3rd December 2008

Dear Investor,

2009 Money Magazine Awards

Money Magazine has awarded second place to the
La Trobe Australian Mortgage Fund Pooled Mortgages Option in the Best Mortgage Fund category and third place for the La Trobe Australian Mortgage Fund Cash and Mortgages Option in the Cash Management Trust category in the Best of the Best 2009 awards magazine announced this week, and currently on release.

La Trobe staff are proud of this recognition as being a worthy recipient of these awards in the highly competitive investment market.

The cost of the Government Guarantee

Regardless of how the market is performing, investors must always consider the right balance between risk and return for their personal circumstances.

There is still a large amount of uncertainty in relation to the share market and the economy broadly. However, there will always be a window of opportunity. It simply depends on each individual's investment approach.

In October 2008, the Australian Government moved to guarantee all bank deposit funds. Whilst it was its intention to provide security for Australian investors, for many Australian investors the guarantee unintentionally caused their funds to become not accessible for sometime.
La Trobe was only one of three mortgage funds rated by S&P that did not freeze redemptions to our investors.

On further news, this week the RBA announced another 1.00% drop in interest rates lowering the official cash rate to 4.25%. This is the RBA's 4th consecutive decrease in a row since 3rd September this year reducing cash rates from 7.25% to 4.25% - with more likely to come. This is ultimately a positive move and, when combined with the Federal Government $10.4 billion stimulus package, will hopefully have the desired affect of protecting our economy. But for investors it means lower returns.

Consider the following comparisons for a 12 month term investment. Receiving a Government guarantee on your investment is a very attractive offer. However as bank deposit rates are directly linked to the RBA cash rate, interest rates for cash investments are diminishing in line with the RBA decreases.

Provider
$1,000
$10,000
La Trobe Australian Mortgage Fund – Pooled Mortgages Option
7.95%p.a.*
7.95%p.a.*
ANZ
Not Available
4.20%p.a.
Bendigo Bank
1.25%p.a.
5.21%p.a.
CBA
Not Available
4.25%p.a.
ING Direct
4.00%p.a.
4.50%p.a.
NAB
Not Available
3.20%p.a.
RaboPlus
3.90%p.a.
4.30%p.a.
St George
3.50%p.a.
3.50%p.a.
Westpac
Not Available
3.10%p.a.

(Data source: Canstar Cannex www.canstar.com.au/term-deposits/)
Note: Term Deposits have a fixed interest rate over the term of the deposit, while the La Trobe Pooled Mortgages Option has a variable interest rate over the term.

Remember our Investment News "How suitable is cash for the risk averse" where we discussed the comparison in dollar terms of return and the potential loss in return and/or capital by not considering alternative low to medium risk investments? Leaving your funds in cash when it may not be absolutely necessary may see investors missing out on potential opportunities that still exist in an uncertain market.

Director of Fund Services for Standard and Poor's ("S&P"), Mr Peter Ward was quoted in both the The Australian Financial Review 29 October 2008 and The Age and Sydney Morning Herald 19 November 2008 saying that of S&P's 17 mortgage fund rated products the La Trobe Australian Mortgage Fund was one of only three funds that had not placed its fund on hold (or 'frozen') and was still available for investment.

Market downturns are not always bad, as amongst many things it helps to rid the market of questionable operators or operators with questionable practices (think back only to the 1980s with the likes of Alan Bond and Christopher Skase).

La Trobe has always erred on the side of conservatism and has stood by its philosophies on good quality lending practices and appropriate returns for investors. These practices have stood the test of time across many economic cycles over La Trobe's 56 year history.

Whilst a Government guarantee creates a 'risk free' return, the rapid and large reductions in cash and term deposit rates have substantially reduced the return from the exceptionally high cash rate of four months ago (which may have further to go) as banks discount for excess cash holdings. This has significantly re-opened the reward premium available to investors through certain other fixed interest classes, such as mortgages. Investors should be speaking to their financial planners in this market even more than when the market is stable, as now may be the time to seek out those opportunities in any portfolio at any risk level.

It may also be prudent to check the diversity of your portfolio. Diversifying helps not only to protect your portfolio but to leverage returns; for example diversifying your portfolio across a low risk investment such as an account with the bank guarantee and a slightly riskier investment in a fixed interest asset that provides a return 2% to 3% above cash may provide security combined with some of your money working a little harder to provide a better return.

Investors may consider this an attractive return premium opportunity for the respective fixed interest class.


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.