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Mayne Investments was formed in June 1968 with the aim of pooling investor funds in order to lend them against first mortgage security. Since that time Mayne has grown to become one of the largest regional fund of its type in Australia with more than 4,800 investment accounts and $230 million in funds under management. Mayne is a public company licensed by ASIC and as responsible entity for the Northern Investment Trust Fund, holds an Australian Financial Services License. It has a strong and experienced Board of Directors with a wide range of skills appropriate to the business and a management team that has a proven track record. Since 21 October 2008, Mayne investments, like most other mortgage funds took the difficult decision to suspend redemption requests. Since then, Mayne has moved to a regime of making partial redemption offers rather than persist with our normal practice of meeting redemption requests within two business days. In that time we have maintained regular correspondence with investors (refer below for more details). Despite these difficult economic times, Mayne has continued to perform in much the same way as it has for the past forty years, underpinned by the security of first mortgage property and conservative lending policies. 2009 Concise Annual Report A new Product Disclosure Statement has been issued to reflect the non-liquid status of the Fund. For investors who do not need daily access to their funds and who are seeking a stable income, excellent returns and high levels of care and service, please take time to look at our site.
Most Recent Correspondence To Investors 28 February 2010 Dear Investor The start of a new year brings increased optimism for investors, as the economy’s rate of recovery continues to gain momentum. The government’s recent announcement to lift the wholesale funding guarantee at the beginning of March is another sign of a return to normalcy although unfortunately, they have stated that the retail guarantee of bank, building society and credit union deposits under $1 million will remain in place. Certainly, the Board of Mayne is committed to normalising operations as soon as possible although in a constantly changing environment this is not proving easy, as the entire industry continues to grapple with the fallout from the government’s guarantee of the banks. At this stage no mortgage fund in Australia has been able to unfreeze. In looking to develop a more contemporary model, your Fund has considered creating two classes of unit holders. However, the Board believes that every investor has the right to the same return on their investment, regardless of whether or not they participate in redemption offers. Accordingly, we will continue to make the same offers to every investor, the size, frequency and nature of which will depend on available liquidity. By now all investors would have received details of the latest partial redemption offer of 10% of account balances; the sixth offer in the past fifteen months. It is pleasing to note that the last two offers of 10% have resulted in redemptions totalling just 3.14% and 3.16% of funds under management, whilst a growing number of investors have elected to reinvest their distributions. This gives us further encouragement as we look to the future. As well, your Fund continues to make quarterly distributions at very attractive rates, evidencing the continued good performance of the Fund. The next distribution for the quarter ending 28 February 2010, will be paid at 5.75% for the month of December and 6% for January and February. It was surprising to note that the Reserve Bank kept interest rates on hold at its February meeting, contradicting the forecast of just about every economist in the country. Despite this, the forecast trend over the coming year remains for continued rate increases. The Board of Mayne Investments continues to work towards a resolution to the current situation and thanks all investors for their patience and understanding over this lengthy period of time. It is our firm intention to ensure investors continue to receive an attractive return whilst we work towards the time when an attractive return can also be coupled with better access to capital. Yours faithfully Greg Andersen 30 November 2009 Dear Investor The festive season is fast approaching as we draw an end to what has been a most difficult year for investors, Mayne Investments and the mortgage funds industry in general. It is expected that 2010 will be a much better year. Certainly there has been a vast improvement in economic conditions and investor sentiment with prospects much brighter for an acceptable solution to the current situation. However, we recognise there are still a number of issues to overcome before resuming normal operations. As recently foreshadowed, we engaged ANOP, a reputable market research company to undertake a significant survey of investor attitudes in light of events since October 2008. The results have been most encouraging with the highlights being:
These results give the Board a great deal of confidence and optimism when looking for a viable, long term solution to our current problem. I will write again giving notice of a meeting of investors to be held early in the New Year to discuss the survey results in more detail and their implications for determining the way ahead. By now all investors would have received details of a further partial redemption offer of 10% of account balances; the fifth offer in the past twelve months. Participating investors are reminded that applications should be returned no later than 5pm on Wednesday, 16 December. As well, your Fund continues to make quarterly distributions with the next distribution due 30 November 2009. The continued good performance of the Fund has allowed us to increase the current distribution rate to 5.75%, effective 1 December 2009. After more than 14 years of valued service, Pat Rummery has announced his decision to stand down as Chairman of the Board of Directors. Pat will remain as a director, a role he has played since the establishment of Mayne Investments more than 41 years ago. Barry Wappett has replaced Pat as Chairman after a long career with Mayne as both Director and General Manager. I take this opportunity to wish all our investors the compliments of the season and assure you that Board and management are firmly committed to repaying the confidence and goodwill that remains during these difficult times by returning the Fund to a liquid status as soon as possible. Yours faithfully Greg Andersen 23 November 2009 Dear Investor Fifth Partial Redemption Offer The Board of Mayne Investments continues to recognise the need for some investors to gain access to their funds. Accordingly, the Board has resolved to make a fifth partial redemption offer of 10% of all investor account balances, effective 16 December 2009. Details of the offer are outlined below. Your Fund continues to perform well and will make another quarterly distribution at the end of November, 2009, at a rate generally better than that currently available from a bank term deposit. A quarterly newsletter outlining developments to date will be sent in the next few days. Yours faithfully Greg Andersen Partial Redemption Offer In making this withdrawal offer the Corporations Act 2001 (Cwth) requires among other things, the offer:
How do you participate? You do not have to participate in this offer. Investors who do wish to take part must complete the attached withdrawal form and submit it to Mayne so that we receive it by no later than 5 pm on Wednesday 16 December, 2009. All previously lodged withdrawal requests will not be considered a withdrawal request under this offer. In order to be included in this offer you must complete and return the Unit Redemption Form attached to this letter so that Mayne receives it by no later than 5 pm, Wednesday 16 December, 2009. How much do I ask for? This is ultimately a decision for each investor. However, the Board strongly urges investors to limit their requests to their immediate requirements. Any withdrawal request that exceeds 10% of an investors balance will be treated as a request for that 10%. How will I be paid? You can nominate to receive your money by cheque or by detailing your bank account details on the attached ‘Periodic Redemption Offer’ form. It is expected that upon expiry of the notice period, requests will be processed and deposited into your nominated account within three working days of the offer closing. This decision enables the Board to undertake a structured withdrawal offer to all investors. If the Board continues with the periodic withdrawal process, then investors will be notified accordingly. 31 August 2009 Dear Investor To say that events since October 2008 have been tumultuous is somewhat of an understatement. Nobody would be aware of this more than our investors, whose patience and understanding during this difficult period have been greatly appreciated. I take this opportunity to bring you up to date with developments and to reassure you that the Fund remains in good shape despite the difficult times. Whilst the chain of events that led to the freezing of most mortgage funds in Australia were beyond the industry’s control, since that time, management and directors have been working to protect your interests and to ensure that the value of units in the Fund is maintained. To this end we believe we have been successful in steering the Fund through some of the most difficult economic conditions ever experienced. As well as protecting the integrity of your investment we have continued to pay distributions at above market rates mindful at all times of the needs of the other important half of our business; our borrowers. Since that time we have also made four partial redemption offers in an effort to give some investors who require it, access to part of their capital. In light of this continued strong performance, the board has determined that the distribution rate for the quarter ending 31 August 2009 will again be 5%. The Board has always been firmly of the view that the underlying strength of the loan book would ensure that we got through these tough times and whilst there are still difficult times ahead for the economy, the worst appears to be behind us. Throughout this time, we have endeavoured to remain as positive as possible by continuing to make partial redemption offers from available funds, meeting hardship requests, accepting new deposits and by making a small number of loans available, generally to existing borrowers. As markets stabilise, the managed funds industry and some of the country’s biggest lenders have backed calls for a rethink of the unprecedented government intervention and its continued value in guaranteeing bank deposits. To date there has been no response from government. As well, there have been numerous indications that the economy is improving quicker than most thought would be possible, including an improvement in the property market. The North Coast in particular has fared better than many other parts of the country, with property values in most sectors showing signs of improvement. This is good news for the mortgage funds industry and with 80% of our assets located in the Northern Rivers region, it is also good news for Mayne Investments and our investors. As at 31 May 2009, the overall loan to value ratio was still a low 45%. We continue to undertake vigorous stress testing to help ensure the continued good performance of the loan book. This situation can only improve further, the more the market continues to pick up. In recent months the Board has turned its attention to how to unfreeze the Fund without being overwhelmed with redemption requests once again. For more than forty years Mayne has been delivering above market returns to investors with no loss of capital and a lending record that would be the envy of any financial institution. Over this time investors probably lost sight of the fact that despite meeting redemptions on request, we were a mortgage fund with most of our assets in property, not cash. Naturally, this made it very difficult to meet a sudden rush of redemption requests. It took a once in a lifetime event such as the global financial crisis to highlight the fact that a mortgage fund cannot possibly meet an overwhelming number of redemption requests in a short period of time. It could be that we could go for another forty years, never seeing the likes of those times again. We have been in protracted discussions with corporate lawyers and industry representatives to try and develop a solution to the current impasse that will retain the essential features of the Fund and which will help alleviate the chance of such an extraordinary event happening again. You can be assured that in looking at a refined model, we will not lose sight of the need for investors to still have a secure and accessible investment, offering good rates, no fees and a service second to none. To implement any such change we will require your support. We will write to you again seeking investor feedback before committing to a course of action. In June 2009, ASIC issued new guidelines for unlisted managed funds that allow them to meet their continuous disclosure obligations by updating their website rather than the current process of ASIC notification. ASIC recognises the updating of the website is a more effective and direct way of communicating with investors and allows us to post on our website any information that is not generally available and would have a material effect on the price or value of units in the Northern Investment Trust Fund. This updating of information does not apply to information already provided in the Product Disclosure Statement. ASIC has recommended all relevant fund managers who intend to comply with ASIC’s ‘Good Practice Guide to Continuous Disclosure’ notify their investors accordingly. Mayne intends to comply with this guide and has now installed a dedicated continuous disclosure section on its website. We are not currently aware of any information that an investor would consider would have a material effect on the price or value of the investment in the Fund. ASIC has also announced changes to hardship rules. These changes expand the circumstances in which frozen mortgage funds are able to make payments to investors who can demonstrate genuine hardship. The most significant change provides for up to four hardship withdrawals a year with an increase to the amount that can be withdrawn. For more details contact our office or visit the ASIC website on www.asic.gov.au. Investors can be reassured that the Board of Mayne Investments is determined to ensure that the Northern Investment Trust Fund will emerge from its current difficulties in good shape, and that the Fund will continue to present as an attractive investment. Yours faithfully Greg Andersen 31 July 2009 Dear Investor Fourth Partial Redemption Offer It is pleasing to note a number of recent key economic indicators suggesting an improved outlook for the Australian economy. The Board of Mayne Investments Limited also believes there has been an improvement in investor sentiment and is exploring a number of options in an attempt to resolve the current impasse. In the interim, we continue to recognise the need for some investors to receive regular access to their capital. Accordingly, the Board has resolved to make a further partial redemption offer of 10% of all investor account balances, effective 26 August 2009. Details of the offer are outlined on the reverse side of this page. Your Fund continues to perform well and will make another quarterly distribution at the end of August, 2009, at a rate generally better than that currently available from a bank term deposit. I will write to you again next month with more details of the distribution and to give an update of developments. Yours faithfully Greg Andersen 24 April 2009 Dear Investor It has now been six months since Mayne Investments and most other mortgage funds in Australia, had to suspend redemptions following an unprecedented increase in withdrawal requests, following the governments bank guarantee. Since that time, the Board and management of Mayne have taken every available measure to preserve the integrity of your investment whilst returning as much capital as is prudently possible to those who wanted it. In addition to making regular quarterly distributions (with the next due 31 May 2009) we have made two Partial Redemption Offers, totalling $50 million. Those who participated in the offers have been able to redeem up to 55% of their investment. However, in both offers more than 70% of accounts did not to participate; investors preferring instead to leave their money in the Fund and receive the higher return than is available with say a bank deposit. We believe that those who needed access to their capital have, to a large extent, had the opportunity to do so and it is perhaps now the time to look towards the future. The Board of Mayne is still conscious of the need for investors to have regular access to some of their capital whilst at the same time mindful of the majority of investors who want to see the Fund continue to prosper and be of a size that will enable us to continue to provide a competitive return and regular income. As has been the case for 40 years, the Fund continues to perform well, enabling us to pay a sound return, underpinned by first mortgage security. Accordingly, with the view to preserving the Fund as much as possible for the time when we are able to lift the freeze and resume normal operations, the Board has determined that rather than continue to put up lump sums, future redemption offers will be restricted to a percentage of each investor’s balance of funds. As with previous offers, investors are under no obligation to participate in the offer. It is intended that we will make these offers on a regular basis. Details of the offer are attached. Hardship Relief The Board recognised at a very early stage that freezing the Fund would cause considerable hardship for some investors. We applied for and received relief under the Corporations Act from ASIC to meet genuine hardship requests, based on their strict guidelines and to be applied on a fair and transparent basis. To this end, a Hardship Committee was formed comprising a number of directors and senior staff. This committee has considered and approved a large number of requests where it could be established that an investor was experiencing genuine hardship and provided they could show, as ASIC states, they “did not otherwise have the financial capacity to meet the expense”. This committee will continue to diligently apply these guidelines based on procedural fairness and in the best interest of the Fund and all investors. Banking Licence and Government Guarantee You will be aware that whilst the governments guarantee on bank deposits brought comfort to bank account holders it also caused considerable concern for investments not covered by the guarantee. The Board of Mayne has sought to obtain relief under this guarantee by exploring the option of becoming an authorised deposit taking institution under the auspices of APRA. After considerable enquiry it would appear that APRA does not have the appetite to issue any new banking licences, indicating instead that there are too many hurdles for mortgage funds to overcome, including the restructuring of a fund to satisfy their capital adequacy requirements. Accordingly, the Board has taken the view that it is no longer appropriate to continue to pursue a banking licence in an attempt to obtain relief under the guarantee. The mortgage funds industry has called on the government to phase out the guarantee on bank deposits, believing that this will greatly assist the recovery of the industry. The Future Like most funds in the mortgage industry we are unable to say just when we will be able to lift the restriction on redemptions. A lot will depend on the speed at which the economy recovers from the global economic crisis and from what is now officially termed by the RBA as a ‘recession’. It would appear that it will be some time yet before funds can again open their doors without having to confront another flood of redemptions. However, we believe that the climate of fear that swept around the world in the last few months of 2008 has dissipated and that investors who no longer fear a loss of capital are now looking to a better return than that being offered by the banking industry at a time of record low interest rates. We have issued a new Product Disclosure Statement that highlights the fact that the Fund is now operating on a non-liquid basis. This enables us to accept deposits from new and existing investors. It is felt that accepting new deposits and resuming lending will also hasten the unfreezing of the Fund. The Board and management of Mayne Investments continue to work hard to overcome this difficult period. The road to recovery is a long one, but with your support, Mayne intends to remain a significant investment alternative to the banks for those seeking security and a good, regular return. Greg Andersen 28 February 2009 Dear Investor Since your Directors took the unprecedented step of deferring redemption requests, we have been working tirelessly to provide investors access to their funds in as timely and prudent a manner as possible. It was recognised that the sudden freeze on funds caused considerable inconvenience to a great many investors and accordingly, we have endeavoured to return funds to those needing to redeem part of their investment in as short a time span as possible. The second Redemption Offer of $30 million closed 16 February 2009 and those who participated in the offer received 39% of their request. The amount redeemed in the first two offers totalled $50 million or approximately 17% of the total funds under management at the time the Fund was frozen. For those who participated in both offers, it was possible to redeem up to 55% of their investment. We believe this to be a significant amount and anecdotally better than any other mortgage Fund in Australia. We continue to explore all options for obtaining relief under the government’s guarantee, although we again stress that this is a long and complicated process. It is hoped that we will be able to make a more definitive statement concerning this in the near future. Despite the difficult conditions currently prevailing, the Fund continues to perform very well. Accordingly, the Board has determined that the distribution rate for the three months ending 28 February 2009 will be 6.73%. The distribution rate effective 1 March 2009 will be 5%. We also recognise that there are a great many investors who value their investment with Mayne and who have no desire to see the size of the Fund continue to decline. The Fund has delivered reliable and consistent returns over forty years and in this time of considerably lower interest rates, many investors continue to look to Mayne to provide them with a regular income stream and capital stability. Accordingly, whilst the Board is committed to making further redemption offers, the scope and nature of future offers will be carefully considered. In this regard, I will write to you again shortly. The problems besetting Mayne Investments are being experienced by every mortgage fund in Australia. Your Directors firmly believe that there is a place for funds such as Mayne in the finance and investment industry, not only to give the banks continued competition but to provide investors with a more generous rate of return than that offered by the market. A number of existing investors are again investing in the Fund and we are in the process of issuing a new Product Disclosure Statement to encourage new deposits. The Board believes that once we begin to again accept new deposits we will be a lot closer to resuming normal activities. Greg Andersen 21 January 2009 Dear Investor Partial Withdrawal offer of $30 million The Board of Mayne Investments Limited has resolved to make an additional $30 million available to investors under a structured withdrawal offer. This follows on from the first redemption offer of $20 million and has been determined as a prudent amount of money to make available based on an assessment of the current status of the Fund. There is no obligation on Mayne to make this offer and the offer must be made to all investors. The first offer was well and truly oversubscribed to the extent that the Fund could only redeem funds at the rate of 25.7 cents in the dollar. This was a disappointing result and anecdotal evidence suggests that a great many applicants inflated their redemption request in the belief that it would be scaled back. This has the effect of masking the underlying demand and makes it difficult for us to manage an orderly programme of partial redemption offers. On a more pleasing note, it was encouraging to see that 75% of accounts chose not to participate in the offer. It is also encouraging to see that some investors are once again adding to their investment. We would remind all investors that the Fund continues to perform well and it is only the ongoing demand for redemptions that stops us from returning to normal operations. This will be achieved much sooner if investors do not participate in the offer or only redeem funds sufficient to meet their pressing needs. Investors are advised that a quarterly distribution will also be made at the end of February, with the current distribution rate at 7%, reducing to 6% effective 1 February 2009. In the absence of any further rate changes, the average for the quarter is expected to be 6.73%. Since deferring withdrawals the Board and management at Mayne have kept the operation of the Fund under constant review to not only work towards resuming normal operations but also to assess what steps Mayne can take to assist investors. During this time we have also been working towards increasing cash levels. The directors will continue to review the operations of the Fund and will determine whether to recommence the processing and payment of withdrawals or continue with periodic withdrawal offers. If the Board continues with the periodic withdrawal process then investors will be notified accordingly. We are working hard to return to normal redemption procedures as quickly as possible although we cannot set a date at this stage. It will be done when we are satisfied that the needs of all investors are protected. For further details of the offer see over the page. Greg Andersen General Manager HOW THE OFFER OPERATES In making this withdrawal offer the Corporations Act 2001 (Cwth) requires among other things, the offer: · be made to all investors; How do you participate? You do not have to participate in this offer. Investors who do wish to take part must complete the attached withdrawal form and submit it to Mayne so that we receive it by no later than 5 pm (Eastern Daylight Saving time) on Monday 16 February 2009. If the total of all withdrawal requests received exceed the $30 million offered then as required by the Corporations Act, requests will be satisfied proportionately in the manner explained below. Amount an investor requested to withdraw___ Amount of money available X Total of all amounts investors request to withdraw For example: There is $30 million available to meet withdrawal requests. Mr Jones lodges a withdrawal request for $20,000. The total amount of valid withdrawal requests received from those investors participating in the offer is $40 million. Mr Jones would therefore receive $15,000. This is an example only. What an investor (who participates in the offer) receives will depend on the amount of their withdrawal request and the total amount of all withdrawal requests. What if you have previously lodged a withdrawal request? All previously lodged withdrawal requests will not be considered a withdrawal request under this offer. In order to be included in this offer you must complete and return the Unit Redemption Form attached to this letter so that Mayne receives it by no later than 5 pm, Monday 16 February 2009. How much do I ask for? This is ultimately a decision for each investor. However, the Board strongly urges investors to limit their requests to their immediate requirements. How will I be paid? You can nominate to receive your money by cheque or by detailing your bank account details on the attached ‘Periodic Redemption Offer’ form. It is expected that upon expiry of the notice period, requests will be processed and into your account within three working days of the offer closing. Does this affect the current 90 day deferral of withdrawals? The decision enables the Board to undertake a structured withdrawal offer to all investors. However, it does not automatically mean existing withdrawal requests lapse. It is important to understand that the move to Periodic Redemption Offers replaces the previous 90 day deferral of redemptions. 10 December 2008 Dear Investor Withdrawal offer of $20 million The Board of Mayne Investments Limited on 21 October 2008 took the unprecedented step of temporarily deferring withdrawal requests for an initial period of 90 days after receiving an overwhelming number of withdrawal requests. The directors of Mayne were and remain very aware this has caused financial difficulties for some investors. The Board has a responsibility to always act in the best interests of its investors. Making a decision to suspend redemptions is an example of doing just that. As an investor in the Fund your money is pooled together with a large number of other investors and invested in Australian based mortgages, fixed interest investments and cash. These mortgages have been providing a steady rate of return and are conservatively managed through strict lending criteria. Mortgages however are not easily turned into cash but the Northern Investment Trust Fund (Fund) maintains a portion of assets that can be quickly turned into cash to pay expected redemptions. Where the level of demand for cash redemptions exceeds the level of cash available, particularly in extraordinary circumstances such as those following the Federal Government’s decision to guarantee bank deposits, redemptions may need to be suspended. Selling assets quickly, simply to meet redemption requests would not provide time to deliver the optimal return to investors. Since deferring withdrawals the Board and management at Mayne have kept the operation of the Fund under constant review to not only work towards resuming normal operations but also to assess what steps Mayne can take to assist investors. During this time we have also been working towards increasing cash levels. With this in mind, the Board has resolved to make up to $20 million available to investors under a structured withdrawal offer. This amount has been determined by the Board as a prudent amount of money to make available based on an assessment of the current status of the Fund at this time. There is no obligation on Mayne to make this offer and whilst the offer must be made available to all investors, the Board hope that only those with pressing financial needs will participate in the offer and then only up to what is actually required. How the offer operates In making this withdrawal offer the Corporations Act 2001 (Cwth) requires among other things, the offer: · be made to all investors; How do you participate? Investors who wish to take part in this offer must complete the mailed withdrawal form and submit it to Mayne so that we receive it by no later than 5 pm (NSW time) on Wednesday 7 January 2009. If the total of all withdrawal requests received exceed the $20 million offered then as required by the Corporations Act, requests will be satisfied proportionately in the manner explained below. Amount of Money available X Total of all amounts investors request to withdraw For example: This is an example only. What an investor (who participates in the offer) receives will depend on the amount of their withdrawal request and the total amount of all withdrawal requests. What if you have previously lodged a withdrawal request? All previously lodged withdrawal requests will not be considered a withdrawal request under this offer. In order to be included in this offer you must complete and return the Withdrawal Application attached to this letter so that Mayne receives it by no later than 5 pm (NSW time) on Wednesday 7 January 2009. How much do I ask for? The Board would encourage investors to limit their requests to their immediate requirements. How will I be paid? You can nominate to receive your money by cheque or by detailing your bank account details on the attached ‘Periodic Redemption Offer’ form. It is expected that upon expiry of the notice period, requests will be processed and into your account within three working days of the offer closing. Does this affect the current 90 day deferral of withdrawals? The decision enables the Board to undertake a structured withdrawal offer to all investors. However, it does not automatically mean existing withdrawal requests lapse. It is important to understand that the move to Periodic Redemption Offers replaces the previous 90 day deferral of redemptions. The directors will continue to review the operations of the Fund and will determine whether to recommence the processing and payment of withdrawals or continue with periodic withdrawal offers. If the Board continues with the periodic withdrawal process then investors will be notified accordingly. We are working hard to return to normal redemption procedures as quickly as possible although we cannot set a date at this stage. It will be done when we are satisfied that the needs of all investors are protected. Greg Andersen General Manager Initial Letter To Investors 22 OCTOBER 2008 Dear Investor, Following the announcement by the Federal Government last Sunday 12 October 2008 to guarantee all funds in Banks, Building Societies & Credit Unions, Mayne Investments Limited, as well as a number of similar funds, has received a steadily increasing number of redemption requests. Extensive publicity has yesterday been given to Australia’s largest mortgage trust, Challenger Howard Mortgage Trust, and their decision to suspend redemption requests. As a result of this sudden and unexpected publicity Mayne Investments and other local funds have received accelerated redemption activity. Accordingly, the directors of Mayne Investments & East Coast Mortgage Trust have both taken the decision to suspend redemption requests for an initial period of up to 90 days. Even though the Fund retains good liquidity, the continued increase in redemptions could not prudently be sustained indefinitely. It is disappointing that the current situation has been caused by the government’s decision not to include managed funds such as Mayne Investments in the support package. This difficult decision has not been taken lightly in the certain knowledge that it will no doubt cause distress to some investors. However, the Board could not let the situation continue to deteriorate. Once this decision was made, the Board could not, under the Corporations Act, give preferential treatment to some investors. The Board is firmly of the view that Mayne Investments remains in a very strong financial position. Quarterly distributions are expected to be unaffected. Directors do not currently anticipate there will be any loss of capital. Investors should note that Mayne has operated successfully through good and bad times for over forty years without loss of capital to any investor. Mayne Investments has: * No exposure to the sub prime residential market; We expect the 90 day period will allow the Board of Directors sufficient time to conduct a thorough and orderly review of the situation and make representation to the government for the guarantee to be extended to mortgage trusts. In the interim, the Board has resolved to withdraw the current product disclosure statement until the market volatility has subsided. Those investors who have their distributions automatically reinvested can contact our office and arrange for the distribution to be paid rather than reinvested. Those investors who have invested in the Fund within the last 14 days may be entitled to apply to have their investment redeemed under the “cooling off” provisions and affected investors who wish to use this process should contact our Lismore office. We would urge investors to contact their federal member of parliament and express their concerns about how the government has chosen to favour the banks, building societies and credit unions to the disadvantage of the investment and funds management industry. We thank our investors for their continued support at a time when factors beyond our control had led us to this disappointing situation. Greg Andersen |