PIC Investments Performance Update

1. PIC Investments Performance Update Year ended 30 June 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 30 June 2010, unless otherwise stated. • The specialist investment management companies are current as at 30 June 2010. Funds under management figures are as at 30 June 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 • Outlook • MLC’s Prospective Returns

4. 1. Overall results • Key Messages: • One year returns remain positive…; • …but market volatility has returned recently; • Appointed managers continue to enhance returns via their securities selection; • Strategic Overlay adjustments, aimed at reducing risks, have better positioned client portfolios for volatile markets; • Looking ahead, appointed managers are ideally placed to pick potential winners in a limited returns environment (volatile markets provide many opportunities for active managers).

5. PIC Wholesale 70/30 Portfolio • Highlights: • Returns over longer time periods remain positive, with 5 yr returns at +4.0% p.a. and 7 yr returns at +7.2% p.a. • Returns for the financial year were also strongly positive at +14.1%, however tempered by a negative final quarter. • We are continuing to monitor our Strategic Overlay positions in Unhedged Global Equity, Duration and Extended Credit, we assess these positions against medium term risk adjusted return expectations. • All asset classes performed strongly over the year with Property and LTAR the standout performers. • LTAR posted strong absolute performance for the year of +20.0% with all asset classes contributing strongly. LTAR’s current defensive positioning has also added value over the final quarter. (ref slide 33) • Both Domestic and Global Property posted strong absolute performance for the year with the hedging on Global Property also contributing strongly for the year. (ref slide 24 & 29) • The hedging story was continued in Global Equity where Global Equity hedged outperformed unhedged for the year, this story was reversed over the final quarter as the $A depreciated against a basket of currencies. (ref slide 18 & 19) Source: MLC Investment Management

6. PIC Wholesale 70/30 – total returns Source: MLC Investment Management

7. PIC Wholesale 70/30 – asset class contribution Source: MLC Investment Management

8. PIC Wholesale 85/15 Portfolio • Highlights: • Returns over longer time periods remain positive, with 5 yr returns at +3.2% p.a. and 7 yr returns at +7.0% p.a. • Returns for the financial year were also strongly positive at +14.4%, however tempered by a negative final quarter. • We are continuing to monitor our Strategic Overlay positions in Unhedged Global Equity, Duration and Extended Credit, we assess these positions against medium term risk adjusted return expectations. • All asset classes performed strongly over the year with Property and LTAR the standout performers. • LTAR posted strong absolute performance for the year of +20.0% with all asset classes contributing strongly. LTAR’s current defensive positioning has also added value over the final quarter. (ref slide 36) • Both Domestic and Global Property posted strong absolute performance for the year with the hedging on Global Property also contributing strongly for the year. (ref slide 24 & 29) • The hedging story was continued in Global Equity where Global Equity hedged outperformed unhedged for the year, this story was reversed over the final quarter as the $A depreciated against a basket of currencies. (ref slide 18 & 19) Source: MLC Investment Management

9. PIC Wholesale 85/15 – total returns Source: MLC Investment Management

10. PIC Wholesale 85/15 – asset class contribution Source: MLC Investment Management

11. PIC Wholesale 100/0 Portfolio • Highlights: • Returns over longer time periods remain positive, with 5 yr returns at +2.6% p.a. and 7 yr returns at +6.9% p.a. • Returns for the financial year were also strongly positive at +14.4%, however tempered by a negative final quarter. • We are continuing to monitor the Strategic Overlay position in Unhedged Global Equity, we assess this position against medium term risk adjusted return expectations. • All asset classes performed strongly over the year with LTAR and Hedged Global Equities the standout performers. • LTAR posted strong absolute performance for the year of +20.0% with all asset classes contributing strongly. LTAR’s current defensive positioning has also added value over the final quarter. (ref slide 33) • Global Equity hedged outperformed unhedged for the year, this story was reversed over the final quarter as the $A depreciated against a basket of currencies. (ref slide 18 & 19) • Domestic Equities performed strongly for the year (+13.8 p.a.) although this was tempered by a negative final quarter. (ref slide 13) Source: MLC Investment Management

12. PIC Wholesale 100/0 – total returns Source: MLC Investment Management

13. PIC Wholesale 100/0 – asset class contribution Source: MLC Investment Management

14. 2. Market environment - asset class returnsfor the period ending 30 June 2010

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

16. Australian shares - performance • Highlights: • Three consecutive months of market declines led to the negative quarter return. However, the one year return remains positive. • The Strategy’s one year pre-fees & tax return (+13.8%) was 0.7% better than market index return. Rolling one year returns have been consistently above index since January 2010, a good outcome in such volatile market circumstances. • Manager returns vs index were mixed for the year with 6/10 managers underperforming (note that many of these managers have outperformed over longer periods). However, the magnitude of the return above index by JF Capital Partners, Maple-Brown Abbott, Balanced Equity Management & Lazard helped the Strategy outperform. • MLC’s managers have been opportunistic, using the market volatility and recent weakness to add to existing holdings or introduce new stocks at cheaper prices. Principal purchases were bank stocks, Brambles, Amcor, ASX, Lihir Gold. Source: MLC Investment Management

17. Australian shares – total returns Source: MLC Investment Management

18. Australian shares – excess returns Source: MLC Investment Management

19. Australian Shares – manager contribution • Contributors for the year: • Balanced: o/w ANZ Bank, AXA Asia Pacific, Boral u/w CSL, ASX • Maple-Brown Abbott: o/w Centennial Coal, ANZ Bank, News Corp. Resmed, APN News & Media • JF Capital Partners: o/w Navitas, Transfield Services, News Corp., Healthscope u/w/ Telstra • Lazard: o/w Flight Centre, James Hardie, News Corp. Ridley, Suncorp-Metway • Detractors for the year: • Northward: o/w Nufarm, Telstra, u/w ANZ Bank, Lihir Gold, Wesfarmers • Contango: o/w Brambles, Downer EDI, AWE Ltd, Lend Lease, u/w Lihir Gold • Dimensional: o/w Bluescope Steel, Lend Lease, Qantas, Incitec, Sigma Pharmaceuticals • Concord: o/w Gunns, Primary Health Care, BlueScope Steel, u/w Comm. Bank, Wesfarmers • Northcape: o/w Origin Energy, National Aust. Bank, u/w Commonwealth Bank, Wesfarmers, • Wallara: o/w Telstra, Brambles, Woolworths, u/w Wesfarmers, Leighton Source: MLC Investment Management

20. Global shares

21. Global shares - performance • Highlights: • Absolute returns were positive for the year, but negative for the quarter, driven by market sentiment turning sour due to European woes. • The strategy benefited from exposure to Emerging Markets that returned +20.1% for the year, outperforming developed markets which returned +12.1%, on an unhedged basis. • Portfolio has been defensively positioned for the most part of the year being over-weight non-cyclical businesses, while being materially underweight financials • The quarter was dominated by bad news of the BP oil spill, and the strategy was hurt due to the small allocation (0.49%) to it via Mondrian and Capital. Source: MLC Investment Management

22. Hedged Global shares - performance • Highlights: • Absolute returns were positive for the year, but negative for the quarter, driven by market sentiment turning sour due to European woes. • The strategy benefited from exposure to Emerging Markets that returned +20.1% for the year, outperforming developed markets which returned +12.1%, on an unhedged basis. • The $A rose by +4% for the year, but lost momentum in the June quarter to reverse by -6.1%, when measured against a basket of currencies. • Portfolio has been defensively positioned for the most part of the year being over-weight non-cyclical businesses, while being materially underweight financials • The quarter was dominated by bad news of the BP oil spill, and the strategy was hurt due to the small allocation (0.49%) to it via Mondrian and Capital. Source: MLC Investment Management

23. Global shares – total returns Source: MLC Investment Management

24. Global shares – excess performance Source: MLC Investment Management

25. Global shares – manager contribution • Contributors for the year: • Tweedy, Browne benefited through industrial holdings, which provided positive returns in a difficult quarter and year. • Harding Loevner’s best performer was Autonomy Corporation, a London listed enterprise software company. • Sands benefited by being overweight Emerging Asia during the quarter, while Las Vegas Sands and salesforce.com contributed for the year. • Detractors for the year: • Mondrian and Capital were hurt by exposure to BP, and under performed the benchmark for both the year and quarter. • Capital’s main detractors for the year came from the utilities (Electricite de France, Veolia Environnement), information technology (Research in Motion) and materials (Monsanto) sectors. • Mondrian’s allocations to the German, UK and French markets along with, weak security selection within UK, United States and France had a negative impact on performance. Source: MLC Investment Management

26. Australian property

27. Australian property - performance • Highlights: • The performance recovery of the Australian REIT sector continues. The sector’s +20.3% one year return was the second highest in the Australian share market. • The performance recovery of second-tier lower quality REITs has brought PIC’s strategy returns (pre fees and tax) back towards benchmark. PIC’s managers have tended to avoid these REITs, which was very beneficial when the poorer quality REITs fell the most 1-2 years ago. • Resolution Capital has tended to be the more consistent outperformer (aided by their ownership of Global REITs), with Challenger’s returns falling below benchmark. • Ownership of non-Australian REITs via the mandate discretion given to Resolution has been very rewarding as GREIT returns have generally been superior to AREITs. As a result, the strategy’s 3 and 5 year pre fees and tax returns are significantly better than index. Source: MLC Investment Management

28. Australian property – total returns Source: MLC Investment Management

29. Australian property– excess returns Source: MLC Investment Management

30. Australian property – manager contribution • Contributors for the year: • Ownership of non-Australian REITs via mandate discretion given to Resolution has been very rewarding as the performance of Global REITs has tended to be superior to Australian REITs for much of the last 2.5 years. • Of the Australian REITs chosen for the strategy, underweight Westfield and Commonwealth Property Office Fund were beneficial. • Detractors fpr the year: • The performance recovery and subsequent high returns of higher risk, poorer quality REITs were a significant negative contributor as the appointed managers tend to remain underweight or in some cases avoid these REITs. • Overweight Charter Hall Retail, Challenger Diversified Property Group Trust, Carindale Property Trust & underweight Mirvac Group. Source: MLC Investment Management

31. Global property

32. Global property - performance • Highlights: • The Global REIT one year market return remains substantial with all regional REIT markets except Japan recording positive returns. • The PIC strategy return of +32.1% (hedged) was substantial in magnitude but significantly below benchmark. • The one year return of all three managers underperformed the index return, the first time this has occurred since the inception of the strategy. While underperformance is disappointing, we retain our strong belief in the appointed managers, who collectively have positively contributed to three and five year returns. • Contributors to the underperformance include the underweight exposure to US REITs which recorded the highest return of global REIT markets. The overweight to Japan, the only major REIT market to record a negative one year return to 30 June also proved detrimental though stock selection in this market has contributed positively to returns until recently. Source: MLC Investment Management

33. Global property – excess returns Source: MLC Investment Management

34. Global property – manager contribution • Contributors: • Underweight the Australian market, which underperformed most of its global peers • Overweight Hong Kong REITs • Detractors: • Country allocations, particularly underweight the US REIT market (which was the strongest global market performer for the year) and overweight relatively weaker performers such as Japan and the UK were detrimental to one year market relative returns. • The performance strength of second-tier lower quality REITs who have rallied strongly were also detrimental as the appointed managers have tended to prefer quality, financially strong REIT exposures. Source: MLC Investment Management

35. Long-Term Absolute Return Strategy

36. Long-Term Absolute Return – performance • Highlights: • Returns for the quarter were negative before fees and taxes (-3.1% p.a.), the most significant absolute contribution for the quarter came from our Pure Alpha strategy (+9.8%), managed by Bridgewater. • Absolute returns for all asset classes were positive for the year, however this was tempered by negative equity market performance in the final quarter. • Relative to the neutral strategy, the portfolio performed stronglyfor the quarter. This strong outcome is the result of the defensive positioning within the fund. Strong contributions came from the underweight position in hedged global equity and the overweight position in Australian Inflation Linked Bonds. Since inception returns have exceeded the neutral strategy by +3.1% p.a (before fees and taxes). • Since inception (Dec 05) the absolute return of the portfolio has been +3.0% p.a. (before fees and taxes)., this result is consistent with the long term risk profile of the Portfolio. Source: MLC Investment Management

37. PIC Diversified Debt Fund • Please note that the debt strategy is slightly different for each PIC Wholesale Portfolio. Details are included in the Annual Review reports.

38. Diversified Debt assets - performance • Highlights: • 1 year returns are still very strong reflecting the solid returns achieved from maintaining exposure to higher credit risk securities in 2009. Global high yield and multi-sector bonds benefited significantly from investors’ renewed appetite for risk. However, returns from these higher credit risk sectors have tempered in 2010. Concerns over sovereign debt levels and the fragility of the global economic recovery led to renewed market volatility in bond markets. • Despite the increased volatility, returns for the quarter were solid. The Fund fulfilled its role as a diversifier against growth assets, particularly when growth assets are weak and falling. • The more challenging conditions over recent months have not deterred our managers with all but one producing a positive return this quarter, and all positive for the year. Source: MLC Investment Management

39. Diversified Debt – excess returns Source: MLC Investment Management

40. Diversified Debt – sector contribution • Contributors: • Global multi-sector bonds and global high yield bonds outperformed lower risk bonds in Australia and globally over the year. Most of this strong performance occurred in 2009, with 2010 proving a more difficult environment for higher risk securities. • Australian bonds benefited from falling yields at the longer end of the interest rate curve over the year. • Global bonds also benefited from falling yields across all maturity terms in the major developed countries over the year. Due to changes to the debt strategy (announced 15 February 2010) returns for new debt sectors are only available for the quarter. 1-year returns will be available from March 2011. Source: MLC Investment Management

41. Diversified Debt – manager contribution • Contributors: • Global high yield bond managers produced stellar returns this year. Although credit spreads have widened in recent months, hence the low returns for the quarter, the prospective for further gains has reduced as spreads are close to long-term averages. • The 2 Australian bond managers, Antares and UBS, performed well over the year and the quarter. Antares positioned their portfolio to perform strongly in an environment of rising global risk aversion, which paid-off. UBS were short duration which helped their performance, however their medium-term view is positive for credit which hurt their short-term performance. • Detractors: • The only detractor was Franklin Templeton over the quarter. Despite their currency positions detracting from returns they believe their longer-term view will play out and therefore took advantage of lower prices to add to their currency positions. Due to changes to the debt strategy (announced 15 February 2010) returns for new managers are only available for the quarter. 1-year returns will be available from March 2011. Source: MLC Investment Management

42. PIC IncomeBuilderTM

43. PIC IncomeBuilderTM - performance • Highlights: • Quarterly distributions remain below those of the last 1-2 years due to the uncertain environment which has caused many companies to review dividend policy in favour of capital preservation. • The aggregate Fund return before fees and tax remains above index for all periods. • Maple-Brown Abbott’s stock selection has been the principal driver of income and total returns. • The five most positive stock contributors for the year were Coca-Cola Amatil, ANZ Bank, AXA Asia Pacific and not owning QBE Insurance Group and CSL. Source: MLC Investment Management

44. PIC IncomeBuilderTM – distribution performance • Highlights: • The 5.77 cents per unit (cpu) 2009-2010 distribution was 20% lower than the previous year’s. However, the capital gains component (0.04 cpu) was negligible and was entirely concessional (tax advantaged) gains. The distribution was also 94% franked. • The lower cpu for 2009-10 reflects a full year of lower company dividends received as many companies have chosen to reduce their dividends until the economic environment becomes more certain. For example, ANZ Bank’s last annual dividend was 25% lower than the previous year’s. • This year’s lower distribution represents only the two year out of the Fund’s 13 year history where the underlying distribution was below the previous year’s. Financial Year End 30 June Source: PIC Wholesale IncomeBuilderTM

45. PIC IncomeBuilderTM – manager contribution • Contributors: • Both Maple-Brown Abbott and Vanguard outperformed the All Industrial’s return in the year. Vanguard’s return was 0.1% higher than index while Maple-Brown Abbott’s aggregate active stock selection outperformed the index by 0.6% (before fees and tax). • For the year, the most positive stock selection contributors were overweight Coca-Cola Amatil, ANZ Bank, AXA Asia Pacific and underweight QBE Insurance and CSL. • Detractors: • For the year: overweight Primary Health Care, Brambles, Telstra, Aristocrat Leisure and underweight Commonwealth Bank Source: MLC Investment Management

46. 4. Outlook • Recovery, but still a complex and uncertain environment • Renewed unease as the latest stage (sovereign risk) of the GFC unfolds. • The world still faces serious issues which will take time to resolve – we are nowhere near returning to a ‘normal’ growth cycle. • Policy makers are on a “tightrope” – tighten fiscal policy too soon or stay loose too long (we’re more worried about the former). • The investment environment will remain volatile, so diversification is important. • In equities, strong and cashed up companies will prosper so good investment opportunities exist: • Active stock selectors are best placed to pick them, and; • Stock selection will be very important in a potentially lacklustre market returns environment

47. The global economy

48. G4 growth in summary: worse recession in decades followed by an anaemic recovery Source: Datastream, MLC Investment Management

49. V-shaped recovery in Asia and other Emerging Markets • Production levels in Asia and Brazil are back above previous peaks, and exports have rebounded strongly • Many Emerging economies had a relatively good GFC, are in excellent financial health, and are well-placed to grow strongly Sources: Datastream, MLC Investment Management. LATAM includes Brazil, Argentina, Mexico, and Chile. Eastern Europe includes Russia, Poland, The Czech Republic, Romania, and Hungary. Emerging Asia is China, India, Indonesia, Malaysia, The Philippines, South Korea, Taiwan, and Thailand. Export data are calculated in IMF SDRs, not US Dollars.

50. Early stage recovery in consumer and business spending? Source: Datastream, MLC Investment Management