annual report of the universal super scheme · 2020-02-07 · the universal super scheme 3 of 28...

The Universal Super SchemeFOR THE YEAR ENDED 30 JUNE 2007

Annual Report of

THIS REPORT APPLIES TO:

MLC MASTERKEY SUPER

MLC MASTERKEY SUPER FUNDAMENTALS

MLC MASTERKEY SUPERANNUATION

MLC PERSONAL SUPERANNUATION

MLC MASTERKEY BUSINESS SUPER

MLC MASTERKEY PERSONAL SUPER

MLC MASTERKEY ALLOCATED PENSION

MLC MASTERKEY TERM ALLOCATED PENSION

MLC MASTERKEY PROTECTION ESSENTIALS SUPER

MLC LIFE COVER SUPER

MLC SELECTERM SUPER

Important notes

In this report

The Scheme means The Universal Super Scheme

‘we’, ‘us’, ‘our’ and ‘Trustee’ means MLC Nominees Pty Limited

Plan means each of the products listed on the front cover

MLC means MLC Limited

• This report is issued by the Trustee of the Scheme.

• Each Plan is managed by MLC on behalf of the Trustee.

• Benefits under each Plan are provided through life insurance policies issued by MLC and, therefore, the following information is not included in this report:

– audited Scheme accounts

– abridged financial information

– auditor’s report

– statement of assets, and

– details of investments having a value in excess of 5% of the total assets of each of the Plans.

• For members of MLC MasterKey Business Super, the Annual Report comprises this report plus the ‘Additional Employer Plan Information’ that will be provided to you with this report if your Plan has:

– a policy committee, or

– a reserve account, or

– an insurer other than MLC.

• Professional indemnity insurance has been arranged to protect the Trustee against any losses which could occur as a result of a claim against it for breach of professional duty.

• Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice in this communication, consider whether it is appropriate to your objectives, financial situation and needs.

• Preparation date: 15 August 2007

MLC Nominees Pty Limited ABN 93 002 814 959 AFSL 230702 RSE L0002998

The Universal Super Scheme ABN 44 928 361 101 R1056778 SFN 281 440 944

MLC Limited ABN 90 000 000 402 AFSL 230694

Plan SPIN numbers MLC MasterKey Super and MLC MasterKey Super Fundamentals SPIN: MLC0440AU MLC MasterKey Superannuation and MLC Personal Superannuation SPIN: MLC0440AU MLC MasterKey Business Super and MLC MasterKey Personal Super SPIN: MLC0430AU MLC MasterKey Allocated Pension SPIN: MLC0420AU MLC MasterKey Term Allocated Pension SPIN: MLC0571AU

The Universal Super Scheme 1 of 28

On behalf of the Trustee, I am pleased to present the 2007 Annual Report for your Plan, a part of The Universal Super Scheme.

Complementing this Annual Report is your annual Statement of Account or Periodic Statement of Benefits, and MLC’s investor magazine – KeyNote.

There have been huge changes to superannuation in Australia, with many of the Federal Government’s 2006 Budget announcements being implemented on 1 July 2007. We encourage members to think carefully about the impact the changes will have on them. By obtaining expert advice, members can maximise the amount available to them in retirement.

You will find a summary of the key changes to superannuation in this report and other important information about your Plan, including investment performance information to 30 June 2007.

We would like to take this opportunity to thank you for your continued support throughout the past year.

Geoff WebbChairman MLC Nominees Pty Limited

From the Chairman


Page

News and information 3

New superannuation rules 3

New anti-money laundering and counter-terrorism measures 4

New products 4

Closure of products 5

Changes to investment options 5

New Custodian 6

Updates to unit pricing 6

Updates to administration procedures 7

Plan specific changes 7

About your investments 8

Strategy and objectives 8

Price maintenance position 8

Default investment strategy 8

Derivatives 8

How earnings are reflected in your account 9

Protection of members' interests 9

Eligible Rollover Fund 10

Surcharge assessment for prior years 11

Investment option profiles 12

How to contact us Back cover

Contents


This section of the Annual Report provides you with information about some of the changes and enhancements that have occurred to the Plans and an update on key developments in superannuation legislation during the financial year.

Some of the information only applies to particular products. So, to help you focus on the changes that have impacted your Plan, we have categorised the Plans in the following way:

Category Plans

Personal MLC MasterKey Super

MLC MasterKey Super Fundamentals

MLC MasterKey Superannuation

MLC Personal Superannuation

Corporate MLC MasterKey Business Super

MLC MasterKey Personal Super

Pension MLC MasterKey Allocated Pension

MLC MasterKey Term Allocated Pension

Insurance MLC MasterKey Protection Essentials Super

MLC Life Cover Super

MLC Selecterm Super

General updateApplies to: All Plans

New superannuation rulesMany of the Federal Government’s reforms to superannuation took effect from 1 July 2007. Below, we have provided a snapshot of some of the more significant changes and recommend you speak to your financial adviser for a comprehensive assessment of how these and other changes may impact you. You can also find more information at www.australia.gov.au/bettersuper

• Tax-free benefits from age 60:

From 1 July, members aged 60 and over will pay no tax on payouts (lump sum or income) from the Scheme.

• Ability to stay in superannuation for longer:

You will no longer be required to draw down your benefits upon reaching age 65 and ceasing work or when you reach age 75.

• Removal of Reasonable Benefit Limits:

Lump sum benefits will no longer be subject to limits above which higher tax rates apply. Similarly, pensions paid to those under age 60 will qualify for a full 15% tax offset on the taxable portion (rather than a reduced tax offset based on any excess). However, limits on contributions will apply as set out below.

• Limits on the amount you can contribute each year:

There are now limits on how much can be contributed for or by you to superannuation each year.

Concessional contributions – these include employer contributions (including salary sacrifice contributions) and personal contributions for which you are claiming a tax deduction.

Age on last day of the financial year

Limit pa Concessional contributions

Less than 50 $50,0001

50 and over $100,000 (only mandated employer contributions can be made from age 75)2

Non-concessional contributions – these most commonly include personal after tax (undeducted) contributions and spouse contributions.

Age on first day of the financial year

Limit pa Non-concessional contributions

Less than 65 $150,0001 per annum or a 3-year limit of $450,0001

65 and over but less than 75

$150,0001

75 and over Not eligible to make non-concessional contributions

1 This limit applies from 2007/2008 and will be indexed periodically. Once triggered, the ‘3-year’ non-concessional limit is not indexed.

2 This limit is not indexed and will apply up to 30 June 2012. From 1 July 2012, the indexed $50,000 limit will apply.

Significant additional taxes are payable if you exceed the limits. Also, if these limits are exceeded, in some circumstances we will be required to reject the contribution and return it to you.

• Age and work test for those over 65:

If you are aged 65 or over, you will need to meet a work test before contributions can be made to your account. Spouse contributions cannot be accepted once you are aged 70 or over. If you are aged 75 or over, only compulsory employer contributions can be accepted.

• Adverse implications if we do not have your Tax File Number (TFN):

During May, we mailed to many members asking them to provide their TFN. If we do not yet have your TFN, you should provide it to us. Although you are not legally required to provide your TFN, the consequences of us not having it can be significant.

For example, we cannot accept certain contributions made by you or on your behalf unless we have your TFN. The only exception to this rule relates to employer contributions which would be subject to an additional tax if we don’t have your TFN.

To provide your TFN, please contact MLC on 132 652.

News and information

• Restrictions on contribution splitting:

You are able to split contributions to your spouse if you are a member of the Personal and Corporate Plans. However, the contributions that can be split have been restricted. In 2007/2008, you may split:

– up to 85% of concessional contributions comprising employer contributions (including salary sacrifice and employer type contributions sent via the Australian Tax Office) and personal contributions for which you are claiming a tax deduction, and

– up to 100% of non-concessional contributions comprising after-tax (undeducted) member contributions, Government co-contributions and spouse contributions made prior to 5 April 2007. These amounts will be classed as a taxable component when paid into your spouse’s superannuation account.

You will not be able to split any type of non-concessional contributions from 2008/2009.

• Changes that will impact how death benefits may be paid to certain beneficiaries:

Your beneficiaries may be able to commence or continue a pension at the time of your death. However, if the beneficiary is your child, they must be:

– under age 18

– between the age of 18 and 25 and either financially dependent upon you, or in an interdependency relationship with you, or

– disabled

at the time of your death. If a child does not meet the conditions above, death benefits can only be paid as a lump sum.

In addition, any death benefit pension which commences to be paid to a child after 30 June 2007 must cease when the child reaches age 25, unless the child is disabled.

• Death benefit pensions are tax-free if you or your dependant beneficiary are 60 or over:

Payments from a pension due to death are exempt from tax when paid to a ‘tax-dependant’ beneficiary. This includes a spouse, a former spouse, a child under 18, an interdependant or a financial dependant.

Payments to non-tax dependant beneficiaries will continue to be subject to tax.

• Only spouses can roll over lump sums from death benefit pensions:

Following the death of a member, where the death benefit is paid as a pension, only the deceased's spouse will have the option to commute the pension and retain the lump sum within superannuation (via a rollover). Rollovers can only occur outside a specified period (being the longer of three months from grant of probate/issue of letters of administration, or six months from date of death).

Beneficiaries other than the spouse are required to receive the commuted lump sum in the form of cash.

• Change to pension rules:

New simpler rules have been introduced for certain pensions. These are known as ‘account-based pensions’ and are basically a simplified form of allocated pension with an identifiable account balance from which a minimum amount must be paid each year. This minimum is calculated by reference to age and a specified percentage of the account balance.

Only those account-based pensions that are commenced under the ‘transition to retirement’ condition of release are subject to a maximum payment limit. This limit is 10% of the account balance each year.

New anti-money laundering and counter-terrorism measuresIn December 2006, the Australian Government introduced the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

As superannuation funds are covered by the Act, we will be establishing new procedures to comply with our obligations as these become effective over the next 18 months. These procedures include:

• verifyingyouridentitywhenyouwithdrawmoneyfrom your account, and

• reportingsuspiciousmatterstotheAustralianTransaction Reports and Analysis Centre (AUSTRAC) and potentially to other third parties. Where such reporting takes place, we are prohibited by law from notifying the impacted member(s) that this has occurred.

If you do not provide us with proof of your identity when requested, we may be unable to provide you with certain services or complete certain requests, such as a withdrawal of money from your account.

New productsNew pension productsIn line with the new pension rules, the Trustee is launching two new pension products specifically designed to enable members to access their super and pension benefits via a single integrated account.

MLC MasterKey Pension and MLC MasterKey Pension Fundamentals provide a range of choices to help members set up a retirement income arrangement to suit their needs. These products also provide flexibility in how members pay costs of financial advice associated with their retirement planning.

For more information about the new products, speak with your financial adviser.

New personal productsFrom December 2006, two new personal superannuation investment products were launched by the Trustee. The new products, MLC MasterKey Super and MLC MasterKey Super Fundamentals, offer new



members a wide range of investment choice and flexibility in how members pay any costs of financial advice associated with their retirement planning. For more information about the new products, speak with your financial adviser.

Note: Before making a decision to acquire a new product you should consider the relevant Product Disclosure Statement which can be obtained by contacting MLC on 132 652.

Closure of products MLC MasterKey Protection Essentials SuperMLC MasterKey Protection Essentials Super was closed to new members on 30 March 2007. Existing member benefits already held under this product have not changed. Future requests for alterations or increases on existing cover will be considered in line with the existing product rules. Members who currently have Life Cover only under MLC MasterKey Protection Essentials Super and wish to apply for Total and Permanent Disability cover are able to transfer their Life Cover to MLC Life Cover Super without further underwriting, and then apply for Total and Permanent Disability cover under MLC Life Cover Super.

MLC MasterKey Superannuation, MLC MasterKey Allocated Pension and MLC MasterKey Term Allocated PensionFollowing the launch of the new personal super and pension products (refer to previous page), MLC MasterKey Superannuation (Gold Star) closed to new members on 30 March 2007 and MLC MasterKey Term Allocated Pension and MLC MasterKey Allocated Pension will close to new members on 19 September 2007 and 31 October 2007 respectively.

Current members within these Plans can continue to transact on their accounts (eg switch and make withdrawals). As there will be no new members joining these products, expected inflows into certain investment options over time are more likely to reduce. Where necessary in future, MLC will implement the Transaction cost policy described on page 6 (refer to the section headed ‘Transaction cost policy’).

Changes to investment optionsDoes not apply to: Insurance Plans

Introduction of variable investment fees for MLC investment options

From 1 May 2007, a change occurred to the way that ongoing management fees are charged for Corporate Plans, MLC MasterKey Superannuation and MLC Personal Superannuation. A similar change occurred for Pension Plans from 1 April 2007.

From the respective dates, a component of the ongoing management fee (namely, fees paid to investment managers under the MLC Manager of Managers Investment Process) became variable. In future, this component may vary without prior notice to you.

New investment optionsApplies to: MLC MasterKey Super MLC MasterKey Super Fundamentals

Two new investment options were added to the investment menu on 1 July 2007, the MLC Global Property Fund and the MLC Hedged Global Share Fund.

The new investment options can help you look further than Australian securities and diversify your portfolio in a truly global sense. For more information on these investment options, please speak with your financial adviser or contact MLC on 132 652.

Removal of investment optionsThe ABN AMRO Global Equity Fund was withdrawn from the investment menu from 1 June 2007 due to a low level of investment in recent times and the relatively small fund size. Members who were impacted by this change were notified in May 2007.

Enhancement to the MLC Horizon Series

In January 2007, the MLC Horizon Series portfolios’ allocation to property securities was moved to a 100% global strategy. Previously, the property securities strategy was 75% Australian and 25% global.

MLC believes the portfolios will benefit from the higher long-term return potential and greater diversification of global property securities when compared to the Australian property securities market.

The exposure to foreign currencies, resulting from holding global property investments, is passively hedged back to the Australian dollar. This strategy aims to reduce most of the risks from currency exposure.

Enhancements to the MLC Long-Term Absolute Return Portfolio

Does not apply to: MLC Personal Superannuation

MLC has enhanced the MLC Long-Term Absolute Return Portfolio by making a number of changes to the neutral investment strategy. These changes are expected to improve diversification of returns and increase confidence in the Portfolio achieving its investment objective.

The changes include:

• two new investment strategies: Insurance Related Investments and Alpha. Returns from these two new strategies are very different to traditional asset classes like shares and bonds, which is why including them in the Portfolio improves diversification

• adjustingtheweightingstotheotherinvestmentstrategies in the Portfolio

• an increase in the gearing level from 160% to 170% (net market exposure).

The new neutral investment strategy is included in the ‘Investment option profiles’ starting on page 12.


Enhancements to National investment optionsDoes not apply to: MLC Personal Superannuation MLC MasterKey Super MLC MasterKey Super Fundamentals

In July 2007, MLC completed some changes to the National Balanced and Capital Stable Funds’ strategic asset allocations to improve expected risk and return outcomes. In general, the changes in asset allocations resulted in:

• alowerallocationtoAustraliansharesandAustralian property assets

• ahigherallocationtoglobalsharesandtheintroduction of partial currency hedging to reduce the impact of currency movements on global share returns

• theintroductionofglobalpropertyassets,and

• amorediversifiedapproachtodebtassets,tailoringthe exposure to the risk and return profile of the investment option.

There were no changes to the investment objective and risk profile of the investment options.

The new strategic asset allocations are included in the ‘Investment option profiles’ starting on page 12.

New CustodianFollowing a review of its operations, MLC has appointed NAB Custodian Services, a division of the National Australia Bank Limited, to provide custodial services for its investment operations. It is expected that NAB Custodian Services will assume the custodian responsibilities from State Street Australia over the next 12 months.

Updates to unit pricingDoes not apply to: Insurance Plans

Transaction cost policy The Trustee is responsible for ensuring that the costs of buying and selling assets when members transact are shared in an equitable way. This is achieved by:

• meetingcostsastheyariseforaninvestmentoptionas a whole by offsetting them against investment earnings. This is the approach when there is a single unit price, sometimes called no-spread unit pricing, or

• meetingcostsastheyariseduetomembertransactions by offsetting them against the individual member assets. This is the approach when investment options have a buy-sell spread in the unit price.

The transaction costs borne by an investment option are identical in each approach and, generally, both methods work well and are satisfactory to the Trustee.

However, having a buy-sell spread in the unit price is acknowledged as industry best practice and is the more equitable method in certain extreme situations. An example of this is the ‘last man standing’ scenario, where an investment option has reduced to a small number of members.

Therefore, the investment options offered through products launched by MLC from December 2006 use unit pricing with buy-sell spreads (eg MLC MasterKey Super and MLC MasterKey Super Fundamentals). For no-spread investment options, MLC allows for expected transaction costs in the valuation of assets when an investment option is in decline (the ‘transaction cost policy’), to protect members against any ‘last man standing’ issues.

Because buy-sell pricing for new products has been adopted, MLC will be implementing the transaction cost policy on an option by option basis in coming years as older products stop receiving substantial inflows.

When implemented, there will be a once off immediate fractional reduction in the unit price for the investment option. This will be offset by improved investment earnings over following years (relative to the performance that would have been experienced had the transaction cost policy not been implemented).

Note: The transaction cost policy is a part of MLC's Valuation Policy.

Error remediation policy Unit prices are calculated using a number of factors and assumptions. Sometimes, after calculating a unit price, these factors and assumptions can be found to have been incorrectly applied and/or assumptions may have been inappropriately made, requiring a unit price correction.

In this regard, MLC believes a tolerance of 0.30% (0.05% for a cash investment option) of a unit price is acceptable. These tolerance levels are consistent with regulatory practice guidelines and industry standards. If a pricing error is greater than these tolerance levels we will:

• compensateyouraccountbalanceifyouhavetransacted on the incorrect unit price or make other adjustments as MLC may consider appropriate, or

• ifyouhaveclosedyouraccountyouwillbesentpayment, where applicable, by cheque.

These adjustments will only occur if the amount is material, which is currently defined as more than $20.

This policy came into effect from July 2005.


Updates to administration proceduresDoes not apply to: Insurance Plans

Consistent processes regarding investment of benefits upon death From 1 January 2008, if we are notified of the death of a member, the deceased member’s balance will be switched into the MLC Cash Fund from the date we receive the necessary documentation (no switching fee will apply). Previously, for some Plans, the benefits would remain invested in the member’s investment strategy. By moving to a consistent basis across all of our Plans, we will be able to quote a precise benefit value to beneficiaries.

Consistent processes regarding transfers to an Eligible Rollover Fund We have introduced a consistent approach across all Plans in respect of when members may be transferred to an Eligible Rollover Fund. The conditions are set out on page 10.

Superannuation transfers from the United KingdomApplies to: MLC MasterKey Super MLC MasterKey Super Fundamentals MLC MasterKey Business Super and MLC MasterKey Personal Super

The Scheme was granted Qualifying Registered Overseas Pension Scheme (QROPS) status by the relevant United Kingdom (UK) authority from the 2006/2007 financial year. This means transfers from UK pension schemes to the Scheme will not incur the UK tax otherwise payable if the Scheme was not registered. We will need to comply with a number of reporting requirements in respect of members who cease to be a UK resident for taxation purposes and transfer moneys from the UK.

For more information, please refer to your financial adviser or call 132 652.

Plan specific changesAbility to record contribution types

Applies to: Insurance Plans

From 1 July 2007, members with MLC Life Cover Super and MLC MasterKey Protection Essentials Super policies are able to specify what type of premium contribution is being made to their policy – either personal, employer or spouse contributions. Where a contribution type is not specified, premium contributions will continue to be classified as personal contributions.

Transfers to MLC MasterKey Personal SuperApplies to: Corporate PlansPreviously, members with account balances above $3,000 were transferred to MLC MasterKey Personal Super on leaving their employer while those with less than this amount could be transferred to an Eligible Rollover Fund.

All members who join MLC MasterKey Business Super from 1 July 2007 will be transferred to MLC MasterKey Personal Super when they leave their employer, regardless of their account balance.

From January 2008, we will also transfer to MLC MasterKey Personal Super existing members who have left their employer and have less than $3,000 in their account.

We will confirm each transfer by sending a welcome kit with relevant information about MLC MasterKey Personal Super. A members’ investment strategy will remain unchanged following the transfer.

MLC MasterKey Personal Super default contribution feeApplies to: Corporate Plans

From 1 July 2007 any contribution fee applying to a member account will default to 0% upon transfer to MLC MasterKey Personal Super.

Previously this fee defaulted to 1.18% (before the tax benefit) on transfer to MLC MasterKey Personal Super.

Reduction of monthly account feeApplies to: Pension Plans

In conjunction with the launch of the new MLC MasterKey Pension and MLC MasterKey Pension Fundamentals products, MLC has taken the opportunity to review the fees charged to existing members. As a consequence, from 1 July 2007, the monthly account fee was reduced to $6.50 (previously $6.75).

New pension payment limits Applies to: MLC MasterKey Allocated PensionThe new account-based pension rules that apply from 1 July 2007 provide greater flexibility for members. The minimum payment level is now lower for most pension recipients. This means that you have the ability to reduce your pension payments if your current payment level is in excess of your needs. Also, no maximum payment applies, allowing you to vary your pension payments in times when extra income is needed. There are still maximum payments for ‘non-commutable’ or ‘transition to retirement’ pensions. In these cases, payments cannot exceed 10% of the account balance (at 1 July) each year.

On 1 July 2008, MLC will automatically adjust payments to the new minimum payment level for those pension recipients who have nominated to receive the ‘minimum’ payment.

If you want to change your income at any time, you can contact MLC on 132 652. Before making any change, we recommend that you talk to your financial adviser.

Note: These changes do not apply to MLC MasterKey Term Allocated Pensions.


Strategy and objectivesApplies to: All Plans

For Personal, Corporate and Pension Plans, the Investment Objective is to provide you with a range of investment options and allow you to invest according to your own needs and circumstances. The individual objectives of the investment options are set out on pages 12 to 27.

To meet the investment objective, we invest in policies issued by MLC. MLC in turn invests your money in investment options (as set out on pages 12 to 27) in accordance with your instructions.

For Insurance Plans, all of your contributions are used to pay the premiums for the insurance cover selected by you.

Price maintenance position Applies to: MLC MasterKey Superannuation

Where the investments in the National Capital Secure Fund fall in value, the unit price is held constant until such time as there has been sufficient accrual of income (less expenses) and/or increase in capital values to offset the fall in the value of the portfolio of investments. This means the unit price will not fall in value.

During the year to 30 June 2007, these circumstances applied at certain times.

Default investment strategyDoes not apply to: Insurance Plans

If you have not chosen a particular investment option, or your instructions were not clear, we will have applied a default investment strategy to your investment until MLC receives your clear instruction.

For Personal Plans, the default investment strategy is the MLC MasterKey Horizon 5 – Growth Portfolio.

For Corporate Plans, the default investment strategy is the MLC MasterKey Horizon 5 – Growth Portfolio except where an alternative default strategy has been approved by the Trustee.

For Pension Plans, the default investment strategy is the MLC MasterKey Horizon 3 – Conservative Growth Portfolio.

Derivatives Does not apply to: Insurance Plans

The Trustee does not invest directly in derivatives. However, investment managers within the investment options may use financial derivatives.

For the MLC and National investment options, with the exception of the MLC Long-Term Absolute Return Portfolio, derivatives may be used by investment managers to:

• reducerisk

• reducetransactioncosts

• takeadvantageofopportunitiestoincreasereturns

• increasemarketexposure,aslongasthetotalexposure is not greater than that possible if derivatives were not used, and

• reducemarketexposure(ieshorting),aslongas appropriate assets are held to offset the short exposure.

For the MLC Long-Term Absolute Return Portfolio, derivatives may be used by investment managers to:

• reducerisk

• reducetransactioncosts

• takeadvantageofopportunitiestoincreasereturns

• increasemarketexposure,and

• reducemarketexposure(ieshorting).

The use of derivatives within the MLC Long-Term Absolute Return Portfolio will not increase market exposure beyond that required to meet its investment objective.

MLC sets rigid guidelines regarding the use of derivatives which cover, among other things, liquidity requirements and limits on investment managers’ exposures. The investment managers and MLC regularly monitor these guidelines.

Derivatives will not be used in a way that is contrary to regulatory requirements.

The investment managers of the External investment options may also invest in derivatives and engage in the short selling of securities. That is, the selling of a security that is not owned, in expectation that its price will fall and it can be bought back later at a profit. MLC and the Trustee have no involvement in the management of the assets within these investment options.

Applies to: Insurance products

Contributions to these Plans are used to pay premiums for insurance cover and therefore the Trustee does not invest in financial derivatives.

About your investments


How earnings are reflected in your accountTo help keep track of the value of your account, the balance you have in an investment option is expressed in terms of units (except for the Fixed Rate Funds of MLC MasterKey Allocated Pension and MLC MasterKey Term Allocated Pension).

The value of these units (called the ‘unit price’) may change depending on the value of the underlying assets, income, expenses and taxes. The value of the underlying assets is influenced by movements in investment markets (shares, bonds, property etc as appropriate).

The change in the value of all of the units you hold over a given period reflects the earnings on your account.

For more information on unit prices and how unit prices are calculated refer to a current Product Disclosure Statement, call MLC on 132 652 or visit mlc.com.au

For the Fixed Rate Funds

Applies to: Pension Plans

The Fixed Rate Funds provide a guaranteed rate of interest on your investment for the term selected. Interest is credited to your Fixed Rate Funds on a daily basis.

For more information on the current rates available call MLC on 132 652.

Protection of Members' InterestsDoes not apply to: Insurance Plans

As a member of a Scheme, you share in the benefits of pooling your investments with many other people. Despite such benefits, pooled investments are not structured for those who like to transact frequently in the same way as ‘day traders’. Abnormal transaction activity, such as frequent switching between investment funds by an individual, can sometimes be to the detriment of other members of the Scheme.

At all times the Trustee is concerned that the interests of members are protected. Accordingly, the Trustee has adopted a policy implemented by MLC whereby transaction activity is regularly monitored and reported. Under this policy, the Trustee can determine action to be taken against an individual member whose switching activity may not be in the interests of members as a whole. The Trustee may take the following actions:

• delay or reject future switching requests, or

• transferthememberandtheirbenefittoanEligible Rollover Fund.

The Trustee will provide a member with written notice of its intentions prior to taking any action.


We may transfer your benefit to an Eligible Rollover Fund (ERF) in circumstances where a contribution has not been made within a 12-month period, and:

• youraccountbalanceisbelow$500andyouhaveno life insurance provided through the account, or

• youhavelifeinsuranceandyouraccountbalancefalls below $200.

Please note, a member cannot be transferred out of the Scheme within 12 months of joining. However, we have the ability to transfer a member to an ERF at any time where the member’s switching activity may not be in the interests of members as a whole.

Benefits may also be transferred to an ERF if you become a ‘lost member’ which means:

• onepieceofcommunicationsenttoyouhasbeenreturned unclaimed, or

• wehaveneverhadyouraddressdetails,or

• youjoinedfromanothersuperannuationfundasalost member.

We will advise you of our intention to transfer your benefit to an ERF in writing at your last known address and will proceed with transferring your benefit if you don’t respond with details of an alternative superannuation fund within the given timeframe.

If we transfer your benefit to an ERF:

• youwillceasetobeamemberoftheScheme

• youwillnolongerreceiveregularreportsfromthe Scheme

• yourinsurancecover(ifany)willceaseandtheERFmay not offer insurance benefits in the event of death or disablement

• youmaybechargedanexitfee,ifapplicable

• theERFmayhaveadifferentfeestructure,and

• theERFmayhavedifferentinvestmentstrategiesand objectives.

The ERF currently used by the Scheme is:

The Australian Eligible Rollover Fund Jacques Martin Administration and Consulting Pty Ltd Locked Bag 5429 Parramatta NSW 2124 Telephone: 1800 677 424 Fax: (02) 9947 4411

To find out more about the Australian Eligible Rollover Fund, you should contact the administrator at the above address to obtain a copy of the current Product Disclosure Statement.

To provide us with updated address details, call MLC on 132 652.

Eligible Rollover Fund


The superannuation surcharge will generally be deducted from your account if the Scheme receives from the ATO a surcharge assessment on your behalf for prior years. If you have taken a lump sum or pension the ATO may send you a surcharge assessment for you to pay.

For MLC Life Cover Super, MLC MasterKey Protection Essentials Super and MLC Selecterm Super any amount of surcharge that is not deducted from your account balance in the Scheme (if any), may be met by MLC directly in its absolute discretion. MLC reviews its policy in this regard on an annual basis.

If you have any questions about:

• howtheATOhascalculatedanamountofsurchargein relation to your superannuation account, or

• detailsofincomethresholdsandamountstowhichthe surcharge is applicable, please contact the ATO on 13 10 20.

Surcharge assessment for prior years


Investment option profiles Information current as at 30 June 2007Past performance is not indicative of future performance. Products have been grouped together for the purpose of performance shown in this section. Please refer to ‘Notes specific to performance’ on page 27 for details of these groupings.

Investment option1 Objective Asset allocation PerformanceReturns to 30 June (% pa)

Single year 5 year 2007 2006 2005 2004 2003

MLC MasterKey Horizon Series

MLC MasterKey Horizon 1 – Bond Portfolio2

Aims to provide returns higher than cash over time, by investing in a diverse range of actively managed debt assets.

Risk level:Low to moderate

Strategic asset allocation

100% Debt assets• 47% Australian debt assets• 30% Cash and short-term

securities• 23% Global debt assets

Superannuation 3.1 3.0 4.7 1.6 7.1 3.9

Superannuation (Five Star)

2.6 2.5 4.2 1.1 6.6 3.4

Pension 3.9 3.8 5.6 2.0 8.4 4.7

Pension (Five Star)

3.2 3.1 4.9 1.3 7.6 4.0

MLC MasterKey Horizon 2 – Capital Stable Portfolio

Aims to provide returns over time from a portfolio that invests in a number of asset classes favouring debt assets and a moderate allocation to growth assets.



70% Debt assets• 39% Australian debt assets• 21% Global debt assets• 10% Cash and short-term

securities30% Growth assets• 11% Global shares

(unhedged)• 10% Australian shares • 5% Global shares (hedged)• 2% Global private markets3

• 2% Global property securities

Superannuation 6.7 7.3 6.9 6.0 3.1 6.0


6.2 6.8 6.4 5.5 2.6 5.5

Pension 7.8 8.5 7.9 7.0 3.7 7.0

Pension (Five Star)

7.1 7.8 7.2 6.3 3.1 6.3

MLC MasterKey Horizon 3 – Conservative Growth Portfolio4

Aims to provide returns over time from a well diversified portfolio with an equal mix of growth and debt assets.



50% Debt assets • 30% Australian debt assets• 20% Global debt assets50% Growth assets• 21% Australian shares• 12% Global shares

(unhedged)• 7% Global shares (hedged)• 6% Global private markets3


• 1% Long-term absolute return strategy

Superannuation 10.1 10.1 9.7 8.9 1.5 8.0


9.6 9.6 9.2 8.4 1.0 7.5

Pension 11.4 11.6 10.9 10.3 2.0 9.2

Pension (Five Star)

10.7 10.9 10.2 9.5 1.3 8.5

MLC MasterKey Horizon 4 – Balanced Portfolio

Aims to provide returns over the medium to long term that are expected to be higher than bonds but less volatile than shares.

Risk level:Moderate


30% Debt assets• 15% Australian debt assets• 15% Global debt assets70% Growth assets• 31% Australian shares • 16% Global shares




Superannuation 13.3 13.2 11.9 12.1 -1.0 9.8


12.8 12.7 11.4 11.6 -1.5 9.2

Pension 14.8 15.0 13.4 14.1 -0.8 11.1

Pension (Five Star)

14.1 14.3 12.7 13.4 -1.4 10.4

See page 27 for footnotes



Single year 5 year 2007 2006 2005 2004 2003

MLC MasterKey Horizon Series (continued)

MLC MasterKey Horizon 5 – Growth Portfolio

Aims to provide long-term growth over time through a portfolio that focuses on growth assets, with a high exposure to shares.

Risk level:Moderate to high


15% Debt assets • 8% Global debt assets• 7% Australian debt assets85% Growth assets• 35% Australian shares• 22% Global shares




Superannuation 15.4 15.5 12.0 14.4 -3.5 10.5


14.8 14.9 11.5 13.9 -4.0 10.0

Pension 17.0 17.7 13.4 16.7 -3.7 11.9

Pension (Five Star)

16.3 16.9 12.7 16.0 -4.2 11.2

MLC MasterKey Horizon 6 – Share Portfolio

Aims to provide long-term growth over time through a portfolio of growth assets, focusing on Australian and global shares.

Risk level:High


100% Growth assets • 40% Australian shares• 27% Global shares (hedged)• 24% Global shares

(unhedged)• 6% Global private markets3


Superannuation 18.1 17.9 12.6 17.0 -6.1 11.5


17.5 17.4 12.0 16.4 -6.5 10.9

Pension 20.1 20.4 14.0 19.5 -6.2 13.4

Pension (Five Star)

19.3 19.6 13.3 18.7 -6.9 12.3

MLC MasterKey Horizon 7 – Accelerated Growth Portfolio4,6

Aims to provide growth over the long term through a portfolio of growth assets, focusing on Australian and global shares. The portfolio will increase the amount of capital invested through the use of borrowing. The borrowing will magnify the return on the assets (positively and negatively).

Risk level: Very high


130% Growth assets5 • 52% Australian shares• 38% Global shares (hedged)• 31% Global shares

(unhedged)• 6% Global private markets3


Superannuation 22.2 22.0 14.6 20.4 – 18.1


21.7 21.5 14.1 19.8 – 16.3

Pension 24.2 23.9 14.8 23.5 – 17.5

Pension (Five Star)

23.0 23.1 14.1 22.7 – 17.6




Single year 5 year 2007 2006 2005 2004 2003

MLC Long-Term Absolute Return Portfolio

MLC Long-Term Absolute Return Portfolio4,6,8

Aims to maximise the net real return (ie after deducting inflation, tax and Investment fees) over rolling 20 year periods, while ensuring a high likelihood of it being positive over the timeframe.

Risk level:Varies up to very high

Neutral investment strategy

170% Net market exposure5,16 • 24% Global real return

strategies• 23% Global shares (hedged)• 20% Global shares

(unhedged)• 18% Australian inflation

linked securities• 18% Global property

securities• 17% Emerging market shares • 17% Australian shares• 11% Commodities• 10% Global private markets3

• 7% Insurance related investments

• 5% Global high yield debt

Superannuation 10.7 – – – – 9.3

Pension 11.7 – – – – 6.3

Australian shares MLC

MLC IncomeBuilder Aims to provide long-term growth by investing primarily in a portfolio of Australian shares with the potential to provide future growth in dividends.

Risk level: High

• 37.3% Financial ex property securities

• 14.2% Consumer staples • 11.5% Industrials • 10.9% Consumer discretionary• 7.9% Property securities • 6.5% Telecommunications • 5.8% Materials • 2.1% Cash and short-term

securities• 1.7% Health care • 1.7% Utilities • 0.2% Information technology• 0.1% Energy• 0.1% Other

Superannuation 22.8 12.7 19.5 15.9 -2.3 13.4


22.2 12.2 18.9 15.4 -2.8 12.8

Pension 24.8 14.1 21.7 18.1 -1.9 14.9

Pension (Five Star)

24.0 13.3 20.9 17.3 -2.6 14.2

MLC Australian Share Fund

Aims to provide long-term growth from an actively managed portfolio of Australian shares.

Risk level: High


• 20.5% Materials • 11.5% Consumer discretionary • 11% Industrials • 8% Consumer staples • 5.8% Energy • 5.7% Telecommunications • 5.3% Health care • 1.9% Property securities • 1.2% Cash and short-term

securities • 0.7% Utilities • 0.6% Other • 0.3% Information technology

Superannuation 24.1 19.1 23.8 18.4 -3.2 16.0


23.5 18.6 23.2 17.9 -3.7 15.4

Pension 26.6 21.5 26.5 20.9 -3.0 18.0

Pension (Five Star)

25.8 20.7 25.7 20.1 -3.6 17.2

Investment option profiles (continued)




Single year 5 year 2007 2006 2005 2004 2003

Australian shares MLC (continued)

MLC Australian Share Growth Style Fund4,6

Aims to provide long-term growth from an actively managed portfolio of Australian shares with a bias towards a growth style of investing.

Risk level: High

• 26% Financial ex property securities

• 24.5% Materials • 12.4% Consumer discretionary • 11.8% Industrials • 8.8% Health care • 5.7% Energy • 4.6% Consumer staples • 2.7% Telecommunications • 1.2% Utilities • 0.8% Property securities • 0.8% Cash and short-term

securities • 0.6% Other • 0.1% Information technology

Superannuation 20.6 24.5 22.8 – – 20.2

Pension 23.3 27.3 25.7 – – 23.2

MLC Australian Share Value Style Fund4,6

Aims to provide long-term growth from an actively managed portfolio of Australian shares with a bias towards a value style of investing.

Risk level: High


• 18.4% Materials • 14.3% Consumer discretionary • 9.6% Industrials • 9.5% Consumer staples • 8.1% Energy • 6.9% Telecommunications • 3.6% Health care • 3.1% Property securities • 1.8% Cash and short-term

securities • 0.7% Utilities • 0.2% Information technology

Superannuation 26.8 12.6 21.4 – – 19.1

Pension 30.3 14.5 23.8 – – 21.3

MLC-Vanguard Australian Share Index Fund7

Aims to approximate the return of the S&P/ASX200 Accumulation Index, before taking into account fees, costs and tax.

Risk level: High


• 22.1% Materials • 9.6% Property securities • 9.8% Industrials • 6% Consumer staples • 5.7% Consumer discretionary • 4.2% Energy • 3.6% Telecommunications • 2.6% Health care • 1.7% Utilities • 1.1% Other• 0.6% Information technology

Superannuation 26.2 21.0 22.7 18.9 -2.5 16.8


25.6 20.4 22.1 18.3 -3.0 16.2

Pension 27.3 22.9 25.5 20.9 -2.1 18.4

Pension (Five Star)

26.5 22.1 24.7 20.1 -2.8 17.6



ABN AMRO Australian Equity Fund6

To provide investors with capital appreciation over the medium term (five years) through investments in shares of companies listed in Australia. The Fund seeks to be fully invested.

Risk level: High


• 20% Materials • 9.3% Health care • 9.2% Consumer discretionary • 7.9% Consumer staples • 7.7% Industrials • 5.2% Property securities • 2.9% Telecommunications • 2% Information technology • 1.8% Energy • 1.3% Cash and short-term

securities

Superannuation 22.7 19.6 25.8 – – 19.8

Pension 25.8 23.0 31.0 – – 24.2

Ausbil Australian Emerging Leaders Fund6,8

The Fund seeks to outperform the benchmark comprising 70% S&P/ASX Midcap 50 Accumulation Index and 30% S&P/ASX Small Ordinaries Accumulation Index by a minimum of 3% pa over rolling three year periods, with defined levels of risk, before taking into account fees, costs and tax.

Risk level: High

• 19% Industrials • 17.3% Materials • 16.3% Energy • 13.5% Financial ex property

securities • 13.1% Consumer discretionary • 4.8% Utilities • 4.8% Property securities • 4.4% Health care • 3% Information technology • 2.6% Cash and short-term

securities • 1.2% Telecommunications

Superannuation 25.7 23.0 – – – 23.6

Pension 29.1 27.0 – – – 27.6

Investors Mutual Australian Share Fund6

To provide a total return, before taking into account fees, costs and tax, superior to the S&P/ASX300 Accumulation Index on a rolling four year basis.

Risk level: High


• 16% Materials • 11.9% Industrials • 10.9% Consumer discretionary • 8.7% Telecommunications • 6% Cash and short-term

securities • 6% Consumer staples • 3% Energy • 2.6% Other • 2% Utilities • 1.2% Health care

Superannuation 24.3 12.1 16.6 – – 15.5

Pension 27.1 13.6 18.3 – – 17.7


Single year 5 year 2007 2006 2005 2004 2003

Australian shares External 4




Perennial Value Shares Wholesale Trust6

To grow the value of an investor’s investment over the long term via a combination of capital growth and tax-effective income by investing in a diversified portfolio of Australian shares with returns that outperform the S&P/ASX300 Accumulation Index measured on a rolling three year basis, before taking into account fees, costs and tax.

Risk level: High

• 28.2% Materials• 26.3% Financial ex property

securities • 10.9% Energy • 10.8% Consumer discretionary • 7% Cash and short-term

securities • 5.4% Telecommunications • 4.1% Consumer staples • 2.5% Industrials • 1.6% Utilities• 1.4% Other• 1% Health Care• 0.8% Information technology

Superannuation 25.4 15.8 21.8 – – 18.1

Pension 29.2 18.0 24.7 – – 21.2

Perpetual’s Wholesale Australian Fund6,8

Aims to provide long-term capital growth and income through investment in quality industrial and resource shares.

Risk level: High


• 28.2% Materials • 9% Consumer discretionary • 8.4% Cash and short-term

securities • 4.4% Energy • 4.4% Industrials • 3.8% Consumer staples • 2.5% Telecommunications • 1% Health care • 0.3% Other


Pension 20.2 – – – – 19.1

Perpetual’s Wholesale Smaller Companies Fund No. 26,8

Aims to provide long-term capital growth and income through investment in quality Australian industrial and resource shares which when first acquired, do not rank in the S&P/ASX50 index.

Risk level: High

• 24.8% Industrials • 23.9% Consumer discretionary • 14% Materials • 10% Financial ex property

securities • 9.1% Energy • 5.3% Health care • 4.8% Information technology • 4.8% Cash and short-term

securities • 1% Consumer staples • 0.9% Property securities • 0.8% Other • 0.6% Telecommunications


Pension 42.2 – – – – 30.0


Single year 5 year 2007 2006 2005 2004 2003

Australian shares External 4 (continued)





Single year 5 year 2007 2006 2005 2004 2003

Australian shares External 4 (continued)

Schroder Wholesale Australian Equity Fund6

To outperform the S&P/ASX200 Accumulation Index over the longer term (three to five years), after taking into account investment manager fees.

Risk level: High


• 24.6% Materials • 8.3% Industrials • 7.8% Consumer staples • 7% Health care • 4.9% Consumer discretionary • 4.5% Telecommunications • 4% Cash and short-term

securities • 3.5% Information technology • 2.7% Other• 2.2% Energy • 1% Property securities

Superannuation 24.0 20.7 21.1 – – 19.6

Pension 28.0 23.9 23.5 – – 23.7

UBS Australian Share Fund6

Aims to provide investors with a total return (after taking into account investment manager fees) in excess of the S&P/ASX300 Accumulation Index when measured over rolling three year periods.

Risk level: High


• 17.5% Materials • 14% Industrials • 11.1% Consumer staples • 7.1% Consumer discretionary • 6.3% Energy • 5.2% Health care • 4.4% Cash and short-term

securities • 2.4% Property securities • 1.8% Telecommunications• 0.1% Utilities

Superannuation 25.1 18.7 21.9 – – 20.2

Pension 29.1 21.6 24.2 – – 23.4

Global shares MLC

MLC Global Share Fund (unhedged)

Aims to provide long-term growth from an actively managed share portfolio selected from sharemarkets around the world.

Risk level: High

• 41.9% USA/Canada • 20.9% Other Europe • 12.1% Japan • 7.9% UK • 6.2% Other Asia • 4.8% Other markets • 3.8% Germany • 2.4% Cash and short-term

securities

Superannuation 6.7 18.3 -1.1 14.3 -14.0 4.2


6.2 17.7 -1.5 13.8 -14.4 3.7

Pension 7.1 20.8 -1.4 16.6 -15.5 4.7

Pension (Five Star))

6.5 20.0 -2.0 15.8 -16.1 4.0

MLC Hedged Global Share Fund17


Risk level: High

Strategic Asset Allocation

100% Global shares

Superannuation – – – – – –

Pension – – – – – –




Single year 5 year 2007 2006 2005 2004 2003

Global shares MLC (continued)

MLC Global Share Growth Style Fund4,6

Aims to provide long-term growth from an actively managed share portfolio selected from sharemarkets around the world with a bias towards a growth style of investing.

Risk level: High

• 50.6% USA/Canada • 29.3% Other Europe • 4.1% Japan • 4.9% UK • 3.3% Other markets• 3.1% Cash and short-term

securities• 2.6% Germany • 2.1% Other Asia

Superannuation 1.8 13.6 -2.5 – – 5.4

Pension 1.8 14.3 -3.0 – – 6.7

MLC Global Share Value Style Fund4,6

Aims to provide long-term growth from an actively managed share portfolio selected from sharemarkets around the world with a bias towards a value style of investing.

Risk level: High

• 39.6% USA/Canada • 20% Other Europe • 9.8% UK • 8.2% Germany• 8.2% Japan • 7.7% Other Asia• 4.9% Other markets • 1.6% Cash and short-term

securities

Superannuation 14.9 20.4 1.6 – – 12.6

Pension 16.5 22.9 1.6 – – 13.9

MLC Capital International Global Share Fund4


Risk level: High

• 46.7% USA/Canada • 18.1% Other Europe • 12.1% Japan • 10.8% UK • 3.7% Germany • 3.5% Cash and short-term

securities• 2.9% Other markets• 2.2% Other Asia

Superannuation 4.9 18.9 -3.3 14.7 -13.7 3.6


4.4 18.4 -3.8 14.2 -23.2 3.1

Pension 5.1 21.0 -3.8 16.4 -15.1 3.9

Pension (Five Star))

4.4 20.2 -4.4 15.6 -15.6 3.2

Global shares External4

AXA Wholesale Global Equity – Value Fund6,8

The objectives are twofold: to provide unitholders with long-term capital growth and to outperform the MSCI World ex-Australia Index (Net Dividends Reinvested), in Australian dollar terms, after taking into account investment manager fees and over rolling five year periods.

Risk level: High

• 40.3% USA/Canada • 18.3% Other Europe • 11.8% UK • 11.7% Japan • 8.2% Germany • 4.8% Other Asia • 3.7% Cash and short-term

securities • 1.2% Other markets


Pension 15.6 – – – – 12.0





Single year 5 year 2007 2006 2005 2004 2003

Global shares External4 (continued)

Platinum International Fund6,8,9

To provide capital growth over the long term through searching out undervalued listed and unlisted investments around the world.

Risk level: High

• 37.4% Cash and short-term securities

• 23.4% Japan • 19.2% Other Europe • 12.7% Other Asia • 6.9% USA/Canada • 0.4% Other marketsThis investment option has a short position of 32.5%. There is also 10% short position on Japanese Government Bonds.


Pension 5.8 19.9 – – – 10.8

PM CAPITAL Absolute Performance Fund6,8

To provide positive investment returns over a three to five year investment horizon, after taking into account investment manager fees, by investing in a concentrated portfolio of undervalued global equities.

Risk level: High

• 54% USA/Canada • 19% UK • 18% Japan • 10% Other Europe• -1% Other Asia securities


Pension 8.6 12.2 – – – 10.5

Vanguard International Shares Index Fund (Hedged)6,7

Seeks to match the total return of the MSCI World ex-Australia Index with the net dividends reinvested, (hedged into Australian dollars) before taking into account fees, costs and tax.Risk level: High

• 53.2% USA/Canada • 19.1% Other Europe • 11.5% UK • 10.5% Japan • 4.2% Germany • 1.4% Other Asia • 0.1% Other markets

Superannuation 20.3 9.5 9.8 – – 12.8

Pension 23.9 11.7 11.0 – – 15.9

Vanguard International Shares Index Fund (Unhedged)6,7

Seeks to match the total return of the MSCI World ex-Australia Index with the net dividends reinvested, in Australian dollars, before taking into account fees, costs and tax.Risk level: High

• 53.2% USA/Canada • 19.1% Other Europe • 11.5% UK • 10.5% Japan • 4.2% Germany • 1.4% Other Asia• 0.1% Other markets

Superannuation 7.6 14.4 -1.9 – – 7.0

Pension 8.3 14.6 -2.3 – – 6.5

Property securities MLC

MLC Property Securities Fund

Aims to provide growth over time from a portfolio of property securities.

Risk level: Moderate to high

• 47.4% Retail property • 24.9% Commercial property • 13.8% Industrial property • 7.1% Residential property • 3.7% Cash and short-term

securities • 1.7% Other• 1.4% Hotel

Superannuation 21.3 14.9 16.1 13.7 9.7 15.1


20.7 14.4 15.6 13.2 9.2 14.5

Pension 23.5 16.7 17.3 16.5 11.0 16.9

Pension (Five Star)

22.7 15.9 16.6 15.8 10.2 16.2

MLC Global Property Fund17

Aims to provide growth over time from an actively managed portfolio of property investments.


Strategic Asset Allocation

100% Global property securities

Superannuation – – – – – –

Pension – – – – – –




Single year 5 year 2007 2006 2005 2004 2003

Property securities External4

Legg Mason Property Securities Trust6

Seeks to earn a return of 1.5% pa, before taking into account fees, costs and tax, in excess of the S&P/ASX200 Property Trust Accumulation Index over rolling three year periods.

Risk level: Moderate

• 45.8% Other• 39.6% Retail property • 7.6% Commercial property • 7% Industrial property

Superannuation 20.9 12.8 15.6 – – 16.3

Pension 24.6 15.1 17.3 – – 19.7

Vanguard Property Securities Index Fund6,7

Seeks to match the total return of the S&P/ASX300 Property Index before taking into account fees, costs and tax.


• 42% Retail property • 34.8% Other• 11.6% Commercial property • 11.6% Industrial property

Superannuation 21.3 13.9 14.8 – – 16.7

Pension 24.0 16.3 16.9 – – 19.8

Global bonds External4

Vanguard International Fixed Interest Index Fund (Hedged)6,7

Seeks to match the total return of the Citigroup World Government Bond Index hedged into Australian dollars before taking into account fees, costs and tax.

Risk level: Low to moderate

• 39.5% Other Europe• 26.2% Japan • 16.4% USA/Canada• 7.4% Germany • 5.9% UK • 4.1% Cash and short-term

securities• 0.5% Other Asia

Superannuation 3.1 -0.6 8.1 – – 2.9

Pension 3.8 -0.7 9.9 – – 3.4

Cash MLC

MLC Cash Fund and Transition Facility Cash Fund10

Aims to provide a competitive interest rate for the cash proportion of an investment portfolio.

Risk level: Low

• 100% Cash and short-term securities

Superannuation 4.0 3.4 3.3 3.1 2.7 3.3


3.5 2.9 2.8 2.6 2.3 2.8

Pension 4.8 4.2 4.1 3.7 3.4 4.0

Pension (Five Star)

4.1 3.5 3.4 3.0 2.8 3.4

Cash and Australian bonds External4

Vanguard Australian Fixed Interest Index Fund6,7

Seeks to match the total return of the UBS Warburg Australian Composite Bond Index before taking into account fees, costs and tax.


• 64.2% Corporate bonds • 26.6% Government/Semi

government bonds • 9.2% Cash and short-term

securities

Superannuation 2.2 1.2 4.8 – – 2.5

Pension 2.9 1.6 5.6 – – 3.0





Single year 5 year 2007 2006 2005 2004 2003

Special purpose External4,11

Colonial First State Wholesale Income Fund8

To provide consistent monthly income, while minimising the risk of capital loss, by predominantly investing in a broad selection of Australian-based mortgages, fixed interest investments and cash.


• 48.3% Mortgages • 43.9% Australian debt • 4.3% Global debt • 3.5% Cash and short-term

securities

Superannuation 4.4 4.0 3.6 – – 3.9

Pension 5.4 4.9 4.4 – – 4.8

Perpetual’s Wholesale Ethical SRI Fund8

Aims to provide long-term capital growth and income through investment in quality shares of socially responsible companies.

Risk level: High


• 21.6% Consumer discretionary

• 17.1% Industrials • 10.5% Cash and short-term

securities • 7.8% Materials • 1.9% Health care • 1.5% Consumer staples• 1% Property Securities • 1% Other• 0.8% Information

Technology• 0.5% Energy• 0.4% Telecommunications • 0.2% Utilities

Superannuation 32.4 21.6 17.7 – – 20.4

Pension 37.4 23.8 19.8 – – 23.9

UBS Hybrid Income Fund6,8

Aims to provide investors with an attractive income distribution and potential for capital growth when measured over a rolling three year period.


• 99.7% Other • 0.3% Cash and short-term

securities


Pension 4.7 – – – – 4.2

Closed investment options12

Accent Capital Guaranteed Fund4,13

Aims to provide returns higher than cash over time and a high level of capital security.

Risk level: Low


• 28.3% Australian debt • 19.4% Global debt • 11.7% Australian Inflation

Linked Securities • 4.6% Australian shares• 3% Global shares • 1.9% Property securities

Superannuation 4.0 4.0 4.0 4.0 2.0 3.6

Accent Managed Fund4



• 31.5% Australian shares • 27.9% Global shares • 14.8% Global debt • 10% Australian debt • 7% Global private markets • 4% Property securities • 3.7% Australian Inflation

Linked Securities• 1.1% Cash and short-tem

securities

Superannuation 13.3 13.2 11.9 12.0 -1.4 9.7




Single year 5 year 2007 2006 2005 2004 2003

Closed investment options12 (continued)

BT Active Balanced Fund14

Aims to provide an overall return (ie a return before the deduction of manager fees and expenses) that is greater than the return from its benchmark over five years or more. This actively managed diversified fund invests in Australian and international shares, Australian and international property securities, Australian and international fixed interest, cash and alternative investments.


• 37.6% Australian shares • 30% Global shares • 16.5% Australian debt • 9.1% Property securities • 6% Global debt • 0.8% Cash and short-term

securities

Superannuation 12.3 14.1 12.7 16.6 -3.0 10.3


11.8 13.5 12.2 16.1 -3.5 9.8

Pension (Five Star)

13.8 14.6 14.1 14.9 -4.8 10.2

BT Balanced Fund Aims to provide an overall return (ie a return before the deduction of manager fees and expenses) that is greater than the return from its benchmark over five years or more. This actively managed diversified fund invests in Australian and international shares, Australian and international property securities, Australian and international fixed interest, cash and alternative investments.

Risk level: High

• 31.2% Australian shares • 27.2% Global shares• 17% Australian debt • 11.1% Cash and short-term

securities • 7.7% Property securities • 5.8% Global debt

Superannuation 11.6 11.3 9.9 9.6 -2.1 7.9


11.1 10.7 9.3 9.0 -2.5 7.4

Pension 13.5 14.1 12.3 12.2 -1.3 10.0

Pension (Five Star)

12.7 13.3 11.5 11.4 -1.9 9.3





Single year 5 year 2007 2006 2005 2004 2003


Colonial First State Diversified Fund4

To provide medium to long-term capital growth and distributions by investing in a range of assets, with emphasis on growth assets.


• 33.7% Australian shares • 26.6% Global shares • 17.7% Australian debt • 8.7% Cash and short-term

securities • 6.9% Global debt• 6.4% Property securities

Superannuation 12.0 12.3 9.9 8.4 -4.2 7.5


11.4 11.8 9.3 7.9 -4.6 7.0

Pension 13.0 14.0 11.4 10.4 -4.7 8.6

Pension (Five Star)

12.3 13.3 10.7 9.6 -5.3 7.9

Entrepreneur Capital Guaranteed Fund4,13

Aims to provide returns higher than cash over time and a high level of capital security.

Risk level: Low


• 28.3% Australian debt • 19.4% Global debt • 11.7% Australian inflation linked securities • 4.6% Australian shares • 3% Global shares • 1.9% Property securities

Superannuation 4.1 4.1 4.1 4.0 2.0 3.7

Entrepreneur Managed Fund4



• 31.5% Australian shares • 27.9% Global shares• 14.8% Global debt • 10.0% Australian debt • 7% Global private markets • 4% Property securities • 3.7% Australian Inflation

Linked Securities• 1.1% Cash and Short Term

Securities

Superannuation 13.5 13.4 12.1 12.2 -1.3 9.8

EQT Wholesale Small Companies Fund4,6

To outperform the ASX Small Ordinaries Accumulation Index by greater than 4–5% per annum over rolling three to five year periods, before taking into account manager fees.

Risk level: High

• 21.9% Materials • 21.1% Information technology • 14.2% Energy • 12.9% Health care • 12.2% Financial ex property

securities • 9.9% Industrials • 5.0% Consumer

discretionary• 2.4% Consumer staples • 0.4% Cash and short-term

securities

Superannuation 26.7 14.2 6.6 – – 12.8

Pension 31.3 17.2 8.1 – – 15.5

INVESCO Growth Fund

To provide medium to long-term capital growth and distributions by investing in a range of assets, with emphasis on growth assets.


• 40.2% Australian shares • 22.5% Global shares • 17.5% Australian debt • 9.3% Property securities • 5.6% Cash and short-term

securities • 4.9% Global debt

Superannuation 15.0 14.6 13.6 16.7 -4.1 10.9


14.5 14.0 13.1 16.1 -4.6 10.3

Pension 15.1 15.3 13.9 17.4 -3.8 11.3

Pension (Five Star)

14.3 14.5 13.2 16.7 -4.4 10.6




Single year 5 year 2007 2006 2005 2004 2003


INVESCO Protected Growth Fund14

To provide medium to long-term capital growth and to avoid a negative total return over a 1 July to 30 June 12 month period.

Risk level: Low to Moderate


• 13% Australian debt • 9% Australian shares • 8.5% Global shares • 5.8% Property securities• 5.3% Global debt

Superannuation 5.6 5.6 5.3 5.0 1.2 4.5

Superannuation(Five Star)

5.1 5.1 4.8 4.5 0.8 4.0

Pension(Five Star)

5.9 5.6 5.2 4.8 0.6 4.4

Merrill Lynch Balanced Fund

Aims to achieve capital growth over the medium to long term with an emphasis on risk management by diversification across asset classes. It aims to achieve this goal by outperforming the benchmark asset allocation over rolling five year periods.

Risk level: High

• 37.8% Australian shares • 26.9% Global shares • 13.6% Australian debt • 9.6% Global debt• 7.7% Property securities • 4.4% Cash and short-term

securities

Superannuation 13.2 14.1 10.9 11.6 -3.5 9.0

Superannuation(Five Star)

12.6 13.5 10.4 11.1 -4.0 8.5

Pension 14.9 16.3 14.0 12.9 -4.4 10.4

Pension(Five Star)

14.1 15.5 13.3 12.1 -5.0 9.7

MLC-Platinum Global Fund4

Aims to provide growth over the long term through searching out undervalued investments around the world.

Risk level: High

• 26.1% Japan• 24.8% USA/Canada • 15.8% Cash and short-term

securities • 10.5% Other Europe • 15.5% Other Asia • 5.6% Germany • 2.7% UK • -1% Other Markets

Superannuation 8.6 22.2 -1.2 28.1 -5.9 9.6


8.1 21.6 -1.7 27.5 -6.4 9.0

Pension 9.7 24.5 -1.2 33.3 -6.4 11.0

Pension (Five Star)

8.9 23.7 -1.8 32.4 -7.0 10.3

National Balanced Fund4, 15

Aims to achieve investment returns through a combination of income and capital growth from a diversified portfolio of domestic and international assets with an emphasis on growth securities.


Strategic asset allocation30% Debt assets• 15% Australian debt assets• 15% Global debt assets70% Growth assets• 31% Australian shares • 16% Global shares

(unhedged)• 10% Global shares (hedged)• 6% Global private

markets3

• 4% Global property securities• 3% Long-term absolute

return strategy

Superannuation 13.3 12.2 10.9 11.1 -2.1 8.9


12.8 11.6 10.3 10.5 -2.6 8.4

Pension 15.6 13.7 13.7 12.8 -0.7 10.8

Pension (Five Star)

14.8 12.9 13.0 12.0 -1.4 10.1





Single year 5 year 2007 2006 2005 2004 2003


National Capital Secure Fund4

To preserve the capital value of investors’ funds and provide returns equal to short-term interest rates.

Risk level: Low

• 100% Cash and short-term securities

Superannuation 3.9 3.4 5.2 3.6 3.0 3.8


3.4 2.9 4.7 3.1 2.5 3.3

National Capital Stable Fund4,15

Aims to achieve investment returns through a combination of income and capital growth from a diversified portfolio of domestic and international assets with an emphasis on debt assets.



70% Debt assets• 39% Australian debt assets• 21% Global debt assets• 10% Cash and short-term

securities30% Growth assets• 11% Global shares

(unhedged)• 10% Australian shares • 5% Global shares (hedged)• 2% Global property securities• 2% Global private

markets3

Superannuation 8.6 7.5 7.8 6.2 2.0 6.4


8.1 7.0 7.3 5.6 1.5 5.9

Pension 9.0 7.9 9.0 6.2 4.0 7.2

Pension (Five Star)

8.3 7.2 8.2 5.4 3.3 6.5

National Property Fund4

To achieve an income stream and growth over time through investment predominantly in a range of property securities listed primarily on the Australian Securities Exchange.


• 100% Property securities

Superannuation 21.6 14.8 16.5 15.3 10.0 15.6


21.0 14.3 15.9 14.8 9.5 15.0



Footnotes1 These are the investment options included in the MLC MasterKey

Investment Menu as at the preparation date of this Annual Report. The investment options can change without prior notice. For a current listing of the available investment options included in the MLC MasterKey Investment Menu, please refer to mlc.com.au

2 This investment option may hold a very small proportion of other asset classes (such as hybrid assets and shares) arising out of capital restructures.

3 The actual allocation to global private markets may be different from that shown as building a diversified global private markets portfolio can take time, and the availability of suitable investments tends to fluctuate. To ensure portfolios are fully invested, any amounts not invested are allocated to global shares with foreign currency exposures hedged to the Australian dollar. Current asset allocations are available at mlc.com.au

4 This investment option is not available for MLC Personal Superannuation.

5 The exposure to assets above 100% is achieved through borrowing.

6 The return shown in the 5 year column is not a 5 year return. It is calculated for a shorter period, from the inception of the investment option.

7 Please contact us on 132 652 if you wish to obtain a comparison of the returns of this investment option against the Index.

8 For a period after the establishment of new investment options, MLC may hold cash which constitutes a significant proportion of the assets of a new investment option. This scenario is likely to arise in the early stages of an investment option’s life. Therefore, investment performance may not reflect the stated investment objective of the investment option, due to the temporary impact of the cash holding.

9 The asset allocation shown for the Platinum International Fund is based on the direct holdings in companies by the investment option. Platinum also engages in short selling. Short selling is selling a security that is not owned, on the expectation that its price will decrease. However, if the price of the security increases the fund will incur a loss when it purchases the security. As there is no limit to the amount a security can increase, the potential loss of short selling a security is infinite.

10 The investment returns shown for ‘Superannuation’ apply to investors in the MLC Transition Facility Cash Fund.

11 Special purpose investment options generally access only a subset of an asset class.

12 Closed investment options are not available to new members.

13 This investment option has an earning rate that is calculated and declared for the period to 30 June each year.

Once a rate is declared the earnings form part of your guaranteed benefit. For the year ending 30 June 2007, the declared rate is equal to the single year return for the fund.

14 This investment option was terminated for MLC MasterKey Allocated Pension (Gold Star) and MLC MasterKey Term Allocated Pension.

15 At the issue date of this report the National Balanced Fund continues to invest in the National Managed Investor Balanced Trust and the National Capital Stable Fund continues to invest into the National Managed Investor Capital Stable Trust.

16 The MLC Long-Term Absolute Return Portfolio uses a number of strategies to generate returns from manager skill, including the Alpha strategy introduced in June 2007. As alpha represents the return generated from the investment manager's skill it is independent of asset market returns. As manager skill (alpha) does not represent an exposure to asset markets (or the returns from asset markets), the asset allocation does not show manager skill (alpha) as an explicit allocation.

17 This investment option is only available in MLC MasterKey Super, MLC MasterKey Super Fundamentals, MLC MasterKey Pension and MLC MasterKey Pension Fundamentals. Performance information is not shown as the investment option commenced on 1 July 2007.

Notes specific to performance• All performance figures apply to investment units only.

Foundation units have an additional management charge of 5% (or 3% pa for Entrepreneur funds) and as a result returns for these units will be lower.

• Returns for the five years to 30 June 2007 are calculated on an annualised basis or where the investment has less than five years performance, compound returns are shown from inception of the fund. For investments with less than one year’s performance the figure shown is from inception (not annualised). All returns are calculated using end of month redemption prices, and are net of Management fees which include Administration fees, Issuer fees and Investment fees but do not take into account Entry/Exit fees or policy charges. Returns are calculated in accordance with IFSA Standard No 6.

• Product groupings for Performance are as follows:

Superannuation – MLC MasterKey Superannuation (Gold Star) MLC Personal Superannuation MLC MasterKey Business Super

MLC MasterKey Personal Super

Superannuation (Five Star) – MLC MasterKey Superannuation (Five Star)

Pension – MLC MasterKey Allocated Pension (Gold Star) MLC MasterKey Term Allocated Pension

Pension (Five Star) – MLC MasterKey Allocated Pension (Five Star)

Note that no past performance can be shown for MLC MasterKey Super and MLC MasterKey Super Fundamentals as these products do not have historical performance exceeding 12 months at 30 June 2007.

• A dash (–) in the performance returns indicates that the investment option was not in existence at that time.

• Although each of the underlying funds of the External investment options has an established record of past investment performance, we are not able to publish that investment performance in this report as it would not accurately reflect the impact of MLC’s Administration Fee and Issuer Fee. Over time, we will establish and publish historical investment performance as part of the ongoing and annual reporting to members.

Notes specific to asset allocation• For the MLC and National multi-sector investment options, the

asset allocation shown is the strategic asset allocation. MLC maintains the strategic (long-term) asset allocation by regularly rebalancing the portfolio. For the single sector investment options (eg Australian Shares, Global Shares, Property Securities, Bonds) the actual asset allocation is shown.


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How to Contact us

MLC Service Centre For more information call the

MLC Service Centre from anywhere in Australia on 132 652

or contact your financial adviser.

Website For details on MLC’s investment process,

unit prices, services and other products visit: mlc.com.au

Postal address The Manager

MLC Service Centre PO Box 200

North Sydney NSW 2059

Address complaints to The Manager

MLC Complaint Resolutions PO Box 1086

North Sydney NSW 2059

Registered office Ground Floor, MLC Building

105–153 Miller Street North Sydney, NSW 2060

5388

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