MACQUARIE NEWTON MULTI-STRATEGY FUND CAPITAL PROTECTED. Product Disclosure Statement 24 April 2006 SERIES 2 UNITS

Transcription

1 MACQUARIE NEWTON MULTI-STRATEGY FUND CAPITAL PROTECTED Product Disclosure Statement 24 April 2006 SERIES 2 UNITS RESPONSIBLE ENTITY MACQUARIE PORTFOLIO MANAGEMENT LIMITED ABN AFSL NO

2 IMPORTANT NOTICE Investments in the Series 2 Units in the Macquarie Newton Multi- Strategy Fund - Capital Protected ARSN ("Protected Multi-Strategy Fund") are not deposits with or other liabilities of Macquarie Bank Limited ABN ( Macquarie Bank ) or of any Macquarie Bank Group company and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Macquarie Bank, Macquarie Portfolio Management Limited, or any other member of the Macquarie Bank Group guarantees the performance of the Series 2 Units or any particular rate of return. Macquarie Bank provides investors with capital protection on the terms of the Put Option (see pages for the terms of the Put Option). Part 1 and Part 2 of this Product Disclosure Statement ( PDS ) and the Application Form included in or accompanying Part 1 of this PDS contain the only terms on which Series 2 Units and Put Options will be issued to retail clients in Australia. To the extent permitted by law, neither Macquarie Portfolio Management Limited nor Macquarie Bank accepts any liability whatsoever for any loss or damage arising from you relying on any other information when investing. This PDS This PDS is comprised of two Parts. This document is Part 1 of the PDS. Part 2 is entitled "Macquarie Newton Specialist Funds. Part 1 of this PDS contains information that relates only to Series 2 Units and the Put Option. Part 2 contains information about the Macquarie Newton Multi-Strategy Fund and also other information that is common to all the Funds. It is important that you read both parts of this PDS. If you did not receive Part 2 of this PDS, please contact the Macquarie Newton Service Centre on to obtain Part 2 of this PDS. Part 1 of the PDS is dated 24 April 2006, when the preparation of the PDS was completed, and is issued by Macquarie Portfolio Management Limited ABN in its capacity as responsible entity of the Protected Multi-Strategy Fund (unless the context indicates it is acting in its own capacity) (referred to as MPML, we or us ). MPML holds Australian Financial Services Licence no Macquarie Bank has neither caused nor authorised the issue of Part 1 or Part 2 of this PDS and takes no responsibility for the offer or for the contents of Part 1 or Part 2 of this PDS. Macquarie Bank has not caused or authorised the provision of information in relation to the Put Option in the PDS except for statements in relation to its role as issuer of the Put Options. Offers under this PDS In this PDS MPML invites you to apply for Series 2 Units. If MPML accepts your application, you will be issued a Put Option at the same time that the Series 2 Units are issued to you. If MPML does not accept your application you will not be issued a Put Option by Macquarie Bank and you will not be issued with Series 2 Units. This PDS is also available in electronic form at the Macquarie Newton website at macquarie.com/newton. Investors who wish to invest in the Series 2 Units must: complete an Application Form which accompanies this PDS (this may be done by completing the Application Form attached to a PDS printed off the Macquarie Newton website); or complete an online Application Form available at macquarie.com/newton. Applications will be processed only: on receipt of a signed Application Form; or on submission of an online Application Form through macquarie.com/newton. We may reject an application for any reason. This offer is open to persons receiving this PDS, whether in paper or electronic form, in Australia. This PDS does not constitute an offer or invitation in any place outside Australia where, or to any person to whom, it would be unlawful to make such an offer or invitation. The distribution of this PDS (electronically or otherwise) in any jurisdiction outside Australia may be restricted by law and persons who come into possession of this PDS should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable law. The information in this PDS is current as at 24 April We may, however, change any information in this PDS, if the change is not materially adverse to Investors, by posting updated information at macquarie.com/newton. You may access this information at any time. Alternatively you can call the Macquarie Newton Service Centre on We will provide you with a paper copy of any information updated on our website on request, free of charge. If the change is materially adverse to Investors, we will issue a supplementary PDS. We will provide you with a paper copy of any updates or supplementary PDSs on request, free of charge. Representations This PDS has been prepared and issued by MPML. Any other parties distributing this product are only doing so as distributor for MPML. Potential investors should only rely on information in this PDS. No person is authorised to give any information or to make any representation in connection with the offer of Series 2 Units or Put Options that is not contained in this PDS. Any information or representation not in this PDS must not be relied upon as having been authorised by MPML. Glossary of Terms At the end of this PDS is a Glossary of Terms in which various words and phrases used in this PDS are defined. If you do not understand certain words and phrases you should refer to the Glossary of Terms. Unless stated otherwise, all dollar amounts and performance data in this PDS are quoted in Australian dollars. Experienced investor The funds in which the Protected Multi- Strategy Fund invests (directly or indirectly) may employ specialist trading and hedging techniques that require the use of derivatives. Investors should not invest in the Series 2 Units unless they are experienced Investors who are familiar with specialist trading and hedging techniques and derivatives, and understand and are comfortable with the risks associated with investing in the Series 2 Units. Further advice recommendation An investment in the Series 2 Units involves financial and other risks and is suitable for investors for whom an investment in the Series 2 Units does not represent a complete investment portfolio or programme and who fully understand the risks of investing in the Series 2 Units. Before making an investment in Series 2 Units you should: carefully read both Part 1 and Part 2 of this PDS; seek professional legal, taxation and financial advice to determine whether an investment in Series 2 Units and a Put Option is appropriate for you; and carefully consider the potential benefits and the risks involved in investing in the Series 2 Units in light of your particular investment needs, objectives and financial and taxation circumstances. This PDS is a general disclosure document and does not take into account your particular investment needs, objectives and financial and taxation circumstances.

3 Contents 1. Where to find information in this PDS 3 2. Series 2 Units 8 3. Capital Protection Significant Risks Fees and Other Costs Terms and Conditions of the Investment Taxation for Australian Residents 26 Glossary of Terms 32 Put Option Agreement 35 How to Complete the Application Form 42 Application Form 45 Withdrawal Form 49 Directory 53 1

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5 SECTION 1 Where to find information in this PDS To find information on the topics listed below, see the page number listed. These highlights indicate the kind of information you can find in this PDS but are not intended to be a complete summary. You should carefully read all of Part 1 and Part 2 of this PDS and seek professional legal, taxation and financial advice to determine whether an investment in the Series 2 Units is appropriate for you. TOPIC HIGHLIGHTS PAGE(S) Issuer of Series 2 Units Issuer of the Put Option Investment Manager of the Protected Multi-Strategy Fund The Multi-Strategy Fund Capital Protection Significant benefits Macquarie Portfolio Management Limited is the responsible entity of the Protected Multi-Strategy Fund. Macquarie Bank Limited (AFSL No ). MPML allocates the assets of the Protected Multi-Strategy Fund in accordance with the Investment Guidelines. Please refer to page 8 for a description of the Investment Guidelines. The monies raised from the issue of the Series 2 Units offered under this PDS will, in accordance with the Investment Guidelines, be invested in the Macquarie Newton Multi-Strategy Fund (referred to as the Multi- Strategy Fund in Part 1 of this PDS). In turn, the Multi Strategy Fund will invest in a portfolio of other Macquarie Newton Specialist Funds and potentially other strategies that are managed by the Investment Manager or managed by managers incubated by the Macquarie Bank Group. More details about the Multi-Strategy Fund, and the funds into which the Multi-Strategy Fund will initially invest, can be found in Part 2 of this PDS. An Investor in Series 2 Units will be provided with a Put Option under which Macquarie Bank can be required to buy all of the Investor s Series 2 Units on the Capital Protection Date. The purpose of the Put Option is to provide Capital Protection to the Investor for an amount equal to the Investor s Capital Protected Amount (being the Investor s Application Amount adjusted for withdrawals and transfers) on the Capital Protection Date. The Put Option provides Capital Protection on the Capital Protection Date. You can gain exposure to specialised and innovative investment strategies not generally used in a more traditional investment approach. For example, the Multi- Strategy Fund may invest in funds that may use hedging strategies, as well as leverage and derivatives. Generally returns may be based on the skill of the investment manager of the underlying funds rather than general market movements. Diversified exposure to investments with the aim of diversifying risk across a number of different shares and markets

6 TOPIC HIGHLIGHTS PAGE(S) Significant risks An investment in Series 2 Units involves a number of risks You should consider carefully the risks that may affect the Protected Multi-Strategy Fund before investing. The risks of investing are described in both Part 1 and Part 2 of this PDS. Part 1 of this PDS contains a description of the risks that are particular to investing in the Protected Multi-Strategy Fund. Part 2 of the PDS contains a description of the general investment risks and risks particular to the Multi-Strategy Fund and the funds in which the Multi-Strategy Fund may invest in at the date of this PDS. The risks that are particular to the Multi-Strategy Fund are relevant to your consideration of investing in the Protected Multi-Strategy Fund. The particular risks of investing in the Protected Multi- Strategy Fund include: there is no assurance as to the level of Cash Distributions (if any), nor as to whether any Cash Distributions will be sufficient to pay the Protection Fee or to service your debt if you borrow to invest. As a result you may need to use your own financial resources to pay these amounts; risks specific to Capital Protection including: that Capital Protection is provided only on the Capital Protection Date; the Put Option may lapse before the Capital Protection Date meaning that Capital Protection will not apply; if an Investor does not give notice to Macquarie Bank before the Exercise Date, the Put Option will lapse and the Investor will lose his or her Capital Protection. This risk may be removed by selecting the Capital Protection Date Notice Option in the Application Form; counterparty risk with Macquarie Bank (that is the risk that Macquarie Bank may not be able to fulfil its contractual obligation under the Put Option); The Investment Guidelines may result in the assets of the Protected Multi-Strategy Fund being substantially or completely invested in Fixed Interest Investments until the Capital Protection Date, rather than invested in the Multi-Strategy Component; 4

7 TOPIC HIGHLIGHTS PAGE(S) Significant risks How to invest How to withdraw Taxation for Australian investors Fees and other costs Distributions of the Protected Multi-Strategy Fund may be compulsorily reinvested. This means an Investor: may not receive Cash Distributions (yet remain liable to pay the Protection Fee and interest on any loan used by the Investor to fund the purchase of their Series 2 Units); may be required to pay tax on those distributions using the Investor s own resources. (Please refer to Section 7 for further information regarding taxation); and if a Cash Distribution is made, it may be insufficient to cover an Investor s interest payments on any loan used to acquire Series 2 Units. Following the Capital Protection Date, the Series 2 Portfolio will be fully allocated to the Multi-Strategy Fund. Therefore, the performance (either positive or negative) will be subject to the performance of the Multi-Strategy Fund. This risk may be removed by selecting the Capital Protection Date Notice Option in the Application Form. The minimum Application Amount is $20,000 and multiples of $1,000 thereafter. The minimum withdrawal is $10,000, with a minimum investment balance of $20,000. A summary of the significant tax issues is included in this PDS. The tax consequences of investing in the Protected Multi-Strategy Fund may be complex. MPML recommends you obtain professional taxation advice so that you understand how the tax issues apply to your personal circumstances. Fees and other costs for the Series 2 Units include: Base Management Fee Protection Fee Withdrawal Fee Placement Incentive Recovery Fee Operational costs Transactional costs Fees are separately calculated for each Class based on the NAV referable to the Class and paid out of the assets referrable to the Class

8 SERIES 2 UNITS AT A GLANCE This is a summary of Series 2 Units offered under this PDS and highlights the key features of Series 2 Units. FEATURE SERIES 1 UNITS IN THE PROTECTED WHERE TO GO FOR MULTI-STRATEGY FUND MORE INFORMATION Offer Open Date Offer Close Date Issue Date Exercise Date Capital Protection Date What occurs on the Capital Protection Date Maximum subscription Minimum subscription and underwriting 24 April June 2006* If your application is accepted, Series 2 Units will be issued to you no later than 30 June 2006*. 1 December June If an Investor selects the Capital Protection Date Notice Option in the Application Form the Investor s Series 2 Units will be withdrawn on the Capital Protection Date. The Capital Protection Date Notice Option provides notice to Macquarie Bank to exercise the Put Option if the Capital Protected Amount is greater than the value of the Investor s Series 1 Units and provides notice to MPML to withdraw an Investor s Series 2 Units if the Put Option is not exercised. The Capital Protection Date Notice Option will take effect only on the Exercise Date and may be revoked at any time prior to this date. If an Investor has not selected the Capital Protection Date Notice Option and has not exercised the Put Option or completed a Withdrawal Form requesting MPML to withdraw the Investor s Series 2 Units on the Capital Protection Date, the Investor will continue to hold the Series 2 Units. The maximum level of subscriptions that MPML proposes to accept is $100,000,000^. The minimum level of subscriptions is $10,000,000^. The offer of Series 2 Units is not underwritten or guaranteed. MPML reserves the right not to proceed with the offer of Series 2 Units. In such circumstances, all monies received from prospective investors will be returned without interest. If MPML does not proceed with the offer, Put Options will not be provided by Macquarie Bank *MPML reserves the right to extend the Offer Close Date to a date no later than 29 June If the Offer Close Date is extended, the Issue Date, the Capital Protection Date, the Maturity Date and the Surrender Cut-off Date may be extended by a period not exceeding the extension to the Offer Close Date. MPML will provide notice of any extension to the offer period on the Macquarie Newton website at macquarie.com/newtonfunds or will provide a paper copy free, upon request. + If the Offer Close Date is extended, the Capital Protection Date may be extended accordingly. ^ MPML reserves the right, in its absolute discretion, to vary this amount.

9 TOPIC HIGHLIGHTS PAGE(S) Investment Guidelines Capital Protected Amount Capital Protection (Put Option) Distributions The Series 2 Portfolio will be managed according to the Investment Guidelines. The goal of the Investment Guidelines is to manage the Series 2 Portfolio so that the value of Series 2 Units on the Capital Protection Date is at least equal to the Aggregate Capital Protected Amount. The Investment Guidelines will cease to apply after the Capital Protection Date. An amount equal to your Application Amount (adjusted for withdrawals and transfers (see page 31)). Macquarie Bank has agreed to provide Capital Protection to Investors subscribing for Series 2 Units. Under the Capital Protection an Investor who exercises the Put Option will receive from Macquarie Bank the Investor's Capital Protected Amount (being the Investor's Application Amount adjusted from withdrawals and transfers). Investors must pay the Protection Fee directly to Macquarie Bank in advance by direct debit on or before each Protection Fee Payment Date otherwise the Put Option will lapse. Note that the benefit of Capital Protection is only available to Series 2 Investors on the Capital Protection Date. If an Investor withdraws their investment in Series 2 Units before or after the Capital Protection Date, Capital Protection will not apply and the amount the Investor receives may be less than the Investor s Capital Protected Amount. MPML intends to distribute all income of the Series 2 Portfolio each Financial Year. A distribution may be a Cash Distribution, or compulsorily reinvested into additional Series 2 Units, or may be a combination of both. Cash Distributions will not be made if any assets of the Series 2 Portfolio are invested in any Fixed Interest Investments or if a Cash Distribution would immediately or imminently lead to a breach of a Sell Trigger. (See page 11)

10 SECTION 2 Series 2 Units SERIES 2 UNITS IN THE PROTECTED MULTI-STRATEGY FUND Investment Objective The Protected Multi-Strategy Fund aims to provide Investors with exposure to the Multi-Strategy Fund on a capital protected basis. Allowable Investments Until the Capital Protection Date, in accordance with the Investment Guidelines, the Series 2 Portfolio may be invested in units in the Multi-Strategy Fund, cash (collectively referred to as the Multi-Strategy Component ) and/or Fixed Interest Investments. On the Issue Date the Series 2 Portfolio is likely to be fully allocated to the Multi-Strategy Component. Until the Capital Protection Date, the proportion of the Series 2 Portfolio that is invested in the Multi-Strategy Fund, cash or Fixed Interest Investments is determined by MPML in accordance with the Investment Guidelines (discussed below). Following the Capital Protection Date, the Investment Guidelines will not apply and MPML intends that the Series 2 Portfolio will be fully allocated to the Multi- Strategy Fund. Information about the Multi-Strategy Fund and its investments is set out in the profile of the Multi-Strategy Fund in Part 2 of this PDS Investment Guidelines The Investment Guidelines apply until the Capital Protection Date. The Investment Guidelines are agreed between MPML and Macquarie Bank before the Series 2 Units are issued. The Investment Guidelines may only be amended with the agreement of MPML and Macquarie Bank. There are two parts to the Investment Guidelines being: Threshold Management; and allocation of the Multi-Strategy Component. FIGURE 1 SERIES 2 PORTFOLIO MULTI-STRATEGY COMPONENT FIXED INTEREST INVESTMENT THRESHOLD MANAGEMENT MULTI-STRATEGY FUND CASH ALLOCATION OF THE MULTI-STRATEGY COMPONENT 8 Please note that Figure 1 is provided for illustrative purposes only. The diagram represents the Investment Guidelines but does not represent the expected or likely allocation of the Series 2 Portfolio amongst asset types.

11 Threshold Management Until the Capital Protection Date, the assets of the Series 2 Portfolio will be allocated using Threshold Management which requires the allocation between two components: investments in the Multi-Strategy Component; and investments in Fixed Interest Investments. The aim of Threshold Management is to manage the Series 2 Portfolio so that the value of Series 2 Units in the Protected Multi-Strategy Fund on the Capital Protection Date is at least equal to the Aggregate Capital Protected Amount (being the total Capital Protected Amount for all of the Investors). Threshold Management is an investment technique and does not constitute capital protection. There is no guarantee that Threshold Management will result in the value of the Series 2 Portfolio being at least equal to the Aggregate Capital Protected Amount on the Capital Protection Date. The Capital Protection is provided by Macquarie Bank under, and on the terms of, the Put Option (see page 13 for details of the Put Option terms). The Capital Protection will apply regardless of the effectiveness of Threshold Management. Threshold Management allows the Series 2 Portfolio to be fully allocated to the Multi Strategy Component unless the value of its investment in the Multi Strategy Component falls to within certain ranges, referred to below as the Sell Trigger and the Knockout Curve. The proportion of the assets of the Series 2 Portfolio allocated to the Multi-Strategy Component and Fixed Interest Investments over time are determined by a series of equations contained in the Investment Guidelines up until the Capital Protection Date. The equations are designed to maintain exposure to the Multi-Strategy Component, while still seeking to ensure that the value of the Series 2 Portfolio on the Capital Protection Date will be not less than the Aggregate Capital Protected Amount. On the Issue Date the Series 2 Portfolio is likely to be fully allocated to the Multi-Strategy Component. However, at any time up to and including the Capital Protection Date the Series 2 Portfolio may comprise Fixed Interest Investments as a result of Threshold Management which will cease after the Capital Protection Date. Threshold Management requires that the allocation of the Series 2 Portfolio to the Multi-Strategy Component be compared daily to the Knockout Curve. The Knockout Curve represents the growth over time of an amount which, if invested in Fixed Interest Investments, would be expected on the Capital Protection Date to equal the Aggregate Capital Protected Amount, adjusted for any currently held Fixed Interest Investments, the Placement Incentive Fee and liabilities within the Series 2 Portfolio. (For details of the adjustment of the Capital Protected Amount for withdrawals and transfers, see page 31.) In addition, a Sell Trigger curve is placed above the Knockout Curve (and below the value of the Series 2 Portfolio s investment in the Multi-Strategy Component). If the value of the Multi-Strategy Component falls below the Sell Trigger curve a portion of the Series 2 Portfolio is reallocated from the Multi- Strategy Component to Fixed Interest Investments and a new Sell Trigger is placed between the then value of the Multi-Strategy Component and the Knockout Curve, while a Buy Trigger is placed above the value of the Multi-Strategy Component. If the Sell Trigger is breached again, further allocations will be made from the Multi-Strategy Component to Fixed Interest Investments. If the value of the Multi-Strategy Component rises above the Buy Trigger curve, the allocation to the Multi-Strategy Component will increase and the allocation to Fixed Interest Investments will decrease. The Knockout Curve is based on the Market Interest Rates and therefore it, and the Buy Triggers and Sell Triggers, will vary with movements in applicable interest rates. A fall (or rise) in interest rates will have the effect of raising (or lowering) the curves. The dynamic nature of these curves has the potential to decrease (or increase) the allocation to the Multi-Strategy Component and increase (or decrease) the allocation to Fixed Interest Investments as a result of movements in interest rates. Figure 2 shows a hypothetical illustration of how the Knockout Curve and an initial Sell Trigger may look over time assuming a full allocation to the Multi- Strategy Component. The curves have been generated using prevailing interest rates as at 28 March 2006, and show the theoretical shape of the curves over time if interest rates were to stay constant. In practice, these curves may vary daily as the Market Interest Rates for fixed interest securities maturing on the Capital Protection Date changes. 9

12 FIGURE 2 140% 120% % of Aggregate Capital Protected Amount 100% 80% 60% 40% 20% Sell Trigger Knockout Curve 0% Years to Capital Protection Date Figure 3 shows a hypothetical illustration of how the Multi-Strategy Component Value, Fixed Interest Investments, Buy Trigger, Sell Trigger and Knockout Curve may look over time assuming the Sell Trigger is breached. The Multi-Strategy Component Value and value of Fixed Interest Investments are hypothetical only and have been included to assist investors to understand the operation of Threshold Management. It does not reflect projected or forecast returns for the Series 2 Portfolio. FIGURE 3 160% Knockout Curve Buy Trigger Sell Trigger Multi-Strategy Component Fixed Interest Investment Series 2 Portfolio 140% % of Aggregate Capital Protected Amount 120% 100% 80% 60% 40% 20% A Buy Trigger now exists since part of the Series 2 Portfolio has been allocated to Fixed Interest Investments. Sell Trigger is breached. As a result part of the Series 2 Portfolio is reallocated out of the Multi-Strategy Component and into Fixed Interest Investments. Buy Trigger is breached. As a result part of the Series 2 Portfolio is reallocated out of Fixed Interest Investments and into the Multi-Strategy Component. 0% Years to Capital Protection Date 10 If the value of the Multi-Strategy Component is less than 10% of the total value of the Series 2 Portfolio, the entire assets of the Series 2 Portfolio will be allocated to Fixed Interest Investments and will remain in Fixed Interest Investments until the Capital Protection Date. Additionally, if the Knockout Curve were to be breached the entire assets of the Series 2 Portfolio will be allocated to Fixed Interest Investments and will remain in Fixed Interest Investments until the Capital Protection Date. After the Capital Protection date MPML intends that the Series 2 Portfolio will be fully allocated to the Multi-Strategy Fund. Due to the relative security of principal that Fixed Interest Investments generally provide, the returns from investments in Fixed Interest Investments are generally relatively lower than the returns from investments in other assets. The allocation of part or all of the Series 2 Portfolio to Fixed Interest Investments will impact on the returns of Series 2 Units and reduce the ability to achieve attractive returns.

13 Allocation of the Multi-Strategy Component Once the Multi-Strategy Component is determined by Threshold Management, the second part of the Investment Guidelines requires the allocation of the Multi-Strategy Component between: units in the Multi-Strategy Fund; and cash. (See Figure 1 on page 8.) This allocation process occurs on a monthly basis. For this to occur, MPML must asses the type of funds or strategies into which the Multi-Strategy Fund has invested. This assessment is based on the levels of exposure to particular strategy types and the perceived risk resulting from those levels of exposure. The strategy types considered by MPML when making thisassessment include: Strategy Type Equity Strategies Event Driven Strategies Relative Value Strategies Tactical Trading Strategies If MPML determines that the allocation is above levels permitted under the Capital Protection Deed, it will withdraw part of the Multi-Strategy Component invested into the Multi-Strategy Fund and hold the proceeds in cash. Provided the allocation is within levels agreed under the Investment Guidelines, the Multi-Strategy Component will be fully invested in the Multi-Strategy Fund. If the allocation is not within agreed levels and part of the Multi-Strategy Component is held in cash, the proceeds in cash may result in a reduction in the returns generated for Series 2 Investors. The permitted fund concentrations Until the Capital Protection Date, the Investment Guidelines also require MPML to assess the allocation of the Multi-Strategy Fund into the underlying funds and strategies to determine whether it meets particular fund concentrations permitted under the Capital Protection Deed. The permitted fund concentrations are determined according to: the length of time the underlying funds or strategies have been traded; the allocation to a single underlying fund or strategy; and the allocations to underlying funds or strategies managed by managers other than the Investment Manager. If Macquarie Bank determines that the portfolio of the Multi-Strategy Fund has not complied with the permitted fund concentrations under the Capital Protection Deed, the Put Option may lapse at the discretion of Macquarie Bank. If the Put Option lapses Capital Protection will no longer apply. See "Termination of the Put Option" on page 16 for further details. MPML s decisions when determining the allocation of the Multi-Strategy Component does not affect the allocation of the Multi-Strategy Fund. MPML, in its capacity as the responsible entity of the Multi-Strategy Fund, determines the allocation of the Multi-Strategy Fund without regard to the determinations to be made under the Investment Guidelines applicable to the Protected Multi-Strategy Fund. Allocation after the Capital Protection Date After the Capital Protection date MPML intends that all of the Series 2 Portfolio will be fully allocated to the Multi- Strategy Fund. Distributions Distributions will be made once a year after the end of the distribution period ending 30 June of each year. MPML intends to distribute all the income of the Protected Multi- Strategy Fund each Financial Year. In relation to Series 2 Units, the distribution of income will be the income referable to the Series 2 Portfolio (and not to any other Class of Units) and will be made pro rata based on the number of Series 2 Units held. A distribution may be made as a Cash Distribution, Distribution Reinvestment, or may be a combination of both. MPML aims to pay the total distribution as a Cash Distribution where possible. Where the payment of the total distribution as a Cash Distribution would immediately or imminently (as determined by MPML in its absolute discretion) cause a Sell Trigger to be breached in accordance with the Investment Guidelines, the Cash Distribution will be reduced to such a level that could be paid without resulting in a breach being imminent or causing an actual breach. Additionally a Cash Distribution will only be declared by MPML if the assets of the Series 2 Portfolio do not include any Fixed Interest Investments. If the assets of the Series 2 Portfolio include Fixed Interest Investments, distributions will be compulsorily reinvested into additional Series 2 Units. As MPML intends to distribute all income of the Series 2 Portfolio each Financial Year, any distribution made which is not a Cash Distribution will be made as a Distribution Reinvestment. This means that you will be issued with more Series 2 Units. Importantly, the payment of a Distribution Reinvestment will not increase your Capital Protected Amount. You will also be required to pay any tax on the Distribution Reinvestment out of your own resources. Cash Distributions will be paid via direct credit to your nominated bank account. Cash Distributions if paid provide you with an immediate cash-flow benefit. Importantly, the payment of Cash Distributions will not reduce your Capital Protected Amount. This means that, when you receive a Cash Distribution, you obtain a portion of your profits without reducing your Capital Protected Amount. On termination of the Series 2 Portfolio, Series 2 Investors will receive a pro rata distribution based on the number of Series 2 Units held, of the net proceeds of the realisation of the assets of the Series 2 Portfolio (that is, after satisfaction of liabilities referable to the Series 2 Units). 11

14 An Example of Cash Distributions and Distribution Reinvestment The below example is not indicative of the performance of the Series 2 Portfolio. The example does not take into account the effect of any fees or charges incurred by the Protected Multi-Strategy Fund. Let s take an example where an Investor has an Application Amount of $100,000 and the Investor is issued with 100,000 Series 2 Units on the Issue Date. The Investor s Capital Protected Amount is $100,000. In this example the Series 2 Unit price increases from $1.00 on the Issue Date to $1.08 (cum distribution) on 30 June Assume that the total distribution is $0.06 per Series 2 Unit causing the Series 2 Unit price to fall by $0.06 to $1.02 due to the Series 2 Units going ex distribution. MPML declares the entire distribution to be a Cash Distribution. The Investor s position on 30 June 2007 (ex distribution basis) is: 100,000 Series 2 Units valued at $1.02 per Series 2 Unit, giving a total investment value of $102,000 a Cash Distribution of $0.06 per Series 2 Unit is paid to the investor, giving a total Cash Distribution of $6,000 the Capital Protected Amount remains at $100,000 the Investor may be required to pay tax on the $0.06 Cash Distribution. Now let s assume that the Series 2 Unit price increases from $1.02 (ex distribution) on 1 July 2007 to $1.06 (cum distribution) on 30 June Assume that the total distribution is $0.03 per Series 2 Unit causing the Series 2 Unit price to fall by $0.03 to $1.03 due to the Series 2 Units going ex distribution. MPML determines that the payment of the total distribution as a Cash Distribution would breach the Sell Trigger. As such MPML declares that a Cash Distribution of $0.01 per Series 2 Unit will be paid and $0.02 will be compulsorily reinvested into additional Series 2 Units (a Distribution Reinvestment). In this example, the Investor s position on 30 June 2008 (ex distribution basis) is: 101,942 Series 2 Units valued at $1.03 per Series 2 Unit, giving a total investment value of $105,000 a Cash Distribution of $0.01 per Series 2 Unit is paid to the Investor, giving a total Cash Distribution of $1,000 the Capital Protected Amount remains at $100,000 the Investor may be required to pay tax on the $0.01 Cash Distribution and the $0.02 Distribution Reinvestment out of his or her own resources Finally let s assume that the Series 2 Unit price falls from $1.03 (ex distribution) on 1 July 2008 to $0.98 (cum distribution) on 30 June Assume that the total distribution is $0.02 per Series 2 Unit causing the Series 2 Unit price to fall by $0.02 to $0.96 due to the Series 2 Units going ex distribution. MPML determines that the payment of part or all of the distribution as a Cash Distribution would breach the Sell Trigger. As such MPML declares that $0.02 will be compulsorily reinvested into additional Series 2 Units (a Distribution Reinvestment). The Investor s position on 30 June 2009 (ex distribution basis) is: 104,066 Series 2 Units valued at $0.96 per Series 2 Unit, giving a total investment value of $99, the Capital Protected Amount remains at $100,000 the Investor may be required to pay tax on the $0.02 Distribution Reinvestment out of its own resources 12

15 SECTION 3 Capital Protection CAPITAL PROTECTION (PUT OPTION) Investors will be provided Capital Protection by Macquarie Bank issuing a Put Option to each Investor with respect to all of the Investor s Series 2 Units. Subject to its specific terms, the Put Option protects Investors on the Capital Protection Date against a fall in the value of their investment in Series 2 Units below their Capital Protected Amount. It does this by giving an Investor the right to sell all of the Investor s Series 2 Units to Macquarie Bank on the Capital Protection Date for their Capital Protected Amount. The Capital Protection is for an amount equal to the Capital Protected Amount and is only for the benefit of Investors who hold Series 2 Units on the Capital Protection Date who hold a Put Option. Accordingly, the Capital Protection does not apply if an Investor withdraws their investment in Series 2 Units before the Capital Protection Date. If this occurs the amount that an Investor receives on the withdrawal of their investment may be less than their Capital Protected Amount; to Series 2 Units issued to the Investor after the date of grant of the Put Option through Distribution Reinvestment; if the Put Option has lapsed because the Investor has not paid the Protection Fee; if the Put Option has not previously lapsed but it is not exercised. If this occurs the Investor will be paid the Withdrawal Proceeds relating to the Investor s Series 2 Units and, if relevant, the Assessed Value Payment (see below); if the Put Option is terminated (see section 4 "Significant Risks"); or after the Capital Protection Date. There are a number of possible scenarios that could occur on the Capital Protection Date if the Investor holds a Put Option that has not lapsed prior to the Capital Protection Date: Scenario 1: Capital Protected Amount less than the value of the Investor s Series 2 Units on the Capital Protection Date If, on the Capital Protection Date, the Investor s Capital Protected Amount is less than the value of the Investor s Series 2 Units: the Put Option will lapse; and either, if the Investor selected the Capital Protection Date Notice Option or the Investor completes a Withdrawal Form requesting MPML to withdraw the Investor s Series 2 Units on the Capital Protection Date, MPML will withdraw the Investor s Series 2 Units. In this case, MPML will pay the Withdrawal Proceeds to the Investor; or the Investor will continue to hold the Series 2 Units. Scenario 2: Capital Protected Amount greater than the value of the Investor s Series 2 Units on the Capital Protection Date a) Put Option exercised If the Investor selected the Capital Protection Date Notice Option or the Investor otherwise gives an exercise notice to Macquarie Bank: the Investor must transfer all of their Series 2 Units to Macquarie Bank on the Settlement Date for an amount equal to the Investor s Capital Protected Amount; and once Macquarie Bank has received from MPML the Withdrawal Proceeds for the Series 2 Units, Macquarie Bank must pay the Investor the Capital Protected Amount. 13

16 b) Put Option not exercised If the Investor has not selected the Capital Protection Date Notice Option and has not otherwise given an exercise notice to Macquarie Bank: the Put Option will lapse; the Investor will be paid the Assessed Value Payment on the Payment Date (see below); and the Investor will continue to hold their Series 2 Units. In this scenario, the Investor may receive less than their Capital Protected Amount when they withdraw their Series 2 Units. This risk may be removed by an Investor selecting the Capital Protection Date Notice Option in the Application Form or by otherwise giving written notice to Macquarie Bank before the Exercise Date. The Assessed Value Payment is a payment from Macquarie Bank to the Investor for an amount equal to 95% of the following amount: the Investor s Capital Protected Amount less the Withdrawal Proceeds paid to the Investor. Protection Fee Investors must pay the Protection Fee directly to Macquarie Bank in advance on or before the Protection Fee Payment Date (the Issue Date and each 30 June from June 2007 to June 2012 inclusive). Failure to pay the Protection Fee may lead to Investors losing their Capital Protection. The Protection Fee is 0.20% p.a. of the Investor s Capital Protected Amount. Costs, charges and expenses under the Put Option Agreement An Investor will be required to pay upon demand any costs, charges and expenses (including any stamp duty, any tax on goods and services, value added tax, registration fees and legal fees, if any) incurred or payable by Macquarie Bank under the Put Option Agreement over all of the Investor s Series 2 Units. Scenario 3: The Investor has withdrawn some or all of the Investor's Series 2 Units The Capital Protection does not apply in respect of those Series 2 Units withdrawn before the Capital Protection Date. For example assume an Investor invests $100,000 and is issued 100,000 Series 2 Units. The Investor s Capital Protected Amount is $100,000 on the Issue Date. Some time later the Investor withdraws 10% of the Investor s total Series 2 Units. This causes the Investor s Capital Protected Amount to be reduced by 10% to $90,

17 SECTION 4 Significant Risks WHAT ARE THE SIGNIFICANT RISKS? Risk and your investment The value of the Investor s investment will go up and down with the value of the net assets of the Series 2 Portfolio. By acquiring Series 2 Units the Investor is gaining exposure to the Multi-Strategy Fund. The Multi- Strategy Fund invests in a portfolio of absolute return and specialist equity strategies. These strategies are exposed to a number of risks. Significant risks that are specific to the Protected Multi- Strategy Fund are described below. Please refer to Part 2 of this PDS for the risks associated with investing in the Multi-Strategy Fund and investing generally. Borrowing to invest in the Series 2 Portfolio If you choose to borrow money to fund all or part of your investment in the Series 2 Portfolio, you must be aware that you will be required to pay interest on your loan. This obligation is not affected by the performance (positive or negative) of the Series 2 Portfolio. If the Series 2 Portfolio does not perform, or the performance is only moderate, you will be required to pay the interest on your loan out of your own financial resources. Neither MPML nor any other person gives any guarantee or assurance as to whether any distributions from the Series 2 Portfolio will be sufficient to enable Investors who borrow to invest to meet the interest payments on their loan. Additionally, the Protection Fee remains payable to Macquarie Bank regardless of whether any Cash Distributions are made. If there is no Cash Distribution, or if the Cash Distribution is less than the amount of interest payments and the Protection Fee, Investors will have to make those payments from their own resources. If there is a Distribution Reinvestment, you will have to pay any tax on those distributions out of your own resources. You cannot require MPML to make a Cash Distribution. Example The following example assumes Application Amount = $100,000 Amount borrowed = $100,000 Protection Fee = 0.20% p.a. of the Capital Protected Amount Fixed interest rate of 7.25% p.a. Annual in advance interest payments Annually you would be required to pay the following amounts. Date Interest Protection Fee Payment Payment 30-Jun-06 $7, $ Jun-07 $7, $ Jun-08 $7, $ Jun-09 $7, $ Jun-10 $7, $ Jun-11 $7, $ Jun-12 $6, $ If there was no or minimal Cash Distribution on any of the payment dates listed above, the Investor would be required to pay the interest payments and Protection Fee Payments using the Investor s own financial resources. Further, if a Cash Distribution was compulsorily reinvested into the Series 2 Portfolio, the Investor would also be required to pay tax on those distributions also out of his or her own resources. 15

18 Additional Classes of Units MPML has previously issued the Series 1 Class of Units and in the future may issue additional Classes of Units in the Protected Multi-Strategy Fund, for which it creates separate portfolios of assets and liabilities. MPML intends to calculate the NAV of each Class exclusively by reference to the assets and liabilities it determines to be referable to the underlying portfolio maintained in respect of that Class. Subject to the Corporations Act, each such portfolio will be managed separately from and independently of the other portfolios. The holders of one Class of Units (including Series 2 Units), in their capacity as holders with respect to a particular portfolio (including the Series 2 Portfolio), have no rights in respect of the assets of other portfolios. However, if one or more portfolios become insolvent, any creditors in respect of the insolvent portfolios, unless those creditors were contracted on a limited recourse basis, would be creditors of the Protected Multi-Strategy Fund as a whole. Accordingly, they could proceed against any assets of the Protected Multi- Strategy Fund, including the assets of Series 2 Units. Similarly, the holders of different Classes of Units would be subject to the insolvency of the Protected Multi- Strategy Fund as a whole. Termination of the Put Option In the circumstances described below, Macquarie Bank may terminate the Put Option with the result that Capital Protection no longer applies. This means that the Investor s Capital Protected Amount is no longer protected on the Capital Protection Date and the amount an Investor receives may be less than their Capital Protected Amount. Macquarie Bank may terminate the Put Option Agreement before the Capital Protection Date in any of the following circumstances: Macquarie Bank determines that the responsible entity has breached the Investment Guidelines Macquarie Bank determines the Multi-Strategy Fund does not comply with the permitted fund concentrations as described in the Capital Protection Deed the Investor fails to pay the Protection Fee to Macquarie Bank on or before a Protection Fee Payment Date and Macquarie Bank has given the Investor 10 Business Days written notice of the Investor s failure to pay and the Investor has not paid within those 10 Business Days the Investor ceases to hold the Put Property on any day before the Settlement Date an event of default occurs under the Investor s Loan Agreement (if any) on the Settlement Date the Put Property is encumbered other than under the Loan Agreement (if any) or Macquarie Bank does not receive such evidence as Macquarie Bank may require to satisfy itself that the Put Property is not encumbered MPML ceases to be the responsible entity of the Protected Multi-Strategy Fund, unless Macquarie Bank has given its written consent to the replacement responsible entity Capital Protection is provided by the Put Option. Capital Protection is only provided on the Capital Protection Date if the Investor exercises the Put Option. If an Investor withdraws prior to or after the Capital Protection Date the amount an Investor receives on withdrawal may be less than their Capital Protected Amount. This risk may be avoided by the Investor selecting the Capital Protection Date Notice Option in the Application Form. Failure to exercise the Put Option If the Investor does not elect in the Application Form to give a Capital Protection Date Notice Option to Macquarie Bank, in order to exercise the Put Option, the Investor will need separately to give written notice to Macquarie Bank before the Exercise Date. Failure by an Investor to give notice will result in the Put Option lapsing and the Investor may receive less than the Capital Protected Amount. Multi-Strategy Fund Risk Subject to the Investment Guidelines, the Protected Multi-Strategy Fund will be invested in the Multi-Strategy Fund. These risks that are particular to the Multi-Strategy Fund are relevant to your consideration of the risks of investing in the Protected Multi-Strategy Fund because the Protected Multi-Strategy Fund will invest on an unprotected basis in the Multi-Strategy Fund. Following the Capital Protection Date, MPML intends that the Series 2 Portfolio will be fully allocated to the Multi-Strategy Fund. Distribution risk As described in Section 2, there may be occasions where there will be no Cash Distribution. Neither MPML nor any other person gives any guarantee or assurance as to whether any distributions from the Protected Multi- Strategy Fund will be sufficient to enable Investors who borrow to invest to meet the interest payments on their loan. Additionally, the Protection Fee remains payable to Macquarie Bank regardless of whether any Cash Distributions are made. If there is no Cash Distribution, or if the Cash Distribution is less than the amount of interest payments and the Protection Fee, Investors will have to make those payments from their own resources. If there is a Distribution Reinvestment, you will have to pay any tax on those distributions out of your own resources. You cannot require MPML to make a Cash Distribution. 16

19 Performance risk The Investment Guidelines may result in some or all of the assets of the Series 2 Portfolio being held substantially in Fixed Interest Investments and cash up until the Capital Protection Date, rather than invested in the Multi-Strategy Fund. If this occurs an Investor s exposure will be to Fixed Interest Investments and cash which, due to their relatively lower risk, generally offer a lower return than investments in other asset classes. This also means that it is unlikely that the performance of the Series 2 Units will mirror the performance of the Multi- Strategy Fund. Macquarie Bank insolvency risk Macquarie Bank will provide Put Options to Investors in Series 2 Units. Additionally the Series 2 Portfolio can potentially invest in Fixed Interest Investments issued by Macquarie Bank. As such Investors in Series 2 Units are taking counterparty risk on Macquarie Bank (that is the risk that Macquarie Bank may not be able to fulfil its contractual obligations). Failure to comply with such obligations may result in the investment in Series 2 Units being worth less than it otherwise would. The obligations of Macquarie Bank under the Put Options and any Fixed Interest Investments are not deposit liabilities of Macquarie Bank and they are not guaranteed by any party. Macquarie Bank s obligations under the Put Options and any Fixed Interest Investments are unsecured and will rank behind claims of secured creditors and creditors mandatorily preferred under the law, such as deposit holders. In this regard, section 13A(3) of the Banking Act 1959 (Cth) provides that in the event of Macquarie Bank becoming unable to meet its obligations, the assets of Macquarie Bank in Australia shall be available to meet its deposit liabilities in Australia, in priority to all other liabilities of Macquarie Bank (which include the obligations of Macquarie Bank under the Put Options and Fixed Interest Investments if issued by Macquarie Bank). Macquarie Bank is rated by Standard & Poor s, Fitch Ratings and Moody s Investors Service. Current ratings are available from Macquarie Bank and are referenced in the financial report and on the website. The ratings agencies do not independently verify information provided to them by Macquarie Bank, and therefore make no representation or warranty with respect to the accuracy of their ratings. The rating agencies have not been involved in the preparation, or authorised the issue of, this PDS. Ratings are subject to change or withdrawal at any time at the rating agency s sole discretion. Counterparty risk If the Series 2 Portfolio is invested in Fixed Interest Investments that are not issued by Macquarie Bank, it will be subject to the risk of those issuers failing in their contractual responsibilities, including in particular, the risk that a counterparty may go into liquidation. Withdrawal risk If an Investor withdraws their Series 2 Units before or after the Capital Protection Date, Capital Protection will not apply and the amount the Investor receives on withdrawal of their Series 2 Units before or after the Capital Protection Date may be less than their Amount. The Investment Guidelines will not apply after the Capital Protection Date, and Investors who do not withdraw their Series 2 Units on or before the Capital Protection Date will not have the benefit of the Investment Guidelines after this date. Therefore if there is a fall in the value of the Series 2 Portfolio as a result of a fall in the value of the Multi-Strategy Fund, the Series 2 Portfolio will continue to be fully allocated to the Multi-Strategy Fund. Investors who withdraw after the Capital Protection Date will be exposed to this risk. This risk may be avoided by the Investor selecting the Capital Protection Date Notice Option in the Application Form in which case the Investor s Series 2 Units will either be transferred to Macquarie Bank or be withdrawn on the Capital Protection Date. Capital Protection and the time value of money The Capital Protected Amount at the Capital Protection Date is unlikely to have the same real value as it has today due to the likely effect of inflation and the time value of money. 17

20 SECTION 5 Fees and Other Costs In this section a reference to a fee payable to MPML means the fee is payable to Macquarie Portfolio Management Limited in its own capacity. TYPE OF FEE OR COST 1 AMOUNT HOW AND WHEN PAID Fees when your money moves in and out of the Protected Multi-Strategy Fund. Establishment fee The fee to open your investment. Withdrawal Fee The fee on each amount you take out of your investment. Termination fee The fee to close your investment. Management Costs The fees for managing your investments Nil. But please refer to the Placement Incentive Recovery Fee. For withdrawals occurring before the Surrender Cut-off Date, one twelfth of 1.00% (inclusive of GST) of the unit price of the corresponding Series 2 Units being withdrawn, multiplied by the number of months from the time of withdrawal until the Surrender Cut-off Date. 2 Nil for withdrawals after the Surrender Cut-off Date. Not applicable. Not applicable. Deducted from your withdrawal proceeds and paid to the MPML. Not applicable. Base Management Fee 0.98% p.a. (inclusive of the net impact of GST) calculated on the month end NAV referable to the Series 2 Portfolio. The value of any amount of the Series 2 Portfolio invested in the Multi-Strategy Fund will also be impacted by a base management fee of 1.60% p.a. (inclusive of the net impact of GST) that is paid out of the assets of the funds or strategies into which the Multi-Strategy Fund invests. The Base Management Fee is payable in arrears to MPML and is calculated monthly and reflected in the unit price 3, and is generally paid monthly out of the Series 2 Portfolio. The base management fee of the underlying funds will be paid from the assets and is reflected in the unit price of those funds or strategies 4 into which the Multi-Strategy Fund invests and will result in a corresponding decrease in the value of the Multi- Strategy Fund and the value of any amount of the Series 2 Portfolio invested in the Multi-Strategy Fund All fees are shown without taking into account income tax but including GST less any applicable reduced input tax credit. 2 Unless the withdrawal results from exercising a cooling-off right. Up to the maximum number of days set out on page 24. The Surrender Cut-off Date is 1 July 2009, subject to adjustment. 3 Unit price is calculated after the deduction of the Base Management Fee, Performance Fee, operational costs and transaction costs properly referrable to the relevant Class in the Protected Multi-Strategy Fund. 4 For details of these fees for the initial underlying funds see pages of Part 2 of this PDS.

21 TYPE OF FEE OR COST 1 AMOUNT HOW AND WHEN PAID Performance Fee Protection Fee Placement Incentive Recovery Fee Operational costs These are all expenses incurred by MPML in relation to the proper performance of its duties in respect of the Series 2 Portfolio. There is no performance fee for the Protected Multi-Strategy Fund. The value of any amount of the Series 2 Portfolio invested in the Multi-Strategy Fund will be impacted by the performance fee payable in relation to the Multi-Strategy Fund of 20% (inclusive of the net impact of GST) of positive returns subject to a high water mark. 0.20% p.a. of the Investor s Capital Protected Amount payable in advance on or before the relevant Protection Fee Payment Date. 1.00% p.a. (inclusive of GST) of the Aggregate Capital Protected Amount until the Surrender Cut-off Date, calculated monthly. Capped at 0.11% p.a. (inclusive of the net impact of GST) of the month end NAV for the Series 2 Portfolio excluding transaction costs and abnormal expenses. The value of any amount of the Series 2 Portfolio invested in the Multi-Strategy Fund will be impacted by operational costs of up to 0.26% p.a. (inclusive of the net impact of GST) of the month end NAV charged by the Multi-Strategy Fund excluding transaction costs and abnormal expenses. The funds into which the Multi-Strategy Fund invests will charge operational costs of up to 0.615% p.a. (inclusive of the net impact of GST) of the month end NAV of each underlying fund excluding transaction costs and abnormal expenses. Not applicable This performance fee will be paid from the assets of the Multi-Strategy Fund and will be reflected in the unit price of that fund. The performance fee paid at the Multi-Strategy Fund will result in a corresponding decrease in the value of any amount of the Series 2 Portfolio invested in the Multi-Strategy Fund. The Protection Fee is payable by the Investor directly to Macquarie Bank in advance by direct debit on or before a Protection Fee Payment Date. This fee is not payable after the Capital Protection Date. See page 13. The Placement Incentive Recovery Fee is payable monthly in arrears to MPML, from the Issue Date to the Surrender Cut-off Date, out of the Series 2 Portfolio. The expenses are payable or reimbursable out of the assets of the Series 2 Portfolio as and when they arise. The expenses are payable or reimbursable out of the assets of the Multi-Strategy Fund as and when they arise. The expenses are payable or reimbursable out of the assets of the underlying funds as and when they arise. ADDITIONAL EXPLANATION OF FEES AND COSTS The following important additional information has been provided to assist you in understanding the Fee Table set out above. Transactional costs In addition to Management Costs (being those costs listed under the heading Management Costs in the fee table on page 18 of Part 1 of this PDS), the Protected Multi- Strategy Fund may incur transactional costs such as stamp duty, settlement or clearing charges, which will be deducted from the Protected Multi-Strategy Fund's assets as and when they arise. The amount of transactional costs charged by our third party service providers will depend on our arrangements with them. We will negotiate commercial fee terms wherever possible. Stamp duty also varies from time to time and between jurisdictions. Operational costs In operating the Protected Multi-Strategy Fund, MPML may incur a number of expenses. All expenses incurred by MPML in relation to the proper performance of its duties in respect of the Protected Multi-Strategy Fund referable to the Series 2 Portfolio are payable or reimbursable out of the assets of the Protected Multi- Strategy Fund referable to the Series 2 Portfolio. These expenses include, but are not limited to, administration costs, auditing fees, legal fees, advertising fees, and fees associated with communication with Investors. The amount of operational costs will depend on the size of the Protected Multi-Strategy Fund referable to the Series 2 Portfolio. Operational costs (excluding transactional costs and abnormal expenses (such as a change of the responsible entity, termination of the Protected Multi-Strategy Fund referable to the Series 2 Portfolio or unit holder meetings)) for the Protected Multi-Strategy Fund referable to the Series 2 Portfolio will be capped at 0.11% p.a. (inclusive of the net impact of GST) on the month end NAV. Operational costs in excess of the capped amount will be borne by MPML. 19

22 Adviser remuneration -Placement Incentive Fee A Placement Incentive Fee of 3% (inclusive of GST) of an Investor s Application Amount is payable after the Issue Date to the Investor s financial adviser (or if an Investor applies directly to MPML, this fee will be kept by MPML). This Placement Incentive Fee is paid by MPML out of its own resources. MPML will then be reimbursed by the Protected Multi-Strategy Fund by charging a Placement Incentive Recovery Fee to be paid out of the Series 2 Portfolio. The Placement Incentive Recovery Fee is 1.00% per annum (inclusive of GST) of the Aggregate Capital Protected Amount until the Surrender Cut-off Date and is payable monthly out of the Protected Multi-Strategy Fund as described above. The Placement Incentive Fee may be in addition to any other fees or expenses you may have agreed with your adviser for their services. Your adviser should give you details of their remuneration arrangements. Depending on your arrangements with your financial advisor, the amount of these fees may be negotiated with your adviser and your financial adviser may rebate all or part of this remuneration. Placement Incentive Recovery Fee The Placement Incentive Recovery Fee is described as an Application Fee under the Constitution. The Constitution allows us to claim the Application Fee in the manner in which we claim the Placement Incentive Recovery Fee. Payment of the Protection Fee The Protection Fee of 0.20% p.a. of the Investor s Capital Protected Amount is payable by direct debit by the Investor directly to Macquarie Bank in advance on or before the Protection Fee Payment Dates: Protection Fee Payment Dates Issue Date (30 June 2006)* 30 June June June June June June 2012 Tax and insurance costs For information on the main Australian tax implications relating to investing in the Protected Multi-Strategy Fund see the "Taxation for Australian Residents" section on page 26. MPML does not intend to pass any tax deduction onto an Investor as a reduced fee or cost. Differental fees MPML may charge or rebate fees: (a) by negotiation with Investors who are wholesale clients, as defined in section 761G of the Corporations Act; and/or (b) to Investors in the Protected Multi-Strategy Fund who are also employees of MPML or a related body corporate of MPML, on a different basis to that applied to other members of the Protected Multi-Strategy Fund where permitted by under the Corporations Act or relevant ASIC policy. In the case referred to in paragraph (b), the amount of any Placement Incentive Fee, Placement Incentive Recovery Fee, Withdrawal Fee, and/or Base Management Fee that relates to an investment in the Protected Multi- Strategy Fund by an employee of MPML or of any related body corporate may be rebated by MPML in part or in full to that employee. Changing fees We reserve the right to increase or defer fees, and to charge for other miscellaneous services. Factors which may lead us to vary the fees of the Protected Multi- Strategy Fund (up to the maximum permitted under the Constitution) include legal, economic, policy and procedural changes. The right to vary is at our discretion and this is not an exhaustive list of circumstances which would lead us to vary the fees of the Protected Multi-Strategy Fund. We will give you notice of any change to the current fee and/or the introduction of any additional fee. Fees charged by third party service providers as part of the management costs may be indexed to rise with inflation. We cannot charge fees higher than the maximum fees stated in the Constitution (to change the Constitution this way, we need to have Investors' approval by ordinary resolution). These maximums are: 3.075% (inclusive of the net impact of GST) of the Application Amount with respect to the Placement Incentive Recovery Fee (in the Constitution this fee is referred to as an Application Fee) % (inclusive of the net impact of GST) per annum of the value of assets with respect to the Base Management Fee (in the Constitution this fee is referred to as a Management Fee) % (inclusive of the net impact of GST) of the greater of the unit price at which the Series 2 Units being withdrawn were issued to the Investor or the unit price at which Series 2 Units are withdrawn as a Withdrawal Fee (in the Constitution this fee is referred to as a Redemption Fee). $2, (inclusive of the net impact of GST) as a withdrawal processing fee (in the Constitution this fee is referred to as a Redemption Processing Fee). Please note that this fee is currently not charged by MPML. 20 * MPML reserves the right to extend the Offer Close Date to a date no later than 29 June If the Offer Close Date is extended the Issue Date may be extended by a period not exceeding the extension of the Offer Close Date.

23 Goods and Services Tax (GST) The Protected Multi-Strategy Fund may be required to pay GST included in management and other fees and expenses. However, to the extent permitted by law, MPML will claim on behalf of the Protected Multi- Strategy Fund a proportion (ie 75%) of this GST as a reduced input tax credit. Unless otherwise stated, fees and charges quoted in this PDS are inclusive of GST and take into account any available input tax credits. Fees and charges have generally been calculated on the basis that the fees and charges attract GST but MPML is expected to be entitled to claim reduced input tax credits on behalf of the Protected Multi-Strategy Fund. However, to the extent that fees and charges attract GST but MPML is unable to claim input tax credits on behalf of the Protected Multi-Strategy Fund, amounts paid or payable on account of GST may also form part of the fees and charges that are charged to Investors. DOLLAR FEE EXAMPLES The dollar fee examples below show the effect that the fees would have on your investment. Please note that the fees are deducted from the assets of the Series 2 Portfolio and included unit price and are not additional charges borne by you. The examples assume an investment balance of $20,000. Please note that this example does not include a Protection Fee or a Placement Incentive Recovery Fee. Additionally this example assumes that the Investor has not withdrawn prior to the Surrender Cut-off Date and therefore no Withdrawal Fee is chargeable. EXAMPLE OF BASE MANAGEMENT FEE AND OPERATIONAL COSTS Base Management Fee A worked example of the Base Management Fee and operational costs is set out below and is based on a $20,000 investment in the Protected Multi-Strategy Fund. The example assumes no increase in the unit price of the Protected Multi-Strategy Fund. The ongoing Base Management Fee on your investment is 0.98% p.a. (inclusive of the net impact of GST). For a $20,000 investment the Base Management Fee is $196 each year which is calculated as follows: $20,000 x 0.98% p.a. = $196 The value of the Series 2 Portfolio will also be impacted by fees when it invests in the Multi-Strategy Fund. Although the Multi-Strategy Fund does not charge a base management fee to its Investors, the underlying funds in which the Multi-Strategy Fund invests charge a base management fee of 1.60% p.a. (inclusive of the net impact of GST) to the Multi-Strategy Fund. This means if all of the assets of the Series 2 Portfolio are allocated to the Multi-Strategy Fund the Series 2 Portfolio will be impacted by an additional base management fee for investing in the Multi-Strategy Fund of $320 each year which is calculated as follows:. $20,000 x 1.60% p.a. = $320 This base management fee is in addition to the $196 Base Management Fee noted above. Alternatively, if only a proportion of the assets are invested in the Multi-Strategy Fund, the additional base management fee will be paid in respect of that portion of assets. Operational costs The operational costs on your investment are capped at 0.11% p.a. (inclusive of the net impact of GST). For a $20,000 investment the operational costs is capped at $22 each year which is calculated as follows: $20,000 x 0.11% p.a. = $22 The Series 2 Portfolio will also incur additional operational costs when investing in the Multi-Strategy Fund of up to 0.26% p.a. (inclusive of the net impact of GST). If all of the assets of the Series 2 Portfolio are allocated to the Multi-Strategy Fund the Series 2 Portfolio will be impacted by additional operational costs capped at $52 each year which is calculated as follows: $20,000 x 0.26% p.a. = $52 The funds into which the Multi-Strategy Fund invests will also charge operational costs. The funds into which the Multi-Strategy Fund initially invests have agreed to cap their costs at 0.615% p.a. (inclusive of the net impact of GST). Therefore, the value of the Multi- Strategy Fund s investments in those funds may be reduced by an additional amount of up to $123 each year which is calculated as follows: $20,000 x 0.615% p.a. = $123 Please note that the above example is very simplistic and is included for illustrative purposes only. In practice the fee is based on the Net Asset Value of the Series 2 Portfolio which is likely to fluctuate. 21

24 EXAMPLE OF PLACEMENT INCENTIVE RECOVERY FEE A worked Placement Incentive Recovery Fee example is set out below: The Placement Incentive Recovery Fee example is based on a $20,000 investment using a fee of 1% p.a. (inclusive of GST) until the Surrender Cut-off Date. MPML pays the Placement Incentive Fee of 3% (inclusive of GST) to the adviser directly. This means that MPML pays the adviser $600 upfront. The Placement Incentive Recovery Fee is then calculated monthly and is generally paid monthly out of the assets of the Series 2 Portfolio. The yearly fee would be 1% p.a. (inclusive of GST) of $20,000. $20,000 x 1% p.a. = $200 p.a. EXAMPLE OF PROTECTION FEE The Protection Fee of 0.20% p.a. of the Investor s Capital Protected Amount is payable to Macquarie Bank in advance on or before a Protection Fee Payment Date. Protection Fee Payment Date 30 June 2006 $ June 2007 $ June 2008 $ June 2009 $ June 2010 $ June 2011 $ June 2012 $37.04 Protection Fee for a $20,000 Capital Protected Amount* EXAMPLE OF WITHDRAWAL FEE If you withdraw before the Surrender Cut-off Date (unless your withdrawal results from exercising a cooling off right) you will be charged a Withdrawal Fee. The Withdrawal Fee is one twelfth of 1.00% (inclusive of the net impact of GST) of the unit price of the corresponding Series 2 Units being withdrawn, multiplied by the number of months from the time of withdrawal until the Surrender Cut-off Date. This Withdrawal Fee is deducted from your Withdrawal Proceeds and paid to MPML. If you decide to withdraw your investment in Series 2 Units on 1 July 2007 it would be 24 months from the time of withdrawal until the Surrender Cut-off Date. If you held 20,000 Series 2 Units and the unit price at the time of withdrawal was $1.00, the Withdrawal Fee is $400 which is calculated as follows: 1/12 x 1.00% x $1.00 x 20,000 x 24 = $400 The withdrawal value of your investment would then be $19,600 which is calculated as follows: $20,000 - $400 = $19, *MPML reserves the right to extend the Offer Close Date to a date no later than 29 June If the Offer Close Date is extended the Issue Date may be extended by a period not exceeding the extension of the Offer Close Date.

25 SECTION 6 Terms and Conditions of the Investment TRANSACTING YOUR ACCOUNT Unit Classes MPML may issue different Classes of Units from time to time. MPML previously issued Series 1 Units. Series 2 Units are offered under this PDS. Different Classes of Units may have different rights including as to fees, minimum investments, unit pricing, and the ability to withdraw and terms attaching to them. For example MPML intends to create separate portfolios of Protected Multi-Strategy Fund assets and liabilities for each new Class of Unit which will be dealt with for the benefit of persons holding that Class of Unit. Certain risks are associated with this structure (refer to Additional Classes of Units in section 4 of Part 1of the PDS). The unit price for each Class of Unit within the Protected Multi-Strategy Fund will be determined by reference to the portion of assets and liabilities referable to the relevant Class in accordance with the provisions of the Constitution. Minimum investment amounts The minimum investment in the Protected Multi-Strategy Fund is $20,000 for Series 2 Units. The minimum balance for your investment in the Protected Multi-Strategy Fund is $20,000 for Series 2 Units. How to apply To apply for Series 2 Units you may either: complete an Application Form which accompanies Part 1 of the PDS (this may be done by completing the Application Form attached to this Part 1 of the PDS printed off the Macquarie Newton website); or complete an online Application Form available at macquarie.com/newtonfunds. Applications will be processed only: on receipt of a signed Application Form; or on submission of an online Application Form through macquarie.com/newtonfunds. If you apply by submitting an online Application Form through macquarie.com/newtonfunds, you must pay your Application Amount by direct debit (cheques will not be accepted). If you apply by completing a paper Application Form you must send a completed and signed Application Form to the Macquarie Newton Service Centre whose address is set out in the Directory. You must also pay the Application Amount, which can be paid via a direct debit from your bank account or by cheque. If you choose to pay by direct debit you will need to complete your bank account details in the Application Form for us to process the direct debit. The bank account which you have chosen to have direct debited or draw a cheque from must be held with an Australian financial institution and the bank account must be held in the applicant's name. Cash will not be accepted. How we confirm applications A confirmation of the number of Series 2 Units and the Put Option issued to you will be sent to you within 20 Business Days of the Issue Date. We reserve the right not to accept any application either wholly or in part. We may require additional information before accepting any application. Series 2 Units and Put Options issued are void if application monies paid are not subsequently cleared. No interest will be paid to applicants on any Application Amounts received. While we must pay your Application Amount into a trust account under the Corporations Act, any interest earned on Application Amounts will be applied to the assets of the Series 2 Portfolio. We will refund your Application Amount if your application isn t accepted, but any interest earned on any application money will be applied to the assets of the Series 2 Portfolio. Investors who choose to pay by direct debit will be charged a processing fee if there are insufficient funds for the direct debit to be processed at the time of processing. 23

26 Due date for receipt of your application The due date for the receipt of your completed Application Form and the applicable Application Amount is 23 June 2006*. How to withdraw your investment You can withdraw some or all of your Series 2 Units in the Protected Multi-Strategy Fund at the unit price on the relevant withdrawal date. The withdrawal proceeds are unable to be paid to you by cheque, but rather will be direct credited to your nominated bank account when finalised. To withdraw some or all of your Series 2 Units in the Protected Multi-Strategy Fund you must send us a completed and signed Withdrawal Form in the form included in or accompanying this PDS to the Macquarie Newton Service Centre whose address is set out in the Directory. The due date for the receipt of Withdrawal Forms is 15 Business Days before the end of each month. We may change the due date at our discretion. If you are unsure about a particular due date, the current due dates are available on-line at macquarie.com/newtonfunds or can be obtained by phoning the Macquarie Newton Service Centre on or by ing us at hedgefunds@macquarie.com. Provided we receive your Withdrawal Form by the relevant due date, your withdrawal will generally be effective on the first Business Day of the following month. The minimum withdrawal amount is $10,000. If immediately after your withdrawal of Series 2 Units, the value of your Series 2 Units would be less than $20,000, your withdrawal request will be treated as a request to withdraw your entire investment. Where we are required to withhold an amount under applicable tax laws on a withdrawal, by requesting a withdrawal, you authorise us to deduct an amount from your withdrawal proceeds to cover any outstanding tax liability. On the withdrawal of Series 2 Units by an Investor, the Investor's Capital Protected Amount under a Put Option will be reduced by an amount equal to the percentage withdrawal of their investment. For example if an Investor withdraws 10% of the Investor s total Series 2 Units, then the Investor s Capital Protected Amount will also be reduced by 10%. Dealing with other Macquarie entities or related parties MPML, in respect of the Protected Multi-Strategy Fund, has entered into, or may enter into, the following arrangements with Macquarie Bank and its subsidiaries: the Capital Protection Deed (under which Macquarie Bank and MPML agree the Investment Guidelines); and if the Investment Guidelines require MPML to hold Fixed Interest Investments, those Fixed Interest Investments may be issued or arranged by Macquarie Bank. MPML may enter into further agreements with Macquarie Bank and its subsidiaries provided that such agreements are on commercial terms. Further all dealings between Macquarie Bank and its subsidiaries and MPML must take place on an arm's length basis. Please refer Part 2 of this PDS for further information relating to related party dealings. Cooling Off If you decide that your initial investment in any of the Series 2 Units does not suit your needs, you can request in writing to have it cancelled within a 14 day cooling off period. The cooling off period begins when your transaction confirmation is received by you or five Business Days after your Series 2 Units are issued, whichever is earlier. When calculating the amount to be returned to you, Contribution and Withdrawal Fees are not charged. However, you will bear any fluctuation in the unit price in the period since the date of your application and we may deduct costs and taxes that relate to the exercise of your cooling off right as the Corporations Act allow. Your right to cooling off will not apply if: you are a wholesale client; distributions attributable to your Series 2 Units are reinvested in accordance with your instructions; or you exercise any of your rights as an Investor in Series 2 Units. If you choose to exercise your cooling off right, Macquarie Bank will cancel your Put Option and will refund any Protection Fees you have paid in advance. If you wish to exercise your cooling off rights, please call the Macquarie Newton Service Centre on the number listed in the Directory. 24 *MPML reserves the right to extend the Offer Close Date to a date no later than 29 June If the Offer Close Date is extended the Issue Date may be extended by a period not exceeding the extension of the Offer Close Date.

27 Your right to cooling off is unrelated to, and does not alter, your obligations under any loan agreement you may have entered into for the purpose of acquiring Series 2 Units (including any loan provided by Macquarie Bank). Generally if you terminate a loan agreement early, for example if you choose to exercise your cooling off right and repay your loan, you will be required to pay any break costs under the loan agreement. Break costs are the cost which may be charged by a lender if the relevant loan agreement is terminated early. Break costs should not be penalties. Rather, they should reflect the cost to the lender of having to redeploy funds at a lower rate when interest rates have fallen. Administrator There is no third party appointed as the administrator of the Protected Multi-Strategy Fund. The functions performed by an administrator are currently performed by MPML. Consents Henry Davis York has given and has not before the issue of the PDS withdrawn its written consent to being named as legal advisor in the Directory prior to the issue of this PDS. Henry Davis York takes no responsibility for any part of this PDS and has not authorised or caused the issue of this PDS. Clayton Utz has given and has not before the issue of the PDS withdrawn its written consent for the inclusion in this PDS of the section entitled Taxation for Australian residents in the form and context in which it is included. Except with respect to the section entitled Taxation for Australian residents, Clayton Utz has made no statement included in this PDS or on which a statement made in this PDS is based, and has not caused or authorised the issue of and takes no responsibility for, any part of this PDS. Clayton Utz has given and has not withdrawn its written consent to be named as tax advisor in the Directory prior to the date of this PDS. PricewaterhouseCoopers has given and has not before the issue of the PDS withdrawn its written consent to be named as the auditor in the Directory prior to the date of this PDS. PricewaterhouseCoopers takes no responsibility for any part of this PDS and has not authorised or caused the issue of this PDS. Macquarie Bank has given and has not before the issue of this PDS withdrawn its consent to statements relating to its role as issuer of the Put Option, being included in this PDS in the form and the context in which they are included. Macquarie Bank takes no responsibility for any part of this PDS, except for those statements in relation to the Put Options, and has not authorised or caused the issue of this PDS. 25

28 SECTION 7 Taxation for Australian Residents Taxation issues are complex and taxation laws, their interpretation and associated administrative practices may change over the term of an investment in the Protected Multi-Strategy Fund. MPML does not provide financial or tax advice and this PDS cannot address all of the taxation issues which may be relevant to a particular Investor. Each Investor must take full and sole responsibility for their own investment in the Protected Multi-Strategy Fund, the associated taxation implications arising from that investment and any changes in those taxation implications during the course of that investment. This summary outlines the main Australian income tax implications for Investors who subscribe for Series 2 Units in the Protected Multi-Strategy Fund pursuant to this PDS. The information in this summary is of a general nature only and does not purport to constitute legal or tax advice. As the taxation implications for each potential Investor may be different, MPML recommends that each prospective Investor obtains their own independent professional taxation advice on the full range of taxation implications applicable to their own individual facts and circumstances. Assumptions and qualifications This summary is limited to Investors who will hold their Series 2 Units on capital account and whose dealings are all at arm's length. This summary assumes that: (a) the Investor is an Australian resident for tax purposes; (b) all transactions entered into by the Investor in relation to their Series 2 Units will be at prevailing market prices and otherwise on arm's length terms, in particular the Protection Fee will represent an arm's length price for the Put Option; (c) at all times the trustee of the Protected Multi- Strategy Fund will be an Australian tax resident and the management and control of the Protected Multi- Strategy Fund will be in Australia; (d) the Protected Multi-Strategy Fund will only enter into transactions in respect of the Series 2 Portfolio of the kind described in this PDS and all such transactions will be entered into at prevailing market prices and otherwise on arm's length terms; (e) all investments made by the Protected Multi- Strategy Fund in respect of the Series 2 Portfolio will be denominated in Australian Dollars and will be entered into in Australia with Australian resident counterparties; (f) any Fixed Interest Investment acquired by MPML more than 12 months prior to the Capital Protection Date will have a term of more than 12 months and a return of greater than 1.5% p.a.; (g) all of the distributable income of the Protected Multi-Strategy Fund will be distributed each Financial Year, as is required under the Protected Multi-Strategy Fund Constitution; (h) the distributable income of the Protected Multi- Strategy Fund for any Financial Year: (i) will be a positive amount; or (ii) if a negative amount, will equal or exceed the net income of the Protected Multi-Strategy Fund for tax purposes; (i) the Put Option will be the only "position" held by the Investor, or any associate, in relation to their Series 2 Units and will have a delta in relation to the Series 2 Units of approximately -0.5; and (j) it is not the case that 75% or more of the Units in the Protected Multi-Strategy Fund or any of the funds in which it invests directly or indirectly, are held, directly or indirectly, by 20 or fewer individuals (counting associates as a single entity). This summary is based on Australian taxation laws in force or proposed and administrative practices generally accepted as at the date of this PDS. Any of these may change in the future without notice and legislation introduced to give effect to announcements may contain provisions that are currently not contemplated. Future changes in tax laws, or their interpretation or associated administrative practices, could affect the tax treatment of Investors, the Protected Multi-Strategy Fund or another fund in which it invests. All references to legislative provisions are to provisions of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 (together, the Tax Act). 26

29 Characterisation of the Protected Multi-Strategy Fund The Protected Multi-Strategy Fund will be characterised as a trust for the purposes of the Tax Act and MPML, as trustee of the Protected Multi-Strategy Fund, should not be liable for income tax in respect of the net income of the Protected Multi-Strategy Fund. The Protected Multi-Strategy Fund will be a "fixed trust" which is "widely held" for the purposes of the Tax Act. The net income of the Series 2 Portfolio of the Protected Multi-Strategy Fund It is likely that the assets acquired by the Protected Multi-Strategy Fund for the Series 2 Portfolio will be characterised as capital assets of that fund. The net income of the Protected Multi-Strategy Fund for a Financial Year will be the sum of all amounts that would be assessable income, less all amounts that would be allowable deductions, on the assumption that MPML was an Australian resident taxpayer in respect of such income and deductions. For each Financial Year, the net income of the Series 2 Portfolio of the Protected Multi-Strategy Fund will take into account the following assessable or deductible items: (a) all profits or losses realised as a result of an acquisition and disposal of securities in the Series 2 Portfolio by the Protected Multi-Strategy Fund; (b) all interest income derived by the Series 2 Portfolio of the Protected Multi-Strategy Fund; (c) all distributions paid to the Series 2 Portfolio of the Protected Multi-Strategy Fund by the Multi-Strategy Fund; (d) all franking credits on any frankable distributions flowing indirectly to the Series 2 Portfolio of the Protected Multi-Strategy Fund; (e) in respect of Fixed Interest Investment acquired more than 12 months prior to the Capital Protection Date, if any, amounts included in assessable income under Division 16E on a 6 monthly compounding accruals basis; (f) in respect of other Fixed Interest Investment, if any, amounts included in assessable income or deductions allowed in respect of any profit or loss on redemption or disposal of the Fixed Interest Investment; and (g) all costs, fees and expenses associated with the conduct of the Series 2 Portfolio of the Protected Multi-Strategy Fund 's business, including all fees and other costs specified in Section 5. Where the net income of the Series 2 Portfolio of the Protected Multi-Strategy Fund for any particular Financial Year is a loss, the ability of the Protected Multi-Strategy Fund to deduct that loss in future Financial Years will be affected by the performance of the other Protected Multi-Strategy Fund portfolios. In general terms, the net income of the Protected Multi- Strategy Fund will be determined on a global basis. That is, losses from one series portfolio will offset gains in other series portfolios in determining the net income of the Protected Multi-Strategy Fund. In these circumstances, a loss in respect of the Series 2 Portfolio may not be available and the capital of the Series 2 Portfolio reduced. Similarly, losses in other series of the Protected Multi-Strategy Fund may reduce the total net income of the Protected Multi-Strategy Fund. In these circumstances, Investors will receive a distribution that will not be included in their assessable income in full but which, to the extent that the distribution is not an income amount, will reduce the cost base of their Series 2 Units (or may give rise to a capital gain to the extent that these amounts exceed the Series 2 Unit cost base). Losses of the Protected Multi-Strategy Fund may also be denied as a result of the application of the trust loss provisions. In general terms, these provisions can apply to deny the availability of tax losses where the Protected Multi-Strategy Fund fails the continuity of majority beneficial ownership test or the income injection test. It may be that changes in the membership of the Protected Multi-Strategy Fund result in the Protected Multi-Strategy Fund failing the continuity of majority beneficial ownership test, resulting in a denial of tax losses that would otherwise be available. Proposed amendments - Taxation of Financial Arrangements (TOFA) As they are currently drafted, the proposed legislative changes set out in the TOFA exposure draft legislation should not apply to a financial arrangement that is constituted by an interest in a trust where the trust has issued only one class of interests or where the interest in the trust would be an "equity interest" as defined by the Income Tax Assessment Act 1997 (Cth) if the trust were a company. On this basis, the proposed amendments should not, if they are enacted in their current form, apply to MPML in its capacity as trustee of the Protected Multi-Strategy Fund in relation to its investment in the Multi-Strategy Fund. Similarly, the amendments should not apply to MPML in its capacity as trustee of the Multi-Strategy Fund in relation to its investments in the other funds. The proposed amendments may however apply to the trustee of those funds in which the Multi-Strategy Fund invests (see Part 2 of the PDS) and may also apply to alter the taxation implications of the Fixed Interest Investments. The Explanatory Memorandum to the exposure draft indicates an intention for the proposed changes to apply only to arrangements entered into after the start date for the proposed legislation, but to allow for taxpayers to elect to apply the rules to arrangements existing at that time. We understand that MPML intends to seek specific tax advice in relation to the application of the provisions if they are enacted. 27

30 Taxation of Investors - Series 2 Units Series 2 Units will be a CGT asset of an Investor. Series 2 Units will not be a qualifying or traditional security of the Investor. The cost base of a Series 2 Unit will include the amount paid to acquire the Series 2 Units, including any Distribution Reinvestment applied on the Investor's behalf to acquire further Series 2 Units, together with any incidental costs of acquisition (including any applicable contribution fee). The cost base of a Series 2 Unit may be reduced by the amount of any tax deferred distributions received from the Protected Multi-Strategy Fund (see Taxation of Investors distributions below). The cost base of a Series 2 Unit may also include the cost base of the Investor's Put Option (see "Taxation of Investors - Put Option" below). On disposal or withdrawal of a Series 2 Unit a capital gain or loss will arise to the extent that the disposal proceeds are either greater than or less than the Investor's cost base in the Series 2 Units. The capital proceeds should be reduced by any applicable withdrawal fee. Capital gains derived by Investors who are individuals, trusts or complying superannuation funds may qualify for a reduced rate of tax where the Series 2 Units have been held by the Investor for more than 12 months at the time of disposal or withdrawal. On withdrawal of a Series 2 Unit, part of the withdrawal amount may include an interim or final distribution of distributable income of the Protected Multi-Strategy Fund. In this case the disposal proceeds for the Series 2 Unit would not include the amount of any such distribution and would equal the withdrawal amount less the amount of any such distribution. Taxation of Investors - Put Option The Put Option will be a CGT asset of an Investor. The cost base of the Put Option will include the Protection Fee paid and required to be paid on each Protection Fee Payment Date to acquire the Put Option, together with any incidental costs. Any capital gain or loss arising on exercise of a Put Option will be disregarded. In these circumstances the cost base of the Put Option will be included in the cost base or reduced cost base of the Series 2 Units disposed of. The Investor will derive a capital gain or incur a capital loss in respect of the disposal of the Series 2 Units equal to the difference between the Put Strike and the cost base or reduced cost base (respectively) in the Series 2 Units. The date of disposal of the Series 2 Unit for CGT purposes will be the date of exercise of the Put Option. Capital gains derived by Investors who are individuals, trusts or complying superannuation funds may qualify for a reduced rate of tax where the Series 2 Units been held by the Investor for more than 12 months at the time of disposal. Expiry of a Put Option will give rise to a CGT event at the time of expiry. The Investor will realise a capital gain or loss equal to the difference between the capital proceeds received in respect of the expiry (including the Assessed Value Payment, if any), which may be nil if the Put Option is not in the money at the time of expiry, and the Investor's cost base or reduced cost base in the Put Option at that time. A capital gain derived by an Investor who is an individual, trust or complying superannuation fund may qualify for a reduced rate of tax where the Put Option has been held by the Investor for more than 12 months at the time of expiry. A CGT event may also occur in relation to the Investor's Put Option on disposal of a Series 2 Unit (other than by exercise of the Put Option). Investors should seek independent advice in relation to the taxation consequences of this occurring. Taxation of Investors - distributions Investors who are presently entitled to the distributable income of the Protected Multi-Strategy Fund will be assessable on the net income of the Protected Multi- Strategy Fund in proportion to their entitlements to that distributable income. This amount will be included in the assessable income of the Investor regardless of whether it is paid to the Investor as a Cash Distribution or is reinvested in Series 2 Units under a Distribution Reinvestment. In the event that the distributable income of the Protected Multi-Strategy Fund exceeds the net income of the Protected Multi-Strategy Fund, the amount of the excess (commonly referred to as "tax deferred income") will not be included in the Investor's assessable income. Rather, the Investor's cost base in their Series 2 Units will be reduced by the amount of any such excess, potentially increasing the amount of capital gain derived on ultimate disposal of the Series 2 Units. Where the Investor's cost base is reduced to nil, any further amounts of distributable income received in excess of the net income of the Protected Multi- Strategy Fund will be assessable as a capital gain in the year of receipt. Such capital gains derived by Investors who are individuals, trusts or complying superannuation funds may qualify for a reduced rate of tax where the Series 2 Units have been held for more than 12 months. An Investor is not required to quote their tax file number in relation to their investment in Series 2 Units. However, MPML will be required to withhold tax from any distribution at the highest marginal tax rate plus the Medicare levy (currently 48.5%) if an Investor does not quote their tax file number, their Australian Business Number or does not provide information in relation to any available exemption from quoting their tax file number. 28

31 Taxation of Investors - franking credits Any franking credits flowing indirectly through the Protected Multi-Strategy Fund in a Financial Year will flow indirectly to Investors where the Protected Multi-Strategy Fund has an amount of distributable income for that Financial Year and the amount of that distributable income included in the assessable income of the Investor takes into account the franked distribution. In this case, the Investor will be required to include their share of those franking credits in their assessable income and, if the Investor and the trustee of each intermediate trust are "qualified persons", the Investor will be entitled to a tax offset equal to the amount of franking credits so included. The tax offset will be a refundable tax offset for all Investors except an Investor who is: (a) a corporate tax entity (excluding certain exempt institution or life insurance companies); (b) a non-complying superannuation fund or noncomplying ADF; or (c) a trustee liable to be assessed under section 98 or 99A of the Tax Act. As the Protected Multi-Strategy Fund will be a "widely held trust" for the purposes of the Tax Act, the "qualified person" test will be satisfied by an Investor provided: (a) the Investor satisfies the "at risk" test in respect of their Series 2 Units; and (b) MPML and the trustee of each other intermediate fund satisfy the "at risk" test in respect of the units in the Multi-Strategy Fund and each other intermediate fund and the shares on which the franked dividends are paid. As the Protected Multi-Strategy Fund will be a "widely held trust" for the purposes of the Tax Act (based on assumption (j) above), the "qualified person" test will be satisfied by an Investor where the Investor holds their Series 2 Units for at least 45 days, not including the days of acquisition or disposal of the Series 2 Units or days for which the Series 2 Unit Holder has "materially diminished" their "risks of loss" or "opportunities for gain" in respect of those Series 2 Units. We note that in this regard, the qualified person test is applied in respect of the Series 2 Units themselves, and not on a "look through" basis in respect of the shares held by the fund. Provided the Put Option is the only "position" in relation to the Series 2 Units held by the Investor and their associates (refer assumptions above), the Investor will not be considered to have materially diminished their risks of loss or opportunities for gain in respect of those Series 2 Units and will accordingly qualify for franking benefits which flow through the Protected Multi- Strategy Fund where they hold their Series 2 Units and the Put Option for at least 45 days, not including the days of acquisition and disposal of the Series 2 Units provided that MPML and the trustee of each intermediate trust are also qualified persons in relation to the relevant dividend. Taxation of Investors - foreign income Deductions (other than debt deductions) which relate to the derivation of foreign income will be quarantined into classes and will only be deductible against the class of foreign income to which they relate. Where there is insufficient foreign income in that class, the losses will be carried forward for application against foreign income (if any) in that class in subsequent tax years. All foreign income derived directly or indirectly by the Protected Multi-Strategy Fund will be grossed up for the amount of any foreign tax paid or deemed to have been paid by MPML in relation to that class of foreign income. Investors will be entitled to a foreign tax credit to the extent that Australian tax is payable by the Investor on their share of the class of net foreign income to which the foreign tax relates. The Federal Government announced in May 2005 proposals to abolish the quarantining of foreign losses and foreign tax credits into classes, applicable for tax years commencing following the Royal Assent of enacting legislation. Accordingly, this quarantining treatment may not apply to the extent the proposals are enacted in the terms announced. Interest deductibility Interest incurred by an Investor on funds borrowed to acquire their Series 2 Units should be deductible to the Investor to the extent it is incurred for the purpose of deriving assessable income from an investment in the Protected Multi-Strategy Fund. On the basis that the capital protection provided is by the Put Option and the Protection Fee represents an arm's length price for that capital protection, no part of any interest incurred under a full recourse loan should be denied deductibility under the proposed capital protection amendments if those proposed amendments are enacted in the terms announced on 16 April Interest prepaid by an Investor on funds borrowed to acquire Series 2 Units in the Protected Multi-Strategy Fund will be deductible in the income year of payment if: (a) the Protected Multi-Strategy Fund has 300 or more beneficiaries; (b) the interest relates to a period of 12 months or less which ends in the next income year; and (c) the Investor is either a STS taxpayer or is an individual who incurs the interest otherwise than in the course of carrying on a business. Prepaid interest of less than $1,000 will also be deductible in the income year of payment. In all other circumstances, interest deductibility will be apportioned on a straight line basis over the period to which the interest relates. 29

32 Proposed amendments Taxation of Financial Arrangements As they are currently drafted, the proposed legislative changes set out in the TOFA exposure draft legislation should not apply to a financial arrangement that is constituted by an interest in a trust where the trust has issued only one class of interests or where the interest in the trust would be an "equity interest" as defined by the Tax Act if the trust were a company. On this basis, the proposed amendments should not, if they are enacted in their current form, apply to Investors in relation to their Series 2 Units. The proposed amendments may however affect the calculation of the net income derived by the various funds which the Protected Multi-Strategy Fund (indirectly) invests in, which would in turn affect each Investor's share of the net income of the Protected Multi-Strategy Fund. The proposed amendments may also affect the taxation treatment of the Put Option and any loan applied by an Investor to acquire Series 2 Units. The Explanatory Memorandum to the exposure draft indicates an intention for the proposed changes to apply only to arrangements entered into after the start date for the proposed legislation, but to allow for taxpayers to elect to apply the rules to arrangements existing at that time. Prospective investors should however seek their own tax advice in relation to the potential application of the TOFA proposals in light of their own individual facts and circumstances. Part IVA Part IVA of the Tax Act contains general anti-avoidance provisions which are capable of broad application and should be considered carefully in relation to any investment decision. In general terms, Part IVA may apply to schemes where a taxpayer obtains a "tax benefit" (in the form of the availability of tax deductions or non-inclusion of assessable income) as a consequence of entering into or carrying out the scheme, whether devised by the taxpayer or by somebody else, and the dominant purpose of one or more of the parties who entered into or carried out the scheme was to secure the obtaining of the tax benefit for the taxpayer. In addition, for schemes directed towards the obtaining of a "franking tax benefit", the provisions can apply not only where the sole or dominant purpose of the scheme is to obtain the franking tax benefit, but also where a purpose (not being an incidental purpose) of entering into the scheme was to enable the taxpayer to obtain the franking tax benefit. The application of Part IVA to any particular taxpayer can only be conclusively determined in light of all of the evidence as to that taxpayer's individual facts and circumstances. Investors should therefore seek their own independent professional advice on the potential for Part IVA to be applied to them on the basis of their own individual facts and circumstances. One possible set of circumstances which may attract the application of Part IVA would be where an Investor's commercial objectives could be achieved via some other means which did not involve the obtaining of a tax benefit yet the taxpayer chose to enter into the Protected Multi-Strategy Fund arrangements and, objectively, it would be concluded that the sole or dominant purpose of doing so was to obtain the tax benefit made available by the investment in the Protected Multi-Strategy Fund. Stamp duty Under current law, for so long as the unit register for the Protected Multi-Strategy Fund is and remains in Victoria and the cash or cash equivalent part of the Multi- Strategy Component is not situated in Queensland or Western Australia for stamp duty purposes, any acquisition or withdrawal of Series 2 Units and the grant and any exercise of the Capital Protection Put Option will not be liable to stamp duty. GST No GST should be payable in respect of the subscription, acquisition or withdrawal of Series 2 Units, nor in respect of any distributions paid in respect of Series 2 Units. GST may apply to fees charged to Investors. Investors should obtain their own advice as to whether an input tax credit is available for any such GST, as it will depend on their personal circumstances. Where GST applies to fees which are charged to the Protected Multi-Strategy Fund and recoverable from the Protected Multi-Strategy Fund 's assets, those fees plus any applicable GST may be recovered from the assets of the Protected Multi-Strategy Fund. However, the Protected Multi-Strategy Fund may be entitled to claim input tax credits or reduced input tax credits for that GST, depending on the precise nature of the fee. Where the Protected Multi-Strategy Fund is so entitled, the amount to be recovered from the assets of the Protected Multi-Strategy Fund will be reduced by the amount of that input tax credit or reduced input tax credit (as the case may be). Other events and circumstances There may be other events and circumstances relating to an investment in the Protected Multi-Strategy Fund that give rise to tax implications that are not discussed in this summary. Investors should seek their own independent tax advice in respect of such events and circumstances. 30

33 31

34 Glossary of Terms Aggregate Capital Protected Amount means the total of all Investors Capital Protected Amounts. Application Amount means the monies paid under an Application Form for Series 2 Units in the Protected Multi-Strategy Fund. Application Form means the application form for Series 2 Units included in or accompanying Part 1 of this PDS. Assessed Value Payment means a payment from Macquarie Bank to an Investor who has not exercised the Put Option, and whose Put Option has not lapsed (other than as a result of the Investor failing to exercise the Put Option), for an amount equal to the greater of zero and 95% of the following amount: the Investor s Capital Protected Amount less the Withdrawal Proceeds. ASIC means the Australian Securities and Investments Commission. Business Day means a day other than a Saturday or Sunday on which Australian banks are open for general banking business in Sydney. Buy Trigger means a curve based on the Knockout Curve used in Threshold Management which is set only after a Sell Trigger has previously been breached. If a Buy Trigger is surpassed, a certain amount of Fixed Interest Investments within the Series 2 Portfolio will be switched to the Multi-Strategy Component. Capital Protected Amount means an amount equal to the Investor s Application Amount, as adjusted from time to time for withdrawals and transfers and in respect of Series 2 Units acquired by an Investor pursuant to a transfer prior to the Exercise Date, an amount calculated in accordance with the methodology as described in the Put Option Agreement as adjusted from time to time for withdrawals and transfers. For example assume an Investor invests $100,000 and is issued 100,000 Series 2 Units. The Investor s Capital Protected Amount is $100,000 on the Issue Date. If the investor withdraws 10% of his total Series 2 Units the Investor s Capital Protected Amount will be reduced by 10% to $90,000. Capital Protection means the right of an Investor under the Put Option to sell his or her Series 2 Units in the Protected Multi-Strategy Fund to Macquarie Bank on the Capital Protection Date for the Investor s Capital Protected Amount. Capital Protection Date means 3 June If the Offer Close Date is extended, the Capital Protection Date may be extended accordingly. Capital Protection Date Notice Option means that part of the Application Form under which an Investor may give a revocable notice: to MPML to withdraw an Investor s Series 2 Units; and to Macquarie Bank to exercise the Put Option under clause 3(a) of the Put Option Agreement if on the Capital Protection Date the Capital Protected Amount is greater than the value of the Investor s Series 2 Units. The Capital Protection Date Notice Option will take effect only on, and will be revocable at any time prior to, the Exercise Date. Capital Protection Deed means the deed between MPML and Macquarie Bank outlining the terms and conditions under which Macquarie Bank will offer Capital Protection to Investors. Cash Distribution means that part of a distribution to Investors made in cash. Class means a class of units in the Protected Multi- Strategy Fund. As at the date of this PDS, MPML has issued Series 1 and under this PDS MPML invites Investors to acquire Series 2 Units. Constitution means the Constitution of the Protected Multi-Strategy Fund. Corporations Act means the Corporations Act 2001 (Cth). cum distribution means the Series 2 Unit price prior to a distribution being declared. Distribution Reinvestment means that part of a distribution to Investors that is compulsorily reinvested into additional Series 2 Units. 32

35 ex distribution means the Series 2 Unit price following a distribution being declared. Exercise Date means 1 December Financial Year means the financial year of the Protected Multi-Strategy Fund. Fixed Interest Investments means fixed term deposits and fixed interest securities that mature at the Capital Protection Date. These instruments may or may not be issued by authorised deposit-taking institutions. GST means goods and services tax. Investment Guidelines means a set of guidelines contained in the Capital Protection Deed that apply to the allocation of assets within the Series 2 Portfolio until the Capital Protection Date. These may only be amended with the agreement of MPML and Macquarie Bank Investor means a registered holder of Series 2 Units in the Protected Multi-Strategy Fund. Issue Date means 30 June 2006 or if the Offer Close Date is extended, this date may be extended by MPML by a similar period not exceeding the extension of the Offer Close Date. Investment Manager means Macquarie Newton Specialist Funds Management Limited ABN and AFSL Knockout Curve means a curve used in Threshold Management that represents the growth over time of an amount which, if invested in appropriately dated Fixed Interest Investments, would deliver on the Capital Protection Date the prevailing Aggregate Capital Protected Amount, adjusted for any Fixed Interest Investments held, the Placement Incentive Fee and liabilities. Loan Agreement means a loan agreement entered into between the Investor and Macquarie Bank providing the Investor with a loan facility with the primary purpose of acquiring Series 2 Units. Macquarie Bank means Macquarie Bank Limited ABN and AFSL No Macquarie Bank Group means Macquarie Bank and its related bodies corporate (as defined in the Corporations Act). Macquarie Newton Specialist Funds means the Funds as that term is defined in Part 2 of the PDS. Market Interest Rates means the equivalent annualised zero coupon rate for the relevant period determined in good faith having reference to the relevant market rates including the overnight rate, bank bill futures, swap spreads and bond futures. MPML, we or us means Macquarie Portfolio Management Limited ABN and AFSL in its capacity as responsible entity of the Protected Multi-Strategy Fund. Multi-Strategy Component means the Series 2 Portfolio that is not invested in Fixed Interest Investments (The Multi-Strategy Component will be invested in a combination of units in the Multi-Strategy Fund and cash). Multi-Strategy Fund means the Macquarie Newton Multi-Strategy Fund ARSN described in more detail in Part 2 of this PDS. Net Asset Value or NAV means in respect of a Class, the total value of all Protected Multi-Strategy Fund assets referable to the Class of Units less the total amount of all Protected Multi-Strategy Fund liabilities referable to that same Class of Units determined in accordance with Australian accounting principles. Offer Close Date means 23 June 2006, being the date on which MPML will close the offer of Series 2 Units in the Protected Multi-Strategy Fund. MPML reserves the right to extend the offer period to a date no later than 29 June If the Offer Close Date is extended, the Issue Date, Surrender Cut-off Date, Exercise Date and the Capital Protection Date may be extended by a period not exceeding the extension to the Offer Close Date. Offer Open Date means 24 April Part 2 of the PDS means the document entitled "Macquarie Newton Specialist Funds The New Alternative. PDS means Product Disclosure Statement. Placement Incentive Fee means an up-front placement incentive paid by MPML to financial advisers (or if none, is kept by MPML) out of its own resources. Placement Incentive Recovery Fee means a fee paid to MPML out of the assets of the Protected Multi- Strategy Fund in consideration for paying the Placement Incentive Fee. Protected Multi-Strategy Fund means the Macquarie Newton Multi-Strategy Fund - Capital Protected ARSN Protection Fee means the fee paid by the Investor directly to Macquarie Bank in advance on or before the Protection Fee Payment Date at the rate of 0.20% p.a. of an Investor s Capital Protected Amount. Protection Fee Payment Date means the Issue Date and each 30 June from 30 June 2007 to 30 June 2012 inclusive. 33

36 Put Option means a put option in respect of Series 2 Units acquired by an Investor from Macquarie Bank under the Put Option Agreement. Put Option Agreement means the agreement to be entered into between Macquarie Bank and the Investor substantially in the form contained in Part 1 of the PDS. Put Property means the Series 2 Units held by the Investor on the Settlement Date. Sell Trigger means a curve based on the Knockout Curve used in Threshold Management which, if breached by the level of allocation to the Multi-Strategy Component, would result in a partial or full reallocation within the Series 2 Portfolio from the Multi-Strategy Component to Fixed Interest Investments. Series 1 Units means fully paid Series 1 Units in the Protected Multi-Strategy Fund offered under the PDS dated 20 October Series 2 Investors means a registered holder of Series 2 Units in the Protected Multi-Strategy Fund. Series 2 Portfolio means the assets and liabilities of the Protected Multi-Strategy Fund referable to Series 2 Units as determined by MPML. Establishing the Series 2 Portfolio assists MPML in dealing with, and accounting for, the assets and liabilities referable to Series 2 Units separately from those of any existing or future Classes of Units (see page 15). The Series 2 Portfolio will be dealt with, and accounted for, in accordance with the Constitution and otherwise as described in this PDS. Series 2 Units mean fully paid Series 2 Units in the Protected Multi-Strategy Fund offered under this PDS. Settlement Date means the Capital Protection Date. Surrender Cut-off Date means 1 July 2009 or if the Offer Close Date is extended by MPML, this date may be extended by a similar period not exceeding the extension of the Offer Close Date. Threshold Management means an investment allocation technique used to manage the investments of the Series 2 Portfolio until the Capital Protection Date. Unit means a unit in the Protected Multi-Strategy fund, and, where relevant, of a particular Class. Withdrawal Fee means a fee paid to MPML for withdrawals before the Surrender Cut-off Date. Withdrawal Form means the form for withdrawal of Series 2 Units included in or accompanying this PDS. Withdrawal Proceeds means the aggregate amount payable to an Investor by MPML when the Put Property is withdrawn. 34

37 Put Option Agreement PUT OPTION AGREEMENT BETWEEN THE INVESTOR AND MACQUARIE BANK LIMITED (ACN ) of Level 15, 1 Martin Place, Sydney NSW 2000 RECITAL This Put Option Agreement records the terms agreed between Macquarie, which has signed this agreement and the Investor who has accepted the terms by signing an Application Form or entering into a Deed of Novation. OPERATIVE PART 1 Grant of Put Option Subject to Series 2 Units being issued to the Investor by the Responsible Entity, for the consideration specified in clause 2, Macquarie irrevocably offers to buy from the Investor the Put Property for the Put Strike on the Settlement Date. 2 Payment of the Protection Fee As consideration for the offer granted in clause 1 and the obligation to make the Assessed Value Payment under clause 8, the Investor must pay the Protection Fee to Macquarie. The Protection Fee is payable in advance on or before each Protection Fee Payment Date. 3 Exercise of Put Option (a) The Investor may only accept the offer granted in clause 1 by: (i) giving written notice of such acceptance to Macquarie on or before the Exercise Date; and (ii) delivering to Macquarie on the Settlement Date a valid transfer of the Put Property duly executed by it and such evidence as Macquarie may reasonably require that the Investor has the unencumbered legal and beneficial title to the Put Property (other than a security interest created pursuant to the Investor s Loan Agreement (if any)). (b) For the purpose of clause 3(a), the Investor may provide a notice to Macquarie by completing the Capital Protection Date Notice Option. (c) Subject to clause 3(d) any notice given by an Investor under clause 3(a) shall be valid only if on the Capital Protection Date the Capital Protected Amount is greater than the aggregate value of the Investor s Series 2 Units. (d) If an Investor gives notice for the purpose of clause 3(a) by completing the Capital Protection Date Notice Option, the notice will be valid only if on the Capital Protection Date the Capital Protected Amount is greater than the aggregate value of the Investor s Series 2 Units. (e) Any notice given by an Investor under clause 3(a) will become irrevocable on the Exercise Date. 4 Lapse of Put Option The Put Option will, at Macquarie s discretion, lapse on the earlier of: (a) the day after the Capital Protection Date if the notice referred to in clause 3(a)(i) has not been received by Macquarie; (b) any date that the Investor ceases to hold Put Property; (c) on the Settlement Date if the Put Property is encumbered other than under the Loan Agreement (if any) or if Macquarie does not receive such evidence as may be required by it under clause 3(a)(ii), (d) 10 Business Days after the date on which Macquarie gave notice to the Investor that the Investor failed to pay the Protection Fee on or prior to a Protection Fee Payment Date, if the Investor has not paid the relevant Protection Fee prior to or within those 10 Business Days; (e) the date on which an event of default occurs under the Investor s Loan Agreement (if any); (f) the date on which Macquarie determines that the Investor has failed to comply with or perform any of its obligations under this agreement; (g) the date on which MPML ceases to be the responsible entity of the Fund unless Macquarie has given its prior written consent to the replacement responsible entity; (h) the date on which Macquarie determines that the Responsible Entity has breached the Investment Guidelines of the Fund; or (i) the date on which Macquarie determines that the Open Ended Fund has not complied with the permitted fund concentrations agreed with the Responsible Entity. 35

38 If an Investor s Put Option lapses in accordance with this clause 4: (j) each of the Investor and Macquarie shall have no further rights against and/or obligations to the other party in connection with the Put Option; (k) such lapse will be deemed to be an event of default for the purposes of the Loan Agreement (if any); and (l) Macquarie will notify the Investor of the lapse of the Put Option (unless the lapse occurs under clause 4(b)) 5 Formation of contract and consequence of exercise of put option (a) Upon acceptance in accordance with clause 3 of the offer granted in clause 1, a contract arises between the Investor and Macquarie under which the Investor must sell to Macquarie and Macquarie must acquire from the Investor the Put Property for the Put Strike on the Settlement Date. (b) Upon acceptance in accordance with clause 3 of the offer granted in clause 1 and at all times prior to the Settlement Date the Investor must exercise its rights as the holder of the Put Property as directed by Macquarie (including, without limitation, requesting Redemption of the Put Property) and not otherwise. (c) On the Settlement Date the Investor must deal with the Put Property as directed by Macquarie (including, without limitation, transferring the Put Property to Macquarie s nominee). (d) On or before the Settlement Date (but after the Exercise Date), Macquarie will lodge a Redemption request with the Responsible Entity of the Fund in respect of the Put Property. (e) On the Payment Date, subject to compliance by the Investor with clause 5(b) and (c) and without limiting clause 5(f), Macquarie must pay to the Investor the Put Strike. (f) Macquarie may hold any amounts payable to the Investor under this agreement as security under the Investor s Loan Agreement (if any) and set off any amounts payable by the Investor to Macquarie (including under the Investor s Loan Agreement (if any)) against the Put Strike or the Assessed Value Payment payable by Macquarie to the Investor. 6 Power of Attorney The Investor directs and appoints Macquarie and each of its officers, employees, agents and solicitors severally as its attorney to execute the transfer referred to in clause 3(a)(ii) and any other document, agreement or certificate which Macquarie considers reasonably necessary to give effect to the terms of this agreement or the exercise of the Put Option, including in particular, lodging a redemption request under clause 5(d). 7 Withdrawal, Distribution Reinvestment or Transfer of Units If the Put Property of the Investor is subject to Redemption, reinvestment of distribution or transfer before the Settlement Date: (a) the Put Property becomes all the Investor s Series 2 Units in the Fund after the Redemption, reinvestment of distribution or transfer; (b) on a Redemption or transfer of Put Property, the Capital Protected Amount of an Investor is adjusted as follows CPA (new) = Series 2 Units after the Redemption or transfer CPA (new) =CPA (old) x CPA (old) x Series 2 Units before the Redemption or transfer CPA (new) means the Capital Protected Amount of the Investor immediately after the Redemption or transfer; CPA (old) means the Capital Protected Amount of the Investor immediately before the Redemption or transfer. For the avoidance of doubt a reinvestment of distribution will not result in an adjustment to the Capital Protected Amount. (c) any Protection Fee in respect of the difference between the CPA (old) and the CPA (new) paid in advance is forfeited. (d) If an Investor (the transferee) acquires Series 2 Units prior to the Exercise Date pursuant to a transfer and has signed a Deed of Novation the transferee's Capital Protected Amount on the transfer date equals Series 2 Units that the transferee has acquired CPA (old) = Series 2 Units held by the transferor prior to the transfer Where CPA (old) means the Capital Protected Amount of the transferor immediately prior to the transfer. 8 Assessed Value Payment (a) On the Settlement Date, if: (i) the Put Option has not been exercised under clause 3(a); (ii) the Put Option has not lapsed under clause 4 (other than as a result of clause 4(a)), and (iii) the Put Strike is greater than the Redemption Proceeds, Macquarie agrees to pay the Assessed Value Payment on the Payment Date. (b) The payment of the Assessed Value Payment does not give rise to any obligation to transfer any of the Put Property from the Investor to Macquarie: 36

39 9 Representations and Warranties of the Investor (a) The Investor represents and warrants to Macquarie that: (i) it obtains various benefits by entering into, exercising its rights and performing its obligations under this agreement; (ii) it is able to pay its debts as and when they become due and payable; (iii) its obligations under this agreement are valid and binding and are enforceable against the Investor in accordance with their terms; (iv) unless stated in the Application Form, the Investor does not enter this agreement as a trustee of a trust; (v) in the case of an Investor who is a corporation: (A) the Investor has been incorporated in accordance with the laws of its place of incorporation, is validly existing under those laws and has power and authority to carry on its business as it is now being conducted; (B) the Investor has power to enter into this agreement and comply with its obligations under it; (C) this agreement does not contravene the Investor s constituent documents (if any) or any law or obligation by which it is bound or to which any of its assets are subject or cause a limitation on its powers or the powers of its directors to be exceeded; (D) the Investor has in full force and effect the authorisations necessary for it to enter into this agreement, comply with its obligations and exercise its rights under it and to allow it to be enforced; (E) no person has contravened or will contravene section 208 or section 209 of the Corporations Act or any other law by entering into this agreement or participating in any transaction in connection with this agreement; (F) there is no pending or threatened proceeding affecting the Investor or its Related Bodies Corporate or any of their assets before a court, governmental agency, commission or arbitrator except those in which a decision against the Investor or the Related Body Corporate would be insignificant; (G) neither the Investor nor any of its Related Bodies Corporate is in breach of a law or obligation affecting any of them or their assets in a way which is likely to be a Material Adverse Change; and (H) neither the Investor nor any of its Related Bodies Corporate has immunity from the jurisdiction of a court or from legal process; and (vi) in the case of an Investor who submits an Application Form in its capacity as trustee of a trust: (A) it is the sole trustee of the trust; (B) the trust is properly established under its trust deed and is validly subsisting; (C) as trustee, it has the power to perform all of its obligations under this agreement and carry on the business or make the investments contemplated by entering into this agreement; (D) it is not in breach of trust; (E) it has the right to be fully indemnified out of the trust assets for obligations incurred under this agreement before the claims of beneficiaries and that this right of indemnity has not been limited in any way; (F) no property of the trust has been resettled or set aside in any way; and (G) this agreement is for the benefit of the trust. An Investor who enters into this agreement in its capacity as the trustee of a trust makes the representations and warranties under this sub clause in its capacity as trustee of the trust and in its personal capacity. (b) The Investor acknowledges that Macquarie has entered into this agreement in reliance on the representations and warranties in this clause. 10 Notices (a) All notices and other communications required by this agreement to be in writing shall be given by the relevant party and shall be sent to the recipient by hand, prepaid post (airmail if outside Australia), facsimile or by Electronic Communication. (b) A notice or other communication shall be deemed to be duly received: (i) if sent by hand, when left at the address of the recipient; (ii) if sent by prepaid post, 5 days after the date of posting; (iii) if sent by facsimile, upon receipt by the sender of an acknowledgement or transmission report generated by the machine from which the facsimile was sent indicating that the facsimile was sent in its entirety to the recipient s facsimile number; (iv) if sent by Electronic Communication, either: (A) upon receipt by the sender of an acknowledgement or transmission report generated by the device from which the Electronic Communication was sent indicating that the Electronic Communication was sent in its entirety to the recipient; or (B) four hours after the time sent (as recorded on the device from which the sender sent the Electronic Communication) unless the sender receives an automated message that the Electronic Communication has not been delivered, whichever happens first. 37

40 A communication sent by Electronic Communication must state the first and last name of the sender and the Electronic Communication is taken to be signed by the named sender. (c) Macquarie may also give a communication to the Investor by making it available at Macquarie s website for the investor s retrieval by Electronic Communication, on condition that Macquarie notifies you by Electronic Communication that the communication is available for your retrieval. A communication we make available for your retrieval is deemed to be duly received when the Electronic Communication Macquarie sends to notify the Investor of the availability of the communication for retrieval is deemed to be received under this clause. All notices and other communications shall be sent to the address of the respective parties as set out in the Application Form or as a party may notify to the other party in writing. 11 Assignment (a) The Investor shall not assign or otherwise transfer the benefit of this agreement or any of its respective rights, remedies, powers, duties or obligations under this agreement without the prior written consent of Macquarie. (b) Macquarie may assign or transfer all or any part of the benefit of this agreement and any of its rights, remedies, powers, duties and obligations under this agreement without the consent of the Investor. (c) Macquarie may disclose to a potential assignee or transferee such information about the Investor and this agreement as Macquarie considers appropriate. 12 Miscellaneous (a) The Investor irrevocably appoints Macquarie and each of its officers, employees, agents and solicitors severally as its attorney to do (either in the name of the Investor or the attorney) all acts and things that the Investor is obliged to do under this agreement. (b) The Investor shall upon demand pay or reimburse Macquarie for all costs, charges, and expenses (including stamp duty, any tax on goods and services, value added tax, registration fees and legal fees, if any) incurred or payable by Macquarie under this agreement and the contemplated or actual enforcement of, or preservation of rights under, this agreement. (c) The failure or delay of Macquarie in exercising any right under this agreement will not operate as a waiver of any right and the exercise of a single right or partial exercise of any right by Macquarie under this agreement will not prevent Macquarie from further exercising that right or exercising any other right. The rights of Macquarie under this agreement are cumulative and are not exclusive of any other rights provided by law. A waiver by Macquarie shall only be effective if it is in writing signed by an officer of Macquarie. (d) Any provision of this agreement which is or becomes prohibited or unenforceable in any jurisdiction shall be severed from this agreement only in respect of that jurisdiction. (e) If the performance by Macquarie of any of its obligations under this agreement or related arrangements is prevented or delayed in whole or in part due to any circumstance which Macquarie is unable to control, this agreement will nevertheless continue and remain in full force and effect but Macquarie will not be in default under this agreement or otherwise liable for any loss, cost, expense or damage suffered by the Investor for that reason only and Macquarie will be granted a reasonable extension of time to complete performance of its affected obligations. (f) Macquarie shall not be responsible for any loss, cost, expense or damage suffered by the Investor as a result of Macquarie acting in accordance with any request or direction from the Investor (or of not acting), or of not acting promptly, in accordance with any such request or direction. (g) This agreement shall be governed by and construed in accordance with the laws of NSW. The parties irrevocably and unconditionally submit to the nonexclusive jurisdiction of the courts of the NSW. (h) If the day on which any act, matter or thing is to be done under or pursuant to this agreement is not a Business Day, that act, matter or thing will be done on the following Business Day or if that Business Day is in another calendar month, on the previous Business Day. (i) All monies payable by the Investor under this agreement shall be paid in full without set off or counterclaim of any kind and free and clear of deduction or withholding of any kind. (j) Time shall be of the essence in respect of each and all of the obligations of the Investor under this agreement. 38

41 13 INTERPRETATION (a) In this agreement, unless the context requires otherwise: Application Amount means the monies paid under an Application Form for Series 2 Units; Application Form means the application form for Series 2 Units included in or accompanying the PDS for the Fund; Assessed Value Payment means a payment from Macquarie to the Investor of an amount equal to: 95% x the greater of: (i) 0; and (ii) Put Strike Redemption Proceeds; Business Day means a day other than a Saturday or Sunday on which banks are open for general banking business in Sydney; Capital Protected Amount means: (i) in respect of Series 2 Units acquired by an Investor completing an Application Form, an amount equal to the Investor's Application Amount, as adjusted from time to time for Redemptions and transfers; and (ii) in respect of Series 2 Units acquired by an Investor pursuant to a transfer prior to the Exercise Date, an amount calculated in accordance with clause 7(d) as adjusted from time to time for Redemptions and transfers; Capital Protection Date means 3 June 2013; Capital Protection Date Notice Option means that part of the Application Form under which an Investor may give a revocable notice to Macquarie under clause 3(a); Capital Protection Deed means a deed so named dated on or around 18 April 2006 between Macquarie and the Responsible Entity; Corporations Act means the Corporations Act 2001 (Cth); Deed of Novation means a deed in a form acceptable for Macquarie whereby the rights and obligations of the Investor under this agreement are transferred to and acquired by a transferee of the Series 2 Units of the Investor; Electronic Communication means a communication of information in the form of data, text or images by means of guided or unguided electromagnetic energy, or both. Electronic Communications include s; Exercise Date means 1 December 2012; Fund means the Macquarie Newton Multi-Strategy Fund Capital Protected ARSN ; Investment Guidelines means the rules agreed from time to time between Macquarie and the Responsible Entity and expressed in the Capital Protection Deed according to which the Responsible Entity agrees to manage the assets and liabilities of the Fund that are attributable to the Series 2 Units; Investor means the holder of Series 2 Units to which this Put Option relates and whose Put Option has not lapsed pursuant to clause 4; Loan Agreement means a loan agreement entered into between the Investor and Macquarie providing the Investor with a loan facility with the primary purpose of acquiring Series 2 Units; Macquarie means Macquarie Bank Limited ABN , the issuer of the Put Option; Material Adverse Change means a change which, in Macquarie s opinion, has a material adverse effect on either the Investor s assets, revenue or financial condition, or its ability to perform its obligations under this agreement; MPML means Macquarie Portfolio Management Limited ABN ; Open Ended Fund means the Macquarie Newton Multi-Strategy Fund (ARSN ); Payment Date means the Business Day following the date upon which Macquarie receives the Redemption Proceeds in cleared funds from the Responsible Entity; PDS means the Product Disclosure Statement for the Series 2 Units; Protection Fee means a fee calculated at the rate of 0.20% per annum of the Investor's Capital Protected Amount and payable to Macquarie on or before the relevant Protection Fee Payment Date; Protection Fee Payment Date means the date the Series 2 Units are issued to the Investors by the Responsible Entity under the PDS and each 30 June from 30 June 2007 to 30 June 2012 inclusive; Put Option means the option granted under clause 1. Put Property means the Series 2 Units held by the Investor on the Settlement Date. Put Strike means an amount equal to the Investor's Capital Protected Amount; 39

42 Redemption means a redemption of the Series 2 Units in accordance with the PDS; Redemption Proceeds means the aggregate amount payable to an Investor by the Responsible Entity when the Put Property is redeemed; Related Bodies Corporate has the same meaning as Corporations Act; Responsible Entity means MPML or a replacement responsible entity of the Fund accepted by Macquarie; Series 2 Units means the fully paid series 2 units in the Fund; Series 2 Portfolio means the assets and liabilities of the Fund referable to Series 2 Units as determined by MPML; Settlement means settlement of transfer of the Put Property pursuant to the contract under clause 5; and Settlement Date means the Capital Protection Date. (b) In this agreement, unless the context otherwise requires: (i) words importing the singular include the plural and vice versa; (ii) references to a person include any type of entity or body of persons whether or not it is incorporated or has a separate legal entity; (iii) references to an agreement or document (including, without limitation, a reference to this agreement) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this agreement or that other agreement or document; and (iv) references to any party to this agreement include references to its respective successors and permitted assigns. (c) Unless specified otherwise in this agreement, Macquarie s discretion under or in connection with this agreement, may be made or exercised in Macquarie s absolute discretion. (d) In this agreement, where the Investor comprises two persons: (i) an obligation of those persons is joint and several; (ii) a right of those persons is held by each of them severally; and (iii) a reference to the Investor is a reference to each of those persons separately, so that (for example) a representation, warranty or undertaking is given by each of them separately. (e) If an Investor submits more than one Application Form: (i) the Investor and Macquarie must enter into a separate agreement in relation to each Application Form; and (ii) each separate agreement will relate to one Application Form. 40

43 EXECUTED in Sydney, SIGNED for MACQUARIE BANK LIMITED by its duly appointed attorneys: Signature of attorney Signature of witness Name Name Signature of attorney Name 41

44 How to complete the Application Form WHO CAN INVEST IN THE FUND? You may only apply Series 2 Units and a Put Option if you are: an individual 18 years or over; a company; an incorporated body; or a trustee or nominee of another entity, such as a family trust, superannuation fund or Indirect Investment Service operator. A trust is not permitted to apply for Series 2 Units and a Put Option. A trust conducts all of its legal activities through its trustee and it is the trustee who must apply. MPML may require you to provide other supporting documentation before processing your application. MPML may also reject or accept an application for any reason in its sole discretion. Addresses We have included a space for you to complete your address on the Application Form. You must specify your residential address (or registered office address, if you are company, trust partnership, or other nonindividual investor). Individual and joint accounts The individual(s) who appear in sections 1.2 and 1.3 of the Application Form should sign. Joint applicants will be deemed to be joint tenants. Company or corporate trustee applicants Company or corporate trustee applications must be signed under seal or by: two directors or a director and secretary on behalf of the company or corporate trustee by authority of the directors; or the sole director (if applicable) unless the company's or corporate trustee s constituent documents or trust deed specify otherwise. If this is the case, please attach a certified copy of the relevant constituent documents or trust deed. This requirement does not apply to sole directors. Incorporated associations must sign under seal and attach a certified copy of the association's certificate of incorporation. Power of attorney If you are applying under a power of attorney, please attach a certified copy of the power of attorney and specimen signature(s) of all attorneys. If your mailing address is care of a third party such as your adviser, please be aware that all correspondence will be sent to this address. Other instructions on paper form Applications Forms The following information is only relevant if you complete a paper form of the Application Form. Further instructions regarding completing an online Application Form will be provided as you complete that form online. Who should sign the Application Form? The signatory section is in section 9 of the Application Form. 42

45 Financial advisers' stamps If a licensed financial adviser's stamp appears on the Application Form we may pay them a Placement Incentive Fee (see "Fees and expenses" - pages 18-22). We will also supply them with information about the account unless you instruct us not to do so. If you are investing on behalf of others If you are investing your application must For example, like this not like this for be in the name of (the numbers refer to those on the Application Form) A trust The trustee(s), rather than 1.2 Yvette Mary Jones Jones Family Trust the name of the trust and 1.3 Jack Michael Jones 1.4 Jones family A/C A superannuation fund The trustee(s) of the 1.1 Yvette Jones Limited Jones Super Fund superannuation fund 1.4 Jones Super Fund A/C A partnership The partners 1.2 Jack Michael Jones Jones Smith Partners (you must supply account 1.3 James David Smith operating instructions 1.4 Jones Smith Partnership A/C which indicate how partners are to sign) An unincorporated A person on behalf of the 1.2 Jack Michael Jones Rolling Hills Cricket Club body unincorporated body 1.4 Rolling Hills Cricket Club A/C A business The proprietor trading as 1.2 Jack Michael Jones Jones Corner Store the Business Name 1.4 Jones Corner Store A/C (you must supply a certified copy of the Certificate of Business Registration and a certified copy of the drivers licence) Checklist When you complete this Application Form, please use a black pen write in BLOCK LETTERS complete all relevant sections sign section 9 If you make an error while completing your Application Form, do not use correction fluid. Cross out your mistakes and initial your changes. Send your completed Application Form to: Postal address Macquarie Newton Service Centre GPO Box 3423 Sydney NSW

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47 NMS2 Macquarie Newton Multi-Strategy Fund - Capital Protected Application Form OFFICE USE ONLY Application number Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with an (X). Start at the left of each answer space and leave a one box gap between words. This Application Form may only be used to invest in Series 2 Units in the Macquarie Newton Multi-Strategy Fund Capital Protected. CROSS OUT AND INITIAL ANY CHANGES MADE TO THE FORM. DO NOT USE CORRECTION FLUID TO AMEND. This Application Form is included in the Product Disclosure Statement (dated 24 April 2006, ( PDS )) issued by Macquarie Portfolio Management Limited (ABN , AFSL ) for the application of Series 2 Units in the Macquarie Newton Multi-Strategy Fund Capital Protected. An application for Series 2 Units will only be considered when a valid Application Form has been completed and delivered as set out in the PDS. The PDS provides details of the offer to issue Series 2 Units in the Macquarie Newton Multi-Strategy Fund Capital Protected. It is important that you have read the PDS and considered its content before lodging an Application Form. This Application Form must not be provided to any person unless at the same time access is given to the PDS. Capitalised terms in this Application Form have the same meaning as defined in the PDS unless the context requires otherwise. IRN 1 ALL APPLICANTS 1.1 COMPANY / CORPORATE TRUSTEE Company name ABN / ACN / ARBN 1.4 ACCOUNT DESCRIPTION Name of trust, superannuation fund, partnership, deceased estate, unincorporated association or business (eg <Super Fund A/C>). Maximum of 30 characters. < Tax File Number / ARBN if applicable A Is this a trust account? / C > If applying in the name of a company go to 1.5 Contact Details. If applying as a corporate trustee go to 1.4 Account Description. 1.2 INDIVIDUAL / NON CORPORATE TRUSTEE Mr Given name(s) Surname Mrs Miss Ms Other TAX FILE NUMBER Collection of tax file numbers is authorised and their use and disclosure are strictly regulated, by the tax laws and Privacy Act. It is not compulsory for you to provide us with a tax file number or exemption information but if you do not then we are required to deduct tax from any income distribution payable to you at the highest marginal tax rate plus Medicare levy. Contact your nearest tax office for more information. 1.5 CONTACT DETAILS Name of applicant to be contacted regarding application Date of birth (you must be 18 or over) D D M M Y Y Y Y Tax File Number OR reason for exemption Gender M F Macquarie staff number (if applicable) If company applicant, position in company Work phone number Home phone number Mobile phone number Fax number If applying as an individual go to 1.5 Contact Details. If applying as a non corporate trustee go to 1.4 Account Description. 1.3 JOINT APPLICANT / NON CORPORATE TRUSTEE 2 Mr Given name(s) Surname Mrs Date of birth (you must be 18 or over) D D M M Y Y Y Y Tax File Number OR reason for exemption Miss Ms Other Gender M F Macquarie staff number (if applicable) address By providing an address in this Application Form, you agree to receive notices (including transaction confirmations) electronically, including by Macquarie Portfolio Managment Limited posting a notice to an internet based standing facility. Please tick box if you wish to receive via confirmation of receipt of Application Quarterly and Annual Reports 1.6 ADDRESS DETAILS Residential address (you must specify a residential address). Company, trust or partnership applicants must specify their registered address. Street no. & Name If applying in joint names ensure both 1.2 Individual/Non Corporate Trustee and 1.3 Joint Applicant/Non Corporate Trustee 2 sections are completed. Postcode Mailing address (if different to above). All correspondence will be sent to this address. Street no. & Name or PO Box Postcode 45

48 46 2 APPLICATION AMOUNT $,, Note that the minimum investment in the Macquarie Newton Multi-Strategy Fund Capital Protected is $20,000 and amounts thereafter must be in multiples of $1,000. If investing via a Macquarie Structured Product Investment Loan the minimum Investment Loan amount is $50,000 and amounts thereafter must be in multiples of $1, PAYMENT METHOD Please indicate how you will be paying your Application Amount THIRD PARTY CHEQUES DETAILS WILL NOT BE ACCEPTED. CHEQUES MUST BE IN THE SAME NAME AS THE APPLICANT. 4 BANK ACCOUNT DETAILS The nominated account must be a bank account with an Australian financial institution. The same account will also be used for direct credit of Cash Distributions and withdrawal proceeds, and direct debit of Protection Fees. NOTE: Direct debiting may not be available from all bank accounts. If in doubt, please refer to your financial institution. Name of financial institution Branch address BSB Macquarie Structured Product Investment Loan. (You must also complete a Macquarie Structured Product Investment Loan Application Form) OR Cheque made out to: Macquarie Newton Multi-Strategy Fund - Capital Protected OR Direct Debit from your bank account THIRD PARTY BANK ACCOUNT DETAILS WILL NOT BE ACCEPTED. THE BANK ACCOUNT MUST BE IN THE SAME NAME AS THE APPLICANT. APPLICANT. ALL INVESTORS MUST COMPLETE THE BANK ACCOUNT DETAILS BELOW. YOUR NOMINATED BANK ACCOUNT WILL BE USED FOR THE DIRECT CREDIT OF CASH DISTRIBUTIONS, WITHDRAWAL PROCEEDS AND DIRECT DEBIT OF PROTECTION FEES AND INTEREST PAYMENTS (IF ANY). IF APPLYING VIA A MACQUARIE STRUCTURED PRODUCT INVESTMENT LOAN YOU MUST PROVIDE THE SAME BANK ACCOUNT DETAILS BELOW AS ARE SUPPLIED IN YOUR INVESTMENT LOAN APPLICATION FORM. Account name Account number Direct Debit and Credit Authority I/We understand and acknowledge that in providing the direct debit and credit instructions to Macquarie Portfolio Management Limited and Macquarie Bank (the Direct Debit and Credit Request respectively ) that: 1. I/we authorise Macquarie Portfolio Management Limited to make debits from my/our nominated account for the amount(s) specified in Section 2 of this Application Form; 2. I/we authorise Macquarie Bank to make debits from my/our nominated account for payments in relation to the Capital Protection; 3. my/our nominated financial institution may in its absolute discretion decide the order of priority of payment by it of any monies pursuant to this request or any authority or mandate; 4. until these instructions are modified or deferred by me/us, Macquarie Portfolio Management Limited and Macquarie Bank may act on the instructions contained in this Direct Debit and Credit Request; 5. Macquarie Portfolio Management Limited, Macquarie Bank and/or my/our financial institution may, in its absolute discretion, at any time by giving notice to me/us, terminate this request or, by giving 14 days notice to me us, vary the billing arrangements with me/us; 6. I/we can stop or cancel my/our direct debit and credit instructions by giving Macquarie Portfolio Managment Limited or Macquarie Bank 14 days notice in writing; 7. I/we can modify or defer our direct debit or credit instructions by giving Macquarie Portfolio Management Limited or Macquarie Bank 14 days notice in writing; 8. if I/we consider that any direct debit against my/our account is inappropriate or wrong it is my/our responsibility to notify Macquarie Portfolio Management Limited and Macquarie Bank as soon as possible; 9. direct debiting through the Bulk Electronic Clearing System ( BECS ) is not available on all accounts. I/we can check my/our account details against a regular statement or check with the financial institution as to whether I/we can request a direct debit for my/our account; 10. it is my/our responsibility to ensure that there are sufficient cleared funds in my/our nominated account to honour the direct debit request. Macquarie Portfolio Management Limited or Macquarie Bank will charge the cost of dishonoured direct debits against my/our account; 11. Macquarie Portfolio Management Limited or Macquarie Bank may need to pass on details of my/our direct debit or credit request to its sponsor bank in BECS to assist with the checking of any incorrect or wrongful debits to my/our account; and 12. If the due date for payment from me/us falls on a day which is not a Business Day in Sydney, Macquarie Portfolio Management Limited or Macquarie Bank may process the payment on the Business Day immediately preceding the due date. I/We understand that I/we may contact Macquarie Portfolio Management Limited or Macquarie Bank if I/we am/are uncertain as to when the payment will be processed. 5 PROTECTION FEE Investors who apply for Series 2 Units in the Protected Multi-Strategy Fund will acquire a Put Option, the Protection Fee associated with this Put Option will be Direct Debited from your bank account nominated in Section 4 Bank Account Details. 6 CAPITAL PROTECTION DATE NOTICE OPTION Please tick the box below if you wish to: (a) request redemption of your Series 2 Units on the Capital Protection Date; and (b) exercise your Put Option subject to the Withdrawal Proceeds on the Capital Protection Date being less than the Capital Protected Amount. This notice will become effective only on the Exercise Date. You may withdraw or revoke this notice in writing at any time prior to the Exercise Date. If you do not tick the box, you may provide a Withdrawal Form and/or Put Option exercise notice at any time on or prior to the Exercise Date in order to withdraw your Series 2 Units or exercise your Put Option. I/we hereby give: (a) on the Exercise Date, a redemption request under clause 6 of the Constitution; and (b) a notice under clause 3(a) of the Put Option Agreement to exercise the Put Option if, on the Capital Protection Date, the Capital Protected Amount is greater than the Withdrawal Proceeds. This notice will be effective unless it is otherwise withdrawn prior to the Exercise Date.

49 7 FUTURE OPERATING INSTRUCTIONS Joint Applicants Please cross the appropriate box to indicate how you wish to issue future written instructions to us in relation to your investment such as change of address or withdrawal requests. If you do not cross any box we will assume that all applicants must sign all written instructions. All joint Unitholders will be registered as joint tenants. Any to sign Other (please specify) 8 PRIVACY All to sign Company Applicants This form is to be executed by two directors or a director and secretary as prescribed in the Corporations Act. Common Seal Macquarie Portfolio Management Limited and Macquarie Bank are required to collect certain personal information about you in order to process your application, keep you up to date on the performance of your investment and to comply with certain laws and regulations. This information may also be used to communicate with you from time to time regarding its other products and services. You agree to allow us to provide access to your personal information to other companies in the Macquarie Bank Group as well as external service providers, which provide services in connection with our products and services, for example mail houses and professional advisers. The Corporations Regulations 2001 require the collection in this Application Form, of your name, date of birth and address. Macquarie Portfolio Management Limited s and Macquarie Bank s policy in relation to your privacy is contained in the Privacy Statement in the PDS ( Privacy Statement ). All investors should read the Privacy Statement in order to understand how information provided by Investors is used and how Investors can ask for it. By signing this Application Form Investors consent to Macquarie Portfolio Management Limited disclosing their information to it, Macquarie Newton Specialist Funds Management Limited, Macquarie Bank Limited and any other member of the Macquarie Bank Group pursuant to the terms set out in the Privacy Statement in the PDS. By supplying your Tax File Number(s) in this Application Form you are authorising the disclosure of this information to Macquarie Portfolio Management Limited where subscription monies are placed in interest bearing short term deposits. 9 CONSENTS DECLARATIONS AND SIGNATURES I/we acknowledge and declare that I/we have read and received the current PDS and any Supplementary PDS prior to completing the Application Form. On acquiring Series 2 Units in the Protected Multi-Strategy Fund, I/we agree to be bound by the provisions of the PDS and the Constitution of the Protected Multi-Strategy Fund. I/we further acknowledge and declare that: a) all information provided as part of this application is true and correct. b) Macquarie Bank Limited: i. has not authorised or caused the issue of the PDS; ii. takes no responsibility for any part of the PDS; and iii. does not endorse or recommend investment under the PDS c) I/we am/are not in the United States or a US Person and I/we am/are not engaged in the business of distributing Series 2 Units and will not offer, sell or resell in the United States or to any US Person (as defined under Regulation 5 under the United States Securities Act 1933, as amended) a) any Series 2 Units I/we acquire under or pursuant to the offer under the PDS or b) any Series 2 Units I/we acquire under or pursuant to the offer under the PDS until the end of 40 days after the date on which the Series 2 Units are allocated under the PDS. d) I/we understand the risks associated with an investment in the Protected Multi-Strategy Fund as they are outlined in the PDS. e) I/we have read, understood and agree to be bound by the Privacy Statement contained in the PDS. f) I/we am/are not aware of any liquidation or bankruptcy proceedings that have been commenced or are intended to be commenced by any person against me/us or which are intended or anticipated by me/us. g) by completing this Application Form, I/we am/are accepting an offer made by Macquarie Portfolio Management Limited for the issue of Series 2 Units and at the same time applying to Macquarie Portfolio Management Limited for the issue of those Series 2 Units. I/we acknowledge that Macquarie Portfolio Management Limited, at its sole discretion, reserves the right not to issue Series 2 Units in accordance with any application or to allot fewer Series 2 Units than subscribed for. h) Macquarie Portfolio Management Limited is required to comply with the anti-money laundering laws in force in a number of jurisdictions (including the Financial Transaction Reports Act 1988 (Cth)) and I/we must provide Macquarie Portfolio Management Limited with such additional information or documentation as Macquarie Portfolio Management Limited may request of me/us from time to time to ensure its compliance with such requirements. Should I/we fail to provide Macquarie Portfolio Management Limited with any such information or documentation as Macquarie Portfolio Management Limited may request of me/us, my/our application for Series 2 Units may be refused, any Series 2 Units I/we hold may be compulsorily withdrawn, and any disposal request by me/us may be delayed or refused and Macquarie Portfolio Management Limited will not be liable for any loss arising as a result thereof. i) I/we understand that I/we will not receive any interest earned on my/our Application Amount, and that all such interest earned will accrue to the Series 2 Portfolio, as detailed in the PDS. j) I/we have the legal power to invest in and hold Series 2 Units in the Protected Multi-Strategy Fund. k) I/We: i) consent to the recording of all telephone conversations in connection with present and future dealings in relation to the Series 2 Units in Protected Multi-Strategy Fund for which Macquarie Portfolio Management Limited is the responsible entity with or without the use of an automatic tone warning device; ii) agree to obtain any necessary consent of, and give notice of such recording to, its affected personnel; iii) agree that recordings may be submitted in evidence in any proceedings relating to Series 2 Units in Protected Multi-Strategy Fund for which Macquarie Portfolio Management Limited is the responsible entity; and iv) agree that the Macquarie Bank Group is not obliged to maintain copies of such recordings and transcripts for the benefit of the other party. l) I/we acknowledge that investments in the Protected Multi-Strategy Fund are not deposits with, or other liabilities of Macquarie Bank Limited ABN or of any entity in the Macquarie Bank Group, and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither Macquarie Bank, Macquarie Portfolio Management Limited nor any member company of the Macquarie Bank Group guarantees any particular rate of return on, or the performance of the Protected Multi-Strategy Fund, nor do they guarantee repayment of capital from the Protected Multi-Strategy Fund other than Macquarie Bank s obligations under the Put Option. Further, I/we hereby authorise Macquarie Portfolio Management Limited to complete any blanks and amendments or additions with respect to any part of this Application Form on my/our behalf. 47

50 ALL APPLICANTS MUST SIGN THE APPLICATION FORM Authorisation of Applicant 1.2 or Company Officer Name of Applicant 1.2 or Company Officer If a company officer, you must specify your corporate title Date SIGN HERE D D M M Y Y Y Y Authorisation of Applicant 1.3 or Company Officer Name of Applicant 1.3 or Company Officer If a company officer, you must specify your corporate title Date SIGN HERE D D M M Y Y Y Y Send your completed Application Form to: Macquarie Newton Service Centre GPO Box 3423 Sydney NSW ADVISER DETAILS (for adviser use only) Recipient Created Tax Invoice Agreement This section concerns any investor referral services ( the Supplies ) provided by the adviser (acting on behalf of the entity which holds the requisite Australian Financial Services Licence for the Supplies (the Supplier ) to the Macquarie Bank Group company identified as the entity paying commissions to advisers for this financial product (the Recipient ). By completing the details below or by confirming any details generated automatically during an electronic Application and/or affixing the relevant stamp to this application form, and in consideration of being paid any remuneration in relation to this application, the adviser: (a) represents and warrants that it is duly authorised to enter into this agreement on behalf of the Supplier; (b) declares that the Supplier holds an Australian Business Number and is registered for GST as at the date they completed their details and/or affix their stamp; (c) agrees to permit the Recipient to produce tax invoices (known as Recipient Created Tax Invoices) for supplies of referral services the Supplier makes to the Recipient ( RCTIs ). The Supplier will not issue tax invoices for those supplies unless agreed otherwise with the Recipient in relation to a particular supply. The Supplier will notify the Recipient if the Supplier ceases to be registered for GST; and (d) if a stamp is affixed to the dealer group box below, directs the Recipient to pay any adviser remuneration payable to the Supplier, and give any RCTIs to be given to the Supplier, to the dealer group identified on the stamp in that box in full satisfaction of the Recipient's obligation to make such payment, or give such RCTI, to the Supplier. The Recipient acknowledges that it is registered for GST and that it will notify the Supplier if it cease to be so registered or it ceases to satisfy any of the requirements under A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination No.1 (2000). This section forms a separate binding agreement between the Supplier and the Recipient. Name of firm 10 HOW DID YOU HEAR ABOUT US? ABN Brochure Print Advertising Online Advertising Other (please specify Website Finaincial Adviser Firm Australian Financial Services Licence ( AFSL) number Adviser name address Adviser phone number Adviser/ DealerGroup Stamp 48

51 Macquarie Newton Multi-Strategy Fund - Capital Protected Withdrawal Form Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with an (X). Start at the left of each answer space and leave a one box gap between words. This Withdrawal Form may only be used to withdraw investments in Series 2 Units in the Macquarie Newton Multi-Strategy Fund Capital Protected. Capitalised terms in this Withdrawal Form have the same meaning as defined in the PDS unless the context requires otherwise. CROSS OUT AND INITIAL ANY CHANGES MADE TO THE FORM. DO NOT USE CORRECTION FLUID TO AMEND. OFFICE USE ONLY Application number IRN 1.1 COMPANY / CORPORATE TRUSTEE DETAILS Company name 3 AUTHORISATION Authorisation of Company Officer or Applicant INDIVIDUAL / NON CORPORATE TRUSTEE SIGN HERE Mr Given name(s) Mr s Miss Ms Other Name of Company Officer or Applicant 1.2 Surname If a company officer, you must specify your corporate title 1.3 JOINT APPLICANT / NON CORPORATE TRUSTEE 2 Mr Mr s Miss Ms Other Given name(s) Date D D M M Y Y Y Y Authorisation of Company Officer or Applicant 1.3 Surname 1.4 TRUST DETAILS Name of trust, superannuation fund, partnership, deceased estate, unincorporated association or business (eg <Super Fund A/C>). Maximum of 30 characters. < A / C > 2 WITHDRAWAL AMOUNT $,, OR,, OR Withdraw entire investment balance Series 2 Units Note that the minimum withdrawal amount is $10,000 or the equivalent Series 2 Unit value. The minimum investment balance after withdrawal is $20,000 unless withdrawing your entire investment. If you have invested via a Macquarie Structured Product Investment Loan the minimum withdrawal amount is $10,000 with a minimum investment balance of $50,000 unless withdrawing your entire investment. Name of Company Officer or Applicant 1.3 If a company officer, you must specify your corporate title Date DELIVERY SIGN HERE D D M M Y Y Y Y Send your completed Withdrawal Form to: Macquarie Newton Service Centre GPO Box 3423 Sydney NSW 2001 Accompanying your Withdrawal Form, please enclose your unit certificate. If you have invested via a Macquarie Structured Product Loan Macquarie Bank will already hold your unit certificate. NOTE: Proceeds from withdrawal will be credited to the bank account in your Application Form. Should you wish to check or change the bank account details you have nominated please contact the Macquarie Newton Service Centre on

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55 Macquarie SECTION Bank Ltd 1 ABN AFS Licence January 2004 FINANCIAL SERVICES GUIDE This Financial Services Guide (FSG) is an important document which we are required to give you as an Australian Financial Services Licensee. This FSG is intended to inform you of certain basic matters relating to our relationship, prior to providing you with a financial service. The matters covered by the FSG include: who we are and how we can be contacted what services and types of products we are authorised to provide to you how we (and any other relevant parties) are remunerated details of any potential conflicts of interest details of our internal and external dispute resolution procedures and how you can access them. It is intended that this FSG should assist you in determining whether to use any of our services. If you choose to use any of our products and services you may also receive other documents relating to the services or products which you should read carefully. These documents may include either or both of the following: Statement of Advice (SOA) This will usually be given whenever we provide you with any advice which takes into account your objectives, financial situation and needs (personal advice). The SOA will contain the advice, the basis on which it is given and other information, including information about fees, commissions and associations which may have influenced the provision of this advice. No SOA will be provided in respect of advice given by telephone, fax or in relation to securities, derivatives or managed investment products able to be traded on a licensed market. However, details of such advice will be recorded in a Record of Advice which you will have the right to request for up to 90 days after the advice has been given. Product Disclosure Statement (PDS) This will be provided when we make a recommendation to acquire a particular financial product (other than securities) or offer to issue or arrange the issue of a financial product. This document contains significant information necessary for you to make an informed decision about that product. Information about Macquarie Bank Ltd Any financial services offered will be provided by representatives of Macquarie Bank Ltd. Macquarie Bank Ltd is part of the Macquarie group of companies and as such is associated with other Macquarie entities. Macquarie Bank Ltd is a participant member of the SFE Corporation Limited, the ASX Futures Exchange Pty Ltd and their associated licensed clearing and settlement facilities. You can contact us by: speaking to your nominated representative if you do not have a nominated representative, call visiting our website at writing to us at: GPO Box 4294 SYDNEY NSW 1164 Fax: us using the Contact Directory on our website Our financial services and financial products Macquarie Bank Ltd is authorised to offer the following financial services and financial products: giving advice (both general and personal) and dealing in: basic deposit products non-basic deposit products non-cash payment products derivatives foreign exchange contracts general insurance products government debentures, stocks or bonds managed investment schemes managed investment warrants 51

56 securities superannuation making a market for: derivatives foreign exchange contracts bonds and debentures other financial products holding a financial product or interests in a financial product for you directly or indirectly. We can also assist you in relation to products offered by other financial institutions, including other members of the Macquarie Group. Personal financial advice In order for Macquarie to give you personal financial advice you will need to provide us with details of your personal objectives, current financial situation, needs and any other relevant information, so that we can offer you the most appropriate advice. You have the right not to provide us with this information. However, if you do not the advice you receive will be general in nature and may not be appropriate to your objectives, financial situation and needs. You should read the warnings contained in the SOA carefully before making any decision relating to a financial product. We only give personal advice to you if you secure the services of one of our Strategic Financial Planners. We will not give you personal advice in our regular updates or marketing material. We will not give you personal advice when you visit our website or contact our Client Services Centre. We maintain a record of your personal profile including details of your objectives, financial situation and needs. We also maintain records of any recommendations made to you. For information on how to access these records, please refer to the section Personal information below. Providing instructions to Macquarie You can give us instructions by telephone, mail, , fax or via our website. There may be special instruction arrangements for some products and services details of which are explained in the relevant PDS. Payments to Macquarie for the services provided If you invest in a product we provide, Macquarie will receive remuneration in relation to your investment in that product, based on the value of your holdings. This remuneration may include upfront fees and management fees (which includes transaction, ongoing and if applicable any borrowing costs) or brokerage. In some situations exit fees, account fees and transaction fees may apply. The remuneration we will receive for the products we offer are set out in the PDS for that particular product. When we advise you about products offered by another member of the Macquarie Group and you acquire that product, then that member will receive remuneration. The table below is a summary of the range of commissions we may receive from product issuers for referring clients who purchase their investment products: Upfront fee 1% to 3% of the amount you invest Trailing Commission 0.07% to 0.50% (usually 0.25%) of the ongoing value of your investment Remuneration or other benefits received by Macquarie staff Our employees and directors receive salaries, bonuses and other benefits from us. The PDS for the particular product will disclose further details of remuneration received by Macquarie employees or paid to financial advisers. Your adviser is also required to set out the remuneration and commissions they receive in the SOA which they must give to you when providing personal advice. Remuneration or benefits paid to those who refer clients to us If we pay a fee or commission in relation to a referral, we will make a separate disclosure to you. Remuneration received by those who offer Macquarie Bank Ltd products You may receive advice in relation to the products we offer from financial advisers who do not work for Macquarie. These advisers may receive commission from us in the range of 0.25 per cent to 0.65 per cent based on the value of your holdings. The adviser s remuneration is included in the fees you pay when investing in our products. Personal information At Macquarie the privacy of your personal information is important to us. Any personal information collected will be handled in accordance with our Privacy Policy. Our Privacy Policy details how we comply with the requirements of the Privacy Act in the handling of your personal information. A copy of that policy can be obtained by visiting the Macquarie website at Complaints handling Macquarie is committed to providing a high standard of client service and to maintaining our reputation for honesty and integrity. If our level of service or quality of products has failed to meet your expectations we would like you to tell us about your concerns. Macquarie s complaint handling process is designed to ensure that your concerns are treated seriously and that your complaint is addressed promptly and fairly. Your complaint may be lodged either verbally or in writing and will be dealt with in strict confidence. If you have a complaint about the service provided to you, you should take the following steps: contact your nominated representative or contact our Client Service Centre if your complaint is not satisfactorily resolved, contact: Risk Management Division Compliance Macquarie Bank Limited Level 4 No.1 Martin Place SYDNEY NSW 2000 Fax: if you are not satisfied with our handling of your complaint you may lodge a written complaint with the Banking and Financial Services Ombudsman Banking and Financial Services Ombudsman GPO Box 3A MELBOURNE VIC Phone: Fax: (03) for superannuation investments, financial advice, securities, managed investments and other financial products you can lodge a complaint with: Financial Industry Complaints Service (FICS) PO Box 579 Collins St West MELBOURNE VIC Phone: Fax: (03)

57 For further information please contact: Macquarie Newton Service Centre GPO Box 3423 Sydney NSW 2001 macquarie.com/newtonfunds

58 MACQUARIE NEWTON SPECIALIST FUNDS Product Disclosure Statement 24 April 2006 MACQUARIE NEWTON SPECIALIST FUNDS ISSUED BY MACQUARIE PORTFOLIO MANAGEMENT LIMITED ABN AFSL NO

59 IMPORTANT NOTICE Investments in the Funds are not deposits with or other liabilities of Macquarie Bank Limited ABN ("Macquarie Bank") or of any Macquarie Bank Group company and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Macquarie Bank, Macquarie Portfolio Management Limited, Macquarie Newton Specialist Funds Management Limited or any other member of the Macquarie Bank Group guarantees the performance of the Funds or the repayment of capital from the Funds or any particular rate of return. This PDS This PDS is dated 24 April 2006, when the preparation of this PDS was completed, and is issued by Macquarie Portfolio Management Limited ABN as responsible entity of the Funds (unless the context indicates it is acting in its own capacity) (referred to as "MPML", "we" or "us"). MPML holds Australian Financial Services Licence no This Product Disclosure Statement ("PDS"), and the Application Form contain the only terms on which Units will be issued to retail clients in Australia. To the extent permitted by law, we accept no liability whatsoever for any loss or damage arising from you relying on any other information when investing. In this PDS, MPML invites you to apply for Units in one or more of: Macquarie Newton Special Events Fund ARSN Macquarie Newton Buy Write Fund ARSN Macquarie Newton Global Futures Fund ARSN Macquarie Newton Global Futures Fund Enhanced ARSN Macquarie Newton Australian Absolute Return Fund ARSN Macquarie Newton Income Timing Fund ARSN Macquarie Newton Asia Statistical Arbitrage Fund ARSN Macquarie Newton Asia Long Short Fund ARSN Macquarie Newton Japan Market Neutral Fund ARSN Macquarie Newton Multi-Strategy Fund ARSN These are referred to in this PDS as the "Funds". A reference to the Funds also includes an additional fund, the Macquarie Newton Multi-Strategy Fund Capital Protected ARSN , except where expressly excluded. A reference to a "Fund" means any of the Funds, unless the context requires otherwise. Each Fund is a registered managed investment scheme. Macquarie Newton Multi-Strategy Fund Capital Protected For investors who wish to invest in the Macquarie Newton Multi-Strategy Fund Capital Protected, the PDS for that Fund is in 2 parts, this being Part 2 of that PDS. If you are considering investing in the Macquarie Newton Multi-Strategy Fund - Capital Protected you should read both Part 1 and Part 2 of the PDS in full before making an investment decision. If you are not considering investing in the Macquarie Newton Multi-Strategy Fund - Capital Protected, Part 1 of the PDS will not be relevant to you. If you have not received both parts, then please contact the Macquarie Newton Service Centre on Applications Units to which this PDS relate will only be issued on receipt of an Application Form included in or accompanying this PDS. To invest in the Macquarie Newton Multi- Strategy Fund Capital Protected you must complete the Application Form included in or accompanying Part 1 of the PDS for the Macquarie Newton Multi-Strategy Fund Capital Protected. MPML may reject an application for Units for any reason. Offers made in Australia This offer is open to persons receiving this PDS, whether in paper or electronic form, in Australia. This PDS does not constitute an offer or invitation in any place outside Australia where, or to any person to whom, it would be unlawful to make such an offer or invitation. The distribution of this PDS (electronically or otherwise) in any jurisdiction outside Australia may be restricted by law and persons who come into possession of this PDS should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable law. Currency of information The information in this PDS is current as at 24 April We may, however, change any information in this PDS, if the change is not materially adverse to Unitholders, by posting updated information at macquarie.com/newtonfunds. You may access this information at any time. Alternatively you can call the Macquarie Newton Service Centre on We will provide you with a paper copy of any information updated on our website on request, free of charge. If the change is materially adverse, we will issue a supplementary PDS. We will provide you with a paper copy of any updates or supplementary PDSs on request, free of charge. Representations This PDS has been prepared and issued by MPML. Potential Unitholders should only rely on information in this PDS. No person, including any distributor of this PDS, is authorised to give any information or to make any representation in connection with the offer of Units that is not contained in this PDS. Any information or representation not in this PDS must not be relied upon as having been authorised by MPML. Electronic copies This PDS is available on our website at macquarie.com/newtonfunds. Any person receiving this PDS electronically should note that applications can only be accepted if Citco Fund Services (Australia) Pty Limited ("Administrator") receives a completed Application Form which was included in or accompanied the electronic or paper copy of this PDS. Indirect investment service disclosure We authorise the use of this PDS as disclosure for investors who wish to access the Funds through an investor directed portfolio service ("IDPS") or IDPSlike scheme (commonly a master trust or wrap account) or a nominee or custody service approved by us ("Indirect Investment Services"), where the operator has provided us with a written undertaking in accordance with ASIC requirements. Glossary of Terms At the end of this PDS is a Glossary of Terms in which various words and phrases used in this PDS are defined. If you do not understand a word or phrase you should refer to the Glossary of Terms. Unless stated otherwise, all dollar amounts and performance data in this PDS are quoted in Australian dollars. Experienced investor The Funds employ specialist trading and hedging techniques that may require the use of derivatives. Investors should not invest in any of the Funds unless they are experienced investors who are familiar with specialist trading and hedging techniques and derivatives, and understand and are comfortable with the risks associated with investing in the Funds. Further advice recommendation An investment in the Funds involves financial and other risks and is suitable for investors for whom an investment in the Funds does not represent a complete investment portfolio or programme and who fully understand the risks of investing in the Funds. Before making an investment in any of the Funds, you should: carefully read all of this PDS; seek professional legal, taxation and financial advice to determine whether an investment in the Funds is appropriate for you; and carefully consider the potential benefits and the risks involved in investing in the Funds, in light of your particular investment needs, objectives and financial and taxation circumstances. This PDS is a general disclosure document and does not take into account your particular investment needs, objectives and financial and taxation circumstances.

60 Contents Macquarie Newton Specialist Funds 3 1. Where to find Information in this PDS 4 2. Funds at a Glance 6 3. Management Team 8 4. Alternative Investments and Specialist Trading Strategies The Funds Significant Risks Fees and Other Costs Terms and Conditions of the Investment Additional Information Taxation for Australian Residents 44 Glossary of Terms 49 How to Complete the Application Form 51 Application Form 53 Withdrawal Form 57 Switching Form 59 Directory 61 1

61

62 Macquarie Newton Specialist Funds The Macquarie Newton Specialist Funds allow you to access sophisticated investment strategies and trading techniques, developed by Macquarie Newton Specialist Funds Management Limited (the "Investment Manager"), with the potential for generating positive returns in a variety of market conditions. The Investment Manager is part of the Macquarie Bank Group. The following suite of Macquarie Newton Specialist Funds offered in this PDS provide a range of investment choices: Macquarie Newton Special Events Fund Macquarie Newton Buy Write Fund Macquarie Newton Global Futures Fund Macquarie Newton Global Futures Fund Enhanced Macquarie Newton Australian Absolute Return Fund Macquarie Newton Income Timing Fund Macquarie Newton Asia Statistical Arbitrage Fund Macquarie Newton Asia Long Short Fund Macquarie Newton Japan Market Neutral Fund Macquarie Newton Multi-Strategy Fund The Macquarie Newton Specialist Funds provide alternative investment opportunities and may offer suitable diversification to a portfolio of more traditional investments such as traditional managed funds or direct share investments. Of course, as with any investment, there are risks in investing in the Funds. See section 6 for details. 3

63 SECTION 1 Where to find Information in this PDS To find information on the topics listed below, see the page number listed. These "highlights" indicate the kind of information you can find in the PDS, but are not intended to be a complete summary. You should carefully read all of the PDS and seek professional legal, taxation and financial advice to determine whether an investment in Units is appropriate for you. TOPIC HIGHLIGHTS PAGE(S) MPML Investment Manager Choice of Funds Investment objectives and strategies Significant benefits Significant risks Macquarie Portfolio Management Limited is the responsible entity of the Funds (also referred to as "we" or "us"). Macquarie Newton Specialist Funds Management Limited is the investment manager for the Funds, except for the Multi-Strategy Fund Capital Protected. You can invest in a choice of 10 Funds under this PDS. In each case you will acquire Units in a registered managed investment scheme. See section 5 for a description of the investment objective and strategy of each Fund. You can gain exposure to specialised investment strategies not generally used by more traditional investment managers. For example, the Funds may use hedging strategies, as well as leverage and derivatives. Generally returns may also be based on the performance of the Investment Manager rather than just general market movements. You will have access to investments in hedge funds that may have a low correlation to traditional investment classes such as shares, property or fixed interest securities. The Funds offer the potential to earn positive returns in a variety of market conditions. You will have easy access to information about your investment - in addition to the regular reporting and statements you receive, you can access information about the Macquarie Newton Specialist Funds via our website at macquarie.com/newtonfunds. Some of the Funds provide you with access to Asian investment market opportunities while benefiting from Australian management, compliance, administration and investor support. The Multi-Strategy Fund provides investors with the potential to achieve long term absolute returns with moderate levels of risk by investing in a portfolio of absolute return and specialist equity funds. An investment in any of the Funds involves a number of risks. You should consider carefully those risks before investing. There are: Risks particular to the Funds; and General investment risks. 8,

64 SECTION 1 TOPIC HIGHLIGHTS PAGE(S) How to invest How to withdraw Taxation for Australian residents Fees and other costs Indirect Investment Services (IDPS or IDPS-like scheme) Complaints Cooling off Contact us For direct investors the minimum initial investment is $20,000 per Fund and multiples of $1,000 thereafter. The minimum additional investment, except for the Multi- Strategy Fund Capital Protected, is $10,000 per Fund and multiples of $1,000 thereafter. For direct investors the minimum withdrawal is $10,000 per Fund, with a minimum investment balance of $20,000. A summary of the significant tax issues is included in this PDS. Fees and other costs for the Funds include: Base Management Fee Performance Fee Contribution Fee Withdrawal Fee Operational costs Transactional costs You can access the Funds through an investor directed portfolio service ("IDPS") or IDPS-like scheme (commonly a master trust or wrap account) or a nominee or custody service approved by us (collectively referred to as "Indirect Investment Services" in this PDS). To do this, please contact the provider of that service. We have procedures for resolving complaints. You have "cooling off" rights when investing in the Funds. For further information at any time, contact the Macquarie Newton Service Centre on , HOW DO I INVEST? Carefully read all of this PDS; Consult your professional legal, taxation and financial adviser; Complete the Application Form at the back of this PDS, or in the PDS on the Macquarie Newton website (macquarie.com/newtonfunds); and If you are a direct investor, send your completed Application Form to: If you are investing through an Indirect Investment Service, please contact your Indirect Investment Service operator for details on how to invest. If you are investing in the Macquarie Newton Multi- Strategy Fund Capital Protected, you must complete the Application Form included in or accompanying Part 1 of the PDS for the Macquarie Newton Multi-Strategy Fund Capital Protected. Postal address Citco Fund Services (Australia) Pty Limited Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW

65 SECTION 2 Funds at a glance FUNDS AT A GLANCE SPECIAL BUY WRITE GLOBAL GLOBAL AUSTRALIAN EVENTS FUND FUTURES FUTURES ABSOLUTE FUND FUND FUND RETURN ENHANCED FUND Fund Type Investment Strategy Investment Manager s expectation of risk Contribution Fee Base Management Fee 1 Performance Fee 2 (all subject to High Water Mark 3 ) Withdrawal Fee 4 Hedge fund Event driven and relative value Moderate to high Specialist equity fund Long equity/ short derivatives Moderate to high Hedge fund Managed futures Very high Hedge fund Managed futures Extremely high Up to 3% (inclusive of GST) of the Application Amount. This fee is deducted from your Application Amount and paid to your financial adviser where applicable. 1.55% p.a. of NAV 20% of the returns over the RBA cash rate target 1.15% p.a. of NAV 20% of the returns over the S&P/ASX200 Accumulation Index 2.05% p.a. of NAV 20% of positive returns 3.05% p.a. of NAV 25% of positive returns Hedge fund Long short equity-market neutral Low to moderate 1.55% p.a. of NAV 20% of the returns over the RBA cash rate target 1% (inclusive of GST) calculated on the unit price at withdrawal but only for withdrawals within 12 months of your initial investment Investment Regions 5 Australia and New Zealand Australia Global Australia INVESTING IN THE FUNDS Suggested investment time frame years Applications and Withdrawals Monthly 7 Minimum Initial Investment 8 $20,000 Minimum Additional Investment 8 $10,000 Minimum Withdrawal 8 $10,000 Minimum Investment Balance 8 $20,000 1 Inclusive of the net impact of GST, calculated monthly on the month end NAV and payable monthly. 2 Inclusive of the net impact of GST, accrued daily and payable quarterly. 6 3 The High Water Mark is adjusted by deducting paid per Unit Performance Fees and distributions. Returns over the High Water Mark and positive returns are calculated before the deduction of the Performance Fee. 4 The Withdrawal Fee will apply unless withdrawal results from exercising a cooling off right or switching between Funds in certain circumstances. 5 Current investment regions. 6 Although we have suggested a time frame for investment, you should regularly review your investment decision with your professional financial adviser as your investment requirements or market conditions may have changed. Our suggested time frame should not be considered as personal advice. 7 Subject to the receipt of applications or withdrawal requests prior to the applicable due date. 8 If you are investing via an Indirect Investment Service, please contact your Indirect Investment Service operator for details. Fees are separately calculated for each Class based on the NAV referable to the Class, and paid out of the assets referable to the Class. Please refer to page 34 for additional information relating to Classes.

66 SECTION 2 Funds at a glance Continued FUNDS AT A GLANCE INCOME ASIA ASIA LONG JAPAN MULTI- TIMING FUND STATISTICAL SHORT FUND MARKET STRATEGY ARBITRAGE NEUTRAL FUND FUND FUND Fund Type Investment Strategy Investment Manager s expectation of risk Contribution Fee Base Management Fee 1 Hedge fund Long equity/ short derivatives Low to moderate Hedge fund Relative value Moderate to high Specialist equity fund Long short equity Moderate to high Hedge fund Long short equity - market neutral Moderate Multi-strategy Diversified Low to moderate Up to 3% (inclusive of GST) of the Application Amount. This fee is deducted from your Application Amount and paid to your financial adviser where applicable. 1.55% p.a. of NAV There is no Base Management Fee for this Fund. However, a Base Management Fee of 1.60% p.a. of the amount invested in the underlying funds will be paid out of the assets of each of the underlying funds into which this Fund invests 9. Performance Fee 2 (all subject to High Water Mark 3 ) Withdrawal Fee 4 20% of the returns over the RBA cash rate target 20% of positive returns 1% (inclusive of GST) calculated on the unit price at withdrawal but only for withdrawals within 12 months of your initial investment Investment regions 5 Australia, Hong Kong and Singapore Australia, Hong Kong and Japan Asia Japan Not applicable 1 Inclusive of the net impact of GST, calculated monthly on the month end NAV and payable monthly. 2 Inclusive of the net impact of GST, accrued daily and payable quarterly. 3 The High Water Mark is adjusted by deducting paid per Unit Performance Fees and distributions. Returns over the High Water Mark and positive returns are calculated before the deduction of the Performance Fee. 4 The Withdrawal Fee will apply unless withdrawal results from exercising a cooling off right or switching between Funds in certain circumstances. 5 Current investment regions. 6 Although we have suggested a time frame for investment, you should regularly review your investment decision with your professional financial adviser as your investment requirements or market conditions may have changed. Our suggested time frame should not be considered as personal advice. 7 Subject to the receipt of applications or withdrawal requests prior to the applicable due date. 8 If you are investing via an Indirect Investment Service, please contact your Indirect Investment Service operator for details. 9 Inclusive of the net impact of GST. This amount is calculated monthly on the month end NAV of the underlying Funds. Fees are separately calculated for each Class based on the NAV referable to the Class, and paid out of the assets referable to the Class. Please refer to page 34 for additional information relating to Classes. 7

67 SECTION 3 Management team MACQUARIE PORTFOLIO MANAGEMENT LIMITED Macquarie Portfolio Management Limited is the responsible entity of the Funds and the issuer of this PDS. It has appointed the Investment Manager to manage the Funds investments (except for the Macquarie Newton Multi-Strategy Fund Capital Protected, for which MPML will be the investment manager). It is part of the Macquarie Bank Group. It holds an Australian Financial Services Licence no , issued by ASIC, which authorises it to operate managed investment schemes. MPML is in the business of acting as the responsible entity for registered managed investment schemes. MPML currently acts as the responsible entity of a number of registered managed investment schemes including the Macquarie Equinox 6 Trust and Macquarie Atlas Trust which were established in The directors of MPML are the same as the directors of the Investment Manager. THE INVESTMENT MANAGER Macquarie Newton Specialist Funds Management Limited The Investment Manager is part of the Macquarie Bank Group. The Macquarie Bank Group is a market leader in managing specialist investments, with $69.8 billion of specialist assets under management as at 31 January 2006, including infrastructure, property, private equity and hedge funds. Prior to October 2003, Macquarie Bank traded a variety of hedge fund strategies via the principal trading desk of its Equity Markets Group. In October 2003 the Investment Manager was founded to make these strategies more generally available. The principal traders of Macquarie Bank s Equity Markets Group joined the Investment Manager and became the portfolio managers of the Macquarie Newton Specialist Funds. As at 28 February 2006, the Investment Manager had $233.3 million in funds under management, including in managed accounts. In its role as the investment manager for a Fund, the Investment Manager is responsible for managing the investments of the Fund. The Investment Manager holds an Australian Financial Services Licence no , issued by ASIC, which authorises it to provide investment management services to the Funds. DIRECTORS' PROFILES Greg Mackay Mr Mackay is CEO of the Investment Manager and an Executive Director of Macquarie Bank. Mr Mackay has over 20 years experience with Macquarie Bank. Over the past 10 years Mr Mackay has been the head of both the Hong Kong and Australian divisions of Macquarie Bank s Equity Markets Group, which is widely recognised as a market innovator and leader in the issuing and trading of equity derivative products in Australia and Hong Kong. Mr Mackay currently heads the Fund Products Division of the Equity Markets Group. Mr Mackay holds a Bachelor of Science from the University of Adelaide. Kim Burke Mr Burke is an Executive Director and Executive Committee member of Macquarie Bank and Global Head of the Equity Markets Group. Mr Burke joined Macquarie Bank in 1991 and has been an Executive Director since Mr Burke has extensive experience in equity derivatives including managing the sales, trading, structuring, product origination and equity finance activities of the Equity Markets Group. Prior to assuming the role of Equity Markets Group Head in 2005, Mr Burke was in charge of the Asian business of the Equity Markets Group from 2000 to 2005 and the South African business from 1998 to Mr Burke has a Bachelor of Economics and a Bachelor of Laws and a Master of Laws from the University of Sydney. 8

68 Ottmar Weiss Mr Weiss retired from Macquarie Bank in early 2006 but has remained a director on a number of Macquarie Boards, including the Investment Manager and MPML. Mr Weiss retired after 20 years of service to Macquarie Bank, where he held the position of Global Head of the Equity Markets Group and was an Executive Director since He was a member of Macquarie Bank's Executive Committee. Mr Weiss has extensive experience in structuring and product origination in both equities and equity derivatives, equity finance activities, principal trading, and managed a global group involved in market making, principal trading, structuring and product origination in both equities and equity derivatives, derivative sales (corporate, institutional and retail) and stock banking. Mr Weiss has a Bachelor of Arts (Accounting) from the University of Canberra and is a Certified Practicing Accountant. Bruce Terry Mr Terry was an Executive Director in Macquarie Bank's Financial Services Group. Mr Terry has 20 years experience with Macquarie Bank and over 16 years associated with the retail financial services area of Macquarie Bank in roles including Head of Retail Investment Services (1989 to 2001). Mr Terry is a director of a number of companies, including Macquarie Investment Management Limited (since 1991), Macquarie Life Limited (since 1992), Macquarie Investment Services Limited (since 1995), and Macquarie Private Portfolio Management Limited (since 2001). Mr Terry was Director of the Investment Funds Association (Australia) from 1996 to 1997 and held the position of Vice Chairman during Prior to his employment with Macquarie Bank, Mr Terry was employed by Hill Samuel & Co. in London, and KPMG in London and Hong Kong. Mr Terry is a Chartered Accountant, and graduated with an Honours degree from the University of York in England. 9

69 SECTION 4 Alternative Investments and Specialist Trading Strategies WHAT IS A TRADITIONAL MANAGED FUND? A traditional managed fund is an investment vehicle that pools the money of many individual investors. The pool of money is invested by a professional manager in accordance with the objectives of the fund. A traditional fund manager generally aims to make a return "relative" to an index or benchmark. An index is a measurement of the performance or movement of a financial variable. For example the S&P/ASX 200 Accumulation Index is a broad index generally used to measure the performance of the Australian share market. It is based on the price movements of, and dividends paid on, 200 of the largest shares listed on the ASX. A traditional managed fund may achieve its aim of matching an index's performance but deliver a negative result because the index has fallen in value. For example, if the S&P/ASX 200 Accumulation Index fell by 7% over the relevant period, a traditional managed fund that produced a -5% return would achieve its aim (a return 2% better than the -7% return of the index) but still deliver a negative result. WHAT IS A HEDGE FUND? The term hedge fund is used quite broadly to describe managed funds that use a wider range of investment strategies and asset classes than a traditional managed fund. Initially the term may have been used to indicate that the investment manager of the fund sought to hedge against risk by using specific investments or strategies. Hedging means investing or acquiring a financial instrument that is expected to offset (to some extent) another investment or financial instrument. For example, a long short equity fund may take a long position (by buying shares in a company that is thought to be undervalued) and seek to hedge that long position by taking a short position (by selling shares in another company that is thought to be overvalued). Hedge fund is now used more broadly and not all hedge funds use a hedging strategy. Hedging may also be used to reduce the volatility of returns. Volatility is a measure of the degree of fluctuation in a fund s returns. The higher the volatility, the higher the variation you should expect in a fund s returns. A hedge fund manager may invest in the same types of assets that a traditional manager uses, such as the traditional asset classes of shares and fixed interest securities (bank bills and bonds). However a hedge fund manager may use a range of investment strategies and trading techniques with the aim of producing returns that are relatively independent of, or have a low correlation to, general changes in market values or indices. Correlation is a measure of the extent to which the value of one variable is related to the value of another variable. A low correlation means that the movement in the value of one asset is relatively independent of the movement in value of another asset. The low correlation to general changes in market values and indices usually sought by hedge funds has led to such funds often being referred to as an absolute return fund, which refers to the ability to make profits in both rising and falling markets. The return objective of the hedge fund is to produce an absolute return not a return relative to an index or benchmark. Hedge funds also often use leverage to increase the exposure of the fund's portfolio to a level greater than the net assets of the portfolio by borrowing or through the use of derivatives. Leverage is also known as gearing. Examples of hedge funds include: equity market neutral funds which generally hold a portfolio of both long and short positions which broadly offset each other across a number of key risk dimensions (e.g. dollar exposure, sector, size). The Macquarie Newton Australian Absolute Return Fund and the Macquarie Newton Japan Market Neutral Fund are equity market neutral funds. relative value funds which generally use quantitative and qualitative techniques to identify mispricing between related securities (a security is overvalued or undervalued compared to the market value of a related security). For example this mispricing could occur between shares and options in the same company or between shares and options in the same sector. These funds use arbitrage meaning they simultaneously buy and sell similar assets to take advantage of price discrepancies. The Macquarie Newton Asia Statistical Arbitrage Fund is a relative value fund. Also, the Macquarie Newton Special Events Fund can invest in relative value strategies. 10

70 WHAT IS A SPECIALIST EQUITY FUND? The Macquarie Newton Buy Write Fund is a specialist equity fund. Specialist equity funds are a type of managed fund that use specialist trading and hedging techniques. A specialist equity fund may use derivatives with the aim of generating higher levels of income than an industry benchmark or index. A derivative is a financial instrument that derives its value from an underlying asset (such as a share, a commodity, a currency or an index). Examples of derivatives include futures and options. Examples of the uses of derivatives in trading strategies are described in the section Other useful information about the Funds. A specialist equity fund is likely to have a higher degree of correlation to the performance of the share market than that of a hedge fund. KEY TRADITIONAL SPECIALIST HEDGE FUND CHARACTERISTICS MANAGED FUND EQUITY FUND Types of investments Investment mandate Leverage (amount of borrowing of the fund) Return profile Performance benchmark Performance fees Volatility level Generally only takes long positions in shares, fixed interest securities and/or derivatives. Generally more specific investment mandate and investment restrictions. Generally does not leverage or conservatively leverages the fund s assets. Usually aims to achieve a return relative to an industry benchmark or index such as the S&P/ASX 200 Index. Typically an index such as the S&P/ASX 200 Index. Does not usually charge a performance fee (although some traditional fund managers do charge a performance fee). Varies from low volatility (like cash) to high volatility (like shares) depending on the underlying investments. Able to take both long and short positions in shares and fixed interest securities and to enter into derivatives. Generally greater investment manager discretion in the investment process. Generally has the ability to leverage the fund s assets. Aims to generate higher levels of income than an industry benchmark or index such as the S&P/ASX200 Index. Typically an index such as the S&P/ASX 200 Index. Usually charge a performance fee. Volatility is generally less than that of the relevant benchmark. Aims to achieve an "absolute return" - a positive return regardless of market conditions. Typically zero or a cash based benchmark. Varies from low volatility to extremely high levels of volatility. 11

71 SECTION 5 The Funds MACQUARIE NEWTON SPECIAL EVENTS FUND Investment objective The Fund's objective is to capture price movement generated by corporate events such as mergers, corporate restructures and markets mispricing of securities issued by the same entity or related entities. Investment strategy The Investment Manager uses a number of strategies to participate in "special situations" that arise in the Australian and New Zealand share markets. If a special situation arises the Investment Manager will trade in securities that it considers to be affected by the relevant situation and are mispriced by the market. The strategies used may include: Event driven strategies which aim to profit from the market s mispricing of a company s (or a trust s) securities where the company (or trust) is subject to anticipated or current corporate events. The mispricing of such securities is typically due to differences in opinion of investors and analysts of the likelihood of the event completing, and the time in which it will complete. Such events include mergers and acquisitions, capital restructures, dividend announcements, capital raisings, corporate buybacks, earnings announcements, and any other significant market or corporate event. Relative value strategies which employ quantitative and qualitative techniques to identify mispricing between related securities. A typical trade will involve purchasing the relatively undervalued security and selling the relatively overvalued security. Examples can include: capital structure arbitrage - which aims to profit from the market's mispricing of different securities from a single issuing entity, by purchasing the undervalued security and selling the related overvalued security; and share class arbitrage - which aims to profit from mispricings between the same securities of a single issuing entity which are listed on different share markets, by purchasing the undervalued security listed on one exchange and selling short the same or similar security listed on another exchange. If limited or no suitable situations exist, the Fund may hold significant cash reserves. This Fund typically has low correlation to the Australian share market as its performance is determined according to company (or trust) special situations rather than general or market price movements. Example of an event driven strategy If Company T (the target company) is subject to an announced takeover offer, the Investment Manager will buy shares in Company T in anticipation that the price of shares in Company T will increase on its successful acquisition. If Company B (the bidder company) offers its own shares as consideration for Company T (known as a scrip offer ), the Investment Manager may sell shares in Company B to hedge the market risk of owning shares in Company T. PERFORMANCE TO 28 FEBRUARY 2006 As this Fund was only established on 2 October 2003, actual long-term data is not available. Additionally the short data history is not representative of the potential performance of the Fund during a variety of market conditions. TOTAL BENCHMARK*** RETURN** Last 12 months 9.74% p.a. 5.50% p.a. Since inception* 10.66% p.a. 5.33% p.a. Past performance is not an indicator of future performance. For more recent performance visit the Macquarie Newton Specialist Funds website at macquarie.com/newtonfunds. Also refer to the footnotes below. CURRENT INVESTMENTS The Fund invests primarily in Australian and New Zealand listed securities and instruments such as ordinary shares, preference shares, options and futures, as well as approved cash deposits and cash equivalents. The Fund may also invest in foreign listed companies whose securities are related by way of corporate structure or corporate event to Australian or New Zealand securities held by the Fund as part of its event driven and relative value strategies. Foreign exchange contracts may also be used to manage currency risk. 12 * 2 October ** The Macquarie Newton Special Events Fund existed as a wholesale trust prior to its conversion to a registered managed investment scheme. It is important to note that the total return information has been adjusted for differences between the fees that were charged by the wholesale trust and the fees that are charged by the registered managed investment scheme. *** RBA cash rate target. The RBA cash rate target is the overnight money market interest rate. It is the benchmark against which the performance of the Fund is measured. The total return has been calculated on a per annum basis after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions.

72 MACQUARIE NEWTON BUY WRITE FUND Investment objective The Fund's objective is to generate income from equities above that of the S&P/ASX200 Index. In doing so, the Fund is likely to forgo capital appreciation relative to the S&P/ASX200 Index. Investment strategy The Investment Manager s strategy is to buy a portfolio of Australian shares and sell options over some or all of those shares, or options over a share price index or share price index futures, to enhance income. The selling of options is known as "writing" options and so the strategy is known as "buy write". The portfolio of shares held consists of approximately 60 companies (although this number may vary) selected using a predominantly quantitative process. This process aims to: create a portfolio with a high degree of correlation to the S&P/ASX 200 Index; earn market based levels of dividends and franking credits on shares in that portfolio; and generate additional income over and above the income generated from dividends, due to the amount received (premium) on each option sold by the Fund. While selling options increases the income based returns to the Fund, it also limits the ability of the Fund to benefit from an increase in the share price of a company over which an option is written. Single share options are only written over shares held in the portfolio. If, within the next three months, the share price increases to $1.15 per share, the option holder has the right to exercise the call option and purchase 7,500 shares from the Fund at $1.05 per share. If the call option is exercised, the Fund has not benefited from any increase in the share price above $1.05 with respect to these 7,500 shares. The Fund, however, has received a premium for selling the option over the 7,500 shares. If, however, during that same time period the share price instead declines from $1.00 to $0.95 per share, the Fund will own 10,000 shares valued at $0.95 per share. The Fund has also received a premium for selling the option. Investors should note that the Fund is a specialist equity fund, and not a hedge fund. Consequently, an investment in this Fund has greater exposure to the risk of a decline in the share market in general because the investment strategy used by the Fund does not aim to limit exposure to movements in the S&P/ASX 200 Index. PERFORMANCE TO 28 FEBRUARY 2006 As this Fund was only established on 29 March 2004, actual long-term data is not available. Additionally the short data history is not representative of the potential performance of the Fund during a variety of market conditions. TOTAL BENCHMARK*** RETURN** Last 12 months 13.80% p.a % p.a. Since inception* 14.04% p.a % p.a. Example of a buy write strategy Assume the Investment Manager: buys 10,000 shares in a company at $1.00 per share (as part of the Fund's long share portfolio); and sells 7,500 call options with an exercise price of $1.05, allowing the holder of the option to buy 7,500 shares in the company within the next three months for $1.05 per share. The Fund would receive a premium for selling the options. Past performance is not an indicator of future performance. For more recent performance visit the Macquarie Newton Specialist Funds website at macquarie.com/newtonfunds. Also refer to the footnotes below. CURRENT INVESTMENTS The Fund currently invests in Australian securities in the S&P/ASX 200 Index and options relating to those securities. The Fund may also sell exchange traded options with the aim of enhancing income. Exchange traded options are options that are traded on an exchange and include: options over shares in listed companies ( single share options ) index options such as options over a share price index (for example the S&P/ASX 200 Index) options over share price index futures such as the SFE SPI 200 Equity Index Futures * 29 March ** The Macquarie Newton Buy Write Fund existed as a wholesale trust prior to its conversion to a registered managed investment scheme. It is important to note that the total return information has been adjusted for differences between the fees that were charged by the wholesale trust and the fees that are charged by the registered managed investment scheme. *** S&P/ASX200 Accumulation Index. The S&P/ASX200 Accumulation Index comprises 200 of the largest shares listed on the ASX and takes into account both price movements and income payments relating to the companies in the index. The index assumes that the value of a company s dividends is re-invested across the whole index portfolio. The total return has been calculated on a per annum basis after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions. 13

73 MACQUARIE NEWTON GLOBAL FUTURES FUND MACQUARIE NEWTON GLOBAL FUTURES FUND ENHANCED Investment objective The Funds aim to profit over the medium to long term by capturing the benefit of short term price movements in global markets. These Funds have a very high to extremely high risk profile and investment in these Funds should be considered highly speculative. The Global Futures Fund Enhanced may employ up to twice the leverage of the Global Futures Fund (refer to the note below on leverage) and so has a higher risk profile. Investment strategy The Investment Manager uses systematic trading models to invest in a number of global markets by taking either long or short positions in index futures. For further information on futures contracts refer to page 23. Systematic trading involves making investments where all conditions of the investment such as market choice, and entry and exit points are set by rules defined before the trade is made. The Investment Manager places a predefined stop loss order on each futures contract it enters. A stop loss order is a direction to sell (or buy) the futures contract if its value falls below (or rises above) a certain preset level. The stop loss orders put in place by the Investment Manager aim to limit losses. However, stop loss orders are not guaranteed and if there are sudden adverse movements in the index relating to the futures contract the stop loss order may not be filled and the Investment Manager may not be able to close the trade. The Funds may suffer substantial losses if a stop loss order is unable to be filled. To acquire a futures contract, the Fund may need to pay an initial amount (called margin or a deposit) which may only be a fraction of the value of the asset to which the derivative relates. Losses are, however, not limited to the initial margin or deposit. If the futures market moves against a Fund's position, the Fund may be required, at short notice, to make further payments as additional margin or deposits. The further payments may be substantial. If the Fund fails to make those further payments within the required time, the Fund's position may be liquidated at a loss and the Fund will be liable for any shortfall resulting from that failure. Under certain conditions, it could become difficult or impossible for the Fund to close out a position. This can, for example, happen when there is a significant change in prices over a short period. Market conditions may make it impossible to fill a stop-loss order. GLOBAL FUTURES FUND PERFORMANCE TO 28 FEBRUARY 2006 As this Fund was only established on 1 August 2004, actual long-term data is not available. Additionally the short data history is not representative of the potential performance of the Fund during a variety of market conditions. Investment in this Fund should be considered highly speculative Last 12 months Since inception* TOTAL RETURN** 15.50% p.a % p.a. Past performance is not an indicator of future performance. For more recent performance visit the Macquarie Newton Specialist Funds website at macquarie.com/newtonfunds. Also refer to the footnotes below. * 1 August 2004 ** The Macquarie Newton Global Futures Fund existed as a wholesale trust prior to its conversion to a registered managed investment scheme. It is important to note that the total return information has been adjusted for differences between the fees that were charged by the wholesale trust and the fees that are charged by the registered managed investment scheme. The total return has been calculated on a per annum basis after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions. GLOBAL FUTURES FUND ENHANCED PERFORMANCE TO 28 FEBRUARY 2006 As this Fund was only established on 1 August 2004, actual long-term data is not available. Additionally the short data history is not representative of the potential performance of the Fund during a variety of market conditions. It is important to note that due to the Global Futures Fund Enhanced currently holding less assets than the Global Futures Fund, the performance of the Global Futures Fund Enhanced may not necessarily correlate exactly to the performance of the Global Futures Fund. Investment in this Fund should be considered highly speculative Last 12 months Since inception* TOTAL RETURN** 21.89% p.a % p.a. Past performance is not an indicator of future performance. For more recent performance visit the Macquarie Newton Specialist Funds website at macquarie.com/newtonfunds. Also refer to the footnotes below. * 1 August ** The Macquarie Newton Global Futures Fund - Enhanced existed as a wholesale trust prior to its conversion to a registered managed investment scheme. It is important to note that the total return information has been adjusted for differences between the fees that were charged by the wholesale trust and the fees that are charged by the registered managed investment scheme. The total return has been calculated on a per annum basis after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions. 14

74 A NOTE ON LEVERAGE AND LOSS OF INVESTMENT CAPITAL Leverage generally magnifies both profits and losses and may result in a total loss of an investor's capital. The Global Futures Fund and Global Futures Fund Enhanced employ high to extremely high levels of leverage. In the context of these Funds, the term leverage refers to the exposure each Fund takes compared to the value of the assets of the Fund. The exposure is the total face value of all futures contracts held by the Fund. Example of a futures contract The Investment Manager determines to buy 1 futures contract with a face value of $750. To effect the purchase, the Investment Manager will need to pay an initial deposit, for example $100. In this case, the Fund gains exposure of 7.5 times the initial deposit. If the futures contract price were to fall in value by 5% the Fund is exposed to a $37.50 (5% x $750) loss. This will have the result of reducing the value of the initial deposit by 37.5%, down from $100 to $ Conversely if the futures contract price were to increase in value by 5% the return on the initial deposit will be 37.5%. The percentage of the deposit loss or gain is greater than the percentage loss of the face value because of the level of leverage. You should also note that the potential loss to the Fund is not limited to the amount initially paid for the futures contract. Example Loss Initial Deposit $ Initial Face Value $ Final Face Value $ Value of Invested Amount $62.50 Percentage Loss (37.5%) Example Gain Initial Deposit $ Initial Face Value $ Final Face Value $ Value of Invested Amount $ Percentage Gain 37.5% The Global Futures Fund - Enhanced has the ability to employ up to twice the leverage employed by the Global Futures Fund. As a result then Global Futures Fund may be exposed to greater potential gains and losses as a result of fluctuations in its investment. Leverage risk is a significant risk for these Funds. Losses to the Funds are not limited to the amounts paid to obtain the initial face value exposure to the futures contracts. Until the futures contract has been "closed out" the liability of the relevant Fund cannot be definitively determined. The strategy implemented by the Funds is designed with the aim of limiting the largest drawdown to around 25% for the Global Futures Fund and 50% for the Global Futures Fund Enhanced. However there is no guarantee that these levels will not be exceeded. While not removing these risks, the Investment Manager aims to limit and monitor these risks within the investment framework using model diversification, market and time zone diversification, and the placing of stop loss orders on all trades. CURRENT INVESTMENTS These Funds currently trade in the following 21 equity index futures contracts, across 12 countries in the major time zones of Asia, US and Europe. Additional index futures contracts may be added at the discretion of MPML. The names listed in the table below are the common names of the futures contracts. Amsterdam Index CAC 40 Euro Dax Index DJ Euro Dow Jones DJIA Mini $5 STOXX 50 Index Nasdaq 100 Nasdaq 100 Russell 2000 E-mini Russell S&P 500 S&P 500 E-mini Index E-mini FTSE 100 Hang Seng Index Index KOSPI 200 S&P/MIB Swiss Index Nikkei Market Index MSCI Taiwan S&P/ASX Index Topix 200 Index The Funds may also invest in approved cash deposits and cash equivalents. 15

75 MACQUARIE NEWTON AUSTRALIAN ABSOLUTE RETURN FUND Investment objective The Fund aims to achieve consistent returns irrespective of the direction of the Australian share market, with low to moderate levels of risk. The investment process is depicted in the graph below. S&P/ASX 300 SECURITIES Investment strategy The Investment Manager employs a two stage process to select the securities for the Fund s portfolio. In stage 1, the Investment Manager uses a quantitative security selection model to assess securities based on a number of factor models including: Analyst behaviour which measure changes in investor expectations by monitoring earnings forecasts amongst the analyst community Valuation which estimate the impact of a share's historical and forecasted valuation, based on a number of fundamental measures Quality which measures the quality of a company s financial position based on a number of factors including the company s balance sheet and risk based measures such as price and earnings volatility Market sentiment these factors predominately measure the recent price behaviour of a share and trading volume as a means of forecasting future returns. Stage 2 uses a number of mathematical models which seek to incorporate the results of stage 1 of the selection model and maximise the investment portfolio s risk adjusted return subject to a number of constraints including: Sector constraints this aims to minimise exposure to the risk of market movements which may adversely affect specific industries or sectors (like mining or transport) differently than others Dollar constraints this aims to reduce the sensitivity of the portfolio to movements in the underlying market by setting the long positions (buying shares) and short positions (selling shares) approximately equal in value Maximum position size this aims to limit the size of an investment in a single company or sector Market Impact aims to minimise trading costs associated with illiquid securities The portfolio is frequently assessed and re-weighted to incorporate the latest market based information. QUANTITATIVE SECURITY SELECTION MODEL Analyst behaviour Quality Valuation Market sentiment QUANTITATIVE PORTFOLIO OPTIMISATION MODEL Maximise risk adjusted return subject to investment constraints INVESTMENT PORTFOLIO The Fund currently invests in securities in the S&P/ASX 300 Index and those securities anticipated by the Investment Manager to be included in the S&P/ASX 300 Index in the near future. PERFORMANCE TO 28 FEBRUARY 2006 As this Fund was only established on 2 October 2003, actual long-term data is not available. Additionally the short data history is not representative of the potential performance of the Fund during a variety of market conditions. TOTAL BENCHMARK*** RETURN** Last 12 months 0.72% p.a. 5.50% p.a. Since inception* 4.69% p.a. 5.33% p.a. Past performance is not a reliable indicator of future performance. For more recent performance visit the Macquarie Newton Specialist Funds website at macquarie.com/newtonfunds. Also refer to the footnotes below. CURRENT INVESTMENTS The Fund currently invests in securities in the S&P/ASX 300 Index and those securities anticipated by the Investment Manager to be included in the S&P/ASX 300 Index in the near future, as well as approved cash deposits and cash equivalents. The Fund is likely to trade in options and futures going forward. 16 * 2 October 2003 ** The Macquarie Newton Australian Absolute Return Fund existed as a wholesale trust prior to its conversion to a registered managed investment scheme. It is important to note that the total return information has been adjusted for differences between the fees that were charged by the wholesale trust and the fees that are charged by the registered managed investment scheme. *** RBA cash rate target. The RBA cash rate target is the overnight money market interest rate. It is the benchmark against which the performance of the Fund is measured. The total return has been calculated on a per annum basis after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions.

76 MACQUARIE NEWTON INCOME TIMING FUND Investment objective This new Fund aims to achieve consistent returns with low correlation to global share markets and low to moderate levels of risk. Investment strategy Long term historical share market data suggests that during the period leading up to a security s ex-dividend date* the price of the security has a tendency to increase by an amount greater than the broader market. This difference has tended to be more pronounced for securities with relatively high dividend yields. In managing the Fund s assets, the Investment Manager will use a strategy which seeks to benefit from this historical tendency. In general the strategy is implemented by the Investment Manager purchasing securities before the ex-dividend date and selling them around their exdividend date. The Fund typically increases its exposure to share markets at times when a large number of shares are approaching their ex dividend dates. At these times, the Fund will hold a portfolio of approximately 150 to 170 long share positions (although this number may vary). At other times of the year, the Fund will typically hold a portfolio of approximately 30 to 40 share positions (although this number may also vary). The Investment Manager may sell equity index futures to minimise the exposure of the Fund to a broad-based fall in share prices in the relevant countries. INCOME TIMING FUND PERFORMANCE INFORMATION As the inception date of the Fund is 1 April 2006, actual long-term data is unavailable. Additionally due to the absence of trading history for this Fund, the Investment Manager is unable to determine the potential performance (either positive or negative) of the Fund during a variety of market conditions. Please refer to section 6 for further information regarding the risk of investing in a Fund with limited or no trading history. CURRENT INVESTMENTS The Fund currently invests primarily in Australian, Singaporean, and Hong Kong listed securities and instruments such as shares, units in unit trusts, futures, swaps, contracts for differences, and approved cash deposits and cash equivalents. It is anticipated that the Fund will, if opportunities arise in the future, invest in other countries, and may discontinue its investments in any country at any time. *The ex-dividend date is the date securities are quoted ex dividend. To be entitled to a dividend the holder of the security must have purchased the relevant securities before the ex dividend date. 17

77 MACQUARIE NEWTON ASIA STATISTICAL ARBITRAGE FUND Investment objective This new Fund aims to achieve absolute returns with low to moderate levels of risk relative to Asian share markets. Investment strategy The Investment Manager uses quantitative models to select shares in sectors which have historically shown a high tendency to revert to the average sector performance. As the security outperforms the sector the Investment Manager will hold a short position in the security and long positions in other securities in the sector If a security were to outperform its sector the Investment Manager would attempt to short sell those securities (short position) and buy other securities in that sector in anticipation that the market price of the security will fall and trend back towards the sector s average performance. Alternatively, if a security under performs the sector s average performance, the Investment Manager would attempt to buy those securities (long position) and short sell other securities in that sector in anticipation that the market price of the security will rise and trend back towards the sector s average performance. This principle is illustrated in the graph below. Security Price Sector Average Performance As the security underperforms the sector the Investment Manager will hold a long position in the security and short positions in other securities in the sector The Investment Manager aims to maintain long positions in some securities and simultaneously maintain some short positions in other securities which will reduce the exposure of the Fund to general movements in the share markets in which it trades. The Fund currently invests in Australia, Hong Kong and Japan. It is anticipated that the Fund will, if opportunities arise in the future, invest in other Asian countries, and may discontinue its investments in these countries. The combined long/short portfolio consists of approximately 25 to 50 individual share positions (although this number may vary). ASIA STATISTICAL ARBITRAGE FUND PERFORMANCE INFORMATION As the inception of the Fund is 1 April 2006, actual longterm data is unavailable. Additionally due to the absence of trading history for this Fund, the Investment Manager is unable to determine the potential performance (either positive or negative) of the Fund during a variety of market conditions. Please refer to section 6 for further information regarding the risk of investing in a Fund with limited or no trading history. CURRENT INVESTMENTS This Fund invests primarily in Australian, Hong Kong and Japanese listed securities and instruments such as shares, units in unit trusts, swaps, contracts for differences, and approved cash deposits and cash equivalents. 18

78 MACQUARIE NEWTON ASIA LONG SHORT FUND Investment objective This new Fund aims to achieve absolute returns with lower risk than the Asian markets. Investment strategy The Investment Manager uses a dynamic stock portfolio selection process which incorporates a country allocation model, security selection analysis and risk management constraints. At the first level a quantitative country allocation model is used together with quantitative security analysis to reduce the "investment universe" of approximately 5,000 securities across the various Asian markets to a smaller pool of potential securities into which the Fund may invest. The quantitative country allocation model determines how the Fund s assets may be allocated to countries within Asia. The country allocation model is based on a number of factors including: Valuation whether the country s share market is determined by the Investment Manager to be over valued, under valued or fairly valued Risk premium comparing a share market s earnings and dividend yield with the yield of fixed interest securities to determine the risk premium of investing in equities Analyst sentiment how the country s share market rates on the basis of analyst earnings and recommendation reports Independently of the country allocation analysis, the Investment Manager quantitatively analyses the "investment universe" to identify securities that are expected to out perform or under perform due to particular market characteristics. When analysing the securities in the investment universe, the Investment Manager may consider the following : Turnaround plays buying shares that have had recent poor performance but are beginning to show short term momentum and have improving analyst sentiment Announcements that surprise brokers buying or selling shares that make a positive or negative market announcement but which are rated poorly or highly respectively by the broker community Value buying or selling shares that the Investment Manager considers are underpriced or overpriced by the market All stars buying shares that rate well based on a number of factors including valuation, analyst sentiment, momentum and quality factors Once the country allocation model and security selection analysis are applied, the Investment Manager must formulate the most appropriate balance between the country allocation preferred by the country allocation model and the securities preferred following the security selection analysis. If the country allocation model selects countries which do not allow investment in the preferred securities, the country allocation may be adjusted to accommodate those preferred securities. Similarly, if the preferred securities are in countries that do not match the country allocation selected by the country allocation, the preferred securities may be adjusted. The Investment Manager also must factor in the investment constraints placed on the Fund. These investment constraints are applied to manage risk. They include limits on the size of an investment in a particular security or country. Following the evaluation described above, the Investment Manager will then use its discretion in evaluating the outcomes derived from the above process when deciding to execute the stock selections. This process is depicted in the graph below. INVESTMENT UNIVERSE APPROXIMATELY 5,000 SECURITIES Investment constraints Quantitive stock screening Country allocation model INDIVIDUAL SECURITY SELECTION ASIA LONG SHORT FUND PERFORMANCE INFORMATION As the inception date of the Fund is 1 April 2006, actual long-term data is unavailable. Additionally due to the absence of trading history for this Fund, the Investment Manager is unable to determine the potential performance (either positive or negative) of the Fund during a variety of market conditions. Please refer to section 6 for further information regarding the risk of investing in a Fund with limited or no trading history. CURRENT INVESTMENTS The Fund invests in listed securities and instruments such as shares, futures, swaps, contracts for differences, and approved cash deposits and cash equivalents in a number of countries throughout Asia, including but not limited to: Australia, China, Hong Kong, India, Indonesia Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan and Thailand. 19

79 MACQUARIE NEWTON JAPAN MARKET NEUTRAL FUND Investment objective This new Fund aims to achieve absolute returns with relatively lower risk than the Japanese share market. Investment strategy The Investment Manager utilises quantitative securities selection models to select a portfolio of long and short Japanese securities. These models are sector-specific and are based on the Investment Manager s view that the performance of securities in each sector is driven by different sector specific factors. There are currently 6 sectors in the Japanese share market that are considered for investment by the Investment Manager: Consumer Discretionary, Materials, Information Technology, Industrials, Financials and Consumer Staples. Shares may be selected from these sectors using quantitative security selection models. The quantitative security selection models are based on a number of factors, each of which broadly falls into one of the following categories: Analyst behaviour which measure changes in investor expectations by monitoring earnings forecasts amongst the analyst community Valuation which estimate the impact of a security s historical and forecasted valuation, based on a number of fundamental measures Quality which measures the quality of a company s financial position based on a number of factors including the company s balance sheet and risk based measures such as price and earnings volatility Market sentiment which predominately measure the recent price behaviour of a share and trading volume The Investment Manager s security selection models analyse each sector independently of the other sectors. Stage 2 uses mathematical equations (models) which seek to incorporate the results of stage 1 of the selection model and maximise the investment portfolio s risk adjusted return subject to a number of constraints including: Sector constraints this aims to minimise exposure to the risk of market swings which affect specific industries or sectors (like mining or transport) differently than others Dollar constraints this aims to reduce the sensitivity of the portfolio to movements in the underlying market by making the long positions (buying shares) and short positions (selling shares) approximately equal in value Maximum position size this aims to limit the size of an investment in a single company or sector JAPAN MARKET NEUTRAL FUND PERFORMANCE INFORMATION As the inception date of the Fund is 1 April 2006, actual long-term data is unavailable. Additionally due to the absence of trading history for this Fund, the Investment Manager is unable to determine the potential performance (either positive or negative) of the Fund during a variety of market conditions. Please refer to section 6 for further information regarding the risk of investing in a Fund with limited or no trading history. CURRENT INVESTMENTS The Fund invests in Japanese listed securities and instruments such as shares, units in unit trusts, and approved cash deposits and cash equivalents. 20

80 MACQUARIE NEWTON MULTI-STRATEGY FUND Investment objective The Fund aims to achieve long term absolute returns with moderate levels of risk by investing in a portfolio of absolute return and specialist equity funds. Investment strategy The Fund invests in a portfolio of Macquarie Newton Specialist Funds. Over time it is expected that the portfolio may change, and may include additional strategies and funds that are managed by the Investment Manager or by managers incubated + by the Macquarie Bank Group. The Investment Manager will generally change the investments or strategy allocation within the Fund when it believes that superior opportunities or investment strategies are available from the pool of strategies having regard to the overall risk and return profile of the Fund. Allocation to other funds The Investment Manager seeks to allocate capital among the various Macquarie Newton Specialist Funds in a manner that it considers most suitable for achieving the investment objective of the Fund. The Investment Manager formulates a strategic view of the relevant markets and the investment opportunity set in the medium term. The portfolio is then constructed by first taking into account the strategic view and then supplementing this with qualitative and quantitative analysis seeking to maximise the risk/return profile for the portfolio. The Investment Manager also considers diversification on a number of levels including the number of funds in the portfolio, the trading history of these funds, and the contribution that each fund makes to the overall risk of the portfolio. For example, the Investment Manager may form a strategic view that there will be a high level of merger and acquisition activity in the next 12 months. As a result, the Investment Manager may also form the view that this will lead to many investment opportunities for the Special Events Fund (as part of its investment strategy involves aiming to profit from the market s mispricing of merger and acquisition activity). Accordingly, the Investment Manager may decide to increase the Fund s allocation to the Special Events Fund. At the date of this PDS, it is intended that the Fund will invest in the Macquarie Newton Specialist Funds listed in the table below. FUND APPROXIMATE ALLOCATION Special Events Fund 32.50% Buy Write Fund 18.00% Global Futures Fund 17.50% Australian Absolute Return Fund 10.00% Income Timing Fund 12.00% Asia Statistical Arbitrage Fund 10.00% The allocation to each of the Funds listed in the table above is only current at the date of this PDS and is provided for illustration purposes. The allocation is likely to change in accordance with the views of the Investment Manager described above. The allocation to the particular Funds is available on the Investment Manager s website at macquarie.com/newtonfunds. Additional investment strategies of the Fund will also be set out on the Investment Manager s website. MULTI-STRATEGY FUND PERFORMANCE INFORMATION As this Fund was only established on 2 September 2005, actual long term data is unavailable. Additionally due to the absence of long term trading history for this Fund, the Investment Manager is unable to determine the potential performance (either positive or negative) of the Fund during a variety of market conditions. Please refer to section 6 for further information regarding the risk of investing in a Fund with limited or no trading history. While we have included in this PDS past performance information for four of the underlying Funds into which this Fund currently invests, it is not possible to determine the past performance of this Fund by reference to the past performance of the underlying funds as the allocation to underlying funds may change. + An incubated manager is a hedge fund manager to whom Macquarie has provided initial seed capital, funding and assistance in establishing a hedge fund typically in exchange for a shareholding in their management company. 21

81 OTHER USEFUL INFORMATION ABOUT THE FUNDS Allowable investments Investors should note that the Constitution for each Fund allows the Fund to invest in a much broader range of assets than those in which it currently invests and which are described in the Current investments section under each Fund profile above. In particular, each of the Funds may invest in approved cash deposits, cash equivalents and derivatives. As a result of holding long and short positions which may completely or partially offset each other, the Funds may hold significant amounts of cash. As such the return the Funds receive on cash will have an effect on the Funds performance. SPECIAL BUY GLOBAL GLOBAL AUSTRALIAN EVENTS WRITE FUTURES FUTURES ABSOLUTE FUND FUND FUND FUND RETURN FUND - ENHANCED Inception Date 2 October March August August October 2003 Annualised volatility* 2.33% 6.33% 9.68% 18.63% 3.74% Reward to risk ratio* Largest drawdown* -0.22% -3.22% -2.81% -7.90% -4.19% Percentage of winning months* 93.10% 70.83% 73.68% 68.42% 68.97% Average gain in a winning month* 0.92% 2.03% 2.29% 4.45% 0.94% Average loss in a losing month* -0.17% -1.25% -1.34% -2.84% -0.84% Historical performance statistics for the Asia Statistical Arbitrage Fund, the Income Timing Fund, the Asia Long Short Fund, the Japan Market Neutral Fund and the Multi-Strategy Fund were not available at the date of this PDS due to these Funds having limited or no trading history. Please refer to the risks section of this PDS for a description of the risk associated with investing in funds with limited or no trading history. The figures included in the above table have been calculated from the inception date for the relevant Fund. * The Funds above existed as wholesale trusts prior to their conversion to registered managed investment schemes. It is important to note that the performance statistic information set out above has been adjusted for differences between the fees that were charged by the Macquarie Newton Specialist Funds wholesale trusts and the fees that are charged by the Macquarie Newton Specialist Funds registered managed investment schemes. The performance statistics have been calculated after taking into account Fund fees and expenses (in particular including Performance Fees but not any Contribution Fee or Withdrawal Fee) and assumes reinvestment of distributions. The performance statistics are based on a short time period and the results could vary significantly in the future if market conditions are different from those that existed for the period relating to the above figures. In particular the Global Futures Fund and Global Futures Fund - Enhanced may have significantly higher volatility. Explanation of performance statistics Volatility is a measure of the degree of fluctuation in a fund s returns^. The higher the volatility, the higher the variation you should expect in a fund s returns. Reward to risk ratio means the ratio of the total annualised return^ since inception of an investment relative to the annualised volatility of those returns. Largest drawdown means the percentage decrease in value of an investment from its highest month end value to its subsequent lowest month end value (assuming reinvestment of distributions and ignoring applications and withdrawals). A winning month means a month in which the value of a fund (assuming reinvestment of distributions and ignoring applications and withdrawals) has increased. A losing month means a month in which the value of a fund (assuming reinvestment of distributions and ignoring applications and withdrawals) has decreased. ^Return when used in the above definitions refers to the percentage change in unit prices for the relevant period assuming reinvestment of distributions. 22

82 ABOUT DERIVATIVES The Macquarie Newton Specialist Funds may employ strategies that require the use of derivatives. This section aims to provide potential investors with some understanding of the use of these instruments. A derivative is a financial contract that derives its value from something else (often referred to as the underlying it is usually a security, index (for example the S&P/ASX 200 Index) or currency rate or the value of another asset type). As the value of the underlying changes, the value of the derivative will also change. FUND Special Events Fund Buy Write Fund Global Futures Fund* Global Futures Fund Enhanced* Australian Absolute Return Fund Income Timing Fund Asia Statistical Arbitrage Fund Asia Long Short Fund Japan Market Neutral Fund Multi-Strategy Fund Multi-Strategy Fund Capital Protected THE INVESTMENT MANAGER CURRENTLY ENVISAGES BUYING AND SELLING THE FOLLOWING TYPES OF DERIVATIVES Options, futures, currency derivatives** Options, futures Futures, currency derivatives** Futures, currency derivatives** Options, futures Futures, currency derivatives**, contracts for difference, swaps Options, futures, currency derivatives**, contracts for difference, swaps Futures, currency derivatives**, contracts for difference, swaps Options, futures, currency derivatives**, contracts for difference, swaps May have exposure to derivatives and futures through investment in underlying funds and strategies which require the use of derivatives * For these Funds, futures contracts are the primary investment. ** Currency derivatives may be held for the purpose of hedging foreign currency exposure (please refer to section 6 for a description of the risk related to foreign currency exposure). DERIVATIVE STRATEGIES USING OPTIONS Buying options to gain or reduce exposure This strategy can be used if you want to gain exposure to (by buying call options) or reduce exposure to (by buying put options) an asset. Taking shares as an example, it may allow you to profit from movements in share prices, without having to purchase or sell the underlying share. Your loss is limited to the cost of the option. Using options for leverage Leverage provides potential for a higher return from a smaller initial outlay than investing directly. The purchase price of an option may be a fraction of the cost of the underlying share. Therefore trading options allows you to benefit from movements in share prices without having to pay the full price of the share. Using options to protect exposure Options can be used as a risk management tool. For example, buying put options over shares you own can be used to protect against adverse share price movements. Using options to generate income You can earn extra income from shares, over and above dividends, by writing call options against the shares you own. This is known as a buy write strategy. This is the core strategy of the Buy Write Fund. Please refer to the description of the Buy Write Fund in section 5 for an example of how options may be used to generate income. DERIVATIVE STRATEGIES USING FUTURES What are futures? A futures contract is an agreement to buy, or sell, a specific commodity, currency or financial instrument (underlying asset) at a fixed price on a fixed future date. Futures contracts are legally binding. The future date, price and details of the underlying asset are all fixed at the time the contract is entered into. Only an initial deposit needs to be made at that time (although, depending on the value of the underlying asset, additional amounts (known as margin) may be required to secure obligations which may arise on the settlement date of the futures contract). Accordingly, futures contracts are leveraged as they provide a larger exposure to the underlying asset than the value of the initial deposit. Please refer to the description of the Global Futures Fund in section 5 for further information on leverage. Uses of futures Futures traders can generally be categorised as: hedgers who have an interest in the underlying asset and want to offset the risks of holding this interest; and speculators who have no interest in the underlying asset but seek to profit from expected price movements in the underlying asset. Futures markets transfer risk between traders with different risk and time preferences. The Global Futures Fund and the Global Futures Fund Enhanced primarily trade futures contracts to achieve their investment objective. 23

83 SECTION 6 Significant Risks WHAT ARE THE SIGNIFICANT RISKS? Risk and your investment Investing in the Funds may be considered speculative as the value of your investment will go up and down with the value of the assets of the Fund in which you invest. The risk of your investment depends on many factors; some include the asset class in which the Fund invests, the investment strategy of the Fund, the Fund s use of leverage, your investment time frame, the timing of your investment and the performance of the Investment Manager. You should be aware that you may lose some or all of the money you invested and there is no guarantee that you will receive any income. Your investment may be exposed to risks including the following: RISKS PARTICULAR TO THE FUNDS No trading history As at the date of this PDS, the Asia Statistical Arbitrage Fund, the Income Timing Fund, the Asia Long Short Fund and the Japan Market Neutral Fund have no trading history as registered managed investment schemes. Therefore these Funds do not have a trading history which investors may use in making an evaluation of them. Also, the strategies used by these Funds have not been tested in actual market conditions and any historical testing of how these Funds may have performed or simulations in relation to how they may perform is unreliable. Similarly, funds and investment strategies invested in by the Multi-Strategy Fund in the future (including funds being developed by the Investment Manager and those incubated by Macquarie) may have only limited or no trading history. Without such a trading history, the information used by the Investment Manager for the purpose of evaluating these funds and strategies is less reliable. Leverage/gearing risk Each Fund has the ability to borrow cash or use derivatives to leverage exposures within the Fund. Leverage generally magnifies both profits and losses and increases the risk of a total loss of Unitholders' money. The higher the level of leverage, the greater the chance of profit or loss. Further, returns from a leveraged investment will generally be more volatile than returns from an unleveraged investment (see "Volatility risk" on page 25 for further details). In particular, managed futures strategies such as the Global Futures Fund and Global Futures Fund Enhanced employ high to extremely high levels of leverage. Derivative risk The value of a derivative may fail to move in line with the underlying asset. In addition the derivative may be illiquid or the counterparty to the contract may not meet their contractual obligations. This may have an adverse effect on the value of a Fund's investments. While using derivatives for hedging can reduce the risk associated with an investment, it cannot be guaranteed that hedging will always be successful. When derivatives are used for investment purposes rather than for hedging purposes the risks may increase. As derivatives provide leverage both profits and losses can be magnified. This risk is particularly relevant to the Global Futures Fund and the Global Futures Fund Enhanced. The primary investments of these Funds are futures contracts (which are derivatives). For these Funds futures contracts are not used for hedging investment risk. Performance risk The value of investments of a Fund (and so the value of your investments in the Fund) may decline. While the Funds operate within a risk management framework, the risk management techniques or investment strategies adopted by the Investment Manager may not be successful and the value of the Fund may decline. Performance is affected by each of the risks outlined in this section. Additional factors which may result in poor performance include: Incorrect information - the information available to the Investment Manager or the analysis of information by the Investment Manager may be incorrect. Use of models the strategies employed by the Investment Manager in relation to the Funds may rely on quantitative trading and valuation models. These models may not successfully select profitable investments or manage risk or perform in a manner to which they have historically performed or were intended to perform. Trading costs incurred in trading investments may be higher than anticipated. If lenders exercise their rights to recall securities borrowed and sold short, and the Funds cannot borrow elsewhere, the Investment Manager will be forced to close out the short sale contracts and this may result in realised losses to the relevant Fund. 24

84 Volatility risk Generally, the higher the potential return for a Fund the higher the corresponding risk, and the greater the chance of substantial return fluctuations (including the possibility of losses) that may occur over time (especially over shorter periods of time). This is especially so for the Global Futures Fund and the Global Futures Fund Enhanced due to the high to very high levels of leverage used in these Funds. Volatility risk may also mean that the value of a Unit may decline considerably between lodging a Withdrawal Form and the determination of the unit price at the time of withdrawal. Fees paid to the responsible entity and Investment Manager Performance Fees could be made in respect of unrealised gains of the Funds that may never be actually realised. As the Investment Manager will be partially compensated based on the trading profits of the Funds (by way of a Performance Fee) it may create an incentive for the Investment Manager to make investments on behalf of the Funds that are riskier or more speculative than would be the case in the absence of such fees. Broad investment mandate Each of the Funds has a broad investment mandate. This gives the Investment Manager generally more discretion to allocate the Funds' investments, as compared with traditional investment managers who may have a narrower investment mandate. While the investment mandates have been designed with the aim of maximising each Fund's risk adjusted returns, there is still the risk that investing to the full extent of the investment mandate may have an adverse effect on the value of the Funds. Event/opportunity risk There is the risk that there are inadequate trading opportunities which the Investment Manager wishes or is able to participate in. As a result, the assets of the Funds may not be fully invested in trading positions and may be heavily weighted in cash or equivalent assets. The return on cash or equivalent assets may be lower than that available if there were sufficient trading opportunities. There is the risk that the performance of the Funds may be affected adversely by market conditions where opportunities to buy are not evenly matched with opportunities to sell. The performance of the Funds may also be affected by adverse corporate events such as takeover risk and demerger risk. For example a Fund may incur loses if it is short a share that is the subject of a takeover. Event/opportunity risk is particularly relevant to the Special Events Fund because the performance of this Fund depends on the volume of special events opportunities available. The Special Events Fund is also subject to "deal failure risk" where once a position is entered into, the corporate transaction does not proceed. This risk is monitored and assessed by the Investment Manager until completion of the transaction. Trading restrictions MPML and the Investment Manager s relationship to Macquarie Bank mean that MPML and the Investment Manager may be subject to trading restrictions from time to time. One such restriction is that the Funds may not invest in shares issued by Macquarie Bank Limited except upon the terms of any exemption granted by ASIC (section 259C of the Corporations Act). As at the date of this PDS an exemption had been obtained in respect of all of the Funds issued under this PDS. Trading restrictions may result in an adverse effect on the value of a Fund s investments due to the Investment Manager being unable to enter into positions or exit positions as desired. Option writing risk The core investment strategy of the Buy Write Fund is to buy a diversified portfolio of shares and to write options over some of these shares to generate additional income. The Buy Write Fund writes single share options only over shares held in the portfolio so this Fund s potential liability is limited to the total value of the shares over which options are written. In a rising market the use of call option writing has the effect of capping the upside potential, and limiting this Fund s growth potential as a whole. Additionally, when markets are not volatile, the potential income generated from writing call options may be limited. Counterparty risk The strategies implemented by the Funds rely on the successful completion of contracts by external counterparties. There is a risk that these counterparties may fail in their contractual responsibilities, including in particular, the risk that a counterparty may go into liquidation. As at the date of this PDS, Macquarie Bank is a key provider of stock broking, stock lending, custody, and other fund services to the Funds. In this regard the Funds have counterparty exposure to the credit worthiness of Macquarie Bank. It is intended that Goldman Sachs International ( GSI ) will be been appointed as a prime broker and custodian to the Funds (excluding the Multi-Strategy Fund, Global Futures Fund and the Global Futures Fund- Enhanced)(please refer to page 41 for further details). Once appointed as prime broker to the Funds, GSI will provide broking, stock lending, and other fund services. And, once appointed as custodian, GSI will be responsible for the safekeeping of all the investments and other assets of the Funds (the "Custody Assets") delivered to it. 25

85 The Custody Assets may be used by GSI as collateral for obligations owed by the Funds to GSI, in which case the Custody Assets will become the property of GSI and the Funds will have a right against GSI for the return of equivalent assets only. The Funds will rank as an unsecured creditor in relation to the Custody Assets held as collateral, in the event of the insolvency of GSI, the Funds may not be able to recover such equivalent assets in full. In this regard the Funds have counterparty exposure to the credit worthiness of GSI. Cash held or received for the Funds by or on behalf of GSI will not be treated as client money and will not be subject to the client money protections conferred by the client money rules set out in the FSA Client Money Rules. Accordingly the Fund s cash will also be collateral and will not be segregated from the cash of GSI. As a consequence such cash may be used by GSI in the course of its business and the Fund will rank as a general creditor of the Prime Broker in the event of GSI s insolvency. Credit risk The Funds face the risk that an issuer of a security in which a Fund has invested will default on its obligations due to insolvency or financial distress, resulting in an adverse effect on the value of a Fund's investments. Liquidity of investment portfolio Liquidity relates to the ability of the Investment Manager to sell an investment in a timely manner at a price around the prevailing market rates. The market for some securities in which the Funds may invest may be relatively illiquid. The liquidity of the markets in which the Funds may invest has the potential to fluctuate substantially over time. The market for relatively illiquid securities tends to be more volatile than the market for more liquid securities. Investment of the Funds' assets in relatively illiquid securities may restrict the ability of the Investment Manager to dispose of investments at a price and time that it wishes to do so. The risk of illiquidity also arises in the case of over-the-counter transactions. There is no regulated market in such transactions, and the bid and offer prices will be established solely by dealers in these transactions. Liquidity of Units Investments in the Funds may not be as liquid as some other investments. An active secondary market is not expected to develop in the Units. The Funds underlying investments may also be illiquid (refer to "Liquidity of investment portfolio" above). In some circumstances MPML may delay or stagger withdrawals and delay payment of withdrawal proceeds from any of the Funds (see page 36). Suspension risk The Constitution allows MPML to suspend pricing of Units as well as suspend applications and withdrawals for Units in the Funds (see page 36). Investors may not be able to invest or withdraw when such a suspension is invoked by MPML. Investors may not be able to obtain a market value of their investment if the unit price is suspended. Risk of litigation The Funds may accumulate substantial positions in the securities of a company that becomes involved in proxy fights or other litigation or attempts to gain control of the company. Under those circumstances, MPML might be named as a defendant in a lawsuit or regulatory action. In addition the outcome of such disputes, which may affect the value of the Funds, may be impossible to anticipate. Technology risk The quantitative models developed by the Investment Manager rely on in-house and third party technology. The Investment Manager s proprietary execution systems, for example, may not always be available due to technological faults. This may have an adverse effect on the value of the Funds, for example, if the Investment Manager is unable immediately to exit a position due to technological faults. Key person risk Key individuals of the Investment Manager may change, which may affect the future performance of a Fund. In addition each Fund s contract with the Investment Manager may be terminated on short notice. Fund risk The Funds may terminate or the Investment Manager or the investment professionals could change. The suggested time frame for investment in the Funds is 5 to 7 years. MPML has discretion to terminate the Funds before that time frame ends. MPML has discretion to compulsorily withdraw Units. Investing in the Funds may give different results than investing directly in the market because investing in the Funds may have a different income, capital gains and expense profile outcome compared to direct investment. Furthermore the results of investing in the Funds may be affected by investment and withdrawal of other investors. 26

86 GENERAL INVESTMENT RISKS General market Investors' returns may be adversely affected by market conditions including, but not limited to, market volatility, interest rates, economic variables, political events, war, natural events and changes in law which may occur globally or at a country, industry or asset class specific level. Foreign exchange If the Fund in which you invest has investments denominated in a foreign currency then the Fund's assets will be at risk to adverse movements in the Australian dollar against that foreign currency. For example, assuming an unhedged position, if the value of the Australian dollar rose against the foreign currency, the value of the Fund's offshore investments would fall in Australian dollar terms. The currency hedging employed by the Investment Manager will not completely remove the risk of a foreign currency exposure causing an adverse impact on your investment return. In addition, costs will be incurred in implementing any hedging strategy. Taxation Changes in tax laws or their interpretation could adversely affect the tax treatment of the Fund, its investments and its investors. Other than the "Taxation" section (see page 44) which sets out some tax issues, MPML does not provide taxation advice to investors and all investors should seek independent taxation advice before investing in any of the Funds. In the event of an adverse tax change MPML reserves the right to change investments of the Fund, or restructure the Fund, or compulsorily withdraw Units in the Fund in accordance with the Constitution to limit or prevent any adverse effects. Investment via a Fund may offer a different tax outcome than investing directly due to withdrawals or investments by other investors and as a result of income or capital accruing in the Fund. HOW YOU CAN MANAGE RISK You can seek to reduce your investment risk in a number of ways including: Obtain professional advice Professional legal, taxation and financial advice can help you determine whether an investment in Units is appropriate for you bearing in mind your investment objectives, financial and personal situation, risk tolerance and level of investment experience. Diversification Diversifying your investments, spreading them across asset classes, securities and markets, can help reduce the impact that events affecting one asset class, security or market will have on your overall investment portfolio. HOW THE INVESTMENT MANAGER MANAGES RISK The Investment Manager manages risk for the Funds by: using ongoing research and risk software to monitor the value of the investment portfolios, limit exposure to individual investments and to seek to maintain the optimum levels of diversification in accordance with the Funds' investment objectives using derivatives to hedge equity and foreign exchange risk in certain market conditions managing and maintaining reasonable liquidity risk in accordance with the Funds' investment objectives diversifying investments with the aim of not overexposing the Funds to any one particular sector, country and other known risk factors in accordance with the Fund s investment objectives Although these controls may help to mitigate risks, they do not remove them. Legal and compliance risk Domestic and/or international laws or regulations may change in a way that adversely affects the Fund in which you invest. Differences in laws between countries or jurisdictions may make it difficult for MPML to enforce legal agreements entered into on behalf of the Funds. Each Fund reserves the right to take steps to limit or prevent any adverse effects from changes to laws or their interpretation, including altering investments of the Fund or restructuring the Fund. Country risk The Investment Manager may invest in securities in a country which may experience economic or political instability. Such instability may cause delays in realising, or loss in value of the assets invested in that country. 27

87 SECTION 7 Fees and Other Costs In this section a reference to a fee payable to MPML means the fee is payable to Macquarie Portfolio Management Limited in its own capacity. TYPE OF FEE OR COST 1 AMOUNT HOW AND WHEN PAID Fees when your money moves in and out of the Funds. Establishment fee The fee to open your investment Contribution Fee The fee on each amount contributed to your investment 2 Withdrawal Fee The fee on each amount you take out of your investment 3 Nil. Your financial adviser may charge you a fee of up to 3% (inclusive of GST) of your Application Amount. This fee is deducted from your Application Amount and paid to your financial adviser. 1% (inclusive of GST) calculated on the unit price at withdrawal for withdrawals within 12 months of your initial investment (unless the withdrawal results from exercising a cooling off right or switching to another Fund). Not applicable Deducted from your Application Amount and paid to your financial adviser once your Units are issued. Depending on your arrangements with your financial adviser, the amount of this fee may be negotiated and your adviser may rebate all or part of this remuneration. This fee may not apply when switching to another Fund (see section on Switching your investment between Funds. See page 30). Deducted from your withdrawal proceeds and paid to MPML. 28 Termination fee The fee to close your investment Switching fee The fee charged when you switch between Funds. Management Costs The costs associated with managing your investment Operational costs excluding the Multi-Strategy Fund: are the fees and costs for operating the Fund. They include administration, distribution costs, and other expenses incurred in operating the Fund except for transaction costs and abnormal expenses. See page 29 for further details. Nil Nil (See section on Switching your investment between Funds. See page 30) Capped at 0.615% p.a. (inclusive of the net impact of GST) calculated monthly on the month end NAV excluding transaction costs and abnormal expenses for each of the Funds. Not applicable Not applicable The expenses are payable or reimbursable out of the assets of the Funds as and when they arise. 1 All fees are shown without taking into account income tax but include the net impact of GST (that is including GST less any applicable reduced input tax credit) unless otherwise stated. 2 This fee includes an amount payable to an adviser for advice about this product (See Adviser remuneration under the heading Additional explanation of fees and costs page 33). 3 The Withdrawal Fee will apply unless withdrawal results from exercising a cooling off right or switching between Funds in certain circumstances.

88 Management Costs AMOUNT HOW AND WHEN PAID The costs associated with managing your investment Operational costs of the Multi-Strategy Fund: are the fees and costs for operating the Multi-Strategy Fund. They include administration, distribution costs, and other expenses incurred in operating the Multi-Strategy Fund except for transaction costs and abnormal expenses. See below for further details. Capped at 0.26% p.a. (inclusive of the net impact of GST) calculated monthly on the month end NAV excluding transaction costs and abnormal expenses for the Multi- Strategy Fund. Please note that the Multi- Strategy Fund buys Units in other Funds which also incur operational costs as detailed above (see "Operational costs excluding the Multi-Strategy Fund"). Management Fees The fees for managing your investments Funds (except the Multi-Strategy Fund) Base Management Fee The Base Management Fee varies for each Fund from 1.15% p.a. to 3.05% p.a. (inclusive of the net impact of GST) calculated monthly on the month end NAV. Performance Fee This fee varies for each Fund from 20% to 25% (inclusive of the net impact of GST) of the returns 5 over the relevant Fund s benchmark subject to a High Water Mark accrued daily. The calculation of the Performance Fee for the Global Futures Fund and the Global Futures Fund Enhanced is not subject to a benchmark. Macquarie Newton Multi-Strategy Fund Base Management Fee There is no Base Management Fee for this Fund. Performance Fee This Fund will, however, pay a Base Management Fee of 1.60%p.a. (inclusive of the net impact of GST) calculated monthly on the month end NAV for each of the Funds and underlying funds into which this Fund invests. 20% (inclusive of the net impact of GST) of positive returns 5 subject to a High Water Mark accrued daily. The calculation of the Performance Fee for this Fund is not subject to a benchmark The expenses are payable or reimbursable out of the assets of the Multi-Strategy Fund as and when they arise. The Base Management Fee payable to MPML is calculated monthly and reflected in the unit price 4, and is paid monthly in arrears out of the Fund (but adding back accruals for performance fees). The Performance Fee payable to MPML is accrued daily and reflected in the unit price 4, and is generally paid quarterly out of the Fund. For the particular fees charged by each Fund, please refer to the table on page 6 of this PDS. Not applicable This Base Management Fee will be paid from the Funds' assets in which the Multi-Strategy Fund invests and will be reflected in the unit price 4 of those Funds. The Performance Fee payable to MPML is accrued daily and reflected in the unit price 4, and is generally paid quarterly out of the Fund. For fees associated with investing in the Macquarie Newton Multi-Strategy Fund - Capital Protected, please refer to Part 1 of this PDS. 4 Unit price is calculated after the deduction of the Base Management Fee, Performance Fee, operational costs and transaction costs properly referable to the relevant Class in the Fund. 5 Returns are calculated before the deduction of the Performance Fee. The High Water Mark is adjusted by deduction paid per Unit Performance Fees and distributions. 29

89 A note on the Performance Fee payable with respect to the Buy Write Fund In the event that the unit price of the Buy Write Fund is above the Benchmark Value, even in a falling market, MPML is entitled to a Performance Fee. This means that investors in the Buy Write Fund may have to pay a Performance Fee even if the unit price falls. A note on the Base Management Fee and Performance Fee payable with respect to the Multi-Strategy Fund The Funds or strategies into which the Multi-Strategy Fund invests will charge a Base Management Fee, but not a Performance Fee, to the Multi-Strategy Fund. The Base Management Fee payable by the Multi-Strategy Fund may differ from that payable by other investors into the relevant Fund. Additionally the Multi-Strategy Fund will not charge a Base Management Fee, but will charge a Performance Fee, to its investors. The Performance Fee is calculated on the performance of the Multi-Strategy Fund and not on the performance of the individual component strategies. Additional explanation of fees and costs The following important additional information has been provided to assist you in understanding the "Fee" table set out on pages DIFFERENTIAL FEES MPML may charge or rebate fees: (a) by negotiation with investors who are wholesale clients, as defined in section 761G of the Corporations Act; and/or (b) to investors of the Funds who are also employees of MPML or a related body corporate of MPML who hold Direct Class Units, on a different basis to that applied to other members of the Funds where permitted by under the Corporations Act or relevant ASIC policy. In the case referred to in paragraph (b), the amount of any fee that relates to an investment in the Funds by an employee of MPML or of any related body corporate may be rebated by MPML in part or in full to that employee. Differential fee arrangements for employees (who hold Direct Class Units) will only apply where the number of votes that may be cast on a resolution of the Fund's Unitholders by employee Fund Unitholders (who hold Direct Class Units) is no more than 5% of all votes of Fund Unitholders or as otherwise permitted by law. Wholesale clients wanting to negotiate fees should contact the Macquarie Newton Service Centre on the number listed in the Directory. The level of any negotiated fee may depend on the amount invested by the client. We are not obliged to offer the same terms to, or make similar arrangements with, any other client. MANAGEMENT COSTS The total amount of management costs for a Fund may vary materially depending on the costs and expenses of operating the Fund. For example, management costs will depend on: the amount of the Base Management Fee charged by MPML; and the amount of the Performance Fee charged by MPML which varies depending on the Fund in which you invest. SWITCHING YOUR INVESTMENT BETWEEN FUNDS Up to two times a year you may switch all or part of your investment out of one Fund and into another Fund (excluding the Multi-Strategy Fund Capital Protected), without incurring the Contribution Fee or, if the switch occurs in the first 12 months of your investment, the Withdrawal Fee. This option allows you the flexibility to adjust your exposure to the Funds without incurring fees or charges resulting from the switch from MPML. Switching involves a withdrawal and application for Units and so it may have tax consequences. Please refer to section 10 for information regarding the taxation implications of switching. If you would like to switch all or part of your investment in a Fund, you must complete a Switching Form for the amount you would like to switch. Your switch may only be made if following the switch the amount invested in the Fund from which you would like to switch out of is greater than A$20,000 (or nil if you choose to switch your entire investment in the relevant Fund). Similarly, the total amount of your investment in the Fund into which you would like to switch into (including existing amounts in that Fund) must be greater than A$20,000. DOLLAR FEE EXAMPLES The dollar fee examples below show the effect that the fees would have on your account. Please note that the fees are included in each Fund's return and are not an additional charge borne by you. The examples assume an investment balance of $20,000 in the Special Events Fund. Example of Contribution Fee, Base Management Fee, Operational Costs and Withdrawal Fee Please note that this example does not include a Performance Fee, as we have assumed that there has been no increase in the unit price of the Fund. The effect of Performance Fees on your investment is considered in a separate example below. A Contribution Fee may be deducted from your Application Amount and paid to your financial adviser once your Units are issued. 30

90 A worked Contribution Fee example is set out below. The Contribution Fee for a $20,000 investment into the Fund, which has a 3% Contribution Fee (inclusive of GST) is as follows: $20,000 x 3% = $600 Therefore depending on the individual arrangements you have with your financial adviser, for every $20,000 you invest, you will be charged between $0 and $600 by your financial adviser. This means between $19,400 and $20,000 will be invested on your behalf. A worked Base Management Fee example is set out below. The ongoing Base Management Fee example is based on a $20,000 investment held over a 12 month period and using a total ongoing fee of 1.55% (inclusive of the net impact of GST) per annum: $20,000 x 1.55% per annum = $310 A worked Withdrawal Fee example is set out below. The Withdrawal Fee assumes that the Fund is liquid. It also assumes that you wish to withdraw 10,000 Units within 12 months after your initial investment. If the unit price at withdrawal is $1.06 and the Withdrawal Fee is 1% (inclusive of GST), the value of Units to be withdrawn is: 10,000 x $1.06 = $10,600 The Withdrawal Fee is: $10,600 x 1% = $106 So the proceeds you will receive following the withdrawal (and deduction of the Withdrawal Fee) is: $10,600 - $106 = $10,494. Please note that in addition to the above your $20,000 investment could also incur operational costs of up to $123 each year ($20,000 x 0.615%), assuming no increase in the unit price of the Fund. This represents an operational cost of up to 0.615% p.a. (inclusive of the net impact of GST) excluding transaction costs and abnormal expenses for the Fund. Example of Performance Fee* Assume you make an investment of $20,000 in the Special Events Fund as at 1 October and 20,000 Units are issued to you as at 1 October (that is, the unit price as at 30 September is assumed to be $1.00 per Unit). The High Water Mark is also assumed to be $1.00 per Unit and the benchmark for this Fund is the RBA cash rate target which is assumed to be 5.50% p.a. in the following examples. Performance Fee payable because the Fund s performance referrable to the relevant Class exceeds the Benchmark Value Let s assume that the unit price has increased to $1.025 (before deduction of the Performance Fee but after all other Fund fees and expenses) so that the value of your investment in the Fund as at 31 December is $20,500 (before deduction of the Performance Fee but after all other Fund fees and expenses). The Performance Fee payable on your investment is calculated in the following way: Benchmark Value = $ x (5.50% / 365) x $1.00 per Unit = $ Fund Performance = ($ $ ) per Unit = $ Performance Fee = $ x 20% per Unit = $ Total Performance = $ x 20,000 Fee = $44.55 The total Performance Fee of $44.55 is paid to MPML out of the assets of the Fund referrable to the relevant Class. This payment is made after 31 December. The value of your investment in the Fund is now worth $20, and the unit price is $ The new High Water Mark is $ per Unit and this is the High Water Mark for the next quarter used to calculate the Benchmark Value. Performance Fee not payable as performance is below the Benchmark Value Now let s assume instead that the value of your investment in the Fund as at 31 December has increased to $20,250 (before the Performance Fee but after all other fees and charges). No Performance Fee is payable on your investment as the unit price ($1.0125) has not exceeded the Benchmark Value ($ ). The High Water Mark will continue to increase by the benchmark over the next quarter and will not be adjusted at the end of the current quarter as a Performance Fee has not been paid nor any distribution made. Please note that the above are just examples. In practice, the actual investment balance of a Unitholder will vary daily and the actual fees and expenses that MPML charges are based on the value of the specific Fund, which also fluctuates daily. * All examples assume a constant daily change in the value of your investment within the quarter. 31

91 PERFORMANCE FEES, BENCHMARK AND HIGH WATER MARK Quarter 1 Quarter 2 Quarter 3 (30 June) Quarter 4 Quarter 5 Quarter 6 Quarter 7 (30 June) Quarter 8 Legend: Benchmark Value Unit Price Performance Fee No. 5 High Water Mark Performance Fee Distribution unit price ((before deduction of the Performance Fee but after all other Fund fees and expenses (except government charges)) Performance Fee Distribution Performance Fee No. 2 High Water Mark No. 1 High Water Mark No. 3 High Water Mark No. 4 High Water Mark Performance Fees are not payable at quarter 2, quarter 5, quarter 7 or quarter 8 because the unit price (before deduction of the Performance Fee but after all other Fund fees and expenses (except government charges)) has not exceeded the Benchmark Value. Performance Fees are payable at quarter 1, quarter 3, quarter 4 and quarter 6 because the unit price (before deduction of the Performance Fee but after all other Fund fees and expenses (except government charges))has exceeded the Benchmark Value. Performance Fee graph The graph is indicative only. It has been included to assist investors to understand the operation of the High Water Mark, Benchmark Value and Performance Fees. It does not reflect projected or forecast returns for any of the Funds. The above graph shows a hypothetical unit price (before deduction of the Performance Fee but after all other Fund fees and expenses) over time. The Performance Fee is calculated on the performance of the unit price (before deduction of the Performance Fee but after all other Fund fees and expenses) over the Benchmark Value. In the event that there is no benchmark for the Fund, the Performance Fee is calculated on the positive performance over the High Water Mark. If the unit price (before the Performance Fee) does not exceed the Benchmark Value or High Water Mark, then no Performance Fee is paid. Investors should note that the High Water Mark is adjusted for the payment of Performance Fees (for example at Quarter 6 in the graph above). The High Water Mark is also adjusted for distributions (for example at Quarter 7). Unit price and High Water Mark as at 28 February 2006 for Direct Class Units FUND UNIT PRICE HIGH WATER MARK BENCHMARK Special Events Fund $ $ RBA cash rate target Buy Write Fund $ $ S&P/ASX 200 Accumulation Index Global Futures Fund $ $ No benchmark Global Futures Fund Enhanced $ $ No benchmark Australian Absolute Return Fund $ $ RBA cash rate target Income Timing Fund Not applicable* Asia Statistical Arbitrage Fund Asia Long Short Fund Japan Market Neutral Fund Multi-Strategy Fund $ $ RBA cash rate target RBA cash rate target RBA cash rate target RBA cash rate target No benchmark 32 *As at 28 February 2006 the Income Timing Fund, Asia Statistical Arbitrage Fund, Asia Long Short Fund and Japan Market Neutral Fund have not issued Units, as such have no unit price or High Water Mark.

92 Transactional costs In addition to management costs, the Funds will incur transactional costs such as stamp duty, brokerage, settlement or clearing charges, which will be deducted from the Funds' assets as and when they arise. The amount of transactional costs charged by our third party service providers will depend on our arrangements with them (which are unknown and could not be found out by us at the date of this PDS). We will, however, try to negotiate commercial fee terms wherever possible. Stamp duty also varies from time to time and between jurisdictions. Operational costs In operating the Funds, MPML will incur a number of expenses. All expenses incurred by MPML in relation to the proper performance of its duties in respect of the Funds are payable or reimbursable out of the assets of the Funds to the extent that such payment or reimbursement is not prohibited by the Corporations Act. These expenses include, but are not limited to, administration fees, auditing fees, legal fees, advertising fees, and fees associated with communication with Unitholders. The amount of operational costs depends on the size of the Funds. Operational costs (excluding transactional costs) for each of the Funds, except for the Multi-Strategy Fund, will be capped at 0.615% p.a. (inclusive of the net impact of GST). Operational costs (excluding transactional costs) for the Multi-Strategy Fund will be capped at 0.26% p.a. (inclusive of the net impact of GST). Operational costs in excess of the capped amount will be borne by MPML. Adviser remuneration Your financial adviser will receive any Contribution Fee you pay on your investment. These fees may be in addition to any other fees or expenses you may have agreed with your adviser for their services. Your adviser should give you details of their remuneration arrangements. Depending on your arrangements with your financial adviser, the amount of these fees may be negotiated with your adviser and they may rebate all or part of this remuneration. Tax and insurance costs For information on significant tax implications relating to investing in the Funds - see the Taxation section on page 44. Changing fees We reserve the right to increase or defer fees, and to charge for other miscellaneous services. Factors which may lead us to vary the fees of the Funds (up to the maximum permitted under the relevant Constitutions) include legal, economic, policy and procedural changes. The right to vary is at our discretion and this is not an exhaustive list of circumstances which would lead us to vary the fees of the Funds. We will give you a minimum of 30 days notice of any change to the current fee and/or the introduction of any additional fee. Fees charged by third party service providers as part of the management costs may be indexed to rise with inflation. We cannot charge fees higher than the maximum fees stated in the Constitutions (to change the Constitution this way, we need to have Unitholders' approval by special resolution). These maximums are: 3.075% (inclusive of the net impact of GST) of the Application Amount with respect to the Contribution Fee (in the Constitutions this fee is referred to as an Application Fee) % (inclusive of the net impact of GST) per annum of the value of assets (but adding back any accruals for Performance Fees) with respect to the Base Management Fee (in the Constitutions this fee is referred to as a Management Fee) % (inclusive of the net impact of GST) of the greater of the unit price at which the Units being redeemed were issued to the Unitholder and the unit price at which Units are withdrawn as a Withdrawal Fee (in the Constitutions this fee is referred to as a Redemption Fee). $5, (inclusive of the net impact of GST) (in the case of the Multi-Strategy Fund) and $2, (inclusive of the net impact of GST) (for each other Fund) as a withdrawal processing fee. Please note that this fee is currently not charged by MPML % (inclusive of the net impact of GST) of the returns over the relevant Fund s benchmark (if any) subject to a High Water Mark with respect to the Performance Fee. Goods and Services Tax (GST) A Fund may be required to pay GST included in management and other fees and expenses. However, to the extent permissible by law, MPML will claim on behalf of the Fund a proportion (i.e. 75%) of this GST as a reduced input tax credit. Unless otherwise stated, fees and charges quoted in this PDS are inclusive of GST and take into account any available input tax credits. Fees and charges have generally been calculated on the basis that the fees and charges attract GST but MPML is expected to be entitled to claim reduced input tax credits on behalf of the Funds. However, to the extent that fees and charges attract GST and MPML is unable to claim input tax credits on behalf of the Funds, amounts paid or payable on account of GST may also form part of the fees and charges that are charged to investors. MPML retains the ability to recover the entire GST component of all fees and charges. Soft Dollar Commissions MPML or any member of the Macquarie Bank Group may from time to time give or receive non-monetary benefits, sometimes known as soft dollar commissions. These benefits may include, but are not restricted to research and market information, free or subsidised services, accommodation, broking arrangements, software and sponsorship of seminars and conferences. These benefits, when provided, will be paid by MPML or any member of the Macquarie Bank Group out of its own resources and so are not an additional cost to you of the Funds. We also maintain a register summarising forms of remuneration paid or provided to advisers. If you would like to review this register please contact Client Services on

93 SECTION 8 Terms and Conditions of the Investment 34 INDIRECT INVESTMENT SERVICE Where an Indirect Investment Service investor directs the responsible entity or operator of an Indirect Investment Service to acquire Units in the Funds on their behalf they do not become Unitholders in the Funds and accordingly have no rights as a Unitholder. The responsible entity or custodian of the Indirect Investment Service is the direct investor and becomes a Unitholder. Whether the responsible entity or custodian will exercise its rights as a Unitholder in the Funds on behalf of the Indirect Investment Service investor will depend on the arrangements between the Indirect Investment Service investor and the Indirect Investment Service responsible entity or operator. You should be able to request reports on your investment from the operator, and you should direct any enquiries to them. Certain provisions of each Fund's constitution are not relevant to indirect investors. For example, indirect investors cannot attend Unitholder meetings. Indirect Investment Service investor's should contact their Indirect Investment Service operator for details on the minimum initial investment amount, minimum additional investment amount, minimum withdrawal amount and minimum investment balance. TRANSACTING YOUR ACCOUNT Unit Classes Each Fund may issue different Classes of Units from time to time. Different Classes of Units may have different rights including as to fees, minimum investments, and the ability to withdraw and terms attaching to them. Direct Class and Indirect Class Units are offered under this PDS. For each of the Funds, Direct Class Units will be issued to persons investing directly in the Funds rather than via an Indirect Investment Service and will have the rights as specified in this PDS. Indirect Class Units will be issued to Indirect Investment Services. Multi-Strategy Class Units (which are not offered under this PDS) in the Funds, will be issued to certain wholesale clients, including the Multi-Strategy Fund. Multi-Strategy Class Unitholders will be charged a Base Management Fee of 1.60% p.a. (inclusive of the net impact of GST of the amount invested) for each of the Funds noted above, but will not be charged a Performance Fee and may be entitled to hold a lower minimum investment. Also Multi-Strategy Class Unitholders have an optional weekly withdrawal facility. Employee Class Units in the Funds may be offered to employees of MPML or a related body corporate of MPML. MPML may determine that Employee Class Unitholders will be not be charged a Base Management Fee or Contribution Fee for each of the Funds noted above, but will be charged all other fees and costs described in section 7 of this PDS. In addition, employees may only withdraw Employee Class Units in accordance with the policy described by the employee s employer. Additionally, the Multi-Strategy Fund will issue Capital Protected Class Units (which are not offered under this PDS) to certain wholesale clients, including the Multi- Strategy Fund - Capital Protected. Capital Protected Class Unitholders will not be charged a Base Management Fee but will be charged a Performance Fee in the Multi-Strategy Fund and may be entitled to hold a lower minimum investment. Also Capital Protected Class Unitholders have an optional weekly withdrawal facility. The unit price for each Class of Unit within a Fund will be determined by reference to the portion of assets and liabilities referable to the relevant Class in accordance with the provisions of the Constitutions. MPML will ensure it treats Unitholders in difference classes in accordance with its obligations under the Corporations Act. Making additional investments After initially investing in any of the Funds, except for the Macquarie Newton Multi-Strategy Fund - Capital Protected, you may apply for additional Units in the same Fund for a total value of at least $10,000 for direct investments. If you want to increase your holding of Units, you must send us a completed, signed Application Form in the form included in or accompanying this PDS plus your Application Amount to the Administrator whose address is set out in the Directory. Your Application Amount can only be paid via a direct debit from your bank account. The bank account which you have chosen to have direct debited must be held with an Australian financial institution and the bank account must be held in the applicant's name. Cash and cheques will not be accepted.

94 How we confirm applications A confirmation of receipt of your application will be sent to you generally within 10 Business Days of receiving your application. A confirmation of the number of Units issued to you will be generally sent to you within 5 Business Days of the determination of the unit price. The unit price is generally determined within 15 Business Days of the first Business Day of the month following the month in which your application is accepted. Your Unitholding will be rounded to six decimal places. If you are investing in the Macquarie Newton Multi- Strategy Fund Capital Protected, please refer to section 6 of Part 1 of the PDS for details on how we confirm applications. We reserve the right not to accept any application either wholly or in part. We may require additional information before accepting any application. Units issued are void if application monies paid are not subsequently cleared. No interest will be paid to applicants on any Application Amounts received. While we must pay your Application Amount into a trust account under the Corporations Act, any interest earned will not be paid to you but rather will be retained for the benefit of the Fund you invest in. We will refund your Application Amount if your application isn t accepted, but any interest earned on any application money will be retained by the Fund in which you wished to invest. Due dates for receipt of initial and additional investment applications The due date for receipt of Application Forms and the applicable Application Amounts is 7 Business Days before the last Business Day of the month. We may change the due dates at our discretion. If you are investing in the Macquarie Newton Multi- Strategy Fund Capital Protected, please refer to section 6 of Part 1 of the PDS for details on the due date for the receipt of the Application Form and the applicable Application Amount. Provided we receive your completed Application Form and the applicable Application Amount by the relevant due date and we accept your application, you will receive an interest in a Fund when we invest your monies in the Fund, which will generally occur on the first Business Day of the following month. If you are unsure about a particular due date, the current due dates and issue dates are available on-line at macquarie.com/newtonfunds or can be obtained by phoning the Macquarie Newton Service Centre on or by ing us at hedgefunds@macquarie.com. Alternatively your financial adviser will be able to provide you with details. Cooling off period If you decide that your initial investment in any of the Funds does not suit your needs, you can request in writing to have it cancelled within a 14 day cooling off period. The cooling off period begins when your transaction confirmation is received by you or five Business Days after your Units are issued, whichever is earlier. When calculating the amount to be returned to you, Contribution and Withdrawal Fees are not charged. However, you will bear any fluctuation in the unit price in the period since the date of your application and we may deduct costs and taxes that relate to the exercise of your cooling off right as the Corporations Act allow. Your right to cooling off will not apply if: you are a wholesale client; distributions attributable to your Units in the Fund are reinvested in accordance with your instructions; or you exercise any of your rights as a Unitholder in the Fund. If you wish to exercise your cooling off rights, please call the Macquarie Newton Service Centre on the number listed in the Directory. If you have invested via an Indirect Investment Service, you should consult the operator of that service about any cooling off rights you may have. How to withdraw your investment You can withdraw your investment in the Funds by withdrawing some or all of your Units at the unit price at the time of withdrawal. The withdrawal proceeds are unable to be paid to you by cheque, but rather will be direct credited to your nominated bank account when finalised. To withdraw some or all of your Units in the Funds you must send a completed, signed Withdrawal Form in the form included in or accompanying this PDS to the Administrator whose address is set out in the Directory. The due date for receipt of Withdrawal Forms is 10 Business Days before the last Business Day of the month, except for the Macquarie Newton Multi-Strategy Fund Capital Protected where the due date for receipt of Withdrawal Forms is 15 Business Days before the last Business Day of the month. We may change the due dates at our discretion. Provided we receive your Withdrawal Form by the relevant due date, your Units will generally be withdrawn on the first Business Day of the following month, subject to delayed withdrawals and illiquidity as described below. If there is a delay between the date your Units are withdrawn and the date the proceeds are paid to you, you will not be paid interest on your withdrawal proceeds. The current due dates and withdrawal dates are available on-line at macquarie.com/newtonfunds or can be obtained by phoning the Macquarie Newton Service Centre on or by ing us at hedgefunds@macquarie.com. Alternatively your financial adviser will be able to provide you with details. The minimum withdrawal amount is $10,

95 If immediately after your withdrawal from a Fund, the value of your investment in a Fund would be less than $20,000, your withdrawal request will be treated as a request to withdraw your entire investment. Until the unit price is determined, the return you receive on withdrawal will continue to be subject to changes in the value of the investments of the relevant Fund. See "When do we calculate unit prices" below to determine when the unit price will be determined for your withdrawal. Assuming that the Fund is liquid and withdrawals have not been delayed, we intend to pay the withdrawal proceeds generally within 5 Business Days after the determination of the unit price. The unit price is generally determined within 15 Business Days of the first Business Day of the month following the month in which your withdrawal is accepted. This may take longer where, for example, distributions are being calculated, audited and paid. Where we are required to withhold an amount under applicable tax laws on a withdrawal, by requesting a withdrawal, you authorise us to deduct an amount from your withdrawal proceeds to cover any outstanding tax liability. If you are a joint Unitholder, we will only accept requests for withdrawal from all parties. Transfers Units may be transferred to another person by completing and signing a standard transfer form, which can be obtained from MPML. MPML may impose conditions on any transfer in its sole discretion and may refuse to facilitate a transfer for any reason. Transfers of Units may have tax implications (see "Taxation for Australian residents" - page 44). You should obtain your own legal and tax advice before requesting a transfer. Delayed withdrawals and illiquidity We may extend the period for processing a withdrawal in certain circumstances such as if: we have taken all reasonable steps to realise sufficient assets to satisfy a withdrawal request but are not able to do so; we believe it is not in the best interests of investors as a whole to realise assets; we are unable to calculate the redemption price or fairly determine the Net Asset Value due to one or more circumstances outside our control. If a Fund becomes illiquid (as defined in the Corporations Act), you will only be able to withdraw from the Fund if we make an offer of withdrawal. If we do make an offer of withdrawal, you may only be able to withdraw part of your investment. There is no obligation for us to make such an offer. If we receive withdrawal requests comprising more than 5% of the Units on issue in a Class, we may pro rata the withdrawal requests and stagger the processing of remaining unsatisfied withdrawal requests. HOW WE CALCULATE UNIT PRICES What are unit prices? Unit prices determine how many Units you receive pursuant to any application or how many Units you withdraw under any withdrawal. We determine how many Units you receive pursuant to a successful application by dividing your Application Amount by the unit price applicable to the relevant Class. Similarly, the number of Units withdrawn as a result of any withdrawal is calculated by dividing the amount of the investment to be withdrawn by the unit price applicable to the relevant Class at the time of withdrawal. You can also request a number of Units to withdraw when withdrawing part or all of your investment. When do we calculate unit prices? Unit prices are calculated on a monthly basis. The unit price applied to your application or withdrawal will be the price based on the Net Asset Value referable to the relevant Class in the Fund as at the close of business on the last Business Day of the month in which the Application Form or Withdrawal Form is received, if the applicable form is received before the cut-off date for that month (otherwise, the unit price as determined for the next calendar month). If withdrawals from the Fund or applications for Units are suspended for any reason (see "Delayed withdrawals and illiquidity" - above), unit prices will be based on the Net Asset Value applicable when the suspension ends. If you choose to reinvest your distributions in additional Units (see page 37), the unit price for each reinvested distribution will be based on the Net Asset Value as at the close of business on the date the distribution is determined. The latest unit prices are available on-line at macquarie.com/newtonfunds or can be obtained by phoning the Macquarie Newton Service Centre on or by ing us at hedgefunds@macquarie.com. Alternatively, your financial adviser may be able to provide you with details. Other than for the Macquarie Newton Multi-Strategy Fund Capital Protected, the latest unit prices and your account information are also available on-line at the Administrator s Investor Web site at citco.com/funds. If you are interested in gaining online access to your current holdings, and transaction history, please contact investorweb@citco.com. The responsible account representative will provide the necessary documentation to be completed and returned in order to gain access. 36

96 How do we calculate unit prices? For each Class we divide the Net Asset Value referable to the Class of Units in the relevant Fund by the number of all Units on issue in that Class at the relevant time (NAV per Unit). All unit prices are rounded to six decimal places. MPML does not currently intend that there will be a buy or sell spread charged for the issue or withdrawal of Units, however, it reserves the right to do so. If a buy or sell spread is charged, then the application price of a Unit will be the NAV per Unit plus a per Unit estimate of the total cost of acquiring the assets referrable to the relevant Class and for the withdrawal price the NAV per Unit less a per Unit estimate of the total cost of selling those assets. MPML s estimate of total costs referred to above must be an estimate of the average amount of costs in the previous year or an estimate of the actual amount of costs, appropriate to avoid an adverse impact on other Unitholders due to the acquisition or disposal of assets because of the issue or withdrawal of Units. Valuation of the Fund We generally value the Funds as at the close of business on the last calendar day of each month. YOUR INVESTMENT RETURNS What makes up return on my investment? As a Unitholder your investment returns comprise: (a) capital return: the change in value of your Units over time, which can be positive or negative, and relates to movements in value of a Fund's investments that are properly referable to the relevant class of Units in a Fund, realised by withdrawing or selling your investment; and (b) distributions: any periodic payment you receive as a result of holding Units. Distributions As an investor in a Fund, you may receive a distribution from a Fund on an annual basis. As permitted by a Fund s Constitution we may require you to reinvest some or all of your distribution into additional Units in the Fund. If you are investing in Units in the Macquarie Newton Multi-Strategy Fund Capital Protected, please refer to section 2 of Part 1 of the PDS for information regarding the distribution policy particular to that Fund. Distributions typically comprise your portion of any income (such as interest payments, currency gains or losses and dividends) and any realised capital gains or losses (that is, profits or losses from the sale of investments) that are properly referable to the relevant Class of Units in a Fund. We intend, where possible, to distribute a Fund's net taxable income in the distribution period ending 30 June. The Funds Constitutions allow up to 60 calendar days after the end of the distribution period to pay distributions, or if the audit of a Fund has not been completed, as soon as possible after the audit. You can choose to credit these distributions to your bank account or reinvest them in Units. Distributions are unable to be paid to you by cheque. It's important that you mark which of these options you prefer on the Application Form if you do not choose one, we will reinvest the distributions to be paid on the Units you ve applied for in additional Units. See "How we calculate unit prices" (page 36) for details on how and when the unit price for Units applied for by way of reinvestment is determined. Unit prices fall after the end of each distribution period because the allocation of the distribution reduces a Fund's assets. The allocation of income with respect to a Class of Units in a Fund is made to all Unitholders holding Units in a Class at the distribution date, pro rata to the total Units on issue that are properly referable to the relevant Class of Units in a Fund. If you invest just before the end of a distribution period, you may find that some of your capital is returned as income. This distribution may represent a taxable return on your investment, see the "Taxation for Australian residents" section (page 44). 37

97 ACCESSING INFORMATION ABOUT YOUR INVESTMENT How we keep you informed If you are investing in the Macquarie Newton Multi- Strategy Fund Capital Protected, please refer to section 6 of Part 1 of the PDS for details on how we keep you informed. It is important that you know exactly what is happening with your investment. To help you stay informed we send you: Transaction You will receive confirmation that your confirmations application or withdrawal request has been received. Confirmations will be mailed to you generally within 10 Business Days of receiving your application or withdrawal request. You will receive confirmation if your application or withdrawal has been transacted. Confirmations will be mailed to you generally within 5 Business Days of the determination of the unit price. Statements Unit holding statements will be mailed to you monthly. Consolidated You will receive a tax annual tax statement Tax summary Reporting statement containing a summary of your distributions and tax components for the year ended 30 June to help you prepare your tax return. This summary may assist you in completing your tax return. Investor update: You will receive an annual investor update that provides relevant general investment information as well as a performance update for the Fund you have invested in. Disclosing entity The Funds are expected to become a disclosing entity under the Corporations Act, in which case they will be subject to the reporting and disclosure obligations required under the Corporations Act. Copies of documents lodged with ASIC in relation to the Funds may be obtained from, or inspected at, any ASIC office. If and when a Fund becomes a disclosing entity, you may obtain a copy of the Fund's annual and half year financial reports, which will be lodged with ASIC and any continuous disclosure notices given by the Fund. Copies of the financial reports and any continuous disclosure notices can be obtained from MPML free of charge. MPML will comply with this request as soon as practicable, and in any event within 5 days after receiving that request. If you would like more information on a Fund or any aspect of investing with the Macquarie Bank Group please talk to your financial adviser. Alternatively, you can contact the Macquarie Newton Service Centre on , or visit our website at macquarie.com/newtonfunds. Annual financial statements: You will receive the concise reports for each financial year for the Fund generally within four months after the end of each financial year, which includes a director s report, auditor s report and concise financial report. The full annual financial reports for the Fund and the half-yearly statements for the Fund are available on request. You may also gain online access to your account information from the Administrator at citco.com/funds. Please refer to "When do we calculate unit prices?" on page

98 SECTION 9 6 Additional Information Continued THE RESPONSIBLE ENTITY Macquarie Portfolio Management Limited is the responsible entity of the Funds. The role of the responsible entity includes: holding scheme property on trust for the investors; managing and investing scheme property; and ensuring scheme property is managed and dealt with in accordance with the scheme's constitution and the Corporations Act. Our legal relationship with you is governed by this PDS, the Funds' Constitutions, the Corporations Act and other laws such as case law, general law relating to trusts and legislation about the duties of trustees. Copies of the Constitutions are available free of charge, on request. To obtain a copy, please phone the Macquarie Newton Service Centre on The following brief summary does not refer to every provision of the Constitutions, and should be read in conjunction with other references contained in this PDS. YOUR RIGHTS AS A UNITHOLDER The Constitution for each of the Funds: provides that each Unit confers an equal undivided interest in the assets of a Fund subject to any rights, obligation and restrictions attaching to any particular Class. Where Units of a Fund are issued in different Classes, the rights and obligations attaching to the Units may vary among the Classes. provides that you are entitled to transfer all or any of your Units that you hold in a Fund to another person in the manner prescribed by MPML. sets out your rights to receive distributions of any income of a Fund. defines your rights to withdraw from the Fund: subject to the Fund being liquid investors can request withdrawal of some or all of the Units they hold in a Fund. define what you are entitled to receive when you withdraw your Units. define when a Fund may be wound up - a Fund will generally continue for a set period of not more than 80 years (less one day) unless MPML terminates a Fund at an earlier time by written notice to Unitholders. define what you are entitled to receive if a Fund is wound up - Unitholders are entitled to receive a share of the net proceeds of a Fund for the Class in which they hold Units pro rata to the number of Units they hold in that Class at the time of termination, after deducting the costs of realising a Fund's investments and any amounts owed to us. state that your liability as a Unitholder is limited to the amount you paid for your Units however, higher courts are yet to determine the effectiveness of provisions of this kind (see page 40). states that a quorum for a meeting concerning an ordinary resolution is two Unitholders holding at least 10% of all units or units in the relevant Class, unless the Fund or Class has only one member who may vote on a resolution, in which case that one member constitutes the quorum. Your rights to requisition, attend and vote at meetings are mainly contained in the Corporations Act. OUR RIGHTS AND OBLIGATIONS AS RESPONSIBLE ENTITY As responsible entity, we are subject to many duties under the Corporations Act including duties to act honestly, exercise care and diligence, and treat investors in the same class equally. Subject to the Corporations Act, the Constitutions of the Funds give us the following powers, duties and liabilities as responsible entity of the Funds and: allow us to refuse applications for Units, in whole or in part, at our discretion and without giving reasons. MPML may determine from time to time not to accept applications for Units in a particular Fund or in a number of Funds. The decision not to accept applications for a particular Fund may be made by MPML in its absolute discretion. allow us to set a minimum investment to be made in the Funds, and according to a Class of Units where applicable. allow us to extend the period for the withdrawal of Units in limited circumstances. allow us to compulsory redeem Units in the Fund. provide that, subject to the Corporations Act and proper performance by us in relation to the Fund, we are not liable in contract, tort or otherwise to investors for any loss relating to the Fund. 39

99 provide that, where we have acted in good faith, we are not liable for loss suffered in relation to the Fund as a result of reliance on documents or advice provided by another person, for a failure or omission by us or a delegate. provide that we are entitled to be indemnified out of Fund assets for any expense or liability incurred in properly performing our duties in relation to the Fund and to be reimbursed out of Fund assets for costs incurred in the proper performance of our duties. provide that there are no restrictions on us, or our associates, holding or dealing with Units in the Funds, dealing with ourselves, any related company or an investor and contracting and acting in any capacity in relation to Units. We will not be liable to account for any profits or benefits gained in connection with these activities. allow us to, in our absolute discretion, invest, borrow and generally manage the Fund, including by giving authority to another party to act as our agent or delegate in relation to the Funds. allow us to change the Constitution, but only with investor approval if the change would adversely affect your rights. allow us to retire, but only in accordance with the law. allow us to recover expenses incurred by us in relation to the proper performance of our duties to the relevant Fund out of the assets of the Fund. give us the right to terminate the Fund by notice to investors and then to sell the funds investments, pay expenses and pay your share of net proceeds to you. Compliance plan The compliance plan for each of the Funds describes procedures that we apply in operating the Funds to ensure compliance with the Corporations Act, the Funds' Constitutions and other applicable laws. A compliance committee with a majority of external representation oversees our procedures for complying with the compliance plans, the Constitutions and the Corporations Act. Unitholder's liability The Constitution and the Corporations Act are designed to limit a Unitholder's liability to the value of the Units held in each of the Funds. Unitholders should not therefore be personally liable for the obligations and liabilities of any Fund beyond their investment value. However, the law in this particular area is complicated and not certain; therefore we cannot give any assurances that the liability of the Unitholder as discussed above will be limited in all circumstances. In particular, the position may be different for Unitholders who have participated in the establishment of a Fund if the Fund is highly geared or leveraged. Unitholders of a Fund have no right or power to take part in the Fund's management. Accordingly, no person should purchase the Units unless such person is willing to entrust all investment decisions to the Investment Manager. Borrowing The Constitutions for all of the Funds allow MPML to borrow. Dealing with other Macquarie entities or related parties Members of the Macquarie Bank Group or their directors, employees or affiliates may buy and sell instruments or securities or other financial products which are related to the investments or underlying investments of the Funds. In addition, companies in the Macquarie Bank Group may advise on transactions concerning such instruments, securities or other financial products. Such dealings may or may not affect the value of the investments in the Funds. The directors and employees of the Investment Manager may receive compensation based on the performance of the Investment Manager in its role as investment manager to the Funds. Under the terms of the investment management agreements, MPML will pay out of the Base Management Fee that MPML receives, a management fee to the Investment Manager. Additionally all Performance Fees received by MPML will be paid to the Investment Manager. These amounts are included in "Fees and Other Costs" set out on pages and will be reflected in the Fund's return. As at the date of this PDS, Macquarie Structured Products (International) Limited, a subsidiary of Macquarie Bank Limited is a significant majority Unitholder in the Asia Long Short Fund and the Japan Market Neutral Fund. Additionally, Macquarie Structured Products (International) Limited is a Unitholder in the Global Futures Fund and the Global Futures Fund Enhanced. Macquarie Structured Products (International) Limited may reduce its holdings or transfer its holdings to other entities in the Macquarie Bank Group, including the Investment Manager or MPML. MPML, in respect of some or all of the Funds, has entered into, or may enter into, the following arrangements with Macquarie Bank and its subsidiaries: prime brokerage agreement; stock lending agreement; ASX derivatives agreement; derivatives trading agreement with Macquarie Bank; ISDA master agreement; investment management agreement; administrative services agreement - for the supply of administrative services to MPML. 40

100 MPML may appoint Macquarie Bank or one of its subsidiaries as sub custodian for the purposes of prime brokerage services. Further, MPML may transfer assets of the Funds to Macquarie Bank or its subsidiaries as collateral under the arrangements. All dealings between Macquarie Bank and its subsidiaries and MPML must take place on an arm's length basis. MPML (whether in its own capacity or as responsible entity of a Fund) may only enter into further agreements with Macquarie Bank and its subsidiaries provided that such agreements are on commercial terms. In order to safeguard the interests of Unitholders information protocols have been implemented between the Funds and Macquarie Bank. When we invest for the Funds we deal with professional organisations in the execution of transactions which may include Macquarie Bank or its associated companies. We can trade each of the Funds investments with Macquarie or its associated companies unless we believe the investments are not in the best interest of the investors. Fees and costs payable to Macquarie or its associated companies in such circumstances include brokerage, execution and clearing fees. The fee payable for each service reflects market rates for the relevant service. These professional organisations may receive payments at prevailing market rates for these services. All services are provided on arm's length terms. Prime Broker and Custodian Belike Nominees Pty Limited ABN , a Macquarie Bank nominee company, has been appointed as the custodian of the Multi-Strategy Fund to hold the assets of this Fund on trust. The fees payable to the Custodian will be paid by MPML. It is intended that Goldman Sachs International ( GSI ) will be appointed as a Prime Broker and Custodian to the following Funds pursuant to a prime brokerage agreement and a number of product specific supplemental documents (together the Prime Brokerage Agreement): the Australian Absolute Return Fund; the Special Events Fund; the Buy Write Fund; the Income Timing Fund; the Asia Statistical Arbitrage Fund; the Asia Long Short Fund; the Japan Market Neutral Fund. GSI is authorised and regulated in the conduct of its investment business by the Financial Services Authority ("FSA") of the United Kingdom. In its capacity as Prime Broker, GSI may execute purchase and sale orders for the Funds, and clear and settle such orders and orders executed by other brokers. In addition, GSI may enter into off-exchange contracts with the Fund as principal. GSI may also provide the Fund with finance and short selling facilities. GSI may hold the Custody Assets with a subcustodian, depository or clearing agent, including a person connected with the Prime Broker (each a subcustodian ) in a single account that is identified as belonging to customers of GSI. GSI will identify in its own books and records that part of the Custody Assets held by a sub-custodian as being held for the Fund. The Custody Assets should thus be unavailable to the creditors of GSI in the event of its insolvency. However, in the event of an irreconcilable shortfall following the default of any sub-custodian, the Funds may share in that shortfall proportionately with GSI s other customers. Assets of the Funds held as collateral or margin are not required to be segregated and in the event of GSI s insolvency may not be recoverable in full. GSI must exercise reasonable skill, care and diligence in the selection of any sub-custodian and will be responsible to the Funds for the duration of any subcustody agreement for satisfying itself as to the ongoing suitability of such sub-custodian, for the maintenance of an appropriate level of supervision over such subcustodian and for confirming by means of appropriate periodic enquiries that the obligations of such subcustodian continue to be competently discharged. GSI shall be liable for damage or loss only to Fund s account(s) and only to the extent arising directly from any act or omission by GSI that constitutes negligence, fraud or wilful default. GSI shall not be liable under or in connection with the Prime Brokerage Agreement for loss (whether direct or indirect) of business profits, revenue or of data or any indirect, consequential or incidental damages, liabilities, claims, losses, expenses, awards, proceedings and costs, in each case, regardless of whether the possibility of such damages, liabilities, claims, losses, expenses, awards, proceedings and costs was disclosed to, or could reasonably have been foreseen by GSI and whether arising in contract, in tort or otherwise. The Fund will indemnify GSI for any and all expenses, losses, damages, liabilities, demands, charges, actions and claims arising out of any act or omission on the part of the Funds, except to the extent that the same is due to the negligence or wilful default of, or breach of the Prime Brokerage Agreement by GSI. The Fund s obligations to GSI will be secured by way of a first fixed charge over the Custody Assets. In addition, the Fund s obligations to GSI in respect of any financing lines and short selling facilities will be secured by transferring to GSI all rights, title and interest in and to certain of the Custody Assets identified for such purposes by GSI as collateral. Collateral shall pass from the Funds to GSI free and clear of any liens, claims, charges or encumbrances or any other interest of the Fund or any third party and accordingly GSI may deal with, lend, dispose of, pledge or otherwise use all collateral for its own purposes and shall be obliged to redeliver equivalent collateral to the Funds on satisfaction by the Funds of all its obligations to GSI and its affiliates. GSI will have no decision-making discretion relating to the Fund s investments. GSI is a service provider to the Funds and is not responsible for the preparation of this document or the activities of the Funds and therefore accepts no responsibility for any information contained in this document. 41

101 Administrator At the date of this PDS the Administrator has been appointed as administrator of the Funds except for the Macquarie Newton Multi-Strategy Fund - Capital Protected where MPML is the administrator. The Administrator is a global provider of administration services to funds and may provide MPML with services including: maintenance of the Unitholder register; calculation and verification of the unit prices of the Funds; processing and reconciliation of cash for applications and withdrawals; and fee calculations. Anti-money laundering regulations MPML reserves the right to require any Unitholder to provide appropriate detailed proof of identity as well as documented evidence of the source of proceeds being used for investment in the Funds. Such proof and evidence may be considered necessary by MPML to ensure that it fulfils its anti-money laundering obligations. Amendment to this PDS and the Funds Constitutions MPML reserves the right to change, subject to the law, any of the terms and conditions of this PDS (including investment approach, fees and charges) and the Fund s Constitution. Investors who withdraw prior to the effective date will not be bound by the changes. Enquiries and complaints MPML has procedures for dispute resolution, and they are available to investors free of charge. Investors may make a complaint relating to the Funds directly to MPML in writing. MPML will always acknowledge any complaint promptly and provide a substantive response within no more than 45 days. If the outcome is unsatisfactory, investors may refer their complaint to the Banking and Financial Services Ombudsman at: Banking and Financial Services Ombudsman GPO Box 3 Melbourne VIC 3001 Toll free: Fax: (03) bfso.org.au Privacy statement By completing the Application Form included in or accompanying this PDS and the Application Form accompanying Part 1 of the PDS for the Macquarie Newton Multi-Strategy Fund Capital Protected (if you are investing in the Macquarie Newton Multi-Strategy Fund Capital Protected) you agree to MPML collecting and using personal information about you to process your application, and administer and manage the products and services we provide to you. This includes monitoring, auditing and evaluating those products and services, modelling data, data testing, communicating with and dealing with any complaints or enquiries. You need not give us any personal information requested in the Application Form or in any other document or communication relating to the products or services we supply you. However, if you do not provide us with this complete information, we may not be able to process your application or provide you with an appropriate level of service. You agree to allow us to provide access to your personal information to other companies in the Macquarie Bank Group as well as external service providers, which provide services in connection with our products and services, for example the Administrator, the custodian, the prime broker, mail houses and professional advisers. If an adviser's stamp appears on the Application Form we will supply that adviser with information about your investments. We may also disclose your personal information: if, acting in good faith, we believe that the law requires or permits us to do so; if you consent; or to any person proposing to acquire an interest in our business. We and other companies in the Macquarie Bank Group may use your personal information to offer products or services that may be of interest to you unless you request us not to. Under the Privacy Act 1988, you may request access to your personal information that we hold. You can contact us to make such a request or for any other reason relating to the privacy of your personal information by telephoning the Macquarie Newton Service Centre on or writing to the Macquarie Newton Service Centre whose address is set out in the Directory. Macquarie's privacy statement and details on how you may access or update your personal information can be accessed at macquarie.com.au/au/privacy_policy.htm. 42

102 Ethical Considerations Labour standards or social, environmental or ethical considerations are not taken into account when selecting, retaining or realising investments on behalf of the Funds. Consents The Investment Manager has given and has not before the issue of this PDS, withdrawn its written consent to the inclusion in this PDS of statements regarding its role as investment manager to the Funds, the use of tables and diagrams sourced from the Investment Manager and the description of that company's history and its directors in the form and context in which they are included. Other than as stated in the previous paragraph, the Investment Manager has not caused or authorised the issue of this PDS and was not involved in the preparation of this PDS or any part of this PDS. Henry Davis York has given and has not before the issue of this PDS, withdrawn its written consent to being named as legal adviser in the Directory prior to the issue of this PDS. Henry Davis York takes no responsibility for any part of this PDS and has not authorised or caused the issue of this PDS. Clayton Utz has given and has not before the issue of this PDS, withdrawn its written consent for the inclusion in this PDS of the section entitled "Taxation for Australian residents" in the form and context in which it is included. Except with respect to the section entitled "Taxation for Australian residents", Clayton Utz has made no statement included in this PDS or on which a statement made in this PDS is based, and has not caused or authorised the issue of and takes no responsibility for, any part of this PDS. Clayton Utz has given and has not withdrawn its written consent to be named as tax adviser in the Directory prior to the date of this PDS. The Administrator has given its consent to the issue of this PDS containing statements as to its role as Administrator in this PDS. That consent has not been withdrawn prior to the date of this PDS. The Administrator has not been involved in the preparation of this PDS and takes no responsibility for any part of this PDS and has not authorised or caused the issue of this PDS. Pricewaterhouse Coopers has given its consent and has not withdrawn its consent to be named as auditor in this PDS. Pricewaterhouse Coopers has not been involved in the preparation of this PDS, has not caused or authorised the issue and takes no responsibility for any part of this PDS. Goldman Sachs International, in its capacity as the proposed prime broker for the Funds (other than for the Multi-Strategy Fund, the Multi-Strategy Fund Capital Protected, the Global Futures Fund and the Global Futures Fund-Enhanced) has given its consent to the issue of this PDS containing statements as to its role as proposed prime broker in this PDS. That consent has not been withdrawn prior to the date of this PDS. The proposed prime broker has not been involved in the preparation of this PDS and takes no responsibility for any part of this PDS and has not authorised or caused the issue of this PDS. 43

103 SECTION 10 Taxation for Australian Residents This section does not apply to the Macquarie Newton Multi-Strategy Fund - Capital Protected. A separate section headed "Taxation for Australian residents" is included in Part 1 of the PDS for that Fund. Tax Taxation issues are complex and taxation laws, their interpretation and associated administrative practices may change over the term of an investment in a Fund. MPML does not provide financial or tax advice and this PDS cannot address all of the taxation issues which may be relevant to a particular Unitholder. Each Unitholder must take full and sole responsibility for their own investment in a Fund, the associated taxation implications arising from that investment and any changes in those taxation implications during the course of that investment. This summary outlines the main Australian income tax implications for Unitholders who subscribe for Units in a Fund pursuant to this PDS. The information in this summary is of a general nature only and does not purport to constitute legal or tax advice. As the taxation implications for each potential Unitholder may be different, MPML recommends that each prospective Unitholder obtains its own independent professional taxation advice on the full range of taxation implications applicable to its own individual facts and circumstances. Assumptions and qualifications This summary is limited to Unitholders who will hold their Units on capital account and whose dealings are all at arm's length. This summary assumes that: (a) the Unitholder is an Australian resident for tax purposes; (b) all transactions entered into by a Unitholder in relation to its Units will be at prevailing market prices and otherwise on arm's length terms; (c) at all times the responsible entity of each Fund will be an Australian tax resident and the management and control of each Fund will be in Australia; (d) each Fund will only enter into transactions of the kind described in this PDS and all such transactions will be entered into at prevailing market prices and otherwise on arm's length terms; (e) all of the distributable income of a Fund will be distributed each Financial Year, as is required under each Constitution; (f) the distributable income of a Fund for any Financial Year will either: (i) be a positive amount; or (ii) if a negative amount, equal or exceed the net income of the Fund for tax purposes; and (g) it is not the case that 75% or more of the Units in a Fund are held, directly or indirectly, by 20 or fewer individuals (counting associates as a single entity). This summary is based on Australian taxation laws in force or proposed and administrative practices generally accepted as at the date of this PDS. Any of these may change in the future without notice and legislation introduced to give effect to announcements may contain provisions that are currently not contemplated. Future changes in tax laws, or their interpretation or associated administrative practices, could affect the tax treatment of Unitholders or a Fund. All references to legislative provisions are to provisions of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 (together, the Tax Act). Characterisation of a Fund Each Fund will be characterised as a trust for the purposes of the Tax Act and MPML as the responsible entity of each Fund should not be liable for income tax in respect of the net income of the Fund. Except for the Multi-Strategy Fund, it is likely that each Fund will be considered to be carrying on a business of investing in securities in the course of which it regularly acquires and disposes of securities. As a result, all securities acquired by one of those Funds will be characterised as revenue assets for income tax purposes. It is likely that the units acquired by the Multi-Strategy Fund will be characterised as capital assets of that Fund. Each Fund will be a "fixed trust" which is "widely held" for the purposes of the Tax Act. The net income of a Fund The net income of a Fund for a financial year will be the sum of all amounts that would be assessable income, less all amounts that would be allowable deductions, on the assumption that MPML was an Australian resident taxpayer in respect of such income and deductions. 44

104 For each financial year, the net income of a Fund will take into account the following assessable or deductible items: (a) all profits or losses realised as a result of an acquisition and disposal of securities by the Fund; (b) all interest income derived by the Fund; (c) all dividends and non-share dividends paid to the Fund; (d) all franking credits on any frankable distributions received by the Fund; (e) all fees and payments derived or incurred by the Fund under securities lending arrangements; (f) any foreign exchange gains or losses derived or incurred by the Fund together with any relevant amounts arising from relevant fluctuations in foreign exchange rates; (g) any amounts determined under the foreign investment fund provisions of Part XI of the Tax Act; (h) any amounts of foreign taxes for which MPML is liable; and (i) all costs, fees and expenses associated with the conduct of the Fund's business, including all fees and other costs specified in section 7. Where the net income of a Fund for any particular financial year is a loss, the ability of the Fund to deduct that loss in future financial years will be affected by the application of the trust loss provisions. In general terms, these provisions can apply to deny the availability of tax losses where the Fund fails the continuity of majority beneficial ownership test or the income injection test. It may be that changes in the membership of a Fund result in the Fund failing the continuity of majority beneficial ownership test, resulting in a denial of tax losses that would otherwise be available. Proposed amendments - Taxation of Financial Arrangements (TOFA) As they are currently drafted, the proposed legislative changes set out in the TOFA exposure draft legislation should not apply to a financial arrangement that is constituted by an interest in a trust where the trust has issued only one class of interests or where the interest in the trust would be an "equity interest" as defined by the Income Tax Assessment Act 1997 (Cth) if the trust were a company. On this basis, the proposed amendments should not, if they are enacted in their current form, apply to MPML in its capacity as trustee of the Multi-Strategy Fund in relation to its investment in the others Funds. The proposed amendments may however apply to MPML as the trustee of the Funds other than the Multi-Strategy Fund in respect of each Fund's investment in the various securities that the Funds are accustomed to acquiring. One of the main features of the proposed TOFA regime is to tax gains from financial arrangements on a revenue basis and in some cases on an accruals basis over the term of the arrangement. If enacted in their current form, the proposed provisions may therefore require the calculation of the net income of the Fund (which will be included in the assessable income of Unitholders as described below) in a manner different to that outlined above. While the various securities held by the Funds other than the Multi-Strategy Fund are likely to be taxed on revenue account in any event, the TOFA rules may apply to tax gains from those securities on an accruals basis over the term of the investment. The Explanatory Memorandum to the exposure draft indicates an intention for the proposed changes to apply only to arrangements entered into after the start date for the proposed legislation, but to allow for taxpayers to elect to apply the rules to arrangements existing at that time. We understand that MPML intends to seek specific tax advice in relation to the application of the provisions if they are enacted. Taxation of Unitholders - Units Units will be a CGT asset of a Unitholder. Units will not be a qualifying or traditional security of the Unitholder. The cost base of a Unit will include the amount paid to acquire the Units together with any incidental costs (including any applicable contribution fee). The cost base of a Unit may be reduced by the amount of any tax deferred distributions received from the Fund (see "Taxation of Unitholders distributions" on page 46). On disposal or withdrawal of a Unit, a capital gain or loss will arise to the extent that the disposal proceeds are either greater than or less than the Unitholder's cost base in the Units. The capital proceeds should be reduced by any applicable withdrawal fee. Capital gains derived by Unitholders who are individuals, trusts or complying superannuation funds may qualify for a reduced rate of tax where the Units have been held by the Unitholder for more than 12 months at the time of disposal or withdrawal. On withdrawal of a Unit, part of the withdrawal amount may include an interim or final distribution of distributable income of the Fund. In this case the disposal proceeds for the Unit would not include the amount of any such distribution and would equal the withdrawal amount less the amount of any such distribution. Switching investments from one Fund to another Fund will constitute a withdrawal of the original Units and the investment by the Unitholder in new Units. This will give rise to the CGT consequences described above in relation to withdrawal and will result in the acquisition of a new CGT asset on the date of acquisition of the new Units. These will have a cost base equal to the amount paid by the Unitholder in respect of their acquisition as described above. 45

105 Taxation of Unitholders - distributions Unitholders who are presently entitled to the distributable income of a Fund will be assessable on the net income of the Fund, in proportion to their entitlements to that distributable income. In the event that the distributable income of the Fund exceeds the net income of the Fund, the amount of the excess (commonly referred to as "tax deferred income") will not be included in the Unitholder's assessable income. Rather, the Unitholder's cost base in its Units will be reduced by the amount of any such excess, potentially increasing the amount of capital gain derived on ultimate disposal of the Units. Where the Unitholder's cost base is reduced to nil, any further amounts of distributable income received in excess of the net income of the Fund will be assessable as a capital gain in the year of receipt. Such capital gains derived by Unitholders who are individuals, trusts or complying superannuation funds may qualify for a reduced rate of tax where the Units have been held for more than 12 months. A Unitholder is not required to quote its tax file number in relation to its investment in Units. However, MPML will be required to withhold tax from any distribution at the highest marginal tax rate plus the Medicare levy (currently 48.5%) if a Unitholder does not quote its tax file number, its Australian Business Number or does not provide information in relation to any available exemption from quoting its tax file number. Taxation of Unitholders - franking credits Any franking credits on frankable distributions received by a Fund in a financial year will flow indirectly to Unitholders where the Fund has an amount of distributable income for that financial year. In this case, the Unitholder will be required to include its share of those franking credits in its assessable income and will be entitled to a tax offset equal to the amount of franking credits so included. The tax offset will be a refundable tax offset for all Unitholders except a Unitholder who is: (a) a corporate tax entity (excluding certain exempt institution or life insurance companies); (b) a non-complying superannuation fund or noncomplying ADF; or (c) a trustee liable to be assessed under section 98 or 99A of the Tax Act. As each Fund will be a "widely held trust" for the purposes of the Tax Act, the 45 day rule will be satisfied by a Unitholder provided: (a) the Unitholder holds its Units "at risk" for more than 45 days, not including the days of acquisition or disposal of the Units. In this regard, the "at risk" test is applied in respect of the Units themselves, and not on a "look through" basis in respect of the shares held by the relevant Fund; and (b) the trustee of the relevant Fund satisfies the "at risk" test in respect of the shares on which the franked dividends are paid. Taxation of Unitholders - foreign income Deductions (other than debt deductions) incurred by a Fund which relate to the derivation of foreign income will be quarantined into classes and will only be deductible against the class of foreign income to which they relate. Where there is insufficient foreign income in that class, the losses will be carried forward for application against foreign income (if any) in that class derived by the Fund in subsequent tax years. All foreign income derived by a Fund will be grossed up for the amount of any foreign tax paid or deemed to have been paid by MPML in relation to that class of foreign income. A Unitholder will be entitled to a foreign tax credit to the extent that Australian tax is payable by the Unitholder on its share of the class of net foreign income to which the foreign tax relates. The Federal Government announced in May 2005 proposals to abolish the quarantining of foreign losses and foreign tax credits into classes (referred to above), applicable for tax years commencing following the Royal Assent of enacting legislation. Accordingly, this quarantining treatment may not apply to the extent the proposals are enacted in the terms announced. Interest deductibility Interest incurred by a Unitholder on funds borrowed to acquire its Units should be deductible to the Unitholder to the extent it is incurred for the purpose of deriving assessable income from an investment in the Fund. Interest prepaid by a Unitholder on funds borrowed to acquire Units in a Fund will be deductible in the income year of payment if: (a) the Fund has 300 or more beneficiaries; (b) the interest relates to a period of 12 months or less which ends in the next income year; and (c) the Unitholder is either a STS taxpayer or is an individual who incurs the interest otherwise than in the course of carrying on a business. Prepaid interest of less than $1,000 will also be deductible in the income year of payment. In all other circumstances, interest deductibility will be apportioned on a straight line basis over the period to which the interest relates. 46

106 Proposed amendments Taxation of Financial Arrangements As they are currently drafted, the proposed legislative changes set out in the TOFA exposure draft legislation should not apply to a financial arrangement that is constituted by an interest in a trust where the trust has issued only one class of interests or where the interest in the trust would be an "equity interest" as defined by the Tax Act if the trust were a company. On this basis, the proposed amendments should not, if they are enacted in their current form, apply to a Unitholder in relation to a Unit it holds in any of the Funds. The proposed amendments may however affect the calculation of the net income derived by the Funds which would in turn affect each Unitholder's share of the net income of the relevant Fund. The Explanatory Memorandum to the exposure draft indicates an intention for the proposed changes to apply only to arrangements entered into after the start date for the proposed legislation, but to allow for taxpayers to elect to apply the rules to arrangements existing at that time. Prospective Unitholders should however seek their own tax advice in relation to the potential application of the TOFA proposals in light of their own individual facts and circumstances. Part IVA Part IVA of the Tax Act contains general anti-avoidance provisions which are capable of broad application and should be considered carefully in relation to any investment decision. In general terms, Part IVA may apply to schemes where a taxpayer obtains a "tax benefit" (in the form of the availability of tax deductions or noninclusion of assessable income) as a consequence of entering into or carrying out the scheme, whether devised by the taxpayer or by somebody else, and the dominant purpose of one or more of the parties who entered into or carried out the scheme was to secure the obtaining of the tax benefit for the taxpayer. In addition, for schemes directed towards the obtaining of a "franking tax benefit", the provisions can apply not only where the sole or dominant purpose of the scheme is to obtain the franking tax benefit, but also where a purpose (not being an incidental purpose) of entering into the scheme was to enable the taxpayer to obtain the franking tax benefit. The application of Part IVA to any particular taxpayer can only be conclusively determined in light of all of the evidence as to that taxpayer's individual facts and circumstances. Unitholders should therefore seek their own independent professional advice on the potential for Part IVA to be applied to them on the basis of their own individual facts and circumstances. One possible set of circumstances which may attract the application of Part IVA would be where a Unitholder's commercial objectives could be achieved via some other means which did not involve the obtaining of a tax benefit yet the taxpayer chose to enter into the Fund arrangements and, objectively, it would be concluded that the sole or dominant purpose of doing so (or in the case of a franking tax benefit, there was merely a purpose of doing so) was to obtain the tax benefit made available by the investment in the Fund. Stamp duty At the date of this PDS: (a) the unit register for each Fund (except the Multi- Strategy Fund - Capital Protected) is and will remain located in New South Wales. (b) the unit register for the Multi-Strategy Fund - Capital Protected is and will remain located in Victoria. (c) where any asset of a Fund is cash or a cash equivalent, that asset will not be situated in Queensland or Western Australia for stamp duty purposes. Under current laws, any acquisition or withdrawal of Units by a Unitholder will not be liable to stamp duty, save that any transfer of Units in a Fund (other than the Multi-Strategy Fund - Capital Protected) will be liable to 0.6% duty in New South Wales by reference to the greater of the consideration for the transfer or the market value of the Units. Please note MPML reserves the right to move the register of the Funds. GST No GST should be payable in respect of the subscription, acquisition or withdrawal of Units, nor in respect of any distributions paid in respect of Units. GST may apply to fees charged to Unitholders. Unitholders should obtain their own advice as to whether an input tax credit is available for any such GST, as it will depend on their personal circumstances. Where GST applies to fees which are charged to the Fund and recoverable from the Fund's assets, those fees plus any applicable GST may be recovered from the assets of the Fund. However, the Fund may be entitled to claim input tax credits or reduced input tax credits for that GST, depending on the precise nature of the fee. Other events and circumstances There may be other events and circumstances relating to an investment in the Fund that give rise to tax implications that are not discussed in this summary. Unitholders should seek their own independent tax advice in respect of such events and circumstances. 47

107

108 Glossary of Terms absolute return funds means actively managed investments that aim to produce positive returns in both rising and falling markets. Administrator means Citco Fund Services (Australia) Pty Limited. ASIC means the Australian Securities and Investments Commission. Application Amount means, in relation to an application for Units pursuant to this PDS (including by way of reinvestment of distributions), the monies paid with the application. Application Form means the application form for Units included in or accompanying this PDS. arbitrage means the process of simultaneously buying and selling similar assets to take advantage of any price discrepancy. ASX means the Australian Stock Exchange Limited. Base Management Fee means a fee paid to MPML out of the Fund for managing the Fund. Benchmark Value means the High Water Mark adjusted by the relevant benchmark (if any) calculated on a simple interest basis or the change in value of the index, as the case may be. Business Day means a day other than a Saturday or Sunday on which Australian banks are open for general banking business in Sydney. buy write means purchasing a share and then selling (called writing) a call option against that share. capital structure arbitrage means a strategy that aims to profit from the relative mispricings of various forms of capital employed by a firm. Class means a class of units in a Fund. Constitution means, in relation to a Fund, the constitution of the Fund. Contribution Fee means a fee paid to a Unitholder s adviser on application for Units in a Fund, other than by way of reinvestment of distribution or switch. Corporations Act means the Corporations Act 2001 (Cth). correlation means the extent to which the value of one variable is related to the value of another variable. A low correlation means that the movement in value of one asset is relatively independent of the movement in value of another asset. derivative means a financial instrument that derives its value from an underlying asset including a share, a commodity, a currency, an index or other thing. Examples of derivatives include futures and options. Direct Class means a Class issued to a person investing directly in the Fund rather than via an Indirect Investment Service. Employee Class Units means those Units issued to employees of MPML or any of its related bodies corporate. equity market neutral means a portfolio of both long and short positions which broadly offset each other across a number of key risk dimensions (e.g. dollar exposure, sector, size). equity risk premium means the extra return that the overall share market or a particular share must provide over the yield of fixed interest securities to compensate for market risk. event driven strategies means strategies which aim to profit from the market s mispricing of entities securities where those entities are subject to anticipated or current corporate events. ex-dividend date means the date securities are quoted ex-dividend. To be entitled to a dividend the holder of the security must have purchased the relevant securities before the ex-dividend date. exchange traded option or ETO means an option over shares (such as ASX listed shares) created and traded on an exchange. fixed interest security means a security, such as a debenture or bond, which offers a set return over the period of investment. Fund has the meaning set out on the inside cover. Fund Performance means the return on the unit price (before deduction of the Performance Fee but after all other Fund fees and expenses) over the Benchmark Value. futures or futures contract means an agreement to buy or sell a specific commodity, currency or financial instrument (underlying asset) at a fixed price on a fixed future date. GST means goods and services tax. High Water Mark means, in respect of the Class of Units, the highest previous NAV referable to that Class and divided by the number of Units in that Class, adjusted by deducting paid Performance Fees and distributions. 49

109 50 hedge means investing or acquiring a financial instrument that is expected to offset (to some extent) another investment or financial instrument. IDPS means investor directed portfolio service. index futures or index futures contract means a futures contract which has as its underlying asset an index such as the S&P/ASX200 Index. index option or index option contract means an option which has as its underlying asset an index such as the S&P/ASX 200 Index. Indirect Investment Service means an IDPS or IDPSlike scheme (commonly a master trust or wrap account) or a nominee or custody service approved by us, where the operator has provided us with a written undertaking in accordance with ASIC requirements. Indirect Class means a Class issued to an Indirect Investment Service. Investment Manager means Macquarie Newton Specialist Funds Management Limited ABN and AFSL largest drawdown means the percentage decrease in value of an investment from its highest month end value to its subsequent lowest month end value (assuming reinvestment of distributions and ignoring applications and withdrawals). leverage means increasing the exposure of the portfolio to a level greater than the net assets of the portfolio by borrowing or through the use of derivatives. Leverage is also known as gearing. long means holding or purchasing an asset. A "long" position generally increases in value when the asset increases in value and conversely generally decreases in value when the asset decreases in value. losing month means in respect of a Fund for a month, that the value of the Fund (assuming reinvestment of distributions and ignoring applications and withdrawals) has decreased. Macquarie or Macquarie Bank means Macquarie Bank Limited ABN and AFSL Macquarie Bank Group means Macquarie and its related bodies corporate (as defined in the Corporations Act). market risk means the risk to shares, fixed interest securities and other financial instruments resulting from a decline in the market. market sentiment factors mean factors used to measure the current sentiment in the market, on a stock by stock basis. MPML, we or us means Macquarie Portfolio Management Limited ABN and AFSL in its capacity as responsible entity of each Fund (unless the context indicates it is acting in its own capacity). Net Asset Value or NAV means, in respect of a Class, the total value of all Unitholders assets referable to the Class of Units less the total amount of all Unitholders liabilities referable to that same Class of Units determined in accordance with Australian equivalents to international financial reporting standards. option or option contract means an agreement whereby the holder of the option has the right, but not the obligation, to receive or deliver a specified quantity and quality of an underlying asset at or before a specified future date (the expiry date) at a price agreed when the contract was executed. This is known as an option contract that is physically settled. Option contracts may also be cash settled. Option contracts may be closed out before the expiry date. Performance Fee means a fee paid to MPML quarterly out of the Fund, subject to performance being greater than the Benchmark Value. relative value strategies means strategies which employ quantitative and qualitative techniques to identify mispricing between related securities. Examples include statistical arbitrage and capital structure arbitrage. reward to risk ratio means the ratio of the total annualised return since inception of an investment relative to the annualised volatility of those returns. sector means a group of securities that share characteristics (for example, textiles sector, resources sector, manufacturing sector). short means the sale of an asset, including the sale of an asset which is not currently owned. A "short" position generally increases in value when the asset decreases in value and conversely generally decreases in value when the asset increases in value. statistical arbitrage means a strategy which employs quantitative techniques to identify baskets of related securities, and then purchases baskets of securities and sells short baskets of securities which together have a likelihood of mean reversion. stop loss means an instruction to a broker to sell an asset in the event it falls to, or in the case of short positions to buy an asset in the event it rises to, a certain level. Switching Form means the switching form to be used if you would like to switch all or part of your investment in a Fund into another Fund included in or accompanying this PDS. Unit means a fully-paid Unit in the Direct Class, Employee Unit Class or Indirect Class in a Fund. Unitholder means a registered holder of Units. unit price means, in respect of a Class, the NAV calculated referable to the Class on a per Unit basis (adjusted for a buy or sell spread if charged, see pages 36-37). volatility is a measure of the degree of fluctuation in a fund s returns. The higher the volatility, the higher the variation you should expect in a fund s returns. winning month means in respect of a Fund for a month, that the value of the Fund (assuming reinvestment of distributions and ignoring applications and withdrawals) has increased. Withdrawal Fee means a fee paid to MPML for withdrawals within 12 months of a Unitholder s initial investment. Withdrawal Form means the form for withdrawal of Units included in or accompanying this PDS.

110 How to complete the Application Form WHO CAN INVEST IN THE FUND? Note that if you are investing in the Macquarie Newton Multi-Strategy Fund Capital Protected, you must complete the Application Form attached to or accompanying Part 1 of the PDS for the Macquarie Newton Multi-Strategy Fund Capital Protected. You may only apply for Units if you are: an individual 18 years or older; a company; an incorporated body; or a trustee or nominee of another entity, such as a family trust, superannuation fund or Indirect Investment Service Operator. A trust is not permitted to apply for Units in the Funds. A trust conducts all of its legal activities through its trustee and it is the trustee who must apply. We may require you to provide other supporting documentation before processing your application. MPML may reject or accept an application for any reason in its sole discretion. Addresses We have included a space for you to complete your address on the Application Form. You must specify your residential address (or registered office address, if you are company, trust partnership, or other nonindividual investor). If your mailing address is care of a third party such as your adviser, please be aware that all correspondence will be sent to this address. Individual and joint accounts The individual(s) who appear in sections 1.2 and 1.3 of the Application Form should sign. Joint applicants will be deemed to be joint tenants. Company or corporate trustee applicants Company or corporate trustee applications must be signed under seal or by: two directors or a director and secretary on behalf of the company or corporate trustee by authority of the directors; or the sole director (if applicable) unless the company's or corporate trustee s constituent documents or trust deed specify otherwise. If this is the case, please attach a certified copy of the relevant constituent documents or trust deed. This requirement does not apply to sole directors. Incorporated associations must sign under seal and attach a certified copy of the association's certificate of incorporation. Power of attorney If you are applying under a power of attorney, please attach a certified copy of the power of attorney and specimen signature(s) of all attorneys. Financial adviser s stamps If a licensed financial adviser s stamp appears on the Application Form we may pay them a Contribution Fee if one has been specified in the Application Form (see Fees and other Costs pages 28-33). We will also supply them with information about the account unless you instruct us not to do so. Who should sign the Application Form? The signatory section is in section 6 of the Application Form. 51

111 IF YOU ARE INVESTING ON BEHALF OF OTHERS If you are investing your application must For example, like this not like this for be in the name of (the numbers refer to those on the Application Form) A trust The trustee(s), rather than 1.2 Yvette Mary Jones Jones Family Trust the name of the trust and 1.3 Jack Michael Jones 1.4 Jones family A/C A superannuation fund The trustee(s) of the 1.1 Yvette Jones Limited Jones Super Fund superannuation fund 1.4 Jones Super Fund A/C A partnership The partners 1.2 Jack Michael Jones Jones Smith Partners (you must supply account 1.3 James David Smith operating instructions 1.4 Jones Smith Partnership A/C which indicate how partners are to sign) A deceased estate The executors of the estate 1.2 Yvette Mary Jones Estate of Fred Brown (you must supply a 1.4 Estate of Fred Brown A/C certified copy of the probate) An unincorporated A person on behalf of the 1.2 Jack Michael Jones Rolling Hills Cricket Club body unincorporated body 1.4 Rolling Hills Cricket Club A/C A business The proprietor trading as 1.2 Jack Michael Jones Jones Corner Store the Business Name 1.4 Jones Corner Store A/C (you must supply a certified copy of the Certificate of Business Registration and a certified copy of the drivers licence) CHECKLIST When you complete this Application Form, please use a black pen write in BLOCK LETTERS complete all relevant sections sign section 6 If you make an error while completing your Application Form, do not use correction fluid. Cross out your mistakes and initial your changes. Send your completed Application Form to: Postal address Citco Fund Services (Australia) Pty Limited Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW

112 Macquarie Newton Specialist Funds Application Form OFFICE USE ONLY NEW Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with an (X). Start at the left of each answer space and leave a one box gap between words. This Application Form may only be used to invest in the Macquarie Newton Specialist Funds. CROSS OUT AND INITIAL ANY CHANGES MADE TO THE FORM. DO NOT USE CORRECTION FLUID TO AMEND. This Application Form is included in the Product Disclosure Statement (dated 24 April 2006, ( PDS )) issued by Macquarie Portfolio Management Limited (ABN , AFSL ) for the offer of Units in the Macquarie Newton Specialist Funds. An application for Units will only be considered where a valid Application Form has been completed and delivered as set out in the PDS. The PDS provides details of the offer to issue Units in the Macquarie Newton Specialist Funds. It is important that you have read the PDS and considered its content before lodging an Application Form. This Application Form must not be provided to any person unless at the same time access is given to the PDS. Unless otherwise defined in this Application Form, capitalised terms have the same meaning as defined in the PDS. Application number IRN 1 APPLICANT DETAILS 1.1 COMPANY / CORPORATE TRUSTEE Company name ABN / ACN / ARBN 1.4 ACCOUNT DESCRIPTION Name of trust, superannuation fund, partnership, deceased estate, unincorporated association or business (eg <Super Fund A/C>). Maximum of 30 characters. < Tax File Number / ARBN if applicable A / C > If applying in the name of a company go to 1.5 Contact Details If applying as a corporate trustee go to 1.4 Account Description 1.2 INDIVIDUAL / NON CORPORATE TRUSTEE Mr Given name(s) Surname Mrs Miss Ms Other TAX FILE NUMBER Collection of tax file numbers is authorised and their use and disclosure are strictly regulated by the tax laws and Privacy Act. It is not compulsory for you to provide us with a tax file number or exemption information but if you do not then we are required to deduct tax from any income distribution payable to you at the highest marginal tax rate plus Medicare levy. Contact your nearest tax office for more information. 1.5 CONTACT DETAILS Name of applicant to be contacted regarding application Date of birth (you must 18 or over) Gender D D M M Y Y Y Y M F If company applicant, position in company Tax File Number OR reason for exemption Macquarie staff number (if applicable) Home phone number Mobile phone number If applying as an individual go to 1.5 Contact Details If applying as a non-corporate trustee go to 1.4 Account Description Work phone number Fax number 1.3 JOINT APPLICANT / NON CORPORATE TRUSTEE 2 address Mr Mrs Miss Ms Other Given name(s) 1.6 ADDRESS DETAILS Surname Residential address (you must specify a residential address). Company, trust, partnership or other non-individual applicants must specify their registered address. Date of birth (you must be 18 or over) Gender Street no. & Name D D M M Y Y Y Y M F Tax File Number OR reason for exemption Macquarie staff number (if applicable) If applying in joint names make sure both 1.2 Individual/Non-Corporate Trustee and 1.3 Joint Applicant/Non Corporate Trustee 2 sections are completed Mailing address (if different to above). All correspondence will be sent to this address. Street no. & Name or PO Box Postcode Postcode 53

113 2 APPLICATION AMOUNT Please select the Fund(s) you wish to invest in and the Application Amount for each Fund Note that the minimum investment is $20,000 per Fund and amounts thereafter must be in multiples of $1,000 per Fund Macquarie Newton Special Events Fund $,, Macquarie Newton Buy Write Fund $,, Macquarie Newton Global Futures Fund $,, Macquarie Newton Global Futures Fund Enhanced $,, Macquarie Newton Australian Absolute Return Fund $,, Macquarie Newton Income Timing Fund $,, Macquarie Newton Asia Statistical Arbitrage Fund $,, Macquarie Newton Asia Long Short Fund $,, Macquarie Newton Japan Market Neutral Fund $,, Macquarie Newton Multi-Strategy Fund $,, PAYMENT AND BANK ACCOUNT DETAILS Your Application Amount can only be paid via a direct debit from your bank account. Please complete your bank account details below. The nominated account must be a bank account with an Australian financial institution. The same account will be used for direct credit of distributions and withdrawal proceeds. NOTE: Direct debiting may not be available from all bank accounts. If in doubt, please refer to your financial institution. Third party bank account details will not be accepted. The bank account must be in the same name as the applicant. Name of financial institution Branch address BSB number Account name Account number Direct Debit Authority I/We understand and acknowledge that in providing the direct debit and credit instructions to the Macquarie Portfolio Management Limited or the Administrator on behalf of Macquarie Portfolio Management Limited (the Direct Debit and Credit Request) that: 1. I/we authorise the Administrator on behalf of Macquarie Portfolio Management Limited to make debits from or credits to my/our nominated account for the amount(s) specified in Section 2; 2. my/our nominated financial institution may in its absolute discretion decide the order of priority of payment by it of any monies pursuant to this request or any authority or mandate; 3. until these instructions are modified or deferred by me/us, the Administrator on behalf of Macquarie Portfolio Management Limited may act on the instructions contained in this Direct Debit and Credit Request; 4. Macquarie Portfolio Management Limited, the Administrator and/or my/our financial institution may, in its absolute discretion, at any time by notice to me/us, terminate this request or, by giving 14 days notice to you, vary the billing arrangements with you; 5. I/we can modify or defer our direct debit or credit instructions by giving the Administrator on behalf Macquarie Portfolio Management Limited 14 days notice in writing; 6. if I/we consider that any direct debit against my/our account is inappropriate or wrong it is my/our responsibility to notify Macquarie Portfolio Management Limited and the Administrator as soon as possible; 7. direct debiting through the Bulk Electronic Clearing System ( BECS ) is not available on all accounts. I/we can check my/our account details against a regular statement or check with the financial institution as to whether I/we can request a direct debit for my/our account; 8. it is my/our responsibility to ensure that there are sufficient cleared funds in my/our nominated account to honour the direct debit request. Macquarie Portfolio Management Limited or the Administrator on behalf of Macquarie Portfolio Management Limited will charge the cost of dishonoured direct debits against my/our account; 9. the Administrator or Macquarie Portfolio Management Limited may need to pass on details of my/our direct debit or credit request to its sponsor bank in BECS to assist with the checking of any incorrect or wrongful debits to my/our account; and 10. If the due date for payment from me/us falls on a day which is not a business day in Sydney, the Administrator on behalf of Macquarie Portfolio Management Limited may process the payment on the business day immediately preceding the due date. I/We understand that I/we may contact Macquarie Portfolio Management Limited or the Administrator if I/we am/are uncertain as to when the payment will be processed. 4 DISTRIBUTION OPTION Please select how you would like your distributions to be treated: Reinvested into the Fund you have selected in section 2. or Direct credited to your nominated bank account in section 3.

114 5 PRIVACY MPML is required to collect certain personal information about you in order to process your application, keep you up to date on the performance of your investment and to comply with certain laws and regulations. This information may also be used to communicate with you from time to time regarding its other products and services. You agree to allow us to provide access to your personal information to other companies in the Macquarie Bank Group as well as external service providers, which provide services in connection with our products and services, for example mail houses and professional advisers. The Corporations Regulations 2001 require the collection in this Application Form of your name, date of birth and address. MPML's policy in relation to your privacy is contained in the Privacy Statement in the PDS ( Privacy Statement ). All investors should read the Privacy Statement in order to understand how information provided by investors is used and how investors can ask for it. By signing this Application Form investors consent to MPML disclosing their information to it, Macquarie Newton Specialist Funds Management Limited, Macquarie Bank Limited, any other member of the Macquarie Bank Group and the Administrator pursuant to the terms set out in the Privacy Statement in the PDS. By supplying your Tax File Number(s) in this Application Form you are authorising the disclosure of this information to MPML. 6 DECLARATIONS AND SIGNATURES I/we acknowledge and declare that I/we have read and received the current PDS and any Supplementary PDS prior to completing the Application Form. On acquiring Units in the Fund(s), I/we agree to be bound by the provisions of the PDS and the Constitutions of the Fund(s). I/we further acknowledge and declare that: a) all information provided as part of this application is true and correct. b) Macquarie Bank Limited: i. has not authorised or caused the issue of the PDS; ii. takes no responsibility for any part of the PDS; and iii. does not endorse or recommend investment under the PDS. c) I/we am/are not in the United States or a US Person and I/we am/are not engaged in the business of distributing Units and will not offer, sell or resell in the United States or to any US Person (as defined under Regulation 5 under the United States Securities Act 1933, as amended) i) any Units I/we acquire under or pursuant to the offer under the PDS or ii) any Units I/we acquire under or pursuant to the offer under the PDS until the end of 40 days after the date on which the Units are allocated under the PDS. d) I/we understand the risks associated with an investment in the Fund(s) as they are outlined in the PDS. e) I/we have read, understood and agree to be bound by the Privacy Statement contained in the PDS. f) I/we am/are not aware of any liquidation or bankruptcy proceedings that have been commenced or are intended to be commenced by any person against me/us or which are intended or anticipated by me/us. g) by completing this Application Form, I/we am/are accepting an offer made by MPML for the issue of Units and at the same time applying to MPML for the issue of those Units. I/we acknowledge that MPML, at its sole discretion, reserves the right not to issue Units in accordance with any application or to allot fewer Units than subscribed for. h) MPML is required to comply with the anti-money laundering laws in force in a number of jurisdictions (including the Financial Transaction Reports Act 1988 (Cth)) and I/we must provide MPML with such additiona information or documentation as MPML may request of me/us from time to time to ensure its compliance with such requirements. Should I/we fail to provide MPML with any such information or documentation as MPML may request of me/us, my/our application for Units may be refused, any Units I/we hold may be compulsorily withdrawn, and any disposal request by me/us may be delayed or refused and MPML will not be liable for any loss arising as a result thereof. i) I/we understand that I/we will not receive any interest earned on my/our Application Amount, and that all such interest earned will accrue to the Fund(s). j) I/we have the legal power to invest in and hold Units in the Fund(s). k) I/We: i. consent to the recording of all telephone conversations in connection with present and future dealings in relation to the Units in Funds for which Macquarie Portfolio Management Limited is the responsible entity with or without the use of an automatic tone warning device; ii. agree to obtain any necessary consent of, and give notice of such recording to, its affected personnel; iii. agree that recordings may be submitted in evidence in any proceedings relating to Units in Funds for which Macquarie Portfolio Management Limited is the responsible entity; and iv. agree that the Macquarie Bank Group is not obliged to maintain copies of such recordings and transcripts for the benefit of the other party. l) I/we acknowledge that investments in the Fund(s) are not deposits with, or other liabilities of Macquarie Bank Limited ABN or of any entity in the Macquarie Bank Group, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. Neither Macquarie Bank, MPML nor any member company of the Macquarie Bank Group guarantees any particular rate of return on, or the performance of the Fund(s), nor do they guarantee repayment of capital from the Fund(s). Further, I/we hereby authorise MPML to complete any blanks and amendments or additions with respect to any part of this Application Form on my/our behalf. ALL APPLICANTS MUST SIGN THE APPLICATION FORM Please be advised that online access to your account information is available via the Citco Investor Web site at If you are interested in gaining online access to your current holdings and transaction history, please contact investorweb@citco.com. The responsible account representative will provide the necessary documentation to be completed and returned in order to gain access. Authorisation of Applicant 1.2 or Company Officer Name SIGN HERE If a company officer, you must specify your corporate title Date D D M M Y Y Y Y Authorisation of Applicant 1.3 or Company Officer Name SIGN HERE If a company officer, you must specify your corporate title Date D D M M Y Y Y Y DATE DATE Send your completed Application Form (including direct debit details) to: Citco Fund Services (Australia) Pty Ltd Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW

115 7 HOW DID YOU HEAR ABOUT US? Brochure Name of Firm or Dealer Group holding the Australian Financial Services Licence (AFSL) Print Advertising 4 Online Advertising Website Financial Adviser Australian Financial Services License (AFSL) number ABN 4 Other (please specify) 8 ADVISER DETAILS (for adviser use only) Recipient Created Tax Invoice Agreement This section concerns any investor referral services ( the Supplies ) provided by the adviser (acting on behalf of the entity which holds the requisite Australian Financial Services Licence for the Supplies (the Supplier ) to the Macquarie Group company identified as the entity paying commissions to advisers for this financial product (the Recipient ). By completing the details below or by confirming any details generated automatically during an electronic Application and/or affixing the relevant stamp to this application form, and in consideration of being paid any remuneration in relation to this application, the adviser: (a) represents and warrants that it is duly authorised to enter into this agreement on behalf of the Supplier; (b) declares that the Supplier holds an Australian Business Number and is registered for GST as at the date they completed their details and/or affix their stamp; (c) agrees to permit the Recipient to produce tax invoices (known as Recipient Created Tax Invoices) for supplies of referral services the Supplier makes to the Recipient ( RCTIs ). The Supplier will not issue tax invoices for those supplies unless agreed otherwise with the Recipient in relation to a particular supply. The Supplier will notify the Recipient if the Supplier ceases to be registered for GST; and (d) if a stamp is affixed to the dealer group box below, directs the Recipient to pay any adviser remuneration payable to the Supplier, and give any RCTIs to be given to the Supplier, to the dealer group identified on the stamp in that box in full satisfaction of the Recipient s obligation to make such payment, or give such RCTI, to the Supplier. The Recipient acknowledges that it is registered for GST and that it will notify the Supplier if it cease to be so registered or it ceases to satisfy any of the requirements under A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination No.1 (2000). This section forms a separate binding agreement between the Supplier and the Recipient. Adviser name (and Adviser Firm if different from AFSL entity specified above) Adviser address Adviser phone number Contribution Fee (up to 3% incl. GST). % IF THE CONTRIBUTION FEE IS LEFT BLANK IT WILL BE ASSUMED AS NIL This fee will come out of the Application Amount and the balance will be invested in your nominated Fund Adviser Stamp Dealer Group Stamp IMPORTANT: TO BE SIGNED BY ALL SIGNATORIES I/we acknowledge that I/we have received and read the Supplementary Product Disclosure Statement dated 30 June 2006 which supplements the Macquarie Newton Specialist Funds Product Disclosure Statement dated 24 April

116 Macquarie Newton Specialist Funds Withdrawal Form OFFICE USE ONLY Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with an (X). Start at the left of each answer space and leave a one box gap between words. This Withdrawal Form may only be used to withdraw investments from the Funds. Capitalised terms in this Withdrawal Form have the same meaning as defined in the PDS unless the context requires otherwise. CROSS OUT AND INITIAL ANY CHANGES MADE TO THE FORM. DO NOT USE CORRECTION FLUID TO AMEND. Application number IRN 1 APPLICANT DETAILS 1.1 COMPANY / CORPORATE TRUSTEE Company name 1.3 JOINT APPLICANT / NON CORPORATE TRUSTEE 2 Mr Mrs Miss Ms Other Given name(s) 1.2 INDIVIDUAL / NON CORPORATE TRUSTEE Mr Mrs Miss Ms Other Given name(s) Surname Surname 1.4 TRUST DESCRIPTION Name of trust, superannuation fund, partnership, deceased estate, unincorporated association or business (eg <Super Fund A/C>). Maximum of 30 characters. < A / C > 2 WITHDRAWAL AMOUNT Please select the Fund(s) you wish to withdraw your investment from. Note that the minimum withdrawal amount is $10,000 per Fund or the equivalent Unit value and amounts thereafter must be multiples of $1,000 per Fund or the equivalent Unit value. The minimum investment balance after withdrawal is $20,000 per Fund unless withdrawing your entire investment. Macquarie Newton Special Events Fund Macquarie Newton Income Timing Fund,,. Units,,. Units OR OR $,, $,, OR OR Withdraw entire investment balance Withdraw entire investment balance Macquarie Newton Buy Write Fund Macquarie Newton Asia Statistical Arbitrage Fund,,. Units,,. Units OR OR $,, $,, OR OR Withdraw entire investment balance Withdraw entire investment balance Macquarie Newton Global Futures Fund Macquarie Newton Asia Long Short Fund,,. Units,,. Units OR OR $,, $,, OR OR Withdraw entire investment balance Withdraw entire investment balance 57

117 Macquarie Newton Global Futures Fund - Enhanced Macquarie Newton Japan Market Neutral Fund,,. Units,,. Units OR $,, OR $,, OR OR Withdraw entire investment balance Withdraw entire investment balance Macquarie Newton Australian Absolute Return Fund Macquarie Newton Multi-Strategy Fund,,. Units,,. Units OR $,, OR $,, OR Withdraw entire investment balance OR Withdraw entire investment balance NOTE: Proceeds from withdrawal will be credited to the bank account in your initial Application Form. Should you wish to check or change the bank account details you have nominated please contact the Macquarie Newton Service Centre on AUTHORISATION Authorisation of Applicant 1.2 or Company Officer Authorisation of Applicant 1.3 or Company Officer SIGN HERE DATE SIGN HERE DATE Name of Applicant 1.2 or Company Officer Name of Applicant 1.3 or Company Officer If a company officer, you must specify your corporate title If a company officer, you must specify your corporate title Date D D M M Y Y Y Y Date D D M M Y Y Y Y 4 DELIVERY Send your completed Withdrawal Form to: Citco Fund Services (Australia) Pty Limited Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW

118 Macquarie Newton Specialist Funds Switching Form Complete this form using BLACK INK and print well within the boxes in CAPITAL LETTERS. Mark answer boxes with an (X). Start at the left of each answer space and leave a one box gap between words. This Switching Form may only be used to switch investments from one Fund to other Fund(s). Should you wish to switch between multiple Funds you will need to complete a separate Switching Form for each Fund you wish to switch from. Capitalised terms in this Withdrawal Form have the same meaning as defined in the PDS unless the context requires otherwise. CROSS OUT AND INITIAL ANY CHANGES MADE TO THE FORM. DO NOT USE CORRECTION FLUID TO AMEND. OFFICE USE ONLY Application number IRN 1. APPLICANT DETAILS 1.1 COMPANY / CORPORATE TRUSTEE DETAILS Company name 1.3 JOINT APPLICANT / NON CORPORATE TRUSTEE 2 Mr Mrs Miss Ms Other Given name(s) 1.2 INDIVIDUAL / NON CORPORATE TRUSTEE Surname Mr Mrs Miss Ms Other Given name(s) Surname 1.4 TRUST DETAILS Name of trust, superannuation fund, partnership, deceased estate, unincorporated association or business (eg <Super Fund A/C>). Maximum of 30 characters. < A / C > 2 SWITCHING OUT OF Please select the Fund you wish to switch out of and the amount you wish to withdraw. Note that the minimum switching amount is $20,000 per Fund and amounts thereafter must be multiples of $1,000 per Fund. The minimum investment balance after switching is $20,000 per Fund unless switching your entire investment. Macquarie Newton Special Events Fund $,, OR Entire investment balance Macquarie Newton Buy Write Fund $,, OR Entire investment balance Macquarie Newton Global Futures Fund $,, OR Entire investment balance Macquarie Newton Global Futures Fund - Enhanced $,, OR Entire investment balance Macquarie Newton Australian Absolute Return Fund $,, OR Entire investment balance Macquarie Newton Income Timing Fund $,, OR Entire investment balance Macquarie Newton Asia Statistical Arbitrage Fund $,, OR Entire investment balance Macquarie Newton Asia Long Short Fund $,, OR Entire investment balance Macquarie Newton Japan Market Neutral Fund $,, OR Entire investment balance Macquarie Newton Multi-Strategy Fund $,, OR Entire investment balance 59

119 3 SWITCH INTO Please select the Fund(s) you wish to switch into and the amount you wish to invest. Note that the minimum amount you may invest in each Fund is $20,000 and amounts thereafter must be multiples of $1,000 per Fund. Macquarie Newton Special Events Fund $,, OR Entire investment balance Macquarie Newton Buy Write Fund $,, OR Entire investment balance Macquarie Newton Global Futures Fund $,, OR Entire investment balance Macquarie Newton Global Futures Fund - Enhanced $,, OR Entire investment balance Macquarie Newton Australian Absolute Return Fund $,, OR Entire investment balance Macquarie Newton Income Timing Fund $,, OR Entire investment balance Macquarie Newton Asia Statistical Arbitrage Fund $,, OR Entire investment balance Macquarie Newton Asia Long Short Fund $,, OR Entire investment balance Macquarie Newton Japan Market Neutral Fund $,, OR Entire investment balance Macquarie Newton Multi-Strategy Fund $,, OR Entire investment balance 4 AUTHORISATION Authorisation of Applicant 1.2 or Company Officer Authorisation of Applicant 1.3 or Company Officer SIGN HERE DATE SIGN HERE DATE Name of Applicant 1.2 or Company Officer Name of Applicant 1.3 or Company Officer If a company officer, you must specify your corporate title If a company officer, you must specify your corporate title Date D D M M Y Y Y Y Date D D M M Y Y Y Y 5 DELIVERY Send your completed Withdrawal Form to: Citco Fund Services (Australia) Pty Limited Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW

120 Directory THE RESPONSIBLE ENTITY Macquarie Portfolio Management Limited No. 1 Martin Place Sydney NSW 2000 INVESTMENT MANAGER Macquarie Newton Specialist Funds Management Limited Level 2 No. 1 Martin Place Sydney NSW 2000 SERVICE CENTRE Postal address Macquarie Newton Service Centre GPO Box 3423 Sydney NSW 2001 Ph: TAX ADVISERS Clayton Utz Level No. 1 O Connell Street Sydney NSW 2000 ADMINISTRATOR Postal address Citco Fund Services (Australia) Pty Limited Attention: Investor Relations Group PO Box R1825 Royal Exchange NSW 1225 AUDITOR PricewaterhouseCoopers Darling Park Tower Sussex Street Sydney NSW 2000 LEGAL ADVISERS Henry Davis York 44 Martin Place Sydney NSW

121 For further information please contact: Macquarie Newton Service Centre GPO Box 3423 Sydney NSW 2001 macquarie.com/newtonfunds OFD /06