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ANNUAL REPORT

For the Financial Year Ended 29 February 2016

KENANGA PREMIER FUND

KENANGA PREMIER 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

Independent Auditor’s Report 9 - 10

Statement by the Manager 11

Financial Statement 12 - 39

ii Kenanga Premier Fund Annual Report

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 OFFICELevel 13, Menara CIMB Level 21, Menara CIMBJalan Stesen Sentral 2 Jalan Stesen Sentral 2Kuala Lumpur Sentral Kuala Lumpur Sentral50490 Kuala Lumpur 50490 Kuala LumpurTel: 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

iiiKenanga Premier Fund Annual Report

DIRECTORY OF MANAGER’S OFFICES

REGIONAL BRANCH OFFICES:

Kuala LumpurSuite 12.02, 12th FloorKenanga InternationalJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : 03-2057 3688 Fax : 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 3, Taman Intan41300 Klang, Selangor Darul EhsanTel : 03-3341 8818 / 03-3348 7889 Fax : 03-3341 8816

Penang16th Floor, Menara Boustead Penang 39, Jalan Sultan Ahmad Shah 10050 PenangTel : 04-227 3788 / 04-210 6644 Fax : 04-226 5120

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

Johor BahruLot 11.03, 11th FloorMenara MSC Cyberport5, Jalan Bukit Meldrum80300 Johor Bahru, JohorTel : 07-223 7505 / 4798Fax : 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 Floor,63, Persiaran Greenhill,30450 Ipoh, Perak, MalaysiaTel : 05-254 7573 / 7570 Fax : 05-254 7606

Miri 2nd Floor, Lot 1264, Centre Point Commercial Centre, Jalan Melayu, 98000 Miri, Sarawak Tel : 085-416 866 Fax : 085-322 340

DIRECTORY OF MANAGER’S OFFICES

1 Kenanga Premier Fund Annual Report

1. FUND INFORMATION

1.1 Fund Name

Kenanga Premier Fund (KPF 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.

1.4 Investment Strategy

The Fund seeks to maximise total returns by providing investors with a combination of capital appreciation and income distribution, if any, while reducing risk through diversifi ed investments mainly in equities.

1.5 Duration

The Fund was launched on 26 November 1996 and 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 distributions or by the creation of additional units after the end of each Accrual Period (i.e. 12-month period ending on the last day of December of each year) or any specifi ed period, where possible.

1.8 Breakdown of unit holdings of KPF as at 29 February 2016

Size of holdings No. of members No. of units held 5,000 and below 348 792,500 5,001 - 10,000 305 2,205,209 10,001-50,000 959 24,715,176 50,001-500,000 558 70,360,543 500,001 and above 56 119,507,107 Total 2,226 217,580,535

2Kenanga Premier Fund Annual Report

2. MANAGER’S REPORT

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

The Fund has declined by 5.2% in net asset value terms (while its benchmark fell 8.4%). The outperformance was attributable to favourable stock selection. Meeting the Fund’s stated objective of achieving of medium to long term capital appreciation.

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

Performance Chart Since Launch (26/11/1996– 29/02/2016)Kenanga Premier Fund vs FTSE-Bursa Malaysia 100 Index

Source: Lipper

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

For the fi nancial year under review, the Fund continued with its strategy of investing in companies with strong fundamentals and good growth prospect. The Fund has also increased its exposure to defensive high dividend yield stocks to reduce volatility.

2.4 The Fund’s asset allocation as at 29 February 2016 and comparison with the previous fi nancial year

Asset 29 Feb 2016 28 Feb 2015 Quoted investment securities 80.0% 75.3% Short term deposits and cash 20.0% 24.7% Reason for the differences in asset allocation

As of 29 Feb 2016, the Fund’s asset allocation has increased to 80.0% in equities and the remaining 20.0% is held in short term deposits and cash.


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

Period under review Kenanga Premier Fund -5.20% FTSE-Bursa Malaysia 100 Index (FMB-100) -8.39%

Source: Lipper

For the fi nancial year under review as at 29 February 2016, the Fund declined by 5.2%, outperforming the negative 8.4% return in the FBM 100 index. The outperformance was attributable to favourable stock selection.

2.6 Review of the market

Market Review

In February, the Malaysian market underperformed the rest of the Asean markets, but still outperformed peers in India and China. For the global market, risk-off mood continued in early part of February, after a sharp selloff in January, before rebounding strongly towards the later part of February. China played a part in stabilising the market by announcing various easing measures like reserve requirement ratio (RRR) cut of 50bps. PBOC offi cials also assured investors by releasing statement emphasizing stability in its exchange rate policy.

In Malaysia, February was a month of consolidation, with the KLCI’s trading range was only 40pts during the month. In February, the KLCI lost 13pts or 0.8% mom. The broader market outperformed the KLCI, with the FBM Emas losing 0.6% mom to 11,568pts. Small caps also outperformed, with the FBM Small Cap index closing positive, up 0.5% mom to 15,119pts. The FBM ACE was the biggest loser, down 3.64% mom to 5,702pts.

Market Outlook

Heighted volatility for the markets is expected to remain in view of the sluggish global growth. US rate normalisation could be slower than initially expected with its slowing economic activity while ECB and BOJ remain steadfast on monetary easing to combat defl ation. China’s economic activity remains weak despite the monetary easing since end 2014 and this poses downside risk to the Asian economies.

While there are still challenges for the Malaysian economy, we believe Malaysia market should perform better in 2016 after a poor 2015. The recent Ringgit strength showcased that the Malaysian market could be oversold. We continue to favour sectors like consumer, construction, infrastructure and technology. The rollout of mega projects including MRT2, LRT3, Pan Borneo highway and RAPID should provide a boost to the construction sector.


2.6 Review of the market (Contd.)

Strategy

Stock picking would continue to be a key attribute for investors in identifying companies with resilient growth characteristics, steady cash fl ows and strong balance sheets. While earnings growth is the main driver for the creation of new shareholder value, the challenging outlook suggests that we should not ignore stocks with the ability to generate recurring dividends.

2.7 Income Distribution

For the fi nancial year 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 year under review. 2.9 Signifi cant changes in the state of affair of the Fund during the fi nancial year There were no signifi cant changes in the state of affair of the Fund during the fi nancial

year 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 year under review, there were no circumstances that materially

affected any interests of the unitholders. 2.11 Rebates & Soft commissions Any rebates received are channeled 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 year under review, the Manager has received soft commissions from stockbrokers.


3. FUND PERFORMANCE

3.1 Details of portfolio composition of Kenanga Premier Fund (“the Fund”) for the last 3 fi nancial years as at 29/28 February are as follows:

a. Distribution among industry sectors and category of investments:

2016 2015 2014 % % %

Consumer products 15.0 5.9 8.9 Finance 14.3 11.4 15.3 Trading/Services 11.4 10.7 29.2 Industrial products 9.6 9.6 2.3 Plantations 7.9 6.0 13.0 Properties 7.6 13.7 1.2 Construction 4.5 9.2 4.1 Technology 2.6 0.7 - Infrastructure 1.8 2.5 4.7 Special Purpose Acquisition Company 0.2 - - Real Estate Investments Trusts 5.0 5.5 11.3 Warrants 0.1 0.1 - Loan stocks - - 0.4 Short term deposits and cash 20.0 24.7 9.6 100.0 100.0 100.0

* Included in warrants is an unquoted warrant that has been approved for listing by the 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 quoted investment securities and cash instruments only.


3.2 Performance details of the Fund for the last 3 fi nancial years/period ended 29/28 February are as follows:

Period FY FY from 1.3.2015 to 1.3.2014 to 1.1.2013 to 29.2.2016 28.2.2015 28.2.2014

Net asset value (“NAV”) (RM Million) 84.12* 95.31 103.70 Units in circulation (Million) 217.58 233.73 236.72 NAV per unit (RM) 0.3866* 0.4078 0.4381 Highest NAV per unit (RM) 0.4114 0.4635 0.4700 Lowest NAV per unit (RM) 0.3469 0.3872 0.3838 Total return (%) -5.20 1.95 19.01 - Capital growth (%) -5.20 -6.92 11.33 - Income growth (%) - 8.87 7.68 Gross distribution per unit (sen) - 3.89 3.01 Net distribution per unit (sen) - 3.89 3.00 Management expense ratio (“MER”) (%)1 1.75 1.57 1.86 Portfolio turnover ratio (“PTR”) (times)2 1.25 0.86 0.92 Note: Total return is the actual return of the Fund for the respective fi nancial years/period,

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.

Above NAV and NAV per unit are not shown as ex-distribution as there was no distribution declared by the Fund in the current fi nancial year under review.

1 MER is higher against previous fi nancial year mainly due to decrease in average fund size and increase in recovered expenses during the fi nancial year under review.

2 PTR is higher against previous fi nancial year due to higher trading activities incurred.

* Based on bid price fair valuation method on all investments held by the Fund as at 29 February 2016, the NAV and NAV per unit would be RM83.81 million and RM0.3852 respectively.

(As disclosed under Note 13 of the fi nancial statements)


3.3 Average total return of the Fund

1 Year 3 Years 5 Years 28 Feb 15 28 Feb 13 28 Feb 11 -29 Feb 16 -29 Feb 16 -29 Feb 16

Kenanga Premier Fund -5.20% 5.35% 5.21% FTSE-Bursa Malaysia 100 Index -8.39% 0.64% 2.50%

Source: Lipper

3.4 Annual total return of the Fund

Period under review 1 Year Period 1 Year 1 Year 28 Feb 15 28 Feb 14 31 Dec 12 31 Dec 11 31 Dec 10 -29 Feb 16 -28 Feb 15 -28 Feb 14 -31 Dec 12 -31 Dec 11

Kenanga Premier Fund -5.20% 1.95% 19.01% 5.91% 3.18% FTSE-Bursa Malaysia 100 Index -8.39% -0.99% 9.32% 9.60% 1.94%

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 PREMIER FUND

We, CIMB COMMERCE TRUSTEE BERHAD (“the Trustee”), being the Trustee of KENANGA PREMIER 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 its duties in the following manner for the fi nancial year ended 29 February 2016:

a) The Fund has been managed in accordance with the limitations imposed on 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 (313031-A) LEE KOOI YOKE Chief Operating Offi cer Kuala Lumpur, Malaysia 22 April 2016


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND

Report on the fi nancial statements

We have audited the fi nancial statements of Kenanga Premier Fund (“the Fund”), which comprise the statement of fi nancial position as at 29 February 2016 and the statement of comprehensive income, statement of changes in net asset value and statement of cash fl ows for the fi nancial year then ended, and a summary of signifi cant accounting policies and other explanatory information, as set out on pages 12 to 39.

Manager’s and Trustee’s responsibility for the fi nancial statements and fair presentation

The Manager of the Fund is responsible for the preparation of fi nancial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error. The Trustee is responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these fi nancial statements.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.


5. INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF KENANGA PREMIER FUND (CONTD.)

Opinion

In our opinion, the fi nancial statements give a true and fair view of the fi nancial position of the Fund as at 29 February 2016 and of its fi nancial performance, changes in net asset value and cash fl ows for the fi nancial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Other matters

This report is made solely to the unitholders of the Fund, as a body, and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Chan Hooi Lam AF: 0039 No. 2844/02/18(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

22 April 2016


6. 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 29 February 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 year ended 29 February 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 Premier Fund as at 29 February 2016 and of its fi nancial performance and cash fl ows for the fi nancial year then ended and comply with the requirements of the Deed.

For and on behalf of the Manager Kenanga Investors Berhad

Ismitz Matthew De Alwis

Kuala Lumpur, Malaysia

22 April 2016


7. FINANCIAL STATEMENT

7.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2016

Note 2016 2015 RM RM

INVESTMENT INCOME

Dividend income 2,128,029 2,909,605Interest income 685,299 292,749Net (loss)/gain from investments: - Financial assets at fair value through profi t or loss (“FVTPL”) 4 (5,563,040) 1,657,858 (2,749,712) 4,860,212

EXPENSES

Manager’s fee 5 1,316,475 1,482,499Trustee’s fee 6 43,883 49,417Auditors’ remuneration 12,000 5,000Tax agent’s fee 12,500 4,800Administration expenses 141,860 17,127Brokerage and other transaction costs 736,794 685,284 2,263,512 2,244,127

NET (LOSS)/INCOME BEFORE TAX (5,013,224) 2,616,085

Income tax 7 (25,589) -

NET (LOSS)/INCOME AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE FINANCIAL YEAR (5,038,813) 2,616,085

Net (loss)/income after tax is made up as follows: Realised gain 2,778,596 5,678,755 Unrealised loss 4 (7,817,409) (3,062,670) (5,038,813) 2,616,085

Distribution for the fi nancial year: Gross/Net distribution (RM) 8 - 8,513,612 Gross/Net distribution per unit (sen) 8 - 3.89

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


Kenanga Premier Fund Annual Report13

7.2 STATEMENT OF FINANCIAL POSITION AS AT 29 FEBRUARY 2016

Note 2016 2015 RM RM

INVESTMENTS

Financial assets at FVTPL 4 65,601,110 73,285,423Short term deposits 9 15,392,000 20,086,000 80,993,110 93,371,423

OTHER ASSETS

Other receivables 10 4,910,580 1,073,940Tax recoverable - 347,637Cash at bank 990,897 3,889,121 5,901,477 5,310,698

TOTAL ASSETS 86,894,587 98,682,121

LIABILITIES

Amount due to Manager 104,233 104,391Amount due to Trustee 3,320 3,561Other payables 11 2,972,924 1,005,442Distribution payable - 2,441,308TOTAL LIABILITIES 3,080,477 3,554,702

EQUITY

Unitholders’ contribution 44,586,273 50,860,769Retained earnings 39,227,837 44,266,650NET ASSET VALUE (“NAV”) ATTRIBUTABLE TO UNITHOLDERS 12 83,814,110 95,127,419 TOTAL EQUITY AND LIABILITIES 86,894,587 98,682,121 NUMBER OF UNITS IN CIRCULATION 12(a) 217,580,535 233,727,452 NET ASSET VALUE PER UNIT (RM) 13 0.3852 0.4070


Kenanga Premier Fund Annual Report 14

7.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2016

Unitholders’ Retained Total Note contribution earnings NAV

RM RM RM

2016At beginning of the fi nancial year 50,860,769 44,266,650 95,127,419Total comprehensive loss - (5,038,813) (5,038,813)Creation of units 12(a) 207,199 - 207,199Cancellation of units 12(a) (6,282,556) - (6,282,556)Distribution equalisation 12(a) (199,139) - (199,139)At end of the fi nancial year 44,586,273 39,227,837 83,814,110

2015 At beginning of the fi nancial year 52,611,029 50,364,470 102,975,499Total comprehensive income - 2,616,085 2,616,085Creation of units 12(a) 171,994 - 171,994Cancellation of units 12(a) (7,994,558) - (7,994,558)Distribution equalisation 12(a) (200,293) - (200,293)Distribution 8 200,293 (8,713,905) (8,513,612)Reinvestment of income distributed 12(a) 6,072,304 - 6,072,304At end of the fi nancial year 50,860,769 44,266,650 95,127,419


7.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2016

2016 2015 RM RM

CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES

Proceeds from sale of fi nancial assets at FVTPL 105,486,007 96,769,766Dividends received 2,215,812 3,065,483Interest from deposits received 683,010 295,080Auditors’ remuneration paid (12,000) (12,000)Tax agent’s fee paid (12,400) (3,400)Trustee’s fee paid (44,124) (49,854)Payments for other fees and expenses (96,641) (30,747)Manager’s fee paid (1,323,717) (1,495,609)Purchase of fi nancial assets at FVTPL (106,101,499) (74,457,885)Cash generated from operating and investing activities 794,448 24,080,834Income tax refund 322,048 -Net cash generated from operating and investing activities 1,116,496 24,080,834

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from units created 217,495 176,607Cash paid on units cancelled (6,484,907) (8,225,969)Distribution paid (2,441,308) (1,870,452)Net cash used in fi nancing activities (8,708,720) (9,919,814)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (7,592,224) 14,161,020CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 23,975,121 9,814,101CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 16,382,897 23,975,121 Cash and cash equivalents comprise: Cash at bank 990,897 3,889,121 Short term deposits 15,392,000 20,086,000 16,382,897 23,975,121



7.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 29 FEBRUARY 2016

1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES

Kenanga Premier Fund (“the Fund”) was constituted pursuant to the executed Deed dated 21 November 1996 (collectively, together with deeds supplemental thereto, referred to as “the Deed”) between the Manager, Kenanga Investors Berhad, and Universal Trustee (Malaysia) Berhad (“the Trustee” prior to 15 April 2005). Pursuant to the executed Fourth Supplemental Deed dated 15 April 2005, the Fund changed its trustee to HSBC (Malaysia) Trustee Berhad (“the Trustee” for the period from 15 April 2005 to 2 December 2013). The Fund has subsequently 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 19 November 2013. The Fund commenced operations on 26 November 1996 and will continue to be in operation until terminated in accordance to 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.

The fi nancial statements were authorised for issue by the Board of Directors of the Manager on 22 April 2016.

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 - 65,601,110 65,601,110 Short term deposits 15,392,000 - 15,392,000 3.33 Other assets - 5,901,477 5,901,477 15,392,000 71,502,587 86,894,587

Liabilities Other liabilities - 3,080,477 3,080,477 Total interest rate sensitivity gap 15,392,000 68,422,110 83,814,110

2015 Assets Financial assets at FVTPL - 73,285,423 73,285,423 Short term deposits 20,086,000 - 20,086,000 3.22 Other assets - 4,963,061 4,963,061 20,086,000 78,248,484 98,334,484

Liabilities Other liabilities - 3,554,702 3,554,702

Total interest rate sensitivity gap 20,086,000 74,693,782 94,779,782

* 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 quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant. The Fund invests in quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant 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 year due to a reasonably possible change in investments in quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant with all other variables held constant is indicated in the table below:

Effect on profi t for Change in price the fi nancial year Increase/(Decrease) Increase/(Decrease) Basis points RM

2016 Financial assets at FVTPL 5/(5) 32,801/(32,801) 2015 Financial assets at FVTPL 5/(5) 36,643/(36,643)

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 2016 2015 2016 2015 RM RM % %

Financial assets at FVTPL 65,601,110 73,285,423 78.3 77.0


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 quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant analysed by sector is as follows:

Fair value Percentage of NAV 2016 2015 2016 2015 RM RM % %

Consumer products 12,301,309 5,774,286 14.7 6.1 Finance 11,734,751 11,134,759 14.0 11.7 Trading/Services 9,340,214 10,323,784 11.2 10.8 Industrial products 7,887,729 9,351,700 9.4 9.8 Plantations 6,467,816 5,871,540 7.7 6.2 Properties 6,203,346 13,325,002 7.4 14.0 Construction 3,682,494 8,932,975 4.4 9.4 Technology 2,107,827 724,105 2.5 0.7 Infrastructure 1,515,360 2,446,020 1.8 2.6 Special Purpose Acquisition Company 171,094 - 0.2 - Real Estate Investments Trusts 4,134,681 5,338,489 4.9 5.6 Warrants 54,489 62,763 0.1 0.1 65,601,110 73,285,423 78.3 77.0

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 fi nancial institutions licensed 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 2016 2015 2016 2015 % % % %

Rating P1 100.0 100.0 18.4 21.1

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.


2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity Risk

Up to 1 year Note 2016 2015 RM RM

Assets Financial assets at FVTPL 65,601,110 73,285,423 Short term deposits 15,392,000 20,086,000 Other assets 5,901,477 4,963,061 (i) 86,894,587 98,334,484

Liabilities Other liabilities (ii) 3,080,477 3,554,702 Equity (iii) 83,814,110 95,127,419 Liquidity gap - (347,637)

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 quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant 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 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”) issued by the International Accounting Standards Board (“IASB”).

The accounting policies adopted are consistent with those of the previous fi nancial year except for the adoption of the new and amended MFRS which became effective for the Fund on 1 March 2015. 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.

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 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 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 9: Financial Instruments 1 January 2018 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor To be announced and its Associate or Joint Venture by MASB


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

b. Standards and Amendments Issued But Not Yet Effective (Contd.)

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 quoted equity securities, quoted collective investment schemes, quoted warrant and unquoted warrant 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 quoted 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.



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 year, 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.



g. Income Tax

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

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. Distribution

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 year.

4. FINANCIAL ASSETS AT FVTPL

2016 2015 RM RM

Financial assets held for trading, at FVTPL: Quoted equity securities 61,411,940 67,884,171 Quoted collective investment schemes 4,134,681 5,338,489 Quoted warrant 41,242 62,763 Unquoted warrant 13,247 - 65,601,110 73,285,423

Net (loss)/gain on fi nancial assets at FVTPL comprised: Realised gain on disposals 2,254,369 4,720,528 Unrealised changes in fair values (7,817,409) (3,062,670) (5,563,040) 1,657,858


4. FINANCIAL ASSETS AT FVTPL (CONTD.)

Details of fi nancial assets at FVTPL as at 29 February 2016:

Aggregate Percentage Quantity cost Fair value of NAV RM RM %

Quoted equity securities

Consumer products Carlsberg Brewery Malaysia Berhad 210,700 2,489,513 2,629,536 3.1 Dutch Lady Milk Industries Berhad 37,200 1,730,181 1,848,840 2.2 Homeritz Corporation Berhad 1,124,600 1,160,224 1,107,731 1.3 Nestlé (M) Berhad 25,400 1,563,232 1,884,172 2.3 Panasonic Manufacturing Malaysia Berhad 69,500 1,673,995 1,779,200 2.1 Tek Seng Holdings Berhad 665,800 705,748 732,380 0.9 UMW Holdings Berhad 329,000 2,565,443 2,319,450 2.8 11,888,336 12,301,309 14.7

Finance AMMB Holdings Berhad 662,900 3,073,939 2,870,357 3.4 BIMB Holdings Berhad 246,700 849,067 885,653 1.1 LPI Capital Berhad 131,450 1,198,328 1,942,831 2.3 Malayan Banking Berhad 227,264 1,945,988 1,934,017 2.3 RHB Capital Berhad 460,780 2,751,411 2,432,918 2.9 Tune Protect Group Berhad 1,402,500 1,675,994 1,668,975 2.0 11,494,727 11,734,751 14.0

Trading/Services Amway (M) Holdings Berhad 243,400 2,673,965 2,275,790 2.7 Axiata Group Berhad 364,600 1,957,675 2,154,786 2.6 Berjaya Auto Berhad 583,280 1,520,116 1,265,718 1.5 Media Prima Berhad 1,433,400 2,357,033 1,920,756 2.3 OldTown Berhad 1,164,300 1,639,573 1,723,164 2.1 10,148,362 9,340,214 11.2

Industrial products Cahya Mata Sarawak Berhad 108,500 520,800 541,415 0.6 Coastal Contracts Bhd. 54,300 161,327 90,681 0.1 Evergreen Fibreboard Berhad 1,490,900 1,830,722 1,729,444 2.1 Kossan Rubber Industries Berhad 230,300 1,570,185 1,483,132 1.8 Reach Energy Berhad 1,548,200 944,402 1,006,330 1.2 Sarawak Cable Berhad 719,100 1,161,298 1,143,369 1.4 Supermax Corporation Berhad 387,000 964,564 1,110,690 1.3 Ta Ann Holdings Berhad 155,600 571,620 782,668 0.9 7,724,918 7,887,729 9.4



Details of fi nancial assets at FVTPL as at 29 February 2016 (Contd.):


Quoted equity securities (Contd.)

Plantations Batu Kawan Berhad 47,500 842,935 843,600 1.0 Genting Plantations Berhad 198,400 1,900,626 2,150,656 2.6 Sarawak Oil Palms Berhad 185,900 1,239,750 797,511 0.9 TSH Resources Berhad 363,750 645,418 672,937 0.8 United Plantations Berhad 77,400 2,016,525 2,003,112 2.4 6,645,254 6,467,816 7.7

Properties KSL Holdings Berhad 1,282,735 2,347,830 1,641,901 2.0 MCT Berhad 878,700 1,124,736 1,054,440 1.3 S P Setia Berhad 653,807 2,124,110 1,954,883 2.3 Tambun Indah Land Berhad 1,158,300 1,967,766 1,552,122 1.8 7,564,442 6,203,346 7.4

Construction Econpile Holdings Berhad 686,900 697,303 693,769 0.8 Gamuda Berhad 203,800 943,203 904,872 1.1 Ikhmas Jaya Group Berhad 938,500 625,588 581,870 0.7 Malaysian Resources Corporation Berhad 574,300 701,289 648,959 0.8 Protasco Berhad 561,200 838,096 853,024 1.0 3,805,479 3,682,494 4.4

Technology D & O Green Technologies Berhad 1,005,600 367,273 346,932 0.4 Globetronics Technology Bhd. 323,100 1,712,656 1,760,895 2.1 2,079,929 2,107,827 2.5

Infrastructure DiGi.Com Berhad 308,000 1,477,599 1,515,360 1.8

Special Purpose Acquisition Company Red Sena Berhad 444,400 222,200 171,094 0.2

Total quoted equity securities 63,051,246 61,411,940 73.3



Details of fi nancial assets at FVTPL as at 29 February 2016 (Contd.):


Quoted collective investment schemes

CapitaLand Malaysia Mall Trust 1,327,800 1,844,679 1,951,866 2.3 MRCB-Quill REIT 1,966,500 2,300,068 2,182,815 2.6 Total quoted collective investment schemes 4,144,747 4,134,681 4.9

Quoted warrant

Red Sena Berhad-WA 549,900 - 41,242 0.1 Total quoted warrant - 41,242 0.1

Unquoted warrant

Gamuda Berhad-WR4 33,966 8,492 13,247 - Total unquoted warrant 8,492 13,247 -

Total fi nancial assets at FVTPL 67,204,485 65,601,110 78.3

Unrealised loss on fi nancial assets at FVTPL (1,603,375)

5. MANAGER’S FEE

The Manager’s fee is computed on a daily basis at a rate not exceeding 2.00% 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 1.50% per annum of the NAV of the Fund (2015: 1.50% per annum).

6. TRUSTEE’S FEE

Pursuant to the Fifth Master Supplemental Deed dated 25 July 2014, the Trustee’s fee is computed at a rate not exceeding 0.05% per annum of the NAV of the Fund effective from 1 August 2014. Prior to 1 August 2014, the Trustee’s fee was computed at a rate not exceeding 0.15% per annum of the NAV of the Fund.

The Trustee is currently charging Trustee’s fee of 0.05% per annum of the NAV of the Fund (2015: 0.05% per annum).


7. INCOME TAX

Income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable income for the fi nancial year.

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 (loss)/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:

2016 2015 RM RM Net(loss)/income before tax (5,013,224) 2,616,085 Tax at Malaysian statutory tax rate of 24% (2015: 25%) (1,203,174) 654,021 Tax effect of: Income not subject to tax (1,216,247) (1,980,721) Loss not deductible for tax purposes 1,876,178 765,668 Expenses not deductible for tax purposes 215,600 186,868 Restriction on tax deductible expenses for unit trust fund 327,643 374,164 Under provision in prior fi nancial year 25,589 - Income tax for the fi nancial year 25,589 -

8. DISTRIBUTION

Distribution to unitholders was from the following sources:

2016 2015 RM RM Tax exempt income - 7,191,874 Distribution out of distribution equalisation (Note 12(a)) - (200,293) Undistributed income b/f - 3,076,736 - 10,068,317 Less: Expenses - (1,554,705) Distribution for the fi nancial year - 8,513,612 Gross/Net distribution per unit (sen) - 3.89 Date of distribution - 26.2.2015

The income distribution for the fi nancial year ended 28 February 2015 included an amount of RM3,076,736 which was made from realised gains of preceding fi nancial period/years.

The previous fi nancial year’s income distribution was proposed before taking into account the unrealised loss for the previous fi nancial year of RM3,062,670 which has been carried forward to the current fi nancial year.


9. SHORT TERM DEPOSITS

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

10. OTHER RECEIVABLES

2016 2015 RM RM

Amount due from licensed fi nancial institutions 4,780,303 858,169 Dividend receivable 125,155 212,938 Interest receivable from short term deposits 5,122 2,833 4,910,580 1,073,940

11. OTHER PAYABLES

2016 2015 RM RM

Amount due to licensed fi nancial institutions 2,926,749 978,562 Accrual for auditors’ remuneration 12,000 12,000 Accrual for tax agent’s fees 4,000 3,900 Provision for printing and other expenses 30,175 10,980 2,972,924 1,005,442

12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS

NAV attributed to unitholders is represented by:

Note 2016 2015 RM RM Unitholders’ contribution (a) 44,586,273 50,860,769 Retained earnings: Realised reserves 40,831,212 38,052,616 Unrealised reserves (1,603,375) 6,214,034 39,227,837 44,266,650 83,814,110 95,127,419


12. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.)

a) Unitholders’ contribution

2016 2015 No. of units RM No. of units RM At beginning of the fi nancial year 233,727,452 50,860,769 236,716,456 52,611,029 Add: Creation of units 550,480 207,199 411,335 171,994 Less: Cancellation of units (16,697,397) (6,282,556) (18,268,863) (7,994,558) Distribution equalisation - (199,139) - (200,293) Distribution (Note 8) - - - 200,293 Reinvestment of income distributed - - 14,868,524 6,072,304 At end of the fi nancial year 217,580,535 44,586,273 233,727,452 50,860,769

The number of units legally or benefi cially held by the Manager, Kenanga Investors Berhad, and parties related to the Manager as at 29 February 2016 were nil (2015: nil).

13. 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:

2016 2015 RM RM/Unit RM RM/Unit NAV attributable to unitholders for creation/cancellation of units 84,123,189 0.3866 95,312,022 0.4078 Effects of adopting bid prices as fair value (309,079) (0.0014) (184,603) (0.0008) NAV attributable to unitholders per statement of fi nancial position 83,814,110 0.3852 95,127,419 0.4070

14. PORTFOLIO TURNOVER RATIO (“PTR”)

PTR for the fi nancial year is 1.25 times (2015: 0.86 times).

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


15. MANAGEMENT EXPENSE RATIO (“MER”)

MER for the fi nancial year is 1.75% (2015: 1.57%).

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

16. TRANSACTIONS WITH LICENSED FINANCIAL INSTITUTIONS

Brokerage, stamp duty Transaction Percentage and clearing Percentage Value of total fee of total RM % RM %

Kenanga Investment Bank Berhad* 68,263,953 21.9 136,071 23.2 Public Bank Berhad 61,736,437 19.8 - - Public Investment Bank Berhad 34,753,952 11.1 93,411 16.0 RHB Investment Bank Berhad 33,084,136 10.6 103,263 17.6 Affi n Bank Berhad 19,064,700 6.1 - - Affi n Hwang Investment Bank Berhad 15,825,014 5.1 41,691 7.1 Hong Leong Investment Bank Berhad 14,256,791 4.5 34,467 5.9 AmInvestment Bank Berhad 10,847,051 3.5 29,373 5.0 Macquarie Capital Securities (Malaysia) Sdn Bhd 9,585,707 3.1 25,381 4.3 Maybank Investment Bank Berhad 9,144,305 2.9 29,539 5.1 Others 35,503,674 11.4 92,334 15.8 312,065,720 100.0 585,530 100.0

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

The above transactions values are in respect of quoted equity securities, quoted collective investment schemes, quoted warrant, unquoted warrant 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.


17. SEGMENTAL REPORTING

a. Business Segments

In accordance with the objective of the Fund, the Fund can invest 70% to 98% of its fund in quoted Malaysian investment securities. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

Quoted investment Other securities investments Total RM RM RM

2016 Revenue Segment (loss)/income (3,435,011) 685,299 Segment expense (736,794) - Net segment (loss)/income representing segment results (4,171,805) 685,299 (3,486,506) Unallocated expenditure (1,526,718) Loss before tax (5,013,224) Income tax (25,589) Net loss after tax (5,038,813) Assets Financial assets at FVTPL 65,587,863 13,247 Short term deposits - 15,392,000 Other segment assets 4,905,458 5,122 Total segment assets 70,493,321 15,410,369 85,903,690 Unallocated assets 990,897 86,894,587

Liabilities Total segment liabilities 2,926,749 - 2,926,749 Unallocated liabilities 153,728 3,080,477


17. SEGMENTAL REPORTING (CONTD.)

a. Business Segments (Contd.)

Quoted investment Other securities investments Total RM RM RM

2015 Revenue Segment income 4,565,745 294,467 Segment expense (685,284) - Net segment income representing segment results 3,880,461 294,467 4,174,928 Unallocated expenditure (1,558,843) Income before tax 2,616,085 Income tax - Net income after tax 2,616,085

Assets Financial assets at FVTPL 73,285,423 - Short term deposits - 20,086,000 Other segment assets 1,071,107 2,833 Total segment assets 74,356,530 20,088,833 94,445,363 Unallocated assets 4,236,758 98,682,121

Liabilities Total segment liabilities 978,562 - 978,562 Unallocated liabilities 2,576,140 3,554,702

b. Geographical Segments

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


18. 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

2016 Assets Quoted equity securities 61,411,940 - - 61,411,940 Quoted collective investment schemes 4,134,681 - - 4,134,681 Quoted warrant 41,242 - - 41,242 Unquoted warrant 13,247 - - 13,247 Short term deposits - 15,392,000 - 15,392,000 Other receivables - 4,910,580 - 4,910,580 Cash at bank - 990,897 - 990,897 65,601,110 21,293,477 - 86,894,587

Liabilities Amount due to Manager - - 104,233 104,233 Amount due to Trustee - - 3,320 3,320 Other payables - - 2,972,924 2,972,924 - - 3,080,477 3,080,477

2015 Assets Quoted equity securities 67,884,171 - - 67,884,171 Quoted collective investment schemes 5,338,489 - - 5,338,489 Quoted warrant 62,763 - - 62,763 Short term deposits - 20,086,000 - 20,086,000 Other receivables - 1,073,940 - 1,073,940 Cash at bank - 3,889,121 - 3,889,121 73,285,423 25,049,061 - 98,334,484

Liabilities Amount due to Manager - - 104,391 104,391 Amount due to Trustee - - 3,561 3,561 Other payables - - 1,005,442 1,005,442 Distribution payable - - 2,441,308 2,441,308 - - 3,554,702 3,554,702


18. 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 RM RM RM RM

Investments: 2016 - Quoted equity securities 61,411,940 - - 61,411,940 - Quoted collective investment schemes 4,134,681 - - 4,134,681 - Quoted warrant 41,242 - - 41,242 - Unquoted warrant - 13,247 - 13,247 2015 - Quoted equity securities 67,884,171 - - 67,884,171 - Quoted collective investment schemes 5,338,489 - - 5,338,489 - Quoted warrant 62,763 - - 62,763

Level 1: Quoted 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 quoted equity securities, quoted collective investment schemes and quoted warrant are determined by reference to Bursa Malaysia Securities Berhad’s bid prices at reporting date. The fair value of unquoted warrant is based on its reference price minus subscription price 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.


19. 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 years.


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Investor Services Center Head Offi ce, Kuala LumpurToll Free Line: 1 800 88 3737 Suite 12.02, 12th Floor, Kenanga International,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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