30th July 2008

Dear Investor,

Income Investments vs Capital Growth Investments

In today's complex investment world, it is increasingly important to understand all viable investment options and strategies. Asset allocation is a key ingredient for a successful investment portfolio and it can be easily summarised by the tried and tested adage "don't put all of your eggs in one basket."

By effectively diversifying your assets, you can lower your overall investment risk while achieving your financial goals. In fact, many studies have revealed that the asset allocation decision can be the most important decision made by an investor.

Selecting the investments should be the last piece of the puzzle. Before you can invest, you must first decide on your investment needs and tolerance for risk.

All investors have different investment objectives, so the type of investments you select will depend on your own situation. Investment objectives change as we become older and will depend on our ability to generate income from other sources such as employment. A 35 year old investor with potentially 30 years' working life remaining will have a different investing outlook to a 70 year old retiree. This has been highlighted in recent share market movements where many retirees reliant on superannuation investments have seen dramatic decreases in the values of their share portfolios.

Once you have decided on your investment objectives, you will then need to decide between the two most common objectives of investing, these being investing for capital growth or for income streaming. When making this decision it is important to remember that all investors can benefit from having exposure to both capital growth investing and income investing - it is just the mix of these that may change over time.

Capital growth investments will hopefully increase in value over time. The best examples of capital growth investments are property and shares (equities). Both these types of investments are purchased with the hope that they will be sold at a greater price than what they were purchased for, with the benefit to the investor being the difference between purchase price and sale price.

Income earning investments are investments that provide a regular source of income. Generally, this can be in the form of interest or distributions, and investments which can generate this type of income include term deposits, property trusts and fixed-interest securities.

Most investors would agree that the key to a successful investment strategy is diversification. Recent events in the share and interest rate markets in Australia have highlighted this importance. By exposing yourself to both these areas, you can effectively lower your risk. In the current economic environment, many investors with exposure to income bearing investments have effectively lowered their risk compared to those who have invested solely in equities.

La Trobe offers four investment options, all of which aim to provide a regular income stream, rather than capital growth. Interest, at the request of investors, can be reinvested.

Investment Option 1 - Cash & Mortgages Option

This option offers investors a competitive variable rate of return with flexible access to their funds on twenty four hours' notice. Investment is in a range of Australian dollar assets and mortgages, with interest paid monthly. This investment option is currently returning 7.50% p.a., variable*.

Investment Option 2 - Pooled Mortgages Option

This option offers investors a variable rate of return from a pool of mortgages chosen and managed by La Trobe's experienced management team. Investment is in a broadly diversified pool of Australian registered first mortgages, with no exposure to the US sub-prime market. This option has an initial twelve month investment term and has been independently rated by Standard & Poor's and Property Investment Research**. This investment option is currently returning 8.25% p.a., variable*.

Investment Options 3 & 4 - Select Mortgages & Special Situation Mortgages Options

These two investment options offer investors the ability to individually select the mortgage investments in which they want to invest, depending on their appetite for risk and return. Both options offer the choice of fixed and variable rate of returns (subject to availability). The investment decision is made by investors after considering information about the loan, its term and its rate of return, the security property and the borrower. Interest rates vary between the options and the individual investment selected. Current returns range from 8.00% - 18.50% p.a.*

*The rates of return from the Fund are not guaranteed and are determined by the future profits of the Fund. Past performance is no guide to future performance.
**Copies of the Standard & Poor's and Property Investment Research rating reports can be viewed on the La Trobe website www.latrobefinancial.com.au or by clicking on the links on the right-hand sidebar.

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.

Copyright 2010 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

* La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
(1) The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Past performance is no guarantee of future performance. Investors risk losing some or all of their principal investment.
(2) Withdrawal rights are subject to liquidity and may be delayed or suspended.
(3) As at 30/11/10 the La Trobe Australian Mortgage Fund had received a Morningstar RatingTM of 5 stars. The Morningstar Rating is an assessment of a fund's past performance - based on both return and risk - which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision. © 2010 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the above data or content to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant product disclosure statement, before making any decision. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.pdf
(4) 3.75 star rating out of a possible 5 star rating indicates that Adviser Edge believes that La Trobe has performed in line with its peers and exceeded its peers on some fronts.
(5) The Standard and Poors rating of 4 out of 5 stars indicates that S + P has high conviction that La Trobe Financial will consistently generate risk-adjusted fund returns in excess of its relevant investment objectives and relative to its peers.
(6) The award was given to the La Trobe Australian Mortgage Fund, Pooled Mortgages Option.
Research Ratings are subject to change. To view the latest research information please visit www.adviseredge.com.au or www.standardandpoors.com.au. Ratings issued by Adviser Edge Investment Research AFS Licence No. 236783 and Standard & Poors Information Services (Australia) Pty Ltd AFS Licence No. 258896 are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. The ratings are only one factor to be taken into account in deciding to invest. Research Houses receive a fee from La Trobe for rating the product. The Adviser Edge rating is generally a measure of the rated entity's capacity to meet its repayment obligations in all market circumstances.
IMPORTANT: This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website.