kenanga yield enhancement fund · 2020. 6. 30. · kenanga yield enhancement fund quarterly report...

quarterly rePOrt

29 FeBruary 2020

KeNaNGa yield eNhaNcemeNt FuNd

Kenanga investors BerhadCompany No. 199501024358 (353563-P)

KeNaNGa yield eNhaNcemeNt FuNd

Contents Page

corporate directory ii Directory of Manager’s Offices iiiFund information 1manager’s report 2 - 3Fund Performance 4 - 6Financial Statements 7 - 15

ii Kenanga Yield Enhancement Fund Quarterly Report

cOrPOrate directOrymanager: Kenanga investors Berhad Company No. 199501024358 (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 Abdullah (independent

director)Ismitz Matthew De AlwisNorazian Ahmad Tajuddin (independent

director)

investment committee Syed Zafilen Syed Alwee (independent

member)Peter John Rayner (independent member)Imran Devindran Abdullah (independent

member)Ismitz Matthew De AlwisNorazian Ahmad Tajuddin (independent

member)

company Secretary: Norliza abd Samad (MAICSA 7011089)

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

trustee: cimB commerce trustee Berhad Company No. 199401027349 (313031-A)

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

auditor: ernst & young Plt Company No. 202006000003 (LLP0022760-LCA) & 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. 198901002487 (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

Kenanga Yield Enhancement Fund Quarterly Report iii

directOry OF maNaGer’S OFFiceSRegional Branch Offices :

Kuala lumpurLevel 13, Kenanga Tower237, Jalan Tun Razak50400 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 Shop,No. 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 Greenhill30450 Ipoh, PerakTel: 05-254 7573 / 7570 / 7575Fax: 05-254 7606

miri 2nd Floor, Lot 1264, Centre Point Commercial Centre Jalan Melayu98000 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

1 Kenanga Yield Enhancement Fund Quarterly Report

1. FuNd iNFOrmatiON

1.1 Fund Name

Kenanga yield enhancement Fund (KyeF or the Fund)

1.2 Fund type / category

Income & Growth / Fixed Income

1.3 investment Objective

The Fund seeks to provide Investors with income and capital growth by investing into short to medium-term money market instruments and fixed income securities.

1.4 investment Strategy

The Fund seeks to achieve its objective by investing a minimum of 60% of its NAV and a maximum of 100% of its NAV in fixed income securities. The Fund will invest up to 40% of its NAV in placements of fixed deposits with financial institutions and development financial institutions, money market instruments and fixed income securities with a maturity period of 2 years and below.

1.5 asset allocation

Minimum of 60% to a maximum of 100% of its NAV will be invested in fixed income securities; and up to 40% of its NAV will be invested in placements of fixed deposits, money market instruments and fixed income securities with a maturity period of 2 years and below.

1.6 duration

The Fund was launched on 18 January 2016 and it shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unit holders for it to continue.

1.7 Performance Benchmark

4.5% per annum.

Please note that the benchmark herein is NOT a guaranteed rate of return of the Fund; instead it is a benchmark reference rate which is used to measure the performance of the Fund.

1.8 distribution Policy

Subject to the availability of income, income distribution (if any) will be incidental.

Kenanga Yield Enhancement Fund Quarterly Report 2

2. maNaGer’S rePOrt

2.1 Fund performance analysis based on NaV per unit (adjusted for income distribution) since last review period

Period under reviewKenanga yield enhancement Fund 1.79%4.5% per annum 1.10%

Source: Lipper; Novagni Analytics & Advisory

For the period under review of 3 months, the fund return of 1.79% outperformed its absolute benchmark return of 1.10%. The outperformance was led by investment in high yield bonds.

2.2 the Fund’s asset allocation as at 29 February 2020 and comparison with the previous financial period

asset 29 Feb 2020 28 Feb 2019Unlisted fixed income securities 88.8% 96.9%Short term deposits and cash 11.2% 3.1%

reason for the differences in asset allocation

The Fund’s asset allocation in unlisted fixed income securities as at 29 Feb 2020 was reduced to 88.8% from 96.9% as at 28 Feb 2019 upon maturity of some bonds.

2.3 market review and strategy

In the final month of the year, following the positive trade developments on the US-China Phase 1 trade talks, US Treasuries (UST) weakened as the yield curve shifted higher with the 10Y UST yield rose by 14 basis points (bps) month-on-month (MoM) to 1.92% end-December. As widely expected, the Federal Reserve (Fed) kept interest rates unchanged at 1.50%-1.75% in its final meeting of the year on 11 December. Fed signaled that interest rates would likely remain on hold throughout 2020 as long as the US economic outlook remains unchanged. Meanwhile, the Malaysian Government Securities (MGS) market remained relatively steady in early December, despite the fluctuations in UST. Nonetheless, in the second half of the month, MGS gained as global risk-on sentiment improved. Buying interest was also driven by portfolio rebalancing activities at year-end, sending the 10Y MGS rallying by 13 bps to end the year at 3.30%.

Going into the new year, UST rallied on safe-haven demand in January 2020 due to geopolitical tensions between the US and Iran, as well as risk-off sentiment from the growing coronavirus outbreak in China. Meanwhile, US-China trade tensions eased following the signing of the highly anticipated Phase 1 trade deal on 15 January, although several outstanding trade issues remain unresolved. As widely expected, the Fed kept its policy rate unchanged at 1.50%-1.75% at its first Federal Open Market Committee (FOMC) meeting of the year on 29 January, citing steady US economic growth and a healthy labour market. Following these developments, UST prices strengthened as the yield curve shifted lower during the month. Consequently, the 2Y, 5Y and 10Y UST yields fell by 26, 38 and 41 bps MoM to 1.31%, 1.31% and 1.51% respectively as at end-January. Locally, the positive sentiment in UST spilled over into the domestic bond market as the MGS yield curve shifted lower on strong buying momentum in the new year. The rally in MGS was further boosted after Bank Negara Malaysia (BNM) unexpectedly cut the Overnight Policy Rate (OPR) by 25 bps to 2.75% at its first Monetary Policy Committee (MPC) meeting on 22 January. On a MoM basis, MGS yields tumbled across the board, particularly on longer-tenures e.g. 10Y MGS yields fell 17 bps to 3.13% at end-January, while 15Y MGS yields plunged 35 bps to 3.25%.


2.3 market review and strategy (cont’d)

In early February, demand for UST eased as US-China trade relations continued to improve, supported by positive economic data. However, investors subsequently turned cautious on renewed concerns over the coronavirus outbreak, thus boosting demand for safe haven assets. Towards end-Feb, UST prices surged as the global growth outlook became murkier. Consequently, 2Y and 10Y UST yields fell by 40 bps and 36bps MoM to 0.91% and 1.15% respectively as at end-February. Similarly, the MGS market also rallied across the board in tandem with similar movements in UST. Buying interest was also boosted by heightened expectations of an upcoming interest rate cut, after Malaysia’s 4Q2019 Gross Domestic Product (GDP) reading declined to 3.6% year-on-year (YoY) (3Q2019: 4.4%, full year 2019: 4.3%). MoM, MGS yields tumbled across the board, particularly on longer-tenures e.g. 7Y MGS yields plunged by 35 bps to 2.75% as at end-February, while 10Y MGS yields tumbled 32 bps lower to 2.82%.

2.4 market outlook

On 3 March, the US Fed lowered interest rates by 0.50% to 1.00%-1.25%, to counter risks to the US economy from the coronavirus epidemic. The intermeeting rate cut took place ahead of the Fed’s scheduled policy meeting on 17th March. While the Fed continued to view the fundamentals of the US economy as strong, the committee highlighted that it is closely monitoring developments and will act as appropriate to support the economy. Looking ahead, demand for UST may continue to be supported by accommodative monetary policies by global central banks to safeguard growth, as the outbreak continues to cloud the global growth outlook.

Prior to the Fed’s cut, BNM on 3 March reduced the OPR for the second time this year, by 25 bps to 2.50% to support domestic growth amid the global coronavirus outbreak. Looking ahead, the central bank expects 1Q2020 growth to be affected by the outbreak, particularly in the tourism and manufacturing sectors. While growth is expected to gradually improve in 2H2020, supported by the recently announced RM20 billion economic stimulus plan, downside risks remain from the evolving outbreak situation.

Meanwhile, headline inflation picked up from 1.0% YoY in December 2019 to 1.6% in January 2020, mainly due to the low-base effect (January 2019: -0.7%). Going forward, inflation is expected to average higher but remain modest, given delayed implementation of the targeted fuel subsidy programme (RON95 and diesel prices continue to be subsidised). Therefore, given lingering risks to growth amid modest inflation, BNM is widely anticipated to remain accommodative to safeguard domestic growth.

2.5 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 the most favourable for the Fund. For the financial period under review, the Manager has received soft commissions from the stockbrokers.

2.6 cross trade

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


3. FuNd PerFOrmaNce

3.1 details of portfolio composition of the Fund as at 29 February 2020 against the last three financial years/period as at 31 May 2019 are as follows:

a. distribution among industry sectors and category of investments:

as at Fy Fy as at29.2.2020 2019 2018 31.05.2017

% % % %

Unlisted fixed income securities 88.8 84.8 96.9 92.3

Short term deposits and cash 11.2 15.2 3.1 7.7

100.0 100.0 100.0 100.0

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

b. distribution among markets

The Fund invests in unlisted fixed income securities as well as short term deposits and cash.


3.2 Performance details of the Fund for the financial period ended 29 February 2020 against the last three financial years/period as at 31 May 2019 are as follows:

1.6.2019 to 29.2.2020

Fy2019

Fy 2018

18.1.2016 (date of

commencement) to 31.5.2017

Net asset value (“NAV”) (RM Million) 155.64* 146.92 96.71 33.03

Units in circulation (Million) 124.77 123.44 85.92 30.92 NAV per unit (RM) 1.2474* 1.1902 1.1256 1.0683 Highest NAV per unit (RM) 1.2474 1.1123 1.1256 1.0683 Lowest NAV per unit (RM) 1.1902 1.0685 1.0685 1.0000 Total return (%) 4.81 5.74 5.36 6.83- Capital growth (%) 4.81 5.74 5.36 6.83- Income growth (%) - - - - Gross distribution per unit (sen) - - - - Net distribution per unit (sen) - - - - Management expense ratio

(“MER”) (%) 1 0.61 0.85 0.95 1.21 Portfolio turnover ratio (“PTR”)

(times) 2 0.11 0.25 1.28 0.71

Note: TotalreturnistheactualreturnoftheFundfortherespectivefinancialperiods/years,computed based on NAV per unit and net of all fees.

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

Above NAV and NAV per unit are not shown as ex-distribution as there were no distributiondeclaredbytheFundinthefinancialperiodunderreview.

1. MERisloweragainstpreviousfinancialyearmainlyduetolowerrecoveredexpensesincurredduringthefinancialperiodunderreview.

2. PTR is low due to minimal trading activities as mostly are held-to-maturity investments.

* Based on bid price fair valuation method on all investments held by the Fund as at 29 February2020,theNAVandNAVperunitwouldbeRM155.01millionandRM1.2463respectively.

(AsdisclosedunderNote8ofthefinancialstatements)


3.3 average total return of the Fund

1 year28 Feb 19

- 29 Feb 20

3 years28 Feb 17

- 29 Feb 20

Since inception18 Jan 16

- 29 Feb 20Kenanga yield enhancement Fund 6.15% 5.62% 5.40%4.5% p.a 4.51% 4.71% 4.97%

Source: Lipper; Novagni Analytics and Advisory

3.4 annual total return of the Fund

Period under review

31 may 19 - 29 Feb 20

1 year31 may 18

- 31 may 19

1 year31 may 17

- 31 may 18

Since inception

18 Jan 16 - 31 may 17

Kenanga yield enhancement Fund 4.81% 5.74% 5.36% 6.83%4.5% p.a 3.36% 4.50% 4.50% 6.20%

Source: Lipper; Novagni Analytics and Advisory

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


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

4. FiNaNcial StatemeNtS

4.1 StatemeNt OF cOmPreheNSiVe iNcOme FOr the FiNaNcial PeriOd FrOm 1 JuNe 2019 tO 29 FeBruary 2020 (unaudited)

Note1.6.2019 to 29.2.2020

1.6.2018 to 28.2.2019

rm rm

iNVeStmeNt iNcOme

Interest income 6,711,395 5,966,468Net gain from investments:

- Financial assets at fair value through profit or loss (“FVTPL”) 2 467,280 71,350

7,178,675 6,037,818

eXPeNSeSManager’s fee 3 555,955 484,611Performance fee 114,786 -Trustee fees 22,238 19,384Auditors’ remuneration 17,652 6,732Tax agent’s fees 2,992 2,992 Administration expenses 3,377 3,052

717,000 516,771

Net iNcOme BeFOre taX 6,461,675 5,521,047

Income tax - -

Net iNcOme aFter taX, rePreSeNtiNG tOtal cOmPreheNSiVe iNcOme FOr the FiNaNcial PeriOd 6,461,675 5,521,047

Net income after tax is made up as follows:Realised gain 5,980,420 5,442,594Unrealised gain 481,255 78,453

6,461,675 5,521,047



4.2 StatemeNt OF FiNaNcial POSitiON aS at 29 FeBruary 2020 (unaudited)

Note 29.2.2020 28.2.2019rm rm

aSSetS

iNVeStmeNtS

Financial assets at fair value through profit or loss (“FVTPL”) 2 136,654,331 146,153,610

Short term deposits 5 17,261,000 26,377,000153,915,331 172,530,610

Other aSSetS

Amount due from Manager 1,600,921 -Other receivable 2,794 21,701Cash at bank 10,807 20,303

1,614,522 42,004

tOtal aSSetS 155,529,853 172,572,614

liaBilitieS

Amount due to Manager - 65,555Amount due to Trustee 2,287 2,622Other payables 25,732 16,728tOtal liaBilitieS 28,019 84,905

equity

Unit holders’ contribution 136,385,373 162,253,673Retained earnings 19,116,461 10,234,036Net aSSet Value (“NaV”)

attriButaBle tO uNit hOlderS 6 155,501,834 172,487,709

tOtal liaBilitieS aNd equity 155,529,853 172,572,614

NumBer OF uNitS iN circulatiON 6(a) 124,767,546 146,860,623

Net aSSet Value Per uNit (rm) 1.2463 1.1745



4.3 StatemeNt OF chaNGeS iN Net aSSet Value FOr the FiNaNcial PeriOd FrOm 1 JuNe 2019 tO 29 FeBruary 2020(unaudited)

Noteunit holders’ contribution

retained earnings total NaV

rm rm rm

1.6.2019 to 29.2.2020At beginning of the financial

period 134,651,665 12,654,786 147,306,451 Total comprehensive income - 6,461,675 6,461,675 Creation of units 6(a) 8,678,484 - 8,678,484 Cancellation of units 6(a) (7,355,898) - (7,355,898)Distribution equalisation 6(a) 411,122 - 411,122 At end of the financial period 136,385,373 19,116,461 155,501,834

1.6.2018 to 28.2.2019At beginning of the financial

period 91,994,131 4,712,989 96,707,120Total comprehensive income - 5,521,047 5,521,047Creation of units 6(a) 70,812,107 - 70,812,107Cancellation of units 6(a) (9,869,353) - (9,869,353)Distribution equalisation 6(a) 9,316,788 - 9,316,788At end of the financial period 162,253,673 10,234,036 172,487,709



4.4 StatemeNt OF caSh FlOWS FOr the FiNaNcial PeriOd FrOm 1 JuNe 2019 tO 29 FeBruary 2020(unaudited)

Note1.6.2019 to 29.2.2020

1.6.2018 to 28.2.2019

rm rm

caSh FlOWS FrOm OPeratiNG aNd iNVeStiNG actiVitieS

Proceeds from maturity of financial assets at FVTPL 23,000,000 13,000,000

Interest received 5,781,343 4,116,823Performance fee paid 7 - (199,329)Payment for other fees and expenses (4,789) (17,867)Auditors’ remuneration paid (9,600) (9,000)Trustee’s fee paid (22,437) (18,403)Manager’s fee paid (560,938) (460,087)Purchase of financial assets at FVTPL (32,600,000) (63,244,000)Net cash used in operating and investing

activities (4,416,421) (46,831,863)

caSh FlOWS FrOm FiNaNciNG actiVitieS

Cash received from units created 8,765,000 81,654,039Cash paid on units cancelled (9,431,292) (11,394,497)Net cash (used in)/generated from financing

activities (666,292) 70,259,542

Net (decreaSe)/iNcreaSe iN caSh aNd caSh equiValeNtS (5,082,713) 23,427,679

caSh aNd caSh equiValeNtS at BeGiNNiNG OF the FiNaNcial PeriOd 22,354,520 2,969,624

caSh aNd caSh equiValeNtS at eNd OF the FiNaNcial PeriOd 17,271,807 26,397,303

Cash and cash equivalents comprise:Cash at bank 10,807 20,303Short term deposits 17,261,000 26,377,000

17,271,807 26,397,303


4.5 NOteS tO the FiNaNcial StatemeNtS FOr the FiNaNcial PeriOd FrOm 1 JuNe 2019 tO 28 FeBruary 2020(unaudited)

1. the FuNd, the maNaGer aNd their PriNciPal actiVitieS

Kenanga Yield Enhancement Fund (“the Fund”) was constituted pursuant to the executed Deed dated 29 September 2015 (“the Deed”) between the Manager, Kenanga Investors Berhad, and CIMB Commerce Trustee Berhad (“the Trustee”). The Fund commenced operations on 18 January 2016 and will continue to be in operation until terminated in accordance with Part 11 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 investors with income and capital growth by investing into short to medium term money market instruments and fixed income securities.

2. FiNaNcial aSSetS at FVtPl

29.2.2020 28.2.2019 rm rm

Financial assets held for trading, at FVTPL:Unlisted fixed income securities 136,654,331 146,153,610

1.6.2019 to 29.2.2020

1.6.2018 to 28.2.2019

rm rm

Net gain on financial assets at FVTPL comprised:Realised loss (13,975) (7,103)Unrealised change in fair values 481,255 78,453

467,280 71,350


2. FiNaNcial aSSetS at FVtPl (cONtd.)

Details of financial assets at FVTPL as at 29 February 2020:

quantityamortised

cost Fair valuePercentage

of NaV rm rm %

Unlisted fixed income securities

Dynasty Harmony Sdn Bhd maturing on 20/06/2031 5,000,000 5,118,775 5,471,182 3.5



Hektar Black Sdn Bhd maturing on 20/07/2020 5,000,000 5,043,836 5,043,836 3.2

Hektar Green Sdn Bhd maturing on 30/10/2020 3,000,000 3,080,877 3,080,877 2.0

KYS Assets Sdn Bhd maturing on 09/12/2020 15,000,000 15,235,890 15,235,890 9.8

KYS Assets Sdn Bhd maturing on 06/05/2020 5,000,000 5,110,274 5,110,274 3.3

Potensi Angkasa Sdn Bhd maturing on 30/09/2020 9,600,000 9,839,868 9,839,868 6.3

Radimax Group Sdn Bhd maturing on 03/10/2023 35,000,000 35,928,699 35,928,699 23.1

Radimax Group Sdn Bhd maturing on 22/05/2020 40,000,000 40,657,534 40,657,534 26.1

Total unlisted fixed income securities, representing total financial assets at FVtPl 135,355,121 136,654,331 87.8

unrealised gain on financial assets at FVtPl 1,299,210


3. maNaGer’S Fee

The Manager’s fee is calculated on a daily basis at a rate not exceeding 1.0% per annum of the NAV of the Fund as provided under Division 12.1 of the Deed.

The Manager is currently charging management fee of 0.50% per annum of the NAV of the Fund (financial period from 1 June 2018 to 28 February 2019: 0.50% per annum).

4. truStee’S Fee

Trustee’s fee is calculated on a daily basis at a rate not exceeding 0.02% per annum of the NAV of the Fund as provided under Division 12.2 of the Deed.

The Trustee’s fee is currently calculated at 0.02% per annum of the NAV of the Fund (financial period from 1 June 2018 to 28 February 2019: 0.02% per annum).

5. ShOrt term dePOSitS

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

6. Net aSSet Value attriButaBle tO uNit hOlderS

NAV attributable to unit holders is represented by:

Note1.12.2019 to

29.2.20201.12.2018 to

28.2.2019rm rm

Unit holders’ contribution (a) 136,385,373 162,253,673

Retained earnings:Realised reserve 17,817,251 10,155,449Unrealised reserve 1,299,210 78,587

19,116,461 10,234,036

155,501,834 172,487,709


6. Net aSSet Value attriButaBle tO uNit hOlderS (cONtd.)

(a) unit holders’ contribution

1.6.2019 to 29.2.2020 1.6.2018 to 28.2.2019No. of units rm No. of units rm

At beginning of the financial period 123,444,960 134,651,665 85,917,869 91,994,131

Add: Creation of units 8,678,484 8,678,484 70,812,107 70,812,107

Less: Cancellation of units (7,355,898) (7,355,898) (9,869,353) (9,869,353)

Distribution equalisation - 411,122 - 9,316,788

At end of the financial period 124,767,546 136,385,373 146,860,623 162,253,673

The Manager, Kenanga Investors Berhad, did not hold any units in the Fund, either legally or beneficially, as at 29 February 2020 (28 February 2019: nil). The number of units legally or beneficially held by the other parties related to the Manager were 212,122 units valued at RM264,368 as at 29 February 2020 (28 February 2019: nil).

7. PerFOrmaNce Fee

The performance fee is calculated and readjusted on a daily basis at a rate of 20% on the appreciation in the NAV per unit over and above the hurdle value during a particular performance period.

However, in the interest of investors, the Manager imposes a hurdle value, that is high water mark (“HWM”) plus 4.5%, in which the Fund’s performance have to exceed before the Manager is eligible for a performance fee. Although calculation is on a daily basis, the performance fee is only payable to the Manager at the end of each performance period.

Performance period means a period of 12 months beginning from 1 June to 31 May every year to coincide with the start and the end of the Fund’s financial year. However, the Fund’s financial year may be more or less than 12 months in the first financial period, depending on when the Fund is launched.

High water mark refers to the NAV per unit that forms the basis of calculating and determining the hurdle value for a particular performance period. At launch, the HWM will be the initial offer price and thereafter, will be the closing NAV per unit on the last business day of the preceding performance period or the previous HWM of the preceding performance period, whichever is higher.


8. Net aSSet Value Per uNit

Financial assets at FVTPL have been valued at the marked-to-market price based on prices provided by a bond pricing agency accredited by the Securities Commission of Malaysia at reporting date. The calculation of NAV attributable to unit holders per unit for the creation and cancellation of units is computed based on financial assets measured at amortised cost.

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:

29.2.2020 28.2.2019rm rm/unit rm rm/unit

NAV attributable to unit holders for creation/cancellation of units 155,640,585 1.2474 172,580,267 1.1751

Effects of adopting marked-to-market prices as fair value (138,751) (0.0011) (92,558) (0.0006)

NAV attributable to unit holders per statement of financial position 155,501,834 1.2463 172,487,709 1.1745

9. SuBSequeNt eVeNt

The COVID-19 pandemic has significantly disrupted many business operations around the world. For the Fund, the impact on business operations has not been a direct consequence of the COVID-19 outbreak, but a result of the measures taken by the Government of Malaysia to contain it. As the outbreak continues to evolve, it is challenging to predict the full extent and duration of its impact on business and the economy.

Whilst the Fund is not able to fully conclude on the financial impact of the COVID-19 outbreak at the date of this report, it is anticipated based on initial assessments performed, that there have not been any circumstances which would require adjustments to be made to the carrying values of the assets and liabilities of the Fund as at 29 February 2020. The Fund holds sufficient capital and will continue to prudently manage risks while implementing cost reduction measures in order to ensure that it remains resilient through this period of uncertainty.

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