8th January 2010

Dear Investor,

The New Year is already a week old and, sadly, many New Year resolutions have already been broken. Amidst the activity and, hopefully, relaxation of the holiday season, it is worthwhile to consider where the last two years have taken us and what is likely to lie ahead for investors in 2010.

The Global Financial Crisis and investors

As 2008 dawned and it became clear that the world faced a genuine financial crisis, many were thrown into panic. Underlying weaknesses in even advanced economies like the US and the UK were thrown into stark relief. Massive stimulus packages and record low interest rates could not stem the bleeding. Investment banks Bear Sterns and Lehman Brothers collapsed and AIG - once the world's largest insurer - went to the brink.

As the bad news continued, dramatic measures were taken to protect Australia. In February 2009 the Federal Government's $42 billion stimulus package was passed in the Senate. Perhaps even more significantly, between August 2008 and February 2009, the Reserve Bank of Australia slashed official cash interest rates by 4%. This did not stop the announcement in March 2009 of the first quarter of negative growth (of 0.5%) in Australia in eight years. Further, although growth in the following quarter was slightly positive (thereby avoiding a technical recession), economists were quick to point out that this was largely caused by a decrease in imports and an increasing population, rather than a more productive economy.

As could be expected, investors in more volatile asset classes were hit hard by all of these developments. The S&P/ASX 200 stock market index lost nearly half of its value between late 2007 and early 2009, effectively losing an entire decade's worth of growth. Stories abound of people being forced to abandon retirement plans and of retirees forced to return to work to cover the shortfall in their retirement savings.

Wealth survey reports

All this has caused many to question the adequacy of their retirement plans. In late 2009, Citibank released its 'Australian Wealth Survey'. Among its findings was the worrying fact that around one in two Australians are not confident that their retirement savings will be sufficient to provide for a decent lifestyle post-work. This correlates with the similar findings in the 2009 AMP.NATSEM Income and Wealth Report that many retirement funds will not last for the length of the average retirement.

So where to for investors?

Business collapses have, of course, been occurring since the beginning of time and stock markets will always be subject to dramatic swings. But having an adequate savings and investment strategy is imperative if we are to enjoy a decent lifestyle in retirement. Investors, particularly those nearing retirement, need to be able to access stable and reliable investment options. In doing so, they should never forget the three immutable rules of investing:

  • Rule 1 - Never put all your eggs in one basket.
  • Rule 2 - A higher rate of return always equals higher risk.
  • Rule 3 - Getting rich slowly will never go out of fashion.

La Trobe - a reliable investment partner

At La Trobe, we are committed to providing you with an outstanding income that you can depend on. The four investment options in our Mortgage Fund allow you either to choose the specific investment and security that suits your investment needs or obtain all the benefits of diversification and income 'smoothing' that can be obtained from a pooled investment scheme.

Our Pooled Mortgages Option recently won the 2010 Money magazine award for Best Mortgage Fund in Australia. This reflects our:

  • stable returns (currently 7.35%1) outperforming even the elite of our competitors, whether one looks at one year or three year periods;
  • liquidity management that meant we never froze or restricted redemptions, even when virtually of all our competitors did2; and
  • stable management model that has been honed over almost 60 years of managing mortgages and scrutinised by independent reviewers Standard & Poor's and Adviser Edge.

You can access the research reports and other information from our website or discuss your investment needs with our dedicated Investor Liaison staff on 1800 818 818.

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.