INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA INCOME FUND - SERIES 1

Transcription

1 KENANGA INVESTORS BERHAD INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA INCOME FUND - SERIES 1 Manager: Kenanga Investors Berhad ( P) Trustee: RHB Trustees Berhad (formerly known as OSK Trustees Berhad) ( U) This Information Memorandum is dated 5 June 2014 Investors are advised to read and understand the contents of this Information Memorandum. If in doubt, please consult a professional adviser.

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3 TABLE OF CONTENTS Page No. RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER CORPORATE DIRECTORY DEFINITION I II IV CHAPTER 1: KEY DATA 1 CHAPTER 2: RISK FACTORS 5 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 9 CHAPTER 4: FEES, CHARGES AND EXPENSES Sales Charge Redemption Charge Management Fee Trustee Fee Other Expenses Directly Related to the Fund Reduction / Waiver of Fees 10 CHAPTER 5: TRANSACTION INFORMATION Pricing Policy 11

4 5.2 Valuation Point of the Fund Computation of NAV and how the Management Fee and Trustee Fee are calculated: Subscription of Units Redemption of Units Periodic Reporting to Unit Holders 12 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 20 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 Anti Money Laundering Provisions Disclosure on Related-Party Transactions/Conflict of Interests Trustee s Statement of Responsibility Trustee s Delegate Material Litigation & Arbitration 26 CHAPTER 8: RIGHTS AND LIABILITIES OF UNIT HOLDERS 27

5 8.1 Unit Holders Rights Unit Holders Liabilities 27 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 30 CHAPTER 10: OTHER INFORMATION Unclaimed Moneys Policy Anti Money Laundering Policy Regulatory Approval No Guarantee Enquiries 33

6 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 authorized the Fund, the subject of this 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 Kenanga Investors Berhad and takes no responsibility for the contents of this 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. i

7 CORPORATE DIRECTORY Manager Name: Registered Office: Business Address: Telephone number: Kenanga Investors Berhad ( P) 8 th Floor, Kenanga International Jalan Sultan Ismail Kuala Lumpur, Malaysia Suite 12.02, 12th Floor Kenanga International Jalan Sultan Ismail Kuala Lumpur, Malaysia Facsimile number: / Customer Service Hotline: Address: Website: investorservices@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) Peter John Rayner (Independent Director) Bruce Kho Yaw Huat Abdul Razak bin Ahmad Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member) Vivek Sharma (Independent Member) Peter John Rayner (Independent Member) Abdul Razak bin Ahmad Company Secretary Name: Norliza Abd Samad (MAICSA ) Business Address: Telephone number: Facsimile number: th Floor, Kenanga International Jalan Sultan Ismail Kuala Lumpur, Malaysia Trustee Name: Registered Office: RHB Trustees Berhad (formerly known as OSK Trustees Berhad) ( U) Level 10, Tower One RHB Centre Jalan Tun Razak ii

8 Business Address: Kuala Lumpur Malaysia Telephone number: Facsimile number: Trustee s Delegate Name: Registered Office: Business Address Telephone number: Facsimile number: th Floor, Plaza OSK Jalan Ampang Kuala Lumpur Wilayah Persekutuan, Malaysia (Custodian Functions) CIMB Group Nominees (Tempatan) Sdn Bhd ( T) 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 Auditors for the Fund Name: Address: Ernst & Young Telephone number: Facsimile number: Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Kuala Lumpur, Malaysia 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, Malaysia Raja, Darryl & Loh Telephone number: Facsimile number: th Floor, Wisma Sime Darby Jalan Raja Laut Kuala Lumpur, Malaysia iii

9 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 interest; 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 13 June 2012 in respect of the Fund, including any supplemental deeds thereto. 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 The Kenanga Income Fund - Series 1, a wholesale fund issued pursuant to the Guidelines. iv

10 Guidelines Information Memorandum Initial Offer Period Islamic bank 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 The Guidelines on Wholesale Funds issued by the Securities Commission. 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 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, 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; 2. an individual who has a gross annual income exceeding RM300,000 or its equivalent in foreign currencies per annum in the preceding 12 months; 3. an individual who, jointly with his or her spouse, has a v

11 gross annual income exceeding RM400,000 or its equivalent in foreign currencies in the preceding 12 months; 4. a corporation with total net assets exceeding RM10 million or its equivalent in foreign currencies based on the last audited accounts; 5. a partnership with total net assets exceeding RM10 million or its equivalent in foreign currencies; 6. a unit trust scheme or prescribed investment scheme; 7. a private retirement scheme; 8. a closed-end fund; 9. 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; 10. 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; 11. a statutory body established by an Act of Parliament or an enactment of any State; 12. a pension fund approved by the Director General of Inland Revenue under section 150 of the Income Tax Act 1967; 13. a holder of a capital markets services licence; 14. a licensed institution; 15. Islamic bank; 16. an insurance company licensed under the Insurance Act 1996; 17. a takaful operator registered under the Takaful Act 1984; 18. a bank licensee or insurance licensee as defined under the Labuan Financial Services and Securities Act 2010; and 19. an Islamic bank licensee or takaful licensee as defined under the Labuan Islamic Financial Services and Securities Act RAM RM or Ringgit Malaysia relevant laws scheduled institution 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 vi

12 licensed bank, a licensed finance company, or a licensed merchant bank carrying on the aforesaid businesses. Securities Commission or SC short-term Special Resolution Trustee Trustee Fee Unit Unit Holder / Investors 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. RHB Trustees Berhad (formerly known as OSK Trustees Berhad) ( U) 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. vii

13 CHAPTER 1: KEY DATA This section contains a summary of the salient information about the Fund. Information about the Fund Name Kenanga Income Fund - Series 1. Fund Type Fund Category Investment Objective Income. Fixed Income. 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 fixed income, 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. In very bearish market conditions, the Fund may invest only in money market instruments and deposits that may result in the Fund underperforming the benchmark. Asset Allocation Principal Risks Benchmark The Fund s portfolio will be structured as follows: 50% - 100% of the NAV will be placed in fixed income instruments; and up to 50% of the NAV will be invested in money market instruments. Interest Rate Risk Liquidity Risk Credit/Default Risk Maybank 1 month Fixed Deposits (FD) rate. Source: Investors should be aware that investing in the Fund is not the same as placement in the Maybank 1 month Fixed 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 the Maybank 1 month Fixed Deposits. 1

14 The Fund has a higher risk profile than the Maybank 1 month Fixed Deposits. Investors Profile Financial Year End Price per Unit during the Initial Offer Period Initial Offer Period Commencement Date The Fund is suitable for Investors who:- seek to invest in a fixed income fund; seek regular income with capital stability; have low risk tolerance; and prefer a short to medium-term investment horizon. 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 and shall end on a date which does not exceed 18 (eighteen) months of the date of the first Information Memorandum. RM1.00. The Initial Offer Period is one (1) day and falls on 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 12 p.m. on a Business Day; any requests received after 12 p.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 2

15 Business Day upon receipt of the redemption request form. Transfer Facility Switching Facility Transfer facility is not available for this Fund. Switching facility is not available for this Fund. Fees and Charges Expenses directly incurred by Unit Holders Sales Charge None. Redemption Charge None. Expenses indirectly incurred by Unit Holders. Management Fee Trustee Fee Other Expenses Up to zero point one zero per centum (0.10%) per annum of the NAV of the Fund. The Management Fee is calculated on a daily basis and payable monthly. Up to zero point zero two per centum (0.02%) per annum of the NAV of the Fund subject to a minimum of RM10,000 per annum. 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 3

16 If distribution of returns is declared by the Fund, Unit Holders will receive a Statement of Distribution of Returns and tax statement/voucher for submission to the Inland Revenue Board of Malaysia. Distribution Policy Subject to the availability of income, distribution of income will be done on a monthly basis. Distribution Options 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 THE INFORMATION MEMORANDUM AND OBTAIN PROFESSIONAL ADVICE BEFORE SUBSCRIBING TO THE FUND. 4

17 CHAPTER 2: RISK FACTORS The Manager encourages Unit Holders to give careful consideration to the risks associated when investing in the Fund and, accordingly, to obtain independent financial and taxation advice before investing in the Fund. Below are some of the general risks which Unit Holders 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 investors. The 5

18 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 or corporate 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 carry credit ratings that are at least of investment grade. In respect of the instruments issued by financial institution, in the absence of a credit rating for the instrument, the credit rating of the financial institution issuing the instrument will be used instead. The investment grade refers to credit rating of at least BBB3 / P3 by RAM or its equivalent by MARC or any other recognized local rating agencies. 6

19 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 fixed income, 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. In very bearish market conditions, the Fund may invest only in money market instruments and deposits that may result in the Fund underperforming the benchmark. 3.3 Asset Allocation In seeking to achieve its investment objective, the Fund will invest in a diversified portfolio of investments as stated in Chapter 3.6, Permitted Investments; the Fund s asset allocation will be as follows: 50% - 100% of the NAV will be placed in fixed income instruments; and up to 50% of the NAV will be invested in money market instruments. 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 1 month Fixed Deposits (FD) rate. Source: Investors should be aware that investing in the Fund is not the same as placement in the Maybank 1 month Fixed 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 7

20 reflect that of the Maybank 1 month Fixed Deposits. The Fund has a higher risk profile than the Maybank 1 month Fixed Deposits. 3.5 Risk Management Active risk management is employed through the pre-determined investment process that seeks to mitigate credit risk, while active asset allocation strategies are employed to mitigate duration risk in relation to our prevailing market outlook. 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 and money market instruments with financial institutions; 2. Fixed income instruments, commercial papers (CP) and medium-term notes (MTN); 3. Malaysian Government Securities (MGS) issued by the Government of Malaysia; 4. Bank Negara Monetary Notes (BNMN) or equivalent issued by Bank Negara Malaysia; or 5. 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 This Fund can only be sold or marketed to Qualified Investors. 3.8 Income Distribution and Distribution Options Subject to the availability of income, distribution of income will be done on a monthly 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 8

21 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. Unquoted debt securities, commercial papers (CP), medium-term notes (MTN) and Malaysian Government Securities (MGS) will be valued on a daily basis based on fair value prices quoted by a bond pricing agency (BPA) registered with the SC. If the Manager is of the view that the price quoted by the BPA for a specific bonds differs from the market price by more than twenty (20) basis points, the Manager may use the market price. In the absence of reliable market quotation, valuation should be the average price obtained from at least three (3) independent dealers. 2. Deposits placed with other financial institutions will be valued with reference to the principal value of such investments and interest accrued thereon for the relevant period. 3. Money market instruments such as bankers acceptance (BA), negotiable instruments of deposits (NID) and Malaysian government and/or any other government-related agencies investment issues will be valued on a daily basis by reference to the value of such investments and interest accrued thereon for the relevant period. 9

22 CHAPTER 4: FEES, CHARGES AND EXPENSES Expenses 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. Expenses indirectly incurred by Unit Holders. 4.3 Management Fee The Management Fee is a charge levied for the services rendered by the Manager. The Management Fee is up to zero point one zero per centum (0.10%) per annum of the NAV of the Fund. The Management Fee is calculated daily and payable monthly. Please refer to the illustration under item 5.3 below to see how the Management Fee is calculated. 4.4 Trustee Fee Up to zero point zero two per centum (0.02%) per annum of the NAV of the Fund subject to a minimum of RM10,000 per annum. 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. 4.5 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. 4.6 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 of time at its absolute discretion. 10

23 5.1 Pricing Policy CHAPTER 5: TRANSACTION INFORMATION 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 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/365 days) 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. 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. 11

24 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 4 p.m. on any Business Day; any requests received after 4 p.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 Business 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 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. 12

25 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 RM25,000, comprising 15,000,000 ordinary shares of RM1.00 each and 10,000,000 preference shares of RM1.00 each of which 13,465,300 ordinary shares and 5,000,000 preference shares are issued and fully paid up. KIB is 100% owned by Kenanga Investment Bank Berhad which is a whollyown subsidiary of K & N Kenanga Holdings Berhad. The Manager is licensed and authorised to conduct business in distributing unit trust funds and fund management on behalf of corporate, institutional and individual clients under the CMSA. As at 30 April 2014, the Manager manages 28 unit trust funds, 1 private retirement scheme (consisting of 3 funds), 8 wholesale funds and other funds from government agencies, pension funds, insurance, corporate and individual clients with a total fund size of more than RM6 billion. The Manager has the services of 88 experienced personnel (77 executives, and 11 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 2011 to 31 December 2013 are summarised below: Year ended 31 December Year ended 31 December 2012 Year ended 31 December 2011 RM 000 RM 000 RM 000 Paid-up capital 18,465 6,765 6,765 Shareholders funds 35,583 11,036 12,777 Revenue 35,551 12,178 10,234

26 Profit/ (Loss) before taxation 14,138 (1,914) (1,473) Profit/ (Loss) after taxation 12,847 (1,741) (1,290) 6.4 Board of Directors The board of directors of KIB ( Board ) 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 Cahya Mata Sarawak (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). 14

27 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 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 twenty (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 Corporation in South East Asia. He was also executive director, Asia for Laureate Higher Education Group, as well as director of development, Asia for INSEAD business school. He holds a BSc. Economics (Finance) from the Wharton School at the University of Pennsylvania and a MBA from International Institute for Management Development (IMD) in Lausanne, Switzerland. Peter John Rayner (Independent Director) 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 also a trustee of the Rookwood General Cemeteries Trust in Sydney, and 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 Certified Practising Accountant ( CPA ). Bruce Kho Yaw Huat Date of Appointment: 29 June

28 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 officer / 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. 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) Peter John Rayner (Independent Member) Abdul Razak bin Ahmad 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. Ismitz Matthew De Alwis Deputy Chief Executive Officer 16

29 Ismitz Matthew De Alwis joined KIB in June 2013 as Deputy Chief Executive Officer following the acquisition of ING Funds Berhad ( ING Funds ) by KIB. He is responsible for the company's retail business, finance, strategic business planning, risk management and governance, business development, operations and information technology (IT) functions. He was with ING Funds since 2003 and was part of the pioneer team who was responsible for the exponential growth of ING Funds in Malaysia. He was the Executive Director and country head for ING Funds. Before assuming the strategic and executive oversight of ING Funds; he was responsible for nationwide distribution, product management and business development for retail, corporate and institutional markets. He started his career as an investment analyst with a regional research & advisory firm, where he obtains vast regional exposure in Hong Kong, Philippines, Dubai and Singapore. He was responsible for research, marketing, distribution and product development. Upon his return to Malaysia, he joined a local established financial institution and investment management company before joining ING Funds. He brings with him twenty one (21) years of experience and multiple expertise including a number of leadership roles experiences in the field of financial and investment management. Ismitz Matthew holds a Master of Business Administration (MBA) from Southern Cross University where he graduated with distinction and a Bachelor Degree (H) in Business Administration from RMIT. In addition, he holds two other professional qualifications from the Chartered Institute of Marketing UK (CIM UK), and is a Certified Financial Planner (CFP). Ismitz Matthew is also a Capital Markets Services Representative s Licence holder for investment advice, fund management and dealing in private retirement schemes approved by the SC. Lee Sook Yee Chief Investment Officer Lee Sook Yee joined KIB as the Chief Investment Officer ( CIO ) in March 2013, bringing with her more than twelve (12) years of experience in local and regional equities investment. Prior to this, Sook Yee was Head of Equities at Meridian Asset Management ( Meridian ), where she led an experienced team of fund managers/analysts in managing equities portfolios of more than RM1 billion in assets under management. At Meridian, she managed various local and regional funds. Before joining Meridian, Sook Yee was Vice President/Senior Portfolio Manager at Credit-Suisse Asset Management in Singapore where she co-managed mutual funds focusing on emerging Asian markets. She was also Associate Director/ Portfolio Manager with UOB-OSK Asset Management. Andrew Chan Chief Financial Officer Andrew Chan joined KIB in June 2013 to head the Finance & Investment Operations team. Prior to this, Andrew was with ING Funds Berhad ( ING Funds ), where he joined since He has been with ING Funds since the company s inception and is one of the pioneers during the company s green field set-up. Andrew has more than twenty (20) years of experience in the business management, finance and accounting field. He started his accounting career in Australia. Upon his return, he joined a public-listed company as a senior accountant. His last stint prior to joining ING Funds was with an established unit trust management company where he was responsible for all financial and management reporting. Andrew is a Certified Practising Accountant ( CPA ), Aust and holds a Bachelor of Economics from La Trobe University, Melbourne, Australia. 17