INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA … · CHAPTER 2: RISK FACTORS 6 CHAPTER 3: FUND...

INFORMATION MEMORANDUM

IN RESPECT OF THE

KENANGA ISLAMIC BALANCED WHOLESALE FUND - SERIES 1

Manager: Kenanga Investors Berhad (353563-P)

Trustee: CIMB Islamic Trustee Berhad (167913-M)

This Information Memorandum is dated 20 November 2015

Investors are advised to read and understand the contents of this Information Memorandum and obtain professional advice before investing into the Fund.

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TABLE OF CONTENTS

Page No.

RESPONSIBILITY STATEMENTS AND STATEMENTS OF DISCLAIMER i

CORPORATE DIRECTORY ii

DEFINITION v

CHAPTER 1: KEY DATA 1

CHAPTER 2: RISK FACTORS 6

CHAPTER 3: FUND INFORMATION 8

3.1 Investment Objective 8

3.2 Investment Policy and Strategy 8

3.3 Asset Allocation 9

3.4 Benchmark 9

3.5 Risk Management 9

3.6 Permitted Investments 9

3.7 Investment Restrictions and Limits 10

3.8 Income Distribution and Distribution Options 10

3.9 Valuation of the Assets of the Fund 10

3.10 Shariah Investment Guidelines adopted by IBFIM, Cleansing Process and Zakat (tithe) for the Fund 11

CHAPTER 4: FEES, CHARGES AND EXPENSES 15

4.1 Sales Charge 15

4.2 Redemption Charge 15

4.3 Management Fee 15

4.4 Trustee Fee 15

4.5 Other Expenses Directly Related to the Fund 15

4.6 Reduction or Waiver of Fees 15

CHAPTER 5: TRANSACTION INFORMATION 16

5.1 Pricing Policy 16

5.2 Valuation Point of the Fund 16

5.3 Computation of NAV and how the Management Fee and Trustee Fee are calculated: 16

5.4 Subscription of Units 16

5.5 Redemption of Units 17

5.6 Periodic Reporting to Unit Holders 17

CHAPTER 6: MANAGEMENT COMPANY 18

6.1 The Manager 18

6.2 Functions of the Manager 18

6.3 Financial Position of the Manager 18

6.4 Board of Directors 19

6.5 The Investment Committee 21

6.6 The Management Team 21

6.7 The Investment Teams 23

6.8 Material Litigation 24

6.9 Conflict of Interest 24

6.10 Retirement and Removal of Manager 24

6.11 External Fund Manager 25

CHAPTER 7: TRUSTEE 28

7.1 Background of the Trustee 28

7.2 Financial position of the Trustee 28

7.3 Experience in Trustee Business 28

7.4 The Board of Directors 29

7.5 Key Personnel of the Trustee 29

7.6 Trustee’s Declaration 29

7.7 Duties and Responsibilities of the Trustee 29

7.8 Trustee’s Statement of Responsibility 30

7.9 Trustee’s Delegate 30

7.10 Material Litigation & Arbitration 30

7.11 Retirement and Removal of the Trustee 31

CHAPTER 8: SHARIAH ADVISER 32

8.1 IBFIM 32

8.2 General Information of IBFIM 32

8.3 Experience in Advisory and Services 32

8.4 Roles and Responsibilities of IBFIM as the Shariah Adviser 32

8.5 Profile of the Shariah Team 33

CHAPTER 9: RIGHTS AND LIABILITIES OF UNIT HOLDERS 35

9.1 Unit Holders’ Rights 35

9.2 Unit Holders’ Liabilities 35

CHAPTER 10: POWER TO CALL FOR UNIT HOLDERS’ MEETINGS 36

10.1 Meetings Directed by the Unit Holders 36

10.2 Meetings Summoned by the Trustee 36

10.3 Meetings Summoned by the Manager 36

10.4 Provisions Governing Unit Holders’ Meetings 36

10.5 Termination of the Fund 38

CHAPTER 11: OTHER INFORMATION 40

11.1 Unclaimed Moneys Policy 40

11.2 Anti-Money Laundering Policy, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 40

11.3 No Guarantee 40

11.4 Enquiries 40

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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. INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. IN CONSIDERING THE INVESTMENT, INVESTORS WHO ARE IN DOUBT AS TO THE ACTION TO BE TAKEN SHOULD CONSULT THEIR PROFESSIONAL ADVISERS IMMEDIATELY. Additional Statements Investors should note that they may seek recourse under the Capital Markets and Services Act 2007 for breaches of securities laws and regulations including any statement in the Information Memorandum that is false, misleading, or from which there is a material omission; or for any misleading or deceptive act in relation to the Information Memorandum or the conduct of any other person in relation to the Fund. The Fund will not be offered for sale in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to any U.S. Person(s). Accordingly, investors may be required to certify that they are not U.S. Person(s) before making an investment in the Fund. Kenanga Islamic Balanced Wholesale Fund - Series 1 has been certified as being Shariah-compliant by IBFIM, the appointed Shariah Adviser for the Fund.

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CORPORATE DIRECTORY

Manager Name: Kenanga Investors Berhad (353563-P)

Registered Office: 8th Floor, Kenanga International Jalan Sultan Ismail 50250 Kuala Lumpur

Business Address: Suite 12.02, 12th Floor Kenanga International Jalan Sultan Ismail 50250 Kuala Lumpur

Telephone number: 03-2057 3688

Facsimile number: 03-2057 3722

Customer Service Hotline:

1-800-88-3737

Email Address: [email protected]

Website: www.kenangainvestors.com.my Board of Directors Datuk Syed Ahmad Alwee Alsree (Chairman) Syed Zafilen Syed Alwee (Independent Director)

Peter John Rayner (Independent Director)

Imran Devindran bin Abdullah (Independent Director)

Dato‘ Bruce Kho Yaw Huat

Ismitz Matthew De Alwis

Investment Committee Dato’ Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member)

Peter John Rayner (Independent Member)

Imran Devindran bin Abdullah (Independent Member)


Company Secretary Name: Norliza Abd Samad (MAICSA 7011089)

Business Address: 9th Floor, Kenanga International Jalan Sultan Ismail 50250 Kuala Lumpur.


Facsimile number: 03-2161 4990 External Fund Manager Name: Kenanga Islamic Investors Berhad (Company No. 451957-D)

Registered Office: 8th Floor, Kenanga International Jalan Sultan Ismail 50250 Kuala Lumpur

Business Office: Suite 12.03, 12th Floor Kenanga International Jalan Sultan Ismail

http://www.kenangainvestors.com.my/

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50250 Kuala Lumpur



Trustee Name: CIMB Islamic Trustee Berhad (Company No. 167913-M)

Registered Office:

Level 13, Menara CIMB Jalan Stesen Sentral 2, Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia

Business Address: Level 21, Menara CIMB Jalan Stesen Sentral 2, Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia


Facsimile number: 03-2261 9889 Trustee’s Delegate Name: CIMB Islamic Bank Berhad (Company No. 371380 H)

Registered Office: Level 13, Menara CIMB Jalan Stesen Sentral 2, Kuala Lumpur Sentral 50470 Kuala Lumpur

Business Address Level 21, Menara CIMB Jalan Stesen Sentral 2, Kuala Lumpur Sentral 50470 Kuala Lumpur


Facsimile number: 03-2261 9892 Auditor for the Fund Name: Ernst & Young (AF: 0039)

Address: Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur



Tax Adviser for the Fund

Name: Ernst & Young Tax Consultants Sdn Bhd (179793-K)

Address: Level 23A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur



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Solicitor Name: Naqiz & Partners

Address: No. 42A, Lorong Dungun Damansara Heights 50490 Kuala Lumpur


Facsimile number: 03-2081 7886 Shariah Adviser Name: IBFIM (763075-W)

Registered Office:

No : 149A, 149B, 151B Persiaran Raja Muda Musa 42000 Port Klang Selangor Darul Ehsan

Business Address: 3rd Floor, Menara Takaful Malaysia Jalan Sultan Sulaiman 50000 Kuala Lumpur



Website: www.ibfim.com

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DEFINITION

the Act or CMSA Means the Capital Markets and Services Act 2007.

Business Day Means the day on which Bursa Malaysia is open for trading.

BNM Refers to Bank Negara Malaysia.

Bursa Malaysia Means the stock exchange managed or operated by Bursa Malaysia Securities Berhad (635998-W).

Deed Means the deed entered into between the Manager and the Trustee dated 18 June 2014 in respect of the Fund, including any supplemental deeds thereto.

development financial institution Means a development financial institution prescribed by and regulated under the Development Financial Institutions Act 2002.

External Fund Manager or KIIB

Refers to Kenanga Islamic Investors Berhad.

financial institution Means: (a) if the institution is in Malaysia :-

(i) licensed bank; (ii) licensed investment bank; (iii) licensed Islamic bank; or (iv) such institution that is approved or

authorised to provide scheduled business;

and

(b) if the institution is outside Malaysia, any institution that is licensed, registered, approved or authorised by the relevant banking regulator to provide financial services.

the Fund Means the Kenanga Islamic Balanced Wholesale

Fund - Series 1.

GST Refers to the tax levied on goods and services pursuant to the Goods and Services Tax Act 2014.

Guidelines Means the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework

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issued by the SC and any other relevant guidelines issued by the SC.

Information Memorandum Means this document, and includes any supplementary or replacement information memorandums.

Initial Offer Period

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.

Islamic deposits Means Islamic fixed deposits and/or Islamic current deposits.

MARC Refers to Malaysian Rating Corporation Berhad.

Manager or Management Company or KIB

Kenanga Investors Berhad (353563-P).

Management Fee Is a percentage of the NAV of the Fund that is paid to the Manager for managing the Fund.

medium to long-term A period of more than 3 years.

Net Asset Value or NAV

Means 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.

NAV per Unit Means 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.

Offer Price Means the price payable by an applicant for a Unit during the Initial Offer Period.

RAM Refers to RAM Rating Services Berhad.

RM or Ringgit Malaysia Means the lawful currency of Malaysia.

relevant laws 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.

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SACSC

Means the Shariah Advisory Council of the Securities Commission.

Securities Commission or SC The Securities Commission Malaysia.

Shariah Adviser or IBFIM

Means IBFIM or any Shariah adviser appointed for the Fund which includes its permitted assigns, successors in title and any new or replacement Shariah adviser.

Shariah Means Islamic Law comprising the whole body of rulings pertaining to human conducts derived from sources of the Shariah.

Shariah requirements

Is a phrase or expression which generally means making sure that any human conduct must not involve any elements which are prohibited by the Shariah and that in performing that conduct all the essential elements that make up the conduct must be present and each essential element must meet all the necessary conditions required by the Shariah for that element.

Sophisticated Qualified Investors 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 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 approved the SC; 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

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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 license or an executive director or a chief executive officer of a holder of a capital markets services license;

14. a licensed institution as defined in the Financial Services Act 2013;

15. an Islamic bank as defined in the Islamic Financial Services Act 2013;

16. an insurance company licensed under the Financial Services Act 2013;

17. a takaful operator registered under the Islamic Financial Services Act 2013;

18. a bank licensee or insurance licensee as defined under the Labuan Financial Services and Securities Act 2010;

19. an Islamic bank licensee or takaful licensee as defined under the Labuan Islamic Financial Services and Securities Act 2010; and

20. any other investor as may be defined by the SC from time to time.

Special Resolution 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.

sukuk

Means certificates of equal value which evidence undivided ownership or investment in the assets using Shariah principles and concepts endorsed by the SACSC.

Trustee

Means CIMB Islamic Trustee Berhad (167913-M).

Trustee Fee Is a percentage of the NAV of the Fund that is paid to the Trustee for acting as the trustee for the Fund.

Unit(s) Refers to a measurement of the right or interest of a Unit Holder in the Fund including a fraction of a Unit.

Unit Holder(s) Refers to Sophisticated Investors for the time being registered as the holder of Units in the Fund,

ix

including a jointholder.

U.S. (United States) Person(s) Means: (a) a U.S. citizen (including those who hold dual

citizenship or a greencard holder); (b) a U.S. resident alien for tax purposes; (c) a U.S. partnership; (d) a U.S. corporation; (e) any estate other than a non-U.S. estate; (f) any trust if:

(i) a court within the U.S. is able to exercise primary supervision over the administration of the trust; and

(ii) one or more U.S. Persons have the authority to control all substantial decisions of the trust;

(g) any other person that is not a non-U.S. Person; or

(h) any definition as may be prescribed under the Foreign Account Tax Compliance Act, as may be amended from time to time.

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CHAPTER 1: KEY DATA This section contains a summary of the salient information about the Fund.

Information about the Fund

Name Kenanga Islamic Balanced Wholesale Fund - Series 1.

Fund Type Growth & income.

Fund Category Balanced (Islamic).

Investment Objective

The Fund seeks to achieve returns over the medium to long-term through investments in Shariah-compliant equities and sukuk.

Investment Policy and Strategy

The Fund will invest in a balanced portfolio of Shariah-compliant equities and equity-related securities* and sukuk. * “Equity related securities” refers to warrants, convertible loan stocks, transferable subscription rights and depository receipts.

The investments in Shariah-compliant equities and equity-related securities are to achieve growth and the investments in sukuk are to generate income. Accordingly, the Fund may invest in equities and equities-related securities issued by a single issuer and/ or invest in sukuk issued by a single issuer. For investments in Shariah-compliant equities and sukuk, the fund manager adopts an actively managed strategy and a disciplined investment process whereby thorough research is undertaken, and Shariah-compliant equities and sukuk are analyzed utilizing a fundamental top down and bottom up investment process. Shariah-compliant equities are evaluated in a disciplined manner carefully balancing business outlook valuations, financial performance and management quality. The Fund will be active in the credit selection process and in managing the duration of the sukuk portfolio. The Fund seeks to achieve its objective by investing in sukuk with a minimum credit rating of “BBB3” or “P2” by RAM, or an equivalent credit rating by MARC. In respect of the sukuk issued by financial institutions, in the absence of a credit rating for the sukuk, the credit rating of the financial institution issuing the sukuk will be used instead. The holding period for sukuk depends on multiple factors, which include but not limited to, the type of the sukuk, and the strategy or purpose of acquiring the sukuk. Since the sukuk are acquired to generate income for the portfolio, the sukuk may be held up to a year or more. In very bearish market conditions, the Fund may place only in Islamic deposits with financial institutions and/or overnight Islamic money market instruments that may result in the Fund underperforming the benchmark.

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Asset Allocation

The Fund’s portfolio will be structured as follows:

40% - 60% of the Fund’s NAV in Shariah-compliant equities and equity-related securities;

40% - 60% of the Fund’s NAV in sukuk; and

at least 2% of the Fund’s NAV in Islamic liquid assets.

Principal Risks

- Profit rate risk - Liquidity risk - Stock & issuer risk - Reclassification of Shariah status risk - Credit risk - Concentration risk

Benchmark - 60% FTSE-Bursa Malaysia Emas Shariah Index (Source: www.bursamalaysia.com).

- 40% Maybank 12-month GIA rate (Source: www.maybank2u.com).

The risk profile of the Fund is not the same as the risk profile of the benchmark.

Investors’ Profile The Fund is suitable for investors who:- - prefer a portfolio of investments that complies with Shariah

requirements; - have medium risk tolerance; and - prefer a medium to long-term investment horizon.

Financial Year End The period of twelve (12) months ending on the 31st 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.

Price per Unit during the Initial Offer

Period

RM1.00.

Initial Offer Period The Initial Offer Period is one (1) day and falls on the date of this Information Memorandum.

Commencement Date

The Fund will commence on the Business Day after the end of the Initial Offer Period.

Transaction Information

Minimum Initial Investment

RM50,000 or such other amount as the Manager may prescribe from time to time.

Minimum Additional Investment

RM10,000 or such other amount as the Manager may prescribe from time to time.

Minimum Redemption Amount

10,000 Units or such other amount as the Manager may prescribe from time to time.

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Conditions for Redemption

Unit Holders may redeem their investments in the Fund on any Business Day by completing the prescribed redemption request form or such other manner as the Manager may accept and returning it to the Manager on any Business Day; the redemption request form is available at the office of the Manager. All such requests must be received by us before 11 a.m. on any Business Day; any requests received after 11 a.m. will be treated as having been received the following Business Day. Redemption proceeds are based on the NAV per Unit of the Fund at the close of a Business Day on the day the redemption request form is received by the Manager. Redemption proceeds will be paid within ten (10) days from the date the redemption request is deemed received. Note: Deemed received, is when the fax copy of the transaction form for redemption request is received at the Manager’s head office or the Manager’s branches.

Transfer Facility

Transfer facility is not available for this Fund.

Switching Facility Switching facility is not available for this Fund.

Fees and Charges

Expenses directly incurred by Unit Holders

Sales Charge

Up to 5.00% of the NAV per Unit of the Fund.

Redemption Charge

None.

Expenses indirectly incurred by Unit Holders.

Management Fee

Up to zero point three zero per centum (0.30%) per annum of the NAV of the Fund. The Management Fee is calculated on a daily basis and payable monthly.

Trustee Fee

Up to zero point zero five per centum (0.05%) per annum of the NAV of the Fund. The Trustee Fee is calculated on a daily basis and payable monthly.

Other Expenses

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, Shariah Adviser’s fees and other relevant professional fees, foreign custodial charges (if applicable), cost of distribution of quarterly and annual reports, tax certificates, statements and other notices to Unit Holders. In addition, there are fees and 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.

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Other Information

Reports Unit Holders will receive the following statements and reports in a financial year:

Confirmation of investment statements detailing the Unit Holder’s 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;

Monthly statements of account showing the balance of Unit Holders’ 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 which provides a brief overview of the Fund including key risk factors, investment outlook for the quarter, the Fund’s financial performance, credit risk, 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;

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, 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

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.

Distribution Policy Subject to the availability of income, the Fund will distribute income annually. Distribution of income is made from the realized gains and/ or realized income.

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

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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 distributions in cash or cheque in Ringgit Malaysia within 5 Business Days from the distribution declaration date and in any event, the pay-out shall be made no later than 14 Business Days from the distribution declaration date, unless the distribution proceeds is less than RM50.00. 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.

External Fund Manager

Kenanga Islamic Investors Berhad.

INVESTORS ARE ADVISED TO READ THE INFORMATION MEMORANDUM AND OBTAIN PROFESSIONAL ADVICE BEFORE SUBSCRIBING TO THE FUND. ALL FEES AND CHARGES PAYABLE TO THE MANAGER AND THE TRUSTEE ARE SUBJECT TO GST AS IMPOSED BY THE GOVERNMENT OR OTHER AUTHORITIES FROM TIME TO TIME. INVESTORS, WHO INTEND TO FINANCE AN INVESTMENT IN A SHARIAH-COMPLIANT FUND, OR FOR THAT MATTER ANY SHARIAH-COMPLIANT INVESTMENT, ARE ADVISED TO SEEK FOR ISLAMIC FINANCING TO FINANCE THEIR INVESTMENT.

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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 – As the investment management functions of the Fund has been delegated to the External Fund Manager, the performance of the Fund depends on the experience, expertise and ability of the External Fund Manager to generate returns. Lack of any of the above mentioned on the part of the External Fund Manager may adversely affect the performance of the Fund.

Inflation risk – Inflation 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 due to system failures or human error. 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 non-compliance with the rules is sufficiently serious and may affect the value of the Fund. This may occur, for instance, if the Manager inadvertently bought an instrument which is not permitted and thereafter having to sell that instrument at a loss to the Fund.

The specific risks affecting investments in this Fund may include but are not limited to:

Profit rate risk – This refers to the risk that the investment value of the Fund may generally be reduced due to a rise in future profit rates. Profit rate risk is particularly borne by profit-bearing assets, such as sukuk or Shariah-compliant money market instruments. In the event that a sukuk is held till maturity, the profit rate changes will not affect the yields of the sukuk. However, investors should be aware that whether the Fund will hold any sukuk until maturity will depend on actual and expected changes in profit rates. Sukuk prices generally moves inversely with profit rates, the prices will decline when profit rate rises or are expected to rise. The price volatility is normally greater for longer-tenure profit-bearing asset rather than shorter-tenure profit-bearing asset as they are more sensitive to profit rate changes. The Manager attempts to mitigate the profit rate risk of the Fund by managing the duration

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structure of the profit-bearing assets according to the Manager's view of the future profit rate trend. When profit rates are expected to increase, the Fund will switch to profit-bearing assets with shorter duration and are less sensitive to profit rate changes.

Liquidity risk – This risk refers to the possibility that the Shariah-compliant security of the Fund may be sold at an unfavourable price, as there may not be a buyer, or sufficient buyers, available for the Shariah-compliant security. This will result in a drop of the NAV of the Fund. This risk is mitigated through a diversified portfolio in terms of the type of Shariah-compliant securities and the tenure of the Shariah-compliant securities.

Stock & issuer risk – The investment in Shariah-compliant equities and equity-related securities and sukuk is subject to the risk of the company or issuer of the Shariah-compliant equities and equity-related securities and sukuk. Risks include but are not limited to competitive operating environments, changing industry conditions and poor management. For example, a company that has an incompetent management in term of experience and skill sets will contribute to the ineffectiveness of the operations of the company as indicated by metric such as revenue declining and loss making. This risk is mitigated through portfolio diversification by investing in various companies across different industries or sectors.

Credit risk – This risk refers to the possibility that a financial institution or corporate issuer of sukuk or money market instrument will not be able to meet the scheduled profit and/or principal payments. 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 sukuk or money market instrument that carry credit rating that is at least of investment grade i.e. a credit rating of at least BBB3 or P2 by RAM or its equivalent ratings by MARC.

Reclassification of Shariah status risk – The risk that the currently held Shariah-compliant securities in the portfolio of the Fund may be reclassified to be Shariah non-compliant upon review of the securities by the SACSC performed twice yearly. If this occurs, the Manager will take the necessary steps to dispose of such securities.

– Concentration Risk – The risk arises because the Fund may invest in equities and equities-related securities issued by a single issuer and/ or invests in sukuk issued by a single issuer. The Fund is subject to the risks linked to the particular issuer. The risk may be in the form of stock & issuer risk or credit risk, for example when the particular issuer has incompetent management or is not able to meet the scheduled profit and/ or principal payments. Therefore, should such risk happen, the Fund’s concentrated portfolio will cause the Fund’s overall value to decline to a greater degree than if the Fund was exposed to a less concentrated portfolio. The risk may be mitigated through the diversification (i.e. invest in more than one issuer) employed by the Manager in managing the Fund.

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CHAPTER 3: FUND INFORMATION

3.1 Investment Objective

The Fund seeks to achieve returns over the medium to long-term through investments in Shariah-compliant equities and sukuk. 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 will invest in a balanced portfolio of Shariah-compliant equities and equity-related securities* and sukuk.

* “Equity related securities” refers to warrants, convertible loan stocks, transferable subscription rights and depository receipts. The investments in Shariah-compliant equities and equity-related securities are to achieve growth and the investments in sukuk are to generate income. Accordingly, the Fund may invest in equities and equities-related securities issued by a single issuer and/ or invests in sukuk issued by a single issuer. For investments in Shariah-compliant equities and sukuk, the fund manager adopts an actively managed strategy and a disciplined investment process whereby thorough research is undertaken, and Shariah-compliant equities and sukuk are analyzed utilizing a fundamental top down and bottom up investment process. Shariah-compliant equities are evaluated in a disciplined manner carefully balancing business outlook valuations, financial performance and management quality. The Fund will be active in the credit selection process and in managing the duration of the sukuk portfolio. The Fund seeks to achieve its objective by investing in sukuk with a minimum credit rating of “BBB3” or “P2” by RAM, or an equivalent credit rating by MARC. In respect of the sukuk issued by financial institutions, in the absence of a credit rating for the sukuk, the credit rating of the financial institution issuing the sukuk will be used instead. The holding period for sukuk depends on multiple factors, which include but not limited to, the type of the sukuk, and the strategy or purpose of the acquiring the sukuk. Since the sukuk are acquired to generate income for the portfolio, the sukuk may be held up to a year or more. In very bearish market conditions, the Fund may place only in Islamic deposits with financial institutions and/or overnight Islamic money market instruments that may result in the Fund underperforming the benchmark.

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3.3 Asset Allocation

In seeking to achieve its investment objective, the Fund will invest in a diversified portfolio of Shariah-compliant securities as stated in Section 3.6, Permitted Investments; the Fund’s asset allocation will be as follows:

40% - 60% of the Fund’s NAV will be invested in Shariah-compliant equities and

equity-related securities;

40% - 60% of the Fund’s NAV will be invested in sukuk; and

at least 2% of the Fund’s NAV will be invested in Islamic liquid assets.

Specific risks associated with such investments are elaborated in Chapter 2, Risk Factors.

3.4 Benchmark

60% FTSE-Bursa Malaysia Emas Shariah Index (Source: www.bursamalaysia.com).

40% Maybank 12-month GIA rate (Source: www.maybank2u.com). The risk profile of the Fund is not the same as the risk profile of the benchmark. The composite benchmark and the performance of the Fund are available on Kenanga Investors Berhad’s website at www.kenangainvestors.com.my.

3.5 Risk Management

The External Fund Manager adopts an active management by conducting research on macro fundamentals, market valuations, sector outlook, company financial position and valuation, as well as the sukuk structure to mitigate investment risks.

3.6 Permitted Investments

The Fund may invest in the following investments which have been approved by the SACSC and/or the Shariah Adviser as permissible instruments that comply with Shariah requirements, subject further to the Guidelines and in accordance with the Fund’s objective:

1. Shariah-compliant securities of companies listed on Bursa Malaysia;

2. Sukuk;

3. Government investment issues, Islamic accepted bills, Bank Negara Malaysia monetary

notes-i, Cagamas sukuk and other obligations issued or guaranteed by the government

of Malaysia, Bank Negara Malaysia and other government-related agencies that comply

with Shariah requirements;

4. Shariah-compliant securities traded on eligible markets and/or approved stock

exchanges;

5. Placements of Islamic deposits with financial institutions;

6. Islamic money market instruments; or

7. Any other Shariah-compliant investments as may be agreed upon between the Manager

and the Trustee from time to time.


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3.7 Investment Restrictions and Limits

The permitted investments of the Fund as stated in Section 3.6 above are subject to the following restrictions:- 1. At least 2% of the Fund’s NAV shall be invested in Islamic liquid assets; 2. Investments in sukuk must be rated at least “BBB3” or “P2” by RAM, or an equivalent

credit rating by MARC. There are no restrictions imposed on sukuk issued or guaranteed by the Malaysian government or Bank Negara Malaysia.; and

3. All the Fund’s investments have to be Shariah-compliant.

3.8 Income Distribution and Distribution Options

Subject to the availability of income, the Fund will distribute income annually. Distribution of income is made from the realized gains and/ or realized income. The following distribution options are available for the Fund. Unit Holders may specify their distribution preferences: 1. Pay-out Option: Distribution proceeds paid directly to Unit Holders; or 2. Reinvestment Option: Unit Holders may opt for distribution proceeds to be reinvested as

additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date.

If Unit Holders do not indicate their preferred distribution option, any distributions will be automatically reinvested as additional Units of the Fund at the NAV per Unit on the Business Day following the distribution declaration date. For Unit Holders who select the pay-out option, the Manager shall endeavour to pay all distribution proceeds in cash or cheque in Ringgit Malaysia within 5 Business Days from the distribution declaration date and in any event, the pay-out shall be made no later than 14 Business Days from the distribution declaration date, unless the distribution proceeds is less than RM50.00. 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. Unlisted sukuk, Islamic commercial papers, Islamic medium-term notes and government

investment issues 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 sukuk differs from the market price by more than

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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. Shariah-compliant securities listed on any exchange will be valued at market price. However, if a valuation based on the market price does not represent the fair value of the Shariah-compliant securities, e.g. during abnormal market conditions or no market price is available, including in the event of a suspension in the quotation of the Shariah-compliant securities for a period exceeding fourteen (14) days, or such shorter period as agreed by the Trustee, then the Shariah-compliant securities should be valued at fair value, as determined in good faith by the Manager based on the methods or bases approved by the Trustee after appropriate consultation.

3. Islamic deposits placed with financial institutions will be valued with reference to the

principal value of such investments and profits accrued thereon for the relevant period. 4. Islamic money market instruments such as Islamic accepted bills (IAB), Islamic

negotiable instruments (INI), Islamic promissory notes, Bank Negara Malaysia monetary notes-i, Islamic negotiable certificate of deposits or other Islamic short-term financial instruments issued by Malaysian government or any other government-related agencies will be valued on a daily basis by reference to the principal value of such investments and the profits accrued thereon for the relevant period.

3.10 Shariah Investment Guidelines adopted by IBFIM, Cleansing Process and Zakat (tithe) for the Fund

1. Shariah Investment Guidelines The following matters are adopted by IBFIM in determining the Shariah status of investments of the Fund. INVESTMENT IN MALAYSIA Equity: Reference for investment in local securities is based on the list of Shariah-compliant securities issued by the SACSC twice yearly on the last Friday of May and November which is readily available at the Securities Commission’s website. However, for Initial Public Offering (“IPO”) companies that have yet to be determined the Shariah status by the SACSC, IBFIM adopts the following analysis as a temporary measure in determining its Shariah status until the SACSC releases the Shariah status of the respective companies.

Core Business Activities Analysis Companies whose activities are not contrary to the Shariah will be classified as Shariah-compliant securities. On the other hand, companies will be classified as Shariah non-compliant if they are involved in the following core business activities:

a) Conventional financial services;

b) Gambling and gaming;

c) Manufacture or sale of non-halal products or related products (e.g. pork and liquor);

d) Manufacture or sale of tobacco-based products or related products;

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e) Pornography;

f) Weaponry;

g) Entertainment activities that are not permitted by the Shariah; and

h) Other activities considered non-permissible according to the Shariah.

Mixed Business Activities Analysis

For companies with activities comprising both permissible and non-permissible elements, IBFIM applies two analyses before they can be classified as Shariah-compliant. The analyses are as follows: i) Qualitative Analysis

In this analysis, IBFIM will look into aspects of general public perception of the companies’ images, core businesses which are considered important and maslahah (beneficial) to the Muslim ummah and the country, the non-permissible elements are very small and involve matters like umum balwa (common plight and difficult to avoid), ‘uruf (custom) and rights of the non-Muslim community which are accepted by the Shariah.

ii) Quantitative Analysis

Companies which passed the above qualitative analysis will be further subjected to quantitative analysis. IBFIM deduces the following to ensure that they are lower than the Shariah tolerable benchmarks:

a) Business Activity Benchmarks

The 5% benchmark would be applicable to the following business activities:

Conventional banking;

Conventional insurance;

Gambling;

Liquor and liquor-related activities;

Pork and pork-related activities;

Non-halal food and beverages;

Shariah non-compliant entertainment;

Interest income from conventional accounts and instruments;

Tobacco and tobacco-related activities; and

Other activities considered non-compliant according to Shariah. The 20% benchmark would be applicable to the following activities:

Hotel and resort operations;

Share trading;

Stockbroking business;

Rental received from Shariah non-compliant activities; and

Other activities considered non-compliant according to Shariah.

The contribution of Shariah non-compliant activities to the overall revenue/sales/turnover/income and profit before tax of the companies will be calculated and compared against the relevant business activity benchmarks.

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b) Financial Ratio Benchmarks

The financial ratios applied are as follows:

Cash over Total Assets Cash will only include cash placed in conventional accounts and instruments,

whereas cash placed in Islamic accounts and instruments will be excluded from the calculation.

Debt over Total Assets Debt will only include interest-bearing debt whereas Islamic debt/financing

or sukuk will be excluded from the calculation. Both ratios, which are intended to measure riba and riba-based elements within a companies’ balance sheet, must be lower than 33%.

Should any of the above deductions fail to meet the benchmarks, IBFIM will not accord Shariah-compliant status for the companies.

Sukuk and Islamic Money Market Instruments: IBFIM will review any sukuk and/or Islamic money market instruments based on the data available at Bond Info Hub (www.bondinfo.bnm.gov.my) and Fully Automated System For Issuing/Tendering (https://fast.bnm.gov.my). 2. Cleansing Process for the Fund

a) Wrong Investment

This refers to Shariah non-compliant investment made by the Manager. The said investment will be disposed of or withdrawn with immediate effect. In the event of the investment resulted in gain (through capital gain and/or dividend or profit), the gain is to be channelled to baitulmal or any other charitable bodies as advised by the Shariah Adviser. If the disposal of the investment resulted in losses to the Fund, the losses are to be borne by the fund manager.

b) Reclassification of Shariah Status of the Fund’s Investment

Reclassification of Shariah status refers to security which is reclassified as Shariah non-compliant by the SACSC, the Shariah Adviser or the Shariah boards of the relevant Islamic indices. The said security will be disposed soonest practical, once the total amount of dividends is received and the market value held equals the original investment costs.

Any capital gains arising from the disposal of the Shariah non-compliant security

made at the time of the announcement can be kept by the Fund. However, any excess capital gains derived from the disposal after the announcement day at a market price that is higher than the closing price on the announcement day is to be channelled to baitulmal or any charitable bodies as advised by the Shariah Adviser.

http://www.bondinfo.bnm.gov.my/

https://fast.bnm.gov.my/

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3. Zakat (tithe) for the Fund The Fund does not pay zakat on behalf of Muslim individuals and Islamic legal entities who are Unit Holders of the Fund. Thus, Unit Holders are advised to pay zakat on their own.

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CHAPTER 4: FEES, CHARGES AND EXPENSES Expenses directly incurred by Unit Holders.

4.1 Sales Charge

Up to 5.00% of the NAV per Unit of the Fund.

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 three zero per centum (0.30%) per annum of the NAV of the Fund. The Management Fee is calculated on a daily basis and payable monthly. Please refer to the illustration under item 5.3 to see how the Management Fee is calculated.

4.4 Trustee Fee

Up to zero point zero five per centum (0.05%) per annum of the NAV of the Fund. The Trustee Fee is calculated on a daily basis and payable monthly. Please refer to the illustration under item 5.3 to see how the Trustee Fee is calculated.

4.5 Other Expenses Directly Related to the Fund

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, Shariah Adviser’s fees and other relevant professional fees, foreign custodial charges (if applicable), cost of distribution of quarterly and annual reports, tax certificates, statements and other notices to Unit Holders. In addition, there are fees and 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 or 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. ALL FEES AND CHARGES PAYABLE TO THE MANAGER AND THE TRUSTEE ARE SUBJECT TO GST AS IMPOSED BY THE GOVERNMENT OR OTHER AUTHORITIES FROM TIME TO TIME.

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CHAPTER 5: TRANSACTION INFORMATION

5.1 Pricing Policy

The Manager will adopt a single pricing policy when calculating your subscription for and redemption of Units which means that the selling price per Unit and the redemption price per Unit will be transacted and quoted on a single price i.e., the NAV per Unit of the Fund. The NAV per Unit of the Fund will be valued as at the next valuation point (at the end of each Business Day) on a forward pricing basis and will be made available on the following day. Unit Holders may obtain the NAV per Unit of the Fund by contacting the Manager directly. Unit Holders 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 10,001,000.00 Other Assets 5,000.00 Total Assets 10,006,000.00 Less: Liabilities 1,590.07 Gross NAV of the Fund 10,004,409.93 Less:

Management Fee - Calculated on a Daily Basis (0.30% per annum/365 days)

82.23

GST of 6% on Management Fee (RM82.23 x 6%) 4.93 Trustee Fee – Calculated on a Daily Basis (0.05% per annum/365 days)

13.70

GST of 6% on Trustee Fee (RM13.70 x 6%) 0.82

NAV of the Fund 10,004,308.25 Units In Circulation 10,004,000.00 NAV per Unit 1.000031

NAV per Unit (Rounded to 4 decimal points) 1.0000

5.4 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.

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5.5 Redemption of Units

Unit Holders may redeem their investments in the Fund on any Business Day by completing the prescribed redemption request form or such other manner as the Manager may accept and returning it to the Manager on any Business Day; the redemption request form is available at the office of the Manager. All such requests must be received by the Manager before 11 a.m. on any Business Day; any requests received after 11 a.m. will be treated as having been received the following Business Day. Redemption proceeds are based on the NAV per Unit of the Fund at the close of Business Day on the day the redemption request form is received by the Manager. Payments for redemption proceeds will be made within ten (10) days from the date at which a redemption request is deemed received. 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 the Unit Holder’s 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 showing the balance of Unit Holders’ 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;

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, 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, 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.

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CHAPTER 6: MANAGEMENT COMPANY

6.1 The Manager

Kenanga Investors Berhad has its principal place of business at Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 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 RM25,000,000.00 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 wholly-own subsidiary of K & N Kenanga Holdings Berhad.

The Manager is licensed and authorised to conduct business in distributing unit trust funds and fund management on behalf of corporate, institutional and individual clients under the CMSA. As at 30 September 2015, the Manager manages 25 unit trust funds, 1 private retirement scheme (consisting of 3 core funds and 1 non-core fund), 14 wholesale funds and other funds from government agencies, pension funds, insurance, corporate and individual clients with a total fund size of approximately RM6 billion. The Manager has the services of 90 experienced personnel (78 executives, and 12 non-executives).

6.2 Functions of the Manager

KIB is responsible for the day-to-day management, marketing and administration of the Fund, where its key functions include: a) Endeavouring that the Fund is managed in a sound and professional manner in

accordance with its investment objective, 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 2012 to 31 December 2014 are summarised below:

Year ended 31 Dec 2014

RM’000


RM’000


RM’000

Paid-up capital 18,465 18,465 6,765

Shareholders’ funds 38,004 35,583 11,036

Revenue 55,608 35,551 12,178

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Profit / (loss) before taxation 13,839 14,138 (1,914)

Profit / (loss) after taxation 9,671 12,847 (1,741)

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 2006. He was appointed as a Non-Executive Director of K&N Kenanga Holdings Berhad on 28 August 2009 and had, on 26 July 2011, re-designated 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 2008. 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 2008. 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. Peter John Rayner (Independent Director) Date of Appointment: 11 November 2010 Peter John Rayner was appointed a Director of Kenanga Investors Berhad (KIB) on 11 November 2010. He is currently also an Independent member of KIB’s Investment Committee and OnePRS - Audit Committee. He has over thirty (30) years successful experience in building and leading businesses in the fields of Asset Management, Private Equity and Chartered Accounting. He has held many senior positions including as Chief Executive Officer of Dresdner RCM Global Investors (later Allianz Global Investors), and Saltbush Funds Management in Australia. He was also an Executive Director of a private equity firm, Audant Capital, Head of Institutional

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Investment at Perpetual Investments, National Chief Financial Officer of a major Australian hospital group. He is also a past trustee of the Rookwood General Cemeteries Trust in Sydney. He currently consults as Head of Business Advisory & Valuations at Valuator in Sydney. A professional Director and business advisor, he has held a number public and private entity directorships. He holds a business degree (majoring in Accounting & Finance) from Charles Sturt University in Australia and is a Certified Practicing Accountant (FCPA Australia), and a Fellow of The Australian Institute of Company Directors (FAICD). Dato’ Bruce Kho Yaw Huat Date of Appointment: 29 June 2010 Dato’ Bruce Kho Yaw Huat was appointed as the Director of KIB on 29 June 2010. Dato’ 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. Imran Devindran bin Abdullah (Independent Director) Date of Appointment: 1 June 2015 Imran Devindran was appointed as the director of KIB on 1 June 2015. He is a partner of Messrs. Imran Shahareen & Co, advocates and solicitors in Batu Pahat, Johor, established in 2000 in partnership with his wife. He has accumulated over 25 years’ experience in criminal and civil litigation, with a portfolio that includes expertise in insurance, civil litigation and banking from his tenure as a legal assistant with some of the most established firms in Kuala Lumpur. Mr. Imran Devindran holds an Honours Bachelor of Law (1998) from the University of Buckingham, England and a Certificate of Legal Practice from the University of Malaya. He acquired his formative education in Malaysia, before progressing with his secondary schooling in Singapore and acquiring his A-Levels at Raffles Junior College, Singapore. He was admitted to the Malaysian Bar as an advocate and solicitor in August 1990 after successfully completing his chambering with M/S Rashid & Lee in Kuala Lumpur. Mr. Imran Devindran has represented major corporations such as Pan Global Insurance Berhad, Royal Insurance (M) Berhad, Malayan British Assurance, United Oriental Assurance Berhad (now known as Tune Insurance Berhad), Nusantara Worldwide Insurance (M) Sdn Bhd, Progressive Insurance Sdn Bhd and People’s Insurance Sdn Bhd in settlement negotiation, claims consultancy and developing strategies for litigation. He was also active in the North Johor Affairs Committee, from 2003 until 2008. In that capacity, he brought his superb communication skills and vigilant analytical approach to execute his responsibilities mediating and resolving complaints received by the Johor Bar, overseeing the welfare of lawyers and nurturing closer relations between the lawyers and the North Johor judiciary by organizing social interaction activities. When he’s not running his successful law firm, he keeps his mind and body active through games and sports, mainly badminton, football and improving his golfing skills. Ismitz Matthew De Alwis (Executive Director/Chief Executive Officer) Date of Appointment: 25 February 2015 Ismitz Matthew De Alwis is the Chief Executive Officer for Kenanga Investors Berhad (KIB). He is responsible for the overall asset and investment management business of KIB

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and its subsidiaries. He started his career as an Investment Analyst with a regional research and advisory firm, where he obtains vast regional exposure in Hong Kong, Philippines, Dubai and Singapore. He brings with him 23 years of experience, multiple expertise and several leadership roles in the fields of financial and investment management both regionally and locally. He joined Kenanga Investors Group in June 2014 upon the acquisition by Kenanga Investors Group of ING Investment management business in Malaysia, ING Funds Berhad where he was the Executive Director and country head. He has attended the Advanced Business Management Program (ABMP) by International Institute for Management Development (IMD), Lausanne, Switzerland and holds a MBA where he graduated with distinction. In addition, he has a Bachelor Degree (H) in Business Administration and holds two other professional qualifications from the Chartered Institute of Marketing UK (CIM UK), and is a Certified Financial Planner (CFP). Matthew also holds a Capital Markets Services Representative’s Licence (CMSRL) from the Securities Commission for fund management and investment advice. Mr De Alwis is currently on the board of the Federation of Investment Managers Malaysia (FIMM) and the Board of Governors of Financial Planning Association of Malaysia (FPAM).

6.5 The Investment Committee

The investment committee formulates, establishes and implements investment strategies and policies. The investment 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 investment 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:

Dato’ Bruce Kho Yaw Huat (Chairman)

Syed Zafilen Syed Alwee (Independent Member)

Imran Devindran bin Abdullah (Independent Member)

Peter John Rayner (Independent Member)


Please refer to the Board of Director’s section for more details on their profile.

6.6 The Management Team

Ismitz Matthew De Alwis Executive Director/Chief Executive Officer Ismitz Matthew De Alwis’s profile is as set out above under the Board of Directors section. Lee Sook Yee Chief Investment Officer Lee Sook Yee joined Kenanga Investors Bhd as Chief Investment Officer in March 2013, bringing with her more than fourteen (14) years of experience in local and regional equities investment. Prior to this, Sook Yee was Head of Equities at Meridian Asset Management, where she managed various local and regional funds. Before joining Meridian, Sook Yee

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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. Sook Yee graduated with a Bachelor of Science (First Class Honours) in Economics from the London School of Economics, United Kingdom (UK), and later obtained her Master of Philosophy (MPhil) in Economics from the University of Cambridge, UK. 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 2004. 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”), Australia and holds a Bachelor of Economics from La Trobe University, Melbourne, Australia. Mariam Veronica Abu Bakkar Seddek Senior Vice President, Institutional Business

Mariam Veronica joined KIB in July 2012 and assumed the role of the Senior Vice President, Institutional Business in March 2014 overseeing the institutional and corporate businesses of KIB. Mariam brings with her over 15 years of extensive experience in the capital market industry specialising in the areas of asset management, unit trust and audit. She was previously the Head of Compliance in one of the leading asset management companies in Malaysia. She had also gained numerous capital market experience and knowledge through her 8.5 years stint with the Securities Commission Malaysia. Prior to starting her career in Malaysia, Mariam had a one year working experience in the education sector in the United Kingdom. Prior to that she did part-time marketing for a shipping company in the United Kingdom. She was also selected to be the Cardiff University representative to Malaysia to promote Cardiff University as an education destination. Mariam is currently a holder of the Capital Market Services Representative License. She graduated with a Bachelor of Science in Accounting from University of Wales Cardiff, United Kingdom in 1998. Dr. Sahar Effendi bin Hj Daud Head, Compliance Dr. Sahar joined KIB on 3 November 2014 as the Head of Compliance. He started his career in 1997 with an international affiliated accounting firm before joining the Securities Commission in 2001. Whilst with the SC, he was attached to the Trust and Investment Management Department for about 2 years prior to joining the Investigation Department until his departure from the SC in October 2014. During his tenure with the Investigation Department, he was exposed to numerous high profile cases in various areas involving insider trading, market manipulation, illegal investment schemes, corporate fraud and forensic accounting as well as money laundering related offences. Dr. Sahar, a Chartered Accountant (Malaysia), holds a Bachelor of Accountancy (Hons) from Universiti Putra Malaysia, MBA (Management and Finance) and Doctor of Business

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Administration (Accounting: Financial Disclosure, Corporate Governance and Performance Measurement); both from Universiti Utara Malaysia. Dr. Sahar is also a member of the Malaysian Institute of Accountants (MIA), Chartered Tax Institute of Malaysia (CTIM), Association of Certified Fraud Examiner (ACFE) as well as the Certified Financial Investigator Alumni (CFIA). Dr Sahar is the designated person responsible for compliance matters for the Fund.

6.7 The Investment Teams

The Manager’s various investment teams meet informally on a daily basis with a formal meeting (the investment sub-committee) occurring fifteen (15) times a year (at times considered appropriate), to amongst other things, monitor the changing investment landscape and re-assess market conditions in terms of opportunity and risk. This activity seeks to ensure the investment strategies and policies of all funds managed by the Manager are consistently matched with the prevailing market environment and outlook. As the fund management functions for the Fund has been delegated to the External Fund Manager, the designated fund manager for the Fund is Ahmad Tajuddin Bin Yeop Aznan, the vice president of the External Fund Manager. Please refer to Ahmad Tajuddin’s particulars in Section 6.11.

The External Fund Manager will work closely with the investment team of the Manager. The External Fund Manager will actively manage the Fund in a disciplined fashion by investing in certain Islamic money instruments as dictated by the Fund’s investment process and the Fund mandate. This will include managing the maturities of the Shariah-compliant securities the Fund invests in, to amongst other things, target suitable returns. The External Fund Manager will however, remain cognizant of prevailing levels of risk including liquidity and other issues affecting capital preservation, because investing in the Fund is not the same as placing cash on deposit with a bank. The investment team of the Manager will work with the External Fund Manager by providing research input on salient economic issues and also on the appropriateness of the instruments to be included in the Fund portfolio. The Fund is also actively managed to accommodate certain cash flow requirements of its investors. Notwithstanding the direct involvement of the External Fund Manager in managing the Fund, the investment team members of the Manager will offer focused input, continually challenging the investment thesis of the External Fund Manager. This activity occurs via the investment sub-committee, where all investment decisions, views and portfolio outcomes are rigorously debated, scrutinized and tested with the intention of maximizing a risk / return outcome consistent with client requirements and / or fund mandate guidelines.

The Investment Team of the Manager is headed by:

Lee Sook Yee Chief Investment Officer Lee Sook Yee’s profile is set out in Section 6.6 – The Management Team

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6.8 Material Litigation

As at 30 September 2015, save as disclosed below, the Manager is not engaged in any litigation or arbitration proceedings, either as plaintiff or defendant which has a material effect on the financial position of the Manager, and the board of directors of the Manager is not aware of any proceedings pending or threatened, or of any fact likely to give rise to any such proceedings which might materially and adversely affect the position or business of the Manager. An ex-employee of the Manager who was dismissed by the Manager has filed an action under section 20(3) of the Industrial Relations Act 1967 to challenge his dismissal. The ex-employee contends that his dismissal was without just cause or excuse and is seeking to be reinstated to his former position without any loss of salary and benefits. The matter came up for further submissions on 31 January 2011 before the Industrial Court in Kuching. The learned chairman then adjourned the matter and informed the Manager that he will be handing down his written decision on the above matter in due course. As at 30 September 2015, the learned chairman has yet to deliver his decision on the case. The directors are of the opinion that the claim has no bearing on the performance of the Fund and that it has no adverse effect on the capability of the Manager in discharging its duties and responsibilities to the Unit Holders of the Fund.

6.9 Conflict of Interest

The directors and investment committee members should avoid conflicts of interest arising, or if conflicts arise, ensure that the Fund is not disadvantaged by the transaction concerned. Any transaction carried out for or on behalf of the Fund must be executed on terms that are the best available to the Fund and which are no less favourable to the Fund than arm’s length transactions between independent parties. In the event that any of the directors or investment committee members is directly or indirectly involved, he or she would have to abstain from being involved with any decision making process of the said transaction.

KIB has in place policies and procedures which regulates its employees’ securities dealings. Annual declaration of securities trading is required of all employees to ensure that there is no potential conflict of interest between the employees’ securities trading and the execution of the employees’ duties to the company and customers of the company.

6.10 Retirement and Removal of Manager

Manager’s Right to Retire The Manager shall have the power to retire in favour of some other corporation and as necessary under any relevant law upon giving to the Trustee six (6) months' notice in writing of its desire so to do, or such shorter period as the Manager and the Trustee may agree upon, and subject to the fulfilment of the following conditions:

the retiring Manager shall appoint such corporation by writing under the seal of the retiring Manager as the fund manager of the Fund in its stead and assign and transfer to such corporation all its rights and duties as fund manager of the Fund;

such corporation shall enter into such deed or deeds as the Trustee may consider to be necessary or desirable to secure the due performance of its duties as fund manager for the Fund; and

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upon the payment to the Trustee of all sums due from the retiring Manager to the Trustee at the date of such retirement, the retiring Manager shall be absolved and released from all further obligations under the Deed but without prejudice to the rights of the Trustee or any Unit Holder or other person in respect of any act or omission on the part of the retiring Manager prior to such retirement and the new fund manager may and shall thereafter exercise all the powers and enjoy all the rights and shall be subject to all the duties and obligations of the Manager as fully as though such new fund manager had been originally a party to the Deed.

Removal of the Manager The Manager may be removed by the Trustee by way of a Special Resolution passed at a Unit Holders’ meeting (details on Unit Holders’ meetings are provided in Chapter 10, Power to Call for Unit Holders’ Meetings) convened on the grounds that the Manager:

has failed or neglected to carry out their duties to the satisfaction of the Trustee and the Trustee considers that it would be in the interest of Unit Holders for the Trustee to do so after the Trustee has given notice to the Manager of its opinion and the reasons for that opinion, and has considered any representations made by the Manager in respect of that opinion, and after consultation with the relevant authorities and with the approval of the Unit Holders by way of a Special Resolution;

unless expressly directed otherwise by the relevant authorities, if the Manager is in breach of any of its obligations or duties under the Deed or the relevant laws, or has ceased to be eligible to be a fund manager under the relevant laws; or

the Manager has gone into liquidation, except for the purpose of amalgamation or reconstruction or some similar purpose, or has had a receiver appointed or has ceased to carry on business.

The Manager shall not accept any extra payment or benefit in relation to such removal. The Manager shall upon receipt of a written notice from the Trustee cease to be the fund manager of the Fund by the mere fact of the Manager’s receipt of the notice. The Trustee shall, at the same time, by writing appoint some other corporation to be the fund manager of the Fund; such corporation shall have entered into such deed or deeds as the Trustee may consider to be necessary or desirable to secure the due performance of its duties as fund manager for the Fund.

6.11 External Fund Manager

Kenanga Islamic Investors Berhad (KIIB) Background Information Kenanga Islamic Investors Berhad (“KIIB”) was incorporated as a public company in 1997 under the Companies Act 1965 as Kenanga Unit Trust Berhad (“KUTB”) to solely conduct a unit trust business in Malaysia. In 2009, pursuant to the rationalization and re-organization of the asset and unit trust management businesses of the K & N Kenanga Holdings Berhad group of companies (“Kenanga Group”), the business and assets of Kenanga Asset Management Sdn Bhd (“KAM”) a fund management company within the Kenanga Group was transferred to KUTB. KUTB subsequently applied for and was licensed as a fund manager under the Capital Markets and Services Act 2007. KUTB was renamed as Kenanga Fund Management Berhad (KFMB) following the completion of the rationalization and re-organization exercise.

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In November 2010, KFMB transferred its business and employees to Kenanga Investors Berhad (“KIB”) and subsequently changed its name to Kenanga Islamic Investors Berhad in August 2011. Pursuant to the Kenanga Group business plans for KIIB to become a fully operational Islamic fund management business, KIIB applied for and received its Islamic fund management licence from the Securities Commission in April 2012. KIIB is the Kenanga Group’s asset management arm focused on exclusively providing Shariah-compliant investment products to both domestic and regional markets. Effective 1 April 2013, KIIB is a wholly-owned subsidiary of KIB. As at 30 September 2015, the total asset under management of KIIB stands at approximately RM1.67 billion. Below are the profiles of the key personnel of KIIB. Shahariah Binti Shaharudin Chief Executive Officer/ Executive Director Shahariah Binti Shaharudin joined KIIB as the chief executive officer in March 2014. She was in KIB from April 2011 as the Head of Institutional Business. Shahariah brings with her twenty (20) years of experience in the financial services industry. She began her career in a local bank and has extensive experience in both retail and corporate banking. Subsequently she joined a stock broking company as Head of Dealing managing institutional trade. In 2006, she joined a local fund management company under Strategic Business and Market Development Division where her core responsibility is sourcing business and servicing both retail and wholesale clients ranging from unit trust, corporate and government agencies to insurance companies. She graduated with Bachelor of Arts Degree in Business Studies from Knox College, Illinois and Master of Arts in Economics from University of Illinois, Springfield, USA. She holds the Capital Markets Services Representative’s Licence. Ahmad Tajuddin Bin Yeop Aznan Vice President, Investment Ahmad Tajuddin has 6 years of experience in the capital market industry with both exposure in equity and fixed income instruments. Previously, he was a Senior Manager of Global Sukuk Market at RHB Research Institute Sdn Bhd. Prior to that, he was with CIMB Principal Islamic Asset Management as a Co-Portfolio Manager & Lead Credit Analyst. At CIMB Principal Islamic Asset Management, he had the exposure in managing Global Sukuk Portfolios with total AUM of more than USD500 million covering the Middle East, Asian and Turkish credits and currencies (USD,AED,MYR and CNY). He began his career in 2009 with CIMB Private Equity & Venture Capital SdnBhd as investment analyst. Subsequently, he joined Malaysia Rating Corporation Berhad as a Rating Analyst covering local sukuk market. He is a member of the Association of Chartered Certified Accountants, United Kingdom. He also holds a BSc. (Hons.) in Applied Accounting from Oxford Brookes University and is a CMSRL holder. Mohd Ezani Bin Abu Yazid Senior Portfolio Manager Mohd Ezani bin Abu Yazid joined Kenanga Investors Berhad as Senior Manager – Fixed Income in March 2011, bringing with him more than twenty two (22) years of experience in

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money market and treasury products. Prior to this, Mohd Ezani was Deputy Head of Market Operations at RHB Investment Management (“RHBIM”), where he managed cash and money market portfolios. At RHBIM, he also handled the liquidity management of other RHBIM’s funds, fixed income, foreign exchange and equity trades executions. Before joining RHBIM, Ezani was Senior Executive at SBB Asset Management and BHLB Asset Management where he handles cash and money market funds. He was also a Senior Officer, Treasury Division at Alliance Finance Berhad and Bank Utama (M) Berhad before joining the fund management industry. Mohd Ezani graduated with a Diploma in AgriBusiness from the University Putra Malaysia (UPM) in 1993. He holds a Capital Markets Services Representative’s Licence (CMSRL). Roles and Duties of the External Fund Manager or KIIB The Manager has delegated the investment management functions for the Fund to KIIB, an Islamic fund management company. KIIB shall manage, realize, invest, reinvest or deal with the Fund according to the objective of the Fund and requirements of the Shariah. KIIB will at all times act with bona fides and in the best interests and for the benefit of the Fund and shall ensure that all investment transactions will be effected in accordance with the objective of the Fund and requirements of the Shariah.

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CHAPTER 7: TRUSTEE

7.1 Background of the Trustee

CIMB Islamic Trustee Berhad was incorporated on 19 January 1988 and registered as a trust company under the Trust Companies Act, 1949 and having its registered office at Level 13, Menara CIMB, Jalan Stesen Sentral 2, Kuala Lumpur Sentral, 50470 Kuala Lumpur, Malaysia. The Trustee is qualified to act as a trustee for collective investment schemes approved under the Capital Markets and Services Act 2007. CIMB Islamic Trustee Berhad has an authorised capital of RM5,000,000 divided into 500,000 ordinary shares of RM10 each of which the total issued capital is RM2,000,000 divided into 200,000 ordinary shares of RM10 each, and the total paid up capital is RM1,000,000 divided into 200,000 ordinary shares of RM10 each and partly paid-up at RM5 each.

7.2 Financial position of the Trustee The audited financial results of the Trustee for the financial years ended 31 December 2012 to 31 December 2014 and the unaudited financial results of the Trustee for the financial period ended 30 September 2015 are summarised below:

Financial period ended

Financial year ended

30 September 2015

(unaudited) RM’000

31 December 2014

RM’000

31 December 2013

RM’000

31 December 2012

RM’000

Paid-up capital 1,000 1,000 1,000 1,000

Shareholders’ funds 5,743 5,018 6,573 6,311

Turnover* 2,619 3,403 2,788 4,000

Pre-tax profit 845 1,312 370 1,386

After tax profit 724 945 263 993

*Only Shariah-compliant income is recognised since the entity's conversion to Islamic in 2012.

7.3 Experience in Trustee Business As at 30 September 2015, CIMB Islamic Trustee Berhad acts as trustee to one (1) real estate investment trust funds, twenty four (24) unit trust funds, nineteen (19) wholesale funds and one (1) private retirement scheme (consisting of three (3) funds) and has more than twenty-five (25) years of experience as a trustee to unit trust funds. In addition to overseeing these funds, CIMB Islamic Trustee Berhad also acts as trustee to private debt securities issues such as bonds and notes. Other than being the administrator of deceased’s estates, executor of wills, trustee for minors or incapacitated persons, CIMB Islamic Trustee also acts as trustee for public, charitable, staff retirement, and pension/ gratuity fund scheme, custodian trustee for associations, clubs and others.

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CIMB Islamic Trustee Berhad is supported by nineteen (19) staffs, constituting fifteen (15) executives and four (4) non-executives as at 30 September 2015.

7.4 The Board of Directors The following table sets out information regarding the Board of Directors of the Trustee:

Name Directorship

Zahardin bin Omardin Independent Director and Chairman, Non-Executive

Mohamad Safri Bin Shahul Hamid Non-Independent Director, Non-Executive

Liew Pik Yoong Non-Independent Director, Executive

7.5 Key Personnel of the Trustee Liew Pik Yoong (Head/Director, Group Trustee Services) Ms. Liew is responsible for the overall business direction and management of CIMB Trustee Services. In addition to holding the position as Head/Director of Group Trustee Services, she is also Head/Director of Securities Services in CIMB Group. She joined CIMB Group in 2011 and has over 26 years’ experience in the financial market and securities industry. Prior to CIMB Group, she held various positions as Head/Director of Investors & Intermediaries, Head of Securities Services and Vice President/Head of Department with local foreign banks mainly responsible for Custody Services, Nominees, and Fund Services and Share Margin products. She was also previously the Chief Operating Officer with a local foreign trustee company. She has a degree from the Institute of Chartered Secretaries & Administrators (ICSA). Lee Kooi Yoke (Chief Operating Officer) Ms. Lee holds a Bachelor Degree in Administration (Finance) from Griffith University, Australia and she is a member of both the Certified Practising Accountants (CPA) Australia and the Malaysia Institute of Accountant and Financial Planning Association Malaysia. She has more than 22 years of working experience in the financial industry. Prior to her current appointment, she headed the operations of a unit trust management company responsible for transfer agency, investment back-office, system and projects and retail and corporate agency operations. Also, prior to this position, she headed the investment operations of an established insurance company in Malaysia and Singapore. 7.6 Trustee’s Declaration The Trustee is independent of the Manager. The Trustee will carry out transactions on an arm’s length basis and on terms which are best available for the Fund, as well as act at all times in the best interest of the Fund’s Unit Holders. The Trustee also has adequate procedures and processes in place to prevent or control conflicts of interest. 7.7 Duties and Responsibilities of the Trustee

The Trustee’s functions, duties and responsibilities are set out in the Deed. The general function, duties and responsibility of the Trustee include, but are not limited to, the following:

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a) Take into custody the investments of the Fund and hold the investments in trust for the Unit Holders;

b) Ensure that the Manager operates and administers the Fund in accordance with the provisions of the Deed, the Guidelines and acceptable business practice within the fund management industry;

c) As soon as practicable notify the SC of any irregularity or breach of the provisions of the Deed, the Guidelines and any other matters which in the Trustee's opinions may indicate that the interests of Unit Holders are not served;

d) Exercise reasonable diligence in carrying out its functions and duties, in actively monitoring the operations and management of the Fund by the Manager to safeguard the interests of Unit Holders;

e) Maintain, or cause the Manager to maintain, proper accounting records and other records as are necessary to enable a complete and accurate view of the Fund to be formed and to ensure that the Fund is operated and managed in accordance with the Deed, Information Memorandum, the Guidelines and securities law; and

f) Require that the accounts be audited at least annually.

The Trustee has covenanted in the Deed that it will exercise all due diligence and vigilance in carrying out its functions and duties, and in safeguarding the rights and interests of Unit Holders. 7.8 Trustee’s Statement of Responsibility The Trustee has given its willingness to assume the position as Trustee of the Fund and all the obligations in accordance with the Deed, all relevant laws and rules of law. 7.9 Trustee’s Delegate CIMB Islamic Trustee Berhad has appointed CIMB Islamic Bank Berhad (CIMB Islamic) as the Custodian of the Fund's assets. CIMB Islamic custodial services come under Securities Services (SS), a unit of Transaction Banking under the Wholesale Banking Division of CIMB Group. CIMB Islamic SS provides full-fledged custodial services, typically clearing and custody services covering all types of investment assets and classes, to a cross section of investors and intermediaries client base, both locally and overseas. For the local Ringgit assets, the assets are held through its wholly owned nominee subsidiary "CIMB Islamic Nominees (Tempatan) Sdn Bhd". For foreign non-Ringgit assets, CIMB Islamic SS appoints global custodian as its agent bank to clear, settle and safekeep on its behalf and to its order. The appointed global custodians are Citibank N. A, Singapore and BNP Paribas Securities Services, Singapore.

7.10 Material Litigation & Arbitration

As at 30 September 2015, the Trustee is not engaged in any material litigation and arbitration, including those pending or threatened, and is not aware of any facts likely to give rise to any proceedings which might materially affect the business and financial position of the Trustee or any of its delegates.

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Trustee’s Obligation

The Trustee’s obligation in respect of monies paid by an investor for the application of units arises when the monies are received in the relevant account of the Trustee for the Fund and the Trustee’s obligation is discharged once it has paid the redemption amount to the Manager.

7.11 Retirement and Removal of the Trustee

Trustee’s Right to Retire The Trustee may retire upon the expiration of six (6) months' notice to the Manager of its desire to do so, or such shorter period as the Manager and the Trustee shall agree, and may be by deed appoint in its stead a new trustee. The Trustee shall on retirement vest or transfer the assets of the Fund or cause the assets of the Fund to be vested or transferred in or to such new trustee and shall deliver to such new trustee all books, documents, records and other property whatsoever relating to the Fund and in the Trustee’s possession. The costs and expenses incidental thereto shall be paid from the Fund. Removal of the Trustee

The Manager is obliged to give Unit Holders notice in writing to consider the removal of the Trustee if the Trustee fails or neglects to carry out its duties as stipulated in the Deed and under the relevant laws. The Manager shall take all reasonable steps to replace the Trustee as soon as practicable after becoming aware that:

the Trustee has ceased to exist;

the Trustee has not been validly appointed;

the Trustee is not eligible to be appointed or act as a trustee under any relevant law;

the Trustee has failed or refused to act as trustee in accordance with the provisions and covenants of the Deed and any relevant law;

a receiver has been appointed over the whole or substantial part of the assets or undertaking of the Trustee and has not ceased to act under the appointment, or a petition is presented for the winding up of the Trustee (other than for the purpose of and followed by a reconstruction, unless during or following such reconstruction the Trustee becomes or is declared to be insolvent); or

the Trustee is under investigation for conduct that contravenes the Trust Companies Act 1949, the Trustee Act 1949, the Companies Act 1965 or any relevant law.

The Trustee may be removed and another trustee may be appointed as the replacement trustee of the Fund by Special Resolution of the Unit Holders at a duly convened meeting of which notice has been given to the Unit Holders in accordance with the Deed (details on Unit Holders’ meetings are provided in Chapter 10, Power to Call for Unit Holders’ Meetings).

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8.1 IBFIM

IBFIM has been appointed as the Shariah adviser for the Fund. IBFIM is scheduled to meet the Manager and/or the investment committee of the Fund every quarter, where IBFIM will advise the Manager on the selection of investment tools to be adopted. IBFIM will also counsel the mechanism of the operations of the Fund’s activities to ensure that the operations of the Fund comply with Shariah requirements.

8.2 General Information of IBFIM

IBFIM was incorporated as a company limited by guarantee and not having share capital in Malaysia under the Companies Act, 1965 on 15 February 2007.

8.3 Experience in Advisory and Services

IBFIM is registered with the SC to act as a Shariah adviser for Shariah-compliant collective investment schemes and sukuk issuance. IBFIM is also involved in numerous Shariah-compliant private mandates as well as the Shariah Adviser for Islamic real estate investment trusts and Islamic asset management houses. As at 30 September 2015, IBFIM has total staff strength of 86 employees, and has 81 funds under its supervision.

8.4 Roles and Responsibilities of IBFIM as the Shariah Adviser

As the Shariah adviser, the role of IBFIM is to ensure that the operations and investments of the Fund are in compliance with Shariah requirements. The Shariah Adviser reviews the Fund’s investments on a monthly basis to ensure compliance with Shariah requirements at all times and meets with the Manager on a quarterly basis to review and advise on the Fund’s compliance with Shariah requirements. The final responsibility for ensuring Shariah compliance of the Fund with Shariah requirements in all relevant aspects rests solely with the Manager.

The roles of IBFIM as the Shariah adviser are; 1. ensuring that the Fund is managed and administered in accordance with the Shariah

principles;

2. providing expertise and guidance for the Fund in all matters relating to Shariah principles, including on the Fund’s Deed and Information Memorandum, its structure and investment process, and other operational and administrative matters;

3. consulting the SC who may consult the SACSC where there is any ambiguity or

uncertainty as to an investment, instrument, system, procedure and/or process;

CHAPTER 8: SHARIAH ADVISER

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4. scrutinising the Fund’s compliance report as provided by the compliance officer, transaction report provided by or duly approved by the Trustee and any other report deemed necessary for the purpose of ensuring that the Fund’s investments are in line with the Shariah principles;

5. preparing a report to be included in the Fund’s quarterly and annual report certifying

whether the Fund has been managed and administered in accordance with the Shariah principles;

6. ensuring that the Fund comply, with any guideline, ruling or decision issued by the SC,

with regard to Shariah matters;

7. vetting and advising on the promotional materials of the Fund; and

8. assisting and attending to any ad-hoc meeting called by the SC and/or any other relevant authority.

8.5 Profile of the Shariah Team

IBFIM’s Shariah team consists of the following personnel; Dato’ Mohd Bakir Bin Haji Mansor (Distinguished Shariah Advisor) Dato’ Mohd Bakir is a member of the Shariah Advisory Body of Syarikat Takaful Malaysia Berhad and sits on the Shariah Panel Committee of Amanah Ikhtiar Malaysia. He is also the Chairman of the Shariah Advisory Committee of BIMB Securities Sdn. Bhd. Prior to joining IBFIM, Dato’ Mohd Bakir was the Shariah Coordinator at Bank Islam Malaysia Berhad, from 1984 to 2001. Previously, he served at the National Council for Islamic Religious Affairs in the Prime Minister's Department for 10 years from 1971. He was also a Chief Assistant Director at the Islamic Research Centre for 4 years from 1981. He holds a Shahadah Ulya from Kolej Islam Malaya. Dato’ Mohd Bakir was awarded “Anugerah Maulidur Rasul 1434H/2013M” by the

government of Malaysia for his contributions in promoting the Islamic finance industry.

Mohd Nasir Bin Ismail (Shariah Advisor) Mohd Nasir, IFP, a holder of the Islamic Financial Planner (IFP) certification, has been with IBFIM since its incorporation in 2001. He is responsible in providing Shariah input on the advisory, consultancy and research functions with regard to Islamic banking, takaful, Islamic capital market and Shariah-compliant unit trust funds. Prior to joining IBFIM, he was a faculty member of a private higher learning institution specializing in Islamic studies, Institut Pengajian Ilmu-Ilmu Islam, Kelantan. He graduated with a Bachelor of Shariah (Honours) Degree from the University of Malaya. He is also a designated person responsible for Shariah matters related to the Shariah-compliant funds management related activities. Ahmad Zakirullah Bin Mohamed Shaarani (Shariah Advisor) Ahmad Zakirullah joined IBFIM in February 2008. He is responsible in providing Shariah input on the advisory, consultancy and research functions with regard to Islamic banking,

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takaful, Islamic capital market and Shariah-compliant unit trust funds. Prior to joining IBFIM, he served at University Sains Islam Malaysia before joining PTPL College. He obtained his Diploma of Shariah Islamiyyah (Honours) from Higher Institute of Islamic and Arabic Language (MADIWA), Perak; Bachelor of Shariah Islamiyyah (Honours) Degree from Al-Azhar University, Egypt; and Master’s Degree (with Honours) of Islamic Revealed Knowledge and Heritage (Fiqh and Usul al-Fiqh) from the International Islamic University Malaysia. He is also a designated person responsible for Shariah matters related to the Shariah-compliant funds management related activities.

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CHAPTER 9: RIGHTS AND LIABILITIES OF UNIT HOLDERS

9.1 Unit Holders’ Rights

As a Unit Holder of the Fund, and subject to the provisions of the Deed, you have the right:

1. to receive distributions, if any, from the Fund;

2. to participate in any increase in the NAV of Units of the Fund;

3. to call for Unit Holders’ meetings and to vote for the removal of the Trustee or the Manager through a Special Resolution;

4. to receive monthly statements, quarterly and annual reports on the Fund; and

5. to exercise such other rights and privileges as provided for in the Deed.

No Unit Holder shall be entitled to require the transfer to him of any of the assets of the Fund or be entitled to interfere with or question the exercise by the Trustee, or the Manager on its behalf, of the rights of the Trustee as the registered owner of such assets.

9.2 Unit Holders’ Liabilities

As a Unit Holder of the Fund, and subject to the provisions of the Deed, Unit Holders’ liabilities would be limited to the following:

No Unit Holder shall by reason of any provision of the Deed and the relationship created hereby between the Manager, the Trustee and the Unit Holders, or in any event whatsoever, be liable for any amount in excess of the purchase price paid for the Units as determined in accordance with the Deed at the time the Units were purchased and any charges payable in relation thereto. A Unit Holder shall not be under any obligation to indemnify the Manager and/or the Trustee in the event that the liabilities incurred by the Manager and/or the Trustee in the name of or on behalf of the Fund pursuant to and/or in the performance of the provisions of the Deed exceed the value of the assets of the Fund, and any right of indemnity of the Manager and/or the Trustee shall be limited to recourse to the Fund.

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CHAPTER 10: POWER TO CALL FOR UNIT HOLDERS’

MEETINGS

10.1 Meetings Directed by the Unit Holders

Unit Holders may call for a meeting for any purpose. Unless otherwise required or allowed by the relevant laws, the Manager shall, within twenty-one (21) days of receiving a direction from not less than fifty (50) or one-tenth (1/10) of all the Unit Holders, whichever is less, at the registered office of the Manager, summon a meeting of the Unit Holders by: (a) sending by post/facsimile at least fourteen (14) days before the date of the proposed

meeting a notice of the proposed meeting to all the Unit Holders; and (b) specifying in the notice the place and time of the meeting and the terms of the

resolutions to be proposed at the meeting.

10.2 Meetings Summoned by the Trustee

The Trustee may summon a meeting of Unit Holders for any purpose whatsoever by: (a) giving at least fourteen (14) days written notice of the meeting to Unit Holders; and (b) specifying in the notice the place and time of the meeting and the terms of the


10.3 Meetings Summoned by the Manager

The Manager may summon a meeting of Unit Holders for any purpose whatsoever by: (a) giving at least fourteen (14) days written notice of the meeting to Unit Holders; and (b) specifying in the notice the place and time of the meeting and the terms of the


10.4 Provisions Governing Unit Holders’ Meetings

Quorum The quorum required for a meeting of the Unit Holders shall be five (5) Unit Holders, whether present in person or by proxy, provided that if the Fund has five (5) or less Unit Holders, the quorum required for a meeting of the Unit Holders of the Fund shall be two (2) Unit Holders, whether present in person or by proxy; if the meeting has been convened for the purpose of voting on a Special Resolution, the Unit Holders present in person or by proxy must hold in aggregate at least twenty five per centum (25%) of the Units in circulation at the time of the meeting.

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If within one (1) hour from the time appointed for the meeting a quorum is not present, the meeting if convened upon the request of Unit Holders shall be dissolved. In any other case, it shall stand adjourned to such day and time not being less than seven (7) days thereafter and to such place as may be appointed by the chairman; at such adjourned meeting, the Unit Holders present in person or by proxy shall be the quorum for the transaction of business including the passing of Special Resolutions if the quorum prescribed by the Deed is not present after one (1) hour from the time appointed for the adjourned meeting. Resolutions passed at a meeting of Unit Holders bind all Unit Holders whether or not they were present at the meeting at which the resolutions were passed. No objection may be made as to any vote cast unless such objection is made at the meeting. Voting by Proxy Every instrument of proxy whether for a specific meeting or otherwise shall, as nearly as circumstances admit, be in the following form or in such other form as the Manager may accept:

I/We, ..................................., being a Unit Holder of ......... Units in the ..................... Fund, hereby appoint ............................. or failing him/her, the chairman of the meeting, as my/our proxy to vote for me/us and on my/our behalf at the Unit Holders' meeting to be held on the ........ day of ................ 20.... and at any adjournment thereof. My said proxy has my instructions to vote:[ * Delete as applicable] (a)* in favour of the resolutions as stated in the notice of meeting; (b)* against the resolutions as stated in the notice of meeting; (c)* as he/she deems fit in respect of the resolutions as stated in the notice of meeting. SIGNED by the said .................... on the .......... day of ........................ 20.... in the presence of: (Witness's signature) (Signature of Unit Holder)

The instrument appointing a proxy must be duly stamped, if required, and deposited at the office of the Manager not less than forty-eight (48) hours before the time appointed for the meeting or adjourned meeting as the case may be at which the person named in such instrument proposes to vote. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or the power of attorney or other authority under which the proxy was signed or the sale of Units in respect of which the proxy was given provided that no intimation in writing of such death, insanity, revocation or sale shall have been received at the place so appointed for the deposit of proxies or if no such place is appointed at the registered office of the Manager before the commencement of the meeting or adjourned meeting at which the proxy is used. Chairman of the Meeting The meeting will be chaired if the meeting was convened at the instance of the Unit Holders or the Trustee, by a person appointed by the Unit Holders present at the meeting or, where no such appointment is made, a nominee of the Trustee; or if the meeting was convened at the instance of the Manager, by a person appointed by the Manager. The decision of the chairman of the meeting on any matter shall be final.

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10.5 Termination of the Fund

The Fund may be terminated or wound up should the following events occur:

A Special Resolution is passed at a Unit Holders’ meeting to terminate or wind up the Fund; and

Such other events and situations as provided in the Deed.

Upon the termination of the Fund, the Trustee shall:

a) sell all the assets of the Fund then remaining in its hands and pay out of the Fund any

liabilities of the Fund; such sale and payment shall be carried out and completed in such manner and within such period as the Trustee considers to be in the best interests of the Unit Holders; and

b) from time to time distribute to the Unit Holders, in proportion to the number of Units held

by them respectively:

i) the net cash proceeds available for the purpose of such distribution and derived from the sale of the investments and assets of the Fund less any payments for liabilities of the Fund; and

ii) any available cash produce;

provided always that the Trustee shall not be bound, except in the case of final distribution, to distribute any of the moneys for the time being in his hands the amount of which is insufficient for payment to the Unit Holders of fifty (50) sen in respect of each Unit and provided also that the Trustee shall be entitled to retain out of any such moneys in his hands full provision for all costs, charges, taxes, expenses, claims and demands incurred, made or anticipated by the Trustee in connection with or arising out of the winding-up of the Fund and, out of the moneys so retained, to be indemnified against any such costs, charges, taxes, expenses, claims and demands; each such distribution shall be made only against the production of such evidence as the Trustee may require of the title of the Unit Holder relating to the Units in respect of which the distribution is made. In the event of the Fund is terminated, the Trustee shall be at liberty to call upon the Manager to grant the Trustee, and the Manager shall so grant, a full and complete release from the Deed and the Manager shall indemnify the Trustee against any claims arising out of the Trustee's execution of the Deed provided always that such claims have not been caused by any failure on the part of the Trustee to exercise the degree of care and diligence required of a trustee as contemplated by the Deed and all relevant laws.

Where the termination of the Fund and the winding-up of the Fund have been occasioned by any of the events set out herein: a) if the Manager has gone into liquidation, except for the purpose of reconstruction or

amalgamation upon terms previously approved in writing by the Trustee and the relevant authorities;

b) if, in the opinion of the Trustee, the Manager has ceased to carry on business; or c) if, in the opinion of the Trustee, the Manager has to the prejudice of Unit Holders failed to

comply with the provisions of the Deed or contravened any of the provisions of any relevant law;

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the Trustee shall summon for a Unit Holders’ meeting to get directions from the Unit Holders. If a Special Resolution is passed to terminate the trust and wind-up the Fund, the Trustee shall apply to the court for an order confirming such Special Resolution. The Trustee shall, as soon as it becomes aware that the Fund is to be terminated and wound-up, inform the relevant authorities of the same. The Trustee shall also arrange for a final review and audit of the final accounts of the Fund by the auditor of the Fund.

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CHAPTER 11: OTHER INFORMATION

11.1 Unclaimed Moneys Policy

Redemption proceeds payable to Unit Holders who have requested for full or partial redemption of their investments in the Fund that remain unclaimed after twelve (12) months as prescribed by the Unclaimed Moneys Act, 1965 (revised 1989), shall be lodged with the Registrar of Unclaimed Moneys in accordance with the provisions of the Unclaimed Moneys Act, 1965.

11.2 Anti-Money Laundering Policy, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001

Application for Units must be accompanied by proper identification documents for our verification. All investors will be checked against various reliable sources for money laundering information. Any cases which are suspicious will be reported to our compliance officer who will then report the matter to the SC and BNM. Money laundering is a process intended to conceal the benefits derived from unlawful activities which are related, directly or indirectly, to any serious offence so that they appear to have originated from a legitimate source. The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) is the act that provides for the offence of money laundering and also the measures to be taken for the prevention of money laundering and terrorism financing offences. The Financial Intelligence and Enforcement Department of BNM has been established to carry out the functions as the competent authority under the AMLATFPUAA. All market intermediaries under the CMSA and fund management companies approved by the SC under the CMSA are obliged to comply with the provisions of the AMLATFPUAA.

11.3 No Guarantee

The Manager of the Fund does not guarantee the performance or success of the Fund. Investors are advised to read the Information Memorandum and obtain professional advice before subscribing to the Fund.

11.4 Enquiries

All enquiries about the investment should be directed in writing to:- Kenanga Investors Berhad Suite 12.02, 12th Floor Kenanga International Jalan Sultan Ismail, 50250 Kuala Lumpur Website: www.kenangainvestors.com.my Email: [email protected] Toll free Line: 1-800-88-3737 Facsimile No.: 03-2057 3722



Kenanga Investors Berhad Suite 12.02, 12th floor, Kenanga International

Jalan Sultan Ismail, 50250 Kuala Lumpur Malaysia

Website: www.kenangainvestors.com.my

Email: [email protected]

Toll free Line: 1-800-88-3737


mailto:[email protected]

INFORMATION MEMORANDUM IN RESPECT OF THE KENANGA … · CHAPTER 2: RISK FACTORS 6 CHAPTER 3: FUND...

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