HONG LEONG VIETNAM 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, 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 authorised the issuance of the Hong Leong Vietnam Fund and a copy of this Product Highlights Sheet has been lodged with the Securities Commission Malaysia. The authorisation of the Hong Leong Vietnam Fund and lodgement of this Product Highlights Sheet, should not be taken to indicate that the Securities Commission Malaysia recommends the Hong Leong Vietnam 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 responsible for the Hong Leong Vietnam 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 Vietnam Fund. Investors are advised to request, read and understand the information memorandum before deciding to invest. 1. What is this fund about? PRODUCT HIGHLIGHTS SHEET HONG LEONG VIETNAM FUND BRIEF INFORMATION ON THE FUND Hong Leong Vietnam Fund ( HLVF or the Fund ) is an equity wholesale fund managed by Hong Leong Asset Management Bhd (the Manager ) that seeks to maximise long-term 1 capital growth for its qualified investors through capital appreciation and dividend income from investments in securities (equity and equity-related securities) of companies that are based in Vietnam or that have substantial operations, sales or asset exposure to the economy, assets or currency of Vietnam. 2. Who is this fund suitable for? FUND SUITABILITY HLVF is appropriate for qualified investors who are seeking: potentially higher return while accepting moderate to higher risk in their investment holdings; and capital growth from the investment exposure in Vietnam over the long-term 1. 3. What am I investing in? KEY PRODUCT FEATURES Investment objective Category of fund Type of fund Investment process and strategy HLVF seeks to maximise long-term 1 capital growth for its qualified investors through capital appreciation and dividend income from investments in securities (equity and equity-related securities) of companies that are based in Vietnam or that have substantial operations, sales or asset exposure to the economy, assets or currency of Vietnam. Equity (Wholesale). Growth. The Fund will invest in equities and equity-related securities of companies that are based in Vietnam or that have substantial operations, sales or asset exposure to the economy, assets or currency of Vietnam. The Fund may invest in public equities as well as convertible debts and any other equity-linked instruments of listed and unlisted companies in Vietnam. The Fund intends to invest across a broad range of industries (including but not limited to banking and financials, consumer, health care, energy, materials and resources, industrials, real estate, telecommunications and utilities) with not more than 40% of the Fund s net asset value ( NAV ) in any single industry. At the same time, the Fund will also invest into fixed income instruments for liquidity management purpose. The Fund may also invest in derivatives which include futures, options, forward contracts and warrants, to gain exposure to the equities in Vietnam and in fixed income instruments. The Fund may also invest in derivatives as a way for the Fund to hedge against investment risks such as market risk, interest rate risk and currency risk. The underlying reference of these derivatives instruments may include equity, fixed income, interest rate, currency or any other underlying as may be permitted by the Securities Commission Malaysia ( SC ) from time to time. Asset allocation (% of the Fund s NAV) For more details on the Fund s investment process and strategy, please refer to Section 4.3. of the information memorandum of the Fund. Equities and equity-related securities in Vietnam: Minimum 70% Fixed income instruments: Maximum 30% The asset allocation for equities and equity-related securities may be reduced below the minimum levels, at the discretion of the Manager, should the following conditions (but not limited to) occur: Potential sharp downturn in the equities market; Potential prolonged fall in interest rates and therefore possibility of higher capital appreciation in fixed income instruments; 1 Long-term refers to a period of above 5 years. 1
Performance benchmark Distribution policy Insufficient funds to form an efficient portfolio; Period of high fund redemption; and Under defensive conditions for the best interest of the Fund. Vietnam (Capital Return) Index. The Fund intends to provide potentially consistent medium-to-long term capital appreciation. As such, distributions will be incidental 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 unitholders. Note: medium-to-long term refers to a period of between 3 to 5 years. Launch date 18 February 2008. 4. Who am I investing with? Manager External Foreign Investment Manager Trustee Trustee s delegate Hong Leong Asset Management Bhd (318717-M). Vietnam Asset Management Limited (BVI Co.Reg.No. 1030256) CIMB Commerce Trustee Berhad (formerly known as BHLB Trustee Berhad) (313031-A). CIMB Group Nominees (Tempatan) Sdn Bhd (274740-T). For details on the Manager, External Foreign Investment Manager, Trustee and Trustee s delegate, please refer to Sections 8 and 9 of the information memorandum of the Fund. 5. What are the possible outcomes of my investment? There are many possible outcomes associated with an investment in the Fund and involves some degree of risk. Investors are to take note that the value of an investment in the Fund and its distributions payable (if any) may go down as well as up and are not guaranteed. The value of your investment is at risk depending on the underlying investments of the Fund. As you will be investing in a Fund that will invest in an emerging market such as Vietnam, you will be exposed to both country concentration risk and emerging markets risk. While investments in a single emerging country may present greater opportunities and potential for capital growth, you will also be subject to higher than average volatility than investing in a diversified portfolio of developed markets. Consequently, you will also be exposed to: (a) liquidity risks as the Fund may invest in thinly-traded securities (i.e. securities that are traded infrequently or in low volume, which can often lead to volatile changes in price when a transaction does occur) and which may potentially reduce the NAV of the Fund; and (b) currency risk as investments of the Fund may be denominated in Vietnamese Dong and any adverse fluctuations in the exchange rates can also reduce the NAV of the Fund. The value of your investment is also at risk when the Fund invests in derivatives. While the prudent and judicious use of these derivatives can be beneficial, the investments in derivatives may expose you to a higher degree of risk as derivatives investments can be highly volatile as compared to traditional investments in equities or bonds. For more information on risks associated with an investment in the Fund, please refer to the following section and the information memorandum of the Fund. 6. What are the key risks associated with this fund? KEY RISKS General Risks Please refer to Section 5.1. of the information memorandum of the Fund for more details of each of the Fund s general risks. Market risk Market risk refers to the potential losses that may arise from 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 changes in government regulations and policies, economic developments, investor sentiment, inflation, interest rates and exchange rates), which would then affect the Fund s NAV. Management risk The performance of the Fund is dependent upon the experience, knowledge, expertise and investment strategies adopted by the Manager and the external foreign investment manager. Lack of experience, knowledge and expertise, as well as poor execution of the investment strategy or general management of the Fund will jeopardise the unitholder s capital and returns. Particular security risk The performance of each individual security that the Fund invests in will affect the price of the units. The performance of each individual security is dependent on factors which include but is not limited to the management quality of the particular company and its growth potential, changes in consumer tastes and preferences, and conditions specific to 2
the industry of the security that the Fund has invested in. Valued collectively, the performance of individual security will cause the Fund s NAV to rise and fall accordingly. The Fund s NAV is also dependent on the weightage of the individual security within the Fund s portfolio. Interest rate risk This risk refers to the effect of the interest rate changes in the market value of the Fund s fixed income portfolio. In the event of rising interest rates, prices of debt securities tend to move inversely. Meanwhile, debt securities with longer maturities and lower coupon/profit rates are more sensitive to interest rate changes. Inflation risk This risk refers to the likelihood that the unitholders investments are not growing proportionately to the inflation rate, thus resulting in the unitholders decreasing purchasing power even though the investment in monetary terms may have increased. Loan financing risk In the case of an investor who obtains financing to invest in the Fund, the higher the margin of financing, the greater the potential for losses as well as gains. The financing cost may be higher than the gains derived (if any) from investing in the Fund. Risk of non-compliance This is the risk where the Manager and/or any other parties associated with the Fund (such as the external foreign investment manager and/or the trustee do 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, system failures or fraudulent acts by the Manager and/or the trustee. Whilst not every non-compliance will necessarily result in investment losses to the unitholders, there is still always a risk that the investments of the unitholders may be adversely affected, especially in situations where the Manager is forced to sell the investments of the Fund at a discount in order to resolve the noncompliance. Specific Risks Please refer to Section 5.2. of the information memorandum of the Fund for more details of each of the Fund s specific risks. Country concentration risk Investments in a single country may present greater opportunities and potential for capital growth but may also be subject to higher risks as they may be less diversified than a global or regional portfolio of investments. As such, the Fund is exposed and more sensitive to changes in the economic, social and/or political conditions of Vietnam. These changes may in turn, influence the growth and development of businesses and have an adverse impact on market sentiment. Emerging markets risk Emerging markets such as Vietnam are still at a relatively early stage of development. Investments of securities in emerging markets would generally entail a higher risk than investments in securities of developed markets because such investments are more susceptible to the risk that the government may discriminately impose or fail to enforce the laws, regulations, policies or contracts governing an investment. Such changes may have an adverse impact on the Fund s NAV and affect the unitholders capital and returns. Liquidity risk This risk refers to the ease with which a security can be sold at or near its fair value depending on the volume traded in the market. Currency risk The Fund is subjected to currency risk as a percentage of the value of the Fund has overseas investments or its assets denominated in the Vietnamese Dong. Any fluctuations in the foreign exchange rates between the Vietnamese Dong/Ringgit Malaysia will affect the value of the Fund s foreign investments denominated in Vietnamese Dong when converted into local currency and subsequently the value of unitholders investments. Credit/default risk This risk is intrinsic with the Fund s investments in fixed income securities and refers to the possibility that the issuer of a fixed income security is unable or not willing to pay/repay in a timely manner the coupon/profit payments due and/or repay/pay the principal respectively. This will cause a decline in the value of the defaulted fixed income security and subsequently, affect the Fund s NAV. Derivatives risk The Fund may from time to time invest in derivatives, which are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. Such assets, rates and indices may include shares, interest rates, currency exchange rates and stock indices. While the judicious use of these financial derivative instruments by the Manager can be beneficial, the risks involved in the investments of these financial derivative instruments may be higher than risks involved in traditional securities investments. Unitholders should be aware that there is a risk of higher volatility in the NAV of the Fund when derivatives are part of the Fund s underlying investment assets. 3
Derivatives valuation risk The Manager is relying on the issuer of the derivatives to conduct the daily valuation of the derivatives. Any error in valuation would result in an under or over valuation of the Fund s NAV. Qualified investors are advised to read the information memorandum of the Fund and understand the risks involved and, if necessary, consult your professional adviser 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. a) The following table describes the fees and charges that you may incur directly when you invest in the Fund: Sales charge Redemption charge Switching fee Transfer fee Sales charge for each distribution channel: Distribution channel Institutional Unit Trust Agents ( IUTAs ) 1 Tied agents 2 Direct investments through the Manager Sales charge Up to 2.5% of amount invested Up to 2.5% of amount invested Up to 2.5% of amount invested Qualified investors may be entitled to a lower sales charge through the sales and promotional campaigns from time to time. Alternatively, qualified investors may negotiate with their preferred distributor for lower charges, subject to the respective channel s decision. Redemption charge for each distribution channel: Distribution channel Within 6 months from date of investment Redemption charge (% of NAV per Unit) After 6 months but within 1 year from date of investment After 1 year from date of investment IUTAs 1 Up to 2% Up to 1% Nil Tied agents 2 Up to 2% Up to 1% Nil Direct investment through the Manager Up to 2% Up to 1% Nil The redemption charge shall be reimbursed back to the Fund. Not applicable as switching is not permitted for this Fund. Not applicable as transfer is not permitted for this Fund. Notes: 1 IUTA is an institution, organisation or corporation that is licensed by the SC for the purpose of carrying out dealing in securities restricted to unit trust funds and is duly registered with the Federation Investment Managers Malaysia to market and distribute unit trust funds. For a list of the Fund s participating IUTA, please contact the Customer Experience personnel of the Manager at 03-2733 2500 or 03-2733 2528. 2 Tied agents refer to the Manager s authorised agents. b) The following table describes the fees that you may incur indirectly when you invest in the Fund: Annual management fee Annual trustee fee Up to 3.5% per annum of the Fund s NAV, calculated on a daily basis. 0.08% 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 information memorandum of the Fund for more details of the fees and charges of the Fund. 8. How often are valuations available? VALUATIONS AND EXITING FROM INVESTMENT The weekly NAV per unit of the Fund is valued at the next valuation point after the request for purchase and redemption of the units is received by the Manager. The NAV per unit can be obtained from the unit trust column published in various major newspapers every Friday. Alternatively, qualified investors may contact the Customer Experience personnel at 03-2733 2500 or 2733 2528 for the NAV per unit. 9. How can I exit from this investment and what are the risks and costs involved? Cooling-off period A cooling-off right allows qualified 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* commencing from the date the Manager receives the application. 4
A cooling-off right is only given to qualified 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 (as stipulated under the Guidelines on Unit Trust Funds issued by the SC): 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 qualified 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 sales charge per unit originally imposed on the day the units were purchased. Payment will be made to the qualified investor who exercised the cooling-off right within 20 business days* from the redemption notice day (i.e. every Tuesday of the week with a cut-off time of 4.00 p.m.). For investments made through cheques, payment for the cooling-off right will only be made to the qualified investor after the cheque has been cleared. For more information on the above, please refer to Section 6.9. of the information memorandum of the Fund. Redemption of units The minimum redemption amount of units is 100,000 units for each request on any business day*. You must maintain a minimum balance of 100,000 units in the Fund. Otherwise, the Manager will automatically effect a full redemption. Cut-off time for redemption requests is 4.00 p.m. on every Tuesday (the Redemption Notice Day ). Redemption requests received after 4.00 p.m. on the Redemption Notice Day will only be processed on the next redemption cycle i.e. the following Tuesday. Payment will be made to you within 20 business days* from the Redemption Notice Day (i.e. every Tuesday of the week with a cut-off time of 4.00 p.m.). * business day refers to a day (other than Saturday, Sunday and public holidays) on which the Manager is open for business and Bursa Malaysia is open for trading. For more information on the above, please refer to Section 6.5. of the information memorandum of the Fund. CONTACT INFORMATION 10. 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 8, Menara HLA No.3 Jalan Kia Peng 50450 Kuala Lumpur Tel : 03-2733 2500 / 03-2733 2528 Fax : 03-2733 2541 / 03-7873 6088 / 03-7873 6091 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 Corporation (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 www.sc.com.my (e) via letter to : Investor Affairs & Complaints Department Securities Commission Malaysia No 3 Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur 5
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