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Watermark Global Leaders FundLevel 6, 139 Macquarie Street NSW Sydney 2000

TEL (02) 9252 0225 FAX (02) 9252 [email protected] | www.wfunds.com.au

Watermark Global Leaders Fund

Annual Report 2017YEAR ENDED 30 JUNE 2017

ABN 71 614 536 560

COMPANY PARTICULARS

Watermark Global Leaders Fund LimitedA.B.N. 71 614 536 560

Rohan Hedley (Independent Chairman)Philip Howard (Independent Director)Justin Braitling (Non-Independent Director)Tim Bolger (Non-Independent Director)

Mark Licciardo

Level 6139 Macquarie StreetSydney NSW 2000Phone: (02) 9252 0225Fax: (02) 9252 1220Email: [email protected]

For enquiries regarding net asset backing (as advisedeach month to the Australian Securities Exchange) referto www.asx.com.au or call (02) 8280 1700.

Boardroom Pty LimitedLevel 12225 George StreetSydney NSW 2000Phone: (02) 9290 9600Fax: (02) 9279 0664

For enquiries relating to shareholdings, dividends(including participation in the Dividend ReinvestmentPlan) and related matters, please contact the shareregistrar.

Pitcher PartnersLevel 22 MLC Centre19 Martin PlaceSydney NSW 2000Phone: (02) 9221 2099

Australian Securities Exchange (ASX)The home exchange is Sydney.ASX code: WGF ordinary sharesASX code: WGFO options $1.10 expiring 16 November 2018

DIRECTORS:

COMPANY SECRETARY

PRINCIPAL REGISTERED OFFICE IN AUSTRALIA:

SHARE REGISTER

AUDITORS

SECURITIES EXCHANGE LISTING

Watermark Global Leaders Fund Limited ABN 71 614 536 560

Annual Report - 30 June 2017

ContentsPage

Chairman's Letter 1Chief Investment Officer's Report 3Company Profile 6Investments at Market Value 9Corporate Governance Statement 10Directors' Report 11Auditor's Independence Declaration 21Financial Statements

Statement of Comprehensive Income 22Statement of Financial Position 23Statement of Changes in Equity 24Statement of Cash Flows 25Notes to the Financial Statements 26

Directors' Declaration 51Independent Auditor's Report to the Members 52Shareholder Information 57

Watermark Global Leaders Fund LimitedChairman's Letter

30 June 2017

Chairman's Letter

Dear fellow shareholders,

The Watermark Global Leaders Fund (WGF) reported a maiden after tax profit of $726,721 in respect of theFinancial Year ending June 30, 2017. As at the end of the period, the Company’s pre-tax net tangible assetbacking (NTA) was $1.08, unchanged from the NTA at listing in December 2016.

Figure 1. NTA Bridge

The Company has made a solid start, delivering a portfolio return since listing of 2.2% before fees. This has beenan establishment phase for the Company, with the Investment Manager having made good progress in buildingthe Company’s balance sheet towards its target gross exposure of 200%. As at June 30, the Company’s grossbalance sheet was 187% of its capital base, with 134 individual positions, listed predominantly in markets acrossNorth America and developed Europe. Performance to date has been driven primarily by the long portfolio, whichoutperformed the MSCI All Country World Index by almost 4%.

Unlike a traditional long-only fund that moves up and down with the share market, investors benefit in thisstrategy to the extent that the long portfolio of shares the Manager prefers, outperforms the short portfolio ofcompanies that the Manager expects will struggle. This ‘spread’ represents the gross return on the Company’sportfolio, from which fees and expenses are deducted.

WGF should be viewed differently from other global equity strategies, by virtue of its market neutral approach.This strategy is designed to eliminate the Company’s underlying exposure to the market, while capturing thevalue created by the Manager through its stock selection. In this way, the Company does not benefit from a risingmarket, which has been the prevailing trend in recent years. With central banks signalling an end to ultra-easymonetary policy, the Company is well-positioned to weather any volatility that may emerge as this bull marketcomes to an end.

Your Board is committed to achieving two key outcomes for shareholders; attractive returns with relatively lowvolatility and a growing income stream via distribution of franked dividends. We believe the Investment Manageris well placed to execute the Company’s investment strategy in pursuit of these goals. The Board has beenpleased to observe recent growth in the Manager’s investment team, bringing additional skills and experience inidentifying investment opportunities from across the global investment universe.

As a measure to preserve value for shareholders, the Board also announced its approval of an on-marketbuy-back of up to 10% of the Company’s issued share capital. Where there is a material dislocation between thevalue of the Company’s investment portfolio and the share price, particularly during periods of weakness in globalshare markets, the Manager may buy back the Company’s shares at a discount to the NTA. Directors considerthat this represents a good investment for remaining shareholders and will be accretive to the NTA.

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Watermark Global Leaders Fund LimitedChairman's Letter

30 June 2017(continued)

Upon listing, each investor was issued with a free bonus option for every share held in WGF. We remind ouroption holders that these securities are valuable and last traded at 0.04 cents per option on the 10th ofSeptember 2017. While the options do not expire until November 2018, please keep them in mind whenmanaging your investment in the Company.

Finally, I would like to thank all Shareholders for their support in the Company’s maiden half-year on theAustralian Securities Exchange. WGF is unique in the Australian market and offers shareholders an importantmeans of diversifying risk in their portfolio at a time when true diversification is increasingly hard to find. I lookforward to meeting shareholders at the Annual General Meeting and sharing with you in the success of theCompany in years to come.

Rohan HedleyChairman

Dated at Sydney, September 18, 2017

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Watermark Global Leaders Fund LimitedChief Investment Officer's Report

30 June 2017

Chief Investment Officer's Report

Performance Review

The 2017 financial year presented a myriad of challenges for active stock pickers. The performance of globalshare markets turned largely on the prospect of further support from central banks, while being buffeted bygeopolitical upheaval in many parts of the world. Volatility on the other hand has been subdued, as sharemarkets grind ever higher. WGF’s investment portfolio increased in value by 2.2% before fees during the period,delivering positive returns in 6 out of 7 months since listing.

Given the buoyant conditions for global share markets, returns were driven predominantly from the long portfolio,which comfortably outperformed the broader market, increasing in value by 7.2% as compared with the MSCI ACWorld Index (AUD) which rose by 4.1%. Shorting in a rising share market proved more challenging, and the shortportfolio also rose in excess of the market, detracting from performance. Of course, the insurance against marketfalls that the short portfolio provides will be well-worthwhile in the longer term, if it protects investors form the nextmarket drawdown.

As we have mentioned previously, in a market neutral strategy, gross performance is derived from theoutperformance of the long portfolio over the short. This ‘spread’ represents the Company’s gross portfolio return,from which fees and expense are deducted. While security selection is the primary driver of returns, the numberand size of positions will also have an impact. While the ‘spread’ has been modest in the first 6 months of trading,we would expect it to increase as we initiate new positions and add to existing ones, building the Company’sgross exposure towards our target of 200%.

Portfolio Review

Healthcare

Healthcare was amongst the best performing sectors for the Fund in the 12 months to June. Political rhetoric,particularly in the US has been a significant driver of sentiment towards the sector, with drug pricing becoming amajor election issue in 2016. We have consistently looked to invest in the best science we can find across thehealthcare spectrum, while shorting companies with undifferentiated products, and those most vulnerable topricing pressures.

Consumer

The global consumer sector can be broadly divided into retailers and brand owners. Retailers are facingnumerous challenges from new online competitors, with many struggling to adapt ageing business models andhaving overinvested in store rollouts. This has been fertile ground for short ideas and has also presentedopportunities to buy more resilient businesses that have been sold down with the broader sector. Amongst brandowners, we look for sustainably managed brands in growing categories while shorting companies most exposedto structural challenges in the sector or facing idiosyncratic risks that have not been fully appreciated by themarket. Our investments in casino operators performed well in the period, along with exposures in the householdgoods and personal product categories.

Technology/Media/Telecommunications

In this dynamic and highly competitive sector of the market, we have sought to identify winners and losers fromthe key trends that have emerged in recent years. Businesses are transitioning their IT environments to the cloudat an accelerating rate. This is a strong tailwind for key players in this space such as Amazon and Microsoft,along with networking and security companies. In semiconductors, manufacturers of logic chips are increasinglyunder pressure as sales fall. Analog semiconductors on the other hand are enjoying a resurgence with the rapidadvance of connected vehicles and devices. The rise and rise of social media and streaming services hascompletely disrupted traditional media, also creating a wealth of investment opportunities. Our focused effortsacross this broad sector were successful in the period, which was amongst the strongest contributors to returns.

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Industrials

Leading indicators for the global economy were stronger in FY17, prompting investors to rotate out of defensiveshares in preference for more cyclical exposures. Notwithstanding recent strength in the sector, the Fund hasretained a hedged position in industrials, with investments in high quality, undervalued companies balanced byshorts in lower quality names which have fully captured the uplift in economic momentum. In this sector too, thedigitisation of manufacturing platforms is creating a structural shift. Companies’ abilities to adapt to this newparadigm will be a key determinant in their ongoing success or failure. The Fund’s industrial exposures detractedfrom returns, as some of the low-quality capital goods companies, rallied along with the broader sector.

Financials

Our investments in banking are in companies that can benefit from higher rates without suffering from adversecredit quality such as UniCredit SpA and ING Groep. On the short side, we have found a number of markets suchas Canada and Australia where banks are more exposed to any deterioration in credit quality and whoseresidential property stock is fully priced. In the listed Real Estate sector, we are long the super-regionals andshort the lower quality sub-regional centres which are under pressure as specialty retailers in B and C gradelocations close. In aggregate, the financials portfolio detracted from returns in FY17.

Basic Industries

Our approach in the mining sector has been to build hedged exposures, favouring higher quality companies suchas BHP, Rio Tinto and Iluka while shorting the shares of companies that are more highly exposed to anyslowdown in China and to commodities that are oversupplied. We expect the sharp relief rallies that have beencharacteristic of the resource sector in recent times will continue, however we will look to sell into this strengthgiven the softer medium-term outlook. Navigating this complex macroeconomic environment proved challengingin FY17 and the mining portfolio detracted from fund returns.

In the energy sector, we are positioned for a protracted period of lower oil prices. Once the swing supplier of oil,US shale producers have improved productivity and reduced costs, rendering them competitive at lower oilprices. Investments in low cost producers and companies with optionality across their portfolio such as RoyalDutch Shell and Inpex have been balanced with shorts in high cost producers and super majors such as Exxonand Repsol whose portfolios of unconventional oil projects look increasingly isolated. The Fund’s energyexposures made a modest contribution in the period.

Economic Outlook

Economic data has been steadily improving for over a year now. This was principally in response to coordinatedstimulus introduced at the end of 2015, when the global industrial economy was teetering on recession. For thefirst time in nine years since the crisis, economists have been upgrading growth forecasts, in part reflecting howlow expectations had fallen last year.

With the new Trump administration promising large tax cuts and further spending, investors quickly jumped onthe “reflation trade” buying value and cyclical shares in the belief interest rates would rise and the deflationaryscourge that has beset major economies would pass.

With a resurgence in both leading indicators and confidence (soft data), the reflation trade quickly moved toover-bought levels as we moved into the new-year. This exuberance has faded however in the first half of theyear as “hard data” has fallen short of expectations and as Trump’s reform agenda floundered in congress.Reflecting this, the reflation names have underperformed so far this year, as bonds have rallied and both growthand defensive shares have resumed their leadership. This is certainly consistent with our view - we would expectthe pick-up in activity to fade in response to tightening financial conditions as we move through the year, aflattening yield curve is certainly guiding toward this.

A debate is raging amongst investors: is it time to revisit the reflation trade or will growth moderate and deflationreturn? It is too early to tell if the uplift in activity is sustainable or not. Investors instead are taking their lead fromCentral Banks, as bond and currency markets break out in response to changes in the policy narrative.

European Central Bank president Draghi was so bold as to suggest in July “the threat of deflation has gone andreflationary forces are now at play”. Following this speech European bonds collapsed in a re-run of the US tapertantrum of 2013. The heads of the Bank of England and the Bank of Canada have followed suit with the BOCraising interest rates vaulting the Canadian dollar and the pound upwards.

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The pendulum has shifted, central banks are clearly now looking for opportunities to tighten policy, in the firstinstance through exiting large-scale asset purchases (ECB) and divesting trillions of dollars of purchasedsecurities in the case of the US Federal Reserve. The liquidity drain is obvious as central banks move from buyerto seller sucking the same quantum of wholesale deposits out of the financial system.

Investors are still coming to terms with this change of tack with many still expecting policy makers to back off onthe first sign of weakness in the data. The realisation that monetary policy, the mainstay of this bull market, is nolonger supportive of asset markets is yet to fulling sink in. This will be an important source of volatility in themedium term as the new paradigm becomes clearer.

The uncertainty following the crisis saw a steady flow of capital into the US economy pushing the US dollar andthe US share market higher at the expense of other markets in the Eurozone and EM which have struggled. Asactivity is now recovering in many of these regions, these capital flows are reversing pushing these assetsmarkets higher while at the same time putting the US dollar under pressure. A weaker dollar eases financialconditions in emerging markets (EM) accentuating this outflow. The Euro and reflation currencies such as theAustralian dollar and Canadian dollar have rallied hard and spreads between European bonds and US treasurieshave narrowed.

Markets want to celebrate the return of animal spirits and a return to sustainable growth even as policynormalises, I suspect this resolve will be tested as activity slows later in the year in response to the policytightening already in train.

With key markets at all-time highs and valuations stretched, we will retain our fully hedged position as thisexpansion cycle tires. Our first priority is to protect our investors from loss, while at the same time generatingalpha through security selection. Shares are expensive, earnings momentum in Australia is sluggish andvaluations are very full. The bull market in its ninth year is more than likely approaching its twilight hour.

Justin BraitlingChief Investment OfficerWatermark Funds Management

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Watermark Global Leaders Fund LimitedCompany Profile

30 June 2017

Company Profile

Investment Objective

The Company’s investment objectives are to:

(a) provide capital growth and income using a market neutral investment strategy, investing in aportfolio predominantly comprised of international listed securities

(b) deliver consistent, positive rates of return with relatively low volatility whilst maintaining little or nonet exposure to the underlying share market is to deliver attractive returns with relatively lowvolatility reduced market risk while returning a consistent stream of fully franked dividends toShareholders.

Investment Philosophy

The Investment Manager believes successful investing requires the following skills:

• An ability to evaluate the true worth of a business and the management charged with running it;• An understanding of how and why a company’s shares come to be mispriced; and• An appreciation of the risks that may undermine the investment case.

Employing these skills, the best investment opportunities arise when securities in strong, well-managedbusinesses (‘winners’) can be purchased on attractive terms. These businesses typically have the followingcharacteristics:

• A history of superior returns through the economic cycle;• Management with a track record of creating and distributing value to security holders; and• The capacity to grow.

Consistent with these same principles, in selecting securities to short sell the Investment Manager will look to sellthe securities of businesses with weak fundamentals on occasions when the Investment Manager believes theyare overvalued (‘losers’).

In populating the long portfolio with ‘winners’ and the short portfolio with ‘losers’, the value of the combinedportfolio should appreciate over time.

Investment Process

The Manager's investment process is a fundamentally driven, security selection process based on soundinvestment ideas taken from the investment of public companies. A summary of the investment process is set outbelow.

Investment Universe

The Company has a global mandate and may invest in securities (including listed, unlisted, fixed income andcertain debt securities), derivatives, currency positions, cash, and other permitted investments. Notwithstandingthis broad mandate, the Company’s portfolio is expected to be predominantly comprised of long and shortpositions in international listed securities, with a focus on larger companies, listed on exchanges in developedmarkets in North America, Europe, and Asia.

Investment ideas and opportunities

The Manager employs a fundamental research process in seeking to identify investment ideas. Investment ideascome from monitoring economic and industry trends as well as extensive contact with company management andindustry sources.

The Manager has industry specialists that look globally for the best long and short ideas in their respectiveindustries.

Investment opportunities emerge from close examination of industry trends. These developments may includeeconomic, political, or legislative changes that impact the structure and competitive environment in which acompany operates. The Manager considers that investors in many instances are slow to identify and correctlyprice the impact of these changes.

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Investment ideas and opportunities (continued)

The Manager believes that the best investment ideas are based on a unique view or insight, are relevant to thevalue of the business and are not currently reflected in the share price.

Qualitative assessment

Once an investment idea has been identified, the Manager undertakes a full qualitative assessment of theproposed investment to establish whether the underlying business is of a suitable quality and attractively priced.

Initially a full review of financial performance is completed. This is usually followed by a meeting orteleconference with management to further develop an understanding of the business and the managementphilosophy. Where possible, members of the Manager’s investment team will also meet with or speak tosuppliers, regulators, competitors, and customers to gauge the competitive.

An overall qualitative scorecard is compiled for each security, incorporating business quality, management qualityand valuation. The results of macroeconomic and sector research along with a full range of risk metrics as wellare also built into this scorecard.

A ranking of investment ideas by score, along with conviction will determine security weightings in the finalportfolio construction.

Picking ‘Winners’ and ‘Losers’ within industries

The Manager looks to invest (i.e. hold long positions) in attractive entities that it considers to be undervalued andthat rank well on the qualitative scorecard. Equally, the Manager looks to short sell securities it identifies asovervalued that rank poorly on the qualitative scorecard. This is aimed at ensuring the Company’s portfolio getsexposure to the best individual investment ideas, with the highest conviction while maintaining a favourablequality and value bias between the long and short portfolios.

Macroeconomic and sector research along with a full range of risk metrics (built into the scorecard mentionedabove), will influence the overall weighting of each investment.

Ongoing monitoring

The Manager will monitor the portfolio daily rebalancing when required to ensure that the respective values of thelong and short portfolios remain within the limits for net equity exposure. To maintain the net equity exposurewithin the stated limits, the Manager may adjust the relative size of positions within the long and short portfolio,increasing or reducing market risk.

Short Selling

Short selling is an important part of the investment strategy employed by the Manager. In a market neutralstructure, the manager will seek to match long and short exposures to maintain a fully hedged portfolio.

The Manager employs a similar security selection process as above, but is looking for the opposite qualities incompanies to borrow and sell. The Manager believes the best "shorting" opportunities are found in poorlymanaged companies with weak fundamentals where the shares in those companies can be sold for more thanthey are worth.

When targeting companies to borrow and sell (short), the Manager will target:

• A history of inferior returns.• Management with a poor track record.• Businesses operating in highly competitive industries that are struggling to grow.• Securities which are expensive on a range of valuation measures.

Portfolio Construction

The long and the short portfolios will each be comprised of a select number of securities (typically between 40 to80 securities) that the Manager considers to be mispriced.

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Portfolio Construction (continued)

Net equity exposure within the portfolio (that is long positions minus short positions and derivatives) will typicallybe zero, and is limited to ±20% of the portfolio’s NAV. In line with the market neutral strategy, net exposures toregions, industries, or sectors, as well as derivatives within the portfolio are also limited.

Foreign currency exposures will be managed by balancing long and short exposures in each region and throughan active treasury management program and any net exposure to any foreign currency within the portfolio isrestricted to ±20% of the portfolio’s NAV.

Gross equity exposure within the portfolio (i.e. the sum of the value of long positions, short positions, andderivatives) will not exceed 400% (but will typically be between 150% and 300% of the portfolio’s NAV).

Short Selling

A short sale occurs when the Manager borrows a security from the Prime Broker (or lender) and sells the securityto a third party, generating cash proceeds. In return, the Manager pays a lending fee to the Prime Broker. TheManager will reacquire the same security on-market and return it to the lender to close the transaction. The Fundgenerates a return if the price of the borrowed security declines in value in the period between the short sale andthe reacquisition. Conversely, the Fund will suffer a loss if the borrowed security increases in value during thisperiod. While the time period for borrowing securities to short sell is not fixed, the Prime Broker may recall thesecurities and the Manager must acquire them on-market to close the transaction.

Pursuant to the Company’s investment strategy, the Manager will use the proceeds of short selling to buy LongPositions. As the long portfolio is funded from the proceeds of the short portfolio, the Fund’s portfolio (as a whole)can be effectively hedged with little or no net market exposure.

Short selling can involve greater risk than buying a security (i.e. a Long Position), as losses can continue to growto the extent that the price of the borrowed security rises. The risk of losses associated with a Long Position isgenerally restricted to the amount invested, whereas losses on a Short Position can be greater than thepurchased value of the security. Whilst short selling can often reduce risk by offsetting (or hedging) losses onLong Positions, it is also possible for Long and Short Positions to both lose money at the same time.

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Watermark Global Leaders Fund Limited

Investments at Market Value

30 June 2017

Investments at Market Value

Automobiles & Components Pharmaceuticals Biotechnology & Life Sci

Bayerische Motoren Werke AG 902,444.53 1.08% Celgene Corporation 1,416,455.82 1.69%

O'Reilly Automotive, Inc. 997,526.28 1.19% Juno Therapeutics, Inc. 224,764.39 0.27%

1,899,970.81 2.27% Merck & Co., Inc. 2,582,650.33 3.09%

Consumer Durables & Apparel Novartis AG 1,313,948.32 1.57%

Lululemon Athletica Inc 488,686.46 0.58% 5,537,818.86 6.62%

488,686.46 0.58% Capital Goods

Media CK Hutchison Holdings Ltd 872,287.68 1.04%

ProSiebenSat.1 Media SE 1,255,136.36 1.50% Airbus SE 1,034,511.08 1.24%

1,255,136.36 1.50% Eaton Corp. Plc 1,352,246.17 1.62%

Retailing KBR, Inc. 936,931.35 1.12%

Dick's Sporting Goods, Inc. 419,771.50 0.50% Siemens AG 426,263.87 0.51%

Lowe's Companies, Inc. 1,448,513.72 1.73% USG Corporation 408,599.19 0.49%

1,868,285.21 2.23% 5,030,839.34 6.01%

Food Beverage & Tobacco Transportation

Heineken NV 1,064,811.10 1.27% Deutsche Post AG 1,054,493.29 1.26%

Pernod Ricard SA 997,414.02 1.19% 1,054,493.29 1.26%

2,062,225.12 2.47% Semiconductors & Semiconductor Equipment

Energy Micron Technology, Inc. 425,603.79 0.51%

Inpex Corporation 846,605.73 1.01% NXP Semiconductors NV 944,319.29 1.13%

Eni S.p.A. 1,609,898.94 1.92% 1,369,923.08 1.64%

Halliburton Company 1,366,185.49 1.63% Software & Services

Hess Corporation 1,666,951.36 1.99% Facebook, Inc. Class A 1,732,121.79 2.07%

Royal Dutch Shell Plc Class B 2,578,808.58 3.08% Fortinet, Inc. 1,762,054.65 2.11%

8,068,450.10 9.65% Alphabet Inc. Class C 835,218.90 1.00%

Banks Honeywell International Inc. 1,323,950.89 1.58%

ABN AMRO Group N.V. Shs Depositary receipts 744,071.33 0.89% Intuit Inc. 894,288.07 1.07%

Allied Irish Banks p.l.c. 1,445,726.03 1.73% NetEase, Inc. Sponsored ADR 916,332.64 1.10%

Australia and New Zealand Banking Group Limited 4,283,789.04 5.12% Ubisoft Entertainment SA 903,660.37 1.08%

Barclays PLC 1,775,174.94 2.12% Analog Devices, Inc. 463,625.33 0.55%

UniCredit S.p.A. 2,111,145.86 2.52% Activision Blizzard, Inc. 1,338,959.41 1.60%

Westpac Banking Corporation 2,065,130.37 2.47% Nokia Oyj 1,013,118.29 1.21%

Wells Fargo & Company 2,076,908.85 2.48% Palo Alto Networks, Inc. 1,043,370.87 1.25%

14,501,946.43 17.34% 12,226,701.20 14.62%

Diversified Financials Materials

Janus Henderson Group PLC Registered Shs Chess

Depository Interests repr 1 Shs 443,591.40 0.53% Agrium Inc. 863,983.13 1.03%

Charles Schwab Corporation 896,108.48 1.07% BHP Billiton Limited 2,469,588.96 2.95%

Synchrony Financial 726,674.21 0.87% Fletcher Building Limited 901,488.21 1.08%

Aviva plc 2,340,180.12 2.80% Newmont Mining Corporation 1,706,761.53 2.04%

NN Group N.V. 2,415,603.90 2.89% 5,941,821.83 7.10%

6,822,158.10 8.16% Telecommunication Services

Health Care Equipment & Services China Telecom Corp. Ltd. Class H 1,745,168.05 2.09%

Fresenius Medical Care AG & Co. KGaA 920,639.74 1.10% China Mobile Limited 411,791.50 0.49%

Mylan N.V. 627,810.58 0.75% Orange SA 2,199,015.70 2.63%

1,548,450.33 1.85% Vivendi SA 2,298,309.73 2.75%

Pharmaceuticals Biotech & Life Sciences 6,654,284.98 7.95%

Allergan plc 2,436,129.15 2.91%

Genmab A/S 709,188.66 0.85% Total Long Portfolio 83,652,881.00 100.00%

Nevro Corp. 1,912,250.88 2.29% Total Short Portfolio (82,219,735.00)

Roche Holding Ltd Genusssch. 1,200,113.67 1.43%

Walgreens Boots Alliance Inc 1,064,007.34 1.27%

7,321,689.70 8.75%

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Watermark Global Leaders Fund LimitedCorporate Governance Statement

30 June 2017

Corporate Governance Statement

As an ASX-listed company, Watermark Global Leaders Fund Limited (“Watermark GLF”) and its directors arecommitted to responsible and transparent financial and business practices to protect and advance shareholders’interests. The Company’s strong corporate governance practices are based on the ASX Corporate GovernancePrinciples and Recommendations.

The Board has adopted these ASX principles and recommendations which are complemented by the Company’score principles of honesty and integrity. The corporate governance policies and practices adopted by the Boardare outlined in Watermark GLF’s Corporate Governance section(http://wfunds.com.au/fund/watermark-global-leaders-fund-limited/).

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Watermark Global Leaders Fund LimitedDirectors' Report

For the period ended 30 June 2017

Directors' Report

The Directors present their report together with the financial statements of Watermark Global Leaders FundLimited ("the Company") for the period ended 30 June 2017. The financial report covers the period from30 August 2016 (date of incorporation) to 30 June 2017.

Directors

The following persons held office as directors of Watermark Global Leaders Fund Limited during the financialperiod:

Rohan Hedley (Chairman)Philip Howard (Independent Director) (appointed 13 October 2016)Justin Braitling (Non-Independent Director)Tim Bolger (Non-Independent Director)

Directors have been in office since the start of the financial period to the date of this report unless otherwisestated.

Principal activities

During the financial period, the principal activities of the Company included making investments in global listedsecurities. No change in this activity took place during the period or is likely to in the future.

There was no significant change in the nature of the activity of the Company during the period.

Dividends

No dividends have been paid during the financial period. The Directors have not declared that a dividend be paidin respect of the financial period.

Review of operations

The Company was registered with the Australian Securities and Investments Commission (ASIC) on 30 August2016 and commenced operations on 21 December 2016.

On 21 December 2016, the Company issued 82,804,001 ordinary fully paid shares at an issue price of $1.10 and82,804,001 options to acquire ordinary shares in the Company at an exercise price of $1.10 with an expiry dateof 16 November 2018. No options have been exercised during the period.

Information on the operations and financial position of the Company and its business strategies and prospects isset out in the review of operations and activities on pages 3 to 5 of this Annual Report.

The profit from ordinary activities after income tax amounted to $726,721.

The net tangible asset backing for each ordinary share as at 30 June 2017 amounted to $1.08 per share. Theequivalent asset backing before tax was $1.08 per share.

The gross portfolio value increased 2.2% over the financial period while the Reserve Bank of Australia’scash-rate increased by 0.8%, representing an outperformance of 1.4%. After deducting costs in funding thebalance sheet, along with management fees and other expenses, the fund reported a positive 0.1% return for theperiod.

On 21 July 2017, a total of 5,000 options was exercised and allotted for a total consideration of $5,500. At as thedate of this report 82,799,001 options remain unissued.

Financial Position

The net asset value of the Company for the current financial period ended was $89,786,209.

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For the period ended 30 June 2017(continued)

Significant changes in the state of affairs

As a measure to preserve value for shareholders the board announced on 8 May 2017 the approval of an onmarket buy-back of up to 10% of the Company’s capital up to a maximum of 8,280,400 shares to be bought backin a 12 month period commencing 23 May 2017. As at 30 June 2017 no shares have been bought back.

Other than the matters noted above, there were no other significant changes in the state of affairs of theCompany during the period ended 30 June 2017.

Matters subsequent to the end of the financial period

On 17 July 2017, the Company bought back 100 shares for a total consideration of $101.

On 21 July 2017, a total of 5,000 options was exercised and allotted for a total consideration of $5,500.

On 24 July 2017, the Company announced the resignation of Sophia Gartzonis as Company Secretary effective24 July 2017. Following the resignation, Mark Licciardo of Mertons Corporate Services Pty Ltd was appointed asCompany Secretary, effective 24 July 2017.

Other than the matters noted above, no other matter or circumstance has occurred subsequent to period end thathas significantly affected, or may significantly affect, the operations of the Company, the results of thoseoperations or the state of affairs of the Company in subsequent financial periods.

Likely developments and expected results of operations

The Company will continue to pursue its investment objectives for the long term benefit of the members. This willrequire continual review of the investment strategies that are currently in place and may require changes to thesestrategies to maximise returns.

Environmental regulation

The Company is not affected by any significant environmental regulation in respect of its operations.

To the extent that any environmental regulations may have an incidental impact on the Company's operations,the Directors of the Company are not aware of any breach by the Company of those regulations.

12



Information on directors

Rohan Hedley Chairman Age 55.

Experience and expertise

Rohan has 28 years’ experience in the funds management and investment industry.

Rohan joined Bankers Trust Funds Management (BT) as an investment analyst in 1988 and subsequently heldthe role of Head of Equities for BT’s domestic and international equity portfolios. At the time, BT managed $15billion in international and domestic shares on behalf of a range of superannuation and retail clients. At BT,Rohan held the position of Executive Vice President of Bankers Trust Australia Ltd, was a member of theManagement Committee of Bankers Trust Australia Ltd and a partner of Bankers Trust (New York) Inc.

After leaving BT in 2002, Rohan founded, seeded and managed the boutique Australian equity hedge fundmanager, Hayberry Investments. Hayberry managed $400 million for a range of domestic and international highnet worth investors. The Hayberry Australian Equity Fund was wound up in 2011 at its high water mark and afterreturning a net of fees life of fund return of 163%. Subsequent to Hayberry, Rohan has invested in a privatecapacity.

Prior to BT, Rohan worked within the Insolvency and Reconstruction Division of Arthur Young (now Ernst andYoung). Rohan graduated from the University of Newcastle with an accounting degree.

Other current directorships

Rohan Hedley has not held any other directorships of listed companies outside the Company.

Former directorships in last 3 years

Rohan Hedley has not held any other directorships of listed companies within the last three years.

Special responsibilities

Chairman of the Board.

Interests in shares and options

Details of Rohan Hedley’s interests in shares of the Company are included later in this report.

Interests in contracts

Rohan Hedley has no interests in contracts of the Company.

13



Information on directors (continued)

Philip Howard Non-Independent Director Age 56.


Philip Howard has over 30 years' experience in the financial services and funds management sectors. Philip hasheld senior roles at Platinum Asset Management, State Street Australia, Bankers Trust Australia andPriceWaterhouse Sydney.

Philip Howard holds a B Comm from the University of Tasmania and is a member of the Institute of CharteredAccountants of Australia.


Philip Howard is a director of the Trustee of the Club Plus Superannuation Fund.


Philip Howard was formerly a director of Platinum Asset Management Limited and Platinum Capital Limited.


Philip Howard is the Chair of the Audit and Risk Committee.


Details of Philip Howard’s interests in shares of the Company are included later in this report.


Philip Howard has no interests in contracts of the Company.

14




Justin Braitling Non-Independent Director Age 50.


Justin Braitling has over 25 years' experience in investing in Australian and international companies. He was anInvestment Analyst and Portfolio Manager at Bankers Trust for 12 years from January 1991 to June 2002. Hewas a key member of the investment team at Bankers Trust that was consistently ranked in the top quartile ofmanagers by InTech.


Justin Braitling is the sole Director of the investment management company, Watermark Funds Management PtyLimited.

Justin Braitling has been a Director of Australian Leaders Fund Limited since October 2003 of which he becomeChairman in February 2007 and is also a Director of Watermark Market Neutral Fund Limited (appointed May2013).


Justin Braitling has not held any other directorships of listed companies within the last three years.


Investment Manager of the Company.


Details of Justin Braitling’s interests in shares of the Company are included later in this report.


Details of Justin Braitling’s interests in contracts of the Company are included later in this report.

15




Tim Bolger Non-Independent Director Age 40.


Tim is the Chief Operating Officer at Watermark Funds Management, where he is responsible for allnon-investment functions, including operations, distribution, marketing, and compliance.

Tim joined the Manager in 2014. He has 15 years’ experience in financial services, with roles spanning thedevelopment, marketing and distribution of investment and insurance products throughout Australia andinternationally. Prior to joining the Manager, Tim was a Director of Distribution at Bennelong Funds Management.

Tim holds a Bachelor of Arts and a Diploma in Law.


Tim Bolger has not held any other directorships of listed companies outside the Company.


Tim Bolger has not held any other directorships of listed companies within the last three years.


Investment Manager of the Company.


Details of Tim Bolger’s interests in shares of the Company are included later in this report.


Tim Bolger has no interests in contracts of the Company.

Company secretary

Matthew McShane of Link Fund Solutions Pty Limited (formerly White Outsourcing Pty Limited) resigned asCompany Secretary, effective 9 December 2016. Following the resignation, Ms Sophia Gartzonis of Link FundSolutions Pty Limited (previously White Outsourcing Pty Limited) was appointed as Company Secretary, effective9 December 2016.

Sophia Gartzonis resigned as Company Secretary, effective 24 July 2017. Following the resignation, MarkLicciardo of Mertons Corporate Services Pty Ltd was appointed as Company Secretary, effective 24 July 2017.

Mark Licciardo is the founder and Managing Director of Mertons Corporate Services Pty Ltd. As a formercompany secretary of ASX 50 companies, Transurban Group and Australian Foundation Investment CompanyLimited, his expertise includes working with boards of directors in the areas of corporate governance, businessmanagement, administration, consulting and company secretarial matters. He is also the former Chairman of theGovernance Institute of Australia Victoria division and Melbourne Fringe Festival and a current non-executivedirector of a number of public and private companies.

Mark Licciardo holds a Bachelor of Business Degree (Accounting) from Victoria University and a GraduateDiploma in Company Secretarial Practice, is a Fellow of the Australian Institute of Company Directors, theInstitute of Chartered Secretaries and Administrators and the Governance Institute of Australia.

16



Meetings of directors

The numbers of meetings of the Company's board of Directors and of each board committee held during theperiod ended 30 June 2017, and the numbers of meetings attended by each Director were:

Directors'

Meetings ofcommittees

Meetings Audit and Risk

A B A B

Rohan Hedley 6 6 2 2Philip Howard 6 6 2 2Justin Braitling 6 6 -* 2Tim Bolger 6 6 2 2

A = Number of meetings attendedB = Number of meetings held during the time the Director held office or was a member of the committee duringthe period* Not a member of the relevant committee

Remuneration report (audited)

This report details the nature and amount of remuneration for key management personnel of Watermark GlobalLeaders Fund Limited in accordance with the Corporations Act 2001.

Fees and payments to Directors reflect the demands that are made on and the responsibilities of the Directorsand are reviewed annually by the Board. The Company determines the remuneration levels and ensures they arecompetitively set to attract and retain appropriately qualified and experienced Directors.

Directors’ base fees are set at a maximum of $100,000 per annum. Directors do not receive bonuses nor are theyissued options on securities. Directors’ fees cover all main board activities and membership of committees. Underthe ASX Listing Rules, the maximum fees paid to Directors may not be increased without approval from theCompany at a general meeting. Directors will seek approval from time to time as appropriate.

(a) Executive remuneration policy and framework

Details of remuneration

The following tables show details of the remuneration received by key management personnel of the Companyfor the current financial period.

2017Short-term

employee benefitsPost-employment

benefits

NameSalary

and fees Superannuation Total$ $ $

Rohan Hedley 14,582 1,385 15,967Philip Howard 14,582 1,385 15,967Justin Braitling - - -Tim Bolger - - -Total key management personnel compensation 29,164 2,770 31,934

17



Remuneration report (audited) (continued)

Details of remuneration (continued)

The following table comprises the company performance and non-executive directors' remuneration:

2017*Operating profit/(loss) after tax $726,721Dividends paid (cents per share) -Net tangible asset ($ per share) $1.08Total Directors' remuneration $31,934Total Shareholder's Equity 89,786,209

* The profit and loss balances are reflecting the reporting period from 30 August 2016 to 30 June 2017.

Director Related Entity Remuneration

All transactions with related entities were made on normal commercial terms and conditions.

Watermark Funds Management Pty Limited is a Director associate entity and has been appointed to manage theinvestment portfolio of Watermark Global Leaders Fund Limited. Watermark Funds Management Pty Limitedoperates a funds management business. In its capacity as manager, Watermark Funds Management Pty Limitedwas paid a management fee of 1.2%p.a. (plus GST) on the net value of the portfolio amounting to $590,001. Asat 30 June 2017, the balance payable to the manager was $97,017.

In addition, Watermark Funds Management Pty Limited is to be paid, annually in arrears, a performance feebeing 20% of:

• where the level of the Reserve Bank of Australia’s cash-rate has increased over that period, the amount ofthe increase in the Value of the Portfolio exceeds this increase; or

• where the Reserve Bank of Australia’s cash-rate has decreased over that period, the amount of the increasein the Value of the Portfolio.

No performance fee is payable in respect of any performance period where the portfolio has decreased in valueover that period. If the portfolio underperforms the benchmark over a financial period that underperformance is tobe recouped before any entitled performance fee can be accrued.

For the period ended 30 June 2017, in its capacity as manager, Watermark Funds Management Pty Limited isentitled to be paid a performance fee of $149,021.

These amounts are in addition to the above Directors remuneration.

No Director has received or become entitled to receive a benefit (other than those detailed above) by reason of acontract made by the Company or a related Company with the Director or with a firm of which he is a member orwith a Company in which he has substantial financial interest.

Remuneration of Executives

There are no executives that are paid by the Company. Watermark Funds Management Pty Limited, theinvestment manager of the Company, remunerated Justin Braitling and Tim Bolger as employees and/or as aDirector of the Manager during the financial year. The Manager is appointed to provide day-to-day managementof the Company and is remunerated as outlined above.

18



Remuneration report (audited) (continued)

Details of remuneration (continued)

Equity Instrument Disclosures Relating to Directors

As at the date of this report, the Company's Directors and their related parties held the following interests in theCompany:

Ordinary Shares Held

2017

Director Position

Balance at30 August

2016 Acquisitions Disposals

Balance at30 August

2017Rohan Hedley Chairman - 100,000 - 100,000Philip Howard Independent Director - 50,000 - 50,000Justin Braitling Non-Independent Director - 520,001 - 520,001Tim Bolger Non-Independent Director - 10,000 - 10,000

- 680,001 - 680,001

Options Held

2017

Director Position

Balance at30 August

2016Options

Acquired Options Expired

Balance at30 August

2017Rohan Hedley Chairman - 100,000 - 100,000Philip Howard Independent Director - 50,000 - 50,000Justin Braitling Non-Independent Director - 470,000 - 470,000Tim Bolger Non-Independent Director - 10,000 - 10,000

- 630,000 - 630,000

Directors and Director related entities acquired options in the Company on the same terms and conditionsavailable to other shareholders.

The Directors have not, during or since the end of the financial period, been granted options over unissuedshares or interests in shares of the Company as part of their remuneration.

End of remuneration report

Insurance and indemnification of officers and auditor

(a) Insurance of officers

During the financial period, the Company paid a premium in respect of a contract insuring the Directors of theCompany, the Company Secretary and any related body corporate against liability incurred as such by a Directoror Secretary to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosureof the nature of the liability and the amount of the premium.

(b) Indemnity of auditor

No indemnities have been given or insurance premiums paid during or since the end of the financial period, forany person who is or has been an auditor of the Company.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bringproceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, forthe purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

19



Proceedings on behalf of the Company (continued)

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court undersection 237 of the Corporations Act 2001.

Non-audit services

The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that theprovision of non-audit services during the period is compatible with the general standard of independence forauditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed in Note 20did not compromise the external auditor’s independence for the following reasons:

• all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact theimpartiality and objectivity of the auditor

• none of the services undermines the general principles relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants.

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 21.

Rounding of amounts

The Company is an entity of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)Instrument 2016/191 issued by the ASIC relating to the 'rounding off' of amounts in the financial statements.Amounts in the financial statements have been rounded to the nearest dollars in accordance with that ASICCorporations Instrument, unless otherwise indicated.

This report is made in accordance with a resolution of Directors.


Sydney30 August 2017

20

21

An independent New South Wales Partnership. ABN 17 795 780 962. Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000 Liability limited by a scheme approved under Professional Standards Legislation

Pitcher Partners is an association of independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle

An independent member of Baker Tilly International

Auditor’s Independence Declaration

To the Directors of Watermark Global Leaders Fund Limited

A.B.N. 71 614 536 560

In relation to the independent audit for the period ended 30 June 2017, to the best of my knowledge and

belief, there have been:

(i) no contraventions of the auditor independence requirements of the Corporations Act 2001; and

(ii) no contraventions of any applicable code of professional conduct.

This declaration is in respect of Watermark Global Leaders Fund Limited during the period.

S M WHIDDETT

Partner

PITCHER PARTNERS

Sydney

30 August 2017

Watermark Global Leaders Fund LimitedStatement of Comprehensive Income


Statement of Comprehensive Income

For the period

Notes

30 August 2016to 30 June 2017

$

Investment income from ordinary activitiesNet realised gains on investments 1,526,524Net unrealised gains on investments 1,091,269Dividends and trust distributions 1,062,055Interest 682,655Net foreign exchange gains 128,694

4,491,197

ExpensesManagement fees 22(b) (590,001)Performance fees 22(b) (138,860)Brokerage expense (747,247)Short dividend expense (1,217,312)Interest expense (398,828)Stock loan fees (163,440)Accounting fees (45,226)Share registry fees (25,456)Legal fees (2,250)Directors' fees 19(a) (31,934)ASX fees (44,571)Audit fees 20 (44,110)Other expenses (46,217)

(3,495,452)

Profit before income tax 995,745

Income tax expense 7 (269,024)Profit for the period 726,721

Other comprehensive income for the period, net of tax -

Total comprehensive income for the period 726,721

Cents

Earnings per share for profit attributable to the ordinary equity holders of theCompany:Basic earnings per share 25 0.88Diluted earnings per share 25 0.88

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

22

Watermark Global Leaders Fund LimitedStatement of Financial Position

As at 30 June 2017

Statement of Financial Position

At

Notes

30 June2017

$

ASSETSCurrent assetsCash and cash equivalents 8 84,390,240Trade and other receivables 9 9,450,352Financial assets at fair value through profit or loss 10 83,652,881Prepayments 15,587

Total current assets 177,509,060

Non-current assetsDeferred tax assets 12 744,547

Total non-current assets 744,547

Total assets 178,253,607

LIABILITIESCurrent liabilitiesTrade and other payables 13 6,099,382Derivative financial instruments 11 2,532Financial liabilities at fair value through profit or loss 14 82,219,735

Total current liabilities 88,321,649

Non-current liabilitiesDeferred tax liabilities 15 145,749

Total non-current liabilities 145,749

Total liabilities 88,467,398

Net assets 89,786,209

EQUITYIssued capital 16 89,059,488Reserves 17(a) 778,539Accumulated losses 17(b) (51,818)

Total equity 89,786,209

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

23

Watermark Global Leaders Fund LimitedStatement of Changes in Equity


Statement of Changes in Equity

NotesIssued capital

$

ProfitsReserves

$

Accumulatedlosses

$Total

$

Balance at 30 August 2016 - - - -aProfit for the period - - 726,721 726,721aOther comprehensive income - - - -

Total comprehensive income for the period - - 726,721 726,721

Transactions with owners in their capacity asowners:Shares issued upon incorporation 1 - - 1Shares issued under IPO 16 91,084,400 - - 91,084,400On market buy back 16 - - - -Costs of issued capital 16 (2,024,913) - - (2,024,913)Transfer to profits reserve 17 - 778,539 (778,539) -

89,059,488 778,539 (778,539) 89,059,488

Balance at 30 June 2017 89,059,488 778,539 (51,818) 89,786,209

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

24

Watermark Global Leaders Fund LimitedStatement of Cash Flows


Statement of Cash Flows

For the period

Notes


$

Cash flows from operating activitiesPurchase of financial assets (150,131,296)Proceeds from sale of financial assets 73,357,715Proceeds from short sale of financial liabilities 149,855,151Re-purchase of financial liabilities (75,481,183)Interest received 624,276Interest paid (351,796)Dividends and trust distributions received 898,681Dividends paid on short stocks (1,016,946)Investment management fees paid (519,164)Brokerage expense (751,175)Stock loan fees (145,314)Payments for other expenses (269,071)

Net cash (outflow) from operating activities 24(a) (3,930,122)

Cash flows from financing activitiesShares issued 91,084,401Share issue transaction costs (2,892,733)

Net cash inflow from financing activities 88,191,668

Net increase in cash and cash equivalents 84,261,546Cash and cash equivalents at the beginning of the period -Effects of exchange rate changes on cash and cash equivalents 128,694

Cash and cash equivalents at end of the period 8 84,390,240

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

25

Watermark Global Leaders Fund LimitedNotes to the Financial Statements

30 June 2017

1 General information

Watermark Global Leaders Fund Limited (the "Company") is a listed public company incorporated and domiciledin Australia. The address of Watermark Global Leaders Fund Limited's registered office is Level 6, 139Macquarie Street, Sydney, NSW 2000. The financial statements of Watermark Global Leaders Fund Limited arefor the period ended 30 June 2017. The Company is primarily involved in making investments, and derivingrevenue and investment income from global listed securities.

The Company was registered with the Australian Securities and Investments Commission (ASIC) on 30 August2016 and commenced operations on 21 December 2016.

As this is the Company's first period of operations, there are no comparatives.

2 Significant accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below.These policies have been consistently applied to all the periods presented, unless otherwise stated. The financialstatements are for the entity Watermark Global Leaders Fund Limited.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian AccountingStandards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act2001. Watermark Global Leaders Fund Limited is a for-profit entity for the purpose of preparing the financialstatements.

The financial statements were authorised for issue by the Board of Directors on 30 August 2017.

(i) Compliance with IFRS

The financial statements of the Watermark Global Leaders Fund Limited also comply with International FinancialReporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) New and amended standards adopted by the Company

There are no standards, interpretations or amendments to existing standards that are effective for the first timefor the financial period beginning 30 August 2016 that have a material impact on the Company.

(iii) Historical cost convention

These financial statements have been prepared under the accruals basis and are based on historical costconvention, as modified by the revaluation of financial assets and liabilities at fair value through profit or loss.

(iv) Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the process of applying the Company's accounting policies. The areasinvolving a higher degree of judgement or complexity, or areas where assumptions and estimates are significantto the financial statements, are disclosed in Note 5.

(v) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June2017 reporting periods and have not been early adopted by the Company. The Company’s assessment of theimpact of these new standards and interpretations is set out below.

26



2 Significant accounting policies (continued)

(a) Basis of preparation (continued)

Title ofstandard Nature of change Impact

Mandatory applicationdate/ Date of adoptionby the Company

AASB 9FinancialInstruments

AASB 9 addresses theclassification,measurement andderecognition of financialassets and financialliabilities and introducesnew rules for hedgeaccounting. In December2014, the AASB madefurther changes to theclassification andmeasurement rules andalso introduced a newimpairment model. Theselatest amendments nowcomplete the newfinancial instrumentsstandard.

Following the changes approved by theAASB in December 2014, theCompany no longer expects anyimpact from the new classification,measurement and derecognition ruleson the Company's financial assets andfinancial liabilities.

There will also be no impact on theCompany’s accounting for financialliabilities, as the new requirements onlyaffect the accounting for financialliabilities that are designated at fairvalue through profit or loss and theCompany does not have any suchliabilities.

The derecognition rules have notchanged from the previousrequirements, and the Company doesnot apply hedge accounting. The newstandard also introduces expandeddisclosure requirements and changesin presentation.

The new impairment model is anexpected credit loss (ECL) modelwhich may result in the earlierrecognition of credit losses.

The Company has not yet assessedhow the impairment provisions wouldbe affected by the new rules.

Must be applied forfinancial yearscommencing on or after 1January 2018.

Based on the transitionalprovisions in thecompleted IFRS 9, earlyadoption in phases wasonly permitted for annualreporting periodsbeginning before 1February 2015. After thatdate, the new rules mustbe adopted in theirentirety.

The Company has notyet decided whether itwill early adopt AASB 9.

27




(a) Basis of preparation (continued)

Title ofstandard Nature of change Impact

Mandatory applicationdate/ Date of adoptionby the Company

AASB 15RevenuefromContractswithCustomers

The AASB has issued anew standard for therecognition of revenue.This will replace AASB118 which coverscontracts for goods andservices and AASB 111which coversconstruction contracts.

The new standard isbased on the principlethat revenue isrecognised when controlof a good or servicetransfers to a customer -so the notion of controlreplaces the existingnotion of risks andrewards.

The standard permits amodified retrospectiveapproach for theadoption. Under thisapproach entities willrecognise transitionaladjustments in retainedearnings on the date ofinitial application (eg 1July 2017), ie withoutrestating the comparativeperiod. They will onlyneed to apply the newrules to contracts that arenot completed as of thedate of initial application.

The Company's main sources ofincome are interest, dividends anddistributions and gains on financialinstruments held at fair value. All ofthese are outside the scope of the newrevenue standard. As a consequence,the Directors do not expect theadoption of AASB 15 to have asignificant impact on the Company’saccounting policies or the amountsrecognised in the financial statements.

Mandatory for financialyears commencing on orafter 1 January 2017.

The Company has notyet decided whether itwill early adopt AASB 15.

There are no other standards that are not yet effective and that would be expected to have a material impact onthe entity in the current or future reporting periods and on foreseeable future transactions.

(b) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primaryeconomic environment in which the entity operates ('the functional currency'). The financial statements arepresented in Australian dollars, which is Watermark Global Leaders Fund Limited's functional and presentationcurrency.

28




(b) Foreign currency translation (continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing atthe dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at period end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the Statement of Comprehensive Income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange ratesat the date when the fair value was determined. Translation differences on assets and liabilities carried at fairvalue are reported as part of the fair value gain or loss in the Statement of Comprehensive Income.

(c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenueare net of rebates and amounts collected on behalf of third parties.

Revenue is recognised where it is probable that the economic benefit will flow to the entity and can be reliablymeasured.

(i) Investment income

Profits and losses realised from the sale of investments and unrealised gains and losses on securities held at fairvalue are included in the Statement of Comprehensive Income in the period they are incurred in accordance withthe policies described in Note 2(h).

(ii) Dividends and trust distributions

Dividends and trust distributions are recognised as revenue when the right to receive payment is established.

(iii) Interest income

Interest income is recognised as it accrues, taking into account the effective yield on the financial asset.

(iv) Other income

The Company recognises other income when the amount of revenue can be reliably measured and it is probablethat future economic benefits will flow to the entity. The Company bases its estimates on historical results, takinginto consideration the type of customer, the type of transaction and the specifics of each arrangement.

(d) Income tax

The income tax expense/(income) for the period comprises current income tax expense/(income) and deferredtax expense/(income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current taxliabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxationauthority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances duringthe period as well as unused tax losses.

Current and deferred income tax expense/(income) is charged or credited outside profit or loss when the taxrelates to items that are recognised outside profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when theasset is realised or the liability is settled and their measurement also reflects the manner in which managementexpects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extentthat it is probable that future taxable profit will be available against which the benefits of the deferred tax assetcan be utilised.

29




(d) Income tax (continued)

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended thatnet settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferredtax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred taxassets and liabilities relate to income taxes levied by the same taxation authority on either the same taxableentity or different taxable entities where it is intended that net settlement or simultaneous realisation andsettlement of the respective asset and liability will occur in future periods in which significant amounts of deferredtax assets or liabilities are expected to be recovered or settled.

(e) Cash and cash equivalents

For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash onhand, deposits held at call with financial institutions, other short-term, highly liquid investments with originalmaturities of three months or less that are readily convertible to known amounts of cash and which are subject toan insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings incurrent liabilities in the Statement of Financial Position.

(f) Due from/to brokers

Amounts due from/to brokers represent receivables for securities sold and payables for securities purchased thathave been contracted for but not yet delivered by the end of the period. Trades are recorded on trade date, andfor equities normally settled within three business days. A provision for impairment of amounts due from brokersis recognised in the Statement of Comprehensive Income when there is objective evidence that the Company willnot be able to collect all amounts due from the relevant broker. Indicators that the amount due from brokers isimpaired include significant financial difficulties of the broker, probability that the broker will enter bankruptcy orfinancial reorganisation and default in payments.

(g) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method, less provision for impairment. Trade and other receivables are generally duefor settlement within 30 days. They are presented as current assets unless collection is not expected for morethan 12 months after the reporting date.

Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to beuncollectible are written off by reducing the carrying amount directly.

(h) Financial assets and liabilities

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

Classification(i) Financial assets and liabilities at fair value through profit or loss - held for trading

Financial assets are classified in this category if acquired principally for the purpose of selling in the short term.Assets in this category are classified as current assets if they are expected to be settled within 12 months;otherwise they are classified as non-current.

The Company makes short sales in which a borrowed security is sold in anticipation of a decline in the marketvalue of that security, or it may use short sales for various arbitrage transactions. Short sales are classified ascurrent financial liabilities at fair value through profit or loss.

Dividends expense on short sales of securities, which have been classified at fair value through profit or loss, isrecognised in the Statement of Comprehensive Income.

30




(h) Financial assets and liabilities (continued)

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for those with maturities greater than 12months after the reporting period which are classified as non-current assets. Loans and receivables are includedin trade and other receivables (note 9) in the Statement of Financial Position.

Recognition and derecognitionPurchases and sales of financial assets and liabilities at fair value through profit or loss are recognised ontrade-date - the date on which the Company commits to purchase or sell the asset or liability. Investments arederecognised when the rights to receive cash flows from the investments have expired or have been transferredand the Company has transferred substantially all the risks and rewards of ownership.

MeasurementFinancial instruments are initially measured at fair value, adjusted for transaction costs, except where theinstrument is classified at fair value through profit and loss, in which case, transaction costs are immediatelyrecognised as expenses in profit or loss. Transaction costs of financial assets and financial liabilities at fair valuethrough profit or loss are expensed in the Statement of Comprehensive Income.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Subsequent to initial recognition, all instruments held at fair value through profit or loss are measured at fair valuewith changes in their fair value recognised in the Statement of Comprehensive Income.

When an investment is disposed, the cumulative gain or loss, net of tax thereon, is recognised as realised gainsand losses from the sale of financial instruments in the Statement of Comprehensive Income.

Determination of Fair Value

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date in the principal, or in its absence, themost advantageous market to which the Company has access at that date. The fair value of a liability reflects itsnon-performance risk.

The Company's accounting policy on fair value measurements is discussed in Note 4.

Under AASB 13, if an investment has a bid price and an ask price, the price within the bid-ask spread that ismore representative of fair value in the circumstances shall be used to measure fair value. Accordingly, theCompany uses the last sale price as a basis of measuring fair value.

Derivatives

As at 30 June 2017, the Company also held derivative instruments in the form of equity swaps. Derivatives areclassified as at fair value through profit or loss - held-for-trading unless they are designated as hedges. Assets inthis category are classified as current assets if they are expected to be settled within 12 months; otherwise theyare classified as non-current.

Derivatives in a net receivable position (positive fair value) are reported as financial assets at fair value throughprofit or loss - held-for-trading. All derivatives in a net payable position (negative fair value) are reported asfinancial liabilities at fair value through profit or loss - held-for-trading.

(i) Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financialperiod which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Tradeand other payables are presented as current liabilities unless payment is not due within 12 months from thereporting date. They are recognised initially at their fair value and subsequently measured at amortised costusing the effective interest method.

31




(j) Finance costs

Finance costs are recognised as expenses in the period in which they are incurred using the effective interestrate method.

(k) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,net of tax, from the proceeds.

(l) Profits reserve

A profits reserve has been created representing an amount allocated from current and retained earnings that ispreserved for future dividend payments.

(m) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at thediscretion of the entity, on or before the end of the reporting period but not distributed at the end of the reportingperiod.

In accordance with the Corporations Act 2001, the Company may pay a dividend where the Company's assetsexceed its liabilities, the payment of the dividend is fair and reasonable to the Company's shareholders as awhole and the payment of the dividend does not materially prejudice the Company's ability to pay its creditors.

It is the Directors’ policy to pay dividends franked to the maximum extent possible provided the Company hassufficient profit reserves and franking credits and to distribute the majority of franking credits received eachperiod. Franking credits are generated by receiving fully franked dividends from shares held in the Company'sinvestment portfolio, and from the payment of corporate tax on its other investment income, unfranked incomeand net realised gains.

(n) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinaryshares

• by the weighted average number of ordinary shares outstanding during the financial period and adjusted forbonus elements in ordinary shares issued during the period.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take intoaccount:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinaryshares, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming theconversion of all dilutive potential ordinary shares.

(o) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurredis not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of theasset or as part of the expense.

32




(o) Goods and Services Tax (GST) (continued)

Where applicable, the Company qualifies for Reduced Input Tax Credits (RITC) at a rate of at least 75%; hencefees for these services have been recognised in the Statement of Comprehensive Income net of the amount ofGST recoverable from the taxation authority.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount ofGST recoverable from, or payable to, the taxation authority is included with other receivables or payables in theStatement of Financial Position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing orfinancing activities which are recoverable from, or payable to the taxation authority, are presented as operatingcash flows.

3 Financial risk management

The Company's financial instruments consist mainly of deposits with banks, trading portfolios, trade and otherreceivables and trade and other payables.

The Company's activities expose it to a variety of financial risks: market risk (including interest rate risk, foreignexchange risk and price risk), credit risk and liquidity risk. The Board of the Company has implemented a riskmanagement framework to mitigate these risks.

(a) Market risk

The standard defines this as the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in market prices.

(i) Price risk

Exposure

The Company is exposed to currency risk arising from its investments denominated other than in Australiandollars. The Fund retains a natural hedge of its foreign exchange risk as it holds both assets and liabilitiesdenominated in foreign currencies. Any residual foreign exchange risk is actively managed by the InvestmentManager through its treasury management framework.

The Company seeks to manage and constrain market risk by diversification of the investment portfolio acrossmultiple stocks and industry sectors. The portfolio is maintained by the Investment Manager within a range ofparameters governing the levels of acceptable exposure to stocks and industry sectors. The relative weightingsof the individual securities and relevant market sectors are reviewed normally weekly and risk can be managedby reducing exposure where necessary.

The table below analyses the Company's concentration of price risk by region.

2017Long

Exposure %Short

Exposure % Net Exposure %Australia 10,163,588 12.15% (9,275,347) 11.28% 888,241 62.09%North America 37,299,761 44.59% (33,130,984) 40.29% 4,168,777 291.40%Europe 32,313,679 38.63% (39,815,936) 48.43% (7,502,257) (524.41%)Rest of World 3,875,853 4.63% - 0.0% 3,875,853 270.92%Total 83,652,881 100.00% (82,222,267) 100.00% 1,430,614 100.00%

The North American region includes the United States and Canada. Europe includes countries in mainlandEurope and the United Kingdom.

As at 30 June 2017 one security represented over 5 per cent of the long or short investment portfolio.

33



3 Financial risk management (continued)

(a) Market risk (continued)

Sensitivity

The following table illustrates the effect on the Company's equity from possible changes in other market risk thatwere reasonably possible based on the risk the Company was exposed to at reporting date, assuming a flat taxrate of 30 per cent:

Impact onpost-tax

profit/(loss)2017

$

Decrease 5% (50,072)Increase 5% 50,072Decrease 10% (100,143)Increase 10% 100,143

Post-tax loss for the period would increase as a result of losses on equity securities classified as at fair valuethrough profit or loss.

At balance date, the net portfolio position was $1,430,614 long therefore there is a small price risk impact onpost-tax loss.

(ii) Foreign exchange risk

Exposure

The Company operates internationally and holds both monetary and non-monetary assets denominated incurrencies other than the Australian dollar. The foreign exchange risk relating to non-monetary assets andliabilities is a component of price risk. Foreign exchange risk arises as the value of monetary securitiesdenominated in other currencies will fluctuate due to changes in exchange rates. The net value of monetaryassets and liabilities denominated in other currencies that is exposed to foreign exchange risk was $370,133 asat 30 June 2017. The risk is measured using sensitivity analysis. The Investment Manager monitors theCompany's currency positions on a daily basis.

Sensitivity

The analysis is based on the assumption that the Australian dollar weakened and strengthened by 10% againstthe foreign currencies to which the Company is exposed. The impact on post-tax loss for the period would be$25,909 lower/$25,909 higher.

(iii) Cash flow and fair value interest rate risk

The Company'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.

The table below summarises the Company's exposure to interest rate risks. It includes the Company's assets andliabilities at fair values, categorised by the earlier of contractual repricing or maturity dates.

At 30 June 2017Floating

interest rateNon- interest

bearing Total

$ $ $

Financial assetsCash and cash equivalents 84,390,240 - 84,390,240Trade and other receivables - 9,450,352 9,450,352Financial assets held at fair value through profit or loss - 83,652,881 83,652,881

34




(a) Market risk (continued)

At 30 June 2017Floating

interest rateNon- interest

bearing Total

$ $ $

84,390,240 93,103,233 177,493,473

Financial liabilitiesTrade and other payables - (6,099,382) (6,099,382)Financial liabilities held at fair value through profit or loss - (82,219,735) (82,219,735)

- (88,319,117) (88,319,117)

Net exposure to interest rate risk 84,390,240 4,784,116 89,174,356

Sensitivity

At 30 June 2017, if interest rates had increased by 75 or decreased by 75 basis points from the period end rateswith all other variables held constant, post-tax loss for the period would have been $443,049 lower/$443,049higher, manly as a result of lower interest income from cash and cash equivalents.

(b) Credit risk

The standard defines this as the risk that one party to a financial instrument will cause a financial loss for theother party by failing to discharge an obligation.

Under the arrangements which the Company has entered into to facilitate stock borrowing for covered shortselling, borrowed stock is collateralised by the long stock portfolio. If the stock borrowing counterparty becameinsolvent, it is possible that the Company may not recover all of the collateral that the Fund gave to thecounterparty. The collateral on securities sold short is set at 100% of the borrowed stock.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date torecognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, asdisclosed in the Statement of Financial Position and Notes to the Financial Statements.

Credit risk is managed as noted in Note 8 with respect to cash and cash equivalents, Note 9 for trade and otherreceivables and Note 10 for financial assets at fair value through profit or loss. None of these assets is overdueor considered to be impaired.

(c) Liquidity risk

The standard defines this as the risk that an entity will encounter difficulty in meeting obligations associated withfinancial liabilities.

The Investment Manager monitors its cash-flow requirements daily in relation to the investing account taking intoaccount upcoming dividends, tax payments and investing activity.

The Company's inward cash flows depend upon the level of dividend and distribution revenue received. Shouldthese decrease by a material amount, the Company would amend its outward cash flows accordingly. As theCompany's major cash outflows are the purchase of securities and dividends paid to shareholders, the level ofboth of these is managed by the Board and Investment Manager.

The assets of the Company are largely in the form of readily tradeable securities which can be sold on-market ifnecessary.

Maturities of financial liabilities

The tables below analyse the Company's financial liabilities into relevant maturity groupings based on theircontractual maturities at period end date.

35




(c) Liquidity risk (continued)

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 monthsequal their carrying balances as the impact of discounting is not significant.

Contractual maturities of financial liabilities Less than 1month

Totalcontractual

undiscountedcash flows

At 30 June 2017 $ $

Non-derivatives

Trade and other payables 6,099,382 6,099,382Financial liabilities at fair value through profit or loss 82,219,735 82,219,735Total non-derivatives 88,319,117 88,319,117

Derivatives

Net settled (equity swaps) 2,532 2,532Total derivatives 2,532 2,532

4 Fair value measurements

The Company measures and recognises the following assets and liabilities at fair value on a recurring basis:

• Financial assets and financial liabilities at fair value through profit or loss (FVTPL)

The Company has no assets or liabilities measured at fair value on a non-recurring basis in the current reportingperiod.

(a) Fair value hierarchy

AASB 13 requires disclosure of fair value measurements by level of the following fair value measurementhierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either

directly (as prices) or indirectly (derived from prices) (level 2), and(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs)

(level 3).

36



4 Fair value measurements (continued)

(a) Fair value hierarchy (continued)

(i) Recognised fair value measurements

The following table presents the Company’s assets and liabilities measured and recognised at fair value at periodend.

At 30 June 2017Level 1

$Level 2

$Level 3

$Total

$

Financial assetsEquity securities 10,163,588 - - 10,163,588Equity securities international 73,489,293 - - 73,489,293

Total financial assets 83,652,881 - - 83,652,881

Financial liabilitiesEquity securities sold short 9,275,347 - - 9,275,347Equity securities international sold short 72,944,388 - - 72,944,388International swaps - 2,532 - 2,532

Total financial liabilities 82,219,735 2,532 - 82,222,267

Included within Level 1 of the hierarchy are listed investments. The fair value of these financial assets andliabilities have been based on the last sale prices at the end of the reporting period, excluding transaction costs.

The fair value of equity swaps is the estimated amount that the Fund would receive or pay to terminate the swapat the reporting date, taking into account current indices and the current credit worthiness of the swapcounterparties.

There were no transfers between levels for recurring fair value measurements during the period.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the endof the reporting period.

(ii) Disclosed fair values

For all financial instruments other than those measured at fair value their carrying value approximates fair value.

The carrying amounts of trade and other receivables and payables are reasonable approximations of their fairvalues due to their short-term nature.

5 Critical accounting estimates and judgements

(a) Significant estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that may have a financial impact on the entity and that are believed to bereasonable under the circumstances.

(b) Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,by definition, seldom equal the related actual results.

6 Segment information

The Company has only one reportable segment. The Company operates in one industry being the securitiesindustry, deriving revenue from dividend and trust distribution income, interest income and from the sale of itstrading portfolio.

37



7 Income tax expense

(a) Income tax expense through profit or loss

For the period30 August 2016to 30 June 2017

$

Deferred tax on temporary differences 135,982Tax on permanent differences 133,042

269,024

Income tax expense is attributable to:Profit from continuing operations 269,024

(b) Numerical reconciliation of income tax expense to prima facie tax payable

For the period30 August 2016to 30 June 2017

$

Profit from continuing operations before income tax expense 995,745Tax at the Australian tax rate of 30.0% 298,724Tax effect of amounts which are not deductible (taxable)in calculating taxable income:

Temporary differences (35,322)Franked dividends not subject to tax (23,983)Foreign tax gross up on dividend income 29,605

Income tax expense 269,024

(1,264,769)The applicable weighted average effective tax rate is as follows: 22.07% 27.02%

The positive effective tax rate in the current period is mainly due to profits realised, net of gains from securitiesthat are not subject to tax.

(c) Amounts recognised directly in equity

For the period

Notes


$

Aggregate deferred tax arising in the reporting period and not recognised in net profit orloss or other comprehensive income but directly debited or credited to equity:

Net deferred tax - debited (credited) directly to equity 12 694,256

38



8 Current assets - Cash and cash equivalents

At30 June

2017$

Current assetsCash at bank 75,390,240Term Deposits 9,000,000

84,390,240

(a) Risk exposure

The Company's exposure to interest rate risk is discussed in Note 3. The maximum exposure to credit risk at theend of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

Cash investments are made with the following financial institutions:

Standard & Poor's RatingAustralia and New Zealand Banking Group Ltd AA-Morgan Stanley BBB+

9 Current assets - Trade and other receivables

At30 June

2017$

Dividends and distributions receivable 158,206Interest receivable 58,379GST receivable 44,088Withholding tax receivable 69,077Unsettled trades 9,120,602

9,450,352

Receivables are non-interest bearing and unsecured.

Fair value and credit risk

Due to the short-term nature of these receivables, the carrying amounts are reasonable approximations of theirfair values.

39



10 Current assets - Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are all held for trading and include the following:

At30 June

2017$

International listed equity securities 73,489,293Australian listed equity securities 10,163,588

Total securities 83,652,881

The market values of all investments as at 30 June 2017 are disclosed on page 9 of the Annual Report.Listed securities are readily saleable with no fixed terms.

Changes in fair values of financial assets at fair value through profit or loss are recorded in investment income inthe Statement of Comprehensive Income.

(a) Investment transactions

The total number of contract notes that were issued for transactions in securities during the financial period was824. Each investment transaction may involve multiple contract notes.

The total brokerage paid on these contract notes was $1,104,843.

(b) Risk exposure and fair value measurements

Information about the Company's exposure to price risk and about the methods and assumptions used indetermining fair value is provided in Note 3.

11 Derivative financial instruments

In the normal course of business, the Company enters into transactions in derivative financial instruments withcertain risks. A derivative is a financial instrument or other contract whose value depends on, or is derived from,underlying assets, liabilities or indices. Derivative transactions include a wide assortment of instruments, such asforwards, futures, options and swaps.

Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of theCompany's portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivativesis multi-faceted and includes:

(i) hedging to protect an asset of the Company against a fluctuation in market values or to reduce volatility;(ii) as a substitute for physical securities; and(iii) adjustment of asset exposures within the parameters set out in the investment strategy.

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.

40



11 Derivative financial instruments (continued)

The Company holds the following derivative instruments:

Equity swaps:

An equity swap is an agreement between counterparties to exchange a set of payments, determined by a stockor index return, with another set of payments (usually an interest-bearing (fixed or floating rate) instrument, butthey can also be the return on another stock or index). Equity swaps are used to substitute for a direct transactionin stock. The two cash flows are usually referred to as "legs". As with other swaps, the difference in the paymentstreams is netted.

Fair value $

Notionalvalues

$Assets

$Liabilities

$

Equity swaps 809,351 - (2,532)Total 809,351 - (2,532)

12 Non-current assets - Deferred tax assets

At30 June

2017$

The balance comprises temporary differences attributable to:Tax losses 40,523Capitalised share issue costs 694,256Accrued expenses 9,768

744,547

At30 June

2017$

Movements:Opening balance -Charged:

- to profit or loss 50,291- directly to equity 694,256

Closing balance 744,547

41



13 Current liabilities - Trade and other payables

At30 June

2017$

Management fees payable 97,017Performance fees payable 149,021Unsettled trades 5,639,535Interest payable 47,032Other payables 166,777

6,099,382

Trade and other payables are unsecured and are usually paid within 30 days of recognition.

Due to the short-term nature of these payables, the carrying amounts are reasonable approximations of their fairvalues.

14 Current liabilities - Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are all held for trading and include the following:

At30 June

2017$

International listed equity securities sold short 72,944,388Australian listed equity securities sold short 9,275,347

82,219,735

A short sale occurs when the Investment Manager borrows a security and sells the security on market to a thirdparty, generating cash proceeds. The Investment Manager will reacquire the same security and return it to thelender to close the transaction. In doing so, the Company is exposed to price risk of those securities sold short.

42



15 Non-current liabilities - Deferred tax liabilities

At30 June

2017$

The balance comprises temporary differences attributable to:Net unrealised gains on investments 102,619Other temporary differences 43,130

145,749

At 30 August 2016 -

Charged to- profit or loss 145,749

At 30 June 2017 145,749

16 Issued capital

(a) Share capital

Notes

30 June2017

Shares

30 June2017

$

Ordinary shares 16(b) 82,804,002 89,059,488

(b) Movements in ordinary share capital

Details Notes Number of shares $

Opening balance 30 August 2016 - -

Shares issued upon incorporation 1 1Share issued under IPO 82,804,001 91,084,400Cost of issued capital - (2,024,913)

Closing balance 30 June 2017 82,804,002 89,059,488

(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company inproportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to onevote, and upon a poll each share is entitled to one vote.

(d) Shares under IPO

The Company issued a replacement Prospectus on 4 November 2016 for the offer of up to 100,000,000 fully paidordinary shares at an office price of $1.10 per share to raise up to $110,000,000, together with 1 option to acquire1 ordinary share exercisable at $1.10 per option on or before 16 November 2018. On the 16 December 2016, theCompany issued 82,804,001 fully paid ordinary shares under this initial public offering at $1.10 per share.

43



16 Issued capital (continued)

(e) Option Issue

On 16 December 2016, as part of IPO the Company issued options to acquire ordinary shares in the Company atan exercise price of $1.10 with expiry 16 November 2018. No options have been exercised during the period.

(f) Share buy-back

An on market buy-back commenced on 23 May 2017 for a twelve month duration. No shares have been boughtback during the period.

(g) Capital risk management

The Board of Directors will actively manage the capital of the Company. The overriding intention is to delivervalue to shareholders.

To achieve this the Board monitor the monthly NTA results, investment performance, the Company's IndirectCost Ratio and share price movements.

The Company is not subject to any externally imposed capital requirements.

17 Reserves and accumulated losses

(a) Reserves

At30 June

2017$

Profits reserve 778,539

This reserve details an amount preserved for future dividend payments as outlined in accounting policy Note 2(l).

At30 June

2017$

Movements:

Opening balance -Transfer from current and retained earnings 778,539Closing balance 778,539

44



17 Reserves and accumulated losses (continued)

(b) Accumulated losses

Movements in (accumulated losses) were as follows:

At30 June

2017$

Opening balance -Net profit for the period 726,721Transfer to profits reserve (778,539)Closing balance (51,818)

18 Dividends

(a) Dividend rate

There were no dividends paid or declared during the period.

(b) Dividend franking account

The franked portions of the final dividends recommended after 30 June 2017 will be franked out of existingfranking credits or out of franking credits arising from the payment of income tax in the period ended 30 June2018.

30 June 2017$

Opening balance of franking account -Franking credits on dividends received 18,523Franking credits lost under 45 day rule (18,523)Closing balance of franking account -

Adjustments for tax payable/refundable in respect of the current period's profits and the receiptof dividends -Adjusted franking account balance -

Impact on the franking account of dividends proposed or declared before the financial reportauthorised for issue but not recognised as a distribution to equity holders during the period -Franking credits available/(shortfall) for subsequent reporting period based on a tax rate of30.0% -

The Company's ability to continue to pay franked dividends is dependent upon the receipt of franked dividendsfrom investments and the payment of tax.

45



19 Key management personnel disclosures

(a) Key management personnel compensation

For the period30 June 2017

$

Short-term employee benefits 29,164Post-employment benefits 2,770

31,934

Detailed remuneration disclosures are provided in the remuneration report on pages 17 to 19.

There are no executives that are paid by the Company, The Manager remunerated Justin Braitling and TimBolger as an employee and/or Directors of the Manager during the financial period to 30 June 2017.

(b) Equity instrument disclosures relating to key management personnel

(i) Share holdings

The numbers of shares in the Company held during the financial period by each Director of Watermark GlobalLeaders Fund Limited and other key management personnel of the Company, including their personally relatedparties, are set out below. There were no shares granted during the reporting period as compensation.

2017Name

Balance atthe start ofthe period Net movement

Balance at30 June

2017

Directors of Watermark Global Leaders Fund LimitedOrdinary sharesRohan Hedley - 100,000 100,000Philip Howard - 50,000 50,000Justin Braitling - 520,001 520,001Tim Bolger - 10,000 10,000

- 680,001 680,001

(ii) Option holdings

All options were granted as a consequence of Directors subscribing for shares in the Company's initial publicoffer on the same terms as all investors subscribing for shares under the Prospectus.

The numbers of options over ordinary shares in the Company that were held during the financial period by eachDirector of Watermark Global Leaders Fund Limited and other key management personnel of the Company,including their personally related parties, are set out below.

46



19 Key management personnel disclosures (continued)

(b) Equity instrument disclosures relating to key management personnel (continued)

2017Name

Balance atstart of the

period Granted Forfeited

Balance at30 June

2017

Directors of Watermark Global Leaders FundLimitedOptionsRohan Hedley - 100,000 - 100,000Philip Howard - 50,000 - 50,000Justin Braitling - 470,000 - 470,000Tim Bolger - 10,000 - 10,000

- 630,000 - 630,000

20 Remuneration of auditor

During the period the following fees were paid or payable for services provided by the auditor of the Company, itsrelated practices and non-related audit firms:

Pitcher Partners

(i) Audit and other assurance services


$

Audit and other assurance servicesAudit and review of financial statements 33,660

Total remuneration for audit and other assurance services 33,660

Non-assurance services provided by related practice of the auditor:Tax compliance services 10,450Financial due diligence services 38,500

Total remuneration 82,610

The Company’s Audit and Risk Committee oversees the relationship with the Company’s External Auditors. TheAudit and Risk Committee reviews the scope of the audit and the proposed fee. It also reviews the cost andscope of other services provided by the audit firm, to ensure that they do not compromise independence.

21 Contingencies

The Company had no contingent liabilities at 30 June 2017.

47



22 Related party transactions

(a) Key management personnel

Disclosures relating to key management personnel are set out in Note 19.

(b) Transactions with other related parties

All transactions with related entities were made on normal commercial terms and conditions no more favourablethan those available to other parties unless otherwise stated.

Watermark Funds Management Pty Limited is a Director associate entity and has been appointed to manage theinvestment portfolio of Watermark Global Leaders Fund Limited. Watermark Funds Management Pty Limitedoperates a funds management business. In its capacity as manager, Watermark Funds Management Pty Limitedwas paid a management fee of 1.2% p.a. (plus GST) on the net value of the portfolio amounting to $590,001.

As at 30 June 2017, the balance payable to the Investment Manager was $97,017.

In addition, Watermark Funds Management Pty Limited is to be paid, annually in arrears, a performance feebeing 20% of:

• where the level of the Reserve Bank of Australia’s cash-rate has increased over that period, the amount bywhich the Value of the Portfolio exceeds this increase; or

• where the Reserve Bank of Australia’s cash-rate has decreased over that period, the amount of the increasein the Value of the Portfolio.

No performance fee is payable in respect of any performance period where the portfolio has decreased in valueover that period. If the portfolio underperforms the benchmark over a financial year that underperformance is tobe recouped before any entitled performance fee can be accrued.

For the period ended 30 June 2017 in its capacity as manager, Watermark Funds Management Pty Limited isentitled to be paid a performance fee of $149,021.

No Director has received or become entitled to receive a benefit (other than those detailed above) by reason of acontract made by the Company or a related Company with the Director or with a firm of which he is a member orwith a Company in which he has substantial financial interest.

23 Events occurring after the reporting period

On 24 July 2017, the Company announced the resignation of Sophia Gartzonis as Company Secretary effective24 July 2017. Following the resignation, Mark Licciardo of Mertons Corporate Services Pty Ltd was appointed asCompany Secretary, effective 24 July 2017.

Other than the above, no other matter or circumstance has occurred subsequent to period end that hassignificantly affected, or may significantly affect, the operations of the Company, the results of those operations orthe state of affairs of the Company in subsequent financial periods.

48



24 Reconciliation of profit after income tax to net cash inflow from operating activities

(a) Reconciliation of profit after income tax to net cash inflow from operating activities


$

Profit for the period 726,721Fair value losses/(gains) on financial assets at fair value through profit or loss (1,430,614)Effects of foreign currency exchange rate changes on cash and cash equivalents (128,694)Change in operating assets and liabilities:

Increase in trade and other receivables (9,450,352)Increase in other current assets (15,587)Decrease in deferred tax assets 123,273Increase in trade and other payables 6,099,382Increase in deferred tax liabilities 145,749

Net cash inflow from operating activities (3,930,122)

25 Earnings per share

(a) Basic earnings per share


Cents

Basic earnings per share attributable to the ordinary equity holders of the Company 0.88

(b) Diluted earnings per share


Cents

Diluted earnings per share attributable to the ordinary equity holders of the Company 0.88

Diluted earnings per share is the same as basic earnings per share.

Options granted are considered to be potential ordinary shares and have been included in the determination ofdiluted earnings per share to the extent to which they are dilutive.

(c) Weighted average number of shares used as denominator

49



25 Earnings per share (continued)

(c) Weighted average number of shares used as denominator (continued)

For theperiod

30 June 2017Number

Weighted average number of ordinary shares used as the denominator in calculating basicearnings per share 82,804,002

Weighted average number of ordinary shares used as the denominator in calculating dilutedearnings per share 82,804,002

50

Watermark Global Leaders Fund LimitedDirectors' Declaration

30 June 2017

In the opinion of the directors of Watermark Global Leaders Fund Limited:

(a) the financial statements and notes set out on pages 22 to 50 are in accordance with the Corporations Act2001, including:(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other

mandatory professional reporting requirements, and(ii) giving a true and fair view of the Company's financial position as at 30 June 2017 and of its

performance for the period ended on that date, and(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they

become due and payable.(c) Note 2(a) confirms that the financial statements also comply with International Financial Reporting

Standards as issued by the International Accounting Standards Board, and(d) The Directors have been provided with the declarations required by section 295A of the Corporations Act

2001 from the Manager, Watermark Funds Management Pty Limited, declaring that:(i) the financial records of the Company for the financial period have been properly maintained in

accordance with section 286 of the Corporations Act 2001;(ii) the financial statements and notes for the financial period comply with the Accounting Standards;

and(iii) the financial statements and notes for the financial period give a true and fair view.

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


Sydney30 August 2017

51

52

An independent New South Wales Partnership. ABN 17 795 780 962. Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000 Liability limited by a scheme approved under Professional Standards Legislation

Pitcher Partners is an association of independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle

An independent member of Baker Tilly International

Independent Auditor’s Report

to the Members of Watermark Global Leaders Fund Limited

A.B.N. 71 614 536 560

REPORT ON THE FINANCIAL REPORT

We have audited the accompanying financial report of Watermark Global Leaders Fund Limited (the

Company), which comprises the statement of financial position as at 30 June 2017, the statement of

comprehensive income, the statement of changes in equity and the statement of cash flows for the period

then ended, notes comprising a summary of significant accounting policies and other explanatory

information and the directors’ declaration.

Opinion

In our opinion

a) the financial report of Watermark Global Leaders Fund Limited is in accordance with the

Corporations Act 2001, including:

i. giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its

performance for the period ended on that date; and

ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.

b) the financial report also complies with International Financial Reporting Standards as disclosed in

Note 2(a) Basis of preparation.

Basis of Opinion

We conducted our audit in accordance with Australian Auditing Standards. Those standards require that

we comply with relevant ethical requirements relating to audit engagements and plan and perform the

audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our

responsibilities under those standards are further described in the Auditor’s Responsibility section of our

report. We are independent of the Company in accordance with the Corporations Act 2001 and the ethical

requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for

Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia.

We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

our opinion.

53

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the financial report of the current period. We have communicated the key audit matters to the

Audit Committee, but they are not a comprehensive reflection of all matters that were identified by our

audit and that were discussed with the Audit Committee. These matters were addressed in the context of

our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

Key audit matter How our audit addressed the matter

Financial Assets and Financial Liabilities

Refer to Note 4: Fair value measurements, Note 9: Financial assets at fair value through profit or loss,

Note 11: Derivative financial instruments and Note 14: Financial liabilities at fair value through profit

or loss

We focused our audit effort on the

valuation, existence and completeness of

the Company’s financial assets and

financial liabilities as they are its largest

assets and liabilities, and represent the

most significant driver of the Company’s

Net Tangible Assets and profits.

The quantum of investments held

inherently makes financial assets and

financial liabilities a key audit matter, in

addition however, there may be

judgements involved in determining the

fair value of the investments.

We therefore identified the valuation,

existence, completeness and ownership of

investments as an area of focus.

Our procedures included, amongst others:

We obtained an understanding of the investment

management process and controls;

We reviewed the independent audit report on internal

controls (ASAE 3402 Assurance Reports on Controls at

a Service Organisation) for the period 1 July 2016 to 30

June 2017 for the Administrator;

We reviewed the latest available independent audit

report on internal controls (ASAE 3402 Assurance

Report on Controls at a Service Organisation) for the

Company’s Custodian;

We made enquiries as to whether there had been any

changes to these controls or their effectiveness;

For the period since the last internal controls audit, we

obtained and tested a sample of monthly

reconciliations between the Administrator and the

Custodian, and obtained confirmation of subsequent

settlement of purchase and sale transactions;

We agreed the investment holdings to a confirmation

obtained directly from Custodian;

We assessed the Company’s valuation of individual

investment holdings to independent sources where

readily observable data was available. For investments

where there was little or less observable market data,

we obtained and assessed other relevant valuation

data;

We evaluated the appropriateness of the accounting

treatment of revaluations of financial assets and

financial liabilities for current/deferred tax and

realised/unrealised gains or losses; and

We assessed the adequacy of disclosures in the

financial statements.

54

Other information

The Directors are responsible for the other information. The other information comprises the information

in the Company’s annual report for the period ended 30 June 2017, but does not include the financial

report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form

of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially consistent with the financial report or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the

work we have performed, we conclude that there is a material misstatement of this other information, we

are required to report that fact. We have nothing to report in this regard.

Directors’ Responsibility for the Financial Report

The directors of Watermark Global Leaders Fund Limited are responsible for the preparation and fair

presentation of the financial report that gives a true and fair view in accordance with Australian Accounting

Standards and the Corporations Act 2001 and for such internal controls as the directors determine are

Key audit matter How our audit addressed the matter

Management and Performance Fees

Refer to Note 13: Trade and other payables, Note 22: Related party transactions and the Remuneration

Report

We focused our audit effort on the

accuracy and completeness of

management and performance fees as

they are significant expenses of the

Company and their calculation may

require adjustments for events in

accordance with the Investment

Management Agreement between the

Company and the Investment Manager.

In addition to their quantum, as these

transactions are made with related

parties, there are additional inherent risks

associated with these transactions,

including the potential for these

transactions to be made on terms and

conditions more favourable than if they

had been with an independent third-

party.

We therefore identified the accuracy of

management and performance fees as an

area of focus.

Our procedures included, amongst others:

Making enquiries with the Investment Manager and

the Directors with respect to any significant events

during the period and associated adjustments made as

a result, in addition to having reviewed ASX

announcements;

In order to verify the Company’s calculation, we

recalculated management and performance fees in

accordance with our understanding of the Investment

Management Agreement;

Considered the treatment of events that may be

significant to the calculation of management and

performance fees;

Tested key inputs used in the calculation of

management and performance fees and performed a

reasonableness test;

Considered the appropriateness of the current

methodology in relation to calculation of the

management and performance fees; and

We also assessed the adequacy of disclosures made in

the financial statements in relation to these related

party transactions.

55

necessary to enable the preparation of the financial report that is free from material misstatement,

whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are

to obtain reasonable assurance about whether the financial report as a whole is free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of this

financial report.

As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement

and maintain professional scepticism throughout the audit.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial report.

The procedures selected depend on the auditor’s judgement, including the assessment of the risks of

material misstatement of the financial report, whether due to fraud or error. In making those risk

assessments, the auditor considers internal controls relevant to the Company’s preparation of the financial

report that gives a true and fair view in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal controls.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal controls.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness

of accounting estimates made by the directors, as well as evaluating the overall presentation of the

financial report.

We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to

the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,

future events or conditions may cause the Company to cease to continue as a going concern.

We evaluate the overall presentation, structure and content of the financial report, including the

disclosures, and whether the financial report represents the underlying transactions and events in a

manner that achieves fair presentation.

56

We obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the financial report. We are responsible

for the direction, supervision and performance of the Company audit. We remain solely responsible for

our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the

audit and significant audit findings, including any significant deficiencies in internal control that we identify

during our audit.

The Auditing Standards require that we comply with relevant ethical requirements relating to audit

engagements. We also provide the Directors with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters

that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most

significance in the audit of the financial report of the current period and are therefore key audit matters.

We describe these matters in our auditor’s report unless law or regulation precludes public disclosure

about the matter or when, in extremely rare circumstances, we determine that a matter should not be

communicated in our report because the adverse consequences of doing so would reasonably be expected

to outweigh the public interest benefits of such communication.

REPORT ON THE REMUNERATION REPORT

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 17 to 19 of the directors’ report for the

period ended 30 June 2017. In our opinion, the Remuneration Report of Watermark Global Leaders Fund

Limited for the period ended 30 June 2017, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of Watermark Global Leaders Fund Limited are responsible for the preparation and

presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001.

Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in

accordance with Australian Auditing Standards.

S M WHIDDETT PITCHER PARTNERS

Partner Sydney

30 August 2017

Watermark Global Leaders Fund LimitedShareholder information

30 June 2017

The Shareholder information set out below was applicable as at 24 July 2017.

Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosedelsewhere in this report, is listed below.

A. Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

Class of equity securityOrdinary shares

HoldingNo. of

Shareholders Shares Percentage

1 - 1000 19 9,947 0.011,001 - 5,000 573 1,839,566 2.225,001 - 10,000 421 3,703,216 4.4710,001 - 100,000 1,329 47,106,321 56.89100,001 and over 95 30,149,952 36.41

2,437 82,809,002 100.00

There were 9 holders of less than a marketable parcel of ordinary shares.

Analysis of numbers of option holders by size of holding:

Class of equity securityOptions

HoldingNo. of

Shareholders Shares Percentage

1 - 1000 - - -1,001 - 5,000 599 1,906,077 2.305,001 - 10,000 367 3,256,404 3.9310,001 - 100,000 1,137 41,282,252 49.86100,001 and over 108 36,354,268 43.91

2,211 82,799,001 100.00

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B. Equity security holders

Twenty largest quoted equity security holders

Name Ordinary shares

Number heldPercentage ofissued shares

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP 2,378,646 2.87PERSHING AUSTRALIA NOMINEES PTY LTD <NOMINEE A/C> 2,000,000 2.42MS HONGLI HUA-NON SIV 1,806,819 2.18AVANTEOS INVESTMENTS LIMITED <CLEARVIEW S/P A/C> 1,218,200 1.47J P MORGAN NOMINEES AUSTRALIA LIMITED 1,089,162 1.32JJ OPPERMAN SUPERANNUATION PTY LIMITED <OPPERMAN SUPERFUND A/C> 812,500 0.98KACEL NOMINEES PTY LTD 600,000 0.72LIC INVESTMENTS PTY LTD <LIC INVESTMENTS UNIT A/C> 600,000 0.72BNP PARIBAS NOMS PTY LTD <DRP> 521,785 0.63HEAPS BIG ABUNDANCE PTY LTD <DALY FAMILY A/C> 511,287 0.62MR VICTOR JOHN PLUMMER 500,000 0.60ANTHONY CIABOTTI & MARIA CIABOTTI <CIABOTTI SUPER FUND A/C> 500,000 0.60AUSTRALIAN EXECUTOR TRUSTEES LIMITED 474,000 0.57SUPER RAB PTY LTD <R A BLACK PERS S/F RAB A/C> 454,545 0.55LENTAL SUPERANNUATION PTY LTD <LENTAL SUPER FUND A/C> 454,545 0.55MR GREGORY JOHN MILLS & MRS SUSAN MAREE MILLS <THE MILLSGLOBAL FUND A/C> 454,545 0.55MS XIAORONG DENG 454,500 0.55MR JIZHONG LIN 454,500 0.55MR IAN ESPIE HAY & MRS JAN HAY <VEPEREY SUPER FUND A/C> 450,772 0.54NEVILLE WARD SUPER PTY LIMITED <THE NW WARD SUPER FUNDA/C> 443,506 0.54

16,179,312 19.54

Twenty largest quoted option holders

Options

Numberon issue

Percentage ofoptions

MR MICHAEL DAVID ROW 3,000,000 3.62MS HONGLI HUA-NON SIV 1,818,300 2.20BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP 1,770,699 2.14BNP PARIBAS NOMINEES PTY LTD <IB AU NOMS RETAILCLIENT DRP> 1,431,298 1.73J P MORGAN NOMINEES AUSTRALIA LIMITED 1,249,543 1.51JJ OPPERMAN SUPERANNUATION PTY LIMITED <OPPERMAN SUPERFUND A/C> 1,200,000 1.45AVANTEOS INVESTMENTS LIMITED <CLEARVIEW S/P A/C> 968,200 1.17HURLEY CUMMINS PTY LTD <HURLEY CUMMINS S/F A/C> 921,354 1.11NATIONAL NOMINEES LIMITED 794,727 0.96KACEL NOMINEES PTY LTD 600,000 0.72MR STEPHEN JAMES GLOSSOP & MS CASSANDRA JOY GIBBENS <S&CGLOSSOP SUPER FUND A/C> 550,000 0.66WHOTIF PTY LTD 550,000 0.66NEVILLE WARD SUPER PTY LIMITED <THE NW WARD SUPER FUND A/C> 500,000 0.60MR VICTOR JOHN PLUMMER 500,000 0.60

58



B. Equity security holders (continued)

Options

Numberon issue

Percentage ofoptions

ANTHONY CIABOTTI & MARIA CIABOTTI <CIABOTTI SUPER FUND A/C> 500,000 0.60MR MICHAEL JOHN STREAT & MS KAREN DENISE STREAT <M J STREATSUPERFUND A/C> 481,843 0.58MR IAN ESPIE HAY & MRS JAN HAY <VEPEREY SUPER FUND A/C> 454,545 0.55LENTAL SUPERANNUATION PTY LTD <LENTAL SUPER FUND A/C> 454,545 0.55MR GREGORY JOHN MILLS & MRS SUSAN MAREE MILLS <THE MILLSGLOBAL FUND A/C> 454,545 0.55MS XIAORONG DENG 454,500 0.55MR JIZHONG LIN 454,500 0.55

19,108,599 23.08

C. Substantial holders

There are no substantial shareholders.

D. Voting rights

The voting rights attaching to each class of equity securities are set out below:

Each share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxyhas one vote on a show of hands.

E. Stock Exchange Listing

Quotation has been granted for all of the ordinary shares and options of the Company on all Member Exchangesof the ASX Limited.

F. Unquoted Securities

There are no unquoted shares.

G. Securities Subject to Voluntary Escrow

There are no securities subject to voluntary escrow.

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