3. INVESTMENTS. 1 July 2017 SECTION CONTENTS

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1 3. S 1 July 2017 The information in this document forms part of the Kinetic Super Product Disclosure Statement dated 1 July SECTION CONTENTS 1. Making your investment choice Default investment option Growth (MySuper) Your investment choices at a glance Investment performance Changing your investment choice Investment options can change Insurance proceeds Socially responsible investments 20 You should consider the likely investment return, the risk and your investment timeframe when choosing an investment option. Please refer to the Kinetic Super Risks Incorporated Information for information about investment risks and an explanation of the different types of assets that may be utilised in an investment option. 15

2 1. MAKING YOUR CHOICE We offer you the choice of the Growth (MySuper) option (which is a pre-mixed investment option), two other pre-mixed investment options and five asset class investment options in which to invest your super. MySuper option Growth (MySuper) Pre-mixed options Aggressive Moderate Asset class options Australian Shares Overseas Shares Property Bonds Cash 2. DEFAULT OPTION GROWTH (MYSUPER) If you choose not to make an investment choice, your super account will be invested in the Growth (MySuper) option, which is the default investment option. Any insurance proceeds are treated differently (see page 20 for more information). 3. YOUR CHOICES AT A GLANCE You can choose to invest your super in any one option or a combination of options as long as the total equals. You can also choose to invest your current account balance and future contributions in different ways. All investment selections must be in whole percentages (e.g. 33%, not 33.5%). Your investment choice, however, won t apply to any insurance proceeds (see page 20 for more information). To make your investment choice, all you need to do is complete the Investment Choice form available by calling or at kineticsuper.com.au. Information about the characteristics of each of the investment options is shown overleaf. To help you understand the information in the tables, please note: the objective for each of the pre-mixed options (including the Growth (MySuper) option) is measured by reference to the Consumer Price Index. The Consumer Price Index is a measure of the rate of price inflation that compares the changes in prices in a standard basket of goods and services consumed by Australian households the strategic asset allocation ranges are guides and actual asset allocations may vary from time to time due to various factors including market fluctuations or underlying manager decisions all investment options other than Cash and Australian Shares may include both overseas and Australian assets. This means any investment option that has an allocation to shares, property or bonds (as shown in the tables overleaf) may include overseas shares, property or bonds, taking into account the objective and risk profile of an investment option cash and cash-like assets include term deposits, commercial papers and floating-rate notes the risk profile for each investment option (which includes a risk band, risk level and estimated occurrence of negative returns) is consistent with a Standard Risk Measure. The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The Standard Risk Measure isn t a complete assessment of all forms of investment risk, for instance it doesn t detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it doesn t take into account the impact of administration fees and tax on the likelihood of a negative return. Members should still ensure they re comfortable with the risks and potential losses associated with their chosen investment option(s), and information about suitability, minimum suggested investment time frame and risk level is general only and doesn t take into account your personal situation. Refer to the Kinetic Super Risks Incorporated Information for more information about risks. We recommend you consult an appropriately licensed or authorised financial adviser about the investment option(s) that may be most suitable for you. 16

3 Investment option Suitability GROWTH (MySuper) This is the default option if you don t make a choice suitable for members with a medium term investment timeframe prepared to accept potentially modest to material fluctuations in asset values over shorter time It is also the default option that members who do not exercise an investment choice will be invested in. Members may elect to make an investment choice at a later stage. AGGRESSIVE suitable for members with a long term investment timeframe prepared to accept potentially material fluctuations in asset values over shorter time Pre-mixed options MODERATE suitable for members with a medium term investment timeframe prepared to accept potentially modest fluctuations in asset values over shorter time Investment return objective (net of fees and taxes) of at least 3% per year above the Consumer Price Index over rolling 5-year (net of fees and taxes) of at least 4.0% a year above the Consumer Price Index over rolling 8-year (net of fees and taxes) of at least 2.5% a year above the Consumer Price Index over rolling 4-year We have also formulated a return target for the Growth (MySuper) Option in accordance with legislative requirements. The return target is shown in the product dashboard that can be accessed at the Super section of the Kinetic Super website. Strategic asset allocation (benchmark) 24% 15% 10% 17% 35% 8% 13% 55% 75% 35% 13% Shares 55% Property 13% Private Capital 8% Bonds 24% Cash 0% Shares 75% Property 15% Private Capital 10% Bonds 0% Cash 0% Shares 35% Property 13% Private Capital 0% Bonds 35% Cash 17% Strategic asset allocation (ranges) 3 This may include both overseas and Australian assets. Shares 35% to 75% Property 3% to 23% Private capital 0% to 18% Bonds 14% to 34% Cash and cash-like assets 0% to 10% Shares 55% to 95% Property 5% to 25% Private capital 0% to 20% Bonds 0% to 10% Cash and cash-like assets 0% to 10% Shares 15% to 55% Property 3% to 23% Private capital 0% to 10% Bonds 25% to 45% Cash and cash-like assets 7% to 27% Minimum suggested investment timeframe 5 years 8 years 4 years Risk band Risk level High High Medium to high Estimated number of negative annual returns over any 20 year period 4 to less than 6 4 to less than 6 3 to less than 4 1 CPI stands for Consumer Price Index, which is a measure of the rate of price inflation that compares the changes in prices in a standard basket of goods and services consumed by Australian households. 2 Includes term deposits, commercial paper and floating rate notes. 3 The strategic asset allocation ranges are a guide to how asset classes may be invested within each investment option. These ranges show the maximum and minimum limits which the Trustee may invest in an asset class for each investment option. The Trustee regularly reviews the asset allocations and may alter them within the ranges over time. 17

4 Asset class options Investment option AUSTRALIAN SHARES OVERSEAS SHARES PROPERTY BONDS CASH Suitability with a long term investment timeframe prepared to accept potentially material fluctuations (and reductions) in asset values over shorter time with a long term investment timeframe prepared to accept potentially material fluctuations (and reductions) in asset values over shorter time with a medium term investment timeframe prepared to accept modest fluctuations in asset values over shorter time who seek short term returns above cash and protection against fluctuations in asset values over shorter time concerned about capital preservation. Investment return objective average of Australian sharemarket indices as outlined below) over average of overseas sharemarket indices as outlined below) over average of Australian and overseas property market indices as outlined below) over average of Australian and overseas bond market indices as outlined below) over (net of fees and taxes) that exceeds the benchmark (the Bloomberg Ausbond Bank Bill Index) over Strategic asset allocation Australian Shares Benchmark 50% S&P/ASX 200 Accumulation Index + 50% S&P/ASX 300 Accumulation Index. Overseas shares 60% MSCI World (ex-aust) Index with net dividends reinvested ($A Unhedged) + 30% MSCI World (ex-aust) Index with net dividends reinvested ($A Hedged) + 10% MSCI Emerging Markets Index with net dividends reinvested ($A Unhedged). Property 80% Mercer/IPD Australian Pooled Property Fund Index + 20% FTSE EPRA/NAREIT Developed Index Hedged to AUD (Net of Withholding Tax). Bonds 45% Bloomberg AusBond Composite Index + 30% Bloomberg Barclays Global Aggregate Index ($A Hedged) + 25% Bloomberg AusBond Inflation Government Index. Cash & cash-like assets Bloomberg Ausbond Bank Bill Index. Minimum suggested investment timeframe 8 years 8 years 4 years 2 years 2 years Risk band Risk level Very high High High Medium Very low Estimated number of negative annual returns over any 20 year period 6 or greater 4 to less than 6 4 to less than 6 2 to less than 3 Less than 0.5 Note: For further information about the Benchmarks relevant to Asset Class, please contact us. The strategic asset allocation ranges are a guide to how asset classes may be invested within each investment option. These ranges show the maximum and minimum limits which the Trustee may invest in an asset class for each investment option. The Trustee regularly reviews the asset allocations and may alter them within the ranges over time. 18

5 4. PERFORMANCE For information about the investment performance of each of the investment options, go to kineticsuper.com.au. An explanation of how investment returns are allocated to member accounts can be found in the Kinetic Super Contributions, Features and Benefits Incorporated Information. Past performance is not a reliable indicator of future performance. We recommend you consider longerterm performance figures (e.g. over five and 10-year periods) when comparing super products. 5. CHANGING YOUR CHOICE You can change your investment choice at any time. All you need to do is complete the Investment choice form or go to your online account at kineticsuper.com.au and make your choice online. There are no switching fees, however buy/sell spreads may apply. If you make an investment choice, the benefits, features or services applicable or available in relation to your Kinetic Super account, don t change. For example, you have access to the same insurance cover regardless of the investment option(s) you participate in. However, you should note if you choose an investment option other than the Growth (MySuper) option, the indirect cost ratio and the obligations imposed by superannuation laws on the Trustee will be different. Additional legislative rules apply to MySuper arrangements designed to ensure the Trustee has greater responsibility for members who don t make an investment choice. The effective date of an investment switch will depend on the date the request is received (either via a form or an online request) during a weekly investment switch cycle. The weekly investment switch cycle commences on Saturday (12.00am) and closes on the following Friday (11.59pm). All investment switch requests received during this weekly cycle period will be processed and become effective once the next unit price has been declared. Typically the next unit price will be declared on the Wednesday after the close of the switch cycle. This means all investment switches will take between five and 11 days to become effective. Please see the examples below: Example 1 Switch request received on a Friday A switch request received (either online or via mail) on a Friday (May 10), will typically be effective on the following Wednesday (May 15), This will take approximately five days as the switch cycle closed on the Friday the request was received. Example 2 Switch request received on a Saturday A switch request received (either online or via mail) on a Saturday (May 11), will typically be effective on the Wednesday (May 22) after the close of the current weekly switch cycle. This will take approximately 11 days as the switch request was received at the beginning of the weekly investment switch cycle. For more information about unit pricing refer to the Kinetic Super Contributions, Features and Benefits Incorporated Information. Other important information When making an investment choice: consider the Kinetic Super Risks Incorporated Information, and consider the fees and costs associated with each investment option, shown in the Kinetic Super Fees and Costs Incorporated Information. 19

6 6. OPTIONS CAN CHANGE The investment options made available to members may be changed from time to time. We may close, remove or add investment options. If an investment option is closed, we may transfer a member s account balance to another option we consider to be reasonably equivalent (where possible, this will be subject to at least one month s notice being provided). 7. INSURANCE PROCEEDS Insurance proceeds received for death, total and permanent disablement and terminal illness claims will be held in the Cash investment option from the date of receipt from the Insurer until the benefit is paid from the Fund. The receipt of insurance proceeds depends on the insurer s assessment of a claim. Refer to the Kinetic Super Insurance Incorporated Information for more information. 8. SOCIALLY RESPONSIBLE S Kinetic Super has formulated an inprinciple position regarding sustainable investments. Kinetic Super acknowledges that incorporating a sustainable approach to investing is important to the long-term performance of the investment strategy. The Trustee believes this is an integral part of its fiduciary responsibility to members. When appointing external investment managers, Kinetic Super will take into account the ESG (Environment, Social and Governance)/sustainability framework adopted by the managers. While we encourage our managers to take ESG/sustainability factors into account, they are taken into account by the managers in their own right, not on behalf of the Trustee. The Trustee does not take into account labour standards or environmental, social or ethical considerations for the purpose of selecting, retaining or realising particular investments (including underlying investments made by our managers) of the Fund. 20