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MACQUARIE UNIT TRUST SERIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
4 Financial risk management (continued)
a) Strategies in using financial instruments (continued)
Policies and processes
The Manager constructs an investment portfolio consisting of newly listed stocks that meet the Sub-Fund’s
quantitative and qualitative criteria based on independent research and investment techniques. When the
Manager determines that new IPO Securities are suitable for the investment portfolio, the Manager may
remove an IPO Security and re-balance the portfolio.
In circumstances where the Manager makes an application for a security that will be listed and the
Manager’s allocation through the primary market is scaled back, secondary market purchases may be made.
The Manager will determine the weightings it considers appropriate from time to time in its discretion. Cash
and money market instruments will also be held to manage the liquidity within the Sub-Fund’s portfolio. The
number of IPO Securities to be held within the investment portfolio will be determined by the Manager from
time to time.
Macquarie IPO China Gateway Fund
Investment objective
The Macquarie IPO China Gateway Fund’s investment objective is to provide unitholders exposure to returns
from initial public offerings and secondary market trading of equity securities of companies which have been
recently listed. This is achieved by:
• directly by investing in equity securities or other related financial instruments which are or will be listed
predominantly on stock exchanges in Hong Kong, Singapore, Taiwan or the United States of America
(the “Direct Portfolio”); and
• indirectly by investing in the Macquarie IPO China Concentrated Core Fund (the “Indirect Portfolio”).
The exposure of the Sub-Fund is maintained by investing 70% to 100% in the Direct Portfolio and 0% to 30%
in the Indirect Portfolio.
Policies and processes
In pursuit of the investment objective the Sub-Fund’s Direct Portfolio will acquire a portfolio of recent IPO
Securities. The IPO Securities to be included in the Direct Portfolio will be chosen by the Manager in
accordance with the Manager’s quantitative and qualitative investment criteria (this is described further
below). The Manager will generally seek to acquire new IPO Securities for the Direct Portfolio through the
initial public offering of the relevant IPO Securities or on the market after listing. The eligible universe of the
Direct Portfolio includes listed equities with a focus on IPO Securities listed in Hong Kong, Singapore,
Taiwan and the United States. In the case of IPO Securities not listed in Hong Kong, Singapore or Taiwan,
the IPO Securities must relate to companies which derive or are expected to derive a significant portion of
their revenues from Greater China or Singapore. The Sub-Fund intends to invest no more than 30 per cent of
its Net Asset Value in IPO Securities which are listed in markets other than Hong Kong or Taiwan and which
are not expected to derive a significant portion of their revenues from the PRC. Equity exposure in the
secondary market may be achieved through investment in shares, depositary receipts, participation rights
and potentially through other instruments which are linked to the performance of eligible IPO securities such
as participation notes, equity swaps and equity linked notes, provided that exposure via investments in such
instruments (excluding ADRs and GDRs) shall not exceed 15% of the net assets of the Sub-Fund.
The Manager will determine the investment portfolio by applying a variety of quantitative and qualitative
criteria.
The Manager will determine an appropriate number of positions to best serve the investment objectives of
the Sub-Fund having regard to the relative size of allocations that the Sub-Fund would need to make to
individual positions compared to the available liquidity and likely market impact and transaction costs of
trading those positions. The number and relative size of the positions may be adjusted from time to time. The
Direct Portfolio may also comprise cash.
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