Magellan Global Fund Magellan Infrastructure Fund JULY 2007

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Units in the Fund are issued by Magellan Asset Management (ABN 31 120 593 946, AFSL 304301).

Before making an investment decision in relation to the Fund, investors should obtain and read

the Product Disclosure Statement for the Funds dated 23 July 2007 which can be obtained from

Magellan’s website at www.magellangroup.com.au. Any general advice about the Funds in this

document have been prepared without taking into account your personal objectives, financial

situation or needs. You should consider the appropriateness of the information having regard to

your personal circumstances.

Introduction

MAgeLLAN FiNANciAL groUP wAS ForMeD iN 2006

ASX LiSteD with A MArket cAPitALiSAtioN oF over $230 MiLLioN

SPeciALiSt iNveStMeNt MANAger with gLoBAL FocUS

NeXt geNerAtioN BoUtiqUe

toDAY’S AgeNDA

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The Best of Both WorldsBoutique Structure with focuSed inveStment depth

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(xx) shows years in of investment/industry experience, while the average is provided per team.

chairmanPortfolio ManagerHamish Douglass

(17)

Deputy chairman/cioPortfolio ManagerChris Mackay (19)

Financial Services Team (7)Sector head – Dom giuliano (14)

vihari ross (5)henry Pennington (3)

Infrastructure Team (15)Portfolio Manager – gerald Stack (15)Dennis eagar (20)Alex hone (10)

Consumer Team (11)Sector head – Jacqueline Fernley (14)

Nikki thomas (15)Michael Young (6)

Dan ellis (8)

Global Team/ General ResearchMichael Leonard – New York (5)

Magellan Investment Team[05]

As at 30 June 2007

NAMe YeArS eXPerieNce

Prior eXPerieNce qUALiFicAtioNS

hamish Douglass 17 Deutsche Bank, eL & c Baillieu, Schroders Bcom

chris Mackay 19 UBS, Schroders Bec, LLB(hons), LLM, gDipAppFin

gerald Stack 15 capital Partners, AiDc, ord Minnett Bec, MBA, cA

Dennis eagar 20 capital Partners, Macquarie Bank, Leighton holdings Ltd

BA, DipProjMgt, gDipAppFin, gDipFinPlanning

Alex hone 10 capital Partners, Schroders, National Aust Bank BA, MAppFin

Dom giuliano 14 Morgan Stanley, tillinghast-towers Perrin Bec, MBA, FiAA

vihari ross 5 Ausbil Dexia, commonwealth investment Mgt Mcom (Finance), AiAA

henry Pennington 3 eL & c Baillieu Bec, cA, cFA

Jacqueline Fernley 14 Suncorp investment Mgt, credit Suisse Bcom, LLB, gDipAppFin, cFA

Nikki thomas 15 Bt Securities, Deutsche Bank Bcom, cA, cFA

Michael Young 6 Macquarie Bank Bcom (hons), gDipAppFin

Dan ellis 8 wesfarmers BSc, Beng, FFin

Michael Leonard 5 caldwell Asset Mgt, Bell Potter BBus, cA

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MAgeLLAN gLoBAL FUND

Portfolio manager: hamish Douglass global equities fund high conviction: 25-50 outstanding global companiesFocused research: Financial services, consumer & retail, infrastructure (>60% of MSci)MFg capital commitment: $15 Million

MAgeLLAN iNFrAStrUctUre FUND

Portfolio Manager: gerald Stack global infrastructure securities fund high conviction: 15-35 global infrastructure companies Unmatched research depth with outstanding track record MFg capital commitment: $5 Million

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Our Investment OfferFocused expertise, conviction, alignment

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the Australian stock market represents a very small proportion of the total listed investment universe (less than 3% of the MSci) and has significantly outperformed

The Case For Global Diversification

Source: Bloomberg

totAL retUrNS % P.A.

5 YeArS P.A. 10 YeArS P.A.

ASX 300 (AUD) 18.50% 13.40%

S&P 500 (USD) 8.50% 4.70%

FtSe 100 (gBP) 8.70% 3.90%

DAX 30 (eUr) 8.50% 3.00%

Nikkei 225 (YeN) 9.30% 1.00%

MSci world (Local) 14.30% 4.80%

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The Case For Global DiversificationAustrAliAn DollAr neAr An 18 yeAr high

Source: rBA

0.4000

0.4500

0.5000

0.5500

0.6000

0.6500

0.7000

0.7500

0.8000

0.8500

0.9000

Apr-98

Aug-98

Dec-98

Apr-99

Aug-99

Dec-99

Apr-00

Aug-00

Dec-00

Apr-01

Aug-01

Dec-01

Apr-02

Aug-02

Dec-02

Apr-03

Aug-03

Dec-03

Apr-04

Aug-04

Dec-04

Apr-05

Aug-05

Dec-05

Apr-06

Aug-06

Dec-06

Apr-07

USD

trade weighted

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The Case For Global DiversificationNarrow performaNce across resources aNd fiNaNcials

Source: Morgan Stanley capital international

MSCI Australia

46.25%

24.00%

MSCI World 13.11%

25.07%

Resources (Energy, Metals &Mining)Financials

Other Materials

Industrials

Consumer Discretionary

Consumer Staples

Health Care

Information Technology

Telecommunication Services

Utilities

MSCI World 13.11%

25.07%

Resources (Energy, Metals &Mining)Financials

Other Materials

Industrials

Consumer Discretionary

Consumer Staples

Health Care

Information Technology

Telecommunication Services

Utilities

MSCI World 13.11%

25.07%

Resources (Energy, Metals &Mining)Financials

Other Materials

Industrials

Consumer Discretionary

Consumer Staples

Health Care

Information Technology

Telecommunication Services

Utilities

MSci world

MSci Australia

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Magellan Global FundOur Investment ApprOAch

iNveStMeNt oBJectiveS

to achieve superior risk adjusted investment returns over the medium to long-term

to minimise the risk of permanent capital loss

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iNveStMeNt PhiLoSoPhY

our investment Philosophy is to find outstanding companies at attractive prices

outstanding companies have sustainable competitive advantages which translate into returns on capital materially in excess of their cost of capital for a sustained period of time

our investments are focused upon outstanding companies in our 3 focus sectors when they are available at attractive prices

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Characteristics of Outstanding Companies

WIDe eConoMIC MoaT: Protection around an economic franchise (i.e. sustainable competitive advantages) which enables a company to earn returns materially in excess of the cost of capital for a sustained period of time

HIGH Re-InveSTMenT poTenTIal: Ability to re-invest into the core franchise at high incremental returns on capital

loW buSIneSS RISk: translates into high predictability of future cash flows and earnings

loW aGenCy RISk: risk associated with the redeployment of free cashflow generated by a business

An ideal investment will have a number of favourable attributes which reinforce and amplify each other, illustrating what

Charlie Munger describes as the “Lollapalooza effect”

Investment Committee Determination

Investment Universe PortfolioStocks

Value AnalysisMargin of

Safety

ApprovedInvestments

Identification of Attractive Investments

Shortlist of Investments

Detailed Assessment

Fundamental Screening

Stock Scoring Matrix

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Magellan Global FundInvestment Process

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Magellan Global FundPortfolio ConstruCtion

QuantitativeAssessment

Qualitative Assessment

Assessment Criteria

A larger circle implies a greater portfolio weighting. Note: this diagram is indicative only.

Smaller

Greater

Discount toIntrinsic Value

Low High

PortfolioConstruction

Matrix

We weight the portfolio towards our highest conviction investment opportunities whilst maintaining sufficient diversification

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Magellan Global FundPortfolio as at 17 July 2007

Top 10 Holdings as at 17 July 2007

American express company 7.1%

eBay inc 5.9%

Yum! Brands inc 5.4%

Nutrisystem inc 4.8%

Abercrombie & Fitch company 4.2%

wells Fargo & company 3.8%

Lowe’s companies inc 3.2%

wal-Mart Stores inc 3.2%

tesco Plc 3.0%

Bank of America corporation 2.8%

harley-Davidson inc 2.6%

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Magellan Infrastructure FundWhy Invest In Infrastructure securItIes

Stable Cash Flow Generation – infrastructure assets generate stable cash flows irrespective of economic and market conditions

Investment Arbitrage – the infrastructure asset class is relatively new and this results in attractive investment opportunities becoming available from time to time because investors have less experience in assessing such investments

New Investment Opportunities – the ongoing requirement for infrastructure renewal, combined with the desire of governments to limit public sector indebtedness, is expected to lead to a consequent increase in private infrastructure investment opportunities

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“…in an inflationary world a toll bridge would be a great thing to own if it was unregulated… Because you have laid out the capital costs. You build the bridge in old dollars and you don’t have to keep replacing it.”

– BUFFett: the MAkiNg oF AN AMericAN cAPitALiSt (Lowenstein, 1995)

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Magellan Infrastructure FundOur Investment ApprOAch

investment objectives:

> to achieve superior risk adjusted investment returns over the medium to long-term

> to minimise the risk of permanent capital loss

our investment Philosophy is to find outstanding companies at attractive prices. outstanding companies have sustainable competitive advantages which translate into returns on capital materially in excess of their cost of capital for a sustained period of time

the Magellan infrastructure Fund:

> has a limited number of securities (15-35) with the portfolio weighted towards our highest conviction ideas

> focuses on identifying mis-priced investments through a deep, thorough and rigorous research process

> is managed by a team with an average involvement in global infrastructure investment of more than 10 years

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we invest in a limited number

of outstanding infrastructure

companies where we assess the market

price is below intrinsic value.

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Magellan Infrastructure FundIndIcatIve PortfolIo as at 17 July 2007

Indicative Sector Weights as at 17 July 2007

Airports 7%

toll roads 57%

Ports 17%

Utilities 9%

Diversified 10%

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MAgeLLAN oFFerS:

global diversification

A unique investment approach, targeting outstanding businesses, purchased at attractive valuations

A focused approach which targets superior risk adjusted return whilst minimising risk of permanent capital loss

on the ground presence and transparency for Australian investors

Boutique flexibility with deep resources and investment experience

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Summary

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Outstanding business + attractive prices = superior returns over time

“We want to buy a great business, defined as having a high return on capital for a long period of time, where we think management will treat us right. We like to buy at 40 cents on the dollar, but will pay a

lot closer to $1 on the dollar for a great business”

wArreN BUFFett 2007 Berkshire hathaway, Annual general Meeting