interim report - kenanga filekenanga islamic money market fund interim report for the financial...

KENANGA ISLAMIC MONEY MARKET FUND

INTERIM REPORT

For the Financial Period Ended 30 June 2013

i

KENANGA ISLAMIC MONEY MARKET FUND (KIMMF)

Report to Unit Holders for the 6-Month Financial Period Ended 30 June 2013

Contents Page

CORPORATE DIRECTORY ii

DIRECTORY OF MANAGER’S OFFICES iii

MANAGER’S REPORT

1.0 FUND INFORMATION 1

2.0 FUND REVIEW 2

3.0 MARKET REVIEW & OUTLOOK 4

4.0 PERFORMANCE DATA 5

5.0 PORTFOLIO COMPOSITION 7

TRUSTEE’S REPORT 8

SHARIAH ADVISER’S REPORT 9

STATEMENT BY THE MANAGER 10

STATEMENT OF COMPREHENSIVE INCOME 11

STATEMENT OF FINANCIAL POSITION 12

STATEMENT OF CHANGES IN EQUITY 13

STATEMENT OF CASH FLOwS 14

NOTES TO THE FINANCIAL STATEMENTS 15 - 35

ii

CORPORATE DIRECTORY

MANAGER: KENANGA INVESTORS BERHAD (Company No. 353563-P)

REGISTERED OFFICEKenanga Investors Berhad (KIB)8th Floor, Kenanga International, Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia.Tel: 03-2162 1490 Fax: 03-2161 4990

BUSINESS OFFICESuite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Tel: 03-2057 3688 / 03-2713 3188Fax: 03-2161 8807 / 03-2713 5868E-mail: [email protected] Website: www.KenangaInvestors.com.my

BOARD OF DIRECTORSDatuk Syed Ahmad Alwee Alsree (Chairman)Syed Zafilen Syed Alwee (Independent Director)YM Raja Dato’ Seri Abdul Aziz bin Raja Salim (Independent Director)Vivek Sharma (Independent Director)Bruce Kho Yaw HuatAbdul Razak bin AhmadPeter John Rayner

COMPANY SECRETARY: Norliza Abd Samad, (MAICSA 7011089)9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.

TRUSTEE: HSBC (MALAYSIA) TRUSTEE BERHAD (Company No. 1281-T)

REGISTERED AND BUSINESS OFFICE 13th Floor, Bangunan HSBC, South Tower, No. 2, Leboh Ampang, 50100 Kuala Lumpur, Malaysia. Tel: 03-2075 7800 Fax: 03-2026 1273

EXTERNAL FUND MANAGER: KENANGA ISLAMIC INVESTORS BERHAD (Company No. 451957-D)

REGISTERED OFFICE8th Floor, Kenanga International, Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia.Tel: 03-2162 1490 Fax: 03-2161 4990

BUSINESS OFFICESuite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Tel: 03-2057 3688 Fax: 03-2161 8805

AUDITOR: ERNST & YOUNG

Room 300-303, 3rd Floor, Wisma Bukit Mata Kuching, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak, Malaysia.

SHARIAH ADVISER: IBFIM (Company No. 763075-w)

3rd Floor, Menara Takaful Malaysia, Jalan Sultan Sulaiman, 50000 Kuala Lumpur, Malaysia.Tel: 03-2031 1010 Fax: 03-2078 5250 Website: www.ibfim.com

iii

DIRECTORY OF MANAGER’S OFFICES

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th Floor, Kenanga InternationalJalan Sultan Ismail,50250 Kuala Lumpur, MalaysiaTel: 03-2057 3688 / 03-2713 3188Fax: 03-2161 8807 / 03-2713 5868

Johor BahruLot 11.03, 11th Floor, Menara MSC Cyberport5 Jalan Bukit Meldrum80300 Johor Bahru, JohorTel: 07-223 7505/4798 Fax: 07-223 4802

Petaling JayaUnit B-6-2, Sunway Giza MallDataran Sunway, PJU 5/14Kota Damansara47810 Petaling Jaya, SelangorTel: 03-6148 1871, 6150 3983 Fax: 03-6148 1872

Kuching1st Floor, No 71, Lot 7Lot 10900, Jalan Tun Jugah93350 Kuching, SarawakTel: 082-572 228 Fax: 082-572 229

KlangNo. 12 Jalan Batai Laut 3, Taman Intan41300 Klang, Selangor Darul EhsanTel:03-3341 8818, 3348 7889 Fax:03-3341 8816

Kota KinabaluA-03-11, 3rd FloorBlock A Warisan SquareJalan Tun Fuad Stephens88000 Kota Kinabalu, SabahTel: 088-447 089/448 106 Fax: 088-447 039

PenangBlok A, Aras 3,Wisma PerkesoNo. 269, Jalan Burma10538 George Town, PenangTel: 04-226 4880 Fax: 04-226 5120

IpohNo. 5A, Persiaran Greentown 9Greentown Business Centre30450 Ipoh,Perak Darul RidzuanTel: 05-254 7573/7570 Fax: 05-254 7606

MelakaNo. 25-1 Jalan Kota Laksamana 2/17Taman Kota Laksamana Seksyen 275200 MelakaTel: 06-281 8913, 282 0518 Fax: 06-281 4286

SerembanSuite 08-3, Seremban City CentreJalan Pasar70000 SerembanTel: 06-761 5678 Fax: 06-761 2243

Agency OfficeMiri (Sarawak)c/o Lot 1084, 2nd Floor,Jalan Merpati98000 MiriSarawak, MalaysiaTel: 085-427 782

This page has been intentionally left blank

1

MANAGER’S REPORT

Dear Unit Holders,

We are pleased to present the Manager’s interim report and the financial statements of the KENANGA ISLAMIC MONEY MARKET FUND for the 6-month financial period ended 30 June 2013.

1.0 FUND INFORMATION

1.1 Fund Name

KENANGA ISLAMIC MONEY MARKET FUND (KIMMF or the Fund)

1.2 Fund Category / Type

Money Market (Islamic) / Income

1.3 Investment Objective

The Fund aims to provide investors with a regular income stream that comply with Shariah requirements whilst maintaining capital stability.

1.4 Investment Strategy

The Fund will invest primarily in short term government or government-backed sukuk, Islamic accepted bills, Islamic negotiable instruments, Islamic promissory notes, Islamic call deposits and other short-term corporate sukuk and Islamic money market instruments.

1.5 Asset Allocation

Up to 100% in Islamic money market instruments and Shariah-compliant government securities and sukuk.

1.6 Duration

The Fund was launched on 9 November 2007 and shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unit holders for it to continue.

1.7 Performance Benchmark

Maybank Overnight Repo Rate.

1.8 Distribution Policy

Subject to availability of income, the Fund will distribute income monthly.

2


2.0 FUND REVIEw

2.1 Fund performance vs benchmark performance

NAV per unit (RM) 1 Fund Return 2

(%)Benchmark Return 2

(%)30/6/2013 31/12/20122

0.5343 0.5343 1.20 0.90

1 Published NAV per unit based on last done price.2 Source:Lipper.Performancereturnsareadjustedforalldistributions(onareinvestedbasis)andunitsplits.

For the financial period under review the Fund registered a return of 1.20% compared to the benchmark (Maybank’s Repo rate) of 0.90% for the same period. The outperformance is mainly due to the continued active management of the maturity structure of the portfolio, which enabled the Fund to enhance returns while maintaining capital stability

2.2 Has the Fund achieved its objective?

The Fund has generated a return of 8.14%* since inception and has met its objective in maintaining capital stability. With regard to regular income, the Fund has not distributed any income since inception.

* Source: Lipper.

2.3 Strategies & policies employed

For the period under review, the Fund invested in short-term Islamic money market placements and Islamic deposits with Islamic Financial Institutions to provide a reasonable level of income while maintaining liquidity to its investors. The strategy adopted by the Fund for the period is consistent with the investment strategy stated in the prospectus.

2.4 State of Affairs of the Fund

There were no other significant changes to the state of affairs of the Fund and no circumstances that materially affect the interests of Unit Holders up to the date of this Manager’s report.

Note: With effect from 30th June 2013, the Fund’s income distribution policy has been changed to “Subject to the availability of income, the Fund will distribute income monthly.”

3


2.5 Unit Holders’ Profile

As at 30 June 2013, the number of units of the Fund in circulation stood at 45,087,620 (includes Manager Stock) units out of an approved Fund size of 200 million units.

Breakdown of Unit Holdings by Size

Unit Holders Unit Holdings

Size of holdings Number % Units %

5,000 and below 8 22.22 22,399.27 0.05

5,001 - 10,000 7 19.44 58,466.58 0.13

10,001-50,000 13 36.11 257,535.68 0.57

50,001-500,000 6 16.67 1,043,559.54 2.31

500,001 and above 2 5.56 43,705,659.06 96.93

Total 36 100.00 45,087,620.13 100.00

Manager and Related Party Holdings

Breakdown of holdings by the Manager and related parties as at 30 June 2013 is as follows:-

No. of Units Held

Manager# -

Director of the Manager -

Other related parties -

Total -

# excludes normal & EPF bookings

2.6 Rebates & Soft Commission

The Manager from time to time may receive rebates which are then paid to the Fund. During the financial period under review, the Manager did not receive rebates or soft commission from bankers, or any other source pursuant to transactions conducted by the Fund.

4


3.0 MARKET REVIEw & OUTLOOK

3.1 Market Review

There were little changes in the Islamic money market rates during the financial year under review. Bank Negara Malaysia (BNM) retained the Overnight Policy Rate (OPR) at 3%. The central bank views that the growth remains at a slow pace, while highlighting the weak growth in advanced economies. Regionally, emerging economies that are supported by domestic demand have begun to feel the impact of protracted external headwinds. Heightened volatility in financial markets has led markets to reassess the prevailing accommodative global monetary conditions.

The continued expansion of local consumption and investment, supported by ongoing public infrastructure and ETP projects had maintained the economic momentum. Inflation has turned upside since January this year and accelerated to 1.8% year-on-year in June and May, up from 1.7% in April. However, given the absence of announcement to rationalize subsidies, the Consumer Price Index (CPI) is likely to stay range-bound in the coming months before easing slightly in late 2nd half of 2013.

During the period under review, the Fund invested wholly in Islamic money market placements and Islamic deposits to provide a reasonable level of income while maintaining liquidity to its investors.

3.2 Market Outlook

The Malaysian private consumption is expected to remain steady underpinned by income growth and stable labour market conditions. Capital spending in the domestic-oriented industries and the ongoing implementation of infrastructure projects will also support investment activity and economic momentum. The headline inflation is expected to remain flattish going into second half of 2013.

BNM still considers the current stance of monetary policy to be appropriate given the outlook for inflation and growth and will continue to carefully assess the global economic and financial developments and their implications on the overall outlook for inflation and growth of the Malaysian economy.

With no strong pressure points for domestic growth, the market expects BNM to keep its policy rate at 3% until end-2013. As alluded by the BNM governor, the central bank is committed to maintaining orderly market conditions and believes that Malaysia is in a strong position to weather volatility in currency and stock markets.

5


4.0 PERFORMANCE DATA

4.1 Performance Chart

PERFORMANCE CHART SINCE LAUNCH (09/11/2007 – 30/6/2013)

KENANGA ISLAMIC MONEY MARKET FUND vs. BENCHMARK

% Growth, Cum, TR, ExD, MYR, Launch to 30/06/2013

-1.00

Kenanga Islamic Money Market* : 8.14 Maybank Overnight Repo Rate : 9.72

9.72

8.14

30/0

6/20

08

30/0

3/20

09

30/1

2/20

08

30/0

9/20

08

30/0

6/20

09

30/1

2/20

09

30/0

9/20

09

30/0

3/20

10

30/0

6/20

10

30/1

2/20

10

30/0

9/20

10

30/0

3/20

11

30/0

6/20

11

30/1

2/20

11

30/0

9/20

11

30/0

3/20

12

30/0

6/20

12

30/0

3/20

13

30/0

6/20

13

30/1

2/20

12

30/0

9/20

12

31/0

3/20

08

31/1

2/20

0709

/11/

2007

0.001.002.003.004.005.006.007.008.009.00

10.00

*Containsestimateddata.Source: Lipper

4.2 Average Total Returns

1 year 3 years 5 years

30/6/12 – 30/6/13 30/6/10 – 30/6/13 30/6/08 – 30/6/13

KIMMF (%) 2.23% 1.70% 1.32%

Benchmark (%) 1.82% 1.73% 1.63%

Source: Lipper

4.3 Annual Total Returns

Period Under Review

31/12/12 – 30/6/13

201231/12/11 – 31/12/12

201131/12/11 – 31/12/12

201031/12/11 – 31/12/12

200931/12/11 – 31/12/12

200831/12/11 – 31/12/12

Since inception

09/11/07 – 30/6/13

KIMMF (%) 1.20% 1.79% 1.47% 0.82% 0.53% 1.92% 8.14%

Benchmark (%) 0.90% 1.80% 1.65% 1.24% 1.13% 2.31% 9.72%

Source: Lipper

Investors are reminded that past performance is not necessarily indicative of future performance and that unit prices and investment returns may fluctuate.

6


4.4 Other Performance Data

Performance details of the Fund as at 30 June 2013 and the two previous financial years are as follows:

6-months ended 30/6/2013




Net Asset Value (RM’000 ) 1 24,380 24,212 3,491 3,412

Net Asset Value Per Unit (RM)

0.5407 0.5344 0.5249 0.5173

Units In Circulation (‘000 units)

45,087 45,309 6,651 6,596

Highest Net Asset Value Per Unit (RM)

0.5407 0.5343 0.5253 0.5173

Lowest Net Asset Value Per Unit (RM)

0.5343 0.5249 0.5173 0.5131

Total Return (%) 2 1.20 1.79 1.47 0.82

- Capital Growth (%)2 1.20 1.79 1.47 0.82

- Gross Income Distribution (%)

- - - -

Gross Distribution Per Unit (RM)

- - - -

Net Distribution Per Unit (RM)

- - - -

Unit Split (Ratio) - - - -

Management Expenses Ratio (%)3

0.33 0.94 1.52 1.54

Portfolio Turnover (times) 4 - - - -

1 NAV computed based on last done price.2 Source:Lipper.TotalreturnistheannualisedreturnoftheFundfortherespectivefinancialperiod/yearscomputed

basedonthenetassetvalueperunitandnetofallfees.3 ManagementExpenseRatio(MER)iscomputedbasedonthetotalfeesandexpensesincurredbytheFunddividedby

theaveragefundsizecalculatedonadailybasis.MERisloweragainstpreviousfinancialyearsasthecomputationsarefor6monthsonly.

4 PortfolioTurnoverRatio(PTR) iscomputedbasedontheaverageofthetotalacquisitionsandtotaldisposalsofinvestmentsecuritiesoftheFunddividedbytheaveragefundsizecalculatedonadailybasis.

4.5 Distribution / Unit Split for the Period under Review

No distribution / unit split was made during the period under review.

Investors are reminded that past performance is not necessarily indicative of future performance and that unit prices and investment returns may fluctuate.

7


5.0 PORTFOLIO COMPOSITION

5.1 Portfolio Composition

From 31 December 2012 to 30 June 2013, the Fund has been fully invested in short term Islamic deposits.

The following pie-chart shows the asset allocation of the Fund as at 30 June 2013:


Asset Allocation as at 30 June 2013

Liquidity100.00%

5.2 Portfolio Composition – Comparative Table

Details of portfolio composition of the Fund as at 30 June 2013 and the two previous financial years are as follows:

Sectors30/6/13

% of NAV31/12/12 % of NAV

31/12/11 % of NAV

31/12/10 % of NAV

Short-term Islamic Deposits 100.00 100.00 99.87 97.82

Cash at Banks / Receivables - -0.13 0.13 2.18

Total 100.00 100.00 100.00 100.00

8


TRUSTEE’S REPORT

To the Unit Holders of Kenanga Islamic Money Market Fund

We have acted as Trustee of Kenanga Islamic Money Market Fund (“the Fund”) for the financial period ended 30 June 2013. To the best of our knowledge, Kenanga Investors Berhad (“the Manager”), has operated and managed the Fund in accordance with the following:

(a) limitations imposed on the investment powers of the Manager and the Trustee under the Deed, the Securities Commission’s Guidelines on Unit Trust Funds in Malaysia, the Capital Markets and Services Act, 2007 and other applicable laws;

(b) valuation/pricing is carried out in accordance with the Deed and any regulatory requirements; and

(c) creation and cancellation of units are carried out in accordance with the Deed and any regulatory requirements.

For HSBC (Malaysia) Trustee Berhad

Tan Bee NieHead, Trustee Operations

Kuala LumpurDate: 28 August 2013

9


SHARIAH ADVISER’S REPORT


We have acted as the Shariah Adviser of Kenanga Islamic Money Market Fund. Our responsibility is to ensure that the procedures and processes employed by Kenanga Investors Berhad and that the provisions of the Deed dated 29 August 2007, followed by the first supplementary Deed of Trust dated 29 November 2007, master supplementary Deed of Trust dated 1 June 2009 and second master supplementary Deed of Trust dated 13 October 2010 are in accordance with Shariah principles.

In our opinion, Kenanga Investors Berhad has managed and administered Kenanga Islamic Money Market Fund in accordance with Shariah principles and complied with applicable guidelines, rulings and decisions issued by the Securities Commission pertaining to Shariah matters for the period ended 30 June 2013.

In addition, we also confirm that the investment portfolio of Kenanga Islamic Money Market Fund comprises securities which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission. As for the securities which are not certified by the Shariah Advisory Council of the Securities Commission, we have reviewed the said securities and opine that these securities are designated as Shariah-compliant.

For IBFIM

MOHD NASIR ISMAILShariah Advisor/Designated Person Responsible for Shariah Advisory

Kuala Lumpur, Malaysia Date: 28 August 2013

10


STATEMENT BY THE MANAGER


We, Abdul Razak Bin Ahmad and Bruce Kho Yaw Huat, being two of the directors of Kenanga Investors Berhad, the Manager, do hereby state that in the opinion of the Manager, the accompanying financial statements set out on pages 11 to 35 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and Securities Commission’s Guidelines on Unit Trust Funds in Malaysia so as to give a true and fair view of the financial position of Kenanga Islamic Money Market Fund as at 30 June 2013 and of its financial performance and cash flows for the period then ended.

For and on behalf of the Manager,Kenanga Investors Berhad

Bruce Kho Yaw Huat Abdul Razak Bin AhmadDirector Director

Kuala Lumpur, MalaysiaDate: 28 August 2013

11


Statement of Comprehensive Income for the financial period ended 30 June 2013 (Unaudited)

Note1.1.2013 to

30.6.2013 1.1.2012 to

30.6.2012

RM RM

INCOME

Profit from Islamic deposits 372,270 52,466

EXPENSES

Manager’s fee 5 60,365 8,576

Trustee’s fee 6 9,658 8,286

Auditors’ remuneration 7,112 5,984

Tax agent’s fee 1,471 1,247

Administrative expenses 2,477 1,738

81,083 25,831

Net income before tax 291,187 26,635

Income tax expense 7 - 55

Net income after tax 291,187 26,580

Total comprehensive income for the period 291,187 26,580

Net income after tax is made up as follows:

Net realised income 291,187 26,580

Net unrealised gain/(loss) - -

291,187 26,580

The accompanying notes are an integral part of the financial statements.

12


Statement of Financial Position for the financial period ended 30 June 2013 (Unaudited)

Note

As at 30.6.2013

As at 30.6.2012

RM RM

ASSETS

Cash at bank 16,787 10,325

Islamic deposits with licensed financial institutions 8 24,333,387 3,401,621

Profit receivable from Islamic money market deposits 53,565 9,049

TOTAL ASSETS 24,403,739 3,420,995

LIABILITIES

Amount due to Manager 10 9,365 1,397

Other payables and accruals 13,827 8,974

Tax payable 55 55

TOTAL LIABILITIES 23,247 10,426

UNITHOLDERS’ EQUITY

Unitholders’ capital 23,737,846 3,224,533

Retained earnings 642,646 186,036

TOTAL EQUITY 11 24,380,492 3,410,569

TOTAL EQUITY AND LIABILITIES 24,403,739 3,420,995

UNITS IN CIRCULATION 12 45,087,620 6,447,551

NET ASSET VALUE (“NAV”) PER UNIT (RM) 13 0.5407 0.5290


13


Statement of Changes in Equity for the financial period ended 30 June 2013 (Unaudited)

Unitholders’capital

(Note 11)

Retainedearnings

(Note 11) Total

equity

RM RM RM

At 1 January 2012 3,331,919 159,456 3,491,375

Total comprehensive income for the period - 26,580 26,580

Creation of units 412,949 - 412,949

Cancellation of units (514,916) - (514,916)

Distribution equalisation (5,419) - (5,419)

At 30 June 2012 3,224,533 186,036 3,410,569

At 1 January 2013 23,860,640 351,459 24,212,099

Total comprehensive income for the period - 291,187 291,187

Creation of units 994,890 - 994,890

Cancellation of units (1,104,895) - (1,104,895)

Distribution equalisation (12,789) - (12,789)

At 30 June 2013 23,737,846 642,646 24,380,492


14


Statement of Cash Flowsfor the financial period ended 30 June 2013 (Unaudited)

1.1.2013 to 1.1.2012 to

30.6.2013 30.6.2012

RM RM

OPERATING AND INVESTING ACTIVITIES

Profit from Islamic deposits received 355,757 58,264

Manager’s fee paid (61,210) (8,662)

Trustee’s fee paid (10,334) (22,298)

Auditors’ remuneration paid (14,500) (7,000)

Payment for other fees and expenses (2,231) (4,300)

Net cash flows generated from operating and investing activities 267,482 16,004

FINANCING ACTIVITIES

Cash received from units created 1,068,300 434,888

Cash paid on units cancelled (1,191,094) (542,273)

Net cash flows used in financing activities (122,794) (107,385)

NET DECREASE IN CASH AND CASH EQUIVALENTS 144,688 (91,381)

CASH AND CASH EQUIVALENTS AT 1 JANUARY 24,205,486 3,503,327

CASH AND CASH EQUIVALENTS AT 30 JUNE 24,350,174 3,411,946

Cash and cash equivalents comprise:

Cash at bank 16,787 10,325

Islamic deposits with licensed financial institutions 24,333,387 3,401,621

24,350,174 3,411,946


15


Notes to the Financial Statements for the financial period ended 30 June 2013

1. The Fund, the Manager and their principal activities

Kenanga Islamic Money Market Fund (the “Fund”) was constituted pursuant to the execution of a Deed of Trust dated 29 August 2007, followed by the first supplementary Deed of Trust dated 29 November 2007, master supplementary Deed of Trust dated 1 June 2009 and second master supplementary Deed of Trust dated 13 October 2010 made between the Manager, Kenanga Investors Berhad, the Trustee, HSBC (Malaysia) Trustee Berhad and the registered Unitholders of the Fund.

The Fund’s registered office is at 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The objective of the Fund is to provide Unitholders with a regular income stream that complies with Shariah requirements whilst maintaining capital stability.

The principal activity of the Fund is to invest in “Permitted Investments” as defined under Division 7.1 of the Deed of Trust, which include Islamic debentures, Islamic money market instruments, sukuk and any other Shariah-compliant investments. The Fund commenced operations on 9 November 2007 and will continue its operations until terminated by the Trustee as provided under Division 12.3 of the Deed of Trust.

The Manager, a company incorporated and domiciled in Malaysia, is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, a company incorporated and domiciled in Malaysia. The principal activities of the Manager are the promotion and management of unit trust funds and management of investment funds.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Fund have been prepared on in accordance with the Malaysian Financial Reporting Standards (“MFRS”).

The financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by International Accounting Standards Board.

The financial statements have been prepared on the historical cost basis, except for financial assets and financial liabilities held at fair value through profit or loss, that have been measured at fair value.

The financial statements are presented in Ringgit Malaysia (“RM”), being the Fund’s functional currency.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial period except as follows:

On 1 January 2013, the Fund adopted the following new and amended MFRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2013.

16



2. Summary of significant accounting policies (contd.)

2.2 Changes in accounting policies (contd.)

Description

Effective for annual periods beginning

on or after

MFRS 10 Consolidated Financial Statements 1 January 2013

MFRS 11 Joint Arrangements 1 January 2013

MFRS 12 Disclosure of Interests in Other Entities 1 January 2013

MFRS 13 Fair Value Measurement 1 January 2013

MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2012) 1 January 2013

MFRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2012)

1 January 2013

MFRS 128 Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2012)

1 January 2013

Amendment to MFRS 7 Disclosures: Offsetting Financial ssets and Financial Liabilities

1 January 2013

Amendment to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards – Government Loans

1 January 2013

IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

Annual Improvements 2009-2012 Cycle 1 January 2013

Amendments to MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosed of Interests in other Entities

1 January 2013

MFRS 12 Disclosed of Interests in other Entities 1 January 2013

MFRS 3 Business combination (IFRS 3 Business Combinations issued by IASB in March 2004)

1 January 2013

MFRS 127 Consolidation and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003)

1 January 2013

Adoption of the above Standards and Interpretations did not have any significant effect on the financial performance and position of the Fund except for those discussed below:

MFRS 9 Financial Instruments: Classification and Measurement

MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Fund’s financial assets. The Fund will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

17




2.3 Financial assets

Financial assets are recognised in the statement of financial position when, and only when, the Fund become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Fund determines the classification of its financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss and receivables.

(i) Financial assets at FVTPL

Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading include Islamic money market instruments, sukuk and any other Shariah-compliant investments acquired principally for the purpose of selling in the near term. All transactions costs for such instruments upon initial recognition are recognised directly in profit or loss.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Changes in the fair value of those financial instruments are recorded in ‘Net gain or loss on financial assets at fair value through profit or loss’. Profit from Islamic deposits and dividend revenue elements of such instruments are recorded separately in ‘Profit from Islamic deposits’ and ‘Gross dividend income’, respectively. Exchange differences on financial assets at FVTPL are not recognised separately in profit or loss but are included in net gains or net losses on changes in fair value of financial assets at FVTPL.

(ii) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. The Fund includes Islamic deposits with licensed financial institutions and short term receivables in this classification.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective profit method less any allowance for impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

18




23 Financial assets (contd.)

(ii) Loans and receivables (contd.)

The effective profit method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the profit income or profit expense over the relevant period. The effective profit rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective profit rate, the Fund estimates cash flows considering all contractual terms of the financial instruments, but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective profit rate, transaction costs and all other premiums or discounts.

There are no loans receivables as at the reporting date (30.6.2012: Nil).

A financial asset is derecognised where the asset is disposed and the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Fund commits to purchase or sell the asset.

2.4 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial liabilities are classified as other financial liabilities.

The Fund’s financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective profit method as described in Note 2.2 (ii).

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

19




2.5 Determination of fair value

The fair value for financial instruments traded in active markets at the reporting date is based on their quoted price or binding dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

Where the Fund has assets and liabilities with offsetting market risks, it uses mid-market prices as a basis for establishing fair values for the offsetting risk positions and applies the bid or ask price to the net open position as appropriate.

For all other financial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include: using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible.

2.6 Impairment of financial assets

The Fund assesses at each reporting date whether a financial asset or group of financial assets classified as loans and receivables is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is an objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor, or a group of debtors, is experiencing significant financial difficulty, default or delinquency in profit or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and, where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) discounted using the asset’s original effective profit rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss as ’Credit loss expense’.

Impaired debts, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Fund. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a previous write-off is later recovered, the recovery is credited to the ’Credit loss expense’.

Profit income on impaired financial assets is recognised using the rate of profit used to discount the future cash flows for the purpose of measuring the impairment loss.

20




2.7 Net gain or loss on financial assets and liabilities at FVTPL

This item includes changes in the fair value of financial assets and liabilities held for trading or designated upon initial recognition as ‘at fair value through profit or loss’ and excludes profit and dividend income and expenses.

Unrealised gains and losses comprise changes in the fair value of financial instruments for the period and from reversal of prior period’s unrealised gains and losses for financial instruments which were realised (i.e. sold, redeemed or matured) in the reporting period.

Realised gains and losses on disposals of financial instruments classified as part of ‘at FVTPL’ are calculated using weighted average method. They represent the difference between an instrument’s initial carrying amount and disposal amount, or cash payments or receipts made of Shariah-compliant derivative contracts (excluding payments or receipts on collateral margin accounts for such instruments).

2.8 Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.9 Functional and presentation currency

The Fund’s functional currency is RM, which is the currency of the primary economic environment in which it operates. The Fund’s performance is evaluated and its liquidity is managed in RM. Therefore, the RM is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The fund’s presentation currency is also the RM.

2.10 Unitholders’ capital

The Unitholders’ contributions to the Fund meet the definition of puttable instruments classified as Shariah-compliant equity instruments.

Distribution equalisation represents the average distributable amount included in the creation and cancellation prices of units. This amount is either refunded to Unitholders by way of distribution and/or adjusted accordingly when units are cancelled.

2.11 Distribution

Distributions are at the discretion of the Fund. A distribution to the Fund’s Unitholders is accounted for as a deduction from realised reserves except where the distribution is sourced out of distribution equalisation which is accounted for as a deduction from Unitholders’ capital. A proposed distribution is recognised as a liability in the period in which it is approved by the Manager. No income distribution was declared by the Fund for the financial period ended 30 June 2013.

21




2.12 Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and Islamic deposits with licensed financial institutions which are subject to an insignificant risk of changes in value, with original maturities of three months or less.

Short-term investments that are not held for the purpose of meeting short-term cash commitments and restricted margin accounts are not considered as ‘cash and cash equivalents’.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

2.13 Income Recognition

Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable.

Profit from Islamic deposits, which includes the accretion of discount and amortisation of premium on sukuk, is recognised using the effective profit method.

2.14 Fees

Manager’s fee and Trustee’s fee are recognised on an accrual basis.

2.15 Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

No deferred tax is recognised as there are no material temporary differences.

2.16 Segment reporting

For management purposes, the Fund is managed by single portfolios, Islamic money market instruments. The Investment Committee assumes the role of chief operating decision maker, for performance assessment purposes and to make decisions about resources allocated to each investment segment.

22



3. Significant accounting judgements, estimates and assumptions

The preparation of the Fund’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgements

In the process of applying the Fund’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Going Concern

The Fund’s management has made an assessment of the Fund’s ability to continue as a going concern and is satisfied that the Fund has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Fund’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are discussed below. The Fund based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Fund. Such changes are reflected in the assumptions when they occur.

4. Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Fund’s financial statements are listed below. The Fund intends to adopt applicable standards when they become effective.

Description

Effective for annual periods beginning

on or after

Amendment to MFRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014

MFRS 9 Financial instruments (IFRS 9 issued by IASB in November 2009) 1 January 2015

MFRS 9 Financial instruments (IFRS 9 issued by IASB in October 2010) 1 January 2015

23



5. Manager’s fee

The Manager is currently charging Manager’s fee of 0.50% (30.6.2012: 0.50%) per annum of the NAV of the Fund. This is calculated on a daily basis by dividing the NAV of the Fund before deducting the Manager’s fee and Trustee’s fee for the particular day by the number of days in the period and multiplying the total with the rate of the annual fee disclosed in the current prospectus of the Fund. However, under Division 13.1.2 of the Deed of Trust, the Manager is entitled to a fee not exceeding 1.00% (30.6.2012: 1.00%) per annum of the NAV of the Fund.

6. Trustee’s fee

The Trustee’s fee is computed at 0.08% (30.6.2012: 0.08%) per annum of the NAV of the Fund. This is calculated on a daily basis by dividing the NAV of the Fund before deducting the Manager’s fee and Trustee’s fee for the particular day by the number of days in the period and multiplying the total with the rate of the annual fee disclosed in the current prospectus of the Fund. However, Division 13.1.2 of the Deed of Trust provides that the Trustee is entitled to a fee not exceeding 1.00% (30.6.2012: 1.00%) of the NAV of the Fund, subject to a minimum of RM18,000 (30.6.2012: RM18,000) per annum.

7. Income tax expense

1.1.2013 to 30.6.2013

1.1.2012 to 30.6.2012

RM RM

Tax expense for the period - 55

Income tax is calculated at the Malaysian statutory tax rate of 25% (30.6.2012: 25%) of the estimated assessable income for the financial period.

The Malaysian tax charge for the financial period is in relation to the taxable income earned by the Fund after deducting tax allowable expenses. In accordance with Schedule 6 of the Income Tax Act 1967, profit income earned by the Fund is exempted from tax.

A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

1.1.2013 to 30.6.2013

1.1.2012 to 30.6.2012

RM RM

Net income before tax 291,187 26,635

Tax at Malaysian statutory rate of 25% (30.6.2012: 25%) 72,796 6,659 Effect of income not subject to tax (93,067) (12,694) Restriction on tax deductible expenses for unit trust funds 20,271 6,090 Tax expense for the period - 55

24



8. Islamic deposits with licensed financial institutions

As at30.6.2013

As at 30.6.2012

RM RM

These are short-term placements with:

Investment banks 1,353,000 580,408

Islamic banks 22,980,387 2,821,213

24,333,387 3,401,621

The weighted average rate of return of the Fund during the period is 3.09% (30.6.2012: 1.54%) per annum and the maturity of Islamic deposits range from 1 to 153 days (30.6.2012: 1 to 184 days).

9. Shariah information of the Fund

The Shariah Adviser confirmed that the investments portfolio of the Fund is Shariah-compliant, which comprises cash placements and liquid assets in local market, which are placed in Shariah-compliant investments and/or instruments.

10. Amount due to Manager

As at30.6.2013

As at 30.6.2012

RM RM

Management fee 9,365 1,397

11. Total equity

NoteAs at

30.6.2013As at

30.6.2012

RM RM

Unitholders’ capital 12 23,737,846 3,224,533

Retained earnings

- Realised 642,646 186,036

24,380,492 3,410,569

25



12. Unitholders’ capital and units in circulation

2013 2012

No. of units RM No. of units RM

As at 1 January 45,308,993 23,860,640 6,651,469 3,331,919

Creation of units 1,987,948 994,890 825,714 412,949

47,296,941 24,855,530 7,477,183 3,744,868

Cancellation of units (2,209,321) (1,104,895) (1,029,632) (514,916)

Distribution equalisation - (12,789) - (5,419)

As at 30 June 45,087,620 23,737,846 6,447,551 3,224,533

The approved size of the Fund is 200,000,000 units. As at 30 June 2013, the number of units not in issue are 154,912,380 (30.6.2012: 193,552,449).

13. NAV per unit

The NAV per unit has been calculated based on the Fund’s NAV of RM24,380,492 (30.6.2012: RM3,410,569) and on the number of units in circulation of 45,087,620 (30.6.2012: 6,447,551) at the date of the Statement of Financial Position.

14. Units held by related parties

There were no units held by related parties as at 30 June 2013 (30 June 2012: Nil).

15. Transactions with financial institutions

Value ofTrade

As a % ofTotal Trade

BrokerageFees

As a % of TotalBrokerage Fees

RM % RM %

RHB Islamic Bank Bhd 30,486,000 51.24 - -

CIMB Islamic Bank Bhd 17,011,000 28.59 - -

Public Islamic Bank Bhd 5,219,000 8.77 - -

AmIslamic Bank Bhd 4,131,000 6.94 - -

Malayan Banking Berhad 1,654,000 2.78 - -

Maybank Islamic Bank Berhad 1,000,000 1.68 - -

59,501,000 100.00 - --

26



16. Management expense ratio (“MER”)

The MER of the Fund is the ratio of the sum of fees and expenses incurred by the Fund to the average NAV of the Fund calculated on a daily basis. The fees and expenses include Manager’s fee, Trustee’s fee, auditors’ remuneration, tax agent’s fee and other administrative expenses. For the financial period ended 30 June 2013, the MER of the Fund stood at 0.33% (30.06.2012: 0.75%) calculated as follows:

RM

A = Manager’s fee 60,365

B = Trustee’s fee 9,658

C = Auditors’ remuneration 7,112

D = Tax agent’s fee 1,471

E = Administrative expenses 2,477

F = Average NAV of the Fund 24,345,460

MER = (A + B + C + D + E) x 100

F

= RM81,083 x 100

RM 24,345,460 x 100

= 0.33%

The average NAV of the Fund for the financial period ended 30 June 2013 was RM 24,345,460 (30.6.2012: RM3,446,557).

17. Segment information

The Manager and Investment Committee of the Fund are responsible for allocating resources available to the Fund in accordance with the overall investment strategies as set out in the Investment Guidelines of the Fund.

For management purposes, the Fund is organised into one main segment which invests in Islamic money market instruments. The financial results from this segment are equivalent to the financial statements of the Fund as a whole.

27



18. Financial instruments

(a) Classification of financial instruments

The following table analyses the financial assets and liabilities of the Fund in the statement of financial position as at 30 June 2013 and 2012 by the class of financial instrument to which they are assigned, and therefore by the measurement basis.

As at 30 June 2013

Financialassets at

FVTPL Receivables

Financialliabilities at

amortisedcost Total

RM RM RM RM

Assets

Islamic deposits with licensed financial institutions - 24,333,387 - 24,333,387

Profit receivable from Islamic money market deposits - 53,565 - 53,565

Cash at bank - 16,787 - 16,787

Total financial assets - 24,403,739 - 24,403,739

Liabilities

Other payables and accruals - - 13,827 13,827

Amount due to Manager - - 9,365 9,365

Tax payable - - - -

Total financial liabilities - - 23,192 23,192

Income, expense, gains and losses

Profit from Islamic deposits - 372,270 - -

28



18. Financial instruments (contd.)

(a) Classification of financial instruments (contd.)

As at 30 June 2012

Financialassets at

FVTPL Receivables

Financialliabilities at

amortisedcost Total

RM RM RM RM

Assets

Islamic deposits with licensed financial institutions - 3,401,621 - 3,401,621

Profit receivable from Islamic money market deposits - 9,049 - 9,049

Cash at bank - 10,325 - 10,325

Total financial assets - 3,420,995 - 3,420,995

Liabilities

Other payables and accruals - - 8,974 8,974

Amount due to Manager - - 1,397 1,397

Tax payable - - 55 55

Total financial liabilities - - 10,426 10,426

Income, expense, gains and losses

Profit from Islamic deposits - 52,466 - -

(b) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

• Islamic deposits with licensed financial institutions• Dividends receivable• Profit receivable from Islamic money market deposits • Other payables and accruals• Amounts due from/to Manager• Amounts due from/to stockbrokers• Distribution payable

29



18. Financial instruments (contd.)

(b) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value (contd.)

There were no financial instruments which are not carried at fair values and whose carrying amounts are not reasonable approximation of their respective fair values.

The methods and basis for the determination of fair value of the Fund’s financial instruments in the current financial period were consistent with that of the previous financial period.

19. Financial risk and management objectives and policies

(a) Introduction

The Fund maintains investment portfolios in a variety of Islamic deposits with licensed financial institutions as dictated by its Trust Deed and investment management strategy.

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk), credit risk and liquidity risk. Whilst these are the most important types of financial risks inherent in each type of financial instruments, the Manager would like to highlight that this list does not purport to constitute an exhaustive list of all the risks inherent in an investment in the Fund.

The Fund’s objective in managing risk is the creation and protection of Unitholders’ value. Risk is inherent in the Fund’s activities, but it is managed through a process of ongoing identification, measurement and monitoring of risks. Financial risk management is also carried out through sound internal control systems and adherence to the investment restrictions as stipulated in the Trust Deed, the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Markets and Services Act, 2007.

(b) Risk management structure

The Fund’s Manager is responsible for identifying and controlling risks. The Board of Directors of the Manager is ultimately responsible for the overall risk management approach within the Fund.

(c) Risk measurement and reporting system

Monitoring and controlling risks is primarily set up to be performed based on limits established by the Manager. These limits reflect the investment strategy and market environment of the Fund as well as the level of the risk that Fund is willing to accept. In addition, the Fund monitors and measures the overall risk bearing capacity in relation to the aggregate risk exposure across all risks type and activities.

30



19. Financial risk and management objectives and policies (contd.)

(d) Risk mitigation

The Fund has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy. The Manager also has a Compliance Department to ensure that the Fund complies with the various regulations and guidelines as stipulated in its Trust Deed, the Securities Commission’s Guidelines on Unit Trust Funds and the Capital Markets and Services Act, 2007.

It is, and has been throughout the current and previous financial period, the Fund’s policy that no derivatives shall be undertaken for either investment risk management purposes.

(e) Market risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates. The maximum risk resulting from financial instruments equals their fair value.

(i) Interest rate risk

Interest rate risk refers to the exposure of the Fund’s assets to movements in interest rates. In this regard, the fund’s exposure to interest rate risk is mainly confined to Islamic deposits placement with licensed financial institutions.

Interest rate is a general economic indicator that will have an impact on the management of funds regardless of whether it is a Shariah-compliant fund or otherwise. It does not in any way suggest that this fund will invest in conventional financial instruments. All the investments carried out for this fund are accordance with requirements of Shariah.

Interest rate risk sensitivity

The following table demonstrates the sensitivity of the Fund’s profit/(loss) for the period and other comprehensive income to a reasonably possible change in interest rates, with all other variables held constant.

The sensitivity is the effect of the assumed changes in interest rates on:

• The net profit income for the period, based on the floating rate financial assets held at the end of the reporting period; and

• Changes in fair value of Shariah-compliant investments for the period, based on revaluing fixed rate financial assets at the end of the reporting period.

31




(e) Market risk (contd.)

(i) Interest rate risk (contd.)

Interest rate risk sensitivity (contd.)

Changesin basispoints*

Sensitivity ofprofit income

and profitincrease/

(decrease)

Sensitivityof other

comprehensive income

(decrease)/increase

Sensitivity of changes in fair value Shariah-

compliantincrease/

(decrease)

RM RM RM

As at 30 June 2013 +25/-25 60,833/(60,833) - 60,833/(60,833)

As at 30 June 2012 +25/-25 8,504/(8,504) - 8,504/(8,504)

* The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

Interest rate risk exposure

The following table analyses the Fund’s interest rate risk exposure. The Fund’s assets and liabilities are included at fair value and categorised by the earlier of contractual re-pricing or maturity dates.

0-3

months

3 months-

5 years5-10

years

Non-exposure tointerest rate

movement Total

Effective rate

of return*

RM RM RM RM RM %

As at 30 June 2013

Assets:

Islamic deposits with licensed financial institutions 24,333,387 - - - 24,333,387 2.85 - 3.30

Other assets - - - 70,352 70,352

Total assets 24,333,387 - - 70,352 24,403,739

Liabilities:

Other liabilities - - - 23,247 23,247

Total liabilities - - - 23,247 23,247

Total interest rate sensitivity gap 24,333,387 - - 47,160 24,380,547

32




(e) Market risk (contd.)

(i) Interest rate risk (contd.)

0-3

months

3 months-

5 years5-10

years

Non-exposure

to interest rate

movement Total

Effective

rate of return*

RM RM RM RM %

As at 30 June 2012

Assets:

Islamic deposits with licensed financial institutions 3,401,621 - - - 3,401,621 2.85 - 3.25

Other assets - - - 19,374 19,374

Total assets 3,401,621 - - 19,374 3,420,995

Liabilities:

Other liabilities - - - 10,426 10,426

Total liabilities - - - 10,426 10,426

Total interest rate sensitivity gap 3,401,621 - - 8,948 3,410,569

* Computed based on Shariah-based deposits only

(f) Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Fund by failing to discharge an obligation. The Fund is exposed to the risk of credit-related losses that can occur as a result of a counterparty or issuer being unable or unwilling to honour its contractual obligations to make timely payments of profit, principal and proceeds from realisation of Shariah-compliant investments. These credit exposures exist within financing relationships, Shariah-compliant derivatives and other transactions.

The Manager manages the Fund’s credit risk by setting internal counterparty limits and undertaking internal credit evaluation to minimise such risk. It is the Fund’s policy to enter into financial instruments with reputable counter parties.

33




(g) Liquidity risk

Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or redeem its units earlier than expected. The Fund is exposed to cash redemptions of its units on a regular basis. Units sold to Unitholders by the Manager are redeemable at the Unitholder’s option based on the Fund’s NAV per unit at the time of redemption calculated in accordance with the Fund’s Trust Deed.

The Manager’s policy is to always maintain a prudent and sufficient level of Islamic liquid assets so as to meet normal operating requirements and expected redemption requests by Unitholders. Islamic liquid assets comprise cash, Islamic deposits with licensed financial institutions and other instruments which are capable of being converted into cash within 7 days.

The following table summarises the maturity profile of the Fund’s units in issue (classified as equity instruments) and financial liabilities. Balances due within six months equal their carrying amounts, as the impact of discounting is insignificant. The table also analyses the maturity profile of the Fund’s financial assets (undiscounted where appropriate) and equity in order to provide a complete view of the Fund’s contractual commitments and liquidity.

Less than 1 month- 3 months- 1 year- 5-10

1 month 3 months 1 year 5 years years Total

RM RM RM RM RM RM

As at 30 June 2013

Financial assets:

Islamic deposits with licensed financial institutions 24,333,387 - - - - 24,333,387

Other assets 70,352 - - - - 70,352

Total undiscounted financial assets 24,403,739 - - - - 24,403,739

Financial liabilities:

Other liabilities 23,247 - - - - 23,247

Total undiscounted financial liabilities 23,247 - - - - 23,247

Total equity 24,380,492 - - - - 24,380,492

Liquidity gap - - - - - -

34




(g) Liquidity risk (contd.)

Less than 1 month- 3 months- 1 year- 5-10

1 month 3 months 1 year 5 years years Total

RM RM RM RM RM RM

As at 30 June 2012

Financial assets:

Islamic deposits with licensed financial institutions 3,401,621 - - - - 3,401,621

Other assets 19,374 - - - - 19,374

Total undiscounted financial assets 3,420,995 - - - - 3,420,995

Financial liabilities:

Other liabilities 10,426 - - - - 10,426

Total undiscounted financial liabilities 10,426 - - - - 10,426

Total equity 3,410,569 - - - - 3,410,569

Liquidity gap - - - - - -

Notes:

(i) Financial assets

The analysis into maturity groupings of financial assets is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised/maturity dates of sukuk.

(ii) Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date. When a counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay.

(iii) Shariah-compliant equity

As Unitholders can request for redemption on their units without giving the Manager any notice period and the redemptions are repayable within 10 days, they have been categorised as having a maturity of “Less than 1 month”.

35




(h) Inflation risk

The Fund is subject to the risk of Unitholders’ investment not growing proportionately to the inflation rate thereby decreasing the Unitholders’ purchasing power even though the investment in monetary terms may have increased.

(i) Compliance risk

Non-compliance of regulations imposed by the Securities Commission Act 1993 and the Securities Commission’s Guidelines on Unit Trust Funds may affect the Unitholders’ investment.

(j) Regulatory risk

Any changes in national policies and regulations may have an effect on the capital market.

(k) Management risk

Poor management of a fund may cause considerable losses to the Fund that in turn will affect the capital invested by Unitholders.

(l) Reinvestment risk

This is a risk that future proceeds (profit and/or capital) are reinvested at a lower potential profit rate.

20. Capital Management

The capital of the Fund can vary depending on the demand for redemptions and subscriptions to the Fund. The Fund’s approved fund size and units in issue at the end of the period is disclosed in Note 12.

The Fund’s objectives for managing capital are:

(a) To invest in investments meeting the description, risk exposure and expected return indicated in its prospectus;

(b) To achieve consistent returns while safeguarding capital by using various investment strategies;

(c) To maintain sufficient liquidity to meet the expenses of the Fund, and to meet redemption requests as they arise; and

(d) To maintain sufficient fund size to make the operation of the Fund cost-efficient.

No changes were made to the capital management objectives, policies or processes during the current financial period.

21. Events after the reporting period

There were no events occurring since the last reporting date and before the completion of these financial statements.

This page has been intentionally left blank

KENANGA MONEY MARKET FUND

INTERIM REPORT

For the Financial Period Ended 30 June 2013

interim report - kenanga filekenanga islamic money market fund interim report for the financial...

Documents