INVESTSMART GROUP LIMITED — Regulatory Filings 2012

Nov 8, 2012

Merricks Capital Special Opportunity Fund Limited ACN 111 772 359

Level 1, 600 Chapel Street South Yarra VIC 3141 Australia Telephone +613 8319 8111 Fax +613 9827 9145

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17 October 2012

Dear Shareholder,

Please find enclosed the Notice of Annual General Meeting (AGM) for Merricks Capital Special Opportunity Fund Limited (MEF) and requisite proxy form. Adrian Redlich and I are both standing for re-election to the board at the AGM.

Over recent months, we have had a significant amount of communication from shareholders as a result of the decline in NTA of MEF. As you would expect, some of this communication has been unhappy but constructive whilst other letters share the former but not latter attribute. Having collated the various letters and opinions, I hope to be able to address the various issues and questions within my AGM comments and in questions at the meeting itself.

We remain of the view that the use of MEF’s funds as permanent capital has not been invalidated by the events of fiscal 2012. This type of investment requires active management, which as Adrian has pointed out, can preclude MEF from being able to communicate in the most effective manner with our shareholders due to confidentiality constraints.

Whilst one of the three significant investment exposures of fiscal 2012 – Straits Resources (SRQ) - had a significant setback, the two other investments were either successfully realised with the anticipated return (Digital Harbour Holdings) or in IEF’s case, have now reached a more stable stage with a far more appropriate management and legal structure. The market for the IEF’s assets looks to be at the start of a more promising period.

Adrian’s commentary in the annual report gave an assessment of the thesis behind the SRQ investment, and the issues that resulted in the assumptions and forecasts underlying the investment not being achieved. Since the MEF annual report, SRQ has raised $60million in new equity, of which over 70% came from existing shareholders. SRQ has also established a new relationship with Glencore International PLC, as well as an undertaking a number of operational and corporate initiatives. The manager is committed to playing an active role in the restructure of SRQ and we have a genuine expectation that a significant recovery in the market price of SRQ equity from the current level will take place.

Since the release of the Annual Report, we have also restarted the on-market share buy-back scheme.

Adrian will update MEF shareholders on the two remaining major exposures and the Merricks Capital assessment of the general investing environment in the Manager’s Presentation after the conclusion of the AGM.

Yours sincerely,

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Andrew Brown Chairman

MEF - Covering Letter to Shareholders with Notice

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of the Members of Merricks Capital Special Opportunity Fund Limited ACN 111 772 359 ( Company ) will be held on Thursday 22 November 2012 at the Gadwall Suite, The Como Melbourne, located at 630 Chapel Street, South Yarra, Victoria 3141 at 2.00pm (Melbourne time).

ORDINARY BUSINESS

1. Chairman’s Address

Report on results and activities during the financial year.

2. Financial Statements for the year ended 30 June 2012

To receive and consider the Company’s Financial Report, the Directors’ Report and the Auditor’s Report for the year ended 30 June 2012.

3. Re-Election of Director – Adrian Redlich

To consider and, if thought fit, to pass the following as an ordinary resolution:

“That Adrian Redlich, a Director who retires from office by rotation in accordance with rule 6.4 of the Company’s Constitution, and being eligible, is re-elected as a Director of the Company.”

4. Re-Election of Director – Andrew John Brown

To consider and, if thought fit, to pass the following as an ordinary resolution:

“That Andrew John Brown, a Director who retires from office by rotation in accordance with rule 6.4 of the Company’s Constitution, and being eligible, is reelected as a Director of the Company.”

5. Adoption of Remuneration Report

To consider and, if thought fit, to pass the following in accordance with section 250R(2) of the Corporations Act :

“That the Remuneration Report (which forms part of the Directors Report) for the year ended 30 June 2012 be adopted.”

Note: This resolution will be determined as if it were an ordinary resolution, but under section 250R(3) of the Corporations Act , the vote is advisory only and does not bind the Directors or the Company.

Merricks Capital Special Opportunity Fund Limited: Notice of AGM page 1

Entitlement to Vote

The Company has determined that for the purposes of the Annual General Meeting all Shares will be taken to be held by the persons who, according to records of the Company’s share registrar, held them as registered Shareholders at 7.00pm (Melbourne time) on 20 November 2012. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Annual General Meeting.

Voting Exclusion Statement on Item 5

Except to the extent otherwise permitted by law, a member of the key management personnel of the Company (and any closely related party of any such member) may not vote, and the Company will disregard any votes cast by such persons, on the resolution referred to in Item 5, unless:

• that person is appointed as proxy by writing that specifies the way the proxy is to vote on the resolution; or

• that person is the Chairman of the Annual General Meeting and his appointment as proxy:

• does not specify the way he is to vote on the resolution; and

• expressly authorises him to exercise the proxy even if the resolution is connected, directly or indirectly, with the remuneration of a member of the key management personnel of the Company whose remuneration details are included in the Remuneration Report;

and

• the vote is not cast on behalf of a member of the key management personnel of the Company whose remuneration details are included in the Remuneration Report or a closely related party of such a member.

For the purposes of these voting restrictions:

• The “key management personnel” of the Company are those persons having authority and responsibility for planning, directing and controlling the activities of the company, either directly or indirectly, including any Director (whether executive or otherwise).

• A closely related party of a member of the key management personnel of the Company includes a spouse or child of the member, a child of the member's spouse, a dependant of the member or of the member's spouse, anyone else who is one of the member's family and may be expected to influence the member (or be influenced by the member) in the member's dealings with the Company, or a company the member controls.

If a member of the key management personnel, other than the Chairman, is your proxy, you must direct him how to vote on the resolution, otherwise your vote will not be counted.

If the Chairman of the Annual General Meeting is your proxy, and you do not direct him how to vote, you must expressly authorise the Chairman to exercise the proxy to vote on the Remuneration Report. The form of proxy provided with this notice includes such express authorisation.

Merricks Capital Special Opportunity Fund Limited: Notice of AGM page 2

Voting by Proxy

Any shareholder of the Company entitled to attend and vote at this Annual General Meeting is entitled to appoint a proxy to attend and vote instead of that shareholder.

The proxy does not need to be a Member of the Company. A shareholder that is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified, each proxy may exercise half of the shareholder’s votes.

Where the Chairman of the Annual General Meeting is appointed proxy, he will vote in accordance with the shareholder’s directions as specified on the proxy form or, in the absence of a direction and where permitted, in favour of the resolutions contained in the Notice of Meeting.

Proxies must be:

• (a) lodged at the Company’s share registry; or

• (b) received at the share register’s fax number specified below,

not later than 48 hours before the Annual General Meeting .

The Company’s share registry:

Postal address: Fax number:

Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 Boardroom Pty Limited GPO Box 3993 SYDNEY NSW 2001 (02) 9290 9655

A form of proxy is provided with this notice.

Further Information

If you have any queries in relation to the Annual General Meeting, please contact Adam Lindell, on (03) 8319 8111 or adam.lindell@merrickscapital.com

Dated this 12 day of October 2012

By order of the Board of Directors

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H. Adam Lindell Director

Merricks Capital Special Opportunity Fund Limited: Notice of AGM page 3

EXPLANATORY MEMORANDUM

This Explanatory Memorandum provides information for members in respect of the resolutions to be considered at the Annual General Meeting of Merricks Capital Special Opportunity Fund Limited ( Company ) to be held at 2.00pm on 22 November 2012 at the Gadwall Suite, The Como Melbourne, 630 Chapel Street, South Yarra, Victoria.

ORDINARY BUSINESS

1. Chairman’s Address

Report on results and activities during the financial year.

2. Financial Statements

As required by section 317 of the Corporations Act the Financial Report, Directors’ Report and Auditor’s Report of the Company, contained within the Annual Report 2012 and will be laid before the meeting.

Members will be provided with the opportunity to ask questions about the reports or about the Company generally but there will be no formal resolution put to the meeting.

3. Re-Election of Director – Adrian Redlich

In accordance with rule 6.4 of the Company’s Constitution, Adrian Redlich is retiring from office, and offers himself for re-election at the Annual General Meeting of the Company.

Adrian is the co-Founder and Chief Investment Officer of Merricks Capital. From 2005 to 2007 Adrian worked at Citadel Investment Group in Chicago as the Head of Quantitative Alpha Generation, Global Equities. This team was primarily responsible for the evolution and refinement of the investment process of Citadel’s Global Equities & Derivative Portfolio, which ran the world’s largest fundamental long/short market neutral portfolio. During this time Adrian was also directly responsible for an Asian focussed derivative portfolio.

Between 2000 and 2005, Adrian was a Director at Merrill Lynch (New York & Hong Kong), where he was Head of the Global Valuation and Analytics Group. Prior to this, Adrian was a Vice President at Merrill Lynch (Melbourne, Australia) where he worked as a commodities and mining analyst from 1993 to 2000. Adrian holds a Bachelor of Economics from Monash University, Melbourne, Australia (1994). He also completed the Quantum Financial Services (Australia) Diploma of Financial Services (2007) and the National Association of Securities Dealers (USA) Series 7 Examination (2000).

4. Re-Election of Director – Andrew John Brown

In accordance with rule 6.4 of the Company’s Constitution, Andrew Brown is retiring from office, and offers himself for re-election at the Annual General Meeting of the Company.

Merricks Capital Special Opportunity Fund Limited: Notice of AGM page 4

Andrew Brown has 32 years experience in the Australian equity market as a stockbroker, corporate investor and funds manager. Andrew has an honours degree majoring in economics and econometrics from the University of Manchester, England, and completed the National Association of Securities Dealers (USA) Series 7 Examination (1983).

During the past three years, Andrew has served as a Director of the following other public companies:

• Adelaide Resources Limited (Chairman – ongoing)

• Cheviot Bridge Limited (Executive Director – ongoing)

• Cheviot Kirribilly Vineyard Property Group (Executive Director – ongoing)

• Continuation Investments Limited (appointed 31/10/2011; resigned 8/3/2012)

• Equities and Freeholds Limited (appointed 2/10/2007; resigned 16/3/2010)

• Tidewater Investments Limited (Managing Director – ongoing)

Andrew became a Director of the Company in December 2005, is a Non Executive Director and member of the Audit Committee.

5. Remuneration Report

As required by section 250R(2) of the Corporations Act, a resolution that the Company’s Remuneration Report be adopted must be put to a vote. The Report is contained within the Directors’ Report in the Company’s Annual Report 2012.

The Board believes the Company’s remuneration policies and structures as outlined in the Remuneration Report are appropriate relative to the size of the Company, its business and strategic objectives and in relation to current and emerging market practices.

Section 250R(3) of the Corporations Act provides that the vote on this resolution is advisory only and does not bind the directors or the Company. In accordance with section 250SA of the Corporations Act, members of the Company will be provided with an opportunity to ask questions or make comments on the Remuneration Report.

Merricks Capital Special Opportunity Fund Limited: Notice of AGM page 5

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Merricks Capital Special Opportunity Fund Limited ABN 62 111 772 359

FOR ALL ENQUIRIES CALL: (within Australia) 1300 737 760 (outside Australia) +61 2 9290 9600

FACSIMILE +61 2 9290 9655

ALL CORRESPONDENCE TO:

Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Australia

Your Address

This is your address as it appears on the company’s share register. If this is incorrect, please mark the box with an “X” and make the correction on the form. Securityholders sponsored by a broker should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

YOUR VOTE IS IMPORTANT

Reference Number:

Please note it is important you keep this confidential

FOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE 2:00PM (AEDT) TUESDAY 20[TH] NOVEMBER 2012

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 Appointment of Proxy

Indicate here who you want to appoint as your Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a Securityholder of the company. Do not write the name of the issuer company or the registered Securityholder in the space.

Proxy which is a Body Corporate

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an “Appointment of Corporate Representative” prior to admission. An Appointment of Corporate Representative form can be obtained from the company’s securities registry.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s securities registry or you may copy this form.

To appoint a second proxy you must:

• (a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together in the same envelope.

STEP 2 Voting Directions to your Proxy

STEP 3 Sign the Form

The form must be signed

In the spaces provided you must sign this form as follows:

Individual: This form is to be signed by the Securityholder.

Joint Holding : where the holding is in more than one name, all the Securityholders must sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 2:00pm (AEDT) on Thursday 22 November 2012 . Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxies may be lodged using the reply paid envelope or:

BY MAIL - Share Registry – Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia

BY FAX - + 61 2 9290 9655

• IN PERSON - Share Registry – Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000 Australia

You can tell your Proxy how to vote

To direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Attending the Meeting

If you wish to attend the meeting please bring this form with you to assist registration .

Merricks Capital Special Opportunity Fund Limited

STEP 1 - Appointment of Proxy

I/We being a member/s of Merricks Capital Special Opportunity Fund Limited and entitled to attend and vote hereby appoint

the Chairman of OR the Meeting (mark with an ‘X’)

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If you are not appointing the Chairman of the Meeting as your proxy please write here the full name of the individual or body corporate (excluding the registered Securityholder) you are appointing as your proxy.

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy at the Annual General Meeting of Merricks Capital Special Opportunity Fund Limited to be held at the Gadwall Suite, The Como Melbourne, located at 630 Chapel Street, South Yarra, Victoria 3141 on Thursday the 22[nd] of November 2012 at 2:00pm (AEDT) and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given (and in the case of any procedural resolutions), as the proxy sees fit (to the extent permitted by law). I/We acknowledge that the Chairman may vote as my/our proxy even if he has an interest in the outcome of the resolution (including the resolution in Item 5 to adopt the Remuneration Report) and votes cast by the Chairman, other than as proxy holder, will be disregarded because of that interest. The Chairman intends to vote all undirected proxies in favour of each of the items of business, including in respect of Item 5.

Important for Item 5: If a member of the Company's key management personnel, other than the Chairman of the Meeting, is your proxy (or becomes your proxy by default) you must direct him/her how to vote on Item 5 otherwise your vote will not be counted.

STEP 2 - Voting directions to your Proxy – please mark  to indicate your directions

Ordinary Business		For Against Abstain*	For Against Abstain*	For Against Abstain*	For Against Abstain*	For Against Abstain*
Item 3 Re-election of Director – Adrian Redlich
Item 4 Re-election of Director – Andrew John Brown
Item 5 Adoption of Remuneration Report
*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in
computing the required majority on a poll.
STEP 3 - PLEASE SIGN HEREThis sectionmust be signed in accordance with the instructions overleaf to enable your directions to be implemented.
Individual or Securityholder 1	Securityholder 2	Securityholder 3
Sole Director and Sole Company Secretary	Director	Director/Company Secretary
Contact Name……………………………….……..	Contact Daytime Telephone…………………………………..Date/ /2012