BT Monthly Markets Chart Pack – December 2007

1. BT Monthly Markets Chart Pack – December 2007 An overview of movements in global financial markets

2. Global share markets mixed in December • December was a mixed month for global share markets as investors continued to worry about the usual suspects – weakness in the US housing market, the fallout from the global credit crisis, and the threat of a recession in the US. Bourses in the US and Japan were weaker, while share markets in Europe, the UK and China made positive gains. • In Australia, the S&P/ASX 300 Accumulation Index closed the month down 2.64%. The local market was dragged lower by the listed property sector after Centro Properties became the first major (local) casualty of the global credit crisis. Weakness in mining stocks also affected performance as a softer outlook for global growth weighed on commodity prices.

3. The Australian share market closed the year on a weaker note S&P/ASX 300 Accumulation Index – year to 31 December 2007 Source: BT Financial Group, Datastream

4. Key Australian economic news – December • The Reserve Bank of Australia (RBA) left interest rates on hold at 6.75% following its December meeting, though their decision came as no real surprise in light of recent financial market turmoil. Rates are widely expected to remain on hold again when the RBA next meets in February, unless the latest CPI data on 24 January comes in on the high side. • Employment figures were surprisingly weaker in November. The unemployment rate came in at 4.5%, while October unemployment was revised up from 4.3% to 4.4%. This brought the unemployment rate up 0.3% from its September low of 4.2%, putting it back to where it was in March of this year. • After unexpected weakness in October, retail sales rebounded strongly in November, up 0.8%. This took annual retail sales growth to 8.1%; the fastest growth since mid-2004. • November building approvals came in well above market expectations, rising by almost 9% over the month. Source: BT Financial Group

5. The Australian dollar slightly weaker in December • The Australian dollar (A$) was slightly weaker against the major currencies in December amid ongoing concerns over the global economic outlook and the impact that slower growth would have on commodity prices. • At the end of December: A$1 bought US$0.8751 -1.1% €0.5999 -0.7% ¥97.77 -0.6% Source: BT Financial Group

6. The Australian dollar versus the US dollar… Currency markets – A$ per US dollar Source: BT Financial Group. Figures at 31 December 2007.

7. the Euro… Currency markets – A$ per Euro Source: BT Financial Group. Figures at 31 December 2007.

8. and the Yen Currency markets – A$ per Yen Source: BT Financial Group. Figures at 31 December 2007.

9. Official world interest rate movements – December • Both the US Federal Reserve and the Bank of England cut interest rates in December, while the European Central Bank and the Bank of Japan decided to leave rates on hold. Source: BT Financial Group

10. World growth is expected to be 3.7% this year, and a further 3.2% in 2008 2008 world growth estimates Month of estimate Source: Consensus Economics

11. Global share market returns 31 December 2007 Source: BT Financial Group

12. Short-term asset class performance 1-year rolling returns to 31 December 2007 (%) Best performing asset class for the year Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

13. Short-term asset class performance (cont’d) 1-year returns to 31 December 2007 (%) 31 December 2006 31 December 2007 Australian bonds Listed property Australian shares Global bonds Global shares Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

14. Long-term asset class performance 31 December 2007 Australian shares Listed property Global shares Australian bonds Cash Note: Accumulated returns based on $1,000 invested in December 1984 Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

15. Oil closed the year 57.1% higher at US$95.99 a barrel, before going on to hit US$100 in early January Oil prices – US$ per barrel Source: BT Financial Group. West Texas Intermediate oil price at 31 December 2007.

16. Summary • We expect global growth to hold up, though the threat of a recession in the US has obviously increased recently and this will pose a significant risk to future growth. • The underlying strength of the Australian economy looks set to continue, though any significant deterioration in global growth will obviously have an adverse effect locally. • Despite the RBA’s decision to leave interest rates on hold in December, the Bank clearly retains a tightening bias. Whether the RBA pulls the trigger on another rate hike in February will depend largely on the next round of inflation data due out in late January. • The threat of a slowdown in global growth will mean a rougher ride for the Australian dollar in the near-term, though it looks set to remain at high levels. • Gains in global share markets, including here in Australia, are likely to slow in the first half of 2008.

17. This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general information only.  Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described.  The presentation has been prepared without taking into account any personal objectives, financial situation or needs.  It does not contain and is not to be taken as containing any securities advice or securities recommendation.  Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice.  BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation.  Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person.  Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee.  It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time)