CORONATION MONEY MARKET FUND (AUTHORIZED AND REGISTERED IN NIGERIA AS A UNIT TRUST SCHEME)

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1 This document is important and you are advised to carefully read and understand its contents. Before subscribing, please consult your Stockbroker, Solicitor, Banker or an Independent Investment Adviser registered by the Securities and Exchange Commission. This Prospectus has been seen and approved by the Directors of Coronation Asset Management Limited and they jointly and individually accept full responsibility for the accuracy of all information given and confirm that, after having made all inquiries which are reasonable in the circumstances, and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading. FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, PLEASE SEE RISK FACTORS ON PAGES 13 & 14. INITIAL PUBLIC OFFERING OF 1,500,000,000 UNITS OF N1.00 EACH AT PAR IN THE CORONATION MONEY MARKET FUND (AUTHORIZED AND REGISTERED IN NIGERIA AS A UNIT TRUST SCHEME) PAYABLE IN FULL ON APPLICATION FUND MANAGER RC ISSUING HOUSE RC APPLICATION LIST OPENS: Monday, 10 July, 2017 APPLICATION LIST CLOSES: Friday, 28 July, 2017 This Abridged Prospectus and the Units which it offers have been registered by the Securities and Exchange Commission. The Investments and Securities Act, 2007 provides for civil and criminal liabilities for the issue of a Prospectus which contains false or misleading information. Registration of this Abridged Prospectus and the Units which it offers does not relieve the parties of any liability arising under the Act for false or misleading statements contained or for any omission of a material fact in any Prospectus. This Abridged Prospectus is dated Thursday, 15 June 2017 Page 1

2 ABRIDGED TIMETABLE Date Activity Responsibility Application List opens Issuing House Application List closes Issuing House Receiving Agents make returns Registrar Forward Basis of Allotment Proposal to SEC Issuing House Obtain SEC s clearance of the Basis of Allotment Proposal Issuing House Disburse Net Proceeds to Custodian Receiving Bank Return Excess/Rejected Application Monies Registrar Publish Allotment Announcement in two national daily newspapers Distribution of Statements of Unit-holdings Registrar Fund Manager/Issuing House List on the Nigerian Stock Exchange Stockbroker Forward Offer Summary Report to the SEC Fund Manager/Issuing House The dates given above are indicative only. The timetable has been prepared on the assumption that certain key activities including, but not limited, to the receipt of regulatory approvals from the SEC for the Offer will be achieved as stated, if not, then dates surrounding key events in the timetable may be subject to adjustments without prior notice. Page 2

3 SUMMARY OF THE OFFER The following is a summary of the terms and conditions of an investment in the Coronation Money Market Fund. This summary draws attention to information contained elsewhere in the Abridged Prospectus; it does not contain all the information a prospective investor in the Fund should consider in making an investment decision. This summary should be read together with the entire Abridged Prospectus. Investors are advised to seek information on the applicable fees and charges before investing in the Fund. FUND MANAGER ISSUING HOUSE TRUSTEE TO THE FUND CUSTODIAN THE OFFER METHOD OF OFFER NATURE OF THE FUND UNIQUE FEATURE TARGET INVESTORS/INVESTOR SUITABILITY FUND SIZE UNIT PRICE UNITS OF SALE PAYMENT TERMS INDICATIVE* FUND RATING *TO BE CONFIRMED SUBJECT TO THE SUCCESSFUL LAUNCH OF THE FUND MANDATORY SUBSCRIPTION Coronation Asset Management Limited Coronation Merchant Bank Limited United Capital Trustees Limited Citibank Nigeria Limited 1,500,000,000 Units of N1.00 each in the Fund Offer for Subscription The Fund seeks to deliver capital preservation, liquidity, and diversification while providing a competitive return to fund investors. The Fund will invest in attractive and high yield short term money market securities, unsubordinated short term debt instruments such as Bankers Acceptances, Certificates of Deposit, Commercial Papers, Collateralized Repurchase Agreements, Deposits (Fixed/Tenored) with eligible financial institutions, and other instrument introduced and approved by the Central Bank of Nigeria (CBN) from time to time as permissible under SEC Rule 470. These eligible securities must have received an investment grade rating from a SECregistered rating agency. The Fund offers an added benefit of a group personal accident policy to retail investors with a minimum balance of N100,000 in the Fund. The Fund would provide a personal accident only insurance policy, whereby Unit-Holders/investors will be entitled to a scale of compensation for death and permanent disability following an accident, to the tune of a 100% of sum invested as stated in schedule of benefits on pages 11 to 13 of this Abridged Prospectus. The Coronation Money Market Fund is tailored for Retail, High net-worth individuals and investors that seek capital preservation and regular stream of income through low risk investments. These investors are looking to optimize return on investment in short dated money market assets. In view of the fund s competitive return, it is particularly suitable for investors who seek: A short term investment horizon; Safety and preservation of capital; Liquidity and regular stream of income as the fund is structured to pay dividend on a quarterly basis. N1,500,000, N1.00 per Unit. 10,000 Units and multiples of 5,000 units thereafter. In full on application. A- (NG)(f) In compliance with the rules and regulations of the SEC which states that promoters of Unit Trust Schemes in Nigeria must subscribe to a minimum of 5% of the initial issue of such schemes, the Fund Manager shall subscribe to 5% of the Offer. OPENING DATE 10, July 2017 CLOSING DATE 28, July 2017 USE OF PROCEEDS The Offer proceeds will be utilized in accordance with the Fund s investment objectives and policies. The Offer costs and expenses amounting to N34,387,500 (Thirty-Four Million, Three Hundred and Eighty-Seven Thousand, Five Hundred Page 3

4 SUMMARY OF THE OFFER Naira) representing 2.29% of the Offer size shall be borne by the Fund. These costs shall be defrayed from the Offer proceeds. DISTRIBUTIONS MINIMUM INVESTMENT PERIOD The following Distribution options are available to Unit-holders: - Reinvestment Option: Under this option, distributions are to be automatically reinvested in additional Units of the Fund at the Offer Price on the day of distribution. - Cash Option: Distributions are paid only via electronic transfer to Unit-holder s account. The minimum holding period for an investment in the Fund is ninety (90) calendar days from the date of subscription. This period commences from the allotment date for subscribers under the Offer for Subscription of the Fund. For subsequent subscribers the period commences from the date of the respective subscription. REDEMPTION Every unit holder shall redeem all or part of the Units held by them based on right at the Bid price on any Business Day, provided that the Statements of Unit-holdings, redemption notice(s) and other redemption documents are forwarded to the Fund Manager on the valuation Day or in accordance with the instructions prescribed from time to time by the Fund Manager. Minimum permissible holding after partial redemption is 5,000 Units or such balance as advised by the Manager from time to time. The Fund will make redemption payments within five (5) Business Days of receipt of the redemption Notice. No additional charges will be made on redemption. However, units redeemed before the expiration of Minimum Investment Period (90 days) will attract a handling fee charge of 1.5% of the income accrued on such investment. QUALIFICATION QUOTATION STATUS SUBSCRIPTION TO THE FUND The Units qualify as securities in which Trustees may invest under the Trustee Investment Act Cap T22 LFN An application of the fund will be made to Council of the NSE for the listing of the Fund by Memorandum. The Units being offered for subscription shall rank pari-passu in all respects with other future Units to be issued in the Fund. Investors can subscribe to Units of the Fund during this initial public offering by: a. Filling and returning the Application Form attached to this Abridged Prospectus. Care must be taken to fill the Application Form in accordance with the instructions set out at the back of the Application Form attached hereto. b. Filling out an Electronic Application Form on the Fund Manager s website ( Investors can also subscribe to Units of the Fund after the initial offering period from the Fund Manager or any of its designated agents/representatives or through any medium that may be approved and provided by the Fund Manager from time to time. Payment for Units of the Fund can be made by a personal or manager s cheque or via a wire transfer made in accordance with instructions on the Form. ELIGIBILITY OF SECURITIES SPONSOR High quality money market instruments, unsubordinated short term debt securities such as Bankers Acceptances, Commercial Papers, Deposits (Fixed/Tenored) with eligible financial institutions and other instruments introduced and approved by the CBN from time to time and as permissible under SEC Rules. These eligible securities will have received an investment grade rating from a SEC-registered rating agency. The Fund is sponsored by Coronation Asset Management Limited. Coronation Asset Management is duly registered with the SEC to carry out portfolio/fund management services. Page 4

5 SUMMARY OF THE OFFER PROFIT OR LOSS AND COMPREHENSIVE INCOME PROJECTIONS (Extracted from the Reporting Accountants Report) 12 months 12 months 3 months ending 31 ending 31 Dec ending 31 Dec Dec N 000 N 000 N 000 Revenue Bank Placements 17, , ,882 Government Treasuries (AFS) 21, , ,868 Banker Acceptances and Commercial Paper 11,703 89, ,090 Total Revenue 50, , ,840 Operating Expenses Management Fees 5,486 44,858 90,584 Other Operating Expenses 17,554 35,886 72,467 Total Operating expenses 23,040 80, ,051 Profit for the year 27, , ,789 NET ASSET VALUE PROJECTION (Extracted from the Reporting Accountants Report) 3 months ending 31 Dec months ending 31 Dec months ending 31Dec 2019 N 000 N 000 N 000 Net Asset Value at beginning of year 1,465,613 1,493,333 3,041,722 Additions during the year 1,500,000 3,000,000 Net Asset Value at end of year 1,465,613 2,993,333 6,041,722 Profit for the year 27, , ,789 1,493,333 3,297,770 6,598,511 Less: Distribution to Unit Holders - (256,048) (493,701) Net Asset at year end 1,493,333 3,041,722 6,104,810 INVESTMENT RISKS SELLING RESTRICTIONS GOVERNING LAW The risks associated with an investment in the Fund are set out in the section titled Risk factors on pages 20 and 21 of this Prospectus. Under no circumstances shall this Prospectus constitute an offer to sell or the solicitation of an offer to buy or shall there be any sale of these Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Offer Documents will be governed by and construed in accordance with the laws of the Federal Republic of Nigeria. Page 5

6 DIRECTORS OF THE FUND MANAGER AND OTHER CORPORATE INFORMATION CHAIRMAN MR. ABUBAKAR JIMOH, CFA 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA DIRECTOR MR. AIGBOVBIOSE AIG -IMOUKHUEDE 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA DIRECTOR (COMPANY SECRETARY) MRS. CORNELIA UTUK 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA DIRECTOR MR. EMEKA OKOLO, CFA 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA DIRECTOR MR. ABIODUN SANUSI, CFA 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA DIRECTOR MR. IVIE OMOROGBE 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA CORPORATE DIRECTORY OF THE FUND MANAGER CORONATION ASSET MANAGEMENT LIMITED 10 AMODU OJIKUTU STREET VICTORIA ISLAND PRINCIPAL OFFICERS OF THE FUND MANAGER MEMBERS OF THE FUND INVESTMENT COMMITTEE LAGOS NIGERIA Telephone: Website: MR. IVIE OMOROGBE (MANAGING DIRECTOR) MR. AKINYEMI OLUWADARE (GROUP HEAD OF OPERATIONS) MR. ADEKUNLE ADELAJA (CHIEF COMPLIANCE OFFICER) MR. TAMUNOIRINAOMI STEVE-TAMUNO (ASSET MANAGEMENT OFFICER) MS. FLORENCE OMONIYI (ASSET MANAGEMENT OFFICER) MR. ABUBAKAR JIMOH, CFA MR. AIGBOVBIOISE AIG-IMOUKHUEDE MR. ABIODUN SANUSI, CFA MR. EMEKA OKOLO, CFA MR. IBRAHIM BELLO DR. OLUBUNMI BAJOMO MS. TOKUNBO AJAYI (REPRESENTATIVE OF THE TRUSTEE) MR. AUSTIN AKPE (REPRESENTATIVE OF THE TRUSTEE) MR. SEGUN OGBONNEWO (INDEPENDENT MEMBER) FINANCIAL SUMMARY The Audited statement of the fund manager provided on page 24 of this document. Page 6

7 PROFESSIONAL PARTIES TO THE OFFER ISSUING HOUSE TRUSTEE TO THE FUND CUSTODIAN TO THE FUND CORONATION MERCHANT BANK LIMITED 10 AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS NIGERIA UNITED CAPITAL TRUSTEES LIMITED 12TH FLOOR, UBA HOUSE 57, MARINA LAGOS STATE CITIBANK NIGERIA LIMITED 27, KOFO ABAYOMI STREET VICTORIA ISLAND LAGOS NIGERIA SOLICITOR TO THE OFFER REPORTING ACCOUNTANTS REGISTRAR RATING AGENCY AKANBI & WIGWE 2A OBAFEMI ANIBABA STREET LEKKI PHASE 1 LAGOS ERNST &YOUNG UBA HOUSE 10 TH & 13 TH FLOORS, 57 MARINA LAGOS NIGERIA UNITED SECURITIES LIMITED 10, AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS STATE AGUSTO & CO LIMITED UBA HOUSE, 5 TH FLOOR 57, MARINA LAGOS ISLAND STOCKBROKER RECEIVING BANK CORONATION SECURITIES LIMITED 10, AMODU OJIKUTU STREET VICTORIA ISLAND LAGOS STATE ACCESS BANK PLC PLOT 999C, DANMOLE STREET OFF ADEOLA ODEKU/IDEJO STREET VICTORIA ISLAND, LAGOS Page 7

8 PARTICULARS OF THE FUND A BRIEF ON THE FUND The Coronation Money Market Fund is an open-ended fund authorized and registered in Nigeria as a Unit Trust Scheme under Section 160 of the ISA. The Fund is governed by a Trust deed with United Capital Trustees Limited as Trustees to the Fund. 1,500,000,000 Units are being offered for subscription at the launch of the Fund at N1.00 per unit of the Fund. The Fund is structured as an open-ended fund, and thus the registered Units will be continuously offered to investors and the Fund Manager will be ready to redeem the Units at all times throughout the duration of the Trust constituting the Fund. The Fund will invest in government securities, fixed deposit, commercial paper, banker s acceptance and other highly liquid and low-risk securities with a maturity not greater than 365 days. CMMF s unique selling point is the bundling of an insurance risk protection plan into the investment. The Fund offers an added benefit of a group personal accident policy to retail investors with a minimum balance of N100,000 in the Fund. The Fund would provide a personal accident only insurance policy, whereby Unit-Holders/investors will be entitled to a scale of compensation for death and permanent disability following an accident, to the tune of a 100% of sum invested as stated in schedule of benefits on page 13 of this Abridged Prospectus. PROSPECT OF THE FUND The Coronation Money Market Fund offers investors the opportunity to preserve their capital and earn returns from investments in short term money market securities such as treasury bills, commercial papers, banker s acceptance, certificate of deposits and other eligible money market instruments with financial institutions in Nigeria recognized by the Securities & Exchange Commission. INVESTMENT OBJECTIVE AND POLICY The Fund seeks to provide safety, liquidity, diversification and competitive return. The Fund will invest in high quality short term money market securities, unsubordinated short term debt securities such as Bankers Acceptances, Certificated of Deposits, Commercial Papers, Collateralised Repurchase Agreements, Deposits (Fixed/Tenored) with eligible financial institutions, and other instrument introduced and approved by the Central Bank of Nigeria (CBN) from time to time as permissible under SEC Rule 470. These eligible securities must have received an investment grade rating from a SEC-registered agency. Material changes to the fund s investment objective would only be made subject to the prior approval of unitholders. CORPORATE GOVERNANCE The Fund shall have an Investment Committee ( Committee ) which shall be primarily responsible for the establishment of investment and risk management policies of the Fund. The Committee will also have oversight over all investment activities of the Fund, consistent with the provisions of the Trust Deed and in accordance with the SEC Rules and Regulations. The membership of the Committee shall include nine (9) members being representatives of the Fund Manager, the Trustee and a member who is independent of the Manager, Trustee and Custodian. The Committee shall be responsible for setting guidelines and risk limits for investment of Fund assets which are supplemental to the related provisions of the Trust Deed and any regulatory constraints to which the Fund is subject. In the event of differences amongst the respective provisions of the Committee s guidelines, the Trust Deed and any applicable regulatory requirements, the most restrictive provision will apply. The Committee will receive and consider periodic reports including compliance and risk reports relating to the Fund s activities. The Committee will meet at least quarterly to set investment policies, determine overall investment strategy and to consider asset allocation and portfolio reporting. The Committee will also set and monitor investment guidelines including investment concentration and risk limits. In addition, the annual reports and accounts of the Fund will be reviewed by the Committee. The audited accounts of the Fund will be published and distributed to all Unitholders annually. Monthly and other periodic reports on the activities of the Fund will be filed with the Commission and the Trustee in accordance with the SEC Rules and Regulations. Please see pages 29 & 30 for the members of the Fund Investment Committee. ASSET ALLOCATION The Fund shall invest a maximum of 100% in quality money market instruments with a minimum tenor of 30 days and a maximum tenor of 365 days; a minimum of 25% in short term debt instruments of the Nigerian government; a minimum of 20% of the Fund s asset in Fixed or Tenored instruments including call placements; and a maximum of 30% in other money market securities which include other money market fund. Proposed Asset Class Asset Asset Allocation Target Weighting (%) Range (%) Deposits (Fixed/Tenured) Fixed Deposits Page 8

9 PARTICULARS OF THE FUND Short Term Government Securities Other Money Market Instruments Treasury Bills Commercial Paper Bankers Acceptance Other Money Market Funds Cash Call Placement *Other money market instrument includes unsubordinated short term debt securities such as Bankers Acceptances and Commercial Papers of companies, other Money Market Funds and other instruments introduced and approved by the Central Bank of Nigeria from time to time and as permissible under Securities and Exchange Commission Rules & Regulations INVESTMENT STRATEGY The Fund Manager s investment philosophy focuses on long-term value creation and wealth protection. The Fund will invest only in eligible securities including high quality money market instruments, unsubordinated short term debt securities such as Bankers Acceptances, Commercial Papers, Deposits (Fixed/Tenured) with eligible financial institutions and other instruments introduced and approved by the CBN from time to time and as permissible under SEC Rules. The Manager s primary goal is to achieve an overall positive total return that is consistent with Unit-Holders investment goals, objectives and risk profile. Investment decisions will be based on in-depth research analysis, thorough due diligence and continuous assessment of specific investments that offer the best prospects in the short term. The long-term interests of fund investors are central to the way in which the Manager approaches its business and invest for income and growth. The Fund s income strategy seeks to maximize current income while its growth strategy seeks to maximize capital gains. At the core of the investment process and in every investment decision is the risk management two-step process, which are determining what risks exist in an investment and then handling those risks in a way best-suited to the Fund s investment objectives. TARGET INVESTORS While the primary target is the retail sector because of their scale and their investment need gap, the competitive return of the Fund will make CMMF an attractive investment option to institutions and high net worth individuals who are interested in term deposit placement or hybrid current accounts and are looking to achieve higher returns from such investments than are ordinarily obtainable. The Fund is particularly suitable for investors who seek: Safety and preservation of capital; To reduce concentration risk by diversifying their investments; A short term investment horizon; Require liquidity; To benefit from wholesale deposit return; and A fund in the low risk spectrum and do not want any exposure to equities. INVESTMENT INCENTIVES The Fund will utilise the market bargaining power obtained from pooling of funds to enable investors enjoy competitive returns at minimal risk. The fund will also give investors access to liquidity, diversification, tax incentives and professional portfolio management. INVESTMENT DISCRETION The Fund Manager will exercise its discretion on investment of the Fund pursuant to the Trust Deed, policies instituted by the Investment Committee and in accordance with the Investment and Securities Act 2007 and Rules and Regulations of the SEC as prescribed from time to time. Within these bounds, the Fund Manager will be responsible for all the decisions as to the investment strategies, assets, size and timing of the investment the Fund seeks to make. INVESTMENT GUIDELINES AND RESTRICTIONS The Fund Manager shall strictly adhere to the investment objective of the Fund and shall invest only in such instruments that are permissible in accordance with SEC Rule 470, allowable under the Trust Deed and authorised by the Investment Committee. The Fund Manager is guided by certain restrictions as stated in the Trust Deed, the main provisions of which are summarised from pages 39 to 49 of the Offer Prospectus. Page 9

10 PARTICULARS OF THE FUND SUBSCRIPTION TO THE FUND Investors can subscribe to Units of the Fund during this initial public offering by: a. Filling and returning the Application Form attached to this Abridged Prospectus. Care must be taken to fill the Application Form in accordance with the instructions set out at the back of the Application Form attached hereto. b. Filling out an Electronic Application Form on the Fund Manager s website ( Investors can also subscribe to Units of the Fund after the initial offering period from the Fund Manager or any of its designated agents/representatives or through any medium that may be approved and provided by the Fund Manager from time to time. Payment for Units of the Fund can be made by a personal or manager s cheque or via a wire transfer made in accordance with instructions on the Form. FOREIGN CURRENCY INVESTORS Non-resident subscribers and subscriptions in foreign currency are permissible. Subscription monies, in foreign currency, shall be converted to Naira determined at the prevailing exchange rate at the time of subscription. Foreign currency subscribers are to also complete the application form and adhere to the instructions at the back of the application form. CCIs shall be issued by the Receiving Bank, to this category of Subscribers, within 24 hours of confirmation of receipt of the subscription amount. CCIs are needed to facilitate the subsequent repatriation, in a freely convertible currency, of proceeds arising from the sale of Units or from any Distribution of the Fund s income that the Fund Manager may undertake. INVESTMENT THRESHOLD The initial minimum investment will be 10,000 units of the Fund and additional units will be issued in multiples of 5,000 units and payable in full upon subscription. MEETING OF UNIT HOLDERS AND VOTING RIGHTS As the need arises or at the request in writing of Unit-holders holding not less than 25% (twenty five per cent) in value of the Units for the time being outstanding (other than Units of which the Fund Manager is beneficial owner), the Fund Manager shall call a General Meeting of Unit-holders with the consent of the Trustee. Any resolution put to vote shall be decided on a show of hands. Each Unit-holder shall have one vote. Where a Poll is demanded, each Unit-holders shall have one vote for every unit held. INCOME AND DISTRIBUTION The Manager intends to distribute income (less expense) as dividend to Unit-Holders on a quarterly basis. DISTRIBUTION OPTIONS AND PAYMENT The following Distribution options are available to Unit-holders: Reinvestment Option: Under this option, distributions are to be automatically reinvested in additional Units of the Fund at the Offer Price on the day of distribution. Where an investor reinvested in additional units, a new statement shall be issue to reflect his/her new holding. Cash Option: Distributions are paid only via electronic transfer to a Unit-holder s account. TAX CONSIDERATIONS Distributions of income to unitholders shall be tax exempt. Also any capital gains derived by the unitholders from the redemption of units in the Fund shall be tax exempt. Foreign investors should contact their respective tax authorities for the tax treatment of income earned in Nigeria. Please note that taxation-related issues are subject to changes in legislation. Investors are therefore advised to seek tax advice regarding an investment in the Fund from their professional tax advisers. STATEMENTS OF UNIT-HOLDINGS Every unit holder shall be entitled to a Statement of Unit-holdings, which shall be evidence of their title to the number of units specified on such documents. Joint unit holders shall be entitled to one Statement of Unit-holdings in respect of the units held jointly by them which shall be delivered to the joint holder whose name first appears on the Register. Page 10

11 PARTICULARS OF THE FUND REDEMPTION OF UNITS Investors shall have the right to redeem all or part of the Units held by them on any Business Day, provided redemption documents are received in accordance with the instructions specified by the Fund Manager from time to time. Minimum permissible holding after partial redemption is 5,000 Units or such balance as advised by the Manager from time to time. The Fund will make redemption payments within five (5) Business Days of receipt of the Redemption Notice. No additional charges will be made on redemption. However, Units redeemed before the expiration of the Minimum Investment Period (90 days) will attract a handling fee charge of 1.5% of the income accrued on such investment. TRANSFER AND TRANSMISSION OF UNITS Every Unit-holder shall be entitled to transfer the Units or any of the Units held by him through the Fund Manager in accordance with the provisions of the Trust Deed. The Fund Manager will not transfer or redeem Units without the submission of a Fund Statement of Unit-holding relating to such Units, which must be surrendered before any transfer or redemption whether for the whole or any part thereof can be processed. VALUATION OF UNITS OF THE FUND The NAV of the Fund shall be determine on the basis of amortized cost method in line with the rules of SEC. The cost is the price the Fund pays for an instrument or security adjusted for accrual of discount and amortization of premium. QUOTATION In order to improve visibility of Units of the Fund, the Fund Manager shall make all necessary efforts to obtain an approval of the listing of Units of the Fund on The Exchange. To this end, a formal application will be made to The NSE for the admission of the Units to its Memorandum List. FEES, CHARGES & EXPENSES OF THE FUND Offer Expenses: Management Fee: Operating Expenses: All charges and fees (including VAT where relevant) for establishing the Fund, including regulatory fees payable to the SEC, professional fees to transaction parties, brokerage commission and administrative expenses amounting to and estimated at N34,387,500 (Thirty-Four Million, Three Hundred and Eighty-Seven Thousand, Five Hundred Naira) representing 2.29% of the Offer size shall be borne by the Fund. These costs shall be defrayed from the Offer proceeds. An annual management fee of 1.50% of the NAV of the Fund shall be paid to the Fund Manager. This fee will be paid quarterly in arrears and represents the remuneration due to the Fund Manager for the management and advisory roles involved in the day-to-day management of the Fund. All operating expenses including charges and expenses incurred in connection with the management of the Fund plus annual fees payable to the Trustee, Auditors, Custodian and Rating Agency shall not exceed 5% of the NAV of the Fund. INSURANCE POLICY COVER Group Personal Accident Insurance Policy The Coronation Money Market Fund offers an added benefit of a group accident policy to Unit holders of the Fund (applicable only to retail investors with a minimum balance of N100,000). The Fund would provide a personal accident only insurance policy whereby unit holders/investors will have access to some level of compensation for death and permanent disability suffered in an accident. In order to maximize unit holder s return, the Fund Manager will bear the insurance premium cost for the Group Personal Accident Policy. Details of the policy are as follows: Conditions: 1. No compensation shall be payable in respect of any one Unit-Holder: a. Unless the death takes place within 3 calendar months after the date of the accident/injury. b. Unless the permanent disability takes place within twelve calendar months after the date of the accident/injury. Page 11

12 PARTICULARS OF THE FUND 2. The insured shall not be entitled to compensation under more than one item in respect of the same injury to one Unit-Holder. 3. Payment of claim as compensation shall be made as stated in the schedule of benefit (See page 13). 4. In the event of a Unit-Holder being accepted for insurance whilst already suffering from a permanent disablement, or if the insurance be continued after such disablement in accordance with the terms of provision 3 above, it is hereby understood that should such Unit-Holder sustain any further disablement compensation as provided by this policy for such further disablement under item 1(b) shall be calculated as that which would have been payable had the previous disability not existed. Exclusions This policy does not apply to bodily injury whether fatal or non-fatal or blindness directly or indirectly by or resulting from or traceable to: i. An accident happening when the Unit-holder is under the influence of intoxicating liquor or of a drug (unless administered under the orders of a hospital or a qualified medical practitioner) or is in a state of insanity; ii. The Unit-Holder being affected (Temporarily or otherwise) by alcohol, drugs or insanity; iii. Suicide or attempted suicide, war, invasion, act of foreign enemy hostilities (whether war be declared or not) civil-war, rebellion, riot, civil commotion, revolution, insurrection or military or usurped power and terrorism; iv. The Unit-Holder playing football for or against professional clubs, polo or motorcycling (whether as driver or passenger) or mountaineering (with the use of ropes or guides), skiing, skijoring, tobogganing, bob-sleighing, hunting or participating in speed or duration, test or races of any kind (other than athletics); v. Child bearing or other physical or natural causes peculiar to the female sex; vi. Air travel (other than as a fare-paying passenger by a regular schedule Air-line Service); vii. Any Unit-Holder involved in any form of military exercises; viii. Any Unit-Holder riding on motorcycle whether as a passenger or rider; and ix. Any Unit-Holder dying of natural causes or sickness. Description of Benefits Definitions Totally Disabled and Total Disabled means the insured person is unable to engage in any occupation or employment for compensation or profit for which the insured person is reasonably qualified by education, training or experience and is under the continuous care and treatment of a physician. Totally and Permanently Disabled means the insured person is unable to engage in any substantially gainful occupation or employment for the remainder of the insured person s life. Elimination Period means the number of consecutive days as stated in the Schedule of Benefits. Commencing with the first day the insured person is Totally Disabled, for which no benefits are payable. Physician means a person legally licensed to practice medicine and/or surgery other than the insured person or a member of the insured person s immediate family. Hospital means an establishment which meets all of the following requirements: i. holds a license as a hospital, if licensing is required in the country or government jurisdiction; ii. operates primarily for the reception, care and treatment of sick, ailing or injured persons as inpatients ; iii. provides 24-hours a day nursing service by registered or graduate nurses; iv. has a staff of one or more physicians available at all times; v. provides organized facilities for diagnosis and major surgical procedures; vi. is not primarily a clinic, nursing, rest or convalescent home or similar establishment and is not, other than incidentally, a place for alcoholics or drug addicts; and vii. maintains X-ray equipment and operating room facilities. Benefit A: Accident, Death and Permanent Disablement If such injury results in loss of life of an insured person within three (3) months after the date of the accident, the Fund Manager will pay the principal sum applicable to the stated beneficiary in accordance with the Classification of insured persons and Schedule of Benefits. If such injury does not result in loss of life of the insured person but does result within three hundred and sixty-five (365) days in any one of the specific losses shown in the Schedule below, the Fund Manager will pay the Schedule percentage of the principal sum applicable to such Insured Person in accordance with the classification of Insured Persons and Schedules of Benefits. Page 12

13 PARTICULARS OF THE FUND However, under no circumstances will payment be made for more than one such loss, the greatest, sustained by any one insured person as a result of any one accident. ACCIDENT/INJURY COMPENSATION ACCIDENT/INJURY COMPENSATION Loss of both hands 100% Loss of whole little finger 4% Loss of arm at shoulder 60% Loss of sight of both eyes 100% Loss of arm between shoulder and elbow 50% Loss of one eye 50% Loss of arm below elbow 45% Deafness one ear 50% Loss of arm between elbow and wrist 45% Loss of one ear to deafness Loss of hand below wrist 45% Loss of both feet 100% Loss of four fingers and thumb 10% 40% Loss of leg at hip 70% Loss of four fingers 35% Loss of leg between knee and hip Loss of whole thumb 25% Loss of leg below knee 35% Loss of whole index finger 10% Loss of all toes 15% Loss of whole middle finger 50% 6% Loss of big toe 5% Loss of whole ring finger 5% Loss of other toes 1% The complete and irrecoverable loss of use of any part of the body specified above shall be deemed to be the loss of such part. In the event of partial loss of any part of the body specified above, a proportionately lower percentage of the principal sum shall be payable, such percentage to be determined solely by the insurance company. Benefit B: Permanent Total Disability If as the result of such injury and within three hundred and sixty-five (365) days after the date of the accident an insured person becomes Totally Disabled and such disability has continued for a period of twelve (12) consecutive months, and if the Insured Person is Totally and Permanently Disabled at the end of this period, the Fund Manager will pay the principal sum, to such insured person in accordance with the Classification of Insured Persons and Schedule of Benefits (See page 13), less any amount paid or payable as a result of the same accident under other sections of Benefit A, at the rate of one (1) percent per month if the Insured Person remains Totally and Permanently Disabled, to a maximum of one hundred (100) months. RISK FACTORS Whilst there are a number of factors that may affect the performance of any asset class, a summary of the major risks that can significantly affect the Fund s performance, and should therefore be considered when investing in the Fund, are listed below: Money Market Fund Risk Although the Fund seeks to maintain the value of your investment, there is no assurance that it will be able to do so, and it is possible to lose money by investing in the Fund. The market value of the Fund would fluctuate due to changes in interest rates. A rise in interest rates would result in a decline in the market value of the Fund while a fall in interest rates would increase the market value of the Fund. Income Risk Short-term funds as money market funds do not generate a level of income as high as funds that invest in longerterm instruments. Because the Fund will invest in short-term instruments, the Fund s dividend yields will fluctuate based on changes in short-term market interest rates. The decline in interest rates will result in a decline in the yield of the Fund. Credit Risk Credit risk is the risk that a borrower/issuer of fixed income securities in which the Fund Manager may invest will be unable to make payment or interest as and when due. While the Fund Manager would only invest in investment grade rated securities, there is no guarantee that the ratings of the issuer will remain the same throughout the tenor of the investment. In addition, investment rating are not a guarantee that an issuer will always honour its maturing obligations. Page 13

14 PARTICULARS OF THE FUND FGN Obligations Risk FGN obligations are subject to low but varying degrees of credit risks, and are still subject to interest rate and market risk. While Treasury Bills and Debt Management Office-issued obligations are backed by the full faith and credit of the FGN, securities issued by the government agencies or government-sponsored entities may not be backed by the full faith and credit of the FGN. If a government-sponsored entity is unable to meet its obligations or its creditworthiness declines, the performance of the Fund that holds securities issued or guaranteed by the entity will be adversely impacted. Reinvestment Risk This is the risk that future money market investments might be at a lower interest rate in comparison to the prevailing rate or that there may be no viable investment opportunity to re-invest in. This is possible in a declining interest rate environment due to the short term maturity of the investible assets. Foreign Currency Risk This is the risk that exchange rates may significantly fluctuate (including changes due to devaluation of Naira being the specified currency for the Fund or the revaluation of an investor s currency) and the risk that authorities with jurisdictions over the investor s currency may impose or modify exchange controls. Inflation Risk Inflation risk is the risk that an increase in price levels will undermine the purchasing power of the Fund s value of investment and returns. RISK MANAGEMENT STRATEGY Whilst it is important to note that not all investment risks can be predicted, the Fund Manager will ensure that a robust risk management framework is established and integrated into every aspect of the Fund s investment process. The risk management framework will primarily focus on the risks discussed above. The under-listed elements of the Risk Management Framework shall be put in place by the Fund Manager: The Fund Manager shall from time to time stress test the portfolio using various simulation scenarios to show any potential risk that could impact the Fund. The result of the test shall be reported to the investment committee In accordance to SEC rule 472 on portfolio maturity for money market investments, the Fund Manager shall ensure that the weighted average maturity of the Fund shall not exceed 90 days. This will limit the impact that changes in market rates have on the money market instruments. The Fund Manager shall ensure that the Fund s assets are adequately diversified among the approved issuers and money market instruments. The credit ratings of approved Issuers will also be monitored on an ongoing basis. Page 14

15 FINANCIAL PROJECTIONS LETTER FROM THE REPORTING ACCOUNTANTS The following is a copy of the letter on the Profit Forecast by Ernst & Young, the Reporting Accountants to the Offer: Page 15

16 FINANCIAL PROJECTIONS MEMORANDUM ON THE PROFIT FORECAST The Fund Manager has projected the profit for the 3 months ending December 31, 2017 and the years ending December 31, 2018 and 2019 respectively and is of the opinion that subject to unforeseen circumstances and based on the assumptions stated below, the profits before distribution of Coronation Money Market Fund for the period ending December 31, 2017 and the years ending December 31, 2018 and 2019 will be in the order of N million, N million and N million respectively. UNDERLYING ASSUMPTIONS FOR THE PROFIT FORECAST 1. Introduction This memorandum has been prepared to summarize the information available to the Fund Manager and their basic assumptions at the time of preparing the forecast of the profits for the 3 months ending 31 December 2017 and the years ending 31 December 2018 and 2019 respectively. 2. Forecast The Fund Manager is of the opinion that subject to unforeseen circumstances, and based on the assumptions stated below, the net income before distribution for the 3 months ending 31 December 2017 and the years ending 31 December 2018 and 2019 respectively will be in order of N million, N million and N million respectively. The Fund Manager has based the profit forecast for 2017 on 3 months from October 2017 to December 2017 while the profit forecast for 2018 and 2019 would run for 12 months each. The investment and income distribution for 2017 will consequently run from 1st October 2017 to 31st December Basis of Assumptions The prospective financial information has been arrived at on the following bases and assumptions: A. Basis The prospective financial information for the 3 months period ending 31 December 2017 and the years ending 31 December 2018 and 2019 have been prepared in compliance with the requirements of International Financial Reporting Standards. B. Assumptions These assumptions are based on the prevailing monetary policies that govern the operations of operators in the money market. i. Based on the projected level of operations, the Net Income of the Fund for the 3 months ending 31 December 2017 and the years ending 31 December 2018 and 2019 respectively will be approximately N million, N million and N million respectively.. ii. The Fund will be set up in 2017 with a fund size of one billion, five hundred million Naira (N1,500,000,000) and is expected to be fully subscribed within the initial subscription period. iii. Investment is expected to commence at the start of the fourth quarter in 2017 iv. Additional investments in the fund are estimated to be 0%, 100% & 200% of the opening balance of year 2017, in years 2017, 2018 and 2019 respectively. v. All charges and fees for establishing the Fund are estimated at 2.29% of the offer proceeds and this amount to N million. This amount is payable by the Fund and will be deducted from the initial N1.5 billion to be raised from the Offer. vi. vii. viii. ix. Other operating expenses are estimated at 0.95% of the Net Asset Value ( NAV ) of the Fund. It is estimated that annual management fees of 1.50% of the Net Asset Value ( NAV ) will be payable to the Fund Manager. The Fund would provide an accident only insurance policy, whereby Unit-Holders/investors with a minimum balance of N100,000 will be entitled to a scale of compensation for death and permanent disability following an accident, to the tune of a 100% of sum invested. The net offer proceed will be invested in money market instruments and the income earned from these investments is not taxable. x. Distributions to unit holders are estimated at 100% of the Net Income of the Fund in any year and Interest income distributable to unit holders will be on quarterly basis. STATEMENT OF ACCOUNTING POLICIES The following is a summary of the significant accounting policies adopted in the preparation of the prospective financial information of the Fund and have been consistently applied throughout the forecast period: Page 16

17 FINANCIAL PROJECTIONS 1. Basis of Preparation a. Statement of compliance The prospective financial information of the Fund for the 3 months ending 31 December 2017 and the years ending 31 December 2018 and 2019 have been prepared in accordance with International Financial Reporting Standards (IFRSs). b. Basis of measurement The prospective financial information has been prepared on certain assumptions as described in the notes. c. Functional and presentation currency This prospective financial information is presented in Naira, which is the Fund s functional currency. All financial information presented in Naira has been rounded to the nearest thousand. d. Use of estimates and judgments The preparation of the prospective financial information in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. 2. Revenue Recognition Interest Income and Expense Interest income and expense are recognised in profit or loss, using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial instruments (or, when appropriate, a shorter period) to the carrying amount of the financial instrument. When calculating the effective interest rate, the Fund estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses. Interest received or receivable and interest paid or payable are recognised in profit or loss as interest income and interest expense respectively. 3. Net Gains on Investment Securities Net gains on investment securities comprises gains and losses related to assets and liabilities, and includes all realised and unrealised fair value changes, interest and dividends.. 4. Dividend Expense Distributions to unit holders are estimated at 100% of the Net Income of the Fund in any year and Interest income distributable to unit holders will be on quarterly basis. 5. Taxation Income from discounted money market instruments are tax free and such incomes are not subjected to any form of tax. 6. Cash and Cash Equivalents Cash and cash equivalents include cash in hand, fund s deposits with banks in Nigeria in highly liquid financial assets with original maturities of less than three months from the acquisition date, which are subject to insignificant risk of changes in their fair value, and are used by the Fund in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the statement of financial position. These include fund s deposits with banks in Nigeria and cash in hand at the end of each reporting date. 7. Government securities and other money market securities These instruments are designated as financial instrument and are accounted for in line with the provision of IAS 39 as financial assets available for sale (AFS). 8. Time deposit Time deposits with banks are classified as loans and receivables in accordance with IAS 39. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Page 17

18 FINANCIAL PROJECTIONS Recognition All financial assets and liabilities are initially recognized when and only when the Fund becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognized on the settlement date, i.e. the date that the assets are delivered to the Fund. Subsequent measurement Loans and receivables are carried at amortized cost using the effective interest method less any allowance for impairment. Gains and losses are recognized in profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process. Interest earned on such instruments is recorded in "Interest income" in the statement of comprehensive income. Initial measurement Loans and receivables are measured initially at their fair value plus any directly attributable incremental costs of acquisition. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument, or when appropriate, a shorter period to the carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial instruments, but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Derecognition A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; or the Fund has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a `pass-through' arrangement; and either a. the Fund has transferred substantially all the risks and rewards of the asset, or b. the Fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Fund has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Fund's continuing involvement in the asset. In that case, the Fund also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects rights and obligations that the Fund has retained. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Impairment of financial assets The Fund assesses at each reporting date whether a financial asset or a group of financial assets classified as loans and receivables is impaired. A financial asset or group of financial assets is deemed to be impaired, if and only if there is objective evidence of impairment as a result of one or more events that have occurred after initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, the probability that they will enter bankruptcy or other financial reorganization, default or delinquency in interest or principal payments and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Page 18