MLC Index Plus portfolios’ strategy update

1. This material is not for circulation to retail investors. January 2017 MLC Index Plus portfolios’ strategy update

2. Important information • This information is provided by NULIS Nominees (Australia) Limited (ABN 80 008 515 633, AFSL 236465) as trustee of the MLC MasterKey and Fundamentals Super and Pension and MLC MasterKey Business Super (including MLC MasterKey Personal Super) products which are a part of the MLC Super Fund (ABN 70 732 426 024 (together “MLC” or “we”), all members of the National Australia Bank Limited (ABN 12 004 044 4397, AFSL 230 686) group of companies, 105–153 Miller Street, North Sydney 2060. • This presentation has been prepared for licensed financial advisers only. This document must not be distributed to “retail clients” (as defined in the Corporations Act 2001 (Cth)) or any other persons.  • This information may constitute general advice. It has been prepared without taking account of an investor’s objectives, financial situation or needs and because of that an investor should, before acting on the advice, consider the appropriateness of the advice having regard to their personal objectives, financial situation and needs. • Investors should obtain a Product Disclosure Statement or other disclosure document relating to any financial product which is issued by MLC, and consider it before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available upon request by phoning the MLC call centre on 132 652 or on our website at mlc.com.au. • An investment in any product offered by a member company of the National Australia Bank group of companies does not represent a deposit with or a liability of the National Australia Bank Limited (ABN 12 004 044 937) or its subsidiaries. • Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. • Any projection or other forward looking statement (‘Projection’) in this document is provided for information purposes only. No representation is made as to the accuracy or reasonableness of any such Projection or that it will be met. Actual events may vary materially. • MLC relies on third parties to provide certain information and are not responsible for its accuracy. MLC is not liable for any loss arising from any person relying on information provided by third parties. • While MLC has taken all reasonable care in producing this communication, subsequent changes in circumstances may occur and impact on its accuracy. • The investment managers are current as at the date this communication was prepared. Investment managers are regularly reviewed and may be appointed or removed at any time without prior notice to you. • The funds affected by these changes • The following funds are affected by the changes to the MLC Index Plus portfolios’ strategy. These funds are offered through MLC’s platforms: • MLC Index Plus Conservative Growth Portfolio MLC Index Plus Balanced Portfolio MLC Index Plus Growth Portfolio

3. What’s changed? • Benchmark asset allocations, including making a new allocation to a: • Simple Real Return Strategy, within alternatives • Risk Management Strategy (an additional derivatives capability) • Widened the defensive/growth asset allocation ranges • Changes are in line with those we made to Horizon last year • Fees are not changing

4. How may clients benefit? • We believe these changes will: • help to smooth out returns by better managing risk, and • provide higher returns for the risk taken.

5. Why are we making these changes? • We frequently make asset allocation adjustments away from the benchmark to reduce risk and outperform the benchmark. These frequent adjustments are based on our scenario analysis (Investment Futures Framework). • Additionally, every 2-3 years we formally review the benchmark asset allocation to ensure it remains efficient. We often introduce new asset classes as a result of these reviews as we identify new opportunities to better manage risk or increase returns. • These changes are a result of the recent review of the benchmark asset allocation. • Given the complex market conditions we've experienced since our last review, we believe these changes provide us with greater ability to smooth returns and provide higher returns for the level of risk we take.

6. What is the benchmark asset allocation? • Benchmark asset allocations are in the PDS • MLC Index Plus portfolios are market-oriented and therefore aim to achieve a return similar to a benchmark, while reducing risk when market risk is high • The benchmark asset allocations are in the PDS and on mlc.com.au/fundprofiletool • We design the benchmark asset allocation to efficiently generate above-inflation returns based on our long-term returns and risk expectations for the asset classes

7. What changes have we made to the benchmark asset allocation? MLC MasterKey Super & Pension Fundamentals MLC Index Plus Balanced Portfolio • New allocation to real return strategy (focussed on achieving returns above inflation) and risk management strategy (derivatives capability used to manage interest rate risk) • Decreased allocation to shares and fixed income • Overall defensive:growth assets mix changed marginally • Widened the total defensive and growth ranges to +/- 10% from +/- 5%. Gives us more flexibility to implement our insights on changing risk and return opportunities and to better manage downside risk

8. Benchmark vs target asset allocation • MLC MasterKey Super & Pension Fundamentals MLC Index Plus – Balanced Portfolio • at 31 December 2016 • We don’t invest in the benchmark asset allocation as the riskiness of asset classes is constantly changing. That’s why we frequently make adjustments away from the benchmark based on the Investment Futures Framework. • The portfolios are currently defensively positioned (relative to the benchmark asset allocation) eg overweight cash, underweight long-maturity fixed income.

9. What is the Simple Real Return Strategy? Performance relative to unhedged global shares (before fees) • Cost-effective strategy aiming to deliver a return of 4% pa above inflation (before fees) over 5 year periods. Similar investment approach to MLC Inflation Plus portfolios ie flexible asset allocation and broadly similar asset allocation but less exposure to more expensive strategies and managers. • Performance (since we started managing in 2014) shows the strategy has performed as expected – outperforming in weaker markets and underperforming in stronger markets ie delivering a smoother pattern of returns. Source: JANA Corporate Investment Services Limited. Past performance is not a reliable indicator of future performance.

10. What is the communication plan?