INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA CASH FUND

Transcription

1 INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA CASH FUND Manager: Kenanga Investors Berhad ( P) Trustee: CIMB Commerce Trustee Berhad ( A) (formerly known as BHLB Trustee Berhad) This Information Memorandum is dated 22 March 2013 Investors are advised to read and understand the contents of this Information Memorandum. If in doubt, please consult a professional adviser.

2 TABLE OF CONTENTS Page No. RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER CORPORATE DIRECTORY IV V DEFINITION 1 CHAPTER 1: KEY DATA 5 CHAPTER 2: RISK FACTORS 9 CHAPTER 3: FUND INFORMATION Investment Objective Investment Policy and Strategy Asset Allocation Benchmark Risk Management Permitted Investments Investment Restrictions and Limits Income Distribution and Distribution Options Valuation of the Assets of the Fund 13 CHAPTER 4: FEES, CHARGES AND EXPENSES Sales Charge Redemption Charge Switching Fee Management Fee Trustee Fee Other Expenses Directly Related to the Fund Reduction / Waiver of Fees 15 i

3 CHAPTER 5: TRANSACTION INFORMATION Pricing Policy Valuation Point of the Fund Illustration on the computation of NAV and how the Management Fee and Trustee Fee are calculated Subscription of Units Redemption of Units Switching of Units Periodic Reporting to Unit Holders 18 CHAPTER 6: MANAGEMENT COMPANY The Manager Functions of the Manager Financial Position of the Manager Board of Directors The Investment Committee The Management Team The Investment Teams Material Litigation Conflict of Interest Retirement and Removal of Manager 27 CHAPTER 7: TRUSTEE Background of the Trustee Financial position of the Trustee Experience in Trustee Business The Board of Directors Key Personnel of the Trustee Trustee s Declaration Duties and responsibilities of the Trustee Trustee s Statement of Responsibility Trustee s Delegate 30 ii

4 7.10 Material Litigation & Arbitration Retirement and Removal of the Trustee 31 CHAPTER 8: RIGHTS AND LIABILITIES OF UNIT HOLDERS Unit Holders Rights Unit Holders Liabilities 32 CHAPTER 9: POWER TO CALL FOR UNIT HOLDERS MEETINGS Meetings Directed by the Unit Holders Meetings Summoned by the Trustee Meetings Summoned by the Manager Provisions Governing Unit Holders Meetings Termination of the Fund 35 CHAPTER 10: OTHER INFORMATION Unclaimed Moneys Policy Anti Money Laundering Policy Regulatory Approval No Guarantee Enquiries 38 iii

5 RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER This Information Memorandum has been seen and approved by the directors of Kenanga Investors Berhad 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, offer or invitation in respect of the Kenanga Cash 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 Kenanga Investors Berhad 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 howsoever arising from, or in reliance upon the whole or any part of the content of this Information Memorandum. iv

6 CORPORATE DIRECTORY Manager Name: Registered Office: Business Address: Kenanga Investors Berhad ( P) 8 th Floor, Kenanga International Jalan Sultan Ismail Kuala Lumpur Suite 12.02, 12th Floor Kenanga International Jalan Sultan Ismail Kuala Lumpur Telephone number: Facsimile number: / Customer Service Hotline: Address: Website: info.trust@kenanga.com.my Board of Directors Investment Committee 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 Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member) Vivek Sharma (Independent Member) Abdul Razak bin Ahmad Peter John Rayner Company Secretary Name: Norliza Abd Samad (MAICSA ) Business Address: Telephone number: Facsimile number: th Floor, Kenanga International Jalan Sultan Ismail Kuala Lumpur. v

7 Trustee Name: Registered Office: Business Address: Telephone number: Facsimile number: Trustee s Delegate Name: Registered Office: Business Address Telephone number: Facsimile number: Auditors for the Fund Name: Address: CIMB Commerce Trustee Berhad (formerly known as BHLB Trustee Berhad) ( A) 5 th Floor, Bangunan CIMB Jalan Semantan, Damansara Heights Kuala Lumpur Malaysia Level 7, Wisma Amanah Raya Berhad Jalan Semantan, Damansara Heights Kuala Lumpur Malaysia (Custodian Functions) CIMB Group Nominees (Tempatan) Sdn Bhd ( T) 5 th Floor, Bangunan CIMB Jalan Semantan, Damansara Heights Kuala Lumpur Level 7,Wisma Amanah Raya Berhad Jalan Semantan, Damansara Heights Kuala Lumpur Ernst & Young Telephone number: Facsimile number: Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Kuala Lumpur Tax Advisers for the Fund Name: Ernst & Young Tax Consultants Sdn Bhd ( K) Address: Telephone number: Facsimile number: Solicitors Name: Address: Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Kuala Lumpur Raja, Darryl & Loh Telephone number: Facsimile number: th Floor, Wisma Sime Darby Jalan Raja Laut Kuala Lumpur vi

8 DEFINITION the Act or CMSA The Capital Markets and Services Act BAFIA The Banking and Financial Institutions Act Business Day BNM Cash Produce A day on which banks in Kuala Lumpur are open for normal business. Bank Negara Malaysia. In respect of any particular period, means all income and capital of the Fund for that period and includes all cash received by the Trustee in the form of: (a) (b) (c) (d) (e) dividends, bonuses and interests; fees or charges charged by the Fund; the proceeds of sale of rights and other cash received pursuant to Clause of the Deed; and paragraph (b) of Clause of the Deed; any profit from the sale of the assets of the Fund; and any other sum having the nature of capital or income which the Manager and Trustee, having consulted the auditor of the Fund, deem to be Cash Produce. Deed development financial institution Financial Year End financial institution The deed entered into between the Manager and the Trustee dated 16 August 2012 in respect of the Fund. Means a development financial institution prescribed by and regulated under the Development Financial Institutions Act st October. Means any of the following: (i) a licensed bank; (ii) a licensed investment bank; (iii) an Islamic bank; (iv) a development financial institution; or (v) a scheduled institution. the Fund Guidelines The Kenanga Cash Fund, a wholesale fund issued pursuant to the Guidelines. The Guidelines on Wholesale Funds issued by the Securities Commission. 1

9 Information Memorandum Initial Offer Period Islamic bank This document, and includes any supplementary or replacement Information Memorandums. A period when the Manager invites potential Investors to participate in the Fund by subscribing for Units in the Fund, during this period, Units are created, cancelled, sold and repurchased at the Offer Price. Means a financial institution licensed or deemed to be licensed under the Islamic Banking Act licensed bank licensed investment bank MARC Manager / Management Company / KIB Management Fee medium-term Net Asset Value or NAV NAV per Unit Offer Price Qualified Investors Means a bank, including a banking and finance company, licensed or deemed to be licensed pursuant to the BAFIA. Means an investment bank licensed or deemed to be licensed pursuant to the BAFIA. Malaysian Rating Corporation Berhad. Kenanga Investors Berhad ( P). A percentage of the NAV of the Fund that is paid to the Manager for managing the Fund. A period of between 1 to 2 years. The 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 the trustee fee for the relevant day. Is the Net Asset Value of the Fund at a particular valuation point divided by the number of Units in circulation at that same valuation point. means the price payable by an applicant for a Unit during the Initial Offer Period. Refers to:- 1. an individual whose total net personal assets exceed RM3 million or its equivalent in foreign currencies; 2. a corporation with total net assets exceeding RM10 million or its equivalent in foreign currencies based on the corporation s audited accounts for its most recent financial year; 3. a unit trust scheme or prescribed investment scheme as defined under Section 2 of the CMSA; 4. a company registered as a trust company under the Trust Companies Act 1949 which has discretion in the investment of trust assets of a trust with total net assets exceeding RM10 million or its equivalent in foreign 2

10 currencies; 5. a corporation that is a public company under the Companies Act 1965 or under the laws of any other country, which has been allowed by the SC to be a trustee for the purposes of the CMSA and has discretion in the investment of trust assets of a trust with total net assets exceeding RM10 million or its equivalent in foreign currencies; 6. a pension fund approved by the Director General of Inland Revenue under section 150 of the Income Tax Act 1967; 7. a holder of a Capital Markets Services License carrying on the business of dealing in securities; 8. any other fund manager who holds a Capital Markets Services License for the regulated activity of fund management as defined under the Capital Markets and Services Act 2007; 9. a person who acquires 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; 10. a licensed institution as defined under the BAFIA; 11. an Islamic bank as defined under the Islamic Banking Act 1983; and 12. an insurance company licensed under the Insurance Act RAM RM or Ringgit Malaysia relevant laws scheduled institution Securities Commission or SC short-term Special Resolution RAM Rating Services Berhad. The lawful currency of Malaysia. Means laws, rules, regulations, guidelines, directives, circulars, guidance notes and investment management standards passed or issued by any relevant authority relating to or connected with the fund management industry in Malaysia. Means a corporation or any other organisation which carries on building credit business, development finance business, factoring business or leasing business but does not include a co-operative society, a statutory body, a local authority, a licensed bank, a licensed finance company, or a licensed merchant bank carrying on the aforesaid businesses. The Securities Commission of Malaysia established under the Securities Commission Act A period of less than 1 year. Means a resolution passed at a meeting of Unit Holders duly convened in accordance with the Deed and carried by a majority in number representing at least three-fourths of the value of the Units held by the Unit Holders voting at the meeting in person or by proxy. 3

11 Trustee Trustee Fee Unit Unit Holder / Investors CIMB Commerce Trustee Berhad (formerly known as BHLB Trustee Berhad) ( A) A percentage of the NAV of the Fund that is paid to the Trustee for acting as the trustee for the Fund. Is an undivided share in the beneficial interest and/or right in the Fund and a measurement of the interest and/or right of a Unit Holder in the Fund and means a Unit of the Fund. The Qualified Investors for the time being registered as the holder of Units in the Fund. General Words and Expressions In this Information Memorandum, unless otherwise stated, monetary amounts are expressed exclusive of government and statutory taxes (if any). Any law, subsidiary legislation, guideline or regulation shall include any amendment, modification, extension or re-enactment thereof. 4

12 CHAPTER 1: KEY DATA This section contains a summary of the salient information about the Fund. Information about the Fund Name Fund Type Fund Category Investment Objective Kenanga Cash Fund Income Money Market The Fund seeks to provide Investors with regular income stream while maintaining capital stability. Note: Unless otherwise indicated by Unit Holders, any distributions will be automatically reinvested as additional Units. Investment Policy and Strategy The Fund seeks to achieve its objective by investing in deposits and money market instruments. The investment strategy will involve actively managing the maturities of each investment to the extent possible to enhance the returns of the Fund. The Fund will also be actively managed to meet potential liquidity requirements of the Fund. Asset Allocation The Fund s portfolio will be structured as follows: up to 100% of the NAV will be placed in deposits and money market instruments, with at least 70% of the NAV placed in deposits and/or money market instruments that have a remaining maturity of 365 days or less. Principal Risks Interest Rate Risk Liquidity Risk Credit /Default Risk Benchmark Maybank Overnight Repo Rate. Source: Investors should be aware that investing in the Fund is not the same as placement of moneys in deposits. The capital and returns of the Fund are not guaranteed and there are risks involved. Hence, the risk profile of the Fund does not reflect that of a deposit. The Fund has a higher risk profile than a deposit. Investors Profile The Fund is suitable for Investors who:- seek to invest in a money market fund; seek regular income with capital stability; 5

13 have low risk tolerance; and prefer a short to medium-term investment horizon. Financial Year End Approved Fund Size Price per Unit during the Initial Offer Period Initial Offer Period Commencement Date The period of twelve (12) months ending on the 31 st day of October of every calendar year, for the avoidance of doubt, the first financial year shall commence on the date of this Information Memorandum. 500,000,000 Units. RM1.00. The Initial Offer Period is for the period of twenty one (21) days from the date of this Information Memorandum. The Fund will commence on the Business Day after the end of the Initial Offer Period. Transaction Information Minimum Initial Investment Minimum Additional Investment Minimum Redemption Amount Conditions for Redemption RM50,000 or such other amount as the Manager may prescribe from time to time. RM10,000 or such other amount as the Manager may prescribe from time to time. 10,000 Units or such other amount as the Manager may prescribe from time to time. Unit Holders may redeem their investments in the Fund on any Business Day by completing the prescribed redemption request form or such other manner as the Manager may accept and returning it to the Manager on any Business Day; the redemption request form is available at the office of the Manager. All such requests must be received by us before 11 a.m. on any Business Day. Any requests received after 11 a.m. will be treated as having been received the following Business Day. Redemption proceeds are based on the NAV per Unit of the Fund at the close of a Business Day on the day the redemption request form is received by the Manager. Redemption proceeds will be paid to Unit Holders on the next Business Day upon receipt of the redemption request form. Transfer Facility Switching Facility Transfer facility is not available for this Fund. Switching of Units is allowed at the discretion of the Manager and is subject to such terms and conditions as the Manager may impose. 6

14 Kindly refer to Section 5.6 for further details on switching transactions. Fees and Charges Fees and Charges directly incurred by Unit Holders Sales Charge None. Redemption Charge Switching Fee None. None. Fees and Expenses indirectly incurred by Unit Holders Management Fee 0.30% per annum of the NAV of the Fund. The Management Fee is calculated on a daily basis and payable monthly. Note: The Manager may in its own discretion, from time to time, charge an annual management fee that is lower than that stated above. Trustee Fee Other Expenses 0.02% per annum of the NAV of the Fund. The Trustee Fee is calculated daily and payable monthly. Only expenses directly incurred by the Fund will be charged to the Fund. These expenses relate primarily to the administration of the Fund. These expenses include auditor s fees and other relevant professional fees, foreign custodial charges (if applicable), cost of distribution of quarterly/annual reports, tax certificates, reinvestment statements and other notices to Unit Holders. Other fees/ expenses directly related to the Fund, such as commissions paid to brokers and taxes, are also paid out of the Fund. Other Information Reports Unit Holders will receive the following statements and reports in a financial year: Confirmation of Investment Statements showing details of the Units purchased and the application prices at which the Units were purchased; Monthly Statements of Account showing the balance of Investors investments and all transactions made during the month, distribution details and investment value based on the NAV per Unit of the Fund as at the last trading day of that month; Quarterly Reports and Annual Report which provides an account of the Fund including a detailed overview of the Fund, investment strategies, performances, portfolio holdings and account of the Fund; and If distribution of returns is declared by the Fund, Unit Holders will receive a Statement of Distribution of Returns and tax 7

15 statement/voucher for submission to the Inland Revenue Board of Malaysia. Distribution Policy Distribution Options Subject to the availability of income, distribution of income will be done on a weekly basis. The following distribution options are available for the Fund. Unit Holders may specify their distribution preferences:- - Pay-out Option: Distribution proceeds paid directly to Unit Holders; or - Reinvestment Option: Unit Holders may opt for distribution proceeds to be reinvested as additional Units of the Fund at NAV per Unit on the Business Day following the distribution declaration date. If Unit Holders do not indicate their preferred distribution option, any distributions will be automatically reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. For Unit Holders who select the pay-out option, the Manager shall endeavour to pay all distribution proceeds in cash or cheque in Ringgit Malaysia within 5 Business Days from the distribution declaration date and in any event, the income distribution shall be made no later than 14 Business Days from the distribution declaration date, unless the distribution proceeds is less than RM In such circumstances, the distribution proceeds will be automatically reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. INVESTORS ARE ADVISED TO READ AND UNDERSTAND THE INFORMATION MEMORANDUM BEFORE SUBSCRIBING TO THE FUND. IF IN DOUBT, PLEASE SEEK PROFESSIONAL ADVICE. 8

16 CHAPTER 2: RISK FACTORS The Manager encourages investors to give careful consideration to the risks associated when investing in the Fund. If in doubt, investors should seek independent financial and taxation advice before investing in the Fund. Below are some of the general risks which investors should be aware of when investing in the Fund. Market risk Market risk arises because of factors that affect the entire market place. Factors such as economic growth, political stability and social environment are some examples of conditions that have an impact on businesses, whether positive or negative. The Fund will be exposed to market uncertainties due to the factors stated above and this in turn will affect the value of the investments either in a positive or negative way. Fund management risk Investors rely on the experience and expertise of the fund management team of the Manager to make investment decisions for the Fund. A failure on the part of the fund management team to display the requisite experience and expertise expected of them in making such decisions may jeopardize the Fund s performance and returns. Performance risk The performance of the Fund depends on the investments of the Fund. If there is a default, there will be a negative impact on the performance of the Fund. The performance of the Fund may also be affected if the allocation of assets is not properly done. This is where the experience and expertise of the fund managers are important as highlighted in the fund management risk write-up above. In view of the aforesaid, there is never a guarantee that investing in the Fund will produce the desired investment returns or the distribution of income. Inflation risk Inflation rate risk is the risk of potential loss in the purchasing power of investment due to a general increase of consumer prices. Inflation erodes the nominal rate of return giving a lower real rate of return. Investors are advised to take note that the Fund is not designed with the objective of matching the inflation rate of Malaysia. Risk of non-compliance The Fund has been established in accordance with the provisions of the Deed and the Guidelines. There is a risk that the Manager may not observe the rules whether intentionally or inadvertently. Whilst non-compliance with the rules governing the Fund will not necessarily result in losses to the Fund, Investors cannot discount the risk that losses may be suffered by the Fund if the noncompliance with the rules is sufficiently serious and may affect the value of the Fund. This may occur, for instance, if the Manager decides to buy an instrument which is not permitted, whether intentionally or inadvertently, and thereafter having to sell that instrument at a loss to the Fund. Operational risk This risk refers to the possibility of a breakdown in the Manager s internal controls and policies. The breakdown may be a result of human error (for instance the keying of wrong details), system failure (causing unnecessary downtime) or even fraud (where employees of the Manager colludes with one another). This risk may cause monetary loss to the Fund and/or inconvenience to 9

17 investors. The Manager will regularly review its internal policies and system capability to minimize the occurrence of this risk. Additionally the Manager maintains a strict segregation of duties to minimize occurrence of fraudulent practices amongst employees of the Manager. The specific risks affecting investments in this Fund may include but are not limited to: Interest Rate risk The risk refers to how the changes in the interest rate environment would affect the performance of the money market portfolio. In the event of a decreasing interest rate environment, banks may offer deposits with lower interest rates, effectively reducing the potential returns of future deposits which in turn will reduce the potential returns of a money market portfolio. Liquidity risk This risk refers to the possibility that the investments of the Fund cannot be readily sold or converted into cash without incurring significant loss in value. For example, disposing a relatively illiquid instrument may result in a disadvantage to the Fund as there may not be a buyer, or sufficient buyers, available for the said instrument. This lack of demand or low trading volume may cause the value of the Fund to drop. This risk is mitigated through a diversified asset allocation in terms of the type of instruments and the tenure of the investment instruments, which include deposits and money market placements. Credit/Default risk This risk refers to the possibility that a financial institution issuer of instruments will not be able to meet the scheduled interest and/or principal repayments. This may lead to a reduction in the value of the Fund due to income and/or capital losses. In general, this risk can be mitigated by investing in instruments that are issued by financial institutions and the instruments carry credit ratings that are at least of A3/P2 by RAM or its equivalent by MARC or any other recognised local rating agencies. In the absence of a credit rating for the instrument, the Manager would use the credit rating of the financial institution issuing the instrument. 10

18 CHAPTER 3: FUND INFORMATION 3.1 Investment Objective The Fund seeks to provide Investors with regular income stream while maintaining capital stability. Any material changes to the investment objective of the Fund would require the approval of Unit Holders. Note: Unless otherwise indicated by Unit Holders, any distributions will be automatically reinvested as additional Units. 3.2 Investment Policy and Strategy The Fund seeks to achieve its objective by investing in deposits and money market instruments. The investment strategy will involve actively managing the maturities of each investment to the extent possible to enhance the returns of the Fund. The Fund will also be actively managed to meet potential liquidity requirements of the Fund. 3.3 Asset Allocation In seeking to achieve the Fund s investment objective, the Fund s portfolio will be structured as follows: The Fund will invest up to 100% of the Fund s NAV in deposits and money market instruments, with at least 70% of the NAV placed in deposits and/or money market instruments that have a remaining maturity of 365 days or less. The above asset allocation is only indicative and will be reviewed from time to time at the discretion of the Manager as to the general market and economic conditions. Specific risks associated with such investments are elaborated in Chapter 2, Risk Factors above. 3.4 Benchmark Maybank Overnight Repo Rate. Source: Investors should be aware that investing in the Fund is not the same as placement of moneys in deposits. The capital and returns of the Fund are not guaranteed and there are risks involved. Hence, the risk profile of the Fund does not reflect that of a deposit. The Fund has a higher risk profile than a deposit. 11

19 3.5 Risk Management The risk management strategy of the Fund entails active management of the tenures (maturities) of the investments in deposits and money market instruments issued by financial institutions as well as setting limits on the credit quality (credit rating of A3/P2 or above by RAM or its equivalent by MARC or any other recognized local credit rating agencies) of the investments in the portfolio. In the event that a credit rating for the instrument is not available, the Manager would use the credit rating of the financial institution issuing the instrument. 3.6 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: 1. Placements of deposits with financial institutions; 2. Money market instruments issued by financial institutions, such as banker s acceptance or negotiable instruments of deposits, where the instruments carry a minimum credit rating of A3/P2 by RAM or an equivalent credit rating by MARC or any other recognized local rating agencies. In the absence of a credit rating for the instrument, the Manager would use the credit rating of the financial institution issuing the instrument; or 3. Any other investment instruments as may be agreed upon between the Manager and the Trustee from time to time. 3.7 Investment Restrictions and Limits The permitted investments of the Fund as stated in Section 3.6 above are subject to the following restrictions:- a) The value of the Fund s holding of permitted investments with a maturity date of no more than 365 days must not be less than 70% of the Fund s total NAV; and b) The value of the Fund s holding of all permitted investments with a remaining tenure of more than 365 days but less than 732 days must not exceed 30% of the Fund s total NAV. The above stated limits and restrictions shall be complied with at all times based on the most up-to-date value of the Fund s investments and instruments. However, a 5% allowance in excess of any limits or restrictions may be permitted where the limit or restriction is breached through the appreciation or depreciation in the NAV of the Fund (as a result of an appreciation or depreciation in value of investments or as a result of the purchase of units or payment made from the Fund). Once the relevant limit is breached, no further acquisitions of the particular securities involved shall be made and the Manager should, within a reasonable period of not more than three (3) months from the date of the breach take all necessary steps and actions to rectify the breach. The above restrictions and limits are not applicable to securities or instruments issued or guaranteed by the Malaysian government or Bank Negara Malaysia. 12

20 3.8 Income Distribution and Distribution Options Subject to the availability of income, distribution of income will be done on a weekly basis. It should be noted that the actual distribution of income and the frequency of distribution as indicated here are provisional and will depend on the availability of distributable surplus (after deducting expenses incurred by the Fund i.e., Management Fee, Trustee Fee and any other fund expenses). The following distribution options are available for the Fund. Unit Holders may specify their distribution preferences: 1. Pay-out Option: Distribution proceeds paid directly to Unit Holders; or 2. Reinvestment Option: Unit Holders may opt for distribution proceeds to be reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. If Unit Holders do not indicate their preferred distribution option, any distributions will be automatically reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. For Unit Holders who select the pay-out option, the Manager shall endeavour to pay all distribution proceeds in cash or cheque in Ringgit Malaysia within 5 Business Days from the distribution declaration date and in any event, the pay-out shall be made no later than 14 Business Days from the distribution declaration date, unless the distribution proceeds is less than RM In such circumstances, the distribution proceeds will be automatically reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. If distribution cheque(s) remain unclaimed for 6 months, the amount will be reinvested into the Fund based on the prevailing NAV per Unit of the Fund. 3.9 Valuation of the Assets of the Fund The Fund will be valued daily at the end of every Business Day. The Manager shall at all times value the assets of the Fund in accordance with the following bases of valuation. Accordingly: 1. Deposits placed with financial institutions will be valued with reference to the principal value of such investments and interest accrued thereon for the relevant period. 2. Money market instruments such as banker s acceptance and negotiable instruments of deposits will be valued on a daily basis by reference to the principal value of such investments and interest accrued thereon for the relevant period. 3. The valuation basis for any other forms of investment will be based on a methodology agreed between the Manager and the Trustee. 13

21 CHAPTER 4: FEES, CHARGES AND EXPENSES Fees and Charges directly incurred by Unit Holders. 4.1 Sales Charge The Manager does not intend to impose any sales charge. 4.2 Redemption Charge The Manager does not intend to impose any redemption charge. 4.3 Switching Fee The Manager does not intend to impose any switching fee. Fees and Expenses indirectly incurred by Unit Holders. 4.4 Management Fee The Management Fee is 0.30% per annum of the NAV of the Fund. The Management Fee is calculated daily and payable monthly. Note: The Manager may in its own discretion, from time to time, charge an annual management fee that is lower than that stated above. Please refer to the illustration under item 5.3 below to see how the Management Fee is calculated. 4.5 Trustee Fee The Trustee Fee is 0.02% per annum of the NAV of the Fund. The Trustee Fee is calculated daily and payable monthly. Please refer to the illustration under item 5.3 below to see how the Trustee Fee is calculated. 4.6 Other Expenses Directly Related to the Fund In administrating the Fund, there are expenses directly related to the Fund. These expenses include auditor s fees and other relevant professional fees, foreign custodial charges (if applicable), cost of distribution of quarterly/annual reports, tax certificates, statements and other notices to Unit Holders. In addition, there are fees/ expenses that are directly related and necessary to the business of the Fund such as commissions paid to brokers and taxes, that are also paid out of the Fund. 14

22 4.7 Reduction / Waiver of Fees The Manager may, for any reason at any time, waive or reduce the amount of any fees or other charges payable by the Unit Holders in respect of the Fund, either generally or specifically and for any period or periods of time at its absolute discretion. 15

23 CHAPTER 5: TRANSACTION INFORMATION 5.1 Pricing Policy The Manager will adopt a single pricing policy when calculating your subscription for and redemption of Units which means that the selling price per Unit and the redemption price per Unit will be transacted and quoted on a single price i.e., the NAV per Unit of the Fund. The NAV per Unit of the Fund will be valued as at the next valuation point (at the end of each Business Day) on a forward pricing basis and will be made available on the following day. Unit Holders may obtain the NAV per Unit of the Fund by contacting the Manager directly. Investors will receive quarterly reports and an audited annual report each year from the Manager. 5.2 Valuation Point of the Fund The Fund will be valued at the end of every Business Day. 5.3 Illustration on the computation of NAV and how the Management Fee and Trustee Fee are calculated Example: Computation of NAV per Unit RM Investments 10,001, Other Assets 5, Total Assets 10,006, Less: Liabilities 1, NAV of the Fund (before deduction of Management and Trustee Fees) 10,004, Less: Management Fee - Calculated on a Daily Basis (0.30% per annum/365 days) Trustee Fee - Calculated on a Daily Basis 5.48 (0.02% per annum/365days) NAV of the Fund (after deduction of Management and Trustee Fees) 10,004, Units In Circulation 10,004, NAV per Unit NAV per Unit (Rounded to 4 decimal points) Subscription of Units Application for Units should be made at or before the cut-off time of 11 a.m. on any Business Day. The subscription form is available at the office of the Manager. 16

24 During the Initial Offer Period, Units of the Fund will be issued at the Offer Price. After the Initial Offer Period, Investors will purchase Units at the NAV per Unit of the Fund at the next valuation point after their application is accepted by the Manager. 5.5 Redemption of Units Unit Holders may redeem their investments in the Fund on any Business Day by completing the prescribed redemption request form or such other manner as the Manager may accept and returning it to the Manager on any Business Day; the redemption request form is available at the office of the Manager. All such requests must be received by the Manager before 11 a.m. on any Business Day. Any requests received after 11 a.m. will be treated as having been received the following Business Day. Redemption proceeds are based on the NAV per Unit of the Fund at the close of a Business Day on the day the redemption request form is received by the Manager. Redemption proceeds will be paid to Unit Holders on the next Business Day upon receipt of the redemption request form. The minimum redemption amount is set at 10,000 Units or such other amount as the Manager may prescribe from time to time. 5.6 Switching of Units The minimum number of Units for each switching transaction is 10,000 Units. Switching of Units is allowed at the discretion of the Manager and is subject to such terms and conditions as the Manager may impose. Unit Holders may at the discretion of the Manager switch their Units into units of wholesale funds or unit trust funds established by the Manager. Unit Holders must contact the Manager to obtain details on the wholesale funds or unit trust funds which they can switch into. Qualified Investors who have invested in other wholesale funds established by the Manager may switch their units into the Fund if switching facility is provided by the wholesale fund they have initially invested in. Any switching transaction is subject to the conditions set out below: 1. unit holders who originally purchased units of a fund with a sales charge imposed will switch into any of the other funds at the net asset value per unit of that fund. 2. unit holders who originally purchased units of a fund with NO sales charge imposed who switches into any other funds with NO sales charge imposed will switch at the net asset value per unit of that fund. 3. However, if a unit holder who originally purchased units of a fund with NO sales charge imposed decides to switch into a fund with a sales charge imposed, the unit holder will switch at the net asset value per unit of that fund and will incur the sales charge 17

25 imposed by the fund they intend to switch into. Thereafter, any subsequent switches into any of the other funds will be at the net asset value per unit of that fund. Please refer to the table below for an illustration on how the switching facility works: SWITCHING FROM SWITCHING TO CURRENT FUND INTENDED FUND *fund with sales charge *fund with NO sales charge *fund with NO sales charge Switch at the net asset value per unit of the fund. Switch at the net asset value per unit of the fund. *fund with sales charge Switch at the net asset value per unit of the fund. Switch at the net asset value per unit of the fund, however, the unit holder will have to incur the sales charge imposed by the fund they intend to switch into. 5.7 Periodic Reporting to Unit Holders During every Financial Year of the Fund, Unit Holder will receive: 1. Confirmation of Investment Statements detailing his investment, which will be sent within ten (10) Business Days from the date monies are received by the Manager for investment in the Fund. This confirmation will include details of the Units purchased and the purchase price; 2. Monthly Statements of Account which shows the balance of Unit Holders investments and all transactions made during the month, distribution details and investment value; 3. Quarterly Reports which provides a brief overview of the Fund including key risk factors, investment outlook for the quarter, the Fund s financial performance, credit risk, level of borrowings, market outlook, changes in the key investment team, illiquid holdings, details on portfolio holdings, information on fund performance and volatility and unaudited accounts of the Fund for the quarter. The Quarterly Reports will be dispatched to all Unit Holders within two (2) months from the close of each financial quarter; 4. An Annual Report which provides a detailed overview of the Fund including key risk factors, investment outlook for the year, the Fund s financial performance, credit risk, level of borrowings, market outlook, changes in the key investment team, illiquid holdings, details on portfolio holdings, information on fund performance and volatility and audited accounts of the Fund for the year. The Annual Report will be dispatched to all Unit Holders within two (2) months from the close of each Financial Year; and 5. If distribution of returns is declared by the Fund, Unit Holders will receive a Statement of Distribution of Returns, detailing the nature and amount of returns distributed by the Fund and a tax statement/voucher for submission to the Inland Revenue Board of Malaysia. 18

26 CHAPTER 6: MANAGEMENT COMPANY 6.1 The Manager Kenanga Investors Berhad has its principal place of business at Suite 12.02, 12 th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia. The Manager, was incorporated as a public limited company on 2 August 1995 under the Companies Act 1965 with an authorized share capital of RM20,000, comprising 20,000,000 ordinary shares of RM1.00 each of which 6,765,300 are issued and fully paid up. KIB is 100% owned by Kenanga Investment Bank Berhad which is a wholly-own subsidiary of K & N Kenanga Holdings Berhad. The Manager is licensed and authorised to conduct business in distributing unit trust funds and fund management under the CMSA. As at 30 September 2012, the Manager manages 11 unit trust funds and other funds from government agencies, pension funds, insurance, corporate and individual clients with a total fund size of RM3.2 billion. The Manager has the services of 51 experienced personnel (39 executives, 9 of which are Capital Markets and Services Representative s Licence Holder, and 12 non-executives). 6.2 Functions of the Manager KIB is responsible for the day-to-day management, marketing and administration of the Fund, where its key functions include: a) Endeavouring that the Fund is managed in a sound and professional manner in accordance with its investment objectives, the provisions of this Information Memorandum and the Deed; b) Endeavouring that the Fund is properly administered and to arrange for sale and redemption of Units of the Fund; c) Issuing the Fund s quarterly and annual reports, and monthly statement of accounts to Unit Holders; d) Keeping proper records of the Fund; and e) Keeping Unit Holders informed on material matters relating to the Fund. 6.3 Financial Position of the Manager The audited financial results of KIB for the financial years ended 31 December 2009 to 31 December 2011 are summarised below: Year ended 31 Dec 2011 RM 000 Year ended 31 Dec 2010 RM 000 Year ended 31 Dec 2009 RM 000 Paid-up capital 6,765 6,765 6,765 Shareholders funds 12,777 14,067 13,627 Revenue 10,234 10,790 9,161 Profit before taxation (1,473) 875 (21) Profit after taxation (1,290) 439 (1) 19

27 6.4 Board of Directors The Board of Directors is responsible for the overall management of the Manager and its funds. The Board not only ensures corporate governance is practised but policies and guidelines are adhered to. The Board will sit once every quarter, or more often should the need arise. Datuk Syed Ahmad Alwee Alsree (Chairman) Date of Appointment: 11 October 2006 Datuk Syed Ahmad Alwee Alsree was appointed Chairman of KIB on 1 January 2008 after having been appointed to the Board in October He was appointed as a Non-Executive Director of K&N Kenanga Holdings Berhad on 28 August 2009 and had, on 26 July 2011, redesignated as Deputy Chairman. Datuk Syed Ahmad Alwee Alsree is also the Group Executive Director of Cahya Mata Sarawak Berhad (CMSB). He had earlier joined CMS in February 2004 as Group General Manager Human Resources where he was responsible for the smooth operations and integration of the various human resource departments within CMS Group. He was appointed as Deputy Group Managing Director of CMSB in September 2006 and subsequently re-designated as Group Executive Director in August Datuk Syed Ahmad graduated with a Bachelor of Law (LL.B.) from the National University of Singapore, and practiced law in Singapore for over ten (10) years prior to joining CMS Group. Apart from K&N Kenanga Holdings Berhad and CMSB, Datuk Syed Ahmad is a director of KKB Engineering Berhad, Kenanga Investment Bank Berhad and SIG Gases Berhad. He is Chairman of Samalaju Aluminium Industries Sdn Bhd (formerly known as Similajau Aluminium Industries Sdn Bhd) and a director of several CMS subsidiaries in financial services, property development and education. Syed Zafilen Syed Alwee (Independent Director) Date of Appointment: 12 May 2008 Syed Zafilen Syed Alwee was appointed as the Director of KIB on 12 May He has spent his career in managing various sectors of operations of companies such as sales, marketing, technical, management, finance in local listed companies as well as multinational including Patimas, Lityan, Cahya Mata Sarawak, Lucent Technologies, Motorola, Mobil and others as well as being ownership of two other companies. He is currently undergoing an MBA programme in Finance at the University of Manchester. YM Raja Dato Seri Abdul Aziz bin Raja Salim (Independent Director) Date of Appointment: 24 February 2012 YM Raja Dato Seri Abdul Aziz bin Raja Salim was appointed as the Director of KIB on 24 February He is an Honorary Fellow of the Malaysian Institute of Taxation, Fellow of the Chartered Association of Certified Accountants, United Kingdom, Fellow of the Chartered Institute of Management Accountants ("CIMA"), United Kingdom and a Chartered Accountant (Malaysia). He served as Director General of Inland Revenue Malaysia from 1980 to 1990 and Accountant General Malaysia from 1990 to After his retirement from the Government service, he was appointed as Chairman of BSN Commercial Bank (M) Berhad from 1995 to He was a Board Member of several Government agencies and organisations as well 20

28 as Deputy Chairman of the Employees Provident Fund and Deputy Chairman of the Universiti Pertanian Malaysia Council. YM Raja Dato' Seri Abdul Aziz was the President of CIMA, Malaysia from 1976 to 1993 and a council member of CIMA, United Kingdom from 1990 to He was awarded the CIMA Gold Medal in recognition of his outstanding service to the Accounting Profession. He was a council member of the Malaysian Institute of Accountants ("MIA") until September 2005 and still sits on many MIA committees. At present, he is also the Chairman of Gamuda Berhad. YM Raja Dato' Seri Abdul Aziz is a Director of K & N Kenanga Holdings Berhad, Kenanga Islamic Investors Berhad (Formerly known as Kenanga Fund Management Berhad), Hong Leong Industries Berhad, Jerneh Asia Bhd, PPB Group Berhad, Panasonic Manufacturing Malaysia Berhad and Southern Steel Berhad. Vivek Sharma (Independent Director) Date of Appointment: 1 October 2012 Vivek Sharma was appointed as the Director of KIB on 1 October He has over 20 years experience in building and leading businesses in South East Asia in the fields of higher education, insurance, wealth management, and real estate. He is currently Managing Director of VS Development, a company which focuses on property development. In financial services, he was a Director of Investments at Merrill Lynch and a business leader at CiGNA in South East Asia. He was also Executive Director, Asia for Laureate Higher Education Group, as well as Director of Development, Asia for INSEAD. He holds a BSc. Economics (Finance) from the Wharton School at the University of Pennsylvania and a MBA from IMD in Lausanne, Switzerland. Bruce Kho Yaw Huat Date of Appointment: 29 June 2010 Bruce Kho Yaw Huat was appointed as the Director of KIB on 29 June Bruce has significant experience in building and leading financial management firms. His experience spans thirty-five (35) years within the fields of finance and management, twenty four (24) of which were as the Chief Executive Officer, and later Chairman, of the Allianz Group s Asian asset management business, a market leader in the provision of asset management services. Abdul Razak bin Ahmad (Chief Executive Officer/ Executive Director) Date of Appointment: 19 July 2010 Abdul Razak bin Ahmad was appointed as Chief Executive Office / Executive Director of KIB on 19 July He has more than twenty (20) years of experience in the financial industry; mainly Asset Management, Unit Trust Business, Corporate Banking and Treasury. He had held Senior Management positions and directorship in three Investment Management Organizations in Malaysia. He holds a Bachelor Degree of Science majoring in Business Administration (Finance) Magna Cum Laude from University of Southwestern Louisiana, USA. He is a holder of the Capital Markets Services Representative s License and a Certified Financial Planner. 21

29 Peter John Rayner Date of Appointment: 11 November 2010 Peter John Rayner was appointed a Director (and Investment Committee member) of KIB on 11 November He has over thirty (30) years successful experience in building & leading businesses in the fields of Chartered Accounting, Stock Broking, Private Equity and Asset Management. He has held many senior positions including as Chief Executive Officer of both Allianz Global Investors & Saltbush Funds Management in Australia, Executive Director of private equity firm Audant Capital, Head of Institutional Investment at Perpetual Investments and National Chief Financial Officer of a major Australian hospital group. He is currently a Director of two Australian private family companies. He holds a business degree (majoring in Accounting & Finance) from Charles Sturt University in Australia, and is a CPA. 6.5 The Investment Committee The Investment Committee formulates, establishes and implements investment strategies and policies. The committee will continually review and monitor the success of these strategies and policies using predetermined benchmarks towards achieving a proper performance for the Fund. The Committee will also ensure investment guidelines and regulations are complied with. The Investment Committee will meet at least once every quarterly or more often should the need arise. Members of the Investment Committee for the Fund are as follows: Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member) Vivek Sharma (Independent Member) Abdul Razak bin Ahmad Peter John Rayner Please refer to the Board of Director s section for more details on their profile. 6.6 The Management Team Abdul Razak bin Ahmad Chief Executive Officer/ Executive Director Abdul Razak bin Ahmad s profile is as set out above under the Board of Director s section. Shahariah binti Shaharudin Head, Institutional Business Shahariah binti Shaharudin joined KIB in April 2011 overseeing the Manager s institutional business. Shahariah brings with her twenty (20) years of experience in the financial services industry. She began her career in a local bank and has extensive experience in both Retail and Corporate Banking. Subsequently she joined a stock broking company as Head of Dealing managing Institutional Trade. In 2006, she joined RHB Investment Management Sdn Bhd under Strategic Business and Market Development Division where her core responsibility is sourcing business and servicing both retail and wholesale clients ranging from unit trust, corporate and government agencies to insurance companies. 22