Investment Update for your MLC Horizon 2 Income Portfolio Year to 31 March 2008

1. Investment Updatefor your MLC Horizon 2Income PortfolioYear to 31 March 2008

2. Important information Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice in this communication, consider whether it is appropriate to your objectives, financial situation and needs. You should obtain a Product Disclosure Statement or other disclosure document relating to any product issued by MLC Investments Limited and MLC Limited and consider it before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available upon request by phoning the MasterKey Service Centre on 132 652 or on our website at mlc.com.au. For the MLC Investment Trust, a Product Disclosure Statement is available at mlcinvestmenttrust.com.au

3. Investment update agenda • The market environment • Your portfolio in review • MLC’s approach to wealth creation • Sector & Manager Performance • Recent enhancements to your portfolio • Outlook & Conclusion

4. The state of play • Too much liquidity • Too much leverage • Too much complacency • Voracious risk appetites • A benign macroeconomic environment Have led to…. • Risk being way underpriced – too little reward on offer for risks that have not been properly understood • Opportunistic funds being launched that do not really meet the needs of long term investors • In short, returns have been too high, and volatility has been too low, and this situation is now normalising The problem was (and still is) much larger than just US sub-prime mortgages!

5. When too much debt just isn’t enough! Source: Thomson Financial Datastream

6. No, it’s not just a US problem Source: Thomson Financial Datastream, MLC Investment Management

7. Asset Class Returns to March 2008 *

8. Some of the major central banks have started the rescue operation… Source: Thomson Financial Datastream. US rate is target rate for Federal Funds. For Europe, short-term repo rate. Canadian rate is Bank of Canada policy rate. Australian rate is the RBA cash rate target. Chinese rate is the 1yr benchmark lending rate. NZ rate is RBNZ cash rate target.

9. “.. there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know."…” • What we don’t know…(and may not know, that we don’t know) • How far US house prices will fall • How much damage will be done to household balance sheets • The full impact on US financial institutions’ balance sheets (and hence their ability to create credit) • The full impact on household spending and hence the economy • The full impact on corporate earnings

10. Global economic and investment prospects • Global economy slowing down (the US is in recession now) • ..but the Chinese economy is well-placed to weather the storm (good news for Australia) • The US Federal Reserve now understands the magnitude of the problem, and is responding.. • ..and the economy and financial markets will eventually recover.. • ..but we are most unlikely to see a repeat of the kind of investment returns seen in recent years.

11. Australian economic prospects • Australian economic growth to slow significantly (either the economy slows ‘by itself’ or RBA will make it slow!) • (Patriotism has paid handsomely over past five years, but this will not last!)

12. ..helping to keep inflation above the RBA’s target range

13. Outlook for business investment is still very strong

14. Australian shares have been incredibly strong. These returns were NEVER going to last Source: Thomson Financial Datastream

15. MLC’s approach to sensible wealth creation • The best way to grow wealth is to use exceptional investment managers • Deep research is the only reliable way to identify exceptional investment managers. Brand and past performance are unreliable predictors of future performance • Diversification leads to more consistent investment outcomes • Be patient - A long-term (strategic) approach should be used if your financial goals are long term • Efficient implementation reduces the costs of running a portfolio Investing does not need to be complex, opaque, and dangerous, but too many people in recent years have made it that way!

16. ..it’s ‘E’ The problem isn’t ‘P’ Source: Thomson Financial Datastream

18. Your portfolio in review: MLC Horizon 2Income Portfolio

19. Contribution to performanceMLC Horizon 2 Income PortfolioContribution from each asset class for the periods ending 31 March 2008Returns are gross of all fees and taxes Data source: MLC Investment Management Contribution from each asset class= strategic asset allocation weighting x total return for the asset class

20. MLC Horizon Fund expected outcomes for investors • Maximise after-tax real returns over the long term with lower than average absoluterisk • Provide consistent added value across market cycles (good and bad) • Provide consistently above median (ie competitors) returns over the long-term • Likely to outperform peers in adverse environments (capital protection)

21. Reasons for Horizon’s recent performance

22. The Investors’ Experience with MLC Protecting & growing real wealth Source: Mercers Retail software Kit, Super Multi-Sector Balanced Growth universe

23. Share manager performance31 March 2007 – 31 March 2008Returns are gross of fees and taxes Australian shares Maple-Brown Abbott -6.5%Dimensional -5.6%Lazard Asset Management -13.0%Contango -4.3%Concord Capital -4.2%Wallara Asset Management -7.2%JF Capital Partners -2.2%Balanced Equity Management -10.4%Northcape -5.3% Total -6.9% Global shares Capital International -6.0%Alliance Growth Equites -14.2%Dimensional - Global -18.8%Dimensional - Emerging Mkts 7.4%Fortis Investments N/Ap*Bernstein Value Equities -18.4%Walter Scott & Partners -7.6%Wellington -12.1% Total hedged -5.9% Total unhedged -12.1% *Returns for this manager are not applicable, because the manager was not appointed to the fund for this period of time

24. Top 10 Australian Shares as at 31 March 2008 Top Ten Australian Stocks – MLC Horizon 2 - Income Portfolio Data: MLC Investments Limited

25. Top 10 Global Shares (Hedged and Unhedged)as at 31 March 2008 Top Ten Global Stocks – MLC Horizon 2 – Income Portfolio Data: MLC Investments Limited

26. Investment ProcessThe Process is monitored by a cycle of ongoing reviews Daily: Monitor compliance and manage cash flow / rebalancing Monthly: Review investment manager portfolio strategies and performance Six monthly: Pre-briefs, formal investment manager reviews, debriefs and marketing updates Annually+: Asset class reviews (Australian share, global share and property securities strategies refined) Ad hoc: Overseas research trips

27. Outlook & Conclusion

28. Let’s be realistic about the kind of returns that are achievable and sustainable over time

29. Conclusion • Investment solutions have to be appropriate for good and bad times. • Its better to outperform in negative return environments than vice versa. • We are committed to providing and maintaining investment solutions that are both sensible and help clients achieve their goals.

30. Questions?Comments.Statements!