Statement Of Changes In Net Asset Value 15

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2 CONTENTS Fund Information 2 Financial Highlights 4 Fund Performance Market Review Fund Review Fund Returns Asset Allocation Income Distribution 5 Report Of The Trustee 8 Statement By The Manager 9 Independent Auditors Report 10 Statement Of Financial Position 13 Statement Of Comprehensive Income 14 Statement Of Changes In Net Asset Value 15 Statement Of Cash Flows 16 Notes To The Financial Statements 17

3 FUND INFORMATION As at 31 December 2017 Name Of Fund Manager Of Fund : Pacific OCBC Cash Fund : Pacific Mutual Fund Bhd ( U) Launch Date : 19 April 2017 The Fund will continue its operations until terminated as provided under Section 25 of the Deed. Category Of Fund Type Of Fund : Money market (wholesale) : Income Investment Objective : Pacific OCBC Cash Fund aims to provide regular income, liquidity and capital stability by investing in cash deposits. Income is in reference to the Fund s distribution, which could be in the form of cash or units. Performance Benchmark : Maybank Overnight Repo Rate Distribution Policy Fund Size : Distribution of income, quarterly, depending on the availability of realised income and/or realised gains and at the Manager s discretion. : million units 2

4 Breakdown : Of Unitholdings Size Of Holdings No. Of Unitholders % Of Unitholders No. Of Units (million) 5,000 units & below ,001-10,000 units ,001-50,000 units , ,000 units ,001 units & above Total

5 FINANCIAL HIGHLIGHTS As At Category % Cash And Money Market Instruments Net Asset Value (RM'000) - ex distribution 84,658 Number Of Units In Circulation (Units '000) 82,619 Net Asset Value Per Unit (RM)* Management Expense Ratio ("MER") 0.17% Portfolio Turnover Ratio (times) # Not Applicable The Management Expense Ratio for the current financial period was computed based on 257 days. # The Fund only has placements with financial institutions. Notes: The net asset value per unit of the Fund is largely determined by market factors. Therefore past performance figures shown are only a guide and should not be taken as indicative of future performance. Net asset value per unit and investment returns may go up or down. * Price quoted is ex-distribution. 4

6 FUND PERFORMANCE For The Financial Period From 19 April 2017 (Date Of Launch) To 31 December 2017 Market Review Local bond yields consolidated lower amid steady gains in the Ringgit which has helped to keep rates low as fixed income inflows remained solid. The bond market continued to see improvements in foreign flows amid the central bank s effort to enhance the onshore foreign exchange hedging. External reserves continued to be rebuilt, rising further to USD100 billion in August and maintained above the psychological level thereafter. Meanwhile, Bank Negara maintained a stable monetary policy with overnight policy rate unchanged at 3.00% on steady growth trajectory. Foreign inflows intensified in November 2017 boosted by rate hike expectations following hawkish assessments by the central bank on its intention to review the current degree of monetary accommodation given the strength in global and domestic macroeconomic conditions. At the tabling of Budget 2018, Ministry Of Finance s GDP growth forecast for 2017 was revised higher to % from previous %, while 2018 was expected to register a growth of %. Over the review period, the 3-year Malaysian Government Securities (MGS) decreased by 6 basis points to 3.32% while the 10-year yields declined by 20 basis points to 3.91%. Meanwhile, Bank Negara maintained a stable monetary policy with overnight policy rate unchanged at 3.00% on steady growth trajectory. In the 2016 annual report, Bank Negara expects a sustained growth of % on the back of higher inflation target of 3-4%. Over the period, the 3-year MGS decreased by 6 basis points to 3.32% while the 10-year yields decreased by of 20 basis points to 3.91%. Fund Review Since inception, total NAV of the Pacific OCBC Cash Fund increased to RM84,657,699 while NAV per unit increased to RM (net of distribution) from its initial offer price of RM As at 31 December 2017, the portfolio was 100% invested in cash deposits. During the review period, the Fund outperformed its benchmark by 183 basis points returning 3.06% while the benchmark returned 1.23%. Outperformance was due to strategic allocation of deposit placements within specific tenure buckets of compelling returns. 5

7 Fund Returns Total Returns Pacific OCBC Cash Fund Benchmark to % 0.35% to % 0.44% to % 0.44% Since Launch 3.06% 1.23% ( to ) Source: Lipper, Maybank Asset Allocation As At 31 December 2017 Cash And Liquid Assets % 6

8 Income Distribution Gross distribution per unit Net distribution per unit NAV per unit before declaration (as at 29 December 2017) NAV per unit after declaration (as at 29 December 2017) Pacific OCBC Cash Fund 0.60 sen ( : 0.30 sen : 0.30 sen) 0.60 sen ( : 0.30 sen : 0.30 sen) RM RM Income distributions amounting to less than or equal to RM200 will be automatically reinvested into further units of the Fund based on the net asset value (NAV) per unit of the Fund on the fourth business day after declaration of distribution at no cost. Similarly, distribution cheques that are returned through mail will be reinvested based on the Fund s NAV per unit on the date Pacific Mutual receives the returned mail. 7

9 REPORT OF THE TRUSTEE To the Unitholders of PACIFIC OCBC CASH FUND We, MTRUSTEE BERHAD, being the Trustee of PACIFIC OCBC CASH FUND ("the Fund"), are of the opinion that in its capacity as Manager of the Fund, PACIFIC MUTUAL FUND BHD ("the Manager"), has managed the Fund for the financial period from 19 April 2017 (date of launch) to 31 December 2017 in accordance with the following: (a) limitations imposed on the investment powers of the Manager and the Trustee under the Deeds, the Securities Commission's Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework, the Capital Markets and Services Act 2007 and other applicable laws; (b) valuation/pricing of units of the Fund is carried out in accordance with the Deeds and relevant regulatory requirements; (c) creation and cancellation of units are carried out in accordance with the Deeds and relevant regulatory requirements; and (d) the distribution of income by the Fund is appropriate and reflects the investment objectives of the Fund. For and on behalf of the Trustee MTRUSTEE BERHAD NURIZAN JALIL Chief Executive Officer Selangor, Malaysia 7 February

10 STATEMENT BY THE MANAGER We, TEH CHI-CHEUN and ONG EU JIN, being two of the directors of PACIFIC MUTUAL FUND BHD, do hereby declare that, in the opinion of the Manager, the accompanying financial statements set out on pages 13 to 27 are prepared in accordance with the requirements of the Deed, Malaysian Financial Reporting Standards, International Financial Reporting Standards and Securities Commission's Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia so as to give a true and fair view of the financial position of PACIFIC OCBC CASH FUND as at 31 December 2017 and of its results, changes in net asset value and cash flows for the financial period from 19 April 2017 (date of launch) to 31 December Signed on behalf of the Manager in accordance with a resolution of the directors TEH CHI-CHEUN ONG EU JIN Kuala Lumpur, Malaysia 7 February

11 INDEPENDENT AUDITORS' REPORT To the Unitholders of PACIFIC OCBC CASH FUND Report on the audit of the financial statements Opinion We have audited the financial statements of Pacific OCBC Cash Fund ("the Fund"), which comprise the statement of financial position as at 31 December 2017, and statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial period from 19 April 2017 (date of launch) to 31 December 2017, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 13 to 27. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 31 December 2017, and of its financial performance and cash flows for the financial period from 19 April 2017 (date of launch) to 31 December 2017 in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. Basis For Opinion We conducted our audit in accordance with approved standards of auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's 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 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 Statement And Auditors' Report Thereon The Manager of the Fund 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. 10

12 Responsibility Of The Manager And Trustee For The Financial Statements The Manager of the Fund 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. As part of an audit in accordance with approved standards of 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. 11

13 Conclude on the appropriateness of 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 Unlisted Capital Market Products under the Lodge and Launch Framework issued by 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 YEO BENG YEAN No /10/2018 J Chartered Accountant Kuala Lumpur, Malaysia 7 February

14 STATEMENT OF FINANCIAL POSITION As at 31 December 2017 Note 2017 RM Assets Interest receivable 37,745 Cash and cash equivalents 3 84,900,334 Total Assets 84,938,079 Liabilities Amount due to Manager 4 20,443 Other payables 12,079 Distribution payable 9 247,858 Total Liabilities 280,380 Net Asset Value Of The Fund 84,657,699 Equity Unitholders' capital 83,269,968 Retained earning 1,387,731 Net Asset Value Attributable To Unitholders 10 84,657,699 Total Equity And Liabilities 84,938,079 Number Of Units In Circulation (Units) 11 82,619,210 Net Asset Value Per Unit (ex-distribution) 10 RM The accompanying notes form an integral part of the financial statements. 13

15 STATEMENT OF COMPREHENSIVE INCOME For the financial period from 19 April 2017 (Date Of Launch) to 31 December 2017 Investment Income to Note RM Interest income 1,736,960 Expenses Audit fee 6,800 Tax agent's fee 3,350 Manager's fee 5 91,778 Trustee's fee 6 9,809 Administration expenses 7, ,992 Net Income Before Taxation 1,617,968 Taxation 8 - Net Income After Taxation 1,617,968 Total Comprehensive Income 1,617,968 Total Comprehensive Income Is Made Up As Follows: Realised 1,617,968 Unrealised - 1,617,968 The accompanying notes form an integral part of the financial statements. 14

16 STATEMENT OF CHANGES IN NET ASSET VALUE For the financial period from 19 April 2017 (Date Of Launch) to 31 December 2017 Net Asset Value Attributable Unitholders' Retained To Note Capital Earning Unitholders RM RM RM At date of launch 2,500-2,500 Net income after taxation - 1,617,968 1,617,968 Creation of units 291,919, ,919,649 Cancellation of units (208,174,464) - (208,174,464) Distribution 9 (477,717) (230,237) (707,954) At 31 December ,269,968 1,387,731 84,657,699 The accompanying notes form an integral part of the financial statements. 15

17 STATEMENT OF CASH FLOWS For the financial period from 19 April 2017 (Date Of Launch) to 31 December to RM Cash Flows From Operating And Investing Activities Interest received 1,699,215 Manager's fee paid (71,334) Trustee's fee paid (7,880) Payment for other fees and expenses (7,256) Net cash generated from operating and investing activities 1,612,745 Cash Flows From Financing Activities Cash proceeds from units created 291,919,649 Cash paid on units cancelled (208,174,464) Distributions paid (460,096) Net cash generated from financing activities 83,285,089 Net Increase In Cash And Cash Equivalents 84,897,834 Cash And Cash Equivalents At Date Of Launch 2,500 Cash And Cash Equivalents At End Of Financial Period 84,900,334 Cash And Cash Equivalents Comprise: Cash at banks 60,334 Deposits with financial institutions 84,840,000 84,900,334 The accompanying notes form an integral part of the financial statements. 16

18 NOTES TO THE FINANCIAL STATEMENTS 31 December The Fund, The Manager And Their Principal Activities Pacific OCBC Cash Fund (hereinafter referred to as "the Fund") was constituted pursuant to the execution of the Deed dated 5 January 2016, First Supplemental Deed dated 29 August 2016 and Second Supplemental Deed dated 22 March 2017 (hereinafter referred to as "the Deeds") made between the Manager, Pacific Mutual Fund Bhd, the Trustee, MTrustee Berhad and the registered holders of the Fund. The principal activity of the Fund is to invest in "Permitted Investments" as defined in the Deed, which include deposits with financial institutions and money market instruments as approved by the Securities Commission. The Fund was launched on 19 April 2017 and will continue its operations until terminated by the Trustee as provided in the Deed. The Manager is a 70% owned subsidiary of Lion Global Investors Limited (formerly known as Lion Capital Management Limited), a company incorporated in Singapore. The remaining 30% of the share capital of the Manager is held by Koperasi Angkatan Tentera Malaysia Bhd. The ultimate holding company is Oversea-Chinese Banking Corporation Limited, a public listed company incorporated in Singapore. The principal activities of Pacific Mutual Fund Bhd are the establishment and management of unit trust funds as well as the management of private investment mandates. The financial statements were authorised for issue by the Board of Directors of the Manager in accordance with a resolution of the directors on 7 February Summary Of Significant Accounting Policies (a) Basis Of Preparation The financial statements of the Fund have been prepared on a historical cost basis, except as otherwise stated in the accounting policies and comply with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS"), the Deed and the Securities Commission's Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia. (b) Standards Issued But Not Yet Effective The following Standards, Amendments and Interpretations have been issued by the Malaysian Accounting Standards Board ("MASB") but are not yet effective and have not been early adopted by the Fund. 17

19 Effective for financial year beginning on or after 1 January 2018 MFRS 9 Financial Instruments MFRS 15 Revenue from Contracts with Customers* Amendments to MFRS 2 Classification and Measurement of Share-based Payment Transactions* Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts* Amendments to MFRS 140 Transfer of Investment Property* Amendments to MFRSs contained in the document entitled "Annual Improvements to MFRSs Cycle" IC Interpretation 22 Foreign Currency Transactions and Advance Consideration Effective for financial year beginning on or after 1 January 2019 MFRS 16 Leases* Amendments to MFRS 9 Prepayment Features with Negative Compensation* Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures* Effective for financial year beginning on or after 1 January 2021 MFRS 17 Insurance Contracts* Effective date to be announced Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture* * These MFRSs and amendments to MFRSs are not relevant to the Fund. The Fund plans to adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are expected to have no significant impact to the financial statements of the Fund upon their initial application except as described below: (i) MFRS 9 Financial Intruments The Fund will adopt the new standard on the required effective date. The Fund expects no significant impact to its financial position and results since the Fund does not expect any additional credit losses on loans and receivables and all investments of the Fund will continue to be carried at fair values. The Fund does not expect significant changes in classification of financial instruments or the presentation of disclosures in the financial statements, except for some changes to the accounting policies to be consistent with MFRS 9. 18

20 (ii) MFRS 15 Revenue from Contracts with Customers Revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The adoption of MFRS 15 is not expected to have any impact on the Fund s revenue and profit or loss as the Fund generally earns its revenue from financial instruments which are scoped out from MFRS 15. (c) 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. (d) Financial Instruments The Fund recognises financial assets and financial liabilities in the Statement of Financial Position on the date it becomes a party to the contractual provisions of the instruments. Regular way purchase and sales of all categories of investments in financial instruments are recognised on trade dates i.e. dates on which the Fund commits to purchase or sell the financial instruments. The Fund determines the classification of its financial assets and financial liabilities at initial recognition, and the categories include receivables and financial liabilities. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These include cash and cash equivalents and other receivables. Receivables are recognised initially at fair value including transaction costs. These are subsequently measured at amortised cost using the effective profit method, less impairment. Financial Liabilities Financial liabilities are recognised initially at fair value i.e. the consideration for goods and services received and subsequently stated at amortised cost. These include amounts due to Manager, Trustee and other payables. The difference between the proceeds and the amount payable is recognised over the period of the payable using the effective interest method. 19

21 (e) Derecognition Of Financial Assets And Liabilities Financial Assets A financial asset is derecognised when the asset is disposed and the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profit or loss. Financial Liabilities A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liability is derecognised, and through the amortisation process. (f) Impairment Of Financial Assets The Fund assesses at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired. Financial Assets Carried At Amortised Cost If a financial asset carried at amortised cost is impaired, an impairment loss is recognised in profit or loss as the difference between the asset's carrying amount and the present value of estimated future cash flow discounted at the financial asset's original effective interest rate. If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through profit or loss. (g) Income Recognition 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. Interest income is recognised using the effective interest rate method on an accrual basis. (h) Cash And Cash Equivalents Cash and cash equivalents comprise cash at banks and deposits in financial institutions which have an insignificant risk of changes in value. (i) Taxation Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rate and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. 20

22 (j) Distribution Distributions made by the Fund are accounted for as a deduction from realised reserves except where distributions are sourced out of distribution equalisation which are accounted for as a deduction from Unitholders' Capital. Distributions are recognised in the Statement of Changes in Net Asset Value when they are approved by the Manager and the Trustee. (k) Unitholders' Capital Unitholders' Capital meets the conditions for the definition of puttable instruments classified as equity instruments. Distribution equalisation is accounted for on the date of creation and cancellation of units. It 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. (l) Significant Accounting Estimates And Judgments The preparation of financial statements in accordance with MFRS and IFRS requires the use of certain accounting estimates and exercise of judgments. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors. No major estimations 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 the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities at reporting date. 21

23 3. Cash And Cash Equivalents Cash and cash equivalents include cash at banks and deposits with financial institutions RM Cash at banks 60,334 Deposits with financial institutions: - Commercial banks 84,840,000 Cash and cash equivalents 84,900,334 The weighted average rate of return and remaining maturity at the reporting date were as follows: Weighted Average Weighted Average Rate Of Return Remaining Maturity (% Per Annum) (Days) Deposits with financial institutions: - Commercial banks Amount Due To Manager The amount due to Manager represents amount payable for unit cancelled and/or amount payable for management fee. Management fee is payable on a monthly basis and amount receivable/payable for units created/ cancelled is received/paid within 10 days of the transaction dates. 5. Manager's Fee The Manager s fee provided in the financial statements is computed at the following rates per annum of the net asset value attributable to unitholders of the Fund, calculated on a daily basis. Period Rate p.a. 19 April 2017 (date of launch) to 25 July % 26 July 2017 to 1 October % 2 October 2017 to 31 December % 6. Trustee's Fee The Trustee's fee provided in the financial statements is computed at 0.02% per annum of the net asset value attributable to unitholders of the Fund, calculated on a daily basis. 22

24 7. Management Expense Ratio to Management expense ratio ("MER") 0.17% MER is the ratio of expenses of the Fund expressed as a percentage of the average net asset value attributable to unitholders of the Fund for the financial period calculated on a daily basis. The MER for the current financial period is computed based on 257 days. 8. Taxation to RM Malaysian income tax: Current period's provision - Income tax is calculated at the Malaysian statutory rate of taxation of 24% of the estimated assessable income for the financial period. There was no taxation charge for the current financial period due to tax exempt income received. A reconciliation of income tax expense applicable to net income before taxation at the statutory rate of taxation to income tax expense at the effective rate of taxation is as follows: to RM Net income before taxation 1,617,968 Taxation at Malaysian statutory rate of 24% 388,312 Tax effects of: Income not subject to tax (416,870) Expenses not deductible for tax purpose 4,601 Restriction on tax deductible expenses for wholesale funds 23,957 Tax expense for the financial period - 23

25 9. Distribution Distributions paid/payable to unitholders during the financial period are as follows: Gross Net Distribution Distribution Distribution Payment Dates Per Unit Per Unit Amount (sen) (sen) RM October ,096 2 January ,858 Total , RM Distribution to unitholders is from the following sources: Interest income 246,575 Distribution equalisation 477, ,292 Less: Expenses (16,338) Taxation - 707,954 Gross distribution per unit (sen) 0.60 Net distribution per unit (sen) Net Asset Value Attributable To Unitholders 2017 RM Unitholders' capital 83,269,968 Retained Earning - Realised reserve 1,387,731 Net asset value attributable to unitholders 84,657,699 The net asset value per unit is rounded up to four decimal places. 11. Number Of Units In Circulation 2017 No. Of Units At date of launch 2,500 Creation 285,606,843 Cancellation (202,990,133) At end of the financial period 82,619,210 24

26 12. Units Held By The Manager And Its Related Parties There were no units held by the manager and other related parties. 13. Financial Risk Management Objectives And Policies The Fund is exposed to a variety of risks which include market risk, credit risk, liquidity risk, specific risk and single issuer risk. Financial risk management is carried out through policy reviews, internal control systems and adherence to the investment restrictions as stipulated in the Securities Commission's Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework in Malaysia. (i) Market Risk The Fund's principal exposure to market risk arises primarily due to changes in the market environment, global economic and geo-political developments. The Fund seeks to diversify some of these risks by investing into various financial institutions and ensuring optimal tenure allocation of deposits placements. The Fund s market risk is affected primarily by the interest rate risk: (a) Interest Rate Risk This risk refers to the effect of interest rate changes on the market value of placements in money market instruments. In the event of reduction in interest rate, the return on placements in money market instruments will decrease and vice versa, thus affecting the net asset value of the Fund. This risk will be minimised via the management of the duration structure of the portfolio of placements in money market instruments. The table below summarises the effect on the net asset value of the Fund at the reporting date due to possible changes in interest rate, with all other variables held constant: Effect On Net Asset Value Change In Basis Point Attributable To Unitholders 2017 RM +25/ 3,011/ (25) (3,011) 25

27 (ii) Credit Risk The Fund s principal exposure to credit risk arises primarily due to changes in the financial conditions of an issuer or a counterparty to make payment of principals, interest and proceeds from realisation of investments. Such events can lead to loss of capital or delayed or reduced interest for the Fund resulting in a reduction in the Fund s asset value and thus unit price. This risk is mitigated by setting counterparty limits and vigorous credit analyses. Credit risk is generally arising from cash and cash equivalents and other receivables. The maximum exposure to credit risk is presented in the statement of financial position. None of these balances are impaired. (iii) Liquidity Risk This risk occurs in thinly traded or illiquid securities. Should the Fund need to sell a relatively large amount of such securities, the act itself may significantly depress the selling price. The risk is minimised by maintaining a prudent level of liquid assets that allows the Fund to meet daily redemption of units without jeopardising potential returns. The Fund's financial liabilities fall due within three months while the net asset value attributable to unitholders are repayable on demand. (iv) Specific Risk The Fund is exposed to the individual risk of the respective companies issuing securities which includes changes to the business performance of the company, consumer tastes and demand, lawsuits and management practices. This risk is minimised through the diversification of the portfolio of investments of the Fund. (v) Single Issuer Risk The Fund s exposure tp securities issued by any issuer is limited to not more than a certain percentage of the Fund's net asset value. Under such restriction, the risk exposure to the Shariah-compliant securities of any issuer is minimised. 26

28 14. Operating Segment All of the Fund's investments are in local money market instruments and, as such, there are no separately identifiable business and geographical segments. 15. Capital Management The Fund s capital comprises unitholders subscription to the Fund. The unitholders capital fluctuates according to the daily subscription and redemption of units at the discretion of unitholders. The Fund aims to achieve its investment objective and at the same time maintain sufficient liquidity to meet unitholders redemptions. 16. Comparative Figures The financial statements are for the financial period from 19 April 2017 (date of launch) to 31 December There are no comparative figures as this is the Fund's first set of financial statements. 27

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