Date of Issuance: 20 April 2018 HONG LEONG ASSET MANAGEMENT BHD HONG LEONG INCOME MANAGEMENT FUND RESPONSIBILITY STATEMENT This Product Highlights Sheet has been reviewed and approved by the directors of Hong Leong Asset Management Bhd and they collectively and individually accept full responsibility for the accuracy of the information. Having made all reasonable inquiries, they confirm to the best of their knowledge and belief, that 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. STATEMENTS OF DISCLAIMER The Securities Commission Malaysia has authorised the issuance of the Hong Leong Income Management Fund and a copy of this Product Highlights Sheet has been lodged with the Securities Commission Malaysia. The authorisation of the Hong Leong Income Management Fund and lodgement of this Product Highlights Sheet, should not be taken to indicate that the Securities Commission Malaysia recommends the Hong Leong Income Management 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 Hong Leong Asset Management Bhd who is responsible for the Hong Leong Income Management Fund, 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.
This Product Highlights Sheet only highlights the key features and risks of the Hong Leong Income Management Fund. Investors are advised to request, read and understand the disclosure documents of the Fund before deciding to invest. PRODUCT HIGHLIGHTS SHEET HONG LEONG INCOME MANAGEMENT FUND 1. What is this fund about? BRIEF INFORMATION ON THE FUND Hong Leong Income Management Fund ( HLIMF or the Fund ) is a money market wholesale fund managed by Hong Leong Asset Management Bhd (the Manager ) that aims to provide investors with the opportunity to enjoy regular income distribution while maintaining capital stability. 2. Who is this fund suitable for? FUND SUITABILITY HLIMF is appropriate for sophisticated investors who: are seeking regular income stream and stable investment returns; are seeking capital stability; have low risk tolerance; and are seeking to park their excess funds in a relatively stable investment vehicle. 3. What am I investing in? Category of fund Money Market (wholesale). KEY FUND FEATURES Type of fund Note: There was a change in the fund category from Fixed income to Money Market. For more details on the category, please refer to the 3 rd Supplementary Information Memorandum of the Fund dated 17 March 2017. Income. Investment objective Asset allocation (% of the Fund s net asset value ( NAV )) Performance benchmark Investment process and strategy Distribution policy* The Fund aims to provide investors with the opportunity to enjoy regular income distribution while maintaining capital stability. Money market instruments and deposits: Minimum 95%. Cash: Maximum 5%. Maybank Overnight Repo rate. Launch date 28 March 2008. 4. Who am I investing with? The Fund will invest primarily in money market instruments and deposits. The duration of the invested instruments vary in accordance with the interest rate trends and market conditions. In selecting financial institutions for investing in such money market instruments and placement of deposits, the Fund will adopt a prudent selection process to ensure only credit worthy financial institutions and appropriate securities are invested in accordance with the investment objective and to optimize yield and provide liquidity to the Fund. The Fund s selection of financial institutions with which to invest and as counterparties depends largely on the Manager s rigorous credit assessment to assure relative certainty in principal repayment and overall total return stability. For more details on the Fund s investment process and strategy, please refer to Section 5 of the Replacement Information Memorandum of the Fund dated 2 November 2015. The Fund aims to provide weekly distributions on a best effort basis to the overall capital growth and a substantial portion of the income returns from investments will be reinvested. The Fund may also declare distributions in the form of additional Units to its Unit holders. *Note: Sophisticated investors who opt to reinvest their cash distributions will have their cash distributions reinvested into additional Units based on the Fund s net asset value ( NAV ) per Unit on the reinvestment date (the reinvestment date is the date on which the distributions will be credited into the Unit holders account). However, cash distribution amounting to less than RM250.00 will not be paid but will be automatically reinvested. Manager Trustee Hong Leong Asset Management Bhd (318717-M). CIMB Commerce Trustee Berhad (313031-A). For details on the Manager, and Trustee, please refer to Sections 8 and 9 of the Replacement Information Memorandum of the Fund dated 2 November 2015. 1
5. What are the possible outcomes of my investment? There are many possible outcomes associated with an investment in the Fund. Unit holders can potentially make profit either (i) when the Fund declares and pays out distributions; or (ii) when the Unit holder sells their investments in the Fund when the market value of the Fund s portfolio and the Fund s NAV per Unit increase. However, this also means that the market value of the Fund s portfolio and Fund s NAV per Unit may fall and as a result, the Unit holder may lose part of its capital. That is why investors should take note that the value of an investment in the Fund and its distribution payable (if any) may go down as well as up and are not guaranteed. Investors should also take note that investment in the Fund involves some degree of risk and that the value of their investment is at risk depending on the underlying investments of the Fund. For more information on risks associated with an investment in the Fund, please refer to the following section and the Replacement Information Memorandum of the Fund dated 2 November 2015. 6. What are the key risks associated with this fund? KEY RISKS General risks Please refer to Section 4.1. of the Replacement Information Memorandum of the Fund dated 2 November 2015 for more details of each of the Fund s general risks. Management risk Inflation/Purchasing power risk Loan financing risk Non-compliance risk Poor management of the Fund will jeopardise the investment of Unit holders through the loss of their capital invested in the Fund. This refers to the likelihood that a Unit holder s investments are not keeping pace with the inflation rate, thus resulting in the Unit holder s decreasing purchasing power even though the investment in monetary terms may have increased. This risk can be mitigated by investing in securities that can provide positive real rate of return. In the case of an investor who obtains financing to invest in the Fund, the investor must be aware that the higher the margin of financing, any losses or gains he makes is then amplified. The financing cost may be higher than the gains derived (if any) from investing in the Fund. It is important for investors to understand the inherent risks of investing with borrowed money which includes the following: i. In the case where Units are used as collateral, if the value of the investment falls below a certain level, investors will always be asked to provide additional collateral. If the investors fail to provide the additional collateral, their Units will be sold towards settling the loan/financing amount; and ii. An investor s ability to service its loan repayments may be affected by an increase in interest rates or affected by unforeseen circumstances e.g. loss of employment. This is the risk where the Manager does not comply with the provisions as set out in the Deed; or the laws/guidelines that govern the Fund; or its internal procedures and policies. The non-compliance could be due to several factors such as a result of human errors and oversight or system failures. Any noncompliance may adversely affect the Fund s NAV per Unit, especially in situations where the Manager is forced to sell the investments of the Fund at an unfavorable price in order to resolve the non-compliance. In order to mitigate this risk, the Manager has imposed stringent internal compliance controls. Specific risks Please refer to Section 4.2. of the Replacement Information Memorandum of the Fund dated 2 November 2015 for more details of each of the Fund s specific risks. Interest rate risk Liquidity risk Market risk Credit risk Particular security risk This risk refers to the effect of interest rate changes on the market value of the Fund s investments in debt securities. In the event of rising interest rates, prices of debt securities tend to move inversely. Meanwhile, debt securities with longer maturities and lower coupon rates are more sensitive to interest rate changes. This risk can be mitigated via the management of the duration structure of the debt securities portfolio by diversifying the investments in debt securities across different maturities (e.g. one year, three years and five years) and investing in short-term (i.e. less than three years) debt securities. The risk that arises when a security cannot be liquidated for cash in a timely manner at or near its market value will affect the price of the Units. Liquidity risks can be minimized through investments mainly in short-term and high quality issues as these securities are more liquid. Market risk refers to the potential losses that may arise from adverse changes in the market prices of the investments of the Fund. Prices of securities that the Fund has invested in may fluctuate in response to market developments (such as adverse changes in government regulations and policies, economic developments, investor sentiment, inflation, interest rates and exchange rates), which would then affect the Fund s NAV per Unit. This risk is intrinsic with the Fund s investments in debt securities and refers to the possibility of the issuer of the debt security being unable or not willing to repay in a timely manner the interest payments due and/or the principal respectively. This will cause a decline in the value of the defaulted debt security and subsequently affect the Fund s NAV per Unit. The Fund s credit risk can be mitigated through a rigorous and disciplined credit research and analysis to ascertain the creditworthiness of the issuer of a debt security prior to its investments. In addition, the Manager may also mitigate this risk by diversifying its investments in debt securities across many issuers. The performance of each individual security that the Fund invests in will affect the price of Units. The performance of each security is dependent on factors which include but are not limited to the management quality of the particular company, its growth potential, changes in consumer tastes and preference, and conditions specific to the industry of the security that the Fund has invested in. Valued collectively, the performance of individual securities will cause the Fund s NAV per Unit to rise or fall accordingly. The Fund s NAV per Unit is also dependent on the weightage of the individual securities within the Fund s portfolio. This risk is managed by adherence to a strict investment decision-making 2
Fund management risk process which is applied in the security selection process and involves conducting primary and secondary research on factors relevant to each individual security issuer. For each security, emphasis will be on the company s industry and business outlook, management track record, financial health, earnings quality, growth potential and other financial valuations. The performance of the Fund is dependent on the experience, knowledge, expertise and investment strategies adopted by the personnel of the Manager. Lack of experience, knowledge and expertise, as well as poor execution of the investment strategy or general management of the Fund may jeopardise the Unit holders capital and returns. In view of this, proper training and stringent selection of personnel to manage the Fund is crucial towards mitigating this risk. INVESTORS SHOULD TAKE NOTE THAT THE ABOVE LIST OF RISKS MAY NOT BE EXHAUSTIVE AND IF NECESSARY, THEY SHOULD CONSULT THEIR ADVISER(S) FOR A BETTER UNDERSTANDING OF THE RISKS. 7. What are the fees and charges involved? FEES & CHARGES There are fees and charges involved and you are advised to consider them before investing in the Fund. The following table describes the charges that you may directly incur when you buy or redeem Units: Sales charge¹ Redemption charge¹ Switching fee¹ Transfer fee¹ There is no sales charge imposed by the Manager. There is no redemption charge imposed by the Manager. There is no switching fee imposed on switching of Units. There is no transfer fee imposed on the transfer of Units to a transferee. The following table describes the fees that you may incur indirectly when you invest in the Fund: Annual management fee 1 Annual trustee fee 1 Up to 0.30% per annum of the Fund s NAV, calculated on a daily basis. Up to 0.035% per annum of the Fund s NAV calculated on a daily basis, subject to a minimum of RM18,000 per annum (excluding foreign custodian fee and charges). Please refer to Section 7 of the Replacement Information Memorandum of the Fund dated 2 November 2015 for more details of the fees, charges and expenses. 8. How often are valuations available? VALUATIONS AND EXITING FROM INVESTMENT The NAV per Unit of the Fund is determined on each business day 2. The daily NAV per Unit of the Fund can be obtained via online portal of The Star and New Straits Times and/or the Manager s website at www.hlam.com.my or our branch offices. Alternatively, investors may contact the Customer Experience personnel at 03-7723 3500 ext 3539/3540 for the NAV per Unit. 9. How can I exit from this investment and what are the risks and costs involved? Cooling-off right A cooling-off right allows sophisticated investors an opportunity to reverse an investment decision, which could have been unduly influenced by certain external elements or factors. The cooling-off period for the Fund is six (6) business days 2 commencing from the date the Manager receives the application for purchase of Units. A cooling-off right is only given to sophisticated investors, who are investing in any of the Manager s funds for the first time. However, the following persons and/or institutions are not entitled to the cooling-off right: a corporation or institution; a staff of the Manager; and persons registered to deal in Unit trust funds for the Manager. The refund for every Unit held by the sophisticated investor pursuant to the exercise of the cooling-off right shall be the sum of:- the NAV per Unit on the day the Units were first purchased: and the sales charge per Unit originally imposed on the day the Units were purchased (if any). Payment will be made to the sophisticated investor within ten (10) calendar days from the application received by the Manager. For investments made through cheque, the payment for the cooling-off will only be made to the sophisticated investor after the cheque has been cleared. Redemption of Units There is no redemption charge for redeeming Units of the Fund. Notes: 1 The fees and charges stated are exclusive of any tax such as Goods and Services Tax ( GST ) and/or other indirect or similar tax that may be payable. The Manager/Trustee (where applicable) shall have the right to charge and recover from the Fund any GST or other indirect or similar tax now or hereafter imposed by law or required to be paid in connection with the products or services provided by the Manager/Trustee (where applicable). 2 business day refers to a day (other than Saturday, Sunday or public holidays) on which the Manager is open for business and Bursa Malaysia is open for trading. 3
Units can be redeemed during normal business or banking hours at the Manager s head office, its branches, sales agents or participating institutional Unit trust advisers on each business day 1. All applications must be accompanied with the relevant documents. Any application for redemption of Units that are received by the Manager after 11.00 a.m. on a business day 1 will be deemed as transacted on the next business day 1 and would only be processed at the next business day 1. The Manager reserves the right to reject any application that is not complete and/or not accompanied by the required documents. Unit holders will be paid within ten (10) calendar days from the date the redemption request is received by the Manager. For more information on the above, please refer to Section 6.4. and Section 6.7. of the Replacement Information Memorandum of the Fund dated 2 November 2015. 10. Information on Fund Performance FUND PERFORMANCE a) Average total return for the following periods ended 28 February 2018 1-year 3-year 5-year Since launch # HLIMF (%) 3.51 3.78 3.71 3.53 Maybank Overnight Repo Rate* (%) 1.78 1.92 1.96 1.88 b) Annual total return for the financial years/period ended 28/29 February 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 # HLIMF (%) 3.51 3.66 3.77 3.35 3.02 2.96 2.91 2.53 2.03 2.75 Maybank Overnight Repo Rate* (%) 1.78 1.87 2.02 1.93 1.82 1.82 1.68 2.96 2.17 3.31 #The figure shown is for the period since launch of the Fund (28 March 2008) * The benchmark for the Fund for financial year 2012 onwards is the Maybank Overnight Repo Rate. Prior to 12 July 2011, the performance benchmark of the Fund was the 12-Months KLIBOR Rate. Sources: Lipper for Investment Management. Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. 1-Year performance review The Fund posted a return of 3.51% for the financial year ended 28 February 2018 while its benchmark the Maybank Overnight Repo Rate registered a return of 1.78%. c) Basis of calculation Percentage Growth, NAV Per Unit-to-NAV Per Unit basis with gross income (if any) from HLIMF reinvested and in MYR terms. d) Performance in Chart Source: Lipper for Investment Management. Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up. Since launch, the Fund has posted a return of 35.02% while its benchmark the Maybank Overnight Repo Rate has registered a return of 18.69%. Note: 1 business day refers to a day (other than Saturday, Sunday or public holidays) on which the Manager is open for business and Bursa Malaysia is open for trading. 4
e) Portfolio turnover ratio (PTR) Financial year ended 28 February 2018 2017 2016* PTR of the Fund (times) 10.79 4.99 4.93 *Financial year ended 29 February The Fund recorded a higher PTR of 10.79 times during the financial year ended 2018 from 4.99 times during the financial year ended 2017 on account of higher level of rebalancing activities performed by the Fund. f) Distribution Financial year Additional Units Cash distribution 2016-2017 - 2018 - Gross/Net 1.8520 sen/unit Gross/Net 1.8060 sen/unit Gross/Net 1.7270 sen/unit INVESTORS SHOULD NOT MAKE PAYMENT IN CASH TO A UNIT TRUST CONSULTANT OR ISSUE A CHEQUE IN THE NAME OF A UNIT TRUST CONSULTANT PAST PERFORMANCE OF THE FUND IS NOT AN INDICATION OF ITS FUTURE PERFORMANCE 5
CONTACT INFORMATION 11. Who should I contact for further information or to lodge a complaint? 1. For internal dispute resolution, you may contact: Hong Leong Asset Management Bhd Level 26, Menara LGB 1, Jalan Wan Kadir Taman Tun Dr. Ismail 60000 Kuala Lumpur Tel : 03-7723 3500 Fax : 03-7873 6088 / 03-7873 6091 Website : www.hlam.com.my Email : inquiry@hlam.hongleong.com.my 2. If you are dissatisfied with the outcome of the internal dispute resolution process, please refer your dispute to the Securities Industries Dispute Resolution Center (SIDREC): (a) via phone to : 03-2282 2280 (b) via fax to : 03-2282 3855 (c) via email 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 59000 Kuala Lumpur 3. You can also direct your complaint to the 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 : 03-6204 8999 (b) via fax to : 03-6204 8991 (c) via e-mail to : aduan@seccom.com.my (d) via online complaint form available at (e) via letter to : www.sc.com.my : Investor Affairs & Complaints Department Securities Commission Malaysia 3 Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur 4. Federation of Investment Managers Malaysia (FIMM) s Complaints Bureau: (a) via phone to : 03-2092 3800 (b) via fax to : 03-2093 2700 (c) via e-mail to : complaints@fimm.com.my (d) via online complaint form available at : www.fimm.com.my: (e) via letter to : Legal, Secretarial & Regulatory Affairs Federation of Investment Managers Malaysia 19-06-01, 6 th Floor Wisma Tune No. 19, Lorong Dungun Damansara Heights 50490 Kuala Lumpur 6
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