2. Equity income: a niche asset class Neil Margolis, Portfolio Manager May 2007

3. 3 Disclaimer The information contained in this presentation is current as at 22 May 2007 unless otherwise specified and is provided by Challenger Managed Investments Limited ABN 94 002 835 592, AFSL 234 668 (Challenger) and is intended solely for holders of an Australian financial services licence or other wholesale clients (as defined in the Corporations Act 2001 (Cth). It must not be passed on to a retail client except where it is included as part of the financial adviser’s own advice to their client and is not accredited to Challenger. It should be regarded as general information only, rather than as advice. It has been prepared without taking account of any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Challenger is the issuer of the Challenger Australian Share Fund ARSN 092 999 301 (Fund). Offers of interests in the Fund are contained in the current relevant product disclosure statement (PDS) issued by Challenger which is available on our website www.challenger.com.au. The relevant PDS should be considered before making any decision whether to acquire or continue to hold units in the Fund. Past performance is not a reliable indicator of future performance. In preparing this presentation, Challenger has relied on publicly available information and sources believed to be reliable. However, the information has not been independently verified by Challenger. While due care and attention has been exercised in the preparation of the presentation, Challenger gives no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this presentation is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the presentation. Any opinions expressed in this presentation, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved.

4. 4 Agenda Agenda: Part 1. An introduction to equity income Part 2. The paradox of longer timeframes Part 3. Using equity income to diversify an income portfolio Part 4. Investing in equity income

5. 5 1. Introduction to equity income What is it? Equity income A niche asset class Cash generative Potential tax effectiveness Typically lower volatility relative to equities Long term real capital growth potential

6. 6 1. Introduction to equity income Potential benefits for investors It’s all about the income Equity diversification Diversify equity portfolio to achieve higher tax effective dividend yield and enhanced defensiveness Income diversification Blend with bonds and other income investments to increase diversification, grow capital value after inflation, and enhance tax effective yield Diversification opportunities

7. 7 The challenge of retirement For retirees, bonds* can reduce short term risk and generate income but the real challenge is to protect capital base without the assistance of compounding. $154,000 $105,000 $81,000 2. The paradox of longer timeframes Short term versus long term risk *Data source: JPMorgan. Calculations: Challenger. Period: 31/12/1996-31/12/2006. *10 year government bonds. Past performance is not a reliable indicator of future performance.

8. 8 Potential to grow your capital in retirement 3. Using equity income to: …diversify an income portfolio *Data source: JP Morgan, Calculations: Challenger. Bond value based on 10 year government bonds. Equity income series calculated as 60% of Australian equity market price return. While expected to be less volatile than equity investments, equity income is expected to provide a higher total return and higher volatility than bond investments over the long term - this relates to expected potential outcomes - actual outcomes may differ from expectations. Period: 31/12/1996-31/12/2006. Past performance is not a reliable indicator of future performance. $147,000 $110,000 $81,000

9. 9 Yield construction 3. Using equity income to: …diversify an income portfolio *Data source: JP Morgan, Calculations: Challenger. Premium yield assumes 1.5% yield premium. Grossed up yield assumes franking level of 90% and a company tax rate of 30%. The above statements relate to expected potential outcomes - actual outcomes may differ from expectations. Period: 31/12/1996- 31/12/2006. Past performance is not a reliable indicator of future performance.

10. 10 Blending (income / growth) 3. Using equity income to: …diversify an income portfolio *Data source: S&P, Calculations: Challenger. Period: 1 year ending 31/03/07. Range of funds chosen to provide a representation of sector income / growth profile of each major income asset class (income / growth data not available at an aggregated sector level). Underlying funds used available on request. Past performance is not a reliable indicator of future performance.

11. 11 Blending (income / growth) 3. Using equity income to: …diversify an income portfolio *Data source: S&P, Calculations: Challenger. Period: 1 year ending 31/03/07. Range of funds chosen to provide a representation of sector income / growth profile of each major income asset class (income / growth data not available at an aggregated sector level). Underlying funds used available on request. Past performance is not a reliable indicator of future performance. Allocations Australian Bonds Mortgages Australian Hybrids Global Credit Equity Income

12. 12 Blending (risk / return) 3. Using equity income to: …diversify an income portfolio *Data source: S&P, Calculations: Challenger. Period: 1 year ending 31/03/07. Range of funds chosen to provide a representation of sector income / growth profile of each major income asset class (income / growth data not available at an aggregated sector level). Underlying funds used available on request. Past performance is not a reliable indicator of future performance. Allocations Australian Bonds Mortgages Australian Hybrids Global Credit Equity Income

13. 13 Capital growth Lower volatility Tax-effective income Lower volatility than benchmark  Options  Equity hybrids  High yielding stocks  Benchmark unaware The Challenger Australian Share Income Fund: A tailored fundamental process that aims to deliver a combination of: Growing dividends to generate capital growth above inflation Sustainable dividends of 2% pa above benchmark and managing distributed capital gains. Benchmark: S&P/ASX 200 Accumulation index. Inception date: 01/04/05 4. Investing in tax effective income Challenger’s investment approach

14. 14 Since its inception on 31 March 2005, the Challenger Australian Share Income Fund has achieved 17.5% per annum (after fees), with a distribution yield of 7.5% per annum (83% franked, equating to approximately 2.5% per annum imputation credits). Challenger Australian Share Income Fund Key outcomes *Data source & calculations: Challenger. Grossed up yield based on a company tax rate of 30%. Past performance is not an indicator of future performance.

15. 15 This is a hypothetical example and is for illustrative purposes only. Actual outcomes may differ from those shown. Past performance is not a reliable indicator of future performance. Source: Challenger/Goldman Sachs JBWere 31/03/07 4. Investing in tax effective income Investment example (300,000) (200,000) (100,000) 0 100,000 200,000 300,000 400,000 Underlying price $ 12.7013.0013.31 13.64 13.9914.3614.7415.1515.5816.0316.5117.0117.5018.0018.4918.99 19.4819.9820.4720.97 Zinifex return ($)Combined stock / option strategy return $

16. 16 Disclaimer The information contained in this presentation is current as at 22 May 2007 unless otherwise specified and is provided by Challenger Managed Investments Limited ABN 94 002 835 592, AFSL 234 668 (Challenger) and is intended solely for holders of an Australian financial services licence or other wholesale clients (as defined in the Corporations Act 2001 (Cth). It must not be passed on to a retail client except where it is included as part of the financial adviser’s own advice to their client and is not accredited to Challenger. It should be regarded as general information only, rather than as advice. It has been prepared without taking account of any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Challenger is the issuer of the Challenger Australian Share Fund ARSN 092 999 301 (Fund). Offers of interests in the Fund are contained in the current relevant product disclosure statement (PDS) issued by Challenger which is available on our website www.challenger.com.au. The relevant PDS should be considered before making any decision whether to acquire or continue to hold units in the Fund. Past performance is not a reliable indicator of future performance. In preparing this presentation, Challenger has relied on publicly available information and sources believed to be reliable. However, the information has not been independently verified by Challenger. While due care and attention has been exercised in the preparation of the presentation, Challenger gives no representation, warranty (express or implied) as to the accuracy, completeness or reliability of the information. The information in this presentation is also not intended to be a complete statement or summary of the industry, markets, securities or developments referred to in the presentation. Any opinions expressed in this presentation, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved.