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MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST PRODUCT INTRODUCTION SLIDES

MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

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Page 1: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES

Page 2: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Presentation: This presentation is prepared by Macquarie Financial Products Management Limited ACN 095 135 694 AFSL 237847 (MFPML), the issuer of units in the Macquarie

Flexi 100 Trust ARSN 129 962 189 (Macquarie Flexi 100, the Fund). An invitation by MFPML to investors to apply for units in Macquarie Flexi 100 is made in the Product

Disclosure Statement dated 14 September 2011 and the Supplementary Product Disclosure Statement dated 8 May 2012, together with the Website Offer Document dated on or

around 1 August 2012 (together, the Offer Document). The Offer Document is available at macquarie.com.au/flexi or by phoning 1800 080 033 from MFPML. In deciding whether

to acquire, or continue to hold, an interest in Macquarie Flexi 100, investors should obtain the Offer Document and consider its contents.

The information in this presentation only applies to the September 2012 Offer of the Macquarie Flexi 100 Trust.

Confidential: The information in this presentation is confidential. It must not be reproduced, distributed or disclosed to any other person. The information may be based on

assumptions or market conditions and may change without notice.

Loans: The loans are offered by Macquarie Specialist Investments Lending Limited (MSIL) (unless otherwise determined by MFPML to be another Macquarie Group company, in

which case it will be that Macquarie Group company) and are subject to approval.

General advice warning: The information contained in this presentation is general information only. It has been prepared without taking into account any potential investor’s

financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. A person should consider the Offer Document in deciding

whether to acquire, or continue to hold, an investment in the Macquarie Flexi 100 Trust.

Past performance: Past performance is not a reliable indicator of future performance.

Examples: Any examples, including any assumptions or figures, contained in this presentation are purely hypothetical and are not actual or potential returns, estimates, projections

or forecasts for investments in the Macquarie Flexi 100 Trust. Any examples have only been included for illustrative purposes. They have been prepared without taking into account

any potential investor’s personal objectives, financial situation or needs. Examples are based on assumptions which may have a material effect on returns. The actual performance

of investments will depend on future economic conditions, investment management and future taxation.

No advice or verification: This presentation does not constitute personal financial or taxation advice. Any taxation discussion in this presentation is based on current laws,

anticipated legislation and Commonwealth announcements at the time of writing. The application of taxation laws to each investor depends on that investor’s individual

circumstances. An investor should seek professional financial and taxation advice before deciding to invest. The material in this presentation has been prepared in good faith with all

reasonable care. However, certain parts of this material is obtained or is based upon information obtained from third parties which may not have been checked or verified.

Subsequent changes in circumstances may also occur at any time and may impact on the accuracy of the information.

No responsibility: Neither MFPML, Macquarie Bank Limited (MBL), MSIL nor any other Macquarie group company, or any officers, employees or agents takes any responsibility for

the information contained in this presentation nor gives any representation or warranty as to the accuracy or completeness of the information nor does any of them accept any

liability for loss or damage arising in anyway from the use of information in this presentation.

Macquarie interests: MFPML or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including

as investment adviser, broker or lender. MFPML or its associates may receive fees, brokerage or commissions for acting in these capacities. In addition, MFPML or its associates,

officers or employees may buy or sell the financial products as principal or agent. Investors may contact MFPML on 1800 080 033.

Investments in the Macquarie Flexi 100 Trust are not deposits with or other liabilities of MBL, MFPML, MSIL or any other member of the Macquarie group of companies

and are subject to investment risk, including possible delays in repayment and loss of income or capital invested. None of MBL, MFPML, MSIL or any other Macquarie

group company guarantees any particular rate of return on, or the performance of the Macquarie Flexi 100 Trust, nor do any of them guarantee the repayment of capital

from the Macquarie Flexi 100 Trust.

2

Important information

Page 3: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Agenda

Potential benefits of using leverage

What is Macquarie Flexi 100?

Key benefits

September 2012 offer

Key risks

Worked examples

Appendices

Macquarie Flexi 100 Trust (Macquarie Flexi 100)

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Page 4: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Potential benefits of using leverage

Offers the potential to build wealth more quickly

Enables investors to create wealth opportunities that may be tax effective if the underlying reference asset performs

Allows potential portfolio diversification and a broader asset allocation

4

Borrowing to invest risk: There is a material risk that the total value of the returns at Maturity (if any) and Distributions paid throughout the

Term will be less than the total interest payments and other costs. If this occurs you will have lost money at Maturity. In addition, you

should take into account relevant taxation considerations and the time value of money.

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What is Macquarie Flexi 100?

Page 6: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Macquarie Flexi 100 - key benefits

100% leverage with a ‘Walk-Away’ feature1

A flexible capital protected investment with no margin calls

An eligible investment for SMSFs (excluding Interest Loan)

Fixed Distributions over the investment Term2

The ability to borrow 100% of the Investment Amount at competitive interest rates

The flexibility to 'Walk-Away' from the investment and Investment Loan without incurring any additional costs (except where an Interest Loan is taken out)1

1. Prepaid interest on an Investment Loan will not be refunded. Investors will be required to pay any amount owing on their Interest Loan (if applicable).

2. An investor's Distributions will be less than their interest payments

Note: Key risks of Macquarie Flexi 100 are discussed later in the presentation.

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‘Walk-Away’ feature

‘Walk-Away’ available quarterly from 28 December 2012

Investors can ‘Walk-Away’ without paying any Investment Loan break costs or shortfalls

– Investors will never be required to contribute more money to pay back their Limited Recourse Investment Loan

Investors will receive the value of their Units relevant to that ‘Walk-Away’ date

– If an investor exercises the ‘Walk-Away’ on or before 30 September 2013, the value of their Units will be $1.00

per Unit. After 30 September 2013, if investors ‘Walk-Away’, the value of their Units will reflect the market

value of the Investment Linked Swap Arrangements

Investors will not receive a refund of any prepaid interest

Investors will be required to repay any Interest Loan

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September 2012 offer

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Investment menu

Investment Opportunity Reference Asset

Australian Equity Focus A fixed basket of 20 equally-weighted shares with large market capitalisation listed on

the ASX.

Asian Alpha The Macquarie Asian Alpha Fund implements a quantitative long short strategy in pan-

Asian equity markets.

Australian Equity S&P/ASX 200 Index, 200 leading companies by market capitalisation listed on the ASX,

available with the benefit of No Hurdle.

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September 2012 offer

Investment

Performance Cap

Hurdle

Gain

Currency2

Participation

Rate Distribution Rate Indicative1 Type

Australian Equity

(No Hurdle) 50% Term 100% AUD 100%

Years 1 to 5: 3.0% pa

At Maturity: 1.5%

Total: 16.5%

Investment

Performance Cap

Hurdle

Gain

Currency2

Participation

Rate Distribution Rate Indicative1 Type

Australian Equity Focus 65% Share3 112.5% AUD 140% Years 1 to 2: 5.0% pa

Year 3: 2.5%

At Maturity: 0.0%

Total: 12.5% Asian Alpha Uncapped Term 112.5% USD 100%

1. Actual performance caps will be determined on or before the Swap Start Date.

2 . The Reference Asset Gain will be determined in this currency, and if in USD, converted to AUD at the time of payment.

3. The Share Performance Cap applies to the individual performance of each constituent share comprising the Reference Asset and not the performance of the Reference Asset

itself.

10

Fixed distribution classes – 5.5 year term

Fixed distribution classes – 3.5 year term

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Interest rates

Limited Recourse Investment Loan:

Interest Loan:

Current indicative interest rates for the year ending 29 September 2013:

7.95% pa

10.70% pa

The Limited Recourse Investment Loan interest rate may be reset annually,

but will not increase throughout the Term.

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Tax treatment

Product Ruling – The Australian Taxation Office has issued Product Ruling PR 2011/19 for the Limited Recourse

Investment Loan. The Product Ruling applies to the Investment Opportunities and features outlined in the PDS dated

14 September 2011 and the SPDS dated 8 May 2012.

Distributions – should be ordinary income.

Limited Recourse Investment Loan – Subject to an investor’s individual circumstances, interest on the Investment

Loan should be deductible up to the Reserve Bank of Australia’s indicator variable rate for standard housing loans

plus 100 basis points (as at the month of June 2012, this was 7.85% pa).

At Maturity – any gain on redemption should be a distribution of ordinary income.

The information contained in this summary is of a general nature only. It does not constitute legal or tax advice and does not seek to address

all of the tax issues that may be relevant to a particular investor. The application of taxation laws to each investor depends on that investor’s

individual circumstances. Accordingly, investors should seek independent professional advice on taxation implications before making any

investment decisions. Furthermore, the summary is limited in scope to the key tax implications for Investors who are residents of Australia for

tax purposes, who hold their Units in Macquarie Flexi 100 and any put options on capital account and whose dealings are all at arm’s length.

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Key information

Minimum Investment

PDS and SPDS

Offer Opens

Applications Close

Unit Issue Date

Swap Start Date

Swap Valuation Date

Maturity Dates

$25,000; $5,000 per class, minimum increments of $1,000

PDS dated 14 September 2011, SPDS dated 8 May 2012, together with the Website

Offer Document dated on or around 1 August 20121

1 August 20121

21 September 20121

30 September 20121

1 October 2012 (30 September 2012 for Asian Alpha Class)1

Australian Equity Focus Class (3.5 Year Term): 16 March 2016

Asian Alpha Class (3.5 Year Term): 29 February 2016

Australian Equity (No Hurdle) Class (5.5 Year Term): 16 March 2018

5.5 Year Fixed Distribution Class: 30 March 2018

3.5 Year Fixed Distribution Classes: 30 March 2016

13

1. MFPML reserves the right to vary the dates and times of the proposed offer, without prior notice.

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Key risks

Poor performance: The risk that an investment in the Fund will be adversely affected if the Reference Asset

performs poorly. The current global economic downturn and high levels of volatility in equity and other markets

increase the risk that the relevant Reference Asset may not perform well enough for you to make a gain on an

investment in the Fund.

Borrowing to invest: There is a material risk that the total value of the returns at Maturity (if any) and Distributions

paid throughout the Term will be less than the total interest payments and other costs. If this occurs you will have lost

money at Maturity. In addition, you should take into account relevant taxation considerations and the time value of

money.

Counterparty risk: The risk that the Counterparties to the agreements through which the Fund gains its exposure to

the Reference Assets (the Swap Counterparty and Collateral Counterparty) do not meet their obligations.

Early termination risk: Your exposure to the Reference Asset may be terminated prior to the Maturity of the Units in

a number of circumstances outlined in Section 4.1 of Part II of the PDS such as a material change in the Swap

Counterparty’s cost of hedging or ability to hedge its exposure, a change in the liquidity of the Reference Asset or a

change in law (amongst other factors). In such circumstances, the Swap Counterparty may seek to terminate the

Swap Agreement early. If this occurs you will be required to repay your Investment Loan, and any Interest Loan

(together with any break costs), your Units will be redeemed and you will no longer have exposure to the Reference

Asset or entitlement to any further Distributions. You will not receive a refund of any prepaid interest.

Foreign exchange risk: For the Asian Alpha Class, the risk that movements in the AUD:USD foreign exchange rate

will adversely affect the return from your Units throughout the Term.

Interest deductibility: The ATO may adopt a position which could lead to the denial of part or all of your tax

deductions for some or all interest expenses referable to your Investment.

An investor's investment may be subject to additional risks. Please refer to the Risks section of the PDS.

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Worked examples

Page 16: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Assumptions

Interest rate is 7.95% pa each year

Investor borrows $100,000 to invest

Fixed Hurdle of 100%

Fixed Term Performance Cap of 50%*

S&P/ASX 200 Initial Investment Level of 4,200

S&P/ASX 200 Hurdle level of 4,200

(100% x 4,200)

S&P/ASX 200 Closing Level of 6,400

Final Investment Level is the lesser of:

– S&P/ASX 200 Closing Level of 6,400

– S&P/ASX 200 capped level of 6,300

(4,200 + 4,200 x 50%)

Therefore the Final Investment Level is equal

to the capped level of 6,300

Potential returns

Total Distribution

payments received over

the term

$16,500 $100,000 x (3% x 5 + 1.5%)

Reference Asset Gain

received at Maturity $50,000

Total received over the

term of the investment $66,500

Total distributions paid over the

term and Reference Asset Gain

paid at Maturity

Total costs over the term

(Loan Establishment Fee

plus annual interest

payments)

($45,725) $100,000 x (7.95% x 5.5 + 2%)

Net Return over the term

of the investment $20,775

Total received over the term of

the investment less total costs

* The actual Term Performance Cap will be determined on or before the Swap Start Date, published at macquarie.com.au/flexi and could be lower than the indicative

performance cap depending on market conditions at the time, in particular the level and volatility of the Reference Asset.

$100,000 x 4200

4200 - 6300

An investor invests in the Fixed Distribution 5.5 Years Australian Equity (No Hurdle) Class

and holds the investment to Maturity.

Example 1 - Market increases

Fixed Distribution 5.5 Years - Australian Equity (No Hurdle)

Class

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Page 17: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

This graph illustrates the Fixed Distributions Received, Fees and Costs and Reference Asset

Gain at Maturity that an investor would receive and incur based on the assumptions in

Example 1*

* This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi 100.

S&

P/A

SX

200 In

dex L

evel

Example 1 - Market increases

Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class

4200

4600

5000

5400

5800

6200

6600

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Upfront Year 1 Year 2 Year 3 Year 4 Year 5 Maturity

Fees and Costs Fixed Distributions Received Reference Asset Gain S&P/ASX 200 Index Level

17

Page 18: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Assumptions

Interest rate is 7.95% pa each year

Investor borrows $100,000 to invest

Fixed Hurdle of 100%

Fixed Term Performance Cap is 50%*

S&P/ASX 200 Initial Investment Level of 4,200

S&P/ASX 200 Hurdle level of 4,200

(100% x 4,200)

S&P/ASX 200 Closing Level of 3,900

Therefore the Final Investment Level is 3,900

Potential returns

Total Distribution payments

received over the term $16,500 $100,000 x (3% x 5 + 1.5%)

Reference Asset Gain received

at Maturity $0

Closing Level of the S&P/ASX 200

has fallen below the Hurdle level.

Therefore no gain at Maturity

Total received over the term of

the investment $16,500

Total distributions paid over the

term and Reference Asset Gain

paid at Maturity

Total costs over the term (Loan

Establishment Fee plus annual

interest payments)

($45,725

) $100,000 x (7.95% x 5.5 + 2%)

Net Return over the term of the

investment

($29,225

)

Total received over the term of the

investment less total costs

* The actual Term Performance Cap will be determined as at the Swap Start Date, published at macquarie.com.au/flexi and could be lower than the Indicative Performance

Cap depending on market conditions at the time, in particular the level and volatility of the Reference Asset.

An investor invests in the 5.5 Year Fixed Distribution Australian Equity (No Hurdle) Class

and holds the investment to Maturity.

Example 2 - Market decreases

Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class

18

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3900

4100

4300

4500

4700

4900

5100

5300

5500

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Upfront Year 1 Year 2 Year 3 Year 4 Year 5 Maturity

Fees and Costs Fixed Distributions Received Reference Asset Gain S&P/ASX 200 Index Level

This graph illustrates the Fixed Distributions Received, Fees and Costs and Reference Asset

Gain at Maturity that an investor would receive and incur based on the assumptions in

Example 2*

* This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi 100.

S&

P/A

SX

200 In

dex L

evel

Example 2 - Market decreases

Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class

19

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Appendices

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Australian Equity (No Hurdle)

Designed for investors with a moderate investment outlook

For the 5.5 Year Fixed Distribution Class

– Investors receive Fixed Distributions of 3% pa and 1.5% at Maturity (Total Fixed Distributions of 16.5%)

– Potential gain at Maturity is:

– Paid in addition to receiving the Fixed Distributions of 16.5% over the term

– Capped at 50%1

– Low breakeven; in order to breakeven the S&P/ASX 200 Index will need to return 4.8% pa based on certain

assumptions2

21

Australian Equity (No Hurdle) Class

1. The Performance Cap is indicative only. The actual Performance Caps will be determined on or before the Swap Start Date and published on the Macquarie Flexi 100

website.

2. This is the average annual increase required during the term, assuming the Limited Recourse Investment Loan interest rate throughout the term is 7.95% pa, and a

Loan Establishment Fee of 2%, ignoring the effects of tax and the time value of money.

Page 22: MACQUARIE SPECIALIST INVESTMENTS …...MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – PRODUCT INTRODUCTION SLIDES Presentation : This presentation is prepared by Macquarie

Australian Equity Focus

A fixed, equally-weighted basket of 20 shares with large market capitalisation listed on the ASX

Each constituent share’s contribution to the Australian Equity Focus Basket’s performance is capped by the Share

Performance Cap

– Indicative Share Performance Cap1 of 65% for the Australian Equity Focus Class (3.5 Year)

Comparison

‘Capped basket of shares’

– Return from each share added together – total return then capped

‘Basket of individually capped shares’

– Return from each share is capped – total return is the sum of each individual capped share return.

– Returns are likely to be lower than that of a ‘capped basket of shares’

– Return above the Hurdle will be multiplied by a fixed Participation Rate of 140%

Australian Equity Focus Class - Australian Equity Focus Basket

22

1. The actual Share Performance Caps will be determined as at the Swap Start Date, published at www.macquarie.com.au/flexi and could be lower than the indicative Share Performance Cap depending on market conditions at the time, in particular the level and volatility of the Reference Asset.

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Australian Equity Focus

Reference Asset Constituent ASX Code

Amcor Limited AMC

AMP Limited AMP

Australia and New Zealand Banking Group

Limited ANZ

BHP Billiton Limited BHP

Brambles Limited BXB

Commonwealth Bank of Australia CBA

CSL Limited CSL

National Australia Bank Limited NAB

Newcrest Mining Limited NCM

Origin Energy Limited ORG

The table below lists the stocks that are included in the Australian Equity Focus Basket.

Reference Asset Constituent ASX Code

QBE Insurance Group Limited QBE

Rio Tinto Limited RIO

Santos Limited STO

Suncorp Group Limited SUN

Telstra Corporation Limited TLS

Wesfarmers Limited WES

Westfield Group WDC

Westpac Banking Corporation WBC

Woodside Petroleum Limited WPL

Woolworths Limited WOW

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Australian Equity Focus

Fixed at 140% (Australian Equity Focus)

At Maturity – applies to the excess return above Hurdle, ie (Final Investment Level – Hurdle)

Example 1 for an investor in the 3.5 Year Australian Equity Focus Fixed Distribution Class:

– Initial Investment Level of Australian Equity Focus Basket = 100

– Final Investment Level of Australian Equity Focus Basket = 160

– Hurdle = 112.5

– Reference Asset Gain at Maturity = Maximum of zero and (160 – 112.5) x 140% = 66.5%

100

– Total Distributions and Gain received over term = 12.5% (distributions) + 66.5% (gain at maturity) = 79%

Example 2 for an investor in the 3.5 Year Australian Equity Focus Fixed Distribution Class:

– Initial Investment Level of Australian Equity Focus Basket = 100

– Final Investment Level of Australian Equity Focus Basket = 110

– Hurdle = 112.5

– Reference Asset Gain at Maturity = Maximum of zero and (110 – 112.5) x 140% = 0.0%

100

– Total Distributions and Gain received over term = 12.5% (distributions) + 0% (gain at maturity) = 12.5%

Participation Rate

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How Reference Asset levels affect Unit values

prior to maturity

The below chart provides a comparison of the indicative value of Units in an Australian Equity

(No Hurdle) 5.5 Year Fixed Distribution Class at various levels of the Reference Asset during the

investment. It assumes all other factors affecting the Unit value remain constant.

Important to note:

Only applies to Class BU,

with an indicative Term

Performance Cap of 50%

In practice, it is unlikely

volatility of the Reference

Asset, AUD interest rates

and other factors affecting

Unit values will be constant

This is hypothetical and

provided for illustrative

purposes only

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