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MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – CLIENT PRESENTATION.

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Presentation on theme: "MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – CLIENT PRESENTATION."— Presentation transcript:

1 MACQUARIE SPECIALIST INVESTMENTS MACQUARIE FLEXI 100 TRUST – CLIENT PRESENTATION

2 Presentation: This presentation is prepared by Macquarie Financial Products Management Limited ACN AFSL (MFPML), the issuer of units in the Macquarie Flexi 100 Trust ARSN (Macquarie Flexi 100, the Fund). An invitation by MFPML to investors to apply for units in Macquarie Flexi 100 is made in the Product Disclosure Statement dated 14 September 2011 and the Supplementary Product Disclosure Statement dated 8 May 2012, together with the Website Offer Document dated 28 February 2013 (together, the Offer Document). The Offer Document is available at macquarie.com.au/flexi or by phoning from MFPML. In deciding whether to acquire, or continue to hold, an interest in Macquarie Flexi 100, investors should obtain the Offer Document and consider its contents. The information in this presentation only applies to the June 2013 Offer of the Macquarie Flexi 100 Trust and is current as at 8 March Confidential: The information in this presentation is confidential. It must not be reproduced, distributed or disclosed to any other person. The information may be based on assumptions or market conditions and may change without notice. Loans: The loans are offered by Macquarie Specialist Investments Lending Limited (MSIL) (unless otherwise determined by MFPML to be another Macquarie Group company, in which case it will be that Macquarie Group company) and are subject to approval. General advice warning: The information contained in this presentation is general information only. It has been prepared without taking into account any potential investor’s financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. A person should consider the Offer Document in deciding whether to acquire, or continue to hold, an investment in the Macquarie Flexi 100 Trust. Potential investors should seek independent professional advice before making any investment decisions. Past performance: Past performance is not a reliable indicator of future performance. Examples: Any examples including any assumptions or figures, contained in this presentation are purely hypothetical and are not actual or potential returns, estimates, projections or forecasts for investments in the Macquarie Flexi 100 Trust. Any examples have only been included for illustrative purposes. They have been prepared without taking into account any potential investor’s personal objectives, financial situation or needs. Examples are based on assumptions which may have a material effect on returns. The actual performance of investments will depend on future economic conditions, investment management and future taxation. No advice or verification: This presentation does not constitute personal financial or taxation advice. Any taxation discussion in this presentation is based on current laws, anticipated legislation and Commonwealth announcements at the time of writing. The application of taxation laws to each investor depends on that investor’s individual circumstances. An investor should seek professional financial and taxation advice before deciding to invest. The material in this presentation has been prepared in good faith with all reasonable care. However, certain parts of this material are obtained or are based upon information obtained from third parties which may not have been checked or verified. Subsequent changes in circumstances may also occur at any time and may impact on the accuracy of the information. No responsibility: Neither MFPML, Macquarie Bank Limited (MBL), MSIL nor any other Macquarie group company, or any officers, employees or agents takes any responsibility for the information contained in this presentation nor gives any representation or warranty as to the accuracy or completeness of the information nor does any of them accept any liability for loss or damage arising in anyway from the use of information in this presentation. Investments in the Macquarie Flexi 100 Trust are not deposits with or other liabilities of MBL, MSIL or any other member of the Macquarie group of companies and are subject to investment risk, including possible delays in repayment and loss of income or capital invested. None of MBL, MSIL or any other Macquarie group company guarantees any particular rate of return on, or the performance of the Macquarie Flexi 100 Trust, nor do any of them guarantee the repayment of capital from the Macquarie Flexi 100 Trust. 2 Important information

3 Agenda  Macquarie Flexi 100 – Key features  June 2013 offer  Key risks  Worked examples  Appendices Macquarie Flexi 100 Trust (Macquarie Flexi 100) 3

4 Macquarie Flexi 100 – Key features Macquarie Flexi 100 A diverse menu of investment opportunities 100% leveraged exposure at competitive interest rates Quarterly liquidity via a ‘Walk-Away’ feature 100% continuous capital protection An eligible investment for SMSFs 1 Fixed distributions to assist with interest payments or 5.5 year investment terms Point to point exposure. 4 Note: Key risks of Macquarie Flexi 100 are discussed later in the presentation. 1. Excluding Interest Loan. 2. Fixed distributions will be less than interest payments.

5 Flexi 100 June 2013 offer - Investment menu 5 Investment OpportunityReference Asset Australian Equity Focus A fixed basket of 20 equally-weighted shares with large market capitalisation listed on the ASX, also available with the benefit of No Hurdle. Best-of Basket This strategy delivers upside exposure to the best performing of two baskets: an ASX Tilt basket and a PIMCO Tilt basket. Australian Equity S&P/ASX 200 Index, 200 leading companies by market capitalisation listed on the ASX, also available with the benefit of No Hurdle. Asian Equity An equally weighted basket of indices and index tracking funds with exposure to China, Hong Kong, Taiwan, Korea and Singapore, available with the benefit of No Hurdle. US Equity S&P 500 Index, 500 leading companies by market capitalisation listed on either the New York Stock Exchange or NASDAQ.

6 Investment Performance Cap Hurdle Gain Currency 2 Participation Rate Breakeven 3 Distribution Rate Indicative 1 Type Australian Equity Focus (No Hurdle) 30%Share 4 100%AUD115%4.2% pa Years 1 to 2: 4.0% pa Year 3: 2.0% Total: 10.0% Australian Equity Focus 65%Share 4 110%AUD115%6.8% pa Best-of BasketUncappedTerm110%AUD130%6.3% pa Investment opportunities: 3.5 Year Fixed Distribution Classes 6 1. Actual performance caps will be determined on or before the Swap Start Date. 2. The Reference Asset Gain will be determined in this currency. 3. This is the average annual increase required during the term to break-even if the investment is held to maturity, assuming the Limited Recourse Investment Loan interest rate throughout the term is 7.25% pa, and a Loan Establishment Fee of 2%, ignoring the effects of tax, currency movements and the time value of money. 4. The Share Performance Cap applies to the individual performance of each constituent share comprising the Reference Asset and not the performance of the Reference Asset itself.

7 Investment Performance Cap Hurdle Gain Currency 2 Participation Rate Breakeven 3 Distribution Rate Indicative 1 Type Australian Equity (No Hurdle) 50%Term100%AUD100%4.7% pa Years 1 to 5: 2.5% pa At Maturity: 1.25% Total: 13.75% Australian EquityUncappedTerm113.75%AUD130%5.7% pa Asian Equity (No Hurdle) 80%Term100%USD100%4.7% pa US EquityUncappedTerm113.75%USD100%6.6% pa 1. Actual performance caps will be determined on or before the Swap Start Date. 2. The Reference Asset Gain will be determined in this currency, and if in USD, converted to AUD at the time of payment. 3. This is the average annual increase required during the term to break-even if the investment is held to maturity, assuming the Limited Recourse Investment Loan interest rate throughout the term is 7.25% pa, and a Loan Establishment Fee of 2%, ignoring the effects of tax, currency movements and the time value of money 7 Investment opportunities: 5.5 Year Fixed Distribution Classes

8 Cashflow for the 3.5 Year Fixed Distribution Class Assumes an investor invests $100,000 in the 3.5 Year Fixed Distribution Australian Equity Focus (No Hurdle) Class and holds the investment to Maturity, receiving either (i) the maximum amount of gain at Maturity or (ii) no gain at Maturity Upfront End of year 1 End of year 2 End of year 3(i) Maturity(ii) Maturity Loan Establishment Fee (rebateable) ($2,000)----- Annual Interest Payment ($7,250) ($3,625)-- Fixed Distributions-$4,000 $2,000-- Potential gain at Maturity ----$34, Investor’s net cashflow (pre tax) ($9,250)($3,250) ($1,625)$34, Investor’s total net cashflow (pre tax) $17,125($17,375) This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi Maximum potential gain at Maturity = $100,000 * (Indicative Share Performance Cap of 30% – Hurdle of 0%) x Participation Rate of 115%. Alternatively if there is no gain at Maturity the investor’s total net cashflow will be ($17,375). 8

9 Cashflow for the 5.5 Year Fixed Distribution Class Assumes an investor invests $100,000 in the 5.5 Year Fixed Distribution Australian Equity (No Hurdle) Class and holds the investment to Maturity, receiving either (i) the maximum amount of gain at Maturity or (ii) no gain at Maturity Upfront End of year 1 End of year 2 End of year 3 End of year 4 End of Year 5 (i) Maturity (ii) Maturity Loan Establishment Fee (rebateable) ($2,000) Annual Interest Payment ($7,250) ($3,625)-- Fixed Distributions-$2,500 $1,250 Potential gain at Maturity $50, Investor’s net cashflow (pre tax) ($9,250)($4,750) ($1,125)$51,250 1 $1,250 Investor’s total net cashflow (pre tax) $21,875($28,125) This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi Maximum potential gain at Maturity = $100,000 * (Indicative Term Performance Cap of 50% – Hurdle of 0%). Alternatively if there is no gain at Maturity the investor’s total net cashflow will be ($28,125). 9

10 Interest rates and fees Limited Recourse Investment Loan: Interest Loan: Current indicative interest rates for the first year of the investment: 7.25% pa 10.25% pa The Limited Recourse Investment Loan interest rate may be reset annually, but will not increase throughout the Term. 10 Fees  Loan Establishment Fee – 2% of the Investment Loan, payable upfront –This is rebateable if no Initial Advice Fee is agreed between the adviser and investor, meaning that no/reduced Loan Establishment Fee is payable by the investor  Interest rate includes 0.55% pa (including GST) for an Ongoing advice fee –This is rebatable if no Ongoing Advice Fee is agreed between the adviser and investor, meaning 0.50% pa discount on the interest rate paid by the investor  There is a Responsible Entity Fee of % pa (inclusive of GST net of any reduced input tax credit), which is paid out of the assets of the Fund on each anniversary of the Unit Issue Date during the term and reflected in the Unit Price. This fee is fully funded by excess payments received by the Fund under the Collateral Agreement.

11 Tax treatment  Product Ruling – the Australian Taxation Office has issued Product Ruling PR 2011/19 for the Limited Recourse Investment Loan. The Product Ruling applies to the Investment Opportunities and features outlined in the PDS dated 14 September 2011 and the SPDS dated 8 May  Distributions – should be ordinary income.  Limited Recourse Investment Loan – subject to an investor’s individual circumstances, interest on the Investment Loan should be deductible up to the Reserve Bank of Australia’s indicator variable rate for standard housing loans plus 100 basis points (as at the month of February 2013, this was 7.45% pa).  At Maturity – any gain on redemption should be a distribution of ordinary income. The information contained in this summary is of a general nature only. It does not constitute legal or tax advice and does not seek to address all of the tax issues that may be relevant to a particular investor. The application of taxation laws to each investor depends on that investor’s individual circumstances. Accordingly, investors should seek independent professional advice on taxation implications before making any investment decisions. Furthermore, the summary is limited in scope to the key tax implications for Investors who are residents of Australia for tax purposes, who hold their Units in Macquarie Flexi 100 and any put options on capital account and whose dealings are all at arm’s length Product Ruling PR 2011/19 only rules on the application of tax laws and in no way expresses or implies a guarantee or endorsement of the commercial viability of the Macquarie Flexi 100 Trust, of the soundness or otherwise of the Macquarie Flexi 100 Trust as an investment, or of the reasonableness or commerciality of any fees charged in connection with the Macquarie Flexi 100 Trust.

12 Key information Minimum Investment Offer document Applications Close Unit Issue Date Maturity Dates $25,000; $5,000 per class, minimum increments of $1,000 PDS dated 14 September 2011, SPDS dated 8 May 2012, together with the Website Offer Document dated 28 February June June Year Fixed Distribution Classes: 19 December Year Fixed Distribution Class: 17 December MFPML reserves the right to vary the dates and times of the proposed offer, without prior notice.

13 Key risks  Poor performance: The risk that an investment in the Fund will be adversely affected if the Reference Asset performs poorly. The current global economic downturn and high levels of volatility in equity and other markets increase the risk that the relevant Reference Asset may not perform well enough for you to make a gain on an investment in the Fund.  Borrowing to invest: There is a material risk that the total value of the returns at Maturity (if any) and Distributions paid throughout the Term will be less than the total interest payments and other costs. If this occurs you will have lost money at Maturity. In addition, you should take into account relevant taxation considerations and the time value of money.  Counterparty risk: The risk that the Counterparties to the agreements through which the Fund gains its exposure to the Reference Assets (the Swap Counterparty and Collateral Counterparty) do not meet their obligations.  Early termination risk: Your exposure to the Reference Asset may be terminated prior to the Maturity of the Units in a number of circumstances outlined in Section 4.1 of Part II of the PDS such as a material change in the Swap Counterparty’s cost of hedging or ability to hedge its exposure, a change in the liquidity of the Reference Asset or a change in law (amongst other factors). In such circumstances, the Swap Counterparty may seek to terminate the Swap Agreement early. If this occurs you will be required to repay your Investment Loan, and any Interest Loan (together with any break costs), your Units will be redeemed and you will no longer have exposure to the Reference Asset or entitlement to any further Distributions. You will not receive a refund of any prepaid interest.  Foreign exchange risk: For the Asian Equity and US Equity classes, the risk that movements in the AUD:USD foreign exchange rate will adversely affect the return from your Units throughout the Term.  Interest deductibility: The ATO may adopt a position which could lead to the denial of part or all of your tax deductions for some or all interest expenses referable to your Investment. Please note that Macquarie Flexi 100 does not invest directly in the underlying reference asset, but obtains exposure through a Swap Agreement and Collateral Agreement. An investor's investment may be subject to additional risks. Please refer to the Risks section of the PDS. 13

14 Assumptions  Interest rate is 7.25% pa each year  Investor borrows $100,000 to invest  Fixed Hurdle of 100%  Fixed Term Performance Cap of 50% 1  Fixed Participation Rate of 100%  S&P/ASX 200 Initial Investment Level of 5,000  S&P/ASX 200 Hurdle level of 5,000 (100% x 5,000)  S&P/ASX 200 Closing Level of 7,600  Final Investment Level is the lesser of: –S&P/ASX 200 Closing Level of 7,600 –S&P/ASX 200 capped level of 7,500 (5, ,000 x 50%)  Therefore the Final Investment Level is equal to the capped level of 7,500 Potential returns Total Distribution payments received over the term $13,750$100,000 x (2.5% x %) Reference Asset Gain received at Maturity $50,000 Total received over the term of the investment $63,750 Total distributions paid over the term and Reference Asset Gain paid at Maturity Total costs over the term (Loan Establishment Fee plus annual interest payments) ($41,875)$100,000 x (7.25% x %) Net Return over the term of the investment $21,875 Total received over the term of the investment less total costs This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi The actual Term Performance Cap will be determined on or before the Swap Start Date, published at macquarie.com.au/flexi and could be lower than the indicative terms depending on market conditions at the time, in particular the level and volatility of the Reference Asset. An investor invests in the Fixed Distribution 5.5 Years Australian Equity (No Hurdle) Class and holds the investment to Maturity. Worked example 1 - Market increase Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class 14

15 This graph illustrates the Fixed Distributions Received, Fees and Costs and Reference Asset Gain at Maturity that an investor would receive and incur based on the assumptions in Example This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi 100. S&P/ASX 200 Index Level Worked example 1 - Market increase Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class 15

16 Assumptions  Interest rate is 7.25% pa each year  Investor borrows $100,000 to invest  Fixed Hurdle of 100%  Fixed Term Performance Cap is 50% 1  Fixed Participation Rate of 100%  S&P/ASX 200 Initial Investment Level of 5,000  S&P/ASX 200 Hurdle level of 5,000 (100% x 5,000)  S&P/ASX 200 Closing Level of 4,900  Therefore the Final Investment Level is 4,900 Potential returns Total Distribution payments received over the term $13,750$100,000 x (2.5% x %) Reference Asset Gain received at Maturity $0 Closing Level of the S&P/ASX 200 has fallen below the Hurdle Level. Therefore no gain at Maturity Total received over the term of the investment $13,750 Total distributions paid over the term and Reference Asset Gain paid at Maturity Total costs over the term (Loan Establishment Fee plus annual interest payments) ($41,875 ) $100,000 x (7.25% x %) Net Return over the term of the investment ($28,125 ) Total received over the term of the investment less total costs An investor invests in the 5.5 Year Fixed Distribution Australian Equity (No Hurdle) Class and holds the investment to Maturity. Worked example 2 - Market decrease Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class 16 This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi The actual Term Performance Cap will be determined on or before the Swap Start Date, published at macquarie.com.au/flexi and could be lower than the indicative terms depending on market conditions at the time, in particular the level and volatility of the Reference Asset.

17 This graph illustrates the Fixed Distributions Received, Fees and Costs and Reference Asset Gain at Maturity that an investor would receive and incur based on the assumptions in Example This example has been provided for illustrative purposes only, and is not intended to be indicative of the performance of any Unit Class within Macquarie Flexi 100. Worked example 2 - Market decrease Fixed Distribution 5.5 Years - Australian Equity (No Hurdle) Class 17 S&P/ASX 200 Index Level

18 Appendices Historical performance of the Best-of Basket Historical performance of the two portfolios compared to the S&P/ASX 200 Historical performance of the ASX Tilt and PIMCO Tilt portfolio. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based partly on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi Period Returns* 1 yr10.0% 2 yr9.3% 3 yr18.4% 5 yr28.4% Important to note: Period Returns are for the best performing of ASX Tilt or PIMCO Tilt.

19 Australian Equity 19 Historical performance of the S&P/ASX 200, in AUD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100. S&P/ASX 200 Index Period Returns* 1 yr14.5% 2 yr2.6% 3 yr6.8% 5 yr-13.7%

20 Asian Equity 20 Historical performance of the Asian Equity Basket, in USD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100. Asian Equity Basket Period Returns* 1 yr7.9% 2 yr-4.8% 3 yr12.2% 5 yr4.0%

21 US Equity 21 Historical performance of the S&P 500 Index, in USD. Note past performance is not a reliable indicator of future performance. * Bloomberg L.P has published this trading data and has not consented to the use of the trading data in this presentation. This graph was produced by MFPML, not by Bloomberg (based on the trading data obtained from Bloomberg). Past performance is not an indicator of future performance or the performance of an investment in Macquarie Flexi 100. S&P 500 Index Period Returns* 1 yr14.1% 2 yr16.5% 3 yr39.5% 5 yr8.7%

22 Best-of Basket  In this investment opportunity, the investor has the benefit of automatically receiving the best performing of two baskets: –ASX Tilt portfolio comprising 60 per cent S&P/ASX 200, 20 per cent Winton Global Alpha Fund and 20 per cent PIMCO GIS Total Return Bond Fund –PIMCO Tilt portfolio comprising 60 per cent PIMCO GIS Total Return Bond Fund, 20 per cent S&P/ASX 200 and 20 per cent Winton Global Alpha Fund. 22

23 Asian Equity Basket Reference Asset Constituent Regional Exposure WeightDescription Hang Seng H-Share Index ETF China20% ETF which seeks to provide investment returns closely matching the performance of the Hang Seng China Enterprises Index. Tracker Fund of Hong KongHong Kong20% ETF which seeks to provide investment returns closely matching the performance of the Hang Seng Index. MSCI Taiwan IndexTaiwan20% Market capitalisation-weighted index of Taiwanese securities listed on the Taiwan Stock Exchange. KOSPI 200 IndexSouth Korea20% Market capitalisation-weighted index of 200 Korean securities listed on the Korea Stock Exchange. MSCI Singapore IndexSingapore20% Market capitalisation-weighted index of Singapore securities listed on the Singapore Stock Exchange. The table below lists the relevant weightings of the Asian Equity Basket. 23

24 Australian Equity Focus Basket Reference Asset ConstituentASX Code Amcor LimitedAMC AMP LimitedAMP Australia and New Zealand Banking Group Limited ANZ BHP Billiton LimitedBHP Brambles LimitedBXB Commonwealth Bank of AustraliaCBA CSL LimitedCSL National Australia Bank LimitedNAB Newcrest Mining LimitedNCM Origin Energy LimitedORG The table below lists the stocks that are included in the Australian Equity Focus Basket. Reference Asset ConstituentASX Code QBE Insurance Group LimitedQBE Rio Tinto LimitedRIO Santos LimitedSTO Suncorp Group LimitedSUN Telstra Corporation LimitedTLS Wesfarmers LimitedWES Westfield GroupWDC Westpac Banking CorporationWBC Woodside Petroleum LimitedWPL Woolworths LimitedWOW 24

25 Australian Equity Focus Basket  A fixed, equally-weighted basket of 20 shares with large market capitalisation listed on the ASX  Each constituent share’s contribution to the Australian Equity Focus Basket’s performance is capped by the Share Performance Cap –Indicative Share Performance Cap 1 of 30% for Class CJ –Indicative Share Performance Cap 1 of 65% for Class CK Comparison  ‘Capped basket of shares’ –Weighted return from each share added together – total return then capped  ‘Basket of individually capped shares’ –Return from each share is capped – total return is the sum of each weighted individual capped share return. –Returns are likely to be lower than that of a ‘capped basket of shares’ –Return above the Hurdle will be multiplied by a fixed Participation Rate of 115% Australian Equity Focus Basket The actual Share Performance Caps will be determined as at the Swap Start Date, published at and could be lower than the indicative Share Performance Cap depending on market conditions at the time, in particular the level and volatility of the Reference Asset.


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