Your investment options explained

Transcription

1 Your investment options explained for the Plum Superannuation Fund Issued by the Trustee: PFS Nominees Pty Ltd ABN AFSL Fund: Plum Superannuation Fund ABN Administrator: Plum Financial Services Limited (Plum) ABN AFSL Level 4, 500 Bourke Street Melbourne Vic 3000 GPO Box 63 Melbourne Vic 3001 Telephone Fax Web plum.com.au MySuper compliant Preparation date: 1 January 2016

2 Contents What this guide covers Things to consider 1 before you invest Before you do any investing, we want you to know about both the benefits and potential risks involved. (page 1) Our investments 2 We provide a broad range of investment options and you can choose any one or more of these options across each of our investment paths. (page 11) Choosing your 3 investment strategy and switching your investments Find out how to change your investment strategy or make an investment switch. (page 34) Investment option 4 costs There are costs associated with your investments. (page 35) The information in this guide forms part of the Plan s Product disclosure statement (PDS) for the Plum Superannuation Fund. Together with the Plan s Your superannuation explained guide, these documents should be considered before making a final decision to invest. Important information This guide provides information about the available investment options under the Plan and is not personal investment advice nor should it be used or relied upon as a substitute for professional investment advice. We do not recommend that any member make decisions based solely on the information contained in this guide and each member is ultimately responsible for making his or her own investment decisions and obtaining whatever assistance he or she deems necessary. Any advice in this guide has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on any information in this guide, consider whether it is appropriate to your objectives, financial situation and needs and seek professional financial advice before you decide to invest in the Fund. The information contained within this guide is current at the time it was prepared. However, changes to the information may subsequently occur. If there is a materially adverse change to information contained in this guide, we will issue a replacement guide and advise members of the Fund in writing.

3 Things to consider before you invest Before you do any investing, we want you to know about both the benefits and potential risks involved. Even the simplest of investments come with a level of risk. While the idea of investment risk can be confronting, it s a normal part of investing. Without it you may not get the returns you need to reach your financial goals. This is known as the risk/return trade-off. The value of an investment with a higher level of risk will tend to rise and fall more often and by greater amounts. In other words, it is likely to be more volatile than those with less risk. Many factors influence an investment s value. These include, but aren t limited to: market sentiment; growth and contraction in the Australian and overseas economies; legislative changes; changes in interest rates; defaults on loans; company specific issues; liquidity (the ability to buy or sell investments when you want to); and changes in the value of the Australian dollar. Consider your investor profile Understanding your investor profile may help you choose an investment mix that suits your needs. For more information about investor profiles, refer to the Five steps to making your investment choice booklet available from the Forms and publications section of the member website at plum.com.au. Investor profile tools Updated information about our investment options, such as asset allocations, performance and investment commentary, is available at plum.com.au or call The Fund is administered by Plum, which is responsible for more than $20 billion of funds under management (as at 31 December 2013) invested on behalf of over 220,000 individuals and employees of many of Australia s largest organisations. Plum and the Trustee are part of the MLC group of companies, the wealth management division of the National Australia Bank. 1

4 Things to consider before you invest As demonstrated in the graphs below, investments that have often produced higher returns over long periods can be volatile in the short term. 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% Investments that have often produced higher returns over long periods... Returns above inflation over 20 year periods ( ) By understanding volatility will occur, you ll be able to manage your expectations and resist reacting to these short-term movements. This will help you stay true to your investment strategy, and keep on track to achieve your long-term goals. Source: Graphs have been calculated by MLC using data presented in DMS Data Module offered through the Morningstar software program EnCorr. Based on copyrighted books by Dimson, Marsh, and Staunton, Triumph of the Optimists, Princeton University Press, 2002, and Global Investment Returns Yearbook 2003, ABN AMRO/London Business School All rights reserved. Used with permission % % p.a. 31 December Source: Calculated by MLC using data provided by Global Financial Data, Inc. and Thomson Reuters Datastream. can be volatile in the short term Returns above inflation over 1 year periods ( ) 80.0% 60.0% 40.0% % p.a. 20.0% 0.0% -20.0% -40.0% December Source: Calculated by MLC using data provided by Global Financial Data, Inc. and Thomson Reuters Datastream. Australian Shares Australian Fixed Interest Australian Cash 2

5 Diversify to reduce volatility and other risks Portfolios can be diversified across types of investments, industries and countries as well as across investment managers with different approaches. Diversification is a sound way to reduce short-term volatility and smooth a portfolio s returns. That s because different types of investments perform well in different times and circumstances. When some are providing good returns, others may not be. So, the more you diversify the less impact any one investment can have on your portfolio. One of the most effective ways of reducing volatility is to diversify across a range of asset classes. Asset classes Asset classes are groups of similar types of investments. Each class has its risks and benefits and goes through its own market cycle. A market cycle can take a couple of years or many years; it s different each time. In the description of the investment options (from page 13), we include a minimum. Investing for the minimum time or longer improves your chances of achieving the return you expect. However, returns can t be guaranteed. You need to be prepared for all sorts of return outcomes when investing. Cash Cash is generally a low risk investment. Things to consider: The return is typically all income and is referred to as interest or yield. Cash is usually the least volatile type of investment. It also tends to have the lowest return over a market cycle. Many cash funds invest in fixed income securities that have a very short term until maturity. Cash tends to be included in a portfolio to meet liquidity needs and for its defensive characteristics. Fixed interest When investing in fixed interest, you re effectively lending money to businesses or governments. Things to consider: There are different types of fixed interest securities and these will have different returns and volatility. The market value of a fixed interest security may fall due to factors such as an increase in interest rates, defaults on loans or concern about defaults. This may result in a loss on your investment. The interest rate on a term deposit is fixed for its specified term. That means the return won t be affected be a change in interest rates for the term of the deposit. Fixed interest securities denominated in foreign currencies will be exposed to exchange rate variations. Fixed interest securities are usually included in a portfolio for their defensive characteristics. 3

6 Things to consider before you invest Property Investing in property securities will give your portfolio exposure to listed and unlisted property securities in Australia and around the world. Listed property securities are referred to as Real Estate Investment Trusts (REITs). Things to consider: Australian property securities are dominated by only a few REITs and provide limited diversification. Returns are driven by many factors including the economic environment in various countries. Investing outside Australia means you re exposed to exchange rate variations. Property securities may be volatile and are usually included in a portfolio for their income and growth characteristics. Australian shares This asset class consists of investments in companies listed on the Australian Securities Exchange (and other regulated exchanges). Shares are also known as equities. Things to consider: The Australian share market has recently been dominated by a few industries such as Financials and Resources. Australian shares can be volatile and are usually included in a portfolio for their growth characteristics. Australian shares may provide dividend income and tax advantages through imputation (franking) credits. International shares International shares consist of investments in companies listed on securities exchanges around the world. Things to consider: The number of potential investments is far greater than in Australian shares. Returns are driven by many factors including the economic environment in various countries. When you invest globally, you re less exposed to the risks associated with investing in just one economy. Investing outside Australia means you re exposed to exchange rate variations. International shares can be volatile and are usually included in a portfolio for their growth characteristics. Private markets These are investments in assets that aren t traded on listed exchanges. An example of this is an investment in a privately owned business. Things to consider: Private assets are usually included in a portfolio to provide higher returns than share markets in the long term, and to increase diversification. However, it can take years to earn a positive return from private assets. Returns are driven by many factors including the economic environment in various countries. Private assets are illiquid which makes them difficult to buy or sell. To access private assets you generally need to do so via a managed fund. Because private assets aren t listed on an exchange, determining their value for a fund s unit price can be difficult and may involve a considerable time lag. You may be exposed to exchange rate variations. Private assets can be volatile and are usually included in a portfolio for their growth characteristics. 4

7 Alternatives These are a very diverse group of assets that aren t like traditional assets of cash, fixed interest or shares. Some examples include hedge funds, infrastructure, and gold. Things to consider: Alternative investments are usually included in portfolios to increase diversification and provide returns that aren t strongly linked with the performance of traditional assets. For some alternatives, such as hedge funds, it can be less obvious what assets you re investing in than with traditional assets. Some alternative assets are illiquid, which makes them difficult to buy or sell. To access some alternative investments you generally need to invest in a managed fund that, in turn, invests in alternatives. Because most alternative investments aren t listed on an exchange, determining their value for a fund s unit price can be difficult and may involve a considerable time lag. You may be exposed to exchange rate variations. Because alternatives are diverse they may be included in a portfolio for their defensive or growth characteristics. Growth and Defensive Assets Asset classes are generally grouped as either defensive or growth because of their different characteristics. Both defensive and growth assets are typically included in a diversified portfolio because they tend to respond differently to market conditions. For example, fixed interest is often included to provide returns at times when share markets are weak. The main differences between defensive and growth assets are: Assets classes include How they are generally used Risk and return characteristics Defensive Cash and fixed interest securities To generate an income, and stabilise returns Expected to produce lower returns and be less volatile over the long term Growth Shares and property securities To provide long term capital growth Expected to produce higher returns and be more volatile over the long term In some market conditions, it is possible for both defensive and growth assets to deliver low or negative returns. 5

8 Things to consider before you invest Investment techniques Investment managers use different investment techniques that can change the value of an investment. Derivatives Derivatives are an investment technique used in some investment options and are commonly used to enhance returns or manage risk. They are contracts that have a value derived from an external reference (eg the level of a share price index). There are many types of derivatives and they can be an invaluable tool for an investment manager. However, they can incur significant losses. We invest most of the assets of the Fund in the Plum Pooled Superannuation Trust (Plum PST), which in turn invests in the investment options of your choice. We do not invest directly in derivatives. Investments in derivatives may be made by the investment managers appointed by the Trustee of the Plum PST, for the purposes of managing their portfolio (investment options). The investment managers are not permitted to use financial derivatives to leverage the performance of the portfolio beyond that which could be obtained if derivatives were not used. The investment managers for our investment options may use derivatives to: reduce risk; reduce transaction costs; increase market exposure, as long as the total exposure is not greater than that possible if derivatives were not used; and reduce market exposure (i.e. short selling), as long as appropriate assets are held to offset the short exposure. Currency management Currency management is a technique to manage the impact of exchange rate movements. It s also known as hedging. For example, if an investment manager in Australia invests in assets in other countries, their returns in Australian dollars will be affected by movements in the exchange rates, as well as changes in the value of the assets. By hedging the currency exposure in Australian dollars, the investment manager can largely reduce the impact of the exchange rate movements. Gearing Gearing is another term for borrowing to invest. The borrowing can be achieved by using loans or derivatives. Gearing an investment magnifies exposure to potential gains and losses. As a result, you can expect larger fluctuations (both up and down) in the value of your investment compared to the same investment which is not geared. Short-selling Short-selling is used by an investment manager when it has a view that an asset s price will fall. The manager borrows the asset from a lender, usually a broker custodian, and sells it with the intention of buying it back at a lower price. If all goes to plan, a profit is made. However, if the price of the asset increases, then the loss could be significant. Investment management philosophies Indexing Index investment managers do not use traditional active management to outperform an index. They aim to match the index return of a particular asset class and incorporate broad diversification at low cost. Index managers do not generally employ high-cost processes (because they follow the index) and have very low transaction costs. Active Active investment managers change their mix of assets depending on current or expected market conditions. They review investments regularly to try to benefit from movements in the market or from growth in individual assets. In the description of the investment options in Path two and Path three we include the investment management philosophy for each option. 6

9 Investment styles Below are details about the investment styles that active investment managers adopt when making investment decisions. Bottom-up (security selection) This is a form of stock or security analysis which focuses more on forecasting returns for individual companies rather than the economy as a whole (opposite of top-down). Top-down (macro view) This is a form of stock or security analysis which focuses more on forecasting broad (macro) economic trends and the effect on the market rather than forecasting returns for individual companies (opposite of bottom-up). Growth Growth investment managers are primarily interested in a company s earnings. They focus on investing in companies that they expect will earn higher profits and shareholder earnings than similar companies. Growth investment managers tend to be concerned with future performance and will most likely invest in companies with a good earnings outlook. They generally price stocks based on forward looking estimates. Value Value investment managers are most interested in buying companies stocks for a good price. They may purchase stocks of companies that they consider to be currently undervalued on the share market. Value investment managers tend to be concerned with historical performance and will most likely invest in companies that have good track records. They generally price stocks based on historical data. Neutral/core These investment managers have no specific investment style bias. They aim to produce competitive returns throughout periods of value and growth. In the description of the investment options in Path two and Path three we include the investment style for each option. Ethical investing The Trustee has an Environment, Social and Governance Risk Management Policy (ESG Policy), which applies to Plum MySuper. The ESG Policy, available on plum.com.au, outlines the expectations of the Trustee that its Investment Consultant, JANA, will have processes in places to assess ESG factors for Plum MySuper. The ESG Policy also requires JANA to consider ESG factors in its investment decision; monitor investment managers to assess how they identify, evaluate and manage ESG factors within their portfolios on an ongoing basis; and maintain a research program in relation to ESG themes and trends. The ESG Policy does not require any specific methodology to be applied by JANA in assessing ESG factors, nor does it require any specific factor to be taken into account. For other investment options, JANA expects the active investment managers to consider any material effect ESG factors may have on the returns from their investments, however JANA doesn t require them to. For more information visit plum.com.au or call us from anywhere in Australia on or contact your financial adviser. Postal address GPO Box 63 Melbourne VIC 3001 Registered address Level 4, 500 Bourke Street Melbourne VIC 3000 Want to know more? For more information on how you can grow and protect your wealth call us on and we ll put you in touch with a licensed financial adviser. 7

10 Things to consider before you invest Investment management approaches Each of the Plan s investment options has a single-manager or multimanager management approach. Single-manager Single-managers manage all or most investments themselves. They manage the underlying investments of options that have a particular investment philosophy and style. Multi-manager Multi-managers do not invest directly themselves but use a combination of external investment managers to manage investments on their behalf. They use investment managers with different styles to take advantage of diversification benefits. In the description of the investment options in Path two and Path three we include the investment management approach for each option. Standard risk measure Investment risk is one of the many issues that should be considered when making an investment decision. The Standard Risk Measure is a simple measure designed to help you compare investment risk across the investment options we offer in our menu. The Standard Risk Measure is the estimated number of negative annual returns in any 20 year period. However, the number of that occur within a 20 years may be different to our estimate. The Standard Risk Measure is not a complete assessment of investment risk. The Standard Risk Measure categories are based on industry guidelines. The risk categories are: For example: it doesn t capture the size of a possible negative return or the potential for sufficient positive returns to meet your objectives; and it doesn t take into account the impact of fees and taxes. These would increase the chance of a negative return. There are many ways you can assess the impact of risk on your investment strategy. You should make sure you re comfortable with the risks and potential losses associated with the investment options you choose. Risk band Risk label Estimate number of negative annual returns over any 20-year period 1 Very Low Less than Low 0.5 to less than 1 3 Low to medium 1 to less than 2 4 Medium 2 to less than 3 5 Medium to high 3 to less than 4 6 High 4 to less than 6 7 Very high 6 or greater Want to know more? For more information on how we calculate the Standard Risk Measure please go to plum.com.au 8

11 How you can assess performance Consumer Price Index (CPI) The CPI (All Groups) is a measure of the price of goods and services and allows comparison of the relative cost of living over time. It is used as a measure of inflation. CPI returns (% p.a.) to 31 December 2013 The CPI returns below enable a comparison with Plum MySuper and Path one simple choice investment returns as these options have objectives to outperform the CPI by specified amount. 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 9yr 10yr Benchmark One way you can assess the performance of the investment options in Path two flexible choice and Path three specialist choice is against its market benchmark over the long term. Benchmarks are usually market indices that are publicly available. In the description of the investment options from page 15 we include the market benchmark for each option, other than those options which are multi-asset portfolios. Benchmarks for multi-asset portfolios may be made up of many indices to reflect the different asset classes they can invest in. When making this assessment, be aware that the market benchmark doesn t take into account investment fees and taxes that may apply. 9

12 Things to consider before you invest Past performance The past performance of the investment options described in this guide from page 15 is not a reliable indicator of future performance and should not be taken to be investment advice nor relied upon when investing in an investment option. The future value of an investment in an investment option may rise or fall on a daily basis with fluctuations in the investment market. Each investment option carries its own level of risk and volatility. The information in this guide does not guarantee performance or payment of income or return of capital. You should consider obtaining professional financial advice before making an investment decision. Ongoing review To make sure our investment options are working hard for our members, we use a detailed range of criteria for choosing and monitoring investments on an ongoing basis. This criteria includes regular internal and external reviews of investment manager costs, services, asset allocations, reporting and performance. Calculation of investment performance Investment returns quoted in this guide: reflect movements in the investment option; are net of tax, ongoing investment management fees and indirect costs; and do not take into account administration fees. Investment returns provided in this guide are the returns of the option expressed as an annual return. For example, if an investment earned 2% in one complete year and 12% in the following complete year, this would be expressed as an annualised return of 6.9% p.a. In the Investment objective section of the investment option tables throughout this guide from page 13 the figures quoted against the Consumer Price Index (CPI) for Plum MySuper and Path one investment options are net of investment fees and taxes. Allocation of earnings Investment earnings (which may be positive or negative) are reflected in the unit price of your investment option(s) (so the price goes up with positive investment earnings and goes down if there are investment losses). The unit price for an investment option reflects the total dollars held in that investment option divided by the number of units issued. Suspension of transactions Investment switches or withdrawals and allocation of contributions may be delayed or suspended in certain circumstances if we consider such action would be in the interests of members as a whole, for example, if unit prices are unavailable for any reason (including restricted or suspended trading in the relevant market), or if the law requires. 10

13 Our investments We provide a broad range of investment options and you can choose any combination of these options across any of our investment paths. Our investment menu has been developed to suit all levels of investment knowledge and experience. You can customise your investment mix by choosing from a range of diversified or single-sector investment options with different management styles. Investment option advisor We have appointed JANA Investment Advisers Pty Ltd (JANA) to be our Investment Consultant. JANA is responsible for advising the Trustee on our entire investment menu, providing regular insight and updates on the performance of our investment options. JANA JANA is an Australian Financial Services Licence Holder and is a wholly owned subsidiary of National Australia Bank Limited (NAB). JANA Investment Advisers was established in 1987 with the objective of providing high quality independent advice to institutional clients on all aspects of investments and asset management. The firm has since grown to become one of the leading investment consultants in Australia, with over A$268 billion funds under advice and A$30 billion funds under management (at 31 December 2013). JANA s core business continues to be the provision of investment and asset consulting advice to institutional clients from its offices in Melbourne and Sydney. In December 2000, JANA became a fully-owned subsidiary of the NAB. JANA s investment philosophy can be summarised as follows: JANA believes it is possible to reduce risk and outperform over the long term by taking advantage of occasional large divergences from fair value in investment markets. Through diligent hands-on research it is possible to select managers capable of outperforming over the long term. While above-average ability in security selection is a prerequisite in most asset classes, managers must also exhibit a disciplined process and style and this should be reflected in the qualities and mindset of its personnel. To be of real value, research needs to be implemented with full commitment and not sit on the fence. 11

14 Plum MySuper Plum MySuper is our default diversified investment option designed by the Trustee to meet the needs of most members of the Plan. Plum MySuper is broadly diversified within asset classes, across asset classes and across underlying investment managers. Path one simple choice There are five diversified investment options in Path one so you can select an expected risk and return profile to meet your needs. At the lower end of the risk and return potential is Pre-mixed Conservative. This invests mainly in defensive assets such as fixed income and cash. At the higher end of the risk and return potential is Pre-mixed Aggressive, which mainly gears its investment into growth assets such as shares. This comprehensive series of investment options means, wherever you are in life you can choose an investment solution to suit you. These options are actively managed and broadly diversified within asset classes, across asset classes and across underlying investment managers. Investing in Path one is an easy way to gain access to sophisticated investments. This way you can implement your financial plan with confidence. Path two flexible choice s in Path two mainly consist of single-sector investment options plus some diversified options. Single-sector investment options cater for people looking for a complete asset class solution. Some options in this path are managed on an active basis while others follow a specific market index and aim to provide similar returns to the market. We also offer the MLC Cash Fund which invests in deposits with banks and other comparable securities. You should have some understanding of investments, including the difference between the main asset classes and whether you prefer an active or indexed management philosophy before selecting an investment option in this path. The main asset classes are described on pages 3, 4 and 5. Path three specialist choice We recognise some members may want extra investment options. To help give you this choice, you can select from investment options in Path three which target specific asset class sectors or invest using a particular investment style. The Trustee has selected the underlying manager for each of these options using guidance provided by JANA. You should have a strong understanding of investment risks before selecting an investment option in this path. We recommend you seek financial advice as greater investment experience is generally required for investing in this path. You should carefully consider the risks of investing your entire account balance in a single-sector investment option and whether this represents adequate diversification. For more information refer to the Diversify to reduce volatility and other risks section of this guide. 12

15 MySuper default Plum MySuper Plum MySuper Investment option objective To outperform inflation, measured by the CPI, by 3% p.a. after investment fees and taxes, over any 10 year period. Aims to invest proportionately more in growth assets than defensive assets to achieve medium-to-high long-term returns, with moderate to high volatility. you want long-term capital growth; and you understand and accept there can be moderate to high fluctuations in the value of your investment. Cash 5% Australian fixed interest 11% International fixed interest 7% Defensive alternatives 7% Defensive 30% Property 5% Australian shares 28% International shares 17% International shares (hedged) 8% Private markets 5% Growth alternatives 7% Growth 70% We may adjust the allocation within these ranges Market benchmark Defensive 15-45% Growth 55-85% 1yr 2 yr 3yr 4yr 5yr 5.7 n.a. n.a. n.a. n.a. A combination of market indices, weighted according to the benchmark asset allocation. Medium to high, Between 3 and 4 years in 20 years 6 years Management fee (%p.a.) 0.60 Estimated performance fee (%p.a.) 0.01 Indicative investment fee (%p.a.) % p.a /

16 Path one simple choice Pre-mixed investment options Pre-mixed Conservative Pre-mixed Cautious Pre-mixed Moderate Investment objective To outperform the CPI plus 2% p.a. after investment fees and taxes over rolling 5 year periods. To outperform the CPI plus 2.5% p.a. after investment fees and taxes over rolling 5 year periods. To outperform the CPI plus 3% p.a. after investment fees and taxes over rolling 10 year periods. Aims provide limited ups and downs in investment value by investing primarily in defensive assets. Aims to provide a balanced mix of assets, steady long-term returns and moderate investment volatility. Aims to invest proportionately more in growth assets than defensive assets to achieve medium-to-high long-term returns, with moderate to high volatility. You want to invest with a bias to defensive assets, with some exposure to growth assets. Preserving your capital is an important but not overriding concern. You want to invest in an approximately equal mix of defensive and growth assets. You want a portfolio with some long-term capital growth potential and can tolerate some changes in value. You want to invest with a bias to growth assets. You want a portfolio with a bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Cash 14% Fixed interest 50% Defensive alternatives 6% Defensive 70% Property 3% Australian shares 10% International shares 7% International shares (hedged) 2% Private markets 1% Growth alternatives 7% Growth 30% Cash 8% Fixed interest 36% Defensive alternatives 6% Defensive 50% Property 4% Australian shares 18% International shares 12% International shares (hedged) 5% Private markets 4% Growth alternatives 7% Growth 50% Cash 5% Fixed interest 18% Defensive alternatives 7% Defensive 30% Property 5% Australian shares 28% International shares 17% International shares (hedged) 8% Private markets 5% Growth alternatives 7% Growth 70% We may adjust the allocation within these ranges Defensive 55-85% Growth 15-45% Defensive 35-65% Growth 35-65% Defensive 15-45% Growth 55-85% 1yr 2 yr 3yr 4yr 5yr 1yr 2 yr 3yr 4yr 5yr 1yr 2 yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. Low to medium, Between 1 and 2 years in 20 years Medium, between 2 and 3 years in 20 years Medium to high, between 3 and 4 years in 20 years 3 years 5 years 6 years Management fee (%p.a.) 0.51 Estimated performance fee (%p.a.) 0.00 Indicative investment fee (%p.a.) 0.51 Management fee (%p.a.) 0.56 Estimated performance fee (%p.a.) 0.01 Indicative investment fee (%p.a.) 0.57 Management fee (%p.a.) 0.60 Estimated performance fee (%p.a.) 0.01 Indicative investment fee (%p.a.) % p.a. 0.22% p.a. 0.25% p.a / / / Sell cost asset transfer %

17 Path one simple choice Pre-mixed investment options Investment objective Pre-mixed Assertive To outperform the CPI plus 3.5% p.a. after investment fees and taxes over rolling 10 year periods. Aims to invest primarily in growth assets with limited exposure to fixed interest investments, accepting higher volatility to seek higher returns over the long term. You want to invest with a strong bias to growth assets. You want a portfolio with a strong bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Fixed interest 8% Defensive alternatives 7% Defensive 15% Property 5% Australian shares 34% International shares 22% International shares (hedged) 11.5% Private markets 5.5% Growth alternatives 7% Growth 85% Pre-mixed Aggressive To outperform the CPI plus 4% p.a. after investment fees and taxes over rolling 10 year periods. Aims to invest wholly in growth assets, accepting high volatility to seek higher long-term returns. You want to invest in growth assets. You want a portfolio focussed on long-term capital growth potential and can tolerate large changes in value. Property 5% Australian shares 42% International shares 27% International shares (hedged) 18% Private markets 6% Growth alternatives 2% Growth 100% We may adjust the allocation within these ranges Defensive 5-35% Growth 65-95% Defensive 0-10% Growth % 1yr 2 yr 3yr 4yr 5yr 1yr 2 yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. High, Between 4 and 6 years in 20 years A combination of market indices, weighted according to the benchmark asset allocation. High, between 4 and 6 years in 20 years 7 years 7 years Management fee (%p.a.) 0.63 Estimated performance fee (%p.a.) 0.02 Indicative investment fee (%p.a.) 0.65 Management fee (%p.a.) 0.66 Estimated performance fee (%p.a.) 0.02 Indicative investment fee (%p.a.) % p.a. 0.28% p.a / / 0.00 Sell cost asset transfer %

18 Path one simple choice Pre-mixed investment options MLC Conservative MLC Cautious MLC Moderate Investment objective To outperform the CPI plus 2% pa after investment fees and taxes over rolling 5 year periods. To outperform the CPI plus 2.5% pa after investment fees and taxes over rolling 5 year periods. To outperform the CPI plus 3% pa after investment fees and taxes over rolling 10 year periods. Aims to provide limited ups and downs in investment value by investing primarily in defensive assets. Aims to provide a balanced mix of assets, steady long-term returns and moderate investment volatility. Aims to invest proportionately more in growth assets than defensive assets to achieve medium-to-high long-term returns, with moderate to high volatility. You want to invest with a bias to defensive assets, with some exposure to growth assets. Preserving your capital is an important but not overriding concern. You want to invest in an approximately equal mix of defensive and growth assets. You want a portfolio with some long-term capital growth potential and can tolerate some changes in value. You want to invest with a bias to growth assets. You want a portfolio with a bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Cash 12% Fixed interest 49% Defensive alternatives 6% Defensive 67% Property 7% Australian shares 10% International shares 7% International shares (hedged) 2% Private markets 1% Growth alternatives 6% Growth 33% Cash 7% Fixed interest 34% Defensive alternatives 6% Defensive 47% Property 9% Australian shares 17% International shares 12% International shares (hedged) 4% Private markets 5% Growth alternatives 6% Growth 53% Cash 5% Fixed interest 15% Defensive alternatives 7% Defensive 27% Property 9% Australian shares 28% International shares 17% International shares (hedged) 8% Private markets 5% Growth alternatives 6% Growth 73% We may adjust the allocation within these ranges Defensive 55-85% Growth 15-45% Defensive 35-65% Growth 35-65% Defensive 15-45% Growth 55-85% 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. Low to medium, Between 1 and 2 years in 20 years Medium, Between 2 and 3 years in 20 years Medium to high, between 3 and 4 years in 20 years 3 years 5 years 6 years Management fee (%p.a.) 0.59 Estimated performance fee (%p.a.) 0.01 Indicative investment fee (%p.a.) 0.60 Management fee (%p.a.) 0.68 Estimated performance fee (%p.a.) 0.02 Indicative investment fee (%p.a.) 0.70 Management fee (%p.a.) 0.74 Estimated performance fee (%p.a.) 0.03 Indicative investment fee (%p.a.) % p.a. 0.29% p.a. 0.30% p.a / / / Sell cost asset transfer %

19 Path one simple choice Pre-mixed investment options Investment objective MLC Assertive To outperform the CPI plus 3.5% pa after investment fees and taxes over rolling 10 year periods. Aims to invest primarily in growth assets with limited exposure to fixed interest investments, accepting higher volatility to seek higher returns over the long term. You want to invest with a strong bias to growth assets. You want a portfolio with a strong bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Fixed interest 7% Defensive alternatives 7% Defensive 14% Property 9% Australian shares 33% International shares 21% International shares (hedged) 11% Private markets 6% Growth alternatives 6% Growth 86% MLC Aggressive To outperform the CPI plus 4% pa after investment fees and taxes over rolling 10 year periods. Aims to invest wholly in growth assets, accepting high volatility to seek higher long-term returns. You want to invest in growth assets. You want a portfolio focussed on long-term capital growth potential and can tolerate large changes in value. Property 9% Australian shares 40% International shares 26% International shares (hedged) 16% Private markets 6% Growth alternatives 3% Growth 100% We may adjust the allocation within these ranges Defensive 5-35% Growth 65-95% Defensive 0-10% Growth % 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. High, Between 4 and 6 years in 20 years A combination of market indices, weighted according to the benchmark asset allocation. High, Between 4 and 6 years in 20 years 7 years 7 years Management fee (%p.a.) 0.79 Estimated performance fee (%p.a.) 0.04 Indicative investment fee (%p.a.) 0.83 Management fee (%p.a.) 0.82 Estimated performance fee (%p.a.) 0.04 Indicative investment fee (%p.a.) % p.a. 0.31% p.a / / 0.00 Sell cost asset transfer %

20 Path one simple choice Pre-mixed investment options Investment objective JANA Conservative JANA Cautious JANA Moderate To outperform the CPI plus 2% pa after investment fees and taxes over rolling 5 year periods. This portfolio is designed to provide investors with a diversified portfolio that is weighted towards the traditionally more stable asset classes of cash and fixed interest. You want to invest with a bias to defensive assets, with some exposure to growth assets..preserving your capital is an important but not overriding concern. Cash 12% Fixed interest 49% Defensive alternatives 6% Defensive 67% Property 7% Australian shares 10% International shares 7% International shares (hedged) 2% Private markets 1% Growth alternatives 6% Growth 33% To outperform the CPI plus 2.5% pa after investment fees and taxes over rolling 5 year periods. This portfolio is designed to provide investors with a diversified portfolio that is equally mixed between the traditionally more stable asset classes of cash and fixed interest and those assets which have traditionally provided higher levels of overall return, namely property and shares. You want to invest in an approximately equal mix of defensive and growth assets. You want a portfolio with some long-term capital growth potential and can tolerate moderate changes in value. Cash 7% Fixed interest 34% Defensive alternatives 6% Defensive 47% Property 9% Australian shares 17% International shares 12% International shares (hedged) 4% Private markets 5% Growth alternatives 6% Growth 53% To outperform the CPI plus 3% pa after investment fees and taxes over rolling 10 year periods. This portfolio is designed to provide investors with a diversified portfolio that is weighted towards the asset classes which have traditionally provided a higher level of overall return, namely property and shares, but also maintains a significant weighting to the traditionally more stable asset classes, namely cash and fixed interest. You want to invest with a bias to growth assets. You want a portfolio with a bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Cash 5% Fixed interest 15% Defensive alternatives 7% Defensive 27% Property 9% Australian shares 28% International shares 17% International shares (hedged) 8% Private markets 5% Growth alternatives 6% Growth 73% We may adjust the allocation within these ranges Defensive 55-85% Growth 15-45% Defensive 35-65% Growth 35-65% Defensive 15-45% Growth 55-85% 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. A combination of market indices, weighted according to the benchmark asset allocation. Low to medium, Between 1 and 2 years in 20 years Medium, Between 2 and 3 years in 20 years Medium to high, Between 3 and 4 years in 20 years 18 3 years 5 years 6 years Management fee (%p.a.) 0.65 Estimated performance fee (%p.a.) 0.03 Indicative investment fee (%p.a.) 0.68 Management fee (%p.a.) 0.70 Estimated performance fee (%p.a.) 0.04 Indicative investment fee (%p.a.) % p.a. 0.27% p.a. 0.24% p.a / / / 0.00 Management fee (%p.a.) 0.76 Estimated performance fee (%p.a.) 0.04 Indicative investment fee (%p.a.) 0.80

21 Path one simple choice Pre-mixed investment options Investment objective JANA Assertive To outperform the CPI plus 3.5% pa after investment fees and taxes over rolling 10 year periods. This portfolio is designed to provide investors with a diversified portfolio that is weighted towards the asset classes which have traditionally provided a higher level of overall return, namely property and shares. You want to invest with a strong bias to growth assets. You want a portfolio with a strong bias towards long-term capital growth potential and can tolerate moderate to large changes in value. Fixed interest 7% Defensive alternatives 7% Defensive 14% Property 9% Australian shares 33% International shares 21% International shares (hedged) 11% Private markets 6% Growth alternatives 6% Growth 86% JANA Aggressive To outperform the CPI plus 4% pa after investment fees and taxes over rolling 10 year periods. This portfolio is designed to provide investors with long-term growth through a diversified property and shares portfolio. You want to invest in growth assets. You want a portfolio focussed on long-term capital growth potential and can tolerate large changes in value. Property 9% Australian shares 40% International shares 26% International shares (hedged) 16% Private markets 6% Growth alternatives 3% Growth 100% We may adjust the allocation within these ranges Defensive 5-35% Growth 65-95% Defensive 0-10% Growth % 1yr 2yr 3yr 4yr 5yr 1yr 2yr 3yr 4yr 5yr Market benchmark A combination of market indices, weighted according to the benchmark asset allocation. High, Between 4 and 6 years in 20 years A combination of market indices, weighted according to the benchmark asset allocation. High, Between 4 and 6 years in 20 years 7 years 7 years Management fee (%p.a.) 0.82 Estimated performance fee (%p.a.) 0.05 Indicative investment fee (%p.a.) 0.87 Management fee (%p.a.) 0.86 Estimated performance fee (%p.a.) 0.06 Indicative investment fee (%p.a.) % p.a. 0.07% p.a / /

22 Path two flexible choice Cash MLC Cash Fund Investment objective Market benchmark To outperform the Reserve Bank of Australia s Cash Rate Target over rolling 1 years before fees and taxes. The Fund invests in deposits with banks (100% National Australia Bank as at 31 March 2015) and may also invest in other comparable high quality securities. MLC Limited guarantees the value of your investment in the MLC Cash Fund (before the deduction of tax and fees). You want to invest in a low risk cash portfolio. Cash 100% 1yr 2 yr 3yr 4yr 5yr Reserve Bank of Australia s Cash Rate Target Low, between half and 1 year in 20 years No minimum % p.a /

23 Path two flexible choice Fixed interest MLC Diversified Fixed Interest Fund Investment objective To outperform the composite benchmark of 50% Bloomberg AusBond Composite Bond (All Maturities) Index and 50% Barclays Global Aggregate Index over rolling 3 years before fees and taxes. The fund is diversified across different types of fixed interest securities in Australia and around the world. The securities are predominately investment grade and typically longer dated. The average term to maturity is normally in the range of three to six years. Foreign currency exposures will generally be substantially hedged to the Australian dollar. As a result of capital restructures of bond issuers, the Fund may have an incidental exposure to shares from time to time. You want to invest in a defensive portfolio that s actively managed and diversified across investment managers, countries, bond sectors and securities. Australian fixed interest 50% International fixed interest 50% Defensive 100% Market benchmark 1yr 2 yr 3yr 4yr 5yr Bloomberg Ausbond Composite Bond (All Maturities) Index Barclays Global Aggregate Bond Index (hedged into Australian dollars) Medium, Between 2 and 3 years in 20 years 3-5 years % p.a /

24 Path two flexible choice Property Investment objective MLC Property Securities Fund To outperform the composite benchmark of 75% S&P/ ASX 300 A-REIT Accumulation Index and 25% FTSE EPRA/NAREIT Global Developed Index (hedged into Australian Dollars) over rolling 5 years before fees and taxes. The fund invests primarily in Australian property securities, including listed REITs and companies across most major listed property sectors. It does not normally invest in direct property, but may have some exposure to property securities listed outside of Australia from time to time. You want to invest in an actively managed property securities portfolio that invests in Australia, with some global exposure, and diversifies across property sectors and REITs. Australian listed property 75% International listed property 25% Australian Property Securities Index To track the S&P/ASX 300 A-REIT Accumulation Index over rolling 5 years before investment fees and taxes. The fund invests primarily in Australian listed property securities, including listed Real Estate Investment Trusts and companies across most major listed property sectors. It does not normally invest in direct property, but may have some exposure to property securities listed outside of Australia from time to time. The fund may invest in securities that have been removed, or are expected to be included in the index. You want to invest in a passively managed property securities portfolio that invests in Australia, with some global exposure and diversified across property sectors and REITs. Australian listed property 100% 1yr 2 yr 3yr 4yr 5yr 1yr 2 yr 3yr 4yr 5yr Market benchmark S&P/ASX 300 A-REIT Accumulation Index FTSE EPRA/NAREIT Global Developed Index (hedged into Australian Dollars) High, Between 4 and 6 years in 20 years S&P/ASX 300 A-REIT Accumulation Index High, Between 4 and 6 years in 20 years 7 years 7 years % p.a. n.a / /