Fusion Fund - Perennial Global Property Trust ARSN Annual report - 30 June 2011

Transcription

1 ARSN Annual report - 30 June 2011

2 ARSN Annual report - 30 June 2011 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 - Perennial Global Property Trust Page These annual financial statements cover Fusion Fund - Perennial Global Property Trust as an individual entity. The Responsible Entity of Fusion Fund - Perennial Global PropertyTrust is Macquarie Financial Products Management Limited (ABN ). The Responsible Entity's registered office is NO.1 Martin Place, Sydney, New South Wales, Australia

3 Directors' report 30 June 2011 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 - Perennial Global Property Trust, submit their report together with the financial report of Fusion Fund - Perennial Global Property Trust ("the Fund") for 1I1e 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 names of the Directors of the Responsible Entity in offce during the year and until the date of this report are: Peter Lucas William Fox Simone Mosse (resigned on 11 February 2011) Jason King Antony Clubb (appointed on 11 February 2011) The Directors were in office from the beginning of the year until the date of this report, unless otherwise stated. Review of results and 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's Constitution. Results The performance of the Fund, as represented by the results of its operations, was as follows: Year ended 30 June 30 June Net operating profit before finance costs attributable to unitholders Final distributions Distribution payable Distribution (cents per unit) Distributions - to redeeming unitholders Distribution paid 52,435 91,020 5, 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. Significant events after year end No matter or circumstance has arisen since 30 June 2011 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 2011 Directors' report Likely developments and expected results 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's Constitution. The results of the Fund's operations will be affécted 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 officers 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 9 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 9 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 in the Statement of financial position and derived using the basis set out in note 2 of the financial statements. Environmental regulation and performance 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 have been rounded off to the nearest dollar, unless otherwise indicated. -3-

5 Directors' report 30 June 2011 Directors' report Auditor's Independence Declaration An independence declaration has been provided to the Directors by the auditor of Fusion Fund - Perennial Global Property Trust, Ernst & Young, and is attached to the Directors' report. Signed in acc dance with a resolution of the Directors. Director Sydney 26 September

6 '"''' i! 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 - Perennial Global Property Trust In relation to our audit of the financial report of Fusion Fund - Perennial Global Property Trust for the financial year ended 30 June 2011, 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 Sydney 26 September 2011 Liability limited by a scheme approved under Professional Standards Legislation

7 Statement of comprehensive income Statement of comprehensive income Notes Year ended 30 June 30 June Income Interest income Distribution income Net gains on financial assets and liabilities held at fair value through profit or loss Total income 1,517 7,196 46,613 55,326 3, ,350 94,494 Expenses Responsible Entity fees Reimbursed Responsible Entity administration expense Other operating expenses Total expenses Operating profit 9 2,450 2, ,891 3,474 52,435 91,020 Finance costs attributable to unitholders Distributions to unitholders Increase in net assets attributable to unitholders Profit/(Ioss) for the year 6 5 (5,492) (46,943) (91,020) Other comprehensive income/(ioss) Total comprehensive income/(loss) for the year The above Statement of comprehensive income should be read in conjunction with the accompanying notes. -6-

8 Fusion Fund. Perennial Global Property Trust Statement of financial position As at 30 June 2011 Statement of financial position Notes 30 June 2011 As at 30 June 2010 Assets Cash and cash equivalents 7 Receivables Financial assets held at fair value through profit or loss 8 Total assets Liabilities Responsible Distribution Entity payable fees 69 Other payables Total liabilities (excluding net assets attributable to unitholders) Net assets attributable to unitholders - liabilty 5 2,745 2,974 7,477 2, , , , ,187 3,105 3,729 5, ,886 4, , ,139 Represented by: Fair value of outstanding units based on redemption value 209, , , ,139 The above Statement of financial position should be read in conjunction with the accompanying notes. -7-

9 Statement of changes in equity Statement of changes in equity,total equity at the beginning of the year Total comprehensive income 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 Interest received Responsible Entity fees paid GST refund received Net cash provided by operating activities 10(a) Cash flows from financing activities Payments for redemptions by unitholders Net cash used in financing activities 77, ,017 1,517 3,130 (3,729) 255 (38,447) 2,622 75, ,322 (75,619) (2,042,405) (75,619) (2,042,405) Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Non cash financing and investing activities 7,10(b) 10(c) (229) (1,724,083) 2,974 1,727,057 2,745 2,974 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 - Perennial Global Property Trust (lithe Fund") as an individual entity. The Fund is an Australian registered scheme, domiciled and incorporated in Australia on 4 September The Fund will terminate on 20 March 2086 unless terminated earlier in accordance with the provisions of the Fund's Constitution. The Responsible Entity of the Fund is MHl.X1UHiie Financial Products Management Limited ("the Responsible Entity"). The Responsible Entity's registered office is NO.1 Martin Place, Sydney, New South Wales, Australia The financial statements are presented in the Australian currency. 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. Durihg 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's Constitution. The financial statements of the Fund for the year ended 30 June 2011 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 (Cth), 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 settled 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 setted within twelve months in relation to these balances cannot be reliably determined. The financial statements are presented in Australian Dollars and all values are rounded to the nearest dollar except where otherwise indicated. 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 and AASB Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010 Amendment to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not traded. The Fund has not yet decided when to adopt AASB 9. Management does not expect this will have a significant not hold any available-for-sale investments. impact on the Fund's financial statements as the Fund does -10-

12 2 Summary of significant accounting policies (b) New accounting standards and interpretations (ii) Revised AASB 124 Related Party Disclosures and AASB Amendments to Australian Accounting Standards (effective from 1 January 2011) In December 2009, the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related party and removes the requirement for government related entities to disclose details of all transactions with the government and other government related entities. The Fund will apply the amended standard from 1 July The amendments will not have any effect on the Fund's financial statements. (iii) AASB Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets (effective for annual reporting periods beginning on or after 1 July 2011) In November 2010, the AASB issued AASB Disclosures on Transfers of Financial Assets which amends AASB 1 First time Adoption of Australian Accounting and AASB 7 Financial Instruments: Disclosures to introduce additional disclosures in respect of risk exposures arising from transferred financial assets. The amendments wil affect particularly entities that sell, factor, securitize, lend or otherwise transfer financial assets to other parties. The amendments will not have any impact on the Fund's disclosures. The Fund intends to apply the amendment from 1 July (iv) Amendments to AASB Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (effective for annual reporting periods beginning on or after 1 July 2010/1 January 2011) In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of the IASB's annual improvements project. The Fund does not expect that any adjustments will be necessary as the result of applying the revised rules. (v) IFRS 10 Consolidated Financial Statements IFRS 10 establishes a new control model that applies to all entities. It replaces parts of las 27 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12 Consolidation -Special Purpose Entities. This standard is yet to be approved by the Australian Accounting Standards Board and has not been issued in Australia. The standard is not applicable until 1 January 2013 but is available for early adoption. The Fund has not yet decided when to adopt IFRS 10. Management does not expect this will have a significant effect on the Fund's financial statements. (vi) IFRS 12 Disclosures of Interests in Other Entities IFRS 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-controlling interests. This standard is yet to be approved by the Australian Accounting Standards Board and has not been issued in Australia. The standard is not applicable until 1 January 2013 but is available for early adoption. The Fund has not yet decided when to adopt IFRS 12. Management does not expect this will have a significant effect on the Fund's financial statements. (vii) IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilities. 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 I FRS when fair value is required or permitted by i FRS. Application of this definition may result in different fair values being determined for the relevant assets. I FRS 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. -11-

13 2 Summary of significant accounting policies (b) New accounting standards and interpretations This standard is yet to be approved by the Australian Accounting Standards Board and has not been issued in Australia. The standard is not applicable until 1 January 2013 but is available for early adoption. The Fund has not yet decided when to adopt I FRS 13. Management does not expect this will have a significant effect on the Fund's financial statements. (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 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 agreement (trade date) and recognises changes in fair value of the financial assets or financial date. liabilities on the date it becomes party to the contractual liabilities from this 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 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). (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. -12-

14 2 Summary of significant accounting policies (f) Investment income Distribution income is recognised when the Fund's right to receive payment is established. Changes in the fair vahie' of finanr.ial rlflflfltfl and liabilities designated in the fair value through profit 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 rate 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 unrealised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capital gains tax and foreign tax paid. 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 and foreign tax paid 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. (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). -13-

15 2 Summary of significant accounting policies (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's 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 Office (A TO). 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. 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 trusts. -14-

16 3 Financial risk management (a) Market risk (i) Price Risk 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 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% (2010: 15%) in one day with all other variables held constant. The impact mainly arises from the possible change in the fair value of investment in 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 Fund does not have direct exposure to debt instruments, guarantees, collateral and derivatives. 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 significant investment in the underlying trust which also has exposure to interest rate markets. The Fund may have an indirect exposure to bonds through its investment in 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. (b) Summarised sensitivity analysis The following table summarises the sensitivity of the Fund's operating profi 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. -15-

17 3 Financial risk management (b) Summarised sensitivity analysis 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 +/- 25 basis points (2010: 1/- 50 basis points) from tho year end rates with all other variables held constant. The impact mainly arises from changes in the fair value of interest bearing securities. + + Price risk I Interest rate risk Impact on operating profit 30 June 2011 (20,816) 20,816 (7) 7 30 June 2010 (35,532) 35,532 (15) 15 (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- (2010: A-) as determined by the Standards and Poor's rating agency. Other than the cash and cash equivalents and the investment in the underlying fund, 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. (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. (e) Fair value of financial assets and liabilities 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 trusts. 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. The inputs for the redemption value are based on market observable data. Any gains and losses (realised and unrealised) are included within total 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 (Le. as prices) or indirectly (Le. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). -16-

18 3 Financial risk management (e) Fair value of financial assets and liabilties 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 2011 and 30 June 2010: 30 June 2011 Level 1 Level 2 Level 3 Total Assets Unlisted unit trusts Total Assets 208, , , , June 2010 Level 1 Level 2 Level 3 Total Assets Unlisted unit trusts Total Assets 236, , , ,877 There have been no transfers between levels for the year ended 30 June 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. 4 Audit and other services During the year the following fees were paid or payable for services provided by the auditor of the Fund: 30 June June 2010 Audit services Audit of financial reports Other audit work under the Corporations Act 2001 Total remuneration for audit services 6, ,310 5, ,090 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's Constitution, each unit represents an equal undivided interest in the Fund's assets. There are 4 classes of unitholders in the Fund. The units are held in separate classes, by release, for the purpose of Threshold Management. -17-

19 5 Net assets attributable to unitholders Movements in number of units and net assets attributable to unitholders during the year were as follows: As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - November 2006 release Opening balance 121, ,782 50, ,065 Applications Redemptions (31,553) (359,912) (15,571 ) (130,288) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 10,278 24,102 Closing balance 90, ,870 45,586 50,879 As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - June 2007 release Opening balance 302, , , ,427 Applications Redemptions (93,530) (527,010) (45,317) (195,440) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 24,495 52,236 Closing balance 208, , , ,223 As at 30 June 30 June 30 June 30 June No. No. Net assets attributable to unitholders - November 2007 release Opening balance 29,585 43,775 12,350 14,255 Applications Redemptions (7,080) (14,190) (3,510) (5,571) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 2,519 3,666 Closing balance 22,505 29,585 11,359 12,350 - i 8-

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 2008 release Opening balance ,736 48,687 40,485 Applications Redemptions (23,218) (7,111 ) (11,192) (2,814) Units issued upon reinvestment of distributions Increase in net assets attributable to unitholders 9,651 11,016 Closing balance 93, ,625 47,146 48,687 Total net assets attributable to unitholders 209, ,139 6 Distributions to unitholders The distributions paid and payable were as follows: Distributions Number of Distributions Distributions Number of Distributions units per unit units per unit cents/unit cents/unit Final distributions 5, , payable Distributions paid to 30 redeeming unitholders Total 5, ,053 - The final distribution is reinvested, effective as at 01 July Cash and cash equivalents 30 June 2011 As at 30 June 2010 Cash at bank 2,745 2,974 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. -19-

21 8 Financial assets held at fair value through profit or loss 30 June 2011 Fair value As at 30 June 2010 Fair value Designated at fair value through profitor loss Unlisted unit trusts Units in Australian equity trusts Total unlisted unit trusts 208, , , ,877 9 Related party disclosures (a) Responsible Entity The Responsible Entity of Fusion Fund - Perennial Global Property Trust 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 Simone Mosse (resigned on 11 February 2011) Jason King Antony Clubb (appointed on 11 February 2011) (ii) Other Key Management Personnel There were no other persons with responsibility for planning, directing and controlling 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). -20-

22 9 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 3,729 38,447 2,450 2, ,105 3,729 (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 period except as disclosed below. 30 June 2011 Number of Number of Number of Number of Distributions units held units held Interest units units paid/payable Unitholders opening closing held acquired disposed by the Fund (Units) (Units) (%) (Units) (Units) () William Fox Antony Clubb June 2010 Number of Number of Number of Number of Distributions units held units held Interest units units paidlpayable Unitholders opening closing held acquired disposed by the Fund (Units) (Units) (%) (Units) (Units) () William Fox Antony Clubb (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 the Key Management Personnel or their personally related entities at any time during the reporting period. (g) 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 byother Fund investors and are trivial in nature. 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 Limited, the parent entity of the Responsible Entity. These balances are held on normal commercial terms. Bond Street Custodians Limited, a wholly owned subsidiary of Macquarie Group Limited, is the custodian of the Fund. -21-

23 10 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 profit before finance costs Net gain on financial assets at fair value Proceeds from sale of financial instruments at fair value through profit or loss 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 52,435 (46,613) 77,347 (14) (624) (7,141) 75,390 91,020 (91,350) 351,017 (1,205) (34,719) 3, ,322 (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 2,745 2,974 (c) Non-cash financing and investing activities During the year, the following distribution payments were satisfied by the issue of units in the Fund 11 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 2011 or on the results and cash flows of the Fund for the year ended on that date. 12 Contingent assets and liabilities and commitments There are no outstanding contingent assets, liabilities or commitments as at 30 June 2011 and 30 June

24 Directors' declaration 30 June 2011 Directors' declaration In accordance with a resolution of the Directors of Macquarie Financial Products Management Limited, i state that: In the opinion of the Directors: (a) The financial statements and notes set out on pages 6 to 22 are in accordance with the Corporations Act 2001 (Cth), including: (i) giving a true and fair view of the Fund's financial position as at 30 June 2011 and of its performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations (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)). On behalf of the board. Sydney 26 September

25 '"'' i! 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 - Perennial Global Property Trust We have.audited the accompanying financial report of Fusion Fund - Perennial Global Property Trust (the "trust")"which comprises the statement of financial position as at 30 June 2011, 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' responsibility for the financial report The directors of Macquarie Financial Products Management Limited, the responsible entity of the trust, 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 responsibilty 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 dueto 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 circumstánces, 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 '"'' i! ERNST & YOUNG Opinion In our opinion: a. the financial report of Fusion Fund - Perennial Global Property Trust is in accordance with the Corporations Act 2001, including: giving a true and fair view of the trust's financial position as at 30 June 2011 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 2011