SELF FUNDING INSTALMENTS MACQUARIE BANK LIMITED AFSL Combined Product Disclosure Statement and Financial Services Guide.

Transcription

1 MACQUARIE BANK LIMITED AFSL ABN SELF FUNDING INSTALMENTS SELF FUNDING INSTALMENTS Combined Product Disclosure Statement and Financial Services Guide SMU Series 52 Series of Macquarie Self Funding Instalments 5 January 2005

2 This is a combined Product Disclosure Statement (PDS) and Financial Services Guide. Part A PDS IMPORTANT NOTICE & DISCLAIMER The date of this PDS is 5 January Purpose Under this PDS Macquarie is inviting Applications for the issue of Macquarie Self Funding Instalments in one or more of three categories. Cash Application Shareholder Application Rollover Application Applications Applications under this PDS must be made on the Application Form attached to this PDS. Except for Applications made by companies which are related bodies corporate of Macquarie, the Offer Period, opens on 17 January 2005 and closes on the date announced by Macquarie. Applications by related bodies corporate of Macquarie may be made from the date of this PDS. To the extent permitted by law, Macquarie may withdraw invitations and offers made under this PDS in respect of a particular Series at its absolute discretion at any time upon giving notice to the ASX. Potential investors should lodge their Application Form with their stockbroker or licensed financial adviser, or directly with Macquarie. Cooling off Rights No cooling off rights apply to the issue of Macquarie Self Funding Instalments. This means that, in most circumstances, you cannot withdraw an Application once it has been made. Foreign Jurisdictions The distribution of this PDS in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this PDS comes should seek advice on and observe any such restrictions. Failure to comply with relevant legislation may violate those laws. This PDS is not an offer or invitation in relation to Macquarie Self Funding Instalments in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. None of the Macquarie Self Funding Instalments or the Shares transferred under the Macquarie Self Funding Instalments or this PDS have been or will be lodged or registered under the United States Securities Act of 1933, as amended and may not be offered or sold directly or indirectly in the United States. Changes to Information in PDS This PDS is current as at 5 January Information in this PDS is subject to change from time to time. Where information that is not materially adverse to Holders changes, Macquarie will update the information by posting a notice on its website at macquarie.com.au/instalments. Macquarie will provide a paper copy of updated information upon request to Holders who contact Macquarie on Representations This PDS has been prepared and issued by Macquarie Bank Limited as Issuer. Any other parties distributing this product are only doing so as a distributor for Macquarie Bank Limited. Potential investors should only rely on information in this PDS. No person is authorised to give any information or to make any representation in connection with the offer of Macquarie Instalments that is not contained in this PDS. Any information or representation not so contained may not be relied upon as having been authorised by Macquarie in connection with the offer. The Security Trustee (Belike Nominees Pty Ltd) is a wholly owned subsidiary of Macquarie Bank Limited. Belike Nominees Pty Ltd is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and Belike Nominees Pty Ltd s obligations do not represent deposits or liabilities of Macquarie Bank Limited. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Belike Nominees Pty Ltd. Underlying Companies and Trusts References in this PDS to Alinta Limited, Alumina Limited, AMP Limited, Amcor Limited, Australian Gas Light Company (The), Australia and New Zealand Banking Group Limited, Australian Stock Exchange Limited, AWB Limited, AXA Asia Pacific Holdings Limited, Babcock & Brown Limited, BHP Billiton Limited, Brambles Industries Limited, Centro Properties Group, Commonwealth Bank of Australia, Commonwealth Property Office Fund, ConnectEast Group, Diversified Utility and Energy Trusts (DUET), Envestra Limited, Foster s Group Limited, Insurance Australia Group Limited, Investa Property Group, Leighton Holdings Limited, Lend Lease Corporation Limited, Macquarie Airports, Macquarie Communications Infrastructure Group, Macquarie Infrastructure Group, Macquarie Prologis Trust, Mirvac Group, National Australia Bank Limited, Pacific Brands Limited, Patrick Corporation Limited, Perpetual Trustees Australia Limited, Promina Group Limited, Publishing & Broadcasting Limited, Qantas Airways Limited, QBE Insurance Group Limited, Rio Tinto Limited, Santos Limited, St George Bank Limited, StreetTracks S&P/ASX 200 Fund, StreetTracks S&P/ASX 200 Listed Property Fund, Suncorp-Metway Limited, Tabcorp Holdings Limited, Telecom Corporation of New Zealand Limited, Telstra Corporation Limited, Ten Network Holdings Limited, Toll Holdings Limited, Wesfarmers Limited, Westfield Group, Westpac Banking Corporation, Woodside Petroleum Limited, Woolworths Limited or to ALN, AWC, AMP, AMC, AGL, ANZ, ASX, AWB, AXA, BNB, BHP, BIL, CNP, CBA, CPA, CEU, DUE, ENV, FGL, IAG, IPG, LEI, LLC, MAP, MCG, MIG, MPR, MGR, NAB, PBG, PRK, PPT, PMN, PBL, QAN, QBE, RIO, STO, SGB, STW, SLF, SUN, TAH, TEL, TLS, TEN, TOL, WES, WDC, WBC, WPL, WOW or to the defined terms for those entities, are included solely for the purposes of identification of the Shares to which the Macquarie Self Funding Instalments relate and to the Listed Entities of the Shares. Such references are not to be construed as any express or implied endorsement by the Listed Entities of this issue of Macquarie Self Funding Instalments, nor does the Listed Entities accept any responsibility for any statement in this PDS nor undertake any liability in respect of the Macquarie Self Funding Instalments. This PDS has been prepared by Macquarie only from publicly available information. The Listed Entities have not been party to its preparation or furnished any information specifically to Macquarie for the purpose of its preparation. Nothing in this PDS can be relied upon as implying that there has been no change in the affairs of the Listed Entities or Macquarie since the date as at which information is given in this PDS, or as a representation as to the future in relation to the Listed Entities or Macquarie. Similarly, information in this PDS concerning the Listed Entities have not been independently verified. Macquarie does not, therefore, accept any liability or responsibility for, and makes no representation or warranty, express or implied, as to the accuracy or completeness of such information. Investors should make their own enquiries. Own Advice The information provided in this PDS is general information only, and has been prepared without taking into account your individual objectives, financial situation or needs. Consequently, you should consider whether the information in this PDS is appropriate for you in light of your objectives, financial situation and needs. You should read the whole of this PDS and consider all of the risks and other information relating to Macquarie Self Funding Instalments before deciding to invest. If you have any questions, you should contact your stockbroker, accountant or other professional adviser before deciding to invest in Macquarie Self Funding Instalments. Admission to trading status on ASX Application has been made and permission given for the Macquarie Instalments offered under this PDS to be admitted to trading status by the ASX. The fact that the ASX has admitted the Macquarie Instalments to trading status is not to be taken in any way as an indication of the merits of Macquarie or of the Macquarie Instalments. Commencement of trading of the Macquarie Instalments pursuant to this PDS will occur as soon as practicable after the issue of Macquarie Instalments to subscribers. The ASX does not warrant the accuracy or truth of the contents of this PDS. In admitting the Macquarie Instalments to trading status and not objecting to the Terms, the ASX has not authorised or caused the issue of this PDS and is not in any way a party to or concerned in authorising or causing the issue of this PDS or the making of offers or invitations with respect to the Macquarie Instalments. The ASX takes no responsibility for the contents of this PDS. In particular, the ASX has not formed a view as to whether this PDS complies with the reasonable investor standard of disclosure contained in the Corporations Act, these matters being the responsibility of Macquarie. The ASX makes no representation as to whether this PDS and the Terms of the Macquarie Instalments comply with the Corporations Act or the ASX Market Rules. To the extent permitted by the Trade Practices Act or any other relevant law, the ASX will be under no liability for any claim whatsoever, including for any financial or consequential loss or damage suffered by Holders or any other person, where that claim arises wholly or substantially out of reliance on any information contained in this PDS or any error in, or omission from this PDS. This PDS complies in all respects with the information requirements of Section 10 of the ASX Market Rules as varied by the ASX with respect to this PDS. Terminology Some words used in this PDS have defined meanings, which are set out in the Glossary in Section 9. Macquarie Instalments will be admitted to trading status by the ASX as warrants under the Warrant Rules in Section 10 of the ASX Market Rules. The terminology used in this PDS varies from the terminology used in the Warrant Rules, as follows: Macquarie Instalment in this PDS corresponds to warrant in the Warrant Rules HPO Exercise Price in this PDS corresponds to exercise price in the Warrant Rules HPO Expiry Date in this PDS corresponds to expiry date in the Warrant Rules HPO Exercise Notice in this PDS corresponds to exercise notice in the Warrant Rules Terms in this PDS corresponds to Terms of Issue in the Warrant Rules

3 PART A Product Disclosure Statement MACQUARIE BANK LIMITED AFSL SERIES OF MACQUARIE SELF FUNDING INSTALMENTS Underlying Shares & ASX Self Funding Instalment Code Alinta Limited Alumina Limited AMP Limited Amcor Limited Australian Gas Light Company (The) Australia and New Zealand Banking Group Limited Australian Stock Exchange Limited AWB Limited AXA Asia Pacific Holdings Limited Babcock & Brown Limited BHP Billiton Limited Brambles Industries Limited Centro Properties Group Commonwealth Bank of Australia Commonwealth Property Office Fund ConnectEast Group Diversified Utility and Energy Trusts (DUET) Envestra Limited Foster s Group Limited ALNSMU AWCSMU AMPSMU AMCSMU AGLSMU ANZSMU ASXSMU AWBSMU AXASMU BNBSMU BHPSMU BILSMU CNPSMU CBASMU CPASMU CEUSMU DUESMU ENVSMU FGLSMU Publishing & Broadcasting Limited Qantas Airways Limited QBE Insurance Group Limited Rio Tinto Limited Santos Limited St George Bank Limited StreetTracks S&P/ASX 200 Fund StreetTracks S&P/ASX 200 Listed Property Fund Suncorp-Metway Limited Tabcorp Holdings Limited Telecom Corporation of New Zealand Limited Telstra Corporation Limited Ten Network Holdings Limited Toll Holdings Limited Wesfarmers Limited Westfield Group Westpac Banking Corporation Woodside Petroleum Limited Woolworths Limited PBLSMU QANSMU QBESMU RIOSMU STOSMU SGBSMU STWSMU SLFSMU SUNSMU TAHSMU TELSMU TLSSMU TENSMU TOLSMU WESSMU WDCSMU WBCSMU WPLSMU WOWSMU Insurance Australia Group Limited IAGSMU Investa Property Group IPGSMU Leighton Holdings Limited LEISMU Lend Lease Corporation Limited LLCSMU Macquarie Airports MAPSMU Macquarie Communications Infrastructure Group MCGSMU Macquarie Infrastructure Group MIGSMU Macquarie Prologis Trust MPRSMU Mirvac Group MGRSMU National Australia Bank Limited NABSMU Pacific Brands Limited PBGSMU Patrick Corporation Limited PRKSMU Perpetual Trustees Australia Limited PPTSMU Promina Group Limited PMNSMU 1

4 At a glance Issuer ASX Self Funding Instalment Code First Payment Maximum Issue Size Per Instalment Series Offer Period Opens Expected Listing Date Annual Interest Dates Maturity Date Investment Term Gearing Level Macquarie Bank Limited (ABN ) No. 1 Martin Place Sydney NSW 2000, Australia Phone: warrants@macquarie.com.au Website: macquarie.com.au/sfi ASX Share code SMU (eg CBASMU) Variable (please refer to Section 2.6). 10 million (20 million for CEUSMU) 17 January January June 2005, 2006, 2007, 2008, June 2010 Up to approximately 5 1/ 2 years Macquarie Self Funding Instalments have an initial gearing level of approximately 50% of the Underlying Share price. Please note that the gearing level will change as the Loan Amount and Underlying Share price changes. Note: The Offer Period will continue past the ASX listing date and may be extended by Macquarie at its discretion. The Offer Period may be closed early by Macquarie upon giving notice to the ASX. The initial issue size for each series of Macquarie Instalments is set out above. Macquarie reserves the right to increase the initial issue size at any time during the General Offer Period or to issue further Macquarie Instalments in each Series without the consent of Holders, subject to making a further application to ASX on the basis that new Macquarie Instalments will form part of the same Series, will be issued on terms identical to those applying to existing Macquarie Instalments of the Series and will trade on the same basis under the same ASX code as existing Macquarie Instalments of that Series. 2

5 Annual Interest Amount Floating Interest Rate Interest Margin Placement Fee Variable and calculated on each Annual Interest Date based on the Current Loan Amount, the current Floating Interest Rate and future dividend expectations. This calculation is made on a forecast reducing Loan Amount over the following 12 months to ensure holders benefit from future dividends. The current 1 year market interest rate ( BBSY Rate ) plus the Interest Margin. Maximum of 2.50% per annum Macquarie may pay a placement fee of up to 2.2% (incl. GST) of the Current Loan Amount to participating organisations of ASX (including Macquarie Equities Limited) and other licensed dealers on Acceptance of an Application. A yearly fee of 0.275% (incl. GST) or in some cases up to 0.55% (incl. GST) of the Current Loan Amount may also be paid to advisers during the term of the Instalments. If you purchase Instalments on the ASX your adviser may also charge you brokerage. The amount of this payment is dependent on your arrangement with your adviser. Loan Amount Adjustment The Loan Amount (Completion Payment) will be adjusted downwards during the term of the Instalments by the amount of dividends paid (subject to any deduction for or on account of any tax) on the Underlying Shares and increased annually by the Annual Interest Amount. The Loan Amount for CEUSMU will also be increased by 0.45 per Instalment on the Final CEU Instalment Payment Date for CEU Shares, to reflect the drawdown of the Loan required to pay the Final CEU Instalment. Categories of Applications Registrar Cash Application Shareholder Application Rollover Application Computershare Investor Services Pty Limited Level 3, 60 Carrington Street, Sydney NSW 1115, Australia Phone: Website: computershare.com.au 3

6 Summary Table of Macquarie Self Funding Instalments Minimum Application Size Initial ASX Instalment Cash Applications Shareholder Completion Code Applications Payment* ALNSMU 2,000 1, AWCSMU 2,000 1, AMPSMU 2,000 1, AMCSMU 2,000 1, AGLSMU 2, ANZSMU 2, ASXSMU 2, AWBSMU 2,000 2, AXASMU 2,000 2, BNBSMU 2, BHPSMU 2, BILSMU 2,000 1, CNPSMU 2,000 1, CBASMU 2, CPASMU 2,000 6, CEUSMU 2,000 6, DUESMU 2,000 4, ENVSMU 2,000 8, FGLSMU 2,000 1, IAGSMU 2,000 1, IPGSMU 2,000 4, LEISMU 2, LLCSMU 2, MAPSMU 2,000 2, MCGSMU 2,000 1, MIGSMU 2,000 2, MPRSMU 2,000 6, MGRSMU 2,000 1, NABSMU 2, PBGSMU 2,000 3, PRKSMU 2,000 1, PPTSMU 2, PMNSMU 2,000 1, PBLSMU 2, QANSMU 2,000 2, QBESMU 2, RIOSMU 2, STOSMU 2,000 1, SGBSMU 2, STWSMU 2, SLFSMU 2, SUNSMU 2, TAHSMU 2, TELSMU 2,000 1, TLSSMU 2,000 1, TENSMU 2,000 2, TOLSMU 2, WESSMU 2, WDCSMU 2, WBCSMU 2, WPLSMU 2, WOWSMU 2, *The Initial Completion Payment per Instalment is valid only on the date of this PDS and is thereafter varied pursuant to the Terms. The current Completion Payment for each Series can be obtained by contacting your stockbroker or adviser or online at macquarie.com.au/sfi ConnectEast Instalments are initally issued over partly paid Shares.

7 Contents PART A Section 1. Investment Overview...6 Section 2. Details of the Issue...13 Section 3. Risks You Should Consider...27 Section 4. Taxation Considerations...31 Section 5. Terms of the Issue...37 Section 6. Description of the Underlying Shares...44 Section 7. About the Issuer...45 Section 8. Loan Agreement...46 Section 9. Glossary of Terms...50 Section 10. How to Apply...57 Instructions for Completing the Cash Application Form...60 Cash Application Form Instructions for Completing the Shareholder Application Form...62 Shareholder Application Form Instructions for Completing the Rollover Application Form...64 Rollover Application Form Section 11. Completion Notice...65 PART B Financial Services Guide (Belike Nominees Pty Limited)

8 SECTION 1 Investment Overview This Section contains a brief summary only of certain material features relating to Macquarie Self Funding Instalments. Detailed information relating to the offer to subscribe for Macquarie Self Funding Instalments can be found in the following sections of this PDS. Potential investors should read this PDS in its entirety before making any investment decision. Macquarie Self Funding Instalments are a long term, tax efficient investment which provide moderately geared exposure to the Underlying Shares. Investing in Macquarie Self Funding Instalments gives you a convenient way to enhance your exposure to capital growth, dividends and franking credits from a selection of 52 different Australian listed Shares. If you have a positive view on an Underlying Share and you want to benefit from any Share price increases with potential taxation benefits, then Macquarie Self Funding Instalments may be the ideal investment for you or your Self Managed Super Fund. What Are Macquarie Self Funding Instalments? Macquarie Self Funding Instalments are a way of borrowing to invest in Shares. You pay a fraction of the Share price upfront, borrow the rest from Macquarie and receive Instalments which are listed on the Australian Stock Exchange (ASX). The Shares are then held in trust for you during the life of the Instalment (subject to the Security Interest). During the investment term any dividends (subject to any deduction for or on account of any tax) paid on the Shares are used to reduce your Loan Amount and then once a year, on the Annual Interest Date, a further advance of the Loan is made to pre-pay your interest expense. No payments are required from you during the investment term unless you do not provide a TFN or ABN (unless an exemption applies). Macquarie will notify such Holders if an amount is required to be withheld. The Completion Payment (the Current Loan Amount) is not compulsory at the end of the Loan but if you make the Completion Payment, you will receive the Underlying Shares. What Are The Key Features And Benefits Of Investing In Macquarie Self Funding Instalments? An investment in Macquarie Self Funding Instalments gives you: a convenient way to enhance your exposure to capital growth, dividends and franking credits in a range of Australian listed Shares; the potential to earn greater returns than an equivalent investment in the Underlying Shares due to the gearing feature of the Instalments; an enhanced ability to create long term wealth with the potential for tax benefits; a simple long term set and forget investment with no payments required from you during the investment term (unless you do not provide a TFN or ABN (if an exemption does not apply); the advantage of the dividends earned being used to reduce your Loan (subject to any deduction for or on account of any tax); yearly interest payments automatically paid on your behalf and added to your Loan; entitlement to any franking credits; an optional Completion Payment; a flexible investment that can be sold on the ASX at any time if required; a straightforward investment that has no credit checks or complicated loan documentation; a convenient tax statement sent to you annually; and an eligible investment for Self Managed Super Funds if made via a Cash Application. for CEUSMU, payment of the Final CEU Instalment payment on behalf of the Holder which is added to your Loan. 6

9 What Are The Risks of Investing in Macquarie Self Funding Instalments? As with any investment decision, you need to consider an investment in Macquarie Self Funding Instalments carefully and in light of your individual circumstances. Potential risks of investing in Macquarie Self Funding Instalments include: a decrease in the Underlying Share price over time decreasing the value of your investment; if the dividends paid on the Underlying Shares do not equal or exceed the Annual Interest Amounts this would increase the outstanding amount of the Loan, decreasing the value of your investment; increases in interest rates giving rise to a higher cost of funding in future years; a change to the corporate structure of the Underlying Share (eg due to a takeover, or scheme of arrangement affecting the Listed Entity) which may affect the value of your investment; where you do not provide a TFN or ABN (or evidence of appropriate exemption) the requirement to make a further payment to Macquarie which may be recovered by lapsing some or all of your Instalments or by receiving a reimbursement directly from you; and for superannuation entities, if you do not provide a TFN or ABN (unless an exemption applies), then there is a risk that where a debt becomes due to Macquarie as a result of a dividend being paid, you may be deemed to be borrowing in contravention of Section 67 of the Superannuation Industry (Supervision) Act. Superannuation entities should not consider investing in Macquarie Self Funding Instalments unless they intend to and are able to provide to Macquarie a TFN or ABN. Refer to Sections 2.8 and 2.25 for more details. You should refer to Section 3 Risks You Should Consider on page 27 of this PDS for more detailed information about the risks of investing in Macquarie Self Funding Instalments. Macquarie or the Security Trustee not performing their duties or obligations, including obligation of Macquarie to make the Final CEU Instalment payment of 0.45 on behalf of Holders of CEUSMU in November 2005; 7

10 How Do Macquarie Self Funding Instalments Work? Timing What happens on a Cash Application Example of Cash Application When you first buy Self Funding Instalments During the life of the Instalment On the Maturity Date (30 June 2010) You pay a fraction of the Share price up front together with Borrowing Fees. You borrow the Current Loan Amount for up to 5 1/ 2 years (subject to adjustments). You pay interest from the Loan Proceeds. The Shares are bought and held in trust for you. For CEUSMU, Macquarie will pay the Final CEU Instalment of 0.45 per share on the Holder s behalf in November This amount will be added to the Loan Amount at the time. All dividends paid on the Underlying Shares will be used to reduce the Loan Amount.* Any franking credits attached to the dividends may potentially reduce your tax liability. Once a year on the Annual Interest Date, the Interest Amount will be added to the Loan Amount. No additional payments are required to be made during the life of the investment (subject to TFN, ABN or evidence of appropriate exemption being provided). You can choose to: Roll over your investment into a new series of Macquarie Self Funding Instalments, if available; Make the Completion Payment and receive the Underlying Shares; Exercise the Holder s Put Option and receive a payment equal to the amount (if any) by which the Market Value of the Underlying Shares exceeds the Current Loan Amount; or Do nothing, and receive the greater of the net sale proceeds of the Underlying Shares less fees, costs and the Completion Payment, or the Assessed Value Payment, if any. Jane is a long-term investor. She has 10,000 to invest in shares, but wants to accelerate her wealth creation and make her investment more tax-efficient. Jane s adviser suggested that instead of buying ConnectEast Shares she buy Macquarie Self Funding Instalments over ConnectEast Shares. ConnectEast Shares are currently trading at Jane pays 0.56 for each Self Funding Instalment which includes 0.07 for Borrowing Fees. The Completion Payment (Loan Amount) is From this Loan, an Interest Amount of 0.01 is paid to Macquarie. Jane buys 17,857 CEUSMU Self Funding Instalments. All dividends paid on Jane s ConnectEast Self Funding Instalments will be used to reduce her Loan Amount.* Jane will also receive the benefit of all franking credits relating to those dividends. On each Annual Interest Date, the Loan Amount will automatically be increased by the Interest Amount. In November 2005 the Loan Amount for CEUSMU is increased by 0.45 plus interest to fund the Final CEU Instalment due on CEU Share. Jane decides to make the Completion Payment and receive ConnectEast Shares. 8 Hypothetical example of ConnectEast share prices only. Macquarie makes no representations as to future prices. * Subject to any deduction for or on account of any tax. You should refer to Section 2.1 of this PDS for further details.

11 Who Do They Suit? Macquarie Self Funding Instalments may suit you if you: are looking to spend less upfront and get greater exposure to Share price increases, dividends and franking credits which can help to accelerate your wealth and reach your investment objectives sooner; want to make a larger investment into shares or financial products than your available capital would currently allow; are looking to benefit from increased franking credit flow; have a Self Managed Super Fund and are looking to enhance capital growth, increase dividend yields and earn excess franking credits which can help reduce earnings and contributions tax paid by the fund; Who Can Apply? Macquarie Self Funding Instalments can be purchased under this PDS using the Cash Application Form, or by converting your existing Shares to Instalments using the Shareholder Application Form (not available for SMSFs). Holders of other Series of Macquarie Instalments may roll their holdings into this Series by using the Rollover Application Form (this may suit Self Managed Super Fund investors who are unable to make Shareholder Applications). Application Forms and Instructions are found in Section 10 of this PDS. want to unlock your existing holdings of shares or financial products and diversify your investment portfolio and receive cashback to purchase other shares or instalments; are looking for a lower risk alternative than other forms of gearing into shares or financial products without the risk of margin calls. General Cash Shareholder Rollover Applicant Applicant Applicant Who Can Apply Australian Residents Current holders of Shares in Listed Entities (excluding Self Managed Super Funds) Current holders of Prior Series Instalments Minimum Application Amount 2,000 Variable depending on Series (refer Application Form) No minimum Amount payable on Application First Payment Nil Variable depending on Series Amount received on Application Nil Cashback amount approximately 40% to 60% of the Underlying Share price Cashback amount may be available for some Series Application Form Cash Application Form Shareholder Application Form Rollover Application Form Offer Period Opens 17 January 2005 Opens 17 January 2005 Opens 17 January

12 How Do I Buy And Sell Macquarie Self Funding Instalments? Before you invest in Macquarie Self Funding Instalments it is important that you have read and understood the terms set out in this PDS. You should also read the ASX booklet Understanding Trading and Investment Warrants which is available free of charge from the ASX or from Macquarie. If you have any questions, you should contact your stockbroker, accountant or other professional adviser. To buy Macquarie Self Funding Instalments you need to complete the relevant Application Form in this PDS. You should read Section 10 How to Apply for full details of how you buy Macquarie Self Funding Instalments. You should also refer to Sections 2.2 and 2.3 of this PDS for further details. Macquarie Self Funding Instalments can be sold on the ASX at any time before the Maturity Date through any ASX accredited derivatives full service or discount adviser or stockbroker using the relevant ASX Instalment code. How Much Do Macquarie Self Funding Instalments Cost? The First Payment The price or First Payment of a Macquarie Self Funding Instalment is not fixed and will vary depending on a number of factors including: the price of the Underlying Share; the volatility of that Share price; the future expected dividends; the time remaining to Maturity; and prevailing interest rates. The effect of those factors on the price of a Self Funding Instalment is demonstrated in the following table: Variable Change in Effect on Variable Instalment Price Underlying Share Price Term to Annual Interest Date Interest Rate Share Price Volatility ss tt ss ss You should refer to Section 2.6 of this PDS for further details. The Holder s Put Option When you invest in a Macquarie Self Funding Instalment you are also purchasing a Holder s Put Option. The Holder s Put Option allows you to sell the Underlying Shares to Macquarie at Maturity for the greater of the Market Value and the Current Loan Amount. The presence of the Holder s Put Option prevents any need for margin calls during the term of your investment. You should refer to Sections 2.13 and 2.14 of this PDS for more information. CEUSMU Completion Payment - Increased by Final CEU Instalment The issue price of CEU Shares is 1.00 payable in two instalments. Holders of partly paid CEU Shares are required to pay the Final CEU Instalment of 0.45 in November For Holders of CEUSMU, Macquarie will make this payment on their behalf and the Completion Payment will be increased by such amount at this time. 10

13 The Completion Payment Varied By Dividends And Interest The Completion Payment (ie the Current Loan Amount) on your Instalment is not compulsory. You can choose to make the current Completion Payment on your Macquarie Self Funding Instalments at any time until Maturity. Please note the following in relation to your Completion Payment: during the term of your investment in Macquarie Self Funding Instalments your Completion Payment will vary your Completion Payment will be reduced by the amount of dividends paid on the Underlying Shares (subject to any deduction for or on account of any tax) and increased by the Annual Interest Amounts the reduction in your Completion Payment will take effect on the same day as the Shares go ex-dividend and you may still be entitled to any franking credits on the dividend the Annual Interest Amount is calculated once a year. The calculation takes into account the expected reduction in the loan during the year based on forecast dividend amounts. This ensures that holders receive the benefit of that expected reduction in the loan. where you do not provide a TFN or ABN (unless an exemption applies) an additional amount may be required to be paid by you so that your Loan Amount is the same as other Holders. Macquarie has the right to recover this amount by lapsing some or all of your Instalments or by receiving a reimbursement directly from you. Macquarie will notify such Holders as soon as reasonably practicable after the dividend is declared if an amount is required and the date by which it is to be paid. You should refer to Section 2.7 of this PDS for a detailed example of how your Completion Payment varies during the term of your investment in Macquarie Self Funding Instalments. Commission, Fees and Expenses When you buy a Macquarie Self Funding Instalment through an Application Form attached to this PDS there are no additional charges payable by you during the investment term, however, an additional amount may be payable by you if you do not provide a TFN or ABN (unless an exemption applies) as outlined above. Fees and costs may also be incurred if you do nothing at Maturity or do not deliver a valid Completion Notice. See below for further information. Macquarie may also pay your adviser a placement fee on acceptance of an Application and during the term of the Instalments. Payment of this fee depends on, among other things, your arrangement with your adviser. What Happens At Maturity? When the Completion Payment is due in June 2010 there are several options available to you. You can either: 1. make your Completion Payment (together with any Transfer Tax) and take ownership of the Underlying Shares; 2. sell your Macquarie Self Funding Instalments on the ASX prior to Maturity; 3. exercise your Holder s Put Option and receive a payment equal to the difference between the Market Value of the Underlying Shares and the final Completion Payment (where this is greater than zero); or 4. roll your Instalment into the next available series of Macquarie Self Funding Instalments, if any; or 5. do nothing. 11

14 If you do nothing at Maturity or do not deliver a valid Completion Notice, the Underlying Shares will be sold and you will receive the greater of: (i) the net proceeds of sale of the Underlying Shares less all fees and costs incurred in connection with such sale and the final Completion Payment; or (ii) the Assessed Value Payment. If the sale proceeds are insufficient to cover the Completion Payment, Macquarie has no recourse against you to recover the shortfall. Remember you are not obliged to make the Completion Payment. You can choose to make the Completion Payment and receive the Underlying Shares at any time prior to Maturity. You should refer to Sections 2.5, 2.9 and 2.11 of this PDS for further details. What Are The Tax Implications of Investing in Macquarie Self Funding Instalments? Macquarie Self Funding Instalments give you the potential for tax benefits, depending on your individual circumstances. Tax benefits might include: for individuals, a deduction for the pre-payment of up to 12 months interest in advance; availability of franking credits which may be used to offset other tax; and the ability to convert your existing Shares into Macquarie Self Funding Instalments without triggering a capital gains tax liability. You should refer to Section 4 Taxation Considerations on page 31 of this PDS for more detailed information in relation to the tax implications of investing in Macquarie Self Funding Instalments. Are There Any Labour Standards Or Social, Environmental Or Ethical Considerations I Should Be Aware Of? Macquarie will not take into account labour standards or social, environmental or ethical considerations for the purpose of selecting, retaining or realising the investment. An investment in Macquarie Self Funding Instalments requires the selection by Investors of specific Underlying Shares. Investors should make their own inquires as to whether labour standards or social, environmental or ethical considerations are taken into account by the issuer of the Underlying Shares by referring to the website of the relevant issuer or information disclosed by the relevant issuer of the Underlying Shares pursuant to its continuous disclosure obligations. Enquiries And Complaints Macquarie has procedures in place to properly consider and deal with any enquiries or complaints from investors in Macquarie Self Funding Instalments. Macquarie will acknowledge receipt of a written complaint within 5 Business Days and provide a substantive response within 21 Business Days after receipt of the complaint. Where a complaint remains unresolved (eg where a remedy is not offered or not instigated or where a remedy offered is not accepted by the complainant), the complaint may fall within the terms of reference of the external complaints scheme, Financial Industry Complaints Scheme ( FICS ). To contact FICS, Holders should telephone or write to PO Box 579 Collins Street West, Melbourne VIC Is There A Cooling Off Period? No. There is no cooling off period when you buy or sell Macquarie Self Funding Instalments. 12

15 SECTION 2 Details of the Issue This Section is a summary of the important features of Macquarie Self Funding Instalments. The contractual terms are contained in the Trust Deed (a summary of which is contained in Section 5) and the Loan Agreement (a sample of which is contained in Section 8). Investors should read and understand the contractual terms before investing in Macquarie Self Funding Instalments. Investors should obtain professional advice which takes into account their particular investment needs, objectives and financial circumstances. 2.1 How do Macquarie Self Funding Instalments work? Macquarie Self Funding Instalments are an investment product offered by Macquarie to enable investors to purchase Shares by paying the purchase price in instalments. During the term of the Self Funding Instalments, any dividends paid on the Underlying Share (subject to any deduction for or on account of any tax) are used to reduce the Loan Amount and then once a year (on the Annual Interest Date) a further drawdown on the Loan will automatically occur to prepay interest (the Annual Interest Amount) for the following year. The Annual Interest Amount is calculated based on the Loan Amount outstanding (after drawdown of the Annual Interest Amount), forecast future dividends and the current market interest rate (BBSY Rate) plus the Interest Margin. If the dividends paid are greater than the Annual Interest Amounts then the Loan Amount will reduce over time meaning there is a smaller amount to pay to receive the unencumbered Shares. If dividends are less than the Annual Interest Amounts then the Loan Amount will increase over time meaning there is a greater amount to pay to receive the unencumbered Underlying Shares. Remember, at maturity you can always just walk away and not pay any more. Dividends Reduce the Loan Amount When dividends are paid the total amount of the cash dividend (subject to any deduction for or on account of any tax) will be applied to reduce the Loan Amount. This reduction will be effective from the ex-dividend date of the Underlying Share. Where a dividend is paid the Security Trustee is required to withhold a portion of the dividend for Holders that do not provide a TFN or ABN (unless an exemption applies). Macquarie will reduce such Holder s Loan Amount by an amount equivalent to the withheld portion of the dividend in order to ensure that the Completion Payment remains equal for all Holders irrespective of whether or not they provide their TFN or ABN. Macquarie has the right to recover this amount by lapsing some or all of a Holder s Instalments or by receiving a reimbursement directly from the Holder. Macquarie will notify such Holders of the amount and the date payment is required (being 5 Business Days after the ex-dividend date) as soon as reasonably practicable after such dividend is declared. Where Macquarie lapses a Holder s Instalment it does so by exercising a power of sale under any Security Interest and deducting the Secured Monies from the proceeds. Any remaining balance will be paid to the Holder. All Holders will still retain the benefit of any franking credits attached to the dividends (assuming that they satisfy the qualification rules discussed in section below) and will receive a statement once a year detailing the amount of dividends and franking credits relating to each Macquarie Self Funding Instalment, together with the Annual Interest Amount from the previous financial year. 2.2 Acceptance of Applications Acceptance of an Application occurs at the earlier of: a) Macquarie and the Applicant (by its attorney) executing the Loan Agreement under which Macquarie agrees to lend the amount of the Loan specified for the relevant Series of Macquarie Self Funding Instalments to the Applicant and Macquarie instructing the Registrar to register the issue of the Macquarie Self Funding Instalments to the Applicant; or b) Macquarie communicating to the Applicant (or their agent) its agreement to procure the delivery to the Security Trustee of the Underlying Share the subject of Macquarie s acceptance, such communication being deemed to have occurred upon Macquarie advising the Applicant (or their agent) of their Application Number whether by mail or otherwise. If Macquarie gives such advice by mail it will be taken to have been given on posting of the advice. Notwithstanding 2.2 (b) above, Macquarie may reject any Application in its absolute discretion including where a TFN or ABN is not quoted on the Application Form. Macquarie may also accept Applications for less than the specified minimum subscription in its absolute discretion. 13

16 SECTION 2 Details of the Issue continued 2.3 What are the consequences of making a successful Application? Each successful Applicant: Must complete and lodge the Application Form and pay cash and/or deliver Shares or other securities to meet the First Payment. Where Applications are made during the General Offer Period the First Payment will vary depending on the price of the relevant underlying Shares and the day on which you apply; Will receive a limited recourse loan from Macquarie. (Please note that the Equalisation Amount is not subject to the limited recourse provisions). The Loan Proceeds will be applied in the manner discussed in Section 2.4. In some cases, a portion of the Loan Proceeds will be paid in cash to the Applicant, and Applicants have the option of applying those funds to the purchase of additional Macquarie Self Funding Instalments; Must, for Shareholder Applications, transfer legal title in their Shares to the Security Trustee, to be held by the Security Trustee as nominee for the Applicant; Will retain the full Beneficial Interest in the Underlying Shares which will be held by the Security Trustee on behalf of the Applicant, subject to any Security Interest; May at any time repay the Current Loan Amount by making the Completion Payment and obtain the full legal title to the Underlying Shares. Repayment of the Loan is optional. An obligation to make the Completion Payment arises only after a Completion Notice is given. The Loan Amount will be reduced by dividends and increased by the Annual Interest Amount (and in the case of CEUSMU also by the Final CEU Instalment) as outlined in Section 2.1 above; May sell the Underlying Share to Macquarie by exercising the Holder s Put Option at the greater of the prevailing Market Value and the amount of the Completion Payment on the Maturity Date; Will, by signing the power of attorney contained in the Application Form, appoint certain directors and employees of Macquarie as the Applicant s attorney to sign the Loan Agreement (or any subsequent Loan Agreement relating to an application for a future series of Macquarie Self Funding Instalments) on behalf of the Applicant (and give those persons power to appoint a sub-attorney) including the Consumer Credit Code declaration. As soon as practicable after an Applicant has been registered as the Holder of Macquarie Self Funding Instalments, the Registrar will send a Holding Statement and confirmation to the Applicant confirming: the number of Macquarie Self Funding Instalments issued to the Applicant; the date upon which the Loan Agreement was entered into; the allocation of the Loan Amount, including: the amounts and dates of interest paid by the Applicant in respect of the Loan; and the amount of any cash payment to be made to the Applicant; the date and amount of Borrowing Fees paid by the Applicant. Investors can opt to sell their Macquarie Self Funding Instalments on the ASX. Macquarie will support a secondary market by offering to buy and sell Macquarie Self Funding Instalments on the ASX. 2.4 What is the Loan used for? Macquarie is offering to make a Loan to successful Applicants and to Holders who acquire Macquarie Self Funding Instalments on the ASX, on a limited recourse basis, which may be secured by a mortgage over the Underlying Shares (which will be held by the Security Trustee as nominee for the Holder). For the avoidance of doubt, the Equalisation Amount is not subject to the limited recourse provisions. The amount of the Loan will vary throughout the term of the Macquarie Self Funding Instalments as set out in Section 2.7. The Current Loan Amount may be obtained by contacting your stockbroker, financial adviser or by asking Macquarie on or at macquarie.com.au/sfi The Loan will be applied by Macquarie as follows: Loans to Cash Applicants will be applied to the purchase of the Underlying Share and the prepayment of the Interest Amount on the Loan; Loans to Shareholder Applicants will be applied to the prepayment of the Interest Amount and Borrowing Fees with the balance of the Loan being paid in cash to the Applicant to be used for investment purposes or if directed to purchase additional Macquarie Self Funding Instalments; 14

17 Loans to Rollover Applicants who are holders of Prior Series Instalments will be applied to payment of the Final Instalment on the Prior Series Instalments and payment of the Interest Amount and Borrowing Fees for the new Macquarie Self Funding Instalments. Any remaining balance will be paid in cash to the Applicant to be used for business or investment purposes or if directed to purchase additional Macquarie Self Funding Instalments in the same Series. Any shortfall must be paid by the Applicant. Loans to Holders who acquire Macquarie Self Funding Instalments on the ASX will be applied to satisfy part of the previous Holder s Loan Amount and to prepay interest in advance until the next Annual Interest Date. Loans to Holders of CEUSMU will also be applied to making the Final CEU Instalment of 0.45 and interest on that amount in November How do I discharge the Loan? The Loan Amount will be discharged by: a) a Holder repaying the existing Current Loan Amount (together with any Transfer Tax) and having full legal ownership of the Underlying Share transferred to them. Upon transfer of the Underlying Share to Holders (such transfer to occur within 20 Business Days from the date of delivery of the valid Completion Notice), the Macquarie Self Funding Instalments will be cancelled. Please note there is no refund of interest if the Completion Payment is made early by the Holder for any reason other than the occurrence of an Extraordinary Event. Please also note Holders of CEUSMU that make the Completion Payment prior to the requirement to pay the Final CEU Instalment will only receive partly paid shares and will have the obligation to pay the Final CEU Instalment. b) exercising the Holder s Put Option on the Maturity Date; c) Macquarie enforcing any Security Interest over the relevant Underlying Share; or d) selling the Macquarie Self Funding Instalments on the ASX on or prior to the Maturity Date. 2.6 Pricing of Macquarie Self Funding Instalments and how the Loan is allocated Before applying for Macquarie Self Funding Instalments offered under this PDS, potential investors should understand the costs of an investment in Macquarie Self Funding Instalments. Investors should consult their stockbroker or financial adviser if they are uncertain as to the level of costs. Cash Applications Setting the First Payment Variable during General Offer Period This PDS does not specify the amount of the First Payment for each Macquarie Self Funding Instalment offered to Cash Applicants. This is because the amount of the First Payment is determined by reference to a number of variable factors as at the time of Application, including the market price of the relevant Shares, the expected volatility of that price and the time to expiry of the Macquarie Self Funding Instalments. The amount of the First Payment will vary accordingly from time to time, including within any day, during the General Offer Period. Applicants applying via their broker or approved financial planner can determine the First Payment amount and obtain an Application Number by asking the adviser to telephone Macquarie on Alternatively, potential Cash Applicants can obtain indications as to the current amount of the First Payment and the applicable Interest Rate at any time during the General Offer Period by telephoning Macquarie on Applications not made through a broker or made through a non-approved financial planner cannot proceed until the First Payment is received in clear funds by Macquarie. In these cases, the First Payment and the Application Number will be issued at that time. The minimum subscription amount for Cash Applications is 2,000. During the General Offer Period, Macquarie will hold Application monies in a non-interest bearing trust account for the Applicant until all conditions relating to the issue of the Macquarie Self Funding Instalments have been fulfilled and the Security Trustee (or its nominee) becomes the registered holder of the relevant Underlying Shares. The First Payment is not refundable once the Application Number has been issued. 15