kenanga malaysian inc fund...kenanga malaysian inc fund interim report iii regional branch offices:...

INTERIM REPORT

For the Financial Period from 1 February 2016 to 31 July 2016

KENANGA MALAYSIAN INC FUND

KENANGA MALAYSIAN INC FUND

Contents Page

Corporate Directory ii

Directory of Manager’s Offi ces iii

Fund Information 1

Manager’s Report 2 - 4

Fund Performance 5 - 7

Trustee’s Report 8

Statement by the Manager 9

Financial Statement 10 - 36

Kenanga Malaysian Inc Fund Interim Reportii

CORPORATE DIRECTORY

MANAGER: KENANGA INVESTORS BERHAD (Company No. 353563-P) REGISTERED OFFICE BUSINESS OFFICEKenanga Investors Berhad (KIB) Suite 12.02, 12th Floor, Kenanga International,8th Floor, Kenanga International, Jalan Sultan Ismail,Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.50250 Kuala Lumpur, Malaysia. Tel: 03-2057 3688Tel: 03-2162 1490 Fax: 03-2161 8807Fax: 03-2161 4990 E-mail: [email protected] Website: www.KenangaInvestors.com.my

BOARD OF DIRECTORS INVESTMENT COMMITTEEDatuk Syed Ahmad Alwee Alsree Dato’ Bruce Kho Yaw Huat (Chairman) (Chairman)Syed Zafi len Syed Alwee Syed Zafi len Syed Alwee (Independent Director) (Independent Member)Peter John Rayner Peter John Rayner (Independent Director) (Independent Member)Imran Devindran bin Abdullah Imran Devindran bin Abdullah(Independent Director) (Independent Member)Dato’ Bruce Kho Yaw Huat Ismitz Matthew De AlwisIsmitz Matthew De Alwis

COMPANY SECRETARY: NORLIZA ABD SAMAD (MAICSA 7011089)9th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Tel: 03-2162 1490 Fax: 03-2161 4990 TRUSTEE: CIMB COMMERCE TRUSTEE BERHAD (Company No. 313031-A) REGISTERED OFFICE BUSINESS OFFICE Level 13, Menara CIMB Level 21, Menara CIMBJalan Stesen Sentral 2 Jalan Stesen Sentral 2Kuala Lumpur Sentral Kuala Lumpur Sentral50490 Kuala Lumpur. 50490 Kuala Lumpur.Tel: 03-2261 8888 Tel: 03-2261 8888Fax: 03-2261 0099 Fax: 03-2261 9889Website: www.cimb.com

AUDITOR: ERNST & YOUNG (AF: 0039)Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

TAX ADVISER: ERNST & YOUNG TAX CONSULTANTS SDN BHD (Company No. 179793-K)Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur.Tel: 03-7495 8000 Fax: 03-2095 5332

MEMBERSHIP: FEDERATION OF INVESTMENT MANAGERS MALAYSIA (FIMM)19-06-1, 6th Floor, Wisma Tune, 19, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia. Tel: 03-2093 2600 Fax: 03-2093 2700 Website: www.fi mm.com.my

Kenanga Malaysian Inc Fund Interim Report iii

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th FloorKenanga InternationalJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : 03-2057 3688Fax : 03-2161 8807

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

KlangNo. 12, Jalan Batai Laut 3Taman Intan, 41300 KlangSelangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889Fax : 03-3341 8816

Penang5.04, 5th Floor, Menara Boustead Penang No. 39, Jalan Sultan Ahmad Shah 10050 PenangTel : 04-227 3788 / 04-210 6644 Fax : 04-226 5120

Seremban 2nd Floor, No. 1D-2Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel : 06-761 5678 Fax : 06-761 2243

Johor BahruLot 11.03, 11th FloorMenara MSC CyberportNo. 5, Jalan Bukit Meldrum80300 Johor Bahru, JohorTel : 07-223 7505 / 4798 Fax : 07-223 4802

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

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

IpohSuite 1, 2nd FloorNo. 63, Persiaran Greenhill30450 Ipoh, Perak, MalaysiaTel : 05-254 7573 / 7570 / 7575Fax : 05-254 7606

Miri 2nd Floor, Lot 1264Centre Point Commercial CentreJalan Melayu98000 Miri, Sarawak Tel : 085-416 866 Fax : 085-322 340

DIRECTORY OF MANAGER’S OFFICES

Kenanga Malaysian Inc Fund Interim Report1

1. FUND INFORMATION

1.1 Fund Name

Kenanga Malaysian Inc Fund (KMIF or the Fund)

1.2 Fund Category / Type

Equity / Growth

1.3 Investment Objective

The Fund aims to provide consistent annual returns and medium to long-term capital appreciation by investing in Malaysian securities with global reach.

1.4 Investment Strategy

The Fund seeks to maximise total returns by providing investors with capital appreciation and income (if any), while reducing risk through diversifi ed investments mainly in equities and short-term money market instruments.

1.5 Duration

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

1.6 Performance Benchmark

FTSE-Bursa Malaysia 100 Index

1.7 Distribution Policy

The Fund intends to pay income by way of distribution or by the creation of additional units after the end of each Accrual Period or any specifi ed period, where possible.

1.8 Breakdown of unit holdings of KMIF as at 31 July 2016

Size of holdings No. of unitholders No. of units held 5,000 and below 3,495 1,695,320 5,001 - 10,000 92 699,202 10,001 - 50,000 152 3,539,560 50,001 - 500,000 63 8,309,006 500,001 and above 10 35,315,559 Total 3,812 49,558,647

Kenanga Malaysian Inc Fund Interim Report 2

2. MANAGER’S REPORT

2.1 Explanation on whether the Fund has achieved its investment objective.

The Fund has appreciated by 5,37% in Net Asset Value terms for the period under review, thus achieving the Fund’s stated objective of medium to long term capital appreciation.

2.2 Comparison between the Fund’s performance and performance of the benchmark

Performance Chart Since Launch (9/11/2007– 31/07/2016)Kenanga Malaysian Inc Fund vs FTSE-Bursa Malaysia 100 Index

Source: Lipper

2.3 Investment strategies and policies employed during the fi nancial period under review

For the fi nancial period under review, the Fund continued with its strategy of investing in companies with sustainable business models and competent management. These are also companies that trade at a discount to their intrinsic/fair value.

Sectors favoured for the period under review included the export and manufacturing sector and construction companies with exposure to ETP projects.

2.4 The Fund’s asset allocation as at 31 July 2016 and comparison with the previous fi nancial year

Asset 31 July 2016 31 July 2015 Listed investment securities 79.1% 81.1% Short term deposits and cash 20.9% 18.9%

Reason for the differences in asset allocation

As at 31 July 2016, the asset allocation of the Fund stood at around 79.1% in equities and the balance of around 20.9% in liquidity. The investment level decreased as the fund adopted a more defensive strategy.


2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution; if any) since last review period

Period under review Kenanga Malaysian Inc Fund 5.37% FTSE-Bursa Malaysia 100 Index (FMB-100) 0.03%

Source: Lipper

For the period under review, the Fund appreciated by 5.37%, outperforming the 0.03% increase in the FBM100. The outperformance was mainly due to better stock selection.

2.6 Review of the market

Market Review

The New Year started with fi erce selling of equity markets following sharp correction in the Chinese markets and RMB depreciation against USD. Sentiment improved towards month end when Bank Negara reduced banks’ reserve requirement by 50bps to ease liquidity and continued until March, driven mainly by major annoucements from central banks and slight rebound in oil prices, while global equities were buoyed by ECB’s stimulus announcement which includes unprecedented measures such as the reduction of deposit rate to negative, expanded asset purchases programme and offered fresh funding via targeted LTRO.

The FBM KLCI then came down by 2.8% in May amid heavy foreign sell down following MSCI rebalancing. Foreign institutions sold a net RM4.3bn of Malaysian equity in May after three consecutive months of net buying. The KLCI held up well despite Brexit fears in June, as the UK referendum to exit EU shocked and sent global markets into correction. Post-Brexit, the global economic landscape remained resilient as results of central banks meetings generally disappointed investors, with no new measures released by the Bank of England and European Central Bank, while the Bank of Japan did not lower interest rates further or expand QE.

Market Outlook

All eyes will be on the upcoming Budget 2017 to be announced in October. Budget 2017 is likely to continue government’s measures to boost private consumption and infrastructure spending. Fiscal and monetary policy should turn more positive at the margin going forward. Corporate earnings are also expected to have bottomed out and show stronger growth for the year ahead.

Strategy

We will continue to adopt a bar-bell strategy of investing in both beta and defensive stocks while adding on any market weakness. Defensive stocks include names such as utilities and high dividend yielding consumer names while we also look to add growth stocks on weakness.


2.7 Distribution

For the fi nancial period under review, the Fund did not declare any income distribution.

2.8 Details of any unit split exercise

The Fund did not carry out any unit split exercise during the fi nancial period under review.

2.9 Signifi cant changes in the state of affair of the Fund during the fi nancial period

There were no signifi cant changes in the state of affair of the Fund during the fi nancial period and up until the date of the manager’s report, not otherwise disclosed in the fi nancial statements.

2.10 Circumstances that materially affect any interests of the unitholders

During the fi nancial period under review, there were no circumstances that materially affected any interests of the unitholders.

2.11 Rebates & Soft commissions

Any rebates received are channelled back to the Fund. On the other hand, soft commissions received from the stockbrokers for goods and services such as technical analysis software, fundamental database, fi nancial wire services, stock quotation system and portfolio management software incidental to investment management of the Fund shall be retained by the Manager. For the fi nancial period under review, the Manager has received soft commissions from stockbrokers.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of Kenanga Malaysian Inc Fund (“the Fund”) for the fi nancial period as at 31 July 2016 against last 3 fi nancial years/period as at 31 January are as follows:

a. Distribution among industry sectors and category of investments:

As at FY FY FP 31.7.2016 2016 2015 2014 % % % Trading/Services 22.4 17.1 28.9 31.0 Consumer products 13.2 7.9 2.6 9.8 Finance 12.7 9.1 7.8 13.5 Constructions 8.7 9.0 6.9 4.8 Industrial products 5.3 16.2 11.0 1.9 Properties 4.2 5.0 11.9 1.9 Plantations 3.9 3.2 2.0 10.9 Technology 3.5 5.2 6.4 - Special Purpose Acquisition Company 1.2 0.2 - - Infrastructure - - 5.4 4.9 Warrants - - 0.1* - Real Estate Investments Trusts 4.0 - 3.6 10.8 Short term deposits and cash 20.9 27.1 13.4 10.5 100.0 100.0 100.0 100.0

* Unlisted warrants that has been approved for listing by relevant authority.

Note: The above mentioned percentages are based on total investment market value plus cash.

b. Distribution among markets

The Fund invests in local listed investment securities and cash instruments only.


3.2 Performance details of the Fund for the fi nancial period ended 31 July 2016 against last 3 fi nancial years/period ended 31 January are as follows:

Period from Period from 1.2.2016 to FY FY 1.1.2013 to 31.7.2016 2016 2015 31.1.2014

Net asset value (“NAV”) (RM Million) 32.87* 19.53 13.39 14.86 Units in circulation (Million) 49.56 31.03 22.86 27.46 NAV per unit (RM) 0.6632* 0.6294 0.5857 0.5410 Highest NAV per unit (RM) 0.6646 0.6515 0.6302 0.5531 Lowest NAV per unit (RM) 0.6239 0.5592 0.5267 0.4625 Total return (%) 5.37 7.46 8.26 14.13 - Capital growth (%) 5.37 7.46 8.26 14.13 - Income growth (%) - - - - Gross distribution per unit (sen) - - - - Net distribution per unit (sen) - - - - Management expense ratio (“MER”) (%)1 1.98 2.13 2.03 2.24 Portfolio turnover ratio (“PTR”) (times)2 1.02 1.59 1.38 1.29

Note: Total return is the actual return of the Fund for the respective fi nancial periods/years, computed based on NAV per unit and net of all fees.

MER is computed based on the total fees and expenses incurred by the Fund divided by the average fund size calculated on a daily basis. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis.

1 MER is lower against previous fi nancial year mainly due to increase in average fund size incurred during the fi nancial period under review.

2 PTR is higher against last fi nancial year mainly due to shorter period under comparison.

* Based on bid price fair valuation method on all investments held by the Fund as at 31 July 2016, the NAV and NAV per unit would be RM32.64 million and RM0.6586 respectively.

(As disclosed under Note 12 of the fi nancial statements)


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 31 July 15 31 July 13 31 July 11 -31 July 16 -31 July 16 -31 July 16

Kenanga Malaysian Inc Fund 6.27% 9.03% 8.01% FTSE-Bursa Malaysia 100 Index -2.47% -2.21% 1.58%

Source: Lipper

3.4 Annual total return of the Fund

Period under review Period Period Period 1 Year 1 Year 31 Jan 15 31 Jan 15 31 Jan 14 31 Jan 13 31 Jan 12 31 Jan 11 -31 July 16 -31 July 15 -31 Jan 15 -31 Jan 14 -31 Jan 13 -31 Jan 12

Kenanga Malaysian Inc Fund 5.37% 6.56% 8.26% 16.27% 0.87% 0.96% FTSE-Bursa Malaysia 100 Index 0.03% -3.41% -1.62% 11.49% 5.34% 1.77%

Source: Lipper

Investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fl uctuate.


4 TRUSTEE’S REPORT TO THE UNITHOLDERS OF KENANGA MALAYSIAN INC FUND

We, CIMB COMMERCE TRUSTEE BERHAD, being the Trustee of KENANGA MALAYSIAN INC FUND (‘the Fund’) are of the opinion that KENANGA INVESTORS BERHAD (‘the Manager’), acting in the capacity of Manager of the Fund, have fulfi lled their duties in the following manner for the fi nancial period ended 31 July 2016.

a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Deed, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws;

b) Valuation/pricing of units of the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; and

c) Creation and cancellation of units have been carried out in accordance with the Deed

and relevant regulatory requirements.

For and on behalf of CIMB COMMERCE TRUSTEE BERHAD

LEE KOOI YOKE Chief Operating Offi cer

Kuala Lumpur, Malaysia

28 September 2016


5. STATEMENT BY THE MANAGER

I, Ismitz Matthew De Alwis, being a director of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of fi nancial position as at 31 July 2016 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial period from 1 February 2016 to 31 July 2016 together with notes thereto, are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the fi nancial position of Kenanga Malaysian Inc Fund as at 31 July 2016 and of its fi nancial performance and cash fl ows for the fi nancial period from 1 February 2016 to 31 July 2016 and comply with the requirements of the Deed.

For and on behalf of the Manager Kenanga Investors Berhad

Ismitz Matthew De Alwis Executive Director/Chief Executive Offi cer

Kuala Lumpur, Malaysia 28 September 2016


6. FINANCIAL STATEMENT

6.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD FROM 1 FEBRUARY 2016 TO 31 JULY 2016 (unaudited)

1.2.2016 to 1.2.2015 to Note 31.7.2016 31.7.2015 RM RM

INVESTMENT INCOME

Dividend income 325,440 172,870 Interest income 73,196 33,011 Net gain from investments: - Financial assets at fair value through profi t or loss (“FVTPL”) 4 1,218,269 892,255 1,616,905 1,098,136

EXPENSES

Manager’s fee 5 218,533 120,870 Trustee’s fee 6 6,070 3,357 Auditors’ remuneration 3,462 3,470 Tax agent’s fee 1,978 3,157 Administration expenses 26,370 8,543 Brokerage and other transaction costs 194,535 108,611 450,948 248,008 NET INCOME BEFORE TAX 1,165,957 850,128 Income tax 7 - (5,945) NET INCOME AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD 1,165,957 844,183 Net income after tax is made up as follows: Realised gain 393,845 991,834 Unrealised gain/(loss) 4 772,112 (147,651) 1,165,957 844,183

The accompanying notes form an integral part of the fi nancial statements.



6.2 STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2016 (unaudited)

Note 31.7.2016 31.7.2015 RM RM

INVESTMENTS

Financial assets at FVTPL 4 26,243,642 10,707,907 Short term deposits 8 6,819,638 2,410,423 33,063,280 13,118,330

OTHER ASSETS

Amount due from Manager 8,175 - Other receivables 9 140,165 386,690 Tax recoverable - 42,268 Cash at bank 112,847 89,233 261,187 518,191

TOTAL ASSETS 33,324,467 13,636,521

LIABILITIES

Amount due to Manager - 359,066 Amount due to Trustee 2,299 589 Other payables 10 684,199 34,576 TOTAL LIABILITIES 686,498 394,231

EQUITY

Unitholders’ contribution 40,726,765 22,381,786 Accumulated losses (8,088,796) (9,139,496) NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNITHOLDERS 11 32,637,969 13,242,290

TOTAL EQUITY AND LIABILITIES 33,324,467 13,636,521

NUMBER OF UNITS IN CIRCULATION 11(a) 49,558,647 21,294,387

NET ASSET VALUE PER UNIT (RM) 12 0.6586 0.6219



6.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL PERIOD FROM 1 FEBRUARY 2016 TO 31 JULY 2016 (unaudited)

Unitholders’ Accumulated Total Note contribution losses NAV

RM RM RM

1.2.2016 to 31.7.2016 At beginning of the fi nancial period 28,714,867 (9,254,753) 19,460,114 Total comprehensive income - 1,165,957 1,165,957 Creation of units 11(a) 12,621,441 - 12,621,441 Cancellation of units 11(a) (738,815) - (738,815) Distribution equalisation 11(a) 129,272 - 129,272 At end of the fi nancial period 40,726,765 (8,088,796) 32,637,969

1.2.2015 to 31.7.2015 At beginning of the fi nancial period 23,346,386 (9,983,679) 13,362,707 Total comprehensive income - 844,183 844,183 Cancellation of units 11(a) (929,620) - (929,620) Distribution equalisation 11(a) (34,980) - (34,980) At end of the fi nancial period 22,381,786 (9,139,496) 13,242,290


6.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD FROM 1 FEBRUARY 2016 TO 31 JULY 2016 (unaudited)

1.2.2016 to 1.2.2015 to 31.7.2016 31.7.2015 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 20,088,068 11,856,568 Dividends received 277,962 174,980 Interest received 72,141 32,956 Trustee’s fee paid (4,498) (3,310) Auditors’ remuneration paid (7,000) - Payments for other fees and expenses (20,198) (10,614) Manager’s fee paid (200,676) (119,186) Purchase of fi nancial assets at FVTPL (30,472,520) (10,495,611) Cash (used in)/generated from operating and investing activities (10,266,721) 1,435,783 Income tax refunded 42,269 7,607 Net (used in)/generated from operating and investing activities (10,224,452) 1,443,390

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 12,710,882 - Cash paid on units cancelled (748,241) (709,175) Net cash generated from/(used in) fi nancing activities 11,962,641 (709,175)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,738,189 734,215 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL PERIOD 5,194,296 1,765,441 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL PERIOD 6,932,485 2,499,656

Cash and cash equivalents comprise: Cash at bank 112,847 89,233 Short term deposits 6,819,638 2,410,423 6,932,485 2,499,656



6.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 FEBRUARY 2016 TO 31 JULY 2016 (unaudited)

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Malaysian Inc Fund (“the Fund”) was constituted pursuant to the executed Master Deed dated 29 August 2007 (collectively, together with deeds supplemental thereto, referred to as “the Deed”) between the Manager, Kenanga Investors Berhad, and HSBC (Malaysia) Trustee Berhad (“the Trustee” prior to 3 December 2013). The Fund has changed its trustee to CIMB Commerce Trustee Berhad (“the Trustee” with effect from 3 December 2013). The aforesaid change was effected on 3 December 2013 via a Fourth Master Supplemental Deed dated 1 October 2013. The Fund commenced operations on 9 November 2007 and will continue to be in operation until terminated by the Trustee in accordance with Part 12 of the Deed.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, which in turn is a wholly-owned subsidiary of K&N Kenanga Holdings Berhad, that is listed on the Main Market of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia.

The principal place of business of the Manager is Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur.

The Fund seeks to provide consistent annual returns and medium to long term capital appreciation by investing in Malaysian securities with global reach.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund is exposed to a variety of risks including market risk (which includes interest rate risk and price risk), credit risk and liquidity risk. Whilst these are the most important types of fi nancial risks inherent in each type of fi nancial instruments, the Manager and the Trustee 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 has an approved set of investment guidelines and policies as well as internal controls which sets out its overall business strategies to manage these risks to optimise returns and preserve capital for the unitholders, consistent with the long term objectives of the Fund.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument

will fl uctuate because of changes in market prices. Market risk includes interest rate risk and price risk.

Market risk arises when the value of the investments fl uctuates in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the investment’s price caused by uncertainties in the economic, political and social environment will affect the NAV of the Fund.

The Manager manages the risk of unfavourable changes in prices by cautious review of the investments and continuous monitoring of their performance and risk profi les.

i. Interest rate risk

Interest rate risk refers to how the changes in the interest rate environment would affect the valuation of the Fund’s investments. Rates offered by the fi nancial institutions will fl uctuate according to the Overnight Policy Rate determined by Bank Negara Malaysia and this has direct correlation with the Fund’s investments in deposits.

The Fund is not exposed to signifi cant interest rate risk as its deposits are short term in nature and have fi xed interest rates.

Interest rate risk exposure

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


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) i. Interest rate risk (Contd.)

Interest rate risk exposure (Contd.)

Weighted Non- average exposure to effective Up to interest rate interest 1 year movement Total rate*

RM RM RM %

2016 Assets Financial assets at FVTPL - 26,243,642 26,243,642 Short term deposits 6,819,638 - 6,819,638 2.98 Other assets - 261,187 261,187 6,819,638 26,504,829 33,324,467

Liabilities Other liabilities - 660,259 660,259

Total interest rate sensitivity gap 6,819,638 25,844,570 32,664,208

2015 Assets Financial assets at FVTPL - 10,707,907 10,707,907 Short term deposits 2,410,423 - 2410,423 3.20 Other assets - 475,923 475,923 2,410,423 11,183,830 13,594,253

Liabilities Other liabilities - 359,655 359,655

Total interest rate sensitivity gap 2,410,423 10,824,175 13,234,598

* Computed based on assets with exposure to interest rate movement only.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk

Price risk is the risk of unfavorable changes in the fair values of listed equity securities and listed collective investment schemes. The Fund invests in listed equity securities and listed collective investment schemes which are exposed to price fl uctuations. This may then affect the NAV per unit of the Fund.

Price risk sensitivity

The Manager’s best estimate of the effect on the profi t for the fi nancial period due to a reasonably possible change in investments in listed equity securities and listed collective investment schemes all other variables held constant is indicated in the table below:

Effects on profi t for Changes in price the fi nancial period Increase/(Decrease) Increase/(Decrease) Basis points RM

31.7.2016 Financial assets at FVTPL 5/(5) 13,122/(13,122) 31.7.2015 Financial assets at FVTPL 5/(5) 5,354/(5,354)

In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material.

Price risk concentration

The following table sets out the Fund’s exposure and concentration to price risk based on its portfolio of fi nancial instruments as at the reporting date.

Fair value Percentage of NAV 31.7.2016 31.7.2015 31.7.2016 31.7.2015 RM RM % % Financial assets at FVTPL 26,243,642 10,707,907 80.4 80.9


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) ii. Price risk (Contd.)

Price risk concentration (Contd.)

The Fund’s concentration of price risk from the Fund’s listed equity securities and listed collective investment schemes analysed by sector is as follows:

Fair value Percentage of NAV 31.7.2016 31.7.2015 31.7.2016 31.7.2015 RM RM % % Trading/Services 7,425,143 2,646,573 22.7 20.0 Consumer products 4,369,778 707,411 13.4 5.4 Finance 4,217,637 1,406,757 12.9 10.6 Constructions 2,898,021 1,639,167 8.9 12.4 Industrial products 1,770,478 1,545,483 5.4 11.7 Properties 1,381,926 1,326,504 4.2 10.0 Plantations 1,278,254 84,744 3.9 0.6 Technology 1,161,986 803,626 3.6 6.1 Special Purpose Acquisition Company 414,680 - 1.3 - Infrastructure - 547,642 - 4.1 Real Estate Investments Trusts 1,325,739 - 4.1 - 26,243,642 10,707,907 80.4 80.9

b. Credit Risk

Credit risk is the risk that the counterparty to a fi nancial instrument will cause a fi nancial loss to the Fund by failing to discharge an obligation. The Manager manages the credit risk by undertaking credit evaluation to minimise such risk.

i. Credit risk exposure

As at the reporting date, the Fund’s maximum exposure to credit risk is represented by the carrying amount of each class of fi nancial asset recognised in the statement of fi nancial position.

ii. Financial assets that are either past due or impaired

As at the reporting date, there are no fi nancial assets that are either past due or impaired.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) b. Credit Risk (Contd.)

iii. Credit quality of fi nancial assets

The Fund invests in deposits with licensed fi nancial institutions under the Financial Services Act 2013 and Islamic Financial Services Act 2013. The following table analyses the licensed fi nancial institutions by rating category:

Short term deposits

Percentage of total short term deposits Percentage of NAV 31.7.2016 31.7.2015 31.7.2016 31.7.2015 RM RM % % Rating P1 100.0 100.0 20.9 18.2

c. Liquidity Risk

Liquidity risk is defi ned as the risk that the Fund will encounter diffi culty in meeting obligations associated with fi nancial liabilities that are to be settled by delivering cash or another fi nancial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or cancel its units earlier than expected. The Fund is exposed to cancellation of its units on a regular basis. Units sold to unitholders by the Manager are cancellable at the unitholders’ option based on the Fund’s NAV per unit at the time of cancellation calculated in accordance with the Deed.

The liquid assets comprise cash, deposits with licensed fi nancial institutions and other instruments, which are capable of being converted into cash within 7 days.

The following table analyses the maturity profi le of the Fund’s fi nancial assets and fi nancial liabilities in order to provide a complete view of the Fund’s contractual commitments and liquidity.

Up to 1 year Note 2016 2015 RM RM

Assets Financial assets at FVTPL 26,243,642 10,707,907 Short term deposits 6,819,638 2,410,423 Other assets 261,187 475,923 (i) 33,324,467 13,594,253

Liabilities Other liabilities (ii) 660,259 359,655

Equity (iii) 32,637,969 13,242,290

Liquidity gap 26,239 (7,692)


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)

c. Liquidity Risk (Contd.)

i) Financial assets

Analysis of fi nancial assets at FVTPL into maturity groupings is based on the expected date on which these assets will be realised. The Fund’s investments in listed equity securities and listed collective investment schemes have been included in the “up to 1 year” category on the assumption that these are highly liquid investments which can be realised should all of the Fund’s unitholders’ equity be required to be redeemed. For other assets, the analysis into maturity groupings 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.

ii) Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the date on which liabilities will be settled. When the 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) Equity

As the unitholders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Accounting

The fi nancial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”) as issued by the Malaysian Accounting Standards Board (“MASB”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The accounting policies adopted are consistent with those of the previous fi nancial period except for the adoption of the new and amended MFRS which became effective for the Fund on 1 February 2016. The adoption of the new and amended MFRS did not have any signifi cant impact on the fi nancial position or performance of the Fund.

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

b. Standards and Amendments Issued But Not Yet Effective

As at the reporting date, the following Standards and Amendments that have been issued by MASB will be effective for the Fund in future fi nancial periods. The Fund intends to adopt the relevant standards when they become effective.

Effective for fi nancial period beginning Description on or after Amendments to MFRS contained in the documents entitled “Annual Improvements to MFRSs 2012 - 2014 Cycle” 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 101: Disclosure Initiative 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarifi cation of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 107: Disclosure Initiative 1 January 2017 Amendments to MFRS 112: Recognition of Deferred Tax for Unrealised Losses Assets 1 January 2017 MFRS 9: Financial Instruments 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 16: Leases 1 January 2019 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its To be announced Associate or Joint Venture by MASB

The Fund will adopt the above pronouncements when they become effective in the respective fi nancial periods. These pronouncements are not expected to have any signifi cant impact to the fi nancial statements of the Fund upon their initial application, other than MFRS 9.

MFRS 9 replaces MFRS 139 on the following requirements: classifi cation and measurement of fi nancial assets and fi nancial liabilities as defi ned in MFRS 139, impairment methodology and hedge accounting. The Fund is in the process of making an assessment of the impact of this Standard.



c. Financial Assets

Financial assets are recognised in the statement of fi nancial position when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instruments.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at FVTPL, directly attributable transaction costs.

The Fund determines the classifi cation of its fi nancial assets at initial recognition.

i. Financial assets at FVTPL

Financial assets are classifi ed as fi nancial assets at FVTPL if they are held for trading or are designated as such upon initial recognition.

Financial assets held for trading include listed equity securities and listed collective investment schemes acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, fi nancial assets at FVTPL are measured at fair value. Changes in the fair value of those fi nancial instruments are recorded in profi t or loss.

Interest earned and dividend revenue elements of such instruments are recorded separately in “interest income” and “dividend income”, respectively.

ii. Receivables

Financial assets with fi xed or determinable payments that are not listed in an active market are classifi ed as receivables.

Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method. Gain or loss is recognised in profi t or loss when the receivable is derecognised or impaired, and through the amortisation process.

A fi nancial asset is derecognised when the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profi t or loss.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) d. Impairment of Financial Assets

The Fund assesses at each reporting date whether there is any objective evidence that a fi nancial asset is impaired.

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Fund considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective interest rate. The impairment loss is recognised in profi t or loss.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets, with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the assets does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profi t or loss.

e. Income

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

Interest income is recognised using the effective interest method.

Dividend income is recognised on declared basis, when the right to receive the dividend is established.

The realised gain or loss on sale of investments is measured as the difference between the net disposal proceeds and the carrying amount of the investment.

f. Cash and Cash Equivalents

For the purposes of the statement of cash fl ows, cash and cash equivalents include cash at bank and short term deposits with licensed fi nancial institutions with insignifi cant risk of change in value.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) g. Income Tax

Income tax on the profi t or loss for the fi nancial period comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the fi nancial period.

As no temporary differences have been identifi ed, no deferred tax has been recognised.

h. Unrealised Reserves

Unrealised reserves represent the net gain or loss arising from carrying investments at their fair values at reporting date. This reserve is not distributable.

i. Financial Liabilities

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability.

Financial liabilities are recognised in the statement of fi nancial position when, and only when, the Fund becomes a party to the contractual provisions of the fi nancial instrument. The Fund’s fi nancial liabilities are classifi ed as other fi nancial liabilities. The Fund’s fi nancial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profi t or loss when the liabilities are derecognised, and through the amortisation process.

j. Unitholders’ Contribution – NAV Attributable to Unitholders

The unitholders’ contribution to the Fund is classifi ed as equity instruments. Distribution equalisation represents the average amount of undistributed net income

included in the creation or cancellation price of units. This amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

k. Functional and Presentation Currency The fi nancial statements of the Fund are measured using the currency of the primary

economic environment in which the Fund operates (“the functional currency”). The fi nancial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.

l. Distributions

Distributions are at the discretion of the Manager. A distribution to the Fund’s unitholders is accounted for as a deduction from retained earnings.



m. Signifi cant Accounting Judgments and Estimates

The preparation of fi nancial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors.

i. Critical judgments made in applying accounting policies

There are no major judgments made by the Manager in applying the Fund’s accounting policies.

ii. Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial period.

4. FINANCIAL ASSETS AT FVTPL

31.7.2016 31.7.2015 RM RM Financial assets held for trading, at FVTPL: Listed equity securities 24,917,903 10,707,907 Listed collective investment schemes 1,325,739 - 26,243,642 10,707,907 1.2.2016 to 1.2.2015 to 31.7.2016 31.7.2015 RM RM

Net gain on fi nancial assets at FVTPL comprised: Realised gain on disposals 446,157 1,039,906 Unrealised changes in fair values 772,112 (147,651) 1,218,269 892,255

Details of fi nancial assets at FVTPL as at 31 July 2016:

Aggregate Percentage Quantity cost Fair value of NAV RM RM %

Listed equity securities

Trading/Services Axiata Group Berhad 2,995 17,578 17,012 - Berjaya Auto Berhad 251,000 575,819 579,810 1.8 Bison Consolidated Berhad 200,900 277,191 289,296 0.9


4. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 31 July 2016: (Contd.)


Listed equity securities (Contd.)

Trading/Services (Contd.) Bumi Armada Berhad 561,000 499,325 415,140 1.3 Cypark Resources Berhad 289,300 560,328 572,814 1.8 Destini Berhad 270,300 156,774 160,828 0.5 Engtex Group Berhad 185,600 229,079 222,720 0.7 Genting Berhad 146,200 1,265,896 1,200,302 3.7 Hubline Berhad 25,431,000 254,310 127,155 0.4 Malaysia Airports Holdings Berhad 79,000 513,224 470,050 1.4 Media Prima Berhad 209,800 332,249 304,210 0.9 PESTECH International Berhad 114,800 140,900 192,864 0.6 SapuraKencana Petroleum Berhad 145,200 229,416 206,184 0.6 Scicom (MSC) Berhad 108,500 174,186 240,870 0.7 Tenaga Nasional Berhad 67,300 887,526 965,082 3.0 TIME dotcom Berhad 71,000 523,270 531,790 1.6 Yinson Holdings Berhad 303,600 828,923 929,016 2.8 7,465,994 7,425,143 22.7

Consumer products Carlsberg Brewery Malaysia Berhad 49,600 610,931 712,256 2.2 Dutch Lady Milk Industries Berhad 8,100 443,064 515,970 1.6 Fraser & Neave Holdings Bhd 22,000 492,281 561,000 1.7 Heineken Malaysia Berhad (formerly known as Guinness Anchor Berhad) 21,500 307,684 387,000 1.2 Magni-Tech Industries Berhad 25,700 112,165 102,029 0.3 NTPM Holdings Berhad 487,100 392,024 409,164 1.2 Panasonic Manufacturing Malaysia Berhad 18,700 481,904 743,512 2.3 Prolexus Berhad 283,050 460,621 410,422 1.3 Salutica Berhad 459,500 433,782 528,425 1.6 3,734,456 4,369,778 13.4






Finance AEON Credit Service (M) Berhad 39,500 522,265 559,320 1.7 BIMB Holdings Berhad 201,000 800,585 804,000 2.5 CIMB Group Holdings Berhad 115,055 513,915 503,941 1.6 Malayan Banking Berhad 46,200 387,701 370,524 1.1 Public Bank Berhad 27,300 501,444 531,804 1.6 RHB Bank Berhad 124,600 640,013 632,968 1.9 Tune Protect Group Berhad 497,000 715,715 815,080 2.5 4,081,638 4,217,637 12.9

Constructions IJM Corporation Berhad 196,700 670,724 666,813 2.0 Kimlun Corporation Berhad 320,000 557,158 563,200 1.7 Mitrajaya Holdings Berhad 380,250 431,760 513,338 1.6 Protasco Berhad 211,200 325,072 316,800 1.0 Sunway Construction Group Berhad 507,800 835,924 837,870 2.6 2,820,638 2,898,021 8.9

Industrial Products EG Industries Berhad 48,400 43,618 40,656 0.1 Evergreen Fibreboard Berhad 235,000 264,963 225,600 0.7 Jaya Tiasa Holdings Berhad 239,100 361,352 260,619 0.8 Pecca Group Berhad 62,700 89,034 109,725 0.3 Reach Energy Berhad 449,600 303,325 305,728 1.0 Success Transformer Corporation Berhad 196,800 421,784 429,024 1.3 United U-LI Corporation Berhad 21,400 74,900 138,030 0.4 V. S. Industry Berhad 197,800 266,541 261,096 0.8 1,825,517 1,770,478 5.4

Properties LBS Bina Group Berhad 352,700 535,011 567,847 1.7 Paramount Corporation Berhad 161,100 291,847 219,096 0.7 Sunsuria Berhad 157,900 131,901 132,636 0.4 Tambun Indah Land Berhad 310,300 501,089 462,347 1.4 1,459,848 1,381,926 4.2






Plantations Felda Global Ventures Holdings Berhad 12,000 21,000 22,080 0.1 Genting Plantations Berhad 43,400 458,195 457,436 1.4 Kuala Lumpur Kepong Berhad 29,500 713,636 681,450 2.1 Sarawak Oil Palms Berhad 32,400 184,979 117,288 0.3 1,377,810 1,278,254 3.9

Technology Inari Amertron Berhad 160,000 496,000 496,000 1.5 KESM Industries Berhad 79,100 431,988 526,015 1.6 ManagePay Systems Berhad 717,800 188,480 139,971 0.5 1,116,468 1,161,986 3.6

Special Purpose Acquisition Company Red Sena Berhad 1,023,900 419,168 414,680 1.3

Total listed equity securities 24,301,537 24,917,903 76.3

Listed collective investment schemes IGB Real Estate Investment Trust 374,300 592,414 610,109 1.9 MRCB-Quill REIT 243,000 280,156 296,460 0.9 Sunway Real Estate Investment Trust 251,000 399,580 419,170 1.3 Total listed collective investment schemes 1,272,150 1,325,739 4.1

Total fi nancial assets at FVTPL 25,573,687 26,243,642 80.4

Unrealised gain on fi nancial assets at FVTPL 669,955


5. MANAGER’S FEE

The Manager’s fee is computed on a daily basis at a rate not exceeding 2.0% per annum of the NAV of the Fund as provided under Division 13.1 of the Deed.

The Manager is currently charging Manager’s fee of 1.80% per annum of the NAV of the Fund (fi nancial period from 1 February 2015 to 31 July 2015: 1.80% per annum).

6. TRUSTEE’S FEE

Pursuant to the Fifth Master Supplemental Deed dated 25 July 2014, the Trustee’s fee is computed on a daily basis at a rate not exceeding 0.05% per annum of the NAV of the Fund and subject to a minimum fee of RM18,000 effective from 1 August 2014.

The Trustee is currently charging Trustee’s fee of 0.05% per annum of the NAV of the Fund (fi nancial period from 1 February 2015 to 31 July 2015: 0.05% per annum).

7. INCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 24% (fi nancial period from 1 February 2015 to 31 July 2015: 25%) of the estimated assessable income for the fi nancial period.

Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, 1967.

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:

1.2.2016 to 1.2.2015 to 31.7.2016 31.7.2015 RM RM Net income before tax 1,165,957 850,128

Tax at Malaysian statutory tax rate of 24% (fi nancial period from 1 February 2015 to 31 July 2015: 25%) 279,830 212,532 Tax effect of: Income not subject to tax (388,057) (311,447) Loss not deductible for tax purposes - 36,913 Expenses not deductible for tax purposes 54,355 30,917 Restriction on tax deductible expenses for unit trust fund 53,872 31,085 Under provision of tax in prior years - 5,945 Income tax for the fi nancial period - 5,945

8. SHORT TERM DEPOSITS

Short term deposits are held with licensed fi nancial institutions in Malaysia at the prevailing interest rates.


9. OTHER RECEIVABLES

31.7.2016 31.7.2015 RM RM

Amount due from licensed fi nancial institutions 80,092 373,496 Dividends receivable 58,470 12,983 Interest receivables from short term deposits 1,603 211 140,165 386,690

10. OTHER PAYABLES

31.7.2016 31.7.2015 RM RM

Amount due to licensed fi nancial institutions 657,960 - Accrual for auditors’ remuneration 3,462 10,470 Accrual for tax agent’s fees 8,978 7,057 Provision for printing and other expenses 13,799 17,049 684,199 34,576

11. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

NAV attributed to unitholders is represented by:

Note 31.7.2016 31.7.2015 RM RM Unitholders’ contribution (a) 40,726,765 22,381,786 Accumulated losses: Realised reserves (8,758,751) (9,607,130) Unrealised reserves 669,955 467,634 (8,088,796) (9,139,496) 32,637,969 13,242,290

a) Unitholders’ contribution

1.2.2016 to 31.7.2016 1.2.2015 to 31.7.2015 No. of units RM No. of units RM At beginning of the fi nancial period 31,031,029 28,714,867 22,859,387 23,346,386 Add: Creation of units 19,686,942 12,621,441 - - Less: Cancellation of units (1,159,324) (738,815) (1,565,000) (929,620) Distribution equalisation - 129,272 - (34,980) At end of the fi nancial period 49,558,647 40,726,765 21,294,387 22,381,786 The number of units legally or benefi cially held by the Manager, Kenanga Investors

Berhad, and parties related to the Manager as at 31 July 2016 were nil (31 July 2015: nil).


12. NET ASSET VALUE PER UNIT

In line with the adoption of MFRS 139, fi nancial assets at FVTPL have been valued at the bid prices at the close of business. In accordance with the Deed, the calculation of NAV attributable to unitholders per unit for the creation and cancellation of units is computed based on fi nancial assets at FVTPL valued at the last done market price.

A reconciliation of NAV attributable to unitholders for creation/cancellation of units and the NAV attributable to unitholders per the fi nancial statements is as follows:

31.7.2016 31.7.2015 RM RM/Unit RM RM/Unit NAV attributable to unitholders for creation/cancellation of units 32,867,479 0.6632 13,289,747 0.6241 Effects of adopting bid prices as fair value (229,510) (0.0046) (47,457) (0.0022) NAV attributable to unitholders per statement of fi nancial position 32,637,969 0.6586 13,242,290 0.6219

13. PORTFOLIO TURNOVER RATIO (“PTR”)

PTR for the fi nancial period from 1 February 2016 to 31 July 2016 is 1.02 times (fi nancial period from 1 February 2015 to 31 July 2015: 0.82 times).

PTR is the ratio of average sum of acquisitions and disposals of investments of the Fund for the fi nancial period to the average NAV of the Fund, calculated on a daily basis.

14. MANAGEMENT EXPENSE RATIO (“MER”)

MER for the fi nancial period from 1 February 2016 to 31 July 2016 is 1.98% (fi nancial period from 1 February 2015 to 31 July 2015: 1.04%).

MER is the ratio of the sum of annualised fees and recovered expenses of the Fund expressed as a percentage of the Fund’s average NAV, calculated on a daily basis.


15. TRANSACTIONS WITH LICENSED FINANCIAL INSTITUTIONS

Brokerage, stamp duty Transaction Percentage and clearing Percentage value of total fee of total

RM RM RM RM

CIMB Bank Berhad 14,339,179 20.3 - - Macquarie Capital Securities (Malaysia) Sdn Bhd 11,149,731 15.8 34,056 21.6 Kenanga Investment Bank Berhad* 9,839,654 13.9 31,035 19.6 Affi n Bank Berhad 6,691,686 9.5 - - JPMorgan Securities (Malaysia) Sdn Bhd 6,639,832 9.4 20,113 12.7 Maybank Investment Bank Berhad 5,689,991 8.0 18,983 12.0 CIMB Investment Bank Berhad 4,545,148 6.4 14,643 9.3 RHB Investment Bank Berhad 4,356,643 6.2 16,077 10.2 CLSA Securities Malaysia Sdn Bhd 3,389,379 4.8 10,419 6.6 UOB Kay Hian Securities (M) Sdn Bhd 1,538,419 2.2 4,973 3.1 Others 2,490,817 3.5 7,692 4.9 70,670,479 100.0 157,991 100.0

* Kenanga Investment Bank Berhad is a related party of Kenanga Investors Berhad.

The above transactions values are in respect of listed equity securities, listed warrants, listed collective investment schemes and short term deposits. Transactions in short term deposits do not involve any commission or brokerage fees.

The directors of the Manager are of the opinion that the transactions with the related party have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties. The Manager is of the opinion that the above dealings have been transacted on an arm’s length basis.


16. SEGMENTAL REPORTING

a. Business Segments

In accordance with the objective of the Fund, the Fund can invest up to 98% in listed investment securities. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Listed investment Other securities investments Total RM RM RM

1.2.2016 to 31.7.2016RevenueSegment income 1,543,709 73,196 Segment expenses (194,535) - Net segment income representing segment results 1,349,174 73,196 1,422,370Unallocated expenditure (256,413)Income before tax 1,165,957Income tax -Net income after tax 1,165,957 31.7.2016 Assets Financial assets at FVTPL 26,243,642 - Short term deposits - 6,819,638 Other segment assets 138,562 1,603 Total segment assets 26,382,204 6,821,241 33,203,445Unallocated assets 121,022 33,324,467

Liabilities Total segment liabilities 657,960 - 657,960Unallocated liabilities 28,538 686,498


16. SEGMENTAL REPORTING

a. Business Segments (Contd.)

Listed investment Other securities investments Total RM RM RM

1.2.2015 to 31.7.2015 Revenue Segment income 1,065,125 33,011 Segment expenses (108,611) - Net segment income representing segment results 956,514 33,011 989,525Unallocated expenditure (139,397)Income before tax 850,128Income tax (5,945)Net income after tax 844,183 31.7.2015 Assets Financial assets at FVTPL 10,707,907 - Short term deposits - 2,410,423 Other segment assets 386,479 211 Total segment assets 11,094,386 2,410,634 13,505,020Unallocated assets 131,501 13,636,521Liabilities Unallocated liabilities 394,231

b. Geographical Segments

As all of the Fund’s investments are located in Malaysia, disclosure by geographical segments is not relevant.


17. FINANCIAL INSTRUMENTS

a. Classifi cation of fi nancial instruments

The Fund’s fi nancial assets and fi nancial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classifi cation. The signifi cant accounting policies in Note 3 describe how the classes of fi nancial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised.

The following table analyses the fi nancial assets and liabilities of the Fund in the statement of fi nancial position by the class of fi nancial instruments to which they are assigned and therefore by the measurement basis.

Financial assets Financial at FVTPL Receivables liabilities Total

RM RM RM RM

31.7.2016 Assets Listed equity securities 24,917,903 - - 24,917,903 Listed collective investment schemes 1,325,739 - - 1,325,739 Short term deposits - 6,819,638 - 6,819,638 Amount due from Manager - 8,175 - 8,175 Other receivables - 140,165 - 140,165 Cash at bank - 112,847 - 112,847 26,243,642 7,080,825 - 33,324,467 Liabilities Amount due to Trustee - - 2,299 2,299 Other payables - - 657,960 657,960 - - 660,259 660,259 31.7.2015 Assets Listed equity securities 10,707,907 - - 10,707,907 Short term deposits - 2,410,423 - 2,410,423 Other receivables - 386,690 - 386,690 Cash at bank - 89,233 - 89,233 10,707,907 2,886,346 - 13,594,253 Liabilities Amount due to Manager - - 359,066 359,066 Amount due to Trustee - - 589 589 - - 359,655 359,655


17. FINANCIAL INSTRUMENTS (CONTD.)

b. Financial instruments that are carried at fair value

The Fund’s fi nancial assets at FVTPL are carried at fair value. The fair values of these fi nancial assets were determined using prices in active markets.

The following table shows the fair value measurements by level of the fair value measurement hierarchy:

Level 1 Level 2 Level 3 Total

Investments: 31.7.2016 - Listed equity securities 24,917,903 - - 24,917,903 - Listed collective investment schemes 1,325,739 - - 1,325,739 31.7.2015 - Listed equity securities 10,707,907 - - 10,707,907 Level 1: Listed prices in active market Level 2: Model with all signifi cant inputs which are observable market data Level 3: Model with inputs not based on observable market data

The fair values of listed equity securities and listed collective investment schemes are determined by reference to Bursa Malaysia Securities Berhad’s bid prices at reporting date.

c. Financial instruments not carried at fair value and whose carrying amounts are reasonable approximations of fair value

The carrying amounts of the Fund’s other fi nancial assets and liabilities are not carried at fair value but approximate fair values due to the relatively short term maturity of these fi nancial instruments.

18. CAPITAL MANAGEMENT

The capital of the Fund can vary depending on the demand for creation and cancellation of units to the Fund.

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 maintain suffi cient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain suffi cient fund size to make the operations of the Fund cost-effi cient.

No changes were made to the capital management objectives, policies or processes during the current and previous fi nancial periods.

Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Suite 12.02, 12th Floor, Kenanga Interna onal,Fax: +603 2057 3722 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.Email: [email protected] Tel: 03-2057 3688 Fax: 03-2161 8807

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