Incorporating nine investment choices: PACIFIC PREMIER FUND PACIFIC PEARL FUND PACIFIC DANA AMAN PACIFIC MILLENNIUM FUND PACIFIC RECOVERY FUND PACIFIC INCOME FUND PACIFIC PROGRESSIVE FUND PACIFIC DANA MURNI PACIFIC DANA KLSI MASTER PR SPECTUS MANAGER : PACIFIC MUTUAL FUND BHD (336059-U) a company incorporated in Malaysia under the Companies Act 1965 TRUSTEES : UNIVERSAL TRUSTEE (MALAYSIA) BERHAD (17540-D) AMTRUSTEE BERHAD (163032-V) BUMIPUTRA-COMMERCE TRUSTEE BERHAD (167913-M) BHLB TRUSTEE BERHAD (313031-A) Investors are advised to read and understand the contents of the Prospectus. If in doubt, please consult a professional adviser. This Master Prospectus is dated 15 November 2003 and expires on 14 November 2004. I n t r o d u c i n g A World of UNIT TRUST INVESTMENT Opportunities WELCOME TO PACIFIC MUTUAL FUND BHD We hope you will find this Master Prospectus informative, easy to read and useful in helping you make smart investment decisions. If you have any queries about the information in this Master Prospectus or would like to know more about investing in our Funds, please feel free to contact our Customer Care personnel at 03-7725 9877, e-mail customercare@pacificmutual.com.my. Alternatively, you may contact our authorised intermediaries or branches. (Please refer to full contact details on pages 122 and 123.) (i) RESPONSIBILITY STATEMENT This Prospectus has been seen and approved by the directors of the Management Company of the unit trust funds 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 the omission of which would make any statement herein misleading. STATEMENT OF DISCLAIMER A copy of this Prospectus has been registered by, and lodged with, the Securities Commission. The Securities Commission has approved the issue, offer or invitation in respect of the unit trust funds the subject of this Prospectus, and that the approval shall not be taken to indicate that the Securities Commission recommends the investment. The Securities Commission shall not be liable for any non-disclosure on the part of the Management Company and takes no responsibility for the contents of the Prospectus, 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 Prospectus. INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. IN CONSIDERING THE INVESTMENT, INVESTORS WHO ARE IN DOUBT AS TO THE ACTION TO BE TAKEN SHOULD CONSULT THEIR PROFESSIONAL ADVISERS IMMEDIATELY. This Prospectus is a concise statement of information about the Funds that is relevant to making investments in the Funds. This Prospectus should be retained for future reference. DOCUMENTS AVAILABLE FOR INSPECTION For a period of not less than 12 months, the following documents or copies thereof, where applicable, may be inspected at the registered office of the Management Company and the Trustee, without charge: • The Deeds of the Funds; • Each material contract or document referred to in the Prospectus; • The latest annual and interim reports of the Funds; • All reports, letters or other documents, valuations and statements by any expert, any part of which is extracted or referred to in the Prospectus; • The audited accounts of the Management Company and the Funds for the last five financial years or from the date of incorporation/commencement, or if less than five years, preceding the date of Prospectus; • The audited accounts of the Management Company and the Funds for the current financial year (where applicable); and • Any consent given by experts or persons whose statement appears in the Prospectus. No units will be issued or sold on the basis of this Prospectus later than one year after the date of this Prospectus. (ii) DEFINITIONS In this Prospectus, except where the context otherwise requires, the following words and expressions shall bear the meanings given to them below: Business Day A day on which the KLSE is open for dealing. Deed The deeds and all supplemental deeds entered into between the Manager and the Trustees for the unitholders of the Funds. Eligible Market A market that is regulated by a regulatory authority within Malaysia, operates regularly, open to the public and has adequate liquidity for the purposes of the Funds. It includes but is not limited to a stock exchange approved and an exempt stock market declared by the Minister under the Securities Industry Act 1983; a futures market of an exchange company approved and exempt futures market declared by the Minister under the Futures Industry Act 1993; the money market; and the over-the-counter private debt securities market. Fund A fund managed by the Management Company. Funds For the purpose of this Prospectus, unless the context otherwise requires, Funds mean all funds managed by the Management Company except Pacific SELECT Balance Fund and Pacific SELECT Income Fund. Guidelines or SC Guidelines Guidelines on Unit Trust Funds issued by the Securities Commission. This includes any amendments or reissue. KLSE Management Expense Ratio (MER) The Kuala Lumpur Stock Exchange. Total expenses incurred by the Fund for the year Average Net Asset Value of the Fund x 100 This ratio will inform the investor of the total expenses incurred by the Fund during the year. This includes management fee, trustee fee and expenses incurred for fund administrative services. A low MER indicates the effectiveness of the Manager in managing the expenses of the Fund. Manager/Company/ Management Company Pacific Mutual Fund Bhd (336059-U) or, in short, Pacific Mutual Net Asset Value (NAV) Net Asset Value (NAV) of the respective Fund is determined by deducting the value of all the Fund’s liabilities from the value of the Fund’s assets, at the valuation point. For the purpose of computing the annual management fee and annual trustee fee, the NAV of the Fund should be inclusive of the management fee and the trustee fee for the relevant day. Net Asset Value (NAV) Per Unit Net Asset Value per unit of the Fund is determined by dividing the Fund’s NAV by the number of units in issue. Portfolio Turnover Ratio (PTR) (Total acquisitions and disposals of investment for the year) / 2 Average Net Asset Value of the Fund The portfolio turnover ratio will inform the investor whether the Fund buys and sells securities frequently or whether it takes a longer view in its investment strategy. A portfolio turnover rate of one means that the average holding period of securities purchases is one year. A high PTR indicates that the Fund buys and sells securities very often. Prospectus Short Term/Medium Term/Long Term Prospectus in relation to the Funds managed by Pacific Mutual. Short term – below one year; medium term – above one year to three years; long term – above three years. (iii) Syariah-Based Funds Trustees Pacific Dana Aman, Pacific Dana Murni and Pacific Dana KLSI. Universal Trustee (Malaysia) Berhad (17540-D) – for Pacific Premier Fund AmTrustee Berhad (163032-V) – for Pacific Pearl Fund, Pacific Dana Murni and Pacific Dana KLSI Bumiputra-Commerce Trustee Berhad (167913-M) – for Pacific Dana Aman BHLB Trustee Berhad (313031-A) – for Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund and Pacific Progressive Fund Unitholder The person registered for the time being as a holder of units in the Fund including persons jointly registered in accordance with the provisions of the Deed. (iv) CORPORATE DIRECTORY Manager Registered Office Business Office Board Of Directors Audit Committee Members Of Investment Committee Pacific Mutual Fund Bhd (336059-U) Level 18, Menara Prudential, No. 10, Jalan Sultan Ismail, 50250 Kuala Lumpur Tel: 03-2176 1000 1001, Level 10, Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan Tel: 03-7725 9877 Fax : 03-7725 9860 E-mail: customercare@pacificmutual.com.my Website: www.pacificmutual.com.my Choi Siew Hong (Chairman) Tan Sri Dato’ Wong Kum Choon Dato’ Haji Mustafa bin Mohamad Ali * Datuk Fong Weng Phak Dr Neoh Soon Kean * Mak Tian Meng * Mej (B) Bibi Zarjaan binti Akhbar Khan Dato’ Haji Mustafa bin Mohamad Ali (Chairman) Datuk Fong Weng Phak Mak Tian Meng Choi Siew Hong Tan Sri Dato’ Wong Kum Choon Dato’ Haji Mustafa bin Mohamad Ali ** Datuk Fong Weng Phak Dr Neoh Soon Kean ** Mak Tian Meng ** Dr Obiyathulla Ismath Bacha ** (for Pacific Dana Aman, Pacific Dana Murni and Pacific Dana KLSI only) Dr Mohd Daud Bakar ** Trustees (for Pacific Dana Aman, Pacific Dana Murni and Pacific Dana KLSI only) Universal Trustee (Malaysia) Berhad (17540-D) - for Pacific Premier Fund No. 1, Jalan Ampang (3rd Floor), 50450 Kuala Lumpur Tel: 03-2070 8050 E-mail: www.utmb@po.jaring.my AmTrustee Berhad (163032-V) - for Pacific Pearl Fund, Pacific Dana Murni and Pacific Dana KLSI 22nd Floor, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur Tel: 03-2078 2633 Website: www.ambg.com.my Bumiputra-Commerce Trustee Berhad (167913-M) D-0-6, Megan Phileo Promenade, 189, Jalan Tun Razak, 50400 Kuala Lumpur Tel: 03-2161 2382 E-mail: ibhi@bctrustee.com Website: www.bctrustee.com BHLB Trustee Berhad (313031-A) - for Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund and Pacific Progressive Fund Ground & 1st Floor, Rockwills Centre, No. 24 Jalan 14/22 Right Angle, Seksyen 14, 46100 Petaling Jaya, Selangor Darul Ehsan Tel: 03-7958 3637 E-mail: trustcom@tm.net.my Website: bhlbtrustee.com.my * Independent Directors ** Independent Investment Committee members (v) - for Pacific Dana Aman Syariah Advisers BIMB Securities Sdn Bhd - for Pacific Dana Aman Tingkat 1 & 2, Blok Podium Bangunan AMBB 1, Jalan Lumut, 50400 Kuala Lumpur Tel: 03-4043 3533 E-mail: bimsec@tm.net.my Islamic Banking and Finance Institute Malaysia Sdn Bhd (340040-M) Dana Murni and Pacific Dana KLSI Wisma BIM (Wisma Zelan), No. 1B, Jalan Tasik Permaisuri 2/106, Bandar Tun Razak, 56000 Kuala Lumpur Tel: 03-9172 2175 E-mail: info@ibfim.com Website: www.ibfim.com Auditors And Reporting Accountants Tax Advisers Company Secretaries Banker Ernst & Young Level 23A, Menara Milenium, Pusat Bandar Damansara, 50490 Kuala Lumpur Tel: 03-2087 7000 Website: www.ey.com/my Ernst & Young Tax Consultants Sdn Bhd (179793-K) Level 23A, Menara Milenium, Pusat Bandar Damansara, 50490 Kuala Lumpur Tel: 03-2087 7000 Website: www.ey.com/my Phuah Lay Chin (MIA 5579) Chong Yok Hua (MAICSA 0861045) Level 18, Menara Prudential, No. 10 Jalan Sultan Ismail, 50250 Kuala Lumpur Tel: 03-2176 1000 OCBC Bank (Malaysia) Berhad (295400-W) (vi) - for Pacific CONTENTS 1 Key Information Of The Funds 5 Eight Principles Of Successful Unit Trust Investing 9 All About The Manager - Pacific Mutual Fund Bhd 20 Trustees Of The Funds, Their Duties And Obligations 29 Syariah Advisers 32 More Information About The Funds • • Non-Syariah-Based Funds ■ Why Invest In Pacific Premier Fund? ■ Why Invest In Pacific Pearl Fund? ■ Why Invest In Pacific Millennium Fund? ■ Why Invest In Pacific Recovery Fund? ■ Why Invest In Pacific Income Fund? ■ Why Invest In Pacific Progressive Fund? Syariah-Based Funds ■ Why Invest in Pacific Dana Aman? ■ Why Invest in Pacific Dana Murni? ■ Why Invest in Pacific Dana KLSI? Risk Management Strategies And Techniques Minimum And Maximum Levels Of Asset Allocation Trading Activities Bases Of Valuation Of Investments 81 Fees, Charges And Expenses 86 Basic Information On Unit Trust Investment Transactions • What Is The Minimum Initial Investment? • What Is The Minimum Additional Investment? • How Are Unit Prices Calculated? ■ Valuation Of Units ■ Manager’s Selling Price ■ Manager’s Buying Price • How And Where Can You Purchase, Redeem And Transfer Your Investment? • Will There Be Flexibility For Switching From One Fund To Another? • Cooling-Off Period • Distributions 90 Getting To Know How Your Funds Work 91 Your Rights As A Unitholder 92 Taxation Adviser’s Letter 96 Financial Information Of The Company 115 Unaudited Interim Financial Statements Of The Funds 117 Directors’ Declaration 117 Consent 118 Master Application Form 122 List Of Pacific Mutual Fund Bhd Offices And Institutional Unit Trust Agents KEY INFORMATION OF THE FUNDS Management Company: PACIFIC MUTUAL FUND BHD (336059-U) Non-Syariah-Based Funds Pacific Pearl Fund Pacific Premier Fund FUND PROFILE • Fund Category • Fund Type • Characteristic Pacific Millennium Fund Pacific Recovery Fund • Equity • Growth and income • Fairly aggressive • Equity (Small cap) • Growth • Fairly aggressive • Equity • Growth • Fairly aggressive • Equity • Growth • Aggressive INVESTORS’ PROFILE Those seeking current returns potentially higher than fixed deposit interest rates and moderate capital growth over the medium to long term. Those seeking high capital growth of small and mediumsized companies with excellent growth potential over the medium to long term. Those seeking steady capital and income growth of large companies whose current prices may fail to reflect their long-term values over the medium to long term. Those seeking high capital growth over the medium to long term and willing to accept a higher degree of risk in return for potentially higher investment gains following any economic downturn, industrywide cyclical downturn or corporate restructuring exercise. INVESTMENT OBJECTIVE & STRATEGY • Aims to achieve strong longterm capital growth with a consistently attractive income. A strategy has been set up to create a balanced portfolio of equity securities with capital growth prospects and high income yielding and fixed interest securities. • Equity allocation: maximum – 80%; minimum – 40% • Aims to achieve maximum capital growth over a medium to long-term period by investing mainly in small to medium-sized companies that have excellent prospects for growth. • Equity allocation: maximum – 85%; minimum – 40% • Aims to achieve long-term capital growth, with income as its secondary objective, by investing mainly in fundamentally sound large market capitalisation companies and also any other investments as may be permitted by the Securities Commission from time to time. • Equity allocation: maximum – 85%; minimum – 40% • Aims to provide above average returns in the form of capital growth over a medium to long-term period by investing mainly in cyclical stocks, stocks that are likely to be crisis survivors as well as stocks that are undergoing restructuring, which may offer considerable recovery prospects and also any other investments as may be permitted by the Securities Commission from time to time. • Equity allocation: maximum – 90%; minimum – 45% PERMITTED INVESTMENTS Please refer to page 33. Please refer to page 39. Please refer to page 45. Please refer to page 51. PRINCIPAL RISKS • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Credit risk • Expectation risk • Futures risks Please see pages 5 to 7. DISTRIBUTION POLICY * Income distribution, if any, once Income distribution, if any, once Income distribution, if any, once Income distribution, if any, once a year. a year. a year. a year. UNIT SPLIT If any, once a year. If any, once a year. If any, once a year. If any, once a year. • Universal Trustee (Malaysia) Berhad (17540-D) • 30 September • 10 August 1995 • 500 million units • 324.53 million units • AmTrustee Berhad (163032-V) • BHLB Trustee Berhad (313031-A) • 30 June • 15 April 1999 • 500 million units • 129.40 million units • BHLB Trustee Berhad (313031-A) • 30 June • 15 April 1999 • 500 million units • 243.90 million units GENERAL INFORMATION • Trustee • • • • Financial Year End Launch Date Approved Fund Size Units In Circulation As At 3 November 2003 • • • • 31 March 6 January 1997 500 million units 360.33 million units * Income distributions are not guaranteed and may not be repeated. Income distributions may be made more than once in a financial year of the Funds. 1 KEY INFORMATION OF THE FUNDS Non-Syariah-Based Funds Pacific Income Fund Syariah-Based Funds Pacific Progressive Fund Pacific Dana Aman Pacific Dana Murni Pacific Dana KLSI • Fixed income/equity • Income • Fairly conservative • Equity (Technology) • Growth • Aggressive • Balanced (Islamic) • Growth and income • Fairly aggressive • Bond (Islamic) • Income • Conservative • Equity index (Islamic) • Growth and income • Aggressive Those seeking a regular income stream with returns higher than fixed deposit rates and moderate capital growth with reasonable preservation of capital. Those seeking high capital growth over the medium to long term and willing to accept a higher degree of risk in return for potentially higher investment gains in the technology sector*. (*Please refer to page 63) Those seeking above average income and capital growth over the medium to long term in investments which comply with Syariah principles. Those seeking steady returns higher than general investment accounts with reasonable protection of capital, while abiding by the Syariah principles. It is suitable for investors seeking a regular income stream and moderate capital growth. Those seeking capital growth over the medium to long term, while abiding by the Syariah principles, and having a moderate to high tolerance level for risks. • Aims to achieve consistently attractive and stable income with reasonable preservation of capital by investing in a diversified portfolio of fixed income securities such as bonds and money market instruments as well as stocks that offer a steady dividend income stream. The Fund also aims to provide moderate capital growth over a medium to long-term period. • Equity allocation: maximum – 40%; minimum – 20% • Fixed income allocation: minimum – 30% • Aims to achieve maximum capital growth and income over a medium to long-term period by investing in securities of companies in the technology industry that offer strong growth prospects. • Equity allocation: maximum – 95%; minimum – 45% • Aims to provide the unitholders with consistently above average returns in both income and capital growth over a medium to long-term period by investing in a wide portfolio of authorised securities over investments which comply with Syariah principles. • Equity allocation: maximum – 75%; minimum – 35% • Islamic debt allocation: minimum – 10% • Aims to achieve a stable income stream with reasonable protection of capital by investing in a diversified portfolio of Islamic debt securities and other liquid assets which comply with Syariah principles. The Fund may also provide some degree of capital growth potential over a medium to long-term period. • Islamic debt allocation: maximum – 95%; minimum – 40% • Aims to provide medium to long-term capital growth by tracking the KLSE Syariah Index (KLSI). • Equity allocation: maximum – 95%; minimum – 45% Please refer to page 57. Please refer to page 64. Please refer to page 69. Please refer to page 75. Please refer to page 77. • Interest rate risk • Credit risk • Liquidity risk • Market risk • Company specific risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Liquidity risk • Futures risks • Credit risk Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risks Please see pages 5 to 7. • Market risk • Company specific risk • Futures risks Please see pages 5 to 7. Income distribution, if any, once Income distribution as secondary Income distribution, if any, once Income distribution, if any, once Income distribution, if any, once a year. objective, if any, once a year. a year. a year. a year. – If any, once a year. If any, once a year. – – • BHLB Trustee Berhad (313031-A) • 30 September • 18 August 2000 • 500 million units • 320.80 million units • BHLB Trustee Berhad (313031-A) • 31 December • 2 January 2001 • 500 million units • 44.60 million units • Bumiputra-Commerce Trustee Berhad (167913-M) • 31 March • 16 April 1998 • 1 billion units • 480.50 million units • AmTrustee Bhd (163032-V) • AmTrustee Bhd (163032-V) • • • • • • • • 2 KEY INFORMATION OF THE FUNDS 31 March 25 March 2003 500 million units 56.90 million units 31 March 25 March 2003 500 million units 8.50 million units Non-Syariah-Based Funds Pacific Premier Fund Pacific Pearl Fund Pacific Millennium Fund Pacific Recovery Fund • Switching Facility • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Premier Fund will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Pearl Fund will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Millennium Fund will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Recovery Fund will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Transfer Facility Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. • MER** • 1.60% (for year ended 30 September 2003) • 0.97 • Buying Price: RM0.6787 Selling Price: RM0.7254 • Please see page 36. • 1.65% (for year ended 31 March 2003) • 0.58 • Buying Price: RM0.7371 Selling Price: RM0.7878 • Please see page 42. • 1.71% (for year ended 30 June 2003) • 0.61 • Buying Price : RM0.5615 Selling Price : RM0.6002 • Please see page 48. • 1.66% (for year ended 30 June 2003) • 0.71 • Buying Price : RM0.5642 Selling Price : RM0.6030 • Please see page 54. • PTR** • Unit Price As At 3 November 2003 • Distribution/Unit Split In The Last Financial Year The table below describes the charges that you may incur when you buy, sell or switch units of the Funds: • Service Charge • Repurchase Charge • Switching Fee • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 1.50% p.a. of the NAV of the Fund. • 0.08% p.a. of the NAV of the Fund calculated on a daily basis. • 1.50% p.a. of the NAV of the Fund. • 0.08% p.a. of the NAV of the Fund calculated on a daily basis. The table below describes the fees that you may incur when you invest in the Funds: • Annual Management Fee • Annual Trustee Fee • 1.50% p.a. of the NAV of the Fund. • 0.01% - 0.06% p.a of the NAV of the Fund calculated on a daily basis (excluding custodian fee of RM25,000 p.a.). • 1.50% p.a. of the NAV of the Fund. • 0.055% p.a. of the NAV of the Fund (excluding custodian fee of 0.035% p.a.) calculated on a daily basis. ** Refer to definitions page There are fees and charges involved and investors are advised to consider the fees and charges before investing in the Funds. STANDARD DETAILS PERTAINING TO INVESTING IN THE FUNDS MANAGED BY PACIFIC MUTUAL (please refer to pages 86 to 89 for more details) Minimum Initial And Additional Investment For Cash Plan, Saver’s Plan And EPF Plan Cash Plan: You may invest by cash on a lump sum basis or through loan financing from approved financial institutions. The initial and subsequent investment must be a minimum of RM500 and RM100 respectively. Saver’s Plan: You may fix your own time frame for saving, starting with a minimum of five years and a monthly investment in multiples of RM50. You may activate your Saver’s Plan anytime with an initial investment of two times the monthly investment amount. EPF Plan: You may invest an amount not less than RM1,000 and not more than 20% of the savings balance exceeding RM50,000 in your EPF Account I (Retirement Account). Minimum Redemption Amount There is no minimum redemption amount. Redemption Of Units You can withdraw or redeem all or part of your units in any Fund, in writing, at any time provided the minimum number of units left in an account after the partial withdrawal is 500. 3 KEY INFORMATION OF THE FUNDS Non-Syariah-Based Funds Syariah-Based Funds Pacific Income Fund Pacific Progressive Fund Pacific Dana Aman Pacific Dana Murni Pacific Dana KLSI • Free switching into Pacific Dana Murni and Pacific Dana KLSI. Unitholders who switch out of Pacific Income Fund will enter at NAV per unit of these target Funds. • Switching out of Pacific Income Fund into all other Pacific Mutual’s Funds will incur a fee of 0.50% based on the NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Progressive Fund will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into all Pacific Mutual’s Funds. Unitholders who switch out of Pacific Dana Aman will enter at NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Switching out of Pacific Dana Murni into Pacific Income Fund and Pacific Dana KLSI will incur a fee of 2.00% based on the NAV per unit of these target Funds. • Switching out of Pacific Dana Murni into all other Pacific Mutual’s Funds will incur a fee of 3.00% based on the NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. • Free switching into Pacific Income Fund and Pacific Dana Murni. Unitholders who switch out of Pacific Dana KLSI will enter at NAV per unit of these target Funds. • Switching out of Pacific Dana KLSI into all other Pacific Mutual’s Funds will incur a fee of 0.50% based on the NAV per unit of the target Funds. • Switching into Pacific SELECT Balance Fund and Pacific SELECT Income Fund is not allowed. • Other terms: ■ Minimum number of units to be switched out is 1,000; ■ Minimum number of units left in an account after partial switching is 500; and ■ Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. Transfer facility (except under the EPF Members’ Savings Investment Scheme) is available for all Funds, free of charge. Please refer to page 87. • 1.67% (for year ended 30 September 2003) • 0.49 • Buying Price : RM0.5088 Selling Price : RM0.5342 • Please see page 60. • 1.50% (for year ended 31 December 2002) • 0.86 • Buying Price : RM0.5449 Selling Price : RM0.5824 • Please see page 66. • 1.63% (for year ended 31 March 2003) • 0.55 • Buying Price : RM0.5341 Selling Price : RM0.5709 • Please see page 72. • N/A • N/A • N/A • Buying Price : RM0.4943 Selling Price : RM0.5042 • N/A • N/A • Buying Price : RM0.5660 Selling Price : RM0.5943 • N/A • Not more than 5.00% of NAV per unit. • Nil • Please refer to page 84. • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 5.00% - 7.00% of NAV per unit. • Nil • Please refer to page 84. • 2.00% of NAV per unit. • 5.00% of NAV per unit. • Nil • Please refer to page 84. • Nil • Please refer to page 84. • 1.50% p.a. of the NAV of the Fund. • 0.10% p.a. of the NAV of the Fund calculated on a daily basis. • 1.50% p.a. of the NAV of the Fund. • 0.10% p.a. of the NAV of the Fund calculated on a daily basis. • 1.50% p.a. of the NAV of the Fund. • 0.08% p.a. of the NAV of the Fund calculated on a daily basis. • 1.00% p.a. of the NAV of the Fund. • 0.07% p.a. of the NAV of the Fund calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a. whichever is higher. • 1.00% p.a. of the NAV of the Fund. • 0.07% p.a. of the NAV of the Fund calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a. whichever is higher. Prospective unitholders should read and understand the contents of the Prospectus and, if necessary, consult their adviser(s). Unit prices and distributions payable, if any, may go down as well as up. Notice Of Cooling-Off Period If you are a first-time investor of Pacific Mutual, you are given a cooling-off period of six Business Days or any other period permitted by the Securities Commission. Within these six Business Days from the date of receipt of the application form by Pacific Mutual, you have the right to call for withdrawal of investment. However, this is not applicable to: • Corporate Investors/Institutional Investors; • Staff of Pacific Mutual; and • Persons Dealing In Unit Trust (PDUT) of Pacific Mutual. When you exercise the cooling-off right, the money will be refunded to you: • (For Cash Plan and Saver’s Plan) within 10 days of receipt of the notice of cooling-off by Pacific Mutual. • (For EPF Plan) within 10 days after receipt of the disbursement of fund from EPF. The refund will be returned to your EPF account. Distribution Reinvestment of distributions will be based on the Manager’s Buying Price* of the respective Funds, 21 days after the declaration of distributions. (*Please refer to pages 86 and 87) 4 KEY INFORMATION OF THE FUNDS EIGHT PRINCIPLES OF SUCCESSFUL UNIT TRUST INVESTING Unit trust investing is a convenient and sensible way to build one’s wealth in the medium and long term. Investment specialists will manage the investments and spread the risks through careful diversification. There are eight principles which are helpful to an investor in making a wise decision in unit trust investing. PRINCIPLE 1 : KNOW THE BASICS What Is A Unit Trust And How Does It Work? A unit trust is a professionally managed investment fund which pools together the money of investors having similar objectives. The aggregate sum is then invested in a diversified investment portfolio comprising stocks, bonds and other assets in accordance with the declared investment objective of a fund. The price of a unit reflects its Net Asset Value (NAV) derived from a fund’s assets less its liabilities and divided by the number of units in issue. Unlike stocks, whose prices are changed at each trade, a fund’s NAV is based on the closing prices of the stocks in its portfolio on each trading day. To protect investors’ rights and interests, an independent trustee will ensure that the unit trust fund manager complies with the requirements of the Deed, the Securities Commission’s Guidelines on Unit Trust Funds and the Securities Commission Act 1993. The unit trust fund manager also appoints an approved company auditor under the Companies Act 1965 to audit a fund’s accounts before they are published in the fund’s annual report. What Is A Typical Unit Trust Fund Investors’ Profile? A typical unit trust fund investors’ profile would be individuals/corporations that: • are willing to assume some form of risk through participation in the stock market and/or fixed income market; • want to hold investments that are liquid and easily redeemed; • want to enjoy a lower transaction cost while investing in the stock market; • want to have a well diversified investment portfolio which is professionally managed. What Are The General Benefits Of Investing In A Unit Trust Fund? • Diversification – Risks are spread over a wide variety of securities in different sectors for a small investment sum. On one’s own, this would normally require a large amount of money. Diversification also exposes a unitholder to opportunities in many more business sectors. • Professional fund management – A fund’s pooled resources makes it cost-effective for a team of qualified and experienced in-house investment professionals to be engaged. They conduct full-time regular investment research and analysis and make on-site visits. The unit trust fund manager also invests in research facilities and information resources essential for making sound investment decisions. • Liquidity – The unit trust fund manager stands ready to repurchase all or part of an investor’s unitholding on any Business Day. • Hassle free – Investment units may be bought or sold conveniently and investors are spared the time, trouble and expense of researching and monitoring investments on their own if they were to invest directly in the stock market. • Affordability – Only a relatively small amount of money is needed to participate in a professionally managed portfolio of investments. For similar benefits from personal direct investments, one would have to invest considerably more in order to have the same reach in investment opportunities and to benefit from the same level of expertise in portfolio management. What Are The General Risks Of Investing In A Unit Trust Fund? • Market risk – This risk refers to developments in the market environment, and typically includes changes in regulations, politics, technology and the economy of the country. Market developments can result in stock market fluctuations which in turn affect a fund’s underlying investments and hence its unit price. A fund's diversification into different sectors, however, helps to mitigate a fund's exposure risk to any single asset class. • Company specific risk – This risk refers to the individual risk of the respective companies issuing securities. Company specific risk includes changes to the business performance of the company, consumer tastes and demand, lawsuits, competitive operating environment and management practices. Developments in a particular company in which a fund has invested would result in fluctuations in the share price of that company and thus the value of a fund’s investments. This risk is minimised through the well-diversified nature of a fund. In addition, this risk may occur when there is a significant deterioration in an investee company’s business or fundamentals or if there is a change in management policy resulting in a reduction or even removal of the company’s dividend policy. Such events would result in an overall decrease in dividend income received by a fund and possible capital loss due to a drop in the share price of a company that cuts or omits its dividend payments. This risk would be mitigated by investing mainly in companies with a consistent historical record of paying dividends, companies operating in fairly stable industries or companies with strong cashflow. 5 EIGHT PRINCIPLES OF SUCCESSFUL UNIT TRUST INVESTING • Interest rate risk – This risk refers to the effect of interest rate changes on the market value of a bond portfolio. In the event of rising interest rates, prices of fixed income securities will decrease and vice versa. Meanwhile, debt securities with longer maturity and lower coupon rate are more sensitive to interest rate changes. Interest rate movements can lead to fluctuations in bond prices resulting in fluctuations in a fund’s investments in such securities. In terms of Islamic debt securities, any fluctuations in conventional interest rates would also affect the indicative/profit rates of these Islamic debt securities. Hence, fluctuations in conventional interest rates, hence profit rates, would also lead to a rise or fall in prices of Islamic debt securities. This risk will be mitigated via the management of the duration structure of the portfolio of debt securities. • Credit risk – This risk refers to the changes in financial conditions of companies issuing debt securities, which may affect their credit worthiness. This in turn may lead to default in the repayment of principal and interest. These events can lead to loss of capital or delayed or reduced income for a fund resulting in a reduction in a fund’s asset value and thus unit price. This risk is mitigated by vigorous credit analyses and diversification by the bond portfolio of a fund. • Loan financing risk – This risk must be considered carefully when unit trust investment is financed by a loan. Borrowings increase the opportunity for profit as well as the incidence of loss. Interest cost may rise and investment value may fall, resulting at times in the lender demanding settlement or more collaterals from the investor. • Liquidity risk – This risk occurs in thinly traded or illiquid securities. Should a fund need to sell a relatively large amount of such securities, the act itself may significantly depress the selling price resulting in a decrease in the value of a fund’s assets. • Inflation or purchasing power risk – This is the risk that inflation or the loss of purchasing power will erode the value of investment returns and the worth of the investment itself. Investor’s returns from a fund may not keep pace with inflation and hence reduce their purchasing power. • Compliance risk – This refers to the risk that the unit trust fund manager does not adhere to legislation or guidelines that govern the investment management and operations of a fund or to a fund’s investment mandate stated in the deed. This risk also concerns non-compliance with internal operating policies and the unit trust fund manager acting fraudulently or in a manner that is unfair to unitholders. Compliance risk could result in disruptions to the operations of a fund and potentially lead to reduced income/gains or even losses to unitholders. • Expectation risk – This risk refers to the fact that prospects for recovery may be diminished by circumstances such as: – A serious global economic meltdown that is beyond expectation; – A company’s proposed restructuring plan fails for various reasons; – Management’s inability to turn around the company within a reasonable period of time due to factors beyond their control; and – The initial cyclical nature of the problem has become structural. Should a recovery situation not turn out as expected due to the above reasons, there may be a loss or reduction of profits/income resulting in a reduction in a fund’s assets. This risk would be mitigated by a thorough study of potential recovery situations (economic, industry and company specific) taking into account the favourable probability of a positive outcome, risks and returns before any investment in such situations are made. Continuous monitoring of developments in potential recovery situations would be conducted to ensure that these pan out as expected. 6 EIGHT PRINCIPLES OF SUCCESSFUL UNIT TRUST INVESTING • Futures risk – As futures are conducted on an initial margin basis, a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Adverse price movements could create additional losses over and above the initial futures contract costs. This risk is mitigated by entering into futures contracts only for hedging purposes. Specifically, a fund will only enter into futures sales contracts to hedge against declines in the value of stocks in the portfolio. Futures contracts can play a part in reducing the risk of a fund’s investment portfolio by providing a hedge against shorter-term volatility of financial markets. However, futures carry certain additional risks that if not properly managed could result in significant losses or underperformance. These include: ■ Gearing risk – Futures contracts may involve a high degree of “gearing” or “leverage”. This means that a small movement in the price of the underlying asset may have a very large magnifying effect in the price of the futures contracts, both in an upward or downward direction. ■ Mismatch risk – Risk that arises when the terms of underlying investments and the instrument used to hedge its risks do not match. Such mismatches could be due to: – Mismatch of derivative parcel size (or multiple of this) versus actual physical portion; – Mismatch of maturity, e.g. 3-month KLIBOR interest rates futures contract versus 1-year bond holding; and – Mismatch of component constituting an index, e.g. KLCI vs actual equity portfolio of fund. ■ Futures liquidity risk – This category of risk includes: – Risk that fair price or firm bid cannot be obtained from a market counterpart; – Risk that funds are unable to unwind illiquid positions; and – Market price stability affecting funds’ ability to meet margin payments. How Do Unit Trusts Compare With Direct Investments In The Stock Market And Fixed Deposits? Unless a person has a very large amount of money to invest directly in individual stocks, he may not be able to achieve a sufficient level of diversification. Losses in one or more of his stocks may substantially reduce the value of his portfolio. A unit trust fund, on the other hand, has a diversified portfolio and losses in some of the stocks will probably be offset by gains in other stocks. Nevertheless, a person with an undiversified portfolio may reap great returns if one or more of the stocks increase in value. Unit trust prices rise more gradually when some of its stocks rise in price because unit prices are based on the total value of the portfolio. Fixed deposits are generally safe and the returns are guaranteed. The returns are however usually lower than investments carrying more risk and may be eroded by inflation more significantly. Unit trusts have historically yielded better returns than fixed deposits but such investments carry more risks of loss. Performance Indicators/Information Investors measure the performance of their investments in unit trusts by various means. This often only takes into account pure price changes (rise or fall in unit prices) or the amount of distributions received from a fund. The best method of calculating performance is by including both. This performance measure is called total returns as it includes all sources of income and gains (or losses). Investors need not compute these calculations themselves as total returns figures are published weekly in leading financial magazines and dailies. For a better picture of a fund’s performance, investors should look at both short (three to six months) and longer-term (three and five years) performance figures. Who Regulates Unit Trust Funds In Malaysia? The Securities Commission regulates the establishment and operations of unit trusts in Malaysia under the Securities Commission Act 1993, the Securities Commission’s Guidelines on Unit Trust Funds and other relevant securities law. This requires, among other things, that the unit trust fund manager and the trustee execute a deed and register it with the Securities Commission. A copy of the deed may be inspected or purchased at the unit trust fund manager’s office. In addition, the Securities Commission has placed stringent requirements in the appointment of the management company, the trustee, the management company’s directors, chief executive officer, investment committee and Syariah Committee Members/Syariah Advisers. The appointment of all these parties must be approved by the Securities Commission. PRINCIPLE 2 : KNOW YOURSELF It is conventional wisdom that one should be willing to accept more risk if one is looking for higher return, or be happy with less return at lower risk. There is however some flexibility in planning to meet individual needs and preferences. Answers to the following questions can serve as a guide to choosing the most appropriate funds for investment: • What stage of the life cycle am I at now? • What are my investment goals? • What kind of returns am I looking for? • How much risk am I comfortable with? 7 EIGHT PRINCIPLES OF SUCCESSFUL UNIT TRUST INVESTING PRINCIPLE 3 : INVESTMENT STRATEGY Unit trust works best when it is taken as an investment vehicle for the medium to long term. Funds selected for investments should be appropriate for one’s investment horizon, financial goals and risk profile. Attention should also be given to hedging against inflation and achieving a good degree of diversification. Circumstances change and so one’s strategy should be reviewed regularly. PRINCIPLE 4 : START EARLY The power of compounded returns makes it wise to start saving and investing as early as possible. There may still be the risk of decline in the capital value of investment, but a longer investment horizon will certainly give more room for riding out the bad times or the occasional setbacks. PRINCIPLE 5 : INVEST REGULARLY Regular investments have benefited in many cases from the principle of Ringgit Cost Averaging. Instead of trying to time the market, which even the experts have difficulty achieving, invest a fixed amount regularly especially when such surplus has been budgeted from a regular stream of income. This practice of investing regularly has a tendency to average out wild fluctuations in prices to the investor’s benefit. PRINCIPLE 6 : INVEST FOR THE MEDIUM TO LONG TERM Historically, unit trusts have provided better returns in the longer term, but have entailed greater short-term risks than other savings vehicles. An investor’s planning and expectations must accordingly be attuned to a longer investment horizon. Unit trusts offer potentially higher returns over the longer term although they do present wider fluctuations in the short run. PRINCIPLE 7 : DIVERSIFY YOUR PORTFOLIO Diversification through prudent asset allocation among the various fund options can help ride out interim fluctuations. It works because the different asset classes have different fundamental characteristics and can move in different directions. For example, when the economy faces a downturn and interest rates are falling, bonds will usually outperform equities, whereas when the economy is booming, equities will generally outperform bonds. In the long run, diversification increases returns while lowering risks, which is why it is the single most important part of any investment strategy. PRINCIPLE 8 : MAKE ADJUSTMENTS OVER TIME Review your investments regularly to ensure that they still reflect your financial goals and personal circumstances. For example, at one stage of your life you might be seeking longer-term investment that focused on building savings and accumulating capital. Later on, you might prefer a lower-risk investment that places more emphasis on income. Whatever the reason, making adjustments over time is essential and needs to be incorporated into your investment strategy. Through regular monitoring you can ensure that your investment portfolio continues to match your financial objectives. 8 EIGHT PRINCIPLES OF SUCCESSFUL UNIT TRUST INVESTING ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD WHO OWNS PACIFIC MUTUAL? PacificMas Berhad owns 85% equity interest in the share capital of Pacific Mutual and Koperasi Angkatan Tentera Malaysia Berhad owns the remaining 15%. WHAT IS THE CORE BUSINESS OF PACIFIC MUTUAL? The principal activity of Pacific Mutual is that of unit trust management. Pacific Mutual was incorporated on 15 March 1995 under the Companies Act 1965 with an authorised and paid-up capital of RM5 million divided into 5 million ordinary shares of RM1.00 each. Its registered office is at Level 18, Menara Prudential, No. 10 Jalan Sultan Ismail, 50250 Kuala Lumpur. As at 3 November 2003, the Company had a staff force of 75, comprising 39 executive staff and 36 non-executive staff. The primary functions of Pacific Mutual are: ■ Investment functions which include: • Conducting investment research. • Determining a fund’s investment strategy. • Investing the assets of a fund. • Reviewing a fund’s portfolio and investment performance. ■ Administrative functions which include: • Maintaining unitholders’ register. • Determining daily buying and selling prices. • Preparing a fund’s interim and annual reports. • Keeping proper records on unitholders’ transactions. WHAT IS OUR CORPORATE MISSION? ■ Our Corporate Mission: • To be Malaysia’s preferred unit trust company. ■ To Achieve Our Mission: • We will provide investors with the highest return possible at minimal risk by being active, disciplined and researchdriven in our investment management. • We will provide excellent services to satisfy the needs and expectations of our investors and distributors. • We will maintain a high level of professionalism among our staff and agents. • We will promote teamwork, innovation and mutual respect at all levels within the Company. WHAT IS OUR INVESTMENT PHILOSOPHY? Our investment philosophy is aimed at providing investors with maximum returns at an acceptable level of risk by: ■ Applying an active fund management style that constantly monitors and reviews the market place for opportunities to invest in. ■ Being research-driven in our stock selection and disciplined in our asset allocation. ■ Diversifying our investments to create a well-balanced portfolio. ■ Adhering to the investment guidelines set by the regulatory Authorities and the Investment Committee. HOW MANY FUNDS ARE MANAGED BY PACIFIC MUTUAL? Pacific Mutual is currently managing 11 Funds. The Funds are in the hands of an experienced Board and a prudent Investment Committee. Fund Launch Date Maximum Approved Fund Size Units In Circulation As 3 November 2003 Pacific Premier Fund 10 August 1995 500 million units 324.53 million units Pacific Pearl Fund 6 January 1997 500 million units 360.33 million units Pacific Dana Aman 16 April 1998 1 billion units 480.50 million units Pacific Millennium Fund 15 April 1999 500 million units 129.40 million units Pacific Recovery Fund 15 April 1999 500 million units 243.90 million units Pacific Income Fund 18 August 2000 500 million units 320.80 million units Pacific Progressive Fund 2 January 2001 500 million units 44.60 million units Pacific Dana Murni 25 March 2003 500 million units 56.90 million units Pacific Dana KLSI 25 March 2003 500 million units 8.50 million units Pacific SELECT Balance Fund 11 August 2003 800 million units 240.70 million units Pacific SELECT Income Fund 11 August 2003 300 million units 54.10 million units 9 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD WHY INVEST WITH PACIFIC MUTUAL? ■ Fund Management Expertise Pacific Mutual’s Investment Management Team comprises full-time in-house professional fund managers who have been meticulously selected for their individual strengths and expertise in portfolio operations and management as well as for their impeccable professional standards. They draw on the combined skills and experience of our Investment Committee in various areas of business. Pacific Mutual is research-oriented and employs fundamental, technical and quantitative analyses in asset allocation and stock selection. ■ A Highly Disciplined Investment Process Pacific Mutual adopts a highly disciplined investment process by taking a team approach in decision-making and applying a consistent investment methodology to secure maximum returns for investors at an acceptable level of risk. ■ Dedicated Customer Service Pacific Mutual is committed to maintaining the highest standards of dedicated customer service. The core services offered include: • Financial Planning The growing speed and complexity of today’s market underline the value of professional advice. Pacific Mutual helps you to allocate your assets properly and in accordance with your specific needs in order to achieve your financial goals. • Regular Updates Pacific Mutual provides regular information updates through publications such as Close Watch, Daily Flash and Manager’s Report. • Customer Care Programme Please refer to the section, “How Does Pacific Mutual View a Company-Investor Relationship?” on page 11. ■ www.pacificmutual.com.my Our comprehensive website offers on-line access to up-to-date information on the Company, our Funds and the stock market, as well as various financial planning assistance tools. • Daily/Current Updates Daily prices of the Funds, up-to-date performance data on the Funds, the latest stock market happenings, along with our fund manager’s current views on the markets. • Key Information On All Our Funds Investment objectives and strategies, targeted asset allocations, investors’ profiles and other important information. • Fund Fact Sheets Monthly fund updates disclosing top stock holdings of our Funds, the current asset allocation, the performance and rankings of the Funds, and our fund manager’s monthly comments, along with various other data. • Aids For Financial Planning Personal financial planning tools and risk profiling to assist in self-directed financial planning. • E-Service Consolidated account statements and relevant fund information bundled in with personal financial planning tools to help investors make informed investment decisions and for our consultants to better serve their clients. • Press Releases The latest and archived press releases on our Funds and developments of the Company. More information and capabilities which also allow surfers to contribute valuable feedback to enhance our service are available at our website. ■ A Wide Choice Of Investment Products As one of Malaysia’s fastest growing unit trust management companies, Pacific Mutual offers an array of innovative unit trust funds to suit the needs of investors over a wide risk/return spectrum. 10 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD WHAT IS THE FINANCIAL POSITION OF PACIFIC MUTUAL? The financial position of Pacific Mutual for the past three financial years is summarised as follows: Financial Highlights Year Ended 31 December 5 months Ended 31 May 2003 RM 2002 RM 2001 RM 2000 RM 5,000 5,000 5,000 5,000 19,204 17,772 13,227 11,286 Turnover (’000) 8,742 31,172 16,598 21,045 Profit Before Taxation (’000) 2,001 7,364 2,785 4,466 Profit After Taxation (’000) 1,432 5,265 1,942 3,243 Paid-up Share Capital (’000) Shareholders’ Funds (’000) IS THERE ANY PRUDENTIAL CONTROL? Yes. Pacific Mutual has a Senior Compliance Officer who reports to the Company’s Board of Directors and liaises with the Securities Commission to ensure that all laws, regulations, codes of conduct and prudential limits are followed. Brochures and marketing materials are subject to rigorous examination and review before release. Customer complaints are also objectively reviewed and seriously attended to. HOW DOES PACIFIC MUTUAL VIEW A COMPANY-INVESTOR RELATIONSHIP? The sensitivities of the investment decision process are such that it is best to work one-on-one with a dedicated unit trust consultant who can be relied on for service and professionalism. Our consultants are trained in financial planning. Through personal discussions, a clear understanding of investment objectives can be arrived at. Although investment objectives are unique to every individual, they inevitably involve the following factors: • Risk tolerance • Capital growth/income requirements • Expectations of performance against risk tolerance • Time horizons Pacific Mutual has also established a Prestige Club under the Customer Care Programme for its customers. Eligibility and value-added benefits are given below: Prestige Silver Investor Investment amount Value-added benefits RM50,000 to RM99,999 Prestige Gold Investor RM100,000 and above • Dedicated toll-free line to access • Dedicated toll-free line to access Customer Care personnel Customer Care personnel • Daily updates on the stock • Daily updates on the stock market through electronic mail market through electronic mail • Birthday programme • Birthday programme • Quarterly updates on unitholding • Quarterly updates on unitholding • Anniversary programme • Anniversary programme • Personalised financial planning • Personalised financial planning service service • Free Personal Accident insurance • Free Personal Accident insurance coverage coverage • Free magazine Prestige Diamond Investor RM500,000 and above • Dedicated toll-free line to access Customer Care personnel • Daily updates on the stock market through electronic mail • Birthday programme • Quarterly updates on unitholding • Anniversary programme • Personalised financial planning service • Free Personal Accident insurance coverage • Free magazine • Pacific Mutual anniversary gift Pacific Mutual’s Prestige Club is only open to investors who have invested directly with the Company or through its Unit Trust Consultants. Investments made through Institutional Unit Trust Agents (IUTAs) may enjoy different terms and privileges offered by the respective IUTAs. 11 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD UNCLAIMED MONIES For distribution cheques which are left uncashed by unitholders upon lapse of the six months’ cheque validity period, the Manager shall reinvest the distribution into additional units of the Funds on their behalf, at the expiry of the distribution cheques based on the Manager’s Buying Price on the said expiry date. For other cases, the unpresented cheques will be deemed as unclaimed monies and shall be paid to the Federal Consolidated Trust Account in accordance with the Unclaimed Moneys Act 1965 (Revised 2002). In the event the unitholders wish to claim the money, they are required to complete and submit the following documents to the Registrar of Unclaimed Moneys: 1. A copy of Application For Refund of Unclaimed Moneys Form (UMA-7); 2. The original cheque, or, if this is not available, letter of confirmation from Pacific Mutual showing ownership of the money to be claimed and “Bon Tanggungrugi” (UMA 8) form; and 3. Photocopy of the identity card/ passport of unitholder. REBATES AND SOFT COMMISSIONS Soft commissions received from brokers are retained by the Manager for goods and services which are of demonstrable benefit to the unitholders such as research materials, data and quotation services, computer hardware and software, investment advisory services, and investment related publications. Rebates, if any, are credited to the accounts of the Funds. CONFLICT OF INTERESTS Investments of the Funds are scrutinised regularly by the Compliance Unit. Furthermore, Directors, Investment Committee members and employees are required to disclose to the Board of Directors any situations where their interests may conflict with those of the Funds and to refrain from participation in decision-making in those areas. Employees who invest in shares are also required to obtain prior permission. This is to ensure that there is no conflict of interests and, in particular, that transactions carried out are executed on the best available terms and that investments are not made in such a way that the Funds are disadvantaged by the transactions. WHO ARE BEHIND PACIFIC MUTUAL? Board Of Directors Pacific Mutual has seven experienced members on the Board of Directors including three independent Directors with backgrounds in investment, banking, finance and the public sector. The Board of Directors meets monthly to ensure that the objectives of the Funds are achieved within the relevant guidelines and mandates set. Name: Experience/Qualifications: Mr Choi Siew Hong (KMN, JMN) - Chairman • He is currently Chairman of PacificMas Berhad, The Pacific Insurance Berhad as well as United Malacca Berhad. He has been the Chairman of Pacific Mutual since October 1997. • He is also a Director of Malaysia Smelting Corporation Berhad. • He has had a long career in banking, having served Bank Negara Malaysia as Secretary and Adviser from December 1958 to January 1966 and then as Deputy Governor to October 1972. He was an Executive Director of the World Bank representing Malaysia and other countries in the South East Asia Voting Group from November 1972 to October 1975. He assumed a senior executive position and later that of General Manager in the Malaysia Division of Oversea-Chinese Banking Corporation Limited from 1976 to July 1986. • He was a Director of the then The Pacific Bank Berhad from 1976 to 1994 and Chairman of the Bank from 1988 to 1994. Prior to his re-appointment as Chairman of Pacific Bank in October 1997, he was the Chairman of OCBC Bank (Malaysia) Berhad. From 1997 to early 2003, he was a Director of Great Eastern Life Assurance (Malaysia) Berhad. • First Class Honours Degree in Economics (University of Malaya). 12 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD Name: Experience/Qualifications: Tan Sri Dato’ Wong Kum Choon (PSM, DPMP) • He has been a Director of Pacific Mutual since its inception in 1995. He also sits on the Board of Directors of PacificMas Berhad. He is currently the Chief Executive Officer of the Malaysian Rubber Export Promotion Council (MREPC). • He has had a long career in the public sector since 1959 when he joined the Malayan Civil Service/Malaysian Home and Diplomatic Service as Assistant State Secretary, Pahang State Government; served for 111/2 years in Economic Planning Unit, Prime Minister’s Department from 1961 to 1972 and was involved in the preparation of five-year National Development Plans and 20-year Perspective Plans, serving in various capacities, including as the Head of Macro Planning. He served in the Ministry of Primary Industries from 1972 to 1993 culminating in the post of Secretary-General. He also served as Chairman of Palm Oil Registration and Licensing Authority and Chairman of Malaysian Timber Industry Board as well as being on the Malaysian Rubber Research and Development Board and the Board of Directors of Malaysian Rubber Development Corporation (MARDEC). He led and participated in various international negotiations on commodity and trade issues and served as the first Chairman of the International Natural Rubber Council. He retired from Government service in April 1993 and assumed the position of Chief Executive Officer, Malaysian Timber Council up to June 1997. He was a member of the Securities Commission from 1996 till May 1999. He served as a consultant for two economic studies: one on timber market opportunities for the International Tropical Timber Organisation and the other on furthering rubberbased industrialisation as part of an overall study for the Economic Planning Unit. • Honours Degree in Economics (University of Malaya); Masters Degree in Public and International Affairs (MPIA) (Graduate School of Public and International Affairs, University of Pittsburg, USA). He also studied under the World Bank and the London Business School. Name: Experience/Qualifications: Dato’ Haji Mustafa bin Mohamad Ali (DIMP, DPCM) - Independent Director • He has been a Director of Pacific Mutual since its inception in 1995. He is also a Director of public listed Sime UEP Properties, Batu Kawan Berhad and Affin Holdings Berhad. He has experience in sales, advertising, marketing and general management, having trained and worked in British-American Tobacco Co. Ltd, London, Malaysian Tobacco Co. Bhd, Kuala Lumpur and Sime Darby Berhad where his responsibilities covered the group’s operations in Malaysia and the Asian region. He also worked as a Business Adviser to Kumpulan Guthrie Berhad for over eight years. • M.A. (Economics) Degree (Cambridge University, UK); Advanced Management Programme (Harvard Business School, USA). Name: Experience/Qualifications: Datuk Fong Weng Phak • He was appointed a Director of Pacific Mutual in August 1999. Currently, he is also a Director of United Malacca Berhad, Fraser & Neave Holdings Bhd, De La Salle Institute, The Tan Sri Tan Foundation, Great Eastern Life Assurance (Malaysia) Berhad, Overseas Assurance Corporation (Malaysia) Berhad, OverseaChinese Banking Corp Ltd, Genesis Malaysia Maju Fund Ltd and Assunta Hospital. • He began his working career in Bank Negara Malaysia in 1964 and was Head of the Economics Department when he left the Bank in 1982. He joined the Malaysia Division of the Oversea-Chinese Banking Corp Ltd in 1983 and was appointed General Manager of the Malaysia Division in 1986. With the incorporation of the Malaysia Division as OCBC Bank (Malaysia) Berhad in 1994, he was appointed Director and Chief Executive Officer. In 1995 he left OCBC Bank (Malaysia) Berhad to serve as Deputy Governor of Bank Negara Malaysia on a three-year contract. • Honours Degree in Economics (University of Malaya); Masters Degree in Public Administration (Harvard University). 13 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD Name: Experience/Qualifications: Dr Neoh Soon Kean - Independent Director • He has been a Director of Pacific Mutual since its inception in 1995. He is a Director of several public and private corporations including Kuala Sidim Berhad. He is the Chairman of Dynaquest Sdn Bhd, an investment consulting and publication firm. Dr Neoh acts as Investment Adviser to private individuals and firms including mutual funds, insurance companies and investment institutions. He is also a financial and economic writer and conducts regular public courses and seminars on investment and financial management. He is currently a member of the Rating Review Committee of Malaysian Rating Corporation and a member of the Panel of KLSE Compensation Fund. He had been a lecturer in Universiti Sains Malaysia, a member of the KLSE Committee and served the maximum of six years as a board member of Malaysian Accounting Standards Board. • BSc. (Economics) Degree (London University); MBA (Harvard University); PhD. in Finance (Edinburgh University). Name: Experience/Qualifications: Mr Mak Tian Meng - Independent Director • He was appointed a Director of Pacific Mutual in 1996. He served Bank Negara Malaysia for 10 years with the Department of Bank Examination and Internal Audit. From November 1973 to October 1977, Mr Mak joined Ong & Co. Stockbrokers, Singapore as the General Manager and thereafter served as a Senior Dealer in GP Securities Sdn Bhd before retiring in 1987. • Honours Degree in Economics (University of Malaya); Fellow of the Chartered Institute of Bankers, London. Name: Experience/Qualifications: Mej (B) Bibi Zarjaan binti Akhbar Khan (AMN) • She was appointed a Director of Pacific Mutual in August 2002. She is a Director of Koperasi Angkatan Tentera Malaysia Berhad. She has had a long career in the Ministry of Defence, beginning with the Record and Pension Directorate before moving on to Human Resource Department. From August 2001 to January 2002, she was the Human Resource Manager of Takaful Nasional Sdn Bhd. Currently, she is a lecturer at the Department of Management and General Studies, Akademi Tentera Malaysia (ATMA) in Sungai Besi, Kuala Lumpur. • Degree in Mass Communications (Universiti Teknologi Mara); Diploma in Strategic Defence Studies (Universiti Malaya); Master of Science (Human Resource Development) (Universiti Putra Malaysia). The Investment Committee The Investment Committee is responsible for setting and determining the investment policies/guidelines and strategies of the Funds. They meet on a monthly basis to discuss investment strategies, asset allocation and stock selection as well as review and monitor portfolio performance against benchmarks and guidelines. The following six persons are members of the Investment Committee for Pacific Premier Fund, Pacific Pearl Fund, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund and Pacific Progressive Fund: • Mr Choi Siew Hong, as aforementioned. • Tan Sri Dato’ Wong Kum Choon, as aforementioned. • Dato’ Haji Mustafa bin Mohamad Ali*, as aforementioned. • Datuk Fong Weng Phak, as aforementioned. • Dr Neoh Soon Kean*, as aforementioned. • Mr Mak Tian Meng*, as aforementioned. 14 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD The following eight persons are members of the Investment Committee for Pacific Dana Aman, Pacific Dana Murni and Pacific Dana KLSI, who act in consultation with the Corporate Syariah Consultants on investment management matters relating to Syariah principles: • Mr Choi Siew Hong, as aforementioned. • Tan Sri Dato’ Wong Kum Choon, as aforementioned. • Dato’ Haji Mustafa bin Mohamad Ali*, as aforementioned. • Datuk Fong Weng Phak, as aforementioned. • Dr Neoh Soon Kean*, as aforementioned. • Mr Mak Tian Meng*, as aforementioned. • Dr Obiyathulla Ismath Bacha*, as belowmentioned. • Dr Mohd Daud Bakar*, as belowmentioned. * Independent Investment Committee members Name: Experience/Qualifications: Dr Obiyathulla Ismath Bacha • He is currently the Professor of Finance and Director of the Management Centre at the International Islamic University Malaysia. Prior to this, he was the Assistant Professor of Finance at Boston University, USA. Dr Obiyathulla has conducted research and publications in the areas of Islamic Finance and Financial Derivative Instruments. • B.Soc.Sc Degree (Universiti Sains Malaysia); M.A. (Economics); MBA; DBA (Doctor of Business Administration in Finance) (Boston University, USA). Name: Experience/Qualifications: Dr Mohd Daud Bakar • He is currently an Associate Professor and Deputy Rector (Student Affairs and Discipline), International Islamic University Malaysia. He is a member of the Syariah Advisory Council of the Securities Commission of Malaysia, Bank Negara Malaysia and other financial institutions such as Malaysian Rating Corporation (MARC), Takaful Nasional, International Islamic Financial Market, Dow Jones Islamic Index, etc. • Bachelor of Syariah (Kuwait University); Doctor of Philosophy (University of St Andrews, Scotland); Bachelor of Jurisprudence (University of Malaya). Appointment Dates Of Investment Committee Members Funds Pacific Premier Fund Pacific Pearl Fund Pacific Dana Aman Pacific Millennium Fund & Pacific Recovery Fund Pacific Income Fund Pacific Progressive Fund Pacific Dana Murni & Pacific Dana KLSI Pacific SELECT Balance Fund & Pacific SELECT Income Fund Mr Choi Siew Hong 21/10/97 21/10/97 16/04/98 15/04/99 14/08/00 02/01/01 06/03/03 16/06/03 Tan Sri Dato’ Wong Kum Choon 10/08/95 06/01/97 16/04/98 15/04/99 14/08/00 02/01/01 06/03/03 16/06/03 Dato' Haji Mustafa bin Mohamad Ali 10/08/95 06/01/97 16/04/98 15/04/99 14/08/00 02/01/01 06/03/03 16/06/03 Datuk Fong Weng Phak 26/07/99 26/07/99 26/07/99 26/07/99 14/08/00 02/01/01 06/03/03 16/06/03 Dr Neoh Soon Kean 10/08/95 06/01/97 16/04/98 15/04/99 14/08/00 02/01/01 06/03/03 16/06/03 Mr Mak Tian Meng 02/03/96 06/01/97 16/04/98 15/04/99 18/08/00 02/01/01 06/03/03 16/06/03 Dr Obiyatulla Ismath Bacha N/A N/A 16/04/98 N/A N/A N/A 06/03/03 N/A Dr Mohd Daud Bakar N/A N/A 16/04/98 N/A N/A N/A 06/03/03 N/A Names 15 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD Key Management Staff Name: Position: Experience/Qualifications: Michael C. A. Auyeung (Date Of Appointment: 22 February 2002) Chief Executive Officer • He commenced his career in the investment industry in Asia in 1989. Based out of Hong Kong, Singapore and Malaysia, Michael has been employed as an investment analyst and head of research in the securities industry, covering the North Asian as well as ASEAN markets. After working for more than five years in equities research with international, regional and local investment houses, Michael subsequently moved on to institutional marketing and management positions with Malaysian based brokerages, before taking up his position as Chief Executive Officer of Pacific Mutual. • Master of Business Administration (University of Western Ontario, London, Canada); Bachelor of Science (University of British Columbia, Vancouver, Canada). Name: Position: Experience/Qualifications: Gan Eng Peng (Date Of Appointment: 8 April 2002) General Manager, Business Development & Marketing • He is responsible for the business and product development, and the marketing and communications functions of Pacific Mutual. He has worked for over nine years in the financial services industry in Malaysia. His main work experience has been in the investment research field for both local and foreign equity research companies. His other work experience includes corporate finance and management of a financial portal. • Bachelor of Science (Honours) Degree in Industrial and Business Economics (London School of Economics, England). Name: Position: Experience/Qualifications: Soon Chen Loy (Date Of Appointment: 1 May 1995) Assistant General Manager, Business Development • He is in charge of leading the Company’s agency force and promotional activities. He is also responsible for planning, developing and implementing marketing plans and strategies aimed at achieving the Company’s sales target and bottom-line profitability. He has more than 11 years’ working experience in financial services and management consulting. • Bachelor of Science (Honours) in Business Administration (University of Arkansas, USA); CFPTM. Name: Position: Experience/Qualifications: Wong Lee Fong (Date Of Appointment: 8 May 1995) Assistant General Manager, Head of Operations • She has more than 15 years’ experience in the field of management covering human resource, administration, marketing and customer service in the services industry. Since joining Pacific Mutual in May 1995, she has been responsible for unit trust administration, customer care and human resource and she assumed her present position in May 2002. • Honours Degree in Economics (Manchester Metropolitan University, UK). Name: Position: Experience/Qualifications: Chee Weng Wah (Date Of Appointment: 8 May 1995) Senior Manager, Business Development • He is responsible for agency force development including recruitment of new agents and retention of quality agents, particularly in East Malaysia. He also assists in establishing agency offices, branches and a professional and effective agency force. He has more than nine years’ working experience in insurance, unit trust and securities, having also worked as a trainer specialising in business development. • Honours Degree in Economics (Universiti Kebangsaan Malaysia); Certificate in Financial Planning (Malaysian Insurance Institute); CFPTM. 16 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD Name: Position: Experience/Qualifications: Elizabeth Yeo Guek Meng (Date Of Appointment: 15 July 2003) Senior Manager, Business Development • She is responsible for the Company’s corporate sales. She has approximately nine years of experience in the financial services industry. She was based in several brokerage houses, where she provided institutional sales and research support to both local and foreign corporate and fund management clients. Prior to that, she was based in Singapore and Johor as an accountant with a conglomerate listed on the Singapore Stock Exchange. • Associate of the Chartered Institute of Management Accountants, UK. Name: Position: Experience/Qualifications: Chong Sai Ching (Date Of Appointment: 15 May 1995) Manager, Finance • She is responsible for the financial accounting of the Company and all the Funds it manages. She has more than eight years’ working experience in the unit trust industry. • Associate of the Chartered Institute of Management Accountants. Name: Position: Experience/Qualifications: Hee Chiew Lin (Date Of Appointment: 17 June 2002) Senior Compliance Officer • She is responsible for the Company’s compliance matters. She has served as a compliance officer with a unit trust management company prior to joining Pacific Mutual and, before that, as an executive in the investment department of a life insurance company. • Bachelor of Laws (Honours) (University of London); Admitted to the Malaysian Bar in 1997. Name: Position: Experience/Qualifications: Khoo Bee Chin (Date Of Appointment: 17 April 1995) Manager, Customer Care & Administration • She is responsible for customer service and administration of sale and repurchase of units of all the Funds. She has more than eight years’ working experience in the unit trust industry. • Associate of the Institute of Chartered Secretaries and Administrators. Name: Position: Experience/Qualifications: Leong Chew Wah (Date Of Appointment: 14 April 1995) Manager, Corporate & Marketing Communications • She is responsible for the Company’s corporate and marketing communications which include branding, publicity and press relations. She has more than eight years’ working experience in the unit trust industry. • Bachelor of Arts (Honours) (Universiti Malaya); Certificate in Financial Planning (Malaysian Insurance Institute). Name: Position: Experience/Qualifications: Wong Yoon Ling (Date Of Appointment: 19 June 1995) Manager, Investment Administration • She is responsible for investment operations and measuring fund performance. She has more than nine years’ working experience in the unit trust and life insurance industries. • Associate of the Institute of Chartered Secretaries and Administrators. Name: Position: Experience/Qualifications: Wong Mee Gor (Date Of Appointment: 21 May 1996) Senior Executive, Human Resources & Administration • She is responsible for human resource and office administration. She has more than eight years’ working experience in several industries including a consumer product company. 17 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD The Investment Team conducts investment research, determines a Fund’s investment strategy, invests the assets of a Fund and reviews a Fund’s portfolio and investment performance. The following are the key members of the Investment Team: Name: Position: Experience/Qualifications: Arnold Lim Boon Lay (Date Of Appointment: 1 October 2002) Chief Investment Officer • He started his career with Citibank NA, Kuala Lumpur before moving to manage venture capital and mezzanine investments and later unit trust and discretionary funds. While as General Manager of HLG Asset Management, the risk-adjusted returns of the firm’s discretionary funds were ranked No. 1 on Information Ratio and No. 2 on Sharpe Ratio by Watson Wyatt over 1994 to 1998. He was previously Head of Research of ING Barings (Malaysia), where he was ranked No. 2 for Malaysia Strategy by Asiamoney in 2001. • CFA charterholder (Association for Investment Management and Research, USA); Master of Business Administration (University of California, Berkeley). • He is the designated person responsible for the investment management of Pacific Premier Fund, Pacific Millennium Fund and Pacific Progressive Fund. Name: Position: Experience/Qualifications: Geoffrey Ng Ching Fung (Date Of Appointment: 17 March 2003) Senior Manager, Investment • He assists the Chief Investment Officer in the investment management of the Funds. Prior to joining Pacific Mutual, Geoffrey was Practice Leader of a professional services company specialising in information management, specialist training and business intelligence best practices for the financial services industry. Preceding that, he was a licensed Portfolio Manager at one of the country’s largest fund management institutions, with collective responsibilities in management of sovereign fixed income, corporate retirement (balanced) plans and fixed income allocations of unit trust mandates. He is currently the Vice-Chairman of the Malaysian Society of Financial Analysts. • CFA charterholder (Association for Investment Management and Research, USA); CFPTM; Bachelor of Commerce (High Honours) (Carleton University, Ottawa, Canada) with double majors in Accounting and Finance. • He is the designated person responsible for the investment management of Pacific Dana Murni, Pacific SELECT Balance Fund and Pacific SELECT Income Fund. Name: Position: Experience/Qualifications: Nurrul Huda Shamsuddin (Date Of Appointment: 7 July 1997) Senior Manager, Investment • She assists the Chief Investment Officer in the investment management of the Funds. Prior to joining Pacific Mutual, Nurrul worked in a unit trust management company as Acting Investment Manager, in charge of portfolio management. She had also earlier worked for several years in the research department of a stockbroking firm. • Master of Science in Statistics (California State University, Hayward, USA). • She is the designated person responsible for the investment management of Pacific Dana Aman. Name: Position: Experience/Qualifications: Esther Ong Chen Woon (Date Of Appointment: 15 June 2000) Manager, Investment • She assists the Chief Investment Officer in the investment management of the Funds. Prior to joining Pacific Mutual, Esther worked in an insurance company as Assistant Manager in charge of portfolio management. She also carried out research on companies listed in the KLSE. • CFA charterholder (Association for Investment Management and Research, USA); Master of Science in Investment Management (City University Business School, London, UK); Bachelor of Science (Honours) in Insurance and Investment (City University Business School, London, UK). • She is the designated person responsible for the investment management of Pacific Recovery Fund and Pacific Income Fund. 18 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD Name: Position: Experience/Qualifications: Robin Yeoh Yern Jin (Date Of Appointment: 2 January 2003) Manager, Investment • He assists the Chief Investment Officer in the investment management of the Funds. Robin has been involved in the Malaysian capital markets since 1997. He was previously with Meridian Asset Management where he helped manage more than RM200 million in the Malaysian and Asia Pacific (ex Japan) portfolios. Prior to his time with Meridian, he was an equities analyst with Credit Lyonnais Securities Asia (CLSA) and RHB Research responsible for the motor and property sectors. At CLSA, he also covered the non-bank financials, including the finance and insurance companies, while providing back-up coverage of the banks. • CFA charterholder (Association for Investment Management and Research, USA); British Chevening Scholar; Master of Science in Economics (University of Nottingham, UK); Bachelor of Science in Accounting and Finance (University of Warwick, UK). • He is the designated person responsible for the investment management of Pacific Pearl Fund and Pacific Dana KLSI. POWER OF PACIFIC MUTUAL TO REMOVE/REPLACE TRUSTEE The Trustee may be removed and another Trustee may be appointed by special resolution of the unitholders at a unitholders’ meeting convened in accordance with the Deed. The Management Company shall take all reasonable steps to replace a Trustee as soon as practicable after becoming aware that: • The Trustee has ceased to exist; • The Trustee has not been validly appointed; • The Trustee is not eligible to be appointed or to act as Trustee under section 99 of the Securities Commission Act 1993; • The Trustee has failed or refused to act as Trustee in accordance with the provisions or covenants of the Deed or the provisions of the Securities Commission Act 1993; • A receiver is appointed over the whole or a substantial part of the assets or undertaking of the Trustee and has not ceased to act under the appointment, or a petition is presented for the winding up of the Trustee (other than for the purpose of and followed by a reconstruction, unless during or following such reconstruction the existing Trustee becomes or is declared to be insolvent); or • The Trustee is under investigation for conduct that contravenes the Trust Companies Act 1949, the Trustee Act 1949, the Companies Act 1965 or any securities law. 19 ALL ABOUT THE MANAGER - PACIFIC MUTUAL FUND BHD TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS A Trustee serves mainly as the custodian of the Fund. The assets of the Funds are registered in the name of the respective Trustees who function independently from Pacific Mutual. They exercise all due diligence and vigilance when carrying out their functions and duties to safeguard the rights and interests of all unitholders. They are responsible to ensure that Pacific Mutual performs its obligations in accordance with the provisions of the Deeds. Below are the details of the Trustees of the respective Funds: PACIFIC PREMIER FUND Name Of Trustee: Universal Trustee (Malaysia) Berhad (17540-D) Address: No. 1, Jalan Ampang, 3rd Floor, 50450 Kuala Lumpur Date Of Incorporation: 5 March 1974 Authorised Capital: RM5 million Staff Strength: 36 as at 3 November 2003 (comprising 19 executive staff and 17 non-executive staff) For details of key personnel, please refer below Funds Under Trusteeship: 34 as at 3 November 2003 Board Of Directors: Datuk Haji Burhanuddin bin Ahmad Tajudin Y.A.M. Tunku Dato’ Seri Nadzaruddin Ibni Tuanku Ja’afar Dato’ Francis Huang Chang Hsun Putri Noor Shariza Binti Noordin Omar Grace Yeoh Cheng Geok (Alternate Director to Putri Noor Shariza binti Noordin Omar) Universal Trustee (Malaysia) Berhad (UTMB) has been involved in the unit trust industry as a trustee since 1994. Below are the details of its key management staff: ■ Liew Kok Wah (General Manager cum Company Secretary) He is the General Manager cum Company Secretary of UTMB. He joined UTMB in July 1988 and is responsible for the overall management of UTMB. He is a Fellow Member of CIMA, England, a Registered Accountant of the MIA and a Member of the British Institute of Management, England. He started his career as an Assistant Accountant with McAlister & Co Ltd from 1971 to 1974 and upon completion of the CIMA examination in 1978, he was appointed as the Senior Management Accountant/Lecturer in the London School of Accountancy, England, till October 1982. Upon his return to Malaysia, he was the Group Finance and Administration Manager with the Harpers Group till June 1983, before joining Faber Merlin Berhad as the Group Management Accountant from 1986 till June 1988, and was also the Director of Studies in the Goon Professional Centre Sdn Bhd. ■ Punithamalar Velupillai (Manager) She is the Manager and is an Associate Member of the ACCA, and prior to joining UTMB in 1994, she was handling accounts and tax matters for one of the subsidiaries of Tanjung Plc. In 1997, she joined EON Berhad and was assisting the treasury department. In 1998, she was appointed as the Assistant Manager in UTMB. She is now responsible for supervising the overall functions of UTMB. ■ Low Lai Chee (Assistant Manager) She is the Assistant Manager and is an Associate Member of the Chartered Institute of Secretaries and Administrators, England. Prior to her joining UTMB in 1994, she had more than 10 years of experience in nominee services with a whollyowned subsidiary of a public listed company. She is currently assisting in supervising the overall functions of UTMB. 20 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS ■ Agnes Lai Yoke Ping (Senior Trust Officer) She is the Senior Trust Officer and is an Associate Member of the Chartered Institute of Management Accountants, England. Prior to her present appointment in 1996, she had more than 10 years’ working experience in the finance and administration division with a wholly-owned subsidiary of a public listed company. She has been handling unit trusts matters since joining UTMB and is currently responsible for compliance division of unit trust funds and administrative functions of UTMB. ■ Suresh Kumar (Legal Executive) He is the Legal Executive. He joined UTMB in September 2000 and holds a law degree from Bond University, Australia. He is responsible for the overall legal and compliance affairs of UTMB with the relevant authorities. Prior to joining UTMB, he was a partner with an established law firm and was in charge of corporate matters, litigation, conveyancing and the administration and management of the firm. Financial Highlights 2002 RM Paid-up Capital Year Ended 31 December 2001 RM 2000 RM 500,000 500,000 500,000 Shareholders’ Fund 3,475,215 3,097,510 2,509,895 Turnover 3,466,082 2,953,420 2,771,031 Profit Before Taxation 1,232,705 867,600 940,928 881,705 587,615 622,901 Profit After Taxation Delegation Of Share Custodial Functions Share custodial functions are not delegated to any other parties. 21 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS PACIFIC PEARL FUND, PACIFIC DANA MURNI AND PACIFIC DANA KLSI Name Of Trustee: AmTrustee Berhad (163032-V) Address: 22nd Floor, Bangunan AmBank Group, No. 55, Jalan Raja Chulan, 50200 Kuala Lumpur Date Of Incorporation: 28 July 1987 Authorised Capital: RM1 million Staff Strength: 36 as at 3 November 2003 (comprising 15 executive staff and 21 non-executive staff) For details of key personnel, please refer below Funds Under Trusteeship: 17 as at 3 November 2003 Board Of Directors: Fauziah binti Yacob Amarjeet Kaur d/o Ranjit Singh Pushparani d/o A Moothathamby Dato’ Jaspal Singh s/o Sher Singh Dato’ Syed Mohd Yusof bin Tun Syed Nasir (Independent Director) Tuan Haji Mohd Idris bin Mohd Isa (Independent Director) AmTrustee Berhad has been involved in the unit trust industry as a trustee since 1997. Below are details of its key management staff: ■ Dato’ Jaspal Singh s/o Sher Singh (Chief Executive Officer cum Director) He is a Fellow Member of the Association of Chartered Certified Accountants (FCCA) and has been with the AmBank Group since October 1981, having served the Asset Administration, Internal Audit, Treasury Department, Arab-Malaysian Investment Management Section (AMIM) and Share Registrar Unit. Besides heading AmTrustee Berhad, he currently also heads the Custodian/Nominees Services (AmMerchant Bank Berhad). ■ Devinder Kaur (Manager) She joined AmTrustee Berhad in November 2001. She graduated with a LLB (Hons) from the University of Liverpool and was admitted as an Advocate and Solicitor to the High Court of Malaya in 1991. Prior to joining AmTrustee Berhad, she was with AmMerchant Bank Berhad and held the position as Legal Counsel, Legal Department. She is currently responsible for the overall legal and compliance affairs of AmTrustee Berhad. ■ Azlinda Abdul Manaf (Manager) She holds a Bachelor of Arts with honours in Accounting and Finance from SouthBank University of London. Prior to joining AmTrustee Berhad, she was with Pengkalen Securities as a Dealer’s Representative. ■ Laila Mujir (Manager) She holds an Advanced Diploma in Business and Management from Swansea Institute of Higher Education and is a member of Financial Markets Association (FMA). Prior to her appointment in AmTrustee Berhad, she served Arab-Malaysian Group of Companies as a Manager in the Share Registrar Department, Organisation & Method Department and headed the Corporate Sales Desk in Treasury Dealing. ■ Sharon Khaw Cheng Sim (Assistant Manager) Prior to her appointment at AmTrustee Berhad, she was the Head of Share Margin Trading Unit at United Overseas Bank (M) Bhd and before that, as Operation Assistant Manager at Inter-Pacific Securities Sdn Bhd. She once served Arab-Malaysian Merchant Bank Berhad as a Marketing Officer. 22 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS Financial Highlights 2003 RM Paid-up Share Capital Year Ended 31 March 2002 RM 2001 RM 500,000 500,000 500,000 Shareholders’ Funds 2,471,589 2,262,373 1,786,990 Turnover 2,607,896 1,879,056 774,348 Profit Before Taxation 461,010 690,514 605,569 Profit After Taxation 209,216 475,383 432,800 Delegation Of Share Custodial Functions AmTrustee Berhad has delegated the share custodial functions to AMMB Nominees (Tempatan) Sdn Bhd [AMMBN(T)SB] to utilise AMMBN(T)SB information systems and to ensure real time notification of settlements and transfer of securities and also to reduce the risks of settlement of securities. AMMBN(T)SB, a fully-owned subsidiary of AmMerchant Bank Berhad and an Authorised Depository Member (ADM) of Malaysian Central Depository Sdn Bhd (MCD), was set up to assist investment advisors, managers of large international portfolios, lending banks and international custodians in the movement and management of cash and securities and providing clients with real-time notification of settlements and reports tailored to clients’ requirements. AMMBN(T)SB is equipped with an AS400 mainframe system with Investment Management System application designed by KPMG Peat Marwick, an integrated and on-line system designed to meet clients’ operations. It is also currently using the CAMRA 2000 system to further enhance their custodian functions. 23 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS PACIFIC DANA AMAN Name Of Trustee: Bumiputra-Commerce Trustee Berhad (167913-M) Address: D-0-6 Megan Phileo Promenade, No. 189 Jalan Tun Razak, 50400 Kuala Lumpur Date Of Incorporation: 19 January 1988 Authorised Capital: RM1 million Staff Strength: 15 as at 3 November 2003 (comprising 8 executive staff and 7 non-executive staff) For details of key personnel, please refer below Funds Under Trusteeship: Board Of Directors: 9 as at 3 November 2003 (including property trust fund) Nik Hassan Nik Mohd (Chairman) Dato’ Bhupatrai a/l Mansukhlal Premji Datin Norhayati Hashim Mohd Tahir Abdul Wahab Mohd Badry Jaafar A. Bakar Buyong Zauyah Wan Chik Bumiputra-Commerce Trustee Berhad has been involved in the unit trust industry as a trustee since 1998. Below are the details of its key management staff: ■ Shahidah Hashim (General Manager) The Company is now led by Shahidah Hashim, who assumed her present post in January 2002. She was honoured with her BBA in Management from Kobe University, Japan, in 1976. She started service with Bank Bumiputra Malaysia Berhad upon her return in the International Banking Division. Her first duties were to coordinate the opening of the Bank’s Representative Office and subsequently the foreign branch of the Bank in Tokyo. She moved on with work related to the opening of the Bank’s branches in various other places, such as New York, Los Angeles and Bahrain. She was also involved in offshore credits, specifically Malaysian Government borrowings from the international markets. In mid 1980s, her foray into electronic banking started with a job in Information Technology Division taking care of computer purchasing and contract administration. In 1988, she headed the Electronic Banking Department, spearheading the introduction of electronic products and services of the Bank until 1992 when she moved to the Consumer Banking area in charge of marketing of loans and deposits until the merger in 1999. Until October 2001, she headed the Retail Marketing Department of the Retail Group of Bumiputra-Commerce Bank, in charge of the deposits and payments services. ■ Ibrahim Hj Ismail (Manager Operations) He served with Jabatan Pemegang Amanah Raya (Public Trustee) for 11 years. In 1990, he joined Bumiputra-Commerce Trustee Berhad as a Junior Officer. He was promoted to Executive Officer in January 1992 and became Assistant Manager in July 1995. He is in charge of operations and trust administration. 24 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS ■ Azhar bin Musa (Accounts/Trust Executive) He joined Bumiputra-Commerce Trustee Berhad on 24 July 2000. Before joining Bumiputra-Commerce Trustee Berhad, he was attached to BBMB Factoring Berhad since mid 1985. His last position was Client Audit/Review Executive. Holding a Diploma in Accountancy from UITM, he now serves the Company as Account/Trustee Executive. ■ Masrina Mat (Administration Officer) She joined Bank Bumiputra Malaysia Berhad Group in 1980 with experience in credit information at head office and branch operation. She joined Bumiputra-Commerce Trustee Berhad in 1993 as a Trust Clerk. In July 1994, she was promoted to Administration Officer. ■ Khairun Mohd Nor (Legal and Trust Executive) He holds a Bachelor of Laws (LLB) (Hons) from International Islamic University of Malaysia. Before joining BumiputraCommerce Trustee Berhad in November 2001 as Legal Executive, he has worked in legal firms and was attached to the Session Court of Malaya, Kuala Lumpur, thus gaining experiences in Malaysia Legal System and knowledge of other related legal matter. ■ Farriz Hanan Jantan (Marketing and Trust Executive) She holds a Bachelor of Accountancy from Mara University of Technology (UiTM). Prior to joining Bumiputra-Commerce Trustee Berhad as Trust and Marketing Executive in February 2001, she served at Winlite Construction Sdn Bhd as a Project Accounts Executive. Financial Highlights 2002 RM Paid-up Capital Year Ended 31 December 2001 RM 2000 RM 500,000 500,000 500,000 Shareholders’ Funds 2,611,879 2,350,619 2,269,806 Turnover 1,265,370 1,265,398 983,893 Profit Before Taxation 384,086 140,813 261,253 Profit After Taxation 261,260 80,813 186,283 Delegation Of Share Custodial Functions Bumiputra-Commerce Trustee Berhad has delegated the share custodial functions to Bumiputra-Commerce Nominees (T) Sdn Bhd [BCN(T)SB] to utilise BCN(T)SB information systems and to ensure real time notification of settlements and transfer of securities and also to reduce the risks of settlement of securities. BCN(T)SB, a fully-owned subsidiary of Bumiputra-Commerce Bank Berhad and an Authorised Depository Member (ADM) of Malaysian Central Depository Sdn Bhd (MCD), was set up to assist investment advisors, managers of large international portfolios, lending banks and international custodians in the movement and management of cash and securities and providing clients with real-time notification of settlements and reports tailored to clients’ requirements. BCN(T)SB is equipped with an AS400 mainframe system with Custodian and Nominees System application designed by AIT Sdn Bhd, a subsidiary of Patimas Group Berhad, an integrated and online system designed to meet clients’ operations. 25 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS PACIFIC MILLENNIUM FUND, PACIFIC RECOVERY FUND, PACIFIC INCOME FUND AND PACIFIC PROGRESSIVE FUND Name Of Trustee: BHLB Trustee Berhad (313031-A) Address: Ground & 1st Floor, Rockwills Centre, No. 24, Jalan 14/22, Right Angle, Seksyen 14, 46100 Petaling Jaya, Selangor Darul Ehsan Date Of Incorporation: 25 August 1994 Issued/Paid-up Capital: Authorised capital of 500,000 shares of RM10.00 each 350,000 shares are issued (Paid up RM5 each) Staff Strength: 20 as at 3 November 2003 (comprising 15 executive staff and 5 non-executive staff) For details of key personnel, please refer below Funds Under Trusteeship: 16 funds as at 3 November 2003 Board Of Directors: Dato’ Seri Goh Eng Toon Dato’ (DR) Stephen Yeap Leong Huat Yeap Lam Yang Johari Low Abdullah @ Low Han Hing Tan Leng Hock Saw Leong Aun BHLB Trustee Berhad has been involved in the unit trust industry as a trustee since 1996. Below are the details of its key management staff: ■ Joshua Lim (Chief Executive Officer) He holds a Masters in Business Administration from Universiti Putra Malaysia and a Bachelor of Law from the University of London. He is an experienced adviser in the Trust Industry and one of the leading promoter of estate planning tools. He has been involved in the Trust and Legal Services Industry since 1992. He has also attended the Malaysian Unit Trust Administration Course organised by the Federation of Malaysian Unit Trust Managers and the Securities Institute of Education Australia. He is responsible for Marketing and Operations and oversees the Legal, Trust Administration, Securities and Investment Divisions of the Trustee. ■ Jeslin Ng (Manager of Finance and Operations Department) She has over eight years’ experience in accounting and has LCCI qualification. She is responsible for finance and operations and supervises the development of systems and methods and all internal control procedures. She also monitors the clients’ accounts and is responsible for monitoring investment portfolio and performance of funds under management. ■ Law Oi Meng (Assistant Manager of Securities and IT Department) She holds an Advance Diploma in Computer Studies and has over four years’ working experience in development and implementation of IT system. She is responsible for planning and implementing systems to support the smooth flow of information and processes, analysing and developing systems and sourcing software and hardware for the Company. ■ Azida binti Abdul Aziz (Securities Officer) She supervises the operations in the Securities Department. She was attached to a trustee firm for one-and-a-half years as Accounts Clerk in Operations and Settlement Department. She is responsible for the administration and smooth operations of the Securities Department. 26 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS ■ Stanley Tan (Senior Legal Executive) He graduated from the University of London with an LLB (Honours) in 1997 and has obtained the Certificate in Legal Practice in 1999. He was formerly attached to a legal firm in Kuala Lumpur and has experience in conveyancing matters. He is responsible for legal documentation, trust administration and certain corporate matters. Financial Highlights 2002 RM Year Ended 31 December 2001 RM 2000 RM Paid-up Capital 1,750,000 1,750,000 1,750,000 Shareholders’ Funds 1,751,427 1,494,545 1,041,816 Turnover 2,209,314 1,469,653 1,237,356 Profit Before Taxation 473,307 500,729 385,324 Profit After Taxation 319,882 452,729 383,024 Delegation Of Share Custodial Functions Share custodial functions are not delegated to any other parties. 27 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS WHAT ARE THE TRUSTEES’ RESPONSIBILITIES? The Trustees have agreed willingly to assume all their obligations under the respective Deeds and all written laws and Securities Commission’s Guidelines which cover the following: • Take into custody the investments of the respective Funds and hold the investments in trust for the unitholders; • Ensure that the Manager operates and administers the Funds in accordance with the provisions of the respective Deeds, Securities Commission’s Guidelines and acceptable business practice within the unit trust industry; • Immediately notify the Securities Commission of any irregularity or breach of the provisions of the Deeds, Securities Commission’s Guidelines and any other matters which in the Trustees’ opinions may indicate that the interests of unitholders are not served; • Exercise due care, skill, diligence and vigilance in carrying out their functions and duties, in actively monitoring the administration of the Funds by the Manager and in safeguarding the interests of unitholders; • Maintain, or cause the Manager to maintain, proper accounting records in relation to those rights and interests, and of all transactions effected by the Manager on account of the Funds; and • Require that the accounts be audited at least annually and that those accounts be sent to the unitholders within two months from the end of the financial year. RETIREMENT AND REMOVAL OF TRUSTEES The Trustees may retire by giving 12 months’ notice to the Manager or any shorter period as the Manager and the respective Trustees may agree upon. Upon receipt of a notice in writing to that effect, the Manager may by the Deeds appoint some other corporation as the new Trustee for the unitholders as approved by the Securities Commission. The Trustees may be removed by special resolution of the unitholders at a unitholders’ meeting convened in accordance with the Deeds. The Trustees shall retire if they go into liquidation or receivers have been appointed over the undertaking of the respective Trustees or the Trustees have ceased to exist. REMOVAL OF THE MANAGER BY THE TRUSTEES The Manager may retire, if so requested by the Trustees, on the following grounds: • The Manager is in fundamental breach of its duties and obligations under the respective Deeds; • The Manager goes into liquidation or a receiver has been appointed over the undertaking of the Manager or the Manager has ceased to carry on business; • The Manager has failed or neglected to carry out its duties to the satisfaction of the Trustees and the Trustees consider that it would be in the interest of unitholders for them to do so; and • If required to do so by the Trustees following a special resolution passed at a unitholders’ meeting duly convened in accordance with the respective Deeds. TRUSTEES’ STATEMENT OF RESPONSIBILITY The Trustees are willing to assume the position and all obligations that come with it under the Deeds, all relevant written laws and rules of laws, and are also willing to provide indemnity to the Manager for the benefit of unitholders of the respective Funds against all claims, damages, losses, costs and expenses suffered or incurred by the Funds due to or arising from the Trustees’ wilful defaults or negligence in the performance of their obligations and duties. 28 TRUSTEES OF THE FUNDS, THEIR DUTIES AND OBLIGATIONS SYARIAH ADVISERS The Syariah Advisers for Pacific Mutual’s Syariah-based Funds are as follow: • BIMB Securities Sdn Bhd (BSSB) for Pacific Dana Aman • Islamic Banking and Finance Institute Malaysia Sdn Bhd (IBFIM) for Pacific Dana Murni and Pacific Dana KLSI. Their role, power and duties are as follow: • Ensure that the Syariah-based Funds are managed and administered in accordance with the Syariah principles; • Provide expertise and guidance for the Syariah-based Funds in all matters relating to the Syariah principles, including on the Syariah-based Funds’ Deed and Prospectus, their structures and investments, and other operational and administrative matters; • Consult the Securities Commission who may consult the Syariah Advisory Council where there is any ambiguity or uncertainty as to an investment, instrument, system, procedure and/or process; • Comply, and ensure that the Syariah-based Funds comply, with any guideline, ruling or decision issued by the Securities Commission; • Act with due care, skill and diligence in carrying out its duties and responsibilities; • Responsible for scrutinising the Syariah-based Funds’ compliance report as provided by the compliance officer and transaction report provided by or duly approved by the Trustees to ensure that the Syariah-based Funds’ investments are in line with Syariah principles; • Prepare a report to be included in the Syariah-based Funds’ interim and annual reports certifying that the Syariah-based Funds have been managed and administered in accordance with Syariah principles; • Vet and advise on the promotional materials of the Syariah-based Funds; and • Assist and attend to any ad-hoc meeting called by the Securities Commission and/or any other relevant authority. MORE ABOUT BSSB BSSB, a stockbroking subsidiary of BIMB Holdings Bhd, was incorporated on 21 February 1994. Its current authorised capital is RM250 million, and its issued and paid-up capital is RM100 million. As at 3 November 2003, the company has a staff force of 30, comprising 19 executive and 11 non-executive staff. There is only one fund under its supervision. Shareholders: BIMB Securities (Holdings) Sdn Bhd (Wholly-owned subsidiary of BIMB Holdings Bhd) Permodalan Nasional Berhad (PNB) 51% 49% Board Of Directors: Datuk Burhanuddin Ahmad Tajudin Dato’ Dr. Abdul Halim Haji Ismail Dato’ Idris Md Tahir Dato’ Mohamad Shafie Dato’ Dr. Ismail Sa’ad Mustapha Hamat - Management Committee: Dato’ Dr. Abdul Halim Haji Ismail Dato’ Idris Md Tahir Mohd Ghazalli Abu Bakar - Chairman - Member/Secretary - Member Chairman Chief Executive Officer/Executive Director Dealing Executive Director Operations/Company Secretary Non-Executive Director Non-Executive Director Non-Executive Director Profile Of Management Members: Dato’ Dr. Abdul Halim Haji Ismail has been with BSSB since its inception in 1994. For his secondary education he went to Arabic/Religious and English schools. He obtained BA Hons. Degree in Economics from University of Malaya in 1965 and Doctor of Philosophy from University of Oxford, England, in 1970. He began his career in 1970 as an academician and later served as Dean in the Faculty of Economics, Universiti Kebangsaan Malaysia. In 1977, he joined Bank Bumiputra Malaysia Berhad as its Chief Economist. When BIMB was formed in 1983, he was appointed its first Managing Director. While with the Bank, he became Chairman of the Board of Directors of its subsidiaries, including Syarikat Takaful Malaysia Sdn Bhd and Al-Wakalah Nominees Sdn Bhd. He is currently a member of the Syariah Advisory Councils at Bank Negara Malaysia, Securities Commission and Labuan Offshore Financial Services Authority. He also presently sits on the Boards of Directors of a few listed companies. Dato’ Dr. Abdul Halim Haji Ismail is the designated person in-charge of Pacific Dana Aman. 29 SYARIAH ADVISERS Dato’ Idris Md. Tahir is currently the Executive Director Operations of BSSB. He is a Director of BIMSEC Nominees (Tempatan) Sdn Bhd and BIMSEC Nominees (Asing) Sdn Bhd (wholly-owned subsidiary of BSSB). He is also the Company Secretary to BSSB’s group of companies which includes another wholly-owned subsidiary, BIMSEC Asset Management Sdn Bhd. Prior to joining BSSB in 1995, he was attached to Bank Islam Malaysia Berhad (BIMB) as the pioneer staff and served at various positions for 14 years within BIMB and its subsidiary companies. He is an accountant by profession and had qualified as Chartered Institute of Cost and Management Accountant (CIMA), United Kingdom in 1982 and was conferred the Fellow Membership in 1995. He is a member of the Malaysian Institute of Accountants (MIA) and Institute of Internal Auditors (IIA). Mohd Ghazalli Abu Bakar is the Chief Dealer and Head of Institutional Dealing of BSSB. He graduated from Western Illinois University, USA with BBA and MBA. He joined Bank Islam Malaysia Berhad in 1987. Prior to joining Bank Islam Malaysia Berhad, he served short stints with Bank of Commerce (M) Berhad and MARA Institute of Technology. From 1991 to 1994, he was a dealer in the Money Market and FOREX Department of the Bank. He has been with BSSB since its inception in 1994. MORE ABOUT IBFIM IBFIM was incorporated on 13 April 1995 and has a paid-up capital of RM10,000,001.00. Its establishment is in line with Malaysia’s target to become a regional and international Islamic banking and takaful centre. As at 3 November 2003, the company has a staff force of 40 and there are a total of 30 funds under its supervision. Shareholders: Bank Negara Malaysia (Special Shareholder) BIMB Holdings Berhad AmMerchant Bank Berhad Malayan Banking Berhad Alliance Bank Malaysia Berhad Affin Bank Berhad Bank Muamalat Malaysia Berhad EON Bank Berhad Hong Leong Bank Berhad Public Bank Berhad RHB Bank Berhad Southern Bank Berhad Southern Finance Berhad Takaful Nasional Sdn Bhd Board Of Directors: Tan Sri Dato’ Sri Dr Zeti Akhtar Aziz Tan Sri Dato’ Azman Hashim Datuk Amirsham A Aziz Dato’ Ahmad Tajudin Abdul Rahman Dato’ Mohd Fadzli Yusof Dato’ Fadzil Yusoff Bakarudin Ishak Aminuddin Md Desa Mustapha Hamat - Chairman - Chief Executive Officer/Director 30 SYARIAH ADVISERS Key Management Staff: Mustapha Hamat Shamshir Alam S.M. Khairuddin Ahmad Sanusi Husain Ahmad Mazlan Zulkifly Mohamad Fauzi Md Khair Roslan Abd Razak - Chief Executive Officer Director, Finance & Administration Acting Director, Training & Professional Development Director, Takaful & Special Projects Acting Director, Education Director, Business Advisory Syariah Advisory Team: Mustapha Hamat Mohd Bakir Haji Mansor Najib Hj Mohd Salleh Mohammad Khairi Saat Wan Jemizan Wan Deraman Mohd Nasir Ismail - Chief Executive Officer Internal Research Fellow Internal Research Fellow Manager Assistant Manager Assistant Manager Designated Person For Pacific Dana Murni And Pacific Dana KLSI: The designated person responsible for Syariah Advisory of the Funds is Mohd Bakir Haji Mansor. He was appointed as one of the Syariah Advisory Team members in 1995. Presently, he is a member of the Syariah Supervisory Councils of Bank Islam Malaysia Berhad (BIMB), Syarikat Takaful Malaysia Berhad (STMB) and ASEAN Retakaful International (L) Ltd (ARIL). Prior to this, he was the Syariah Coordinator of BIMB and the Secretary of the Syariah Supervisory Councils of BIMB, STMB and ARIL. Before joining Bank Islam in 1984, Mohd Bakir served at the National Council for Islamic Religious Affairs in the Prime Minister’s Department for 13 years. He was also one of the Chief Assistant Directors at the Islamic Research Centre for four years. He holds a Cambridge Oversea School Certificate and Shahada Ulya from Kolej Islam Malaya. 31 SYARIAH ADVISERS MORE INFORMATION ABOUT THE FUNDS NON-SYARIAH-BASED FUNDS WHY INVEST IN PACIFIC PREMIER FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve strong long-term capital growth with a consistently attractive income. A strategy has been set up to create a balanced portfolio of equity securities with capital growth prospects and high income yielding and fixed interest securities. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Unit split: Once a year, if any. Type of fund: The Fund is a growth and income fund. Category of fund: The Fund is an equity fund. WHO SHOULD CONSIDER INVESTING? Investors seeking current income returns potentially higher than fixed deposit interest rates and moderate capital growth with low level risk over the medium to long term. WHAT ARE THE LIKELY BENEFITS? The Fund primarily invests in securities that provide capital growth and high income prospects by selecting a portfolio of securities which is equally spread among growth and value stocks. The Fund allows investors the opportunity to benefit from a consistently reasonable income combined with prospects for capital growth. RISK FACTORS Pacific Premier Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? To attain the Fund’s objective of providing investors with a consistently reasonable income as well as capital appreciation, the Fund has significantly higher equity investment in companies with reasonable dividend yields and above average earnings growth potential. As such, the Manager selects a portfolio which adheres to fundamental valuations from sectors which are expected to grow higher than the market growth. Cash & Liquid Assets 13.91% Portfolio Structure (as per the annual report Fixed Income & Other Debt Securities 11.98% Quoted Equity Securities 71.75% Derivative Instruments 2.36% for the financial year ended 30 September 2003) Launch Date : 10 August 1995 32 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 80% (minimum equity allocation is 40%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for equity investments is 80%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 60% in equities and 40% in fixed income securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy The Manager aims to identify companies adhering to fundamental valuations and offer prospects of above average earnings growth. Diversification into different industries will be implemented. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. • Fixed Income Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. PERMITTED INVESTMENTS Pacific Premier Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 33 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 34 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 30 September 2003) Launch Date : 10 August 1995 Performance Benchmark : KLSE Composite Index (KLCI)* 60 Return (%) 40 20 0 -20 -40 -60 Pacific Premier Fund 30.09.2003 31.07.2002 31.05.2001 31.03.2000 29.01.1999 28.11.1997 30.09.1996 10.08.1995 -80 KLCI From 10 August 1995 To 30 September 2003 Performance Data 1 Year’s Period 01.10.2002 to 30.09.2003 Total Average Return Annual Return 3 Years’ Period 01.10.2000 to 30.09.2003 Total Average Return Annual Return 5 Years’ Period 01.10.1998 to 30.09.2003 Total Average Return Annual Return Since Launch 10.08.1995 to 30.09.2003 Total Average Return Annual Return Pacific Premier Fund 14.17% 14.17% 17.34% 5.78% 112.17% 22.43% 35.19% 4.32% KLSE Composite Index 14.96% 14.96% 2.79% 0.93% 96.36% 19.27% (30.56%) (3.75%) * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: All figures pertaining to the Fund’s return were extracted from Standard & Poor’s Workstation System. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 35 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 30 September 2003 Source Of Income For Distribution: Interest income Dividend income Profit on sale of quoted investments Previous year’s realised gains Distribution equalisation 2002 2001 RM’000 % RM’000 % RM’000 % – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Gross Distribution Per Unit (sen) – – – Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) – – – – – – – – – – – – – – – Net Distribution Per Unit (sen) – – – Unit Split Ratio 6:100 – 8:100 NAV per unit (RM) * Cum-unit split and distribution Ex-unit split and distribution 0.6519 0.6150 0.5710 0.5710 0.53 0.50 * With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 36 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 30 September 2003 is 0.97 times (2002: 0.58 times). The portfolio turnover was higher mainly due to an increase in average transactional value of 50.20% i.e. RM122.56 million in 2002 to RM184.09 million in 2003 compared to 9.47% decrease in the average NAV i.e. RM210.17 million in 2002 to RM190.27 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended 30 September 2001 30 September 2002 30 September 2003 Top 5 Equity Securities (Malaysia) 1. United Malacca Bhd 2. Carlsberg Brewery Malaysia Bhd 4.02 3. Fraser & Neave Holdings Bhd 3.40 4. AMMB Holdings Bhd 3.30 5. Gamuda Bhd 2.93 1. IOI Corporation Bhd 4.65 2. AMMB Holdings Bhd 3.95 3. Commerce Asset-Holding Bhd 3.81 4. Resorts World Bhd 3.56 5. Fraser & Neave Holdings Bhd 3.16 1. Malaysia International Shipping Corporation Bhd - F 7.14 2. Malayan Banking Bhd 5.52 3. Maxis Communications Bhd 4.44 4. AMMB Holdings Bhd 4.22 5. AMFB Holdings Bhd - F 3.37 Financial Year Ended 30 September 2001 30 September 2002 30 September 2003 % of NAV Top 3 Unquoted Corporate Bonds 4.59 % of NAV 1. Genting Sanyen Power Sdn Bhd 1.65 2. PLUS Bhd 1.15 3. Tenaga Nasional Bhd 1.10 1. Tenaga Nasional Bhd 3.71 2. Hong Leong Industries Bhd 3.34 3. Genting Sanyen Power Sdn Bhd 1.57 1. Tenaga Nasional Bhd 3.46 2. Hong Leong Industries Bhd 3.04 3. Divine Vista Sdn Bhd 2.80 37 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC PEARL FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve maximum capital growth over a medium to long-term period by investing mainly in small to medium-sized companies that have excellent prospects for growth. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Unit split: Once a year, if any. Type of fund: The Fund is a growth fund. Category of fund: The Fund is an equity (small cap) fund. WHO SHOULD CONSIDER INVESTING? Investors seeking high capital growth of small and medium-sized companies with excellent growth potential over the medium to long term. WHAT ARE THE LIKELY BENEFITS? The Fund invests mainly in small to medium-sized companies that have good prospects for growth. The Fund focuses on companies with paid-up capital of RM300 million and below which the Manager believes can offer better prospects for growth than larger companies. The Fund allows investors the opportunity to benefit from potential capital growth over a medium to long-term period. RISK FACTORS Pacific Pearl Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? To achieve the Fund’s objective of attaining maximum capital growth over a medium to long-term period, the Fund’s portfolio has significantly higher equity investments in companies with paid-up capital of RM300 million and below which have above average earnings growth prospects. These companies could also have the potential of becoming blue chips in the future. Derivative Instruments 0.13% Portfolio Structure Loan Stocks 0.43% Quoted Equity Securities 72.36% Fixed Income & Other Debt Securities 7.97% (as per the annual report for the financial year ended 31 March 2003) Launch Date : 6 January 1997 Cash & Liquid Assets 19.11% 38 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 85% (minimum equity allocation is 40%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for equity investments is 85%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 65% in equities and 35% in fixed income securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy The Manager aims to identify companies with a paid-up capital of RM300 million and below which offer above average earnings growth prospects. Diversification into different industries will be implemented. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. • Fixed Income Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. PERMITTED INVESTMENTS Pacific Pearl Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 39 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 40 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 31 March 2003) Launch Date : 6 January 1997 Performance Benchmark : KLSE Emas Index (Emas)* 40 20 Return (%) 0 -20 -40 -60 -80 Pacific Pearl Fund 31.03.2003 31.03.2002 31.03.2001 31.01.2000 31.01.1999 31.01.1998 06.01.1997 -100 EMAS From 6 January 1997 To 31 March 2003 Performance Data 1 Year’s Period 01.04.2002 to 31.03.2003 Total Average Return Annual Return 3 Years’ Period 01.04.2000 to 31.03.2003 Total Average Return Annual Return 5 Years’ Period 01.04.1998 to 31.03.2003 Total Average Return Annual Return Since Launch 06.01.1997 to 31.03.2003 Total Average Return Annual Return Pacific Pearl Fund (11.59%) (11.59%) (25.58%) (8.53%) 39.88% 7.98% (2.82%) (0.45%) KLSE Emas Index (15.27%) (15.27%) (39.76%) (13.25%) (15.44%) (3.09%) (55.56%) (8.91%) * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: The basis of calculating the Fund’s return is in line with the method used by Standard & Poor’s Fund Services Asia Ltd. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 41 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 31 March 2003 Source Of Income For Distribution: Interest income Dividend income Profit on sale of quoted investments Previous year’s realised gains Distribution equalisation * 2002 2001 * RM’000 % RM’000 % RM’000 % – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Gross Distribution Per Unit (sen) – – – Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) – – – – – – – – – – – – – – – Net Distribution Per Unit (sen) – – – Unit Split Ratio 5:100 10:100 10:100 NAV per unit (RM) ** Cum-unit split Ex-unit split 0.5659 0.5389 0.70 0.64 0.60 0.55 During this financial period, Pacific Pearl Fund changed its financial year-end from 31 January to 31 March. The financial period ended 31 March 2001 represents a period of 14 months from 1 February 2000. ** With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 42 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 31 March 2003 is 0.58 times (2002: 0.45 times). The portfolio turnover was higher mainly due to increase in average transactional value of 34.61% i.e. RM97.01 million in 2002 to RM130.59 million in 2003, compared to an increase in average NAV of 5.07% i.e. RM214.62 million in 2002 to RM225.50 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended Top 5 Equity Securities (Malaysia) % of NAV 31 March 2001 1. 2. 3. 4. 5. Carlsberg Brewery Malaysia Bhd Kian Joo Can Factory Bhd Fraser & Neave Holdings Bhd United Malacca Bhd Gamuda Bhd 3.83 3.15 2.59 2.57 2.51 31 March 2002 1. 2. 3. 4. 5. Carlsberg Brewery Malaysia Bhd Fraser & Neave Holdings Bhd Hong Leong Bank Bhd Gamuda Bhd Malaysia International Shipping Corporation Bhd - Foreign 3.16 2.54 2.27 1.95 1.92 31 March 2003* 1. 2. 3. 4. 5. Resorts World Bhd Malayan Banking Bhd Gamuda Bhd IOI Corporation Bhd Hong Leong Bank Bhd 4.23 4.14 2.71 2.71 2.58 Financial Year Ended Top 3 Unquoted Corporate Bonds % of NAV 31 March 2001 1. 2. 3. Nilai Cipta Sdn Bhd Genting Sanyen Power Sdn Bhd Hong Leong Industries Bhd 2.54 2.07 1.05 31 March 2002 1. 2. 3. Nilai Cipta Sdn Bhd Genting Sanyen Power Sdn Bhd Tenaga Nasional Bhd 2.04 1.65 1.36 31 March 2003 1. 2. 3. RHB Capital Bhd Nilai Cipta Sdn Bhd Tenaga Nasional Bhd 2.53 2.47 1.05 * The investment strategy of Pacific Pearl Fund is to have a significantly higher equity investments in companies with paid-up capital of RM300 million and below. Consequently, the weighting of the big cap stocks have over the period been reduced. As at 5 November 2003, the top 5 equity securities and their weightings are: 1. 2. 3. 4. 5. MISC-F Uchi Technologies Bhd YLI Holdings Bhd Gamuda Bhd Palmco Holdings Bhd % of NAV Issued Capital 7.1 4.8 3.7 3.0 2.9 1,860 million 72 million 97 million 702 million 202 million Stocks with paid-up capital of RM300 million and below comprises 42% of the portfolio currently. As the Fund has a weighting of 75% in equities, it means that the weighting in such stocks comprises 56% of the equity portion of the Fund. As such, the investments of the Fund are within its mandate. 43 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC MILLENNIUM FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve long-term capital growth, with income as its secondary objective, by investing mainly in fundamentally sound large market capitalisation companies and also any other investments as may be permitted by the Securities Commission from time to time. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Unit split: Once a year, if any. Type of fund: The Fund is a growth fund. Category of fund: The Fund is an equity fund. WHO SHOULD CONSIDER INVESTING? Investors seeking steady capital and income growth of large companies whose current prices may fail to reflect their longterm values over the medium to long term. WHAT ARE THE LIKELY BENEFITS? The Fund invests primarily in companies from diverse sectors with market capitalisation of at least RM500 million and that are considered to be attractively valued in relation to their asset backing, dividend yields and future earnings potential. The Fund allows investors the opportunity to benefit from a consistently reasonable income combined with prospects for capital growth through income distribution. RISK FACTORS Pacific Millennium Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? To attain the Fund’s objective of providing investors with a consistently reasonable income as well as capital appreciation, the Manager will construct a diversified investment portfolio that consists of fundamentally sound companies whose current prices may fail to reflect their long-term values. The Fund will target companies exhibiting fundamental strength with market capitalisation, at the time of investment, of at least RM500 million each. Fixed Income & Other Debt Securities 5.08% Quoted Equity Securities 76.73% Portfolio Structure (as per the annual report for the financial year ended Cash & Liquid Assets 18.19% 30 June 2003) Launch Date : 15 April 1999 44 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 85% (minimum equity allocation is 40%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for equity investments is 85%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 60% in equities and 40% in fixed income securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy The Manager aims to identify companies with market capitalisation of at least RM500 million and whose current prices may fail to reflect their longer-term value. Diversification into different industries will be implemented. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. • Fixed Income Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. PERMITTED INVESTMENTS Pacific Millennium Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 45 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • Equity Investments and Fixed Income Investments - The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • Equity Investments and Fixed Income Investments - The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 46 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 30 June 2003) Launch Date : 15 April 1999 Performance Benchmark : KLSE Composite Index (KLCI)* 80 70 60 Return (%) 50 40 30 20 10 0 Pacific Millennium Fund 30.06.2003 31.12.2002 30.06.2002 31.12.2001 30.06.2001 30.11.2000 30.04.2000 31.10.1999 15.04.1999 -10 KLCI From 15 April 1999 To 30 June 2003 Performance Data 1 Year’s Period 01.07.2002 to 30.06.2003 Total Average Return Annual Return 3 Years’ Period 01.07.2000 to 30.06.2003 Total Average Return Annual Return Since Launch 15.04.1999 to 30.06.2003 Total Average Return Annual Return Pacific Millennium Fund (4.52%) (4.52%) 1.14% 0.38% 29.85% 7.08% KLSE Composite Index (4.62%) (4.62%) (16.97%) (5.66%) 19.69% 4.67% * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: The basis of calculating the Fund’s return is in line with the method used by Standard & Poor’s Fund Services Asia Ltd. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 47 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 30 June 2003 Source Of Income For Distribution: Dividend income Interest income Accretion of discount net of amortisation of premium on unquoted corporate bonds Realised gain on sale of investments Distribution equalisation 2001* % RM’000 % RM’000 % 910 948 18.88 19.66 – – – – – – – – 120 1,460 1,384 4,822 2.48 30.28 28.70 100.00 – – – – – – – – – – – – – – – – Gross Distribution Per Unit (sen) 3.00 – – Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) 0.49 (0.14) (0.86) 2.26 1.11 – – – – – – – – – – Net Distribution Per Unit (sen) 2.86 – – – 10:100 – 0.4952 0.4665 0.57 0.52 0.43 0.43 Unit Split Ratio NAV per unit (RM) ** Cum-unit split Ex-unit split * 2002 RM’000 During this financial period, Pacific Millennium Fund changed its financial year-end from 30 April to 30 June. The financial period ended 30 June 2001 represents a period of 14 months from 1 May 2000. ** With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 48 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 30 June 2003 is 0.61 times (2002: 0.80 times). The portfolio turnover was lower mainly due to a decrease in average transactional value of 17.77% i.e. RM43.16 million in 2002 to RM35.49 million in 2003 compared to an increase of 8.01% in the average NAV i.e. from RM53.92 million in 2002 to RM58.24 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended 30 June 2001 30 June 2002 30 June 2003 Top 5 Equity Securities (Malaysia) 1. Hong Leong Bank Bhd 3.67 2. Gamuda Bhd 3.61 3. Carlsberg Brewery Malaysia Bhd 3.52 4. Berjaya Sports Toto Bhd 3.32 5. Unisem (M) Bhd 3.19 1. Tenaga Nasional Bhd 4.54 2. Resorts World Bhd 4.05 3. Malaysia International Shipping Corporation Bhd – Foreign 3.67 4. British American Tobacco (M) Bhd 3.54 5. Gamuda Bhd 3.53 1. Malayan Banking Bhd 5.44 2. AMMB Holdings Bhd 4.16 3. Commerce Asset-Holding Bhd 4.05 4. Maxis Communications Bhd 3.92 5. Hong Leong Bank Bhd 3.86 Financial Year Ended 30 June 2001 30 June 2002 30 June 2003 % of NAV Top 3 Unquoted Corporate Bonds 1. Hong Leong Industries Bhd % of NAV 2.28 2. Penang Bridge Sdn Bhd 2.23 3. Gamuda Bhd 1.88 1. MAA Holdings Bhd 1.63 2. Gamuda Bhd 1.45 3. – 1. MAA Holdings Bhd 0.83 2. Divine Vista Sdn Bhd 0.80 3. RHB Capital Bhd 0.67 – 49 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC RECOVERY FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to provide above average returns in the form of capital growth over a medium to long-term period by investing mainly in cyclical stocks, stocks that are likely to be crisis survivors as well as stocks that are undergoing restructuring, which may offer considerable recovery prospects and also any other investments as may be permitted by the Securities Commission from time to time. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Unit split: Once a year in June, if any. Type of fund: The Fund is a growth fund. Category of fund: The Fund is an equity fund. WHO SHOULD CONSIDER INVESTING? Investors seeking high capital growth over the medium to long term and willing to accept a higher degree of risk in return for potentially higher investment gains following any economic downturn, industry-wide cyclical downturn or corporate restructuring exercise. WHAT ARE THE LIKELY BENEFITS? The Fund invests primarily in stocks which the Manager believes there is a good likelihood of recovery from any cyclical downturn or some non-structural setback with strong possibility of earnings improvement. The Fund allows investors the opportunity to benefit from capital growth following any economic downturn, industry-wide cyclical downturn, or corporate restructuring exercise. RISK FACTORS Pacific Recovery Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Expectation risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? To achieve its objective of attaining above average returns in the form of capital growth over a medium to long-term period, the Fund’s investment strategy is to invest primarily in equities of companies which the Manager believes have a good likelihood of recovery from any cyclical downturn or some non-structural setback with strong possibility of earnings improvement. Recovery is defined as the overcoming of economic or financial setbacks or difficulties and the regaining of the former economic or financial fundamentals. Derivative Instruments 1.85% Quoted Equity Securities 64.87% Fixed Income & Other Debt Securities 2.08% Portfolio Structure (as per the annual report for the financial year ended 30 June 2003) Cash & Liquid Assets 31.20% Launch Date : 15 April 1999 50 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 90% (minimum equity allocation is 45%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for equity investments is 90%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 70% in equities and 30% in fixed income securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy In line with the Fund’s objectives of achieving a high capital growth, the Fund will invest in a diversified portfolio of equities. In this respect, the Fund will primarily invest in: • Cyclical stocks which are out of favour as a result of a downturn in the particular sector; • Stocks which are likely to be crisis survivors that can thrive when the economy recovers; and • Stocks that are undergoing business transformation involving mergers and acquisitions or in the process of streamlining or re-organisation of its core businesses which would enable them to emerge stronger so as to be able to tap the growth prospects upon the eventual recovery of the economy. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. • Fixed Income Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. PERMITTED INVESTMENTS Pacific Recovery Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 51 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 52 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 30 June 2003) Launch Date : 15 April 1999 Performance Benchmark : KLSE Composite Index (KLCI)* 80 70 60 Return (%) 50 40 30 20 10 0 Pacific Recovery Fund 30.06.2003 31.12.2002 30.06.2002 31.12.2001 30.06.2001 30.11.2000 30.04.2000 31.10.1999 15.04.1999 -10 KLCI From 15 April 1999 To 30 June 2003 Performance Data 1 Year’s Period 01.07.2002 to 30.06.2003 Total Average Return Annual Return 3 Years’ Period 01.07.2000 to 30.06.2003 Total Average Return Annual Return Since Launch 15.04.1999 to 30.06.2003 Total Average Return Annual Return Pacific Recovery Fund (6.55%) (6.55%) (2.44%) (0.81%) 44.05% 10.45% KLSE Composite Index (4.62%) (4.62%) (16.97%) (5.66%) 19.69% 4.67% * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: The basis of calculating the Fund’s return is in line with the method used by Standard & Poor’s Fund Services Asia Ltd. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 53 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 30 June 2003 Source Of Income For Distribution: Dividend income Interest income Accretion of discount net of amortisation of premium on unquoted corporate bonds Soft commissions Previous year’s realised gains Distribution equalisation 2001* % RM’000 % RM’000 % 1,850 594 12.99 4.17 – – – – – – – – 44 213 4,849 6,686 14,236 0.31 1.50 34.06 46.97 100.00 – – – – – – – – – – – – – – – – – – – – Gross Distribution Per Unit (sen) 5.00 – – Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) 0.53 (0.15) (0.83) 2.16 3.14 – – – – – – – – – – Net Distribution Per Unit (sen) 4.85 – – – 10:100 – 0.5219 0.4733 0.61 0.55 0.46 0.46 Unit Split Ratio NAV per unit (RM) ** Cum-unit split Ex-unit split * 2002 RM’000 During this financial period, Pacific Recovery Fund changed its financial year-end from 30 April to 30 June. The financial period ended 30 June 2001 represents a period of 14 months from 1 May 2000. ** With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 54 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 30 June 2003 is 0.71 times (2002: 0.91 times). The portfolio turnover was lower mainly due to a decrease in average transactional value of 2.69% i.e. RM79.58 million in 2002 to RM77.44 million in 2003 compared to an increase of 24.43% in the average NAV i.e. from RM87.38 million in 2002 to RM108.73 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended 30 June 2001 30 June 2002 30 June 2003* Top 5 Equity Securities (Malaysia) 1. Asia File Corporation Bhd 2.85 2. Berjaya Sports Toto Bhd 2.65 3. AMMB Holdings Bhd 2.50 4. Hong Leong Bank Bhd 2.39 5. Malakoff Bhd 2.38 1. Resorts World Bhd 3.99 2. Malaysia International Shipping Corporation Bhd – Foreign 2.93 3. IOI Corporation Bhd 2.81 4. AMMB Holdings Bhd 2.57 5. Gamuda Bhd 2.41 1. Commerce Asset-Holding Bhd 4.99 2. AMFB Holdings Bhd – Foreign 4.32 3. AMMB Holdings Bhd 4.16 4. Hong Leong Bank Bhd 3.96 5. Telekom Malaysia Bhd 3.52 Financial Year Ended 30 June 2001 30 June 2002 30 June 2003 % of NAV Top 3 Unquoted Corporate Bonds % of NAV 1. Penang Bridge Sdn Bhd 2.62 2. PLUS Bhd 0.99 3. – – 1. MAA Holdings Bhd 2. – 0.92 – 3. – – 1. MAA Holdings Bhd 0.83 2. Divine Vista Sdn Bhd 0.80 3. RHB Capital Bhd 0.33 * Banking stocks are considered to be cyclical because their earnings typically increase as the economy improves and loan growth accelerates. But in an economic downturn, earnings will fall as non-performing loans surface and provisions have to be made. And because banks are geared up to 10x, the swings are magnified. 55 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC INCOME FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve consistently attractive and stable income with reasonable preservation of capital by investing in a diversified portfolio of fixed income securities such as bonds and money market instruments as well as stocks that offer a steady dividend income stream. The Fund also aims to provide moderate capital growth over a medium to long-term period. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Type of fund: The Fund is an income fund. Category of fund: The Fund is a fixed income/equity fund. WHO SHOULD CONSIDER INVESTING? Investors seeking a regular income stream with returns higher than fixed deposit rates and moderate capital growth with reasonable preservation of capital. WHAT ARE THE LIKELY BENEFITS? The Fund invests its resources predominantly in private debt securities which generally produce higher yield than government bonds and money market instruments. However, the Fund also targets to maximise its medium to long-term capital growth and risk-adjusted rewards by investing a substantial proportion of its resources in equities that are fundamentally sound and have excellent potential for capital appreciation. Therefore, by investing in Pacific Income Fund, you would be able to reap the following benefits: • Gain access to the high yielding bond market which normally trades in large standard blocks of RM5 million each; • Reduce the specific risk of a single bond by investing in a diversified portfolio of fixed income securities; • Sell at any time based on the Fund’s NAV without worrying that the securities are illiquid; and • Benefit from the Fund’s ability to shift between equities and bonds in response to changing market conditions and interest rates to maximise capital gain and interest income. RISK FACTORS Pacific Income Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Interest rate risk • Credit risk • Liquidity risk • Market risk • Company specific risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? To attain the Fund’s objective of achieving consistently attractive and stable income with reasonable protection of capital, Pacific Income Fund will invest in a diversified portfolio of fixed income securities such as bonds and money market instruments as well as stocks that offer a steady dividend income stream. Cash & Liquid Assets 2.95% Portfolio Structure (as per the annual report Quoted Equity Securities 40.04% Fixed Income & Other Debt Securities 57.01% for the financial year ended 30 September 2003) Launch Date : 18 August 2000 56 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 40% (minimum equity allocation is 20%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Minimum fixed income allocation is set at 30%. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. Actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 75% in fixed income securities and liquid assets and 25% in equities. Please also refer to page 79. • Fixed Income Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and is based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. • Equity Investment Strategy The Fund invests in equities that are fundamentally sound and have excellent potential for medium to long-term capital appreciation. Since the Fund’s investment philosophy is mainly fundamentals driven, the Manager will constantly rotate its portfolio selection to accommodate the prevailing macro economic outlook. Meanwhile, the Fund will also actively search for under-valued stocks that can offer promising capital returns. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. PERMITTED INVESTMENTS Pacific Income Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 57 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 58 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 30 September 2003) Launch Date : 18 August 2000 Performance Benchmark : Composite Benchmark (40% in KLSE Composite Index and 60% in 3-month Kuala Lumpur Interbank Offer Rates)* 24 Return (%) 18 12 6 0 -6 Pacific Income Fund 30.09.2003 31.07.2003 30.05.2003 31.03.2003 29.11.2002 31.01.2003 30.09.2002 31.07.2002 31.05.2002 29.03.2002 30.11.2001 31.01.2002 28.09.2001 31.07.2001 31.05.2001 30.03.2001 30.11.2000 31.01.2001 29.09.2000 18.08.2000 -12 Composite Benchmark (40% KLCI & 60% Klibor 3-month) From 18 August 2000 To 30 September 2003 Performance Data 1 Year’s Period 01.10.2002 to 30.09.2003 Total Average Return Annual Return 3 Years’ Period 01.10.2000 to 30.09.2003 Total Average Return Annual Return Since Launch 18.08.2000 to 30.09.2003 Total Average Return Annual Return Pacific Income Fund 9.21% 9.21% 21.00% 7.00% 21.00% 6.73% Composite Benchmark 7.90% 7.90% 7.21% 2.40% 2.07% 0.66% * The benchmark for the Fund is a composite of the KLCI and 3-month KLIBOR and these data are available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: All figures pertaining to the Fund’s return were extracted from Standard & Poor’s Workstation System. Investors should consider the fees and charges involved. The price of units and distribution payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 59 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 30 September 2003 Source Of Income For Distribution: Dividend income Interest income Realised gains on sales of investments Accretion of discount net of amortisation of premium on unquoted corporate bonds Previous year‘s realised gains Distribution equalisation 2002 2001 RM’000 % RM’000 % RM’000 % 1,731 4,114 5,048 643 14.58 34.64 42.50 5.41 617 2,526 3,743 1,025 6.10 25.01 37.07 10.15 415 1,817 1,716 1,071 7.52 32.90 31.07 19.39 341 – 11,877 2.87 – 100.00 – 2,188 10,099 – 21.67 100.00 – 504 5,523 – 9.12 100.00 Gross Distribution Per Unit (sen) 3.00 3.00 2.50 Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) 0.41 (0.11) (0.67) 3.15 0.11 0.16 (0.04) (0.49) 2.58 0.75 0.14 (0.04) (0.57) 2.65 0.28 Net Distribution Per Unit (sen) 2.89 2.96 2.46 – – – 0.5170 0.4881 0.5040 0.4744 0.48 0.46 Unit Split Ratio NAV per unit (RM) * Cum-unit split Ex-unit split * With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 60 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 30 September 2003 is 0.49 times (2002: 0.33 times). Higher portfolio turnover was due to a higher percentage increase in the average NAV of 45.13% from RM114.87 million in 2002 to RM166.72 million in 2003 compared to 113.13% increase in the average transactional value i.e. from RM38.16 million in 2002 to RM81.33 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended 30 September 2001 30 September 2002 30 September 2003 Top 5 Equity Securities (Malaysia) 1. Gamuda Bhd 2.54 2. Public Bank Bhd 1.87 3. IOI Corporation Bhd 1.87 4. The New Straits Times Press (M) Bhd 1.76 5. Sime Darby Bhd 1.67 1. Resorts World Bhd 2.62 2. British American Tobacco (M) Bhd 2.44 3. IOI Corporation Bhd 1.72 4. AMMB Holdings Bhd 1.66 5. Road Builder (M) Holdings Bhd 1.60 1. British American Tobacco (M) Bhd 3.75 2. Tanjong Plc 3.67 3. AMMB Holdings Bhd 3.62 4. Road Builder (M) Holdings Bhd 3.32 5. Hong Leong Bank Bhd 3.09 Financial Year Ended 30 September 2001 30 September 2002 30 September 2003 % of NAV Top 3 Unquoted Corporate Bonds % of NAV 1. Sabah Development Bank Bhd 7.18 2. PLUS Bhd 6.84 3. Lekir Bulk Terminal Sdn Bhd 6.39 1. Road Builder (M) Holdings Bhd 7.53 2. Encorp Systembilt Sdn Bhd 6.35 3. Celcom (Malaysia) Bhd 5.90 1. System Lingkaran Lebuhraya Kajang Sdn Bhd 4.25 2. Divine Vista Sdn Bhd 4.23 3. Perak-Hanjoong Simen Sdn Bhd 4.01 61 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC PROGRESSIVE FUND? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve maximum capital growth and income over a medium to long-term period by investing in securities of companies in the technology industry that offer strong growth prospects. Any changes to the Fund’s investment objective would require unitholder’s approval. Distribution policy: By way of income distribution as a secondary objective, if any, once a year. Unit split: Once a year, if any. Type of fund: The Fund is a growth fund. Category of fund: The Fund is an equity (technology) fund. WHO SHOULD CONSIDER INVESTING? Investors seeking high capital growth over the medium to long term and willing to accept a higher degree of risk in return for potentially higher investment gains in the technology sector* (*please refer to page 63). WHAT ARE THE LIKELY BENEFITS AND POTENTIAL RISKS? The Fund invests primarily in equities of companies from the higher value-added technology industry, which offers investors participation in the business potentials and rewards within the growing knowledge-based economy. Asset allocation and stock selection decisions will be varied from time to time according to market-wide and industry trends to optimise the Fund’s investment returns. The fast evolving and often changing nature of technologies gives rise to both opportunities and threats to those in the business. In this respect, a higher risk premium is typically attached to the industry and the expected investment returns are also higher. Investors into Pacific Progressive Fund enjoy the benefits of: • Access to the potentials of the knowledge-based economy. • Risk diversification from a portfolio invested into different sub-sectors of the broader technology industry. • Ability to sell at any time based on the Fund’s NAV without worrying about the underlying stock’s liquidity. RISK FACTORS Pacific Progressive Fund is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Liquidity risk • Futures risk • Credit risk WHAT IS THE FUND’S INVESTMENT STRATEGY? The Fund will invest in stocks included in either one of the two technology indices, namely, the KLSE Technology Index and the RHB Tech Index. In constructing the investment strategies for the Fund, the Manager will utilise its research facilities to perform macroeconomic, market, industry and corporate valuation analyses to achieve an optimal portfolio that maximises return and minimises risk. Derivative Instruments 3.59% Quoted Equity Securities 58.30% Portfolio Structure (as per the annual report for the financial year ended Cash & Liquid Assets 38.11% 31 December 2002) Launch Date : 2 January 2001 62 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 95% (minimum equity allocation is 45%) of its NAV in equities and equity-related securities of the broad technology industry but this may be reviewed from time to time depending on the economic and stock market conditions. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for equity investments is 95%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 70% in equities and 30% in fixed income securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy Capital appreciation will be the main objective of its equity investment. In selecting equities, fundamental and technical analysis will be used to identify the right investments. ■ Diversification Within the equity portion of the Fund, the Manager will invest in a ’basket’ of promising stocks so as to even out the volatilities of individual stocks. However, as this is a sector specialised fund, broad diversification is given up in favour of diversification within the technology sector. Sector portfolios make a lot more sense than investing in just one stock in an industry (e.g. technology) that the Fund wants to gain exposure to. The Fund diversifies within the industry and thus reduces company specific risk. ■ Stock Selections Equity investment will be focused on technology companies that profit from the acceleration of usage in technology by both businesses and consumers. These companies fall into one of 10 sub-sectors of the broader technology industry. The Fund will actively invest in equities that are under-valued or offer above average growth potentials. • Fixed Income Investment Strategy The Manager will invest a portion of the Fund in fixed income securities at a level based on the investment strategy adopted by the Fund. The Fund’s investment exposure will not be limited to debt securities issued by technology companies where fixed income investment is concerned. These fixed income securities will be primarily private debt securities, money market instruments and Government bonds. The Fund will position itself to capitalise on situations such as changes in future interest rates, inter-sector spreads as well as changes in yield spread of particular bond. DEFINITION OF TECHNOLOGY SECTOR The Fund has adopted the Kuala Lumpur Stock Exchange’s (KLSE) definition of technology sector as laid out in the KLSE’s Practice Note No.7/2001. This would be as follows: A company whose stock would be classified as a technology stock should meet one or more of the following criteria: • Its core business must be of a type readily recognisable as being involved in technological innovation. Currently, the following categories fall under the aforesaid category: ■ computer hardware and software; ■ electronics; or ■ telecommunications. Such categories may be expanded from time to time by KLSE. • Its business growth and success depend on its ability to develop technology, or on its ability to significantly innovate technology, resulting in incremental improvements in process and/or value added products and services. • Its technology is new or emerging in Malaysia. Use of technology which has previously existed in Malaysia will not suffice unless the listed issuer has undertaken significant innovation on such technology. • It invests in Research and Development (R&D). Although there is no prescribed minimum amount spent for R&D, there must be an annual expenditure. • It has a dedicated team of qualified personnel, undertaking the R&D. No minimum number of personnel is prescribed. 63 MORE INFORMATION ABOUT THE FUNDS PERMITTED INVESTMENTS Pacific Progressive Fund may invest in the following permitted investments: • Securities traded on the KLSE and any other market considered as an Eligible Market. • Fixed income securities traded in or under the rules of an Eligible Market. • Fixed income securities issued by Bank Negara Malaysia, the Malaysian Government and government related agencies such as Danamodal Nasional Berhad, Pengurusan Danaharta Nasional Berhad, Khazanah Nasional Berhad and Cagamas Berhad. • Unlisted fixed income securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits and money market instruments with commercial banks, finance companies, merchant banks, discount houses and Bank Islam Malaysia Berhad including Investment Certificates, placement of monies at call with discount houses, and any other instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Futures contracts traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. These include: - KLSE Composite Index futures contracts traded on Malaysian Derivatives Exchange (MDEX); - 3-month KLIBOR Interest Rates futures contracts traded on MDEX; and - Any new derivatives instruments introduced by MDEX. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Fixed Income Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 64 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 31 December 2002) Launch Date : 2 January 2001 Performance Benchmark : RHB Tech Index* 40 30 Return (%) 20 10 0 -10 -20 Pacific Progressive Fund 31.12.2002 30.09.2002 30.06.2002 31.03.2002 31.12.2001 30.09.2001 30.06.2001 31.03.2001 02.01.2001 -30 RHB Tech Index From 2 January 2001 To 31 December 2002 Performance Data 1 Year’s Period 01.01.2002 to 31.12.2002 Total Average Return Annual Return Since Launch 02.01.2001 to 31.12.2002 Total Average Return Annual Return Pacific Progressive Fund (10.48%) (10.48%) 5.84% 2.92% RHB Tech Index (11.97%) (11.97%) (3.08%) (1.54%) * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would also be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: The basis of calculating the Fund’s return is in line with the method used by Standard & Poor’s Fund Services Asia Ltd. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 65 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 31 December 2002 Source Of Income For Distribution: Interest income Dividend income Profit on sale of quoted investments Previous year’s realised gains Distribution equalisation 2001 RM’000 % RM’000 % – – – – – – – – – – – – – – – – – – – – – – – – Gross Distribution Per Unit (sen) – – Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) – – – – – – – – – – Net Distribution Per Unit (sen) – – Unit Split Ratio – 8:100 0.4655 0.4655 0.55 0.52 NAV per unit (RM) * Cum-unit split Ex-unit split * With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 66 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 31 December 2002 is 0.86 times (2001: 0.82 times). Higher portfolio turnover was due to a higher percentage increase in the average transactional value of 138.4% i.e. from RM8.07 million in 2001 to RM19.24 million in 2002 compared to increase in the average NAV of 127.2%. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended Top 5 Equity Securities (Malaysia) % of NAV 31 December 2001 1. 2. 3. 4. 5. The New Straits Times Press (M) Bhd Malaysian Pacific Industries Bhd Computer Systems Advisers (M) Bhd Star Publications (Malaysia) Bhd Unisem (M) Bhd 10.66 9.80 8.95 8.32 7.84 31 December 2002 1. 2. 3. 4. 5. The New Straits Times Press (M) Bhd Star Publications (Malaysia) Bhd Maxis Communications Bhd Globetronics Technology Bhd AKN Technology Bhd 8.34 7.13 5.81 5.71 5.70 67 MORE INFORMATION ABOUT THE FUNDS SYARIAH-BASED FUNDS WHY INVEST IN PACIFIC DANA AMAN? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to provide the unitholders with consistently above average returns in both income and capital growth over a medium to long-term period by investing in a wide portfolio of authorised securities over investments which comply with Syariah principles. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Unit split: Once a year, if any. Type of fund: The Fund is a growth and income fund. Category of fund: The Fund is a balanced Islamic fund. WHO SHOULD CONSIDER INVESTING? Investors seeking above average income and capital growth over the medium to long term in investments, while abiding by Syariah principles. WHAT ARE THE LIKELY BENEFITS? The Fund primarily invests in a diversified investment portfolio that is acceptable under the Syariah principles. The Fund allows investors the opportunity to benefit from returns which are potentially higher than fixed deposit rates over a medium to long-term period. RISK FACTORS Pacific Dana Aman is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risk The Fund is prohibited from investing in interest bearing debt securities. However, interest rate changes do affect the market value of the Islamic debt securities portion of the Fund’s portfolio. The above interest rate risk is a general economic indicator that will have an impact on the management of fund regardless of whether it is a Syariah-based fund or otherwise. It does not in any way suggest that this Fund will invest in fixed income securities, which are not approved by Syariah. All the investments carried out for this Fund are in accordance with the requirement of Syariah. WHAT IS THE FUND’S INVESTMENT STRATEGY? To achieve the Fund’s objective of providing investors with consistently above average income higher than that of fixed deposit rates and capital appreciation, the Manager normally constructs a diversified investment portfolio that is acceptable under the Syariah principles. In upholding the spirit of the Islamic concept of fund management, the Manager invests solely in companies that are approved by the Syariah Advisory Council of the Securities Commission and in Islamic debt securities that comply with Syariah principles. Accordingly, the Fund will not invest in companies that are involved in conventional banking and finance, non-Takaful insurance, gaming, alcoholic beverages and non-halal food products. Derivative Instruments 1.78% Quoted Equity Securities 67.89% Unquoted Islamic Debt Securities 15.07% Portfolio Structure (as per the annual report for the financial year ended 31 March 2003) Islamic Money Market Instruments 15.26% Launch Date : 16 April 1998 68 MORE INFORMATION ABOUT THE FUNDS Asset Allocation The Fund may invest up to 75% (minimum equity allocation is 35%) of its NAV in equities and equity-related securities but this may be reviewed from time to time depending on the economic and stock market conditions. Minimum Islamic debt allocation is set at 10%. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. The liquid assets of the Fund will be in Islamic debt securities and other non-interest bearing assets. Accordingly, the Fund will not purchase bonds, debentures or other interest paying obligations. While the maximum limit for equity investments is 75%, actual asset allocation varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 55% in equities and 45% in Islamic debt securities and liquid assets. Please also refer to page 79. • Equity Investment Strategy The Fund will invest in a diversified portfolio of equities that comply with the Syariah principles. The investment strategy is based on a disciplined “top-down” approach to asset allocation and sector allocation, using macroeconomic analysis, market analysis and industry analysis. Stock selection techniques are based on a “bottom-up” approach using business analysis and security valuation analysis. There is significant overlap between the various disciplines governing these processes, with strong interaction between the determination of asset allocation and stock selection. • Debt Security Investment Strategy The Manager’s strategy hinges on the need for a well-diversified portfolio and focuses on the credit qualities of securities in the portfolio. The debt securities portfolio construction process is research driven and is based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of specific debt securities. PERMITTED INVESTMENTS Pacific Dana Aman may invest in the following permitted investments: • Securities that are approved by the Syariah Advisory Committee of the Securities Commission and are traded on the KLSE and any other market considered as an Eligible Market. • Islamic debt securities traded in or under the rules of an Eligible Market. • Islamic debt securities issued by Bank Negara Malaysia and government related agencies. • Unlisted Islamic debt securities which are rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits under Islamic Banking, money market instruments that comply with Syariah principles and any other Syariah-compliant instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Islamic futures contracts and other approved Islamic derivative instruments traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. • Any other investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. 69 MORE INFORMATION ABOUT THE FUNDS INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Groups Of Companies • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies shall not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. • The value of the Fund’s holding in the securities of and the securities relating to, any group of companies may exceed 20% of the Fund’s NAV provided there are acceptable reasons for exceeding the limit. In this regard, the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or the Trustee may direct the Manager to comply strictly with the 20% investment restriction. Concentration Of Investments • The Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. Permissible Grade For Islamic Debt Securities Investments • The Fund’s holding of any single issuer must be rated at least BBB (or equivalent) and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. 70 MORE INFORMATION ABOUT THE FUNDS HOW IS THE FUND’S PERFORMANCE? Performance Chart (as per the annual report for the financial year ended 31 March 2003) Launch Date : 16 April 1998 Performance Benchmark : RHB Islamic Index* 150 120 90 Return (%) 60 30 0 -30 -60 Pacific Dana Aman 31.03.2003 30.09.2002 31.03.2002 30.09.2001 31.03.2001 30.11.2000 31.05.2000 30.11.1999 31.05.1999 30.11.1998 16.04.1998 -90 RHB Islamic Index From 16 April 1998 To 31 March 2003 Performance Data 1 Year’s Period 01.04.2002 to 31.03.2003 Total Average Return Annual Return 3 Years’ Period 01.04.2000 to 31.03.2003 Total Average Return Annual Return Since Launch 16.04.1998 to 31.03.2003 Total Average Return Annual Return Pacific Dana Aman (5.72%) (5.72%) (20.06%) (6.69%) 90.08% 18.16% RHB Islamic Index (15.36%) (15.36%) (39.13%) (13.04%) (8.77%) (1.77%) * The benchmark for the Fund is widely used and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Note: The basis of calculating the Fund’s return is in line with the method used by Standard & Poor’s Fund Services Asia Ltd. Investors should consider the fees and charges involved. The price of units and distributions payable, if any, may go up as well as down. Past performance of the Fund is not an indication of its future performance. 71 MORE INFORMATION ABOUT THE FUNDS Distribution/Unit Split Year Ended 31 March 2003 Source Of Income For Distribution: Dividend income Profit from Islamic money market instruments and unquoted Islamic debt securities. Realised gain on sale of investments Accretion of discount less amortisation of premium on unquoted Islamic debt securities Soft commissions Previous year’s realised gains Distribution equalisation 2001* % RM’000 % RM’000 % 3,094 8.18 517 7.99 422 10.49 3,190 1,103 8.43 2.91 622 – 9.62 – 674 109 16.75 2.71 – 105 9,901 20,433 37,826 – 0.28 26.18 54.02 100.00 – – 960 4,369 6,468 – – 14.84 67.55 100.00 61 – 463 2,295 4,024 1.52 – 11.51 57.02 100.00 Gross Distribution Per Unit (sen) 9.00 4.00 4.00 Distribution Per Unit: Taxable income (sen) Malaysian taxation (sen) Non-allowable expenses (sen) Non-taxable income (sen) Distribution equalisation (sen) 0.46 (0.12) (0.80) 2.23 7.11 0.07 (0.02) (0.23) 1.30 2.86 0.04 (0.01) (0.21) 1.77 2.40 Net Distribution Per Unit (sen) 8.88 3.98 3.99 – – 7:100 0.4526 0.4134 0.48 0.45 0.54 0.47 Unit Split Ratio NAV per unit (RM) ** Cum-unit split Ex-unit split * 2002 RM’000 During this financial period, Pacific Dana Aman changed its financial year-end from 31 May to 31 March. The financial period ended 31 March 2001 represents a period of 10 months from 1 June 2000. ** With effect from 29 July 2002, the NAV per unit is quoted at four decimal places. Past earnings or the Fund’s distributions record is not a guarantee or a reflection of the Fund’s future earnings/distributions. 72 MORE INFORMATION ABOUT THE FUNDS Portfolio Turnover Explanation The portfolio turnover ratio for the financial year ended 31 March 2003 is 0.55 times (2002: 0.58 times). Lower portfolio turnover was due to a higher percentage increase in the average NAV of 152.86% from RM77.77 million in 2002 to RM196.65 million in 2003 compared to 136.93% increase in the average transactional value i.e. from RM45.28 million in 2002 to RM107.28 million in 2003. Please refer to page (iii) for definition on portfolio turnover ratio (PTR). Investment Highlights Financial Year Ended 31 March 2001 31 March 2002 31 March 2003 Top 5 Equity Securities (Malaysia) 1. Asia File Corporation Bhd 3.63 2. Malakoff Bhd 3.15 3. Gamuda Bhd 2.86 4. Malaysian Pacific Industries Bhd 2.81 5. Unisem (M) Bhd 2.70 1. Tenaga Nasional Bhd 4.64 2. Gamuda Bhd 3.39 3. Malaysia International Shipping Corporation Bhd – Foreign 3.35 4. Road Builder (M) Holdings Bhd 3.30 5. IJM Corporation Bhd 3.11 1. Perusahaan Otomobil Nasional Bhd 4.78 2. O.Y.L. Industries Bhd 3.64 3. Star Publications (Malaysia) Bhd 3.63 4. Tenaga Nasional Bhd 3.62 5. Maxis Communications Bhd 3.33 Financial Year Ended 31 March 2001 31 March 2002 31 March 2003 % of NAV Top 3 Unquoted Islamic Debt Securities % of NAV 1. Prai Power Sdn Bhd 2. Penang Bridge Sdn Bhd 6.37 3. Syarikat Pengeluar Air Sungai Sdn Bhd 4.95 1. Tenaga Nasional Bhd 4.00 2. GB3 Sdn Bhd 2.76 3. Hong Leong Industries Bhd 1.78 1. Celcom (Malaysia) Bhd 5.85 2. Tenaga Nasional Bhd 4.62 3. Hong Leong Industries Bhd 4.60 73 MORE INFORMATION ABOUT THE FUNDS 8.61 WHY INVEST IN PACIFIC DANA MURNI? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to achieve a stable income stream with reasonable protection of capital by investing in a diversified portfolio of Islamic debt securities and other liquid assets which comply with Syariah principles. The Fund may also provide some degree of capital growth potential over a medium to long-term period. Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Type of fund: The Fund is an Islamic income fund. Category of fund: The Fund is an Islamic bond fund. WHO SHOULD CONSIDER INVESTING? Investors seeking steady returns higher than general investment accounts with reasonable protection of capital, while abiding by the Syariah principles. It is suitable for investors seeking a regular income stream and moderate capital growth. WHAT ARE THE LIKELY BENEFITS? By investing in this Fund, investors would be able to reap the following benefits: • Gain access to the reasonably high yielding debt market, which normally trades in large standard blocks of RM5 million each; • Reduce the specific risk of a single debt security by investing in a diversified portfolio of debt securities; and • Sell at any time based on the Fund’s NAV without worrying that the securities are illiquid. RISK FACTORS Pacific Dana Murni is subject to several risk factors including the following (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Interest rate risk • Credit risk • Futures risk The above interest rate risk is a general economic indicator that will have an impact on the management of fund regardless of whether it is a Syariah-based fund or otherwise. It does not in any way suggest that this Fund will invest in fixed income securities, which are not approved by Syariah. All the investments carried out for this Fund are in accordance with the requirement of Syariah. WHAT IS THE FUND’S INVESTMENT STRATEGY? To attain the Fund’s objective of achieving a stable income stream with reasonable protection of capital, the Fund will invest in a diversified portfolio of predominantly private debt securities, which generally produce higher yield than government bonds and money market instruments. In upholding the spirit of the Islamic concept of fund management, the Fund invests solely in Islamic debt securities that are approved by the Securities Commission. With this, investors of the Fund will benefit not only from the higher returns of debt securities but also are assured that their investments comply with Syariah principles at all times. Asset Allocation The Fund may invest up to 95% (minimum Islamic debt allocation is 40%) of its NAV in Islamic debt securities. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. While the maximum limit for bond investments is 95%, asset allocation employed varies according to the Manager’s investment outlook and investment strategies after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 70% in bonds and 30% in liquid assets. Please also refer to page 79. 74 MORE INFORMATION ABOUT THE FUNDS • Fixed Income Security Investment Strategy In managing the Fund’s investments in fixed income securities, the Manager’s strategy hinges on the need for a well-diversified portfolio and focus on the credit qualities of securities in the portfolio. The fixed income portfolio construction process is research driven and based on macroeconomic analysis, interest rate analysis, credit analysis and yield spread analysis. Other than the development of a broad asset allocation model, contributions will be made via active management to capitalise on changes in interest rates, inter-sector yield spreads and yield spreads of any specific bonds. PERMITTED INVESTMENTS Pacific Dana Murni may invest in the following permitted investments: • Islamic debt securities traded in or under the rules of an Eligible Market. • Islamic debt securities issued by Bank Negara Malaysia and government related agencies. • Unlisted Islamic debt securities which are either bank-guaranteed or rated by Rating Agency Malaysia Bhd, Malaysia Rating Corporation Bhd or other recognised rating agencies. • Liquid assets such as Malaysian currency deposits under Islamic Banking, money market instruments that comply with Syariah principles and any other Syariah-compliant instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Islamic futures contracts and other approved Islamic derivative instruments traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. • Any other Syariah-compliant investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Securities Relating To Any Single Issuer • The value of the Fund’s holding of the fixed income securities of, and the fixed income securities relating to, any single issuer must not exceed 20% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Group Of Companies • The value of the Fund’s holding of the fixed income securities of, and the fixed income securities relating to, any group of companies shall not exceed 30% of the NAV of the Fund or any other limit set by the Securities Commission. • The Fund may exceed 30% of the NAV of the Fund if there are acceptable reasons for doing so; in this regard the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or Trustee may direct the Manager to comply strictly with the 30% investment restriction. Concentration Of Investments • The value of the Fund’s holding of any class of fixed income securities of any single issuer must not exceed 20% of the fixed income securities issued or any other limit set by the Securities Commission. Permissible Grade For Islamic Debt Securities Investments • The Fund’s holding of any single issuer must be rated at least BBB and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investments. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. PERFORMANCE BENCHMARK The benchmark for the Fund is the Mayban GIA Tier II 12-month Rate* and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. * GIA refers to general investment account. It has the same attributes as conventional fixed deposits except it upholds Syariah principle. The tier II 12-month rate refers to the 12-month rate offered to placements in excess of RM1 million. Only placements within RM1 millioin qualifies for the board rate or tier I rate which is higher than the tier II rate. Pacific Dana Murni was launched on 25 March 2003 and its first financial year will end on 31 March 2004. Therefore, there is no data on performance, distribution and investment highlights published in this Prospectus for the Fund. Past performance of the Funds is not an indication of the future performance. 75 MORE INFORMATION ABOUT THE FUNDS WHY INVEST IN PACIFIC DANA KLSI? WHAT IS THE FUND’S INVESTMENT OBJECTIVE? The Fund aims to provide medium to long-term capital growth by tracking the KLSE Syariah Index (KLSI). Any changes to the Fund’s investment objective would require unitholders’ approval. Distribution policy: By way of income distribution, if any, once a year. Type of fund: The Fund is an Islamic growth and income fund. Category of fund: The Fund is an Islamic index fund. WHO SHOULD CONSIDER INVESTING? Investors who seek capital growth in the medium to long term, while abiding by the Syariah principles, and who have a moderate to high tolerance level for risks. WHAT ARE THE LIKELY BENEFITS? By investing in this Fund, investors would be able to reap the following benefits: • The KLSI comprises over 300 stocks of companies from a wide range of industries. Investors have the benefit of broad diversification. • Except for trading charges related to infrequent equity allocation changes, the Fund incurs trading charges only when rebalancing component stocks. This is done twice a year when the KLSE changes the component stocks of the KLSI with the advice of the Syariah Advisory Committee. This results in lower trading charges and higher net returns in the long term. • Index funds offer the advantage of lower service charges and management fees compared to normal equity funds. RISK FACTORS Pacific Dana KLSI is subject to several risk factors, some of which are as follows: (please refer to pages 5 to 7 for descriptions of these and other risk factors as well as page 79 for the risk management strategies and techniques): • Market risk • Company specific risk • Futures risk WHAT IS THE FUND’S INVESTMENT STRATEGY? The Fund will invest only in KLSI component stocks. The weighting of a stock in the portfolio will be proportionate to its composition in the KLSI. Weightings will be rebalanced only when there is a significant change in the composition of the KLSI. Stock selection will not be a strategy employed by the Fund. Asset Allocation The Fund may invest up to a maximum of 95% (minimum equity allocation is 45%) of its NAV in KLSI component stocks. Liquid assets will be maintained at all times at a minimum of 5% of the Fund’s NAV. Asset allocation will be varied in accordance with the Manager’s investment outlook and investment strategy after taking into consideration the prevailing market conditions. Based on the risk-return profile of the Fund, the neutral asset allocation (or long-term average asset allocation) is expected to be 85% in equities and 15% in liquid assets. Please also refer to page 79. 76 MORE INFORMATION ABOUT THE FUNDS PERMITTED INVESTMENTS Pacific Dana KLSI may invest in the following permitted investments: • Securities that are approved by the Syariah Advisory Committee of the Securities Commission and are traded on the KLSE and any other market considered as an Eligible Market. • Liquid assets such as Malaysian currency deposits under Islamic Banking, money market instruments that comply with Syariah principles and any other Syariah-compliant instrument capable of being converted into cash within seven days as may be approved by the Trustee. • Islamic futures contracts and other approved Islamic derivative instruments traded in futures markets of an exchange approved under the Futures Industry Act 1993, only for hedging purposes. • Any other Syariah-compliant investments as may be agreed upon by the Manager and the Trustee and permitted by the Securities Commission’s Guidelines from time to time. INVESTMENT RESTRICTIONS AND LIMITS The purchase of investments shall be subject to the following restrictions: Spread Of Investments On Single Issuer* • The value of the Fund’s holding of the share capital of any single issuer must not exceed 10% of the NAV of the Fund or the weighting of the constituent securities in the KLSI, whichever is higher. Spread Of Investments On Securities Relating To Any Single Issuer • The value of the Fund’s holding of the securities of, and the securities relating to, any single issuer must not exceed 15% of the NAV of the Fund or any other limit set by the Securities Commission. Spread Of Investments On Group Of Companies* • The value of the Fund’s holding of the securities of, and the securities relating to, any group of companies in the KLSI shall not exceed 30% of the NAV of the Fund or any other limit set by the Securities Commission. • The Fund may exceed 30% of the NAV of the Fund if there are acceptable reasons for doing so; in this regard the Manager shall notify the Securities Commission and the Trustee immediately of reasons for exceeding the limit. Where reasons are not considered satisfactory, the Securities Commission and/or Trustee may direct the Manager to comply strictly with the 30% investment restriction. Concentration Of Investments • The value of the Fund’s holding of any class of security of any single issuer must not exceed 10% of the security issued or any other limit set by the Securities Commission. * The Fund has obtained the Securities Commission’s approval for the variations of the investment restrictions and limits as provided in the Securities Commission’s Guidelines. 77 MORE INFORMATION ABOUT THE FUNDS Permissible Grade For Islamic Debt Securities Investments • The Fund’s holding of any single issuer must be rated at least BBB and above or short-term rating of P3 and above by Rating Agency Malaysia Bhd (RAM) or Malaysia Rating Corporation Bhd (MARC). Futures Contracts • The Fund’s net market exposure owing to its futures contract positions must not exceed the Fund’s NAV. The investment restrictions and limits must be complied with at all times based on the most up-to-date value of the Fund’s investment. However, a maximum of 5% allowance in excess of the restrictions is permitted where the restriction is breached through appreciation or depreciation of the NAV of the Fund. The Manager will take all necessary steps and actions to rectify any breach within reasonable period of not more than three months from the date of the breach. The Fund shall not borrow in connection with its activities or lend any of its cash or investments unless permitted by the Guidelines or other laws or regulations pertaining to unit trusts. PERFORMANCE BENCHMARK The benchmark for the Fund is the KLSE Syariah Index (KLSI) and publicly available from newspaper publications such as The Star and News Straits Times on a daily basis. It would be published as a comparison against the Fund’s total return on a periodic basis, in the Fund’s annual and interim reports and Pacific Mutual’s quarterly Funds’ publication, Close Watch. Pacific Dana KLSI was launched on 25 March 2003 and its first financial year will end on 31 March 2004. Therefore, there is no data on performance, distribution and investment highlights published in this Prospectus for the Fund. Past performance of the Funds is not an indication of the future performance. ADDITIONAL INFORMATION ABOUT THE FUND • Pacific Dana KLSI is designed to track the KLSE Syariah Index (KLSI). The KLSI is a capitalisation-weighted index of all KLSE mainboard stocks that comply with the Syariah Approved Securites by the Syariah Advisory Council of the Securities Commission. • The KLSI comprises of more than 400 stocks. To minimise transaction costs and liquidity risks, Pacific Dana KLSI will replicate the KLSI by using a representative sample of the component stocks of the KLSI. The sample comprises of the top 30 to 50 stocks ranked by market capitalisation on the KLSI. • Tracking error arises when the representative sample does not replicate fully the fluctuations of the KLSI. This may be the result of changes in the KLSI from introduction of new listings or when stocks not included in the sample undergo huge price movements. As such, the representative sample of stocks may be modified from time to time to replicate the KLSI more accurately. • Risks of investing in an index fund include market risk (please refer to page 5). • Pacific Dana KLSI will be re-balanced when there is a material difference in the weightings of the stocks in the KLSI and the representative sample of stocks. Checks are made twice a month. Besides rebalancing, the equity allocation of the Fund may be increased or reduced in accordance with the Manager’s view of the market direction. • The top ten component securities and weightings of the KLSI and in the Fund’s representative sample as at 23 October 2003 are as follow: Weightings Top 10 Component Securities 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Tenaga Nasional Bhd Telekom Malaysia Bhd MISC Bhd Maxis Communications Bhd Petronas Gas Bhd Sime Darby Bhd IOI Corporation Bhd YTL Power Bhd YTL Corporation Bhd Nestle (M) Bhd KLSI Fund’s Representative Sample 8.6% 8.7% 6.0% 5.6% 4.6% 3.9% 2.5% 2.3% 2.0% 1.5% 11.8% 11.8% 8.1% 7.7% 6.2% 5.3% 3.4% 3.2% 2.7% 2.1% • Pacific Mutual Fund Bhd does not guarantee that Pacific Dana KLSI will fully replicate the KLSI at any one time. 78 MORE INFORMATION ABOUT THE FUNDS RISK MANAGEMENT STRATEGIES AND TECHNIQUES The Manager’s risk management strategy is to conduct fundamental analysis of economic, political and social factors, on a local and global basis, to evaluate their likely effects on the performance of equity and fixed income markets and sectors. Individual stocks and fixed income securities are further screened by detailed analysis of each security and its underlying business and fundamentals. For Syariah-based Funds, further consideration is given to the nature of the investments to ensure that they are fully in compliance with Syariah principles. In terms of the Fund’s portfolio, risk is controlled by strict diversification on both a sector and individual investment instrument basis. The Manager also uses active asset allocation to reduce or increase the Funds’ exposure to various investment instruments depending on the risk reward potential for each investment. This could include the use of futures for hedging purposes as it could be a more efficient portfolio risk management strategy. Specific risk management strategies for general fund risks can also be found on pages 5 to 7 of this Prospectus. The Funds will be guided by the following general principles to control company specific risk*: • Ensure that the risk taken for any specific security is not too large and a reasonable spread of active risk is maintained across different sectors. Investments which have low contributions to active risk will have larger position limits than investments which have high contributions to active risk. The limit per security will be within the limit set by the Investment Committee in compliance with the Securities Commission’s Guidelines on Unit Trust Funds. • Ensure that the risk associated with the totality of positions taken for the group of companies or the same industries is not too large and within limit set by the Securities Commission. In addition, the following investment procedures and internal controls are designed to control operational risk**: • There is strict segregation of duties between securities trading, confirmation and settlement. • There are rules on trading and prohibiting employees to act on insider information. The Senior Compliance Officer will monitor adherence and enforce disciplinary actions on any employee who has breached the code of conduct and compliance. • There is daily computation of the respective Fund’s NAV and independent verification and reconciliation. • There are procedures for Senior Management, Trustee, Investment Committee and the Board of Directors to be informed promptly, to investigate and to ensure timely and appropriate rectification of any deviation and noncompliance that may arise. • There are limits to the placement maintained at financial institutions to manage credit risk exposure. • There are limits on shares traded with stock brokers to manage settlement risk exposure. • There are limits and criteria set on credit rating of debt securities. * Company specific risk refers to external risk associated with the listed company’s share price movements. ** Operational risk refers to the internal risk associated with inadequate systems and controls. MINIMUM AND MAXIMUM LEVELS OF ASSET ALLOCATION The asset allocation may be reduced to below the minimum levels or increased above the maximum levels indicated at the discretion of the Manager depending on the market, economic, political or other conditions. Such conditions or exceptional circumstances will include but not limited to: • Situations where there is an expected sharp downturn in the equity market; • When there is high risk of capital loss on fixed income instruments due to interest rate fluctuations; • When there is insufficient liquidity in either equity or fixed income instruments for the Funds to transact efficiently; • When there is insufficient fund assets to form an efficient portfolio; and/or • When there is redemption affecting the liquidity position of the Funds. 79 MORE INFORMATION ABOUT THE FUNDS TRADING ACTIVITIES A small portion of the Funds (except Pacific Dana KLSI) may be utilised for short-term trading, when opportunities arise. Opportunities would include but are not limited to arbitrage situations, discrepancies in valuation, expected liquidity surges and thematic plays. When there are no opportunities, the Fund will not conduct any short-term trading. BASES OF VALUATION OF INVESTMENTS The Funds shall adopt the bases of valuation of investments prescribed in the Guidelines on Unit Trust Funds. In particular, quoted securities will be valued based on the last done market price. Unquoted securities will be valued based on fair value as determined in good faith on methods which are verified by the auditors of the Funds and approved by the Trustees. Unquoted debt securities will be marked to market, taking the average price obtained from at least three independent dealers, and the valuation will be done at least once a week. In terms of a successful subscription to an Initial Public Offerings (IPO), if any, the IPO securities will be valued at cost prior to their listing. These IPO securities will subsequently be valued at their last done market price upon listing. 80 MORE INFORMATION ABOUT THE FUNDS FEES, CHARGES AND EXPENSES SERVICE CHARGE The service charge is a fee levied on the purchase of units of a Fund. This includes marketing, advertising and distribution expenses of a Fund. The fee is said to be ‘front loaded’ because it is deducted upfront from the purchase amount, leaving only the net amount invested in a Fund. The following table outlines the service charges of the respective Funds: Fund Service Charge Pacific Premier Fund 5.00% - 7.00% of NAV per unit Pacific Pearl Fund 5.00% - 7.00% of NAV per unit Pacific Dana Aman 5.00% - 7.00% of NAV per unit Pacific Millennium Fund 5.00% - 7.00% of NAV per unit Pacific Recovery Fund 5.00% - 7.00% of NAV per unit Pacific Income Fund Not more than 5.00% of NAV per unit Pacific Progressive Fund 5.00% - 7.00% of NAV per unit Pacific Dana Murni 2.00% of NAV per unit Pacific Dana KLSI Up to 5.00% of NAV per unit The service charge is calculated based on the NAV per unit of a Fund as at the next valuation point after the application is received by the Manager. Example: Assuming the NAV per unit on 31 July 2003 to be RM0.476754 and with a service charge of 6.88% levied, the selling price of a unit would be as follows: Per Unit RM NAV 0.476754 (paid to Fund) Service charge 0.032801 (paid to Manager) 0.509555 Rounding adjustment 0.000045 Selling Price 0.509600 (paid to Manager) The Manager pays part or all the service charge of a Fund to its distributors as commission. REPURCHASE CHARGE There is no repurchase charge for all Pacific Mutual’s Funds. 81 FEES, CHARGES AND EXPENSES ANNUAL MANAGEMENT FEE The annual management fee is a fee charged by the Manager for the ongoing portfolio management and administration of a Fund (e.g. maintenance of unitholders’ register, maintenance of proper records of a Fund and investment administration). The following table outlines the annual management fees of the respective Funds: Fund Annual Management Fee Pacific Premier Fund 1.50% p.a. of the NAV of the Fund Pacific Pearl Fund 1.50% p.a. of the NAV of the Fund Pacific Dana Aman 1.50% p.a. of the NAV of the Fund Pacific Millennium Fund 1.50% p.a. of the NAV of the Fund Pacific Recovery Fund 1.50% p.a. of the NAV of the Fund Pacific Income Fund 1.50% p.a. of the NAV of the Fund Pacific Progressive Fund 1.50% p.a. of the NAV of the Fund Pacific Dana Murni 1.00% p.a. of the NAV of the Fund Pacific Dana KLSI 1.00% p.a. of the NAV of the Fund The annual management fee is calculated based on the NAV of the Funds at the respective Fund’s annual management fee rates, calculated on a daily basis and is paid out of the respective Funds. Example: Assuming the NAV of a Fund is RM268,930,000 (before deducting management fee and trustee fee for the day) and with an annual management fee of 1.50% per annum, the management fee for the day would be as follows: Management fee for the day = NAV x Annual Management Fee 365 days = RM268,930,000 x 1.50% 365 = RM11,051.92 82 FEES, CHARGES AND EXPENSES ANNUAL TRUSTEE FEE The annual trustee fee is a fee paid to the Trustee for the custodial management and administration of a Fund’s assets (e.g. transaction settlement, custody and administration costs). The following table outlines the annual trustee fees of the respective Funds: Fund Pacific Premier Fund Annual Trustee Fee 0.01% - 0.06% p.a. of the NAV of the Fund calculated on a daily basis (excluding custodian fee of RM25,000 p.a.) Pacific Pearl Fund 0.055% p.a. of the NAV of the Fund calculated on a daily basis (excluding custodian fee of 0.035% p.a.) Pacific Dana Aman 0.08% p.a. of the NAV of the Fund calculated on a daily basis Pacific Millennium Fund 0.08% p.a. of the NAV of the Fund calculated on a daily basis Pacific Recovery Fund 0.08% p.a. of the NAV of the Fund calculated on a daily basis Pacific Income Fund 0.10% p.a. of the NAV of the Fund calculated on a daily basis Pacific Progressive Fund 0.10% p.a. of the NAV of the Fund calculated on a daily basis Pacific Dana Murni 0.07% p.a. of the NAV of the Fund calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a. whichever is higher Pacific Dana KLSI 0.07% p.a. of the NAV of the Fund calculated and accrued on a daily basis, subject to a minimum of RM18,000 p.a. whichever is higher The annual trustee fee is calculated based on the NAV of the Funds at the respective Fund’s annual trustee fee rates, calculated on a daily basis and is paid out of the respective Funds. Example: Assuming the NAV of a Fund is RM268,930,000 (before deducting management fee and trustee fee for the day) and with an annual trustee fee of 0.08% per annum, the trustee fee for the day would be calculated as follows: Trustee fee for the day = NAV x Annual Trustee Fee 365 days = RM268,930,000 x 0.08% 365 = RM589.44 83 FEES, CHARGES AND EXPENSES SWITCHING FEE The switching fee is a minimal charge levied on the unitholders by the Manager for administering the switching transactions and is subject to the terms as set out by the Manager. Charges may vary from one Fund to another. Switching fee is calculated based on the NAV per unit of the target Fund. The following table outlines the switching fees of the respective Funds: Target Fund Low-Load Service Charge Fund (Fund with service charge of 2% and below) Reduced-Load Service Charge Fund (Fund with service charge of above 2% to 5%) Normal-Load Service Charge Fund (Fund with service charge of above 5% to 7%) Low-Load Service Charge Fund: Pacific Dana Murni Free 2.00% 3.00% Reduced-Load Service Charge Fund: Pacific Income Fund Pacific Dana KLSI Free Free 0.50% Normal-Load Service Charge Fund: Pacific Premier Fund Pacific Pearl Fund Pacific Dana Aman Pacific Millennium Fund Pacific Recovery Fund Pacific Progressive Fund Free Free Free Current Fund Please refer to page 88 for more information on the terms and conditions of the switching facility. 84 FEES, CHARGES AND EXPENSES EXPENSES Expenses directly related to the Fund are management fee, trustee fee and other administrative expenses (e.g. commission paid to brokers, auditor’s fee, courier and handling charges, etc). The following table reflects the breakdown and total annual expenses incurred by the Funds for their last financial year-end respectively: Management Fee Fund Trustee Fee Other Expenses Total Annual Expenses Management Expense Ratio RM(‘000) % of NAV RM(‘000) % of NAV % RM(‘000) % of NAV RM(‘000) % of NAV Pacific Premier Fund (30 September 2003) 2,854 1.50 74 0.04 124 0.06 3,052 1.60 1.60 Pacific Pearl Fund (31 March 2003) 3,405 1.50 110 0.05 206 0.10 3,721 1.65 1.65 Pacific Dana Aman (31 March 2003) 2,969 1.51 158 0.08 85 0.04 3,212 1.63 1.63 879 1.51 47 0.08 70 0.12 996 1.71 1.71 Pacific Recovery Fund (30 June 2003) 1,640 1.51 87 0.08 74 0.07 1,801 1.66 1.66 Pacific Income Fund (30 September 2003) 2,501 1.50 167 0.10 111 0.07 2,779 1.67 1.67 336 1.50 35 0.16 57 0.25 428 1.91 1.91 Pacific Millennium Fund (30 June 2003) Pacific Progressive Fund (31 December 2002) Note: Pacific Dana Murni and Pacific Dana KLSI were launched on 25 March 2003 and their first financial year will end on 31 March 2004. Therefore, there is no data on their expenses published in this Prospectus for the Funds. MANAGEMENT EXPENSE RATIO (MER) MER will inform the investor of the total expenses incurred by the Fund during the year. This includes management fee, trustee fee and expenses incurred for fund administrative services. A low MER indicates the effectiveness of the Manager in managing the expenses of the Fund. MER = Total expenses incurred by the Fund for the year Average Net Asset Value of the Fund x 100 There are fees and charges involved and investors are advised to consider the fees and charges before investing in the Funds. 85 FEES, CHARGES AND EXPENSES BASIC INFORMATION ON UNIT TRUST INVESTMENT TRANSACTIONS WHAT IS THE MINIMUM INITIAL INVESTMENT? Pacific Mutual offers you a choice of three investment plans namely, Cash Plan, Saver’s Plan and EPF Plan. These plans have been carefully developed to cater for various types of investors with differing financial objectives. For immediate investment, simply complete our Master Application Form (found on pages from 118 to 121 of this Prospectus) and forward it to any Pacific Mutual office or its authorised representatives. Cash Plan Option I : Lump Sum Cash Minimum investment : RM500 Option II : Unit Trust Financing Downpayment : RM5,000 Unit Trust Financing* : RM10,000 * Unit Trust Financing Scheme is available from our approved financial institutions for up to 67% of your investment. The minimum unit trust financing is RM10,000 or subject to the financial institution’s discretion. Please refer to the Unit Trust Loan/Financing Risk Disclosure Statement on page 121 of this Prospectus. Saver’s Plan EPF Plan You may fix your own time frame for saving, starting with a minimum of five years. Your initial investment must be two times the monthly investment amount. Monthly investment amount must be in multiples of RM50. You may withdraw 20% of the amount in excess of RM50,000 in your EPF Account 1, subject to a minimum investment of RM1,000. WHAT IS THE MINIMUM ADDITIONAL INVESTMENT? If you are already a unitholder of our Funds and wish to purchase additional units, simply fill in either our Additional Investment Form or the relevant sections in the Master Application Form, indicating your existing unit trust account number. The following are the minimum additional investments for the respective investment schemes: Cash Plan Option I : Lump Sum Cash RM100 Saver’s Plan EPF Plan Monthly investment amount must be in multiples of RM50 via a standing instruction with our appointed bank. RM1,000 or 20% of the amount in excess of RM50,000 in your EPF Account 1 (withdrawal interval is every three months). HOW ARE UNIT PRICES CALCULATED? Valuation Of Units Valuation of units is based on the NAV of the Fund and is calculated at the end of each Business Day. The NAV per unit of the Fund is determined by dividing the Fund’s assets less its liabilities by the number of units in issue. After the offer period, the selling price or buying price of each unit is calculated based on the NAV per unit of the Fund as at the next valuation point after the application is received by the Manager (“forward pricing”). The selling price/buying price may be rounded to four decimal places. The Manager is entitled to retain the service charge and the rounding adjustment, if any. For any purchase/redemption request received or deemed to have been received by the Manager at or before 5.00 p.m., the selling price/buying price would be based on the NAV per unit at the end of the Business Day on which the request is received by the Manager. Any request received or deemed to have been received after this cut-off time would be considered as being transacted on the next Business Day and would be subject to the Manager’s pricing on the next Business Day. 86 BASIC INFORMATION ON UNIT TRUST INVESTMENT TRANSACTIONS Manager’s Selling Price The selling price of each unit is calculated based on the NAV per unit of the Fund as at the next valuation point after the application is received by the Manager (“forward pricing”) plus a service charge of up to 7% of the NAV per unit. Example: Assuming the NAV per unit on 31 July 2003 to be RM0.476754 and with a service charge of 6.88% levied, the selling price of a unit would be as follows: Per Unit RM NAV Service charge (6.88%) 0.476754 0.032801 (paid to Fund) (paid to Manager) Rounding adjustment 0.509555 0.000045 (paid to Manager) Selling Price 0.509600 If a unitholder invested RM1,000.00 on that day, the number of units credited into his investment account would be as follows: Units credited = Investment Selling price per unit = RM1,000.00 RM0.5096 = 1,962.32 units Manager’s Buying Price The buying price is calculated based on the NAV per unit of the Fund as at the next valuation point after a written request to redeem is received by the Manager. Example: If a unitholder sold 1,000 units on 31 July 2003 and assuming the NAV per unit to be RM0.476754 on that day, his/her redemption proceeds would be as follows: NAV per unit Buying price per unit = = RM0.476754 RM0.4768 Redemption proceeds = = = Units redeemed x Buying price 1,000 units x RM0.4768 RM476.80 HOW AND WHERE CAN YOU PURCHASE, REDEEM AND TRANSFER YOUR INVESTMENT? You can purchase, redeem or transfer your investment at any of our offices or authorised representatives (please refer to pages 122 and 123 for full details). Just complete the following forms and submit the duly completed form to any Pacific Mutual offices or our authorised representatives: • Purchase – Master Application Form • Redemption – Quick Form – Redeem/Switch • Transfer – Transfer Form (must be completed in the presence of a witness) – Master Application Form (to be completed by transferee, if he/she is not an existing unitholder of Pacific Mutual) In the case of partial redemption or transfer, the minimum balance to be maintained in your unit trust account must be 500 units or such sum as decided by the Manager and Trustee from time to time. Redemption: If we receive your redemption request before 5.00 p.m. on a Business Day, we will repurchase the units at the Manager’s Buying Price calculated at the end of the Business Day on which a duly completed Quick Form – Redeem/Switch is received by the Manager. You will be paid within 10 days from the date Pacific Mutual receives the redemption request. 87 BASIC INFORMATION ON UNIT TRUST INVESTMENT TRANSACTIONS WILL THERE BE FLEXIBILITY FOR SWITCHING FROM ONE FUND TO ANOTHER? You may switch from one Fund to another as often as your investment situation demands. The advantage of a switch (compared with a redemption from your current Fund and a simultaneous purchase into a target Fund) is that the NAV per unit is used to calculate the number of units you will be getting in the target Fund. All switches are subject to the following three conditions: • Minimum number of units to be switched out is 1,000; • Minimum number of units left in an account after partial switching is 500; and • Switching into a new Fund is done three months after the date of the inaugural Prospectus of the new Fund. A switching fee is payable in certain cases (please refer to page 84). Investors of Pacific Premier Fund, Pacific Pearl Fund, Pacific Dana Aman, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund, Pacific Progressive Fund, Pacific Dana Murni and Pacific Dana KLSI are not allowed to switch into Pacific SELECT Balance Fund and Pacific SELECT Income Fund, and vice versa. To make a switch, you simply need to complete the Quick Form - Redeem/Switch or send a letter of request to any Pacific Mutual office or its authorised representatives. Switching from Syariah-based Fund to a non-Syariah-based Fund is discouraged especially for Muslim unitholders. COOLING-OFF PERIOD If you are a first-time investor with Pacific Mutual, you are given a cooling-off period of six Business Days or any other period permitted by the Securities Commission. Within these six Business Days from the date of receipt of the application form by Pacific Mutual, you have the right to call for withdrawal of investment. However, this is not applicable to: • Corporate investors/institutional investors; • Staff of Pacific Mutual; and • Persons Dealing In Unit Trust (PDUT) of Pacific Mutual. The refund for every unit held by the investors pursuant to the exercise of their cooling-off right is the sum of: • the NAV per unit on the day units were purchased; and • service charge per unit originally imposed on the day the units were purchased. When you exercise the cooling-off right, the money will be refunded to you: • (For Cash Plan and Saver’s Plan) within 10 days of receipt of the notice of cooling-off by Pacific Mutual. • (For EPF Plan) within 10 days after receipt of the disbursement of fund from EPF. The refund will be returned to your EPF account. DISTRIBUTIONS Distributions declared by the Funds will be automatically reinvested into further units of the Fund except for Cash Plan Option 1, where the investor may opt for distribution cheque. Reinvestments of distributions will be based on the Manager’s Buying Price of the respective Funds, 21 days after the declaration of distributions. How Is Total Return Of A Fund Calculated? Rate of price return = NAV of Fund in current year * Adjusted NAV in base year * (after adjustment of unit splits, if any) Rate of income return = Gross distribution within the period +1 NAV on ex-distribution date Total return = [(Price return x Series of income return) -1] x 100 The above formula used to calculate a Fund’s return is in line with the method adopted by Standard & Poor’s Fund Services Asia Ltd. 88 BASIC INFORMATION ON UNIT TRUST INVESTMENT TRANSACTIONS Example: Assuming Fund A, which was launched on 1 July 2002, declared a gross distribution of five sen and a unit split ^ of 10 for every 100 units held on 30 June 2003. Total return since inception would be calculated as follows: 1. 2. 3. * ^ Price return Unit split 1 July 2002 NAV (RM) 30 June 2003 NAV* (RM) Price return Income return Gross distribution (RM) NAV* (RM) Income return Total return (since inception) = = = = = 10 : 100 0.4750 0.4864 0.4864 / (0.4750 / 1.10) 1.1264 = = = = 0.05 0.4864 (0.05 / 0.4864) + 1 1.1028 = = [(1.1264 x 1.1028) –1] x 100 24.22% Ex-distribution A unit split is not a form of distribution. Distributable Income Distribution is made out of a Fund’s distributable income. Distributable income comprises realised gains, dividend income, interest income, distribution equalisation and accretion of discounts on unquoted corporate bonds. Impact Of Distribution On A Fund’s Unit Prices Generally, when distributions are made out of a Fund’s income, the NAV of the Fund will decrease by a similar amount. Example: If a Fund declared a gross distribution of three sen per unit on 30 June 2003, the effect of the distribution on the NAV and unit prices of the Fund would be adjusted as follows, assuming the Fund charges a service charge of 5% of the NAV per unit: Gross distribution per unit: Net distribution per unit: 3.0000 sen 2.6120 sen Before Distribution After Distribution NAV (RM) 0.5395 0.5134 Buying price (RM) 0.5395 0.5134 Selling price (RM) 0.5665 0.5391 89 BASIC INFORMATION ON UNIT TRUST INVESTMENT TRANSACTIONS GETTING TO KNOW HOW YOUR FUNDS WORK HOW DOES THE INVESTMENT PROCESS WORK? At Pacific Mutual, we are relentless in fulfilling our role as an Active Information Processor which demands of us to constantly stay alert to profitable opportunities. A highly disciplined investment process is also adopted to ensure the active involvement of the Investment Committee and Management Teams, all working together to achieve our Funds’ investment objectives. INVESTMENT PROCESS Performance Measurement Fund Objectives & Constraints - Equities research - Quantitative research (risk analysis) - Economic research Active Allocation Strategy Pacific Mutual Investment Policy & Guidelines Asset Allocation Relevant Local & Global Macro Economic Considerations - Interest rate forecast - Exchange rate - GDP growth Capital Market Expectations Portfolio Rebalancing Investment Committee Review 90 GETTING TO KNOW HOW YOUR FUNDS WORK Fixed Income & Equity Fund Portfolio - through centralised dealing/execution YOUR RIGHTS AS A UNITHOLDER Your units in a Fund give you an equal interest in the Fund as a whole. Under the Deed, each unitholder has a claim proportionate to his/her investment on the assets upon termination of the Fund. In a distribution of income, if any, the Manager will recognise unitholders who are registered as at the last day of the distribution period. We describe below some of your more important entitlements as a unitholder. WHAT ARE MY LIABILITIES AS A UNITHOLDER? You are not expected to be under any personal obligation to indemnify the Trustee or Manager or any creditor of the Fund if there was a deficiency of the assets of the Fund. Unitholders’ liabilities are limited only to the purchase price of their units (at the time of purchase) plus any charges payable in relation to the purchase of the units. The Trustee or the Manager may be indemnified by the Fund for their liabilities arising out of the Fund and the Deed. The Deed limits the amount of indemnity to the value of the assets of the Fund. WHERE CAN I INSPECT THE REGISTER OF UNITHOLDERS? The Register of Unitholders is kept at our business office at 1001, Level 10, Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan. You are invited to inspect the register at any time during office hours: Monday to Friday (9.00 a.m. to 6.00 p.m.). WHAT ARE MY RIGHTS AS A UNITHOLDER? You have the right, amongst others, to the following: • To receive any distribution of income of the Fund, to participate in any increase in capital value of the units and to all rights and privileges under the Fund’s Deed. • To exercise the cooling-off right (please refer to page 88). • To receive annual and interim reports. • To call for a unitholders’ meeting (as set out below) and to vote for the removal of the Trustee or the Manager through an extraordinary resolution. You are entitled to attend meetings which may be convened at any time by Pacific Mutual or the Trustee in accordance with the provisions of the Deed. Meetings of unitholders may be called in certain circumstances, including to approve certain amendments to the Deed or to wind up the Fund. The Manager or the Trustee may call a meeting of unitholders but unitholders themselves can request the Trustee to call a meeting. Generally, the required number of unitholders to do this is: • At least 50 unitholders; or • Unitholders who hold at least one-tenth of the total number of units in the Fund. WHERE CAN I REFER FOR UPDATES ON MY INVESTMENT? You can have immediate access to the daily unit pricing and NAV of the Funds which are published in the major daily newspapers, our Infoline 019-200 1577/1578, our website www.pacificmutual.com.my, or contact any of our Customer Care personnel at 03-7725 9877 or e-mail customercare@pacificmutual.com.my, who will be most glad to attend to any of your queries. While it is the duty of the Manager to ensure the Funds are being correctly valued or priced, the Manager, however, cannot be held liable for any error in prices published in the press, Pacific Mutual’s website and the websites of our distributors. In addition, you can also constantly keep abreast of the respective Funds’ developments via their interim and annual reports. The interim and annual reports comprise the following information: • Stock market review and outlook as well as investment strategy. • Funds’ performance review and data. • Funds’ portfolio structure. • Funds’ size and breakdown of unitholdings. Our Funds’ performance and other information will also be featured in our website www.pacificmutual.com.my. IS THERE A VALIDITY PERIOD FOR DISTRIBUTION WARRANT? You are advised to present your distribution warrant for payment within six months of its issuance. All unclaimed distributions will be automatically reinvested into additional units at the expiry of the distribution warrant based on the Manager’s Buying Price on the said expiry date. 91 YOUR RIGHTS AS A UNITHOLDER TAXATION ADVISER’S LETTER IN RESPECT OF THE TAXATION OF THE UNIT TRUST AND UNITHOLDERS (PREPARED FOR INCLUSION IN THIS PROSPECTUS) 30 September 2003 Ernst & Young Tax Consultants Sdn Bhd Level 23A, Menara Milenium Pusat Bandar Damansara 50490 Kuala Lumpur The Board of Directors Pacific Mutual Fund Bhd 1001, Level 10, Uptown 1 No. 1 Jalan SS21/58 Damansara Uptown 47400 Petaling Jaya Selangor Darul Ehsan Dear Sirs TAXATION OF THE UNIT TRUST AND UNITHOLDERS This letter has been prepared for inclusion in this Master Prospectus to be dated 15 November 2003, in connection with the offer of units in the unit trusts known as Pacific Premier Fund, Pacific Pearl Fund, Pacific Dana Aman, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund, Pacific Progressive Fund, Pacific Dana Murni and Pacific Dana KLSI (hereinafter referred to as “the Funds”). TAXATION OF UNIT TRUST The Funds will be treated as a trust body for Malaysian tax purposes. The taxation of the Funds is governed principally by Sections 61 and 63B of the Malaysian Income Tax Act, 1967 (“MITA”). In addition, the activities of the Funds are governed by the Securities Commission Act 1993 and the guidelines and regulations set by the Securities Commission on Unit Trusts. Under Section 2(7) of the MITA, any reference to interest shall apply, mutatis mutandis, to gains or profits received and expenses incurred, in lieu of interest, in transactions conducted in accordance with the principles of Syariah. The effect of this is that any gains or profits received (hereinafter referred to as “profits”) and expenses incurred, in lieu of interest, in transactions conducted in accordance with the principles of Syariah, will be accorded the same tax treatment as if they were interest. Subject to certain exemptions, the income of the Funds comprising dividends, interest and other investment income derived from or accruing in Malaysia after deducting tax allowable expenses, is liable to Malaysian income tax at the rate of 28%. Tax allowable expenses would comprise expenses falling under Section 33(1) and Section 63B of the MITA. Section 33(1) generally provides for a deduction of expenses “wholly and exclusively incurred” in the production of gross income. In addition, Section 63B allows unit trusts to deduct a portion of other expenses not directly related to the production of income as explained below. Expenses in respect of the Manager’s remuneration, maintenance of the register of unitholders, share registration expenses, secretarial, audit and accounting fees, telephone charges, printing and stationery costs and postage (“permitted expenses”) which are incurred by the Funds but are not deductible under Section 33(1) of the MITA, are given a partial deduction under Section 63B of the Act, which is computed as follows: A X B 4C where A is the total of the permitted expenses incurred for that basis period; B is gross income consisting of dividends, interest and rent chargeable to tax for that basis period; and C is the aggregate of the gross income consisting of dividends (whether exempt or not), interest and rent, and gains made from the realisation of investments (whether chargeable to tax or not) for that basis period. provided that the amount of deduction to be made shall not be less than 10% of the total permitted expenses incurred for that basis period. 92 TAXATION ADVISER’S LETTER Exempt Income The Funds may also receive Malaysian dividends and interest which are tax exempt. The exempt dividends may be received from investments in companies which had previously enjoyed or are currently enjoying the various tax incentives provided under the relevant legislation as well as from distributions from exempt income accounts. Investment income of the unit trusts derived from the following sources are also exempt from taxation: • interest from securities or bonds issued or guaranteed by the Government of Malaysia; • interest from debentures (other than convertible loan stock) approved by the Securities Commission; • interest from Bon Simpanan Malaysia issued by Bank Negara Malaysia; • interest derived from Malaysia and paid or credited by banks or financial institutions licensed under the Banking and Financial Institutions Act 1989 or the Islamic Banking Act 1983; • interest received from bonds or securities issued by Pengurusan Danaharta Nasional Berhad; and • interest derived from bonds (other than convertible loan stock) paid or credited by any company listed on the Malaysian Exchange of Securities Dealing and Automated Quotation Berhad (MESDAQ). Foreign Income The Funds may receive dividends, interest and other income from investments outside Malaysia. Pursuant to the Income Tax (Exemption) (No. 48) Order 1997, income derived from sources outside Malaysia and received in Malaysia by a resident unit trust is exempt from Malaysian income tax. However, such income may be subject to tax in the country from which it is derived. Gains From The Realisation Of Investments Pursuant to Section 61(1)(b) of the MITA, gains from the realisation of investments will not be treated as income of the Funds and hence, are not subject to income tax. Such gains may be subject to real property gains tax under the Real Property Gains Tax Act, 1976 (“RPGT Act”), if the gains are derived from the sale of chargeable assets, as defined in the RPGT Act. However, the recently gazetted Real Property Gains Tax (Exemption) (No. 2) Order 2003 exempts any person from the payment of real property gains tax in respect of chargeable gains accruing on the disposal of any chargeable asset from 1 June 2003 until 31 May 2004. Tax Credit Tax deducted at source from Malaysian dividends received by the Funds will be available for set-off either wholly or partly against the tax liability of the Funds. Should the tax deducted at source exceed the tax liability of the Funds, the excess is refundable to the Funds. TAXATION OF UNITHOLDERS For Malaysian income tax purposes, unitholders will be assessed separately on their share of the distributions received from the Funds. The income of unitholders from the investment broadly falls under the following categories: 1. taxable distributions; 2. non-taxable and exempt distributions; and 3. gains from sale of units. The tax implications of each of the above categories are explained below. 93 TAXATION ADVISER’S LETTER Taxable Distribution The amount distributed from the Funds will be grossed up to take into account the underlying tax of the Funds. The unitholders will be taxed on the gross income received from the Funds after deducting the allowable expenses. Taxable distributions carry a tax credit as specified under Section 110(9A) of the MITA, that is, the tax chargeable on the Funds and attributable to the income distributed to the unitholders will be available for set-off against the tax chargeable on the unitholders. The Malaysian tax chargeable depends on the tax residence status of the unitholders and the type of unitholders, that is, whether they are individuals, corporations, non-corporations or trust bodies. The tax rates charged are as follows: Unitholders Malaysian Tax Rates Malaysian tax resident: • Individual and non-corporate unitholders • Progressive tax rates ranging from 0% to 28% (such as co-operatives, associations and societies) • Corporate unitholders • 28% Non-Malaysian tax resident: • Individual and non-corporate unitholders • 28% • Corporate unitholders • 28% With effect from the year of assessment 2003, corporate unitholders with paid-up capital of RM2.5 million and less (at the beginning of the basis period for the year of assessment) will be subject to a tax rate of 20% on chargeable income of up to RM100,000. For chargeable income in excess of RM100,000, corporate tax at the rate of 28% is still applicable to such corporate unitholders. There is no withholding tax in Malaysia on the distribution of income from the Funds to non-resident unitholders. Nonresident unitholders may be subject to tax in their respective countries depending on the provisions of the tax legislation in the respective countries and any existing double taxation arrangements with Malaysia. In addition, the Malaysian tax paid by the Funds and attributable to the income distributed to the unitholders may be available as a tax credit in the foreign tax jurisdictions. Non-Taxable And Exempt Distributions Tax exempt distributions made out of gains from the realisation of investments and other exempt income earned by the Funds will not be subject to Malaysian tax in the hands of the unitholders. Unit Splits New units issued by the Funds pursuant to a unit split will not be subject to tax in the hands of the unitholders. Gains From Sale Of Units Gains arising from the realisation of investments will not be taxable on the unitholders other than insurance companies, financial institutions or traders/dealers in securities. 94 TAXATION ADVISER’S LETTER Reinvestment Of Distributions Unitholders may choose to reinvest their income distribution in new units by informing the Manager. In this event, the unitholders will be deemed to have received the distribution and reinvested it with the Funds. ************************ We hereby confirm that, as at the date of this letter, the statements made in this report correctly reflect our understanding of the tax position under the current Malaysian tax legislation and the related interpretation and practice thereof, all of which are subject to change, possibly on a retrospective basis. We have not been retained (unless specifically instructed hereafter), nor are we obligated to monitor or update the statements for future conditions that may affect these statements. The statements made in this letter are not intended to be a complete analysis of the tax consequences relating to an investor in the Funds. As the particular circumstances of each investor may differ, we recommend that investors obtain independent advice on the tax issues associated with an investment in the Funds. Yours faithfully ERNST & YOUNG TAX CONSULTANTS SDN BHD Bhupinder Singh Executive Director Ernst & Young Tax Consultants Sdn Bhd has given their consent to the inclusion of their letter as Tax Adviser in the form and context in which it appears in this Prospectus and has not withdrawn such consent prior to the delivery of a copy of this Prospectus for approval. 95 TAXATION ADVISER’S LETTER FINANCIAL INFORMATION OF THE COMPANY 4 November 2003 The Board of Directors Pacific Mutual Fund Bhd 1001, Level 10, Uptown 1 No. 1, Jalan SS21/58 Damansara Uptown 47400 Petaling Jaya Selangor Darul Ehsan Ladies/Gentlemen, I. INTRODUCTION The following report has been prepared solely for inclusion in the Master Prospectus to be dated 15 November 2003 issued by Pacific Mutual Fund Bhd (“the Manager” or “the Company”) in connection with the offer of units in Pacific Premier Fund, Pacific Pearl Fund, Pacific Dana Aman, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund, Pacific Progressive Fund, Pacific Dana Murni and Pacific Dana KLSI (“the Funds”). This report is furnished solely for inclusion in this Master Prospectus and is not to be referred to in any documents or used for any other purposes. II. THE FUNDS Pacific Premier Fund, Pacific Pearl Fund and Pacific Dana Aman were each established under a Deed dated 28 July 1995 (amended by First Supplemental Deed dated 31 January 1996 and Second Supplemental Deed dated 20 January 1998), 18 December 1996 (amended by First Supplemental Deed dated 11 December 1998, Second Supplemental Deed dated 29 June 2000 and Third Supplemental Deed dated 16 May 2001) and 15 April 1998 (amended by First Supplemental Deed dated 3 December 1999, Second Supplemental Deed dated 29 June 2000 and Third Supplemental Deed dated 11 September 2002) respectively. Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund and Pacific Progressive Fund (collectively known as PMF Opportunity Trusts) were established under a common Deed dated 14 April 1999 (amended by Supplemental Deeds dated 13 June 2000, 7 August 2000 and 18 December 2000). Pacific Dana Murni and Pacific Dana KLSI were established under a common Deed dated 17 March 2003. III. INFORMATION ON FUNDS MANAGED BY THE MANAGER 1. Details of distributions and unit splits together with the buying and selling prices preceding the date of this report are as follows: Date Of Distribution/ Unit Split Gross Distribution Per Unit Net Asset Value Unit Split Before Declaration After Declaration Buying Price Per Unit * Selling Price Per Unit * RM RM RM RM Pacific Premier Fund (initial issue price at RM1.00) 16 May 1996 – 6 : 100 1.08 1.02 1.07 1.12 7 August 1996 6.0 sen 4 : 100 1.02 0.93 0.98 1.03 31 March 1997 6.0 sen – 1.03 0.97 1.01 1.06 30 September 1997 4.0 sen – 0.73 0.70 0.70 0.75 30 September 1998 – 10 : 100 0.46 0.42 0.42 0.45 30 September 1999 3.0 sen 6 : 100 0.62 0.56 0.56 0.60 30 September 2000 8.0 sen – 0.67 0.60 0.60 0.65 30 September 2001 – 8 : 100 0.53 0.50 0.50 0.54 30 September 2003 – 6 : 100 0.6519# 0.6150# 0.6150# 0.6573# 96 FINANCIAL INFORMATION OF THE COMPANY Date Of Distribution/ Unit Split Pacific Pearl Fund (initial issue price at RM1.00) 31 January 1998 31 January 1999 31 January 2000 31 March 2001 31 March 2002 31 March 2003 Gross Distribution Per Unit : : : : : : After Declaration Buying Price Per Unit * Selling Price Per Unit * RM RM RM RM 0.54 0.61 0.86 0.60 0.70 0.5659# 0.49 0.55 0.78 0.55 0.64 0.5389# 0.49 0.55 0.78 0.55 0.64 0.5389# 0.52 0.59 0.83 0.59 0.68 0.5760# sen sen sen sen sen sen sen sen – – – – 7 : 100 – – – 0.58 0.64 0.62 0.82 0.54 0.48 0.54 0.4526# 0.55 0.59 0.57 0.72 0.47 0.45 0.49 0.4134# 0.55 0.59 0.57 0.72 0.47 0.45 0.49 0.4134# 0.59 0.63 0.61 0.77 0.50 0.48 0.53 0.4419# Pacific Millennium Fund (initial issue price at RM0.50) 30 April 2000 30 June 2002 30 June 2003 7.5 sen – 3.0 sen – 10:100 – 0.65 0.57 0.4952# 0.58 0.52 0.4665# 0.58 0.52 0.4665# 0.63 0.56 0.4986# Pacific Recovery Fund (initial issue price at RM0.50) 30 April 2000 30 June 2002 30 June 2003 5.0 sen – 5.0 sen 10:100 10:100 – 0.74 0.61 0.5219# 0.62 0.56 0.4733# 0.62 0.56 0.4733# 0.67 0.60 0.5059# Pacific Income Fund (initial issue price at RM0.50) 30 September 2001 30 September 2002 30 September 2003 2.5 sen 3.0 sen 3.0 sen – – – 0.48 0.5040# 0.5170# 0.46 0.4744# 0.4881# 0.46 0.4744# 0.4881# 0.49 0.4982# 0.5125# Pacific Progressive Fund (initial issue price at RM0.50) 31 December 2001 – 8 : 100 0.55 0.52 0.52 0.56 3.5 5.0 5.0 10.0 4.0 4.0 5.0 4.0 10 10 6 10 10 5 Before Declaration 100 100 100 100 100 100 Pacific Dana Aman (initial issue price at RM0.50) 30 November 1998 31 May 1999 31 October 1999 31 May 2000 31 March 2001 30 September 2001 31 May 2002 31 March 2003 – – 4.0 sen – – – Net Asset Value Unit Split Pacific Dana Murni, Pacific Dana KLSI, Pacific SELECT Balance Fund and Pacific SELECT Income Fund Pacific Dana Murni and Pacific Dana KLSI were launched on 25 March 2003, both with initial issue price at RM0.50. Pacific SELECT Balance Fund and Pacific SELECT Income Fund were launched on 11 August 2003, both with initial issue price at RM0.50. There has been no distribution for these stated Funds at the date of this Prospectus. * Ex-distribution prices # With effect from 29 July 2002, the prices are quoted at four decimal places. 97 FINANCIAL INFORMATION OF THE COMPANY 2. The quoted buying and selling prices of the units in Pacific Premier Fund, Pacific Pearl Fund, Pacific Dana Aman, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund, Pacific Progressive Fund, Pacific Dana Murni, Pacific Dana KLSI, Pacific SELECT Balance Fund and Pacific SELECT Income Fund on 3 November 2003 being the last practical date prior to the date of this report were as follows: Pacific Pacific Pacific Pacific Pacific Pacific Pacific Pacific Pacific Pacific Pacific 3. Premier Fund Pearl Fund Dana Aman Millennium Fund Recovery Fund Income Fund Progressive Fund Dana Murni Dana KLSI SELECT Balance Fund SELECT Income Fund Buying Price Per Unit RM Selling Price Per Unit RM 0.6787 0.7371 0.5341 0.5615 0.5642 0.5088 0.5449 0.4943 0.5660 0.5133 0.5047 0.7254 0.7878 0.5709 0.6002 0.6030 0.5342 0.5824 0.5042 0.5943 0.5390 0.5148 The Statement of Income and Expenditure and Statement of Assets and Liabilities of the Funds mentioned above based on their audited financial statements for the past five financial years/periods since their incorporation are set out as follows: PACIFIC PREMIER FUND Statement Of Income And Expenditure 1.10.2002 to 30.9.2003 (RM’000) 1.10.2001 to 30.9.2002 (RM’000) 1.10.2000 to 30.9.2001 (RM’000) 1.10.1999 to 30.9.2000 (RM’000) 1.10.1998 to 30.9.1999 (RM’000) 4,504 1,832 351 (20,192) 3,718 2,396 431 (12,875) 5,195 2,481 562 (5,025) 4,393 3,739 263 31,752 3,093 3,934 – 12,903 (13,505) (6,330) 3,213 40,147 19,930 5 2,854 74 231 119 5 3,167 76 62 120 5 2,829 74 40 162 5 3,744 80 – 186 6 2,752 86 – 148 3,283 3,430 3,110 4,015 2,992 Net (Loss)/Income Before Taxation Taxation (16,788) (807) (9,760) (616) 103 (1,081) 36,132 (685) 16,938 (699) Net (Loss)/Income After Taxation Distribution Equalisation (17,595) (45) (10,376) (1,197) (978) 996 35,447 (2,605) 16,239 306 Undistributed Net Income Brought Forward (17,640) 5,293 (11,573) 16,866 18 16,848 32,842 8,726 16,545 583 Distribution For The Year (12,347) – 5,293 – 16,866 – 41,568 (24,720) 17,128 (8,402) (Loss)/Undistributed Net Income Carried Forward (12,347) 5,293 16,866 16,848 8,726 INVESTMENT INCOME Gross dividends Interest income Accretion of discounts on bonds (Loss)/Profit on sale of quoted investments EXPENSES Audit fees Manager’s fees Trustee’s fees Amortisation of premium on bonds Administration expenses 98 FINANCIAL INFORMATION OF THE COMPANY Statement Of Asset And Liabilities 30.9.2003 (RM’000) 30.9.2002 (RM’000) As at 30.9.2001 (RM’000) 30.9.2000 (RM’000) 30.9.1999 (RM’000) ASSETS Quoted equity securities Foreign equity securities Derivative instruments Loan stocks Unquoted corporate bonds Other debt securities Liquid assets Other assets 146,786 – 4,840 – 24,513 – 26,517 6,987 142,531 – 205 910 21,257 – 23,766 4,560 124,949 – 376 895 12,748 – 45,609 1,249 138,805 750 4,785 – 28,179 – 47,462 808 145,521 – 2,843 – 21,229 1,889 36,417 1,551 Total Assets 209,643 193,229 185,826 220,789 209,450 LIABILITIES Creditors and accruals Distribution payable 5,039 – 1,391 – 2,036 – 1,549 24,720 2,343 8,401 Total Liabilities 5,039 1,391 2,036 26,269 10,744 NET ASSET VALUE 204,604 191,838 183,790 194,520 198,706 UNITHOLDERS’ FUNDS 204,604 191,838 183,790 194,520 198,706 NET ASSET VALUE PER UNIT (RM) 0.6150# 0.5710# 0.50 0.60 0.56 # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places. 99 FINANCIAL INFORMATION OF THE COMPANY PACIFIC PEARL FUND Statement Of Income And Expenditure 1.2.2000 to 31.3.2001 (RM’000) 1.2.1999 to 31.1.2000 (RM’000) 1.2.1998 to 31.1.1999 (RM’000) 5,339 2,820 549 (6,561) 4,793 3,733 592 26,293 3,534 2,703 569 20,732 2,876 5,458 – (15,973) (9,332) 2,147 35,411 27,538 (7,639) 5 3,405 185 89 126 5 3,207 185 101 130 5 4,283 214 25 172 5 3,084 185 – 162 6 2,099 126 – 122 3,810 3,628 4,699 3,436 2,353 Net (Loss)/Income Before Taxation Taxation (13,142) (765) (1,481) (1,006) 30,712 (743) 24,102 (580) (9,992) (665) Net (Loss)/Income After Taxation Distribution Equalisation (13,907) (2,899) (2,487) (935) 29,969 (750) 23,522 (208) (10,657) 128 Undistributed Net Income/(Loss) Brought Forward (16,806) 34,511 (3,422) 37,933 29,219 8,713 23,314 (3,925) (10,529) 6,604 Distribution For The Year 17,705 – 34,511 – 37,932 – 19,389 (10,676) (3,925) – Undistributed Net Income/(Loss) Carried Forward 17,705 34,511 37,932 8,713 (3,925) INVESTMENT INCOME Gross dividends Interest income Accretion of discounts on bonds (Loss)/Profit on sale of quoted investments EXPENSES Audit fee Manager’s fee Trustee’s fee Amortisation of premium on bonds Administration expenses 100 1.4.2002 to 31.3.2003 (RM’000) 1.4.2001 to 31.3.2002 (RM’000) 4,687 2,592 212 (16,823) FINANCIAL INFORMATION OF THE COMPANY Statement Of Asset And Liabilities 31.3.2003 (RM’000) 31.3.2002 (RM’000) As At 31.3.2001 (RM’000) 31.1.2000 (RM’000) 31.1.1999 (RM’000) ASSETS Quoted equity securities Derivative instruments Loan stocks Unquoted corporate bonds Liquid assets Other assets 145,315 257 869 16,004 28,988 10,719 117,372 18 432 19,879 101,852 4,452 107,505 872 560 24,949 60,865 1,411 203,537 2,699 448 23,024 42,447 2,812 104,223 – – 8,000 52,890 12,948 Total Assets 202,152 244,005 196,162 274,967 178,061 LIABILITIES Creditors and accruals Distribution payable 1,319 – 567 – 747 – 4,983 10,676 4,498 – Total Liabilities 1,319 567 747 15,659 4,498 NET ASSET VALUE 200,833 243,438 195,415 259,308 173,563 UNITHOLDERS’ FUNDS 200,833 243,438 195,415 259,308 173,563 NET ASSET VALUE PER UNIT (RM) 0.5389# 0.64 0.55 0.78 0.55 # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places. 101 FINANCIAL INFORMATION OF THE COMPANY PACIFIC DANA AMAN Statement Of Income And Expenditure INVESTMENT INCOME Gross dividends Profit from Islamic money market instrument Accretion of discounts on unquoted Islamic debt securities (Loss)/Profit on sale of quoted investments EXPENSES Audit fee Manager’s fee Trustee’s fee Amortisation of premium on unquoted Islamic debt securities Administration expenses Net Income Before Taxation Taxation 1.4.2002 to 31.3.2003 (RM’000) 1.4.2001 to 31.3.2002 (RM’000) 3,484 3,189 19 1,424 1,325 15 422 674 63 267 309 – 65 425 – 846 109 9,292 2,774 5,951 3,610 1,268 9,868 3,264 5 2,969 158 199 5 1,171 62 77 3 583 31 3 3 390 21 – 3 145 8 – 80 66 56 49 27 3,411 1,381 676 463 183 2,540 (523) 2,229 (210) 592 (32) 9,405 (27) 3,081 (11) (741) 1.6.2000 to 31.3.2001 (RM’000) 1.6.1999 to 31.5.2000 (RM’000) 16.4.1998 to 31.5.1999 (RM’000) Net Income After Taxation Distribution Equalisation 2,017 20,433 2,019 10,970 560 7,033 9,378 5,124 3,070 879 Undistributed Net Income Brought Forward 22,450 19,889 12,989 12,983 7,593 9,207 14,502 1,999 3,949 – 42,339 (34,090) 25,972 (6,083) 16,800 (3,817) 16,501 (7,294) 3,949 (1,950) 8,249 19,889 12,983 9,207 1,999 Distribution For The Year Undistributed Net Income Carried Forward 102 FINANCIAL INFORMATION OF THE COMPANY Statement Of Asset And Liabilities 31.3.2003 (RM’000) As at 31.3.2002 31.3.2001 31.5.2000 31.5.1999 (RM’000) (RM’000) (RM’000) (RM’000) ASSETS Quoted equity securities Derivative instruments Unquoted Islamic debt securities Liquid assets Other assets 145,766 3,832 32,364 41,694 11,607 53,284 112 9,424 45,894 2,607 22,983 161 10,425 16,703 857 20,874 486 – 19,821 6,706 6,066 – – 9,331 1,685 Total Assets 235,263 111,321 51,129 47,887 17,082 LIABILITIES Creditors and accruals Distribution payable 210 20,339 869 – 72 3,817 3,100 5,497 695 1,286 Total Liabilities 20,549 869 3,889 8,597 1,981 NET ASSET VALUE 214,714 110,452 47,240 39,290 15,101 UNITHOLDERS’ FUNDS 214,714 110,452 47,240 39,290 15,101 NET ASSET VALUE PER UNIT (RM) 0.4134# 0.53 0.47 0.72 0.59 # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places. 103 FINANCIAL INFORMATION OF THE COMPANY PACIFIC MILLENNIUM FUND Statement Of Income And Expenditure 1.7.2002 to 30.6.2003 (RM’000) INVESTMENT INCOME Gross dividends Interest income Accretion of discounts on bonds (Loss)/Profit on sale of quoted investments EXPENSES Audit fee Manager’s fee Trustee’s fee Amortisation of premium on bonds Administration expenses Net (Loss)/Income Before Taxation Taxation Net (Loss)/Income After Taxation Distribution Equalisation Undistributed Net Income Brought Forward Distribution For The Year Undistributed Net Income Carried Forward 104 1.7.2001 to 30.6.2002 (RM’000) 1,053 415 61 (1,463) 750 653 146 (719) 1.5.2000 to 30.6.2001 (RM’000) 15.4.1999 to 30.4.2000 (RM’000) 871 817 82 314 526 392 – 7,369 66 830 2,084 8,287 5 879 47 4 65 5 802 43 1 59 5 818 44 13 71 5 483 26 8 32 1,000 910 951 554 (934) (182) (80) (123) 1,133 (140) 7,733 (90) (1,116) 502 (203) 60 993 1,536 7,643 2,049 (614) 6,207 (143) 6,350 2,529 3,821 9,692 – 5,593 (3,572) 6,207 – 6,350 – 9,692 (5,871) 2,021 6,207 6,350 3,821 FINANCIAL INFORMATION OF THE COMPANY Statement Of Asset And Liabilities 30.6.2003 (RM’000) As at 30.6.2002 30.6.2001 (RM’000) (RM’000) 30.4.2000 (RM’000) ASSETS Quoted equity securities Derivative instruments Unquoted corporate bonds Liquid assets Other assets 44,673 – 2,954 14,030 659 35,031 – 1,853 22,896 2,659 25,284 6 3,131 16,453 211 34,279 235 2,092 11,337 4,183 Total Assets 62,316 62,439 45,085 52,126 LIABILITIES Creditors and accruals Distribution payable 527 3,572 2,243 – 11 – 485 5,870 Total Liabilities 4,099 2,243 11 6,355 NET ASSET VALUE 58,217 60,196 45,074 45,771 UNITHOLDERS’ FUNDS 58,217 60,196 45,074 45,771 NET ASSET VALUE PER UNIT (RM) 0.4665# 0.52 0.43 0.58 # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places 105 FINANCIAL INFORMATION OF THE COMPANY PACIFIC RECOVERY FUND Statement Of Income And Expenditure 1.7.2002 to 30.6.2003 (RM’000) 1.7.2001 to 30.6.2002 (RM’000) 2,088 594 46 (4,108) 1,529 1,076 144 3,652 1,202 1,262 171 1,008 268 434 – 9,508 (1,380) 6,401 3,643 10,210 5 1,640 87 2 69 5 1,411 75 – 62 5 1,274 68 5 73 5 494 26 7 34 1,803 1,553 1,425 566 Net (Loss)/Income Before Taxation Taxation (3,183) (372) 4,848 (283) 2,218 (140) 9,644 (45) Net (Loss)/Income After Taxation Distribution Equalisation (3,555) 6,686 4,565 1,195 2,078 6,979 9,599 3,952 Undistributed Net Income Brought Forward 3,131 23,968 5,760 18,208 9,057 9,151 13,551 – 27,099 (12,067) 23,968 – 18,208 – 13,551 (4,400) 15,032 23,968 18,208 9,151 INVESTMENT INCOME Gross dividends Interest income Accretion of discounts on bonds (Loss)/Profit on sale of quoted investments EXPENSES Audit fee Manager’s fee Trustee’s fee Amortisation of premium on bonds Administration expenses Distribution For The Year Undistributed Net Income Carried Forward 106 FINANCIAL INFORMATION OF THE COMPANY 1.5.2000 to 30.6.2001 (RM’000) 15.4.1999 to 30.4.2000 (RM’000) Statement Of Asset And Liabilities 30.6.2003 (RM’000) ASSETS Quoted equity securities Derivative instruments Unquoted corporate bonds Liquid assets Other assets As at 30.6.2002 30.6.2001 (RM’000) (RM’000) 30.4.2000 (RM’000) 76,361 2,180 2,448 41,448 7,459 63,342 373 981 46,191 466 44,478 120 2,761 28,784 382 32,077 940 1,054 21,007 10,589 129,896 111,353 76,525 65,667 LIABILITIES Creditors and accruals Distribution payable 119 12,067 5,047 – 15 – 1,135 4,400 Total Liabilities 12,186 5,047 15 5,535 NET ASSET VALUE 117,710 106,306 76,510 60,132 UNITHOLDERS’ FUNDS 117,710 106,306 76,510 60,132 0.55 0.46 0.62 Total Assets NET ASSET VALUE PER UNIT (RM) 0.4733# # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places 107 FINANCIAL INFORMATION OF THE COMPANY PACIFIC INCOME FUND Statement Of Income And Expenditure 1.10.2002 to 30.9.2003 (RM’000) 1.10.2001 to 30.9.2002 (RM’000) 18.8.2000 to 30.9.2001 (RM’000) 2,412 4,707 1,049 5,775 953 3,145 1,382 4,661 597 2,076 1,271 1,961 13,943 10,141 5,905 5 2,501 167 314 106 5 1,730 111 105 92 3 1,171 78 47 50 3,093 2,043 1,349 Net Income Before Taxation Taxation 10,850 (472) 8,098 (161) 4,556 (83) Net Income After Taxation Distribution Equalisation 10,378 (261) 7,937 2,852 4,473 576 Undistributed Net Income Brought Forward 10,117 2,876 10,789 632 5,049 – Distribution For The Year 12,993 (9,349) 11,421 (8,545) 5,049 (4,417) 3,644 2,876 INVESTMENT INCOME Gross dividends Interest income Accretion of discounts on bonds Profit on sale of quoted investments EXPENSES Audit fee Manager’s fee Trustee’s fee Amortisation of premium on bonds Administration expenses Undistributed Net Income Carried Forward 108 FINANCIAL INFORMATION OF THE COMPANY 632 Statement Of Assets And Liabilities As At 30.9.2002 (RM’000) 30.9.2001 (RM’000) 63,319 – 90,145 10,825 3,918 45,065 1,170 70,560 25,279 4,387 22,586 – 30,578 33,131 1,197 168,207 146,461 87,492 726 9,349 770 8,545 546 4,417 10,075 9,315 4,963 NET ASSET VALUE 158,132 137,146 82,529 UNITHOLDERS’ FUNDS 158,132 137,146 82,529 NET ASSET VALUE PER UNIT (RM) 0.4881# 0.4744# 0.46 30.9.2003 (RM’000) ASSETS Quoted equity securities Derivative instruments Unquoted corporate bonds Liquid assets Other assets Total Assets LIABILITIES Creditors and accruals Distribution payable Total Liabilities # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places 109 FINANCIAL INFORMATION OF THE COMPANY PACIFIC PROGRESSIVE FUND Statement Of Income And Expenditure 1.1.2002 2.1.2001 to to 31.12.2002 31.12.2001 (RM’000) (RM’000) INVESTMENT INCOME Gross dividends Interest income Profit on sale of quoted investments 110 313 1,088 27 211 187 1,511 425 5 336 35 52 3 148 35 23 428 209 Net Income Before Taxation Taxation 1,083 (3) 216 – Net Income After Taxation Distribution Equalisation 1,080 699 216 69 Undistributed Net Income Brought Forward 1,779 285 285 – Undistributed Net Income Carried Forward 2,064 285 EXPENSES Audit fee Manager’s fee Trustee’s fee Administration expenses 110 FINANCIAL INFORMATION OF THE COMPANY Statement Of Assets And Liabilities As At 31.12.2002 31.12.2001 (RM’000) (RM’000) ASSETS Quoted equity securities Derivative instruments Liquid assets Other assets 13,912 – 8,128 545 11,113 – 3,493 1,334 Total Assets 22,585 15,940 LIABILITIES Creditors and accruals 105 81 Total Liabilities 105 81 NET ASSET VALUE 22,480 15,859 UNITHOLDERS’ FUNDS 22,480 15,859 NET ASSET VALUE PER UNIT (RM) 0.4655# 0.52 # With effect from 29 July 2002, the Net Asset Value per unit is quoted at four decimal places. 111 FINANCIAL INFORMATION OF THE COMPANY PACIFIC DANA MURNI, PACIFIC DANA KLSI, PACIFIC SELECT BALANCE FUND AND PACIFIC SELECT INCOME FUND Pacific Dana Murni and Pacific Dana KLSI were launched on 25 March 2003 and their first financial year-end will be on 31 March 2004. Pacific SELECT Balance Fund and Pacific SELECT Income Fund were launched on 11 August 2003 and their first financial year-end will be on 30 June 2004. There are no audited financial statements for these stated Funds as at the date of this Prospectus. 4. Significant Accounting Policies (a) Basis Of Accounting The financial statements have been prepared under the historical cost convention and comply with applicable Approved Accounting Standards issued by the Malaysian Accounting Standards Board (“MASB”) and the Securities Commission Guidelines on Unit Trust Funds, modified by the revaluation of investments indicated in the accounting policy below. (b) Investment Quoted equity securities, derivative instruments and loan stocks are valued at the last done market price quoted at the Kuala Lumpur Stock Exchange on the last business day of the financial year/period. The unquoted corporate bonds are valued at cost adjusted for accretion of discount or amortisation of premium to maturity date as agreed by the Manager and the Trustees. (c) Dividend Income Gross dividends from quoted shares are accounted for on a declared basis when the shareholders’ right to receive payment is established. (d) Interest Income Interest income is accounted for on the accrual basis. (e) Profit From Islamic Money Market Instruments Profit from Islamic money market instruments is accounted for on the accrual basis. (f) Realised Profit/(Loss) On Sale Of Investments The realised profit/(loss) on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investment. The carrying amount for determining the profit/(loss) on sale of investments is based on the weighted average cost method for quoted equity, derivative instruments and loan stocks and specific identification method for unquoted corporate bonds. (g) Distribution Equalisation Distribution equalisation is accounted for on the date of creation and cancellation of units. It represents the amount of distributable income included in the creation and cancellation prices of units. 5. Taxation The dividend and interest income of the Funds after deducting the tax allowable expenses are liable to Malaysian income tax at the statutory rate of taxation of the respective years of assessment. Interest income is exempt from tax effective from year of assessment 1999. Profit on sale of investments earned by the Funds is tax exempt. 112 FINANCIAL INFORMATION OF THE COMPANY IV. THE COMPANY Pacific Mutual Fund Bhd was incorporated on 15 March 1995. PacificMas Berhad owns 85% equity interest in the share capital of Pacific Mutual Fund Bhd and Koperasi Angkatan Tentera Malaysia Berhad owns the remaining 15%. The principal activity of Pacific Mutual Fund Bhd is the establishment and management of unit trust funds. The unit trust funds which are currently managed by the Company are Pacific Premier Fund, Pacific Pearl Fund, Pacific Dana Aman, Pacific Millennium Fund, Pacific Recovery Fund, Pacific Income Fund, Pacific Progressive Fund, Pacific Dana Murni, Pacific Dana KLSI, Pacific SELECT Balance Fund and Pacific SELECT Income Fund. V. RESULTS OF THE COMPANY The Company’s Income Statements and Balance Sheets for the past five (5) financial years are summarised as follows: INCOME STATEMENTS Audited 5 Months Ended 31.5.2003 RM’000 2002 RM’000 Revenue 8,742 31,172 16,598 21,045 11,853 7,100 Profit Before Taxation 2,001 7,364 2,785 4,466 2,013 153 Taxation (569) Profit After Taxation 1,432 (2,099) 5,265 Audited Year Ended 31 December 2001 2000 1999 RM’000 RM’000 RM’000 (843) 1,942 (1,223) 3,243 75 2,088 1998 RM’000 (22) 131 Details of dividend declared and paid by the Company are as follows: Year Ended Rate Of Dividend 31 December 1996 31 December 2000 31 December 2002 Net Dividend RM 150% 20% 20% 2,625,000 720,000 720,000 BALANCE SHEETS Current Assets Current Liabilities Net Current Assets Property and Equipment Deferred Taxation Share Capital Retained Profits Audited As At 31.5.2003 RM’000 2002 RM’000 Audited As At 31 December 2001 2000 1999 RM’000 RM’000 RM’000 29,164 (11,819) 26,806 (10,770) 23,919 (12,162) 14,827 (4,980) 9,974 (2,601) 8,281 (3,045) 17,345 2,219 (360) 16,036 2,045 (309) 11,757 1,602 (132) 9,847 1,559 (120) 7,373 1,590 (200) 5,236 1,729 (290) 19,204 17,772 13,227 11,286 8,763 6,675 5,000 14,204 5,000 12,772 5,000 8,227 5,000 6,286 5,000 3,763 5,000 1,675 19,204 17,772 13,227 11,286 8,763 6,675 113 FINANCIAL INFORMATION OF THE COMPANY 1998 RM’000 VI. AUDITORS The financial statements of the Company for the year ended 31 December 1998 to 31 December 2002 were audited by another firm of chartered accountants. All the financial statements for the period covered in this report were reported on without qualification. Ernst & Young No. AF0039 Chartered Accountants Gloria Goh Ewe Gim No. 1685/4/05(J) Partner 114 FINANCIAL INFORMATION OF THE COMPANY UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE FUNDS The Directors have confirmed that the unaudited Statement of Income and Expenditure and Statement of Assets and Liabilities of the Funds as set out below have been approved by the Manager’s Board of Directors and they reflect a true and fair view of the state of affairs of the Funds as at their respective dates: Statement Of Income And Expenditure INVESTMENT INCOME Gross dividends Interest income/Profit from Islamic money market instrument Accretion of discounts on bonds/unquoted Islamic debt securities (Loss)/Profit on sale of quoted investments PACIFIC PEARL FUND 1.4.2003 to 30.9.2003 PACIFIC DANA AMAN 1.4.2003 to 30.9.2003 PACIFIC PACIFIC PROGRESSIVE DANA FUND MURNI 1.1.2003 Launch Date to 25.3.2003 30.9.2003 to 30.9.2003 (RM’000) (RM’000) PACIFIC DANA KLSI Launch Date 25.3.2003 to 30.9.2003 (RM’000) (RM’000) (RM’000) 3,697 1,067 2,277 1,915 258 139 – 556 20 6 68 61 – 114 – (3,631) 3,101 (275) (131) 25 1,201 7,354 122 539 51 1,671 100 28 1,874 100 218 262 17 – 140 10 130 10 1 – 74 63 31 2 – 1,873 2,255 310 282 11 (672) (592) 5,099 (371) (188) (54) 257 – 40 3 Net (Loss)/Income After Taxation Distribution Equalisation (1,264) 187 4,728 (53) (242) (1) 257 (31) 37 9 Undistributed Net Income Brought Forward (1,077) 17,705 4,675 8,249 (243) 2,064 226 – 46 – Undistributed Net Income Carried Forward 16,628 12,924 1,821 226 46 EXPENSES Manager’s fee Trustee’s fee Amortisation of premium on bonds/unquoted Islamic debt securities Administration expenses Net (Loss)/Income Before Taxation Taxation 115 UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE FUNDS Statement Of Asset And Liabilities PACIFIC PEARL FUND (RM’000) ASSETS Quoted equity securities Derivative instruments Loan stocks Unquoted corporate bonds/ Islamic debt securities Liquid assets Other assets PACIFIC DANA AMAN (RM’000) As At 30.9.2003 PACIFIC PROGRESSIVE FUND (RM’000) PACIFIC DANA MURNI (RM’000) PACIFIC DANA KLSI (RM’000) 188,167 2,278 2,158 19,013 177,430 5,779 – 43,044 16,881 678 – – – – – 26,283 2,289 – – – 31,342 16,148 36,275 9,132 5,773 1,040 2,762 402 565 57 259,106 271,660 24,372 29,447 2,911 LIABILITIES Creditors and accruals 4,396 6,112 251 900 10 Total Liabilities 4,396 6,112 251 900 10 NET ASSET VALUE 254,710 265,548 24,121 28,547 2,901 UNITHOLDERS’ FUNDS 254,710 265,548 24,121 28,547 2,901 0.6805 0.4908 0.5047 0.4939 0.5182 Total Assets NET ASSET VALUE PER UNIT (RM) Directors: CHOI SIEW HONG TAN SRI DATO’ WONG KUM CHOON DATO’ HAJI MUSTAFA BIN MOHAMAD ALI DATUK FONG WENG PHAK DR NEOH SOON KEAN MAK TIAN MENG MEJ (B) BIBI ZARJAAN BINTI AKHBAR KHAN 116 UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE FUNDS DIRECTORS’ DECLARATION This Master Prospectus has been seen and approved by the Directors of the Company 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 the omission of which would make any statement herein misleading. Directors: CHOI SIEW HONG TAN SRI DATO’ WONG KUM CHOON DATO’ HAJI MUSTAFA BIN MOHAMAD ALI DATUK FONG WENG PHAK DR NEOH SOON KEAN MAK TIAN MENG MEJ (B) BIBI ZARJAAN BINTI AKHBAR KHAN CONSENT a) The consent of the Trustees, Corporate Syariah Consultants (Advisors), Banker, Auditors and Reporting Accountants and Tax Adviser to the inclusion in this Prospectus of their names in the manner and context in which such names appear have been given before the issue of this Prospectus and have not subsequently been withdrawn. b) The consent of the Auditors and Reporting Accountants to the inclusion in this Prospectus of their names and the Accountants’ Report in the manner and form in which they are contained in this Prospectus have been given before the issue of this Prospectus and have not subsequently been withdrawn. c) The consent of the Tax Adviser and Tax Agent to the inclusion in this Prospectus of their names and Tax Adviser’s letter in the manner and form in which they are contained in this Prospectus have been given before the issue of this Prospectus and have not subsequently been withdrawn. 117 DIRECTORS’ DECLARATION/CONSENT PACIFIC MUTUAL FUND BHD MASTER APPLICATION FORM Please Read These Notes Before Completing The Application Form 1. ELIGIBILITY Individual applicant To apply for units, you must be 18 years old and above on your last birthday. Joint applicant ■ Cash Plan Option I (Lump Sum Purchase)/Saver’s Plan You may nominate a second applicant for your account. If the second applicant is below 18 years old, the Master Application Form (MAF) must be accompanied by a copy of documentary evidence of the minor’s age (eg. birth certificate or new NRIC). Pacific Mutual will only act on instruction given by the first applicant. ■ ■ Cash Plan Option II (Loan Financing) The first and second applicants must be above 18 years old. EPF Plan No joint application is allowed. For joint application, all correspondences relating to the investment units will be sent to the first applicant. All applications must be accompanied by a copy of the applicant’s identity card, passport or other identification. Corporate applicant Corporate applicant must submit a certified true copy of Certificate of Incorporation, Form 24, Form 49, Memorandum and Articles of Association and Board of Directors’ Resolution to the Manager. 2. PAYMENT FOR INVESTMENT The completed MAF should be accompanied by payment and submitted to any Pacific Mutual office, or its authorised representatives. The allotment of units will be based on the date of investment subject to clearance of the cheque. Cheque/bank draft must be made payable to “PACIFIC MUTUAL FUND BHD” and include bank commission for outstation cheque. 3. TRANSACTION ADVICE SLIP A computer generated Transaction Advice Slip (TAS) showing your unitholdings will be issued to you as proof of receipt of payment. 4. AUTHORITY TO OPERATE ACCOUNT First applicant ■ Both parties must sign or affix their thumb print on the MAF for the first time purchase. For subsequent purchases and any other matters relating to the investment, only the first applicant can sign the relevant form. Pacific Mutual will only act on instruction given by first applicant. ■ Where one applicant is below 18 years old, the MAF must be signed the first applicant and accompanied by evidence of the minor’s age. Pacific Mutual will only act on an instruction given by the first applicant. Both of us ■ Where both applicants are above 18 years old, both parties must sign or affix their thumb print on the MAF. Pacific Mutual will only act on instruction given jointly by both parties. Either one of us (both applicants must be above 18 years old) ■ Both parties must sign or affix their thumb print on the MAF for the first time purchase. For subsequent purchases and any other matters relating to the investment, either applicant can sign the relevant form. Pacific Mutual will act on instruction given by either applicant. In the event of a death of any registered jointholder or units, the survivor will be the only person recognised by the Manager and the Trustee as having title to or interest in the investment units, except where the units are pledged as collateral to financial institutions. If jointholder is a minor, the Manager and Trustee shall recognise the estate of the deceased as having title to or interest in the investment units. Additional notes at back page PACIFIC MUTUAL FUND BHD (336059-U) A subsidiary of PacificMas Berhad 1001, Level 10 Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia. General Line: 03-7725 9877 Customer Care Hotline: 03-7726 6332 Infoline: 019-200-1577/1578 Fax: 03-7725 9860 E-mail: customercare@pacificmutual.com.my Website: www.pacificmutual.com.my 118 MASTER APPLICATION FORM PACIFIC MUTUAL FUND BHD MASTER APPLICATION FORM Please use BLACK ink and complete form in BLOCK letters only. Tick (✔) where appropriate. Please also ensure that you have read and understood the notes printed overleaf before completing this form. First Time Investment (please complete Sections 1-7) Additional Investment (please complete Section 1, 5# & 6) 1. YOUR ACCOUNT PARTICULARS Individual Application First Applicant’s Name : New NRIC/Passport No : Date of Birth : – DD EPF No Sex : – Race : MM Male Female Bumiputera Chinese Indian Malaysian Singaporean Others Others YYYY : Nationality : Occupation : *Please select from the codes below Second Applicant’s Name (if any) : Relationship to 1st applicant : _________________________________________________ New NRIC/Passport/Birth Certificate No : Date of Birth : – DD – MM YYYY 2. YOUR CORRESPONDENCE ADDRESS Address : Postcode : Tel No : E-mail Address : – (H) / (HP) – (O) 5. YOUR INVESTMENT PREFERENCE FUND CASH PLAN TYPE EPF SAVER’S FOR ADDITIONAL INVESTMENT # Unit Trust A/C No. Please tick (✔) one only ***TYPE OF ACCOUNT Please select from below AMOUNT/DEPOSIT RM Monthly Savings (RM) 1)__________________ 2)__________________ 3)__________________ 4)__________________ 5)__________________ 6)__________________ CASH PLAN OPTION II (For Bank Use Only) FUND PLAN TYPE ***TYPE OF ACCOUNT DOWNPAYMENT Amount / Deposit FINANCING APPLIED Amount / Loan Please select from below RM RM ___________________ 6. YOUR INSURANCE APPLICATION, DECLARATION AND NOMINATION (Insurance coverage will only be provided to the First Applicant) I hereby declare and agree that the insurance coverage shall be on the faith of and conditional upon the truth of the following statements: i) I have not been medically advised in the past 12 months to begin a course of medication lasting longer than seven days or undergo further diagnostic/laboratory tests and/or surgical procedure nor have I been advised or required to be hospitalised for more than two nights in connection with any disease, sickness or accident; ii) I have not been tested, counselled or treated for Human Immunodeficiency Virus (HIV) or AIDS; Signature of First Applicant iii) I have not had any proposal for life insurance declined, postponed, rated-up, or modified in any way, by the insurer; iv) I have not been treated for or been told that I have high blood pressure, heart disease, diabetes, lung disease, liver disease, kidney cancer, uro-genital, gastro-genital, joints and bones especially spine diseases/problems or any other serious diseases; and v) To the best of my knowledge I am now in good health and fully able to work full time. __________________________ (Insurance coverage will only be provided to the First Applicant) If any of the above statements is not true, please give details below. ____________________________________________________________________________________________ 8. FOR CONSULTANT / STAFF USE ONLY Name : _____________________________ Consultant / Staff Code : Date : – DD Signature – MM ________________________________________________ YYYY 119 MASTER APPLICATION FORM *Occupation Code: 06 Skilled Worker 01 Professional 07 Others 02 Managerial 03 Clerical 04 Student 05 Businessman F218651 Corporate Application Name : Business Registration No : Contact Person : Designation : Country of Incorporation : Malaysia Status : Bumiputera Controlled Business : Singapore Others Non-Bumiputera Controlled Non-Malaysian Controlled ** Please select from the codes below 3. YOUR DISTRIBUTION INSTRUCTION (only applicable for cash Plan Option 1) FOR OFFICE USE ONLY Distribution (if any) to be reinvested into further units Unitholder Type Distribution warrant/cheque to be posted to the correspondence address stated herein. Doc-Type 1 Sub Type 2 3 4 B/Slip 4. AUTHORITY TO OPERATE ACCOUNT Only applicable for joint application : We hereby authorise Pacific Mutual to act on the instruction given below for redemption of units and any transactions in respect of the units held by us as joint applicants. If no instruction is indicated below, Pacific Mutual must only act on instruction given by both applicants to effect any transactions. First applicant Both of us Either one of us Pymt 1 Pymt 2 Financial Institution State Code Transaction Date – DD – MM YYYY SAVER’S PLAN Bank Account No. No.of Years FUND TYPE OPTION CODE SCHEME CODE DISCOUNT FLAG • • • • • • Unit Trust Repayment Period : year(s) Date of Approval For : Unit Trust Financing – DD Branch Stamp NOMINEE CODE FUND TYPE OPTION CODE SCHEME CODE DISCOUNT FLAG – MM YYYY Signature : ___________________ • 7. SIGNATURE(S) I/We have read and fully understood the relevant Prospectus and Supplemental Prospectus (if any) in respect of this investment and I/We agree to be bound by all the terms and conditions in the Fund’s Deed, Prospectus and Supplemental Deed(s) and Prospectus(es) (if any) thereto. ________________________________________________________ ________________________________________________________ Signature or thumb print 1 (for First / Corporate Applicant) Signature or thumb print 2 (for Second Applicant) **Business Code : 01 Agriculture, Forestry & Fishery 02 Automobile 03 Construction/Property Devpt 04 Finance/Banking 05 06 07 08 09 Government/Public Admin Insurance & Real Estate Manufacturing Mining Retail Trade 10 11 12 99 120 Service Transportation Wholesale Trade Others MASTER APPLICATION FORM ***Type of Account 01 Retirement 02 Education (you may request for the Authorisation Form for Trust Arrangement) 03 Personal 04 Corporate Please Read These Additional Notes Before Completing The Application Form 5. DISTRIBUTION INSTRUCTION Distributions declared by the Fund will be automatically reinvested into further units of the same Fund except for Cash Plan Option I (Lump Sum Purchase) where the investor may opt for distribution cheque. If the distribution cheque is not presented within the six (6) months’ validity period, the distribution will be automatically reinvested into further units based on the Manager’s prevailing Buying Price after the said expiry date. The distribution instruction opted for the first time applies to all Funds. If distribution instruction is not specified, distribution will be automatically reinvested. Subsequently, should you wish to change the distribution instruction of any of the Funds, kindly complete and send the “Change of Distribution Instruction Form” to the Manager. 6. RIGHT OF MANAGER The Manager reserves the right to accept or reject any application in whole or in part without assigning any reason. 7. CHANGE OF APPLICATION DETAILS The Manager must be notified immediately in writing of any change of address or resident status or other particulars stated in this form. 8. INDEMNITY The applicant(s) hereby agree to indemnify the Manager, the Trustee and any of their Agents against any actions, proceedings, claims, losses, damages, costs and expenses which may be brought against, suffered or incurred by any or all of them arising either directly or indirectly out of or in connection with the Manager accepting, relying on or failing to act on any instructions given by or on behalf of the applicant unless due to the wilful default or negligence of the Manager. UNIT TRUST LOAN/FINANCING RISK DISCLOSURE STATEMENT Investing In A Unit Trust Fund With Borrowed/Financed Money Is More Risky Than Investing With Your Own Savings. You should assess if loan/financing is suitable for you in light of your objectives, attitude to risk and financial circumstances. You should be aware of the risks, which would include the following: (i) The higher the margin of financing (that is, the amount of money you borrow/obtain from financing for every ringgit of your own money that you put in as deposit or down payment) the greater the potential for losses as well as gains. (ii) You should assess whether you have the ability to service the repayments on the proposed loan/financing. If your loan is a variable rate loan, and if interest rates rise, your total repayment amount will be increased. (iii) If unit prices fall beyond a certain level, you may be asked to provide additional acceptable collateral or pay additional amounts on top of your normal instalments. If you fail to comply within the time prescribed, your units may be sold to settle your loan/financing. (iv) Returns on unit trusts are not guaranteed and may not be earned evenly over time. This means that there may be some years where returns are high and other years where losses are experienced. Whether you eventually realise a gain or loss may be affected by the timing of the sale of your units. The value of units may fall just when you want your money back even though the investment may have done well in the past. The brief statement cannot disclose all the risks and other aspects of loan/financing. You should therefore carefully study the terms and conditions before you decide to take the loan/financing. If you are in doubt in respect of any aspect of this Risk Disclosure Statement or the terms of the loan/financing, you should consult the institution offering the loan/financing. Acknowledgement of Receipt of Risk Disclosure Statement I acknowledge that I have received a copy of this Unit Trust Loan/Financing Risk Disclosure Statement and understand its contents. Signature : Full Name : Date 121 MASTER APPLICATION FORM : LIST OF PACIFIC MUTUAL FUND BHD OFFICES AND INSTITUTIONAL UNIT TRUST AGENTS HEAD OFFICE 1001, Level 10, Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan Tel: 03-7725 9877 Fax: 03-7725 9860 E-mail: customercare@pacificmutual.com.my Website: www.pacificmutual.com.my BRANCHES Pulau Pinang 78, Ground Floor, Lebuh Gereja, 10200 Pulau Pinang Tel: 04-261 5188 Fax: 04-261 5189 E-mail: penang@pacificmutual.com.my Perak Darul Ridzuan 9A, Persiaran Greentown 8, Pusat Perdagangan Greentown, 30450 Ipoh, Perak Tel: 05-242 4322 Fax: 05-242 4323 E-mail: ipoh@pacificmutual.com.my Melaka 601 & 601A, Jalan Melaka Raya 10, Taman Melaka Raya, 75000 Melaka Tel: 06-282 8788 Fax: 06-286 8788 E-mail: melaka@pacificmutual.com.my Johor Darul Takzim 114A, 1st Floor, Jalan Harimau Tarum, Taman Century, 80250 Johor Bahru, Johor Tel: 07-335 2098 Fax: 07-335 2099 E-mail: jb@pacificmutual.com.my Sarawak Lot 893, 2nd Floor, Waterfront Commercial Centre, 98000 Miri, Sarawak Tel: 085-428 055 Fax: 085-438 055 E-mail: miri@pacificmutual.com.my 87-B, Ground Floor, Jalan Ban Hock, 93100 Kuching, Sarawak Tel: 082-233 933 Fax: 082-422 733 E-mail: kuching@pacificmutual.com.my Sabah Block BC, Lot 16, 1st Lorong Ikan Juara, Sadong Jaya, 88100 Kota Kinabalu, Sabah Tel: 088-251 088 Fax: 088-251 059 E-mail: kk@pacificmutual.com.my AGENCY OFFICES PULAU PINANG Bukit Mertajam Tel: 04-621 1980 SELANGOR DARUL EHSAN Dataran Prima, Petaling Jaya Kawasan Perindustrian Bkt Serdang Taman Chi Liung, Klang Tel: 03-7880 0733 Tel: 03-8942 4410 Tel: 03-3371 9118 KUALA LUMPUR Menara Mutiara Bangsar Taman Sri Segambut Tel: 03-2283 3252 Fax: 03-2283 1252 E-mail: nrsheth@pc.jaring.my Tel/Fax: 03-6251 0006 E-mail: pb_chong@hotmail.com NEGERI SEMBILAN DARUL KHUSUS Jalan Tun Dr. Ismail, Seremban Tel: 06-762 5770 Fax: 06-763 5368 E-mail: caroleloong@hotmail.com MELAKA Taman Malim Jaya Taman Melaka Raya Tel: 06-337 6558 Tel: 06-281 5329 Fax: 06-337 6553 Fax: 06-282 4486 E-mail: awbh@pd.jaring.my E-mail: antsclub@yahoo.com JOHOR DARUL TAKZIM Jalan Wayang, Kluang Taman Intan, Kluang Tel/Fax: 07-772 5752 E-mail: kktanag@tm.net.my Tel: 07-776 4909 Fax: 07-776 9454 E-mail: pmf_klg@time.net.my SARAWAK Simpang Tiga, Kuching Bintulu Sibu Tel: 082-412 768 Fax: 082-427 768 E-mail: klsbong@tm.net.my Tel/Fax: 086-330 055 E-mail: pmf1668@pd.jaring.my Tel/Fax: 084-325 055 E-mail: pmfsibu@tm.net.my 122 Fax: 04-621 1780 E-mail: gtkoe@tm.net.my Fax: 03-7880 0703 E-mail: ronlch@tm.net.my E-mail: ericscng@tm.net.my Fax: 03-3371 8375 E-mail: marktan@pc.jaring.my LIST OF PACIFIC MUTUAL FUND BHD OFFICES AND INSTITUTIONAL UNIT TRUST AGENTS INSTITUTIONAL UNIT TRUST AGENTS OCBC Bank (Malaysia) Berhad (295400-W) Tel: 03-2694 8766 Standard Chartered Bank Malaysia Berhad (115793 P) HSBC Bank Malaysia Berhad (127776-V) Southern Bank Berhad (5303-W) Tel: 03-2050 7878 Tel: 03-2087 3000 CIMB Securities Sdn Bhd (163712-V) Tel: 03-2084 9999 United Overseas Bank (Malaysia) Bhd (271809 K) Alliance Bank Malaysia Berhad (88103-W) CIMB Private Banking (18417-M) RHB Bank Berhad (6171-M) Tel: 03-7726 5007 Tel: 03-2612 8121 Tel: 03-2730 2844 Tel: 03-2723 8688 Tel: 03-9206 8118 As our IUTAs have their specific category of customers, they may not carry the complete set of our Funds. Investments made via our IUTAs may be subject to different terms and conditions. 123 LIST OF PACIFIC MUTUAL FUND BHD OFFICES AND INSTITUTIONAL UNIT TRUST AGENTS " To reach out for excellence, to persevere, to mutually trust and support. That's the essence of growing together with Pacific Mutual for a brighter future." PACIFIC MUTUAL FUND BHD (336059-U) A subsidiary of PacificMas Berhad 1001 Level 10 Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia. General Line: 03-7725 9877 Customer Care Hotline: 03-7726 6332 Infoline: 019-200 1577/1578 Fax: 03-7725 9860 E-mail: customercare@pacificmutual.com.my Website: www.pacificmutual.com.my