MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST ADVISER - - PowerPoint PPT Presentation

MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – ADVISER PRESENTATION

Presentatio esentation: This presentation is prepared by Macquarie Financial Products Management Limited ACN 095 135 694 AFSL 237847 (MFP MFPML), the issuer of units in the Macquarie Flexi 100 Trust ARSN 129 962 189 (Mac Macquarie Flexi 100 Flexi 100, the Fund 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 28 February 2013 (together, the Offer ffer Docum 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 The inform information ion in this presen in this presentatio tion only

• nly applie

applies s to to the June 2013 the June 2013 Offer of Offer of the the Mac Macquarie Flexi 100 Flexi 100 Trust and Trust and is is curr current t as as at at 8 Marc arch 2013. 2013. Confi nfidential ential: The information in this presentation is confidential and provided to holders of an AFSL or their authorised representatives only. 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. Loan Loans: The loans are offered by Macquarie Specialist Investments Lending Limited (MS 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. Gen General advice l advice war warnin ing: 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 Past perform performance: Past performance is not a reliable indicator of future performance. Exam Exampl ples: 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 No advice or

• r verific

verification ion: 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 are obtained or are based upon information obtained from third parties which may not have been checked or verified. Subsequent changes in circumstances may also

• ccur at any time and may impact on the accuracy of the information.

No r responsibilit sponsibility: Neither MFPML, Macquarie Bank Limited (MBL 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

• r damage arising in anyway from the use of information in this presentation.

Inve Invest stments s in the Macqu in the Macquarie Flexi Flexi 100 100 Trust Trust are not are not deposits with deposits with or

• r other
• ther liabilit

liabilitie ies s of

• f MBL,

MBL, MSIL MSIL or

• r any

any other membe

• ther member of
• f the

the Mac Macquarie group of group of compan companie ies and are and are subjec subject to to in inve vest stment risk risk, in , inclu cluding g possib ssible d e delays lays in in rep repayment an and loss loss of

• f in

incom come or

• r cap

capit ital in inves

• vested. Non

None of

• f MBL

MBL, MSI MSIL or

• r an

any ot y other r Macq Macquarie group group compan company guara y guarantees any any partic particular rate rate

• f
• f retu

return on,

• n, or
• r the perform

the performance of

• f the

the Macq Macquarie Flexi 100 Flexi 100 Trust, Trust, nor nor do do any of any of them them guara guarantee the repaym the repayment t of

• f capita

capital from from th the Macqu e Macquarie Flexi Flexi 100 100 Trust. Trust.

2

Important information Important information

Agenda Agenda

• Potential benefits of leverage
• What is Macquarie Flexi 100?
• June 2013 offer
• Key risks
• Worked examples
• Appendices

Macquar Macquarie Flexi 100 T e Flexi 100 Trust (Macqua rust (Macquarie Flexi 100) ie Flexi 100)

3

Potential Potential benefits of using leverage benefits of using leverage

Offers the potential to build wealth with a lower initial capital outlay 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.

What is What is Macquarie Macquarie Flexi 100? Flexi 100?

5

Macquarie Flexi Macquarie Flexi 100 100

Macquarie Flexi 100

A diverse menu of investment

• pportunities

100% leveraged exposure at competitive interest rates Quarterly liquidity via a ‘Walk-Away’ feature 100% continuous capital protection An eligible investment for SMSFs1 Fixed distributions to assist with interest payments2 3.5 or 5.5 year investment terms Point to point exposure

.

6 Note: Note: Key Key risks of risks of Macquar Macquarie Flexi ie Flexi 100 100 ar are e discussed discussed later in later in the the presentati presentation.

• 1. Excluding Interest Loan.
• 2. Fixed distributions will be less than interest payments.

‘Walk-Away’ feature ‘Walk-Away’ feature

• ‘Walk-Away’ available quarterly (first Walk-Away date will be last business day in September 2013)
• 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 June 2014, the value of their Units will be $1.00 per Unit. After 30 June 2014, 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 and the remainder of the Loan Establishment Fee that is
• utstanding.

7

June 2013 June 2013 of

• ffer

fer

8

Investment menu Investment menu

9

Investment Oppo Investment Opportunity tunity Refer Reference Asset ence Asset Australian Equity Australian Equity Focus Focus A fixed basket of 20 equally-weighted shares with large market capitalisation listed on the ASX, also available with the benefit of No Hurdle. Best-of Basket Best-of Basket This strategy delivers upside exposure to the best performing of two baskets: an ASX Tilt basket and a PIMCO Tilt basket. Australian Equity Australian Equity S&P/ASX 200 Index, 200 leading companies by market capitalisation listed on the ASX, also available with the benefit of No Hurdle. Asian Equity Asian Equity An equally weighted basket of indices and index tracking funds with exposure to China, Hong Kong, Taiwan, Korea and Singapore, available with the benefit of No Hurdle. US Equity US Equity S&P 500 Index, 500 leading companies by market capitalisation listed on either the New York Stock Exchange or NASDAQ.

Best-of Basket Best-of Basket

• In this investment opportunity, the investor has the benefit of automatically receiving the best performing of two baskets:

– ASX Tilt portfolio comprising 60 per cent S&P/ASX 200, 20 per cent Winton Global Alpha Fund and 20 per cent PIMCO GIS Total Return Bond Fund – PIMCO Tilt portfolio comprising 60 per cent PIMCO GIS Total Return Bond Fund, 20 per cent S&P/ASX 200 and 20 per cent Winton Global Alpha Fund.

10 20% 20% 60%

PIMCO T PIMCO Tilt ilt

S&P/ ASX 200 Winton Global Alpha Fund PIMCO GIS Total Return Bond Fund (qAUD) 60% 20% 20%

ASX T ASX Tilt ilt

S&P/ ASX 200 Winton Global Alpha Fund PIMCO GIS Total Return Bond Fund (qAUD)

Inves Investment Performan Performance Cap ce Cap Hurdl Hurdle Gain Gain Curren Currency2 Participati Participation Rate Rate Breakeven Breakeven3 Distributi Distribution Rate

• n Rate

Indicat Indicative1 Type Type Australi Australian an Equity Focus Equity Focus (No Hurdle) (No Hurdle) 30% Share4 100% AUD 115% 4.2% pa Years 1 to 2: 4.0% pa Year 3: 2.0% Total: 10.0% Australi Australian an Equity Focus Equity Focus 65% Share4 110% AUD 115% 6.8% pa Best-of Basket Best-of Basket Uncapped Term 110% AUD 130% 6.3% pa

3.5 Year Fixed 3.5 Year Fixed Distribution Distribution Classes Classes

11

• 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.
• 3. This is the average annual increase required during the term, assuming the Limited Recourse Investment Loan interest rate throughout the term is 7.25% pa, and a Loan

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

• 4. 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.

Inves Investment Performan Performance Cap ce Cap Hurdl Hurdle Gain Gain Curren Currency2 Participati Participation Rate Rate Breakeven Breakeven3 Distributi Distribution Rate

• n Rate

Indicat Indicative1 Type Type Australi Australian an Equity Equity (No Hurdle) (No Hurdle) 50% Term 100% AUD 100% 4.7% pa Years 1 to 5: 2.5% pa At Maturity: 1.25% Total: 13.75% Australi Australian an Equity Equity Uncapped Term 113.75% AUD 130% 5.7% pa Asian Asian Equit quity y (No (No Hurdle) urdle) 80% Term 100% USD 100% 4.7% pa US Equity US Equity Uncapped Term 113.75% USD 100% 6.6% pa

• 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. This is the average annual increase required during the term, assuming the Limited Recourse Investment Loan interest rate throughout the term is 7.25% pa, and a Loan

Establishment Fee of 2%, ignoring the effects of tax, currency movements and the time value of money

12

5.5 Year Fixed 5.5 Year Fixed Distribution Distribution Classes Classes

Cashflow Cashflow for the 3.5 Year Fixed for the 3.5 Year Fixed Distribution Distribution Class Class

Assumes an investo Assumes an investor invests $100 invests $100,00 000 in in the 3.5 Y the 3.5 Year ear Fix Fixed Distribution Austr ed Distribution Australia lian Equity Focus (No Hur n Equity Focus (No Hurdle) le) Class and holds the investmen Class and holds the investment to Matu t to Maturity ty, r , recei eceivin ving either either (i) (i) the maximu the maximum am m amou

• unt of
• f gain at

gain at Matu Maturity or ty or (ii) (ii) no gain at Matur no gain at Maturity ty

Upfr Upfront End nd of year 1

• f year 1

End of year 2 nd of year 2 End nd of year 3

• f year 3

(i) Maturity i) Maturity (ii) Maturity ii) Maturity Loan Establishment Fee Loan Establishment Fee (r (rebateable) ebateable) ($2,000)

• Annual Inter

Annual Interest est Payment Payment ($7,250) ($7,250) ($7,250) ($3,625)

• Fixed Distributions

Fixed Distributions

• $4,000

$4,000 $2,000

• Potential gain

Potential gain at at Maturity Maturity

• $34,5001
• Investor

Investor’s net s net cashflow cashflow (pr (pre tax) tax) ($9,250) ($3,250) ($3,250) ($1,625) $34,5001

• Investor

Investor’s total s total net et cashflow cashflow (pr (pre tax) tax) $17,125 $17,125 ($17,375) ($17,375)

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.

• 1. Maximum potential gain at Maturity = $100,000 * (Indicative Share Performance Cap of 30% – Hurdle of 0%) x Participation Rate of 115%. Alternatively if there is no gain at

Maturity the investor’s total net cashflow will be ($17,375).

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Cashflow Cashflow for the 5.5 Year Fixed for the 5.5 Year Fixed Distribution Distribution Class Class

Assumes an investo Assumes an investor invests $100 invests $100,00 000 in in the 5.5 Y the 5.5 Year ear Fix Fixed Distribution Austr ed Distribution Australia lian Equity (No Hur n Equity (No Hurdle) Class le) Class and holds the investment to Ma and holds the investment to Matu turity ity, r , receivin eceiving either either (i) (i) the maximu the maximum am amount

• unt of gain at Matur
• f gain at Maturity

ity or (ii) no

• r (ii) no

gain gain at at Matu Maturity

Upfr Upfront End End of f year 1 year 1 End of End of year 2 year 2 End of End of year 3 year 3 End of End of year 4 year 4 End of End of Year ear 5 5 (i) (i) Maturity Maturity (ii) (ii) Maturity Maturity Loan Establishment Loan Establishment Fee (r Fee (rebateable) ebateable) ($2,000)

• Annual Inter

Annual Interest est Payment Payment ($7,250) ($7,250) ($7,250) ($7,250) ($7,250) ($3,625)

• Fixed Distributions

Fixed Distributions

• $2,500

$2,500 $2,500 $2,500 $2,500 $1,250 $1,250 Potential gain Potential gain at at Maturity Maturity

• $50,0001
• Investor

Investor’s net s net cashflow cashflow (pr (pre tax) tax) ($9,250) ($4,750) ($4,750) ($4,750) ($4,750) ($1,125) $51,2501 $1,250 Investor Investor’s total s total net et cashflow cashflow (pr (pre tax) tax) $21,875 $21,875 ($28,125) ($28,125)

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.

• 1. Maximum potential gain at Maturity = $100,000 * (Indicative Term Performance Cap of 50% – Hurdle of 0%). Alternatively if there is no gain at Maturity the investor’s total net

cashflow will be ($28,125).

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Interest rates Interest rates

Limited Recourse Investment Loan: Limited Recourse Investment Loan: Interest Loan: Interest Loan:

Curr Current indicative inter ent indicative interest rates for est rates for the first year the first year of the investmen

• f the investment:

t:

7.25% pa 10.25% pa The Limited Recourse Investment Loan interest rate may be reset annually, but will not increase throughout the Term.

15

Tax treatment Tax treatment

• Product Ruling

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 2012.1

• Distributio

Distributions ns – should be ordinary income.

• Limited Recourse Investment Loan

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 February 2013, this was 7.45% pa).

• At Maturity

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

• f 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. 16

• 1. Product Ruling PR 2011/19 only rules on the application of tax laws and in no way expresses or implies a guarantee or endorsement of the commercial viability of the Macquarie

Flexi 100 Trust, of the soundness or otherwise of the Macquarie Flexi 100 Trust as an investment, or of the reasonableness or commerciality of any fees charged in connection with the Macquarie Flexi 100 Trust.

Adviser remuneration Adviser remuneration and fees and fees

• Initial advice fee

Initial advice fee – 2.20% (including GST) of the Investment Loan – Rebateable, meaning no/reduced Loan Establishment Fee is payable by the investor

• Ongo

Ongoin ing advice fee advice fee – 0.55% pa (including GST) of the Investment Loan - paid annually in arrears – Rebateable, meaning 0.50% pa discount on interest rate paid by investor

Fees Fees

• Loan Establishment Fee – 2% of the Investment Loan, payable upfront
• There is a Responsible Entity Fee of 0.3135% pa (inclusive of GST net of any reduced input tax credit), which is paid out
• f the assets of the Fund on each anniversary of the Unit Issue Date during the term and reflected in the Unit Price. This

fee is fully funded by excess payments received by the Fund under the Collateral Agreement.

Adviser r r remuneration neration

17

Key information Key information

Minimum Investment Minimum Investment Lonsec rating Lonsec rating Of Offer fer document document Appli Applicati ations ns Close Close Unit Issue Unit Issue Date Date Maturity Dates Maturity Dates $25,000; $5,000 per class, minimum increments of $1,000 Recommended1 PDS dated 14 September 2011, SPDS dated 8 May 2012, together with the Website Offer Document dated 28 February 20132 28 June 20132 30 June 20132 3.5 Year Fixed Distribution Classes: 19 December 2016 5.5 Year Fixed Distribution Class: 17 December 2018

18

• 1. An explanation of what this rating means is set out in the Lonsec research report available at macquarie.com.au/flexiadviser. Ratings are only one factor to be taken into account

when deciding whether or not to invest.

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

Key risks Key risks

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Key risks Key risks

• Poor perfo

Poor performance: rmance: 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.

• Borro

Borrowin wing to to invest: 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.

• Counter

Counterpar party risk ty 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 terminatio

Early termination risk: n 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.

• Foreig

Foreign exchang n exchange risk: risk: For the Asian Equity and US Equity classes, the risk that movements in the AUD:USD foreign exchange rate will adversely affect the return from your Units throughout the Term.

• Interes

Interest deducti t deductibil ility: ity: 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.

20

Further information Further information

For For further further infor information, mation, please co please contact your local Business Deve ntact your local Business Developm lopment Manag ent Manager or our client

• r our client

servi service team team on

• n 1800

1800 080 033. 080 033.

21

Worked examples rked examples

22

Assum Assumption

• ns
• Interest rate is 7.25% pa each year
• Investor borrows $100,000 to invest
• Fixed Hurdle of 100%
• Fixed Term Performance Cap of 50%1
• Fixed Participation Rate of 100%
• S&P/ASX 200 Initial Investment Level of 5,000
• S&P/ASX 200 Hurdle level of 5,000

(100% x 5,000)

• S&P/ASX 200 Closing Level of 7,600
• Final Investment Level is the lesser of:

– S&P/ASX 200 Closing Level of 7,600 – S&P/ASX 200 capped level of 7,500 (5,000 + 5,000 x 50%)

• Therefore the Final Investment Level is equal

to the capped level of 7,500 Potential returns Potential returns Total Distribution Total Distribution payments payments received over received over the the term term $13,750 $100,000 x (2.5% x 5 + 1.25%) Reference Asset Gain Reference Asset Gain received at received at Maturity Maturity $50,000 Total received Total received over

• ver the term

the term

• f the
• f the investment

investment $63,750 Total distributions paid over the term and Reference Asset Gain paid at Maturity Total costs Total costs over

• ver the term

the term (L (Loa

• an E

n Establishment F blishment Fee plu plus annu annual interest al interest paymen payments) ($41,875) $100,000 x (7.25% x 5.5 + 2%) Net Return Net Return over

• ver the term

the term of

• f

the investm the investment $21,875 Total received over the term of the investment less total costs

• 1. 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 terms

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

$100,000 x 5,000 5,000

• 7,500

⎟ ⎠ ⎞ ⎜ ⎝ ⎛

An An investo investor invests in invests in the Fixed Distribut the Fixed Distribution 5.5 Y

• n 5.5 Year

ears Australian Equity s Australian Equity (No Hu (No Hurdle) Class and holds the Class and holds the investment to investment to Maturity Maturity.

Example 1 Example 1 - Market increases arket increases Fixed Distribution 5.5 Fixed Distribution 5.5 Years Years - Australian Equity (No Australian Equity (No Hurdle) Class Hurdle) Class

23

This graph illustr This graph illustrates the Fixed Di ates the Fixed Distributions Received stributions Received, Fees and Costs and Refer Fees and Costs and Referenc nce Asset Gain at e Asset Gain at Matu Maturity that an investo ty that an investor woul would r d receive and eceive and incur based on the a incur based on the assump ssumptions in tions in Example 1 Example 11

• 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/ASX 200 Index Level

Example 1 Example 1 - Market increases arket increases Fixed Distribution 5.5 Fixed Distribution 5.5 Years Years - Australian Equity (No Australian Equity (No Hurdle) Class Hurdle) Class

24 5000 5500 6000 6500 7000 7500 $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

Assum Assumption

• ns
• Interest rate is 7.25% pa each year
• Investor borrows $100,000 to invest
• Fixed Hurdle of 100%
• Fixed Term Performance Cap is 50%1
• Fixed Participation Rate of 100%
• S&P/ASX 200 Initial Investment Level of 5,000
• S&P/ASX 200 Hurdle level of 5,000

(100% x 5,000)

• S&P/ASX 200 Closing Level of 4,900
• Therefore the Final Investment Level is 4,900

Potential returns Potential returns Total Distribution Total Distribution payments payments received over received over the the term term $13,750 $100,000 x (2.5% x 5 + 1.25%) Referenc Reference Asset e Asset Gain received Gain received at at Matu Maturity rity $0 Closing Level of the S&P/ASX 200 has fallen below the Hurdle Level. Therefore no gain at Maturity Total received Total received over

• ver the term

the term of

• f the

the investment investment $13,750 Total distributions paid over the term and Reference Asset Gain paid at Maturity Total costs Total costs over

• ver the term

the term (Loan (Loan Estab Establis lishmen ent Fee t Fee plus plus annual annual interest payments) interest payments) ($41,875) $100,000 x (7.25% x 5.5 + 2%) Net Return Net Return over

• ver the term

the term of

• f the

the investment investment ($28,125) Total received over the term of the investment less total costs

• 1. 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 terms

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

An An investo investor invests in invests in the 5.5 Y the 5.5 Year ear Fixed Distribution Australian Equit Fixed Distribution Australian Equity y (No Hur (No Hurdle) Class and holds the ) Class and holds the investment to investment to Maturity Maturity.

Example 2 Example 2 - Market decreases arket decreases Fixed Distribution 5.5 Fixed Distribution 5.5 Years Years - Australian Equity (No Australian Equity (No Hurdle) Class Hurdle) Class

25

This graph illustr This graph illustrates the Fixed Di ates the Fixed Distributions Received stributions Received, Fees and Costs and Refer Fees and Costs and Referenc nce Asset Gain at e Asset Gain at Matu Maturity that an investo ty that an investor woul would r d receive and eceive and incur based on the a incur based on the assump ssumptions in tions in Example 2 Example 21

1

• 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.

Example 2 Example 2 - Market decreases arket decreases Fixed Distribution 5.5 Fixed Distribution 5.5 Years Years - Australian Equity (No Australian Equity (No Hurdle) Class Hurdle) Class

26 4900 5000 5100 5200 5300 5400 5500 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 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

S&P/ASX 200 Index Level

Appendices Appendices

27

90 95 100 105 110 115 120 125 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Class CJ - above 100% Hurdle Class CJ - below 100% Hurdle Class CK - above 110% Hurdle Class CK - below 110% Hurdle

Australian Equity Australian Equity Focus Basket Focus Basket

Austr Australian Equity Focus Basket lian Equity Focus Basket

Historical performance of the Australian Equity Focus Basket, in AUD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100.

Importan Important to t to note: note:

• This chart shows the

Investment Level of the Australian Equity Focus Basket

• Classes CJ and CK are

shown

• The Share Performance Cap

for each Class has been applied – Class CJ – 30% – Class CK – 65%

• Any excess return above the

Hurdle has been multiplied by the Participation Rate, 115%

28

Historical performance of Historical performance of the Best-of Basket the Best-of Basket

Historical p Historical performance o rformance of the two por the two portfolios compar lios compared ed to the S&P/ASX 200 to the S&P/ASX 200

Historical performance of the ASX Tilt , PIMCO Tilt portfolio and S&P/ASX 200. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based partly on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100.

29 40 50 60 70 80 90 100 110 120 130 140 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

S&P/ASX 200 Index ASX Tilt PIMCO Tilt

Perio Period Retur Returns* s* 1 yr 10.0% 2 yr 9.3% 3 yr 18.4% 5 yr 28.4%

Importan Important to t to note: note: Period Returns are for the best performing of ASX Tilt or PIMCO Tilt.

Australian Equity Australian Equity

30

Historical performance of the S&P/ASX 200, in AUD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100.

S&P/ASX 200 Index S&P/ASX 200 Index

3,000 3,500 4,000 4,500 5,000 5,500 6,000 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

Perio Period Retur Returns* s* 1 yr 14.5% 2 yr 2.6% 3 yr 6.8% 5 yr

• 13.7%

Asian Equity Asian Equity

31

Historical performance of the Asian Equity Basket, in USD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100.

Asian Equity Basket Asian Equity Basket

Perio Period Retur Returns* s* 1 yr 7.9% 2 yr

• 4.8%

3 yr 12.2% 5 yr 4.0%

40% 50% 60% 70% 80% 90% 100% 110% 120% Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

US Equity US Equity

32

Historical performance of the S&P 500 Index, in USD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100.

S&P 500 S&P 500 Index Index

Perio Period Retur Returns* s* 1 yr 14.1% 2 yr 16.5% 3 yr 39.5% 5 yr 8.7%

600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

$0.90 $1.00 $1.10 $1.20 $1.30 $1.40 $1.50 $1.60 1 2 3 4 5 Indicative Unit V Indicative Unit Value lue Year ears

90% 100% 110% 120% 130% 140% 150% 160% 180% 200%

How How Reference Reference Asset levels affect Asset levels affect Unit values Unit values prior to maturity prior to maturity

The below chart pr The below chart provi

• vides a

es a compar comparis ison of the indicative value of

• f the indicative value of Unit

Units in s in an an Australian Equity (No Australian Equity (No Hur Hurdle) le) 5.5 Y 5.5 Year Fixed Distri ear Fixed Distribu buti tion

• n Class at

Class at variou various levels of s levels of the Refer the Reference Asset during nce Asset during the investme the investment. It

• t. It assumes

assumes all all other

• ther factor

factors af s affectin fecting the the Unit value r Unit value remain constant. main constant.

Importan Important to t to note: note:

• Only applies to Class CM,

with an indicative Term Performance Cap of 50%

• In practice, it is unlikely

volatility of the Reference Asset, AUD interest rates and

• ther factors affecting Unit

values will be constant

• This is hypothetical and

provided for illustrative purposes only

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Unit Issue Date Maturity

Best-of Basket Best-of Basket

This strateg This strategy delivers y delivers uncapped uncapped up upside expo side exposure to re to the the best best perfo perform rming ing of

• f the

the two two baskets baskets below below.

34

Init Initial al inve investmen ent value value Return Return on

• n

PIMCO Tilt PIMCO Tilt Portfoli Portfolio Return Return on

• n

ASX Tilt ASX Tilt Portfoli Portfolio Return Return on

• n

Reference Reference Asset at Asset at maturity maturity Reference Reference Asset Gain Asset Gain at at Maturity Maturity1 Total Total Di Distrib stributions tions

• ver the
• ver the Term

Term Total Total Cost Costs

• ver the
• ver the

Term Term2 Net Return Net Return

• ver the
• ver the

Term Term3 $100,000 30% 60% 60% 65% 10.0% 27.375% $47,625 $100,000 10% 40% 40% 39% 10.0% 27.375% $21,625 $100,000 20%

• 10%

20% 13% 10.0% 27.375%

• $4,375

$100,000

• 5%
• 10%
• 5%

0% 10.0% 27.375%

• $17,375
• 1. Return on the Reference Asset in excess of the Hurdle of 10.0%, multiplied by a Participation Rate of 130%.

2 .Loan Establishment Fee plus annual interest payments (at 7.25% pa)

• 3. Ignores the effects of tax and the time value of money

Example of Example of potential r potential retur turns at s at Maturity Maturity

60% 20% 20%

ASX T ASX Tilt ilt

S&P/ ASX 200 Winton Global Alpha Fund PIMCO GIS Total Return Bond Fund (qAUD) 20% 20% 60%

PIMCO T PIMCO Tilt ilt

S&P/ ASX 200 Winton Global Alpha Fund PIMCO GIS Total Return Bond Fund (qAUD)

Australian Equity Australian Equity (No Hurdle) and (No Hurdle) and Asian Equity (No Hurdle) Asian Equity (No Hurdle)

35

• Designed for investors with a more moderate investment outlook
• For the 5.5 Year Fixed Distribution Class

– Investors receive Fixed Distributions of 2.5% pa and 1.25% at Maturity (Total Fixed Distributions of 13.75%) – For Australian Equity (No Hurdle) the potential gain at Maturity is: – Paid in addition to receiving the Fixed Distributions of 13.75% over the term – Capped at 50%1 – For Asian Equity (No Hurdle) the potential gain at Maturity is: – Paid in addition to receiving the Fixed Distributions of 13.75% over the term – Denominated in USD (but paid in AUD) – Capped at 80%1

• Low breakeven; in order to breakeven the underlying will need to return 4.6% pa based on certain assumptions2

Austr Australian Equity (No Hur lian Equity (No Hurdle) le) an and Asian d Asian Equity (No Equity (No Hur Hurdle) Classes le) Classes

• 1. The Performance Caps are 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 7.25% pa, and a Loan

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

Asian Equity Basket Asian Equity Basket

Refer Reference Asset Constituent ence Asset Constituent Regional Regional Exp Exposure Weight ight Descriptio Description Hang Seng H-Share Index ETF China 20% ETF which seeks to provide investment returns closely matching the performance of the Hang Seng China Enterprises Index. Tracker Fund of Hong Kong Hong Kong 20% ETF which seeks to provide investment returns closely matching the performance of the Hang Seng Index. MSCI Taiwan Index Taiwan 20% Market capitalisation-weighted index of Taiwanese securities listed on the Taiwan Stock Exchange. KOSPI 200 Index South Korea 20% Market capitalisation-weighted index of 200 Korean securities listed on the Korea Stock Exchange. MSCI Singapore Index Singapore 20% Market capitalisation-weighted index of Singapore securities listed on the Singapore Stock Exchange.

The table below lists the r The table below lists the relevant levant we weight ighting ings of s of the Asian Equity Basket. the Asian Equity Basket.

36

Australian Equity Australian Equity Focus Basket Focus Basket

Refer Reference Asset Constituent ence Asset Constituent ASX ASX Code 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 ar The table below lists the stocks that are inc e included luded in in the Australian the Australian Equity Focus Basket. Equity Focus Basket.

Refer Reference Asset Constituent ence Asset Constituent ASX ASX Code 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

37

Australian Equity Australian Equity Focus Basket Focus Basket

• 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 30% for Class CJ – Indicative Share Performance Cap1 of 65% for Class CK

Compar Comparison

• n
• ‘Capped basket of shares’

– Weighted 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 weighted 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 115%

Austr Australian Equity Focus Basket lian Equity Focus Basket

38

• 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.

Australian Equity Australian Equity Focus (No Hurdle) Focus (No Hurdle)

• Fixed at 115% - Australian Equity Focus (No Hurdle)
• At Maturity – applies to the excess return above Hurdle, i.e. (Final Investment Level – Hurdle)
• Example 1 for an investor in the 3.5 Year Australian Equity Focus (No Hurdle) Fixed Distribution Class:

– Initial Investment Level of Australian Equity Focus Basket = 100 – Final Investment Level of Australian Equity Focus Basket = 130 – Hurdle = 100 – Reference Asset gain at Maturity = (130 – 100) x 115% = 34.5% 100 – Total Distributions and Gain received over term = 10.0% (distributions) + 34.5% (gain at maturity) = 44.5%

• Example 2 for an investor in the 3.5 Year Australian Equity Focus (No Hurdle) Fixed Distribution Class:

– Initial Investment Level of Australian Equity Focus Basket = 100 – Final Investment Level of Australian Equity Focus Basket = 110 – Hurdle = 100 – Reference Asset gain at Maturity = (110 – 100) x 115% = 11.5% 100 – Total Distributions and Gain received over term = 10.0% (distributions) + 11.5% (gain at maturity) = 21.5%

Participation Ra rticipation Rate te

39