Fusion Fund - UBS Australian Share Fund ARSN Annual report - 30 June 2012

Transcription

1 ARSN Annual report - 30 June 2012

2 ARSN Annual report - 30 June 2012 Contents Directors' report Auditor's independence declaration Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Directors' declaration Independent auditor's report to the unitholders of Fusion Fund - UBS Australian Share Fund Page This financial report covers Fusion Fund - UBS Australian Share Fund as an individual entity. The Responsible Entity of Fusion Fund - UBS Australian Share Fund is Macquarie Financial Products Management Limited (ABN ). The Responsible Entity's registered offce is No.1 Martin Place, Sydney, New South Wales, Australia

3 Directors' report 30 June 2012 Directors' report The Directors of Macquarie Financial Products Management Limited (ABN ) (a wholly owned subsidiary of Macquarie Group Limited), the Responsible Entity of Fusion Fund - UBS Australian Share Fund, present their report together with the financial report of Fusion Fund - UBS Australian Share Fund (the "Fund") for the year ended 30 June Principal activities The Fund product delivers investment returns from investments in managed funds, whilst also protecting against losses by employing a capital management technique referred to as Threshold Management. The Fund did not have any employees during the year. There has been no significant change in the nature of the Fund's activity during the year. Directors The following persons held offce as Directors of Macquarie Financial Products Management Limited during the year or since the end of the year and up to the date of this report: Peter Lucas William Fox Jason King Antony Clubb Anthony Abraham (appointed on 19 December 2011) The Directors were in office from the beginning of the year until the date of this report, unless otherwise stated. Review and results of operations During the year, the Fund continued to be managed in accordance with the investment objective and strategy set out in the Fund's offer document and in accordance with the Fund Constitution. Results The performance of the Fund, as represented by the results of its operations, was as follows: Year ended 30 June 30 June Operating (Ioss)/profit before financing costs attributable to unitholders Final distributions Distribution paid and payable Distribution (cents per unit) Distributions - to redeeming unitholders Distribution paid (27,131) 33,402 12, ,695 1,209 Significant changes in the state of affairs In the opinion of the Directors, there were no significant changes in the state of affairs of the Fund that occurred during the financial year under review. Significant events after year end No matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect: (i) the operations of the Fund in future financial years, or (ii) the results of those operations in future financial years, or (iii) the state of affairs of the Fund in future financial years. -2-

4 Directors' report 30 June 2012 Directors' report Likely developments and expected results of operations The Fund will continue to be managed in accordance with the investment objective and strategy set out in the Fund's offer document and in accordance with the Fund Constitution. The results of the Fund's operations will be affected by a number of factors, including the performance of investment markets in which the Fund invests. Investment performance is not guaranteed and future returns may differ from past returns. As investment conditions change over time, past returns should not be used to predict future returns. Further information on likely developments in the operations of the Fund and the expected results of those operations have not been included in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to the Fund. Indemnification and insurance of Directors and offcers No insurance premiums are paid for out of the assets of the Fund in regards to insurance cover provided to either the offcers of Macquarie Financial Products Management Limited or the auditors of the Fund. Under the Fund Constitution, Macquarie Financial Products Management Limited as Responsible Entity of the Fund is entitled to be indemnified out of the assets of the Fund for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Fund. Fees paid to and interests held in the Fund by the Responsible Entity and associates Fees paid to the Responsible Entity and its associates out of Fund property during the year are disclosed in note 8 of the financial statements. No fees were paid out of Fund property to the Directors of the Responsible Entity during the year. The number of interests in the Fund held by the Responsible Entity or its associates as at the end of the financial year are disclosed in note 8 of the financial statements. Interests in the Fund The movement in units on issue in the Fund during the year is disclosed in note 5 of the financial statements. Fund Assets The value of the Fund's assets is disclosed on the Statement of financial position and derived using the basis set out in note 2 of the financial statements. Environmental regulation The operations of the Fund are not subject to any particular or significant environmental regulations under a law of the Commonwealth or of a State or Territory. Rounding of amounts to the nearest dollar Amounts in the Directors' report and financial report have been rounded off to the nearest dollar, unless otherwise indicated. -3-

5 Directors' report 30 June 2012 Directors' report Auditor's independence declaration A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5. This report is made in accordance with a resolution of the Directors. Director r Sydney 26 September

6 ''''. ãj ERNST & YOUNG Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: Auditor's Independence Declaration to the Directors of Macquarie Financial Products Management Limited, as -the Responsible Entity for Fusion Fund - UBS Australian Share Fund In relation to our audit of the financial report of Fusion Fund - UBS Australian Share Fund for the financial year ended 30 June 2012, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Darren Handley-Greaves Partner 26 September 2012 Liability limited by a scheme approved under Professional Standards Legislation

7 Statement of comprehensive income Statement of comprehensive income Investment income Interest income Distribution income Net (Iosses)/gains on financial instruments held at fair value through profit or loss Other operating income Total net investment (Ioss)/income Notes Year ended 30 June 30 June ,073 2,430 8,101 17,085 (32,825) 19, (23,651) 39,624 Expenses Responsible Entity fees Administration expenses Other operating expenses Total operating expenses Operating (Ioss)/profit 8 2,681 5, ,480 6,222 (27,131) 33,402 Finance costs attributable to unitholders Distributions to unitholders Oecrease/(increase) in net assets attributable to unitholders Profit/(Ioss) for the year 5 (5,695) 32,826 (13,419) (19,983) Other comprehensive income/(ioss) for the year Total comprehensive income/(ioss) for the year The above Statement of comprehensive income should be read in conjunction with the accompanying notes. -6-

8 Statement of financial position As at 30 June 2012 Statement of financial position Notes 30 June 2012 As at 30 June 2011 Assets Cash and cash equivalents 6 Receivables Financial assets held at fair value through profit or loss 7 Total assets Liabilities Redemptions payable Responsible Entity fees payable 8 Other payables Total liabilities (excluding net assets attributable to unitholders) Net assets attributable to unitholders - liabilty 5 119,093 20, , , , , ,933 5,831 3,389 6,677 12, ,322 24, ,925 The above Statement of financial position should be read in conjunction with the accompanying notes. -7-

9 Fusion Fund. UBS Australian Share Fund Statement of changes in equity Statement of changes in equity Total equity at the beginning of the year Total comprehensive income/(ioss) for the year Transactions with owners in their capacity as owners Total equity at the end of the year Year ended 30 June 30 June Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end of the year. The above Statement of changes in equity should be read in conjunction with the accompanying notes. -8-

10 Statement of cash flows Statement of cash flows Notes Year ended 30 June 30 June Cash flows from operating activities Proceeds from sale of financial instruments held at fair value through profit or loss Purchase of financial instruments held at fair value through profit or loss I nterest received Other income received Responsible Entity fees paid GST refund received Payment of other expenses Net cash provided by operating activities 9(a) 412,835 (5,831) 1,073 (6,677) 454 (320) 401, ,531 (12,706) 2, (14,018) ,320 Cash flows from financing activities Proceeds from applications by unitholders Payments for redemptions by unitholders Net cash used in financing activities (302,902) (302,902) 12,707 (113,866) (101,159) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year 98,632 20,461 (7,839) 28,300 Cash and cash equivalents at the end of the year 6,9(b) 119,093 20,461 Non-cash financing and investing activities 9(c) 12,210 The above Statement of cash flows should be read in conjunction with the accompanying notes. -9-

11 1 Corporate information This financial report covers Fusion Fund - UBS Australian Share Fund (the "Fund") as an individual entity. The Fund is an Australian registered scheme, domiciled and incorporated in Australia on 11 February The Fund will terminate on 10 August 2083 unless terminated earlier in accordance with the provisions of the Fund Constitution. The Responsible Entity of the Fund is Macquarie Financial Products Management Limited (the "Responsible Entity"). The Responsible Entity's registered office is NO.1 Martin Place, Sydney, New South Wales, Australia The Responsible Entity is incorporated and domiciled in Australia. The financial report is presented in Australian dollars. The principal activity of the Fund is to deliver investment returns from investments in managed funds, whilst also protecting against losses by employing a capital management technique referred to as Threshold Management. During the year, the Fund continued to be managed in accordance with the investment objective and strategy set out in the Fund's offer document and in accordance with the Fund Constitution. The financial statements of the Fund for the year ended 30 June 2012 were authorised for issue in accordance with a resolution of the Board of Directors on 26 September The Directors of the Responsible Entity have the power to amend and reissue the financial report. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements 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 The financial report is a general purpose financial report, which has been prepared in accordance with requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report is prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated. The Statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and are not distinguished between current and non-current. All balances are expected to be recovered or setted within twelve months, except for financial assets and liabilities held at fair value through profit or loss and net assets attributable to unitholders. The amount expected to be recovered or settled within twelve months in relation to these balances cannot be reliably determined. Statement of Compliance with International Financial Reporting Standards The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. (b) New accounting standards and interpretations Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Fund for the annual reporting period ended 30 June The impact of these standards and interpretations has been assessed and to the extent applicable to the Fund are discussed below. Standards and Interpretations that are not expected to have a material impact on the Fund have not been included. (i) AASB 9 Financial Instruments: Classification and Measurement AASB 9 was issued by the IASB in November 2009 and amended in December It introduces new requirements for the classification and measurement of financial assets effective from January 1, 2015 with early adoption permitted. (ii) AASB 10 Consolidated Financial Statements AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG Consolidation - Special Purpose Entities. -10-

12 2 Summary of significant accounting policies (b) New accounting standards and interpretations (iii) AASB 12 Disclosures of Interests in Other Entities AASB 12 includes all disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controllng interests. (iv) AASB 13 Fair Value Measurement AASB 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. AASB 10, AASB 12 and AASB 13 are not applicable until 1 January 2013 but are available for early adoption. The Fund has not yet decided when to adopt AASB 9, AASB 10, AASB 12 and AASB 13. Management does not expect this will have a significant effect on the Fund's financial statements. Standards and interpretations that are not expected to have material impact on the Fund have not been included. (c) Financial instruments (i) Classification The Fund's investments are classified as at fair value through profit or loss. They comprise:. 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 unlisted unit trusts. Financial assets and financial liabilities 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 Fund's documented investment strategy. The Fund's 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. Loans and receivables/payables comprise amounts due to or from the Fund. (ii) Recognition/Derecognition The Fund recognises financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date. Investments are derecognised when the right to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership. (iii) Measurement. Financial assets and liabilities held at fair value through profit or loss Investments in unlisted unit trusts are initially recorded at fair value and revalued at the recording date. Gains and losses (realised and unrealised) are included within total investment income in the Statement of comprehensive income. Investments in unlisted unit trusts are valued by reference to the prevailing redemption value as reported by the managers of such funds at the reporting date. Further details on how the fair values of financial instruments are determined are disclosed in note 3(e). -11-

13 2 Summary of significant accounting policies (d) Net assets attributable to unitholders There is no right to redeem from the Fund until maturity. However, subject to the approval of the Responsible Entity, units can be redeemed before maturity as stipulated in the Product Disclosure Statement. The fair value of units redeemed is measured at the redemption amount that is payable based on the redemption unit price. (e) Cash and cash equivalents For the purposes of the Statement of cash flows, cash includes deposits at call which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Payments and receipts relating to the purchase and sale of financial assets are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Fund's main income generating activity. (f) Investment income Distribution income is recognised when the Fund's right to receive payment is established. Changes in the fair value of financial assets and liabilities designated in the fair value through profi or loss category are recognised as income or expenses in the Statement of comprehensive income in the year in which the changes occur. Interest income is recognised in the Statement of comprehensive income using the effective interest method. (g) Expenses All expenses, including Responsible Entity's fees, are recognised in the Statement of comprehensive income on an accruals basis. (h) Income tax Under current Australian legislation, the Fund is not subject to income tax provided the unitholders are presently entitled to the income of the Fund and the Fund fully distributes its net taxable income. Financial instruments held at fair value may include un realised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax wil be distributed so that the Fund is not subject to capital gains tax. Realised capital losses are not distributed to unitholders but are retained in the Fund to be offset against any realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders. The benefits of imputation credits are passed on to unitholders. (i) Distributions to unitholders In accordance with the Fund Constitution, the Fund fully distributes its distributable (taxable) income to unitholders by cash, reinvestment or by redemption distribution. The distributions are payable at the end of June each year and are recognised in the Statement of comprehensive income as finance costs attributable to unitholders. ü) Increaseldecrease 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 Statement of comprehensive income as finance costs. -12-

14 2 Summary of significant accounting policies (k) Redemption distributions In accordance with the Fund Constitution, the Fund may distribute a "redemption distribution" when a unit is redeemed and the redemption price of that unit is greater than the application price of that unit. The redemption distribution is included in the redemption price of the unit and is accounted for as a distribution paid in the financial statements. (I) Receivables Receivables may include amounts for interest and trust distributions. Trust distributions are accrued when the right to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment in accordance with the policy set out in note 2(f) above. Amounts are generally received within 30 days of being recorded as receivables. Receivables include such items as Reduced Input Tax Credits (RITC). (m) Payables Payables include liabilities and accrued expenses owing by the Fund which are unpaid as at the end of the reporting period. The distribution amount payable to unitholders as at the end of the reporting period is recognised separately in the Statement of financial position when unitholders are presently entitled to the distributable income under the Fund Constitution. (n) Applications and redemptions Applications received for units in the Fund are recorded net of any entry fees payable prior to the issue of units in the Fund. Redemptions from the Fund are recorded gross of any exit fees payable after the cancellation of units redeemed. Unit redemption prices are determined by reference to the net assets of the Fund divided by the number of units on issue less any redemption costs. (0) Goods and Services Tax (GST) The GST incurred on the costs of various services provided to the Fund by third parties such as Responsible Entity fees have been passed onto the Fund. The Fund qualifies for RITC at a rate of 75% hence Responsible Entity fees and other expenses have been recognised in the Statement of comprehensive income net of the amount of GST recoverable from the Australian Taxation Offce (ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the Statement of financial position. Cash flows relating to GST are included in the Statement of cash flows on a gross basis. (p) Use of estimates In preparing the financial statements no estimates were made which included a high degree of judgement. (q) Rounding of amounts Amounts in the financial report have been rounded off to the nearest dollar unless otherwise indicated. -13-

15 3 Financial risk management The Fund's activities expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Fund's overall risk management programme focuses on ensuring compliance with the Fund's Product Disclosure Statement and seeks to maximise the returns derived for the level of risk to which the Fund is exposed. Financial risk management is carried out by the Responsible Entity under policies approved by the Board of Directors of the Responsible Entity. The Fund uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ratings analysis for credit risk. (a) Market risk (i) Price Risk The Fund trades in financial instruments by taking positions in unlisted unit trusts. All securities investments present a risk of loss of capital. The investment manager of the underlying trust moderates this risk through a careful selection of securities within specified limits. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The underlying trust's overall market positions are monitored on a daily basis by the underlying trust's investment manager. In accordance with the Fund's policy, the risk management department of the Fund's Responsible Entity monitors the Fund's overall market price sensitivity on a daily basis. This is done by seeking to ensure the Fund is fully invested in the underlying trust as per the Fund's Product Disclosure Statement. The Fund's unlisted investment is susceptible to market price risk arising from uncertainties about future prices of the underlying trust. Note 3(b) summarises the impact of an increase/(decrease) of the underlying trust's unit price on the Fund's net assets attributable to unitholders at 30 June The analysis is based on the assumptions that the underlying trust's unit price increased/(decreased) by 10% (2011: 10%) in one day with all other variables held constant. The impact mainly arises from the possible change in the fair value of the investment in the unlisted unit trust. (ii) Foreign exchange risk The Fund is not exposed to foreign exchange risk as all assets are denominated in Australian dollars. (iii) Interest rate risk The Fund's interest bearing financial assets expose it to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The risk is measured using sensitivity analysis as set out in note 3(b). The interest rate risk disclosures have been prepared on the basis of the Fund's direct investment in cash and cash equivalents and not on a look-through basis for investments held indirectly through the underlying trust. Consequently, the disclosure of interest rate risk below may not represent the true interest rate risk profile of the Fund where the Fund has a significant investment in an underlying trust which also has exposure to interest rate markets. The Fund may have an indirect exposure to bonds through its investment in the Fusion Fund - Cash Trust (the "Cash Trust" as part of the Threshold Management. Movements in interest rates will affect the amount of interest earned on cash deposits in the Cash Trust. -14-

16 3 Financial risk management (b) Summarised sensitivity analysis The following table summarises the sensitivity of the Fund's operating profit and net assets attributable to unitholders to interest rate risk and price risk. The reasonably possible movements in the risk variables have been determined based on Management's best estimate, having regard to a number of factors, including historical levels of changes in underlying funds investment unit price. However, actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of the economies, markets and securities in which the underlying fund invests. As a result, historic variations in risk variables are not a definitive indicator of future variations in the risk variables. The variables for price risk represent the impact of one day's movement in the price of the underlying equity investment before taking into account the effect of Threshold Management. The Fund uses Threshold Management as an investment technique to manage price risk. Threshold Management seeks to ensure that the value of the Fund's units is at least equal to the original investment at the Threshold Management expiry date as specified in the Product Disclosure Statement. The table below summarises the impact of an increase/(decrease) of interest rates on the Fund's operating profit and net assets attributable to unitholders through changes in fair value or changes in future cash flows. The analysis is based on the assumption that interest rates changed by +/- 100 basis points (2011: +/- 25 basis points) from the year end rates with all other variables held constant. The impact mainly arises from changes in the fair value of cash and cash equivalents. + + Price risk I Interest rate risk Impact on operating profit 30 June June 2011 (42,147) 42,147 (1,191) (51 ) 1, (c) Credit risk The Fund is exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due. The exposure to credit risk for cash and cash equivalents is low as all counterparties have a rating of at least A- (2011: A-) as determined by Standard and Poor's rating agency. Other than the cash and cash equivalents and the investment in the underlying trust, the Fund does not have a concentration of a credit risk that arises from an exposure to a single counterparty. Furthermore, the Fund does not have a material exposure to a group of counterparties which are expected to be affected similarly by changes in economic or other conditions. There are no non-performing assets in the Fund. The carrying amount of the financial assets best represents the Fund's maximum credit risk exposure at the reporting date. The Fund manages its exposure to credit risk by dealing with well established financial institutions that the Responsible Entity has assessed to have a high quality credit standing. The credit standing of these counterparties is monitored on a regular basis. The Compliance Committee of the Responsible Entity reviews any identified exceptions to internal risk policies and procedures on a quarterly basis. (d) Liquidity risk Liquidity risk is the risk that the Fund will experience difficulty in either realising assets or otherwise raising sufficient funds to satisfy commitments. There is no significant direct liquidity risk in the Fund as the Responsible Entity has discretion whether to accept or reject a redemption request as stipulated in the Product Disclosure Statement. - i 5-

17 3 Financial risk management (e) Fair value of financial assets and liabilties The carrying amounts of the Fund's assets and liabilities at the reporting date approximate their fair value. The Fund's investments can include financial assets that are not held for trading purposes and which may be sold. These are investments in unlisted unit trusts. Investments in unlisted unit trusts are valued by reference to the prevailing redemption value as reported by the managers of such trusts at the reporting date. The inputs for the redemption value are based on market observable data. Any gains and losses (realised and unrealised) are included within total net investment income in the Statement of comprehensive income. Fair value hierarchy The Fund classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The appropriate level for an instrument is determined on the basis of the lowest level input that is significant to the fair value measurement. The following table summarises the levels of the fair value hierarchy for financial instruments measured at fair value as at 30 June 2012 and 30 June 2011 : 30 June 2012 Assets Level 1 Level 2 Level 3 Total Unlisted unit trusts Total Assets 30 June 2011 Assets Level 1 Level 2 Level 3 Total Unlisted unit trusts Total Assets 421, , , ,468 There have been no transfers between levels for the year ended 30 June 2012 (2011: Nil). Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. These include unlisted unit trusts valued at the redemption value per unit, as reported by the managers of such trusts. -16-

18 4 Auditor's remuneration During the year the following fees were paid or payable for services provided by the auditor of the Fund: 30 June June 2011 Audit services Ernst & Young Australian Firm Audit of financial reports Other audit work under the Corporations Act 2001 Total remuneration for audit services 3, ,086 6, ,310 Audit fees are paid out of the Responsible Entity's own resources. All other expenses are paid by the Fund. 5 Net assets attributable to unitholders As stipulated within the Fund Constitution, each unit represents an equal undivided interest in the Fund's assets. There are 8 classes of unitholders in the Fund. The units are held in separate classes, by release, for the purpose of Threshold Management. Movements in number of units and net assets attributable to unitholders during the year were as follows: 30 June 2012 No. 30 June 2011 No. As at 30 June June 2011 Net assets attributable to unitholders - June 2003 release Opening balance Applications Redemptions Units issued upon reinvestment of distributions (Decrease)/increase in net assets attributable to unitholders Closing balance 716,731 (737,181) 20, June 2012 No. 748, , ,618 (32,178) (393,887) (19,468) 11,800 (31,496) 16, , ,583 As at 30 June 30 June 30 June No. Net assets attributable to unitholders - December 2003 release Opening balance Applications Redemptions Units issued upon reinvestment of distributions (Decrease)/increase in net assets attributable to unitholders Closing balance 15 3,173 (15) (3,158) ,765 (8) (1,868) (1 )

19 5 Net assets attributable to unitholders As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - April 2004 release Opening balance Applications Redemptions (9) (5) Units issued upon reinvestment of distributions Increase/(decrease) in net assets attributable to unitholders Closing balance 9 5 As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - June 2004 release Opening balance 1,917 1,917 1,106 1,066 Applications Redemptions (1,972) (1,094) Units issued upon reinvestment of distributions (Decrease)/increase in net assets attributable to unitholders (44) 40 Closing balance 1,917 1,106 As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - November 2004 release Opening balance Applications Redemptions (868) (487) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 3 Closing balance As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - December 2005 release Opening balance 66,380 36,925 Applications 21,496 12,706 Redemptions (87,876) (50,356) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 725 Closing balance -18-

20 5 Net assets attributable to unitholders As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - June 2006 release Opening balance 66,875 37,202 Applications Redemptions Units issued upon reinvestment of distributions (66,875) (38,862) Increase in net assets attributable to unitholders 1,660 Closing balance As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - November 2006 release Opening balance 22,913 35,339 13,222 19,659 Applications Redemptions Units issued upon reinvestment of distributions (23,567) 654 (12,426) (12,315) 378 (7,447) (Decrease)/increase in net assets attributable to unitholders (1,285) 1,010 Closing balance 22,913 13,222 Total net assets attributable to unitholders 427,925 Capital risk management The Fund manages its 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 on a daily basis as the Fund is potentially subject to a daily movement of investment in an underlying fund as part of the Threshold Management. 6 Cash and cash equivalents 30 June 2012 As at 30 June 2011 Cash at bank 119,093 20,461 Cash at the end of the financial year, as shown in the Statement of cash flows, is reconciled to the related items in the Statement of financial position as detailed above. These accounts are interest bearing. - i 9-

21 7 Financial assets held at fair value through profit or loss Designated at fair value through profit or loss Unlisted unit trusts Units in Australian equity trust Total unlisted unit trusts 30 June 2012 Fair value As at 30 June 2011 Fair value ,468 8 Related party disclosures (a) Responsible Entity The Responsible Entity of Fusion Fund - UBS Australian Share Fund is Macquarie Financial Products Management Limited (MFPML), a wholly owned subsidiary of Macquarie Group Limited. (b) Details of Key Management Personnel (i) Directors The Directors of MFPML are considered to be Key Management Personnel of the Fund. The Directors of MFPML in office during the year and up to the date of the report are: Peter Lucas William Fox Jason King Antony Clubb Anthony Abraham (appointed on 19 December 2011) (ii) Other Key Management Personnel There were no other persons with responsibility for planning, directing and controllng the activities of the Fund, directly or indirectly during the financial year. (iii) Compensation of Key Management Personnel No amount is paid by the Fund directly to the Directors of the Responsible Entity. Consequently, no compensation as defined in AASB 124 Related Party Disclosures is paid by the Fund to the Directors as Key Management PersonneL. Compensation is paid to the Responsible Entity in the form of fees and is disclosed below. (c) Fees Under the terms of the Fund Constitution, the Responsible Entity is entitled to be paid from the assets of the Fund a fee of up to 3% per annum (GST exclusive) of the value of the assets calculated daily, based on the value of the assets on each day and payable from the assets on 30 June in each year. The current fee charged by the Responsible Entity is 1 % per annum (GST exclusive) (2011: 1 %). -20-

22 8 Related party disclosures (c) Fees All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable at the year end between the Fund and the Responsible Entity are as follows: Year ended 30 June 30 June Management fees paid by the Fund to the Responsible Entity Responsible Entity fees incurred and other transactions Administration expenses incurred by the Responsible Entity which are reimbursed in accordance with the Fund Constitution Aggregate amounts payable to the Responsible Entity at the reporting date 6,677 2, ,389 (d) Unitholdings of Key Management Personnel There were no interests held in the Fund by the Responsible Entity or a related party of the Responsible Entity during the year (2011: Nil). (e) Key Management Personnel Remuneration Key Management Personnel are paid by Macquarie Financial Products Management Limited. Payments made from the Fund to Macquarie Financial Products Management Limited do not include any amounts directly attributable to the compensation of Key Management PersonneL. (f) Key Management Personnel loan disclosures The Fund has not made, guaranteed or secured, directly or indirectly, any loans to Key Management Personnel or their personally related entities at any time during the year (2011: Nil). (g) Investments The Fund held no investments in any schemes which are also managed by MFPML or its related parties (2011: Nil). (h) Other transactions within the Fund From time to time the Directors of the Responsible Entity, or their related entities, may invest in or withdraw from the Fund. These investments or withdrawals are on the same terms and conditions as those entered into by other Fund investors. Apart from those details disclosed in this note, no Director has entered into a material contract with the Fund since the end of the previous financial year and there were no material contracts involving Directors' interests existing at year end. The Fund holds cash balances with Macquarie Bank balances are held on normal commercial terms. Limited, the parent entity of the Responsible Entity. These Bond Street Custodians Limited, a wholly owned subsidiary of Macquarie Group Limited, is the custodian of the Fund

23 9 Reconciliation of profit/(ioss) to net cash provided by/(used in) operating activities Year ended 30 June 30 June (a) Reconciliation of profit/(ioss) to net cash provided by/(used in) operating activities Net (Ioss)/profit before finance costs Net losses/(gains) on financial instruments held at fair value through profit or loss Proceeds from sale of financial instruments at fair value through profi or loss Purchase of financial instruments at fair value through profit or loss and derivative financial instruments Distribution income reinvested Net change in amounts payable and other liabilities Net change in amounts receivable and other assets Net cash provided by operating activities (b) Components of cash and cash equivalents Cash as at the end of the financial year as shown in the Statement of cash flows is reconciled to the Statement of financial position as follows: Cash and cash equivalents (c) Non-cash financing and investing activities During the year, the following distribution payments were satisfied by the issue of units in the Fund (27,131) 33,402 32,825 (19,982) 412, ,531 (5,831 ) (12,706) (12,530) (14,524) (3,288) (7,341) 4,654 (2,060) 401,534 93, ,093 20,461 12, Events occurring after the year end No significant events have occurred since year end which would impact on the financial position of the Fund disclosed in the Statement of financial position as at 30 June 2012 or on the results and cash flows of the Fund for the year ended on that date. 11 Contingent assets and liabilities and commitments There are no outstanding contingent assets, liabilities or commitments as at 30 June 2012 and 30 June

24 Directors' declaration 30 June 2012 Directors' declaration In the opinion of the Directors of the Responsible Entity: (a) the financial statements and notes set out on pages 6 to 22 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the Fund's financial position as at 30 June 2012 and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Fund will be able to pay its debts as and when they become due and payable. The Directors declare that the notes to the financial statements include an explicit and unreserved statement of compliance with the International Financial Reporting Standards (see note 2(a)). This declaration is made in accordance with a resolution of the Directors. Director r-- Sydney 26 September 'if!

25 "'" ãj ERNST & YOUNG Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: Independent auditor's report to the unitholders of Fusion Fund - UBS Australian Share Fund We have audited the accompanying financial report of Fusion Fund - UBS Australian Share Fund (the "Fund"), which comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration. Directors' responsibilty for the financial report The directors of Macquarie Financial Products Management Limited, the responsible entity of the Fund, 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 controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with 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. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about 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 judgment, 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 controls relevant to the 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 responsible entity's internal controls, 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit we have complied with the independence requirements of the Corporations Act We have given to the directors of the responsible entity a written Auditor's Independence Declaration, a copy of which is included with the directors' report. Liability limited by a scheme approved under Professional Standards Legislation

26 ''''. ãj ERNST & YOUNG Opinion In our opinion: a. the financial report of Fusion Fund - UBS Australian Share Fund is in accordance with the Corporations Act 2001, including: giving a true and fair view of the Fund's financial position as at 30 June 2012 and of its performance for the year ended on that date; and ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. Ernst & Young Darren Handley-Greaves Partner Sydney 26 September 2012