INFORMATION SHEET 142

Information sheets provide concise guidance on a specific process or compliance issue or an overview
of detailed guidance.

Page 1 of 2
Estimated frozen funds under management
The term frozen fund refers to a registered managed investment scheme, which was
originally marketed on the basis that investors had an ongoing or periodic right to redeem
their investments on request, but which has since suspended that right. This information
sheet provides an update of the estimated frozen funds under management (FUM) in these
schemes.
If you are an investor in a fund that has been frozen, our information sheet Information for
investors in frozen funds (INFO 111) provides details on your rights and how you can get
your money back, the duties that responsible entities have to investors, and our role.
Current frozen fund estimates
Based on the most recent data available to ASIC (at March 2011), we estimate FUM that are
considered frozen have declined to $18.76 billion from a high of $25.36 billion in November
2009: see Table 1.
Table 1: Estimated frozen funds under management (FUM)
Type of fund March 2011 November 2009 November 2008
Total no. of
schemes
Total frozen
FUM ($b)
Breakdown of total frozen FUM Total
no. of
schemes
Total
frozen
FUM ($b)
Total
no. of
schemes
Total
frozen
FUM ($b) Restructured
or being
wound up ($b)
Remaining
FUM ($b)
Mortgage funds 63 $10.8 $3.9 $6.8 63 $14.8 63 $16.8
Property funds 13 $3.9 $0.3 $3.6 13 $4.9 11 $3.7
Cash-enhanced
funds
10 $4.0 $1.8 $2.3
10
$5.6 6 $2.0
Hedge funds 1 $0.06 $0.06 1 $0.06 1 $0.06
Total 87 $18.76 $6.0 $12.76 87 $25.36 81 $22.56

pgs 13 ASIC Frozen Fund publications
pgs 49 Investor Letters
pgs 915 Media reports
ESTIMATED FROZEN FUNDS UNDER MANAGEMENT
Australian Securities and Investments Commission, J uly 2011
Visit our website: www.asic.gov.au
Page 2 of 2
Since November 2009, frozen FUM have declined through periodic withdrawal offers,
$127 million of hardship redemptions and asset write-downs. Of the current total frozen
FUM of $18.76 billion, funds worth $6.0 billion have been restructured with member
approval or are winding up their schemes.
We estimate that $12.76 billion
1
Figure 1 summarises estimated frozen FUM from November 2008 to March 2011.
remains frozen and inactive in 42 mortgage funds, 11
property funds, 6 cash-enhanced funds and 1 hedge fund.
Figure 1: Estimated FUM: November 2008March 2011

* Note: As at March 2011, funds with $1.8b FUM in cash-enhanced funds (4 funds), $0.3b in property funds
(2 schemes) and $3.9b in mortgage funds (21 schemes) have restructured or are winding up their schemes (which
represents $6.0b of the total frozen FUM at March 2011).

Where can I get more information?
Go to www.asic.gov.au.
Phone ASIC on 1300 300 630.
Important notice
Please note that this information sheet is a summary giving you basic information about a
particular topic. It does not cover the whole of the relevant law regarding that topic, and it is
not a substitute for professional advice. You should also note that because this information
sheet avoids legal language wherever possible, it might include some generalisations about
the application of the law. Some provisions of the law referred to have exceptions or
important qualifications. In most cases your particular circumstances must be taken into
account when determining how the law applies to you.

1
This number is derived by removing schemes that have been restructured through members
approval, are in the process of winding up, or have advised ASIC of their intention to wind up
(approximately $165 million).
$22.56b
$16.8b
$3.7b
$2b
$0.06b
$25.36b
$14.8b
$4.9b
$5.6b
$0.06b
$18.76b*
$10.8b*
$3.9b*
$4b*
$0.06b
0 5 10 15 20 25 30
Total frozen FUM
Mortgage
Property
Cash-enhanced
Hedge
FUM ($b)
T
y
p
e

o
f

f
u
n
d
FUM: March 2011
FUM: November 2009
FUM: November 2008
Extracted from ASIC
INFO 111
http://www.macquarie.com.au/dafiles/Internet/mgl/au/docspa/factsheet/equinox6trustequinoxasiaasia2
selectoppquarterlyreport.pdf
http://www.colonialfirststate.com.au/prospects/HFA_suspensionoffunds.pdf
CERTITUDE/HFA 23 December, 2008
ASX/MEDIA ANNOUNCEMENT
MQ Portfolio Management Limited
ABN 55 092 552 611
AFSL 238 321
No.1 Martin Place Telephone 1800 025 513
Sydney NSW 2000 Facsimile (61 2) 8237 4347
GPO Box 3423
Sydney NSW 2001

MQ Portfolio Management Limited ABN 55 092 552 611 (RE) is not an authorised deposit-taking institution for the
purposes of the Banking Act (Cth) and its obligations do not represent deposits or other liabilities of Macquarie Bank
Limited ABN 46 008 583 542 (Macquarie) or any other Macquarie Group Company. Macquarie does not guarantee or
otherwise provide assurance in respect of the obligations of RE.

P a OMMU






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FIRST PAGE ONLY
MQ Capital Pty Limited
A Member of the Macquarie Group
ABN 31 061 160 558
No.1 Martin Place Telephone 1800 025 513
Sydney NSW 2000 Facsimile (61 2) 8237 4347
GPO Box 4294
Sydney NSW 1164

MQ Capital Pty Limited ('MQCAP') is not an authorised deposit-taking institution for the purposes of the Banking Act
(Cth) 1959, and MQCAPs obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46
008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations
of MQCAP.

3December2008

DearShareho|der

j^`nr^ofb bnrfklu ifjfqba

prpmbkpflk lc obabjmqflkp

Wearewr|t|ngtoadv|seyouasashareho|der|noneormoreofthec|assesof
Macquar|eEqu|nox||m|ted(Equ|nox"}thatonthemorn|ngof28November2008,
theboardofd|rectorsofEqu|noxreso|vedw|th|mmed|ateeffecttosuspend
redempt|onsofshares(aswe||astheca|cu|at|onoftheoff|c|a|netassetva|ue}|na||
Equ|noxc|assesunt||furthernot|ce.Thesuspens|onwasput|np|acepr|mar||y
becausesevera|ofEqu|nox'sunder|y|ngcomponentfundshavethemse|ves
suspendedredempt|onsor|nvokedredempt|ongatesunt||furthernot|ce,asaresu|t
ofthe|mpactofg|oba|marketcond|t|onsonf|nanc|a|marketsandthehedgefund
|ndustry.Assuch,wh||eEqu|noxhasexper|encedfewredempt|onrequests,the
suspens|onofredempt|onsbyEqu|noxwasnecessary|nordertoass|st|ntreat|nga||
shareho|dersfa|r|y.

va||dredempt|onrequestsforthe31October2008redempt|ondatew|||be
processed|naccordancew|thnorma|redempt|onprocedures.A||otherva||d
redempt|onrequestsrece|vedforsubsequentredempt|ondates(|nc|ud|ngforthe
28November2008redempt|ondate}w|||behe|dandprocessedattheredempt|on
datethatf|rstoccursafterthesuspens|on|s||fted.

Wh||sttheca|cu|at|onoftheoff|c|a|netassetva|uew|||a|sobesuspendeddur|ngthe
suspens|onper|od,|nd|cat|vemonth|yportfo||operformancew|||cont|nuetobe
pub||shed.Wh||ethesew|||on|ybeest|mates,theyw|||beprov|dedsothatyoucan
cont|nuetogetupdatesontheperformanceofyourEqu|nox|nvestment.

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D|ff|cu|tmarketcond|t|ons|nrecentmonthshavemeantthatmanyhedgefunds|n
the|ndustryhaveexper|enceds|gn|f|cantredempt|onrequestsfrom|nvestors.Asa
resu|t,manyofthesefundshavebeenforcedto|nvokeredempt|ongatesand
suspens|ons.Severa|oftheunder|y|ngcomponentfundsw|th|ntheEqu|nox
portfo||osfacethesame|ssuesandhavethereforedec|dedto|nvokegatesand|n
somecasesfu||ysuspendredempt|onsunt||furthernot|ce.Th|s|nturn,hasmade|t
necessaryforEqu|noxtosuspendredempt|ons.

ENTIRE THREE PAGE LETTER

Macquarie International Capital Advisors Pty Limited



MQ Capital Pty Limited ('MQCAP') is not an authorised deposit-taking institution for the purposes of the Banking Act
(Cth) 1959, and MQCAPs obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46
008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations
of MQCAP.

2
lnadd|t|on,acomb|nat|onoffactorshasbroughtaboutas|gn|f|cantandcont|nu|ng
se||-downofunder|y|nghedgefund|nvestmentsw|th|ntheEqu|noxportfo||os.

The||qu|d|tyrestr|ct|ons|mposedbycerta|nunder|y|ngcomponentfundsw|th|nthe
Equ|noxportfo||os,comb|nedw|ththerequ|redrap|dse||-downofunder|y|nghedge
fund|nvestments,hasresu|ted|ntheEqu|noxportfo||osbe|ngs|gn|f|cant|yskewed
awayfromthe|rtargeted|eve|sofd|vers|f|cat|onbycomponentfund,strategyand
||qu|d|typrof||e.TheR|skAdv|serhastakena||reasonab|eact|onstose||-down
under|y|nghedgefund|nvestmentstoaddresstheseportfo||oskewsandmeetthe
portfo||os'||qu|d|tyrequ|rements.

However,a||ow|ngredempt|onstobeprocessed|naccordancew|thnorma|
redempt|onprocedureswou|dunfortunate|yexacerbatetheseportfo||oskewsand
wou|dprejud|cethe|nterestsofshareho|dersasawho|e.

ln||ghtoftheabove,onthemorn|ngof28November2008,thed|rectorsdeterm|ned
that,effect|ve|mmed|ate|y,redempt|onsw|||besuspendedfora||Equ|noxportfo||os
unt||furthernot|ce.Thes|tuat|onw|||berev|ewedregu|ar|y.

Wew|||cont|nuetomanagetheEqu|noxportfo||os,|npart|cu|arthereso|ut|onof
these||qu|d|tyandstrategy|mba|ancesw|th|ntheEqu|noxportfo||os.Youw|||be
not|f|edwhenthed|rectorsofEqu|noxreso|veto||ftthesuspens|onofredempt|ons.

o~ J

Thefo||ow|ngfactorshavebroughtaboutas|gn|f|cantandcont|nu|ngse||-downof
under|y|nghedgefund|nvestmentsw|th|ntheEqu|noxportfo||os:

[ Austra||an|nterestrateshavefa||encons|derab|yoverthe|astfewmonths.Asa
resu|t,themechan|smsemp|oyedforcap|ta|protect|onrequ|redase||-downof
under|y|nghedgefund|nvestments.

[ Thes|gn|f|cantfa|||ntheva|ueoftheAustra||ando||ar|nrecentmonthshas
|mpactedtheEqu|noxportfo||os|ntworespects:

[ Wh||stthenetassetva|ue(NAv"}oftheEqu|noxportfo||os|sdenom|nated|n
Austra||ando||ars,mostunder|y|ngassetsaredenom|nated|nSdo||ars.The
|argefa|||ntheva|ueoftheAustra||ando||arcausedtherat|oofunder|y|ng
|nvestmentstoNAvtorap|d|yr|sebeyondperm|ttedexposure|eve|s.Th|s
requ|redfurtherse||-downofunder|y|nghedgefund|nvestments.

[ BecausetheNAv'softheEqu|noxportfo||osaredenom|nated|nAustra||an
do||arsandmostunder|y|ngassetsaredenom|nated|nSdo||ars,
systemat|ca||yapp||edcurrencyhedgesare|np|acetoattempttoprotectthe
NAvoftheportfo||osfromthecurrencytrans|at|oneffectofho|d|ngnon-
Austra||ando||ar|nvestments.However,astheva|ueofunder|y|ng
|nvestmentshas|ncreased|nAustra||ando||arterms|nrecentmonths,th|s
hasbeenoffsetby|osses|ntheva|ueofthecurrencyhedges|np|ace.
Accord|ng|y,add|t|ona|se||-downofunder|y|nghedgefund|nvestmentsw|th|n
theEqu|noxportfo||oshasbeenrequ|redtofundthese|osses.

Macquarie International Capital Advisors Pty Limited

MQ Capital Pty Limited ('MQCAP') is not an authorised deposit-taking institution for the purposes of the Banking Act
(Cth) 1959, and MQCAPs obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46
008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations
of MQCAP.

3
[ A||Equ|noxportfo||osotherthanO|assAshareshavea|oanfac|||ty|np|acewh|ch
enab|esthoseportfo||ostoapp|y|everageofbetween10%and20%ofNAv.As
aresu|tofachange|nthe|oanprov|der's|end|ngpo||c|es|n||ghtofthe
worsen|ngmarketcond|t|ons,|near|yOctober2008Equ|noxrece|veda|oan
term|nat|onnot|cerequ|r|nga|||oanstoberepa|dbyear|yJanuary2009.
Accord|ng|y.cashwasra|sedbyse|||ngdownunder|y|nghedgefund|nvestments
torepaythe|oans|nfu||.ponrece|v|ngthe|oanterm|nat|onnot|ce,Equ|nox
|mmed|ate|ysoughttosourceanew|oanfac|||typrov|derhoweverth|shasbeen
unsuccessfu||nthecurrentmarketenv|ronment.

r~ m~

Desp|tede||ver|ngsomenegat|veperformance|nthe|astfewmonthsonthebackof
thes|gn|f|cantcha||enges|nf|nanc|a|markets,theNAvpershareformostEqu|nox
c|asses|sst|||abovethe|ssuepr|cepershare.P|easerefertotheEqu|noxwebs|te
formoredeta||edperformance|nformat|on.

Asdescr|bedabove,these||-downofunder|y|nghedgefund|nvestments|spart|y
requ|redforthresho|dmanagementpurposes|ntheprov|s|onofcap|ta|protect|on.
Asd|sc|osed|ntheEqu|noxprospectuses,fora||Equ|noxc|assesexceptforO|asses
EandF,theAdv|soryFeeandthetra|||ngAdv|soryFeew|||notbechargedonany
port|onofthoseportfo||oswh|chmaybehe|d|ncashandtermdepos|tsusedfor
thresho|dmanagement.ForO|assesEandF,theR|skAdv|soryFeeandtra|||ng
P|acementlncent|vew|||notbechargedonanyport|onofthoseportfo||oswh|chmay
behe|d|ncashandtermdepos|tsusedforthresho|dmanagement.

c f~

Wew|||regu|ar|yupdateourwebs|tefor|nvestorsandthe|radv|sers.lfyouhaveany
quest|ons,p|easespeaktoyouradv|ser,ca||uson1800025513,v|s|tourwebs|te
www.macquar|e.com.au/equ|noxorema||usatequ|nox@macquar|e.com.

Yoursfa|thfu||y

Gerva|seHedd|e
D|rector
MOOap|ta|Pty||m|ted
(|n|tscapac|tyasR|skAdv|sertoEqu|nox}

Commentary Comment
Tony Boyd
Published 7:37 AM, 31 Dec 2008
An impenetrable hedge
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The freezing of redemptions by several fund-of-hedge-funds that invest in offshore
feeder funds has exposed a glaring anomaly between the Australian and US
regulatory systems.

The anomaly means that Australian investors into offshore feeder funds managed by
Westpac's BT Investment Management and HFA Holdings cannot access their
money while US investors can cash out at will.

The anomaly raises a number of questions that are not being answered by the funds
involved, even though at least one of them blames the media for its problems.

The questions that cannot be put to the managers because they don't want to
comment are as follows:

Are Australian investors frozen out of vehicles that invest in international fund-of-
hedge-funds being treated fairly and equally if the feeder fund is continuing to pay
redemptions to non-Australian residents?

Will the proportion of illiquid investments in an international feeder fund grow as a
percentage of total assets if non-Australian residents are allowed to redeem their
holdings?

Are the details of illiquid assets held by international feeder funds, including the
amount and type of assets that are illiquid, provided to Australian funds that invest in
them?

The latest fund to be engulfed by the redemption freeze sweeping the industry is the
BT Global Return Fund, which is managed by Westpac subsidiary BT Investment
Management.

It follows the suspension of redemptions for Australian residents by Macquarie
Equinox Trusts, DWS Strategic Value, Goldman Sachs J B Were Multi-Strategy
Fund, Select Gottex Market Neutral Fund, the Credit Suisse/Tremont index
Strategies Fund and the HFA Octane Funds and HFA Diversified Funds.

BT Investment Management was unwilling yesterday to say anything beyond the
short statement released on its website on December 19.

That statement said that redemptions had been suspended following receipt of a
notification that underlying manager Grosvenor Capital Management had taken
action to segregate a proportion of the less liquid assets in the Grosvenor Master
Fund in which the BT Global Return Fund invests. Grosvenor has not suspended
redemptions in the Grosvenor Master Fund.

BT did not say or would not admit that based on its limited public disclosure there
has been a run on redemptions in the BT Global Return Fund.

Assets at the end of September were $1.2 billion, according a document on the BT
website. But the latest report on the fund for November said funds under
management were $922 million.

In other words, a quarter of the fund was withdrawn in a month, though of course
some of this disparity could also be due to falls in asset values. Attempts to clarify
this with BT yesterday were unsuccessful.

However, the fund's annual report shows that in the year to J une 2008, the level of
redemptions rose more than threefold on 2007 to $326 million. That caused a $67.8
million decline in net assets attributable to unitholders. The BT Global Return Fund

HFA/ CERTITUDE/ BT


monthly reports give a breakdown of the style of investment being used but no
names of the hedge funds managing the money.

The freezing of redemptions will have an impact upon many BT funds because
about $217 million of the fund is sourced from 30 different BT funds.

This cross investment by one fund manager in its own array of products is a feature
of the industry that may cause corporate governance concerns and trigger conflicts
of interest.

BT's unwillingness to discuss the fund is in keeping with the attitude taken by its
competitor HFA Asset Management. Its managing director Robert White has refused
to answer calls from Business Spectator. Mr White says he did not receive the
messages that were left with his office and with his public relations representative.

However, HFA this week succumbed to pressure from financial planners for greater
detail about why its suspended redemptions in three funds with assets of about $1
billion.

HFA sent a seven page letter to advisors yesterday by email providing more detail
about the suspension of redemptions. It was in a question and answer format.

The letter said that HFA Asset Management had not seen a material spike in
redemptions from retail investors and as such its suspension of redemptions was not
a consequence of a run on the three funds that invest in the Lighthouse Diversified
Fund.

Whilst the Lighthouse Diversified Fund has not suspended withdrawals it is
implementing a change in its withdrawal payment policy which will result in
redemptions being satisfied by a combination of cash and an 'in kind' distribution of
interests in a special purpose vehicle established by the Lighthouse Diversified
Fund, which will hold interests in certain designated, less liquid investments, the
manager said.

This sheds some light on the problems and may be what is happening in the fund
that underpins the BT Global Return Fund.

HFA said that under the Corporations Act it had to suspend redemptions once the
fund was not able to provide redemptions in cash. This contrasts with the situation in
the US were investors in the Lighthouse Diversified Fund have access to a
proportion of their cash.

Although this goes some way toward explaining the anomaly it is not crystal clear
whether Australian investors will be worse off compared to investors in other
jurisdictions.

A broader message from the latest local developments in the hedge fund liquidity
crisis is that lack of transparency is accepted as part of the industry's way of doing
business.

Both Grosvenor Capital Management and Lighthouse Investment Management have
websites that are the equivalent of a blank screen. No information is available
without a password.

The secretive attitude is undermining the efforts by some hedge fund managers to
present themselves as open and transparent investment managers.

HFA Asset Management managing director Robert White has responsed to this
article in The Conversation.
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