MLC investment performance review

1. MLC investment performance review Updated to 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. AGENDA • Overall results • The market environment • Drill down by asset class Slide 3

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. MLC Horizon 4 – Super • 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 12) • Hedged Global Shares outperformed unhedged Global Shares by +32.2% over the year on account of a rising $A. (ref slide 12) • Global Private Assets have continued to rally in the latest quarter, one year return is now +11.5%. (ref slide 34) • Horizon 4 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. Slide 5

6. MLC Horizon 4 – total returns Slide 6

7. MLC Horizon 4 – asset class contribution Slide 7

8. MLC Horizon 5 – Super • 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 12) • Hedged Global Shares outperformed unhedged Global Shares by +32.2% over the year on account of a rising $A. (ref slide 12) • Global Private Assets have continued to rally in the latest quarter, one year return is now +11.5%. (ref slide 34) • Horizon 5 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. Slide 8

9. MLC Horizon 5 – total returns Slide 9

10. MLC Horizon 5 – asset class contribution Slide 10

11. 2. The market environment

12. Market environment - asset class returnsfor the period ending 31 March 2010 Slide 12

13. 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!)

14. 3. Drill down by asset class Australian shares

15. Australian shares - performance • Highlights: • Absolute one year return is very strong, capturing the market recovery which commenced in March 2009. • Rolling one year returns have been above index 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 (+62%). Slide 15

16. Australian shares – total returns Slide 16

17. Australian shares – excess returns Slide 17

18. 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-Brown 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 Slide 18

19. 3. Drill down by asset class Global shares

20. 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. Slide 20

21. Global shares – total returns Slide 21

22. Global shares – excess returns Slide 22

23. 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. Slide 23

24. 3. Drill down by asset class Australian property

25. Australian property - performance • Highlights: • The sector has stabilised due to massive capital raisings. A number of REITs have resumed development activity. • Strong return rebound by the sector but it 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. Slide 25

26. Australian property – total returns Slide 26

27. Australian property– excess returns Slide 27

28. 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. Slide 28

29. 3. Drill down by asset class Global property

30. 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%) the lowest. • The MLC 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’s return is also under benchmark. Slide 30

31. Global property – excess returns Slide 31

32. 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) Slide 32

33. 3. Drill down by asset class Global private assets

34. Global private assets – performance • Highlights: • One year return of +11.5% on a hedged basis reflects the strength of the $A and the positive momentum of valuations. • The strategy has provided positive absolute returns since inception (+8.7% p.a.) and represents a premium of +5.6% when compared to the listed global share markets reflected by the MSCI ACWI return of +3.6%. When comparing this relative performance, listed markets are more volatile than unlisted assets. • The majority of MLC’s Managers are first or second quartile and have acquired quality assets that have proven more resilient through the crisis. • China is continuing to present some attractive opportunities and MLC has backed Managers seeking to invest in select state owned enterprises. Slide 34

35. 3. Drill down by asset class Long-Term Absolute Return Portfolio

36. 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. Slide 36

37. 3. Drill down by asset class Diversified Debt Fund Note: Horizon 1 to 5 debt strategy results are in the detailed quarterly commentary documents.

38. 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. Details are available at mlc.com.au/debtstrategy Slide 38

39. Diversified Debt – excess returns Slide 39

40. Diversified Debt – sector contribution 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. 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. Slide 40

41. 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 underpeformed 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. Slide 41

42. 3. Drill down by asset class MLC IncomeBuilderTM

43. MLC 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. • 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. Slide 43

44. MLC IncomeBuilderTM – distribution performance • Highlights: • The above distribution chart (Fund inception to only 2009) shows the Fund’s strong history of growing underlying annual distribution (Primary objective to grow income achieved in 12 out of 14 years distribution history since inception). • Current year (2009-10, not displayed above) 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. Slide 44 Source: MLC IncomeBuilderTM Unit Trust

45. MLC 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. Slide 45