Macquarie Self Funding Instalments

During the term of an SFI you have four options

1. continue to hold the SFIs
2. sell the SFIs on the ASX
   This will close out your exposure to the underlying share
   - see How do I sell my SFIs? below for more details
3. exercise the SFIs
   This requires you to pay Macquarie the remaining loan amount to acquire the underlying share
   - see How do I exercise my SFIs? below for more details
4. rollover the SFIs
   This may require you to make a rollover payment or to receive a rollover cash back, in order to roll into another series (if available)
   - see How do I rollover my SFIs? below for more details

Your maturity options are:

1. sell your SFIs on the ASX
2. exercise the SFIs
   This requires you to pay Macquarie the remaining loan amount to acquire the underlying share
   - see How do I exercise my SFIs? below for more details
   
3. rollover the SFIs
   This may require you to make a rollover payment or to receive a rollover cash back in order to roll into another series (if available)
   - see How do I rollover my SFIs? below for more details
4. do nothing
   Your SFIs will lapse and you may receive an Assessed Value Payment if there is any remaining value
   - see What happens if I do nothing at maturity? below for details  

Your SFIs are listed on the Australian Securities Exchange (ASX). 

If you wish to sell your SFIs prior to the maturity you will need to place a "sell" order with a stockbroker or through an online trading platform. 

You will need to provide the broker with the HIN/SRN details for where the SFIs are being held (eg I0030030999). This may be found on any trade confirmation, tax statement or other correspondence you may have received.

You may exercise your SFIs by paying the remaining Loan Amount at any time throughout the term of an SFI, right through to maturity. 

To calculate how much is required to be paid, you will need to multiply the number of SFIs you wish to exercise by the current Loan Amount for your SFIs which can be found on the

SFI Indicative Pricing Sheet.

In order to exercise your SFIs, you will need to return a valid

Completion Notice to Macquarie along with the required payment. 

For example, you may own 1,000 SFIs which each have a current Loan Amount of $4.50 per SFI. You would be required to pay $4,500 (1,000 x 4.50) to exercise the SFIs and receive 1,000 shares in the underlying company.

At maturity, or throughout the term of an SFI, you may decide to roll your SFIs into another Macquarie Instalment. You may roll your SFIs into any Macquarie Instalment that is available to be purchased as long as it has the same underlying share (eg BHPSMU can only be rolled into another available BHP Instalment). The rollover will result in either you being required to make a rollover payment or being entitled to receive a rollover cash back. The price of the rollover will continually change as the price of the underlying share and other variables change.

To obtain indicative rollover pricing please go to International Warrants and follow the instructions. Alternatively, to discuss rollover options please contact Macquarie on 1800 803 010.

If you choose not to take any action at the maturity of your SFIs, your SFIs will lapse and, if there is any remaining value, you will be entitled to an Assessed Value Payment. The Assessed Value Payment is calculated as the sale proceeds of the Underlying Share less the final Loan Amount (plus any other amounts owing to Macquarie in connection with the Instalment). 

For example, if at maturity of an SFI over XYZ, Macquarie sells XYZ shares for $43.38 and the Loan Amount on the SFI is $20.00 then the investor would be entitled to an Assessed Vale Payment of $23.38 per SFI held, calculated as $43.38 minus $20.00 (assuming there are no other costs owed to Macquarie).

You should note that if the sale proceeds of the Underlying Share is less than the Loan Amount at maturity, then you do not need to pay the shortfall and your SFIs will lapse with no Assessed Value Payment made to you. 

For example, if at maturity of an SFI, XYZ shares are trading at $17.27 and the Loan Amount on an XYZ SFI is $20.00, then the investor's SFIs would lapse and they would not receive an Assessed Value Payment. As the loan is limited recourse you would not be required to pay the shortfall on the Loan Amount.

The series of your SFIs is denoted by the last three letters of the ASX code

• e.g CBASMA is part of the SMA series.

Once you know your series code you can determine when your SFIs will mature from the

SFI Indicative Pricing Sheet or

• the following table

Series Maturity Date Offer Document

Dividends paid on the Underlying Shares of an SFI are used to reduce the remaining Loan Amount. This is an important feature that distinguishes Self Funding Instalments from many other types of Macquarie Instalments. If you wish to know when a company is paying a dividend then you may like to visit the website of the company. Alternatively, the ASX website may also provide some information.

Enclosed with your annual tax statement (usually sent to investors between August and November each year) will be a summary of the dividends that were paid on your Underlying Shares throughout the previous financial year. You can request another copy of a past tax statement through Request a Document

All SFIs listed on the ASX have six letter codes.

For example, an SFI over CBA shares might have the following code: C B A S M C

• The first three letters indicates the underlying security: Commonwealth Bank = CBA
• The fourth letter indicates the Instalment type: SFI = S
• The fifth letter indicates the Instalment issuer: Macquarie = M
• The sixth letter indicates the SFI Series: C

The last letter in the ASX code determines the series of SFI, which allows you to identify when the SFI will mature and what the Loan Amount is.

The value of an SFI is best illustrated in an example.

Let us assume that a share is trading at $20.00 and that Macquarie has an SFI available with a $10.00 Loan Amount;

In this example you may be able to purchase the SFI for $12.00.

Let’s assume 18 months later the underlying share has increased in value to $24.00 and the Loan Amount has been reduced by dividends to $8.50;

In this example your SFI price has increased to $16.50.

Alternatively, let’s assume 18 months later the underlying share price has decreased to $8.00 and the Loan Amount has only reduced to $9.50 by dividends. In this case the underlying share is trading at a price that is less than the Loan Amount;

As you can see, despite the fact that there is negative intrinsic value in the SFI in this example, the SFI may be trading at a price of $1.00 which represents the remaining Variable Interest Amount and Fixed Interest Amount.

* The Variable Interest Amount and Fixed Interest Amount are determined by Macquarie and, in the case of the Fixed Interest Amount, may fluctuate substantially over time. See section 3.6 of the Macquarie Instalments Product Disclosure Statement dated 7 February 2010 for more information.

The Loan Amount of an SFI will be reduced by an amount equal to a dividend on ex-dividend date for the relevant company. The Loan Amount will also increase once a year on the Interest Drawdown Date (June 30 or the last business day of June) by an amount of prepaid Variable Interest for the following 12 months.

A Corporate Action (e.g. a rights issue or special dividend) may occur in relation to the underlying shares and in these circumstances there may be an adjustment made to the Loan Amount of the SFI, or any other aspect of the SFI, to account for the change in value.

The Initial Variable Interest Amount is a component of the price of an SFI that is paid on the purchase date through to the next Interest Drawdown Date, which is generally the next 30 June (or last business day of June). On the next Interest Drawdown Date, and for each Interest Drawdown Date until maturity, an amount of Variable Interest will be capitalised onto the Loan Amount for the following 12 months. Any Variable Interest Amount will continue to be a component of the SFI price for the period for which it has been pre-paid, meaning that if you decide to sell your SFIs prior to maturity, you will receive a refund of the remaining Variable Interest which will be included within the SFI sale price.

For a current value of the Variable Interest Amount within your SFI please see the

SFI Indicative Pricing Sheet.

Fixed Interest is a component of the price of an SFI, it is a one-off payment made at the time of purchase. It will continue to be a component of the SFI price throughout the term until maturity, meaning that if you decide to sell your SFIs on the ASX prior to maturity, you will receive a refund (as determined by Macquarie) of the remaining Fixed Interest which will be included within the SFI sale price. You should be aware that the Fixed Interest Amount within the SFI price will vary over time, and that there are a number of variables that may affect the Fixed Interest Amount including;

 
You should also be aware that other factors may have an effect on the value of any refund available to you. See section 3.6 of the Macquarie Instalments Product Disclosure Statement dated 7 February 2010 for more information.

Both the initial Variable Interest Amount and the Fixed Interest Amount form part of the price of an SFI and must be paid at the time of purchase (subsequent Annual Interest Amounts are payable throughout the term and are automatically added onto the Loan Amount of the SFI).