eligibility requirement to make downsizer contributions. This is now available to members aged 55 or above. The income threshold for the Commonwealth Seniors Health Card has also been increased.
• Work is being undertaken to develop a Reconciliation Action Plan to formally outline the Fund’s approach to reconciliation with Aboriginal and Torres Strait Islander stakeholder organisations and promote reconciliation.

The Chair acknowledged the technical difficulties some members had experienced logging on to the meeting and sincerely apologised. She indicated that a recording of the meeting would be available on the Fund’s website from early the following week.

The Chair opened the meeting to questions from Members.

She advised that answers to all questions, including those not able to be addressed at the meeting, will be made available on the Fund’s website within 30 days.

Topic 1 Proxy Voting

Peter: How can we see how TelstraSuper votes at ASX company AGMs? In particular, on each resolution at those AGMs?

Anne-Marie O’Loghlin

• TelstraSuper is an active owner in the companies that we invest in.
• When we hold shares in a company, we often meet directly with the company and actively vote at their meetings on important matters. For example: the company’s strategy, remuneration, director appointments, and more recently, a company’s climate change plan.
• We publicly share how we vote at general meetings, on our proxy voting dashboard. This can be found on our sustainable investment page on the TelstraSuper website. This can be accessed at: https://www.telstrasuper.com.au/campaigns/investment-proxy-voting.
• In the last financial year, we voted at 211 company meetings for ASX-listed companies, on a range of issues.

Topic 2 Contributions

Brian: Can retirees whose portfolio was moved to the Lifestyle products, change their investment options back to the original products that are available to those on a TelstraSuper Personal Plus plan?

Graeme Miller

• The Lifestyle investment options were designed specifically for RetireAccess members. Their design reflects the fact that members drawing an income are typically more sensitive to market volatility and often have shorter term time horizons. They are also not required to pay tax on their investment earnings.
• These options are one of the key reasons why the Fund was awarded Pension Fund of the Year by two major ratings agencies this year. They are available to RetireAccess members only and those members are not able to invest in the Fund’s Accumulation options, or vice versa.
• TelstraSuper offers all members the flexibility to tailor their investment options to meet their risk profiles, by combining their diversified investment options with the Fund’s single sector asset class options.
• An adviser from TelstraSuper Financial Planning can help you to craft a portfolio to meet your needs and preferences.

Topic 3 Investment of non-super monies

Peter: Can TelstraSuper provide investment management and options for non-super money? (noting that the Fund already have the expertise, systems and processes in place, and would just need a licence)

Chris Davies

• Managing non-super money involves different processes, systems, and a different legal environment from superannuation investment. For this reason, super funds don’t usually provide this service to members.
• TelstraSuper Financial Planning has selected investment vehicles for non-super investments, for use by their clients. Members requiring advice on non-super investment can contact TelstraSuper Financial Planning, through the contact centre.

Topic 4 Future investment returns

Dong: Do you expect the investment results for next year to be better than this year?

Graeme Miller

• Super is a long-term investment. What really matters is how super performs over long-term periods, rather than any month or any quarter, or even any year. I am proud of the long-term investment returns that we have delivered to our members.
• The 2023 financial year has started off well, with strong returns in the four months to October, and this has continued into November.
• We are expecting inflation and interest rates to remain high, and this is likely to mean that volatility will continue in the short term. However, we are confident that we have the right strategies in place to deliver strong long-term returns.

John: I totally understand about the importance of sticking to the long-term strategy, however, for those of us who are close to retiring, should we be worried about decreasing fund amounts?

Graeme Miller

• Volatility in investment markets and investment options is normal, particularly for our higher growth investment options. While it is never pleasant to see negative returns, it is seldom a good strategy to have a knee-jerk reaction to them.
• This volatility is why the Fund offers a suite of investment options for members that span the risk and return spectrum. In that way, members can tailor an investment strategy to meet their needs.
• An adviser from Telstra Super Financial Planning can help you to work out an investment strategy that suits your personal circumstances.

Topic 5 Technology upgrades

David: Over the last 12 months there have been many technical difficulties. What is planned for computer upgrades?

Chris Davies

• The Fund has been investing heavily in our technology and has a strong internal technology team. They are very experienced across everything from digital to the underlying registry systems, used to maintain member accounts.
• The Fund has technology relationships with a number of suppliers, which are regularly reviewed. There has also been a lot of focus on cybersecurity, including ensuring that the Fund’s systems are as secure as they can be.

The Chair thanked members for the questions raised at the meeting and for their trust in TelstraSuper.

She thanked the TelstraSuper team for their fantastic effort and contribution in assisting members to achieve the financial outcomes they need for their retirement savings.

All questions asked by members regarding the Fund were addressed during the course of the meeting.