MAYBANK Q-CASH FUND Annual report For the financial year ended 31 March 2018

Transcription

1 Maybank Asset Management Sdn Bhd ( M) Level 12, Tower C Dataran Maybank No.1 Jalan Maarof Kuala Lumpur, Malaysia Telephone Facsimile Annual report For the financial year ended 31 March 2018

2 CONTENT PAGE Manager's Report 1-4 Trustee's report 5 Statement by Manager 6 Independent auditors report 7-10 Statement of comprehensive income 11 Statement of financial position 12 Statement of changes in equity 13 Statement of cash flows 14 Notes to the financial statements 15-34

3 Manager s report for the financial year ended 31 March 2018 A. Fund Information 1. Name of Fund Maybank Q-Cash Fund (the "Fund") 2. Type of Fund Income 3. Category of Fund Wholesale money market fund 4. Fund launch date 8 June Fund s investment objective The Fund is a money market fund that aims to provide unitholders with a return that exceeds the benchmark, liquidity of T+0 (i) ; capital preservation (ii) ; and income distribution (iii) at least once every calendar month. Note: (i) (ii) (ii) In the event that the total redemption amount exceeds 50% of the total NAV of the Fund, the liquidity of T+0 may not be applicable. If the total redemption exceeds 50% of the total NAV of the Fund, the Manager reserves the right to pay the redemption proceeds to unitholders within thirty (30) days from the day the request to redeem is received. The Manager shall aim to preserve the capital of unitholders. Nonetheless, the Fund is not a capital guaranteed fund nor a capital protected fund. Income could be in the form of cash or units. For further details, please refer to the Income distribution policy and distribution mode of the Fund in the Maybank Wholesale Funds Master Information Memorandum. 6. Fund distribution policy Subject to the availability of income, the Fund will distribute income to unitholders on a monthly basis. 7. Fund's performance benchmark Maybank overnight deposit rate 8. Fund's investment policy and principal investment strategy The Fund seeks to obtain a yield that exceeds the benchmark by placing 100% of it's net asset value ("NAV") in liquid investments such as Fixed Deposit with tenure of not more than one (1) year and/or money market instruments with maturities of not more than six (6) months. 1

4 Manager s report for the financial year ended 31 March 2018 (cont'd) B. Performance Review Returns of the Fund and its benchmark for the financial year ended 31 March 2018 are as follows: The Fund Benchmark Period % % 1 April 2017 to 31 March Performance of the Fund for the financial year ended 31 March 2018: PENDING Source: Novagni Analytics and Advisory Sdn Bhd, as at 31 March 2018 Investors are reminded that past performance of the Fund is not necessarily indicative of its future performance and that unit prices and investment returns may fluctuate. The Fund has generated a net return of 2.81% per annum for the financial year ended 31 March 2018, compared to the benchmark which registered a return of 1.78% per annum over the same period. The Fund has achieved its objectives of preserving the capital of unitholders and providing them with liquidity and a return that exceeds the benchmark. Barring any unforeseen circumstances, the Fund is expected to sustain its current outperformance. 2

5 Manager s report for the financial year ended 31 March 2018 (cont'd) C. Market Review The Monetary Policy Committee ( MPC ) meeting at the end of January 2018 saw Bank Negara Malaysia ( BNM ) raising the Overnight Policy Rate ( OPR ) by 25 basis points ( bps ) to 3.25%, in-line with our prior expectations, in what was the first OPR hike since The accompanying statement reflected on ensuring proactive monetary policy in order to prevent a build-up of risks, including from prolonged periods of heightened inflation. The subsequent MPC meeting in March 2018 saw BNM maintain the rate steady, after inflation continued to ease, even as the prior hike lent support to the Malaysian Ringgit ("MYR"). Elsewhere, economic growth continued on strongly, with the 4th quarter of 2017 recording +5.9% growth year-on-year ("Y-o-Y"). Looking ahead, growth is expected to moderate slightly albeit remaining at solid levels, as on-going infrastructure projects, coupled with steady external demand, are expected to keep the economy on a healthy growth trajectory, especially going into the 2018 general elections. Elsewhere, US Federal Reserve ( Fed ) hawkish rhetoric continued to drive markets through to March 2018, with the Federal Open Market Committee ( FOMC ) raising interest rates by a further 25 bps at the December 2017 meeting to 1.50% at the upper bound. Consensus expectations point at a further 2 to 3 hikes in D. Market Outlook Malaysia s economic data performed well and surprised many in 2017, placing it well in 2018, although hurdles remain both in terms of domestic demand and external headwinds. As commodity prices have stabilized to a degree, and there has been strong recovery of trade data, the outlook for the economy has turned optimistic, reflected by the improving MYR. A key point also is the improved monetary manoeuvrability of BNM, following decelerating inflation and a stronger MYR. We view Malaysia s growth path to be healthy, amid the mixed external environment, ongoing fiscal rebalancing, and likely undercurrent of improving domestic investment. BNM is seen to be in a better position to navigate these various headwinds, following which we expect money market deposit rates to stay range-bound and conducive. E. Investment Strategies The Manager monitors the liquidity requirements closely in order to place money market deposits in appropriate tenures which will satisfy the liquidity requirements and also position of the Fund to capitalise on any interest rate movement. The Manager also actively looks for products from licensed financial institutions that provide better yields. Hence, the Manager had resorted to maintain the tenure of deposits up to one (1) year and at the same time reserved cash in short-term deposits of less than one (1) month tenure for liquidity requirements. 3

6 Manager s report for the financial year ended 31 March 2018 (cont'd) F. Asset Allocation All assets of the Fund were invested in cash at bank and deposits with licensed financial institutions as at 31 March G. NAV as at 31 March 2018 Below is the summary of the NAV of the Fund: Changes (%) NAV () 202,739, ,033, Units in circulation (unit) 202,526, ,943, NAV per unit () H. Soft Commissions and Rebates The Manager and its delegates will not retain any form of soft commissions or rebates from or otherwise share in any commission with any broker in consideration for directing dealings in the investments of the Fund unless the soft commissions received are retained in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Fund. All dealings with brokers are executed on best available terms. During the financial year ended 31 March 2018, the Manager and its delegates did not receive any soft commissions and rebates from brokers or dealers. 4

7 TRUSTEE S REPORT TO THE UNITHOLDERS OF FOR THE FINANCIAL YEAR ENDED 31 MARCH 2018 We have acted as Trustee of Maybank Q-Cash Fund (the "Fund ) for the financial year ended 31 March In our opinion and to the best of our knowledge, Maybank Asset Management Sdn Bhd, the Manager (the "Manager"), has operated and managed the Fund in accordance with the following:- (a) (b) (c) (d) Limitations imposed on the investment powers of the Manager and of the Trustee under the Deeds, the Securities Commission Malaysia s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework, the Capital Markets and Services Act 2007 ("CMSA") and other applicable laws; Valuation and pricing is carried out in accordance with the Deeds and any regulatory requirements; Creation and cancellation of units have been carried out in accordance with the Deeds and relevant regulatory requirements; and The distributions to the unitholders during the financial year ended 31 March 2018 are consistent with the objectives of the Fund. For and on behalf of RHB TRUSTEES BERHAD TONY CHIENG SIONG UNG Director Kuala Lumpur, Malaysia 21 May

8 STATEMENT BY MANAGER We, Dr Hasnita Binti Dato' Hashim and Ahmad Najib Bin Nazlan, being two of the Directors of Maybank Asset Management Sdn Bhd (the "Manager"), do hereby state that, in the opinion of the Manager, the accompanying financial statements set out on pages 11 to 34 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 Maybank Q-Cash Fund as at 31 March 2018 and of its results, changes in equity and cash flows for the financial year then ended. For and on behalf of the Manager Dr Hasnita Binti Dato' Hashim Ahmad Najib Bin Nazlan Kuala Lumpur, Malaysia 21 May

9 Independent auditors report to the Unitholders of Maybank Q-Cash Fund Report on the audit of the financial statements Opinion We have audited the financial statements of Maybank Q-Cash Fund (the "Fund"), which comprise the statement of financial position as at 31 March 2018 of the Fund, and statement of comprehensive income, statement of changes in equity and statement of cash flows of the Fund for the 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 11 to 34. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 31 March 2018, and of its financial performance and cash flows for the 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 Maybank Asset Management Sdn Bhd (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, which is expected to be made available to us after the date of this auditors report. 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. 7

10 Independent auditors report to the Unitholders of Maybank Q-Cash Fund (cont'd.) Information other than the financial statements and auditors report thereon (cont'd.) 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. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Manager of the Fund and take appropriate action. Responsibilities of the Manager and 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 have 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. 8

11 Independent auditors report to the Unitholders of Maybank Q-Cash Fund (cont'd.) Auditors responsibilities for the audit of the financial statements (cont'd.) As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement 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. 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. 9

12 Independent auditors report to the Unitholders of Maybank Q-Cash Fund (cont'd.) Other matters This report is made solely to the Unitholders of the Fund, as a body, in accordance with the Guidelines on Unlisted Capital Market Products Under the Lodge and Launch Framework 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 AF: 0039 Chartered Accountants Lee Pei Yin No /05/2019 J Chartered Accountant Kuala Lumpur, Malaysia 21 May

13 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MARCH 2018 INVESTMENT INCOME Note Interest income 6,566,565 8,174,735 EXPENSES Manager's fee 3 431, ,692 Trustee's fee 4 43,125 53,269 Auditors remuneration 5,500 5,500 Tax agent's fee 8,100 2,500 Administrative expenses 36,328 39, , ,923 Net income before tax 6,042,265 7,540,812 Income tax expense Net income after tax, which is the comprehensive income for the financial year 6,042,265 7,540,812 Net income after tax is made up of the following: Net realised income 6,042,265 7,540,812 Distributions for the financial year: Net distributions 11 5,283,433 6,870,459 Gross distributions per unit (sen) Net distributions per unit (sen) The accompanying notes form an integral part of the audited financial statements. 11

14 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018 Note ASSETS Interest receivable 632, ,258 Cash at bank 6 202,671, ,985,118 TOTAL ASSETS 203,303, ,502,376 LIABILITIES Due to Manager 7 41,296 34,513 Due to Trustee 8 4,130 3,451 Distributions payable 506, ,452 Other payables and accruals 9 12,556 12,959 TOTAL LIABILITIES 564, ,375 NET ASSET VALUE ("NAV") OF THE FUND 202,739, ,033,001 EQUITY Unitholders' capital 10(a) 202,547, ,952,802 Retained earnings 10(b) 192,146 80,199 NET ASSETS ATTRIBUTABLE TO THE UNITHOLDERS ,739, ,033,001 NUMBER OF UNITS IN CIRCULATION (UNIT) 10(a) 202,526, ,943,245 NAV PER UNIT () The accompanying notes form an integral part of the audited financial statements. 12

15 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2018 Distributable Unitholders' retained capital earnings Total Note 10(a) Note 10(b) equity At 1 April ,385, , ,562,862 Total comprehensive income for the year - 7,540,812 7,540,812 Creation of units 1,950,462,841-1,950,462,841 Reinvestment of units 6,950,753-6,950,753 Cancellation of units (2,058,613,808) - (2,058,613,808) Distributions (Note 11) 767,105 (7,637,564) (6,870,459) At 31 March ,952,802 80, ,033,001 At 1 April ,952,802 80, ,033,001 Total comprehensive income for the year - 6,042,265 6,042,265 Creation of units 1,745,786,033-1,745,786,033 Reinvestment of units 5,059,723-5,059,723 Cancellation of units (1,709,898,088) - (1,709,898,088) Distributions (Note 11) 646,885 (5,930,318) (5,283,433) At 31 March ,547, , ,739,501 The accompanying notes form an integral part of the audited financial statements. 13

16 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Interest received 6,451,213 8,419,504 Manager's fee paid (424,464) (545,122) Trustee's fee paid (42,446) (54,512) Payment of other fees and expenses (50,331) (48,782) Net cash generated from operating and investing activities 5,933,972 7,771,088 CASH FLOWS FROM FINANCING ACTIVITIES Cash received from units created 1,745,786,033 1,950,462,841 Cash paid on units cancelled (1,709,898,088) (2,058,613,808) Distributions paid to unitholders (135,845) (128,473) Net cash generated from/(used in) financing activities 35,752,100 (108,279,440) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 41,686,072 (100,508,352) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 160,985, ,493,470 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 202,671, ,985,118 Cash and cash equivalents comprise: Cash at bank 202,671, ,985,118 The accompanying notes form an integral part of the audited financial statements. 14

17 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES Maybank Q-Cash Fund (the "Fund ) was constituted pursuant to the execution of a Deed dated 30 January 2012 between the Manager, Maybank Asset Management Sdn Bhd ("Maybank AM") and Malaysian Trustee Berhad. However, on 28 October 2013, a second supplementary deed was signed between Maybank AM and RHB Trustee Berhad to appoint RHB Trustees Berhad as the new Trustee of the Fund. On 30 March 2015, the third supplementary deed had been signed between Maybank AM and RHB Trustees Berhad. The Fund was launched on 8 June The principal activity of the Fund is to invest up to 100% of its NAV in liquid investments such as fixed deposit with tenure of not more than one year and/or money market instruments maturing within six months. The Manager of the Fund is Maybank AM, a company incorporated in Malaysia. It is a holder of the Capital Markets Services Licence with fund management as its regulated activity under the Capital Markets and Services Act 2007 ("CMSA"). The principal place of business of Maybank AM is at Level 12, Tower C Dataran Maybank, No. 1 Jalan Maarof, Kuala Lumpur. Maybank AM is a wholly-owned subsidiary of Maybank Asset Management Group Berhad, a wholly-owned subsidiary of Malayan Banking Berhad ("MBB"). The financial statements were authorised for issue by the Board of Directors (the "Directors") of the Manager in accordance with a resolution of the Directors on 21 May SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ("IFRS"). The Fund has adopted the MFRS, Amendments to Standards and Interpretations Committee ("IC") which have become effective during the financial year ended 31 March The adoption of the above did not result in material impact to the financial statements. The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies in Note 2.3 to Note 2.15 to the financial statements. The financial statements are presented in Ringgit Malaysia ( ). 15

18 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.2 Standards and amendments issued but not yet effective As at the date of authorisation of these financial statements, the following Standards and Amendments that have been issued by the Malaysian Accounting Standards Board ("MASB") will be effective for the Fund in future periods. The Fund intends to adopt the relevant standards when they become effective. Effective for annual periods Description beginning on or after Annual Improvements to MFRSs Cycle (i) Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1 January 2018 (ii) Amendments to MFRS 128 Investments in Associates and Joint Ventures 1 January 2018 Transfers of Investment Property (Amendments to MFRS 140) 1 January 2018 IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 MFRS 2 Share-based Payment - Classification and Measurement of Share-based Payment Transactions (Amendments to MFRS 2) 1 January 2018 MFRS 9 Financial Instruments 1 January 2018 MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Annual Improvements to MFRSs Cycle (i) Amendments to MFRS 3 Business Combinations and MFRS 11 Joint Arrangements 1 January 2019 (ii) Amendments to MFRS 112 Income Tax 1 January 2019 (iii) Amendments to MFRS 123 Borrowing Costs 1 January 2019 MFRS 10 Consolidated Financial Statements - Sale or Contribution of Assets between an Investor and its To be announced Associate or Joint Venture (Amendments to MFRS 10) by MASB MFRS 10 Investment in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its To be announced Associate or Joint Venture (Amendments to MFRS 128) by MASB 16

19 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.2 Standards and amendments issued but not yet effective (cont'd.) The Fund expects that the adoption of the above standards will have no material impact on the financial statements in the period of initial application except as discussed below: (i) MFRS 9 Financial Instruments MFRS 9 Financial Investments ("MFRS 9") replaces MFRS 139 Financial Investments: Recognition and Measurement ("MFRS 139"). 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 characteristic. The Fund will classify its financial assets as those to be measured at amortised cost. There will be no changes to the subsequent measurement of these financial assets. MFRS 9 also requires impairment assessments to be based on an expected loss model ("ECL"), replacing the MFRS 139 incurred loss model. The ECL model applies to financial assets measured at amortised cost. The Fund will adopt MFRS 9 on 1 April Financial assets 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 instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss ("FVTPL"), directly attributable transaction costs. The Fund determines the classification of its financial assets at initial recognition, and the category applicable to the Fund is only loans and receivables. 17

20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.3 Financial assets (cont'd.) (i) Loans and receivables Classification Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. The Fund's loans and receivables comprise cash at bank and interest receivable. Recognition and measurement Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statement of profit and loss when the loans and receivables are derecognised or impaired, and through the amortisation process. 2.4 Derecognition on financial assets A financial asset is derecognised when: (1) The rights to receive cash flows from the asset have expired; or (2) The Fund has transferred its rights to receive cash flows from the financial asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement; and 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, but has transferred control of the financial assets. 2.5 Impairment of financial assets The Manager assesses at each reporting date of the Fund whether there is any objective evidence that a financial asset of the Fund is impaired. (i) Loans and receivables To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Fund considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 18

21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.5 Impairment of financial assets (cont'd.) (i) Loans and receivables (cont'd.) If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. 2.6 Financial liabilities Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to Manager, amount due to Trustee, distribution payable and other payables and accruals as financial liabilities. Recognition and measurement The Fund's liabilities 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. The Fund s financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate method. A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. 19

22 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.7 Fair value measurement The Fund measures its financial instruments at fair value, at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: (i) (ii) In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or The principal or the most advantageous market must be accessible by the Fund. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: (i) (ii) (iii) Level 1 Quoted (unadjusted) market prices in active markets for identical assets or Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Fund determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting date. For the purpose of fair value disclosures, the Fund has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. 20

23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.8 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, which is also the Fund s functional currency. 2.9 Unitholders' capital The unitholders contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 Financial Instruments: Presentation. Those criteria include: (i) (ii) (iii) (iv) the units entitle the holder to a proportionate share of the Fund s NAV; the units are the most subordinated class and class features are identical; there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund. The outstanding units are carried at the redemption amount that is payable at each financial year if unit holder exercises the right to put the unit back to the Fund. Units are created and cancelled at prices based on the Fund s NAV per unit at the time of creation or cancellation. The Fund s NAV per unit is calculated by dividing the net assets attributable to unit holders with the total number of outstanding units. Distribution equalisation represents the average distributable amount included in the creation and cancellation prices of units. This amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are cancelled Distributions Any distribution to the Fund s unitholders is accounted for as a deduction from realised reserves except where distribution is sourced out of distribution equalisation which is accounted for as a deduction from unitholders capital. A proposed distribution is recognised as a liability in the period in which it is approved Cash and cash equivalents Cash and cash equivalents comprise cash at bank and deposits with financial institution with original maturity of three (3) months or less which have an insignificant risk of changes in value. 21

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.12 Interest Income Revenue 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. Revenue is measured at the fair value of consideration received or receivable. Interest income is recognised using the effective interest rate method Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current tax expense is determined according to Malaysian tax laws at the current tax rate based upon the taxable profit earned during the financial year. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. No deferred tax is recognised as no temporary differences have been identified Segment information Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments Critical accounting estimates and judgments The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Fund s results and financial position are tested for sensitivity to changes in the underlying parameters. Estimates and judgments are continually evaluated by the Manager and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. No major judgements have been made by the Manager in applying the Fund's accounting policies. There are no key assumptions concerning the future and other key sources of estimation uncertainty at 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. 22

25 3. MANAGER'S FEE The Manager's fee is computed on a daily basis at 0.20% (2017: 0.20%) per annum of the NAV of the Fund before deducting the Manager's fee and Trustee's fee for that particular day. 4. TRUSTEE'S FEE The Trustee's fee is computed on a daily basis at 0.02% per annum for the first 1 billion of the NAV of the Fund and 0.01% per annum on the NAV of the Fund above 1 billion before deducting the Manager's fee and Trustee's fee for that particular day. 5. INCOME TAX EXPENSE Tax expense for the financial year: Current income tax expense - - Income tax is calculated at the Malaysian statutory tax rate of 24% (2017: 24%) of the estimated assessable income for the financial year. A reconciliation of income tax expense applicable to net income before tax at the statutory income tax rate to income tax expense at the effective income tax rate is as follows: Net income before tax 6,042,265 7,540,812 Tax at Malaysian statutory rate of 24% (2017: 24%) 1,450,144 1,809,795 Effects of income not subject to tax (1,575,976) (1,961,936) Effect of expenses not deductible for tax purposes 125, ,141 Tax expense for the financial year - - Under paragraph 35 of schedule 6, Income Tax Act 1967 ( ITA ), any interest income earned by the Fund derived from Malaysia and paid or received from a bank licensed under the Financial Services Act 2013, an Islamic bank licensed under Islamic Financial Services Act 2013, or any development financial institutions prescribed under the Development Financial Institutions Act 2002, (hereafter referred to as "licensed financial institutions ) is exempt from tax. Pursuant to paragraph 29 (h) of Finance Act 2017 which was enacted on 16 January 2017, an amendment to paragraph 35A of schedule 6 of ITA, was made. The amendment seeks to provide that in the case of a Wholesale Fund which is a money market fund, tax exemption shall only apply to a Wholesale Fund which complies with the criteria as set out in the relevant guidelines of Securities Commissions Malaysia ( SC ) in respect of interest derived from Malaysia and paid or credited by licensed financial institutions. 23

26 5. INCOME TAX EXPENSE (CONT'D) On 23 December 2016, SC issued The Guidelines on Tax Exemption for Wholesale Money Market Funds. The Guidelines set out the qualifying criteria referred to in the aforementioned Finance Act 2017, complies with the qualifying criteria for the tax exemption of any interest income. The Guidelines further clarify that any interest income earned or accrued up to 31 December 2016, derived from Malaysia and paid or credited before or after 31 December 2016 by any licensed financial institution, is exempt from tax. Any profit income earned from 1 January 2017, tax exemption will only be accorded if the: (a) Said Fund complies with the qualifying criteria; and (b) Obtain a certification from the SC, prior to 1 January 2017, for the year of assessment For subsequent years of assessments, application for the tax exemption certification must be submitted to the SC, on the second business day of the last month of the proceeding year of assessment. The Fund obtained the tax exemption for the current financial year as the Fund complied with the qualifying criteria for the current financial year. Hence, the interest income on deposits placed with licensed financial institutions earned from 1 April 2017 to 31 March 2018 is not subject to tax. 6. CASH AT BANK From 1 April 2017 to 24 January 2018, the Fund earns interest of 3.00% per annum ("p.a.") from the overnight placement with MBB. From 25 January 2018, the Fund earns 3.25% p.a. from the overnight placement with MBB. In the previous financial year, the Fund earns interest income at the rate of 3.00% p.a. from the overnight placements with MBB. 7. DUE TO MANAGER Amount due to Manager relates to the amount payable to the Manager arising from the accruals for Manager's fee at the end of the financial year. The normal credit term for Manager's fee is 15 days (2017: 15 days). 8. DUE TO TRUSTEE Amount due to Trustee relates to the amount payable to the Trustee arising from the accruals for Trustee's fee at the end of the financial year. The normal credit term for Trustee's fee is 15 days (2017: 15 days). 24

27 9. OTHER PAYABLES AND ACCRUALS Included in other payables and accruals are: Due to external auditor 5,500 5,500 Due to tax agent 2,750 2,500 Other payables 4,306 4,959 12,556 12, TOTAL EQUITY Note Unitholders' capital (a) 202,547, ,952,802 Retained earnings (b) 192,146 80, ,739, ,033,001 (a) Unitholders' capital No. of units No. of units As at beginning of the financial year 160,943, ,952, ,341, ,385,911 Creation of units 1,742,776,046 1,745,786,033 1,946,774,328 1,950,462,841 Reinvestment of units 5,054,169 5,059,723 6,943,242 6,950,753 Cancellation of units (1,706,246,575) (1,709,898,088) (2,054,115,745) (2,058,613,808) 202,526, ,900, ,943, ,185,697 Distribution equalisation (Note 11) - 646, ,105 As at end of the financial year 202,526, ,547, ,943, ,952,802 25

28 10. TOTAL EQUITY (CONT'D.) (a) Unitholders' capital (cont'd) As at end of financial year, the total number and value of units held legally or beneficially by the Manager or parties related to the Manager are as follows: No of units No of units The Manager 5,724 5,730 5,568 5,571 (b) Distributable retained earnings At beginning of the financial year 80, ,951 Net realised income for the financial year 6,042,265 7,540,812 Distribution out of realised reserve* (Note 11) (5,930,318) (7,637,564) At end of the financial year 192,146 80, DISTRIBUTIONS Details of distributions declared to unitholders are as follows: Interest income 6,357,746 8,087,794 Less: Expenses (507,627) (627,181) Prior year realised income * 80, ,951 Distribution out of retained earnings (Note 10(b)) 5,930,318 7,637,564 Effects of distribution equalisation (Note 10(a)) (646,885) (767,105) Distribution for the financial year 5,283,433 6,870,459 Analysed by: Cash distribution 128, ,344 Reinvestment of units 5,154,954 6,737,115 5,283,433 6,870,459 * Part of the distributions were made from previous year's realised income. 26

29 11. DISTRIBUTIONS (CONT'D) The gross and net distribution during the financial year, and the distribution dates are as follows: Distribution dates Gross/net distribution per unit (sen) April May June July August September October November December January February March April May June July August September October November December January February March

30 12. SIGNIFICANT RELATED PARTY TRANSACTION AND BALANCES For the purpose of these financial statements, parties are considered to be related to the Fund or the Manager if the Fund or the Manager has the ability directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decision, or vice versa, or where the Fund or the Manager and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. In addition to the related party information disclosed elsewhere in the financial statements, the following are the significant related party transactions of the Fund Significant related party transactions Malayan Banking Berhad Interest income from deposits 6,566,565 8,174,735 The value of overnight placements with MBB during the current financial year is 78,649 million (2017: 97,172 million). The Manager is of the opinion that the transactions with the related parties 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. 13. MANAGEMENT EXPENSE RATIO ("MER") The MER of the Fund is the ratio of the sum of fees and expenses incurred by the Fund to the average NAV of the Fund calculated on a daily basis. For the financial year ended 31 March 2018, the MER of the Fund stood at 0.24% (2017: 0.24%). 14. PORTFOLIO TURNOVER RATIO ("PTR") The PTR of the Fund is the ratio of average acquisitions and disposals of the Fund for the financial year to the average NAV of the Fund calculated on a daily basis. For the financial year end 31 March 2018, the PTR of the Fund stood at times (2017: times). 15. SEGMENT INFOATION The chief operating decision-maker of the Manager makes the strategic decisions on the resources allocation of the Fund. The decisions are based on an integrated investment strategy to ensure the Fund achieve its targeted return with an acceptable level of risk within the portfolio. The chief operating decision-maker is responsible for the performance of the Fund by investing up to 100% of its NAV in liquid investments such as fixed deposit with tenure of not more than one year and/or money market instruments maturing within six months. The internal reporting provided to the chief operating decision-maker for the Fund s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of MFRS and IFRS. There were no changes in the reportable operating segments during the financial year. 28

31 16. 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 2.3 to Note 2.15 to the financial statements describe how the classes of financial instruments are measured, and how income and expenses are recognised. The following table analyses the financial assets and financial liabilities (excluding tax related matters) of the Fund in the statement of financial position as at the reporting date by the class of financial instrument to which they are assigned, and therefore by the measurement basis. Financial liabilities Loans and at amortised receivables cost Total 2018 Assets Interest receivable 632, ,610 Cash at bank 202,671, ,671,190 Total financial assets 203,303, ,303,800 Liabilities Due to Manager - 41,296 41,296 Due to Trustee - 4,130 4,130 Distributions payable - 506, ,317 Other payables and accruals - 12,556 12,556 Total financial liabilities - 564, , Assets Interest receivable 517, ,258 Cash at bank 160,985, ,985,118 Total financial assets 161,502, ,502,376 Liabilities Due to Manager - 34,513 34,513 Due to Trustee - 3,451 3,451 Distributions payable - 418, ,452 Other payables and accruals - 12,959 12,959 Total financial liabilities - 469, ,375 29

32 16. FINANCIAL INSTRUMENTS (CONT'D.) (b) Financial instruments that are carried at fair value There were no financial assets of the Fund that are carried at fair value as at 31 March 2018 (2017: Nil). (c) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximations of fair value The Fund's financial instruments are not carried at fair value but their carrying amounts are reasonable approximations of fair value due to their short term maturity. Accordingly there are no fair value hierarchy disclosures presented. 17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (a) Introduction The Fund s objective in managing risk is the creation and protection of unitholders value. Risk is inherent in the Fund s activities, but it is managed through a process of ongoing identification, measurement and monitoring of risks. Financial risk management is also carried out through sound internal control systems and adherence to the investment restrictions as stipulated in the Deed, the Securities Commission Malaysia s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework and the CMSA. (b) Market risk Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. However, the Fund is not exposed to equity price risk or currency risk as it does not hold any equity investments nor investments denominated in currencies other than Ringgit Malaysia as at reporting date. Cash and other fixed income securities are particularly sensitive to movements in interest rates. When interest rates rise, the return on cash will rise while the value of fixed income securities will fall and vice versa, thus affecting the NAV of the Fund. The Funds' cash at bank carries a fixed rate and therefore is not be affected by movements in market interest rates. 30