AnnualReport 2006/2007. Celebrating 20 years of HESTA Many happy returns for generations of HESTA members

Transcription

1 2006/2007 AnnualReport Celebrating 20 years of HESTA Many happy returns for generations of HESTA members This Annual Report forms part of your member statement. (Flip over for your Member Magazine)

2 HESTA celebrates 20 years Welcome to HESTA s 2006 /2007 Annual Report and Member Magazine Twenty years ago, Supa-Nurs Ltd was established to run a superannuation fund for nurses. The Trustee is now known as H.E.S.T. Australia Ltd and HESTA is the major health and community services industry super fund with $13 billion in funds under management, more than 595,000 members and 59,000 participating employers. We continue to be one of the fastest growing funds in Australia. HESTA is proud to say that in its 20 year history, not once has Core Pool, (the investment option most members are in), had a negative annual return. Investments and governance HESTA has again delivered a competitive return of 16.7% for Core Pool, where the majority of members have their super, with a five year return for Core Pool of 12.1%. This puts us in the top quartile of balanced funds in Australia. Details about returns for the previous financial years and HESTA s other investment options can be seen on page three of the Annual Report. During the year, HESTA has taken on several further initiatives in the area of Responsible Investing. We were an early signatory to the United Nation s Principles for Responsible Investing (PRI), continued our longstanding involvement with the Australian Council of Superannuation Investors (ACSI) and our membership of the Investor Group for Climate Change (IGCC), joined Enhanced Analytics which rates research in this area and became a shareholder of Regnan which will provide engagement on our behalf with companies we invest in. Member education steps up Last year, HESTA established a new unit that focuses on providing a greater level of financial information and education to HESTA members, including delivering personal financial advice about your super. HESTA s Member Education Managers in each state have been progressively offering HESTA members access to additional education about superannuation and financial matters generally. We also created the new role of Superannuation Services Adviser to provide individual advice on specific issues related to superannuation. As a fund, HESTA takes its responsibility to provide information and advice to members seriously and we aim to help our members feel more confident in their decisions about super. Support for your industry During 2006/2007, HESTA continued to support the health and community services industry with its involvement in a variety of conferences, education seminars and events at both state and national levels. We are committed to supporting the health and community services industry that supports us so well. The 2007 HESTA Australian Nursing Awards were a great success and highlighted the outstanding work of our nurses, many of whom are unsung heroes in the community. In addition, HESTA has continued to lobby for improvements in the superannuation system, particularly in relation to women members who comprise 85% of our Fund. We also bring to members attention new initiatives and policies as they are introduced to enable you to take advantage of them. Goodbye It was with some sadness we farewelled one of our longest serving Directors, John Griffiths, who retired from the Board in December, John was a passionate supporter of industry superannuation and his wisdom, knowledge and experience was a valuable resource for our Board. We wish John well in his future endeavours. Our values At HESTA we value integrity and responsibility to our members. HESTA members and employers find us to be approachable, genuine, professional and committed to the health and community services industry. HESTA s size delivers a number of benefits to members including increased portability when changing jobs, the resources to provide education and advice about super and the ability to keep our fees amongst the lowest in the industry. The future HESTA will continue to strive for strong investment returns, provide quality services to members and employers and support health and community services. All that we do is driven by one vision to increase our members retirement incomes. Anne-Marie Corboy CEO Beth Mohle Chair 2 AnnualReport 2006/2007

3 Investment performance for 2006 /2007 HESTA s most popular option, Core Pool, returned 16.7% to 30 June 2007, continuing the positive annual returns this investment option has enjoyed since HESTA was established. For more details on the reasons behind this year s returns, turn to page seven of your Member Magazine. Returns applied to your account Interest is applied to your account at 30 June each year, based on your daily balance. The rate varies each month and depends on HESTA s earnings and the investment option you are invested in. The cost of protecting low member balances (0.02% for 2006/2007) against fee erosion is deducted from investment earnings before returns are declared. Earnings rates The earning rate reflects how well each investment performed after deducting income taxes and fund manager investment fees, including any performance fees. It s important to note that some other super funds may deduct some of these costs after declaring their rates. Returns Earnings To 30 June (%) Average % To 30 June (%) Average % Cash Plus Cash Plus Ready-Made Investment Pools Core Pool Shares Plus Eco Pool Overseas Share Pool Ready-Made Investment Pools Core Pool Shares Plus Eco Pool Overseas Share Pool Australian Share Pool Australian Share Pool Your Choice Asset Classes Cash Infrastructure International Shares Absolute Return Strategies N.A Your Choice Asset Classes Cash Infrastructure International Shares Absolute Return Strategies N.A Commenced 1 July Commenced July RETURNS RETURNS AnnualReport 2006/2007 3

4 Ready-Made Investment Pools HESTA offers six Ready-Made Investment Pools, each with its own investment objective. You can choose individual investment options or mix and match between them. Ready-Made Investment Pools allow you to invest in areas that interest you, while leaving key investment decisions to a team of expert managers. For more information, or to change your investment choice, free call for a copy of HESTA s Member Investment Choice Kit, or visit OBJECTIVE Cash Plus Cash Plus aims for the lowest year-to-year variation in returns of all HESTA s Ready-Made Investment Pools. With the expectation of lower rates of return than Core Pool over the long term. It s the most conservative of HESTA s pools and is specifically designed to offer a low-risk investment. It aims to provide stable returns slightly greater than that achieved by investing in cash alone. Cash Plus aims to achieve CPI + 3%. STRATEGY Cash Plus has an asset allocation with more exposure to cash and fixed-interest markets than other Ready-Made Pools. It s updated with investment earnings and no reserves are kept. It was designed to offer members a low risk investment seeking greater returns than cash alone. Almost 30% of its investment is in shares. This is because shares tend to have a low correlation, or relationship, with cash and as one rises in value, the other may be expected to slow. So, by investing a proportion in shares, we help reduce the risk while enhancing the potential return over the longer term. Core Pool Core Pool aims to optimise returns while in the short-term achieving consistently better returns than the 90-day bank bill rate (adjusted for tax) and rarely having an interest rate less than zero. Core Pool aims to achieve CPI + 4%. Core Pool uses the strategy of investing in a diversified but balanced mix of assets to provide a consistent return. The asset mix may vary during the year in accordance with market conditions to help achieve this consistency of return. It s the only pool that holds a reserve, which may be used to smooth out short-term fluctuations in returns. These reserves are being reduced by attrition. Shares Plus Shares Plus aims to provide higher long-term returns than Core Pool. This recognises that there is likely to be a substantial year-to-year variation in returns and even in the longer term Shares Plus may not outperform other pools. It has a diversified portfolio that includes assets other than shares. Shares Plus aims to achieve CPI + 5%. Shares Plus has a mixed asset allocation, with more exposure to the share market than Core Pool. However, its diversification means that it has a lower risk profile than an investment in shares alone (such as Australian Share Pool or Overseas Share Pool). It s updated with investment earnings and no reserves are kept. Eco Pool Eco Pool aims to optimise long-term returns while investing in companies that demonstrate best practice environmental/sustainability performance within their industry sector, relative to their peers. Its high allocation to shares means there is likely to be significant year-to-year variation in returns, and although we expect long term returns similar to Core Pool, Eco Pool may not outperform other pools, even in the long-term. Eco Pool aims to achieve CPI + 4%. Eco Pool invests in, International Shares, Australian Direct and Cash Investments. The component is selected via an environmental screen, while the International Shares component is screened according to economic, environmental and social criteria. Companies are evaluated and rated for environmental management/sustainability practices within their sector. After being assessed for their financial performance, investments are made in the best-rated companies in each sector. The property investment is expected to be rated a minimum four green stars under the Green Building Council Australia s guidelines and is considered a defensive asset. Overseas Share Pool By investing purely in international shares, Overseas Share Pool aims to achieve higher long-term returns than Core Pool and Shares Plus. However, with the prospect of increased returns comes a high level of risk and more year-to-year variations in performance is likely. Overseas Share Pool aims to achieve CPI + 5%. Overseas Share Pool invests purely in International Shares, including small companies and emerging markets. It therefore has a higher exposure to overseas share markets than other pools. However, diversification is achieved by investing across many different markets and countries. It s also more aggressively managed than most other HESTA options (including Your Choice share options) and therefore has a higher risk profile than the Your Choice International Shares asset class. It may include managers that also short-sell shares. Australian Share Pool Australian Share Pool aims to achieve higher long-term returns than most pools. It is not widely diversified and accepts the prospect of increased returns means a high level of risk, with more year-to-year variations in performance. Australian Share Pool aims to achieve CPI + 5%. Australian Share Pool invests in Australian shares, including small companies. This impacts on the diversification of the pool and, combined with an aggressive management strategy, it has the highest risk profile of all pools (including Your Choice share options). This product may at times hold a small percentage of its assets in shares of companies not listed on the Australian Stock Exchange. It may include managers that also short-sell shares. 4 AnnualReport 2006/2007

5 Your Choice Asset Classes HESTA s Your Choice (YC) Asset Classes give you a more hands-on role in how your super is invested. You can choose your own asset allocation (where you want to invest) and the level of risk you want to take. You can also mix and match YC Asset Classes with Ready-Made Investment Pools. YC Asset Classes may be excluded from having exposure to certain investments while the value of HESTA s investment is built up to a critical mass. When this occurs, only Core Pool will have exposure. Objective Cash YC Cash aims to produce a return equivalent to or higher than the Overnight Cash Rate. It s the most conservative of the YC options. YC Cash aims to achieve CPI + 1%. Strategy YC Cash is 100% invested in cash and enhanced cash products. It s updated with investment earnings. YC aims to produce a return that is higher than the UBS Composite Bond Index. It s less conservative than Cash, in that it may produce a negative return, but is more conservative than the other YC options. YC aims to achieve CPI + 2%. YC is 100% invested in fixed income products. It will have investments in both Australian and international fixed interest, including products that specialise in investing in corporate bonds (known as credit ). Investments are managed in a style similar to that used by Core Pool for this asset class. The currency exposures in the international bonds are fully hedged by the manager. YC aims to produce a return equivalent to or higher than the Mercer Direct Index. It s less conservative than Cash or Fixed Interest, in that it may produce a negative return, but is more conservative than the remaining YC options. YC aims to achieve CPI + 4%. YC is 100% invested in unlisted property products. It will have investments in both Australian and international property. Investments are managed in a style similar to that used by Core Pool for this asset class. The currency exposures in international property are managed under the HESTA strategic hedge policy. Infrastructure YC Infrastructure aims to produce a return that is significantly higher than the UBS Composite Bond Index. It has holdings in unlisted companies and, although these are not considered speculative, is likely to produce negative returns from time to time. Returns should be less volatile than other equity investments. YC Infrastructure aims to achieve CPI + 4%. YC Infrastructure is invested primarily in unlisted infrastructure products. It will have investments in both Australian and international infrastructure. Investments are managed in a style similar to that used by Core Pool for this asset class. The currency exposures in international infrastructure are either hedged by the manager or under HESTA s strategic hedge policy. International Shares YC International Shares invests in international shares. It aims to produce high long-term returns, however it is very likely to produce negative returns from time to time. YC International Shares aims to achieve CPI + 5%. YC International Shares is invested in listed international shares. Investments are managed in a style similar to that used by Core Pool for this asset class. The currency exposures in International Shares are managed under HESTA s active currency overlay program policy. It may include managers that also short-sell shares. YC invests in Australian shares. It aims to produce high long-term returns, however it is very likely to produce negative returns from time to time. YC aims to achieve CPI + 5%. YC is invested in listed Australian shares. Investments are managed in a style similar to that used by Core Pool for this asset class. It currently has an overweight position to small company managers that is lower than the exposure in the Australian Share Pool. It may at times hold a small percentage of its assets in shares of companies not listed on the Australian Stock Exchange. It may include managers that also short-sell shares. YC invests in Australian and overseas private equity. It aims to produce high long-term returns, however it is very likely to produce negative returns from time to time. YC aims to achieve CPI + 7%. YC is 100% invested in private equity products. It will have investments in both Australian and international private equity. Investments are managed in a style similar to that used by Core Pool for this asset class. The currency exposures in international private equity are managed under the HESTA strategic hedge policy. Absolute Return Strategies YC Absolute Return Strategies invests in hedge funds. It aims for returns considerably above Cash returns, however it may produce a negative return from time to time. YC Absolute Return Strategies aims to achieve CPI + 4%. YC Absolute Return Strategies are 100% invested in absolute return strategy products primarily through international managers, although they may include Australian managers. Investments are managed in a style similar to that used by Core Pool for this asset class. Its currency exposures are fully hedged by the manager. AnnualReport 2006/2007 5

6 Our Ready-Made Investment Pools Strategic Asset Allocation Cash Plus % Core Pool % Shares Plus % Eco Pool % Overseas Share Australian Share Pool % Pool % 30/6/06 30/6/07 1/8/07 30/6/06 30/6/07 1/8/07 30/6/06 30/6/07 1/8/07 30/6/06 30/6/07 1/7/07 30/6/07 1/7/07 30/6/07 1/7/07 Absolute Return Strategies Australian International Australian Infrastructure International Infrastructure International Shares Australian Direct International Direct Australian International Cash Commodities Empty fields indicate zero asset allocation. Strategic Asset Allocation from dates shown above. The strategic asset allocations may change during the year without prior notice. Any variations will be reported at Cash Plus % Eco Pool % Shares Plus % Australian Share Pool % Core Pool % Overseas Share Pool % 6 AnnualReport 2006/2007

7 HESTA s accounts These are HESTA s unaudited accounts for 2006/2007. If you would like a copy of HESTA s audited accounts and auditor s report, free call These will be available from the end of October (Draft) Statement of Financial Position for the period ended 30 June 2007 (Draft) Operating Statement for the period ended 30 June 2007 Assets 2007 ($) 2006 ($) Investments Absolute Return Funds 379,281, ,122,503 Cash & Short Term Deposits 1,363,223, ,173,401 Currrency Hedging 2,381,430 Commodities 99,038, ,912,664 Derivatives 645,000 Other Interest Bearing Securities 1,361,570,060 1,044,231,999 Listed Australian Equities 3,919,259,913 2,909,502,444 Listed Foreign Equities 2,996,593,985 2,238,285,123 Infrastructure & 1,713,616,109 1,013,171,979 1,412,725, ,406,480 13,247,690,555 9,756,451,593 Other Assets Cash at Bank 77,799,941 65,040,476 Deferred Tax Assets 7,363,267 8,708,857 Other Assets 2,757, ,745 GST Receivable 25, ,057 87,945,924 74,429,135 Fixed Assets 543, ,634 TOTAL ASSETS 13,336,179,635 9,831,243,362 Liabilities Payables Accounts Payable 27,414,990 12,065,188 Provision for Employee Benefits 810, ,718 Financial Liabilities Derivatives 2,458,000 Tax Liabilities Income Tax Payable 120,935,368 76,551,437 Deferred Tax Liabilities 214,577, ,294,843 TOTAL LIABILITIES 363,738, ,102,186 NET ASSETS AVAILABLE TO PAY BENEFITS 12,972,441,253 9,603,141,176 Represented by: Liability for accrued benefits Vested Benefits - Allocated to Member Accounts 12,912,985,662 9,541,766,190 - Not Yet Allocated to Member Accounts 5,305,780 (813,402) Total Revenue from ordinary activities 2007 ($) 2006 ($) Investment Revenue Dividends 187,908,603 56,431,129 Trust Distribution Income 370,022, ,716,849 Interest 43,303,662 40,184,604 Other Investment Income 3,097,485 1,155,562 Change in Net Market Value of Investments 1,327,957, ,452,444 Direct Investment Expenses (56,422,407) (13,049,513) Net Investment Revenue 1,875,867,450 1,178,891,076 Contribution Revenue Employer 1,318,579,282 1,116,931,533 Member 569,329, ,720,323 Transfers from Superannuation Funds 548,371, ,576,539 2,436,280,999 1,837,228,395 Other Revenue Group Life Insurance Proceeds 18,393,658 13,686,996 Other Income 19,944 59,983 18,413,602 13,746,979 TOTAL REVENUE FROM ORDINARY ACTIVITIES 4,330,562,051 3,029,866,450 Total Expenses from ordinary activities Group Life Insurance Expenses 69,034,980 56,020,468 General Administration Expenses Administration Expenses 19,046,000 15,948,715 Operating Expenses 19,523,996 16,618,608 Superannuation Contributions Surcharge 5,431,149 7,126,377 44,001,145 39,693,700 TOTAL EXPENSES FROM ORDINARY ACTIVITIES 113,036,125 95,714,167 Benefits Accrued as a Result of Operations Before Income Tax 4,217,525,926 2,934,152,282 Income Tax Expense 326,398, ,611,901 Benefits Accrued as a Result of Operations After Income Tax 3,891,127,440 2,705,540,381 Reserves 54,149,812 62,188,388 12,972,441,254 9,603,141,176 HESTA s Reserving Policy Core Pool is HESTA s only investment that maintains reserves. During the past three years, investment reserves were: 2007 $ million unaudited, 2006 $ million audited, 2005 $ million audited. HESTA s policy is to gradually reduce the level of reserves. HESTA s Derivatives Policy Derivatives are financial instruments linked to the future purchase or sale of securities, such as shares or other assets. They are common risk management tools. Derivatives have a role to play as part of HESTA s overall investment strategy and aim to minimise investment risk in the portfolio while maximising investment return. HESTA s policy on derivatives allows investment managers to use derivatives to achieve their investment objectives, particularly in regard to controlling risk. HESTA s policy also allows the Trustee to use derivatives to implement strategies within the Fund. Managers are not allowed to exceed specific asset sector investment guidelines limiting the circumstances under which they may use derivatives. Derivatives may be used in the management of the portfolio but not used to gear the portfolio or create net short positions. Change to Trust Deed The Trust Deed was amended on 27 July, 2006 to cater for new insurance arrangements, which came in to effect on 1 November, It was amended again on 28 June, 2007 as a consequence of the government s new Simpler/ Better Super initiatives. AnnualReport 2006/2007 7

8 Other things you need to know about your HESTA account Three ways your super account grows 1. Your employer usually contributes an amount equal to at least 9% of your eligible ordinary time earnings to your HESTA account 2. You may make your own contributions to your account and, if you qualify for a government co-contribution, this will be deposited after the Australian Tax Office (ATO) has assessed your tax return 3. Other payments, such as transfers from another fund, can be made at any time How investment returns are distributed HESTA declares interest rates each month that reflect net investment results, applying interest to accounts at 30 June based on your investment choice and daily balance. This year s returns are shown on page three of your Annual Report. Interim interest rates are used when processing benefit payments during the year. Following a partial withdrawal, interest will be recalculated following declaration of final rates which may result in the remaining balance being higher or lower than initially indicated. Investment costs and protection Investment management fees (Core Pool 0.66% in 2006/2007), any applicable performance fees and provision for protecting account balances below $1,000 against fee erosion (0.02% in 2006/2007) are deducted from the assets of the Fund before interest rates are declared. Important information The estimated investment management fees/performance fees for 2006/2007 are: Ready Made Investment Pools Core Pool 0.66% / 0.19% Shares Plus 0.75% / 0.27% Cash Plus 0.37% / 0.12% Eco Pool 0.57% / 0.07% Australian Share Pool 0.56% / 0.03% Overseas Share Pool 0.76% / 0.49% Your Choice Asset Classes 0.46% / 0.03% International Shares 0.62% / 0.37% 6.07% / 1.71% Infrastructure 0.85% / 0.00% 0.34% / 0.00% Cash 0.07% / 0.00% 0.57% / 0.48% Absolute Return Strategies 1.05% / 0.27% Up-to-date management and performance fees are available at If you leave HESTA If you close your HESTA account during the financial year your account will be updated with interim interest rates (positive or negative), adjusted from time to time by the HESTA Trustee Board to reflect investment performance. Administration fee HESTA s administration fee is $1.25 a week. This fee is used to administer your account and for overall management of the Fund, including providing communications and educational material to members. Splitting super on divorce Fees apply to the provision of account information ($88.20) and the splitting of accounts ($68.05). Accounts of less than $5,000 cannot be split. These amounts alter to $91.80 and $70.80 from 1 November Insurance cover You can apply for the level of cover you want, or none at all. Basic cover two units of Death Cover and two units of Income Protection Cover (to age 60 with a 90-day qualifying period) currently costs $3 a week and premiums are deducted from your super account balance. Unless you have notified HESTA otherwise in writing, eligible members automatically receive Basic Cover. Terms and conditions apply. Contributions tax The Federal Government taxes your employer superannuation guarantee and salary sacrifice contributions at 15%. Tax is also payable on personal contributions for which eligible selfemployed persons claim a tax deduction. Tax is calculated on net contributions after insurance premiums and administration fees have been deducted. Superannuation surcharge The Federal Government abolished this tax from 1 July However surcharge deductions for prior years may still appear on your latest statement as a deduction from your account. Contribution splitting HESTA levies a $60 fee for contribution splitting out of the fund. HESTA does not charge a fee to receive split contributions. For more information, free call HESTA on , or visit Something not right? Free call to discuss your inquiry or complaint. If you require further assistance you can: Step one: Write to the Complaints Officer at HESTA Super Fund, PO Box 600, Carlton South, VIC 3053, outlining the relevant details. Step two: If the matter is not resolved within 90 days or you are not satisfied with the outcome, you may contact the Superannuation Complaints Tribunal (SCT) an independent body set up to assist super fund members or their beneficiaries in resolving superannuation related complaints. You can contact the SCT on or at What happens to your super if HESTA loses touch with you? If HESTA has been unsuccessful in delivering two pieces of mail to your address, or your account balance is less than $500 and no contributions have been made for more than one year, or less than $800 and no contributions have been made for more than two years, we may transfer your account to Australia s Unclaimed Super Fund (AUSfund), an eligible rollover fund. When your money is transferred to AUSfund (ABN , AFSL ), any insurance cover you have with HESTA will cease and your HESTA account will be closed. You will become a member of AUSfund and subject to its governing rules. If HESTA can provide your current contact details, AUSfund will send you a copy of its Product Disclosure Statement (PDS). What you need to know AUSfund accounts of $50 or more attract an administration levy of $10 a year. Lower balances are not subject to the levy and do not earn interest. However all accounts are protected from erosion by the levy so that the levy cannot exceed the interest credited to each account. AUSfund may have a different investment strategy to HESTA and does not offer death or disability insurance. If your account is transferred to AUSfund, HESTA will disclose your personal information to allow AUSfund to administer your account. AUSfund Administration PO Box 2468, Kent Town SA 5071 Phone: Fax: admin@ausfund.net.au Web: 8 AnnualReport 2006/2007

9 Who takes care of your Fund? HESTA is run by H.E.S.T. Australia Limited, an APRA and ASIC licensed trustee company with guarantors (who don t receive dividends). Guarantors represent employee and employer organisations and are eligible to nominate Directors to the Board. HESTA s Board HESTA s Board (as at 30 June 2007) Employee representatives (nominated by their organisations) Beth Mohle Chair Australian Nursing Federation (ANF) Appointed 28 June 2001 Rob Elliott Health Services Union (HSU) Appointed 21 November 1997 Janine Freeman LHMU Appointed 1 January 2007 Brett Holmes ANF Appointed 28 September 2000 Kathy Jackson HSU Appointed 20 August 1999 Gerardine Kearney ANF Appointed 1 April 2004 David Whiteley ACTU Appointed 27 September 2001 There are 14 Trustee Directors on HESTA s Board, with equal representation from employee and employer organisations in the health, aged care and community services fields. This ensures the voices of both employers and members are heard and that their views are taken into account when decisions are made. The Board meets 10 times a year, managing every aspect of the Fund s responsibilities and overseeing the administration, investments and future direction of HESTA. The role of the Board is to govern the operations of HESTA, ensuring the Fund is administered in accordance with the Trust Deed, relevant legislation and regulations, and to determine the strategic direction of the Fund. Although the Trustee Company is required to hold professional indemnity insurance to protect both itself and the Directors from claims against them, there has never been a claim under the insurance policy and no penalties have been imposed under the Superannuation Industry (Supervision) Act 1993, which covers the regulation, responsibilities and activities of super funds. If you would like to know more about the governing rules of the Fund, you can obtain a full copy of HESTA s Trust Deed or the rules governing the appointment of Trustee Directors by visiting If you have any feedback on your Annual Report you can write to: Anne-Marie Corboy Chief Executive Officer, HESTA PO Box 615, Carlton South, VIC, 3053 More information on individual Directors is available at as are copies of HESTA's Board Charter and Code of Conduct. Employer representatives (nominated by their organisations) Glenn Bunney Aged & Community Services Australia Appointed 1 January 2007 Lindsay Doherty Aged Care Association Australia Appointed 1 January 2007 Angela Emslie Victorian Employers Chamber of Commerce and Industry Appointed 15 December 1994 Don Good Catholic Health Australia Appointed 16 November 1989 Denis Hogg Australian Private Hospitals Association Appointed 20 December 2005 Valerie Lyons Aged & Community Services Australia Appointed 1 January 2007 Tony Smith Aged Care Association Australia Reappointed 19 April 2007 The Board Committees The Board Committees as at 30 June 2007 Specialised responsibilities are delegated to committees, consisting of Directors who report to the full Board meeting. Audit Committee Chair: Don Good Members: Valerie Lyons, Tony Smith, Rob Elliott, Kathy Jackson, David Whiteley The Audit Committee is responsible for ensuring the Fund observes high standards of business behaviour and ethics, complies with all legal and regulatory requirements, manages risk effectively and provides assurance regarding the quality and reliability of financial information. Board Development Committee Chair: Beth Mohle Members: David Whiteley, Janine Freeman, Glenn Bunney, Angela Emslie, Denis Hogg The Board Development Committee is responsible for ensuring the Board maintains the appropriate balance of skills and expertise to perform the functions required. The committee also reviews and makes recommendations on the level of training and education required, Directors remuneration and Board performance and processes. Marketing Committee Chair: Gerardine Kearney Members: Brett Holmes, Kathy Jackson, Lindsay Doherty, Angela Emslie, Denis Hogg The Marketing Committee is involved in HESTA s marketing function at a strategic level. This ad-hoc committee participates in the development and monitoring of the marketing strategy and the Fund s product portfolio. AnnualReport 2006/2007 9

10 Attendance at meetings The number of meetings held and meetings attended by each of the Directors of HESTA during the financial year were: Director Beth Mohle Denis Hogg Glenn Bunney Lindsay Doherty Rob Elliott Angela Emslie Janine Freeman Don Good John Griffiths Nancy Hogan Brett Holmes Kathy Jackson Gerardine Kearney Valerie Lyons Viv Padman Neil Saxton Tony Smith David Whiteley Remuneration of HESTA Directors The total amount of remuneration paid or payable to the Directors of HESTA for the year ended 30 June 2007 (including superannuation contributions) was $403,500. The following table lists the number of Directors of the Trustee company whose income from the Trustee company or any related party falls within the following bands: Amounts between Board held Board attended Audit held 2006/2007 No. of Directors Less than $9,999 1 $10,000 and $19,999 6 $20,000 and $29,999 8 $30,000 and $39,999 2 $40,000 and $49,999 1 $50,000 or more - Key advisers and service providers HESTA uses a number of external service providers to help us administer your account and invest your money. Frontier Investment Consulting Pty Ltd provides the Board with advice on investing members money and is paid a fee for this service. HESTA is a shareholder of Frontier. Superpartners provides administrative services for HESTA, including operating the Fund s service centre, insurance administration, contribution and benefit processing and other general Fund administration. HESTA invests in the entity that owns Superpartners. Other key advisers and providers as at 30 June 2007 are: JP Morgan Fund Custodian ING Life Limited Member Insurance Benefits Peter Carroll Pty Limited Actuary Dwyer & Co Solicitors Ernst & Young Auditors PricewaterhouseCoopers Tax Accountants & Advisers Audit attended Development held Development attended Marketing held Marketing attended HESTA s investment managers HESTA uses a range of professional fund managers to invest members money according to specific objectives and strategies (including offering strategies to guard against excessive risk) set out by the HESTA Trustee Board with advice from our investment consultant, Frontier Investment Consulting. By using investment managers, HESTA can make use of their expertise in the investment of your retirement savings, while at the same time using our size to achieve economies of scale that keep costs low. HESTA s investment managers at 30 June 2007 were: Alliance Capital Management Australia Limited JP Morgan Chase Bank, N.A. National Australia Bank Limited Perpetual Investment Management Limited Alliance Capital Management Australia Limited Barclays Global Investors Australia Ltd Members Equity Pty Limited Pacific Investment Management Company Western Asset Management Company Limited AEW Value Investors, L.P. BT Funds Management No 2 Limited Charter Hall Limited EG Funds Management Eureka Funds Management Limited Fiduciary Trust Company International Fortius Funds Management Pty Limited IGIPT Pty Ltd Industry Superannuation Trust Pty Ltd Morgan Stanley & Co Queensland Investment Corporation Valad Funds Management Limited Acadian Asset Management, Inc Altrinsic Global Advisors, LLC AQR Capital Management, LLC AXA Rosenberg Investment Asia Pacific Limited Baillie Gifford Overseas Limited Brandywine Global Investment Management, LLC Dexia Asset Management First State Investments (Hong Kong) Limited Generation Investment Management LLP Lazard Asset Management Pacific Co Marathon Asset Management (Australia) Limited Mondrian Investment Partners Limited Orbis Investment Management Limited Queensland Investment Corporation State Street Global Advisors Australia Ltd Turner Investment Partners Pty Ltd Walter Scott & Partners Limited Wellington Management Company, LLP Barclays Global Investors Australia Ltd BT Investment Management No 2 Limited Citigroup Global Markets Australia Pty Limited Confluence Asset Management Ltd Eley Griffiths Group Pty Ltd Industry Funds Management Pty Ltd Maple-Brown Abbott Limited Orbis Investment Management (Australia) Pty Limited Paradice Investment Management Pty Ltd Perpetual Investment Management Limited PM Capital Limited Portfolio Partners Limited Renaissance Smaller Companies Pty Ltd Warakirri Asset Management Pty Ltd Hastings Funds Management Limited Industry Funds Management Pty Ltd Stafford Timberland Limited Adveq Management AG Coller International Partners V-A, L.P. Industry Funds Management Pty Ltd Lexington Capital Partners VI-B, L.P. Members Equity Pty Limited Performance Equity Management, LLC Quay Partners Pty Ltd Siguler Guff & Company, LLC Vencap Limited GMO Australia Limited Harris Alternatives L.L.C. Quellos Capital Management, LP Bridgewater Associates, Inc. Lee Overlay Partners Limited Members Equity Pty Limited Pareto Partners The Bank of New York Capital Markets Ltd Bridgewater Associates, Inc. Goldman Sachs JBWere Financial Markets Pty Ltd Cash Cash Cash Cash Infrastructure Infrastructure Infrastructure Absolute Return Strategies Absolute Return Strategies Absolute Return Strategies Currency Management Currency Management Currency Management Currency Management Currency Management Other Assets (Core Pool only) Commodities 10 AnnualReport 2006/2007