MACQUARIE UNIT TRUST SERIES REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

Transcription

1 REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 Investments in the Macquarie Unit Trust Series are not deposits with or liabilities of Macquarie Bank Limited ABN ( Macquarie ) or any Macquarie Group company and are subject to investments risk, including possible delays in repayment and loss of income and capital invested. None of Macquarie or any other Macquarie Group company guarantees the performance of the Macquarie Unit Trust Series, the repayment of capital from the Macquarie Unit Trust Series or any particular rate of return FANL AD4 JCCH RPT

2 TABLE OF CONTENTS MANAGEMENT AND ADMINISTRATION... 1 STATEMENT OF RESPONSIBILITIES OF THE MANAGER AND THE TRUSTEE... 2 REPORT OF THE TRUSTEE TO THE UNITHOLDERS... 3 INDEPENDENT AUDITOR S REPORT... 4 STATEMENTS OF COMPREHENSIVE INCOME... 6 STATEMENTS OF FINANCIAL POSITION... 8 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS The Fund and the Sub-Funds Summary of significant accounting policies Net assets attributable to unitholders Financial risk management Cash and cash equivalents Amount due from brokers Financial assets held at fair value through profit or loss Net gains on financial instruments held at fair value through profit or loss Related party transactions/transactions with the Trustee, the Manager and their connected persons Taxation Soft commission arrangements Units Contingent assets and liabilities and commitments Events occurring after year end Approval of financial statements INVESTMENT PORTFOLIO (UN-AUDITED) STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO (UN-AUDITED) PERFORMANCE RECORD (UN-AUDITED)... 61

3 MANAGEMENT AND ADMINISTRATION Directors of the Manager Trustee and Registrar John Charles Bugg HSBC Trustee (Cayman) Limited Andrew Alexander P.O. Box 484 Axel Armin Maier HSBC House 68 West Bay Road Grand Cayman KY Cayman Islands Manager Service Provider to the Trustee Macquarie Funds Management Hong Kong Limited HSBC Institutional Trust Services (Asia) Limited Level 18, One International Finance Centre No 1 Queen s Road 1 Harbour View Road Central Central, Hong Kong Hong Kong Sub-Manager Auditor MQ Portfolio Management Limited Ernst & Young Ltd (ABN ) 62 Forum Lane, Camana Bay 50 Martin Place P.O. Box 510 Sydney, NSW 2000 Grand Cayman, KY Australia Cayman Islands Legal Advisors As to matters of Cayman Islands law Maples and Calder 53rd Floor, The Center 99 Queen's Road Central Hong Kong As to matters of Hong Kong law Deacons 5th Floor, Alexandra House Chater Road Central Hong Kong 1

4 STATEMENT OF RESPONSIBILITIES OF THE MANAGER AND THE TRUSTEE Manager s responsibilities The Manager of the Macquarie IPO China Concentrated Core Fund, Macquarie IPO China Gateway Fund, Macquarie Asia New Stars Fund and the Macquarie Asia Infrastructure Equity Fund (each a sub-fund of Macquarie Unit Trust Series (collectively the Fund and individually the Sub-Funds )) is required by the Code on Unit Trusts and Mutual Funds established by the Securities and Futures Commission of Hong Kong (the SFC Code ) and the Trust Deed dated 23 January 2007 (the Trust Deed ) to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of each of the Sub-Funds at the end of that period and of the transactions for the period then ended. In respect of these financial statements the Manager is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are prudent and reasonable; and prepare or arrange for the preparation of the financial statements on the basis that each of the Sub- Funds will continue in operation unless it is inappropriate to presume this. The Manager is also required to manage the Fund in accordance with the Trust Deed and take reasonable steps for the prevention and detection of fraud and other irregularities. The Fund is an umbrella unit trust governed by its Trust Deed. 30 June 2014, the Fund had established the following Sub-Funds that are authorized by the Securities and Futures Commission of Hong Kong: Macquarie IPO China Concentrated Core Fund Macquarie IPO China Gateway Fund Macquarie Asia New Stars Fund 30 June 2013, the Fund had established the following Sub-Fund that is not authorized by the Securities and Futures Commission of Hong Kong and is not available to Hong Kong residents: Macquarie Asia Infrastructure Equity Fund This financial report presents the Sub-Funds of the Macquarie Unit Trust Series, authorized by the Securities and Futures Commission of Hong Kong. The Sub-Fund not authorized by the Securities and Futures Commission of Hong Kong prepares a separate financial report. Trustee s responsibilities The Trustee of the Fund and the Sub-Funds is required to: ensure that the Fund and the Sub-Funds are managed by the Manager in accordance with the Trust Deed and that the investment and borrowing powers are complied with; satisfy itself that sufficient accounting and other records have been maintained; safeguard the property of the Fund and the Sub-Funds and rights attaching thereto; and report to the unitholders for each annual accounting year on the conduct of the Manager in the management of the Fund and the Sub-Funds. 2

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6 Ernst & Young Ltd. 62 Forum Lane Camana Bay P.O. Box 510 Grand Cayman KY CAYMAN ISLANDS Main tel: Fax: ey.com Independent Auditors Report The Trustee Macquarie Unit Trust Series Macquarie IPO China Concentrated Core Fund Macquarie Unit Trust Series Macquarie IPO China Gateway Fund Macquarie Unit Trust Series Macquarie Asia New Stars Fund We have audited the accompanying financial statements of Macquarie Unit Trust Series Macquarie IPO China Concentrated Core Fund, Macquarie Unit Trust Series Macquarie IPO China Gateway Fund and Macquarie Unit Trust Series Macquarie Asia New Stars Fund (the Sub-Funds ) which comprise the statement of financial position as at 30 June 2014, and the statement of comprehensive income, statement of changes in net assets attributable to unitholders and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. This report is made solely to the Trustee, as a body. Our audit work has been undertaken so that we might state to the Trustee those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Sub-Funds and the Trustee as a body, for our audit work, for this report, or for the opinions we have formed. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4 A member firm of Ernst & Young Global Limited

7 Independent Auditors Report (continued) Auditors Responsibility (continued) An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements 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 management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Macquarie Unit Trust Series Macquarie IPO China Concentrated Core Fund, Macquarie Unit Trust Series Macquarie IPO China Gateway Fund and Macquarie Unit Trust Series Macquarie Asia New Stars Fund as at 30 June 2014, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. 29 October

8 STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014 MACQUARIE IPO CHINA CONCENTRATED CORE FUND MACQUARIE IPO CHINA GATEWAY FUND MACQUARIE ASIA NEW STARS FUND Note Year ended 30 June 2014 Year ended 30 June 2014 Year ended 30 June 2014 Income Interest income ,884 Dividend income 626,694 1,208,023 3,423,847 Net gains on financial assets at fair value through profit or loss 8 938,214 1,609,864 37,699,547 Net foreign exchange losses 8 (2,209) (7,158) (51,215) Total income 1,563,069 2,811,430 41,075,063 Expenses Management fee 9(a) 448, ,200 2,170,300 Performance fee 9(b) - - 1,770,457 Administration fee 9(c) 74, , ,717 Transaction handling fee 9(d) 10,600 11, ,151 Transaction costs 108, ,134 1,890,879 Audit fee 19,520 19,519 19,522 Legal and professional fees 1,220 4,423 4,423 Bank charges 4,306 1, Other expenses 39,878 74, ,937 Total expenses 706,987 1,364,995 6,471,559 Operating profit 856,082 1,446,435 34,603,504 Finance costs attributable to unitholders Increase in net assets attributable to unitholders from operations (856,082) (1,446,435) (34,603,504) The notes on pages 14 to 38 are an integral part of these financial statements. 6

9 STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2013 MACQUARIE IPO CHINA CONCENTRATED CORE FUND MACQUARIE IPO CHINA GATEWAY FUND MACQUARIE ASIA NEW STARS FUND Note Year ended 30 June 2013 Year ended 30 June 2013 Year ended 30 June 2013 Income Interest income Dividend income 642,602 1,101, ,505 Net gains on financial assets at fair value through profit or loss 8 6,242,976 15,378,135 14,129,073 Net foreign exchange gains/(losses) ,430 (99,345) Total income 6,886,222 16,483,699 15,023,008 Expenses Management fee 9(a) 493, , ,863 Performance fee 9(b) - - 6,250 Administration fee 9(c) 82, ,669 59,311 Transaction handling fee 9(d) 11,525 11,725 66,159 Transaction costs 88, , ,620 Audit fee 25,268 25,268 25,267 Legal and professional fees 1,219 1,219 1,219 Bank charges 3,926 1,251 1,047 Other expenses 40,566 70,185 52,333 Total expenses 746,176 1,321,590 1,022,069 Operating profit 6,140,046 15,162,109 14,000,939 Finance costs attributable to unitholders Increase in net assets attributable to unitholders from operations (6,140,046) (15,162,109) (14,000,939) The notes on pages 14 to 38 are an integral part of these financial statements. 7

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11 STATEMENTS OF FINANCIAL POSITION (CONTINUED) AS AT 30 JUNE 2013 MACQUARIE IPO CHINA CONCENTRATED CORE FUND 30 June 2013 MACQUARIE IPO CHINA GATEWAY FUND 30 June 2013 MACQUARIE ASIA NEW STARS FUND 30 June 2013 Note Assets Cash and cash equivalents 5 1,231,043 3,120,529 3,519,641 Amounts receivable on subscription - 114, ,038 Amounts due from brokers 6 84,684 4,214, ,719 Dividends receivable 225, , ,767 Other receivables Financial assets held at fair value through profit or loss 7 29,887,385 52,236,709 56,499,639 Total assets 31,428,578 60,018,400 60,849,810 Liabilities Amounts payable on redemption - 368,874 1,791,564 Amounts due to brokers 49,398 94, ,811 Management fee payable 9(a) 123, ,568 93,812 Performance fee payable 9(b) - - 6,151 Administration fee payable 9(c) 20,508 38,261 15,635 Other payables 28,026 34,517 32,169 Total liabilities (excluding net assets attributable to unitholders) 220, ,231 2,584,142 Net assets attributable to unitholders 31,207,598 59,253,169 58,265,668 Represented by: Net assets attributable to unitholders (at last traded market prices) 31,323,817 59,458,933 58,615,706 Adjustment from last traded market prices to bid market prices 3 (116,219) (205,764) (350,038) Number of units in issue Class A1 7,033,586 7,483, ,373 Number of units in issue Class A2 304, ,555 1,028,976 Number of units in issue Class A3-52,700 - Number of units in issue Class I - - 2,099,496 Net assets attributable to unitholders per unit (at last traded market prices) Class A Net assets attributable to unitholders per unit (at last traded market prices) Class A Net assets attributable to unitholders per unit (at last traded market prices) Class A3 (HKD) Net assets attributable to unitholders per unit (at last traded market prices) Class I The notes on pages 14 to 38 are an integral part of these financial statements. 9

12 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS FOR THE YEAR ENDED 30 JUNE 2014 MACQUARIE IPO CHINA CONCENTRATED CORE FUND Year ended 30 June 2014 MACQUARIE IPO CHINA GATEWAY FUND Year ended 30 June 2014 MACQUARIE ASIA NEW STARS FUND Year ended 30 June 2014 Net assets attributable to unitholders at the beginning of the year 31,207,598 59,253,169 58,265,668 Proceeds on units issued 440,947 10,796, ,383,958 Redemption of units (5,980,188) (18,607,961) (10,499,063) Net (decrease)/increase from unit transactions (5,539,241) (7,811,171) 207,884,895 Increase in net assets attributable to unitholders from operations 856,082 1,446,435 34,603,504 Net assets attributable to unitholders at the end of the year 26,524,439 52,888, ,754,067 Units in issue at the beginning of the year 7,337,728 8,044,250 3,280,845 Units issued 45, ,935 10,628,021 Units redeemed (1,354,439) (2,179,715) (537,140) Units in issue at the end of the year 6,028,886 6,846,470 13,371,726 The notes on pages 14 to 38 are an integral part of these financial statements. 10

13 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2013 MACQUARIE IPO CHINA CONCENTRATED CORE FUND MACQUARIE IPO CHINA GATEWAY FUND MACQUARIE ASIA NEW STARS FUND Year ended Year ended Year ended 30 June June June 2013 Net assets attributable to unitholders at the beginning of the year 32,913,304 56,618,715 41,132,515 Proceeds on units issued 954,460 6,959,373 14,206,498 Redemption of units (8,800,212) (19,487,028) (11,074,284) Net (decrease)/increase from unit transactions (7,845,752) (12,527,655) 3,132,214 Increase in net assets attributable to unitholders from operations 6,140,046 15,162,109 14,000,939 Net assets attributable to unitholders at the end of the year 31,207,598 59,253,169 58,265,668 Units in issue at the beginning of the year 9,425,821 10,141,684 3,115,404 Units issued 109, , ,765 Units redeemed (2,197,960) (2,768,992) (673,324) Units in issue at the end of the year 7,337,728 8,044,250 3,280,845 The notes on pages 14 to 38 are an integral part of these financial statements. 11

14 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014 MACQUARIE IPO CHINA CONCENTRATED CORE FUND MACQUARIE IPO CHINA GATEWAY FUND MACQUARIE ASIA NEW STARS FUND Year ended Year ended Year ended 30 June June June 2014 Note Cash flow from operating activities Payment on purchase of financial assets at fair value through profit or loss (12,796,600) (32,516,023) (399,085,081) Proceeds from sales of financial assets at fair value through profit or loss 17,829,714 38,899, ,409,629 Interest received ,885 Dividends received 642,359 1,123,410 3,359,352 Net operating expenses paid (716,175) (1,387,092) (3,976,331) Net cash inflow/(outflow) from operating activities 4,959,670 6,120,474 (203,289,546) Cash flows from financing activities Proceeds from issue of units 440,947 10,851, ,361,224 Payment on redemption of units (5,866,035) (18,691,029) (10,209,860) Net cash (outflow)/inflow from financing activities (5,425,088) (7,839,326) 208,151,364 Net (decrease)/increase in cash and cash equivalents (465,418) (1,718,852) 4,861,818 Cash and cash equivalents at the beginning of year 1,231,043 3,120,529 3,519,641 Cash and cash equivalents at end of the year, represented by bank balances 5 765,625 1,401,677 8,381,459 The notes on pages 14 to 38 are an integral part of these financial statements. 12

15 STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2013 MACQUARIE IPO CHINA CONCENTRATED CORE FUND MACQUARIE IPO CHINA GATEWAY FUND MACQUARIE ASIA NEW STARS FUND Year ended Year ended Year ended 30 June June June 2013 Note Cash flow from operating activities Payment on purchase of financial assets at fair value through profit or loss (10,648,379) (20,851,987) (68,989,599) Proceeds from sales of financial assets at fair value through profit or loss 17,563,548 33,873,523 65,289,806 Interest received Dividends received 713,466 1,260, ,006 Net operating expenses paid (758,069) (1,317,637) (1,102,735) Net cash inflow/(outflow) from operating activities 6,871,116 12,965,618 (3,885,751) Cash flows from financing activities Proceeds from issue of units 954,460 6,848,848 14,099,319 Payment on redemption of units (8,859,284) (19,438,392) (9,282,720) Net cash (outflow)/inflow from financing activities (7,904,824) (12,589,544) 4,816,599 Net (decrease)/increase in cash and cash equivalents (1,033,708) 376, ,848 Cash and cash equivalents at the beginning of year 2,264,751 2,744,455 2,588,793 Cash and cash equivalents at end of the year, represented by bank balances 5 1,231,043 3,120,529 3,519,641 The notes on pages 14 to 38 are an integral part of these financial statements. 13

16 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE The Fund and the Sub-Funds Macquarie Unit Trust Series (the Fund ) is a Cayman Islands based umbrella trust. The Fund was established as an exempted trust under the laws of the Cayman Islands by a trust deed (the Trust Deed ) dated 23 January 2007, made between MQ Portfolio Management Limited as manager and HSBC Trustee (Cayman) Limited as trustee (the Trustee ). Macquarie Funds Management Hong Kong Limited ( MFMHKL ) (the Manager ) replaced MQ Portfolio Management Limited as manager of the Fund by Deed of Retirement of Manager and Appointment of New Manager dated 27 May The Manager is registered with Securities and Futures Commission of Hong Kong and Securities and Exchange Commission of the United States of America. MFMHKL has appointed MQ Portfolio Management Limited ( MQPML ) as the sub-manager (the Sub-Manager), in respect of the Fund pursuant to a submanagement agreement. HSBC Trustee (Cayman) Limited is the trustee (the Trustee ) of the Fund. The Trust Deed of the Fund provides for the establishment of a number of different sub-funds. At 30 June 2014, there were four established sub-funds: Macquarie IPO China Concentrated Core Fund, Macquarie IPO China Gateway Fund, Macquarie Asia New Stars Fund and Macquarie Asia Infrastructure Equity Fund. This financial report presents the financial statements of three of the Sub-Funds. Macquarie IPO China Concentrated Core Fund commenced operations on 8 March 2007, Macquarie IPO China Gateway Fund commenced operations on 8 August 2007, Macquarie Asia New Stars Fund commenced operations on 5 December 2007, (individually known as the Sub-Fund ) and were established and constituted respectively by a deed supplemental to the Trust Deed (the Supplemental Deeds ). A separate financial report has been prepared for the other Sub-Fund. Macquarie IPO China Concentrated Core Fund, Macquarie IPO China Gateway Fund, Macquarie Asia New Stars Fund (the Sub-Funds ) are authorised by the Securities and Futures Commission of Hong Kong under Section 104(1) of the Hong Kong Securities and Futures Ordinance and are required to comply with the Code on Unit Trusts and Mutual Funds established by the Securities and Futures Commission of Hong Kong (the SFC Code ). The Macquarie Asia Infrastructure Equity is not presented in this report as it is not registered with the Securities and Futures Commission of Hong Kong, and consequently is not available to Hong Kong residents. The investment objective of each of the Sub-Funds is set out in note 4(a). 2 Summary of significant accounting policies The principal accounting policies adopted in the preparation of these financial statements are set out below. a) Basis of preparation The financial statements of the Sub-Funds have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss. The financial statements of the Sub-Funds are presented under a multi-column format. Each column represents a separate and individual reporting entity, namely Macquarie IPO China Concentrated Core Fund, Macquarie IPO China Gateway Fund, and Macquarie Asia New Stars Fund. The Fund is not a reporting entity. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Manager and the Trustee to exercise their judgment in the process of applying the accounting policies of each of the Sub-Funds. The areas involving a higher degree of judgment or complexity are disclosed in note 4. The term net assets refers to net assets attributable and redeemable by unitholders unless otherwise stated. 14

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Summary of significant accounting policies (continued) a) Basis of preparation (continued) New accounting standards Certain new accounting standards and interpretations have been recently issued or amended which have been adopted by the Sub-Funds for the annual reporting year ended 30 June The nature and the impact of new standards and amendments are described below. i) IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under IFRS. IFRS 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. Application of IFRS 13 has impacted the Sub-Funds financial position and performance as the Sub-Funds have changed its valuation input to utilize the last traded market price of financial assets and financial liabilities as explained in note 2(c). Adoption of this standard has not had any effect on the financial report disclosures of the Sub-Funds. ii) IFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 7 This standard introduces new disclosures for financial assets and liabilities that are offset against one another and that present the net amount in the statement of financial position in accordance with IAS 32 Financial Instruments: Presentation. The disclosure requirements are also applicable to derivative financial instruments that are subject to enforceable master netting arrangements or similar agreements, irrespective of whether the financial instruments are currently offset. The application of this standard has not had any effect on the financial position, performance or financial report disclosures of the Sub-Funds. iii) IFRS 10 Consolidated Financial Statements IFRS 10 establishes a new control model that applies to all entities. It replaces parts of IAS 27 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC 12 Consolidation -Special Purpose Entities. The application of this standard has not had any effect on the financial position, performance or financial report disclosures of the Sub-Funds. Standards issued but not yet effective The following standards issued but not yet effective up to the date of issuance of the Sub-Funds financial statements are listed below. The Sub-Funds intend to adopt applicable standards when they become effective. i) Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 The amendments clarify the meaning of currently has a legally enforceable right to set off. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments are not expected to impact the Sub-Funds' financial position, performance or financial report disclosures. The amendments are effective for reporting periods beginning on or after 1 January 2014 with early adoption permitted. 15

18 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Summary of significant accounting policies (continued) a) Basis of preparation (continued) Standards issues but not yet effective (continued) ii) IFRS 9 Financial Instruments: Classification and Measurement IFRS 9 as issued reflects the first phase of the International Accounting Standards Board (IASB) s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The mandatory effective date of IFRS 9 is for reporting periods beginning on or after 1 January 2018 with early adoption permitted. Standards and interpretations that are not expected to have material impact on the Sub-Funds have not been included. b) Foreign currency translation i) Functional and presentation currency In view of the international nature of the operations of each of the Sub-Funds, the amounts shown in these financial statements are presented in United States dollars ( ) which are the Sub-Funds functional and presentation currency. The Manager considers the United States dollar to be the functional currency of the Macquarie IPO China Concentrated Core Fund, the Macquarie IPO China Gateway Fund, and the Macquarie Asia New Stars Fund due to unitholders funds being raised in United States dollars. ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of comprehensive income. Translation differences on non-monetary financial assets such as financial assets at fair value through profit or loss are recognised on the statements of comprehensive income within the fair value net gains or losses. c) Financial assets at fair value through profit or loss i) Classification The Sub-Funds investments are categorised 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 include investments in equity securities. Financial assets and financial liabilities may be designated at fair value through profit or loss at inception if they are managed and their performance evaluated on a fair value basis in accordance with the Sub-Funds documented investment strategy. The Sub-Funds policy is for the Manager to evaluate the information about these financial assets on a fair value basis together with other related financial information. ii) Recognition/derecognition Purchases and sales of investments are recognised on the trade date - the date on which each of the Sub- Funds commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or each of the Sub-Funds has transferred substantially all risks and rewards of ownership. iii) Measurement Financial assets and liabilities held at fair value through profit or loss are measured initially at fair value excluding any transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all instruments held at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the statement of comprehensive income. 16

19 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Summary of significant accounting policies (continued) c) Financial assets at fair value through profit or loss (continued) Fair value in an active market The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the statement of financial position date. Prior to 1 July 2013, the quoted market price used for financial assets held by the Sub-Funds was the current bid price; the quoted market price for financial liabilities was the current asking price. Following adoption of IFRS 13, effective from 1 January 2013, the Sub-Funds changed its fair valuation input to utilise the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, management will determine the point within the bid-ask spread that is most representative of fair value. Prior year comparatives have not been changed as permitted under IFRS 13. Fair value in an inactive or unquoted market The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques.these include the use of recent arm s length market transactions, reference to the 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 in a market rate at the statement of financial position date applicable for an instrument with similer terms and conditions. d) Income and expense Dividend income is recognised in the statements of comprehensive income when the right to receive payment by each of the Sub-Funds is established. Interest income and expense is recognised in the statements of comprehensive income on a time-proportion basis using the effective interest method. Expenses are accounted for on an accruals basis and charged to the statements of comprehensive income as incurred. e) Payables Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. f) Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest method, less provision for impairment. g) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash includes cash on hand and deposits held at call with financial institutions. Cash equivalents include other short term, highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes. Bank overdrafts and borrowings, if any, are shown separately on the statement of financial position. Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Sub-Funds main income generating activity. 17

20 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Summary of significant accounting policies (continued) h) Amounts due from and due to brokers Amounts due from and due to brokers represent receivables for listed equity securities sold and payables for listed equity securities purchased that have been contracted for but not yet settled or delivered on the year end date, respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment for amounts due from brokers. A provision for impairment of amounts due from brokers is established when there is objective evidence that each of the Sub-Funds will not be able to collect all amounts due from the relevant broker. Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amounts due from brokers are impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. 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 exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, each of the Sub-Funds estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. i) Units Units of each of the Sub-Funds are redeemable at the option of the unitholders and are classified as financial liabilities. The units can be put back to the respective Sub-Fund for cash equal to a proportionate share of the respective Sub-Fund s net asset value. The unit is carried at the redemption amount that is payable at the year end date if the unitholder exercises the right to put the units back to the respective Sub-Fund. Units are issued and redeemed at the unitholders option at prices based on the Sub-Fund s net asset value per unit at the time of issue or redemption. The respective Sub-Fund s net asset value per unit is calculated by dividing the net assets attributable to the unitholders with the total number of outstanding units. In accordance with the provisions of the Explanatory Memorandum of each of the Sub-Funds and as stated in note 2(c), investment positions are valued based on the last traded market price for the purpose of determining the net asset value per unit for subscriptions and redemptions, as permitted by IFRS 13. j) Proceeds and payments on subscriptions and redemption of units The net asset value of each of the Sub-Funds is computed daily. Prices for subscriptions and redemptions are based on the net asset value per unit calculated as at the close of business on the relevant valuation day in accordance with each of the Sub-Fund s Explanatory Memorandum. Proceeds and payments for units subscribed and redeemed are shown as movements in the statements of changes in net assets attributable to unitholders. k) Transaction costs Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the statements of comprehensive income. l) Taxation Under current laws of the Cayman Islands, there is no income, estate, transfer, sales or other Cayman Island taxes payable by the Fund. Generally, the Sub-Funds intend to conduct its affairs so as not to be liable to taxation in any other jurisdiction, however, the Sub-Funds may invest in securities whose income is subject to nonrefundable foreign withholding. 18

21 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Net assets attributable to unitholders In accordance with the provisions in the Explanatory Memorandum of each of the Sub-Funds, listed investments are stated at the last traded price on the valuation day for the purpose of determining net asset value per unit for subscriptions and redemptions and for various fee calculations. As stated in note 2(c), the accounting policy of each of the Sub-Funds is to value its listed investments at the relevant bid/ask market prices on the year end date for financial years prior to 1 July 2013, in compliance with IAS 39. Following adoption of IFRS 13, which became effective for the Sub-Funds on 1 July 2013, listed investments are valued at the last traded price. The table below shows a reconciliation between net assets attributable to unitholders, calculated in accordance with the Explanatory Memorandum and net assets attributable to unitholders calculated in accordance with IFRS. For the year ended 30 June 2013, this includes differences between the valuation of investments stated in the financial statements and the valuation methodology indicated in the Explanatory Memorandum of the Sub-Funds. Macquarie IPO China Concentrated Core Fund Net assets attributable to unitholders (calculated in accordance with the Explanatory 26,524,439 31,323,817 Memorandum) Adjustment from last traded prices to bid/ask market prices - (116,219) Net assets attributable to unitholders (calculated in accordance with IFRS) 26,524,439 31,207,598 Macquarie IPO China Gateway Fund Net assets attributable to unitholders (calculated in accordance with the Explanatory 52,888,433 59,458,933 Memorandum) Adjustment from last traded prices to bid/ask market prices - (205,764) Net assets attributable to unitholders (calculated in accordance with IFRS) 52,888,433 59,253,169 Macquarie Asia New Stars Fund Net assets attributable to unitholders (calculated in accordance with the Explanatory 300,754,067 58,615,706 Memorandum) Adjustment from last traded prices to bid/ask market prices - (350,038) Net assets attributable to unitholders (calculated in accordance with IFRS) 300,754,067 58,265,668 Net assets attributable to unitholders at last traded market prices represent a liability in the statements of financial position, carried at the redemption amount that would be payable at the year end date if the unitholders exercised their right to redeem the units in the respective Sub-Funds. 4 Financial risk management a) Strategies in using financial instruments Each of the Sub-Funds activities expose them to a variety of financial risks: market risk (which may include price risk, interest rate risk, and currency risk), credit risk and liquidity risk. The overall risk management programme of each of the Sub-Funds focuses on ensuring compliance with the respective Sub-Fund s investment objective and seeks to maximise the returns derived for the level of risk to which the respective Sub-Fund is exposed. The Sub-Funds may use derivatives and other instruments for trading purposes and in connection with its risk management activities. The Sub-Funds may use derivative financial instruments for currency hedging. Derivatives are not used to gear (leverage) the portfolio. Gearing a portfolio would occur if the level of exposure to the markets exceed the underlying value of the Trust. 19

22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Financial risk management (continued) a) Strategies in using financial instruments (continued) Financial risk management is carried out by the risk management department of the Manager under policies approved by senior managers or by the board of the Manager. Macquarie IPO China Concentrated Core Fund Investment objective The Sub-Fund invests in listed equities with a focus on People s Republic of China ( PRC ) related IPO Securities principally those listed in Hong Kong, US and Singapore. Policies and processes The Manager constructs an investment portfolio consisting of newly listed stocks that meet the Sub-Fund s quantitative and qualitative criteria based on independent research and investment techniques. When the Manager determines that new IPO Securities are suitable for the investment portfolio, the Manager may remove an IPO Security and re-balance the portfolio. In circumstances where the Manager makes an application for a security that will be listed and the Manager s allocation through the primary market is scaled back, secondary market purchases may be made. The Manager will determine the weightings it considers appropriate from time to time in its discretion. Cash and money market instruments will also be held to manage the liquidity within the Sub-Fund s portfolio. The number of IPO Securities to be held within the investment portfolio will be determined by the Manager from time to time. Macquarie IPO China Gateway Fund Investment objective The Macquarie IPO China Gateway Fund s investment objective is to provide unitholders exposure to returns from initial public offerings and secondary market trading of equity securities of companies which have been recently listed. This is achieved: directly by investing in equity securities or other related financial instruments which are or will be listed predominantly on stock exchanges in Hong Kong, Singapore, Taiwan or the United States of America (the Direct Portfolio ); and indirectly by investing in the Macquarie IPO China Concentrated Core Fund (the Indirect Portfolio ). The exposure of the Sub-Fund is maintained by investing 70% to 100% in the Direct Portfolio and 0% to 30% in the Indirect Portfolio. At 30 June 2014 and 30 June 2013, the Sub-Fund had no investments in Macquarie IPO China Concentrated Core Fund. Policies and processes In pursuit of the investment objective the Sub-Fund s Direct Portfolio will acquire a portfolio of recent IPO Securities. The IPO Securities to be included in the Direct Portfolio will be chosen by the Manager in accordance with the Manager s quantitative and qualitative investment criteria (this is described further below). The Manager will generally seek to acquire new IPO Securities for the Direct Portfolio through the initial public offering of the relevant IPO Securities or on the market after listing. The eligible universe of the Direct Portfolio includes listed equities with a focus on IPO Securities listed in Hong Kong, Singapore, Taiwan and the United States. In the case of IPO Securities not listed in Hong Kong, Singapore or Taiwan, the IPO Securities must relate to companies which derive or are expected to derive a significant portion of their revenues from Greater China or Singapore. The Sub-Fund intends to invest no more than 30 per cent of its Net Asset Value in IPO Securities which are listed in markets other than Hong Kong or Taiwan and which are not expected to derive a significant portion of their revenues from the PRC. Equity exposure in the secondary market may be achieved through investment in shares, depositary receipts, participation rights and potentially through other instruments which are linked to the performance of eligible IPO securities such as participation notes, equity swaps and equity linked notes, provided that exposure via investments in such instruments (excluding ADRs and GDRs) shall not exceed 15% of the net assets of the Sub-Fund. 20

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Financial risk management (continued) a) Strategies in using financial instruments (continued) The Manager will determine the investment portfolio by applying a variety of quantitative and qualitative criteria. The Manager will determine an appropriate number of positions to best serve the investment objectives of the Sub-Fund having regard to the relative size of allocations that the Sub-Fund would need to make to individual positions compared to the available liquidity and likely market impact and transaction costs of trading those positions. The number and relative size of the positions may be adjusted from time to time. The Direct Portfolio may also comprise cash. The Sub-Fund may invest up to 30% of its net assets in the Macquarie IPO China Concentrated Core Fund, i.e. the Indirect Portfolio. The Direct Portfolio may also acquire IPO Securities that are within the eligible universe of the Macquarie IPO China Concentrated Core Fund and the investments in the Direct and Indirect Portfolio will in aggregate comply with investment restrictions applicable to the Sub-Fund. The Manager, in its capacity as the manager of the Macquarie IPO China Concentrated Core Fund, will not be entitled to any preliminary charge, management fee, administration fee and performance fee (if any) payable in respect of any component of the Sub-Fund that is invested in the Macquarie IPO China Concentrated Core Fund. The Sub-Fund s investments in the Macquarie IPO China Concentrated Core Fund shall be the only investment by the Sub-Fund in other collective investment schemes. Macquarie Asia New Stars Fund Investment objective The investment objective of the Macquarie Asia New Stars Fund is to provide unitholders with exposure returns from: Small market capitalisation equity securities with exposure to any one or more countries within Asia. Initial public offerings and newly listed small market capitalisation equity securities with exposure to any one or more countries within Asia. Policies and processes The investment portfolio includes small market capitalisation equity securities as defined by the Manager. The Manager selects the equity securities based on both quantitative and qualitative investment techniques. In respect of the investments in initial public offerings or those recently listed, if allocations from initial public offerings are limited, the Manager will purchase the shortfall of the targeted equity securities from the stock exchanges after listing. The Manager intends to hold up to 30 recently listed equity securities, comprising up to 30% of the total investment balance, whereby each equity security may have a weighting up to 7.5% of the total investment balance. The Manager may utilize several risk management filters to manage the market risk by limiting up to 147 investment positions in equity securities each with a maximum weighting of 7.5% of the total investment balance. The Manager may diversify the level of concentration in investments in equity securities in terms of geographic region and market sector. b) Market risk i) Price risk Market price risk is the risk that the value of the investments held by the respective Sub-Funds will fluctuate as a result of changes in market prices. 21

24 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Financial risk management (continued) b) Market risk (continued) i) Price risk (continued) Price risk is monitored by the Manager on an ongoing basis and is managed primarily through the diversification of the investment portfolio and other policies as follows: Overall portfolio exposure managed by ensuring that the overall exposure of the portfolio is in compliance with the investment objective of the respective Sub-Funds; Stocks limits manage exposure to any single stock and ensure diversification; and Country limits manage exposure to any single country and ensure diversification across allowable countries. Each of the Sub-Funds investments in equity securities and investments held through the collective investment scheme are substantially publicly traded. The Sub-Funds are not directly correlated with any particular stock market indices. The Manager makes stock selections and monitors each of the Sub-Funds investment portfolios. The below tables show the impact in absolute terms, on the statements of comprehensive income of each of the Sub-Funds, from both the negative and positive reasonable possible movements in equity prices. Actual movements of the reasonable possible shift 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 economies, markets and securities subsequent to the statement of financial position date in which each of the Sub-Funds invests. As a result, the reasonable possible shift used for the purpose of market price risk sensitivity analysis may not be a definitive indicator of future variations in the risk variables. MACQUARIE IPO CHINA CONCENTRATED CORE FUND Location of stock exchanges Reasonable possible shift % Year ended 30 June 2014 Year ended 30 June 2013 Impact to statements of Reasonable Impact to statements of comprehensive income possible shift comprehensive income % Hong Kong +10/-10 2,551,109/(2,551,109) +10/-10 2,988,739/(2,988,739) MACQUARIE IPO CHINA GATEWAY FUND Location of stock exchanges Reasonable possible shift % Year ended 30 June 2014 Year ended 30 June 2013 Impact to statements of Reasonable Impact to statements of comprehensive income possible shift comprehensive income % Hong Kong +10/-10 5,005,555/(5,005,555) +10/-10 5,447,149/(5,447,149) Taiwan +10/-10 90,160/(90,160) +10/-10 52,307/(52,307) 22