ANNUAL REPORT 2012 – 2013

THE INDUSTRY SUPER FUND FOR THE MOTOR INDUSTRY

www.mtaasuper.com.au

MTAA SUPER Annual Report 2012-2013

Contents 2-3 5 6-7 8 15

Message from the Chairman & Chief Executive Officer MTAA Super today The Government’s Stronger Super Reform Program Introducing MTAA Super RetireSafe Our Investment strategy

16-17

Pre-Mixed Investment options

18

My Choice Investment options

19

Investments - Summary of assets

22-23 25 26-27

Understanding crediting rates Financial statements Meet the Board

32

Information for super members

33

Contact details

Message from the Chairman & Chief Executive Officer

At MTAA Super we take a great deal of pride and satisfaction in what we have achieved during the last 12 months.

Since the last Annual Report we have been busy preparing for our transition to the Stronger Super reforms as the Australian superannuation system continues to go through a period of significant change. At MTAA Super we take a great deal of pride and satisfaction in what we have achieved during the last 12 months. We have a strong and cohesive board, positive relationships with our key stakeholders and a highly focussed, hard working team.

A better system for all working Australians

Support for our members and our industry

Reforms like these (and other legislative changes you can read about on pages 6 and 7) are part of the super system’s big picture, affecting the entire industry. Our focus at MTAA Super, however, is on making sure that these systemic changes work for our members and employers on an individual level.

As the industry fund for the motor trades, we want to show loyalty to the industry that has shown loyalty to us for more than twenty years. Our Board is working harder than ever to ensure that our relationships with industry partners and employers are strong, and our commitment to transparency, integrity and service is rock solid. Whilst it is well known that industry super funds, like MTAA Super, exist only to benefit members, we know we cannot afford to simply rely on our guiding values. We are also doing the hard work behind the scenes to make sure we are being responsive to the needs of our members.

Introducing My AutoSuper The introduction of MySuper is a major part of the Stronger Super reforms and from 1 January 2014, all employers who make contributions into a default super fund on behalf of their employees must pay those contributions into a MySuper product. This is a simple, low cost account designed to make it easier for members to understand and compare super funds. As an industry fund, MTAA Super already offers a simple, low cost product, so the changes for our members and employers will be minimal. We have received our MySuper authorisation and will be launching our MySuper product, “My AutoSuper”, on 1 December 2013.

The federal government’s plan to gradually increase the super guarantee made its first step on 1 July this year – from 9.00% to 9.25%. Also, from 1 July 2013, those aged 60 and over are able to make concessional contributions of up to $35,000 per annum, an increase of $10,000 per annum to help their super grow faster.

The peace of mind you are looking for We believe that in order to be truly serious about ‘benefiting members’ we need to work hard to strengthen our relationship with members, and make sure we are helping them to achieve their retirement goals. By making sure our lines of communication are strong and open, we have been able to respond to what our members are asking for. For example, since the Global Financial Crisis, the feedback we have been receiving from members is that they are no longer focussed purely on investment returns, but also on how best to achieve retirement income security. Average life expectancies are increasing, and while this is obviously a good thing, concerns over making super payments last the distance are rising with them. While the traditional response to having inadequate savings to cope with a potentially longer life has been to invest more aggressively, even a well-managed aggressive approach creates increased risk. So, in response to member needs, this year we launched MTAA Super RetireSafe.

MTAA SUPER Annual Report 2012-2013

MTAA Super RetireSafe offers an income for life, payable as a pension, even if a member’s account balance reaches zero. Unlike other similar products, however, it is designed to provide potential for growth when markets are doing well, as well as protection when markets are down.

Over the last year we have reviewed our investment strategy and adjusted our investment portfolio to optimise the risk adjusted returns to members, ensuring a more balanced asset allocation and more secure future returns. There is no doubting the amount of change occurring at the moment and most of it is very positive.

Our primary objective with MTAA Super RetireSafe is to offer peace of mind. For retirees who have been forced to become avid stock watchers when really they want to play with the grandkids or relax, we believe this will be a welcome move.

We believe that during these periods of transition, it is more important than ever to strengthen both our relationships with our members and loyalty to our industry. We are in good shape and well structured to meet future challenges.

We have been running retirement seminars across the country to make our members aware of this new option as well as reminding them about our existing pension options and we will continue to assist our members planning their retirement.

Our commitment to strive for the best possible retirement outcomes for you, our members, is unwavering. It is the only reason MTAA Super exists and we will continue working hard to that end.

We are here to help

We thank you for your support.

We have also been providing workplace education sessions tailored to individual workplaces. Our Business Development Managers travel the country answering questions on all aspects of how super works and helping members make the best of their membership. Hand in hand with our on-going program of educating our members comes our enhanced advice service. We now offer a phone-based limited personal advice service for members who need detailed answers to specific questions as well as our comprehensive financial planning service for those members who need a complete analysis of their overall financial position, particularly in preparing for retirement.

John Brumby Chairman, MTAA Super

On the investment front we have generally seen more stability in 2012/2013 compared to previous years. Equity markets performed strongly and delivered double digit returns. The MTAA Super Balanced Option returned 10.46% for the year ended 30 June 2013.

Leeanne Turner Chief Executive Officer, MTAA Super

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Belinda Fergusson Financial Controller, Parry Nissan Townsville

Belinda Fergusson certainly has her hands full as Financial Controller at Parry Nissan in Townsville. Belinda’s job covers accounting, HR and IT and she aims to ensure all 65 employees are able to work smoothly. After growing up on the Sunshine Coast, Belinda has worked as an accountant for over ten years. She recently spent a stint on Magnetic Island, as a company accountant and front office manager of a resort. But after completing her CPA studies she decided it was time to move her career forward. Yet while accountancy is Belinda’s trade, she has a keen interest in cars. “My husband and I love to go to car shows and participate in car cruises.” she says. Their pride and joy? A 1968 Falcon purchased two years ago. “It’s exactly what both of us wanted. We have very similar interests.” Belinda says while MTAA Super’s association with motor trades was welcome, it was other aspects that make her think it was the right choice for her employees. “I want our employees to be able to maximise their money, and that means low fees. They also need to have decent returns and I believe they get those from MTAA Super,” she says. “MTAA Super give us a lot of support, we always have contact from [local MTAA Super Business Development Manager] Diedre, which is really handy. If we have any questions then we’ve got a contact person there.” “She calls us regularly and has popped in a few times just to see if there’s anything she can help with, which is great.”

MTAA SUPER Annual Report 2012-2013

MTAA Super today The MTAA Super approach MTAA Super does not pay dividends to shareholders or commissions to financial advisers. This approach allows us to provide lower fees and better outcomes for our members. Transforming the service experience

MTAA Super has more than $6.6 billion in funds under management and the net earnings from those investments are paid into fund member’s accounts.

Working with the Fund’s administrator, Superpartners, the development of the new administration platform called spRIGHT has continued throughout 2012-13.

MTAA Super was established in 1989, for workers in the motor trades and allied industries.

This system is part of a business transformation program called nextGEN which will streamline back office processes and will ensure a better member and employer experience when dealing with the Fund. To date we have seen a number of enhancements from the project including improved call centre capabilities which will continue to provide members with an excellent and relevant service experience.

Today, most of our 272,000 members are still working in these industries, although, as a public offer fund, any Australian can become a MTAA Super member. Over 1,700 of those members are members who have a MTAA Super Pension. We work with employers across the country to help ensure their employees receive the products that are appropriate to their needs. We offer free and extensive support to employers to set up and administer their employees’ super and assist employers help our members achieve better retirement outcomes through the provision of clear and accessible information and advice.

To help deliver nextGEN the Fund’s administrator has appointed a specialist and experienced transformation partner to help oversee the program and ensure the best possible solutions and systems are provided for our members and employers.

This year, employer contributions to MTAA Super totalled $633.9 million.

We are confident that the program will deliver to you, our members and employers, the best superannuation administration system in the country.

Member Insurance

Our aim with nextGEN is to make your experience with the Fund as efficient and member friendly as we can.

MTAA Super offers a range of insurance options to protect members and their families. We aim to provide insurance that is easy to access, simple and affordable.

Improved service for employers

As a member you have a certain level of cover automatically granted to you (subject to terms and conditions) with cost-effective premiums that are deducted from your super account balance.

As part of the Government’s SuperStream reforms, from 1 July 2014, data standards and use of e-commerce will become mandatory for employers with 20 or more employees making contributions. This will represent a change for many employers, even those currently utilising an electronic channel. In addition, employers will be required to submit both their default (MTAA Super) and choice (other Funds) contributions in the same electronic format.

MTAA Super meets regularly with the Fund’s insurer, Metlife to discuss insurance arrangements, to ensure they remain appropriate for our members. Over $53 million in claims has been paid to members and beneficiaries during 2012-13.

To assist with these changes, MTAA Super will be offering a Clearing House solution to its employers in late 2013 / early 2014. The MTAA Super Clearing House will enable employers to submit a single contribution advice and single payment for their employees which will cover all fund memberships (MTAA Super default and choice). It will also manage the reconciliation of payment to the contribution advice and distribute the payment to all nominated funds (and fund member accounts).

Members can apply online To continue the Fund’s commitment to improving our service to members, we introduced a new online insurance application facility in March 2013. The application is a real-time process that guides members through the assessment and provides (subject to the nature of the member responses) a confirmed acceptance immediately. The advantage to members is the significant reduction in time taken to process an application. Future enhancements to the facility will enable members to change their work scale and apply for matching insurance cover.

With the introduction of the Clearing House, employers will see a significant benefit in terms of reducing the time and cost in managing superannuation obligations, and most importantly, will be complying with the 1 July 2014 legislative requirements.

5

The Government’s Stronger Super Reform Program The Stronger Super reforms are designed to help protect and grow the retirement savings of Australian super fund members. MySuper

Superannuation guarantee age limit abolished

The introduction of a MySuper product is one of the major Stronger Super reforms. MySuper is a simple, low cost account designed to make it easier for members to understand their super and make comparisons between funds. All employers who make contributions for their employees into a default super fund must pay those contributions into a MySuper product from 1 January 2014.

From 1 July 2013, the upper age limit for the payment of SG contributions has been abolished. This means that no matter what your age, if you are still working, your superannuation can still grow.

My AutoSuper MTAA Super has been authorised to provide its MySuper product – My AutoSuper. This will be available as our default option from 1 December 2013. The impact of the transition to My AutoSuper will be minimal for employers and members because, as an Industry Super Fund, we already offer a simple, low cost product.

Super Stream Super Stream introduces system and process improvements to make super more efficient and user friendly.

Increased Governance The introduction of more effective governance measures will strengthen the integrity of the super system and provide greater peace of mind to super fund members.

Other reforms Increase in Superannuation guarantee (SG) The super guarantee rate (the amount employers are required to contribute to your superannuation account) increased from 9% to 9.25% on 1 July 2013. This gradual increase will continue until the rate reaches 12% by 1 July 2019. The table below outlines the changes:

Year

Reduction of super co-contribution From 1 July 2012, the Government has reduced the matching rate of the super co-contribution from 100 per cent to 50 per cent, effectively reducing the maximum co-contribution payable from $1,000 to $500. For the 2013/14 financial year, those members making after tax contributions and earning less than $33,516 are eligible for the maximum amount payable with the upper income threshold for eligibility being $48,516. For more information on how the super co-contribution works, you can refer to the Super Co-contribution fact sheet on our website at www.mtaasuper.com.au.

Abolition of Member Protection Under member protection rules, administration costs incurred by a member whose balance is less than $1,000 at the end of a reporting period must not exceed the investment return credited to or debited against the member’s account for that period. This measure has been abolished from 1 July 2013. This means that, from 1 July 2013, members whose MTAA Super account balance is less than $1,000 will no longer receive any rebate for their administration costs and will pay the standard administration fees applicable to all members.

Concessional Contribution caps From 1 July 2013, those aged 60 and over will be able to make concessional contributions of up to $35,000 per annum. The existing limit of $25,000 still applies to those under age 60. From 1 July 2014, the higher contributions cap of $35,000 per annum will be extended to those aged 50 and over.

% Rate

2012/13 2013/14 2014/15 2015/16

9.00 9.25 9.50 10.00

2016/17

10.50

2017/18 2018/19 2019/20

11.00 11.50 12.00

MTAA SUPER Annual Report 2012-2013

Reduction in tax concession for high income earners The Coalition policy for superannuation

From 1 July 2012, concessional contributions made by or for those individuals whose income exceeds $300,000 per annum will be taxed at a total rate of 30% rather than the previous rate of 15%. The Fund will continue to pay tax on these contributions at the rate of 15% and the individual will be personally taxed by the Australian Tax Office for the additional 15% tax. Visit the ATO website for more information.

The change of government has set the stage for a number of developments in superannuation policy. Some key proposals announced include: - A delay of 2 years in the Superannuation Guarantee (SG) increase. This would see the level of SG contributions made by employers reach 12% by 1 July 2021 instead of 1 July 2019.

Excess concessional contributions In recognition that many individuals accidentally contribute in excess of the contribution limits, excess concessional contributions made from 1 July 2013 will be taxed at the individual’s marginal tax rate, plus an interest component, rather than the top marginal rate. The Government will also allow individuals to withdraw 85 per cent of their excess contributions.

- A re-examination of the contribution limits and super co-contribution scheme after the budget is back in surplus. - A review of the minimum draw-down amounts for account-based pensions.

Proposed legislation

- The discontinuation of the Low Income Super Contribution scheme.

Tax on pension account investment earnings

- Plans for the ATO to become the superannuation clearing house for small busness.

From 1 July 2014, the Fund will be required to apply a 15% tax to investment earnings over $100,000 for retirement accounts in pension phase. Currently, there is no tax on these investment earnings. This proposed change is not yet law. For more information, visit the ATO website.

We will provide regular updates as more information becomes available.

Social security deeming rules From 1 January 2015, normal income test deeming rules will be extended to new account based pension products. These rules will not be applied to account based pension products that were commenced prior to this date, so no existing pensions will be affected unless a transfer is made to a new pension product after 1 January 2015. This proposed change is not yet law.

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Introducing MTAA Super RetireSafe: an income for your whole retirement

Achieve peace of mind with the new MTAA Super RetireSafe. Recognising that some Australians are looking for more security in planning their retirement, in February we launched ‘MTAA Super RetireSafe’. MTAA Super RetireSafe, developed in conjunction with Metlife Australia, is an income for life product, providing protection against market and longevity risk. It is payable as a pension, but members can make lump sum withdrawals from their account. MTAA Super RetireSafe’s primary advantage is peace of mind. It means that superannuants can avoid becoming avid stock watchers when really they want to play with the grandkids and relax.

MetLife Australia provides the guarantee for MTAA Super RetireSafe and the product is open to all Australians aged 60 and over with a superannuation account balance of $50,000 or greater. More information is available via the Product Disclosure Statement at www.mtaasuper.com.au or by calling the dedicated MTAA Super RetireSafe number 1300 232 092. We also recommend that you seek advice from a licensed financial adviser about whether MTAA Super RetireSafe is the right option for you.

With MTAA Super RetireSafe, your lifetime monthly pension payments continue even if your Account Balance reduces to nil. Members have the potential for growth when markets are strong, protection against negative investment performance, access to capital and a death benefit. MTAA Super RetireSafe is very different to other fixed term and lifetime annuities, which lock in the income rate applicable at the purchase date. While this approach might be attractive when interest rates are falling, it can be disadvantageous when rates start rising again. With MTAA Super RetireSafe, the income rate is guaranteed for the first five years. After that the rate can increase or decrease in some circumstances, but only in small increments. So while an income for life is guaranteed, the amount of income can vary from year to year.

Income and peace of mind for life.

MTAA SUPER Annual Report 2012-2013

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Laura Granger Administration Assistant, MTAA Super

Laura Granger realised early on she’s a people person, and that’s guided her young career toward her hands-on role assisting members at MTAA Super. Growing up in Canberra, Laura has held various customer service and reception roles, before moving up to her current position as Administration Assistant at MTAA Super. She says her current job really opened her eyes about the importance of super. Like most young Australians, Laura held various positions in the early part of her career, resulting in the familiar problem of multiple super funds. “I always just took whatever fund was allocated to the business. I never really thought much of it. It was just easier and I didn’t really make an informed decision at the time,” she recalls. At 24, socialising and sport are more likely to be at the front of Laura’s mind than retirement, but she notes that she now keeps half an eye on the long term. “I want to know I’ve got something to fall back on in retirement. I don’t want to be living off a pension,” she says. “I want to know that my super fund has got it under control for now and when the time comes to worry about it, it will all be in place and good to go. “I chose to be a member of MTAA Super, because I want a fund that is reliable, that I can trust, and that puts their members’ needs first. “We, the members, need to be the fund’s main concern and at the forefront of all decisions made. I know that’s how things are done at MTAA Super.”

MTAA SUPER Annual Report 2012-2013

Providing the level of advice that’s right for you It’s time to start planning the retirement you want. MTAA Super has many options to help make your planning easy. With Australians now living far longer than they have before, planning carefully for retirement is more important than ever. MTAA Super recognises that retirement plans are unique to the individual member and that the same approach is unlikely to work for everyone. We want our members to actively plan for their future and reach the lifestyle they want so they can relax and feel more confident. To assist our members with their retirement planning, MTAA Super offers a range of education and advice services. Simply contact us and we can help you determine the level of advice you need to achieve the retirement you want.

Online calculators

Comprehensive personal advice

This year MTAA Super launched a range of quick and easy calculators on our website. The calculators will give you an indication of the level of income you can expect to receive in retirement and help you make the most of your situation. The online tools also provide tips on how you might increase your retirement income. Just having a play with them is guaranteed to get you thinking about your financial future.

Planning your retirement can be complicated and areas like taxation and social security entitlements can be tricky to navigate. Some members can benefit from a more detailed and personal approach.

Retirement seminars MTAA Super runs retirement seminars across Australia, from February to November. The seminars focus on our retirement income stream products and are presented in an accessible format by our financial planning and product experts. These seminars are a great starting point for members who wish to explore their retirement options. Visit the MTAA Super website to register for a seminar.

Workplace visits

MTAA Super has an arrangement with Industry Fund Financial Planning (IFFP) which provides fee-for-service financial planning for MTAA Super members. A dedicated IFFP adviser can work with you to provide a comprehensive financial plan, giving consideration to all your relevant financial and personal circumstances. The initial interview and fact-finding consultation with one of our advisers is free. However, fees will apply for the development of a full financial plan. Prior to receiving any advice you will be given a fixed price quote so you will know in advance what that advice is going to cost. Any fees payable are fee-for-service only – there are never any commissions, or other hidden charges, and fees for advice about superannuation can be deducted from your account.

MTAA Super provides education sessions tailored to individual workplaces. If you think a workplace visit would benefit your colleagues or your employees, we can put you in touch with one of our Business Development Managers (BDMs). MTAA Super BDMs can answer questions on all aspects of how super works, and help you and your co-workers make the most of your membership.

Everything we do at MTAA Super is driven by one purpose: to look after the best interests of our members.

General advice If you require information about how super works (for example, making contributions, investment choice, or insurance within your super) you can talk to MTAA Super over the phone at no cost. If your query goes beyond the basics, we can offer you various levels of personal advice.

Limited personal advice If you have a question on a single issue that requires a detailed answer and we need to take your personal circumstances into account, we can provide you with limited personal advice. This service is available to MTAA Super members over the phone or in person from one of our fully qualified financial advisers at no cost. It can cover topics such as salary sacrifice contributions, choosing the right investment option for your personal circumstances, how much insurance you need and a range of other matters that relate to your MTAA Super account.

11

Sponsorship MTAA Super’s association with the automotive industry provides regular opportunities to engage with existing and potential members and employers. Sponsorship forms part of MTAA Super’s Marketing and Advertising budget allocation and is reviewed by the MTAA Super Board each year. In 2012-13 MTAA Super provided sponsorship to Lifeline for the readthesigns program and to V8 Supercars Australia (V8’s), Holden Racing Team (HRT) and Ford Performance Racing (FPR). Further arrangements were made via the State based motor trade associations in support of Apprentice of the Year awards. MTAA Super intends to continue these associations throughout the 2013-14 year in support of the motor trade industry.

readthesigns

V8 Supercars

We are proud of the ongoing work of the readthesigns program, a joint initiative of MTAA Super and Lifeline Australia aimed at promoting help seeking and suicide prevention among employees and employers in the retail motor trades and allied industries.

Given our origins, MTAA Super’s sponsorship of the world-class V8 Supercar Series racing event is a natural fit.

The readthesigns program was launched in September 2004, as a result of MTAA Super’s concern at the number of suicides within the industry. Suicide accounts for 25 per cent of deaths among Australian males aged between 15-24. This year we have had significant success in promoting the readthesigns program nationally, and in acquiring new opportunities to expand the program so that it reaches more automotive apprentices.

How readthesigns works The readthesigns program aims primarily to promote help seeking. Help seeking behaviour, is the term used to refer to a person’s willingness to seek help when facing personal difficulties or challenging times in their lives.

We recognise the importance that the V8 Supercar Championship Series plays in promoting the Australian motor industry. As a bi-partisan measure MTAA Super also sponsors both the Holden Racing Team and Ford Performance Racing Team. We know the series means a lot to many MTAA Super members, particularly those working in the motor industry. Our sponsorship of the Series serves as a means of connecting with younger members, who are generally not as engaged with their superannuation arrangements as older members. We believe that by engaging with younger members, MTAA Super has a better chance of helping them learn more about their superannuation and insurance, so they can enjoy a secure working life today and a better quality retirement tomorrow.

Apprentice of the Year Awards

The purpose of readthesigns is to promote help seeking by creating awareness of mental health issues, such as stress, anxiety and depression. It also informs MTAA Super members about the best places and services to seek help when going through difficult times.

To further raise awareness with younger members around Australia, MTAA Super has been a sponsor of Apprentice of the Year Awards. These awards are held in states and territories to encourage and attract the next generation to progress in the industry.

The program also seeks to educate members in ways to recognise and respond to mates who might be going through a hard time.

Sponsorship of the awards enables MTAA Super to recognise the achievements of all those members participating in the motor trades and assist them to learn more about superannuation and insurance.

Mental health problems make many people feel isolated, so it is important to remember that getting help can be as easy as talking things over with a friend, family member or colleague. In most cases just being there to listen to a friend talk through their problems can be of great help. Often, after having the opportunity to talk about their concerns, people feel more able to work through their problems and reach out for further help. For more information visit www.readthesigns.com.au The program includes a range of ‘road signs’ brochures and posters for display in workplaces to raise awareness of the campaign and the importance of mental health.

MTAA SUPER Annual Report 2012-2013

Matt Gold Motor Mechanic MTA SA Apprentice of the Year

Matt Gold is a young man who has evidently found his calling. Since starting his apprenticeship at Kym’s Auto Repairs workshop in Adelaide, he received the Outstanding OH&S Award, was crowned Third Year Apprentice of the Year in 2011 and, most recently, picked up the coveted 2012 MTA SA Apprentice of the Year Award, which included a $2,000 cheque from MTAA Super. “I was pretty happy to receive the Apprentice of the Year Award,” he says. “MTAA Super’s support is much appreciated” “You don’t always get recognised for the hard work you do so it’s great to be acknowledged. MTA organised absolutely everything for me – from training through to employment.” And while retirement couldn’t be further from the 22-year-old’s mind, he does have a rough idea of what he wants to be able to do when the time comes. “I would like to be able to spend most of my retirement period overseas,” Matt says. “That would be ideal. I don’t think I’d be the kind of person who’d like to jump in a caravan and see Australia - I’d like to go overseas and go on cruises. All the kind of things my grandparents are doing now.” For now though, it’s all about working and playing hard, which, for Matt – is basically the same thing. “In my spare time, I enjoy working on my own project cars. That’s exactly why I’m a mechanic, it’s what I enjoy doing.”

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Investment market update Performance of investment markets. Listed equity markets delivered strong performance over the 2012-13 financial year, supported by stimulatory policies from central banks in the US, Europe and Japan. Over the year, the MSCI World Index, an index of global stock prices gained 19% in local currency terms. In Australia, the S&P/ASX 200 price index gained 17%. However, the outlook for global growth remains uncertain. Growth is slowing in China and Australia, and Europe remains in recession. Defensive asset classes posted positive returns over the year, however gains were lower than those achieved in listed equities. Towards the end of the financial year, fixed income returns were impacted by rising interest rates due to increasing speculation that the US Federal Reserve may scale back the size of its quantitative easing program (injection of new money into the monetary supply).

Japan The Japanese equity market was the standout performer for the year, with the Nikkei increasing by more than 50%. The market has responded very positively to a dramatic shift in policy direction, following the election of Prime Minister Shinzo Abe in December 2012 and the appointment of Haruhiko Kuroda as Bank of Japan Governor. The change in leadership spurred a suite of ambitious stimulus measures intended to end deflation and stimulate growth, including a doubling of the country’s inflation target to 2%, further government spending, and a new program of quantitative easing on an unprecedented scale. The new measures have been positive for consumer and business confidence and have resulted in a depreciation of the Japanese yen, benefitting the country’s exporters. However, these policies are also associated with significant risk, while Japan continues to face the challenges of a rapidly aging population and the highest levels of government debt in the developed world.

Europe Investor concerns over the European financial crisis dissipated somewhat over the financial year, following the European Central Bank’s commitment to do “whatever it takes” to maintain the Euro. However, economic conditions are still weak and Europe remains in a mild recession. The unemployment rate continued to increase over the financial year, reaching a new record high of over 12%.Cyprus became the latest country to require a bailout, as part of a controversial plan that required bank depositors to accept losses.

China Economic indicators continue to point to a slowing economy in China, with GDP and trade figures both well below official targets for 2013. Manufacturing activity has also been generally sluggish, and this has had an impact on the labour market. There were some signs that producer prices had fallen, signalling deflationary conditions as a result of reduced aggregate demand, lower global commodity prices and unused capacity in factories. Concerns are also growing over the sustainability of the Chinese financial system, in particular the rapid growth of the unregulated shadow banking system.

USA

The impact on Australia

Despite the global slowdown, the US economy has continued to grow at a modest pace. The US housing market has been a source of positive news, with signs of a recovery in both house prices and home construction activity.

The slowdown in China has had a marked impact locally, with economic data suggesting that the Australian economy is losing momentum.

Based on the S&P/Case Shiller house price indices, house prices have increased by more than 10% over the financial year. The US employment market also continues to show signs of gradual improvement, with the unemployment rate declining modestly from 8.2% to 7.6% over the year. This has led to higher consumer confidence, which is now at its highest levels in several years. However, the US Government’s large fiscal deficit and rising debt levels remain key concerns. Government spending cuts have weighed on economic growth and employment, and further cuts will likely be necessary to balance the budget.

The economy has been impacted by falling commodity prices, a slowdown in mining investment and soft domestic economic conditions. Over the year, the RBA cut interest rates to a record low of 2.75%. However, weaker GDP growth and falling consumer and business confidence suggest that recent interest rate cuts have so far had a limited impact. After remaining above parity for some time, the Australian dollar declined significantly in the last few months of the financial year, and was one of the worst performing currencies. Against the US dollar, the Australian dollar declined by 9% over the year, to US$0.92.

Markets have been supported by the Federal Reserve’s commitment to continue to stimulate the economy until economic conditions improve. Towards the end of the financial year, anticipation that the Federal Reserve may begin to reduce its support for the economy resulted in higher interest rates and weighed on equity markets.

MTAA SUPER Annual Report 2012-2013

Our investment strategy Each year, the Trustee undertakes a major review of our investment strategy. The overarching aim is to deliver suitable, risk-adjusted returns to our members. Our key focus in the 2012-13 financial year was to maintain an investment approach, suited to the volatile market conditions, that remained appropriate with respect to the new superannuation regulatory reforms. Looking ahead over the next three years, we believe there is a strong likelihood that investment returns in financial markets will be lower than investors expect to achieve over the longer term. Recognising this, we are reducing the investment return objectives for our pre-mixed investment options: •

Conservative Option: from CPI + 3% per annum to CPI + 1.5% per annum

•

Balanced Option: from CPI + 4% per annum to CPI + 3.5% per annum

•

Growth Option: from CPI + 5% per annum to CPI + 4.5% per annum.

At the same time we have reassessed the estimated level of investment risk we expect to see in each option, measured as the number of negative annual returns that may occur over a 20 year period. •

Balanced Option: investment risk level reduced from 5 years in 20 to 4 years in 20

•

Growth Option: investment risk level changed from 5 years in 20 to 5.5 in 20.

We have also made some changes to the strategic asset allocations of our investment options. From 1 July 2013 these changes include: •

Limiting the exposure to illiquidity by reducing the allocations to unlisted assets (infrastructure, property, private equity and alternatives credit) - Balanced Option: allocation to unlisted assets reduced from 35% to 30% - Conservative Option: allocation to unlisted assets reduced from 17.5% to 15% - Growth Option: allocation to unlisted assets reduced from 50% to 25%

•

Increasing the exposure to listed equity within the Growth Option from 47% to 75% to boost its growth profile

•

Increasing the exposure to global floating rate credit in the Diversified Fixed Interest Option, in recognition of low prevailing bond yields.

15

Pre-Mixed Investment Options The Pre-Mixed Options are spread across a range of asset classes. The objectives are different for each option to allow MTAA Super members to choose from a range of investment portfolios. Members can select one option or a mix of options and can switch at any time, or invest across a combination of options including the My Choice Options. The way each option combines the asset classes can be seen in the following tables. The actual asset allocations may vary from the strategic asset allocations shown here, due to market conditions or investment strategy decisions. The actual asset allocations are available on the MTAA Super website, updated at the end of each week.

The Balanced Option+

The Conservative Option

The Balanced Option asset allocation as at 30 June 2013 Year

Cash Domestic Fixed Interest Overseas Fixed Interest Australian Equities International Equities* Infrastructure Property High Yield Debt Private Equity Other

Strategic %

6.0 7.0 6.0 26.0 20.0 15.0 10.0 7.0 3.0 0.0

Range %

0.5-15.0 0.0-15.0 0.0-15.0 5.0-35.0 5.0-35.0 0.0-35.0 0.0-25.0 0.0-20.0 0.0-12.5 0.0-12.5

The Conservative Option asset allocation as at 30 June 2013 Actual %

6.5 7.2 6.3 28.3 20.8 16.0 7.7 0.3 6.5 0.4

Year

Strategic %

Cash Domestic Fixed Interest Overseas Fixed Interest Australian Equities International Equities* Infrastructure Property High Yield Debt Private Equity Other

34.5 19.0 15.0 8.5 5.5 7.5 5.0 3.5 1.5 0.0

Range %

Actual %

20.0-45.0 5.0-25.0 5.0-25.0 0.0-20.0 0.0-20.0 0.0-15.0 0.0-10.0 0.0-7.5 0.0-7.5 0.0-5.0

34.8 19.2 15.2 8.5 5.4 8.8 4.2 0.2 3.6 0.2

*Developed overseas shares and emerging shares

*Developed overseas shares and emerging market shares

The Balanced Option is the Fund’s ‘default’ option for superannuation members, which means that if a member hasn’t made a choice about where their super is invested it will be invested in the Balanced Option. This option may be suitable for members who have a long-term view of at least five years.

The Conservative Option is the Fund’s ‘default’ option for Pension members, which means that if a pension member hasn’t made a choice about where their pension is invested it will be invested in the Conservative Option. Seeking stable returns over the short and medium term, the Conservative Option may suit members who take a medium-term view of super of at least 3-5 years. The option seeks stability and moderate returns through increased exposure to assets with less volatility, such as cash and fixed interest.

This portfolio represents a wide range of asset types, with a high percentage in the Alternatives Portfolio and in listed equities. The level of risk could be described as high, as this option is expected to have fluctuations in returns over the short term and is expected to produce negative returns from time to time. The objective for the 2012/13 year was to out-perform (after fees and tax) the consumer price index increase plus 4 per cent a year over rolling 7-year periods. The option returned -2.19% p.a. over the 5-year period to 30 June 2013 against a benchmark of 6.63%. + Will be available as the default fund “My AutoSuper” from 1 December 2013.

The risk profile for the Conservative Option was described as low-medium, and has a more moderate exposure to the Alternatives Portfolio and listed equities. This option is expected to produce negative returns from time to time. However, return volatility is generally expected to be lower in comparison to the Balanced, Growth and Target Return Options. The objective for the 2012/13 year was to out-perform (after fees and tax) the consumer price index increase plus 3 per cent a year over rolling 3-5-year periods. The option returned 0.96% p.a. over the 5-year period to 30 June 2013 against a benchmark of 5.63%.

Note: The strategic asset allocations and investment objectives were amended effective 1 July 2013. Please refer to the PDS for further information.

MTAA SUPER Annual Report 2012-2013

The Growth Option

The Target Return Option

The growth option asset allocation as at 30 June 2013 Year

Cash Australian Equities International Equities* Infrastructure Property High Yield Debt Private Equity Other

Strategic %

3.0 24.0 23.0 21.5 14.0 10.0 4.5 0.0

The target return option as at 30 June 2013

Range %

Actual %

0.0-10.0 10.0-30.0 10.0-30.0 0.0-45.0 0.0-30.0 0.0-15.0 0.0-17.5 0.0-5.0

3.1 24.5 23.3 25.5 12.3 0.5 10.2 0.6

*Developed overseas shares and emerging market shares The Growth Option may be suitable for members who are comfortable with above-average risk and take a longer-term view of seven years or more. The level of risk was high in this option and it is likely to exhibit return volatility in the short term and is expected to produce negative returns from time to time. The objective for the 2012/13 year was to out-perform (after fees and tax) the consumer price index increase plus 5 per cent a year over rolling seven-year periods through controlled exposure to specific risk mainly via the Alternatives Portfolio, which has a range of risk exposures. The option returned 1.18% p.a. over the 7-year period to 30 June 2013 against a benchmark of 7.83%.

Strategic %

Cash

5.0

Infrastructure Property

41.0 27.0

Private Equity High Yield Debt

8.0 19.0

The Target Return Option (closed to new investments) seeks high long-term returns through the Alternatives Portfolio’s exposure to specific risk. The Alternatives Portfolio’s assets include infrastructure, property, private equity and high yield debt. The Target Return Option was described as high risk and is expected to produce negative returns from time to time. The objective for the 2012/13 year was to out-perform (after fees and tax) the consumer price index increase plus 7 per cent a year over rolling seven-year periods. The option returned 0.04% p.a. since inception (Jan 2006) to 30 June 2013 against a benchmark of 9.83%. Note: From 1 May 2011, all new and existing members were no longer able to make new investments into the Target Return Option.

Note: The strategic asset allocations and investment objectives were amended effective 1 July 2013. Please refer to the PDS for further information.

Members can select one option or a mix of options and can switch at any time, or invest in a combination of options including the My Choice Options.

17

My Choice Investment Options The My Choice Options provide an opportunity for members who want to pick and choose a portfolio based on asset classes. Members can select any combination of these Options or choose to combine them with the Pre-Mixed Options. The My Choice Options are designed to give maximum flexibility in creating and managing a super portfolio.

The International Shares Option

The Diversified Fixed Interest Option Strategic Allocation %

Strategic Allocation %

International Shares

100.0

With 100 per cent allocated to international shares, the International Shares Option seeks high returns over the long term through an exposure to global market risk. The allocation includes exposure to both developed markets and emerging markets and the percentage allocated to emerging markets is set equal to the weight of emerging markets in the MSCI All Countries World (ex-Australia) Index. It aims to out-perform an average of that Index and the MSCI Emerging Markets Index, after weighting. The option returned -0.11% p.a. (before fees and taxes) over the 7-year period to 30 June 2013 against a benchmark of 0.06%.

Australian Fixed Interest

60.0

International Fixed Interest

40.0

The Diversified Fixed Interest Option contains a mix of Australian and international government bonds and credit securities. The actual allocation is the same as the strategic allocation and this Option seeks stable returns in the short to medium term. The international bonds are fully hedged against foreign exchange rate fluctuations. This Option seeks to out-perform a weighted average of the UBS Australian Treasury All Maturities Index and the JP Morgan Government Bond ex-Australia Index, hedged to Australian dollars (before fees and tax). The option returned 8.32% p.a. (before fees and taxes) over the 5-year period to 30 June 2013 against a benchmark of 8.33%.

The Cash Option

The Australian Shares Option Strategic Allocation %

Australian Shares

100.0

Strategic Allocation %

Cash

100.0

With 100 per cent allocation to managed shares from S&P / ASX 300 Accumulation Index, this Option seeks high returns over the long term through exposure to local market risk. The Option aims to out-perform the returns of the S&P / ASX 300 Accumulation Index gross of franking credits (before fees and tax). MTAA Super employs a range of managers and investment strategies to diversify the exposure to market risk.

The Cash Option seeks stable returns through low exposure to risk. It aims to perform in line with the UBS Australian Bank Bill All Maturities Index (before fees and tax). It invests in term deposits, bank bills, commercial paper and other money market instruments, avoiding higher risk ‘enhanced cash’ products, which are not considered appropriate for this Option. The actual asset allocation is the same as the strategic asset allocation for the Cash Option.

The option returned 4.56% p.a. (before fees and taxes) over the 7-year period to 30 June 2013 against a benchmark of 4.37%.

The option returned 4.01% p.a. (before fees and taxes) over the 2-year period to 30 June 2013 against a benchmark of 3.99%.

The My Choice Options provide an opportunity for members who want to pick and choose a portfolio based on asset classes.

MTAA SUPER Annual Report 2012-2013

Investments: summary of assets Summary of Assets CASH/SHORT TERM DEPOSITS Cash at Account Macquarie Cash Super Loans Trust Loy Yang CPI Bond Notes 1 FIXED INTEREST Macquarie Global Bond Fund Blackrock Australian Indexed Bond Fund Wellington* Global Credit 2 PIMCO* Global Credit 3 AUSTRALIAN SHARES Separately Managed Australian Equities (SSgM) 4 Macquarie* Investment Management Bennelong* Funds Management Colonial First State Asset Management* (Aust) VINVA Investment Management* 5 INTERNATIONAL SHARES Schroder International Selection Fund Emerging Markets Blackrock Indexed Emerging Markets IMI Equity Fund AQR Global Equity MFS Global Equity PanAgora Dynamic Global Equity RealIndex Global Equities ALTERNATIVES PORTFOLIO – PRIVATE EQUITY Allegro Private Equity Fund I Allen & Buckeridge 6 ANU Connect Ventures CM Capital Venture Trust No.s 3 & 4 DIF Equity Trust Directly Managed Private Equity 7 GBS Venture Partners 8 Hastings Hancock Timberland Fund No. 1 IFM Australian Private Equity Fund II Industry Super Holdings 9 KKR 2006 Fund 10 Macquarie Alternative Investment Trust 11 Macquarie CleanTech Fund Macquarie Global Opportunities Fund Macquarie Private Opportunities Fund South Australian Life Science Advancement Fund Starfish Ventures 12 ALTERNATIVES PORTFOLIO – PROPERTY Beacon Capital Strategic Partners IV & V 13 Blackstone Real Estate Partners VI 14 Directly Managed Property 15 Gresham Property Mezzanine Fund No. 3 Macquarie Global Property Advisers Asia Fund III 16 Macquarie Real Estate Equity Funds 5 Tata Realty Initiatives Fund 1 ALTERNATIVES PORTFOLIO – INFRASTRUCTURE Directly Managed Infrastructure 17 Latin Power III Fund (Conduit Capital) Macquarie Global Infrastructure Funds II Macquarie Infrastructure Partners Currency Hedge (Insight Pareto)

June-2012

June-2013

($ million)

($ million)

26.9 730 23.8 31.3

45.7 666.7 19.5 0

147.5 508.5 0 0

114.7 522.6 158.6 159.8

433.4 477.9 196 200.5 0

0 646.4 248.7 311.9 646.2

154 32.7 257.1 113.1 262.1 113.3

178.1 95.6 358.9 151.8 359.1 152.1

4.2 2.7 2.0 18.8 0.1 89.5 2.7 24.2 0.8 82.2 25.2 0.5 28.1 3.6 141.9 12.7 6.2

4.4 1.5 1.8 18.1 0.1 92.9 2.4 24.8 0.7 68.7 0 0 27.3 2 155.5 13.2 6.4

33.1 102.5 503.3 13.1 37.1 6.7 20.6

0 24.8 403.2 13 0 0.3 21.5

911.9 20.6 54 98.1 5.2

779.2 15.9 55.3 123.1 -43.4

* Investment Manager

19

1.

Divested in FY 2012/13

2.

Wellington was appointed to the Fixed Interest Portfolio in FY 2012/13

3.

PIMCO was appointed to the Fixed Interest Portfolio in FY 2012/13

4.

SSGM’s transition management concluded in FY 2012/13

5.

VINVA was appointed to the Australian Australian Shares Portfolio in FY ‘12/13

6.

Includes the Fund’s investment in: - Allen & Buckeridge Fund III - Allen & Buckeridge Emerging Technologies Fund - Allen & Buckeridge Emerging - Technologies Companion Fund

7.

Includes the Fund’s investment in: - Icon Parking Systems, USA - Moto Hospitality, UK

8.

Includes the Fund’s investment in: - GBS Genesis Fund - GBS Genesis Companion Fund

9.

Includes the Fund’s interests in: - Super Partners Pty Ltd - ME Bank - Industry Funds Services

10. Divested FY 2012/13 11. Wound up FY 2012/13 12. Includes the Fund’s investment in: - Starfish Ventures PreSeed Fund - Starfish Ventures PreSeed Companion Fund 13. Divested in FY 2012/13 14. Partial divestment FY 2012/13 15. Includes the Fund’s investment in: - 60 Margaret Street, Sydney, NSW - Alkimos Estates, WA - PEET Flagstone/Flagstone Creek/ Spring Mountain Estates, QLD - Flinders Ports Wineshed, SA - 121 Marcus Clarke Street, ACT - Spirit Finance Corp, USA - The R.G. Casey Building, ACT 16. Divested FY 2012/13 17. Includes the Fund’s investment in - Arqiva, UK - Brisbane Airport, QLD - Carrix Inc., USA - DCT Gdansk Port, Poland - Flinders Ports, SA - Mildura Base Hospital, VIC - Southern Water, UK - Sydney Airport, NSW

MTAA SUPER Annual Report 2012-2013

Top 20 Australian Equity stock MTAA Superannuation Fund – Top 20 listed Australia shareholdings as at 30 June 2013 Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Asset ID

CBA BHP WBC ANZ NAB TLS CSL WES WOW NWS RIO WPL IAG AMC QBE STO WDC SUN RMD BXB

% Total

Security Name

COMMONWEALTH BANK OF AUSTRALIA BHP BILLITON LIMITED WESTPAC BANKING CORPORATION AUSTRALIA AND NEW ZEALAND BANKING GROUP NATIONAL AUSTRALIA BANK TELSTRA CORPORATION LTD CSL LIMITED WESFARMERS LIMITED WOOLWORTHS LIMITED NEWS CORPORATION RIO TINTO LTD WOODSIDE PETROLEUM LIMITED INSURANCE AUSTRALIA GROUP LTD AMCOR LIMITED QBE INSURANCE GROUP LIMITED SANTOS LIMITED WESTFIELD GROUP SUNCORP GROUP LIMITED RESMED INC BRAMBLES LIMITED

8.61% 8.02% 7.03% 7.02% 5.14% 4.80% 4.12% 3.29% 2.90% 2.61% 2.56% 1.62% 1.53% 1.49% 1.48% 1.46% 1.45% 1.36% 1.16% 1.16%

* The percentage of each company held within MTAA Super’s total listed Australian shares portfolio 2013($m)

2012($m)

MTAA Super aims to deliver suitable risk-adjusted returns to our members.

21

Understanding Crediting rates One of the most important tasks of the Trustee is to ensure that the Fund’s net assets and investment earnings are equitably attributed to our members. To do this with the utmost fairness, the Trustee uses crediting rates. The MTAA Super Fund is a pool of members’ money held in trust. Members are beneficial owners of those assets; which include cash, shares and private equity and infrastructure investments. As beneficiaries, members are entitled to a share of the returns that those assets generate.

What are crediting rates? Crediting rates represent the returns from the Fund’s investments. They are calculated weekly, based on investment performance data, less fees and taxes. Crediting rates can be positive or negative, depending on investment performance. A positive crediting rate will result in an increase to an account balance. A negative crediting rate will result in a reduction of an account balance. For most of the year, weekly rates are published on our website on the last business day of each week. In the first few weeks of each new financial year, the publication of weekly rates may be delayed while we finalise the annual crediting rates for the prior year.

How each member’s share is calculated Each member’s share of the earnings is calculated daily, based on crediting rates along with a few other factors: •

how much has been contributed to the pool;

•

the period during which a member has been contributing;

•

the investment options selected.

Rates will differ between a superannuation member and a pension member. This is because the earnings and the assets that underlie the account are taxed differently before and after you start drawing a pension.

Credited to your account annually In the usual course of business, investment earnings are credited to accounts once a year, after the calculation of the annual crediting rates. Investment earnings will also be credited following a switch between the investment options, on exiting the fund, or if the entire balance is transferred to an MTAA Super Pension.

Rates will differ between a superannuation member and a pension member.

MTAA SUPER Annual Report 2012-2013

Annual crediting rates for superannuation and pension members 2009/10

2010/11

2011/12

2012/13

Investment Option Pre Mixed Options Balanced Growth Conservative Target Return My Choice Options Australian Shares International Shares Diversified Fixed Interest Cash

Super 4.61 3.95 5.05 1.24

Pension 5.54 4.89 5.92 2.32

Super 4.39 4.60 5.09 1.23

Pension 5.48 5.13 5.86 1.39

Super -1.08 -2.72 2.69 -2.85

Pension -1.09 -2.57 3.53 -2.14

Super 10.46 10.00 5.25 1.60

Pension 12.07 11.93 6.26 2.14

12.10 7.21 7.47 3.26

13.48 8.20 8.68 3.81

11.07 12.79 4.56 4.33

13.57 14.16 5.11 5.05

-5.42 -5.09 10.86 4.06

-4.71 -3.51 12.89 4.72

20.33 25.08 2.96 2.86

24.36 30.63 3.46 3.40

Compound returns for superannuation and pension members 3 years %

5 years %

10 years %

Since Inception

Year of Inception

Investment Option Pre Mixed Options Balanced Growth Conservative Target Return My Choice Options Australian Shares International Shares Diversified Fixed Interest Cash

Super 4.49 3.83 4.34 -0.03

Pension 5.35 4.66 5.21 0.45

Super -2.19 -2.43 0.96 -5.12

Pension -2.20 -2.42 1.37 -5.28

Super 5.34 5.74 5.08 -

Pension -

Super 7.31 6.07 5.03 0.98

Pension 0.81 1.50 3.27 0.41

Super 1989 1998 1998 2006

Pension 2006 2006 2006 2006

8.12 10.22 6.07 3.75

10.40 12.89 7.08 4.39

2.83 0.76 6.97 3.80

3.92 1.56 8.14 4.46

9.17 2.98 5.60 4.30

-

9.55 3.52 5.66 4.31

4.90 -0.54 7.36 5.07

2003 2003 2003 2003

2006 2006 2006 2006

Past performance is not necessarily an indication of future performance.

23

MTAA SUPER Annual Report 2012-2013

Financial statements The abridged financial information is drawn from the Fund’s unaudited financial statements, which will be finalised in October. A copy of the financial statements and Auditor’s Report are placed on the MTAA Super website www.mtaasuper.com.au annually after the completion of the audit. Abridged statement

of financial position as at 30 June 2013 2013($m)

Assets Investments Other assets Total assets Liabilities Income tax payable Deferred tax liability Other liabilities Total Liabilities Net assets Members’ accounts Reserves

2012($m)

6,691.3 233.5 6,924.8

5,929.4 212.5 6,141.9

19.2 5.9 166.3 191.4 6,733.4 6,676.0 57.4

13.3 18.7 51.1 83.1 6,058.8 6,018.8 40.0

Operating statement

For the year ended 30 June 2013 2013($m)

Revenue Investment income Employer contributions Member contributions Government co-contributions Transfers from other funds Reinsurance received Other income Total revenue Expenses Government taxes Regulator Levies Administrator costs Other Operating Costs Insurance expenses Benefits paid to members Gross expenses Benefits accrued after tax

652.0 633.9 33.6 4.2 126.3 54.2 3.5 1,507.7

-66.5 639.8 36.4 5.5 130.5 29.2 8.5 783.4

117.0 2.1 19.2 13.5 74.8 606.5 833.1 674.6

61.4 1.9 18.0 15.5 55.0 619.0 770.8 12.6

Reserves

Reserves for the 3 years to 30 June 2013 2011 ($m)

Reserves % of members’ balance

24.5 0.41%

2012 ($m)

40.0 0.66%

2012($m)

2013 ($m)

57.4 0.86%

25

Meet the Board Motor Trades Association of Australia Superannuation Fund Pty Limited (ABN 14 008 650 628) is the corporate trustee of MTAA Super; as Trustee, it is responsible for the management and operation of MTAA Super. The Trustee has an Australian Financial Services Licence (AFSL 238 718) issued by the Australian Securities and Investments Commission and an RSE Licence (L0001069) issued by the Australian Prudential Regulation Authority. The Trustee Board comprises: •

three member representative Directors—two nominated by members of the Fund and one (the Union Nominee Director) nominated by the Vehicle Division of the AMWU;

•

three employer representative Directors nominated by Motor Trades Association of Australia; and

•

three independent Directors appointed by the member and employer representative directors.

The Hon. John Brumby Independent Chairman

Year

Vicki Allen Independent Director

John commenced his Susanne Dahn appointment on 4 April 2011. Independent Director John has a long and distinguished career in public life, serving in both the Federal and Victorian Parliaments and for more than 10 years as Treasurer and then Premier of Victoria. As Treasurer, % Rate Mr Brumby delivered strong financial results including seven consecutive Budget surpluses, all AAA rated. Since retiring from Parliament, Mr Brumby has joined a number of not-for-profit and private sector Boards.

Susanne commenced her appointment on 1 January 2012. Susanne has extensive experience in the Australian superannuation and financial services industry, including 12 years as a non-executive Director on two superannuation boards. Susanne is currently a partner at Pitcher Partners in Melbourne.

Vicki commenced her appointment on 19 December 2011. Vicki has more than 25 years’ experience in the financial services and property sectors, and was most recently Chief Operating Officer of The Trust Company Limited. Her executive career spans senior strategic, product, operations and advisory roles at National Australia Bank, MLC and Lend Lease Corporation.

Alix commenced his appointment at MTAA Super as the Union Nominee Director on 26 March 1996. In 2000 Alix was appointed as a Member Nominee Director at MTAA Super. Alix will retire in December 2013 at the end of this current term. A new member nominated Director will be appointed in December 2013.

Alix Sachinidis Member Director

MTAA SUPER Annual Report 2012-2013

Mark Georgiou Member Director

Bruce Hatcher

Mark is a member nominated Director and his appointment commenced on 23 November 2006. Mark was reappointed on 22 November 2012 for a further 3 year term. Mark has more than 20 years experience as a Senior Industrial Officer that includes working in the National Vehicle Industry on matters including the superannuation arrangements for workers covered by Awards, Enterprise Arrangements and individual contracts.

Don Rowland

Bruce is an employer

Philip Perdikaris

Don is an employer Employer Representative Director representative Director nominated by MTAA Ltd. He commenced his appointment on 23 November 2009 and was reappointed on 22 November 2012 for a further 3 year term. Don has over 40 years’ experience in the finance and motor industry. He currently acts as Secretary to the Motor Trades Association of NSW.

Philip is an employer Employer Representative Director representative Director nominated by MTAA Ltd. He commenced his appointment on 19 December 2011. Philip has significant experience as an executive in the automotive industry. He is currently the Chief Executive of MTA Apprentice Plus, a training organisation that provides apprentices to the automotive industry.

Employer Representative Director representative Director nominated

by MTAA Ltd. He commenced his appointment on 1 February 2012. Bruce has been a specialist adviser to the motor industry for over 20 years. He was the National Chairman of Horwath Australia (specialists in Motor Industry Services) and Managing Partner of Horwath Queensland for 15 years as well as the former Chairman of BDO (Qld) Pty Ltd.

David Smith Union Nominee Director

David Smith is the union nominee Director nominated by the Vehicle Division of the AMWU. He commenced his appointment on 13 September 2012. David has over 20 years’ experience as a union official and is the AMWU-Vehicle Division National Secretary and the Chairperson for the Federation of Vehicle Industry Unions.

27

Directors’ attendance at meetings Director

Investment Committee*

Trustee Board*

Audit, Risk and Compliance Committee

Claims Review Committee

Remuneration Committee

Operations and Stronger Super Committee

Chairman: John Brumby Vicki Allen Susanne Dahn Bruce Hatcher Mark Georgiou Phil Perdikaris Donald Rowland Alix Sachinidis

11/11 11/11 11/11 10/11 11/11 9/11 11/11 10/11

11/11 10/11 11/11 10/11 11/11 9/11 11/11 10/11

2/2 2/2 5/5 4/5 2/2 5/5 5/5 1/2

2/4 4/4 4/4

1/1 1/1 -

8/8 6/8 8/8

8/9

8/9

4/4

-

-

-

David Smith **

* Includes face-to-face meetings and telephone conferences ** Mr. David Smith was appointed on 13 September 2012.

Committees

The Remuneration Committee

The Trustee Board has established the following committees to which it has delegated certain functions. The Committees are made up of members of the Trustee Board and report to meetings of the Trustee Board.

The Remuneration Committee is responsible for: •

reviewing and making recommendations for the remuneration of the Trustee directors (after consideration of an independent consultant’s report);

The Investment Committee

•

reviewing and assessing the performance of the CEO and recommending the CEO’s remuneration;

•

setting the parameters for the review of the remuneration of Trustee Office management and staff.

The Investment Committee is responsible for the Trustee’s investment related functions. In particular, the Investment Committee reviews and sets the Fund’s investment objectives and strategies, determines the ongoing strategic and tactical asset allocations of the Fund’s investment options, approves the acquisition and sale of Fund assets (other than assets under external management), approves the valuations of Fund assets and sets the Fund’s final crediting rates. All board members are members of this committee.

The Audit, Risk and Compliance Committee The Audit, Risk and Compliance Committee assists the Trustee fulfil its responsibilities in relation to the monitoring and assessment of the financial management of the Trustee and the Fund, the compliance of the Trustee in managing the Fund, the management of risk in relation to the Trustee and the Fund and the prudential management of the Trustee and the Fund. The Committee members are Susanne Dahn (Chair), Bruce Hatcher, Philip Perdikaris, Don Rowland and David Smith.

The Operations and Stronger Super Committee The Operations and Stronger Super Committee was established last year to assist the Trustee Board to prepare for the implementation of the Federal Government’s Stronger Super reforms and to oversee the general operations of the Fund, including the Fund’s administration, IT systems, member services, and communications and marketing programs. It is expected that as we finalise the implementation of the reforms associated with Stronger Super, the Committee will increase its focus on general operations. The Committee members are Vicki Allen (Chair), Philip Perdikaris and Alix Sachinidis.

The Committee members are Bruce Hatcher (Chair), John Brumby and Mark Georgiou.

The Claims Review Committee The Claims Review Committee is responsible for the assessment of disputed Total and Permanent Disability (TPB) claims, as well as reviewing the performance of the Fund’s Administrator and Group life Insurer in connection with the administration of the Trustee’s group life insurance claims. The Committee members are Alix Sachinidis (Chair), Mark Georgiou and Don Rowland.

Directors’ and Senior Executive remuneration MTAA Super Directors are remunerated for their services to the Trustee and Fund. During 2012/13 Directors (other than the independent Chairman) were paid a fixed annual base fee and an additional fee for each Board or Committee meeting they attended (including meetings held by telephone conference). The Chairman was paid a fixed annual amount. Directors were also reimbursed for reasonable expenses incurred in carrying out their duties for the Trustee. There were no increases in the remuneration payable to Directors during 2012-13. Details of the remuneration in bands paid during 2012/13 to MTAA Super Directors and the top six executives are outlined in the following tables.

MTAA SUPER Annual Report 2012-2013

Trustee Directors Remuneration bands

30/06/13

Less than $25,000 $25,001 - $50,000 $50,001 - $75,000 $75,001 - $100,000 $100,001 - $125,000 $125,001 - $150,000

30/06/12

1 1 6 1 -

4 5 3 1

MTAA Super executive team remuneration Remuneration bands

30/06/13

Less than $75,000 $175,001 - $225,000 $225,001 - $275,000 $275,001 - $325,000 $325,001 - $400,000

30/06/12

1* 5 1

3* 2 2 1 -

* Three Executive Managers were appointed in April/May 2012. Remuneration reflects earnings from commencement to 30 June 2012. One Executive retired in July 2012.

Rules relating to the nomination and appointment of Trustee Directors The Trustee Board is comprised of: •

three Member-Representative Directors (two Member Nominated Directors and one Union Nominee Director)

•

three Employer-Representative Directors; and

•

three Independent Directors.

Member Nominated Directors Nominations for appointment as a Member Nominated Director are advertised on the Fund’s website. A person wishing to be considered for appointment as a Member Nominated Director must: • have been a member of the Fund for a continuous period of not less than 12 months prior to being nominated (unless the Board decides that the period of membership is not material to the nomination); • be able to satisfy the Board that they have a substantial and relevant connection to the retail motor trades in Australia by virtue of employment, business interests or membership of an organisation that represents the interests of members of the Fund or another connection or qualification that the Board decides is significant, meritorious and valuable to the Fund;

Nominees for appointment are provided with a Nomination Kit which includes a copy of the Trustee’s Fit and Proper Policy, indicates the amount of time and commitment that may be required, outlines the degree of responsibility associated with the role and gives a general overview of the management and operation of the Fund. Nominations are independently assessed and ranked according to the nominee’s capacity to meet the Trustee’s eligibility and ‘fit and proper’ requirements as well as the skills and experience they would bring to the Board. The independent assessment and ranking is provided to a committee of the Trustee Board which, after taking into account the independent assessment, determines the nominee to be recommended to the Trustee Board. The appointment of the successful nominee is made by the Trustee Board and generally takes effect at the expiry of the retiring director’s term of office.

Union Nominee Director The Vehicle Division of the Australian Manufacturing Workers’ Union is entitled to nominate a person to be the Union Nominee Director on the Trustee Board. If a person nominated by the Union meets the Trustee’s eligibility requirements, including being able to satisfy the ‘fit and proper’ standards required of Directors of superannuation trustees, that person may be appointed by the Trustee Board as the Union Nominee Director.

Employer Representative Directors Motor Trades Association of Australia Ltd (MTAA Ltd) is the employer organisation responsible for nominating Employer Representative Directors to the Trustee Board. If a person nominated by MTAA Ltd meets the Trustee’s eligibility requirements, including being able to satisfy the ‘fit and proper’ standards required of directors of superannuation trustees, that person may be appointed to the Trustee Board as an Employer Representative Director.

Independent Directors Independent Directors are appointed by the Trustee Board with the mutual consent of the Employer Representative Directors and the Member Representative Directors. A nominee for the position of Independent Director must be able to satisfy the Trustee’s requirements relating to ‘independence’ as well as the ‘fit and proper’ standards required of directors of superannuation trustees.

• be able to satisfy the ‘fit and proper’ standards required of Directors of superannuation trustees; and • not be a Director, executive or staff member of Motor Trades Association of Australia or of any organisation or body related to Motor Trades Association of Australia.

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Rules relating to the removal of Directors

Changes to the Trust Deed

Member Nominated Directors

During 2012/13 the Fund’s Trust Deed was amended by two Deeds of Amendment:

A majority of the Member Nominated Directors may, by notice in writing, indicate to the Board that they wish to remove a Member Nominated Director. Upon the receipt of such a notice (a copy of which must be provided to the affected member nominated director) the Board may remove the Member Nominated Director.

The Union Nominee Director The Vehicle Division of the Australian Manufacturing Workers’ Union may, by written notice to the Trustee, request the removal of the Union Nominee Director from the Board. Upon the receipt of such a notice the Board may remove the Union Nominee Director from the Board.

Employer Representative Directors An Employer Representative Director may be removed from the Trustee Board by notice in writing from MTAA Ltd to the Trustee.

Independent Directors

• Deed of Amendment dated 23 August 2012; and • Deed of Amendment dated 13 March 2013. The amendments made by the Deed of Amendment dated 23 August 2012 included amendments to enable the Trustee to establish a new class of membership to which the new MySuper rules would apply, and to enable the Trustee to provide members with different types of pensions (including the Fund’s RetireSafe Pension). The amendments made by the Deed of Amendment dated 13 March 2013 reflect a number of legislative changes made to the MySuper product requirements after the Trust Deed was amended on 23 August 2012. The Deed of Amendment also makes changes to enable the Trustee to attribute to its MySuper product certain amounts which are invested in the Fund’s Balanced Option when the Fund launches its MySuper product. As a member of MTAA Super you are entitled to request a copy of the Fund’s Trust Deed. If you would like a copy please send your written request to:

An Independent Director may be removed from office by a resolution passed by a majority of the Non-independent Directors.

MTAA Super Locked Bag 15 Haymarket NSW 1236

Loss of Office

A copy of the Fund’s Trust Deed is also available on the MTAA Super Fund’s website – www.mtaasuper.com.au

The office of a Director will also become vacant if: • the Director is subject to assessment or treatment under any mental health law and the Board resolves that the person should cease to be a Director; • the Director resigns; • the Director is disqualified from being a director; • the Director is removed from office by a regulator; • the term of appointment of the Director has expired and the Director has not been reappointed; • the Board declares the office to be vacant where the Director is directly or indirectly interested in a contract or proposed contract with the Trustee and has failed to declare the nature of such an interest; • the Board declares the office to be vacant in circumstances where the Director ceases to satisfy the Trustee’s ‘fit and proper’ requirements.

MTAA SUPER Annual Report 2012-2013

Meet the Executive Team Executive Managers

L to R: Michael Irving, Tom Jarosz, Phil Brown, Leeanne Turner (CEO), Chris Porter, Michael Sykes

Chief Executive Officer and Secretary

Finance

Leeanne Turner

Michael Sykes

Leeanne was appointed CEO of MTAA Super in November 2011. She has over 25 years’ experience in the superannuation industry across a broad spectrum of complex superannuation funds. Leeanne was the Deputy CEO at MTAA Super before being appointed CEO and prior to joining MTAA Super, Leeanne was CEO of AvSuper.

Michael is the Fund’s Executive Manager, Finance and Accounting and has been with MTAA Super since April 2005. Michael’s areas of responsibility include the external and internal audit programs, statutory reporting and lodgments, budgeting and expense control, Fund tax compliance and oversight of crediting rate processes. Michael has recently been appointed as Deputy Chief Executive Officer.

Governance

Operations

Tom Jarosz

Chris Porter

Tom was appointed Executive Manager, Governance in May 2012. He has over 25 years’ experience in compliance, regulation, law, risk, enforcement and governance, primarily in management. Immediately prior to joining the Fund, Tom was a Manager with the superannuation industry regulator, APRA.

Chris was appointed Executive Manager Operations in May 2012. Prior to that Chris was the Manager Administration and Operations for MTAA Super for four years. He has over 29 years experience in the superannuation industry and has held senior managerial positions in a range of organisations.

Investments

Marketing, Communication, Education and Advice

Phil Brown Phil joined MTAA Super in April 2005 as Executive Manager, Investment Operations. He has more than 15 years’ experience in the financial services industry across a range of roles primarily involving managing institutional investment portfolios for not-for-profit funds.

Michael Irving Michael was appointed Executive Manager of Marketing, Communications, Education & Advice in April 2012. He has over twenty years’ experience within the superannuation industry in both retail and not-for-profit funds.

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Information for super members Investment reserve policy The Trustee’s policy is to apply net investment earnings to members’ balances in the year in which they are earned. However, it does maintain a small investment reserve in order to ensure that the Trustee can cover any unforeseen fluctuations in the Fund’s net assets which might arise from taxation and valuation adjustments at year end and to ensure solvency of the Fund. The cost of rectifying crediting rate errors or making crediting rate adjustments may be met from the investment reserve if, after considering the issue, the Trustee deems it to be the most appropriate, fair and equitable approach for members.

We will write to you if we intend to transfer your benefit to AUSfund, and will outline the full terms of the proposed transfer. If your account is transferred to AUSfund, you cease to be a member of MTAA Super and will not receive benefits such as insurance cover. AUSfund does not provide death or total and permanent disability cover. The fees and costs and investment strategy will be different. If your balance has been transferred you may wish to consider a ‘roll over’ of your balance in AUSfund into another super account. If you need further information contact:

Each issue will be considered on a case-by-case basis, but in all circumstances the Trustee must consider the most fair and equitable outcome for all members (including affected members). If it is considered inappropriate to use the investment reserve, the Trustee may decide to retrospectively apply adjusted earning rates.

AUSfund PO Box 2468 Kent Town SA 5071 Telephone 1300 361 798

Derivatives MTAA Super allows some of its investment managers to use derivatives such as futures and options in order to manage risk and increase returns. The Fund also employs derivatives to effect a currency hedge to manage foreign exchange rate risks. Strict parameters apply, and at no time during 2012-13 did the derivative charge ratio exceed 5 per cent of assets.

Superannuation surcharge For financial years until 30 June 2005, the Federal Government applied an additional surcharge tax to members whose adjusted taxable income (that is, taxable income plus gross fringe benefits plus deductible superannuation contributions) exceeded a specific limit. MTAA Super will deduct any surcharge due from your account for the relevant periods and will pay this to the Australian Taxation Office. The superannuation surcharge tax has been abolished for contributions received since 1 July 2005.

Operational Risk Financial Requirement A number of new regulatory requirements under the Stronger Super Reforms came into effect at 1 July 2013. One of these is the Operational Risk Financial Requirement which requires RSE licensees to hold a separate reserve/provision to meet financial losses associated with operational risks which might arise within a superannuation fund. The Trustee has traditionally provided for operational risk as part of its Administration and Investment Reserves. On 1 July 2013, $20m was transferred from the Administration Reserve of the Fund into a new Operational Risk Reserve to satisfy the new requirement. This reserve is invested in cash and cash equivalents and can only be used for operational risk events as defined under the Prudential Standard on Operational Risk Financial Requirement (SPS 114).

Transfers to Eligible Rollover Fund Your account may be transferred to AUSfund (Australia’s leading unclaimed superannuation fund). This usually occurs if you have an account balance of less than $1,000 and the Fund has not received an employer contribution for you for more than 12 months.

Trustee indemnity insurance The Trustee has taken out indemnity insurance to protect the Trustee from losses arising as a result of claims made against the Trustee. The Trustee has also taken out a directors and officers insurance policy to indemnify its directors and officers against certain liabilities.

Complaints MTAA Super is committed to providing excellent service to members. If you have any concerns about the service provided to you as a member of MTAA Super please contact us on 1300 362 415 to discuss the issue. If we cannot resolve your problem over the phone you may wish to direct your complaint to: The Complaints Officer MTAA Super Locked Bag 15 Haymarket NSW 1236 Any complaints are dealt with as soon as possible. If you believe your complaint has not been satisfactorily handled, or if you do not receive a response within 90 days, you may have the right to take your complaint to the Superannuation Complaints Tribunal. The Tribunal is an independent dispute resolution body established by the Australian Government. The Tribunal will consider your complaint if it falls within its jurisdiction and you have gone through the Fund’s internal dispute resolution procedures first. The Tribunal’s contact details are: Superannuation Complaints Tribunal Locked Bag 3060 Melbourne VIC 3001 Telephone 1300 884 114 If your complaint is outside the jurisdiction of the Superannuation Complaints Tribunal and you are not satisfied with the response or you don’t receive a response to your complaint within 45 days, you may be eligible to take your complaint to the Financial Ombudsman Service. The contact details are: Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001

MTAA SUPER Annual Report 2012-2013

Contact details MTAA Super’s Business Development Managers

External service providers

NSW

Superpartners

Graham Millar 02 8748 3005 Marie Hadjidakas 02 8748 3004 Ben Andrich 02 8748 3003

QLD

Diedre Bell Lynne Wilkinson

07 3422 7703 07 3422 7704

SA and NT

Asta McCormack 08 8291 2025 Craig Walker 08 8291 2019

VIC and TAS Scott Harris Sue Schlesinger Eric Vine Peter Mitchell

WA

Phil Seals Richard Stuttard

Fund administrator Group life insurer Metlife Insurance Limited

Internal auditor, taxation and accounting adviser PricewaterhouseCoopers

External auditor Deloitte Touche Tohmatsu

Investment adviser 03 9558 6822 03 9558 6822 03 9558 6822 03 9230 5833

Access Capital Advisers Pty Limited

Property adviser JG Service Pty Limited

Legal advisers 08 9453 7981 08 9453 7982

MTAA Super’s Business Development Managers are authorised representatives of the Motor Trades Association of Australia Superannuation Fund Pty Limited (AFSL 238 718).

HWL Ebsworth Hall and Wilcox Holding Redlich

Master custodian

NAB Asset Servicing (a division of the National Australia Bank)

Bank

National Australia Bank

Debt collection agency Industry Funds Credit Control

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MTAA Super Contact Details

Telephone: 1300 362 415 Facsimile: 1300 365 142 Email: [email protected] Web: www.mtaasuper.com.au

Sydney:

Level 5 477 Pitt Street Sydney NSW 2000

Melbourne:

Level 2 Casselden Place 2 Lonsdale Street Melbourne VIC 3000

Perth:

Level 2 12 Georges Terrace Perth WA 6000

Adelaide:

Level 2 104 Frome Street Adelaide SA 5000

Brisbane:

Level 10 120 Edward Street Brisbane QLD 4000

Postal Address: Locked Bag 15 Haymarket NSW 1236

MTAA Superannuation Fund ABN 74 559 365 913

Fund Trustee: Motor Trades Association of Australia Superannuation Fund Pty Ltd ABN 14 008 650 628, AFSL 238 718 Trustee Office: MTA House, 3rd Floor, 39 Brisbane Avenue Barton ACT 2600

Important note: This Annual Report is issued by the Motor Trades Association of Australia Superannuation Fund Pty Ltd (ABN 14 008 650 628, AFSL 238 718) the Trustee of the MTAA Superannuation Fund (ABN 74 559 365 913). The information provided is of a general nature and does not take into account your specific financial needs or personal situation. You should assess your financial position and personal objectives before making any decision based on this information. We also recommend that you seek professional advice from a licensed financial adviser. © Motor Trades Association of Australia Superannuation Fund Pty Limited 2013.

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