MAGELLAN FINANCIAL GROUP LIMITED — Proxy Solicitation & Information Statement 2007

Dec 27, 2007

ACN 108 437 592

==> picture [260 x 59] intentionally omitted <==

NOTICE OF EXTRAORDINARY GENERAL MEETING &

EXPLANATORY MEMORANDUM

Approvals required in order for the proposed acquisition of 100% of the securities in New Privateer Holdings Limited, and the subsequent internalisation of the Management Services Agreement between Magellan Financial Group Limited and NPH Funds Pty Limited, to proceed.

Date of meeting: 29 January 2008 Time: 4.00 pm Place: Magellan Investor Presentation Room, Level 7, 1 Castlereagh Street Sydney, New South Wales

The Independent Directors of Magellan Financial Group Limited recommend that shareholders vote in favour of all the resolutions at the Extraordinary General Meeting.

This document is important and requires your immediate attention. It should be read in its entirety. If you are in doubt as to what you should do, please consult your investment, financial or other professional adviser.

Important information

This document is a Notice of Extraordinary General Meeting and contains the resolutions that will be voted upon at the Extraordinary General Meeting on 29 January 2008. The resolutions relate to shareholder approvals that are being sought in relation to the proposal referred to on the cover of this document, and which are described in more detail in this document.

You should read this Notice of Meeting carefully, including the Explanatory Memorandum and Independent Expert’s Report which form part of it, before you decide whether and how to vote on the resolutions. If you are in doubt as to what you should do, please consult your investment, financial or other professional adviser.

If you are unable to vote in person at the Extraordinary General Meeting, please complete the enclosed proxy form and return it by 4.00pm on 27 January 2008 in accordance with the instructions.

The information outlined in this Notice of Meeting is not financial product advice and does not take into account your investment objectives, financial situation or particular needs.

Defined Terms

Certain terms used in this Notice of Meeting are defined in the Glossary found on page 44.

Independent Expert’s Report

Grant Thornton Corporate Finance Pty Limited has prepared the Independent Expert’s Report set out in Annexure A, and takes responsibility for that report. None of MFG, its officers, its employees or its advisers assume any responsibility for the accuracy and completeness of the information contained in the Independent Expert’s Report except to the extent of information given to Grant Thornton Corporate Finance Pty Limited by any of those persons.

Forward Looking Statements

Some of the statements appearing in this Notice of Meeting may be in the nature of forward looking statements. You should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to

the industries in which MFG and NPH operate as well as general economic conditions, prevailing exchange rates and interest rates and conditions in the financial markets. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement. None of MFG, its officers, its employees, its advisers or any person named in this booklet with their consent or any person involved in the preparation of this Notice of Meeting makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any such statement. The forward looking statements in this Notice of Meeting reflect views held only as at the day before this Notice of Meeting.

This Notice of Meeting is dated 28 December 2007.

Details of Extraordinary General

Meeting

Time: 4.00 pm Date: 29January 2008 Location: Magellan Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney Key Dates	Time: 4.00 pm Date: 29January 2008 Location: Magellan Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney Key Dates
4.00 pm on27 January 2008	Last time and date for receipt of proxy forms
4.00 pm on27 January 2008	Time and date for establishing entitlement to vote at Extraordinary General Meeting
4.00pm on29 January 2008	Extraordinary General Meeting

Contact Information

If you have any questions in relation to the Extraordinary General Meeting, please call David Simpson or Leo Quintana at MFG on +61 2 8114 1888.

Page i

TABLE OF CONTENTS

Letter to Magellan Financial Group Shareholders	2
NOTICE OF EXTRAORDINARY GENERAL MEETING	6
1. Items of Business	6
2. Voting Entitlements	8
3. Voting Exclusions	8
4. Proxies	9
5. Voting by Attorney	10
6. Corporations	10
7. Registration	10
EXPLANATORY MEMORANDUM	11
1. The Proposal	11
2. Overview of NPH AND NPH Funds	20
3. Effect of Proposal ON MFG'S Financial Position	20
4. Independent Director’s Recommendation	32
5. Resolutions to be Considered at the Meeting	32
GLOSSARY	44
ANNEXURE A - INDEPENDENT EXPERT'S REPORT	47
ANNEXURE B – TERMS OF ISSUE OF MFG 2016 OPTIONS	120
ANNEXURE C – TERMS OF ISSUE OF MFG CLASS B SHARES	127
ANNEXURE D – TERMS OF SHARE BUY-BACK AGREEMENTS WITH NPH AND NPH FUNDS	139

Page 1

LETTER TO MAGELLAN FINANCIAL GROUP SHAREHOLDERS

28 December 2007

Dear Shareholder,

Enclosed with this letter is a Notice and Explanatory Memorandum for an Extraordinary General Meeting of Magellan Financial Group Limited ( MFG ) to be held on 29 January 2008 at Magellan’s Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney, commencing at 4.00 pm.

The purpose of the meeting is to consider and, if thought fit, approve a number of resolutions which must be passed in order for the proposed acquisition by MFG of New Privateer Holdings Limited ( NPH ), an ASX-listed company, and the internalisation of the existing Management Services Agreement between MFG and NPH Funds Pty Limited ( NPH Funds ) (together, the Proposal ), to proceed.

Background

The background to the Proposal is as follows:

• Under the terms of the existing Management Services Agreement between MFG and NPH Funds dated 21 November 2006 ( MSA ), MFG is required to pay NPH Funds a quarterly base fee of 0.3125% of the market capitalisation of MFG, and annual performance fees calculated by reference to total shareholder return to MFG shareholders over the relevant period. Essentially total shareholder return is the increase in market capitalisation of MFG over the relevant period plus dividends and other entitlements over the period less any new capital raised during the period.

• Depending on the MFG share price at the time the annual performance fee is calculated, significant performance fees may become payable to NPH Funds over the life of the MSA. MFG cannot terminate the MSA until 21 November 2016 (except for cause) and, upon such termination after 21 November 2016, MFG is required to pay NPH Funds a cash amount equal to 12 times the most recent annual base fee and annual performance fee.

• NPH Funds is a company 60% owned by NPH and 40% owned by a company controlled by Hamish Douglass, the Chairman of MFG.

• NPH shareholders include:

• Chris Mackay, the Deputy Chairman of MFG, who has, through his investment company, an approximate 36% shareholding in NPH (equivalent to approximately 55% on a fully diluted basis); and

• Hamish Douglass, who has, through his investment company, an approximate 2% shareholding (on a fully diluted basis) in NPH.

Page 2

• On a fully diluted basis, Chris Mackay and Hamish Douglass would therefore together have an approximate 74.2% indirect economic interest in NPH Funds.

• In August this year, Hamish Douglass and Chris Mackay advised the Boards of MFG and NPH that they did not wish to participate in any performance fees under the MSA, and that ultimately MFG would seek to simplify the arrangements between MFG, NPH Funds, NPH and Hamish Douglass and Chris Mackay. Work was then commenced on developing a proposal which would allow them to forego that participation, while at the same time recognising the legitimate interest of other shareholders in NPH (approximately 25.8% indirect economic interest on a fully diluted basis) in maintaining their economic interest in the MSA.

• The outcome of this work was the announcement by MFG on 5 October 2007 of a proposal to make takeover offers for all of the securities in NPH and, if those offers are successful, MFG would then acquire the 40% of NPH Funds held by Hamish Douglass' investment company. NPH and NPH Funds would then be wholly owned subsidiaries of MFG, and the MSA would be fully internalised. These offers were formally made on 5 December 2007. The proposal was subsequently revised following discussions between MFG and NPH, which resulted in the previous offers for NPH securities being withdrawn (with ASIC's consent) and replaced with a revised proposal that was announced jointly by MFG and NPH on 10 December 2007.

Key Elements of the Proposal

The key elements of the Proposal are:

• The consideration being offered by MFG under the takeover offer for NPH Shares (which were despatched to NPH shareholders on 24 December 2007), per NPH Share, is 1.95 MFG Ordinary Shares plus 0.33 MFG 2016 Options

• The consideration being offered by MFG under the takeover offer for NPH Second Options (also despatched on 24 December 2007), per NPH Second Option, is 3 MFG 2011 Options.

Internalisation Proposal

If the Takeover Offers are successful so that MFG owns 100% of NPH, MFG intends to then internalise the MSA between NPH Funds and and MFG (the Internalisation Proposal ) by acquiring the 40% shareholding in NPH Funds owned by Hamish Douglass' investment company in return for the issue of MFG Ordinary Shares and a new class of shares, MFG Class B Shares. The Class B Shares carry no rights to distributions but have certain rights to convert to MFG Ordinary Shares. The consideration has been structured to exclude any compensation for possible performance fees under the MSA. The terms of this acquisition are summarised in section 1.4 of the Explanatory Memorandum.

Resolutions required to be passed by MFG Shareholders for the Proposal to proceed

The takeover offers by MFG for NPH securities and the Internalisation Proposal are conditional on, amongst other things, all of resolutions referred to in the enclosed Notice being passed at the extraordinary general meeting of MFG to be held on 29 January 2008.

Page 3

All of the resolutions must be passed in order for the Proposal to proceed. Please note that even if all of the resolutions are passed, the transactions referred to in the resolutions will only proceed if the other conditions of the takeovers offers for NPH shares are satisfied or waived (see section 1.3 of the Explanatory Memorandum for a description of those other conditions).

Independent Directors' recommendation

The Independent Directors (those MFG Directors other than Chris Mackay and Hamish Douglass) unanimously recommend that you vote in favour of all the resolutions. Unless all of the resolutions are passed the Proposal will not proceed. In recommending shareholders vote in favour of all the resolutions, the Independent Directors consider that:

• the terms of the acquisition of the NPH Shares held by Mr Mackay are fair to the nonassociated shareholders of MFG. This has been confirmed by the Independent Expert. In arriving at this conclusion the Independent Directors consider that the consideration being offered to Mr Mackay is worth less than the value of his NPH Shares being acquired;

• the terms of the acquisition of Mr Douglass’ 40% interest in NPH Funds are fair to the nonassociated shareholders of MFG. This has been confirmed by the Independent Expert. In arriving at this conclusion the Independent Directors believe that consideration being offered to Mr Douglass is worth less than the value of his 40% interest in NPH Funds and note that the terms of the Class B Shares are less favourable to Mr Douglass than his economic interest in the Management Services Agreement;

• acquiring NPH and NPH Funds and internalising the Management Services Agreement will simplify the group structure and will facilitate the future development of Magellan Financial Group.

The Independent Directors have also considered additional benefits not specifically addressed by the Independent Expert accruing to MFG in recommending that you vote in favour of all the resolutions.

The Independent Directors believe that the Independent Expert has assessed the value of NPH and NPH Funds as stand alone entities and has not assessed their value as wholly-owned subsidiaries of MFG. For example, the Independent Expert has deducted from the value of NPH and NPH Funds capitalised corporate costs totalling $2.4 million and deferred tax liabilities totalling $6.2 to 6.9 million, which will be effectively eliminated on acquisition. In addition, the Independent Expert has not included in its valuation of NPH and NPH Funds value for any franking credits that would be generated by NPH or NPH Funds. The Independent Directors believe that that these franking credits are valuable to Shareholders and will effectively be captured by MFG via the elimination of the fees payable under the MSA.

Page 4

Independent Expert's Report

MFG has engaged Grant Thornton Corporate Finance Pty Limited to prepare an independent expert’s report in relation to the Proposal. Grant Thornton Corporate Finance Pty Limited has concluded that the proposed acquisition of Mr Mackay’s shareholding in NPH is fair and reasonable to the non-associated shareholders of MFG and the proposed acquisition of Mr Douglass’ interests in NPH Funds is fair and reasonable to the non-associated shareholders of MFG. A copy of the Independent Expert's Report forms Annexure A to this Notice of Meeting.

I recommend that you read the Notice of Meeting, Explanatory Memorandum and Independent Expert's Report in full. If you cannot attend the meeting on 29 January 2008, you can still vote by completing and signing the proxy form attached and returning it to the address on the form on or before 4.00 pm on 27 January 2008.

If you have any questions, please call David Simpson or Leo Quintana at MFG on +61 2 8114 1888.

Yours sincerely

==> picture [121 x 48] intentionally omitted <==

Paul Lewis Independent Director Magellan Financial Group Limited

Page 5

NOTICE OF EXTRAORDINARY GENERAL MEETING

Magellan Financial Group Limited ( MFG ) gives notice that an Extraordinary General Meeting of MFG will be held at Magellan’s Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney on 29 January 2008, commencing at 4.00 pm. The Explanatory Memorandum attached to this Notice of Meeting describes in more detail the matters to be considered. Defined terms in this Notice of Meeting have the meanings given to those terms in the Glossary on page 44.

1. Items of Business

Resolution 1 – Acquisition by MFG of NPH Shares held by Chris Mackay and entities controlled by him (each a related party of MFG)

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

" THAT, subject to and conditional upon Resolutions 2 to 7 being passed, the acquisition by MFG of any NPH Shares held by Chris Mackay (whether held individually or jointly with another person) and/or his controlled entities Magellan Equities Pty Limited and Naumov Pty Limited under the Takeover Offers, be approved for the purposes of ASX Listing Rule 10.1."

Resolution 2 – Acquisition by MFG of the shares in NPH Funds held by an entity controlled by Hamish Douglass (a related party of MFG)

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

" THAT, subject to and conditional upon Resolutions 1 and Resolutions 3 to 7 being passed, the acquisition by MFG of the 40% shareholding in NPH Funds held by Midas Touch Investments Pty Limited, an entity controlled by Hamish Douglass, on the terms and conditions described in the Explanatory Memorandum forming part of this Notice of Meeting, be approved for the purposes of ASX Listing Rule 10.1."

Resolution 3 – Issue of MFG Ordinary Shares and MFG Class B Shares to an entity controlled by Hamish Douglass (a related party of MFG)

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

" THAT, subject to and conditional upon Resolutions 1 to 2 and Resolutions 4 to 7 being passed, the issue of MFG Ordinary Shares and MFG Class B Shares (the later having the terms of issue set out in Annexure C to this Notice of Meeting) in consideration for the acquisition by MFG of the 40% shareholding in NPH Funds held by Midas Touch Investments Pty Limited, an entity controlled by Hamish Douglass, on the terms and conditions described in the Explanatory Memorandum forming part of this Notice of Meeting, be approved for the purposes of ASX Listing Rule 10.11."

Resolution 4 – Amendment of MFG Constitution to include Class B Share terms

of issue

To consider and, if thought fit, to pass the following resolution as a special resolution:

Page 6

"THAT, subject to and conditional upon Resolutions 1 to 3 and Resolutions 5 to 7 being passed, the Constitution of MFG be amended by:

• (a) inserting at the end of Article 5(a) the words: “Without limiting the foregoing, the Company may by resolution of the Board issue Class B Shares on the terms set out in Annexure A of this Constitution”; and

• (b) inserting as a new Annexure A the terms of issue of the MFG Class B Shares on the terms set out in Annexure C to this Notice of Meeting."

Resolution 5 - Consolidation or subdivision of MFG Class B Shares

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

" THAT, subject to and conditional upon Resolutions 1 to 4 and Resolutions 6 and 7 being passed, any consolidation or subdivision of MFG Class B Shares that occurs prior to their conversion into MFG Ordinary Shares, in accordance with the terms of issue of the MFG Class B Shares set out in Annexure C to this Notice of Meeting, be approved for the purposes of section 254H of the Corporations Act, with such consolidation or subdivision (as applicable) occurring immediately before 12.01 am on the relevant Conversion Date (as that term is defined in the terms of issue of MFG Class B Shares)."

Resolution 6– Selective reduction of capital

To consider and, if thought fit, to pass the following resolution as a special resolution for the purposes of section 256C(2)(a) of the Corporations Act:

" THAT, subject to and conditional upon Resolutions 1 to 5 and Resolution 7 being passed and to NPH and NPH Funds becoming wholly-owned subsidiaries of MFG, MFG be authorised (but not obligated) to reduce its share capital by cancelling all MFG Ordinary Shares held by NPH and all of the MFG Ordinary Shares held by NPH Funds in return for a capital payment to be determined by the Board of MFG (but not in excess of the market price of MFG Ordinary Shares at the time)."

Resolution 7– Selective buy-back of shares

To consider and, if thought fit, to pass the following resolution as a special resolution for the purposes of section 257D(1) of the Corporations Act:

" THAT, subject to and conditional upon Resolutions 1 to 6 being passed and to NPH and NPH Funds becoming wholly-owned subsidiaries of MFG, MFG be authorised (but not obligated) to offer to buy-back all of the MFG Ordinary Shares held by NPH and all of the MFG Ordinary Shares held by NPH Funds for a consideration to be determined by the Board of MFG (but not in excess of the market price of MFG Ordinary Shares at the time) and, if any such offer is accepted, to enter into a buy-back agreement on the terms set out in Annexure D to this Notice of Meeting, provided that any such agreement is entered into, and any buy-back pursuant to that agreement occurs, within 12 months after the date of this approval."

Page 7

2. Voting entitlements

MFG has determined that for the purposes of voting at the Meeting, MFG Ordinary Shares will be taken to be held by those persons recorded in MFG's register of shareholder as at 4.00 pm on 27 January 2008.

3. Voting exclusions

The following voting exclusions apply:

Resolution	Voting exclusions
Resolution 1 Acquisition by MFG of NPH Shares held by Chris Mackay and entities controlled by him (each a related party of MFG)	MFG will disregard any votes cast on this resolution by Chris Mackay, Magellan Equities Pty Limited and Naumov Pty Limited and their respective associates (who include Hamish Douglass and his controlled entities)
Resolution 2 Acquisition by MFG of the 40% shareholding in NPH Funds held by an entity controlled by Hamish Douglass (a related party of MFG)	MFG will disregard any votes cast on this resolution by Midas Touch Investments and its associates (who include Hamish Douglass, Chris Mackay and their respective controlled entities)
Resolution 3 Issue of MFG Ordinary Shares and MFG Class B Shares to Midas Touch Investments, an entity controlled by Hamish Douglass (a related party of MFG)	MFG will disregard any votes cast on this resolution by Midas Touch Investments and its associates (who include Hamish Douglass, Chris Mackay and their respective controlled entities)
Resolution 4 Amendment of MFG Constitution to include the Class B Share terms of issue	MFG will disregard any votes cast on this resolution by Midas Touch Investments and its associates (who include Hamish Douglass, Chris Mackay and their respective controlled entities)
Resolution 5 Consolidation or subdivision of MFG Class B Shares	MFG will disregard any votes cast on this resolution by Midas Touch Investments and its associates (who include Hamish Douglass, Chris Mackay and their respective controlled entities)
Resolution 6 Selective reduction of capital	If NPH and NPH Funds are to receive consideration for the cancellation of their shares, they and their and their respective associates cannot cast any votes in favour of this resolution. MFG will disregard any votes so cast.

Page 8

Resolution	Voting exclusions
Resolution 7 Selective buy-back of shares	NPH, NPH Funds and their respective associates cannot cast any votes in favour of this resolution. MFG will disregard any votes so cast.

However, MFG need not disregard a vote under Resolutions 1 to 3 if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• (b) it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

The Proxy Form accompanying and forming part of this Notice of Meeting specifies that the Chairman of the Meeting is appointed as proxy if a Shareholder does not appoint another person to act as the Shareholder's proxy or the Chairman is appointed proxy by default.

4. PROXIES

A MFG Ordinary Shareholder entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies, who need not be members of MFG. Where more than one proxy is appointed, each proxy should be appointed to represent a specified percentage or specified number of the MFG Ordinary Shareholder's voting rights. If the appointments do not specify the percentage of number of votes that each proxy may exercise, each proxy may exercise half the votes. Fractions of votes will be disregarded.

A Proxy Form accompanies and forms part of this Notice of Meeting. To be valid, the completed Proxy Form must be lodged at least 48 hours before the time for holding the Meeting (ie. by no later than 4.00 pm on 27 January 2008 by one of the following methods:

• delivering the Proxy Form to the office of MFG's Share Registry: mailing it to: Level 7, 207 Kent Street, Sydney NSW 2000, Australia;

• mailing the Proxy Form to Registries Limited, PO Box R67, Royal Exchange NSW 1223, Australia;

• faxing the Proxy Form to +61 2 9279 0664 (within Australia) or +61 2 9279 0664 (outside Australia); or

• online at www.investorserve.com.au and follow the instructions.

Further directions for the proper completion of the Proxy Form are printed on the reverse side of the Proxy Form.

Page 9

5. VOTING BY ATTORNEY

A MFG Ordinary Shareholder entitled to attend and vote at the Meeting may appoint an attorney to vote at the Meeting. Attorneys should bring an original or certified copy of the power of attorney to the Meeting.

6. CORPORATIONS

A corporation that is a MFG Ordinary Shareholder or a proxy may elect to appoint a representative in accordance with the Corporations Act, in which case MFG will require written proof of the representative's appointment, which must be lodged with or presented to MFG before the Meeting.

7. REGISTRATION

Any MFG Ordinary Shareholder attending the Meeting in person should bring the personalised Proxy Form accompanying and forming part of this Notice of Meeting with them to facilitate registration. A MFG Ordinary Shareholder who does not bring the Proxy Form will still be able to attend the Meeting, but at registration MFG’s representatives will need to undertake a verification of identity. Registration will commence at 3.30 pm on the day of the Meeting.

By order of the Board

Dated: 28 December 2007

==> picture [136 x 32] intentionally omitted <==

David Simpson Company Secretary

Page 10

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of the Notice of Extraordinary General Meeting of Magellan Financial Group Limited to be held at Magellan’s Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney on 29 January 2008, commencing at 4.00 pm. It contains information relevant to the resolutions to be considered at the Extraordinary General Meeting.

Defined terms in this Explanatory Memorandum have the meanings given to those terms in the Glossary on page 44.

1. The Proposal

1.1 The Proposal

On 5 October 2007, MFG announced a proposal to make takeover offers for all of the securities in NPH and, if those offers are successful, MFG would then acquire the 40% of NPH Funds held by Hamish Douglass' investment company. NPH and NPH Funds would then be wholly owned subsidiaries of MFG, and the MSA would be fully internalised. These offers were formally made on 5 December 2007. The proposal was subsequently revised following discussions between MFG and NPH, which resulted in the previous offers for NPH securities being withdrawn (with ASIC's consent) and replaced with a revised proposal that was announced jointly by MFG and NPH on 10 December 2007.

The announcement stated that the revised proposal was recommended by the NPH directors, subject to NPH’s independent expert determining that the revised takeover offer for NPH Shares is fair and reasonable.

The Bidder's Statement containing the terms of the Takeover Offers (for NPH Shares and NPH Second Options) was lodged by MFG with ASIC on 20 December 2007 and sent to NPH Shareholders and NPH Second Optionholders on 24 December 2007. The Bidder's Statement can be downloaded from MFG's website at www.magellangroup.com.au. Any Shareholder wishing to obtain a printed copy can do so by contacting MFG on +61 2 8114 1888.

The purpose of the Extraordinary General Meeting is to consider and, if thought fit, approve a number of resolutions which must be passed in order for the Takeover Offers to become unconditional, and for the Proposal to proceed.

1.2 Background to the Proposal

The background to the Proposal is as follows:

• (a) Under the terms of the existing Management Services Agreement between MFG and NPH Funds dated 21 November 2006 (MSA), MFG is required to pay NPH Funds:

Page 11

• (i) a quarterly base fee of 0.3125% of the market capitalisation of MFG; and

• (ii) an annual performance fee of up to 15% of the total shareholder return over the prior financial year, subject to performance hurdles which relate to the percentage total shareholder return over that period (note that the first calculation of the performance fee occurs shortly after 30 June 2008 based on percentage total shareholder return over the period from 21 November 2006, the date of the MSA, to 30 June 2008). Total shareholder return is essentially the increase in market capitalisation of MFG over the period plus dividends and other entitlements over the period less any new capital raised during the period.

• (b) Depending on the MFG share price at the time the annual performance fee is calculated, significant performance fees may become payable to NPH Funds over the life of the MSA. MFG cannot terminate the MSA until 21 November 2016 (except for cause) and, upon such termination after 21 November 2016, MFG is required to pay NPH Funds a cash amount equal to 12 times the most recent annual base fee and annual performance fee (if any).

• (c) NPH Funds is a company 60% owned by NPH, an ASX listed company, and 40% owned by a company controlled by Hamish Douglass, the Chairman of MFG.

• (d) NPH Shareholders include:

• (i) Chris Mackay, the Deputy Chairman of MFG, who has, through his investment company, an approximate 36% shareholding in NPH (equivalent to approximately 55% on a fully diluted basis); and

• (ii) Hamish Douglass, who has, through his investment company, an approximate 2% shareholding (on a fully diluted basis) in NPH.

• (e) On a fully diluted basis, Chris Mackay and Hamish Douglass would therefore together have an approximate 74.2% indirect economic interest in NPH Funds.

• (f) In August this year, Hamish Douglass and Chris Mackay advised the Boards of MFG and NPH that they did not wish to participate in any performance fees under the MSA, and that ultimately MFG would seek to simplify the arrangements between MFG, NPH Funds, NPH and Hamish Douglass and Chris Mackay. Work was then commenced on developing a proposal which would allow them to forego that participation, while at the same time recognising the legitimate interests of other shareholders in NPH (approximately 25.8% indirect economic interest on a fully diluted basis) in maintaining their economic interest in the MSA. The original proposal, as announced on 5 October 2007, represents the outcome of this work.

Page 12

1.3 Takeover Offers for NPH

• (a) Key Elements of the Takeover Offers

The Key elements of the Takeover Offers are:

• (i) MFG is offering to acquire all of the NPH Shares for a consideration per NPH Share of 1.95 MFG Ordinary Shares plus 0.33 of an MFG 2016 Option.

• (ii) MFG is also offering to acquire all of the NPH Second Options for a consideration per NPH Second Option of 3 MFG 2011 Options.

• (iii) If following the Offers, MFG has acquired 100% of NPH, MFG will acquire the 40% shareholding in NPH Funds owned indirectly by Hamish Douglass' investment company in return for the issue of a MFG Ordinary Shares and a new class of shares, MFG Class B Shares, the latter of which carry no rights to distributions but have certain rights to convert to MFG Ordinary Shares.

• (iv) Following completion of the acquisitions, NPH and NPH Funds would be direct or indirect wholly-owned subsidiaries of MFG and the MSA would therefore be fully internalised, while former NPH and NPH Funds shareholders will hold securities in MFG.

• (v) Chris Mackay’s investment company has irrevocably agreed to let lapse all of its 6.992 million NPH First Options by not exercising them prior to their expiration on 31 December 2007. This commitment is subject to NPH's independent expert determining that the Share Offer is fair and reasonable.

An announcement will be made to the ASX on or before 31 December 2007 as to whether this conditions has been met.

The effect of the lapse of Mr Mackay’s investment company’s options is to reduce the aggregate consideration that would otherwise be payable by MFG and increase the value of, and the value offered for, each remaining NPH security. This was necessary because of the different views on value between the parties and was motivated by Mr Hamish Douglass’ and Mr Chris Mackay’s perception of the benefits of a simpler structure and their concern to seek to enhance the positions of the shareholders of both MFG and NPH.

(b) Terms and Conditions of Takeover Offers

The Takeover Offers are concurrent off-market takeover offers under Chapter 6 of the Corporations Act to acquire all of the NPH Shares (ie. the Share Offer) and NPH Second Options (ie. the Options Offer). The consideration being offered under the Takeover Offers is set out in section 1.3 above. The Takeover Offer for NPH Shares is subject to a number of conditions, in addition to a condition requiring that the Resolutions set out in this Notice and Explanatory Memorandum are passed at the meeting of MFG Ordinary Shareholders. If those conditions are not satisfied or waived by the end of the Offer period, the Proposal (including the transactions referred to in the Resolutions) will not proceed. Those other conditions can be summarised as follows:

• (i) Before the end of the Share Offer period, MFG and its associates:

Page 13

• (A) have relevant interests in at least 90% of the NPH Shares and have acquired (whether under the Share Offer or otherwise) at least 75% of the NPH Shares which MFG offered to acquire under the Share Offer; and

• (B) have relevant interests in at least 90% of the NPH Second Options and have acquired (whether under the Options Offer or otherwise) at least 75% of the NPH Second Options which MFG has offered to acquire under the Options Offer;

• (i) NPH undertakes no material acquisitions or divestments or commitments prior to the end of the Share Offer period;

• (ii) NPH confirms in its Target’s Statement certain financial information relating to NPH;

• (iii) NPH does not pay any dividends prior to the end of the Share Offer period; (iv) That Mr. Mackay’s investment company does not exercise the 6,992,705 NPH First Options that it holds before their expiration; and

• (v) there are no prescribed occurrences in relation to NPH.

MFG may choose to waive any of the conditions to which the Share Offer is subject. If these conditions are not satisfied or waived then the Share Offer will not proceed.

The Options Offer is subject to the condition that the conditions of the Share Offer are satisfied or waived. MFG may choose to waive this condition.

The Takeover Offers commenced on 24 December 2007 and will close on 15 February 2008 (unless extended in accordance with the Corporations Act). As the Takeover Offers comprise a Share Offer and a separate Options Offer, MFG may decide to extend the offer period for one but not the other.

As set out above, the Bidder's Statement containing the terms of the takeover offers can be downloaded from MFG's website at www.magellangroup.com.au. Any Shareholder wishing to obtain a printed copy can do so by contacting MFG on +61 2 8114 1888.

1.4 Internalisation Proposal

(a) Acquisition of 40% shareholding in NPH Funds

If, following the Takeover Offers, MFG has been successful in acquiring all of the NPH Shares and NPH Second Options, MFG intends to internalise the MSA between NPH Funds and MFG by acquiring the 40% shareholding in NPH Funds from Midas Touch Investments (an entity controlled by Hamish Douglass) for a consideration which excludes any compensation for possible performance fees under the MSA.

(b) Share Purchase Agreement

Page 14

On 20 November 2007, MFG and Midas Touch Investments entered into a conditional Share Purchase Agreement under which MFG has agreed to purchase, and Midas Touch Investments has agreed to sell, all of the shares in NPH Funds held by Midas Touch Investments (representing 40% of all the NPH Funds shares) for the following consideration:

• (i) the issue of 5,844,799 MFG Ordinary Shares, which is equal to Midas Touch Investments' effective 40% economic interest in:

• (A) the 12,606,006 MFG Ordinary Shares and 6,300,601 MFG 2009 Options held by NPH Funds less the estimated net other liabilities as at 31 December 2007 of NPH Funds, being $3,202,111 and with no value ascribed to the MSA; and

• (B) the issue of 10,200,000 MFG Class B Shares, the terms of which are set out in Annexure C and summarised below.

For the purposes of the Share Purchase Agreement, the assumed value of an MFG Ordinary Share provided as consideration is $1.73, being the average VWAP of MFG Ordinary Shares for the 20 day period immediately following the announcement by MFG on 5 October 2007, and the assumed value of MFG 2009 Options is $1.06, being the average VWAP of MFG 2009 Options for the 20 day period immediately following MFG's announcement of its original proposal on 5 October 2007. The estimated net other liabilities as at 31 December 2007 of NPH Funds has been formulated on the basis of the 31 October 2007 unaudited management accounts of NPH Funds with an estimate forward to 31 December 2007 (taking into account the estimated management fee under the MSA through to that date).

The Share Purchase Agreement, and therefore completion of the Internalisation Proposal is conditional upon approval of the agreement by MFG Ordinary Shareholders (which cannot be waived) and upon MFG acquiring 100% of the NPH Shares and NPH Second Options (which can only be waived with the agreement of Midas Touch Investments and MFG). If those conditions are satisfied and/or waived, the Internalisation Proposal will be completed promptly after the close of the Takeovers Offers and completion of compulsory acquisition.

(c) Terms of MFG Class B Shares

The proposed terms for the MFG Class B Shares which will be provided to Midas Touch Investments as part of the consideration for the purchase by MFG of Midas Touch Investments’ 40% shareholding in NPH Funds are set out in Annexure C. In summary, the rights are as follows:

• (i) no entitlement to receive dividends;

• (ii) conversion into MFG Ordinary Shares on the first business day after 21 November 2016 in accordance with the conversion formula set out in Annexure B;

Page 15

• (iii) the MFG Class B Shares will convert into only one MFG Ordinary Share on the first business day after 21 November 2016 if, before 1 July 2012:

• (A) Mr Douglass ceases to be a director or employee of MFG or a subsidiary of MFG, other than through death or incapacity; or

• (B) Mr Douglass' employment has been terminated on the grounds of wilful misconduct, negligence or fraud.

1.5 Employment of Hamish Douglass and Chris Mackay

As a result of the acquisition of NPH and the 40% shareholding in NPH Funds, NPH Funds will be wholly owned by MFG. Hamish Douglass and Chris Mackay will then become employees of MFG’s wholly-owned subsidiary, MAM. Currently Messrs Douglass or Mackay are directors of MAM and MFG and they do not receive any remuneration from MAM or MFG. The proposed terms of employment for Messrs Douglass and Mackay are that each will be paid an annual salary of $250,000 plus the right to an annual bonus of up to $250,000. The performance criteria for the bonus will be set by the Board of MFG.

In addition, Chris Mackay and Hamish Douglass have agreed to re-commit to their current exclusivity arrangements with MFG until at least 1 July 2012. Under the current arrangements, as set out in an Exclusivity Deed dated 21 November, 2006, each of NPH, NPH Funds, Chris Mackay and Hamish Douglass have undertaken not to, for the terms of the MSA, invest in a funds management business within Australia and New Zealand. This restraint does not apply in respect of any investment in shares in a company, interests in a managed investment scheme or other interests in any entity which represent less than 10% of the shares in that company, interests in that managed investement scheme or other interest in any other entity respectively. The restraint will cease to apply to Chris in the event that he and his controlled entities hold less than 10% of the NPH Shares. Therefore, if the Takeover Offers are successful, the restraint would no longer apply to Chris. Separately, the restraint will cease to apply to Hamish in the event that he and his controlled entities hold less than 10% of the shares in NPH Funds. Therefore, if the Internalisation Proposal is implemented, the restraint would no longer apply to Hamish.

It was considered appropriate and desirable that, if the Proposal is implemented, these restraints continue to apply to Chris and Hamish for a specified period. It was agreed that the restraints would continue to apply until at least 1 July 2012, which is the earliest time at which the MSA can be terminated by MFG.

1.6 MFG Group Structure

Below are diagrams showing :

• (a) the current ownership structure of MFG, NPH and NPH Funds; and

• (b) the ownership structure of MFG, NPH and NPH Funds upon successful completion of the Proposal.

Page 16

==> picture [431 x 245] intentionally omitted <==

----- Start of picture text -----

Magellan Financial Group
Pre-offer Corporate Structure
Hamish Chris
Douglass(1) Mackay (2) Other Shareholders
36% (undiluted)
4% (undiluted) 60% (undiluted)
40%
New Privateer Securityholders (3)
Holdings Ltd (Ordinary Shares and Options)
6% (undiluted)
82% (undiluted)
60%
NPH Funds Management Services Magellan Financial
Pty. Ltd Agreement Group Ltd
12% (undiluted)
----- End of picture text -----

• (1) Held by an entity controlled by Mr. Douglass.

• (2) Held by an entity controlled by Mr. Mackay. This means that Mr. Mackay would have voting power of 55% in NPH if all holders (including Mr Mackay’s investment company) were to exercise all of their NPH First Options and NPH Second Options.

• (3) Includes Mr. Mackay’s and Mr. Douglass’ holdings of MFG Ordinary Shares and MFG 2009 Options (see section 8.1).

Magellan Financial Group Post-offer and Internalisation Corporate Structure

==> picture [455 x 194] intentionally omitted <==

----- Start of picture text -----

Other Securityholders(1) Hamish Douglass Chris Mackay
Ordinary Shares, MFG 2009 Options, MFG Ordinary Shares, MFG 2009 Options, MFG Ordinary Shares, MFG 2009
2011 Options & MFG 2016 Options 2016 Options and MFG Class B Shares [(2)] Options & MFG 2016 Options [(3] [)]
83.1% of Ordinary 5.3% of Ordinary 11.6% of Ordinary
Shares (undiluted) Shares (undiluted) Shares (undiluted)
Magellan Financial
Group Limited
40% 100%
Internalised Management
Services Agreement
NPH Funds New Privateer
Pty Limited 60% Holdings Limited
----- End of picture text -----

• (1) Includes former NPH Shareholders.

• (2) These MFG Securities will be held by the investment company controlled by Mr Douglass.

• (3) There MFG Securities will be held be the investment company controlled by Mr Mackay and includes Mr Mackay’s 3% of MFG 2009 Options and 33.1% of the MFG 2016 Options.

Note : The Post-Offer and Internalisation Corporate Structure has been prepared on the basis that:

• the Offers are successful and MFG acquires 100% of the NPH Shares and NPH Second Options;

• the Internalisation Proposal is implemented;

• the respective MFG Ordinary Shareholdings of NPH (6%) and NPH Funds (12%) have been cancelled

• � the assumptions in section 3.4(a) apply; and

• on the basis of the NPH securities on issue as at 18 December 2007.

Page 17

1.7 Hamish Douglass' and Chris Mackay's relevant interests in MFG shares pre and post implementation of the Proposal

(a) Current relevant interests and voting power

As at the date of this Explanatory Memorandum, Hamish Douglass has a relevant interest in 39,311 MFG Ordinary Shares and 3,934 MFG 2009 Options (excluding his deemed relevant interest in MFG shares and options held by NPH Funds).

As at the date of this Explanatory Memorandum, Chris Mackay has a relevant interest in 1,392,711 MFG Ordinary Shares and 619,272 MFG 2009 Options (excluding his deemed relevant interests in MFG shares and options held by NPH and NPH Funds).

As Hamish Douglass and Chris Mackay are currently associates in relation to MFG for the purposes of the Corporations Act, each of their voting power in MFG (as defined in the Corporations Act) will include the relevant interests of the other in voting shares in MFG. As at the date of this Notice and Explanatory Memorandum, each of Hamish Douglass and Chris Mackay has voting power of approximately 1.3% of MFG excluding deemed relevant interests in MFG Ordinary Shares held by NPH and NPH Funds, and approximately 18% of MFG including deemed relevant interests in MFG Ordinary Shares held by NPH and NPH Funds.

(b) Relevant interests and voting power post the implementation of the Proposal

Post the implementation of the Proposal (including the acquisition of the 40% shareholding in NPH Funds from Hamish Douglass' investment company):

• (i) Hamish Douglass will have relevant interests (excluding any deemed relevant interest in MFG Securities held by NPH or NPH Funds) in 7,643,794 MFG Ordinary Shares, 3,934 MFG 2009 Options, 297,793 MFG 2016 Options and 10,200,000 MFG Class B Shares (giving an 8.7% ordinary shareholding on a fully diluted basis); and

• (ii) Chris Mackay will have relevant interests (excluding any deemed relevant interest in MFG Securities held by NPH or NPH Funds) in 16,798,805 MFG Ordinary Shares, 619,272 MFG 2009 Options and 2,607,185 MFG 2016 Options (giving a 10.0% ordinary shareholding on a fully diluted basis).

This is calculated on the basis of the assumptions in section 3.4 of this Explanatory Memorandum and on the assumption that:

• (i) the Offers are successful and MFG acquires 100% of the NPH Shares and NPH Second Options;

• (ii) the respective MFG Ordinary Shareholdings of NPH (6%) and NPH Funds (12%) have been cancelled; and

Page 18

• (iii) Chris Mackay’s investment company lets lapse the 6,992,705 NPH First Options held by his investment company, as contemplated in the joint announcement by MFG and NPH on 10 December 2007.

Post the Offers and implementation of the Internalisation Proposal, and on the basis of the assumptions above, Hamish Douglass’ and Chris Mackay's relevant interests in MFG Ordinary Shares on an undiluted basis will be 5.3% and 11.6%, respectively. Messrs Douglass and Mackay believe that they will no longer be associates for the purposes of the Corporations Act as they will no longer jointly control NPH Funds and have no agreement or understanding in relation to their shareholdings in or conduct of the affairs of MFG.

1.8 Tax impact on MFG of implementing the Proposal

The tax impact on MFG of implementing the Proposal is as follows:

(a) Formation of a tax consolidated group

At some time after the acquisition of all of the interests in NPH and NPH Funds, MFG intends to elect to form a consolidated group. The effect of this will be to treat MFG and all of its Australian resident wholly owned subsidiaries as a single entity for tax purposes, with the subsidiary members effectively being treated as divisions of MFG (as head company). The consequence of this will be that any intra-group transactions between MFG, NPH and NPH Funds will be ignored for income tax purposes.

(b) Buy-back or cancellation

MFG proposes to either buy-back or cancel all of the MFG Ordinary Shares held by NPH and NPH Funds in the manner described in sections 5.6 and 5.7 below. As MFG, NPH and NPH Funds are expected to be members of the same tax consolidated group at that time, this intra-group transaction should be ignored for tax purposes and therefore there should be no tax impact for MFG.

1.9 Independent Expert's Report

MFG has engaged Grant Thornton Corporate Finance Pty Limited to prepare an independent expert’s report in relation to the Proposal. Grant Thornton Corporate Finance Pty Limited has concluded that each of the following aspects of the Proposal is fair and reasonable to MFG Ordinary Shareholders whose votes are not to be disregarded:

• (a) the acquisition by MFG of any NPH Shares and NPH Second Options held by Chris Mackay and entities controlled by him (each a related party of MFG) under the terms of the Takeover Offers;

• (b) the acquisition by MFG of the shares in NPH Funds held by Midas Touch Investments (a related party of MFG) pursuant to the Share Purchase Agreement dated 20 November 2007; and

Page 19

• (c) the issue of MFG Ordinary Shares and MFG Class B Shares to Midas Touch Investments (a related party of MFG) as consideration for the acquisition of the NPH Funds shares held by Midas Touch Investments.

1.10 MFG Board processes

The Board of MFG has put in place structures and procedures to ensure that the conflict which Chris Mackay and Hamish Douglass have in relation to the Proposal has been properly managed and the interests of non-associated MFG Ordinary Shareholders are protected. These structures and procedures include the following:

• (a) neither Chris Mackay or Hamish Douglass voted on the MFG Board proposal to put the resolutions in this Notice of Meeting to MFG Ordinary Shareholders or to approve this Notice of Meeting for release; and

• (b) MFG has commissioned an Independent Expert’s Report in relation to the Proposal.

2. Overview of NPH and NPH Funds

The principal activities of NPH are:

• (a) conducting the business of an investment holding company; and

• (b) investing in NPH Funds (60% owned subsidiary) which provides management services to MFG.

Any information in this Notice and Explanatory Memorandum concerning NPH and/or NPH Funds has been prepared based on a review of publicly available information (which has not been independently verified MFG does not make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

3. Effect of Proposal on MFG'S Financial Position

3.1 INTRODUCTION

This section provides an indication of the possible effect of the Takeover Offers and the Internalisation Proposal on the consolidated financial position of MFG. The information provided has been prepared on the basis that MFG acquires 100% of the share capital of NPH and NPH Funds, including the 40% minority interest in NPH Funds.

The information provided comprises:

• (a) a consolidated pro-forma post-transaction balance sheet of MFG, which incorporates the net assets of NPH and NPH Funds that are to be acquired;

• (b) a pro-forma schedule of the capital structure of MFG following the acquisitions;

Page 20

• (c) an explanation of the assumptions that the Directors of MFG have adopted in preparing the pro-forma consolidated balance sheet and schedule of capital structure;

• (d) a discussion of the sensitivity of the pro-forma financial information to the key assumptions used in their preparation; and

• (e) the potential impact of the proposed acquisitions on the profit and loss of MFG for the year ending 30 June 2008.

The directors of MFG do not consider that a pro-forma historical income statement for the post-transaction MFG Group is meaningful and accordingly, this information is not presented. The MSA did not commence until 21 November 2006, which was after the recapitalisation of the MFG Group. Further, the full year results for the year ended 2007 include the results from activities prior to the recapitalisation, which do not reflect the ongoing business of MFG.

3.2 BASIS OF PREPARATION

The consolidated pro-forma post-acquisition balance sheet of MFG is based on the following information:

• (a) the audited consolidated balance sheet of MFG as at 30 June 2007 as presented in its Annual Report for that year, adjusted for material transactions or changes in fair value of assets that have occurred or are expected to occur between 1 July 2007 and the anticipated date of the completion of the acquisitions;

• (b) the audited consolidated balance sheet of NPH as at 30 June 2007, as presented in its Annual Report for that year, adjusted for material transactions or changes in fair value of assets that have occurred or are expected to occur between 1 July 2007 and the anticipated date of the completion of the acquisitions; and

• (c) adjustments that will arise from the acquisition of 100% of the share capital of NPH and NPH Funds and the consolidation of the post-transaction balance sheets of NPH and NPH Funds into MFG.

The transaction will be accounted for using the fair value of MFG Ordinary Shares, MFG 2009 Options, MFG 2011 Options and MFG 2016 Options as at the close of the Offers. For the purposes of presenting pro-forma information, the average VWAP of MFG Ordinary Shares and MFG 2009 Options for the 20 day period immediately following the announcement on 5 October 2007 of the intention to make the original takeover offers have been used to illustrate the effect of movements in the prices of these securities since 30 June 2007.

The financial information is provided for illustrative purposes only and is presented on an abbreviated basis. It does not include all the disclosures normally provided in an annual report prepared in accordance with Corporations Act requirements and applicable Accounting Standards.

Page 21

3.3 PRE-TRANSACTION ADJUSTED BALANCE SHEETS FOR MFG AND NPH

(a) MFG

The following adjustments have been made to the audited consolidated balance sheet of MFG as presented in its 2007 Annual Report:

• (i) the provision of $20 million of seed capital to two unlisted unit trusts launched by MFG on 2 July 2007;

• (ii) the issue of $6.3 million of share capital to Magellan staff under an employee Share Purchase Plan. The shares have been partially funded by the granting of staff loans;

• (iii) the revaluation of MFG’s investment in MFF from its fair value at 30 June 2007 of 93.5c per share to its current fair value of 84.2c per share, measured as the average VWAP for the 20 day period immediately following the announcement on 5 October 2007 of the intention to make the Offers;

• (iv) the revaluation of a liability required to be recognised and measured at fair value under AASB 132 from the market values of $2.20 per MFG Ordinary Share and $2.22 per MFG 2009 Option as at 30 June 2007 to indicative values of $1.73 per MFG Ordinary Share and $1.06 per MFG 2009 Option, which are based on the average VWAP for the 20 day period immediately following the announcement on 5 October 2007 of the intention to make the Offers. Further explanation of this liability can be found in note 2(i) to the MFG 2007 Annual Report; and

• (v) the issue of shares as a result of the exercise of Initial Options by some option holders.

Page 22

Current assets Cash and cash equivalents Other current assets Total current assets Non-current assets Other financial assets Other non-current assets Total non-current assets Total assets Current liabilities Trade creditors and other payables Total current liabilities Non-current liabilities AASB 132 accounting adjustment Total non-current liabilities Total liabilities Net assets Equity Issued securities AASB132 adjustment Contributed equity Asset revaluation reserve Retained profits / (losses) Total equity	Per 30 June 2007 Annual Report Adjustments Adjusted Balance Sheet as at 30 June 2007 $M $M $M 74.4 (17.9) 56.5 2.5 0.0 2.5
	76.9 (17.9) 59.0
	24.8 17.5 42.3 3.0 5.0 8.0
	27.8 22.6 50.3
	104.7 4.6 109.3
	(5.2) 0.0 (5.2)
	(5.2) 0.0 (5.2)
	(30.0) 19.7 (10.3)
	(30.0) 19.7 (10.3)
	(35.2) 19.7 (15.5)
	69.5 24.3 93.8
	103.1 6.3 109.4 (34.7) 0.0 (34.7)
	68.4 6.3 74.7 (1.2) (1.7) (2.9) 2.3 19.7 22.0
	69.5 24.3 93.8

Page 23

(b) NPH

The following adjustments have been made to the audited consolidated balance sheet of NPH as presented in its 2007 Annual Report:

• (i) The exercise of 1.983 million NPH First Options held by NPH option holders that expire on 31 December 2007. The exercise price of each option is $1.25 and the holder is entitled to one NPH Share and one NPH Second Option. Mr Mackay’s investment company has not exercised its 6.993 million NPH First Options prior to 31 December 2007.

• (ii) The revaluation of 19.3 million MFG Ordinary Shares and 9.4 million MFG 2009 Options that are held by NPH and NPH Funds from the market values as at 30 June 2007 of $2.20 per MFG Ordinary Share and $2.22 per MFG 2009 Option to the indicative market values of $1.73 per MFG Ordinary Share and $1.06 per MFG 2009 Option, based on the average VWAP of MFG Ordinary Shares and MFG 2009 Options for the 20 day period immediately following the announcement on 5 October 2007 of the intention to make the Offers.

Page 24

Current assets Cash and cash equivalents Trade and other receivables Financial assets Total current assets Non-current assets Financial assets Deferred tax assets Total non-current assets Total Assets Current liabilities Trade and other payables Bank loan Total current liabilities Non-current liabilities Deferred tax liabilities Total non-current liabilities Total liabilities Net Assets Equity Issued capital Reserves Retained earnings Minority interests Total Equity	Per 30 June 2007 Annual Report Adjustments Adjusted Balance Sheet as at 30 June 2007 $M $M $M 4.9 2.5 7.4 0.7 0.0 0.7 20.9 (10.9) 10.0
	26.5 (8.4) 18.1
	57.7 (9.0) 48.7 0.2 0.0 0.2
	57.9 (9.0) 48.9
	84.4 (17.4) 67.0
	(0.7) 0.0 (0.7) (7.5) 0.0 (7.5)
	(8.2) 0.0 (8.2)
	(13.8) 6.0 (7.8)
	(13.8) 6.0 (7.8)
	(22.0) 6.0 (16.0)
	62.4 (11.4) 51.0
	26.0 2.5 28.5 12.9 (4.7) 8.2 11.6 (5.5) 6.1 11.9 (3.7) 8.2
	62.4 (11.4) 51.0

3.4 PRO-FORMA BALANCE SHEET

(a) Assumptions

• (i) All NPH shareholders select the Share Offer Consideration of 1.95 MFG Ordinary Shares and 0.33 MFG 2016 Options for each NPH Share held.

• (ii) All NPH Second Optionholders will select the Option Offer Consideration of 3 MFG 2011 Options for each NPH Second Option held.

Page 25

• (iii) Mr Mackay’s investment company will let lapse all of its 6.993 million First Options.

• (iv) The number of NPH Second Options on issue at the date of completion of the acquisitions will be 2.057 million. This assumption is based on all current holders of NPH First Options, excluding Mr Mackay’s investment company, exercising those options prior to their expiry on 31 December 2007 and no holders of Second Options exercising those options between 20 December 2007 and the date of completion of the acquisitions.

• (v) The fair value of the MFG Securities provided as consideration under the Offers are assumed to be as follows:

MFG Security	Price per Security(1)
MFG Ordinary Shares(2)	$1.73
MFG 2009 Options(2)	$1.06
Option on MFG 2011 Option embedded in MFG 2009 Option(3)	$0.36
MFG 2011 Option immediately after issue(3)	$0.80
MFG 2016 Option(3)	$0.30
MFG Class B Shares(4)	$0.80

• (1) These security prices are indicative only. If the Offers are successful, the acquisitions will be accounted for using market values prevailing at the date of completion of the acquisitions. The eventual cost of the acquisitions and the goodwill recognised on acquisition of NPH and NPH Funds will be determined by the values on that date.

• (2) Based on the average VWAP for the 20 day period immediately following the announcement of the Offers on 5 October 2007.

• (3) Calculated using a Black-Scholes option pricing framework and relevant market inputs based on the average VWAP for the 20 day period immediately following the announcement of the Offers on 5 October 2007.

• (4) Applying a discount to the MFG Ordinary Share Price (see note 1) which reflects the Terms of Issue of MFG Class B Shares (see Annexure C).

(b) Acquisition adjustments

The post-transaction pro-forma consolidated balance sheet of MFG reflects the following adjustments:

• (i) the issue of 52.3 million MFG Ordinary Shares, 6.2 million MFG 2011 Options, 7.9 million MFG 2016 Options and 10.2 million MFG Class B Shares to holders of NPH Shares and NPH Second Options in NPH and shares in NPH Funds. Details of the anticipated capital structure of the group are provided in section 3.5;

Page 26

• (ii) the cancellation of 19.3 million MFG Ordinary Shares and 9.4 million MFG 2009 Options currently owned by NPH and NPH Funds;

• (iii) estimated total acquisition costs of $1.5 million to be incurred by MFG and NPH;

• (iv) an adjustment to the carrying value of the AASB 132 liability arising from the cancellation of 9.4 million MFG 2009 Options; and

• (v) recognition of $48.9 million of intangible assets that reflect the difference between the fair value of the MFG capital provided as consideration and the fair value of the tangible net assets acquired in the acquisition.

Page 27

(c) Pro-forma balance sheet at 30 June 2007

Current assets Cash and cash equivalents Other current assets Total current assets Non-current assets Goodwill Other financial assets Other non-current assets Total non-current assets Total assets Current liabilities Trade creditors and other payables Bank loans Total current liabilities Non-current liabilities Deferred tax liabilities AASB 132 accounting adjustment Total non-current liabilities Total liabilities Net assets Equity Issued securities AASB132 adjustment Contributed equity Asset revaluation reserve Retained profits / (losses) Minority interests Total equity	MFG Pro-forma as at 30 June 2007 NPH Pro- forma as at 30 June 2007 Total Adjustments Consolidated Pro-forma Balance Sheet as at 30 June 2007 $M $M $M $M 56.5 7.4 (1.5) 62.4 2.5 10.7 (9.9) 3.3
	59.0 18.1 (11.4) 65.7
	0.0 0.0 48.9 48.9 42.3 48.7 (33.5) 57.5 8.0 0.2 0.0 8.2
	50.3 48.9 15.4 114.6
	109.3 67.0 4.0 180.3
	(5.2) (0.7) 0.0 (5.9) 0.0 (7.5) 0.0 (7.5)
	(5.2) (8.2) 0.0 (13.4)
	0.0 (7.8) 7.0 (0.8) (10.3) 0.0 3.4 (6.9)
	(10.3) (7.8) 10.4 (7.7)
	(15.5) (16.0) 10.4 (21.1)
	93.8 51.0 14.4 159.2
	109.4 28.5 34.3 172.2 (34.7) 0.0 3.4 (31.3)
	74.7 28.5 37.7 140.9 (2.9) 8.2 (8.8) (3.5) 22.0 6.1 (6.3) 21.8 0.0 8.2 (8.2) 0.0
	93.8 51.0 14.4 159.2

Page 28

3.5 Schedule of Capital Structure

(a) Current Security Structure

The impact on the current number of MFG Securities on issue is as follows:

• (i) Where no NPH Second Options are exercised prior to completion of the transaction:

	Pre- acquisition	Issued	Cancelled	Post- acquisition
	(millions)	(millions)	(millions)	(millions)
MFG Ordinary Shares	112.3	52.3	(19.3)	145.3
MFG 2009 Options	28.3	--	(9.4)	18.9
MFG 2011 Options	--	6.2	--	6.2
MFG 2016 Options	--	7.9	--	7.9
MFG Class B Shares	--	10.2	--	10.2

(ii) Where all NPH Second Options are exercised prior to completion of the transaction :

	Pre- acquisition	Issued	Cancelled	Post- acquisition
	(millions)	(millions)	(millions)	(millions)
MFG Ordinary Shares	112.3	56.4	(19.3)	149.4
MFG 2009 Options	28.3	--	(9.4)	18.9
MFG 2011 Options	--	--	--	--
MFG 2016 Options	--	8.6	--	8.6
MFG Class B Shares	--	10.2	--	10.2

(b) Fully Diluted Share Capital

The impact of the acquisitions on the fully diluted share capital of MFG is as follows:

Page 29

(i) Where no NPH Second Options are exercised prior to completion of the transaction:

	Pre-acquisition	Post-acquisition
Number of Securities	(millions)	(millions)
Shares on issue	112.3	145.4
Exercise of MFG 2009 Options	28.3	18.9
Exercise of MFG 2011 Options	28.3	25.1
Exercise of MFG 2016 Options	--	7.9
Conversion of MFG Class B Shares(1)	--	10.2
Fully diluted share capital	168.9	207.5

(1) Based on the maximum conversion ratio and the share cap at 170 million MFG Ordinary Shares.

(i) Where all NPH Second Options are exercised prior to completion of the transaction:

	Pre-acquisition	Post-acquisition
Number of Securities	(millions)	(millions)
Shares on issue	112.3	149.4
Exercise of MFG 2009 Options	28.3	18.9
Exercise of MFG 2011 Options	28.3	18.9
Exercise of MFG 2016 Options	--	8.7
Conversion of MFG Class B Shares(1)	--	10.2
Fully diluted share capital	168.9	206.0

• (1) Based on the maximum conversion ratio and the share cap at 170 million MFG Ordinary Shares.

3.6 Sensitivity Analysis

(a) Alternative Offer Consideration

Under the terms of the offer, NPH option holders have the choice of:

Page 30

• (i) retaining their Second Options and receiving 3 MFG Secondary (2011) Options; or

• (ii) exercising their Second Options (at a strike price of $1.30 per option) and receiving 1.95 MFG Ordinary Shares and 0.33 MFG 1016 options.

The pro-forma financial data presented in sections 3.3 to 3.5 has been prepared on the basis that no option holders will exercise their Second Options. If all option holders do exercise their Second Options the impact on the pro-forma balance sheet following the transaction will be as follows:

• an increase of $2.6m in cash and cash equivalents;

• a decrease of $0.4m in goodwill; and

• an increase of $2.2m in issued capital.

(b) Value of MFG Securities Issued

An increase in 10c per share in the market value of MFG Ordinary Shares will increase the goodwill and share capital issued each by $4.0 million. A decrease of $10c per share in the market value of MFG shares will decrease goodwill and share capital issued each by $4.0 million.

3.7 IMPACT ON MFG'S FINANCIAL PERFORMANCE

The 2007 Annual Report provided the following guidance for MFG’s financial outlook for 2008:

“For the 2008 financial year we have budgeted for a loss after tax of similar magnitude to the $2.8 million to $3.0 million loss that was forecast for 2007. This ignores the impact of any Accounting Adjustment for the Secondary Options and is before the impact of any performance fee that may be payable under the Management Services Agreement (MSA) discussed below…

The budgeted total expenses for the business, including the base management fee under the MSA, are approximately $15 million. Revenue assumptions in the budget include full year investment management fees from Magellan Flagship Fund, our listed investment company, interest income on our cash balance and modest investment management fees from our new unlisted funds (Magellan Global Fund and Magellan Infrastructure Fund) launched in July 2007. We believe it is realistic to assume that investment management fees from the new unlisted funds will be modest in 2007/2008 as a whole and particularly modest for the 6 months to 31 December 2007…..”

The impact of the acquisitions on MFG’s financial outlook for 2008 as above (using the basis of preparation set out in section 3.2, the adjustments set out in section 3.3 and the assumptions set out in section 3.4) would be to increase budgeted total revenue by $0.3 million reduce the budgeted total expenses by $1.3 million and reduce the budgeted loss after tax by $1.1 million.

Page 31

4. Independent Directors' Recommendation

4.1 Independent Directors' Recommendation

The Independent Directors (the MFG Directors other than Chris Mackay and Hamish Douglass) unanimously recommend that you vote in favour of all the resolutions. Unless all of the resolutions are passed the Proposal will not proceed. In recommending shareholders vote in favour of all the resolutions the Independent Directors consider that:

• (a) the terms of the acquisition of the NPH Shares held by Mr Mackay are fair and reasonable to the non-associated shareholders of MFG. This has been confirmed by the Independent Expert. In arriving at this conclusion the Independent Directors consider that the consideration being offered to Mr Mackay is worth less than the value of his NPH Shares and/or NPH Second Options being acquired.;

• (b) the terms of the acquisition of Mr Douglass’ 40% interest in NPH Funds are fair and reasonable to the non-associated shareholders of MFG. This has been confirmed by the Independent Expert. In arriving at this conclusion the Independent Director’s believe that consideration being offered to Mr Douglass is worth less than the value of his 40% interest in NPH Funds and note that the terms of the MFG Class B Shares are less favourable to Mr Douglass than his economic interest in the Management Services Agreement because, among other things:

• (i) MFG Class B Shares do not confer entitlements to receive dividends, whereas under the current arrangements NPH Funds could pay to its shareholders (Midas Touch Investments and NPH) any base and performance fees it receives under the MSA in the form of dividends. Therefore under the terms of the acquisition of Mr. Douglass’ 40% interest in NPH Funds, he will not receive, in the form of dividends, the benefit of any base fees or any performance fees that may have been paid during the term of the MSA; and

• (ii) the conversion terms of the MFG Class B Shares into MFG Ordinary Shares are based on 12 times the most recent base fee, whereas the MSA termination fee is based on 12 times the most recent base fee and the most recent performance fee (if any) that was paid. In addition, the conversion terms are based on a cap on the issued capital of MFG of 170 million shares, whereas the termination fee in the MSA has no such cap; and

• (c) acquiring NPH and NPH Funds and internalising the Management Services Agreement will simplify the group structure and will facilitate the future development of Magellan Financial Group.

In addition to the Independent Expert’s conclusion that the Proposal is fair and reasonable, the Independent Directors have also considered additional benefits not specifically

Page 32

addressed by the Independent Expert accruing to MFG in recommending that you vote in favour of all the resolutions.

The Independent Directors believe that the Independent Expert has assessed the value of NPH and NPH Funds as stand alone entities and has not assessed their value as whollyowned subsidiaries of MFG. For example, the Independent Expert has deducted from the value of NPH and NPH Funds capitalised corporate costs totalling $2.4 million and deferred tax liabilities totalling $6.2 to $6.9 million, which will be effectively eliminated on acquisition. In addition, the Independent Expert has not included in its valuation of NPH and NPH Funds value for any franking credits that would be generated by NPH or NPH Funds. The Independent Directors believe that that these franking credits are valuable to MFG Ordinary Shareholders and will effectively be captured by MFG via the elimination of the fees payable under the MSA.

5. RESOLUTIONS TO BE CONSIDERED AT THE MEETING

5.1 Resolution 1 – Acquisition of NPH Securities from Chris Mackay's controlled entities as a result of acceptances of the takeover offers

(a) Background

Chris Mackay, the Deputy Chairman of MFG and therefore a related party of MFG, currently holds NPH Shares and NPH First Options both directly and indirectly through his controlled entities, Magellan Equities Pty Limited and Naumov Pty Limited. If any of the NPH First Options held by Chris Mackay's investment company, are exercised, 1 NPH Share and 1 NPH Second Option will be issued for each NPH First Option exercised. However, Chris Mackay’s investment company, Magellan Equities Pty. Limited, has irrevocably agreed to let lapse all of its 6,992,705 NPH First Options by not exercising them prior to their expiration on 31 December 2007. This commitment is subject to NPH's independent expert determining that the Share Offer is fair and reasonable. It is a condition of the Share Offer that Mr. Mackay’s investment company does not exercise any of the 6,992,705 First Options that it holds. An announcement will be made to the ASX on or before 31 December 2007 as to whether this condition has been met.

If the condition is not met, Chris Mackay's investment company is free to exercise its NPH First Options and in these circumstances a condition of the Share Offer will have been triggered.

Pursuant to the Takeover Offers, MFG has offered to acquire all of the NPH Shares and NPH Second Options, including those NPH Shares held by Chris Mackay both directly and indirectly through his controlled entities. The NPH Shares constitute a 'substantial asset' within the meaning of ASX Listing Rule 10.1, on the basis that their value exceeds the 'substantial asset' threshold of 5% of MFG's consolidated equity interests, as shown in the 30 June 2007 accounts (namely, $69,449,000).

Page 33

Under ASX Listing Rule 10.1, MFG can only issue securities with a value in excess of this threshold to a related party with approval by ordinary resolution of MFG Ordinary Shareholders, excluding any person who is to receive shares and any associates of that person.

Accordingly, approval is being sought for the acquisition by MFG of such NPH Shares under the Takeover Offers.

Chris Mackay, Magellan Equities Pty Limited and Naumov Pty Limited and his associates are excluded from voting on Resolution 1. The associates include Hamish Douglass and his controlled entities.

(b) Independent expert's report

ASX Listing Rule 10.10.2 requires this Notice of Meeting to include a report on the acquisitions from an independent expert. The report must state whether the acquisitions of NPH Shares from Chris Mackay and his controlled entities, if they accept the Takeover Offers for those securities, are fair and reasonable to Shareholders whose votes are not to be disregarded on Resolution 1.

Grant Thornton Corporate Finance Pty Limited has prepared an Independent Expert's Report and has concluded that the terms of the acquisitions of NPH Shares from Chris Mackay and his controlled entities are fair and reasonable to MFG Ordinary Shareholders whose votes are not to be disregarded on Resolution 1. A copy of the Independent Expert's Report is attached as Annexure A to this Notice of Meeting.

(c) Directors' recommendation

Chris Mackay has a material personal interest in the outcome of Resolution 1 by virtue of his holdings of NPH Shares and NPH First Options. Hamish Douglass has a material personal interest in the outcome of Resolution 1 by virtue of his interest in the outcome of Resolutions 2, 3 and 4, and the fact that those Resolutions are conditional upon Resolution 1 being passed. The Independent Directors do not have any material personal interest in the outcome of Resolution 1.

Each Independent Director recommends that Shareholders vote in favour of Resolution 1 for the following reasons:

• (i) the expected benefits of the Proposal as described in section 4 above; and

• (ii) the opinion of Grant Thornton Corporate Finance Pty Limited, the Independent Expert, that the acquisitions of the NPH securities held by Chris Mackay and his controlled entities are fair and reasonable to MFG Ordinary Shareholders whose votes on Resolution 1 are not to be disregarded.

Page 34

5.2 Resolution 2 – Acquisition of 40% shareholding in NPH Funds from Midas Touch Investments

(a) Background

By reason of ASX Listing Rule 10.1, the acquisition or disposal by MFG of a 'substantial asset' to or from a related party requires the approval by ordinary resolution of MFG Ordinary Shareholders, excluding any MFG Ordinary Shareholder who is a party to the transaction and any associates of that party.

The acquisition by MFG of the 40% shareholding in NPH Funds shares from Midas Touch Investments under the Share Purchase Agreement needs to be approved by MFG Ordinary Shareholders by ordinary resolution under ASX Listing Rule 10.1, on the basis that Midas Touch Investments, a controlled entity of Hamish Douglass, is a related party of MFG and the value of the 40% shareholding in NPH Funds exceeds the 'substantial asset' threshold of 5% of MFG consolidated equity interests (as shown in the 30 June 2007 accounts).

Midas Touch Investments and its associates are excluded from voting on Resolution 2. The associates include Hamish Douglass, Chris Mackay and their respective controlled entities.

Details of the Share Purchase Agreement are set out in section 1.4 above.

(b) Independent expert's report

ASX Listing Rule 10.10.2 requires this Notice of Meeting to include an independent expert's report on the acquisition of the NPH Funds shares. Grant Thornton Corporate Finance Pty Limited has prepared the Independent Expert's Report and has concluded that the terms of the acquisition of the NPH Funds shares are fair and reasonable to MFG Ordinary Shareholders whose votes are not to be disregarded on Resolution 2. A copy of the Independent Expert's Report is attached as Annexure A to this Notice of Meeting.

(c) Directors' recommendation

Hamish Douglass (Chairman of MFG) has a material personal interest in the outcome of Resolution 2 by virtue of his controlling interest in Midas Touch Investments. Chris Mackay has a material personal interest in the outcome of Resolution 2 by virtue of his interest in the outcome of Resolution 1, and the fact that Resolution 1 is conditional upon Resolution 2 being passed. The Independent Directors do not have any material personal interest in the outcome of Resolution 2.

Each Independent Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 2 for the following reasons:

• (i) the expected benefits of the Proposal as described in section 4 above; and

• (ii) the opinion of Grant Thornton Corporate Finance Pty Limited, the independent expert, that the acquisition of the NPH Funds shares is fair and

Page 35

reasonable to MFG Ordinary Shareholders whose votes on Resolution 2 are not to be disregarded.

5.3 Resolution 3 – Issue of Shares to Midas Touch Investments

(a) Background

By reason of ASX Listing Rule 10.11, MFG can only issue securities to a related party with approval by ordinary resolution of MFG Ordinary Shareholders, excluding any person who is to receive shares and any associates of that person.

As consideration for the acquisition of NPH Funds shares from Midas Touch Investments under the Share Purchase Agreement, MFG will issue MFG Ordinary Shares and MFG Class B Shares to Midas Touch Investments. The number of shares to be issued and the terms of the MFG Class B Shares are described in section 1.4 of this Explanatory Memorandum and Annexure C. As Midas Touch Investments is a related party of MFG, the issue of these shares needs to be approved by ordinary resolution of MFG Ordinary Shareholders.

Midas Touch Investments and its associates are excluded from voting on Resolution 3. The associates include Hamish Douglass, Chris Mackay and their respective controlled entities.

Details of the Share Purchase Agreement are set out in section 1.4 above.

(b) Additional information

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of the ASX Listing Rule 10.13, the following information is provided in relation to Resolution 3.

Information required	Details
ASX LR 10.13.1 Name of the person who is to receive MFG securities	Midas Touch Investments
ASX LR 10.13.2 Maximum number of MFG securities to be issued to the person (if known) or the formula for calculating the number of securities to be issued	5,844,799 MFG Ordinary Shares and 10,200,000 Class B Shares (see section 1.4 above)
ASX LR 10.13.3 Date by which MFG will issue the securities, which must not be more than 1 month after the date of the shareholders' meeting	Within 15 months after the date of the Meeting. ASX has waived ASX LR 10.13.3 to permit this Notice of Meeting to include a date by which MFG must issue the securities which is more than 1 month after the date of the meeting, provided that this Notice of Meeting states that the securities will be issued within 15 months of the date of the Meeting.

Page 36

Information required	Details
ASX LR 10.13.4 If the person is not a Director, statement of the relationship between the person and the Director that requires the approval to be obtained.	Midas Touch Investments is controlled by Hamish Douglass (Chairman of MFG).
ASX LR 10.13.5 The issue price of the securities and a statement of the terms of issue	MFG Ordinary Shares: The MFG Ordinary Shares do not have an issue price as they are part consideration for the transfer of the 40% shareholding in NPH Funds. However, as set out in section 1.4 above, for the purposes of determining the number of MFG Ordinary Shares to be issued, a value of $1.73 per MFG Ordinary Share has been assumed. The MFG Ordinary Shares will rank equally with existing MFG Ordinary Shares. MFG Class B Shares: The MFG Class B Shares do not have an issue price as they are part consideration for the transfer of the 40% shareholding in NPH Funds. The terms of issue set out in Annexure B and summarised in section 1.4 above.
ASX LR 10.13.6 A voting exclusion statement	See Explanatory Notes above to Notice of Meeting.
ASX LR 10.13.6A Intended use of the funds raised.	MFG will not be raising any funds from the issue of MFG Ordinary Shares and MFG Class B Shares to Midas Touch Investments, as these securities will be issued in consideration for the acquisition of shares in NPH Funds.

(c) Independent expert's report

ASX Listing Rule 10.10.2 requires this Notice of Meeting to include an independent expert's report on the issue of the MFG Ordinary Shares and MFG Class B Shares to Midas Touch Investments. Grant Thornton Corporate Finance Pty Limited has prepared the Independent Expert's Report and has concluded that the terms of the share issues to Midas Touch Investments are fair and reasonable to MFG Ordinary Shareholders whose votes are not to be disregarded on Resolution 3. A copy of the Independent Expert's Report is attached as Annexure A to this Notice of Meeting.

(d) Directors' recommendation

Hamish Douglass (Chairman of MFG) has a material personal interest in the outcome of Resolution 3 by virtue of his controlling interest in Midas Touch Investments. Chris Mackay has a material personal interest in the outcome of Resolution 3 by virtue of his interest in the outcome of Resolution 1, and the fact that Resolution 1 is conditional upon Resolution 3 being passed. The Independent

Page 37

Directors do not have any material personal interest in the outcome of Resolution 3.

Each Independent Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 3 for the following reasons:

• (i) the expected benefits of the Proposal as described in section 4 above; and

• (ii) the opinion of Grant Thornton Corporate Finance Pty Limited, the independent expert, that the issues of the securities are fair and reasonable to MFG Ordinary Shareholders whose votes on Resolution 3 are not to be disregarded.

5.4 Resolution 4 – Amendment of MFG Constitution to include Class B Share terms of issue

(a) Background

The 10,200,000 MFG Class B Shares that are being offered as part consideration for the acquisition by MFG of NPH Funds shares held by Midas Touch Investments under the Share Purchase Agreement are a new class of shares. The MFG Class B Shares have been structured to exclude any compensation for possible performance fees under the MSA.

Their terms of issue are set out in Annexure C.

(b) Issue of MFG Class B Shares

Shareholder approval is being sought to amend MFG’s Constitution to permit the issue of the MFG Class B Shares and to include their terms as part of the Constitution.

(c) Directors' recommendation

Each Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 4 because of the expected benefits of the Proposal as described in section 4 above.

5.5 Resolution 5 – Consolidation or subdivision of MFG Class B Shares

(a) Background

The 10,2000,000 MFG Class B Shares that are being offered as part consideration for the acquisition by MFG of NPH Funds shares held by Midas Touch Investments under the Share Purchase Agreement are a new class of shares, being neither ordinary shares or preference shares. The MFG Class B Shares have been structured to exclude any compensation for possible performance fees under the MSA.

Their terms of issue are set out in Annexure C.

Page 38

(b) Conversion into MFG Ordinary Shares

The 10,200,000 MFG Class B Shares can, in accordance with their terms of issue, be converted into a maximum of 10,200,000 MFG Ordinary Shares, depending on the number of MFG Ordinary Shares on issue at the relevant time.

(c) Adjustment of number of shares on conversion

If the number of MFG Ordinary Shares on issue at the relevant time is less than 170,000,000, the 10,200,000 MFG Class B Shares will convert into less than 10,200,000 MFG Ordinary Shares, meaning that the conversion ratio not be 1:1. To provide for a 1:1 conversion ratio in that circumstance, the terms of issue provide that, immediately before 12.01 am on the day of conversion of any MFG Class B Shares, those MFG Class B Shares are automatically consolidated.

Under section 254H of the Corporations Act, a company may only convert all or any of its shares into a larger number of shares (a subdivision) or a smaller number of shares (a consolidation) by resolution passed at a general meeting. The consolidation takes effect on the day the resolution is passed or on a later date specified in the resolution. Accordingly, the approval of MFG Ordinary Shareholders is being sought under section 254H for any consolidation or subdivision which occurs each time MFG Class B Shares are converted into MFG Ordinary Shares.

(d) Directors' recommendation

Each Independent Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 5 because of the expected benefits of the Proposal as described in section 4 above.

5.6 Resolution 6 – Selective reduction of capital

(a) Background

Section 259D(1) of the Corporations Act provides that if a company obtains control of an entity that holds shares in the company, then within 12 months after it occurs either the entity must cease to hold the shares or the company must cease to control the entity.

As at the date of this Notice of Meeting:

• (i) NPH holds 6,696,651 MFG Ordinary Shares (approximately 6% of all the MFG Ordinary Shares) and 3,069,666 MFG 2009 Options; and

• (ii) NPH Funds (a 60%-owned subsidiary of NPH) holds 12,606,006 Ordinary Shares (approximately 12% of all the MFG Ordinary Shares) and 6,300,601 MFG 2009 Options.

If, as a result of the Takeover Offers, MFG acquires more than 50% of the NPH Shares, MFG will control NPH and each of its subsidiaries (including NPH Funds) and section 259D(1) will therefore apply. To comply with section 259D(1), MFG

Page 39

intends for NPH and NPH Funds to cease holding MFG Ordinary Shares within 12 months after MFG obtains control of NPH and NPH Funds.

If MFG obtains control of NPH and each of its subsidiaries (including NPH Funds), MFG also intends to cancel the MFG 2009 Options and any MFG 2011 Options held by NPH and NPH Funds.

(b) Selective reduction proposal

One of the ways by which MFG can comply with section 259D(1) is to cancel the MFG Ordinary Shares held by NPH and NPH Funds by way of a selective reduction. By reason of section 259D(1), the cancellation would need to occur no later than 12 months after MFG obtains control of NPH and NPH Funds.

By reason of section 256C(2) of the Corporations Act, any selective reduction involving a cancellation of shares must be approved by:

• (i) a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or by their associates; and

• (ii) a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.

Resolution 6 is the special resolution referred to in paragraph (i) above. As it is proposed that the MFG Ordinary Shares held by NPH and NPH Funds be cancelled, NPH and NPH Funds are not prevented from voting in favour of the resolution. The cancellation will only occur if NPH and NPH Funds have become wholly-owned subsidiaries of MFG.

The special resolution referred to in paragraph (ii) above will be put to a separate meeting at which only NPH and NPH Funds (which at the relevant time would be wholly owned subsidiaries of MFG) is entitled to attend and vote. For that

purpose, a separate notice of meeting will be sent to NPH and NPH Funds and a copy of it will be lodged with ASIC and released to ASX. That separate meeting will occur immediately after the conclusion of the Extraordinary General Meeting.

Approval of these two resolutions will authorise MFG to undertake the selective reduction, but does not oblige MFG to do so. It is possible that MFG will instead elect to comply with section 259D(1) by other means, eg. by way of a selective buy-back (see Resolution 7 below) or on-market sale. The reason for seeking approval for both a selective reduction and buy-back is to provide MFG with maximum flexibility in complying with section 259D(1) of the Corporations Act.

(c) Additional information

As the MFG Ordinary Shares held by NPH and NPH Funds would be cancelled for fair consideration, as required by Australian Accounting Standards, the selective reduction will have no impact on MFG's reported profits. The cancellation of MFG Ordinary Shares will reduce the number of MFG Ordinary Shares on issue and

Page 40

increase each MFG Ordinary Shareholder's proportionate holdings of MFG Ordinary Shares. However, the Directors do not believe this will have a material impact on the control of MFG.

The cancellation will not materially prejudice MFG's ability to pay its creditors.

Other relevant information

The Directors consider that there is no other information known to MFG that is material to the decision as to how to vote on Resolution 6, except information which it would be unreasonable to require MFG to disclose because MFG has previously disclosed that information to MFG Ordinary Shareholders.

(d) Directors' recommendation

Each Independent Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 6.

5.7 Resolution 7 – Selective buy back of MFG Shares

(a) Selective buy-back proposal

Another means by which MFG can comply with section 259D(1) (see Resolution 6 above) is to buy-back the MFG Ordinary Shares held by NPH and NPH Funds. This would be a selective buy-back because MFG will offer to buy-back MFG Ordinary Shares held by NPH and NPH Funds only.

By reason of section 257D(1) of the Corporations Act, the terms of a buy-back agreement for a selective buy-back must be approved before it is entered into by a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person whose shares are proposed to be bought-back or by their associates. Alternatively, the agreement must be conditional on such approval.

The approval of MFG Shareholders is sought to offer to buy-back the MFG Ordinary Shares held by NPH and NPH Funds for a fair consideration, as required by Australian Accounting Standards, and, if those offers are accepted, to enter into buy-back agreements on the terms set out in Annexure D to this Notice of Meeting.

The requirement that any buy-back agreement be entered into, and for any buyback pursuant to that agreement to occur, within 12 months after the date of the approval has been included to reflect ASIC policy regarding shareholder approvals for buy-backs – see ASIC Regulatory Guide 110. By reason of section 259D(1), any buy-back would need to occur no later than 12 months after MFG obtains control of NPH and NPH Funds.

Approval of Resolution 8 will authorise MFG to proceed with a buy-back of shares, but will not oblige MFG to do so. It is possible that MFG will elect to comply with section 259D(1) by alternative means, eg. by way of a selective reduction of capital (see Resolution 6) or on-market sale.

Page 41

(b) Prescribed information

The following information is provided as required by ASIC policy regarding share buy-backs – see ASIC Regulatory Guide 110.

(i) Number of shares on issue

As at 21 December, 2007 (the last practicable date prior to the publication of this Notice of Meeting), MFG had 112,315,981 MFG Ordinary Shares on issue.

(ii) Quantity of shares to be bought back

Resolution 7, if passed, authorises MFG to buy-back any or all of the MFG Ordinary Shares held by NPH and NPH Funds.

As at the date of this Notice of Meeting:

• (A) NPH holds 6,696,651 MFG Ordinary Shares (approximately 6% of all the MFG Ordinary Shares); and

• (B) NPH Funds (a 60%-owned subsidiary of NPH) holds 12,606,006 Ordinary Shares (approximately 12% of all the MFG Ordinary Shares).

(iii) Terms of buy-back

The terms of any buy-back agreement with NPH and NPH Funds are set out in Annexure D to this Notice of Meeting.

(iv) Offer price

The purchase price to be offered for each MFG Ordinary Share held by NPH and NPH Funds will be equal to their fair market purchase cost.

(v) Reasons for buy-back

See paragraph (a) above.

(vi) Interests of directors who may participate in buy-back

None of the Directors can participate in the buy-back.

(vii) Financial effect of buy-back on MFG

The buy-back will not have any impact on MFG’s reported profitability and will not affect MFG’s cash or debt position on a consolidated basis.

All shares bought-back will be cancelled, thus reducing MFG's issued share capital.

MFG's ability to pay its creditors will not be materially prejudiced by MFG undertaking the buy-back.

(viii) Advantages and disadvantages of buy-back

The cancellation of MFG Ordinary Shares will reduce the number of MFG

Ordinary Shares on issue and increase each MFG Ordinary Shareholder's

Page 42

proportionate holdings of MFG Ordinary Shares. However, the Directors do not believe this will have a material impact on the control of MFG.

In addition, the Directors do not believe that the buy-back poses any disadvantages to MFG Ordinary Shareholders.

(ix) Financial statements

The most recent set of audited financial statements for MFG was for the financial year ending 30 June 2007. Those financial statements were contained in the 2007 Annual Report provided or made available to Shareholders. The 2007 Annual Report is available for viewing online at www.magellangroup.com.au.

MFG will provide to any of its Shareholders upon a requires a printed copy of the 2007 Annual Report upon request.

(x)

Share price

The closing price of MFG Ordinary Shares on 21 November, 2007 being the last practicable date prior to publication of this Notice of Meeting, was $1.52.

(xi) Other relevant information

The Directors consider that there is no other information known to MFG that is material to the decision as to how to vote on Resolution 7, except information which it would be unreasonable to require MFG to disclose because MFG has previously disclosed that information to MFG Ordinary Shareholders.

(c) Directors' recommendation

Each Independent Director recommends that MFG Ordinary Shareholders vote in favour of Resolution 7.

Page 43

GLOSSARY

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691) or, as the context requires, the financial market operated by it.

ASX Listing Rules means the listing rules of ASX.

Bidder's Statement means the Bidder’s Statement of MFG dated 20 December 2007 in relation to the Takeover Offers, as may be supplemented or replaced from time to time.

Corporations Act means the Corporations Act 2001 (Cth) and accompanying regulations, each as amended from time to time.

Directors means the directors of MFG from time to time and Director means any one of them.

EGM or Meeting means the Extraordinary General Meeting of MFG to be held on 29 January, 2008 at 4.00 pm.

Independent Directors means Naomi Milgrom, Paul Lewis and Brett Cairns (ie. all Directors other than Hamish Douglass and Chris Mackay).

Independent Expert or Grant Thornton means Grant Thornton Corporate Finance Pty Limited (ABN 59 003 265 987).

Independent Expert’s Report means the report prepared by the Independent Expert, as set out in Annexure A.

Internalisation Proposal means, following the acquisition of 100% of the NPH Shares and NPH Second Options, the internalisation of the MSA to be achieved by MFG acquiring the 40% shareholding in NPH Funds held by Midas Touch Investments.

MAM means Magellan Asset Management Limited (ACN 120 593 946).

MFF means Magellan Flagship Fund Limited (ABN 32 121 977 884).

MFG means Magellan Financial Group Limited (ABN 59 108 437 592).

MFG 2009 Option means an option issued by MFG pursuant to its Explanatory Memorandum dated 13 October 2006 or the Entitlements Offer and Priority Offers Prospectus dated 5 April 2007 to subscribe for an MFG Ordinary Share at $1.20, where such option has an expiry date of 30 June 2009. Upon exercise of a MFG 2009 Option, the holder will also be issued a MFG 2011 Option.

MFG 2011 Option means an option to subscribe for a MFG Ordinary Share at $1.30, where such option has an expiry date of 30 June 2011 and is issued by MFG either:

• (a) upon the exercise of a MFG 2009 Option; or

• (b) as consideration under the Options Offer,

Page 44

and having the terms of issue set out in Annexure A of the Bidder’s Statement.

MFG 2016 Option means an option to subscribe for a MFG Ordinary Share at $3.00, where such option has an expiry date of 30 June 2016 and is issued by MFG as consideration under the Options Offer, and having the terms of issue set out in Annexure B of the Bidder’s Statement.

MFG Class B Share means a class B share in MFG, to be issued as consideration under the Internalisation Proposal and having the terms of issue set out in Annexure C.

MFG Group means MFG and its subsidiaries.

MFG Ordinary Share means a fully paid ordinary share issued in the capital of MFG.

MFG Ordinary Shareholder means a person registered in the register of shareholders of MFG as a holder of MFG Ordinary Shares.

Midas Touch Investments means Midas Touch Investments Pty. Ltd. (ABN 19 079 087 031), a company controlled by Hamish Douglass, the Chairman of MFG.

MSA means Management Services Agreement dated 21 November 2006 between MFG and NPH Funds.

Notice of Meeting means this booklet, comprising the Chairman's letter, the Notice of Extraordinary General Meeting, the Annexures (including the Independent Expert’s Report) and the accompanying proxy form.

NPH means New Privateer Holdings Limited (ABN 83 006 106 690).

NPH First Option means an option to subscribe for a NPH Share exercisable at $1.25 during the months of June and December each year until 31 December 2007, such option having been issued pursuant to NPH’s Renounceable Rights Issue and Public Offer Prospectus dated 2 May 2006. Upon exercise of a NPH First Option, the holder will also be issued a NPH Second Option.

NPH Funds means NPH Funds Pty Limited (ABN 25 120 592 672).

NPH Second Option means an option to subscribe for a NPH Share exercisable at $1.30 during the months of June and December each year until 31 December 2010, such option being issued upon the exercise of a NPH First Option and having the terms set out in NPH's Renounceable Rights Issue and Public Offer Prospectus dated 2 May 2006.

NPH Second Optionholder means a person registered as a holder of NPH Second Options.

NPH Share means a fully paid ordinary share issued in the capital of NPH.

NPH Shareholder means a person registered in the register of shareholders of NPH as a holder of NPH Shares.

Options Offer means the offer by MFG to acquire all of the NPH Second Options, as set out in the Bidder’s Statement.

Proposal means the Takeover Offers and Internalisation Proposal, or either of them, as applicable.

Resolutions means the resolutions to be put to MFG Ordinary Shareholders at the EGM, as set out in Notice of Extraordinary General Meeting.

Page 45

Share Offer means the offer by MFG to acquire all of the NPH Shares, as set out in the Bidder’s Statement.

Share Purchase Agreement means the share purchase agreement dated 20 November 2007 between MFG and Midas Touch Investments in relation to the Internalisation Proposal.

Takeover Offers means the Share Offer and the Options Offer.

VWAP means, in relation to a security in a class of securities, the volume weighted average sale price of a security in that class in the ordinary course of trading on ASX (excluding special crossings, overnight trades and exchange traded option exercises) as traded on ASX over a period of time immediately preceding, but not including, a given date.

Page 46

ANNEXURE A - INDEPENDENT EXPERT'S REPORT

==> picture [440 x 622] intentionally omitted <==

Page 47

==> picture [440 x 623] intentionally omitted <==

Page 48

==> picture [440 x 622] intentionally omitted <==

Page 49

==> picture [440 x 619] intentionally omitted <==

Page 50

==> picture [440 x 619] intentionally omitted <==

Page 51

==> picture [440 x 624] intentionally omitted <==

Page 52

==> picture [440 x 621] intentionally omitted <==

Page 53

==> picture [440 x 623] intentionally omitted <==

Page 54

==> picture [440 x 624] intentionally omitted <==

Page 55

==> picture [440 x 624] intentionally omitted <==

Page 56

==> picture [440 x 627] intentionally omitted <==

Page 57

==> picture [440 x 622] intentionally omitted <==

Page 58

==> picture [440 x 625] intentionally omitted <==

Page 59

==> picture [440 x 623] intentionally omitted <==

Page 60

==> picture [440 x 624] intentionally omitted <==

Page 61

==> picture [440 x 624] intentionally omitted <==

Page 62

==> picture [440 x 620] intentionally omitted <==

Page 63

==> picture [440 x 624] intentionally omitted <==

Page 64

==> picture [440 x 623] intentionally omitted <==

Page 65

==> picture [440 x 622] intentionally omitted <==

Page 66

==> picture [440 x 619] intentionally omitted <==

Page 67

==> picture [440 x 623] intentionally omitted <==

Page 68

==> picture [440 x 621] intentionally omitted <==

Page 69

==> picture [440 x 621] intentionally omitted <==

Page 70

==> picture [440 x 621] intentionally omitted <==

Page 71

==> picture [440 x 622] intentionally omitted <==

Page 72

==> picture [440 x 624] intentionally omitted <==

Page 73

==> picture [440 x 623] intentionally omitted <==

Page 74

==> picture [440 x 624] intentionally omitted <==

Page 75

==> picture [440 x 625] intentionally omitted <==

Page 76

==> picture [440 x 619] intentionally omitted <==

Page 77

==> picture [440 x 621] intentionally omitted <==

Page 78

==> picture [440 x 621] intentionally omitted <==

Page 79

==> picture [440 x 623] intentionally omitted <==

Page 80

==> picture [440 x 622] intentionally omitted <==

Page 81

==> picture [440 x 625] intentionally omitted <==

Page 82

==> picture [440 x 624] intentionally omitted <==

Page 83

==> picture [440 x 621] intentionally omitted <==

Page 84

==> picture [440 x 623] intentionally omitted <==

Page 85

==> picture [440 x 621] intentionally omitted <==

Page 86

==> picture [440 x 625] intentionally omitted <==

Page 87

==> picture [440 x 624] intentionally omitted <==

Page 88

==> picture [440 x 620] intentionally omitted <==

Page 89

==> picture [440 x 624] intentionally omitted <==

Page 90

==> picture [440 x 621] intentionally omitted <==

Page 91

==> picture [440 x 622] intentionally omitted <==

Page 92

==> picture [440 x 619] intentionally omitted <==

Page 93

==> picture [440 x 626] intentionally omitted <==

Page 94

==> picture [440 x 622] intentionally omitted <==

Page 95

==> picture [440 x 620] intentionally omitted <==

Page 96

==> picture [440 x 620] intentionally omitted <==

Page 97

==> picture [440 x 620] intentionally omitted <==

Page 98

==> picture [440 x 622] intentionally omitted <==

Page 99

==> picture [440 x 619] intentionally omitted <==

Page 100

==> picture [440 x 620] intentionally omitted <==

Page 101

==> picture [440 x 622] intentionally omitted <==

Page 102

==> picture [440 x 622] intentionally omitted <==

Page 103

==> picture [440 x 622] intentionally omitted <==

Page 104

==> picture [440 x 621] intentionally omitted <==

Page 105

==> picture [440 x 622] intentionally omitted <==

Page 106

==> picture [440 x 618] intentionally omitted <==

Page 107

==> picture [440 x 619] intentionally omitted <==

Page 108

==> picture [440 x 621] intentionally omitted <==

Page 109

==> picture [440 x 624] intentionally omitted <==

Page 110

==> picture [440 x 620] intentionally omitted <==

Page 111

==> picture [440 x 621] intentionally omitted <==

Page 112

==> picture [440 x 623] intentionally omitted <==

Page 113

==> picture [440 x 621] intentionally omitted <==

Page 114

==> picture [440 x 622] intentionally omitted <==

Page 115

==> picture [440 x 624] intentionally omitted <==

Page 116

==> picture [440 x 620] intentionally omitted <==

Page 117

==> picture [440 x 619] intentionally omitted <==

Page 118

==> picture [425 x 602] intentionally omitted <==

Page 119

ANNEXURE B – TERMS OF ISSUE OF MFG 2016 OPTIONS

Magellan Financial Group Limited

(ACN 108 437 592)

MFG 2016 Options Terms of Issue

Page 120

1. Interpretation

1.1 Definitions

In these terms:

Applicable Law means the Corporations Act, Listing Rules and ASTC Operating Rules.

ASTC means ASX Settlement and Transfer Corporation Pty Ltd (ABN 49 008 504 532).

ASTC Operating Rules means the operating rules of ASTC in its capacity as a CS facility licensee, except to the extent of any relief given by ASTC in their application to MFG.

ASX means ASX Limited (ABN 98 008 624 691) or, as the context requires, the financial market operated by it.

Bonus Issue means a bonus issue of MFG Ordinary Shares or other securities convertible into MFG Ordinary Shares pro rata to holders of MFG Ordinary Shares (other than an issue in lieu of dividends or by way of dividend reinvestment pursuant to any election by a holder of MFG Ordinary Shares).

Business Day :

• (a) if MFG is admitted to the official list of ASX at the time, has the meaning given in the Listing Rules; or

• (b) otherwise, means a day except a Saturday, Sunday or public holiday in New South Wales.

Change in Control Event means either of the following:

• (a) a takeover bid is made to acquire all or some of the MFG Ordinary Shares and the offer under the takeover bid is, or becomes, unconditional and:

• (i) the bidder has a relevant interest in more than 50% of the MFG Ordinary Shares on issue; or

• (ii) the Directors unanimously recommend acceptance of the offers under the takeover bid; or

• (b) a court approves a proposed compromise or arrangement under the Corporations Act which, when implemented, will result in a person having a relevant interest in more than 50% of the MFG Ordinary Shares on issue.

Corporations Act means Corporations Act 2001 (Cth).

Directors means the directors of MFG for the time being.

Exercise Period means the following periods which occur after 1 July 2008 and which are prior to the Expiry Date:

Page 121

• (a) each period of two months commencing on the date which is two Business Days after the announcement of the results of MFG for the financial year to 30 June in each year (commencing with the year to 30 June 2008);

• (b) each period of two months commencing on the date which is two Business Days after the announcement of the results of MFG for the half year to 31 December in each year (commencing with the half year to 31 December 2008).

The final Exercise Period (being in respect of the results for the half year to 31 December 2015) commences on the date that is two Business Days after the announcement of such results and ends at the Expiry Time.

Exercise Price means $3.00 per Option (as adjusted under clause 6).

Expiry Date means 30 June 2016.

Expiry Time means 5.00pm Sydney time on the Expiry Date.

Holder means, in respect of an Option, the person recorded as the holder of that Option in the Register.

Listing Rules means the listing rules of ASX, except to the extent of any express written waiver by ASX in their application to MFG.

Market Price has the meaning given in the Listing Rules.

MFG means Magellan Financial Group Limited (ACN 108 437 592).

Option means an option to subscribe for one Share.

Pro Rata Issue has the meaning given in the Listing Rules.

Register means MFG's register of optionholders maintained under the Corporations Act.

Share means an ordinary share in the capital of MFG.

1.2 Interpretation

Unless the context indicates a contrary intention, in these terms:

• (a) a reference to any statute or to any statutory provision includes any statutory modification or re-enactment of it or any statutory provision substituted for it, and all ordinances, by-laws, regulations, rules and statutory instruments (however described) issued under it;

• (b) a reference to the Listing Rules or the ASTC Operating Rules includes any amendment or replacement of those rules from time to time;

• (c) a reference to the Applicable Law is to the Applicable Law in force in relation to MFG after taking into account any modification, waiver or exemption which is in force either generally or in relation to MFG; and

• (d) an expression in a provision of these terms which deals with a matter dealt with by a provision of the Applicable Law has the same meaning as in that provision of the Applicable Law.

Page 122

2. Options

2.1 Entitlement

Each Option entitles the Holder to subscribe for one fully paid Share at the Exercise Price in accordance with these terms.

2.2 Quotation

MFG must promptly apply for quotation of Options on ASX on and from the date of issue of Options.

2.3 Transfer

• (a) Subject to the Applicable Law, the Holder may transfer some or all of the Options at any time before the Expiry Time:

• (i) if the Options are quoted on ASX, by a proper ASTC transfer or any other method permitted by the Applicable Law; or

• (ii) by an instrument of transfer in compliance with clause (b).

• (b) An instrument of transfer of an Option must be:

• (i) in writing;

• (ii) in any usual form or in any other form approved by the Directors that is otherwise permitted by law;

• (iii) subject to the Corporations Act, executed by or on behalf of the transferor, and if required by MFG, the transferee;

• (iv) stamped, if required by a law about stamp duty; and

• (v) delivered to MFG, at the place where the Register is kept, together with the certificate (if any) of the Option to be transferred and any other evidence as the Directors require to prove the title of the transferor to that Option, the right of the transferor to transfer that Option and the proper execution of the instrument of transfer.

• (c) Subject to the Applicable Law and this clause 2.3, MFG must not refuse or fail to register a transfer of Options.

• (d) MFG may refuse to register a transfer of Options where the Applicable Law permits MFG to do so.

• (e) MFG must refuse to register a transfer of Options where the Applicable Law or a law about stamp duty requires MFG to do so.

2.4 Expiry

An Option expires at the Expiry Time.

Page 123

3. Exercise

3.1 Time of exercise

• (a) Subject to this clause 3.1, a Holder may only exercise some or all of the Options during the Exercise Period.

• (b) A Holder may only exercise less than all the Options if the number of Shares to be issued on exercise would, when aggregated with the number of Shares already registered in the Holder's name, be a marketable parcel if issued on the day of exercise.

• (c) A Holder must exercise Options in multiples of 500 Options, unless the holding is less than 500, in which case all Options must be exercised.

• (d) Notwithstanding 3.1(a), all Options may be exercised by the Holder at any time after a Change of Control Event has occurred.

3.2 Manner of exercise

The Holder may only exercise Options at a time when the Options can be exercised by delivery to MFG of:

• (a) a notice addressed to MFG and signed by the Holder stating the Holder exercises the Options and specifying the number of Options exercised;

• (b) payment to MFG in immediately available cleared funds of the Exercise Price for each Option exercised;

• (c) if the Options are not quoted on ASX, the certificate for the Options or if the certificate for the Options has been lost, mutilated or destroyed, a declaration to that effect, accompanied by an indemnity in favour of MFG against any loss, costs or expenses which might be incurred by it as a consequence of its relying on the declaration that the certificate has been lost, mutilated or destroyed.

3.3 Notice of Expiry Time

If the Options are quoted on ASX, MFG must give the Holder a notice at least 20 Business Days before the Expiry Date with the information required by the Listing Rules.

4. Issue of MFG Ordinary Shares

4.1 Issue

• (a) MFG must issue to the Holder one fully paid Share to be issued on exercise of an Option within 15 Business Days of the date on which the notice of exercise took effect.

• (b) Subject to the Applicable Law, MFG must deliver to the Holder holding statements or certificates (as the case may be) for the Shares issued on exercise of an Option within 5 Business Days of their issue.

Page 124

4.2 Ranking

• (a) Subject to clause 4.2(b), all Shares issued pursuant to the exercise of Options will, subject to the constitution of MFG, rank in all respects (including rights to dividends or distributions) equally with the existing Shares at the date of issue.

• (b) A Share issued pursuant to the exercise of an Option is only entitled to receive a distribution where that Option is exercised and the Share is issued on or before the record date for that distribution. It is intended that Shares issued pursuant to the exercise of an Option will not be issued until after the record date for any distribution payable in respect of the half year period immediately prior to the Exercise Period during which that Option was exercised.

4.3 Quotation

MFG must promptly apply for quotation of Shares issued on exercise of an Option.

5. Participation rights

The Holder may only participate in new issues of MFG by reason of an Option if the Holder exercises that Option and becomes the holder of Shares on or prior to the record date for the new issue of Shares.

6. Adjustments

• (a) Subject to clause (c) below, if MFG makes a Pro Rata Issue, the Exercise Price of each Option will be reduced with the new exercise price of each Option to be calculated in accordance with the following formula:

  • NP � OP � E [ P � ( S � D )] N � 1

where:

• NP = the new exercise price of the Option;

• OP = the old exercise price of the Option;

• E = the number of underlying securities into which one Option is exercisable;

• P = the average Market Price per security (weighted by volume) of the underlying securitise during the 5 trading days ending on the day before the ex rights date or ex entitlements date;

• S = the subscription price for a security to be issued under the Pro Rata Issue;

• D = the amount of any dividend or distribution due but not yet paid on the existing underlying securities (except those securities to be issued under the Pro Rata Issue);

• N = the number of existing securities with rights or entitlements that must be held to receive a right to one new security under the Pro Rata Issue.

• No change will be made to the number of Shares to which the Holder is entitled.

Page 125

• (b) If MFG makes a Bonus Issue, the number of Shares issued on exercise of each Option will be increased by the number of bonus Shares that the Holder would have received if the Option had been exercised prior to the record date for the Bonus Issue. No change will be made to the Exercise Price.

7. Reorganisation

If there is a reorganisation (including consolidation, sub-division, reduction or return) of the share capital of MFG, the rights of Holders in respect of any unexercised Options will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

8. Notices

Any notices to a Holder regarding an Option will be sent to the address of the Holder in the Register.

9. Governing law

These terms are governed by and must be construed according to the law applying in New South Wales, Australia.

10. Duties and taxes

MFG is not responsible for any duties or taxes which may become payable in connection with the issue of Shares pursuant to an exercise of the Options or any other dealing with the Options or Shares

Page 126

ANNEXURE C – TERMS OF ISSUE OF MFG CLASS B SHARES

Magellan Financial Group Limited

(ACN 108 437 592)

Class B Shares Terms of Issue

Page 127

1. Form and Face Value

1.1 Form

Class B Shares are shares in the capital of MFG issued on the terms set out in these Terms of Issue.

1.2 Face Value

Each Class B Share has a face value equal to $0.001 ( Face Value ).

2. No Quotation

MFG is not obliged to apply for quotation of the Class B Shares on the ASX.

3. No Dividends

Class B Shares carry no right to dividends.

4. General Rights

4.1 Ranking

Class B Shares rank equally among themselves and are unsecured and subordinated to all creditors of MFG.

4.2 Return of capital

If there is a return of capital on a winding up of MFG, Holders will have the right to receive a cash amount equal to the Face Value per Class B Share, on an equal ranking basis with respect to the rights of Ordinary Shareholders have to receive capital amounts on their Ordinary Shares.

4.3 No additional rights to profits or property

Class B Shares do not confer on their Holders any rights to participate in profits or property except as set out in these Terms of Issue.

4.4 Participation in new issues

Unless and until Class B Shares are converted into Ordinary Shares in accordance with these Terms of Issue, they will confer no rights to subscribe for new securities in MFG or to participate in any bonus issues of securities of MFG unless (and then only to the extent) the Directors determine otherwise, including under clause 7.6.

5. Notices and Meetings

Holders have the same rights as Ordinary Shareholders to:

• (a) receive accounts, reports and notices of general meetings of MFG; and

• (b) attend and be heard at all general meetings of MFG.

Page 128

6. Voting Rights

Holders will not be entitled to vote at any general meeting of MFG, except:

• (a) on a proposal to reduce the share capital of MFG;

• (b) on a resolution to approve the terms of a buy-back agreement;

• (c) on a proposal that affects rights attached to the Class B Shares;

• (d) on a proposal to wind up MFG;

• (e) on a proposal for the disposal of the whole of the property, business and undertaking of MFG;

• (f) on any matter considered at a meeting held during the winding of MFG; and

• (g) in any other circumstances in which the ASX Listing Rules require the holders of preference shares to be entitled to vote,

in which case each Holder who is a Holder at the time which MFG has fixed for determining voting entitlements for holders of Ordinary Shares at the relevant meeting (the Voting Entitlement Time ) shall:

• (h) on a poll, be entitled to one vote for each of the Ordinary Shares that the Holder's Class B Shares would have converted into pursuant to clause 7.1 (as adjusted under clauses 7.2 to 7.6 as those clauses may apply from time to time) as if those Class A Preference Shares had converted immediately prior to the Voting Entitlement Time; and

• (i) have the same rights as a holder of Ordinary Shares to appoint a proxy, corporate representative or power of attorney to vote on the Holder's behalf.

7. Automatic Conversion

7.1 Conversion into Ordinary Shares

• (a) Immediately before 12.01am on the Conversion Date, the Class B Shares will be automatically consolidated or subdivided into such number of Class B Shares calculated as follows (the Conversion Number ), as may be adjusted in accordance with clauses 7.2 to 7.6:

• (i) if the Service Condition referred to in paragraph (b) below has been satisfied as at the Conversion Date - then 12 x 0.0125 x 0.40 x MFG Share Capital, or

• (ii) if the Service Condition referred to in paragraph (b) below has not been satisfied as at the Conversion Date - then 1,

with any fraction in respect of the total number of Class B Shares arising from the consolidation or subdivision being disregarded.

Page 129

• (b) The Service Condition will be regarded as having been satisfied as at the Conversion Date if, as at the Conversion Date (or, where the Conversion Date is after 1 July 2012, as at 1 July 2012) any of the following apply:

• (i) Mr Douglass remains an employee or director of MFG or a subsidiary of MFG;

• (ii) Mr Douglass’ employment with MFG or a subsidiary of MFG has been terminated by MFG or the relevant subsidiary for any reason other than wilful misconduct, negligence or fraud; or

• (iii) Mr Douglass has died or has become incapacitated and is unable to work.

• (c) The Class B Shares to be converted will, following consolidation or subdivision under paragraph (a), without any further act, convert into such number of Ordinary Shares equal to the number of Class B Shares held by the Holder that are to be converted.

• (d) On Conversion of a Class B Share under this clause 7.1, all rights and restrictions conferred on that Class B Share under these Terms of Issue will no longer have any effect, except paragraph (d) below and clause 7.7.

7.2 Adjustments for bonus and rights issues

• (a) Subject to paragraph (b), if MFG makes a pro rata bonus issue or a rights issue of Ordinary Shares to holders of Ordinary Shares generally the Conversion Number shall be:

CN = CNo x P x (RD + RN) / [(RD x P) + (RN x A)]

where:

"CN" is the Conversion Number applying immediately after the application of this formula;

"CNo" is the Conversion Number applying immediately prior to the application of this formula;

"P" is the VWAP during the period from the first business day after the announcement of the bonus or rights issue to the ASX up to and including the last business day of trading cum rights or bonus issue;

"A" is the subscription price per Ordinary Share for the rights issue and is zero in the case of a bonus issue;

"RN" is the numerator of the ratio (expressed as a fraction) used to determine entitlements to a rights or bonus issue; and

"RD" is the denominator of the ratio (expressed as a fraction) used to determine entitlements to a rights or bonus issue.

• (b) No adjustment to the Conversion Number shall occur in accordance with this clause 7.2 if A exceeds P.

Page 130

7.3 Adjustment for return of capital

If MFG makes a return of capital to holders of Ordinary Shares the Conversion Number shall be adjusted in accordance with the following formula:

CN = CNo x P / (P-C)

where:

"CN" is the Conversion Number applying immediately after the application of this formula;

"CNo" is the Conversion Number applying immediately prior to the application of this formula;

"P" means the VWAP during the period from the first business day after the announcement of the return of capital to the ASX up to and including the last business day of trading cum return of capital; and

"C" means the amount of the cash and/or the value (as reasonably determined by the Directors) of any other property distributed to holders of Ordinary Shares per Ordinary Share (or such lesser amount such that the difference between P and C is greater than zero).

The Class B Shares confer no right to participate in a return of capital to holders of Ordinary Shares, except on winding up.

7.4 Adjustment for buy-back

• (a) Subject to paragraph (b), if MFG undertakes an off market buy-back under a buyback scheme which but for any applicable restrictions on transfer would be generally available to holders of Ordinary Share (or otherwise cancels Ordinary Shares for consideration), the Conversion Number will be adjusted immediately in accordance with the following formula:

CN = CNo x P x (BD – BN) / [(BD x P) – (BN x A)]

where:

"CN" is the Conversion Number applying immediately after the application of this formula;

"CNo" is the Conversion Number applying immediately prior to the application of this formula;

"P" is the VWAP during the 20 Business Days prior to the announcement to ASX of the buy-back (or cancellation);

"BD" is the number of Ordinary Shares on issue immediately prior to the buy-back (or cancellation);

"BN" is the number of Ordinary Shares bought back (or cancelled);

and

"A" is the buy-back (or cancellation) price per Ordinary Share.

Page 131

• (b) No adjustment to the Conversion Number will occur if P exceeds A.

• (c) The Class B Shares confer no right to participate in a buy-back of Ordinary Shares.

7.5

Adjustment for capital reconstruction

If at any time the Ordinary Shares are reconstructed, consolidated, divided or reclassified (other than by way of a bonus issue, which is dealt with under clause 7.2) into a lesser or greater number of securities, then the Class B Shares must, in accordance with the ASX Listing Rules, be reconstructed, consolidated, divided or reclassified by the directors on the same basis in order to maintain the relative value of the Class B Shares and Ordinary Shares.

7.6 Discretion in Adjustment of Conversion Mechanism

Where:

• (a) any of the adjustment provisions set out in clauses 7.2 to 7.5 is not, in the reasonable opinion of the Directors, appropriate in any particular circumstances (including for the reason that more than one adjustment provision applies to a particular occurrence);

• (b) MFG makes a distribution other than by way of dividend in the ordinary course of business or makes a pro rata offer to the holders of its Ordinary Shares to subscribe for, or purchase, securities in any company other than MFG in a way which does not, in the reasonable opinion of the Directors, result in an appropriate adjustment to the Conversion Number; or

• (c) any other similar event occurs in relation to MFG that may have a diluting or concentrative effect on the value of the Ordinary Shares,

and the Directors determine that any such occurrence would, in the reasonable opinion of the Directors, affect the relative values of the Class B Shares and the Ordinary Shares, the Directors may:

• (d) make such alterations to the Conversion Number as the Directors reasonably consider appropriate or necessary to maintain that relativity; or

• (e) extend an entitlement to the holders of the Class B Shares to participate in such distribution or pro rata offer based upon the number of Ordinary Shares to which those holders would have been entitled if their Class B Shares had been converted on a date nominated by the Directors.

7.7 Ranking of Ordinary Shares

• (a) On Conversion of any Class B Shares to Ordinary Shares, each Ordinary Share arising on Conversion will rank equally with, and have the same rights as, all other Ordinary Shares then on issue and MFG will:

• (i) issue a certificate or statement of holding for the Ordinary Shares resulting from the Conversion;

Page 132

• (ii) make entries in its registers to reflect the Conversion; and

• (iii) as soon as reasonably practicable (but in accordance with the requirements of the ASX Listing Rules) apply for quotation of the Ordinary Shares.

• (b) Each holder of a Class B Share must surrender the certificates representing the Class B Shares so converted (unless the holding is uncertificated) as soon as practicable.

8. Early Conversion

8.1 Holder's right to convert

• (a) Each Holder will have the right to convert all (but not some only) of their Class B Shares into Ordinary Shares in accordance with this clause 8, during the period ending at 5.00pm on the 15[th] Business Day following:

• (i) any shareholder approval being obtained under ASX Listing Rule 11.2 (or any successor rule) to permit MFG to sell all or substantially all of its business, undertaking or assets; or

• (ii) the occurrence of an Acquisition Event,

• (in each case a Holder Conversion Period ).

• (b) Any Holder desiring and able to convert Class B Shares into Ordinary Shares must give a notice to MFG (a Holder Conversion Notice ) in accordance with clause 8.2, but may only do so during a Holder Conversion Period.

8.2 Holder Conversion Notice

• (a) In order to be valid, a Holder Conversion Notice must:

• (i) be in the form set out in Annexure 1 or such other form as notified by MFG to Holders;

• (ii) be signed by the Holder or, where Class B Shares are held jointly, by each Holder in respect of those Class B Shares;

• (iii) be issued in respect of all of the Holder's Class B Shares; and

• (iv) be received by MFG at its registered office (or other office nominated by MFG) or at the office of the registrar of Holders during a Holder Notice Conversion Period.

• (b) A valid Holder Conversion Notice, once received by MFG, is irrevocable.

8.3 Conversion following receipt of valid Holder Conversion Notice

If a Holder has given a valid Holder Conversion Notice to MFG, the Class B Shares the subject of the Holder Conversion Notice will convert into Ordinary Shares in accordance

Page 133

with clause 7 on the date which is 2 Business Days after receipt of a valid Holder Conversion Notice (the Holder Conversion Date ).

9. Transfer

Class B Shares are transferable in accordance with the Constitution.

10. Amendments to these Terms of Issue

10.1 Amendment without consent

Subject to complying with all applicable laws, MFG may, without the authority, assent or approval of Holders, amend these Terms of Issue:

• (a) if MFG is of the opinion that the amendment is:

• (i) of a formal, minor or technical nature;

• (ii) made to cure any ambiguity;

• (iii) made to correct any manifest error; or

• (iv) necessary to comply with the provisions of any statute, the requirements of any statutory authority or the listing or quotation requirements of any stock exchange on which MFG is listed; and

• (b) generally, in any case where such amendment is considered by MFG not to be prejudicial to the interests of Holders as a whole.

10.2 Amendment with consent

Without limiting clause 10.1, MFG may amend these Terms of Issue if the amendment has been approved in accordance with Article 7 of the Constitution.

11. Governing Law

These Terms of Issue are governed by the laws of New South Wales, Australia.

12. Definitions and Interpretation

12.1 Definitions

Unless the context requires otherwise, the following words and expressions shall have the following meanings. Capitalised terms not defined below have the same meaning as in the Constitution.

Acquisition Event means;

• (a) a takeover bid is made to acquire all or some of the Ordinary Shares and the offer is, or becomes, unconditional and the bidder has a relevant interest in more than 50% of the Ordinary Shares; or

Page 134

• (b) the Directors issue a statement recommending a transaction (including a scheme of arrangement or selective capital reduction) which, if implemented, will result in a person having a relevant interest in more than 50% of the Ordinary Shares.

Adjustment Event means any reconstruction, consolidation, division or reclassification of Ordinary Shares into a lesser or greater number of securities, but does not include any buyback of Ordinary Shares or capital reduction.

ASX means Australian Securities Exchange.

ASX Listing Rules means the listing rules of ASX from time to time with any modification or waivers in their application to MFG, which ASX may grant.

Business Day means a business day as defined in the ASX Listing Rules

Constitution means the constitution of MFG as amended from time to time.

Conversion means the conversion of a Class B Share into an Ordinary Share in accordance with clause 7.1.

Conversion Date means a Holder Conversion Date or MFG Conversion Date.

Conversion Number has the meaning given in clause 7.1(a).

Corporations Act means the Corporations Act 2001 (Cth).

Directors means some or all of the directors of MFG.

Face Value has the meaning given in clause 1.2.

Holder means a person whose name is for the time being registered in the Register as the holder of a Class B Share.

Holder Conversion Date has the meaning given in clause 8.3.

Holder Conversion Notice has the meaning given in clause 8.1(b).

Holder Conversion Period has the meaning given in clause 8.1(a).

MFG means Magellan Financial Group Limited (ABN 59 108 437 592).

MFG Conversion Date means the first Business Day after 21 November 2016.

MFG Share Capital means the lower of:

• (a) the number of Ordinary Shares on issue at the end of 21 November 2016 (in the case of conversion under clause 7); and

• (b) 170,000,000 (in the case of conversion under clause 7 or 8).

Ordinary Share means an ordinary share issued in the capital of MFG.

Ordinary Shareholder means a person whose name is for the time being registered as the holder of an Ordinary Share.

Register means the register of Class B Shares maintained by MFG or its agent.

Terms of Issue means these terms of issue of Class B Shares.

Trading Day means a day on which shares are traded on ASX other than:

Page 135

• (a) a Saturday, Sunday, New Year's Day, Good Friday, Easter Monday, Christmas Day and Boxing Day; and

• (b) any other day which ASX declares and published is not a trading day.

VWAP means the arithmetic average of the daily volume weighted average sale price of Ordinary Shares sold on ASX during the relevant Trading Day but does not include any transaction defined in the ASX Market Rules as "special", crossings prior to the commencement of normal trading, crossings during the after hours adjust phase and overseas trades or trades pursuant to the exercise of options over Ordinary Shares and any overnight crossings.

For the purpose of calculating the average of the daily VWAP in respect of Trading Days during a relevant period:

• (a) where an Adjustment Event occurs during the relevant period, then for each day in the relevant period prior to the occurrence of the Adjustment Event the daily weighted average sale price of Ordinary Shares sold on ASX included in the VWAP calculation is amended by adjusting the volume of Ordinary Shares sold on ASX in the same ratio as the number of Ordinary Shares on issue following completion of the Adjustment Event to the number of Ordinary Shares on issue immediately before announcement of the Adjustment Event and adjusting the sale price of Ordinary Shares sold on ASX in inverse proportion to that ratio;

• (b) if the Ordinary Shares were suspended during any part (but not all) of the relevant period over which the average of the daily VWAP is calculated, any Trading Day on which the Ordinary Shares were suspended (for all or part of that day) will be excluded in counting the relevant number of preceding Trading Days; and

• in the case where Ordinary Shares are not trading at all on ASX over the relevant period over which the average of the daily VWAP is calculated (for whatever reason, including, but not limited to suspension from trading) the relevant average of the daily VWAP will be deemed to be the average of the daily VWAP calculated over the relevant number of Trading Days up to and including the date on which the Ordinary Shares last traded on ASX

12.2 Interpretation

• (a) Unless the context otherwise requires, if there is any inconsistency between the provisions of these Terms of Issue and the Constitution then, to the maximum extent permitted by law, the provisions of these Terms of Issue will prevail.

• (b) Unless otherwise specified, the Directors may exercise all powers of MFG under these Terms of Issue that are not, by the Corporations Act or by the Constitution, required to be exercised by MFG in general meeting.

• (c) A reference to $, dollars or cents is a reference to the lawful currency of Australia.

• (d) A reference to time is a reference to Sydney, New South Wales, Australia time.

Page 136

• (e) Unless otherwise specified, notices may be given by MFG to a Holder in the manner prescribed by the Constitution for the giving of notices to members of MFG and the relevant provisions of the Constitution apply with all necessary modification to notices to Holders.

• (f) Unless otherwise specified, a reference to a clause is a reference to a clause of these Terms of Issue.

• (g) If a calculation is required under these Terms of Issue, unless the contrary intention is expressed, the calculation will be rounded to four decimal places.

• (h) Calculations, elections and determinations made by MFG under these Terms of Issue are binding on Holders in the absence of manifest error.

• (i) A reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them.

• (j) If an event under these Terms of Issue must occur on a stipulated day which is not a Business Day, then the stipulated day for that event will be taken to be the next Business Day.

• (k) Subject to paragraph (a), the rules of interpretation in clause 2 of the Constitution also apply to these Terms of Issue.

Page 137

Annexure 1 – Holder Conversion Notice

Magellan Financial Group Limited

(ABN 59 108 437 592)

CLASS B SHARES

HOLDER CONVERSION NOTICE

I/We, being holder(s) of [number] Class B Shares, hereby give notice, pursuant to and in accordance with clause 8 of the terms of issue of the Class B Shares ( Issue Terms ), of my/our wish to convert [insert number] Class B Shares into Ordinary Shares in accordance with clause 7.1 of the Issue Terms.

I/We represent, both at the time of giving the notice and separately at the time my/our Class B Shares are converted pursuant to this notice (if this occurs), as follows:

• (a) I/We are the legal and beneficial owner of the Class B Shares; and

• (b) the Class B Shares are free and clear of any interest or power reserved in or over any interest in any Class B Shares including, without limitation, under a bill of sale, mortgage, charge, lien, pledge, option, trust or power, by way of security for the payment of debt or any other monetary obligation or the performance of any other obligation and whether existing or agreed to be granted or created.

Words and expressions defined in and for the purposes of the Issue Terms have the same meanings where used in this notice.

[Name and signature of holder(s)]

Dated:

A corporation must execute by signing by 2 directors or a director and secretary or under its corporate seal (if it has one) or by its sole director. In the case of joint holders, all holders must sign. Where the notice is signed under a power of attorney, the attorney warrants that he or she has received no notice of the revocation of the power by death of the grantor or otherwise.

Page 138

ANNEXURE D – TERMS OF SHARE BUY-BACK AGREEMENTS WITH NPH AND NPH FUNDS

The Directors

[New Privateer Holdings Limited] / [NPH Funds Pty Limited] [Address]

Dear Directors

Offer to buy-back shares in Magellan Financial Group Limited

1. Subject to obtaining the necessary shareholder approval under paragraph 2, Magellan Financial Group Limited ( MFG ) offers to buy-back [] fully paid ordinary shares in the capital of MFG held by [New Privateer Holdings Limited ( NPH )] / [NPH Funds Pty Limited ( NPH Funds )] on the terms set out below (the Offer* ).

2. Any agreement constituted by [NPH's]/[NPH Funds'] acceptance of the Offer in accordance with paragraph 6 is conditional upon shareholder approval by a special resolution passed at a general meeting of MFG, with no votes being cast in favour of the resolution by [NPH]/[NPH Funds] or by its associates.

3. The consideration to be provided for the buy-back of the shares is [*] per share.

4. MFG will provide the consideration for the share bought back under this Offer within [5] days after both the following have occurred:

5. (a) MFG has received a written acceptance of the Offer in accordance with paragraph 6 and the signed share transfer or confirmation (as applicable) referred to in paragraph 7 below; and

6. (b) the shareholder approval described in paragraph 2 has been obtained.

7. This Offer is dated as specified below and will, unless withdrawn, remain open during the period ending on the day which is [4] weeks later.

8. [NPH]/[NPH Funds] may accept this Offer by delivering a signed copy, prior to the expiry of the Offer under paragraph 5, to:

Magellan Financial Group Limited

Attention: Company Secretary

Address: Level 1, 1-7 Castlereagh Street, Sydney NSW 2000

Page 139

1. At the same that this Offer is accepted, [NPH]/[NPH Funds] should provide to MFG in accordance with paragraph 6:

2. (a) in respect of shares held on MFG's issuer-sponsored subregister, a signed share transfer; and

3. (b) in respect of shares held on MFG's CHESS sub-register, a copy of written instructions to [NPH's]/[NPH Funds'] broker to immediately transfer the shares to MFG.

Dated: [*]

On behalf of Magellan Financial Group Limited :

[Name]

Agreed and accepted by [New Privateer Holdings Limited]/[NPH Funds Pty Limited] .

[Name]

[Date]

Page 140

ABN 59 108 437 592

==> picture [201 x 47] intentionally omitted <==

PROXY FORM

Extraordinary General Meeting - 29 January 2008 – 4.00 pm

==> picture [110 x 22] intentionally omitted <==

All correspondence to: Registries Limited P O Box R67 Royal Exchange, Sydney NSW 1223 Enquiries: 61 2 9290 9600 Facsimile: 61 2 9279 0664 www.registries.com.au registries@registries.com.au

Appointment of Proxy

If appointing a proxy to attend the Extr ~~aordinary General Meeting on your~~ behalf, please complete the form and submit it in accordance with the directions on this form.

I/We being a shareholder/shareholders of the Company pursuant to my/our right to appoint not more than two proxies, appoint

==> picture [24 x 19] intentionally omitted <==

----- Start of picture text -----

�
----- End of picture text -----

The Chairman of the Meeting OR (mark with an “X”) or failing him/her

Write here the name of the person you are appointing if this person is someone other than the Chairman of the Meeting.

Write here the name of the other person you are appointing.

~~or failing him/her, (or if no proxy is specified above), the Chairma~~ n ~~of the meeting, as my/our proxy to vote for me/us and on my/our~~ behalf at the Extraordinary Meeting to be held at the Magellan Investor Presentation Room, Level 7, 1 Castlereagh Street, Sydney NSW on 29 January 2008, commencing at 4.00 pm and at any adjournment of that meeting.

This proxy is to be used in respect of

% of the ordinary shares I/we hold.

Voting directions to your proxy – please mark � to indicate your directions

~~, ,~~ behalf at the Extraordinary Meeting to be heldat theMagellan In NSW on 29 January 2008, commencing at 4.00 pmand at any	~~, ,~~ behalf at the Extraordinary Meeting to be heldat theMagellan In NSW on 29 January 2008, commencing at 4.00 pmand at any	~~, ,~~ behalf at the Extraordinary Meeting to be heldat theMagellan In NSW on 29 January 2008, commencing at 4.00 pmand at any	~~, ,~~ behalf at the Extraordinary Meeting to be heldat theMagellan In NSW on 29 January 2008, commencing at 4.00 pmand at any
This proxy is to be used in respect of % of the o Voting directions to your proxy – please
~~RESOLUTION~~ ~~For~~ ~~Against~~ ~~Abstain*~~
Resolution 1 Acquisition by MFG of NPH Shares held byChris Mackayand entities ~~���~~
controlled by him (each a related partyof MFG)
Resolution 2 Acquisition by MFG of the shares in NPH Funds held by an entity ���
~~controlled by Hamish Douglass (a~~ related party of MFG)
Resolution 3 Issue of MFG OrdinaryShares and
MFG Class B Shares to an entity controlled by Hamish Douglass (a relatedpartyof MFG) ~~���~~
Resolution 4 Amendment of MFG Constitution to include Class B Share terms of issue ���

~~,~~ tor Presentation Room, Level 7, 1 Castlereagh Street, Sydney urnment of that meeting. ary shares I/we hold. rk� to indicate your directions	~~,~~ tor Presentation Room, Level 7, 1 Castlereagh Street, Sydney urnment of that meeting. ary shares I/we hold. rk� to indicate your directions	~~,~~ tor Presentation Room, Level 7, 1 Castlereagh Street, Sydney urnment of that meeting. ary shares I/we hold. rk� to indicate your directions	~~,~~ tor Presentation Room, Level 7, 1 Castlereagh Street, Sydney urnment of that meeting. ary shares I/we hold. rk� to indicate your directions
~~RESOLUTION~~ ~~For~~ ~~Against~~ ~~Abstain*~~
Resolution 5 Consolidation or subdivision of MFG Class B Shares ���
Resolution 6 Selective reduction of capital	�	�	�
Resolution 7 Selective buy-back of shares ���

~~* If you mark the Abstain box for a particular item~~ , yo ~~u are directing your proxy not to vote on your be~~ half ~~on a show of hands or on a poll and your votes~~ will not be counted in computing the required majority on a poll.

~~PLEASE SIGN HERE~~

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented. Executed in accordance with section 127 of the Corporations Act:

Individual or Shareholder 1 Joint Shareholder 2 Joint Shareholder 3 Sole Director & Sole Company Secretary Director Director / Company Secretary Dated this day of 2008

Contact Name

Contact Business Telephone / Mobile

Extraordinary General Meeting Proxy Form

INSTRUCTIONS FOR COMPLETING PROXY FORM

1. Your pre-printed name and address is as it appears on the share register of the Company. If you are Issuer Sponsored and this information is incorrect, make the correction on the form, sign it and return it to us. Securityholders sponsored by a broker on the CHESS subregister should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.

2. Completion of a proxy form will not prevent individual shareholders from attending the Meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the Meeting in person, then the proxy’s authority to speak and vote for that shareholder is suspended while the shareholder is present at the Meeting.

3. A shareholder of the Company entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder’s voting rights. If the shareholder appoints two proxies and the appointment do not specify this proportion, each proxy may exercise half of the votes.

5. A proxy need not be a shareholder of the Company.

6. If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

7. If a representative of a company shareholder is to attend the Meeting, a properly executed original (or certified copy) of the appropriate “Certificate of Appointment of Corporate Representative” should be produced for admission to the Meeting. Previously lodged “Certificates of Appointment of Corporate Representative” will be disregarded by the Company.

8. If a representative as Power of Attorney of a shareholder is to attend the meeting, a properly executed original (or originally certified copy) of an appropriate Power of Attorney should be produced for admission to the Meeting. Previously lodged Powers of Attorney will be disregarded by the Company.

Signing Instructions

• You must sign this form as follows in the spaces provided:

Individual: Where the holding is in one name, the holder must sign.

Joint Holding: Where the holding is in more than one name, all of the shareholders should sign.

Power of Attorney: If you are signing under a Power of Attorney, you must lodge an original or certified photocopy of the appropriate Power of Attorney with your completed Proxy Form.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person.

If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone.

Otherwise, this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address below not later than 4.00 pm, 27 January 2008 (48 hours before the commencement of the meeting). Any Proxy Form received after that time will not be valid for the scheduled meeting.

Hand deliveries Registries Limited Level 7 207 Kent Street Sydney NSW 2000 Postal address: Registries Limited PO Box R67 Royal Exchange NSW 1223

Fax number: (02) 9279 0664

Online:

www.investorserve.com.au