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Chairman’s Letter

12 March 2010

Dear Investor

With New Zealand’s demand for new infrastructure growing each year, and the Government’s commitment to improving the country’s productivity while maintaining high standards of public services, there is an increasing need to deliver essential infrastructure to New Zealand in a cost effective and efficient manner.

Morrison & Co, one of New Zealand’s leading infrastructure investment managers, has established the Public Infrastructure Partners LP (the PIP Fund) exclusively to invest in Social Infrastructure Assets through Public-Private Partnerships (PPPs). In a strong endorsement of the PPP opportunity in New Zealand (and also in Australia) and Morrison & Co’s investment expertise, the New Zealand Superannuation Fund has already committed capital of $100 million to the PIP Fund and has an option to commit a further $100 million in the future.

For smaller investors who are unable to invest directly in the PIP Fund, we have created the New Zealand Social Infrastructure Fund (NZSIF), which will invest alongside the New Zealand Superannuation Fund and other institutional investors on substantially the same terms. NZSIF’s primary focus will be its investment in the PIP Fund. It will have its own Board, independent of Morrison & Co, to ensure best practice corporate governance (which will be modelled on NZX governance and reporting disciplines).

Investments made by the PIP Fund will target PPP projects that deliver Social Infrastructure Assets (such as hospitals, schools or university facilities, water treatment facilities and prisons) to central or local government agencies under contracts that run for 15 to 35 (or more) years.

PPPs are relatively new to New Zealand. They have, however, been successfully utilised by governments in the United Kingdom, Australia and Canada for a number of years. International experience using a PPP model to procure infrastructure has demonstrated that projects have generally been delivered on a more timely and cost eff ective basis than traditional infrastructure procurement methods, and have allowed governments to succeed in delivering essential social services to the public.

Further, investors in PPP projects have benefi ted from attractive, stable returns under the long-term contractual nature of PPP arrangements, often with a secure counterparty such as a central or local government agency. Revenues from Social Infrastructure PPP arrangements are typically linked to the availability of an asset for use, rather than being linked to usage of, or demand for, an asset (which is oft en the case for toll roads or airports). Once the PIP Fund is fully invested, an investment in NZSIF can off er investors attractive long-term stable, partially inflation-linked returns.

I recommend you consider an investment in NZSIF as part of a balanced investment portfolio.

Yours sincerely

Kim Ellis

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