EQUINOX 6 MACQUARIE EQUINOX 6 TRUST AN ISSUE OF INTERESTS IN A REGISTERED MANAGED INVESTMENT SCHEME. Product Disclosure Statement ARSN

Transcription

1 EQUINOX 6 MACQUARIE EQUINOX 6 TRUST AN ISSUE OF INTERESTS IN A REGISTERED MANAGED INVESTMENT SCHEME Product Disclosure Statement ARSN

2 IMPORTANT INFORMATION NOTE TO INVESTORS Investments in the Macquarie Equinox 6 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 Bank Limited, 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 that includes Hedge Funds and Tactical Traders. Hedge Funds and Tactical Traders are described in Section 2. An investment in the Trust contains risks which are described in Section 4. 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 as part of the Exposure Agreement for the benefit of the Trust. 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 1,3 and 9. Macquarie is not the issuer of interests in the Trust or this PDS, and takes no responsibility for the offering or for the contents of this PDS. 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. This PDS This PDS is dated 10 May 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 or print and complete a copy of an Application Form which is included in the PDS on the Equinox website. Applications will be processed only on receipt of a signed Application Form which accompanies this PDS or which was printed from the Application Form included in the PDS on the Equinox website. 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 10 May 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. 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 the 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.

3 The Macquarie Equinox 6 Trust has been designed to provide investors with efficient access to returns from a reference portfolio of international Hedge Funds and Tactical Traders, with the security of capital protection 1, the cash-flow of distributions, and the added bonus of Profit Lock-ins. CONTENTS Important Information 1. Introduction 3 2. The Investment Strategy Rising Capital Protection and Cash Distributions Significant risks The investment terms Fees Taxation for Australian residents The Trust Additional information 59 Appendices 67 Appendix 1 Australian tax opinion 68 Appendix 2 Contact directory 69 Appendix 3 Glossary 70 Application instructions and checklist 76 Application form 77 1 Subject to the terms and conditions of the Exposure Agreement as described in Sections 1 and 3. See Section 4 for information on risks relating to the Capital Protection. 1

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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 SIGNIFICANT BENEFITS Access to returns derived from the Equinox Reference Portfolio of Hedge Funds and Tactical Traders until the Capital Protection Date (30 December 2012) 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; Exposure to offshore markets 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 international investment and trading strategies 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 the Application Form found at the back of this PDS, or in the PDS on the Equinox website (macquarie.com.au/equinox); and Send in the completed Application Form, with direct debit instructions, any applicable Macquarie investment loan application, or a cheque made payable to: Macquarie Equinox 6 Trust a/c <insert applicant s name> Completed forms should be sent to: Macquarie Equinox Service Centre GPO Box 3423 Sydney NSW 2001 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. The Offer Close Date is 22 June 2005, subject to the right of the Responsible Entity to extend the date. 2 Subject to the terms and conditions of the Exposure Agreement as described in Sections 1,3 and 9. See Section 4 for information on Risks relating to the Capital Protection 4

7 Equinox has been designed to provide investors with an efficient way to gain exposure to the Equinox Reference Portfolio which contains international Hedge Funds and Tactical Traders with the benefit of Rising Capital Protection on the Capital Protection Date (100% Capital Protection and a Profit Lock-in facility). The Responsible Entity aims to provide investors with an income stream, through possible annual distributions, as well as capital growth. Investments such as the Component Funds contained in the Equinox Reference Portfolio have traditionally 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 10 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 6 Trust. The Responsible Entity s address is No. 1 Martin Place, Sydney NSW The Macquarie Equinox 6 Trust, an Australian registered managed investment scheme. Units issued under this Offering will be issued at $1.00 each. Offer Close Date 22 June Capital Protection Date 30 December Delivery Date Minimum Investment Issue Date The date 5 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 monies have been received and cleared 5 ; or (b) 30 June 2005, 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 30 June The maximum level of subscriptions that the Responsible Entity proposes to accept is $250,000, 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 to extend the offer period to a date no later than 30 June 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 extension to the offer period on the Equinox website at macquarie.com.au/equinox or will provide a paper copy free, upon request. 4 The Capital Protection Date is fixed once the offer is closed. 5 Application monies received 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 right, 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 120% 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 7 of ASX listed securities to the Responsible Entity for the benefit of the Trust on the Delivery Date. The Exposure Agreement also provides Rising Capital Protection and allows for Periodic Returns, when applicable. The Exposure Agreement is likely to be initially the Trust s only significant asset. 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 international investment and trading strategies. Approximate initial weightings are: 50% to a group of 3 diversified funds of international Hedge Funds (the Diversified Funds ); and 50% to a group of 3 tactical traders (the Tactical Traders ). In order to increase the investment power of the Equinox Reference Portfolio, the investment exposure to the Component Funds reflected in the Equinox Reference Portfolio will initially approximate $1.20 for each Unit issued at $1.00. The Investment Guidelines do not permit the exposure of the Equinox Reference Portfolio to Component Funds to exceed 130% of the value of the Exposure Agreement 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 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. 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. 7 See the investment overview in this section for more information on the Delivery Basket. Investment overview below, Sections 2, 3 & 4 Investment overview below and Section 2 Investment overview below and Section 2 Section 2 Investment overview below and Section 3 Section 3

9 TERM SUMMARY WHERE TO GO FOR MORE INFORMATION Periodic Returns Withdrawal Fees Risks The Trust will be entitled to Periodic Returns under the Exposure Agreement where 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. These distributions may be reinvested 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 up to 40 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 managers of the Component Funds. There is a risk that these managers may perform poorly or that the strategies adopted may produce investment losses; 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); Section 3 Section 5 Section 6 Section 4 7

10 SECTION 18 INTRODUCTION THE COMPANY 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 a related party of the Responsible Entity. This creates the potential for conflicts of interest to arise; The managers of the Component Funds may 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 an opinion from Blake Dawson Waldron 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. 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 7, Appendix 1 Section 9 Section 5 Section 2 Section 9 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 as at the Capital Protection Date to rise through Profit Lock-ins; The potential for Periodic Returns as well as capital growth; Foreign currency exposure hedged to Australian dollars; Provision of the Delivery Basket on the Delivery Date. How does the Exposure Agreement work? The Exposure Agreement is a deferred purchase agreement 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 and settlement (delivery of the securities) 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, 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 under the same agreement. 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. 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. 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 2 (with the weightings and level of exposure described in that section), foreign exchange contracts, cash at call and, potentially, interest expenses. Over time, due to the implementation of Threshold Management (see Section 3), the Equinox Reference Portfolio may also contain Security Deposits. 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 9 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 Threshold Management operations as specified in the Investment Guidelines of the Exposure Agreement. 9

12 SECTION 1 INTRODUCTION Continued 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; and the changes being able to be implemented physically (even though the Equinox Reference Portfolio is notional). in the case of a new Component Fund, Macquarie s approval. 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. 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; Minimum track record lengths for the Component Funds; Minimum levels of diversification within the Equinox Reference Portfolio; Maximum allowable percentage allocations to individual strategies and individual Component Funds; Minimum levels of assets under management for the Component Funds; The foreign exchange hedging methodology. The Investment Guidelines may be amended at any time if the Responsible Entity and Macquarie agree. 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. How is Capital Protection provided through the Exposure Agreement? Macquarie is required, on the Delivery Date, to deliver to the Trust the Delivery Basket. The Responsible Entity will utilise a sale facility offered by Macquarie under the Exposure Agreement, to the extent required to satisfy Unitholder withdrawals at the Capital Protection Date. The sale facility allows the Responsible Entity, immediately after delivery occurs, to dispose of part or all of the Delivery Basket for the corresponding proportion of the Delivery Amount. The Delivery Amount must be the higher of: The Exposure Agreement Value; and The Capital Protected Amount, each as at the Capital Protection Date. If the sale facility is utilised in respect of the whole Exposure Agreement the Trust is assured of receiving at least the Capital Protected Amount on the Delivery Date, even if the Exposure Agreement Value pertaining to the Capital Protection Date is below that amount. The Responsible Entity will not take any action during the Trust s investment in the Exposure Agreement that results in the level of Capital Protection available to the Trust, when considered on a per Unit basis, being reduced. 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 Profit Lock-ins being declared. See Section 3 for more details of the Capital Protection and the way in which Profit Lock-ins can be declared. 10

13 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 terminate partially the Exposure Agreement except to satisfy Unitholder withdrawals. See Section 4 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. If you withdraw your investment prior to this date you will receive no benefits of the Capital Protection, and there will be no ongoing protection for your Units if held past this 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. The Delivery Amount will be determined once the Exposure Agreement Value pertaining to the Capital Protection Date has been finalised by the Valuation Agent. To the extent possible the Delivery Basket should be delivered on the Delivery Date. Where this is not possible due to circumstances beyond the reasonable control of Macquarie, such as suspended trading, the Delivery Basket must be delivered as soon as possible thereafter. 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 3 for details of Periodic Returns and the resultant Cash Distributions made from the Trust. Periodic Returns do not reduce the Capital Protected Amount. Investor withdrawals will not cause the level of Capital Protection, when considered on a per Unit basis, to fall. 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 8 ordinary shares contained in the ASX S&P200 index. 8 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 ASX S&P200 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 & Poors, 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 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY The Equinox Reference Portfolio 14 What are Hedge Funds and Tactical Traders? % exposure 14 Why this strategy mix? 15 The Equinox Reference Portfolio s Component Funds 16 The initial exposures 16 Key to terms used in the Component Fund descriptions 17 Selectinvest Arbitrage/Relative Value Ltd. 18 Vision Asia Maximus Fund 20 Cadogan Alternative Strategies Fund Limited 22 Transtrend B.V. 24 Vega Diversified Fund Limited 26 Bridgewater Associates, Inc. 28 Table of Component Fund returns and stated targets 30 Portfolio management 31

16 SECTION 2 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY THE EQUINOX REFERENCE PORTFOLIO The strategy for the construction and management of the Equinox Reference Portfolio has been agreed between the Responsible Entity and Macquarie. The strategy is that the Equinox Reference Portfolio will include Diversified Funds (funds of international Hedge Funds) and Tactical Traders (directly or otherwise) so as to provide investors with exposure to a portfolio of investment and trading strategies believed to be capable of providing attractive returns in a variety of market conditions. Initially the Equinox Reference Portfolio will include: a group of three Diversified Funds; and investments providing exposure to three Tactical Traders. The Equinox Reference Portfolio will also include foreign exchange contracts, cash at call, and may include notional liabilities to increase investment exposure and Security Deposits as appropriate. The inclusion of Security Deposits is possible under the terms of the Rising Capital Protection, which is detailed in Section 3. The Equinox Reference Portfolio will not include any investments other than those directly or indirectly gaining exposure to diversified funds of Hedge Funds, Tactical Traders, foreign exchange contracts, Security Deposits, notional liabilities or cash at call. WHAT ARE HEDGE FUNDS AND TACTICAL TRADERS? Hedge Funds are usually privately offered funds that are open mainly to professional investors or high net worth individuals. As privately managed portfolios, Hedge Funds have flexibility in terms of investment mandates and may make use of leverage. Unlike most traditional investment funds, which are limited to long (bought) positions in securities, which profit when prices rise, Hedge Funds can also engage in the short sale of securities, which profit when prices decline. Depending on the Hedge Fund strategy, managers may trade and invest in a wide range of investments, including individual equities, bonds, convertible notes, over-thecounter derivatives, swaps, foreign exchange, Futures, options and mutual funds. Hedge Funds generally aim to generate positive absolute returns, rather than performance relative to a benchmark. The term Hedge Fund has been used because many of the managers have constructed their portfolios with long and short positions to make them less sensitive to broad market fluctuations. Tactical Trading can be considered to be a directional Hedge Fund strategy. Tactical Traders attempt to profit from outright moves in single instruments, and in some cases moves in spreads and ratios of instruments, often using Futures, foreign exchange and physical markets. 120% EXPOSURE In order to increase the investment power of the Equinox Reference Portfolio, the investment exposure reflected in the Equinox Reference Portfolio will initially approximate $1.20 for each $1.00 invested in the Exposure Agreement. This 120% exposure will increase the Equinox Reference Portfolio s volatility. See Section 4 for more information on the risks associated with the use of leverage. To achieve this 120% exposure the Equinox Reference Portfolio will, where possible, include only partially funded Tactical Trading investments. The method through which it is intended, where possible, to gain exposure to these traders (via the Tactical Access Company, described in Section 9) will allow the Equinox Reference Portfolio to reflect an investment exposure greater than the value of shares in the Tactical Access Company. This will allow the Equinox Reference Portfolio to contain higher exposure to the Diversified Funds and Tactical Traders with lower interest expenses than would otherwise be required. The diagram on the following page illustrates the resulting strategy mix. Where this method of gaining extra exposure to the Diversified Funds and Tactical Traders is not able to be employed, a notional liability, which will result in interest costs, may be included within the Equinox Reference Portfolio from time to time. The maximum exposure to the Diversified Fund and Tactical Trading investments that the Equinox Reference Portfolio may have is 130% of the Exposure Agreement Value. 14

17 WHY THIS STRATEGY MIX? This strategy mix was chosen by the Responsible Entity to provide diversification across a variety of sophisticated Hedge Fund and Tactical Trading strategies in a way that it believes will provide attractive risk-adjusted returns in a variety of market conditions. A group of three Diversified Funds has been included to provide exposure to a broad range of international investment and trading strategies such as: long/short equity strategies, where managers seek to buy under-valued shares and equity instruments and sell short those that are assessed to be over-valued; discretionary macro and trading strategies, where managers aim to use fundamental and technical analysis to predict price moves in global interest rate, currency, commodity and stock markets; event-driven strategies, where managers take positions based upon assessments of the effect of events such as corporate re-structuring, changes in credit rating, mergers and acquisitions and bankruptcies; and relative value strategies, where managers seek to exploit pricing anomalies between similar or related securities, which may include individual equities, convertible notes, physical bonds, bank bills and commodities, Futures, options, warrants, swaps and currencies. In choosing the Diversified Funds for the Equinox Reference Portfolio, the Responsible Entity sought management teams aiming to achieve attractive riskadjusted returns with investment processes that emphasise thorough due diligence and risk control. The Responsible Entity sought managers whose allocations to Hedge Funds are made on a discretionary basis. The Tactical Traders have been included to provide a more concentrated exposure to global financial markets through a series of trading strategies that complement the Diversified Funds overall profiles. Being more directional in nature, they attempt to profit from outright moves in single instruments, and in some cases moves in spreads and ratios of instruments, rather than sourcing equity long/short trades, event-driven or relative value trades. This means that the sources of risk and return within the Tactical Traders can be quite different to those within Diversified Funds. Such Tactical Traders have generally displayed higher volatility than many Diversified Funds but may also have the potential for higher returns in certain market conditions. Many Tactical Traders follow a systematic, rather than discretionary, approach to trading, while some combine a systematic approach with some discretion. Each of the Tactical Traders and Diversified Funds has been included based upon the assessment that each adds something unique to the Equinox Reference Portfolio, thus creating diversification. The Equinox Reference Portfolio is likely to display low correlation to traditional asset classes (such as equities, bonds and property) and thus an investment in the Trust has the potential to provide those investors holding traditional assets with an effective means to diversify their existing investments. Figure 1 : The Equinox Reference Portfolio strategy mix $1.40 $1.20 $1.20 $1.00 $0.80 $1.00 Tactical Traders 40c Tactical Traders 60c $0.60 $0.40 $0.20 Diversified Funds 60c Diversified Funds 60c $0.00 Initial NAV per Unit Initial exposure to Equinox strategy mix 15

18 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued THE EQUINOX REFERENCE PORTFOLIO S COMPONENT FUNDS The information about the Component Funds presented in this Section has been obtained from the relevant managers and is included with their consents. However, the Responsible Entity does not guarantee the accuracy, completeness or currency of the information. Investors should note the following in relation to this information: the performance histories of each of the Diversified Funds and each of the individual Tactical Traders investment programs (the Component Funds ) have been included in this section in the form provided by the relevant managers without alteration, with the exception of Transtrend B.V. (please refer to the footnotes on page 25 for details of the alterations to the track record of Transtrend B.V.); each track record shows performance net of the Component Fund s fees for the period from inception of the Component Fund until 31 March 2005, and is expressed in U.S. Dollar terms without the effect of any currency hedging; the Equinox Reference Portfolio will contain currency hedging transactions to reduce the risk of currency fluctuations having any material impact on the value of the Equinox Reference Portfolio; and these track records have not been adjusted for any of the features of this offering including effects of the Capital Protection mechanism, and do not include the effect of any fees particular to the Equinox Reference Portfolio or this Offering. Information about the Component Funds and their managers is included in this PDS to give investors an insight into the attributes, trading methodology, experience, diversity and risk/ reward characteristics of each manager and to help investors become informed about the nature of the investment. IMPORTANT NOTE In considering this information you should bear in mind that: Past performance is not a reliable indicator of future performance. Investors should not base their decision to invest solely upon past performance figures; The Trust has not yet issued Units and has no performance history; Although the initial Equinox Reference Portfolio will reflect the performance of the Component Funds for which past performance information is presented, the Responsible Entity will be able to make changes to the composition of the Equinox Reference Portfolio where those changes comply with the Investment Guidelines set forth in the Exposure Agreement; The exposure of the Trust (through the Equinox Reference Portfolio) to the returns of the Component Funds may be reduced as a result of Threshold Management (Threshold Management is explained in Section 3). You should not assume that the Trust will remain fully exposed to the Component Funds in all circumstances. This may reduce the Portfolio s return potential (see Section 4 for more details). THE INITIAL EXPOSURES The intended initial exposures to each Component Fund will be as illustrated in the following chart. $1.40 $1.20 $1.00 $0.80 Tactical Traders 60c Initial exposures per $1.00 Unit Vega Diversified Fund Limited 20c Bridgewater Pure Alpha 20c Transtrend B.V. 20c Figure 2: The Equinox Reference Portfolio intended initial exposures 16 $0.60 $0.40 $0.20 $0.00 Diversified Funds 60c Strategy mix Selectinvest Arbitrage/Relative Value Ltd 20c Vision Asia Maximus Fund 20c Cadogan Alternative Strategies Fund Limited 20c Initial exposure to Component Funds

19 KEY TO TERMS USED IN THE COMPONENT FUND DESCRIPTIONS Explanation of terms used in this section: Compound annual return Annualised monthly volatility Reward to risk ratio VAMI Largest drawdown The percentage return required each year of the Component Fund s existence to arrive at the total return achieved by the Component Fund since its inception (assuming reinvestment of all income). This figure therefore includes the effect of compounding. This is different from the average annual return, which is simply the arithmetic average of the annual returns. This is a measure of the variability of the monthly returns. The larger the annualised monthly volatility, the more the monthly returns fluctuate around the averagemonthly return. It is equal to the standard deviation of the monthly returns, adjusted to give an annual figure. This is a ratio measuring the reward versus risk of an investment and is equal to the compound annual return divided by the annualised monthly volatility. The higher the ratio the better the investment has performed from a reward to risk perspective. As a point of comparison, the reward to risk ratio of the S&P500 accumulation index over the last 14 years is approximately Value Added Monthly Index. Tracks the value of a hypothetical US$100 investment in the Component Fund since its inception and is shown against a similar US$100 investment in the S&P500 over the same period assuming reinvestment of income. The largest percentage fall in the Component Fund s VAMI over any period from one month-end to another. Percentage of winning The percentage of the months since inception that have produced positive returns. months Average winning month Average losing month The average monthly return of the Component Fund for all those months with positive returns. The average monthly return of the Component Fund for all those months with negative returns. S&P500 A capitalisation-weighted index of 500 U.S. stocks, which includes the effect of (accumulation index) dividends being reinvested. The index is designed to measure performance of 500 stocks representing all major industries in the US. Annual return comparison Notional funds Risk-adjusted returns Annualised historical returns Shows the return of the Component Fund each year compared to the S&P500 over the same period. If the year is incomplete, it shows the return for the portion of the year for which data exist. This term is used for any Tactical Traders whose trading programs may be accessed via managed accounts and may not require the accounts to be fully funded (i.e. they may be able to be traded on margin). The notional funds denote the face value of the amount traded by the Tactical Trader, rather than the margin lodged in the account. Investment returns considered in the context of the volatility of those returns. Riskadjusted returns considered attractive by the Responsible Entity would likely have a high reward to risk ratio. The compound annual return of the Component Fund over various time periods looking back from the present, such as the most recent three years, five years etc. The S&P500 accumulation index has been included as a point of comparison only. The Equinox Reference Portfolio is not an index-linked investment and presents a different risk profile to an investment linked to the S&P500 accumulation index. The S&P500 accumulation index track record has been included to provide investors with a frame of reference from which to consider the performance information of the Component Funds. 17

20 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued SELECTINVEST ARBITRAGE/RELATIVE VALUE LTD. Manager: Fund: Strategy: Union Bancaire Privée Asset Management LLC Selectinvest Arbitrage/Relative Value Ltd. Fund of Hedge Funds Inception Date: August 1998 Firm Background Union Bancaire Privée Asset Management LLC ( UBPAM ) is a limited liability company incorporated in the USA and is registered with the U.S. Securities and Exchange Commission (SEC) as a Registered Investment Advisor (RIA). Founded in 1998, UBPAM s primary business is managing funds of hedge funds. Prior to joining UBPAM, the principals of the firm built and managed successful funds of hedge funds, and as such, have nearly 65 years of combined investment experience. UBPAM is a member of Union Bancaire Privée s Alternative Asset Management Group ( UBP AAMG ). Union Bancaire Privée ( UBP ) was founded in 1969 and has been investing in hedge funds since the early 1970s. Fund Description Selectinvest Arbitrage/Relative Value Ltd. (the Fund ) is a fund of hedge funds, designed to produce aboveaverage, risk adjusted long term returns with low and controlled volatility by investing in non-directional hedge fund strategies that focus on deep value opportunities and pricing anomalies in the global marketplace. Investment Process UBPAM seeks managers who employ best practice procedures and who have an excellent infrastructure and solid reputation in the hedge fund industry. UBPAM dedicates significant resources to manager selection and portfolio management, and has access to valuable resources such as manager research from the Geneva and London offices of UBP AAMG as well as one of the leading structural risk analysis teams in the hedge fund industry. This team is solely dedicated to researching and evaluating the non-investment operational procedures of a hedge fund. These offices assist UBPAM in the identification, research, selection and monitoring of hedge fund managers. The firm s organisation and resources greatly contribute to UBPAM s success in selecting top tier hedge fund managers. While qualitative and quantitative analysts in New York are in constant collaboration with affiliates in Geneva and London, the structural risk specialists are part of a separately-organised company within UBP AAMG. Segregation of duties enables these separate entities to sustain the highest level of integrity in assessing, selecting and approving managers for the Fund and to present the most accurate and objective information regarding a hedge fund under consideration for investment. UBPAM constructs and manages the Fund s portfolio from its universe of approved managers and with strict adherence to overall portfolio risk-return objectives. Global Network and Resources With US $5.86 billion managed by UBPAM and an additional US $13 billion managed through its European affiliates, totalling approximately US $19 billion as of April 1, 2005, UBP AAMG is one of the largest allocators of capital to the hedge fund industry. UBPAM believes that this position, combined with the experience of its team and a thorough process of manager evaluation and selection, benefits its investors from: Global network and vast resources that enable the identification of the top hedge fund managers in the hedge fund industry; Access to hedge funds that are otherwise closed to new investors; Greater transparency and communication from the managers; and Proven track record of selecting top tier managers resulting in above average risk-adjusted rates of return. 18

21 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 5.71% 2 Years 8.68% 3 Years 6.88% 4 Years 6.53% 5 Years 7.76% 6 Years 8.32% KEY STATISTICS Compound annual return 7.79% Annualised monthly volatility 3.07% Reward to risk ratio 2.54 Largest drawdown -4.76% Percentage of winning months 91.25% Average winning month 0.83% Average losing month -1.44% VAMI COMPARISON ANNUAL RETURN COMPARISON All data are current as at 31 March 2005 and the source is Union Bancaire Privée Asset Management LLC. The monthly return for March 2005 is an estimate. Performance results for Series QN Shares of Selectinvest Arbitrage/Relative Value Ltd. (the Fund ) are net of the underlying managers fees and expenses, Union Bancaire Privée Asset Management s fees and all Fund expenses, and reflect the reinvestment of dividends, interest and capital gains. Series QN Shares of the Fund were not offered prior to May Therefore, the returns from May 2004 to the present are the returns of the QN Shares of the Fund, whereas the returns from August 1998 through April 2004 are the returns of ARV Ltd., which have been restated to reflect the fees payable by Series QN investors (Series QN Shares are subject to management fees of 1.25% per annum and an administration fee of 0.10% per annum). Performance results for August 1998 through March 2004 are based on audited ARV Ltd. net asset values. The returns for April 2004 through February 2005 are based on unaudited ARV Ltd. net asset values and are subject to change. The March 2005 performance figure is based on preliminary performance figures obtained from managers of the underlying funds and it, and all figures incorporating it, are subject to change. Past results are not necessarily indicative of future results. The S&P500 (accumulation index) is an unmanaged capitalisationweighted index of 500 US stocks, which includes the effect of dividends being reinvested and does not reflect the deduction of any fees. This index is presented merely to show the general trends in the market for the period presented and is not intended to imply that the Fund s portfolio is comparable to the index either in composition or element of risk. 19

22 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued VISION ASIA MAXIMUS FUND Manager: Fund: Strategy: Inception Date: April 2002 Firm Background Vision Asia Pacific Limited Vision Asia Maximus Fund Diversified Asian Fund of Hedge Funds Based in Hong Kong, Vision Investment Management ( Vision ), the parent company of Vision Asia Pacific Limited, is an independent fund of hedge funds manager. The team has experience in managing both global and Asian-focused fund of hedge funds and has developed a rigorous manager selection, portfolio allocation and risk management process. More importantly, the presence in the Asia-Pacific region coupled with a strong network of industry contacts has enabled Vision to identify quality emerging managers. Vision has thus become one of the gateways for international investors who wish to gain exposure to absolute returns in Asia. As at 1 April 2005, Vision has approximately US$800 million under management. Fund Description Vision Asia Maximus Fund (the Fund ) is a Pan-Asia multi-strategy fund of hedge funds, designed to provide investors with exposure to the Asian markets without the inherent high volatility typically associated with investing in the region. In managing the assets of the Fund, a balance is maintained between equity and non-equity strategies across a number of hedge fund managers. Disciplined Investment Process Vision s ability to generate absolute returns while maintaining consistently low volatility in the Fund reflects the effectiveness of its disciplined investment process. Vision s investment process is iterative and consists of 4 phases: Phase 1: Manager Identification this involves filtering and screening hedge fund managers followed by detailed due diligence of selected managers in each hedge fund strategy. Phase 2: Research & Analysis this involves further qualitative and quantitative analysis of selected managers to determine their overall suitability for the investment portfolio. Phase 3: Asset Allocation & Risk Management this involves combining the qualitative and quantitative analysis with investment market intelligence, giving regard to correlations amongst strategies and managers and risk guidelines at both the underlying funds and the portfolio levels to ensure optimal portfolio diversification. Phase 4: Continuous Monitoring this involves frequent on-going review of both the hedge fund managers and the overall portfolio. Vision Asia Maximus Fund was recently awarded with 2004 Best Asia Fund from InvestHedge. In the past, the Fund was also awarded with Best Asia Fund of Hedge Funds and Best Fund of Asian Hedge Funds from Asian Investor in 2004 and Asia Asset Management in 2003 respectively. 20

23 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 8.67% 2 Years 18.34% 3 Years 13.65% KEY STATISTICS Compound annual return 13.65% Annualised monthly volatility 4.18% Reward to risk ratio 3.27 Largest drawdown -0.93% Percentage of winning months 80.56% Average winning month 1.51% Average losing month -0.49% VAMI COMPARISON ANNUAL RETURN COMPARISON All data are current as at 31 March 2005 and the source is Vision Asia Pacific Limited. The monthly return for March 2005 is an estimate. InvestHedge, Asian Investor and Asia Asset Management are industry publications. The track record shown above represents the actual performance of Vision Asia Maximus Fund - Class A Shares. 21

24 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued CADOGAN ALTERNATIVE STRATEGIES FUND LIMITED Manager: Fund: Strategy: Cadogan Management, LLC Inception Date: February 1997 Firm Background Cadogan Alternative Strategies Fund Limited Diversified Fund of Hedge Funds Firm Description: Cadogan Management, LLC ( Cadogan ), formed in 1995, is a limited liability company incorporated in Delaware (USA.). The firm s goal since inception has been to provide investors with access to top quality hedge fund managers through a multi manager approach. It operates independently from any investment house or manager. As of 28 February, 2005, Cadogan has approximately US$1.47 billion of clients assets under management. Fund Description The Cadogan Alternative Strategies Fund Limited (the Fund ) aims to achieve both preservation of capital and long-term growth. The Fund does not directly use leverage, and only invests in funds where use of leverage is considered prudent. Historically, the Fund has been in aggregate approximately 60% long and 40% short, for a net exposure of 20%, albeit that the Fund has and is being managed such that it exhibits little or no sensitivity to broad equity market movements. The majority of the Fund s capital is allocated to long/short equity strategies, with smaller allocations to event-driven strategies, credit-related strategies and low-leverage arbitrage. The fund also has an allocation to short-oriented managers. Cadogan seeks to generate absolute returns, uncorrelated to the equity and fixed income markets with low levels of risk. These managers are identified and monitored on an on going basis by the proprietary qualitative and quantitative methodology developed by Cadogan. The Fund intends to provide its investors the opportunity to capture the attractive returns offered by these managers without the attendant levels of volatility and risk that they could individually experience. Key Attributes Consistent absolute performance the Fund has met its objective with low volatility and low drawdowns. Attractive risk-adjusted returns in a broad range of market climates the Fund has performed particularly well during periods of US equity market decline. Diversification among investment styles and managers the Fund seeks to generate returns by using managers applying different techniques and approaches in a broad range of market sectors. Active use of emerging managers who are sufficiently nimble to provide attractive risk-adjusted returns considerable due diligence and the experience of Cadogan professionals allows for diminished small business risk. Active use of managers with net short exposures experience has shown that such managers provide a portfolio hedge during major market declines. Portfolio leverage the Fund has been able to meet its return objectives without taking on the risk of explicit portfolio leverage. The Fund aims to maintain a low net exposure to the equity markets the Fund has achieved a correlation of close to zero versus the major U.S. market indices. Long-term investment approach the Fund does not rely on market timing for results. 22 Portfolio Management Cadogan seeks to allocate assets among managers with proven track records and emerging managers who have not yet been discovered by the investment community. The emerging managers tend to have sufficiently low levels of capital under management that they can remain nimble in their portfolio selection and investment management. Many such managers have a low profile and are difficult for an individual investor to identify, analyse and access.

25 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 2.67% 2 Years 7.37% 3 Years 6.49% 4 Years 8.27% 5 Years 10.23% 6 Years 10.56% 8 Years 8.30% KEY STATISTICS Compound annual return 8.48% Annualised monthly volatility 4.33% Reward to risk ratio 1.96 Largest drawdown -8.05% Percentage of winning months 74.49% Average winning month 1.22% Average losing month -0.85% VAMI COMPARISON ANNUAL RETURN COMPARISON All data are current as at 31 March 2005 and the source is Cadogan Management, LLC. The return for March 2005 is an estimate. 23

26 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued TRANSTREND B.V. Manager: Transtrend B.V., Rotterdam, The Netherlands Program Name: Diversified Trend Program Enhanced Risk (USD) Strategy: Inception Date: January 1995 Firm Background Commodity Trading Adviser (CTA). Diversified systematic trading using trend-following techniques. The Diversified Trend Program Enhanced Risk (USD) ( DTP-ER-USD ) is a managed futures program designed to pursue capital growth within the limits of a defined risk tolerance. DTP-ER-USD is based entirely on quantitative analysis of signalled price behaviour of outright prices and of intra-market and/or inter-market spreads in the markets concerned. The program may enter into both long and short positions in any of the markets involved, or it may have no position. The trading program is systematic by nature and requires a consistent application. Therefore, discretionary inputs are not essential to the effectiveness of the program. Since June 17 of 2002, 49% of the voting interest in the trading adviser is owned by a major Dutch asset management firm with managed assets of approximately Euro 113 billion. Transtrend s investment management team is comprised of experienced trading professionals with a wealth of expertise in financial markets. This professional expertise is supported by innovative research, an advanced infrastructure, and an extensive proprietary database. Transtrend currently has the equivalent of over US$2.9 billion under management, including notional funds. The analytical approach attempts to benefit from categorised price patterns in global markets including (futures and forward contracts of) stock indices, interest rate instruments, currencies and tangible commodities. The approach is extremely consistent and disciplined and has demonstrated to be effective since its implementation. The trading adviser of the program is Transtrend B.V. ( Transtrend ) a Dutch limited liability company formed on November 7, 1991 to provide futures trading and investment services to selected clients. In the USA, Transtrend is registered as a Commodity Trading Adviser (CTA) with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA). It is licensed as an asset manager - and subject to regulation - by the Netherlands Authority of the Financial Markets. 24

27 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 6.68% 2 Years 8.51% 3 Years 15.56% 4 Years 15.90% 5 Years 17.67% 7 Years 14.20% 9 Years 19.19% KEY STATISTICS Compound annual return 19.36% Annualised monthly volatility 16.02% Reward to risk ratio 1.21 Largest drawdown % Percentage of winning months 62.60% Average winning month 4.19% Average losing month -2.77% VAMI COMPARISON 9 ANNUAL RETURN COMPARISON 9 The statistical information and charts shown on this page reflect the combination of (a) the composite of the performance of all the accounts traded by Transtrend for its Diversified Trend Program - Enhanced Risk (USD) for the period from January 1995 through November 2003 ( Transtrend DTP-ER-USD Composite ) and (b) the performance of the managed account of the Tactical Access Company traded pursuant to Transtrend s Diversified Trend Program - Enhanced Risk (USD) for the period from December 2003 through March 2005 ( the TAC Account ). For the purposes of this PDS, such combination is referred to as the Transtrend-Cradle Composite. For the avoidance of doubt, the VAMI Comparison chart, the Annual Return Comparison chart, the Key Statistics and the Annualised Historical Returns information have been prepared on this basis. With respect to the Transtrend DTP-ER-USD Composite, the performance of one managed account has been excluded from the composite for the whole of 1997 due to more favourable performance achieved in that account that year due to a higher risk profile. All data are current as at 31 March The source is Transtrend for the Transtrend DTP-ER-USD Composite and the Tactical Access Company for the TAC Account. 25

28 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued VEGA DIVERSIFIED FUND LIMITED Manager: Fund: Strategy: Vega Asset Management Limited Vega Diversified Fund Limited Global Macro Trading Inception Date: February 2003 Firm Background Vega Asset Management Limited ( Vega ) has brought together a team of individuals with over 120 years of cumulative trading experience. Using opportunistic global macro and relative value trading strategies, Vega's investment outlook is based on global macro views developed through both fundamental and technical analysis. While the various funds managed by Vega utilise various levels of leverage and trading styles that are more or less aggressive to achieve each of their particular investment objectives, a disciplined riskreward framework coupled with loss limiting parameters underlies the trading tactics deployed by Vega for all the funds it manages. Vega Diversified Fund Limited (the Diversified Fund ) comprises four of the Vega funds, offering exposure to various trading styles with different levels of leverage. Fund Description The investment objective of the Diversified Fund is to generate attractive absolute returns on its assets over the intermediate to long term by investing in Vega Global Fund Limited ( Vega Global ), Vega Select Opportunities Fund Limited ( Vega Select ), Vega Relative Value Fund Limited ( Vega Relative Value ) and Vega Feeder Fund Limited ( Vega Feeder ) (collectively the Vega Funds ). At the end of each month, the Diversified Fund allocates 25% of its assets to each of Vega Global, Vega Select, Vega Relative Value and Vega Feeder or otherwise as may be necessary to replicate the weighting of the Diversified Fund between the Vega Funds. The Vega Funds invest primarily in G-10 government fixed income and currency markets with some emerging market and equity index exposure. The instruments that the Vega Funds invest in include listed futures and options, sovereign government bond and bond options, over-the-counter interest rate swaps and swaptions, spot/forward foreign exchange and options, listed equities and equity indices. Vega's suite of funds is managed such that their return objectives can be achieved in both rising and falling markets and with low levels of correlation with major stock or bond market indices. As at 31 March 2005, Vega has approximately $10.5 billion under management, making it one of the largest hedge fund asset management firms in the world. 26

29 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 6.02% 2 Years 11.40% 3 Years 10.42% KEY STATISTICS Compound annual return 12.09% Annualised monthly volatility 7.00% Reward to risk ratio 1.73 Largest drawdown -9.77% Percentage of winning months 84.62% Average winning month 1.65% Average losing month -2.75% VAMI COMPARISON 10 ANNUAL RETURN COMPARISON 10 The track record shown above represents (a) the actual performance of the Vega Diversified Fund Limited for the period since its inception, 1 February 2003, until 31 March 2005 and (b) the pro forma performance of a portfolio of equal investments in Vega Global Fund Limited, Vega Select Opportunities Fund Limited, Vega Relative Value Fund Limited and Vega Feeder Fund Limited (the constituent funds in Vega Diversified Fund Limited) using the actual performance of these four constituent funds for the period from January 2002 to January All data are current as at 31 March 2005 and the source is Vega Asset Management Limited. 27

30 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued BRIDGEWATER ASSOCIATES, INC. Manager: Program Name: Strategy: Bridgewater Associates, Inc. Pure Alpha Strategy Discretionary Global Macro Inception Date: December 1991 Firm Background Bridgewater Associates, Inc. ( Bridgewater ) was founded in 1975 to provide money management and consulting services in the global credit and currency markets. Initially, these services were provided to corporations in the management of income and balance sheet exposures, however today institutional portfolio management is Bridgewater s sole focus. Bridgewater is registered with the U.S. Securities and Exchange Commission (SEC) as a registered investment advisor and as a Commodity Trading Advisor (CTA) and as a Commodity Pool Operator with the National Futures Association (NFA). The Pure Alpha Strategy ( Pure Alpha ) is a fundamentally based trading approach that is grounded on the belief that the returns of individual markets and asset classes are primarily driven by changing macroeconomic conditions. Through its rigorous fundamental research, Bridgewater has identified sustainable linkages and relationships concerning macro-economic influences on the behaviour of financial and commodity markets. These linkages and relationships have been tested across various economic and market environments for reliability and incorporated into Bridgewater s proprietary investment process. This process allows Bridgewater to make an assessment of the expected return for each market and execute corresponding trades in those markets. The senior investment professionals at Bridgewater have an average of over 20 years of experience in the financial markets. The research and trading team is comprised of more than 80 people. This team is supported by other internal departments that provide services and support in operations, legal & compliance, accounting, administration, and client services. As at 1 April 2005, Bridgewater was managing approximately US$105 billion in assets for a wide array of institutional clients, including corporate and public pension funds, university endowments, charitable foundations, supranational agencies, foreign governments and central banks. This includes approximately US$27 billion managed in accordance with its Pure Alpha Strategy. 28

31 ANNUALISED HISTORICAL RETURNS Last: Return 1 Year 14.85% 2 Years 17.35% 3 Years 17.40% 4 Years 16.14% 5 Years 10.85% 7 Years 9.64% 10 Years 13.02% KEY STATISTICS Compound annual return 11.52% Annualised monthly volatility 9.93% Reward to risk ratio 1.16 Largest drawdown % Percentage of winning months 62.50% Average winning month 2.65% Average losing month -1.88% VAMI COMPARISON ANNUAL RETURN COMPARISON The performance information shown above reflects the combination of (a) the actual performance of the Bridgewater Pure Alpha Fund 1 - which is traded pursuant to the Pure Alpha Strategy - since its inception, 1 May 1999, until 31 March 2005; and (b) the actual performance of the partially funded managed account traded pursuant to the Pure Alpha Strategy for the period from December 1991 to April 1999, restated to reflect a fully funded account by applying such actual performance to an initial notional amount (as adjusted for gains and losses), adjusted to include imputed interest using US 30-day T-bill rates and Bridgewater Associates Inc. s standard Pure Alpha Strategy fees. All data are current as at 31 March 2005 and the source is Bridgewater Associates, Inc. 29

32 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued TABLE OF COMPONENT FUND RETURNS AND STATED TARGETS Table 1 contains information on each Component Fund in the Equinox Reference Portfolio. Included are the intended initial weights allocated to each Component Fund, the inception date of each trading program or fund to be included in the Equinox Reference Portfolio, the compound annual return for each, and each manager s stated annual return target (net of fees) for the medium term (4 to 7 years). Using the table below, investors may compare each manager s actual historical performance to their stated medium term annual return targets. Investors should be aware that the historical returns achieved by the managers are not reliable indicators of future returns for either the Component Funds or the Equinox Reference Portfolio as a whole. The managers stated return targets are not projections, forecasts or predictions nor do they reflect the result of a simulation of future performance. Future performance may differ materially. These targets are used by the managers in determining the level of risk undertaken in making investment decisions and have been included so that investors may gain an insight into the type of reward sought and the commensurate risk undertaken for various Component Funds within the Equinox Reference Portfolio. COMPONENT INITIAL EXPOSURE INCEPTION COMPOUND MANAGER S FUND/ IN EQUINOX REFERENCE DATE ANNUAL STATED PROGRAM PORTFOLIO (WHERE RETURN 11 RETURN INITIAL EXPOSURE = 120% TARGET 12 OF THE EXPOSURE AGREEMENT VALUE) Selectinvest Arbitrage/ Relative Value Ltd. Vision Asia Maximus Fund Cadogan Alternative Strategies Fund Limited Transtrend Diversified Trend Program Enhanced Risk (USD) Vega Diversified Fund Limited Bridgewater Pure Alpha 20% 20% 20% 20% 20% 20% Aug 1998 Apr 2002 Feb 1997 Jan 1995 Feb 2003 Dec % 13.64% 8.48% 19.36% % 11.52% 7-10% 15% 8-12% 20% 15-20% 12% Table 1 : Component Fund information 11 Returns are calculated over the period from inception to 31 March Return target as at 31 March This return reflects the combination of (a) the composite of the performance of all the accounts traded by Transtrend for its Diversified Trend Program - Enhanced Risk (USD) for the period from January 1995 through November 2003 ( Transtrend DTP-ER-USD Composite ) and (b) the performance of the managed account of the Tactical Access Company traded pursuant to Transtrend s Diversified Trend Program - Enhanced Risk (USD) for the period from December 2003 through March 2005 ( the TAC Account ). 30

33 The Equinox Reference Portfolio and the Component Funds should not be seen as predictable, low risk investments. The returns of the Component Funds have sometimes exceeded their return target and sometimes fallen short. In fact, the Component Funds have each experienced periods of negative returns. Investors should be aware that the Trust s Unit price is likely to display high volatility leading to significant fluctuations in monthly returns. The Responsible Entity estimates that the annualised monthly volatility is likely to be less than 12%, but may rise to far higher levels. High volatility does not imply that investment returns over the medium term will be negative (although they may be), but it does suggest that returns over short periods of time will be unpredictable and may vary significantly from period to period. Therefore investors should not expect consistent returns every year. PORTFOLIO MANAGEMENT The six Component Funds described in the preceding pages have been chosen by the Responsible Entity to be included in the Equinox Reference Portfolio. The Responsible Entity has chosen this Portfolio with the intention of leaving the strategy mix generally unchanged throughout the term of the investment except for periodic re-balancing to original weights. As such, investors should ensure they are comfortable with the possibility that the composition of the Equinox Reference Portfolio may remain unchanged for the entirety of their investment. The Responsible Entity has retained the services of Macquarie International Capital Advisors Pty Limited ( MICAP ), a wholly owned subsidiary of Macquarie, to act as Risk Adviser. In this role MICAP will monitor the Equinox Reference Portfolio s exposure to the Component Funds and advise if it believes there is a material breach of conduct, in terms of the investing, trading or business activities of the managers of the Component Funds. Material breaches of conduct by Component Fund managers would include significant deviation from stated investment mandate, failure to adhere to stated risk limits, deterioration in operational, risk management or trading practices, significant deterioration of, or inadequate, infrastructure or personnel, rapidly exceeding stated capacity limits, deception, misrepresentation or inadequate ongoing disclosure, inadequate data redundancy, or other circumstances that might arise that may be considered to increase the investment, trading, operational or business risk of the manager to unacceptably high levels. MICAP s role will include frequent Portfolio monitoring, regular contact with the managers of the Component Funds, site visits to those managers, and risk monitoring. MICAP will also advise the Responsible Entity on any changes to the Equinox Reference Portfolio. The Responsible Entity reserves the right to change one or all of the Component Funds, or to add new managers at any time during the course of the investment, for any reason. However, the Responsible Entity does not intend to manage the Equinox Reference Portfolio in a high-turnover fashion and will make changes only when they are considered to be necessary and are evaluated to be in the best interests of its Unitholders. A change may occur, for example, if the Responsible Entity believes that a change in a manager s original investment strategy means that the strategy no longer complements the Equinox Reference Portfolio s overall strategy. At the date of this PDS the Responsible Entity has no Equinox Reference Portfolio alterations planned. If the Responsible Entity decides that a change in the Equinox Reference Portfolio is warranted it will inform Macquarie of its decision. If the proposed alteration conforms to the Investment Guidelines set forth in the Exposure Agreement, Macquarie must implement the appropriate change to the Equinox Reference Portfolio at the earliest practicable date. If the proposed change contravenes the Investment Guidelines in any way or if the proposal includes a new Component Fund and Macquarie does not approve of that Component Fund s inclusion Macquarie will not be obliged to make the alteration. In such a case the Responsible Entity will reconsider its proposed changes and decide whether to leave the Equinox Reference Portfolio unchanged or adjust its proposal to accommodate the Investment Guidelines. The Investment Guidelines are outlined in Section 1. 31

34 SECTION 2 17 THE EQUINOX REFERENCE PORTFOLIO INVESTMENT STRATEGY Continued Compulsory Equinox Reference Portfolio Changes It may be necessary for the composition of the Equinox Reference Portfolio to change in other circumstances. The Equinox Reference Portfolio will be managed with all practical considerations that would apply were the Equinox Reference Portfolio comprised of physical assets and liabilities being adhered to (including those factors relating to capacity constraints and subscription and redemption terms of the Portfolio s Component Funds). For example, a situation may arise in which a Component Fund s redemption terms change (it may move from monthly redemptions to quarterly redemptions, for example), creating a breach of the Equinox Reference Portfolio s Investment Guidelines. Similarly, a Component Fund may, due to capacity constraints, return capital to some or all of its investors. Such situations, and any others that would affect the Equinox Reference Portfolio were the Trust investing directly in its constituents, may result in Macquarie advising the Responsible Entity that the Equinox Reference Portfolio must change. If the Responsible Entity, in collaboration with the Risk Adviser or otherwise, does not propose an acceptable remedy to the composition of the Equinox Reference Portfolio within 10 Business Days after being informed by Macquarie of the current or impending breach, Macquarie may instigate any change to the Equinox Reference Portfolio it believes to be appropriate in the circumstances. Equinox Reference Portfolio re-balancing The Responsible Entity intends to re-balance the Component Funds of the Equinox Reference Portfolio periodically to reflect the initial relative weights, assuming that it contains the same Component Funds as at inception. Thus, if one manager within the Equinox Reference Portfolio outperforms the others significantly, causing a deviation from the initial weights, the Equinox Reference Portfolio will likely be brought back to the original ratios by re-balancing. Under the Exposure Agreement the Responsible Entity may choose to re-balance the Equinox Reference Portfolio at any time. If such a re-balance is not possible for some reason beyond the control of the Responsible Entity, such as one of the Component Funds being closed to further investments, the Responsible Entity may re-balance the Equinox Reference Portfolio according to its own discretion, or choose an alternative Component Fund manager (subject to Macquarie's approval of any alternative manager). All changes to the Equinox Reference Portfolio proposed by the Responsible Entity, including such re-balances, must be consistent with the Investment Guidelines set forth in the Exposure Agreement in order to be implemented by Macquarie. Initial and final periods of the Exposure Agreement The Responsible Entity contemplates that the Equinox Reference Portfolio will be comprised of cash investments and/or Security Deposits for approximately 25 days immediately following the Investment Date and for approximately 30 days prior to the Capital Protection Date. In the last three months of the term of the Exposure Agreement, the Equinox Reference Portfolio composition may be progressively shifted from Component Funds to cash at call and/or Security Deposits, so that it is comprised of those constituents exclusively on the Capital Protection Date. Portfolio management after the Delivery Date Once the Delivery Basket has been delivered to the Trust, and to the extent that the sale facility has not been utilised, the Trust assets will consist mainly of the portfolio of delivered shares. The Responsible Entity intends to leave the portfolio unchanged, and will distribute any dividends and attached franking credits to Unitholders annually. The same investment terms will apply for investor withdrawals after the Delivery Date as are specified in Section 5. The Responsible Entity will fund investor withdrawals by disposing of such portion of one or more of the different shareholdings in the portfolio that it deems appropriate. 32

35 SECTION 3 RISING CAPITAL PROTECTION AND CASH DISTRIBUTIONS Capital Protection 34 Profit Lock-ins 34 Cash Distributions 35 Distribution Reinvestment Facility 35 Threshold Management explained 36 Threshold Management effects 37 Examples 37

36 SECTION 3 RISING CAPITAL PROTECTION AND CASH DISTRIBUTIONS The Trust s investment in the Exposure Agreement is designed to provide the Trust with the security of Capital Protection, the potential for annual distributions, and the added bonus of Profit Lock-ins. CAPITAL PROTECTION Holders of Units can receive the benefit of the Capital Protection only as at the Capital Protection Date. The level of protection available to the Trust as at the Capital Protection Date (the Capital Protected Amount) will initially be the amount the Trust will pay Macquarie under the Exposure Agreement. This will equate to $1.00 per Unit. Units redeemed prior to the Capital Protection Date will not receive the benefits of Capital Protection. Units held after the Capital Protection Date will not have the benefits of Capital Protection after that date. Investors wanting to ensure they realise the benefits of the Capital Protection therefore have to withdraw their investment as at the Capital Protection Date, rather than disposing of Units earlier, or holding Units past that date. The Capital Protection is provided to the Trust via the Exposure Agreement. The terms of the Exposure Agreement state that Macquarie must deliver to the Trust, on the Delivery Date, the Delivery Basket. The composition of the Delivery Basket will be determined using the Delivery Amount and the closing price of the Delivery Securities on the Delivery Date. The Delivery Amount must be the higher of: the Exposure Agreement Value; and the Capital Protected Amount, each as at the Capital Protection Date. The Responsible Entity is also entitled to use a sale facility offered by Macquarie under the Exposure Agreement, by giving notice in advance. The sale facility allows the Responsible Entity, immediately after delivery, to sell, through Macquarie, the Delivery Basket (or part thereof) for the Delivery Amount (or the corresponding fraction thereof). Under the Exposure Agreement the Equinox Reference Portfolio must conform to a set of Investment Guidelines, which includes the use of Threshold Management. Threshold Management is described later in this section. Macquarie is responsible for compliance with the Investment Guidelines. The Delivery Amount will be used to calculate the Withdrawal Price in respect of the Capital Protection Date. The Responsible Entity expects that the Withdrawal Price will be no less than the Capital Protected Amount as at the Capital Protection Date divided by the number of Units then on issue. The level of Capital Protection provided to the Trust under the Exposure Agreement cannot be reduced by Macquarie during the term of the agreement. The Responsible Entity has the right to request payments in respect of a partial or complete termination of the Exposure Agreement which, if not to satisfy investor withdrawals, would have the effect of reducing the Capital Protected Amount both in absolute terms and expressed on a per Unit basis. The Responsible Entity agrees it will exercise this right only if it uses the proceeds towards obtaining alternative investment exposure with an amount of capital protection no lower than was to apply under the Exposure Agreement. For further information on risks pertaining to the Capital Protection see Section 4. PROFIT LOCK-INS The Exposure Agreement contains a Profit Lock-in provision that increases the level of Capital Protection by 50% of any increase in the Exposure Agreement Value (adjusted for withdrawals) above 4% in any Financial Year (after making good any previous years shortfalls below the 4% level). Profit Lock-ins will apply in such an amount unless this would immediately or imminently (as determined by Macquarie in its discretion) cause a Sell Trigger to be breached (see the heading Threshold Management effects below for more details). Any Profit Lock-in will raise the Capital Protected Amount by the same value. You should note that the Exposure Agreement Value may not increase by more than 4% (or at all) in any Financial Year and therefore there is no assurance that Profit Lockins will occur. After a Profit Lock-in occurs the increased Capital Protected Amount cannot be reduced by Macquarie. Any Profit Lock-ins will have a bearing on the Equinox Reference Portfolio s Threshold Management (explained below). The Responsible Entity may choose to manage the associated increase in the Capital Protected Amount in one of the following two ways, or a combination of both: the first method entails leaving the allocations to the Component Funds unchanged (thereby raising the threshold curves used within the Threshold Management mechanism, which are explained later in this section); 34

37 the second method is to effect appropriate reductions in the allocations to the Component Funds such that the reduction amounts, when applied to appropriately dated term deposits, would be sufficient to yield the Profit Lock-in amount on the Capital Protection Date. This second method, if used, would serve to reduce the Equinox Reference Portfolio s exposure to the Component Funds. Investors should note that, as with the Capital Protection, any Profit Lock-ins will apply only as at the Capital Protection Date. CASH DISTRIBUTIONS The Exposure Agreement also entitles the Trust to receive a Periodic Return where the Exposure Agreement Value has increased by more than 4% (after making good any previous years shortfall below the 4% level) in any Financial Year. Such a Periodic Return entitlement will be for 50% of the excess of the increase in value above the 4% level. Periodic Returns represent consideration by Macquarie for the Responsible Entity having pre-paid the purchase price of the Delivery Basket under the Exposure Agreement. Payment of a Periodic Return will reduce the Exposure Agreement Value accordingly but will not reduce the Capital Protected Amount. Where the allocation of a Periodic Return would immediately or imminently (as determined by Macquarie in its discretion) cause a Sell Trigger to be breached, the Periodic Return will be reduced to such a level that could be paid without causing an impending breach. See Threshold Management explained later in this section for an explanation of Threshold Management and Sell Triggers. The Responsible Entity intends to apply any Periodic Returns received by the Trust towards Cash Distributions to Unitholders. You will be paid via direct credit to your bank account or by cheque, unless you have elected to participate in the Trust s Distribution Reinvestment Facility. Cash Distributions provide you (if you are not participating in the Distribution Reinvestment Facility) with an immediate cash-flow benefit. Importantly, the payment of Cash Distributions will not reduce the Capital Protected Amount. This means that, when you receive a Cash Distribution, you are extracting a portion of your profits without reducing the Trust s level of Capital Protection. Cash Distributions paid by the Trust will not be franked. The Responsible Entity intends to distribute all income of the Trust each Financial Year. DISTRIBUTION REINVESTMENT FACILITY You may elect to participate in the Trust s Distribution Reinvestment Facility. Under this facility, your Cash Distributions will be reinvested in additional Units. The Trust will then increase its investment in the Exposure Agreement accordingly. The issue price will be the Unit price determined for the Trust as at the last Valuation Day immediately preceding the end of the relevant distribution period (calculated on the basis that transaction costs are nil and disregarding the aggregate amount of the Cash Distribution for the distribution period). The number of Units to be issued to each participating investor will be rounded down to the nearest whole Unit and any rounding surplus will become an asset of the Trust. There is no discount applied for the purchase of Units under the facility. Any Units issued under the Distribution Reinvestment Facility will rank equally in all respects with all other Units. Capital Protection benefits will also apply to these Units in the same way and to the same amount per Unit as to all other Units. Electing to receive Cash Distributions in the form of additional Units under the Distribution Reinvestment Facility will not abrogate your taxation liability in the financial year in which the Cash Distribution is paid. See Section 7 for further detail on this point. You may elect to participate in the Distribution Reinvestment Facility at the time of your subscription by indicating where appropriate on the Application Form. You may only elect to participate in relation to your entire unitholding, not for part of your holding. You may choose to alter your choice regarding participation in the Distribution Reinvestment Facility at any time after subscription. In order to alter your choice, you must notify the Macquarie Equinox Service Centre and will then be sent a Distribution Reinvestment Facility election form which must be completed and submitted to the Responsible Entity. Such notification must be received prior to a Cash Distribution being declared for the change to apply to that Cash Distribution. 35

38 SECTION 3 RISING CAPITAL PROTECTION AND CASH DISTRIBUTIONS Continued THRESHOLD MANAGEMENT EXPLAINED The Exposure Agreement requires that, over the life of the Exposure Agreement, an asset management method called Threshold Management be employed. Threshold Management requires that the allocation within the Equinox Reference Portfolio to the Component Funds is compared weekly to certain reference curves. The most important reference curve is called the Knockout Curve. It represents the growth over time of an amount of capital which, if invested in appropriately dated Security Deposits, would deliver at the Capital Protection Date the prevailing Capital Protected Amount adjusted for any currently held Security Deposits, the Placement Incentive, cash at call and liabilities within the Equinox Reference Portfolio. In addition, a Sell Trigger curve is placed above the Knockout Curve (and below the level of allocation to the Component Funds). If the amount allocated to the Component Funds were to fall below the Sell Trigger, a certain portion of the allocation to the Component Funds would be shifted to Security Deposits. The proportions allocated to Component Funds and Security Deposits are determined by a series of equations contained in the Exposure Agreement. The equations are designed to maintain an acceptable exposure to the Component Funds, while still seeking to ensure that there is not an unacceptably high risk that the Exposure Agreement Value on the Capital Protection Date will fall short of the Capital Protected Amount. The Capital Protection will apply regardless of the effectiveness of Threshold Management. After a Sell Trigger has been hit, a new Sell Trigger is placed between the current level of allocation to Component Funds and the Knockout Curve, while a Buy Trigger is placed above the current level of allocation to Component Funds. If the Sell Trigger is breached again, further shifts from the Component Fund allocations to Security Deposits will be effected. If the Buy Trigger is surpassed, allocations to the Component Funds will increase at the expense of the exposure to Security Deposits. The Knockout Curve is based on currently prevailing applicable interest rates and therefore it and the Buy and Sell Triggers will vary with movements in applicable interest rates. A fall in interest rates will have the effect of raising the curves and a rise in interest rates will cause the curves to fall. The dynamic nature of these curves has the potential to cause reductions in the allocations to Component Funds (and corresponding increases in allocations to Security Deposits) within the Equinox Reference Portfolio purely through movements in interest rates. Figure 3 shows a hypothetical illustration of how the Knockout Curve and an initial Sell Trigger may look over time assuming a full initial allocation in the Equinox Reference Portfolio to Component Fund investments at the intended level of notional exposure. The curves have been generated using prevailing interest rates as at 31 March 2005, 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 relevant fixed interest rate for deposits maturing on the Capital Protection Date changes. A Buy Trigger has not been included on the graph, as a Buy Trigger will appear only after a Sell Trigger has been breached. At inception no Buy Trigger will exist. Figure 3 An illustration of Threshold Management 36

39 If the Knockout Curve were to be breached by the level of allocation to Component Funds, the entire Equinox Reference Portfolio would consist of Security Deposits until the Capital Protection Date. THRESHOLD MANAGEMENT EFFECTS In circumstances where a Profit Lock-in and a Periodic Return would immediately or imminently (as determined by Macquarie in its discretion) cause a Sell Trigger to be breached the Profit Lock-in and Periodic Return for the relevant period will each be reduced in part or in whole as appropriate. If a Sell Trigger were to be breached, a certain portion of the Equinox Reference Portfolio s allocation to Component Funds would be switched to Security Deposits. The Responsible Entity will not receive Profit Lock-ins or Periodic Returns to the extent that they would come at the expense of the Equinox Reference Portfolio maintaining its exposure to the Component Funds. AN EXAMPLE OF THE OPERATION OF RISING CAPITAL PROTECTION AND CASH DISTRIBUTIONS SPANNING TWO YEARS Let s take an example where the Equinox Reference Portfolio has performed well over its first Financial Year of operation, resulting in an increase in the Exposure Agreement Value equating to 12 cents per Unit. Let s assume: that 50% of the surplus amount (i.e. 50% of the gain over 4%, which is 50% of 8 cents per Unit) becomes a Profit Lock-in. This would allow the Capital Protected Amount, when expressed on a per Unit basis, to increase by 4 cents per Unit to $1.04; and that a Periodic Return equivalent to 4 cents per Unit is paid to the Trust, and that the Responsible Entity distributes the same to Unitholders of the Trust, with no reinvestment of those Cash Distributions. This is illustrated in the first graph below, entitled First Financial Year. The graph shows on a per Unit basis the Capital Protected Amount, the Profit Lock-in, the Cash Distribution and the unprotected value increases (increases in the value of the Equinox Reference Portfolio not allocated as a Profit Lock-in or a Periodic Return/Cash Distribution). The line represents the Unit price. At the beginning of the second year, the Profit Lock-in has been added to the Capital Protected Amount, taking it to the equivalent of $1.04 per Unit, and the Cash Distribution has been paid to investors, causing the Unit price to fall by 4 cents, due to the Units going ex-distribution. $1.15 First Financial Year $1.10 Amount per Unit $1.05 $1.00 $0.95 $0.00 End of Year 1 Start of Year 2 Capital Protected Amount (expressed per Unit) Profit Lock-In Unprotected profits Cash Distribution Equinox Reference Portfolio value 37

40 SECTION 3 17 RISING CAPITAL PROTECTION AND CASH DISTRIBUTIONS Continued To continue the example, let s assume that in the following Financial Year Component Fund performance causes the value of the Equinox Reference Portfolio to fall by an amount equal to 5 cents per Unit. Here, neither a Profit Lock-in nor a Periodic Return is possible (and therefore the Responsible Entity is unable to pay a Cash Distribution), as the Exposure Agreement Value has fallen for that year. This is illustrated as Second Financial Year in the graph below. Despite the decline in value for the year, which takes the Unit price below the Capital Protected Amount (per Unit), the Trust s Capital Protection remains at the equivalent of $1.04 per Unit. Investors should note that there is no guarantee that there will be a Profit Lock-in allocated or Periodic Return/Cash Distribution paid in respect of any Financial Year or that there will be an increase in the Exposure Agreement Value. The preceding examples are not intended to be indicative of future returns. $1.15 Second Financial Year $1.10 Amount per Unit $1.05 $1.00 $0.95 $0.00 End of Year 1 End of Year 2 Start of Year 3 Capital Protected Amount (expressed per Unit) Unprotected profits Cash Distribution Equinox Portfolio NAV 38

41 SECTION 4 SIGNIFICANT RISKS General investment risks 40 Risks specific to the Trust 40 Risks specific to the Capital Protection 42 Potential conflicts of interest 42

42 SECTION 4 SIGNIFICANT RISKS An investment in Units in the Trust involves a number of risks. Before investing in Units in the Trust, you should consider carefully the significant risks that may affect the performance of the Equinox Reference Portfolio and the value of your investment in the Trust. These are outlined below. GENERAL INVESTMENT RISKS General market Your 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. Change of law and taxation risk Changes to laws or their interpretation in Australia or foreign jurisdictions in which the Equinox Reference Portfolio s investments are domiciled, including taxation laws, corporate regulatory and money laundering laws could have a negative impact on the Exposure Agreement s returns to the Responsible Entity and, accordingly, returns to investors. Changes to applicable law may delay the satisfaction or an investor s withdrawal request. The Responsible Entity reserves the right to take steps to limit or prevent any adverse effects from changes to laws or their interpretation including altering its investments or, if possible, restructuring the Trust. Changes in tax laws or their interpretation could adversely affect the tax treatment of the Trust, its investments and its investors. See Section 8 and Appendix 1 for details of related tax issues. In the event of such adverse change the Responsible Entity reserves the right to change the Trust s investments or restructure the Trust to limit or prevent any adverse effects. Historical performance The Equinox Reference Portfolio has no performance history. The historical performance of the Component Funds and the managers stated return targets are not reliable indicators of future performance of those investments or of the Equinox Reference Portfolio and are not forecasts, projections or the result of a simulation of future performance. There is a risk that the future performance of the Component Funds will fall short of the performance shown in their individual track records and the managers stated return targets. RISKS SPECIFIC TO THE TRUST Counterparty risk Entering into the Exposure Agreement with Macquarie will result in the Trust taking significant counterparty risk on Macquarie. This is the risk that Macquarie may not be able to discharge its obligations under the Exposure Agreement. Counterparty risk arises because Macquarie does not hold the amount the Responsible Entity pays to it or any other property on trust for, or for the benefit of, the Trust or its members. The obligations of Macquarie under the Exposure Agreement are not deposit liabilities of Macquarie, and they are not guaranteed by any party. Macquarie s obligations under the Exposure Agreement are unsecured and will rank behind claims of secured creditors and creditors mandatorily preferred under the law, such as depositors. For the Trust to be able to realise the value of the Exposure Agreement at any time Macquarie must be able to perform its obligations under the Exposure Agreement at that time. If, for example, Macquarie were to become insolvent, it may be unable to perform its obligations under the Exposure Agreement, making the Capital Protection and the Exposure Agreement potentially worthless. In considering this risk, investors should make their own assessment of the ability of Macquarie to meet its obligations under the Exposure Agreement. See Section 9 for information on Macquarie. No operating or performance history The Trust has no financial operating or performance history. As at the date of this PDS no audited financial statements exist for the Trust and no Units in the Trust have been issued. The historical performance of the Component Funds and the managers stated return targets are not reliable indicators of future performance of those investments or of the Equinox Reference Portfolio and are not forecasts, projections or the result of a simulation of future performance. There is a risk that the future performance of the Component Funds will fall short of the performance shown in their individual track records and the managers stated return targets. Liability of Unitholders Subject to certain limitations, the Constitution provides that the liability of a Unitholder is generally limited to the amount, if any, which remains unpaid in relation to the Unitholder s subscription for Units, and that Unitholders are not obliged to indemnify the Responsible Entity if there is a deficiency in the Trust assets, or to meet any claim or a creditor of the Responsible Entity, in respect of the Trust. 40

43 However, the effectiveness of these provisions has not yet been determined by Australian courts. Unitholders of the Trust have no right or power to interfere with any rights or powers of the Responsible Entity under the Constitution. Accordingly, no person should purchase the Units of the Trust unless such person is willing to entrust all investment decisions to the Responsible Entity and its agents, including MICAP. Foreign exchange The currency hedging contained within the Equinox Reference Portfolio will not completely remove the risk that foreign exchange fluctuations may have an adverse impact on your investment return. Component Funds The performance of the Equinox Reference Portfolio will depend largely on the investment performance achieved by the managers of the Component Funds. There is a risk that these investments may perform poorly. The use of leverage may magnify investment returns, both profits and losses. The Component Funds in the Equinox Reference Portfolio may use leverage depending on their investment strategy. Portfolio changes MICAP will be responsible for performing due diligence on the Component Funds, as described in Section 2. In performing this role, MICAP may recommend changes to the Equinox Reference Portfolio if it believes an underlying Component Fund is no longer suitable for inclusion, for reasons such as a material deviation from a stated investment strategy. Therefore, there is the possibility that the composition of the Equinox Reference Portfolio will change due to information discovered during the term of the investment. Should the value of the Equinox Reference Portfolio be too low to maintain the desired allocations to the Component Funds, the Equinox Reference Portfolio will be altered according to the assessment of the Responsible Entity of how best to achieve its investment goals. If this is deemed impossible, part or all of the Equinox Reference Portfolio may be allocated to Security Deposits, for any length of time deemed necessary. There is also the risk that any or all of the Component Funds may develop capacity limitations. It is common practice for Hedge Funds and Tactical Traders to limit the amount of money they manage based on their assessment of their own ability to trade and invest the funds effectively. It is possible that during the life of the Equinox Reference Portfolio a Component Fund s returns will push its assets beyond the manager s assessed capacity (or the assessed capacity falls due to changes in market opportunities or liquidity, for example), causing the manager to return part of its investors assets to preserve the viability of the fund s return profile. In such a case, because the Equinox Reference Portfolio will be managed with all practical considerations being adhered to, the composition of the Equinox Reference Portfolio would be altered in favour of other Component Funds and/or allocations would be made to other managers as deemed appropriate. Liquidity Investments in the Trust may not be as liquid as some other investments. Third-party transfers require prior consent of the Responsible Entity or its duly authorised agent. The Equinox Reference Portfolio s investments may also be illiquid. The suggested term of the investment is at least three years. While withdrawals are possible prior to the Capital Protection Date, they are only available periodically and with certain restrictions, as disclosed in Section 5. Although the Responsible Entity will endeavour to pay withdrawal proceeds as soon as practicable after it receives the corresponding proceeds from its investment in the Exposure Agreement, the Responsible Entity is only obliged to pay withdrawal proceeds within 60 days after the date as at which the applicable Withdrawal Price is calculated. The Responsible Entity may further delay the payment of withdrawal proceeds in certain circumstances. The Responsible Entity may also stagger the processing of withdrawal requests over a number of withdrawal periods where withdrawal requests received for a month exceed 30% of the Units on issue. There is a risk that the value of Units will change materially between the time a withdrawal request is submitted and the date for which the Withdrawal Price is calculated. Risks associated with leverage As set out in Section 2, the Equinox Reference Portfolio may include notional liabilities of up to 30 per cent of the Exposure Agreement Value at any time in order to gain higher investment exposure. Additionally, the managers of the Component Funds and intermediary investments through which the Component Funds are accessed may also use leverage, depending on their respective investment strategies. The use of leverage at all of these levels is likely to magnify investment returns, both profits and losses. 41

44 SECTION 4 SIGNIFICANT RISKS Continued RISKS SPECIFIC TO THE CAPITAL PROTECTION Capital Protection is provided to the Trust Because Capital Protection is provided to the Trust (not directly to Unitholders), Unitholders who withdraw as at the Capital Protection Date can only receive the benefit of Capital Protection to the extent that the value provided by Macquarie to the Trust as at the Capital Protection Date (which must not be less than the Capital Protected Amount) is reflected in the Withdrawal Price. There is a risk that the Trust will have unanticipated liabilities on the Capital Protection Date, in which case the Capital Protected Amount may not flow through to Unitholders who withdraw as at the Capital Protection Date in full or at all. This could arise, for example, as a consequence of changes to tax law or if there was litigation against the Trust. The Responsible Entity does not anticipate that the Trust will have any such liabilities on the Capital Protection Date. Reduced exposure to Component Funds As described in Section 2, the Equinox Reference Portfolio may include Component Funds, foreign exchange contracts, notional liabilities, cash at call and Security Deposits. A risk associated with the Capital Protection is that allocations within the Equinox Reference Portfolio may be shifted from Component Funds to Security Deposits, reducing the potential for the Equinox Reference Portfolio to generate attractive returns, and potentially forgoing the ability to re-allocate to the Component Funds in cases where capacity is limited. The allocation between the Component Funds and Security Deposits is determined by the value of the allocation to Component Funds compared to the threshold curves used (namely the Sell Triggers and Buy Triggers) in Threshold Management. These curves are dynamic and are constructed primarily as a function of prevailing Australian interest rates, the time until the Capital Protection Date, the Capital Protected Amount and the level of exposure to the Component Funds. A fall in the value of the Equinox Reference Portfolio s Component Fund allocations may result in a decreased allocation to Component Funds. A fall in applicable Australian interest rates may also result in a reduced allocation to Component Funds, even if the value of the Equinox Reference Portfolio s Component Fund investments has remained stable or has increased. Investors should note that, although Periodic Returns (which will be applied towards Cash Distributions to Unitholders) and Profit Lock-ins provide benefits to investors, they also increase the risk of a Sell Trigger being breached, causing a reduction in exposure to the Component Funds. Under the terms of the Exposure Agreement, there may be a time at which 100% of the Equinox Reference Portfolio has been allocated to Security Deposits, in which case re-allocation to Component Funds will not be possible. This may occur, for example, if the applicable Australian interest rates or the value of the Component Fund investments have fallen considerably. Capital Protection Date You should be aware that Capital Protection applies only as at the Capital Protection Date. No Capital Protection will apply to investments withdrawn prior to that date. Investments held past that date will have had the benefit of the Capital Protection on that date, but will not have ongoing protection. POTENTIAL CONFLICTS OF INTEREST Potential conflicts of interest exist in the structure of Equinox 6. In particular: The counterparty to the Exposure Agreement is Macquarie; Macquarie is the Valuation Agent under the Exposure Agreement; the Responsible Entity has retained MICAP as its risk adviser; and the custodian is Belike Nominees Pty Limited. A number of entities involved in this offer are related either by direct shareholding or through common directors. The following companies, associated with this offer, are wholly-owned subsidiaries of Macquarie: Macquarie International Capital Advisors Pty Limited; Macquarie Portfolio Management Limited; and Belike Nominees Pty Limited. The following companies, associated with this offer, have one or more common directors, some of whom are also senior executives within Macquarie: Macquarie International Capital Advisors Pty Limited; Macquarie Portfolio Management Limited; and Belike Nominees Pty Limited. As required under the Corporations Act and the Responsible Entity s Australian Financial Service Licence, the Responsible Entity has procedures and structures in place to manage potential conflict of interests.

45 SECTION 5 THE INVESTMENT TERMS Application for Units 44 Cooling-off period 44 Disposal of Units 44 The term of the investment 45 Reporting to investors 45

46 SECTION 5 THE INVESTMENT TERMS Continued APPLICATION FOR UNITS The minimum Application Amount is $10,000, with $1,000 increments thereafter. The offer by the Responsible Entity is subject to the terms of this PDS. Application for Units can be made only as set out under How do I invest? in Section 1. Application Forms received may not be withdrawn. The Responsible Entity reserves the right to reject any applications for Units (including under the Distribution Reinvestment Facility) in whole or in part without giving any reason for the rejection. If fewer Units than requested are allotted then the residual Application Amount will be returned to the investor without interest. If no Units are allotted to an investor then all of the investor s Application Amount will be returned without interest. Investors will be notified shortly after their application has been received and processed. If your application is accepted, Units in the Trust will be issued to you no later than: one month after the Application Amount was received and cleared; or 30 June 2005, whichever is earlier, and a unitholding certificate will subsequently be mailed to you or your loan provider as appropriate. COOLING-OFF PERIOD 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. Under the Corporations Act, the amount to be repaid to you may be adjusted to reflect any difference between the actual issue price of the relevant Units and the price at which Units would have been issued to you at the date of receipt of your cooling off request. The Responsible Entity expects that there will be no such Unit price difference, and the amount repaid to you will be your Application Amount less any costs and taxes that relate to the exercise of your cooling off right as the Corporations Regulations allow to be deducted. This cooling-off right is extinguished where you have exercised a right under the terms applicable to your Units. If you have invested through a master trust or wrap account service, you should consult the operator of that service about any cooling off rights you may have. DISPOSAL OF UNITS Although this offering is designed to be a medium term investment, you may dispose of your investment subject to certain conditions. Such disposals may be via withdrawals, or investors may transfer their holdings to a third party with prior consent of the Responsible Entity or its duly authorised agent. You should contact the Macquarie Equinox Service Centre on or to request the appropriate form for withdrawal of your investment or transfer of your Units. You should be aware that stamp duty may be payable upon a transfer of Units. Withdrawal In accordance with the Corporations Act, while the Trust is liquid, you may withdraw your investment by submitting a withdrawal request. To receive withdrawal proceeds based on a Withdrawal Price calculated for a Valuation Day (currently the last Business Day of a month), the Responsible Entity must receive your withdrawal request at least 40 days prior to the Valuation Day in that month. You will not be able to retract a withdrawal request once it has been received by the Responsible Entity. Under normal circumstances, you will receive the applicable net withdrawal proceeds approximately 40 days after the Valuation Date as at which your Withdrawal Price is calculated. The Responsible Entity may delay or stagger the processing of withdrawal requests in the circumstances set out in Section 4. The Withdrawal Price for a month will be calculated as the Net Asset Value of the Trust as at the Valuation Day in that month less any applicable transaction costs 14, divided by the number of Units in issue on that Valuation Day. At the time a withdrawal request is made the applicable Withdrawal Price will not be known. As the Net Asset Value of the Trust is based on the value of the Exposure Agreement, which in turn is based on the value of the Equinox Reference Portfolio, you should note that the Withdrawal Price may be calculated using a value for the Exposure Agreement based on estimated NAVs for any or all Component Funds included in the Equinox Reference Portfolio, as set out at Section Transaction costs are the Responsible Entity s estimate of the total cost of selling or realising the assets of the Trust. 44

47 Transfer to a third party Subject to prior consent of the Responsible Entity, you may transfer all or part of a holding of Units to a third party. You should be aware that stamp duty may be payable upon transfer of Units. Partial disposals and the minimum holding Partial withdrawal requests and partial transfers must be for at least 10,000 Units. You must maintain a minimum holding of 10,000 Units. The Responsible Entity may treat a withdrawal request which, if satisfied, would leave you with less than 10,000 Units as a request for redemption of your entire unitholding. How to request disposal Requests for the appropriate withdrawal and transfer forms should be directed to: Macquarie Equinox Service Centre GPO Box 3423 Sydney NSW 2001 Phone: or equinox@macquarie.com.au Investors disposing of their Units must send in their unitholding certificate with their disposal request. THE TERM OF THE INVESTMENT There is no fixed term for this investment. However, Capital Protection is applicable only on, and will cease immediately after, the Capital Protection Date. If you wish to stay invested in Units in the Trust beyond the Capital Protection Date you should be aware that you will not have the benefits of Capital Protection after that date. The nature of the investment will change after that date, as the Exposure Agreement will have expired, with the Trust taking delivery of the Delivery Basket, (and/or disposing of some or all of the Delivery Basket in order to satisfy investor withdrawals as at the Capital Protection Date) under the Exposure Agreement. The Trust s exposure to the performance of the Equinox Reference Portfolio will cease after the Capital Protection Date unless an alternative exposure mechanism is put in place. After that date the Trust s assets will consist of the basket of shares delivered as the Delivery Basket and cash at call. REPORTING TO INVESTORS Investors will be sent an investor report each calendar quarter. This report will contain details of the progress of the investment, the Unit price as well as important information about their unitholding. Each month the Equinox website will contain the following information about the Equinox Reference Portfolio: The Equinox total return index (an accumulation index of the Unit price adjusted for the effect of Cash Distributions); and The prevailing level of Capital Protection pertaining to the Trust s investment in the Exposure Agreement, Profit Lock-in and Cash Distribution information. The Equinox website address is macquarie.com.au/equinox. The Trust s financial year is from 1 July through 30 June, except for the first financial year which will be from the date of the establishment of the Trust to 30 June In the event the Trust is terminated the financial year end will be determined by the date of distribution on winding up of the Trust. Within six months of the end of each full financial year, or as soon as practicable thereafter, investors will be sent audited financial statements of the Trust. The Responsible Entity must comply with the requirements of Chapter 2M of the Corporations Act in so far as they are relevant to the Trust. Except as required in order to comply with Chapter 2M of the Corporations Act, the Responsible Entity (without being obliged to) need only apply generally accepted accounting principles or accounting standards as generally accepted or in force immediately before 1 January 2005 in carrying out any calculation or making any determination in respect of the Trust. The preparation of the accounts on any particular basis is independent of and does not affect a determination of the method for calculating distributable income of the Trust. Before the Capital Protection Date the Responsible Entity will seek from you confirmation as to whether you wish to withdraw your investment as at that date or to continue to hold your Units beyond the Capital Protection Date. 45

48 SECTION 5 THE INVESTMENT TERMS Continued Disclosing entity The Trust is expected to become a disclosing entity under the Corporations Act, in which case it will be subject to regular reporting and disclosure obligations. Copies of documents lodged with ASIC in relation to the Trust may be obtained from, or inspected at, any ASIC office. If and when the Trust becomes a disclosing entity, you may obtain a copy of: the Trust s annual financial report most recently lodged with ASIC; any half-year financial reports lodged with ASIC by the Trust after the lodgement of that annual report and before the date of this PDS; and any continuous disclosure notices given by the Trust after that date of lodgement of that annual report and before the date of this PDS, on request from the Responsible Entity free of charge. 46

49 SECTION 6 FEES Table of fees 48 Additional explanation of fees and costs 49 Taxes, costs and unpaid amounts 50

50 SECTION 6 FEES This section sets out fees and other costs that you may be charged. These fees and costs may be deducted from the returns on your investment or from the Trust assets as a whole. Taxes are set out in another part of this PDS. This table sets out the fees and other costs that may be charged in relation to your investment. 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 recoverable by the Responsible Entity from the Trust's assets, the Responsible Entity can also recover the GST, and may be entitled to claim input tax credits, depending on the precise nature of the fee. The fees in the table below are stated as GST exclusive. You should read all the information about fees and costs because it is important to understand their impact on your investment. Table of fees TYPE OF FEE OR COST AMOUNT HOW AND WHEN PAID Fees when your money moves in and out of the fund Establishment fee The fee to open your investment Contribution fee The fee on each amount contributed to 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 15 The fees and costs for managing your investment 16 Nil Nil Nil, for withdrawals after the Surrender Cut-off Date and for redemption of Units acquired under the Distribution Reinvestment Facility. For withdrawals occurring before the Surrender Cut-off Date, the amount expressed in dollars being 0.1% of the number of Units to be redeemed multiplied by the number of months between the date of withdrawal and the Surrender Cut-off Date, or such lesser amount as permitted under the Constitution Nil The withdrawal fee is deducted from the relevant withdrawal proceeds prior to the payment of those proceeds to the Unitholder. Management fee 1.25% per annum of the Net Asset Payable from the Trust monthly Value of the Trust in arrears on the first day of the following month Administration fee 0.25% per annum of the Net Asset Payable from the Trust monthly in Value of the Trust. arrears on the first day of the following month See Additional explanation of fees and costs below for information about the application of the Management fee, the Placement Incentive and ongoing expenses. 16 This fee includes and amount payable to an adviser. See adviser remuneration under the heading Additional explanation of fees and costs.

51 TYPE OF FEE AMOUNT HOW AND WHEN PAID Placement Incentive Recovery 1.2% per annum of the aggregate Payable from the Trust monthly in application price paid for all Units issued arrears on the first day of the on or within 30 days of the initial Unit following month, accruing for issue date that remain on issue at the 36 months from the initial Unit time of calculation, calculated monthly issue date. based on the number of those Units on issue at the end of the calendar month. Trailing Placement Incentive 0.5% per annum of the month-end Payable from the Trust quarterly in Exposure Agreement Value (less any arrears on the first day of the amounts held in Security Deposits) month following the quarter end. calculated monthly. Offer establishment costs Establishment costs in relation to Establishment costs will initially be and ongoing expenses the Trust and this Offering up to a borne by the Responsible Entity, maximum of 2% of the amount however the Responsible Entity raised in this Offering. intends to recover those expenses from the Trust assets up to the maximum amount during the first 3 years of the Trust s operation. The Responsible Entity will not seek reimbursement of any such expenses exceeding 2% of the amount raised in this Offering. Ongoing expenses incurred in the proper performance of the Responsible Entity s duties in relation to the Trust. The Responsible Entity expects expenses not to exceed 0.50% pa of the Net Asset Value of the Trust. The Responsible Entity will be reimbursed for these expenses from the Trust generally once each month. Service Fees Investment switching fee The fee for changing investment options Not applicable ADDITIONAL EXPLANATION OF FEES AND COSTS Adviser remuneration Application of the Placement Incentive recovery - Under an arrangement with the Responsible Entity, MICAP will pay to sales agents, brokers and financial advisers a Placement Incentive of 3.3% (including GST) of the amount invested by their referred investors. For investors without such an intermediary, MICAP will pay the Placement Incentive at the same rate to the Responsible Entity. This is not a payment out of Trust assets and accordingly does not reduce the amount available for investment in the Exposure Agreement. In order to compensate MICAP for paying the Placement Incentive, the Responsible Entity will be paid the Placement Incentive recovery which it will in turn pay to MICAP for the first 36 months after the Investment Date. 49

52 SECTION 6 FEES Continued Application of the Trailing Placement Incentive - The Trailing Placement Incentive received by the Responsible Entity at a rate of 0.5% per annum of the month-end Exposure Agreement Value (less any amounts held in Security Deposits) is used to pay sales agents, brokers and financial advisers, by reference to the currently held Unit holding of their referred investors. The Responsible Entity will retain so much of this trailing Placement Incentive as relates to the Unitholders who invested without an intermediary such as a financial adviser. Ongoing expenses The Constitution permits the Responsible Entity to recover from the assets of the Trust all expenses incurred by the Responsible Entity in relation to the proper performance of its duties in respect of the Trust, to the extent permitted by the Corporations Act. The ongoing expenses that may be reimbursed from the Trust include ongoing costs incurred in the acquisition, holding and disposal of investments, auditor s fees, the costs of convening and holding meetings of investors and certain other administrative costs, including engagement of third parties to assist with administration of the Trust. Capital Protection fee The Exposure Agreement Value will reduce by 1.25% per annum to reflect a fee to Macquarie for the provision of Capital Protection through the Exposure Agreement. This reduction will be calculated and effected monthly in arrears for the life of the Exposure Agreement. This fee is not paid directly from the Trust assets. Capital Protection surrender fee In order to satisfy any Unitholder withdrawals, the Responsible Entity will terminate a proportion of the Exposure Agreement. Prior to the Surrender Cut-off Date, any such terminations will result in a Capital Protection surrender fee equivalent to one twelfth of 1.25% of the NAV of the corresponding Units being redeemed, multiplied by the number of months from the time of redemption until the Surrender Cut-off Date. This fee is payable to Macquarie. As the obligation of the Responsible Entity to pay this fee is triggered by a transaction that is entered into to satisfy a withdrawal request, this fee is treated as a transaction cost under the Constitution and is deducted in calculating the Withdrawal Price. It therefore represents an additional cost to the withdrawing Unitholder The Responsible Entity will not deduct any other amounts on account of transaction costs. The Capital Protection surrender fee will not apply for redemptions effected on or after the Surrender Cut-off Date. Fees payable in connection with Component Funds The Net Asset Value of the Component Funds used to determine the value of the Equinox Reference Portfolio (and in turn the Exposure Agreement Value) is net of fees (including management and performance fees) and expenses charged by the Component Funds themselves. Fees permitted under the Constitution and differential fees The Constitution permits the Responsible Entity to charge higher fees than are set out in this table and additional fees. However, the Responsible Entity agrees only to charge the fees, and to such amounts, as set out in this PDS. In the case of the Withdrawal fee the maximum amount that may be charged under the Constitution, and the maximum amount that will be charged, is 5% of the aggregate Withdrawal Price for the Units that are redeemed. The Responsible Entity may charge or rebate fees: (a) (b) by negotiation with Unitholders who are wholesale clients, as defined in section 761G of the Corporations Act; and/or to members of the Trust who are also employees of the Responsible Entity or a related body corporate of the Responsible Entity, on a different basis to that applied to other members of the Trust. In the case referred to in paragraph (b), the amount of any Placement Incentive paid by MICAP to the Responsible Entity that relates to an investment in the Trust by an employee of the Responsible Entity or of any related body corporate, will be rebated by the Responsible Entity in full to that employee. Examples of withdrawal fee: If you invested $50,000 under this Offering (to acquire 50,000 Units) and then withdrew your entire investment and assuming the NAV of the Trust s assets has remained unchanged since the initial investment, the withdrawal fee will be: $1650 if you withdrew as at 30 September 2005; $900 if you withdrew as at 31 December 2006; and nil if you withdrew as at or after 30 June Note that the Capital Protection surrender fee would also apply in the case of the first two of these examples. TAXES, COSTS AND UNPAID AMOUNTS You are liable for all taxes and costs in relation to your entitlement to income or capital of the Trust and for unpaid amounts otherwise payable to you by the Trust.

53 SECTION 7 TAXATION FOR AUSTRALIAN RESIDENTS Taxation of Australian resident Unitholders 52 Independent tax opinion 54

54 SECTION 7 TAXATION FOR AUSTRALIAN RESIDENTS TAXATION OF AUSTRALIAN RESIDENT UNITHOLDERS General The following comments provide a general guide in relation to the Australian tax implications for investors who are Australian residents for tax purposes and who subscribe for Units pursuant to this PDS and who hold their Units on capital account. This Section does not address the taxation consequences for non-australian investors or investors who acquire Units in the course of carrying on a business or otherwise with the intention of making a profit and who hold the Units on revenue account or as trading stock. This Section of the PDS does not purport to contain advice in relation to your specific taxation treatment. As the taxation profile of each potential investor is different, all investors should seek their own professional taxation advice to determine the tax treatment applicable in their particular circumstances. Investors who change tax residency should also seek professional tax advice as to any change in tax treatment of holding Units. 1. Taxation of the Trust 1.1 Taxation of Responsible Entity The Responsible Entity of the Trust should not be liable for tax in respect of the income or capital gains of the Trust. Rather, all of the net income of the Trust should be included in the assessable income of the Unitholders as described below. 1.2 Trust income - Periodic Returns The income of the Trust will include the Periodic Returns. This income will be foreign sourced income for tax purposes. 1.3 Capital Gains The Trust may also derive capital gains at the time of any realisation of the capital value of the Exposure Agreement upon early termination of that agreement (for example, where Units are redeemed prior to the Capital Protection Date). Similarly, if the Responsible Entity elects to use the sale facility to sell all or a part of the Delivery Basket, a capital gains tax event will occur, giving rise to a capital gain or loss for the Trust equal to the difference between the sale price and the purchase price of the securities disposed of. If the Trust does not elect to dispose of some or all of the Delivery Basket under the sale facility, that portion of the Delivery Basket will be delivered to the Trust on the Delivery Date. There should be no income or capital gains tax consequences for the Trust at this time. In particular, the Trust should not be treated as deriving a capital gain on Macquarie satisfying its obligation under the Exposure Agreement to deliver the Delivery Basket (refer National Tax Liaison Group CGT Subcommittee meeting minutes). The cost base in the securities comprising the Delivery Basket should be equal to the purchase price relating to that portion of the Delivery Basket, plus the incidental costs of their acquisition. Investors should note that views expressed by the National Tax Liaison Group CGT Subcommittee are not binding on the ATO and, although we are not aware of any proposal to change these views, it is possible that the ATO may change its view in the future. If that occurs, we would expect that the ATO would treat the Trust as realising a taxable capital gain on the Delivery Date and to treat the Trust's cost base in the securities comprising the Delivery Basket as being equal to their value on the Delivery Date to prevent double taxation, however, the position is uncertain. 1.4 Qualifying securities and traditional securities Under current income tax laws, returns on "qualifying securities" may be taxable on an accruals basis over the term of that security. Securities that are not "qualifying securities" may be "traditional securities" for income tax purposes, with any gains or losses on the disposal of that security taxable on revenue account. These rules take precedence over the capital gains tax regime. The Exposure Agreement should not be characterised as either a "qualifying security" or a "traditional security", on the basis that it is a contract for the purchase of the Delivery Basket, and therefore should not be a "security" as defined for these purposes. Accordingly, these rules should have no application to the Trust in relation to the Exposure Agreement. 2. Taxation of Unitholders 2.1 Assessable Income - Distributions and Reinvestment Facility Investors who are presently entitled to a share of the income of the Trust for any income year will include in their assessable income their pro-rata share of the net income of the Trust for that income year (as outlined above). Such Unitholders must include this amount regardless of whether the amount is received from the

55 Trust in the form of a Cash Distribution or is otherwise reinvested in further Units under the Distribution Reinvestment Facility. To the extent that the income of the Trust is foreign sourced, this will also be foreign sourced income in the hands of the investor. The main implication of this income being foreign sourced is that deductions (other than debt deductions see paragraph 2.6 below) will only be deductible against that foreign income or other foreign income of the same class. An investor who receives a Cash Distribution in excess of their proportionate entitlement to the net income of the Trust will not include the amount of the excess in their assessable income, however the investor's CGT cost base and CGT reduced cost base (discussed further below) will be reduced by the non-assessable amount. 2.2 Capital Gains Tax Redemption of Units Upon a redemption of a Unit, an investor will receive the Withdrawal Price which will include a distribution of any capital gains made by the Trust. Any capital gain so distributed will be included in the calculation of the investor's net capital gain for the income year. If the Trust s capital gain is a discount capital gain, this amount will also be treated as a discount capital gain in the hands of any investor entitled to discount capital gains treatment (for example, if the investor is an individual who has held their Units for at least 12 months). An investor who is not entitled to discount capital gains treatment must take into account the full capital gain when making its net capital gain calculation. Any excess of the remainder of the Withdrawal Price over the CGT cost base of that Unit will also be treated as a capital gain in the hands of the investor. If the remainder of the Withdrawal Price is less than the CGT reduced cost base of the Unit, the investor will realise a capital loss equal to the amount of the shortfall. For the purpose of this calculation, the CGT cost base of a Unit would be the issue price of the relevant Unit (being $1.00 for Units subscribed for by an investor under this PDS and the relevant issue price for Units subsequently acquired under the Distribution Reinvestment Facility), or where the Unit is acquired in the secondary market, the relevant acquisition cost of that Unit, plus certain incidental costs incurred in acquiring the Unit such as fees paid to a financial adviser. In the case of a Unit (and unlike some other assets), the CGT reduced cost base should normally be the same as the CGT cost base. As discussed above, the CGT cost base and CGT reduced cost base of a Unit will be reduced by the amount of any Cash Distributions received, or any amount re-invested under the Distribution Reinvestment Facility, in excess of the investor's proportionate entitlement to the net income of the Trust. This discussion assumes that the Withdrawal Price will be equal to the market value of the Unit at the time of redemption. Where this is not the case the resulting CGT consequences may differ from those outlined above. 2.3 Capital Gains Tax Transfer or sale of Units For CGT purposes, an investor will derive a capital gain on the disposal of a Unit to another person to the extent that the capital proceeds on disposal exceed the CGT cost base of the Unit (as discussed above). An investor will incur a capital loss on the disposal of a Unit to another person to the extent that the capital proceeds on disposal are less than the CGT reduced cost base of the Unit. 2.4 Net capital gain or net capital loss All capital gains and capital losses arising in a year are added together to determine whether a taxpayer has derived a net capital gain or incurred a net capital loss in a year. If an investor is entitled to discount CGT treatment in respect of a capital gain (for example if the investor is an individual who derives a capital gain on Units held for at least 12 months), only 50% of the amount of such gain will be included in the calculation of the investor's net capital gain or loss. In making this calculation investors will be entitled to apply any capital losses against non-discount gains prior to their application against discount capital gains. If an investor derives a net capital gain in a year, this amount is generally included in the investor s assessable income for the relevant year. If an investor incurs a net capital loss in a year, this amount is carried forward and is available to offset capital gains derived in subsequent years, subject in some cases to the investor satisfying certain rules relating to the recoupment of carried forward losses. 2.5 Qualifying securities and Traditional securities As discussed above, the rules applying to "qualifying securities" and "traditional securities" will take precedence over the capital gains tax regime and will result in a differing taxation treatment of the instruments to which they apply. A Unit in the Trust should not be characterised as either a "qualifying security" or a "traditional security", on the basis that it is a unit in a unit trust and therefore should not be a "security" as defined for these purposes. Accordingly, these rules should have no application to an investor in the Trust. 53

56 SECTION 7 TAXATION FOR AUSTRALIAN RESIDENTS Continued Interest deductions An investor should generally be able to claim a tax deduction for interest expenses incurred on any loan used to fund the acquisition of Units provided that the investor has incurred that interest for the purpose of deriving assessable income from the holding of the Units, being the distributions (or other assessable income other than capital gains) that are expected to be derived from the investment in the Units. Where expenses are deductible under this test, the deductions should be available against all types of assessable income of the investor. That is, a deduction for interest expense will not be quarantined or limited to the foreign income derived from the Trust. If the Trust is not a widely held unit trust (that is, the Trust has fewer than 300 beneficiaries or 20 or fewer individuals are entitled to 75% or more of the Trust s income or capital) any prepaid interest will not be deductible at the time of payment by any investor, but will be deductible over the period to which the prepayment relates. On 16 April 2003, an announcement was made of the Government's intention to legislate to deny deductibility of some of the interest incurred by investors under "capital protected products". If the legislation is introduced in the terms of the announcement, the amendments will apply to deny deductibility of a proportion of the interest expense incurred in respect of a limited recourse loan applied to acquire listed shares, units and stapled securities. Investors utilising any loan to subscribe for Units should consider this announcement and consult their own tax adviser where necessary. 2.7 Tax File Number Declaration An investor in Units in the Trust is not required to quote their tax file number (TFN) in relation to the investment. However, if the investor does not quote their TFN, or alternatively in certain circumstances their Australian Business Number, and does not provide information in relation to any available exemption from quoting their TFN, the Responsible Entity will be required to withhold tax from any Cash Distribution or any amount reinvested under the Reinvestment Facility at the highest marginal tax rate plus the Medicare levy (currently 48.5%). 3. Part IVA Part IVA of the Income Tax Assessment Act 1936 (Cth.) contains general anti-avoidance provisions and should be considered by investors in respect of all investments. In general, Part IVA may apply where a taxpayer obtains a tax benefit as a consequence of entering into or carrying out a scheme (or part of a scheme), whether devised by the taxpayer or somebody else, and the dominant purpose of one or more parties who entered into or carried out the scheme (or part of the scheme) was to secure the tax benefit for the taxpayer. The application of Part IVA to a taxpayer can only be conclusively determined in light of each individual taxpayer's own facts and circumstances. Investors should therefore seek their own independent professional tax advice in relation to the potential application of Part IVA in light of their own individual facts and circumstances. 4. Stamp Duty Under current laws, for so long as the Unit register is maintained in Victoria, the acquisition of Units by an investor, the sale of Units by an investor, and the redemption of Units by the Responsible Entity should not be liable to stamp duty. 5. Goods and services tax (GST) No GST should be payable in respect of the subscription, acquisition, disposal or redemption of Units, nor in respect of any Cash Distributions paid in respect of the 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 recoverable by the Responsible Entity from the Trust's assets, the Responsible Entity can also recover the GST, and may be entitled to claim input tax credits, depending on the precise nature of the fee. 6. Tax reform It should be noted that Australia is in the process of major taxation reform. There is considerable uncertainty as to the breadth and ultimate impact of this reform. The precise meaning of much of the new legislation is unclear and, of course, it has not been tested before the courts. Accordingly, there is a degree of uncertainty applying to matters impacted by such legislation. The above taxation comments have been based on current Australian taxation legislation, and on changes announced but not yet legislated, at the time of this PDS. INDEPENDENT TAX OPINION Blake Dawson Waldron has provided a tax opinion relating to Australian residents investment in Units in the Trust. This opinion appears in Appendix 1.

57 SECTION 8 THE TRUST Trust details 56 Compliance committee and compliance plan 56 The constitution 56 Unit rights 56 Meetings of Unitholders 57 Limitation of liability and indemnity in favour of the Responsible Entity 57 Powers of the Responsible Entity 57 Rights and Liabilities of the Responsible Entity 58 Removal of the Responsible Entity 58 Termination of the Trust 58 Amending the constitution 58 Tax status 58

58 SECTION 8 THE TRUST TRUST DETAILS The Trust is a registered managed investment scheme established according to the terms of a trust deed dated 22 April 2005 (the Constitution ). As the Trust was established on 22 April 2005, no audited accounts have been prepared nor distributions declared in respect of the Trust as at the date of this PDS. The Trust has no performance history or outstanding liabilities as at the date of this PDS. The Responsible Entity is not aware of any litigation or claim pending or threatened by or against it. The legal relationship between the Responsible Entity and Unitholders is governed by this PDS, the Constitution and the Corporations Act in addition to other applicable laws relating to trusts and trustees. The Responsible Entity s duties under that relationship include the specific statutory duties to: Act honestly and in the best interests of Unitholders; Exercise the degree of care and diligence that a reasonable person would exercise in the Responsible Entity s position; Treat Unitholders equally; Not make use of information obtained by being the Responsible Entity in order to obtain an improper advantage for the Responsible Entity or another person or to cause detriment to Unitholders; Comply with the Trust s compliance plan and Constitution; Clearly identify Trust property and hold it separately from property of the Responsible Entity and that of other schemes operated by the Responsible Entity (except where the Corporations Act permits the pooling of the property); Ensure that the Constitution and the Trust s Compliance Plan comply with the Corporations Act; Only make payments out of the Trust in accordance with the Constitution and the Corporations Act; Have the Trust s property valued regularly; and Report to ASIC any breaches of the Corporations Act which relate to the Trust and which have had, or are likely to have a materially adverse effect on the interests of Unitholders. The Responsible Entity can appoint an agent, or otherwise engage a person, to do anything that it is authorised to do in connection with the Trust. However, for the purposes of determining whether there is any liability to Unitholders, or whether the Responsible Entity has properly performed its duties, the Responsible Entity is taken to have done, or failed to do, anything that the agent or person has done (or failed to do) even if the agent was acting fraudulently or outside the scope of its authority or engagement. COMPLIANCE COMMITTEE AND COMPLIANCE PLAN Under the Corporations Act, a responsible entity is required to either have a board of directors comprising not less than one half external directors, or to appoint a compliance committee with a majority of external representation. The Responsible Entity intends to comply with this requirement by having a compliance committee with a majority of external representation. The Corporations Act also requires the Responsible Entity to adopt a compliance plan which sets out the procedures applied in operating the Trust to ensure compliance with the Corporations Act and the Trust s Constitution. The compliance committee monitors the Responsible Entity s adherence to the compliance plan (and the adequacy of that plan), the Constitution and the Corporations Act. The compliance committee is required to report any breaches of the Constitution and the Corporations Act to the Responsible Entity, and in some instances, to ASIC. THE CONSTITUTION The following sets out a few aspects of the Constitution and the way in which it operates in conjunction with the Corporations Act. This section does not include every provision of the Constitution if you would like to review a copy of the Constitution, please contact us and we will provide a copy free of charge. UNIT RIGHTS The Constitution provides that each Unit confers on the Unitholder an equal and undivided interest in the assets of the Trust as a whole, subject to the liabilities of the Trust. Each Unitholder holds the Units subject to the rights, restrictions and obligations attaching to that Unit. The Constitution also sets out Unitholder s right to receive distributions from the Trust, as well as the right to withdraw from the Trust and the method under which Unitholders entitlement upon such withdrawal is calculated. 56

59 MEETINGS OF UNITHOLDERS The Constitution and the Corporations Act prescribe when and how meetings of Unitholders are to be convened. Under the Constitution, the Responsible Entity may convene a meeting of Unitholders at any time, and must do so if required under the Corporations Act. The rights of Unitholders to request, convene, attend and vote at meetings of Unitholders are primarily prescribed by the Corporations Act. The Constitution sets out the quorum for a meeting of Unitholders, which is generally two Unitholders present in person or by proxy together holding at least 10% of all Units. A resolution by Unitholders binds all Unitholders, whether or not they were present at the meeting. The Corporations Act provides that, on a show of hands, each Unitholder has one vote, and on a poll, each Unitholder has one vote for each dollar of the value of the total interest they have in the Trust. LIMITATION OF LIABILITY AND INDEMNITY IN FAVOUR OF THE RESPONSIBLE ENTITY The Constitution provides that the Responsible Entity is not liable in contract, tort or otherwise to Unitholders for any loss suffered in any way relating to the Trust except to the extent that the Corporations Act imposes such liability. Subject to the Corporations Act, the liability of the Responsible Entity to any person other than a Unitholder in respect of the Trust (including in respect of any contracts entered into as trustee of the Trust or in relation to any assets) is limited to the Responsible Entity s ability to be indemnified from the assets. The Constitution also provides that the Responsible Entity is entitled to be indemnified out of the assets of the Trust for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Trust, including, to the extent permitted by the Corporations Act, any liability incurred as a result of any act or omission of a delegate or agent appointed by the Responsible Entity. POWERS OF THE RESPONSIBLE ENTITY Under the Constitution, the Responsible Entity: is conferred all the powers in respect of the Trust that it is possible under the law to confer on a trustee as though it were the absolute owner of the Trust assets and acting in its personal capacity; has the power, in its capacity as trustee of the Trust, to borrow or raise money, to grant security and to incur all types of obligations and liabilities; may in its capacity as trustee of the Trust invest in, dispose of or otherwise deal with property and rights in its absolute discretion, subject to the Corporations Act; may authorise any person to act as its agent or delegate to hold title to any asset of the Trust, perform any act or exercise any discretion within the Responsible Entity s power. Subject to the Corporations Act, the agent or delegate may be an associate of the Responsible Entity; may charge fees and recover expenses, including the fees and expenses set out in section 6 of this PDS and waive and defer payment or reimbursement of those fees and expenses; may reject any application for Units in whole or in part and without giving any reason for the rejection, and may specify minimum investment, minimum holding and minimum withdrawal amounts; may, at its discretion, in respect of any withdrawal period in which the total withdrawal requests it has received or is deemed to have received comprise more than 30% of the Units on issue: satisfy the withdrawal requests received, or deemed to have been received, during that withdrawal period pro rata to the extent of 30% of the Units on issue; and deem the remaining unsatisfied component of those withdrawal requests to be separate withdrawal requests received in the next withdrawal period; may delay withdrawals in certain circumstances, including where it has taken all reasonable steps to realise sufficient assets to satisfy a withdrawal request and is unable to do so, where the Responsible Entity believes it is not in the best interests of Unitholders as a whole to realise assets, or where the Responsible Entity is unable to calculate the Withdrawal Price or determine the Trust s Net Asset Value due to circumstances outside its control; and may refuse to register any transfer of Units without giving any reason for the refusal. The Constitution requires that the Responsible Entity must, in its capacity as responsible entity of the Trust, enter into the Exposure Agreement. 57

60 SECTION 8 THE TRUST Continued RIGHTS AND LIABILITIES OF THE RESPONSIBLE ENTITY The Constitution provides that the Responsible Entity and its associates may hold Units in the Trust, but the Corporations Act requires that it may only acquire and hold an interest in the Trust for not less than the consideration that would be payable if the Units were acquired by someone else and subject to terms and conditions that would not disadvantage other Unitholders. Subject to the Corporations Act, the Constitution provides that the Responsible Entity (or its associates) may: deal with itself (as trustee of the Trust or in another capacity), an associate, a related party or with any Unitholder; be interested in any contract or transaction with itself (as trustee of the Trust or in another capacity), an associate, a related party or with any Unitholder and retain for its own benefit any profits or benefits derived from any such contract or transaction; and act in the same or a similar capacity in relation to any other managed investment scheme. REMOVAL OF THE RESPONSIBLE ENTITY The Responsible Entity may retire by calling a meeting of Unitholders to enable Unitholders to vote on a resolution to choose a company to be the new responsible entity, which will occur by extraordinary resolution (i.e. passed by 50% of the total votes that may be cast by Unitholders entitled to vote). Unitholders can remove the Responsible Entity by calling a Unitholders meeting under the Corporations Act and resolving, by an extraordinary resolution, to remove the Responsible Entity and choose a company to be the new responsible entity. Following termination of the Trust, the Constitution requires that the Responsible Entity must realise the assets of the Trust within 180 days or as soon as possible after that time. The net proceeds of this realisation will be distributed to Unitholders by reference to the number of Units held by Unitholders as at termination. VALUATION METHODS AND POLICIES To the extent permitted under the Corporations Act, the Responsible Entity will adopt the following methodologies, policies and principles for the purpose of calculating the NAV of the Trust from time to time: the value of the Exposure Agreement will be the most recent value determined by the Valuation Agent; and the value of other assets will be determined by reference to the methodologies, policies and principles set out in the most recent expert determination provided to the Responsible Entity by a qualified accountant or other person reasonably believed by the Responsible Entity to be an expert. AMENDING THE CONSTITUTION The Constitution may be amended following a special resolution of the Unitholders (passed by 75% of the votes cast by Unitholders entitled to vote on the resolution), or by the Responsible Entity if it reasonably considers the change will not adversely affect Unitholders rights. TAX STATUS The Trust is subject to taxation laws pertaining to trusts in Australia. The Responsible Entity intends to distribute all income of the Trust to Unitholders each Financial Year. TERMINATION OF THE TRUST The Trust terminates on the earliest of: the 80th anniversary of the day before the Trust commenced; a date which the Unitholders determine by extraordinary resolution (i.e. passed by at least 50% of the total votes that may be cast by Unitholders entitled to vote); the date specified by the Responsible Entity as the date of termination of the Trust in a notice given to Unitholders; and the date on which the Trust terminates in accordance with another provision of the Constitution or by law. 58

61 SECTION 9 ADDITIONAL INFORMATION About the Responsible Entity 60 About Macquarie 60 The Custodian 60 Material contracts 61 Component Fund access 63 Privacy statement 63 Consents 64 Disclaimer of responsibility 66 Complaints 66

62 SECTION 9 ADDITIONAL INFORMATION ABOUT THE RESPONSIBLE ENTITY Macquarie Portfolio Management Limited, the responsible entity of the Trust, is an Australian public company and a wholly owned subsidiary of Macquarie. Macquarie Portfolio Management Limited holds Australian Financial Services Licence No which authorises it to operate managed investment schemes, including the Trust. For more information about the duties of Macquarie Portfolio Management Limited in its capacity as Responsible Entity of the Trust, see section 8. ABOUT MACQUARIE Macquarie Bank Limited is an authorised deposit taking institution under Section 9 of the Banking Act 1959 (Commonwealth). As at 30 September 2004, Macquarie had total assets of approximately A$42.1 billion and equity attributable to equity holders of Macquarie of approximately A$3 billion on a consolidated basis. For the half year ended 30 September 2004 Macquarie reported profit from ordinary activities after income tax attributable to ordinary equity holders of approximately A$284 million on a consolidated basis. Macquarie s Australian Financial Services License Number is Rating Agencies Macquarie is rated by Standard & Poor s, Fitch Ratings and Moody s Investors Service. Current ratings are available from various sources including the ASX, brokers and Macquarie. The rating agencies have not been involved in the preparation, or authorised the issue of, this PDS. Investors should note that credit ratings assigned by the rating agencies address only credit risk, which is only one element of any investment decision and should not be construed as relating to the Exposure Agreement with Macquarie, which is discussed in this PDS. Ratings are not recommendations in relation to the Exposure Agreement. By publishing a rating, the rating agencies are not inducing or advising investors to take any action with respect to the Exposure Agreement, the Units or any other security. Ratings and rating reports should not be construed as investment advice, personalised or otherwise. Accordingly, each investor should conduct their own evaluation of the Exposure Agreement and consult with their investment adviser. Ratings are subject to change or withdrawal at anytime, and such change or withdrawal is within each rating agency s sole discretion. Disclosure Obligations Macquarie, as a company whose shares are quoted on the stock market of the ASX, is a disclosing entity under the Corporations Act and the ASX Listing Rules and has a continuous disclosure obligation. This means that, subject to certain exceptions, Macquarie must disclose to the ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of Macquarie s securities or financial products which are quoted on the ASX. Copies of the information disclosed to the ASX can be viewed on the public file of Macquarie at the ASX. Documents Available Macquarie will provide a copy, free of charge, of any of the following documents to any person who requests such copies in relation to this PDS, by contacting Macquarie Bank Limited at: No. 1 Martin Place Sydney NSW 2000 Australia. Phone: : the latest available financial report and annual review of Macquarie; and the latest available interim result announcement document. Macquarie s latest available Annual Review, Interim Report and Financial Reports are also able to be reviewed on-line via Macquarie s website at: THE CUSTODIAN The Responsible Entity has appointed Belike Nominees Pty Limited ABN , AFSL No as custodian of the Trust ( Custodian ). The Custodian will enter into the Exposure Agreement as agent of the Responsible Entity. References in this PDS to the Responsible Entity entering into, or as a party to, the Exposure Agreement are references to the Responsible Entity entering into, or as a party to, the Exposure Agreement through the Custodian. 60

63 Material contracts Exposure Agreement General information on the operation of the Exposure Agreement is provided in Section 1. Further material details of this agreement are set out below Counterparty Term Valuation Agent Valuation methods Macquarie Bank Limited (London branch) Approximately 7 and a half years. Macquarie Bank Limited The Exposure Agreement Value will be determined with reference to the NAV of the Equinox Reference Portfolio. The NAV of the Equinox Reference Portfolio will be determined by the Valuation Agent from time to time in accordance with generally accepted accounting principles, or accounting standards as generally accepted or in force immediately before 1 January For the purpose of valuing the NAV of the Equinox Reference Portfolio, the Valuation Agent shall be entitled to (but not in any particular order): rely on the final NAV provided by either the investment manager or the administrator of any Component Fund; rely on estimated NAV provided by either the investment manager or the administrator of any Component Fund; and rely on the estimated valuation of any Component Fund as determined by the Valuation Agent in consultation with the Responsible Entity. In determining the NAV of the Equinox Reference Portfolio, the Valuation Agent may use estimated NAVs for any or all Component Funds (when their final NAVs are not available before the 20th day following a Valuation Day) in order to finalise the Reference Portfolio Value in a timely manner. The Valuation Agent may delay the valuation of the Equinox Reference Portfolio for the whole or any part of a period: during which any exchange or over-the-counter market on which any significant portion of the investments relevant to the Equinox Reference Portfolio are listed, quoted, traded or dealt is closed (other than customary weekend and holiday closing) or on which trading is restricted; when a breakdown occurs in any of the means normally employed in ascertaining the value of the investments relevant to the Equinox Reference Portfolio or when for any reason the value of any of the Equinox Reference Portfolio s investments or other assets cannot reasonably or fairly be ascertained; when there is a suspension in the determination of the NAV of any Component Fund or other investment in the Equinox Reference Portfolio. 61

64 SECTION 9 ADDITIONAL INFORMATION Continued Termination by Responsible Entity The Responsible Entity is entitled to terminate the Exposure Agreement if Macquarie fails to comply with its obligations to pay amounts in accordance with the Exposure Agreement. In this event Macquaire will be required to pay the Responsible Entity the greater of the value of the Exposure Agreement (plus 1%) and the prevailing present value of the Capital Protection Date s Capital Protected Amount (plus 1%). The Responsible Entity may also terminate the Exposure Agreement at any time prior to the Capital Protection Date by giving notice to Macquarie. The Responsible Entity agrees not to do so unless it is to satisfy investor withdrawals or (if investors remain in the Trust) unless it can secure in an alternate investment at least the same level of capital protection that Macquarie was to provide under the Exposure Agreement. Termination by Macquarie Partial termination of the Exposure Agreement The Exposure Agreement does not confer any right on Macquarie to terminate the Exposure Agreement. The Responsible Entity is entitled to terminate partially the Exposure Agreement and receive cash payments in the following circumstances: by requesting a partial termination in order to satisfy Unitholder withdrawals. This will have the effect of reducing the Capital Protected Amount but will not reduce the level of Capital Protection per Unit; by requesting a reduction in the Exposure Agreement Value to pay fees and expenses of the Trust. This will not reduce the Capital Protected Amount. Such reductions are capped at a level which allows the current fees and expenses of the Trust to be met. Macquarie is entitled to reduce the Exposure Agreement Value by the Capital Protection Fee, which will not reduce the Capital Protected Amount. Delivery obligations On the Delivery Date Macquarie is required to transfer the Delivery Basket to the Responsible Entity. The number of each Delivery Security to be delivered will be one tenth of the Delivery Amount divided by the closing price for the Delivery Security on the Delivery Date. Where abnormal trading conditions prevail in respect of any Delivery Security on the Delivery Date, or Macquarie is unable to purchase the entire Delivery Basket on that day for reasons beyond its reasonable control, Macquarie must deliver the appropriate securities as soon as practicable after the Delivery Date. 62 Risk Advisory Agreement The Responsible Entity has entered into a Risk Advisory Agreement with MICAP. Under this agreement MICAP is required to monitor the performance of the managers of the Component Funds and provide weekly valuation information in relation to Component Funds. MICAP is also required to provide advisory services to the Responsible Entity including advice on investments included in the Equinox Reference Portfolio and advice on possible changes to Component Funds. The Responsible Entity is required to pay MICAP: the Placement Incentive recovery; all withdrawal fees; and all of the management fee, described in Section 6. These payments do not represent an additional expense to the Trust as the Responsible Entity agrees that all payments to MICAP will be paid by the Responsible Entity out of the fees it is entitled to recover from the Trust as described in Section 6. The Responsible Entity s obligations to pay the Placement Incentive recovery and all withdrawal fees to MICAP continue even if the Risk Advisory Agreement is terminated.

65 COMPONENT FUND ACCESS The Equinox Reference Portfolio s exposure to Cadogan Alternative Strategies Fund Limited ( Cadogan ) will reference Class C shares or another share class in Cadogan that may be established in the future. Cadogan is a corporation organised as an internal business company under the laws of the British Virgin Islands. The Equinox Reference Portfolio s exposure to Vision Asia Maximus Fund ( Vision Asia ) will reference Class C shares, or another share class in Vision Asia that may be established in the future. Vision Asia is an openended investment company organised as an exempted company with limited liability in the Cayman Islands. The Equinox Reference Portfolio s exposure to Selectinvest Arbitrage/Relative Value Ltd. ( Selectinvest ) will reference Series M participating shares or Series QN participating shares in Selectinvest. Selectinvest is an exempt company with limited liability organised under the laws of the Cayman Islands. The Equinox Reference Portfolio s exposure to the Tactical Traders will, where possible, reference an investment in a company called Cradle Mountain Trading Fund No.1 Limited (the Tactical Access Company ). The Equinox Reference Portfolio s exposure will reference shares in separate share classes of the Tactical Access Company, one class for each applicable Tactical Trader. The Equinox Reference Portfolio is unable to gain its exposure to the Tactical Trader known as Vega Diversified Fund Limited ("Vega Diversified") via reference to the Tactical Access Company and will instead reference shares in the "Vega Diversified Fund - Investor USD Class". Vega Diversified is incorporated in the Cayman Islands as an exempted company with limited liability. The Equinox Reference Portfolio is unable to gain its exposure to the Tactical Trader known as Bridgewater Associates, Inc. via reference to the Tactical Access Company and will instead reference the Bridgewater Pure Alpha Fund I ("Pure Alpha") "Class B" shares, or another share class in Pure Alpha that may be established in the future, or by referencing Non-Voting Participating Shares in The Longchamp Global Investment Fund, Ltd ("Longchamp") or another share class in Longchamp that may be established in the future. Both Pure Alpha and Longchamp are openended investment companies with limited liability and incorporated under the laws of the British Virgin Islands. Where exposure to a Component Fund is intended to be gained via a different vehicle or share class than is specified in Section 2 under Component Fund information, the vehicle or share class chosen will have the same investment strategy and the same material parameters and features as those share classes shown in Section 2, to the extent that those factors have a bearing on the investment performance information shown in Section 2. Exposure to the Component Funds within the Equinox Reference Portfolio may be gained via other means. PRIVACY STATEMENT By completing the Application Form investors will be supplying the Responsible Entity with personal information over which it will be bound by the Privacy Act 1988 (the "Privacy Act"). Investors should be aware that: the information in the Application Form and any other information provided by an investor in connection with the application ( Information ) is provided by that investor to the Responsible Entity to allow the investor's application for Units in the Trust to be assessed and processed and, if the application is successful, to give effect to that application, including allowing the investor's investment in the Trust to be administered and the investor s obligations in relation to it to be enforced. It may also be used and disclosed to the Responsible Entity s affiliates ("Affiliates") and/or contracted service providers to offer investment and loan products to investors; should an investor fail to provide the Responsible Entity with any such information or documentation requested of that investor, the investor s application for Units may be refused, and any transfer request by the investor may be delayed or refused; the Information may be collected, held, used and disclosed by Affiliates in accordance with the Privacy Act 1988 (Cth); and, without limiting the disclosures permitted under that Act, Affiliates may disclose an investor's Information to a person authorised by the investor and notified to any Affiliate in writing as the investor's representative (including a person authorised to buy and sell investments on behalf of the investor) to fund managers and clearing houses; neither the Responsible Entity nor Macquarie Bank Limited will be in any way liable to the investor, and investors release the Responsible Entity, Macquarie Bank Limited and their directors and employees, from any liability for the unauthorised accessing or release of any Information (except to the extent, and only to the extent, arising from their gross negligence or fraud); 63

66 SECTION 9 ADDITIONAL INFORMATION Continued the Corporations Regulations 2001 require the collection, in the Application Form, of an applicant s name, date of birth and address; and an investor may request access to his or her information by contacting the Macquarie Equinox Service Centre at the address on page 1 of the Application Form, or by calling CONSENTS Consent to be named The following parties have given written consent (which has not been withdrawn at the date of this PDS) to being named, in the form and context in which they are named, in this PDS: Cradle Mountain Trading Fund No.1 Limited; Vision Asia Pacific Limited; Vision Asia Maximus Fund; Union Bancaire Privée Asset Management LLC; Selectinvest Arbitrage/Relative Value Ltd.; Cadogan Management, LLC; Transtrend B.V.; Vega Asset Management Limited; Vega Diversified Fund Limited; Bridgewater Associates, Inc.; Longchamp Global Investment Fund, Ltd.; PricewaterhouseCoopers as Auditor; Macquarie Bank Limited; Belike Nominees Pty Limited; Macquarie International Capital Advisors Pty Limited as Risk Adviser to the Responsible Entity; Mallesons Stephen Jaques as legal adviser; Consent to be named and to inclusion of information The following parties have given written consent (which has not been withdrawn at the date of this PDS) in the following terms: Blake Dawson Waldron has given its consent to be named in this PDS as tax adviser to the Trust on Australian income tax in relation to subscribers under this offer of interests in the Trust in the form and context in which it is named. It has also given its consent to the inclusion of, and takes responsibility for, the taxation report in Appendix 1 ( Australian tax opinion ) and all references to that report in this PDS in the form and context in which they are included. Macquarie Bank Limited has given its consent to be named in this PDS in the form and context in which it is named and to the inclusion in the PDS of each of the statements about its role in the form and context in which they are included. Macquarie International Capital Advisors Pty Limited has given its consent to be named as the Risk Adviser in this PDS in the form and context in which it is named. It consents to the inclusion in the PDS of each of the statements about its role in the form and context in which they are included. It has also given its consent to the issue of this PDS with the inclusion of the second paragraph under the heading Portfolio Management in Section 2 of the PDS. Cadogan Management, LLC has given its consent to be named in this PDS in the form and context in which it is named. Cadogan Management, LLC consents to the inclusion in the PDS of each of the statements about it and the Cadogan Alternative Strategies Fund Limited in the form and context in which those statements are included. Cadogan Management, LLC has also given its consent to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to Cadogan Management, LLC and the Cadogan Alternative Strategies Fund Limited respectively in Section 2 of this PDS. Blake Dawson Waldron as tax adviser on Australian income tax in relation to subscribers under this offer; and 64

67 Vision Asia Pacific Limited and Vision Asia Maximus Fund Limited (the latter being the Fund ) have given their consents to be named in this PDS in the form and context in which they are named. Vision Asia Pacific Limited and the Fund each consents to the inclusion in the PDS of each of the statements about it in the form and context in which it is included. Vision Asia Pacific Limited and the Fund have also given their consents to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to Vision Asia Pacific Limited and the Fund respectively in Section 2 of this PDS. Each of Union Bancaire Privée Asset Management LLC ( UBPAM ) and Selectinvest Arbitrage/Relative Value Ltd. ( Selectinvest ) has given its consent to be named in this PDS in the form and context in which it is named. Each of UBPAM and Selectinvest consents to the inclusion in the PDS of each of the statements about it in the form and context in which it is included. UBPAM and Selectinvest have also given their consents to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to UBPAM and Selectinvest in Section 2 of the PDS. Transtrend B.V. has given its consent to be named in this PDS in the form and context in which it is named. It consents to the inclusion in the PDS of each of the statements about it and its Diversified Trend Program - Enhanced Risk (USD) in the form and context in which they are included. It has also given its consent to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to Transtrend B.V. and the Diversified Trend Program - Enhanced Risk (USD) in Section 2 of this PDS. Vega Asset Management Limited and Vega Diversified Fund Limited (the latter being the Fund ) have given their consents to be named in this PDS in the form and context in which they are named. Each of Vega Asset Management Limited and the Fund has given its consent to the inclusion in the PDS of each of the statements about it in the form and context in which it is included. Vega Asset Management Limited and the Fund have also given their consents to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to Vega Asset Management Limited and the Fund respectively in Section 2 of this PDS. Bridgewater Associates, Inc. has given its consent to be named in this PDS in the form and context in which it is named. It consents to the inclusion in the PDS of each of the statements about it and its Pure Alpha Strategy in the form and context in which they are included. It has also given its consent to the issue of this PDS with the inclusion of all of the background information, performance information, target return information and other information relating to Bridgewater Associates, Inc. and the Pure Alpha Strategy in Section 2 of this PDS. Cradle Mountain Trading Fund No.1 Limited has given its consent to be named in this PDS in the form and context in which it is named. It consents to the inclusion in the PDS of each of the statements about the Tactical Access Company in the form and context in which they are included. It has also given its consent to the issue of this PDS with the inclusion of all references to it in the Component Fund Access and the Tactical Access Company sections of Section 9 of this PDS. 65

68 SECTION 9 ADDITIONAL INFORMATION Continued DISCLAIMER OF RESPONSIBILITY Each of these persons named above who has consented to be named in this PDS: has not authorised or caused the issue of this PDS; and does not make or purport to make any statement in this PDS (or any statement on which a statement in this PDS is based) other than as specified above; and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this PDS other than the reference to their name and a statement or report included in this PDS with their consent as specified above. COMPLAINTS A Unitholder may make a complaint relating to the Trust to the Responsible Entity by sending the complaint in writing to The Complaints Officer C/- Macquarie Equinox Service Centre GPO Box 3423 Sydney NSW 2001 The Responsible Entity will acknowledge a complaint made by a Unitholder and will provide the Unitholder with a response to the complaint as soon as practicable, and in any event no later than 45 days after receipt of the complaint. If the outcome is unsatisfactory, Unitholders may refer their complaint to the Banking and Financial Services Ombudsman at: Banking and Financial Services Ombudsman GPO Box 3 Melbourne, Victoria, 3001 Toll Free: Fax: (03)

69 APPENDICES Appendix 1 Australian tax opinion 68 Appendix 2 Contact directory 69 Appendix 3 Glossary 70