I am pleased to bring you the Annual Report for the 2007/2008 year. The past year in the global financial market has seen conditions which have not been experienced for many years. As you have no doubt seen and heard in the media, the US market has had much turmoil, starting with the Sub Prime “credit crisis” and the flow–on effects that have occurred. More recently, large financial institutions such as Lehmanns have collapsed and others like Meryll Lynch have had to take drastic action to stay afloat. Fanny Mae and Freddy Mac are in trouble, requiring large cash injections from the US Federal Reserve.

In an effort to maintain the best possible outcome for members in the current market, the Board of Trustees have been very pro-active in the management of the Fund. Some significant changes have been made to the Fund during the year, and these are outlined below:

As discussed above, the volatility within the world financial market has had a marked impact on all superannuation funds in Australia. The Trustee Board have been pro-active in reviewing the performance of our external investment managers, as well as taking steps to enhance our investment returns outside the normal share market index. One such strategy was to investigate the area of ethical investments. The Trustee was successful in obtaining membership of the Responsible Investment Association Australasia, which includes the former Ethical Investment Association. This means that the Fund is engaged in actively screening investments (for the ethical portfolios) against the ethical stance taken by the Fund, reflecting our Christian values in keeping with our Ethical Investment Policy.

The Trustee also moved funds into direct property through high class commercial mortgages in carefully selected projects that fit within the Investment Policy (for the fixed interest and alternative asset classes).

In the current financial market uncertainty, ACSuper has managed to act quickly to isolate itself as much
as possible from the turmoil. By increasing our cash holdings, reducing exposure to equities in general, investment in direct property through mortgages in the fixed interest and alternative asset categories, and by actively screening within the Ethical Investment portfolios, ACSuper has been able to lessen the impact of the global market on the Fund. The continuing volatility of the global financial market and the accompanying decline in the world economy will see a move to more modest returns on investments in the short to medium term. Although returns for the past twelve months have been negative, the historical pattern of investment returns shows that positive returns will occur again in the near future. Super is a long term investment, and although there can be periods of volatility such as we are experiencing now, the overall outlook is still very positive.

Your annual statement will show how, over a number of years, the performance of your investments has remained positive overall. This takes into account the ups and downs of individual years within the range specified.

It is clear from all reports that the current uncertainty in the global market is going to continue for some time. There has been a major shake-up of investment practice, which should result in a more conservative approach being taken by global markets in the future.

Can I encourage you to remain calm in the midst of this storm, and to take the longer view to your investment strategy within the Fund. The Board continues to monitor the situation closely and is doing all in its power to bring stability and the best possible result for the Fund.

On behalf of the Board may I take this opportunity to thank you for your continued support of ACSuper, and pray God’s blessing on you and your family for the coming year.