Return of Capital – April 2011

21 April 2011

Balmain Trilogy is pleased to announce that it will process a return of capital payment to all Pacific First Mortgage Fund (the Fund) Unitholders totalling $8.87 million on 30 April 2011. All Unitholders recorded on the register as at 19 April 2011 will receive a capital repayment of 1c per unit.

As previously stated, the property market in Queensland has continued to retract as demand for vacant land and completed residential dwellings has declined. Depressed property values, combined with the effects of the flooding in Queensland, have caused the projected sales of assets to fall below our forecasts.

As a result, and as previously indicated, the scheduled capital return of $35 million (or 4c per unit) can only be partially paid in April. The residual amount is forecast to be returned by June 2011. However, this may be extended if market conditions deteriorate further and/or there are delays with settlements. We will provide an update nearer that time. We still remain confident that the capital repayment anticipated for October 2011 will be made in full.

As we work to have properties realised in an orderly fashion, we remain conscious of the continued decline in the market and ask Unitholders to understand that our commitment is to provide the optimal return of funds without resorting to fire sales.

As per our undertaking in February 2011, Trilogy Funds Management Limited (Trilogy), as the responsible entity, will reduce its management fee from 1 April to reflect the scheduled repayment of $35 million. That is, Trilogy will be excluding the full $35 million from the calculation of the gross assets of the Fund when calculating the management fee.

If you have any questions, please contact the Balmain Trilogy Client Services team on 1800 194 500.