KENANGA SHARIAH BALANCED FUND

Transcription

1 KENANGA SHARIAH BALANCED FUND RESPONSIBILITY STATEMENT This Product Highlights Sheet has been reviewed and approved by the directors or authorized committee or persons approved by the Board of Kenanga Investors Berhad and they collectively and individually accept full responsibility for the accuracy of the information. Having made all reasonable enquiries, they confirm to the best of their knowledge and belief, there are no false or misleading statements, or omission of other facts which would make any statement in the Product Highlights Sheet false or misleading. STATEMENT OF DISCLAIMER The Securities Commission Malaysia has authorized the issuance of Kenanga Shariah Balanced Fund and a copy of this Product Highlights Sheet has been lodged with the Securities Commission Malaysia. The authorization of the Kenanga Shariah Balanced Fund and lodgement of this Product Highlights Sheet, should not be taken to indicate that the Securities Commission Malaysia recommends the Kenanga Shariah Balanced Fund or assumes responsibility for the correctness of any statement made or opinion or report expressed in this Product Highlights Sheet. The Securities Commission Malaysia is not liable for any non-disclosure on the part of the Kenanga Investors Berhad responsible for the Kenanga Shariah Balanced and takes no responsibility for the contents of this Product Highlights Sheet. The Securities Commission Malaysia makes no representation on the accuracy or completeness of this Product Highlights Sheet, and expressly disclaims any liability whatsoever arising from, or in reliance upon, the whole or any part of its contents

2 This Product Highlights Sheet only highlights the key features and risks of this unlisted capital market product. Investors are advised to request, read and understand the prospectus before deciding to invest. PRODUCT HIGHLIGHTS SHEET KENANGA SHARIAH BALANCED FUND ( KSBF ) 1. What is this product about? BRIEF INFORMATION ON THE PRODUCT KSBF is an open-ended fund which aims to achieve long-term* capital growth through diversified investments in equities, fixed income and money market instruments which are Shariah-compliant. Category / Type: Management Company: Capital protected / guaranteed: Islamic Balanced/Income & Growth Kenanga Investors Berhad No *long-term refers to a period of 7 years and above. 2. Who is this product suitable for? PRODUCT SUITABILITY KSBF is suitable if you: Are seeking Shariah-compliant returns from a fund which has potentially lower volatility compared to an equity fund; and Have medium to long-term** investment horizon. ** medium to long-term refers to a period of 5 years or longer. 3. What am I investing in? KEY PRODUCT FEATURES Launch date 23 April Financial year-end 30 September. Income distribution policy Income (if any) as secondary objective, is paid annually. Asset allocation Ranges Shariah-compliant equities 40% - 60% of KSBF s NAV Sukuk/Islamic money market instruments 40% - 60% of KSBF s NAV Investment strategy KSBF aims to invest in a balanced mix between Shariah-compliant equities, sukuk and Islamic money market instruments. KSBF s Shariah-compliant equity exposure ranges from 40% to 60% of KSBF s NAV, with the remaining consisting of sukuk and Islamic money market instruments. Performance benchmark A composite of FTSE Bursa Malaysia Emas Shariah (50%) and the All Malaysian Government Investment Issue (50%) obtainable from and 4. Who am I investing with? Management Company Trustee Auditor Taxation adviser Independent legal adviser Kenanga Investors Berhad ( P) CIMB Commerce Trustee Berhad ( A) Ernst & Young (AF:0039) Ernst & Young Tax Consultants Sdn Bhd ( K) Wei Chien & Partners 5. What are the possible outcomes of my investment? KSBF engages active management style to produce a diversified portfolio which aims to achieve steady capital growth. The volatility of the portfolio is expected to be lower than that of an equity portfolio. However KSBF is not a capital guaranteed nor is a capital protected fund and the prices of the units in KSBF may go down as well as up due to the prices fluctuations of the portfolio that KSBF invests in. The NAV per unit may be lower at the point of switching or redemption than the NAV per unit when you initially invested into KSBF. Hence, you may have to suffer losses upon switching or redemption. KEY RISKS 6. What are the key risks associated with this product? Table A: The following are some risks involved when you invest in unit trust funds: Market Risk Particular Stock Risk Market risk refers to the possibility that an investment will lose value because of a general decline in financial markets, due to economic, political and/or other factors, which will result in a decline in the fund s net asset value. Prices of a particular stock may fluctuate in response to the circumstances affecting individual companies such as adverse financial performance, news of a possible merger or loss of key personnel of a company. Any adverse price movements of such stock will adversely affect a fund s net asset value

3 Manager s Risk Liquidity Risk Credit and Default Risk Interest Rate Risk Inflation Risk Non-compliance Risk Loan Financing Risk This risk refers to the day-to-day management of the fund by the manager which will impact the performance of the fund. For example, investment decisions undertaken by the manager, as a result of an incorrect view of the market or any non-compliance with internal policies, investment mandate, the deed, relevant law or guidelines due to factors such as human error or weaknesses in operational process and systems, may adversely affect the performance of the fund. Liquidity risk refers to the ease of liquidating an asset depending on the asset s volume traded in the market. If a fund holds assets that are illiquid, or are difficult to dispose of, the value of the fund will be negatively affected when it has to sell such assets at unfavourable prices. Credit risk relates to the creditworthiness of the issuers of the debt instruments and their expected ability to make timely payment of interest and/or principal. Any adverse situations faced by the issuer may impact the value as well as liquidity of the debt instrument. In the case of rated debt instruments, this may lead to a credit downgrade. Default risk relates to the risk that an issuer of a debt instrument either defaulting on payments or failing to make payments in a timely manner which will in turn adversely affect the value of the debt instruments. This could adversely affect the value of the fund. Interest rate risk refers to the impact of interest rate changes on the valuation of debt instruments. When interest rates rise, debt instruments prices generally decline and this may lower the market value of the fund s investment in debt instruments. The reverse may apply when interest rates fall. The risk will be mitigated via the management of the duration structure of the fixed income portfolio. This is the risk that investors investment in the fund may not grow or generate income at a rate that keeps pace with inflation. This would reduce investors purchasing power even though the value of the investment in monetary terms has increased. This refers to the current and prospective risk to the unit trust fund and the investors interest arising from non-compliance of regulations imposed by the Capital Markets and Services Act 2007, the Securities Commission Act 1993 and the Securities Commission s Guidelines on Unit Trust Funds, deeds, prospectuses and/or manager s internal policies and procedures by the manager. Risk of non-compliance can lead to diminished reputation, reduced franchise value, limited business opportunities and reduced expansion potential for the company. Accordingly, non-compliance may affect the investor s investments by causing a fall in the value of the unit trust fund. This risk occurs when investors take a loan/financing to finance their investment. The inherent risk of investing with borrowed money includes investors being unable to service the loan repayments. In the event units are used as collateral, an investor may be required to top-up the investors existing instalment if the prices of units fall below a certain level due to market conditions. Failing which, the units may be sold at a lower net asset value per unit as compared to the net asset value per unit at the point of purchase towards settling the loan. Shariah-compliant unit trust fund s investors are advised to seek for Islamic financing to finance their investment. Table B: The following are specific risks involved when you invest in KSBF and how the risks are managed. Market risk The market price of securities owned by KSBF might go down or up, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. Equity securities generally have greater price volatility than fixed income securities/sukuk. Reinvestment risk Stock-specific risk Liquidity risk Reclassification of Shariah status risk Derivatives/structured products risk Interest rate risk Reinvestment risk arises when an issuer of bonds/sukuk decides to exercise its right to pay principal on an obligation earlier than the expected maturity date, especially during times of declining interest rates. Consequently, KSBF may experience lower returns due to having to reinvest in lower yielding securities. The value of each individual stock that KSBF invests in may decline for a number of reasons which is directly related to the issuer, such as, the management performance, financial position and reduced demand for the issuer s goods or services. Liquidity risks exist when particular investments are difficult to purchase or sell, possibly preventing a unit trust fund from selling such illiquid securities at an advantageous time or price. Unit trust funds with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit/default risk tend to have the greatest exposure to liquidity risks. The risk that the currently held Shariah-compliant equities in the portfolio of KSBF may be reclassified to be Shariah non-compliant upon review of the equities by the Shariah Advisory Council of the Securities Commission Malaysia performed twice yearly. If this occurs, the value of KSBF may be adversely affected when the investment manager take the necessary steps to dispose of such equities. KSBF may from time to time use derivatives for hedging. Derivatives are financial contracts whose value depend on, or are derived from, the value of an underlying asset, reference rate or index. Such assets may include shares, interest rates, currency exchange rates and stock indices. Some of the risks associated with derivatives are market risk, management risk, credit risk, liquidity risk and counterparty risk. This risk refers to the effect of interest rate changes on the market value of a bond/sukuk portfolio. In the event of rising interest rates, prices of fixed income securities/valuation for sukuk will decrease and vice versa. Meanwhile, bonds/sukuk with longer maturity and lower coupon/profit rate are more sensitive to interest rate changes. The risk will be mitigated via the management of the duration structure of the fixed income/sukuk portfolio. As for KSBF, the interest rate is a general economic indicator that will have an impact on the management of KSBF regardless of whether it is a Shariah-compliant unit trust fund or otherwise. This does not in any way suggest that KSBF will invest in conventional financial instruments. All the - 3 -

4 investments carried out for the KSBF are in accordance with Shariah requirements. Credit/default risk Counterparty risk A unit trust fund could lose money if the issuer or guarantor of a fixed income security/sukuk, or the counterparty 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/default risk, which are often reflected in their credit ratings. 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. 7. What are the fees and charges involved? FEES & CHARGES The table below describes the fees and charges (if any) that you may incur directly when you purchase or redeem units in KSBF. Entry fee (negotiable) Up to 6.50% of NAV per Unit. Redemption fee Switching fee Transfer fee The table below describes the fees and charges that you may incur indirectly when you invest in KSBF. Annual management fee 1.55% of NAV of the Fund per annum. Annual trustee fee 0.07% of NAV of the Fund per annum. All fees and charges payable to the Manager and the Trustee are subject to goods and services tax as imposed by the government or other authorities from time to time. 8. How often are valuations available? VALUATIONS AND EXITING FROM INVESTMENT The NAV of KSBF is determined at the end of each Business day. The NAV of KSBF is published daily in KIB s website at 9. How can I exit from this investment and what are the risks and costs involved? If you wish to exit from this investment, you may submit your redemption request at KIB s regional branch offices or through KIB s advisers or investor services centre. Redemption requests received by us before 4:00 pm on any Business day will be based on NAV determined at the end of the same Business day. Redemption requests received after 4:00 pm will be based on NAV determined at the end of the next Business day. We reserve the right not to effect the transaction if the requested documents required for the redemption transaction are incomplete. There is no charge for redeeming units from KSBF. Please refer to Fees & Charges for more information. CONTACT INFORMATION 10. Who should I contact for further information or to lodge a complaint? Unitholders can seek the assistance of our marketing personnel on fund related issues at our business office during our business hours from 8.30 a.m. to 5.30 p.m. from Monday to Friday. 1. For internal dispute resolution, you may contact investor services centre or any of ING Funds regional branch offices during office hours. Alternatively you can reach us via the following: (a) via phone to : (b) via fax to : (c) via customer service toll free : (d) via to (e) via letter to : investorservices@kenanga.com.my : Kenanga Investors Berhad Suite 12.02, 12 th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur. 2. If you are dissatisfied with the outcome of the internal dispute resolution process, please refer your dispute to the Securities Industries Dispute Resolution Corporation (SIDREC): (a) via phone to : (b) via fax to : (c) via to (d) via letter to : info@sidrec.com.my : Securities Industry Dispute Resolution Center (SIDREC) Unit A-9-1, Level 9, Tower A, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, Kuala Lumpur. 3. You can also direct your complaint to Securities Commission Malaysia (SC) even if you have initiated a dispute resolution process with SIDREC. To make a complaint, please contact the SC s Investor Affairs & Complaints Department: (a) via phone to the Aduan Hotline at : (b) via fax to : (c) via to : aduan@seccom.com.my (d) via online complaint form available at : (e) via letter to : Investor Affairs & Complaints Department, Securities Commission Malaysia No 3 Persiaran Bukit Kiara, Bukit Kiara, Kuala Lumpur

5 APPENDIX: GLOSSARY Business day Deed Guidelines NAV Unitholder The day which Bursa Malaysia Securities Berhad is open for trading. Deed dated 16 April 2004 and includes any supplemental deeds thereafter. The guidelines issued by the Securities Commission Malaysia governing the creation and operation of unit trust funds, as may be amended from time to time. Means the net asset value (NAV) of KSBF that is the value of all KSBF s assets less the value of all KSBF s liabilities, at the point of valuation. For the purpose of computing the annual management fee and annual trustee fee, the NAV of KSBF should be inclusive of the management fee and trustee fee for the relevant day. The person for the time being registered under the provision of the Deed as the holder of units of KSBF. Investors are advised to read and understand the contents of the master prospectus and supplementary master prospectus, if any. If in doubt, please consult a professional adviser