EQUINOX ASIA 2 MACQUARIE EQUINOX ASIA 2 TRUST

Transcription

1 EQUINOX ASIA 2 MACQUARIE EQUINOX ASIA 2 TRUST AN ISSUE OF INTERESTS IN A REGISTERED MANAGED INVESTMENT SCHEME BY MACQUARIE PORTFOLIO MANAGEMENT LIMITED ACN Product Disclosure Statement ARSN

2 IMPORTANT INFORMATION NOTE TO INVESTORS Investments in the Macquarie Equinox Asia 2 Trust ARSN (the Trust or Equinox ) are not deposits with, or other liabilities of, Macquarie Bank Limited ABN ( Macquarie ) or of any entity in the Macquarie Group, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. Neither Macquarie, Macquarie Portfolio Management Limited ABN nor any member company of the Macquarie Group guarantees any particular rate of return on, or the performance of, the Trust or the Equinox Reference Portfolio, nor do they guarantee repayment of capital from the Trust. Investors should not rely on any statement made or any information provided by any person about this offering that is not contained in this Product Disclosure Statement (PDS) or the update information (see below). An investment in the Trust provides access to returns derived from a reference portfolio of Asia-Strategy Hedge Funds. These Component Funds are described in Section 3. An investment in the Trust contains risks which are described in Section 5. The issuer of this PDS is Macquarie Portfolio Management Limited ABN ( Responsible Entity ) in its capacity as trustee and responsible entity of the Trust. The Responsible Entity currently holds Australian financial services licence ( AFSL ) number Macquarie provides Capital Protection to the Trust through the Exposure Agreement and not to each individual investor. This Capital Protection is available only on the Capital Protection Date and is subject to the terms and conditions specified in the Exposure Agreement. Information about the Exposure Agreement can be found in Sections 1, 4 and 10. See Section 5 for information on risks relating to the Capital Protection. Macquarie is not the issuer of interests in the Trust or this PDS, and (except where expressly stated) takes no responsibility for the offering or for the contents of this PDS. This PDS does not constitute an offer or invitation to subscribe for shares or interests in the Component Funds, nor does an investment in the Trust constitute a direct investment in the Component Funds. This PDS This PDS is dated 8 February This PDS is available in paper form and is also available in electronic form at the Equinox website: macquarie.com.au/equinox. Investors who wish to invest in Units in the Trust 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 Equinox website); or complete an online Application Form available at macquarie.com.au/equinox. Applications will be processed only: on receipt of a signed Application Form; or on submission of an online Application Form through macquarie.com.au/equinox. This offer is open to Australian residents who receive this PDS, whether in paper or electronic form, in Australia. Investors who receive this PDS in electronic form are entitled to obtain a paper copy (including the Application Form) free of charge by calling or Changes to information in PDS This PDS is current as at 8 February Where information that is not materially adverse to investors changes, the Responsible Entity will update the information by posting a notice on the Equinox website macquarie.com.au/equinox (the update information ). The Responsible Entity will provide upon request a paper copy of the update information to investors free of charge. Representations This PDS has been prepared and issued by the Responsible Entity. Any other parties distributing this product are doing so only as distributor for the Responsible Entity. Potential investors should rely only on information in the PDS or the update information. No person is authorised to give any information or to make any representation in connection with the offer of Units in the Trust that is not contained in this PDS or the update information. Any information or representation not so contained may not be relied upon as having been authorised by the Responsible Entity. Further Information If you have any questions concerning the information contained in this PDS, please contact us on or us at equinox@macquarie.com.au. Selling restrictions apply This PDS is not an offer or invitation in relation to Units in the Trust in any place in which, or to any person to whom, it would not be lawful to make that offer or invitation. No action has been taken to register or qualify the Units or the offer or otherwise to permit an offering of the Units in any jurisdiction outside Australia. Accordingly, the distribution of this PDS (either electronically or otherwise) in any jurisdiction outside Australia is limited and may be restricted by law. Persons into whose possession this PDS comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws. The Units have not been and will not be registered under the US Securities Act of 1933, as amended. The Units may not be offered, sold or delivered within the United States or to US Persons (as defined in Regulation S under the United States Securities Act 1933, as amended). Further advice recommended Before making an investment decision on the basis of this PDS you should consider the appropriateness of the information in this PDS in light of your particular investment needs, objectives and financial and taxation circumstances. This PDS contains general information only and hence does not take into account your objectives, financial situation or needs. You are advised to read this PDS in its entirety and seek professional legal, taxation and financial advice to determine whether an investment in the Trust is appropriate for you. Privacy Act Please read the privacy statement located at the end of this PDS. By signing and delivering the Application Form accompanying this PDS, you consent to the matters outlined in that statement. Glossary Terms throughout this PDS which appear with the first letter in upper case are defined terms (e.g. Trust, Capital Protection etc.). The defined terms are listed in the glossary table, which can be found in Appendix 3.

3 The Macquarie Equinox Asia 2 Trust has been designed to provide investors with efficient access to returns from a reference portfolio of Asia-Strategy Hedge Funds, with the security of capital protection, the cash-flow of distributions, and the added bonus of Profit Lock-ins. 1 CONTENTS Introduction 3 2. Regional Focus The Investment Strategy Rising Capital Protection and Cash Distributions Significant risks The investment terms Fees Taxation for Australian residents The Trust Additional information 69 Appendices 77 Appendix 1 Australian tax opinion 79 Appendix 2 Contact directory 80 Appendix 3 Glossary 81 Application instructions 87 Application form 89 1 Capital Protection is provided to the Trust through the Exposure Agreement and not to each individual investor. Capital Protection, Cash Distributions and Profit Lock-ins are all subject to the terms and conditions of the Exposure Agreement as described in Sections 1, 4 and 10. See Section 5 for information on risks relating to the Capital Protection. 1

4

5 SECTION 1 INTRODUCTION Significant benefits 4 Investor suitability 4 How do I invest? 4 Important information 5 Key concepts and terms and where to find more information 6 Investment overview Q & A 9 3

6 SECTION 1 INTRODUCTION Continued SIGNIFICANT BENEFITS Access to returns derived from the Equinox Reference Portfolio of Asia-Strategy Hedge Funds which focus on Asia-Pacific markets until the Capital Protection Date (30 September 2014); Returns from a basket of ten ASX listed securities after the Delivery Date; Capital Protection as at the Capital Protection Date; 2 Profit Lock-in feature designed to increase the level of Capital Protection; Potential capital growth and income; Foreign currency exposure hedged to Australian dollars; Ability to dispose of your investment prior to the Capital Protection Date; Minimum investment of $10,000. INVESTOR SUITABILITY This investment may suit you if you want to diversify your investment portfolio by gaining access to investment and trading strategies which focus on Asia-Pacific markets within a capital protected framework, and you are a: Self-managed superannuation fund; Family trust; Individual investor; or Company. HOW DO I INVEST? Read this PDS in full; Consult your financial adviser; Complete either a paper Application Form or an online Application Form; A paper Application Form can be found at the back of this PDS (including the PDS available on the Equinox website: macquarie.com.au/equinox - if accessing this PDS from the website, please print the form from the website and complete it by hand); The online Application Form is available at macquarie.com.au/equinox; If you complete a paper Application Form, send it, together with direct debit instructions, any applicable Macquarie investment loan application, or a cheque made payable to: Macquarie Equinox Asia 2 Trust a/c <insert applicant s name>. Completed forms should be sent to: Macquarie Equinox Service Centre, GPO Box 3423, Sydney NSW Alternatively, Application Forms may be delivered to Macquarie Bank s Mezzanine Reception, 1 Martin Place, Sydney (entrance on Pitt Street) or sent or delivered to your financial adviser; If you complete an online Application Form and you choose to invest by sending in a cheque (rather than providing direct debit instructions in your online Application or by borrowing all the investment funds from Macquarie) send a cheque made payable to: Macquarie Equinox Asia 2 Trust a/c <insert applicant s name> to: Macquarie Equinox Service Centre, GPO Box 3423, Sydney NSW Cheques must be attached to the Cheque Deposit Form generated when you elect online to invest by sending in a cheque. Please print this form and attach your cheque to it. Alternatively, cheques (attached to the Cheque Deposit Form) may be delivered to Macquarie s Mezzanine Reception, 1 Martin Place, Sydney (entrance on Pitt Street) or sent or delivered to your financial adviser; The Offer Close Date is 17 March 2006, subject to the right of the Responsible Entity to close the offer early or extend the date. 4 2 Capital Protection is provided to the Trust through the Exposure Agreement and not to each individual investor. Capital Protection is subject to the terms and conditions of the Exposure Agreement as described in Sections 1, 4 and 10. See Section 5 for information on risks relating to the Capital Protection.

7 Equinox has been designed to provide investors with an efficient way to gain exposure to the Equinox Reference Portfolio which contains Asia-Strategy Hedge Funds. Equinox has the benefit of Rising Capital Protection on the Capital Protection Date (Capital Protection and a Profit Lock-in facility). The Responsible Entity aims to provide investors with an income stream, through annual distributions, as well as capital growth. Investments such as the Component Funds contained in the Equinox Reference Portfolio have generally been available only to institutions and high net worth individuals. Equinox provides retail investors with exposure to the performance of such investments, for a minimum investment of $10,000. After the Delivery Date, the Trust s investments will consist of a basket of ten ASX listed securities. IMPORTANT INFORMATION Issuer, Responsible Entity The Trust Unit issue price Macquarie Portfolio Management Limited as trustee and responsible entity of the Macquarie Equinox Asia 2 Trust. The Responsible Entity s address is Level 2, No.1 Martin Place, Sydney NSW The Macquarie Equinox Asia 2 Trust, an Australian registered managed investment scheme. Units issued under this Offering will be issued at $1.00 each. Offer Close Date 17 March Capital Protection Date 30 September Delivery Date Minimum Investment Issue Date The date five Business Days after the final valuation of the Exposure Agreement pertaining to the Capital Protection Date is determined by the Valuation Agent. Minimum application of $10,000, with $1,000 increments thereafter. If your application is accepted, Units will be issued to you no later than: (a) one month after your application moneys have been received and cleared 5 ; or (b) 31 March 2006, whichever is the earlier. Investment Date Maximum subscriptions No further offers No minimum subscription or underwriting The date on which the Responsible Entity will pay to Macquarie $1.00 per Unit under the Exposure Agreement, expected to be on or about 31 March The maximum level of subscriptions that the Responsible Entity proposes to accept is $50,000, The Responsible Entity does not currently intend to offer additional Units after the Offer Close Date except under the Distribution Reinvestment Facility. The Offering is not subject to any minimum level of subscription and is not underwritten or guaranteed. 3 The Responsible Entity reserves the right, in its absolute discretion, to close the offer early or extend the offer period to a date no later than 31 March If the Offer Close Date is extended, the Capital Protection Date and the Surrender Cut-off Date may be extended by a period not exceeding the extension to the Offer Close Date. The Responsible Entity will provide notice of any change to the Offer Close Date on the Equinox website at macquarie.com.au/equinox or will provide a paper copy of such notice free, upon request. 4 The Capital Protection Date is fixed once the offer is closed. See footnote 3. 5 Application moneys received and accepted on or prior to the Offer Close Date will be held by the Responsible Entity in a separate account with Macquarie designated as a trust account until the Units are issued. You will receive no interest on your Application Amount. Any interest earned will become an asset of the Trust. 6 The Responsible Entity reserves the rights, in its absolute discretion, to increase this amount, reject applications and to close the offer early. 5

8 SECTION 1 INTRODUCTION Continued KEY CONCEPTS AND TERMS AND WHERE TO FIND MORE INFORMATION This section contains a summary of some of the key concepts and terms and references to other sections of this PDS where you can find further information. The meaning of other defined terms (indicated by the first letter being in upper case) can be found in the Glossary (Appendix 3). You should read this PDS in full before deciding whether to invest. TERM SUMMARY WHERE TO GO FOR MORE INFORMATION 6 The Exposure Agreement The Equinox Reference Portfolio The Component Funds Up to 130% exposure Rising Capital Protection Threshold Management The Exposure Agreement with Macquarie will provide the Trust with exposure to the performance of the Equinox Reference Portfolio until the Capital Protection Date. The agreement is a deferred purchase agreement which specifies that Macquarie will deliver the Delivery Basket of ASX listed securities to the Responsible Entity for the benefit of the Trust on the Delivery Date. The Exposure Agreement provides the Trust with Rising Capital Protection and allows for Periodic Returns, when applicable. Until the Delivery Date, the Exposure Agreement is likely to be the Trust s only significant asset. The Equinox Reference Portfolio is a list of assets and liabilities used as a reference point for determining the value of the Exposure Agreement. The Equinox Reference Portfolio does not contain physical assets and liabilities. The Equinox Reference Portfolio will contain Component Funds that employ sophisticated investment and trading strategies which focus on Asia-Pacific markets. Intended initial weightings are: 50% to a fund of Asia-Strategy Hedge Funds and a multi-strategy Asia-Strategy Hedge Fund (together the Diversified Funds ); and 50% to a group of 5 specialist Asia-Strategy Hedge Funds (the Specialist Funds ). Under the terms of the Exposure Agreement, the exposure of the Equinox Reference Portfolio to the Component Funds will, in certain circumstances, be increased through the use of notional leverage. The Investment Guidelines do not permit the exposure of the Equinox Reference Portfolio to Component Funds to exceed 130% of the Exposure Agreement Value at any time. The Exposure Agreement is designed to provide the Trust with Capital Protection as at the Capital Protection Date. The initial Capital Protected Amount will equate to $1.00 per Unit, but this may increase through any Profit Lock-ins being declared. Note that the benefit of Capital Protection provided to the Trust is available only as at the Capital Protection Date. See Section 5 for information on risks relating to the Capital Protection. The Exposure Agreement requires that an asset management method called Threshold Management be employed in determining the composition of the Equinox Reference Portfolio. This may result in the Equinox Reference Portfolio s exposure to Component Funds being reduced partially or completely in favour of Security Deposits which may adversely affect the future return potential of the Equinox Reference Portfolio. Investment overview Q & A below, Sections 3, 4 & 5 Investment overview Q & A below and Section 3 Investment overview Q & A below and Sections 2 & 3 Section 3 Investment overview Q & A below and Sections 4 & 5 Sections 4 & 5

9 TERM SUMMARY WHERE TO GO FOR MORE INFORMATION Periodic Returns Withdrawal Fees and costs Risks The Trust will be entitled to Periodic Returns under the Exposure Agreement if the Exposure Agreement Value has increased sufficiently in any Financial Year. Such Periodic Returns are made in consideration of the Trust having paid for the Delivery Basket in advance. In such circumstances the Trust will be able to make Cash Distributions to investors. You can choose to reinvest these distributions under the Distribution Reinvestment Facility. Any Periodic Returns will reduce the level of the Trust s exposure to the Equinox Reference Portfolio but will not reduce the level of Capital Protection. You will generally be able to withdraw your investment by giving written notice to the Responsible Entity. The minimum withdrawal is for 10,000 Units. To receive the withdrawal proceeds based on a Withdrawal Price for a particular month, we must receive your withdrawal request no later than 40 days before the Valuation Day (generally the last Business Day) in that month. Although the Trust is expected to remain liquid, it will usually take days from the Valuation Day as at which your Withdrawal Price is calculated until you receive your withdrawal proceeds. In unusual circumstances, withdrawal may take longer. Fees and expenses apply to this offering and to other arrangements associated with the Trust s ongoing operations, including the operation of the Exposure Agreement. An investment in Equinox involves a number of risks. Prospective investors should consider carefully the risks that may affect the Trust and the performance of the Equinox Reference Portfolio before investing. Significant risks include: The performance of the Equinox Reference Portfolio will depend largely on the performance of the Component Funds. There is a risk that these Component Funds may perform poorly or that the strategies adopted by the managers of the Component Funds may produce investment losses; The Component Funds are Asia-Strategy Hedge Funds. Adverse events or conditions within the Asia-Pacific region may have a greater effect on the performance of the Component Funds than they would on the performance of Hedge Funds with a different or wider geographic focus; Section 4 Section 6 Section 7 Section 5 7

10 SECTION 1 INTRODUCTION Continued TERM SUMMARY WHERE TO GO FOR MORE INFORMATION Taxation Dispute resolution Cooling off Ethical considerations Further information and questions The Exposure Agreement is with Macquarie, a related party of the Responsible Entity. Macquarie Newton Specialist Funds Management Limited, the manager of the Macquarie Asian Multi-Strategy Fund (one of the Component Funds), is also a related party of the Responsible Entity. This creates the potential for conflicts of interest to arise; Entering into the Exposure Agreement with Macquarie will result in the Trust taking significant counterparty risk on Macquarie (that is the risk that Macquarie may not be able to fulfil its contractual obligations); The Exposure Agreement may (in certain circumstances) reflect the use of leverage. The managers of the Component Funds may also utilise leverage. Leverage magnifies investment returns, both profits and losses. Some general information on the significant tax implications of an investment in the Trust and a taxation opinion from Clayton Utz are included in this PDS. Nevertheless, all investors should seek their own professional taxation advice to determine the tax treatment applicable in their particular circumstances. We have established internal and external dispute resolution procedures that you may access if you have a complaint. If you decide that your initial investment in the Trust 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 days after your Units are issued, whichever is earlier. The Responsible Entity does not take into account labour standards or social, environmental or ethical considerations for the purpose of selecting, retaining or realising the Trust s investments. To the best of the Responsible Entity s knowledge, none of the Component Funds take into account such considerations in making investment decisions. Further information on Macquarie and copies of the Constitution are available free of charge. Should you have any questions about an investment in the Trust please contact your financial adviser or the Macquarie Equinox Service Centre: Phone: or equinox@macquarie.com.au Internet: macquarie.com.au/equinox Section 8, Appendix 1 Section 10 Section 6 Section 3 Section 10 8

11 INVESTMENT OVERVIEW Q & A How is your money invested? The Responsible Entity will pay the net proceeds raised in this Offering to Macquarie as consideration for delivery of the Delivery Basket under the Exposure Agreement on the Delivery Date. The Exposure Agreement is designed to provide the Trust with the following significant benefits: Exposure to the performance of the Component Funds included in the Equinox Reference Portfolio until the Capital Protection Date; Capital Protection initially equivalent to $1.00 per Unit as at the Capital Protection Date; The potential for the level of Capital Protection to rise through Profit Lock-ins; The potential for Periodic Returns as well as capital growth; and Foreign currency exposure hedged to Australian dollars. How does the Exposure Agreement work? The Exposure Agreement is a deferred purchase agreement between the Responsible Entity acting on behalf of the Trust and Macquarie for the purchase and delivery of shares (the Delivery Basket) under which the purchase price (in this case, the proceeds from this Offering plus any reinvestments under the Distribution Reinvestment Facility) is paid up front by the Trust to Macquarie and settlement (delivery of the securities by Macquarie to the Trust) is deferred until the Delivery Date. The Delivery Amount is the higher of: the Exposure Agreement Value, which will be determined by the performance of the Equinox Reference Portfolio up to the Capital Protection Date; and the Capital Protected Amount, What is the Equinox Reference Portfolio? The Equinox Reference Portfolio is a list of notional assets and liabilities, used as a reference point for determining: the value of the Exposure Agreement from time to time; and the Delivery Amount under the Exposure Agreement. The Equinox Reference Portfolio will be comprised of assets and liabilities that can be acquired or incurred respectively, such as Component Funds and foreign exchange contracts. However, the Equinox Reference Portfolio is not comprised of physical assets and in that sense is notional - simply a list of assets and liabilities used as a reference, which takes into account all practical considerations which would arise if the Portfolio were comprised of actual physical assets and liabilities. What are the constituents of the Equinox Reference Portfolio? The Exposure Agreement is designed to track and deliver returns based on those that could be obtained by investing directly in the various components of the Equinox Reference Portfolio. The Equinox Reference Portfolio will initially contain the Component Funds described in Section 3 (with the weightings and level of exposure described in that section), foreign exchange contracts and cash at call. The level of exposure to each of the Component Funds may increase through the use of leverage, which will result in notional liabilities and interest costs being included in the Equinox Reference Portfolio (see Section 3).Through the implementation of Threshold Management (see Section 4), the Equinox Reference Portfolio may also contain Security Deposits. The Investment Guidelines do not permit the exposure of the Equinox Reference Portfolio to Component Funds to exceed 130% of the Exposure Agreement Value at any time. each as at the Capital Protection Date. In this way, exposure to the returns of the Equinox Reference Portfolio and Capital Protection are efficiently delivered to the Trust under the same agreement. See Section 4 for more details of the Capital Protection. The Exposure Agreement is classified as a derivative under Chapter 7 of the Corporations Act, because the value of the Exposure Agreement will vary significantly over time by reference to the value of the Equinox Reference Portfolio. 9

12 SECTION 1 INTRODUCTION Continued How is the Exposure Agreement valued? The value of the Exposure Agreement will reflect the value of the Equinox Reference Portfolio and will be calculated monthly by the Valuation Agent. See Section 10 for details. The value of the Equinox Reference Portfolio will reflect all actual practical considerations (including Component Fund subscription and redemption terms, capacity constraints, applicable fees, charges, taxes and brokerage, transactions costs, interest expenses and any delays in repayments) as if the Trust were itself investing directly in the components of the Equinox Reference Portfolio. The value of the Equinox Reference Portfolio will also be affected by its foreign currency exposure being hedged to Australian dollars and by the operation of Threshold Management as specified in the Investment Guidelines of the Exposure Agreement. Can the Equinox Reference Portfolio change? Yes. Under the Exposure Agreement the Responsible Entity is entitled to make changes to the composition of the Equinox Reference Portfolio, subject to: the changes complying with the Investment Guidelines; the changes being able to be implemented physically (even though the Equinox Reference Portfolio is notional); and in the case of adding a new Component Fund, Macquarie s approval. What are the Investment Guidelines? The Investment Guidelines are mandatory restrictions concerning the composition of the Equinox Reference Portfolio. The Investment Guidelines specify, among other things: Minimum liquidity levels for the Component Funds; Track record criteria for the Component Funds; Minimum levels of diversification within the Equinox Reference Portfolio; Maximum allowable percentage allocations to strategies, countries and Component Funds; Criteria based on the levels of assets managed by the Component Funds; The foreign exchange hedging methodology. The Investment Guidelines may be amended at any time by agreement between the Responsible Entity and Macquarie. Is Macquarie actually required to acquire assets or incur liabilities that comprise the Equinox Reference Portfolio? No. Macquarie is not required to acquire assets or incur liabilities that comprise the Equinox Reference Portfolio. If it chooses to do so (to hedge its own exposure) the Trust will have no interest in those assets, nor will it be liable to meet Macquarie s liabilities. The composition of the Equinox Reference Portfolio may also change compulsorily as a consequence of the implementation of Threshold Management. In managing the composition of the Equinox Reference Portfolio the Responsible Entity can only implement changes that would be possible to implement were the portfolio real. In other words, all practical considerations will be adhered to by the Responsible Entity in its management of the Equinox Reference Portfolio. 10

13 Can the level of Capital Protection change? The Capital Protected Amount will initially be the amount the Responsible Entity pays to Macquarie under the Exposure Agreement. This will be the equivalent at inception of $1.00 per Unit. The Capital Protected Amount may rise during the term of the agreement as a result of any Profit Lock-ins being declared. See Section 4 for more details of the Capital Protection and the way in which Profit Lock-ins can be declared. The effect of the Exposure Agreement is that the Capital Protected Amount, when expressed on a per Unit basis, cannot be reduced by Macquarie prior to the Capital Protection Date. The Responsible Entity also agrees not to partially terminate the Exposure Agreement except to satisfy Unitholder withdrawals. Unitholder withdrawals will not cause the level of Capital Protection provided to the Trust on the Capital Protection Date, when considered on a per Unit basis, to fall. You should be aware that the Capital Protected Amount per Unit at the Capital Protection Date is unlikely to have the same real value as it would today (or at the time any Profit Lock-in is declared) due to the likely effect of inflation and the time value of money. See Section 5 for details on the significant risks pertaining to the Capital Protection. Is there any Capital Protection before or after the Capital Protection Date? No. Capital Protection applies only as at the Capital Protection Date. What is the nature of the Trust s investment after the Capital Protection Date? After the Capital Protection Date, the Trust s exposure to the Equinox Reference Portfolio will cease as the Exposure Agreement will have ended. After that time, the Trust s investment will consist of that part of the Delivery Basket not disposed of to satisfy investor withdrawals as at the Capital Protection Date and cash at call. See Sections 3 and 6 for further details. What is the Delivery Basket? The Delivery Basket is the basket of securities, prepurchased by the Responsible Entity, that Macquarie must deliver under the terms of the Exposure Agreement. The Delivery Basket will consist of parcels of approximately equal value of each of the top ten 7 ordinary shares contained in the S&P/ASX 200 index. Can the Trust receive periodic distributions of income under the Exposure Agreement prior to the Capital Protection Date? The Trust is entitled to receive Periodic Returns from Macquarie each time that the Exposure Agreement Value (adjusted for redemptions) has increased sufficiently in any Financial Year. See Section 4 for details of Periodic Returns and the resultant Cash Distributions made from the Trust. Periodic Returns do not reduce the Capital Protected Amount. If you withdraw your investment prior to this date you will not receive the benefit of the Capital Protection and you may receive less than the amount you paid on application for your Units. There will be no ongoing protection of the Trust s investment if it is held past the Capital Protection Date. You must therefore elect to withdraw your investment as at the Capital Protection Date in order to realise the benefits of the Capital Protection. We will write to you around three months prior to the Capital Protection Date with details on how you can withdraw your investment as at the Capital Protection Date. 7 Ranked by market capitalisation as at 10 Business Days prior to the Delivery Date. Macquarie reserves the right to substitute any of these securities for others within the S&P/ASX 200 index (or a comparable index if that index no longer exists) in the event it is not reasonably practicable for Macquarie to acquire the top ten stocks (for example, if there is lack of liquidity or a trading halt). 11

14 SECTION 1 INTRODUCTION Continued Can the Responsible Entity bring the Exposure Agreement to an end? The Responsible Entity reserves the right to gain exposure to the Equinox Reference Portfolio by any means other than via the Exposure Agreement that it deems necessary if, for any reason, the terms of the Exposure Agreement no longer suit the Responsible Entity s investment goals for the Trust and an investment in the Exposure Agreement is no longer deemed by the Responsible Entity to be in the best interests of Unitholders. This right may be exercised at any time prior to or during the Trust s investment in the Exposure Agreement. The Responsible Entity will not exercise this right unless it can secure in an alternate investment at least the same amount of capital protection that Macquarie was to provide under the Exposure Agreement. Under such a circumstance, the Responsible Entity will not invest with a counterparty whose long-term credit rating, as measured by Standard & Poor s, is lower than the S&P rating applicable to Macquarie as at the date of this PDS. In such a situation the Responsible Entity will use its reasonable endeavours, having regard to prevailing market conditions, to ensure that any alternate investment will contain substantially similar terms to the Exposure Agreement with Macquarie. 12

15 SECTION 2 REGIONAL FOCUS Introduction the Asia-Pacific Region 14 Asia in Focus 14 Australia and New Zealand 16 Fertile ground for Hedge Funds 16 The Macquarie Equinox Asia 2 Trust a unique opportunity 18 13

16 SECTION 2 REGIONAL FOCUS Continued The research material in this section under the headings Introduction the Asia Pacific region, Asia in Focus and Australia and New Zealand, including charts and commentary, have been provided to the Responsible Entity by Macquarie and have been reproduced in this form and context with Macquarie s consent. Macquarie has not been involved in the preparation of any other material in this PDS, and has not made any other statement in this PDS, or any statement on which a statement made in this PDS is based, except as expressly stated. Past performance information presented in this section is not a reliable indicator of future performance. INTRODUCTION THE ASIA-PACIFIC REGION The Asia-Pacific region is highly diverse economically and in terms of financial markets. The discussion below highlights some of the features of this region and the opportunities they present. It is not intended to be exhaustive. ASIA IN FOCUS Asia: a growth story As a region, Asia has enjoyed positive rates of growth since 1999 (see Figure 1). 8 Annual % change *Estimate for year to December *Estimate for year to December * CHINA INDIA UNITED STATES WESTERN EUROPE Source: Macquarie (January 2006) Figure 2: Real GDP growth in China, India, the US and Western Europe. Strong foundations for further growth There are a number of factors which indicate that, on the whole, Asia s economies have significantly improved since the 1997 Asian financial crisis. The region is running a significant current account surplus, governments have pursued structural reforms that have increased transparency, accountability and sophistication in investment markets and governments and corporates are holding significant amounts of cash. Overall, Asian interest rates remain low by historical standards, which is supportive for economic growth. 14 Annual % change *Estimate for year to December * Source: Macquarie (January 2006) Figure 1: Real GDP growth in Asia Growth rates in key economies in the Asia region, such as China and India, have mostly exceeded those in the United States and Western Europe over the past 10 years. As Figure 2 shows, the difference in growth rates has been significant in some years. 9 8 Past performance is not a reliable indicator of future performance. 9 Past performance is not a reliable indicator of future performance. Both China and Japan are potentially strong drivers of growth in the region given their demand for Asian imports. The Chinese economy has displayed positive momentum and whilst growth in the Japanese economy has been comparatively weak, the economic fundamentals have improved. For example the number of full-time employees in Japan is growing for the first time in seven years. Asia s large levels of foreign currency reserves and substantial current account surpluses, coupled with Asia s growing domestic demand and stronger intra-regional trade links, mean that Asian economies are now better able to manage negative external market influences. South-east Asian economies have also undergone structural reforms since the Asian financial crisis in 1997, resulting in a generally more robust financial sector within that region. These factors together provide a solid foundation for potential further economic and financial market growth in the region.

17 Nevertheless, continued growth in Asia as a whole may be affected by many factors, including continued firm growth in the United States and China, the sustainability of Japan s economic recovery, the future direction of oil and commodity prices, the continuation of expansionary monetary conditions in the region and movements in foreign exchange markets. There are also a number of region-specific risks and country-specific risks, which could affect growth prospects in Asia, including the risk of political instability and its effect on the continued implementation of reforms, excessive speculative volatility and the possibility of regional epidemics such as the Asian bird flu or SARS. Asian equity and capital markets have improved Since mid 2003, the performance of Asian equity markets has generally improved (see Figure 3), 10 underpinned by growing investor confidence and improved corporate earnings. These factors have also contributed to an improvement in the liquidity and risk profile of Asian corporate bond markets. Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 MSCI AC Asia USD Index Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Source: MSCI (January 2006) Figure 3: Asian equity markets have improved Market conditions in the Asian region as reflected in equity raisings, bond issuance, the availability of a wider range of financial products and equity and bond market liquidity have generally improved in recent years Unique features provide unique opportunities As a region, Asia is characterised by diversity in terms of the level of development and maturity among its economies. For example, the economies of Vietnam, Thailand and Cambodia are heavily reliant on labourintensive primary industry whilst the more industrialised economies of Korea and Taiwan have highly developed manufacturing sectors. At the same time, less mature Asian markets are characterised by market inefficiency which has manifested itself in pricing anomalies and information asymmetry. These features are less prevalent in highly developed economies. Asian markets have also proved to be volatile. Figure 4 shows movements in the MSCI AC Asia USD index from December 1987 until December Dec 87 Dec 88 Dec 89 Dec 90 Dec 91 Dec 92 Dec 93 Dec 94 Dec 95 MSCI AC Asia USD Index Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Source: MSCI (January 2006) Figure 4: Asian markets have proved volatile. As discussed below, it is these and other features of Asian markets which, in the context of potentially positive economic and market conditions, create opportunities for investment professionals who are able to employ nontraditional investment techniques using a broad array of financial market instruments. 10 The MSCI AC Asia USD Index is a market capitalisation weighted index which represents the equity market performance of 12 key equity markets within Asia. The past performance of this index is not a reliable indicator of future performance. MSCI data is the exclusive property of Morgan Stanley Capital, Inc. (MSCI) and may not be reproduced or redisseminated in any form without prior written permission from MSCI. This information is provided on an as is basis, and the user of this information assumes the entire risk of any use made of this information. Neither MSCI nor any other party makes any express or implied warranties or representations with respect to the information (or the results to be obtained by the use thereof), and MSCI hereby expressly disclaims all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI or any other party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. MSCI, Morgan Stanley Capital International and the MSCI indexes are service marks of MSCI. 15

18 SECTION 2 REGIONAL FOCUS Continued AUSTRALIA AND NEW ZEALAND Whilst showing recent signs of moderation, Australia and New Zealand have experienced positive rates of growth over the past 13 years. Both countries have strong trade links with key economies in the rest of Asia. Equity markets in Australia and New Zealand have steadily improved since March Whilst Australia and New Zealand financial markets are generally more efficient compared to other markets in Asia, inefficiencies do exist. In Australia, high levels of liquidity combined with well developed and cost-effective derivative markets, provide opportunities for investment professionals who are able to employ non-traditional investment techniques. FERTILE GROUND FOR HEDGE FUNDS Investors can access opportunities in the Asia-Pacific region through Hedge Funds. What are Hedge Funds? The term Hedge Fund is used broadly to describe managed funds that make use of a wider range of investment strategies and financial instruments than traditional investment funds. Hedge Funds are usually privately offered funds that are open mainly to professional investors or high net worth individuals. Hedge Funds generally aim to produce absolute returns for their investors that is, positive returns in both rising and falling markets. It is for this reason that Hedge Funds are often referred to as absolute return funds. Traditional investment funds generally construct and manage their portfolios with the aim of making a return relative to an industry index or benchmark, such as the S&P/ASX 200, and are limited to taking long positions in securities. This means that generally, traditional investment funds are less able to profit in choppy or falling markets. Hedge Funds invest in the same assets as traditional investment funds, such as shares and bonds, and are also able to invest and trade in currencies and commodities. Hedge Funds are also able to draw on a broader range of investment strategies, techniques and instruments, including the use of derivatives and the short selling of securities, to generate returns in a variety of market conditions. Hedge Funds can also make use of leverage to enhance their returns. The term Hedge Fund has been used because many Hedge Fund managers have constructed their portfolios so that any potential fall in the value of one investment in the portfolio will be fully or partly offset (or hedged ) by a rise in the value of another investment in the portfolio, to make their portfolio less vulnerable to broad market movements. The Asia-Pacific Hedge Fund Landscape Accessing Asian opportunities through Hedge Funds Hedge Funds provide a means for investors to access the opportunities in the Asia-Pacific region. Examples of features which may exist in Asia-Pacific financial markets and the way Hedge Funds attempt to capitalise on them include: volatility: Hedge Funds are generally better able to manage and profit from market volatility (in both rising and falling markets), compared to traditional long-only funds because they are able to short sell securities and use derivatives; market inefficiency: Hedge Funds are able to employ sophisticated strategies to take advantage of pricing inefficiencies and information asymmetry within and across markets such as misunderstood, under-valued and underresearched distressed assets and restructuring situations. Whether a particular Hedge Fund will benefit from a particular situation will depend on the precise strategy employed by that Hedge Fund. From time to time, there may also be general or specific features in Asia-Pacific markets or economies which could negatively affect Hedge Fund returns which, depending on the particular Hedge Fund strategy, could include low volatility, reduced liquidity, sudden large movements in equity and credit markets as well as unanticipated or unexpected shifts in government and central bank policies. See Section 5 for more information on the risks associated with an investment in the Asia-Pacific region. 16

19 Asia-Strategy Hedge Funds vs. Asia-Pacific equities Figure 5 compares the performance of a hypothetical US$100 investment in both the Eurekahedge Asia Hedge Fund Index 11 and the MSCI AC Asia Pacific USD Index 12, assuming reinvestment of income. The Eurekahedge Asia Hedge Fund Index has been included to show the performance of Asia-Strategy Hedge Funds generally and is not representative of the future performance of the Trust. For the period from the inception of the Eurekahedge Asia Hedge Fund Index (December 1999) until November 2005, the Eurekahedge Asia Hedge Fund Index has outperformed the MSCI AC Asia Pacific USD Index. 13 Dec 99 Mar 00 Jun 00 Sept 00 Eurekahedge Asia Hedge Fund Index Dec 00 Mar 01 Jun 01 Sept 01 Dec 01 Mar 02 Jun 02 Sept 02 Dec 02 Mar 03 Jun 03 Sept 03 Dec 03 Source: Eurekahedge/MSCI (January 2006) Mar 04 Jun 04 Sept 04 Dec 04 Mar 05 Jun 05 Sept 05 MSCI AC Asia Pacific USD Index Figure 5: Asia-Strategy Hedge Funds generally vs Asia-Pacific equity markets Asia-Strategy Hedge Funds have proved an effective way of accessing the opportunities presented by the Asia- Pacific region. Asia-Strategy Hedge Funds vs. Hedge Funds generally Figure 6 compares the performance of a hypothetical US$100 investment in both the Eurekahedge Asia Hedge Fund Index and the HFRI Fund Weighted Composite Index 14 from December 1999 until November 2005, assuming reinvestment of income The Eurekahedge Asia Hedge Fund Index has been included to show the performance of Asia-Strategy Hedge Funds generally and is not representative of the future performance of the Trust. From early 2001, the Eurekahedge Asia Hedge Fund Index has outperformed the HFRI Fund Weighted Composite Index. 15 Dec 99 Mar 00 Jun 00 Sept 00 Eurekahedge Asia Hedge Fund Index Dec 00 Mar 01 Jun 01 Sept 01 Dec 01 Mar 02 Jun 02 Sept 02 Dec 02 Mar 03 Jun 03 Sept 03 Dec 03 Mar 04 Jun 04 Source: Eurekahedge/HFRI (January 2006) Sept 04 Dec 04 Mar 05 Jun 05 Sept 05 HFRI Weighted Composite Index Figure 6: Asia-Strategy Hedge Funds generally vs Hedge Funds generally As demonstrated in Figure 6, from December 1999 to November 2005, Asia-Strategy Hedge Funds have on the whole, been able to achieve superior performance when compared to Hedge Funds generally. Asia-Strategy Hedge Funds focus on opportunities in Asia-Pacific markets. Similar opportunities may not be as prevalent in more mature markets. Investors should however be aware that Asia-Strategy Hedge Funds are more directly exposed to Asia-specific risks, some of which have been outlined above. Investors should also refer to Section 5 for more information on these risks. 11 The Eurekahedge Asia Hedge Fund Index represents the average monthly return on a non-weighted portfolio of over 300 Hedge Funds (whether or not still in existence) which focus primarily on markets within the Asia-Pacific region. 12 The MSCI AC Asia Pacific USD Index is a market capitalisation weighted index which represents the performance of 14 key equity markets within the Asia-Pacific region (including Australia and NZ). 13 The past performance of the Eurekahedge Asia Hedge Fund Index is not a reliable indicator of its future performance or the future performance of the Trust, which has no performance history. 14 The HFRI Fund Weighted Composite Index is a fund weighted index of over 1600 hedge funds encompassing a broad and diverse range of strategies and markets. It is widely regarded in the Hedge Fund industry as a measure of the general performance of Hedge Funds. Source: Hedge Funds Research, Inc., HFR, Inc. January 2006, 15 The past performance of the Eurekahedge Asia Hedge Fund Index is not a reliable indicator of its future performance or the future performance of the Trust, which has no performance history. 17