INFORMATION MEMORANDUM

Transcription

1 FUND MANAGEMENT COMPANY Kenanga Investors Berhad ( P) A Company incorporated in Malaysia, under the Companies Act 1965 TRUSTEE CIMB Commerce Trustee Berhad ( A) Website: info.trust@kenanga.com.my Toll Free Line: Head Office, Kuala Lumpur Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur. Tel: Fax: INVESTORS ARE ADVISED TO READ THE REPLACEMENT INFORMATION MEMORANDUM AND OBTAIN PROFESSIONAL ADVICE BEFORE SUBSCRIBING TO THE WHOLESALE FUND. FOR INFORMATION CONCERNING RISKS FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, PLEASE SEE RISKS FACTOR COMMENCING ON PAGE 13. REPLACEMENT This document is a replacement information memorandum in respect of the Kenanga Principal Protected Income Fund (formerly known as ING Principal Protected Income) dated 8 June 2013 which replaces and supersedes the information memorandum in respect of the ING Principal Protected Income dated 2 May 2012 and the first supplemental information memorandum dated 15 October 2012 and the second supplemental information memorandum dated 3 May INFORMATION MEMORANDUM (formerly known as ING PRINCIPAL PROTECTED INCOME) This fund was constituted on 25 April 2008 THIS REPLACEMENT INFORMATION MEMORANDUM IS DATED 8 JUNE 2013 KENANGA PRINCIPAL PROTECTED INCOME FUND

2 Inside cover: Responsibility Statement and Statement of Disclaimer This Replacement Information Memorandum has been seen and approved by the directors of the Fund Management Company 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 authorized the wholesale fund, the subject of this Replacement Information Memorandum, and the authorization 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 the Fund Management Company and takes no responsibility for the contents of the Replacement Information Memorandum, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon the whole or any part of the content of this Replacement Information Memorandum. 2

3 Table of Contents Page/s 1 Glossary of Terms 5 2 Corporate Directory 7 3 Key Data of Kenanga Principal Protected Income Fund 3.1 General information Fees and charges Transactions 12 4 Risk Factors 4.1 General risks of investing in a wholesale fund Specific and peculiar risks when investing in Kenanga Principal Protected Income Fund 13 5 Details of Kenanga Principal Protected Income Fund 5.1 What is Kenanga Principal Protected Income Fund? Why invest in Kenanga Principal Protected Income Fund? Fund information Category/type Investment objective Investment strategy Performance benchmark Income distribution (if any) Authorised investments of Kenanga Principal Protected Income Fund Investment restrictions & limits of Kenanga Principal Protected Income Fund Valuation of assets Borrowing policy and liquid assets Policy on stockbroking rebates and soft commissions 16 6 Fees, Charges and Expenses 6.1 Single pricing policy How Net Asset Value is calculated Fees and charges directly incurred Entry fee Redemption fee Switching fee Fees and charges indirectly incurred Annual management fee Annual trustee fee Other fees and charges The expenses of Kenanga Principal Protected Income Fund 19 7 Transaction Information 7.1 Forward pricing for both entry and redemption prices Investing into Kenanga Principal Protected Income Fund Redeeming from Kenanga Principal Protected Income Fund Cooling-off 21 3

4 7.5 Switching facility Facsimile instruction facility 24 8 The Fund Management Company 8.1 Board of Directors Key management staff The Fund Management Company s track record and experience Summary of financial position for the last 3 Years (audited) Roles and functions of the Fund Management Company Material litigation and arbitration Investment Committee Members Investment management team 29 9 Trustee 9.1 Directors Trustee s experience Financial position Trustee s statement of responsibility Duties and responsibilities of the trustee in relation to the Fund Material litigation and arbitration Purchase and redemption of unit procedure Trustee s delegate and delegate s roles and duties Salient Terms of the Deed 10.1 Unitholders rights Unitholders liabilities Maximum fees and charges permitted by the Deed Permitted expenses payable by the Fund Factors that may lead to the retirement, removal or replacement of the Fund Management Company Powers of the Fund Management Company to remove or replace the Trustee Factors that may lead towards the retirement, removal or replacement of the Trustee Power of the Trustee to remove, retire or replace the Fund Management Company Termination of the Fund Unitholders meeting Conflict of Interest 11.1 Policy on conflict of interest Additional Information Managing your investment portfolio Keeping track of your investment Documents available for inspection Periodic reports 37 4

5 1. GLOSSARY OF TERMS In this Replacement Information Memorandum, the following abbreviations or words shall have the following definitions unless stated otherwise: Authorised distributors Bursa Malaysia Business day CMSA Collection centre Collective Investment Scheme days Kenanga Investors Berhad s advisers, selected Institutional Unit Trust Advisers (IUTA), Corporate Unit Trust Advisers (CUTA) and direct sales team. Bursa Malaysia Securities Berhad. The day on which Bursa Malaysia Securities Berhad is open for trading. Means the Capital Markets and Services Act 2007, as amended or modified. A centre for submission of transaction forms only. No investment consultation will be provided at these centres. Comprises unit trust funds, property trust funds, closed end funds, exchange traded funds, derivative funds, hedge funds and any other investment vehicles that utilize the pooling of funds concept. References to days in this Replacement Information Memorandum will be taken to mean calendar days unless otherwise stated. Deed Deed dated 25 February 2008 First Supplemental Deed dated 15 May 2013 Direct sales Entry fee Entry price Forward pricing Guidelines Kenanga OneAnswer TM Fund Management Company, KIB, or we MARC Net Asset Value of the Fund or NAV performance benchmark Qualified investors Kenanga Investors Berhad s employees responsible for business development targeted at retail individual and corporate/institutional market segments. The fee chargeable to acquire units in the Fund. The entry price for units should be the NAV per unit of the Fund as at the next valuation point after the request for units is received by the Fund Management Company. Entry price is commonly known as selling price. Means the NAV per unit of the Fund used for the purpose of calculating a price is the NAV per unit as at the next valuation point after an instruction or a request is received before 4.00pm on any Business day. Refers to Guidelines on Wholesale Funds. Refers to Kenanga OneAnswer TM Investment Funds. Kenanga Investors Berhad. Refers to Malaysian Rating Corporation Berhad. The Net Asset Value ( NAV ) of the Fund is determined by deducting the value of all the Fund s liabilities from the value of all the Fund s assets, 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 for the relevant day. The performance of Kenanga Principal Protected Income Fund is benchmarked against the overnight rate obtainable from refers to:- (a) an individual whose total net personal assets, or total net joint assets with his or her spouse, exceed RM3 million or its equivalent in foreign currencies, excluding the value of the individual s primary residence; (b) an individual who has a gross annual income exceeding RM300,000 or its equivalent in foreign currencies per annum in the preceding 12 months; (c) an individual who, jointly with his or her spouse, has a gross annual income exceeding RM400,000 or its equivalent in foreign currencies in the preceding 12 months; 5

6 (d) a corporation with total net assets exceeding RM10 million or its equivalent in foreign currencies based on the last audited accounts; (e) a partnership with total net assets exceeding RM10 million or its equivalent in foreign currencies; (f) a unit trust scheme or prescribed investment scheme; (g) a private retirement scheme; (h) a closed-end fund; (i) a company that is registered as a trust company under the Trust Companies Act 1949 which has assets under management exceeding RM10 million or its equivalent in foreign currencies; (j) a corporation that is a public company under the Companies Act 1965 which is approved by the SC to be a trustee under the Act and has assets under management exceeding ten million ringgit or its equivalent in foreign currencies; (k) a statutory body established by an Act of Parliament or an enactment of any State; (l) a pension fund approved by the Director General of Inland Revenue under section 150 of the Income Tax Act 1967; (m) a holder of a capital markets services licence; (n) a licensed institution; (o) Islamic bank; (p) an insurance company licensed under the Insurance Act 1996; (q) a takaful operator registered under the Takaful Act 1984; (r) a bank licensee or insurance licensee as defined under the Labuan Financial Services and Securities Act 2010; and (s) an Islamic bank licensee or takaful licensee as defined under the Labuan Islamic Financial Services and Securities Act RAM Redemption fee Redemption price Regional Branch Offices RM and sen SC Securities Laws Switching of units Single pricing The Fund Trustee unit Unitholder Wholesale fund Refers to the Rating Agency of Malaysia. The fee chargeable to redeem units from the Fund. The redemption price for units should be the NAV per unit of the Fund as at the next valuation point after the request for redemption is received by the Fund Management Company. Redemption price is commonly known as repurchase price. Kenanga Investors Berhad s sales and administration offices throughout the country to support all distribution channels sales activities and where units can be purchased and redeemed. Ringgit Malaysia and sen respectively. The Securities Commission Malaysia. The Securities Industry (Central Depositories) Act 1991, the Securities Commission Act 1993 and the Capital Market and Services Act 2007 and unless expressly stated otherwise, includes any regulations, rules, orders, notifications or other subsidiary legislation made under those laws. Switching of units from one fund to another fund under the same Unitholder s account. Means the pricing of all unit trust funds shall be based on a single price which is the NAV per unit of the fund. Kenanga Principal Protected Income Fund. CIMB Commerce Trustee Berhad (31301-A). The unit of the Fund and where applicable includes a fraction of a unit. The person for the time being registered under the provision of the Deed as the holder of units of the Fund. Means 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. 6

7 2. CORPORATE DIRECTORY The Fund Management Company Kenanga Investors Berhad ( P) Registered Office: 8th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia Tel: ; Fax: Regional Branch Offices: Kuala Lumpur Suite 12.02, 12 th Floor, Kenanga International Jalan Sultan Ismail, Kuala Lumpur, Malaysia Tel: / Fax: / Petaling Jaya Unit B-6-2, Sunway Giza Mall Dataran Sunway, PJU 5/14 Kota Damansara Petaling Jaya, Selangor Tel: , Fax: Klang No. 12 Jalan Batai Laut 3, Taman Intan Klang, Selangor Darul Ehsan Tel: , Fax: Penang Blok A, Aras 3, Wisma Perkeso No. 269, Jalan Burma George Town, Penang Tel: Fax: Ipoh No. 5A, Persiaran Greentown 9 Greentown Business Centre Ipoh, Perak Darul Ridzuan Tel: /7570 Fax: Melaka No Jalan Kota Laksamana 2/17 Taman Kota Laksamana Seksyen Melaka Tel: , Fax: Business Office: Suite 12.02, 12 th Floor, Kenanga International Jalan Sultan Ismail, Kuala Lumpur, Malaysia Tel: / Fax: / info.trust@kenanga.com.my Website: Johor Bahru Lot 11.03, 11 th Floor, Menara MSC Cyberport 5 Jalan Bukit Meldrum Johor Bahru, Johor Tel: /4798 Fax: Kuching 1 st Floor, No 71, Lot 7 Lot 10900, Jalan Tun Jugah Kuching, Sarawak Tel: Fax: Level 1, Wisma Mahmud, Jalan Sungai Sarawak, Kuching, Sarawak, Malaysia Tel: / Fax: / Kota Kinabalu A-03-11, 3 rd Floor Block A Warisan Square Jalan Tun Fuad Stephens Kota Kinabalu, Sabah Tel: / Fax: Lot 47, No. 20, 1 st Floor, Damai Plaza Phase 4, Block F, Lorong Pokok Kayu Manis II, Kota Kinabalu, Sabah, Malaysia Tel: / Fax: AGENCY OFFICE Miri (Sarawak) c/o Lot 1084, 2 nd Floor, Jalan Merpati Miri Sarawak, Malaysia Tel: Seremban Suite 08-3, Seremban City Centre Jalan Pasar Seremban Tel: Fax:

8 Board of Directors Datuk Syed Ahmad Alwee Alsree (Chairman) Syed Zafilen Syed Alwee (Independent Director) YM Raja Dato Seri Abdul Aziz bin Raja Salim (Independent Director) Vivek Sharma (Independent Director) Bruce Kho Yaw Huat Abdul Razak bin Ahmad Peter John Rayner Investment Committee Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member) Vivek Sharma (Independent Member) Abdul Razak bin Ahmad Peter John Rayner Secretary Norliza Abd Samad (MAICSA ) 9th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur Trustee: CIMB Commerce Trustee Berhad ( A) Registered Office: 5 th Floor Bangunan CIMB Jalan Semantan Damansara Heights Kuala Lumpur Tel: Fax: Web: Business Office: Level 7, Wisma Amanah Raya Berhad Jalan Semantan, Damansara Heights Kuala Lumpur Tel: Fax: Trustee s Delegate CIMB Group Nominees (Tempatan) Sdn Bhd (Co. No T) (Custodian) Registered Office: 5th Floor, Bangunan CIMB Jalan Semantan Damansara Heights Kuala Lumpur Tel : Fax: Web: Business Address: Level 7, Wisma Amanah Raya Berhad Jalan Semantan Damansara Heights Kuala Lumpur Tel : Fax:

9 Auditor Taxation Adviser Ernst & Young (AF:0039) Ernst & Young Tax Consultants Sdn. Bhd. ( K) Business Address: Business Address: Level 23A, Menara Millennium Level 23A, Menara Millennium Jalan Damanlela Jalan Damanlela Pusat Bandar Damansara Pusat Bandar Damansara Kuala Lumpur Kuala Lumpur Tel: Tel: Independent Legal Adviser Naqiz & Partners No. 42A, Lorong Dungun Damansara Heights Kuala Lumpur Malaysia Federation of Investment Managers Malaysia , 7 th Floor, PNB Damansara 19 Lorong Dungun, Damansara Heights Kuala Lumpur Tel: Fax: Principal Bankers Standard Chartered Bank Malaysia Berhad ( P) Registered Address: Level 16, Menara Standard Chartered 30 Jalan Sultan Ismail Kuala Lumpur Public Bank Berhad (6463-H) Registered Address: 86 Jalan Raja Chulan Kuala Lumpur RHB Bank Berhad RHB Centre Jalan Tun Razak Kuala Lumpur 9

10 3. KEY DATA OF KENANGA PRINCIPAL PROTECTED INCOME FUND 3.1 GENERAL INFORMATION Fund Management Company: Kenanga Investors Berhad ( P) Trustee: CIMB Commerce Trustee Berhad ( A) Key information of Kenanga Principal Protected Income Fund: Brief description Kenanga Principal Protected Income Fund is an open ended short-term money market fund which will provide: 1) Steady stream of income i.e. monthly income distribution; 2) Capital preservation; 3) Enhanced returns and yields; and 4) Liquidity and convenience. More details on section(s) 5 Fund Kenanga Investors Berhad 8 Management Company Category/type Wholesale money market/income 5 Investment objective of the Fund The Fund aims to provide investors a regular stream of income from the short-term money market returns which is competitive to that offered by fixed deposits, while preserving its capital by placing the funds primarily in short-term money market and deposit-based instruments issued by licensed financial institutions with a minimum of RAM A3 or MARC P2. The Fund also provides a high level of liquidity Investment strategy Asset allocation Performance benchmark Risk profile of the Fund Investors profile Suggested minimum investment timeframe Any material changes to the Fund s investment objective would require Unitholders approval. The Fund seeks to achieve its objective by placing its funds primarily in a diversified portfolio of short-term money market and deposit-based instruments that are not subject to market valuation risks. In order to enhance the returns of the Fund, an active management process will be adopted, including active management of the maturities of the Fund s holdings, continuous monitoring of the prevailing interest rates environment and to actively seek out the best rates and instruments available for the Fund Short-term money market instruments Up to 100% 5.2, Overnight rate obtainable from The above benchmark has been changed from 1-month fixed deposit rate to overnight rate with effect from 2 May 2012 to better reflect the investment objective and the underlying investment strategies, and is therefore more suitable to measure performance against. The benchmark change will have no impact on the portfolio or how it is managed. Low - This Fund is suitable for investors who: Desire a steady stream of income i.e. monthly income distribution; Have short to medium-term placement horizon; Have low tolerance of market and credit risks; Want a highly liquid fixed income portfolio; and Want a low-risk fund as part of the asset allocation strategy months

11 Principal risks of investing Income distribution Approved fund size Financial yearend Liquidity risk, interest rate risk, market risk, inflation risk and counterparty risk. Income will be paid daily on a best effort basis, if any. Income paid (if any) will be reinvested into the Fund. 1 billion units - 30 April FEES AND CHARGES The table below describes the fees and charges (if any) that you may incur directly when you purchase or redeem units in Kenanga Principal Protected Income Fund. More details on section(s) Entry fee Distribution channels Maximum entry fee 6.1, 6.2, Kenanga Investors Berhad s advisers Nil Institutional unit trust advisers (IUTAs) Nil Corporate unit trust advisers (CUTAs) Nil Direct sales team Nil Redemption fee Distribution channels Redemption fee Kenanga Investors Berhad s advisers Nil Institutional unit trust advisers (IUTAs) Nil Corporate unit trust advisers (CUTAs) Nil Direct sales team Nil Switching fee Nil Transfer fee Transfer facility is not available for Kenanga Principal Protected Income Fund. - The table below describes the fees and charges that you may incur indirectly when you invest in Kenanga Principal Protected Income Fund. Annual management fee Annual trustee fee Expenses related to the Fund Other fees incurred indirectly Up to 0.50% p.a. of NAV of the Fund. This fee is calculated and accrued daily and payable monthly to the Fund Management Company. 0.04% p.a. of the NAV of the Fund. This fee is calculated and accrued daily and paid monthly to the Trustee. More details on section(s) Tax adviser fees 6.6 Auditor s fees Annual/quarterly reports All fees authorized by the Deed Nil - 11

12 3.3 TRANSACTIONS Minimum initial investment Minimum additional investment More details on section(s) RM100,000 or such amounts as we may from time to time decide. - RM50,000 or such amounts as we may from time to time decide. - Minimum redemption 50,000 units or such amounts as we may from time to time decide. - Minimum switching 50,000 units or such amounts as we may from time to time decide. - Minimum holdings 50,000 units or such amounts as we may from time to time decide. - Frequency of redemption Period of payment of redemption proceeds Switching facility Transfer facility Cooling-off period Unclaimed income policy No limit. - Same business day after the redemption is received by the Fund Management Company before 11:00 am on a Business Day. If the redemption is received after 11:00 am on a Business Day, the redemption proceed is paid the next Business Day. Switching facility is available for Kenanga Principal Protected Income Fund. Switching from Shariah-based fund to a conventional fund is discouraged especially for Muslim Unitholders. Transfer facility is not available for Kenanga Principal Protected Income Fund. Within 6 Business days from the date your application is received and accepted by the Fund Management Company. However terms and conditions applies. Any monies payable to Unitholders which remain unclaimed after such period (currently being 1 year) will be sent to Registrar of Unclaimed Monies by the Fund Management Company in accordance with the requirements of the Unclaimed Monies Act Prospective Unitholders should read and understand the contents of this Replacement Information Memorandum and if necessary should consult their adviser(s). Past earnings or the Fund s distribution record is not a guarantee or reflection of the Fund s future earnings or future distribution. Unit prices and distribution payable, if any, may go down as well as up

13 4. RISK FACTORS 4.1 GENERAL RISKS OF INVESTING IN A WHOLESALE FUND The following are some risks involved when you invest in wholesale funds: Fund management company risk Wholesale funds are managed by of the Fund Management Company. The expertise, experience and investment process of the investment team would affect the performance of the fund. Poor management of a wholesale fund may jeopardise the investment of each investor. Credit risk A wholesale fund could lose money if the issuer or guarantor of a fixed income security, or the counterpart to a derivatives contract, redemption agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest/profit payments, or to otherwise honour its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Risk of non-compliance The operations and administrations of the fund by the Fund Management Company or its delegates are governed by the Deed, all applicable laws and regulations or internal policies and procedures. Non-adherence may result in tarnished reputation, limited business opportunities and reduced expansion potential for the Fund Management Company. Unitholder investment goals may also be affected should the Fund Management Company not adhere to the investment mandate. Loan financing risk The inherent risk of investing with borrowed money, which includes the ability for you to service the loan repayments and the effect of increase in interest rates on the loan repayments and your ability to provide additional collateral should wholesale fund prices fall beyond a certain level. 4.2 SPECIFIC AND PECULIAR RISKS WHEN INVESTING IN KENANGA PRINCIPAL PROTECTED INCOME FUND The following are specific risks involved when investing in Kenanga Principal Protected Income Fund and how the risks are managed. Liquidity risk Liquidity risk stems from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize loss. This may lead to a possibility that the Fund may not be able to unwind its positions which may result in the Fund not obtaining a fair price or true bid on the market. The lack of liquidity could also bring about instability in market prices, hence the net asset value of the Fund. This risk is managed by investing only in short-term money market and deposit-based instruments. Interest rate risk This risk refers to the effect of interest rate changes on the market value of a fixed income portfolio. In the event of rising interest rates, prices of fixed income securities such as debentures will decrease and vice versa. The risk is mitigated by investing only in short-term money market and deposit-based instruments that are not subject to valuation risk. Market risk Market risk refers to fluctuations in market values of investments that affect the entire market. Economic and political uncertainties represent some sources of market risks because they affect the entire market and cannot be avoided through diversification. Inflation risk Inflation reduces the purchasing power of money. Therefore, in a high inflationary environment, there is possibility that income from debt securities may not be able to keep up with inflation. Counterparty risk Counterparty risk occurs when a financial institution that has entered into a securities trade defaults on its obligations under the agreement. A fund may encounter unit price volatility due to this risk arising. 13

14 5. DETAILS OF KENANGA PRINCIPAL PROTECTED INCOME FUND 5.1 WHAT IS KENANGA PRINCIPAL PROTECTED INCOME FUND? Kenanga Principal Protected Income Fund is an open ended short-term money market fund which is designed to provide investors a regular stream of income from short-term money market returns which is competitive to that offered by fixed deposits. It is also designed to provide investors 100% capital preservation, where its funds are placed only in low-risk money market and deposit-based instruments issued by licensed financial institutions with a minimum of RAM A3 or MARC P2 ratings that are not subject to market valuation risks. 5.2 WHY INVEST IN KENANGA PRINCIPAL PROTECTED INCOME FUND? Kenanga Principal Protected Income Fund offers investors the safety of capital as the funds are only placed in instruments that are stable and safe such as short-term money market and deposit-based instruments issued by licensed financial institutions with a minimum of RAM A3 or MARC P2 ratings i.e., fixed deposit and money market or repo placements which are not subject to any market valuation risks, to preserve the capital of the Fund. As the funds are placed primarily in short-term money market and deposit-based instruments, it provides high level of liquidity and ensures the capital is preserved. Investors will be able to meet cash flow commitments through the high liquidity level. In short, Kenanga Principal Protected Income Fund provides both income and capital preservation and is deemed to be among the safest short-term money market instruments for investors and yet provides investors with enhanced returns and yields, compared to ordinary savings account or fixed deposits. This Fund is targeted at institutions, corporation, and high net worth clients who seek higher yields from conventional bank fixed deposits, with the added benefit of the liquidity that the Fund may provide without compromising or forfeiting on their yields as in the case of the fixed deposits. 5.3 FUND INFORMATION Category/type Kenanga Principal Protected Income Fund is an open ended wholesale money market income fund Investment objective The Fund aims to provide investors a regular stream of income from the short-term money market returns which is competitive to that offered by fixed deposits, while preserving its capital by placing the funds primarily in shortterm money market and deposit-based instruments issued by licensed financial institutions with a minimum of RAM A3 or MARC P2. The Fund also provides a high level of liquidity. Any material changes to the Fund s investment objective would require Unitholders approval Investment strategy The Fund seeks to achieve its objective by placing its funds primarily in a diversified portfolio of short-term money market and deposit-based instruments that are not subject to market valuation risks. In order to enhance the returns of the Fund, an active management process will be adopted, including active management of the maturities of the Fund s holdings, continuous monitoring of the prevailing interest rates environment and to actively seek out the best rates and instruments available for the Fund. An extremely defensive unitized portfolio is proposed with: 1. Placement in only selected instruments which have no capital or revaluation risk; 2. Staggered maturities to take advantage of higher yield for longer tenured placements; 3. Diversification of placements to further reduce risk of single bank issuer; and 4. Dynamic rebalancing and mix of fixed deposits and repo placements to ensure best returns for investors. 14

15 5.3.4 Performance benchmark The Fund is benchmarked against the overnight rate obtainable from The above benchmark has been changed from 1-month fixed deposit rate to overnight rate with effect from 2 May 2012 to better reflect the investment objective and the underlying investment strategies, and is therefore more suitable to measure performance against. The benchmark change will have no impact on the portfolio or how it is managed. Note: The Fund Management Company may from time to time decide to review the above benchmark to reflect any material changes to the Fund s asset allocation range as permitted by the prevailing regulations Income distribution (if any) It is the discretion of the Fund Management Company to pay out income received by the Fund to its investors. The source of income is derived from the stream of income generated from short-term money market returns after deducting the Fund s permitted expenses. For Kenanga Principal Protected Income Fund, distribution of income (if any) will be declared daily and will be reinvested into the Fund at NAV Authorised investments of Kenanga Principal Protected Income Fund The Fund may invest in the following investments subject to the SC Guidelines and the Fund s objective: Cash; Debentures, money market instruments and placements of deposits with financial institutions; Repurchase agreements; Collective investment schemes; Treasury products; Interest rate and fixed income related derivatives; Listed or unlisted foreign money market or treasury instruments; and Any other kind of investment or investments as permitted by the SC or any other relevant authorities from time to time Investment restrictions and limits of Kenanga Principal Protected Income Fund The Fund only places its investments into instruments that are stable and safe such as short-term money market and deposit-based instruments issued by licensed financial institutions with a minimum credit rating of A3 by RAM or P2 by MARC Valuation of assets The NAV of the Fund is based on its value of investments at any one time which includes liquid assets, such as money market instruments and deposits with licensed financial institutions and collective investment schemes value at last available published price immediately preceding the valuation point. Investments in collective investment schemes which are quoted on an approved exchange shall be valued based on the same manner as listed securities as described above. Investments in unlisted open-ended unit trust funds shall be based on the last exit price published by the trust manager. However, if the aforementioned valuation methods results in values which the Fund Management Company or fund management delegate considers not to be representative of a fair value of the investments, the Fund Management Company or fund management delegate may determine the fair value in good faith based on the methods approved by the Trustee. Investments such as bank bills and deposits placed with banks or other financial institutions shall be valued by reference to the value of such investments and the shared profit/interest accrued thereon for the relevant period. 15

16 5.3.9 Borrowing policy and liquid assets The Fund is permitted to borrow cash to meet redemption requests. The period of borrowing must not exceed 1 month. At the time borrowings incurred, the aggregate borrowing amount must be less than 10% of the Fund s NAV. Borrowing can only be made from licensed financial institutions. The Fund is not permitted to borrow cash or to employ any other form of lending with the intention of enhancing its returns. There will be no minimum limit for liquid assets as this is a money market fund which is highly liquid Policy on stockbroking rebates and soft commissions The Fund Management Company will direct any stock broking rebates to the account of the Fund. The Fund Management Company may receive goods or services by way of soft commissions provided always that the goods or services are of demonstrable benefit to the Fund and Unitholders. Examples of soft commission include but not limited to research materials, data services and investment related publications. 16

17 6. FEES, CHARGES AND EXPENSES 6.1 SINGLE PRICING POLICY We adopt single pricing with no entry fee or redemption fee for investments into the Fund. When you invest into or redeem from the Fund, the selling or buying of units by us is carried out at NAV per unit. The entry or redemption fee (if any) would be calculated separately based on your net investment or redemption amount. In the case of Kenanga Principal Protected Income Fund, there is no entry fee or redemption fee involved and the NAV per unit is RM If you intend to invest into the Fund by issuing a cheque of RM100, to Kenanga Investors Berhad, the breakdown between the investment amount into the Kenanga Principal Protected Income Fund account and the entry fee is as follows: RM Investment into your Kenanga Principal Protected Income Fund 100, account Entry fee payable (Nil) 0.00 Amount payable to Kenanga Investors Berhad 100, Your account will be allotted the following units: = RM100, / RM = 100, units 6.2 HOW NET ASSET VALUE IS CALCULATED The NAV of the Fund is determined at the end of each Business day and is the total value of all investments and cash held by the Fund including income derived by the Fund which has not been distributed to you, less any amount owing or payable in respect of the Fund including any provision that the Trustee or the Fund Management Company considers necessary to be made. Please note that the example below is for illustration only: Assuming that the calculation below is for the Fund: Current investment portfolio 50,000, Add: Cash (uninvested) 10, Income Derived 2, (Less): Liabilities (5,000.00) NAV before deducting management fee and trustee fee 50,007, (Less) Management fee for the day (at 0.50% per annum) (685.04) (Less) Trustee fee for the day (at 0.04% per annum) (54.80) NAV 50,006, RM If the units in circulation for the Fund at the end of the Business day was 50,000,000.00, the NAV per unit for the Fund would be RM 50,006, divided by 50,000,000 units to result in RM per unit. 6.3 FEES AND CHARGES DIRECTLY INCURRED Entry Fee There is no entry fee when you invest in Kenanga Principal Protected Income Fund Redemption Fee There is no redemption fee for redeeming units from Kenanga Principal Protected Income Fund. 17

18 6.3.3 Switching Charge There are no switching fees for switching units from Kenanga Principal Protected Income Fund. Switching into Kenanga Principal Protected Income Fund is only allowed for Qualified investors as defined in the Glossary of Terms. Switching from Shariah-based fund is discouraged especially for Muslim Unitholders 6.4 FEES AND CHARGES INDIRECTLY INCURRED Annual management fee The annual management fee for Kenanga Principal Protected Income Fund is 0.50% per annum of the NAV of the Fund. The annual management fee is calculated and accrued daily but payable at the end of each month to the Fund Management Company. Please note that the example below is for illustration only: Assuming that the total gross NAV in the Fund is RM100 million (before deducting the management and trustee fee). The calculation of annual management fee based on total gross NAV in Kenanga Principal Protected Income Fund is: RM100 million x 0.50% 365 days = RM1, per day Annual trustee fee The annual trustee fee for the Fund is 0.04% per annum on the NAV of the Fund. This fee is calculated and accrued daily and paid monthly to the Trustee. Please note that the example below is for illustration only: Assuming that the total gross NAV in Kenanga Principal Protected Income Fund (before deducting the management = RM100,000, fee and trustee fee) Rate = 0.04% p.a. of gross NAV Accrued trustee fee (on daily basis) = RM100,000, x 0.04% 365 days = RM per day 6.5 OTHER FEES AND CHARGES Certain charges may be incurred when we execute a transaction for you. These may include bank charges such as commission for outstation cheques, telegraphic charges and courier charges. For investment payment through auto debit, you will be charged RM5 if there is insufficient funds in your bank account. These charges are borne by you and will be deducted from your next auto debit deduction. The balance will then be invested into your relevant account. 6.6 THE EXPENSES OF KENANGA PRINCIPAL PROTECTED INCOME FUND The fees and expenses to be paid out of the Fund include: Annual management fee; Annual trustee fee; Such expenses of the Trustee as permitted under the Deed and Guidelines; Commissions/fees paid to brokers and all banks fees in effecting dealings in the investments of the Fund; Tax and other duties charged on the Fund by the government or other authorities; Tax agent fee; Fees and other expenses properly incurred by the auditor & reporting accountant appointed for the Fund; 18

19 Fees for valuation of any investment of the Fund by independent valuers for the benefit of the Fund; Costs incurred for the modification of the Deed other than those for the benefit of the Fund Management Company; Costs incurred in printing and dispatching to Unitholders the reports, accounts of the Fund, tax vouchers and distribution statements; Costs incurred for any meetings of the Unitholders other than those convened by, or for the benefit of the Fund Management Company or Trustee; Where the Fund Management Company and the Trustee deem fit, fees and other expenses incurred by the investment committee appointed for the Fund. Expenses associated with the management and administration of the Fund, such as general overheads and costs for services expected to be provided by the Fund Management Company, will not be charged to the Fund. There are fees and charges involved and as such investors are advised to consider the fees and charges before investing in the Fund. 19

20 7. TRANSACTION INFORMATION 7.1. FORWARD PRICING FOR BOTH ENTRY AND REDEMPTION PRICES Investments or redemptions are transacted based on forward pricing. This is done after we have received and accepted your application for units. The valuation and pricing of units normally take place at the end of each Business day at the close of Bursa Malaysia. Investment requests submitted at our Regional Branch Offices before 11.00am on any Business day will be based on NAV determined at the end of the same Business day. Investment requests submitted after 4.00pm will be based on the NAV determined at the end of the next Business day. Likewise, redemption requests submitted at our Regional Branch Offices before 11.00am on any Business day will be based on NAV determined at the end of the same Business day. Redemption requests submitted after 4.00pm will be based on NAV determined at the end of the next Business day. 7.2 INVESTING INTO KENANGA PRINCIPAL PROTECTED INCOME FUND For opening of the Kenanga Principal Protected Income Fund account, the Qualified investors must submit all relevant documents as required by us. We reserve the right to terminate the relationship if any documents requested pursuant to this opening of account are not received within 14 Business days. In the event of termination, units will be redeemed at the closing NAV price as at the 15th Business day. In the event of redemption or switching transactions, we reserve the right to not effect the transactions if the requested documents are still outstanding. When investing in the Fund, the entry price for units will be the NAV per unit of the Fund as at the next valuation point after the request for units is received by us. The entry fee (if any) is charged separately. There is no entry fee when you invest into the Fund. Please note that the example below is for illustration only: If you intend to invest RM100, in the Fund and assuming the NAV per unit of the Fund is RM1.0000, below is the amount incurred for your investment: RM Investment into your Kenanga Principal Protected Income Fund 100, account Entry fee payable (Nil) 0.00 Amount payable to Kenanga Investors Berhad 100, Your account will be allotted the following units: RM100, / RM = 100, units 7.3 REDEEMING FROM KENANGA PRINCIPAL PROTECTED INCOME FUND The redemption price for units will be the NAV per unit of the Fund as at the next valuation point after the request for redemption is received by us. The payment of the redemption shall be effected on the same Business day if redemption request is received before 11:00 am on the Business Day. If the redemption is received after 11:00 am on a Business Day, the redemption proceed is paid the next Business Day. You may redeem from Kenanga Principal Protected Income Fund at NAV per unit. There is no charge for redeeming units from Kenanga Principal Protected Income Fund. 20

21 Please note that the example below is for illustration only: If you redeem 50, units from your Kenanga Principal Protected Income Fund account and assuming the NAV price per unit of the Fund is RM1.0000, you will receive redemption proceed totaling: RM 50, units x RM per unit 50, Redemption fee (Nil) 0.00 Net redemption proceed 50, The number of units credited to an investor s account will be determined based on the amount invested divided by the NAV per unit computed at the end of the Business day. 7.4 COOLING-OFF As an investor, you may withdraw your initial investment application with us. You can request for a refund within the cooling-off period, which is 6 Business days from the date of your first application. You will be refunded your total initial investment amount (please refer to following example). A cooling-off right should be given to an investor who is investing in any wholesale fund managed by a particular fund management company for the first time. However, this cooling-off period is not applicable to subsequent investments or to the following type of investors: A corporation or institution; Staff of KIB; Persons registered to deal in unit trust of KIB. We will refund your money within 10 calendar days upon receiving your notice to exercise your cooling-off right, subject to your initial funds clearance. Please note that the example below is for illustration only: RM Total initial investment amount into the Fund 100, Add entry fee (Nil) 0.00 Total refund as per your cooling-off right 100, Therefore, if you decide to exercise the cooling-off right, we will refund your total initial payment amount of RM100, SWITCHING FACILITY Switching is a facility that we offer to our Unitholders. This facility is a convenient way of converting units of one fund to another fund that we manage in response to changing market conditions or changes in your investment goals. Switching into this Fund is only allowed for Qualified investors as defined in the Glossary of Terms in this Replacement Information Memorandum. Conditions for switching are set out below. Switching from Recipient funds = Equity or Balanced Recipient funds = Bond or Money Market Equity, Balanced At NAV per unit At NAV per unit Fixed Income/Bond/Money Market Exit from Fixed Income/Bond/Money Market at NAV. Pay the differential entry fee amount to enter into any equity or balanced funds. Subsequent switching fee shall depend on the specific fund terms. Exit from Bond/Money Market at NAV. Pay the differential entry fee amount to enter into any bond funds. Subsequent switching fee shall depend on the specific fund terms. 21

22 Note: Types of fund Global funds Local funds Real Estate Kenanga Global Real Estate Fund (formerly known as ING Global Real Estate) Equity Kenanga Global Dividend Fund (formerly known as ING Global Dividend) Kenanga China Access Fund (formerly known as ING China Access) Kenanga Global Opportunities Fund (formerly known as ING Global Opportunities) Kenanga OneAnswer TM o Kenanga Blue Chip Fund (formerly known as ING Blue Chip) o Kenanga Shariah Growth Opportunities Fund (formerly known as ING Shariah Growth Opportunities) o Kenanga Growth Opportunities Fund (formerly known as ING Growth Opportunities) o Kenanga Ekuiti Islam Fund (formerly known as ING Ekuiti Islam ) Balanced Kenanga OneAnswer TM Bond Kenanga Emerging Markets Debt Fund (formerly known as ING Emerging Markets Debt) o o Kenanga Managed Growth Fund (formerly known as ING Managed Growth) Kenanga Shariah Balanced Fund (formerly known as ING Shariah Balanced) o Kenanga Diversified Fund (formerly known as ING Diversified) Kenanga OneAnswer TM o Kenanga Income Plus Fund (formerly known as ING Income Plus) o Kenanga Bon Islam Fund (formerly known as ING Bon Islam) Fixed Income Kenanga Cash Plus Fund (formerly known as ING Cash Plus) Kenanga i-enhanced Cash Fund (formerly known as ING i-enhanced Cash) Money Market Kenanga Principle Protected Income Fund (formerly known as ING Principal Protected Income) Please note that the examples below are for illustration only. a Switching from Kenanga Principal Protected Income Fund to an equity or balanced fund under Kenanga OneAnswer TM. The assumptions for this example are as follows: You want to switch 50,000 units of Kenanga Principal Protected Income Fund into Kenanga Managed Growth Fund (formerly known as ING Managed Growth). The NAV per unit of Kenanga Principal Protected Income Fund is RM and the entry fee is 0%. The NAV per unit of Kenanga Managed Growth Fund (formerly known as ING Managed Growth) is RM and the entry fee for Kenanga Managed Growth Fund (formerly known as ING Managed Growth) is 6.5%. 22

23 RM Switching value (50,000 units of Kenanga Principal Protected 50, Income Fund x RM1.0000) = (Less) Differential entry fee of 6.5% (6.5% - 0%) (3,051.64) Amount switched into Kenanga Managed Growth Fund 46, (formerly known as ING Managed Growth) Number of units in your Kenanga Managed Growth Fund (formerly known as ING Managed Growth) account = RM46, / RM per unit = 90, units b. Switching from Kenanga Principal Protected Income Fund to a bond fund under Kenanga OneAnswer TM. The assumptions for this example are as follow: You want to switch 50,000 units of Kenanga Principal Protected Income Fund into Kenanga Income Plus Fund (formerly known as ING Income Plus). The NAV per unit of Kenanga Principal Protected Income Fund is RM and the entry fee is 0%. The NAV of Kenanga Income Plus Fund (formerly known as ING Income Plus) is RM per unit and the entry fee is 1.5%. RM Switching value (50,000 units of Kenanga Principal Protected 50, Income Fund x RM1.0000) (Less) Differential entry fee of 1.5% (1.5% - 0%) (738.92) Amount invested in your Kenanga Cash Plus Fund (formerly 49, known as ING Cash Plus) account Number of units in your Kenanga Income Plus Fund (formerly known as ING Income Plus) account = RM49, / RM per unit = 95, units c. Switching from equity or balanced funds into an existing Kenanga Principal Protected Income Fund account. The assumptions for this example are as follow: You want to switch 100,000 units of Kenanga Blue Chip Fund (formerly known as ING Blue Chip) into Kenanga Principal Protected Income Fund. The NAV per unit of Kenanga Principal Protected Income Fund is RM and the entry fee is 0%. The NAV of Kenanga Blue Chip Fund (formerly known as ING Blue Chip) is RM per unit and the entry fee is 6.5%. Switching value (100,000 units of Kenanga Blue Chip Fund (formerly known as ING Blue Chip) x RM0.5000) RM 50, Amount switched into your Kenanga Principal Protected 50, Income Fund account Number of units in your Kenanga Cash Plus Fund (formerly known as ING Cash Plus) account = RM50,000 / RM1.000 per unit = 50, units 23

24 d. Switching from a bond fund into an account without Kenanga Principal Protected Income Fund account. The assumptions for this example are as follow: You are a Qualified investor as defined in the Glossary of Terms in this Replacement Information Memorandum, You want to switch 200,000 units of Kenanga Income Plus Fund (formerly known as ING Income Plus) into Kenanga Principal Protected Income Fund. The NAV per unit of Kenanga Principal Protected Income Fund is RM and the entry fee is 0%. The NAV of Kenanga Income Plus Fund (formerly known as ING Income Plus) is RM per unit and the entry fee is 1.5%. Switching value (200,000 units of Kenanga Income Plus Fund (formerly known as ING Income Plus) x RM0.5000) RM 100, Amount invested in your Kenanga Principal Protected Income 100, Fund account Number of units in your Kenanga Cash Plus Fund (formerly known as ING Cash Plus) account = RM100, / RM per unit = 100, units A minimum of 50,000 units is imposed for switching from and into Kenanga Principal Protected Income Fund. 7.6 FACSIMILE INSTRUCTION FACILITY For Kenanga Principal Protected Income Fund, you can give us a facsimile instruction to make withdrawals. The fax number for this facility is Before using this facility, you will first need to read and understand the facsimile instruction facility conditions mentioned below. By ticking Yes for the facsimile instruction facility on the application form you are deemed to have accepted the facsimile instruction facility conditions. Facsimile instruction facility conditions: 1. Whilst we exercise every care in ensuring the legitimacy of a facsimile instruction, there is still a risk that fraudulent facsimile redemption requests in respect of your account can be made by someone who has access to your fund account number and copy of your signature; 2. You accept full responsibility for any loss arising as a result of us acting upon instructions given in a facsimile which bears your fund account number and a signature which is or appears to be your signature or a signature of an authorized signatory of the account; 3. You release and indemnify us and the Trustee against all claims and demands in respect of any liabilities arising as a result of us acting upon instructions given in a facsimile even if those claims/ demands are not genuine; 4. You agree that neither you nor any person claiming through you has any claims against us or the Trust or the Trustee in relation to a payment made or action taken by us under the facsimile instruction facility if the payment is made in accordance with these conditions; 5. These terms and conditions are in addition to any requirements for giving instructions to us. 6. We may cancel this facility in the following instances: a. immediately, if you do not comply with any of these conditions mentioned in this Replacement Information Memorandum; or b. at any time, after giving you reasonable notice. 7. We may change the conditions but only after notifying you in writing; 8. By signing on the application form and requesting for the facsimile instruction facility, you are deemed to have read and understood the terms and conditions governing the operations of the facsimile instruction facility and agree to abide by them. 24