kenanga syariah growth fund

annual REPORT

For the Financial Year Ended 31 May 2019

KEnanGa SyaRiah GROwTh fund

KEnanGa SyaRiah GROwTh fund

Contents Page

Corporate directory ii - iiiDirectory of Manager’s Offices ivfund information 1Manager’s Report 2 - 5fund Performance 6 - 8Trustee’s Report 9independent auditors’ Report 10 - 12Shariah adviser’s Report 13Statement by the Manager 14financial Statements 15 - 49

ii Kenanga Syariah Growth Fund Annual Report

CORPORaTE diRECTORyManager: Kenanga investors Berhad (Company No. 353563-P)

Registered OfficeLevel 17, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 2888Fax: 03-2172 2999

Business OfficeLevel 14, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 3000Fax: 03-2172 3080E-mail:[email protected]: www.KenangaInvestors.com.my

Board of directorsDatuk Syed Ahmad Alwee Alsree (Chairman)Syed Zafilen Syed Alwee (independent

director)Peter John Rayner (independent director)Imran Devindran bin Abdullah (independent

director)Ismitz Matthew De AlwisNorazian Binti Ahmad Tajuddin (independent

director)

investment Committee Syed Zafilen Syed Alwee (independent

Member)Peter John Rayner (independent Member)Imran Devindran bin Abdullah (independent

Member)Ismitz Matthew De AlwisNorazian Binti Ahmad Tajuddin (independent

Member)

Company Secretary: norliza abd Samad (MAICSA 7011089)

Level 17, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

External fund Manager: Kenanga islamic investors Berhad (Company No. 451957-D)

Registered Office Level 17, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 2888Fax: 03-2172 2999

Business Office Level 14, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 3000Fax: 03-2172 3080

Trustee: CiMB islamic Trustee Berhad (Company No. 167913-M)

Registered Office Level 13, Menara CIMBJalan Stesen Sentral 2Kuala Lumpur Sentral50490 Kuala Lumpur.Tel: 03-2261 8888Fax: 03-2261 0099Website:www.cimb.com

Business Office Level 21, Menara CIMBJalan Stesen Sentral 2Kuala Lumpur Sentral50490 Kuala Lumpur.Tel: 03-2261 8888Fax: 03-2261 9889

Shariah adviser: Kenanga investment Bank Berhad (Company No. 15678-H)

Registered Office Level 17, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 2888Fax: 03-2172 2999

Business Office Level 16, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, Malaysia.Tel: 03-2172 2727Fax: 03-2172 2897Website: www.kenanga.com.my

Kenanga Syariah Growth Fund Annual Report iii

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.fimm.com.my

iv Kenanga Syariah Growth Fund Annual Report

diRECTORy Of ManaGER’S OffiCESRegional Branch Offices :

Kuala lumpurLevel 13, Kenanga Tower,237, Jalan Tun Razak,50400 Kuala Lumpur, MalaysiaTel: 03-2172 3123 Fax: 03-2172 3133

Johor BahruNo. 63 Jalan Molek 3/1,Taman Molek 81100 Johor Bahru, JohorTel: 07-288 1683Fax: 07-288 1693

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

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

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

KuantanGround Floor ShopNo. B8, Jalan Tun Ismail 125000 Kuantan, PahangTel : 09-514 3688Fax : 09-514 3838

Penang5.04, 5th Floor, Menara Boustead Penang No. 39, Jalan Sultan Ahmad Shah 10050 Penang Tel : 04-210 6628Fax : 04-210 6644

ipohSuite 1, 2nd Floor,No. 63, Persiaran Greenhill,30450 Ipoh, Perak, MalaysiaTel: 05-254 7573 / 7570 / 7575Fax: 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

Kota KinabaluLevel 8, Wisma Great EasternNo. 68, Jalan Gaya, 88000 Kota Kinabalu, SabahTel: 088-203 063 Fax: 088-203 062

Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir 70000 Seremban, Negeri Sembilan Tel: 06-761 5678 Fax: 06-761 2242

Petaling Jaya44B, Jalan SS21/35Damansara Utama47400 Petaling Jaya, SelangorTel: 03-7710 8828Fax: 03-7710 8830

Kenanga Syariah Growth Fund Annual Report 1

1. fund infORMaTiOn

1.1 fund name

Kenanga Syariah Growth fund (KSGf or the fund)

1.2 fund Category / Type

Equity (Islamic) / Growth

1.3 investment Objective

The Fund aims to provide unit holders with long-term capital growth by investing principally in equities that comply with Shariah requirements.

1.4 investment Strategy

The Fund’s assets are actively invested in a diversified portfolio of Malaysian Shariah-compliant equity and Shariah-compliant equity-related securities of companies with sustainable business model and trading at a discount to its intrinsic value.

1.5 duration

The Fund was launched on 29 January 2002 and shall exist as long as it appears to the Manager and the Trustee that it is in the interest of the unit holders for it to continue.

1.6 Performance Benchmark

FTSE-Bursa Malaysia Emas Shariah Index (FBMS).

1.7 distribution Policy

Income distribution is incidental, if any.

1.8 External fund Manager

Kenanga Islamic Investors Berhad

1.9 Breakdown of unit holdings of KSGf as at 31 May 2019

Size of holdingsno. of

unit holdersno. of

units held5,000 and below 4,990 13,180,7075,001 - 10,000 3,662 27,300,72110,001 - 50,000 7,247 166,644,34950,001 - 500,000 2,004 212,733,939500,001 and above 36 74,662,300Total 17,939 494,522,016

2 Kenanga Syariah Growth Fund Annual Report

2. ManaGER’S REPORT

2.1 Explanation on whether the fund has achieved its investment objective

The Fund boasts a return of 351.65% since inception; hence it has achieved its investment objective of achieving consistent capital appreciation over the long term by primarily investing in Shariah-compliant securities with good growth prospects.

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

Performance Chart Since launch (29/1/2002 - 31/5/2019)Kenanga Syariah Growth fund vs fTSE-Bursa Malaysia Emas Shariah index

Source: Novagni Analytics & Advisory

2.3 Investment strategies and policies employed during the financial year under review

For the financial year under review, the Fund continued with its strategy of investing in Shariah compliant securities of companies with sustainable business models and competent management, whilst trading at a discount to their intrinsic / fair value. The Fund focused on companies whose top line / revenue should prove to be relatively more resilient to a global economic slowdown and have the ability to maintain their profit margins.

2.4 The fund’s asset allocation as at 31 May 2019 and comparison with the previous financial year

asset 31 May 2019 31 May 2018Listed Shariah-compliant investment securities 91.8% 78.4%Short term Islamic deposits and cash 8.2% 21.6%

Reason for the differences in asset allocation

The fund invested level increased to 91.8% due to the fund manager taking an aggressive stance.

Benchmark

HISTORICAL FUND PRICE *

Annual Management Fee

1.50% p.a.

Annual Trustee Fee

0.05% p.a.

Redemption Charge

Since Inception DateRM 518.84 million

4-May-12RM 3.0262Highest

Aims to provide unit holders with long-term capital growth by

investing principally in equities that comply with Shariah

requirements.

Fund Category/Type

Equity (Islamic) / Growth

Launch Date

2018

Fund

-14.47

Benchmark

1 year

RM 1.0492

FUND PERFORMANCE (%)

June 2019

CUMULATIVE FUND PERFORMANCE (%) #

6 months

CALENDAR YEAR FUND PERFORMANCE (%) #

Period

1 month

Fund

-1.69 -0.35

Period

-13.52

FUND OBJECTIVE

External Investment Manager / Designated Fund Manager

Syarifah Hidayatul Akmal

-6.142.34

5.69

3.82

351.65

1.40

-3.12

2017

2016

12.96

-2.29

KLIFF Islamic Finance Awards 2019

Most Outstanding Islamic Fund ProductKenanga Syariah Growth Fund

3 years -1.06

-10.20

2.35

-4.17

127.67

2015

2014

Sales Charge

Max 5.50%

10.72

9.49

-1.20

FUND SIZE *

#Source : Lipper, 31 May 2019

5 years

Since Launch

5.14

29 January 2002

Trustee

CIMB Islamic Trustee Berhad

Benchmark

FTSE Bursa Malaysia EMAS Shariah Index

NAV PER UNIT *

Lipper Analytics10 May 2019

3-yearFund Volatility

Moderate

-50

0

50

100

150

200

250

300

350

400

450

Jan

02

Jun

02

De

c 0

2

Jun

03

De

c 0

3

Jun

04

De

c 0

4

Jun

05

De

c 0

5

Jun

06

De

c 0

6

Jun

07

De

c 0

7

Jun

08

De

c 0

8

Jun

09

De

c 0

9

Jun

10

De

c 1

0

Jun

11

De

c 1

1

Jun

12

De

c 1

2

Jun

13

De

c 1

3

Jun

14

De

c 1

4

Jun

15

De

c 1

5

Jun

16

De

c 1

6

Jun

17

De

c 1

7

Jun

18

De

c 1

8M

ay

19

% Cumulative Return, Launch to 31/05/2019

Kenanga Syariah Growth : 351.65 FTSE Bursa Malaysia Emas Shariah Index : 127.67

Source: Novagni Analytics and Advisory

1

2

3

4

5

TENAGA NASIONAL BHD

AXIATA GROUP BHD

DIALOG GROUP BHD

PENTAMASTER CORP BHD

YINSON HOLDINGS BHD

8.52%

5.34%

4.42%

4.15%

3.92%

10.11 sen

10.50 sen

ASSET ALLOCATION (% NAV) *

DISTRIBUTION HISTORY *TOP EQUITY HOLDINGS (% NAV) *

-

-

8.65%

5.83%

Based on the fund’s portfolio returns as at 10 May 2019, the Volatility Factor (VF) for this fund is 8.02 and is classified as “Moderate”. (Source: Lipper). “Moderate” includes

funds with VF that are above 6.595 and less than or equal to 8.795 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside

return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised

every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future.

Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 29 March 2019 and the Supplemental

Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission

Malaysia, who takes no responsibility for its contents. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our

offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any),

SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before

investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution

is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-

unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the

distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust

26-Feb-15

28-May-14

RM Yield (%)

* Source: Kenanga Investors Berhad, 31 May 2019

-9.31%

Date

Gross Distribution

Unit Split

16-May-16

7.50 sen

SECTOR ALLOCATION (% NAV) *

Redemption Charge

Nil

All fees and charges payable to the Manager and the Trustee are

subject to the goods and services tax /sales and services tax/other taxes

of similar nature as may be imposed by the government or other

authorities from time to time.

4-May-12

18-Dec-18

RM 3.0262

RM 0.9433

Highest

Lowest

87.10%

89.30%

90.50%

12.90%

10.70%

9.50%

March

April

May

Liquidity Equity

33.6%

14.2%

9.6%

9.5%

8.4%

7.6%

6.9%

3.9%

3.1%

2.3%

0.9%

Trading and Services

Industrial Products

Technology

Short Term Islamic Deposits and Cash

Construction

Finance

Consumer Products

Energy

Properties

Plantations

Others

loan financing risk disclosure statement before deciding to borrow to purchase units.“Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment

Scheme (EPF MIS). Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its

clients/directors/shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict

of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are equity and equity-related securities risk and

reclassification of Shariah status risk.


2.5 fund performance analysis based on naV per unit (adjusted for income distribution; if any) since last review year

year under review

Kenanga Syariah Growth fund 2.34%fTSE-Bursa Malaysia Emas Shariah index (fBMS) -3.12%

Source: Lipper

For the financial year under review, the Fund outperformed the FBMS benchmark by 5.46% mainly due to Shariah-compliant stock selection.

2.6 Review of the market

Market review

The FBMS started the month positive during the first week of June. However, the positive momentum failed to sustain as foreigners continued to sell the market. The initial decline was dragged by finance related stocks which brought the index lower on 11 June; bucking regional trend which closed in the green on optimism that the US-North Korea summit in Singapore may lead to the denuclearization of the Korean peninsula. The downtrend for the index continued, in line with regional markets on trade-war fears after Donald Trump threatened to have additional tariffs on another USD200 billion of Chinese imports. Despite concerns over elevated trade tensions, a strong round of US corporate earnings have helped pacify market jitters and lifted US stock indices in July before ending positively in August led by solid US corporate earnings and continued to hit a new high in September.

October was a brutal month for equity markets. Equities tumbled amidst escalated US-China trade tension, rising treasury yields, disappointment over apple suppliers’ profits and UK’s introduction of digital tax. The International Monetary Fund (IMF) cut 2018/19 global growth to 3.7% (previously 3.9%), the first downgrade since July 2016. IMF highlighted that risks to global outlook have risen due to the trade tensions and sharper interest rate hikes. November ended with mixed performances across the globe. While US equity markets recorded monthly gains with Dow Jones up by 1.7% month-on-month (MoM), European markets were generally negative. Investors were generally cautious over Brexit-led turmoil, falling oil prices and the uncertain outcome between Trump and Xi’s trade talk in G20 meeting.

The beginning of the year 2019 saw Asian markets rallying post–overselling in December mainly attributed to the Fed’s firm shift into a more dovish tone in addition to China’s positive monetary and fiscal policy implementation. The optimism continued for a 2 second month in a row, as US President Donald Trump announced he will be delaying US tariffs on China until further notice. Locally, higher oil prices boosted sentiment in oil and gas stocks, making it the biggest sector winner in February. Foreigners remained net sellers in March with RM1.6 billion outflows, bringing year-to-date outflow to RM1.3 billion.

In the month of April, Malaysia saw notable weakness in the Malaysian blue-chip index led by losses in banking names after Bank Negara’s cautious tone on the economy which ignited concern over an Overnight Policy Rate cut, and decline in a heavy weight utility stock following an unexpected secondary placement by a government-linked companies.

The year ended with a widespread selloff in May, triggered by both US and China raising tariffs against each other. On 7 May, BNM cut Overnight Policy Rate by 25 bps to 3%, the first change in 8 policy meetings which is negative for banks’ net interest margins and companies with high cash holdings. 9 May marked the first anniversary of Pakatan Harapan government in power where it made good progress in improving governance and addressing structural weaknesses.


2.6 Review of the market (contd.)

Market outlook

Key events to watch are the Bills that will be tabled at the fourteenth Parliament session which runs from 1 to 18 July 2019. Among the highly anticipated Bills that could be tabled are the abolition of the mandatory death penalty and Independent Police Complaints and Misconduct Commission (IPCMC). Investors will also be tracking the potential impact of the sugar tax on soft drinks and juices, which came into effect on 1 July, on soft drinks consumption. The anticipated economic recovery in 2H19 is less certain given the concerns of a prolonged US-China trade tensions despite the pre-emptive interest rate cut of 25 bps by BNM in May 2019. The persistently weak consumer and business sentiments may continue to undermine economic growth which is now projected at 4.5% for 2019.

Strategy

We expect the local market to remain volatile due to earnings risk and possible changes in global bond indices which could potentially trigger outflows, though the recent truce in US-China trade war and spate of mergers and acquisitions activities in the local market could boost near-term sentiment. We are positive on selective stocks in the construction, oil and gas and export sector.

2.7 distributions

For the financial year under review, the Fund did not declare any distribution.

2.8 details of any unit split exercise

The Fund did not carry out any unit split exercise during the financial year under review.

2.9 Significant changes in the state of affair of the Fund during the financial year

There were no significant changes in the state of affair of the Fund during the financial year and up until the date of the Manager’s report, not otherwise disclosed in the financial statements.

However, a Master Prospectus dated 29 March 2019 was issued to make the following changes:

a. slight amendments to the terminology used in relation to the Fund for better clarity; andb. general administrative updates such as branch details, cross trade statement,

unclaimed moneys statement and corporate details of the Manager.

Kindly refer to the Master Prospectus for further details.

2.10 Circumstances that materially affect any interests of the unit holders

During the financial year under review, there were no circumstances that materially affected any interests of the unit holders.


2.11 Rebates and soft commissions

It is the policy of the Manager to credit any rebates received into the account of the Fund. Any soft commissions received by investment manager on behalf of the Fund are in the form of research and advisory services that assist in the decision making process relating to the investment of the Fund which are of demonstrable benefit to unit holders of the Fund. Any dealing with the broker or dealer is executed on terms which are most favourable for the Fund. For the financial year under review, the Manager has received soft commissions from the stockbrokers.

2.12 Cross trade

During the financial year under review, no cross-trade transactions were undertaken by investment manager for the Fund.


3. fund PERfORManCE

3.1 Details of portfolio composition of the Fund for last three financial years as at 31 May are as follows:

a. distribution among industry sectors and category of Shariah-compliant investments:

fy fy fy2019 2018 2017

% % %

Energy 14.3 11.4 4.1 Consumer Products and Services 11.5 12.9 7.8 Technology 11.3 4.6 3.5 Telecommunications and Media 8.8 5.6 4.2 Utilities 8.6 6.3 7.9 Financial Services 7.7 4.2 4.1 Health Care 7.5 5.0 1.2 Industrial Products and Services 7.2 11.1 13.1 Construction 6.3 8.9 12.5 Property 5.3 4.7 9.2 Plantation 2.4 2.3 3.2 Transportation and Logistics - 0.2 1.5 Islamic Real Estate Investment

Trusts 0.8 0.9 3.8 Shariah-compliant warrants 0.1 0.3 -Short term Islamic deposits and

cash 8.2 21.6 23.9

100.0 100.0 100.0

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

b. distribution among markets

The Fund invests in local Shariah-compliant investment securities and cash instruments only.


3.2 Performance details of the Fund for the last three financial years ended 31 May are as follows:

fy2019

fy 2018

fy 2017

Net asset value (“NAV”) (RM Million) 518.84* 421.03 361.64 Units in circulation (Million) 494.52 410.67 340.58 NAV per unit (RM) 1.0492* 1.0252 1.0618 Highest NAV per unit (RM) 1.0888 1.1678 1.0802 Lowest NAV per unit (RM) 0.9433 1.0217 0.9868 Total return (%) 2.34 -3.45 6.95- Capital growth (%) 2.34 -3.45 6.95- Income growth (%) - - - Gross distribution per unit (sen) - - - Net distribution per unit (sen) - - - Management expense ratio (“MER”) (%)1 1.59 1.70 1.69 Portfolio turnover ratio (“PTR”) (times)2 0.79 1.05 0.48

Note: Total return is the actual return of the Fund for the respective financial 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 Shariah-compliant investment securities of the Fund divided by the average fund size calculated on a daily basis.

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

2. PTR is lower due to less trading activities.

* Based on bid price fair valuation method on all Shariah-compliant investments held by the Fund as at 31 May 2019, the NAV and NAV per unit would be RM517.12 million and RM1.0457 respectively. (As disclosed under Note 13 of the financial statements)


3.3 average total return of the fund

1 year31 May 18 - 31 May 19

3 years31 May 16 - 31 May 19

5 years31 May 14 - 31 May 19

Kenanga Syariah Growth fund 2.34% 2.17% 1.12%fTSE-Bursa Malaysia Emas Shariah index (fBMS) -3.12% 0.02% -1.73%

Source: Lipper

3.4 annual total return of the fund

year under review

31 May 18 - 31 May 19

1 year31 May 17 - 31 May 18

1 year31 May 16 - 31 May 17

1 year31 May 15 - 31 May 16

1 year31 May 14 - 31 May 15

Kenanga Syariah Growth fund 2.34% -3.45% 6.96% -0.47% -1.30%fTSE-Bursa Malaysia Emas Shariah index (fBMS) -3.12% -4.91% 7.39% -5.20% -4.26%

Source: Lipper

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


4 TRuSTEE’S REPORT TO ThE uniT hOldERS Of KEnanGa SyaRiah GROwTh fund

We, CIMB Islamic Trustee Berhad being the trustee for Kenanga Syariah Growth Fund (“the Fund”), are of the opinion that Kenanga Investors Berhad (“the Manager”), acting in the capacity as Manager of the Fund, has fulfilled its duties in the following manner for the financial year ended 31 May 2019.

a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager 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 and pricing for 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 Islamic Trustee Berhad

Lee Kooi Yoke Chief Executive Officer Kuala Lumpur, Malaysia

16 July 2019


5. indEPEndEnT audiTORS’ REPORT TO ThE uniT hOldERS Of KEnanGa SyaRiah GROwTh fund

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Kenanga Syariah Growth Fund (“the Fund”), which comprise the statement of financial position as at 31 May 2019, and the statement of comprehensive income, statement of changes in net asset value and statement of cash flows of the Fund for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, as set out on pages 15 to 49.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 31 May 2019 and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence and other ethical responsibilities

We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Information other than the financial statements and auditors’ report thereon

The Manager of the Fund (“the Manager”) is responsible for the other information. The other information comprises the information included in the annual report of the Fund, but does not include the financial statements of the Fund and our auditors’ report thereon.

Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


5. indEPEndEnT audiTORS’ REPORT TO ThE uniT hOldERS Of KEnanGa SyaRiah GROwTh fund (COnTd.)

Responsibilities of the Manager and the Trustee for the financial statements

The Manager is responsible for the preparation of financial statements of the Fund that 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 financial statements of the Fund that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

The Trustee is responsible for overseeing the Fund’s financial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager.


5. indEPEndEnT audiTORS’ REPORT TO ThE uniT hOldERS Of KEnanGa SyaRiah GROwTh fund (COnTd.)

Auditors’ responsibilities for the audit of the financial statements (contd.)

• Conclude on the appropriateness of the Manager’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Other matters

This report is made solely to the unit holders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Ng Sue EanAF: 0039 No. 03276/07/2020 JChartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

16 July 2019


6. ShaRiah adViSER’S REPORT TO ThE uniT hOldERS Of KEnanGa SyaRiah GROwTh fund

We have acted as the Shariah Adviser of Kenanga Syariah Growth Fund. Our responsibility is to ensure that the procedures and processes employed by Kenanga Investors Berhad are in accordance with Shariah principles.

In our opinion, based on true and fair view, Kenanga Investors Berhad has managed and administered Kenanga Syariah Growth Fund in accordance with Shariah principles and complied with applicable guidelines, rulings and decisions issued by the Securities Commission pertaining to Shariah matters for the financial year ended 31 May 2019.

In addition, we also confirm that the investment portfolio of Kenanga Syariah Growth Fund comprises instruments which have been classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia and the Shariah Advisory Council of Bank Negara Malaysia. As for the instruments which are not classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia and the Shariah Advisory Council of Bank Negara Malaysia, we have reviewed the said instruments and opine that these instruments are designated as Shariah-compliant.

If there is any material Shariah non-compliance with the financial information and the operations we need to report the fact. In this regard, we have nothing to report.

I, Dr. Kamaruzaman Noordin, hereby confirm that all members of the Shariah Adviser have been consulted and made aware of all the Shariah issues in relation to this fund.

For and on behalf of the Shariah AdviserKenanga Investment Bank Berhad Shariah Committee

DR KAMARUZAMAN BIN NOORDINShariah Adviser/Designated Person Responsible for Shariah Advisory


16 July 2019


7. 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 financial position as at 31 May 2019 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial year ended 31 May 2019 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 financial position of Kenanga Syariah Growth Fund as at 31 May 2019 and of its financial performance and cash flows for the financial 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 Executive Director/Chief Executive Officer


16 July 2019


8. finanCial STaTEMEnTS

8.1 STaTEMEnT Of COMPREhEnSiVE inCOME fOR ThE finanCial yEaR EndEd 31 May 2019

note 2019 2018RM RM

inVESTMEnT inCOME

Dividend income 9,760,669 10,431,798Profit income 2,703,498 1,717,473Net gain/(loss) from Shariah-compliant

investments:- Financial assets at fair value through profit

or loss (“FVTPL”) 4 9,506,901 (19,142,369) 21,971,068 (6,993,098)

EXPEnSES

Manager’s fee 5 7,154,029 5,887,988Trustee’s fee 6 238,468 196,266Auditors’ remuneration 13,000 14,000Tax agent’s fee 4,000 9,400Administration expenses 152,941 575,826Brokerage and other transaction costs 2,580,325 2,690,162

10,142,763 9,373,642

nET inCOME/(lOSS) BEfORE TaX 11,828,305 (16,366,740)

Income tax 7 - -

nET inCOME/(lOSS) afTER TaX, REPRESEnTinG TOTal COMPREhEnSiVE inCOME/(lOSS) fOR ThE finanCial yEaR 11,828,305 (16,366,740)

Net income/(loss) after tax is made up as follows:Realised (loss)/gain (25,010,891) 2,069,400Unrealised gain/(loss) 4 36,839,196 (18,436,140)

(11,828,305) (16,366,740)

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


8.2 STaTEMEnT Of finanCial POSiTiOn aS aT 31 May 2019

note 2019 2018RM RM

aSSETS

inVESTMEnTS

Financial assets at FVTPL 4 467,705,451 325,110,386Short term Islamic deposits 8 41,998,000 89,327,122

509,703,451 414,437,508

OThER aSSETS

Amount due from licensed financial institutions 9 7,370,667 8,717,294Other receivables 10 555,041 980,762Tax recoverable 9,092 9,092Cash at bank 12,682 22,790

7,947,482 9,729,938

TOTal aSSETS 517,650,933 424,167,446

liaBiliTiES

Amount due to licensed financial institutions 9 - 4,069,280Amount due to Manager 457,293 725,255Amount due to Trustee 21,869 18,316Other payables 11 52,167 91,487TOTal liaBiliTiES 531,329 4,904,338

EQuiTy

Unit holders’ contribution 503,072,685 417,044,494Retained earnings 14,046,919 2,218,614nET aSSET ValuE (“naV”) aTTRiBuTaBlE

TO uniT hOldERS 12 517,119,604 419,263,108

TOTal liaBiliTiES and EQuiTy 517,650,933 424,167,446

nuMBER Of uniTS in CiRCulaTiOn 12(a) 494,522,016 410,674,447

nET aSSET ValuE PER uniT (RM) 13 1.0457 1.0209



8.3 STaTEMEnT Of ChanGES in nET aSSET ValuE fOR ThE finanCial yEaR EndEd 31 May 2019

noteunit holders’ contribution

Retained earnings Total naV

RM RM RM

2019At beginning of the financial

year 417,044,494 2,218,614 419,263,108 Total comprehensive income - 11,828,305 11,828,305 Creation of units 12(a) 132,450,387 - 132,450,387 Cancellation of units 12(a) (46,429,767) - (46,429,767)Distribution equalisation 12(a) 7,571 - 7,571 At end of the financial year 503,072,685 14,046,919 517,119,604

2018At beginning of the financial

year 341,577,232 18,585,354 360,162,586 Total comprehensive loss - (16,366,740) (16,366,740)Creation of units 12(a) 122,166,685 - 122,166,685 Cancellation of units 12(a) (47,743,728) - (47,743,728)Distribution equalisation 12(a) 1,044,305 - 1,044,305 At end of the financial year 417,044,494 2,218,614 419,263,108



8.4 STaTEMEnT Of CaSh flOwS fOR ThE finanCial yEaR EndEd 31 May 2019

2019 2018RM RM

CaSh flOwS fROM OPERaTinG and inVESTinG aCTiViTiES

Proceeds from sale of financial assets at FVTPL 308,903,399 374,679,010 Dividends received 10,167,337 10,087,613 Profit from Islamic deposits received 2,722,551 1,725,385 Tax agent’s fee paid - (9,400)Auditors’ remuneration paid (12,000) (12,000)Payment for other fees and expenses (173,827) (454,765)Trustee’s fee paid (234,915) (192,802)Manager’s fee paid (7,047,436) (5,784,058)Purchase of financial assets at FVTPL (447,317,975) (456,116,074)Net cash used in operating and investing activities (132,992,866) (76,077,091)

CaSh flOwS fROM finanCinG aCTiViTiES

Cash received from units created 132,420,482 123,806,685 Cash paid on units cancelled (46,766,846) (47,440,663)Net cash generated from financing activities 85,653,636 76,366,022

nET (dECREaSE)/inCREaSE in CaSh and CaSh EQuiValEnTS (47,339,230) 288,931

CaSh and CaSh EQuiValEnTS aT BEGinninG Of ThE finanCial yEaR 89,349,912 89,060,981

CaSh and CaSh EQuiValEnTS aT End Of ThE finanCial yEaR 42,010,682 89,349,912

Cash and cash equivalents comprise:Cash at bank 12,682 22,790 Short term Islamic deposits 41,998,000 89,327,122

42,010,682 89,349,912



8.5 nOTES TO ThE finanCial STaTEMEnTS fOR ThE finanCial yEaR EndEd 31 May 2019

1. ThE fund, ThE ManaGER and ThEiR PRinCiPal aCTiViTiES

Kenanga Syariah Growth Fund (“the Fund”) was constituted pursuant to the executed Master Deed dated 8 January 2002 (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 Islamic Trustee Berhad (“the Trustee” with effect from 3 December 2013). The aforesaid change was effected on 3 December 2013 via a Second Master Supplemental Deed dated 19 November 2013. The Fund commenced operations on 29 January 2002 and will continue to be in operation until terminated by the Trustee, as provided under Part 12 of the Deed.

Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank 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 Level 14, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur.

The Fund seeks to provide unit holders with long-term capital growth by investing principally in equities that comply with Shariah requirements.

The financial statements were authorised for issue by the Chief Executive Officer of the Manager on 16 July 2019.

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, liquidity risk and reclassification of Shariah status risk. Whilst these are the most important types of financial risks inherent in each type of financial 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 a Shariah-compliant 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 unit holders, consistent with the long-term objectives of the Fund.

a. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes interest rate risk and price risk.


2. finanCial RiSK ManaGEMEnT OBJECTiVES and POliCiES (COnTd.)

a. Market risk (contd.)

Market risk arises when the value of the Shariah-compliant investments fluctuates 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 Shariah-compliant investments’ prices 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 Shariah-compliant investments and continuous monitoring of their performance and risk profiles.

i. interest rate risk

Interest rate risk refers to how the changes in the interest rate environment would affect the valuation of Shariah-compliant instruments. In the event of a rising interest rate environment, the valuation of Shariah-compliant instruments may decrease, and vice versa. Interest rate, such as the Overnight Policy Rate set by Bank Negara Malaysia, will have an impact on the investment decisions of the Fund regardless of whether it is a Shariah-compliant fund or otherwise. It does not in any way suggest that the Fund will invest in conventional financial instruments.

The Fund is not exposed to significant interest rate risk as its Islamic deposits are short term in nature and have fixed profit rates.

interest rate risk exposure

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

up to 1 year

non-exposure

to interest rate

movement Total

weighted average effective

rate of return*

RM RM RM %

2019assetsFinancial assets at

FVTPL - 467,705,451 467,705,451 Short term Islamic

deposits 41,998,000 - 41,998,000 3.1Other assets - 7,938,390 7,938,390

41,998,000 475,643,841 517,641,841

liabilitiesOther liabilities - 479,162 479,162

Total interest rate sensitivity gap 41,998,000 475,164,679 517,162,679




i. interest rate risk (contd.)

interest rate risk exposure (contd.)

up to 1 year

non-exposure

to interest rate

movement Total

weighted average effective

rate of return*

RM RM RM %

2018assetsFinancial assets at

FVTPL - 325,110,386 325,110,386Short term islamic

deposits 89,327,122 - 89,327,122 3.3Other assets - 9,720,846 9,720,846

89,327,122 334,831,232 424,158,354

liabilitiesOther liabilities - 4,812,851 4,812,851

Total interest rate sensitivity gap 89,327,122 330,018,381 419,345,503

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

ii. Price risk

Price risk is the risk of unfavourable changes in the fair values of listed Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants. The Fund invests in listed Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants which are exposed to price fluctuations. This may then affect the NAV of the Fund.




ii. Price risk (contd.)

Price risk sensitivity

The Manager’s best estimate of the effect on the profit for the financial year due to a reasonably possible change in investments in listed Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants with all other variables held constant is indicated in the table below:

Changes in price

increase/(decrease)

Basis points

Effects on profit for the financial

yearGain/(loss)

RM

2019Financial assets at FVTPL 5/(5) 233,853/(233,853)

2018Financial assets at FVTPL 5/(5) 162,555/(162,555)

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 Shariah-compliant financial instruments as at the reporting date.

fair value Percentage of naV2019 2018 2019 2018

RM RM % %

Financial assets at FVTPL 467,705,451 325,110,386 90.4 77.5




ii. Price risk (contd.)

Price risk concentration (contd.)

The Fund’s concentration of Shariah-compliant investment security price risk from the Fund’s listed Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants analysed by sector is as follows:

fair value Percentage of naV2019 2018 2019 2018

RM RM % %

Energy 73,043,386 47,399,811 14.1 11.3 Consumer Products

and Services 58,106,156 53,381,332 11.2 12.7 Technology 57,557,393 19,045,367 11.2 4.5 Telecommunications

and Media 45,049,880 23,330,537 8.7 5.6 Utilities 44,088,450 25,979,040 8.5 6.2 Financial Services 39,259,809 17,332,548 7.6 4.1 Health Care 38,196,450 20,813,992 7.4 5.0 Industrial Products

and Services 36,636,233 46,233,538 7.1 11.0 Construction 32,036,133 36,943,612 6.2 8.8 Property 26,813,817 19,568,064 5.2 4.7 Plantation 12,045,360 9,606,604 2.3 2.3 Transportation and

Logistics - 664,950 - 0.2 Islamic Real Estate

Investment Trusts 4,191,020 3,723,342 0.8 0.9 Shariah-compliant

warrants 681,364 1,087,649 0.1 0.2 467,705,451 325,110,386 90.4 77.5

b. Credit risk

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



b. Credit risk (contd.)

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 financial asset recognised in the statement of financial position.

ii. financial assets that are either past due or impaired

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

iii. Credit quality of financial assets

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

Short term islamic deposits

Percentage of totalshort term islamic deposits Percentage of naV

2019 2018 2019 2018% % % %

RatingWR 88.5 100.0 7.2 21.3 P1 11.5 - 0.9 -

100.0 100.0 8.1 21.3

c. liquidity risk

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

The Islamic liquid assets comprise cash, short term Islamic deposits with licensed financial institutions and other Shariah-compliant instruments, which are capable of being converted into cash within 7 days.



c. liquidity risk (contd.)

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

up to 1 yearnote 2019 2018

RM RM

assetsFinancial assets at FVTPL 467,705,451 325,110,386 Short term Islamic deposits 41,998,000 89,327,122 Other assets 7,938,390 9,720,846

i. 517,641,841 424,158,354

liabilitiesOther liabilities ii. 479,162 4,812,851

Equity iii. 517,119,604 419,263,108

Liquidity gap 43,075 82,395

i. financial assets

Analysis of financial 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 Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants have been included in the “up to 1 year” category on the assumption that these are highly liquid Shariah-compliant investments which can be realised should all of the Fund’s unit holders’ 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 unit holders can request for redemption of their units, they have been categorised as having a maturity of “up to 1 year”.



d. Reclassification of Shariah status risk

The risk that the currently held Shariah-compliant securities in the portfolio of Shariah-compliant funds may be reclassified to be Shariah non-compliant upon review of the securities by the Shariah Advisory Council of the Securities Commission Malaysia (“SACSC”) performed twice yearly. If this occurs, the Manager will take the necessary steps to dispose such securities.

There may be opportunity loss to the Fund due to the Fund not being allowed to retain the excess capital gains derived from the disposal of the Shariah non-compliant equities. The value of the Fund may also be adversely affected in the event of a disposal of Shariah non-compliant equities at a price lower than the investment cost.

e. Regulatory reportings

It is the Manager’s responsibility to ensure full compliance of all requirements under the Guidelines on Unit Trust Funds issued by Securities Commission Malaysia. Any breach of any such requirement has been reported in the mandatory reporting to Securities Commission Malaysia on a monthly basis.

3. SuMMaRy Of SiGnifiCanT aCCOunTinG POliCiES

a. Basis of accounting

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

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the new and amended MFRS and Interpretation Committee’s (“IC”) Interpretation which became effective for the Fund on 1 June 2018.

description

Effective for financial period beginning on

or after

Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018

Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018

Amendments to MFRS 128: Investments in Associates and Joint Ventures contained in the document entitled “Annual Improvements to MFRS Standards 2014 - 2016 Cycle” 1 January 2018

MFRS 9: Financial Instruments 1 January 2018


3. SuMMaRy Of SiGnifiCanT aCCOunTinG POliCiES (COnTd.)

a. Basis of accounting (contd.)

description


or after

MFRS 15: Revenue from Contracts with Customers 1 January 2018Clarifications to MFRS 15: Revenue from Contracts with

Customers 1 January 2018Amendments to MFRS 2: Classification and Measurement

of Shared-Based Payment Transactions 1 January 2018

Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts

Temporary exemption from MFRS 9 subject

to certain criteria being met for annual periods

beginning on or after 1 January 2018

Amendments to MFRS 140: Transfers of Investment Property 1 January 2018

IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2018

The adoption of the new and amended MFRS and IC Interpretation did not have any significant impact on the financial position or performance of the Fund other than the impacts as discussed below:

MfRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9 for annual periods on or after 1 January 2018. MFRS 9 requires financial assets to be classified on the basis of the business model within which they are held and their contractual cash flow characteristics. The requirements related to the fair value option for financial liabilities were also changed to address own credit risk. The adoption of MFRS 9 has no effect on the classification and measurement of the Fund’s financial assets and financial liabilities.

MFRS 9 also requires impairment assessments to be based on an expected credit loss model, replacing the MFRS 139 incurred loss model. Finally, MFRS 9 aligns hedge accounting more closely with risk management, establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the previous model.

The Fund did not change the classification of its investments nor were there any material financial impact arising from the adoption of this standard.



b. Standards, amendments and interpretations issued but not yet effective

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

description


or after

Amendments to MFRS contained in the document entitled “Annual Improvements to MFRS Standards document 2015 - 2017 Cycle” 1 January 2019

Amendments to MFRS 3 and MFRS 11: Previously Held Interest in a Joint Operation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019

Amendments to MFRS 112: Income Tax Consequences of Payments on Financial Instruments Classified as Equity contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019

Amendments to MFRS 123: Borrowing Costs Eligible for Capitalisation contained in the document entitled “Annual Improvements to MFRS Standards 2015 - 2017 Cycle” 1 January 2019

MFRS 16: Leases 1 January 2019Amendments to MFRS 9: Prepayment Features with

Negative Compensation 1 January 2019Amendments to MFRS 119: Plan Amendment, Curtailment

or Settlement 1 January 2019Amendments to MFRS 128: Long-term Interests in

Associates and Joint Ventures 1 January 2019IC Interpretation 23: Uncertainty over Income Tax

Treatments 1 January 2019Amendments to MFRS 2: Share-Based Payment 1 January 2020Amendments to MFRS 3: Business Combinations 1 January 2020Amendments to MFRS 3: Definition of a Business 1 January 2020Amendments to MFRS 6: Exploration for and Evaluation of

Mineral Resources 1 January 2020Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020Amendments to MFRS 101: Presentation of Financial

Statements 1 January 2020Amendments to MFRS 108: Accounting Policies, Changes

in Accounting Estimates and Errors 1 January 2020Amendments to MFRS 101 & MFRS 108: Definition of

Material 1 January 2020Amendments to MFRS 134: Interim Financial Reporting 1 January 2020



b. Standards, amendments and interpretations issued but not yet effective (contd.)

Amendment to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 January 2020

Amendment to MFRS 138: Intangible Assets 1 January 2020Amendments to IC Interpretation 12: Service Concession

Arrangements 1 January 2020Amendments to IC Interpretation 19: Extinguishing

Financial Liabilities with Equity Instruments 1 January 2020Amendment to IC Interpretation 20: Stripping Costs in the

Production Phase of a Surface Mine 1 January 2020Amendments to IC Interpretation 22: Foreign Currency

Transactions and Advance Consideration 1 January 2020Amendments to IC Interpretation 132: Intangible Assets -

Web Site Costs 1 January 2020MFRS 17: Insurance Contracts 1 January 2021Amendments to MFRS 10 and MFRS 128: Sale or

Contribution of Assets between an Investor and its Associate or Joint Venture

To be announcedby MASB

The Fund will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any significant impact to the financial statements of the Fund upon their initial application.

c. financial instruments

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

i. Measurement categories of financial assets and liabilities

From 1 June 2018, the Fund classifies all of its financial assets based on the business model for managing the assets and the asset’s contractual terms, measured at either:

• Amortised cost;• Fair value through other comprehensive income; and• Fair value through profit or loss.

The Fund may designate financial instruments at FVTPL, if so doing eliminates or significantly reduces measurement or recognition inconsistencies.

The Fund’s other financial assets include cash and bank balances, short term deposits and other receivables. Prior to 1 June 2018, the Fund classified its Islamic other financial assets as receivables (amortised cost), as explained in Note 3(c)(iii).

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

The Fund’s other financial liabilities include trade payables and other payables.



c. financial instruments (contd.)

i. Measurement categories of financial assets and liabilities (contd.)

Other financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective yield rate. Gains or losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

ii. initial recognition and subsequent measurement

The classification of financial assets at initial recognition depends on their contractual terms and the business model for managing the instruments, as described in Note 3(c)(iii). Financial assets are initially measured at their fair value, except in the case of financial assets recorded at FVTPL, transaction costs are added to, or subtracted from, this amount. Trade receivables are measured at the transaction price. When the fair value of financial instruments at initial recognition differs from the transaction price, the Fund accounts for the Day 1 profit or loss, as described below.

After initial measurement, debt instruments are measured at amortised cost, using the effective yield rate (“EYR”) method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EYR. Expected credit losses (“ECLs”) are recognised in the statement of comprehensive income when the investments are impaired.

Financial assets at FVTPL are recorded in the statement of financial position at fair value. Changes in fair value are recorded in profit or loss.

iii. due from banks, short term islamic deposits, trade and other receivables at amortised cost

Prior to 1 June 2018, included in the financial assets are cash and bank balances, short term Islamic deposits and other receivables including receivables which are those non–derivative financial assets with fixed or determinable payments that were not quoted in an active market.

From 1 June 2018, the Fund only measures the amount due from banks, short term Islamic deposits and other receivables at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and profit (“SPPP”) on the principal amount outstanding.




iii. due from banks, short term islamic deposits, trade and other receivables at amortised cost (contd.)

The details of these conditions are outlined below.

Business model assessment

The Fund determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.

The Fund’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity’s key management personnel;

• The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed;

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); and

• The expected frequency, value and timing of sales are also important aspects of the Fund’s assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Fund’s original expectations, the Fund does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward, unless it has been determined that there has been a change in the original business model.

The SPPP test

As a second step of its classification process the Fund assesses the contractual terms of financial assets to identify whether they meet the SPPP test.

‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation/accretion of the premium/discount).

The most significant elements of profit within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPP assessment, the Fund applies judgment and considers relevant factors such as the currency in which the financial asset is denominated, and the period for which the profit rate is set.

In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and profit on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL.




iv. financial investments

Financial assets in this category are those that are managed in a fair value business model, or that have been designated by management upon initial recognition, or are mandatorily required to be measured at fair value under MFRS 9. This category includes debt instruments whose cash flow characteristics fail the SPPP criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell.

d. Reclassification of financial assets and liabilities

The Fund has not reclassified its financial assets and financial liabilities subsequent to their initial recognition and upon adoption of MFRS 9.

e. Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the financial asset have expired. The Fund also derecognises the financial asset if it has both transferred the financial asset and the transfer qualifies for derecognition.

The Fund has transferred the financial asset if, and only if, either:

• The Fund has transferred its contractual rights to receive cash flows from the financial asset; or

• It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass–through’ arrangement.

Pass-through arrangements are transactions whereby the Fund retains the contractual rights to receive the cash flows of a financial asset (the ‘original asset’), but assumes a contractual obligation to pay those cash flows to one or more entities (the ‘eventual recipients’), when all of the following three conditions are met:

• The Fund has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short term advances with the right to full recovery of the amount lent plus accrued profit at market rates;

• The Fund cannot sell or pledge the original asset other than as security to the eventual recipients; and

• The Fund has to remit any cash flows it collects on behalf of the eventual recipients without material delay. In addition, the Fund is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents including profit earned, during the period between the collection date and the date of required remittance to the eventual recipients.

A transfer only qualifies for derecognition if either:

• The Fund has transferred substantially all the risks and rewards of the asset; or• The Fund has neither transferred nor retained substantially all the risks and

rewards of the asset, but has transferred control of the asset.



e. Derecognition of financial assets (contd.)

The Fund considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.

When the Fund has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Fund’s continuing involvement, in which case, the Fund also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Fund has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Fund could be required to pay.

If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Fund would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

f. Impairment of financial assets (Policy applicable from 1 June 2018)

i. Overview of the expected credit loss (“ECl”) principles

As described in Note 3(a), the adoption of MFRS 9 has fundamentally changed the Fund’s receivables impairment method by replacing MFRS 139’s incurred loss approach with a forward-looking ECL approach.

ii. write-offs

The Fund’s accounting policy under MFRS 9 remains the same as it was under MFRS 139. Financial assets are written off either partially or in their entirety only when the Fund has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to credit loss expense.

g. income

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

Profit income is recognised using the effective yield 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 Shariah-compliant investments is measured as the difference between the net disposal proceeds and the carrying amount of the Shariah-compliant investment.



h. Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents include cash at bank and short term Islamic deposits with licensed financial institutions with insignificant risk of changes in value.

i. income tax

Income tax on the profit or loss for the financial year comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year.

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

j. unrealised reserves

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

k. unit holders’ contribution – naV attributable to unit holders

The unit holders’ contribution to the Fund is classified 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 unit holders by way of distribution and/or adjusted accordingly when units are released back to the Trustee.

l. functional and presentation currency

The financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Fund’s functional currency.

m. distributions

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

n. Significant accounting judgments and estimates

The preparation of financial 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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.


4. finanCial aSSETS aT fVTPl

2019 2018 RM RM

Financial assets held for trading, at FVTPL:Listed Shariah-compliant equity securities 462,833,067 320,299,395 Listed Islamic collective investment schemes 4,191,020 3,723,342 Listed Shariah-compliant warrants 681,364 1,087,649

467,705,451 325,110,386

Net gain/(loss) on financial assets at FVTPL comprised:Realised loss on disposals (27,332,295) (706,229)Unrealised changes in fair values 36,839,196 (18,436,140)

9,506,901 (19,142,369)

Details of financial assets at FVTPL as at 31 May 2019:

Quantity aggregate

cost fair value Percentage

of naVRM RM %

listed Shariah-compliant equity securities

EnergyDialog Group Berhad 6,905,876 16,258,276 22,858,450 4.4 Hibiscus Petroleum

Berhad 12,258,200 12,900,912 12,625,946 2.5 Sapura Energy Berhad 31,643,100 10,965,627 9,334,714 1.8 Serba Dinamik Holdings

Berhad 1,970,900 7,454,932 7,903,309 1.5 Yinson Holdings Berhad 4,121,900 15,997,413 20,320,967 3.9

63,577,160 73,043,386 14.1

Consumer Products and Services

Bermaz Auto Berhad 6,768,400 14,480,464 15,567,320 3.0 CCK Consolidated

Holdings Berhad 4,503,500 2,790,239 2,364,338 0.5 Nestlé (Malaysia) Berhad 89,100 6,297,173 13,088,790 2.5 Power Root Berhad 4,035,100 6,193,761 5,729,842 1.1 PPB Group Berhad 271,600 5,133,583 5,095,216 1.0 QL Resources Berhad 1,019,525 3,058,030 6,932,770 1.3 Sime Darby Berhad 4,055,600 9,374,547 9,327,880 1.8

47,327,797 58,106,156 11.2

# Included a non-Shariah compliant equity security, Sentoria Group Berhad, of RM1,292,462. The security has been reclassified as Shariah-compliant by SACSC on 31 May 2019.


4. finanCial aSSETS aT fVTPl (COnTd.)

Details of financial assets at FVTPL as at 31 May 2019: (contd.)

Quantity aggregate


of naVRM RM %

listed Shariah-compliant equity securities (contd.)

TechnologyFrontken Corporation

Berhad 14,142,200 12,068,343 17,819,172 3.4 Inari Amertron Berhad 6,651,600 10,777,074 10,243,464 2.0 My E.G. Services Berhad 5,788,500 7,452,834 8,046,015 1.6 Pentamaster Corporation

Berhad 5,193,400 14,776,927 21,448,742 4.2 45,075,178 57,557,393 11.2

Telecommunications and Media

Axiata Group Berhad 5,906,228 25,837,951 27,463,960 5.3 TIME dotCom Berhad 1,998,400 16,630,787 17,585,920 3.4

42,468,738 45,049,880 8.7

utilitiesTenaga Nasional Berhad 3,482,500 47,864,301 44,088,450 8.5

financial ServicesBIMB Holdings Berhad 4,207,100 17,292,083 19,394,731 3.8 Syarikat Takaful Malaysia

Keluarga Berhad (formerly known as Syarikat Takaful Malaysia Berhad) 3,158,200 9,885,006 19,865,078 3.8

27,177,089 39,259,809 7.6

health CareDuopharma Biotech

Berhad 1,960,136 2,676,531 2,626,582 0.5 Hartalega Holdings

Berhad 2,794,200 14,631,546 14,501,898 2.8 IHH Healthcare Berhad 1,364,900 7,259,881 7,506,950 1.5 Kossan Rubber Industries

Berhad 3,424,500 13,482,430 13,561,020 2.6 38,050,388 38,196,450 7.4




Quantity aggregate


of naVRM RM %


industrial Products and Services

ATA IMS Berhad (formerly known as Denko Industrial Corporation Berhad) 1,576,400 2,664,116 2,632,588 0.5

Chin Hin Group Berhad 988,600 1,293,277 726,621 0.2 PETRONAS Chemicals Group

Berhad 2,190,300 18,766,075 18,223,296 3.5 PESTECH International Berhad 2,839,264 2,600,191 2,952,835 0.6 Rohas Tecnic Berhad 1,146,700 1,370,443 636,418 0.1 Sunway Berhad 6,824,092 10,740,162 11,464,475 2.2

37,434,264 36,636,233 7.1

ConstructionGabungan AQRS Berhad 5,579,196 9,163,650 7,308,747 1.4 IJM Corporation Berhad 5,146,400 10,090,883 11,322,080 2.2 Kerjaya Prospek Group Berhad 7,336,240 9,271,757 8,950,213 1.7 MGB Berhad 6,230,900 7,404,185 4,455,093 0.9

35,930,475 32,036,133 6.2

PropertyLBS Bina Group Berhad -

preference shares 817,580 899,338 666,328 0.1 LBS Bina Group Berhad -

ordinary shares 9,900,440 8,780,706 5,098,726 1.0 Malaysian Resources

Corporation Berhad 11,963,000 9,242,478 11,005,960 2.1 Paramount Corporation Berhad 3,573,900 6,977,654 7,397,973 1.5 Sentoria Group Berhad 2,344,930 1,559,499 716,729 0.1S P Setia Berhad - preference

shares B 428,546 377,121 336,409 0.1 Tambun Indah Land Berhad 2,136,500 3,653,455 1,591,692 0.3

31,490,251 26,813,817 5.2




Quantity aggregate


of naVRM RM %


PlantationSime Darby Plantation Berhad 2,590,400 13,328,170 12,045,360 2.3

Total listed Shariah-compliant equity securities 429,723,811 462,833,067 89.5

listed islamic collective investment scheme

Axis Real Estate Investment Trust 2,450,889 3,852,851 4,191,020 0.8

Total listed islamic collective investment scheme 3,852,851 4,191,020 0.8

listed Shariah-compliant warrants

Kerjaya Prospek Group Berhad-WB* 384,360 - 80,716 - #

Malaysian Resources Corporation Berhad-WB* 400,581 - 104,151 - #

N2N Connect Berhad-WB* 1,407,550 - 309,661 0.1 Sunway Berhad-WB* 511,880 - 186,836 - #

- 681,364 0.1

Total financial assets at fVTPl 433,576,662 467,705,451 90.4

Unrealised gain on financial assets at fVTPl 34,128,789

* Corporate action entitlement# Denotes less than 0.05%


5. ManaGER’S fEE

The Manager’s fee is calculated on a daily basis at a rate not exceeding 1.50% per annum of the NAV of the Fund as provided under Clause 13.1 of the Deed.

The Manager is currently charging Manager’s fee of 1.50% per annum (2018: 1.50% per annum) of the NAV of the Fund.

6. TRuSTEE’S fEE

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

The Trustee’s fee is currently calculated at 0.05% per annum (2018: 0.05% per annum) of the NAV of the Fund.

7. inCOME TaX

Income tax is calculated at the Malaysian statutory tax rate of 24% of the estimated assessable income for the current and previous financial years.

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/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows:

2019 2018RM RM

Net income/(loss) before tax 11,828,305 (16,366,740)

Tax at Malaysian statutory tax rate of 24% (2018: 24%) 2,838,793 (3,928,018)Tax effect of:

Income not subject to tax (11,832,807) (2,915,825)Losses not deductible for tax purposes 6,559,751 4,594,169Expenses not deductible for tax purposes 688,252 812,364Restriction on tax deductible expenses for unit trust fund 1,746,011 1,437,310

Income tax for the financial year - -

8. ShORT TERM iSlaMiC dEPOSiTS

Short term Islamic deposits are held with licensed financial institutions in Malaysia at the prevailing profit rates.


9. aMOunT duE fROM/TO liCEnSEd finanCial inSTiTuTiOnS

Amount due from/to licensed financial institutions relates to the amount to be received from or paid to licensed financial institutions arising from the sales and purchases of Shariah-compliant investments.

10. OThER RECEiVaBlES

2019 2018RM RM

Profit receivable from short term Islamic deposits 25,472 44,525Dividend receivable 529,569 936,237

555,041 980,762

11. OThER PayaBlES

2019 2018RM RM

Accrual for auditors’ remuneration 13,000 12,000 Accrual for tax agent’s fees 8,000 4,000 Provision for printing and other expenses 31,167 75,487

52,167 91,487

12. nET aSSET ValuE aTTRiBuTaBlE TO uniT hOldERS

NAV attributed to unit holders is represented by:

note 2019 2018RM RM

Unit holders’ contribution (a) 503,072,685 417,044,494

Retained earnings:Realised reserves (20,081,870) 4,929,021Unrealised reserves 34,128,789 (2,710,407)

14,046,919 2,218,614

517,119,604 419,263,108


12. nET aSSET ValuE aTTRiBuTaBlE TO uniT hOldERS (COnTd.)

(a) unit holders’ contribution

2019 2018no. of units RM no. of units RM

At beginning of the financial year 410,674,447 417,044,494 340,583,836 341,577,232

Add: Creation of units 129,180,903 132,450,387 113,855,544 122,166,685

Less: Cancellation of units (45,333,334) (46,429,767) (43,764,933) (47,743,728)

Distribution equalisation - 7,571 - 1,044,305

At end of the financial year 494,522,016 503,072,685 410,674,447 417,044,494

The Manager, Kenanga Investors Berhad, did not hold any units in the Fund, either legally or beneficially, as at 31 May 2019 (2018: nil). The number of units legally or beneficially held by the parties related to the Manager were 14,967 units valued at RM15,651 as at 31 May 2019 (2018: 14,967 units valued at RM15,280).

13. nET aSSET ValuE PER uniT

Financial 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 unit holders per unit for the creation and cancellation of units is computed based on financial assets at FVTPL valued at the last done market price.

A reconciliation of NAV attributable to unit holders for creation/cancellation of units and the NAV attributable to unit holders per the financial statements is as follows:

2019 2018RM RM/unit RM RM/unit

NAV attributable to unit holders for creation/cancellation of units 518,840,588 1.0492 421,033,265 1.0252

Effects of adopting bid prices as fair value (1,720,984) (0.0035) (1,770,157) (0.0043)

NAV attributable to unit holders per statement of financial position 517,119,604 1.0457 419,263,108 1.0209


14. ShaRiah infORMaTiOn Of ThE fund

The Shariah Adviser confirmed that the investment portfolio of the Fund is Shariah-compliant, which comprises the following:

a. Investment in equity securities listed on Bursa Malaysia Securities Berhad which have been classified as Shariah-compliant by the SACSC for the financial year;

b. Investment in collective investment schemes listed on Bursa Malaysia Securities Berhad which was verified as Shariah-compliant by the Shariah Adviser; and

c. Liquid assets in the local market, which have been placed in Shariah-compliant investments and/or instruments.

15. PORTfOliO TuRnOVER RaTiO (“PTR”)

PTR for the financial year is 0.79 times (2018: 1.05 times).

PTR is the ratio of average sum of acquisitions and disposals of Shariah-compliant investments of the Fund for the financial year to the average NAV of the Fund, calculated on a daily basis.

16. ManaGEMEnT EXPEnSE RaTiO (“MER”)

MER for the financial year is 1.59% (2018: 1.70%).

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.

17. TRanSaCTiOnS wiTh liCEnSEd finanCial inSTiTuTiOnS

Transaction value

Percentage of total

Brokerage, stamp duty

and clearing fee

Percentage of total

RM % RM %

UOB Kay Hian Securities (M) Sdn Bhd 148,279,532 19.8 358,370 19.9

Kenanga Investment Bank Berhad* 113,838,124 15.2 264,375 14.7

Credit Suisse Securities (Malaysia) Sdn Bhd 91,023,647 12.1 219,285 12.2

Macquarie Capital Securities (Malaysia) Sdn Bhd 66,452,143 8.8 162,228 9.0


17. TRanSaCTiOnS wiTh liCEnSEd finanCial inSTiTuTiOnS (COnTd.)

Transaction value

Percentage of total

Brokerage, stamp duty

and clearing fee

Percentage of total

RM % RM %

RHB Investment Bank Berhad 62,601,002 8.3 151,806 8.4

CIMB Investment Bank Berhad 59,866,054 8.0 143,587 8.0

Public Investment Bank Berhad 46,835,883 6.2 110,862 6.2

Maybank Investment Bank Berhad 43,255,852 5.8 103,080 5.7

Affin Hwang Investment Bank Berhad 34,268,803 4.6 81,946 4.6

CLSA Securities Malaysia Sdn Bhd 34,252,679 4.6 80,744 4.5

Others 49,205,189 6.6 122,163 6.8 749,878,908 100.0 1,798,446 100.0

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

The above transaction values are in respect of listed Shariah-compliant equity securities, listed Islamic collective investment schemes and listed Shariah-compliant warrants.

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.


18. SEGMEnTal REPORTinG

a. Business segments

In accordance with the objective of the Fund, the Fund can invest 75% to 95% in listed Shariah-compliant investment securities. The following table provides an analysis of the Fund’s revenue, results, assets and liabilities by business segments:

listed Shariah-

compliant investment

securities

Other Shariah-

compliant investments Total

RM RM RM

2019RevenueSegment income 19,267,570 2,703,498 Segment expenses (2,580,325) -Net segment income representing

segment results 16,687,245 2,703,498 19,390,743 Unallocated expenditure (7,562,438)Income before tax 11,828,305 Income tax -Net income after tax 11,828,305

assetsFinancial assets at FVTPL 467,705,451 -Short term Islamic deposits - 41,998,000 Other segment assets 7,900,236 25,472 Total segment assets 475,605,687 42,023,472 517,629,159 Unallocated assets 21,774

517,650,933

liabilitiesUnallocated liabilities 531,329

531,329


18. SEGMEnTal REPORTinG (COnTd.)

a. Business segments (contd.)

listed Shariah-

compliant investment

securities

Other Shariah-

compliant investments Total

RM RM RM

2018RevenueSegment (loss)/income (8,710,571) 1,717,473 Segment expenses (2,690,162) -Net segment (loss)/income

representing segment results (11,400,733) 1,717,473 (9,683,260)Unallocated expenditure (6,683,480)Loss before tax (16,366,740)Income tax -Net loss after tax (16,366,740)

assetsFinancial assets at FVTPL 325,110,386 -Short term Islamic deposits - 89,327,122 Other segment assets 9,653,531 44,525 Total segment assets 334,763,917 89,371,647 424,135,564Unallocated assets 31,882

424,167,446

liabilitiesSegment liabilities 4,069,280 - 4,069,280 Unallocated liabilities 835,058

4,904,338

b. Geographical segments

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


19. finanCial inSTRuMEnTS

a. Classification of financial instruments

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

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

financial assets at

fVTPl

financial assets at

amortised cost

Other financial liabilities Total

RM RM RM RM

2019assetsListed Shariah-

compliant equity securities 462,833,067 - - 462,833,067

Listed Islamic collective investment schemes 4,191,020 - - 4,191,020

Listed Shariah-compliant warrants 681,364 - - 681,364

Short term Islamic deposits - 41,998,000 - 41,998,000

Amount due from licensed financial institutions - 7,370,667 - 7,370,667

Other receivables - 555,041 - 555,041 Cash at bank - 12,682 - 12,682

467,705,451 49,936,390 - 517,641,841

liabilitiesAmount due to

Manager - - 457,293 457,293 Amount due to

Trustee - - 21,869 21,869 - - 479,162 479,162


19. finanCial inSTRuMEnTS (COnTd.)

a. Classification of financial instruments (contd.)

financial assets at

fVTPl

financial assets at

amortised cost

Other financial liabilities Total

RM RM RM RM

2018assetsListed Shariah-


Listed Islamic collective investment schemes 3,723,342 - - 3,723,342

Listed Shariah-compliant warrants 1,087,649 - - 1,087,649

Short term Islamic deposits - 89,327,122 - 89,327,122

Amount due from licensed financial institutions - 8,717,294 - 8,717,294

Other receivables - 980,762 - 980,762 Cash at bank - 22,790 - 22,790

325,110,386 99,047,968 - 424,158,354

liabilitiesAmount due to

licensed financial institutions - - 4,069,280 4,069,280

Amount due to Manager - - 725,255 725,255

Amount due to Trustee - - 18,316 18,316

- - 4,812,851 4,812,851

b. financial instruments that are carried at fair value

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


19. finanCial inSTRuMEnTS (COnTd.)

b. financial instruments that are carried at fair value (contd.)

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

level 1 level 2 level 3 TotalRM RM RM RM

investments:2019Listed Shariah-


Listed Islamic collective investment scheme 4,191,020 - - 4,191,020

Listed Shariah-compliant warrants 681,364 - - 681,364

2018Listed Shariah-


Listed Islamic collective investment scheme 3,723,342 - - 3,723,342

Listed Shariah-compliant warrants 1,087,649 - - 1,087,649

Level 1: Listed prices in active marketLevel 2: Model with all significant inputs which are observable market dataLevel 3: Model with inputs not based on observable market data

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

c. financial instruments not carried at fair value and which their carrying amounts are reasonable approximations of fair value

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


20. 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 Shariah-compliant investments meeting the description, risk exposure and expected return indicated in its prospectus;

b. To maintain sufficient liquidity to meet the expenses of the Fund, and to meet cancellation requests as they arise; and

c. To maintain sufficient fund size to make the operations of the Fund cost-efficient.

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

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