11th July 2007

Dear Investor,

Socially Responsible Investing

More than 7 million people, about 46% of the population over the age of 18, are now investing in the stock market, either directly through shares or indirectly through managed funds or self-managed super funds. Even though figures are down from 55% in 2004, there are still some 6 million people who still own shares directly. A recent survey showed 58% of respondents plan to increase the money they have invested over the next year. Even more interesting is that 7 out of 10 advised that they favour a particular type of company for investment: one that is socially and environmentally responsible.

Socially responsible investment or SRI funds are funds that reflect environmental, social or other non-financial values. Socially responsible investors may focus on a range of different issues, but the area of highest interest in Australia is the environment. Researchers of SRI funds provide their analysis of the funds in different forms; some by way of company profiles, others will award a rating based on the company’s performance in socially responsible areas and others will provide a detailed analysis, but do not provide a ranking of the companies.

Whilst the socially responsible investment sector is a relatively small portion of the whole market, holding $21.5 billion total investments ($3.6 billion of this is invested in managed funds) it is nevertheless on the increase. In fact, it is growing at a faster rate than the general market, having increased by 41% since 2003. A study by AMP showed SRI funds outperformed the Australian stock market over one, three and five years. Over 5 years to March 31 2006, the median-performing SRI fund produced an average return of 17.08% compared to 14.83% for the Australian share market, represented by the S&P/ASX 200 index.

SRI is not only affecting the share market - it is also crossing over into the property market. A property investment forum we attended earlier this year noted that investments in commercial properties that were environmentally aware were becoming quite popular and were being selected over non-environmentally friendly properties. It was suggested that investors and corporate tenants alike want to be associated with SRI as this was seen to be an advantage in the marketplace with potential clients.

Opponents of socially responsible funds have argued that even though the popularity of these funds is on the increase, excluding stocks from particular sectors, for example resources, will disadvantage the SRI funds when these sectors do well and that the positive performance of SRI funds will be short lived.

Whilst past performance is not a reliable indicator of future performance, statistics have shown that many ethical funds have outperformed conventional funds consistently over a period of time.

Investing in socially responsible funds means that investors can have the best of both worlds: they can obtain strong financial returns while supporting socially oriented responsible entities.

Best regards,
Chris Andrews


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Chris Andrews
Head of Funds Management

t  +61 3 8610 2811
e  candrews@latrobefinancial.com.au

Chris Andrews is the Head of Funds Management for the La Trobe Group and has responsibility for the La Trobe Australian Mortgage Fund.
Read full profile here.

La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

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