6th August 2008

Dear Investor,

La Trobe Australian Mortgage Fund -
Pooled Mortgages Option Update

In light of the events in capital markets and mortgage markets over the last twelve months, we thought it valuable to provide you with a specific update on the performance of the Pooled Mortgages Option within our Mortgage Fund.

We would like to reaffirm that La Trobe continues to be very satisfied with the Option's performance in all regards, that there has been no deterioration in the quality of the Option's investments and that we expect the Option to continue to perform strongly going forward.

Highlights of the Pooled Mortgage Option at present are:

  • Our variable distribution rate of 8.25% pa* is extremely competitive and going forward we expect to at least maintain our present performance benchmark of exceeding the Reserve Bank of Australia Official Cash Rate by 1.0%.
  • The performance of this Option for investors has not been impacted by the 'sub-prime crisis' or by general events in the Australian mortgage market.
  • The mortgage investment pool continues to perform strongly in line with our requirements and expectations. This Option does not undertake any medium or large scale construction or 'mezzanine' lending, and our lending to small scale residential construction is presently less than 10% of the pool.
  • The average loan to value ratio of the Option at 30 June 2008 was 59.9%.
  • Our arrears, default and impairment measures have not changed in the last 12 months relative to previous periods and continue to be very satisfactory.
  • Our lending rate increases to borrowers over the last twelve months have been in line with those of the Australian banks. This has not caused any measurable deterioration in borrower performance. Recent indications from the Reserve Bank are that interest rates may now be at the peak of the rates cycle.
  • The Pooled Mortgages Option 'Reserve' is a structural enhancement to the security of investors' capital and income. It is available to cover any income or capital shortfalls that might arise in the underlying mortgage pool. This Reserve is presently in line with our benchmark of 1.20% of the total Option investment balance, with no provisions against this amount. We believe that this feature, unique in Australia, is an outstanding enhancement to your investment security.
  • The Pooled Mortgages Option has been independently rated by both Standard & Poor's and Property Investment Research in recent years. These reports are available by clicking on the links on the sidebar. These are presently being renewed and to date are consistent with prior years. We are also presently engaging Adviser Edge to rate the Option and we look forward to releasing that report.
  • We also note that Morningstar has allocated a 5 out of 5 star performance rating for the Option as a conservative mortgage fund (refer to the Australian Financial Review).**

Extensive, specific information including the ratings papers are provided and regularly updated on our website at www.latrobefinancial.com.au and we will always be delighted to answer any queries you may have in person. Please call La Trobe on 1800 818 818.

Our aim is to provide investors with a low risk investment opportunity that is outstanding in a 'crowded' market place and that stands the test of time and cycles. We trust that the update is helpful for you and we look forward to the opportunity to meet all your ongoing expectations as investors in our Fund.

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.