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AUGUST 2012 FUND UPDATE by Chief Investment Officer Carlos Gil

REPORTING SEASON For us the fundamentals of a business are they determinant of intrinsic value. Over the long term, market value is intimately linked to intrinsic value. Given we are a fundamental based investors, the operational results of the businesses we own are of great importance. This does not necessarily mean we will disinvest out of a business based on a poor operational result, there are many factors to consider, but over multiple periods, the underlying strength of a businesses (and value) are ultimately washed out in their numbers. So what is the one number that above all else captures a key gauge of value? Underlying operational earnings per share (EPS). This number is simply the underlying operational net profit after tax from the business on a per share basis. It is an important metric which we look at each reporting half. To provide you with greater insight and visibility into the underlying strength of our owned businesses we will be publishing the Year on Year (YoY) EPS growth rate of our portfolio after final year profit announcements. YoY EPS growth of Deep Value Microcap Fund Simple Average +21.99% Weighted Average +26.07% *Based on actual reported financial results except for one business which has yet to report The weighted average EPS growth rate YoY of 26.07% demonstrates an adherence to our value growth ethos. We are a value based investor, but we look to invest in undervalued growing businesses, not merely undervalued businesses. A business that grows its EPS over time will increment its intrinsic value. Hopefully the gap between the intrinsic value and market value of the business will over time close, thereby providing us with another engine for capital appreciation. Microequities Deep Value Microcap Fund returned a positive +5.33% versus the All Ordinaries Accumulation Index positive +2.12% in August; this brings the total return net of fees to 143.06% for the Fund compared to 61.09% for the All Ords Accumulation since inception in March 2009


8.3% 8.2% 3.2%
Software & Services Telecommunications Media Commercial Services & Supplies Health Care Equipment & Services Diversfied Financials

Latest Unit Price $2.0797

Latest Fund Performance as at August 31, 2012
FUND 1 Month 3 Month 6 Month 12 Month 2 yrs comp pa 3 yrs comp pa Inception AOAI* OP*






Utilities Hotels & Restaurants

+5.33% +6.02% +6.59% +19.20% +12.05% +15.68% +143.06%

+2.12% +3.21% +6.21% -0.19% +1.12% +5.47% +4.04% +15.17% +3.32% +8.73% +3.12% +12.56% +61.09% +81.97%

*Deep Value Microcap Portfolio as of 31 of August 2012


(Returns are calculated after all fees and expenses and reinvestment of distributions. Inception of Fund March 2009) *AOAI: All Ordinaries Accumulation Index. *OP: Out-performance. 2 & 3 year performance calculated as compound per annum. Past performance is not indicative of future performance.

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