WHAT 
INTENDS TO DO
Management Structure
Trilogy Funds Management Limited will be the responsible entity of the fund and in that capacity will appoint a joint venture company owned 50/50 by Balmain and Trilogy (BalmainTRILOGY) as investment manager. Upon Trilogy's appointment as responsible entity the Fund will be renamed as the "Pacific First Mortgage Fund".
The critical functions of Custody and Registry, currently performed by CPL, to the discomfit of many Investors, will be outsourced to independent specialists to remove all existing conflicts in this area. Trilogy will be responsible for Investor services and Fund compliance. The following Structure Diagram describes the various functions to be performed in managing the fund.
Investor Representation
The lack of any transparency for the Investors in respect of the current Fund will be reversed with an independent responsible entity fully cognisant of its disclosure duties and constitutionally restricted from entering into related party loans.
The new Manager intends to take this one step further by establishing an Investors' Consultative Committee ('ICC'). The ICC will meet not less than 4 times each year and will comprise 3 members of BalmainTRILOGY, three representatives of the Fund's Investors and will be Chaired independently.
The ICC will provide a ready forum for open discussion about Investors' issues.
We confirm that the Pacific First Mortgage Fund will not be listed on the ASX.
Asset Assessment
Immediately upon appointment BalmainTRILOGY will commence a detailed assessment of the quality and value of all of the assets of the Fund, being the underlying mortgages. When complete this Asset Assessment will be reviewed by an independent expert. The reviewed Asset Assessment will form the basis of a comprehensive disclosure to Investors. Investors will be advised of the results of the Asset Review not later than 6 months from the date of appointment.
Legal Review
Immediately upon appointment BalmainTRILOGY will instruct a leading Australian law firm to complete a review of the past conduct of the Fund with particular emphasis on assessing whether Investor's may have any valid cause of action relating to the conduct of the previous responsible entity. BalmainTRILOGY intends to pursue any legally valid claim to help recover any lost value to the Fund.
Costs in relation to the legal review will be borne by the Fund and may be recoverable in certain circumstances.
Future Strategy
Upon completion of the Asset Assessment and the Legal Review BalmainTRILOGY will advise Investors of the intended future direction of the Fund. This advice will include definitive policies for future distributions and future redemptions.
No Listing
We undertake that the fund will not be listed on any securities exchange.
Other Stakeholders
BalmainTRILOGY is acutely aware that other stakeholders in the Fund, such as CBA, will need to be regularly consulted and properly informed in accordance with the Fund's contractual obligations.
Management Fees
The historical management fees charged by the existing responsible entity are a matter for personal opinion as to their appropriateness. BalmainTRILOGY's assessment is that the present fees are approximately double what would be an appropriate level at this time given the current state of the Fund.
Following detailed consultation with unitholders (and some criticism of our original proposal) BalmainTRILOGY has decided to amend its proposed fee structure. The proposed fee structure is now limited to 1.50% per annum of funds under management. In the event that funds under management reduces through either asset revaluations or redemptions to unitholders the management fee will consequently reduce.
The estimated cost of Custody, Registry and Fund Auditing will remain as a cost to the Fund in accordance with standard industry practice. This cost remains estimated to be 0.12% per annum. It should be noted that BalmainTRILOGY will receive no other income in respect of the Fund other than the abovementioned 1.50% per annum of funds under management.
Constitution
There will be some Constitutional changes required as a result of BalmainTRILOGY's proposals including adding restrictions to management fees and prohibitions on lending to related parties. The specific Constitutional amendments will be included in the Notice of Meeting to be sent to all Investors.