1GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

QUARTERLY INVESTMENT UPDATE (MAR 2012)

COMMODITY MARKET REVIEWOverall commodity markets were flat during the first quarter, with the Dow Jones UBS Commodity Index falling by 0.3% in Australian dollars (AUD). However, this disguises the divergence in performance of the various sectors within the commodity space. The range between the best performing sector over the quarter, precious metals, and the worst performing sector, energy, was 14.4%.

The precious metals index gained 7.2%, driven by silver, which gained 15% for the quarter. It was the first three-month gain in a year for the precious metal. Platinum (+15.3%) had its best quarter in three years. The metal used in auto catalysts rallied on supply disruptions in South Africa and prospects for increased demand.

Agriculture (2.0%) overall gained, driven primarily by soybeans which gained 15.5% on speculation that demand for US exports will rise as production declines in South America. However, these gains were largely offset by coffee, which was down 20.6% and was the worst performing commodity in the index on expectations that Brazilian growers will produce a bountiful harvest later this year.

Energy markets lost ground, finishing down by 7.2%, This was driven by a 32.9% fall in the price of natural gas, with prices falling to a 10-year low. A government report showed US supplies of natural gas climbed to levels much higher than expected. Brent crude rose by 14.4% as supply conditions in the world oil market tightened and better economic news from the US fuelled speculation that demand from the developed world would quicken.

Industrial metals (4.5%) had a strong start at the beginning of the year, up over 10% at one stage in January before giving back some gains on Chinese Premier Wen Jiabao’s comments that China, the world’s largest consumer of metals, had cut its growth target to 7.5%. Copper posted a gain of 9.9%, and zinc rose by 7% while nickel was down 6% for the month.

THE PERFORMANCE OF THE SUBSECTOR COMPONENTS OF THE DOW JONES UBS COMMODITIES INDEX IN AUD (ALL COMPONENTS REBASED TO 100 AS AT 30 DECEMBER FOR COMPARATIVE PURPOSES).

95

100

105

110

115

90

85

80

PRECIOUS METALS

INDUSTRIAL METALS

AGRICULTURE

ENERGY

30 D

EC

11

6 JA

N 1

2

13 J

AN

12

20 J

AN

12

27 J

AN

12

3 FE

B 1

2

10 F

EB

12

17 F

EB

12

24 F

EB

12

2 M

AR

12

9 M

AR

12

16 M

AR

12

23 M

AR

12

30 M

AR

12

Source: Bloomberg

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2 GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

COMMODITY EQUITIES REVIEWGenerally, equities worldwide performed well in the first quarter as risk aversion fell and fund flows into riskier assets increased. As a result, the March quarter was the second consecutive quarter where resource equities outperformed physical commodities. Overall, global materials stocks gained 8.8% and global energy stocks gained 2.4% for the quarter.

Within the materials sector, agricultural stocks (+10.4%) were outperformers as were iron and steel producers. The worst four performing stocks in the MSCI World Materials Index were all gold miners.

Oil services companies were among the best performers within the energy sector. Stocks within the top ten performers in the MSCI World Energy Index for the quarter included companies such as Transocean, Subsea 7, CGG Veritas, Aker Solutions and Amec who all provide various drilling, mapping and construction services to exploration companies.

THE PERFORMANCE OF THE MSCI WORLD ENERGY AND MATERIALS INDICES IN AUD (ALL COMPONENTS REBASED TO 100 AS AT 30 DECEMBER FOR COMPARATIVE PURPOSES).

CURRENCY MARKET REVIEWThe Australian dollar advanced for a second straight quarter against its US counterpart as signs of improvement in the domestic economy eased concern that a slowdown in China would curb demand for resource exports. China’s purchasing managers index (PMI) has increased for three consecutive months and this has also lent support to the Australian dollar. Federal Reserve Chairman Ben Bernanke said accommodative monetary policy was still needed, sending investors searching for higher yields in currencies like the Australian dollar.

FUND PERFORMANCE AND INVESTMENTSThe NTA for the Company at 31 March 2012 was $1.511 per share. On 22 February GRF declared a dividend of 4 cents per share which was paid on 26 March 2012. Including the dividend, the total return for the period was 1.9%.

This compares to the Dow Jones UBS Commodity Index performance of -0.3%, the MSCI World Materials Index of 8.8%, and the MSCI World Energy Index of 2.4%.

As at 31 March 2012, the Company was 99.2% invested.

100

105

110

115

95

MATERIALS

ENERGY

30 D

EC

11

6 JA

N 1

2

13 J

AN

12

20 J

AN

12

27 J

AN

12

3 FE

B 1

2

10 F

EB

12

17 F

EB

12

24 F

EB

12

2 M

AR

12

9 M

AR

12

16 M

AR

12

23 M

AR

12

30 M

AR

12

Source: Bloomberg

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3GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

The investments made as at 31 March are:

FUND % INVESTED ASSET CLASS RESOURCES FOCUS

iShares S&P Global Energy 15.4% Equity Energy

Market Vectors Agribusiness ETF 13.1% Equity Agriculture

Schroders AS Commodity Fund 8.8% Physical Broad

PIMCO Commodity Real Return Strategy 8.6% Physical Broad

RS Global Natural Resource 7.7% Equity Broad

Martin Currie Global Resources Fund 7.3% Equity Broad

Blackrock Small Cap Energy Fund 7.0% Equity Energy

Credit Suisse Gains Fund 7.0% Physical Broad

Invesco Energy Fund 4.3% Equity Energy

Tocqueville Gold Fund 3.9% Equity Precious

Passport Capital Energy Fund 3.6% Equity Energy

Van Eck Global Hard Assets Fund 3.0% Equity Broad

Passport Capital Materials Fund 3.0% Equity Materials

ETFS Physical Gold 2.6% Physical Precious

Taurus Precious Metals Fund 2.5% Mix Precious

iShares S&P Global Materials Index Fund 1.5% Equity Materials

Passport Capital Agriculture Fund 0.1% Equity Broad

99.25%

Cash 0.76%

Total 100.0%

The top 50 equity and top 20 physical commodity holdings of the Company are:

RANK NAME % TOTAL PORTFOLIO % EQUITY PORTFOLIO SECTOR

1 Exxon Mobil Corp 2.8% 4.2% Integrated Oil

2 Chevron Corp 1.5% 2.2% Integrated Oil

3 Royal Dutch Shell PLC 1.3% 2.0% Integrated Oil

4 Monsanto Co 1.2% 1.8% Agriculture

5 Occidental Petroleum Co 1.2% 1.7% Oil & Gas E&P

6 Potash Corp of Saskatchewan 1.1% 1.6% Agriculture

7 Syngenta AG 1.1% 1.6% Agriculture

8 BP PLC 1.0% 1.5% Integrated Oil

9 Schlumberger Ltd 0.9% 1.4% Oil Services

10 Halliburton Co 0.9% 1.3% Oil Services

11 Deere & Co 0.9% 1.3% Agriculture

12 Total SA 0.9% 1.3% Integrated Oil

13 ConocoPhillips 0.8% 1.2% Integrated Oil

14 Apache Corp 0.8% 1.2% Oil & Gas E&P

15 Anadarko Petroleum Corp 0.7% 1.1% Oil & Gas E&P

16 Range Resources Corp 0.7% 1.1% Oil & Gas E&P

17 Wilmar International Limited 0.7% 1.1% Agriculture

18 HRT Participacoes 0.7% 1.0% Integrated Oil

19 Peabody Energy Corp 0.7% 1.0% Coal

20 National Oilwell Varco 0.7% 1.0% Oil Services

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4 GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

RANK NAME % TOTAL PORTFOLIO % EQUITY PORTFOLIO SECTOR

21 Mosaic Co 0.6% 1.0% Agriculture

22 Archer-Daniels-Midland 0.6% 1.0% Agriculture

23 Goldcorp Inc 0.6% 1.0% Precious Metals

24 BG Group PLC 0.6% 1.0% Oil & Gas E&P

25 Agrium Inc 0.6% 0.9% Agriculture

26 CF Industries Holdings 0.6% 0.9% Agriculture

27 EQT Corp 0.6% 0.9% Oil & Gas E&P

28 Southwestern Energy Co 0.6% 0.9% Oil & Gas E&P

29 Yara International ASA 0.6% 0.8% Agriculture

30 Brasil Foods SA 0.6% 0.8% Agriculture

31 Suncor Energy Inc 0.6% 0.8% Oil & Gas E&P

32 Petroleo Brasileiro SA 0.5% 0.8% Integrated Oil

33 Tullow Oil PLC 0.5% 0.8% Oil & Gas E&P

34 Kubota Corp 0.5% 0.7% Agriculture

35 Clayton Williams Energy 0.5% 0.7% Oil & Gas E&P

36 ENI SpA 0.5% 0.7% Integrated Oil

37 Baker Hughes Inc 0.5% 0.7% Oil Services

38 Alpha Natural Resources 0.5% 0.7% Coal

39 Barrick Gold Corp 0.5% 0.7% Precious Metals

40 IOI Corp Bhd 0.5% 0.7% Agriculture

41 Consol Energy Inc 0.5% 0.7% Coal

42 Franco-Nevada Corp 0.4% 0.7% Precious Metals

43 Denbury Resources Inc 0.4% 0.7% Oil & Gas E&P

44 Plains Exploration 0.4% 0.6% Oil & Gas E&P

45 Energy XXI 0.4% 0.6% Oil & Gas E&P

46 CNH Global NV 0.4% 0.6% Agriculture

47 QEP Resources Inc 0.4% 0.6% Oil & Gas E&P

48 Barisan Gold Corp 0.4% 0.6% Oil & Gas E&P

49 EOG Resources Inc 0.4% 0.6% Oil & Gas E&P

50 Weatherford International 0.4% 0.6% Oil Services

Total 35.7% 53.5%

RANK NAME % TOTAL PORTFOLIO % PHYSICAL PORTFOLIO SECTOR

1 Gold 7.2% 24.6% Precious

2 Crude Oil 3.5% 12.0% Energy

3 Aluminium 1.8% 6.2% Base Metals

4 Copper 1.5% 5.2% Base Metals

5 Corn 1.5% 5.2% Agriculture

6 Soybeans 1.5% 5.1% Agriculture

7 Gasoline 1.3% 4.3% Energy

8 Wheat 1.2% 4.1% Agriculture

9 Heating Oil 0.9% 3.2% Energy

10 Sugar 0.8% 2.6% Agriculture

11 Coal 0.7% 2.4% Base Metals

12 Natural Gas 0.6% 2.2% Energy

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5GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

RANK NAME % TOTAL PORTFOLIO % PHYSICAL PORTFOLIO SECTOR

13 Live Cattle 0.6% 2.1% Agriculture

14 Zinc 0.5% 1.8% Base Metals

15 Nickel 0.5% 1.8% Base Metals

16 Silver 0.4% 1.4% Precious

17 Lean Hogs 0.3% 1.2% Agriculture

18 Soybean Oil 0.3% 1.0% Agriculture

19 Coffee 0.3% 1.0% Agriculture

20 Cotton 0.3% 1.0% Agriculture

Total 25.8% 88.4%

THE AGGREGATE SECTOR ALLOCATION OF THE PORTFOLIO

Energy

Agriculture

Precious Metals

Industrial Metals

Alternative / Other

14%

14%

22% 49%

1%

GLOBAL RESOURCE MASTERS FUND PERSPECTIVEThe relatively subdued performance of commodities in the first quarter is representative of the conundrum investors in this asset class currently find themselves in. It has become accepted that the world is going through a commodity super cycle, a prolonged trend rise in real commodity prices driven by the urbanisation and industrialisation of countries in emerging markets, in particular China. This is the core reason for an investor with a long-term view to invest in commodities.

However, events in the last quarter have given rise to much speculation that commodity demand, particularly demand for industrial metals, will fall, at least in the short to medium term. For example, US investment bank Goldman Sachs cut its three month outlook on commodities to neutral from overweight, saying economic growth in China may soften in the next quarter as Chinese Premier Wen Jibao announced a cut to China’s economic growth target to 7.5% per annum. Slowing growth in China is policy driven and largely aimed at the construction sector. Goldman forecast that these policies could have a much larger impact on metals demand than on energy. But taking a step back and looking at the bigger picture, there is little doubt that China’s economy will be much bigger than it is today five to ten years from now.

With the US economic recovery looking more sustainable, and as the macro stress abates, investors are putting more pressure on gold as they seek other growth oriented asset classes. However, the gold “hedge” still remains a useful weapon in portfolios. Europe remains in a recession and its debt problems, while sidelined for now, are far from being resolved.

Further, there is an interesting school of thought that as China travels along the economic development spectrum its demand for base metals will slowly be replaced by demand for precious metals. The theory goes like this: China’s economy is currently heavily reliant on capital investment, for example, heavy construction of highways, railways and skyscrapers. But as its economy evolves into one more reliant on domestic consumption its demand for base metals like steel and copper, used in heavy construction will fall. Another symptom of this transition to a consumption-led economy is the increasing wealth of the low to middle class workers. As a result, demand for consumption goods such as jewellery (gold, silver and platinum) and cars (which use platinum and palladium in catalytic converters) is expected to rise substantially.

On the energy side, the futures curve on oil remains in backwardation longer term, reflecting continued tensions in the Middle East. With possible disruptions in supply (for example, through a ban on oil imports from Iran), the temporary surge in the geopolitical premium could intensify further. But provided other major oil producing countries such as Saudi Arabia remain politically stable, current spare capacities are sufficient to make up for the shortfall. On the demand side, an improving economic background in the US, the world’s biggest consumer of oil, bodes well for the sector, as does supportive momentum and attractive valuation.

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6 GLOBAL RESOURCE MASTERS FUND LIMITED • QUARTERLY UPDATE – MARCH 2012

MAXIMILIAN WALSH Chairman

ALEX MACLACHLAN Managing Director

NIRAV DESAI Director

JEFFREY WHALAN Director

MOIRA DAW Director

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