April 2008

Dear Member

Welcome to the April edition of the WA Local Government Superannuation Plan newsletter, brought to you by the team at Western Financial.

In this edition -

1. MARKET COMMENTARY

Share markets suffered their fifth consecutive monthly fall in March, with monthly declines of varying sizes being recorded since the markets peaked in early November 2007. In March, the Reserve Bank of Australia again increased official interest rates (to 7.25%) but has started to moderate its comments relating to future economic growth. The net effect was a weaker $A which fell by 3.0% against the $US while the Trade Weighted Index fell by 4.0%.

The Australian share market again continued its weakness with the latest month contributing to a five month decline of almost 20% (-11% in January) to record -7.2% for the full 12 months to the end of March 2008. The RBA’s Financial Stability Review cited increasing concerns about the global financial system and outlook, but concluded that Australia’s financial system was relatively well positioned to cope with the difficulties being faced. Banks had high quality assets with low levels of nonperforming loans and had not significantly lowered their lending standards. The financial sector of the share market reflected this, being one of the few sectors to record positive returns for the month. However since the end of March the banking sector has undergone significant weakness due to problems now being identified. Conversely, in March the weakness in some commodity prices was reflected in Materials (which includes resource stocks) being the weakest sector in March with a fall of 8.6%. BHP Billiton and Rio fell by 9.5% and 10.6% respectively. Other weak sectors were Consumer Discretionary (-8.0%) with ABC Learning down by a third after corporate difficulties and Harvey Norman down 14.1% and Telecommunications (-7.7%) with Telstra 6.8% lower.

Global share markets were also generally weak during March, with the MSCI World ex Australia Index being 2.1% lower in local currency terms but due to the weaker $A it rose by 1.6% in $A terms. Various economic indicators appear to confirm a US recession. The US Federal Reserve has responded by injecting extra liquidity into the US banking system and further reducing its cash rate by 0.75% to 2.25%. These actions helped to keep the US market flat against a climate of declining world share markets. The US Dow Jones Index was flat while the respective MSCI country indices in local currency terms declined by 8.3% for Japan, 3.1% for Germany, 6.1% in Italy and 2.1% in the UK. Over 12 months, global markets were down by 9.7% in local currency and by 16.6 % in $A terms.

After five consecutive negative months resulting in a downturn of almost 30% since September, listed property trusts recorded a flat month in March. Following the decline, the estimated distribution yield of the sector of 7.5% compares favourably with the long term government bond yield of 6.2%. This should help support the sector, which fell 27% in the twelve months to March 2008.

As stated above, in March central banks in Australia and the US continued to move their target cash rates in different directions. However due to the slight reduction in long term bond yields in Australia, the fixed interest sector returned a positive result for the month.

Source: Counterpoint Group April 2008

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2. MARKET INDICES

Source: Counterpoint Group April 2008

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3. FUND PERFORMANCE

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INCOME STREAM PERFORMANCE

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4. DEARSON'S DIATRIBE - THE WORLD OF SPORT ACCORDINGTO CHRIS

This month it has mainly been doom and gloom for the WA sports teams.

The Netball team, the Dockers & the Eagles have all only won a single game, while the Force are more like the Fizzle!!

The only consolation is the Dockers are almost as bad as the Eagles.

Rugby

In rugby the Force are now out of the running for the finals play offs.

If they keep up the poor performances , they will be able to move to Members Equity Stadium from Subiaco Oval without a problem – as they will not even fill that.

AFL
In the footy, the top teams are all Victorian (though there are 16 rounds to go). This could be the first year for about 8 that there is no interstate team in the Grand Final.

Cricket

In the cricket, the IPL 20:20 series is in full swing in India and is mainly a success.

The most interesting result so far is that Harbhajan Singh must have thought Sreesanth was an Australian and gave him a slap instead of a handshake.

$600,000 in lost earnings later, Harbhajan will not play again unless his team makes the semi finals.

1st Test Match against the Windies is due to start on 22 May at Kingston so some of the Aussies may have to cut short their IPL cash cow if they are playing test cricket.

Soccer

ManU failed to wrap up the Premier League due to their loss to Chelski but they lead on goal difference with 2 games to go.

Who will blink first?

David Wilsher’s West Ham will end up a position ahead of my team Spurs this year so congratulations to all Hammers supporters for being less mediocre than Spurs.

We won the League Cup and will be in Europe next year while they won’t but I am not gloating.

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