Fusion Fund - UBS Australian Share Fund - Macquarie · Fusion Fund - UBS Australian Share Fund In relation to our audit of the financial report of Fusion Fund - UBS Australian Share

Fusion Fund - UBS Australian Share FundARSN 103530525

Annual report - 30 June 2011

Fusion Fund - UBS Australian Share FundARSN 103 530 525

Annual report - 30 June 2011Contents

Directors' reportAuditor's independence declarationStatement of comprehensive incomeStatement of financial positionStatement of changes in equityStatement of cash flowsNotes to the financial statementsDirectors' declarationIndependent auditor's report to the unitholders of Fusion Fund - UBS Australian Share Fund

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These annual financial statements cover Fusion Fund - UBS Australian Share Fund as an individual entity.

The Responsible Entity of Fusion Fund - UBS Australian Share Fund is Macquarie Financial Products ManagementLimited (ABN 38 095135694). The Responsible Entity's registered office is NO.1 Martin Place, Sydney, New SouthWales, Australia 2000.

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Fusion Fund - UBS Australian Share FundDirectors' report

30 June 2011

Directors' report

The Directors of Macquarie Financial Products Management Limited (ABN 38 095 135694) (a wholly ownedsubsidiary of Macquarie Group Limited), the Responsible Entity of Fusion Fund - UBS Australian Share Fund,submit their report together with the financial report of Fusion Fund - UBS Australian Share Fund ("the Fund") for theyear ended 30 June 2011.

Principal activities

The Fund product delivers investment returns from investments in managed funds, whilst also protecting againstlosses 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 LucasWilliam FoxSimone 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 setout 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 ended30 June 30 June2011 2010$ $

Net operating profit before finance costs attributable to unitholders

Final distributionsDistribution payableDistribution (cents per unit)

Distributions - to redeeming unitholdersDistribution paid

33,402 153,929

12,2101.65

1,209 18,609

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 occurredduring 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.

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30 June 2011

(continued)

Directors' report (continued)

Likely developments and expected results

The Fund will continue to be managed in accordance with the investment objective and strategy set out in theFund's offer document and in accordance with the Fund's Constitution.

The results of the Fund's operations will be affected by a number of factors, including the performance of investmentmarkets in which the Fund invests. Investment performance is not guaranteed and future returns may differ frompast 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 thoseoperations have not been included in this report because the Responsible Entity believes it would be likely to resultin 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 eitherthe offcers of Macquarie Financial Products Management Limited or the auditors of the Fund. Under the FundConstitution, Macquarie Financial Products Management Limited as Responsible Entity of the Fund is entitled to beindemnified out of the assets of the Fund for any liability incurred by it in properly performing or exercising any of itspowers 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 9of 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 financialyear 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 outin 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 ofthe 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.

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I


30 June 2011

(continued)

Directors' report (continued)

Auditor's Independence Declaration

An independence declaration has been provided to the Directors by the auditor of Fusion Fund - UBS AustralianShare Fund, Ernst & Young, and is attached to the Directors' report.

ccordance with a resolution of the Directors.

Sydney26 September 2011

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111111111111111111111I1111111I1"""a! ERNST & YOUNG

Ernst & Young Centre680 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555Fax: +61 292485959www.ey.com/au

Auditor's Independence Declaration to the Directors of MacquarieFinancial Products Management Limited, as the Responsible Entity forFusion Fund - UBS Australian Share Fund

In relation to our audit of the financial report of Fusion Fund - UBS Australian Share Fund for the financialyear ended 30 June 2011, to the best of my knowledge and belief, there have been no contraventions ofthe.auditor independence requirements of the Corporations Act 2001 or any applicable code ofprofessional conduct.

Ernst & Young

Darren Handley-Greaves

PartnerSydney26 September 2011

Liability limited by a scheme approvedunder Professional Standards Legislation

Fusion Fund - UBS Australian Share FundStatement of comprehensive income

For the year ended 30 June 2011

Statement of comprehensive income

Year ended30 June 30 June2011 2010$ $Notes

IncomeI nterest incomeDistribution incomeNet gains on financial assets and liabilities held at fair value through profitor lossOther operating incomeTotal income

2,430 4,93717,085 26,654

19,982 135,343127 58

39,624 166,992

ExpensesResponsible Entity feesReimbursed Responsible Entity administration expenseOther operating expensesTotal expenses

Operating profit

9 5,284 11,0859 792 1,662

146 3166,222 13,063

33,402 153,929

Fin'ance costs attributable to unitholders

Distributions to unitholdersIncrease in net assets attributable to unitholdersProfitl(loss) for the year

65

(13,419)(19,983)

(18,609)(135,320)

Other comprehensive income/(Ioss)Total comprehensive income/(Ioss) for the year

The above Statement of comprehensive income should be read in conjunction with the accompanying notes.

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Fusion Fund - UBS Australian Share FundStatement of financial position

As at 30 June 2011

Statement of financial position

As at

Notes

30 June2011

$

30 June2010

$

AssetsCash and cash equivalents 7ReceivablesFinancial assets held at fair value through profit or loss 8Total assets

20,461 28,30010,714 3,260

421,468 496,182452,643 527,742

6,677 14,01812,2105,831

24,718 14,018

427,925 513,724

LiabilitiesResponsible Entity fees payable 9Distribution payable 6Redemptions payableTotal Iciabilities (excluding net assets attributable to unitholders)

Net assets attributable to unitholders - liability 5

Represented by:

Fair value of outstanding units based on redemption value 427,925427,925

513,724513,724

The above Statement of financial position should be read in conjunction with the accompanying notes.

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Fusion Fund - UBS Australian Share FundStatement of changes in equity


Statement of changes in equity


Total equity at the beginning of the yearTotal comprehensive income for the yearTransactions with owners in their capacity as ownersTotal equity at the end of the year

Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather thanequity. 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.

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Fusion Fund. UBS Australian Share FundStatement of cash flows


Statement of cash flows

Year ended30 June 30 June2011 2010Notes $ $

Cash flows from operating activitiesProceeds from sale of financial instruments held at fair value throughprofit or lossPurchase of financial instruments held at fair value through profit or lossInterest receivedOther income receivedResponsible Entity fees paidGST refund receivedNet cash provided by operating activities 10(a)

116,531 1,653,198(12,706) (980,298)

2,430 4,937127 58

(14,018) (91,141)956 6.215

93,320 592,969

12,707 980,302(113,866) (2,171,667)(101,159) (1,191 ,365)

(7,839) (598,396)

28,300 626,696

20,461 28,300

Cash flows from financing activitiesProceeds from applications by unitholdersPayments for redemptions by unitholdersNet cash used in financing activities

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)

The above Statement of cash flows should be read in conjunction with the accompanying notes.

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Fusion Fund - UBS Australian Share FundNotes to the financial statementsFor the year ended 30 June 2011

1 Corporate information

This financial report covers Fusion Fund - UBS Australian Share Fund ("the Fund") as an individual entity. The Fundis an Australian registered scheme, domiciled and incorporated in Australia on 11 February 2003. The Fund willterminate on 10 August 2083 unless terminated earlier in accordance with the provisions of the Fund's Constitution.

The Responsible Entity of the Fund is Macquarie Financial Products Management Limited ("the ResponsibleEntity"). The Responsible Entity's registered offce is NO.1 Martin Place, Sydney, New South Wales, Australia 2000.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 alsoprotecting against losses by employing a capital management technique referred to as Threshold Management.

During the year, the Fund continued to be managed in accordance with the investment objective and strategy setout 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 witha resolution of the Board of Directors on 26 September 2011. The Directors of the Responsible Entity have thepower 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. Thesepolicies 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 requirementsof the Corporations Act 2001 (Cth), Australian Accounting Standards and other authoritative pronouncements of theAustralian Accounting Standards Board. The financial report is prepared on the basis of fair value measurement ofassets and liabilities except where otherwise stated.

The Statement of financial position is presented on a liquidity basis. Assets and liabilities are presented indecreasing order of liquidity and are not distinguished between current and non-current. All balances are expectedto be recovered or setted within twelve months, except for financial assets and liabilities held at fair value throughprofit or loss and net assets attributable to unitholders. The amount expected to be recovered or settled withintwelve 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 exceptwhere otherwise indicated.

Statement of Compliance with International Financial Reporting Standards

The financial statements also comply with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board.

(b) New accounting standards and interpretations

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yeteffective have not been adopted by the Fund for the annual reporting period ended 30 June 2011. The impact ofthese standards and interpretations has been assessed and to the extent applicable to the Fund are discussedbelow. Standards and Interpretations that are not expected to have a material impact on the Fund have not beenincluded.

(i) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising fromAASB 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 andfinancial 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 equityinvestments that are not traded.

The Fund has not yet decided when to adopt AASB 9. Management does not expect this will have a significantimpact on the Fund's financial statements as the Fund does not hold any available-for-sale investments.

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(continued)

2 Summary of significant accounting policies (continued)

(b) New accounting standards and interpretations (continued)

(ii) Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian AccountingStandards (effective from 1 January 2011)

In December 2009, the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accountingperiods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies andsimplifies the definition of a related party and removes the requirement for government related entities to disclosedetails of all transactions with the government and other government related entities. The Fund will apply theamended standard from 1 July 2011. The amendments will not have any effect on the Fund's financial statements.

(iii) AASB 2010-6 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 2010-6 Disclosures on Transfers of Financial Assets which amendsAASB 1 First time Adoption of Australian Accounting and AASB 7 Financial Instruments: Disclosures to introduceadditional disclosures in respect of risk exposures arising from transferred financial assets. The amendments willaffect particularly entities that sell, factor, securitize, lend or otherwise transfer financial assets to other parties. Theamendments will not have any impact on the Fund's disclosures. The Fund intends to apply the amendment from 1July 2011.

(iv) Amendments to AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the AnnualImprovements 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 theIASB's annual improvements project. The Fund does not expect that any adjustments will be necessary as the resultof 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 andSeparate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12Consolidation -Special Purpose Entities.

This standard is yet to be approved by the Australian Accounting Standards Board and has not been issued inAustralia. 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 significanteffect 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 andstructured entities. New disclosures have been introduced about the judgements made by management todetermine whether control exists, and to require summarised information about joint arrangements, associates andstructured entities and subsidiaries with non-controlling interests.



(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 todetermine fair value under IFRS when fair value is required or permitted by IFRS. Application of this definition mayresult in different fair values being determined for the relevant assets.

IFRS 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includesinformation about the assumptions made and the qualitative impact of those assumptions on the fair valuedetermined.

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Fusion Fund. UBS Australian Share FundNotes to the financial statementsFor the year ended 30 June 2011

(continued)


(b) New accounting standards and interpretations (continued)



(c) Financial instruments

(i) Classification

The Fund's investments are classified as at fair value through profi 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 investmentsin unlisted trusts.

Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that aremanaged and their performance evaluated on a fair value basis in accordance with the Fund's documentedinvestment strategy. The Fund's policy is for the Responsible Entity to evaluate the information about these financialinstruments on a fair value basis together with other related financial information.

Loans and receivables/payables comprise amounts due to or from the Fund.

(ii) Recognition/Derecognition

The Fund recognises financial assets and financial liabilities on the date it becomes party to the contractualagreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from thisdate.

Investments are derecognised when the right to receive cash flows from the investments have expired or the Fundhas 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 themanagers 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 unitsredeemed 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 toknown 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 fromoperating activities, as movements in the fair value of these securities represent the Fund's main income generatingactivity.

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(continued)


(f) Investment income

Distribution income is recognised when the Fund's right to receive payment is established.

Changes in the fair value of financial assets and liabilities designated in the fair value through profit or loss categoryare recognised as income or expenses in the Statement of comprehensive income in the year in which the changesoccur.

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 anaccruals basis.

(h) Income tax

Under current Australian legislation, the Fund is not subject to income tax provided the unitholders are presentlyentitled 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, thatportion of the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capitalgains tax and foreign tax paid.

Rèalised capital losses are not distributed to unitholders but are retained in the Fund to be offset against anyrealised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders.

The benefis 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 unitholdersby cash, reinvestment or by redemption distribution. The distributions are payable at the end of June each year andare recognised in the Statement of comprehensive income as finance costs attributable to unitholders.

U) Increase/decrease in net assets attributable to unitholders

Income not distributed is included in net assets attributable to unitholders. Movements in net assets attributable tounitholders 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 isredeemed and the redemption price of that unit is greater than the application price of that unit. The redemptiondistribution is included in the redemption price of the unit and is accounted for as a distribution paid in the financialstatements.

(I) Receivables

Receivables may include amounts for interest and trust distributions. Trust distributions are accrued when the rightto receive payment is established. Interest is accrued at the end of each reporting period from the time of lastpayment in accordance with the policy set out in note 2(f) above. Amounts are generally received within 30 days ofbeing recorded as receivables.

Receivables include such items as Reduced Input Tax Credits (RITC).

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(continued)


(m) Payables

Payables include liabilities and accrued expenses owing by the Fund which are unpaid as at the end of the reportingperiod.

The distribution amount payable to unitholders as at the end of the reporting period is recognised separately in theStatement of financial position when unitholders are presently entitled to the distributable income under the Fund'sConstitution.

(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 inthe Fund. Redemptions from the Fund are recorded gross of any exit fees payable after the cancellation of unitsredeemed.

Unit redemption prices are determined by reference to the net assets of the Fund divided by the number of units onissue 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 Entityfees have been passed onto the Fund. The Fund qualifies for RITC at a rate of 75% hence Responsible Entity feesand other expenses have been recognised in the Statement of comprehensive income net of the amount of GSTrecoverable from the Australian Taxation Offce (ATO). Accounts payable are inclusive of GST. The net amount ofGST recoverable from the ATO is included in receivables in the Statement of financial position. Cash flows relatingto GST are included in the Statement of cash flows ona 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 riskand interest rate risk), credit risk and liquidity risk.

The Fund's overall risk management programme focuses on ensuring compliance with the Fund's ProductDisclosure 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 ofDirectors of the Responsible Entity.

The Fund uses different methods to measure different types of risk to which it is exposed. These methods includesensitivity analysis in the case of interest rate, foreign exchange and other price risks and ratings analysis for creditrisk.

(a) Market risk

(i) Price Risk

The Fund trades in financial instruments by taking positions in unlisted trusts.

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(continued)

3 Financial risk management (continued)

(a) Market risk (continued)

(i) Price Risk (continued)

All securities investments present a risk of loss of capitaL. The investment manager of the underlying trustmoderates this risk through a careful selection of securities within specified limits. The maximum risk resulting fromfinancial instruments is determined by the fair value of the financial instruments. The underlying trust's overallmarket 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 monitorsthe Fund's overall market price sensitivity on a daily basis. This is done by seeking to ensure the Fund is fullyinvested 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 ofthe underlying trust.

Note 3(b) summarises the impact of an increase/(decrease) of the underlying trust's unit price on the Fund's netassets attributable to unitholders at 30 June 2011. The analysis is based on the assumptions that the underlyingtrust's unit price increased/(decreased) by 10% (2010: 15%) in one day with all other variables held constant. Theimpact 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 theprevailing levels of market interest rates on its financial position and cash flows. The risk is measured usingsensitivity 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 cashequivalents 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 profie of theFund where the Fund has significant investment in the underlying trust which also has exposure to interest ratemarkets.

The Fund may have an indirect exposure to bonds through its investment in Fusion Fund- Cash Trust ("the CashTrust") as part of the Threshold Management. Movements in interest rates will affect the amount of interest earnedon cash deposits in the Cash Trust.

(b) Summarised sensitivity analysis

The following table summarises the sensitivity of the Fund's operating profit and net assets attributable tounitholders to interest rate risk and price risk. The reasonably possible movements in the risk variables have beendetermined based on Management's best estimate, having regard to a number of factors, including historical levelsof changes in underlying funds investment unit price. However, actual movements in the risk variables may begreater or less than anticipated due to a number of factors, including unusually large market shocks resulting fromchanges in the performance of the economies, markets and securities in which the underlying fund invests. As aresult, 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 equityinvestment before taking into account the effect of Threshold Management. The Fund uses Threshold Managementas an investment technique to manage price risk. Threshold Management seeks to ensure that the value of theFund's units is at least equal to the original investment at the Threshold Management expiry date as specified in theProduct Disclosure Statement.

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(continued)


(b) Summarised sensitivity analysis (continued)

The table below summarises the impact of an increase/(decrease) of interest rates on the Fund's operating profitand net assets attributable to unitholders through changes in fair value or changes in future cash flows. The analysisis based on the assumption that interest rates changed by +/- 25 basis points (2010: +/- 50 basis points) from theyear end rates with all other variables held constant. The impact mainly arises from changes in the fair value ofinterest bearing securities.

Price risk I Interest rate riskImpact on operating profit+ +

$ $ $ $

30 June 2011

30 June 2010

(42,147)

(74,427)

42,147

74,427

(51)

(142)

51

142

(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 whenthey 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 aconcentration of a credit risk that arises from an exposure to a single counterparty. Furthermore, the Fund does nothave a material exposure to a group of counterparties which are expected to be affected similarly by changes ineconomic 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 thereporting date.

(d) Liquidity risk

Liquidity risk is the risk that the Fund will experience difficulty in either realising assets or otherwise raising sufficientfunds to satisfy commitments. There is no significant direct liquidity risk in the Fund as the Responsible Entity hasdiscretion 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. TheFund'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 themanagers of such trusts at the reporting date. The inputs for the redemption value are based on market observabledata. Any gains and losses (realised and unrealised) are included within total investment income in the Statement ofcomprehensive income.

Fair value hierarchy

The Fund classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputsused 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, eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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(continued)


(e) Fair value of financial assets and liabilties (continued)

The appropriate level for an instrument is determined on the basis of the lowest level input that is significant to thefair value measurement.

The following table summarises the levels of the fair value hierarchy for financial instruments measured at fair valueas at 30 June 2011 and 30 June 2010:

30 June 2011Level 1

$Level 2

$Level 3

$Total

$

Assets

Unlisted unit trustsTotal Assets

421,468421,468

421,468421,468

30 June 2010Level 1

$Level 2

$Level 3

$Total

$

Assets

Unlisted unit trustsTotal Assets

496,182496,182

496,182496,182

There have been no transfers between levels for the year ended 30 June 2011.

Financial instruments that trade in markets that are not considered to be active but are valued based on quotedmarket prices, dealer quotations or alternative pricing sources supported by observable inputs are classified withinlevel 2. These include unlisted unit trusts valued at the redemption value per unit, as reported by the Managers ofsuch 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 June2011

$

30 June2010

$

Audit servicesAudit of financial reportsOther audit work under the Corporations Act 2001

Total remuneration for audit services

6,000310

6,310

5,800290

6,090

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 9 classes of unitholders in the Fund. The units are held in separate classes, by release, for the purpose ofThreshold Management.

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(continued)

5 Net assets attributable to unitholders (continued)

Movements in number of units and net assets attributable to unitholders during the year were as follows:

As at

Net assets attributable to unitholders - June2003 releaseOpening balanceApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease in net assets attributable to unitholdersClosing balance

Net assets attributable to unitholders -December 2003 releaseOpening balanceApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease in net assets attributable to unitholdersClosing balance

Net assets attributable to unitholders - April2004 releaseOpening balanceApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease/(decrease) in net assets attributable tounitholdersClosing balance

30 June2011No.

748,909

(32,178)

30 June2010No.

1,841,901

(1,092,992)

716,731

30 June2011No.

3,173

(3,158)

30 June2011No.

-18-

748,909

30 June2010No.

3,185

(12)

15 3,173

30 June2010No.

9

9

30 June2011

$

416,618

(19,468)

16,433413,583

As at30 June

2011$

1,765

(1,868)

1129

As at30 June

2011$

9

9

30 June2010

$

901,327

(599,600)

114,891416,618

30 June2010

$

1,559

(7)

2131,765

30 June2010

$

5 5

5 5

I

~

Fusion Fund. UBS Australian Share FundNotes to the financial statementsFor the year ended 30 June 2011

(continued)


As at30 June 30 June 30 June 30 June

2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders - June2004 releaseOpening balance 1,917 1,917 1,066 938ApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease in net assets attributable to unitholders 40 128Closing balance 1,917 1 ,917 1,106 1 ,066


2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders -November 2004 releaseOpening balanceApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease in net assets attributable to unitholdersClosing balance

868 40,141 484 19,642

(868) (39,273) (487) (22,078)

3 2,920868 484


2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders - June2005 releaseOpening balanceApplicationsRedemptionsUnits issued upon reinvestment of distributionsIncrease in net assets attributable to unitholdersClosing balance

93,373607,002

(700,375)

45,691355,352

(404,202)

3,159

-19-


(continued)



2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders -December 2005 releaseOpening balance 66,380 13,996 36,925 6,849Applications 21,496 123,649 12,706 68,915Redemptions (87,876) (71,265) (50,356) (41,470)Units issued upon reinvestment of distributionsIncrease in net assets attributable to unitholders 725 2,631Closing balance 66,380 36,925


2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders - June2006 releaseOpening balance 66,875 144,143 37,202 70,536Applications 662,412 400,260Redemptions (66,875) (739,680) (38,862) (440,590)Units issued upon reinvestment of distributionsIncrease in net assets attributable to unitholders 1,660 6,996Closing balance 66,875 37,202


2011 2010 2011 2010No. No. $ $

Net assets attributable to unitholders -November 2006 releaseOpening balance 35,339 62,875 19,659 30,767Applications 262,919 155,771Redemptions (12,426) (290,455) (7,447) (171,261 )Units issued upon reinvestment of distributionsIncrease in net assets attributable to unitholders 1,010 4,382Closing balance 22,913 35,339 13,222 19,659

Total net assets attributable to unitholders 427,925 513,724

-20-

6 Distributions to unitholders

The distributions paid and payable were as follows:

2011

Distributions Number of

$ units

Final distributions 12,210 741,585payable

Distributions paid to 1,209redeeming unitholders

Total 13,419 741,585

Distributionsper unit

cents/unit

1.65

The final distribution is reinvested, effective as at 01 July 2011.

7 Cash and cash equivalents

Cash at bank


(continued)

Distributions$

18,609

18,609

2010

Number of Distributionsunits per unit

cents/unit

30 June2011

$

20,461

As at30 June

2010$

28,300

Cash at the end of the financial year, as shown in the Statement of cash flows, is reconciled to the related items inthe Statement of financial position as detailed above. These accounts are interest bearing.

8 Financial assets held at fair value through profit or loss

Designated at fair value through profit or lossUnlisted unit trustsUnits in Australian equity trustsTotal unlisted unit trusts

-21-

30 June2011

Fair value$

421,468421,468

As at30 June

2010Fair value

$

496,182496,182


(continued)

9 Related party disclosures

(a) Responsible Entity

The Responsible Entity of Fusion Fund - UBS Australian Share Fund is Macquarie Financial Products ManagementLimited (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 inoffice during the year and up to the date of the report are:

Peter LucasWilliam FoxSimone 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 compensationas defined in AASB 124 "Related Party Disclosures" is paid by the Fund to the Directors as Key ManagementPersonneL.

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 afee of up to 3% per annum (GST exclusive) of the value of the assets calculated daily, based on the value of theassets on each day and payable from the assets on 30 June in each year. The current fee charged by theResponsible Entity is 1% per annum (GST exclusive).

All related party transactions are conducted on normal commercial terms and conditions. The transactions duringthe year and amounts payable at the year end between the Fund and the Responsible Entity are as follows:


Management fees paid by the Fund to the Responsible EntityResponsible Entity fees incurred and other transactionsAdministration expenses incurred by the Responsible Entity which are reimbursedin accordance with the Fund ConstitutionAggregate amounts payable to the Responsible Entity at the reporting date

14,0185,284

7926,677

91,14111,085

1,66214,018

-22-


(continued)

9 Related party disclosures (continued)

(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 Entityduring the period.

(e) Key Management Personnel Remuneration

Key Management Personnel are paid by Macquarie Financial Products Management Limited. Payments made fromthe Fund to Macquarie Financial Products Management Limited do not include any amounts directly attributable tothe 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 Personnelor their personally related entities at any time during the reporting period.

(g) Other transactions within the Fund

The Fund holds cash balances with Macquarie Bank Limited, the parent entity of the Responsible Entity. Thesebalances are held on normal commercial terms.

Bond Street Custodians Limited, a wholly owned subsidiary of Macquarie Group Limited, is the custodian of theFund.

10 Reconciliation of profit/(Ioss) to net cash provided by/(used in) operating activitiesYear ended

30 June 30 June2011 2010$ $

(a) Reconcilation of profitl(loss) to net cash provided by/(used in) operatingactivities

Net profit before finance costsNet gain on financial assets at fair valueProceeds from sale of financial instruments at fair value through profit or lossPurchase of financial instruments at fair value through profit or loss and derivativefinancial instrumentsDistribution income reinvestedNet change in amounts payable and other liabilitiesNet change in amounts receivable and other assetsNet cash provided by operating activities

33,402 153,929(19,982) (135,343)116,531 1,653,198

(12,706) (980,298)(14,524) (32,074)

(7,341) (77,119)(2,060) 10,67693,320 592,969

(b) Components of cash and cash equivalentsCash as at the end of the financial year as shown in the Statement of cash flows isreconciled to the Statement of financial position as follows:Cash and cash equivalents 20,461 28,300

(c) Non-cash financing and investing activitiesDuring the year, the following distribution payments were satisfied by the issue ofunits in the Fund

-23-


(continued)

11 Events occurring after the year endNo significant events have occurred since year end which would impact on the financial position of the Funddisclosed in the Statement of financial position as at 30 June 2011 or on the results and cash flows of the Fund forthe 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 2010.

-24-

Fusion Fund - UBS Australian Share FundDirectors' 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 24 are in accordance with the Corporations Act2001 (Cth) , including:

(i) giving a true and fair view of the Fund's financial position as at 30 June 2011 and of its performancefor the year ended on that date; and

(ii) complying with Accounting Standards and Corporations Regulations 2001.

(b) There are reasonable grounds to believe that the Fund will be able to pay its debts as and when theybecome due and payable.

The Directors declare that the notes to the financial statements include an explicit and unreserved statement ofcompliance with the International Financial Reporting Standards (see note 2(a)).

On behalf of the board.

Sydney26 September 2011

-25-

11111111111111111111111111111""'" a! ERNST & YOUNG

Ernst & Young Centre680 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

Tel: +61 292485555Fax: +61 292485959www.ey.com/au

Independent auditor's report to the unitholders of Fusion Fund - UBSAustralian Share Fund

We have audited the accompanying financial report of Fusion Fund - UBS Australian Share Fund (the"fund"), which comprises the statement of financial position as at 30 June 2011, the statement ofcomprehensive income, statement of changes in equity and statement of cash flows for the year thenended, 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 fund,are responsible for the preparation of the financial report that gives a true and fair view in accordancewith Australian Accounting Standards and the Corporations Act 2001 and for such internal controls asthe directors determine are necessary to enable the preparation of the financial report that is free frommaterial misstatement. whether due to fraud or error. In Note 2, the directors also state, in accordancewith Accounting Standard AASB 101 Presentation of Financial statements, that the financial statementscomply with International Financial Reporting Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted ouraudit in accordance with Australian Auditing Standards. Those standards require that we comply withrelevant ethical requirements relating to audit engagements and plan and perform the audit to obtainreasonable 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 inthe financial report. The procedures selected depend on the auditor's judgment. including the assessmentof the risks of material misstatement of the financial report. whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controls relevant to the preparation of the financialreportthat gives a true and fair view in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the responsibleentity's internal controls. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by the directors, as well as evaluating theoverall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act2001. We have given to the directors of the responsible entity a written Auditor's IndependenceDeclaration, a copy of which is included with the directors' report.

Liability limited by a scheme approvedunder Professional Standards Legislation

1111111111111111111111111111111'"'' a! ERNST & YOUNG

Opinion

In our opinion:

a. the financial report of Fusion Fund- UBS Australian Share Fund is in accordance with theCorporations Act2001. including:

giving a true and fair view of the fund's financial position as at 30 June 2011 and of itsperformance 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 inNote 2.

Ernst & Young

~'Y

Darren Handley-Greaves

PartnerSydney26 September 2011

Documents

Fusion Fund - UBS Australian Share Fund - Macquarie · Fusion Fund - UBS Australian Share Fund In relation to our audit of the financial report of Fusion Fund - UBS Australian Share