Investment markets are the main driver of the Fund’s investment returns. The Fund’s allocation to investment markets is shown in its strategic asset allocation and ranges below. The strategic asset allocation has a strong bias to defensive assets and some exposure to growth assets

To provide medium-term returns higher than those generally associated with cash and fixed income securities, while providing lower volatility in short-term investment returns than funds with a greater proportion of growth assets.

Benefits of investing in the Pre Select Funds

• Our Funds have different investment objectives because we know everyone has different ideas about how their money should be managed.

• Our Funds make sophisticated investing straightforward.

• Our investment experts use a market- leading investment approach to structure our Funds with the aim of delivering more reliable returns in many potential market environments.

• And, as their assessment of world markets changes, our Funds are evolved to manage new risks and capture new opportunities.

• We use specialist investment managers in our Funds. Our investment experts research hundreds of investment managers from around the world and select the managers they believe are the best for our Funds. Our investment managers may be specialist in-house managers, external managers or a combination of both.

• Importantly, we stay true to the objectives of our Funds so you can keep on track to meeting your goals.

Investor suitability

The Fund may be suited to you if:

• you want to invest with a bias to defensive assets, with some exposure to growth assets; and

• you are seeking stable returns.

Our approach to investing

For over 30 years, our investment experts have been designing portfolios using a multi-manager approach, to help investors achieve their goals.

The four key aspects of this market- leading investment approach are:

1 Portfolio design

Our multi-asset Funds focus on what affects investor outcomes the most - asset allocation.

Each asset class has its own risk and return characteristics. We allocate money between asset classes based on the following beliefs:

• Risks can't be avoided, but can be managed

Key to the investment approach is a unique Investment Futures Framework (Framework). The Framework guides our forward-looking approach to managing risk.

In an unpredictable and constantly changing world, the Framework helps continually identify the very wide range of potential market scenarios - both good and bad - that could occur.

The Framework also helps our investment experts analyse how these scenarios could affect the risks and returns of the asset classes in the Funds.

The insights from this analysis are used to work out the combination of asset classes that they believe will best achieve a Fund's objective.

This helps us prepare our Funds for future market ups and downs.

• Risks and returns vary through time

The Framework shows how the potential risks and returns of each asset class could change over the next three to seven years.

With this information we can adjust our Funds' asset allocations to reduce the risk or improve their return potential.

• Diversification matters

Asset classes perform differently in different market conditions.

Investing in many asset classes helps smooth out the Funds' overall returns, as asset class ups and downs can offset one another.

2 Managing the portfolio

Our Funds have different investment objectives. That's why our investment experts select a different mix of assets and investment managers for each.

The investment managers may be specialist in-house managers, external managers or a combination of both.

Our investment experts research hundreds of investment managers from around the world and select the managers they believe are the best for our Funds.

They are then combined in the Funds so they complement each other.

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

You can find out about our current investment managers at mlc.com.au.

3 Ongoing review

To make sure our Funds are working hard for investors, we continuously review and manage them.

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

This may be because our investment experts' assessment of the future market environment has altered or because we have found new ways to balance risk and return in our Funds.

4 Portfolio implementation

We deliver better returns by avoiding unnecessary costs. Our investment experts do this by carefully managing cash flows, tax and changes in our Funds.

How we invest your money

Investment markets are the main driver of the Fund's investment returns. The Fund's allocation to investment markets is shown in its target asset allocation and ranges below. The asset allocation has a strong bias to defensive assets and some exposure to growth assets.

Our investment experts actively manage the Fund's exposure to the risks of investing in markets. Our investment experts do this by:

1. Researching and selecting a broad range of mainstream asset classes, and including some exposure to alternative assets and strategies.
2. Adjusting the allocations to the asset classes within the defined ranges shown below.
3. Researching hundreds of investment managers from around the world and selecting the managers they believe are the best for the Fund. These investment managers, who are mainly active managers, choose many companies and securities in Australia and overseas for investment.

The Fund invests using all aspects of our approach to investing, outlined on page 10 of the PDS.

Target asset allocation and ranges

(Asset class: Target asset allocation / Range)

• Cash: 15.5% / 0-30%

• Fixed income: 45.5 / 30-75%

• Defensive alternatives and other: 7% / 0-15%

Total defensive assets: 68% / 58-78%

• Australian shares: 15% / 0-25%

• Global shares: 7% / 0-25%

• Listed property securities: 7% / 0-15%

• Growth alternatives and other: 3% / 0-15%

Total growth assets: 32% / 22-42%

In addition, most global assets are hedged to the Australian dollar. For benchmark currency hedging levels for global assets please refer to our Fund Profile Tool for MLC Wrap and Navigator at mlc.com.au