PERPETUAL PRIVATE INVESTMENT FUNDS Annual Financial Report 30 June Perpetual Investment Management Limited ABN AFSL

Transcription

1 PERPETUAL PRIVATE INVESTMENT FUNDS Annual Financial Report Perpetual Investment Management Limited ABN AFSL

2 Annual Financial Report Contents Page Directors' report 2 Lead auditor's independence declaration 7 Statements of comprehensive income 8 Balance sheets 10 Statements of changes in equity 12 Cash flow statements Directors' declaration 89 Independent auditor's report to the unitholders 90-1-

3 Directors' report Statutory name Referred to in this document as ARSN Perpetual Private Australian Share Fund "Australian Share Fund" Perpetual Private Balanced Fund "Balanced Fund" Perpetual Private Conservative Fund "Conservative Fund" Perpetual Private Diversified Fund "Diversified Fund" Perpetual Private Fixed Income Fund "Fixed Income Fund" Perpetual Private Geared Australian Share Fund "Geared Australian Share Fund" Perpetual Private Geared High Growth Fund "Geared High Growth Fund" Perpetual Private Growth Fund "Growth Fund" Perpetual Private International Share Fund "International Share Fund" Perpetual Private Real Estate Fund "Real Estate Fund" Responsible Entity The Responsible Entity of Perpetual Private Investment Funds is Perpetual Investment Management Limited (ABN ). The Responsible Entity's registered office and principal place of business is Level 18, 123 Pitt Street, Sydney, NSW Directors The following persons held office as directors of Perpetual Investment Management Limited during the year or since the end of the year and up to the date of this report: G Foster (appointed 25 January 2013, Alternate for G Larkins) M Gordon (appointed 28 March 2013, resigned 24 February ) J Hawkins (appointed 6 July 2012) D Kiddie (appointed 24 February ) G Larkins (appointed 7 January 2013) P Lynch (appointed 6 July 2012, Alternate for J Hawkins) P Statham (appointed 24 February, Alternate for D Kiddie) P Statham (appointed 9 September 2013, resigned 24 February, Alternate for M Gordon) D Winterton (appointed 24 February, Alternate for D Kiddie) D Winterton (appointed 20 April, resigned 24 February, Alternate for M Gordon) Perpetual Private Investment Funds Directors' report For the year ended The directors of Perpetual Investment Management Limited (a wholly owned subsidiary of Perpetual Limited), the Responsible Entity of Perpetual Private Investment Funds, present their report together with the annual financial report of Perpetual Private Investment Funds (''the Schemes'') for the year ended and the auditor's report thereon. -2-

4 Directors' report For the year ended Directors' report Principal activities The Schemes invest in a wide range of asset classes and generally adopt a multi-manager approach to investing where several specialist investment managers for various asset classes are appointed to manage the assets of the Schemes. The objective and investment strategy for each Scheme are disclosed in the respective Perpetual Select Investment Funds Product Disclosure Statement and Implemented Portfolios Product Disclosure Statement. The Schemes did not have any employees during the year. There were no significant changes in the nature of the Schemes' activities during the year. Review and results of operations During the year, the Schemes continued to invest in accordance with target asset allocations as set out in the governing documents of the Schemes and in accordance with the provisions of the Schemes' Constitutions. The performance of the Schemes, as represented by the results of their operations, was as follows: Australian Share Fund Fixed Income Fund International Share Fund Real Estate Fund Operating profit/(loss) before finance costs attributable to unitholders Distribution paid and payable Distribution (cents per unit) - Class R Distribution (cents per unit) - Class I 29,045 54,389 25,373 13,787 (6,093) 139,264 76,754 46,507 25,946 24,697 25,795 18,502 9,812 10,

5 Directors' report For the year ended Directors' report Review and results of operations The performance of the Schemes, as represented by the results of their operations, was as follows: Balanced Fund Conservative Fund Diversified Fund Operating profit/(loss) before finance costs attributable to unitholders Distribution paid and payable Distribution (cents per unit) 5,231 16, ,102 2,237 7,657 2, Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund Operating profit/(loss) before finance costs attributable to unitholders Distribution paid and payable Distribution (cents per unit) 111, , , , , , Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

6 Directors' report For the year ended Directors' report Interests in the Schemes The movement in on issue in the Schemes during the year is disclosed in note 6 to the financial statements. The value of the Schemes' assets and liabilities is disclosed on the balance sheets and derived using the basis set out in note 2 to the financial statements. Significant changes in state of affairs In the opinion of the directors, there were no significant changes in the state of affairs of the Schemes that occurred during the financial year under review. Likely developments and expected results of operations The Schemes will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the Schemes and in accordance with the provisions of the Schemes' Constitutions. Matters subsequent to the end of the financial year No matter or circumstance has arisen since that has significantly affected, or may significantly affect: (i) the operations of the Schemes in future financial years; or (ii) the results of those operations in future financial years; or (iii) the state of affairs of the Schemes in future financial years. Environmental regulation The operations of the Schemes are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law. Fees paid to and interests held in the Schemes by the Responsible Entity or its associates Fees paid to the Responsible Entity and its related parties out of Schemes property during the year are disclosed in note 12 to the financial statements. No fees were paid out of Schemes property to the directors of the Responsible Entity during the year. The number of interests in the Schemes held by the Responsible Entity or its associates as at the end of the financial year is disclosed in note 12 to the financial statements. -5-

7 Directors' report For the year ended Directors' report Indemnification and insurance of officers and auditors No insurance premiums are paid for out of the assets of the Schemes in regards to insurance cover provided to either the officers of Perpetual Investment Management Limited or the auditor of the Schemes. So long as the officers of Perpetual Investment Management Limited act in accordance with the Schemes' Constitutions and the law, the officers remain indemnified out of the assets of the Schemes against losses incurred while acting on behalf of the Schemes. The auditor of the Schemes is in no way indemnified out of the assets of the Schemes. Rounding of amounts to the nearest thousand dollars The Schemes are entities of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /191. Amounts in the directors report and financial report have been rounded to the nearest thousand dollars in accordance with the legislative instrument, unless otherwise indicated. Lead auditor's independence declaration A copy of the Lead auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7. This report is made in accordance with a resolution of the directors. Director Sydney 20 September -6-

8 ABCD Lead Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Perpetual Investment Management Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Michael O Connell Partner Sydney 20 September -7- KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.

9 Statements of comprehensive income For the year ended Statements of comprehensive income Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund Notes Investment income Dividend/distribution income 60,325 53,696 5,132 4, ,277 1,235 26,878 19,569 Interest income 2,771 2, Net gains/(losses) on financial instruments held at fair value through profit or loss 3 (5,492) 27,206 1,490 12, ,369 (467) (4,759) Net foreign exchange gains/(losses) (11) (73) Other operating income Total net investment income 57,829 83,833 6,707 17, ,536 2,639 27,227 15,247 Expenses Responsible Entity's fees 12 23,459 24,321 1,421 1, ,752 1,365 Other expenses 4 5,325 5, Total operating expenses 28,784 29,444 1,476 1, ,854 1,460 Operating profit/(loss) 29,045 54,389 5,231 16, ,102 2,237 25,373 13,787 Finance costs attributable to unitholders to unitholders 5 25,946 24,697 7,657 2, ,795 18,502 Changes in net assets attributable to unitholders (total comprehensive income) 6 3,099 29,692 (2,426) 14, ,574 (422) (4,715) The above statements of comprehensive income should be read in conjunction with the accompanying notes. -8-

10 Statements of comprehensive income For the year ended Statements of comprehensive income Notes Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund Investment income Dividend/distribution income 152, , ,819 17,988 18,215 11,696 Interest income 4,058 3, Net gains/(losses) on financial instruments held at fair value through profit or loss 3 (31,883) 314,167 (21) 1, ,105 (13,988) 125,188 65,202 39,070 Net foreign exchange gains/(losses) ,044 8,999 (791) 956 Other operating income 155, , Total net investment income 279, , ,482 1,286 3,834 10, ,779 83,270 52,254 Expenses Responsible Entity's fees , , ,940 12,439 5,703 5,090 Other expenses 4 12,853 12, ,270 1, Total operating expenses 167, , ,210 13,515 6,516 5,747 Operating profit/(loss) 111, , , ,567 (6,093) 139,264 76,754 46,507 Finance costs attributable to unitholders to unitholders 5 495, , ,812 10, Interest expense 153, , Changes in net assets attributable to unitholders (total comprehensive income) 6 (537,054) 54,767 (212) ,407 (15,917) 128,689 76,746 45,861 The above statements of comprehensive income should be read in conjunction with the accompanying notes. 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

11 Balance sheets As at Balance sheets Assets Cash and cash equivalents Financial assets held at fair value through profit or loss Due from brokers - receivable for securities sold Receivables Total assets Liabilities Financial liabilities held at fair value through profit or loss payable to unitholders of the Scheme Due to brokers - payable for securities purchased Payables Total liabilities (excluding net assets attributable to unitholders) Notes Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund 15(b) 60,988 61,135 12,812 5,283 1, ,541 2,868 68,968 28, ,133,083 1,154, , ,693 12,299 14,105 38,464 39, , ,094 1, ,670 15,158 2,744 1, ,962 8,136 1,214,791 1,231, , ,384 14,011 14,648 42,598 42, , , ,006 1, ,302 6,722 6,548 1, ,910 7,434 2,949 2, ,129 7, ,386 17,183 6,836 1, ,515 7,743 Net assets attributable to unitholders - liability 6 1,194,405 1,214, , ,871 13,798 14,450 41,960 42, , ,798 The above balance sheets should be read in conjunction with the accompanying notes. -10-

12 Balance sheets As at Balance sheets Assets Cash and cash equivalents Financial assets held at fair value through profit or loss Due from brokers - receivable for securities sold Receivables Total assets Liabilities Financial liabilities held at fair value through profit or loss payable to unitholders of the Scheme Due to brokers - payable for securities purchased Borrowings Interest payables Payables Total liabilities (excluding net assets attributable to unitholders) Notes Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund 15(b) 64, , ,032 3, ,953 90,626 39,550 39, ,353,394 8,423,627 10,809 13,336 40,807 42, , , , , , , , , ,299 7,312 6,044 4,292 7,699,830 8,667,734 11,698 14,005 43,176 46,234 1,074, , , , , , , ,812 9, ,354 1,072 3, ,851,729 4,319,425 3,867 4, , ,768 63, ,822 1,925 1, ,387,958 4,643,315 4,190 4, ,988 12,537 4,917 2,562 Net assets attributable to unitholders - liability 6 3,311,872 4,024,419 7,508 9,056 42,724 46,040 1,057, , , ,910 The above balance sheets should be read in conjunction with the accompanying notes. 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

13 Statements of changes in equity For the year ended Statements of changes in equity The Schemes' net assets attributable to unitholders are classified as a liability under AASB 132 Financial Instruments: Presentation. As such the Schemes have no equity and no items of changes in equity have been presented for the current or comparative period. -12-

14 Cash flow statements Notes Cash flows from operating activities Dividends/distributions received 55,442 52,101 4,541 5, ,046 1,402 18,531 16,350 Interest received 2,766 2, Other income received 2,490 2, Responsible Entity's fees paid (25,434) (25,988) (1,527) (1,482) (164) (163) (419) (375) (1,860) (1,403) Other expenses paid (7,923) (3,421) (54) (69) (41) (55) (41) (56) (99) (107) Net cash inflow/(outflow) from operating activities 15(a) 27,341 27,669 3,143 3, ,032 17,453 15,360 Cash flows from investing activities Proceeds from sale of investments 473, ,039 20,030 24,009 3,035 1,278 5,720 2, Payments for purchase of investments (456,300) (422,868) (4,541) (6,232) (1,154) (1,995) (4,647) (3,302) (86,530) (388,350) Net cash inflow/(outflow) from investing activities 17,510 6,171 15,489 17,777 1,881 (717) 1,073 (899) (86,530) (388,350) Perpetual Private Investment Funds Cash flow statements For the year ended Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund Cash flows from financing activities Proceeds from applications by unitholders Payments for redemptions by unitholders paid Net cash inflow/(outflow) from financing activities 106, ,916 8,967 9,867 1,644 3,617 2,443 4, , ,066 (148,398) (136,397) (18,046) (26,304) (2,516) (3,182) (3,194) (2,266) (83,030) (40,125) (2,923) (1,401) (2,024) (2,132) (80) (126) (324) (570) (17,008) (13,058) (44,998) (11,882) (11,103) (18,569) (952) 309 (1,075) 1, , ,883 Net increase/(decrease) in cash and cash equivalents (147) 21,958 7,529 3,083 1,110 (59) 673 2,127 40,657 13,893 Cash and cash equivalents at the beginning of the year 61,135 39,177 5,283 2, , ,311 14,418 Cash and cash equivalents at the end of the year 15(b) 60,988 61,135 12,812 5,283 1, ,541 2,868 68,968 28,311 The above cash flow statements should be read in conjunction with the accompanying notes. -13-

15 Cash flow statements Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Perpetual Private Investment Funds Cash flow statements For the year ended Notes Cash flows from operating activities Dividends/distributions received 135, , ,273 15,541 17,427 11,567 Interest received 3,982 3, Other income received 171, , , Responsible Entity's fees paid (169,273) (223,518) (235) (274) (267) (226) (14,983) (13,011) (6,064) (5,338) Other expenses paid (13,168) (13,220) (13) (13) (45) (60) (2,527) (1,362) (813) (709) Net cash inflow/(outflow) from operating activities 15(a) 128, , ,033 2,412 11,627 6,407 Cash flows from investing activities Proceeds from sale of investments 3,231,302 5,075,739 4,187 1,501 6,464 6, , , , ,302 Payments for purchase of investments (2,373,952) (2,897,438) (1,845) (1,168) (4,276) (3,413) (430,134) (373,043) (267,212) (211,385) Net cash inflow/(outflow) from investing activities 857,350 2,178,301 2, ,188 3,578 (134,351) (158,880) (59,683) (104,083) Real Estate Fund Cash flows from financing activities Proceeds from applications by unitholders Payments for redemptions by unitholders paid Interest expense paid Proceeds from borrowings Repayments of borrowings Net cash inflow/(outflow) from financing activities 991,580 1,285,417 1,461 1,638 1,876 5, , ,749 93, ,648 (1,391,091) (2,817,547) (2,936) (2,189) (5,778) (6,590) (74,135) (122,404) (45,254) (55,187) (488) (294) (8) (8) (120) (174) (6,577) (1,187) - (1,600) (193,165) (234,068) (193) (189) - - (12) (11) (8) (3) 2,431,304 2,838,196 1,344 1, (2,899,000) (3,738,000) (2,114) (906) (1,060,860) (2,666,296) (2,446) (344) (4,022) (1,515) 142, ,147 48, ,858 Net increase/(decrease) in cash and cash equivalents (74,621) (299,021) (1,308) 2,539 12,896 48, ,182 Cash and cash equivalents at the beginning of the year 139, , , ,626 40,544 39,091 12,895 Effects of foreign currency exchange rate changes on cash and cash equivalents (1,569) 1, Cash and cash equivalents at the end of the year 15(b) 64, , ,032 3, ,953 90,626 39,550 39,091 The above cash flow statements should be read in conjunction with the accompanying notes. 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

16 For the year ended 1 General information This annual financial report covers Perpetual Private Investment Funds ("the Schemes"). The Schemes are registered managed investment schemes under the Corporations Act The Schemes are domiciled in Australia. The Responsible Entity of the Schemes is Perpetual Investment Management Limited. The Responsible Entity's registered office is Level 18, 123 Pitt Street, Sydney, NSW The annual financial report was authorised for issue by the directors of the Responsible Entity on 20 September. The directors of the Responsible Entity have the power to amend and reissue the annual financial report. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of this annual financial report are set out below. These policies have been consistently applied to all years presented, unless otherwise stated in the following text. (a) Basis of preparation This general purpose annual financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (''AASB'') and the Corporations Act 2001 in Australia. The annual financial report is prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated. Compliance with International Financial Reporting Standards The annual financial report of the Schemes also complies with International Financial Reporting Standards ("IFRS") and Interpretations as issued by the International Accounting Standards Board ("IASB"). Functional and presentation currency The annual financial report is presented in Australian dollars, which is the Schemes' functional currency. Use of estimates and judgement The preparation of the annual financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised prospectively. -15-

17 For the year ended 2 Summary of significant accounting policies (b) New accounting standards and interpretation Certain new accounting standards and interpretations have been published that are not mandatory for the reporting period and have not been early adopted by the Schemes. The assessment of the impact of these new standards (to the extent relevant to the Schemes) and interpretations is set out below: (i) AASB 9 Financial Instruments (and applicable amendments) (effective from 1 January 2018) AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has also introduced revised rules around hedge accounting and impairment. The standard is available for early adoption. Management does not expect the adoption of AASB 9 to have a significant impact on the recognition and measurement of the Schemes' financial instruments because they are carried at fair value through profit or loss. The derecognition rules have not been changed from the previous requirements, and the Schemes do not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the Schemes' investments are all held at fair value through profit or loss, the change in impairment rules will not impact the Schemes. (ii) AASB 15 Revenue from Contracts with Customers (effective from 1 January 2018) The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer - so the notion of control replaces the existing notion of risks and rewards. The Schemes' main sources of income are interest, dividends/distributions and gains on financial instruments held at fair value. All of these are outside the scope of the new revenue standard. As a consequence, management does not expect the adoption of the new revenue recognition rules to have a significant impact on the Schemes' accounting policies or the amounts recognised in the financial statements. (c) Financial instruments (i) Classification The Schemes' investments are classified at fair value through profit or loss. They comprise: Financial instruments held for trading Derivative financial instruments such as futures, forward contracts, options and swaps are included under this classification. The Schemes do not designate any derivatives as hedges in a hedging relationship. -16-

18 For the year ended 2 Summary of significant accounting policies (c) Financial instruments (i) Classification Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These are investments in exchange traded debt, equity instruments, unlisted unit trusts and commercial papers. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Schemes' documented investment strategy. The Schemes' policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information. (ii) Recognition/derecognition The Schemes recognise financial assets and financial liabilities on the date they become party to the purchase contractual agreement (trade date) and recognise changes in fair value of the financial assets or financial liabilities from this date. Investments are derecognised on the date the Schemes become party to the sale contractual agreement (trade date). (iii) Measurement Financial assets and liabilities held at fair value through profit or loss At initial recognition, the Schemes measure financial assets and financial liabilities at fair value. Transaction costs are expensed in profit or loss as incurred. Subsequently, all financial assets and liabilities are measured at fair value without any deduction for estimated future selling cost. Gains and losses arising from changes in the fair value measurement are included in profit or loss. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Further details of fair value measurement are disclosed in note 16(d) to the financial statements. Borrowings Borrowings including bank loans are measured at fair value which approximates the carrying value. -17-

19 For the year ended 2 Summary of significant accounting policies (c) Financial instruments (iv) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheets when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. (d) Net assets attributable to unitholders Units are redeemable at unitholders' option, however applications and redemptions may be suspended by the Responsible Entity if it is in the best interest of the unitholders. The are classified as financial liabilities as the Schemes are required to distribute their distributable income in accordance with the Schemes' Constitutions. The can be put back to the Schemes at any time for cash based on the redemption price. The are measured at the redemption amount that is payable at the balance sheet date if unitholders exercise their right to redeem in the Schemes. (e) Cash and cash equivalents For the purpose of presentation in the cash flow statements, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term and highly liquid financial assets with a maturity period of three months or less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown as a liability on the balance sheets. (f) Receivables Receivables include accrued income, application monies receivable and Reduced Input Tax Credits ("RITC") refund. Receivables are measured at their nominal amounts. Amounts are generally received within 30 days of being accrued for. Given the short term nature of most receivables, the nominal amount approximates fair value. (g) Payables Payables include accrued expenses and redemption monies owing by the Schemes which are unpaid at the end of the reporting date. Amounts are generally paid within 30 days of being accrued for. Given the short term nature of most payables, the nominal amount approximates fair value. -18-

20 For the year ended 2 Summary of significant accounting policies (h) Investment income Interest income is recognised in profit or loss as it accrues using the nominated interest rates available on the bank accounts held and using the effective interest method for all other interest bearing financial instruments. Other changes in fair value for such instruments are recorded in accordance with the accounting policies described in note 2(c). The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial instrument. When calculating the effective interest rate, the Schemes estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses. The calculation includes all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, including transaction costs and all other premiums or discounts. Dividend income is recognised on the ex-dividend date. Trust distributions (including distributions from cash management trusts) are recognised on a present entitlements basis. Other income is brought to account on an accruals basis. (i) Expenses All expenses, including Responsible Entity's fees, are recognised in profit or loss on an accruals basis. Interest expense is recognised in profit or loss as it accrues, using the applicable interest rates. (j) Income tax Under current legislation, the Schemes are not subject to income tax as unitholders are presently entitled to the income of the Schemes, provided the taxable income of the Schemes is fully distributed either by way of cash or reinvestment. The benefits of franking credits and foreign tax credits are passed on to unitholders, providing certain conditions are met. (k) In accordance with the Schemes' Constitutions, the Schemes distribute their distributable income to unitholders by cash or reinvestment. The distributions are recognised in profit or loss as finance costs attributable to unitholders. (l) Changes in net assets attributable to unitholders Income not distributed is included in net assets attributable to unitholders. Movements in net assets attributable to unitholders are recognised in profit or loss as finance costs attributable to unitholders. -19-

21 For the year ended 2 Summary of significant accounting policies (m) Goods and Services Tax ("GST") The GST incurred on the cost of various services provided to the Schemes by third parties such as Responsible Entity's fees, has been passed onto the Schemes. The Schemes qualify for RITC; hence Responsible Entity's fees and other expenses have been recognised in profit or loss net of the amount of GST recoverable from the Australian Taxation Office ("ATO"). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the balance sheets. Cash flows relating to GST are included in the cash flow statements on a gross basis. (n) Foreign currency translation Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined. Translation differences on assets and liabilities carried at fair value are reported in profit or loss on a net basis within net gains/(losses) on financial instruments held at fair value through profit or loss. 3 Net gains/(losses) on financial instruments held at fair value through profit or loss Net gains/(losses) arising from changes in the fair value measurement comprise: Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Net unrealised gains/(losses) on financial instruments held for trading Net unrealised gains/(losses) on financial instruments designated at fair value through profit or loss Net realised gains/(losses) on financial instruments held for trading Net realised gains/(losses) on financial instruments designated at fair value through profit or loss Net gains/(losses) on financial instruments held at fair value through profit or loss (940) (256) 166 (108) 9 (5) 29 (22) (20,233) (32,915) (2,908) 8, ,350 2,641 (981) (49) (1,069) (2) (65) (39) (196) 13,040 61,358 4,281 5, (75) 237 (5,492) 27,206 1,490 12, ,

22 For the year ended 3 Net gains/(losses) on financial instruments held at fair value through profit or loss Net gains/(losses) arising from changes in the fair value measurement comprise: Fixed Income Fund Geared Australian Share Fund 1 Geared High Growth Fund Net unrealised gains/(losses) on financial instruments held for trading Net unrealised gains/(losses) on financial instruments designated at fair value through profit or loss Net realised gains/(losses) on financial instruments held for trading Net realised gains/(losses) on financial instruments designated at fair value through profit or loss Net gains/(losses) on financial instruments held at fair value through profit or loss (467) (4,759) (372,430) (1,001,237) (1,275) ,547 1,315,404 1, (467) (4,759) (31,883) 314,167 (21) 1,056 Growth Fund International Share Fund Real Estate Fund Net unrealised gains/(losses) on financial instruments held for trading Net unrealised gains/(losses) on financial instruments designated at fair value through profit or loss Net realised gains/(losses) on financial instruments held for trading Net realised gains/(losses) on financial instruments designated at fair value through profit or loss Net gains/(losses) on financial instruments held at fair value through profit or loss 31 (16) - - 4,219 (2,688) (300) 1,978 (30,892) 100,032 14,529 43,041 (49) (287) (27) (37) (7,207) (19,853) 737 1,430 16,931 25,193 53,661 18, ,105 (13,988) 125,188 65,202 39,070 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

23 For the year ended 4 Other expenses Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund Performance fees 3,539 3, Transaction costs 1,422 1, Sundry expenses Total 5,325 5, Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund Performance fees , Transaction costs Sundry expenses 12,853 12, Total 12,853 12, ,270 1, Sundry expenses include audit fees, custody fees, printing fees and other expenses incurred in the operation of the Schemes. 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

24 For the year ended 5 to unitholders The distributions for the year were as follows: Australian Share Fund - Class R CPU CPU Australian Share Fund - Class I CPU CPU paid - September 4, , paid - December 6, , paid - March 2, , payable - June 8, , , Total distributions 22,467 22,831 3,479 1,866 Fixed Income Fund - Class R CPU CPU Fixed Income Fund - Class I CPU CPU paid - September , paid - December , , paid - March , , payable - June , , Total distributions 1,167 1,228 24,628 17,

25 For the year ended 5 to unitholders The distributions for the year were as follows: International Share Fund - Class R CPU CPU International Share Fund - Class I CPU CPU paid - September paid - December payable - June 1, , , , Total distributions 1,270 3,189 8,542 7,375 Real Estate Fund - Class R CPU CPU Real Estate Fund - Class I CPU CPU paid - September paid - December payable - June Total distributions

26 For the year ended 5 to unitholders The distributions for the year were as follows: Balanced Fund CPU CPU Conservative Fund CPU CPU paid - September paid - December paid - January paid - March payable - June 6, , Total distributions 7,657 2, Diversified Fund CPU CPU Growth Fund CPU CPU paid - September paid - December paid - March payable - June Total distributions Geared Australian Share Fund 1 CPU CPU Geared High Growth Fund CPU CPU payable - June 495, , Total distributions 495, , Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

27 For the year ended 6 Net assets attributable to unitholders Movements in the number of and net assets attributable to unitholders during the year were as follows: Units '000 Australian Share Fund Units '000 Units '000 Fixed Income Fund Units '000 Net assets attributable to unitholders Opening balance 809, ,916 1,214,713 1,170, , , , ,508 Applications 85, , , , , , , ,890 Redemptions (99,823) (85,532) (148,947) (131,600) (80,763) (38,075) (83,296) (39,560) Units issued upon reinvestment of distributions 12,762 14,522 19,443 22, Changes in net assets attributable to unitholders - - 3,099 29, (422) (4,715) Closing balance 807, ,113 1,194,405 1,214, , , , ,798 Units '000 International Share Fund Units '000 Units '000 Real Estate Fund Units '000 Net assets attributable to unitholders Opening balance 831, , , , , , , ,035 Applications 187, , , ,351 77, ,122 94, ,150 Redemptions (68,096) (113,509) (74,194) (112,023) (40,564) (67,376) (45,555) (54,454) Units issued upon reinvestment of distributions 2, , ,446-2,318 Changes in net assets attributable to unitholders - - (15,917) 128, ,746 45,861 Closing balance 953, ,239 1,057, , , , , ,910 As stipulated within the Schemes' Constitutions, each unit in a unit class represents a right to a unit in the class within the Schemes and does not extend to a right to the underlying assets of the Schemes. There are two classes of in the Schemes - Class R is offered through the Perpetual Select Investment Funds Product Disclosure Statement and Class I is offered through the Implemented Portfolios Product Disclosure Statement. -26-

28 For the year ended 6 Net assets attributable to unitholders Movements in the number of and net assets attributable to unitholders during the year were as follows: Units '000 Balanced Fund Units '000 Units '000 Conservative Fund Units '000 Net assets attributable to unitholders Opening balance 175, , , ,041 12,725 12,260 14,450 13,513 Applications 8,059 8,343 9,702 9,869 1,437 3,208 1,640 3,616 Redemptions (15,157) (21,445) (18,171) (25,332) (2,151) (2,864) (2,463) (3,240) Units issued upon reinvestment of distributions Changes in net assets attributable to unitholders - - (2,426) 14, Closing balance 168, , , ,871 12,075 12,725 13,798 14,450 Units '000 Diversified Fund Geared Australian Share Fund 1 Units '000 Units Units Net assets attributable to unitholders Opening balance 37,525 35,056 42,281 37,924 6,339,302 8,184,031 4,024,419 5,304,424 Applications 2,173 4,302 2,446 4,836 1,593,157 1,875, ,370 1,290,017 Redemptions (2,847) (2,027) (3,194) (2,266) (2,202,453) (4,002,561) (1,370,822) (2,808,064) Units issued upon reinvestment of distributions , , , ,275 Changes in net assets attributable to unitholders , (537,054) 54,767 Closing balance 36,970 37,525 41,960 42,281 6,076,487 6,339,302 3,311,872 4,024,419 As stipulated within the Schemes' Constitutions, each unit represents a right to an individual share in the Schemes and does not extend to a right to the underlying assets of the Schemes. There are no separate classes of and each unit has the same right attaching to it as all other of the Schemes. 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

29 For the year ended 6 Net assets attributable to unitholders Movements in the number of and net assets attributable to unitholders during the year were as follows: Units '000 Geared High Growth Fund Units '000 Units '000 Units '000 Net assets attributable to unitholders Opening balance 12,737 13,193 9,056 8,560 36,591 37,874 46,040 43,912 Applications 2,030 2,332 1,447 1,630 1,486 4,065 1,876 5,222 Redemptions (4,155) (3,105) (2,995) (2,144) (4,556) (5,425) (5,778) (6,590) Units issued upon reinvestment of distributions Changes in net assets attributable to unitholders - - (212) ,407 Closing balance 10,910 12,737 7,508 9,056 33,563 36,591 42,724 46,040 As stipulated within the Schemes' Constitutions, each unit represents a right to an individual share in the Schemes and does not extend to a right to the underlying assets of the Schemes. There are no separate classes of and each unit has the same right attaching to it as all other of the Schemes. Capital risk management Growth Fund The Schemes consider their net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Schemes are subject to daily applications and daily redemptions at the discretion of unitholders. Applications and redemptions are reviewed relative to the liquidity of the Schemes' underlying assets on a daily basis by the Responsible Entity. Under the terms of the Schemes' Constitutions, the Responsible Entity has the discretion to reject an application and to defer or adjust a redemption if the exercise of such discretion is in the best interest of unitholders. -28-

30 For the year ended 7 Financial assets held at fair value through profit or loss Australian Share Fund Fair value Fair value Balanced Fund Fair value Fair value Conservative Fund Fair value Fair value Held for trading Futures Designated at fair value through profit or loss Equities 1,083,218 1,103, Debt securities 22,357 20, Unlisted unit trusts 27,494 30, , ,693 12,299 14,105 1,133,069 1,154, , ,693 12,299 14,105 Total financial assets held at fair value through profit or loss 1,133,083 1,154, , ,693 12,299 14,105 Diversified Fund Fair value Fair value Fixed Income Fund Fair value Fair value Geared Australian Share Fund 1 Fair value Fair value Designated at fair value through profit or loss Unlisted unit trusts 38,464 39, , ,094 7,353,394 8,423,627 Total financial assets held at fair value through profit or loss 38,464 39, , ,094 7,353,394 8,423,627 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

31 For the year ended 7 Financial assets held at fair value through profit or loss Geared High Growth Fund Fair value Fair value Growth Fund Fair value Fair value International Share Fund Fair value Fair value Real Estate Fund Fair value Fair value Held for trading Foreign exchange forward contracts , , Designated at fair value through profit or loss Equities , , , ,811 Unlisted unit trusts 10,809 13,336 40,807 42,607 80,189 68,474 2,221 2,213 10,809 13,336 40,807 42, , , , ,024 Total financial liabilities held at fair value through profit or loss 10,809 13,336 40,807 42, , , , ,

32 For the year ended 8 Financial liabilities held at fair value through profit or loss Australian Share Fund Balanced Fund Conservative Fund Held for trading Futures Options 1, Foreign exchange forward contracts Total financial liabilities held at fair value through profit or loss 2,006 1, Diversified Fund Growth Fund Real Estate Fund Held for trading Futures Foreign exchange forward contracts ,901 Total financial liabilities held at fair value through profit or loss ,

33 For the year ended 9 Receivables Australian Share Fund Balanced Fund Conservative Fund Dividends/distributions receivable Interest receivable Applications receivable Other receivables Total receivables 18,087 13,204 1,878 1, ,670 15,158 2,744 1, Diversified Fund Fixed Income Fund Geared Australian Share Fund 1 Dividends/distributions receivable Interest receivable Applications receivable Other receivables Total receivables ,196 6,849 60,410 44, ,620 1,211 24,784 40, ,574 19, ,962 8, , ,931 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

34 For the year ended 9 Receivables Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund Dividends/distributions receivable Interest receivable Applications receivable Other receivables Total receivables ,305 3,759 4,479 3, ,775 2,444 1, ,200 1, ,299 7,312 6,044 4, Payables Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Responsible Entity's fees payable Performance fees payable Other fees payable Redemptions payable Total payables 2,028 2, ,367 4, ,129 7,

35 For the year ended 10 Payables Fixed Income Fund Geared Australian Share Fund 1 Geared High Growth Fund Responsible Entity's fees payable Other fees payable Redemptions payable Total payables ,931 16, ,119 10, ,718 35, ,768 63, Growth Fund International Share Fund Real Estate Fund Responsible Entity's fees payable Performance fees payable Other fees payable Redemptions payable Total payables ,266 1, ,822 1,925 1, Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

36 For the year ended 11 Borrowings and interest payables Geared Australian Geared High Share Fund 1 Growth Fund Carrying amount Carrying amount Carrying amount Carrying amount Bank loans Loan interest payables Total borrowings and interest payables 3,851,729 4,319,425 3,867 4, , ,852,113 4,359,247 3,867 4,680 The carrying amount of the bank loans represents amount drawn under a cash advance facility, which approximates the fair value. This arrangement is available for Geared Australian Share Fund and Geared High Growth Fund for the purpose of gearing of investment of the Schemes. Geared Australian Share Fund The cash advance facility is limited to 6 million (: 6 million), however gearing is not allowed to exceed 60% of the Scheme s assets. The interest rate applicable to the cash advance facility is 3.66% as at (: 3.88%). Geared High Growth Fund The cash advance facility is limited to 5 million (: 5 million), however, gearing is not allowed to exceed 50% of the Scheme s assets. The interest rate applicable to the cash advance facility is 3.66% as at (: 3.88%). 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

37 For the year ended 12 Related party transactions Responsible Entity The Responsible Entity of Perpetual Private Investment Funds is Perpetual Investment Management Limited (ABN ), a wholly owned subsidiary of Perpetual Limited (ACN ). The Schemes do not employ personnel in their own right. However, they are required to have an incorporated Responsible Entity to manage the activities of the Schemes and this is considered the key management personnel. Key management personnel (a) Directors The directors of Perpetual Investment Management Limited during the financial year or since the end of the year and up to the date of this report are as follows: G Foster (appointed 25 January 2013, Alternate for G Larkins) M Gordon (appointed 28 March 2013, resigned 24 February ) J Hawkins (appointed 6 July 2012) D Kiddie (appointed 24 February ) G Larkins (appointed 7 January 2013) P Lynch (appointed 6 July 2012, Alternate for J Hawkins) P Statham (appointed 24 February, Alternate for D Kiddie) P Statham (appointed 9 September 2013, resigned 24 February, Alternate for M Gordon) D Winterton (appointed 24 February, Alternate for D Kiddie) D Winterton (appointed 20 April, resigned 24 February, Alternate for M Gordon) (b) Other key management personnel There were no other persons with responsibility for planning, directing and controlling the activities of the Schemes, directly or indirectly, during or since the end of the financial year. Key management personnel unitholdings From time to time directors of the Responsible Entity, or their related entities, may invest in or withdraw from the Schemes. These investments or withdrawals are on the same terms and conditions as those entered into by other unitholders of the Schemes. No key management personnel of the Responsible Entity held in the Schemes as at (: nil). -36-

38 For the year ended 12 Related party transactions Transactions with key management personnel Key management personnel services are provided by Perpetual Investment Management Limited and included in the Responsible Entity's fees. There is no separate charge for these services. There was no compensation paid directly by the Schemes to any of the key management personnel during the year. The Schemes have not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their related entities at any time during the financial year. Responsible Entity's fees and other transactions The Responsible Entity's fees are calculated in accordance with the Schemes' Constitutions (as amended). The Responsible Entity's fees for retail investors (Class R or single unit class) offered under the Perpetual Select Investment Funds Product Disclosure Statement comprise of a base fee and an investment management fee, which are expressed as a percentage of the net asset values of the relevant unit classes or Schemes. Perpetual Select Investment Funds Australian Share Fund - Class R Fixed Income Fund - Class R International Share Fund - Class R Real Estate Fund - Class R Balanced Fund Conservative Fund Diversified Fund Geared Australian Share Fund Geared High Growth Fund Growth Fund Responsible Entity s fees Investment Management Base Fee Fee 1.49% 0.54% 1.49% 0.25% 1.49% 0.56% 1.49% 0.51% 1.49% 0.39% 1.49% 0.26% 1.49% 0.33% 2.98% 1.08% 2.24% 0.71% 1.49% 0.42% -37-

39 For the year ended 12 Related party transactions Responsible Entity's fees and other transactions The Responsible Entity's fees for wholesale investors (Class I) offered under the Implemented Portfolios Product Disclosure Statements are expressed as a percentage of the net asset values of the relevant unit classes. Implemented Portfolios Australian Share Fund - Class I Fixed Income Fund - Class I International Share Fund - Class I Real Estate Fund - Class I Responsible Entity s fees 0.87% 0.44% 0.90% 0.67% All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable at year end between the Schemes and the Responsible Entity were as follows: Responsible Entity's fees paid and payable directly by the Scheme Fees payable to the Responsible Entity as at reporting date Australian Share Fund Balanced Fund Conservative Fund Diversified Fund 23,459,311 24,321,275 1,421,258 1,392, , , , ,838 2,028,438 2,285, , ,987 13,309 15,334 36,125 36,

40 For the year ended 12 Related party transactions Responsible Entity's fees and other transactions All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable/receivable at year end between the Schemes and the Responsible Entity were as follows: Responsible Entity's fees paid and payable directly by the Scheme Responsible Entity's fee rebate received and receivable directly by the Scheme Fees payable to the Responsible Entity as at reporting date Rebates receivable from the Responsible Entity as at reporting date Fixed Income Fund Geared Australian Share Fund Geared High Growth Fund 1,751,700 1,364, , , , , , , , , , ,482 13,931 16,819 19,119 25, ,998 15,694 15,777 20,865 Responsible Entity's fees paid and payable directly by the Scheme Fees payable to the Responsible Entity as at reporting date Growth Fund International Share Fund Real Estate Fund 243, ,246 13,939,588 12,438,964 5,702,649 5,089,662 19,701 25,105 1,265,805 1,289, , ,

41 12 Related party transactions Perpetual Private Investment Funds For the year ended Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: paid/payable paid/payable Australian Share Fund - Class R Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Managed Investment Schemes Perpetual Charitable and Community Investor Fund 244, ,876 10,606 7, , ,345 3,060 7,139 Perpetual Charitable Endowment Fund 48, , ,527 43, , ,257 Perpetual Private Balanced Fund 31, ,222 1,046 35, ,285 1,100 Perpetual Private Conservative Fund 1, , Perpetual Private Diversified Fund 4, , , Perpetual Private Geared Australian Share Fund 4, ,568 2, , ,841 3, Perpetual Private Geared High Growth Fund 3, , , Perpetual Private Growth Fund 8, , ,

42 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: Australian Share Fund - Class R Superannuation Funds Australian Eligible Rollover Fund Perpetual Super Wrap Perpetual's Select Superannuation Fund - Australian Share Pension Option - Australian Share Super Option - Balanced Pension Option - Balanced Super Option - Conservative Pension Option - Conservative Super Option - Diversified Pension Option - Diversified Super Option - Growth Pension Option - Growth Super Option - High Growth Pension Option - High Growth Super Option Australian Share Fund - Class I Superannuation Fund Perpetual Super Wrap paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 95, ,036 15,754 3, , ,136 25,031 3, , ,201 2, , ,020 4, , ,996 2, , ,651 5, , ,654 1,150 39, ,011 1,908 1,219 41, ,035 1,406 50, ,066 7,840 1,624 3, , , , , , , , ,565 2, , , , , , ,597 4,357 1,719 55, ,779 4,005 1,642 45, ,044 1,499 55, ,036 6,086 1, , , , , ,025 2, paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 49, ,972 3,319 1,556 39, ,

43 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: paid/payable paid/payable Balanced Fund Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap 2, , paid/payable paid/payable Conservative Fund Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap 3, , paid/payable paid/payable Diversified Fund Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap

44 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: Fixed Income Fund - Class R paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Funds Perpetual Super Wrap Perpetual's Select Superannuation Fund - Fixed Income Pension Option 5, , , , Fixed Income Super Option 9, ,374 1, , ,603 3, Fixed Income Fund - Class I paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap 186, ,705 19,132 7, , ,844 5,408 5,

45 12 Related party transactions Perpetual Private Investment Funds For the year ended Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: Geared Australian Share Fund 1 Superannuation Fund Perpetual's Select Superannuation Fund - Geared Australian Share Super Option Geared High Growth Fund Superannuation Fund Perpetual's Select Superannuation Fund - Geared High Growth Super Option held paid/payable paid/payable Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at % % 5,863, ,619,426 1,899, ,696 6,143, ,758,412 3,470, ,641 paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 10, ,876 3, , ,903 2, paid/payable paid/payable Growth Fund Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

46 12 Related party transactions Perpetual Private Investment Funds For the year ended Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: International Share Fund - Class R Managed Investment Schemes Perpetual Private Balanced Fund Perpetual Private Conservative Fund Perpetual Private Diversified Fund Perpetual Private Geared High Growth Fund Perpetual Private Growth Fund paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 45, , , , , , , , , , , , ,630 1, , , Superannuation Funds Perpetual Super Wrap Perpetual's Select Superannuation Fund - Balanced Pension Option 50, , , , Balanced Super Option 59, , , , Conservative Pension Option 5, , , , Conservative Super Option 3, , , , Diversified Pension Option 6, , , , Diversified Super Option 7, , , , Growth Pension Option 77, , , ,156 9, Growth Super Option 67, ,711 5, , , High Growth Pension Option 1, , , High Growth Super Option 22, , , , International Share Pension Option 4, , , International Share Super Option 13, ,714 2, , ,008 2,

47 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: paid/payable paid/payable International Share Fund - Class I Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap 170, ,206 7,528 2, , ,483 3,341 2,482 Real Estate Fund - Class R Managed Investment Schemes Perpetual Charitable and Community Investor Fund Perpetual Charitable Endowment Fund Perpetual Private Balanced Fund Perpetual Private Conservative Fund Perpetual Private Diversified Fund Perpetual Private Growth Fund paid/payable paid/payable held Interest held acquired disposed by the Scheme at held Interest held acquired disposed by the Scheme at '000 % '000 '000 '000 % '000 '000 65, ,131-69, , , , , ,107-19, , , , , , ,

48 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: paid/payable paid/payable Real Estate Fund - Class R Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Funds Perpetual Super Wrap Perpetual's Select Superannuation Fund - Balanced Pension Option 20, ,539-22, , Balanced Super Option 26, ,631-28, , Conservative Pension Option 2, ,211-4, Conservative Super Option 1, ,728-3, Diversified Pension Option 3, , Diversified Super Option 3, , , Growth Pension Option 24, , , Growth Super Option 22, , , High Growth Pension Option High Growth Super Option 5, , Real Estate Pension Option 3, , , Real Estate Super Option 11, ,601 2,357-12, ,189 3,

49 For the year ended 12 Related party transactions Related party unitholdings Parties related to the Schemes (including the Responsible Entity, its related parties and other schemes managed by the Responsible Entity) held in the Schemes as follows: paid/payable paid/payable Real Estate Fund - Class I Interest by the Interest by the held held acquired disposed Scheme at held held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Superannuation Fund Perpetual Super Wrap 66, ,981 6,833-55, ,103 1, Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Australian Share Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Managed Investment Scheme Perpetual Pure Microcap Fund 17,958 27, ,278 8,476 10,163 22,156 30, ,405-5,

50 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Balanced Fund Managed Investment Schemes Perpetual Credit Income Fund Perpetual Defensive Alternative Pool Fund Perpetual Growth Alternative Pool Fund Perpetual Institutional Cash Management Trust Perpetual Private Australian Share Fund Perpetual Private Duration Fixed Income Fund Perpetual Private International Share Fund Perpetual Private Real Estate Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 9,044 9, ,781 9, , ,461 10, , ,109 11, , ,234 21, ,327 1,155 18,666 24, ,578 9, ,403 9, ,492 48, ,222 1,046 35,104 54, ,285 1,100 31,226 31, ,083 1,404 1,757 31,547 31, ,979 1,525 1,518 45,099 44, , ,744 48, , ,534 15, ,107-19,641 15, ,

51 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Conservative Fund Managed Investment Schemes Perpetual Credit Income Fund Perpetual Defensive Alternative Pool Fund Perpetual Growth Alternative Pool Fund Perpetual High Grade Treasury Fund Perpetual Institutional Cash Management Trust Perpetual Private Australian Share Fund Perpetual Private Duration Fixed Income Fund Perpetual Private International Share Fund Perpetual Private Real Estate Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 1,558 1, ,798 1, , ,722 1, ,882 1, ,506 1, ,027 1, ,103 1, ,435 3, , ,377 4, ,632 1, ,440 1,

52 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Diversified Fund Managed Investment Schemes Perpetual Credit Income Fund Perpetual Defensive Alternative Pool Fund Perpetual Growth Alternative Pool Fund Perpetual Institutional Cash Management Trust Perpetual Private Australian Share Fund Perpetual Private Duration Fixed Income Fund Perpetual Private International Share Fund Perpetual Private Real Estate Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 2,052 2, ,992 2, ,434 2, , ,835 4, , ,713 3, , ,675 2, ,425 3, , ,934 1, ,151 6, , ,147 7, ,206 11, , ,942 11, , ,380 6, ,020 6, ,648 3, ,717 2,

53 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Fixed Income Fund Managed Investment Schemes Perpetual Credit Income Fund Perpetual Private Duration Fixed Income Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 ' , , ,694-9, , , ,961-7, , , ,395-17, , , ,516-12,022 Geared Australian Share Fund 1 Managed Investment Scheme Perpetual Private Australian Share Fund held Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the investment held acquired disposed Scheme at held investment held acquired disposed Scheme at % % 4,751,851 7,353, ,567,945 2,270, ,187 5,454,258 8,423, ,841,757 3,210, ,162 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

54 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: Geared High Growth Fund Managed Investment Schemes Perpetual Growth Alternative Pool Fund Perpetual Institutional Cash Management Trust Perpetual Private Australian Share Fund Perpetual Private International Share Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 1,234 1, ,540 2, ,407 5, , ,256 6, ,899 3, , ,720 4,

55 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: received/ received/ Growth Fund receivable receivable Fair value of Interest by the Fair value of Interest by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 Managed Investment Schemes Perpetual Credit Income Fund 1,509 1, ,465 1, Perpetual Defensive Alternative Pool Fund 1,367 1, , Perpetual Growth Alternative Pool Fund 3,292 4, , ,482 7, Perpetual Institutional Cash Management Trust 2,018 2, ,495 1, Perpetual Private Australian Share Fund 8,470 13, , ,158 14, Perpetual Private Duration Fixed Income Fund 2,940 2, ,365 3, Perpetual Private International Share Fund 12,454 12, ,630 1, ,897 11, , Perpetual Private Real Estate Fund 3,775 3, ,822 2, ,

56 For the year ended 12 Related party transactions Investments The Schemes held investments in the following schemes which are also managed by the Responsible Entity or their related parties: International Share Fund Managed Investment Schemes Perpetual Wholesale Global Share Fund 2 Perpetual Smart Beta Emerging Market Equities Fund Fair value of Interest received/ receivable by the Fair value of Interest received/ receivable by the held investment held acquired disposed Scheme at held investment held acquired disposed Scheme at '000 % '000 '000 '000 % '000 '000 39,487 55, ,666-1,251 28,821 43, ,821-2,153 25,465 24, , ,051 25, ,721-1, Structured entities A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding control and the relevant activities are directed by means of contractual arrangements. The Schemes consider all investments in unlisted unit trusts to be structured entities. The Schemes invest in unlisted unit trusts for the purpose of capital appreciation and earning investment income. The unlisted unit trusts are managed in accordance with the investment strategy by the respective investment managers. The investment decisions are based on the analysis conducted by the managers. The return of the unlisted unit trusts is exposed to the variability of the performance of the investment strategies. The unlisted unit trusts finance their operations by issuing redeemable which are puttable at the holder's option and entitle the holder to a proportional stake in the respective trusts' net assets and distributions. The Schemes' interest in unconsolidated structured entities from investing in unlisted unit trusts at the reporting date is disclosed in note 7. The fair value of these entities is included in financial assets held at fair value through profit or loss in the balance sheets. 2 Formerly known as Perpetual Global Share Fund. -55-

57 For the year ended 13 Structured entities The Schemes' maximum exposure to loss is equal to the total fair value of their investments in these entities as there are no off balance sheet exposures relating to them. The Schemes' exposure to any risk from the structured entities will cease when these investments are disposed of. Unconsolidated subsidiaries The Schemes have determined that they are investment entities under the definition in AASB 10 as they meet the following criteria: (a) The Schemes have obtained funds for the purpose of providing unitholders with investment management services; (b) The Schemes' business purpose, which is communicated directly to unitholders, is investing solely for returns from capital appreciation and investment income; and (c) The performance of investments made through the Schemes are measured and evaluated on a fair value basis. The Schemes also meet all of the typical characteristic of an investment entity. Consequently the Schemes applied the investment entity exception to consolidation and measured their subsidiaries at fair value through profit or loss. With the exception of the Fixed Income Fund, no other Schemes are considered to have control in structured entities. Fixed Income Fund The following table provides information in relation to unconsolidated subsidiary of the Scheme at the reporting date: Ownership interest % % Unconsolidated subsidiary Perpetual Private Duration Fixed Income Fund 307, , The above subsidiary is domiciled in Australia. The Schemes do not have current commitments or intentions and contractual obligations to provide financial or other support to the unconsolidated structured entities. There are no loans or advances currently made to these entities. There are no significant restrictions on the ability of an unconsolidated structured entity to transfer funds to the Schemes in the form of cash distributions. Fair value -56-

58 For the year ended 14 Auditor's remuneration During the year the following fees were paid or payable by the Schemes for services provided by the auditor of the Schemes: Audit and audit related services KPMG Total remuneration for audit and audit related services Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund 21,619 20,855 15,658 15,011 12,217 11,637 12,217 11,637 12,327 11,896 Audit and audit related services KPMG Total remuneration for audit and audit related services Geared Australian Share Fund Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund 11,518 11,103 11,518 11,103 15,658 15,011 22,799 22,011 22,799 22,

59 For the year ended 15 Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities (a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities Operating profit/(loss) (Increase)/decrease in dividends/distributions receivable (Increase)/decrease in interest receivable (Increase)/decrease in other receivables Increase/(decrease) in payables Net (gains)/losses on financial instruments held at fair value through profit or loss Net foreign exchange (gains)/losses Net cash inflow/(outflow) from operating activities (b) Components of cash and cash equivalents Cash at the end of the year as shown in the cash flow statements is reconciled to the balance sheets as follows: Cash on hand Deposit at call Future deposits Total cash and cash equivalents Australian Share Fund Balanced Fund Conservative Fund 29,045 54,389 5,231 16, (4,883) (1,595) (591) 405 (61) 61 (5) (11) (10) (4) (1) (167) - (3) (1) (1) (2,469) 2, (3) 5,492 (27,206) (1,490) (12,880) (84) (359) ,341 27,669 3,143 3, ,689 58,155 12,812 4,392 1, ,001 2, ,988 61,135 12,812 5,283 1,

60 For the year ended 15 Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities (a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities Operating profit/(loss) (Increase)/decrease in dividends/distributions receivable (Increase)/decrease in interest receivable (Increase)/decrease in other receivables Increase/(decrease) in payables Net (gains)/losses on financial instruments held at fair value through profit or loss Net cash inflow/(outflow) from operating activities (b) Components of cash and cash equivalents Cash at the end of the year as shown in the cash flow statements is reconciled to the balance sheets as follows: Cash on hand Future deposits Total cash and cash equivalents Diversified Fund Fixed Income Fund Geared Australian Share Fund 1 1,102 2,237 25,373 13, , ,147 (231) 167 (8,347) (3,219) (16,235) 7,275 (1) (3) (61) (7) (76) (2) (9) (16) 4,151 1, (2,584) (1,703) (200) (1,369) 467 4,759 31,883 (314,167) 675 1,032 17,453 15, , ,974 3,541 2,697 68,968 28,311 64, , ,541 2,868 68,968 28,311 64, ,176 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

61 For the year ended 15 Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities (a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities Operating profit/(loss) (Increase)/decrease in dividends/distributions receivable (Increase)/decrease in interest receivable (Increase)/decrease in other receivables Increase/(decrease) in payables Net (gains)/losses on financial instruments held at fair value through profit or loss Net foreign exchange (gains)/losses Net cash inflow/(outflow) from operating activities (b) Components of cash and cash equivalents Cash at the end of the year as shown in the cash flow statements is reconciled to the balance sheets as follows: Cash on hand Future deposits Total cash and cash equivalents Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund 159 1, ,567 (6,093) 139,264 76,754 46, (38) (52) 18 1,454 (2,447) (788) (129) (5) (6) 45 6 (13) 7 (3) - - (104) (361) (18) (33) (6) (162) (1,056) (419) (3,105) 13,988 (125,188) (65,202) (39,070) (4,044) (8,999) 791 (956) ,033 2,412 11,627 6, ,032 3, ,953 90,626 39,550 39, ,032 3, ,953 90,626 39,550 39,

62 For the year ended 16 Financial risk management The Schemes' investing activities are exposed to a variety of financial risks. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. A risk management framework has been established by the Responsible Entity of the Schemes to monitor the Schemes' compliance with their governing documents and to minimise risks in their investment activities. This framework incorporates a regular assessment process to ensure procedures and controls adequately manage investment activities. The investment activities of the Schemes are carried out by the asset managers in accordance with the investment strategy specifically tailored for the Schemes' objectives. The strategy is approved by the Board of Directors of the Responsible Entity, and must comply with any authorised investments and management restrictions specified in the Schemes' Constitutions. The Schemes are permitted to use derivative products. The use of derivatives is considered to be part of the investment management process and is not managed in isolation. This note presents information about the Schemes' exposure to each of the above risks. The Schemes use different methods to measure different types of risks to which they are exposed. These methods include sensitivity analysis in the case of interest rate risk, currency risk and price risk; and credit ratings analysis for credit risk. (a) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices such as foreign exchange rates, interest rates, equity prices and credit spreads. The Schemes may use derivative instruments to manage their exposure to market risks. However, the use of derivatives is limited to the investment strategy and restrictions specified in the Schemes' governing documents. The Schemes held futures, foreign exchange forward contracts and options as at and. (i) Currency risk Schemes that invest in financial instruments denominated in currencies other than the Australian dollar are exposed to currency risk. Currency risk arises as the fair value or future cash flows of monetary securities denominated in foreign currency will fluctuate due to changes in exchange rates. The currency risk relating to non-monetary assets and liabilities is a component of price risk not currency risk. However, management monitors the exposures on all foreign currency denominated assets and liabilities. The Schemes may enter into derivative contracts to protect the valuation of financial assets and liabilities against variations in the exchange rates. The Schemes do not designate any derivatives as hedges, and hence these derivative financial instruments are classified at fair value through profit or loss. With the exception of International Share Fund, the Schemes did not have significant exposure to currency risk after taking into account the effect of currency hedging from the derivative contracts held at the reporting date. -61-

63 For the year ended 16 Financial risk management (a) Market risk (i) Currency risk International Share Fund The following table summarises the net amount of financial assets and liabilities, monetary and non-monetary, denominated in currencies that were significant at the reporting date: Net currency exposure Net currency exposure Australian Dollar 91,756 77,481 United States Dollar 649, ,271 British Pound 65,428 76,041 Euro 75,858 73,302 Others 174, ,478 1,057, ,573 Sensitivity analysis The sensitivity analysis estimates the sensitivity of the Scheme s operating profit and net assets attributable to unitholders to the currency risk. The analysis is based on the assumption that Australian dollar strengthened or weakened by the sensitivity rates against other currencies. The sensitivity rates represent management s best estimate of a reasonably possible movement in the foreign exchange rates, having regard to historical volatility of those rates. Sensitivity rates % Impact on operating profit and net assets attributable to unitholders Strengthened Weakened Strengthened Weakened United States Dollar 10 (64,980) 64,980 (51,527) 51,527 British Pound 8 (5,234) 5,234 (6,083) 6,083 Euro 8 (6,069) 6,069 (5,864) 5,

64 For the year ended 16 Financial risk management (a) Market risk (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Schemes are exposed to cash flow interest rate risk on financial instruments with floating interest rates. Financial instruments with fixed interest rates expose the Schemes to fair value interest rate risk. With the exception of the Geared Australian Share Fund and Geared High Growth Fund, the Schemes' exposure to interest rate risk is limited to their cash and cash equivalents, which earn/charge a floating rate of interest. Geared Australian Share Fund The Scheme is exposed to interest rate risk on its cash and borrowings, which earn/charge floating interest rates. The interest rate received on cash holdings at was 1.70% (: 1.95%). The interest rate paid on borrowings at was 3.66% (: 3.88%). Sensitivity analysis The sensitivity analysis estimates the sensitivity of the Scheme s operating profit and net assets attributable to unitholders to interest rate risk. The sensitivity rate is based on management s best estimate of a reasonably possible movement in the interest rates, having regard to historical levels of changes in interest rates. An increase of 1% in interest rates applicable at reporting date would have decreased the Scheme's operating profit and net assets attributable to unitholders by 37,872 (: 41,802). This analysis assumes that all variables, in particular foreign currency rates, remain constant. A decrease of 1% would have an equal, but opposite effect to the amounts shown above on the basis that all other variables remain constant. Geared High Growth Fund The Scheme is exposed to interest rate risk on its cash and borrowings, which earn/charge floating interest rates. The interest rate received on cash holdings at was 1.70% (: 1.95%). The interest rate paid on borrowings at was 3.66% (: 3.88%). Sensitivity analysis The sensitivity analysis estimates the sensitivity of the Scheme s operating profit and net assets attributable to unitholders to interest rate risk. The sensitivity rate is based on management s best estimate of a reasonably possible movement in the interest rates, having regard to historical levels of changes in interest rates. An increase of 1% in interest rates applicable at reporting date would have decreased the Scheme's operating profit and net assets attributable to unitholders by 32,583 (: 41,188). This analysis assumes that all variables, in particular foreign currency rates, remain constant. A decrease of 1% would have an equal, but opposite effect to the amounts shown above on the basis that all other variables remain constant. -63-

65 For the year ended 16 Financial risk management (a) Market risk (iii) Price risk The Schemes are exposed to market price risk predominantly through their investment in equities, unlisted unit trusts and derivatives for which prices in the future are uncertain (other than arising from currency risk or interest rate risk). The Schemes' asset managers aim to manage the impact of market price risk through the use of consistent and carefully considered investment guidelines. Risk management techniques are used in the selection of investments. Investments (including derivatives) are only purchased that meet investment criteria. Risk can be reduced by diversifying investments across several asset managers, markets, regions and different asset classes. At the reporting date, the fair value of the Schemes' investments exposed to price risk was as follows: Fair value of investments exposed to price risk Fair value of investments exposed to price risk Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund 1,108,837 1,132, , ,693 12,299 14,105 38,464 39, , ,094 Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund 7,353,394 8,423,627 10,809 13,336 40,807 42, , , , ,024 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

66 For the year ended 16 Financial risk management (a) Market risk (iii) Price risk Sensitivity analysis The sensitivity analysis estimates the sensitivity of the Schemes' operating profit and net assets attributable to unitholders to market price risk. The sensitivity rate is based on management s best estimate of a reasonably possible movement in the market price, having regard to historical correlation of the Schemes' investments with the relevant benchmark and market volatility. An increase of 15% at the reporting date of the market prices would have increased the Schemes' operating profit and net assets attributable to unitholders by the amounts disclosed in the following tables. A decrease of 15% would have an equal, but opposite effect to the amounts shown below, on the basis that all other variables remain constant. Impact on operating profit and net assets attributable to unitholders Impact on operating profit and net assets attributable to unitholders Australian Share Fund Balanced Fund Conservative Fund Diversified Fund Fixed Income Fund 166, ,939 28,579 30,700 1,845 2,116 5,770 5,904 94,524 81,614 Geared Australian Share Fund 1 Geared High Growth Fund Growth Fund International Share Fund Real Estate Fund 1,103,009 1,263,544 1,621 2,000 6,121 6, , ,006 75,884 57,604 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

67 For the year ended 16 Financial risk management (b) Credit risk Credit risk is the risk that a counterparty will be unable to pay amounts when they fall due. The Schemes are predominantly exposed to credit risk on derivative financial instruments, cash and cash equivalents and amounts due from brokers. (i) Derivative financial instruments The use of derivatives is limited to the investment strategy specifically tailored for the Schemes. Asset managers are only permitted to use derivative financial instruments that meet certain investment criteria. The counterparty risk arising from entering into derivative contracts is minimised by predominantly using exchange traded derivatives (except for currency hedging, contracts for differences, and occasionally, other approved over the counter instruments). The exchange traded derivatives are only executed and cleared through approved members of the exchanges. For over the counter derivatives, minimum credit ratings apply for counterparties at the time of entering into a contract and ISDA agreements. (ii) Cash and cash equivalents The exposure to credit risk for cash and cash equivalents is low as all counterparties have a rating of A or higher (as determined by Standard & Poor's). (iii) Amounts due from brokers All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered low, as delivery of securities sold is only made once the broker has received payment from the counterparty. Payments on securities acquired are only made after the broker has received the securities. The trade will fail if either party fails to meet its obligations. All transactions in unlisted unit trusts are settled/unitised when unit prices are issued. The risk of default is considered low except when the unlisted unit trusts are suspended. (c) Liquidity risk Liquidity risk is the risk that the Schemes will not be able to meet their financial obligations as they fall due. The Schemes are exposed to daily cash redemptions of redeemable and daily margin call on derivatives. The Schemes' investments are considered to be readily realisable. The Schemes primarily hold investments in an active market and can be readily disposed. Only a limited proportion of their assets are held in investments not actively traded on a stock exchange. The Schemes' investments in unlisted unit trusts expose the Schemes to the risk that the Responsible Entity or the manager of those trusts may be unwilling or unable to fulfil the redemption requests within the timeframe requested by the Schemes. However, these investments are considered readily realisable unless the unlisted unit trusts are declared illiquid. -66-

68 For the year ended 16 Financial risk management (c) Liquidity risk The Schemes may, from time to time, invest in derivative contracts traded over the counter, which are not traded in an organised market and may be illiquid. As a result, the Schemes may not be able to quickly liquidate their investments in these instruments at an amount close to their fair value to meet their liquidity requirements or to respond to specific events. No significant over the counter derivative contracts were held at year end. In order to manage the Schemes' overall liquidity, asset managers will only purchase securities (including derivatives) which meet the Schemes' investment criteria including the assessment of saleability in different market conditions. The Schemes' investment strategies generally define a minimum liquidity level for the Schemes which is monitored regularly. The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Australian Share Fund less more less more Carrying amount At call than 6 months 6-12 months than 12 months Carrying amount At call than 6 months 6-12 months than 12 months Non-derivative financial liabilities payable to unitholders of the Scheme 10,302-10, ,722-6, Due to brokers - payable for securities purchased 2,949-2, ,311-2, Payables 5,129-5, ,049-7, Net assets attributable to unitholders 1,194,405 1,194, ,214,713 1,214, Total 1,212,785 1,194,405 18, ,230,795 1,214,713 16, Derivative financial liabilities Futures Options 1,871-1, Foreign exchange forward contracts Outflow - - 4, Inflow - - (4,291) Total 2,006-1, ,

69 For the year ended 16 Financial risk management (c) Liquidity risk The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Balanced Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme 6,548-6,548 1,187-1,187 Payables Net assets attributable to unitholders 199, , , ,871 - Total 206, ,248 6, , ,871 1,347 Derivative financial liabilities Futures Total Contractual cash flows Contractual cash flows Conservative Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme Payables Net assets attributable to unitholders 13,798 13,798-14,450 14,450 - Total 14,011 13, ,639 14, Derivative financial liabilities Futures Total

70 For the year ended 16 Financial risk management (c) Liquidity risk The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Diversified Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme Payables Net assets attributable to unitholders 41,960 41,960-42,281 42,281 - Total 42,598 41, ,563 42, Derivative financial liabilities Futures Total Contractual cash flows Contractual cash flows Fixed Income Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme 15,910-15,910 7,434-7,434 Payables Net assets attributable to unitholders 701, , , ,798 - Total 718, ,572 16, , ,798 7,

71 For the year ended 16 Financial risk management (c) Liquidity risk The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Geared Australian Share Fund 1 less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme 495, , , ,447 Borrowings 3,851,729-3,851,729 4,319,425-4,319,425 Interest payables ,822-39,822 Payables 40,768-40,768 63,621-63,621 Net assets attributable to unitholders 3,311,872 3,311,872-4,024,419 4,024,419 - Total 7,699,830 3,311,872 4,387,958 8,667,734 4,024,419 4,643,315 Contractual cash flows Contractual cash flows Geared High Growth Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme Borrowings 3,867-3,867 4,637-4,637 Interest payables Payables Net assets attributable to unitholders 7,508 7,508-9,056 9,056 - Total 11,698 7,508 4,190 14,005 9,056 4,949 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

72 For the year ended 16 Financial risk management (c) Liquidity risk The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Growth Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme Payables Net assets attributable to unitholders 42,724 42,724-46,040 46,040 - Total 43,176 42, ,203 46, Derivative financial liabilities Futures Total Contractual cash flows Contractual cash flows International Share Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme 9,812-9,812 9,540-9,540 Due to brokers - payable for securities purchased 5,354-5,354 1,072-1,072 Payables 1,822-1,822 1,925-1,925 Net assets attributable to unitholders 1,057,694 1,057, , ,573 - Total 1,074,682 1,057,694 16, , ,573 12,

73 For the year ended 16 Financial risk management (c) Liquidity risk The following tables summarise the contractual maturities of financial liabilities, including interest payments where applicable: Contractual cash flows Contractual cash flows Real Estate Fund less less Carrying amount At call than 6 months Carrying amount At call than 6 months Non-derivative financial liabilities payable to unitholders of the Scheme Due to brokers - payable for securities purchased 3,433-3, Payables 1,004-1, Net assets attributable to unitholders 550, , , ,910 - Total 555, ,797 4, , , Derivative financial liabilities Foreign exchange forward contracts 480 1,901 Outflow , ,127 Inflow - - (23,278) - - (165,226) Total ,901-1,901 (d) Fair value measurement The Schemes classify fair value measurement of their financial assets and liabilities using a fair value hierarchy model that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). -72-

74 For the year ended 16 Financial risk management (d) Fair value measurement (i) Fair value in an active market (level 1) The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and listed securities) is based on quoted market prices at the end of the reporting period without any deduction for estimated future selling costs. For the majority of financial assets and liabilities, information provided by the quoted market independent pricing services is relied upon for valuation. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. An active market is a market in which transactions for the financial asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Listed securities and exchange traded derivatives are valued at the last traded price. Investments in unlisted unit trusts are recorded at the redemption value per unit as reported by the investment managers of such trusts. (ii) Fair value in an inactive or unquoted market (level 2 and level 3) The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques. These include the use of recent arm's length transactions, reference to current fair value of a substantially similar other instrument, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions. Where discounted cash flow techniques are used, estimated future cash flows are based on management's best estimates and the discount rate used is a market rate at the end of the reporting period applicable for an instrument with similar terms and conditions. For other pricing models, inputs are based on market data at the end of the reporting period. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions. The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions held. Quoted market prices or dealer quotes for similar instruments are used for debt instruments held. The fair value of derivatives that are not exchange traded is estimated at the amount that would be received or paid to terminate the contract at the end of the reporting period taking into account current market conditions (volatility and appropriate yield curve) and the current creditworthiness of the counterparties. Options are valued with the reference to the quoted prices of the underlying index or share. If there is no liquid market available, the options are valued based on option prices provided by an arm's length broker. These valuations are based on Black-Scholes option pricing models. The fair value of a forward contract is determined as a net present value of estimated future cash flows, discounted at appropriate market rates as at the reporting date. Investments in unlisted unit trusts are recorded at the redemption value per unit as reported by the investment managers of such trusts. -73-

75 For the year ended 16 Financial risk management (d) Fair value measurement (ii) Fair value in an inactive or unquoted market (level 2 and level 3) The Real Estate Fund held investments in an unlisted unit trust that is classified as level 3. The unlisted unit trust has exposure to direct property which may use significant unobservable inputs in their valuations. The Scheme obtained the fair value prices from the relevant investment managers without significant adjustments and did not calculate any unobservable inputs itself. No other Schemes held financial instruments with fair value measurement using significant unobservable inputs (level 3) as at and. The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Australian Share Fund Financial assets Financial assets held for trading: Futures Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets designated at fair value through profit or loss: Equities 1,080,106 3,112-1,083,218 1,103, ,103,831 Debt securities 22, ,357 18,862 1,938-20,800 Unlisted unit trusts 27, ,494 30, ,198 Total 1,129,971 3,112-1,133,083 1,152,495 2,334-1,154,829 Financial liabilities Financial liabilities held for trading: Futures Options 1, , Foreign exchange forward contracts Total 1, ,006 1, ,

76 For the year ended 16 Financial risk management (d) Fair value measurement The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Balanced Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 118,426 72, , ,516 77, ,693 Total 118,426 72, , ,516 77, ,693 Financial liabilities Financial liabilities held for trading: Futures Total Conservative Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 5,815 6,484-12,299 5,373 8,732-14,105 Total 5,815 6,484-12,299 5,373 8,732-14,105 Financial liabilities Financial liabilities held for trading: Futures Total

77 For the year ended 16 Financial risk management (d) Fair value measurement The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Diversified Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 19,390 19,074-38,464 18,764 20,602-39,366 Total 19,390 19,074-38,464 18,764 20,602-39,366 Financial liabilities Financial liabilities held for trading: Futures Total Fixed Income Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts - 630, , , ,094 Total - 630, , , ,

78 For the year ended 16 Financial risk management (d) Fair value measurement The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Geared Australian Share Fund 1 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 7,353, ,353,394 8,423, ,423,627 Total 7,353, ,353,394 8,423, ,423,627 Geared High Growth Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 9,198 1,611-10,809 11,303 2,033-13,336 Total 9,198 1,611-10,809 11,303 2,033-13,336 1 Stated to the nearest whole dollar as the Scheme does not meet the criteria set out in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument /

79 For the year ended 16 Financial risk management (d) Fair value measurement The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Growth Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Unlisted unit trusts 30,777 10,030-40,807 30,489 12,118-42,607 Total 30,777 10,030-40,807 30,489 12,118-42,607 Financial liabilities Financial liabilities held for trading: Futures Total International Share Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss: Equities 884, , , ,898 Unlisted unit trusts 55,834 24,355-80,189 43,297 25,177-68,474 Total 940,040 24, , ,195 25, ,

80 For the year ended 16 Financial risk management (d) Fair value measurement The following tables present the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date: Real Estate Fund Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Financial assets held for trading: Foreign exchange forward contracts - 2,858-2, Financial assets designated at fair value through profit or loss: Equities 503, , , ,811 Unlisted unit trusts - - 2,221 2, ,213 2,213 Total 503,515 3,017 2, , , , ,083 Financial liabilities Financial liabilities held for trading: Foreign exchange forward contracts ,901-1,901 Total ,901-1,901 Transfers between levels The Schemes' policy is to recognise transfers into and transfers out of the fair value hierarchy levels at the end of each reporting period. As at, there were no transfers between levels except for the Scheme below: Australian Share Fund Level 1 Level 2 Level 3 Transfers between level 1 and 3: Equities (376) The transfer from level 1 to level 3 was related to a single listed equity which has gone into voluntary administration on 25 November. The entire value of the listed equity (376,078) was subsequently written down to zero and recognised in profit or loss at the reporting date. -79-

81 16 Financial risk management Perpetual Private Investment Funds For the year ended (d) Fair value measurement Transfers between levels As at, there were no transfers between levels except for the Scheme below: International Share Fund Level 1 Level 2 Level 3 Transfers between level 1 and 2: Unlisted unit trusts (25,177) 25,177 - The transfer from level 1 to level 2 was related to a single unlisted unit trust that invested into equity securities and provided daily unit prices. However, the unlisted unit trust did not have frequent applications and redemptions to be considered traded in an active market during the reporting period. Fair value measurements using significant unobservable inputs (level 3) The following table presents the movement in level 3 instruments by class of financial instrument: Real Estate Fund Opening balance Sales Gains/(losses) recognised in profit or loss Closing balance Total unrealised gains/(losses) for the year included in the statements of comprehensive income for financial assets and liabilities held at the end of the year Unlisted Unlisted unit trusts Total unit trusts Total 2,213 2,213 4,240 4,240 (51) (51) (2,741) (2,741) ,221 2,221 2,213 2,

82 For the year ended 17 Offsetting financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the balance sheets when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The gross and net positions of financial assets and liabilities that have been offset in the balance sheets are disclosed in the first three columns of the tables below. Apart from the Schemes mentioned in this note, no other Schemes held financial assets or liabilities subject to offsetting arrangements at the reporting date. Australian Share Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Margin accounts (117) 396 Derivative financial instruments Total (117) 396 Financial liabilities Derivative financial instruments (2,006) - (2,006) - (2,006) (1,101) - (1,101) 117 (984) Total (2,006) - (2,006) - (2,006) (1,101) - (1,101) 117 (984) Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -81-

83 For the year ended 17 Offsetting financial assets and financial liabilities Real Estate Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Derivative financial instruments 2,858-2,858-2, Total 2,858-2,858-2, Financial liabilities Derivative financial instruments (480) - (480) - (480) (1,901) - (1,901) - (1,901) Total (480) - (480) - (480) (1,901) - (1,901) - (1,901) Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -82-

84 For the year ended 17 Offsetting financial assets and financial liabilities Balanced Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Margin accounts (166) 725 Total (166) 725 Financial liabilities Derivative financial instruments (166) - (166) Total (166) - (166) Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -83-

85 For the year ended 17 Offsetting financial assets and financial liabilities Conservative Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Margin accounts (9) 42 Total (9) 42 Financial liabilities Derivative financial instruments (9) - (9) 9 - Total (9) - (9) 9 - Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -84-

86 For the year ended 17 Offsetting financial assets and financial liabilities Diversified Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Margin accounts (29) 142 Total (29) 142 Financial liabilities Derivative financial instruments (29) - (29) 29 - Total (29) - (29) 29 - Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -85-

87 For the year ended 17 Offsetting financial assets and financial liabilities Growth Fund Effects of offsetting on the Related amounts not Effects of offsetting on the balance sheets offset balance sheets Amounts subject to master netting arrange- Related amounts not offset Financial assets Margin accounts (31) 167 Total (31) 167 Financial liabilities Derivative financial instruments (31) - (31) 31 - Total (31) - (31) 31 - Master netting arrangements Agreements with derivative counterparties are based on the ISDA Master Agreement. Under the terms of these arrangements, only where certain credit events occur (such as default), the net position owing/receivable to a single counterparty in the same currency will be taken as owing and all the relevant arrangements terminated. As the Schemes do not presently have a legally enforceable right of set-off, these amounts have not been offset in the balance sheets, but have been presented separately in this note. Amounts subject to master netting arrange- Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts Gross amounts Gross amounts set off in the balance sheets Net amounts presented in the balance sheets ments Net amounts -86-

88 For the year ended 18 Derivative financial instruments A derivative is a financial instrument or other contract which is settled at a future date and whose value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable. Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. Derivative transactions include many different instruments such as foreign exchange forward contracts, futures and options. Derivatives are considered to be part of the investment process and the use of derivatives is an essential part of the Schemes' portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives is multifaceted and includes: hedging to protect an asset or liability of the Schemes against a fluctuation in market values or to reduce volatility; a substitution for trading of physical securities; and adjusting asset exposures within the parameters set in the investment strategy, and adjusting the duration of fixed interest portfolios or the weighted average maturity of cash portfolios. While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio. Gearing a portfolio would occur if the level of exposure to the markets exceeds the underlying value of the Schemes. The Schemes held the following derivative financial instruments during the year: (a) Futures Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an organised market. The futures contracts are collateralised by cash or marketable securities. Changes in futures contracts' values are usually settled net daily with the exchange. (b) Options An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a predetermined price. The seller receives a premium from the purchaser in consideration for the assumption of future securities price risk. (c) Foreign exchange forward contracts Foreign exchange forward contracts are primarily used by the Schemes to hedge against currency risks on its non-australian dollar denominated trading securities. The Schemes agree to receive or deliver a fixed quantity of foreign currency for an agreed upon price on an agreed future date. Foreign exchange forward contracts are valued at the prevailing bid price at the end of each reporting period. The Schemes recognise a gain or loss equal to the change in fair value at the end of each reporting period. -87-

89 For the year ended 18 Derivative financial instruments Risk exposures and fair value measurements Information about the Schemes' exposure to financial risks and the methods and assumptions used in determining fair values is provided in note 16 to the financial statements. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of the derivative financial instruments. 19 Events occurring after the reporting period No significant events have occurred since the reporting date which would impact on the financial position of the Schemes disclosed in the balance sheets as at or on the results and cash flows of the Schemes for the year ended on that date. 20 Contingent assets, liabilities and commitments There were no outstanding contingent assets, liabilities or commitments as at or. -88-

90 Directors' declaration For the year ended Directors' declaration In the opinion of the directors of Perpetual Investment Management Limited, the Responsible Entity of Perpetual Private Investment Funds: (a) the annual financial statements and notes, set out on pages 8 to 88, are in accordance with the Corporations Act 2001, including: (i) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and (ii) giving a true and fair view of the Schemes' financial position as at and of their performance for the financial year ended on that date; (b) there are reasonable grounds to believe that the Schemes will be able to pay their debts as and when they become due and payable; and (c) the financial report also complies with International Financial Reporting Standards as discussed in note 2(a). This declaration is made in accordance with a resolution of the directors. Director Sydney 20 September -89-

91 ABCD Independent auditor s report to the unitholders of Perpetual Private Investment Funds Report on the financial report We have audited the accompanying financial report of Perpetual Private Investment Funds (the Schemes), which comprises the balance sheets as at 30 June, and the statements of comprehensive income, statements of changes in equity and cash flow statements for the year ended on that date, notes 1 to 20 comprising a summary of significant accounting policies and other explanatory information and the directors declaration. Directors responsibility for the financial report The directors of Perpetual Investment Management Limited (the Responsible Entity) are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In note 2(a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Schemes financial positions and of their performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.

92 ABCD Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act Auditor s opinion In our opinion: (a) the financial report of Perpetual Private Investment Funds is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Schemes financial positions as at and of their performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a). KPMG Michael O Connell Partner Sydney 20 September -91-

93 NEW SOUTH WALES Angel Place Level Pitt Street Sydney NSW 2000 AUSTRALIAN CAPITAL TERRITORY Level 6 10 Rudd Street Canberra ACT 2601 VICTORIA Rialto South Tower Level Collins Street Melbourne VIC 3000 SOUTH AUSTRALIA Level Grenfell Street Adelaide SA 5000 WESTERN AUSTRALIA Exchange Plaza Level 29 2 The Esplanade Perth WA 6000 QUEENSLAND Central Plaza 1 Level Queen Street Brisbane QLD