Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)€¦ · MQ Portfolio Management Limited ACN 092 552 611 (Responsible Entity of Macquarie Asian Alpha Fund (formerly MQ

Macquarie Asian Alpha Fund (formerly MQ AsiaLong Short Fund)ARSN 117946219

Annual report - 30 June 2009

MQ Portfolio Management Limited ACN 092 552 611 (Responsible Entity of Macquarie Asian Alpha Fund (formerly MQ AsiaLong Short Fund) ("the Trust") ARSN 117 946 219) is a wholly owned subsidiary of Macquarie Bank Limited ACN 008 583542 which in turn is a wholly owned subsidiary of Macquarie Group Limited ACN 122169279.

Other than Macquarie Bank Limited ABN 46 008 583 542 ("MBL"), any Macquarie Group entity noted on this page is not anauthorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). That entity'sobligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance inrespect of the obligations of that entity, unless noted otherwise.

This report is not an offer or invitation for subscription or purchase, or a recommendation of securities. It does not take intoaccount the investment objectives, financial situation and particular needs of the investor. Before making an investment in theFund, the investor or prospective investor should consider whether such an investment is appropriate to their particularinvestment needs, objectives and financial circumstances and consult an investment adviser if necessary.

MQ Portfolio Management Limited, as Responsible Entity of the Trust, is entitled to fees for so acting. Macquarie BankLimited and its related corporations, together with their offcers and Directors, may hold units in the Trust from time to time.

Macquarie Asian Alpha Fund (formerly MQ AsiaLong Short Fund)ARSN 117 946 219

Annual report - 30 June 2009Contents

PageDirectors' report 2Auditor's independence declaration 5Income statement 6Balance sheet 7Statement of changes in equity 8Cash flow statement 9Notes to the financial statements 10Directors' declaration 29Independent auditor's report to the unitholders of Macquarie Asian Alpha Fund (formerly MQ Asia Long ShortFund) 30

This financial report covers Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) as an individualentity.

The Responsible Entity of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) is MQ PortfolioManagement Limited (ACN 092 552 611). The Responsible Entity's registered office is Mezzanine Level, NO.1Martin Place, Sydney, NSW 2000.

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Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Directors' report

30 June 2009

Directors' report

The directors of MQ Portfolio Management Limited (a wholly owned subsidiary of Macquarie Group Limited), theResponsible Entity of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund), present their reporttogether with the financial report of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) ("the Trust")for the year ended 30 June 2009.

Principal activities

The Trust invests in equities, equity derivatives and foreign exchange contracts in accordance with the provisions ofthe Trust Constitution.

The Trust did not have any employees during the year.

There were no significant changes in the nature of the Trust's activities during the year.

Directors

The following persons held office as directors of MQ Portfolio Management Limited during the year or since the endof the year and up to the date of this report:

Ottmar Weiss (resigned 23/06/2009)Gregory John Mackay (resigned 19/09/2008)Bruce Neil TerryGervaise Robert John HeddleScot Thompson (appointed 03/02/2009)

Review and results of operations

During the year, the Trust continued to invest in accordance with target asset allocations as set out in the governingdocuments of the Trust and in accordance with the provisions of the Trust Constitution.

Results

The performance of the Trust, as represented by the results of its operations, was as follows:

Year ended30 June 30 June2009 2008$ $

Total net investment income/(Ioss)Operating profiU(loss) before finance costs attributable to unitholders

DistributionsDistribution paid and payableDistribution (cents per unit)

(2,457,368)(7,067,613)

7,532,7622,228.484

5,617,38622.48

Significant changes in state of affairs

During the year the Trust changed its name from the MQ Asia Long Short Fund to the Macquarie Asia Long ShortFund on 3 February 2009 and then changed its name to the Macquarie Asian Alpha Fund on 1 April 2009.

In addition, during the year all unit classes in the Trust were merged into a single unit class.

In the opinion of the directors, there were no significant changes in the state of affairs of the Trust that occurredduring the financial year under review.

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30 June 2009(continued)

Directors' report (continued)

Matters subsequent to the end of the financial year

No matter or circumstance has arisen since 30 June 2009 that has significantly affected, or may significantly affect:

(i) the operations of the Trust in future financial years, or

(ii) the results of those operations in future financial years, or

(iii) the state of affairs of the Trust in future financial years.

Likely developments and expected results of operations

The Trust will continue to be managed in accordance with the investment objectives and guidelines as set out in thegoverning documents of the Trust and in accordance with the provisions of the Trust Constitution.

The results of the Trust's operations will be affected by a number of factors, including the performance ofinvestment markets in which the Trust invests. Investment performance is not guaranteed and future returns maydiffer from past returns. As investment conditions change over time, past returns should not be used to predictfuture returns.

Further information on likely developments in the operations of the Trust 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 Trust.

Indemnification and insurance of officers and auditors

No insurance premiums are paid for out of the assets of the Trust in regards to insurance cover provided to eitherthe officers of MQ Portfolio Management Limited or the auditors of the Trust. So long as the officers of MQ PortfolioManagement Limited act in accordance with the Trust Constitution and the Law, the officers remain indemnified outof the assets of the Trust against losses incurred while acting on behalf of the Trust. The auditors of the Trust are inno way indemnified out of the assets of the Trust.

Fees paid to and interests held in the Trust by the Responsible Entity or its associates

Fees paid to the Responsible Entity and its associates out of Trust property during the year are disclosed in note 11on page 25 of the financial statements.

No fees were paid out of Trust property to the directors of the Responsible Entity during the year.

The number of interests in the Trust held by the Responsible Entity or its associates as at the end of the financialyear are disclosed in note 11 on page 25 of the financial statements.

Interests in the Trust

The movement in units on issue in the Trust during the year is disclosed in note 6 of the financial statements.

The value of the Trust's assets and liabilities is disclosed on the balance sheet and derived using the basis set outin note 2 of the financial statements.

Environmental regulation

The operations of the Trust are not subject to any particular or significant environmental regulations under aCommonwealth, State or Territory law.

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Directors' report (continued)

Auditor's independence declaration

A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 isset out on page 5.

This report is made in accordance with a resolution of the directors.

j¡2¡£-Gervaise Robert John HeddleDirector

Sydney29 September 2009

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pmCfW1ERHousFßPERS IPricewaterhouseCoopersABN 52 780 433 757

Auditor's Independence Declaration

Darling Park Tower 2201 Sussex StreetGPO BOX 2650SYDNEY NSW 1171DX 77 SydneyAustraliaTelephone +61 282660000Facsimile +61 282669999ww.pwc.com/au

As lead auditor for the audit of Macquarie Asian Alpha Fund (formerly MQAsia Long Short Fund) for the year ended 30 June 2009, I declare that to the best of my knowledgeand belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; andb) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund).

~E A BarronPartnerPricewaterhouseCoopers

Sydney29 Septem ber 2009

Liability limited by a scheme approved under Professional Standards Legislation

Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Income statement

For the year ended 30 June 2009

Income statement

Notes

30 June2009

$

30 June2008

$

Investment incomeInterest income from financial assets not held at fair value through profitor lossDividend incomeNet gains/(losses) on financial instruments held at fair value throughprofit or lossOther operating incomeTotal net investment income/(Ioss)

1,140,898 1,469,2242,645,724 2,763,368

5 (6,457,825) 3,074,435213,835 225,735

(2,457,368) 7,532,762

ExpensesResponsible Entity's feesPerformance feesInterest expenseTransaction costsDividends paid on short equity positionsTotal operating expenses

Operating profit/(Ioss)

11 1,526,238 1,662,18911 747,983

1,265,297 1,288,401648,172 674,810

1,170,538 930,8954,610,245 5,304,278

(7,067,613) 2,228,484

Finance costs attributable to unitholdersDistributions to unitholders(Increase)/decrease in net assets attributable to unitholdersProfit/(Ioss) for the year

6 7,067,613(5,617,386)3,388,902

The above income statement should be read in conjunction with the accompanying notes.

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Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Balance sheet

As at 30 June 2009

Balance sheet

Notes

30 June2009

$

30 June2008

$

AssetsCash and cash equivalents 7 9,533,066 13,711,958Due from brokers - receivable for securities sold 14,394,935 81,254,464Receivables 6,826,199 5,323,988Financial assets held at fair value through profit or loss 8 70,457,737 68,959,276Total assets 101 ,211 ,937 169,249,686

LiabiltiesDistributions payable 5,617,386Responsible entity fees payable 350,768 506,146Redemption Payable 3,544,756Payables 8,636,362 16,868,597Financial liabilities held at fair value through profit or loss 9 27,561,245 56,645,502Total liabilities (excluding net assets attributable to unitholders) 40,093,131 79,637,631

Net assets attributable to unitholders - liabilty 6 61,118,806 89,612,055

Fair value of outstanding units based on redemption value 60,796,489 89,612,055Adjustments arising from different unit pricing and financial reportingprinciples 322,317

61,118,806 89,612,055

The above balance sheet should be read in conjunction with the accompanying notes.

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Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Statement of changes in equity


Statement of changes in equity30 June

2009$

30 June2008

$

Total equity at the beginning of the financial year

ProfiU(loss) for the yearNet income/(expense) recognised directly in equityTotal recognised income and expense for the financial year

Transactions with equity holders in their capacity as equity holdersTotal equity at the end of the financial year

Under AIFRS, net assets attributable to unitholders are classified as a liability rather than equity. As a result therewas 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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Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Cash flow statement


Cash flow statement

30 June 30 June2009 2008

Notes $ $

Cash flows from operating activitiesProceeds from sale of financial instruments held at fair value through 311,999,650 243,250,400profit or lossPurchase of financial instruments held at fair value through profit or loss (382,197,577) (233,822,565)Dividends received 2,372,251 2,691,777Interest received 1,045,050 1,486,592Other income received 175,334 239,849Responsible Entity's fees paid (1,351,605) (1,270,805)Performance fees paid (1,180,541)Interest paid (1,165,505) (1,291,651 )Other expenses paid (867,778) (673,824)Dividends paid on short equity positions (1,055,039) (854,632)Due from/to brokers 66,872,761 (73,270,607)Net cash inflow/(outflow) from operating activities 12(a) (4,172,458) (64.696,007)

Cash flows from financing activitiesProceeds from applications by unitholders 26,837,609 76,680,825Payments for redemptions by unitholders (44,717,275) (6,574,920)Distributions paid (1,903,423) (187,394)Application monies received in advance (12,292,706) 2,697,992Net cash inflow/(outflow) from financing activities (32,075,795) 72,616,503

Net increase/(decrease) in cash and cash equivalents (36,248,253) 7,920,496

Cash and cash equivalents at the beginning of the year 13,711,958 9,770,212

Effects of foreign currency exchange rate changes on cash and cashequivalents 32,069,361 (3,978,750)

Cash and cash equivalents at the end of the year 7 9,533,066 13,711,958

Non-cash financing activities 12(b) 3,713,942

The above cash flow statement should be read in conjunction with the accompanying notes.

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Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Notes to the financial statements

30 June 2009

1 General information

This financial report covers Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) ("the Trust") as anindividual entity. The Trust was constituted on 27 January 2006.

The Responsible Entity of the Trust is MQ Portolio Management Limited (the "Responsible Entity" or "MQPML").The Responsible Entity's registered offce is Mezzanine Level, NO.1 Martin Place, Sydney, NSW 2000. Thefinancial report is presented in Australian currency.

During the year, the Trust continued to invest funds in accordance with target asset allocations as set out in thecurrent offer document and in accordance with the provisions of the Trust Constitution.

The financial statements were authorised for issue by the directors on 29 September 2009. The directors of theResponsible Entity have the power to amend and reissue the financial report.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interimreporting period.

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

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, otherauthoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretationsand the Corporations Act 2001 in Australia.

The financial report is prepared on the basis of fair value measurement of assets and liabilities except whereotherwise stated.

Compliance with International Financial Reporting Standards (IFRS)

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards(AI FRS). Compliance with AIFRS ensures that the financial report of the Trust, comprising the financial statementsand notes thereto, complies with International Financial Reporting Standards.

(b) Financial instruments

(i) Classification

The Trust's investments are categorised as at fair value through profit or loss. They comprise:

. Financial instruments held for trading

These include derivative financial instruments including futures, contracts for differences and foreign exchangecontracts. The Trust does not designate any derivatives as hedges in a hedging relationship.

. 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, such asinvestments in exchange traded equity instruments.

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

The Trust makes short sales in which a borrowed security is sold in anticipation of a decline in the market value ofthat security, or it may use short sales for various arbitrage transactions. Short sales are classified as financialliabilities at fair value through profit or loss.

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2 Summary of significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Recognition/derecognition

The Trust 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 cashflows from the investments have expired or the Trusthas transferred substantially all risks and rewards of ownership.

(iii) Measurement

Financial assets and liabilities held at fair value through profi or loss are measured initially at fair value excludingany transaction costs that are directly attributable to the acquisition or issue of the financial asset or financialliability. Transaction costs on financial assets and financial liabilities at fair value through profi or loss are expensedimmediately. Subsequent to initial recognition, all instruments held at fair value through profit or loss are measuredat fair value with changes in their fair value recognised in the income statement.

. Fair value in an active market

The fair value of financial assets and liabilities traded in active markets is based on their quoted market pricesat the balance sheet date without any deduction for estimated future selling costs. Financial assets are priced atcurrent bid prices, while financial liabilities are priced at current asking prices.

. Fair value in an inactive or unquoted market

The fair value of financial assets and liabilities that are not traded in an active market is determined usingvaluation techniques. These include the use of recent arm's length market transactions, reference to the currentfair value of a substantially similar other instrument, discounted cash flow techniques, option pricing models orany other valuation technique that provides a reliable estimate of prices obtained in actual market transactions.

For other pricing models, inputs are based on market data at the balance sheet date. Fair values for unquotedequity investments are estimated, if possible, using applicable pricing/earnings ratios for similar listedcompanies adjusted to reflect the specific circumstances of the issuer.

The fair value of derivatives that are not exchange-traded is estimated at the amount that the Trust wouldreceive or pay to terminate the contract at the balance sheet date taking into account current market conditions(volatility and appropriate yield curve) and the current creditworthiness of the counterparties. The fair value of aforward contract is determined as a net present value of estimated future cash flows, discounted at appropriatemarket rates as at the valuation date. The fair value of an option contract is determined by applying the Black-Scholes option valuation modeL.

(a) Loans and receivables

Loan assets are measured initially at fair value plus transaction costs and subsequently amortised using theeffective interest rate method, less impairment losses if any. Such assets are reviewed at each balance sheet dateto determine whether there is objective evidence of impairment for example when there has been a significant orprolonged decline in the fair value below carrying amount.

If any such indication of impairment exists, an impairment loss is recognised in the income statement as thedifference between the asset's carrying amount and the present value of the revised estimated future cash flowsdiscounted at the original effective interest rate.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortisedcost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the income statement.

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(c) Net assets attributable to unitholders

Units are redeemable at the unitholders' option and are therefore classified as financial liabilities. The units can beput back to the Trust at any time for cash based on the redemption price. The fair value of redeemable units ismeasured at the redemption amount that is payable (based on the redemption unit price) at the balance sheet dateif unitholders exercised their right to put the units back to the Trust.

(d) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand and bankoverdrafts. Bank overdrafts are shown separately on the balance sheet.

Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows fromoperating activities, as movements in the fair value of these securities represent the Trust's main incomegenerating activity.

(e) Investment income

Interest income and expenses are recognised in the income statement for all financial instruments that are not heldat fair value through profit or loss using the effective interest method. Interest income on assets held at fair valuethrough profit or loss is included in the net gains/(Iosses) on financial instruments. Other changes in fair value forsuch instruments are recorded in accordance with the policies described in note 2(b).

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liabilityand of allocating the interest income or interest expense over the relevant period. The effective interest rate is therate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financialinstrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or liability. Whencalculating the effective interest rate, the Trust estimates cash flows considering all contractual terms of thefinancial instrument (for example, prepayment options) but does not consider future credit losses. The calculationincludes all fees paid or received between the parties to the contract that are an integral part of the effective interestrate, including transaction costs and all other premiums or discounts.

Dividend income is recognised on the ex-dividend date with any related foreign withholding tax recorded as anexpense.

(f) ExpensesResponsible Entity's fees are recognised in the income statement on an accruals basis. All other expenses arerecognised when incurred.

Dividends paid on short equity positions are recognised on the ex-dividend date.

(g) Income tax

Under current legislation, the Trust is not subject to income tax provided the taxable income of the Trust is fullydistributed either by way of cash or reinvestment (i.e. unitholders are presently entitled to the income of the Trust).

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 Trust is not subject to capitalgains tax.

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

The benefits of imputation credits and foreign tax paid are passed on to unitholders.

The Trust currently incurs withholding tax imposed by certain countries on investment income. Such income isrecorded gross of withholding tax in the income statement.

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(h) Distributions

In accordance with the Trust Constitution, the Trust distributes its distributable (taxable) income, and any otheramounts determined by the Responsible Entity, to unitholders by cash or reinvestment. The distributions arerecognised in the income statement as finance costs attributable to unitholders.

(i) 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 the income statement as finance costs.

G) Foreign currency translation

i) Functiona/ and presentation currency

Items included in the Trust's financial statements are measured using the currency of the primary economicenvironment in which it operates (the "functional currency"). This is the Australian dollar, which reflects the currencyof the economy in which the Trust competes for funds and is regulated. The Australian dollar is also the Trust'spresentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactionsand from the translations at year end exchange rates of monetary assets and liabilties denominated in foreigncurrencies are recognised in the income statement.

The Trust does not isolate that portion of gains or losses on securities and derivative financial instruments that aremeasured at fair value through profit or loss and which is due to changes in foreign exchange rates from that whichis due to changes in the market price of securities. Such fluctuations are included with the net gains or losses onfinancial instruments at fair value through profit or loss.

(k) Due from/to brokers

Amounts due from/to brokers represent payables for securities purchased and receivables for securities sold thathave been contracted for but not yet delivered by the end of the year. A provision for impairment of amounts duefrom brokers is established when there is objective evidence that the Trust will not be able to collect all amountsdue from the relevant broker. Significant financial difficulties of the broker, probability that the broker will enterbankruptcy or financial reorganisation, and default in payments are considered indicators that the amount due frombrokers is impaired.

(I) Receivables

Receivables may include amounts for dividends and interest. Dividends are accrued when the right to receivepayment is established. Interest is accrued at the reporting date from the time of last payment in accordance withthe policy set out in note 2(e) above. Amounts are generally received within 30 days of being recorded asreceivables.

(m) Payables

Payables includes liabilities, dividends payable on securities sold short and accrued expenses owing by the Trustwhich are unpaid as at balance date.

The distribution amount payable to unitholders as at the reporting date is recognised separately on the balancesheet when unitholders are presently entitled to the distributable income under the Trust's Constitution.

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(n) Applications and redemptions

Applications received for units in the Trust are recorded net of any entry fees payable prior to the issue of units inthe Trust. Redemptions from the Trust are recorded gross of any exit fees payable after the cancellation of unitsredeemed.

(0) Goods and Services Tax (GST)

The GST incurred on the costs of various services provided to the Trust by third parties such as custodial servicesand investment management fees have been passed onto the Trust. The Trust qualifies for Reduced Input TaxCredits (RITC) at a rate of 75% hence investment management fees, custodial fees and other expenses have beenrecognised in the income statement net of the amount of GST recoverable from the Australian Taxation Office(ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included inreceivables in the balance sheet. Cash flows relating to GST are included in the cash flow statement on a grossbasis.

(p) Use of estimates

The Trust makes estimates and assumptions that affect the reported amounts of assets and liabilities within thenext financial year. Estimates are continually evaluated and based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

For the majority of the Trust's financial instruments, quoted market prices are readily available. However, certainfinancial instruments, for example, over-the-counter derivatives or unquoted securities are fair valued usingvaluation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values,they are validated and periodically reviewed by experienced personnel of the Responsible Entity. independent ofthe area that created them. Models are calibrated by back-testing to actual transactions to ensure that outputs arereliable.

Models use observable data, to the extent practicable. However, areas such as credit risk (both own andcounterparty), volatilities and correlations require management to make estimates. Changes in assumptions aboutthese factors could affect the reported fair value of financial instruments.

For certain other financial instruments, including amounts due from/to brokers, accounts payable and the carryingamounts approximate fair value due to the immediate or short-term nature of these financial instruments.

(q) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June2009 reporting periods. The directors' assessment of the impact of these new standards (to the extent relevant tothe Trust) and interpretations is set out below:

(i) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to AustralianAccounting Standards arising from AASB 101 (effective from 1 January 2009)

The revised AASB 101 requires the presentation of a statement of comprehensive income and makes changes tothe statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If aTrust has made a prior period adjustment or has reclassified items in the financial statements, it will need todisclose a third balance sheet (statement of financial position), this one being as at the beginning of thecomparative period. The Trust will apply the revised standard from 1 July 2009.

(ii) AASB 132 Financial Instruments: Presentation and AASB 2008-2 Amendments to Australian AccountingStandards - Puttable Financial Instruments and Obligations Arising on Liquidation (Revised AASB 132) (effectivefrom 1 January 2009)

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(q) New accounting standards and interpretations (continued)

Revised AASB 132 is applicable for reporting periods beginning on or after 1 January 2009. The Trust has notadopted this standard early. Application of this standard will not affect any of the amounts recognised in thefinancial statements as the Trust is obligated to distribute all of its taxable income in accordance with the Trust'sConstitution. Accordingly, there will be no change to classification of' funds as a liability and therefore no impact onprofi or loss and equity.

(iii) AASB 2009-2 Amendments to Australian Accounting Standards - Improving Disclosures about FinancialInstruments (effective from 1 January 2009)

In April 2009, the AASB published amendments to AASB 7 Financial Instruments: Disclosures to improve theinformation that entities report about their liquidity risk and the fair value of their financial instruments. Theamendments require fair value measurement disclosures to be classified into a new three-level hierarchy andadditional disclosures for items whose fair value is determined by valuation techniques rather than observablemarket values. The AASB also clarified and enhanced the existing requirements for the disclosure of liquidity risk ofderivatives. The Trust will apply the amendments from 1 July 2009. They will not affect any of the amountsrecognised in the financial statements.

(r) Early adoption of standards

The Trust has early adopted AASB 8 Operating Segments in the year ended 30 June 2009. The application ofAASB 8 will not impact the Trust as the Trust is outside the scope of AASB 8 because it does not have debt orequity instruments traded in a public market, or file its financial statements with a securities commission or otherregulatory organisation for the purpose of issuing any class of instruments in a public market. Following the earlyadoption of AASB 8, the Trust has omitted the segment disclosure previously required under AASB 114 SegmentReporting.

(s) Margin accounts

Margin accounts comprise cash held as collateral for derivative transactions and short sales. The cash is held bythe broker and is only available to meet margin calls.

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3 Financial risk management

(a) Strategy in using financial instruments

The Trust's activities expose it to a variety of financial risks: market risk (including price risk), credit risk and liquidityrisk.

The Trust's overall risk management programme focuses on ensuring compliance with the Trust's ProductDisclosure Statement and seeks to maximise the returns derived for the level of risk to which the Trust is exposed.The Trust uses derivative financial instruments to alter certain risk exposures.

Financial risk management is carried out by the investment management department under policies approved byMQPML's senior managers or by the board of directors of the Responsible Entity (the Board).

(b) Market risk

(i) Price risk

Other price risk is the risk that the value of the Trust's investment portfolio will fluctuate as a result of changes inmarket prices.

Macquarie Asian Alpha Fund is exposed to other price risk on all of the investments held by the Trust. The Trust'sother price risk is monitored by the Investment Manager on an ongoing basis and is managed by adopting thefollowing policies to minimise exposure to other price risk.

. Overall portfolio exposure - managed by ensuring that the overall exposure of the portfolio is within acceptablelimits

. Stock limits - manage exposure to any single stock and ensure diversification

Short sales made by the Trust involve certain risks and special considerations. Possible losses from short salesdiffer from losses that could be incurred from a purchase of a security, because losses from short sales may beunlimited, whereas losses from purchases cannot exceed the total amount invested.

The Trust's equity securities held long and short, whether cash positions or through derivative instruments, aresubstantially all publicly traded. The table below summarises the impact of increases/decreases of the key indicesto which the Trust is exposed. The reasonably possible movements in the risk variables have been determinedbased on management's best estimate, having regard to a number of factors, including historical levels of changesin interest rates and foreign exchange rates, historical correlation of the Trust's investments with the relevantbenchmark and market volatility. However, actual movements in the risk variables may be greater or less thananticipated due to a number of factors, including unusually large market shocks resulting from changes in theperformance of the economies, markets and securities in which the Trust invests. As a result, historic variations inrisk variables are not a definitive indicator of future variations in the risk variables.

30 June 2009 30 June 2009 30 June 2008 30 June 2008

Impact on operating Impact on operatingprofiUNet assets profit/Net assets

Change in attributable to Change in attributable to

market index unitholders market index unitholders

+/- % +/- $ +/- % +/- $

Australia (ASX 200) 15.00 1,451,717 5.00 131,093

Japan (Topix) 15.00 729,766 5.00 7,222

Hong Kong (Hang Seng) 15.00 962,766 5.00 181,959

Singapore (FSSTI) 15.00 458,003 5.00 241,664

Other Asian markets 15.00 2,753,283 5.00 35,335

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3 Financial risk management (continued)

(b) Market risk (continued)

(ii) Foreign exchange risk

The Trust holds both monetary and non-monetary assets denominated in currencies other than the Australiandollar. The foreign exchange risk relating to non-monetary assets and liabilities is a component of price risk.Foreign exchange risk arises as the value of monetary securities denominated in other currencies will fluctuate dueto changes in exchange rates. The risk is measured using sensitivity analysis.

As the majority of the foreign exchange risk is hedged by the Investment Manager there will be little to nosensitivities to foreign currency movements. However, for accounting purposes, the Fund does not designate anyderivatives as hedges in a hedging relationship, and hence these derivative financial instruments are classified asat fair value through profit or loss.

The table below summarises the Fund's exposure to foreign exchange risks as at 30 June 2009 and 30 June 2008.

Hong KongDollars

JapaneseYen

SingaporeDollars

US

Dollars Other

30 June 2009 A$ A$ A$ A$ A$

Cash and cash equivalents

Financial assets held at fair value through profit or

loss

Receivables

PayablesFinancial liabilities held at fair value through profit or

lossNet increase/decrease in exposure from foreign

currency forward contracts - sell foreign currency

Impact to fund of 15% movement in foreign

exchange rates

12,483,895 21,690,439 3,888,470 15,304 18,692,473

2,001,569 13,660,451 1,890,744

(585,868) (2,406,383) (93,373)

(5,956,924) (16,544,781 ) (821,655) (156,858)

(9,966,992) (18,364,716) (2,540,048) 4,167,864 (11,211,1 69)

(1,438,452) 441,392 (59,101) 1,776,785 9,121,817

(215,768) 66,209 (8,865) 266,518 1,368,273

-17-


(b) Market risk (continued)

30 June 2008



Hong KongDollars

JapaneseYen

SingaporeDollars

US

Dollars Other

A$ A$ A$ A$ A$

Cash and cash equivalents

Financial assets held at fair value trhough profit or

lossReceivables

Distiibutions payablePayables

Financial liabilities held at fair value through profi or

loss

Net increase/decrease in exposure from foreign

currency forward contracts - sell foreign currency

Impact to fund of 15% movement in foreign

exchange rates

14,443,092 28,802,076 7,085,899 411,009

13,087,359 24,678,070 6,330,661 (74,090)

(143,465) (2,610,566) (401,641) (11,967)

(10,803,908) (28,657,635 ) (2,252,614) (32,695)

(16,652,296) (10,593,352) 4,272,907

(69,218) 22,211,945 168,953 4,565,164

(10,383) 3,331,792 25,343 684,775

706,696

(204,378)

(28,886)

(2,565,584)

(2,092,152)

(313,823)

(iii) Interest rate risk

The Trust's is exposed to interest rate risk on its bank and broker balances. However, the majority of the Trust'sfinancial assets and liabilities are non interest bearing. As a result, the Trust is not subject to significant amounts ofrisk due to fluctuations in the prevailing levels of market interest rates. The Investment Manager believes there isinsignificant interest rate risk in the Trust as the relevant cash balances are due on demand. Any excess cash andcash equivalents are invested at short term market interest rates.

(c) Credit risk

The Trust is subject to credit risk, which is the risk that an issuer or counterparty will be unable or unwilling to meeta commitment (including payment of amounts arising from derivative contracts) in full when due, that it has enteredinto with the Trust. All investment transactions are settled/paid for upon delivery using approved brokers. The riskof default is considered minimal since delivery of securities sold is only made once the broker has receivedpayment. On a purchase, payment is made once the broker has received the securities. If either party fails to meettheir obligation, the trade will faiL.

The Trust is exposed to credit risk on its cash and cash equivalents held and on the derivative contracts heldthrough approved brokers. This risk is monitored on an ongoing basis. Financial assets which potentially subjectthe Trust to concentrations of credit risk consist principally of bank deposits and balances, assets held withGoldman Sachs International (the "Prime Broker"), and derivatives where the Prime Broker is the counterparty. ThePrime Broker also provides the clearing and depository operations for the Fund's security transactions. The PrimeBroker provides loans and finance to the Trust and, as continuing security for the payment and discharge of allliabilities of the Trust, assets held by the Prime Broker will be charged in favour of the Prime Broker.

As at 30 June 2009 the net assets of the Trust, which amount to $61,118,806 (2008: $89,612,055), are held withthe Prime Broker whose credit rating issued by Moody's at the year end was:

Goldman Sachs

30 June2009

30 June2008

A1 Aa3

-18-




(c) Credit risk (continued)

Collateral pledged under prime brokerage agreements

The Trust has entered into a prime brokerage agreement with Goldman Sachs. All of the assets of the Trust arepledged as cross-collateral for all amounts owed to the prime broker including amounts due to brokers forsecurities purchased and securities sold short.

The Trust limits its exposure to credit risk by transacting the majority of its securities and contractual commitmentactivities with broker-dealers, banks and regulated exchanges with high credit ratings and that the Trust considersto be well established. The maximum exposure to credit risk at the reporting date is the carrying amount of thefinancial assets excluding those assets not subject to credit risk (i.e. equity securities as diclosed in note 9).

In accordance with the Trust's policy, the Investment Manager monitors the Trust's credit position on a daily basis.

(d) Liquidity Risk

Liquidity risk is the risk that the Trust will encounter difficulty in meeting obligations associated with financialliabilities.

The Trust is exposed to monthly cash redemptions of redeemable units and as a result it primarily holdsinvestments that are traded in an active market and can be readily disposed.

The Trust's listed securities are considered readily realisable. The Trust may invest in derivative contracts tradedover the counter, which are not traded in an organised market and may be iliquid. As a result, the Trust may not beable to quickly liquidate its investments in these instruments at an amount close to their fair value to meet itsliquidity requirements or to respond to specific events such as deterioration in the creditworthiness of any particularissuer or counterparty.

As of 30 June 2009, the Investment Manager believes that all of its positions are in liquid instruments that can beliquidated without any significant market impact.

The Compliance Committee of the Responsible Entity reviews any identified exceptions to internal risk policies andprocedures on a quarterly basis.

The table below analyses the Trust's financial liabilities, includes gross setted derivative financial liabilities intorelevant maturity groupings based on the remaining period at the balance sheet date to the earliest possiblecontractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.Balances due within 12 months equal their carrying amounts, as the impact of discounting is not significant.

Less than 1

month 1-6 monthsNo statedmaturity Total

$ $ $ $

At 30 June 2009Financial liabilities at fair value throughprofi or lossDividends payable on short positionsPayable for investment purchasedRedemptions PayableOther payablesNet assets attributable to unitholdersTotal financial liabilities 62,319 27,458,514

27,561,24424,608

8,611,7543,544,756

350,76861,118,806

101,211,936

65,019

8,611,7543,544,756

350,76861.18,80673,691,103

37,71124,608

27,458,514

-19-




(d) Liquidity Risk (continued)

At 30 June 2008Financial liabilities at fair value throughprofit or lossDividends payable on short positionsPayable for investment purchasedDistribution payableApplication received in advanceOther payablesNet assets attributable to unitholdersTotal financial liabilities

10,95025,193

56,583,90850,64465,701

4,483,0315,617,386

12,292,706508,112

89,612,055112,629,635 56,583,90836,143

56,645,50290,894

4,483,0315,617,386

12,292,706508,112

89,612,055169,249,686

The table below analyses the Trust's derivative financial instruments that will be settled on a gross basis intorelevant maturity groupings based on the remaining period to the contractual maturity date at the year end date.The amounts disclosed in the table are the contractual undiscounted cash flows.

Less than 1

month Total

At 30 June 2009Foreign currency forward contracts

Inflows(Outflows)

$ $47,135,257 47,135,257

(46,606,370) (46,606,370)

At 30 June 2008Foreign currency forward contracts

Inflows(Outflows)

69,037,670 69,037,670

(68,258,315) (68,258,315)

4 Auditor's remuneration

During the year the following fees were paid or payable for services provided by the auditor of the Trust:

30 June2009

$

Audit services

PricewaterhouseCoopers Australian firmAudit and review of financial reportsOther audit work under the Corporations Act 2001

Total remuneration for audit services

7,3581,4008,758

Non-audit services

Tax compliance servicesOther

Total remuneration for non-audit services

30 June2008

$

15,8665,500

21,366

4,6633,9608,623

The above costs are paid by the Responsible Entity on behalf of the Fund and recouped through the operatingexpenses of the Fund.

-20-



5 Net gains/(Iosses) on financial instruments held at fair value through profit or loss

Financial assetsNet gains/(losses) on financial assets held for tradingNet gains/(Iosses) on financial assets designated as at fair value through profit orlossNet gains/(Iosses) on financial assets held at fair value through profit or loss

Financial liabilitiesNet gains/(Iosses) on financial liabilities held for tradingNet gains/(Iosses) on financial liabilities designated as at fair value through profior lossNet gains/(Iosses) on financial liabilities held at fair value through profit or loss

Total net gains/(Iosses) on financial instruments held at fair value throughprofi or loss

6 Net assets attributable to unitholders

30 June 30 June2009 2008

$ $

(18,220,117) (5,781,549)

5,792,915 (8,853,167)(12,427,202) (14,634,716)

30 June 30 June2009 2008

$ $

5,448,820 3,618,893

520,557 14,090,2585,969,377 17,709,151

(6,457,825) 3,074,435

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

Direct Employee Indirect Institutionalclass class class class Total2009 2009 2009 2009 2009units units units units units

Opening balance at 1 July 8,463,262 12,843,235 15,138,944 47,074,225 83,519,666Application 1,324,164 17,066,212 901,454 8,218,445 27,510,275

Redemption (810,806) (4,486,530) (5,137,039) (39,434,650) (49,869,025)Unit consolidation (8,976,620) (25,422,917) (10,903,359) 45,302,896

Closing balance at 30 June 61,160,916 61,160,916

-21-



6 Net assets attributable to unitholders (continued)Direct Employee Indirect Institutionalclass class class class Total

2009 2009 2009 2009 2009

$ $ $ $ $

Opening balance at 1 July 9,746,289 14,619,238 15,751,370 49,495,158 89,612,055

Application 620,336 16,950,377 908,213 8,361,248 26,840,174

Redemption (864,481) (4,698,089) (4,828,309) (37,874,930) (48,265,810)Unit consolidation (9,502,144) (26,871,526) (11,831,273) 48,204,943

Increase/(decrease) in net assetsattributable to unitholders (7,067,613) (7,067,613)

Closing balance at 30 June 61,118,806 61,118,806

Opening balance at 1 July

Application

RedemptionIncrease/(decrease) in net assets

attri but able to unitho Id ers

Closing balance at 30 June

Direct Employee Indirect Institutionalclass class class class Total

2008 2008 2008 2008 2008

units units units units units

2,667,814 4,440,257 3,887,118 9,684,684 20,679,873

7,180,235 9,530,201 11,987,776 39,969,573 68,667,785

(1,384,787) (1,127,223) (735,950) (2,580,032) (5,827,992)8,463,262 12,843,235 15,138,944 47,074,225 83,519,666

Direct Employee Indirect Institutionalclass class class class Total

2008 2008 2008 2008 2008

$ $ $ $ $

3,154,515 5,136,674 4,155,633 10,448,231 22,895,053

8,811,621 11,172,636 13,185,820 43,510,747 76,680,824

(1,639,831) (1,324,860) (793,660) (2,816,569) (6,574,920)

(580,016) (365,212) (796,423) (1,647,251 ) (3,388,902)9,746,289 14,619,238 15,751,370 49,495,158 89,612,055

Opening balance at 1 July

Application

Redemption

Closing balance at 30 June

As stipulated within the Trust Constitution, each unit represents a right to an individual share in the Trust and doesnot extend to a right to the underlying assets of the Trust. At year end, due to all classes being merged into a singleclass, there are no separate classes of units and each unit has the same rights attaching to it as all other units ofthe Trust.

Capital risk management

The Trust manages its net assets attributable to unitholders as capital, notwithstanding net assets attributable tounitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantlyon a monthly basis as the Trust is subject to monthly applications and redemptions at the discretion of unitholders.

The Trust monitors the level of daily applications and redemptions relative to the liquid assets in the Trust.

-22-



7 Cash and cash equivalents

Cash at bank11 am accounts

8 Financial assets held at fair value through profit or loss

Designed at fair value through profit or lossListed equity securities

Held for tradingContracts for differencesForward currency contractsFutures contractsTotal financial assets held at fair value through profit or loss

9 Financial liabilities held at fair value through profit or loss

Designated at fair value through profit or lossListed equity securities sold shortTotal listed equity securities sold short

Held for tradingContracts for differenceForward currency contractsFutures contractsTotal derivatives

Total financial liabilties held at fair value through profit or loss

-23-

30 June2009

$

9,431,724101,342

9,533,066

30 June2009

Fair value$

66,513,914

3,358,258585,566

70,457,738

30 June2009

Fair value$

26,900,05826,900,058

558,52456,67945,984

661,187

27,561,245

30 June2008

$

13,611,939100,019

13,711958

30 June2008

Fair value$

64,096,043

4,316,541485,098

61,59468,959,276

30 June2008

Fair value$

52,662,43252,662.432

3,983,070

3,983,070

56,645,502



10 Derivative financial instruments

In the normal course of business the Trust enters into transactions in various derivative financial instruments withcertain risks. A derivative is a financial instrument or other contract which is setted at a future date and whosevalue changes in response to the change in a specified interest rate, financial instrument price, commodity price,foreign exchange rate, index of prices or rates, credit rating or credit index or other variable.

Derivative financial instruments require no initial net investment or an initial net investment that is smaller thanwould be required for other types of contracts that would be expected to have a similar response to changes inmarket factors.

Derivative transactions include a wide assortment of instruments, such as forwards, futures and options.Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of theFund's portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives ismultifaceted and includes:

. hedging to protect an asset or liability of the Fund against a fluctuation in market values or to reducevolatility

. a substitution for trading of physical securities

. adjusting asset exposures within the parameters set in the investment strategy, and adjusting the

duration of fixed interest portfolios or the weighted average maturity of cash portfolios.

While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio. Gearing a portfoliowould occur if the level of exposure to the markets exceeds the underlying value of the Fund.

The Fund holds the following derivative instruments:

(a) Futures

Futures are contractual obligations to buy or sell financial instruments on a future date at a specified priceestablished in an organised market. The futures contracts are collateralised by cash or marketable securities.Changes in futures contracts' values are usually settled net daily with the exchange. Interest rate futures arecontractual obligations to receive or pay a net amount based on changes in interest rates at a future date at aspecified price, established in an organised financial market.

(b) Forward currency contracts

Forward currency contracts are primarily used by the Trust to hedge against foreign currency exchange rate riskson its non-Australian dollar denominated trading securities. The Trust agrees to receive or deliver a fixed quantity offoreign currency for an agreed upon price on an agreed future date. Forward currency contracts are valued at theprevailing bid price at the reporting date. The Trust recognises a gain or loss equal to the change in fair value at thereporting date.

(c) Contracts for difference

Contracts for difference (CFD) are derivatives that allow users to speculate on underlying price movements, withoutthe need for the ownership of underlying assets. CFD are traded over the counter (OTC). CFD allow investors totake long or short positions and unlike future contracts they don't have any fixed pricing rates or contract size. CFDwere marked to market base on the closing exchange price of the underlying security. Non Australian dollardenominated CFD were translated to AUD equivalent based on an appropriate foreign exchange rate at theAustralian market close. Margin payments were based on the changes in the market value of the underlyingsecurities.

-24-



10 Derivative financial instruments (continued)

As at year end, the Trust held for trading the following outstanding derivative financial instruments:

30 June 2009 Fair Values

Contract!Maturity notional Assets Liabilties

$ $ $

Forward currency contracts 38,779,627 585,566 56,679Contracts for difference (19,866,378) 3,358,258 558,524Hang Seng Index Futures 30/07/2009 (3,086,680) 3,436MSCI Singapore Index ITS Futures 30/07/2009 (2,050,379) 4,837SPI 200 Futures 17/09/2009 (4,681,200) 35,275Topix Index Futures 10/09/2009 (355,521) 2,436

3,943,824 661,187

30 June 2008 Fair ValuesContract!

Maturity notional Assets Liabilities$ $ $

Forward currency contracts 6,345,499 485,098Contracts for difference 7,761,795 4,316,541 (3,983,070)SPI 200Futures 30/09/2008 (400,425) 10,950MSCI Singapore Index ETS future 31/07/2008 (4,395,968) 50,644

4,863,233 (3,983,070)

An overview of the risk exposures relating to derivatives is included in note 3.

11 Related party transactions

Responsible Entity

The Responsible Entity of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) is MQ PortfolioManagement Limited.

Key management personnel

Key management personnel includes persons who were directors of MQ Portfolio Management Limited at any timeduring the financial year as follows:

Ottmar Weiss (resigned 23/06/2009)Gregory John Mackay (resigned 19/09/2008)Bruce Neil TerryGervaise Robert John HeddleScot Thompson (appointed 03/02/2009)

-25-



11 Related party transactions (continued)

Key management personnel unitholdings

The key management personnel of MQ Portfolio Management Limited held units in the Trust as follows:

2009

Number of Number of Number of Number of Distributionsunits held units held units units paid/payableopening closing Interest held acquired disposed by the Trust

(OOO's Units) (OOO's Units) (%) (OOO's Units) (OOO's Units) ($)

Gregory John Mackay 864,423 942,884 1.54 78,461

2008

Number of Number of Number of Number of Distributionsunits held units held units units paid/payableopening closing Interest held acquired disposed by the Trust

Unitholder (OOO's Units) (OOO's Units) (%) (OOO's Units) (OOO's Units) ($)

Gregory John Mackay 864,423 864,423 1.00 63,953

Key management personnel loan disclosures

The Trust 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.

Responsible entity's/manager's fees and other transactions

For the year ended 30 June 2009, in accordance with the Trust Constitution, the Responsible Entity received a totalfee of 1.55% of net asset value (inclusive of GST, net of RITC available to the Trust) per annum (2008: 1.55%).

The Responsible Entity is entitled to receive 20% of the returns over the Benchmark (being the Reserve Bank ofAustralia cash rate target) subject to a high water mark accrued daily.

All expenses in connection with the preparation of accounting records and the maintenance of the unit register arereimbursed in accordance with the Trust constitution.

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

30 June2009

$

30 June2008

$

Management fees for the year paid by the Trust to the Responsible EntityPerformance fees for the year paid by the Trust to the Responsible Entity

Aggregate amounts receivable from, and payable to, each class of other related parties at balance date:

1,526,238 1,662,189747,983

-26-



11 Related party transactions (continued)

2009$

2008$

Current assets

Macquarie Bank Lim~ed related entities (cash)Macquarie Bank Lim~ed related entities (interest receivables)Current liabilitiesMacquarie Bank Lim~ed related entities (management and performance feespayable)

585,735249

13,711,9585,346

350,768 506,146

Related party schemes' unitholdin9s

Parties related to the Trust (including MQ Portolio Management Limited, its related parties and other schemesmanaged by MQ Portfolio Management Limited), hold no units in the Trust.

Other transactions within the Fund

Apart from those details disclosed in this note, no key management personnel have entered into a material contractwith the Trust since the end of the previous financial year and there were no material contracts involving director'sinterests subsisting at year end.

The bank account for the Trust may be held with Macquarie Bank Limited. The Trust may use Macquarie SecuritiesLimited and Macquarie Futures Limited (both Macquarie Group entities), for broking and clearing servicesrespectively. Fees and expenses are negotiated on an arm's length basis for all transactions with related parties.

-27-



12 Reconcilation of profit/(Ioss) to net cash inflow/(outflow) from operating activities

(a) Reconciliation of profit/(Ioss) to net cash inflow/(outflow) from operatingactivitiesIncrease/(decrease) in net assets attributable to unitholdersNet (gains)/losses on financial instruments held at fair value through profit or lossProceeds from sale of financial instruments held at fair value through profit or lossPurchase of financial instruments held at fair value through profit or loss andderivative financial instruments

(Increase)/decrease in dividends receivable(I ncrease )/decrease in interest receivable(I ncrease )/decrease in other receivable(Increase)/decrease in due from brokers(Increase)/decrease in management fee payable(Increase)/decrease in interest payable(Increase)/decrease in performance fee payable(Increase)/decrease in dividend payable(Increase)/decrease in other payable

Net change in payables and other liabilitiesNet cash inflow/(outflow) from operating activities

(b) Non-cash financing and investing activitiesDuring the year, the following distribution payments were satisfied by the issue ofunits under the distribution reinvestment plan

30 June2009

$

30 June2008

$

(7,067,613) 2,228,4846,457,825 (3,074,435)

311,999,650 243,250,400

(382,197,577) (233,822,565)(25,103) (71,591)(16,734) 17,36827,961 14,116

66,872,762 (73,270,607)(155,378) 391,384

(213) (3,249)(432,559)

(66,285) 76,263(1,753) 984

(4,172,458) (64,696,007)

3,713,942

As described in note 2(i), income not distributed is included in net assets attributable to unitholders. The change inthis amount each year (as reported in (a) above) represents a non-cash financing cost as it is not settled in cashuntil such time as it becomes distributable (ie taxable).

13 Events occurring after the balance sheet date

No significant events have occurred since balance date which would impact on the financial position of the Trustdisclosed in the balance sheet as at 30 June 2009 or on the results and cash flows of the Trust for the year endedon that date.

14 Contingent assets and liabilties and commitments

There are no outstanding contingent assets and liabilities or commitments as at 30 June 2009 and 30 June 2008.

-28-

Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)Directors' declaration

30 June 2009

Directors' declaration

In the opinion of the directors of the Responsible Entity:

(a) the financial statements and notes set out on pages 6 to 28 are in accordance with the Corporations Act2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatoryprofessional reporting requirements; and

(ii) giving a true and fair view of the Trust's financial position as at 30 June 2009 and of its performancefor the financial year ended on that date; and

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

This declaration is made in accordance with a resolution of the directors.

/¿,~~,/ti r:--'---Gervaise Robert John HeddleDirector


-29-

pmCEWtRHOUSF(OOPERS I

PricewaterhouseCoopersABN 52 780 433 757

Independent auditor's report to the unitholders ofMacquarie Asian Alpha Fund (formerly MQ Asia Long ShortFund)

Darling Park Tower 2201 Sussex StreetGPO BOX 2650SYDNEY NSW 1171DX 77 SydneyAustraliaTelephone +61 282660000Facsimile +61 2 8266 9999ww.pwc.com/au

Report on the financial report

We have audited the accompanying financial report of Macquarie Asian Alpha Fund (formerly MQAsia Long Short Fund) (the Trust), which comprises the balance sheet as at 30 June 2009, and theincome statement, statement of changes in equity and cash flow statement for the year ended onthat date, a summary of significant accounting policies, other explanatory notes and the directors'declaration for Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund).

Directors' responsibílty for the financial report

The directors of MQ Portolio Management Limited (the Responsible Entity) are responsible for thepreparation and fair presentation of the financial report in accordance with Australian AccountingStandards (including the Australian Accounting Interpretations) and the Corporations Act 2001.This responsibility includes establishing and maintaining internal controls relevant to thepreparation and fair presentation of the financial report that is free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances. In Note 2, the directors also state,in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, thatcompliance with the Australian equivalents to International Financial Reporting Standards ensuresthat the financial report, comprising the financial statements and notes, complies with InternationalFinancial Reporting Standards.

Auditor's responsibílty

Our responsibility is to express an opinion on the financial report based on our audit. We conductedour audit in accordance with Australian Auditing Standards. These Auditing Standards require thatwe comply with relevant ethical requirements relating to audit engagements and plan and performthe audit to obtain reasonable assurance whether the financial report is free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial report. The procedures selected depend on the auditor's judgement,including the assessment of the risks of material misstatement of the financial report, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevantto the entity's preparation and fair presentation of the financial report in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimatesmade by the directors, as well as evaluating the overall presentation of the financial report.

Our procedures include reading the other information in the Annual Report to determine whether itcontains any material inconsistencies with the financial report.

Liability limited by a scheme approved under Professional Standards Legislation

pmCEW1ERHOUSFßPERS I

Independent auditor's report to the unitholders ofMacquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)(continued)

Our audit did not involve an analysis of the prudence of business decisions made by directors ormanagement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the CorporationsAct 2001.

Auditor's opinion

In our opinion:

(a) the financial report of Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund) isin accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Trust's financial position as at 30 June 2009 and

of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the AustralianAccounting Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards asdisclosed in Note 2.

f. ( w-J, l d" i(.-C "'

PricewaterhouseCoopers

~E A BarronPartner


Documents

Macquarie Asian Alpha Fund (formerly MQ Asia Long Short Fund)€¦ · MQ Portfolio Management Limited ACN 092 552 611 (Responsible Entity of Macquarie Asian Alpha Fund (formerly MQ