From Greed to Concern U.S economy-catch me if you can The Feds get serious Inflation resists arrest! Julian & George surrender

Three strikes and you’re out!* * The FOMC has now raised rates five times

NASDAQ 1000 2000 3000 4000 5000 6000 Jan97 Jun97 Dec97 Jun98 Dec98 May99 Nov99 May00 Source: Bloomberg

JASDAQ 20 40 60 80 100 120 140 Jan97 Jun97 Dec97 Jun98 Dec98 May99 Nov99 May00 Source: Bloomberg

Surely not Cisco! 10 20 30 40 50 60 70 80 90 May95 Feb96 Oct96 Jul97 10 20 30 40 50 60 70 80 90 May95 Feb96 Oct96 Jul97 Mar98 Dec98 Aug99 May00 Source: Bloomberg

“The ability to monetise shareholder ignorance has probably never been exceeded” Warren Buffett April 2000

Anything.com Q . How to turn $10,000 into $3.0m in one day A . Buy the wrong stock The story of AppNet Systems, APPN and Appian Technology Inc.

Nobusiness.com or Suckedin.com “The company is not currently engaged in any substantial activity and has no plans to engage in any such activity in the foreseeable future”. …. NetJ.com worth $50m* * as of January 2000 - since then NetJ.com has fallen sharply

How big is this? U.S 40 65 44 JPN 20 40 11 EUR 20 45 29 L. AM 7 7 3 PC Penetration Worldwide (%) Home Business internet usage U.S 40 65 44 JPN 20 40 11 EUR 20 45 29 L. AM 7 7 3 Asia 1 5 6 Source: Morgan Stanley, Dean Witter

How fast is this?* Radio - 38 T.V - 13 Cable - 10 Internet - 5** * Years to reach 50 million U.S households ** estimate

How boring is this? What’s “in” on College Campuses? 73% - internet 71% - beer If stranded on a desert island? 67% - PC with internet 23% - telephone 9% - T.V Source: Americaonline/Roper Starch Cyberstudy

B2B - to be or not to be? $39bn to $1,500bn by 2004* A disinflationary force GM and Ford already have * Goldman Sachs Report - Jan 2000 ** Goldmans are now saying $3 trillion by 2005!

The Tech Locomotive* 1960 - 4 1970 - 6 1980 - 13 1990 - 30 1999 - 52 1960 - 4 1970 - 6 1980 - 13 1990 - 30 1999 - 52 Source: U.S Dept of Commerce * U.S based I.T as a % of business capital equipment spending

Yes it’s big! Continued demand for I.T A smarter mobile phone Exponential growth in demand 1.5 bn customers by 2003* * Morgan Stanley

Valuations and the denominator* Increase US$bn 1997 1998 1999 1997-99 Sales 686 762 880 Earnings 54 56 70 16 Mkt Cap 1,700 2,900 5,700 4,000 * U.S Technology Sector Source: Sanford C. Bernstein & Co., Proprietary Limited

Alice.com in Wonderland $ Billion Number of % Market Companies* Unprofitable Earnings Value 324 90% (6.9) 1,157 * Internet Universe at 31 December 1999 Source: Sanford C. Bernstein & Co., Proprietary Limited

Pursuit of digital nirvana? Marginal Cost Sales or Output

Not everyone can win Vicious attrition rate Brand name is the key Winners will be awesome

Is it different this time? P/Es are for nerds Price/Sales - the new valuation paradigm Japan in 1989 Who owns a Japanese car or stereo?

The Lucky Country Who stole the silverware? Signs of a slowdown RBA hostage to A$ Banks are cheap Selective value

“We do not dispute or deny that the information technology revolution will have a seismic impact upon our lives. Similar to the telephone, automobile etc. The debate is how to quantify the future value of this revolution into today’s prices”.

In Closing.com The implosion of concept.com Yes it is a revolution, so was the car Adam and the web The end of totalitarianism? Old will become new Tech - still priced for perfection

Disclaimer This presentation has been prepared by Rothschild Australia Asset Management Limited (ACN 000 727 659) 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. 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. Rothschild 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, Rothschild 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, Rothschild 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.