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Sweet Savings saving for retirement the kiwi way Mercer KiwiSaver scheme Annual Report 2018

SECTION ONE 6 DETAILS OF SCHEME SECTION TWO 7 INFORMATION ON CONTRIBUTIONS AND SCHEME PARTICIPANTS SECTION THREE 8 CHANGES RELATING TO THE SCHEME SECTION FOUR 8 OTHER INFORMATION FOR A KIWISAVER SCHEME Message from Sarah WELCOME FROM SARAH It is my pleasure to be introducing this year s Annual Report and welcoming all members of the Mercer KiwiSaver scheme. SECTION FIVE 12 CHANGES TO PERSONS INVOLVED IN THE SCHEME SECTION SIX 12 HOW TO FIND FURTHER INFORMATION SECTION SEVEN 13 CONTACT DETAILS AND COMPLAINTS

Scheme s Performance Despite a somewhat rocky finish, the 12 months to 31 March 2018 provided another strong year for members of the Scheme. All investment options delivered positive returns. Over the last few years, the markets have experienced an impressive run of positive returns, so it was not surprising to see a correction at the start of this year. The political landscape continues to influence sentiment and therefore KiwiSaver members returns. During the year, US President Donald Trump was never too far from the headlines. Stories included clashing with North Korea over nuclear missile tests, announcing tariffs on Chinese exports and blocking Chinese takeovers of US companies. Trump also signed off on the largest tax cuts in US history, a US$1.5 trillion deal, which should see increased corporate earnings and, with it, a modest boost to economic growth. Markets going up and down can make us nervous, but it is simply a part of being an investor. It is therefore important not to make any knee jerk reactions when it comes to switching your investments as it can negatively impact your long-term savings. Maximising your membership Contributions come from you, your employer and the Government. To maximise contributions from the Government, you need to contribute at least $1,042 a year. Every year we also take an opportunity to remind those who are not maximising this benefit, by communicating via email, on our website www.mercerfinancialservices.co.nz, text messages, post and this year we have used Facebook to reach our members. If you re on contributions holiday, you can still transfer money directly from your online banking into your KiwiSaver account. It is also very important to be in the investment option that is right for your age, circumstances and how comfortable you are with risk. Don t forget to reach out to our financial advice team who can help you make the right investment decision. You can request a call back from the team online or simply call us on 0508 637 237 and ask to speak to an advisor. There are no fees to use this service. Mercer also offers a number of online tools, which include a risk quiz and a retirement projections tool to help with this important decision. The Scheme benefits As a member of the Scheme you receive a number of benefits that other schemes do not offer. With Mercer you have access to some of the most diverse and actively managed investment options, which have recently been certified by Responsible Investment Association Australasia; industry leading tools; award winning communications; and the ability to protect your KiwiSaver contributions through MercerProtect. The Mercer KiwiSaver scheme also continues to be rated as Best Value for Money by SuperRatings. Later in the year we ll be running forums in Auckland, Christchurch and Wellington, so keep an eye on the www.mercerfinancialservices.co.nz website or the Mercer KiwiSaver Facebook page for further details. If you are on Facebook, don t forget to follow and like our Mercer KiwiSaver Facebook page. This is a great way to keep up to date! Be sure to let your family members and friends know about the seminars and our new Mercer KiwiSaver Facebook page, so that they can find out how to maximise their KiwiSaver savings. Thank you Thank you for continuing your KiwiSaver journey with Mercer and we look forward to helping you achieve your financial goals. I would also like to take this opportunity to thank all the service providers and partners who help us deliver outstanding results and a great member experience. The Scheme is in excellent shape and I look forward to seeing it grow! Sarah Whitelock Consumer Wealth Leader Mercer (N.Z.) Limited 1

Scheme Snapshot As at 31 March 2018 94,052 members $1.74B invested $18,478 average member balance $144M contributed by members during the year $404 per average contribution from the Government member 9% active of default members made an investment choice 2

Mercer & KiwiSaver KiwiSaver helps around 2.8 million Kiwis save for their first home and retirement. Mercer has been providing the Mercer KiwiSaver scheme since KiwiSaver was introduced 11 years ago. We are proud to be helping our members into their first homes and to save for their future. Helping you retire with more is what Mercer is all about. As an investment manager, we search the globe for the best investments and deliver them back home for you. Our scope of global investments, tailored for the New Zealand market, is what makes us different. The other thing that makes us different is our people. Find out more You can find out what our experts are saying on our Facebook page. There are lots of useful sources of further information to help you plan for your future. You may want to also check out: the Mercer Magazine, a leading source of information on health, wealth and career, which we believe are integral to helping you get the most out of life. www.mercermagazine.co.nz the Retirement Income Simulator, the only tool you ll need to help you stay on track and plan for your retirement. www.retirementsimulator.co.nz Mercer can help you make decisions Mercer s Helpline team will answer any questions you may have about your membership in the Scheme and is open 9.00am to 7.00pm on all business days. You can also leave us a message and we will call back at a time convenient to you or can email you the information you need. We can help you get started and understand how your account works, as well as answer general queries about your investment options, fees and confirm your account balance and connect you with one of our financial advisers. You can also request a financial adviser to call you by completing an online Request a Call Back form. Visit the KiwiSaver benefits page at www.mercerfinancialservices.co.nz. 3 3

INVESTING YOUR SAVINGS When reviewing the annual report, you should take the opportunity to consider whether your savings are invested in an appropriate investment option or options. No matter what age you are, the investment option(s) you choose can have the biggest impact on your balance at retirement and in achieving your other financial goals such as buying a first home. Your savings goals and the timeframe for achieving them are not the only thing you should be considering when choosing your investment option(s). The option(s) you choose also depend on whether you re an aggressive investor with an appetite for risk or the type who likes to play it safe. Even if you are somewhere in between, the Mercer KiwiSaver scheme has an investment option for you. The Scheme offers a choice of seven investment options with a mix of different growth assets and defensive assets. The investment options shown are from the Product Disclosure Statement dated 28 August 2017, and the details may change from time to time. 74% 100% Growth 26% Australasian Mercer Shares Invests almost entirely in the share market. May be suitable for investors seeking exposure mostly to shares and who are comfortable with a high level of volatility in returns. 1.5% Commodities 3% Unlisted 3% Listed 28.5% 9% Other*** 55% Growth 10% Cash 45% Defensive 10% NZ Fixed Interest 25% Fixed Interest 10% Australasian Mercer Balanced Invests in a wide range of assets. May be suitable for investors who want a diversified investment with exposure to shares, real assets, alternative assets, fixed interest and cash, who are comfortable with a higher degree of volatility in returns than can be expected from the Moderate fund and who can invest for the long term. ***Listed Infrastructure, Unlisted Infrastructure and Alternatives 2% Listed 16% 7% Australasian 2% Unlisted 1% Commodities 35% Growth 65% Defensive 7% Other* 24% Cash 13% NZ Fixed Interest 28% Fixed Interest Mercer Moderate Invests in cash and fixed interest, with about a third of investments being in growth assets such as shares and real assets. May be suitable for investors who want to invest in a broad mix of assets and who are comfortable with a higher degree of volatility in returns than can be expected from the Conservative fund. *Listed Infrastructure, Unlisted Infrastructure and Alternatives 4

2% 10% Commodities Other** 3.5% Unlisted 3.5% Listed 2% Cash 10% Defensive 2% NZ Fixed Interest 6% Fixed Interest 2% 10% Commodities Other** 3.5% Unlisted 3.5% Listed 4% Cash 25% Defensive 5% NZ Fixed Interest 16% Fixed Interest 53% 90% Growth 18% Australasian 44% 75% Growth 12% Australasian Mercer High Growth Invests almost entirely in growth assets such as shares, real assets and alternative assets, with only a small amount invested in cash and fixed interest. May be suitable for investors wanting to invest predominately in growth assets, who want higher long-term returns and are comfortable with high volatility in returns. **Listed Infrastructure, Unlisted Infrastructure and Alternatives Mercer Growth Invests mainly in growth assets such as shares, real assets and alternative assets with only a limited amount in cash and fixed interest, May be suitable for investors wanting to invest mostly in growth assets who are comfortable accepting more volatile returns than those expected from the Balanced fund with a view to achieving higher longer-term returns. **Listed Infrastructure, Unlisted Infrastructure and Alternatives 0.88% Listed 0.87% Unlisted 0.50% Commodities 100% Cash 11% 1.75% Other** * 5% Australasian 20% Growth 30% Cash 100% Defensive 35% Fixed Interest 80% Defensive 15% NZ Fixed Interest Mercer Conservative Invests mostly in cash and fixed interest, with only limited investment in growth assets such as shares and real assets. May be suitable for investors who want to achieve slightly higher returns than those expected from investing solely in cash. Investors need to be comfortable with the possibility of some fluctuations in returns. **Listed Infrastructure and Unlisted Infrastructure Mercer Cash Invests mainly in cash and short term interest bearing investments. Designed for members who want no exposure to growth assets or where the funds may be required in the shorter term. For more information about the investment options, please see the latest product disclosure statement and fund updates or visit www.mercerfinancialservices.co.nz. 5

SECTION ONE DETAILS OF SCHEME Name of the scheme: Mercer KiwiSaver scheme Type of scheme: KiwiSaver Manager: Mercer (N.Z.) Limited Supervisor: Trustees Executors Limited Product Disclosure Statement: The current product disclosure statement for the scheme is dated 28 August 2017 and is open for applications. Fund Updates: Fund updates for the seven investment funds for the quarter ended 30 June 2018 were made publically available on 27 July 2018. Financial Statements and Auditor s Report: The latest full financial statements for the scheme that comply with, and have been registered under, the Financial Markets Conduct Act 2013 cover the financial year 1 April 2017 to 31 March 2018 and were authorised for issue by the manager, Mercer (N.Z.) Limited, on 23 July 2018. The auditor s report on those financial statements was dated 23 July 2018. The auditor s report did not refer to any fundamental uncertainty, and nor was it qualified or modified in any respect. 6

SECTION TWO INFORMATION ON CONTRIBUTIONS AND SCHEME PARTICIPANTS Contributions to your KiwiSaver account can come from you, your employer and from the Government. MEMBERS ACCUMULATION At 1 April 2017, the total amount of members accumulation relating to 96,807 members was $1,573,494,334. At 31 March 2018, the total amount of members accumulation relating to 94,052 members was $1,737,915,265. MEMBERSHIP DETAILS CONTRIBUTING MEMBERS NON CONTRIBUTING MEMBERS TOTAL NUMBER OF MEMBERS TOTAL MEMBERSHIP AT 1 APRIL 2017 56,296 40,511 96,807 PLUS New members 7,643 Members transferring from other schemes 133 TOTAL NEW MEMBERS 7,776 LESS Retirement 717 Death 122 Transfers to other KiwiSaver schemes 9,172 Transfers to Australian Super schemes 6 Other exits 514 TOTAL EXITS 10,531 TOTAL MEMBERSHIP AT 31 MARCH 2018 54,623 39,429 94,052 CONTRIBUTIONS MADE DURING THE YEAR ENDED 31 MARCH 2018 TYPE NUMBER OF MEMBERS TOTAL AMOUNT Member contributions 72,601 $128,429,900 Member voluntary additional contributions $23,121,808 General member voluntary additional contributions 4,676 $15,758,359 Transfer-in contributions 286 $7,363,449 Employer or other sponsor contributions $102,822,011 Employer contributions 72,139 $77,055,883 Member tax credits 63,789 $25,766,128 TOTAL CONTRIBUTIONS $254,373,720 7

SECTION THREE CHANGES RELATING TO THE SCHEME Trust Deed There were no amendments to the trust deed during the year. Terms of Offer of Interests in the Scheme There have been no changes to the terms of offer of interests in the scheme during the year. Statement of Investment Policy and Objectives of the Scheme Changes were made to the Statement of Investment Policy and Objectives (SIPO), which included: The Responsible Investment Policy section wording was updated to reflect the new Responsible Investment Policy; and Cash and Unlisted Investments definitions were added to the glossary. Related Party Transactions There were no changes to the nature or scale of the related party transactions. All related party transactions were conducted on normal commercial terms and conditions during the accounting period and were on arm s-length terms. SECTION FOUR OTHER INFORMATION FOR A KIWISAVER SCHEME UNIT PRICES TYPE AT 1 APRIL 2017* AT 31 MARCH 2018 28% PIR 17.5% PIR 10.5% PIR 28% PIR 17.5% PIR 10.5% PIR Shares 1.1658 1.1695 1.1801 1.2967 1.3061 1.3200 High Growth 1.3310 1.3884 1.7871 1.4582 1.5280 1.9731 Growth 1.1310 1.1410 1.1520 1.2215 1.2376 1.2529 Balanced 1.3770 1.4321 1.6248 1.4666 1.5316 1.7425 Moderate 1.0892 1.0950 1.1039 1.1413 1.1517 1.1638 Conservative 1.4674 1.5217 1.4628 1.5236 1.5851 1.5264 Cash 1.2931 1.3418 1.2230 1.3121 1.3642 1.2451 *Opening price as at 1 April 2017, is the closing price on 31 March 2017. WITHDRAWALS MADE DURING THE YEAR ENDED 31 MARCH 2018 NUMBER OF MEMBERS TOTAL AMOUNT Retirement 2,023 $25,996,868 First home withdrawal 795 $19,178,083 Permanent emigration 97 $1,622,890 Transfers to Australian superannuation schemes 6 $73,631 Death and serious illness 204 $4,026,296 Significant Financial Hardship 362 $1,965,298 Transfer to other schemes 9,172 $114,921,291 Other Benefits 345 $713,326 TOTAL WITHDRAWALS 13,004 $168,497,683 8

PERFORMANCE Whether you re an aggressive investor with an appetite for risk, the type who likes to play it safe or somewhere in between, we ve got an investment option for you. See how the options performed during the year in the return chart on the next page. For further information please visit the www.mercerfinancialservices.co.nz website. 9

ONE YEAR RETURNS AS AT 31 MARCH 2018 (AFTER TAX AND FEES) 14% 12% 11.86% 11.68% 11.22% 10% 10.41% 10.06% 9.55% 8% 8.76% 8.46% 8.00% 7.25% 6.95% 6.51% PIR 28% PIR 17.5% PIR 10.5% 6% 4% 5.42% 5.17% 4.78% 4.34% 4.16% 3.83% 2% 1.81% 1.67% 1.47% 0 Shares High Growth Growth Balanced Moderate Conservative Cash 10 Note: The investment returns are shown after deducting fund fees (but excluding any applicable other charges) and after tax at the Prescribed Investor Rate (PIR) noted. Your individual return can differ from these returns depending on the unit price applicable to each contribution or withdrawal you have made and how long they have been invested, as well as what proportion of each fund you may have selected to invest in. Returns represent past performance only and are not an indication or guarantee of future performance.

MANAGER S ANNUAL STATEMENT As the manager of the Mercer KiwiSaver scheme, we confirm that for the year ended 31 March 2018: all the benefits required to be paid from the scheme in accordance with the terms of the governing document and the KiwiSaver scheme rules have been paid; the market value of the Scheme at the close of the financial year, 31 March 2018, equalled or exceeded the total value of the benefits that would have been payable had all members of the scheme ceased to be members at that date and had provision been made for the continued payment of all benefits being paid to members and other beneficiaries as at the close of the financial year. Martin Lewington Mercer (N.Z.) Limited 31 July 2018 11

SECTION FIVE CHANGES TO PERSONS INVOLVED IN THE SCHEME There were no changes to the manager, the supervisor, administration manager, investment manager, securities registrar, custodian or auditor of the Scheme. Kristen Jane Kohere-Soutar was appointed a director of the manager on 7 August 2017. Changes to the key personnel of the manager, were Kylie Willment was appointed Chief Investment Officer (CIO) Pacific, with effect from 25 October 2017, replacing Russell Clarke. There were changes to the directors of the supervisor during the year: Andrew Scott-Howman was appointed as a Director on 24 April 2017 Franceska Banga was appointed as a Director on 18 July 2017 Since year end: Franceska Banga resigned as a Director on 5 April 2018; Matthew Sale was appointed as a Director on 17 May 2018; Robert Russell resigned as a Director on 17 May 2018; Andrew Scott-Howman resigned as a Director on 15 June 2018; Mark Darrow was appointed as a Director on 18 June 2018; Sarah Roberts was appointed as a Director on 16 July 2018. SECTION SIX HOW TO FIND FURTHER INFORMATION Information relating to the Mercer KiwiSaver scheme, for the offer register and the scheme register can be found at www.disclose-register.companiesoffice.govt.nz. The scheme register includes the financial statements, trust deed and statement of investment policy and objectives. The offer register includes the product disclosure statement for the scheme, information relating to membership and the funds within the scheme. It also includes fund updates and other material information. Information relating to the scheme, such as fund updates, annual report, current product disclosure statement and other useful information is available at www.mercerfinancialservices.co.nz. You can also call us on 0508 637 237 to request this information. All the information can be obtained from us without charge. 12

Connect SECTION SEVEN CONTACT DETAILS AND COMPLAINTS Manager Mercer (N.Z.) Ltd 151 Queen Street PO Box 105591 Auckland 1143 0508 637 237 Supervisor Trustees Executors Ltd Level 7 51 Shortland Street PO Box 4197 Auckland 1140 0800 809 962 Privacy Officer Mercer (N.Z.) Ltd Attn: Privacy Officer 151 Queen Street PO Box 105591 Auckland 1143 0508 637 237 How to complain Please direct any complaints about your investment to the manager at: Mercer (N.Z.) Limited 151 Queen Street PO Box 105591 Auckland 1143 Attn: Privacy Officer Telephone: 0508 637 237 Email: NZ.Privacy@mercer.com If we are unable to resolve your complaint, you may choose to contact the supervisor at: Trustees Executors Limited Level 7, 51 Shortland Street PO Box 4197 Auckland 1140 Attn: Client Manager Telephone: 09 308 7100 Mercer is a member of the Insurance and Financial Services Ombudsman Scheme (IFSO) and the supervisor is a member of Financial Services Complaints Limited (FSCL), both of which are approved dispute resolution schemes. The IFSO and FSCL will not charge a fee to any complainant to investigate or resolve a complaint. If you make a complaint to us and the complaint cannot be resolved, then you may refer it to the IFSO subject to certain conditions being met. You can contact: IFSO PO Box 10-845 Wellington 6143 0800 888 202 FSCL PO Box 5967 Wellington 6145 0800 347 257 Help is just a click or a call away, we would love to hear from you. 0508 637 237 We are here between 9am and 7pm, Monday to Friday, or leave us a message and we ll call you back. Submit your query from your online account www.mercerfinancialservices.co.nz Mercer KiwiSaver scheme PO Box 1849 Wellington @Mercer_NZ Mercer New Zealand @MercerKiwiSaver 13

Want to know more? www.mercerfinancialservices.co.nz 0508 637 237 @Mercer_NZ @MercerKiwiSaver Mercer New Zealand Mercer (N.Z.) Limited is the manager of the Mercer KiwiSaver scheme and the issuer of this annual report. This annual report has been prepared by the Manager to meet its legislative obligations under the Financial Markets Conduct Regulations 2014, and the KiwiSaver Act 2006. The information contained in this annual report is of a general nature only and does not take into account the personal objectives, financial situation or financial goals of individual members. Accordingly, before making any decisions, you should consider the information in light of your own objectives, financial situation and needs and read and consider the current product disclosure statement. It is also recommended that you obtain advice from an authorised financial adviser. A copy of the current product disclosure statement is available on the website www.mercerfinancialservices.co.nz or by calling the Helpline on 0508 637 237. You should be aware that the value of an investment in the Mercer KiwiSaver scheme may rise and fall from time to time. Neither Mercer, nor Trustees Executors Limited, MMC nor any member of the worldwide Marsh & McLennan Companies guarantees the investment performance, earnings or return of capital invested in any of the Mercer KiwiSaver scheme investment options. The investment returns shown in this annual report do not take into account the unique characteristics that apply to each member (such as timing of cashflow). As a result, the actual returns applying to a particular member are different from the investment returns shown. You should also remember that past performance should not be relied upon as an indicator of future performance. The Certification Symbol signifies that a product or service offers an investment style that takes into account certain environmental, social, governance or ethical considerations. The Symbol also signifies that the Mercer KiwiSaver scheme adheres to the strict operational and disclosure practices required under the Responsible Investment Certification Program for the category of Superfund Option. The Certification Symbol is a Registered Trade Mark of the Responsible Investment Association Australasia (RIAA). Detailed information about RIAA, the Symbol and Mercer KiwiSaver scheme s methodology and performance can be found at www.responsiblereturns.com.au, together with details about other responsible investment products certified by RIAA. 1 1. The Responsible Investment Certification Program does not constitute financial product advice. Neither the Certification Symbol nor RIAA recommends to any person that any financial product is a suitable investment or that returns are guaranteed. Appropriate professional advice should be sought prior to making an investment decision. RIAA does not hold an Australian Financial Services Licence.