Memorandum of Understanding with the Australian Infrastructure Fund

David Neal, Chief Investment Officer at the Future Fund said:

"Australian infrastructure assets are attractive to the Future Fund because of their strong correlation with Australian economic growth, inflation protection and relative high levels of earnings certainty. These characteristics provide a strong fit with the Fund's mandate to achieve high, risk adjusted returns over the long term.

"Over the last five years, the Fund has been building its Tangible Assets program. The infrastructure program is part of that and is now valued at over $4.3 billion or 5.6% of the portfolio. We continue to seek opportunities to increase our exposure to quality Australian and international infrastructure assets."

The proposal is consistent with the Future Fund's long stated strategy, and will further enhance the Fund's direct exposure to quality domestic infrastructure assets. The Future Fund already directly holds 16.8% of Australia Pacific Airports Corporation.

The Future Fund has given careful consideration to its proposal. The MOU provides exclusivity and sets out the process to close the transaction, including the requirement for a period of confirmatory due diligence and final approval by the Future Fund Board of Guardians.

The proposal to acquire AIX's assets for $2 billion represents a 10% premium to the AIX Directors' published valuation of its assets as at 30 June 2012 and provides AIX securityholders with certainty of value.

Any transaction would require the support of the Board of Directors of Australian Infrastructure Fund Limited and the sub-committee of independent directors of Hastings Funds Management Limited, as well as the approval of AIX securityholders.