Of course, with any investments, there are risks. To thoroughly understand these risks, a potential Investor in Pacific West Mortgage Fund must carefully read the Private Placement Memorandum and the Operating Agreement. The following is a summary of the risks:

• There is no public market for the shares and there are significant limitations on transfer and withdrawal – Investors should be prepared to hold their shares as a long term investment. Withdrawal from the fund on a limited basis is permitted after 24 months.

• Investment in the shares is speculative, and by investing, each Investor assumes the risk of losing the entire investment.

• Loans bear the risk of defaults by borrowers. Although the managers take care to assure that the value of the property is adequate to cover this risk, there is no assurance that the property can be obtained and then liquidated without losses to the Investor. This risk increases in the case of a bankruptcy filing by the borrower.

• Because of the nature of the LLC’s business, the LLC’s profitability will depend to a large degree upon the future availability of secured loans. The LLC will compete with institutional lenders and others engaged in the mortgage lending business.

• Possible limited supply of loans.

• The manager may use leverage to enhance the returns of the portfolio or to meet operational requirements – the use of leverage can have an adverse affect on profits particularly in the case of interest rate fluctuations.

• Although the manager has a general fiduciary responsibility to the Investors, there are certain conflicts of interest between the managers and the fund that must be considered. (Profit sharing could, for example, lead to the manager making riskier investments.) (See the Private Placement Memorandum and Operating Agreement for a detailed description of risks.)

Benefits involved with investing.