mlc investment trusts - mlc asset management

MLC Investment TrustsProduct Guide

Issued by: The Responsible Entity, MLC Investments LimitedABN 30 002 641 661 AFSL 230705

Preparation Date 1 October 2021

3Trusts covered by this Product Guide

4How the Trusts work

6Risks of managed investment schemes

11How we invest your money

14Fees and costs

16How managed investment schemes are taxed

17Other information

Important informationThis MLC Investment Trusts Product Guide (Product Guide) provides additional information about topics under the prescribed sections of theProduct Disclosure Statements (PDSs) listed in the ‘Trusts covered by this Product Guide’ section of this Product Guide. The information inthis Product Guide forms part of those PDSs. This Product Guide and the PDSs contain important information you should consider beforemaking an investment decision in relation to the products listed in the ‘Trusts covered by this Product Guide’ section of this Product Guide.The information provided in this Product Guide and the PDSs is general information only and does not take into account your objectives,personal financial situation or needs. We recommend you obtain financial advice for your own personal circumstances before making anyinvestment decision.

These documents are available from mlcam.com.au/MLCWholesale/pds or you can request a copy free of charge by calling us or your investordirected portfolio service, IDPS-like scheme, master trust or wrap operator (collectively referred to as an ‘IDPS’ in this Product Guide and thePDSs). If you are accessing the MLC Wholesale Inflation Plus – Conservative Portfolio or MLC Wholesale Inflation Plus – Moderate Portfoliothrough the ASX mFund Settlement Service (mFund), you can also access these PDSs at mFund.com.au. To invest directly in the Trusts, youmust have received the PDSs (electronically or otherwise) within Australia or New Zealand and meet the eligibility requirements set out inthis Product Guide.

The information in these documents is up to date at the time of preparation and may change from time to time. If a change is consideredmaterially adverse, we will issue a replacement PDS. Information that is not materially adverse to investors can be updated by us and will bepublished on our website mlcam.com.au/MLCWholesale/pds. A paper copy of any updates will be provided free of charge upon request. Youshould check you have the most up to date version before making an investment decision. All amounts in these documents are in Australiandollars unless stated otherwise.

MLC Investments Limited is part of the IOOF group of companies (comprising IOOF Holdings Ltd ABN 49 100 103 722 and its related bodiescorporate) (IOOF Group). This document has been prepared on behalf of MLC Investments Limited ABN 30 002 641 661 AFSL 230705 asResponsible Entity of the Trusts. The capital value, payment of income and performance of the Trusts are not guaranteed. An investment inthe Trusts is subject to investment risk, including possible delays in repayment and loss of income and principal invested.

References in this document to ‘MLC’, ‘we’, ‘our’ or ‘us’ should be read as references to MLC Investments Limited in its capacity as ResponsibleEntity.

Warning for New Zealand investorsIf you received the offer in New Zealand, to invest in a Trust covered by this Product Guide, you must invest upfront a minimum subscriptionamount of NZ$750,000 per Trust you want to invest in (net of any currency exchange losses or costs) and have satisfactorily completed the'Minimum Subscription Certification' set out in the application form which was provided with this Product Guide.

WarningNew Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires thoseoffering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do notapply to this offer because there is an exclusion for offers where the amount invested upfront by the investor (plus any other investmentsthe investor has already made in the financial products) is NZ$750,000 or more. As a result of this exclusion, you may not receive a completeand balanced set of information. You will also have fewer other legal protections for this investment.

Investments of this kind are not suitable for retail investors.

Ask questions, read all information given carefully, and seek independent financial advice before committing yourself.

2 | MLC Investment Trusts Product Guide

Contents

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http://www.asx.com.au/mfund/

http://mlcam.com.au/MLCWholesale/pds

ASXmFundCode

APIR CodePDS DateARSNTrusts

MLC Horizon portfolios

N/AMLC0669AU1 October 2021117 295 495MLC Wholesale Horizon 1 Bond Portfolio

N/AMLC0670AU1 October 2021117 295 584MLC Wholesale Horizon 2 Income Portfolio

N/AMLC0398AU1 October 2021096 796 379MLC Wholesale Horizon 3 Conservative Growth Portfolio

N/AMLC0260AU1 October 2021087 446 375MLC Wholesale Horizon 4 Balanced Portfolio

N/AMLC0265AU1 October 2021087 446 633MLC Wholesale Horizon 5 Growth Portfolio

N/AMLC0397AU1 October 2021096 796 075MLC Wholesale Horizon 6 Share Portfolio

N/AMLC0449AU1 October 2021102 215 501MLC Wholesale Horizon 7 Accelerated Growth Portfolio

MLC Inflation Plus portfolios1

MLC01MLC0921AU1 October 2021165 016 035MLC Wholesale Inflation Plus – Conservative Portfolio

MLC02MLC0920AU1 October 2021165 016 151MLC Wholesale Inflation Plus – Moderate Portfolio

MLC Index Plus portfolios

N/AMLC7849AU1 October 2021618 813 077 MLC Wholesale Index Plus Conservative Growth Portfolio

N/AMLC7387AU1 October 2021618 813 059MLC Wholesale Index Plus Balanced Portfolio

N/AMLC9748AU1 October 2021618 813 282MLC Wholesale Index Plus Growth Portfolio

MLC asset class funds

N/AMLC0262AU1 October 2021087 447 078MLC Wholesale Australian Share Fund

N/AMLC0893AU1 October 2021150 845 971MLC Wholesale Australian Share Index Fund

N/AMLC0839AU1 October 2021130 171 078MLC Wholesale Diversified Debt Fund

N/AMLC0786AU1 October 2021124 947 164MLC Wholesale Global Property Fund

N/AMLC0261AU1 October 2021087 446 875MLC Wholesale Global Share Fund

N/AMLC0264AU1 October 2021087 447 265MLC Wholesale IncomeBuilder

N/AMLC0263AU1 October 2021087 447 425MLC Wholesale Property Securities Fund

1 There is a third MLC Inflation Plus portfolio known as MLC Wholesale Inflation Plus – Assertive Portfolio which does not form part of this

Product Guide. The Product Disclosure Statement for the MLC Wholesale Inflation Plus – Assertive Portfolio is available at mlcam.com.au/MLCWholesale/pds

MLC Investment Trusts Product Guide | 3

Trusts covered by this Product Guide



Opening an accountIf you invest in the Trusts via an IDPS, pleasecontact your IDPS operator for details of howto invest with your IDPS.

To invest in the Trusts directly you must havereceived this Product Guide (electronically orotherwise) within Australia and be a residentin Australia.

However, if you received this Product Guide(electronically or otherwise) within NewZealand, you may invest in the Trusts only ifyou invest upfront a minimum subscriptionamount of NZ$750,000 per Trust that youwant to invest in (net of any currencyexchange losses or costs) and havesatisfactorily completed the “MinimumSubscription Certification” set out in theapplication form which was provided with thisProduct Guide.

If you are a New Zealand investor, you shouldread the ‘Warning for New Zealand investors’at the start of this Product Guide, along withthe other important information in the sectiontitled ‘Notice to residents of New Zealand’.

In addition some of the Trusts are restrictedto an Australian resident ‘wholesale client’within the meaning of the Corporations Act2001 (Cth). If this applies it is indicated insection 2 of each Trust’s PDS.

Investors who satisfy the above criteria mayinvest directly in the Trusts. You should,however, contact us to discuss the applicationrequirements before making your firstinvestment in the Trusts. We will advise whatyou need to do. Among other things, we mayneed to request formal identification from youbefore you can invest. Until all ourrequirements are satisfied we cannot acceptan application.

Overseas investorsThis PDS only constitutes an offer if receivedin Australia or New Zealand.

As at the date of this Product Guide, no actionhas been taken to register or qualify the unitsor offer or otherwise permit the public offeringof the units outside Australia or New Zealand.If you come into possession of this ProductGuide outside Australia or New Zealand youshould seek advice on and observe any suchrestrictions imposed by law. Any failure tocomply with such restrictions may violatesecurities laws in that jurisdiction.

This Product Guide does not constitute an offeror invitation in any jurisdiction in which itwould be unlawful to make such an offer orinvitation. We reserve the right to make anoffer of units to any institutional investoroutside Australia or New Zealand where to doso would not be in breach of the securities lawrequirements of the relevant jurisdiction.

As at the date of this Product Guide, therelevant Trust’s units are sold predominantlythrough a public offering outside of the US,which means the relevant Trust is limited inthe level of investment it will accept from “USpersons” (as defined under Regulation S of theUS Securities Act of 1933).

Applications and withdrawalsIf accepted, application requests received byus before 3:00 pm (Sydney time) on anyBusiness Day will receive that day’s unit price.Application requests received after 3:00 pmwill receive the next Business Day’s unit price.

Application money received will be held intrust until processed. We will not process yourapplication unless we have received allrequired information. If we’re unable toprocess your application within 30 days ofreceipt we will return your money to you. Anyinterest earned during this time will be keptby us.

If accepted, withdrawal requests received bythe Trusts before 3:00 pm (Sydney time) onany Business Day will normally receive thatday’s unit price. Requests received after 3:00pm will normally receive the next BusinessDay’s unit price. Once lodged, withdrawalrequests may not be cancelled except with ourconsent.

We may deduct from a withdrawal paymentany amount owed under the constitution.

We can only process transaction requestswhen we receive all required information. Wewill not be responsible for any loss arising fromunauthorised or fraudulent requests.

TransfersIf you invest directly in the Trusts you maybe able to transfer all or some of yourunitholding in the Trusts to another eligibleinvestor.

Joint investorsUnless otherwise expressly indicated, in thecase of joint applications, units will be held asjoint tenants and either investor will be ableto operate the account and bind the otherinvestor for future transactions, includingadditional investments and withdrawals.

Identity verification documentsUnder the Anti-Money Laundering andCounter-Terrorism Financing Act 2006 (Cth)(AML/CTF Act), we are required to collectoriginal certified copies of original document(s)(not scanned copies) which must be valid atthe time you send them to us to verify youridentity and that of related parties (includingif you are a non-individual entity, identity ofany persons who are deemed to own orcontrol (directly or indirectly) you (beneficialowner)).

In addition, under the AML/CTF Act, we maybe required to ask you for additional identityverification documents or information aboutyou, a related party or a beneficial owner eitherwhen we are processing your application or atsome stage after we issue the units.

Until we receive this documentation - or if wehave concerns that a transaction requested byyou, or anyone authorised to act on yourbehalf, might breach any obligations we haveunder legislation or cause us to commit orparticipate in an offence, under any law - wereserve the right to:

block, suspend or refuse to processtransactionsfreeze accounts or access to funds, orclose your account without further notice.

These actions may be taken if we havereasonable grounds to suspect that there is abreach of any of our regulatory obligations,including where there may be a risk of damageto our reputation.

We also reserve the right to report details ofaccounts or transactions to the relevantauthorities.

Where transactions are delayed, blocked,frozen or refused in the above circumstances,we're not liable for any loss you suffer,including consequential loss. We will incur noliability to you or a related party if we do so. Ifinvesting through mFund your broker willconduct anti-money laundering andcounter-terrorism financing checks.


How the Trusts work

Business DaysBusiness Days are generally days on whichbanks are open for business in Sydney (exceptSaturday, Sunday and public or bank holidays).

Termination of the TrustsA Trust may be terminated:

if MLC believes the Trust can no longer fulfilits purposeif the Trust’s unitholders pass anextraordinary resolution to terminatethe Trustby Court order, oras otherwise allowed by the relevant Trust'sconstitution or the law.

Unit pricingThe overall value of your investment inthe Trusts will change according to the unitprice and the number of units held.

The unit price will reflect the performance ofthe underlying assets, income earned, fees,expenses and taxes paid and payable. Theperformance of the underlying assets isinfluenced by movements in investmentmarkets. For unlisted assets we have policiesand guidelines to manage asset valuationsincluding valuation lags.

We usually calculate the unit price as at theend of each Business Day and use robust unitpricing policies to do this. Our unit pricingphilosophy is available at mlc.com.au

You can view the current unit prices for theMLC Trusts at mlcam.com.au/MLCWholesale or if you invest through mFundyou can also view the current unit pricesat mFund.com.au for the MLC WholesaleInflation Plus – Conservative Portfolio and theMLC Wholesale Inflation Plus – ModeratePortfolio.

If there is a unit pricing error that substantiallyimpacts the Trusts’ performance, anadjustment may be made. This will generallyinvolve reprocessing affected transactionsusing the corrected unit price, adjusting youraccount or both. The value of your investmentcould be increased or decreased as a result.

Investing in our other fundsThe Trusts may access investment managersvia other funds operated by us, via othermanagers’ pooled investments and may alsohold direct assets.

Income distributionsIf you invest in the Trusts via an IDPS, pleasecontact your IDPS operator for details of howto receive any income distributions fromthe Trusts.

To be eligible to receive a distribution youmust hold units in the Trusts on thedistribution calculation date.

You can have income distributions:reinvested in the Trusts, orpaid into your bank account.

We may, in our absolute discretion, accept orreject any such request. If you do not make aselection we will reinvest the distribution backinto the relevant Trusts.

If you elect to have any income distributionsreinvested, units will be issued at the unit priceapplicable at the distribution calculation date.The buy spread does not currently apply to theissue of these units.

Unitholders’ liabilityThe Trusts’ underlying assets are owned bythe Responsible Entity on behalf of investors.The Trusts’ constitutions limit unitholders’liability to their investment in the Trusts.


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Diversify to reduce volatility and other risksDiversification - investing in a range ofinvestments - is a sound way to reduce theshort-term volatility of a portfolio’s returns.That’s because different types of investmentsperform well in different times andcircumstances. When some are providing goodreturns, others may not be.

Portfolios can be diversified across differentasset classes, industries, securities andcountries, as well as across investmentmanagers with different approaches.

The more you diversify, the less impact anyone investment can have on your overallreturns.

One of the most effective ways of reducingvolatility is to diversify across a range of assetclasses.

Diversification across asset classes is justone way of managing risk. Our multi-assetportfolios diversify across asset classesand investment managers. Please readmore about the investment approach in'How we invest your money'.

Types of assetsAsset classes are commonly grouped as defensive or growth, based on their different characteristics.

Defensive assets, such as cash and fixed income, may help provide positive returns in a portfolio when share markets are weak. On theother hand growth assets, such as shares and property, may be included in a portfolio because of their potential to produce higher returnsthan cash in the long term.

Multi-asset portfolios are usually invested across both defensive and growth assets because their risk and return characteristics tend tobe diverse. However in some market conditions, all types of assets may move in the same direction, delivering low or negative returns atthe same time.

The main differences between defensive and growth assets are:

GrowthDefensive

To provide long-term capital growth and income.To generate income and stabilise returns.How they are generally used

Expected to produce higher returns, and be morevolatile, than defensive assets over the long term.

Expected to produce lower returns, and be lessvolatile, than growth assets over the long term.

Risk and return characteristics


Risks of managed investment schemes

Asset classesAsset 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 as prices rise, peak, fall and stabilise. Through investing for the long term, at leastthrough a whole market cycle, you can improve your chance of benefiting from a period of strong returns and growth to offset periods ofweakness.

The following illustration shows indicative returns and volatility for the main asset classes over a whole market cycle. However, each marketcycle is different, so unfortunately it isn’t possible to accurately predict asset class returns or their volatility. Depending on the conditions atthe time, actual returns could be significantly different from those shown.

Indicative returns and volatility over a market cycle

Indicative volatility

Lower Higher

Higher

Shares

Fixed incomeInd

icat

ive

retu

rns

Cash

Alternatives

Property

Source: MLC Asset Management Services Limited


Here are the main asset class risks andbenefits.

Cash

Cash is generally a low risk investment.

Things to consider:Cash is often included in a portfolio to meetliquidity needs and stabilise returns.The return is typically all income and isreferred to as interest or yield.Cash is usually the least volatile type ofinvestment. It also tends to have the lowestreturn over a market cycle.The value of an investment in high qualitycash securities tends not to change.However, in extreme market environmentscash interest rates or yields could becomenegative, resulting in a gradual decline inthe value of your investment over time.Many cash funds invest in fixed incomesecurities that have a very short term untilmaturity.

Fixed income (including term deposits)

When investing in fixed income you’reeffectively lending money to businesses orgovernments. Bonds are a common form offixed income security. Fixed income is alsoknown as fixed interest.

Things to consider:Fixed income securities are usually includedin a portfolio for their relatively stable returncharacteristics.Returns typically comprise interest andchanges in the market value of the fixedincome security. While income from fixedincome securities usually stabilises returns,falls in their market value may result in aloss on your investment. Market values mayfall due to concern about defaults on loansor increases in interest rates.Values of fixed income securities tend tomove in opposite directions to interest rates.So when interest rates rise, fixed incomesecurities' values tend to fall and wheninterest rates fall, values can rise. Wheninterest rates and interest income are lowor negative, even small rises in interest ratesmay lead to falling market values and losses. Duration is a common measure of aninvestment’s sensitivity to changes ininterest rates. To illustrate, if interest ratesrise sharply by 1%, and a fixed income fundhas a duration of three years, the fund wouldlikely lose approximately 3% of its value.The longer the duration of a fixed income

investment, the more its value will beimpacted by rising or falling interest rates,and the greater its interest rate risk.Market values of fixed income securitiesmay rise or fall due to changes inperceptions of the business or governmentissuing the securities being able to meettheir interest and repayment obligations.This is known as default risk or credit risk.Higher credit risk securities generally havehigher potential returns (yields) tocompensate investors for their higher risk.There are different types of fixed incomesecurities and these will have differentreturns and volatility.Investing in fixed income securities outsideAustralia may expose your portfolio tomovements in exchange rates.

Property

Access to property may be through trustslisted on a securities exchange (known as listedproperty securities, Real Estate InvestmentTrusts, or REITs), unlisted trusts, or directownership of unlisted property. Investmentsmay include retail, commercial, industrial andresidential properties in Australia and aroundthe world.

Things to consider: Property is usually included in a portfoliofor its income, growth and defensivecharacteristics.Returns typically comprise income (such asrental or REIT income) and changes in value.Returns are driven by many factorsincluding the economic environment invarious countries.Returns from property can be volatile.Because listed property securities are listedon an exchange, their prices constantlyreflect the market's changing view ofREIT values. Unlisted property values aremore difficult to determine and usuallyinvolve a considerable time lag. As a resultof these differences in valuation frequency,listed property securities' returns may bemore volatile than unlisted property. Investments in listed property securitiesgenerally provide investors greaterdiversification across countries,sectors, properties, and property-relatedcompanies than investments that aren'tlisted. And the global listed propertysecurities market is even more diversifiedthan the Australian market.

Unlisted property is illiquid which makes itmore difficult for an investment managerto buy or sell. Investing outside Australia may expose yourportfolio to movements in exchange rates.

Australian shares

This asset class consists of investments incompanies listed on the Australian SecuritiesExchange (and other regulated exchanges).Shares are also known as equities.

Things to consider:Australian shares can be volatile and areusually included in a portfolio for theirgrowth and income characteristics.The Australian share market is lessdiversified than the global market becauseAustralia is currently dominated by a fewindustries such as Financials and Resources.Returns usually comprise dividend incomeand changes in share prices.Dividends may have the benefit of taxcredits attached to them (known as frankingor imputation credits).Returns are driven by many factorsincluding the performance of the Australianeconomy.

Global shares

Global shares consist of investments incompanies listed on securities exchangesaround the world.

Things to consider:Global shares can be volatile and are usuallyincluded in a portfolio for their growthcharacteristics.The number of potential investments is fargreater than in Australian shares.Returns usually comprise dividend incomeand changes in share prices.Returns are driven by many factorsincluding the economic environment invarious countries.When you invest globally, you’re lessexposed to the risks associated withinvesting in just one economy.Investing outside Australia means you’reexposed to movements in exchange rates.

Alternatives

These are a very diverse group of assets. Someexamples may include private equity, hedgefunds, real return strategies, infrastructure,and gold.

Things to consider:



Because alternatives are diverse, they maybe included in a portfolio for their defensiveor growth characteristics.Alternative investments are usually includedin portfolios to increase diversification andprovide returns that aren’t strongly linkedwith the performance of mainstream assets.Investment managers include alternativeinvestments in a portfolio because theygenerally expect the return anddiversification benefits of alternativeinvestments to outweigh the higher costsoften associated with them.Some alternative strategies are managed todeliver a targeted outcome. For example, realreturn strategies aim to produce returnsexceeding increases in the costs of living (ieinflation).For some alternatives, such as hedge funds,derivatives may be used extensively and itcan be less obvious which assets you’reinvesting in compared to other asset classes.Some alternative investments are illiquid,which makes them difficult to buy or sell.To access alternative investments yougenerally need to invest in a managed fundthat, in turn, invests in alternatives.Because most alternative investments aren’tlisted on an exchange, determining theirvalue for a fund’s unit price can be difficultand may involve a considerable time lag.Alternatives invested outside Australia mayexpose your portfolio to movements inexchange rates.

Investment approachesInvestment managers have differentapproaches to selecting investments, whichinvariably results in different returns. Nosingle investment approach is guaranteed tooutperform all others in all market conditions.

There are generally two broad approaches:passive and active management.

Passive management

Passive, or index, managers chooseinvestments to form a portfolio which willdeliver a return that closely tracks a marketbenchmark (or index). Passive managers tendto have lower costs because they don’t requireextensive resources to select investments.

Active management

Active managers select investments theybelieve, based on research, will perform betterthan a market benchmark over the long term.

They buy or sell investments when theirmarket outlook alters or investment insightschange.

The degree of active management affectsreturns. Less active managers take smallpositions away from the market benchmarkand more active managers take largerpositions. Generally, the larger an investmentmanager's positions, the more their returnswill differ from the benchmark.

Active managers have different investmentstyles that also affect their returns. Somecommon investment styles are:

Bottom-up – focuses on forecasting returnsfor individual companies, rather than themarket as a whole.Top-down – focuses on forecasting broadmacroeconomic trends and their effect onthe market, rather than returns forindividual companies.Growth – focuses on companies they expectwill have strong earnings growth.Value – focuses on companies they believeare undervalued (their price doesn’t reflectearning potential).Income – focuses on generating a regularincome stream through selecting companies,trusts and other securities they believe willdeliver income, or through using derivativesand other strategies.Core – aims to produce competitive returnsin all periods.

Investment techniquesOur investment experts and investmentmanagers may use different investmenttechniques that can change the value of aninvestment. Some of the main investmenttechniques are explained below. Where theTrusts use these investment techniques, we’vemade a note of it in the PDS.

Derivatives

Derivatives are contracts that have a valuederived from another source such as an asset,market index or interest rate. There are manytypes of derivatives including swaps, optionsand futures. They are a common tool used tomanage risk or improve returns.

Some derivatives allow investment managersto earn large returns from small movementsin the underlying asset's price. However, theycan lose large amounts if the price movementin the underlying asset is unfavourable.

Risks particular to derivatives include the riskthat the value of a derivative may not movein line with the underlying asset, the risk thatcounterparties to the derivative may not beable to meet payment obligations and the riskthat a particular derivative may be difficult orcostly to trade.

Investment managers, including MLC, havederivatives policies which outline howderivatives are managed. Information on ourDerivatives Policy is availableat mlc.com.au/derivativesforinvestments

Currency management

If an investment manager invests in assets inother countries, its returns in Australian dollarswill be affected by movements in exchangerates (as well as changes in the value of theassets).

A manager of international assets may chooseto protect Australian investors againstmovements in foreign currency. This is knownas ‘hedging’. Alternatively, the manager maychoose to keep the assets exposed to foreigncurrency movements, or ‘unhedged’.

Returns from exposure to foreign currency canincrease diversification in a portfolio.

Gearing

Gearing can be achieved by using loans(borrowing to invest), or through investing incertain derivatives, such as futures.

Gearing magnifies exposure to potential gainsand losses of an investment. As a result, youcan expect larger fluctuations (both up anddown) in the value of your investmentcompared to the same investment which isnot geared.

Investment managers can take differentapproaches to gearing. Some change thegearing level to suit different marketconditions. Others maintain a target level ofgearing.

It’s important to understand the potential risksof gearing, as well as its potential benefits.When asset values are rising by more than thecosts of gearing, the returns will generally behigher than if the investment wasn't geared.When asset values are falling, gearing canmultiply the capital loss. If the fall is dramaticthere can be even more implications for gearedinvestments.

For example, where the lender requires thegearing level to be maintained below apredetermined limit, if asset values fall


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dramatically, the gearing level may rise abovethe limit, forcing assets to be sold when valuesmay be continuing to fall.

In turn, this could lead to more assets havingto be sold and more losses realised.Withdrawals (and applications) may besuspended in such circumstances, preventingyou from accessing your investments at a timewhen values are continuing to fall.

Although this is an extreme example,significant market falls have occurred in thepast. Recovering from such falls can take manyyears and the geared investment’s unit pricemay not return to its previous high.

Other circumstances (such as the lenderrequiring the loan to be repaid for otherreasons) may also prevent a geared investmentfrom being managed as planned, leading tolosses.

You need to be prepared for all types ofenvironments and understand their impacton your geared investment.

Information on 'Borrowing costs' is availablein the 'Fees and costs' section of this ProductGuide.

Short selling

Short selling is used by an investment managerwhen it has a view that an asset’s price willfall. The manager borrows the asset from alender, usually a broker, and sells it with theintention of buying it back at a lower price. Ifall goes to plan, a profit is made. The key riskof short selling is that, if the price of the assetincreases, the loss could be significant.



Approach to investingFor over 35 years our investment experts havebeen designing portfolios using amulti-manager approach, to help investorsachieve their goals.

The four key aspects of this market-leadinginvestment approach are:

1. Portfolio design

Our multi-asset Trusts focus on what affectsinvestor outcomes the most – asset allocation.

Each asset class has its own return andrisk characteristics. Money is allocatedbetween asset classes based on the followingbeliefs:

Risk can’t be avoided, but can be managed

Key to the investment approach is a uniqueInvestment Futures Framework (Framework).The Framework guides a forward-lookingapproach to capitalising on investmentopportunities and managing risk.

In an unpredictable and constantly changingworld, the Framework helps continuallyidentify the very wide range of potentialmarket scenarios – both good and bad – thatcould occur.

The Framework also helps our investmentexperts analyse how these scenarios couldaffect the returns and risks of the asset classesin the Trusts.

The insights from this analysis are used towork out the combination of asset classes thatthey believe will best achieve a Trust’sobjective.

This helps prepare our Trusts for future marketups and downs.

Returns and risks vary through time

The Framework shows how the potentialreturns and risks of each asset class couldchange over the next three to seven years.

With this information, our Trusts’ assetallocations are adjusted to improve their returnpotential or reduce their risk.

Diversification matters

Asset classes perform differently in differentmarket conditions.

Investing in many asset classes helps smoothout the overall Trusts’ returns, as asset classups and downs can offset one another.

2. Managing the portfolio

Our Trusts have different investmentobjectives. That’s why our investment expertsselect a different mix of assets and investmentmanagers for each.

The investment managers may be specialistin-house managers, external managers or acombination of both.

Our investment experts research hundreds ofinvestment managers from around the worldand select the managers they believe are thebest for our Trusts.

They are then combined in our Trusts so theycomplement each other.

This multi-manager approach helps to reducerisk and deliver more consistent returns.

You can find out about the investmentmanagers from our Fund Profile Toolat mlcam.com.au/MLCWholesale

3. Ongoing review

To make sure our Trusts are working hard forinvestors, our investment expertscontinuously review and actively managethem.

This includes adjusting the asset allocation,investment strategies and managers.

This may be because our investment experts'assessment of the future market environmenthas altered or because they've found new waysto balance risk and return in our Trusts.

4. Portfolio implementation

We deliver better returns by avoidingunnecessary costs. Our investment expertshelp us do this by carefully managing cashflows, tax and changes in our Trusts.

Each Trust in the MLC Investment Trustsuses the aspects of this approach toinvesting that are relevant to it.

Responsible investingEnvironmental, social, governance (ESG), andethical factors impact the sustainability ofcompanies and governments and thereforeinfluence the returns from investing.Incorporating ESG and ethical considerationsinto investment decisions is known asresponsible investing.

Examples of ESG and ethical factors are:Environmental – climate change, waste andpollution, resource depletion.

Social and labour standards – workingconditions, employee relations and diversity,health and safety.Governance – executive pay, bribery andcorruption, tax strategy.Ethical considerations – other factors thatcould be detrimental to the broadercommunity.

We don’t, as Responsible Entity, take intoaccount labour standards, environmental,social and ethical considerations for thepurposes of selecting, retaining or realisinginvestments.

Investment management decisions for theTrusts are made by our investment experts atMLC Asset Management, and the investmentmanagers they select.

MLC Asset Management expects activeinvestment managers to consider materialeffects any factors may have on investmentreturns, including ESG and ethical factors. MLCAsset Management and the investmentmanagers also engage with companies,providing an opportunity to enhance andprotect the long-term value of investments.

We don't intend for the Trusts to invest intobacco manufacturing companies. There may,from time to time, be a small level ofunintended tobacco-related exposure.

The Trusts aren't promoted as sociallyresponsible or ethical investments.


How we invest your money


Explanation of termsThe information below explains terms used in section 5 'How we invest your money' of the PDS.

ExplanationTerms used in Trust profiles

Describes what the Trust aims to achieve over a certain timeframe. Most trusts aim to produce returnsthat are comparable to a benchmark.The investment objective outlines whether returns used to judge a Trust’s success should have feesincluded. Investment objectives may consider fees in the following ways:

Investment objective:

‘After fees’ – when calculating performance against the investment objective, the management feeand indirect costs have already been deducted from the return. However, other costs outlined in thePDS, have not been deducted.‘Before fees’ – when calculating performance against the investment objective, indirect costs havebeen deducted from the return, but management fees and costs have not been deducted.

More information on fees and how they are deducted is available in section 6 'Fees and costs' of the PDS.

Benchmarks are usually market indices that are publicly available. Shares are often benchmarked againsta share market index and fixed income against a fixed income market index. Other benchmarks can bebased on particular industries (eg mining), company size (eg small caps) or the wider market (eg

Benchmark:

S&P/ASX200 or the MSCI World Index).

Benchmarks for multi-asset portfolios may be:made up of a combination of market indices weighted according to the asset allocation (commonlyknown as composite benchmarks), ora single measure, such as inflation. A common index of inflation, which is the rise in the cost of living,is the Consumer Price Index (CPI).

When comparing returns to a benchmark you should consider:whether the Trust’s return is calculated before or after feesthe period over which the return should be measured, andthat a Trust is unlikely to achieve its objective in all market environments.

Describes the investment strategy and approach to managing the Trust.How the Trust is managed:

Suggests the type of investor who may be interested in investing in this particular Trust. Each investor'sown personal objectives and circumstances will also affect their decision.

The Trust may be suited to youif:

Investing for the minimum suggested time or longer improves your chances of achieving a positivereturn. However, investing for the minimum time doesn’t guarantee a positive return outcome becauseevery market cycle is different. Your personal circumstances should determine how long you hold an

Minimum suggested time toinvest:

investment.

Asset allocations are displayed in different ways, reflecting how the Trust is managed:Asset allocation:Strategic asset allocations (also known as benchmark or long-term asset allocations) provide anindication of the proportion of the Trust invested in each asset class.Ranges indicate the minimum and maximum that may be allocated to an asset class.

Actual asset allocations aren't shown in the PDS as they constantly change due to movements in assetvalues, and activities such as buying and selling of assets by investment managers. As a result, actualasset allocations can move above and below the strategic asset allocation. While usually remaining withinany ranges provided, actual asset allocations may temporarily move outside the ranges due to movementsin asset values.

Recent actual asset allocations are available at mlcam.com.au/MLCWholesale

Strategic asset allocations and ranges may change from time-to-time. We’ll notify you of any materialupdates.


How we invest your money


ExplanationTerms used in Trust profiles

We include the estimated number of negative annual returns over any 20 year period to help youunderstand investment risk of the Trusts. Because it's an estimate, the actual number of negative annualreturns that occur in a 20 year period may be different. This estimation isn't a complete assessment of

Risk measure:

investment risk, for instance it doesn't:detail the size a negative return could be or the potential for a positive return to be less than an investorrequires to meet their objectivescapture the risk of the Trust not meeting its investment objective, ortake into account the impact of fees, which would increase the chance of a negative return.

Investors should still ensure they are comfortable with the risks and potential losses associated withtheir chosen investment.


The fees and costs outlined in the PDSs and this Product Guide are for the Trusts only.

If you are investing in the Trusts via an IDPS, you will need to consider the fees and other costs of the IDPS when calculating the total cost ofyour investment.

This section shows the fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returnson your investment or from the assets of the relevant managed investment scheme as a whole.

You should read all the information about fees and costs because it is important to understand their impact on your investment.

The information in this table can be used to compare fees and costs between different simple managed investment schemes. Taxes are setout under the ‘How managed investment schemes are taxed’ section of this document. All fees are shown inclusive of GST and net of ReducedInput Tax Credits (where applicable).

How and when paidAmountType of fee or cost

Fees when your money moves in or out of the managed investment products.

There is no Establishment fee.NilEstablishment feeThe fee to open your investment.

There is no Contribution fee.NilContribution feeThe fee on each amount contributed toyour investment.

There is no Withdrawal fee.NilWithdrawal feeThe fee on each amount you take out ofyour investment.

There is no Exit fee.NilExit feeThe fee to close your investment.

Management costs1,2

The fees and costs for managing your investment.

The management fee is calculated daily on therelevant Trust’s net asset value and is reflectedin the daily unit price. It is paid, generally on a

Between 0.29% and 1.73% pa of each relevantTrust’s net asset value.

Management fee3

monthly basis, from the assets of the relevantTrust.

Wholesale clients (as defined in the CorporationsAct 2001 (Cth)) may be able to negotiate themanagement fee

1.

Indirect costs are costs and expenses incurredby the relevant Trust that are not charged as amanagement fee. Indirect costs are deducted

Between 0.00% and 0.24% pa ofeach relevant Trust’s net asset value.

This is made up of:

Estimated indirect costs4

from the assets of the Trust (paid periodically),Estimated performance related costs ofbetween 0.00% and 0.11% pa

are reflected in the daily unit price and expectedto reduce the net return of the relevant Trust.

Estimated other indirect costs of between0.00% and 0.13% pa

Service fees

There is no switching fee.Not applicableSwitching feeThe fee for changing investment options.

1An allowance for transactional costs may apply to investments into and withdrawals from the Trust. Please see 'Transactional costs' in the‘Additional explanation of fees and costs’ in the PDSs for further details. 2Rounded to two decimal places.

3For the purposes of the MLC Wholesale Diversified Debt Fund and MLC Wholesale Global Property Fund, a reference to the 'Trust's net assetvalue' is a reference to the net asset value referable to Class A units in the Trust or Class B units in the Trust (as relevant).4The estimated indirect costs are based on costs incurred for the 12 months to 30 June 2021 and include estimates where information wasunavailable at the date this Product Guide was issued.


Fees and costs

Additional explanation of feesand costsBorrowing costs

Borrowing costs (or gearing costs) may beincurred in a number of circumstances,including (but not limited to) where money isborrowed to purchase an asset and wheresecurities are borrowed as part of a Trust’s

investment strategy. Borrowing costs aregenerally paid to third parties such as banks,providers of a margin lending facility andprime brokers and may include upfront coststo establish the arrangement and ongoingcosts like interest payments.

These costs are not included in themanagement costs but are deducted from theassets of the Trust and reduce the unit price

at the time they are incurred. Borrowing costsmay rise and fall over time, and will dependon the level of borrowing, the interest amountand other amounts paid to lenders.

The estimated borrowing costs for theprevious financial year to 30 June 2021 areshown below:

Borrowing Costs pa of the relevant Trust's net asset valueTrust Name

0.02%MLC Wholesale Horizon 2 Income Portfolio

0.02%MLC Wholesale Horizon 3 Conservative Growth Portfolio

0.02%MLC Wholesale Horizon 4 Balanced Portfolio

0.01%MLC Wholesale Horizon 5 Growth Portfolio

0.01%MLC Wholesale Horizon 6 Share Portfolio

0.50% Please refer to the 'Borrowing costs' section of the PDS for further details. MLC Wholesale Horizon 7 Accelerated Growth Portfolio

0.05%MLC Wholesale Inflation Plus - Conservative Portfolio

0.02%MLC Wholesale Inflation Plus - Moderate Portfolio

Management fee may be negotiated

Wholesale clients who invest directly in theTrusts may be able to negotiate themanagement fee by contacting Client Serviceson 1300 738 355.

Any discount in fees will be rebatedperiodically. We suggest that you consult yourtax adviser in regards to the tax treatment ofany fee rebates.

Reimbursable expenses

We are entitled to be reimbursed froma Trust for all costs and expenses incurred inacting as Responsible Entity or in relation tothe administration and management of therelevant Trust. The expenses may include, butare not limited to, PDS preparation andprinting costs.

We currently pay these costs and expensesout of the management fee and do not chargethem to you as an additional cost.

Payments to IDPS operators

These are commercial payments made by theResponsible Entity to IDPS operators. Thesepayments may be rebated to you or may beretained by the IDPS operator where allowedby law.

How and when these payments are made varybetween the Responsible Entity and IDPSoperators from time to time. They are paid bythe Responsible Entity out of the managementfee and are not an additional cost to you.

Non-monetary benefits

We keep a register detailing certainnon-monetary benefits that we receive (egbenefits valued between $100 and $300,genuine education or training and informationtechnology software or support). You canreview an extract of the register by contactingClient Services on 1300 738 355. Please beaware that MLC may charge you for the costof providing this information to you.

Fees paid to related companies

We may use the services of related companieswhere it makes good business sense to do soand will benefit our unitholders.

Amounts paid for these services are alwaysnegotiated on an arm’s length basis and are,in the Responsible Entity’s opinion, reasonableremuneration.

Appointments of these companies are madein accordance with the requirements of theIOOF Group’s Conflicts of Interest Policy.

The Responsible Entity regularly monitors theongoing compliance of such appointmentswith the Group’s Conflicts of Interest Policy.


The AMIT regimeEach of the Trusts is an Attribution ManagedInvestment Trust (AMIT).

This means: The Trusts will be deemed to be a ‘fixedtrust’ for taxation purposes.The allocation of taxable income ofeach Trust to its investors is based on“attribution” on a “fair and reasonable basis”,rather than a present entitlement to the“income of the Trust” for each financial yearand the relevant Trust is not liable to taxprovided all its taxable income is attributedto investors.A Trust may make year-on-yearadjustments to reflect under-or-overdistributions of the Trust’s income.Investors may increase or decrease the costbase of their units where taxable incomeattributed is either greater than or less than(respectively) broadly the cash distributionand tax offsets for an income year, to helpalleviate the potential for double taxation.

Under the AMIT regime:Australian residents will include their shareof a Trust’s taxable income in their incometax return, andnon-residents may have withholding taxdeducted from distributions they receivefrom the relevant Trust.

Each Trust may accumulate income which isreflected in the unit price. Taxable income isattributed to investors, even if a Trust doesn’tdistribute its income.

However, we intend to continue our currentpractice of distributing all of the Trust’staxable income (including any capital gains)to our investors each financial year. We willnotify you if this changes.

The details of the taxable income attributedto you will be set out in an AMIT MemberAnnual Statement (AMMA Statement), whichwill contain all necessary tax information. Thetax payable (if any) depends on your individualtax profile and applicable tax rate.

If you disagree with our attribution of taxableincome, you can object to the Commissionerof Taxation. If you decide to take this course,it is important that you obtain professionaltax and legal advice. The constitution ofeach Trust provides for you to give us noticebefore making an objection, so please do soand we will work with you to try to resolve theissue.

Australian tax file numberMLC is authorised under the Income TaxAssessment Act 1936 (Cth) to ask for yourAustralian tax file number (TFN) when youopen an investment account for incomedistribution purposes. You don't have toprovide your TFN and it’s not an offence if youdecide not to, but if you don't, 'Pay As You GoWithholding Tax' will be deducted at thehighest marginal tax rate (plus Medicare Levy)from any income distributions payable to you.


How managed investment schemes are taxed

Email terms and conditionsIf emails are used in operating your account,you should understand that there is potentiallya greater risk that a person could fraudulentlysend us an email and, by pretending to be you,withdraw money from your account.

These terms and conditions apply when we(or Registry Services) receive emailinstructions or communications about youraccount. These terms are in addition to anyother requirements relating to you giving usinstructions or completing any particularauthority. We can change these terms bygiving you 14 days’ written notice.

By investing in the Trust, you agreethat MLC and Registry Services are notresponsible for any losses you may suffer asa result of any fraudulent communicationsreceived by email, except to the extent thoselosses arise directly from their or their agents’negligence, wilful default or fraud. You agreeto be liable and indemnify MLC and RegistryServices for any losses suffered by any of themas a result of any fraudulent communicationsreceived by email to the extent those lossesarise from your negligence, wilful default orfraud.

MLC and Registry Services will only act oncompleted communications from you. MLCand Registry Services will not be liable for anyloss which results from not receiving youremail, or from a delay in receiving your email.

Investor Online and AdviserOnlineInvestor Online, accessible via mlcam.com.au/mlc, gives you access to up to date informationon your investments at any time. Youautomatically get access to Investor Online ifyou are an investor in the Trust. If you electto give your financial adviser permission toaccess information about your investment onthe Initial Application Form, your financialadviser will also have access to yourinvestment information via Adviser Online.

Once you have an investment in the Trust,your Investor Online account will beestablished and Registry Services will sendyou the details you need to complete the onlineregistration process for your account.

Use of Investor Online and Adviser Online isprovided by Registry Services and is subjectto specific terms and conditions, as disclosedon these sites.


Other information

http://mlcam.com.au/mlc


Notice to residents of NewZealandAny offer or sale of any units in the Trusts (the‘Units’) described in these materials in NewZealand is available only to, and may only beaccepted by, a person who invests upfront aminimum subscription amount of NZ$750,000per Trust that he or she wants to invest in (netof any currency exchange losses or costs) andhas satisfactorily completed the “MinimumSubscription Certification” as part of theirapplication and agrees that:a. it has not offered, sold or transferred, and

will not offer, sell or transfer, directly orindirectly, any Units and it has not granted,issued or transferred, and will not grant,issue or transfer an interest in or optionsover, directly or indirectly, any Units otherthan in accordance with an exclusion underPart 1 of Schedule 1 of the FMC Act (N.Z.);and

b. it has not distributed and will notdistribute, directly or indirectly, thisProduct Guide, any offering materials oradvertisement in relation to any offer ofUnits in each case in New Zealand otherthan to persons who meet the criteria setout in clauses 3(2)(a), 3(2)(b), 3(2)(c), 3(2)(d)or 3(3)(a) of Schedule 1 of the FMC Act (N.Z.).

c. or in other circumstances where nodisclosure under Part 3 of the FMC Act (N.Z.)is required and there is no contraventionof the FMC Act (N.Z.) and its regulations (orany statutory modification or re-enactmentof, or statutory substitution for, the FMCAct (N.Z.) or its regulations).

This Product Guide and the informationcontained in or accompanying this ProductGuide is not, and is under no circumstances tobe construed as, an offer of financial productsfor issue requiring disclosure to an investorunder Part 3 of the FMC Act (N.Z.).

This Product Guide and the informationcontained in or accompanying this ProductGuide has not been registered, filed with orapproved by any New Zealand regulatoryauthority or under or in accordance with theFMC Act (N.Z.). This Product Guide and theinformation contained in or accompanyingthis Product Guide is not a disclosuredocument under New Zealand law and doesnot contain all the information that adisclosure document is required to containunder New Zealand law.

For a copy of the New Zealand WholesaleInvestor form, please contact our client serviceteam on 1300 738 355 (0800 404 988 if callingfrom New Zealand).


Other information

Keeping you informedIf you invest directly into the Trusts (including where you have applied to the Trust through mFund), we will provide you with the informationset out in the table below. If you wish to obtain information on your account or update your details, please contact our Client Services team.See ‘Contact details’ at the end of this Product Guide.

If you invest via an IDPS you can obtain information on your investment in the Trusts by contacting your IDPS.

Information provided to direct investors

Confirms any investment, switch or withdrawal. This will be available on Investor Onlinevia mlcam.com.au/mlc

Transaction confirmation

Provides details regarding your account balance, a summary of any transactions on yourinvestment, fees and costs incurred during the period and information about returns onyour investment each quarter. This will be available on Investor Online via mlcam.com.au/

Periodic statement

mlc. Periodic statements only apply to Trusts offered directly to retail investors whichcurrently are the MLC Wholesale Inflation Plus - Conservative Portfolio and the MLCWholesale Inflation Plus - Moderate Portfolio.

Provides details of the distributions paid on your account. This will be available on InvestorOnline via mlcam.com.au/mlc

Distribution statement

You will be provided with an annual taxation statement, referred to as an AMIT MemberAnnual Statement (AMMA Statement), to assist you in completing your tax return. TheAMMA Statement will show the taxable and non-taxable components of the income attributed

Annual taxation statement

to you (which includes any distributions received or reinvested). This will be available onInvestor Online via mlcam.com.au/mlc

You can elect to receive, free of charge, a copy of the MLC Investment Trusts' annual reportas a hard copy or an electronic copy by contacting us. If you do not make an election, youcan access a copy of the annual report on our website mlcam.com.au/MLCWholesale

Annual financial report

Available to you without charge on request by contacting Client Services on 1300 738 355.Constitution

Performance history

Unit Pricing Policy (including discretions register)

Derivatives Policy

Privacy Policy

You can obtain a paper copy of the PDS and this Product Guide on request by contactingClient Services on 1300 738 355 or by visiting the website mlcam.com.au/MLCWholesale/pds. Alternatively, mFund investors can access the latest PDS and this Product Guide by

Product Disclosure Statement updates

visiting the website mFund.com.au This only applies to the MLC Wholesale Inflation Plus- Conservative Portfolio and the MLC Wholesale Inflation Plus - Moderate Portfolio. ThePDS and this Product Guide can be updated or replaced from time to time.










https://www.asx.com.au/mfund/index.htm

Contact detailsIf you invest via an IDPS you should contact your IDPSfor all enquiries.

If you invest directly, the contact details are:

Registry ServicesNational Australia BankC/- OneVue Fund Services Pty LtdGPO Box 804Melbourne VIC 3001 Australia

Client ServicesGround Floor105-153 Miller StreetNorth Sydney NSW 2060 Australia

Telephone: 1300 738 355

Email: [email protected]

Responsible EntityMLC Investments Limited105-153 Miller StreetNorth Sydney NSW 2060 Australia

Websitemlcam.com.au/MLCWholesale

mFund websitemFund.com.au



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