sp downgrade

21 August 2008 The Manager ASX Limited 20 Bridge Street Sydney NSW 2000 Allco Max Securities & Mortgage Trust: MAX (ASX: AXQ) – Standard & Poor’s Downgrade

MAX wishes to advise that Standard & Poor’s (S&P) today downgraded the rating on medium term notes (MTNs) issued by MAX under its debt programme to AA- from AAA. The ratings remain on CreditWatch with negative implications. A copy of the S&P release is attached for reference. As previously announced to the market, MAX’s warehouse facility (previously provided by an Société Générale Australia Branch (SG) managed trust (Warehouse Provider)) terminated on 30 June 2008 following SG’s strategic decision to exit the Australian securitisation market. For the period of 3 months following termination (ie until 30 September 2008), MAX has a best endeavours obligation to refinance or repay the MTNs held by the Warehouse Provider (Warehouse MTNs). If the Warehouse MTNs are not redeemed by 30 September 2008, the Warehouse Provider is entitled to take certain actions which include re-pricing the Warehouse MTNs to the then-current market rate (as determined by the Warehouse Provider acting reasonably) and selling the re-priced notes. MAX may also be required by the Warehouse Provider to undertake a new issue of MTNs to refinance the outstanding Warehouse MTNs by 31 December 2008. S&P’s downgrade of the rating on the MTNs issued by MAX of itself has no direct consequence under the documentation for MAX’s debt programme other than obligations to notify certain transaction parties of that event. However, the downgrade will have an impact on the repricing and/or refinancing of the Warehouse MTNs. Based on current market conditions and the downgrading of MAX’s MTNs, it is likely that the Warehouse MTNs will be repriced, and/or any new MTNs will be issued, at considerably higher effective interest rates than MAX currently pays. It is also possible given current market conditions and the downgrade that MAX would be unable to complete a new issue of MTNs to refinance the Warehouse MTNs by 31 December 2008. If MAX is unable to redeem or refinance the Warehouse MTNs and they remain outstanding at these higher effective interest rates, this may impact on MAX’s current and ongoing compliance with its portfolio tests, including having the effect of putting MAX in a position of breaching its portfolio tests. In addition, as noted in our Investor Update dated 30 July 2008, MAX has recently experienced portfolio test pressures which it has been able to address by rebalancing the portfolio, including through selected asset sales, within the grace period permitted, to restore or maintain compliance with the portfolio tests. The ability to rebalance the portfolio may be impacted by the repricing of any outstanding Warehouse MTNs because MAX’s ability
to buy and sell assets is restricted where it is, or following the acquisition or sale would be, in breach of the portfolio tests. If MAX breaches a portfolio test (subject to some allowance for breach of certain tests during the ‘ramp-up’ period which MAX is currently in) and fails to correct the breach within any applicable grace period, an Early Amortisation Event will occur. If an Early Amortisation Event occurs MAX must use its best endeavours to remedy the relevant breach. If MAX remedies the relevant breach, the Cash Flow and Systems Manager must provide notice of this to the Security Trustee. If the Security Trustee has not received a notice confirming the remedy of an Early Amortisation Event with 6 months of the occurrence of the Early Amortisation Event then the Security Trustee will convene a meeting at which the Creditors of MAX (being holders of the MTNs and certain other creditors secured under MAX’s debt programme documentation) will vote on the following course of action: - Declare an Event of Default and take all actions available to them (primarily the enforcement of security). - Continue with the Early Amortisation event imposing such conditions as they consider proper and (if considered appropriate) replace the Investment Manager. While an Early Amortisation Event is subsisting, distributions to unitholders cannot be made. Following an Event of Default, distributions to unitholders may only be made once MAX’s Creditors and any other expenses of the MTN program have been paid in full. As noted in our Investor Update dated 30 July 2008, MAX continues to review the potential sources of funds to redeem the Warehouse MTNs outstanding to the maximum amount permitted whilst retaining compliance with the portfolio tests. The MAX management team is focused on redeeming the Warehouse MTNs, seeking replacement warehouse financing, monitoring the credit strength of the asset portfolio and adhering to our portfolio test obligations and will continue to inform S&P of developments in this regard. However, in the current climate there is no guarantee that such redemption or re-financing can be achieved. Yours sincerely, Tom Lennox Company Secretary Allco Managed Investment Funds Limited For more information on Allco Max Securities & Mortgage Trust please contact: Alexandra Ballard Investor Relations Manager Allco Finance Group Tel: + 61 2 9255 4100

Ratings On Allco Max Securities And Mortgage Trust Notes Lowered To ‘AA-’, Remain On Watch Neg Melbourne, Aug. 21, 2008—

Standard & Poor’s Ratings Services today announced that the ratings on the A$535 million medium-term notes (MTNs) issued by Allco Max Securities and Mortgage Trust (Allco Max) have been lowered to ‘AA-’ from ‘AAA’. The ratings remain on CreditWatch with negative implications (see list). The downgrades have occurred for a number of reasons. The unfavorable credit environment has markedly reduced the investment manager’s flexibility in managing the transaction. Although the investment manager has explored several ways to address the uncertainties affecting the transaction, it does not appear, from the information available to Standard & Poor’s, that the proposed strategies will be effective in the short term. The deterioration of the portfolios’ credit quality and the reduced flexibility have resulted in several breaches of the capital adequacy and liquidity test. Although the breaches have since been rectified, or are in the process of being rectified, we expect further breaches to occur given the continuation of the tight credit market conditions. The transaction’s lack of flexibility makes it very sensitive to any breaches. The downgrades also reflect how difficult it is, in the current market, to find appropriate replacement parties when needed. The requisite management skills in the transaction are very specific. This exposes it to the risk of key people leaving their positions and no suitable replacements being readily available. At present, Allco Max is unlikely to be able to redeem a significant proportion of the warehouse notes outstanding under the note purchase facility (which was terminated on June 30, 2008) by Sept. 30, 2008. The purchaser will then have the option to remarket the remaining unredeemed warehouse notes at the prevailing market rate, which is to be reasonably determined by the purchaser. The price and the amount of notes outstanding will impact future yield sufficiency. This has resulted in the MTNs remaining on CreditWatch with negative implications. Standard & Poor’s continues to assess all events, which may impact the credit quality of the MTNs. Name Ratings To Ratings From Allco Max Securities and Mortgage Trust MTNs 2005-1T AA-/Watch Neg AAA/Watch Neg Allco Max Securities and Mortgage Trust MTNs 2006-1T AA-/Watch Neg AAA/Watch Neg