MICROEQUITIES ASSET MANAGEMENT |AFSL 287526 |Suite 702, 109 Pitt Street, Sydney NSW 2000 Office: +61 2 9231 6169 Fax: +61 2 9475 1156 invest@microequities.com.au

MARCH 2012 PERFORMANCE UPDATE Markets and economy With some of Europe’s economies facing deep recessions German’s economy (Europe’s biggest) continues to display strong resilience. German unemployment fell to 6.7%, the lowest it’s been in the last 20 years. Its export oriented economy benefiting from what is clearly evident; Europe might be struggling, but the world economy is growing. In fact Germany’s resilient economy despite many of its neighbouring counterparts enduring mild to strong recessions is verification of the global forces that drive export oriented economies. Those global forces will deliver growth, because the world economy by in large is growing.

Reading commentary on the “impending China slowdown” is somewhat bemusing that China’s revised target of 8% GDP growth is now considered by some as a “slowing economy”. It wasn’t long ago that China superseded Japan as the world second biggest economy. The last time Japan grew at rate of more than 8% was over 4 decades ago (1970), at the time Japan was not the world’s second biggest economy. We have no historical precedents of an economy the size of China growing at speeds of over eight percent; it is history in the making. Still for the eternal pessimist amongst us, a GDP growth rate of eight percent is unarguably numerically smaller than nine percent. For some, even a glass three quarters full still contains some level of emptiness.

Microequities High Income Value Microcap Fund returned a positive +2.09% versus the All Ordinaries Accumulation Index positive +1.15% in March.

The inaugural month for our New High Income Value Microcap Fund has started positively with the Fund posting a +2.09% return. Obviously it’s very early days, but the Fund has managed to acquire a portfolio of businesses that are forecast to provide grossed up dividend income of 13.22%. We have been able to secure stakes in a number of high quality businesses at excellent yields. Out of the 14 businesses that were acquired, only three of them are also in our Deep Value Microcap Fund. Cash position of the fund was deliberately kept low due to strong committed inflow from new investors for the month of April. Written by Carlos Gil, Chief Investment Officer.

Current Forecast Grossed Up Dividend Yield of the Fund*: +13.22% *Forecast Grossed up Yield is based on internal forecasts and actual results may vary. Investors should note that Gross Dividend Yield is not a forecast distribution as distributions will depend on actual dividend income received and actual number of units on issue at the time a distribution is made.

*Deep Value Portfolio as of 30th

of March 2012

0.3%

41.6%

22.2%

5.9%

1.7%

1.4% 2.9%

9.2% 14.9%

Cash

Software & Services

Consumer Durables & Apparel

Capital Goods

Banks

Retailing

Commercial Services & Supplies

Diversified Financials

Media

Latest Unit Price

$1.0209 Latest Fund Performance as at March 30, 2012

FUND AOAI* OP* 1 Month +2.09% +1.15% +0.94%

3 Month

6 Month

12 Month

2 yrs comp pa

3 yrs comp pa

Inception

(Returns are calculated after all fees and expenses and

reinvestment of distributions. Inception of Fund March 1, 2012) *AOAI: All Ordinaries Accumulation Index. *OP: Out-

performance. Past performance is not indicative of future performance.