RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER RISK DISCLOSURE STATEMENTS

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2 RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER This Information Memorandum has been seen and approved by the Directors of Areca Capital Sdn Bhd and they collectively and individually accept full responsibility for the accuracy of all information contained herein and confirm, having made all enquiries which are reasonable in the circumstances, that to the best of their knowledge and belief, there are no other facts omitted which would make any statement herein misleading. The Securities Commission Malaysia has approved the issue of, offer or invitation in respect of the Areca AUD Savings Fund, the subject of this Information Memorandum, and the approval shall not be taken to indicate that the Securities Commission Malaysia recommends the investment. The Securities Commission Malaysia will not be liable for any non-disclosure on the part of Areca Capital Sdn Bhd and takes no responsibility for the contents of the Information Memorandum, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss however arising from, or in reliance upon the whole or any part of the contents of this Information Memorandum. RISK DISCLOSURE STATEMENTS In the event some of the underlying investments of the Areca AUD Savings Fund are not actively traded, potential investors are warned that under such circumstances, they may face difficulties in redeeming their investments. Investors are advised to read and understand the contents of the Information Memorandum and obtain professional advice before subscribing to the Fund. INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. IN CONSIDERING THE INVESTMENT, INVESTORS WHO ARE IN DOUBT ON THE ACTION TO BE TAKEN SHOULD CONSULT PROFESSIONAL ADVISERS IMMEDIATELY. i

3 CONTENTS GLOSSARY... 1 CORPORATE DIRECTORY... 4 KEY DATA... 6 FUND DETAILS... 9 INVESTMENT PHILOSOPHY... 9 OBJECTIVE, ASSET ALLOCATION, INVESTMENT POLICIES AND STRATEGIES OF THE FUND... 9 FUND CATEGORY/TYPE... 9 PERFORMANCE BENCHMARK... 9 TEMPORARY DEFENSIVE POSITION LIQUID ASSETS POLICY PERMITTED INVESTMENTS INVESTMENT RESTRICTIONS VALUATION METHOD OF THE PERMITTED INVESTMENTS FOREIGN EXCHANGE RATE CONVERSION POLICY ON GEARING RISK MANAGEMENT INVESTORS PROFILE RISKS FACTORS GENERAL RISKS OF INVESTING IN THE FUND SPECIFIC RISKS ASSOCIATED WITH THE INVESTMENT PORTFOLIO OF THE FUND FEES, CHARGES AND EXPENSES CHARGES DIRECTLY INCURRED FEE AND EXPENSES INDIRECTLY INCURRED DIRECT EXPENSES RELATED TO THE FUND OTHER CHARGES AND FEES TRANSACTION INFORMATION CALCULATION OF UNIT PRICES INITIAL OFFER PERIOD INITIAL OFFER PRICE MAKING AN INVESTMENT PAYMENT METHODS LIQUIDATION... 19

4 INCOME DISTRIBUTION AND REINVESTMENT POLICIES UNCLAIMED MONEYS FOREIGN EXCHANGE ADMINISTRATION RULES THE PEOPLE BEHIND ARECA CAPITAL SDN BHD DUTIES AND RESPONSIBILITIES OF THE MANAGER ROLES AND PRIMARY FUNCTION OF THE BOARD OF DIRECTORS AND INVESTMENT COMMITTEE INVESTMENT COMMITTEE FOR THE FUND PROFILE OF DIRECTORS AND MEMBERS OF THE INVESTMENT COMMITTEE MATERIAL LITIGATION FUND MANAGEMENT FUNCTION DESIGNATED PERSON RESPONSIBLE FOR THE MANAGEMENT OF THE FUND PROFILE OF KEY PERSONNEL TRUSTEE: OSK TRUSTEES BERHAD BOARD OF DIRECTORS FINANCIAL INFORMATION TRUSTEE S STATEMENT OF RESPONSIBILITY DUTIES & RESPONSIBILITIES OF THE TRUSTEE TRUSTEE S DELEGATE ANTI MONEY LAUNDERING PROVISIONS MATERIAL LITIGATIONS KEY PERSONNEL OF THE TRUSTEE OTHER INFORMATION UNIT HOLDERS RIGHTS & LIABILITIES POWER TO CALL FOR UNIT HOLDERS MEETINGS TERMINATION OF THE FUND ADDITIONAL INFORMATION ANTI-MONEY-LAUNDERING ( AML ) POLICIES AND PROCEDURES OTHER DOCUMENTS AVAILABLE FOR INSPECTION DIRECTORY DIRECTORS RESPONSIBILITY STATEMENT... 33

5 GLOSSARY Act/CMSA The Capital Market and Services Act, 2007 including all amendments thereto; AUD Australian Dollar; AUD Denominated Assets Means money market instruments (including negotiable certificates of deposits, bankers acceptances and Repo), fixed income instruments (including debentures, private debts securities and commercial papers), deposits with Financial Institutions, cash and amounts due to the Fund, which are all denominated in AUD; Base Currency The currency in which the Fund is denominated i.e. the AUD; BNM Bank Negara Malaysia; Bursa Malaysia Bursa Malaysia Securities Berhad, the stock exchange managed or operated by Bursa Malaysia Berhad; Business Day A day on which the Bursa Malaysia is open for trading. The Manager may declare certain Business Day to be non-business Day, although Bursa Malaysia is open for trading, when it is a non-business day for banks in Australia; Debenture It includes debenture stock, bond, note and any other evidence of indebtedness of a corporation for borrowed moneys, whether or not constituting a charge on the assets of the corporations as defined in the Act; Deed The Deed in relation to the Areca AUD Savings Fund dated 27 November 2012 and any other supplemental deeds that may be entered into between the Manager and the Trustee; Financial Institution (a) if the institution is in Malaysia (i) (ii) (iii) A licensed bank, including a banking and finance company, licensed under Banking Act 1973, to carry a banking business; A licensed merchant bank licensed under Banking Act 1973 to carry a merchant banking business; or An Islamic bank licensed under the Islamic Banking Act 1983 to carry a banking business based on Islamic law (Shariah); (b) if the institution is outside Malaysia, any institution that is licensed/ registered/approved/authorised to provide financial services by the relevant banking regulator; 1

6 Fund Areca AUD Savings Fund; Fund Manager A person who holds a Capital Market Services Representative s License to carry on the regulated activity of fund management; Information Memorandum Refers to this document issued by Areca Capital Sdn Bhd describing the details of the Fund and which is deemed to be a prospectus in so far as it relates to the liability of the Manager for any statement or information that is false or misleading or from which there is material ommission; Guidelines Guidelines on Wholesale Funds issued by the Securities Commission Malaysia as may be amended from time to time; Long Term A period of 5 years or more; Manager or We or Us Areca Capital Sdn Bhd; Medium Term A period of 3 to 5 years; NAV Net Asset Value of the Fund, which is the value of all the assets of the Fund less the total liabilities of the Fund at the valuation point. For the purpose of computing the annual management fee and annual trustee fee, the NAV of the Fund should be inclusive of the management fee and trustee fee, if any, for the relevant day; NAV per Unit The NAV of the Fund divided by the number of units in circulation, at the valuation point; Qualified Investors This refers to: i) individuals whose total net personal assets exceed RM3 million or its equivalent in foreign currencies; ii) iii) iv) corporations with total net assets exceeding RM10 million or its equivalent in foreign currencies based on the last audited accounts; unit trust schemes or prescribed investment schemes; companies registered as a trust company under the Trust Companies Act, 1949 which have discretion in the investment of trust assets of a trust with total net assets exceeding RM10 million or its equivalent in foreign currencies; corporations that are public companies under the Companies Act, 1965 or under the laws of any other country, which have been allowed by the SC to be a trustee for the purposes of the CMSA and have discretion in the investment of trust assets of a trust with total net assets exceeding RM10million or its equivalent in foreign currencies; v) pension funds approved by the Director General of Inland Revenue under section 150 of the Income Tax Act, 1967; vi) vii) holders of Capital Markets Services License carrying on the business of dealing in securities; any other Fund Managers; 2

7 viii) ix) persons who acquire securities pursuant to an offer, as principal, if the aggregate consideration for the acquisition is not less than RM250,000 or its equivalent in foreign currencies for each acquisition; licensed institutions; x) Islamic banks; and xi) insurance companies licensed under the Insurance Act, 1996 or any other persons, entities, institutions or corporations as may be allowed; Repo A repurchase agreement or an agreement between a Financial Institution and an investor to sell and buyback a money market instrument or other financial instruments at an agreed price, inclusive of interest, on a specific future date; RM Ringgit Malaysia; SC The Securities Commission Malaysia which was established under the Securities Commission Act, 1993; Short Term A period less than 3 years; Short to MediumTerm A period less than 5 years; Trustee OSK Trustees Berhad; Units Units of the Fund and includes a fraction of a unit; Unit Holder/You Person for the time being who is registered pursuant to the Deed as a holder of Units of the Fund; Wholesale Fund A unit trust fund, the units of which are issued, offered for subscription or purchase, or for which invitations to subscribe for or purchase the units have been made, exclusively to Qualified Investors. 3

8 CORPORATE DIRECTORY The Manager Areca Capital Sdn Bhd ( D) Registered Office: Suite 30C, 3 rd Floor, Wisma TCL, 470, Jalan Ipoh, 3 rd Mile, Kuala Lumpur. Business Address: 107, Blok B, Pusat Dagangan Phileo Damansara 1, No 9, Jalan 16/11, Off Jalan Damansara, Petaling Jaya, Selangor. Tel: , Fax: Website: invest@arecacapital.com Trustee OSK Trustees Berhad ( U) Registered Office: 20th Floor, Plaza OSK, Jalan Ampang, Kuala Lumpur. Business Address: 6 th Floor, Plaza OSK, Jalan Ampang, Kuala Lumpur. Tel: , Fax: Trustee s Delegate ( as custodian): Malayan Banking Berhad (3813-K), Maybank Custody Services - Transaction Banking, Global Wholesale Banking 4th Floor, Menara Maybank, 100, Jalan Tun Perak, Kuala Lumpur. Tel: , Fax: / Board of Directors Dato Wee Hoe Gooi Hoe Soon (Independent, Chairman) Dr. Junid Saham (Independent) Danny Wong Teck Meng (Non-Independent Executive) Raja Datuk Zaharaton binti Raja Dato Zainal Abidin (Non-Independent) Tam Chiew Lin (Non-Independent) Investment Committee Members Dato Wee Hoe Gooi Hoe Soon (Independent, Chairman) Dr. Junid Saham (Independent) Raja Datuk Zaharaton binti Raja Dato Zainal Abidin (Non-Independent) Teoh Boon Kiaw (Non-Independent) Audit Committee Members Danny Wong Teck Meng Dato Wee Hoe Soon@ Gooi Hoe Soon (Independent) Dr. Junid Saham (Independent) 4

9 Company Secretary Fong Yin Peng (MAICSA ) Suite 30C, 3rd Floor, Wisma TCL, 470 Jalan Ipoh, 3rd Mile, Kuala Lumpur. Auditor PricewaterhouseCoopers (AF1146) Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P O Box 10192, Kuala Lumpur. Tel: , Fax: Tax Adviser PricewaterhouseCoopers Taxation Services Sdn Bhd ( M) Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P O Box 10192, Kuala Lumpur. Tel: , Fax: Principal Bankers Malayan Banking Berhad (3813-K) No. 8 &10, Jalan SS2/63, Petaling Jaya, Selangor. Standard Chartered Bank Malaysia Berhad ( P) Registered office: Level 16, Menara Standard Chartered, 30, Jalan Sultan Ismail, Kuala Lumpur. Others Federation of Investment Managers Malaysia , 7th Floor, PNB Damansara, No.19, Lorong Dungun, Damansara Heights, Kuala Lumpur. Tel: , Fax:

10 KEY DATA Fund Information The Fund Areca AUD Savings Fund Trustee OSK Trustees Berhad ( U) Fund Category/Type Objective of the Fund Fixed Income (Wholesale)/Income To provide Qualified Investors with a steady income * capital stability. while maintaining * Income could be in the form of cash or units. Please refer to page 19 for further details. Investment Policy and Strategy The Fund s investment strategy is to invest primarily in AUD denominated:- money market instruments including negotiable certificates of deposits, bankers acceptances and Repo; fixed income instruments including debentures, private debts securities and commercial papers; and deposits with Financial Institutions. Base Currency Australian Dollar ( AUD ) i.e. all transactions of the Fund are quoted and denominated in AUD. Asset Allocation AUD denominated money market instruments, AUD denominated fixed income instruments and AUD denominated deposits Minimum 70% of the NAV Maximum 98% of the NAV Specific Risk Credit/default risk Country risk Concentration risk Interest rate risk Liquidity risk Investor s Profile Suitable for investors who are: planning their financial objectives which involve the use of AUD in the future, for example, for the purpose of education, travelling, retirement, purchase of property or other investments in Australia; seeking a relatively liquid and less volatile investment in AUD Denominated Assets as compared to investing directly in AUD denominated bonds. 6

11 Fund Information Performance Indicator Maybank s 6-month Foreign Currency Account AUD deposit rate Investors are advised to take note that the benchmark selected is merely to provide an indication of the performance of the Fund. It has no relevance to the risk profile of the Fund. Investors may be exposed to a higher level of risk by investing in this Fund as compared to fixed deposits and potentially have higher or lower income vis-à-vis the benchmark. Approved Fund Size 500 million Units Initial Offer Price AUD per unit Initial Offer Period 10 days from the date of this Information Memorandum. The initial offer period may be shortened by the Manager in the event the Fund is fully subscribed or where the Manager is of the opinion that no further subscription is expected or where the Manager determines that it is in the better interest of the Unit Holders. Financial year end 30 September Auditor PricewaterhouseCoopers (AF1146) Charges and Fees This table describes the charges and fees that you may incur when you buy or redeem Units of the Fund. Entry Fee Distribution channels Maximum rate Direct Investment through the Manager Up to 1% of the amount invested. Third party distributors including appointed Institutional Unit Trust Advisers Penalty/Exit Fee NIL Annual Management Fee Up to 1% per annum of the NAV of the Fund. Trustee Fee List of Expenses Directly Related to the Fund 0.05 % per annum of the NAV of the Fund (excluding foreign custodian fees and charges). The Manager will bear the trustee fee. Auditor s fee, commissions paid to brokers, cost of convening meetings of Unit Holders, foreign custodian fees and charges, cost of printing of reports/statements, tax adviser s fee, taxes, valuation fee and other related costs as allowed by the Deed. 7

12 Fund Information Any other Charges Payable Directly by Investors There are no other charges (except charges levied by banks on remittance of money) payable directly by investors when purchasing or liquidating Units. Transaction Details Investors are advised to consult with any Financial Institution for currency exchange rates or procedures to maintain an AUD foreign currency account as all transactions will only be made in AUD. Minimum Investment Minimum Additional Minimum Liquidation Minimum Balance Liquidation AUD5,000 or such other limit at the Manager s discretion. AUD200 or such other limit at the Manager s discretion. AUD1,000 or such other limit at the Manager s discretion. 5,000 Units or such other limit at the Manager s discretion. Liquidation requests can be made on any Business Day. However, a liquidation notice must be submitted to the Manager at least two Business Days before the transaction day (T-2 day) in order for the Manager to process liquidation requests. Liquidation Payment Payments will be made within 10 days upon receipt by the Manager of the duly completed original liquidation form. However, it is the Manager s general liquidation policy to make payments within 3 Business Days from the transaction day (T+3 days). All proceeds on liquidation of units will be remitted and paid in AUD. Cooling Off Right Not available for the Fund. Transfer Facility Not available for the Fund. Switching Facility Not available for the Fund. Distribution Income Income Reinvestment policy Unclaimed Moneys Policy of Yearly or more frequent, subject to the availability of distributable income. Distribution, if any, will be payable in AUD. In the absence of instructions to the contrary from Unit Holder, the Manager is entitled to reinvest the income distributed from the Fund in additional Units at the NAV per Unit at the end of the distribution day (at ex-distribution price) with no entry fee. Any moneys which remain unclaimed after 12 months from the date of payment or any such other period as prescribed by the Unclaimed Moneys Act, 1965 shall be dealt with in accordance with the provisions of the Unclaimed Moneys Act, Please refer to page 17 for more details on Transactions. 8

13 FUND DETAILS Investment Philosophy The Fund s investment philosophy is based on the premise that price movements in financial assets are driven by a combination of liquidity flows, risk appetite and ultimately, the intrinsic value of the underlying assets or businesses. We seek to optimize our investments through balancing the need for liquidity and returns. Objective, Asset Allocation, Investment Policies and Strategies of the Fund The investment objective of the Fund is to provide Qualified Investors with a steady income* while maintaining capital stability. The Fund will invest a minimum of 70% and up to 98% of its NAV in AUD denominated money market instruments, AUD denominated fixed income instruments and AUD denominated deposits. Money market instruments include negotiable instruments of deposits, bankers acceptances and Repo. Fixed income instruments include debentures, private debt securities and commercial papers. To meet the objective of the Fund, the Manager intends to invest in high grade fixed income instruments with varying maturities that will be able to provide a steady fixed stream of income flows. High grade fixed income instruments refer to issues that are rated by their domestic or globally recognized rating agency with a rating which is equivalent to a credit rating of P1/A3 by Rating Agency Malaysia (RAM), which is the minimum credit rating requirement for the Fund ( Minimum Credit Rating ). Notwithstanding the above and subject to the Investment Committee s unanimous approval, the Fund may invest up to 25% of its NAV in fixed income instruments below the Minimum Credit Rating requirement. There may, however, be instances where the Fund may continue to hold more than 25% of its NAV in fixed income instruments below the Minimum Credit Rating requirement due to the appreciation or depreciation of the Fund s NAV (whether as a result of an appreciation or depreciation of the Fund s underlying investments, or as a result of repurchase of Units or payments made out of the Fund). To provide capital stability and liquidity, the Fund will also invest in AUD denominated deposits with Financial Institutions and AUD denominated money market instruments. The Manager may invest proceeds collected during the offer period in AUD denominated money market instruments or AUD denominated deposits with Financial Institutions to maximize returns for the Fund. There is no investment limit imposed on the Fund s investments, including no single issuer and group limits for its portfolio. * Income could be in the form of cash or Units. Please refer to page 19 for further details. Note: Any material change to the Fund s investment objective would require Unit Holders approval. Fund Category/Type Fixed Income (Wholesale) /Income Performance Benchmark The performance of the Fund is benchmarked against the Maybank s 6-month Foreign Currency Account AUD deposit rate. For ease of reference, investors may refer to for further details. Investors are advised to take note that the benchmark selected is merely to provide an indication of the performance of the Fund. It has no relevance to the risk profile of the Fund. Investors may be exposed to a higher level of risk by investing in this Fund as compared to fixed deposits and potentially have higher or lower income vis-à-vis the benchmark. 9

14 Temporary Defensive Position The Fund may take a temporary defensive position, which may be inconsistent with the Fund s investment strategies, in attempting to respond to adverse economic, political or any other market conditions such as changes in interest rate policies or the introduction of new policies which may affect the markets in which the Fund invests. These include reducing the Fund s exposure in investments in AUD Denominated Assets and increasing the Fund s exposure in fixed income instruments, money market instruments, cash in bank and deposits denominated in currencies other than AUD. For instance, the Fund might invest a substantial portion of its NAV in RM denominated assets when the Manager is of the opinion that the exposure in AUD Denominated Assets might cause a loss to the Fund due to the country s negative outlook. In general, the temporary defensive position shall be taken for a period of not more than 6 months with prior approval from the Investment Committee. However, this position could be held for a longer period subject to the approval of the Investment Committee and in consultation with the Trustee during prolonged adverse market conditions. The Manager will re-align the Fund to its investment strategies when market conditions turn for the better. Liquid Assets Policy The Manager shall ensure that there are sufficient liquid assets based on the liquidity level required in order to meet potential liquidation requests for the Fund. Liquid assets of the Fund will be held in the Base Currency of the Fund. Liquid assets include cash in bank, net amount receivables from the brokers/dealers and deposits with Financial Institutions. Other liquid assets include but not limited to securities issued or guaranteed by the government, or quasi-government bodies, or their agencies and private debt securities which have been accorded with the Minimum Credit Rating and any other instruments which are readily convertible into cash within seven (7) days. Permitted Investments Unless otherwise prohibited by the relevant authorities or any relevant law and provided always that there are no inconsistencies with the objective of the Fund, the Fund may invest in the following: Money market instruments issued by Financial Institutions including negotiable certificates of deposits, bankers acceptances and Repo; Fixed income instruments including debentures, private debt securities and commercial papers. These may also include sovereign bonds, treasury bills and government approved or guaranteed bonds, including those issued or guaranteed by government related bodies; Deposits with Financial Institutions; Units and shares in other collective investment schemes ( CIS ); Derivatives such as futures contract for hedging purposes only; Structured products which contain embedded derivatives (including options). The value of the derivatives depends on a variety of underlying reference assets including but not limited to interest rate levels, indexes and foreign exchange rates; and Any other form of investment as may be permitted by the relevant authorities from time to time, where necessary. The Fund will primarily invest in investments denominated in the Base Currency. However, should the Manager adopt a temporary defensive position, the Fund may invest in investments denominated in other currencies. 10

15 Investment Restrictions The investment restrictions are as follows : All instruments invested by the Fund must be accorded with the Minimum Credit Rating. The Minimum Credit Rating is defined as a rating by a domestic or globally recognized rating agency which is equivalent to a credit rating of P1/A3 by the Rating Agency Malaysia (RAM). However, subject to the Investment Committee s unanimous approval, the Fund may invest up to 25% of its NAV in fixed income instruments below the Minimum Credit Rating requirement. The Fund may continue to hold more than 25% of its NAV in fixed income instruments below the Minimum Credit Rating requirement due to the appreciation or depreciation of the Fund s NAV (whether as a result of an appreciation or depreciation of the Fund s underlying investments, or as a result of repurchase of Units or payments made out of the Fund). Valuation Method of the Permitted Investments The Manager will ensure the valuation of the assets of the Fund will be carried out at fair value and at all times in compliance with the relevant laws. The bases of valuations of the securities/instruments are as follows: Listed fixed income instruments Investment in listed fixed income instruments shall be based on closing market prices. When no market value is publicly available or where the use of the quoted market price value does not represent the fair values of the securities or when no market price is available, including in the event of a suspension in the quotation of the securities for a period exceeding 14 days, or such shorter period as agreed by the Trustee, such investments will be valued at fair value determined in good faith by the Manager, verified by the auditor of the Fund and approved by the Trustee. Where the market price is not available due to a nonbusiness day in a foreign market, the last available market price will be used. Unlisted fixed income instruments These are generally valued at least once on a Business Day with the appropriate price by reference to quotes/yields quoted by three independent and reputable institutions. Money Market instruments For money market instruments, valuation shall be based on the value provided by the bank or the Financial Institution that issues the instruments. Deposits Deposits placed with Financial Institutions are valued by reference to the value of such investments and the interest accrued thereon for the relevant period. Structured products Structured products will be valued based on the value provided to the Manager by the issuer. Derivatives Derivatives instruments are marked-to-market on a daily basis. Any changes in the value of the contracts are adjusted for directly in the margin accounts, with a corresponding recognition in the unrealised reserves. 11

16 Collective Investment Schemes ( CIS ) Investment in units or shares in other CIS will be valued based on the last published repurchase price of the CIS. Suspended or defaulted instruments For suspended and/or defaulted fixed income instrument where there is an objective evidence of irrecoverability, the recoverable amount of the instrument, if any, is calculated and an impairment loss is recognised as the unrecoverable amount. Foreign Exchange Rate Conversion The NAV of the Fund will be valued in AUD which is the Base Currency of the Fund. The Manager shall convert all expenses and income of the Fund which are denominated in currencies other than the AUD, into the Base Currency using the exchange rates ruling at the transaction dates. For assets denominated in currencies other than the AUD, the assets are translated to the Base Currency at bid exchange rate quoted by Maybank at the valuation point or any such time as shall be agreed with the Trustee of the Fund. Policy On Gearing The Fund is prohibited from borrowing other assets (including borrowing of securities within the meaning of Guidelines on Securities Borrowing and Lending) in connection with its activities. However, the Fund may borrow cash for the purpose of meeting repurchase request for Units and for short term bridging requirements. The Manager should ensure that such borrowings are subjected to the following: The Fund s cash borrowings are only on a temporary basis and that borrowings are not persistent; The borrowing period should not exceed one month; The aggregate borrowing of the Fund should not exceed 10% of the Fund s NAV at the time borrowing is incurred; and The Fund may only borrow from Financial Institutions. Risk Management Notwithstanding the investment strategies and policies of the Fund, all investments carry an element of risk which may affect the Fund s performance including capital losses arising from volatility of the markets. The value of the Fund may fluctuate in response to the underlying factors such as economies conditions, interest rates movements, global and domestic liquidity flows and general markets conditions. The Manager adopts various risks management strategies such as asset allocation, diversification, liquidity management and temporary defensive strategy in order to mitigate and diversify the inherent risks associated to the Fund. Generally the broad asset allocation and the related investment restrictions of the Fund are monitored regularly by the compliance department, who reports monthly to the Investment Committee. As to the credit risks management, the Fund has a Minimum Credit Rating requirement for its investment in fixed income instruments. However, the Fund may invest up to 25% of its NAV in fixed income instruments below the Minimum Credit Rating subject to the Investment Committee s unanimous approval. As part of the Manager s risk management strategy, the Manager will attempt to reduce the liquidity risk by investing in CIS with similar investment objective as the Fund. Although the cost of investing in CIS are relatively higher due to the management fees and trustee fees included therein, CIS are more liquid as they can usually be liquidated on any business day at prices quoted daily. On the other hand, it may not 12

17 always be possible to immediately liquidate a direct investment in a fixed income instrument as it will be subjected to prevailing market conditions at that point in time, including availability of a ready buyer and a reasonable market price approximating the investment s fair value. As mentioned above, investment in CIS, if any, is part of the Manager s risk management strategy to mitigate the Fund s liquidity risk. The Manager does not consider CIS as one of the core investments to meet the Fund s objective of providing income and capital stability. If an instrument is downgraded to below the Minimum Credit Rating and it causes the investment limit of 25% to be breached, the Manager would use its best efforts to dispose the holding before maturity, failing which, the instrument shall be held to maturity. Another risk management measure is to adopt a temporary defensive strategy in attempting to respond to adverse economic, political or any other market conditions which may affect the Fund s performance. Investors Profile Suitable for investors who are: planning their financial objectives which involve the use of AUD in the future, for example, for the purpose of education, travelling, retirement, purchase of property or other investments in Australia; and seeking a relatively liquid and less volatile investment in AUD Denominated Assets as compared to investing directly in AUD denominated bonds. 13

18 RISKS FACTORS All types of investment carry some degree of risks which may have an adverse effect on the price of the Fund. Therefore, before making an investment decision, investors are advised to consider the different types of risks that may affect the Fund. Below are some of the general risks of investing in the Fund and specific risks associated with the investment portfolio of the Fund. General Risks of Investing in the Fund Currency Risk The Fund s assets and Base Currency are denominated in AUD. Investors will be exposed to the currency risk if they convert RM to invest in the Fund, or when they convert proceeds from liquidation of the Fund, which is in AUD, back to RM. Depreciation of AUD against RM will affect the returns of the investment negatively when liquidation proceeds are converted back to RM and vice versa. Inflation/Purchasing Power Risk This is the risk that the real rate of return from the investment may be lower than the prevailing inflation rate. As such, although the investment may grow in value over time, the investor s purchasing power is reduced over the same period. Fund Management Risk The performance of the Fund depends on the experience, knowledge and expertise of the Manager and the investment strategies adopted. The investments which the Manager has selected may not perform as expected and this could affect the performance of the Fund. Loan Financing Risk Investors must be aware of the inherent risk involved with loan financing for investments including their ability to service loan instalments, which may be affected by increase in interest rates or unforeseen circumstances, such as loss of a regular income stream. Investors may be required to pledge Units held in the Fund or any other assets as collateral to cover the loan margin. In addition, if the unit prices fall beyond a certain level, investors may also be required to provide additional collateral. If the additional collateral is not made within the prescribed time, the investors Units may be sold towards settling the loan financing. Risk of Non-Compliance This is the risk that the Manager does not adhere to relevant laws, regulations and guidelines that govern the investment management and operations of the Fund or the Fund s investment mandate stated in the Deed. This risk could result in disruptions to the operations of the Fund and potentially leads to reduced income/gains or even capital losses to investors. The compliance unit of the Manager has implemented compliance monitoring program to mitigate such risk. Specific Risks Associated with the Investment Portfolio of the Fund Liquidity Risk Liquidity risk refers to the ease at which an instrument can be sold at or near its fair value depending on the volume traded on the market. To mitigate liquidity risk, the Manager intends to invest in a range of products mainly in shorter tenured, high grade fixed income instruments where the market for such instruments are more liquid compared to longer tenured instruments. High grade fixed income instruments refer to issues that are rated with the Minimum Credit Rating. 14

19 Credit/Default Risk Credit or default risk arises when there is a possiblity that an issuer is unable to fulfill its obligation to pay interests and/or the principal amount. The Manager expects to be able to reduce credit risk substantially by mainly investing in fixed income instruments with the Minimum Credit Rating. Interest Rate Risk This risk relates to unforeseen movements in the direction of interest rates. Interest rate movements can lead to fluctuations in bond prices. The bond prices generally move in the opposite direction of interest rate, that is, any increase in interest rate will lead to a reduction in the bond prices, thus may affect the valuation of the Fund. The Manager will undertake a thorough evaluation of macro-economic variables before an interest rate strategy is implemented, mainly via managing the durations and coupon rates of the investment portfolio. Country Risk This is the risk that prices of AUD Denominated Assets may be affected due to changes in Australia s economic fundamentals, its regulatory, economic or foreign exchange policies or socio-political factors. The Manager will mitigate this risk by keeping abreast of regulatory developments that may affect the investments of the Fund and varying the Fund s exposure such as adopting the temporary defensive strategy if the Manager s outlook for the Australian market is negative. Concentration Risk There is no investment limit imposed on the Fund s investments, including no single issuer and group limits for its portfolio. As such, the Fund may be exposed to risks specific to a single issuer or instrument. Losses, if any, arising from such exposure may be significant if the Fund s holding in the affected investment is substantial to the portfolio. The Manager will mitigate this risk by ensuring that the risk management strategies as explained in Page 16 are carried out diligently. 15

20 FEES, CHARGES AND EXPENSES Charges Directly Incurred Below are the charges directly incurred when you buy or redeem Units of the Fund: Entry Fee (Sales Charge) Distribution channels Direct Investment through the Manager Maximum rate Up to 1.0% of the amount invested Third party distributors including appointed Institutional Unit Trust Adviser The entry fee payable for investments in a Fund is equivalent to the specified percentage of the NAV per unit of the Fund. Please refer to page 17 for an illustration on the calculation of the entry fee. Fee and Expenses Indirectly Incurred Below are the fees and expenses indirectly incurred when you invest in the Fund: Annual Management Fee: Up to 1.0% per annum of the NAV of the Fund. Foreign Custodian Fees and Charges: The Trustee fee of 0.05 % per annum of the NAV of the Fund is borne by the Manager. However, the Fund will bear any foreign custodian fees and charges incurred. For details of computation of Management Fee, please refer to page 17. Direct Expenses Related to the Fund Below is a list of expenses directly related to the Fund, which include:- Auditors fee; Commissions paid to brokers; Cost of convening meetings of Unit Holders; Cost of printing and postage of reports and statements; Tax advisors fee; Taxes; Valuation fee; and Other related costs as allowed by the Deed. Other Charges and Fees Other charges In executing your transaction, certain charges may be incurred. For instance, bank charges, telegraphic charges and courier charges. We reserve the right to vary such conditions on other charges and fees from time to time, which shall be communicated to you in writing. Rebates and Soft Commissions The Manager will retain soft commissions received from stockbrokers, provided these are of demonstrable benefit to the Unit Holders. Soft commissions may take the form of goods and services such as data and quotation services, computer software incidental to the management of the Fund and investment related publications. Cash rebates, if any, will be directed to the account of the Fund. There are fees and charges involved and investors are advised to consider the fees and charges before investing in the Fund. 16

21 TRANSACTION INFORMATION Calculation of Unit Prices Valuation Point Valuation point refers to the time(s) on a Business Day as may be decided by the Manager where the NAV per Unit of the Fund is calculated. The Manager may consider additional valuation points for the Fund during a Business Day when there is a material market movement (more than 5% of the last valuation point) within the day. The valuation of the Fund will be carried out at valuation point on the Business Day (T Day).The daily NAV per Unit of the Fund will be published on the next following Business Day (T+1 Day). Investors may visit our website for the latest NAV per Unit of the Fund. Single Pricing The Manager adopts the single pricing policy to price the Units in relation to investment and liquidation of Units. This means that the sale of Units by the Manager (i.e. when you purchase Units and invest in the Fund) and repurchase of Units by the Manager (i.e. when you redeem your Units and liquidate your investments) will be carried out at NAV per Unit (the actual value of the unit). The entry or penalty/exit fee (if any) would be computed separately based on your net investment/liquidation amount. The single price for investment and liquidation of Units shall be the daily NAV per Unit at the next valuation point after the Manager receives the investment or liquidation application (i.e. forward prices are used). How Is The NAV Per Unit Calculated? The NAV of the Fund is calculated in the Base Currency at the Valuation Point of each Business Day and is defined as the total value of the Fund s investment, assets and properties less any liabilities or provisions. Where applicable, investment income, interest payable, fees and other liabilities will be accrued daily in arriving at the NAV of the Fund. The value of all assets and liabilities not expressed in the Base Currency of the Fund, if any, will be converted into the Base Currency using the bid foreign exchange rate quoted by Maybank at 12p.m the same day. The NAV per Unit is then determined by dividing the NAV of the Fund by the number of Units in AUD Investments of the Fund 153,791,000 Add: Other Assets 18,668, ,459,000 Less: Liabilities 41,858,000 NAV before deducting Management Fee for the day 130,601,000 Less: Management Fee for the day (1.0% per annum) 3, ,601,000 x 1.0% 365 NAV 130,597,

22 NAV per Unit The NAV per Unit is then determined by dividing the NAV of the Fund by the number of Units in circulation. If the Units in circulation are 100,000,000 at the point of valuation, therefore; Illustration 2: Computation of NAV per Unit NAV per Unit of the Fund = NAV Units in Circulation = AUD 130, 597, ,000,000 =AUD =AUD (rounded to 4 decimal place) Investment of Units - Allocation Of Units To You. The number of Units invested is determined by dividing the investment amount (excluding entry fee), with the NAV per Unit at the next valuation point after the Manager receives the investment application, rounded up to two (2) decimal places. Illustration 3: Allocation of Units to Investor During Initial Offer Period: Assuming an investor invests AUD 10, into the Fund and the NAV of the Fund on that day is AUD , therefore; Investment amount 10, Add: Entry Fee of 1 % (AUD 10,000 x 1%) Total amount payable by investor 10, Value of investment 10, Divided by NAV per Unit Number of Units 10, Units credited to investor s account is 10, units AUD Liquidation of Units How is the Liquidation Value Determined? The liquidation value is calculated by multiplying the NAV per Unit at the next valuation point after the Manager receives the liquidation request. Illustration 4: Calculation of liquidation proceeds paid to Investor Assuming you request to liquidate 10, Units of the Fund on 10 January 2012, and the NAV per unit for the Business Day is AUD , therefore; AUD Number of Units liquidated 10, Multiply by NAV per Unit Net amount payable to investor 11,

23 Initial Offer Period The initial offer period is 10 days commencing from the date of this Information Memorandum. The initial offer period may be shortened by the Manager in the event the Fund is fully subscribed or where the Manager is of the opinion that no further subscriptions are expected or where the Manager determines that it is in the better interest of the Unit Holders. Initial Offer Price The initial offer price is AUD per Unit. Making An Investment Investments can be made at the Manager s office or our appointed third party distributors, including Institutional Unit Trust Advisers, on any Business Day, after completing an investment form. New investors are required to complete an account opening form and other relevant documents required by the Manager. Application for account opening must be accompanied by either a copy of the applicant s identity card, passport or other identification documentation. Investment forms and the necessary remittance must be submitted before the cut-off time, 11.00am on the Business Day (T-day) for processing. Payment Methods Payments shall be made in AUD and remitted to the foreign currency account of Areca Capital Sdn Bhd maintained by the Company. Payment should be made in full, taking into account of any transfer fees or bank charges. Kindly attach the copy of the remittance advice with your application form. For investments made through our appointed third party distributors including Institutional Unit Trust Advisers, please contact the respective distributors/advisers for their bank account numbers. Investors are advised not to make payment in cash when purchasing the Units via any institutional/retail agent. Investors are required to have a foreign currency account (AUD) with any financial institution as all transactions will only be made in AUD and via telegraphic transfer or other appropriate means. Liquidation Liquidation request can be made on any Business Day. However, a liquidation notice must be submitted to the Manager at least two Business Days before the transaction day (T-2). Payment of redemption proceeds shall be made in AUD within 10 days at the latest, upon receipt of the duly completed original liquidation form by the Manager. However, it is the Manager s general liquidation policy to make payments within 3 Business Days from the transaction day (T+3 days). All proceeds on liquidation of Units will be remitted and paid in AUD. In exceptional circumstances, as in the event of force majeure, where it is not possible for the Manager to make the payment within the prescribed period, then such payment shall be made as soon as reasonably practicable within 30 days thereafter without any interest. Income Distribution and Reinvestment Policies The income distribution for the Fund is yearly or more frequent, subject to the availability of distributable income. Distribution, if any, will be paid out in AUD. In the absence of instructions to the contrary from Unit Holders, the Manager is entitled to reinvest the income distributed from the Fund in additional Units at the NAV per Unit at the end of the distribution day (at ex-distribution price) with no entry fee. 19

24 Unclaimed Moneys Any moneys which remain unclaimed after 12 months or any such other period as is prescribed by the Unclaimed Moneys Act, 1965 shall be dealt with in accordance with the provisions of the Unclaimed Moneys Act, Foreign Exchange Administration Rules As the Fund s Base Currency is in AUD, investors will be subject to the Exchange Control Rules ( Rules ) issued by BNM. Investors who are Residents (as defined by the Rules) are required to declare and confirm that they have read and understood the Rules in relation to Investments in Foreign Currency Assets By Residents and declare to the Manager that they shall at all times comply with the requirements of the Rules. In particular, Resident individuals with domestic ringgit ( RM ) credit facilities are only allowed to invest in foreign currency assets of up to RM1 million in aggregate per calendar year if the investment is funded from conversion of RM. Resident companies are only allowed to invest in foreign currency assets of up to RM50 million equivalent in aggregate on a corporate group basis per calendar year if funded from conversion of RM. For further information and details on the Rules, please refer to BNM s website at Please refer to the Guide on How to buy and sell? on page 21 for further details. 20

25 How to Buy and Sell? How To Documents required/action Minimum Amount What the investor will receive Make an investment For new investors: Completed and signed Account Opening form, Customer Information Form and investment form; Legible photocopy of identity card or passport for each applicant, in the case of individual applicant; Certified true copy of certificate of incorporation, Form 24 & 49, Memorandum and Articles of Association or Constitution or By laws, Company Resolution, in the case of corporate applicant; Payment or proof of payment; Submit to the Manager by hand or by post. For existing investors: Completed and signed investment form; Payment or proof of payment; Submit to the Manager by hand or by post. Initial: AUD5,000 Additional: AUD200 Confirmation of account opening Confirmation of investment Liquidate an investment Completed and signed liquidation form; Submit to the Manager by hand or by post. AUD1,000 Liquidation Advice Cooling-off period is not available for the Fund. Transfer facility is not available for the Fund. Switching facility is not available for the Fund. The Manager, may at its discretion, lower or raise the minimum transaction amounts of the Fund. Cut-off time for investment of Units is a.m. on any Business Day. If the transaction form is received after the cut-off time, your request will be deemed to be received on the next Business Day. Liquidation notice must be submitted to the Manager at least two Business Days before the transaction day (T-2). The minimum holding requirement in the account is 5,000 Units. If the liquidation request leaves a Unit Holder with less than 5,000 Units (minimum balance), the Unit Holder may be required to make an application for the Manager to liquidate all the Unit Holder s holdings in the Fund. In the event an account has more than one registered holder, the principal holder shall receive all confirmation advices, notices and correspondences in respect of the Fund, as well as any liquidation proceeds, unless there is an instruction given to the contrary. Units will be created once an application for Units is received by the Manager at the Fund s NAV per Unit calculated at the end of that particular Business Day (i.e. forward pricing, please refer to page 17 on the computation on NAV). The Manager reserves the right to accept or reject any application for Units if the information is incomplete, or if not accompanied by the required documents, or is not signed by investors/authorised representative of the investors or where there are any other reasonable grounds to reject it. Unsuccessful applicants will be notified and entitled to a full refund. Transaction forms can be obtained from our office or downloaded from our website. Units can be bought on any Business Day from Monday to Friday at Areca s offices as stated in the directory on page