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Interim Report Dec 2016

For the Period Ended 31 December 2016

Areca moneyTRUST Fund

I NTERIM REPORT DECEMBER 2016

ARECA moneyTRUST FUND

Contents CORPORATE DIRECTORY

2

MANAGER’S REPORT

Fund Information, Performance & Review 3

Market Review & Outlook 8

TRUSTEE’S REPORT 11

STATEMENT BY THE MANAGER 11

UNAUDITED FINANCIAL STATEMENTS FOR

ARECA moneyTRUST Fund 12

INTERIM REPORT DECEMBER 2016


2

C O R P O R A T E D I R E C T O R Y

MANAGER

Areca Capital Sdn Bhd (740840-D)

107, Blok B, Pusat Dagangan Phileo Damansara 1,

No. 9, Jalan 16/11, Off Jalan Damansara,

46350 Petaling Jaya, Selangor.

Tel: 603-7956 3111, Fax: 603-7955 4111

website: www.arecacapital.com

e-mail: [email protected]

BOARD OF DIRECTORS

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Wong Teck Meng (Executive)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Non-Executive Non-Independent)

Tam Chiew Lin (Non-Executive Non-Independent)

- Resigned w.e.f 6 March 2015 Dr. Junid Saham (Independent)

INVESTMENT COMMITTEE MEMBERS

Dato’ Wee Hoe Soon @ Gooi Hoe Soon

(Independent, Chairman)

Raja Datuk Zaharaton Bt Raja Dato’ Zainal Abidin

(Non-Independent)

Teoh Boon Liaw (Non-Independent)

- Resigned w.e.f 16 February 2015

Dr. Junid Saham (Independent)

AUDIT COMMITTEE MEMBERS Dato’ Wee Hoe Soon @ Gooi Hoe Soon

Wong Teck Meng

Dr. Junid Saham

TRUSTEE

RHB Trustees Berhad (573019-U)

Level 1, Tower One, RHB Centre

Jalan Tun Razak

50400 Kuala Lumpur

Tel: 03-9280 8799 Fax: 03-9280 8796

AUDITOR Deloitte PLT (LLP0010145-LCA) (AF 0080)

Level 16, Menara LGB

1 Jalan Wan Kadir

Taman Tun Dr Ismail

60000 Kuala Lumpur

Tel: 03-7610 8888, Fax: 03-7726 8986

TAX ADVISER

Deloitte Tax Services Sdn Bhd (36421-T) Level 16, Menara LGB

1 Jalan Wan Kadir

Taman Tun Dr Ismail

60000 Kuala Lumpur

Tel: 03-7610 8888, Fax: 03-7726 8986

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,

46350 Petaling Jaya, Selangor.

Tel: 603-7956 3111, Fax: 603-7955 4111

website: www.arecacapital.com

e-mail: [email protected]

PENANG – PULAU TIKUS PERAK – IPOH MALACCA

368-2-02 Belissa Row

Jalan Burma, Georgetown

10350 Pulau Pinang

Tel: 604-210 2011

Fax: 604-210 2013

11A, (First Floor)

Persiaran Greentown 5

Greentown Business Centre

30450 Ipoh, Perak

Tel: 605-249 6697

Fax: 605-249 6696

95, Jalan Melaka Raya 24

Taman Melaka Raya

75000 Melaka

Tel : 606-282 9111 Fax: 606-283 9112

mailto:[email protected]:[email protected]



3

F U N D I N F O R M A T I O N

Name of the

Fund

Areca moneyTRUST Fund

Fund Category/

Type

Fixed Income/Income

Objective of the

Fund

To provide investors with a high level of liquidity while providing current income

and capital preservation

Benchmark Maybank’s 1-month repo rate

Distribution

Policy of the

Fund

At least twice a year, subject to availability of distributable income. 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

As at 31 December 2016

Size of Holding (Units) No. of

accounts %

No. of unit

held

(million)

%

Up to 5,000 35 55.55 0.04 0.12

5,001 to 10,000 3 4.76 0.02 0.06

10,001 to 50,000 9 14.29 0.19 0.49

50,001 to 500,000 8 12.70 1.36 3.57

500,001 and above 8 12.70 36.44 95.76

Total* 63 100.00 38.05 100.00

Rebates & Soft

Commissions

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 RM0.5000 per unit during the initial offer period of 1 day

Pricing Policy Single Pricing – Selling and repurchase of units by Manager are at Net Asset

Value per unit

Financial Year

End

30 June



4

F U N D P E R F O R M A N C E

2016 2015 2014

NET ASSET VALUE (“NAV”) as at 31 December

Total Net Asset Value (RM million) 19.57 15.69* 22.73*

Units in circulation (million units) 38.07 30.96* 45.32*

NAV per unit (RM) 0.5141 0.5069* 0.5015*

* Ex-Distribution

2016 2015 2014

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) 0.5154 0.5103* 0.5059*

Lowest NAV per unit (RM) 0.5095 0.5049* 0.5015*

* Ex-Distribution

2016 2015 2014

ASSET ALLOCATION % of NAV as at 31 December Fixed Income Securities

Corporate bonds 43.04 76.60 37.30

General Investment Account - 6.42 -

Floating rate negotiable instrument of deposit - 6.16 8.59

Negotiable instrument of deposit 2.55 - -

Cash & cash equivalents including placements & repo 54.41 10.82 54.11

DISTRIBUTION

2016

2015

2014

Distribution date -

-

29 Sep 2015

31 Dec 2015

29 Sep 2014

30 Dec 2014

Gross distribution (sen per unit) -

-

0.35 (29 Sep)

0.35 (31 Dec)

0.35 (29 Sep)

0.35 (30 Dec)

Net distribution (sen per unit) -

-

0.35 (29 Sep)

0.35 (31 Dec)

0.35 (29 Sep)

0.35 (30 Dec)

NAV before distribution (RM per unit) -

-

0.5084 (28 Sep)

0.5103 (30 Dec)

0.5059 (26 Sep)

0.5049 (29 Dec)

NAV after distribution (RM per unit) -

-

0.5049 (29 Sep)

0.5069 (31 Dec)

0.5026 (29 Sep)

0.5015 (30 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.

2016 2015 2014

EXPENSE/ TURNOVER for the period ended 31 December Management expense ratio (MER) (%)

Please refer to Note 2 for further information 0.47 0.45 0.42

Portfolio turnover ratio (PTR) (times)

Please refer to Note 3 for further information 0.10 0.34 0.01



5

2016 2015 2014

TOTAL RETURN for the period ended 31 December Please refer to Note 4 for further information

Total Return (%) 0.94 1.57 1.32

- Capital Return (%) 0.94 0.18 (0.08)

- Income Return (%) - 1.39 1.40

2016 2015 2014 2013 2012

Annual Total Return (%) 1.88 3.14 2.64 2.80 3.12

Benchmark: Average Maybank's 1-

month repo rate (%) 2.41 2.62 2.50 2.43 2.43

1-yr 3-yrs 5-yrs

Average Total Return per annum (%) 2.82 2.98 3.02

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.

Note 4: Fund performance figures are calculated based on NAV to NAV and assume reinvestment of

distributions (if any) at NAV. 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 indication of its future performance.



6

F U N D R E V I E W

The Fund's NAV per unit increased from RM0.5069 as at 31 December 2015 to RM0.5141 as at 31

December 2016. For the half year ended 31 December 2016, the Fund posted an annualised return of

1.88% p.a., whilst its benchmark, Maybank's 1-month repo rate provided, 2.41% p.a. The

underperformance was impacted by the adverse conditions in the last two months of the year resulting in

diminution of the marked to market valuations of the assets held. We maintain our strategy of providing

high liquidity and current income, whilst achieving the objective for the period under review by investing in short term fixed income assets and very short term repo and money placements.

79.7% of the Fund is held in cash and short tenured Corporate Bonds with maturities within a year. The

balance is invested in highly liquid, strong credit corporate bonds. Average duration of the Portfolio stands

at 1.83 years.

The Fund has yet to achieve its objective to provide investors with a high level of liquidity while providing

current income and capital preservation.

The Fund will maintain its current highly liquid position to ensure efficient liquidity management.

Investment Policy and Strategy

The Fund invests in fixed income securities and money market instruments, which is actively managed and capped at the maximum 30% of its NAV. The remaining balance of the NAV is placed with deposits or other

liquid assets to meet anticipated redemption requests.

The minimum credit rating of the fixed income securities and money market instruments that the Fund shall

invest in is the credit rating of 'P2/A3' by RAM or such equivalent rating by other rating agencies.

Performance of Areca moneyTRUST Fund

for the financial period since inception to 31 December 2016

Maybank 1 Month Repo Rate

Areca MoneyTrust



7

F U N D R E V I E W

NAV per unit as at 31 December 2016 RM0.5141

Asset Allocation / Portfolio Composition as at 31 December

2016 2015 2014

Fixed income securities 43.04% 76.60% 37.30%

General Investment Accounts - 6.42% -

Floating rate negotiable

instrument of deposit

-

6.16%

8.59% Negotiable instrument of

deposit

2.55%

-

-

Cash & cash equivalents 54.41% 10.82% 54.11%

Corporate bonds that matured in 2016 were only partially replaced, we continue to seek suitable

investments that commensurate with the fund's profile.

43.04%

54.41%

2.55%



8

MARKET REVIEW & OUTLOOK

ECONOMIC REVIEW

In the aftermath of the surprise decision to leave the European Union, Theresa May became only the

second female Prime Minister of the United Kingdom (UK). She is to lead the UK in the process of

‘Brexit’ which some estimate will take more than two years. Inevitably, rating agencies downgraded

the UK and the GB£ plunged from 1.49 just before the referendum to a low of 1.21 before ending the

year just above 1.23 against US$. Against the MYR, it fell from 5.9790 the night before ‘Brexit’ to a low of 5.0580 in mid October before recovering to 5.5350 at year close. To mitigate the ‘Brexit’

impact, the UK cut benchmark rates to a historic low of 0.25%, broaden bond buying program to

include corporate bonds and deepen the size of Quantitative Easing to £435 billion from £60 billion.

Meantime, the European Central Bank kept rates unchanged throughout the year while extending

their Quantitative Easing program to beyond March 2017 (end of 2017) albeit a reduced size of €60

billion from €80 billion monthly. Japan followed with introduction of additional fiscal budget of ¥4.6

trillion for welfare, infrastructure and small-to-medium enterprise (SME) businesses while adjusting

their monetary policy to ‘yield curve’ focused; vague as it may appear at this point.

China on the other hand stayed relatively quiet compared to the start of the year with their economy

recording a full year growth of 6.7%, lowest since 1990 but within their government and market’s expectation.

The Organization of the Petroleum Exporting Countries (OPEC) finally agreed to cut production late

November in an effort to drain global glut helping to prop oil price up. Non-OPEC members were also

coaxed to comply.

Then came the US elections results that perplexed many and put the world on a tentative pause. With

most of his campaign sound bites controversial and provocative to the world at large, Donald Trump’s

presidency promises to be anything but conventional. The Federal Reserve then followed up with a

widely expected rate hike in December.

Malaysia’s economy

The National Budget announced in October had fiscal discipline but little goodies to the ‘man on the

street’. It did little to pacify the MYR doubters as anticipated declining interest rates differential added

to the negative effect of the reduction of the Morgan Stanley Capital International (MSCI) Emerging

Market Index weight for Malaysia from 3.25% to 2.92% in early June. MYR slid 11.3% to 4.4860 from

4.0275 against US$, 7.9% against AUD$ from 3.00 to 3.2371 and 3.6% against SGD$ from 2.99 to

3.0975 in the second half of 2016 alone. The ignominy that surrounds 1MDB did not help as it

resurfaced in the mainstream media again.

However, Gross Domestic Product (GDP) held up to record 4.3% annual growth for Q3 with private

consumption making up for slowdown in exports. Exports did pick up in the last two months of 2016 with 7.8% and 10.7% higher than a year ago but accompanied by imports growth of 11.2% and

11.5% respectively as well. Trade Balance continues to register monthly surplus since the Asian

Financial crisis. As a result, External Reserves remained healthy at MYR424.2 billion or US$94.6

billion and sufficient to finance 8.8 months of retained imports. It is 1.3 times the short term external

debt. Inflation remains muted for the year at 2.1% despite petrol prices at the pump rising 13.5%

from RM1.85 to RM2.10 for the year.



9

FIXED INCOME MARKET REVIEW

Benchmark 10 years US Treasury traded to a historical low in July at 1.375%. Trump’s victory

sparked a turnaround with yields surging to a 26 months high of 2.606% in December as it coincided

with the Federal Open Market Committees' (FOMC) rate hike. It closed the year at 2.45%.

In Malaysia, the Overnight Policy Rate (OPR) was surprisingly cut by 25bps to 3.00% in what seemed

to be a pre-emptive move in July. However, with Trump’s win, interest rates differential is expected

to narrow quicker, compounding MYR weakness with reversal of ‘carry-trades’ and the sell-down of

Malaysian bonds by foreign investor that totaled MYR24 billion in the last two months of 2016. This

reversed all that we gained in the year with a MYR1 billion net negative at the year close. MGS yields

rose almost 1 percent before recovering to a net rise of 50 bps against half a year ago while

corporate bonds rose about 50 bps before ending the year with a net 20 bps higher.

For the second half of 2016, the government raised RM35.0 bil through 13 Malaysian Government

Securities (MGS)/Government Investment Issues (GII) issues with tenures ranging from 3 to 20 years

bringing the total issued for the year to RM86.0 bil. As of end December 2016, foreigners held RM190.0 bil MGS/GII or 30.6% of outstanding. Corporate Bonds issued for the period July to

December was RM46.8 bil. Outstanding issued Corporate Bonds excluding quasi-government stood at

RM374.0 bil at end of 2016 of which foreign participation was only RM14.8bil or 3.96%.

Constant Maturity Conventional Yield-To-Maturity: December 2016 vs December 2015

Tenure 1Y 3Y 5Y 7Y 10Y

Dec’15 Dec’16 Dec’15 Dec’16 Dec’15 Dec’16 Dec’15 Dec’16 Dec’15 Dec’16

MGS 2.611 3.235 3.236 3.549 3.482 3.674 4.085 4.131 4.206 4.206

AAA 3.980 4.140 4.320 4.310 4.510 4.490 4.760 4.590 4.880 4.730

AA2 4.200 4.410 4.630 4.660 4.840 4.820 5.110 4.910 5.230 5.030

A2 5.550 5.580 6.340 6.320 6.850 6.860 7.310 7.260 7.950 7.900

Source: Bond Pricing Agency Malaysia Sdn Bhd (BPA)



10

ECONOMIC OUTLOOK

The US economy appears to be turning the corner. Unemployment rate reached a nine year low at

4.6% while housing and consumption data is on the general uptrend. Inflation has picked up in this

half rising to 2.1% year on year in December. Trump is definitely inheriting a healthier economy than

his predecessor. Trump’s promised fiscal expansion will likely entail infrastructure rebuilding funded

by possible corporate tax cuts. This will be favourable to the US economy and global growth. It is

likely therefore that the Federal Reserve may bow to hawkish pressures and raise interest rates at least twice in 2017. Barring trade or economic war with China or even Europe, the other major

economies will benefit from the normalization of US rates and economy. However, despite this;

internal factors like stubborn inflation and lack of economic reaction to stimulus in these countries will

likely peg Europe’s and Japan’s interest rates low. As for China, currency peg or control may come

into question with Trump taking an abrasive stance. Interest rates will also likely remain low in China

as its economy continues to shift to one that is consumption based.

Crude oil price is expected to be range bound between US$45-60 supported by the OPEC production

cut agreement but limited by re-introduction of other sources like shale oil.

FIXED INCOME MARKET OUTLOOK

In Malaysia, a higher anticipated supply of MGS may instigate a rise in yields coupled with expected

higher US interest rates. Mitigating this is the possibility of early General Election this year as well as

the tightening disposable income level of the population at large as the effects of subsidy removal

from most items continue to reverberate.

There also remains the possibility of Statutory Rate cut as an option if liquidity tightens as a result of

withdrawal of funds from the system as experienced in November or December.

Fixed income markets is expected to be buoyant but challenged. The possible tail end of low interest

rates regime is balanced out by the new norm of low interest rates for a very long time as global

growth remains low and lumpy at best.



11

T R U S T E E ’ S R E P O R T

For The Period Ended 31st December, 2016

To the Unitholders of Areca moneyTRUST Fund

We have acted as Trustee of Areca moneyTRUST Fund (“the Fund”) for the financial period ended 31st

December, 2016. In our opinion and to the best of our knowledge, Areca Capital Sdn Bhd, the Manager,

has operated and managed the Fund in accordance with the following:-

(a) limitations imposed on the investment powers of the Management Company and the Trustee

under the Deeds, the Securities Commission Malaysia’s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws;

(b) valuation or pricing is carried out in accordance with the Deeds and any regulatory

requirements; and

(c) creation and cancellation of units are carried out in accordance with the Deeds and relevant

regulatory requirements.

For and on behalf of the Trustee

RHB TRUSTEES BERHAD (Company No: 573019-U)

TONY CHIENG SIONG UNG DIRECTOR

Kuala Lumpur

21 February 2017

S T A T E M E N T B Y T H E M A N A G E R

To the Unitholders of Areca moneyTRUST Fund

We, Wong Teck Meng and Dato’ Wee Hoe Soon @ 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 Malaysian Financial Reporting

Standards, International 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, 2016 and the financial performance and the cash flows 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 SOON @ GOOI HOE SOON

INDEPENDENT DIRECTOR

Kuala Lumpur

21 February 2017



12

UNAUDITED STATEMENT OF FINANCIAL POSITION As Of 31st December, 2016

2016 2015

Note RM RM

Assets

Investment

Unquoted fixed income securities 4 8,923,625 13,991,691

Other Assets

Other receivables 5 76,199 149,537

Short-term deposits 6 10,596,461 1,562,456

Cash at bank 3,915 8,276

Total Other Assets 10,676,575 1,720,269

Total Assets 19,600,200 15,711,960

Liabilities

Amount due to Manager 7 5,900 -

Accruals 8 21,508 20,043

Total Liabilities 27,408 20,043

Unitholders’ Fund

Unitholders’ capital 9 18,046,979 14,405,567

Unrealised reserve 10 (100,975) (87,915)

Realised reserve 11 1,626,788 1,374,265

Net Asset Value attributable to unitholders 19,572,792 15,691,917

Total Unitholders’ Fund and Liabilities 19,600,200 15,711,960

Number of Units in Circulation 9 38,068,481 30,959,148

Net Asset Value Per Unit

(Ex-Distribution) 12 0.5141 0.5069

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



13

UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For The Period Ended 31st December, 2016

2016 2015

Note RM RM

Investment Income

Interest income 4 318,509 481,919

Net loss from investments: 4

Investment at fair value through profit or loss

(“FVTPL”) 4 (91,825)

(56,135)

Total Investment Income 226,684 425,784

Expenditure

Management fee 13 59,666 90,120

Trustee’s fee 14 6,365 9,613

Audit fee 3,180 -

Other expenses 5,225 1,627

Total Expenditure 74,436 101,360

Net Income Before Tax 152,248 324,424

Income Tax Expense 15 - -

Net Income After Tax/ Total Comprehensive

Income For The Period 152,248

324,424

Net Income After Tax Is Made Up Of:

Realised gain 195,873 363,109

Unrealised loss (43,625) (38,685)

152,248 324,424

Distribution for the period:

Net distribution - 284,027

Gross distribution per unit (sen)

Net distribution per unit (sen)

-

-

0.70

0.70




14

UNAUDITED STATEMENT OF CHANGES IN NET ASSET VALUE

For The Period Ended 31st December, 2016

Unitholders’

capital

Realised

reserve

Unrealised

reserve

Total net asset

value

RM RM RM RM

As of 1st July, 2015 25,469,407 1,295,183 (49,230) 26,715,360

Amounts received from units created

465,027

-

-

465,027

Amounts paid for units cancelled (11,528,867) - - (11,528,867)

Total comprehensive income for the

period

-

324,424

-

324,424

Net unrealised loss transferred to

unrealised reserve

-

38,685

(38,685)

-

Distribution to unitholders for the

Period (Note 16)

-

(284,027)

-

(284,027)

As of 31st December, 2015 14,405,567 1,374,265 (87,915) 15,691,917

As of 1st July, 2016

12,932,919 1,430,915 (57,350) 14,306,484

Amounts received from units

created

6,994,620

-

-

6,994,620

Amounts paid for units cancelled (1,880,560) - - (1,880,560)

Total comprehensive income for the

period

-

152,248

-

152,248 Net unrealised loss transferred to

unrealised reserve

-

43,625

(43,625)

-

As of 31st December, 2016 18,046,979 1,626,788 (100,975) 19,572,792




15

UNAUDITED STATEMENT OF CASH FLOWS For The Period Ended 31st December, 2016

2016 2015

Cash Flows From Operating And Investing Activities RM RM

Proceeds from disposal of investments 5,000,000 6,756,100

Interest received 378,749 454,018

Purchase of investments (2,000,000) (6,051,850)

Management fee paid (55,997) (96,969)

Trustee’s fee paid (7,860) (5,716)

Audit fee paid (8,500) (9,134)

Payment for other fees and expenses (5,604) (972)

Net Cash Generated From Operating And Investing Activities 3,300,788 1,045,477

Cash Flows (Used In)/From Financing Activities

Proceeds from units created 6,994,620 465,027

Payment for cancellation of units (1,874,661) (11,528,867)

Distribution to unitholders - (284,027)

Net Cash Generated From/(Used In) Financing Activities 5,119,959 (11,347,867)

Net Increase/(Decrease) In Cash And Cash Equivalents 8,420,747 (10,302,390)

Cash And Cash Equivalents At Beginning Of Period 2,179,629 11,873,122

Cash And Cash Equivalents At End Of Period 10,600,376 1,570,732

Cash and cash equivalents consist of the following amounts: 2016 2015

RM RM

Short-term deposits 10,596,461 1,562,456


10,600,376 1,570,732




16

NOTES TO THE FINANCIAL STATEMENTS

1 GENERAL INFORMATION

Areca moneyTRUST Fund (“moneyTRUST” or “the Fund ”) was established pursuant to the Trust

Deed dated 12th March, 2007, as modified by the First Supplemental Deed dated 25th August

2008, Second Supplemental Deed dated 10th April, 2009, Third Supplemental Deed dated 15th

August, 2013 between Areca Capital Sdn Bhd as the Manager, RHB Trustees Berhad as 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 Schedule 7 of the

Trust Deed, which includes money market instruments, fixed income securities 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 a high level of liquidity while providing

current income and capital preservation by actively managing the exposure in fixed income

securities and money market instruments, which is capped at the maximum 30% of its NAV. The

remaining balance of the NAV is placed with deposits or other liquid assets to meet anticipated

redemption requests.

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 the Malaysian

Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRS”) and

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 Board (“MASB”) that are effective for annual

financial periods beginning on or after 1st July, 2015.

MFRS 119 Employees Benefits: Defined Benefit Plans (Amendments

relating to Employee contribution)

Annual Improvements to MFRSs 2010 -2012 cycle

Annual Improvements to MFRSs 2011 -2013 cycle

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 and Amendments in issue but not yet effective

At the date of authorisation for issue of these financial statements, the new and revised Standards

and Amendments which were in issue but not yet effective and not early adopted by the Fund are

as listed below:

MFRS 9 Financial Instruments3

MFRS 14 Regulatory Deferral Accounts1

MFRS 15 Revenue from Contracts with Customers3 Clarification to MFRS 15 Revenue from Contracts with Customers3

MFRS 16 Leases5

Amendments to MFRS 10,

MFRS 12 and MFRS 128

Investment Entities: Applying the Consolidation Exception1

Amendments to MFRS 10 to

MFRS 128

Sale or Contribution of Assets between an Investor and its Associate

or Joint Venture4

Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations1

Amendments to MFRS 101 Disclosure Initiative1

Amendments to MFRS 107 Disclosure Initiative2

Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses2



17

Amendments to MFRS 116

and MFRS 138

Clarification of Acceptable Methods of Depreciation and Amortisation1

Amendments to MFRS 127 Equity Method in Separate Financial Statements1

Annual Improvements to MFRSs 2012-2014 cycle1

1 Effective for annual periods beginning on or after 1st January, 2016, with earlier application

permitted.

2 Effective for annual periods beginning on or after 1st January, 2017 with limited exceptions.

Earlier application is permitted.

3 Effective for annual periods beginning on or after 1st January, 2018, with earlier application

is permitted.

4 Effective date deferred to a date to be determined and announced with earlier application

still permitted.

5 Effective for annual periods beginning on or after 1st January, 2019. Earlier application

permitted is permitted provided MFRS 15 is also applied.

The Manager anticipates that abovementioned Standards and Amendments will be adopted in the

annual financial statements of the Fund when they become effective and that the adoption of these

Standards and Amendments will have no material impact on the financial statements of the Fund in

the period of initial application except as disclosed below:

MFRS 9 Financial Instruments

In November, 2014, Malaysian Accounting Standards Board (“MASB”) issued the final version of

MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and

replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions

of MFRS 9. MFRS 9 is effective for annual periods beginning on or after 1st January, 2018, with

early application permitted. Retrospective application is required, but comparative information is

not compulsory.

Key requirements of MFRS 9:

(a) All recognised financial assets that are within the scope of MFRS 139 Financial Instruments:

Recognition and Measurement are required to be subsequently measured at amortised cost

or fair value. Specifically, debt investments that are held within a business model whose

objective is to collect the contractual cash flows, and that have contractual cash flows that

are solely payments of principal and interest on the principal outstanding are generally

measured at amortised cost at the end of subsequent accounting periods. Debt instruments

that are held within a business model whose objective is achieved both by collecting

contractual cash flows and selling financial assets, and that have contractual terms of the

financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt

investments and equity investments are measured at their fair value at the end of

subsequent accounting periods. In addition, under MFRS 9, entities may make an irrevocable

election to present subsequent changes in the fair value of an equity investment (that is not

held for trading) in other comprehensive income, with only dividend income generally

recognised in profit or loss.

(b) With regards to the measurement of financial liabilities designated as at fair value through

profit or loss, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability be presented in other

comprehensive income, unless the recognition of the effects of changes in the liability’s credit

risk in other comprehensive income would create or enlarge an accounting mismatch in profit

or loss. Changes in fair value attributable to a financial liability’s credit risk are not

subsequently reclassified to profit or loss. Under MFRS 139, the entire amount of the change



18

in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

(c) In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss

model, as opposed to an incurred credit loss model under MFRS 139. The expected credit loss

model requires an entity to account for expected credit losses and changes in those expected

credit losses at each reporting date to reflect changes in credit risk since initial recognition.

In other words, it is no longer necessary for a credit event to have occurred before credit

losses are recognised.

(d) The new general hedge accounting requirements retain the three types of hedge accounting

mechanisms currently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening

the types of instruments that qualify for hedging instruments and the types of risk

components of non-financial items that are eligible for hedge accounting. In addition, the

effectiveness test has been overhauled and replaced with the principle of an ‘economic

relationship’. Retrospective assessment of hedge effectiveness is also no longer required.

Enhanced disclosure requirements about an entity’s risk management activities have also

been introduced.

The Manager of the Fund anticipate that the application of MFRS 9 in the future may have impact on the amounts reported and disclosure made in the Fund’s financial assets and financial liabilities.

However, it is not practicable to provide a reasonable estimate of the effect of MFRS 9 until the

Manager completes a detailed review.

MFRS 15 Revenue from Contracts with Customers

In September, 2014, MFRS 15 was issued which establishes a single comprehensive model for

entities to use in accounting for revenue arising from contracts with customers. Subsequently,

amendments to MFRS 15 were issued in June, 2016 which provide clarifications on certain

requirements of MFRS 15 and provide additional transitional relief upon implementing MFRS 15. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue,

MFRS 111 Construction Contracts and the related Interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration to which the

entity expects to be entitled in exchange for those goods or services. Specifically, the Standard

introduces a 5-step approach to revenue recognition:

(a) Step 1: Identify the contract(s) with a customer. (b) Step 2: Identify the performance obligations in the contract.

(c) Step 3: Determine the transaction price.

(d) Step 4: Allocate the transaction price to the performance obligations in the contract.

(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e.

when ‘control’ of the goods or services underlying the particular performance obligation is

transferred to the customer. Far more prescriptive guidance has been added in MFRS 15 to deal

with specific scenarios. Furthermore, extensive disclosures are required by MFRS 15.

The Manager of the Fund anticipate that the application of MFRS 15 in the future may have an

impact on the amounts reported and disclosures made in the Fund’s financial statements. However,

it is not practicable to provide a reasonable estimate of the effect of MFRS 15 until the Manager

completes a detailed review.



19

3 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES AND JUDGEMENTS

A. SIGINIFICANT ACCOUNTING POLICIES

Income Recognition

Interest income from unquoted fixed income securities and 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 at based on net sales proceeds less

carrying value.

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 each reporting

period.

No deferred tax in recognised as no temporary differences have been identified.

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.

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 Trustees. 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 no contractual obligation to deliver cash or another financial asset other than the

obligation on 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 value of the Fund.

Financial Instruments

Financial instruments 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. Financial

assets and liabilities include cash at bank, unquoted 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. Interests, gains and losses relating to the financial instruments

classified as assets, are reported as investment income.

(a) 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’



20

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.

(i) 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.

(ii) FTVPL

Financial assets are classified as at FVTPL when the financial asset is either held for

trading of it is designated as at FVTPL.

A financial assets is 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:

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 derivates, and FRS

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 accounts.

(iii) Investments

Unquoted fixed income securities are generally valued at least once a day with the

appropriate prices by reference to quotes published by an approved bond pricing

agency ("BPA").

When no market prices are available or during abnormal market or when the Manager

is of the view that the quotes by the BPA differ from the ‘market price’ by 20 basis

points, such securities will be valued at ‘fair values’ in accordance with the

requirements stipulated in the Guidance Note issued by the Securities Commission

Malaysia.

Gains or losses from the changes in the fair value of the unquoted fixed income

securities is recognised as unrealised gains or losses in profit or loss and transferred to

unrealised reserve.



21

(iv) 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.

(v) Impairment of Financial Assets

Financial assets, 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.

(vi) 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, redeemed or mature) 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.

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.

(b) 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.



22

(i) 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.

(ii) 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.

(iii) Derecognition of Financial Liabilities

The Fund derecognises financial liabilities when, and only when, the Fund’s obligations

are discharged, cancelled or they expire.

B. ACCOUNTING ESTIMATES AND JUDGEMENTS

(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 period.

4 INVESTMENTS

Investments designated as FVTPL are as follows:

2016 2015 At aggregate cost Note RM RM


At market value


Net loss on investments at FVTPL comprised:

Realised loss on disposals (48,200) (17,450)

Unrealised loss on changes in fair values (43,625) (38,685)

(91,825) (56,135)



23

Details of investments as of 31st December, 2016 are as follows:

Issuer (rating) maturity/ coupon

(%)

Nominal

Value

Valuation

Price

Aggregate

Cost

Carrying

Value

Market

Value

Market

Value as

a % of Net

Asset

Value

RM RM RM RM RM %

31.12.2016

Bonds

Berjaya Land Berhad (AAA)

2017/4.75 4,000,000 100.101 4,022,000 4,018,680 4,004,040 20.46

Lembaga Pembiayaan

Perumahan Sektor Awam

(NR) 2036/4.62 2,000,000 96.639 2,000,000 2,000,000 1,932,780 9.87 AMMB Holdings Berhad

(AA3) 2019/4.50 1,000,000 98.972 1,000,000 991,000 989,720 5.06

Alpha Circle Sdn Berhad

(AA-) 2017/4.85 500,000 100.094 500,000 501,830 500,470 2.56 Public Bank Berhad (AA1)

2022/4.28 500,000 99.995 502,600 500,920 499,975 2.55

UEM Sunrise Berhad (AA-)

2022/4.80 500,000 99.328 500,000 498,820 496,640 2.54 Negotiable Instrument

of Deposit (NID)

Ambank Islamic Berhad 5-

Year Islamic Callable Accrual NID 2021/5.44 500,000 100.00 500,000 500,000 500,000 2.55

Total unquoted fixed income securities 9,024,600 9,011,250 8,923,625 45.59

Total investments 9,024,600 9,011,250 8,923,625 45.59

Issuer (rating)

maturity/ coupon

(%)

Nominal

Value

Valuation

Price

Aggregate

Cost

Carrying

Value

Market

Value

Market

Value as

a % of Net

Asset

Value

RM RM RM RM RM %

31.12.2015

Bonds Gulf Investment

Corporation (AAA)

2016/4.90 4,000,000 100.605 4,043,200 4,024,200 4,024,200 25.65

Berjaya Land Berhad (AAA) 2017/4.75 4,000,000 100.423 4,022,000 4,009,480 4,016,920 25.60

AmBank Islamic Berhad

(AA3) 2021/4.40 1,000,000 100.217 1,005,000 1,004,820 1,002,170 6.39

AMMB Holdings Berhad

(AA3) 2019/4.50 1,000,000 98.519 1,000,000 991,100 985,190 6.28 Public Bank Berhad (AA1)

2022/4.28 500,000 99.959 502,600 499,575 499,795 3.19

Alpha Circle Sdn Berhad

(AA-) 2017/4.85 500,000 100.207 500,000 499,950 501,035 3.19 Hong Leong Bank Berhad

(AA2) 2024/4.50 500,000 98.997 500,000 498,410 494,985 3.15

UEM Sunrise Berhad (AA-)

2022/4.80 500,000 98.918 500,000 503,240 494,590 3.15 GIA

Maybank Islamic Berhad

2016/4.00 1,006,806 100.00 1,006,806 1,006,806 1,006,806 6.42



24

Issuer (rating)

maturity/ coupon

(%)

Nominal

Value

Valuation

Price

Aggregate

Cost

Carrying

Value

Market

Value

Market

Value as

a % of Net

Asset

Value

RM RM RM RM RM % FRNID

CIMB 5-Year Callable

KLIBOR Range Accrual

FRNID 2018/5.90 1,000,000 96.60 1,000,000 1,000,000 966,000 6.16

Total unquoted fixed income securities 14,079,606 14,037,581 13,991,691 89.18

Total investments 14,079,606 14,037,581 13,991,691 89.18

5 OTHER RECEIVABLES

Other receivables consist of interest receivable from unquoted fixed income securities, negotiable

instrument of deposit ('NID') and short-term deposits.

6 SHORT TERM DEPOSITS

Short-term deposits represent deposits with local licensed financial institutions.

The effective average interest rate for short-term deposits is 3.17% per annum (2015:3.38%) and

the average maturity period is 9 days (2015:7 days).

7 AMOUNT DUE TO MANAGER

Amount due to Manager consist of amounts payable to the Manager in respect of cancellation of

units. Amount payable for units cancelled is paid within 10 days of the transaction dates.

8 ACCRUALS 2016 2015

RM RM

Accruals consist of:

Management fee 12,462 10,576

Trustee’s fee 1,329 5,757

Audit fee 3,180 -

Tax agent’s fee 3,500 3,710

Others 1,037 -

21,508 20,043

9 UNITHOLDERS’ CAPITAL



25

2016 2015 RM RM

At fair value 8,923,625 13,991,691

At Aggregate cost (9,024,600) (14,079,606)

Unrealised reserve (100,975) (87,915)

11 REALISED RESERVE 2016 2015

RM RM

At beginning of period 1,430,915 1,295,183

Total comprehensive income for the period 152,248 324,424

Net unrealised loss transferred to unrealised reserve 43,625 38,685 Distribution for the period - (284,027)

At end of period 1,626,788 1,374,265

12 NET ASSET VALUE PER UNIT (EX-DISTRIBUTION)

The net asset value per unit is calculated by dividing the net asset value attributable to unitholders

of RM19,572,792 (2015: RM15,691,917) as of 31st December, 2016 by 38,068,481 units (2015:

30,959,148 units) in issue as of 31st December, 2016.

13 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 0.75% (2015:0.75) per annum for the period.

14 TRUSTEE’S FEE

The Schedule 9 of the Deed provides that the Trustee is entitled to an annual Trustee’s fee at rate

not exceeding 0.25% 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% (2015:0.08%) per annum for the

period.

15 INCOME TAX EXPENSE

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, 1967. Gains arising from realisation of

investments are not treated as income pursuant to Paragraph 61(1)(b) of the Income Tax Act,

1967.

16 NET DISTRIBUTION

2016 2015

RM RM

Distribution to unitholders is from the following sources:

Interest income - 385,387

Less: Expenses - (101,360)

Net distribution - 284,027



26

The distributions above have been made as follows:

2016 2015

RM RM

Distribution on 31st December, 2015

Gross distribution per unit (sen) - 0.35

Net distribution per unit (sen) - 0.35

Distribution on 29th September, 2015

Gross distribution per unit (sen) - 0.35 Net distribution per unit (sen) - 0.35

Total distribution

Gross distribution per unit (sen) - 0.70

Net distribution per unit (sen) - 0.70

17 MANAGEMENT EXPENSE RATIO AND PORTFOLIO TURNOVER

Management Expense Ratio (MER)

Management expense ratio for the Fund is 0.47% (0.45% in 2015) for the year ended 31st

December, 2016. The management expense ratio which includes management fee, Trustee’s fee,

audit fee, tax agent’s fee and other expenses, is calculated as follows:

MER = (A + B + C + D + E) ÷ F x 100

A = Management fee D = Tax agent’s fee B = Trustee’s fee E = Other expenses

C = Audit fee F = Average net asset value of Fund

The average net asset value of the Fund for the year is RM15,780,928 (RM22,487,228 in 2015).

Portfolio Turnover Ratio (PTR)

The portfolio turnover ratio for the Fund is 0.10 times (0.34 times in 2015) for the period ended

31st December, 2016. The portfolio turnover is derived from the following calculation:

(Total acquisition for the period + total disposal for the period) 2

Average net asset value of the Fund for the period calculated on a daily basis

Where: total acquisition for the period = RM2,000,000 (2015: RM10,056,014)

total disposal for the period = RM1,000,000 (2015: RM5,026,237)

18 UNITS HELD BY THE MANAGER AND RELATED PARTIES

As of end of the financial period, the total number and value of units held by the Manager and

related parties are as follows:

No. of units

RM

31.12.2016

The Manager 14,765 7,591

Dato’ Wee Hoe Soon @ Gooi Hoe Soon, a director of the Manager

22,413,936

11,523,005

22,428,701 11,530,596

31.12.2015

The Manager 12,149 6,159

Dato’ Wee Hoe Soon @ Gooi Hoe Soon,

a director of the Manager

22,108,810

11,206,956

22,120,959 11,213,115



27

The directors of the Manager are 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.

19 TRADE WITH BROKERS/ DEALERS

Details of transactions with brokers/dealers are as follows:

Brokers/Dealers

Value of

Trades

% of Total

Trades Fees

% of Total

Brokerage

Fee

RM % RM %

2016

Hong Leong Investment Bank Berhad 5,940,000 32.61 - -

RHB Investment Bank Berhad 5,170,000 28.38 - -

KAF Investment Bank Berhad 3,998,000 21.95 - - CIMB Bank Berhad 2,110,000 11.58 - -

Malayan Banking Berhad 1,000,000 5.48 - -

18,218,000 100.00 - -

2015

Malayan Banking Berhad 9,000,000 39.13 - -

Hong Leong Bank Berhad 6,082,251 26.44 - -

Hong Leong Investment Bank Berhad 5,020,000 21.82 - - KAF Investment Bank Berhad 2,030,000 8.83 - -

CIMB Bank Berhad 820,000 3.56 - -

RHB Investment Bank Berhad 50,000 0.22 - -

23,002,251 100.00 - -

20 RISK MANAGEMENT POLICIES

A. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Fund seeks to provide high level of liquidity while providing current income and capital preservation by investing primarily in very short-term, highly liquid, near cash and money market

instruments, and partially in fixed income securities. In order to meet its stated investment

objectives, the Fund utilises risk management for both defensive and proactive purposes. Rigorous

analysis of sources of risk in the portfolio is carried out and the following policies are implemented

to provide effective ways to reduce future risk and enhance future returns within the Fund’s

mandate.

The key risks faced by the Fund are market risk, credit risk, liquidity risk, interest rate risk, and

price risk primarily on its investments.

Categories of Financial Instruments

2016 2015

RM RM

Financial assets

Carried at FVTPL:

Unquoted fixed income securities 8,923,625 13,991,691

Loans and receivables:


Short-term deposits 10,596,461 1,562,456

Other receivables 76,199 149,537



28

2016 2015 RM RM

Financial liabilities

Carried at amortised cost:

Amount due to Manager 5,900 -

Accruals 21,508 20,043

Credit risk management

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for

the Fund by failing to discharge an obligation. The Fund is exposed to the risk of credit-related

losses that can occur as a result of a counterparty or issuer being unable or unwilling to honour its

contractual obligations to make timely repayments of interest, principal and proceeds from

realisation of investments.

The Manager manages the Fund’s credit risk by undertaking credit evaluation and close monitoring

of any changes to the issuer/counterparty’s credit profile to minimise such risk. It is the Fund’s

policy to enter into financial instruments with reputable counterparties.

The Fund’s maximum exposure to credit risk is represented by the carrying amount of each class

of financial assets recognised in the statement of financial position. None of the Fund’s financial

assets were past due or impaired as at 31st December, 2016.

The Fund invests in unquoted investments of at least investment grade as rated by a credit rating

agency. The following table set out the Fund’s portfolio of unquoted investments by rating

categories:

Market Value

RM

As a % of

unquoted

investments

As a % of

NAV

Credit rating

31.12.2016

Bonds

AAA 4,004,040 44.87 20.46

AA1 499,795 5.60 2.55

AA3 989,720 11.09 5.06 AA- 997,110 11.17 5.10

NR 1,932,780 21.66 9.87

Others

NID 500,000 5.61 2.55

8,923,625 100.00 45.59

31.12.2015

Bonds

AAA 8,041,120 57.47 51.24

AA1 499,795 3.57 3.19

AA2 494,985 3.54 3.15

AA3 1,987,360 14.20 12.67

AA- 995,625 7.12 6.35

Others GIA 1,006,806 7.20 6.42

FRNID 966,000 6.90 6.16

13,991,691 100.00 89.18



29

The following table set out the Fund’s portfolio of unquoted investments by industry:

Industry

Short-term

deposits

Unquoted

fixed income

securities

RM RM 31.12.2016

Finance, insurance and business services 10,596,461 3,922,475

Property & real estate - 4,500,680

Trading & services - 500,470

10,596,461 8,923,625

31.12.2015

Finance, insurance and business services 1,562,456 8,979,146

Property & real estate - 4,511,510

Trading & services - 501,035

1,562,456 13,991,691

Liquidity risk management

This risk is defined as the ease with which a security can be sold at or near its fair value

depending on the volume traded on the market. To minimise liquidity risk, the Manager intends to

invest mainly in high quality instruments where the market for such instruments is more liquid,

which are capable of being converted into cash within 7 days.

The table below summarises the maturity profile of the Fund’s liabilities at the reporting date

based on contractual undiscounted repayment obligations:

Up to

1 month

1 - 3

months

3 months

to 1 year

Total

RM RM RM RM

31.12.2016 Financial Liability:

Non-interest bearing

Amount due to Manager 5,900 - - 5,900

Accruals 20,518 990 - 21,508

26,418 990 - 27,408

31.12.2015

Financial Liability:

Non-interest bearing

Accruals 16,333 3,710 - 20,043

16,333 3,710 - 20,043

Market risk management

This is a class of risk that inherently exists in an economy and cannot be avoided by any business

or company. It is usually due to changes in the economic outlook and affects broad market

confidence. This risk cannot be removed from an investment portfolio, which is solely invested

within that particular market, by diversification.

Therefore, as the Fund presently invests only in Malaysian fixed income securities, the

performance of the Fund might go up or down in accordance with the prevailing market risk of

Malaysia.

Interest rate risk management

This risk related to movements in the direction of the interest rates that will cause the value of the

securities to fluctuate. The Fund seeks to manage this risk by constructing a fixed income portfolio

with sufficient diverse range of maturities in accordance to the interest rate strategies developed

after thorough evaluation of macroeconomic variables.



30

As interest rates and yield curves change over time, the Fund may be exposed to a loss in

earnings due to the effects of interest rates on the structure of the statement of financial position.

Interest rate risk sensitivity

Sensitivity to interest rate arises from mismatches in the repricing dates, cash flows and other

characteristics of the assets and their corresponding liability funding. A 50 basis point increase or

decrease is used when reporting interest rate risk internally to key management personnel and

represents management’s assessment of the reasonably possible change in interest rates.

The sensitivity is the effect if the assumed changes in interest rates on changes in fair value of

investments for the year, based on revaluing fixed rate financial assets at the end of the reporting

period.

Price Risk management

Price risk is the risk of unfavourable changes in the fair value of unquoted fixed income securities

as the result of changes in the levels of the equity indices and the value of individual securities.

The price risk exposure arises from the Fund’s investment in quoted and unquoted securities.

Capital risk management

The capital of the Fund is represented by equity consisting of unitholders’ capital and retained

earnings. The amount of equity can change significantly on a daily basis as the Fund is subject to

daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when

managing capital is to safeguard the Fund’s ability to continue as a going concern in order to

provide returns for unitholders and benefits for other stakeholders and to maintain a strong capital

base to support the development of the investment activities of the Fund.

21 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction in the principal (or most advantageous) market at the measurement date

under current market condition.

For unquoted fixed income securities in general, fair values have been estimated by reference to

quotes published by BPA.

For deposits and placements with financial institutions with maturities of less than twelve months,

the carrying value is a reasonable estimate of fair value.

The carrying amounts of other financial assets and financial liabilities approximate their fair values

due to short maturity of these financial instruments.

The following table provides an analysis of financial instruments that are measured subsequent to

initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair

value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in

active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices

included within Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements are those derived from valuation techniques that include

inputs for the asset or liability that are not based on observable market data (unobservable

inputs).



31

Level 1 Level 2 Level 3 Total RM RM RM RM

31.12.2016

Financial assets at FVTPL

Unquoted fixedincome securities - 8,923,625 - 8,923,625

31.12.2015

Financial assets at FVTPL

Unquoted fixedincome securities - 13,991,691 - 13,991,691

There was no transfer between Levels 1 and 2 during the financial period.

22 INTERIM ACCOUNTS

The interim accounts for the 6-month period ended 31st December, 2016 have not been audited.

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