Putting local and international financial markets into context

Prepared by BT Financial Group for the adviser marketUpdated to 28 February 2009

3. A quick look at the different asset classes

1. Australian share markets – the 1, 10 and 50 year view

2. How have international markets fared?

4. Getting some perspective on market volatility

3

Source: BT Financial Group, Premium Data

S&P/ASX 300 Accumulation Index – 12 months to 28 February 2009

The Australian share market has fallen 38% in the past 12 months

Series Rebased: 28 February 2008 = 100

Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09

4

Source: BT Financial Group, Premium Data

S&P/ASX 300 Accumulation Index – 10 years to 28 February 2009

But over the past 10 years, it’s still up 81%

Series Rebased: 28 February 1999 = 100

Feb-99 Feb-01 Feb-03 Feb-05 Feb-07 Feb-09

2008 was a ‘1 in 50’ year event for Australian share market returns

Source: Standard & Poor’s

2007

2003

2001

1999 2006

1998 2005

2002 1997 2004 1993

1994 1996 1995 1985

1992 2000 1989 1978 1980

1990 1987 1976 1988 1977 1979

1982 1984 1971 1969 1972 1968

1974 1981 1965 1964 1966 1963 1967 1983

2008 1973 1970 1960 1962 1961 1958 1991 1959 1986 1975

-40 to -30 -30 to -20 -20 to -10 -10 to 0 0 to 10 10 to 20 20 to 30 30 to 40 40 to 50 50 to 60 60 to 70

All Ords /ASX 300 Accumulation Index – 50 years to 2008

But every period of negative returns is generally followed by increased gains

Source: Standard & Poor’s

2007

2003

2001

1999 2006

1998 2005

2002 1997 2004 1993

1994 1996 1995 1985

1992 2000 1989 1978 1980

1990 1987 1976 1988 1977 1979

1982 1984 1971 1969 1972 1968

1974 1981 1965 1964 1966 1963 1967 1983

2008 1973 1970 1960 1962 1961 1958 1991 1959 1986 1975

-40 to -30 -30 to -20 -20 to -10 -10 to 0 0 to 10 10 to 20 20 to 30 30 to 40 40 to 50 50 to 60 60 to 70

All Ords /ASX 300 Accumulation Index – 50 years to 2008

3. A quick look at the different asset classes

1. Australian share markets – the 1, 10 and 50 year view

2. How have international markets fared?

4. Getting some perspective on market volatility

8

Source: BT Financial Group, Premium Data

The major international markets also plunged in the past 12 months

Series Rebased: 28 February 2008 = 100

FTSE 100 (UK) -35.8%, Nikkei 225 (Japan) -45.7%, S&P500 (US) -46.3%, DJ Euro Stoxx 50 (Europe) -47.8%

Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09

And it’s no wonder why – the linchpin of the global economy had its worst year in more than 50 years

Source: Value Square Asset Management, Yale University

2006

2007 2004 2003

2005 1988 1999

1994 1986 1998

1993 1979 1996 1997

2000 1992 1972 1983 1995

1990 1987 1971 1982 1991

1981 1984 1968 1976 1989

2001 1977 1978 1965 1967 1985

2002 1973 1969 1970 1964 1963 1980

2008 1974 1966 1962 1960 1959 1961 1975 1958

-50 to -40 -40 to -30 -30 to -20 -20 to 10 -10 to 0 0 to 10 10 to 20 20 to 30 30 to 40 40 to 50

The US All Ords /ASX 300 Accumulation Index – 50 years to 2008

3. A quick look at the different asset classes

1. Australian financial markets – a 12 month view

2. How have international markets fared?

4. Getting some perspective on market volatility

Growth assets have been the most affected by the rise in market volatility in the past year

Source: BT Financial Group

Cash

International listed property – hedged

Australian bonds

International shares - hedged

Australian shares

International bonds - hedged

Australian listed property

International shares

12 months to 28 Feb 2009

12 months to 28 Feb 2008

12

While cash saw stronger returns this past year, Aussie shares still outperform over the long-term

Note: Accumulated returns based on $1,000 invested in December 1984Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, UBS Bank Bill 0+ years

28 February 2009

Australian bonds

Listed property

Australian shares

Cash

Global shares

3. A quick look at the different asset classes

1. Australian share markets – the 1, 10 and 50 year view

2. How have international markets fared?

4. Getting some perspective on market volatility

Annual returns of Australian shares (%) – All Ords / ASX S&P Accumulation Index (since 1956)

-30

-20

-10

0

10

20

30

40

50

60

70

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

Volatility can hurt returns in the short term…

14

Source: Standard & Poor’s

Rolling 5 year returns of Australian shares (% annualised) – All Ords / ASX S&P Accumulation Index (since 1960)

-10

-5

0

5

10

15

20

25

30

35

19

60

19

63

19

66

19

69

19

72

19

75

19

78

19

81

19

84

19

87

19

90

19

93

19

96

19

99

20

02

20

05

…but it’s a different picture over the longer term

15

Source: Standard & Poor’s

Rolling 10 year returns of Australian shares (% annualised) – All Ords / S&P Accumulation Index (since 1965)

Source: Standard & Poor’s

And the longer the better!

-10

-5

0

5

10

15

20

25

30

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

16

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.

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