Lm Investment Management

[dinga]

I would like to contact fellow investors in the LM First Mortgage Income Fund (FMIF), to arrange a forum for us to discuss the proposal by LM to change the Constitution of that Fund.

There is presently no ability for investors to discuss the proposal amongst themselves, and develop other recommendations/proposals to be put to a members vote as is their right under the Fund Constitution. I have tried to make constructive suggestions about how LM can facilitate such a process but is seems none will be adopted by LM. Given this, and LM's refusal to provide me with a copy of the members' register, I can only conclude LM seeks to discourage direct investor interaction in order to restrict investors' focus to only those matters promoted by LM.

While on the surface LM's proposal appears to be simple, it seems to me the implications of the proposed changes to the Constitution are profound and will likely have significant impact on the value of my investment.

While there may be benefits to LM, in my view LM has failed to provide sufficent information to demonstrate that its proposal is in my best interests as an investor eg. where is the information about other options that were identified and analyzed, and why are they not preferred?; Where is the financial modelling of all options?; Has the bank financing facility been secured and do the terms and timeframes place any limitation on investors' position? etcetcetc

In the absence of such, I have concluded there is insufficient information for me to make a informed decision on the LM recommendation being put to members' vote. I see this as being unsatisfactory, as it seems investors will be pretty well locked into the LM process if the vote is passed, and I will have to blindly gamble on what may give me the "least worse" outcome.

In my view, the vote scheduled for 16 May should therefore be postponed until sufficient information is available.

If there are other like-minded investors in the LM FMIF, I suggest we urgently meet to:

* discuss LM's performance to date, including whether LM should be removed and replaced as the 'responsible entity'

* discuss the changes to FMIF Constitution proposed by LM, so that we can all be better informed (I see this as especially important given my understanding a significant proportion of investors are elderly and may rely on the opinion of the advisors who introduced them to LM and whose independence may be questionable if there are trailing commissions)

* identify any information deficiencies, and request such information be provided prior to the vote

* discuss the need for LM to hold Investors Forums - also prior to the vote - to provide members with the opportunity to discuss and question LM on its recommendations

* identify alternative options to be put to those Investors Forums and/or to a vote by investors

Fellow LM FMIF investors please provide urgent feedback on these thoughts.

[dinga]

So forgive me, but I will repeat them here:

Issue 2. Investors in LM First Mortgage Income Fund whose interest payments were treated as 're-investments'.

As stated already, I am an investor in the frozen LM First Mortage Income Fund (FMIF).

The Financial Statement for Y/E 30 June 2011 records that over A$12 million in interest was treated by LM as being 're-investments' in the Fund.

I assume that many/most of the investors due that interest would be very unhappy with such treatment (and the impact of the consequent +20% haircut applied to unit prices).

In my circumstances, I believe the PDS indicates that interest should be paid in the period subsequent to the submission of a redemption request and that LM's treatment was not supportable.

I took the matter up directly with LM and after extended and extensive effort had them agree to rectify the situation (despite LM stating there was no liability to do so).

Any unhappy FMIF investor in similar circumstances can contact me and I'll provide full details.

Issue 3: Investors in LM Currency Protected Australian Income Fund

I hold 2 investments in the LM Currency Protected Australian Income Fund (CPAIF), which is one of a number of feeder funds for the LM First Mortgage Income Fund (FMIF).

CPAIF investors should be aware that LM is proposing changes to the FMIF Constitution that I believe will have a substantial impact on investments in those feeder funds.

Despite this, at present LM will not allow feeder fund investors any input into those changes. This is unacceptable to me.

As Responsible Entity, LM holds those CPAIF units on my behalf. While LM will rightly will not use those Units to vote (as it recognizes the clear conflict), given the extraordinary circumstances it should afford investors in feeder funds the opportunity to vote on the proposal on the basis of their FMIF indirect investments.

In my view, CPAIF members should request a special meeting to thrash this issue out with LM and have it corrected - with the FMIF vote to be suspended until that is done.

I'd welcome any thoughts from feeder fund investors especially in the CPAIF.

Edited April 23, 2012 by metisdead
Moderation comments removed.

[lenmichaels]

I see you mentioned a vote on May 16^th, I haven’t received anything from them about it. Did they include a package about the details. Was it sent my email or post?

I will try to keep my post short. I am also frustrated with my dealings with them. I have written to them and to ASIC but didn’t get anywhere with either of them. I too would like to talk with other investors, my first thought was the vote would be a resounding no to the changes to the plan. Why would anyone want to get into another scheme with them when they have done such a poor job with this one. My advisor seems to think that people do want out but are afraid a no vote would force a wind up and that a yes vote might be a cleaner way to get out. I would like to know what others think about a no vote. Maybe some information about that is in a package sent to investors but I don’t have it.

I think there are grounds to remove them as the responsible entity. According to ASIC, for frozen funds if there is a conflict between the members’ interests and those of the responsible entity, they must give priority to the members’ interests. I don’t think they give any priority anyones interests but their own.

So how do we meet, how do we get LM to hold an Investor Forum on this matter.

[dinga]

Lenmichaels

1. Are you a member of the First Mortgage Income Fund? If so, you should have received the material re. the vote - I received it via email. Suggest you urgently contact the James Young who is Bangkok-based at [email protected] (At present, investors in the feeder funds have no input - which I find completely unacceptable)

2. Be great to catchup with you to discuss how we fellow frostbitten investors can fight back - pls contact me at my private email address . Are you based in Bangkok?

3. I am trying a number of means to linkup with other investors. I've been advised that Aussie Stock Forums has been successfully used in similar circumstances to ours, so have made 3 posts there - checkout http://www.aussiestockforums.com/forums/forumdisplay.php?f=23.

4. I am also thinking about asking ASIC to assist in ensuring LM acts in the best interest of investors - which for me means delaying any vote until (a) FMIF investors have been provided with all necessary information; ( Investors Forums are held in and LM addresses investors concerns, and © Investors in the feeder funds also have appropriate input on matters that may materially effect their investments.

[sbk]

A post lobbying members has been removed, If you wish to take action then you can do so privately but please do not use the forum for this purpose.

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