mlc investment performance review
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MLC investment performance review. Updated to 31 March 2010. General advice warning and disclaimer. - PowerPoint PPT PresentationTRANSCRIPT
MLC investment performance review
Updated to 31 March 2010
General advice warning and disclaimerAny 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.
AGENDA
1. Overall results
2. The market environment
3. Drill down by asset class
Slide 3
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.
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
MLC Horizon 4 - Balanced Portfolio
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a. MLC MasterKey Super / Gold Star / Business Super(before taking into account fees and tax) MLC MasterKey Super Fundamentals(takes into account fees and tax) MLC MasterKey Super Gold Star / Business Super*(takes into account fees and tax)*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star. The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
1.7 24.7 -2.6 3.6
1.8 25.6 -2.1 -
-1.028.72.6 6.0
MLC Horizon 4 – total returns
Slide 6
Historical Absolute Performance MLC MasterKey Super Gold Star Horizon 4 Balanced Portfolio
(after taking into account fees and tax)
-30%
-20%
-10%
0%
10%
20%
30%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Ret
urn
% p
.a.
1 Year Ended 31 March 5 Years Ended 31 March
MLC Horizon 4 – asset class contribution
Slide 7
Contribution to Total Return by Asset ClassMLC Horizon 4 Balanced Portfolio
(before taking into account fees and tax)
-5
0
5
10
15
20
25
30
35
AustralianShares
Global Shares- Hedged
Global Shares- Unhedged
GlobalProperty
Securities
Global PrivateAssets
LTAR DebtSecurities
Total
Re
turn
Co
ntr
ibu
tio
n %
(an
nu
alis
ed f
or
per
iod
s g
reat
er t
han
1 y
ear)
3 months to Mar-2010 1 year to Mar-2010 3 years to Mar-2010 5 years to Mar-2010
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
MLC Horizon 5 - Growth Portfolio
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a. MLC MasterKey Super / Gold Star / Business Super(before taking into account fees and tax) MLC MasterKey Super Fundamentals(takes into account fees and tax) MLC MasterKey Super Gold Star / Business Super*(takes into account fees and tax)
1.8 29.6 --3.5
*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star.The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
5.632.62.6 -2.7
28.6 -4.01.7 3.4
MLC Horizon 5 – total returns
Slide 9
Historical Absolute Performance MLC MasterKey Super Gold Star Horizon 5 Growth Portfolio
(after taking into account fees and tax)
-30%
-20%
-10%
0%
10%
20%
30%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ret
urn
% p
.a.
1 Year Ended 31 March 5 Years Ended 31 March
MLC Horizon 5 – asset class contribution
Slide 10
Contribution to Total Return by Asset ClassMLC Horizon 5 Growth Portfolio
(before taking into account fees and tax)
-5
0
5
10
15
20
25
30
35
AustralianShares
Global Shares- Hedged
Global Shares- Unhedged
GlobalProperty
Securities
Global PrivateAssets
LTAR DebtSecurities
Total
Re
turn
Co
ntr
ibu
tio
n %
(an
nu
alis
ed f
or
per
iod
s g
reat
er t
han
1 y
ear)
3 months to Mar-2010 1 year to Mar-2010 3 years to Mar-2010 5 years to Mar-2010
2. The market environment
Asset Class Performance
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
AustralianShares
GlobalShares
(hedged)
GlobalShares
(unhedged)
EmergingMarkets
AustralianProperty
Securities
GlobalProperty
Securities
AustralianBonds
GlobalBonds
(hedged)
Global HighYield Bonds
(hedged)
Inflation-LinkedBonds
Cash
Quarter to Mar-10 % p.a. 1 Year to Mar-10 % p.a. 3 Year to Mar-10 % p.a. 5 Year to Mar-10 % p.a.
Index data source: Australian Shares - S&P/ASX 300 Accumulation Index; Global Shares (hedged) - MSCI All Countries (A$ hedged); Global Shares (unhedged) - MSCI All Countries; Australian Property Securities - S&P/ASX 300 LPT Accumulation Index; Global Property Securities - UBS Global REIT (hedged); Australian Bonds - UBS Composite Bond (all mats); Global Bonds (hedged) - BCGA Global Agg (hedged); Global High Yield Bonds (hedged) - BCGA US Corp HY BB/B (hedged), Australian Inflation Linked Bonds - UBS Inflation Linked Bonds (all mats); Cash - UBS Australian Bank Bill;
Market environment - asset class returnsfor the period ending 31 March 2010
Slide 12
Recovery, but still a complex and uncertain environment
• A very uneven global recovery is underwaySolid, V-shaped upswing in the emerging economiesA modest U-shaped recovery in the USJapan, Europe are still laggingAustralian economy continuing to improve, after an extraordinary
period of outperformance
• But unresolved imbalances still remainHousehold indebtedness in the English-speaking worldUnsustainable budget deficits and rising public debt in the US, UK,
and peripheral European economiesInflexible 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!)
3. Drill down by asset class
Australian shares
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
MLC Australian Share Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC Masterkey Super Fundamentals / Gold Star / Business Super(before taking into account fees and tax)MLC Masterkey Super Fundamentals(takes into account fees and tax)MLC Masterkey Super Gold Star / Business Super*(takes into account fees and tax)S&P/ASX 300 Accumulation Index(S&P/ASX 200 Index prior to Nov 2002)
1.3 8.0
41.1 -
0.9 40.0 -1.9 7.0
8.6
1.1
*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star. The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
45.0
-1.2
1.3 -1.3
-2.641.9
Australian shares – total returns
Slide 16
Historical Absolute Performance MLC MasterKey Super Gold Star Australian Share Fund
(after taking into account fees and tax)
-30%
-20%
-10%
0%
10%
20%
30%
40%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Ret
urn
% p
.a.
1 Year Ended 31 March 5 Years Ended 31 March
Australian shares – excess returns
Slide 17
Rolling Performance in Excess of the IndexMLC Australian Share Fund
(before taking into account fees and tax)
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
De
c-9
0
Jun
-91
De
c-9
1
Jun
-92
De
c-9
2
Jun
-93
De
c-9
3
Jun
-94
De
c-9
4
Jun
-95
De
c-9
5
Jun
-96
De
c-9
6
Jun
-97
De
c-9
7
Jun
-98
De
c-9
8
Jun
-99
De
c-9
9
Jun
-00
De
c-0
0
Jun
-01
De
c-0
1
Jun
-02
De
c-0
2
Jun
-03
De
c-0
3Ju
n-0
4
De
c-0
4Ju
n-0
5
De
c-0
5Ju
n-0
6
De
c-0
6Ju
n-0
7
De
c-0
7Ju
n-0
8
De
c-0
8Ju
n-0
9
De
c-0
9
An
nu
alis
ed
Ex
ce
ss
Re
turn
(S
&P
/AS
X 3
00
Ac
cu
mu
lati
on
Ind
ex
)
1 Year 3 Years 5 Years
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, SeekDetractors:• 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
Manager Performance in Excess of the IndexMLC Australian Share Fund
(before taking into account fees and tax)
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Maple-BrownAbbott
Lazard Dimensional Contango Concord JF Capital Wallara BalancedEquity
Northcape NorthwardCapital
AustralianShare Fund
Ex
ce
ss
Re
turn
vs
S&
P/A
SX
30
0 A
cc
um
ula
tio
n I
nd
ex
(an
nu
alised
fo
r p
eri
od
s g
reate
r th
an
1 y
ear)
Quarter to Mar-10 1 Year to Mar-10 3 years to Mar-10 5 Years to Mar-10
3. Drill down by asset class
Global shares
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
MLC Global Share Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC MasterKey Super Fundamentals / Gold Star / Business Super(before taking into account fees and tax)MLC MasterKey Super Fundamentals(takes into account fees and tax)
MLC MasterKey Super Gold Star / Business Super*
(takes into account fees and tax)MSCI All Country World Index(MSCI World Index prior to July 2002)
16.2 -9.5 -1.3
*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star.The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
18.31.2 1.0
19.6
-9.0
1.0 -8.6
-7.9
-0.2
0.5
17.0 -
-0.4
Global shares – total returns
Slide 21
Historical Absolute Performance MLC MasterKey Super Gold Star Global Share Fund
(after taking into account fees and tax)
-30%
-20%
-10%
0%
10%
20%
30%
40%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Ret
urn
% p
.a.
1 Year Ended 31 March 5 Years Ended 31 March
Global shares – excess returns
Slide 22
Rolling Performance in Excess of the IndexMLC Global Share Fund
(before taking into account fees and tax)
-15%
-10%
-5%
0%
5%
10%
15%
20%
De
c-9
0
Jun
-91
De
c-9
1Ju
n-9
2
De
c-9
2
Jun
-93
De
c-9
3
Jun
-94
De
c-9
4
Jun
-95
De
c-9
5Ju
n-9
6
De
c-9
6
Jun
-97
De
c-9
7
Jun
-98
De
c-9
8
Jun
-99
De
c-9
9Ju
n-0
0
De
c-0
0
Jun
-01
De
c-0
1
Jun
-02
De
c-0
2
Jun
-03
De
c-0
3Ju
n-0
4
De
c-0
4
Jun
-05
De
c-0
5
Jun
-06
De
c-0
6Ju
n-0
7
De
c-0
7Ju
n-0
8
De
c-0
8
Jun
-09
De
c-0
9
An
nu
alis
ed
Ex
ce
ss
Re
turn
(M
SC
I All
Co
un
try
Wo
rld
Ind
ex
)
1 Year 3 Years 5 Years
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
Manager Performance in Excess of the IndexMLC Global Share Fund
(before taking into account fees and tax)
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
CapitalInternational
WellingtonManagement
Walter Scott HardingLoevner
Sands Capital Mondrian Tweedy,Browne
Dimensional Global ShareFund
Ex
ce
ss
Re
turn
vs
MS
CI
All
Co
un
try
Wo
rld
In
de
x(a
nn
ual
ised
fo
r p
erio
ds
gre
ater
th
an 1
yea
r)
Quarter to Mar-10 1 Year to Mar-10 3 years to Mar-10 5 Years to Mar-10
3. Drill down by asset class
Australian property
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
MLC Property Securities Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC MasterKey Super Fundamentals / Gold Star / Business Super(before taking into account fees and tax)MLC MasterKey Super Fundamentals(takes into account fees and tax)MLC MasterKey Super Gold Star / Business Super*(takes into account fees and tax)S&P/ASX 300 Property Accumulation Index(S&P/ASX 200 Property Index prior to Nov 2006)
-1.3 39.0 -19.7 -5.6
42.7
40.2
-0.9 -18.9
-1.2
-3.6
-19.3 -
*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star. The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
-23.342.0-1.6 -7.2
Australian property – total returns
Slide 26
Historical Absolute PerformanceMLC MasterKey Super Gold Star Property Securities Fund
(after taking into account fees and tax)
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Ret
urn
% p
.a.
1 Year Ended 31 March 5 Years Ended 31 March
Australian property– excess returns
Slide 27
-6%
-4%
-2%
0%
2%
4%
6%
8%
De
c-9
0
Ju
n-9
1
De
c-9
1
Ju
n-9
2
De
c-9
2
Ju
n-9
3
De
c-9
3
Ju
n-9
4
De
c-9
4
Ju
n-9
5
De
c-9
5
Ju
n-9
6
De
c-9
6
Ju
n-9
7
De
c-9
7
Ju
n-9
8
De
c-9
8
Ju
n-9
9
De
c-9
9
Ju
n-0
0
De
c-0
0
Ju
n-0
1
De
c-0
1
Ju
n-0
2
De
c-0
2
Ju
n-0
3
De
c-0
3
Ju
n-0
4
De
c-0
4
Ju
n-0
5
De
c-0
5
Ju
n-0
6
De
c-0
6
Ju
n-0
7
De
c-0
7
Ju
n-0
8
De
c-0
8
Ju
n-0
9
De
c-0
9
An
nu
ali
se
d E
xc
es
s R
etu
rn
(S&
P/A
SX
30
0 L
PT
In
de
x)
1 Year 3 Years 5 Years
Rolling Performance in Excess of the IndexMLC Property Securities Fund
(before taking into account fees and tax)
-6%
-4%
-2%
0%
2%
4%
6%
8%
Dec
-90
Jun-
91D
ec-9
1Ju
n-92
Dec
-92
Jun-
93D
ec-9
3Ju
n-94
Dec
-94
Jun-
95D
ec-9
5Ju
n-96
Dec
-96
Jun-
97D
ec-9
7Ju
n-98
Dec
-98
Jun-
99D
ec-9
9Ju
n-00
Dec
-00
Jun-
01D
ec-0
1Ju
n-02
Dec
-02
Jun-
03D
ec-0
3Ju
n-04
Dec
-04
Jun-
05D
ec-0
5Ju
n-06
Dec
-06
Jun-
07D
ec-0
7Ju
n-08
Dec
-08
Jun-
09D
ec-0
9
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
Manager Performance in Excess of the IndexMLC Property Securities Fund
(before taking into account fees and tax)
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Resolution Capital Challenger Property Securities Fund
Ex
ce
ss
Re
turn
vs
S&
P/A
SX
30
0 L
PT
Ind
ex
(An
nu
alis
ed f
or
per
iod
s g
reat
er t
han
1 y
ear)
Quarter to Mar-10 1 Year to Mar-10 3 years to Mar-10 5 Years to Mar-10
3. Drill down by asset class
Global property
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
MLC Global Property Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC MasterKey Super Fundamentals(before taking into account fees and tax)MLC MasterKey Super Fundamentals(takes into account fees and tax)UBS Global Investors Index (hedged) 6.8 81.9 - -
6.5 - -
6.0
85.2
--87.4
Global property – excess returns
Slide 31
Rolling Performance in Excess of the IndexMLC Global Property Fund
(before taking into account fees and tax)
-4%
-2%
0%
2%
4%
6%
8%
Se
p-0
6
Ma
r-0
7
Se
p-0
7
Ma
r-0
8
Se
p-0
8
Ma
r-0
9
Se
p-0
9
Ma
r-1
0
An
nu
alis
ed
Ex
ces
s R
etu
rn
UB
S R
ea
l Es
tate
Inv
es
tors
Tru
st
Ind
ex
(h
ed
ge
d)
1 Year
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 REITsDetractors:• O/w Japan• O/w Link REIT (Hong Kong retail, due to management change related
price weakness), Unibail (Europe retail), Hammerson (UK) Slide 32
Manager Performance in Excess of the IndexMLC Global Property Fund
(before taking into account fees and tax)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
LaSalle InvestmentManagement
Morgan Stanley Resolution Capital Global Property Fund
Ex
ces
s R
etu
rn v
s U
BS
Re
al
Es
tate
In
ves
tors
Tru
st
Ind
ex
(an
nu
ali
se
d f
or
pe
rio
ds
gre
ate
r th
an
1 y
ea
r)
Quarter to Mar-10 1 Year to Mar-10 3 years to Mar-10 5 Years to Mar-10
3. Drill down by asset class
Global private assets
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
MLC Global Private Assets
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC Global Private Assets(diversified fund component,before taking into account fees and tax)MSCI All Country World Index Hedged into AUD (MSCI World Index Hedged prior to July 2002)
5.3
11.611.58.3 6.0
-3.952.85.4
3. Drill down by asset class
Long-Term Absolute Return Portfolio
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
MLC Long-Term Absolute Return Portfolio
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a. MLC MasterKey Super Fundamentals / Gold Star / Business Super
(before taking into account fees and tax)
MLC MasterKey Super Fundamentals(after taking into account fees and tax) MLC MasterKey Super Gold Star / Business Super*(after taking into account fees and tax)
MLC LTAR Neutral Strategy
(before taking into account fees and tax)
Inflation (CPI)** 0.5 2.1 2.9 -
-1.532.64.1
--6.251.73.3
**The Consumer Price Index figures are currently only available to 31 December 2009
*MLC MasterKey Business Super commenced on 5 December 2005 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star. The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
2.8
2.7
--1.329.4
--1.928.4
3. Drill down by asset class
Diversified Debt Fund
Note: Horizon 1 to 5 debt strategy results are in the detailed quarterly commentary documents.
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
MLC Diversified Debt Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC MasterKey Super Fundamentals(before taking into account fees and tax)MLC MasterKey Super Fundamentals(takes into account fees and tax)50% UBS Composite Bond Index (All Maturities)and 50% Barclays Capital Global Aggregate Bond Index (hedged)
6.6
-2.4
1.7
6.42.0
9.2 -
7.5
--6.6
Diversified Debt – excess returns
Slide 39
Rolling Performance in Excess of the IndexMLC Diversified Debt Fund
(before taking into account fees and tax)
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Jun-
08
Sep
-08
Dec
-08
Mar
-09
Jun-
09
Sep
-09
Dec
-09
Mar
-10
An
nu
alis
ed E
xces
s R
etu
rn A
bo
ve
50%
UB
S C
om
p B
on
d /
50%
BC
GA
In
dex
Quarter 1 Year
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.
Slide 40
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.
Contribution to Total Return by Asset ClassMLC Diversified Debt Fund
(before taking into account fees and tax)
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
AustralianBonds
AustralianInflation-LinkedBonds
GlobalBonds
(GlobalGovernment
Bonds)
(Global Non-Government
Bonds)
Global Multi-SectorBonds
Global HighYield Bonds
Global BankLoans
GlobalMortgages
Total
Ret
urn
Co
ntr
ibu
tio
n %
(an
nu
alis
ed f
or
per
iod
s g
reat
er t
han
1 y
ear)
Quarter to Mar-10 1 Year to Mar-10
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.Slide 41
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.
Manager Absolute PerformanceMLC Diversified Debt Fund
(before taking into account fees and tax)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Antares UBS GoldmanSachs
WellingtonManagement
Rogge Amundi FranklinTempleton
PIMCO W. R. Huff Oaktree ShenkmanCapital
Stone Tower
DomesticComposite
DomesticComposite
GlobalSovereign
GlobalCredit
GlobalCredit
GlobalMulti-Sector
GlobalMulti-Sector
GlobalMulti-Sector
GlobalHigh Yield
Debt
GlobalHigh Yield
Debt
GlobalBankLoans
Non-Agency
Mortgages
Ma
na
ge
r P
erf
orm
an
ce
%(a
nn
ual
ised
fo
r p
erio
ds
gre
ater
th
an 1
yea
r)
Quarter to Mar-10 1 Year to Mar-10
3. Drill down by asset class
MLC IncomeBuilderTM
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
MLC IncomeBuilderTM Fund
Performance to 3 Months 1 Year 3 Years 5 Years31-Mar-10 % % % p.a. % p.a.MLC MasterKey Super Fundamentals / Gold Star / Business Super(before taking into account fees and tax)MLC MasterKey Super Fundamentals(takes into account fees and tax)MLC MasterKey Super Gold Star / Business Super*(takes into account fees and tax)S&P/ASX 200 All Industrials Accumulation Index 1.4 43.8 -5.6 5.4
*MLC MasterKey Business Super commenced on 30 April 2001 and issues the same unit price as that reported for MLC MasterKey Superannuation Gold Star.The returns outlined above do not include allowance for fee rebates you may be entitled to should you be part of a large employer plan.
1.2 37.8 -3.8 5.1
1.5 -3.3 6.4
-1.3
43.9
-3.238.9
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.
1.86 2.46 2.23 2.73 3.04 2.83 2.984.24 4.87
6.74 7.64 8.21 8.71 8.97
1.68
3.59
5.34
0.43
0.35
1.310.99
0.02
0.35
0.08
0
2
4
6
8
10
12
14
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Financial Year End 30 J une
Cen
ts P
er S
hare
Income Buy Backs Total Capital Gains
Slide 44
Source: MLC IncomeBuilderTM Unit Trust
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
Manager Performance in Excess of the Index
MLC IncomeBuilderTM
(before taking into account fees and tax)
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Vanguard Maple-Brown Abbott IncomeBuilderTM
Ex
ce
ss
Re
turn
vs
S&
P/A
SX
20
0 A
ll In
du
str
ials
Ind
ex
(an
nu
alis
ed f
or
per
iod
s g
reat
er t
han
1 y
ear)
Quarter to Mar-10 1 Year to Mar-10 3 years to Mar-10 5 Years to Mar-10