Kauri Notes continue to fly high in Down Markets

Media Release: 13 February 2008

Savings & Loans innovative Kauri Notes product continues to fly high in Down Markets

Emerging Financial Services Company Savings & Loan continues to go from strength to strength, announcing today that their first Kauri Notes product has accumulated a market-leading 8.25% return in just five months,(as at 28/1/’08) and that they have now secured New Zealand distribution rights for the global Permal Fund of Fund.

“The striking performance of Kauri Notes, at a time when investment media & market confidence is low, continues to defy trends and reinforces the importance of serious investors having exposure to quality alternative assets in their balanced portfolio,” Savings & Loans Director Don Cowie said.

“It is this sort of exceptional performance that has now convinced Permal that Savings & Loans are to be their partner of choice for the New Zealand market.”

Kauri Notes are a limited recourse interest bearing debt security invested in Permal Multi-manager funds, that generate high returns with the benefit of 100% capital protection and the expertise and track record of the Permal Group; one of only two independent entities in the ten leading global hedge fund-of funds managers.

The Permal Group, one of the oldest and largest alternative asset management firms, provides investment opportunities in directional and absolute return strategies across global financial markets. Permal offers access to independent investment managers worldwide through its multi-manager and single manager funds, separate accounts, and participation in structured products. Establishing its asset management business over three decades ago, Permal has grown to over $37 billion in AUM and has more than 190 employees worldwide (as of 12/31/07).

Mr Cowie added, “While we are understandably delighted at the performance of Kauri Notes, we recognise that investment is cyclical and that returns will vary over time. However, it is important to note that Kauri Notes are designed to deliver regular returns above market rate, whatever the phase of the market cycle. For those investors seeking security, regular income, and competitive returns Kauri Notes is delivering on its promise.”

Savings & Loans Director Maurizio Piglia, a professional funds management and treasury operations manager with lengthy European experience, understands that performance is the critical thing to investors and advisors.

Mr Piglia said, “We believe that our products are a clear demonstration that even during difficult times, investors in New Zealand can have access to quality alternative investment options, and that investors and advisors should be aware that things are not all doom and gloom, or buy and hold situations. To that end, we have developed two Occasional Papers outlining our views on alternative asset allocation, and investing in a bear market, both available on the following web page link http://www.savingsandloans.co.nz/occasional_papers.htm, that we encourage all responsible investors and advisors to read.”

The Kauri Units offer opened on 17 December 2007, with Funds being invested in Permal Funds each two months. The first subscription closes on 28 February 2008 with the sixth and final subscription closing on 28 October 2008.

-ENDS-

www.savingsandloans.co.nz

About Savings & Loans Superannuation and Investments Limited

Savings & Loans is a financial services company, established in 1995 and proudly 100% New Zealand owned. We provide quality financial services for individuals and businesses, focusing on tailoring solutions to suit each customer's specific circumstances. Everything we do is backed by our commitment to professional standards, quality and reliability.

Our services include attractive savings and investment products, flexible and competitive loan options, and expert independent mortgage brokering services and financial advice.

Savings & Loans is committed to customer satisfaction and complete transparency, straight talking, and integrity in everything we do.

Savings & Loans has five company directors: Denis Kirkcaldie, Don Cowie, Maurizio Piglia, Milenko Boric and Scott Masters. Together they have more than 120 years' experience in business and finance in New Zealand, the United Kingdom, Italy, Switzerland, the United States, Japan, Hong Kong, Malaysia, and Korea.

While Savings & Loans is operated by financial experts, we recognise that providing financial services is as much about people as it is about money. So when you invest with us or obtain finance from us, we tailor a solution to fit your personal circumstances and lifestyle.

More about our latest offer of Kauri Units:

For both Income and Growth Units

- Issuer - This offer is being made by Savings & Loans Superannuation and Investments Limited as manager of the Kauri Unit Trust No. 1 (“Unit Trust”).

- Issue Price - $1.00 per Unit for Class B Units and NAV on allotment dates for Class C to Class F Units.

- Issue Amount – up to $100 million each of the Income Units and Growth Units.

- Scheduled Term - 7 years 3 months, with the Manager having the right to redeem the Units at any time within 3 months of maturity. The Units may be redeemed early in certain other circumstances, the details of which are comprised within the terms of the Prospectus and Investment Statement.

- Minimum Investment and Term - $5,000 and thereafter in multiples of $1,000. The term of the Kauri Units is 7 years and 3 months.

Income Units:

- Type of Security - Kauri Income Units are issued by the Unit Trust for a fixed term and pay a fixed quarterly interest.

- Use of Proceeds - The net proceeds from the issue of the Units will be applied towards:

* the payment of all of the initial costs associated with this Offer, being 3.50% of the proceeds raised from the Offer; and

* investment in the Permal FX, Financial & Futures Ltd Fund via Prosper Notes - Series III issued by Merrill Lynch.

- Principal - To ensure that this amount is available to holders on maturity, the Issuer will rely on the capital guarantee provided by Merrill Lynch & Co., Inc in respect of the principal of the Prosper Notes - Series III. There are certain circumstances however, where the guarantee of the principal under the Prosper Notes - Series III will not be applicable, the details of which are contained in the Prospectus and Investment Statement.

- Interest - 9.50% per annum payable in equal quarterly amounts. Interest are of two types:

* fixed interest ("Fixed Interest"), which are the first eight quarterly Interest payable in respect of the Income Units. The Issuer expects that these first eight quarterly Interest will be fixed having regard to the fact that Merrill Lynch & Co., Inc. have guaranteed the payment by Merrill Lynch S.A to the Issuer of the first eight quarterly coupons of 2.375% each payable in respect of the Prosper Notes - Series III. The amounts payable by the Issuer to holders of Income Units in respect of the Fixed Interest will ultimately reflect the amounts received by the Issuer under the Prosper Notes - Series III.

* performance Interest ("Performance Interest") which are dependent on the subsequent performance of the Prosper Notes - Series III investment in the Permal Fund. In the event that the performance of the Prosper Notes achieves a return of less than 9.50% per annum, then with the exception of the first 8 coupon payments, the Unitholders may receive an Interest return less than 9.50% per annum.

- Redemption Premium - The accumulated returns on the Prosper Notes - Series III at maturity which have not been distributed either as Fixed or Performance Interest will be distributed to Kauri Unitholders as redemption premium.

- First Interest - The first Interest payment will be paid to the original subscriber for each Kauri Unit irrespective of any subsequent transfer of the Kauri Unit before the first Interest payment date (Interest to original subscriber "ITOS").

- Fees - Other than the subscription price payable to subscribe for a Kauri Unit, and in respect of the fees applicable to the early redemption of the Kauri Units by a Unitholders no entry or management fees are payable by a holder of Kauri Units.

- Limited Recourse - The Income Units are limited recourse obligations of the Issuer. This means that the Issuer is obliged to make payments on the Kauri Units only to the extent that it has money available to it from the Prosper Notes - Series III whether or not this is sufficient to repay the Principal or pay any Interest.

- Security - The obligations of the Issuer under the Kauri Income Units will be secured by a first ranking security interest over the Prosper Notes - Series III to be acquired by the Issuer.

Growth Units:

- Type of Security - Growth Units are designed to provide investors with capital appreciation derived from investment of the net proceeds of issue of the Growth Units by the Trustee in the Permal Delta 2.5 shares issued by ARES Investment Funds.

- Use of Proceeds - The net proceeds from the issue of the Kauri Growth Units will be applied towards:

* the payment of all of the initial costs associated with this Offer, being 3.50% of the proceeds raised from the Offer; and

* the purchase of Permal Delta 2.5 shares issued by ARES Investment Funds a segregated portfolio company for whom Merrill Lynch International is both Sponsor and Investment Manager

- Principal - To ensure that this amount is available to holders on maturity, the Issuer will rely on the capital guarantee provided by Merrill Lynch & Co., Inc in respect of the principal of the Permal Delta 2.5 Shares. There are certain circumstances however, where the guarantee of the principal under the Permal Delta 2.5 Shares will not be applicable, the details of which are contained in the Prospectus and Investment Statement.

- No coupon payment is provided. The returns of the units are capitalised for growth along all the life of the Growth Units till maturity

- Fees - Other than the subscription price payable to subscribe for a Kauri Unit, and in respect of the fees applicable to the early redemption of the Kauri Units by a Unitholders no entry fee is requested a management fee and performance fee are payable by a holder of Kauri Notes Growth for the management of the Portfolio Insurance.

- Security - The obligations of the Issuer under the Kauri Growth Units will be secured by a first ranking security interest over the Shares of the Ares Delta 2.5 Fund and the cash securities to be acquired by the Issuer.

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