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Trading Warrants – Boart Longyear Limited Second Supplementary Product Disclosure Statement This document is a Supplementary Product Disclosure Statement (“SPDS”).

This SPDS is dated 16 August 2007.

This SPDS supplements the Product Disclosure Statement dated 23 March 2004 (“PDS”) and together, they establish the terms of issue of the Warrants referred to below. You should read this SPDS together with the PDS. Words defined in the PDS have the same meaning when used in this SPDS. This SPDS amends the Exercise Price of the BLYWMQ Series of Macquarie Trading Warrants only.

KEY INFORMATION*

Issuer: Macquarie Bank Limited (“Macquarie”) ABN 46 008 583 542

AFSL 237 502

Listed Entity: Boart Longyear Limited ACN 123 052 728

IPO Offer Document: The prospectus issued by the Listed Entity dated 1 March 2007. Potential investors should refer to www.boartlongyearshareoffer.com or call the Boart Longyear Information Line on 1800 781 633 for further information relating to the Shares including the initial public offering of Shares.

Underlying Share/ Share: A fully paid ordinary share in the Listed Entity.

Offer Opens: 11:00am on the date on which the Share is trading on the ASX on a conditional and Deferred Settlement basis (see Additional Terms below). This is expected to be 5 April 2007, however is subject to change.

Listing Date of Warrants on the ASX:

5 April 2007 on a conditional and Deferred Settlement basis. Potential investors should refer to the “Additional Risks to Consider” section below for more information concerning the listing of the Warrants on conditional and Deferred Settlement basis.

Listing Date of Shares on the ASX:

5 April 2007 on a conditional and Deferred Settlement basis (see Additional Terms section below).

Expected Trading of Shares and Warrants on a

16 April 2007 (subject to the satisfaction of the Listing Conditions – see Additional Terms below).

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normal basis:

Deferred Settlement Date:

19 April 2007, provided that the Warrants trade on a normal basis on the ASX on the date referred to above.

Registrar:

Computershare Investor Services Pty Limited

Level 3, 60 Carrington Street,

Sydney NSW 2000, Australia

Phone: 1300 85 05 05

Website: www.computershare.com.au

Note:

• Some of the dates and other information contained in this table is dictated by the information in the IPO Offer Document. The information in this SPDS may be amended from time to time by Macquarie in line with any amendments made to the information in the IPO Offer Document.

The Series of Macquarie Trading Warrants referred to herein are able to be traded on the ASX. DETAILS – CALL WARRANTS

Issue Size ASX Warrant Code

Exercise Price (per Specified Number)

Type (American, European)

Specified Number

(millions)

Expiry Date Offer Closing Date

BLYWMA $ 1.80 European 2 10 27/07/2007 13/07/2007 BLYWMB $ 2.00 European 2 10 27/07/2007 13/07/2007 BLYWMC $ 2.00 European 2 10 27/09/2007 13/09/2007 BLYWMD $ 2.25 European 2 10 27/09/2007 13/09/2007

DETAILS – PUT WARRANTS

Issue Size ASX Warrant Code

Exercise Price (per Specified Number)

Type (American, European)

Specified Number

(millions)

Expiry Date Offer Closing Date

BLYWMP $ 2.00 European 2 10 27/07/2007 13/07/2007 BLYWMQ $ 2.00 European 2 10 27/09/2007 13/09/2007

ADDITIONAL TERMS AND CONDITIONS APPLICATIONS Applications prior to the Share trading on an unconditional basis on the ASX

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If you make an Application for these Series of Macquarie Trading Warrants prior to the satisfaction of the Listing Conditions (see below for explanation of Listing Conditions):

• you must have received and read a complete and unaltered copy of the IPO Offer Document before completing the relevant Application Form. If a copy of the IPO Offer Document does not accompany this SPDS and PDS, please contact your broker or adviser, or Macquarie on 1800 803 010; and

• you must read this SPDS and the PDS in their entirety. ADDITIONAL RISKS TO CONSIDER As with any investment decision, you need to consider an investment in Macquarie Trading Warrants carefully and in light of your individual circumstances. In addition to the risks detailed in Sections 1 and 3 of the PDS, certain specific risks arise in relation to these Series of Macquarie Trading Warrants which Macquarie would like to highlight and encourage you to consider in detail and discuss with your professional advisers. These risks include: Conditions Precedent to issuing the Shares and Macquarie Trading Warrants The IPO Offer Document for the offering of the Shares specifies the following conditions which will need to be met before the Shares will trade on an unconditional basis on the ASX:

• the ASX agreeing to quote the Shares on ASX; • allotment of the Shares to applicants under the IPO Offer Document; • settlement in respect of all, or substantially all, of the Shares the subject of the Offer occurring

under the Offer Management Agreement (as defined in the IPO Offer Document) and associated settlement support arrangements (“Settlement”); and

• Settlement occurs within 14 days (or such longer period as ASX allows) after the day Shares are first quoted on ASX.

(together, the “Listing Conditions”). You should refer to the IPO Offer Document for more information. Conditional trading of the Shares on the ASX is expected to occur following the ASX agreeing to quote the Shares. Conditional trading is then expected to continue until the Listed Entity has advised ASX that Settlement has occurred, which is expected to be on or about 11 April 2007. On Settlement, the Shares will trade on an unconditional but Deferred Settlement basis (Deferred Settlement is expected to continue until 16 April 2007 when normal trading is expected to commence). The listing and trading of these Series of Macquarie Trading Warrants is intended to mirror the listing and trading of the Shares. That is these Series of Macquarie Trading Warrants will: (a) only commence trading on the ASX following the successful listing of the Shares on the ASX; (b) trade on a conditional and Deferred Settlement basis until the Shares cease to trade on a

conditional and Deferred Settlement basis, which is expected to be on or about the date specified in the Key Information table; and

(c) will, following satisfaction of the Listing Conditions, continue to trade on a Deferred Settlement

basis for so long as the Shares continue to trade on a Deferred Settlement basis. You should note that the contracts formed on acceptance of an Application for these Series of Macquarie Trading Warrants will be conditional on the satisfaction of the Listing Conditions and the Shares are issued and transferred to applicants under the IPO Offer Document. If any or all of the Listing Conditions are not satisfied and the Shares do not trade unconditionally on the ASX, all

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contracts arising on acceptance of an Application for these Series of Macquarie Trading Warrants will be cancelled and of no further effect, meaning you will not receive any Macquarie Trading Warrants. In these circumstances, your application moneys will be refunded (without interest) within 20 Business Days. Similarly, any ASX trades or off-market dealings in these Series of Macquarie Trading Warrants will be of no effect. Macquarie will hold Application monies in a non-interest bearing trust account for you until all conditions relating to the conditional issuance of these Series of Macquarie Trading Warrants have been fulfilled. Trading Macquarie Trading Warrants which have been issued on a conditional basis Trades of these Series of Macquarie Trading Warrants on the ASX prior to trading in these Series of Macquarie Trading Warrants becoming unconditional are at your own risk and, if this issue of Macquarie Trading Warrants does not proceed (see above), all dealings in those Trading Warrants will be of no effect. Applicants should call the Registrar on 1300 85 05 05 to find out or confirm their allocations of Macquarie Trading Warrants from 5 April 2007. It is the responsibility of each Applicant to confirm their holding before trading these Series of Macquarie Trading Warrants. Applicants who sell these Series of Macquarie Trading Warrants before they receive their initial Holding Statement do so at their own risk as they may not receive any Trading Warrants. Macquarie and the Registrar disclaim all liability, whether in negligence or otherwise, to persons who sell their Holding of Macquarie Trading Warrants before receiving their initial Holding Statement. Trading Macquarie Trading Warrants which are trading on a Deferred Settlement basis These Series of Macquarie Trading Warrants will also commence trading on a Deferred Settlement basis. This is expected to continue until such time as the Shares cease to trade on a Deferred Settlement basis on the ASX. This means that all trades of these Series of Macquarie Trading Warrants before the Macquarie Trading Warrants trade on a normal basis on the ASX will not settle until the Deferred Settlement Date. Accordingly a purchaser of these Series of Macquarie Trading Warrants in this period on the ASX would not make a payment until the Deferred Settlement Date and conversely the seller would not receive payment until the Deferred Settlement Date. The Macquarie Trading Warrants may trade on a Deferred Settlement basis even if trading has become unconditional.

YOU SHOULD BE AWARE THAT THESE RISKS APPLY TO ALL APPLICANTS WHO APPLY FOR MACQUARIE TRADING WARRANTS AT ANY TIME PRIOR TO THE SATISFACTION OF THE LISTING CONDITIONS. YOU SHOULD ALSO BE AWARE THAT MACQUARIE TRADING WARRANTS MAY TRADE ON A DEFERRED SETTLEMENT BASIS AT OTHER TIMES DURING THE LIFE OF THE TRADING WARRANTS. Failure of Shares to be issued

There is a risk that the Shares will not trade unconditionally or Shares will not be issued or transferred to applicants under the IPO Offer Document. For this reason the issuance of Trading Warrants is conditional. No Trading Warrants will be created or issued prior to the Shares being listed for quotation on the ASX and issued and transferred to applicants under the IPO Offer Document. Consequently, if the Shares fail to be listed for quotation on the ASX, no Trading Warrants could be listed for quotation on the ASX. For the avoidance of doubt, no Trading Warrants can be traded prior to the Shares being listed for quotation on the ASX.

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UPDATE TO THE PRODUCT DISCLOSURE STATEMENT DATED 23 MARCH 2004 INSIDE FRONT COVER – IMPORTANT NOTICE & DISCLAIMER: Insert the following additional information: “Macquarie Group’s interest in the Listed Entities Boart Longyear Limited The Macquarie Group is acting as Global Coordinator and Joint Lead Manager for the proposed public offering of ordinary shares of Boart Longyear Limited ("BLY") as announced on 1 March 2007 and will receive remuneration for acting in such capacities (as described in Section 12.5.1 of the IPO Offer Document). The Macquarie Group may continue to hold an interest in the BLY on completion of the offers under the IPO Offer Document, as described in the IPO Offer Document. The Macquarie Group may receive a portion of any profit achieved by certain Vendors (as that term is defined in the IPO Offer Document) in relation to any increase in the value of the Vendor's investment up to the date of the Offer (as that term is defined in the IPO Offer Document) as determined in part by reference to the Final Price. Additionally, Macquarie European Investments Pty Ltd, a subsidiary of Macquarie Bank Limited ("MBL") is responsible for determining the Final Price at which shares are allotted after the close of the Institutional Offer (as that term is defined in the IPO Offer Document). The Interests of MBL are more fully detailed in Section 12.10.2.1 of the IPO Offer Document. BLY has also entered into an agreement with MBL and Macquarie Equity Capital Markets ("MECM") under which MBL and MECM will provide investment banking services to BLY up until 8 August 2008 for which MECM and MBL will be entitled to receive fees. The Listed Entity may pay Macquarie a fee equal to 1.25% (incl. GST) of the Final Price per Share multiplied by the number of Shares allotted to Macquarie or the Security Trustee under the IPO Offer Document. The Macquarie Group has given, and not withdrawn prior to the lodgement of the IPO Offer Document with ASIC, its written consent to be named in the IPO Offer Document as Global Coordinator and Joint Lead Manager to the proposed public offering of ordinary shares of BLY in the form and context in which it is named. You should carefully read the IPO Offer Document before making any investment decision.” Privacy Act 1988 (Commonwealth) – Collection Statement Replace the section with the following: “If you complete an application for Warrants offered under this PDS you will be supplying personal information to Macquarie. Macquarie will be bound by the Privacy Act 1988 (Commonwealth), as amended by the Privacy Amendment (Private Sector) Act 2000 (“the Privacy Act”), in relation to Macquarie's collection, holding, use, disclosure, management, access, correction and disposal of that information.

You should be aware that:

You can contact us by phone, fax or email and request access to your information. In normal circumstances, we will give you full access to your information, however there may be some legal or administrative reason to deny you access, in which case we will provide reasons for denying access. Further, we may charge a fee to give you full access where your request requires the compiling of information that has been archived or is significant in volume.

Macquarie will use your personal information for the following purposes: assessing your application for Warrants; assessing the credit and other exposure that the Macquarie Group has to you; to keep and maintain a register of Holders; marketing of products and services which are of the same type as Warrants; to determine future product and business strategies and to develop its services;

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to comply with all applicable regulatory or legal requirements (including the requirements of ASIC, ASX, ATO and AUSTRAC); and

to communicate with you in relation to your Warrants and all transactions relating to your Warrants.

Your personal information may be disclosed to other entities in the Macquarie Group or third party service providers (including those located in Australia and overseas) in making use of your personal information in the manner described above. It may also be disclosed to any financial institution nominated by you in an Application Form and may be disclosed to your stockbroker or licensed financial adviser.

While the information we ask you to supply in the Application Form is not required by law, Macquarie may not be able to assess your application if the information is not supplied.

You can also obtain a copy of Macquarie’s privacy statement on www.macquarie.com.au or by requesting it from us.”

SECTION 1 – INVESTMENT OVERVIEW Insert the following additional information: “Factors that will Affect the Cost of Macquarie Trading Warrants The price (or Premium) of a Macquarie Warrant is not fixed and will vary depending on a number of factors including:

• the price of the Share comprised in the Underlying Parcel;

• the volatility of that Share price;

• the future expected dividends;

• the time remaining to Maturity; and

• prevailing interest rates. The effect that those factors above may have on the price of Macquarie Warrants is demonstrated in the following table:

Variable Change in Variable

Effect on Call Warrant Price

Effect on Put Warrant Price

Price of the Share comprised in the Underlying Parcel ▲ ▲ ▼ Time Remaining to Maturity ▼ ▼ ▼ Interest Rate ▲ ▲ ▼ Share Price Volatility ▲ ▲ ▲ Future Expected Dividends ▲ ▼ ▲

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SECTION 2.14 - SHAREHOLDING LIMITS OR RESTRICTIONS Replace the final paragraph with the following: “Some Australian companies are subject to legislation which prescribe maximum shareholding limits for shareholders or restrictions (including without limitation cross media ownership restrictions) which may prohibit or limit the interests in Listed Entities that certain investors may acquire. Prospective investors should inform themselves of the restrictions that may apply to their investment in Macquarie Trading Warrants.” SECTION 3 – RISKS YOU SHOULD CONSIDER Insert the following additional information: “Change of Law Risk Changes to laws or their interpretation in Australia including taxation and corporate regulatory laws could have a negative impact on the return to investors. Historic Performance of the Shares Past performance of the Shares is not necessarily a guide to future performance which can be volatile. The value of the Macquarie Trading Warrants between the date of issue and the Expiry Date may fall as well as rise. Leveraged Investment The gains and losses on Macquarie Trading Warrants are magnified, compared to a holding in the Underlying Share, because of the leverage incorporated within the Macquarie Trading Warrants”

Section 3.8 - Conflicts of Interest Replace the existing text with the following: “Macquarie, other members of the Macquarie Group, or their directors, employees or affiliates may, subject to law, hold shares or units in members of the Macquarie Group and/or hold Macquarie Trading Warrants.

The directors and employees of Macquarie and other members of the Macquarie Group may receive remuneration based on the issue or performance of Macquarie Trading Warrants, in whole or in part.

The directors and employees of Macquarie and other members of the Macquarie Group may also hold directorships in the Listed Entities.

Macquarie, other members of the Macquarie Group or their directors, employees or affiliates may buy and sell (whether as principal or agent) instruments or securities or other financial products which are related to the Macquarie Trading Warrants or the Listed Entities the Shares of which underlie Macquarie Trading Warrants.

Members of the Macquarie Group may have business relationships or alliances (including joint ventures) with any of the Listed Entities and/or be a substantial shareholder of any of the Listed Entities. In addition, members of the Macquarie Group may from time to time advise any of the Listed Entities in relation to activities unconnected with the issue of Macquarie Trading Warrants and which may or may not affect the value of the Listed Entities. Such relationships and advisory roles may include:

• acting as manager or joint lead manager in relation to the offering or placement of rights, options or other securities including Shares;

• underwriting the offering or placement of rights, options or other securities including Shares;

• advising in relation to mergers, acquisitions or takeover offers; and

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• acting as general financial adviser in respect of, without limitation, corporate advice, financing, funds management, property and other services.

Macquarie may also have a commercial relationship with various senior executives of a Listed Entity and may sell financial products to, or advise, such senior executives in relation to matters unconnected with Macquarie Trading Warrants.

These activities may have an affect on the value of Shares or Macquarie Trading Warrants.” SECTION 7 – ABOUT THE ISSUER Replace the first paragraph with the following: “Macquarie Bank Limited (“Macquarie”) is an authorised deposit taking institution under s9 of the Banking Act 1959 (Commonwealth). As at 30 September 2006 Macquarie had total assets of A$112.6 billion and equity attributable to ordinary equity holders of Macquarie of A$5.5 billion on a consolidated basis. For the half-year ended 30 September 2006 Macquarie reported profit from ordinary activities after income tax attributable to ordinary equity holders of A$730 million on a consolidated basis.” Disclosure Obligations Replace the first paragraph with the following: “Macquarie, as a company whose shares are quoted on ASX, is a disclosing entity under the Corporations Act and has a continuous disclosure obligation. This means that, subject to certain exceptions, Macquarie must disclose to ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of Macquarie’s securities. Copies of the information disclosed to ASX can be viewed on the ASX website, www.asx.com.au.” Documents Available Replace the final paragraph with the following: “No circumstance has arisen or information has become available except as disclosed in this PDS or to the ASX that would materially affect an investor’s decision for the purpose of making an informed assessment of the capacity of Macquarie to fulfil its obligations under the Terms of Issue since the end of the financial half- year ended 30 September 2006.”

SECTION 8 – GLOSSARY Replace the definition “ASX” with the following:

“ASX means the ASX Limited (ABN 98 008 624 691) or the stock market conducted by the ASX Limited, as the context requires.” Insert the following additional definition:

“Deferred Settlement has the meaning attributed to it by the ASX Listing Rules. Deferred Settlement Period means the period during which Deferred Settlement relating to trading in the Underlying Shares or Trading Warrants operates.

Holding Statement means a statement given to a Holder in respect of the number of Warrants held and particulars of the Holder as described in section 2.11 of the PDS.”

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Important Information Macquarie makes no representation or warranty with respect to:

• whether the Shares will be issued or transferred to applicants under the IPO Offer Document;

• whether the Shares will be quoted on the ASX or trade on an unconditional basis on the ASX;

• the accuracy or truth of the contents of the IPO Offer Document. In issuing Macquarie Trading Warrants, Macquarie has not authorised or caused the issue of the IPO Offer Document, unless as disclosed under "Macquarie Bank Limited - Disclosure of Interest" section above is not a party to or concerned in authorising or causing the issue of the IPO Offer Document. To the extent permitted by the Corporations Act, ASIC Act or any other relevant law, Macquarie will be under no liability for any claim whatsoever, including for any financial or consequential loss or damage suffered by Applicants or any other person, where that claim arises wholly or substantially out of reliance on any information contained in the IPO Offer Document, or any error in or omission from the IPO Offer Document.

The information in this SPDS has been prepared without taking into account the objectives, financial situation and particular needs of investors. Accordingly, before making a decision to acquire Macquarie Trading Warrants, you should consider whether such an investment is appropriate having regard to your objectives, financial situation and particular needs, and consult your adviser or broker. You should read this SPDS and the PDS and consider them before making any decision as to whether to acquire Macquarie Trading Warrants. Macquarie does not accept any liability or responsibility for, and makes no representation or warranty, whether express or implied, as to the affairs of any Listed Entity included in this SPDS. You should obtain independent advice from a stockbroker or licensed financial adviser on the nature, activities and prospects of the Listed Entities and the merits of an investment in the Listed Entities or Macquarie Trading Warrants. You should not take the historical prices of any Share as an indication of future performance.

MACQUARIE BANK LIMITED No. 1 Martin Place Sydney, New South Wales Australia Telephone: (612) 8232 3333 © Macquarie Bank Limited 2004

DATED: 23 MARCH 2004

COMBINED PRODUCT DISCLOSURE STATEMENT AND FINANCIAL SERVICES GUIDE

The Issuer: MACQUARIE BANK LIMITED AFSL 237502 Relating to the offer of Warrants to be traded on the Australian Stock Exchange, as specified in the relevant Supplementary Product Disclosure Statement. This PDS constitutes the general terms and conditions that shall govern the issue by Macquarie Bank Limited of Call Warrants and Put Warrants. This PDS is not a stand alone document and does not of itself constitute an offer capable of acceptance. The additional terms relating to each Series of Warrants will be set out in a Supplementary Product Disclosure Statement which will be supplemental to, and should be read in conjunction with, this PDS.

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IMPORTANT NOTICE & DISCLAIMER

This document is a Product Disclosure Statement.

The date of this Product Disclosure Statement is 23 March 2004 (“PDS”).

Supplementary Product Disclosure Statements

This PDS constitutes the general terms and conditions that shall govern the issue by Macquarie Bank Limited of Call Warrants and Put Warrants from time to time. This PDS is not a stand alone document and does not of itself constitute an offer capable of acceptance. The additional terms relating to each Series of Warrants will be set out in a Supplementary Product Disclosure Statement (“Supplementary PDS”) which will be supplemental to, and should be read in conjunction with, this PDS.

Purpose

Under this PDS and the relevant Supplementary PDS, Macquarie is inviting Applications for certain Series of Warrants, the commercial terms of which will be set out in the relevant Supplementary PDS issued by Macquarie from time to time.

Application Form

Applications for Warrants will only be accepted on the Application Form attached to this PDS. The Offer Period for a Series of Warrants will open and close on the dates specified for that Series in the relevant Supplementary 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.

Cooling-off Rights

No cooling-off rights apply to the issue of Warrants. 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 restrictions may violate those laws. This PDS is not an offer or invitation in relation to Warrants in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. Warrants have not and will not be registered under the United States Securities Act of 1933 and may not be offered or sold directly or indirectly in the United States of America.

Changes to Information in PDS

This PDS is current as at 23 March 2004. 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 www.macquarie.com. au/warrants. Macquarie will provide a paper copy of updated information upon request to Holders who contact Macquarie on 1800 803 010.

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 and the relevant Supplementary PDS. No person is authorised to give any information or to make any representation in connection with the offer of Macquarie Trading Warrants 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. Role of Listed Entities

No Listed Entity has been a party to the preparation of this PDS or furnished any information specifically to Macquarie for the purpose of its preparation. Otherwise than as disclosed in a Supplementary PDS, Macquarie has no affiliation with any Listed Entity and has not, for the purposes of preparation of this PDS, sought access to information concerning any Listed Entity which is not publicly available. No Listed Entity accepts any responsibility for any statement in this PDS. No Listed Entity nor any director or officer of any Listed Entity has authorised or caused the issue of any part of this PDS. None of those persons has had any involvement in the preparation of any part of this PDS, purports to make any statement in any part of this PDS or has consented to be named in this PDS.

Own Advice

The information provided in this PDS is not financial product advice, and has been prepared without taking into account your individual investment objectives or personal circumstances. You should read the whole of this PDS and consider all of the risks and other information relating to Macquarie Trading Warrants 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 Trading Warrants.

Commissions

Macquarie may give to brokers to the Issue, whether in the primary or secondary market, a discount, commission or fee in respect of each Warrant placed or purchased by the broker.

Defined Terms

Section 8 of this PDS contains definitions of certain terms used in this document.

Role of the Registrar

The Registrar has had no involvement in the preparation of any part of this PDS and its name appears for information purposes only.

Admission to Trading Status on ASX

Application will be made for each Series of Macquarie Trading Warrants offered under this PDS to be admitted to Trading Status by the ASX. The fact that the ASX may admit the Warrants to Trading Status is not to be taken in

any way as an indication of the merits of Macquarie, any Listed Entity or the Warrants offered for subscription. Admission to Trading Status of the Warrants offered pursuant to this PDS will commence as soon as practicable after Macquarie notifies subscribers of the issue of the Warrants. The ASX does not warrant the accuracy or truth of the contents of this PDS including any expert’s report which it may contain.

In not objecting to the Terms or by admitting the Warrants to Trading Status, 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 Warrants. 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 ASX Market Rules, this being the responsibility of Macquarie. The ASX makes no representation as to whether this PDS and the Terms comply with the Corporations Act or the ASX Market Rules. To the extent permitted by the Trade Practices Act 1974 (Cth) 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. Consents

Allens Arthur Robinson has given and not withdrawn its consent to be named in this PDS. Allens Arthur Robinson has been involved in the preparation of this PDS, and accepts responsibility for Sections 2.13, 2.14, Section 4, but accepts no responsibility for any other part of this PDS, and has not authorised or caused its issue. Computershare Investor Services Pty Limited has given and, as at the date hereof, not withdrawn its written consent to be named as Registrar in the form and context in which it is named. Computershare Investor Services Pty Limited has had no involvement in the preparation of this PDS other than being named as Warrant Registrar to Macquarie. Computershare Investor Services Pty Limited has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for, any part of this PDS.

Privacy Act 1988 (Commonwealth) – Collection Statement

If you complete an application for Warrants offered under this PDS you will be supplying personal information to Macquarie. Macquarie will be bound by the Privacy Act 1988 (Commonwealth), as amended by the Privacy Amendment (Private Sector) Act 2000 (“the Privacy Act”), in relation to Macquarie's collection, holding, use, disclosure, management, access, correction and disposal of that information.

You should be aware that:

You can contact us by phone, fax or email and request access to your information. In normal circumstances, we will give you full access to your information, however there may be some legal or administrative reason to deny you access, in which case we will provide reasons for denying access. Further, we may charge a fee to give you full access where your request requires the compiling of information that has been archived or is significant in volume.

Macquarie will use your personal information for the following purposes: assessing your application for Warrants; assessing the credit and other exposure that the

Macquarie Group has to you; to keep and maintain a register of Holders; marketing of products and services which are of

the same type as Warrants; to determine future product and business

strategies and to develop its services; to comply with all applicable regulatory or legal

requirements (including the requirements of ASIC, ASX, ATO and AUSTRAC); and

to communicate with you in relation to your Warrants and all transactions relating to your Warrants.

Your personal information may be disclosed to other entities in the Macquarie Group in making use of your personal information in the manner described above. It may also be disclosed to any financial institution nominated by you in an Application Form and may be disclosed to your stockbroker or licensed financial adviser.

While the information we ask you to supply in the Application Form is not required by law, Macquarie may not be able to assess your application if the information is not supplied.

You can also obtain a copy of Macquarie’s privacy statement on www.macquarie.com.au or by requesting it from us.

Contents

0

Section 1 Investment Overview 1

Section 2 Details of the Warrants 4

Section 3 Risks You Should Consider 10

Section 4 Taxation Considerations 12

Section 5 Description of the Underlying Parcels 13

Section 6 Terms of Issue 14

Section 7 About the Issuer - Macquarie Bank Limited 30

Section 8 Glossary 31 Application Form 34 Appendix I (Sample Supplementary PDS) 36 FINANCIAL SERVICES GUIDE 37

Section 1: Investment Overview

This Section contains a brief summary only of certain material features relating to Macquarie Trading Warrants. Detailed information relating to the offer to subscribe for Macquarie Trading Warrants can be found in the following sections of this PDS. Potential investors should read this PDS in its entirety before making any investment decision. If there is any conflict between this section and any other section of this PDS (including the Terms) the latter will prevail.

1

What are Macquarie Trading Warrants?

What is a Call Warrant?

A Call Warrant gives a Holder of the Specified Number of Warrants the right to acquire one Underlying Parcel from Macquarie in the relevant Listed Entity for the Exercise Price plus any applicable Transfer Tax. This PDS relates to different styles of Call Warrants. The rights of the Holder of American Call Warrants are, in principle, similar to those of an “American call option” and the rights of the Holder of European Call Warrants are, in principle, similar to those of the holder of a “European call option” over Shares in the relevant Listed Entity.

What is a Put Warrant?

Put Warrants give a Holder of the Specified Number of Warrants the right upon exercise to require Macquarie to acquire from the Holder one Underlying Parcel in the relevant Listed Entity for the Exercise Price less any applicable Transfer Tax. The rights of the Holder are, in principle, similar to those of the holder of a “European put option” over Shares in the relevant Listed Entity.

What is an American Warrant?

An American Warrant is a Warrant that can be exercised at any time before the Expiry Date or on the Expiry Date at or before the Closing Time.

What is a European Warrant?

A European Warrant is a Warrant that can only be exercised on the Expiry Date at or before the Closing Time.

Underlying Parcel

The Underlying Parcel is initially one Share in the relevant Listed Entity. It may be adjusted in certain circumstances, such as a bonus or rights issue, a cash return of capital or a reconstruction of capital. The Exercise Price as applicable, may also be adjusted in these circumstances. The adjustments are designed so that neither the Holder nor Macquarie is disadvantaged in such circumstances.

A Leveraged Investment

Warrants are a leveraged investment. Warrants can provide exposure to the Share comprised in the Underlying Parcel for a fraction of the price of that Share.

The value of Call Warrants tends to rise if the value of the Underlying Parcel increases, and tends to fall if the value of the Underlying Parcel decreases. The value of Put Warrants tends to rise if the value of Underlying Parcel decreases, and tends to fall if the value of the Underlying Parcel increases. Both increases and decreases in the value of the

Underlying Parcel are likely to be magnified, in percentage terms, in the Warrant price.

What are the Key Features and Benefits of Investing in Macquarie Trading Warrants?

An investment in Macquarie Trading Warrants gives you:

• a convenient way to enhance your exposure to share price movements in a range of Australian listed Shares;

• the potential to earn greater returns than an equivalent investment in the Share comprised in the Underlying Parcel because of the leverage provided by Warrants;

• the right to buy (call) or sell (put) a particular share for a fixed price on or before a future date; and

• a flexible investment that may be sold on the ASX at any time up to and including Maturity, if required.

What are the Risks of Investing in Macquarie Trading Warrants?

As with any investment decision, you need to consider an investment in Macquarie Trading Warrants carefully and in light of your individual circumstances.

Potential risks of investing in Macquarie Trading Warrants include:

• adverse movements in the price of the Underlying Parcel decreasing the value of your investment;

• the value of the Warrant decreasing over time even if the price of the Underlying Parcel remains the same due to time decay;

• a change to the corporate structure of the Underlying Parcel (eg due to a takeover or scheme of arrangement affecting the Listed Entity in which the Share comprised in the Underlying Parcel exists) which may affect the value of your investment;

• Macquarie failing to perform its obligations; and

• all the general risks of investing in options and listed shares.

You should refer to Section 3 ‘Risks You Should Consider’ on page 10 of this PDS for more detailed information about the risks of investing in Macquarie Trading Warrants. Potential investors should ensure that they fully understand the risks involved and consult with relevant advisers before making any investment decision.

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How Do Macquarie Trading Warrants Work and What Happens at Maturity?

Call Warrants

A Holder of the Specified Number of Call Warrants is entitled by giving an Exercise Notice and paying the Exercise Price plus any applicable Transfer Tax, to acquire the Underlying Parcel in the relevant Listed Entity from Macquarie. The Holder is not obliged to give Macquarie an Exercise Notice.

Put Warrants

A Holder of the Specified Number of Put Warrants is entitled by giving Macquarie an Exercise Notice and delivering the Underlying Parcel to Macquarie (per Specified Number of Warrants exercised) to be paid the relevant Exercise Price less any applicable Transfer Tax. The Holder is not obliged to give Macquarie an Exercise Notice. Who Do They Suit?

Macquarie Trading Warrants may suit you if you:

• are looking to spend less up front and get greater exposure to any share price movements;

• are looking for an alternative to other forms of gearing into shares; and

• have had previous experience with options.

Who Can Apply?

Macquarie has a range of Warrants to suit a variety of different investors. Macquarie Trading Warrants can be purchased under this PDS using the Application Form. Application Forms and Instructions are found on pages 34 and 35 of this PDS. Who Can Apply

Australian residents

Minimum Application Amount (no. of Warrants)

2,000 (and thereafter in multiples of 2,000)

Amount Payable on Application

Premium

How Do I Buy and Sell Macquarie Trading Warrants?

Before you invest in Macquarie Trading Warrants it is important that you have read and understood the terms set out in this PDS and the relevant Supplementary 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.

Macquarie Trading Warrants can be purchased either by making an Application under this PDS (ie in the primary market) or on the ASX (ie in the secondary market).

Primary Market Applications

To apply for Macquarie Trading Warrants in the primary market you must complete the Application Form in this PDS and submit it with payment to your licensed financial adviser or directly to Macquarie.

Purchasing Macquarie Trading Warrants on the Secondary Market (ASX) – Just Like Ordinary Shares

To gain immediate access to Share price movements, Macquarie Trading Warrants can be purchased on the ASX through any ASX Accredited Derivatives full service or discount adviser or stockbroker using the relevant ASX Code. For example, BHP Billiton Macquarie Call Warrants would be listed as BHPWMG on the ASX where “W” = Warrant, “M” = Macquarie and “G” = Warrant Series.

To trade Macquarie Trading Warrants on the secondary market, you will need to have completed a Warrant Client Agreement Form available from your stockbroker.

How Much Do Macquarie Trading Warrants Cost (the Premium)?

The Premium

The price (or Premium) of a Macquarie Warrant is not fixed and will vary depending on a number of factors including:

• the price of the Share comprised in the Underlying Parcel;

• the volatility of that Share price;

• the future expected dividends;

• the time remaining to Maturity; and

• prevailing interest rates.

The Exercise Price (Call Warrants)

To exercise a Specified Number of Call Warrants, a Holder is required to pay to Macquarie the Exercise Price specified for that Series of Warrant in the relevant Supplementary PDS, together with any Transfer Tax (if applicable).

Commission, Fees and Expenses

When you purchase Macquarie Trading Warrants on the ASX your adviser may also charge you commission.

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What are the Tax Implications of Investing in Macquarie Trading Warrants?

Purchasing, holding and exercising Warrants may have income tax or capital gains tax implications for investors. The tax consequences will depend on the particular circumstances of each Holder. Investors should seek independent advice referable to their own circumstances prior to making any investment decision. You should refer to Section 4 'Taxation Considerations' on page 12 of this PDS for detailed information in relation to the tax implications of investing in Macquarie Trading Warrants. In brief:

no tax implications should arise from investing in Macquarie Trading Warrants until they are sold or until they expire or until the Underlying Parcel is sold upon, or following, the exercise of a Warrant;

upon the sale or expiry of a Macquarie Warrant or upon the sale of the Underlying Parcel upon, or following, the exercise of a Warrant, capital gains tax consequences are likely to arise to the investor;

no dividend income will be derived from the Underlying Parcel by an investor in a Call Warrant unless and until the Warrant is exercised; and

dividend income will continue to be derived from the Share comprised in the Underlying Parcel by an investor in a Put Warrant unless and until the Warrant is exercised.

Is there a Cooling Off Period?

There is no cooling off period when you buy or sell Macquarie Trading Warrants.

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 purposes of selecting retaining or realising the investment. An investment in Macquarie Trading Warrants by Investors requires the selection of a specific Underlying Parcel. Investors should make their own enquiries as to whether labour standards or social, environmental or ethical considerations are taken into account by the issuer of the Share comprised in the Underlying Parcel by referring to the website of the relevant issuer or information disclosed by the relevant issuer 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 Trading Warrants. Macquarie will acknowledge receipt of a written complaint within 5 days and provide a substantive response within 21 days. Where a complaint remains unresolved (eg where a remedy is not offered or not instigated or where a remedy is 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 1300 780 808 or write to PO Box 579 Collins Street West, Melbourne, Victoria 8007.

Section 2: Details of the Warrants

This Section is a summary of the important features of Macquarie Trading Warrants. The contractual terms are contained in Section 6. Investors should read and understand the contractual terms before investing in Macquarie Trading Warrants. Investors should obtain professional advice which takes into account their particular investment needs, objectives and financial circumstances. If there is any conflict between this summary and the Terms, the Terms prevail.

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2.1 Offer of Macquarie Trading Warrants

Issuer

The Issuer is Macquarie Bank Limited. Please refer to Section 7 which contains more information on Macquarie.

Issue Description

Macquarie may issue several Series of Warrants under this PDS. The commercial terms for a particular Series will be set out in a Supplementary PDS (which must be attached to, or issued with this PDS) issued on or before the Issue Date for each Series. Copies of each Supplementary PDS can be obtained by contacting Macquarie on 1800 803 010 or at warrants@macquarie.com.au.

Maximum Issue Size

The initial issue size for each Series will be set out in the relevant Supplementary PDS. Macquarie reserves the right, without the consent of, or the giving of prior notice to Holders, to increase the maximum issue size by seeking the consent of the ASX to such increase at any time during the relevant Offer Period.

Underlying Parcel

The relevant Specified Number of Warrants of a particular Series relates to one Underlying Parcel which is initially one Share in the relevant Listed Entity. The composition of an Underlying Parcel may be adjusted in certain circumstances in accordance with the Terms. See “Adjustments” later in this section.

Minimum Subscription and Underwriting

There is no minimum number of Warrants which must be issued for the offer to proceed. The offer is not underwritten.

Offer Period

The offer of Warrants under this PDS in respect of each Series is open from 9:00am (Sydney time) on the date specified in the relevant Supplementary PDS and will close with respect to a particular Series of Warrants at the earlier of:

(a) the date specified in the Supplementary PDS; and

(b) the date on which the Warrants lapse pursuant to Clause 2.3 of the Terms,

subject to the rights of Macquarie to withhold offering any or all Series of Warrants at any time and for any period of time and to close the offer with respect to any or all Series of Warrants on an earlier date without prior notice.

Macquarie reserves the right and currently intends to continue to issue Warrants in each Series after the commencement of trading of Warrants on the ASX.

Issue Price

This PDS does not specify the price at which Warrants of a particular Series will be issued. The issue price (or “Premium”) will depend on the price of the relevant Shares and other parameters at the time the offeree agrees to subscribe for Warrants and will therefore vary from time to time during the offer period.

Application Procedure

Applications may only be made on the Application Form attached to this PDS or attached to the complete and unaltered electronic PDS dated 23 March 2004.

Investors intending to apply for Warrants must first make a telephone commitment to Macquarie by calling 1800 80 30 10 to acquire the specified Warrants.

At the time of making this commitment, the number and Premium for the specified Warrants will be agreed between Macquarie and the investor and the investor will be given a discrete subscription number, which must be inserted on the Application Form. Investors are then required to lodge a completed Application Form together with the application money within five Business Days after making a telephone commitment to acquire the specified Warrants. Payments must be made by cheque in Australian dollars. Investors should receive confirmation of the number of Warrants acquired within twelve Business Days of submitting a valid Application Form and application money being cleared.

All telephone conversations may be tape recorded.

Macquarie reserves the right to accept or reject any commitment or subsequent application in its absolute discretion and to vary the application procedure.

Macquarie will not accept Application Forms prior to the date of this PDS.

A paper copy of this electronic PDS will be provided to investors free of charge during the offer period on request by contacting Macquarie.

Trading

Application will be made to the ASX for permission to admit the Warrants offered under this PDS to Trading Status. Each Series of Warrants are expected to commence trading on the date set out in the relevant Supplementary PDS.

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2.2 How Do Macquarie Trading Warrants Work?

Macquarie Trading Warrants give the Holder the right to buy (call) or sell (put) a particular Share for a fixed price (Exercise Price) on a future date (European) or on or before a future date (American) (Expiry Date).

Exercise Price

The Exercise Price per Specified Number of Warrants of a particular Series is set out in the relevant Supplementary PDS. The Exercise Price for each Series is subject to adjustment in certain circumstances in accordance with Clause 4 of the Terms.

Expiry Date

The Expiry Date of each particular Series is set out in the relevant Supplementary PDS. The Supplementary PDS will specify whether the Warrants are American Warrants or European Warrants.

The Warrants of a particular Series may be exercised in accordance with the Exercise Procedure outlined below.

Specified Number

Holders should exercise Warrants of a Series in multiples of the Specified Number for that Series. If an Exercise Notice is given for a number of Warrants which is either not a whole number or a whole multiple of the Specified Number, the number of Warrants exercised under the notice will be rounded down to the closest whole multiple of the Specified Number and any excess exercise money will be refunded to the Holder and an Assessed Value Payment will be made for the Warrants which are not exercised (see Clauses 5.11 and 5.14 of the Terms).

Exercise Procedure

Call Warrants

Holders wishing to exercise Call Warrants of a Series must lodge with Macquarie a completed Exercise Notice for a number of Call Warrants of that Series which is a multiple of the relevant Specified Number together with payment of the Exercise Price and any applicable Transfer Tax in respect of the Warrants.

In respect of an American Warrant, the Exercise Notice may be lodged before the Expiry Date or on the Expiry Date at or before 4.15pm. The Business Day on which the Exercise Notice is duly given to Macquarie in respect of a Warrant is the Exercise Day for that Warrant.

In respect of a European Warrant, the Exercise Notice must be lodged on the Expiry Date at or before 4.15pm. If an Exercise Notice is received prior to the

Expiry Date, it will be treated as having been received on the Expiry Date.

Holders should note that an Exercise Notice only becomes effective if both the funds accompanying the Exercise Notice are cleared and, the Holder is registered as the Holder of the relevant number of Warrants on or before the fifth Business Day after the Exercise Day.

Put Warrants

Holders wishing to exercise Put Warrants of a Series must lodge with Macquarie a completed Exercise Notice for the number of Put Warrants of that Series which is a multiple of the relevant Specified Number on the Expiry Date at or before 4.15pm. If an Exercise Notice is received prior to the Expiry Date, it will be treated as having been received on the Expiry Date.

Together with the Exercise Notice, the Holder must also lodge all documents relating to the Underlying Parcel including (if applicable) a copy of their Issuer Sponsored Statement showing the holding, or evidence of the Holder’s instructions to the Sponsoring Participant to deliver the Shares to the Broker. The Holder must also lodge any other documents Macquarie notifies the Holder that it reasonably requires.

The Broker will then arrange for the Underlying Parcel to be transferred to Macquarie.

If the Holder delivers a valid Exercise Notice and if the Holder procures that Macquarie is in a position to be registered as the owner of the relevant Underlying Parcel within 5 Business Days of the Expiry Date, Macquarie will pay the Holder the Exercise Price less any applicable Transfer Tax on the Payment Date by cheque.

If a Warrant is not exercised prior to 4.15pm on the Expiry Date it will lapse, with the Lapse Date being the Expiry Date.

If a Warrant is exercised, but the Holder does not procure that Macquarie is in a position to be registered as owner of the relevant Underlying Parcel within 5 Business Days of the Expiry Date, the Warrant will lapse, with the Lapse Date being the day 5 Business Days after the Expiry Date.

Failure to Exercise/Lapse of the Warrant

A Warrant will automatically lapse if a valid Exercise Notice has not been received by Macquarie at or before 4:15pm on the Expiry Date. In the situation where a Warrant has lapsed, the Holder may be entitled to an Assessed Value Payment, provided the Warrant has an intrinsic value of equal to or greater than 5% of the Exercise Price on the Expiry Date. The Assessed Value Payment is calculated in accordance with clause 5.11 of the Terms.

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2.3 Treatment of Dividends and Other Rights

Voting Rights

The Holders of Macquarie Trading Warrants, in their capacity as Holders, are not entitled to receive any annual reports or notices of meetings of the relevant Listed Entity or attend or speak or vote at any meeting of members (or class of members) of the Listed Entities.

Dividends

Holders are not entitled to participate in any dividends, dividend reinvestment plans, or other plans of Listed Entities for the investment or receipt of other benefits in lieu of dividends in respect of the Underlying Parcel, including among other things, discount cards.

Special Dividends

If a Listed Entity declares a Special Dividend, the Exercise Price and Specified Number will be adjusted. The Underlying Parcel will remain unchanged.

The adjustments will generally follow the methodology that is used by ASX to adjust exchange traded options (“ETOs”) over the same Shares in the same situation. If there is no corresponding ETOs, Macquarie may still use the methodology set out in the ASX Market Rules. Macquarie may, with the consent of the ASX, make an alternate adjustment to that used by the ASX or set out in the ASX Market Rules if it determines the actual ETO adjustment or ASX methodology is inappropriate in a particular situation.

2.4 Expiry Date

Each Series of Macquarie Trading Warrants will expire on the Expiry Date specified for that Series in the relevant Supplementary PDS. Potential investors should note however, that the Expiry Date for a Series of Macquarie Trading Warrants may be brought forward upon the occurrence of an Extraordinary Event.

Macquarie may at any time, at its discretion and with the consent of ASX, nominate as an Extraordinary Event for a particular Series of Warrants events including the actual or proposed delisting, withdrawal of admission to trading status or suspension of the Shares or the Warrants (except, in the case of Warrants, where that delisting, withdrawal or suspension is caused by Macquarie) or a material limitation of the ability of Macquarie to hedge the Warrants or maintain secondary market prices in the Warrants.

If Macquarie makes such a nomination, the relevant Series of Warrants will automatically lapse.

2.5 Variation of the Terms

The Exercise Price, Specified Number and the Underlying Parcel may be varied in the event of corporate actions such as returns of capital, rights and bonus issues and other reconstructions.

Other variations are possible in two circumstances:

1) Where the change is necessary or desirable in the reasonable opinion of Macquarie:

• to comply with any statutory or other legal requirements or any requirement of the ASX;

• to rectify any technical defects, manifest error or ambiguity; or

• to provide for the consequences of any corporate action by the Listed Entity.

2) Where the terms of the change are authorised by a resolution of Holders.

Such a resolution is passed only where Macquarie:

• notifies every Holder of the proposed change;

• supplies the Holder with a document setting out the reasons for, and any advantages and disadvantages of, the changes proposed; and

• supplies the Holder with a ballot paper allowing the Holder to vote for or against the change.

A resolution varying the Terms in respect of a Series is only passed if it is approved by the Holders of 75% of the relevant Series who cast votes (being Holders that are not Macquarie or its associates).

The votes will be validated and checked by Macquarie’s auditors. Each Holder will have one vote for each Macquarie Warrant held. The voting period may not be less than 20 Business Days from dispatch of the last notice of proposed changes to a Holder. No ballot can be requisitioned by Holders.

Where Macquarie Trading Warrants are held by Macquarie or its associate as trustee or nominee for a Holder, Macquarie or its associate will only cast a vote in respect of each Macquarie Warrant so held in the manner directed by the Holder.

2.6 Adjustments for Corporate Actions and other Events

Several events may occur in relation to the Listed Entities or the Shares which will result in adjustments being made to the Exercise Price, Specified Numbers or the composition of an Underlying Parcel.

These events are set out in Clause 4 of the Terms.

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The adjustments will generally follow the methodology that is used by ASX to adjust exchange traded options (“ETO”) over the same Shares as those comprised in the Underlying Parcel in the same situation. If there are no corresponding ETOs, Macquarie may still use the methodology set out in the ASX Market Rules. Macquarie may, with the consent of the ASX, make an alternate adjustment to that used by the ASX or set out in the ASX Market Rules if it determines the actual ETO adjustment or ASX methodology is inappropriate in a particular situation.

Some events and the adjustments set out in the ASX Market Rules are summarised below. These summaries provide an outline only and where there is any difference between these summaries and the adjustments contemplated by Clause 4 of the Terms, the latter shall prevail.

Reconstruction of Capital

The Underlying Parcel will become the new securities issued in substitution for the Share which constituted the Underlying Parcel before the reconstruction. The Exercise Price, composition of the Underlying Parcel and Specified Number, as applicable, will be adjusted in accordance with the methodology set out in the ASX Market Rules 11.3.

Cash Return of Capital

If a pro-rata cash return of capital involves the cancellation or repurchase of any Share, the Underlying Parcel will be adjusted to exclude the cancelled or repurchased securities.

The Exercise Price, composition of the Underlying Parcel and Specified Number, as applicable, will be adjusted in accordance with the methodology set out in ASX Market Rules 11.3.

Bonus or Rights Issue

If there is a pro rata issue or distribution of securities by way of a bonus issue or a pro rata right to acquire securities, the Exercise Price, composition of the Underlying Parcel and Specified Number, as applicable, will be adjusted in accordance with the methodology set out in ASX Market Rules 11.3.

2.7 Contractual Rights to Payment if Macquarie Defaults

If after an effective Exercise Notice has been given in respect of Macquarie Trading Warrants, Macquarie fails to either:

(a) in the case of Call Warrants, procure that the Holder becomes the registered owner of the Underlying Parcel within twenty (20) Business Days after the later of the Exercise Day and the day on which the Transferee has satisfied its obligations under these Terms; or

(b) in the case of Put Warrants, post a cheque to the Transferor on the Payment Date for the Exercise Price (less any Transfer Tax) for every Specified Number of Warrants exercised,

the Holder will, upon giving notice to Macquarie, be entitled to receive a payment equal to

A = 1.1 x S

Where:

A = the amount; and

S = in the case of a Call Warrant, the value of the Underlying Parcel calculated in accordance with Clause 5.12 of the Terms and, in the case of a Put Warrant, the Exercise Price.

Upon payment of this amount, the relevant Macquarie Warrant will cease to exist, and Macquarie shall have no further obligations to the Holder. 2.8 Register

Macquarie will arrange (at its cost) for a register of Holders of each Series of Macquarie Trading Warrants to be established and maintained at the offices of Computershare Investor Services Pty Limited (see Directory on the last page) in Sydney. The Register will be open during normal business hours for inspection by any Holder or authorised representative of any member of the Listed Entities.

As the Macquarie Trading Warrants will be CHESS Approved Securities, a CHESS sub-register and an Issuer Sponsored Subregister of Holdings will be established in respect of each Series of Macquarie Trading Warrants.

2.9 Form of Holding

The Macquarie Trading Warrants will be held in uncertificated form and no certificates will be issued. The Macquarie Trading Warrants will be noted in the Register of Macquarie Trading Warrants for each Series maintained by Computershare Investor Services Pty Limited.

2.10 Activities of Macquarie

The Macquarie Trading Warrants will constitute direct unconditional obligations of Macquarie.

Macquarie reserves the right to buy back Macquarie Trading Warrants that have been issued. Macquarie Trading Warrants bought back will not be cancelled automatically, but may be cancelled or resold by Macquarie. Macquarie Trading Warrants may be issued after commencement of trading on the ASX.

Members of the Macquarie Group may apply for Macquarie Trading Warrants to facilitate market

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making activities that may be undertaken in relation to the Warrants. Macquarie will provide, as and when practicable, buy and sell quotations for Macquarie Trading Warrants on the ASX.

From time to time Macquarie (or other members of the Macquarie Group) may hold shares in, or warrants or other securities relating to the Shares comprised in the Underlying Parcel. Holders of Warrants have no power, directly or indirectly, to vote or control how Macquarie (or the relevant Macquarie Group company) votes in relation to those shares or other securities. Macquarie (or the relevant Macquarie Group company) may vote or not vote in relation to those shares or other securities at its sole discretion and having regard solely to its own interests.

2.11 The Clearing House Electronic Sub-register System (CHESS)

CHESS (Clearing House Electronic Subregister System) is a computer system which electronically transfers title between the buyers and sellers of securities on the ASX. It is a paperless system where security ownership is recorded on an account in CHESS, rather than through the use of physical share certificates. CHESS also enables the electronic settlement of transactions between CHESS participants (i.e. stockbrokers and institutional investors).

CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of the ASX. All CHESS participants must abide by the published rues known as the ASX Settlement Transfer Corporation Pty Limited (ASTC) Settlement Rules (ASTC Settlement Rules).

Macquarie will apply to have the Warrants offered under this PDS admitted to CHESS. When the Warrants become “CHESS Approved Securities”, holdings will be registered on one of two subregisters: an electronic CHESS subregister or an Issuer Sponsored Subregister. Warrants held by a Holder who is a participant in CHESS or a person sponsored by a participant in CHESS will be registered on the CHESS subregister. All other holdings will be registered on the Issuer Sponsored Subregister.

Under the CHESS system, Holders will be provided with a holding statement on a monthly basis whenever there is a change in holding, rather than with a certificate. The holding statement will record the number of Warrants held and the particulars of the Holder, including the Holder’s Holder Identification Number in the case of a CHESS Holder or a Shareholder Reference Number in the case of an Issuer Sponsored Holder.

Holders who hold Warrants with more than one sponsoring participant will receive separate holding statements from the ASX.

2.12 Distributions of this PDS and any Supplementary PDS

As the Macquarie Trading Warrants are to have Trading Status on the ASX, they may be transferred to secondary holders. This PDS, together with any relevant Supplementary PDS may be passed on to such secondary holders in that capacity or to potential transferees who approach existing Holders, the Broker or Macquarie. Macquarie will provide a copy of this PDS and any relevant Supplementary PDS on request.

2.13 Substantial Shareholders, Takeovers and Associations

The acquisition of Macquarie Trading Warrants may have implications for Holders (particularly substantial shareholders) under Chapters 6, 6A, 6B, 6C and 6D of the Corporations Act 2001. The precise implications depend upon the Holder’s particular circumstances.

The following explanation of the law as at the date of the PDS is provided to assist Holders in identifying the practical obligations that may arise from a holding of Macquarie Trading Warrants. The obligations of Holders will, however, be affected by circumstances peculiar to individual Holders and Holders should obtain their own advice on the obligations they may have under the Corporations Act.

ASIC has issued Class Order 02/924 which disregards any relevant interest in, or voting power in relation to, a Share which a Holder may have solely as the result of holding a Call Warrant. ASIC has also issued Class Order 02/925 which disregards certain associations between the Issuer and a Holder. These Class Orders apply to the Call Warrants.

2.14 Foreign Holders

The acquisition or exercise of Macquarie Trading Warrants could have implications for Holders under the Foreign Acquisitions and Takeovers Act 1975 (Commonwealth) (FATA). The following paragraphs are a very general summary of the requirements of FATA as they may affect an acquisition of Macquarie Trading Warrants. The summary does not purport to be exhaustive nor to give legal advice and should not be relied on by the potential investors, who should seek their own legal advice in relation to all aspects of the proposed investment including but not limited to those referred to below.

FATA empowers the Treasurer of Australia to prohibit a proposed acquisition of shares in an Australian corporate or interests in assets of an Australian

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business where the result of the acquisition will be that a foreign person, together with its associates would have an interest of not less than 15% of the issued shares in the corporation or interests in assets of an Australian business, or two or more foreign persons (together with their associates) would in aggregate have an interest of not less than 40% of the interests in the issued shares in the corporation or assets of the Australian business. Where such an acquisition has already occurred, the Treasurer has the power to order a person who acquired the shares or interests in the assets to dispose of them. The concepts of acquisition, interest, associate and foreign person are very widely defined in FATA.

In addition, FATA requires certain persons who propose to make such acquisitions first to notify the Treasurer of their intention to do so. The acquisition of Macquarie Trading Warrants on-market will constitute an acquisition by the Holder of the Shares comprised in the Underlying Parcel for the purposes of FATA.

Foreign ownership of Shares in Australian companies may also be restricted under other Commonwealth legislation, or under Commonwealth Government policy for example, in relation to Australian banks and Telstra Corporation Limited. In addition, some Australian companies are subject to legislation which prescribes maximum shareholding limits for all shareholders.

Section 3: Risks You Should Consider

An investment in Macquarie Trading Warrants is speculative with returns received depending on a number of variable factors. All investments involve varying degrees of risk. In evaluating the merits and suitability of an investment in Macquarie Trading Warrants, careful consideration should be given to the risks inherent in Macquarie Trading Warrants. This Section does not purport to be a comprehensive summary of all the risks associated with an investment in Macquarie Trading Warrants but highlights particular risks that Macquarie wishes to encourage prospective investors to consider in detail and discuss with their professional advisers.

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3.1 National Guarantee Fund - not a guarantor in all cases

Claims against the National Guarantee Fund may only be made in respect of secondary trading in Warrants between brokers on the ASX and cannot be made in relation to the primary issue of Warrants by Macquarie or the settlement obligations of Macquarie arising from the giving of Exercise Notices or the expiry or termination of the Warrants.

The capacity of Macquarie to settle all outstanding Warrants is not guaranteed by the ASX, the National Guarantee Fund or the ASTC. 3.2 Obligations of Macquarie

The value of the Warrants depends upon, among other things, the ability of Macquarie to perform its obligations under the Terms.

The obligations of Macquarie under the Warrants are not deposit liabilities of Macquarie, and they are not guaranteed by any other party. They are unsecured contractual obligations of Macquarie which will rank equally with Macquarie’s other unsecured contractual obligations and with its unsecured debt, other than liabilities mandatorily preferred by law. In this regard, Section 13A(3) of the Banking Act 1959 provides that in the event of Macquarie becoming unable to meet its obligations, the assets of Macquarie in Australia shall be available to meet its deposit liabilities in Australia in priority to all other liabilities of Macquarie (which includes the obligations of Macquarie under the Warrants).

Investors must make their own assessment of the ability of Macquarie to meet its obligations. A description of Macquarie is set out in Section 7 to assist potential investors in making this assessment. 3.3 Exercise Procedure and Exercise Notice

Holders who wish to exercise their Warrants should ensure that they follow the proper exercise procedures. Shares to be delivered by the Holder following the exercise of a Put Warrant must be registered in the same name and address as the Warrant is registered in. The exercise of Put Warrants will not be valid if the Holder does not procure that Macquarie is in a position to be registered as the holder of the adjusted Underlying Parcel by the fifth Business Day after the Expiry Date.

If the Warrants are not properly exercised they will lapse and the Holder may receive an Assessed Value Payment.

3.4 Corporate Events

Several corporate events may occur which result in an adjustment to the Underlying Parcel, the Specified Number or the Exercise Price. Such corporate events include reconstructions of capital, cash returns of capital, bonus issues, rights issues and Special Dividends. Macquarie will notify the Holder of any change to the Underlying Parcel, the Specified Number and any likely change to the Exercise Price. 3.5 Takeover of a Listed Entity and Schemes of

Arrangement

A takeover offer or scheme of arrangement may result in the automatic lapse of a Warrant (see Clause 2.3(d) and Clause 2.3(e) of the Terms). 3.6 Factors Affecting Warrant Value

The market price of a Warrant is expected to be dependent upon such factors as the market price of Shares, the volatility of the price of Shares, the level of interest rates, the time remaining until the Expiry Date and other interrelated and complex factors and general risks applicable to stock markets on which Shares and the Warrants are traded.

The market price of a Call Warrant is likely to fall if the market price of the relevant Underlying Parcel falls. The market price of a Put Warrant is likely to fall if the market price of the relevant Underlying Parcel increases. The financial performance of the relevant Listed Entity will affect the market value of Shares and, consequently, the market value of the Warrant. Macquarie makes no representation or warranty as to the financial performance of any Listed Entity.

No liability or responsibility is accepted by Macquarie regarding the completeness or accuracy of such information regarding any Listed Entity. The value of a Warrant is also reduced by time decay, meaning that even if the market price of a Share moves in the desired direction, the value of the Warrant may fall if the time decay is greater. 3.7 Possible Illiquidity of Trading Market

Investors should be aware that there is no accurate indication as to the extent to which the Warrants will trade in the secondary market, nor is there sufficient evidence as to whether that market will be liquid or illiquid.

Section 3: Risks You Should Consider

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3.8 Potential Conflicts of Interest

Companies in the Macquarie Group may buy and sell Warrants, Shares of the Listed Entity and other financial products relating to the Share comprised in the Underlying Parcel, either as principal or agent. In addition, companies in the Macquarie Group may from time to time advise any of the Listed Entities in relation to activities unconnected with the issue of Warrants, including (but not limited to) general corporate advice, financing, funds management and property and other services. Macquarie Group’s interest in the Listed Entities is disclosed in the First Supplementary PDS.

The rights of Holders against Macquarie are set out in the Terms. Macquarie is not a fiduciary to Holders. Any profits earned and any losses incurred by Macquarie and its related bodies corporate in their trading activities (in relation to Shares, Warrants or otherwise) will accrue entirely to those parties independently of Macquarie’s obligations to Holders.

3.9 General Market Risks

General movements in local and international stock markets, prevailing and anticipated economic conditions, investor sentiment and interest rates could all affect the market price of Warrants. These risks are generally applicable to any investment on the ASX or any other stock market.

3.10 Exercise of Discretion by Macquarie

Investors should note that some provisions of the Terms confer discretions on Macquarie. These discretions include the discretion to nominate Extraordinary Events (see Clause 1.5 of the Terms) and to vary the adjustments contemplated in Clause 4 (see Clause 4.7 of the Terms). The exercise or non-exercise of these discretions could adversely affect the value of the Warrants.

Holders do not have the power to direct Macquarie concerning the exercise of any discretion, although in some cases Macquarie may only exercise certain discretions with the consent of the ASX. The discretions are set out in the Terms.

3.11 Suspension, Discontinuance or Modification of the Shares

Except where Macquarie nominates it as an Extraordinary Event, suspension of any Shares from official quotation on the ASX will not affect the validity of a Warrant or in any way detract from the obligations of Macquarie under a Warrant.

The cancellation of any Shares or the modification of their rights may, in certain circumstances, lead to a change in the Underlying Parcel, Exercise Price and/or Specified Number. Otherwise, except where Macquarie nominates it as an Extraordinary Event, the cancellation of any Shares or the modification of their rights will not affect the validity of a Warrant or in any way detract from the obligations of Macquarie.

3.12 Suspension of Warrant Trading

Trading of Warrants on the ASX may be halted or suspended by the ASX. This may occur whenever the ASX deems such action appropriate in the interests of maintaining a fair and orderly market in a Series of Warrants or in the relevant Shares or otherwise deems such action advisable in the public interest or to protect investors.

Matters that may also be considered include circumstances where the ASX has been advised that a Listed Entity is about to make an important announcement affecting its Shares, any unusual conditions or circumstances are present or Macquarie becomes unable or unwilling or fails to comply with the ASX Market Rules or if the ASX in its absolute discretion thinks fit.

The withdrawal of admission to Trading Status or suspension of the Warrants may, in Macquarie’s discretion, cause the Warrants to lapse if it would be an Extraordinary Event.

3.13 Delisting of Listed Entity

Except to the extent that it constitutes an Extraordinary Event (in which case the Warrants will lapse), the removal of a Listed Entity from the official list of the ASX will not affect the validity of the relevant Series of Warrants or in any way detract from the obligations of Macquarie under that Series of Warrants. However, the Warrants themselves may have Trading Status withdrawn by the ASX in such circumstances. If the Shares become worthless or the relevant Listed Entity is wound up or ceases to exist, it is likely that the Call Warrants will cease to have any value.

3.14 Voting Rights

Warrants confer no rights on the Holder to vote in relation to any Shares.

3.15 Investment Decisions

It is impossible in a document of this type to take into account the investment objectives, financial situation and particular needs of each investor. Accordingly, nothing in this PDS should be construed as a recommendation by Macquarie or any other person concerning an investment in Macquarie Trading Warrants, Shares or any other security. Readers should not rely on this PDS as the sole basis for any investment decision in relation to Macquarie Trading Warrants, Underlying Parcels or any other security, but should obtain relevant information concerning the Listed Entities and where necessary, independent financial advice.

Section 4: Taxation Considerations

This Section contains a general summary only of some of the taxation consequences of investing in Macquarie Trading Warrants by an Australian resident individual taxpayer .

The summary is necessarily general in nature and does not take into account the specific circumstances of an investor. Potential investors should not rely on the contents of this Section and should obtain specific taxation advice referrable to their own circumstances prior to making an investment decision.

Also, potential investors should be aware that the ultimate interpretation of the taxation law rests with the Courts and that the law, and the way that the Commissioner of Taxation administers the law, may change at any time.

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4.1 Relevant Taxpayers

This Section is confined to the position of an Australian resident individual taxpayer who does not carry on the business of trading or dealing in shares or warrants.

4.2 Application or Purchase

No immediate tax consequences will arise to an investor who acquires a Macquarie Warrant, whether by primary market application or through purchase on the ASX. The cost of acquiring the Warrant will not be deductible to the investor but will be relevant for capital gains tax purposes.

If the Warrant is sold or expires unexercised, the cost of acquiring the Warrant will form part of the cost base of the Warrant. If the Warrant is exercised, the cost of acquiring the Warrant will form part of the cost base of the Underlying Parcel acquired (in the case of a Call Warrant) or sold (in the case of a Put Warrant) by the investor from the exercise of the Warrant.

4.3 Derivation of Dividend Income

Investors in a Call Warrant will not derive dividend income from the Underlying Parcel unless and until they acquire the Underlying Parcel by exercising the Warrant. Investors in a Put Warrant will continue to derive dividend income from any Underlying Parcel that they own until they sell the Underlying Parcel to Macquarie by exercising the Warrant. However, investors in a Put Warrant should consider whether their entitlement to any franking credits will be affected by the 'holding period rule' by virtue of their investment in the Put Warrant.

4.4 Sale of Macquarie Warrant

If the investor does not exercise the Macquarie Warrant, and sells it on the ASX before the Expiry Date, the investor will be treated as having disposed of a CGT asset. A capital gain or a capital loss might then arise to the investor, calculated as the difference between the capital proceeds from the disposal and the cost base of the Warrant.

If the investor held the Warrant for at least 12 months prior to the sale, then the 50% CGT discount may be applied to the amount of any capital gain remaining after the application of available capital losses, for the purposes of calculating the net capital gain for inclusion in the investor's assessable income.

4.5 Exercise of Macquarie Warrant

The tax consequences of the exercise of a Macquarie Warrant will depend upon whether the Warrant is a Call Warrant or a Put Warrant.

Call Warrant

When an investor exercises a Call Warrant, the exercise of the Warrant will not of itself give rise to any immediate tax consequences. Rather, both the cost of acquiring the Warrant and the Exercise Price of the Warrant will then be included in the cost base of the Underlying Parcel which is acquired from the exercise of the Warrant, for the purposes of calculating any capital gain or capital loss made on the subsequent disposal of the Underlying Parcel by the investor.

The investor will only be entitled to claim the 50% CGT discount on any capital gain realised on the subsequent disposal of the Underlying Parcel (after the application of any available capital losses) if the disposal occurs 12 months or more after the exercise of the Warrant irrespective of the period for which the Warrant was held prior to exercise.

Put Warrant

When an investor exercises a Put Warrant, the resulting sale of the Underlying Parcel will be treated as a disposal of a CGT asset. A capital gain or a capital loss may then arise to the investor, calculated as the difference between the Exercise Price and the cost base of the Underlying Parcel. In calculating the cost base of the Underlying Parcel, the cost of acquiring the Warrant will be added to the investor's existing cost base in the Underlying Parcel.

If the investor acquired the Underlying Parcel after 21 September 1999 and held the Underlying Parcel for at least 12 months prior to the sale, then the 50% CGT discount may be applied to the amount of any capital gain remaining after the application of available capital losses, for the purposes of calculating the net capital gain for inclusion in the investor's assessable income.

If the investor acquired the Underlying Parcel on or before 21 September 1999 (but after 19 September 1985), then the investor may choose to either apply the 50% CGT discount or calculate their capital gain using a cost base indexed up to 30 September 1999.

4.6 Expiry of Macquarie Warrant

If the Macquarie Warrant expires unexercised, then a CGT event will occur on the expiry of the Warrant. A capital gain or capital loss may the