BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

2 Global share markets were mixed in May...  May proved to be a mixed month for global share markets, helped on the one hand by speculation that the US economy had avoided a recession but hurt on the other by rising oil prices and stagflation fears. The US and Japanese share markets managed to close the month higher, while markets in the UK and Europe finished slightly in the red.  The Australian share market posted its second monthly gain in a row in May, with the S&P/ASX 300 Accumulation Index returning 1.71%. The gains came mostly on the back of a solid rise in resources stocks, which rallied amid speculation that Chinese aluminium giant, Chinalco, had bought a significant stake in our own BHP Billiton.

3 Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$. Source: BT Financial Group, MSCI Impact of major market events on global shares since 1986 …but continue to perform well over the long-term, despite some major market events Jan 91 Gulf War 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 Oct 87 Wall Street crash Nov 89 Fall of the Berlin Wall Mar 03 Troops enter Iraq

4 Source: BT Financial Group, Premium Data S&P/ASX 300 Accumulation Index – 2008 The Australian share market closed May 1.71% higher

5 Key Australian economic news – May  The Reserve Bank of Australia left interest rates on hold at 7.25% following their early June meeting. The decision had been widely expected after recent economic data hinted that the Bank’s earlier rate hikes were beginning to have the desired effect (of slowing the local economy).  Australia’s trade balance was -$2.7 billion in March, a touch better than the market (-$2.9 billion) had expected.  Retail trade fell 0.2% in April but remains 4.7% higher year-on-year. The fall came after March’s numbers were revised down from 0.5% to 0.2%.  The Australian job market remains healthy, with 25,400 jobs added in April, though the unemployment rate did edge up slightly from 4.1% last month to 4.2%. Source: BT Financial Group

6 The Australian dollar hit US$0.96 cents in May  The Australian dollar climbed to US$ cents in May, its highest level since way back in February So far this year, the local currency has risen 9% against the US dollar, helped along by strong commodity prices and relatively high domestic interest rates.  At the end of May: A$1 boughtUS$ % € % ¥ % Source: BT Financial Group

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

8 Currency markets – A$ per Euro the Euro… Source: BT Financial Group. Figures at 31 May 2008.

9 and the Yen Currency markets – A$ per Yen Source: BT Financial Group. Figures at 31 May 2008.

10 Official world interest rate movements – May  The European Central bank, the Bank of England, the Bank of Japan and the Reserve Bank of Australia all left their benchmark interest rates on hold in May. The US Federal Reserve, which lowered interest rates by 0.25% in April, didn’t meet in May. Current rateLast moved Direction of last move Australia7.25%Mar 2008 US2.00%Apr 2008 Europe (ECB)4.00%Jun 2007 Japan0.50%Feb 2007 United Kingdom5.00%Apr 2008 Source: BT Financial Group

11 Source: BT Financial Group 31 May 2008 Global share market returns 1 year3 years (pa)5 years (pa) Global S&P 500 Index (US)-8.51%7.16%7.76% Nasdaq (US Tech.)-3.14%6.84%9.59% Nikkei 225 (Japan)-19.79%8.34%11.22% Hang Seng (Hong Kong)18.89%20.95%20.93% DAX (Germany)-9.97%16.74%18.93% CAC (France)-17.85%6.76%10.88% FTSE 100 (UK)-8.58%6.84%8.38% Australia S&P/ASX 300 Accum. Ind.-6.71%16.18%18.38% S&P/ASX Small Ordinaries-10.25%19.80%22.11% S&P/ASX 300 Listed Prop %3.15%7.15%

12 Short-term asset class performance Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$ 1-year rolling returns to 31 May 2008 (%) Best performing asset class for the year Australian cash Australian bonds Australian property Australian shares International bonds International shares

13 Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$ 1-year returns to 31 May 2008 (%) Short-term asset class performance (cont’d) 31 May May 2008 Australian bonds Listed property Australian shares Global bonds Global shares

14 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 May 2008 Australian bonds Listed property Australian shares Cash Global shares

15 Source: BT Financial Group. West Texas Intermediate oil price at 31 May Oil prices – US$ per barrel Oil prices hit a record US$134 a barrel in May on concerns that supply will fail to keep up with demand

16 Summary  The underlying strength of the Australian economy relative to its global counterparts looks set to continue in the near-term, though any significant deterioration in global growth will have an adverse effect locally.  Though the Reserve Bank of Australia left interest rates on hold following their June meeting, the Bank will no doubt be concerned by the high level of domestic inflation, which currently sits well outside its target band of 2-3%.  The Australian dollar looks set to remain at high levels in the near-term and could well hit parity with the greenback within the next few months.  Gains in global share markets, including here in Australia, are likely to remain under pressure in the near-term but are likely to stay above their recent March lows.

17 This presentation has been prepared by BT Financial Group Limited (ABN ) ‘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 :00am to 6:30pm (Sydney time)