Interim Report Dec 2017

Transcription

1 Interim Report Dec 2017 For the Period Ended 31 December 2017 Areca equitytrust Fund

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3 I NTERIM REPORT DECEMBER 2017 Contents CORPORATE DIRECTORY 2 MANAGER S REPORT Fund Information, Performance & Review 3 Market Review & Outlook 7 TRUSTEE S REPORT 9 STATEMENT BY THE MANAGER 10 UNAUDITED FINANCIAL STATEMENTS FOR 11

4 C O R P O R A T E D I R E C T O R Y MANAGER Areca Capital Sdn Bhd ( D) 107, Blok B, Pusat Dagangan Phileo Damansara 1 No. 9, Jalan 16/11, Off Jalan Damansara Petaling Jaya, Selangor Tel: , Fax: website: invest@arecacapital.com BOARD OF DIRECTORS Dato Wee Hoe Gooi Hoe Soon (Non-Independent, Chairman) Wong Teck Meng (Executive) Raja Datuk Zaharaton Bt Raja Dato Zainal Abidin (Non-Executive Non-Independent) Dr. Junid Saham (Independent) INVESTMENT COMMITTEE MEMBERS Dato Wee Hoe Gooi Hoe Soon (Non-Independent, Chairman) Raja Datuk Zaharaton Bt Raja Dato Zainal Abidin (Non-Independent) Dr. Junid Saham (Independent) TRUSTEE Maybank Trustees Berhad (5004-P) 8th Floor, Menara Maybank 100 Jalan Tun Perak Kuala Lumpur Tel: , Fax: AUDITOR Deloitte PLT (LLP LCA) Level 16, Menara LGB 1 Jalan Wan Kadir, Taman Tun Dr. Ismail Kuala Lumpur Tel: , Fax: TAX ADVISER Deloitte Tax Services Sdn Bhd (36421-T) Level 16, Menara LGB 1 Jalan Wan Kadir, Taman Tun Dr. Ismail Kuala Lumpur Tel: , Fax: M A N A G E R S O F F I C E A N D B R A N C H E S HEAD OFFICE 107, Blok B, Pusat Dagangan Phileo Damansara 1, No. 9, Jalan 16/11, Off Jalan Damansara, Petaling Jaya, Selangor. Tel: , Fax: website: invest@arecacapital.com PENANG PULAU TIKUS PERAK - IPOH MALACCA Belissa Row 11A, (First Floor) 95A, Jalan Melaka Raya 24 Jalan Burma, Georgetown Persiaran Greentown 5 Taman Melaka Raya Pulau Pinang Greentown Business Centre Melaka Tel : Ipoh, Perak Tel : Fax: Tel : Fax: Fax:

5 F U N D I N F O R M A T I O N Name of the Fund Fund Category/ Type Areca equitytrust Fund Equity/Growth Objective of the Fund Benchmark Distribution Policy of the Fund To provide investors with medium to long term capital growth Average Returns of the funds under ''Equity Malaysia'' Non-Islamic category Incidental. In the absence of written instructions from a Unit Holder, the Manager is entitled to reinvest the income distributed from the Fund in additional units of that Fund at the NAV per unit at the end of the distribution day with no entry fee. Profile of unitholdings * excluding units held by the Manager Rebates & Soft Commissions No. of As at 31 December 2017 No. of units held Size of Holding (Units) accounts % (million) % Up to 5, ,001 to 10, ,001 to 50, ,001 to 500, ,001 and above Total* The Manager retains soft commissions received from stockbrokers, provided these are of demonstrable benefit to unitholders. The soft commissions may take the form of goods and services such as, data and quotation services, computer software incidental to the management of the Fund and investment related publications. Cash rebates (if any) are directed to the account of the Fund. During the period under review, the Manager had not received any soft commissions. Inception Date 23 April 2007 Initial Offer Price RM per unit during the initial offer period of 21 days ended 13 May 2007 Pricing Policy Single Pricing Selling and repurchase of units by Manager at Net Asset Value per unit Financial Year End 30 June 3

6 F U N D P E R F O R M A N C E NET ASSET VALUE ( NAV ) as at 31 December Total Net Asset Value (RM million) * Units in circulation (million units) * NAV per unit (RM) * * Ex-Distribution HIGHEST & LOWEST NAV PER UNIT for the period ended 31 December Please refer to Note 1 for further information on NAV and pricing policy Highest NAV per unit (RM) * Lowest NAV per unit (RM) * * Ex-Distribution ASSET ALLOCATION % of NAV as at 31 December Quoted equities & equity-related securities ACE Market Technology Main Board Construction Consumer products Finance Infrastructure Project Co Industrial products Plantations Properties Special Purpose Acquisition (SPAC) Technology Trading/Services Cash & cash equivalent including placements & repo DISTRIBUTION Distribution date Dec 2015 Gross distribution (sen per unit) Net distribution (sen per unit) NAV before distribution (RM per unit) (30 Dec) NAV after distribution (RM per unit) (31 Dec) UNIT SPLITS There was no unit split exercise for the financial period under review. AVERAGE ENTRY FEE (SALES CHARGE) % The average entry fee (sales charge) for the period is zero EXPENSE/ TURNOVER for the period ended 31 December Management expense ratio (MER) (%) Please refer to Note 2 for further information 4

7 Portfolio turnover ratio (PTR) (times) Please refer to Note 3 for further information TOTAL RETURN for the period ended 31 December Please refer to Note 4 for further information Total Return (%) Capital Return (%) Income Return (%) Annual Total Return (%) Benchmark: Average Returns of the funds under "Equity Malaysia'' Non-Islamic category yr 3-yrs 5-yrs Average Total Return (%) NOTES: Note 1: Selling of units by the Management Company (i.e. when you purchase units and invests in the Fund) and redemption of units by the Management Company (i.e. when you redeem your units and liquidate your investments) will be carried out at NAV per unit (the actual value of a unit). The entry/ exit fee (if any) would be computed separately based on your net investment/ liquidation amount. Note 2: MER is calculated based on the total fees and expenses incurred by the Fund, divided by the average net asset value calculated on a daily basis. Note 3: PTR is computed based on the average of the total acquisitions and total disposals of the investment securities of the Fund, divided by the average net asset value calculated on a daily basis. PTR increased as total trade improved by RM24.4mil as compared to Note 4: Fund performance figures are calculated based on NAV to NAV and assume reinvestment of distributions (if any) at NAV. The performance figures for the benchmark, Average Returns of the funds under ''Equity Malaysia'' Non-Islamic category are calculated assuming investment in the index. The total return and benchmark data are sourced from Lipper. Unit prices and distributions payable, if any, may go down as well as up. Past performance of the Fund is not an indication of its future performance. 5

8 F U N D R E V I E W During the period under review, the Fund s NAV/unit increased 14.8% compared to the benchmark gain of 3.5%. The outperformance of the Fund was mainly due to stock selection. During the period under review, the Manager focused on several investment themes including companies which were beneficiaries of increased construction jobs and bottoming in consumer sentiment. The Fund was also positioned in technology and export oriented companies which were beneficiaries of the global economic upturn. The fund outperformed its benchmark mainly due to stock selection. During the period, the top performing stocks for the Fund were Press Metal, SKP Resources, and Pentamaster while the detractors were Malaysian Pacific Industries, Notion Vtec, and Fajarbaru Builders Group. The Fund has achieved its objective of providing investors with medium to long term capital growth for the year under review. Performance of Areca equitytrust Fund for the financial period since inception to 31 December 2017 Areca equitytrust Average Returns of the funds under Equity Malaysia Non-Islamic category Investment Policy and Strategy The Fund invests principally in equities and equity-related securities. The Fund will pursue an investment strategy that emphasizes on appropriate asset allocation for changing market conditions and market cycles and seeks out economic sectors that are anticipated to perform well. NAV per unit as at 31 December Asset Allocation /Portfolio Composition as at 31 December % Equities and equityrelated securities 90.57% 83.52% 88.02% Cash and cash 90.57% Equivalents 9.43% 16.48% 11.98% The Fund s size increased RM22.8mil while the value of equities and equity-related securities increased at a higher rate from RM39.2mil to RM63.1mil, an increase of RM23.9mil. 6

9 MANAGER S REPORT MARKET REVIEW & OUTLOOK ECONOMIC REVIEW Fueled by low interest rates and ample liquidity, the US economic recovery gathered pace in the second half of Annualised 4Q2017 Gross Domestic Product (GDP) grew at 2.5% y-o-y following 3Q s 2.3%, marking 7 consecutive quarters of steady rise. For the year, the US economy grew 2.3%. Unemployment rate has gradually declined and now reads 4.1% as at end December, the lowest level in 17 years, while December inflation held up at 2.1%. The stock market benefited as it continue to push through umpteen new highs with year-end closing at yet another all-time high of 24,837. However, constant distractions in the form geopolitical risks with Syria, Iran and North Korea, internal government upheavals with regular bickerings and ongoing investigation into Russian collusion in the US elections have now become a norm. If not for Trump s tax reform plan getting endorsed by Senate at the end of November, the year would have passed with no legislative victory for Trump. In Europe, GDP grew by 2.8% and 2.7% for 3Q and 4Q respectively. Even more encouraging is the steady decline of unemployment rate to 8.7% in December which is the lowest level since January However, inflation struggles allow for continued bond buying program at least until September 2018 though it is to be halved to 30 bil a month beginning January. Inflation in December registered a tepid 1.3%. Meanwhile China s National Congress meeting and snap elections in Japan in the last quarter of 2017 returned and reaffirmed Xi Jin Peng and Shinzo Abe as leaders of their respective countries; the 2 nd and 3 rd largest economies in the world; granting them the ability to upstage and display to the world the symbolic shift in global power when hosting President Trump in his first trip to Asia. Seduced by the rolled out red carpet treatment, the praise-hungry US President backtracked from the lambasting he gave months earlier branding China a currency manipulator and stealing American jobs but instead heaped warm words of admiration towards China. Through OPEC s continued cartel production cut, crude oil prices have steadily risen in the 2 nd half of 2017 from USD47.90 to USD This 40% increase explains an overall increase in global inflation. Malaysia s economy In Malaysia, inflation has kept above 3% throughout this year with December reading at 3.5%. For the year 2017 Consumer Price Index (CPI) was higher by 3.7% against a year ago, versus 2016 s 2.1% against the previous year. The mark increase is largely attributed to higher average petrol prices. 3Q GDP growth advanced 6.2%, above last quarter s 5.8% and market expectation of 5.4%, highest since 2Q 2014 with major contribution from private consumption and exports. For the year 2017, growth is expected to hit the upper range of official estimate of %. Foreign Reserves stands at USD102.4 billion (or RM414.6 bil) as at end December after adjustments for forex revaluations, sufficient to finance 7.2 months of retained imports and is 1.1 times short-term external debt. EQUITY MARKET REVIEW During the period under review, the FBM KLCI Index which is the barometer of the Malaysian equity market closed 1.9% higher at 1,797 points. The FBM Emas Index gained 2.7% to 12,943 points but the FBM Smallcap Index declined 2.3% to 17,051 points. Regional markets closed higher during the period with the top performers being Vietnam and Hong Kong while the laggards were Malaysia and Taiwan. Initially, the market performance was capped by rising geopolitical tension in North Korea. However, global markets gradually shrugged the North Korea tensions due to robust economic data and corporate earnings on the back of a synchronized global upturn. The performance of the FBM KLCI lagged its regional peers as investors continued to focus on North Asian markets due to stronger earnings momentum. The PM unveiled the country s 2018 Budget in October. Under the Budget, the government expects Gross Domestic Product (GDP) to grow by 5.0% 5.5% in 2018, driven by buoyant export markets 7

10 MANAGER S REPORT and improving domestic demand. Meanwhile, fiscal deficit is expected to narrow to RM39.8bn or 2.8% of GDP in 2018 from the current 3.0% level projected for this year. Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 3.00% for the eighth consecutive Monetary Policy Committee (MPC) meeting in November. The decision was in line with market expectations. However, BNM indicated that they may consider reviewing the current degree of monetary policy accommodation. The statement was interpreted as more hawkish and has raised the possibility of an earlier than expected interest rate hike in The more hawkish stance by BNM coupled with strength in macro numbers and oil price helped the Ringgit. For the period, the Ringgit strengthened 6.1% against the US Dollar to while Brent futures gained 39.5% to almost US$67/bbl. Historically, the month of December has tended to be positive for the performance of the FBM KLCI was no exception. The market was led by the heavyweight FBM KLCI index which closed at 1,797 points. In terms of corporate development during the period, RHB Bank Bhd and AMMB Holdings Bhd called off their plans for a merger citing that both banks could not arrive at mutually acceptable terms. Meanwhile, Sime Darby completed its internal restructuring towards the end of the year. EQUITY MARKET OUTLOOK We are positive on the market due to a few factors. We see positive earnings momentum for Malaysia in 2018 underpinned by robust GDP growth. Pump priming activities are expected to continue while the uncertainty from General Elections would be removed eventually. With the weakness in the US Dollar (US$) and recovery in commodity prices, we believe that this would create a relatively conducive environment for performance from Emerging Markets including Malaysia. We would employ a stock picking strategy to focus on selected themes including increased construction jobs, improving consumer sentiment and recovery in commodities prices. Given the roll out of major projects especially in rail-related infrastructure, and Pan Borneo Highway, we anticipate strong construction job flows and this is expected to sustain interest in the construction sector. Identifiable contracts in the medium term include the Pan Borneo Highway, LRT3, and packages in the East Coast Rail Link (ECRL) project. We would look for opportunities in contractors who would be major beneficiaries of construction job awards. The MIER Consumer Sentiment Index has started to show signs of a recovery, albeit modest. The recent strength in the Ringgit (vs the US Dollar) is expected to help consumer sentiment. With the recovery in consumer sentiment, we see investment opportunities in high quality consumer franchises. We have a constructive view on commodities generally given the global economic growth outlook and weakness in the US$. We would look to invest in companies which would benefit from this trend. 8

11 T R U S T E E S R E P O R T For The Period Ended 31 December 2017 To the Unitholders of Areca equitytrust Fund We have acted as Trustee for Areca equitytrust Fund ("the Fund") for the financial period ended 31 December To the best of our knowledge, Areca Capital Sdn Bhd ( the Manager ) has managed the Fund in the financial period under review in accordance with the following: 1. Limitations imposed on the investment powers of the Manager under the deeds, securities laws and Guidelines on Unit Trust Funds; 2. Valuation and pricing of the Fund are carried out in accordance with the deeds and any regulatory requirement; and 3. Creation and cancellation of units are carried out in accordance with the deeds and any regulatory requirement. For Maybank Trustees Berhad (Company No: 5004-P) BERNICE KM LAU Head, Operations Kuala Lumpur, Malaysia 13 February

12 STATEMENT BY THE MANAGER To the Unitholders of Areca equitytrust Fund We, Wong Teck Meng and Dato Wee Hoe Gooi Hoe Soon, two of the Directors of the Manager, Areca Capital Sdn Bhd, do hereby state that in the opinion of the Manager, the accompanying unaudited financial statements are drawn up in accordance with Financial Reporting Standards and the Securities Commission Malaysia s Guidelines on Unit Trust Funds in Malaysia so as to give a true and fair view of the financial position of the Fund as of 31st December, 2017 and the financial performance and the cash flow of the Fund for the period ended on that date. For and on behalf of the Manager, Areca Capital Sdn Bhd WONG TECK MENG CEO/ EXECUTIVE DIRECTOR DATO WEE HOE GOOI HOE SOON NON-INDEPENDENT DIRECTOR Kuala Lumpur 13 February

13 UNAUDITED STATEMENT OF FINANCIAL POSITION As Of 31st December, 2017 Assets Note RM RM Investments Quoted securities 4 63,125,787 39,177,352 Other Assets Amount due from Manager 5-34,388 Other receivables 6 1,574,891 30,294 Short-term deposits 7 6,636,260 8,616,938 Cash at bank 431,588 6,368 Total Other Assets 8,642,739 8,687,988 Total Assets 71,768,526 47,865,340 Unitholders Fund and Liabilities Liabilities Amount due to Manager 5 20,000 - Other payable and accruals 8 2,048, ,734 Total Liabilities 2,068, ,734 Unitholders Fund Unitholders capital 9 48,743,493 43,170,498 Unrealised reserve 10 14,491,910 2,603,436 Realised reserve 11 6,464,814 1,132,672 Net Asset Value attributable to unitholders 69,700,217 46,906,606 Total Unitholders Fund and Liabilities 71,768,526 47,865,340 Number of Units in Circulation 9 115,479,683 85,666,032 Net Asset Value Per Unit The accompanying Notes form an integral part of the Financial Statements. 11

14 UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For 6-month Period Ended 31st December, to to Note RM RM Investment Income Gross dividend income 551, ,485 Interest income 99, ,870 Net gain/(loss) from investments: Investment at fair value through profit or loss ( FVTPL ) 4 9,151,942 (88,372) Total Investment Income 9,802, ,983 Expenditure Management fee , ,831 Trustee s fee 14 24,848 20,166 Transaction cost 446, ,184 Other expenses 41,228 36,555 Total Expenditure 1,092, ,736 Net Income /(Loss)Before Tax 8,710,429 (199,753) Income Tax Expense Net Income /(Loss) After Tax/ Total Comprehensive Loss For The Period 8,710,429 (199,753) Net Income /(Loss) After Tax Is Made Up Of: Realised gain 3,000, ,772 Unrealised gain /(loss) 5,709,478 (1,070,525) 8,710,429 (199,753) The accompanying Notes form an integral part of the Financial Statements 12

15 UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE For 6-month Period Ended 31st December, 2017 Unitholders Realised Unrealised Total net asset capital reserve reserve value RM RM RM RM As of 1st July, ,146, ,900 3,673,961 52,082,629 Amounts received/receivable from units created 11,370, ,370,464 Amounts paid for units cancelled (16,346,734) - - (16,346,734) Total comprehensive loss for the period - (199,753) - (199,753) Net unrealised loss transferred to unrealised reserve - 1,070,525 (1,070,525) - As of 31st December, ,170,498 1,132,672 2,603,436 46,906,606 As of 1st July, ,216,406 3,463,863 8,782,432 57,462,701 Amounts received from units created 9,320, ,320,245 Amounts paid/payable for units cancelled (5,793,158) - - (5,793,158) Total comprehensive gain for the period - 8,710,429-8,710,429 Net unrealised gain transferred to unrealised reserve - (5,709,478) 5,709,478 - As of 31st December, ,743,493 6,464,814 14,491,910 69,700,217 The accompanying Notes form an integral part of the Financial Statements. 13

16 UNAUDITED STATEMENT OF CASH FLOWS For 6-month Period Ended 31st December, to to Cash Flows From/(Used In) Operating Activities RM RM Proceeds from disposal of quoted securities 45,512,364 36,883,411 Gross dividend income received 526, ,795 Interest received 100, ,114 Purchase of quoted securities (50,761,120) (34,709,538) Management fee paid (559,475) (489,731) Trustee s fee paid (24,008) (20,625) Transaction cost paid (444,695) (342,154) Payment for other fees and expenses (52,070) (43,372) Net Cash(Used In)/ From Operating Activities (5,702,192) 2,045,900 Cash Flows From/(Used In) Financing Activities Cash proceeds from units created 9,370,245 11,336,075 Payment for cancellation of units (5,773,158) (16,346,734) Net Cash Used In Financing Activities (3,597,087) (5,010,659) Net Decrease In Cash And Cash Equivalents (2,105,105) (2,964,759) Cash And Cash Equivalents At Beginning Of Period 9,172,953 11,588,065 Cash And Cash Equivalents At End Of Period 7,067,848 8,623,306 Cash and cash equivalents consist of the following amounts: RM RM Short-term deposits 6,636,260 8,616,938 Cash at bank 431,588 6,368 7,067,848 8,623,306 The accompanying Notes form an integral part of the Financial Statements. 14

17 NOTES TO THE FINANCIAL STATEMENTS 1 GENERAL INFORMATION Areca equitytrust Fund ( equitytrust or the Fund ) was established pursuant to the Trust Deed dated 12th March, 2007 as modified by the First Supplemental Deed dated 27 June 2007, Second Supplemental Deed dated 14th April 2008, Third Supplemental Deed dated 21st October 2008, Fourth Supplemental Master Deed dated 10th April 2009, Fifth Supplemental Master Deed dated 12th March 2013 and Sixth Supplemental Master Deed dated 6th September 2013 between Areca Capital Sdn Bhd as the Manager, the Trustee and all the registered unitholders of the Fund ( the Deed ). The principal activity of the Fund is to invest in investments as defined under the Schedule 7 of the Deed, which include stocks and shares of companies quoted on any recognised Stock Exchange(s) in Malaysia and deposits with financial institutions. The Fund commenced operations on 23rd April, 2007 and will continue its operations until terminated by the Trustee in accordance with Part 12 of the Deed. The objective of the Fund is to provide investors with medium to long term capital growth by investing principally in equities and equity related securities. The Manager of the Fund is Areca Capital Sdn Bhd, a company incorporated in Malaysia. Its principal activities are managing private and unit trust funds. 2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards and the Securities Commission Malaysia s Guidelines on Unit Trust Funds in Malaysia. Adoption of New and Revised Malaysian Financial Reporting Standards In the current financial year, the Fund adopted all the new and revised MFRSs and Amendments to MFRSs issued by Malaysian Accounting Standards Boards (''MASB'') that are relevant to its operations and effective for annual financial periods beginning on or after 1st July, 2016 as follows: Amendments to MFRS 101 Amendments to MFRS 116 and MFRS 138 Annual Improvements to MFRSs cycle Disclosure Initiative Clarification of Acceptable Methods of Depreciation and Amortisation The adoption of these new and revised MFRSs did not result in significant changes in the accounting policies of the Fund and had no significant effect on the financial performance or position of the Fund. Standards, Issue Committee ( IC ) Interpretation and Amendments in Issue But Not Yet Effective At the date of authorisation for issue of these financial statements, the new and revised Standards, IC Interpretation and Amendments which were in issue but not yet effective and not early adopted by the Fund are as listed below: MFRS 9 Financial Instruments 3 MFRS 15 Revenue from Contracts with Customers (and the related Clarifications) 2 Amendments to MFRS 107 Disclosure Initiative 1 Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses 1 IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 2 Amendments to MFRSs Annual Improvement to MFRS Cycle 1or2 1 Effective for annual periods beginning on or after 1st January, Effective for annual periods beginning on or after 1st January,

18 3 Effective for annual periods beginning on or after 1st January, 2018, with early application permitted. In addition, an entity may elect to early apply only the requirements for the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss for annual periods beginning before 1st January, 2018, as stated in paragraph of MFRS 9 The Manager of the Fund anticipates that the abovementioned Standards, IC Interpretation and Amendments will be adopted in the annual financial statements of the Fund when they become effective and that the adoption of these Standards, IC Interpretation and Amendments will have no material impact on the financial statements of the Fund in the period of initial application except for MFRS 9 and MFRS 15. However, it is not practicable to provide a reasonable estimate of the effect of MFRS 9 and MFRS 15 until the Manager undertakes a detail review. 3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES AND JUDGEMENTS A. SIGINIFICANT ACCOUNTING POLICIES Income Recognition Dividend income is recognised based on the ex-dividend date, when the right to receive the dividend has been established. Interest income from short-term deposits is recognised on a time proportion basis that reflects the effective yield on the asset. Realised gain and loss on disposal of investments is arrived based on net sales proceeds less carrying value. Unrealised gains and losses comprise changes in the fair value of financial instruments for the year. Income Tax Income tax comprises Malaysian corporate tax for the current financial year, which is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period. No deferred tax is recognised as no temporary differences have been identified. Transaction Costs Transaction costs are costs incurred to acquire or dispose financial assets or liabilities at fair value through profit or loss. They include fees and commissions paid to agents, advisors, brokers and dealers. Transaction costs, when incurred, are immediately recognised in the profit or loss as expenses. Statement of Cash Flows The Fund adopts the direct method in the preparation of statement of cash flows. Cash equivalents are highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash with insignificant risk of changes in value. Creation and Cancellation of Units The Fund issues cancellable units, which are cancelled at the unitholder s option and are classified as equity. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s net assets value. The outstanding units is carried at the redemption amount that is payable at the net assets value if the holder exercises the right to put the unit back to the Fund. Units are created and cancelled at the holder s option at prices based on the Fund s net asset value per unit at the time of creation or cancellation. The Fund s net asset value per unit is calculated by dividing the net assets attributable to unitholder with the total number of outstanding units. 16

19 Functional and Presentation Currency The financial statements are measured using the currency of the primary economic environment in which the Fund operates ( functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is also its functional currency. Distribution Distributions are at the discretion of the Trustee. A distribution to the Fund s Unitholders is accounted for as a deduction from realised reserve. A proposed distribution is recognised as a liability in the period in which it is approved by the Trustee. Unitholders capital The unitholders contributions to the Fund meet the definition of puttable instruments classified as equity instruments under the revised MFRS 132 Financial Instruments: Presentation. The units in the Fund are puttable instruments which entitle the unitholders to a pro-rata share of the net asset value of the Fund. The units are subordinated and have identical features. There is no contractual obligation to deliver cash or another financial asset other than the obligation on the Fund to repurchase the units. The total expected cash flows from the units in the Fund over the life of the units are based on the change in the net asset of the Fund. Financial Instruments Financial instruments are recognised in the statement of financial position when, and only when the Fund has become a party to the contractual provisions of the instruments. Financial assets and liabilities include short-term deposits, cash at bank, quoted securities, receivables and payables. The accounting policies on recognition and measurement of these items are disclosed in their respective accounting policies. Financial instruments are classified as assets or liabilities in accordance with the substance of the contractual arrangements. Interest, dividends, gains and losses relating to financial instruments classified as assets, are reported as investment income. Financial Assets Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (FVTPL), held-to-maturity investments, available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial assets are classified as held for trading if: it has been acquired principally for the purpose of selling it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Fund manages together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging instrument. A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: 17

20 such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial asset forms a part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Fund s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognitions and Measurement permits the entire combined contract (asset of liability) to be designated as at FVTPL. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss under Net gain or loss on financial assets at FVTPL. Investments Investments in quoted securities are classified as at FVTPL and valued at the last done market price quoted on Bursa Malaysia at the end of the reporting period. Gains or losses arising from the changes in the fair value of the investments are recognised as gains or losses from investments in profit or loss and transferred to unrealised reserve. Loans and Receivables Receivables that have fixed or determinable payments that are not quoted in an active market are classified as loan and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been affected. Objective evidence of impairment for a portfolio of receivables could include the Fund s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in the national or global economic conditions that correlate with default on receivables. In respect of receivables carried at amortised cost, the amount of impairment loss recognised is 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 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 is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. Classification of Realised and Unrealised Gains and Losses Unrealised gains and losses comprise changes in the fair value of financial instruments for the year and from reversal of prior year s unrealised gains and losses for financial instruments which were realised (sold) during the reporting period. Realised gains and losses on disposals of financial instruments classified as FVTPL are accounted for as the difference between the net disposal proceeds and the carrying amount of the financial instruments. 18

21 Derecognition of Financial Assets The Fund derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Fund neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Fund recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Fund retains substantially all the risks and rewards of ownership of a transferred financial asset, the Fund continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. Financial Liabilities and Equity Instruments Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of the Fund after deducting all of its liabilities. Equity instruments issued by the Fund are recognised at the proceeds received, net of direct issue costs. Financial Liabilities Financial liabilities are initially measured at fair value, net of transaction cost and subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Derecognition of Financial Liabilities The Fund derecognises financial liabilities when, and only when, the Fund s obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised paid or payable is recognised in profit or loss. B. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (i) Critical judgements in applying accounting policies In the process of applying the Fund s accounting policies, which are described in Note 3(A) above, the Manager is of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the Amounts recognised in the financial statements. (ii) Key sources of estimation uncertainty The Manager believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. 4 QUOTED SECURITIES Investments designated at FVTPL are as detailed below:- RM RM At aggregate cost Shares quoted in Malaysia 48,633,877 36,573,916 At fair value Shares quoted in Malaysia 63,125,787 39,177,352 19

22 RM RM Net gain/(loss) on investments at FVTPL comprised: Realised gain on disposals 3,442, ,153 Unrealised gain/(loss) on changes in fair value 5,709,478 (1,070,525) 9,151,942 (88,372) (a) Details of quoted securities as of 31st December, 2017 are as follows: 2017 Shares quoted in Malaysia Main Market Construction Gabungan AQRS No. of Shares Market Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value Units RM RM RM RM % Berhad 1,046, ,628,828 1,628,828 2,019, Gamuda Bhd 207, ,003,731 1,003,731 1,030, Consumer Products Carlsberg Brewery 2,632,559 2,632,559 3,049, Malaysia Bhd 57, , , , Sasbadi Holdings Bhd 1,369, ,155,778 1,155, , CCK Consolidated Holdings Bhd 1,141, ,087,294 1,048,840 1,255, CCM Duopharma Biotech Bhd 454, , ,776 1,150, Formosa Prosonic Industries 1,415, ,871,301 1,871,301 2,435, Finance Tune Protect Group 4,987,582 5,158,195 6,501, Berhad 1,505, ,742,566 1,742,566 1,581, Industrial Products Comfort Gloves 1,742,566 1,742,566 1,581, Berhad 1,651, ,528,693 1,528,693 1,965, Cahya Mata Sarawak Bhd 197, , , , Chemical Company of Malaysia 549, ,873,003 1,873,003 1,016, Taann Holdings Bhd 71, , , , Wah Seong Corporation Bhd 467, , , , Thong Guan Industries Bhd 256, ,102,835 1,102,835 1,084, Supermax Corporation Bhd 756, ,531,317 1,531,317 1,512, SKP Resources Bhd 1,012, ,367,465 1,367,465 2,308, Press Metal Aluminium Holdings Berhad 456, ,550 1,222,187 2,458, Total 9,525,400 10,181,419 11,895,

23 2017 Shares quoted in Malaysia Properties Malaysian Resources Corporation No. of Shares Market Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value Units RM RM RM RM % Berhad 921, ,031,826 1,031,826 1,031, S P Setia Berhad- Islamic Redeemable Convertible Preference Shares (RCPS-I) 137, , , , Total 1,169,346 1,185,848 1,182, Technology MMS Ventures Bhd 1,154, ,006,851 2,006,851 2,008, Unisem (M) Berhad 371, ,491 1,335,947 1,355, Pentamaster Corporation Bhd 1,412, ,139,454 2,459,110 4,280, Total 4,082,796 5,801,908 7,644, Trading/Services Frontken Corporation Bhd 3,217, ,401,914 1,401,914 1,480, Hss Engineers Berhad 1,917, ,795,441 1,894,481 2,838, George Kent(M) Bhd 753, ,122,072 2,144,125 2,644, Genting Malaysia Berhad 428, ,133,326 2,345,326 2,411, Malaysia Airports Holdings Berhad 258, ,039,930 2,181,264 2,268, Samchem Holdings Berhad 1,718, ,731,020 1,731,020 1,770, Berjaya Food Berhad 1,701, ,712,057 2,693,749 3,146, Oldtown Berhad 952, ,019,929 2,742,048 2,941, Serba Dinamik Holdings Berhad 1,096, ,208,799 2,185,654 3,552, Tenaga Nasional Bhd 171, ,655,189 2,655,189 2,620, Yong Tai Bhd 1,677, ,076,875 2,358,407 2,549, Hai-O Enterprise Bhd 568, ,597,076 2,342,828 3,047, Total 24,493,628 26,676,005 31,271, Total quoted securities 48,633,877 53,378,500 63,125, Shares Quoted in Malaysia ACE Market Technology No. of Shares Market Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value Units RM RM RM RM % Mikro MSC Berhad 2,401, ,890 1,068,801 1,212, Total 910,890 1,068,801 1,212,

24 2016 Shares Quoted in Malaysia Main Market Construction Sunway Construction No. of Shares Market Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value Units RM RM RM RM % Group Berhad 408, , , , Gamuda Bhd-WE 40, ,204 38,367 49, Kerjaya Prospek Group Berhad 478, ,579 1,002,807 1,038, Gadang Holdings Bhd 728, , , , Gadang Holdings Bhd-Warrants 2021/ , , Mitraja Holdings Bhd 803, ,017 1,057,289 1,012, Mitrajaya Holdings Berhad-Warrants D15/20 115, ,153 52, Total 3,015,713 3,520,979 3,673, Consumer Products Carlsberg Brewery Malaysia Bhd 76, ,896 1,016,618 1,070, Total 873,896 1,016,618 1,070, Finance CIMB Group Holdings Berhad 302, ,408,768 1,408,768 1,362, Total 1,408,768 1,408,768 1,362, Infrastructure Project Co TIME dotcom Bhd 130, , ,536 1,020, Total 407, ,536 1,020, Industrial Products Cahya Mata Sarawak Bhd 433, ,628,340 1,622,700 1,734, Jaya Tiasa Holdings Bhd 175, , , , TA Ann Holdings Berhad 288, ,053,794 1,053,794 1,138, Petronas Chemicals Group Bhd 163, ,088,947 1,088,947 1,139, Supermax Corporation Berhad 221, , , , KNM Group Berhad- Warrants 2015/ , ,869 15, Press Metal Bhd 933, ,293 1,226,544 1,483, Sam Engineering & Equipment (M) Berhad 79, , , , Total 5,806,899 6,325,871 6,600,

25 2016 Shares Quoted in Malaysia Plantations No. of Shares Market Price Aggregate Cost Carrying Value Fair Value Fair Value as a % of Net Asset Value Units RM RM RM RM % IOI Corporation Bhd 259, ,142,393 1,142,393 1,143, Boustead Holdings Bhd 477, ,068,406 1,068,406 1,274, Sarawak Oil Palms Bhd 246, ,056, , , Total 3,267,112 3,132,877 3,326, Properties Malaysian Resources Corporation Berhad 1,028, ,348,794 1,348,794 1,367, S P Setia Berhad- Islamic Redeemable Convertible Preference Shares (RCPS-I) 137, , , , Total 1,486,314 1,486,314 1,510, Technology Inari Amertron Berhad 338, ,991 1,004,454 1,122, Unisem (M) Berhad 479, ,124,510 1,124,510 1,130, Pentamaster Corporation Bhd 451, , , , Total 2,702,768 2,735,231 2,862, Trading/Services My E.G. Services Bhd 523, , , , OCK Group Berhad 911, , , , Sime Darby Bhd 195, ,594,225 1,594,225 1,581, Genting Malaysia Berhad 330, ,491,408 1,491,408 1,513, Malaysia Airports Holdings Berhad 126, , , , Airasia Berhad 461, ,157,110 1,157,110 1,055, Berjaya Food Berhad 1,095, ,081,124 1,964,533 1,719, Oldtown Berhad 586, ,098,747 1,098,747 1,119, Datasonic Group Berhad 732, , , , Only World Group Holdings Berhad 557, ,186,410 1,186,410 1,281, Astro Malaysia Holdings Berhad 72, , , , Axiata Group Berhad 191, , , , Yong Tai Bhd 1,053, ,126,924 1,126,924 1,327, Uzma Bhd 403, , , , Hai-O Enterprise Bhd 247, , , , KUB Malaysia Bhd 2,611, , ,329 1,044, Total 16,693,783 16,562,305 16,536, Total quoted securities 36,573,916 38,252,300 39,177,

26 5 AMOUNT DUE FROM/ (TO) MANAGER Amount due from/(to) Manager consists of amounts receivable from/(payable) to the Manager in respect of creation/(cancellation) of units. Amount receivable/(payable) for units created/(cancelled) is received/(paid) within 10 days of the transaction dates. 6 OTHER RECEIVABLES RM RM Amount due from stockbrokers 1,459,568 - Dividends receivable 111,894 24,174 Interest receivable 3,429 6,120 1,574,891 30,294 7 SHORT-TERM DEPOSITS Short-term deposits represent deposits with local licensed financial institutions. The effective average interest rate for short-term deposits is 3.14% (2016: 3.36%) per annum and the average maturity period is 11 days (2016: 9 days). 8 OTHER PAYABLES AND ACCRUALS RM RM Amount due to a stockbroker 1,923, ,130 Accruals: Management fee 109,374 69,813 Trustee s fee 4,605 2,940 Audit fee - 3,405 Tax agent s fee 3,850 3,850 Others 7,070 4,596 2,048, ,734 9 UNITHOLDERS CAPITAL No. of units RM No. of units RM At beginning of period 109,263,016 45,216,406 94,147,760 48,146,768 Created during the period 16,714,709 9,320,245 20,636,880 11,370,464 Cancelled during the period (10,498,042) (5,793,158) (29,118,608) (16,346,734) At end of period 115,479,683 48,743,493 85,666,032 43,170,498 In accordance with Part 6.1 of the Deed and Securities Commission Malaysia s approval letter dated 3 April, 2007, the maximum number of units that can be issued is 200,000,000 (2016: 200,000,000 units). As of 31st December 2017, the number of units not yet issued is 84,520,317 (2016: 114,333,968 units). 10 UNREALISED RESERVE RM RM At beginning of period 8,782,432 3,673,961 Net unrealised gain/(loss) attributable to investments held at fair value through profit or loss 5,709,478 (1,070,525) At end of period 14,491,910 2,603,436 Investments: At fair value 63,125,787 39,177,352 At aggregate cost (48,633,877) (36,573,916) Unrealised reserve 14,491,910 2,603,436 24

27 11 REALISED RESERVE RM RM At beginning of period 3,463, ,900 Total comprehensive income/(loss) for the period 8,710,429 (199,753) Net unrealised (gain)/loss transferred to unrealised reserve (5,709,478) 1,070,525 At end of period 6,464,814 1,132, NET ASSET VALUE PER UNIT The net asset value per unit is calculated by dividing the net asset value attributable to unitholders of RM69,700,217 (2016: RM46,906,606) as of 31st December, 2017 by 115,479,683 units in issue (2016: 85,666,032 units) as of 31st December, MANAGEMENT FEE The Schedule 8 of the Deed provides that the Manager is entitled to an annual management fee at a rate not exceeding 2.50% per annum computed daily on the net asset value of the Fund before the deduction of the management fee and Trustee s fee for the relevant day. The management fee provided for in the financial statements amounted to 1.87% (2016: 1.90%) per annum for the period, net of management fee rebate on collective investment scheme. 14 TRUSTEE S FEE The Schedule 9 of the Deed provides that the Trustee is entitled to an annual Trustee fee at rate not exceeding 0.50% per annum computed daily on the net asset value of the Fund before the deduction of the management fee and Trustee s fee for the relevant day. The Trustee s fee provided for in the financial statements amounted to 0.08% (2016: 0.08%) per annum for the period. 15 INCOME TAX EXPENSES There is no tax charge as interest income derived by the Fund is exempted pursuant to Paragraph 35 and 35A, Schedule 6 of the Income Tax Act, Gains arising from realisation of investments are not treated as income pursuant to Paragraph 61(1)(b) of the Income Tax Act, MANAGEMENT EXPENSE RATIO & PORTFOLIO TURNOVER Management Expense Ratio (MER) Management expense ratio for the Fund is 1.05% (2016: 1.07%) for the period ended 31st December, The management expense ratio which includes management fee, Trustee s fee, and other expenses, is calculated as follows: MER = (A + B + C ) D x 100 A = Management fee C = Other expenses B = Trustee s fee D = Average net asset value of Fund The average net asset value of the Fund for the period is RM61,609,602 (2016: RM50,001,370). Portfolio Turnover Ratio (PTR) The portfolio turnover ratio for the Fund is 0.78 (2016: 0.72 times) times for the financial period ended 31st December, The portfolio turnover is derived from the following calculation: (Total acquisition for the financial period + total disposal for the financial period) 2 Average net asset value of the Fund for the period calculated on a daily basis Where: total acquisition for the financial period = RM49,690,364 (2016: RM35,255,667) total disposal for the financial period = RM46,877,315 (2016: RM36,883,411) 25