Transcript March Qtr Distribution Update

Asian Opportunities
Adviser Teleconference
Presenters:
Don Sillar, Head of Distribution, BT
Chris Caton, Chief Economist, BT
Stewart Brentnall, Head of Investment Solutions, BT
Robert Lau, Vice President Asia-Pacific, MFS
23 August 2006
1
BT wrap and investment update
Presented by BT Head of Distribution – Don Sillar
2
More flexibility and efficiency with BT’s Wrap

A leading Wrap provider with FUA of $25billion

Product development focused on delivering a flexible and
efficient platform for advisers.

Recent developments include:

a more competitive DIY super service

QROPS status for UK pension transfers

6 new funds on Wrap Essentials

continued enhancements to reporting

contributions splitting from 1 September.
3
An industry first with new online calendars

Two new online calendars for Corporate Actions and IPOs

Easy online access to the latest investment opportunities

Online participation with bulk transactions for up to 100
clients

The online Calendars are available for:
All SuperWrap clients
All Wrap clients under Custodial HIN holding options
All Wrap Clients with a Sponsored HIN holding optionfor takeovers and buy-backs only.

An industry first for Wrap
4
It’s now easier to gear your clients through Wrap

EOY record for Margin Lending – loan book hit $3.5bn – a
46% increase since June 05.

Geared Wrap is a key focus for product development

The driver – delivering a faster and more efficient geared
Wrap service.
Recent Geared Wrap enhancements include:
 Automation of trade vetting
 Choice of funding method
 Choice of where funds are allocated once trade
settles - cash sweeping is no longer required.
 Ability to automate regular gearing and nominated
drawdown to set instructions.

5
Fund Manager of the Year 2006
6
BT Performance – excess returns
Fund
1 year
2 years
3 years
5 years
Aust Core
+3.3%
+2.7%
+3.1%
-0.1%
Imputation
+5.3%
+4.5%
+5.0%
+3.6%
Small Caps
+2.0%
+8.3%
+11.3%
+6.9%
Ethical
+4.8%
+4.7%
+5.5%
+0.8%
Balanced
+2.1%
+1.4%
+1.8%
-0.4%
Fund
3 months
6 months
1 year
Focus
+2.24%
+4.19%
+7.25%
Source: BT Financial Group. Excess returns shown of BT Wholesale Fund’s after the deduction of management fees, as at 30 June 2006
7
Strong support from leading researchers
BT fund
Van Eyk
Morningstar
Lonsec
BT Aust Core
A
Recommended
Recommended
BT Imputation
A
Not rated
Recommended
BT Small Caps
Not rated
Recommended
Recommended
A
Not rated
Not rated
BT Ethical
Navigator
Not rated
8
BT Quartile Performance
Fund
1 year
2 years
3 years
5 years
Aust Core
Q1
Q1
Q1
Q2
Imputation
Q1
Q1
Q1
Q1
Small Caps
Q2
Q1
Q1
Q1
Ethical
Q1
Q1
Q1
n/a
Balanced
Q1
Q1
Q1*
Q2
Fund
3 months
6 months
1 year
Since
inception
Focus
Q1
Q1
Q1
Q1
* ranked No. 2 in survey
Source: Mercer IDPS Australian Shares Survey, IDPS Multi-Sector Balanced Growth Survey, IDPS Australian Smaller Companies
Survey. All rates of return are before tax and after management fees as at 30 June 2006. Rates of return are annualised for periods
exceeding one year. Returns refer to BT’s wholesale Fund’s. Past performance is no indicator of future performance.
9
Global Economic Outlook
Presented by BT Chief Economist - Chris Caton
10
2006 Growth Forecasts (%)
Month of Forecast
J-06
F-06
M-06
A-06
M-06
J-06
J-06
Australia
3.2
3.1
3.2
3.2
3.2
3.3
3.3
US
3.4
3.2
3.3
3.3
3.4
3.4
3.5
Japan
2.2
2.3
2.9
2.9
3.0
2.9
3.0
China
8.7
9.0
9.1
9.1
9.6
9.6
9.7
Germany
1.6
1.6
1.7
1.7
1.8
1.7
1.8
UK
2.1
2.1
2.2
2.2
2.3
2.3
2.4
“World”
3.3
3.3
3.4
3.5
3.5
3.6
3.6
Source: Consensus Economics
11
2007 Growth Forecasts (%)
Month of Forecast
J-06
F-06
M-06
A-06
M-06
J-06
J-06
Australia
3.4
3.4
3.4
3.4
3.4
3.4
3.4
US
3.1
3.0
3.0
2.9
2.9
2.8
2.8
Japan
2.1
2.2
2.1
2.2
2.3
2.2
2.2
China
8.3
8.5
8.7
8.6
8.8
8.9
8.8
Germany
1.0
1.0
1.0
1.0
1.1
1.1
1.1
UK
2.4
2.4
2.5
2.5
2.5
2.5
2.5
“World”
3.1
3.1
3.1
3.1
3.2
3.1
3.1
Source: Consensus Economics
12
The Asian Growth Outlook
(% change in GDP)
Australia
China
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
Singapore
South Korea
Taiwan
Thailand
Asia/Pacific
(6 months ago)
2004
3.5
10.1
8.6
7.5
5.1
2.3
7.1
4.3
8.7
4.7
6.1
6.2
Actual
2005
2.5
9.9
7.3
8.4
5.6
2.6
5.3
2.3
6.4
4.0
4.1
4.5
4.8
2006
3.3
9.7
6.1
7.6
5.2
3.0
5.4
1.7
6.7
5.3
4.1
4.5
5.0
4.2
Forecast
2007
3.4
8.8
4.9
7.2
5.6
2.2
5.2
2.1
5.1
4.7
4.1
4.8
4.4
4.0
2006-16
3.2
8.1
4.2
7.0
5.6
2.0
5.2
2.8
5.2
4.6
4.3
4.8
13
Rates going up in all regions
Source: ISI
14
Total US Non-farm Employment
3mth / 3mth chg
1.2
0.8
0.4
0
-0.4
-0.8
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
Source: Datastream
15
US Inflation – Headline & Core
US Consumer Prices
year-to % change
7.0
6.0
5.0
4.0
Headline
3.0
2.0
Core
1.0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
Source: Datastream
16
Oil Prices (West Texas) in $US/bbl
80
$77.05 as at 8 August
70
60
50
40
30
20
10
0
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Source: Datastream
17
Morgan Stanley Capital Indexes
Developed Index
Asian Emerging Markets Index
2400
360
2200
330
2000
300
Asian Emerging Markets Index (RHS)
1800
270
1600
240
1400
210
1200
180
1000
150
World Developed Index (LHS)
800
120
600
90
99
00
01
02
03
04
05
06
Source: Datastream
18
BT’s Regional Equities Offering
An Introduction to Massachusetts Financial Services (MFS)
Presented by BT Head of Investment Solutions –
Stewart Brentnall
19
Who is MFS?

Founded in 1924 as America’s first Mutual Fund company

Headquartered in Boston, with investment offices in London,
Singapore, Tokyo and Mexico City

Traditionally retail focused firm, but growing institutional business
– now 37%

A$238bn* under management

96.5% owned by Sun Life of Canada

Highly rated by asset consultants here and overseas
*Assets under management are at 31 March 2006 and are rounded to the nearest billion
20
Why MFS

Focused on research driven selection of stocks

Analyst teams in all BT mandate regions

Portfolios are constructed by analysts’ from their best ideas

Higher conviction and tracking errors (up to 8%)

For the most part, currency exposures are unhedged
21
MFS’s competitive strengths

Strong corporate culture

Organically grown company – not built through acquisitions

Global research platform

Analyst team approach to managing money

Focused on active return generation
22
MFS - Philosophy and Process

Bottom up research driven process

Teams on the ground in all four mandate areas

Focused local insights good for regional mandates’ narrower
benchmarks

Analysts’ views clearly expressed in portfolio

Company fundamentals, not broader economic factors, drive
long term returns
23
MFS global sector teams
How the Financials team works across the world
24
Asian opportunities for
Australian investors
Presented by Robert Lau, Senior Analyst and
Vice President Asia Pacific, MFS
25
Outlook – Key Drivers



China/India growth story (demand for energy,
metals, etc.)
Recovery and development of the Asian domestic
demand
Global service / manufacturing outsourcing
26
China/India’s Potential Impact
Risks:
Counter-forces:
-
-
-
-
Building too much
capacity
Weak lending
discipline
Inflationary pressure
from commodity price
increase
Corp governance
-
Political pressure for
economic growth
Financial services
sector reforms
Steady increase in
transparency
* No forecasts can be guaranteed.
27
U.S. Trade surpluses of Asian Exporters as
of December 31, 2005
$201
$82
China
Japan
$23
$16
$12
$12
Malaysia
South
Korea
Taiwan
Thailand
Source: United States Census Bureau 2005
28
Strong economic results in Asia Pacific ex-Japan Region
10
9
8
7
6
5
4
3
2
1
0
2003
2004
2005 projected
No forecasts can be guaranteed.
Ja
pa
n
U
K
e
E
ur
oz
on
ta
te
s
te
d
U
ni
co
n
E
an
ce
d
S
om
ie
s
di
a
In
A
dv
C
hi
E
m
er
gi
ng
na
2006 projected
A
si
a
Real GDP Growth %
Comparative Real GDP Growth
29
Relative out performance of Asia Pacific ex Japan
Annualized returns for periods ended June 30, 2006
MSCI All Country Asia Pacific ex Japan Free
MSCI EAFE
S&P 500
30%
25%
20%
15%
10%
5%
0%
-5%
27.19%
26.56%
23.94%
22.91%
17.61%
11.22%
8.63%
10.02%
2.49%
1 Year
3 Years
5 Years
Source: Factset
The MSCI All-Country Asia Pacific ex Japan free Index, is a free float-adjusted market capitalization index that measures equity market performance in the
Asia Pacific region, excluding Japan. The free float adjustment considers only those shares of companies that are available for purchase in the public equity
markets by international Investors.
S&P 500 Stock Index measures the broad U.S. stock market.
MSCI EAFE (Europe, Australasia, Far East) Index measures the non-US stock market.
It is not possible to invest directly in an index. not possible to invest directly in an index.
Past Performance is no guarantee of future results.
30
Relative Valuation
MSCI AC Asia Pacific ex Japan
Historical Price/Cash Earnings
10 Years Ended 30/06/06
15
14
13
12
11
10
9
8
AC Asia Pacific ex Japan
n06
Ju
n05
Ju
n04
Ju
n03
Ju
n02
Ju
n01
Ju
n00
Ju
n99
Ju
n98
Ju
n97
Ju
n96
7
6
Ju
Price/Cash Earnings Ratio
16
Average
31
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
Relative
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
0.50
Jun-96
Relative Price/Cash Earnings
Relative Valuation:
MSCI AC Asia Pacific ex Japan vs. MSCI AC World
(Relative Price/Cash Earnings)
10 Years Ended 30/06/06
Average
32
Asia Pacific ex-Japan Has Offered Good Relative Value
(as of 30 June 2006)
IBES Long
Term Growth*
Price/Earnings
Next 12 Months*
Price/Cash
Earnings
MSCI World
12.0%
13.3x
10.6x
MSCI Asia Pacific Ex Japan
15.2%
12.1x
8.7x
MSCI US
12.6%
14.5x
11.6x
9.7%
12.4x
8.6x
15.5%
17.1x
8.8x
MSCI Europe ex UK
MSCI Japan
Source: EDP
IBES LT EPS Growth is the service that assembles analysts’ estimates of future earnings for thousands of publicly traded companies, detailing how many estimates are
available for each company and the high, low, and average estimates for each. EPS is earnings per share.
Price/Earnings Ratio (P/E) is the price of a stock divided by its earnings per share.
Price/Cash Earnings is stock price divided by trailing earnings plus depreciation..
The portfolio is actively managed, and current holdings may be different. Portfolio characteristics data is based on unadjusted total assets as of 30/06/06.
*No forecasts can be guaranteed
33
Top Ten Holdings
Significant performer in past 12 months : Hana Financial, Daewoo Shipbuilding, Hon Hai Precision, and CNOOC.
34
Sector Weights
35
Country Weights
36
Fund Performance
On Longer history
MFS Asia Pac
ex Japan (incl. Aus)
Since Inception (1-July-2003)
29.8%
MSCI AC Asia Pac
ex Japan (incl. Aus)
27.2%
37
MFS Fund Profiles at a glance
Asia ex
Japan
Japan
Europe
US
Global
Tech
3% above
index
3% above
index
2% above
index
2% above
index
3% above
index
Risk (TE)
4% - 8%
4% - 9%
2% - 6%
3% - 6%
4% - 10%
No. of stocks
40 – 70
30 – 60
60 – 90
80 – 110
30 -60
Core
GARP
Core
Core
Growth
Stock selection
Stock selection
Stock selection
Stock selection
Stock selection
FUM
US$580mn
US$400mn
US$4.6bn
US$4.3bn
US$150mn
Funds offered
BT Asian
Share Fund
BT Japanese
Share Fund
BT European
Share Fund
BT American
Share Fund
BT Technology
Fund
Company
founded 1924
Active Return object
(rolling 3 yrs)
Style
Alpha sources
Company AUM
US$160 billion
Fund access
BT Wrap & Wrap Essentials, External Platforms
38
Questions & Answers
39
Disclaimers
The information in this presentation is general only and does not take into
account your particular investment objectives or financial situation. Before
making an investment decision you should consult a financial adviser. The
information is given in good faith and has been derived from sources
believed to be accurate. However, no member of the BT Financial Group
gives any warranty of reliability or accuracy nor accepts any responsibility
arising in any other way including for negligence. This disclaimer is subject to
any contrary provisions of any applicable legislation. An investment in any
fund described in this presentation is not a deposit with or any other liability
of Westpac Banking Corporation ABN 33 007 457 141. None of Westpac
Banking Corporation or its related entities guarantee the capital value or
investment performance of any fund. Unless stated otherwise, BT Financial
Group is the source of all charts, performance information and other data.
Past performance is not a reliable indicator of future performance.
40
U