1. 1 Market volatility and its impact on the Australian share market A presentation prepared by BT Financial Group for the adviser market 31 January 2008

2. 2 Source: BT Financial Group, Datastream S&P/ASX All Ordinaries Index – six months to 31 January 2008 Rising market volatility has seen the Australian share market fall 11% so far this year…

3. 3 Source: BT Financial Group, Datastream S&P/ASX All Ordinaries Index – 10 years to 31 January 2008 …but it remains at elevated levels over the long- term, up 118% over the last 10 years…

4. 4 Source: BT Financial Group, Datastream S&P/ASX All Ordinaries Index – 15 years to 31 January 2008 …and 265% over the last 15 years

5. 5 Source: BT Financial Group, Datastream Major international markets – six months to 31 January 2008 It’s worth keeping in mind that market volatility has affected all markets, not just ours S&P 500 (US) -16% (9/10 - 22/1) FTSE 100 (UK) -17% (12/10 - 21/1) DJ EuroStoxx 50 (Europe) -17% (12/10 - 21/1) Nikkei 225 (Japan) -31% (17/7 - 22/1) US, UK and European stocks hit record highs

6. 6 So what’s been driving the global market volatility we’ve seen lately?  The source of recent market volatility goes back to 2007 and the US housing market  Problems arising from defaults in the sub-prime mortgage component of the US housing market spread to global asset markets in the latter half of last year  The ripple effect of those problems on the US and global economy is what’s behind the market conditions we’ve seen recently, with global share markets falling as much as 25% in January on concerns that we’re headed for a global recession

7. 7 What’s behind the falls we’ve seen lately in the Australian market?  Leveraged investments have played a big role in the run-up in share markets, both here and overseas  Every 10-15 years, when we get this generalised fear of recession, we end up having what we call ‘Leveraged Players’ being forced out of their positions  Recently, we’ve seen some of these leveraged players – both companies and individual investors – forced to sell, pushing the market lower  Individual investors who had over-leveraged have been forced to sell either because of margin calls or, in many cases, because of fear as they react to the impact that current uncertainty is having on their portfolio

8. 8 What does this market volatility mean for the Australian market in the near-term?  Investors need to get used to higher levels of market volatility. From 2002-2006 we had steady returns and few hiccups, but this is unlikely to be repeated in the next 2-3 years  How the Australian market performs in the near-term will rest on the underlying fundamentals, which from BT’s perspective represent the corporate profits and associated dividends paid to shareholders, and whether or not a global slowdown will spill into the local economy and undermine those fundamentals  We think that question is yet to be answered, but we would expect global growth this year to be positive and the Australian economy to remain relatively robust despite this growing volatility  We’ve not actually had an extended down market like we’ve seen recently since 1994/95, but it’s generally after a week or two of forced selling that long- term investors re-enter the market. When this happens, we normally get a reasonable bounce and a period of market stability

9. 9 What steps is BT taking to address the impact of this market volatility?  One of BT’s strengths is that we always focus on the right levels of diversification and risk within our portfolios, whether its Australian shares, listed property or fixed income, so nothing’s really changed from our perspective  This focus on diversification and risk management, as well as our investment insight, is what prevents BT’s portfolios from being damaged excessively in the sorts of down markets we’ve seen recently  We’ve also stepped up our focus on ensuring that we have the right valued stocks in our portfolios. We continue to invest in companies with secure cash flows, limited expectations in their valuations and sound management teams  At BT, we’re happy in our ability to sidestep some of the blow ups that have really triggered the downturn in the last 8-10 weeks

10. 10 What can investors do in this type of market environment to help protect their own portfolio?  Don’t panic – invest for the long-term  Understand risk  Diversify your investments  Avoid chasing returns  Don’t forget – time is on your side  Find hidden value  Employ experts  Seek professional advice There are a number of investment strategies that investors can employ to help manage and protect their own portfolio

11. 11 Don’t panic – invest for the long-term

12. 12 Source: BT Financial Group, Datastream. Global shares measured by the MSCI World (Price) Index to 31 January 2008 It’s easy to get caught up in short-term market movements. Keep the end goal in sight Feb 94 Bond Market Crash Aug 97 Asian Currency Crisis Jul 98 Russian Bond Crisis Jul 01 Tech Wreck Sep 01 Attack on Twin Towers Jun 07 US Sub-prime Crisis Jan 91 Gulf War Impact of major market events on global shares since 1990

13. 13 Long-term asset class performance 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$ 31 January 2008 Australian bonds Listed property Australian shares Cash Global shares

14. 14 Understand risk

15. 15 All investing involves a trade-off between risk and return Australian shares, one year returns - Greater volatility over the short-term Source: Datastream. S&P/ASX 200 Accumulation Index annualised returns to 30 November 2007 shown Australian shares, five year returns - Reduced volatility over the long-term 19852005200019951990

16. 16 Diversify your investments

17. 17 The more you spread your investments, the less chance you have of losing money Cash Fixed interest Individual securities Property Shares Investment managers (or styles) RegionsAsset classes

18. 18 0 10 20 30 40 50 60 0788899091929394959697989900010203040506 Every asset class has its day in the sun Source: MSCI World ex-Australia index. Net Dividends reinvested in A$, S&P/ASX 300 Property Trusts Accum. Index, S&P/ASX 300 ex-LPT Accum. Index, UBS Composite Bond Index (all matures), UBS Bank Bill Index. Figures are as at 30 June 2007. Best performer each year (%) Australian shares Australian bonds International shares Cash International bonds Listed property

19. 19 Diversification also applies to regions Source: MSCI World Index as at 30 June 2007 World sharemarket values (%) US Europe U.K. Australia Asia (ex-Japan) Japan

20. 20 Avoid chasing returns

21. 21 Can you pick next year’s winner? One-year returns to 30 June 2007 (%) Australian199619971998199920002001200220032004200520062007 Cash7.786.615.154.965.345.964.624.855.205.495.806.42 Fixed interest9.4016.8110.883.336.187.446.239.712.437.766.793.99 Property3.7029.219.743.9615.6213.9115.2412.1717.2118.4017.4226.32 Shares14.6227.161.6315.1318.499.11-4.54-1.6121.7326.0323.0829.21 International199619971998199920002001200220032004200520062007 Fixed interest-9.609.1326.19-2.5713.7314.543.14-2.461.71-1.661.52-9.93 Shares6.6628.5642.168.1723.81-6.01-23.50-18.5319.370.0620.977.77 Best performing asset class for each year is highlighted. Indices: Liquids Index (Cash), UBS Composite 0+ years index (Australian Fixed Interest), S&P/ASX 300 Property Index (Australian Listed Property), S&P/ASX 300 Accumulation Index (Australian Shares), Citigroup World Government Bond Index unhedged in $A (International Fixed Interest), MSCI World ex-Aust (net divs) Index in $A (International Shares)

22. 22 Don’t forget – time is on your side

23. 23 Enrol in a get rich slowly program – the power of compound interest $153,971 142,566 132,006 122,227 113,174 104,790 97,028 89,841 83,186 77,024 71,319 66,036 61,144 56,615 52,421 48,583 44,943 55 54 53 52 51 50 49 48 47 46 45 44 43 42 41 40 39 Assumptions: 8% p.a. interest, all reinvested Source: BT Financial Group $98,471 90,251 82,639 75,592 69,067 63,025 57,430 52,250 47,454 43,013 38,901 35,093 31,568 28,304 25,281 22,483 19,891 41,61438 38,53137 35,67736 33,03435 30,58734 28,32233 26,22432 24,28131 22,48630 19,89129 17,49228 15,27027 13,21326 11,30925 9,54524 7,91223 6,40022 $5,00021 Sally 17,492 15,270 13,213 11,309 9,545 7,912 6,400 $5,000 - - - - - - - - - - Matt

24. 24 Time, not timing, is important All ordinaries index, annualised returns (%) Note: The returns are shown as historical, investment returns are volatile and past performance is not necessarily indicative of future returns Minus the 10 best days Minus the 20 best days Minus the 30 best days Minus the 40 best days Minus the 50 best days Minus the 60 best days Minus the 70 best days Full 2,609 trading days June 1997- June 2007

25. 25 What is dollar cost averaging? $10010.0$10$100January Total value Units purchased Unit priceInvestmentMonth $65065.0$500Total $65010.0$10$100May $44012.5$8$100April $21320.0$5$100March $18012.5$8$100February Note: No allowance made more inflation, taxation, fees or expenses Source: BT Financial Group

26. 26 Find hidden value

27. 27 Economic trends $ The best investment research processes unlock hidden value Research analysis Industry trends $ Company analysis $ Supplier/competitor environment $

28. 28 Employ experts

29. 29 Even the smartest investors (including many corporate investors) use managed funds A managed fund provides investors with:  More convenient investing  Broader diversification with less investment dollars  Professional fund managers who monitor and actively manage your portfolio  Economic research and specific company information  Assets not available to individual investors  Alternative styles of investment strategies “The methodical, systematic approach taken by most fund managers helps them avoid many of the mistakes individual investors are prone to”

30. 30 Seek professional advice

31. 31 “What is your main information source for making investment decisions?” Source: BT Investor Poll, October 2004 Financial adviser/accountant Magazines/newspapers Other family members Spouse/partner Internet Friends Other None/don’t know 10% 7% 4% 5% 10% 12% 13% 38%

32. 32 What you get from your financial adviser Expertise Efficiency 1. A holistic approach 2. Asset allocation 3. Security selection 4. An education

33. 33 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)