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BalmainTRILOGY has made progress in developing a Hardship Policy for PFMF investors. There are a number of steps required in the process of building a Hardship Policy. These include:

Approval of the Hardship Policy by Australian Securities and Investment Commission (ASIC); and

The availability of funding within the PFMF to enable BalmainTRILOGY to instigate financial hardship payments.

BalmainTRILOGY anticipates lodgement of the proposed Hardship Policy with ASIC in the near future.

Investors should note that the provision of a Hardship redemption facility will only be available to those investors who find themselves in particularly difficult financial circumstances and have no other sources of income or capital to meet their essential expenditure requirements as defined in the Hardship Policy.

The various applications forms and eligibility requirements for the scheme will be available from BalmainTRILOGY in hardcopy and from the BalmainTRILOGY website.

The large impairments of the Fund are not solely a result of the global financial crisis (GFC). The GFC was a trigger that brought to light a myriad of discrepancies relating to the Fund resulting from less than desirable lending practices by the previous manager. These included a number of related or associated party loans.

The further impairment for the half year to 31 December 2009 can be largely attributed to the ‘Longer Term’ and Martha Cove assets the Fund holds. Assets of this nature which are yet to be developed out continue to be affected and thus realization is further deferred. As these assets are not income producing and not providing any immediate return, values become adversely affected. Notwithstanding this, these assets as indicated previously by Joint CEO Andrew Griffin in the Asset Review are capable of providing potential uplift to the Fund by proper development management. A number of other assets in the Fund continue to perform in line with our original expectations.

The management fees described on your periodic statement are those charged by City Pacific and predate the appointment of BalmainTRILOGY. The BalmainTRILOGY fees are substantially less at 1.5%. On your next Periodic Statement, you will notice a substantial fall in this amount.

BalmainTRILOGY encourages on going participation within the Investor Committee. If you have any questions or comments that you would like to be raised by the Investor Committee Members at a committee meeting, please forward to the following email address: investorcommittee@pfmf.com.au

The Investor Committee Members will review these questions and raise them at a subsequent meeting, if not beforehand. The Committee at its discretion will respond to any relevant questions raised.

The next Investor Committee meeting will be held on Friday, 16 April 2010.