12 May 2006Dear UnitholderLINQ RESOURCES FUND (‘LRF’) NET...

12 May 2006
Dear Unitholder
LINQ RESOURCES FUND (‘LRF’) NET TANGIBLE ASSET PER UNIT (‘NTA’)
I am pleased to advise that the unaudited NTA per unit of the LinQ Resources Fund at 30 April 2006 was
$1.39. This is an increase of 17 cents or 14% over the 31 March 2006 NTA.
Since listing of the Fund in January 2005, the Fund paid its maiden distribution on 8 September 2005. On a
pre distribution basis the NTA of the Fund at 30 April 2006 would have been $1.41.
The NTA has risen very quickly over the past few months in particular, as the Fund has increased its
percentage investment and reduced its cash balances (see table below). Whilst the unit price has increased, it
has not kept pace with the appreciation in the NTA. Despite a 40% increase in LRF’s NTA during the last 10
months, the unit price has only increased approximately 17%.
Qtr End Reported
NTA
Cash per unit Investments
Value
Jun-05 $0.99 $0.69 $0.30
Sep-05 $1.00 $0.59 $0.41
Dec-05 $1.10 $0.50 $0.60
Mar-06 $1.22 $0.44 $0.78
Month End
Apr-06 $1.39 $0.43 $0.96
The performance of the Fund’s individual investments has been further masked by the large cash drag in the
Fund. Importantly, the total investment return (defined as monthly profit sourced from unaudited management
accounts pre management fee and bank interest) this financial year for the Fund's investments (excluding
cash and bank interest), would be an impressive 73%, or 87% on an annualised basis. This includes the
September 2005 distribution.
The table below analyses the investment return of the fund from its individual investments over each quarter
for this financial year until the March 2006 quarter.
Qtr End
Adjusted
Investment
Value1,2
Investment
Return per
unit3
Quarterly %
return on
Investment
Value
Sep-05 $0.41 $0.03 7%
Dec-05 $0.60 $0.08 13%
Mar-06 $0.78 $0.12 15%
Further strong performance in investments is evident in the return for the month ended 30 April 2006:-
Month End
Adjusted
Investment
Value1,2
Investment
Return per
unit3
Monthly %
return on
Investment
Value
Apr-06 $0.96 $0.17 18%
1. Adjusted for 2 cent distribution from Sept 05
2. NTA less cash per unit and pre management fee and bank interest
3. Monthly profit sourced from unaudited management accounts pre
management fee and bank interest divided by units on issue
Period
Annualised Investment
Return per unit4
Growth in Small Res.
Index5
1 Jul 05- 30 April 06 87% 63%
4. Investment return divided by investment value at 1 July 05 adjusted for net cash applied in 10 months to 30 April 06
5. Sourced using ASX Small Resources Accumulation Index
Focussing only on the Fund's investments and ignoring the “cash drag” effect, the Fund's investments have
outperformed the ASX Small Resources Accumulation Index during the financial year. The Fund’s
investment return was 87% compared to the ASX Small Resources Accumulation Index growth of 63%, both
annualised.
As mentioned, the cash drag on the Fund has been significant. At the beginning of the financial year cash
represented approximately 69% of the NTA and at 30 April 2006 it was only 30% of NTA. Including this
cash, the return on the Fund's entire portfolio including the distribution is a more modest 41%, or 50% on an
annualised basis.
This shows that overall performance of the Fund has been significantly impacted by its initial large cash
position and performance has improved as the percentage of cash invested continues to increase. It also
demonstrates that the Fund’s strategy and investment selection processes are strongly validated. We expect
that once the fund is more fully invested, it will better reflect the performance of its investments. With the
cash position as at 30 April 2006 down to 30% of NTA, and strong deal flow, we are well on our way to
achieving this.
Marketing of the Fund is continuing in order to increase the awareness of the Fund and to address its unit
price discount. These marketing initiatives include:-
• Broker presentations for retail and institutional investors.
• Presenting at ASX seminars.
• Press and magazine coverage
The focus of this marketing activity has been to confirm LRF’s strategy of capital growth as well as
distributions (from realised returns, coupons from convertible notes and other financial facilities) which could
generate a relatively stable earnings stream once the Fund is fully invested.
In addition to the above, we have commenced the process of amending LRF’s scheme constitution to insert a
cancellation mechanism for units bought back on market by the responsible entity. This will allow for a
buyback to be initiated, should this be decided as an appropriate capital management tool. Amendments have
been given to ASX and will be posted on the LRF’s website http://www.linqresources.com once this
administrative process is finalised.
Yours sincerely
Clive Donner
Managing Director
Any financial product advice contained in this letter is general advice only. Any such advice has been prepared without
taking into account your objectives, financial situation or needs. Accordingly, before acting on this advice, you should
consider whether the advice is appropriate having regard to your objectives, financial situation and needs. Full details of
remuneration and other benefits received by LinQ Capital Limited AFSL 239785, its Directors, associates and any related
body corporate are contained in the Product Disclosure Statement dated the 11 October 2004 and lodged with ASIC for the
offer of units and options in the Fund. A copy of this Statement is available on the Linq Resources website. Please note
that past performance is not necessarily a reliable guide to future performance.