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This Information Memorandum has been seen and approved by the directors of Affin Hwang Asset Management 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.
A copy of this Information Memorandum is lodged with the Securities Commission Malaysia. The Securities Commission Malaysia will not be liable for any non‐disclosure on the part of Affin Hwang Asset Management 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 contents of this Information Memorandum.
This Information Memorandum is not intended to and will not be issued and distributed in any country or jurisdiction other than in Malaysia (“Foreign Jurisdiction”). Consequently, no representation has been and will be made as to its compliance with the laws of any Foreign Jurisdiction. Accordingly, no issue or sale of Units of the Fund to which this Information Memorandum relates, is made in any Foreign Jurisdiction or under any circumstances, where such action is unauthorised.
TABLE OF CONTENTS
SECTION PAGE
1. CORPORATE DIRECTORY .............................................................................................................. 12. GLOSSARY .................................................................................................................................... 23. ABOUT THE FUND ........................................................................................................................ 64. ABOUT THE TARGET FUND ........................................................................................................... 85. UNDERSTANDING THE RISKS OF THE FUND AND THE TARGET FUND .......................................... 196. WHAT ARE THE FEES AND CHARGES INVOLVED? ........................................................................ 237. DEALING INFORMATION ............................................................................................................ 258. VALUATION POLICY AND VALUATION BASIS .............................................................................. 289. RELEVANT PARTIES TO THE FUND .............................................................................................. 2910. RELATED INFORMATION ............................................................................................................ 3011. INVESTORS INFORMATION ......................................................................................................... 3312. DIRECTORY OF SALES OFFICE ...................................................................................................... 33
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1. CORPORATE DIRECTORY
The Manager Affin Hwang Asset Management Berhad (429786‐T) Registered Office 27th Floor, Menara Boustead, 69 Jalan Raja Chulan 50200 Kuala Lumpur Business Address Suite 11‐01, 11th Floor Menara Keck Seng 203 Jalan Bukit Bintang 55100 Kuala Lumpur Tel No.: (603) 2116 6000 Fax No.: (603) 2116 6100 Toll free line: 1‐800‐88‐7080 E‐mail: customercare@affinhwangam.com Website: www.affinhwangam.com Board of Directors of the Manager
Tan Sri Dato’ Seri Che Lodin Bin Wok Kamaruddin
Puan Maimoonah Binti Mohamed Hussain
Mr Teng Chee Wai
Mr David Semaya
Encik Abd Malik Bin A Rahman (Independent Director)
Dato’ Hj Latip Bin Ismail (Independent Director) Manager’s Delegate (fund valuation & accounting function) Deutsche Bank (Malaysia) Berhad (312552‐W) Business address Level 18‐20, Menara IMC 8, Jalan Sultan Ismail 50250 Kuala Lumpur Tel No. : (603) 2053 6788 Fax No. : (603) 2031 9822 Company Secretaries Azizah Shukor(LS0008845) 27th Floor Menara Boustead 69 Jalan Raja Chulan 50200 Kuala Lumpur Wilayah Persekutuan Deutsche Trustees Malaysia Berhad (763590‐H) Registered office & Business address Level 20, Menara IMC 8, Jalan Sultan Ismail 50250 Kuala Lumpur Tel No. : (603) 2053 7522 Fax No. : (603) 2053 7526 Trustee’s Delegate (Local & Foreign Custodian) Deutsche Bank (Malaysia) Berhad (312552‐W) Business address Level 18‐20, Menara IMC 8, Jalan Sultan Ismail 50250 Kuala Lumpur Tel No. : (603) 2053 6788 Fax No. : (603) 2031 8710
Tax Adviser Deloitte Tax Services Sdn. Bhd. Level 16, Menara LGB, 1 Jalan Wan Kadir Taman Tun Dr Ismail, 60000 Kuala Lumpur Auditor PricewaterhouseCoopers Level 10, 1 Sentral, Jalan Rakyat, KL Sentral P.O. Box 10192 50706 Kuala Lumpur Banker HSBC Bank (M) Berhad Head Office 2, Leboh Ampang 50100 Kuala Lumpur Solicitors Messrs. Soon Gan Dion & Partners 1st Floor, No. 73, Jalan SS 21/1A Damansara Utama 47400 Petaling Jaya FiMM Federation of Investment Managers Malaysia 19‐07‐3, 7th Floor, PNB Damansara 19, Lorong Dungun, Damansara Heights 50490 Kuala Lumpur Tel No. : (603) 2093 2600 Fax No. : (603) 2093 2700 Email: info@fimm.com.my Website: www.fimm.com.my Agents Registered unit trust consultants and other approved Institutional Unit Trust Advisers (as and when appointed) of the Manager.
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2. GLOSSARY
the Act or CMSA 2007 Means the Capital Markets and Services Act 2007 as originally enacted and
amended or modified from time to time.
AUD Means the Australia Dollar, the lawful currency of Australia.
Base Currency Means the currency in which the Fund is denominated i.e. EUR.
Bursa Malaysia Means the stock exchange managed and operated by Bursa Malaysia Securities Berhad including such other name as it may be changed to from time to time.
Business Day A day on which the Bursa Malaysia is open for trading. The Manager may declare certain Business Days a non‐Business Day when deemed necessary, such as in the event of market disruption.
CFFS Refers to Commission de Surveillance du Secteur Financier.
Class P (EUR) Refers to a class of units offered by the Target Fund.
Class(es) Means any number of Class(es) of Unit(s) representing similar interests in the assets of the Fund and “Class” means any one Class of Units.
Clearstream International Refers to a post‐trade services provider where it operates securities settlement systems based in both Luxembourg and Germany, which allow for the holding and transfer of securities.
CESR Guidelines 10‐049 Means guidelines on a common definition of European money market funds.
Commencement Date
Means the date of this Information Memorandum and is the date on which sales of Units of the Fund may first be made. The Commencement Date is also the date of constitution of the Fund.
Community Law Means the common law in the Member States of the European Union.
Company Refers to UBS (Lux) Equity SICAV.
Council Directive 83/349/EEC Means Council Directive 83/349/EEC of 13 June 1983 based on Article 54, paragraph 3 under (g) of the Treaty on consolidated accounts, as amended.
Deed(s) Refers to the Deed dated 21 October 2015 entered into between the Manager and the Trustee and includes any subsequent amendments and variations to the Deed.
Directive 2004/39/EC Means the Directive 2004/39/EC of the Euroepan Parliament and of the Council of 21 April 2004 on markets in financial instruments.
Directive 2009/65/EC Means the Directive 2009/65/EC of the Eurpoean Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to the collective investment in transferable securities (UCITS).
EU Directive 2003/48/EC Means Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, is a directive of the European Union enacted to implement the European Union withholding tax, requiring Member States to provide other Member States with information on interest paid to achieve effective taxation of the payments in the member state where the taxpayer is resident for tax purposes.
EU Member State Means the member state of the European Union.
EUR Means Euro, the official currency of the European Union’s member states.
Euroclear Refers to a Belgium based financial services company that specializes in the settlement of securities transactions as well as the safekeeping and asset servicing of the securities.
European Union A politico‐economic union of 28 member states that are located primarily in Europe, operates through a system of supranational institutions and
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intergovernmental‐negotiated decisions by the member states
FiMM Means the Federation of Investment Managers Malaysia.
Financial Institution
Means (1) if the institution is in Malaysia –
(i) Licensed Bank;
(ii) Licensed Investment Bank;
(iii) Development Financial Institutions (DFIs); or
(iv) Islamic Bank;
(2) if the institution is outside Malaysia, any institution that is licensed/registered/approved/authorised by the relevant banking regulator to provide financial services.
Forward Pricing Means the method of determining the price of a Unit which is the NAV per Unit calculated at the next valuation point after an application for purchase or repurchase request is received by the Manager.
Fourth Council Directive 78/660/EEC
Means Council Directive 78/660/EEC of 25 July 1978 based on Article 54, paragraph 3 under (g) of the Treaty on the annual accounts of certain types of companies, as amended.
Fund Refers to Affin Hwang European Unconstrained Fund.
GST Refers to the tax levied on goods and services pursuant to the Goods and Services Tax Act 2014.
Guidelines Guidelines on Unlisted Capital Market Products Under The Lodge And Launch Framework issued by the SC and as amended from time to time.
Hedged‐class Means a particular Class that aims to reduce the effect if exchange rate fluctuations between the Based Currency and the currency in which Unit Holders are exposed to having invested in that Class.
Information Memorandum Means this offer document in respect of this Fund.
Islamic Bank Means a bank under Islamic Financial Services Act 2013.
Institutional Unit Trust Advisers (IUTA)
Means institutional unit trust adviser, which is an institution, a corporation or an organisation that is registered with the FiMM to market and distribute unit trust funds.
Law of 2010 Refers to the law of 17 December 2010 relating to undertakings for collective investment, as may be amended from time to time.
Licensed Bank Means a bank licensed under Financial Services Act 2013.
Licensed Investment Bank Means an investment bank licensed under Financial Services Act 2013.
the Manager Refers to Affin Hwang Asset Management Berhad.
Member State Designates a member state of the European Union; states that are parties to the agreement on the European economic area but are not member states of the European Union are considered the same as member states of the European Union, within the limits of that agreement and its related agreements.
MYR Means the Malaysian Ringggit, the lawful currency of Malaysia.
NAV
Means the value of all the assets of the Fund less the value of all the liabilities of the Fund at a valuation point; solely for the purpose of computing the annual management fee and annual trustee fee, the NAV of a Fund is inclusive of the management fee and trustee fee for the relevant day; where a Fund has more than one Class of Units, there shall be a Net Asset Value of the Fund attributable to each Class of Units.
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NAV per Unit Means the Net Asset Value of the Fund at a particular valuation point divided by
the number of Unit in Circulation at the same valuation point; where the Fund has more than one Class of Units, there shall be a Net Asset Value per Unit for each Class of Units; the Net Asset Value per Unit of a Class of Units at a particular valuation point shall be the Net Asset Value of the Fund attributable to that Class of Units divided by the number of Units in circulation of that Class of Units at the same valuation point.
OECD Means the Organisation for Economic Co‐operation and Development.
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 per annum 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 by 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 the SC to be a trustee under the Act and has assets under management exceeding RM10 million 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 [Act 53];
(13) a holder of a capital markets services licence or an executive director or a chief executive officer of a holder of a capital markets services licence;
(14) a licensed institution;
(15) an Islamic bank licensee;
(16) an insurance company licensed under the Financial Services Act 2013;
(17) a takaful licensee 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 [704];
(19) an Islamic bank licensee or takaful licensee as defined under the Labuan Islamic Financial Services and Securities Act 2010 [705]; and
(20) such other investor(s) as may be permitted by the Securities Commission Malaysia from time to time and/or under the relevant guidelines for wholesale funds.
Repurchase Charge Means a charge imposed pursuant to a repurchase request.
Repurchase Price Means the price payable to a Unit Holder by the Manager for a Unit pursuant to a
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repurchase request and it shall be exclusive of any Repurchase Charge.
SC Means the Securities Commission Malaysia established under the Securities Commission Act 1993.
Sales Charge Means a charge imposed pursuant to the Unit Holder’s purchase request.
Selling Price Means the NAV per Unit payable by the Unit Holder for the Manager to create a Unit in the Fund and it shall be exclusive of any Sales Charge.
SGD Means Singapore Dollar, the lawful currency of Singapore.
Special Resolution Means a resolution passed at a meeting of Unit Holders duly convened in accordance with the Deed by a majority of not less than three‐fourths of the Unit Holders present and voting at the meeting in person or by proxy; for the avoidance of doubt, “three‐fourths of the Unit Holders present and voting” means three‐fourths of the votes cast by the Unit Holders present and voting; for the purposes of winding‐up the Fund or a Class, “Special Resolution” means a resolution passed at a meeting of Unit Holders duly convened in accordance with the Deed by a majority in number holding not less than three‐fourths of the value of the votes cast by the Unit Holders present and voting at the meeting in person or by proxy.
Target Fund Means UBS (Lux) Equity SICAV – European Opportunity Unconstrained.
Target Fund Manager Refers to UBS Global Asset Management (UK) Ltd, London.
Trustee Refers to Deutsche Trustees Malaysia Berhad.
UCI Means undertaking for collective investment.
UCITS Refers to undertakings for collective investment in transferable securitiessubject to Directive 2009/65/EC.
Unit or Units Means an undivided share in the beneficial interest and/or right in the Fund and a measurement of the interest and/or right of a Unit Holder in the Fund and means a Unit of the Fund and if the Fund has more than one class of Units, it means a Unit issued for each Class.
Units in Circulation Means Units created and fully paid for and which has not been cancelled.
It is also the total number of Units issued at a particular valuation point.
Unit Holder or Unit Holders or You
Refers to the person or persons registered for the time being as the holder or holders of Units of the Fund including persons jointly registered.
USD Means United States Dollar, the lawful currency of United States of America.
US Person Means a US citizen or US tax resident individual, (including a green‐card holder, an individual with substantial US presence and an individual who has US permanent or mailing address), a US corporation, US partnership, US trust or US estate for US federal income tax purposes.
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3. ABOUT THE FUND
EUR Class
MYR Hedged‐class
SGD Hedged‐class
AUD Hedged‐class
USD Hedged‐class
Fund Category Equity feeder (wholesale)
Base Currency EUR
Fund Type Growth
Launch Date 9 November 2015
Initial Offer Price N/A* N/A* N/A* N/A* USD 0.50**
* The price of Units will be based on the NAV per Unit.
** The price of Units offered for purchase during the initial offer period.
Initial Offer Period One (1) day commencing from the date of the Information Memorandum.
Investors’ Profile The Fund is suitable for investors who:
have long‐term investment horizon;
seek capital appreciation through investments in European equities; and
have high risk tolerance.
Financial Year End 31 March
Distribution Policy The Fund is not expected to make distribution. However, incidental distribution may be declared whenever appropriate.
Investment Objective The Fund seeks to achieve capital appreciation over medium to long‐term period through investments in European equities.
Note : Any material change to the Fund’s investment objective would require Unit Holders’ approval.
Performance Benchmark MSCI Europe Index
The risk profile of this Fund is different from the risk profile of the benchmark.
Asset Allocation A minimum of 80% of the Fund’s NAV to be invested in the Target Fund; and
A maximum of 20% of the Fund’s NAV to be invested in money market instruments, fixed deposits and/or liquid assets.
Investment Strategies The Fund will be investing in a minimum of 80% of the Fund’s NAV into the Target Fund and a maximum of 20% of the Fund’s NAV into money market instruments, fixed deposits and/or liquid assets.
The Manager may take temporary defensive positions that may be inconsistent with the Fund’s principal strategy by reducing its investment into the Target Fund and raise liquidity level of the Fund during adverse market conditions to protect the Unit Holders’ interest.
The Manager holds the discretion to substitute the Target Fund with another fund that has a similar objective with the Fund, if, in the Manager’s opinion, the Target Fund no longer meets the Fund’s investment objective. However, this is subject to the Unit Holder’s approval before any such changes are made.
The Manager may use derivatives, such as foreign exchange forward contracts and cross currency swaps for hedging purposes. Cross currency swaps and/or foreign exchange forward contracts may be used to hedge the principal and/or the returns of the foreign currency exposure of any of the classes against the Base Currency of the Fund. The employment of derivatives under these circumstances is expected to reduce the impact of foreign currency movements on the Fund’s NAV irrespective of the currency classes. While the hedging strategy will assist with mitigating the potential foreign exchange losses by the
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Fund, any potential gains from the hedging strategy will be capped as well. The Fund may also employ derivatives for investment purposes to enhance the returns of the Fund by taking a view on the underlying asset or currency and establish a long position to gain a specific underlying exposure. The types of derivatives envisaged for investment purposes include forwards and swaps which are over‐the‐counter or traded on centralized exchange.
Permitted Investment The Fund will invest in the following investments:
(a) Collective investment scheme;
(b) Money market instruments;
(c) Fixed deposits with Financial Institutions;
(d) Derivatives; and
(e) Any other form of investments as may be determined by the Manager from time to time that is in line with the Fund’s objective.
Denomination of the Fund
The transaction for the Fund listed in this Information Memorandum is denominated in EUR as it is the Base Currency for the Fund. The Manager may create new classes of Units in respect of the Fund in the future. Unit Holders will be notified of the issuance of the new classes of Units by way of communiqué and the prospective investors will be notified of the same by way of a supplemental/replacement information memorandum.
Cross Trades Policy We may conduct cross trades between funds we currently manage provided that all criteria imposed by the regulators are met. Notwithstanding, cross trades between the personal account of our employee and the Fund’s account(s); and between our proprietary trading accounts and the Fund’s account(s) are strictly prohibited. Compliance with the criteria are monitored by our compliance unit, and reported to our compliance and risk management committee, to avoid conflict of interests and manipulation that could have a negative impact on the investors.
Unitholdings in Different Classes
You should note that there are differences when purchasing Units of a Class other than MYR Hedged‐Class in the Fund.
For illustration purposes, assume the exchange rate of a Class (other than MYR Hedged‐Class) and MYR is 2.4, and you have RM10,000 to invest. The Class (other than MYR Hedged‐Class) is priced at EUR/AUD/SGD/USD 0.50, while the MYR Hedged‐Class is priced at MYR 0.50. By purchasing Units in the MYR Hedged‐Class, you will receive more Units for every MYR invested in the Fund (i.e. 20,000 Units) compared to purchasing Units in a Class (other than MYR Hedged‐Class) (i.e. 8,333 Units).
Upon a poll every Unit Holder present in person or by proxy shall be proportionate to the value of Unit held by him or her. Hence, holding more number of Units may not give you an advantage when voting at Unit Holders meetings. You should note that in a Unit Holders’ meeting to terminate or wind up the Fund, a special resolution may only be passed by a majority in number representing at least three‐fourths (¾) of the value of the Units held by Unit Holders voting at the meeting, and not based on number of Units held.
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4. ABOUT THE TARGET FUND
The Target Fund is a sub‐fund of UBS (Lux) Equity SICAV (“the Company”). The Company was established on 7 October 1996 as an open‐ended investment fund in the form of a “Société d’Investissement à Capital Variable (SICAV) pursuant to Part I of the Luxembourg Law of 30 March 1988 relating to undertakings for collective investment and was adapted in March 2005 to conform to the provisions of the Law of 2002; it has been subject to the Law of 17 December 2010 on undertakings for collective investment since 1 July 2011. With effect from 15 June 2011, the Company has appointed UBS Fund Management (Luxembourg) S.A. as its management company (“the Management Company”).
The Target Fund Manager, UBS Global Asset Management (UK) Ltd, London is commissioned to manage the securities portfolio under the supervision and responsibility of the Management Company, and carries out all relevant transactions while adhering to the prescribed investment restrictions. The portfolio management units of UBS Global Asset Management may transfer their mandates, fully or partially, to associated fund managers within UBS Global Asset Management. However, responsibility in each case remains with the respective target fund manager assigned by the Company.
Name of the Target Fund
UBS (Lux) Equity SICAV – European Opportunity Unconstrained
Type of Class Class P (EUR)
Base Currency EUR
Date of Establishment 14 June 2012
Target Fund Manager UBS Global Asset Management (UK) Ltd, London
Custodian Bank UBS (Luxembourg) S.A.
Country of Origin Luxembourg
Regulatory Authority Commission de Surveillance du Secteur Financier (CSSF) Luxembourg
Investment Objective The Target Fund aims to achieve growth with appropriate earnings, while giving due consideration to capital security and the liquidity of the Target Fund’s assets.
General Investment Policy
The Target Fund invest at least two‐thirds of their assets in equities, other equity shares, dividend‐right certificates and in an ancillary basis in warrants on equities and other equity shares.
Furthermore, the Target Fund may invest up to a maximum of one‐third of its net assets in countries/regions other than those which its name sug gests.
In line with the following guidelines on investment instruments and restrictions, the Target Fund may invest up to 25% of its net assets in convertible and warrant issues whose warrants entitle the holder to subscribe to securities, and up to 15% of net assets in bonds, notes and other fixed income and floating‐rate investments (incl. floating rate notes) issued by public authorities, semi‐public enterprises or private borrowers, as well as in money market papers and, linked to the aforementioned, in options on debt instruments issued by the above borrowers.
Up to 15% of the net assets may be invested in claims of any type whose income may be qualified as “interest” within the meaning of EU Directive 2003/48/EC of 3 June 2003 on the taxation of interest income.
The Subfund invests a maximum of 10% of its assets in UCITS or UCI, unless stipulated to the contrary in the investment policy of the relevant Subfund.
As stipulated in item 1.1 (g) and indent 4 of the Investment Principles below, the Company may, as a main element in achieving the investment policy for the Target Fund, within the statutory limits, use special techniques and financial instruments whose underlying assets are securities, money market instruments and other financial instruments.
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ABOUT THE TARGET FUND
The markets in derivatives are volatile and both the chance of earning returns and the risk of suffering losses are higher than with investments in securities.
The Target Fund may hold liquid funds on an ancillary basis.
Special Investment Policy
The Target Fund predominantly invests in equities, equity rights or other capital shares of companies domiciled or chiefly active in Europe. Through a combination of long positions and short positions, the Target Fund typically aims for a net equity exposure of between 80% and 120% of the total net assets. This net exposure may vary between 50% and 150% of the total net assets. The maximum gross long equity exposure must not exceed 150% of the net assets and the maximum gross short equity exposure is limited to 50% of the total net assets. The Target Fund may use exchange‐traded derivatives, such as equity options and futures, or OTC derivatives, such as equity rights (swaps), to build long equity positions and short equity positions. The Target Fund may not engage in the physical short‐selling of equities.
Investment Principles
1. Permitted Investments
1.1 The investments of Target Fund may consist exclusively of one or more of the following components:
a) Securities and money market instruments which are listed or traded on a regulated market, as defined in European Parliament and Council Directive 2004/39/EC of 21 April 2004 on markets for financial instruments;
b) Securities and money market instruments which are traded in a Member State on another market which operates regularly and is recognised and open to the public. The term “Member State” designates a Member State of the European Union; states that are parties to the agreement on the European Economic Area but are not Member States of the European Union are considered the same as Member States of the European Union, within the limits of that agreement and its related agreements;
c) Securities and money‐market instruments admitted to official listing on a stock exchange in a non‐Member State or traded there on another market of a European, American, Asian, African or Australasian country (hereinafter “approved state”) which operates regularly and is recognised and open to the public;
d) Newly issued securities and money market instruments provided that the terms of issue contain a clause that an application will be made for an official listing on one of the securities exchanges or a licence to trade on one of the regulated markets mentioned under item 1.1 (a) to item 1.1 (c) above, and that this listing/licence is to be granted within one year of the issue of the securities;
e) Units of UCITS admitted pursuant to Directive 2009/65/EEC and/or other UCI within the meaning of Article 1 (2) (a) and (b) of Directive 2009/65/EEC with registered office in a Member State as defined in the Law of 2010 or a non‐Member State, provided that:
such other UCI have been approved in accordance with statutory rules subjecting them to supervision that, in the opinion of the CSSF, is equivalent to that which applies under Community Law, and that adequate provision exists for ensuring cooperation between authorities;
the level of protection afforded to shareholders in the other UCI is equivalent to that afforded to shareholders in Target Fund and, in particular, rules apply to the separate holding of fund assets, borrowing, lending and the short‐selling of securities and money market instruments that are equivalent to the requirements set
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forth in Directive 2009/65/EC;
the business operations of the other UCI are the subject of annual and semi‐annual reports that permit an assessment to be made of the assets and liabilities, income and transactions arising during the reporting period; and
the UCITS or such other UCI the units of which are to be acquired, may invest, pursuant to its management regulations or its founding documents, a maximum of 10% of its assets in units of another UCITS or UCI; Target Fund invests a maximum of 10% of its assets in other UCITS or UCIs, unless stipulated to the contrary in the investment policy of the relevant Target Fund;
f) sight deposits or deposits at notice at credit institutions with a term of up to twelve (12) months, provided the institution concerned has its head office in an EU Member State, or – if the institution’s head office in located in a non‐EU state – it is subject to supervisory regulations which the CSSF deems equivalent to those under Community law;
g) derivative financial instruments (“derivatives”), including equivalent cash instruments, which are traded on one of the stock exchanges stated in item (a), (b) and (c) above, and/or derivatives which are not traded on a stock exchange (“OTC derivatives”), provided that:
the use of derivatives is in accordance with the investment purpose and investment policy of the Target Fund, and is suited towards achieving these;
the underlying securities are instruments in accordance with the definition given in item (a) and item (b) above or financial or macroeconomic indices, interest rates, currencies or other underlying instruments in which Target Fund’s investment policy allows it to invest directly or via other existing UCI or UCITS;
the Target Funds shall ensure, through adequate diversification of the underlying assets, that the diversification requirements applicable to them and listed in Item 2 ‐ “Risk diversification” below are adhered to;
the counterparties in transactions involving OTC derivatives are institutions subject to official supervision belonging to the categories admitted by the CSSF and expressly approved by the Target Fund. The approval process by Target Fund is based on the principles drawn up by the Target Fund Manager’s credit risk and relating to inter alia the credit worthiness, reputation and experience of the counterparty in question in settling transactions of this type, as well as their willingness to provide capital. The Target Fund maintains a list of counterparties it has approved;
the OTC derivatives are valued in a reliable and verifiable manner on a daily basis and may be sold, at any time, upon the Target Fund’s initiative at the appropriate market value, liquidated or settled by means of a back‐to‐back transaction; and
the respective counterparty is not granted discretion regarding the composition of the portfolio managed by the Target Fund (e.g. in the case of a total return swap or a derivative financial instrument with similar characteristics) or the underlying of the respective OTC derivative;
h) Money market instruments as defined under “General Investment Policy” above, which are not traded on a regulated market, provided that the issuance or issuer of these instruments is governed by rules providing protection for investors and investments and on condition that such instruments are:
issued or guaranteed by a central, regional or local authority or the
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central bank of a Member State, the European Central Bank, the European Union or European Investment Bank, by a non‐Member State, or, in the case of a federal state, a Member State of the federation or by a public international body of which at least one Member State is a member; or
issued by an undertaking whose securities are traded on the regulated markets mentioned in items (a), (b) and (c);
issued or guaranteed by an institution that is subject to official supervision in accordance with the criteria laid down by Community Law or by an institution that is subject to supervision that, in the opinion of the CSSF, is at least as stringent as that provided for by Community Law and complies with it, or are issued by other issuers belonging to a category approved by the CSSF, provided that investor protection rules apply to investments in such instruments, which are equivalent to those of the first, second or third listed point above and provided the issuers constitute either a company with equity capital amounting to at least 10 million euros (EUR 10,000,000), which prepares its annual accounts under the provisions of the Fourth Council Directive 78/660/EEC, or an entity within a group encompassing one or more listed companies and responsible for its financing, or an entity which is to fund the underlying securities for obligations by the use of a credit line made available by a bank.
1.2 Contrary to the investment restrictions set out in item 1.1 above, the Target Fund may invest up to 10% of its net assets in securities and money market instruments other than those named in item 1.1 above.
1.3 The Target Fund ensures that the overall risk associated with derivatives does not exceed the overall net value of the portfolio. As part of its investment strategy, the Target Fund may make investments in derivatives within the limits laid down in items 2.2 and 2.3 of “Risk Diversification” below, provided the overall risk of the underlying instruments does not exceed the investment limits stipulated in item 2 of “Risk Diversification” below.
1.4 The Target Fund may hold liquid funds on an ancillary basis.
2. Risk Diversification
2.1 In accordance with the principle of risk diversification, the Target Fund is not permitted to invest more than 10% of its net assets in securities or money market instruments from a single institution. The Target Fund may not invest more than 20% of its net asset value in deposits with a single institution. Transactions in OTC derivatives, the risk of loss must not exceed 10% of the assets of the Target Fund if the counterparty is a credit institution as defined in item 1.1 (f) of “Permitted Investments” above; the maximum allowable risk of loss is reduced to 5% in transactions with other counterparties. The total value of all positions in the securities and money market instruments of those institutions accounting for more than 5% of the Target Fund’s net assets may not exceed 40% of the Target Fund’s net assets. Such limitation shall not apply to deposits and transactions in OTC derivatives with financial institutions which are subject to supervision.
2.2 Regardless of the maximum limits set out in item 2.1 above, the Target Fund may not invest more than 20% of its net assets in a single institution in a combination of:
securities and money market instruments issued by such institution;
deposits with this institution; and/or
OTC derivatives traded with such an institution. 2.3 Contrary to the above, the following applies:
a) The limit of 10% mentioned in item 2.1 above may be raised to 25% for various debt instruments issued by credit institutions domiciled in an EU
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Member State and subject, in that particular country, to special legislative supervision of public authorities that would ensure the protection of investors. In particular, funds originating from the issue of such bonds must, in accordance with the law, be invested in assets which provide sufficient cover for the obligations arising from them during the entire term of the bonds and, in the event of insolvency of the borrower, provide a preference right in respect of the payment of capital and interest. If the Target Fund invests more than 5% of its net assets in bonds of a single issuer, then the total value of these investments may not exceed 80% of the value of its net assets;
b) This limit of 10% can be raised to 35% for securities or money market instruments issued or guaranteed by an EU Member State or its central, regional and local authorities, by another approved state, or by international organisations with public‐law character of which one or more EU States are members. Securities and money‐market instruments that come under the special ruling given in item 2.3 (a) and (b) above are not counted when calculating the abovementioned 40% risk‐diversification ceiling;
c) The limits set out in items 2.1, 2.2, 2.3 (a) and (b) above may not be accumulated; therefore the investments listed in the said paragraphs made in securities or money market instruments of a single issuer or in deposits with the said institution or in its derivatives may not exceed 35% of the Target Fund’s net assets;
d) Companies which belong to the same group of companies in that they prepare their consolidated accounts under the rules of Council Directive 83/349/EEC (1) or according to recognised international accounting principles, must be treated as a single issuer for the calculation of the investment limits set out in this article. However, investments in securities and money market instruments of a single group of companies may together make up to 20% of the assets of the Target Fund;
e) In the interests of risk diversification, the Target Fund is authorised to invest up to 100% of it’s net assets in securities and money market instruments from various issues that are guaranteed or issued by an EU Member State or its local authorities, an OECD Member State, Russia, Brazil, Indonesia or Singapore, or by international organisations under public law to which one or more EU Member States belong. These securities or money market instruments must be divided into at least six different issues, with securities or money market instruments from a single issue not exceeding 30% of the total net assets of the Target Fund.
2.4 The following provisions apply with regard to investments in other UCITS or UCI:
a) The Target Fund may invest up to 20% of its net assets in units in a single UCITS or other UCI. In implementing this investment limit, each subfund of a UCI consisting of a number of subfunds is treated as an independent issuer if it can be guaranteed that said subfunds are individually liable in respect of third parties;
b) Investments in units of UCI other than UCITS may not exceed 30% of the Target Fund’s net assets. The assets invested in the UCITS or other UCI are not included in the calculation of the maximum limits set out in items 2.1, 2.2 and 2.3 above.
2.5 The Target Fund may subscribe, acquire and/or hold shares that are to be issued by or have been issued by one or more other subfunds of the Company, provided that:
the target subfund does not itself invest in the Target Fund that is investing in that target subfund; and
the total share of the assets which the target subfunds to be acquired
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may invest in units of the same UCI may not, in accordance with their sales prospectuses or articles of incorporation, exceed 10%; and
any voting rights associated with the securities in question is suspended for the period they are held by the Target Fund, regardless of their appropriate evaluation in the financial statements and periodic reports; and
in any event, for as long as these securities are held by the Target Fund, their value will not be taken into consideration for the purposes of verifying the minimum threshold of the net assets imposed by the 2010 Law; and
there is no multiple charging of fees for management/subscription or redemption either at the level of the Target Fund that has invested in the target subfund or at the level of the target subfund.
2.6 The Target Fund may invest a maximum of 20% of its net assets in shares and/or debt securities issued by the same body when the aim of the investment policy is replicate the composition of a certain stock or debt securities index recognised by the CSSF, provided that:
the composition of the index is sufficiently diversified;
the index represents an appropriate benchmark for the market to which it refers;
the index is published appropriately. The limit is 35% provided this is justified based on exceptional market conditions, and in particular on regulated markets on which certain securities or money market instruments are in a strongly dominant position. Investment up to this upper limit is only permitted in the case of a single issuer.
If the limits mentioned in “Permitted Investments” and “Risk Diversification” above are exceeded unintentionally or due to the exercise of subscription rights, the Target Fund must attach top priority in its sales of securities to normalising the situation while, at the same time, considering the best interests of the Company’s shareholders.
3. Investment Restrictions
In accordance with the principle of risk diversification, the Target Fund is not permitted to:
Invest more than 10% of the net assets of the Target Fund in securities or money market instruments from a single institution;
Invest more than 20% of the net asset value of the Target Fund in deposits with a single institution.
In transactions by the Target Fund in OTC derivatives:
The risk of loss must not exceed 10% of the assets of the Target Fund concerned if the counterparty is a credit institution;
The maximum allowable risk of loss is reduced to 5% in transactions with other counterparties. The total value of all positions in the securities and money market instruments of those institutions accounting for more than 5% of the net assets of the Target Fund may not exceed 40% of the net assets of the respective Target Fund. Such limitation shall not apply to deposits and transactions in OTC derivatives with financial institutions which are subject to supervision.
The Target Fund is prohibited from:
3.1 Acquiring securities, the subsequent sale of which is subject to any restrictions arising from contractual agreements;
3.2. Acquiring equities with voting rights that would enable the Target Fund, possibly in collaboration with other investment funds under its supervision, to exert a significant influence on the management of the borrower in question;
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3.3 Acquiring more than
• 10% of the non‐voting shares of a single issuer;
• 10% of the debt instruments of a single issuer;
• 25% of the units of a single UCITS or UCI;
• 10% of the money market instruments of a single issuer;
In the latter three cases, the restrictions on acquiring securities need not be observed if the gross amount of the debt instruments or the money market instruments and the net amounts of the issued units cannot be determined at the time of acquisition;
Exempt from the provisions of items 3.2 and 3.3 above are:
• Securities and money market instruments issued or guaranteed by a Member State of the EU or its local authorities or by another approved state;
• Securities and money market instruments issued or guaranteed by a non‐Member State of the European Union;
• Securities and money market instruments issued by public international bodies to which one or more Member States of the European Union belong;
• Shares held in the capital of a company incorporated in a non‐member State investing its assets mainly in the securities of issuing bodies having their registered offices in that non‐member State, where under the legislation of that non‐member State such a holding represents the only way in which investments may be made in the securities of issuing bodies of that non‐Member State. In doing so, the provisions of the Law of 2010 must be complied with; and
• Shares held in the capital of subsidiary companies carrying on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the repurchase of units at the shareholders’ request exclusively on behalf of the Target Fund;
3.4 Short‐selling derivatives, money market instruments or shares of a UCITS fund;
3.5 Acquiring precious metals or related certificates;
3.6 Investing in real estate and purchasing or selling commodities or commodities contracts;
3.7 Taking out loans, unless
• it is in the form of a back‐to‐back loan for the purchase of foreign currency;
• it is only temporary and does not exceed 10% of the net assets of the Target Fund;
3.8 Granting loans or acting as guarantor for third parties. This restriction does not prevent the acquisition of derivatives, money market instruments or the shares of a UCITS fund if these are not fully paid up.
The Target Fund Manager is authorised to introduce further investment restrictions at any time in the interests of the shareholders provided these are necessary to ensure compliance with the laws and regulations of those countries in which The Target Fund’s shares are offered and sold.
4. Special Techniques and Instruments That Have Securities and Money MarketInstruments as Underlying Assets
The Target Fund Manager is entitled to employ techniques and instruments which feature securities and money market instruments, provided such techniques and instruments are used in the interests of efficient portfolio management (the “techniques”) subject to the conditions and limits defined by the CSSF. If such transactions relate to the use of derivatives, the terms and limits must comply with the provisions of the Luxembourg Law of 2010. The use of these techniques and
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instruments must be in accordance with the best interests of the investors. The Target Fund may under no circumstances deviate from its investment objectives for these transactions. Equally, the use of these techniques may not cause the risk level of the fund in question to increase significantly with regard to its original risk level (i.e. without the use of these techniques). The risks inherent to the use of these techniques are essentially comparable to the risks associated with the use of derivatives (in particular, counterparty risk). For this reason, reference is made here to the information contained in Section 6 – Specific Risks of the Target Fund – subsection entiled “Risks connected with the use of derivatives”.
The Target Fund ensures that it or one of its appointed service providers will monitor and manage the risks incurred through the use of these techniques, particularly counterparty risk, as part of the risk management procedure. The monitoring of potential conflicts of interest arising from transactions with companies associated with the Target Fund and the Target Fund Manager is primarily carried out through reviewing contracts and corresponding processes on a regular basis.
The Target Fund also ensures that, at any time, it can cancel any contract entered into within the framework of the use of the techniques and instruments for the efficient management of the portfolio or that the securities and/or liquid funds transferred to the respective counterparty can be reclaimed by the Target Fund. In addition, the liquid funds should include the interest incurred up to the time of being reclaimed.
Furthermore, the Target Fund ensures that, despite the use of these techniques and instruments, the investors’ redemption applications can be processed at any time.
Within the framework of the use of techniques and instruments for the efficient management of the portfolio, the Target Fund may lend portions of its securities portfolio to third parties (“securities lending”). In general, securities lending may be effected only via recognised clearing houses such as Clearstream International or Euroclear, or using first‐class financial institutions that specialize in such activities and following the procedure specified by them. In the case of securities lending transactions, the Target Fund must, in principle, receive collateral, the value of which must at least correspond to the total value of the securities lent out and any accrued interest thereon. This collateral must be issued in a form of financial collateral as permitted by the provisions of Luxembourg law. Such collateral is not required if the transaction is effected via Clearstream International or Euroclear, or another organisation which guarantees the Target Fund that the value of the securities lent will be refunded. The provisions of the section entitled “Collateral management” shall apply accordingly to the management of collateral that was left to the Target Fund within the scope of securities lending. In derogation from the provisions of the Subsection ‐ “Collateral Management” as below, shares from the finance sector are accepted as securities within the framework of securities lending. Service providers that provide services to the Target Fund in the field of securities lending have the right to receive a fee in return for their services that is line with the market standards. The amount of this fee is reviewed and adapted, where appropriate, by an independent body on an annual basis. The recipients of these and other direct and indirect fees, the amounts of the respective fees, as well as the findings as to whether the fee recipients are associated with the Target Fund, the Target Fund Manager and/or the Target Fund’s custodian can be found in the respective annual or semi‐annual report. Furthermore, the Company has drawn up internal framework agreements regarding securities lending. These framework agreements contain, among other things, the relevant definitions, the description of the principles and standards of the contractual management of the securities lending transaction, the quality of the collateral, the approved counterparties, the risk management, the fees to be paid to third parties and fees to be received by the Target Fund, as well as the information to be published in the annual and semi‐annual reports. The board of directors of the Company has approved instruments of the following asset classes as collateral from securities transactions and determined the following haircuts to be used on these instruments:
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Asset Class
(Fixed and variable‐rate interest‐bearing instruments)
Minimum Haircut
(% deduction from market value)
Instruments issued by a state belonging to the G‐10 (apart from the USA, Japan, the UK, Germany and Switzerland, including their federal states and cantons as issuers) and with a minimum rating of A
2%
Instruments issued by the USA, Japan, the UK, Germany and Switzerland, including their federal states and cantons*
0%
Bonds with a minimum rating of A 2%
Instruments issued by supranational organisations
2%
Instruments issued by an entity and belonging to an issue with a minimum rating of A
4%
Instruments issued by a local authority and with a minimum rating of A
4%
Shares 8%
Note:
Rating refers to the rating scale used by Standard & Poor’s Financial Services LLC (S&P). Ratings by S&P, Moody’s Investors Service and Fitch Ratings Inc. are used with their corresponding scales. If the ratings given by these rating agencies to a certain issuer are not uniform, then the lowest rating shall apply.
*Non‐rated issues by these states are also permissible. No haircut is applied to these either.
Shares listed on the following indices are accepted as permissible collateral:
Bloomberg ID
Australia (S&P/ASX 50 INDEX) AS31
Austria (AUSTRIAN TRADED ATX INDX) ATX
Belgium (BEL 20 INDEX) BEL20
Canada (S&P/TSX 60 INDEX) SPTSX60
Denmark (OMX COPENHAGEN 20 INDEX) KFX
Europe (Euro Stoxx 50 Pr) SX5E
Finland (OMX HELSINKI 25 INDEX) HEX25
France (CAC 40 INDEX) CAC
Germany (DAX INDEX) DAX
Hong Kong (HANG SENG INDEX) HSI
Japan (NIKKEI 225) NKY
Netherlands (AEX‐Index) AEX
New Zealand (NZX TOP 10 INDEX) NZSE10
Norway (OBX STOCK INDEX) OBX
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Singapore (Straits Times Index STI) FSSTI
Sweden (OMX STOCKHOLM 30 INDEX) OMX
Switzerland (SWISS MARKET INDEX) SMI
Switzerland (SPI SWISS PERFORMANCE IX) SPI
U.K. (FTSE 100 INDEX) UKX
U.S. (DOW JONES INDUS. AVG) INDU
U.S. (NASDAQ 100 STOCK INDX) NDX
U.S. (S&P 500 INDEX) SPX
U.S. (RUSSELL 1000 INDEX) RIY
Collateral Management
If the Target Fund enters into OTC transactions, it may be exposed to risks related to the creditworthiness of the OTC counterparties: when the Target Fund enters into futures contracts or options or uses other derivative techniques it is subject to the risk that an OTC counterparty may not meet (or cannot meet) its obligations under a specific or multiple contracts. Counterparty risk can be reduced by depositing a security (“collateral”). Collateral may be provided in the form of liquid funds in highly liquid currencies, highly liquid equities and first‐rate government bonds. The Target Fund will only accept such financial instruments as collateral, which would allow it (after objective and appropriate valuation) to liquidate these within an appropriate time period. The Target Fund, or a service provider appointed by the Target Fund, must assess the collateral’s value at least once a day. The collateral’s value must be higher than the value of the position of the respective OTC counterparty.
However, this value may fluctuate between two consecutive valuations. After each valuation, however, it is ensured (where appropriate, by requesting additional collateral) that the collateral is increased by the desired amount to meet the value of the respective OTC counterparty’s position (mark‐to‐market). In order to adequately take into account the risks related to the collateral in question, the Target Fund determines whether the value of the collateral to be requested should be increased, or whether this value should be depreciated by an appropriate, conservatively measured amount (haircut). The larger the collateral’s value may fluctuate, the higher the markdown. The Target Fund shall decide on an internal framework agreement that determines the details of the above‐mentioned requirements and values, particularly regarding the types of collateral accepted, the amounts to be added to and subtracted from the respective collateral, as well as the investment policy for liquid funds that are deposited as collateral. This framework agreement is reviewed and adapted where appropriate by the Target Fund on a regular basis.
The approved instruments of the following asset classes as collateral from OTC derivative transactions and determined the following haircuts to be used on these instruments:
The following haircuts are accepted as collateral from OTC derivative transactions:
Asset Class
(fixed and variable rate interest‐bearing instruments)
Minimum haircut
(% deduction from market value)
Liquid funds in the currencies CHF, EUR, GBP, USD, JPY, CAD and AUD
0%
Short‐term instruments (up to 1 year) issued by one of the following countries (Australia, Austria, Belgium, Denmark, Germany, France, Japan, Norway, Sweden, UK, USA) and the issuing country has a minimum rating of A
1%
Instruments which fulfil the same criteria as above and have an average duration (1 – 5
3%
18
years)
Instruments which fulfil the same criteria as above and have a long duration (5 – 10 years)
4%
Instruments which fulfil the same criteria as above and have a very long duration (more than 10 years)
5%
US TIPS (treasury inflation protected securities) with a duration of up to 10 years
7%
US treasury strips or zero coupon bonds (all durations)
8%
US TIPS (treasury inflation protected securities) with a duration of more than 10 years
10%
The haircuts eligible to be used as collateral from securities lending are, insofar as they are usable, described in abovementioned Section 5 – Investment Principles – Subsection 4 ‐ “Special Techniques and Instruments That Have Securities and Money Market Instruments as Underlying Assets”. Securities deposited as collateral may not have been issued by the corresponding OTC counterparty or have a high correlation with this OTC counterparty. For this reason, shares from the finance sector are not accepted as collateral. Securities deposited as collateral are held by the Target Fund’s custodian in favour of the Target Fund and may not be sold, invested or pledged by the Target Fund.
The Target Fund shall ensure that the collateral transferred to it is adequately diversified, particularly regarding geographic dispersal, diversification across different markets and diversification of the concentration risk. The latter is considered to be sufficiently diversified if securities and money market instruments held as collateral and issued by a single issuer do not exceed 20% of the respective Target Fund’s net assets.
Collateral that is deposited in the form of liquid funds may be invested by the Target Fund.
Investments may only be made in: sight deposits or deposits at notice in accordance with abovementioned Section 5 ‐ Investment Principles – Subsection 1 – “Permitted investments” ‐ item 1.1 (f); highquality government bonds; repurchase transactions within the meaning of abovementioned Section 5 ‐ Investment Principles – Subsection 4 ‐ “Special Techniques and Instruments That Have Securities and Money Market Instruments as Underlying Assets”, provided that the counterparty to this transaction is a credit institute within the meaning of abovementioned Section 5 ‐ Investment Principles – Subsection 1 – “Permitted investments” ‐ item 1.1 (f) and the Target Fund has the right to cancel the transaction at any time and to request the back transfer of the amount invested (incl. accrued interest); short‐term money‐market funds within the meaning of the CESR Guidelines 10‐049. The restrictions listed in the previous paragraph also apply to the diversification of the concentration risk. Bankruptcy and insolvency events or other credit events with the Target Fund’s custodian or within their subcustodian/correspondent bank network may result in the rights of the Target Fund in connection with the security to be delayed or restricted in other ways. If the Target Fund is owed a security pursuant to an applicable agreement, then any such security is to be transferred to the OTC counterparty as agreed between the Target Fund and the OTC counterparty. Bankruptcy and insolvency events or other credit events with the OTC counterparty, the Target Fund’s custodian or within their subcustodian/correspondent bank network may result in the rights or recognition of the Target Fund in connection with the security to be delayed, restricted or even eliminated, which would go so far as to force the Target Fund to fulfil its obligations in the framework of the OTC transaction, in spite of any security that had previously been made available to cover any such obligation.
The Target Fund shall decide on an internal framework agreement that determines the details of the above‐mentioned requirements and values, particularly regarding
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ABOUT THE TARGET FUND
Fees and Charges of the Target Fund
Preliminary charge Not applicable
Redemption fee Not applicable
Management fee Up to 1.63% per annum of the net asset value of the Target Fund
Please note that management fee will only be charged once at the Fund level. The management fee charged by the Target Fund will be paid out of the annual management fee charged by the Manager at the Fund level. There is no double charging of management fee.
5. UNDERSTANDING THE RISKS OF THE FUND AND THE TARGET FUND
Below are the risks associated with the investments of the Fund and the Target Fund. Before investing, you should first consider these factors. You are recommended to read the whole Information Memorandum to assess the risk of the Fund and the Target Fund. If necessary, you should consult your professional adviser(s) for a better understanding of the risks.
It is important to note that events affecting the investments cannot always be foreseen. Therefore, it is not always possible to protect investments against all risks. The various asset classes generally exhibit different levels of risk.
GENERAL RISKS OF 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. It stems from the fact that there are economy‐wide perils, or instances of political or social instability which threaten all businesses. Hence, the Fund will be exposed to market uncertainties and fluctuations in the economic, political and social environment that will affect the market price of the investments either in a positive or negative way.
Fund management risk The performance of the Fund depends on the experience and expertise of the fund manager to generate returns. Lack of any of the above mentioned may adversely affect the performance of the Fund.
Performance risk This Fund is a feeder fund which invests in another collective investment scheme, namely the Target Fund. The performance of the Fund very much depends on the performance of the Target Fund. If the Target Fund does not perform in accordance with its objective, the performance of the Fund will also be impacted negatively. The performance of the Target Fund and consequently of this Fund may go down as well as up, depending on the circumstances prevailing at a particular given time. On that basis, there is never a guarantee that investing in the Fund will produce a positive investment returns in accordance with its objective.
Inflation risk Inflation risk is the risk of loss in the purchasing power due to general increase of consumer prices. Inflation erodes the nominal rate of your return giving you a lower real rate of return. Inflation is thus one of the major risks to you and results in uncertainty over the future value of investments. You are advised to take note that this Fund is not constituted with the objective of matching the inflation rate of Malaysia. The Fund has a specified objective that it seeks to achieve without having regard to the inflation rate. If your investment
the types of collateral accepted, the amounts to be added to and subtracted from the respective collateral, as well as the investment policy for liquid funds that are deposited as collateral. This framework agreement is reviewed and adapted where appropriate by the Target Fund on a regular basis.
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objective is to match the inflation rate (so as not to lose your purchasing power over time), this Fund may not be suitable for you.
Loan financing risk If you intend to purchase Units of this Fund by means of borrowed/ financed moneys and pledging those Units as collateral for the borrowed/ financed moneys, you should be aware that if the NAV attributable to the Units falls below the borrowed/ financed amount, the lender may require you to provide additional forms of collateral. You should be aware that the cost of borrowing may rise if the interest rates move up especially if your borrowing is based on floating interest rates (i.e. not a fixed rate). Thus, the cost of borrowings may even be higher than any returns that you may eventually make from your investments in this Fund.
Risk of non‐compliance This refers to the risk where the Manager does not comply with the applicable rules, laws, regulations or the Deed. Although not every non‐compliance will necessarily result in some losses to the Fund, there is always a risk that losses may be suffered by the Fund. For instance, if the Manager is forced to dispose off any investments of the Fund at loss to resolve the non‐compliance. Notwithstanding that, the Manager has imposed stringent internal compliance controls to mitigate this risk.
Operational risk This risk refers to the possibility of a breakdown in the Manager’s internal controls and policies. The breakdown may be a result of human error, system failure or fraud where employees of the Manager collude with one another. This risk may cause monetary loss and/or inconvenience to you. The Manager will regularly review its internal policies and system capability to mitigate instances of this risk. Additionally, the Manager maintains a strict segregation of duties to mitigate instances of fraudulent practices amongst employees of the Manager.
SPECIFIC RISKS OF THE FUND
Concentration risk The Fund is a feeder fund which invests in a single collective investment scheme. Any adverse effect on the Target Fund will inevitably affect the Fund as well. The performance of the Fund is also dependent on the performance of the Target Fund. This risk may be mitigated as the Manager is allowed to take temporary defensive positions in response to adverse market conditions. The Manager is also able to substitute the Target Fund with another fund with similar objective of the Fund if, in the Manager’s opinion, the Target Fund no longer meets the Fund’s objective subject to Unit Holders’ approval with prior notification to SC.
Liquidity risk This is the risk that the units of the Target Fund that is held by the Fund cannot be readily sold and converted into cash. This can occur when there is a restriction on realisation of units of the Target Fund. The Target Fund Manager may suspend the realisation of units, or delay the payment of realisation proceeds in respect of any realisation request received, during any periods in which the determination of the net asset value of the Target Fund is suspended. As a result, the Fund may not be able to receive the repurchase proceeds in timely manner which in turn may delay the payment of repurchase proceeds to the Unit Holders. In managing liquidity risk, the Manager will maintain a sufficient liquidity level for the purposes of meeting repurchase requests.
Country risk Since the Fund invests in Target Fund which is established in Luxembourg and invests in European region, the Fund will be exposed to risks specific to the Luxembourg and European region. The changes or developments in the regulations, political environment and the economy of the above countries may impact the Target Fund which will in turn affect the Fund.
Currency risk Currency risk is also known as foreign exchange risk where the risk is associated with the Fund’s underlying investments which are denominated in
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different currencies than the Fund’s Base Currency, i.e. EUR. The impact of the exchange rate movement between EUR and the currencies of the underlying investments may result in depreciation or appreciation of the value of the Fund’s investments as expressed in EUR.
Investors should also be aware that currency risk is applicable to Classes which are in different currencies than the Fund’s Base Currency, i.e. EUR. The impact of the exchange rate movement between the base currency of the Fund and the currencies of the respective Classes may result in depreciation or appreciation of the investors’ holdings as expressed in EUR.
Target Fund Manager risk As a feeder fund, the Fund invests into the Target Fund which is managed by the Target Fund Manager. The Manager has no control over the investment technique and knowledge, operational controls and management of the Target Fund Manager. In the event of any mismanagement of the Target Fund, the NAV of the Fund, which invests substantially all of its assets into the Target Fund, would be affected adversely.
SPECIFIC RISKS OF THE TARGET FUND
Risk connected with the use of derivatives
Investments in derivatives are subject to general market risk, settlement risk, credit risk and liquidity risk.
However, the nature of these risks may be altered as a result of the special features of the derivative financial instruments, and may in some cases be higher than the risks associated with an investment in the underlying instrument.
For this reason, the use of derivatives requires not only an understanding of the underlying instrument, but also in‐depth knowledge of the derivatives themselves.
With derivatives, the credit risk is the risk that a party may not meet (or cannot meet) its obligations under a specific or multiple contracts. The credit risk for derivatives traded on a stock exchange is, generally speaking, lower than that of OTC derivatives traded on the open market, because the clearing agent that acts as counterparty of every market‐traded derivative accepts a settlement guarantee (see above). To reduce the overall risk of default, the guarantee is supported by a daily payment system maintained by the clearing agent, in which the assets required for cover are calculated. Despite derivatives not possessing any such settlement guarantee, their default risk is generally limited by the investment restrictions set out in the Section 5 ‐ “Investment Principles”, subsection “Risk Diversification” above. Even in cases where the difference between the mutually owed payments (e.g. interest rate swaps, total return swaps) is owed, as opposed to the delivery or exchange of the underlying assets (e.g. options, forwards, credit default swaps), the Fund’s potential loss is limited to this difference in the event of default by the counterparty. The credit risk can be reduced by depositing collateral. To trade derivatives on a stock exchange, participants must deposit collateral with a clearing agent in the form of liquid funds (initial margin). The clearing agent will evaluate (and settle, where appropriate) the outstanding positions of each participant, as well as re‐evaluate the existing collateral on a daily basis. If the collateral’s value falls below a certain threshold (maintenance margin), the participant in question will be required by the clearing agent to bring this value up to its original level by paying in additional collateral (variation margin). With OTC derivatives, this credit risk may also be reduced by the respective counterparty providing collateral (see below), by offsetting different derivative positions that were entered into with this counterparty, as well as through a careful selection process for counterparties (see the Section 5 ‐ “Investment Principles”, subsection “Risk Diversification” above. Even in cases Section 5 ‐ “Investment Principles”, subsection “Risk Diversification” above. Even in cases “Investment Principles”, sub‐section “Permitted Investments”, item 1.1 (g),
22
indent (4).
There are also liquidity risks, as it may be difficult to buy or sell certain instruments. When derivative transactions are particularly large, or the corresponding market is illiquid (as may be the case with derivatives traded over‐the‐counter on the open market), it may in some cases not always be possible to fully execute a transaction, or else it may only be possible to liquidate a position subject to high costs.
Other risks associated with the use of derivatives include the risk of incorrectly valuing or determining the price of derivatives. There is also the possibility that derivatives do not completely correlate with their underlying assets, interest rates or indices.
Many derivatives are complex and are frequently subjectively valued. Inappropriate valuations can result in higher cash payment requirements in relation to counterparties or in a loss of value for the Target Fund.
OTC counterparty risk As the Target Fund may invest in derivatives, there is OTC counterparty risk. Derivative instruments may not be listed and are subject to the terms and conditions imposed by their issuer.
Derivative default risk As compared to conventional securities, such as shares and debt securities, derivative instruments with leveraging effect (such as futures, warrants) can be more sensitive to changes in interest rates; or to sudden fluctuations in market prices. Additionally, since the Target Fund may engage in a derivative contract with a counterparty, there is a risk that the counterparty may default.
Company‐specific changes risk
As the Target Fund invests in European companies with growth potential, any company‐specific changes of such companies may affect the stock price of the company which the Target Fund has invested in. The value of the assets in particular of securities directly or indirectly held by the Target Fund may drop significantly if company‐specific factors (such as the issuer’s business situation) deteriorate, even if the market trend is generally positive. There is no assurance that all companies the Target Fund invests in will actually yield capital growth; as such the Fund is subject to company‐specific changes which affect stock prices.
Changes in interest rates risk
Changes in interest rates might impact the valuation of the company, i.e. borrowing costs may increase, and this may even affect the equity market as a whole. For example, if the central bank implemented an interest rate hike, the cost of borrowing from the banks may increase. As a result, companies might not borrow as much and will have to pay higher rates of interest on their loans. Less business spending can slow down the growth of a company, resulting in decreases in profit – which in turn, will lead to a decrease in the company’s stock price.
Changes in the prices of raw materials and energy resources risk
As the Target Fund invests in production‐focused companies, any changes in the prices of raw materials and energy resource may have a direct impact to production costs for these production companies. This may pose as a risk to the Target Fund since and can increase the Target Fund’s volatility as the company’s earnings potential is correlated to the pricing of raw materials and energy resources. For example, a sudden increase in the price of fuel and coal might lead to higher production costs for a manufacturing company, and thus lead to a lower stock price due to a reduction in revenue.
Changes affecting economic factors risk
As the Target Fund invest into the Europe region only; any changes affecting economic factors may cause movements in financial markets and result in greater volatility. For example, if inflation increases unexpectedly in the European Union, companies will take several quarters to be able to pass along higher input costs to consumers. Likewise, consumers feel the unexpected “pinch” when goods and services cost more. As a result, the stock prices which the Target Fund has invested into may experience a drop, which would subsequently reduce the NAV of the Target Fund. However, the Target Fund
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Manager and team are actively monitoring any potential risks as they operate out of Europe, and have strong research support and also the necessary expertise in investing in Europe.
Changes in the legal environment risk
The investment objectives and parameters of the Target Fund are restricted by legislative and regulatory guidelines. There may be a risk that legislative or regulatory changes may make it less likely for the Target Fund to achieve its objectives. Any regulatory changes pose a risk to the Target Fund as it may materially impact its investments. The Target Fund Manager may dispose of any investments in a particular country should the regulatory changes adversely impacts the Target Fund’s returns.
Changes in investor confidence in certain asset classes, markets, countries, industries and sectors risk
Investor confidence may be influenced by market factors such as economic growth of the region, political stability, and social environments. This stems from the fact that there are economy‐wide perils, or instances of political or social instability which may threaten the wellbeing of certain companies, industries, sectors or even countries. As the Target Fund invests in equities, the Fund will be exposed to market uncertainties and fluctuations in investor confidence, which may or may not affect the stock prices of companies.
6. WHAT ARE THE FEES AND CHARGES INVOLVED?
There are fees and charges involved and you are advised to consider the fees and charges before investing in the Fund.
The fees, charges and expenses quoted in this Information Memorandum are exclusive of GST. The Trustee, other service providers of the Fund and us will charge GST at the prevailing rate of 6% on the fees, charges and expenses in accordance with the Goods and Services Tax Act 2014.
The following are the charges that may be directly incurred by you.
Sales Charge Up to 5.50% of the initial offer price of a Class during the initial offer period, thereafter, on the NAV per Unit of a Class.
Repurchase Charge Not applicable
Transfer Fee A RM5.00 transfer fee will be levied for each transfer of Units.
Switching Fee There are two (2) types of switching facilities available for the Fund, which are:‐
1) Switching between Classes of the Fund, and
2) Switching from this Fund into other funds managed by the Manager.
Note: There is a minimum number of Units that are required to be held within the Fund after a switching transaction is carried out. The minimum holding of Units vary between Classes. Please refer to Section 7 – “Dealing Information” for further details.
The switching fees applicable to the switching facilities set out above are as follows:‐
1) Switching between Class(es) of the Fund
You are entitled to two (2) free switching transactions per calendar year per account when switching between the Classes of the Fund, provided that you meet the minimum holding of Units requirements of the Class that you intend to switch into. A switching fee of up to 1% of the NAV per Unit of the Class switched out from will be charged for any further switching transactions.
2) Switching from this Fund into other funds managed by us
You are allowed to switch from the Fund into other funds managed by us provided that the currency denominated of the fund that you intend to switch into is the same as the Fund. A switching fee of up to 1% of the NAV per Unit of the Class switched out from the Fund will be charged within the
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first six (6) months from the date of your investment.
The following are the fees and expenses that you may indirectly incur when you invest in the Fund
With the issuance of multiple Classes in this Fund, the indirect fees and/or charges for the Fund are apportioned based on the size of the Class relative to the whole Fund. This means that the multi‐class ratio is calculated by taking the “value of a Class before income & expenses” for a particular day and dividing it with the “value of the Fund before income & expenses” for that same day. This apportionment is expressed as a ratio and calculated as a percentage.
As an illustration, assuming there is an indirect fee chargeable to the Fund of EUR 100 and assuming further the size of the EUR Class over the size of the Fund is 60% whereas the size of the MYR‐hedged Class over the size of the Fund is 40%, the ratio of the apportionment based on the percentage will be 60:40, 60% being borne by the EUR Class.
Annual Management Fee The annual management fee is up to 1.80% per annum of the NAV of the Fund. The management fee is calculated and accrued daily and payable monthly to us.
Assuming that the NAV of the Fund is EUR 120 million for the day, then the daily accrued management fee would be:‐
EUR 120 million x 1.80%
365 days = EUR 5,917.81 per day
The management fee is only charged at the Fund level. The management fee chargeable by the Target Fund will be paid out of the annual management fee charged by us at the Fund level. There is no double charging of the management fee.
The management fee is apportioned to each Class based on the multi‐class ratio.
Note: For Unit Holders of a Class other than EUR Class, the management fee payable shall be reflected in MYR/SGD/AUD/USD in the Fund’s financial report.
Annual Trustee Fee The Fund pays an annual trustee fee of up to 0.06% per annum of the NAV of the Fund or its equivalent in the Base Currency (excluding foreign custodian fees and charges). The Trustee may be reimbursed by the Fund for any expenses properly incurred by it in the performance of its duties and responsibilities.
The trustee fee is calculated and accrued daily and payable monthly to the Trustee.
Assuming that the NAV of the Fund is EUR 120 million for the day, then the daily accrued trustee fee would be:‐
EUR 120 million x 0.06% 365 days = EUR 197.26 per day
The trustee fee is apportioned to each Class based on the multi‐class ratio.
Note: For Unit Holders of a Class other than EUR Class, the trustee fee payable shall be reflected in MYR/SGD/AUD/USD in the Fund’s financial report.
Administrative Fee Only fees and expenses that are directly related and necessary to the business of the Fund may be charged to the Fund. These include the following:
(a) Commissions or fees paid to brokers and dealers in effecting dealings in the investments of the Fund, shown on the contract notes or confirmation notes;
(b) (where the custodial function is delegated by the Trustee for the custody of foreign investments) charges and fees paid to sub‐custodians taking into
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custody any foreign assets of the Fund;
(c) Tax and other duties charged on the Fund by the government and/or other authorities;
(d) Costs, fee and other expenses properly incurred by the auditor appointed for the Fund;
(e) Costs, fees and expenses incurred for the valuation of any investments of the Fund by independent valuers for the benefit of the Fund;
(f) Costs, fees and expenses incurred for any modification of the Deed save where modification is for the benefit of the Manager and/or the Trustee;
(g) Costs, fees and expenses incurred for any meeting of the Unit Holders save where such meeting is convened for the benefit of the Manager and/or Trustee;
(h) any tax such as GST and/or other indirect or similar tax now or hereafter imposed by law or required to be paid in connection with any costs, fees and expenses incurred by the Fund; and
(i) Other fees and expenses related to the Fund allowed under the Deed.
All expenses are apportioned to each Class based on the multi‐class ratio.
Maximum Rate of Fees And Charges Allowable By The Deed
We may impose higher fees and charges up to the following stated maximum rate, provided that we have taken the necessary procedures (please refer to page 31 for details) to increase the fees and charges.
Sales Charge 10.00% of the NAV per Unit
Annual Management Fee 5.00% per annum of the NAV of the Fund calculated and accrued daily
Annual Trustee Fee 0.10% per annum of the NAV of the Fund Fund or its equivalent in the Base Currency of the Fund calculated and accrued daily (excluding foreign custodian fees and charges)
7. DEALING INFORMATION
You are advised not to make payment in cash to any individual agent when purchasing Units of the Fund.
If you are intending to invest in a Class other than MYR Class, you are required to have a foreign currency account with any Financial Institutions as all transactions relating to the particular foreign currency will ONLY be made via telegraphic transfers.
Pricing of Units The Selling Price and the Repurchase Price of the Fund shall be equivalent to the NAV per Unit of the Fund. For the USD Hedged‐class, during the initial offer period, the Selling Price per Unit and the Repurchase Price per Unit is equivalent to USD 0.50. After the initial offer period for the USD Hedged‐class and for all other Classes, forward pricing will be used to determine the Selling Price per Unit and Repurchase Price per Unit of the Fund, which is the NAV per Unit as at the next valuation point after the purchase and repurchase request has been received by us.
How Can I Invest? You can obtain the Information Memorandum, account opening form and investment application form from our offices listed in Section 12 ‐ Directory of Sales or from any of the our authorised agents. The Fund’s application form can be handed directly to any of the said offices, or sent by mail, together with proof of payment of the telegraphic transfer. Bank charges (if applicable) will be borne by you.
Please note that other than telegraphic transfer, no other form of payment is allowed.
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Units will be sold on any Business Day between 9.00 a.m. to 3.30 p.m. at any of the locations set out in Section 12 ‐ Directory of Sales.
For first time investors
Individual or joint‐application must be accompanied by a copy of the applicant’s identity card or passport or other document of identification. Application by a corporation must be accompanied by a certified true copy of its Memorandum and Articles of Association, Certificate of Incorporation, Form 24, Form 44, Form 49, the latest audited financial statement of the corporation and board resolution relating to the investment, a list of the corporation’s authorised signatories and specimen signatures of the respective signatories.
Please note that if you are a US Person, you are not eligible to subscribe to the Units of the Fund. If we become aware that you are a US Person who holds Units of the Fund, we will issue a notice requiring you to:‐
1. withdraw your Units of the Fund; or
2. transfer your Units to a non‐US Person;
within thirty (30) days from the date of the said notice.
How Can I Redeem? You may repurchase your Units by completing a repurchase application form and returning it to us on any Business Day between 9:00 a.m. to 3.30 p.m. Repurchase of Units must be made in terms of Units and not in EUR, MYR, SGD, AUD or USD value.
You must elect whether to receive the proceeds in a manner of cheque or telegraphic transfer. If cheque is elected, it will be issued in the name of the Unit Holder. If telegraphic transfer is elected, proceeds will be transferred to your account.
Any incurred bank charges and other bank fees due to a withdrawal by way of telegraphic transfer, bank cheque or other special arrangement method will be borne by you.
TRANSACTION DETAILS
Classes of the Fund EUR class MYR Hedged‐
class SGD Hedged‐
class AUD Hedged‐
class USD Hedged‐
class
Minimum Initial Investment*
EUR 5,000 MYR 10,000 SGD 5,000 AUD 5,000 USD 5,000
Minimum Additional Investment*
EUR 1,000 MYR 5,000 SGD 1,000 AUD 1,000 USD 1,000
Minimum Units Held* 10,000 20,000 10,000 10,000 10,000
If the balance of your investment (i.e. total number of Units) is less than the minimum holding of Units, you will be required to make an additional investment in order to meet the required minimum balance of investment. Otherwise, we may withdraw all your holding of Units in the Fund and pay the proceeds to you.
Frequency and Minimum Units Redeemed
There are generally no limits in the frequency of redemption. However, investors will be required to comply with the minimum units held (which may change at the discretion of the Manager).
Applications for repurchase must be submitted to us on any Business Day between 9.00 a.m. to 3.30 p.m. Such repurchase requests are deemed received only if all documents and forms received by us are duly and correctly completed.
Period of Payment of Redemption Proceeds
You will be paid within fourteen (14) days from the day the repurchase request is received by us and provided that all documentations are completed and verifiable.
* Subject to the Manager’s discretion, the investor may negotiate for a lower amount or value.
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However, if the request to the Trustee to repurchase or cancel the Units results in the sale of assets of the Fund, or sale of assets which cannot be liquidated at an appropriate price or on adequate terms and is as such not in the interest of existing Unit Holders, the Trustee may refuse the said request in accordance to the Deed.
Cooling Off Period Within 6 Business Days from the initial application of Units is received by us.
This right is available if you are investing in any funds managed by us for the first time.
Transfer Facility You are permitted to transfer your Units to another person at any point in time by completing the transfer application form. There is no specific amount of Units required to be transferred. However, Unit Holders are required to comply with the minimum units held after the transfer to remain as a Unit Holder of this Fund. The transfer must be made in terms of Units and not USD, MYR, SGD, AUD or USD value.
Please note that the person who is in receipt of the Units must be a Qualified Investor as well.
Switching Facility There are no restrictions on the frequency of switching; however, there is a minimum number of Units for switching between Class(es), as following:
EUR class MYR Hedged‐class
SGD Hedged‐class
AUD Hedged‐class
USD Hedged‐class
10,000 Units 20,000 Units 10,000 Units 10,000 Units 10,000 Units
Also, you are to note that we reserves the right to reject any switching requests:
(1) that it regards as disruptive to efficient portfolio management; or
(2) if deemed by us to be contrary to the best interest of the Fund or the existing Unit Holders of a particular Class.
In addition, there are two (2) types of switching facilities which are available for the Fund, namely 1) switching between Classes of the Fund and 2) switching from the Fund into other funds managed by us, so long as the currency denomination of the fund that you intend to switch into is the same as the Fund. The switching processes have been individually detailed below:‐
Switching between Classes of the Fund
You are permitted to switch from your current holdings in a particular Class to any other Classes of the Fund. Switching will be made at the prevailing NAV per Unit of the Class to be switched from and the intended Class to be acquired on a Business Day, when the switching request is received or deemed to have been received by us.
You are entitled to two (2) free switching transactions per calendar year per account when switching between the Classes of the Fund provided that you meet the minimum holding of Units requirements of the Class that you intend to switch into. A switching fee of up to 1% of the NAV per Unit of each Class will be charged for any further switching transactions.
Under no circumstances is the Unit Holder entitled to any refund of the Sales Charge (where applicable) paid on the Class being switched from, which exceeds that imposed on the intended Class to be acquired.
Switching from the Fund into other funds managed by us
You are permitted to switch from and into other funds managed by us so long as the currency denomination of the fund that you intend to switch into is the same as the Fund. A switching fee of up to 1% of the NAV per Unit of the Class switched out from the Fund will be within the first six (6) months from the date of your investment.
The switching will be made at the prevailing NAV per Unit of the Fund and the intended fund to be switched into on a Business Day when the switching
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request is received or deemed to have been received by us (subject to availability and terms of the fund that you intend to switch into, if any).
If you wish to switch into another fund (e.g. fund A) and the Sales Charge paid by you is less than the sales charge of fund A, you shall pay the difference between the two (2) funds. Conversely, no sales charge on fund A will be imposed on you, should it be less than or equal to the Sales Charge you have paid for the Fund.
You are allowed to switch into any other funds managed by us (subject to the availability and terms of the fund that you intend to switch into).
Under no circumstances you are entitled to any refund on the Sales Charge that you have paid when you invested in the Fund if it exceeds the sales charge of the fund that you intend to switch into.
We reserve the right to reject any switching request:‐
(1) that it regards as disruptive to efficient portfolio management; or
(2) if deemed by us to be contrary to the best interest of the Fund.
8. VALUATION POLICY AND VALUATION BASIS
Valuation of Fund The Fund will be valued at 6.00 p.m. on every Business Day (or “trading day” or “T” day). However, if the Fund has exposure to investments outside of Malaysia, the Fund shall be valued at 11.00 a.m. on the next Business Day (or “T + 1”). All foreign assets are translated into the Base Currency based on the exchange rate quoted by Bloomberg or Reuters at 4.00 p.m. (United Kingdom time) which is equivalent to 11 p.m. or 12 a.m. midnight (Malaysian time) on the same day, or at such time as stipulated in the investment management standards issued by the FiMM. If the foreign market in which the Fund is invested in is closed for business, we will value the underlying assets based on the latest available price as at the day the particular foreign market was last opened for business.
Valuation of Assets In valuing the Fund’s investments, we will ensure that all the assets of the Fund will be valued at fair value and in accordance to the Financial Reporting Standard 139 issued by the Malaysian Accounting Standards Board.
Unlisted Collective Investment Schemes
Investments in unlisted collective investment schemes shall be valued based on the last published repurchase price.
Fixed Deposit
Valuation of fixed deposits placed with Financial Institutions will be done by reference to the principal value of the fixed deposits and the interests accrued thereon for the relevant period.
Money Market Instruments
Valuation of money market instruments will be based on amortised costs.
Derivatives
The valuation of derivatives will be based on the rates provided by the respective issuers. For foreign exchange forward contracts (“FX Forwards”), we will apply interpolation formula to compute the value of the FX Forwards based on the rates provided by the Bloomberg. If the rates are not available on the Bloomberg, the FX Forwards will be valued by reference to the average indicative rate quoted by at least 3 independent dealers. In the case where we are unable to obtain quotation from 3 independent dealers, the FX Forwards will be valued in accordance to fair value as determined in good faith by us, on methods or bases which have been verified by the auditor of the Fund and approved by the Trustee.
Any Other Investment
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Fair value as determined in good faith by us, on methods or bases which have been verified by the auditor of the Fund and approved by the Trustee.
9. RELEVANT PARTIES TO THE FUND
About Us – Affin Hwang Asset Management Berhad
We were incorporated in Malaysia on 2 May 1997 under the Companies Act 1965 and began our operations under the name Hwang‐DBS Capital Sdn. Bhd. in 2001. In early 2014, we were acquired by the Affin Banking Group (“Affin”) and hence, we are now supported by a major home‐grown financial services conglomerate. Affin has over 38 years of experience in financial industry which focuses on commercial, Islamic and investment banking services, money broking, fund management and underwriting of life and general insurance business. Additionally, we are also 30% owned by Nikko Asset Management International Limited, a wholly‐owned subsidiary of Tokyo‐based Nikko Asset Management Co. Ltd, an independent Asian investment management franchise.
We offer a wide range of unit trust products, private mandates and investment solutions to private clients, as well as to retail clients. These include conventional equities, balanced, bond, money market, capital guaranteed, capital protected, global, structured and feeder funds, as well as Shariah‐compliant equity, Islamic money market instruments and Islamic fixed income funds. Our Role as the Manager
We are responsible for the investment management and marketing of the Fund; servicing Unit Holders’ needs; keeping proper administrative records of Unit Holders and the Fund; ensuring compliance with stringent internal procedures and guidelines of relevant authorities.
Our Investment Team
Our investment team comprises a group of portfolio managers who possess the necessary expertise and experience to undertake the fund management of its unit trust funds. The investment team will meet at least once a week or more should the need arise. The designated fund manager of the Fund is:‐
Mr. David Ng Kong Cheong – Chief Investment Officer
Mr. David Ng joined the Manager in September 2002 as a Portfolio Manager and was appointed as Chief Investment Officer on 1 September 2006, to oversee the equities, fixed income and the central dealing units. He graduated with both Bachelor of Commerce (Accounting) and Bachelor of Law degrees from Monash University in Melbourne, Australia and he is also Chartered Financial Analyst charter holder. In total, David has over 15 years of investment experience in managing both institutional and unit trust funds. Mr. David Ng’s key responsibilities at the Manager is setting the investment strategy for the assets under management, and the management of selected portfolios.
About the Trustee – Deutsche Trustees Malaysia Berhad
Deutsche Trustees Malaysia Berhad (“DTMB”) (Company No. 763590‐H) was incorporated in Malaysia on 22 February 2007 and commenced business in May 2007. The company is registered as a trust company under the Trust Companies Act 1949, with its business address at Level 20, Menara IMC, 8 Jalan Sultan Ismail, 50250 Kuala Lumpur. DTMB is a member of Deutsche Bank Group (“Deutsche Bank”), a global investment bank with a substantial private client franchise. With more than 100,000 employees in more than 70 countries, Deutsche Bank offers financial services throughout the world.
Duties and Responsibilities of the Trustee The Trustee’s main functions are to act as trustee and custodian of the assets of the Fund and to safeguard the interests of Unit Holders of the Fund. In performing these functions and duties, the Trustee has to exercise all due care and vigilance and is required to act in accordance with the provisions of the Deed, all relevant laws and the Guidelines.
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10. RELATED INFORMATION
Your Rights and Liabilities
You have the right, among others, to the followings:‐
(a) To receive the distribution of income, participate in any increase in the value of the Units and to other such rights and privileges as set out under the Deed for the Fund;
(b) To call for Unit Holders’ meetings, and to vote for the removal of the Trustee or the Manager through a special resolution; and
(c) To receive quarterly and annual reports.
However, you would not have the right to require the transfer to you of any of the investments or assets of the Fund. Neither would you have the right to interfere with or question the exercise by the Trustee or the Manager on his behalf, of the rights of the Trustee as the registered owner of the assets of the Fund. You are not liable to the followings:‐
(a) For any amount in excess of the purchase price paid for the Units as determined pursuant to the Deed at the time the Units were purchased and any charges payable in relation thereto;
(b) For any obligation to indemnify the Trustee and/or the Manager in the event that the liabilities incurred by the Trustee and the Manager 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 NAV of the Fund, and any right of indemnity of the Trustee and/or the Manager shall be limited to recourse to the Fund.
Provisions Regarding Unit Holders’ Meetings
Unit Holders’ Meeting convened by the Unit Holders
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), whichever is less, of all the Unit Holders of the Fund or of a particular Class of Units, as the case may be, summon a meeting of the Unit Holders of the Fund or of that Class of Units by:
(a) sending by post at least seven (7) days before the date of the proposed meeting a notice of the proposed meeting to all the Unit Holders or Unit Holders of a particular Class of Units, as the case may be; and
(b) publishing at least fourteen (14) days before the date of the proposed meeting an advertisement giving notice of the proposed meeting in a national language newspaper published daily and another newspaper approved by the relevant authorities.
The Unit Holders may direct the Manager to summon a meeting for any purpose including, without limitation, for the purpose of:‐
(a) requiring the retirement or removal of the Manager;
(b) requiring the retirement or removal of the Trustee;
(c) considering the most recent financial statements of the Fund; or
(d) giving to the Trustee such directions as the meeting thinks proper;
provided always that the Manager shall not be obliged to summon any such meeting unless direction has been received from not less than fifty (50) or one‐tenth (1/10), whichever is less, of all the Unit Holders of the Fund or all the Unit Holders of a particular Class of Units. Unit Holders’ Meeting convened by the Manager or Trustee
Unless otherwise required or allowed by the relevant laws, the Manager or Trustee may convene a Unit Holders’ meeting by giving Unit Holders of the Fund or a particular Class of Units, as the case may be, by:
(a) sending by post at least twenty‐one (21) days before the date of the proposed meeting a notice of the proposed meeting to each of the Unit Holders at the Unit Holder’s last known address or, in the case of jointholders, to the jointholder whose name stands first in the records of the Manager at the jointholder’s last known address; and
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(b) publishing at least twenty‐one (21) days before the date of the proposed meeting an advertisement
giving notice of the meeting in a national language newspaper published daily and another newspaper approved by the relevant authorities.
Quorum Required for Convening a Unit Holders’ Meeting
The quorum required for a meeting of the Unit Holders shall be five (5) Unit Holders (irrespective of the Class), whether present in person or by proxy, provided that if the Fund or a Class of Units has five (5) or less Unit Holders (irrespective of the Class), the quorum required for a meeting of the Unit Holders of the Fund or a Class of Units shall be two (2) Unit Holders (irrespective of the Class), 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 (irrespective of the Class) of the Fund or the particular Class of Units at the time of the meeting. Termination of the Fund
The Fund may be terminated or wound up subject to a Special Resolution being passed at a Unit Holders’ meeting to terminate or wind up the Fund.
Termination of a Class of Units
The Manager may terminate a particular Class of Units in accordance with the relevant laws. The Manager may only terminate a particular Class of Units if the termination of that Class of Units does not prejudice the interests of Unit Holders of any other Class of Units. For the avoidance of doubt, the termination of a Class of Units shall not affect the continuity of any other Class of Units of the Fund.
Procedures to be taken to increase the Fees and Charges from the current amount stipulated in the Information Memorandum
We may not charge a Sales Charge at a rate higher than that disclosed in a prevailing information memorandum unless:‐
(a) we have notified the Trustee in writing of the higher rate and the date on which such higher rate is to become effective; and
(b) a supplemental/replacement information memorandum is issued thereafter.
We or the Trustee may not charge an annual management fee and/or an annual trustee fee at a rate higher than that disclosed in a prevailing information memorandum unless:
(a) both the trustee and the Manager have come to an agreement on the higher rate;
(b) we have notified the Unit Holders of the higher rate and the date on which such higher rate is to become effective; and
(c) a supplemental/replacement information memorandum stating the higher rate is issued thereafter.
Goods And Services Tax
The Royal Malaysian Customs Department has announced the implementation of GST with effect from 1 April 2015 onwards pursuant to the Goods and Services Tax Act 2014. Collective investment schemes are generally exempted from GST. However, some fees, charges and expenses of the Manager, Trustee or the Fund are subject to GST which includes:
(a) Sales Charge (if any); (b) Repurchase Charge (if any); (c) Switching fee (if any); (d) Transfer fee; (e) Management fee; (f) Trustee fee; and (g) Any other expenses of the Fund that may be confirmed to be GST taxable by the Royal Malaysian
Customs Department.
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The Trustee, other service providers of the Fund and us will charge GST at the prevailing rate of 6% on the abovementioned fees, charges and expenses in accordance with the Goods and Services Tax Act 2014. You should be aware that all fees, charges and expenses referred to or quoted in the Information Memorandum (including any supplemental information memorandum) and the Deed (including any supplemental deed) are referred to or quoted as being exclusive of GST. Incorrect Pricing
Subject to any relevant law, if there is an error in the pricing of the NAV per Unit of a particular Class, we will take immediate remedial action to correct the error. Rectification shall, where necessary, extend to the reimbursement of money as follows if the error is at or above the significant threshold of 0.5% of the NAV per Unit attributable to a Class of Units unless the total impact on a Unit Holder’s account of each Class of Units is less than EUR 10.00, or its foreign currency equivalent:
(a) if there is an over pricing in relation to the purchase and creation of Units, the Fund shall reimburse the Unit Holder;
(b) if there is an over pricing in relation to the repurchase of Units, the Manager shall reimburse the Fund;
(c) if there is an under pricing in relation to the purchase and creation of Units, the Manager shall reimburse the Fund; and
(d) if there is an under pricing in relation to the repurchase of Units, the Fund shall reimburse the Unit Holder or former Unit Holder.
The Manager retains the discretion whether or not to reimburse if the error is below 0.5% of the NAV per Unit of each Class and where the total impact on an individual account is less than RM10.00 or its foreign currency equivalent in absolute amount. This is because the reprocessing costs may be greater than the amount of the adjustment.
Policy on Gearing and Minimum Liquid Assets Requirements
The Fund is not permitted to borrow cash or other assets (including the borrowing of securities within the meaning of the SC’s Guidelines on Securities Borrowing and Lending [SBL Guidelines]) in connection with its activities.
Except for securities lending as provided under the SBL Guidelines, none of the cash or investments of the Fund may be lent. Further, the Fund may not assume, guarantee, endorse or otherwise become directly or contingently liable for or in connection with any obligation or indebtedness of any person. In structuring the portfolio of the Fund, we will maintain sufficient liquid assets to ensure short term liquidity in the Fund to meet operating expenses. Policy on Stockbroking Rebates and Soft Commissions
We or any of our delegates thereof will not retain any rebate or soft commission from, or otherwise share in any commission with, any broker/dealer in consideration for directing dealings in the investments of the Fund. Accordingly, any rebate or shared commission will be directed to the account of the Fund.
The soft commission can be retained by us or any of our delegates thereof provided that the goods and services are of demonstrable benefit to the Unit Holders such as research materials, data and quotation services, financial wire services and investment related tools/publication which are incidental to the investment management activities of the Fund.
Anti‐Money Laundering Policies and Procedures
Pursuant to the Anti‐Money Laundering, Anti‐Terrorism Financing and Proceeds of Unlawful Activities Act 2001, it is our responsibility to prevent the use of the Fund for money laundering and terrorism financing activities. To this end, we have put in place anti‐money laundering policies and procedures to combat such activities. Amongst others, prior to the establishing or conducting business relations, particularly when opening new accounts for clients and entering into a fiduciary transaction with a client, we will conduct a “Know Your Customer” procedures to identify and verify the client through documents such as identity card, passport, birth certificate, driver’s licence, constituent documents or any other official documents, whether in the possession of a third party or otherwise. Such documents shall be filed and retained by us in accordance with relevant laws. We will thereafter perform a Customer Due Diligence (CDD) to identify the risk profile of each customer and will continuously monitor each customers risk profile should there be any changes. Enhanced Customer
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Due Diligence (EDD) is performed on customers deemed as high risk and senior management’s approval is required before a business relationship is entered into or an account is opened with such customers.
Where we suspect that a particular transaction may not be genuine, a Suspicious Transactions Form (STF) shall be completed and the matter will be discussed with senior management. If senior management ascertains that there is a reasonable ground to suspect the transaction to be a money laundering or terrorism financing activity, a STF will then be submitted to the Financial Intelligence and Enforcement Department of Bank Negara Malaysia.
11. INVESTORS INFORMATION
How will I be informed of my investment?
We will send you:‐
(a) a financial reports with an annual report within two (2) months of the Fund’s financial year‐end and a quarterly report within two (2) months of the end of the period covered. In both annual and quarterly reports, we will state our view on the performance of the portfolio and market review for the reporting period.
(b) a monthly statement confirming the current shareholdings and transactions relating to your Units in the Fund.
You can also seek assistance from our Customer Service personnel at our office or at any location listed in Section 12 during the office hour. Alternatively, you can communicate via our toll free number 1‐800‐88‐7080 or email to customercare@affinhwangam.com.
12. DIRECTORY OF SALES OFFICE HEAD OFFICE Suite 11‐01, 11
th Floor,
Menara Keck Seng, 203, Jalan Bukit Bintang, 55100 Kuala Lumpur. Tel : (603) – 2116 6000 Fax : (603) – 2116 6100 Toll Free No : 1‐800‐88‐7080 Email: customercare@affinhwangam.com SELANGOR A‐7‐G Jaya One, No. 72A, Jalan Universiti, 46200, Petaling Jaya, Selangor. Tel: (603)‐7620 1290 Fax: (603)‐7620 1298 JOHOR 1st Floor, No. 93, Jalan Molek 1/29, Taman Molek, 81100 Johor Bahru, Johor. Tel : 07 – 351 5677/ 5977 Fax : 07 – 351 5377
PENANG No. 10‐C‐23 & 10‐C‐24, Precinct 10, Jalan Tanjung Tokong, 10470 Penang. Tel : (604) ‐ 899 8022 Fax : (604) ‐ 899 1916 PERAK 13A, Persiaran Greentown 7, Greentown Business Centre, 30450 Ipoh, Perak. Tel: (605) ‐ 241 0668 Fax: (605) – 255 9696 MELAKA Ground Floor, No. 584, Jalan Merdeka, Taman Melaka Raya, 75000 Melaka. Tel : (606) – 281 2890 Fax : (606) – 281 2937
SABAH Lot No. B‐2‐09, 2
nd Floor,
Block B, Warisan Square, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah. Tel : (6088) ‐ 252 881 Fax : (6088) ‐ 288 803 SARAWAK Ground Floor, No. 69, Block 10, Jalan Laksamana Cheng Ho, 93200 Kuching, Sarawak. Tel : (6082) – 233 320 Fax : (6082) – 233 663 1st Floor, Lot 1291,
Jalan Melayu, MCLD, 98000 Miri, Sarawak. Tel : (6085) ‐ 418 403 Fax : (6085) – 418 372
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