PIC Investments Performance Update

1. PIC Investments Performance Update Year ended 31 March 2010

2. General advice warning and disclaimer • Any advice in this communication has been prepared without taking account of individual objectives, financial situation or needs. Because of this you should, before acting on any information 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 financial product issued by MLC Investments Limited (ABN 30 002 641 661) and MLC Nominees Pty Ltd (ABN 93 002 814 959) as trustee of The Universal Super Scheme (ABN 44 928 361 101), 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 MLC call centre on 132 652 or on our website at mlc.com.au. • An investment in any product offered by a member company of the National group does not represent a deposit with or a liability of the National Australia Bank Limited ABN 12 004 044 937 or other member company of the National Australia Bank group of companies and is subject to investment risk including possible delays in repayment and loss or income and capital invested. None of the National Australia Bank Limited, MLC Limited, MLC Investments Limited or other member company in the National Australia Bank group of companies guarantees the capital value, payment of income or performance of any financial product referred to in this publication. • Past performance is not indicative of future performance. The value of an investment may rise or fall with the changes in the market. Please note that all return figures reported are before management fees and taxes, and for the period up to 31 March 2010, unless otherwise stated. • The specialist investment management companies are current as at 31 March 2010. Funds under management figures are as at 31 March 2010, unless otherwise stated. Investment managers are regularly reviewed and may be appointed or removed at any time without prior notice to you.

3. Contents • Overall results • The market environment • Drill down by asset class

4. 1. Overall results • Key Messages: • Markets have rebounded strongly, however risks remain. • Clients participated fully in the recovery due to our disciplined investment approach. • Market rebound has justified advice to clients to remain fully invested and focused on long-term goals. • Appointed managers have generally enhanced returns though security selection. • Our diversified portfolios’ 5-year returns remain positive.

5. PIC Wholesale 70/30 Portfolio • Highlights: • 5-year returns remain positive and 1 year returns rebounded very strongly. • All asset classes provided positive returns for both the year and quarter. • Australian Shares (+45%) and Hedged Global Shares (+51.8%) performed strongly. (ref slide 15) • Hedged Global Shares outperformed unhedged Global Shares by +32.2% over the year on account of a rising $A. (ref slide 15) • 70/30 Portfolio debt returns (+10.9% for the year) have been driven by strong returns from higher credit risk bonds which continue to benefit from robust corporate earnings and buoyant investor risk appetites.

6. PIC Wholesale 70/30 – total returns

7. PIC Wholesale 70/30 – asset class contribution

8. PIC Wholesale 85/15 Portfolio • Highlights: • 5-year returns remain positive, and 1 year returns rebounded very strongly. • All asset classes provided positive returns for both the year and quarter. • Australian Shares (+45%) and Hedged Global Shares (+51.8%) performed strongly. (ref slide 15) • Hedged Global Shares outperformed unhedged Global Shares by +32.2% over the year on account of a rising $A. (ref slide 15) • 85/15 Portfolio debt returns (+12.4% for the year) have been driven by strong returns from higher credit risk bonds which continue to benefit from robust corporate earnings and buoyant investor risk appetites.

9. PIC Wholesale 85/15 – total returns

10. PIC Wholesale 85/15 – asset class contribution

11. PIC Wholesale 100/0 Portfolio • Highlights: • 5-year returns remain positive, and 1 year returns rebounded very strongly. • All asset classes provided positive returns for both the year and quarter. • Australian Shares (+45%) and Hedged Global Shares (+51.8%) performed strongly. (ref slide 15) • Hedged Global Shares outperformed unhedged Global Shares by +32.2% over the year on account of a rising $A. (ref slide 15)

12. PIC Wholesale 100/0 – total returns

13. PIC Wholesale 100/0 – asset class contribution

14. 2. The market environment

15. Market environment - asset class returnsfor the period ending 31 March 2010

16. Recovery, but still a complex and uncertain environment • A very uneven global recovery is underway • Solid, V-shaped upswing in the emerging economies • A modest U-shaped recovery in the US • Japan, Europe are still lagging • Australian economy continuing to improve, after an extraordinary period of outperformance • But unresolved imbalances still remain • Household indebtedness in the English-speaking world • Unsustainable budget deficits and rising public debt in the US, UK, and peripheral European economies • Inflexible currencies in key emerging economies (e.g. China) • Equity and credit market recovery is welcome, but prospective returns are now lower as a result (markets no longer cheap!)

17. 3. Drill down by asset class • Australian shares

18. Australian shares - performance • Highlights: • Absolute returns very strong since market recovery commenced in March 2009. • Rolling one year returns have exceeded market with a very high degree of consistency since September 2008 – a good result in varying market circumstances. • 7/10 appointed managers outperformed – a range of styles contributed. Stock selection will be more important from here. • Positive stock contributors: o/w News Corporation (+65%), Brambles (+53%), Fairfax Media (+77%), ANZ (+61%) which helped offset u/w Commonwealth Bank u/w (+62%).

19. Australian shares – total returns

20. Australian shares – excess returns

21. Australian Shares – manager contribution • Contributors: • Dimensional: o/w small caps, Macquarie Group, Amcor, OneSteel, Qantas, Alumina, Boral • Balanced: o/w Wesfarmers, Orica, ANZ Bank, Qantas • Maple-B. Abbott: o/w Fairfax Media, APN News & Media, News Corp., Lion Nathan (takeover) and u/w Woolworths • Concord: o/w James Hardie, ANZ Bank, Macquarie Group, JB Hi-Fi, Arrow Energy • JF Capital Partners:o/w Navitas, News Corp., Independence Group, Rio Tinto, u/w/ Telstra • Northcape: o/w ANZ Bank, Brambles, Incitec Pivot, Seek, Fairfax Media • Wallara: o/w Challenger, OneSteel, Orica, James Hardie, Macquarie Group, Seek • Detractors: • Lazard: o/w Telecom NZ, Telstra, Intoll, u/w Commonwealth Bank, Tabcorp • Northward: o/w Woolworths, Nufarm u/w ANZ Bank, Wesfarmers • Contango: o/w Orica, Seek, Lion Nathan, Oz Minerals, u/w Fosters

22. 3. Drill down by asset class • Global shares

23. Global shares - performance • Highlights: • All markets provided positive returns for the year, which was captured by the managers who all provided absolute double-digit returns for the year. • The portfolio benefited by having exposure to emerging markets, which returned +58.4% for the year. • It has been one year since the MLC Global Share strategy underwent an enhancement with the appointment of four new managers. The short term results from the new managers are in line with how they were expected to perform in a rising market. Sands Capital (+44.3%), Harding Loevner (+18.9%) and Tweedy, Browne (+18.6%) outperformed the benchmark, while Mondrian (+13.4%) lagged the broader market over the year.

24. Global shares – total returns

25. Global shares – excess performance

26. Global shares – manager contribution • Contributors: • Returns from Sands Capital (+25.9% over the benchmark) and Dimensional (+15.7% over the benchmark) were driven by the riskier parts of the market rallying the most during the year. • Harding Loevner's excess performance (+1.3% over the benchmark) for the quarter was driven by good stock selection in the Health Care, Information Technology, and Consumer Discretionary sectors. • Detractors: • Capital (-7.9% below the benchmark) and Walter Scott (-6.7% below the benchmark) lagged the market over the year in an environment where companies with higher risk levels rose above conservatively placed quality companies. • Mondrian (-3.0% below the benchmark) underperformed for the quarter due to allocations to the Spanish and Singaporean markets. Further, weak security selection within the US, UK, Australia and Germany had a negative impact on performance.

27. 3. Drill down by asset class • Australian property

28. Australian property - performance • Highlights: • The sector has stabilised due to massive capital raisings. A number of REITs have resumed development activity. • Strong return rebound but the sector index is still 58% below mid 2007 peak. • Strong track record of index outperformance intact (through variable market conditions) • The Fund’s one year performance was due largely to Resolution Capital’s outperformance (70% allocation) while Challenger underperformed (though still ahead over 3 and 5 years) • Ownership of non-Australian REITs via mandate discretion given to Resolution has been very rewarding in addition to Australian REIT stock selection.

29. Australian property – total returns

30. Australian property– excess returns

31. Australian property – manager contribution • Contributors: • Ownership of non-Australian REITs via mandate discretion given to Resolution has been very rewarding (e.g. US mall owner Simon Property Group, US diversified Vornado, Hong Kong Land and Manhattan office REIT SL Green). Other positives were o/w Challenger Diversified Prop. Group & Challenger Kenedix Japan Trust and u/w Dexus Property Group. • Detractors: • Underweight Goodman Group (recapitalised recently), Charter Hall Office REIT (formerly Macquarie Office Trust), Centro Properties, ING Industrial Trust and Mirvac Group. • Performance recovery of higher risk, poorer quality REITs which the managers tend to avoid

32. 3. Drill down by asset class • Global property

33. Global property - performance • Highlights: • Substantial performance recovery and return outcome for the year (though still negative on a 3 year basis). The US (+109%) and Singapore (+79%) REIT markets were the best regional market performers in local currency terms, Japan (+15%) was the lowest. • The PIC strategy captured the one year return surge, and more. • Largest country REIT market overweights remain Hong Kong, Singapore and Japan while USA, Australia and Europe continue to be underweighted. • Morgan Stanley continues to outperform strongly (40% of portfolio in Asian REITs). Resolution’s excess return recently went negative (price weakness of their largest holding Link REIT) while La Salle return is also below benchmark.

34. Global property – excess returns

35. Global property – manager contribution • Contributors: • Asian stock selection by Morgan Stanley (40% of their portfolio) • O/w Manhattan office specialist SL Green • U/w Australian REITs • Detractors: • O/w Japan • O/w Link REIT (Hong Kong retail, due to management change related price weakness), Unibail (Europe retail), Hammerson (UK)

36. 3. Drill down by asset class • Long-Term Absolute Return Strategy

37. Long-Term Absolute Return – performance • Highlights: • Returns were positive for most risky assets - with the exception of Australian REITs over the last quarter. Most notable were the positive returns from private markets and the multi-asset class real return strategy, managed by Ruffer. • The Portfolio underperformed the Neutral Strategy because we started to take a relatively defensive asset allocation stance in the first half of 2009 and market returns have continued to be strong. • This stance is consistent with LTAR’s objective of ensuring that the long-term return is robust regardless of market performance – this implies reducing risk exposure when the risk of a long-term adverse outcome is relatively high. We believe this continues to be the case. • LTAR’s longer-term returns are significantly ahead of the Neutral Strategy.

38. 3. Drill down by asset class • PIC Diversified Debt Fund • Please note that the debt strategy is slightly different for each diversified fund. These results will be included within the quarterly commentaries that will be available on the 3rd May

39. Diversified Debt assets - performance • Highlights: • The Fund’s returns have been driven by strong returns from higher credit risk bonds which continue to benefit from robust corporate earnings and buoyant investor risk appetites. • Credit spreads (the difference between yields on high yield bonds and government bonds) are now close to long-term averages so the prospective for further gains has reduced. Investments in non-investment grade bonds are a variable component of our debt strategy and we continue to assess the risk/return trade-off of investing and will make adjustments accordingly. • Almost all managers have outperformed their respective benchmarks over the year. • During the quarter we announced changes to the debt strategy that are designed to strengthen their defensive characteristics and improve our ability to preserve capital when growth assets are weak.

40. Diversified Debt – excess returns

41. Diversified Debt – sector contribution Due to changes to the debt strategy (announced 15 February 2010) occurring during the quarter, returns will be available for the new debt sectors from the June quarter onwards. • Contributors: • Global high yield bonds and global multi-sector bonds have continued to outperform lower credit risk bonds in Australia and globally. 1 year returns have been extremely strong after the market bottomed just over a year ago. • Global bonds, which have more exposure to higher credit risk securities, have outperformed Australian bonds over the year and the quarter. • Detractors: • The Fund is more exposed to interest rate changes because it’s a longer-term focussed strategy. It was therefore more affected by increasing government bond yields in almost all developed countries. • Global government bonds have been relatively weak this year due to concerns about the increase in supply. Governments, particularly in the developed world, have had to borrow massive sums to fund fiscal stimulus packages and the market is increasingly concerned about their ability to service their debt. The market is currently more concerned about some of the developed countries, like the US, defaulting than many companies and governments of emerging countries. • Over the year Australian inflation-linked bonds detracted from performance, however they were removed from the Diversified Debt Fund in September 2009. That’s why the graph doesn’t include a return for the last quarter.

42. Diversified Debt – manager contribution • Contributors: • The graph reflects the extremely strong returns achieved by managers in the global high yield and multi-sector bond sectors this past year. • All but one of the managers outperformed their respective benchmarks over the year because they maintained their exposure to higher credit securities during the recovery. • NSIM and UBS outperformed their Australian bond benchmarks, boosting returns from one of the weaker sectors this year. • Detractors: • Oaktree marginally underperformed in a sector that produced a massive return this year. Due to changes to the debt strategy (announced 15 February 2010) occurring during the quarter, returns from the 7 new managers will be available from the June quarter onwards.

43. 3. Drill down by asset class • PIC IncomeBuilderTM

44. PIC IncomeBuilderTM - performance • Highlights: • Quarterly distributions are still below those of 1-2 years ago due to the profit environment and companies (especially banks) acting cautiously re their dividend policies. Current year to date distribution is down 30% versus p.c.p. • Aggregate return (pre fees & tax) above benchmark for all periods shown above. • Positive stock contributors for the year include Lion Nathan (takeover late 2009), Fairfax Media and underweighting/not owning CSL, QBE Insurance and Woolworths. These and others offset overweighting Telstra, Fosters, Primary Health Care, Metcash and underweighting Commonwealth Bank.

45. PIC IncomeBuilderTM – distribution performance Financial Year End 30 June • Highlights: • The chart shows the Fund’s very strong history of growing underlying annual distribution (Primary objective to grow income achieved in 11 out of 12 years distribution history since inception to 2009). • Current year (2009-2010) distributions have so far been consistently lower than last year’s due to many companies deciding to reduce dividends in response to the GFC and associated earnings slowdown. • The Fund is well positioned for an anticipated recovery in earnings and dividends. Source: PIC Wholesale IncomeBuilderTM

46. PIC IncomeBuilderTM – manager contribution • Contributors: • O/w Lion Nathan (takeover late 2009), Fairfax Media and underweighting/not owning CSL, QBE Insurance and Woolworths. • Detractors: • O/w Telstra, Fosters, Primary Health Care, Metcash and u/w Commonwealth Bank.