- Investment objectives
- Investment Liquidity
- Investment Exposure
- Investment Decision
- Transaction policy
- Investment Restrictions
- Borrowing policy
- Dividend policy
- Valuation policy
- Net Asset Value (NAV) Calculation
- Limitation of Expenses
- Price Fixation Policy
- Sale & Repurchase Procedure
- Winding Up & Redemption Policy
The Fund is designed as an Income Fund. The primary objective of the Fund is to achieve capital gain as well as earn dividend and interest income through investment in the capital markets of Bangladesh. It mostly shall focus on generating cash earning and at the same time preservation of capital. The Fund shall not accumulate significant reserves over its life as the Fund shall distribute at least 70% of its earning to the unit holders. The assets of the Fund will be invested both in equity securities and fixed-income securities (FIS). Most of the equity investments will be made in listed companies and entities. However, the Fund will also invest in unlisted equity and debt securities directly from the issuers, including IPO and pre-IPO placement for issuing company only, at the primary market. The Fund may also invest in other quasi-equity or debt instruments, including warrants, preference securities, government notes, bills and different types of bonds and debentures, but generally may not prefer financing venture capital undertakings.
The principal investment objective and policies of the Fund as set out above will, in the absence of unforeseen circumstances, be adhered to during the life of the Fund. The Fund will always adopt the investment policy that will ensure the income nature that is being contemplated.
All money collected under the Mutual Fund shall be invested only in encashable / transferable instruments, securities whether in money market or capital market or privately placed Pre-IPO equity shares, preference shares, debentures or securitized debts. The Mutual Fund shall get the securities purchased or transferred in the name of the Fund.
The details of the investment policies are as follows:
- The investments of the Fund shall be subject to the provisions and restrictions of rules and regulations and only in securities and investments approved by the competent authorities in this regard.
- Entire money under the Fund, except FIS investments, shall preferably be invested only in transferable securities whether in money market or equity market or privately placed debentures or securitized debts.
- Generally not more than 25% of the assets will be invested in non-transferable fixed-income securities (FIS).
- The equity portfolio will be a growth-value blend basket of large-cap as well as small-cap stocks.
- In order to increase the profit potential, the manager will have the flexibility to use market timing to move between stocks and FIS or cash in any percentage they deem prudent when investment conditions change.
- The Fund will seek to invest in companies, which it considers to exhibit good growth and earning potential and have sound management.
- The AMC shall categorize the investments either as ‘Trading Securities’ or as ‘Available for Sale Securities’ as they deem prudent, as per provisions of IAS-39 corresponding to the Statement of Financial Accounting Standard (SFAS) No. 115 of Financial Accounting Standard Board, USA.
- Capital appreciation will be the primary consideration and dividend and interest income will be the secondary consideration for the trading security investments.
- Dividend and interest income will be the primary consideration and capital appreciation will be the secondary consideration for the available for sale security investments.
- During periods in which the Investment Manager believes changes in economic, financial or political conditions will adversely affect the Fund’s portfolio, the Fund may, for short to medium-term risk minimizing defensive purposes, reduce or liquidate holdings in equity and other securities and invest in medium-term debt or depository instruments or hold cash.
Only the Asset Management Company will make the investment decisions and place orders for securities to be purchased or sold for the Scheme’s portfolio.
The investment objective of the Fund may be reviewed and changed by the Trustee and the AMC. However, unit holders would be notified of any material change in the Fund’s objective.
- The AMC will make the investment decisions and place orders for securities to be purchased or sold by the Fund.
- The AMC will choose prime corporate broker(s) for the purchase and sale of securities for the Fund’s portfolio.
- The primary objective of the AMC in choosing broker(s) will be to obtain the most favorable net results taking into account such factors as price, commission, execution and the degree of skill required of the broker(s). The capability and financial condition, integrity and reputation of the broker(s) shall also be a criterion for the choice of that particular broker.
- AMC can transact in securities of the portfolio of the Fund for any amount through any number of brokers other than the prime brokers, if the AMC deems prudent, considering the prevailing market environment.
- Transactions requiring physical settlement shall be through the Custodian of the Fund.
- The Fund shall buy and sell securities on the basis of deliveries and shall, in all cases of purchases, take delivery of securities and in all cases of sale, deliver the securities on the respective settlement dates as per the custom and practice of the stock exchanges and shall in no case put itself in a position whereby it has to make short sale.
The following restrictions are fundamental policies of the Scheme that may not be changed without approval of majority of the Scheme’s outstanding voting securities or through any act of the Bangladesh Securities and Exchange Commission. These are also and should remain in compliance with Section-56 and Schedule-V of the সিকিউরিটিজ ও এক্সচেঞ্জ কমিশন (মিউচ্যুয়াল ফান্ড) বিধিমালা, ২০০১ and any amendment thereto from time to time. If a percentage restriction on investment or use of assets set forth below is adhered to at the time a transaction is effected, later changes of holding value due to changes in market price movement or accrued gain in value over time will not constitute a breach of the restrictions.
- The Fund shall not invest in securities having unlimited liability.
- The Fund shall not buy its own units, other than under any approved buy-back or redemption plan.
- Investments by way of privately placed debentures, securitized debts and other unquoted debt instruments shall generally not exceed 25% (twenty five percent) of the total assets of the Scheme.
- The Fund shall not invest more than 10% (ten percent) of its assets in any one particular company shares or as determined by the Commission from time to time.
- The Fund shall not own more than 15% (fifteen percent) of any company’s paid-up capital at any point of time or as determined by the Commission from time to time.
- The Fund shall not invest more than 20% (twenty percent) of its total assets in the shares, debentures or other securities of a single company or group or as determined by the Commission from time to time.
- The Fund shall not invest more than 25% (twenty five percent) of its total assets in shares, debentures or other securities in any one industry or as determined by the Commission from time to time.
- The Fund shall not involve in option trading or short selling or carry forward transactions unless authorized by the Commission.
- The Fund shall not invest in or lend to another Scheme of the Fund under the same AMC unless authorized by the Commission.
- The Fund shall not provide term loan or advance to any entity unless authorized by the Commission.
- The Fund shall not borrow fund for investing unless authorized by the Commission.
- The Fund shall not buy its own Unit.
- The Fund shall not acquire my asset out of the trust property, which involves the assumption of any liability that is unlimited or shall result in encumbrance of the trust property in any way.
- The Fund or the Asset Manager on behalf of the Fund shall not give or guarantee term loans for any purpose or take up any activity in contravention of the বিধিমালা.
- The Fund shall buy and sell securities on the basis of deliveries and shall, in all cases of purchases, take delivery of securities and in all cases of sale, deliver the securities on the respective settlement dates as per custom and practice of the stock exchange and shall in no case put itself in a position whereby is has to make short sell or carry forward transaction.
The Fund is not permitted to borrow to finance investments or to advance any term loan or guarantee term loan for any purpose. However, if the BSEC withdraws or relaxes these restrictions, it may well opt for borrowing, if necessary, from any legal source at competitive rates.
- The accounting year of the Fund shall be January 01 to December 31 fiscal year.
- After the close of annual accounts, the Trustee, as appears appropriate, shall declare dividend for the beneficiaries.
- The Trustee may consider declaring dividends for any time period, if recommended by the asset management company.
- Being an “Income Fund” in nature the Fund shall, as soon as may be, after the closing of the annual accounts, declare and distribute dividend if any, as recommended by the Asset Management Company and approved by the Trustee to the unit holders in accordance with the বিধিমালা, an amount, which shall not be less than 70 (seventy) percent of the net profits earned during the year, or as determined by the Commission from time to time;
- No dividend may be declared or paid other than from earnings or reserve of the Fund, available for distribution.
- Surpluses arising simply from valuation of investments shall not be available for dividend.
- A transfer of unit shall not pass the right to any dividend declared thereon before the registration of the transfer.
The Fund intends to determine its NAV no less frequently than the close of business on the last business day of each week by dividing the value of the net assets of the Fund (the value of assets less liabilities) by the total number of units of the Fund outstanding. Through consenting on the prospectus, the BSEC has approved the method of valuation that the Fund has adopted to value investments. Details of the valuation policy are as under:
- For listed securities held in the portfolio of the Fund, the average quoted closing market price at the stock exchange(s) on the date of valuation shall be taken into account for calculation of Net Asset Value (NAV) of the Scheme of the Fund.
- For securitized debts, debentures, margin or fixed deposits, held in the portfolio of the Fund, the accrued interest on such instruments on the date of valuation shall be taken into account for calculating the Net Asset Value (NAV) of such securities in the portfolio of the Fund.
- The Fund shall fix the valuation method as specified in the বিধিমালা. For the scheme subject to the prior approval of the commission.
- The Fund shall follow the method for valuation of the non-listed investments, if any, as approved by the Commission, and the Asset Management Company and the Trustee shall review the non-listed investments, if any, at least quarterly and the auditors shall comment on such investments in the annual report of the Scheme of the Fund.
- Once non-listed securities are valued, the valued amount will be considered for purpose of valuing the Fund’s assets in any interval of time until the securities are further revalued by the Asset Management Company.
- The valuation of the listed securities not traded within previous one month will be made with their reasonable value which shall not be more than the intrinsic value, and such valuation must be approved by the Trustee and commented upon by the Auditors in the Annual Report of the mutual fund.
- The Fund shall follow a general net formula approved by the Commission and prescribed in the বিধিমালা for computing the Net Asset Value (NAV) per unit of the Scheme at least on weekly basis or as directed by the Commission, and adequate disclosure shall be made as per the provision of the বিধিমালা.
- In the event any holding exceeds the limits laid down in the Offer Document or in the বিধিমালা for acquisition of bonus shares, subscription of right shares or through any disinvestments, the Asset Management Company shall make its best endeavors to bring the exposure within the prescribed limits within six months of the event but in any case the Asset Management Company shall not invest further in such securities or sectors while the deviation continues.
- The Fund shall not borrow to finance its investments, as long as it is not permissible under the বিধিমালা.
- In case of deferred expenses, accrued expenses for the period will be taken into account for determining total liabilities.
- Net Asset Value (NAV) calculation.
- AMC and Trustee will value the non-listed securities at least once in every three months.
Limitation of Expenses
The initial issue expenses in respect of the Fund shall not exceed 5 (five) percent of the collected amount of the Fund raised under the Scheme and will be amortized within 7 (seven) years on a straight-line method. The total expenses charged to the Fund, except the amortization of initial issue expenses and including transaction cost in the form of stock brokerage against buy and sale of securities forming a part of acquisition or disposal cost of such securities, transaction fees payable to the Custodian against acquisition or disposal of securities, the annual registration fees payable to the Commission, audit fees, cost of publication of reports and periodicals, bank charge, etc., shall not exceed 4 (four) percent of the weekly average net asset outstanding during any accounting year.
Price Fixation Policy
After completion of initial subscription, the Fund will be opened to the investors for regular buy/sale of Units. The date of re-opening shall be declared by the asset manager upon approval of the Trustee and with due intimation to the BSEC.
The asset manager shall calculate the Net Asset Value (NAV) per unit on the last working day of every week or for shorter period, as practicable, as per formula prescribed in the বিধিমালা and shall disclose sales price and repurchase/surrender price per unit determined on the basis of NAV before commencement of business operation of the first working day of the following week to the Commission and to the investors through at least one national daily, the website of the asset management company and the authorized selling agents of the Fund.
The difference between sales price and surrender value shall be BDT 0.30 (Paisa Thirty) per unit and may increase up to 5% of the surrender price at a given point of time at the decision of the Board of Directors of the Asset Management Company.
The difference between sales price and surrender value shall be within 3% (in normal situation) of the sale price of the Unit and may increase up to 5% of the sale price at the decision of the Board of Directors Of the AMC with due intimation to the trustee justifying the ground of such decision. The difference between sales price surrender values shall not exceed 5% of the sale price of the unit.
The unit holders may surrender their unit certificates during the business hour as specified by the Asset Management Company. The fund shall be liable to repurchase the units at the surrender value determined by the Asset Management Company. Sale and repurchase of unit certificates by Asset Management Company shall remain closed during first week of January unless the Commission decides otherwise.
Sale & Repurchase Procedure
Sale and repurchase procedure is given below:
- The Units of Zenith Annual Income Fund may be bought/surrendered through Zenith Investments Limited and authorized selling agents appointed by the Asset Manager from time to time and any other procedure as prescribed by the Asset Manager. Surrender of units is allowed only through Zenith Investments Limited or the selling agent from which the units are originally purchased.
- During initial subscription minimum purchase amount for individual investors is 500 (Five Hundred) Units and for institutional investors is 5,000 (Five Thousand) Units. For subsequent period any investor can purchase one unit of the fund.
- Application for purchase of Units should be accompanied by an account payee cheque/pay order/bank draft in favor of ‘Zenith Annual Income Fund’’ for the total value of Units.
- After clearance/encashment of cheque/draft/pay order, the applicant will be issued with a Confirmation of Unit Allocation against every purchase of Units he/she/the institutional investor applies for. If BO A/C is provided during the registration, the units will also be delivered to the Unit holders’ BO A/C.
- Partial surrender (fraction of total units held under a Unit Allocation Confirmation) is allowed without any additional cost subject to minimum surrender quantity is 500 (Five Hundred) units for individuals and 5,000 (Five Thousand) units for institutions. Upon partial surrender, the Unit holder will be issued with a new Confirmation of Unit Allocation representing the balance of his Unit holding.
- All payments/receipts in connection with or arising out of transactions in the Units shall be in Bangladeshi Taka.
Winding Up & Redemption Policy
Procedure of Winding Up & Redemption:
The policies pertaining to redemption are described below:
- If the total number of outstanding Units held by the Unit holders after repurchase at any point of time fall below 25 (Twenty Five) percent of the actual Units issued, the Fund will be subject to wound up.
- The Fund may be wound up on the happening of any event, which, in the opinion of the Trustee, requires the Fund to be wound up, subject to approval from the Commission.
- The Fund will be wound up if the Commission so directs in the interest of the unit-holders.
- Where the Fund is to be wound up in pursuance to the above, the Trustee and the Asset Management Company shall separately but simultaneously give notice of the circumstances leading to the winding up of the Scheme to the Commission and the Stock Exchange(s), where applicable, and if winding up is approved by the Commission, shall publish in two national daily newspapers including a Bangla having circulation all over Bangladesh or as per direction of the Commission from time to time.
- The Trustee shall call a meeting within 30 (thirty) days from the notice date of the unit holders to consider and pass necessary resolutions by 3/4th (three-fourth) majority of the unit holders present and voting at the meeting for authorizing the Trustee to take steps for winding up of the Fund. If it fails to have three-fourth majority mandate, the Commission shall have the power to supersede the mandate, if situation demands such.
- The Trustee shall dispose of the assets of the Fund in the best interest of the unit holders, provided that the proceeds of sale made in pursuance of the Rules, shall in the first instance be utilized towards discharging of such liabilities as are properly due under the Fund and after making appropriate provision for meeting the expenses connected with such winding up, including fees & charges payable to the constituents and service providers, the balance shall be paid to the unit holders in proportion to their respective interest in the assets of the Fund as on the date when the decision for winding up was taken.
- Within 30 (thirty) days from completion of the winding up, the Trustee shall forward to the Commission and the unit holders a report on the winding up containing particulars such as circumstances leading to the winding up, the steps taken for disposal of assets of the Fund before winding up, expenses of the Fund for winding up, net assets available for distribution to the unit holders and a certificate from the auditors of the Fund.
On and from the date of the notice of the winding up of the Fund, the Trustee or the Asset Management Company as the case may be, shall:
- Cease to carry on any business activities of the open-end fund
- Cease to create and cancel units of the open-end fund
Cease to issue and redeem units of the open-end fund