7/31/2019 Microequities High Income Value Microcap Fund May 2012 update

1/1

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

MAY 2012 PERFORMANCE UPDATEby Carlos Gil, Chief Investment Officer

MARKETS AND ECONOMY:

Financial markets renewed their focus on Europes sovereign debt issues. There are structural challenges facing European

leaders, clearly there is going to be some painful decisions that will necessitate solidifying the balance sheets of some

nations and in some countries, private banks. This will mean that creditors and debtor nations will need to carve out an

agreement to alleviate the financial markets demanding unsustainable risk premiums on some sovereigns. Not an easy

agreement to carve out in a region where political consensus is seldom achieved expeditiously. However, we are comforted

by the fact that the choice is rather simple, or as I like to put it, binomial in nature; if Europe wants the EC to continue, and

clearly they do, they will need to bring forward financial support packages (i.e. cash) to solidify the region, if not the system

will implode. Like the decision the Fed faced on whether to support its US banks after the Lehman collapse, the

consequences of inaction are much more unpalatable than the unsavory medicine required to save the patient. As

tediously slow as the Europeans are at brining consensus resolute actions, they are not irrational people, and reason says

they will save Europes banking system and that other malfunctioning organization called the EC. Just to dont ask them to

do it quickly.

Microequities High Income Value Microcap Fund returned a negative -3.91% versus the All Ordinaries Accumulation

Index negative -6.9% in May.

May has proved to be a difficult month from a market pricing perspective. Though we declined we still attained an almost

3% outperformance compared to our benchmark Index. Our asset class tends to do worse in falling markets than rising

ones, but we believe our value approach will provide resilience. Certainly from a fundamental perspective the businesses

the Fund owns have an intrinsic value far greater than the current market pricing, so given we received strong investment

inflow into the fund during the month of May, we will be deploying these funds at very good value points.

Current Forecast Grossed Up Dividend Yield of the Fund*: +12.62%*Forecast Grossed up Yield is based on internal forecasts and actual results may vary. Investors should note that Gross Dividend Yield is not a forecastdistribution as distributions will depend on actual dividend income received and actual number of units on issue at the time a distribution is made.

*High Income Value Microcap Portfolio as of 31st

of May 2012

8.5%

40.2%

18.0%

3.9%

12.4%

2.7%

5.7%

1.0%

7.6% Cash

Software & Services

Consumer Durables &

Apparel

Capital Goods

Media

Commercial Services &

Supplies

Diversfied Financials

Retailing

Banks

Latest Unit Price

$1.0027Latest Fund Performance as at May 31, 2012

FUND AOAI* OP*

1 Month -3.91% -6.90% +2.99%

2 Month -1.78% -5.87% +4.09%

3 Month +0.27% -4.79% +5.06%4 Month

5 Month

6 Month

Inception +0.27% -4.79% +5.06%

(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.

mailto:invest@microequities.com.aumailto:invest@microequities.com.au