JF Capital Partners Limited ¾

Manages Australian shares for MLC, since 2001

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Manages $4 billion as at 31 December 2007

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Origins dating back to 1998

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50% owned by employees of the firm

Why has MLC chosen JF Capital Partners? MLC use JF Capital Partners because of the rigour of their investment process which emphasises very detailed industry and company analysis, leading to high conviction portfolios with pronounced growth characteristics that complement other MLC manager portfolios. JF Capital Partners applies their process with discipline, incorporating sensible and well considered process refinements along the way.

Philosophy on investing JF Capital Partners has a unique investment philosophy, that explicitly considers the strategic growth options which may be inherent in some businesses. While their process pays careful attention to company valuations, the long term horizon they use when considering a company's future growth potential can at times result in portfolios that exhibit relatively pronounced growth characteristics. The Australian share portfolios JF Capital Partners manages for MLC typically comprise around 40 stocks, which represent JFCP’s highest conviction ideas. JF Capital Partners firmly believes that equity markets are efficient in the long term. However, in the short term, market inefficiencies caused by money flows, market sentiment changes and irrational Michael Fitzsimmons investor behaviour can mean the market’s pricing of a company Chief Investment Officer may not reflect its true or intrinsic value. JF Capital Partners believes these short-term inefficiencies can be exploited by accurately assessing the intrinsic value of companies through in-depth proprietary research and being prepared to hold those positions in the portfolio until the market’s efficiency prevails, which may take months or years.

Investment process JF Capital uses the Trinity Investment Process™. This process has been developed by their investment team applying the soundest strategic, valuation, and portfolio theory into the Australian market to answer three fundamental investment questions. ‰ ‰ ‰

What are the key strategic and organisational factors that impact a company’s intrinsic value? What is the probability-weighted return and risk profile of a company? What is an efficient portfolio weight for a company based on this return and risk profile relative to other companies?

The first two stages contribute most of the value added in terms of expected return and risk. The portfolio construction stage is mainly about risk control. The primary objective of the first part of the process is to identify "which companies JF Capital Partners wish to own". That is, companies that in the long term have strategic growth options. The considerations JF Capital Partners assesses in their strategic analysis of companies involve both company specific and industry considerations. They are designed to assess the characteristics of the industry in which the company operates the company’s competitive position within the industry and the growth prospects of both the company and the industry. Components of JF Capital Partner’s strategic analysis include: a review of industry structure; the presence or otherwise of barriers to entry; competition within the industry (monopoly, oligopoly); industry dynamics (e.g. the power of buyers versus sellers); industry outlook; the company’s competitive positioning in the industry; and, the sustainability of its competitive edge. JF Capital Partner’s analysis of a company’s organisational features includes assessing the performance targets management are aiming to achieve; management incentives to achieve company performance targets; the internal operating structure; and, the culture of the company. The detailed assessment of these factors allows the analysts to determine the key forecasting parameters for their company valuations i.e. revenue growth, operating profit margins, capital efficiency, competitive advantage period, and therefore a company’s cash flow growth profile and strategic growth options. The primary objective of the company valuation process is to establish "what price they are prepared to buy (sell) at". Each company's intrinsic value is calculated by discounting its future free cash flows, based on JF Capital Partners’ forecasts. A portfolio optimisation process determines the third stage of setting stock weights. Stock weightings are a function of risk and return inputs from the research process. The diagram below shows an overview of our investment process, including the information sources we use, the stock selection part of our process; and the portfolio construction part of our process.

Information Sources Company management, Brokers, Competitors, Complementors, Customers, Suppliers, Industry, Media

Strategic Analysis Horizontal, vertical & corporate boundaries, Industry & competitive analysis, Positioning & dynamics

Operating Value DCF value

+

Organisational Analysis Incentives & agency, Structure, Power & culture

Strategic Value Real option value

=

Intrinsic Value Operating value + Strategic value

Strategic analysis Valuation

Portfolio Construction Probability weighted return, Variance, Co-variance Portfolio range = +/ - Index weight ~ Tracking error Buy(sell) = Actual versus Model weight

Portfolio construction

}

Stock Selection

Investment people

Name

Responsibility

Years in industry

Years at firm

Years responsible for this mandate

Formal qualifications

Michael Fitzsimmons

Chief Investment Officer – global macro economic research, portfolio management, team management, business development, investment process development

17

8

8

B.Bus., F.A.S.I.A.

Pierre Prentice

Head of Research – valuation process, new investment opportunities, research review, domestic macro economic research

21

8

4

B.Com. & Admin., A.C.A.

Steven Semczyszyn

Senior Research Analyst / Portfolio Manager – stock/industry, portfolio management

8

8

8

M.Fin., B.Com., B.Sc.

Shane Priest

Senior Research Analyst – stock/industry research

17

8

8

B.Bus. A.S.I.A.

Paul Turnbull

Senior Research Analyst – stock/industry research

8

5

5

B.Bus.(Hons.)

Peter Harris

Senior Research Analyst – stock/industry research

9

2

2

B.Ec.

5

2

2

B.Com.(Hons.), CFA

6

2

2

B.Sc.IM.,MBA

2

2

2

B.Sc.ECE.,MBA

David Cibura

Jean Dieudonne

Hardeep Hunjan

Research Analyst –

stock/industry research Research Analyst –

stock/industry research Research Analyst –

stock/industry research

Brendan Sproules

Research Analyst –

5

1

1

B.Com. A.S.I.A.

Aisling Twomey

Research Analyst

4

0

0

B.Bus. (Hons.), MBS (Hons.)

Wesley Campbell

Senior Dealer

7

6

6

B.Bus. A.S.I.A.

stock/industry research stock/industry research

Investments Investment Advisory Team Prof. Robert Officer Capit al Resear ch Lt d Investment process

Wesley Campbell Age 30, Exp: 7yrs Ind. / 6yrs JFCP Senior Deal er Dealing Market intelligence Broker review

Prof. Bruce Grundy Univer sit y of Mel bour ne Depar t ment of Finance Portfolio construction Valuation Prof. Paul Kerin Mel bour ne Business School Strategic/ organisational analysis

Michael Fitzsimmons Age 43, Exp: 17yrs Ind. / 8yrs JFCP Chief Invest ment Of f icer Team management Portfolio management Investment process

Steven Semczyszyn Age 32, Exp: 8yrs Ind. / 8yrs JFCP Senior Por t f ol io Manager Portfolio management

Pierre Prentice Age 52, Exp: 21yrs Ind. / 8yrs JFCP Head of Resear ch Research reviews New investment opportunities

Research Team A Industrials

Research Team B Financials

Research Team C Industrials

Research Team D Resources

Automobiles & Components, Commercial Services & Supplies, Consumer Services, Information Technology, Media, Real Estate Management & Development, Telecommunications Services, Utilities Miscellaneous [ASX]

Banks, Diversified Financials, Health Care, Highways & Railtracks, Insurance

Capital Goods, Chemicals,Construction Materials, Consumer Durables & Apparel, Consumer Staples, Containers & Packaging, Paper & Forest Products, Retailing, Transportation, Miscellaneous [BIL, DOW, ABS, MFS]

Energy, Metals & Mining

Shane Priest Age 41, Exp: 17yrs Ind. / 8yrs JFCP Senior Resear ch Anal yst

Brendan Sproules Age 32, Exp: 5yrs Ind. / 1yr JFCP Senior Resear ch Anal yst

Paul Turnbull Age 31, Exp: 8yrs Ind. / 5yrs JFCP Senior Resear ch Anal yst

Peter Harris Age 40, Exp: 9yrs Ind. / 2yr JFCP Senior Resear ch Anal yst

Jean Dieudonne Age 35, Exp: 6yrs Ind. / 2yrs JFCP Resear ch Anal yst

Aisling Twomey Age 28, Exp: 4yrs Ind. / 0yrs JFCP Resear ch Anal yst

David Cibura Age 31, Exp: 5yrs Ind. / 2yrs JFCP Resear ch Anal yst

Hardeep Hunjan Age 33, Exp: 2yrs Ind. / 2yrs JFCP Resear ch Anal yst

Stock story INVOCARE (IVC) JFCP made its initial investment in IVC when it was floated out of private equity in December 2003. Its listing was keenly anticipated by senior analyst Shane Priest whose industry contacts had alerted him to the quality of the business and its imminent listing. IVC is the largest funeral operator in Australia (and now Singapore). It has a long operating history with a strong “culture of compassion” and stable of brands such as White Lady, Simplicity, Le Pine, and Guardian. The stock’s more obvious strategic attractions were its strong positioning in an industry favoured by an ageing population. Less obvious were IVC’s scope to consolidate the industry with IVC the natural consolidator (valued as a separate strategic option), and the company’s very low operating risk (given the absence of any correlation of deaths to economic activity). JFCP felt the market under-rated the consolidation option, and especially the company’s low risk, the value of which is much better trapped in JFCP’s DCF approach to valuation than traditional earnings multiple based valuation techniques. The detailed bottom-up approach to the valuation task and JFCP’s internal review process also resulted in the identification of potential value in a trust facility offered by IVC for the prepayment of funerals. Quantification of future cash flows from the trusts’ investment earnings less the costs of delivering the funeral services on average 14 years later attributed material “hidden” value in this off balance sheet asset. JFCP believes it is only over the last year or so that the sharemarket has begun to appreciate the extent of the value inherent in the prepaid funeral facility and the company’s low operating risk.

The information contained in this material has been prepared by MLC Limited (ABN 90 000 000 402) and MLC Investments Limited (ABN 30 002 641 661) and is intended as general information only and is current as at 31 March 2007. It has not been prepared to take into account individual investment objectives, financial situation or investment needs. Prior to making an investment decision, you should assess whether the information in this material is appropriate to your particular investment objectives, financial situation or investment needs. It is recommended that you obtain financial advice specific to your situation before making any financial investment or insurance decision. Past performance is not indicative of future performance. The future value of your investment may rise and fall with changes in the market. An investment with MLC Limited or MLC Investments Limited does not represent a deposit with, or a liability of National Australia Bank Limited (ABN 12 004 044 937) or other member company of the National group of companies and is subject to investment risk including possible delays in repayment and loss of income and capital invested. None of MLC Limited or MLC Investments Limited or other member companies in the National Group of companies, or appointed managers guarantee the capital value or performance of any specific investments selected by investors except where specified in the current disclosure document.