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Fund Information : Rebranding of The Fund

Rebranding of The Fund

This FAQ is targeted to existing unitholders of FBM30etf.

1) Can you tell me more about the re-branding exercise for FBM30etf (“the Fund”)?
The re-branding exercise comprises a new name for the Fund and unit split exercise as follows:

The Fund’s new name
On 6 July 2009, FTSE Bursa Malaysia Large 30 Index (“FBM30”) was replaced by FTSE Bursa Malaysia KLCI. Following the change of the Fund’s benchmark from FBM30 to FTSE Bursa Malaysia KLCI, we are taking a proactive step to change the Fund’s name from FBM30etf to FTSE Bursa Malaysia KLCI etf (“FBM KLCI etf”). The diagram below illustrates the changes of the index and the Fund.


Diagram 1: New name for FBM30etf

Unit split exercise
Following the above development, Bursa Malaysia has informed the market that the index value of FTSE Bursa Malaysia KLCI will adopt the KLCI’s closing value on July 3 2009. In order to ensure that the Fund closely tracks approximately 1/1000th of FTSE Bursa Malaysia KLCI value, the Fund implemented a unit split exercise with a ratio 6.43 to 1 on 6 July 2009. The exercise grants existing investors 5.43 additional Fund’s units for every unit owned.

2) Will the re-branding exercise affect the Fund’s underlying holdings?
No, the Fund’s underlying holdings will remain unchanged i.e. no impact to the index constituents as the new FTSE Bursa Malaysia KLCI follows the same index calculation methodology as the existing FBM30 (e.g. 30 largest companies based on market capitalization, free-float adjusted and liquidity-screened).

However, the Fund’s underlying holdings may change (since the Fund’s objective is to follow the performance of its Benchmark) subject to a periodic review by FTSE conducted semi-annually in June and December or as and when FTSE Bursa Malaysia KLCI’s index composition changes.

3) How will the Fund’s price be affected by the exercise?
Following the above development, Bursa Malaysia has informed the market that the index value of FTSE Bursa Malaysia KLCI will adopt the KLCI’s closing value on July 3 2009. In order to ensure that the Fund closely tracks approximately 1/1000th of FTSE Bursa Malaysia KLCI value, we will undertake a unit split exercise. For example, if the index value of FTSE Bursa Malaysia KLCI is at 1,400 points, the Fund’s market price will be approximately RM1.40.

As a result from the unit split exercise, this will lower the Fund’s price from its current level. A lower price after the unit split will make it more affordable for investors. We believe the unit split may enhance the Fund’s liquidity and trading volume to further benefit unit holders.

The decrease in price will be in tandem with the increase in units’ holdings by the same ratio upon the proposed unit split exercise. Thus, the value of your existing units in the Fund’s investment remains unchanged.

4) If the Fund’s price is reduced from the unit split, how would this affect the value of my Fund’s existing investment?
The decrease in price will be in tandem with the increase in units’ holdings by the same ratio upon the proposed unit split exercise. Thus the value of your Fund’s investment or portfolio remains unchanged.

For example, if you now hold 100 units at RM7 each with a total portfolio value of RM700 and the Fund declares a 5-for-1 unit split. This means that you will have an additional 400 units for 100 units owned, giving you a total of 500 units in your portfolio. Correspondingly, the existing price of each unit will be divided by 5 times, reducing from RM7 to RM1.40. After the unit split exercise, the total value of your portfolio will remain the same at RM700 (RM1.40 x 500).


Diagram 2: A simple example of a unit split scenario

5) What are the benefits from the proposed unit split?
The new price after the proposed unit split would enable investors to relate the Fund’s performance against FTSE Bursa Malaysia KLCI’s movement. Based on the example above, if FTSE Bursa Malaysia KLCI moves up 10% from 1,100 to 1,210 points, this would represent an approximately 10% return* for the investor as the Fund’s market price would approximately increase from RM1.100 to RM1.210*.

A lower price after the unit split will make it more affordable for investors. We believe the unit split may enhance the Fund’s liquidity and trading volume to further benefit unit holders

* This is a simplified example whereby the returns exclude fees and charges and assuming the Fund has no tracking error.

6) When will the proposed change of fund name and unit split take place?
Following Bursa Malaysia’s announcement that the new FTSE Bursa Malaysia KLCI would take effect on 6 July 2009, the proposed change of fund name and the new price from the unit split exercise would be on the same day i.e. 6 July 2009.